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Reviewed condensed consolidated financial results and final cash dividend for the year ended 31 December 2013
AECI LIMITED
(Incorporated in the Republic of South Africa) Registration number
1924/002590/06
Tax reference number 9000008608
(“AECI” or “the Company”)
Share code: AFE
ISIN Number: ZAE000000220
Reviewed condensed consolidated financial results and final cash dividend
declaration for the year ended 31 December 2013
Best-ever safety performance with a TRIR of 0,52
Revenue +15% to R15,9 billion, 33% generated outside SA
Headline earnings +57% to R885 million
EPS +63% to 845c
HEPS +57% to 791c
Results exclude Shanghai Zendai property transaction
Income statement
% 2013 2012 2012 2012
R millions change Audited(2) Adjusted(2) Restated(2)
Revenue(3) +15 15 908 14 916 (1 089) 13 827
Net operating costs (14 510) (13 575) 945 (12 630)
Profit from operations +17 1 398 1 341 (144) 1 197
CST share-based payment(4) — (138) — (138)
Net income from pension fund employer
surplus accounts — 8 (8) —
Net loss from plan assets for post-
retirement medical aid liabilities — (6) 6 —
1 398 1 205 (146) 1 059
Interest expense (211) (262) 6 (256)
Interest received 37 40 (2) 38
Share of profit of equity-accounted
investees, net of tax 43 — 57 57
Profit before tax 1 267 983 (85) 898
Tax expense (313) (345) 36 (309)
Profit for the year 954 638 (49) 589
Profit for the year attributable to:
— Ordinary shareholders 946 630 (49) 581
— Preference shareholders 3 2 — 2
— Non-controlling interest 5 6 — 6
954 638 (49) 589
Headline earnings are derived from:
Profit attributable to
ordinary shareholders 946 630 (49) 581
Impairment of goodwill 5 9 — 9
Impairment of property, plant and
equipment 9 3 — 3
Profit on partial disposal of net
investment in foreign operation (38) — — —
Surplus on derecognition of
businesses, joint ventures and
subsidiaries disposed of (3) (15) — (15)
Surplus on disposal of property,
plant and equipment and investment
property (49) (18) — (18)
Tax effects of the above items 15 2 — 2
Headline earnings 885 611 (49) 562
Per ordinary share (cents):
Headline earnings +57 791 547 (44) 503
Diluted headline earnings 740 521 (42) 479
Basic earnings 845 564 (44) 520
Diluted basic earnings 791 537 (41) 496
Dividends declared +14 210 185 — 185
Dividends paid 290 257 — 257
Statement of comprehensive income
2013 2012 2012 2012
R millions Audited(2) Adjusted(2) Restated(2)
Profit for the year 954 638 (49) 589
Other comprehensive income net of tax:
Items that may be reclassified subsequently
to profit or loss:
Foreign currency translation
differences 362 41 — 41
Items that will not be reclassified
subsequently to profit or loss:
Actuarial gain on defined-benefit
obligations 86 — 49 49
Total comprehensive income for
the year 1 402 679 — 679
Total comprehensive income attributable to:
— Ordinary shareholders 1 389 672 — 672
— Preference shareholders 3 2 — 2
— Non-controlling interest 10 5 — 5
1 402 679 — 679
Statement of changes in equity
2013 2012 2012 2012
R millions Audited(2) Adjusted(2) Restated(2)
Total comprehensive income for the year 1 402 679 — 679
Dividends paid (336) (297) — (297)
Business combinations and change
in ownership percentage 7 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 47 30 (1) 29
Transfer to retained earnings for
CST share-based payment — 138 — 138
Equity at the beginning of the year 5 757 5 214 (11) 5 203
Equity at the end of the year 6 877 5 769 (12) 5 757
Made up as follows:
Ordinary share capital 116 116 — 116
Share premium 496 496 — 496
Reserves 813 406 (1) 405
Property revaluation surplus 237 237 — 237
Foreign currency translation reserve 500 143 — 143
Share-based payment reserve 76 30 (1) 29
Other — (4) — (4)
Retained earnings 5 394 4 697 — 4 697
Preference share capital 6 6 — 6
Non-controlling interest 52 48 (11) 37
6 877 5 769 (12) 5 757
Ordinary shares in issue
2013 2012
millions millions
Listed ordinary shares
At the beginning of the year 128,2 119,1
Issued during the year for CST and KTH
transactions(4)?(5) — 9,1
At the end of the year 128,2 128,2
Treasury shares held by subsidiary company (11,9) (11,9)
116,3 116,3
Unlisted redeemable convertible ordinary shares
