| Thu 14 Feb 2002, 0:00 | | Kumba Resources Limited - Interim Financial Result |
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Kumba Resources Limited
Registration number 2000/011076/06
SHARE CODE: KMB ISIN CODE: ZAE000034310
Interim financial Results
For the six months ended 31 December 2001
Harnessing the power of the earth
- Highlights
- Revenue up 20%
- Operating profit up 114%
- Headline earnings up 150%
Anchor empowerment deal finalised
COMMENTS
GROUP RESULTS
- Net operating profit in all segments was higher in the second quarter than
reported in the first quarter. Revenue increased by 41% and net operating
profit by 104%.
- For the six months reporting period, operating results showed a
significant improvement compared to the same period last year. Revenue
increased by 20%, while net operating profit improved by 114%.
- Headline earnings for the period more than doubled to R487 million (177.7
cents per share) from last year's first half earnings of R195 million (74.4
cents per share).
- Net debt decreased by R177 million to R2 364 million from R2 541 million
at 30 June 2001 after capital expenditure of R437 million, which included a
R263 million investment in the heavy minerals project.
SEGMENT RESULTS
Year
Quarter ended Six months ended ended
31 Dec 30 Sep 31 December 30 June
2001 2001 2001 2000 2001
Rm Rm Rm Rm Rm
REVENUE
Iron ore 1 128 804 1 932 1 384 2 944
Coal 356 323 679 634 1 241
Base metals 251 210 461 554 945
Heavy minerals 32 8 40
Other 87 22 109 154 274
Intra group (13) (59) (72) (99)
Total 1 841 1 308 3 149 2 627 5 404
NET OPERATING PROFIT
Iron ore 380 221 601 307 699
Coal 70 60 130 44 100
Base metals 15 13 28 55 98
Heavy minerals 21 (21) (14)
Other 34 (6) 28 5 (190)
Group (38) (31) (69) (61) (123)
Total 482 236 718 336 584
The comparative periods include the effect of the agreement in respect of
the iron ore tonnage supplied to Iscor Ltd from Sishen mine.
Iron ore
Iron ore exports in the quarter ended 31 December 2001 improved by 823 000
tons over those of the first quarter while domestic sales were stable. A
comparison of the six months with the same period last year shows a similar
trend, with exports having increased by over 1.5 million tons.
Sishen mine performed well and established new rail and sales records during
the reporting period. This, together with the favourable exchange rate and
cost containment, resulted in a substantial improvement of 96% in net
operating profit.
The expansion project at Sishen is more than 95% complete and the planned
capacity of 27 million tons per annum by July 2003 is expected to be
achieved on schedule.
The feasibility study for the development of a new mine, Sishen South, is
scheduled for completion by December 2002.
Coal
The increased supply of thermal coal to Eskom's Matimba power station from
Grootegeluk was the main contributor to higher coal production and sales for
the reporting period.
The improved net operating profit of 195% is as a result of the increase in
sales to the domestic market, higher domestic prices, depreciation of the
Rand, and a strong focus on cost reduction. Unit costs were significantly
below PPI levels.
Kumba Coal is a participant in the phase 5 expansion programme (10 million
tons per annum) at the Richards Bay Coal Terminal, and will have access to 2
million tons per annum. This project, which is scheduled for completion by
early 2004, will both facilitate greater participation in the export sector
and reduce logistical costs.
In accordance with a memorandum of understanding entered into between Kumba
Coal and Eyesizwe Mining, the potential benefits that might flow from the
merging of their respective coal businesses are being assessed.
Base metals
Production of zinc metal improved by 6% over the comparable six month period
in 2000, while lead concentrate production grew by 56%.
Notwithstanding Zincor's position at the bottom of the global cost curve,
the financial performance of the business was adversely affected by the
dramatic collapse in the London Metal Exchange price of zinc to a 20 year
low in nominal terms. This led to a 49% decline in net operating profit for
the period.
Heavy minerals
The commissioning of the Hillendale mine and mineral separation plant at
Empangeni has been successfully completed ahead of schedule and within
budget. Marketable quality ilmenite, rutile and zircon are being produced
and full capacity is expected to be achieved in March 2002.
Current market conditions for ilmenite are depressed and have resulted in
lower crude ilmenite sales. The surplus ilmenite will ultimately be
converted by the smelter into higher value titanium dioxide slag. The
construction of the first furnace of the smelter is being fast-tracked for
commissioning ahead of the scheduled date of March 2003.
