| Wed 3 Aug 2005, 8:26 | | Kumba - Kumba Interim Results |
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Kumba - Kumba Interim Results
KUMBA RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 2000/011076/06)
Share Code: KMB
ISIN Number: ZAE000034310
(`Kumba`)
KUMBA RESOURCES REVIEWED GROUP INTERIM FINANCIAL RESULTS AND PHYSICAL
INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2005
Sustained excellent operational performance
Buoyant commodity prices
Strong cash flow
Headline earnings per share up 200%
Major expansion projects under way
Interim dividend of 160 cents per share
Special dividend of 220 cents per share
Diversified South African-based metals and mining company Kumba Resources
Limited (Kumba) today reported revenue of R5,3 billion and net operating profit
of R1,5 billion for the six months ended 30 June 2005.
Attributable earnings per share compared with the comparative period in 2004 are
284% higher at 318 cents and headline earnings are 200% higher at 318 cents per
share. Revenue increased by 22% and net operating profit increased 149% in the
period.
`The results for the six months to 30 June 2005 reflect a continuation of the
excellent operational performance of the group,` said Dr Con Fauconnier, Kumba`s
chief executive.
`Increased commodity prices across all business segments, strong market demand
and the ongoing realisation of the benefits of the business improvement
programme in respect of revenue enhancement and cost savings initiatives more
than offset a stronger currency in the period,` he added.
An average exchange rate of R6,20 to the US dollar was realised compared with
R6,38 for the same six-month period in 2004.
EARNINGS
The more than doubling in net operating profit resulted in an increase in
attributable earnings by R711 million to R954 million and headline earnings by
R646 million to R963 million, after accounting for a 146% increase in the
group`s tax charge due to the higher taxable income for the period.
The settlement of A$231.4 million before tax that was received on 1 July 2005
for Kumba`s interest in the Hope Downs Project will be accounted for in the full
2005 financial year`s results. The option payment of A$5.1 million pre-tax
received on 4 April 2005 is, however, included in the financial results for the
period under review.
CASH FLOW
Higher net cash flow from operating activities and lower capital expenditure,
offset to some extent by higher taxation and dividend payments, resulted in a
net cash inflow of R669 million compared with R171 million in the comparative
period. Net debt of R1,87 billion at 31 December 2004 decreased to R1,26 billion
at 30 June 2005 with a debt to equity ratio of 17%.
SAFETY, HEALTH AND ENVIRONMENT
An average lost time injury frequency rate of 0.57 per 200 000 man-hours worked
(LTIFR) was recorded in the past six months compared with a rate of 0.50 in the
previous six months to December 2004. A target of 0.35 LTIFR has been set for
the group.
Regrettably, two fatalities were suffered during the review period and a further
fatality occurred shortly after the end of the period.
The group remains committed to zero fatalities and its ongoing safety awareness
and preventative programmes are being driven aggressively.
The group`s HIV/Aids voluntary testing and counselling programme has now been
implemented at all its business units. Following the successful implementation
of pilot antiretroviral programmes at certain business units, the group is
extending the programme to all its businesses.
By 30 June 2005, the group had obtained international environment and safety
certifications (ISO 14001 & OHSAS18001) at nine of its 10 business units.
BLACK ECONOMIC EMPOWERMENT
Kumba, in close co-operation with its holding company, Anglo American plc, is
making good progress on its empowerment initiative to achieve a sustainable
position as a pre-eminent South African-based diversified mining company. Kumba
is confident that the proposals under consideration will satisfy the ownership
requirements of the Mineral and Petroleum Resources Development Act and
associated Charter.
OUTLOOK
Higher commodity prices, particularly the substantial iron ore price increase,
and strong market demand together with the ongoing benefits of Kumba`s business
improvement programme, are expected to result in a further improvement in
earnings for the next six months.
DECLARATION OF DIVIDEND NUMBER 6 AND SPECIAL DIVIDEND
The directors have declared an interim dividend, number 6, of 160 cents per
share in respect of the past six-month period. Following the Hope Downs
settlement amount received, a special dividend of 220 cents per share, has also
been declared. Both the dividends have been declared in South African currency
and are payable to shareholders recorded in the books of the company at close of
business on 9 September 2005.
View or download the full results announcement on www.kumbaresources.com
See Addendum 1 for Operational highlights; Addendum 2 for Growth opportunities.
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
Enquiries:
Trevor Arran
General Manager: Corporate Affairs & Investor Relations
Tel: +27 (0) 12 307 3292
Mobile: +27 (0) 83 609 1444
Sponsor:
JP Morgan Equities Limited
ADDENDUM 1:
OPERATIONAL HIGHLIGHTS
Iron Ore
Higher production and sales volumes were recorded.
Sishen mine increased production by 262 000 tonnes to 14,2Mt over the
comparative period. Export sales were 61 000 tonnes higher at 10,6Mt while 421
000 tonnes over the contractual tonnage were sold locally.
Revenue increased by 33% and net operating profit by 184% as higher prices,
increased sales volumes and operating efficiencies more than offset a stronger
rand. An average international iron ore price increase of 71,5% came into effect
on 1 April 2005 and will apply until
31 March 2006.
A new transport agreement, effective from 1 January 2005, was concluded with
Transnet providing for a rand-based rail tariff from Sishen mine to the Saldanha
Bay export facilities and for Kumba`s growth in iron ore exports.
