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Financial Reports


Assmang Limited

Group financial results for the year ended 30 June 2002

Highlights

Group balance sheet

At 30 June      
  2002
Audited
R'000		 2001
Audited
R'000
Assets
Non-current assets
Fixed assets 1 877 833 1 622 306
Deferred tax assets 11 204 27 558
Environmental rehabilitation trust fund 10 385 8 150

Current assets
Inventories 709 936 564 811
Trade and other receivables 714 413 350 705
Deposits and cash 14 877 15 537
Total assets 3 338 648 2 589 067

Equity & liabilities
Total shareholders' interest 2 127 254 1 188 614

Current liabilities
Long-term borrowings 692 2 831
Deferred tax liabilities 379 801 288 395
Long-term provisions 31 197 26 729

Non-current liabilities
Trade & other payables 187 581 145 550
Overdrafts & short-term borrowings 576 849 909 767
Taxation 35 274 27 181
Total equity & liabilities 3 338 648 2 589 067

Group income statement

  2002
Audited
R'000		 2001
Audited
2001
Turnover 2 809 352  1 926 189
Cost of sales 1 921 636 1 401 622
Gross profit 887 716 524 567
Other operating income 45 248 2 302
Other operating expenses 174 590 111 101
Profit from operations 758 374 415 768
Interest received 3 518 2 496
Finance costs 72 160 68 385
Profit before exceptional item 689 732 349 879
Exceptional item 543 720 -
Profit before taxation and State's share of profit 1 233 452 349 879
Taxation & State's share of profit 246 911 118 943

Earnings		 986 541 230 936
Earnings per share (cents)
- Attributable 27 804 6 508
- Headline 12 480 6 492

Dividends per share (cents)		 1 350 750
Number of shares in issue ('000)
- Weighted average and at year end 3 548 3 548

Determination of headline earnings
Earnings 986 541 230 936
Disposal of mineral rights (543 720) -
Profit on sale of property, plant, equipment - (582)
Headline earnings 442 821 230 354

Group cash flow statement

Year ended 30 June
  2002
Audited
R'000		 2001
Audited
R'000
Cash flow from operating activities
Cash generated from operations 410 157 340 667
Interest received 3 518 2 496
Interest paid (72 160) (68 385)
Dividends paid (47 901) (26 612)
Taxation paid (131 058) (44 198)
Net cash in-flow from operating activities 162 556 203 968

Cash flow from investing activities
Additions to fixed assets to maintain operations (280 809) (285 206)
Additions to fixed assets to expand operations (91 503) (339 174)
Proceeds from the sale of platinum group metal mineral rights 543 720 -
Other 432 744
Net cash inflow/(outflow) from investing activities 171 840 (623 636)

Cash flow from financing activities
Long-term borrowings repaid (1 910) (2 029)
(Decrease)/increase in short-term borrowings (333 147) 436 705
Net cash (outflow)/inflow from financing activities (335 057) 434 676
Net (decrease)/increase in cash (661) 15 008
Cash and cash equivalents at beginning of year 15 537 529
Cash and cash equivalents at end of year 14 877 15 537

Group statement of changes in shareholders' equity

  Stated
capital
Audited
R'000		 Retained
earnings
Audited
R'000		 Total
Audited
R'000
Balance at 30 June 2000 13 385 970 905 984 290
Earnings for the year 230 936 230 936
Ordinary dividends   (26 612) (26 612)
Balance at 30 June 2001 13 385 1 175 229 1 188 614
Earnings for the year 986 541 986 541
Ordinary dividends   (47 901) (47 901)
Balance at 30 June 2002 13 385 2 113 869 2 127 254

Results

Revenue for the year ended 30 June 2002 rose by 45,9 per cent to R2 809,35 million and attributable earnings by 327,2 per cent to R986,54 million, equivalent to R278,04 per share. Contributions to earnings by the three divisions, before deducting secondary tax on companies (STC), amounted to R504,32 million from the chrome division, R350,94 million from the manganese division and R135,05 million from the iron ore division. Attributable earnings include the profits on the sale of the platinum group metals (PGM) mineral rights at Dwarsrivier to Two Rivers Platinum (Proprietary) Limited for a net R543,72 million, which, as an exceptional item, has been excluded from headline earnings of R442,82 million (2001: R230,35 million).

The SA rand/United States dollar exchange rate has continued to be the key determinant in the Group's performance over the year. While US$ prices for almost all the Group's products declined - some significantly - the rand equivalent showed substantial gains led by manganese ore at an average of around 45 per cent and iron ore at 38,5 per cent.

