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A E C I Limited - Reviewed Condensed Consolidated Financial Results And Final Cash Dividend For The Year Ended 31 December 2013

Release Date: 25/02/2014 07:05:00      Code(s): AFE     
AECI LIMITED
(Incorporated in the Republic of South Africa) Registration number 
1924/002590/06
Tax reference number 9000008608
(?AECI? or ?the Company?)
Share code: AFE
ISIN Number: ZAE000000220

Reviewed condensed consolidated financial results and final cash dividend 
declaration for the year ended 31 December 2013

Best-ever safety performance with a TRIR of 0,52
Revenue +15% to R15,9 billion, 33% generated outside SA 
Headline earnings +57% to R885 million
EPS +63% to 845c
HEPS +57% to 791c
Results exclude Shanghai Zendai property transaction

Income statement


                                        %     2013       2012        2012        2012
R millions                         change           Audited(2) Adjusted(2) Restated(2) 
Revenue(3)                            +15   15 908     14 916      (1 089)     13 827
Net operating costs                        (14 510)   (13 575)        945     (12 630) 
Profit from operations                +17    1 398      1 341        (144)      1 197
CST share-based payment(4)                       ?       (138)          ?        (138)
Net income from pension fund employer
surplus accounts                                 ?          8          (8)          ?
Net loss from plan assets for post- 
retirement medical aid liabilities               ?         (6)          6           ?
                                             1 398      1 205        (146)      1 059
Interest expense                              (211)      (262)          6        (256) 
Interest received                               37         40          (2)         38
Share of profit of equity-accounted
investees, net of tax                           43          ?          57          57
Profit before tax                            1 267        983         (85)        898
Tax expense                                   (313)      (345)         36        (309) 
Profit for the year                            954        638         (49)        589
Profit for the year attributable to:
? Ordinary shareholders                        946        630         (49)        581
? Preference shareholders                        3          2           ?           2
? Non-controlling interest                       5          6           ?           6
                                               954        638         (49)        589
Headline earnings are derived from:
Profit attributable to 
ordinary shareholders                          946        630         (49)        581
Impairment of goodwill                           5          9           ?           9
Impairment of property, plant and
equipment                                        9          3           ?           3
Profit on partial disposal of net 
investment in foreign operation                (38)         ?           ?           ?
Surplus on derecognition of 
businesses, joint ventures and 
subsidiaries disposed of                        (3)       (15)          ?         (15)
Surplus on disposal of property, 
plant and equipment and investment 
property                                       (49)       (18)          ?         (18) 
Tax effects of the above items                  15          2           ?           2
Headline earnings                              885        611         (49)        562
Per ordinary share (cents):
Headline earnings                     +57      791        547         (44)        503
Diluted headline earnings                      740        521         (42)        479
Basic earnings                                 845        564         (44)        520
Diluted basic earnings                         791        537         (41)        496
Dividends declared                    +14      210        185           ?         185
Dividends paid                                 290        257           ?         257

Statement of comprehensive income
                                               2013       2012        2012        2012
R millions                                           Audited(2) Adjusted(2) Restated(2) 
Profit for the year                             954        638         (49)        589
Other comprehensive income net of tax:
Items that may be reclassified subsequently 
to profit or loss: 
Foreign currency translation
differences                                     362         41           ?          41
Items that will not be reclassified 
subsequently to profit or loss:
Actuarial gain on defined-benefit
obligations                                      86          ?          49          49
Total comprehensive income for
the year                                      1 402        679           ?         679
Total comprehensive income attributable to:
? Ordinary shareholders                       1 389        672           ?         672
? Preference shareholders                         3          2           ?           2
? Non-controlling interest                       10          5           ?           5
                                              1 402        679           ?         679

