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A E C I Limited - Interim Financial Results And Cash Dividend Declaration For The Half-year Ended 30 June 2013

Release Date: 24/07/2013 07:05:00      Code(s): AFE     
AECI Limited
(AECI or the Company or the Group)
(Incorporated in the Republic of South Africa) 
Registration number 1924/002590/06
Tax reference number 9000008608
SHARE CODE: AFE
ISIN NO: ZAE000000220

Condensed consolidated unaudited Interim Financial results and cash 
dividend declaration
For the half-year ended 30 June 2013

Revenue up 13% to R7223m
Profit from operations up 28% to R612m
HEPS up 236% to 356c
Cash dividend up 35% to 105c

Commentary
Performance
Revenue increased by 13% to R7 223 million in what were again challenging 
operating and trading conditions owing to an unpredictable global economic 
environment. A weaker ZAR/US$ exchange rate and higher ammonia prices 
assisted revenue growth. Profit from operations was 28% higher at R612 
million and headline earnings increased by 238% to R399 million
(2012: R118 million) primarily due to a significantly improved performance 
from the explosives business as well as the non-recurrence of the once off 
non-cash IFRS 2 charge of R138 million (or 123 cents per share) in respect 
of the B-BBEE transaction in 2012. Volumes, excluding bulk sulphur
trading, grew by 3,7% in the period.
Headline earnings per share (HEPS) increased by 236% to 356 cents (2012:
106 cents).
The Board has declared an interim cash dividend of 105 cents per ordinary 
share (2012: 78 cents).
Safety
AECIs 12 month rolling average Total Recordable Injury Rate (TRIR) was
0,60 (2012: 0,58). The TRIR measures the number of incidents per 200 000 
hours worked.
Explosives
Revenue from AEL Mining Services (AEL) was 22% higher at R3 551 million 
(2012: R2 907 million) as ammonia prices increased by an average of 44% 
and bulk explosives volumes grew by 3%. It is pleasing that profit from
operations improved by 75% to R312 million (2012: R178 million), while the 
operating margin recovered to 8,8% (2012: 6,1%). This significant change
in AELs results is attributable to the better operational performance of
the companys nitric acid complex, a better business mix and exchange rate 
effects. The latter represented a net contribution of R27 million.
Higher working capital levels were maintained to mitigate potential
industrial action in South Africas chemicals sector. However, agreement 
with unions on wage increases was reached in the second week of July at 
the National Bargaining Council for the Chemical Industry. Strikes did
occur at some customer sites in West Africa during the half-year.
Capital expenditure totalled R108 million. R58 million of this related to 
growth projects at customer sites, primarily outside South Africa. 
Regional performance
Volumes in South Africa continued to be affected by uncertainty in the 
mining sector, weaker commodity prices and safety-related stoppages. 
Strong growth was nonetheless evident in the Open Pit and Massive 
business, particularly in coal mining. Volumes in the rest of Africa were
flat owing to labour relations issues in West Africa and electricity 
shortages which prevented growth in Central Africa.
In Indonesia, volume growth of 14% was achieved despite some new coal 
projects being put on hold due to weaker thermal coal prices and a 
consequent reduction in demand.
ISAP
Significant progress was made in the technical and quality performance of 
the Initiating Systems Automated Plant (ISAP) and output target are 
being achieved. The full savings associated with closure of the 
conventional plants and efficiency enhancements will only be optimised by 
the end of 2013. This delay is the result of the extensive communication 
required with the affected unions.
Specialty chemicals
Revenue increased by 3% to R3 667 million (2012: R3 575 million). Volumes 
declined by 14,5% owing to lower sales of traded sulphur in Central Africa 
and the disposal of Resitec and Duco towards the end of 2012. Excluding
the sulphur trading activities, overall specialty chemicals volumes were
5% higher. Profit from operations declined by 2% to R389 million (2012: 
R395 million) and the operating margin was 10,6% compared to 11% last year 
due to a lag in foreign exchange-related price increases.
The results for the prior period included a once-off profit of R24 million 
on the sale of a building.
Chemfit, Lake Foods, Lake Specialties, Nulandis and Senmin delivered 
pleasing performances. Senmins results in 2012 were negatively impacted 
by strikes in the platinum mining industry but a strong recovery was 
evident during the first half of 2013. ImproChem delivered a solid result 
after the integration of General Electrics Chemical and Monitoring 
Solutions business in Africa and the Indian Ocean Islands, which was 
acquired in June 2012. SANS Technical Fibers (STF), in the USA, is now 
reported as part of the specialty chemicals cluster. STFs results
deteriorated year-on-year because of higher raw material prices and weaker 
conditions in the European automotive sector.
Other companies in the specialty chemicals cluster remained challenged by
the volatile conditions prevailing in South Africas manufacturing sector. 
The acquisition of SA Premix was finalised in June, pending Competition 
Commission approval. SA Premix produces and distributes animal feed 
formulations that fortify and enhance the nutritional content of feeds.
R93 million was invested in capital projects of which R33 million was for
expansion, mainly at STF where a conversion to single stage equipment is 
in progress.
Property
Operating profit showed a pleasing increase of 138% to R50 million (2012: 
R21 million). Of the land sales concluded in the half-year, most were in 
Longlake Extensions 1 and 12 at Modderfontein and were predominantly for 
industrial end-use developments. Longlake Extension 1 will be sold out in 
the second half of 2013 as will a significant portion of Westlake 
Industrial, also at Modderfontein.
Demand from the industrial and residential property sectors is improving 
while that for office accommodation remains subdued.
The leasing and services businesses contributed R82 million to the 
segments revenue. Vacancy rates, at about 20%, were unchanged from the 
prior period.
Property development expenditure of R29 million was incurred, primarily 
for Longlake and Westlake.
Financial
The Group invested R216 million (2012: R272 million) in capital 
expenditure, with R104 million of this relating to expansion projects at 
customer sites for explosives and mining chemicals. Gearing was at 35% 
from 51% in June 2012 (December 2012: 33%). Working capital was R573
million higher due to the weaker rand, higher ammonia prices and the 
Groups decision to build inventories to mitigate supply chain disruptions 
to mitigate potential industrial action in South Africas chemicals 
industry. Group net working capital as a percentage of revenue was 21,8% 
(2012: 21,2%) and net interest cover was at 9,3 times (2012: 7,1 times). 
The higher corporate centre charges are due largely to an increase in the 
provision for AECIs cash-settled long-term incentive scheme which tracks 
the share price and HEPS.
Restatement of 2012 comparatives
On 1 January 2013, the following accounting standards applicable to the
AECI Groups reporting took effect:
 IAS 19: Employee Benefits
 IFRS 10: Consolidated Financial Statements
 IFRS 11: Joint Arrangements
As a result of these changes, comparative figures for the periods 1
January 2012, 30 June 2012 and 31 December 2012 have been restated. The
effect of the restatements on year-on-year HEPS was less than 2%. 
Cautionary announcement
On 8 July 2013 the Company issued a cautionary announcement stating that
it has entered into discussions relating to the disposal of the greater 
portion of its property assets at Modderfontein which are surplus to 
operational requirements.
Discussions regarding this potential disposal are on-going and 
shareholders will be advised of the outcome at the appropriate time. They 
should continue to exercise caution when dealing in AECI shares until an 
announcement is made.
Outlook and strategic focus
AECIs explosives and mining chemicals businesses remain poised for 
further growth outside South Africa notwithstanding the expected limited 
global economic recovery in the medium term. The positive trends in the 
local opencast coal and iron ore mining industries are expected to be 
sustained. However, conditions for the Groups customers in the narrow 
reef mining sector will remain challenging owing to weaker commodity 
prices and escalating costs.
The enhancement of the Groups African footprint will continue to receive
attention not only in mining services but also in other markets of 
strategic interest, namely food additives; agriculture; personal and home 
care; and the water, oil, energy and gas industries.
Uncertainty regarding the extent and pace of recovery in the local 
manufacturing sector will continue to have an effect on AECIs South 
African-based businesses.
Management will maintain its focus on improving cost efficiencies, 
especially in AEL, and optimising cash management by decreasing working 
capital to targeted levels.
Acquisitions in Africa and South America continue to be pursued.  
Schalk Engelbrecht              Mark Dytor
Chairman                        Chief Executive
Woodmead, Sandton
23 July 2013
Directors: S Engelbrecht (Chairman), MA Dytor (Chief Executive), RMW 
Dunne*, Z Fuphe, KM Kathan (Financial Director), MJ Leeming, LL Mda, AJ 
Morgan, LM Nyhonyha, R Ramashia.
Executive *British

