Assore earnings down by 37.4%

However, after adjusting for the non-recurring profit on disposal of investments and the discount on the sale of Assore shares, the profit for the year on normal operations would have been R364.1m, a decrease of 28.5%, it said.

This was mainly due to a lower profit contribution from Assmang Limited in which company the group holds a 50% interest, it added.

Headline earnings per share reduced by 37.4% from 1 833.7c to 1 160.8c.

Assmang declared an unchanged final dividend of 150c per share, making an increased total dividend for the year of 230c (2005: 200c).

As a result of an offer made to minorities earlier in the year, Assmang was delisted on 28 February 2006 and, as a joint venture, is partially consolidated.

Assmang's after tax profit for the year decreased to R666.6m (2005: R949m) largely attributable to lower prices for manganese ore and alloys as well as for charge chrome.

The higher profit generated by iron ore, due to significantly higher prices and the additional tonnage, was unable to offset the effects of lower manganese ore and alloy prices. These were largely brought about by the over supply situation which developed in the market during the year, the group stated.

Looking ahead, Assmang said that world carbon steel production remained robust, driven by China, and this had resulted in a 19% increase in iron ore prices with effect from April 2006 and a steady demand for manganese ore and manganese alloys.

"This situation is expected to continue but would be threatened if the Chinese carbon steel industry moves into a large supply surplus, resulting in a substantial increase of steel exports from China.

"The stainless steel industry has recovered from the downturn it experienced during the second half of 2005 and ferrochrome prices have shown significant gains. However, the supply of ferrochrome is expected to increase in response to the commissioning of a number of new projects which is likely to put pressure on prices, going forward.

"As always group results remain significantly exposed to fluctuation in exchange rates as the bulk of sales are for export," the group said.