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Assmang Limited - Group Financial Results And Dividend Announcement For The Year
Release Date: 28/08/2003 17:13:14 Code(s): ASG
ASSMANG LIMITED - GROUP FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE YEAR
ENDED 30 JUNE 2003
Assmang Limited
(Incorporated in the Republic of South Africa)
(Registration number 1935/007343/06)
Share code: ASG ISIN code: ZAE000030789
("Assmang" or "the Company")
SALIENT FEATURES
- INCREASED SALES VOLUMES FOR ALL PRODUCTS
- HEADLINE EARNINGS DECREASE BY 54 PER CENT TO R204 MILLION DUE TO
STRONGER RAND/US DOLLAR EXCHANGE RATE
Group financial results and dividend announcement for the year ended
30 June 2003
The audited financial results of the Company and its subsidiaries are as
follows:
Group balance sheet
At 30 June
2003 2002
Audited Audited
R"000 R"000
Assets
Non-current assets
Fixed assets 2 072 198 1 877 833
Deferred tax assets 12 006 11 204
Environmental rehabilitation trust fund 13 068 10 385
Current assets
Inventories 829 772 709 936
Trade and other receivables 696 480 714 413
Deposits and cash 3 162 14 877
Total assets 3 626 686 3 338 648
Equity and liabilities
Total shareholders" interest 2 288 515 2 127 254
Non-current liabilities
Long-term borrowings 3 692
Deferred tax liabilities 447 768 379 801
Long-term provisions 35 845 31 197
Current liabilities
Trade and other payables 310 004 187 581
Overdrafts and short-term borrowings 524 036 576 849
Taxation 20 515 35 274
Total equity and liabilities 3 626 686 3 338 648
Group income statement
Year ended 30 June
2003 2002
Audited Audited
R"000 R"000
Turnover 2 904 483 2 809 352
Cost of sales 2 308 403 1 921 636
Gross profit 596 080 887 716
Other operating income 13 119 45 248
Other operating expenses 219 895 174 590
Profit from operations 389 304 758 374
Interest received 1 306 3 518
Finance costs 56 883 72 160
Profit before exceptional item 333 727 689 732
Exceptional item - 543 720
Profit before taxation and
State"s share of profit 333 727 1 233 452
Taxation and State"s share of profit 129 888 246 911
Earnings 203 839 986 541
Earnings per share (cents)
- Attributable 5 745 27 804
- Headline 5 745 12 480
Dividends per share (cents) 1 200 1 350
Number of shares in issue ("000)
- Weighted average and at year end 3 548 3 548
Determination of headline earnings
Earnings 203 839 986 541
Disposal of mineral rights - (543 720)
Profit on sale of property, plant,
equipment 22 -
Headline earnings 203 817 442 821
Group cash flow statement
Year ended 30 June
2003 2002
Audited Audited
R"000 R"000
Cash flow from operating
activities
Cash generated from operations 553 836 410 158
Interest received 1 306 3 518
Interest paid (56 883) (72 160)
Dividends paid (42 578) (47 901)
Taxation paid (77 480) (131 058)
Net cash in-flow from operating
activities 378 201 162 557
cash flow from INVESTING
activities
Additions to fixed assets to
maintain operations (338 116) (280 809)
Additions to fixed assets to
expand operations - (91 503)
Proceeds from the sale of platinum
group metal mineral rights - 543 720
Other 1 702 432
Net cash (outflow)/inflow from
investing activities (336 414) 171 840
Cash flow from financing
activities
Long-term borrowings repaid (49) (1 910)
(Decrease)/increase in short-term
borrowings (53 453) (333 147)
Net cash (outflow)/inflow from
financing activities (53 502) (335 057)
Net (decrease)/increase in cash
and cash equivalents (11 715) (660)
Cash and cash equivalents at
beginning of year 14 877 15 537
Cash and cash equivalents
at end of year 3 162 14 877
Group statement of changes in shareholders" equity
Stated Retained
capital earnings Total
Audited Audited Audited
R"000 R"000 R"000
Balance at 30 June 2001 13 385 1 175 229 1 188 614
Earnings for the year - 986 541 986 541
Ordinary dividends - (47 901) (47 901)
Balance at 30 June 2002 13 385 2 113 869 2 127 254
Earnings for the year - 203 839 203 839
Ordinary dividends - (42 578) (42 578)
Balance at 30 June 2003 13 385 2 275 130 2 288 515
Results
The Group"s revenue for the year ended 30 June 2003 rose by 3,4 percent
to R2 904,5 million. Attributable earnings decreased by 79,3 percent to
R203,8 million (2002: R986,5 million) and headline earnings decreased by 54,0
percent to R203,8 million (2002: R442,8 million) equivalent to
R57,45 per share (2002: R12,48 per share) almost entirely due to the
strengthening of the South African rand against the United States dollar
over the past year. Included in attributable earnings for the year ended
30 June 2002 was profit on the sale of the platinum group metal mineral
rights ("PGM"s") at Dwarsrivier to Two Rivers Platinum (Proprietary) Limited
for a net profit of R543,7 million. This was disclosed as an exceptional
item in the previous year and excluded from headline earnings.
