| Mon 22 Aug 2005, 16:15 | | Assmang Limited - Financial results for the year e |
|
Assmang Limited - Financial results for the year ended 30 June 2005
ASSMANG LIMITED
Incorporated in the Republic of South Africa
Registration number 1935/007343/06
Share code: ASG & ISIN: ZAE000030789
FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2005
Salient features
* Turnover increases by 33 percent
* Increased sales volumes for manganese and iron ore
* Improved performances from all operations
* headline earnings increase by 349 percent
* Final dividend increases by R26.50 per share
* Increased final dividend
GROUP BALANCE SHEET
AT 30 JUNE
2005 2004
Reviewed Audited
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 2 778 702 2 395 331
Deferred tax assets - 4 972
Environmental rehabilitation
trust fund 25 536 18 617
Current assets
Inventories 1 136 587 889 164
Trade and other receivables 1 088 667 908 562
Cash and cash equivalents 39 883 9 951
Total assets 5 069 375 4 226 597
EQUITY AND LIABILITIES
Ordinary share capital and premium 13 385 13 385
Retained earnings 3 325 335 2 466 841
Total shareholders` interest 3 338 720 2 480 226
Non-current liabilities
Long-term borrowings 13 216 14 285
Deferred tax liabilities 730 634 527 587
Long-term provisions 97 391 63 830
Current liabilities
Trade and other payables 500 217 373 338
Short-term provisions 18 362 15 450
Overdrafts and short-term
borrowings 160 804 737 190
Taxation 210 031 14 691
Total equity and liabilities 5 069 375 4 226 597
GROUP INCOME STATEMENT
YEAR ENDED 30 JUNE
2005 2004
Reviewed Audited
R`000 R`000
Turnover 4 406 474 3 304 537
Cost of sales 2 916 680 2 740 527
Gross profit 1 489 794 564 010
Other operating income 167 561 22 125
Other operating expenses 204 536 193 824
Profit from operations 1 452 819 392 311
Interest received 2 351 1 734
Finance costs 40 920 51 741
Profit before taxation and
State`s share of profit 1 414 250 342 304
Taxation and State`s share of profit 465 277 123 981
Earnings 948 973 218 323
Determination of headline earnings
Earnings 948 973 218 323
Loss/(profit) on disposal of
property, plant and equipment 7 990 (4 502)
Loss on scrapping of plant and equipment 2 134 -
Headline earnings 959 097 213 821
Number of ordinary shares
in issue (`000) 3 548 3 548
Earnings per share (Rand)
- Attributable 267,45 61,53
- Headline 270,30 60,26
Dividends paid per share (Rand) 25,50 7,50
GROUP CASH FLOW STATEMENT
YEAR ENDED 30 JUNE
2005 2004
Reviewed Audited
R`000 R`000
Cash flow from operating activities
Cash generated from operations 1 456 875 389 884
Interest received 2 351 1 734
Finance costs (44 588) (70 003)
Dividends paid (90 479) (26 612)
Taxation paid (61 915) (42 952)
Net cash inflow from operating activities 1 262 244 252 051
cash flow from
INVESTING activities
Additions to property, plant and equipment
to maintain operations (583 054) (458 107)
Additions to plant and machinery
to expand operations (92 427) -
Proceeds on disposal of property, plant
and equipment 20 624 6 219
Net cash outflow from investing activities (654 857) (451 888)
Cash flow from financing activities
Long-term borrowings raised/(repaid) 2 924 (3)
(Decrease)/increase in short-term borrowings (580 379) 206 629
Net cash (outflow)/inflow from
financing activities (577 455) 206 626
Net increase in cash and cash equivalents 29 932 6 789
Cash and cash equivalents
at beginning of year 9 951 3 162
Cash and cash equivalents
at end of year 39 883 9 951
GROUP STATEMENT OF CHANGES IN
SHAREHOLDERS` EQUITY
YEAR ENDED 30 JUNE
2005 2004
Reviewed Audited
R`000 R`000
Share capital and premium
Balance at beginning and end of year 13 385 13 385
Retained earnings
Balance at beginning of year 2 466 841 2 275 130
Earnings per income statement 948 973 218 323
Ordinary dividends (90 479) (26 612)
Balance at end of year 3 325 335 2 466 841
COMMENT
Results
The Group`s turnover for the year ended 30 June 2005 rose by 33,4 percent to R4
406,5 million (2004: R3 304,5 million). Attributable earnings increased by
334,7 percent to R949,0 million (2004: R218,3 million), equivalent to R267,5 per
share (2004: R61,5 per share). Headline earnings increased by 348,6 percent to
R959,1 million (2004: R213,8 million).
