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HVL
HVL
HVL - Highveld Steel and Vanadium Corporation - Group reviewed financial results
for the period ended 30 September 2009
Highveld Steel and Vanadium Corporation Limited
(Incorporated in the Republic of South Africa)
(Registration No. 1960/001900/06)
Share code: HVL ISIN: ZAE000003422
("the Corporation" or "Highveld" or "the Group")
GROUP REVIEWED FINANCIAL RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2009
CHAIRMAN AND CEO`S REVIEW
- Group revenue from operations decreased by 61% from R7 664 million to R3
019 million
- Headline earnings per share from operations decreased from 2 124.2 cents to
105.4 cents
- Uncertain market conditions remain
- Competition commission found no collusion of Highveld in the long product
steel market
Business environment
Since the beginning of the second quarter, the market has shown a certain degree
of improvement, albeit less than anticipated. Despite some opinions that South
Africa will exit the recession in the fourth quarter, it would appear that the
recovery is more likely to be punctuated by a series of growth and relapses, as
opposed to a smooth and gradual improvement. Internationally, a similar trend
is evident.
Sales volumes in the domestic market during the third quarter increased by 54%,
compared to the second quarter. This increase is mainly due to an improvement
in the demand for rolled products in the domestic market, which consequently
resulted in a decrease in sales of semi products to the export market.
Compared to the second quarter, total export revenue decreased by 61% in the
third quarter, as a consequence of a 67% decrease in sales volume, mainly due to
increased sales in the improved domestic market. The impact could have been
much more severe had it not been softened by a 16% increase in the average
export sales price, due to, inter alia, product mix.
Financial results
The operating profit before depreciation (EBITDA) for the nine months ended 30
September 2009 was R294 million, with a profit for the period of R105 million.
This compares to an EBITDA of R3 260 million and a profit of R2 107 million for
the same period last year. Consequently earnings per share reduced from 2 124.2
cents to 105.4 cents.
The Group`s profit was negatively affected by the reversal of the deferred tax
asset of R66 million in its subsidiary, Hochvanadium Holdings, as a consequence
of weakening vanadium prices, which did not allow full depreciation of the
procurement right.
Business risks
The recent rise in energy tariffs and the indication of substantial future
increases, together with the continuing challenges of rail transport, further
aggravates the consequences of the weak market. This makes it more difficult
for the Corporation, in the short term, to efficiently manage its costs
downwards.
Operations
Steel
Despite growing Chinese output, global crude steel production still declined by
16.4% to 866 million tons, with South Africa`s output declining by 26% during
the first nine months of the year. During this period, the Corporation`s gross
steel output decreased by 21%, slightly lower than the country average.
Vanadium
A total of 2 285 tons of V in vanadium slag was produced during the period,
compared to 3 324 tons of V in vanadium slag in the same period last year.
The average price achieved during the period was USD31.3 per kg V. The lowest
price was USD26.38 kg V and the highest, USD35.5 kg V. At the end of the third
quarter, prices were showing signs of weakening.
Safety, health, environment and quality
Following the renewed focus on health and safety, the lost time injury frequency
rate dropped from 0.41 as at 1 July 2009 to 0.31 as at 30 September 2009. During
the period under review the Corporation, as well as the Contractors, achieved 2
million lost time injury free hours.
Competition Commission allegations of price fixing
During June 2008 the Competition Commission investigated allegations of
prohibited practices relating to price fixing in the flat and long product steel
market. Following an extensive investigative process, the Competition
Commission informed Highveld that it found no irregular dealings and that the
matter relating to the alleged collusion in the long product steel market was no
longer pursued.
Change in directorate
We are pleased to announce that Mr Bheki Shongwe was appointed as Chairman of
the Highveld Board with effect from 15 October 2009. Bheki initially joined the
Board on 1 September 1994. He also serves as Chairman of the Transformation
Committee.
Mrs Bernie de Beer was appointed Financial Director on 26 August 2009.
