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Metorex - Reviewed consolidated results for the financial year ended 30 June
2003
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
Share code MTX
ISIN code ZAE000022745
Issuer code MEMTX
www.metorexgroup.com
("the Group")
Reviewed consolidated results for the financial year ended 30 June 2003
New Gold acquisition exceeds expectation
Coal performance excellent
Fluorspar quality improves to world standards
Rand strength impacts negatively on earnings
Chib South and Middelburg Townlands developments progressing
Consolidated income statement
Year ended Year ended
30 June 2003 30 June 2002
(Reviewed) (Audited)
R000 R000
Revenue
Mineral sales
Copper 290 092 340 441
Zinc 83 492 105 774
Coal 179 236 122 928
Fluorspar 93 730 119 746
Gold 105 703 80 291
Antimony 121 484 71 772
Cobalt 5 986 15 558
Other 6 594 6 441
Gross revenue 886 317 862 951
Realisation costs 150 709 170 524
On-mine revenue 735 608 692 427
Cost of production 653 120 553 619
Depreciation 40 934 30 397
Mining profit 41 554 108 411
Foreign exchange (losses)/gains (5 948) 3 066
Other income 3 890 6 024
Income before exceptional items
and finance costs 39 496 117 501
Finance income 4 692 5 539
Finance costs (18 926) (12 010)
Income before exceptional items 25 262 111 030
Exceptional items - (132 702)
Income/(Loss) before taxation 25 262 (21 672)
Taxation - normal and STC 6 820 25 257
Taxation - deferred 5 630 (31 943)
Income/(Loss) after taxation 12 812 (14 986)
Income attributable to outside
shareholders 2 459 8 088
Income/(Loss) attributable to
ordinary shareholders 10 353 (23 074)
-
Earnings per share (cents) 7,4 (18,6)
Headline earnings per share (cents) 9,1 72,8
Diluted earnings per share (cents) 7,4 (18,6)
Diluted headline earnings
per share (cents) 9,1 72,8
Dividend per share (cents) 14,0 12,0
Earnings per share and headline
earnings per share are
calculated using the following:
Income attributable to ordinary
shareholders 10 353 (23 074)
Exceptional items net of tax - 112 368
Exceptional items - 132 702
Tax effect on exceptional items - (20 334)
Goodwill amortisation 3 662 3 662
Profit on sale of assets (1 704) (3 720)
Tax effect on sale of assets 511 1 116
Headline earnings (R000"s) 12 822 90 352
Weighted average number of
shares in issue (000"s) 140 498 124 140
Number of shares in issue at
year end (000"s) 175 019 138 970
Consolidated balance sheet
30 June 2003 30 June 2002
(Reviewed) (Audited)
R000 R000
ASSETS
Non-current assets
Property, plant and equipment 499 952 239 346
Mineral rights 218 288 240 665
Goodwill 21 971 25 633
Investments 891 891
Rehabilitation trust funds 41 063 21 636
Deferred tax asset - 8 030
782 165 536 201
Current assets
Inventories 53 074 70 858
Trade and other receivables 109 072 110 809
Derivative instruments 840 -
Taxation prepaid 9 550 6 314
Bank balances and cash 23 498 82 986
196 034 270 967
Total assets 978 199 807 169
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 473 204 383 083
Hedging and translation reserve (32 391) 10 924
Retained income 116 069 125 175
Equity reserve (128 066) (128 066)
428 816 391 116
Minority interest 16 699 16 490
Non-current liabilities
Long-term liabilities
- interest bearing 179 974 84 907
Long-term provisions 71 081 48 434
Deferred tax liabilities 56 370 71 283
Deferred income 1 343 -
308 768 204 624
Current liabilities
Trade and other payables 124 582 102 224
Derivative instruments - 380
Short-term borrowings
- interest bearing 45 080 57 734
Short-term provisions 28 168 14 517
Bank overdraft 25 554 9 353
Taxation 532 10 731
223 916 194 939
Total equity and liabilities 978 199 807 169
Net asset value per share (cents) 245 281
Net tangible asset value per
share (cents) 233 263
Statement of changes in equity
30 June 2003 30 June 2002
(Reviewed) (Audited)
R 000 R 000
Share capital 17 502 13 897
- Balance at start of year 13 897 12 073
- Issue of new shares 3 605 1 824
Share premium 455 702 369 186
- Balance at start of year 369 186 313 578
- Issue of new shares 86 516 56 472
- Share issue expenses - (864)
Reverse acquisition reserve (128 066) (128 066)
Foreign exchange translation reserve (33 231) 11 304
- Balance at start of year 11 304 (4 903)
- Foreign exchange reserve 15 832 (18 309)
- Translation (loss)/gain on foreign
monetary item (84 631) 42 230
- Tax effect of translation
(loss)/gain on foreign monetary item 24 264 (7 714)
Hedging reserve 840 (380)
- Balance at start of year (380) -
