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ARI
ARIM
ARI - African Rainbow Minerals Limited - Provisional results for the year
ended 30 June 2009
African Rainbow Minerals Limited
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
JSE Share code: ARI
ISIN: ZAE000054045
("ARM" or "the Company")
Provisional results for the year ended 30 June 2009
Shareholder information
Issued share capital as at 30 June 2009 212 068 223 shares
Market capitalisation as at 30 June 2009 R28 billion
Share price as at 30 June 2009 R129.90
Daily average volume traded 475 585 shares
Primary listing JSE Limited
Ticker symbol `ARI`
Results commentary
Salient features
- Headline earnings decrease 42% from R4.0 billion to R2.3 billion, impacted
by the global economic recession
- Headline earnings per share of 1 094 (F2008: 1 906) cents
- Profit from operations before exceptional items decreases 44% from R6.7
billion to R3.7 billion
- Record sales volumes for iron ore and PGMs
- Cash balances increase by R0.9 billion to R3.5 billion; net debt reduces to
R231 million from R1.3 billion
- ARM corporate loan of R967 million refinanced; new facility increased to
R1.75 billion and extended for three years
- Khumani 10 mtpa mine completed on time and within budget; a further 6 mtpa
expansion approved
- Goedgevonden and Nkomati expansion projects commence commissioning
- TEAL`s shareholding restructured as ARM forms 50:50 joint venture with Vale
- The declaration of a dividend of 175 cps (F2008: 400 cps)
ARM operational review
The Board of Directors ("the Board") of ARM announces satisfactory results for
the year ended 30 June 2009 (F2009) as the Company continues to deliver on its
2 x 2010 volume growth strategy amidst a global economic recession. Headline
earnings have decreased by 42% to R2.3 billion (F2008: R4.0 billion), or 1 094
(F2008: 1 906) cents per share.
These provisional results for the financial year ended 30 June 2009 have been
prepared in accordance with International Financial Reporting Standards (IFRS)
and the disclosures are in accordance with IAS 34: Interim Financial
Reporting.
Contribution to headline earnings
Commodity group 12 months ended 30 June
Reviewed Audited
R million 2009 2008 % change
Platinum Group Metals (348) 915 >(100)
Nkomati nickel and chrome 29 432 (93)
Ferrous metals 3 150 2 775 14
Coal 135 175 (23)
Sub-total 2 966 4 297 (31)
Exploration: TEAL (689) (211) >(100)
Corporate and other 40 (73) >100
ARM headline earnings 2 317 4 013 (42)
These results have been achieved in conjunction with our partners at the
various operations, namely Anglo Platinum Limited ("Anglo Platinum"), Assore
Limited ("Assore"), Impala Platinum Holdings Limited ("Implats"), Open Joint
Stock Company Mining and Metallurgical Company Norilsk Nickel ("Norilsk
Nickel"), Xstrata Coal ("Xstrata") and Companhia Vale do Rio Doce ("Vale").
The massive global slowdown in the demand for resources, impacting three
quarters of this financial year, resulted in lower US Dollar commodity prices
and reduced sales volumes for most operations, most notably manganese ore,
since October 2008. During this period, ARM`s results were bolstered by
increased iron ore and Platinum Group Metal ("PGM") sales volumes illustrating
the benefit of our diversified portfolio of assets.
Operational features for the year include (100% basis, except for PGM
production):
- 13% increase in iron ore sales to 7.4 million tonnes
- 6% increase in PGM production/sales to 323 259 ounces
- 42% decrease in external manganese ore sales to 2.15 million tonnes
- 12% decrease in nickel production to 4 495 tonnes
ARM has responded decisively and effectively to the challenges presented by
the current market environment, by:
- implementing production volume decreases once optimal stockpile levels were
reached, driven by the respective commodity demand factors;
- containing costs at all operations, including reduction of ARM`s labour
force and contractors by approximately 30%;
- continuing capital expenditure on key development projects while delaying
some 30% of capital expenditure over the next three years; and
- enhancing cash preservation at all operations.
Earnings before interest, tax, depreciation and amortisation, excluding
exceptional items and income from associate ("EBITDA") decreased by R2.7
billion to R4.5 billion in F2009. The EBITDA margin for F2009 is lower at 44%,
compared to 57% in F2008. Project investment continues as ARM`s balance sheet
remains strong and with low gearing even after R3.3 billion capital
expenditure in F2009. The corporate action undertaken during the year, as
detailed under a separate heading, has further enhanced the value of ARM`s
operations.
Financial commentary
Headline earnings for the year were R2.3 billion, 42% (R1.7 billion) lower
than F2008 or 1 094 cents per share (F2008: 1906 cents per share) having been
severely impacted by the global recession as well as significantly increased
costs at Teal Exploration & Mining ("TEAL").
A 24% weaker average Rand/US Dollar exchange rate of R9.03/$ (F2008: R7.30/$)
has to some extent compensated for lower US Dollar commodity prices. Basic
earnings were R551 million higher than headline earnings due mainly to the
significant exceptional gain as a result of the TEAL restructuring transaction
with Vale. Effective end February 2009, ARM disposed of 15% of TEAL realising
a net gain after all transactional costs and fees of R137 million. In
addition, as a result of Vale acquiring 50% of TEAL`s assets and liabilities a
consolidation gain of R420 million accrued to ARM.
The major contributor to ARM`s headline earnings for F2009 was the Ferrous
Division where the contribution increased by 14% to R3 150 million (F2008: R2
775 million). This was the only division to reflect an increase which was
mainly driven by a strong result from iron ore while manganese ore performed
well until October 2008.
The Platinum Division`s (inclusive of Nkomati Mine ("Nkomati")) contribution
to headline earnings reflects a decrease of R1.6 billion from the F2008 profit
of R1.3 billion to a F2009 loss of R0.3 billion. This decrease is largely
attributable to approximately 32% lower average PGM basket prices for the year
which also caused a realised loss on the 30 June 2008 debtors of R547 million.
The Nkomati results have also been significantly impacted by the virtual
cessation of chrome sales since October 2008. Sales of chrome in F2009 were
661 thousand tonnes compared to 1 146 thousand tonnes in F2008.
ARM Coal contributed R135 million to headline earnings (F2008: R175 million)
while corporate and other contributed R40 million (F2008: loss R73 million).
Attributable costs at TEAL increased by R478 million to R689 million in F2009
(F2008: R211 million) largely due to the following increases in expenses and
restructuring costs:
- stock write downs: R103 million;
- cancellation of mining contracts at Kalumines in the Democratic Republic of
Congo ("DRC"): R87 million;
- fluctuation of the Rand/US Dollar exchange rate, TEAL`s functional currency
being US Dollars: R87 million;
- interest paid: R30 million; and
- increased mining losses at Kalumines: R112 million.
The effective taxation charge for the year increased to 39.3% of profit before
tax from 29.6% for F2008. The increase is largely attributable to (i)
increased secondary tax on companies arising from the dividends paid by ARM
Ferrous during the year and (ii) the non-deductibility of the increased ARM
Exploration costs. This effective charge is reduced by the non-taxable
exceptional items included in the results.
ARM responded promptly to the global economic downturn by focusing on the
conservation of cash and a reduction of debt at all operations. This was
achieved by the immediate deferment of certain non-essential capital
expenditure at all operations, operational cost reduction initiatives,
significant production cuts at the ferromanganese and ferrochrome units and
the application of surplus cash to eliminate bank debt at ARM Mining
Consortium (Modikwa Platinum Mine ("Modikwa")), as well as to reduce the
balance outstanding on the ARM company corporate loan. In addition, at Company
level, ARM received dividend payments of R2.1 billion from ARM Ferrous during
the year (this division reflects an attributable cash balance at year end of
R1.6 billion).