Outlook for the last quarter of 2009
Outlook for the domestic steel market for the remainder of the year looks fairly
stable, subject to seasonally weaker demand at year end. This is partially due
to merchants as well as the construction industry closing for the festive
season.
A strong Rand will influence both the domestic and international markets, by
opening the domestic market to cheap imported steel, thereby putting pressure on
prices as well as limiting export opportunities.
The Board, having taken all relevant factors into account, concluded that the
Corporation remains a going concern.
With the uncertainty of the current economic climate, the Board resolved not to
declare a dividend.
B J T Shongwe W G Ballandino
(Chairman) (Chief Executive Officer)
20 November 2009
Sponsor:
J.P. Morgan Equities Limited
GROUP REVIEWED FINANCIAL RESULTS
Basis of preparation
The Group`s interim condensed consolidated financial statements for the nine
months ended 30 September 2009 set out below have been prepared in accordance
with IAS 34 Interim Financial Reporting. The interim condensed consolidated
financial statements do not include all the information and disclosures required
in the annual financial statements, and should be read in conjunction with the
Group`s annual financial statements as at 31 December 2008.
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group`s annual financial statements for the year ended 31
December 2008, except for the adoption of new Standards and Interpretations as
of 1 January 2009, noted below:
IFRS 2 - Share-based Payment - Vesting Conditions and Cancellations
The Standard has been amended to clarify the definition of vesting conditions
and to prescribe the accounting treatment of an award that is effectively
cancelled because a non-vesting condition is not satisfied. The adoption of this
amendment did not have any impact on the financial position or performance of
the Group.
IFRS 7 - Financial Instruments: Disclosures
The amended Standard requires additional disclosure about fair value measurement
and liquidity risk. These amendments did not have any significant impact on the
Group`s results.
IAS 1 - Revised Presentation of Financial Statements
The revised Standard separates owner and non-owner changes in equity. The
statement of changes in equity includes only details of transactions with
owners, with non-owner changes in equity presented as a single line. In
addition, the Standard introduces the statement of comprehensive income: it
presents all items of recognised income and expense, either in one single
statement, or in two linked statements. The Group has elected to present two
statements.
IAS 39 and IFRS 7 - Amendment - Reclassification of Financial Assets
The Standards have been amended to permit an entity to reclassify non-derivative
financial assets (other than those designated at fair value through profit or
loss by the entity upon initial recognition) out of the fair value through
profit or loss category in particular circumstances. The amendment also permits
an entity to transfer from the available-for-sale category to the loans and
receivables category a financial asset that would have met the definition of
loans and receivables (if the financial asset had not been designated as
available-for-sale), if the entity has the intention and ability to hold that
financial asset for the foreseeable future. The adoption of these amendments did
not have any impact on the financial position or performance of the Group.
IAS 32 - Financial Instruments: Presentation and IAS 1 - Puttable Financial
Instruments and Obligations Arising on Liquidation
The Standards have been amended to allow a limited scope exception for puttable
financial instruments to be classified as equity if they fulfill a number of
specific criteria. The adoption of these amendments did not have any impact on
the financial position or performance of the Group.
IFRIC 13 - Customer Loyalty Programmes
This interpretation requires customer loyalty credits to be accounted for as a
separate component of the sales transaction in which they are granted. As the
Group has no customer loyalty programmes, this interpretation had no impact on
the Group.
IFRIC 9 - Reassessment of Embedded Derivatives and IAS 39 - Financial
Instruments: Recognition and Measurement
These amendments to IFRIC 9 require an entity to assess whether an embedded
derivative must be separated from a host contract when the entity reclassifies a
hybrid financial asset out of the fair value through profit or loss category.
This assessment is to be made on circumstances that existed on the later of the
date the entity first became party to the contract and the date of any contract
amendments that significantly change the cash flows of the contract. IAS 39 now
states that if an embedded derivative cannot be reliably measured, the entire
hybrid instrument must remain classified as at fair value through profit or
loss. As the Group has no embedded derivatives, these amendments had no impact
on the Group`s results.