Company Secretary: EN Rapoo

Notice to shareholders
Interim Ordinary Cash Dividend No. 159
Notice is hereby given that on Tuesday, 23 July 2013 the Directors of AECI 
declared a gross interim cash dividend of 105 cents per share, in respect 
of the six month period ended 30 June 2013, payable on Monday, 9 September
2013 to ordinary shareholders recorded in the books of the Company at the 
close of business on Friday, 6 September 2013.
The last day to trade cum dividend will be Friday, 30 August 2013 and 
shares will commence trading ex dividend as from Monday, 2 September 2013. 
A South African dividend withholding tax of 15% will be applicable to all 
shareholders who are not either exempt or entitled to a reduction of the 
withholding tax rate in terms of a relevant Double Taxation Agreement 
resulting in a net dividend of 89,25000 cents per share to those 
shareholders who are not exempt. Application forms for exemption or 
reduction may be obtained from the Transfer Secretaries and must be 
returned to them on or before Friday, 30 August 2013.
The issued share capital at the declaration date is 128 241 140 listed 
ordinary shares and 10 117 951 unlisted redeemable convertible B ordinary 
shares. The dividend has been declared from the income reserves of the 
Company. No Secondary Tax on Companies credits are available to be used. 
Any change of address or dividend instruction must be received on or 
before Friday, 30 August 2013.
Share certificates may not be dematerialised or rematerialised from
Monday, 2 September 2013 to Friday, 6 September 2013, both days inclusive.