Statement of changes in equity
                                               2013       2012        2012        2012
R millions                                           Audited(2) Adjusted(2) Restated(2) 
Total comprehensive income for the year       1 402        679           ?         679
Dividends paid                                 (336)      (297)          ?        (297) 
Business combinations and change
in ownership percentage                           7          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                      47         30          (1)         29
Transfer to retained earnings for
CST share-based payment                           ?        138           ?         138
Equity at the beginning of the year           5 757      5 214         (11)      5 203
Equity at the end of the year                 6 877      5 769         (12)      5 757
Made up as follows:
Ordinary share capital                          116        116           ?         116
Share premium                                   496        496           ?         496
Reserves                                        813        406          (1)        405
Property revaluation surplus                    237        237           ?         237
Foreign currency translation reserve            500        143           ?         143
Share-based payment reserve                      76         30          (1)         29
Other                                             ?         (4)          ?          (4) 
Retained earnings                             5 394      4 697           ?       4 697
Preference share capital                          6          6           ?           6
Non-controlling interest                         52         48         (11)         37
                                              6 877      5 769         (12)      5 757

Ordinary shares in issue

                                                                      2013        2012 
                                                                  millions    millions
Listed ordinary shares
At the beginning of the year                                         128,2       119,1
Issued during the year for CST and KTH
transactions(4)?(5)                                                      ?         9,1
At the end of the year                                               128,2       128,2
Treasury shares held by subsidiary company                           (11,9)      (11,9) 
                                                                     116,3       116,3
Unlisted redeemable convertible ordinary shares
At the beginning of the year                                          10,1           ?
Issued during the year for EST transaction(4)                            ?        10,1
At the end of the year                                                10,1        10,1
Treasury shares held by consolidated EST(4)                          (10,1)      (10,1)
                                                                         ?           ?
Ordinary shares in issue                                             116,3       116,3
 
Reconciliation of weighted average number of shares
                                                                      2013        2012 
                                                                  millions    millions
Weighted average number of ordinary shares at the
beginning of the year                                                138,3       119,1
Weighted average number of ordinary shares issued
during the year                                                          ?        17,4
Weighted average number of ordinary shares held by   
consolidated EST                                                     (10,1)       (9,0) 
Weighted average number of contingently returnable
ordinary shares held by CST                                           (4,4)       (3,9)
Weighted average number of shares held by consolidated
subsidiary                                                           (11,9)      (11,9) 
Weighted average number of ordinary shares for basic
earnings per share                                                   111,9       111,7
Dilutive adjustment for potential ordinary shares                      7,7         5,4
Dilutive adjustment for share options under the AECI
share option scheme                                                      ?         0,1
Weighted average number of ordinary shares for diluted
earnings per share                                                   119,6       117,2

Statement of financial position
                                               2013       2012        2012        2012
                                             31 Dec     31 Dec      31 Dec      31 Dec   
                                                     Audited(2) Adjusted(2) Restated(2)
R millions
Assets
Non-current assets                            6 472      6 314         153       6 467
Property, plant and equipment                 3 756      3 733         (71)      3 662
Investment property                             173        445           ?         445
Intangible assets                               143        214         (55)        159
Goodwill                                      1 123      1 124         (35)      1 089
Pension fund employer surplus accounts          231        267           ?         267
Investments in associates                       217         56           ?          56
Investments in joint ventures                   301          ?         318         318
Other investments                                50         30           ?          30
Loans receivable                                 10         11           ?          11
Deferred tax                                    468        434          (4)        430
Current assets                                7 921      6 752        (355)      6 397
Inventories(6)                                3 090      2 867        (156)      2 711
Accounts receivable                           3 326      2 737        (120)      2 617
Loans to joint ventures                           ?          ?           ?           ?
Assets classified as held for sale(6)           286          ?           ?           ?
Cash                                          1 219      1 148         (79)      1 069
Total assets                                 14 393     13 066        (202)     12 864
Equity and liabilities
Ordinary capital and reserves                 6 819      5 715          (1)      5 714
Non-controlling interest                         52         48         (11)         37
Preference share capital                          6          6           ?           6
Total equity                                  6 877      5 769         (12)      5 757
Non-current liabilities                       2 214      2 488         (37)      2 451
Deferred tax                                    168        232         (31)        201
Non-current borrowings                        1 099      1 251           ?       1 251
Non-current provisions                          947      1 005          (6)        999
Current liabilities                           5 302      4 809        (153)      4 656
Accounts payable                              3 284      2 912        (154)      2 758
Current borrowings                            1 861      1 738           ?       1 738
Loans from joint ventures                        21          ?           ?           ?
Tax payable                                     136        159           1         160
Total equity and liabilities                 14 393     13 066        (202)     12 864

