| Thu 19 Feb 2004, 9:21 | | NEWS RELEASE: INTERIM RESULTS FOR PERIOD ENDED |
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KUMBA RESOURCES LIMITED - NEWS RELEASE: INTERIM RESULTS FOR PERIOD ENDED
31 DECEMBER 2003
Kumba Resources Limited
(Incorporated in the Republic of South Africa)
Registration number: 2000/011076/06
JSE Share code: KMB
ISIN code: ZAE000034310
("Kumba")
Telephone: + 27 (12) 307 4843
Telefax: + 27 (12) 307 4080
P.O. Box 9229
PRETORIA
0001
KUMBA RESOURCES INTERIM RESULTS FOR PERIOD ENDED 31 DECEMBER 2003
* Solid operational performance
* Interim dividend of 20 cents per share
* 18,62% US dollar iron ore price increase from April 2004
Diversified metals and mining company Kumba Resources (Kumba) today reported
revenue of R3,96 billion for the six months ended 31 December 2003, an increase
of 5% compared with the corresponding period last year.
The consolidation of Ticor Limited, Australia, from 1 April 2003 was the main
contributor to the increased revenue while higher iron ore prices and increased
coal and heavy minerals sales volumes were offset by a stronger currency.
"The group maintained its sound operational performance with a significant
improvement in production levels on the previous corresponding period while
recording strong sales volumes," said Kumba"s chief executive Dr Con Fauconnier.
The continued strengthening of the rand resulted in lower operating margins
despite the effects of operating efficiencies and cost control measures.
Profit attributable to ordinary shareholders reduced by 37% to R265 million as a
result of a lower net operating profit, a reduction in income from equity
accounted investments and the impairment of the cyanide plant at Ticor Limited,
offset to some extent by a lower tax charge.
Headline earnings decreased 46% to R243 million, or 81,5 cents per share,
compared with the same period last year.
Net cash outflow for the period was R272 million after capital expenditure of
R618 million, which included R276 million invested in the Ticor SA project. Net
debt increased to R2,57 billion with debt to equity ratio of 41%.
Safety
The group achieved an all-time low lost day injury frequency rate of 1,91 per
million man-hours worked (LDIFR) for the interim period. Regrettably, shortly
after the end of the period a fatal accident occurred at the Sishen mine. The
group is committed to a LDIFR of below 2,5 and zero fatalities.
Outlook
The group is pursuing cost containment and value-enhancing initiatives to
protect operating margins. These initiatives, together with the 18,62% average
increase in the US dollar price of iron ore from 1 April 2004 and the recovery
in LME zinc prices will have a positive impact on the group"s results. Earnings,
however, will continue to be affected by the value of the rand.
Shareholding And Reporting Of Results
On conclusion of the mandatory offer made to Kumba"s minority shareholders,
Anglo American plc announced on 8 December 2003 that it had increased its
shareholding in Kumba to 66,62%. In line with the year-end of its controlling
shareholder, Kumba will change its year-end from 30 June to 31 December.
Dividend
The Kumba board has reviewed the group"s policy of considering dividends
annually based on the full year"s results and has approved the payment of an
interim dividend. The directors have accordingly resolved to declare dividend
number 3 of 20 cents per share in South African currency in respect of the
interim period ended 31 December 2003.
Board Of Directors
Following the change in control of Kumba, the Board has appointed Messrs WA
Nairn, PL Zim and PM Baum as non-executive directors of Kumba with effect from
17 February 2004.
ends
* View or download the full results announcement on www.kumbaresources.com
* See Addendum 1 for Operational highlights; Addendum 2 for Business
development.
Note:
Kumba Resources Limited, one of the largest South African-based mining companies
listed on the JSE Securities Exchange, is a focused metals and mining company
with a diverse commodity portfolio consisting of iron ore, heavy minerals, coal,
base metals and industrial minerals. www.kumbaresources.com
19 February 2004
For media relations enquiries contact:
Pat Mdoda
General Manager: Corporate Affairs
Tel: 012 - 307-4552
Mobile: 083 609 1204
For investor relations enquiries contact:
Trevor Arran
General Manager: Investor Relations
Tel: 012 - 307-3292
Mobile: 083 609 1444
ADDENDUM 1:
OPERATIONAL HIGHLIGHTS
(Compared to corresponding interim period last year)
Iron Ore
* Combined production from Sishen and Thabazimbi increased 8%.
* Revenue decreased 20% as the 9% average increase in iron ore prices was
more than offset by a stronger average exchange rate.
* Net operating profit decreased 42% to R299 million despite better operating
efficiencies and a reduction in unit production costs.
