| Thu 1 Mar 2001, 0:00 | | Avmin - Interim Report |
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Anglovaal Mining Limited
(Reg. No. 1933/004580/06)
("Avmin" or "the Company")
INTERIM REPORT
For the half-year ended 31 December 2000
HIGHLIGHTS
EARNINGS INCREASE BY 92% TO R146 MILLION
HEADLINE EARNINGS INCREASE 38% TO R134 MILLION
ASSMANG EARNINGS INCREASE BY 194% TO R106 MILLION
NKOMATI'S PROFIT BEFORE TAX UP 198% TO R137 MILLION
CHAMBISHI METALS' COMMISSIONING PROCESS WELL UNDERWAY
TARGET GOLD MINE AHEAD OF SCHEDULE AND
SIGNIFICANT NEW RESOURCES IDENTIFIED
GROUP INCOME STATEMENT
Unaudited Audited
Half-year ended Year ended
31 December 30 June
2000 1999 Increase/ 2000
Restated* (Decrease)
Rm Rm % Rm
Revenue 1 224 1 263 (3) 2 934
Cost of sales 891 1 011 (12) 2 119
Gross profit 333 252 32 815
Other operating income 70 45 56 76
Other operating expenses 149 143 4 289
Profit from operations 254 154 65 602
Income from investments 89 28 218 183
Finance costs 60 33 82 72
Profit before exceptional items 283 149 90 713
Exceptional items 12 (26) 146 3 648
Profit before taxation 295 123 140 4 361
Taxation 94 36 161 324
Profit after taxation 201 87 131 4 037
Minority interest 55 11 400 57
Earnings 146 76 92 3 980
Headline earnings 134 97 38 486
Earnings per share (cents) 135 72 3 723
Headline earnings
per share (cents) 124 91 455
Fully diluted earnings
per share (cents) 131 70 3 592
Fully diluted headline earnings
per share (cents) 121 89 439
Dividends per share (cents) - - 1 123
Number of shares in issue at
end of period (thousands) 108 409 107 399 107 610
Weighted average number of
shares in issue (thousands) 108 050 106 284 106 889
Weighted average number
of shares used in calculating
fully diluted earnings
per share (thousands) 111 071 108 391 110 805
*Refer to note 1 of the notes to the financial statements.
GROUP BALANCE SHEET
Unaudited Audited
at 31 December at 30 June
2000 1999 2000
Restated*
Rm Rm Rm
ASSETS
Non-current assets
Tangible and intangible fixed assets 4 867 3 072 3 916
Loans and long-term receivables 3 2 2
Deferred tax assets 13 34 22
Environmental rehabilitation
trust funds 51 39 51
Investments 252 53 57
5 186 3 200 4 048
Current assets
Inventories 746 592 586
Trade and other receivables 449 673 640
Taxation 7 5 3
Deposits and cash 923 219 4 160
2 125 1 489 5 389
Total assets 7 311 4 689 9 437
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 5 5 5
Preference share capital 4 4 4
Share premium 51 1 743 51
Non-distributable reserves 73 50 56
Distributable reserves 3 118 274 2 971
Shareholders' interest in
capital and reserves 3 251 2 076 3 087
Minority interest 1 413 1 129 1 185
Total shareholders' interest 4 664 3 205 4 272
Non-current liabilities
Long-term borrowings - interest bearing 955 374 556
- non-interest bearing 5 11 6
Deferred tax liabilities 297 209 289
Long-term provisions 201 151 202
1 458 745 1 053
Current liabilities
Trade and other payables 291 371 493
Short-term provisions 101 118 -
Taxation 103 24 194
Shareholders for dividends - - 2 905
Overdrafts and short-term borrowings 694 226 520
1 189 739 4 112
Total equity and liabilities 7 311 4 689 9 437
*Refer to note 1 of the notes to the financial statements
GROUP CASH FLOW STATEMENT
Unaudited Audited
Half-year ended Year ended
31 December 30 June
2000 1999 2000
Rm Rm Rm
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers 1 514 1 208 2 878
