| Mon 9 Dec 2002, 15:55 | | South African Chrome & Alloys Limited - Unaudited |
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South African Chrome & Alloys Limited - Unaudited results for the six months
ended 30 September 2002 Group abridged income statement
SOUTH AFRICAN CHROME & ALLOYS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/003452/06)
("SA Chrome")
Share Code: SCE
ISIN Number: ZAE 000022943
Unaudited results for the six months ended 30 September 2002
Group abridged income statement
6 months to 6 months to 13 months to
30 September 31 August 31 March
2002 2001 2002
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue 47,368 31,714 44,643
Operating loss (24,874) (4,169) (16,747)
Net financing (23,055) 6,181 160
(costs)/income
Profit before (47,929) 2,012 (16,587)
exceptional items
Exceptional items - (808) (6,535)
Net (loss)/income (47,929) 1,204 (23,122)
before tax
Taxation - - -
Net (loss)/income after (47,929) 1,204 (23,122)
exceptional items
Transfer from non- - 60 60
distributable reserves
Net (loss)/income for (47,929) 1,264 (23,062)
the period
(Loss)/earnings per (4.80) 0.15 (2.54)
share (cents)
Headline (4.80) 0.24 (1.82)
(loss)/earnings per
share (cents)
Ordinary shares in 998,566,822 997,900,166 998,566,822
issue
Weighted average for 998,566,822 822,073,632 911,400,085
period
Note 1: Taxation has not been provided for due to estimated assessed losses
Group abridged balance sheet
As at As at As at
30 September 31 August 31 March
2002 2001 2002
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
NON-CURRENT ASSETS 685,996 295,987 647,824
Options, minerals and 258 258 258
participation rights
Property, plant and equipment 668,397 280,945 630,960
Investments 14,657 14,401 14,401
Long-term receivables 2,684 383 2,205
CURRENT ASSETS 100,108 139,617 93,960
Inventories 57,416 10,116 23,076
Accounts receivable 32,245 17,764 24,264
Bank and cash 10,447 111,737 46,620
786,104 435,604 741,784
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 315,682 387,640 363,611
Share capital 9,986 9,979 9,986
Share premium 407,350 407,058 407,350
Non-distributable reserves 1 1 1
Accumulated loss (101,655) (29,398) (53,726)
NON-CURRENT LIABILITIES
Long-term liabilities 347,066 9,179 284,229
CURRENT LIABILITIES 123,356 38,785 93,944
Accounts payable 86,907 32,142 63,418
Bank overdraft - 1,381 -
Short-term borrowings 36,449 5,262 30,526
786,104 435,604 741,784
Net asset value per share 31.6 38.8 36.4
(cents)
GROUP ABRIDGED CASH FLOW STATEMENT
6 months to 6 months to 13 months to
30 September 31 August 31 March
2002 2001 2002
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash utilised by (38,866) (10,581) (30,765)
operations
Net interest (23,055) 6,181 160
(paid)/received
Cash flows from operating (61,921) (4,400) (30,605)
activities
Cash flows from investing (43,012) (201,937) (523,644)
activities
Cash flows from financing 68,760 315,608 599,785
activities
Net (decrease)/increase (36,173) 109,271 45,536
in cash and cash
equivalents
Cash and cash equivalents 46,620 1,088 1,085
at beginning of period
Cash and cash equivalents 10,447 110,356 46,620
at end of period
STATEMENTS OF CHANGES IN EQUITY
6 months to 6 months to 13 months to
30 September 31 August 31 March
2002 2001 2002
Unaudited Unaudited Audited
R`000 R`000 R`000
Share capital 9,986 9,979 9,986
Balance at beginning of 9,986 2,258 2,258
period
New shares issued during - 7,721 7,728
period
Share premium 407,350 407,058 407,350
Balance at beginning of 407,350 68,156 68,156
period
Premium on new shares - 339,852 340,145
issued during the period
Share issue expenses - (950) (951)
written off
Accumulated loss (101,655) (29,398) (53,726)
Balance at beginning of (53,726) (30,663) (30,664)
period
Net (loss)/income for the (47,929) 1,265 (23,062)
period
Non-distributable 1 1 1
reserves
Balance at beginning of 1 61 61
period
Revaluation profit - (60) (60)
realised
Balance at end of period 315,682 387,640 363,611
Commentary
Accounting policy
This interim report has been prepared in accordance with South African
Statements of GAAP, using accounting policies consistent with those applied in
the financial statements for the period ended 31 March 2002.
