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HVL
HVL
HVL - Highveld Steel And Vanadium Corporation Audited Results for the year ended
31 December 2009
HIGHVELD STEEL AND VANADIUM CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1960/001900/06)
Share code: HVL ISIN: ZAE000003422
("the Corporation" or "Highveld" or "the Group")
Audited Results for the year ended 31 December 2009
Group revenue from continued operations for the year ended 2009 decreased by
47% over 2008 from R8 022 million to R4 252 million
Headline earnings per share from operations decreased from 2 594.1 cents to
168.1 cents
Uncertain market conditions persist
Further inquiry from the Competition Commission regarding alleged price
fixing of flat products
Basis of preparation
The Group`s financial results for the quarter and 12 months ended 31 December
2009 set out below have been prepared in accordance with the principal
accounting policies of the Group, which comply with International Financial
Reporting Standards ("IFRS") and in the manner required by the Companies Act
in South Africa and are consistent with those applied in the Group`s most
recent annual financial statements, including the Standards and Interpretations
as listed below.
These results are presented in terms of International Accounting Standards
("IAS") 34 applicable to Interim Financial Reporting.
Significant accounting policies
The Group has adopted the following new and revised Standards and
Interpretations issued by the International Accounting Standards Board ("the
IASB") and the International Financial Reporting Interpretation Committee
("IFRIC") of the IASB, that are relevant to its operations and effective for
accounting periods beginning on 1 January 2009.
i) The adoption of these new and revised Standards and Interpretations has
resulted in changes in the Group`s accounting policies and are disclosed as
follows:
IAS 1, Presentation of Financial Statements (effective from 1 January 2009)
This Standard prescribes the basis for presentation of general purpose
financial statements to ensure comparability both with the entity`s financial
statements of previous periods and with the financial statements of other
entities. It sets out overall requirements for the presentation of financial
statements, guideline for their structure and minimum requirements for their
content.
IFRS 7, Financial Instrument: Disclosures (effective from 1 January 2009)
The amended Standard requires additional disclosures about fair value
measurement and liquidity risk. Fair value measurements related to items
recorded at fair value are to be disclosed by source of inputs using a three
level fair value hierarchy, by class, for all financial instruments recognised
at fair value. In addition, a reconciliation between the beginning and ending
balance for level 3 fair value measurements is now required, as well as
significant transfers between levels in the fair value hierarchy. The
amendments also clarify the requirements for liquidity risk disclosures with
respect to derivative transactions and assets used for liquidity management.
ii) The Group changed the cost formula for measuring work-in-progress and
finished goods inventory from standard costing formula to actual cost on a
weighted average basis. This coincided with a change in accounting and costing
IT systems that now allows the Group to use this method. Due to the system
change, it is not practical to determine the cumulative impact on the opening
balances of inventory.
iii) The following Standards, amendment to Standards and Interpretations,
effective in future accounting periods have not been adopted in these financial
statements:
IFRS 2, Amended - Share-based Payments: Group cash-settled share-based
payment transactions (effective from 1 January 2010)
IFRS 3, Business Combinations (effective from 1 July 2009)
IFRS 9, Financial Instruments (Phase 1 of new Standard to replace IAS 39)
(effective from 1 January 2013)
IAS 24, Amended - Related Party Disclosures (effective 1 January 2011)
IAS 27, Consolidated and Separate Financial Statements (effective from 1 July
2009)
IAS 32, Amended - Classification of Rights Issues Denominated in a Foreign
currency (effective 1 February 2010)
IAS 39, Financial Instruments: Recognition and Measurement - Eligible Hedged
Items (effective from 1 July 2009)
IFRIC 14, Amended - Prepayments of a Minimum Funding Requirement (effective
1 January 2011)
IFRIC 17, Distribution of Non-cash Assets to Owners (effective 1 July 2009)
IFRIC 18, Transfers to Assets from Customers (effective 1 July 2009)
IFRIC 19, Extinguishing Financial liabilities with Equity instruments
(effective 1 July 2010)
Improvements to IFRS (effective April 2009)
The financial information has been audited by Ernst & Young Inc. whose
unmodified audit report is available for inspection at the Corporation`s
registered office.