IFRIC 15 - Agreement for the Construction of Real Estate
This interpretation clarifies when and how revenue and related expenses from the
sale of a real estate unit should be recognised if an agreement between a
developer and a buyer is reached before the construction of the real estate is
completed. As the Group has no real estate under construction, this
interpretation has had no impact in the financial position or results.
IFRIC 16 - Hedges of a Net Investment in a Foreign Operation
IFRIC 16 provides guidance on the accounting for a hedge of a net investment in
terms of identifying the foreign currency risks that qualify for hedge
accounting in the hedge of a net investment. As the Group does not hedge any net
investment in a foreign operation, this interpretation had no impact on the
financial position or results.
The IASB has issued Improvements to IFRS - a collection of amendments to
International Financial Reporting Standards in line with their annual
improvement project. It deals with amendments to certain accounting standards
contained in this document which are effective to annual periods beginning on or
after 1 January 2009, except for IFRS 5 amendment which is effective 1 July
2009. The Group adopted the amendments which are effective 1 January 2009 with
no material impact on the results of the Group.The financial information has
been reviewed by Ernst & Young Inc. in accordance with ISRE 2410 "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity", whose unmodified review report is available for inspection at the
Corporation`s registered office.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Reviewed Reviewed Audited
as at as at as at
30 Sep 30 Sep 31 Dec
2009 2008 2008
Notes Rm Rm Rm
ASSETS
Non-current assets 1 915 1 881 1 956
Property, plant and equipment 1 915 1 881 1 956
Current assets 2 870 4 403 3 381
Inventories 1 171 565 831
Trade and other receivables 625 1 700 769
Prepaid expenditure 16 - 180
Cash and cash equivalents 5 1 058 2 138 1 601
--------- --------- ---------
TOTAL ASSETS 4 785 6 284 5 337
========= ========= =========
EQUITY AND LIABILITIES
Total equity 2 900 2 364 2 842
Non-current liabilities 769 741 739
Provisions 452 374 422
Deferred tax liability 317 367 317
Current liabilities 1 116 3 179 1 756
Trade and other payables 864 1 059 804
Interest-bearing loans and - 119 -
borrowings
Short-term provisions 16 17 230
Shareholders for dividends - 1 388 -
Income tax payable 236 596 722
--------- --------- ---------
TOTAL LIABILITIES 1 885 3 920 2 495
--------- --------- ---------
--------- --------- ---------
TOTAL EQUITY AND LIABILITIES 4 785 6 284 5 337
========= ========= =========
Net cash 5 1 058 2 019 1 601
Net asset value - cents per 2 925 2 385 2 866
share
CONDENSED CONSOLIDATED INCOME STATEMENTS
Reviewed Unaudited Reviewed Reviewed Audited
for the for the for the for the for the
three three nine nine year
months months months months ended
ended ended ended ended
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2009 2008 2009 2008 2008
Notes Rm Rm Rm Rm Rm
CONTINUING
OPERATIONS
Revenue from the 1 114 2 461 3 019 6 376 8 022
sale of goods
======== ========= ======== ======== =======
Operating profit 112 1 010 294 2 647 3 321
before
depreciation
(EBITDA)
Depreciation, ( 64) ( 64) ( 181) ( 193) ( 252)
scrapping and
changes in
estimated useful
lives of
property, plant
and equipment
-------- --------- -------- -------- -------
Operating profit 48 946 113 2 454 3 069
Interest and 11 40 60 123 161
investment income
received
Finance costs ( 15) ( 8) ( 48) ( 23) ( 39)
-------- --------- -------- -------- -------
Profit before tax 44 978 125 2 554 3 191
Income tax 7 ( 85) ( 457) ( 20) (1 010) (1 015)
expense
-------- --------- -------- -------- -------
(Loss)/Profit for ( 41) 521 105 1 544 2 176
the period/year
from continuing
operations
-------- --------- -------- -------- -------
DISCONTINUED
OPERATIONS
Revenue from the - 386 - 1 288 1 288
sale of goods
