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Interim financial results and cash dividend declaration for the half-year ended 30 June 2013
AECI Limited
(AECI or the Company or the Group)
(Incorporated in the Republic of South Africa)
Registration number 1924/002590/06
Tax reference number 9000008608
SHARE CODE: AFE
ISIN NO: ZAE000000220
Condensed consolidated unaudited Interim Financial results and cash
dividend declaration
For the half-year ended 30 June 2013
Revenue up 13% to R7223m
Profit from operations up 28% to R612m
HEPS up 236% to 356c
Cash dividend up 35% to 105c
Commentary
Performance
Revenue increased by 13% to R7 223 million in what were again challenging
operating and trading conditions owing to an unpredictable global economic
environment. A weaker ZAR/US$ exchange rate and higher ammonia prices
assisted revenue growth. Profit from operations was 28% higher at R612
million and headline earnings increased by 238% to R399 million
(2012: R118 million) primarily due to a significantly improved performance
from the explosives business as well as the non-recurrence of the once off
non-cash IFRS 2 charge of R138 million (or 123 cents per share) in respect
of the B-BBEE transaction in 2012. Volumes, excluding bulk sulphur
trading, grew by 3,7% in the period.
Headline earnings per share (HEPS) increased by 236% to 356 cents (2012:
106 cents).
The Board has declared an interim cash dividend of 105 cents per ordinary
share (2012: 78 cents).
Safety
AECIs 12 month rolling average Total Recordable Injury Rate (TRIR) was
0,60 (2012: 0,58). The TRIR measures the number of incidents per 200 000
hours worked.
Explosives
Revenue from AEL Mining Services (AEL) was 22% higher at R3 551 million
(2012: R2 907 million) as ammonia prices increased by an average of 44%
and bulk explosives volumes grew by 3%. It is pleasing that profit from
operations improved by 75% to R312 million (2012: R178 million), while the
operating margin recovered to 8,8% (2012: 6,1%). This significant change
in AELs results is attributable to the better operational performance of
the companys nitric acid complex, a better business mix and exchange rate
effects. The latter represented a net contribution of R27 million.
Higher working capital levels were maintained to mitigate potential
industrial action in South Africas chemicals sector. However, agreement
with unions on wage increases was reached in the second week of July at
the National Bargaining Council for the Chemical Industry. Strikes did
occur at some customer sites in West Africa during the half-year.
Capital expenditure totalled R108 million. R58 million of this related to
growth projects at customer sites, primarily outside South Africa.
Regional performance
Volumes in South Africa continued to be affected by uncertainty in the
mining sector, weaker commodity prices and safety-related stoppages.
Strong growth was nonetheless evident in the Open Pit and Massive
business, particularly in coal mining. Volumes in the rest of Africa were
flat owing to labour relations issues in West Africa and electricity
shortages which prevented growth in Central Africa.
In Indonesia, volume growth of 14% was achieved despite some new coal
projects being put on hold due to weaker thermal coal prices and a
consequent reduction in demand.
ISAP
Significant progress was made in the technical and quality performance of
the Initiating Systems Automated Plant (ISAP) and output target are
being achieved. The full savings associated with closure of the
conventional plants and efficiency enhancements will only be optimised by
the end of 2013. This delay is the result of the extensive communication
required with the affected unions.
Specialty chemicals
Revenue increased by 3% to R3 667 million (2012: R3 575 million). Volumes
declined by 14,5% owing to lower sales of traded sulphur in Central Africa
and the disposal of Resitec and Duco towards the end of 2012. Excluding
the sulphur trading activities, overall specialty chemicals volumes were
5% higher. Profit from operations declined by 2% to R389 million (2012:
R395 million) and the operating margin was 10,6% compared to 11% last year
due to a lag in foreign exchange-related price increases.
The results for the prior period included a once-off profit of R24 million
on the sale of a building.
