Document kD34OXwo0EwLXD6jg0wwazEp0

FILE NAME Cape Asbestos CAPE DATE 1975 Mar 31 DOC CAPE161 DOCUMENT DESCRIPTION Consolidated Balance Sheet - Charter Consolidated Ltd. and its Subsidiary Companies Legal - Tibbs Case Exhibit 59 mee Consolidated Balance Sheet fame = 31 March 1975 ! CHARTER CONSOLIDATED LIMITED AND ITS SUBSIDIARY COMPANIES : : pee ro to Fixed assets note 9 Exploration and developinent expenditure Investraents note 10 Current assets Stocks and work in progress Debtors Short term loans and deposits Bank and cash balances a Ae bs eo, ty Current liabilities Associated companies and other deposit accounts Bank loans and overdrafts Creditors Taxation Proposed final dividend Net current assets Total net assets 1975 000s 000s 1974 000s 000s 36,668 4,442 199,393 30.075 4,069 184.410 24,727 32.185 27,563 1,489 85,964 16.804 26,061 29.673 1.083 73.621 9.514 16,690 42,821 3,521 4,149 76,695 9,269 249.772 6.541 8.293 25.099 5.266 3.891 49.090 24.531 243,085 a3 / ae ; oe . - iS Financed by Issued capital note 11 Share premium account note 12 Reserves note 13 Total capital and reserves Investment and other grants Minority interest Long term indebtedness note 14 Deferred taxation note 15 26,201 30,624 140.725 197,550 947 7.843 42.172 1.260 249.772 S. SPIRO Chairman M. B. HOFMEYR Managing Director Directors Directors For the accounting policies see pages 18 and 19. For notes on the accounts see pages 23 to 30 26.201 30.620 138.075 194.896 1.098 7.608 39.797 314 243.085 223 Consolidated Profit and Loss Account Year ended 31 March 1975 CHARTER CONSOLIDATED LIMITED AND ITS SUBSIDIARY COMPANIES Income from investments note ) Associated companies note 2 Other investments Surplus on realizations of investments less amounts written off Interest received Trading profit note 4 Deduct Administration and technical expenditure note 4 Directors emoluments note 5 Prospecting expenditure Interest paid note 3 Auditors remuneration parent company- company- 7,000 1974- 1975 000s 000s 4,145 13,554 1974 000s 000s 2,919 10.335 Add Group share of retained profits less losses of associated companies note 2 Profit before taxation Taxation note 7 Profit after taxation and before extraordinary items Deduct Interest of outside shareholders in profits of subsidiaries acquisition loss pro-fprioft it Attributable to Charter Earnings per share 16.42p 1974 note 6 Dividends Interim dividend of 2.25p per share 1974 2p paid on 3 January 1975 Proposed final dividend of 3.05966p per share 1974 3.71371p payable on or about 18 July 1975 Profit of the year retained before extraordinary items Extraordinary items note 8 Retained profit transferred to reserves note 13 Profit of the year after extraordinary items totalled 8,873,000 1974- 16,737,000 6.507 10.699 8.333 2.366 For the accounting policies see pages 18 and 19. For notes on the accounts see pages 23 to 30 CHARTER CONSOLIDATED LIMITED Report and Accounts Year ended 31 March 1975 Notice of Meeting NOTICE IS HEREBY GIVEN that the tenth annual general meeting of members of Charter Consolidated Limited will be held at Winchester House 100 Old business on 13 June 1975 and to persons presenting coupon no 20 detached from share warrants to bearer Prd Street London EC2N IBU on Tuesday 15 July 1975 at 12 noon for the purpose of considering and if thought fit passing the following ordinary resolutions 1. That the consolidated profit and loss account for the year ended 31 March 1975 and the balance sheet of the company and the consolidated balance sheet at that date together with the annexed report of the directors be and are hereby approved and adopted 2. That the final dividend of 3.95966p per share for the year ended 31 March 1975 recommended by the board of directors be and is hereby approved for payment to shareholders registered at the close of That the following be and are hereby reappointed directors of the company Mr P. D. Burnell Mr H. F. Oppenheimer Mr W. D. Wilson Mr J. E. H. Collins These appointments will be dealt with in one resolution unless any member present or represented at the meeting requires otherwise 4. That the remuneration of the joint auditors for the period until the next annual general meeting be fixed by the board of directors 'The transfer books and registers of members in the United Kingdom the | RepuboflSi outch Africa and Rhodesia will be closed from 12 to 15 July 1975 both days inclusive A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and on poll to vote instead of him A proxy need not bea member of the company A form of proxy accompanies this notice Holders of share warrants to bearer who wish to attend in person or by proxy or to vote at any general meeting of the company must comply with the relevant conditions governing share warrants to bearer see page 48 by order ofthe board D. S. BOOTH 40 Holborn Viaduct | London ECIP TAJ Secretary 19 June 1975 NOTES 1. Holders of loan stock are reminded that only shareholders are entitled to attend and vote at the meeting To be valid the form of proxy must reach the company at PO Box 102 Charter House Park Street Ashford Kent TN23 not less than 48 hours meethte mieentig ng 3. There are no directors service contracts required by The Stock Exchange to be made available for inspection at the meetmieentigng INTRODUCTION Charter Consolidated is a United Kingdom mining finance company operating internationally and having assets valued on 31 March 1975 at 302 million Its mining investments include interests in gold copper diamonds platinum potash coal iron ore lead nickel silver tin uranium wolfram and zinc Many of these interests arise indirectly from holdings in other mining finance companies such as Anglo American Corporation of South Africa Anglo American Investment Trust Minerals and Resources Corporation The Rio Tinto Corporation Selection Trust and Union Corporation Charter also provides administrative technical and other services to a number of mining operations including Cleveland Potash in the United Kingdom the Tronoh group of tin mines in Malaysia Beralt Tin and Wolfram in Portugal and the SMTF copper project in Zaire Charter's principal industrial activity is the manufacture of products for the building and automotive industries through its subsidiary Cape Industries The other industrial subsidiaries manufacture rail fastening clips for railways throughout the world and domestic and industrial heating appliances Charter has a close association with the Anglo American Corporation group The services of a single technical organization are shared by both groups and the two operate in partnership in the development of mining and other ventures in various parts of the world Directorate and Administration Chairman S. Spiro MC Alternate Directors R. J. Armitage Director responsible for technical services Deputy Chairman Sir Philip Oppenheimer Managing Director M. B. Hofmeyr P. G. Hatch M. W. B. Heald A. E. Oppenheimer A. J. W. Owston Managers M. W. Stephenson Consulting Engineers K. G. Heath T. Jones H. J. Stucke Directors S. Berning R. Armitage P. D. Burnell P. G. Hatch Assistant Consulting Engineer A. Smith C. D. Burnell G. A. Smith J. N. Clarke J. H. Collins MBE DSC R. H. Dent M. W. Heald A. J. W. Owston Secretary D. S. Booth Consulting Mechanical and Electrical Engineers A. H. W. Purkiss S. Sheer H. R. Fraser Treasurer : O. Hambro MC S. W. Parks N. K. Weekes H. F. Oppenheimer B. W. Pain Chief Economist L. C. Smets Consulting Metallurgist A. K. Chant Consulting Geologists Dr F. W. D. Cornwall Dr J. F. Osten G. W. Relly G. Richardson Personnel Controller H. Holmes MBE it M. W. Stephenson ^i' L. G. Stopford Sackville Public Relations Consultant : M. W. Thomas d i :i W. D. Wilson i i L. J. Burke a Members of Executive Committee Committee Report of the Directors The directors have pleasure in submitting their tenth annual report with the audited accounts for the year ended 31 March 1975 Financial results results The following are the salient features from the consolidated profit and loss account for the year ended 31 March 1975 Consolidated profit before taxation Deduct Taxation . . . Interest of outside shareholders 1975 1974 000s 000s 27,936 25,983 9,869 | 9,076 861 | 1,016 10,730 10,092 Earnings attributable . Appropriations Dividends Interim of 2.25p per share paid January . .. Recommended final of 3.95966p per share payable on or about 18 July 6 ww wee 15,891 2,096 3,891 5,987 Profit for the year retained Extraordinary items Transfer to reserves 10,699 8,333 9,904 846 2,366 10,750 Charter's earnings after taxation and excluding extraordinary items showed a substantial increase at 17,206,000 equivalent to 16.42p per share compared with 15,891,000 or 15.16p per share last year The board has recommended a final dividend of 3.95966p per share which with the interim dividend of 2.25p per share makes a total for the year of 6.20966p per share 1974 5.71371p per share The dividends together with the associated tax credit of 3.24034p per share represent the maximum distribu- tion which can be made under the inflation legislation Investment income rose by one third to 17,699,000 from 13,254,000 This reflects increased earnings from Charter's direct and indirect gold mining interests the latter through higher dividends from Anglo American Corporation of South Africa Limited and Union Corporation Limited as well as substantially larger dividends from tin mining and diamond interests and from the provision of technical and metal marketing services The retained earnings of associated companies were similarly improved and the amount attributable to Charter and incorporated in Charter's profit and loss account was 5,965,000 compared with 3,109,000 In addition to greater retained earnings from tin mining Minerals and Resources Corporation Limited MINORCO - formerly Zambian Anglo American Limited - and Beralt Tin and Wolfram Limited achieved better results due to the higher copper and wolfram prices respectively prevailing in the relative accounting periods The operating loss from Soci^'t^' Mini^re de Mauritanie SOMIMA has not had to be taken into account this year consequent upon the disposal of Charter's entire interest in the company Apart from gold mining shares stock markets generally suffered a sharp decline in 1974 due to recession and the adverse economic and industrial conditions affect- ing the United Kingdom in particular In the circumstances the reduced profit on realizations of 2,124,000 can be regarded as satisfactory Some improvement in market prices occurred in the first quarter ofthis year and the value of Charter's net assets at 31 March 1975 taking listed investments at market value and unlisted at directors valuation 5 Charter House the new office accommodation at Ashford Kent Report of the Directors amounted to 302,020,000 equivalent to 288p per share 1974 345p Charter's industrial subsidiaries suffered unfavourable business conditions in 1974 and trading profits fell from 7,198,000 to 6,566,000 The taxation charge increased from 9,076,000 to 9,869,000 which includes a provision for taxation deferred of 1,052,000 The higher charge reflects taxation attributable to Charter's share of the retained profits of associates the charge on group income showinga small decrease of 630,000 Prospecting expenditure increased this year to 2,163,000 from 919,000 representing largely Charter's share of the cost of the exploration well for hydrocarbons sunk on block 210/19 in the North Sea The shortfall in the net amount of interest paid over interest received is mainly accounted for by the increased cost of borrowings by Cape Industries Limited Extraordinary items a show net deficit of 8,333,000 The writing off of the balance of the investment in SOMIMA together with Charter's share of liabilities to provide for the repayment of loans to SOMIMA absorbed 11,408,000 The fall in the exchange rate of sterling required 3,230,000 to be provided against the conversion of monetary assets and liabilities held in foreign currencies Against these amounts a credit of 6,057,000 was attributable to Charter through the surplus in the value of the compensation received for assets transferred by MINORCO over their original written down cost Operations and investments CLEVELAND POTASH Cleveland Potash Limited the major deep level mining project in Yorkshire owned jointly by Charter and associates and Imperial Chemical Industries Limited continued production of potash during the year while further development of the mine and facilities was being carried on but the scale of production was limited owing to lack of hoisting capacity This problem will be overcome shortly when the second shaft becomes fully operational but because of delays that have occurred the planned annual rate of pro- duction will not now be achieved until 1976. The exceptional rates of cost inflation combined with the delays in completion have increased the project cost to 47 million To replace temporary bridging loans and to finance additional expenditure a medium term loan of 18 million has been obtained from Barclays Bank Limited in addition to overdraft facilities The potash price which has shown a marked upward trend in recent years is expected to remain firm and no difficulties are foreseen in the marketing of the full production MALAYSIAN TIN Charter's principal tin mining interests are held through the Tronoh group of companies comprising Tronoh Mines Limited Bidor Malaya Tin Sendirian Berhad Ayer Hitam Tin Dredging Limited and The Sungei Besi Mines Limited Profits of these companies showed satisfactory increases in 1974 mainly as a result of the higher tin prices prevailing The production of concentrates is sold entirely in Penang and the average price quoted on the South Asian exchanges was the equivalent of 3,367 per metric ton in 1974 compared with 1,910 in 1973. Nonetheless technical improvements and innovations have also played a significant part in the performance of the group as regards both production and costs For the first three months of 1975 the tin price has averaged 2,996 per metric ton Tronoh and its subsidiary companies produced a total of 3,077 metric tons of tin concentrates in 1974 com- pared with 2,748 metric tons the previous year and earnings increased from 423,000 to 1,533,000 Production at Ayer Hitam fell from 3,525 to 2,636 metric tons in consequence of the lower grade of ground mined but this was more than offset by the higher price and profit for the year to 30 June 1974 was 1,626,000 compared with 691,000 for the previous year Sungei Besi's profits increased substantially in its year to March 1974 and although production in the current year has fallen profits have again improved Report of the Directors Detailed feasibility work has continued on the major tin discovery made by Charter and Tronoh in the state of Selangor Extensive reserves of recoverable tin have been indicated and this joint venture with Selangor State Development Corporation in which Charter has a 36 per cent direct interest could become an important tin producer for the year which at 1,827 metric tons was similar to that of the previous year A total of 3,032 metric tons of concentrates was sold against 1,409 metric tons in 1973 and as a result of these large sales at high prices a profit before tax was achieved of 3,066,000 compared with a loss of 115,000 in 1973 HAW PAR As logical extension of its interests in South Asia Charter purchased last year at a cost of 5.1 million a 13 per cent shareholding in Haw Par Brothers International Limited Haw Par has extensive trading property plantation and other interests in South Asia together with a 29 per cent holding in London Tin Corporation Limited Arrangements have recently been announced where- by Haw Par would issue new shares representing some 40 per cent of its increased capital to the principal investment agency of the Malaysian government PERNAS in exchange for the acquisition of a company having assets largely complementary to those already held including just over 20 per cent of the share capital of London Tin which thereby becomes a subsidiary of Haw Par In consequence Charter's interest in Haw Par will drop to some eight per cent The operating subsidiary has declared a dividend of which Beralt's share after providing for Portuguese withholding taxes would amount at current exchange rates to just over million before United Kingdom taxation Permission for the remittance of the dividend to the United Kingdom has however not yet been granted by the Portuguese authorities Every effort has been made to contain costs and improve efficiencies at the mine but the effects of inflation have borne heavily on operations and in the unsettled conditions in Portugal there has been a series of wage claims throughout the year with the result that labour costs have increased by over 80 per cent The new government in Portugal has declared an intention to participate to a greater extent in commerce and industry including mining and to promote industrial development but no specific proposals have so far been made relating to the mine The entering into partnership with the Malaysian government and the expansion of its assets are regarded as likely to be in the best interests of share- holders of Haw Par as a whole Charter will continue to be represented on the boards of both Haw Par and London Tin BERALT TIN AND WOLFRAM The operations of Beralt Tin and Wolfram Limited in Beralt and Portugal are carried on by a Portuguese subsidiary of which 80.5 per cent owned by the balance through the nationalization of the banks is now under the control of the government The market for wolfram was much stronger in 1974 and this enabled the whole of the stockpile of wolfram concentrates accumulated when prices were low to be disposed of as well as the major part of production SOCIETE MINIERE DE MAURITANIE SOMIMA . Serious problems were encountered in the early years by SOMIMA in the mechanical operation of the processing plant due to the difficult climatic conditions pre- vailing in the desert and on account of the special characteristics of the mineral These problems were however overcome and consistent rate of production achieved but the increase over the originally estimated capital cost of the project gave rise to much greater financing charges which were aggravated by the very high interest rates prevailing The increased costs resulting from inflation and more especially the quadrupling of the price of oil by the OPEC countries in 1973 had a most severe effect on the relatively small operations of the company since the recovery of copper and the production of concentrates