- Change in accounting policy - 718
- Restated hedging reserve (380) 718
Fair value gains/(losses)
for the year 5 603 (10 227)
Foreign exchange movement (92) -
- Transferred to income statement (4 291) 9 129
Retained income 116 069 125 175
- Balance at start of year 125 175 162 746
- Net income/(loss) for the year 10 353 (23 074)
- Dividends distributed (19 459) (14 497)
Total equity 428 816 391 116
Consolidated cash flow statement
30 June 2003 30 June 2002
(Reviewed) (Audited)
R000 R000
Cash generated before working
capital changes 82 388 145 147
Working capital changes 11 828 (62 730)
Cash generated by operations 94 216 82 417
Dividends received - 47
Dividends paid (21 709) (20 706)
Taxation paid (20 159) (33 793)
Finance costs (14 234) (6 471)
Cash inflows from operating
activities 38 114 21 494
Cash outflows from
investing activities (39 986) (94 061)
Cash (outflows)/inflows from
financing activities (53 109) 79 161
Net increase in cash and
cash equivalents (54 981) 6 594
Cash at beginning of year 95 269 88 186
Effect of foreign exchange
rate changes (1 281) 489
Cash at end of year 39 007 95 269
Segmental report - 2003
Mining profit
Revenue (Pre-depreciation)
% %
Copper 33 17
Flourspar 11 21
Zinc 9 5
Antimony/Gold 26 34
Coal 20 23
Other 1 -
100 100
2003 2002
Exchange rate (average) 9,07 10,10
Exchange rate (year-end) 7,58 10,31
COMMENTARY
METOREX GOLD ACQUISITION
The recent gold mine acquisition of BML (ETC division of Avgold) from Avgold,
with our empowerment partner MCI Gold(Pty) Ltd, has exceeded initial production
expectations. These production improvements combined with the forward sale
contracts, of 177 kilograms (+/- 65% of production) per month at a price of R103
462 per kilogram for the forthcoming three years, generated profits for the two
weeks of ownership in the financial year.
Good progress has been made in converting BML to a Metorex style of management
with positive feedback from the on-mine staff.
OPERATING PERFORMANCE
Group base metal operations experienced a difficult and frustrating year. While
the metal prices in US Dollars were generally most welcome, the strengthening of
the Rand/Dollar exchange rate negated these benefits. Production problems at
Chibuluma West and O"Okiep compounded these financial effects to produce a
disappointing contribution from the group"s copper operations. Zinc profits were
also materially affected by the Rand"s strength although production at Maranda
remained stable.
Coal operations had a commendable year with gratifying increases in both sales
volumes and prices.
Fluorspar operations at Vergenoeg achieved significant progress in their primary
objective of improving product quality. It is now clear that a globally
competitive product can be produced, which will command significantly higher
prices on world markets. The impact of this achievement during the past year has
been an increase in unit production costs and reduction in recovery and saleable
product, which together with the impact of the exchange rate, resulted in
significantly lower profitability.
Gold and antimony production at Cons Murch was lower than anticipated due to
lower grades however, improved profit performance was forthcoming due to
increased gold and antimony prices and Cons Murch achieved record profits.
The increase in the cost of production was primarily due to increased production
volumes and mix at Cons Murch and the coal operations, the inclusion of BML
operating costs and a reduction in product stock levels. The depreciation charge
increased with the commissioning of the O"Okiep slag plant during the year.
FINANCIAL POSITION AND CASHFLOW
The Group net asset value increased to R429 million with the issue of 36 million
shares for the funding of the gold acquisition.
The current ratio decreased to 0,88 : 1 due to the consolidation of the BML net
current liability position of R33 million on acquisition immediately prior to
year-end. This acquisition also absorbed a portion of the group"s cash reserves.
Cash generated by operations increased by R12 million to R94 million for the
year ended 30 June 2003. After dividends, tax and finance costs the Group cash
inflow from operating activities amounted to R38 million. Debt repayments
amounted to R53 million and capital expenditure of R30 million was funded with
cash resources. Further cash was allocated to the acquisition of ETC and related
costs, all of which have temporarily reduced the group current ratio.