There has been an improvement of R1.1 billion in the ARM net debt position at
30 June 2009 to R231 million from the position at 30 June 2008 of R1.3
billion. The debt on the balance sheet includes an amount of R1.8 billion
advanced by our partners (Implats: R539 million; Anglo Platinum: R132 million;
Xstrata: R1 135 million).
Net cash inflow from operating activities was R4.1 billion (F2008: R4.2
billion) as reflected in the table below. The ARM Platinum, ARM Coal and ARM
Ferrous operations all had positive operating cash flows.
The ARM corporate loan facility of R967 million has been refinanced and
increased to R1.75 billion with a maturity in August 2012. ARM and its partner
at Nkomati, Norilsk Nickel, have decided to fund the completion of the Phase
II expansion project utilising their respective corporate balance sheets,
given the current restrictive lending environment.
Current PGM Reported Cash inflow Cash
basket PGM cash from and cash
cost operating
price for the activities equivalents
at year to for the year at
20 August 30 June to 30 June 30 June
2009 2009 2009 2009
Attributable R/kg R/kg R million R million
ARM Mining 191 136 160 507 380 247
Consortium
(Modikwa
Platinum Mine)
Two Rivers 213 215 136 288 450 21
Platinum Mine
Nkomati nickel 177 53
and chrome
Ferrous metals 4 034 1 624
Coal 414 -
Sub-total 5 455 1945
Exploration: (554) 5
TEAL
ARM Company (851) 1 135
Other 428
ARM total 4 050 3 513
Safety
As a responsible South African corporate citizen, the health and safety of
ARM`s employees is of paramount importance. Our performance in this area over
the reporting period shows good progress in most areas but there is further
room for improvement.
Safety statistics/fatalities
Regrettably five fatalities were reported during F2009 (two at Khumani Iron
Ore Mine ("Khumani"), one at Nkomati, one at Dwarsrivier Chrome Mine
("Dwarsrivier") and one at Nchwaning Manganese Mine ("Nchwaning")). This
compares to nine fatalities in the previous year. The ARM management team
expresses its deepest condolences to the family, friends and colleagues of the
people who lost their lives.
ARM has consistently reduced the Lost Time Injury Frequency Rate (LTIFR) over
four years from 6.08 to 3.68. The number of Lost Time Injuries (LTIs)
decreased from 247 in the previous financial year to 166 in this financial
year. Eighty-two reportable accidents occurred during F2009 compared to 111 in
the previous year.
Achievements
Among the most significant safety achievements in ARM are:
- on 26 August 2008 Modikwa achieved 4 000 000 fatality free man shifts worked
and on 10 March 2009, Modikwa joined the ranks of a select few mines in South
Africa when it achieved 5 000 000 fatality free man shifts worked. This marks
a period of more than three years without a fatal accident occurring on the
mine;
- on 2 September 2008, Beeshoek achieved 6 000 fatality free production shifts
worked in the Northern Cape Department of Minerals and Resources ("DMR")
safety competition;
- in the 1 000 fatality free production shift competition of the DMR,
Dwarsrivier achieved a total of 4 098 fatality free production shifts until
the end of December 2008; and
- on 5 March 2009 Two Rivers Platinum Mine completed 1 000 000 fatality free
man shifts worked.
Figures and statistics in this report currently exclude the ARM Coal
operations, but include the ARM Corporate Office (F2009 only). A detailed
Sustainable Development report will be available in October 2009 which will
contain further health and safety details.
ARM Ferrous
ARM Ferrous produced strong results in a challenging and volatile period,
increasing headline earnings attributable to ARM by 14% to R3.2 billion. This
was mainly due to the weaker Rand/US Dollar exchange rate and higher average
US Dollar sales prices but was off-set by lower sales volumes in all ferrous
products except iron ore. The slowdown in global demand from October 2008,
impacted the sales volumes and US Dollar prices for the remainder of F2009.
After a very strong performance from the manganese division in the last
financial year, higher received prices in this reporting period were off-set
by lower volumes, resulting in near flat earnings compared to the previous
reporting period. The manganese headline earnings were split between manganese
ore and manganese alloy which contributed 78% and 22%, respectively, in F2009.
The iron ore division delivered an excellent performance, with its
contribution increasing significantly compared to the previous period, driven
by higher iron ore prices and sales volumes.
Cost increases in excess of the average inflation rate for the period were due
to high electricity, reductant and additional contractor costs. During the
earlier months of the reporting period, contractors were employed to load and
haul manganese ore to Richards Bay port and iron ore to the Beeshoek
processing plant. This expenditure generated additional revenue at very high
margins. In the second half of the reporting period, unit fixed costs
increased due to lower production volumes in the manganese and chrome
divisions.
Assmang Limited`s ("Assmang") total capital expenditure was R2.8 billion
(F2008: R2.9 billion). The main expenditure items include the completion of
the new Khumani (R924 million) and the new Nchwaning beneficiation plant
construction (R161 million) which is expected to be commissioned in March
2010. At Cato Ridge, R296 million was spent on rebuilding furnaces and on
control of fume emissions at the Cato Ridge and Machadodorp Works, R383
million on mining fleet enhancements, R191 million on housing and R165 million
on various capital replacement items.
The ARM Ferrous operations, held through its 50% investment in Assmang,
consist of three divisions: iron ore, manganese and chrome. Assore Limited,
ARM`s partner in Assmang, owns the remaining 50%.
Assmang headline earnings
100% basis 12 months ended 30 June
R million 2009 2008 % change
Iron ore division 2 160 780 177
Manganese division 3 927 4 087 (4)
Chrome division 213 683 (69)
Total 6 300 5 550 14
Headline earnings attributable to 3 150 2 775 14
ARM (50%)
Assmang product sales
100% basis 12 months ended 30 June
R million 2009 2008 % change
Iron ore 7 409 6 581 13
Manganese ore* 2 152 3 711 (42)
Manganese alloys* 117 247 (53)
Charge chrome 144 275 (48)
Chrome ore* 256 304 (16)
*Excluding intra-group sales
Assmang cost and EBITDA margin performance
Rand per
tonne cost
change EBITDA
Commodity group % margin %
Iron ore (7) 70
Manganese ore 19 81
Manganese alloys 38 62
Charge chrome 37 21
Assmang capital expenditure
100% basis 12 months ended 30 June
R million 2009 2008
Iron ore 1 529 2 231
Manganese 854 511
Chrome 397 158
Total 2 780 2 900
Khumani
The 10 mtpa Khumani has been successfully commissioned on time and within
budget. The next phase of expansion to a 16 mtpa mine has been approved by the
Board. Construction has commenced and final commissioning will take place
during the first six months of 2012. Total capital for the 6 mtpa expansion
amounts to R6.7 billion, of which R1.2 billion was previously approved in
September 2008.
Logistics
The Iron Ore Export contractual agreement with Transnet Limited ("Transnet")
to increase iron ore export to 14 mtpa through the port of Saldanda Bay is
being finalised. ARM Ferrous is jointly investigating with Transnet the
possible expansion of the Iron Ore corridor beyond 60 mtpa. ARM Ferrous is
participating with Transnet in a capacity allocation process to finalise
future manganese export tonnages. It is anticipated that the short-term
allocation process will be completed towards the end of the calendar year
2009, while the long-term allocation process will be completed during 2010.
ARM Platinum
Despite a good operational performance, ARM Platinum`s results were
significantly affected by the global decrease in PGM prices and a slowing
world economy.
Cash operating losses were recorded by both Modikwa and Two Rivers, while
Nkomati generated a cash operating profit. ARM Platinum`s attributable PGM
production (including Nkomati) for F2009 increased by 6% to 323 259 ounces
(F2008: 305 508 ounces) of PGMs in concentrate, resulting from grade
improvements, increased production and enhanced efficiencies. The Nkomati
chrome ore sales decreased by 42% due to a sudden downturn in the chrome
market. ARM Platinum`s attributable headline loss amounts to R319 million.
