| Wed 31 Aug 2011, 7:05 | | ARI - African Rainbow Minerals Limited - Reviewed Provisional results for |
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ARI
ARIM
ARI - African Rainbow Minerals Limited - Reviewed Provisional results for
the year ended 30 June 2011
African Rainbow Minerals Limited
Incorporated in the Republic of South Africa
Registration number 1933/004580/06
ISIN: ZAE000054045
JSE Share Code: ARI
("ARM" or "the Company")
Reviewed Provisional results for the year ended 30 June 2011
Salient features
Headline earnings increased by 94% to R3.32 billion (F2010: R1.71
billion).The headline earnings per share were 1 559 cents compared to 807
cents in F2010.
Dividend increases substantially by 125% to 450 cents per share (F2010: 200
cents per share).
Cash generated by operations increased by 72% to R5.9 billion from R3.4
billion in F2010.
Robust balance sheet with net cash (excluding partner loans) of R2 594
million (F2010: R1 811 million).
Attributable headline earnings from iron ore increased 224% to R2.3
billion.
Increase in production volumes in the ARM Ferrous Division as well as at
the Nkomati Nickel and Goedgevonden Coal operations.
Unit operating costs well controlled at the manganese ore, ferrochrome, Two
Rivers and Modikwa platinum operations.
Good progress in growth projects:
- Khumani Iron Ore Expansion Project from 10 to 16 million tonnes per annum
ahead of schedule and well within budget.
- Nkomati Nickel Mine expansion commissioned, plant recoveries lower than
anticipated due to oxidised ore.
- The Goedgevonden Coal Mine at full production.
- Konkola North Copper Project progresses on budget and on schedule to
produce first copper in December 2012.
ARM operational review
The ARM Board of Directors (the Board) announces significantly improved
earnings for the financial year ended 30 June 2011 (F2011). During this
period headline earnings increased 94% to R3 319 million or 1 559 cents per
share. The increase in earnings was driven mainly by improved dollar
commodity prices especially for iron ore. The positive impact of these
increased prices was however reduced by the strengthening of the Rand
versus the US Dollar. The average Rand/US Dollar exchange rate strengthened
by 7.9% from R7.59/US$ in the 2010 financial year (F2010) to R6.99/US$ in
F2011.
The provisional results for the year ended 30 June 2011 have been prepared
in accordance with and containing the information required by International
Financial Reporting Standards (IFRS) and the disclosures are in accordance
with IAS 34: Interim Financial Reporting.
Rounding of figures may result in computational discrepancies on the
tabulations.
Building on the successful completion of the 2 X 2010 growth strategy to
double production between 2005 and 2010, ARM continues with its aggressive
growth strategy with four major growth projects namely the Khumani Iron Ore
Expansion Project, the Nkomati Large Scale Nickel Expansion, the
Goedgevonden (GGV) Coal Mine and the Konkola North Copper Project.
The Khumani Iron Ore Expansion Project which will increase production from
10 to 16 million tonnes per annum, 2 million tonnes of which is for local
sales, continues ahead of schedule and is well within budget.
The GGV Coal Mine achieved full production on a monthly basis in November
2010. Export sales from GGV were however negatively affected by challenges
within Transnet Freight Rail (TFR). Local sales to Eskom were also affected
by logistical constraints both by rail and road.
At the Nkomati Nickel Mine the 250 thousand tonnes per month (ktpm)
Chromotitic Peridotite Mineralised Zone (PCMZ) concentrator plant was
commissioned on time and within budget in October 2010 and continues to
ramp-up. Grade and recovery challenges arising from the complexity and
oxidation of the ore did however negatively affect both concentrator plants
at the mine and resulted in substantially lower than expected production of
nickel, platinum group metals (PGMs) and copper. This is expected to be a
temporary problem which will be resolved as the quality of the ore improves
with depth. The management team has also taken active steps to manage this
challenge by increasing mining flexibility through advanced waste
stripping.
Development of the Konkola North Copper Project is progressing on time and
within budget with approximately 82% of the authorised US$391 million (in
July 2010 terms) already contracted for.
