| Mon 16 Aug 2004, 17:39 | | Results For The Year Ended 30 June 2004 |
|
Assmang Limited - Financial Results For The Year Ended 30 June 2004
Assmang Limited
(Incorporated in the Republic of South Africa)
(Registration number 1935/007343/06)
Share code: ASG ISIN: ZAE000030789
(`the Company` or `the Group`)
FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2004
Salient features
* Turnover increases by 14 percent despite stronger rand
* Headline earnings increase by 5 percent
* Increased sales volumes and prices for all products
* First production from the new shaft complex at Nchwaning
* Strong performance in second half of the year: operating profit
R392 million compared to R52 million at 31 December 2003
GROUP BALANCE SHEET
At 30 June
2004 2003
Reviewed Audited
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 2 395 331 2 072 198
Deferred tax assets 4 972 12 006
Environmental rehabilitation trust fund 18 617 13 068
Current assets
Inventories 889 164 829 772
Trade and other receivables 908 562 696 480
Deposits and cash 9 951 3 162
Total assets 4 226 597 3 626 686
EQUITY AND LIABILITIES
Ordinary share capital at premium 13 385 13 385
Retained earnings 2 466 841 2 275 130
Total shareholders` interest 2 480 226 2 288 515
Non-current liabilities
Long-term borrowings 14 285 3
Deferred tax liabilities 527 587 447 768
Long-term provisions 63 830 35 845
Current liabilities
Trade and other payables 373 338 2 98 649
Short-term provisions 15 450 11 355
Overdrafts and short-term borrowings 737 190 5 24 036
Taxation 14 691 20 515
Total equity and liabilities 4 226 597 3 626 686
GROUP INCOME STATEMENT
Year ended 30 June
2004 2003
Reviewed Audited
R`000 R`000
Turnover 3 304 537 2 904 483
Cost of sales 2 740 527 2 308 403
Gross profit 564 010 596 080
Other operating income 22 125 13 119
Other operating expenses 193 824 219 895
Profit from operations 392 311 389 304
Interest received 1 734 1 306
Finance costs 51 741 56 883
Profit before taxation and State`s share
of profit 342 304 333 727
Taxation and State`s share of profit 123 981 129 888
Earnings 218 323 203 839
Determination of headline earnings
Earnings 218 323 203 839
Profit on disposal of property, plant and
equipment 4 502 22
Headline earnings 213 821 203 817
Number of ordinary shares in issue (`000) 3 548 3 548
Earnings per share (cents)
- Attributable 6 153 5 745
- Headline 6 026 5 745
Dividends per share (cents) 750 1 200
GROUP CASH FLOW STATEMENT
Year ended 30 June
2004 2003
Reviewed Audited
R`000 R`000
CASH FLOW FROM OPERATING
ACTIVITIES
Cash generated from operations 389 853 553 836
Interest received 1 734 1 306
Finance costs (70 003) (56 883)
Dividends paid (26 612) (42 578)
Taxation paid (42 921) (77 480)
Net cash inflow from operating
activities 252 051 378 201
CASH FLOW FROM INVESTING
ACTIVITIES
Additions to property, plant and
equipment to maintain operations (458 107) (338 116)
Proceeds on disposal of property,
plant and equipment 6 219 1 702
Net cash outflow from investing activities (451 888) (336 414)
CASH FLOW FROM FINANCING
ACTIVITIES
Long-term borrowings repaid (3) (49)
Increase/(decrease) in short-term
borrowings 206 629 (53 453)
Net cash in/(out)-flow from
financing activities 206 626 (53 502)
Net increase/(decrease) in cash
and cash equivalents 6 789 (11 715)
Cash and cash equivalents
at beginning of year 3 162 14 877
Cash and cash equivalents
at end of year 9 951 3 162
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Stated Retained 2004 2003
capital earnings Total Total
R`000 R`000 R`000 R`000
Balance at
beginning of
year (audited) 13 385 2 275 130 2 288 515 2 127 254
Earnings for the
year - 218 323 218 323 203 839
Ordinary dividends
paid - (26 612) (26 612) (42 578)
Balance at end of
year (reviewed) 13 385 2 466 841 2 480 226 2 288 515
RESULTS
The Group`s turnover for the year ended 30 June 2004 rose by 13,8 percent to R3
304,5 million. Attributable earnings increased by 7,1 percent to R218,3 million
(2003: R203,8 million), equivalent to R61,5 per share (2003: R57,5 per share).