from the refractory oxide ores forming the upper part of the deposit involves the consumption of large quantities 8 Report of the Directors of fuel The world market for copper is largely for metal in a refined form and SOMIMA suffered an additional disadvantage in having to carry the burden of high financing charges while its concentrates were transported to and treated by such overseas smelters as had the available capacity and ability to handle them satisfactorily The major decline in the copper price from the level of 1,400 April 1974 to about 550 had a most dramatic and serious effect on the company causing sales pro- ceeds to fall far below what was needed to meet production costs and debt service In the knowledge that the winning ofthe copper from the substantial reserves of sulphide ore occurring deeper down in the deposit below the oxides would be much less expensive and likely to be of economic potential and in the desire to maintain employment the government of Mauritania was determined that the operation should be maintained To fall in with the wishes of the government and to avoid the heavy expenditure and very serious hardship that a closing down would have involved Charter agreed to con- tribute with the Mauritanian government additional loan finance to meet current payments so as to keep the operation going and allow time for the government to make arrangements for a long term solution An agreement has since been entered into with the Mauritanian government whereby the Mauritanian state mining organization has taken over the share capital and liabilities of the company and will continue to operate the mine In conjunction with other shareholders Charter was called upon to meet its liabilities as guarantor of certain of SOMIMA's loans at cost of 8.7 million and was obliged to accept as a loss loans totalling 2.7 million made between September 1974 and January 1975. These amounts have been written off In the interests of all concerned it is believed that this ultimate outcome was the best attainable in the circumstances SOCIETE MINIERE DE FUNGURUME Design engineering construction work and site development have proceeded on the Fungurume project in Zaire which is planned to produce 130,000 metric tons of refined copper and an average of 6,500 metric tons of cobalt per annum from established ore reserves estimated at 51 million metric tons containing 5.7 per cent copper and 0.45 per cent cobalt Consequent upon the exceptional escalation in costs which has taken place affecting capital goods in particular the revised capital estimates for the project after allowing for inflation during the construction period and providing for contingencies indicate a total cost of 660 million Working capital amounting to 50 million will be required additionally as pro- duction commences in order to finance inventories but this should be obtainable as short term credit facilities against stocks of copper in the pipeline The financing scheme contemplates that 235 million will be contributed by shareholders in the form of equity and shareholders advances and the balance of 425 million in export credit finance and loans from commercial banks Preliminary undertakings have been received for ex- port credit guarantee cover for purchases up to a total just in excess of 200 million from the United States Export Bank France COFACE Canada and the United Kingdom and negotiations are well advanced for the raising of the balance in the form of eurodollar credits from a syndicate of banks under the leadership of Chase Manhattan Owing to the complicated and international nature of the project finance involving many considerations and aspects both political and commercial negotiation of the detailed terms and drafting of the relevant legal documents has been a lengthy process The scheme envisages undertakings from the private shareholders to complete the project to certain production standards and to provide any additional finance that may be required Until completion is achieved shareholders will be responsible for the service of the third party debt and they will be required to guarantee a minimum price for the copper produced Charter will provide administrative and technical services and Fluor Utah Inc. a United States com- pany has been appointed principal contractor respon- 9 A stockpile of drilling pipefor IndonesianIndonesian oil exploration by Trend Exploration Report of the Directors sible for engineering and process plant construction In order to achieve the earlicst production date which is now estimated to be in the second quarter of 1978 it has been necessary to pursue construction activities and to place orders for plant and equipment Considerable progress has thus already been made and the first houses for personnel at Fungurume have been completed Expenditure of 110 million has been incurred and pending finalization of the financing arrangements this has been provided by shareholders directly or under guarantee PROSPECTING AND OIL EXPLORATION Although the attitude of the Australian authorities is inhibiting to foreign investors the Anglo American Corporation group including Charter continued prospecting and other activities in Australia and adjacent areas in the Pacific An assessment was made of the small gold and antimony mining project of Blue Spec in Western Australia and a decision taken to go ahead Mining is expected to begin in 1976 Charter either directly or indirectly through associated companies continued prospecting work in other parts of the world in particular in South Asia South and Central America Spain and Ireland Charter has a 25 per cent interest in a consortium with Home Oil of Canada Limited as the operator which has licences over two blocks in the United Kingdom sector of the North Sea Drilling of an exploratory well in the northern block 210/19 was completed without any significant showings of hydrocarbons The geological results obtained are under study and consideration is being given to the sinking of a further well on this block CAPE INDUSTRIES Charter's principal industrial subsidiary Cape Industries Limited formerly The Cape Asbestos Company Limited achieved a substantial increase in turnover from 69,767,000 to 81,278,000 Pre profit however fell from 5,056,000 last year to 4,004,000 This reduction is largely due to the increased costs of production and higher financing costs in the United Kingdom which cannot be fully recovered under present legislation and to technical problems which persisted at the company's amosite mines in South Africa African wages which were raised by over 90 per cent in 1974 are now running at three times the rate paid in 1971 Demand for the company's building and insulation products remained strong but the market in industrial and agricultural buildings is likely to be depressed in 1975. The need for energy conservation and higher insulation standards should lead to the continuation of active trading conditions in the insulation business in which Cape is in the forefront The acquisition by Cape Contracts Limited of the insulation contracting subsidiary of Turner & Newall Limited has strengthened Cape's capacity and range of competitiveness as a con- tractor In the field of friction materials and automotive pro- ducts some progress has been made in improving productivity and efficiencies There has been marked fall in demand for original automotive equipment in the United Kingdom but Cape is well placed to compete in replacement and export markets Cape plays a leading part in research into health hazards associated with asbestos and will continue its efforts to ensure that its products are made and used safely and efficiently ELASTIC RAIL SPIKE AND HEATRAE GROUPS Although in common with United Kingdom industry generally the sales of the Elastic Rail Spike and Heatrae groups in terms of money were greater last year the price increases permitted in the United Kingdom did not cover the substantial cost increases affecting all materials and services and profits of the two groups before tax fell from 1,250,000 to 800,000 Elastic Rail Spike has a substantial export business and profits were only slightly below the peak achieved in 1973. Production in the United Kingdom and Australia was affected by limited availability of low alloy steel but this has now eased The rail fastenings manufactured by the group are achieving increasing acceptance by railway systems abroad and continued growth of exports is expected A new sub- 11 Report of the Directors sidiary in Canada commenced production in May 1975 and attention has been turned to the United States where the long term sales potential is considerable The subsidiary in Australia and associated company in South Africa will both benefit from the track modernization and extension programmes in their territories The volume of sales of the Heatrae group which are made largely in the United Kingdom market also declined sharply during the latter months of 1974 dropping by some 15 per cent and reducing profits materially Charter's offer for Sadia Limited - a company with activities similar to those of Heatrae group which had been suspended for investigation by the Monopolies and Mergers Commission was renewed after clearance by the commission and proved to be successful The Heatrae and Sadia groups have now been merged and reorganized to achieve operational advantages MINERALS AND RESOURCES CORPORATION MINORCO With the object of developing as a major international finance company in the natural resources field Zambian Anglo American Limited carried out in 1974 an im- portant expansion and diversification of its business and in order to reflect more accurately its new role changed its name to Minerals and Resources Corpora- tion Limited MINORCO Through the issue of A ordinary shares it increased its holding in Engelhard Minerals & Chemicals Corporation to 30 per cent and acquired certain other interests thereby raising the value ofits assets by 145 million The year 1974 was the most successful in the history of Engelhard Minerals & Chemicals Earnings at 110 million were double those of 1973 itself a record year and the dividend was increased by 27 cents to 70 cents a share MINORCO also acquired at a cost of US million 43 per cent in Trend Exploration Limited an oil and gas exploration company which owns producing oil wells in the United States and Canada and has been respon- sible for the discovery and establishment of a new oil field in Irian Jaya Indonesia Gross production from 12 this field in 1974 reached a peak of 50,000 barrels a day With the addition of new wells and increased production facilities sales in 1975 are expected to increase to 100,000 barrels per day The balance of the equity of Trend is held by a subsidiary of Hudson Bay Mining and Smelting Co. Limited The expansion of its asset base creating a much wider geographical and commodity spread should enable MINORCO to participate in the development of important mineral and metal projects and generally enhance its capacity and potential for large scale business in the future In particular it is proposed that the company should play a major part in new business of the Anglo American Corporation and Charter groups in areas which are not covered by their regional companies Charter has an effective interest of 20 per cent in the enlarged MINORCO compared with its 23.5 per cent interest before the expansion ANGLO AMERICAN CORPORATION OF CANADA Charter has 25 per cent of Anglo American Corporation of Canada Limited AMCAN the major asset of which is 36 per cent of Hudson Bay Mining and Smelting Co. Limited Although the copper mining operations at Flin Flon remain an important activity of Hudson Bay the company has recently diversified into a more broadly based international resources organization In 1974 the proportion of earnings from base metals accounted for only 44 per cent of the total compared with 80 per cent in 1973. The Sylvite of Canada potash division is operating at full capacity and Hudson Bay has agreed to increase its interest from 31 per cent to 51 per cent in Terra Chemicals International Inc. an important United States manufacturer of fertilizers crop production chemicals and food ingredients which is the major sales agent in the United States for the Sylvite potash production Hudson Bay and AMCAN have each acquired a one third interest in Lytton Minerals Limited which holds a 48 per cent interest in a company formed with the Mexican government and private Mexican interests to develop the La Verde copper project where ore reserves are estimated at 80 million tons grading 0.7 per cent copper with some gold and silver Report of the Directors In spite of the downturn in metal prices and sharply increased taxation Hudson Bay's earnings amounted to 38.6 million in 1974 compared with 44.6 million in 1973. The consolidated net income of AMCAN which in 1973 benefited from a net gain on realization of investments of 6.8 million dropped from 21.7 million to 11.9 million Since the end of the year Hudson Bay has continued to pursue its policy of expansion and diversification and an agreement has been entered into subject to the necessary approvals being obtained whereby Hudson Bay and MINORCO would subscribe for new shares representing 15.6 per cent and 10.4 per cent respectively ofthe capital of Inspiration Consolidated Copper Company a United States company at a cost of US 31,450,000 The principal business ofInspiration is the production and sale of copper from its operations in the state of Arizona which include mines smelter refinery and rod fabricating plant and the production of sulphuric acid The company has substantial reserves of copper ore which are capable of further development and it plans also to enter the coal mining industry OFFICES During the year the company occupied its new office building Charter House at Ashford in Kent and progressively vacated the premises there which it had rented since 1967. Charter House although built to a high specification shows substantial savings in accommodation costs against comparable office space in London while conditions at Ashford provide a more pleasant working environment for employees The value of work completed at 31 March 1975 was 6,150,000 and includes provision of approximately 20 per cent capacity for expansion Work on the first stage of development of the twoacre site adjoining Charter House which will include scope for provision of office development as well as a storey car park and supermarket is expected to commence in 1976 Directorate A list of the directors of the company is on page 4 Mr P. C. D. Burnell was appointed a director on 3 June 1975. In accordance with the provisions of article 103 of the company's articles of association he holds office only until the forthcoming annual general meeting but offers himself for reappointment Mr H. F. Oppen- heimer Mr W. D. Wilson and Mr J. E. H. Collins retire by rotation in accordance with the provisions of article 99 of the articles of association and offer themselves for reappointment General information The book value of the group's fixed assets increased from 30,075,000 to 36,668,000 during the year Details are shown on page 26 in note 9 on the accounts Movements on reserves are shown on page 28 in note 13 on the accounts During the year the company issued 1,267 fully paid shares of 25p each against conversion of 5,068 5 per cent convertible unsecured loan stock 1984. The issued share capital was thereby increased to 26,201,367.75 in 104,792,411 fully paid shares of 25p each and 326,500 partly paid shares of 25p each 1p paid up An analysis of investments and investment income appears on page 37. Other particulars which constitute part of this report are given on page 47 and a list of subsidiary companies on page 36 Auditors Coopers & Lybrand and Deloitte & Co. will be reappointed in accordance with the provisions of section 159 of the Companies Act 1948 40 Holborn Viaduct London ECIP IAJ 3 June 1975 by order of the board D. S. BOOTH secretary Ten Year Financial Record CHARTER CONSOLIDATED LIMITED AND ITS SUBSIDIARY COMPANIES EARNINGS yearto 31 March 1975 000s 1974 000s 1973 000s 1972 000s 1971 000s 1970 000s 1969 000S 1968 000s 1967 000s 1961 20005 Income from investments 17,699 13,254 Surplus on realizations Interest received less paid Trading profit 2,124 4,309 758 6,566 327 7.198 Deduct: administration and technical expenditure 25,631 25,088 1,497 1.295 prospecting expenditure 2,163 919 10,440 10,441 4,034 3,445 129 222 5,716 20,061 4,442 18.550 14,372 10.705 9.578 1,104 5,343 3,041 15 511 125 3,704 4.499 839 19,165 20,036 13,583 8,972 2,253 539 871 12,035 8,218 1619 777 834 11,446 8.717 1,200 1,216 518 11,651 944 i. 602 901 778 999 760 1,237 2) 1.349 1.283 a 9 1,135 - 1.216 Add group share of retained profits less losses of associated companies 3,660 21,971 2.214 1.546 1.768 1,237 22,874 18,515 16,871 17,397 18,799 1,349 1,283 12,234 11,352 1,135 10.313 1.216 10.435 5,965 3.109 1.137 774 2,803 _ -~ - Profit before taxation Deduct : taxation 27,936 25,983 17,378 9,869 9,076 3,832 17,645 3,036 20,200 3,276 18.799 4,772 12,234 2,114 11.352 1,649 10.313 1.576 10,435 2,656 Deduct : amount attributable to outside shareholders and 18,067 16,907 13.546 14,609 16,924 14,027 10,120 9.703 8,737 7,779 acquisition 861 1,016 1.103 673 556 1,029 - _: Earnings attributable 17,206 15.891 12,443 13,936 16.368 12,998 10.120 9.703 8,737 7.779 paid on Deduct dividends 6,507 5.987 6.654 8.383 tea 8,381 7,422 6,522 6,522 5.707 4,784 507 Retained steamrs Earnings per share 16.42p 15.1op 11.87p 13.30p 13.30p 15.84p 13.13p 10.34p 10.34p 9.92p 8.93p 7.90p tainsnes Dividends per share 6.21p 6.21p 5.71pt 6.35p 6.35p 8.00p 8.00p 7.50p 6.66p 6.66p 5.83p 5.83p 4.90p nct tverme Imputed tax credit ~renk 8.40 8.00p 8.00p 8.00p 7.50p 6.66p 6.66p 5.83p 4.90p nee per share tia ete mt 3.24pt 2.69pt 9.45p 1.65p os - _ . sec items introduced in 1972 resulting from accounting policies the item includedthefirst time in 1973 on the introduction of the imputation tax system to two decimal places Hearnings recalculated on revisedfigures resultingfrom new accounting policies 14 CHARTER CONSOLIDATED LIMITED AND ITS SUBSIDIARY COMPANIES NET ASSETS at 31 March Investments at market value or directors valuation 1974 000s C000s 1971 000s 1969 000s 000s 1968 = C000s 1967 000s 1966 000S 303,863 351,347 324,189 272,637 266,785 325,959 383,226 268,929 163,286 155,688 Investatmbe ooknvtals ue 199,393 184,410 178,597 150,413 143,559 138,388 141,547 123,723 106,111 92,326 Fixed assets 36,668 30,075 23,640 22,000 19.578 