Sharenet Sites 
Sharenet Sites
WE ARE COMMITTED TO REBUILDING VALUE THROUGH ENERGETIC TRANSFORMATION AECI LIMITED 1998 FINANCIAL RESULTS FINANCIAL RESULTS
THE DIRECTORS ANNOUNCE THE FINANCIAL RESULTS OF THE GROUP BASED ON AUDITED FIGURES FOR THE YEAR ENDED 31 DECEMBER 1998 AS FOLLOWS:
1998 1997 %
R MILLIONS CHANGE TURNOVER (1) 8 646 8 275 4
NET TRADING PROFIT 644 671 (4) FINANCING COSTS 318 145
326 526
TAXATION 102 137
224 389
INVESTMENT INCOME 18 9
NET HEADLINE PROFIT 242 398 ATTRIBUTABLE TO PREFERENCE AND
OUTSIDE SHAREHOLDERS 35 32 NET HEADLINE PROFIT ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 207 366 (43) NET EXCEPTIONAL CHARGE 313 (15)
GROSS EXCEPTIONAL CHARGE (2) 425 (2) ATTRIBUTABLE TO OUTSIDE
SHAREHOLDERS (7) 4
TAX EFFECTS (105) (17)
AMORTISATION OF GOODWILL 21 - NET (LOSS)/PROFIT ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS (127) 381 HEADLINE EARNINGS PER ORDINARY
SHARE (CENTS) 134 237 (43) ATTRIBUTABLE (LOSS)/EARNINGS PER
ORDINARY SHARE (CENTS) (82) 246
DIVIDENDS PER ORDINARY SHARE (CENTS) 55 90 NUMBER OF ORDINARY SHARES
IN ISSUE (MILLIONS) 155 155 (1) INCLUDES EXPORTS OF R1 449 MILLION (1997 - R1 553 MILLION)
(2) CLOSURE OF OPERATIONS 220 -
RESTRUCTURING OF OPERATIONS 181 37 PROVISION FOR POST-EMPLOYMENT
HEALTH CARE BENEFITS 24 20 NET GAIN ON DISPOSAL OF
BUSINESSES AND INVESTMENTS - (59)
425 (2) ABRIDGED BALANCE SHEET
1998 1997
R MILLIONS CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' INTEREST 2 917 3 107
MINORITIES' INTEREST 128 139
TOTAL SHAREHOLDERS' INTEREST 3 045 3 246
DEFERRED TAXATION (67) 66
NET BORROWINGS 1 522 662
4 500 3 974 EMPLOYMENT OF CAPITAL
FIXED ASSETS AND GOODWILL 3 484 2 886
INVESTMENTS 115 116
CURRENT ASSETS 3 110 2 931
TOTAL ASSETS 6 709 5 933
NON INTEREST-BEARING LIABILITIES 1 911 1 720
LONG-TERM PROVISIONS 298 239
4 500 3 974
GEARING % 50 20
CURRENT ASSETS TO CURRENT LIABILITIES 1.2 1.3
NET ASSET VALUE PER ORDINARY SHARE (CENTS) 1 886 2 009
NET CAPITAL EXPENDITURE (R MILLIONS) 385 463
DEPRECIATION AND AMORTISATION (R MILLIONS) 358 265 ABRIDGED CASH FLOW STATEMENT
1998 1997
R MILLIONS
CASH GENERATED BY OPERATIONS 986 937
INVESTMENT INCOME 10 20
FINANCING COSTS (318) (145)
TAXES PAID (234) (132)
CHANGE IN WORKING CAPITAL (14) (366)
EXPENDITURE RELATING TO PROVISIONS (25) (23)
EXPENDITURE RELATING TO EXCEPTIONAL ITEMS (106) (5)
CASH AVAILABLE FROM OPERATING ACTIVITIES 299 286
DIVIDENDS PAID (149) (153)
CASH RETAINED FROM OPERATING ACTIVITIES 150 133
CASH UTILISED IN INVESTMENT ACTIVITIES (1 003) (560)
PROCEEDS FROM DISINVESTMENT AND RESTRUCTURING 14 204
NET CASH UTILISED (839) (223)
CASH EFFECTS OF FINANCING ACTIVITIES 837 (16)