By order of the Board
E N Rapoo
Company Secretary
Woodmead, Sandton
23 July 2013

Transfer Secretaries Computershare Investor Services (Pty) Ltd
70 Marshall Street                   PO Box 82
Johannesburg                         2001

Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS 99 7NH England

Registered Office
1st floor, AECI Place
24 The Woodlands Woodlands Drive Woodmead
Sandton
Sponsor

Rand Merchant Bank (A division of FirstRand Bank Limited)

Income statement
                                            2013         2012         2012
                                   %  First half   First half         Year
R millions                    change   Unaudited   Restated(2)  Restated(2)
Revenue(3)                       +13       7 223        6 405       13 827
Net operating costs                       (6 611)      (5 928)     (12 630) 
Profit from operations           +28         612          477        1 197
CST share-based payment(4)                              (138)        (138)
                                             612         339         1 059
Interest expense                             (97)       (118)         (256) 
Interest received                             16          20            38
Share of profit of equity-                    20          23            57
accounted investees, net of tax
Profit before tax                            551         264           898
Tax expense                                 (150)       (128)         (309) 
Profit for the period                        401         136           589
Profit for the period attributable to:
 ordinary shareholders                      398         134           581
 preference shareholders                      1           1             2
 non-controlling interest                     2           1             6
                                             401         136           589
Headline earnings are derived from:
Profit attributable to
ordinary shareholders                        398         134           581
Impairment of goodwill                                    4             9
Impairment of property,
plant and equipment                                                    3
Surplus on derecognition of
businesses, joint ventures
and subsidiaries disposed of                                         (15) 
Surplus on disposal of
property, plant and
equipment                                      1        (23)           (18)
Tax effects of the above
items                                          *          3              2
Headline earnings                            399        118            562
Per ordinary share (cents):
Headline earnings                +236        356        106            503
Diluted headline earnings                    333        102            479
Basic earnings                               356        120            520
Diluted basic earnings                       332        116            496
Dividends declared               +35         105         78            185
Dividends paid                               185        179            257
* Nominal amount

Statement of comprehensive income
                                            2013          2012        2012
                                      First half    First half        Year
R millions                             Unaudited    Restated(2) Restated(2)
Profit for the period                        401           136         589
Other comprehensive income net of tax:
Items that may be reclassified
subsequently to profit or loss: 
Foreign currency translation
differences                                  303            (1)         41
Other                                          *             1            
Items that will not be reclassified
subsequently to profit or loss: 
Actuarial gain on defined benefit
obligations                                   (4)            2          49
Total comprehensive income for the
period                                       700           138         679
Total comprehensive income
attributable to:
 ordinary shareholders                      697           136         672
 preference shareholders                      1             1           2
 non-controlling interest                     2             1           5
                                             700           138         679

* Nominal amount

Statement of changes in equity
                                            2013        2012         2012
                                      First half  First half         Year
R millions                             Unaudited  Restated(2)  Restated(2)
Total comprehensive income for the
period                                       700         138          679
Dividends paid                             (213)       (206)         (297)
Business combinations                        (2)                       1
Issue of ordinary shares:
 at par value(4)                                        4             4
 at market value(5)                                   393           393
Net effect of acquisition of non-
controlling interest to equity(5)                     (393)         (393)
Share-based payment reserve                  17          10            29
Transfer to retained earnings for CST
Share-based payment                                    138           138
Equity at the beginning of the period     5 757       5 203         5 203
Equity at the end of the period           6 259       5 287         5 757
Made up as follows:
Ordinary share capital                      116         116           116
Share premium                               496         496           496
Reserves                                    726         354           405
Property revaluation surplus                237         237           237
Foreign currency translation reserve        442         100           143
Share-based payment reserve                  46          10            29
Other                                         1           7            (4) 
Retained earnings                         4 880       4 287         4 697
Preference share capital                      6           6             6
Non-controlling interest                     35          28            37
                                          6 259       5 287         5 757

Statement of cash flows
                                            2013        2012         2012
                                      First half  First half         Year
R millions                             Unaudited  Restated(2)  Restated(2)
Cash generated by operations                 992         777        1 777
Dividends received                             7          28           28
Interest paid                               (103)       (118)        (238)
Interest received                             16          20           37
Income tax paid                             (202)       (155)        (289) 
Changes in working capital                  (573)       (694)        (331) 
Expenditure relating to non-current
provisions                                   (17)        (47)        (101) 
Cash available/(utilised) from
operating activities                         120        (189)         883
Dividends paid                              (213)       (206)        (297)
Cash flows from operating activities         (93)       (395)         586
Cash flows from investing activities        (261)       (363)        (616) 
Net investment expenditure                   (52)        (11)        (134) 
Prepayment for business
combination(6)                                         (135)           
Net capital expenditure                     (209)       (217)        (482)
Net cash utilised                           (354)       (758)         (30) 
Cash flows from financing activities         318         614           96
Non-current loans receivable                   3          (1)          14
Borrowings                                   315         615           82
(Decrease)/increase in cash                  (36)       (144)          66
Cash at the beginning of the period        1 069         979          979
Translation gain on cash                     102           3           24
Cash at the end of the period              1 135         838        1 069