3,315 2,664 2,030 Exploration and development expenditure 4,442 4,069 2,250 Net current assets 9,269 24,531 27,177 37,760 = 17.969 5,424 3.986 7.177 = 15,163 ea Deduct investment 249,772 243,085 231,664 202,875 175,935 150,286 130,724 115.952 109,519 grants minority interest ee long term indebtedness hie and deferred taxation 52,222 48,189 46,951 35.234 35.175 33,969 = 14,991 1,125 1,080 1,240 Total and [eg reserrv eseervs es 197,550 194,896 184,713 172,363 167,700 141,966 135,295 129,599 114,872 108.279 ne Add surplus of market ne value or directors valuation of investments Fahad over book value 104,470 166.937 145,592 123,226 187,571 241,679 145,206 57,175 63,362 Total net assets 302,020 361,833 330,305 294,587 290.92v 329,537 376,974 274,805 172,047 171,641 Net assets per share 288p 345p 315p 281p 277p 333p 385p 280p 175p 1751p75p ISSUED SHARE CAPITAL at 31 March 26,201 26.200 26.199 26,194 24.458 24,458 24,431 item introduced in 1972 resulting from newaccounting policies Ades greas. rabema ABOVE Insulation work by Cape Contracts on fuel tanks at the Inverkip power station in Scotland BELOW Manufacture of Sadia water heaters at Salisbury Wiltshire ACCOUNTS Accounting Policies Consolidated Profit and Loss Account Consolidated Balance Sheet Balance Sheet Notes on the Accounts Source and Application of Funds Report of the Auditors to the Members Accounting Policies 1. Basis of consolidation 6. Investment and other grants ( In order to facilitate administration the financial years of Cape Industries Limited and its subsidiaries and those of the other group manufacturing subsidiaries terminate on 31 December Grants in respect of capital expenditure are credited to profit and loss account over the estimated average life of the relevant fixed assets Grants shown in the consolidated balance sheet represent total ii The results of subsidiaries acquired during the year are included in the consolidated profit and loss account from their effective dates grants to date less the amount credited to profit and loss account of acquisition mo, 7. Depreciation e 2. Foreign currencies Fixed assets are written off evenly over their expected useful lives with the exception that no depreciation has been provided free- hold land ee Profit and loss items assets and liabilities in foreign currencies are ne converted into sterling at the rates of exchange ruling at the dates of Depreciation on assets qualifying for investment and other grants is the respective balance sheets Differences arising from the con- calculated on their full cost see policy 6 e version of currencies are shown as an extraordinary item 3. Income received Income from investments including where applicable the imputed tax credit is accounted for on a received basis 8. Technical development expenditure Group expenditure on research and development patents and trade marks is written off when incurred 4. Investments i Investments have been classified into portfolio which includes investments in prospecting companies and long term holdings The latter are deemed to be long term when they are considered to be of strategic importance to the group and as such are held with no intention of resale If due to changed circumstances long term investments cease to be of strategic importance they are reclassified as portfolio investments ii Treatment of profits less losses arising on disposal of invest- ments Profits less losses arising on disposal of portfolio investments are included in the profit and loss account as surplus on realization of investments Any profits and losses arising from the disposal of long term investments are dealt with as extraordinary items iii Investments are included at cost unless the aggregate of market value and directors valuation is less than book value or when in the opinion of the directors a permanent loss in value has arisen on any investment The diminution in value of long term investments is charged as an extraordinary item 5. Turnover Turnover is the invoiced value of sales and excludes transactions between group companies 9. Deferred taxation This represents United overseas taxation at between the amounts balance sheets and the relief in the future Kingdom corporation tax at 52 per cent and the appropriate rates on the differences at which certain items are included in the amounts at which they will rank for taxation Advance corporation tax on dividends payable after the balance sheet date is deducted from deferred taxation 10. Stocks and work in progress Stocks and work in progress are valued at the lower of cost and net realizable value on bases consistent with those adopted in previous years In determining cost appropriate overhead expenses are included 11. Prospecting exploration and development expenditure Group expenditure on prospecting and on exploration and development is dealt with as follows ( Expenditure to develop existing mining areas The expenditure is considered a part of the general development of the mine and is written off to mine operating costs in the year incurred 18 ii Expenditure on general prospecting Expenditure during the initial exploration stage is written off in full in the profit and loss account of the year Further expenditure on prospects which after the initial stage appear promising is carried forward as an asset in the balance sheet under the heading of exploration and development expenditure while an evaluation is carried out to establish its commercial viability In the event that any prospect is abandoned after such evaluation the total expenditure is charged as an extraordinary item iii Expenditure on development of new mines When it is decided to develop a prospect into a mine any exploration and development expenditure relating thereto is capitalized in the appropriate asset account All further expenditure on development of the mine is capitalized If any project has to be abandoned in the development stage the total expenditure is charged as an extraordinary item 12. Associated companies Associated companies are ( those in which the group owns 20 per cent or more of the issued equity capital or ii those in which the group's investment is effectively that of a partner in a joint venture or consortium or iii mining companies managed by the group in which it also has a significant holding and in which the group exercises a significant influence over management and participates in the commercial and financial policy decisions of the companies concerned Certain other companies in which the group owns 20 per cent or more of the issued equity capital are not considered to be associated companies as the group does not exercise a significant influence over their management These companies are shown in the list of other investments of 10 per cent or more on page 35 The group share of retained profits less losses of associated companies since 1 April 1971 or the date when they were first treated as associated companies is included in the book values of the investments in the consolidated balance sheet It is not practicable to ascertain the group share of retained profits prior to these dates The accounts used to calculate the group share of profits less losses of associated companies are the latest audited accounts available to the group Consolidated Profit and Loss Account Year ended March 1975 CHARTER CONSOLIDATED LIMITED AND ITS SUBSIDIARY COMPANIES Income from investments note ) Associated companies note 2 Other investments Surplus on realizations of investments less amounts written off Interest received Trading profit note 4 Deduct Administration and technical expenditure note 4 Directors emoluments note 5 Prospecting expenditure Interest paid note 3 Auditors remuneration parent company- 7,000 1974- 1974- 4,500 1975 000s 000s 4,145 13.554 1974 000s 000s 2,919 10.335 Add Group share of retained profits less losses of associated companies note 2 Profit before taxation Taxation note 7 Profit after taxation and before extraordinary items Deduct Interest of outside shareholders in profits of subsidiaries acquisition loss 1974 - profit Attributable to Charter Earnings per share 16.42p 16.42p 1974-15.16p note 6 Dividends Interim dividend of 2.25p per share 1974-219p74-2p 1974-2p paid on 3 January 1975 Proposed final dividend of 3.95966p per share 1974 1974 3.71371p payable on or about 18 July 1975 Profit of the year retained before extraordinary items Extraordinary items note 8 Retained profit transferred to reserves note 13 Profit of the year after extraordinary items totalled 8,873,000 1974- 1974- 16,737,000 For the accounting policies see pages 18 and 19. For notes on the accounts see pages 23 to 30 5.987 9.904 846 10.750 Consolidated Balance Sheet 31 March 1975 CHARTER CONSOLIDATED LIMITED AND ITS SUBSIDIARY COMPANIES Fixed assets note 9 Exploration and development expenditure Investments note 10 Current assets Stocks and work in progress Debtors Short term loans and deposits Bank and cash balances 1975 000s 000s 1974 000s 000s 36,668 4,442 199,393 30.075 4.069 184.410 Current liabilities Associated companies and other deposit accounts Bank loans and overdrafts Creditors Taxation Proposed final dividend Net current assets Total net assets 9,269 249,772 24.531 243.085 Financed by Issued capital note 11 Share premium account note 12 Reserves note 13 Total capital and reserves Investmeanndt other grants Minority interest Long term indebtedness note 14 Deferred taxation note 15 S. SPIRO Chairman M. B. HOFMEYR Managing Director 26,201 30,624 140.725 26.201 30.620 138.075 197,550 947 7,843 42.172 1,260 ~. 194.896 a 1.098 7,608| , 39,797 - oo. 314 249.772 243,085 Directors For the accounting policies see pages 18 and 19. For notes on the accounts see pages 23 to 30 Balance Sheet 31 March 1975 CHARTER CONSOLIDATED LIMITED Subsidiary companies Shares at cost Add Amounts due from subsidiaries Deduct Amounts due to subsidiaries Deferred asset Advance corporation tax note 15 Current asset Bank balances 1975 000s 000s 1974 000s 000s 93,779 59,595 153.374 95,158 93,779 53,630 147.409 90.518 Financed by Issued capital note 11 Share premium account note 12 Reserves note 13 Total capital reserves Long term indebtedness note 14 Current liabilities Creditors Taxation Proposed final dividend S. SPIRO . Chairman M. B. HOFMEYR Managing Director Directors For the accounting policies see pages 18 and 19. For notes on the accounts see pages 23 to 30 58.816 Notes the Accounts 1. Income from investments i Includes franked investment income ii Arises from Listed investments Unlisted investments 2. Associated companies ) Those companies considered as principal associated companies as defined in accounting policy 12 on page 19 are listed on page 34. Certain companies in which the group's holding exceeds 20 per cent but which are not considered to be associated companies are listed on page 35 ii Income from investments in associated companies was 4.145,000 1974- 2,919,000 This represents dividends received by Charter in the year ended 31 March 1975 being dividend declarations by associated companies in their financial years ended prior 31 March 1975 of 3.145,000 2,070,000 and dividend payments by associated companies in respect of their current financial years of 1,000,000 8491974- 8.40 9.0 0000 iii Group share of retained profits less losses of associated companies for their latest financial years ended prior to 31 March 1975 Share of profits less losses before taxation Deduct dividends paid from these profits Group share of retained profits taxation Deduct taxation see note 7 less losses before Add extraordinary items see note 8 Group share of retained profits less losses for the year ended 31 March 1975 see note 13 iv For balance sheet details of investments in associated companies see note 10 3. Interest paid on borrowings by the group Loans repayable after more than five years Loans repayable within five years Amounts deposited with the group Bank overdrafts PM RICHLAND COMON Notes on the Accounts PLEAS PLEAS CASF 4. Trading profit and administration and technical expenditure i Turnover of the manufacturing subsidiaries ii Investment and other grants credited in these accounts iii Depreciation of fixed assets charged in these accounts iv Rents paid in respect of hire of plant machinery and equipment charged in these accounts v Rents received vi Administration and technical expenditure Deduct recovered from companies outside the group 5. Directors emoluments Directors of the parent company Fees Salaries and other other remuneration including pension con- tributions Pensions to former directors 1975 14.000 221.000 13,000 1974 E 17,000 200.000 13,000 Deduct fees received from other companies and refunded to the group 248,000 44,000 230,000 59.000 Amounts paid to directors Chairman Mr S. Spiro Others 20,001 - 22,500 17.501 - 20,000 15,001- 15,001- 17,500 12,501- 15,000 10,001- 10,001- 12,500 7.501 - 10,000 5.001 - 7.500 up to 2,500 12 directors have agreed to waive emoluments them from Charter Consolidated Limited and its subsidiary 204,000 171.000 ae 30.214 26.564 1 232 23232 42210 9 - panies Fees waived by these directors during the year amounted to 34,000 1974 13 directors 34,000 6. Earnings per share Earnings per share attributable to Charter is calculated on year earnings of 17,206.000 1974 15,891,000 and on 104.792.411 shares 1974-104,791.144 1974-104,791.144 1974-104,791.144 shares as if the additional 1,267 shares issued during the financial year had been issued for the whole 7. Taxation GROUP COMPANIES On profit for the year United Kingdom corporation tax at 52 per cent including deferred taxation of 1,052,000 1974 670.000 Tax at 33 per cent on United Kingdom investment income 1974-30 1974-30 1974-30 per cent Deduct relief for overseas taxation Overseas taxation including deferred taxation relief of 194.000 1974- 454.000 charge Deduct Adjustments in respect of previous years Estimated overspill relief ASSOCIATED COMPANIES NOTE In the event of certain overseas subsidiaries and associated companies distributing reserves or profits additional liability to United Kingdom taxation would arise 8. Extraordinary items SOMIMA Further investment written off 1974 diminution in value Liability to repay the group's share of SOMIMA's guaranteed and other loans under the terms of an agreement with the Mauritanian government wil @ ery per ahora Meanie io Net effect of conversion of currencies Losses and provisions relating to closure of operations less recoveries of such losses and provisions established in prior years not now required Profits less losses on disposal of long term investments Provision for diminution in value of long term investments Provision for compensation for industrial disease Surplus on sale of freehold land and buildings Additional provision for deferred taxation arising from . change in the United Kingdom corporation tax rate Sundry Associated companies including surplus on realizations of assets 6.117.000 1,410 974- 13,4,00 3,00000 Minority interest No deferred taxation relief has been taken in respect of these items as such relief may be offset by restriction of relief for overseas taxation Notes on the Accounts 1975 000s 2,729 8.679 11.408 3.230 390 15 17 _ 354 5.940 8,736 403 8.333 1974 000s 1.335 1.335 810 PM a f RICHLAND COMON PLEAS Notes on the Accounts PLEAS CASF 203CP10759 2023CP101759 9. Fixed assets Cost or at valuation 3131 March 1974 Currency realignment Additions at cost Subsidiaries acquired during the year Disposals Reallocations Revaluations Balance at 31 March 1975 FREEHOLD PROPERTY 000s LONG LEASEHOLD PROPERTY 000s SHORT LEASEHOLD PROPERTY 000s FLANT FURNITURE AND FITTINGS 000s 15.233 62 4,045 727 223 137 112 2.367 155 235 11 42 213 2,943 78 353 133 37 121 _ 35.139 401 4,898 629 1,817 58 19,695 2,917 3.435 38.506 Depreciation at 31 March 1974 on assets at cost or at valuation Currency realignment Charge to profit and loss account Subsidiaries acquired during the year Disposals Reallocations Balance at 31 March 1975 3,991 75 328 - 5 136 4.103 Net book value At 31 March 1975 15,592 510 76 _ 586 1.727 51 159 16 26 116 1,941 20,942 246 3.110 273 1.362 20 22,737 2,331 1.494 15,769 At March 1974 11,242 1.857 1.216 14,197 MINING _ RIGHTS 000s 1,629 54 _ -- _ _ TOTAL 000s 57.311 595 9.452 1.724 2.088 _ 325 1,576 66,129 66 3 31 _ _ 94 27,236 375 3.704 289 1.393 29.461 1.482 36.668 1.563 30,075 NOTES i Fixed assets are included on the following basis At cost At valuation - 1948 1960 1966 1970 1971 1974 FREEHOLD PROPERTY 000s 17.960 696 255 40 744 LONG LEASEHOLD PROPERTY 000s 1,722 _ 1.195 . SHORT LEASEHOLD PROPERTY 000s PLANT FURNITURE AND FITTINGS 000s 3,333 _ 38.483 _ _ 23 102 _ MINING RIGHTS 000s 272 1.304 _ - _ 19,695 2,917 3.435 38.506 1.576 ii Included in freehold property at cost is an amount of 618,000 relating to freehold land and factory premises acquired by the Belgian subsidiaries and financed by secured loans see note 14 The legal title to the factory premises does not vest in the com- panies concerned until the final instalments on the loans have been paid iii The freehold and leasehold properties at valuation in 1974 are stated mainly on the basis of valuations prepared by chartered surveyors The valuations were prepared on an existing use basis iv Commitments for capital expenditure of subsidiaries amount to 2,065,000 1974- 5,139,000 v Estimated capital expenditure of subsidiaries author ized but not committed amounts to 1,817,000 1974- 2,675,000 vi Virtually all the fixed assets are currently required to maintain the group's business Accordingly no provision has been made for taxation which might become payable in the event of future sales of properties at the revalued amounts included in the accounts in excess of book cost Notes on the Accounts 10. Investments ASSOCIATED COMPANIES Listed in Great Britain Listed outside Great Britain Unlisted Advances Add group share of retained profits less losses see note 13 OTHER INVESTMENTS Listed in Great Britain Listed outside Great Britain Unlisted TOTAL INVESTMENTS Listed in Great Britain Listed outside Great Britain Unlisted including advances AT COST LESS AMOUNTS WRITTEN OFF 1975 000s 1974 000s 13,624 12,973 13.947 123 26,597 22,844 14,070 20.400 49,441 16.401 34.470 20.051 65,842 54.521 14,549 80,391 2,174 56,695 90,973 16,726 107,699 11.303 119,002 93,589 12.836 106.425 21.290 127,715 MARKET VALUE OR DIRECTORS VALUATION 1975 000s 1974 000s 17,294 12,098 21,128 131 29.392 27,408 21,259 26,777 56,800 16.401 48,036 16,627 73,201 64,663 200,284 17.941 218,225 12.437 230,662 245,537 18.320 263.857 22,827 286.684 114,935 29.704 144,639 54,754 199.393 110.105 12,948 