|
HVL
HVL
HVL - Highveld Steel and Vanadium Corporation Limited - Group reviewed results
for the three months ended 31 March 2010
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 RESULTS FOR THE THREE MONTHS ENDED 31 MARCH 2010
Chairman and CEO`s Review
- Group revenue increased by 32% from R927 million for Q1 2009 to R1 223
million for Q1 2010
- Headline loss per share 17.1 cents compared to earnings of 132.8 cents
- Despite markets continuing to marginally improve, Highveld foresees a more
difficult Q2 2010
Business environment
World steel demand is growing faster and earlier than expected, primarily driven
by China`s growth, and is now expected to hit pre-crisis levels this year. It
is expected that global steel use will rise by some 10% to exceed 1.2 billion
tons this year.
South Africa`s manufacturing output has grown by about 3% year-on-year in the
first quarter.
Financial results
The loss for the quarter was R17 million, compared to a profit of R130 million
for 2009. Consequently, earnings per share reduced from 131.0 cents to a loss
of 17.1 cents. Cash flows remain strong.
Operations
Steel
Production performance during Q1 2010 was better than Q1 2009. Sales activity
in Q1 2010 also showed positive trends, with prices increasing. However,
despatches are still being made on orders taken in late 2009 and early 2010 at
low prices, which have a detrimental impact on our margins.
However, steel production for Q1 2010 was seriously compromised against budget
due to intermittent disruptions to gas supplies.
Export sales for Q1 2010 decreased by 39%, compared to Q1 2009 in line as we
focused on the domestic market, which yields higher margins. Hence domestic
sales volumes increased by 116% over the same period.
The Corporation`s crude steel output increased by 30% in the first quarter,
compared to the same period last year and the production of rolled products
increased by 167% for the same period.
Vanadium
A notable recovery is evident in the vanadium market since the year end 2009,
with prices reacting to positive market demand.
A total of 1 901 tons of V in vanadium slag was produced during the quarter,
compared to 930 tons in the same period last year.
The average vanadium price achieved for the period increased with 7%, compared
to the same period last year.
Business risks
The severe impact on production caused by the continual failures of gas supply
during the period remains one of the primary risks of the Corporation. The
Corporation is considering taking recourse against the gas provider. Rail
transport, high energy costs as well as municipal water supply remain serious
business risks.
Safety, health, environment and quality
The Corporation ended with a Lost Time Injury Frequency Rate of 0.32, compared
with 0.34 for the same period last year.
Outlook
The outlook for our steel production for the second quarter is weak, mainly due
to the major production interruptions suffered during April 2010.
Revenue from our vanadium slag sales continues to be strong.
However, barring any unforeseen circumstances and considering the improvement in
demand and prices for both steel and vanadium products, we are expecting to see
improvement as from the second half of 2010.
B J T Shongwe A S MacDonald
(Chairman) (Chief Executive Officer)
13 May 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:
Portion 93 of the farm
Schoongezicht No. 308 JS
District eMalahleni
Mpumalanga
P O Box 111
Witbank 1035
Tel: (013) 690-9911
Fax: (013) 690-9293
Transfer secretaries:
Computershare Investor Services (Proprietary) Limited
70 Marshall Street
Johannesburg
P O Box 61051
Marshalltown 2107
Tel: (011) 370-5000
Fax: (011) 688-5200
Sponsor:
J.P. Morgan Equities Limited
GROUP REVIEWED FINANCIAL RESULTS
Basis of preparation
The Group`s financial results for the quarter ended 31 March 2010 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.
These results are presented in terms of 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 2010.
i) From January 2010 the Group changed its accounting policy for the valuation
of scrap inventory from a cost formula where equal costs were allocated to
scrap than to prime steel, to a cost formula where scrap inventory is
allocated a value equal to the market price of scrap at the time. It is not
possible to apply this change in allocation of costs retrospectively
therefore it is done on all scrap produced from 1 January 2010.
