| Fri 14 Mar 2003, 8:35 | | Gencor Limited - Interim results for the six month |
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GENCOR LIMITED
Registration number 1895/001232/06
ISIN: ZAE000013066
Share code: GMF
Interim results for the six months ended 31 December 2002
INCOME STATEMENT
6 months to 6 months to 12 months to
31 December 31 December 30 June
2002 2001 2002
(R million) Notes Unaudited Unaudited Audited
Dividend income 1 795,8 728,4 1 065,1
from Implats
Share of Implats" 2 & 3 661,9 752,6 2 039,8
income net of
dividends and
adjustments
Equity accounted 1 457,7 1 481,0 3 104,9
income from Implats
Net interest income 27,0 19,8 38,9
Net corporate costs (7,3) (10,1) (18,5)
Other net income 0,4 8,2 89,4
Corporate (8,7) (0,5) (1,2)
restructuring costs
Profit before 1 469,1 1 498,4 3 213,5
taxation
Taxation on (533,5) (470,5) (987,7)
Implats" equity
earnings
Ordinary taxation (8,8) (4,0) (9,8)
on company
Attributable profit 926,8 1 023,9 2 216,0
Earnings per share
Earnings per share 348,6 348,6 348,6
is calculated on
the weighted
average number of
shares in issue (m)
and is based on 926,8 1 023,9 2 216,0
attributable income
of (Rm)
and after deducting 8,3 (7,7) (88,2)
other net income
and corporate
restructuring costs
for the calculation 935,1 1 016,2 2 127,8
of headline
earnings of
Basic and diluted 266 294 636
earnings (cps)
Headline earnings 268 292 610
Dividends per share
(cps)
Dividends declared 228 209 306
and paid
Dividends proposed 36 97 325
statement of changes in shareholders" equity
6 months to 6 months to 12 months to
31 December 31 December 30 June
2002 2001 2002
(R million) Notes Unaudited Unaudited Audited
Opening balance 4 646,1 3 377,5 3 377,5
Distributions to (794,8) (728,6) (1 066,7)
ordinary
shareholders
Attributable income 926,8 1 023,9 2 216,0
Redemption of - - (0,5)
preference share
capital
Gencor"s equity 3 (191,8) 30,9 119,8
portion of the
revaluation of
investments by
Implats
Total shareholders" 4 586,3 3 703,7 4 646,1
equity
BALANCE SHEET
As at As at As at
31 December 31 December 30 June
2002 2001 2002
(R million) Notes Unaudited Unaudited Audited
Investments 2 4 206,3 3 410,9 4 269,8
Current assets 416,3 395,1 417,4
Total assets 4 622,6 3 806,0 4 687,2
Capital and 4 586,3 3 703,7 4 646,1
reserves
Current liabilities 36,3 102,3 41,1
and provisions
Total equity and 4 622,6 3 806,0 4 687,2
liabilities
cash flow statement
6 months to 6 months to 12 months to
31 December 31 December 30 June
2002 2001 2002
(R million) Notes Unaudited Unaudited Audited
Cash generated by 801,6 734,7 1 030,3
operating
activities
Dividends paid (794,8) (728,6) (1 066,7)
Net cash from 6,8 6,1 (36,4)
operating
activities
Share scheme loan - 17,7 17,8
repayments and
surpluses
Other corporate (8,1) (0,3) 67,4
activities
Net (1,3) 23,5 48,8
(decrease)/increase
in cash
Closing cash 407,7 383,7 409,0
balance
VALUATION
As at As at As at
31 December 31 December 30 June
2002 2001 2002
Notes Unaudited Unaudited Audited
Market value of 16 680 17 213 17 501
investment in Implats
(Rm)
Number of Gencor shares 348,6 348,6 348,6
in issue (m)
Gencor"s closing share 4 325 4 825 4 500
price on JSE (cents)
Gencor"s market 15 077 16 819 15 687
capitalisation (Rm)
Gencor"s discount to 9,6 2,3 10,4
market value of
investment in Implats
(%)
Net asset value per 1 316 1 062 1 333
Gencor share (cents)
NOTES TO THE FINANCIAL STATEMENTS
1. Dividends and the related secondary tax on company charge are only brought to
account once dividends have been declared.
2. Implats is equity accounted.
3. Adjustments to reserves that arise on the valuation, at market prices, of
Implats" listed investments that are not equity accounted by it and the
translation adjustments arising on Implats" foreign investments and associates,
are included by Gencor in the "Statement of Changes in Shareholders" Equity".