The earnings of Two Rivers are negatively affected by interest charged on the
shareholders` loans from ARM and Implats. Interest is charged at a rate of
11.5% per annum as at 30 June 2009 (F2008:12.0%).
The PGM basket price for both Modikwa and Two Rivers reduced by about 32% when
compared to the previous financial year. Weaker average metal prices for the
year under review, combined with R547 million of realised losses on the 30
June 2008 debtors` balances, as reported during December 2008, resulted in the
recorded losses for this period.
The table below sets out the relevant pricing comparison:
Average metal prices
100% basis Average for 12 months ended 30 June
R million 2009 2008 % change
Platinum US$/oz 1 148 1 661 (31)
Palladium US$/oz 239 399 (40)
Rhodium US$/oz 2 620 7 389 (65)
Nickel US$/t 13 312 28 507 (53)
Exchange rate R/US$ 9.03 7.30 24
Modikwa`s tonnes milled remained constant since F2008, despite mining on the
Merensky Reef being stopped. An improvement in grade resulted in a 2% increase
in PGM ounces in concentrate. As part of its cost containment strategy,
Modikwa changed from continuous operations (conops) to 11 day fortnight
working shifts in April 2009.
On 31 December 2008, the project loans owed by ARM Mining Consortium for the
development of Modikwa were repaid in full, 18 months ahead of schedule. ARM
Mining Consortium negotiated a revised off-take agreement with Anglo Platinum,
effective from 1 December 2008, resulting in Modikwa now earning revenue on
contained metals for all 6 PGMs (6E), including ruthenium and iridium
(previously on a 4E basis). All production figures for Modikwa reflected in
the table of operational statistics below have been converted to a 6E basis,
in line with the revised off-take agreement.
Two Rivers completed its first financial year at full production capacity.
Tonnes milled increased by 11%; this together with a head grade improvement
resulted in a 19% increase in PGM ounces in concentrate. At year end the
surface ore stockpile was 207 122 tonnes. Cost containment initiatives and the
postponement of expansion capital projects were implemented as part of a cash
preservation strategy.
At Nkomati, the average US Dollar nickel price for the year dropped by 53%
negatively impacting profits. As the conversion to a low grade, high volume
mine continues, milled tonnes increased by 18% and contained nickel declined
by 12% to 4 495 tonnes. Recovery improvements on the 100 ktpm plant are a
continuing process. During the last few weeks of F2009, chrome ore and
concentrate sale volumes showed a steady improvement.
Total capital expenditure in the division amounted to R2.5 billion (R1.4
million attributable) of which 71% was spent on the Nkomati Expansion Project.
Modikwa`s reduced capital expenditure is as a result of the postponement of
the deepening of the existing declines as well as other expansionary capital.
The majority of the capital expenditure at Two Rivers was for the plant
optimisation programme, which was commissioned on 20 August 2009, and the
replacement of the underground mining fleet.
ARM Platinum capital expenditure
100% basis 12 months ended 30 June
R million 2009 2008 % change
Modikwa 368 379 (3)
Two Rivers 346 357 (3)
Nkomati 1 756 584 201
Total 2 470 1 320 87
Modikwa operational statistics
12 months ended 30 June
100% basis 2009 2008 % change
Cash operating R million (286) 1 837 (116)
(loss)/profit
Tonnes milled Mt 2.46 2.46 -
Head grade* g/t, 6E 5.25 5.22 1
PGMs in concentrate* Ounces, 6E 348 866 343 062 2
Average basket price* R/kg, 6E 227 006 341 356 (33)
Cash operating margin % (20) 58 (134)
Cash cost* R/kg, 6E 160 507 123 995 29
Cash cost R/tonne 708 538 32
Cash cost R/Pt oz 12 798 9 882 30
Cash cost* R/PGM oz, 6E 4 992 3 857 29
Capex R million 368 379 (3)
Headline R million (129) 480 (127)
(loss)/earnings
attributable to ARM
(41.5%)
* All production figures have been converted to 6E due to new off-take
agreement in place from 1 December 2008.
Two Rivers operational statistics
12 months ended 30 June
100% basis 2009 2008 % change
Cash operating R million (83) 1 485 (106)
(loss)/profit
Tonnes milled Mt 2.62 2.37 11
Head grade g/t, 6E 4.10 4.00 3
PGMs in concentrate Ounces, 6E 246 295 206 491 19
Average basket price R/kg, 6E 246 680 362 935 (32)
Cash operating margin % (8) 63 (113)
Cash cost R/kg, 6E 136 288 125 319 9
Cash cost R/tonne 399 340 17
Cash cost R/Pt oz 8 846 8 161 8
Cash cost R/PGM oz, 6E 4 239 3 898 9
Capex R million 346 357 (3)
Headline R million (219) 435 (150)
(loss)/earnings
attributable to ARM
(55%)
Nkomati operational statistics
12 months ended 30 June
100% basis 2009 2008 % change
Cash operating profit R million 181 1 192 (85)
Cash operating R million (253) 518 (149)
(loss)/profit - Nickel
Mine
Cash operating profit R million 433 674 (36)
- Chrome Mine
Cash operating margin % 17 60 (72)
Tonnes milled Thousand 1 259 1 070 18
Head grade % nickel 0.54 0.70 (22)
Nickel on-mine cash R/tonne 389 339 15
cost per tonne milled
Cash cost net of by- US$/lb 2.48 (4.45) (156)
products
Contained metal
Nickel Tonnes 4 495 5 136 (12)
PGMs Ounces 26 727 40 813 (35)
Copper Tonnes 2 268 2 605 (13)
Cobalt Tonnes 244 276 (12)
Chrome ore sold Tonnes 661 1 146 (42)
Headline earnings R million 29 432 (93)
attributabe to ARM
(50%)
Nkomati Nickel Large Scale Expansion Project
To date, all project milestones have been met, resulting in the overall
project progress to be on schedule and within budget. Total funds committed on
this project amount to R2.5 billion or 75% of the R3.34 billion approved
capital budget as at 30 June 2009. The Phase 2a project (375 ktpm plant and
associated infrastructure) is on schedule to be commissioned during September
2009. The Phase 2b project (upgrade of the current 100 ktpm plant to 250 ktpm
PCMZ plant) has been released for implementation and construction started
during August 2009.
The Eskom power supply is on schedule to provide the required electricity for
the Phase 2a project. The upgrade of the 132kV overhead distribution lines
needs to be completed to provide sufficient power for the Phase 2b project by
November 2010.
The chrome concentrator plant, treating chrome chips and fines, was
commissioned on schedule during September 2008. The plant ramp up was delayed
by the lack of demand for chrome concentrates since October 2008, and
currently the plant ramp up to full production is in line to match the market
demand.
Kalplats PGM Exploration Project
Definition drilling by Platinum Australia (PLA) on the Kalplats Project was
completed in November 2008. 17 300m were drilled during the year bringing
PLA`s total to 93 100m. Results to date have significantly increased the
mineral resource at Kalplats and have upgraded some of the resource to a
measured category. PLA is preparing a definitive feasibility study on an open
pit mining operation. On the Kalplats Extended Area, an initial drilling
programme has been completed.
The ARM Platinum Division comprises three operating mines, Modikwa, Two Rivers
and Nkomati. It has an effective 41.5% interest in Modikwa where local
communities hold an 8.5% effective interest. The remaining 50% is held by
Anglo Platinum. Two Rivers is an incorporated joint venture with Implats, with
ARM holding 55% and Implats 45%. Nkomati is a 50:50 partnership with Norilsk
Nickel Africa. ARM Platinum also has an interest in two joint ventures with
PLA. The first is the "Kalplats Platinum Project" in which ARM Platinum owns
90% and PLA can earn-in up to 49% by completing a bankable feasibility study.