                                               2012        2012        2012
                                             01 Jan      01 Jan      01 Jan              
R millions                                Audited(2)  Audited(2) Restated(2) 
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 associates                         ?           ?           ?
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(6)                                2 584        (158)      2 426
Accounts receivable                           2 772        (172)      2 600
Loans to joint ventures                           ?          40          40
Assets classified as held for sale(6)            16           ?          16
Cash                                          1 061         (82)        979
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

Statement of cash flows


                                  2013        2012        2012        2012
R millions                               Audited(2) Adjusted(2) Restated(2) 
Cash generated by operations     2 191       1 867         (90)      1 777
Dividends received                  62           ?          28          28
Interest paid                     (212)       (245)          7        (238) 
Interest received                   37          40          (3)         37
Income tax paid                   (464)       (308)         19        (289)
Changes in working capital        (426)       (326)         (5)       (331) 
Expenditure relating to non-
current provisions                 (66)        (98)         (3)       (101) 
Cash available from operating
activities                       1 122         930         (47)        883
Dividends paid                    (336)       (297)          ?        (297) 
Cash flows from operating
activities                         786         633         (47)        586
Cash flows from investing
activities                        (772)       (645)         29        (616) 
Net investment expenditure        (239)       (144)         10        (134)
Net capital expenditure           (533)       (501)         19        (482) 
Net cash generated/(utilised)
before financing activities         14         (12)        (18)        (30) 
Cash flows from financing
activities                         (28)         75          21          96
Non-current loans receivable         1          14           ?          14
Borrowings                         (29)         61          21          82
(Decrease)/increase in cash        (14)         63           3          66
Cash at the beginning of the
year                             1 069       1 061         (82)        979
Translation gain on cash           164          24           ?          24
Cash at the end of the year      1 219       1 148         (79)      1 069
Other salient features


                                                          2013        2012
R millions                                                      Restated(2) 
Capital expenditure                                        633         538
? expansion                                                293         259
? replacement                                              340         279
Capital commitments(7)                                     746         207
? contracted for                                            87          55
? not contracted for                                       659         152
Future rentals on property, plant and equipment leased     199         130
? payable within one year                                   71          52
? payable thereafter                                       128          78
Net borrowings                                           1 741       1 920
Gearing (%)*                                                25          33
Current assets to current liabilities                      1,5         1,4
Net asset value per ordinary share (cents)               5 864       4 914
Depreciation and amortisation                              537         460
ZAR/US$ closing exchange rate (rand)                     10,50        8,49
ZAR/US$ average exchange rate (rand)                      9,63        8,20
Per ordinary share (cents) (excluding CST share-based 
payment):
? headline earnings                                        791         627
? diluted headline earnings                                740         597
* Borrowings less cash as a percentage of total equity.

Industry segment analysis

                                            2013        2012         2013
                                                  Restated(2) Profit from
R millions                               Revenue     Revenue   operations
Explosives                                 7 400       6 327          572
Specialty chemicals                        8 359       7 621          922
Property                                     672         400          219
Group services and inter-segment            (523)       (521)        (315)
                                          15 908      13 827        1 398

                                            2012        2013         2012
                                      Restated(2)              Restated(2)     
                                     Profit from         Net          Net
R millions                            operations      assets       assets
Explosives                                   417       3 059        2 837
Specialty chemicals                          891       4 541        4 374
Property                                      33       1 051          808
Group services and inter-segment            (144)        (38)         (94)
                                           1 197       8 613        7 925

Net assets consist of property, plant, equipment, investment property, 
intangible assets, goodwill, inventory, accounts receivable, and assets
classified as held for sale 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.