At the beginning of the year 10,1 —
Issued during the year for EST transaction(4) — 10,1
At the end of the year 10,1 10,1
Treasury shares held by consolidated EST(4) (10,1) (10,1)
— —
Ordinary shares in issue 116,3 116,3
Reconciliation of weighted average number of shares
2013 2012
millions millions
Weighted average number of ordinary shares at the
beginning of the year 138,3 119,1
Weighted average number of ordinary shares issued
during the year — 17,4
Weighted average number of ordinary shares held by
consolidated EST (10,1) (9,0)
Weighted average number of contingently returnable
ordinary shares held by CST (4,4) (3,9)
Weighted average number of shares held by consolidated
subsidiary (11,9) (11,9)
Weighted average number of ordinary shares for basic
earnings per share 111,9 111,7
Dilutive adjustment for potential ordinary shares 7,7 5,4
Dilutive adjustment for share options under the AECI
share option scheme — 0,1
Weighted average number of ordinary shares for diluted
earnings per share 119,6 117,2
Statement of financial position
2013 2012 2012 2012
31 Dec 31 Dec 31 Dec 31 Dec
Audited(2) Adjusted(2) Restated(2)
R millions
Assets
Non-current assets 6 472 6 314 153 6 467
Property, plant and equipment 3 756 3 733 (71) 3 662
Investment property 173 445 — 445
Intangible assets 143 214 (55) 159
Goodwill 1 123 1 124 (35) 1 089
Pension fund employer surplus accounts 231 267 — 267
Investments in associates 217 56 — 56
Investments in joint ventures 301 — 318 318
Other investments 50 30 — 30
Loans receivable 10 11 — 11
Deferred tax 468 434 (4) 430
Current assets 7 921 6 752 (355) 6 397
Inventories(6) 3 090 2 867 (156) 2 711
Accounts receivable 3 326 2 737 (120) 2 617
Loans to joint ventures — — — —
Assets classified as held for sale(6) 286 — — —
Cash 1 219 1 148 (79) 1 069
Total assets 14 393 13 066 (202) 12 864
Equity and liabilities
Ordinary capital and reserves 6 819 5 715 (1) 5 714
Non-controlling interest 52 48 (11) 37
Preference share capital 6 6 — 6
Total equity 6 877 5 769 (12) 5 757
Non-current liabilities 2 214 2 488 (37) 2 451
Deferred tax 168 232 (31) 201
Non-current borrowings 1 099 1 251 — 1 251
Non-current provisions 947 1 005 (6) 999
Current liabilities 5 302 4 809 (153) 4 656
Accounts payable 3 284 2 912 (154) 2 758
Current borrowings 1 861 1 738 — 1 738
Loans from joint ventures 21 — — —
Tax payable 136 159 1 160
Total equity and liabilities 14 393 13 066 (202) 12 864
2012 2012 2012
01 Jan 01 Jan 01 Jan
R millions Audited(2) Audited(2) Restated(2)
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 associates — — —
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(6) 2 584 (158) 2 426
Accounts receivable 2 772 (172) 2 600
Loans to joint ventures — 40 40
Assets classified as held for sale(6) 16 — 16
Cash 1 061 (82) 979
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
Statement of cash flows
2013 2012 2012 2012
R millions Audited(2) Adjusted(2) Restated(2)
Cash generated by operations 2 191 1 867 (90) 1 777
Dividends received 62 — 28 28
Interest paid (212) (245) 7 (238)
Interest received 37 40 (3) 37
Income tax paid (464) (308) 19 (289)
Changes in working capital (426) (326) (5) (331)
Expenditure relating to non-
current provisions (66) (98) (3) (101)
Cash available from operating
activities 1 122 930 (47) 883
Dividends paid (336) (297) — (297)
Cash flows from operating
activities 786 633 (47) 586
Cash flows from investing
activities (772) (645) 29 (616)
Net investment expenditure (239) (144) 10 (134)
Net capital expenditure (533) (501) 19 (482)
Net cash generated/(utilised)
before financing activities 14 (12) (18) (30)
Cash flows from financing
activities (28) 75 21 96
Non-current loans receivable 1 14 — 14
Borrowings (29) 61 21 82
(Decrease)/increase in cash (14) 63 3 66
Cash at the beginning of the
year 1 069 1 061 (82) 979
Translation gain on cash 164 24 — 24
Cash at the end of the year 1 219 1 148 (79) 1 069
Other salient features
2013 2012
R millions Restated(2)
Capital expenditure 633 538
— expansion 293 259
— replacement 340 279
Capital commitments(7) 746 207
— contracted for 87 55
— not contracted for 659 152
Future rentals on property, plant and equipment leased 199 130
— payable within one year 71 52