Chemfit, Lake Foods, Lake Specialties, Nulandis and Senmin delivered
pleasing performances. Senmins results in 2012 were negatively impacted
by strikes in the platinum mining industry but a strong recovery was
evident during the first half of 2013. ImproChem delivered a solid result
after the integration of General Electrics Chemical and Monitoring
Solutions business in Africa and the Indian Ocean Islands, which was
acquired in June 2012. SANS Technical Fibers (STF), in the USA, is now
reported as part of the specialty chemicals cluster. STFs results
deteriorated year-on-year because of higher raw material prices and weaker
conditions in the European automotive sector.
Other companies in the specialty chemicals cluster remained challenged by
the volatile conditions prevailing in South Africas manufacturing sector.
The acquisition of SA Premix was finalised in June, pending Competition
Commission approval. SA Premix produces and distributes animal feed
formulations that fortify and enhance the nutritional content of feeds.
R93 million was invested in capital projects of which R33 million was for
expansion, mainly at STF where a conversion to single stage equipment is
in progress.
Property
Operating profit showed a pleasing increase of 138% to R50 million (2012:
R21 million). Of the land sales concluded in the half-year, most were in
Longlake Extensions 1 and 12 at Modderfontein and were predominantly for
industrial end-use developments. Longlake Extension 1 will be sold out in
the second half of 2013 as will a significant portion of Westlake
Industrial, also at Modderfontein.
Demand from the industrial and residential property sectors is improving
while that for office accommodation remains subdued.
The leasing and services businesses contributed R82 million to the
segments revenue. Vacancy rates, at about 20%, were unchanged from the
prior period.
Property development expenditure of R29 million was incurred, primarily
for Longlake and Westlake.
Financial
The Group invested R216 million (2012: R272 million) in capital
expenditure, with R104 million of this relating to expansion projects at
customer sites for explosives and mining chemicals. Gearing was at 35%
from 51% in June 2012 (December 2012: 33%). Working capital was R573
million higher due to the weaker rand, higher ammonia prices and the
Groups decision to build inventories to mitigate supply chain disruptions
to mitigate potential industrial action in South Africas chemicals
industry. Group net working capital as a percentage of revenue was 21,8%
(2012: 21,2%) and net interest cover was at 9,3 times (2012: 7,1 times).
The higher corporate centre charges are due largely to an increase in the
provision for AECIs cash-settled long-term incentive scheme which tracks
the share price and HEPS.
Restatement of 2012 comparatives
On 1 January 2013, the following accounting standards applicable to the
AECI Groups 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, 30 June 2012 and 31 December 2012 have been restated. The
effect of the restatements on year-on-year HEPS was less than 2%.
Cautionary announcement
On 8 July 2013 the Company issued a cautionary announcement stating that
it has entered into discussions relating to the disposal of the greater
portion of its property assets at Modderfontein which are surplus to
operational requirements.
Discussions regarding this potential disposal are on-going and
shareholders will be advised of the outcome at the appropriate time. They
should continue to exercise caution when dealing in AECI shares until an
announcement is made.
Outlook and strategic focus
AECIs explosives and mining chemicals businesses remain poised for
further growth outside South Africa notwithstanding the expected limited
global economic recovery in the medium term. The positive trends in the
local opencast coal and iron ore mining industries are expected to be
sustained. However, conditions for the Groups customers in the narrow
reef mining sector will remain challenging owing to weaker commodity
prices and escalating costs.
The enhancement of the Groups African footprint will continue to receive
attention not only in mining services but also in other markets of
strategic interest, namely food additives; agriculture; personal and home
care; and the water, oil, energy and gas industries.
Uncertainty regarding the extent and pace of recovery in the local
manufacturing sector will continue to have an effect on AECIs South
African-based businesses.
Management will maintain its focus on improving cost efficiencies,
especially in AEL, and optimising cash management by decreasing working
capital to targeted levels.
Acquisitions in Africa and South America continue to be pursued.