Notes
1) Basis of preparation and accounting policies
The reviewed condensed consolidated financial results are prepared in
accordance  with  the  requirements  of  the  JSE  Limited?s  Listings 
Requirements (?Listings Requirements?) for provisional reports and the 
requirements of the Companies Act of South Africa, No. 71 of 2008. The 
Listings Requirements require provisional reports to be prepared in 
accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (?IFRS?) and 
the South African Institute of Chartered Accountants Financial Reporting 
Guides as issued by the Accounting Practice Committee and Financial 
Pronouncements as issued by the Financial Reporting Standards Council and 
to also, as a minimum, contain the information required by IAS 34 Interim 
Financial Reporting. The accounting policies applied in the preparation of 
the reviewed condensed consolidated financial results are in terms of IFRS 
and are consistent with those applied in the previous consolidated annual 
financial statements, except for the adoption of the new standards as 
detailed below. The preparation of these reviewed condensed consolidated 
financial results for the year ended 31 December 2013 was supervised by 
the Financial Director, Mr KM Kathan CA(SA)AMP (Harvard). The reviewed 
condensed  consolidated  financial  results  have  been  reviewed  by  the 
Company?s auditors, KPMG Inc., who have issued an unqualified review 
opinion.  A  copy  of  the  review  opinion  is  obtainable  from  AECI?s 
registered office.
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 
ofcomprehensive  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 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 year. 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 
AECI?s 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 
the year ended 31 December 2012.
3) Includes foreign and export revenue of R 5 224 million (2012 restated:
R4 345 million).
4) Share-Based payments CST share-based payment: The AECI Community 
Education and DevelopmentTrust (?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 R155 million of which R38 million (2012: R29 million) was 
recognised in the income statement. The remainder of the expense will be 
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) AECI concluded agreements to dispose of a portion of its surplus 
property assets at Modderfontein to Shanghai Zendai Property Limited in 
November 2013. A significant portion of the transaction is expected to be
effective during 2014. Property assets to be disposed of include vacant 
land and property and buildings held for leasing purposes and these 
assets, amounting to R286 million have been reclassified from investment 
property to assets classified as held for sale at 31 December 2013 in 
terms of IFRS 5 Non-current Assets Held for Sale and Discontinued 
Operations. The agreements also include the disposal of property under 
development and the related development costs (bulk infrastructure) of 
R214 million which is included in the Group?s inventory as at 31 December
2013.
7) Subsequent to year-end, AECI and Clariant Southern Africa Proprietary
Limited (?Clariant?) have reached agreement for AECI?s wholly-owned 
subsidiary ImproChem Proprietary Limited to acquire Clariant?s water 
treatment business in Africa and its South African assets for a total cash 
consideration of R409 million. The acquisition is subject to certain 
conditions precedent.
8) The reviewed condensed consolidated financial results do not include 
all of the disclosures required for full annual financial statements and
should be read in conjunction with the consolidated annual financial 
statements for the year ended 31 December 2012 taking into account the 
changes in accounting policies as set out above.