Sales volumes

Sales volumes for the year are set out below and, with the exception of manganese alloys, volumes for all products have increased on the previous year:
2002 2001
'000 metric tons
Iron ore 4 775 4 315
Manganese ore (excluding deliveries to the Cato Ridge Works) 993 979
Manganese alloys 187 193
Charge chrome 190 125
Chrome ore (excluding deliveries to Machadodorp Works) 39 -

Major capital projects

Assmang continued its significant capital programme spending R372 million (R626 million) during the year - the majority on its two major projects: the new charge chrome smelter and sinter facilities at the Machadodorp Works and the new shaft complex at Nchwaning manganese mine. Assmang has spent R1,8 billion over the past five years on re-capitalising and enlarging the businesses in each of its commodity divisions.

The chrome division's new R375 million, 54 MVA furnace and a 350 000 tons per annum pelletising plant were commissioned during the year under review. Some start-up delays were encountered, but the furnace is currently operating well and production will ramp-up during the current financial year.

Development of the R517 million Nchwaning shaft complex has been well managed and the project is on schedule and within budget. On 27 June 2002, the 2 200 metre long decline shaft was holed and shaft equipping commenced during the first half of the current financial year. It is still expected that the shaft will be commissioned as planned during late calendar 2003. This shaft system will increase the operational life of Assmang's Nchwaning manganese mine by over 20 years and utilisation of the best available mining technology will result in lower operating costs.

It is anticipated that Assmang will spend approximately R644 million in this financial year and some R758 million in the following year 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 conversion of one of the furnaces at the chrome smelter to 30MVA. Capital has also been allocated within the manganese division, to enhance alloy production technology, thereby improving operating margins.

Borrowings

Last year's high level of short-term borrowings, totalling almost R910 million, has been substantially reduced following receipt of the proceeds from the sale of the PGM mineral rights. The equivalent amount at the 30 June 2002 year end was R576,8 million.

Outlook

Sales of the Group's products remain fairly buoyant and appear likely to continue into this new financial year. That would indicate another good year for world-wide steel production with the probability that both iron and manganese ore sales should remain at about the same levels, but with lower dollar prices than in the past year. Manganese alloy sales are anticipated to increase in line with higher production planned at Cato Ridge and US dollar prices have improved markedly since the year end, but are expected to come under pressure when supply disruptions are overcome. The improvement in the stainless steel market should at least be sustained and volumes could be substantially raised by major contractual negotiations. Better margins for ferrochrome could flow from improved utilisation of available capacity. While the market position is encouraging, results may be negatively affected if rail facilities on which exports are dependent are not fully maintained.

A number of South African exporters of bulk minerals have expressed similar sentiments in recent months. Given the strong emphasis rightly being placed by Government upon job creation and poverty alleviation through expansion of the economy, the circumstances would seem to justify investigation into the shortcomings, which undoubtedly exist in the transporting of bulk minerals for export.

Dividends

The interim dividend was increased significantly from R2,50 to R8,50 per share in order to distribute to shareholders a portion of the surplus that was realised on the disposal of the PGM mineral rights. At the time of the interim announcement, it was mentioned that this distribution was exceptional and that the final dividend would be lower based on headline earnings. As the Group is still significantly - although not unacceptability - geared, the Board is pleased to announce a final dividend No.126 of R7,00 per share has been declared payable to members. The last date to trade, ("Cum" the dividend) in order to participate in the dividend will be Thursday, 19 September 2002.

The Company's ordinary shares will commence trading ("ex" the dividend) from the commencement of business on Friday, 20 September 2002 and the record date will be Friday, 27 September 2002. The dividend will be paid on Monday, 30 September 2002. No share certificates may be dematerialised or rematerialised between Friday, 20 September 2002 and Friday, 27 September 2002, both days inclusive.

Accounting policies

The Group's financial information has been extracted from the audited Group annual financial statements, which have been prepared in accordance with Statements of Generally Accepted Accounting Practice in South Africa and International Accounting Standards. The accounting policies used in the preparation of the annual financial statements are consistent with those used in the previous year.

Audited results

Ernst & Young has audited the Group annual financial statements Their unqualified Group financial results The audited financial results of the Company and its subsidiaries are as follows:

Assmang Limited
(Incorporated in the Republic of South Africa)
(Registration number 1935/007343/06)
Share code: ASG ISIN code: ZAE000030789
("Assmang" or "the Company")
Interim AOM 9/5/02 14:49 Page 1 (1,1)

By order of the board
Anglovaal Mining Limited

Secretaries Per : A. Jepson

Registered office: 56 Main Street, Johannesburg, 2001.
5 September 2002

Directors: Desmond Sacco (Chairman), RP Menell (Deputy Chairman), RJ Carpenter, CJ Cory, PC Crous, DN Murray, BR Broekman, JC Steenkamp.

Alternate Directors: BJ Funston, AD Stalker*, JW Lewis*, BM Menell, GC Butler, MJN Uys, FH Kalp, A McAdam*.
* British

Company Secretary: Anglovaal Mining Limited