Schalk Engelbrecht Mark Dytor
Chairman Chief Executive
Woodmead, Sandton
23 July 2013
Directors: S Engelbrecht (Chairman), MA Dytor (Chief Executive), RMW
Dunne*, Z Fuphe, KM Kathan (Financial Director), MJ Leeming, LL Mda, AJ
Morgan, LM Nyhonyha, R Ramashia.
Executive *British
Company Secretary: EN Rapoo
Notice to shareholders
Interim Ordinary Cash Dividend No. 159
Notice is hereby given that on Tuesday, 23 July 2013 the Directors of AECI
declared a gross interim cash dividend of 105 cents per share, in respect
of the six month period ended 30 June 2013, payable on Monday, 9 September
2013 to ordinary shareholders recorded in the books of the Company at the
close of business on Friday, 6 September 2013.
The last day to trade cum dividend will be Friday, 30 August 2013 and
shares will commence trading ex dividend as from Monday, 2 September 2013.
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 89,25000 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, 30 August 2013.
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, 30 August 2013.
Share certificates may not be dematerialised or rematerialised from
Monday, 2 September 2013 to Friday, 6 September 2013, both days inclusive.
By order of the Board
E N Rapoo
Company Secretary
Woodmead, Sandton
23 July 2013
Transfer Secretaries Computershare Investor Services (Pty) Ltd
70 Marshall Street PO Box 82
Johannesburg 2001
Computershare Investor Services PLC
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)
Income statement
2013 2012 2012
% First half First half Year
R millions change Unaudited Restated(2) Restated(2)
Revenue(3) +13 7 223 6 405 13 827
Net operating costs (6 611) (5 928) (12 630)
Profit from operations +28 612 477 1 197
CST share-based payment(4) (138) (138)
612 339 1 059
Interest expense (97) (118) (256)
Interest received 16 20 38
Share of profit of equity- 20 23 57
accounted investees, net of tax
Profit before tax 551 264 898
Tax expense (150) (128) (309)
Profit for the period 401 136 589
Profit for the period attributable to:
ordinary shareholders 398 134 581
preference shareholders 1 1 2
non-controlling interest 2 1 6
401 136 589
Headline earnings are derived from:
Profit attributable to
ordinary shareholders 398 134 581
Impairment of goodwill 4 9
Impairment of property,
plant and equipment 3
Surplus on derecognition of
businesses, joint ventures
and subsidiaries disposed of (15)
Surplus on disposal of
property, plant and
equipment 1 (23) (18)
Tax effects of the above
items * 3 2
Headline earnings 399 118 562
Per ordinary share (cents):
Headline earnings +236 356 106 503
Diluted headline earnings 333 102 479
Basic earnings 356 120 520
Diluted basic earnings 332 116 496
Dividends declared +35 105 78 185
Dividends paid 185 179 257
* Nominal amount
Statement of comprehensive income
2013 2012 2012
First half First half Year
R millions Unaudited Restated(2) Restated(2)
Profit for the period 401 136 589
Other comprehensive income net of tax:
Items that may be reclassified
subsequently to profit or loss:
Foreign currency translation
differences 303 (1) 41
Other * 1
Items that will not be reclassified
subsequently to profit or loss:
Actuarial gain on defined benefit
obligations (4) 2 49
Total comprehensive income for the
period 700 138 679