Commentary
AECI produced commendable results in 2013 in an environment where trading 
and market conditions remained challenging. Revenue increased by 15% to 
R15 908 million (2012: R13 827 million). Revenue generated outside South 
Africa was 20% higher at R5 224 million, representing 33% of total 
revenue. Headline earnings improved by 57% to R885 million (2012: R562 
million). Profit from operations increased by 17% to R1 398 million 
compared to R1 197 million in 2012, the trading margin was 8,8% (2012:
8,7%), earnings per share (?EPS?) were 845 cents (2012: 520 cents) and
headline earnings per share (?HEPS?) were 791 cents (2012: 503 cents).
Key drivers of performance were pleasing year-on-year improvements in the 
explosives and property businesses, the non-recurrence of the non-cash
IFRS charge relating to the community share trust component of the B-BBEE 
transactions concluded in 2012, the weaker ZAR/US$ exchange rate and 
increased selling prices.
The Board has declared a final cash dividend of 210 cents per ordinary 
share (2012: 185 cents) bringing the total cash dividend for the year to
315 cents per share, a 20% increase on 2012?s 263 cents per share. 
Safety
The Group again improved its safety performance, with a best-ever Total
Recordable Incident Rate (?TRIR?) of 0,52. The TRIR measures the number of 
incidents per 200 000 hours worked. Safety remains a key performance 
indicator for management and it is pleasing that sustained efforts in this 
regard are having such a positive result.
Explosives
AEL Mining Services (?AEL?) achieved a 17% increase in revenue to R7 400 
million (2012: R6 327 million) and overall explosives volumes to mining 
and quarrying customers were 5,6% higher. Profit from operations
improved to R572 million (2012: R417 million) after taking to account a 
R84 million retrenchment charge for the closure of the old initiating 
systems  plants  and  the  subsequent  relocation  of  production  to  the 
Initiating Systems Automated Plant (?ISAP?). AEL benefited from the 
weakening rand as more than 50% of its revenue is generated outside South 
Africa and is mostly denominated in US dollars. Consequently, the profit 
improvement in AEL?s foreign operations enhanced the overall result by R72 
million. In addition, a R38 million foreign exchange gain was realised by 
repatriating cash to the AECI Group?s central offshore Treasury.
The trading margin improved to 7,7%, (8,9% before severance costs) (2012:
6,6%). The target remains to improve this to above 10%.
The South African business performed well notwithstanding lower gold and 
platinum  prices.  Explosives  volumes  were  6,8%  higher  than  in
2012.  Market  share  grew  in  the  open  cast  and  massive  businesses,
particularly in the iron ore and coal sectors. New supply contracts were 
secured and this enabled AEL to diversify its commodity portfolio further 
in line with its strategy. Major contracts in initiating systems were 
retained although volumes declined in line with decreased output from the 
narrow reef gold and platinum mining sectors in South Africa.
The African business continued to expand its already extensive footprint 
as a result of an increase in mining activity with the commencement of
greenfield projects and the commissioning of three new bulk explosive 
plants in Burkina Faso, the DRC and Egypt. In addition, AEL gained new 
supply contracts in the copper and gold mining sectors. Explosives volume 
growth in Africa was 5,4%.
The International business recorded improved profitability and growth even 
though some new contracts were delayed by customers owing to low thermal 
coal and gold prices. Explosives volume growth was 1,9%.
The  ammonium  nitrate  plant  in  Indonesia,  part  of  AECI?s  minority 
investment in PT Black Bear Resources Indonesia (?BBRI?), was in 
commissioning by year-end. It will provide AEL with a secure in-country 
source of ammonium nitrate.
During 2013 ISAP produced 98,9 million detonators and assembled 31,8 
million units in line with market demand. ISAP is commercially complete 
and its 120 million detonator output capacity has been verified. A further 
R30 million was delivered in cost savings and efficiencies.
Capital investment amounted to R290 million (2012: R367 million). Of this, 
R126 million was for expansion projects in the African business and for 
the improvement of ammonia storage facilities at Modderfontein. As part of
the phased investment in BBRI an additional R159 million was invested in
2013, bringing the total investment to R201 million.
Further expansion in Africa and other territories of interest is expected 
in 2014.
Specialty chemicals
Revenue increased by 10% to R8 359 million (2012: R7 621 million). 
Excluding sulphur trading, overall volumes grew by 5,2%. Profit from