Coal
Total coal production and sales volumes increased by 7% and 6% to 9,9Mt and
10,1Mt respectively mainly as a result of increased demand from Eskom and higher
exports. Power station coal sales were 480 000 tonnes higher at
7,3Mt and export sales 112 000 tonnes higher at 609 000 tonnes.
Revenue increased by 17% as a result of higher volumes and sales prices. The
higher revenue together with ongoing cost containment resulted in net operating
income improving by 41%.
Heavy Minerals
Ticor SA
Furnace 2 was successfully re-commissioned in January 2005 following its shut-
down to effect improvements and repairs. Record monthly titanium slag output was
recorded in March and May of the reporting period.
Revenue increased by 50% in line with the increase in production capacity of the
furnaces and higher prices for zircon and low manganese pig iron. The stronger
currency and the cessation of the capitalisation of costs and interest during
the construction period resulted in an operating loss of R14 million.
Ticor Limited
Mineral production decreased marginally after the planned maintenance shut on
the mineral separation plant and successful relocation of the North mine
concentrator in April 2005.
Revenue declined by 10% due to the final closure in May 2004 of the company`s
chemicals business. Net operating profit, however, increased by 42% to R163
million as a result of higher pigment and zircon prices, margin improvement
initiatives and the elimination of losses recorded by the chemicals business.
Base Metals
A 20% higher average realised zinc price of US$1 223 per tonne resulted in
revenue improving by 6% despite continued depressed treatment charges and lower
export sales.
Net operating profit turned around from a loss of R22 million to a profit of R11
million. This resulted from higher revenue, the non-recurrence of impairment
charges raised in the comparative period and the benefits realised from the
business improvement programme. A provision raised for the introduction of
royalties by the Government of Namibia at the Rosh Pinah mine and higher
exploration costs, however, adversely affected the improvement in net operating
profit.
A provision of R182 million representing the business unit`s best estimate for
the environmental rehabilitation of a residue disposal site at the Zincor
refinery, was raised against its prior year`s retained income. The potential
extent of the liability was previously under investigation as part of a study
into the viability of a project for the reclamation of the zinc and other
residues. Investigation of viable reclamation alternatives is continuing.
Industrial Minerals
The marginal decline in off-take in both the aggregate and agricultural markets
was more than offset by higher average prices and sales volumes of metallurgical
dolomite to the steel industry.
Revenue and net operating profit, as a result, improved by 16% and 30%
respectively.
ADDENDUM 2:
GROWTH OPPORTUNITIES
Iron Ore
The Sishen Expansion Project (SEP) at a capital cost of R3 billion for a 10Mtpa
production increase at Sishen mine by 2009 concurrently with the Sishen-Saldanha
export channel capacity expansions, was approved in February 2005. Construction
has started with commissioning and production ramp-up scheduled from 2007.
A bankable feasibility study for an initial 3Mtpa mine at Sishen South has been
completed and will be presented to the Kumba Board for consideration in the
second half of the year. It is intended to increase production to at least
9Mtpa in future synchronised with expansions to the export channel.
The exploration of the southern part of the Faleme iron ore deposit in Senegal
has been completed and a resource of approximately 240Mt with a grading of 59%
Fe has been confirmed. Exploration in the north has commenced with the
objective of increasing the resource base. Progress has been made in developing
an investment case for the required rail and port infrastructure with Miferso,
the State mining agency. It is envisaged that a decision to proceed with the
bankable feasibility study for the mine could be taken during the last quarter
of 2005.
Coal
The finalisation of the rail agreement for the Phase V expansion at Richards Bay
between Spoornet and the coal industry as a precursor to the development of the
1Mtpa Inyanda joint venture with Eyesizwe Coal near Witbank, remains to be
resolved.
The new coal beneficiation module (GG6) at Grootegeluk mine at a cost ofR320
million to provide 700 000 tonnes of semi-soft coking coal to the planned Mittal
Steel market coke plant in Newcastle, is under construction.
Commissioning of the jig plant at the Leeuwpan mine near Delmas, at a capital
cost of R95 million, to deliver an additional 1Mtpa of power station coal for
consumption by Eskom`s Majuba power station, has commenced.
Following the conclusion of an agreement between Kumba and Anglo Coal Australia
for the joint development of Moranbah South and the adjoining Grosvenor South
coking coal deposits in the Bowen Basin coalfield of Queensland, good progress
has been made on the exploration of the potential open cut resources.
Exploration on the deeper underground long wall resources has also commenced.
A feasibility study for the production of 160 000 tonnes of char for the ferro-
alloy industry was completed during the year. The study is in the final
approval process, and if approved, construction will commence in April 2006 with
anticipated commissioning set for April 2007.
Heavy Minerals
The pre-feasibility study into the Ranobe deposit at Toliara in south-western
Madagascar has been completed. The bankable feasibility study into the
viability of the deposit to provide a long term ilmenite feedstock supply to
Ticor SA, has commenced.
Alloystream TM
The commercialisation of AlloyStreamTM has been advancing steadily. The
technology allows the use of fine, un-agglomerated ore and non-coking coal to
produce high carbon ferro-manganese.
Date: 03/08/2005 07:38:08 AM
Produced by the JSE SENS Department
