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ASSORE LIMITED
REG. NO. 05/37394/06
GROUP RESULTS FOR THE YEAR ENDED 30 JUNE 2000 AND FINAL DIVIDEND DECLARATION
CONSOLIDATED INCOME STATEMENTS
YEAR ENDED YEAR ENDED
30 JUNE 30 JUNE
2000 1999
R'000 R'000
AUDITED AUDITED
TURNOVER 963 614 763 397
NET OPERATING PROFIT 137 981 194 959
DIVIDENDS RECEIVED 5 334 1 171
NET PROFIT BEFORE TAXATION 143 315 196 130
TAXATION 52 248 63 075
NET PROFIT FOR THE YEAR 91 067 133 055
OUTSIDE SHAREHOLDERS' SHARE OF PROFIT 1 476 -
ATTRIBUTABLE EARNINGS 89 591 133 055
DIVIDENDS 8 400 11 200
RETAINED PROFIT FOR THE YEAR 81 191 121 855
EARNINGS PER SHARE (CENTS) 320,0 475,2
DIVIDENDS PER SHARE (CENTS) 30,0 40,0
CONSOLIDATED BALANCE SHEETS
AT 30 JUNE AT 30 JUNE
2000 1999
R'000 R'000
AUDITED AUDITED
CAPITAL EMPLOYED
SHARE CAPITAL AND RESERVES 637 604 547 031
OUTSIDE SHAREHOLDERS INTEREST 11 712 -
FOREIGN CURRENCY TRANSLATION RESERVE 1 599 -
DEFERRED TAXATION 84 635 59 620
LONG-TERM PROVISIONS 30 901 24 507
LONG-TERM BORROWINGS 1 671 2 367
768 122 633 525
EMPLOYMENT OF CAPITAL
FIXED AND OTHER NON-CURRENT ASSETS 567 796 377 805
ENVIRONMENTAL REHABILITATION FUND 16 363 18 785
LISTED AND OTHER INVESTMENTS 70 658 50 834
CASH RESOURCES 84 017 101 865
OTHER CURRENT ASSETS 488 091 330 972
TOTAL ASSETS 1 226 925 880 261
CURRENT LIABILITIES
- NON-INTEREST BEARING 149 577 107 874
- INTEREST BEARING 309 226 138 862
768 122 633 525
ORDINARY SHARES IN ISSUE (MILLION) 28,0 28,0
NET ASSET VALUE PER SHARE (RAND) 26 22
CAPITAL EXPENDITURE (MILLION) 211,9 155,4
CAPITAL COMMITMENTS (MILLION) 588,6 118,6
STATEMENT OF CHANGES IN EQUITY
NON-
SHARE DISTRIBUTABLE DISTRIBUTABLE
CAPITAL RESERVE RESERVE TOTAL
R'000 R'000 R'000 R'000
BALANCE AT 30 JUNE 1998 700 2 141 169 101 171 942
EFFECT OF CHANGE
IN ACCOUNTING POLICY 241 804 241 804
NET INCREASE IN MARKET
VALUE OF LISTED INVESTMENTS 11 430 11 430
NET PROFIT FOR THE YEAR 133 055 133 055
ORDINARY DIVIDEND (11 200) (11 200)
BALANCE AT 30 JUNE 1999 700 13 571 532 760 547 031
NET INCREASE IN MARKET VALUE
OF LISTED INVESTMENTS 9 287 9 287
FOREIGN EXCHANGE GAIN 95 95
NET PROFIT FOR THE YEAR 89 591 89 591
ORDINARY DIVIDEND (8 400) (8 400)
BALANCE AT 30 JUNE 2000 700 22 953 613 951 637 604
COMMENT
AS FORECAST IN THE INTERIM REPORT, OPERATING RESULTS IMPROVED SIGNIFICANTLY IN
THE SECOND HALF OF THE YEAR BUT THE IMPROVEMENT WAS INSUFFICIENT TO OFFSET THE
RESULTS FOR THE FIRST HALF AND EARNINGS FOR THE YEAR HAVE DECREASED BY 33% TO
R89,6 MILLION (1999: R133,0 MILLION).