Total comprehensive income
attributable to:
ordinary shareholders 697 136 672
preference shareholders 1 1 2
non-controlling interest 2 1 5
700 138 679
* Nominal amount
Statement of changes in equity
2013 2012 2012
First half First half Year
R millions Unaudited Restated(2) Restated(2)
Total comprehensive income for the
period 700 138 679
Dividends paid (213) (206) (297)
Business combinations (2) 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 17 10 29
Transfer to retained earnings for CST
Share-based payment 138 138
Equity at the beginning of the period 5 757 5 203 5 203
Equity at the end of the period 6 259 5 287 5 757
Made up as follows:
Ordinary share capital 116 116 116
Share premium 496 496 496
Reserves 726 354 405
Property revaluation surplus 237 237 237
Foreign currency translation reserve 442 100 143
Share-based payment reserve 46 10 29
Other 1 7 (4)
Retained earnings 4 880 4 287 4 697
Preference share capital 6 6 6
Non-controlling interest 35 28 37
6 259 5 287 5 757
Statement of cash flows
2013 2012 2012
First half First half Year
R millions Unaudited Restated(2) Restated(2)
Cash generated by operations 992 777 1 777
Dividends received 7 28 28
Interest paid (103) (118) (238)
Interest received 16 20 37
Income tax paid (202) (155) (289)
Changes in working capital (573) (694) (331)
Expenditure relating to non-current
provisions (17) (47) (101)
Cash available/(utilised) from
operating activities 120 (189) 883
Dividends paid (213) (206) (297)
Cash flows from operating activities (93) (395) 586
Cash flows from investing activities (261) (363) (616)
Net investment expenditure (52) (11) (134)
Prepayment for business
combination(6) (135)
Net capital expenditure (209) (217) (482)
Net cash utilised (354) (758) (30)
Cash flows from financing activities 318 614 96
Non-current loans receivable 3 (1) 14
Borrowings 315 615 82
(Decrease)/increase in cash (36) (144) 66
Cash at the beginning of the period 1 069 979 979
Translation gain on cash 102 3 24
Cash at the end of the period 1 135 838 1 069
Statement of financial position
2013 2012 2012 2012
30 Jun 30 Jun 31 Dec 01 Jan
R millions Unaudited Restated(2) Restated(2) Restated(2)
Assets
Non-current assets 6 553 6 182 6 467 6 143
Property, plant and
equipment 3 677 3 623 3 662 3 587
Investment property 480 437 445 436
Intangible assets 148 22 159 21
Goodwill 1 089 1 022 1 089 1 024
Pension fund employer
surplus accounts 247 245 267 259
Investments in joint
ventures 331 358 318 363
Other investments 136 26 86 22
Loans receivable 8 25 11 24
Deferred tax 437 424 430 407
Current assets 6 760 5 988 6 397 6 061
Inventories 2 979 2 467 2 711 2 426
Accounts receivable 2 635 2 484 2 617 2 601
Loans to joint ventures 11 64 * 40
Prepayment for business
combination(6) 135
Assets classified as held
For sale 16
Cash 1 135 838 1 069 978
Total assets 13 313 12 170 12 864 12 204
Equity and liabilities
Ordinary capital and
reserves 6 218 5 253 5 714 4 999
Non-controlling interest 35 28 37 198
Preference share capital 6 6 6 6
Total equity 6 259 5 287 5 757 5 203
Non-current liabilities 2 844 2 785 2 451 2 653
Deferred tax 210 170 201 150
Non-current borrowings 1 626 1 575 1 251 1 494
Non-current provisions 1 008 1 040 999 1 009
Current liabilities 4 210 4 098 4 656 4 348