Statement of financial position

                                 2013        2012        2012        2012
                               30 Jun      30 Jun      31 Dec      01 Jan
R millions                  Unaudited  Restated(2) Restated(2) Restated(2)
Assets
Non-current assets              6 553       6 182       6 467       6 143
Property, plant and
equipment                       3 677       3 623       3 662       3 587
Investment property               480         437         445         436
Intangible assets                 148          22         159          21
Goodwill                        1 089       1 022       1 089       1 024
Pension fund employer
surplus accounts                  247         245         267         259
Investments in joint
ventures                          331         358         318         363
Other investments                 136          26          86          22
Loans receivable                    8          25          11          24
Deferred tax                      437         424         430         407
Current assets                  6 760       5 988       6 397       6 061
Inventories                     2 979       2 467       2 711       2 426
Accounts receivable             2 635       2 484       2 617       2 601
Loans to joint ventures            11          64           *          40
Prepayment for business
combination(6)                               135                      
Assets classified as held
For sale                                                            16
Cash                            1 135         838       1 069         978
Total assets                   13 313      12 170      12 864      12 204
Equity and liabilities
Ordinary capital and
reserves                        6 218       5 253       5 714       4 999
Non-controlling interest           35          28          37         198
Preference share capital            6           6           6           6
Total equity                    6 259       5 287       5 757       5 203
Non-current liabilities         2 844       2 785       2 451       2 653
Deferred tax                      210         170         201         150
Non-current borrowings          1 626       1 575       1 251       1 494
Non-current provisions          1 008       1 040         999       1 009
Current liabilities             4 210       4 098       4 656       4 348
Accounts payable                2 418       2 019       2 758       2 799
Current borrowings              1 678       1 947       1 738       1 413
Loans from joint ventures           7          17           *           2
Tax payable                       107         115         160         134
Total equity and
liabilities                    13 313      12 170      12 864      12 204
*    Nominal amount

Reconciliation of weighted average number of shares
                                             2013       2012       2012
                                       First half First half       Year
Millions                                Unaudited  Unaudited    Audited
Weighted average number of ordinary
shares at beginning of the period           138,3      119,1      119,1
Weighted average number of ordinary                    15,5       17,4
shares issued during the period
Weighted average number of ordinary
shares held by consolidated EST            (10,1)      (7,9)      (9,0) 
Weighted average number of
contingently returnable ordinary
shares held by CST                          (4,4)      (3,4)      (3,9) 
Weighted average number of shares
held by consolidated subsidiary            (11,9)     (11,9)     (11,9)
Weighted average number of ordinary
shares for basic earnings per share         111,9      111,4      111,7
Dilutive adjustment for potential
Ordinary shares                               7,9        4,5        5,4
Dilutive adjustment for share options
Under the AECI share option scheme                      0,1        0,1
Weighted average number of ordinary
shares for diluted earnings per share       119,8      116,0      117,2

Ordinary shares in issue

                                             2013         2012     2012
                                       First half   First half     Year
Millions                                Unaudited    Unaudited  Audited
Listed ordinary shares
At the beginning of the period              128,2        119,1    119,1
Issued during the period for CST and
KTH transactions(4) (5)                                   9,1      9,1
At the end of the period                    128,2        128,2    128,2
Treasury shares held by subsidiary
company                                    (11,9)       (11,9)   (11,9)
                                           116,3        116,3    116,3
Unlisted redeemable convertible ordinary 
shares
At the beginning of the period               10,1                    
Issued during the period for EST
transactions(4)                                          10,1     10,1
At the end of the period                     10,1         10,1     10,1
Treasury shares held by consolidated
EST(4)                                      (10,1)      (10,1)   (10,1)
                                                                   
Ordinary shares in issue                    116,3        116,3    116,3

Other salient features
                                             2013       2012       2012
                                       First half First half       Year
R millions                              Unaudited Restated(2)  Restated(2)
Capital expenditure                           216        272        538
 expansion                                   104        143        259
 replacement                                 112        129        279
Capital commitments(6)                        476        334        207
 contracted for                              161         94         55
 not contracted for                          315        240        152
Future rentals on property, plant and
equipment leased                              258        159        130
 payable within one year                      64         47         52
 payable thereafter                          194        112         78
Net borrowings                              2 169      2 684      1 920
Gearing (%)*                                   35         51         33
Current assets to current liabilities         1,6        1,5        1,4
Net asset value per ordinary share
(cents)                                     5 347      4 517      4 914
Depreciation and amortisation                 258        216        460
ZAR/US$ closing exchange rate (rand)         9,94       8,19       8,49
ZAR/US$ average exchange rate (rand)         9,20       7,92       8,20
* Borrowings less cash as a percentage of total equity.

