| Wed 19 Feb 2003, 16:34 | | Metorex Limited - Financial Report |
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METOREX LIMITED
Registration number 1934/005478/06
Incorporated in the Republic of South Africa
Listed on the JSE Securities Exchange South Africa and London Stock Exchange
JSE alpha MTX ISIN ZAE000022745
Issuer code MEMTX
www.metorexgroup.com
("the Group")
* The ETC Division acquired from Avgold Limited
* Chibuluma South equity partner imminent
* Headline earnings per share increased 94%
* Debt to equity ratio improves from 39% to 31%
* Interim dividend of 4 cents per share declared
Consolidated interim results for the period ended 31 December 2002
Consolidated income statement
Six months Six months
31 December 2002 31 December 2001
Unaudited Unaudited
R000 R000
Revenue - Mineral sales
Copper 161 773 152 616
Zinc 48 278 50 566
Coal 92 834 61 859
Fluorspar 50 978 52 566
Gold 49 105 43 522
Antimony 49 330 16 216
Cobalt 5 855 9 005
Other 4 153 2 995
Gross revenue 462 306 389 345
Realisation costs 60 605 64 398
On-mine revenue 401 701 324 947
Cost of production 347 239 291 140
- cash costs 326 883 281 482
- stock movement 474 (4 913)
- depreciation 19 882 14 571
Mining profit 54 462 33 807
Impairment - Chibuluma assets - (112 368)
Other expenses 3 010 4 803
Income before finance costs 51 452 (83 364)
Net finance costs 7 005 1 380
Income before taxation 44 447 (84 744)
Taxation 13 879 12 091
Income after taxation 30 568 (96 835)
Income attributable to outside shareholders 1 822 3 687
Income/(loss) attributable to ordinary
shareholders 28 746 (100 522)
Earnings per share (cents) 20,68 (83,21)
Headline earnings per share (cents) 22,00 11,32
Dividend per share (cents) 10,0 12,0
Proposed dividend per share (cents) 4,0 -
Income attributable to ordinary shareholders 28 746 (100 522)
Impairment provision - 112 368
Goodwill amortisation 1 830 1 830
Headline earnings 30 576 13 676
Weighted average shares in issue (000`s) 138 985 120 805
Number of shares in issue at end of
period (000`s) 139 019 120 805
Statement of change in equity
Six months Six months
31 December 2002 31 December 2001
Unaudited Unaudited
R000 R000
Shareholders` equity at start of period 391 116 355 428
Shares issued 121 203
Hedging and translation reserve (22 442) 10 711
Net income/(loss) for the period 28 746 (100 522)
Dividends distributed (13 898) (14 497)
383 643 251 323
Consolidated balance sheet
31 December 2002 30 June 2002
Unaudited Audited
R000 R000
ASSETS
Non-current assets
Property, plant and equipment 222 159 239 346
Mineral rights 205 202 240 665
Goodwill 23 803 25 633
Investments 891 891
Deferred tax asset 706 8 031
452 761 514 566
Current assets
Inventories 64 923 70 858
Trade and other receivables 115 930 110 809
Derivative instruments 1 323 -
Taxation prepaid 5 432 6 314
Bank balances and cash 55 090 104 622
242 698 292 603
Total assets 695 459 807 169
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 383 204 383 083
Hedging and translation reserve (11 518) 10 924
Retained income 140 023 125 175
Reverse acquisition reserve (128 066) (128 066)
383 643 391 116
Minority interest 16 512 16 490
Non-current liabilities
Long-term liabilities - Interest bearing 67 280 84 907
Long-term provisions 46 060 48 434
Deferred tax liabilities 43 457 71 283
156 797 204 624
Current liabilities
Trade and other payables 71 247 102 224
Derivative instruments - 380
Short-term borrowings - Interest bearing 38 498 57 734
Short-term provisions 14 520 14 517
Bank overdraft 12 149 9 353
Taxation 2 093 10 731
138 507 194 939
Total equity and liabilities 695 459 807 169
Net asset value per share (cents) 276 281
Net tangible asset value per share (cents) 259 263
Consolidated cash flow statement
Six months Six months
31 December 2002 31 December 2001