Cash paid to suppliers and employees 1 309 1 074 2 246
Cash generated from operations 205 134 632
Interest received 88 27 172
Interest paid (60) (33) (72)
Dividends received 1 1 11
Capital distribution (1 697) - -
Dividends paid (1 217) (36) (41)
Taxation paid (178) (47) (68)
Net cash (out)/inflow from
operating activities (2 858) 46 634
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from disposal of subsidiaries,
net of cash disposed - - 17
Proceeds from sale of
Hartebeestfontein mine - - 304
Proceeds on sale of joint venture 16 - -
Additions to fixed assets
to maintain operations (198) (111) (312)
Additions to fixed assets
to expand operations (732) (323) (973)
Proceeds on disposal of fixed assets 1 36 43
Proceeds on disposal of investments 5 282 3 732
Other investments acquired (197) (45) (63)
Net cash (out)/inflow from
investing activities (1 105) (161) 2 748
CASH FLOW FROM FINANCING ACTIVITIES
Increase in shareholder funding - 7 9
Funding received from
minority shareholders 176 - 14
Long-term borrowings raised 376 2 160
Long-term borrowings repaid (3) (3) (6)
Increase/(decrease) in
short-term borrowings 178 (106) 163
(Increase)/decrease in loans
and long-term receivables (1) (2) 2
Net cash in/(outflow) from
financing activities 726 (102) 342
Net (decrease)/increase in cash and
cash equivalents (3 237) (217) 3 724
Cash and cash equivalents at
beginning of period 4 160 436 436
Cash and cash equivalents at
end of period 923 219 4 160
Cash generated from operations
per share (cents) 190 126 591
STATEMENT OF CHANGES IN EQUITY
Share Foreign Revalu-
capital and currency ation Retained
premium translation surplus Other profit Total
Rm Rm Rm Rm Rm Rm
Half-year ended 31 December 2000
Balance at 30 June 2000 60 6 3 47 2 971 3 087
Foreign currency translation
reserve - 17 - - - 17
Earnings - - - - 146 146
Other movements - - - - 1 1
Balance at 31 December 2000 60 23 3 47 3 118 3 251
Half-year ended 31 December 1999
Balance at 30 June 1999
previously reported 1 701 (2) 6 94 202 2 001
Change in accounting
policies - - (3) - (2) (5)
Restated balance 1 701 (2) 3 94 200 1 996
Foreign currency translation
reserve - 2 - - - 2
Earnings - - - - 76 76
Share issues net of expenses 2 - - - - 2
Share election reserve 49 _ _ (49) - -
Other movements - - - 2 (2) -
Balance at 31 December 1999
restated 1 752 - 3 47 274 2 076
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION AND CHANGE IN ACCOUNTING POLICIES
The financial information for the half-year ended 31 December 2000 has been
prepared adopting the same accounting policies used in the most recent annual
financial statements. During the year to 30 June 2000 the Group changed its
accounting policies to account for the decommissioning of mining assets, the
amortisation of non-specialised buildings and the recognition of deferred tax
on all temporary differences. These changes had no significant effect on the
Group earnings, but the Group balance sheet for the half-year ended 31 December
1999 has been restated. The interim financial report has been prepared in
compliance with the South African Statement of Generally Accepted Accounting
Practice, AC 127 - Interim Financial Reporting. Certain amounts reported in
respect of the previous period have been reclassified to bring reporting for
that period into line with the disclosure presented for the current period and
the most recent financial year end.