Industry segment analysis


                                   Revenue        Profit from operations
                                  First half             First half
                                2013        2012       2013       2012
                           Unaudited  Restated(2) Unaudited Restated(2)
R millions
Explosives                     3 551       2 907        312        178
Specialty chemicals            3 667       3 575        389        395
Property                         278         176         50         21
Group services and inter-
segment                        (273)       (253)      (139)      (117)
                              7 223       6 405        612        477

                                                           Net assets
                                                           First half
                                                         2013       2012
                                                    Unaudited Restated(2)
R millions
Explosives                                              3 181      3 087
Specialty chemicals                                     4 597      4 306
Property                                                  811        781
Group services and inter-segment                            1        (3)
                                                        8 590      8 171
Net assets consist of property, plant, equipment, investment property, 
intangible assets, goodwill, inventory, accounts receivable and prepayment 
for business combination less accounts payable.
Specialty fibres (USA) has been reported as part of the Specialty 
chemicals segment effective from 1 January 2013, the comparatives have 
been adjusted accordingly.

Change in accounting policy: Income statement(2)
                                             2012        2012        2012
                                       First half  First half  First half
R millions                              Unaudited  Adjustment    Restated
Revenue(3)                                  6 954       (549)       6 405
Net operating costs                       (6 423)         495     (5 928)
Profit from operations                        531        (54)        477
CST share-based payment(4)                   (138)                 (138)
Net (loss)/income from pension fund
employer surplus accounts                    (14)         14            
Net (loss)/income from plan assets
for post-retirement medical aid
liabilities                                   (2)           2          
                                             377          (38)       339
Interest expense                            (121)           3       (118) 
Interest received                             21           (1)        20
Share of profit of equity-accounted
investees, net of tax                                     23         23
Profit before tax                            277          (13)       264
Tax expense                                 (139)          11       (128)
Profit for the period                        138           (2)       136
Profit for the period attributable to:
 ordinary shareholders                      136           (2)       134
 preference shareholders                      1                      1
 non-controlling interest                     1                      1
                                             138           (2)       136
Headline earnings are derived from: 
Profit attributable to ordinary
shareholders                                 136           (2)       134
Impairment of goodwill                         4                      4
Impairment of property, plant and
equipment                                                             
Surplus on derecognition of
businesses, joint ventures and
subsidiaries disposed of                                              
Surplus on disposal of property,
plant and equipment                          (23)                   (23) 
Tax effects of the above items                 3                      3
Headline earnings                            120           (2)       118
Per ordinary share (cents):
Headline earnings                            108           (2)       106
Diluted headline earnings                    103           (1)       102
Basic earnings                               122           (2)       120
Diluted basic earnings                       117           (1)       116
*    Nominal amount

                                            2012        2012         2012
                                            Year        Year         Year                                 
                                         Audited   Adjustment    Restated 
R millions
Revenue(3)                                 14 916     (1 089)      13 827
Net operating costs                       (13 575)       945      (12 630) 
Profit from operations                      1 341       (144)       1 197
CST share-based payment(4)                   (138)                  (138)
Net (loss)/income from pension fund
employer surplus accounts                       8         (8)            
Net (loss)/income from plan assets for
post-retirement medical aid
liabilities                                    (6)         6            
                                            1 205       (146)       1 059
Interest expense                             (262)         6         (256) 
Interest received                              40         (2)          38
Share of profit of equity-accounted
investees, net of tax                           *         57           57
Profit before tax                             983        (85)         898
Tax expense                                  (345)        36         (309) 
Profit for the period                         638        (49)         589
Profit for the period attributable to:
 ordinary shareholders                       630        (49)         581
 preference shareholders                       2                      2
 non-controlling interest                      6                      6
                                              638        (49)         589
Headline earnings are derived from: 
Profit attributable to ordinary
shareholders                                  630        (49)         581
Impairment of goodwill                          9                      9
Impairment of property, plant and
equipment                                       3                      3
Surplus on derecognition of
businesses, joint ventures and
subsidiaries disposed of                      (15)                   (15) 
Surplus on disposal of property, plant
and equipment                                 (18)                   (18)
Tax effects of the above items                  2                      2
Headline earnings                             611        (49)         562
Per ordinary share (cents):
Headline earnings                             547        (44)         503
Diluted headline earnings                     521        (42)         479
Basic earnings                                564        (44)         520
Diluted basic earnings                        537        (41)         496
*    Nominal amount

Change in accounting policy: 
Statement of comprehensive income(2)
                                             2012        2012        2012
                                       First half  First half  First half                               
                                        Unaudited  Adjustment    Restated                     
R millions
Profit for the period                         138         (2)         136
Other comprehensive income net of tax:
Items that may be reclassified
subsequently to profit or loss: 
Foreign currency translation
differences                                    (1)                    (1)
Other                                           1                      1
Items that will not be reclassified 
subsequently to profit or loss: 
Actuarial gain on defined benefit
obligations                                                2           2
Total comprehensive income for the
period                                        138                    138
Total comprehensive income
attributable to:
 ordinary shareholders                       136                    136
 preference shareholders                       1                      1
 non-controlling interest                      1                      1
                                              138                    138