123.053 61.357 184.410 217,578 30.039 247.617 56.246 303.863 266.665 18.451 285.116 66.231 351.347 NOTES ) In the case of listed South African securities London stock exchange prices have been taken where the securities are held in the United Kingdom and Johannesburg stock exchange prices where the securities are held in South Africa ii Included in other unlisted investments are shares in Anglo American Corporation Rhodesia Limited The book value and directors valuation at 31 March 1975 both amount to 2,989,000 1974 - 2,989,000 Any disposal of these shares would require consent under existing exchange control regulations and no income can be remitted to the company from Rhodesia iv A subsidiary company has entered into contracts for exploration expenditure to be incurred after 31 March 1975 v The greater part of the investments is of a permanent nature but in the event of their realization at the current market values there would be a corporation tax liability on the resultant profit based approximately on the surplus of market values over book cost vi The market value of foreign currency investments in- cludes 75 per cent the investment currency premium where applicable iii Commitments and guarantees by the company and its subsidiaries in respect of subscriptions for shares and loan facilities amount to 10,189,000 1974 2.407,000 Notes on the Accounts 11. Share capital Authorized 120,000,000 shares of 25p each Issued and fully paid At March 1974 Issued during year as detailed in the report of the directors 104.791,144 shares of 25p each fully paid 1.267 104,792,411 Issued partly paid At 31 March 1974 and 1975 326,500 shares of 25p each 1p paid up Total issued at 31 March 1975 NOTES i Under the share incentive scheme adopted in 1970 and the share option scheme designed to supersede it in 1973 the directors can at their discretion issue to senior employees up to a further 2,642,088 partly paid shares under the former scheme or options to subscribe for up to 2,873,500 shares ii The maximum number of shares which may be issued on conversion of the company's 5 per cent convertible loan stock 1984 is 566,313 12. Share premium account Balances at 31 March 1974 Premium on shares issued by the company Effect of conversion of currencies Balances at 31 March 1975 13. Reserves Balances at 31 March 1974 Transfer from profit and loss account Disposal of associated companies by subsidiaries SOMIMA Other Sundry Revaluation of properties Balances at 31 March 1975 losses of SOMIMA written off by subsidiaries 30,000,000 26.197.786 317 26.198,103 3.265 26,201,368 COMPANY 000s 18,622 5 GROUP 000s 138.075 2.366 COMPANY 000s SUBSIDIARY ASSOCIATED COMPANIES COMPANIES 000s 000s 7.143 128,758 2.174 299 6.922 8,989 38 3 325 140,725 3.424 _ 3 325 118,734 3.424 38 14,549 Notes on the Accounts 14. Long term indebtedness Details of loans repayable over a longer period than five years Debenture stocks secured issued by ) Charter Consolidated Investments Limited 4 per cent first debenture stock 1978/83 4 per cent second debenture stock 1978/83 ii Cape Industries Limited 7 per cent debenture stock 1986/89 6 per cent debenture stock 1986/89 Unsecured loan stocks issued by ) The company 5 per cent convertible loan stock 1984 ii Cape Industries Limited 7 per cent loan stock 1986/91 iii Swaziland Collieries Limited 9 per cent registered convertible notes 1972/81 Bonds issued by Charter Cons ted Overseas N.V. ) 6 per cent unsecured ~ .ds of DM114,000,000 1968/83 ii 7 per cent guaranteed bonds of FF96,000,000 1987 Belgian long term loans Secured repayable by years annual instalments over twelve Loans repayable in less than five years Bank loan unsecured Belgian unsecured 375 39,535 2,537 100 42,172 371 37.685 1,978 134 39.797 NOTES ( The company's 5 per cent convertible loan stock carries the following conversion rights Year conversion Number of shares 1984 1975-79 per100 stock 24 1980-84 23 ii The registered holders of the Swaziland Collieries notes have the right during March and September September in any year to 31 March 1981 to surrender the notes for conversion into shares on the basis of one Swaziland Collieries share for every two emalangeni of nominal value so surrendered iii The DM114,000,000 6 per cent unsecured bonds 1968/83 are listed on the Frankfurt stock exchange The FF96,000,000 7 per cent guaranteed bonds 1987 are listed on The Stock Exchange London The company has guaranteed both bonds as regards repayment of principal including premium if any and payment of interest iv The Belgian subsidiaries pay interest at rates determined half yearly by the Belgian authorities currently at rates not exceeding 7 per cent per annum on the secured loans and 7.35 per cent per annum on the unsecured loans v The bank loan amounting to 2,537,000 is in Deutsche Marks repayable not later than 1978 Notes on the Accounts 15. Deferred taxation The balance of deferred taxation is comprised as follows Excess of the book value of assets qualifying for taxation allowances over their written down value for taxation purposes Taxation on capital gains un assets sold and rolled over against the acquisition of new assets Taxation relief relating to provision for compensation for industrial disease Stock appreciation relief relating to industrial subsidiaries in respect of their years ended 31 December 1973 see note ) below Advance corporation tax see note ii below NOTES ( No account has been taken of any stock appreciation relief which may be due to industrial subsidiaries in respect of their years ended 31 December 1974 ii Advance corporation tax recoverable of 2,234,000 1974 1974 1,917,000 is shown as a deferred asset in the company's balance sheet 16. Contingent liabilities For amounts not called on investments In respect of guarantees of 21,497,000 guarantees 5.337.000 company net 1974- 16.980,000 less counter- 14,353,000 In respect of underwriting participations Bills receivable As endorsers of bills of exchange Cape Industries Limited has been named a defendant in actions in the USA which seek the recovery of very sub- stantial damages These actions are being strenuously contested In the opinion of + rican legal advisers the amounts claimed are highly eculative and conjectural and have only a tenuous bas in law or in fact The directors believe that no material liability is likely to arise as a result of the actions and no provision has been made in these accounts in respect of any such liability 4.332 240 1.307 716 2,721 1.260 3,657 210 1.800 _ 2.381 314 Source and Application of Funds Year ended 31 March 1975 Source of funds Earnings attributable to Charter Extraordinary items Adjustments for items not involving movements of funds Depreciation Provision for diminution in value of investments Provision for compensation for industrial disease Changes in currency conversion rates of loans Deferred taxation Share of retained profits less losses of associated companies Funds generated Application of funds Purchases less disposals of fixed assets Exploration and development expenditure Purchases less realizations of investments Decrease in working capital and other items see note ) below Dividends paid and proposed Decrease in liquid funds see note ii below 1975 000s 000s 1974 00US 000s 17.206 8.333 8.873 15.891 846 16.737 3,704 3.441 2,764 1,574 8,989 3.137 5.908 3.500 2,514 1.752 3.362 9.945 26.682 9,972 373 9,473 1.884 6,507 24.441 13,074 30.674 3.992 i Analysis of working capital Increase in stocks and work in progress Increase in debtors Increase in creditors including taxation * Other items 1975 000s 7.923 6.124 15.977 46 1.884 1974 000s 4,288 2,499 2.350 185 4,622 includes liability of 8,679,000 to repay the group share of SOMIMA's guaranteed and other loans see note 8 on the accounts _ ii Decrease in liquid funds Decrease increase in short term loans deposits and cash Increase in associated companies and other deposits Increase in bank loans and overdrafts 1975 000s 1,704 2.973 8,397 13,074 1974 000s 4,519 4.713 3.798 3.992 - | | | | | | Report the Auditors to the Members In ulir sip^findi tihaspil on our examination and on the reports of the auditors of certain subsidiaries and associated companies nul audited by is the accounts set out on pages 18 31 and payes 3d to 20 together together : a Ulve su fai as concerns the members of Charter Cons^...lidatedLimited a Que and fail view of the state of affair 31 March 1975 and of the profit and source and applicaHon of Aids u the year ended on that date so far as is practicable having regard the fact that the accounts of epitain subsidiaries an~-l associated companies have been mad upeto dates other than 31 March 1976 and b comply with the Companies Acts 1940 and 1907 COOPERS LYBRAND DELOITTE A CO Chartered Accountants London 2 June 1976 Principal Investments Subsidiary Companies Analysis of Investments and Investment Income Interests of the Company Principal Investments ASSOCIATED COMPANIES as defined in accounting policy 12 on page 19 shown by principal country ofoperation Australia Accounting Group date interest in equity capital cent South Africa Australian Anglo American Limited Mining finance 25 Euranglo Pty Limited Investment Bermuda Minerals and Resources Corporation Limited MINORCO Mining finance Botswana Freight Services Holdings Limited Shipping andforwarding agents Switzerland Anmersales AG Marketing of metals Anglo American Corporation Botswana Limited Mining finance Canada Anglo American Corporation of Canada Limited Mining finance United Kingdom Anmercosa Sales Limited Marketing of metals Cleveland Potash Limited Potash mining Covenant Industries Limited Marketing and manufacture of chemicals Accounting Group date interest equity capital cent | 25 Luxembourg Park Holdings Limited Investment Malaysia Associated Mines Malaya Sendirian Berhad Mine management Dec Ayer Hitam Tin Dredging Limited June Incorporated in England In addition 17.5 per cent held by Tronoh Mines Limited Tin mining Bidor Malaya Tin Sendirian Berhad Tin mining Dec The Sungei Besi Mines Limited Mar Incorporated in England In addition 25.7 per cent held by Tronoh Mines Limited Tin mining Tronoh Mines Limited Incorporated in England Tin mining Dec CAPE INDUSTRIES GROUP India Rane Brake Linings Limited Manufacture of friction materials New Zealand Don Agencies Limited Manufacture offriction materials and distribution of automotive components Sweden Svenska Bromsbandsfabriken AB Manufacoftfuricrtieon materials Portugal Beralt Tin and Wolfram Limited Incorporated in England Wolfram mining where the country of incorporation is different from the principal country of operation this is shown beneath the company name OTHER INVESTMENTS OF 10 PER CENT OR MORE Australia International Pacific Corporation Limited Merchant banking Tinnabruich Pty Limited Investment Group interest in equity capital cent 38 37 France Soci^'t^M'ini^red'Anglade Scheelite mining Republic of Ireland Tara Exploration and Development Company Limited Incorporated in Canada Lead and zinc mining Mauritania Soci^'t^M'ini^rede Mauritanie SOMIMA Copper mining Rhodesia Anglo American Corporation Rhodesia Limited Industrial finance Singapore Haw Par Brothers International Limited Tin mining and industrial interests South Africa Anglo American Corporation of South Africa Limited Mining finance Group interest in equity capital cent Anglo American Investment Trust Limited 10 Diamond investments Blyvooruitzicht Gold Mining Company Limited 10 Gold mining The Northern Lime Company Limited Lime quarrying Pretoria Portland Cement Company Limited Cement manufacture Union Corporation Limited Mining finance Union Platinum Mining Company Limited Platinum mining United Kingdom Ferranti Limited Manufacture of electrical and electronic equipment Selection Trust Limited Mining finance Zaire Soci^'t^M'ini^rede Fungurume Development ofcopper mine Zambia National Milling Company Limited Flour milling OTHER PRINCIPAL INVESTMENTS South Africa The Argus Printing and Publishing Company Limited Printing and publishing De Beers Consolidated Mines Limited Diamond mining Harmony Gold Mining Company Limited Gold mining Highveld Steel and Vanadium Corporation Limited Steel manufacture Rand Selection Corporation Limited Mining finance United Kingdom The Rio Tinto Corporation Limited Mining finance Zambia Zambian government loans - housing -Kariba -Kariba electric scheme 35 Subsidiary Companies The following are the major subsidiaries of the company including those whose activities materially affected the profit or assets the Charter group during the year Except where otherwise stated each of these companies is wholly owned and all the shares of stock either unclassified or classified as ordinary or held are Cape Industries group Country of incorporation Finance and investment Countroyf incorporation Cape Industries Limited 63.2 per cent England 3 per cent cumulative preference shares - 100 per cent Industrial and mining Cape Asbestos Fibres Limited 63.2 per cent Marketing of asbestos fibre England Cape Asbestos Insulations Pty Limited 63.2 per cent Asbestos insulation producatnsd friction materials Cape Asbestos South Africa Pty Limited 63.2 per cent Administration ofgroup South African companies Cape Blue Mines Pty Limited 63.2 per cent Mining of blue asbestos South Africa South Africa South Africa Cape Boards and Panels Limited 63.2 per cent Insulation board for ship and building construction construction England Cape Contracts Limited 63.2 per c 'nt c 'nt Fire protection thermal and acoustic insulation contracting cent Cape Distribution Limited 63.2 per Distribution of automotive components England England Cape Insulation Limited 63.2 per cent Insulation products Scotland Cape Universal Claddings Limited 63.2 per cent Asbestos cement products and other building materials Don International s.a. 63.2 per cent Automotive and industrialfriction materials England Belgium Egnep Pty Limited 63.2 per cent Mining of amosite asbestos South Africa Small and Parkes Limited 63.2 per cent England 4.2 per cent cumulative preference shares cent Manufacture offriction materials Trist Draper Limited 63.2 per cent Manufacture of friction materials England Other industrial Elastic Rail Spike Company Limited Railway track fastenings Heatrae Holdings Limited Heating equipment Sadia Limited Domestic electrical appliances and commercial refrigerators England England England Barnato Holdings U.K. Limited The British South Africa Company The British South Africa Company Investments Limited Cecil Investments Limited England England England England Central Mining Finance Limited England The Central Mining & Investment Corporation Limited England Centramic South Africa Limited South Africa Charmay Limited Bermuda Charter Consolidated Finance Limited England Charter Consolidated Investments Limited England Charter Consolidated Malaysia Sendirian Berhad Charter Consolidated North Sea Explorations Limited Charter Consolidated Overseas N.V. Malaysia England Cura^ao Charter European Holdings S.A. Charterlux Limited S.A. The Consolidated Mines Selection Netherlands Antilles Luxembourg Luxembourg Johannesburg Limited Equinox Investments Limited Interlink Investments Limited South Africa South Africa Canada Leonora Investments Limited Gibraltar Raven Investments Limited Gibraltar Shafford Holdings Limited Swaziland Collieries Limited 63.4 per cent England Swaziland Services Anglo Charter International Services Limited 51 per cent Employment services Charter Consolidated Services Limited Administrative and technical services Charter France 50.3 per cent Administration England England : . France shares in these companies are held directly by Charter the shares in the remaining companies are held through subsidiaries 36 Geographical United Kingdom Rest of Europe North America South Africa Zambia Rest of Africa South Asia Australia By category INVESTMENTS 1975 1974 000s 000s 31.875 10,876 42,387 153,217 16,700 10,045 11,476 27,287 32,907 12,852 46,355 185,139 18,647 10,168 5,414 39,865 303,863 351,347 PER CENT 1975 1974 PER CENT OF INVESTMENT INCOME 1975 1974 Mining - Finance Diamonds Gold Tin and wolfram Copper and other minerals Industrial commercial oil etc. Long term loans 171,974 21,488 32,663 6,039 32,835 34,923 3,941 174,245 26,922 39,502 7,004 60,365 40,143 3,166 303,863 351,347 NOTES 1. The analysis geographical and by category is based on the stock exchange value of listed investments and the directors valuation of unlisted investments at 31 March 2. The geographical analysis takes into consideration direct interests and where possible major indirect interests in the areas concerned and is therefore only approximate Interests of the Company Thefollowing are briefdescriptions ofsome of the companies in which Charter has important interest Anglo American Corporation of South Africa Limited Anglo American Corporation of South Africa is head of an international group of mining industrial and investment companies to which it provides technical and other services The corporation's investment income for the year ended 31 December 1974 rose from R51,017,000 to R73,298,000 Anglo American Gold Investment Company Limited benefited signifi- cantly from higher dividends from its gold mining interests in- creasing its net profit by R32.3 million to R75.3 million and its dividend by 105 cents to 250 cents a share kilograms Production by the group's gold mines fell to 299,900 compared with 346,100 kilograms for the previous year partly as result of mining lower grades of ore made economic by the higher gold price Working costs per ton milled increased by 31.8 per cent but working profit from gold increased by 48.6 per cent to R648.4 million The group produced 1,023 tons of uranium in 1974 compared with 803 tons in 1973 Coal is the dominant source of energy in South Africa and sales by group collieries rose by 5.5 per cent to 21.0 million tons accounting for 32.5 per cent of South Africa's total production In spite of significantly higher working costs net profits rose from R8.4 mil- lion to R10.3 million Anglo American Industrial Corporation Limited the main channel for the group's industrial investments in South Africa increased its consolidated net profit by 36 per cent to R28.5 million for the year to 31 December 1974 a significant contribution being made by its two major subsidiaries Boart International Limited and Corporation Scaw Metals Limited Highveld Steel and Vanadium Limited achieved record outputs of steel and vanadium and its net profit for the year to 30 June 1974 before providing for de- ferred taxation rose from R7.50 million to R11.17 