operations increased by 3% to R922 million (2012: R891 million) and the 
operating margin was 11,0% compared to 11,7% last year. Although commodity 
prices increased, profit margins in rand terms did not follow the same 
trend owing to the subdued trading environment in South Africa?s 
manufacturing sector. Higher sales at typically lower margins to the
agricultural sector diluted the segment?s overall margin further.
Chemfit, Chemical Initiatives, ImproChem, Nulandis and Senmin delivered 
very good performances when compared to 2012. Senmin?s results in 2012 
were negatively impacted by strikes in South Africa?s platinum mining 
industry but a strong recovery was evident in 2013. ImproChem benefited 
from  the  integration  of  General  Electric?s  Chemical  and  Monitoring 
Solutions business in Africa, which was acquired in 2012. Other companies 
in the specialty chemicals cluster were challenged by the volatile 
conditions prevailing in South Africa?s manufacturing sector.
A number of businesses in the cluster were restructured in the year, at a 
total cost of about R30 million. ChemSystems terminated its electroplating
activities and Chemisphere Technologies, which supplies specialty chemical 
products and services to the pulp and paper industry, will be integrated 
into ChemSystems as a business unit in 2014. Industrial Urethanes was 
brought into Lake Specialties and Infigro was moved to Lake Foods in the 
first half of the year.
The acquisition of SA Premix was finalised in June 2013 and integrated 
into Chemfit?s business in the third quarter. SA Premix produces and 
distributes  animal  feed  formulations  that  fortify  and  enhance  the
nutritional content of feeds. A new blending plant is scheduled to come on 
line early in 2014.
In January 2014 AECI announced that it had reached agreement with Clariant
Southern Africa Proprietary Limited (?Clariant?) for AECI?s wholly-owned 
subsidiary ImproChem to acquire Clariant?s water treatment business in 
Africa and its South African assets for a total cash consideration of R409 
million. Also included in the acquisition is a 50% shareholding in 
Blendtech, Clariant?s B-BBEE partner in South Africa. The acquisition is 
in line with the Group?s strategy to grow its footprint in the water 
solutions sector. It is subject to certain conditions precedent, including 
approval by the relevant competition authorities.
Capital expenditure for the cluster totalled R236 million (2012: R145 
million) of which R151 million was for expansion, mainly at SANS Technical 
Fibers  in  the  USA  where  conversion  to  single  stage  nylon-spinning
equipment is close to completion. 
Property 
Revenue from Heartland?s combined activities increased by 68% to R672 million 
(2012: R400 million). Operating profit increased from R33 million to  R219  
million.  Revenue  comprised  the  recognition  of  land  sale transactions 
totalling R306 million (2012: R53 million) mostly in Longlake Ext 1 and Westlake Industrial, primarily for industrial end-uses. 
Heartland?s results do not include income from the Shanghai Zendai bulk 
sale transaction which will take effect in 2014.
On the back of weak demand for office space and no discernible improvement
in vacancy rates, office market rentals and office land sales continued to 
show lacklustre growth overall although there was better demand for office 
space in Somerset West, Western Cape. In the housing sector the entry- 
level market was strong.
To accelerate the realisation of value from its surplus property assets, 
in November 2013 AECI concluded an agreement for the disposal of the bulk 
of  its  surplus  property  assets  at  Modderfontein  and  its  property 
development  business  to  Shanghai  Zendai  Property  Limited  (?Shanghai 
Zendai?) for R1 061 million (including VAT). Approval for the transaction 
was received from the Competition Commission in South Africa in January
2014 as was the approval of Shanghai Zendai?s shareholders.
For the transaction to take effect, properties to the value of R513 
million (including VAT) (the ?First Tranche?) must be transferred to 
Shanghai Zendai?s South African subsidiaries. This transfer process has 
commenced and its completion is anticipated by no later than 31 July 2014, 
subject to the relevant extension provisions of the transaction. Once the
First Tranche has been executed the full purchase price will be remitted 
to AECI. The full terms of the transaction were published on the Stock 
Exchange News Service on 4 November 2013. On receipt of the cash proceeds, 
the Board will evaluate options for the application thereof.
The Group continues to investigate solutions for the disposal of its 
surplus land and assets at Somerset West.
Financial 
Capital expenditure totalled R633 million for the year (2012: R538