The second joint venture, "Kalplats Extended Area Project" is a 50:50
partnership between ARM Platinum and PLA.
ARM Coal
ARM Coal experienced a challenging six months period to 30 June 2009, with the
weak pricing environment being compounded by a range of operational
challenges. Attributable cash operating profit in the current year increased
by 18% compared to the previous financial year, but attributable headline
earnings declined by 23%. There was a substantial increase in the normal
depreciation due to the amortisation of the capitalised value of the Douglas
Tavistock Joint Venture (DTJV) off-take agreement.
Saleable production for the year was 12% lower than the previous financial
year due to a fire at Xstrata Coal South Africa`s ("XCSA") Tweefontein plant
in November 2008, and abnormally high rainfall in the first quarter of the
2009 calendar year. This decrease was to some extent off-set by an increase in
saleable production at the Goedgevonden ("GGV") opencast mine during the
current financial year from 1.6 mt to 2.5 mt.
Total on-mine costs per tonne increased by 35% in F2009 as a result of an
increase in contractor and consumable costs and the reduction of 12% in
saleable production.
Commissioning of the GGV plant has been delayed from the first quarter to the
third quarter of calendar year 2009 mainly due to the abnormally high rainfall
referred to above as well as re-work on steel fabricated for use in the coal
processing plant.
As from January 2009 there was a marked reduction in demand for inland and
Eskom quality coal as a result of the global economic recession. Although the
average prices achieved during F2009 were higher than F2008, the last six
months of F2009 experienced a decline of 30% for Eskom sales prices, compared
to the first six months of F2009.
The demand for export coal also decreased in the first half of 2009, which saw
US Dollar prices decrease by over 20%. The situation was further aggravated by
logistical problems experienced with the transportation of coal to the port.
ARM`s economic interest in XCSA as at 30 June 2009 remains at 20.2%. ARM Coal
holds a 20% participating interest in XCSA`s Operations, which consists of 12
mines all situated in Mpumalanga as well as a 51% interest in the GGV Thermal
Coal Project situated near Ogies in Mpumalanga. ARM holds 51% of ARM Coal as
well as a 10% direct investment in XCSA`s Operations.
ARM Coal operational statistics
12 months ended 30 June
100% basis 2009 2008 % change
Total production and sales
Saleable production Mt 23.7 25.3 (12)
Export thermal coal sales Mt 11.2 13.7 (18)
Domestic thermal coal Mt 9.3 13.2 (30)
sales
Attributable production
and sales
Saleable production Mt 4.6 5.2 (12)
Export thermal coal sales Mt 2.3 2.8 (17)
Domestic thermal coal Mt 2.0 2.8 (30)
sales
Average received coal
price
Export (FOB) US$/tonne 69.2 58.5 18
Domestic (FOR) R/tonne 139.0 104.3 33
On-mine saleable cost* R/tonne 228.4 168.0 (35)
Cash operating profit
Total R million 3 066 2 620 17
Attributable R million 635 540 18
Headline earnings* R million 135 175 (23)
attributable to ARM
* The F2008 on-mine saleable cost reported was R148/t, which included 1.8mt of
stockpile coal sold to Eskom.
Attributable refers to 20.2% of XCSA Operations and 26% of the GGV Coal
project. Total refers to 100% of Xstrata South Africa and GGV.
12 months ended 30 June
Reconciliation 2009 2008
ARM attributable headline earnings 135 175
reported
Add: additional amortisation 12 21
Imputed interest on Xstrata R4 billion 33 30
debt facilitation
Less: taxation (13) (15)
ARM attributable headline earnings 166 211
excluding IFRS adjustment
Add: normal interest 69 82
normal amortisation* 333 190
taxation 66 57
ARM`s attributable operating profit 635 540
* Increase mainly due to depreciation of the capitalised value of the DTJV off-
take agreement.
ARM Exploration
The Vale/ARM JV`s ("the JV") primary projects are focused on copper in Zambia
(the Konkola North Copper Project ("Konkola North")) and copper-cobalt on the
Kalumines property in the DRC. A conservative, modular and phased approach
will be adopted in the development of the ore bodies in Zambia, which at this
stage is expected to be followed by the development of the DRC ore bodies. The
JV`s steering committee and board has been constituted, and a dedicated
management team will be put in place to implement our strategy of growing the
copper operations.
The development of the Konkola North Copper Project is a high priority for the
JV and a bankable feasibility study is being completed to develop a 2.5 mtpa
mine producing about 45 000 tpa of refined copper for a mine life in excess of
20 years. Geological drilling and evaluation work is continuing in other parts
of the Konkola North property, on additional exploration licences on the
Zambian Copperbelt in close proximity to the Konkola North property, and on
the Kalumine property in the DRC.
The Otjikoto Gold Project in Namibia has nearly 2 million ounces of gold in
the indicated and inferred category, and a land holding under licence that
stretches for over 3 800 square kilometres. The Environmental Impact
Assessment study is at an advanced stage and an initial mine technical study
and financial evaluation has been completed.
The earnings loss attributable to ARM increased from R211 million in F2008 to
R689 million in F2009, due mainly to increased stock write down costs and
restructuring costs arising from the cancellation of mining operations. The
small scale mine at Kalumines in the DRC was mining at a loss when the Company
decided to cease all mining activities with immediate effect. This resulted in
penalty payments due to the contract being stopped 20 months early (R87
million). Furthermore, the mining licence was under review and required
further modifications to the agreement (R25 million). The ore on stockpile of
1.1 million tonnes at 4.5% Cu incurred a write down of R103 million and is
currently valued at US$34 million. The JV has restructured and retrenched 150
people in the DRC and will focus on exploration targets over the 77 square
kilometres under licence. The weaker Rand/US Dollar exchange rate also
impacted on the reported results as the functional reporting currency for TEAL
is US Dollars.
ARM Exploration (Africa) ("ARM Exploration") is a new Division with its main
objective to identify and assess exploration and mineral business
opportunities for base metals, ferrous metals, PGM`s and coal in sub-Saharan
Africa where it has established relationships. A key focus area is the
development of the JV assets. ARM owns 100% of ARM Exploration. ARM
Exploration owns 50% of the ex-TEAL assets, in joint venture with Vale.
Previously, ARM owned 65% of TEAL which was listed on the Toronto Sock
Exchange.
Harmony Gold Mining Company Limited (Harmony)
Harmony reported total headline earnings for the year ended 30 June 2009 of
262 cents per share (F2008: 126 cents per share) and an increase in cash
operating profit of 45% to R3.8 billion (F2008: R2.6 billion). Gold production
for F2009 was 9% lower at 45 437 kilograms (F2008: 49 761 kilograms), with
cash costs for the year 21% higher at R168 661/kg.
Harmony has delivered on its strategic objectives by positioning their company
for growth, improving the profitability of the operations and improving the
balance sheet. Harmony`s balance sheet has cash of R2 billion and is net debt
free, allowing it to declare its first dividend in 5 years of 50 cents per
share after the year end. ARM will receive R32 million and this will be
accounted for in the F2010 financial statements.
The ARM balance sheet at 30 June 2009 reflects a marked-to-market investment
in Harmony of R5.1 billion, which is based on a Harmony share price of R80.
Changes in the value of the investment in Harmony are accounted for by ARM
through the statement of changes in equity net of deferred capital gains tax.
Dividends are recognised in ARM`s income statement. The investment reflected
at market value in the balance sheet represents approximately 18% of ARM`s
market capitalisation of R28 billion at 30 June 2009, compared to 10% at 30
June 2008.