million The group's extensive interests in the property field were expanded during 1974 by the acquisition of a major interest in Sorec Limited The group's principal property vehicle Anglo American Properties Limited achieved slightly improved results during the six months ended 31 August 1974 with a loss of R760,000 compared with R1,005,000 for the corresponding period in 1973. Sorec increased its taxed profit by nine per cent to R2,119,600 for the year to 30 June 1974 The corporation's interest in diamonds lies mainly in its holding in De Beers Consolidated Mines Limited both directly and through Anglo American Investment Trust Limited The corporation's investment in the Zambian copper mining industry is held through the Bermudian company Minerals and Resources Corporation Limited An analysis by primary source of the corporation's investments at 31 December 1974 is shown below Value Income Goid Diamonds Copper Coal Platinum cent 56 9 2 3 2 cent 44 17 9 3 3 38 Other mining Industrial Finance Property Value cent 5 14 7 2 100 Income cent FEATURES OF THE ACCOUNTS Year ended 31 December 1974 Issued share capital in 131,387,300 ordinary shares of 10 cents each and R4,758,750 6 per cent cumulative preferred stock Loan capital Capital reserves and share premium Revenue reserves Group profit before taxation Taxation Group profit after taxation minorities and preferred dividends Earnings per ordinary share Dividends ordina amr ouy nt - per share Market of value listed investments Directors valuation of unlisted investments Net assets value - per ordinary share RGOOS 17,897 49,546 79,188 296,508 83,857 4,942 75,460 57.4 cents 38,100 29 cents 1,057,818 218,785 1,218,000 R9.27 includes unlisted investments at directors valuation R000s 17,748 48,520 70,819 261,541 71,226 9,556 57,954 44.6 cents 31.176 24 cents 1,113,943 1,097,000 R8.45 Anglo American Corporation Corporation Botswana Limited Anglo American Corporation Botswana AMBOT in which Charter holds 25 per cent has an interest of approximately 18 per cent in Botswana RST Limited which in turn holds 85 per cent of Bamangwato Concessions Limited the company mining nickel and copper at Pikwe Technical difficulties in the treatment plant led to low and erratic production throughout the year with some improvement in the last quarter Extensive plant modifications should be completed by 1975 The cost of these modifications together with inadequate production and falling copper prices has strained finances and substantial loans are being provided by the principal shareholders pending refinancing AMBOT also has an 80 per cent holding in Morupule Colliery Proprietary Limited and owns a storey office building in Gaborone FEATURES OF THE ACCOUNTS Year ended 31 December 1974 R000s Issued share capital in shares of RI each Share premium Consolidated loss before taxation Taxation Consolidated loss after taxation and minorities 200 5,568 329 15 295 1973 = R000s 200 5.568 ! profit 4 1 Anglo American Corporation do Brasil Ltda Charter has a 25 per cent interest in Anglo American Corporation do Brasil which is conducting general prospecting activities in Brazil and is examining an interesting occurrence of gold in conglomerates at Jacobina in Bahia An interest has recently been acquired in Mineracao Morro Velho SA which owns a group of small gold mines in the state of Minas Gerais Brazil and also has other mineral and surface rights in the adjoining area The gold mines are the oldest and largest in Brazil and current production of 40,000 tons of ore a month with a gold content of 10 grams a ton is expected to be increased significantly within a short period Anglo American Corporation of Canada Limited The company AMCAN which is a member of the Anglo American Corporation group holds the bulk of the Canadian assets of the Charter Consolidated Anglo American Corporation and De Beers groups The major part of its income is derived from its direct and indirect interest in Hudson Bay Mining and Smelting Co. Limited whose net earnings and dividends were reduced mainly owing to the introduction of higher taxation charges in 1974 At 31 December 1974 AMCAN's principal investments were Francana Development Corporation Ltd Hudson Bay Mining and Smelting Co. Limited Lytton Minerals Limited Tombill Mines Limited Percentage direct 40.00 35.12 33.64 50.63 Whitehorse Copper Mines Ltd 20.63 FEATURES OF THE ACCOUNTS Year ended 31 December 1974 000s Issued capital stock in 6,319,614'A 6,319,614'A and 3,609,931 B shares of no par value Revenue reserves 101,085 48,077 Income less expenses Provision for taxation 4,555 3 Share of income of effectively controlled companies Gain on realization of investments less provision for losses Net income Net earnings per share after extraordinary items Dividends amount - per share Market value of listed investments Book cost of unlisted investments Net asset value per share 7,309 86 11,946 120 cents 3,972 40 cents 50,420 19,941 8.24 1973 000s 101,085 41,069 7,848 1,027 8,950 6,843 23,033 254 cents 3,709 40 cents 97,100 16,632 14.20 Anglo American Investment Trust Limited The company ANAMINT is the principal holding company for the diamond interests of the Anglo American Corporation group having 26 per cent of De Beers Consolidated Mines Limited and shareholdings in certain diamond trading companies At Kimberley De Beers Consolidated Mines owns the De Beers and Wesselton mines and leases the Dutoitspan and Bultfontein mines from subsidiary companies It also operates the Finsch mine north of Kimberley and the Koffiefontein mine in the Orange Free State and is mining on the farms Annex Kleinzee and Dreyers Pan in Namaqualand Agreement has been reached with the Lesotho government for the opening of a new diamond mine at Letseng at an estimated cost of R23 million where production is expected to start in 1977 The De Beers company's mining subsidiaries are The Consolidated Diamond Mines of South West Africa Limited which operates opencast workings along the southern portion of the coast of South West Africa Premier Transvaal Diamond Mining Com- pany Limited which operates the Premier mine near Pretoria in the Transvaal and De Beers Botswana Mining Company Pro- prietary Limited which operates the Orapa mine in central Botswana Other subsidiaries of De Beers include The Diamond Corporation Proprietary Limited a diamond purchasing company De Beers also has interests in The Diamond Purchasing and Trading Company Proprietary Limited and The Diamond Trading Company Proprietary Limited which market gem and near diamonds and in which anamint has direct shareholdings De Beers has 50 per cent indirect interests in companies manufacturing synthetic diamonds in South Africa and Ireland Total sales of gem and industrial diamonds through the Central Selling Organisation in the year to 31 December 1974 fell by 7.8 per cent to R849,148,000 R849,148,000 Sales in the first half of the year set a new record but the world deterioration in economic condi- tion in the latter half of the year caused a sharp reduction in demand for the larger and more valuable stones The consolidated net profit of De Beers for 1974 decreased to R201,314,000 compared with R237,545,000 in the previous year Through its 39.49 per cent direct and indirect interest in Rand Selection Corporation Limited and through its subsidiary De Beers Holdings Proprietary Limited De Beers has large interests in the mining of gold copper platinum coal and other minerals and in a number of industrial finance insurance and property companies Another subsidiary De Beers Industrial Corporation Limited is an industrial finance and investment company whose principal interest is a direct and indirect holding of nearly 41 per cent AE CI Limited FEATURES OF THE ACCOUNTS Year ended 31 December 1974 Issued share capital in 10,000,000 ordinary shares of 50 cents each and 2,500,000 6 per cent cumulative preference shares of R2 each Revenue reserves R000s 10,000 26,917 Profit before taxation Taxation 29,967 226 Profit after taxation and preference dividends Earnings per ordinary share Dividends ordinary amount - per share 29,441 294 cents 29.000 290 cents 10,000 26,476 24,816 160 24,356 244 cents 24,000 240 cents 39 ati a SAGE 9. Year ended 31 December 1974 R000s Market of value listed investments Directors valuation of unlisted investments Net - assets value - per ordinary share 251,224 40,972 281,800 R27.68 includes unlisted investments at directors valuation 1973 R000s 442,415 _ 438,100 R43.31 Australian Anglo American Limited Australian Anglo American AAA is a holding company through which Charter Consolidated together with the Anglo American opportunities Corporation group and associates seeks new business in the Australian mining industry and undertakes prospecting programmes in Australia and neighbouring regions AAA are managers of the joint venture project at the Blue Spec gold mine in Western Australia where development of a mining operation has com- menced FEATURES OF THE ACCOUNTS Year ended 30 June 1974 Issued share capital in ordinary shares of 50 cents each Share premium Consolidated profit before taxation Taxation Consolidated profit after taxation 000s 18,000 2,970 769 2 767 1973 000s 18,000 2,970 205 nil 205 Beralt Tin and Wolfram Limited The company owns 80.55 per cent of Beralt Tin & Wolfram Portugal S.A.R.L. which operates a wolframite deposit in central Portugal to produce wolfram concentrates and small tonnages of tin and copper concentrates The substantial improvement in wolfram prices in 1974 enabled the major part of the year's production together with most of the excess stocks to be sold on advantageous terms Revenue from this exceptionally high level of sales more than offset the sharp rise in working costs and resulted in a return to profitability FEATURES OF THE ACCOUNTS Year ended 31 December 1974 1973 000s 000s Issued share capital in ordinary shares of 25p each 2,869 2,869 Capital reserves 270 130 Revenue reserves Consolidated profit before taxation Taxation Consolidated net profit attributable to Beralt before extraordinary items 1,559 3,066 835 1,690 160 115 133 recoverable 4 Earnings per share Extraordinary items Dividends amount 14.72p 169 nil 0.05p II nil - per share nil nil certain figures adjusted due to change of accounting policy in provid- ing for silicosis claims Blyvooruitzicht Gold Mining Company Limited The company is a member of the Barlow Rand group operating a gold mine on the far west Witwatersrand which recovers uranium oxide silver and osmiridium as products In spite of lower gold production and a sharp rise in working costs the increase in the average price received for gold resulted in a very substantial improvement in the working profit from gold Profit from uranium decreased due to falling sales and higher costs Total working profit was R64,658,000 more than double that for the previous year Shortage of labour in the gold mining industry is expected to hold back the company's production until further mechanization and better working methods can be implemented FEATURES OF THE ACCOUNTS Year ended 30 June 1974 R000s Issued share capital in shares of 25 cents each 6,000 Capital reserves 69,867 Revenue reserves 6,701 Yield per metric ton gold Profit before taxation 16.34 grams 66,092 Taxation and lease payments 38,490 Profit after taxation and lease payments 27,602 Dividends 21,600 - per share 90 cents 1973 R000s 6,000 66,031 4,718 17.36 grams 31,802 17,869 13.933 8,400 35 cents Cape Industries Limited Based in the United Kingdom the Cape Industries group manufactures building and insulation products friction materials and light engineering products undertakes thermal insulation con- tracting and distributes components and replacement parts for the automotive industry It also mines asbestos fibre in South Africa and sells it world wide The name of the company was changed from The Cape Asbestos Company Limited on 1 July 1974 to reflect the widening range of the group's activities Turnover increased substantially from 69,767,000 in 1973 to 81,278,000 but sales margins were reduced due largely to rising production costs which together with higher interest charges on substantially larger borrowings reduced profit before tax by 20 per cent In the building and insulation products division demand remained strong particularly for fire resisting and heat insulation products which form a substantial part of the division's turnover Cape Contracts Limited was considerably enlarged by the acquisition of the insulation contracting business of Newalls Insulation Company Limited The automotive and engineering products division experienced a fall in orders for original automotive equipment but demand to replacement parts was not affected Cape Distribution Limited has completed its expansion programme and now operates over sixty depots for the distribution of vehicle replacement parts 40 On the mining side demand for asbestos fibre was at a high level and the blue mines operated satisfactorily but technical problems in the amosite mines had still not been fully overcome FEATURES OF THE ACCOUNTS Year ended 31 December 1974 000s Issued share capital in 17,573,650 cart ordinary shares of 25p each and 250,000 3 cent cumulative preference shares of each 4,643 acne Loan capital 6 per cent and 7 per cent debenture stocks and 7 per cent Syatad unsecured loan stock ios Reserves and share premium 6,059 15,590 Consolidated profit before taxation 4,004 Taxation 1,352 Profit after taxation and extraordinary items 2,364 Earnings per ordinary share Dividends ordinary - amount - per share 15.0p 989 5.6267p 4,643 6,059 15,096 5,056 2,178 1,656 16.3p 989 5.6267p the proportionate amount of profits of associated companies is included in the figures for 1974 and the 1973 figures have been adjusted to reflect this change Covenant Industries Limited Charter and associates with Imperial Chemical Industries Limited jointly own Covenant Industries which operates in the chemical and allied industries field in east west and central Africa It handles the merchanting of ICI products and the local formulation of some chemicals the manufacture of paint and in Zambia of explosives primarily for the copperbelt Consolidated profit before tax rose from 1.4 million in the year to September 1973 to 2.3 million in 1974 There are many uncertainties in the areas in which Covenant functions but earnings this year are expected to be maintained Remission of profits however from Zambia and Tanzania is restricted by exchange control To comply with the Nigerian enterprises promotion legislation the subsidiary of Covenant handling its business in Nigeria has been obliged to sell 40 per cent ofits share capital to Nigerian citizens at a very low price Although the proceeds of the share issue were thus regrettably small the widely spread Nigerian shareholding that resulted from the issue is expected to be of general advantage to the company Two executive directors and nearly all of the managers and staff are Nigerians The growing strength of the Nigerian economy with its substantial revenue from oil should provide increasing opportunities for the company FEATURES OF THE ACCOUNTS Year ended 30 September Issued share capital in ordinary shares of 1 each Shareholders loans 1974 000s 92 Year ended 30 September Reserves Consolidated profit before taxation Taxation Consolidated profit after taxation minorities and extraordinary items Dividends 1974 2000s 3,332 2,272 931 796 210 1973 2000S 2,668 1,387 398 989 nil Freight Services Holdings Limited Charter has acquired a 23.9 per cent interest in Freight Services Holdings a subsidiary of Anglo American Industrial Corporation Limited for a total consideration of 2.92 million Based in South Africa Freight Services Holdings operates in the clearing and forwarding transport and travel agency business in many parts of the world It is currently expanding its activities in Europe while preparing for the advent of containerization in South Africa and continuing to seek new opportunities internationally Although costs rose substantially during 1974 particularly in the freight forwarding sector carnings were again at a record level Profits from the clearing and forwarding and warehousing activities were increased by the acquisition in April 1974 of the entire issued share capital of Dart & Howes Proprietary Limited an established clearing and forwarding business FEATURES OF THE ACCOUNTS Year ended 31 December 1974 Eighteen months ended 31 December 1973 Issued share capital in ordinary shares of R1 each Capital reserves and share premium Revenue reserves Group profit before taxation Taxation Group profit after taxation minorities and extraordinary items Earnings per share Dividends- - amount - per share Market of valu lise ted investments Directors valuation of unlisted investments Net assets - value - per share R000s 1,437 9,987 4.729 4,802 1,948 1,968 181 cents 1.150 80 cents 299 699 16,154 RI1.24 R000s 1,437 10,210 3,751 4,559 1,867 2,091 171 cents 1,036 75 cents 184 424 15,398 R10.72 Harmony Gold Mining Company Limited The company and its wholly owned subsidiaries members of the Barlow Rand group mine for gold in the Orange Free State Uranium oxide sulphuric acid silver osmiridium and pyrite are recovered as products Total working profit for the year to 30 June 1974 more than 41 doubled from R20,360,000 R20,360,000 to R47,821,000 Although gold output fell this was more than offset by increased revenue from sales resulting from the much higher average gold price Working costs per ton milled increased by 19 per cent rather less than for the industry as a whole due largely to substantial wage increases There was a sharp fall in working profit from uranium pyrite and sulphuric acid FEATURES OF THE ACCOUNTS Year ended 30 June 1974 R0003 Issued share capital in shares of 50 cents cach 13,442 Capital reserves and share premium Revenue reserves Yield per metric ton gold Consolidated profit before taxation and lease payments Taxation and lease payments Consolidated profit after taxation and lease payments Dividpaymee nts an modunst - per share 152,106 16,143 6.38 grams 49,577 23,429 26,148 15,324 57 cents 1973 R000s 13,442 143,787 11,453 7.71 grams 20,932 9,761 11,171 6,642 25 cents figures not comparable with those for 1973 when results of newly acquired wholly owned subsidiaries were includedfor six months only adjusted for increase in issued share capital during year to 30 June 1973 Haw Par Brothers International Limited Incorporated in Singapore the company operates in Singapore Malaysia Hong Kong and Thailand Its principal direct interests are