Chairman and CEO`s Review
Business environment
Sales volumes in the domestic market during the fourth quarter increased by
19% mainly due to some restocking, compared to the third quarter. Prices
remained fairly stable during the last quarter of the year.
Total export revenue decreased by 23% in the fourth quarter, compared to the
third quarter, as a result of a 32% decrease in sales volume, poor export
prices and a gradual strengthening of the Rand against the US Dollar.
Vanadium prices in 2009 dropped from US$26 per kg V at the beginning of the
year, to a low of US$18.96 per kg V in May 2009 and recovered to
US$32 per kg V at the year end. Following the upward trend of vanadium prices,
the price for iron ore fines has also improved. Despite a depressed steel
market, a notable recovery is evident in the vanadium market since the year
end, with prices reacting to positive market demand.
Financial results
The profit for the period from continuing operations was R163 million,
compared to a profit from continued operations of R2 584 million for 2008.
Consequently earnings per share reduced from 2 606.1 cents to 164.4 cents.
Cash flows remain strong.
Business risks
The recently published Eskom energy tariff increase of 25% from 1 April
2010, with further increases planned, will significantly impact on operating
costs and will accordingly necessitate investigation into suitable power co-
generation projects. Despite renewed focus on the reliability of transport
and the improved relations between the Corporation and Transnet, rail
transport still remains a business risk, and likewise the water supply received
from the eMalahleni Local Municipality. The reliability of the supply of oxygen
is now also considered a significant operational risk due to some recent
interruption in supply.
Operations
Steel
Despite an increase in Chinese output of 13.5% for the year, global crude
steel production for 2009 declined by 8% to 1.22 billion tons, with South
Africa`s output declining by 9.5%. In 2009, the Corporation`s gross steel
output decreased by 28%.
Vanadium
A total of 6 190 tons of V in vanadium slag was produced during 2009,
compared to 7 789 tons of V in vanadium slag during last year.
The average price achieved during 2009 was US$25.34 per kg V. The
lowest price was US$18.96 kg V and the highest, US$35.5 kg V. Despite
weakening vanadium prices during the fourth quarter, prices at year end
were showing signs of recovering.
Safety, health, environment and quality
The Corporation ended with a Lost Time Injury Frequency Rate of 0.36, which
was the same as for 2008.
However, the number of lost time injuries decreased from 25 during 2008 to 18
for 2009.
The Corporation has been re-certified to export pressure vessel and
structural steel grades to the EU. A new grade of steel has been developed
for the local tube market with improved forming and welding properties.
The Steelworks was also re-certified for ISO 14001 and ISO 9001.
Competition Commission query
A further inquiry from the Competition Commission was received during March
2010 regarding the alleged price fixing of flat products. The required
information and documentation are being collated to provide the Competition
Commission with a comprehensive response.
Change in directorate
We are pleased to announce that Mr Scott MacDonald was appointed Chief
Executive Officer and Director of the Highveld Board on 1 March 2010. Messrs
Bhabha, Surgey and Yanbukhtin and Mrs Ngonyama were also appointed as
non-executive directors on the same date. The newly appointed members bring
substantial wealth of experience and expertise to the Board.
Outlook for the first quarter of 2010
The steel markets in South Africa remain volatile, however, some slow recovery
in prices and shipment volumes is evident. After some decline in the start of
the year, steel prices appear to be stabilising at present.
Rising energy and raw material costs will require the need for higher selling
prices in the year. With this happening, the negative impact of the rising
energy cost would be partially mitigated.
Revenue from our vanadium slag sales are expected to make a greater
contribution to the profitability of the Corporation. With international
vanadium prices having bottomed out in the first quarter and continuing
their positive trend, we anticipate our vanadium business to be substantially
better than the fourth quarter of 2009.