The significant improvement in the Group`s results can be mainly attributed to
increases in US dollar commodity prices across all the Group`s products,
particularly manganese alloys which peaked during the year but which at year end
were at lower levels. Increases in sales volumes for manganese and iron ores
together with the weakening of the rand against the US dollar towards the latter
part of the financial year also impacted positively on the year`s results.
Simultaneously, cost of sales was contained through operational efficiencies and
effective unit cost control programmes.
Contributions to attributable earnings by the three divisions, before deducting
secondary tax on companies of R11,3 million (2004: R3,3 million) amounted to
R747,7 million (2004: R235,4 million) from the manganese division, R135,2
million (2004: R11,1 million) from the iron ore division and R77,4 million (2004
: R24,9 million - loss) from the chrome division.
Sales
World crude steel production was at a record level of 1,06 billion tons in
calendar 2004, which was over 9 percent above the level achieved in calendar
2003. The main contributor to this record level was China, where production
increased by more than 22 percent from 222 to 272 million tons.
It is anticipated that world steel production in 2005 will exceed 1,1 billion
tons, with China providing strong growth in the various major producing regions.
Iron Ore Division
Continued strong world demand for iron ore resulted in a US dollar price
increase of 71,5 percent for the period April 2005 to March 2006.
Sales volumes of iron ore for the year increased by 2,8 percent to 5 776 000
tons (2004: 5 460 000). It is anticipated that any further increases in sales
volumes for the year ahead will be limited to similar levels mainly due to
constraints on the railage through the Orex line and shipping capacity through
the port of Saldanha Bay.
Manganese Division
Sales volumes of manganese ore increased by 25,9 percent to 1 811 000 tons
(2004: 1 438 000 tons) due to increased global demand and improved availability
of logistical capacity through the port of Port Elizabeth. Strong demand,
principally in China resulted in the bench-mark price in Japan increasing by 63
percent. However, the Group anticipates that the manganese ore market could come
under pressure in the coming year due to potential oversupply.
The Group is continually working with Spoornet and The South African Port
Operations to increase both iron and manganese ore logistical capacity on
railway lines and at the harbours.
Sales volumes of manganese alloys decreased from those of the previous year to
197 000 tons (2004: 218 000 tons) due to the reduction in demand from major
contract customers in the USA and Europe, timing of shipments and increasing
stock levels to allow for furnace rebuilds. High carbon ferromanganese sales
volumes decreased to 134 000 tons (2004: 143 000 tons) and sales volumes of
refined ferromanganese were maintained at 47 000 tons. Silico manganese sales
volumes decreased to 16 000 tons (2004: 28 000 tons) as production of silico-
manganese was terminated in September 2004. Recently, manganese alloy prices
have fallen due to an oversupply situation; this is mainly due to over
production, particularly outside China, and the recent steel production cutbacks
that have reduced demand. It is anticipated that the pressure on pricing will
continue until the stock overhang has been eradicated.
Chrome Division
The first half of calendar 2005 has seen very strong stainless steel production
of almost 13 million tons (2004 calendar year: 24.6 million tons). Much of this
growth has come from China where stainless production has increased more rapidly
than anticipated. However, outside of China, production for the third quarter of
calendar 2005 will be substantially reduced and any meaningful increase
thereafter depends on an economic revival in Europe and North America.
Ferrochrome prices increased for the first two quarters of calendar 2005 due to
good demand and a strong rand. However, the price reduction of 6 per cent for
the third quarter of calendar 2005 sales reflects a weakening in demand. Sales
volumes of charge chrome decreased in 2005 to 262 000 tons (2004: 295 000 tons)
mainly as a result of furnace availability.
Major capital projects
The Group continued with its capital expenditure programme, spending R699,1
million (2004: R493,7 million) during the year including capitalised interest of
R3,7 million (2004: R18,3 million). Of this, R202,7 million was spent on
completing the new shaft complex at the Nchwaning manganese mine, which has
commenced production and is fully operational. The total capital cost of the
project is estimated to be R748,0 million excluding capitalised interest of
which R688,6 million has already been spent. A further R82,0 million was spent
on the construction of the Dwarsrivier underground mine, which is expected to be
completed by the end of this calendar year at a total capital cost of R221,7
million.