— payable thereafter 128 78
Net borrowings 1 741 1 920
Gearing (%)* 25 33
Current assets to current liabilities 1,5 1,4
Net asset value per ordinary share (cents) 5 864 4 914
Depreciation and amortisation 537 460
ZAR/US$ closing exchange rate (rand) 10,50 8,49
ZAR/US$ average exchange rate (rand) 9,63 8,20
Per ordinary share (cents) (excluding CST share-based
payment):
— headline earnings 791 627
— diluted headline earnings 740 597
* Borrowings less cash as a percentage of total equity.
Industry segment analysis
2013 2012 2013
Restated(2) Profit from
R millions Revenue Revenue operations
Explosives 7 400 6 327 572
Specialty chemicals 8 359 7 621 922
Property 672 400 219
Group services and inter-segment (523) (521) (315)
15 908 13 827 1 398
2012 2013 2012
Restated(2) Restated(2)
Profit from Net Net
R millions operations assets assets
Explosives 417 3 059 2 837
Specialty chemicals 891 4 541 4 374
Property 33 1 051 808
Group services and inter-segment (144) (38) (94)
1 197 8 613 7 925
Net assets consist of property, plant, equipment, investment property,
intangible assets, goodwill, inventory, accounts receivable, and assets
classified as held for sale 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.
Notes
1) Basis of preparation and accounting policies
The reviewed condensed consolidated financial results are prepared in
accordance with the requirements of the JSE Limited’s Listings
Requirements (“Listings Requirements”) for provisional reports and the
requirements of the Companies Act of South Africa, No. 71 of 2008. The
Listings Requirements require provisional reports to be prepared in
accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (“IFRS”) and
the South African Institute of Chartered Accountants Financial Reporting
Guides as issued by the Accounting Practice Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and
to also, as a minimum, contain the information required by IAS 34 Interim
Financial Reporting. The accounting policies applied in the preparation of
the reviewed condensed consolidated financial results are in terms of IFRS
and are consistent with those applied in the previous consolidated annual
financial statements, except for the adoption of the new standards as
detailed below. The preparation of these reviewed condensed consolidated
financial results for the year ended 31 December 2013 was supervised by
the Financial Director, Mr KM Kathan CA(SA)AMP (Harvard). The reviewed
condensed consolidated financial results have been reviewed by the
Company’s auditors, KPMG Inc., who have issued an unqualified review
opinion. A copy of the review opinion is obtainable from AECI’s
registered office.
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
ofcomprehensive 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 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 year. 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
AECI’s 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
the year ended 31 December 2012.
3) Includes foreign and export revenue of R 5 224 million (2012 restated:
R4 345 million).
4) Share-Based payments CST share-based payment: The AECI Community
Education and DevelopmentTrust (“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 R155 million of which R38 million (2012: R29 million) was
recognised in the income statement. The remainder of the expense will be
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) AECI concluded agreements to dispose of a portion of its surplus
property assets at Modderfontein to Shanghai Zendai Property Limited in
November 2013. A significant portion of the transaction is expected to be
effective during 2014. Property assets to be disposed of include vacant
land and property and buildings held for leasing purposes and these
assets, amounting to R286 million have been reclassified from investment
property to assets classified as held for sale at 31 December 2013 in
terms of IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations. The agreements also include the disposal of property under
development and the related development costs (bulk infrastructure) of
R214 million which is included in the Group’s inventory as at 31 December
2013.