4. Gencor has certain obligations relating to the closure of the Prima Lirang
gold mine in Indonesia that were due to expire in 2002. Negotiations are in
process with the authorities on the issue of the appropriate closure
certificate. The directors believe that amounts provided are sufficient to meet
its commitments.
5. The accounting policies used by the group are in accordance with Statements
of South African Generally Accepted Accounting Practice and are consistent with
those used in the previous year.
Where necessary, comparative figures have been adjusted to conform to changes in
presentation in the current year.
Results
Gencor"s attributable profit of R927 million is 9,5% lower than the R1 024
million achieved in the corresponding previous six months. This decrease in
profitability is principally due to the lower income (dividends and equity
accounted retained income) from Impala Platinum Holdings Limited ("Implats").
Dividend income comprises the final dividend of R796 million declared by Implats
in August 2002 in respect of the 2002 financial year (R728 million in the six
months ended December 2001).
Net interest received amounts to R27 million, R7 million more than in the
comparative period of the previous year primarily as a result of the higher cash
balances held and harder interest rates that have prevailed lately. Corporate
costs of R7 million have been recorded for the six-month period (R10 million in
the first half of 2002). Other net income comprises dividends forfeited in terms
of the articles of association plus, in 2001, surpluses earned in the share
incentive trust of R8 million. Corporate restructuring costs relate to the
proposed unbundling of the Implats" interest and the litigation costs associated
with the interdict to stop the unbundling.
Implats
- Income
Implats posted a creditable performance for the six months under review.
Sales held up well despite the global economic malaise. The platinum market was
particularly strong due to robust automotive sales worldwide and uncertainties
caused by the threat of war, escalating oil prices and delays in the timing of
new South African production. Jewellery demand has been firm but higher platinum
prices could reverse the trend. The overall outlook for platinum remains
positive as the underlying fundamentals are sound. The palladium price has been
weak as supply has continued to exceed demand, but prices at current low levels
and metal availability may well stimulate a switch back to palladium by the
automotive industry. Even though rhodium off-take has been firm, the price has
continued to be pressurised by producer selling.
Earnings held up due to the firmer platinum price and the increase in mine and
secondary production and, consequently, sales volumes. On balance Implats"
attributable income of R2 011 million for these past six months was some 8,3%
less than the R2 192 million income posted for the first half of last year.
In accordance with its dividend policy, Implats proposed an ordinary interim
dividend of 900 cents per share (1100 cents in the first half of financial year
2002) that was approved by its directors on 11 February 2003. Gencor"s portion
amounts to R275 million.
- Investment
The R16,7 billion market value of Gencor"s investment in Implats at the end of
December 2002 was 3,0% less than the R17,2 billion recorded at 31 December 2001.
litigation and unbundling
The Board called a shareholders" meeting in October 2002 to consider the
proposed unbundling of the Implats" shares held by Gencor, against the
background of the 37 summonses served on several parties, including Gencor,
earlier in the calendar year. The claimants sought compensation totalling R37
million for a variety of alleged asbestos related illnesses purportedly incurred
whilst employed by companies other than Gencor.
Shortly before the general meeting was to be held, the company received
voluminous papers from attorneys apparently acting on behalf of a large number
of claimants. They sought to obtain an interim order preventing the unbundling
until such time as Gencor had put up adequate security for the alleged claims.
Having considered the application for an interdict, the board believed it was
prudent to postpone the general meeting, in accordance with an agreed timetable,
until such time as the applicants" request for an interim interdict had been
heard by the High Court.
Since the date of the hearing, Gencor and its advisors have been involved in
protracted confidential and without prejudice negotiations. The Board is pleased
to announce that two settlement agreements have now been concluded. It is an
overriding condition of the settlements (and the payment of the settlement
amounts) that the Gencor unbundling be completed (free from interference) in
every respect.
