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re: announcement 1
24 September 2004
ION LIMITED [ION] MARKET UPDATE
Following a review of its business status, the directors of ION wish to update the market with the following
information.
1. Major Projects
Work on the major capital projects at Wingfield, Altona, Kentucky and Albury is continuing broadly in line with
recent plans.
Wingfield operating performance continues to improve whilst its cost of operation relative to output is still
adverse as we still have a way to move up the performance curve at this casting plant. The major building
construction at Altona is nearing completion and most equipment has been ordered for delivery around the
start of 2005 and installation during the first half of 2005.
The Kentucky facility is well advanced with the expectation of commencing production on a small scale before
the end of the 2004 calendar year. It will have progressive ramp up of production and sales against the already
secured contracts with Ford for cast aluminium wheels.
Independent engineering advice has been brought in to ensure good project management going forward and to
review the costs to completion of all projects. It is expected this review will be completed by November.
Whilst all projects are backed by major customer contracts and should provide good long term shareholder
value, there is significant greenfield drag in the construction and then ramp up of each of these facilities which
will moderate company profitability in the interim, particularly in view of having multiple overlapping projects.
2. Banking
In mid-September the previously flagged $440 million financing package with a group of five major banks was
completed and final documentation signed. Initial drawdowns of funds against this three and five year facility
have commenced in order to fund our continuing expansion program.
3. Trading
At this stage it is not possible to predict forward profitability for the current financial year but a review by the
Board, the new Managing Director and senior executives indicates that profit in the December half is likely to
be significantly lower than in the previous corresponding period. Profit in the second half of the financial year is
expected to be significantly better than in the first half. The poorer outlook in the first half is a function of both
revenue and cost issues. There will be increased focus on managing both revenue and costs going forward.
4. Final Dividend
As foreshadowed in the ASX announcement of 16 September 2004, ION is likely to make a share placement
equivalent in dollar value to that part of the final dividend not taken up in the Dividend Reinvestment Plan.
Details of such a potential placement have yet to be decided upon. The current dividend is approximately $15
million.
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5. Approaches from Third Parties
ION has had approaches in recent times from parties interested in buying various operating businesses within
the ION group.
As a result of those approaches, discussions have been pursued on some assets which may lead to the sale of
those assets. Prices indicated to ION are significantly above book value and thus would result in substantial
capital profits if those transactions are completed.
Roger Flynn
Managing Director
ION Limited
Tel: (03) 8416 5900