Coal
* Record production and sales volumes were achieved to meet increased demand
from Eskom and other local clients.
* Higher demand resulted in revenue increasing 5%.
* Net operating profit was marginally lower due to a strong rand and
increased distribution costs, which outweighed higher revenue and good cost
control.
Heavy Minerals
Ticor SA Project
* The furnaces continue to ramp-up according to the planned schedule,
resulting in greater production of slag and pig iron.
* Revenue remained virtually unchanged compared with the corresponding
interim period as higher sales, which included the first two shipments of
chloride slag, were negated by the stronger rand. The stronger currency
resulted in an operating loss being reported for the period.
Ticor Limited
* The segmental results reflect the impact of the consolidation of Ticor
Limited on the group operating results.
* Strong production volumes were achieved with synthetic rutile reaching
record levels.
* Revenue and net operating profit were higher than the first quarter as
increased sales of zircon, rutile and synthetic rutile offset the impact of
the strong Australian dollar. Ticor Limited contributed R623 million in
revenue and R48 million in net operating profit to the group for the
interim period under review.
* Unfavourable market conditions and the stronger Australian dollar have
necessitated a review of the potential recovery of the capital investment
of Ticor Limited in its cyanide plant at Gladstone, Queensland. As a
result, the carrying value of this non-core investment has been impaired in
the amount of A$18 million (R88 million).
Base Metals
* Although the LME US dollar zinc prices recovered significantly, the rand-
denominated average zinc price was 22% lower compared with the
corresponding period last year.
* Despite the planned maintenance shut at the zinc refinery, good production
and steady sales performances ensured that revenue was only marginally
lower. Lower treatment charges earned by the refinery, however, resulted in
an operating loss being recorded for the period.
* Kumba has a 85% interest in ZnErgy (Pty) Limited at an investment value of
R35 million. ZnErgy manufactures zinc air fuel battery components under
licence from Zoxy Energy Systems AG. Zoxy is also the supplier of a
critical component to ZnErgy and offtaker of the final product. Subsequent
to the end of the interim period, Zoxy filed for bankruptcy under German
law. Kumba is currently investigating the business alternatives available
to it. Should it be necessary to impair the investment in ZnErgy, the
impact would be a reduction of 10 cents per share on attributable earnings
for the period under review.
Industrial Minerals
* The business continued to make a positive contribution to the group"s
operating results despite weaker market conditions.
ADDENDUM 2:
BUSINESS DEVELOPMENT
Iron Ore
Value adding initiatives to optimise Kumba"s assets in the Northern Cape and to
benefit from the strong global demand for Sishen iron ore are being fast
tracked. These include increased production at the Sishen mine and the planned
development of Sishen South.
Negotiations with Transnet on the contemporaneous expansion of the
infrastructure facilities which are essential to Kumba"s planned iron ore growth
initiatives are being progressed.
As announced, discussions on the potential for an asset swap with Assmang have
been suspended by mutual agreement between the parties.
Completion of a technical feasibility study for the development of the A$1 600
million Hope Downs project in Western Australia, with positive market offtake
support, has been followed by the finalisation of value-enhancement studies. An
appropriate funding structure based on stand-alone infrastructure models is
being investigated while the recent positive court ruling on shared
infrastructure offers the opportunity to consider its viability.
Coal
The development of the Inyanda Coal (Kalbasfontein) joint venture project with
Eyesizwe Coal for the export of one million tons of coal per annum continues to
be negatively affected by the delays experienced in the finalisation of the
infrastructure arrangements in respect of the Phase V expansion of the Richards
Bay Coal Terminal (RBCT). Although progress has been made on the finalisation of
the lease agreement between the National Ports Authority and RBCT for the
expansion, the project will only be able to proceed once the rail agreement with
Spoornet for the Phase V participants as well as the RBCT shareholders"
agreement is concluded.
At Grootegeluk mine, studies to investigate the viability of increasing
production of semi soft coking coal and other specialist coals for the
metallurgical sector have been initiated.
Base Metals
Construction of a second, 25 000 ton per annum module at the Hongye Zinc
Refinery in China (in which Kumba has a 60% interest) was completed on schedule
in December 2003; the related Lindong concentrate roaster will be commissioned
during 2004. Zinc feedstock supplies for the refinery have also been secured.
Heavy Minerals
An agreement was concluded with Madagascar Resources NL (MRNL) to conduct a
feasibility study on mineral sands tenements held by MRNL in South-Western
Madagascar. The deposit has potential to provide ilmenite feedstock that could
support the expansion of the smelting facilities at Empangeni.
Date: 19/02/2004 07:01:08 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