Contributions to attributable earnings by the three divisions, before
deducting secondary tax on companies ("STC"), amounted to R285,1 million
(2002: R350,9 million) from the manganese division, R58,6 million
(2002: R135,1 million) from the iron ore division and a loss of
R134,5 million from the chrome division (2002: R504,3 million - profit,
including the proceeds from the sale of the Dwarsrivier PGM"s mentioned
above).
As mentioned in the previous year the rand/US dollar exchange rate was
the key determinant in the Group"s performance during the year. The rand
equivalent showed substantial decreases from that of the previous year as a
result of the appreciation of the rand against the US dollar. An average
exchange rate of R8,97 to the US dollar was realised on export proceeds
compared with R10,12 for the previous year.
Sales
World steel production for the first half of 2003 increased by
8,2 percent to 466 million tons and production in calendar 2003 is expected
to reach 955 million tons (2002: 902 million tons). The biggest contributor
to these record levels is China which increased steel production for the
first half of 2003 by 21 percent.
Consequently sales volumes of iron ore for the year under review
increased to a record 5,3 million tons (2002: 4,8 million tons). Further
increases in sales volumes are likely to be restricted by the limited
additional railage and shipping capacity through the port of Saldanha Bay.
US dollar prices for both lumpy and fines have increased by just below
9 percent on average for the period April 2003 to March 2004.
Manganese ore has also benefited from the increase in global steel production.
Sales volumes, excluding deliveries to the Company"s Cato Ridge
Works, increased to 1,2 million tons (2002: 1,0 million tons). In Japan, US
dollar prices for manganese ore for the period April 2003 to March 2004 have
increased by 7 percent.
Sales of manganese alloys increased over the previous year to
197 000 tons (2002: 187 000 tons) in line with higher production at the Cato
Ridge Works. High carbon ferromanganese export sales reduced by 15 000 tons
to 127 000 tons due to
increased transfers of molten metal for the production of refined
ferromanganese. Sales of refined ferromanganese increased to 45 000 tons
(2002: 32 000 tons). Silico manganese sales improved as a result of higher
production volumes to 25 000 tons (2002: 13 000 tons).
The increase in world steel production will result in a steady demand for
manganese alloys. The supply of manganese alloys has returned to normal
following supply disruptions experienced during calendar 2002. Despite the
increased demand, prices are expected to come under pressure due to an
oversupply situation.
Global stainless steel production has shown positive growth over the past
twelve months and total production for calendar 2003 is likely to exceed
20,5 million tons (2002: 19,8 million tons).
The stronger rand together with low charge chrome stocks world wide
resulted in US dollar prices rising by
approximately 50 percent over the past four quarters.
Sales volumes of charge chrome increased by almost 30 percent to
244 000 tons (2002: 190 000 tons).
Major capital projects
Assmang continued its significant capital programme, spending
R338 million (2002 : R372 million) during the year, of which R94,6 million
was spent on its new shaft complex at the Nchwaning manganese mine. The
project is scheduled for completion during May 2004 at a total cost of
R601 million excluding capitalised interest.
Current and additional enhancement projects include the completion of the
Nchwaning shaft complex, the possible construction of an underground mine at
Dwarsrivier chrome mine to replace the existing opencast mine and the
development of additional mineable reserves at the iron ore division.