pharmaceuticals merchanting and general trading including insurance merchant and investment banking ship leasing chartering and marine services The principal indirect activities include substantial interests in London Tin Corporation Limited the largest tin mining group in the world Island and Peninsular Development Berhad a Malaysian company whose main activities are in palm oil rubber plantations and property development and Cheung Kong Holdings Limited a large Hong Kong property company FEATURES OF THE ACCOUNTS Year ended 31 December 1974 Issued share capital in ordinary shares of $ each Capital reserves and share premium Revenue reserves Consolidated profit before taxation Taxation Consolidated profit after taxation Dividends - gross amount SS000S 106,812 31,793 35,460 25,108 7.848 17.260 10,681 - per share Market value of investments Book cost of investments 10 cents 96,310 175,062 unaudited 1973 SS000S 69,189 26,200 21,217 24,233 6,667 17.566 6,919 10 cents 202.473 206,536 Minerals and Resources Corporation Limited Minerals and Resources Corporation MINORCO a member of the Anglo American Corporation group is company incorporated in Bermuda with interests in mining prospecting oil and industry It changed its name from Zambian Anglo American Limited in August 1974 to reflect the expansion and diversification of its activities including its proposed major role in new business of the Anglo American Corporation and Charter Consolidated groups in areas not covered by their regional companies As part of its expansion MINORCO acquired in exchange for the issue of new A ordinary shares 30.6 per cent of the common stock of Engelhard Minerals & Chemicals Corporation a United States company The three lines of business of Engelhards are the marketing of ores minerals and metals by the Philipp Brothers division the mining and processing of metallic minerals by the Minerals & Chemicals division and the refining and manu- Engelhard facturing of precious metals for industry by the Industries division In 1974 the company recorded its most successful year with net earnings of 110,164,000 more than double those for 1973. All three operating divisions contributed to these higher earnings but the major portion came from the international marketing operations of Philipp Brothers During 1974 Minorco also acquired at a cost of approximately US million an effective interest of about 43 per cent in Trend Exploration Limited a United States company which owns or operates a of number oil wells in North America and Indonesia A major investment in the Zambian copper mining industry is held through Zambia Copper Investments Limited ZCI of which MINORCO owns fractionally under 50 per cent ZCI holds 49 per cent of Nchanga Consolidated Copper Mines Limited and 12.25 per cent of Roan Consolidated Mines Limited both of which were able to pay increased dividends as a result of the higher copper price prevailing in the first haloff 1974. ZCI's profit after tax for the year to 30 June 1974 improved from 31,909,000 to 54,854,000 and its dividend was increased by 64 per cent to 40 cents a share ZCI's dividend income in the year to 30 June 1975 will however be drastically reduced owing to the lower copper price MINORCO holds 30 per cent of Australian Anglo American Limited and through ZCI an interest in the Pikwe copper mine in Botswana FEATURES OF THE ACCOUNTS Year ended 30 June 1974 Issued share capital in ordinary shares of 1.40 each Loan capital Capital reserve and share premium Revenue reserves Consolidated profit before taxation Overseas taxation Consolidated profit after taxation Market value of listed investments Book cost ofunlisted investments Dividends amount - per share 000s 44.136 5.035 120,236 46.868 29,769 118 29,651 62,807 51,404 22,168 70 cents 1973 USS000S 44.3364 .3 6 44.336 5,035 58.215 39.115 19.394 126 19,268 4.693 31.243 18.583 59 cents 42 Year ended 30 June 1974 1973 Net assets - value - per share 000s 224,700 7.10 USS000S 226,800 7.16 increased since the end of the financial year by the allotment of 41,910,618 A ordinary shares of 1.40 each The Northern Lime Company Limited The company is a member of the Barlow Rand group and operates three limeworks two in the western Cape at Lime Acres and Taung and one in the northern Transvaal at Marble Hall Heavy rainfall and consequent flooding caused some loss of production but this was virtually made up by the end of the year There was a moderate rise in sales of lime and limestone in spite of a fall in supplies to the chrome industry Saies of lime for stabilization of soils used in the construction of road bases were buoyant and now account for 14 per cent of all lime sold Costs were appreciably higher but were covered by the increase in selling prices applied in June 1972 which led to a rise in sales revenue of 15.6 per cent An expansion programme is planned for completion by June 1977 at cost of R11 million to meet the forecast increase in demand particularly from the steel industry FEATURES OF THE ACCOUNTS Year ended 30 June 1974 R000s Issued share capital in 1,860,485 ordinary shares of R2 each and 96,500 ordinary shares of R2 each le paid Share premium Revenue reserves Profit before taxation 3,722 607 4,415 2,356 Taxation Profit after taxation Dividends - amount 988 1,368 632 - per share 34 cents 3,721 607 3,743 2,234 920 1,314 595 32 cents Pretoria Portland Cement Company Limited The company and its subsidiaries which are members of the Barlow Rand group are engaged principally in the manufacture of cement in South Africa The new kiln at the Hercules factory was commissioned in April 1974 and contributed to an increase in sales of 11 per cent over the previous year Extension of the Slurry works is progressing satis- factorily and modernization of the De Hoek plant at Cape Portland Cement Company Limited has been completed Turnover for the year to 30 June 1975 is expected to be higher but continued increases in costs are seriously affecting profitability FEATURES OF THE ACCOUNTS Year ended 30 June 1974 R000s Issued share capital in 11,990,666 fully paid shares of R2 each and 495,000 partly paid shares of R2 each Ic paid Capital reserve and share premium Revenue reserves 23.986 5,773 30,407 23.591 2,300 22,760 Year ended 30 June Group profit before taxation Taxation Group profit after taxation Dividends - amount - per share 1974 R000s 1,951 4,058 7,893 2,158 cents 1973 R000 7,175 3,085 4,090 1,887 16 cents Rand Selection Corporation Limited The corporation a member of the Anglo American Corporation group is a financial and investment company with shareholdings in gold diamond copper and other base metals coal platinum finance insurance industrial and property companies Within this wide spread of investments investments its main strength is in gold The corporation's investment income for the year to 30 September 1974 rose by 5. per cent to R49,412,000 mainly as a result of higher dividend from its gold interests which enjoyed an increase in revenue due to the buoyancy of the gold price The diamond market was also strong and the corporation's principal industrial interests had a good year The acquisition in April 1974 of Schlesinger Insurance and Institutional Holdings Limited SII as wholly owned subsidiary with its substantial interests in life assurance property development and finance in South Africa and the United Kingdom was a major diversification The enlarged group subsequently acquired further holdings in several companies of the SII group and raised to approximately 75 per cent its stake in African Eagle Life Assurance Society Limited the principal vehicle in SII's life insurance opera- tions FEATURES OF THE ACCOUNTS Year ended 30 September 1974 R000s Issued share capital in shares of 50 cents each 20.848 Loan capital Capital reserves and share premium Revenue reserves Group profit before taxation Taxation 57.206 211,631 95,973 46,302 756 Group profit after taxation and minorities Earnings per share - Dividends amount -- per share Market value oflisted investments 43,911 113.6 cents 27,016 70 cents 784,319 Directors valuation of unlisted investments Net assets-asets- value - per share 100,982 850,060 R20.39 R20.39 1973 R000s 17,023 62,694 110,478 78,913 26,465 331 25,903 76.1 cents 17,873 52.5 cents 689,482 _ 732,250 R21.51 including R3,708,000 being excess of written down cost of shares in subsidiaries over book value of net assets at dates of acquisition ~adjustedto reflect that profits from receivedfor only part of the year ew subsidiary companies were the corporation's interest in Charter Consolidated Limited held through Rhochar Holdings Limited an unlisted company has been included at its market value The Rio Tinto Corporation Limited The Rio Tinto Corporation RTZ and its subsidiaries is a British international group of mining and industrial companies with interests in almost every major metal and fuel The group has continued to develop its activities in aluminium and its products borax coal copper industrial and agricultural chemicals iron ore lead specialty steels tin uranium and zinc Higher average prices received for copper and other metals were the principal factor in the increase of group sales revenue by 231.5 million to 1,164.7 million in 1974 Group profit before tax showed a corresponding increase to which all the major operations contributed but a considerably higher taxation charge reduced the net profit by 7.1 million In March 1975 RTZ made a rights issue of 27,706,928 ordinary shares raising approximately 33 million for use primarily in the development of business in the United Kingdom The group's interests in Australia New Zealand and adjacent territories are mainly held through Conzine Riotinto of Australia Limited CRA in which RTZ's holding is 80.6 per cent Bougainville Copper Limited 53.6 per cent owned by CRA marginally increased output during its second full year of commercial production but the higher income tax liability incurred through renegotiation of the 1967 agreement with the Papua New Guinea government substantially reduced RTZ's share of Bougainville's earnings Hamersley Iron Pty Limited 54 per cent owned by CRA increased production and benefited from higher selling prices on Japanese contracts but these factors were offset by labour problems late delivery of equipment and continuing inflation of costs Earnings of Australian Mining & Smelting Limited 73.5 per cent owned by CRA showed a considerable improvement over those for 1973 due to high prices for lead and zinc and increased sales Comalco Limited 45 per cent owned by CRA with interests in bauxite alumina and aluminium achieved sales appreciably higher than those for the previous year but costs of production increased sharply and earnings showed only a small improvement In Canada Rio Algom Mines Limited in which RTZ's holding is 51.3 per cent has interests in copper and uranium mining and in stainless and specialty steels Its principal copper mining investment is 56.9 per cent in Lornex Mining Corporation Ltd which operates an open molybdenum mine in British Columbia In spite of the lower average price realized for copper and the rise in operating costs earnings of Lornex before taxes and government royalty were slightly higher than in the previous year RTZ has a 62.7 per cent interest in Brinco Limited whose principal interests are concentrated in mineral exploration Brinco's gross income exceeded that for the previous year largely as a result of of interest earned on the proceeds of the sale its majority interest in Churchill Falls Labrador Corporation Limited to the Newfound- land and Labrador government for 160 million In southern Africa through its wholly owned subsidiary Rio Tinto South Africa Limited RTZ has interests of 38.9 per cent in Palabora Mining Company Limited and 53.6 per cent in R^ssingUranium Limited the developer of a uranium deposit in South West Africa At Palabora copper production fell slightly but the higher average price received resulted in an increase in profit in spite of the rise in costs Plans have been announced for the expansion of operations by early 1977 R.T.Z. Borax Limited a wholly owned subsidiary of RTZ has interests in borax potash and industriaanld agricultural chemicals through companies operating principally in Europe including the United Kingdom and North and South America It showed improved sales and profits during the year Also wholly owned by RTZ R.T.Z. Europe Limited is the holding company for many of RTZ's activities in the United Kingdom and the rest of Europe and for several related operations in Canada and elsewhere Its chief interests are in products made of aluminium steel glass and wood and in engineering and tin smelting Most parts of the RTZ Europe group had a successful year and increased their profits over those for 1973 In the United Kingdom Anglesey Aluminium Limited in which RTZ's holding is 47 per cent achieved higher output in 1974 although operating below capacity for the latter part of the year Production costs rose but these were compensated for by higher aluminium prices and the companyl'osss was accordingly reduced Through its wholly owned subsidiary R.T.Z. Oil and Gas Limited RTZ's interests in the United Kingdom sector of the North Sea include 25 per cent in the Argyll field where three exploration wells were drilled in 1974 and a production test programme is due to come on stream in 1975 FEATURES OF THE GROUP ACCOUNTS Year ended 31 December 1974 000s Issued share capital of RTZ in 194,101,110 ordinary shares of 25p each 26,858,967 accumulating ordinary shares of 25p each and 7,732,967 3.325 per cent A and 3,143,750 3.5 per cent B cumulative preference shares of each Loan capital Capital reserves and share premium Revenue reserves Profit before taxation Taxation Net profit attributable to RTZ shareholders before extraordinary items Earnings per ordinary share of RTZ Extraordinary items Dividends - amount - per ordinary share 66,100 274,300 130,800 265,400 279.100 135,800 62,500 28.14p 7,200 10,100 4.97p 1973 000s 65,900 289,100 163,700 217,800 224.800 58,400 69,600 31.44p 24,300 24,300 9,000 4.49p represents mainly exchange adjustments onforeign currency indebtedness and on earnings retained overseas the net charge for 1974 18 after deducting a profit of 9 million on the sale of Churchill Falls water power rights 44 NS AE Fans Selection Trust Limited The company owns 11.6 per cent of Amax a major United States Sets: The company is a British mining finance house with net assets natural resource company with widely diversified interests More IParte valued at 31 March 1974 at 152 million Its main business is in- buoyant levels of business activity in the United States Europe Bae vestment and participation in mining and mineral enterprises and and Japan led to higher sales by each of Amax's operating groups EEN in the conduct of its own mining and minerals exploration ventures and total sales for the year to 31 December 1973 rose to 1,337 EA The company's interests cover a wide range of metals and minerals million compared with 876 million in the previous year Net in many parts of the world mainly Australia North America and earnings were a record 105.1 million an increase of 59 per cent Os Africa over the figure of 66.2 million for 1972 ISL Bey Revenue for the year to 31 March 1974 rose from 12,165,000 to SR 13,719,000 The increase was mainly attributable to a sub- YASS stantially larger profit from operations due to improved results Poe from the South Bay copper mine in Canada which combined with his her dividend income more than offset a reduc- tion in the profit on realization of investments a Tsumeb Corporation in which the company has direct interest of 14.3 per cent and an indirect interest in further 29.6 per cent held by Amax owns mines in South West Africa producing mainly copper lead and zinc Increased sales of copper and higher prices for lead boosted Tsumeb's sales revenue considerably and net profit for the year to 31 December 1973 rose from R5 million to R13 million During the year the company maintained its exploration pro- grammes in Australia North America and South Africa and con- cluded a limited programme in the United Kingdom Drilling at the Agnew deposit in Western Australia indicated a mineral reserve of 40 million metric tons at an average grade of about 2.2 per cent nickel which is sufficient to support a major mining operation Results have demonstrated the technical feasibility of mining the deposit and the economic feasibility and financing possibilities are beinginvestigated The company continues to extend its interests in North Sea oil and a gas In addition to its participations in exploration and develop- ment through the Noordwinning and Pennzoil UK groups it is involved in the building and equipping of offshore production platforms through the lease of craneship and ancillary equipment to the Hereema organization of The Hague The company's main investments at 31 March 1974 were in Consolidated African Selection Trust Limited CAST Amax Inc. pro- Tsumeb Corporation Limited and Western Mining Corporation Limited It also has an interest in the Mount Newman iron ore ject and in Southvaal Holdings Limited Through Unisel Gold Mines Limited the company has an equal participation with Union Cor- a poration Limited in the development of gold mine in the Orange Free State Policies of state participation in Sierra Leone and Ghana have reduced the CAST group's interests in its diamond mines there to 49 per cent and 45 per cent respectively and the resultant decline in revenue threatened to impair CAST's ability to follow its participations in Agnew and other developing projects such as the Brouillan copper deposit in Quebec In December 1974 the boards of Selection Trust and CAST agreed that the two companies combined would be in a stronger position to finance participations in projects and arrangements were proposed for a merger in terms of which the 12,472,336 ordinary shares in CAST not already owned by Seltrust Investments Limited were cancelled and holders of those shares received two shares in Selection Trust and 45p in cash for every nine shares held in CAST CAST accordingly became a subsidiary of Selection Trust when the became effective in March 1975 but it continues to operamteeragsera separate company The company's investment of 10.6 per cent in Southvaal Holdings Limited was valued at 31.1 million including investment cur- rency premiuamt 31 March 1974 The company's 8.8 per cent interest in Western Mining Corporation was valued a 31 March 1974 at approximately 21 mitlion includ- principal ing investment