Contribution to headline earnings
Commodity group 12 months ended 30 June
Reviewed Audited
R million 2011 2010 % change
Platinum Group Metals 350 315 11
Nkomati nickel and chrome 110 206 (47)
Ferrous metals 2 897 1 364 112
Coal (103) (17) >(200)
Exploration (173) (143) (21)
Gold 32 32 -
Corporate and other 206 (43) -
ARM headline earnings 3 319 1 714 94
These results have been achieved in conjunction with ARM`s partners at the
various operations, Anglo American Platinum Limited ("Anglo Platinum"),
Assore Limited ("Assore"), Impala Platinum Holdings Limited ("Implats"),
Norilsk Nickel Africa (Pty) Limited ("Norilsk"), Xstrata Coal South Africa
(Pty) Limited ("Xstrata") and Vale S A ("Vale").
Volumes
Sales volumes in iron ore, manganese ore and coal were negatively affected
by logistical constraints whilst sales volumes at Nkomati Mine were
impacted by head grade and plant recovery problems as the Large-Scale
Nkomati Expansion Project ramps-up. Increases in sales volumes were
achieved as follows:
- 133% increase in GGV coal sales to Eskom from 1.17 million tonnes to 2.73
million tonnes
- 124% increase in GGV export coal sales from 1.19 million tonnes to 2.67
million tonnes
- 37% increase in ARM Ferrous chrome ore sales from 272 thousand to 373
thousand tonnes
- 26% increase in chrome alloy sales from 189 thousand to 238 thousand
tonnes
- 22% increase in Nkomati chrome concentrate sales from 313 thousand to 381
thousand tonnes
- 2% increase in iron ore sales volumes from 9.8 million tonnes to 10
million tonnes
Production volumes however were strong with increases as follows:
- 115% increase in GGV saleable coal production from 2.7 million tonnes to
5.9 million tonnes
- 54% increase in manganese ore production from 1.9 million tonnes to 3.0
million tonnes
- 48% increase in chrome ore production from 587 thousand tonnes to 866
thousand tonnes
- 19% increase in chrome alloy production from 200 thousand to 237 thousand
tonnes
- 15% increase in manganese alloy production from 252 thousand to 291
thousand tonnes
- 4% increase in nickel tonnes produced from 9 666 tonnes to 10 100 tonnes
The increase in production without the commensurate increase in sales
resulted in increased stock levels for coal, manganese ore, chrome ore and
nickel at the financial year end positioning these operations well to
deliver into the market in the coming financial year.
Solid cost control
ARM continues to pursue its strategic objective to have all operations
positioned below the 50th percentile of the respective commodities` global
unit cost curves by the year 2012 (2014 and 2015 targeted for the Nkomati
Nickel Mine and the Konkola North Copper Mine respectively). In F2011 ARM
achieved unit cost reductions at its manganese ore and chrome alloy
operations. Single digit unit cost increases were achieved at the Modikwa
Platinum Mine on a Rand per tonne milled and at Two Rivers Platinum Mine on
a Rand per PGM ounce basis. As at 30 June 2011 ARM is well on track to meet
its cost positioning target for all its operations with the exception of
the chrome alloy operations. As such ARM is in the process of reducing its
chrome alloy production and has successfully completed the conversion of
one chrome alloy furnace at Machadodorp Works into a ferromanganese furnace
and plans to convert two additional furnaces within the next 15 months.
This conversion strategy will ensure improved cost positioning for the
Machadodorp Works.
Changes to ARM Exploration Division
ARM is conscious of the need to ensure continued growth beyond the ore
bodies that currently comprise its portfolio and as such has implemented
changes to the corporate structure to further strengthen the ARM
Exploration Division. Effective from 1 July 2011, the copper exploration
assets that previously formed part of ARM Exploration, including a 30%
shareholding in the Kalumines Copper Project and a 50% shareholding in the
Lusaka & Kabwe Project, will be moved into the ARM Copper Division. This
change will allow the ARM Exploration Division to sharpen its focus on
identifying and assessing quality business opportunities in Sub-Saharan
Africa. A highly skilled and experienced exploration team has been
established and will be under the leadership of Mr Jan Steenkamp (who is
also currently the Chief Executive of ARM Ferrous).