Assmang has spent R2,5 billion over the past five years on re-capitalising and
expanding the business capacity at all of its operations.
Total commitments for future capital expenditure at 30 June 2005 amount to
R454,4 million (2004: R441,5 million), which will mainly be spent on current and
additional enhancement projects. This expenditure will be funded from internally
generated cash and available borrowing resources.
Current projects underway within Assmang`s growth strategy include:
* The completion of the underground mine at Dwarsrivier chrome to replace the
existing opencast;
* The development of additional mineable reserves at the iron ore division,
which includes the commissioning of an additional opencast mining area at the
Group`s Beeshoek and Board approval to confirm the mining and development of the
vast resources north of the Beeshoek mine, and adjacent to Sishen, on the Bruce,
King and Mokaning properties; and
* The upgrading of certain furnaces at the Group`s operations at Cato Ridge and
Machadodorp.
Borrowings
Short-term borrowings at 30 June 2005 were substantially lower at R160,8 million
compared to R737,2 million at the end of June 2004. The substantial decrease in
borrowings can be attributed to increased cash flow from improved operational
performances at all of the Group`s operations.
Long-term borrowings at 30 June 2005 decreased to R13,2 million (2004: R14,3
million). These borrowings comprise finance leases to acquire mining vehicles.
Outlook
International demand for iron ore remains fairly buoyant and volumes for the
year ahead are expected to approximate those of the year under review. However,
demand and prices for the Group`s other products could come under pressure due
to an over supply in the international market. Increase in sales volumes of iron
ore will largely be dependant on finalisation of logistical capacity with
Spoornet and The South African Port Operations.
Earnings growth for the year ahead will largely be dependant on the rand/US
dollar exchange rate, US dollar prices and cost saving exercises, which have
already yielded positive results at the Group`s divisions.
Dividends
Given the Company`s improved results and cash flow position, which has resulted
from the significant increase in earnings, an interim dividend of R18,00 per
share (2004: R2,50 per share) was declared on 14 February 2005 and paid to
shareholders on 14 March 2005.
A final dividend of R34,00 per share (2004: R7,50 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 3.23 of the Listing
Requirements of the JSE Limited by the Company`s auditors, Ernst & Young. Their
unqualified review opinion is available for inspection at the Company`s
registered office.
Contingent Liability
A termination account of a contractor that went into liquidation in 2004 before
contract completion, is in dispute. This account deals with claims and
counterclaims between the Company and the contractor in liquidation. The
ultimate outcome of the matter cannot presently be determined and the directors
are of the opinion that no provision for any liability that may accrue needs to
be provided for in these results.
Directorate
On 20 January 2005 Messrs R P Menell and M Arnold tendered their resignations as
directors of the Company and Messrs A J Wilkens and F Abbott were appointed in
their stead. The directors, on 27 January 2005, appointed Mr A J Wilkens as the
Company`s deputy chairman in the place of Mr R P Menell.
On 20 January 2005 Messrs A J Wilkens and F Abbott appointed Messrs W M Gule and
M Arnold respectively as their alternates.
Dividend announcement
Notice is hereby given that a final dividend No.132 of R34,00 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 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, 9 September 2005.
* The Company`s ordinary shares will commence trading (`ex` the dividend) from
the commencement of business on Monday, 12 September 2005.
* The record date will be Friday, 16 September 2005.
* Dividend cheques in payment of this dividend to certificated shareholders will
be posted on or about Monday, 19 September 2005. Electronic payment to
certificated shareholders will be undertaken simultaneously.
* Dematerialised shareholders will have their accounts credited at their Central
Securities Depository Participant or broker on Monday, 19 September 2005.
* Share certificates may not be dematerialised or rematerialised between Monday,
12 September 2005 and Friday, 16 September 2005, both days inclusive.
By order of the board
African Rainbow Minerals Limited
Secretaries
per: A. Jepson
Registered office: 24 Impala Road, Chislehurston, 2196
22 August 2005
Directors: Desmond Sacco (Chairman), A. J. Wilkens (Deputy Chairman),
F. Abbott, B. R. Broekman, R. J. Carpenter, C. J. Cory, P. C. Crous,
J. C. Steenkamp
Alternate directors: M. Arnold, G. C. Butler*, W. M. Gule, P. G. W Henderson, F.
H. Kalp, J. W. Lewis*, A. McAdam*, A. D. Stalker*.
*British
Company secretary: African Rainbow Minerals Limited
Date: 22/08/2005 04:11:09 PM
Produced by the JSE SENS Department
