03 June 1998 Anglo's eventful year ends with poor results
Hilary Joffe
ANGLO American Corporation capped an eventful year
with a 1,4% increase in headline earnings to R5bn for the
year to March, in line with analysts' expectations.
Although chairman Julian Ogilvie Thompson announced
no new moves, he outlined progress made in simplifying
the structure of the group, in line with its strategic review
process.
During the year the group announced the creation of
Anglogold as a focused gold company; the merger of its
financial services interests with those of Rand Merchant
Bank Holdings to form FirstRand; the "bundling" of
Amplats, which now wholly owns its three platinum
mines; the restructuring of holdings in Anamint and De
Beers; and progress by Anglo American Industrial
Corporation, which agreed to sell its stake in AECI to
Sasol, in implementing its "fix, close or sell" philosophy.
Ogilvie Thompson listed moves to tidy up the group's
portfolio, including the sale of its stake in Lonrho, but
said there was still unfinished business.
It is understood the next major step in the restructuring
will be a redistribution of assets between the group and
London-listed Minorco, its offshore natural resources
arm. Market talk has focused on the need to integrate
paper group Mondi with offshore arm Mondi Minorco
Paper, as well as on the possibility that Amcoal might go
into Minorco, which could become a more focused base
metals group.
But Ogilvie Thompson said a decision on Minorco had
not yet been made.
Finance director Rupert Pardoe cited weak commodity
prices and the instability in world markets as reasons for
Anglo's poor performance. Net pretax income was 7,8%
lower at R10,2bn and total net earnings fell 18% to
R5,8bn, reflecting a lower net surplus on the realisation
of investments. A R1,3bn surplus on the disposal of the
JCI stake was offset by a R526m loss on the sale of
Anglo's stake in Lonrho.
The group changed the way it reported headline earnings
and has restated the 1997 comparative figures.
Diamonds remained the largest contributor to headline
earnings, accounting for 21,6% (1997: 21,4%).
Contributions from platinum, financial services and coal
also rose, as did earnings from corporate services,
reflecting interest on the larger cash balances held after
the sale of investments.
The contribution from mining finance dropped due to
reduced earnings at Minorco and because the group cut
its stake in JCI from 39% to 1,5% during the year. Gold,
base metals and industrial earnings were also lower.
Anglo's net asset value was R275 at end-March, when
the share was trading at R230,80, a discount of 16%.
This has since narrowed: Pardoe said Monday's close of
R246 represented a discount of 11% to net asset value
of R277.
The hikes in the share prices of Southern Life and First
National Bank ahead of their absorption into FirstRand
meant Anglo's financial services interests accounted for
18% of market value at end-March, up from 8%.
Traditional core mining interests together accounted for
39% (42%). |