ii) The following Standards, amendment to Standards and Interpretations,
effective in future accounting periods have not been adopted in these
financial statements:
- 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)
- IFRIC 14, Amended - Prepayments of a minimum funding requirement (effective
1 January 2011)
- IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments
(effective 1 July 2010)
The financial information has been reviewed by Ernst & Young Inc. whose
unmodified review report is available for inspection at the Corporation`s
registered office.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed Audited
as at as at as at
31 Mar 31 Mar 31 Dec
2010 2009 2009
Note Rm Rm Rm
ASSETS
Non-current assets 1 868 1 979 1 884
Property, plant and 1 868 1 957 1 884
equipment
Deferred tax asset - 22 -
Current assets 3 041 2 794 3 013
Inventories 1 285 895 1 228
Trade and other 884 784 711
receivables and
prepayments
Cash and short-term 5 872 1 115 1 074
deposits
TOTAL ASSETS 4 909 4 773 4 897
EQUITY AND LIABILITIES
Capital and reserves 3 059 2 962 3 074
Non-current liabilities 721 749 712
Provisions 478 432 469
Deferred tax liability 243 317 243
Current liabilities 1 129 1 062 1 111
Trade and other 818 719 771
payables
Provisions 169 20 182
Income tax payable 142 306 156
Interest-bearing loans 5 - 17 2
and borrowings
TOTAL EQUITY AND 4 909 4 773 4 897
LIABILITIES
Net cash 872 1 098 1 072
Net asset value - cents 3 085 2 987 3 101
per share
CONDENSED CONSOLIDATED INCOME STATEMENT
Reviewed Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Note Rm Rm Rm
Sale of goods 1 223 927 4 252
Revenue 1 223 927 4 252
Cost of sales (1 073) (571) (3 578)
Gross profit 150 356 674
Selling and distribution (60) (213) (243)
costs
Administrative expenses 6 (115) (20) (201)
Other operating 1 (5) (38)
income/(expenses)
Operating (loss)/ profit (24) 118 192
Finance costs (12) (17) (61)
Finance income 11 33 73
(Loss)/Profit before tax (25) 134 204
Income tax 7 8 (4) (41)
credit/(expense)
(Loss)/Profit for the (17) 130 163
period/year
Cents Cents Cents
(Loss)/earnings per share - (17.1) 131.0 164.4
basic and diluted
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Rm Rm Rm
(Loss)/Profit for the (17) 130 163
period/year
Other comprehensive
income/(loss):
Exchange differences on 2 (10) (37)
translation of foreign
operations
TOTAL COMPREHENSIVE (15) 120 126
(LOSS)/INCOME FOR THE
PERIOD/YEAR
HEADLINE EARNINGS PER SHARE
Reviewed Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Rm Rm Rm
Reconciliation of headline
(loss)/earnings
(Loss)/Profit for the (17) 130 163
period/year
Add after tax effect of:
Net gain on disposal and - 1 4
scrapping of property, plant
and equipment
Headline earnings (17) 131 167
Cents Cents Cents
Earnings per share - headline (17.1) 132.8 168.1
and diluted
Number of shares Million Million Million
Ordinary shares in issue as at 99.2 99.2 99.2
end date *+
* Rounded to nearest hundred
thousand
+ Agree to weighted average and
diluted number of ordinary
shares
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD/YEAR ENDED
Issued Other Retained Total
capital capital earnings
and reserves
share
premium
Rm Rm Rm Rm
2009
Balance at 1 January 2009 585 191 2 173 2 949
Total comprehensive (10) 130 120
(expense)/income for the
quarter
Balance at 31 March 2009 - 585 181 2 303 3 069
Reviewed
Total comprehensive (35) 16 (19)
(expense)/income for the
quarter
Balance at 30 June 2009 - 585 146 2 319 3 050
Reviewed
Total comprehensive expense (2) (41) (43)
for the quarter
Balance at 30 September 585 144 2 278 3 007
2009 - Reviewed
Total comprehensive income 9 58 67
for the quarter
Balance at 31 December 2009 585 153 2 336 3 074
- Audited
2010
Total comprehensive 2 (17) (15)
income/(expense) for the
quarter
Balance at 31 March 2010 - 585 155 2 319 3 059
Reviewed
Reviewed Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Cents Cents Cents
Dividends per share
Dividends declared and paid - - -
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Note Rm Rm Rm
Cash flows from operating
activities
Cash (used in)/generated by (131) 9 104
operations before tax paid
Income tax paid - (442) (565)
Net cash used in operating (131) (433) (461)
activities
Cash flows from investing
activities
Proceeds from disposal of - - 164
discontinued operations
Net additions to property, (51) (62) (196)
plant and equipment
Net cash used in investing (51) (62) (32)
activities
Cash flows from financing
activities
Increase/(decrease) in (2) 17 2
short-term loans
Net cash generated by/(used in) (2) 17 2
financing activities
Effects of exchange rate (18) (8) (36)
changes on cash held in
foreign currencies
Net decrease in cash and (202) (486) (527)
cash equivalents
Cash and cash equivalents 1 074 1 601 1 601
at the beginning of the
period/year
Cash and cash equivalents 5 872 1 115 1 074
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
Steel sales to East Metals S.A. (a fellow subsidiary of Mastercroft
Limited) amounted to R104 million (Q1 2009: R232 million) for the three
months ended 31 March 2010. This constitutes 13% of total steel revenue for
the quarter, compared to 14% for the year ended 31 December 2009.