Unaudited Unaudited
R000 R000
Cash generated before working capital charges 73 164 45 405
Working capital charges (36 222) (32 179)
Cash generated by operations 36 942 13 226
Taxation paid (16 587) (19 136)
Dividends paid (15 698) (17 497)
Finance costs (7 005) (1 380)
Cash outflow from operating activities (2 348) (24 787)
Cash outflow from investing activities (14 899) (48 791)
Cash (outflow)/inflow from financing activities (34 268) 22 692
Net decrease in cash and cash equivalents (51 515) (50 886)
Net cash balance at beginning of period 95 269 88 186
Effect of foreign exchange rate changes (813) -
Cash at end of period 42 941 37 300
COMMENTARY
RESULTS OF OPERATIONS
The Group increased its headline earnings per share by 94% to 22 cents for the
six months ended 31 December 2002. The improved results are mainly attributable
to an increase of 19% in Group revenue to R462 million. The antimony and coal
operations performed exceptionally with increased sales volumes and unit prices
achieved. Increased coal production led to an increase of 15% in coal sales
volumes which, coupled with an average price increase of 30% to R125 per ton,
improved Group revenue by R31 million. The spike in the antimony price to an
average of $17 per mtu for the current period and a 12% improvement in volumes
contributed to an increase in revenue of R33 million. Overall commodity prices
improved year on year and a higher average Rand/US Dollar exchange rate
prevailed.
The increase of 16% in cash costs was due primarily to increased antimony and
coal production and the exchange rate effect on US Dollar denominated costs. The
performance for the quarter ended 31 December 2002 was hampered by plant
throughput problems at Chibuluma with lower copper production output and sales.
The strength of the Rand/US Dollar exchange rate in the quarter to 31 December
2002 had a material impact on earnings.
The 36% increase in depreciation is mainly the result of the commissioning of
the O`Okiep Slag Plant and the Chibuluma West incline shaft.
The Group debt to equity ratio improved to 30,7% (30 June 2002: 38,9%) at 31
December 2002. The improvement is the result of significant debt repayments
during the period totalling R34,3 million, which mainly related to the Chibuluma
debt.
The Group`s earnings are sensitive to sustained strength in the Rand/US
Dollar exchange rate. However, recent improvements in gold and base metal
prices, if sustained, will ameliorate the impact.
ACQUISITION OF AVGOLD LIMITED`S ETC DIVISION
On 14 February 2003, Metorex Limited (54%), Millennium Consolidated
Investments Limited (26%) and Crew Development Corporation (20%) entered into an
agreement, through a dormant company Barberton Mines Limited, to acquire from
Avgold Limited its ETC Division, which agreement is subject to certain
conditions precedent.
The details of the transaction were set out in an announcement dated 17
February 2003.
Pro forma financial effects of the ETC acquisition
Set out below are the unaudited pro forma financial effects of the ETC
acquisition based on the unaudited financial information of Metorex and the ETC
Division, excluding ETC`s share of Avgold`s hedging losses, for the six months
ended 31 December 2002.
Unaudited before Pro forma after
the ETC acquisition the ETC acquisition Change
(cents) (cents) (%)
Earnings per share 20,7 22,8 10
Headline earnings per share 22,0 23,9 9
Net asset value per share 276,0 280,2 2
Net tangible asset value per share 258,8 266,2 3
Notes:
1. The earnings per share, headline earnings per share, net asset value per
share and net tangible asset value per share figures in the "Unaudited before
the ETC acquisition" column have been extracted from the unaudited financial
information of Metorex for the period ended 31 December 2002.