B J T Shongwe A S McDonald
(Chairman) (Chief Executive Officer)
23 March 2010
Directors: B J T Shongwe (Chairman), A S MacDonald (Chief Executive Officer)
(British), G C Baizini (Italian), M Bhabha, C B Brayshaw, J W Campbell,
Mrs B E de Beer, A V Frolov (Russian), Mrs B Ngonyama, P M Surgey,
P S Tatyanin (Russian) and T I Yanbukhtin (Russian)
Company Secretary: Mrs C I Lewis
Registered office: Transfer secretaries:
Portion 93 of the farm Computershare Investor Services
Schoongezicht No. 308 JS (Proprietary) Limited
District eMalahleni 70 Marshall Street
Mpumalanga Johannesburg
PO Box 111 PO Box 61051
Witbank 1035 Marshalltown 2107
Tel: (013) 690-9911 Tel: (011) 370-5000
Fax: (013) 690-9293 Fax: (011) 688-5200
Condensed Consolidated Statements of Financial Position
Audited as at Audited as at
31 Dec 2009 31 Dec 2008
Note Rm Rm
ASSETS
Non-current assets 1 884 1 956
Property, plant and equipment 1 884 1 956
Available-for-sale investments - -
Current assets 3 013 3 381
Inventories 1 228 831
Trade and other receivables 711 949
Cash and cash equivalents 5 1 074 1 601
TOTAL ASSETS 4 897 5 337
EQUITY AND LIABILITIES
Capital and reserves 3 074 2 949
Non-current liabilities 712 632
Provisions 469 422
Deferred tax liability 243 210
Current liabilities 1 111 1 756
Trade and other payables 771 804
Short-term provisions 182 230
Income tax payable 156 722
Interest-bearing loans and
borrowings 5 2 -
TOTAL EQUITY AND LIABILITIES 4 897 5 337
Net asset value - cents per share 3 101 2 974
Condensed Consolidated Income Statements
Unaudited Unaudited
for the three for the three
months ended months ended
31 Dec 2009 31 Dec 2008
Note Rm Rm
CONTINUING OPERATIONS
Sale of goods 1 233 1 646
Revenue 1 233 1 646
Cost of sales (1 004) (762)
Gross profit 229 884
Selling and distribution costs (70) (202)
Administrative expenses (53) (38)
Other operating expenses (26) (19)
Operating profit 80 625
Finance costs (11) (162)
Finance income 10 175
Profit before tax from continuing
operations 79 638
Income tax expense 7 (21) (5)
Profit for the period/year from
continuing operations 58 633
DISCONTINUED OPERATIONS
(Loss)/Profit after tax for the
period/year from
discontinued operations - (156)
Profit for the period/year 58 477
Earnings/(Loss) per share - basic
and diluted Cents Cents
From continuing operations 59.0 638.3
From discontinued operations - (156.4)
From total operations 59.0 481.9
Audited Audited
for the for the
year ended year ended
31 Dec 2009 31 Dec 2008
Rm Rm
CONTINUING OPERATIONS
Sale of goods 4 252 8 022
Revenue 4 252 8 022
Cost of sales (3 578) (4 414)
Gross profit 674 3 608
Selling and distribution costs (243) (244)
Administrative expenses (201) (256)
Other operating expenses (38) (30)
Operating profit 192 3 078
Finance costs (61) (39)
Finance income 73 152
Profit before tax from continuing operations 204 3 191
Income tax expense (41) (1 015)
Profit for the period/year from continuing
operations 163 2 176
DISCONTINUED OPERATIONS
(Loss)/Profit after tax for the period/year from
discontinued operations - 408
Profit for the period/year 163 2 584
Earnings/(Loss) per share - basic and diluted Cents Cents
From continuing operations 164.4 2 194.7
From discontinued operations - 411.5
From total operations 164.4 2 606.1
Condensed Consolidated Statements of Comprehensive Income
Unaudited Unaudited
for the three for the three
months ended months ended
31 Dec 2009 31 Dec 2008
Rm Rm
Profit for the period/year 58 477
Other comprehensive income/(loss):
Exchange differences on translation of
foreign operations 9 45
Fair value reserves - 1