Harmony`s results for the fourth quarter and twelve months ended 30 June 2009
can be viewed on Harmony`s website at www.harmony.co.za.
ARM owns 14.8% of Harmony`s issued share capital.
Corporate action
TEAL announced on 24 March 2009 the conclusion of a transaction whereby ARM
and Vale acquired all outstanding common shares of TEAL not already owned by
ARM, and concurrently with this closure formed a 50:50 joint venture between
ARM and Vale for the future development of the assets.
ARM has renegotiated the Modikwa off-take agreement with Anglo Platinum which
results in higher PGM revenue received. ARM has also secured proportionate
funding for the Modikwa communities from Anglo Platinum. Previously, ARM
provided all of the funding requirements of communities in the ARM Mining
Consortium.
ARM has entered into an agreement with Implats to incorporate adjacent
properties into Two Rivers, which will result in a dilution of ARM`s ownership
from 55% to 51%. ARM retains management control. The properties are portion 4,
5 and 6 of the Kalkfontein farm and Tweefontein prospecting rights. This
transaction is conditional upon obtaining the required Section 11 approval
from the Department of Mineral Resources.
Outlook
Despite the uncertainty of the pace and timing of a sustained recovery from
the prevailing local and international recession, ARM is well positioned for
growth into the future. A strong balance sheet allows continuing expenditure
on ARM`s growth projects in nickel, iron ore and coal while keeping gearing
low. Subsequent to the economic lows experienced in the first quarter of
calendar 2009, there have been some early signs of improvement in demand for
certain commodities. ARM continues to evaluate the market on a quarter by
quarter basis to ensure that its business plans remain robust.
This has been a year of wide-ranging and severe challenges; challenges to
which ARM management and staff have all risen with great enthusiasm,
dedication and skill. It is thanks to their continuous efforts that ARM has
delivered a performance which reflects extremely well on the entire Company.
The restructuring exercises implemented in F2009 will stand ARM in good stead
as the Company faces a new financial year which promises to be every bit as
challenging. It is thanks to the commitment of the entire ARM team and our
world-class partners, plus our resilient mix of resources and assets, and a
strong balance sheet, that ARM faces 2010 with renewed confidence. Commitment
to the Company`s organic growth continues as ARM`s three major projects will
shortly be in the process of ramping up production. Khumani will ramp up to 10
mtpa iron ore, GGV to 6.7 mtpa thermal coal and Nkomati to 20 000 tpa nickel.
Furthermore, the Company has recently announced additional capital expenditure
of R5.5 billion to take Khumani to 16 mtpa (14 mtpa export).
Dividends
The Board is pleased to declare a third annual cash dividend of 175 cents per
share. The amount to be paid will be R371 million. This declaration of a
dividend reflects the strength of the ARM cash position while the Board
maintains its prudent approach in the current economic environment.
The last day to trade in ARM shares to participate in this dividend (cum
dividend) will be Thursday, 17 September 2009 and ARM shares will trade ex
dividend from Friday, 18 September 2009. The record date will be Friday, 25
September 2009 with payment of the dividend occurring on Monday, 28 September
2009. No dematerialisation or rematerialisation of share certificates may
occur between Friday, 18 September 2009 and Friday, 25 September 2009, both
days inclusive.
Review by independent auditors
The financial information has been reviewed by Ernst & Young Incorporated
whose unqualified review opinion is available for inspection at the Company`s
registered office.
The annual report, containing a detailed review of the operations of the
Company together with the audited financial statements, will be posted to
shareholders in October 2009.
Signed on behalf of the Board:
PT Motsepe AJ Wilkens
Executive Chairman Chief Executive Officer
Johannesburg
31 August 2009
Group Balance Sheet
as at 30 June 2009
Reviewed Audited
2009 2008
Note Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 11 500 9 024
Investment property 12 12
Intangible assets 213 215
Deferred tax asset 32 20
Loans and long-term receivables 134 -
Financial assets 78 -
Inventories 169 178
Investment in associate 1 327 1 298
Other investments 5 101 6 055
18 566 16 802
Current assets
Inventories 1 854 1 231
Trade and other receivables 1 565 4 150
Taxation 1 14
Cash and cash equivalents 5 3 513 2 660
6 933 8 055
Held for sale assets - 21
Total assets 25 499 24 878
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 11 11
Share premium 3 759 3 733
Other reserves 600 1 366
Retained earnings 11 779 9 766
Equity attributable to equity holders of 16 149 14 876
ARM
Minority interest 602 800
Total equity 16 751 15 676
Non-current liabilities
Long-term borrowings 6 1 364 2 254
Deferred tax liabilities 2 277 2 154
Long-term provisions 401 324
4 042 4 732
Current liabilities
Trade and other payables 1 637 1 515
Short-term provisions 158 184
Taxation 531 1 047
Overdrafts and short-term borrowings 7 2 380 1 724
4 706 4 470
Total equity and liabilities 25 499 24 878
Group Income Statement
for the year ended 30 June 2009
Reviewed Audited
2009 2008
Note Rm Rm
Revenue 10 674 12 919
Sales 10 094 12 590
Cost of sales (6 048) (5 516)
Gross profit 4 046 7 074
Other operating income 916 460
Other operating expenses (1 255) (856)
Profit from operations before 3 707 6 678
exceptional items
Income from investments 414 168
Finance costs (385) (438)
Income from associate* 147 461
Profit before taxation and exceptional 3 883 6 869
items
Exceptional items 3 514 162
Profit before taxation 4 397 7 031
Taxation (1 727) (2 084)
Profit for the year 2 670 4 947
Attributable to:
Minority interest (198) 460
Equity holders of ARM 2 868 4 487
2 670 4 947
Additional information
Headline earnings (R million) 4 2 317 4 013
Headline earnings per share (cents) 1 094 1 906
Basic earnings per share (cents) 1 355 2 131
Diluted headline earnings per share 1 079 1 872
(cents)
Diluted basic earnings per share (cents) 1 336 2 093
Number of shares in issue at end of year 212 068 211 556
(thousands)
Weighted average number of shares in 211 707 210 580
issue (thousands)
Weighted average number of shares used 214 737 214 347
in calculating diluted earnings per
share (thousands)
EBITDA (R million) 4 484 7 229
*Exceptional items included in income 27 317
from associate (R million)
Dividend declared after year end (cents 175 400
per share)
Statement of Changes in Equity
for the year ended 30 June 2009
Revalua-
Share tion of
capital listed
and invest- Retained
premium ments Other* earnings
Group Rm Rm Rm Rm
Balance at 30 June 2007 3 677 1 467 137 5 597
(Audited)
Revaluation of listed - (335) - -
investment
Deferred tax on revaluation - 58 - -
of listed investment
Net impact of revaluation of - (277) - -
listed investment
Profit for the year - - - 4 487
Share-based payments - - 74 -
Share options exercised 67 - - -
Realignment of currency - - (6) -
Minorities bought out in - - (29) -
Copperbelt venture
Dividend paid - - - (315)
Other - - - (3)
Balance at 30 June 2008 3 744 1 190 176 9 766
(Audited)
Revaluation of listed - (954) - -
investment
Deferred tax on revaluation - 134 - -
of listed investment
Net impact of revaluation of - (820) - -
listed investment
Profit for the year - - - 2 868
Share-based payments - - 64 -
Share options settled in - - (25) -
cash
Share options exercised 26 - - -
Realignment of currency - - (43) -
Dilution of interest in - - 48 -
TEAL:
Share appreciation rights: - - 14 -
TEAL - minority share
Premium paid on purchaseof - - 15 -
minorities
FCTR realised - - 19 -
Dividend paid - - - (847)
Other - - 10 (8)
Balance at 30 June 3 770 370 230 11 779
2009(reviewed)
Total
Share-
holders Total
of minority
ARM interest Total
Group Rm Rm Rm
Balance at 30 June 2007 10 878 340 11 218
(Audited)
Revaluation of listed (335) - (335)
investment
Deferred tax on revaluation 58 - 58
of listed investment
Net impact of revaluation of (277) - (277)
listed investment
Profit for the year 4 487 460 4 947
Share-based payments 74 - 74
Share options exercised 67 - 67
Realignment of currency (6) - (6)
