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Group interim results for the half-year ended 30 June 2001 HIGHLIGHTS * HEADLINE EARNINGS PER SHARE UP 30% * PROFIT OF CONTINUING OPERATIONS UP 25% * SALE OF FERTILIZER BUSINESS COMPLETED * RESTRUCTURING CONTINUES Income statement
2001 2000 2000 First half First half Year Unaudited Unaudited Audited Note R millions R millions R millions Revenue (1) 3 246 2 913 6 009 Net trading profit 200 210 474 Continuing operations 200 160 414 Discontinued operations - 50 60
Net financing costs (68) (20) (27) Income/(loss) from associates
and investments 14 (7) 10
146 183 457 Exceptional items (114) - (30) Amortisation of goodwill (21) (14) (30) Net profit before taxation 11 169 397 Taxation (30) (54) (121) Normal activities (41) (54) (137) Exceptional items 11 - 16
Net (loss)/profit after taxation (19) 115 276 Attributable to preference and
outside shareholders (11) (16) (32) Normal activities (17) (16) (35) Exceptional items 6 - 3 Net (loss)/profit attributable to
ordinary shareholders (30) 99 244 Headline earnings are derived from: Net (loss)/profit attributable to
ordinary shareholders (30) 99 244 Net exceptional items 97 - 11
Amortisation of goodwill 21 14 30
88 113 285 Headline earnings per ordinary
share (cents) 95 73 184 Attributable (loss)/earnings per
ordinary share (cents) (32) 64 158 Dividend per ordinary share (cents)
Paid during the period 50 50 80 Number of ordinary shares in
issue (millions) (2) 93 155 155 Notes
(1) Includes exports of R833 million (2000 - R601 million).
(2) In January 2001 the Company re-purchased 61 866 725 of its own ordinary shares, representing 40% of the issued share capital, from Anglo South Africa (Pty) Limited. Industry segment analysis for the half-year ended 30 June
Revenue Net trading profit Assets
2001 2000 2001 2000 2001 2000
Unaudited Unaudited Unaudited
R millions R millions R millions
Mining solutions 683 580 60 50 851 851
Specialty chemicals 1 121 941 101 93 787 643
Specialty fibres 874 628 78 58 733 608
Property - - 3 9 681 627
Other businesses 581 572 (11) (20) 414 430 Group services, development and
intergroup (13) (130) (31) (30) 41 34
3 246 2 591 200 160 3 507 3 193
Discontinued operations - 322 - 50 - 249
3 246 2 913 200 210 3 507 3 442
Assets consist of property, plant, equipment and goodwill, inventory, accounts receivable and accounts payable. Balance sheet
2001 2000 2000 30 June 30 June 31 Dec Unaudited Unaudited Audited Note R millions R millions R millions Assets
Non-current assets 2 487 2 576 2 482 Property, plant and equipment 1 832 1 856 1 798 Goodwill 491 446 428 Investments 164 274 256 Current assets 2 788 3 222 3 291 Inventory 1 042 996 1 035 Accounts receivable 1 290 1 252 1 219 Cash and cash equivalents 456 974 1 037 Total assets 5 275 5 798 5 773 Equity and liabilities (3)
Ordinary capital and reserves 2 215 2 946 3 061 Preference capital and outside shareholders' interest in
subsidiaries 182 165 177 Total shareholders' interest 2 397 3 111 3 238 Non-current liabilities 195 208 184 Deferred taxation (185) (194) (182) Long-term borrowings 59 50 38
Long-term provisions 321 352 328 Current liabilities 2 683 2 479 2 351 Accounts payable 1 148 1 104 1 160 Provision for restructuring 44 106 62
Short-term borrowings 1 450 1 249 1 073 Taxation 41 20 56
Total equity and liabilities 5 275 5 798 5 773 (3) Accounting policies are consistent with those applied in the previous financial year other than the introduction of AC 107 (Revised) in regard to accounting for dividends declared. Comparative figures have been restated. Statement of changes in shareholders' equity
2001 2000 2000 First half First half Year Unaudited Unaudited Audited R millions R millions R millions Headline earnings 88 113 285 Exceptional items net of taxation and
outside shareholders' interest (97) - (11) Amortisation of goodwill (21) (14) (30) Dividends paid (46) (77) (123) Foreign currency
translation differences 2 - 20
Other 2 4 - Net (decrease)/increase in equity
for the period (72) 26 141 Equity at the beginning of the year 3 061 2 920 2 920 Repurchase of own shares (775) - -
Ordinary shares issued 1 - -
Equity at the end of the period 2 215 2 946 3 061 Made up as follows: Ordinary share capital
and share premium 94 228 228 Non-distributable reserves 503 581 608 Retained income 1 618 2 137 2 225 2 215 2 946 3 061 Cash flow statement
2001 2000 2000 First half First half Year Unaudited Unaudited Audited R millions R millions R millions Cash generated by operations 300 300 608 Investment income 2 - 10
Net financing costs (68) (20) (27) Taxes paid (47) (53) (64) Changes in working capital (103) (126) (149) Expenditure relating to long-term
provisions (8) (1) (20) Expenditure relating to restructuring (24) (141) (190) Cash available from operating
activities 52 (41) 168 Dividends paid (53) (83) (134) Cash (absorbed by)/retained
from operating activities (1) (124) 34 Cash utilised in investment
activities (212) (159) (212) Proceeds from disinvestment and
restructuring 8 86 224 Expenditure on repurchasing own shares (775) - -
Net cash (utilised)/generated (980) (197) 46
Cash effects of financing activities 398 282 97
Proceeds from issue of new shares 1 - - (Decrease)/increase in cash and
cash equivalents (581) 85 143 Other salient features
2001 2000 2000 First half First half Year Unaudited Unaudited Audited R millions R millions R millions Capital expenditure 137 113 271 Expansion 65 64 147 Replacement 72 49 124 Capital commitments 106 151 235 Contracted for 86 68 143 Not contracted for 20 83 92 Future rentals on property, plant
and equipment leased 147 166 162 Payable within one year 32 38 42
Payable thereafter 115 128 120 Net contingent liabilities and
guarantees 180 169 289 Net borrowings 1 053 325 74
Gearing (%) 44 11 2
Current assets to current liabilities 1.1 1.3 1.4 Net asset value per ordinary
share (cents) 2 383 1 875 1 947 Depreciation and amortisation 128 117 235 Overview
Headline earnings per ordinary share at 95 cents were 30 per cent higher than in the first half of 2000. This result reflects a resilient performance by the core businesses of the Group in particularly difficult trading conditions, augmented by the significant effect of the share buy-back which took place in January this year. An increased interim dividend of 32 cents per ordinary share has been declared (2000 - 30 cents).