7) Subsequent to year-end, AECI and Clariant Southern Africa Proprietary
Limited (“Clariant”) have reached agreement for AECI’s wholly-owned
subsidiary ImproChem Proprietary Limited to acquire Clariant’s water
treatment business in Africa and its South African assets for a total cash
consideration of R409 million. The acquisition is subject to certain
conditions precedent.
8) The reviewed condensed consolidated financial results do not include
all of the disclosures required for full annual financial statements and
should be read in conjunction with the consolidated annual financial
statements for the year ended 31 December 2012 taking into account the
changes in accounting policies as set out above.
Commentary
AECI produced commendable results in 2013 in an environment where trading
and market conditions remained challenging. Revenue increased by 15% to
R15 908 million (2012: R13 827 million). Revenue generated outside South
Africa was 20% higher at R5 224 million, representing 33% of total
revenue. Headline earnings improved by 57% to R885 million (2012: R562
million). Profit from operations increased by 17% to R1 398 million
compared to R1 197 million in 2012, the trading margin was 8,8% (2012:
8,7%), earnings per share (“EPS”) were 845 cents (2012: 520 cents) and
headline earnings per share (“HEPS”) were 791 cents (2012: 503 cents).
Key drivers of performance were pleasing year-on-year improvements in the
explosives and property businesses, the non-recurrence of the non-cash
IFRS charge relating to the community share trust component of the B-BBEE
transactions concluded in 2012, the weaker ZAR/US$ exchange rate and
increased selling prices.
The Board has declared a final cash dividend of 210 cents per ordinary
share (2012: 185 cents) bringing the total cash dividend for the year to
315 cents per share, a 20% increase on 2012’s 263 cents per share.
Safety
The Group again improved its safety performance, with a best-ever Total
Recordable Incident Rate (“TRIR”) of 0,52. The TRIR measures the number of
incidents per 200 000 hours worked. Safety remains a key performance
indicator for management and it is pleasing that sustained efforts in this
regard are having such a positive result.
Explosives
AEL Mining Services (“AEL”) achieved a 17% increase in revenue to R7 400
million (2012: R6 327 million) and overall explosives volumes to mining
and quarrying customers were 5,6% higher. Profit from operations
improved to R572 million (2012: R417 million) after taking to account a
R84 million retrenchment charge for the closure of the old initiating
systems plants and the subsequent relocation of production to the
Initiating Systems Automated Plant (“ISAP”). AEL benefited from the
weakening rand as more than 50% of its revenue is generated outside South
Africa and is mostly denominated in US dollars. Consequently, the profit
improvement in AEL’s foreign operations enhanced the overall result by R72
million. In addition, a R38 million foreign exchange gain was realised by
repatriating cash to the AECI Group’s central offshore Treasury.
The trading margin improved to 7,7%, (8,9% before severance costs) (2012:
6,6%). The target remains to improve this to above 10%.
The South African business performed well notwithstanding lower gold and
platinum prices. Explosives volumes were 6,8% higher than in
2012. Market share grew in the open cast and massive businesses,
particularly in the iron ore and coal sectors. New supply contracts were
secured and this enabled AEL to diversify its commodity portfolio further
in line with its strategy. Major contracts in initiating systems were
retained although volumes declined in line with decreased output from the
narrow reef gold and platinum mining sectors in South Africa.
The African business continued to expand its already extensive footprint
as a result of an increase in mining activity with the commencement of
greenfield projects and the commissioning of three new bulk explosive
plants in Burkina Faso, the DRC and Egypt. In addition, AEL gained new
supply contracts in the copper and gold mining sectors. Explosives volume
growth in Africa was 5,4%.
The International business recorded improved profitability and growth even
though some new contracts were delayed by customers owing to low thermal
coal and gold prices. Explosives volume growth was 1,9%.
The ammonium nitrate plant in Indonesia, part of AECI’s minority
investment in PT Black Bear Resources Indonesia (“BBRI”), was in
commissioning by year-end. It will provide AEL with a secure in-country
source of ammonium nitrate.
During 2013 ISAP produced 98,9 million detonators and assembled 31,8
million units in line with market demand. ISAP is commercially complete
and its 120 million detonator output capacity has been verified. A further
R30 million was delivered in cost savings and efficiencies.