Total comprehensive income for the
period/year 67 523
Audited Audited
for the for the
year ended year ended
31 Dec 2009 31 Dec 2008
Rm Rm
Profit for the period/year 163 2 584
Other comprehensive income/(loss):
Exchange differences on translation of foreign
operations (38) 97
Fair value reserves - -
Total comprehensive income for the period/year 125 2 681
Headline Earnings per Share
Unaudited Unaudited
for the three for the three
months ended months ended
31 Dec 2009 31 Dec 2008
Rm Rm
Reconciliation of headline earnings/(loss):
Profit for the period/year 58 477
Add after tax effect of:
Loss/(Profit) on disposal of discontinued
operations - 13
Impairment losses recognised - 5
Net loss on disposal and scrapping of property,
plant and equipment 6 11
Headline earnings 64 506
Headline earnings/(loss)
From continuing operations 64 636
From discontinued operations - (175)
From total operations 64 461
Earnings per share - headline and diluted Cents Cents
From continuing operations 64.6 654.2
From discontinued operations - (142.6)
From total operations 64.6 511.6
Number of shares Million Million
Ordinary shares in issue as at end date* 99.2 99.2
Weighted average number of ordinary shares* 99.2 99.2
Diluted number of ordinary shares* 99.2 99.2
Audited Audited
for the for the
year ended year ended
31 Dec 2009 31 Dec 2008
Rm Rm
Reconciliation of headline earnings/(loss):
Profit for the period/year 163 2 584
Add after tax effect of:
Loss/(Profit) on disposal of discontinued
operations - (28)
Impairment losses recognised - 5
Net loss on disposal and scrapping of property,
plant and equipment 4 11
Headline earnings 167 2 572
Headline earnings/(loss)
From continuing operations 167 2 192
From discontinued operations - 380
From total operations 167 2 572
Earnings per share - headline and diluted Cents Cents
From continuing operations 168.1 2 210.6
From discontinued operations - 383.5
From total operations 168.1 2 594.1
Number of shares Million Million
Ordinary shares in issue as at end date* 99.2 99.2
Weighted average number of ordinary shares* 99.2 99.2
Diluted number of ordinary shares* 99.2 99.2
*Rounded to nearest hundred thousand.
Condensed Consolidated Statements of Changes in Equity
for the period/year ended
Issued share capital Translation
and share and other Fair value
premium reserves reserves
Rm Rm Rm
2008
Balance at 1 January 2008 585 94 -
Adjustment to deferred tax liability
Balance at 1 January 2008 - Restated 585 94 -
Total comprehensive income for
the quarter 62
Balance at 31 March 2008 - Unaudited 585 156 -
Total comprehensive income for
the quarter 2
Dividends
Balance at 30 June 2008 - Reviewed 585 158 -
Total comprehensive
(expense)/income for the quarter (12) (1)
Dividends
Balance at 30 September 2008 - Reviewed 585 146 (1)
Total comprehensive income for
the quarter 45 1
Balance at 31 December 2008 - Audited 585 191 -
2009
Total comprehensive
(expense)/income for the quarter (10)
Balance at 31 March 2009 -
Reviewed 585 181 -
Total comprehensive
(expense)/income for the quarter (35)
Balance at 30 June 2009 - Reviewed 585 146 -
Total comprehensive expense
for the quarter (2)
Balance at 30 September 2009 - Reviewed 585 144 -
Total comprehensive income for
the quarter 9
Balance at 31 December 2009 -
Audited 585 153 -
Retained
earnings Total
Rm Rm
2008
Balance at 1 January 2008 2 700 3 379
Adjustment to deferred tax liability 62 62
Balance at 1 January 2008 - Restated 2 762 3 441
Total comprehensive income for the quarter 644 706
Balance at 31 March 2008 - Unaudited 3 406 4 147