Accounts payable 2 418 2 019 2 758 2 799
Current borrowings 1 678 1 947 1 738 1 413
Loans from joint ventures 7 17 * 2
Tax payable 107 115 160 134
Total equity and
liabilities 13 313 12 170 12 864 12 204
* Nominal amount
Reconciliation of weighted average number of shares
2013 2012 2012
First half First half Year
Millions Unaudited Unaudited Audited
Weighted average number of ordinary
shares at beginning of the period 138,3 119,1 119,1
Weighted average number of ordinary 15,5 17,4
shares issued during the period
Weighted average number of ordinary
shares held by consolidated EST (10,1) (7,9) (9,0)
Weighted average number of
contingently returnable ordinary
shares held by CST (4,4) (3,4) (3,9)
Weighted average number of shares
held by consolidated subsidiary (11,9) (11,9) (11,9)
Weighted average number of ordinary
shares for basic earnings per share 111,9 111,4 111,7
Dilutive adjustment for potential
Ordinary shares 7,9 4,5 5,4
Dilutive adjustment for share options
Under the AECI share option scheme 0,1 0,1
Weighted average number of ordinary
shares for diluted earnings per share 119,8 116,0 117,2
Ordinary shares in issue
2013 2012 2012
First half First half Year
Millions Unaudited Unaudited Audited
Listed ordinary shares
At the beginning of the period 128,2 119,1 119,1
Issued during the period for CST and
KTH transactions(4) (5) 9,1 9,1
At the end of the period 128,2 128,2 128,2
Treasury shares held by subsidiary
company (11,9) (11,9) (11,9)
116,3 116,3 116,3
Unlisted redeemable convertible ordinary
shares
At the beginning of the period 10,1
Issued during the period for EST
transactions(4) 10,1 10,1
At the end of the period 10,1 10,1 10,1
Treasury shares held by consolidated
EST(4) (10,1) (10,1) (10,1)
Ordinary shares in issue 116,3 116,3 116,3
Other salient features
2013 2012 2012
First half First half Year
R millions Unaudited Restated(2) Restated(2)
Capital expenditure 216 272 538
expansion 104 143 259
replacement 112 129 279
Capital commitments(6) 476 334 207
contracted for 161 94 55
not contracted for 315 240 152
Future rentals on property, plant and
equipment leased 258 159 130
payable within one year 64 47 52
payable thereafter 194 112 78
Net borrowings 2 169 2 684 1 920
Gearing (%)* 35 51 33
Current assets to current liabilities 1,6 1,5 1,4
Net asset value per ordinary share
(cents) 5 347 4 517 4 914
Depreciation and amortisation 258 216 460
ZAR/US$ closing exchange rate (rand) 9,94 8,19 8,49
ZAR/US$ average exchange rate (rand) 9,20 7,92 8,20
* Borrowings less cash as a percentage of total equity.
Industry segment analysis
Revenue Profit from operations
First half First half
2013 2012 2013 2012
Unaudited Restated(2) Unaudited Restated(2)
R millions
Explosives 3 551 2 907 312 178
Specialty chemicals 3 667 3 575 389 395
Property 278 176 50 21
Group services and inter-
segment (273) (253) (139) (117)
7 223 6 405 612 477
Net assets
First half
2013 2012
Unaudited Restated(2)
R millions
Explosives 3 181 3 087
Specialty chemicals 4 597 4 306
Property 811 781
Group services and inter-segment 1 (3)
8 590 8 171
Net assets consist of property, plant, equipment, investment property,
intangible assets, goodwill, inventory, accounts receivable and prepayment
for business combination 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.