KEY FACTORS CONTRIBUTING TO THE 62% DECLINE IN EARNINGS IN THE FIRST HALF WERE
LOW PRICES AND REDUCED SALES OF ALLOYS AND REDUCED PRICES FOR MANGANESE ORE,
COMPOUNDED BY A STRENGTHENING RAND/US DOLLAR EXCHANGE RATE. FORTUNATELY, THESE
FACTORS ALL IMPROVED IN THE SECOND HALF OF THE YEAR. ALLOY PRICES RECOVERED
FROM JANUARY 2000, THE RAND/US DOLLAR EXCHANGE RATE WEAKENED SIGNIFICANTLY AND
MANGANESE ORE PRICES FIRMED IN RESPONSE TO THE INCREASE IN THE WORLD PRODUCTION
OF CRUDE STEEL DURING THE YEAR. THIS TREND IS EXPECTED TO CONTINUE OVER THE
REST OF 2000 WITH THE BENEFITS BEING FELT PREDOMINANTLY IN THE NEW FINANCIAL
YEAR.
ASSMANG AND ITS WHOLLY-OWNED SUBSIDIARY FERALLOYS, PLAN TO INVEST SOME R1,2
BILLION OVER THE NEXT FIVE YEARS IN VARIOUS CAPITAL PROJECTS. THE PROJECTS ARE
DESIGNED TO FURTHER INTEGRATE THEIR RESPECTIVE OPERATIONS AND THE REDUCTION OF
COSTS, PURSUANT TO BECOMING ONE OF THE LOWEST COST ORE AND ALLOY PRODUCERS.
THESE PROJECTS ARE CURRENTLY FUNDED FROM SHORT-TERM BORROWINGS, SOME OF WHICH
WILL PROBABLY BE CONVERTED TO MEDIUM-TERM LOANS, DEPENDING ON MARKET
CIRCUMSTANCES.
DURING THE YEAR, WHOLLY OWNED SUBSIDIARY, ORE & METAL COMPANY, ACQUIRED A 51%
STAKE IN MINERAIS U.S. LLC ("MINERAIS"), EFFECTIVE FROM 1 JULY 1999. US-BASED
MINERAIS IS ONE OF THE GROUP'S FOREIGN AGENTS, RESPONSIBLE MAINLY FOR THE
DISTRIBUTION OF ITS MANGANESE ALLOYS IN NORTH AMERICA. THIS INVESTMENT SHOULD
GAIN IN STRATEGIC IMPORTANCE WITH THE PLANNED EXPANSION OF THE GROUP'S
FERROCHROME BUSINESS.
THE SIGNIFICANT INCREASE IN WORLD CRUDE STEEL PRODUCTION SHOULD SEE THE DEMAND
AND PRICES FOR BOTH IRON AND MANGANESE ORE AND ALLOYS REMAINING FIRM FOR THE
REST OF THE YEAR. WHILE THE LEVEL OF CRUDE STEEL PRODUCTION MAY DECLINE IN
2001, IT IS NEVERTHELESS EXPECTED TO EXCEED 800 MILLION TONS AND MANGANESE
ALLOY PRICES MAY DECLINE IN UNISON, DEPENDING ON THE EXTENT TO WHICH SUPPLY
ADJUSTS TO THE REDUCED DEMAND.
GLOBAL STAINLESS STEEL PRODUCTION IN CALENDAR 2000 WILL PROBABLY EXCEED 18
MILLION TONS. DEPENDING ON ASIAN DEMAND, PRODUCTION IS EXPECTED TO CONTINUE TO
GROW IN 2001. WITH THE OPENING OF THE DWARSRIVIER CHROME MINE IN OCTOBER THIS
YEAR AND THE INCREASE IN FURNACE CAPACITY PLANNED FOR THE MACHADODORP WORKS,
MARKET CONDITIONS COULD OPERATE IN THE GROUP'S FAVOUR.
IRRESPECTIVE OF CONDITIONS IN THE MARKET, THE GROUP'S REVENUE INFLOWS ARE
SIGNIFICANTLY EXPOSED TO MOVEMENTS IN THE RAND/DOLLAR EXCHANGE RATE. IT IS ALSO
EXPOSED OVER THE MEDIUM-TERM TO INTEREST RATE FLUCTUATIONS AFFECTING THE
BORROWINGS REQUIRED TO FINANCE THE CAPITAL EXPENDITURE PROGRAMME. ALTHOUGH
FAIRLY STABLE AT PRESENT, IT IS DIFFICULT TO PREDICT, WITH ANY CERTAINTY, THE
COMBINED EFFECT OF RATES ON THE GROUP'S RESULTS FOR NEXT YEAR.