Total comprehensive income for the quarter 821 823
Dividends (1 785) (1 785)
Balance at 30 June 2008 - Reviewed 2 442 3 185
Total comprehensive (expense)/income for the quarter 642 629
Dividends (1 388) (1 388)
Balance at 30 September 2008 - Reviewed 1 696 2 426
Total comprehensive income for the quarter 477 523
Balance at 31 December 2008 - Audited 2 173 2 949
2009
Total comprehensive (expense)/income for the quarter 130 120
Balance at 31 March 2009 - Reviewed 2 303 3 069
Total comprehensive (expense)/income for the quarter 16 (19)
Balance at 30 June 2009 - Reviewed 2 319 3 050
Total comprehensive expense for the quarter (41) (43)
Balance at 30 September 2009 - Reviewed 2 278 3 007
Total comprehensive income for the quarter 58 67
Balance at 31 December 2009 - Audited 2 336 3 074
Unaudited Unaudited
for the three for the three
months ended months ended
31 Dec 2009 31 Dec 2008
Cents Cents
Dividends per share
Dividends declared and paid - 1 400
Audited Audited
for the for the
year ended year ended
31 Dec 2009 31 Dec 2008
Cents Cents
Dividends per share
Dividends declared and paid - 3 200
Condensed Consolidated Statements of Cash Flows
Unaudited Unaudited
for the three for the three
months ended months ended
31 Dec 2009 31 Dec 2008
Note Rm Rm
Cash flows from operating activities
Cash generated by operations
before tax paid (27) 1 116
Income tax paid (68) 18
Net cash (used in)/generated by
operating activities (95) 1 134
Cash flows from investing activities
Proceeds from disposal of
discontinued operations 164 (13)
Net additions to property, plant and equipment (50) (157)
Net cash (used in)/generated by
investing activities 114 (170)
Cash flows from financing activities
Increase in short-term loans 2 -
(Decrease)/Increase in loan to joint venture - (119)
Dividends paid - (1 389)
Net cash generated by/(used in)
financing activities 2 (1 508)
Effects of exchange rate changes
on cash held in foreign currencies (5) 7
Net (decrease)/increase in cash
and cash equivalents 16 (537)
Cash and cash equivalents at the
beginning of the period/year 1 058 2 138
Cash and cash equivalents at the
end of the period/year 5 1 074 1 601
Audited Audited
for the for the
year ended year ended
31 Dec 2009 31 Dec 2008
Rm Rm
Cash flows from operating activities
Cash generated by operations before tax paid 105 3 994
Income tax paid (566) (530)
Net cash (used in)/generated by operating activities (461) 3 464
Cash flows from investing activities
Proceeds from disposal of discontinued operations 164 1 055
Net additions to property, plant and equipment (196) (543)
Net cash (used in)/generated by investing activities (32) 512
Cash flows from financing activities
Increase in short-term loans 2 -
(Decrease)/Increase in loan to joint venture - 17
Dividends paid - (3 173)
Net cash generated by/(used in) financing activities 2 (3 156)
Effects of exchange rate changes on cash held in
foreign currencies (36) 13
Net (decrease)/increase in cash and cash equivalents (527) 833
Cash and cash equivalents at the beginning of
the period/year 1 601 768
Cash and cash equivalents at the end of
the period/year 1 074 1 601
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 arm`s length transactions between knowledgeable,
willing parties at fair value.
Steel sales to East Metals S.A. (a fellow subsidiary of Mastercroft Limited)
amounted to R443 million (2008: R30 million) for the 12 months ended 31
December 2009. This constitutes 14% of total steel revenue for the year,
compared to 0.69% 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, structural
steel, plate and coil.