======== ========= ======== ======== =======
Operating profit - 239 - 613 610
before
depreciation
(EBITDA)
Depreciation, - - - -
scrapping and
changes in
estimated useful
lives of
property, plant
and equipment
-------- --------- -------- -------- -------
Operating profit - 239 - 613 610
(Loss)/Profit on 6 - ( 55) - 162 13
disposal of
discontinued
operations
Interest and - 2 - 5 8
investment income
received
Finance costs - ( 4) - ( 14) ( 16)
-------- --------- -------- -------- -------
Profit before tax - 182 - 766 615
Income tax 7 - ( 61) - ( 203) ( 252)
expense
-------- --------- -------- -------- -------
Profit for the - 121 - 563 363
period/year from
discontinued
operations
-------- --------- -------- -------- -------
TOTAL OPERATIONS
Revenue from the 1 114 2 847 3 019 7 664 9 310
sale of goods
======== ========= ======== ======== =======
Operating profit 112 1 249 294 3 260 3 931
before
depreciation
(EBITDA)
Depreciation, ( 64) ( 64) ( 181) ( 193) ( 252)
scrapping and
changes in
estimated useful
lives of
property, plant
and equipment
-------- --------- -------- -------- -------
Operating profit 48 1 185 113 3 067 3 679
(Loss)/Profit on 6 - ( 55) - 162 13
disposal of
discontinued
operations
Interest and 11 42 60 128 169
investment income
received
Finance costs ( 15) ( 12) ( 48) ( 37) ( 55)
-------- --------- -------- -------- -------
Profit before tax 44 1 160 125 3 320 3 806
Income tax 7 ( 85) ( 518) ( 20) (1 213) (1 267)
expense
-------- --------- -------- -------- -------
(Loss)/Profit for ( 41) 642 105 2 107 2 539
the period/year
-------- --------- -------- -------- -------
(Loss)/Earnings Cents Cents Cents Cents Cents
per share - basic
and diluted
From continuing ( 41.5) 525.5 105.4 1 556.4 2 194.6
operations
From - 122.0 - 567.9 366.1
discontinued
operations
-------- --------- -------- -------- -------
From total ( 41.5) 647.5 105.4 2 124.2 2 560.7
operations
-------- --------- -------- -------- -------
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Reviewed Unaudited Reviewed Reviewed Audited
for the for the for the for the for the
three three nine nine year
months months months months ended
ended ended ended ended
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2009 2008 2009 2008 2008
Rm Rm Rm Rm Rm
(Loss)/Profit for the ( 41) 642 105 2 107 2 539
period/year
Other comprehensive
(loss)/income:
Exchange differences ( 2) ( 12) ( 47) 52 97
on translation of
foreign operations
Fair value reserves - ( 1) - ( 1) -
-------- --------- -------- -------- -------
TOTAL COMPREHENSIVE ( 43) 629 58 2 158 2 636
(LOSS)/INCOME FOR THE
PERIOD/YEAR
-------- --------- -------- -------- -------
HEADLINE EARNINGS PER SHARE
Reviewed Unaudited Reviewed Reviewed Audited
for the for the for the for the for the
three three nine nine year
months months months months ended
ended ended ended ended
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2009 2008 2009 2008 2008
Rm Rm Rm Rm Rm
Reconciliation of
headline
(loss)/earnings
(Loss)/Profit for ( 41) 642 105 2 107 2 539
the period/year
Add/(Deduct) after
tax effect of:
Loss/(Profit) on - 137 - ( 41) 73
disposal of
discontinued
operations
Impairment losses - - - - 5
recognised
(Profit)/Loss on ( 1) - ( 2) - 11
disposal and
scrapping of
property, plant and
equipment
-------- --------- -------- -------- -------
Headline ( 42) 779 103 2 066 2 628
(loss)/earnings
-------- --------- -------- -------- -------
Headline Rm Rm Rm Rm Rm
(loss)/earnings
From continuing (42.0) 525.5 103.0 1 556.4 2 192.0
operations
From discontinued - 260.2 - 526.1 436.0
operations
-------- --------- -------- -------- -------
From total (42.0) 785.7 103.0 2 082.5 2 628.0
operations
-------- --------- -------- -------- -------
(Loss)/Earnings per Cents Cents Cents Cents Cents
share - headline
and diluted
From continuing ( 42.8) 525.5 103.5 1 556.4 2 210.6
operations
From discontinued - 122.0 - 567.9 439.5
operations
-------- --------- -------- -------- -------
From total ( 42.8) 647.5 103.5 2 124.2 2 650.1