IN THE LIGHT OF THE RESULTS AND TO CONSERVE RESOURCES TO MEET CAPITAL
EXPENDITURE REQUIREMENTS, THE FINAL DIVIDEND HAS BEEN REDUCED TO 20 CENTS PER
SHARE FOR AN ANNUAL TOTAL OF 30 CENTS PER SHARE.
DECLARATION OF FINAL DIVIDEND
FINAL DIVIDEND NO. 87 OF 20 CENTS PER SHARE WAS DECLARED PAYABLE TO
SHAREHOLDERS RECORDED IN THE REGISTER OF THE COMPANY AT THE CLOSE OF BUSINESS
ON 6 OCTOBER 2000. THE TRANSFER BOOKS AND REGISTER OF MEMBERS WILL BE CLOSED
FROM 7 OCTOBER 2000 TO
14 OCTOBER 2000, BOTH DAYS INCLUSIVE, AND DIVIDEND WARRANTS WILL BE POSTED TO
SHAREHOLDERS ON OR ABOUT 27 OCTOBER 2000.
ON BEHALF OF THE BOARD
DESMOND SACCO R.J. CARPENTER
CHAIRMAN DEPUTY CHAIRMAN
JOHANNESBURG
18 SEPTEMBER 2000
REGISTERED OFFICE: ASSORE HOUSE, 6 ST ANDREWS ROAD, PARKTOWN, JOHANNESBURG,
2193.
TRANSFER SECRETARIES: COMPUTERSHARE SERVICES LIMITED, 41 FOX STREET,
JOHANNESBURG, 2001.
COMPANY SECRETARIES: AFRICAN MINING AND TRUST COMPANY LIMITED.
DIRECTORS: DESMOND SACCO (CHAIRMAN AND MANAGING DIRECTOR), R.J.
CARPENTER (DEPUTY CHAIRMAN), R.A. CHUTE, C.J. CORY, P.C. CROUS, B.M.
HAWKSWORTH. ALTERNATE: J.W. LEWIS (BRITISH).
ASSORE PERFORMS WELL IN SECOND HALF
AS PREDICTED AT THE DECEMBER 1999 INTERIM STAGE, A MORE FAVOURABLE US$- RAND
EXCHANGE RATE AND HIGHER PRICES FOR ALLOYS AND MANGANESE COMBINED TO
SUBSTANTIALLY LIFT ASSORE'S PERFORMANCE IN THE SECOND HALF OF THE 30 JUNE 2000
FINANCIAL YEAR.
EARNINGS AT 238,4 CENTS PER SHARE IN THE SECOND HALF WERE ONLY 3,06% DOWN ON
THE EQUIVALENT PERIOD OF THE PREVIOUS YEAR. HOWEVER, THIS WAS INSUFFICIENT TO
OFFSET THE 62% DECLINE IN THE FIRST HALF AND EARNINGS FOR THE YEAR AS A WHOLE
WERE 31,6% LOWER.
THE DIRECTORS HAVE DECIDED TO REDUCE THE FINAL DIVIDEND BY 10 CENTS TO 20 CENTS
FOR AN ANNUAL TOTAL OF 30 CENTS AND "TO RETAIN RESOURCES TOWARDS MEETING THE
GROUP'S CAPITAL EXPENSE REQUIREMENTS FOR THE CURRENT YEAR."
EXPECTATIONS ARE THAT THE IMPROVED CONDITIONS CURRENTLY BEING EXPERIENCED WILL
PERSIST FOR AT LEAST THE BALANCE OF CALENDAR YEAR 2000 AND THAT THE BENEFITS
WILL BE FELT IN THE CURRENT FINANCIAL YEAR. CERTAINLY, THE PRESENT STRENGTH OF
THE DOLLAR AUGURS WELL FOR THIS SCENARIO AND WITH WORLD CRUDE STEEL PRODUCTION
PROJECTED TO RISE BY AROUND 3% IN THE 2000 YEAR, IRON AND MANGANESE ORE PRICES
ARE LIKELY TO REMAIN FIRM FOR THE REMAINDER OF THE YEAR TOGETHER WITH THOSE FOR
MANGANESE ALLOYS.
IT IS CONSIDERED LIKELY THAT WORLD CRUDE STEEL PRODUCTION WILL SEE SOME
REDUCTION IN 2001 AND MANGANESE ALLOY PRICES COULD FACE SOME PRESSURE AS SUPPLY
ADJUSTS TO DEMAND.