Had the share buy-back not taken place, it is estimated that headline earnings would have been 75 cents per ordinary share, an improvement of 2 cents on the prior year. Operating results
In the midst of a major slowdown in the world chemical industry,
characterised by lower volumes, higher energy related raw material costs and a widespread decline in earnings, the sustained performance of the Group's core business clusters was commendable.
Revenue and trading profit of continuing operations increased by some 25 per cent year on year as additional PET capacity at SANS Fibres and
acquisitions by Chemical Services offset flat to lower demand in most sectors of the domestic economy. Export revenue increased by 39 per cent, boosted by the weaker Rand exchange rate. However, the widening effects of the economic downturn in the United States became progressively evident in the second quarter with sharp cutbacks in international demand for industrial yarns from SANS Fibres.
Higher raw material costs in Rand terms could still not be fully recovered from local markets and the operating margin in continuing operations was unchanged from the 6.2 per cent recorded in the same period last year. Initiatives to lift margins through enhanced efficiencies and lower
operating costs continue to be pursued aggressively.
The highlight of the period was the performance of SANS Fibres where local demand for both industrial yarns and PET exceeded expectations. An unplanned outage of the SANS polyester polymer plant at Bellville in July is not expected to have a material effect on Group results for the year. African Explosives achieved a pleasing result with an increased contribution from foreign operations. Solid gains in most of the Chemical Services' portfolio were offset by continued underperformance of the technical coatings
business. A weakening market for industrial land adversely affected the Group's property operations, although the uptake of land for residential use remained buoyant.
Net capital and investment expenditure of R204 million, together with the R775 million disbursement of cash resources on the share buy-back,
contributed to an increased net debt to equity ratio of 44 per cent at mid- year. Cash interest cover at 4.5 times in the period is expected to be higher in the seasonally stronger second half. Restructuring
During July the sale of AECI's 50 per cent interest in Kynoch Fertilizer to Norsk Hydro was finalised. The transaction, effective 1 January 2001, completes the Group's exit from the non-core retail fertilizer business. A book loss on disposal of R60 million has been recognised as an exceptional item in the period. The disposal has reduced the contingent liabilities of the Group by R90 million.
Chemical Services has decided to discontinue non-core components of the technical coatings business to focus on technology and service intensive sectors. A provision of R54 million in respect of this and other closures and restructuring was recognised as an exceptional item in the period. All businesses in the Group have identified significant further
opportunities for restructuring and rationalisation in the ongoing drive for world class competitive performance.
Notwithstanding widespread interest in the course of a formal tender process, indicative offers received for the Dulux decorative business did not approach the Board's estimate of fair value. Accordingly the business will be retained and restructured with a view to the realisation of fair value in future years. Discussions are continuing with various parties regarding the remaining, relatively minor non-core operations of the Group. Prospects
Trading conditions in the second half now appear likely to be less
favourable than envisaged in the previous report to shareholders as the global slowdown takes hold. Nonetheless, given the further benefits of restructuring, the Group remains well positioned to achieve an improvement in headline earnings per share in the second half-year. STRATE
The conversion of the Company's shares to the STRATE system commenced on 2 July 2001 with the dematerialisation of such shares. Electronic trading commenced on 23 July with the first electronic settlement date being 30 July 2001. Alan Pedder Lex van Vught Chairman Chief Executive Declaration of Ordinary Dividend No. 135
Notice is hereby given that an interim dividend of 32 cents per share has been declared in respect of dividend No. 135 for the financial year ending 31 December 2001.
Shareholders are advised that the last day to trade cum dividend will be Friday, 17 August 2001. The shares will trade ex dividend as from Monday, 20 August 2001. The record date will be Friday, 24 August 2001 and the dividend will be payable on Tuesday, 25 September 2001. By order of the Board M J F POTGIETER Secretary 30 July 2001 Transfer secretaries Computershare Services Limited 41 Fox Street Johannesburg 2001 and Computershare Investor Services plc PO Box 82 The Pavilions Bridgewater Road Bristol BS99 7NH England Registration number 1924/002590/06 www.aeci.co.za
AEL CS SANS FIBRES
MINING SOLUTIONS SPECIALTY CHEMICALS SPECIALTY FIBRES