Vanadium
The major products of the continuing vanadium segment are vanadium slag and
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:
Unaudited for the three months ended
31 Dec 2009
Continuing operations
Steelworks Vanadium Total
Rm Rm Rm
Revenue from the sale of goods 943 290 1 233
Unaudited for the three months ended
31 Dec 2008
Continuing operations
Steelworks Vanadium Total
Rm Rm Rm
Revenue from the sale of goods 1 164 482 1 646
Discontinued operations
Vanadium Ferro-alloys Total
Rm Rm Rm
Revenue from the sale of goods - - -
Audited for the year ended
31 Dec 2009
Continuing operations
Steelworks Vanadium Total
Rm Rm Rm
Revenue from the sale of goods 3 208 1 044 4 252
Audited for the year ended
31 Dec 2008
Continuing operations
Steelworks Vanadium Total
Rm Rm Rm
Revenue from the sale of goods
Revenue from external customers 5 415 2 607 8 022
Intersegment revenue - - -
Total segment revenue 5 415 2 607 8 022
Discontinued operations
Vanadium Ferro-alloys Total
Rm Rm Rm
Revenue from the sale of goods
Revenue from external customers 1 268 20 1 288
Intersegment revenue 4 6 10
Total segment revenue 1 272 26 1 298
Intersegment revenue are eliminated on consolidation.
Unaudited for the three months ended
31 Dec 2009
Continuing Discontinued
operations operations Total
Rm Rm Rm
Operating profit
Steelworks (636) - (636)
Vanadium 716 - 716
Ferro-alloys - - -
Total 80 - 80
Unaudited for the three months ended
31 Dec 2008
Continuing Discontinued
operations operations Total
Rm Rm Rm
Operating profit
Steelworks 393 - 393
Vanadium 232 (5) 227
Ferro-alloys - 1 1
Total 625 (4) 621
Audited for the year ended
31 Dec 2009
Continuing Discontinued
operations operations Total
Rm Rm Rm
Operating profit
Steelworks 119 - 119
Vanadium 73 - 73
Ferro-alloys - - -
Total 192 - 192
Audited for the year ended
31 Dec 2008
Continuing Discontinued
operations operations Total
Rm Rm Rm
Operating profit
Steelworks 2 202 - 2 202
Vanadium 876 577 1 453
Ferro-alloys - 33 33
Total 3 078 610 3 688
Audited as at 31 Dec 2009
Continuing Discontinued
operations operations Total
Rm Rm Rm
Total assets
Steelworks 4 413 - 4 413
Vanadium 484 - 484
Total 4 897 - 4 897
Audited as at 31 Dec 2008
Continuing Discontinued
operations operations Total
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 three For the three
months ended months ended
31 Dec 2009 31 Dec 2008
Sales volumes of major products
Continuing operations
Total steel Tons 158 536 122 531
Ferrovanadium kg V 1 360 023 1 065 068
Vanadium slag Tons V2O5 - 3 278
Fines ore Tons 158 906 130 225
Weighted average selling
prices achieved for major products
Continuing operations
Total steel $/t 767 914
Ferrovanadium $/kg V 24 44
Fines ore $/t 19 42
Average R/$ exchange rate 7.51 9.96
For the For the
year ended year ended
31 Dec 2009 31 Dec 2008
Sales volumes of major products
Continuing operations
Total steel Tons 580 943 668 116
Ferrovanadium kg V 4 883 655 5 194 834
Vanadium slag Tons V2O5 - 13 580
Fines ore Tons 519 578 130 225
Weighted average selling prices
achieved for major products
Continuing operations
Total steel $/t 621 953
Ferrovanadium $/kg V 23 60
Fines ore $/t 24 42
Average R/$ exchange rate 8.43 8.00
5. Net cash
Net cash is calculated as follows: Audited as at Audited as at
31 Dec 2009 31 Dec 2008
Rm Rm
Cash and cash equivalents 1 074 1 601
Bank overdraft included in other current
liabilities (2) -
Net cash 1 072 1 601
6. (Loss)/Profit on disposal of discontinued operations
Unaudited Unaudited
for the three for the three
months ended months ended
31 Dec 2009 31 Dec 2008
Rm Rm
Total proceeds on disposal of operations - (52)
Net asset value disposed of - (97)
(Loss)/Profit on disposal before tax - (149)