                                             2012        2012        2012
                                             Year        Year        Year
R millions                                Audited  Adjustment    Restated
Profit for the period                         638        (49)         589
Other comprehensive income net of
tax:
Items that may be reclassified 
subsequently to profit or loss: 
Foreign currency translation differences       41                     41
Other                                                                 
Items that will not be reclassified 
subsequently to profit or loss: 
Actuarial gain on defined benefit
obligations                                               49          49
Total comprehensive income for the
period                                        679                    679
Total comprehensive income attributable to:
 ordinary shareholders                       672                    672
 preference shareholders                       2                      2
 non-controlling interest                      5                      5
                                              679                    679

Change in accounting policy: 
Statement of changes in equity(2)
                                             2012        2012       2012
                                       First half  First half First half                                
                                        Unaudited  Adjustment   Restated 
R millions
Total comprehensive income for 
the period                                    138                   138
Dividends paid                               (206)                 (206)
Business combinations                                                 
Issue of ordinary shares:
 At par value(4)                               4                     4
 At market value(5)                          393                   393
Net effect of acquisition of non-
controlling interest to equity(5)            (393)                 (393)
Share-based payment reserve                    10                    10
Transfer to retained earnings for CST
share-based payment                            138                  138
Equity at the beginning of the period        5 214        (11)     5 203
Equity at the end of the period              5 298        (11)     5 287
Made up as follows:
Ordinary share capital                         116                  116
Share premium                                  496                  496
Reserves                                       354                  354
Property revaluation surplus                   237                  237
Foreign currency translation reserve           100                  100
Share-based payment reserve                     10                   10
Other                                            7                    7
Retained earnings                            4 287                4 287
Preference share capital                         6                    6
Non-controlling interest                        39        (11)        28
                                             5 298        (11)     5 287

                                              2012        2012       2012
                                              Year        Year       Year                                  
                                           Audited  Adjustment   Restated 
R millions
Total comprehensive income for the period      679                   679
Dividends paid                               (297)                 (297)
Business combinations                            1                     1
Issue of ordinary shares:
 at par value(4)                                4                     4
 at market value(5)                           393                   393
Net effect of acquisition of non-
controlling interest to equity(5)             (393)                 (393)
Share-based payment reserve                     30          (1)        29
Transfer to retained earnings for CST
share-based payment                            138                   138
Equity at the beginning of the period        5 214        (11)      5 203
Equity at the end of the period              5 769        (12)      5 757
Made up as follows:
Ordinary share capital                         116                   116
Share premium                                  496                   496
Reserves                                       406         (1)        405
Property revaluation surplus                   237                   237
Foreign currency translation reserve           143                   143
Share-based payment reserve                     30         (1)         29
Other                                          (4)                   (4) 
Retained earnings                            4 697                 4 697
Preference share capital                         6                     6
Non-controlling interest                        48        (11)         37
                                             5 769        (12)      5 757
Change in accounting policy: 
Statement of cash flows(2)
                                              2012        2012       2012
                                        First half  First half First half                                
                                         Unaudited  Adjustment   Restated
R millions
Cash generated by operations                   819        (42)        777
Dividends received                                         28         28
Interest paid                                (121)           3      (118) 
Interest received                               21         (1)         20
Income tax paid                              (168)          13      (155) 
Changes in working capital                   (702)           8      (694) 
Expenditure relating to non-current
provisions                                    (47)                  (47) 
Cash (utilised)/available from
operating activities                         (198)           9      (189) 
Dividends paid                               (206)                 (206) 
Cash flows from operating activities         (404)           9      (395) 
Cash flows from investing activities         (360)         (3)      (363) 
Net investment expenditure                     (1)        (10)       (11)
Prepayment for business combination(6)       (135)                 (135)
Net capital expenditure                      (224)           7      (217)

Net cash utilised                            (764)           6      (758) 
Cash flows from financing activities           593          21        614
Non-current loans receivable                   (1)                   (1)
Borrowings                                     594          21        615 
(Decrease)/increase in cash                  (171)          27      (144) 
Cash at the beginning of the period          1 061        (82)        979
Translation gain on cash                         3                     3
Cash at the end of the period                  893        (55)        838

                                              2012        2012       2012
                                              Year        Year       Year                                  
                                           Audited  Adjustment   Restated 
R millions
Cash generated by operations                 1 867        (90)      1 777
Dividends received                                         28         28
Interest paid                                (245)           7      (238) 
Interest received                              40          (3)         37
Income tax paid                              (308)          19      (289)
Changes in working capital                   (326)         (5)      (331) 
Expenditure relating to non-current
provisions                                    (98)         (3)      (101)
Cash (utilised)/available from
operating activities                           930        (47)        883
Dividends paid                               (297)                 (297)
Cash flows from operating activities           633        (47)        586
Cash flows from investing activities         (645)          29      (616) 
Net investment expenditure                   (144)          10      (134) 
Prepayment for business combination(6)                                
Net capital expenditure                      (501)          19      (482)
Net cash utilised                             (12)        (18)       (30) 
Cash flows from financing activities            75          21         96
Non-current loans receivable                    14                    14
Borrowings                                      61          21         82 
(Decrease)/increase in cash                     63           3         66
Cash at the beginning of the period          1 061        (82)        979
Translation gain on cash                        24                    24
Cash at the end of the period                1 148        (79)      1 069