MANAGEMENT EXPECTS GLOBAL STAINLESS STEEL PRODUCTION TO EXCEED 18 MILLION TONS
IN CALENDAR YEAR 2000 AND, DEPENDING ON ASIAN DEMAND, TO CONTINUE TO GROW IN
2001. THE OPENING OF THE DWARSRIVIER CHROME MINE IN OCTOBER AND THE INCREASED
FURNACE CAPACITY PLANNED FOR MACHADODORP SHOULD BENEFIT FROM THIS SITUATION.
DURING THE YEAR, ASSORE SUBSIDIARY ORE & METAL ACQUIRED A 51% STAKE IN MINERAIS
U.S. LLC (MINERAIS), ONE OF ASSORE'S FOREIGN AGENTS RESPONSIBLE MAINLY FOR THE
DISTRIBUTION OF THE GROUP'S MANGANESE ALLOYS IN NORTH AMERICA.
THE INVESTMENT IS EXPECTED TO CONTRIBUTE INCREASINGLY TOWARDS RESULTS AS THE
EXPANSION OF THE GROUP'S FERROCHROME BUSINESS PROGRESSES.
THE TWO COMPANIES ARE IN THE MIDDLE OF A SIGNIFICANT CAPITAL EXPENDITURE
PROGRAMME TOTALLING SOME RL,2 BILLION OVER THE NEXT FIVE YEARS AND DESIGNED TO
"FURTHER THE INTEGRATION OF THEIR RESPECTIVE OPERATIONS AND THE REDUCTION OF
COSTS WHEREVER POSSIBLE, PURSUANT TO THE OBJECTIVE OF BECOMING ONE OF THE
LOWEST COST ORE AND ALLOY PRODUCERS."
FUNDING OF THE PROGRAMME AT THIS STAGE IS BY SHORT-TERM BORROWINGS BUT AT LEAST
SOME OF IT IS LIKELY TO BE CONVERTED TO MEDIUM-TERM LOANS IF MONEY MARKET
CONDITIONS ARE FAVOURABLE.
THE PRACTICAL FEATURES OF THE PROGRAMME ARE A NEW SHAFT COMPLEX AT THE
MANGANESE MINE, NCHWANING, FOR R517 MILLION, THE DEVELOPMENT OF THE R190
MILLION DWARSRIVIER OPENCAST CHROME MINE, THE UPGRADING OF THREE FURNACES AND
AN ADDITIONAL 54MVA FURNACE AND A PELLETISING PLANT FOR R440 MILLION AT
MACHADODORP.
THE NEW NCHWANING SHAFT COMPLEX IS DUE FOR PRODUCTION TOWARDS THE END OF 2003
AND WILL HAVE A RUN-OF-MINE CAPACITY OF ABOUT 2 MILLION TONS A YEAR WHILE
CHROME ALLOY CAPACITY AT MACHADADORP IS TARGETED AT OVER 400 000 TONS A YEAR
SUBSEQUENT TO COMPLETION OF THE FOURTH FURNACE.
A BUILD-UP TO 5,5 MILLION TONS A YEAR AT BEESHOEK IRON ORE MINE IS DUE TO BE
PHASED IN AHEAD OF SCHEDULE DURING 2001.
DWARSRIVIER OPENCAST CHROME MINE WILL COMMENCE COMMISSIONING DURING OCTOBER
2000 AND AN UNDERGROUND SECTION IS PROVISIONALLY PLANNED TO COMMENCE DURING THE
LATTER PART OF 2001 BY WHICH TIME THE TOTAL FERROCHROME CAPACITY SHOULD DOUBLE.
CHAIRMAN DESMOND SACCO CAUTIONS THAT WHILE THE CURRENT OUTLOOK FOR THE GROUP IS
POSITIVE, "THE GROUP IS SIGNIFICANTLY EXPOSED TO MOVEMENTS IN THE RAND/DOLLAR
EXCHANGE RATE AND, OVER THE MEDIUM TERM, TO INTEREST RATE FLUCTUATIONS
IMPACTING ON BORROWINGS TO FUND THE CAPITAL EXPENDITURE PROGRAMME. WHILE
CONDITIONS IN THESE MARKETS ARE FAIRLY STABLE AT PRESENT, IT IS DIFFICULT TO
PREDICT, WITH ANY CERTAINTY, THEIR COMBINED EFFECT ON THE GROUP'S RESULTS FOR
NEXT YEAR."
ENDS
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