operations
-------- --------- -------- -------- -------
Number of shares Million Million Million Million Million
Ordinary shares in 99.2 99.2 99.2 99.2 99.2
issue as at end
date *
Weighted average 99.2 99.2 99.2 99.2 99.2
number of ordinary
shares *
Diluted number of 99.2 99.2 99.2 99.2 99.2
ordinary shares *
* Rounded to
nearest hundred
thousand
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Fair Total
capital Translati value Retained
and on and reserve earnings
share other s
premium reserves
Rm Rm Rm Rm Rm
2008
Balance at 1 January 585 94 - 2 700 3 379
2008 - Audited
Total comprehensive 62 644 706
income for the
quarter
------- --------- ------- ------- ------
Balance at 31 March 585 156 - 3 344 4 085
2008 - Unaudited
Total comprehensive 2 821 823
income for the
quarter
Dividends (1 785) (1
785)
------- --------- ------- ------- ------
Balance at 30 June 585 158 - 2 380 3 123
2008 - Reviewed
Total comprehensive ( 12) ( 1) 642 629
(expense)/income for the
quarter
Dividends (1 388) (1
388)
------- --------- ------- ------- ------
Balance at 30 585 146 ( 1) 1 634 2 364
September 2008 -
Unaudited
Total comprehensive 45 1 432 478
income for the
quarter
------- --------- ------- ------- ------
Balance at 31 585 191 - 2 066 2 842
December 2008 -
Audited
------- --------- ------- ------- ------
2009
Total comprehensive ( 10) 130 120
(expense)/income for the
quarter
------- --------- ------- ------- ------
Balance at 31 March 585 181 - 2 196 2 962
2009 - Reviewed
Total comprehensive ( 35) 16 ( 19)
(expense)/income for the
quarter
------- -------- ------- ------- ------
Balance at 30 June 585 146 - 2 212 2 943
2009 - Reviewed
Total comprehensive ( 2) ( 41) ( 43)
expense for the
quarter
------- --------- ------- ------- ------
Balance at 30 585 144 - 2 171 2 900
September 2009 -
Reviewed
======= ========= ======= ======= ======
Reviewe Unaudited Reviewe Reviewed Audite
d for for the d for for the d for
the three the nine the
three months nine months year
months ended months ended ended
ended ended
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2009 2008 2009 2008 2008
Cents Cents Cents Cents Cents
Dividends per share
Dividends declared - 1 400 - 3 200 3 200
and paid
------- --------- ------- ------- ------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Reviewe Unaudit Review Review Unaudit Audited
d for ed for ed for ed for ed for for the
the the the the the year
three three six nine nine ended
months months months months months
ended ended ended ended ended
30 Sep 30 Sep 30 Jun 30 Sep 30 Sep 31 Dec
2009 2008 2009 2009 2008 2008
Note Rm Rm Rm Rm Rm Rm
Cash flows
from operating
activities
Cash generated by 74 1 198 58 132 2 878 3 994
operations before
taxation paid
Income tax ( 24) ( 320) ( 474) ( 498) ( 548) ( 530)
paid
------- ------- ------ ------ ------- ------
Net cash (used in)/ 50 878 ( 416) ( 366) 2 330 3 464
from operating
activities
------- ------- ------ ------ ------- ------
Cash flows
from investing
activities
Proceeds from - 771 - - 1 068 1 055
disposal of
discontinued
operations
Additions to ( 57) ( 146) ( 89) ( 146) ( 386) ( 543)
property,
plant and
equipment
------- ------- ------ ------ ------- ------
Net cash (used in)/ ( 57) 625 ( 89) ( 146) 682 512
from investing
activities
------- ------- ------ ------ ------- ------
Cash flows
from financing
activities
Decrease in - ( 32) - - 136 17
loan to joint
venture
Dividends paid - - - - (1 784) (3 173)
------- ------- ------ ------ ------- ------
Net cash used - ( 32) - - (1 648) (3 156)
in financing
activities
------- ------- ------ ------ ------- ------
Effects of ( 3) ( 3) ( 28) ( 31) 6 13
exchange rate
changes on
cash held in
foreign
currencies
------- ------- ------ ------ ------- ------
Net (decrease) ( 10) 1 468 ( 533) ( 543) 1 370 833
/increase in
cash and cash
equivalents
Cash and cash 1 068 670 1 601 1 601 768 768
equivalents at
the beginning
of the period
/year
------- ------- ------ ------ ------- ------