In terms of the agreement concluded with Ticor Ltd of Australia (in which
Kumba owns a 46.47% interest), for the acquisition of a 40% interest in the
project, Ticor has assumed management and operational responsibility.
PROSPECTS
Stringent cost management, together with stable operational performance and
prevailing exchange rates, should have the effect of headline earnings being
maintained for the remainder of the year.
DIVIDEND
Dividends are considered annually in August and are based on the full year's
results taking cognisance of cash flow available to reduce debt.
POST-LISTING SHARE ISSUES
Ten million shares were issued to the Industrial Development Corporation of
South Africa Limited in December 2001 on behalf of Iscor as final settlement
for the acquisition of the mining assets from Iscor as contemplated in the
pre-listing statement of Kumba Resources issued on 29 October 2001. This
increased the shares in issue at the end of the reporting period to 282 821
716.
The Tiso Consortium, a broad based empowerment group, subscribed for a 5%
shareholding in Kumba Resources (after the reporting period) at a price of
R393 million increasing the issued shares to 296 962 801.
On behalf of the Board
H J Smith (Chairman)
Dr C J Fauconnier (Chief Executive)
D J van Staden (Executive Director, Finance)
14 February 2002
GROUP INCOME STATEMENT
Six months ended Year ended
31 December 30 June
2001 2000 2001
unaudited pro forma pro forma
Rm Rm Rm
Revenue 3 149 2 627 5 404
Operating expenses 2 431 2 291 4 820
Net operating profit 718 336 584
Net financing costs (152) (131) (271)
Exceptional items 72
Goodwill amortisation (12) (23) (27)
Share of pre-taxation income
from equity accounted investments 53 70 137
Profit before taxation (note 1) 607 252 495
Taxation (149) (79) (107)
Profit after taxation 458 173 388
Outside shareholders' interest 1 (1)
Net profit attributable
to ordinary shareholders 459 172 388
Adjusted for:
- Exceptional items (72)
- Goodwill amortisation 12 23 27
- Net deficit on disposal or scrapping
of property, plant and equipment 2 203
- Share of associate's goodwill 14 40
- Share of associate's exceptionals (14)
- Taxation on adjustments (61)
Headline earnings 487 195 511
Ordinary shares (million)
- in issue 283 272 272
- weighted average number of shares 274 262 262
- diluted weighted average
number of shares 276 262 262
Attributable earnings per share (cents)
- basic 167.5 65.6 148.1
- diluted 166.5 65.6 148.1
Headline earnings per share (cents)
- basic 177.7 74.4 195.0
- diluted 176.6 74.4 195.0
GROUP BALANCE SHEET
As at
As at 31 December 30 June
2001 2000 2001
unaudited pro forma pro forma
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 5 398 4 122 4 987
Goodwill 35 58 47
Investments in associates and
joint ventures (note 2)
- listed 1 320 779 804
- unlisted 15 30 6
Other financial assets 394 192 294
7 162 5 181 6 138
Current assets
Cash and cash equivalents 547 80
Other 1 837 1 210 1 577
Total assets 9 546 6 471 7 715
EQUITY AND LIABILITIES
Capital and reserves
Shareholders' funds 4 234 3 431 3 270
Minority interest 362 4 349
Non-current liabilities
Interest-bearing borrowings 1 729 981 1 242
Non-current provisions 392 354 398
Deferred taxation 626 481 727
7 343 5 251 5 986
Current liabilities
Interest-bearing borrowings 1 182 674 1 299
Other 1 021 546 430
Total equity and liabilities 9 546 6 471 7 715
Net debt 2 364 1 575 2 541
Net asset value per share (cents) 1 496 1 261 1 202
Capital expenditure
- incurred 437 562 1 297
- contracted 708 842 293
- authorised but not contracted 1 459 620 393
Contingent liabilities 48 119 29
Operating lease commitments 135 201 161
GROUP CASH FLOW statement
Six months ended
31 December
2001
unaudited
Rm
Net cash flow from operating activities 640
Net cash used in investing activities
- capital expenditure (437)
- proceeds from disposal of property, plant and equipment 9
- other (35)
Net cash inflow 177
Net cash flow from financing activities
- unbundling expenses (43)
- borrowings raised 489
Net increase in cash and cash equivalents 623
Cash and cash equivalents at beginning of period (76)
Cash and cash equivalents at end of period 547
GROUP STATEMENT OF CHANGES IN EQUITY
31 December
2001
unaudited
Rm
Shareholders' funds on unbundling from Iscor 1 400
Changes in share capital and premium
- issue of shares 3
- share premium 2 328
- unbundling expenses (43)
Changes in non-distributable reserves
- discount on acquisition of investment 49
- currency translation reserve (74)
- financial instruments' movements 112
- transfer of equity accounted earnings 22
Changes in retained income
- net profit for the period 459
- transfer of equity accounted earnings (22)
Shareholders' funds at end of period 4 234
NOTES TO THE FINANCIAL STATEMENTS
Six months ended Year ended
31 December 30 June
2001 2000 2001
unaudited pro forma pro forma
Rm Rm Rm
Note 1
Profit before taxation is arrived at after
- depreciation (208) (171) (340)
- financing costs (169) (167) (282)
- interest received 17 36 11
Note 2
Listed investments
- market value 1 378 997 1 049
Unlisted investments
- directors' valuation 44 52 42
Additional notes to the interim financial results
1. Pro forma comparative figures for the year ended 30 June 2001 are shown
as per the Kumba pre-listing statement dated 29 October 2001.