Change in accounting policy: 
Statement of financial position(2)
                                              2012        2012       2012
                                            30 Jun      30 Jun     30 Jun                                
                                         Unaudited  Adjustment   Restated 
R millions
Assets
Non-current assets                           6 030         152      6 182
Property, plant and equipment                3 754       (131)      3 623
Investment property                            437                   437
Intangible assets                               78        (56)         22
Goodwill                                     1 075        (53)      1 022
Pension fund employer surplus accounts         245                   245
Investments in joint ventures                             358        358
Other investments                               26                    26
Loans receivable                                25                    25
Deferred tax                                   390          34        424
Current assets                               6 295       (307)      5 988
Inventories                                  2 613       (146)      2 467
Accounts receivable                          2 654       (170)      2 484
Loans to joint ventures                                    64         64
Prepayment for business combination(6)         135                   135
Assets classified as held for sale                                     
Cash                                           893        (55)        838
Total assets                                12 325       (155)     12 170
Equity and liabilities
Ordinary capital and reserves                5 253                 5 253
Non-controlling interest                        39        (11)         28
Preference share capital                         6                     6
Total equity                                 5 298        (11)      5 287
Non-current liabilities                      2 786         (1)      2 785
Deferred tax                                   165           5        170
Non-current borrowings                       1 575                 1 575
Non-current provisions                       1 046         (6)      1 040
Current liabilities                          4 241       (143)      4 098
Accounts payable                             2 183       (164)      2 019
Current borrowings                           1 947                 1 947
Loans from joint ventures                                  17         17
Tax payable                                    111           4        115
Total equity and liabilities                12 325       (155)     12 170
*    Nominal amount

                                              2012        2012       2012
                                            31 Dec      31 Dec     31 Dec                                  
                                           Audited  Adjustment   Restated 
R millions
Assets
Non-current assets                           6 314         153      6 467
Property, plant and equipment                3 733        (71)      3 662
Investment property                            445                   445
Intangible assets                              214        (55)        159
Goodwill                                     1 124        (35)      1 089
Pension fund employer surplus accounts         267                   267
Investments in joint ventures                             318        318
Other investments                               86                    86
Loans receivable                                11                    11
Deferred tax                                   434         (4)        430
Current assets                               6 752       (355)      6 397
Inventories                                  2 867       (156)      2 711
Accounts receivable                          2 737       (120)      2 617
Loans to joint ventures                                     *          * 
Prepayment for business combination(6)                                
Assets classified as held for sale                                     
Cash                                         1 148        (79)      1 069
Total assets                                13 066       (202)     12 864
Equity and liabilities
Ordinary capital and reserves                5 715         (1)      5 714
Non-controlling interest                        48        (11)         37
Preference share capital                         6                     6
Total equity                                 5 769        (12)      5 757
Non-current liabilities                      2 488        (37)      2 451
Deferred tax                                   232        (31)        201
Non-current borrowings                       1 251                 1 251
Non-current provisions                       1 005         (6)        999
Current liabilities                          4 809       (153)      4 656
Accounts payable                             2 912       (154)      2 758
Current borrowings                           1 738                 1 738
Loans from joint ventures                                   *          *
Tax payable                                    159           1        160
Total equity and liabilities                13 066       (202)     12 864
*    Nominal amount

                                              2012        2012       2012
                                            01 Jan      01 Jan     01 Jan                                  
                                           Audited  Adjustment   Restated 
R millions
Assets
Non-current assets                           6 024         119      6 143
Property, plant and equipment                3 721       (134)      3 587
Investment property                            436                   436
Intangible assets                               77        (56)         21
Goodwill                                     1 078        (54)      1 024
Pension fund employer surplus accounts         259                   259
Investments in joint ventures                             363        363
Other investments                               22                    22
Loans receivable                                24                    24
Deferred tax                                   407                   407
Current assets                               6 433       (372)      6 061
Inventories                                  2 584       (158)      2 426
Accounts receivable                          2 772       (171)      2 601
Loans to joint ventures                                    40         40
Prepayment for business combination(6)                                
Assets classified as held for sale              16                    16
Cash                                         1 061        (83)        978
Total assets                                12 457       (253)     12 204
Equity and liabilities
Ordinary capital and reserves                4 998           1      4 999
Non-controlling interest                       210        (12)        198
Preference share capital                         6                     6
Total equity                                 5 214        (11)      5 203
Non-current liabilities                      2 702        (49)      2 653
Deferred tax                                   179        (29)        150
Non-current borrowings                       1 507        (13)      1 494
Non-current provisions                       1 016         (7)      1 009
Current liabilities                          4 541       (193)      4 348
Accounts payable                             2 987       (188)      2 799
Current borrowings                           1 421         (8)      1 413
Loans from joint ventures                                   2          2
Tax payable                                    133           1        134
Total equity and liabilities                12 457       (253)     12 204
*    Nominal amount