Review of operations
Both 54MVA closed furnaces had an excellent start-up and first tap and reached
50% of capacity within the first full month of operation. The commissioning of
the slag granulation plant was delayed and is expected to be implemented by
February / March 2003. In order to minimize the effect of the delayed
implementation, a modified interim tapping arrangement has been implemented
which will from January 2003, sustain operations at 90% of capacity, being
18,000 tons of ferrochrome production per month.
The pelletising and sintering plant reached 70% of capacity during its second
month of operation. The pelletising and sintering plant continues to perform
ahead of furnace requirements and capacity performance is expected during
December 2002.
The UG2 plant demonstrated its ability to exceed design capacity and reports
excellent chrome grades from the waste streams of Impala Platinum.
The new beneficiation plant at the Horizon mine has been commissioned and is
performing to design capacity. The underground mine has been phased in from
November 2002, whilst the opencast mining is being phased out. There is
sufficient opencast material on surface to facilitate the transition.
Production of ferrochrome for the period to 30 September 2002 was 22,000 tonnes.
Production for the year ending 31 March 2003 is expected to be 115,000 tonnes
versus a budget of 145,000 tonnes i.e. 80% of budget.
Based on operational indications to date, the company is confident that it will
exceed the design capacity of 235,000 tonnes per annum for the full year to 31
March 2004 i.e. its first full year of operation.
Financial review
The construction of the ferrochrome facility was completed within the R700
million budget.
As budgeted and as referred to in the 2002 Annual Report , the company is
reporting an operating loss after financing costs of R47,9 million. This was
expected due to the results reflecting only 3 months "ramp-up" production, while
absorbing all the fixed costs, start-up costs as well as finance charges.
Sales for the period to 30 September 2002 totalled 15,226 tonnes of ferrochrome
and 17,936 tonnes of foundry sand. The sales revenue of R47,4 million is on an
F.O.B. basis and is net of all shipping, insurance, commissions and similar
charges incurred in the delivery of the product to the final customer.
The company does not expect to show profits for the full year to 31 March 2003
due to the strengthening of the Rand and the fact that production is expected to
be 80% of budget for this period whilst absorbing all the fixed costs and
finance charges.
However, as stated earlier, in our first full year of operation, being the 12
months to March 2004, we expect production to exceed the design capacity of
235,000 tonnes per annum. This, coupled with the favourable ferrochrome prices
expected during this period, should enable the company to produce meaningful
results.
Market review
After an extremely difficult 2001, characterised by low ferrochrome prices and
high inventory levels of ferrochrome, the ferrochrome market has come back
strongly in the latter half of 2002. This strength in ferrochrome prices
coincides perfectly with SA Chrome coming into full production.
Increased demand for stainless steel has been one of the drivers behind
improving ferrochrome prices. Although global economic growth has been slow
during 2002, there has been huge demand for stainless steel in China. Chinese
stainless steel output grew at 25% this year and this growth is set to continue.
The closure of ferrochrome operations in Europe, South Africa and in Japan will
result in the removal of nearly 700,000 tonnes of ferrochrome production that
was available last year but not available this year. There are planned additions
to ferrochrome capacity. However, whether all such projects will come to
fruition is debatable and the long lead-time to construct new capacity should
not negatively effect the supply demand balance.
Supply of stainless steel scrap, an alternative source of chrome units, is low
due to Russian export restrictions and lower stainless steel production last
year.
As a result of the various factors listed above, we are expecting improved
ferrochrome prices in 2003.
Empowerment profile
Following the release of the Mining Charter, SA Chrome is pleased to report that
it continues to embrace empowerment at:
- shareholder level (60%);
- employee level (80%); and
- procurement level.
Empowerment at all levels continues to play a key role in the development of the
company, whilst also providing historically disadvantaged people with an
opportunity to participate in the growing economy.
Prospects
Your directors remain confident that, despite the recent strengthening of the
Rand, the future prospects for SA Chrome are extremely positive, given:
- the successful start-up of the ferrochrome facility;
- the improved outlook for ferrochrome prices;
- the growing demand for stainless steel;
- that SA Chrome will be in full production next year;
- the future access to additional chromite reserves;
- the prospects indicated by feasibility studies being conducted into the
expansion of the existing ferrochrome facility; and
- the opportunities that may present themselves as a result of the Mining
Charter.
On behalf of the board
Jack Dorfan Terence McConnachie
Chairman Managing Director
9 December 2002
Johannesburg
Date: 09/12/2002 03:52:10 PM Produced by the JSE SENS Department