DECREASE IN LIQUID FUNDS (2) (239) INDUSTRY SEGMENT ANALYSIS
TURNOVER TRADING PROFIT NET ASSETS
1998 1997 1998 1997 1998 1997
R MILLIONS R MILLIONS R MILLIONS AGRICULTURAL PRODUCTS
AND INDUSTRIAL CHEMICALS 2 168 2 257 25 67 748 815
COATINGS 711 720 14 30 276 280
FIBRES 1 177 1 230 115 111 553 511
MINING SOLUTIONS* 1 142 528 188 66 822 198 MONOMERS, POLYMERS AND
RELATED PRODUCTS 1 453 1 543 283 370 1 068 992
OTHER BUSINESSES 555 571 (22) 11 339 317
SPECIALITY CHEMICALS 1 500 1 371 151 126 479 440
PROPERTY AND SITE SERVICES 413 435 - (1) 703 741
CORPORATE RESEARCH (62) (58) 66 42 INTERGROUP/CORPORATE/SOCIAL
RESPONSIBILITY (473) (380) (48) (51) (41) (11) 8 646 8 275 644 671 5 013 4 325 *1997 - 49% SHARE
ASSETS CONSIST OF NET FIXED ASSETS, INVENTORY, ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. COMMENT
IN THE ANNOUNCEMENT OF A TRANSFORMATION STRATEGY ON 21 OCTOBER 1998,
SHAREHOLDERS WERE ADVISED THAT HEADLINE EARNINGS FOR THE YEAR WOULD BE SIGNIFICANTLY LOWER THAN IN 1997. IN ADDITION, THE BOARD STATED ITS INTENT TO MAKE APPROPRIATE PROVISION IN THE 1998 FINANCIAL YEAR FOR THE ESTIMATED COSTS ASSOCIATED WITH THE TRANSFORMATION STRATEGY.
IN THE EVENT, HEADLINE EARNINGS AT 134 CENTS PER SHARE WERE 43 PER CENT LOWER THAN IN 1997. WEAK DOMESTIC DEMAND FOR MOST GROUP PRODUCTS, TOGETHER WITH EXCEPTIONALLY LOW INTERNATIONAL PRICES FOR UREA, AMMONIA AND COMMODITY PLASTICS, SEVERELY CONSTRAINED LOCAL SALES AND MARGINS. EXPORT SALES REFLECTED GENERALLY LOWER PRICES AS WELL AS LOWER DEMAND IN DEVELOPING COUNTRIES. KYNOCH AND POLIFIN WERE PARTICULARLY AFFECTED BY THESE ADVERSE MARKET
CONDITIONS WHILE MOST OF THE GROUP'S SMALLER BUSINESSES ALSO POSTED
DISAPPOINTING RESULTS. PLEASING IMPROVEMENTS IN PERFORMANCE WERE RECORDED IN AECI EXPLOSIVES, CHEMICAL SERVICES AND SANS FIBRES. FOLLOWING THE PURCHASE OF ICI'S 51 PER CENT INTEREST IN AECI EXPLOSIVES ON 1 JANUARY 1998, GROUP FINANCIAL RESULTS INCLUDE 100 PER CENT OF THE EXPLOSIVES BUSINESS AS AGAINST 49 PER CENT IN 1997.
FINANCING COSTS INCREASED SHARPLY TO R318 MILLION REFLECTING ADDITIONAL BORROWING TO FINANCE ACQUISITION OF THE EXPLOSIVES BUSINESS AND THE STEEP RISE IN DOMESTIC INTEREST RATES IN THE SECOND HALF OF THE YEAR. TRADE WORKING CAPITAL WAS CONTAINED TO 17.5 PER CENT OF ANNUAL SALES AT YEAR END AGAINST 17.4 PER CENT IN 1997.
THE EXCEPTIONAL CHARGE AGAINST INCOME INCLUDES R401 MILLION OF ESTIMATED COSTS ASSOCIATED WITH THE GROUP'S TRANSFORMATION STRATEGY. OF THIS AMOUNT, R137 MILLION WAS INCURRED IN 1998 WITH R106 MILLION BEING EXPENDED IN CASH WHILE PROVISION HAS BEEN MADE FOR FURTHER COSTS OF R264 MILLION OF WHICH CASH EXPENDITURES ARE PROJECTED TO COMPRISE R193 MILLION.