Work in ARM Exploration is already under way and in July 2011 ARM signed an
agreement with Rovuma Resources, a Mozambican exploration company, to
explore for manganese ore, nickel, PGMs and base metals in Mozambique. In
terms of the agreement ARM will fund ongoing exploration at an estimated
cost of US$7 million per annum and will have exclusive rights to exercise
options to purchase prospecting/ mining rights to the resources.
CEO succession
After a comprehensive search process ARM announced on 23 June 2011 the
appointment of Mr Michael (Mike) Schmidt, a senior executive in the ARM
Platinum Division, as the CEO designate from 1 September 2011. To ensure an
efficient transition period Mr Mike Schmidt will work with the incumbent
CEO, Mr Andre Wilkens, for a period of six months and then take over from 1
March 2012.
Changes to resources and reserves
Please note the following material changes to the mineral resources and
reserves relative to the resources and reserves disclosed in the Integrated
Annual Report in 2010 as follows:
- Two Rivers Merensky reef Indicated Resource tonnage increased by 105% due
to the re-evaluation of the full Merensky reef. Previously only a top cut
of 120 centimetres had been reported.
- An increase of 79% in Measured and Indicated Resource tonnage for Gloria
Mine (Black Rock Mine Operations) lower seam due to in-fill drilling which
increased the resource confidence and resulted in the movement of resources
from the Inferred category.
At all other operations there has been no material change to the ARM
mineral resources and reserves as disclosed in the Integrated Annual Report
for the financial year ended 30 June 2010, other than depletion due to
continued mining activities at the operations.
Financial commentary
Headline earnings for the year to 30 June 2011 at R3 319 million were 94%
or R1 605 million higher than the prior year headline earnings (F2010: R1
714 million).
Sales for the year increased by 35% to R14.9 billion (F2010: R11.0
billion). The average gross profit margin of 40% (F2010: 32%) is
substantially higher than the previous year largely due to increased US
Dollar commodity prices for most commodities.
The F2011 average Rand/US Dollar of R6.99/US$ is 7.9% lower than the
average of R7.59/US$ for F2010. For reporting purposes the closing exchange
rate was R6.76/US$ (F2010: R7.67/US$).
ARM`s earnings before interest, tax, depreciation and amortisation (EBITDA)
excluding exceptional items and income from associates were R6.4 billion,
which represents an increase of 65% or R2.5 billion over F2010.
The detailed segmental contribution analysis is provided in note 2 to the
financial statements.
- The ARM Ferrous contribution to ARM`s headline earnings amounted to R2
897 million (F2010: R1 364 million). This is an increase of 112% compared
to the F2010 result.
- The ARM Platinum segment contribution, which includes the results of
Nkomati, was R460 million which is 12% lower than the F2010 result of R521
million largely due to a decline in the contribution from Nkomati Nickel
Mine.
- The ARM Coal segment result was a loss of R103 million (F2010: R17
million loss) as a result of increased amortisation and interest charges.
- ARM Exploration costs increased relative to the previous year at R173
million (F2010: R143 million cost). All costs on the Konkola North Copper
Project including exploration costs on Area "A" are being capitalised.
- The Corporate, other companies and consolidation segment shows a positive
contribution of R206 million for the year as compared to a R43 million loss
for F2010. This increase is largely a result of consolidation accounting
adjustments to reverse self-insurance premiums expensed by individual
operations.
- Included in the Gold segment is a dividend of R32 million received in
October 2010 from ARM`s investment in Harmony relating to their F2010
results.
ARM`s basic earnings for F2011 approximate the reported headline earnings
as exceptional items amounted to an R8 million loss for the year (F2010:
R98 million gain).
The net cash position at 30 June 2011 amounts to R599 million and is an
improvement of R906 million relative to the net debt position of R307
million at 30 June 2010.
- Cash generated from operations increased by R2 468 million from R3 430
million to R5 898 million after working capital requirements of R640
million resulting from the increased activity levels at operations.
- Capital expenditure amounted to R3 404 million for the year (F2010: R2
738 million) and was mainly expended on the growth projects of Khumani,
Nkomati and Konkola North.
- Net cash at 30 June 2011 excluding partner loans (Impala Platinum: R73
million, Anglo Platinum: R114 million and Xstrata: R1.8 billion) amounted
to R2.6 billion as compared to R1.8 billion at 30 June 2010.