currency premium In addition to its Australia nickel mining operations at Kambalda in Western Western Mining has a 50 per cent interest in the Windarra nickel project which is being operated as a joint venture with Poseidon Limited of The Mount Newman iron ore project in the Pilbara region of Western Australia is a joint venture in which the company has a direct interest of five per cent and an indirect interest through the 25 per cent participation in the project held by Amax During the year to 31 March 1974 sales iron ore rose to 27.2 million long tons compared with 22.6 million long tons in the previous year and sales proceeds derived by the company from its direct participation amounted to 5.64 million 1973 4.45 million Arrangements are being made to expand the annual capacity of the project to 40 million long tons by early 1976 FEATURES OF THE ACCOUNTS Year ended 31 March 1974 000s Issued share capital ordinary shares of25p each 5,100 Capital reserves and share premium Revenue reserves Consolidated profit before taxation 25,421 9,628 9,802 Taxation 3,751 Consolidated profit after taxation and deduction ofminority interests Earnings per share - Divideanmodunst - per share Net assets at book value 5,269 25.8p 2,621 12.8505p 40,149 at market or diredcit reo ctrorss valuation Net asset value per share 151,608 7.43 1973 000s 5,100 21,338 7,519 6,077 2,575 3.450 16.9p 2,953 12.6p 33,957 107,991 5.29 previously figures adjusted because expenditure on exploration charged against reserves is now dealt with in the profit and loss account Tronoh Mines Limited group Tronoh Mines and its subsidiaries Bidor Malaya Tin Sendirian Berhad and Southern Tronoh Tin Dredging Limited operate tin mines in Malaysia Production for the year to 31 December 1974 rose to 3,077 metric tons of tin concentrate compared with 2,748 metric tons for 1973 Associated companies are Ayer Hitam Tin Dredging Limited and The Sungei Besi Mines Limited in Malaysia and Aokam Tin Berhad in Thailand all of which are tin mining companies The increased profitability of the group is due in the main to substantially higher tin prices FEATURES OF THE ACCOUNTS Year ended 31 December 1974 Issued share capital in shares of 25p each Capital reserves and share premium Revenue reserves Group profit before taxation Taxation Group net profit attributable to Tronoh before extraordinary items Earnings per share Extraordinary items Dividends - amount - per share 000s 2,579 1,900 3,532 4,423 2,430 1,533 14.9p 231 415 4.02p The market value of the corporation's United Kingdom investments including its substantial interest in Capital & Counties Property Company had fallen considerably below their book costs by the end of the year and an amount of R25,311,000 was transferred from general reserve FEATURES OF THE ACCOUNTS Year ended 31 December 1974 Issued share capital in ordinary shares of 6.25 cents each Loan capital 6 per cent registered unsecured notes 1974/83 Capital reserves and share premium Revenue reserves Consolidated profit before taxation Taxation Consolidated profit after taxation Earnings per share Dividends - amount - per share Market value oflisted investments Directors valuation ofunlisted investments Net assets value - per share R000s 3,631 3,200 79,358 69,540 42,832 4,085 38,747 67 cents 24,402 42 cents 426,374 71,449 514,050 R8.85 1973 R000s 3,631 3,600 79,378 82,434 29,685 1,872 27,813 48 cents 13,944 24 cents 316,115 107.540 445,758 R7.67 Union Corporation Limited Union Corporation is a mining finance company whose main interests are in the South African gold mining industry and in mining and refining of platinum nickel and copper Other interests of the group include property paper packaging and shipping printing engineering and road construction and coastal In South Africa it administers two investment companies with mining finance and industrial portfolios It also explores for new sources ofmetals and minerals Output from the gold mines in the group was reduced by 12 per cent during the year and working costs per ton milled were 21 per cent higher due largely to substantial wage increases The upsurge in the gold price increased the average price received from production R2,090 to R3,400 per kilogram and total working profit rose by 59 per cent from R115,107,000 to R182,792,000 Work began on the development of a new gold mine in the Orange Free State Unisel Gold Mines Limited which is scheduled to reach ^fin 1978 at an estimated capital cost of R50 million The market for platinum remained firm for most of 1974 but States towards the end of the year the recession in the United Europe and Japan caused a marked falling off in demand Impala Platinum Limited recently announced plans to scale down its annual production to match the level of sales expected in 1975 Mainly as a result of record dividend distributions received from its gold mining investments and increased distributions from Impala the corporation's dividend income increased by R11,397,000 to R33,634,000 46 Union Platinum Mining Company Limited The company's revenue consists almost entirely of dividend income from Rustenburg Platinum Mines Limited of which it owns 37.3 per cent In spite of unsettled economic conditions following the inter- platinum national oil embargo at the end of 1973 demand for remained firm throughout most of 1974 and the volume of Rusten- burg's sales increased significantly Turnover for the year ended 31 August 1974 was 50 per cent higher than for the previous year while profit after tax of R56.9 million and dividends declared of R21.84 per share set new record levels As a result of recessionary trends in the world economy demand for platinum has declined Rustenburg has announced a cutback in production and its expansion programme has been slowed down Sales revenue for the year to 31 August 1975 is expected to be substantially lower FEATURES OF THE ACCOUNTS Year ended 31 October 1974 1973 Issued share capital in shares of 10 cents each Capital reserves Revenue reserves Profit before taxation Taxation Profit after taxation Dividends - amount - per share R000s 4,570 35,807 25 9.340 9 9,331 9,327 20.41 cents ROOOS 4,570 35,807 10,308 10.310 10.310 25.34 cents includes special dividend of 7.7 cents paid to holders of A shares General Information Directors interests The following are the interests of the directors of the company who held office on 31 March 1975 as notified to the company in terms of the Companies Act 1967 DIRECTORS F. S. Berning G. Carey N. Clarke E. H. Collins R. H. Dent H. Fraser J. O. Hambro M. B. Hofmeyr N. K. Kinkead H. F. Oppenheimer Sir PPhilihp ilip Oppenheimer W. W. Pain G. W. Relly G. Richardson S. Spiro Spiro M. W. Stephenson L. G. Stopford Sackville M. W. Thomas W. D. Wilson FULLY PAID SHARES OF 25p EACH | April 1974 31 March 1975 100 100 100 100 1,155 100 1,131 1,745 100 100 5,000,100 5,000,100 9,798 100 500 100 100 100 100 4,750 100 100 100 100 100 100 1,155 100 1,131 1,745 100 100 5,000,1007 5,000,1007 9,798 100 500 100 100 100 100 4,750 100 100 ALTERNATE DIRECTORS R. J. Armitage G. Hatch M. W. B. Heald A. E. Oppenheimer A. J. W. Owston nil nil nil nil nil nil nil nil nil nil these interests are beneficially ; owned the remainder are not beneficially owned tof which 5,000,000 being shares held by a body corporate are notified pursuant to section 28 ofthe Companies Act 1967 Of these directors and alternate directors the following had beneficial interests in the partly paid shares of the company issued under its share in- centive scheme the effect of which was to enable executive directors and senior employees to subscribe for shares which after a qualifying period could be fully paid up at a price determined at the time of subscription PARTLY PAID SHARES OF 25p EACH 1 April 1974 31 March 1975 N. K. Weekes B. W.Pain G. Richardson L. G. Stopford Sackville R. Armitage G. Hatch M. W. Heald A. W. Owston 7,500 12,500 12,500 10,000 10,000 7,500 3,500 5,000 6,000 7,500 12,500 12,500 10,000 10,000 7,500 3,500 5,000 6,000 Mr R. H. Dent also had a beneficial interest in 4.000 ordinary shares of 25p each in Cape Industries Limited a subsidiary of the company at 1 April 1974 and 31 March 1975 Taxation i Capital gains tax The market price of the company's shares on 6 April 1965 was Registered shares 98.75p Shares represented by renounceable letters of allotment - 100p Share warrants to bearer - 100p ii The company is not a close company within the provisions of the Income of and Corporation Taxes Act 1970 and this position has not changed since the end the financial year Turnover 4 The following is an analysis of the turnover shown in note on the accounts and the amount of profit attributable to each different class of business undertaken by the group's manufacturing subsidiaries Building and insulation products Automotive and engineering products Mining and sale of asbestos fibre Railway track fastenings mine roof bolting systems galvanizing etc. Heating and catering equipment Coal mining Proportion of turnover cent 38.6 28.8 14.9 Contribution to group trading profit before taxation 000s 3,087 1,141 1,367 7.5 9.7 0.5 684 272 15 100.0 6,566 Geographical analysis of turnover and trading profit United Kingdom Rest of Europe Australasia and South Asia Africa Middle East North and South America Turnover 000s 64,869 15,548 7,123 6,755 4,484 98,779 Trading profit LOOOS 5,102 404 39 867 154 6,566 Exports The aggregate value of goods exported by the group's United Kingdom manufacturing subsidiaries during the year was 12,107,000 Number and remuneration of employees The average number of employees per week of the company and its subsidiaries working wholly or mainly in the United Kingdom was 10,371 during the year The aggregate amount of the remuneration paid to such employees during the year was 24,752,000 R There has been no change notified in any of the mentioned interests Political and charitable contributions of peo ay between the end the financial year and 19 May 1975 being one month prior to the date of the notice of annual general meeting Contributions for political purposes during the year amounted to 26,000 consisting of a payment of 25,000 to The City and Industrial Liaison Seite There were no contracts or arrangements subsisting during the financial Council and a payment of 1,000 to British United Industrialists both of year which require to be disclosed in terms of section 16 ) c of the Com- which were made through a subsidiary company panies Act 1967 as interpreted by the Council of The Stock Exchange Contributions for charitable purposes made by the company and its sub- sidiaries during the year totalled 42,000 Substantial shareholding Anglo American Corporation of South Africa Limited and its associated companies held an interest of 35.8 per cent in the issued share capital of the company at 19 May 1975 Proc^'durepermettant aux d^'tenteursde certificats au d'actions porteur d'assister ^ une assembl^'eg^'n^'rale Procedure for holders of share warrants to bearer to attend a general meeting Les d^'tenteursde certificats d'actions au porteur d^'sirantassister en leur qualit^'de membre ^ une assembl^'eg^'n^'ralseont tenus de d^'poserleurs certificats d'actions trois jours ouvrables francs au moins avant la date de l'assembl^'e au bureau du directeur du registre de la soci^'t^a 'u Royaume ou ^ ceux des agents de la soci^'t^^' l'^'tranger Les administrateurs acceptent qu'^ la place du certificat d'actions soit d^'pos^'uene attestation d^'livr^'pear un d^'positaireautoris^' ou par toute autre personne d^'clarant avoir re^u le d^'p^tdu certificat d'actions Le d^'positaire autoris^' ou la personne habilit^'e doit s'engager ^ ne remettre le certificat d'actions au d^'posantque contre remise de l'attestation de d^'p^ett d'engage- ment La soci^'t^r'emettra au d^'posantd'un certificat d'actions ou d'une attestation de d^'p^tet d'engagement une carte d'admission portant ses nom et adresse de m^"meque le nombre d'actions repr^'sent^'par le certificat correspondant Cette carte lui permettra de ce fait d'assister et de voter en personne ou par mandataire ^ une assembl^'eg^'n^'rale des formulaires peuvent ^"treobtenus aupr^sdes bureaux indiqu^'s dessus MM les actionnaires peuvent se procurer des exemplaires des conditions r^'gissantles certificats d'action au porteur en s'adressant soit au si^gesocial ou au bureau du directeur du registre de la soci^'t^'soit aux bureaux des agents de la soci^'t^a'ux adresses suivantes Cr^'ditLyonnais 19 boulevard des Italiens 75002 Paris Banque Rothschild 21 rue Laffitte 75009 Paris Holders of share warrants to bearer wishing to attend as members at a general meeting must deposit their share warrants at least three clear normal business days before the meeting at the offices of the company's registrars in the United Kingdom or any of the company's overseas paying agents The directors may accept in lieu of the deposit ofa share warrant a certificate from an authorized depositary or other approved person to the effect that the share warrant has been deposited with him The authorized depositary or approved person must give an undertaking not to surrender the share warrant to the depositor except against return of the certificate of deposit and the undertaking The company will deliver to the person depositing a share warrant or certificate of deposit and an undertaking an admission card stating his name address and the number ofshares represented by the relative warrant to enable him to attend and vote in person or by proxy at meeting forms are available from the mentioned offices Copies of the conditions governing share warrants to bearer are available from the registered office of the company and the office of its registrars in the United Kingdom and from the company's overseas paying agents Cr^'dit Lyonnais 19 boulevard des Italiens 75002 Paris and Banque Roths- child 21 rue Laffitte 75009 Paris MM les actionnaires sont inform^'squ'ils peuvent se procurer un exemplaire en fran^ais de ce rapport en s'adressant soit au Secr^'taire CHARTER CONSOLIDATED LIMITED 40 Holborn Viaduct London ECIP IAJ soit ^ CHARTER FRANCE soit au CREDIT LYONNAIS soit BANQUE ROTHSCHILD 9 rue de Vienne 75008 Paris 19 boulevard des Italiens 75002 Paris 21 rue Laffitte 75009 Paris Offices United Kingdom 40 Holborn Viaduct London ECIP 1AJ registered 7 Rolls Buildings Fetter Lane London EC4A 1HX Charter House Park Street Ashford Kent TN24 8EQ South Africa 44 Main Street Johannesburg 2001 Canada PO Box 28 Dominion Centre Toronto Ontario M5K 1B8 Australia 26th Floor 500 Collins Street Melbourne Victoria 3000 France 9 rue de Vienne 75008 Paris Portugal 244 Avenida da Liberdade Lisbon 2 Rhodesia 70 Jameson Avenue Central Salisbury C4 ., Registrars > United Kingdom : Charter Consolidated Services Limited Ee PO Box 102 Charter House Park Street Ashford " TN24 8EQ _ South Africa : Consolidated Share Registrars Limited ~ : 62 Marshall Street Johannesburg 2001 Rhodesia re Anglo American Corporation of South Africa Limited 70 Jameson Avenue Central Salisbury C4 Printed in England by Westerham Press Statement by the Chairman Mr S. Spiro MC The year was marked by continued high rates of inflation accompanied reductioinn industrial activity and a notable decline in commodity prices particularly for base metals In these circumstances it is gratifying that Charter's profits before tax and extraordinary items were the highest ever achieved at 27,936,000 Earnings after taxation amounted to 17,206,000 equivalent to 16.42p per share compared with 15.16p last year Investment income increased by almost exactly one third to 17,699,000 reflecting the continued growth in earnings from Charter's overseas interests in gold diamonds tin and other minerals both direct and indirectly through other mining finance houses Our industrial companies achieved a substan- tially greater turnover during the year but under the inflation legislation were unable to recover in full the effect of cost increases so that the previous level of profits could not be maintained A further effect of inflation is the continual increase in the working capital requirements of the industrial companies which is reflected in higher borrowings and interest costs The charge for prospecting was 2,163,000 The greater part of the increase over last year's figure of 919,000 arose from Charter's share of the cost of the exploration well sunk on block 210/19 in the North Sea Apart from the gold mining sector stock market prices were very depressed in 1974 and in these circumstances the achievement of a profit of 2,124,000 on realizations is considered satis- factory Market prices have since recovered somewhat and at 31 March 1975 the value of our net assets was 302,020,000 equivalent to 288p per share compared with 361,833,000 equivalent to 345p at 31 March 1974 A substantial improvement in profits was achieved by our associated companies and the retained earnings attributable to Charter after taking into account dividends declared increased from 3,109,000 3,109,000 to 5,965,000 An agreement was reached with the Mauritanian government whereby Soci^'t^M'ini^rede Mauritanie SOMIMA was taken over entirely by the Mauritanian state mining organization and SOMIMA has ceased to be an associated company Charter in conjunction with the Mauritanian government and other shareholders was obliged to meet its liabilities as guarantor of certain of SOMIMA's loans at a cost of 8.7 million and in addition to accept as a loss loans totalling 2.7 million made to SOMIMA between September 1974 and January 1975. These amounts representing the remaining balance of Charter's in- vestment in SOMIMA have been written off in the accounts for the year under extraordinary items The net deficit from extraordinary items amounted to 8,333,000 8,333,000 after making the appro- priate provision in respect of the fall in the exchange rate of sterling and taking credit for the surplus from extraordinary items of associated companies Raw materials The action of the principal oil producing countries in imposing a massive increase in the price and being prepared to sustain national policies if necessary by the restriction of supplies has undoubtedly influenced thinking and attitudes to raw materials generally A tendency is growing for natural resources to be regarded as available primarily to serve national aspirations and needs with little consideration for the contribution of those who provide the skills and capital and assume the risks in discovering and developing new sources of supply The terms on which mining concessions are granted or new developments permitted have become