Unaudited Audited
Half-year ended Year ended
31 December 30 June
2000 1999 2000
Rm Rm Rm
2. HEADLINE EARNINGS
Earnings per income statement 146 76 3 980
Impairment of assets - - 6
Inventory written down - - 6
Investments written down - - 7
Restructuring costs
- insurance commissions - - 6
Surplus on disposal of investments (12) 21 (3 668)
134 97 337
Taxation - - 140
Minority interest - - 9
Headline earnings 134 97 486
3. INVESTMENTS
Listed 249 43 52
Unlisted 3 10 5
Total carrying amount of investments 252 53 57
Market value of listed investments 394 151 131
Corporate
Base Ferrous explo- Corporate
Rm Gold metals metals ration and other Total
4. SEGMENTAL INFORMATION
Primary segmental information
Half-year ended
31 December 2000
Revenue 105 333 786 - - 1 224
Segment result 19 73 203 (11) (30) 254
Interest received 1 3 1 - 83 88
Dividends received - - 1 - - 1
Finance costs - (7) (31) - (22) (60)
Exceptional items - - - - 12 12
Taxation - (20) (55) - (19) (94)
Minority interest (4) 2 (53) - - (55)
Contribution to earnings 16 51 66 (11) 24 146
Contribution to
headline earnings 16 51 66 (11) 12 134
Other information
Consolidated total assets 2 306 1 806 2 092 - 1 107 7 311
Consolidated total
Liabilities 177 1 223 1 016 - 231 2 647
Capital expenditure 267 432 229 - 2 930
Depreciation 1 26 42 - 2 71
CONTRIBUTIONS TO EARNINGS
GRAPHIC: SEE PRESS FOR DETAIL
COMMENTARY
REVIEW FOR THE HALF-YEAR ENDED 31 DECEMBER 2000
A strong operating performance from the ferrous metals division and the Nkomati
mine, coupled with a weak South African rand, increased Anglovaal Mining
Limited's (Avmin) earnings by 92 per cent to R146 million for the half-year
ended 31 December 2000, despite average commodity prices for most products
being lower in US dollar terms. Earnings for the six months ended 31 December
1999 totalled R76 million, which included diamond royalty income from The
Saturn Partnership that was sold during the second half of the last financial
year.
Headline earnings, which exclude the surplus from the sale of investments
during the period, rose to R134 million (31 December 1999: R97 million).
Earnings per share rose 88 per cent to 135 cents (72 cents per share) and
headline earnings per share were higher at 124 cents (91 cents per share).
REVIEW OF OPERATIONS
FERROUS METALS
The Associated Manganese Mines of South Africa Limited (ASSMANG)
Supported by a favourable US$-rand exchange rate and a stringent cost control
programme, Assmang reported a 194 per cent increase in earnings to R106 million
(R36 million) for the period. With higher unit sales prices and lower costs,
margins were an important feature of Assmang's performance. Net operating
profit before depreciation more than doubled to R233 million (R111 million).
Sales volumes of manganese ore rose to 0,6 million tons (0,5 million tons), but
iron ore sales declined to 1,8 million tons (2 million tons). Sales of
manganese alloys decreased slightly to 85 000 tons from 88 000 tons, while
chrome alloys were lower at 45 000 tons (49 000 tons).
The new Dwarsrivier opencast chrome mine and beneficiation plant has been
commissioned and the supply of ore to its chrome alloys division has commenced.
The R375 million expansion programme at the chrome alloys division is also
ahead of schedule and due for commissioning during the second half of this
calendar year. In addition, the new R517 million shaft complex at the Nchwaning
manganese mine is on track for its scheduled opening in late 2003.
It is anticipated that Assmang's strong performance will continue with second
half results to 30 June 2001 likely to match those of the first half.
BASE METALS
The Nkomati mine had an exceptionally good half-year with final sales tonnages
of 2 292 tons (1 710 tons) of nickel and 1 284 tons (882 tons) of copper. The
increased mining tonnages, a weaker South African rand and strong platinum
group metal (PGM) prices (Nkomati sold about 18 670 ounces of PGMs during the
period) all resulted in Nkomati's profit before taxation surging to R137
million (R46 million). Nkomati has now achieved full tax paying status and its
total earnings amounted to R96 million (R32 million).
An initial feasibility study on expanding the current Nkomati mine complex by
the open pit mining of 150 000 and then 200 000 tons per month and installing
associated plant facilities was completed last year. The joint venture partners
have reviewed this study favourably, but have asked the project team to
investigate increasing the underground mining tonnages to 75-80 000 tons per
month in addition to the open pit tonnages. The revised feasibility report
should be available to the partners in September of this year.