Change in accounting policy: Income statement(2)
2012 2012 2012
First half First half First half
R millions Unaudited Adjustment Restated
Revenue(3) 6 954 (549) 6 405
Net operating costs (6 423) 495 (5 928)
Profit from operations 531 (54) 477
CST share-based payment(4) (138) (138)
Net (loss)/income from pension fund
employer surplus accounts (14) 14
Net (loss)/income from plan assets
for post-retirement medical aid
liabilities (2) 2
377 (38) 339
Interest expense (121) 3 (118)
Interest received 21 (1) 20
Share of profit of equity-accounted
investees, net of tax 23 23
Profit before tax 277 (13) 264
Tax expense (139) 11 (128)
Profit for the period 138 (2) 136
Profit for the period attributable to:
ordinary shareholders 136 (2) 134
preference shareholders 1 1
non-controlling interest 1 1
138 (2) 136
Headline earnings are derived from:
Profit attributable to ordinary
shareholders 136 (2) 134
Impairment of goodwill 4 4
Impairment of property, plant and
equipment
Surplus on derecognition of
businesses, joint ventures and
subsidiaries disposed of
Surplus on disposal of property,
plant and equipment (23) (23)
Tax effects of the above items 3 3
Headline earnings 120 (2) 118
Per ordinary share (cents):
Headline earnings 108 (2) 106
Diluted headline earnings 103 (1) 102
Basic earnings 122 (2) 120
Diluted basic earnings 117 (1) 116
* Nominal amount
2012 2012 2012
Year Year Year
Audited Adjustment Restated
R millions
Revenue(3) 14 916 (1 089) 13 827
Net operating costs (13 575) 945 (12 630)
Profit from operations 1 341 (144) 1 197
CST share-based payment(4) (138) (138)
Net (loss)/income from pension fund
employer surplus accounts 8 (8)
Net (loss)/income from plan assets for
post-retirement medical aid
liabilities (6) 6
1 205 (146) 1 059
Interest expense (262) 6 (256)
Interest received 40 (2) 38
Share of profit of equity-accounted
investees, net of tax * 57 57
Profit before tax 983 (85) 898
Tax expense (345) 36 (309)
Profit for the period 638 (49) 589
Profit for the period attributable to:
ordinary shareholders 630 (49) 581
preference shareholders 2 2
non-controlling interest 6 6
638 (49) 589
Headline earnings are derived from:
Profit attributable to ordinary
shareholders 630 (49) 581
Impairment of goodwill 9 9
Impairment of property, plant and
equipment 3 3
Surplus on derecognition of
businesses, joint ventures and
subsidiaries disposed of (15) (15)
Surplus on disposal of property, plant
and equipment (18) (18)
Tax effects of the above items 2 2
Headline earnings 611 (49) 562
Per ordinary share (cents):
Headline earnings 547 (44) 503
Diluted headline earnings 521 (42) 479
Basic earnings 564 (44) 520
Diluted basic earnings 537 (41) 496
* Nominal amount
Change in accounting policy:
Statement of comprehensive income(2)
2012 2012 2012
First half First half First half
Unaudited Adjustment Restated
R millions
Profit for the period 138 (2) 136
Other comprehensive income net of tax:
Items that may be reclassified
subsequently to profit or loss:
Foreign currency translation
differences (1) (1)
Other 1 1
Items that will not be reclassified
subsequently to profit or loss:
Actuarial gain on defined benefit
obligations 2 2
Total comprehensive income for the
period 138 138
Total comprehensive income
attributable to:
ordinary shareholders 136 136
preference shareholders 1 1
non-controlling interest 1 1
138 138
2012 2012 2012
Year Year Year
R millions Audited Adjustment Restated
Profit for the period 638 (49) 589
Other comprehensive income net of
tax:
Items that may be reclassified
subsequently to profit or loss:
Foreign currency translation differences 41 41
Other
Items that will not be reclassified
subsequently to profit or loss:
Actuarial gain on defined benefit
obligations 49 49
Total comprehensive income for the
period 679 679
Total comprehensive income attributable to:
ordinary shareholders 672 672
preference shareholders 2 2
non-controlling interest 5 5
679 679
Change in accounting policy:
Statement of changes in equity(2)
2012 2012 2012
First half First half First half
Unaudited Adjustment Restated
R millions
Total comprehensive income for
the period 138 138
Dividends paid (206) (206)
Business combinations
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 10 10
