Aeci 5 1/2% Prf Regulatory News (87FZ)

AECI Limited("AECI" or "the Company" or "the Group")(Incorporated in the Republic of South Africa)Registration number 1924/002590/06Tax reference number 9000008608SHARE CODE: AFEISIN NO: ZAE000000220 Condensed consolidated unaudited Interim Financial results and cash dividenddeclaration 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 challengingoperating and trading conditions owing to an unpredictable global economicenvironment. A weaker ZAR/US$ exchange rate and higher ammonia prices assistedrevenue growth. Profit from operations was 28% higher at R612 million andheadline earnings increased by 238% to R399 million(2012: R118 million)primarily due to a significantly improved performance from the explosivesbusiness as well as the non-recurrence of the once off non-cash IFRS 2 chargeof R138 million (or 123 cents per share) in respect of the B-BBEE transactionin 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: 106cents). The Board has declared an interim cash dividend of 105 cents per ordinary share(2012: 78 cents). Safety AECI's 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 hoursworked. 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% andbulk explosives volumes grew by 3%. It is pleasing that profit fromoperationsimproved by 75% to R312 million (2012: R178 million), while the operatingmargin recovered to 8,8% (2012: 6,1%). This significant changein AEL's resultsis attributable to the better operational performance of the company's nitricacid complex, a better business mix and exchange rate effects. The latterrepresented a net contribution of R27 million. Higher working capital levels were maintained to mitigate potential industrialaction in South Africa's chemicals sector. However, agreement with unions onwage increases was reached in the second week of July at the NationalBargaining Council for the Chemical Industry. Strikes did occur at somecustomer sites in West Africa during the half-year. Capital expenditure totalled R108 million. R58 million of this related togrowth projects at customer sites, primarily outside South Africa. Regional performance Volumes in South Africa continued to be affected by uncertainty in the miningsector, weaker commodity prices and safety-related stoppages. Strong growth wasnonetheless evident in the Open Pit and Massive business, particularly in coalmining. Volumes in the rest of Africa wereflat owing to labour relations issuesin West Africa and electricity shortages which prevented growth in CentralAfrica. In Indonesia, volume growth of 14% was achieved despite some new coal projectsbeing put on hold due to weaker thermal coal prices and a consequent reductionin demand. ISAP Significant progress was made in the technical and quality performance of theInitiating Systems Automated Plant ("ISAP") and output target are beingachieved. The full savings associated with closure of the conventional plantsand efficiency enhancements will only be optimised by the end of 2013. Thisdelay is the result of the extensive communication required with the affectedunions. Specialty chemicals Revenue increased by 3% to R3 667 million (2012: R3 575 million). Volumesdeclined by 14,5% owing to lower sales of traded sulphur in Central Africa andthe disposal of Resitec and Duco towards the end of 2012. Excluding the sulphurtrading activities, overall specialty chemicals volumes were 5% higher. Profitfrom operations declined by 2% to R389 million (2012: R395 million) and theoperating margin was 10,6% compared to 11% last year due to a lag in foreignexchange-related price increases. The results for the prior period included a once-off profit of R24 million onthe sale of a building. Chemfit, Lake Foods, Lake Specialties, Nulandis and Senmin delivered pleasingperformances. Senmin's results in 2012 were negatively impacted by strikes inthe platinum mining industry but a strong recovery was evident during the firsthalf of 2013. ImproChem delivered a solid result after the integration ofGeneral Electric's Chemical and Monitoring Solutions business in Africa and theIndian Ocean Islands, which was acquired in June 2012. SANS Technical Fibers("STF"), in the USA, is now reported as part of the specialty chemicalscluster. STF's results deteriorated year-on-year because of higher raw materialprices and weaker conditions in the European automotive sector. Other companies in the specialty chemicals cluster remained challenged by thevolatile conditions prevailing in South Africa's manufacturing sector. The acquisition of SA Premix was finalised in June, pending CompetitionCommission approval. SA Premix produces and distributes animal feedformulations that fortify and enhance the nutritional content of feeds. R93 million was invested in capital projects of which R33 million was forexpansion, mainly at STF where a conversion to single stage equipment is inprogress. Property Operating profit showed a pleasing increase of 138% to R50 million (2012: R21million). Of the land sales concluded in the