Tax charge - 136
(Loss)/Profit on disposal after tax - (13)
Audited Audited
for the for the
year ended year ended
31 Dec 2009 31 Dec 2008
Rm Rm
Total proceeds on disposal of operations - 1 244
Net asset value disposed of - (1 231)
(Loss)/Profit on disposal before tax - 13
Tax charge - 15
(Loss)/Profit on disposal after tax - 28
7. Income tax
Unaudited Unaudited
for the three for the three
months ended months ended
31 Dec 2009 31 Dec 2008
Rm Rm
South African
Normal
Current (16) 94
Prior year overprovision - -
Other - -
Deferred
Current 23 (89)
Prior year overprovision - -
Other 10 (5)
Other
STC - -
Non-South African
Normal
Current 4 9
Reversal of deferred tax asset - -
Income tax expense 21 9
Attributable to:
Continuing operations 21 5
Discontinued operations - 4
21 9
Audited Audited
for the for the
year ended year ended
31 Dec 2009 31 Dec 2008
Rm Rm
South African
Normal
Current 2 883
Prior year overprovision - -
Other - 15
Deferred
Current 23 (89)
Prior year overprovision - (13)
Other 10 (5)
Other
STC - 316
Non-South African
Normal
Current 6 115
Reversal of deferred tax asset - -
Income tax expense 41 1 222
Attributable to:
Continuing operations 41 1 015
Discontinued operations - 207
41 1 222
During 2009 it was discovered that adjustments had to be made to the deferred
tax calculation for 2008 and 2007 due to misinterpretations on the deferred tax
treatment on the disposal of divisions. This resulted in the deferred tax
liability for 2007 being over stated by R62 million and in 2008 with R107
million. These adjustments were not material to the 2008 and 2007 balance sheet
or income statement, but the directors decided to adjust for these adjustments
in the year they arose, even though they were immaterial for those years. The
impact on retained earnings for 2008 was an increase of R45 million and for
2007 an increase of earnings by R62 million.
8. Financial ratios - Unaudited
Unaudited Unaudited
for the three for the three
months ended months ended
31 Dec 2009 31 Dec 2008
Rm Rm
Current ratio 2.71 1.93
Market capitalisation - Rm 6 394 6 345
Audited Audited
for the for the
year ended year ended
31 Dec 2009 31 Dec 2008
Rm Rm
Current ratio 2.71 1.93
Market capitalisation - Rm 6 394 6 345
9. Retrenchment costs
The Corporation has incurred retrenchment costs of R32 million (2008: Rnil) for
the 12 months ended 31 December 2009.
10. Inventories
A net realisable value provision of R101 million (work-in-progress R76 million
and finished goods R25 million) was raised on inventories.
11. 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 R39
million (2008: R55 million).
As required by certain suppliers of the Corporation, guarantees were issued
in favour of these suppliers to the value of R8 million (2008: R8 million) in
the event the Corporation will not be able to meet its obligations to the
supplier.
12. Subsequent events
A new summons was received from the Competition Commission relating to a
complaint referring to price fixing allegations of flat products.
The allegations are being evaluated and a comprehensive response with requested
documentation is being compiled for submission.
A summons was received from the Xai-Xai Slag Distributors (Proprietary) Limited
and Rothinvest 30 (Proprietary) Limited t/a Xai-Xai Slag Management
(in liquidation). This is currently being investigated and considered. The
Corporation was advised by its attorneys that the pleadings as received from the
plaintiffs are excipiable and an application for an exception is being prepared
currently.
23 March 2010
Sponsor
J.P.Morgan Equities Limited
Date: 23/03/2010 17:30:01 Produced by the JSE SENS Department.
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