2. The interim financial results are prepared in accordance with
International Accounting Standard 34 on Interim Financial Reporting and
should be read in conjunction with the 2001 annual financial statements of
Iscor Ltd. The accounting policies used are consistent with those applied by
Iscor at its previous year-end.
3. Iscor retained an undivided share in iron ore rights at Sishen mine
entitling it to 6.25 million ton per annum of iron ore from 1 July 2001 at
cost plus a management fee.
4. During the period the company and its subsidiaries, in the ordinary
course of business, entered into various sale and purchase transactions with
associates and joint ventures. These transactions were subject to terms that
are no less favourable than those arranged with third parties.
5. Net debt is calculated as being interest-bearing debt less cash and cash
equivalents.
6. Pro forma comparative figures for the cash flow statement and the
statement of changes in equity are not shown as it is not meaningful.
PHYSICAL INFORMATION
Three months ended Six months ended Year ended
31 Dec 30 Sep 31 December 30 June
2001 2001 2001 2000 2001
unaudited unaudited unaudited unaudited unaudited
'000 tons '000 tons '000 tons '000 tons '000 tons
IRON ORE
Production 6 590 6 977 13 567 12 983 27 044
Sales
- Export 5 349 4 526 9 875 8 363 18 057
- Domestic 2 180 2 174 4 354 4 022 7 924
Total 7 529 6 700 14 229 12 385 25 981
COAL
Production
- Power
station 3 217 3 502 6 719 5 991 12 037
- Coking 524 538 1 062 1 147 2 126
- Other 705 742 1 447 1 456 2 833
Total 4 446 4 782 9 228 8 594 16 996
Sales
- Eskom 3 067 3 304 6 371 5 878 11 934
- Other
domestic 954 982 1 936 2 010 3 888
- Export 340 215 555 644 1 115
Total 4 361 4 501 8 862 8 532 16 937
BASE METALS
Production
- Zinc
concentrate 17 20 37 38 72
- Zinc metal 27 27 54 51 105
- Lead
concentrate 7 7 14 9 22
Zinc metal sales
- Domestic 25 22 47 45 89
- Export 3 3 6 6 17
28 25 53 51 106
HEAVY MINERALS
Production
- Ilmenite 11 28 39
- Zircon 14 4 18
- Rutile 5 2 7
Sales
- Export 12 10 22
Registered office Kumba Resources Limited
Roger Dyason Road
Pretoria West, Pretoria, 0002
Postal Address PO Box 9229
Pretoria, 0001, South Africa
Tel no +27 12 307 5000
Fax no +27 12 307 4080
Transfer secretaries Mercantile Registrars Limited
First National House, 11 Diagonal Street, Johannesburg, 2001
PO Box 1053, Johannesburg, 2000
Directors H J Smith (Chairman), Dr C J Fauconnier (Chief Executive), T L de
Beer, C T Fenton, J J Geldenhuys, G S Gouws, M J Kilbride*, Dr D Konar, M L
D Marole, C F Meintjes*, A J Morgan, S A Nkosi, Prof N S Segal, D J van
Staden*, R G Wadley*
Company Secretary M S Viljoen
*Executive
This report is available at Kumba Resources worldwide website at:
www.kumbaresources.com