half-year, most were in LonglakeExtensions 1 and 12 at Modderfontein and were predominantly for industrialend-use developments. Longlake Extension 1 will be sold out in the second halfof 2013 as will a significant portion of Westlake Industrial, also atModderfontein. Demand from the industrial and residential property sectors is improving whilethat for office accommodation remains subdued. The leasing and services businesses contributed R82 million to the segment'srevenue. Vacancy rates, at about 20%, were unchanged from the prior period. Property development expenditure of R29 million was incurred, primarily forLonglake 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 forexplosives and mining chemicals. Gearing was at 35% from 51% in June 2012(December 2012: 33%). Working capital was R573 million higher due to the weakerrand, higher ammonia prices and the Group's decision to build inventories tomitigate supply chain disruptions to mitigate potential industrial action inSouth Africa's chemicals industry. Group net working capital as a percentage ofrevenue 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 theprovision for AECI's cash-settled long-term incentive scheme which tracks theshare price and HEPS. Restatement of 2012 comparatives On 1 January 2013, the following accounting standards applicable to the AECIGroup'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 January2012, 30 June 2012 and 31 December 2012 have been restated. The effect of therestatements on year-on-year HEPS was less than 2%. Cautionary announcement On 8 July 2013 the Company issued a cautionary announcement stating that it hasentered into discussions relating to the disposal of the greater portion of itsproperty assets at Modderfontein which are surplus to operational requirements. Discussions regarding this potential disposal are on-going and shareholderswill be advised of the outcome at the appropriate time. They should continue toexercise caution when dealing in AECI shares until an announcement is made. Outlook and strategic focus AECI's explosives and mining chemicals businesses remain poised for furthergrowth outside South Africa notwithstanding the expected limited globaleconomic recovery in the medium term. The positive trends in the local opencastcoal and iron ore mining industries are expected to be sustained. However,conditions for the Group's customers in the narrow reef mining sector willremain challenging owing to weaker commodity prices and escalating costs. The enhancement of the Group's African footprint will continue to receiveattention not only in mining services but also in other markets of strategicinterest, namely food additives; agriculture; personal and home care; and thewater, oil, energy and gas industries. Uncertainty regarding the extent and pace of recovery in the localmanufacturing sector will continue to have an effect on AECI's SouthAfrican-based businesses. Management will maintain its focus on improving cost efficiencies, especiallyin AEL, and optimising cash management by decreasing working capital totargeted levels. Acquisitions in Africa and South America continue to be pursued. Schalk Engelbrecht Mark DytorChairman Chief Executive Woodmead, Sandton23 July 2013 Directors: S Engelbrecht (Chairman), MA Dytor (Chief Executive)†, RMW Dunne*, ZFuphe, KM Kathan (Financial Director)†, MJ Leeming, LL Mda, AJ Morgan, LMNyhonyha, 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 AECIdeclared a gross interim cash dividend of 105 cents per share, in respect ofthe six month period ended 30 June 2013, payable on Monday, 9 September 2013 toordinary shareholders recorded in the books of the Company at the close ofbusiness on Friday, 6 September 2013. The last day to trade cum dividend will be Friday, 30 August 2013 and shareswill commence trading ex dividend as from Monday, 2 September 2013. A South African dividend withholding tax of 15% will be applicable to allshareholders who are not either exempt or entitled to a reduction of thewithholding tax rate in terms of a relevant Double Taxation Agreement resultingin a net dividend of 89,25000 cents per share to those shareholders who are notexempt. Application forms for exemption or reduction may be obtained from theTransfer Secretaries and must be returned to them on or before Friday, 30August 2013. The issued share capital at the declaration date is 128 241 140 listed ordinaryshares and 10 117 951 unlisted redeemable convertible B ordinary shares. Thedividend has been declared from the income reserves of the Company. NoSecondary Tax on Companies' credits are available to be used. Any change of address or dividend instruction must be received on or beforeFriday, 30 August 2013. Share certificates may not be dematerialised or rematerialised from Monday, 2September 2013 to Friday, 6 September 2013, both days inclusive. By order of the Board E N RapooCompany Secretary Woodmead, Sandton23 July 2013 Transfer Secretaries Computershare Investor Services (Pty) Ltd70 Marshall Street(PO Box 82)Johannesburg 