Cash and cash 5 1 058 2 138 1 068 1 058 2 138 1 601
equivalents at
the end of the
period/year
======= ======= ====== ====== ======= ======
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1 Companies Act and JSE Limited Listings Requirements
Compliance with the Companies Act, No. 61 of 1973 as well as the Listings
Requirements of the JSE Limited has been maintained throughout the reporting
periods.
2 Related party transactions
Transactions entered into between the Group and its related parties during the
reporting periods were arms length transactions between knowledgeable, willing
parties at fair value.
Steel sales to East Metals S.A. (a fellow subsidiary of Mastercroft Limited)
amounted to R403 million for the nine months ended 30 September 2009. This
constitutes 18% of total steel revenue for the year to date, compared to 0.59%
for the year ended 31 December 2008.
3 Segment Information
The Group is organised into business units based on their products and has three
reportable segments as follows:
Steelworks
The major products of the steel segment are magnetite iron ore, vanadium slag,
structural steel, plate and coil.
Vanadium
The major product of the continuing vanadium segment is ferrovanadium. Vanadium
pentoxide, ferrovanadium and various vanadium chemicals are included in the
discontinued vanadium segment.
Ferro-alloys
The major products of the ferro-alloys segment are ferrosilicon, char,
ferromanganese and silicomanganese and this segment is included under
discontinued operations.
No operating segments have been aggregated to form the above reportable
operating segments. Management monitors the operating results of its business
units separately for the purposes of making decisions about resource allocation
and performance assessment. Segment performance is evaluated based on operating
profit.
The following tables present the revenue, operating profit and total assets
information regarding the Group`s operating segments:
Reviewed for the three months ended
30 Sep 2009
Continuing operations
Steelworks Vanadium Total
Rm Rm Rm
Revenue from the sale of
goods
Revenue from external 853 261 1 114
customers
Intersegment revenue 28 - 28
------------ ---------- ----------
Total segment revenue 881 261 1 142
------------ ---------- ----------
Reviewed for the three months ended
30 Sep 2008
Continuing operations Discontinued operations
Steelworks Vanadium Total Vanadium Ferro- Total
alloys
Rm Rm Rm Rm Rm Rm
Revenue from
the sale of
goods
Revenue from 1 729 732 2 461 386 - 386
external
customers
Intersegment 139 - 139 2 - 2
revenue
---------- -------- ------ -------- ------ -------
Total segment 1 868 732 2 600 388 - 388
revenue
---------- -------- ------ -------- ------ -------
Reviewed for the nine months ended
30 Sep 2009
Continuing operations
Steelworks Vanadium Total
Rm Rm Rm
Revenue from the sale of goods
Revenue from external customers 2 265 754 3 019
Intersegment revenue 140 - 140
------------ ---------- ---------
Total segment revenue 2 405 754 3 159
------------ ---------- ---------
Reviewed for the nine months ended
30 Sep 2008
Continuing operations Discontinued operations
Steelworks Vanadium Total Vanadium Ferro- Total
alloys
Rm Rm Rm Rm Rm Rm
Revenue from
the sale of
goods
Revenue from 4 341 2 035 6 376 1 268 20 1 288
external
customers
Intersegment 481 481 4 6 10
revenue
---------- -------- ------- -------- ------ -------
Total segment 4 822 2 035 6 857 1 272 26 1 298
revenue
---------- -------- ------- -------- ------ -------
Audited for the year ended
31 Dec 2008
Continuing operations Discontinued operations
Steelworks Vanadium Total Vanadium Ferro- Total
alloys
Rm Rm Rm Rm Rm Rm
Revenue from
the sale of
goods
Revenue from 5 542 2 480 8 022 1 268 20 1 288
external
customers
Intersegment 529 - 529 4 6 10
revenue
---------- -------- ------- -------- ------ -------
Total segment 6 071 2 480 8 551 1 272 26 1 298
revenue
---------- -------- ------- -------- ------ -------
Intersegment revenue are eliminated on consolidation.
