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2001 highlights * Headline earnings per share up 32% * Final dividend per share up 10% * Transformation complete * Trading profit of core operations up 20% * Outlook positive Comment
This was another eventful year for the new AECI. Final steps in the
transformation strategy were completed, the overhang of Anglo American's shareholding was resolved and pleasing growth in headline earnings was achieved. The Group's performance was particularly creditable when viewed against the parlous state of the chemical industry globally and the world's economies in general. Performance
Headline earnings of 243 cents per ordinary share increased by 32 per cent on the prior year, boosted by the reduction in the number of shares in issue to 93 million following the buy-back of 62 million shares from Anglo
American in January 2001. The final dividend has been raised by 10 per cent to 55 cents per share to bring the total dividend for the year to 87 cents per share (80 cents in 2000) with a dividend cover of 2.8 (2.3 in 2000). While Group revenue and trading profit increased by 12 and 4 per cent respectively, the core businesses of Mining Solutions, Specialty Chemicals and Specialty Fibres posted gains of 23 per cent in revenue and 20 per cent in trading profit. This impressive performance in difficult trading
conditions provides further validation of the Group's strategic focus on specialty product and service solutions which add value for customers. The sharp decline in the external value of the rand during the fourth quarter of the year had a net positive impact on trading and earnings. Translation gains on the Group's net investment in activities outside South Africa, however, were recognised through reserves and not through the income statement. Transformation
Major features of the transformation programme accomplished during the year were the buy-back of shares from Anglo American, which subsequently sold most of its residual holding in the Company, the disposal of the Group's interests in Kynoch Fertilizer and AECI Bioproducts and the closure of the fine chemicals development unit. This programme led to exceptional charges of R283 million after tax, made up primarily of losses on disposal of Kynoch Fertilizer and AECI Bioproducts of R87 million and R88 million respectively. The balance arose mostly from restructuring and the closure costs of
discontinued operations. It is not envisaged that further exceptional charges will be incurred in 2002. Financial
The Group's net borrowings rose to R987 million at year-end as a result of the share buy-back, the cash portion of exceptional charges, and the high level of capital and investment expenditure incurred by core businesses. SANS Fibres in particular spent R170 million on growth projects including the new specialty nylon spinning and drawing platforms in Bellville, Western Cape and North Carolina, USA which are in the process of being commissioned. Cash interest cover was 5.1 times for the year while gearing at year-end was contained to 40 per cent of shareholder funds.
On 15 January 2002, a further payment of R186 million was made to Anglo American in terms of the share buy-back agreement approved by shareholders in January 2001. Secondary tax of R23 million in respect of this deemed distribution will be paid on 28 February 2002. These post-balance sheet events have not been recognised in the 2001 financial statements. Outlook
While the global economy and chemical industry are only expected to pick up towards the end of 2002, the new AECI's coherent structure, lower cost base and more specialised business portfolio provides a sound basis for further improvements in performance. The lower level of the rand will also benefit the core businesses both in terms of export opportunities and
competitiveness in the domestic market. The Group therefore expects further real earnings growth in 2002. Dividend
A formal announcement of the dividend declared by the Board is published separately from this announcement. Alan Pedder Lex van Vught Chairman Chief Executive Sandton 25 February 2002 www.aeci.co.za Group income statement
% 2001 2000
Note change R millions R millions
Revenue (1) +12 6 745 6 009 Net trading
profit +4 492 474 Net financing
costs (141) (27) Income from associates
and investments 25 10
376 457 Provision for post-employment
medical benefits (20) -
Amortisation of goodwill (56) (30)
Exceptional items (371) (30) Net (loss)/profit
before taxation (71) 397
Taxation 3 (121)
Normal activities (85) (137)
Exceptional items 88 16
Net (loss)/profit (68) 276 Attributable to preference and
outside shareholders (20) (32)
Normal activities (45) (35)
Amortisation of goodwill 12 -
Exceptional items 13 3 Net (loss)/profit attributable to
ordinary shareholders (88) 244 Headline earnings are derived from: Net (loss)/profit attributable to
ordinary shareholders (88) 244
Amortisation of goodwill 44 30
Net exceptional items 270 11
226 285 Headline earnings per
ordinary share (cents) +32 243 184 Attributable (loss)/ earnings per ordinary
share (cents) (95) 158 Dividends declared per
ordinary share (cents) 87 80 Ordinary shares (millions) (2)
- in issue 93 155 - weighted average number
of shares 93 155 Notes
(1) Includes exports of R1 783 million (2000 - R1 189 million).
(2) In January 2001 the Company repurchased 61 866 725 of its own ordinary shares, representing 40% of the issued share capital, from Anglo South Africa (Pty) Limited.