Headline earnings increased by 4,9 percent to R213,8 million (2003:
R203,8 million).
Contributions to attributable earnings by the three divisions, before deducting
secondary tax on companies of R3,3 million (2003: R5,3 million) amounted to
R235,4 million (2003: R285,1 million) from the manganese division, R11,1
million (2003: R58,6 million) from the iron ore division and a loss of R24,9
million (2003: R134,6 million - loss) from the chrome division.
Production volumes, including production to supply the Group`s alloy
operations, across all the Group`s commodities increased over those of the
previous year as detailed in the table below:
Production Tons
2004 2003 Percentage
Tons `000 Tons `000 increase
Iron Ore 6 260 5 810 7,7
Manganese Ore 1 406 1 374 2,3
Manganese Alloys 238 229 3,9
Charge Chrome 263 222 18,5
Chrome Ore 648 604 7,3
The rand/ US dollar exchange rate continued to be the key determinant of the
Group`s performance during the year. The rand equivalent of total US dollar
revenue showed substantial decreases from that of the previous year, mainly as a
result of the appreciation of the rand against the US dollar. An average
exchange rate of R6,77 to the US dollar was realised on export proceeds,
compared with R8,97 for the previous year, but solid operational performances
somewhat countered the adverse effects of the stronger average rand/US dollar
exchange rate.
Sales
World crude steel production for the first half of calendar 2004 increased by
7,8 percent to 502,3 million tons and it is estimated that production should
exceed one billion tons by the end of calendar 2004 (2003: 965 million tons).
China continues to be the main contributor to the record production levels and
is producing at a level of 21 percent above the first half of calendar 2003.
Consequently, sales volumes of iron ore for the year under review increased to a
record 5,5 million tons (2003: 5,3 million tons). Further increases in sales
volumes will be constrained by limited railage and shipping capacity through the
port of Saldanha Bay. As a result of buoyant markets, US dollar prices for both
iron ore lumpy and fines have increased on average by 19 percent for the period
April 2004 to March 2005.
Despite the increase in global steel production, sales volumes of manganese ore
were only slightly higher than last year`s levels at 1,4 million tons (2003: 1,2
million tons), due to constraints in rail and port facilities. In Japan, US
dollar prices for manganese ore for the period April 2004 to March 2005 have
increased on average by 16 percent.
The Group is working with Spoornet and the South African Port Operations to
increase both iron and manganese ore logistical capacity.
Sales of manganese alloys increased from those of the previous year to 218 000
tons (2003: 197 000 tons), in line with both higher production and a reduction
in stock levels at the Cato Ridge Works. High carbon ferromanganese sales
increased to 143 000 tons (2003: 127 000 tons) and sales of refined
ferromanganese were slightly higher at 47 000 tons (2003: 45 000 tons). Silico
manganese sales also improved to 28 000 tons (2003: 25 000 tons) as a result of
increased production volumes. Recently, manganese alloy prices have reached
unprecedentedly high levels due to strong demand, the closure of a major French
high carbon ferromanganese producer and production cutbacks in China due to a
shortage of electric power. It is anticipated that demand will remain robust but
that prices could ease. However, pressure due to high costs of coke, electricity
and ocean freight should ensure that prices do not fall back to previous levels.
Global stainless steel production continued to show positive growth over the
year and total production for calendar 2004 is likely to reach almost 24,0
million tons (2003: 22,5 million tons). The stronger rand together with low
ferrochrome stocks worldwide and the same cost factors as manganese alloys,
resulted in US dollar prices for charge chrome rising by 75 percent over the
past year. Sales volumes of charge chrome increased by over 20 percent to a
record 295 000 tons (2003: 244 000 tons).
Major capital projects
Assmang continued its significant capital programme, spending R493,5 million
(2003: R338,1 million) during the year including capitalised interest at R18,3
million and finance leases of R17,1 million. Of this, R182,3 million was spent
on the new shaft complex at the Nchwaning manganese mine, which has commenced
production and is currently being ramped up. The total capital cost of the
project is estimated to be R748,0 million excluding capitalised interest.
