Sharenet Sites 
Sharenet Sites
AECI LIMITED Registration number 1924/002590/06 HIGHLIGHTS * Buy-back enhances pro forma EPS by 34% * Transformation well advanced * Growth strategy gaining momentum * Headline earnings marginally down * Dividend unchanged
Audited financial results for the year ended 31 December 2000 Income statement for the year ended 31 December
2000 1999 Note R millions R millions Revenue (1) 6 009 7 311 Net trading profit 474 568
Net financing costs (27) (120) Income from associates and investments 10 20
457 468
Exceptional items (30) 683
Amortisation of goodwill (30) (25) Net profit before taxation 397 1 126 Taxation (123) (117) Normal activities (139) (134) Exceptional items 16 17
Net profit 274 1 009 Attributable to preference and
outside shareholders (32) (35) Normal activities (35) (35) Exceptional items 3 - Net profit attributable to ordinary
shareholders 242 974 Headline earnings are derived from:
Net profit attributable to ordinary shareholders 242 974
Net exceptional items 11 (700) Amortisation of goodwill 30 25
283 299
Headline earnings per ordinary share (cents) 183 193
Attributable earnings per ordinary share (cents) 156 630 Dividend per ordinary share (cents)
Normal 80 80
Special - 600
Number of ordinary shares (millions) 155 155 Note:
(1) Includes exports of R1 189 million (1999 - R1 334 million). Balance sheet at 31 December
2000 1999 R millions R millions Assets
Non-current assets 2 482 2 657 Property, plant and equipment 1 798 1 933 Goodwill 428 386
Investments 256 338
Current assets 3 291 3 079 Inventory 1 035 939
Accounts receivable 1 219 1 251 Cash and cash equivalents 1 037 889
Total assets 5 773 5 736 Equity and liabilities
Ordinary capital and reserves 3 012 2 843 Preference capital and outside
shareholders' interest 177 145
Total shareholders' interest 3 189 2 988 Non-current liabilities 184 233
Deferred taxation (182) (215) Long-term borrowings 38 95
Long-term provisions 328 353
Current liabilities 2 400 2 515 Accounts payable 1 160 1 193 Provision for restructuring 62 282
Short-term borrowings 1 073 918
Taxation 58 45
Dividend declared 47 77
Total equity and liabilities 5 773 5 736 Cash flow statement for the year ended 31 December
2000 1999 R millions R millions Cash generated by operations 608 897
Investment income 10 11
Net financing costs (27) (120) Taxes paid (64) (62) Changes in working capital (149) (207) Expenditure relating to long-term provisions (20) (36) Expenditure relating to restructuring (190) (206) Cash available from
operating activities 168 277
Normal dividends paid (134) (99) Cash retained from
operating activities 34 178
Cash utilised in investment activities (212) (199) Proceeds from disinvestment and restructuring 224 2 432 Special dividend and STC paid - (1 044) Net cash generated 46 1 367 Cash effects of financing activities 97 (679) Increase in liquid funds 143 688 Statement of changes in shareholders' equity for the year ended 31 December
2000 1999 R millions R millions Headline earnings 283 299 Exceptional items net of taxation and outside
shareholders' interest (11) 700
Amortisation of goodwill (30) (25) Dividends (93) (1 051) Foreign currency translation differences 19 3
Other 1 -
Net increase/(decrease) in equity for the year 169 (74) Equity at the beginning of the year 2 843 2 917 Equity at the end of the year 3 012 2 843 Made up as follows:
Share capital and share premium 228 228
Non-distributable reserves 608 596
Retained income 2 176 2 019 3 012 2 843 Industry segment analysis for the year ended 31 December
Revenue Net trading profit Assets
2000 1999 2000 1999 2000 1999
R millions R millions R millions
Mining solutions 1 254 1 225 116 195 821 861
Specialty chemicals 1 982 1 885 203 196 686 637
Specialty fibres 1 355 1 210 128 125 688 458
Property - - 30 4 640 644
Other businesses 1 286 1 713 28 (14) 487 417 Group services, development
and intergroup (90) (507) (57) (65) 1 (7)
5 787 5 526 448 441 3 323 3 010
Businesses sold 222 1 785 26 127 (3) 306
6 009 7 311 474 568 3 320 3 316
Assets consist of property, plant, equipment and goodwill, inventory, accounts receivable and accounts payable. Other salient features
2000 1999 R millions R millions Capital expenditure 271 231
- expansion 147 104
- replacement 124 127
Capital commitments 235 181
- contracted for 143 57
- not contracted for 92 124 Future rentals on property,
plant and equipment leased 162 173
- payable within one year 42 45
- payable thereafter 120 128
Contingent liabilities and guarantees 289 169
Net borrowings 74 124
Gearing (%) 2 4
Current assets to current liabilities 1.4 1.2
Net asset value per ordinary share (cents) 1 947 1 838 Net capital expenditure 141 155
Depreciation and amortisation 235 311 COMMENTARY Operating results
Headline earnings per ordinary share at 183 cents were marginally lower than in 1999.