Minorities bought out in (29) - (29)
Copperbelt venture
Dividend paid (315) - (315)
Other (3) - (3)
Balance at 30 June 2008 14 876 800 15 676
(Audited)
Revaluation of listed (954) - (954)
investment
Deferred tax on revaluation 134 - 134
of listed investment
Net impact of revaluation of (820) - (820)
listed investment
Profit for the year 2 868 (198) 2 670
Share-based payments 64 - 64
Share options settled in (25) - (25)
cash
Share options exercised 26 - 26
Realignment of currency (43) - (43)
Dilution of interest in 48 - 48
TEAL:
Share appreciation rights: 14 - 14
TEAL - minority share
Premium paid on purchaseof 15 - 15
minorities
FCTR realised 19 - 19
Dividend paid (847) - (847)
Other 2 - 2
Balance at 30 June 16 149 602 16 751
2009(Reviewed)
2009 2008 2007
* Other reserves consist of the Rm Rm Rm
following:
General reserve 32 32 32
Insurance contingency 18 8 8
Share-based payments 220 167 93
Foreign currency translation reserve (26) (2) 4
(FCTR)
Premium paid on purchase of (14) (29) -
minorities
Total 230 176 137
Group Cash Flow Statement
for the year ended 30 June 2009
Reviewed Audited
2009 2008
Rm Rm
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers 13 432 10 876
Cash paid to suppliers and employees (6 754) (5 701)
Cash generated from operations 6 678 5 175
Interest received 406 166
Interest paid (328) (412)
Dividends received 118 21
Dividend paid (847) (315)
Taxation paid (1 977) (466)
Net cash inflow from operating activities 4 050 4 169
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and equipment to (927) (1 194)
maintain operations
Additions to property, plant and equipment to (2 337) (1 465)
expand operations
Proceeds on disposal of property, plant and 9 28
equipment
Net proceeds on disposal of 15% in TEAL 120 -
Proceeds on disposal of 50% of Nkomati - - 135
final tranche payment
Proceeds on sale of interest in Otjikoto - 32
Proceeds on sale of interest in Zambian - 37
properties
Net cash outflow from investing activities (3 135) (2 427)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds on exercise of share options 27 66
Share options settled in cash (25) -
Long-term borrowings raised 259 558
Long-term borrowings repaid (312) (804)
Increase/(decrease) in short-term borrowings (120) 5
Net cash outflow from financing activities (171) (175)
Net increase in cash and cash equivalents 744 1 567
Cash and cash equivalents at beginning of 2 594 1 039
year
Foreign currency translation on cash balance (13) (12)
Cash and cash equivalents at end of year 3 325 2 594
Notes to the Financial Statements
for the year ended 30 June 2009
1 BASIS OF PREPARATION
The reviewed consolidated provisional results have been prepared on an
historical cost convention, as modified by the revaluation of available-for-
sale financial assets, and financial assets and financial liabilities
(including derivative instruments) at fair value through the income statement
or the statement of changes in equity.
The financial information for the year ended 30 June 2009 has been prepared
adopting the same accounting policies used in the most recent annual financial
statements which comply with the South African Companies Act, the Listings
Requirements of the JSE, International Financial Reporting Standards and with
the disclosure requirements of IAS 34: Interim Financial Reporting.
The following new and revised accounting standards were adopted by ARM but
have had no impact on the provisional financial statements.
IAS 18: Determining whether an entity is acting as a principal or as an agent
IAS 39 & IFRS 7: Amendments to IAS 39 and IFRS 7 - Reclassification of
financial assets
IFRIC 13: Customer loyalty programmes
IFRIC 12: Service concession arrangements
IFRIC 14 IAS 19: The limit on defined benefit asset, minimum funding
requirements and their interaction
2 SEGMENTAL INFORMATION
Primary segmental information
Business segments
For management purposes, the Group is organised into four major operating
divisions. The operating divisions are ARM Platinum (which includes platinum
and nickel), ARM Ferrous, ARM Coal and ARM Exploration. ARM has a strategic
holding in Harmony (gold).
Platinum comprises Two Rivers Platinum Mine as a 55% subsidiary and ARM Mining
Consortium Limited through which ARM holds an effective 41.5% interest in the
Modikwa.
Nickel comprises Nkomati as a 50% joint venture for both its nickel and chrome
operations.
ARM Ferrous comprises Assmang as a 50% joint venture. Assmang comprises iron
ore, manganese ore, ferromanganese, ferrochrome and chrome ore operations.
ARM Coal, a 51% joint venture for accounting purposes, consists of a 10.2%
participating investment in the existing coal operations of XCSA and a 26%
joint venture interest in the Goedgevonden mine. In addition ARM has a direct
10% participating investment in the existing coal operations of XCSA.
ARM Exploration comprises TEAL as a 64,9% held subsidiary up to February 2009
and thereafter as a 50% Joint Venture. In addition this new division is
involved in identifying and assessing exploration and mineral business
opportunities in sub-Saharan Africa.
The commodity groupings predominantly reflect the risks and rewards of trading
and the operating divisions are therefore identified as the primary reporting
segments.
ARM Platinum
ARM
Platinu Nickel Ferrous
m
Rm Rm Rm
2.1 Year to 30 June 2009
(Reviewed)
Total sales 1 750 543 7 632
Intergroup sales to ARM Ferrous - 2 -
Sales 1 750 541 7 632
Cost of sales (2 317) (491) (3 007)
Other operating income 8 24 615
Other operating expenses 2 (48) (462)
Segment result (557) 26 4 778
Income from investments 69 8 220
Finance cost (216) (1) (36)
Income from associate - - -
Exceptional items 1 (1) -
Taxation 152 (4) (1 802)
Minority interest 204 - -
Contribution to basic earnings (347) 28 3 160
Contribution to headline earnings (348) 29 3 150
Other information
Segment assets including 5 334 1 791 8 292
investment in associate
Investment in associate
Segment liabilities 1 535 332 815
Unallocated liabilities (tax and
deferred tax)
Consolidated total liabilities
Cash in/(out) flow from operating 830 177 4 034
activities
Cash in/(out) flow from investing (475) (866) (1 388)
activities
Cash in/(out) flow from financing (270) 149 (263)
activities
Capital expenditure 524 878 1 335
Amortisation and depreciation 323 28 378
EBITDA (234) 54 5 146
Corp-
ARM orate
ARM Explora- and
Coal tion other*
Rm Rm Rm
2.1 Year to 30 June 2009
(Reviewed)
Total sales 121 50 -
Intergroup sales to ARM Ferrous - - -
Sales 121 50 -
Cost of sales (84) (177) 28
Other operating income 1 - 268
Other operating expenses (1) (515) (231)
Segment result 37 (642) 65
Income from investments - 6 111
Finance cost (15) (49) (68)
Income from associate 147 - -
Exceptional items - 567 (53)
Taxation (7) (4) (62)
Minority interest - - (6)
Contribution to basic earnings 162 (122) (13)
Contribution to headline earnings 135 (689) 40
Other information
Segment assets including 2 973 483 1 535
investment in associate
Investment in associate 1 327
Segment liabilities 1 463 497 1 298
Unallocated liabilities (tax and
deferred tax)
Consolidated total liabilities
Cash in/(out) flow from operating 414 (554) (851)
activities
Cash in/(out) flow from investing (498) 147 (55)
activities
Cash in/(out) flow from financing 211 276 (274)
activities
Capital expenditure 572 22 2
Amortisation and depreciation 36 20 2
EBITDA 73 (622) 67
Gold Total
Rm Rm
2.1 Year to 30 June 2009
(Reviewed)
Total sales - 10 096
Intergroup sales to ARM Ferrous - 2
Sales - 10 094
Cost of sales - (6 048)
Other operating income - 916
Other operating expenses - (1 255)
Segment result - 3 707
Income from investments - 414
Finance cost - (385)
Income from associate - 147
Exceptional items - 514
Taxation - (1 727)
Minority interest - 198
Contribution to basic earnings - 2 868
Contribution to headline earnings - 2 317
Other information
Segment assets including 5 091 25 499
investment in associate
Investment in associate 1 327
Segment liabilities - 5 940
Unallocated liabilities (tax and 2 808
deferred tax)
Consolidated total liabilities 8 748
Cash in/(out) flow from operating - 4 050
activities
Cash in/(out) flow from investing - (3 135)
activities
Cash in/(out) flow from financing - (171)
activities
Capital expenditure - 3 333
Amortisation and depreciation - 787
EBITDA - 4 484
* Corporate, other companies and consolidation adjustments.