Capital investment amounted to R290 million (2012: R367 million). Of this,
R126 million was for expansion projects in the African business and for
the improvement of ammonia storage facilities at Modderfontein. As part of
the phased investment in BBRI an additional R159 million was invested in
2013, bringing the total investment to R201 million.
Further expansion in Africa and other territories of interest is expected
in 2014.
Specialty chemicals
Revenue increased by 10% to R8 359 million (2012: R7 621 million).
Excluding sulphur trading, overall volumes grew by 5,2%. Profit from
operations increased by 3% to R922 million (2012: R891 million) and the
operating margin was 11,0% compared to 11,7% last year. Although commodity
prices increased, profit margins in rand terms did not follow the same
trend owing to the subdued trading environment in South Africa’s
manufacturing sector. Higher sales at typically lower margins to the
agricultural sector diluted the segment’s overall margin further.
Chemfit, Chemical Initiatives, ImproChem, Nulandis and Senmin delivered
very good performances when compared to 2012. Senmin’s results in 2012
were negatively impacted by strikes in South Africa’s platinum mining
industry but a strong recovery was evident in 2013. ImproChem benefited
from the integration of General Electric’s Chemical and Monitoring
Solutions business in Africa, which was acquired in 2012. Other companies
in the specialty chemicals cluster were challenged by the volatile
conditions prevailing in South Africa’s manufacturing sector.
A number of businesses in the cluster were restructured in the year, at a
total cost of about R30 million. ChemSystems terminated its electroplating
activities and Chemisphere Technologies, which supplies specialty chemical
products and services to the pulp and paper industry, will be integrated
into ChemSystems as a business unit in 2014. Industrial Urethanes was
brought into Lake Specialties and Infigro was moved to Lake Foods in the
first half of the year.
The acquisition of SA Premix was finalised in June 2013 and integrated
into Chemfit’s business in the third quarter. SA Premix produces and
distributes animal feed formulations that fortify and enhance the
nutritional content of feeds. A new blending plant is scheduled to come on
line early in 2014.
In January 2014 AECI announced that it had reached agreement with Clariant
Southern Africa Proprietary Limited (“Clariant”) for AECI’s wholly-owned
subsidiary ImproChem to acquire Clariant’s water treatment business in
Africa and its South African assets for a total cash consideration of R409
million. Also included in the acquisition is a 50% shareholding in
Blendtech, Clariant’s B-BBEE partner in South Africa. The acquisition is
in line with the Group’s strategy to grow its footprint in the water
solutions sector. It is subject to certain conditions precedent, including
approval by the relevant competition authorities.
Capital expenditure for the cluster totalled R236 million (2012: R145
million) of which R151 million was for expansion, mainly at SANS Technical
Fibers in the USA where conversion to single stage nylon-spinning
equipment is close to completion.
Property
Revenue from Heartland’s combined activities increased by 68% to R672 million
(2012: R400 million). Operating profit increased from R33 million to R219
million. Revenue comprised the recognition of land sale transactions
totalling R306 million (2012: R53 million) mostly in Longlake Ext 1 and Westlake Industrial, primarily for industrial end-uses.
Heartland’s results do not include income from the Shanghai Zendai bulk
sale transaction which will take effect in 2014.
On the back of weak demand for office space and no discernible improvement
in vacancy rates, office market rentals and office land sales continued to
show lacklustre growth overall although there was better demand for office
space in Somerset West, Western Cape. In the housing sector the entry-
level market was strong.
To accelerate the realisation of value from its surplus property assets,
in November 2013 AECI concluded an agreement for the disposal of the bulk
of its surplus property assets at Modderfontein and its property
development business to Shanghai Zendai Property Limited (“Shanghai
Zendai”) for R1 061 million (including VAT). Approval for the transaction
was received from the Competition Commission in South Africa in January
2014 as was the approval of Shanghai Zendai’s shareholders.
For the transaction to take effect, properties to the value of R513
million (including VAT) (the “First Tranche”) must be transferred to
Shanghai Zendai’s South African subsidiaries. This transfer process has
commenced and its completion is anticipated by no later than 31 July 2014,
subject to the relevant extension provisions of the transaction. Once the
First Tranche has been executed the full purchase price will be remitted
to AECI. The full terms of the transaction were published on the Stock
Exchange News Service on 4 November 2013. On receipt of the cash proceeds,
the Board will evaluate options for the application thereof.