The consolidated ARM total assets of R32.3 billion (F2010: R28.2 billion)
include the mark-to-market valuation of ARM`s investment in Harmony of R5.7
billion at a share price of R89.95 per share (F2010: R81.40 per share).
The effective tax rate for the year including Secondary Tax on Companies
remained fairly constant at 32.3% for the year (F2010: 33.8%). The expense
for mineral royalty tax is included in Other Expenses and amounts to R162
million for the year (F2010: R19 million - representing four months).
State`s share of profits for manganese ore sales amounts to R93 million for
the year (F2010: R80 million) and is included in the taxation charge.
Since the year-end the portion of the insurance claim relating to the
furnace explosion at the Cato Ridge Works, claimable against the local
reinsurers, was settled on 26 August 2011. The portion attributable to ARM
will be approximately R60 million after tax. The results to 30 June 2011
have not been adjusted as the impact is not considered material.
Safety
ARM accomplished a notable improvement in its safety performance during the
financial year. The number of lost-time injuries (LTIs) was reduced from
165 in F2010 to 109 in F2011. The lost-time injury frequency rate (LTIFR)
calculated on 200 000 man hours worked was 0.43 compared with 0.77 in the
previous financial year.
Regrettably, a fatality occurred at Machadodorp Works during the year. On 2
February 2011 Mr. Solomon Vusi Sindane, a trainee crane operator was
fatally injured at furnace No. 2. ARM together with its Board of Directors
would like to extend our sincerest condolences to Mr. Sindane`s family,
friends and colleagues for their loss.
Achievements
- Modikwa Platinum Mine achieved 8 000 000 fatality-free shifts on 21 June
2011, and has been awarded the Department of Mineral Resources (DMR) Safety
Achievement Flag for Platinum Mines, which will be proudly displayed at
Modikwa throughout 2011. According to the Modikwa team, this huge safety
success is attributable to the diligent adherence to standards and the
practising of one of Modikwa`s core values "of caring for each other".
- Beeshoek Iron Ore Mine recorded 8 000 fatality-free production shifts in
the DMR (Northern Cape) safety competition. During the third quarter,
Beeshoek also achieved 12 months without a lost-time injury.
- On 11 November 2010, Two Rivers Platinum Mine completed 2 000 000
fatality-free shifts.
- Khumani Iron Ore Mine achieved its first 1 000 000 fatality-free shifts
in November 2010 and was awarded the St Barbara floating trophy.
- Black Rock Manganese Mine achieved 1 000 000 fatality-free shifts during
the fourth quarter.
Safety figures and statistics in this report are presented on a 100% basis
and exclude the ARM Coal operations.
ARM Ferrous
For the financial year ended June 2011, Assmang Limited (Assmang) achieved
a 112% increase in headline earnings to R5.8 billion (F2010: R2.7 billion).
Dollar commodity prices increased across all Assmang`s ferrous metals with
iron ore prices increasing by 130% and chrome ore prices by 56%. Manganese
ore prices increased 23% whilst the prices of manganese and chrome alloys
were 24% and 20% higher respectively. The positive impact of the increased
commodity prices was however subdued by a stronger Rand versus the US
Dollar.
Iron ore sales volumes increased by 2% to 10 million tonnes, while
manganese ore sales (excluding intragroup sales) decreased by 7% to 3
million tonnes. Chrome ore sales excluding intragroup sales increased by
37% to 373 thousand tonnes. Manganese alloys` sales volumes decreased by 8%
to 218 thousand tonnes, whilst sales of chrome alloys increased by 26% to
238 thousand tonnes.
Accelerated ramp-up of the Khumani Iron Ore Mine Expansion Project to 16
million tonnes per annum (mtpa) coupled with production losses due to high
summer rainfall resulted in a 21.6% increase in iron ore production unit
costs. On-mine production unit costs at the manganese ore operation
decreased by 2.5% and at the chrome ore operations by 4.6% as a result of
increased production. Above inflation unit cost increases at the manganese
alloys operations of 12.9% were due to price increases in electricity and
reductants, as well as lower production due to the rebuild of furnaces 1
and 2. Increased production resulted in a 1.4% reduction in chrome alloy
unit costs.