Reviewed for the three Unaudited for the three
months ended months ended
30 Sep 2009 30 Sep 2008
Conti- Disconti- Total Conti- Discon- Total
nuing nued nuing tinued
opera- opera- opera- opera-
tions tions tions tions
Rm Rm Rm Rm Rm Rm
Operating
profit
Steelworks 45 - 45 664 664
Vanadium 3 - 3 282 238 520
Ferro-alloys - - - 1 1
-------- --------- ----- -------- --------- -------
Total 48 - 48 946 239 1 185
-------- --------- ----- -------- --------- -------
Reviewed for the nine months ended
30 Sep 2009
Continuing Discontinued Total
operations operations
Rm Rm Rm
Operating profit
Steelworks 61 - 61
Vanadium 52 - 52
Ferro-alloys - - -
---------- ------------ ---------
Total 113 - 113
---------- ------------ ---------
Reviewed for the nine months ended
30 Sep 2008
Continuing Discontinued Total
operations operations
Rm Rm Rm
Operating profit
Steelworks 1 659 1 659
Vanadium 795 581 1 376
Ferro-alloys 32 32
---------- ------------ ----------
Total 2 454 613 3 067
---------- ------------ ----------
Audited for the year ended
31 Dec 2008
Continuing Discontinued Total
operations operations
Rm Rm Rm
Operating profit
Steelworks 2 105 - 2 105
Vanadium 964 577 1 541
Ferro-alloys - 33 33
---------- ----------- ----------
Total 3 069 610 3 679
---------- ----------- ----------
Reviewed as at
30 Sep 2009
Continuing Discontinued Total
operations operations
Rm Rm Rm
Total assets
Steelworks 4 374 - 4 374
Vanadium 411 - 411
---------- ------------ ------------
Total 4 785 - 4 785
---------- ------------ ------------
Reviewed as at
30 Sep 2008
Continuing Discontinued Total
operations operations
Rm Rm Rm
Total assets
Steelworks 5 678 - 5 678
Vanadium 606 - 606
---------- ------------ -------------
Total 6 284 - 6 284
---------- ------------ -------------
Audited as at
31 Dec 2008
Continuing Discontinued Total
operations operations
Rm Rm Rm
Total assets
Steelworks 4 891 - 4 891
Vanadium 446 - 446
---------- ------------ -------------
Total 5 337 - 5 337
---------- ------------ -------------
4 Supplementary revenue information - Unaudited
For the For the For the
three three nine
months months months
ended ended ended
30 Sep 2009 30 Sep 2008 30 Sep
2009
Sales volumes of
major products
Continuing operations
Total steel Tons 147 231 178 726 422 407
Ferrovanadium kg V 1 146 974 1 256 633 3 523 632
Vanadium slag Tons - -
V2O5
Fines ore Tons 167 026 - 360 672
---------- ---------- ---------
For the For the
nine year ended
months
ended
30 Sep 31 Dec 2008
2008
Sales volumes of
major products
Continuing operations
Total steel Tons 545 585 668 116
Ferrovanadium kg V 4 129 766 5 194 834
Vanadium slag Tons V2O5 10 302 13 580
Fines ore Tons 130 225
-
---------- ----------
Weighted average selling prices
achieved for major products
Continuing
operations
Total steel USD/t 695 942 591 947 953
Ferrovanadium USD/kg V 26 80 23 63 60
Fines ore USD/t 40 - 26 - 42
Average R/USD 7.82 7.77 8.74 7.65 8.00
exchange rate
------ -------- -------- ------- --------
5 Net cash
Net cash is calculated as follows:
Reviewed Reviewed Audited
as at as at as at
30 Sep 30 Sep 31 Dec
2009 2008 2008
Rm Rm Rm
Cash and cash equivalents 1 058 2 138 1 601
Bank overdraft included in other - ( 119) -
current liabilities
--------- --------- ---------