Assmang has spent R2,1 billion over the past six years on re-capitalising and
enlarging the businesses of all its commodity divisions.
Total commitments in respect of further capital expenditure at 30 June 2004 are
R441,5 million (2003: R342,3 million) and this will be spent on current and
additional enhancement projects. These projects will include the completion of
the Nchwaning shaft complex, the construction of an underground mine at
Dwarsrivier chrome mine to replace the existing opencast mine and the
development of mineable reserves at the iron ore division. This expenditure will
be funded from internally generated cash and available borrowing resources.
Borrowings
Short-term borrowings at 30 June 2004 were higher at R737,2 million compared to
R524,0 million at 30 June 2003. The additional borrowings were incurred mainly
in financing the capital expenditure programmes noted above.
Long-term borrowings at 30 June 2004 increased to R14,3 million compared to
R0,003 million at 30 June 2003. These borrowings comprise finance leases to
acquire mining vehicles.
Fatalities
The Board regrets to report that two employees tragically lost their lives in
two separate incidents at the Group`s chrome mine and ferrochrome smelter during
the year under review.
The board extends its condolences to the bereaved families and friends.
Outlook
International demand for the Group`s products remains fairly buoyant and volumes
are expected to approximate those of the year under review, however, US dollar
prices for the Group`s products are expected to be higher than those achieved in
the past financial year. Earnings growth will be largely dependant on the
rand/US dollar exchange rate and cost saving exercises which have already
yielded positive results at the Group`s divisions. Better margins for
ferrochrome could flow from improved utilisation of available capacity and
higher prices.
Alternative expansion scenarios involving the Group`s iron ore assets in the
Northern Cape, adjacent to Sishen, are being investigated.
Dividends
An interim dividend of R2,50 per share (2003: R5,00 per share) was declared on
10 March 2004 and paid to shareholders on 5 April 2004.
A final dividend of R7,50 per share (2003: R5,00 per share) has been declared
after year end and is not included in the results recorded in this announcement.
Accounting policies
The financial information included in this announcement has been prepared in
accordance with Statements of Generally Accepted Accounting Practice in South
Africa and International Financial Reporting Standards. The accounting policies
used are consistent with those used in the previous year.
Audit review
The year end results have been reviewed in terms of Rule 3.22 of the Listings
Requirements of the JSE Securities Exchange South Africa by the Company`s
auditors, Ernst & Young. Their unqualified review opinion is available for
inspection at the Company`s registered office.
Directorate
With effect from 1 May 2004 Mr D. N. Campbell resigned as a director of the
Company and Mr M. Arnold was appointed in his stead.
Messrs M. J. N. Uys and P. G. W. Henderson were appointed as alternate directors
to Messrs M. Arnold and J. C. Steenkamp, respectively.
Dividend announcement
Notice is hereby given that a final dividend No.130 of R7,50 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 and salient features apply to the
final dividend:
* The last date to trade to qualify for the dividend (and for changes of
address or dividend instructions) will be Friday, 3 September 2004.
* The Company`s ordinary shares will commence trading (`ex` the dividend)
from the commencement of business on Monday, 6 September 2004.
* The record date will be Friday, 10 September 2004.
* Dividend cheques in payment of this dividend to certificated shareholders
will be posted on or about Monday, 13 September 2004. 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, 13 September
2004.
* Share certificates may not be dematerialised or rematerialised between
Monday, 6 September 2004 and Friday, 10 September 2004, both days inclusive.
By order of the board
African Rainbow Minerals Limited
Secretaries
per: A. Jepson
Registered office: 24 Impala Road, Chislehurston, 2196
16 August 2004
Directors: Desmond Sacco (Chairman), R. P. Menell (Deputy Chairman),
R. J. Carpenter, C. J. Cory, P. C. Crous, M. Arnold, B. R. Broekman,
J. C. Steenkamp
Alternate directors: P. G. W Henderson, A. D. Stalker*, J. W. Lewis*,
G. S. Potgieter, G. C. Butler*, M. J. N. Uys, F. H. Kalp, A. McAdam*
*British
Company secretary: African Rainbow Minerals Limited
Date: 16/08/2004 05:13:09 PM
Produced by the JSE SENS Department