Primary segmental information
ARM Platinum
ARM
Platinum Nickel Ferrous
Rm Rm Rm
2.2 Year to 30 June 2008
(Audited)
Total sales 3 943 998 7 418
Intergroup sales to ARM Ferrous - 12 -
Sales 3 943 986 7 418
Cost of sales (1 785) (419) (3 193)
Other operating income 6 46 217
Other operating expenses (31) (11) (350)
Segment result 2 133 602 4 092
Income from investments 93 6 36
Finance cost (311) (1) (14)
Income from associate - - -
Exceptional items - (7) -
Taxation (540) (173) (1 346)
Minority interest (460) - -
Contribution to basic earnings 915 427 2 768
Contribution to headline 915 432 2 775
earnings
Other information
Segment assets including 6 513 1 081 7 771
investment in associate
Investment in associate
Segment liabilities 1 563 112 1 196
Unallocated liabilities (tax and
deferred tax)
Consolidated total liabilities
Cash in/(out) flow from 1 369 518 3 005
operating activities
Cash in/(out) flow from (508) (292) (1 360)
investing activities
Cash in/(out) flow from (776) - (51)
financing activities
Capital expenditure 547 292 1 394
Amortisation and depreciation 241 20 264
EBITDA 2 374 622 4 366
Corp-
ARM orate
ARM Explora- and
Coal tion other*
Rm Rm Rm
2.2 Year to 30 June 2008
(Audited)
Total sales 96 147 -
Intergroup sales to ARM Ferrous - - -
Sales 96 147 -
Cost of sales (51) (72) 4
Other operating income - - 191
Other operating expenses - (271) (193)
Segment result 45 (196) 2
Income from investments - 2 31
Finance cost (13) (15) (84)
Income from associate 461 - -
Exceptional items - 34 135
Taxation (1) (2) (22)
Minority interest - - -
Contribution to basic earnings 492 (177) 62
Contribution to headline 175 (211) (73)
earnings
Other information
Segment assets including 2 392 413 663
investment in associate
Investment in associate 1 298
Segment liabilities 930 608 1 592
Unallocated liabilities (tax and
deferred tax)
Consolidated total liabilities
Cash in/(out) flow from 103 (344) (482)
operating activities
Cash in/(out) flow from (361) (41) 135
investing activities
Cash in/(out) flow from 274 353 25
financing activities
Capital expenditure 414 130 2
Amortisation and depreciation 6 10 -
EBITDA 51 (186) 2
Gold Total
Rm Rm
2.2 Year to 30 June 2008
(Audited)
Total sales - 12 602
Intergroup sales to ARM Ferrous - 12
Sales - 12 590
Cost of sales - (5 516)
Other operating income - 460
Other operating expenses - (856)
Segment result - 6 678
Income from investments - 168
Finance cost - (438)
Income from associate - 461
Exceptional items - 162
Taxation - (2 084)
Minority interest - (460)
Contribution to basic earnings - 4 487
Contribution to headline - 4 013
earnings
Other information
Segment assets including 6 045 24 878
investment in associate
Investment in associate 1 298
Segment liabilities - 6 001
Unallocated liabilities (tax and 3 201
deferred tax)
Consolidated total liabilities 9 202
Cash in/(out) flow from - 4 169
operating activities
Cash in/(out) flow from - (2 427)
investing activities
Cash in/(out) flow from - (175)
financing activities
Capital expenditure - 2 779
Amortisation and depreciation - 541
EBITDA - 7 229
The ARM platinum segment is analysed further into Two Rivers and ARM Mining
Consortium which includes Modikwa Platinum Mine.
ARM Platinum
Two Rivers Modikwa Total
Rm Rm Rm
2.3 Year to 30 June 2009
(Reviewed)
Sales
External Sales 1 022 728 1 750
Cost of sales (1 373) (944) (2 317)
Other operating income 7 1 8
Other operating expenses (7) 9 2
Segment result (351) (206) (557)
Income from investments 19 50 69
Finance cost (39) (21) (60)
Finance cost Implats: (70) - (70)
Shareholders loan Two Rivers
Finance cost ARM: Shareholders (86) - (86)
loan Two Rivers
Exceptional items 1 - 1
Taxation 131 21 152
Minority interest 177 27 204
Contribution to basic earnings (218) (129) (347)
Contribution to headline (219) (129) (348)
earnings
Other information
Segment and consolidated assets 2 853 2 481 5 334
Segment liabilities 1 117 418 1 535
Unallocated liabilities (tax 638
and deferred tax)
Consolidated total liabilities 2 173
Cash inflow from operating 450 380 830
activities
Cash outflow from investing (294) (181) (475)
activities
Cash outflow from financing (168) (102) (270)
activities
Capital expenditure 340 184 524
Amortisation and depreciation 251 72 323
EBITDA (100) (134) (234)
ARM Platinum
Two Rivers Modikwa Total
Rm Rm Rm
2.4 Year to 30 June 2008
(Audited)
Sales
External Sales 2 363 1 580 3 943
Cost of sales (1 031) (754) (1 785)
Other operating income 6 - 6
Other operating expenses (6) (25) (31)
Segment result 1 332 801 2 133
Income from investments 64 29 93
Finance cost (105) (43) (148)
Finance cost Implats: (73) - (73)
Shareholders loan Two Rivers
Finance cost ARM: Shareholders (90) - (90)
loan Two Rivers
Taxation (332) (208) (540)
Minority interest (361) (99) (460)
Contribution to basic earnings 435 480 915
Contribution to headline 435 480 915
earnings
Other information
Segment and consolidated assets 3 487 3 026 6 513
Segment liabilities 1 126 437 1 563
Unallocated liabilities (tax 831
and deferred tax)
Consolidated total liabilities 2 394
Cash inflow from operating 777 592 1 369
activities
Cash outflow from investing (355) (153) (508)
activities
Cash outflow from financing (677) (99) (776)
activities
Capital expenditure 390 157 547
Amortisation and depreciation 154 87 241
EBITDA 1 486 888 2 374
Additional information
Pro forma analysis of the Ferrous segment
100%
Iron ore Manganese Chrome
Division Division Division
Rm Rm Rm
2.5 Year to 30 June 2009
(Reviewed)
Sales 5 018 8 436 1 809
Other operating income 329 914 145
Other operating expense 182 532 368
Operating profit 3 080 6 199 277
Contribution to earnings 2 170 3 956 193
Contribution to headline 2 160 3 927 213
earnings
Other information
Consolidated total assets 6 506 8 350 2 038
Consolidated total liabilities 1 745 2 506 654
Capital expenditure 1 529 854 397
Amortisation and depreciation 409 236 127
Cash inflow from operating 2 844 610 312
activities
Cash outflow from investing (1 541) (840) (395)
activities
Cash outflow from financing (492) - (34)
activities
EBITDA 3 478 6 406 424
50%
Attributable
Total to ARM
Rm Rm
2.5 Year to 30 June 2009
(Reviewed)
Sales 15 263 7 632
Other operating income 1 388 615
Other operating expense 1 082 462
Operating profit 9 556 4 778