Net cash 1 058 2 019 1 601
========= ========= =========
6 (Loss)/Profit on disposal of discontinued operations
Reviewed Unaudited Reviewed Reviewed Audited
for the for the for the for the for the
three three nine nine year
months months months months ended
ended ended ended ended
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2009 2008 2009 2008 2008
Rm Rm Rm Rm Rm
Total - 991 - 1 296 1 244
proceeds on
disposal of
operations
Net asset - (1 046) - (1 134) (1 231)
value
disposed of
--------- --------- -------- -------- -------
(Loss)/Profit - ( 55) - 162 13
on disposal
before
taxation
Taxation - ( 82) - ( 121) ( 86)
charge
--------- --------- -------- -------- -------
(Loss)/Profit on - ( 137) - 41 ( 73)
disposal after
taxation
========= ========= ======== ======== =======
7 Income taxation
Reviewed Unaudited Reviewed Reviewed Audited
for the for the for the for the for the
three three nine nine year
months months months months ended
ended ended ended ended
30 Sep 30 Sep 30 Sep 30 Sep 31 Dec
2009 2008 2009 2008 2008
Rm Rm Rm Rm Rm
South African
Normal
Current 32 339 18 789 883
Other - - - 15 15
Deferred
Current - - - - (44)
Prior year over - - - (13) (13)
provision
Other - - - (5)
Other
STC - 139 - 316 316
Non-South African
Normal
Current (13) 40 2 106 115
Reversal of deferred 66 - - - -
tax asset
-------- --------- -------- -------- -------
Income tax expense 85 518 20 1 213 1 267
======== ========= ======== ======== =======
Attributable to:
Continuing operations 85 457 20 1 010 1 015
Discontinued - 61 - 203 252
operations
-------- --------- -------- -------- -------
85 518 20 1 213 1 267
======== ========= ======== ======== =======
Based on information available at the time, the Group recognised a deferred tax
asset on losses arising in its foreign operations in quarter one and quarter
two. As a result of a subsequent change in management`s view of the
recoverability of the tax losses resulting from the Procurement Right, the
deferred tax asset (R66mil) was reversed in quarter three.
8 Financial ratios - Unaudited
Current ratio 2.57 1.93 2.57 1.39 1.93
Market capitalisation - 7 387 6 345 7 387 12 890 6 345
Rm
9 Retrenchment costs
The Corporation has incurred retrenchment costs of R31 million for the nine
months ended 30 September 2009. Retrenchment costs for the quarter ended 30
September 2009 amounted to R4 million.
10 Contingent liabilities
As required by the Mineral and Petroleum Resources Development Act, a guarantee
amounting to R235 million (2008: R191 million) was issued in favour of the
Department of Minerals and Energy for the unscheduled closure of Mapochs Mine.
In terms of the Corporation`s employment policies, certain employees could
become eligible for post-retirement medical aid benefits at any time in the
future prior to their retirement subject to certain conditions. The potential
liability, should they become medical scheme members in the future, is R64
million (2008: R57 million).
11 Subsequent events
There have been no reportable events after the reporting period until the date
of this announcement.
20 November 2009
Sponsor:
J.P. Morgan Equities Limited
Date: 20/11/2009 15:00:05 Produced by the JSE SENS Department.
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