Borrowings
Short-term borrowings at 30 June 2003 were lower at R524,0 million
compared to R576,8 million at the end of June 2002.
Fatalities
The Board regrets to report that five employees tragically lost their
lives in four separate accidents at the Company"s manganese and iron ore
mines during the year under review.
The Board extends its condolences to the bereaved families and friends.
Outlook
Sales of the Group"s products remain fairly buoyant and tonnages for the
year appear likely to approximate those of the previous financial year. With
the exception of ferromanganese, US$ prices for the Group"s products are
expected to be higher than those achieved in the previous financial year.
Earnings growth will be significantly dependent on the R/US dollar exchange
rate and, to a lesser extent, cost saving exercises at the Group"s
divisions.
Better margins for ferrochrome could flow from improved utilisation of
available capacity and higher prices.
Various expansion scenarios involving the Group"s iron ore assets in the
Northern Cape are being investigated and the Company has entered into a
heads of agreement with Kumba Resources Limited for the purposes of
technical information exchange with a view to evaluating certain of these
possibilities.
The conditions of South Africa"s ports continue to be an area of concern.
While port costs have increased, productivity and efficiencies have decreased
alarmingly at certain ports. A
critical situation has developed, resulting in ship owners imposing a port
inefficiency surcharge on carrying certain products. These developments are
having a negative effect on freight rates and rendering exports less
competitive and costing the country valuable foreign exchange revenue.
Dividends
An interim dividend of R5,00 per share was declared on 12 March 2003 and
paid to shareholders on 7 April 2003.
A final dividend of R5,00 per share was declared after year end and is not
included in the
results recorded in this announcement.
Accounting policies
The financial information has been extracted from the audited Group
annual financial statements have been prepared in accordance with Statements
of Generally Accepted Accounting Practice in South Africa and International
Accounting Standards. The accounting policies used in the preparation of the
annual financial statements are consistent with those used in the previous
year.
Audited results
Ernst & Young has audited the Group annual financial statements. Their
unqualified audit report is available for inspection at the Company"s
registered office.
Directorate
Since year end Mr D N Murray, a non-executive director of the Company,
has resigned and Mr D N Campbell has been appointed in his stead on
31 July 2003.
On 31 July 2003 Messrs G S Potgieter and M J N Uys were appointed as
alternate directors to Messrs R P Menell and D N Campbell respectively.
Dividend announcement
Notice is hereby given that a final dividend No. 128 of R5,00 per share
has been declared payable to members. The dividend has been declared in the
currency of the Republic of South Africa.
Trading in the STRATE environment requires settlement within five
business days. In accordance with STRATE, the following dates will apply to
the final dividend:
The last day for trading to qualify for and participate
in the dividend ("Cum" dividend) Friday,12 September 2003
Trading ex dividend commences Monday,15 September 2003
Record date Friday, 19 September 2003
Dividend payment date (electronic and
certificated register) Monday, 22 September 2003
Dividend cheques in payment of this dividend to certificated shareholders
will be posted to shareholders on or about Monday, 22 September 2003.
Electronic payment to certificated shareholders will be undertaken
simultaneously.
Dematerialised shareholders will have their accounts at their Central
Securities Depository Participant or broker
credited on Monday, 22 September 2003.
In the case of certificated shareholders, notice of any change in address
must reach the transfer secretaries, Computershare Limited, on or before
Friday, 12 September 2003. Share certificates may not be dematerialised or
rematerialised from Monday, 15 September 2003 to Friday, 19 September 2003,
both days inclusive.
By order of the board
Anglovaal Mining Limited
Secretaries
per: A. Jepson
Registered office:
56 Main Street
Johannesburg, 2001
28 August 2003
Directors: Desmond Sacco (Chairman), R. P. Menell (Deputy Chairman),
R. J. Carpenter, C. J. Cory, P. C. Crous, D. N. Campbell,
B. R. Broekman, J. C. Steenkamp.
Alternate directors: B. J. Funston, A. D. Stalker*, J. W. Lewis*,
G. S. Potgieter, G. C. Butler*, M. J. N. Uys, F. H. Kalp,
A. McAdam*. *British
Company secretary: Anglovaal Mining Limited