FUTURE PROSPECTS
The Group is partially protected against a strong Rand due to the local sales
generated by its profitable coal operations and the hedged gold book at
Barberton Mines Limited, which provides a sustained price of R103,462/kg gold
for 177 kg per month.
The hedge book enables Barberton to sell total production at hedged prices where
spot gold is at a low level.
COPPER AND COAL EXPANSIONS APPROVED
The opening of the Chibuluma South sulphide orebody was approved with the
Industrial Development Corporation as equity partners in the project.
Development of the decline shaft will commence in September 2003 with Metorex
responsible for 13% of the project funding.
A plant for the new Middelburg Townlands coal project was purchased and will be
modified for production to commence in early 2004 producing low phosphorus coal.
FINAL DIVIDEND APPROVED
A final dividend of 3 cents per share has been approved for declaration giving a
total dividend for the financial year of 7 cents per share (2002: 10 cents per
share). This exceeds the policy of 20 - 30% of earnings but recognises the cash
earnings of the group.
CAPITAL EXPENDITURE AND COMMITMENTS
Group capital expenditure, excluding the acquisition of ETC, totalled R30
million (2002: R99 million), which mainly related to the smelter refurbishment
at O"Okiep and machinery upgrades at the coal operations.
Contracted capital commitments at 30 June 2003 amount to R1 million (2002: R1
million), whilst uncontracted commitments amount to R7 million (2002: R5
million).
Operating lease commitments, which fall due within one year amount to R3 million
(2002: R2 million), whilst commitments of R5 million (2002: R2 million) fall due
in years two to five.
SHARES ISSUED
On 13 June 2003, Metorex issued 36 million shares at a price of 250 cents per
share as part of the BML acquisition.
AUDIT REVIEW
Deloitte & Touche, the company"s auditors, have reviewed the financial results.
A copy of their unqualified reviewed report is available for inspection at the
company"s registered office.
ACCOUNTING POLICIES
The financial statements have been prepared on the historical cost basis, except
for certain financial instruments and the assets and liabilities acquired with a
business, which are stated at fair value and in accordance with International
Financial Reporting Standards applicable to Interim Financial Reporting. The
accounting policies are consistent with those adopted in the previous year.
SAFETY
The Group safety record for the year was marred by four fatal accidents. Two
occurred at Wakefield and one each at Maranda and Consolidated Murchison.
The Group strives to conduct its activities with due regard to the safety and
health of its employees.
A.S. MALONE
Chairman
C.D.S NEEDHAM
Financial Director
DECLARATION OF DIVIDEND
Notice is hereby given that a final dividend referenced 006 of 3 (three) cents
per share has been declared in respect of the year ended 30 June 2003. The
dividend, which is declared in the currency of the Republic of South Africa,
will be paid on 29 September 2003.
The last day to trade in the company"s shares for purposes of entitlement to the
dividend is Thursday, 18 September 2003. The shares will commence trading ex-
dividend on Friday, 19 September 2003 and the record date is Friday, 26
September 2003. Share certificates may not be dematerialised or rematerialised
from Friday, 19 September 2003 to
Friday, 26 September 2003, both days inclusive.
By order of the board
26 August 2003
Secretaries
Moore Stephens MWM
7 West Street
Houghton, 2198
Transfer secretaries
Computershare Limited
70 Marshall Street
Johannesburg, 2001
Contact details for Metorex Limited and Corporate Advisers
Metorex Limited
Postal: PO Box 2814 Saxonwold 2132 South Africa
Telephone: (+27 11) 880-3155
Facsimile: (+27 11) 880-3322
website: www.metorexgroup.com
e-mail info@metorexgroup.com
Registrars: South African and United Kingdom
Computershare Limited
PO Box 1053 Johannesburg 2000
South Africa Telephone: (+27 11) 370-5000
Capita Group plc The Registry 34 Beckenham Road
Beckenham Kent BR 34 TU England
Telephone: (+44 208) 639-2486
Fax: (+44 208) 639-2279
Company Secretaries:
Moore Stephens MWM PO Box 1574 Houghton, 2041
Telephone (+27 11) 728-7240
Auditors: Deloitte & Touche Private Bag X6 Gallo Manor, 2052 RSA
Telephone: (+27 011) 806-5000
Date: 26/08/2003 04:00:15 PM
Produced by the JSE SENS Department
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