The Group continues to investigate solutions for the disposal of its
surplus land and assets at Somerset West.
Financial
Capital expenditure totalled R633 million for the year (2012: R538
million) with R293 million of this invested in expansion projects at AEL’s
customer sites, SANS Technical Fibers’ expansion in single stage
technology and the improvement of ammonium nitrate storage and nitric acid
production facilities at Modderfontein. Gearing was at 25% from 35% in
June 2013 and 33% in December 2012. Net working capital was 19,7% of
revenue (2012: 18,6%), reflecting the longer working capital trade cycles
in operations outside South Africa and in the property market.
Cash interest cover improved to 11,3 times (2012: 7,8 times). Net interest
paid decreased to R175 million (2012: R201 million) as interest rates
remained low and offset the longer working capital trade cycle.
Higher corporate centre charges were incurred, due largely to an increase
in the provision for AECI’s long-term incentive scheme which tracks the
share price and HEPS, a higher provision for costs associated with the
Company’s defined-benefit retirement and post-retirement medical aid, as
well as transaction costs relating to the disposal of land to Shanghai
Zendai. In addition, the management of the Group’s environmental costs and
liability provision were moved from the property segment to the corporate
centre in 2013.
Restatement of 2012 comparatives
On 1 January 2013, the following accounting standards applicable to the
AECI Group’s 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 and 31 December 2012 have been restated. The effect of the
restatements was a decrease in HEPS of 8%, from 547 cents per share to 503
cents per share.
Directorate
Mike Leeming will retire as a Non-executive Director of the Company at the
Annual General Meeting to be held on 2 June 2014. Mike has served on the
Board and several Board Committees since 2002. The Board thanks him for
his dedicated service over the past 11 years. The recruitment process to
appoint an additional Non-executive Director to fill the vacancy has
commenced.
Strategic focus and outlook
AECI’s explosives and mining chemicals businesses are poised for further
growth in South Africa in open cast mining, particularly in iron ore and
coal, while the narrow reef platinum and gold sectors are expected to
remain under pressure owing to weaker commodity prices and escalating
costs. Industrial action will have a negative effect on local markets.
Strikes in the platinum mining industry in 2014 have already impacted on
AECI’s results in the early part of the year.
The benefits of growth outside South Africa from both green- and
brownfield expansion projects in the copper, gold and iron ore mining
sectors, as well as those of the BBRI investment, are expected from 2014.
The expansion of the Group’s African footprint will continue to be
supported not only in mining solutions but also in other markets of
strategic interest namely water, oil, energy and gas; food additives;
agriculture and specialty chemicals distribution.
Further restructuring in the explosives business as well as the specialty
chemicals cluster can be expected as the Group continues to review its
portfolio and cost base to ensure the best possible alignment with
customer requirements and the maximisation of growth opportunities in all
countries where it operates.
Acquisitions in South Africa, the rest of Africa and in selected other
regions in AECI’s markets of interest will continue to be pursued in the
coming year.
Schalk Engelbrecht Mark Dytor
Chairman Chief Executive
Woodmead, Sandton
25 February 2014
Notice to shareholders
Final ordinary cash dividend No. 160
Notice is hereby given that on Monday, 24 February 2014 the Directors of
AECI declared a gross final cash dividend of 210 cents per share, in
respect of the financial year ended 31 December 2013, payable on Monday,
14 April 2014 to ordinary shareholders recorded in the books of the
Company at the close of business on Friday, 11 April 2014.
The last day to trade cum dividend will be Friday, 4 April 2014 and shares
will commence trading ex dividend as from Monday, 7 April 2014.
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 178,50000 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, 4 April 2014.
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, 4 April 2014.
Share certificates may not be dematerialised or rematerialised from
Monday, 7 April 2014 to Friday, 11 April 2014, both days inclusive.
By order of the Board
EN Rapoo
Group Company Secretary
Woodmead, Sandton
25 February 2014
Transfer Secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg
2001
Computershare Investor Services PLC PO Box 82
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)
Date: 25/02/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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