Notes
(1) Basis of preparation and accounting policies
The condensed consolidated unaudited interim financial results are 
prepared in accordance with International Financial Reporting Standards, 
IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides 
as issued by the Accounting Practices Committee, the Listings Requirements 
of the JSE Limited and the requirements of the Companies Act of South 
Africa. Accounting policies have been applied consistently by all entities 
in the Group and are consistent with those applied in the previous 
reporting period, apart from the adoption of the new accounting standards 
as detailed below. This interim report has not been audited or reviewed by 
the Companys auditor, KPMG Inc. This interim report for the six months 
ended 30 June 2013 is being published on 24 July 2013. The preparation of 
these condensed consolidated unaudited interim financial results for the 
period ending 30 June 2013 was supervised by the Financial Director, Mr KM 
Kathan CA(SA) AMP (Harvard).
(2) Change in accounting policies
IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors has
been applied retrospectively to adjust the income statement, statement of 
comprehensive income, statement of changes in equity, statement of 
financial position and statement of cash flows for the effects of the 
following new accounting standards:
IAS 19: Employee Benefits became effective from 1 January 2013. Under its 
previous accounting policy, AECI elected to recognise its defined-benefit 
costs in the income statement, and applied the asset limitation in 
recognising the defined-benefit pension fund assets in the statement of 
financial position. The liability for the
post-retirement medical aid was recognised in the statement of financial 
position.
The income statement effects were recognised in profit from operations 
except for the net return on the employer surplus accounts and the net 
return on the post-retirement medical aid which were separately disclosed 
after profit from operations. Under the revised IAS 19, the basis of 
calculation of finance costs has been altered and is determined by 
applying the discount rate used to measure the defined-benefit obligation 
to the net defined-benefit asset/obligation at the beginning of the 
period. Profit from operations now includes only the current service cost 
and the net interest of the defined-benefit asset/liability. 
Remeasurements of the net defined-benefit asset/liability are now 
recognised in other comprehensive income. There are no amendments to the 
statement of financial position.
AECI has also adopted the new Consolidation Suite of standards: IFRS 10: 
Consolidated Financial Statements, IFRS 11: Joint Arrangements, IFRS 12: 
Disclosure of Interests in Other Entities, IAS 27: Separate Financial 
Statements and IAS28: Investment in Associates and Joint Ventures 
effective from 1 January 2013. In terms of IFRS 11, the proportionate 
consolidation of joint arrangements is no longer permitted. Joint 
arrangements are now classified as either joint ventures or joint 
operations. Joint ventures are required to be equity accounted. For joint 
operations, AECI recognises its share of assets, liabilities, revenue and 
expenses. This is done on a line-by-line basis. Equity accounting of 
AECIs joint ventures has resulted in a restatement of the income 
statement, statement of comprehensive income, statement of changes in 
equity, statement of financial position and statement of cash flows for 
June 2012 and December 2012.
(3) Includes foreign and export revenue of R2 348 million (2012 first half 
restated: R1 944 million).
(4) Share-based payments
CST share-based payment: The AECI Community Education and Development
Trust (CST) subscribed for 4 426 604 ordinary shares at par value in the
Company in 2012. The shares vested immediately and a share-based payment
expense of R138 million (2012 first half) was recognised in full in the 
income statement. These shares are contingently returnable and, as a 
result, are excluded from EPS and HEPS.
EST share-based payment: The AECI Employees Share Trust (EST) subscribed 
for 10 117 951 unlisted B ordinary shares of the Company. The total cost
is estimated at R143 million of which R15 million (2012 first half: R10 
million) was recognised in the income statement. The remainder of the 
expense is being recognised in future periods over the respective vesting 
periods.
(5) The Kagiso Tiso Holdings Proprietary Limited (RF) (KTH) transaction
in the 2012 financial year involved the purchase by AECI of the 25,1% 
interest held in AEL Holdco Limited by a KTH-led consortium in exchange 
for 4 678 667 ordinary shares in AECI. The shares issued were recognised 
in equity, with R5 million allocated to share capital and R388 million 
allocated to share premium. The non-controlling interest was reduced by 
the carrying amount of R172 million, with the balance of R221 million 
recognised directly in retained earnings.
(6) The prepayment for business combination at 30 June 2012 related to a 
payment made for the acquisition of General Electrics Chemical and 
Monitoring Solutions business in Africa.
(7) The preparation of the condensed consolidated unaudited interim 
financial statements requires management to make judgements, estimates and 
assumptions that affect the application of policies and reported amounts
of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various 
other factors that are believed to be reasonable under the circumstances, 
the results of which form the basis of making the judgements about 
carrying values of assets and liabilities that are not readily apparent 
from other sources. Actual results may differ from these estimates.

Date: 24/07/2013 07:05:00 Supplied by www.sharenet.co.za                     
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