2001 Computershare Investor Services PLCThe PavilionsBridgwater RoadBristol BS 99 7NH England Registered Office 1st floor, AECI Place24 The Woodlands Woodlands Drive WoodmeadSandton Sponsor Rand Merchant Bank (A division of FirstRand Bank Limited) Income statement 2013 2012 2012 % First half First half YearR 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 - (138) (138)(4) 612 339 1 059 Interest expense (97) (118) (256) Interest received 16 20 38 Share of profit of 20 23 57equity- accountedinvestees, net of tax Profit before tax 551 264 898 Tax expense (150) (128) (309) Profit for the period 401 136 589 Profit for the periodattributable to: - ordinary shareholders 398 134 581 - preference 1 1 2shareholders - non-controlling 2 1 6interest 401 136 589 Headline earnings arederived from: Profit attributable to 398 134 581ordinary shareholders Impairment of goodwill - 4 9 Impairment of - - 3property,plant andequipment Surplus on - - (15)derecognition ofbusinesses, jointventures andsubsidiaries disposedof Surplus on disposal of 1 (23) (18)property, plant andequipment Tax effects of the * 3 2above items Headline earnings 399 118 562 Per ordinary share(cents): Headline earnings +236 356 106 503 Diluted headline 333 102 479earnings 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 YearR millions Unaudited Restated(2) Restated(2) Profit for the period 401 136 589 Other comprehensive income net oftax: 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 (17) (47) (101)Provisions 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 asheld 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 35 28 37 198interest Preference share 6 6 6 6capital 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 7 17 * 2ventures 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 (11,9) (11,9) (11,9)company 116,3 116,3 116,3 Unlisted redeemable convertibleordinary shares At the beginning of the period 10,1 - - Issued during the period for EST - 10,1 10,1transactions(4) At the end of the period 10,1 10,1 10,1 Treasury shares held by consolidated (10,1) (10,1) (10,1)EST(4) - - - 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 258 159 130equipment leased - 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 5 347 4 517 4 914(cents) 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 (273) (253) (139) (117)inter-segment 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 1 (3)inter-segment 8 590 8 171 Net assets consist of property, plant, equipment, investment property,intangible assets, goodwill, inventory, accounts receivable and prepayment forbusiness combination less accounts payable. Specialty fibres (USA) has been reported as part of the Specialty chemicalssegment effective from 1 January 2013, the comparatives have been adjustedaccordingly. 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 (2) 2 -for post-retirement medical aidliabilities 377 (38) 339 Interest expense (121) 3 (118) Interest received 21 (1) 20 Share of profit of equity-accounted - 23 23investees, net of tax Profit before tax 277 (13) 264 Tax expense (139) 11 (128) Profit for the period 138 (2) 136 Profit for the period attributableto: - 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 andsubsidiaries disposed of Surplus on disposal of property, (23) - (23)plant and equipment 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 (6) 6 -for post-retirement medical aidliabilities 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 attributableto: - 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 (15) - (15)businesses, joint ventures andsubsidiaries disposed of Surplus on disposal of property, (18) - (18)plant and equipment 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 oftax: Items that may be reclassifiedsubsequently to profit or loss: Foreign currency translation Differences (1) - (1) Other 1 - 1 Items that will not be reclassifiedsubsequently to profit or loss: Actuarial gain on defined benefit - 2 2obligations Total comprehensive income for the 138 - 138period Total comprehensive incomeattributable 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 41 - 41differences 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 incomeattributable 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 (393) - (393)non-controlling interest to equity(5) Share-based payment reserve 10 - 10 Transfer to retained earnings for CST 138 - 138share-based payment 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 679 - 679period 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 (98) (3) (101)provisions Cash (utilised)/available from 930 (47) 883operating activities 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 245 - 245accounts 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 135 - 135(6) 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 267 - 267accounts 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 259 - 259accounts 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 consolidatedunaudited interim financial results are prepared in