Total capital expenditure was R4.1 billion (F2010: R3.3 billion). The main
expenditure items include R2.8 billion on infrastructure development at the
Khumani Iron Ore Expansion Project and R313 million for rebuilding furnaces
at Cato Ridge and Machadodorp Works. The remaining capital was spent on IT
related projects, vehicles and other equipment replacements.
Assmang headline earnings
100% basis 12 months ended 30 June
Reviewed Audited
R million 2011 2010 % change
Iron ore division 4 654 1 436 224
Manganese division 1 377 1 478 (7)
Chrome division (234) (185) (26)
Total 5 797 2 729 112
Headline earnings attributable to 2 897 1 364 112
ARM (50%)
Assmang production
100% basis 12 months ended 30 June
Reviewed Audited
Thousand tonnes 2011 2010 % change
Iron ore 9 685 9 286 4
Manganese ore 3 048 1 973 54
Manganese alloys 291 252 15
Charge chrome 237 200 19
Chrome ore 866 587 48
Assmang sales volumes
100% basis 12 months ended 30 June
Thousand tonnes 2011 2010 % change
Iron ore 10 006 9 799 2
Manganese ore* 2 882 3 095 (7)
Manganese alloys 218 238 (8)
Charge chrome 238 189 26
Chrome ore* 373 272 37
* Excluding intra-group sales
Assmang cost and EBITDA margin performance
Rand per tonne EBITDA
cost change margin
Commodity group % %
Iron ore 21.6 68.4
Manganese ore (2.5) 47.4
Manganese alloys 12.9 22.5
Charge chrome (1.4) (6.8)
Assmang capital expenditure
100% basis 12 months ended 30 June
Reviewed Audited
R million 2011 2010
Iron ore 3 225 2 304
Manganese 656 743
Chrome 216 289
Total 4 097 3 336
Khumani Iron Ore Mine Expansion Project
The 16 mtpa Khumani Iron Ore Expansion Project is progressing well within
budget and is currently nine months ahead of schedule. R5 billion of the
total project cost of R6.7 billion was spent as at 30 June 2011.
Conversion of chrome furnaces to manganese furnaces
The No. 5 Furnace at Machadodorp Works was successfully converted from a
ferrochrome to a high carbon ferromanganese furnace at the beginning of the
financial year. Production of ferromanganese from this furnace exceeded
production and efficiency targets at reduced costs.
After the successful conversion of the No. 5 Furnace, a decision was made
to convert further furnaces and as such Assmang announced on 30 June 2011 a
plan to convert No. 2 and 3 furnaces to produce high carbon ferromanganese.
There are a number of engineering modifications required and certain
logistical issues that need to be addressed prior to the conversion being
implemented. This conversion is anticipated to commence during the first
quarter of the 2012 calendar year, and ferromanganese production to
commence from the third quarter of 2012.
This conversion will increase Assmang`s high carbon ferromanganese
production by approximately 100 000 tonnes per annum, bringing its total
capacity to some 375 000 tonnes per year. Key ferrochrome customers will
continue to be supplied from the No. 1 Furnace at Machadodorp Works.
Logistics
Assmang`s iron ore export rail capacity throughput was negatively affected
by abnormal rainfall in the Northern Cape. Assmang and Transnet are in
continued negotiations with respect to capacity allocations and future
export growth.
The iron and manganese ore industries, together with Transnet, have
embarked on a joint feasibility project to expand the current Saldanha
Export Channel to beyond 60 mtpa. Completion of this feasibility study is
expected at the end of the 2011 calendar year.
Assmang and Transnet have an agreement, expiring on 31 March 2013, to
export manganese ore through Port Elizabeth. Manganese ore stockpile and
export capacity has also been secured at the Durban and Richards Bay ports
until June 2014.
Assmang is endeavouring to reduce the current amount of road transport
utilised for both raw materials and final product. This is dependent on
operational service levels achieved by Transnet and future rail and port
capacity.
Projects
A feasibility study to increase the manganese ore capacity from 3 mtpa to 6
mtpa is in progress. Two new shafts and a new beneficiation plant for the
Gloria Mine, as well as new load-out infrastructure will be required to
increase production to 6 mtpa.