(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. Group industry segment analysis Net trading
Revenue profit Assets
R millions 2001 2000 2001 2000 2001 2000 Mining
solutions 1 474 1 254 142 116 887 820 Specialty
chemicals 2 415 1 955 232 200 912 642 Specialty
fibres 1 717 1 355 161 128 945 688
Property 149 139 9 33 675 666 Other
businesses 1 002 1 084 22 27 222 403 Group services, development and
intergroup (54) (179) (73) (62) (4) 13
6 703 5 608 493 442 3 637 3 232 Discontinued
operations 42 401 (1) 32 (2) 108
6 745 6 009 492 474 3 635 3 340
Assets consist of property, plant, equipment and goodwill, inventory, accounts receivable and accounts payable. Group balance sheet as at 31 December 2001
2001 2000
R millions R millions Assets
Non-current assets 2 606 2 482
Property, plant and equipment 1 910 1 798
Goodwill 525 428
Investments 171 256
Current assets 3 277 3 291
Inventory 1 231 1 035
Accounts receivable 1 469 1 219
Cash and cash equivalents 577 1 037
Total assets 5 883 5 773 Equity and liabilities
Ordinary capital and reserves 2 264 3 061 Preference capital and
outside shareholders' interest 211 177
Total shareholders' interest 2 475 3 238
Non-current liabilities 1 391 184
Deferred taxation (207) (182)
Long-term borrowings 1 248 38
Long-term provisions 350 328
Current liabilities 2 017 2 351
Accounts payable 1 530 1 160
Provision for restructuring 109 62
Short-term borrowings 316 1 073
Taxation 62 56
Total equity and liabilities 5 883 5 773
Group statement of changes in shareholders' equity
2001 2000
R millions R millions
Headline earnings 226 285 Amortisation of goodwill net
of outside shareholders' interest (44) (30) Exceptional items net of taxation and outside
shareholders' interest (270) (11) Net (loss)/profit attributable
to ordinary shareholders (88) 244
Dividends paid (76) (123) Foreign currency translation
differences net of deferred taxation 140 20
Ordinary shares issued 2 - Net (decrease)/increase in equity for the year before
share buy-back (22) 141
Repurchase of own shares (775) -
Equity at the beginning of the year 3 061 2 920
Equity at the end of the year 2 264 3 061 Made up as follows:
Share capital and share premium 95 228
Non-distributable reserves 662 608 Surplus arising on revaluation
of property, plant and equipment 391 525 Foreign currency translation
reserve net of deferred taxation 182 50
Retained earnings of associates 84 31
Other 5 2
Retained income 1 507 2 225
2 264 3 061 Group cash flow statement
2001 2000
R millions R millions
Cash generated by operations 660 608
Dividends received 2 10
Net financing costs (141) (27)
Taxes paid (74) (64)
Changes in working capital (72) (149) Expenditure relating to
long-term provisions (14) (20) Expenditure relating to
restructuring (74) (190) Cash available from operating
activities 287 168
Dividends paid (87) (134) Cash retained from operating
activities 200 34 Cash utilised in investment
activities (470) (212) Proceeds from disinvestment
and restructuring 65 224 Expenditure on repurchasing
own shares (775) -
Net cash (utilised)/generated (980) 46 Cash effects of financing
activities 464 97
Proceeds from issue of new shares 2 -
(Decrease)/increase in liquid funds (514) 143 Cash and cash equivalents at the
beginning of the year 1 037 889 Translation gain on cash and
cash equivalents 54 5 Cash and cash equivalents at
the end of the year 577 1 037 Group other salient features
2001 2000
R millions R millions
Capital expenditure 424 271
- expansion 276 147
- replacement 148 124
Capital commitments 102 235
- contracted for 92 143
- not contracted for 10 92 Future rentals on property,
plant and equipment leased 179 162
- payable within one year 40 42
- payable thereafter 139 120 Net contingent liabilities
and guarantees 160 289
Net borrowings 987 74
Gearing (%) 40 2 Current assets to current
liabilities (ratios) 1.6 1.4 Net asset value per ordinary
share (cents) 2 430 1 975
Depreciation 221 205 AECI LIMITED Incorporated in the Republic of South Africa (Registration No. 1924/002590/06) Share code: AFE ISIN No: ZAE000000220 Transfer secretaries Computershare Services Limited 41 Fox Street, Johannesburg and Computershare Investor Services PLC PO Box 82, The Pavilions Bridgewater Road Bristol BS99 7NH England Registered office First floor AECI Place 24 The Woodlands Woodlands Drive Woodmead Sandton Sponsor JP Morgan AEL Mining solutions
Development, manufacture and supply of value-adding services, initiating systems and explosives. Chemical Services Limited Specialty chemicals
Largest specialty chemical operation in southern Africa, supplying a diverse range of specialties, raw materials and related services to a broad spectrum of industries. SANS FIBRES Specialty fibres
Production, marketing and distribution of specialty nylon and polyester yarn for local and export markets; production of PET bottle polymer. Specialty product and service solutions