accordance withInternational Financial Reporting Standards, IAS 34: Interim FinancialReporting, the SAICA Financial Reporting Guides as issued by the AccountingPractices Committee, the Listings Requirements of the JSE Limited and therequirements of the Companies Act of South Africa. Accounting policies havebeen applied consistently by all entities in the Group and are consistent with those applied in the previous reportingperiod, apart from the adoption of the new accounting standards as detailedbelow. This interim report has not been audited or reviewed by the Company'sauditor, KPMG Inc. This interim report for the six months ended 30 June 2013 is being published on 24 July 2013. The preparation of thesecondensed consolidated unaudited interim financial results for the periodending 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 beenapplied retrospectively to adjust the income statement, statement ofcomprehensive income, statement of changes in equity, statement of financialposition 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 itsprevious accounting policy, AECI elected to recognise its defined-benefit costsin the income statement, and applied the asset limitation in recognising thedefined-benefit pension fund assets in the statement of financial position. Theliability for thepost-retirement medical aid was recognised in the statement offinancial position. The income statement effects were recognised in profit from operations exceptfor the net return on the employer surplus accounts and the net return on thepost-retirement medical aid which were separately disclosed after profit fromoperations. Under the revised IAS 19, the basis of calculation of finance costshas been altered and is determined by applying the discount rate used tomeasure the defined-benefit obligation to the net defined-benefit asset/obligation at the beginning of the period. Profit from operations now includesonly the current service cost and the net interest of the defined-benefit asset/liability. Remeasurements of the net defined-benefit asset/liability are nowrecognised in other comprehensive income. There are no amendments to thestatement 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 FinancialStatements and IAS28: Investment in Associates and Joint Ventures effectivefrom 1 January 2013. In terms of IFRS 11, the proportionate consolidation ofjoint arrangements is no longer permitted. Joint arrangements are nowclassified as either joint ventures or joint operations. Joint ventures arerequired to be equity accounted. For joint operations, AECI recognises itsshare of assets, liabilities, revenue and expenses. This is done on aline-by-line basis. Equity accounting of AECI's joint ventures has resulted ina restatement of the income statement, statement of comprehensive income,statement of changes in equity, statement of financial position and statementof cash flows for June 2012 and December 2012. (3) Includes foreign and export revenue of R2 348 million (2012 first halfrestated: R1 944 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 theCompany in2012. The shares vested immediately and a share-based paymentexpense of R138million (2012 first half) was recognised in full in the income statement. Theseshares are contingently returnable and, as a result, are excluded from EPS andHEPS. EST share-based payment: The AECI Employees Share Trust ("EST") subscribed for10 117 951 unlisted B ordinary shares of the Company. The total cost isestimated at R143 million of which R15 million (2012 first half: R10 million)was recognised in the income statement. The remainder of the expense is beingrecognised in future periods over the respective vesting periods. (5) The Kagiso Tiso Holdings Proprietary Limited (RF) ("KTH") transaction inthe 2012 financial year involved the purchase by AECI of the 25,1% interestheld in AEL Holdco Limited by a KTH-led consortium in exchange for 4 678 667ordinary shares in AECI. The shares issued were recognised in equity, with R5million allocated to share capital and R388 million allocated to share premium.The non-controlling interest was reduced by the carrying amount of R172million, with the balance of R221 million recognised directly in retainedearnings. (6) The prepayment for business combination at 30 June 2012 related to apayment made for the acquisition of General Electric's Chemical and MonitoringSolutions business in Africa. (7) The preparation of the condensed consolidated unaudited interim financialstatements requires management to make judgements, estimates and assumptionsthat affect the application of policies and reported amountsof assets andliabilities, income and expenses. The estimates and associated assumptions arebased on historical experience and various other factors that are believed tobe reasonable under the circumstances, the results of which form the basis ofmaking the judgements about carrying values of assets and liabilities that arenot readily apparent from other sources. Actual results may differ from theseestimates.