The special dividend of R6.00 per share paid to shareholders in November 1999 reduced the capital base of the Company by R1 billion with material effects on year 2000 results. Had this distribution been retained in the Company, headline earnings in 2000 would have shown an increase of some 20 per cent.
Revenue of continuing operations increased by some 5 per cent, reflecting muted volume growth in the subdued manufacturing and mining sectors of the domestic economy. An unchanged operating margin of 7.8 per cent is considered a reasonable result in a year of steep increases in oil and energy-based raw material costs, not least being an almost trebling in the price of ammonia, compounded by the negative impact of a strong US dollar and weak euro. AECI's ability to weather a most difficult year for the global chemical industry can be ascribed to the benefits of the two-year transformation programme, which has resulted in the emergence of a leaner, focused performance chemicals Group.
Of the three core clusters, the results of Chemical Services and SANS Fibres were commendable. Further successful acquisitions and strong cash flow enabled Chemserve to record a 25 per cent increase in headline earnings per share. SANS Fibres achieved improved results in a dismal year for the global fibres industry. African Explosives was unable to pass the aforementioned surge in ammonia costs on to its final product markets, resulting in a 40 per cent decline in its operating profit. A highlight of the year was the R26 million increase in profit contributed by the Group's property operations.
Pleasing progress in the strategic expansion of SANS Fibres' operations was marked by the implementation of a joint venture with a leading world-class fibres producer for the manufacture of specialty nylon industrial yarns in the United States. This investment represents a significant first step by AECI in establishing a strategic presence internationally. SANS Fibres also completed the highly successful commissioning of the R60 million PET bottle polymer extension in record time with the full output of prime quality product sold out from the day of startup. Transformation
Further steps towards achieving clear focus on the core business clusters included the disposal of the Group's interest in the Fedmis phosphates partnership with effect from July 2000, and the sale to Chemical Services Limited of the 80.1 per cent interest in AECI Coatings and the business operations of Kynochem and Industrial Urethanes with effect from January 2001. The consideration for the latter transaction, which has been treated as a post-balance sheet event, was determined at R272 million and was settled by the payment of R168 million in cash and the issue to AECI of eight million ordinary shares in Chemical Services. In consequence, the Group's holding in Chemical Services has increased to 71 per cent from 68 per cent at year-end.
While further transformation cash costs amounting to R190 million were incurred during the year, proceeds from disposals and sound asset management enabled the Group to record a net debt to equity ratio at year-end of only 2 per cent. Buy-back
The strong balance sheet facilitated the specific buy-back of 40 per cent of AECI's ordinary shares from Anglo American for an initial consideration of R11.49 per share, which was approved by shareholders on 10 January 2001. Details of this transaction have been announced in previous circulars. On a pro forma basis, had the buy-back been effective 1 January 2000, headline earnings per share for the year under review would have amounted to 245 cents as opposed to 183 cents (an enhancement of 34 per cent), and total net borrowings at year-end would have been R870 million, representing a gearing ratio of 36 per cent. Dividend policy and gearing
An unchanged annual dividend of 80 cents per share has been declared for the full year, resulting in a dividend cover of 2.3 times. The Group's dividend policy will be to increase dividend cover to at least three times over the next few years while reducing the debt to equity ratio from its current level. Prospects
Although global economies show signs of slowing, a modest recovery is
anticipated in the domestic manufacturing sector, with the possibility of short-term interest rates declining during the year. Decreasing energy-based raw material prices are also supportive of an improved trading outlook which, coupled with the benefits of transformation and market focus in the operating businesses, is encouraging for the Group's earnings prospects, particularly from the second half of 2001.
Alan Pedder Lex van Vught
Chairman Chief Executive Declaration of ordinary dividend No. 134
Notice is hereby given that a final dividend of 50 cents per share, in respect of the year ended 31 December 2000, has been declared to holders of ordinary shares registered in the books of the Company at the close of business on 16 March 2001.
Payment will be made from the offices of the transfer secretaries in
Johannesburg on 25 April 2001. Changes of address or dividend instructions to apply to this dividend must be received not later than 16 March 2001. The transfer books and register of members will be closed from 17 March 2001 to 30 March 2001, both days inclusive. By order of the Board M J F Potgieter Secretary 26 February 2001
Transfer secretaries Registered office
Computershare Services Limited First Floor 41 Fox Street AECI Place
Johannesburg 24 The Woodlands
and Woodlands Drive Computershare Services plc Woodmead PO Box 82 Sandton The Pavilions Bridgewater Road Bristol BS99 7NH England Registration number 1924/002590/06 www.aeci.co.za