Transfer to retained earnings for CST
share-based payment 138 138
Equity at the beginning of the period 5 214 (11) 5 203
Equity at the end of the period 5 298 (11) 5 287
Made up as follows:
Ordinary share capital 116 116
Share premium 496 496
Reserves 354 354
Property revaluation surplus 237 237
Foreign currency translation reserve 100 100
Share-based payment reserve 10 10
Other 7 7
Retained earnings 4 287 4 287
Preference share capital 6 6
Non-controlling interest 39 (11) 28
5 298 (11) 5 287
2012 2012 2012
Year Year Year
Audited Adjustment Restated
R millions
Total comprehensive income for the period 679 679
Dividends paid (297) (297)
Business combinations 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 30 (1) 29
Transfer to retained earnings for CST
share-based payment 138 138
Equity at the beginning of the period 5 214 (11) 5 203
Equity at the end of the period 5 769 (12) 5 757
Made up as follows:
Ordinary share capital 116 116
Share premium 496 496
Reserves 406 (1) 405
Property revaluation surplus 237 237
Foreign currency translation reserve 143 143
Share-based payment reserve 30 (1) 29
Other (4) (4)
Retained earnings 4 697 4 697
Preference share capital 6 6
Non-controlling interest 48 (11) 37
5 769 (12) 5 757
Change in accounting policy:
Statement of cash flows(2)
2012 2012 2012
First half First half First half
Unaudited Adjustment Restated
R millions
Cash generated by operations 819 (42) 777
Dividends received 28 28
Interest paid (121) 3 (118)
Interest received 21 (1) 20
Income tax paid (168) 13 (155)
Changes in working capital (702) 8 (694)
Expenditure relating to non-current
provisions (47) (47)
Cash (utilised)/available from
operating activities (198) 9 (189)
Dividends paid (206) (206)
Cash flows from operating activities (404) 9 (395)
Cash flows from investing activities (360) (3) (363)
Net investment expenditure (1) (10) (11)
Prepayment for business combination(6) (135) (135)
Net capital expenditure (224) 7 (217)
Net cash utilised (764) 6 (758)
Cash flows from financing activities 593 21 614
Non-current loans receivable (1) (1)
Borrowings 594 21 615
(Decrease)/increase in cash (171) 27 (144)
Cash at the beginning of the period 1 061 (82) 979
Translation gain on cash 3 3
Cash at the end of the period 893 (55) 838
2012 2012 2012
Year Year Year
Audited Adjustment Restated
R millions
Cash generated by operations 1 867 (90) 1 777
Dividends received 28 28
Interest paid (245) 7 (238)
Interest received 40 (3) 37
Income tax paid (308) 19 (289)
Changes in working capital (326) (5) (331)
Expenditure relating to non-current
provisions (98) (3) (101)
Cash (utilised)/available from
operating activities 930 (47) 883
Dividends paid (297) (297)
Cash flows from operating activities 633 (47) 586
Cash flows from investing activities (645) 29 (616)
Net investment expenditure (144) 10 (134)
Prepayment for business combination(6)
Net capital expenditure (501) 19 (482)
Net cash utilised (12) (18) (30)
Cash flows from financing activities 75 21 96
Non-current loans receivable 14 14
Borrowings 61 21 82
(Decrease)/increase in cash 63 3 66
Cash at the beginning of the period 1 061 (82) 979
Translation gain on cash 24 24
Cash at the end of the period 1 148 (79) 1 069
Change in accounting policy:
Statement of financial position(2)
2012 2012 2012
30 Jun 30 Jun 30 Jun
Unaudited Adjustment Restated
R millions
Assets
Non-current assets 6 030 152 6 182
Property, plant and equipment 3 754 (131) 3 623
Investment property 437 437
Intangible assets 78 (56) 22
Goodwill 1 075 (53) 1 022
Pension fund employer surplus accounts 245 245
Investments in joint ventures 358 358
Other investments 26 26
Loans receivable 25 25
Deferred tax 390 34 424
Current assets 6 295 (307) 5 988
Inventories 2 613 (146) 2 467
Accounts receivable 2 654 (170) 2 484
Loans to joint ventures 64 64
Prepayment for business combination(6) 135 135
Assets classified as held for sale
Cash 893 (55) 838
Total assets 12 325 (155) 12 170
Equity and liabilities
Ordinary capital and reserves 5 253 5 253
Non-controlling interest 39 (11) 28
Preference share capital 6 6
Total equity 5 298 (11) 5 287
Non-current liabilities 2 786 (1) 2 785
Deferred tax 165 5 170
Non-current borrowings 1 575 1 575