The feasibility study to establish a new 4 mtpa operation at Beeshoek Mine
has been completed. First production is planned to commence during the
latter part of 2013 from a new established mining area. Initial development
will include new housing accommodation, upgraded infrastructure and new
load-out facilities.
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%.
ARM Platinum
ARM Platinum`s attributable headline earnings decreased by R61 million
(12%) to R460 million. PGM production (on 100% basis and including Nkomati)
reduced to 680 108 ounces (F2010: 688 957 ounces) while total nickel
produced increased 4% to 10 100 tonnes (F2010: 9 666 tonnes). The head
grade and plant recoveries at Nkomati were substantially lower than
planned. With respective unit costs of R4 499/PGM oz and R4 979/PGM oz, Two
Rivers and Modikwa continue to be positioned below the 50th percentile of
the global PGM cost curve.
Notwithstanding a 7.9% strengthening in the Rand against the US Dollar, the
basket prices for Modikwa and Two Rivers increased by 17% and 12% to R263
530/kg and R277 279/kg respectively. Realising the debtors at 30 June 2010
resulted in a negative mark-to-market adjustment of R23 million (F2010:
positive R50 million).
The table below sets out the relevant price comparison:
Average metal prices
Average for 12 months ended 30 June
2011 2010 % change
Platinum $/oz 1 707 1 453 17
Palladium $/oz 680 393 73
Rhodium $/oz 2 248 2 173 3
Nickel $/t 23 970 20 285 18
ARM Platinum capital expenditure
100% basis 12 months ended 30 June
Reviewed Audited
2011 2010 % change
Modikwa 250 102 145
Two Rivers 304 97 213
Nkomati 808 1 202 (33)
Total 1 362 1 401 (3)
The capital expenditure at ARM Platinum was R1.36 billion (R833 million
attributable). Capital expenditure on a 100% basis at the Nkomati Nickel
Mine was R808 million of which R690 million was for the completion of the
Large Scale Expansion Project and the pre-stripping of Pit 3. The balance
was to sustain operations. Modikwa`s major capital items include the
deepening of North shaft, commencement of the sinking of South 2 shaft, an
underground mining fleet replacement programme, as well as the
establishment of an open pit UG2 operation. At Two Rivers, 40 percent of
the capital spent relates to an underground mining fleet replacement
programme, with the balance incurred for the commencement of deepening both
the Main and North declines.
Modikwa operational statistics
100% basis 12 months ended 30 June
2011 2010 % change
Cash operating profit R million 572 665 (14)
Tonnes milled Mt 2.30 2.27 1
Head grade g/t, 6E 5.48 5.53 (1)
PGMs in concentrate Ounces, 6E 319 336 339 623 (6)
Average basket price R/kg, 6E 263 530 225 865 17
Average basket price $/oz, 6E 1 172 928 26
Cash operating margin % 26 31
Cash cost R/kg, 6E 160 084 137 241 17
Cash cost R/tonne 692 639 8
Cash cost R/Pt oz 12 468 11 025 13
Cash cost R/oz, 6E 4 979 4 269 17
Cash cost $/oz, 6E 712 564 26
Headline earnings R million 122 135 (10)
attributable to ARM
(41.5%)
Modikwa
Modikwa`s tonnes milled and head grade remained constant. 281 000 tonnes of
open pit material was treated during the period. As the open pit material
is oxidised, plant recoveries on this material were lower at 45%, resulting
in PGM ounces decreasing to 319 336 ounces (F2010: 339 623 ounces). The
mine also experienced numerous delays due to Section 54 stoppages. Unit
costs increased 8% to R692 per tonne milled (F2010: R639 per tonne milled)
and as a result of the open pit material, Rand unit cost per 6E PGM ounce
increased 17% to R4 979 per ounce (F2010: R4 269 per ounce).
On 21 June 2011 Modikwa Platinum Mine set a new standard in the industry by
achieving 8 million fatality-free shifts.