more onerous not only in the develop- ing countries but in the industrialized nations as well Mining companies in some important instances have been obliged to accept unilateral modifications or even abrogation of agreements freely entered into soon after the finance has been provided and fully expended and the project has come on stream It is the business of mining companies to seek rewards for their skills and capital by assuming a inflationary risk element in new ventures but pressures have increased costs to such an extent that production expenditure may in many cases involve raising funds in excess of half a billion dollars for a single project The raising of finance in these circumstances and on these scales presents considerable prob- lems particularly at a time when there has been a serious deterioration in financial markets as a result of the combination of inflation and reces- sion currency instability and the disturbance caused by the massive transfer of funds to the oil producing countries There has already been a sharp falling off in exploration expenditure and new development 2 which if allowed to continue unchecked is likely to cause potentially serious supply shortages in the industrialized consuming countries and we particularly welcome in this context the initiative taken by the European Economic Community in drawing attention to the political social and financial problems involved The pricing of commodities and the means of achieving the greater stability which is much to be desired in the interests of producer and consumer alike has been receiving consideration at international level and in particular at the recent Commonwealth prime ministers conference The decline in economic activity throughout the industrialized countries led to a substantial drop in the prices of base metals with the exception of tin and wolfram The price of copper was seriously affected by the downturn in demand falling from a peak of 1,400 per metric ton in April 1974 to the present critically low levels of 500- per metric ton With the reduction in the pur- chasing power of money and the lower value of sterling against other currencies the effective drop is even greater than these figures suggest A marked down of inventories by consumers has taken place which has had an im- portant influence on the price This is a process which cannot continue indefinitely and is sub- ject to reversal when the appropriate changes in economic measures conditions are being occur taken recessionary in a number of countries primarily to combat unemployment and there is thus reason to expect an improvement in industrial activity in the foreseeable future The current price of copper is below the cost at many existing mines and well below the cost at which new production can be brought in The persistence of these price levels is not only likely to bring about supply shortages in the next decade but would have a most harmful effect on the economies of producing countries Associated resources companies In addition to its direct mining interests Charter participates in projects indirectly through shareholdings in associated companies of the Anglo American Corporation group for which personnel of both Charter and Anglo American provide services During the year a number of important new business interests have in this way been acquired A major expansion and diversification scheme was carried out by Minerals and Resources Corporation MINORCO the main investments of which were formerly centred on the Zambian copper mining industry by the acquisition in exchange for shares ofa stake now amounting to more than 30 per cent in Engelhard Minerals & Chemicals Engelhard in which the Anglo American group has long held an interest has recently shown a remarkable rate of growth with earnings rising from some 36 million in 1972 to 110 million in 1974 MINORCO of which Charter holds 20 per cent has now built up a well balanced range of investments in mineral resources and is well placed to develop further as an international raw materials company It has a promising interest in oil through Trend Exploration which has achieved a marked success in discovering and establishing a new oil field in Indonesia Production there is being expanded considerably and sales are expected this year to reach 100,000 barrels per day We have a further indirect interest in Trend through Anglo American Corporation of Canada AMCAN in which Charter's stake is just under 25 per cent MINORCO and AMCAN have together acquired a joint participation amounting to some 30 per cent in a well established United States copper enterprise Inspiration Consolidated Copper Company having a fully integrated operation in Arizona including mines smelter and refinery also with toll treatment facilities and a rod fabricating plant It has substantial reserves of copper capable of further development AMCAN and Hudson Bay Mining and Smelting in conjunction with the Mexican government and Mexican private interests are proceeding with the development of the La Verde copper deposit in Mexico which has reserves estimated at 80 million tons grading 0.7 per cent Through Anglo American Corporation do Brasil Charter has an interest in the oldest gold mining operation in Brazil Mineracao Morro Velho where production is to be significantly increased These new interests represent further diversification and in due course should co ibute to the growth and development of Charte .. Soci^'t^M'ini^rede Fungurume Considerable progress has been made with de- sign engineering and construction work on the Fungurume project in which Charter is participating in an international consortium including the government of Zaire Inflation has made a severe impact on costs and after allowing for contingencies the total capital cost up to the commencement of the production phase is now estimated at 660 million Negotiations for the raising of the third party loans have proceeded well but with the complicated nature of the international project finance and the economic constraints generally affecting markets it has necessarily takena long time In the meantime in order to achieve the earliest possible production date estimated to be in the second quarter of 1978 work has continued and has been financed by shareholders directly or under guarantee Some 110 million has been spent to date The project is fortunate in having very large reserves of copper with a grade of 5.7 per cent This places it in the category of one of the richest unexploited deposits in the world Although it is located a long way from export outlets on the coast and the capital cost of providing infrastructure items such as housing roads schools and other services will be heavy the high copper content of the ore should enable the mine to pro- duce at a very competitive price With a production target of 130,000 metric tons refined copper per annum it is one of the few major new projects going ahead at this time Cleveland Potash The construction and development phase of the Cleveland Potash project in Yorkshire has taken rather longer than was originally expected due mainly to problems in sinking the shafts through difficult ground The very high rate of inflation combined with the delays has resulted in the cost of the project rising to 47 million To bridg- meet the additional costs and to fund the ing finance the company has obtained a medium term loan from Barclays Bank Limited of 18 million in addition to overdraft facilities The equipping of the second shaft is virtually complete and the availability of the full shaft system will enable production to be pro- gressively built up over the next twelve months Mining plans have had to be adjusted somewhat in view of the geological conditions experienced underground and there are indications of some irregularities in the potash seam which will call for flexibility in mining There may be some falling off in the demand for fertilizers resulting from higher prices occurring at a time of financial stringency but in the medium and long term the market for potash is likely to remain strong Cleveland should be well placed to compete as a supplier and at current potash prices Cleveland would produce in year of full production a gain to the United Kingdom balance of payments of over 40 million Malaysia Our tin mining interests held mainly through the Tronoh group performed well and with the substantially higher tin prices prevailing achieved significant increases in profits Recently the tin price has fallen from an average of 3,367 per metric ton in 1974 to 2,909 per metric ton at the end of April 1975 and the International Tin Council has imposed restrictions on output in an attempt to stabilize the price Malaysia is not escaping inflation and increasing mining costs coming at a time of lower tin prices make the outlook less favourable than it was last year nevertheless the opera- tions are expected to show satisfactory profits overall this year The joint venture agreement between Tronoh and Perak State Development Corporation has been under consideration by the Malaysian federal authorities Further discussions have delay been called for and this has caused some The construction of a new high capacity dredge to work the area adjacent to the existing Tronoh leases has had to be postponed for the time being Prospecting and evaluation of the very large tin bearing area held in conjunction with Selangor State Development Corporation has continued during the year A feasibility study is now being carried out together with further work including additional prospecting and investigations are in progress into the design of suitable dredges and stripping equipment to work the reserves 4 Beralt Tin and Wolfram The Portuguese operating subsidiary of Beralt Tin and Wolfram had a good year and sold more than twice as much of its principal product wolfram as in the preceding year mainly because of continuing buoyancy in the wolfram market and strong demand for the company's high quality concentrate Since production remained virtually at the same level as in 1973 some 40 per cent of sales were met from the stockpile built up in the previous two years when prices were low thereby reducing stocks to more normal levels As a result of the high sales volume and improved wolfram prices the mining company managed in a year of severely escalating costs to earn profits of over million before tax compared with a loss of 115,000 in 1973. However the parent company in the United Kingdom is unable to declare a dividend until consent for the remittance of abroad its share of the subsidiary's dividend has been received from the Portuguese authorities Although the price of wolfram has for some time been reasonably steady at the higher levels it has traditionally been subject to wide fluctuations which are harmful to both producer and consumer The support given this year by the United Nations Conference on Trade and Development to the efforts for securing a greater measure of price stability and the elimination of undue troughs is therefore very welcome but it will be of little help to any producer unless wage inflation is curbed before the margin between costs and selling prices renders mining operations un- economic Soci^'t^M'ini^rede Mauritanie From the beginning the relatively small scale operations of SOMIMA experienced a series of difficulties but through the determined efforts of all concerned in particular those working under the unfavourable climatic and other conditions at the mine the technical problems were overcome and a consistent rate of production was achieved although this was somewhat below the original forecasts The high cost of treating the oxide ores and other charges involved in the production of concentrates combined with very large debt service charges nevertheless meant that there was little potential for positive cash flow even when the copper price was high The dramatic fall in the copper price that occurred in 1974 together with inflation and the massive increase in fuel oil costs brought about a substantial deficit on operations Closure of the mine would however have involved heavy expenditure and created serious hardships and the Mauritanian government was therefore determined to keep the mine operating while at the same time seeking a long term solution In the circumstances Charter agreed to contribute with the Mauritanian government additional loan funds necessary to meet current payments SOMIMA has now been taken over entirely by the Mauritanian state mining organization and Charter in conjunction with the Mauritanian government and other shareholders was obliged to meet its liabilities as a guarantor of certain of SOMIMA's loans at a cost of 8.7 million and to accept as a loss loans made during the year of 2.7 million A spirit of cooperation and understanding has prevailed throughout in our relationship with the Mauritanian government and we believe that the ultimate solution was the best attainable in the circumstances North Sea oil In the latter half of 1974 the consortium led by Home Oil of Canada in which Charter is a major participant drilled its first well on block 210/19 without encountering any significant oil shows The information gained from this well is being studied and appraised together with other geological information available and consideration is being given to the sinking of a further well on this block The rapid development of North Sea oil is of the utmost importance to the economy of the United Kingdom The capital and other costs of obtaining this oil will be very high and the risks involved considerable A reasonable and con- sistent government policy is therefore essential if the full potential ofthe field is to be realized Overall trading in the first quarter has exceeded the budget and shows an improvement over the same period last year With the economic uncertainties it cannot necessarily be assumed that results for the rest of the year will be as good as in the first quarter but we believe that given reasonable conditions the prospects for the re- sumption of a growth trend are good Elastic Rail Spike and Heatrae The Elastic Rail Spike and Heatrae groups suffered severely during the year from inflation and price control in spite of achieving important working economies Heatrae with 85 per cent of its sales in the United Kingdom was affected adversely by the red'iced activity in the building trade Cape Industries Our principal industrial subsidiary Cape Industries reported lower profits although group turnover rose substantially The decline in profits resulted from increased costs of production pressure on margins because of price controls higher interest charges and in particular continuing problems at the amosite mine at Penge where a loss was made in 1974 The increase in working capital during the year was a major drain on liquid resources and resulted in a sharp rise in the company's indebtedness However measures are now being taken to ensure that the total indebtedness is contained at reasonable levels Demand for most of the company's manufactured products remained strong throughout the year and with progress being achieved in overcoming technical mining problems there was a marked improvement in profitability in the second half which has continued into the current year A successful offer was made for Sadia Limited which has a similar business to that of Heatrae and a reorganization and rationalization of the electric water heater production of the two groups has since been carried out It is difficult to predict how far the Heatrae group will be able in 1975 to reap the full advantage foreseen in the merger which created the largest integrated electric water heater enterprise in the United Kingdom The expanded group however is well placed to benefit from any revival of markets for heating equipment conforming to the needs of national energy policies Elastic Rail Spike which now exports 40 per cent of its production from the United Kingdom enjoyed buoyant markets at home and abroad but its output was somewhat limited by shortage of the special steel used in the manufacture of railway track fastenings The outlook for the group is encouraging particularly in view of its emphasis on export growth and the increasing profit contribution 6 atzsreony ds expected from its subsidiaries in Australia and also in Canada where the manufacture of rail fastenings began in May this year Elastic Rail Spike is to be congratulated for the British Design Council award which it received in 1974 for technical innovation Outlook Inflation in the United Kingdom is now running at a rate seldom experienced outside Latin America and there is little indication that the measures so far taken or contemplated will be effective in dealing with this very serious prob- lem If inflation continues unchecked the ability of industry in the United Kingdom to achieve the export earnings necessary to pay for our essential imports of food and raw materials will be seriously threatened Unemployment will rise standards of living must fall and our whole industrial and economic structure will be imperilled Mining costs and in particular the capital costs of plant and machinery have risen substantially throughout the world and at the same time a recessionary cycle persists and most metal prices are at depressed levels Charter is fortunate in drawing its income from many different and diverse sources and this in the aggregate provides some protection against the impact of adverse conditions in individual areas ofactivity The very low price prevailing for copper will materially reduce our earnings from this source but income from gold and other overseas mining interests is likely to remain strong Earnings from our industrial interests will be influenced by the way in which the fundamental issues now con- fronting the United Kingdom are dealt with but results for the beginning of this year have been somewhat better than expected Indications suggest that the profits overall attributable to Charter should be maintained in the current year Our inherently strong investment position combined with the new developments being pursued both by ourselves and through our associated companies provide good grounds for confidence in Charter's future growth and expansion Shareholders will doubtless wish to join with me in expressing our gratitude to all members of the staff for the great contribution they have made to our operations both at home and abroad The achievements of the company are due largely to the loyalty and perseverance ofthe staff London 12 June 1975 A [7 Chairman