Non-current provisions 1 046 (6) 1 040
Current liabilities 4 241 (143) 4 098
Accounts payable 2 183 (164) 2 019
Current borrowings 1 947 1 947
Loans from joint ventures 17 17
Tax payable 111 4 115
Total equity and liabilities 12 325 (155) 12 170
* Nominal amount
2012 2012 2012
31 Dec 31 Dec 31 Dec
Audited Adjustment Restated
R millions
Assets
Non-current assets 6 314 153 6 467
Property, plant and equipment 3 733 (71) 3 662
Investment property 445 445
Intangible assets 214 (55) 159
Goodwill 1 124 (35) 1 089
Pension fund employer surplus accounts 267 267
Investments in joint ventures 318 318
Other investments 86 86
Loans receivable 11 11
Deferred tax 434 (4) 430
Current assets 6 752 (355) 6 397
Inventories 2 867 (156) 2 711
Accounts receivable 2 737 (120) 2 617
Loans to joint ventures * *
Prepayment for business combination(6)
Assets classified as held for sale
Cash 1 148 (79) 1 069
Total assets 13 066 (202) 12 864
Equity and liabilities
Ordinary capital and reserves 5 715 (1) 5 714
Non-controlling interest 48 (11) 37
Preference share capital 6 6
Total equity 5 769 (12) 5 757
Non-current liabilities 2 488 (37) 2 451
Deferred tax 232 (31) 201
Non-current borrowings 1 251 1 251
Non-current provisions 1 005 (6) 999
Current liabilities 4 809 (153) 4 656
Accounts payable 2 912 (154) 2 758
Current borrowings 1 738 1 738
Loans from joint ventures * *
Tax payable 159 1 160
Total equity and liabilities 13 066 (202) 12 864
* Nominal amount
2012 2012 2012
01 Jan 01 Jan 01 Jan
Audited Adjustment Restated
R millions
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 joint ventures 363 363
Other investments 22 22
Loans receivable 24 24
Deferred tax 407 407
Current assets 6 433 (372) 6 061
Inventories 2 584 (158) 2 426
Accounts receivable 2 772 (171) 2 601
Loans to joint ventures 40 40
Prepayment for business combination(6)
Assets classified as held for sale 16 16
Cash 1 061 (83) 978
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
* Nominal amount
Notes
(1) Basis of preparation and accounting policies
The condensed consolidated unaudited interim financial results are
prepared in accordance with International Financial Reporting Standards,
IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee, the Listings Requirements
of the JSE Limited and the requirements of the Companies Act of South
Africa. Accounting policies have been applied consistently by all entities
in the Group and are consistent with those applied in the previous
reporting period, apart from the adoption of the new accounting standards
as detailed below. This interim report has not been audited or reviewed by
the Companys auditor, KPMG Inc. This interim report for the six months
ended 30 June 2013 is being published on 24 July 2013. The preparation of
these condensed consolidated unaudited interim financial results for the
period ending 30 June 2013 was supervised by the Financial Director, Mr KM
Kathan CA(SA) AMP (Harvard).
(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 of
comprehensive 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 the 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
period. 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
AECIs 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
June 2012 and December 2012.
(3) Includes foreign and export revenue of R2 348 million (2012 first half
restated: R1 944 million).
(4) Share-based payments
CST share-based payment: The AECI Community Education and Development
Trust (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 R143 million of which R15 million (2012 first half: R10
million) was recognised in the income statement. The remainder of the
expense is being 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) The prepayment for business combination at 30 June 2012 related to a
payment made for the acquisition of General Electrics Chemical and
Monitoring Solutions business in Africa.
(7) The preparation of the condensed consolidated unaudited interim
financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts
of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making the judgements about
carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
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