The Chambishi Metals Plc toll-refining operation experienced a difficult
half-year. This was mainly due to lower concentrate grades and quantities of
feed material from third parties. The plant produced 1 500 tons (976 tons) of
cobalt and 5 840 tons (3 580 tons) of copper for its clients. Chambishi Metals
received an average cobalt price of US$11,47/lb for the period and the plant
reported a net operating loss after taxation of R21 million (nil) for the
half-year.
Chambishi Metals has virtually completed the new and expanded facility to treat
its 20 million ton surface slag deposit. Commissioning of the feed preparation
plant commenced in October 2000. By the end of January 2001 the first alloy was
tapped from the furnace. The remaining construction and commissioning
activities focussed on the downstream leach plant are on schedule, with the
first saleable metal production from slag due in March 2001.
Precious Metals
Avgold Limited
A higher gold price and well maintained costs helped reverse Avgold's R23
million headline earnings loss in the six months ended 31 December 1999 into a
R11,5 million profit for the comparable six months in 2000. Gold sales from
operations, now being derived only from the ETC mining complex, totalled 1
432kg (3 527kg) at a cash cost of US$249/oz (US$296/oz). During the last
quarter of the six months period, Avgold achieved a cash cost of US$222/oz, a
trend that is continuing into the second-half of the year. The average rand
gold price received for the period was higher at R73 129/kg (R60 787/kg), or
US$314/oz (US$310/oz).
The rate of development advance by mine crews at the new Target mine continues
ahead of schedule and plan.
Avgold successfully completed a rights issue at the end of October 2000 to
provide R500 million of funding for the new Target mine. The remaining funds
required for the completion of Target will be financed by a five-year facility
of R700 million made available in US dollars and rands, which has been signed.
External consultants have finalised an assessment of the resources to the
immediate north of the Target mine declines. This information has enabled the
resources for the newly named Paradise area to be augmented. The indicated and
inferred total resource of the Paradise area is 13,8 million ounces (from a
previous calculation of 7,2 million ounces) at an average grade of 10.02g/t
(previously 7.37g/t). The main increase is in the Elsburg Reefs, which are
within 2 500m of surface. These results suggest that the Eldorado Fan extends
further north than previously anticipated. A pre-feasibility study has been
completed on the Paradise area to assess the viability of increasing Target's
production from 350 000 ounces of gold a year to 500 000 ounces. An important
feature of this is that Target's life of mine could extend from the current 13
years to over 40 years.
ACQUISITION OF ISCOR SHARES
During December 2000 and January 2001, Avmin acquired a total of 35 293 300
(13,7 per cent) ordinary shares in Iscor Limited for a cash consideratoin of
R490,6 million, which was funded from existing cash resources. An alliance has
been formed with the Industrial Development Corporation of South Africa Limited
to pursue strategies for unlocking value in Iscor.
DIRECTORATE
On 27 November 2000, Roy Oron was appointed as a non-executive director of
Avmin and, on 1 February 2001, David Murray was appointed as an executive
director. Mr Murray also assumed his position as President and Chief Operating
Officer of the Company from that date.
PROSPECTS FOR THE REMAINDER OF THE YEAR
Operating results for the current half-year to 30 June 2001 are expected to
show a slight improvement over the first six months period. This will be due to
continued strong performances from the ferrous metals division and the Nkomati
mine, maintaining the positive momentum at Avgold's ETC mine, and the
commissioning to full production, over the next few months, of the new facility
at Chambishi Metals. However, overall earnings over the next six months are
expected to be slightly reduced due to lower interest earnings.
For and behalf of the board:
Kennedy W Maxwell Richard P Menell
Chairman Deputy Chairman and Chief Executive Officer
Johannesburg
1 March 2001
Registered office:
Anglovaal Mining Limited, 56 Main Street, Johannesburg 2001
Directors:
KW Maxwell (Chairman), RP Menell (Deputy Chairman and Chief Executive Officer),
DN Murray (Chief Operating Officer), DE Jowell, Dr TV Maphai, JR McAlpine, BM
Menell, Dr MZ Nkosi, R Oron. Company Secretary: SE Sather