The settlements (which incorporate some 6 000 potential claimants in South
Africa together with their legal advisors as well as some 7 500 potential
claimants in England together with their legal advisors) remove any objection to
Gencor"s unbundling by any of the claimants or their legal representatives and,
on the completion of the unbundling, will involve Gencor paying, without any
admission of liability of any nature whatsoever and in full and final settlement
of all claims and potential claims, a total amount of R460,5 million (inclusive
of costs). This amount will be apportioned as follows:
1. In terms of the first agreement:
1.1 R378 million will be paid into the Asbestos Relief Trust ("Trust"), which is
in the process of being established in South Africa. The primary object of the
Trust is to provide compensation as fully, fairly and effectively as its means
allow to all persons who are able to demonstrate to the satisfaction of the
Trustees that they have contracted an asbestos-related disease from working at
(or living in the vicinity of) mines operated by Gefco and/or Msauli and/or
their subsidiaries during the period in which Gencor had an interest in those
companies;
1.2. An additional R40 million will be paid and retained in a separate trust
account to be kept by Gencor"s lawyers for a period of 3 years in order to cover
any potential rehabilitation claim/s which may be brought against Gencor by any
person, notwithstanding the Board"s view that Gencor does not have liability for
any such claim/s. After a period of 3 years, the R40 million (or any balance
then remaining if any potential rehabilitation liability is discharged) will be
paid to the Trust.
2. In terms of the second agreement, R42,5 million will be paid to the
approximately 7 500 claimants who sued Cape Plc in the United Kingdom and joined
Gencor to those proceedings. These claimants will not be eligible to claim from
the Trust. The R42,5 million settlement amount to be paid to them will be
administered by their UK lawyers and will be distributed to those of them who
can demonstrate that they had material exposure to asbestos from a company in
which Gencor had an interest and have contracted an asbestos-related disease as
a result.
Further salient features of the settlement include undertakings having been
procured and furnished by the claimants that they will not bring nor represent
any other person or class of persons who may wish to bring any action against
Gencor arising out of any asbestos-related disease or alleged rehabilitation
liability; and that upon the Gencor unbundling being completed in every respect,
the actions and applications currently pending will be withdrawn irrevocably.
The Griqualand Exploration and Finance Company Limited, Hanova Mining Holdings
(Pty) Ltd, Msauli Asbes Beperk and African Chrysotile Asbestos Limited, being
the companies in which Gencor had an interest and which operated asbestos mines
in the relevant period, or shareholders of those companies, have also entered
into one of the settlement agreements and have undertaken not to intervene or
interfere with the proposed unbundling by Gencor of all of its shares in
Implats.
Gencor will as soon as possible post a circular to its shareholders convening a
meeting of shareholders to consider the proposed unbundling of all of its shares
in Implats.
Prospects
- Implats anticipates that the platinum market will remain firmly underpinned by
continued fundamental demand.
- Implats" growth strategy is on track to deliver 2 million ounces platinum by
2006. The development of the Marula mine in the Eastern Bushveld is progressing
well and material sourced from strategic partners continues to grow. Implats has
taken recent opportunities to increase its holdings in various platinum ventures
in Zimbabwe. All of these corporate activities provide a solid platform for
Implats" future.
- Given the current strength of the South African currency, Implats has
indicated that it expects earnings to be significantly down on 2002 levels.
Dividends
Gencor has, in the past, pursued a policy of distributing, to the extent
possible, all dividend income received from its underlying investments. Given
the recent settlement of the asbestosis claims and the need to retain sufficient
cash, the Board has propposed an interim dividend of 36 cents per ordinary share
(2002: 97 cents per share), absorbing R125 million.
For and on behalf of the Board
AS du Plessis (Chairman) Johannesburg
WE Bhrmann (Director) 14 March 2003
Announcement of interim dividend no. 154 of 36 cents per share
An interim dividend no. 154 of 36 cents (2002: 97 cents) per ordinary share was
declared on 13 March 2003:
- Last day to trade cum-dividend Friday, 4 April 2003
- Trading ex-dividend commences Monday, 7 April 2003
- Record date Friday, 11 April 2003
- Date of payment Monday, 14 April 2003
The dividend is payable in the currency of the Republic of South Africa, unless
arrangements to the contrary have been made with the transfer secretaries,
provided such payments are in accordance with the regulations of the South
African Reserve Bank.
Share certificates may not be dematerialised or rematerialised between Monday, 7
April 2003 and Friday, 11 April 2003, both days inclusive.
Gencor limited Registration number 1895/001232/06
ISIN: ZAE000013066
Share code: GMF
registered office KPMG Crescent, North Wing, First
Floor, 85 Empire Road, Parktown 2193
POSTAL ADDRESS Postnet Suite 222, Private Bag
X30500, Houghton 2041
Company secretary J Marais
TRANSFER SECRETARIES Computershare Investor Services Limited
70 Marshall Street, Marshalltown 2001
P O Box 10651, Johannesburg 2000
SPONSOR Investec Bank Limited
uk shareholder
administrators Project Consultants Limited
Walnut House, Walnut Gardens, Claydon,
Banbury, Oxon OX17 1NA