Two Rivers operational statistics
100% basis 12 months ended 30 June
2011 2010 % change
Cash operating profit R million 881 837 5
Tonnes milled Mt 2.95 2.92 1
Head grade g/t, 6E 3.94 3.95 -
PGMs in concentrate Ounces, 6E 307 162 296 760 4
Average basket price R/kg, 6E 277 279 247 323 12
Average basket price $/oz, 6E 1 233 1 016 21
Cash operating margin % 39 40
Cash cost R/kg, 6E 144 638 134 213 8
Cash cost R/tonne 468 425 10
Cash cost R/Pt oz 9 509 8 792 8
Cash cost R/oz, 6E 4 499 4 174 8
Cash cost $/oz, 6E 643 551 17
Headline earnings R million 228 180 27
attributable to ARM (55%)
Two Rivers
Tonnes milled and head grade at Two Rivers remained constant, but an
increase in recoveries resulted in a 4% improvement in yield to 307 162 PGM
ounces (F2010: 296 760 ounces). At year end, the surface stockpile was 85
246 tonnes. Unit costs increased by 8% to R4 499 per 6E PGM ounce (F2010:
R4 174 per 6E PGM ounce). Costs associated with trial mining on the
Merensky Reef, a brownfields project, have been expensed and therefore
contribute to increasing unit costs.
Two Rivers surpassed 48 months fatality free during July 2011.
The earnings of Two Rivers were negatively affected by interest charged on
the shareholder`s loans from ARM and Implats. Interest was charged at a
rate of 6.5% per annum as at 30 June 2011 (F2010: 8%).
Nkomati operational statistics
100% basis 12 months ended 30 June
2011 2010 % change
Cash operating profit R million 824 916 (10)
- Nickel Mine R million 256 584 (56)
- Chrome Mine R million 567 332 71
Cash operating margin % 28 38
Tonnes milled Mt 5.26 3.31 59
Head grade % nickel 0.32 0.45 (29)
Nickel on-mine cash cost R/tonne 271 242 12
per tonne milled
Cash cost net of by- $/lb 4.99 3.26 53
productsper nickel pound
produced *
Contained metal
Nickel Tonnes 10 100 9 666 4
PGMs Ounces 53 610 52 574 2
Copper Tonnes 5 210 5 210 -
Cobalt Tonnes 553 578 (4)
Chrome ore sold Tonnes 334 803 502 281 (33)
Chrome concentrate sold Tonnes 381 196 313 735 22
Headline earnings R million 110 206 (47)
attributable to ARM (50%)
* This reflects US Dollar cash costs net of by-products (PGMs, copper,
cobalt and chrome) per pound of nickel produced
Nkomati
Availability and utilisation of the primary crusher improved during the
last six months as a result of improved maintenance and operating
practices. Ore fragmentation in the crusher feed improved significantly,
resulting in an increased crusher feed rate. The focus during the next six
months will remain on further optimisation of maintenance practices, ore
fragmentation and ore loading rates to achieve sustainable production.
During the last six months of F2011, Nkomati delivered disappointing
results ascribed to various production complications, mainly attributed to
lower than expected head grade, recovery as well as operational
inefficiencies at both concentrator plants.
The 250 ktpm PCMZ plant was completed on time and within budget and
commissioned in October 2010. Design milling capacity on this plant was
achieved in June 2011. Nkomati`s total tonnes milled increased by 59% year
on year, but due to the problems discussed below, only yielded 4% more
nickel.
Chrome ore sales decreased to 334 803 tonnes (F2010: 502 281 tonnes) while
chrome concentrate sales increased by 22% to 381 196 tonnes (F2010: 313 735
tonnes).
Head grade and plant recoveries
Mining operations at Nkomati moved from the now depleted Pit 2, to Pit 3 in
February 2011. This resulted in the head grade of the Main Mineralised Zone
(MMZ) concentrator plant reducing from 0.4% to 0.3% nickel. Furthermore the
complexity of the ore body exacerbated by highly oxidised ore reduced
recoveries from the newly exposed Pit 3 shallow mining areas. This has a
direct impact on the concentrator plant recoveries, which are currently
running on average 8% below anticipated levels of approximately 68%.