2. The earnings per share and headline earnings per share figures in the "Pro
forma after the ETC acquisition" column have been calculated:
- on the basis that the ETC acquisition was implemented with effect from 1 July
2002;
- on the basis that interest of 14,6% pre-tax was incurred by Barberton Mines on
the R150 million interest-bearing debt;
- on the basis that Metorex has foregone interest of 10% pre-tax on the R30
million cash contribution;
- on the basis that no interest was incurred on the shareholder`s loans from
Metorex and Crew;
- on the assumption that Metorex issued 30 million new ordinary shares;
- on the basis that the life of the ETC mine is 10 years; and
- without taking into account any potential transaction costs in relation to the
ETC acquisition.
3. The net asset value per share and net tangible asset value per share figures
in the "Pro forma after the ETC acquisition" column have been calculated on the
basis that the ETC acquisition was implemented with effect from 31 December
2002.
4. Shareholders are advised that they no longer need to act with caution when
trading in Metorex securities.
CHIBULUMA SOUTH EQUITY PARTNER
Chibuluma Mines Plc is finalising a shareholder agreement with the Industrial
Development Corporation ("IDC") whereby the IDC will acquire a 35% interest in
the development of the Chibuluma South operations. The Chibuluma South
operations will be separately housed in a company (Newco) to which Chibuluma
Mines Plc will sell the relevant infrastructure and mining assets. Newco will
also receive cash contributions of $8,3 million and $1,3 million respectively
from the IDC and Chibuluma Mines Plc.
Development of the Chibuluma South orebody is expected to commence during the
second half of this calendar year and should continue for 12 - 15 months before
production commences.
FUTURE PROSPECTS
The Group continues to pursue quality acquisitions, which would add value to
its shareholders. This process involves various discussions with potential
empowerment partners, which will add to the existing partnerships with
Millennium Consolidated Investments and Umnotho weSizwe.
CAPITAL EXPENDITURE AND COMMITMENTS
Group capital expenditure for the period totalled R14,9 million (2001: R48,8
million), which mainly related to the upgrading of equipment at Wakefield and
Chibuluma, expenditure on the Middelburg coal project, final plant improvements
at Vergenoeg, components for a smelter upgrade at O`Okiep and expenditure on the
Beta shaft at Consolidated Murchison.
Contracted capital commitments at 31 December 2002 amount to R11,4 million (30
June 2002: R1 million), whilst uncontracted commitments amount to R4,2 million
(30 June 2002: R5 million).
Operating lease commitments, which fall due within one year amount to R2,7
million (30 June 2002: R2,3 million), whilst commitments of R4,7 million (30
June 2002: R2,4 million) fall due in years two to five.
ACCOUNTING POLICIES
The interim results have been prepared on the historical cost basis in
accordance with International Accounting Standards. The accounting policies are
consistent with those adopted in the financial year ended 30 June 2002. Where
necessary comparative figures have been adjusted to conform with changes in
presentation in the current year.
SAFETY
The Group`s operations produced commendable safety statistics and thanks are
extended to all staff for their contribution to this record. Management is
firmly committed to the elimination of all risks that threaten the health and
safety of employees.
DECLARATION OF DIVIDEND
Notice is hereby given that an interim dividend referenced No. 006 of 4
(four) cents per share has been declared in respect of the period ended 31
December 2002. The dividend, which is declared in the currency of the Republic
of South Africa, will be paid on 17 March 2003.
The last day to trade in the company`s shares for purposes of entitlement is
Friday, 7 March 2003. The shares will commence trading ex-dividend on Monday, 10
March 2003 and the record date is Friday, 14 March 2003. Share certificates may
not be dematerialised or rematerialised between Monday, 10 March 2003 and
Friday, 14 March 2003, both days inclusive.
A S MALONE C D S NEEDHAM
Chairman Financial Director
By order of the board
19 February 2003
Secretaries: Transfer Secretaries:
Meyer Wilson Marsh Inc Computershare Investor Services Limited
7 West Street 70 Marshall Street
Houghton Johannesburg
2198 2000
Date: 19/02/2003 04:27:00 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