CONSIDERABLE PROGRESS HAS BEEN MADE WITH INTERNAL IMPLEMENTATION OF THE TRANSFORMATION STRATEGY, INCLUDING THE CLOSURE OF CERTAIN UNDERPERFORMING FACILITIES AND EXTENSIVE RATIONALISATION OF OVERHEAD COSTS AT MODDERFONTEIN, KYNOCH AND IN GROUP SUPPORT FUNCTIONS. AS A RESULT, AN ANNUALISED ENHANCEMENT TO TRADING PROFIT IN EXCESS OF R150 MILLION IS PROJECTED ONCE ALL COSTS HAVE BEEN INCURRED.
THE GROUP IS ENGAGED IN PRELIMINARY DISCUSSIONS WITH VARIOUS PARTIES REGARDING POTENTIAL JOINT VENTURES IN STRATEGIC BUSINESSES AND THE DISPOSAL OF CERTAIN NON-CORE OPERATIONS. SHAREHOLDERS WILL BE ADVISED WHEN ANY OF THESE DISCUSSIONS REACH A MORE SUBSTANTIVE STAGE.
IN LIGHT OF THE CASH EFFECTS OF RESTRUCTURING AND THE STEEP DECLINE IN EARNINGS, THE BOARD HAS DECLARED A REDUCED FINAL DIVIDEND OF 27.5 CENTS PER SHARE, MAKING A TOTAL DISTRIBUTION OF 55 CENTS FOR THE YEAR (1997 - 90 CENTS). PROSPECTS
KEY DETERMINANTS OF EARNINGS IN THE CURRENT YEAR INCLUDE THE TIMING AND EXTENT OF RECOVERY IN INTERNATIONAL CHEMICAL DEMAND AND PRICING, THE LEVEL OF INTEREST RATES AND GROWTH IN THE LOCAL ECONOMY, AND THE RATE OF PROGRESS ACHIEVED IN IMPLEMENTATION OF THE GROUP'S TRANSFORMATION STRATEGY. WHILE ONLY A LIMITED IMPROVEMENT IN EXTERNAL MARKET CONDITIONS IS PROJECTED TO DEVELOP LATER IN THE YEAR, CONTINUED GOOD PERFORMANCE IS EXPECTED FROM THE GROUP'S MORE SPECIALISED BUSINESSES AND THE GROUP IS BUDGETING FOR INCREASED HEADLINE EARNINGS IN 1999. YEAR 2000 COMPLIANCE
THE GROUP IS WELL ADVANCED IN IMPLEMENTATION OF A PROGRAMME TO ENSURE THAT ALL RELEVANT PLANT AND BUSINESS SYSTEMS ARE YEAR 2000 COMPLIANT BY JULY 1999. THE COST IS NOT EXPECTED TO EXCEED R10 MILLION. A J TRAHAR CHAIRMAN L C VAN VUGHT MANAGING DIRECTOR 22 FEBRUARY 1999 DECLARATION OF ORDINARY DIVIDEND NO. 129
NOTICE IS HEREBY GIVEN THAT A FINAL DIVIDEND OF 27.5 CENTS PER SHARE, IN RESPECT OF THE YEAR ENDED 31 DECEMBER 1998, HAS BEEN DECLARED TO HOLDERS OF ORDINARY SHARES REGISTERED IN THE BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS ON 19 MARCH 1999.
PAYMENT WILL BE MADE FROM THE OFFICES OF THE TRANSFER SECRETARIES IN
JOHANNESBURG ON 28 APRIL 1999. CHANGES OF ADDRESS OR DIVIDEND INSTRUCTIONS TO APPLY TO THIS DIVIDEND MUST BE RECEIVED NOT LATER THAN 19 MARCH 1999. THE TRANSFER BOOKS AND REGISTER OF MEMBERS WILL BE CLOSED FROM 20 MARCH TO 2 APRIL 1999, BOTH DAYS INCLUSIVE. BY ORDER OF THE BOARD M J F POTGIETER SECRETARY 22 FEBRUARY 1999 TRANSFER SECRETARIES CONSOLIDATED SHARE REGISTRARS LIMITED 41 FOX STREET JOHANNESBURG AND COMPUTERSHARE SERVICES PLC PO BOX 82 CAXTON HOUSE REDCLIFFE WAY BRISTOL BS 99 7 KH ENGLAND REGISTERED OFFICE 1ST FLOOR, AECI PLACE, 24 THE WOODLANDS, WOODLANDS DRIVE, WOODMEAD, SANDTON WWW.AECI-HQ.CO.ZA REGISTRATION NUMBER 04/02590/06