Contribution to earnings 6 319 3 160
Contribution to headline 6 300 3 150
earnings
Other information
Consolidated total assets 16 894 8 292
Consolidated total liabilities 4 905 815
Capital expenditure 2 780 1 335
Amortisation and depreciation 772 378
Cash inflow from operating 3 766 4 034
activities
Cash outflow from investing (2 776) (1 388)
activities
Cash outflow from financing (526) (263)
activities
EBITDA 10 308 5 146
100%
Iron ore Manganese Chrome
Division Division Division
Rm Rm Rm
2.6 Year to 30 June 2008
(Audited)
Sales 2 776 9 552 2 507
Other operating income 51 320 99
Other operating expense 136 489 111
Operating profit 1 079 6 160 946
Contribution to earnings 779 4 075 681
Contribution to headline earnings 780 4 087 683
Other information
Consolidated total assets 4 324 9 419 2 015
Consolidated total liabilities 1 735 3 226 826
Capital expenditure 2 231 511 158
Amortisation and depreciation 241 184 110
Cash inflow from operating 710 4 175 646
activities
Cash outflow from investing (2 080) (488) (151)
activities
Cash inflow/(outflow) from 281 - (384)
financing activities
EBITDA 1 320 6 344 1 056
50%
Attributable
Total to ARM
Rm Rm
2.6 Year to 30 June 2008
(Audited)
Sales 14 835 7 418
Other operating income 470 217
Other operating expense 736 350
Operating profit 8 185 4 092
Contribution to earnings 5 535 2 768
Contribution to headline 5 550 2 775
earnings
Other information
Consolidated total assets 15 758 7 771
Consolidated total liabilities 5 787 1 196
Capital expenditure 2 900 1 394
Amortisation and depreciation 535 264
Cash inflow from operating 5 531 3 005
activities
Cash outflow from investing (2 719) (1 360)
activities
Cash inflow/(outflow) from (103) (51)
financing activities
EBITDA 8 720 4 366
Reviewed Audited
2009 2008
Rm Rm
3 EXCEPTIONAL ITEMS
Surplus on dilution in TEAL to 50% 557 -
Surplus on disposal of 50% of Nkomati; - 135
final tranche payment
Profit on sale of interest in Otjikoto - 32
Profit on sale of interest in Zambian - 46
properties
Impairments of property, plant and (43) (51)
equipment
Exceptional items per income statement 514 162
Taxation - 5
Profit on asset swap in the DTJV - ARM Coal 27 317
Capital portion of insurance claim at Cato 14 -
Ridge
Loss on disposal of property, plant and (4) (10)
equipment
Total amount adjusted for headline earnings 551 474
4 HEADLINE EARNINGS
Basic earnings per income statement 2 868 4 487
- Surplus on dilution in TEAL to 50% (557) -
- Surplus on disposal of 50% of Nkomati; - (135)
final tranche payment
- Impairments of property plant and 43 51
equipment
- Capital portion of insurance claim at (14) -
Cato Ridge
- Profit on sale of interest in Zambian - (46)
properties
- Profit on sale of interest in Otjikoto - (32)
- Loss on disposal of property, plant and 4 10
equipment
- Profit on asset swap in the DTJV - ARM (27) (317)
Coal
2 317 4 018
- Taxation - (5)
Headline earnings 2 317 4 013
5 CASH AND CASH EQUIVALENTS
- African Rainbow Minerals 1 135 297
- Assmang 1 624 1 395
- ARM Mining Consortium 247 467
- Nkomati 53 159
- Two Rivers 21 100
- Vale/ARM joint venture 5 15
- Restricted cash - trust funds and 136 114
guarantees
- Other 292 113
Total as per balance sheet 3 513 2 660
Less: Overdrafts 188 66
Total as per cash flow statement 3 325 2 594
6 LONG-TERM BORROWINGS
- African Rainbow Minerals - 1 217
- Assmang 6 14
- ARM Mining Consortium 3 1
- ARM Coal 1 135 847
- Two Rivers 160 161
- Vale/ARM joint venture 60 14
1 364 2 254
7 OVERDRAFTS AND SHORT-TERM BORROWINGS
- African Rainbow Minerals* 967 42
- Assmang 7 256
- ARM Mining Consortium 138 255
- ARM Coal - 10
- Nkomati 149 -
- Vale/ARM joint venture 335 436
- Two Rivers - Bank loans 208 63
- Two Rivers - Implats 539 635
- Other 37 27
2 380 1 724
* Since the year end the loan has been refinanced and is repayable in August
2012.
8 COMMITMENTS
Commitments in respect of future capital expenditure, which will be funded
from operating cash flows and by utilising available cash and borrowing
resources, are summarised below:
Commitments
Commitments in respect of capital
expenditure:
Approved by directors
- contracted for 4 707 1 380
- not contracted for 915 1 325
Total commitments 5 622 2 705
9 CONTINGENT LIABILITIES
9.1 The Vale/ARM joint venture has a potential contingent liability of US$15
million (US$7,5 million attributable to ARM) arising from the DRC government
review of a mining licence granted.
This review is currently being finalised and based on the current position of
the DRC government, it will only be the present value of the above amount that
will need to be accrued in the capital cost of the mine, with payments in
incremental installments thereafter, should a decision be made by the Vale/ARM
joint venture to develop a mine on this property.
9.2 There have been no other changes in the contingent liabilities of the
group as disclosed in the 30 June 2008 annual report.
10 EVENTS AFTER BALANCE SHEET
No reportable events.
Registered office
ARM House
29 Impala Road
Chislehurston
Sandton 2196
PO Box 786136
Sandton
2146
Telephone: +27 11 779 1300
Telefax: +27 11 779 1312
E-mail: ir.admin@arm.co.za
Website: http://www.arm.co.za
Contact details and administration
Investor relations
Monique Swartz
Corporate Development and Head of Investor Relations
Telephone: +27 11 779 1507
E-mail: monique.swartz@arm.co.za
Corne Dippenaar
Corporate Development
Telephone: +27 11 779 1478
E-mail: corne.dippenaar@arm.co.za
Company secretary
Alyson D`Oyley
Telephone: +27 11 779 1480
E-mail: alyson.doyley@arm.co.za
Transfer secretaries
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown
2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5222
E-mail: web.queries@computershare.co.za
Website: http://www.computershare.co.za
Directors
PT Motsepe (Executive Chairman)
AJ Wilkens (Chief Executive Officer)
F Abbott*
M Arnold
Dr MMM Bakane-Tuoane**
AD Botha**
JA Chissano (Mozambican)**
WM Gule
MW King**
AK Maditsi**
KS Mashalane
JR McAlpine**
LA Shiels
Dr RV Simelane**
JC Steenkamp
ZB Swanepoel*
*Non-executive
**Independent non-executive
www.arm.co.za
Johannesburg
31 August 2009
Issued by sponsor: Deutsche Securities (SA) (Proprietary) Limited
Date: 31/08/2009 07:05:08 Produced by the JSE SENS Department.
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