million) with R293 million of this invested in expansion projects at AEL?s 
customer  sites,  SANS  Technical  Fibers?  expansion  in  single  stage 
technology and the improvement of ammonium nitrate storage and nitric acid 
production facilities at Modderfontein. Gearing was at 25% from 35% in 
June 2013 and 33% in December 2012. Net working capital was 19,7% of 
revenue (2012: 18,6%), reflecting the longer working capital trade cycles 
in operations outside South Africa and in the property market.
Cash interest cover improved to 11,3 times (2012: 7,8 times). Net interest 
paid decreased to R175 million (2012: R201 million) as interest rates 
remained low and offset the longer working capital trade cycle.
Higher corporate centre charges were incurred, due largely to an increase
in the provision for AECI?s long-term incentive scheme which tracks the 
share price and HEPS, a higher provision for costs associated with the 
Company?s defined-benefit retirement and post-retirement medical aid, as 
well as transaction costs relating to the disposal of land to Shanghai 
Zendai. In addition, the management of the Group?s environmental costs and 
liability provision were moved from the property segment to the corporate 
centre in 2013.
Restatement of 2012 comparatives
On 1 January 2013, the following accounting standards applicable to the
AECI Group?s 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  and  31  December  2012  have  been  restated.  The  effect  of  the 
restatements was a decrease in HEPS of 8%, from 547 cents per share to 503 
cents per share.
Directorate
Mike Leeming will retire as a Non-executive Director of the Company at the 
Annual General Meeting to be held on 2 June 2014. Mike has served on the 
Board and several Board Committees since 2002. The Board thanks him for
his dedicated service over the past 11 years. The recruitment process to 
appoint an additional Non-executive Director to fill the vacancy has 
commenced.
Strategic focus and outlook
AECI?s explosives and mining chemicals businesses are poised for further 
growth in South Africa in open cast mining, particularly in iron ore and 
coal, while the narrow reef platinum and gold sectors are expected to
remain under pressure owing to weaker commodity prices and escalating 
costs. Industrial action will have a negative effect on local markets. 
Strikes in the platinum mining industry in 2014 have already impacted on 
AECI?s results in the early part of the year.
The  benefits  of  growth  outside  South  Africa  from  both  green-  and 
brownfield expansion projects in the copper, gold and iron ore mining 
sectors, as well as those of the BBRI investment, are expected from 2014. 
The expansion of the Group?s African footprint will continue to be 
supported not only in mining solutions but also in other markets of 
strategic interest namely water, oil, energy and gas; food additives; 
agriculture and specialty chemicals distribution.
Further restructuring in the explosives business as well as the specialty
chemicals cluster can be expected as the Group continues to review its 
portfolio and cost base to ensure the best possible alignment with 
customer requirements and the maximisation of growth opportunities in all 
countries where it operates.
Acquisitions in South Africa, the rest of Africa and in selected other 
regions in AECI?s markets of interest will continue to be pursued in the 
coming year.
Schalk Engelbrecht            Mark Dytor
Chairman                      Chief Executive
Woodmead, Sandton
25 February 2014

Notice to shareholders
Final ordinary cash dividend No. 160
Notice is hereby given that on Monday, 24 February 2014 the Directors of
AECI declared a gross final cash dividend of 210 cents per share, in
respect of the financial year ended 31 December 2013, payable on Monday,
14 April 2014 to ordinary shareholders recorded in the books of the
Company at the close of business on Friday, 11 April 2014.
The last day to trade cum dividend will be Friday, 4 April 2014 and shares
will commence trading ex dividend as from Monday, 7 April 2014.
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 178,50000 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, 4 April 2014.
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, 4 April 2014.
Share certificates may not be dematerialised or rematerialised from
Monday, 7 April 2014 to Friday, 11 April 2014, both days inclusive.

By order of the Board

EN Rapoo
Group Company Secretary

Woodmead, Sandton
25 February 2014

Transfer Secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg
2001

Computershare Investor Services PLC PO Box 82
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)

Date: 25/02/2014 07:05:00 Supplied by www.sharenet.co.za                     
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