3 Segment Information
The Group is organised into business units based on their products and has
two 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.
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 Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Rm Rm Rm
Revenue from the sale
of goods
Steelworks 839 641 3 208
Vanadium 384 286 1 044
Total 1 223 927 4 252
Intersegment revenue are eliminated on consolidation.
Reviewed Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Rm Rm Rm
Operating (loss)/profit
Steelworks (162) 58 119
Vanadium 138 60 73
Total (24) 118 192
Reviewed Reviewed Audited
as at as at as at
31 Mar 31 Mar 31 Dec
2010 2009 2009
Rm Rm Rm
Total assets
Steelworks 4 399 4 253 4 413
Vanadium 510 520 484
Total 4 909 4 773 4 897
4 Supplementary revenue information - Unaudited
For the For the For the
three three year ended
months months
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Sales volumes of
major products
Total steel Tons 147 119 77 735 580 943
Ferrovanadium kg V 1 749 877 1 075 513 4 883 655
Vanadium slag Tons 1 382 - -
V2O5
Fines ore Tons 138 302 108 352 519 578
Weighted average selling prices achieved for major products
Total steel $/t 700 695 621
Ferrovanadium $/kg V 24 27 23
Vanadium slag $/kg V2O5 6 - 5
Fines ore $/t 34 19 24
Average R/$ 7.52 9.95 8.43
exchange rate
5 Net cash
Net cash is calculated as follows:
Reviewed Reviewed Audited
as at as at as at
31 Mar 31 Mar 31 Dec
2010 2009 2009
Rm Rm Rm
Cash and cash 872 1 115 1 074
equivalents
Bank overdraft included in other - (17) (2)
current liabilities
Net cash 872 1 098 1 072
6 Administrative expenses
Reviewed Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Rm Rm Rm
Included in
Administrative expenses
are:
Compensation for loss of (27) 0 0
office - Chief Executive
Officer and Chief
Operating Officer
Revaluation of foreign (27) 0 (22)
dividend receivable
Reversal of structural 0 27 27
claim provision
7 Income tax
Reviewed Reviewed Audited
for the for the for the
three three year
months months ended
ended ended
31 Mar 31 Mar 31 Dec
2010 2009 2009
Rm Rm Rm
South African
Normal
Current 27 (26) 35
Non-South African
Normal
Current (19) 22 6
Income tax expense 8 (4) 41
The period income tax expense is accrued using the estimated average annual
effective income tax rate applied to the pre-tax income of the interim report.
8 Financial ratios - Unaudited
Current ratio 2.69 2.63 2.71
Market capitalisation - Rm 7 916 7 040 6 394
9 Contingent liabilities
As required by the Mineral and Petroleum Resources Development Act, a
guarantee amounting to R235 million before tax and R169 million after tax
(2009: R235 million before tax and R169 million after tax 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 before tax and R28 million after tax (2009: R39 million
before tax and R28 million after tax).
As required by certain suppliers of the Corporation, guarantees were issued
in favour of these suppliers to the value of R8 million (2009: R8 million)
in the event the Corporation will not be able to meet its obligations to
the supplier.
Date: 13/05/2010 16:30:04 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