The independent confirmation of nickel concentrate assay results taken
prior to shipment were significantly delayed during the financial year. The
delay in obtaining assay confirmations was due to the stockpiling of
Nkomati concentrate at the smelter in Finland. Once these confirmations
were received it became evident that the on-site assay results were
overstated thereby masking the problem of reduced plant recoveries. This
matter has been addressed by management by inter-alia appointing an
independent assay laboratory for the performance of testing until such time
as the on-site laboratory is accredited. The nickel units produced, which
were previously reported for the first half of the 2011 financial year (1H
F2011) as 5 321 tonnes, have been adjusted to 4 886 tonnes.
Due to timing of the shipments the Nkomati Nickel Mine had 720 tonnes
nickel in concentrate stock at the port at year end.
Variability as a result of the shallow oxidised ore is a temporary problem;
management is confident that ore quality will improve when the oxidised
zone is mined out over the next 18 months. To further mitigate the effect
of the complex ore body and to create increased mining flexibility, Nkomati
has now commenced with advanced stripping of 4 million tonnes of waste,
which will continue until November 2011.
Cash cost
Unit cost increased by 12% year on year to R271 per tonne milled and cash
cost net of by-products (C1 cash cost) increased from US$3.26/lb to
US$4.99/lb for the same period. The increase in C1 cash cost is caused by
the following, most of which is attributable to 2H F2011:
- Reduced nickel and by-products production as a result of the grade and
recovery issues discussed above.
- Termination of the capitalisation of pre-production working costs. In 1H
F2011 R287 million was capitalised, in contrast to R43 million in 2H F2011.
- Higher than anticipated drilling and blasting costs caused by the ore
variability.
- Excessive ore re-handling.
- Increased cost incurred on steel balls and reagents to improve plant
efficiencies.
Projects
Modikwa expansion
The feasibility study for the Phase 2 UG2 replacement and expansion project
was completed and presented to Modikwa`s shareholders for approval. In the
interim an amount of R125 million was approved to continue mining
development for the South 2 declines and the deepening of North shaft.
Two Rivers additional ore sources
As part of a feasibility study, Two Rivers is currently conducting Merensky
reef trial mining. A bulk sample of 70 000 tonnes was mined and will be
processed in September 2011. A feasibility study for the North open pit is
in progress.
Nkomati Nickel Large Scale Expansion Project
Total funds committed at 30 June 2011 amount to R3.5 billion of the total
R3.7 billion approved for the capital project. The next phase of the Eskom
power supply project is the upgrade of the 132kV overhead distribution
lines and we anticipate this to be completed by December 2011. Nkomati`s
Eskom Electricity Supply Agreement was concluded in December 2010.
Kalplats PGM Exploration Project
Platinum Australia (PLA) submitted a Definitive Feasibility Study (DFS) to
ARM Platinum for review. The review is still in progress but the joint
venture has agreed that carrying out pilot plant scale metallurgical test
work on a bulk sample from the existing box cut on the Crater deposit will
provide a more accurate estimate of the full scale plant recovery. The bulk
sample programme and test work is planned for the first half of F2012.
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
Although ARM Coal experienced a challenging year, attributable cash
operating profit increased by R67 million from R376 million to R443
million. Headline earnings attributable to ARM declined by R86 million to a
R103 million loss. The deterioration in headline earnings can mainly be
ascribed to increased amortisation and interest charges. The rise in
interest charges is due the termination of the capitalisation of interest,
an increase in borrowing levels on existing facilities and a new facility
entered into for the funding of ARM Coal`s shareholding in Richards Bay
Coal Terminal Phase V. Interest charges are anticipated to remain at these
levels for the next year as borrowings for GGV peaks.
Notwithstanding that the coal processing plant at Goedgevonden Mine did not
consistently perform to design capacity, saleable production increased by
115% compared to F2010 as the mine continued to ramp-up towards full
production. The Participative Coal Business (PCB) operations experienced a
very challenging year resulting in saleable production being 29% lower than
F2010. The decline in production was due to a delay in the commissioning of
the iMpunzi East project, rationalisation of opencast and underground
production at Tweefontein and the unplanned closure of the 5 seam
operation. Run of Mine (ROM) stock levels at both GGV and PCB increased
substantially during the year due to the coal processing plants not
reaching consistent design capacity performance. Sufficient stock is
available for plant feed when the GGV and iMpunzi East processing plants
reach steady state design capacity. The challenges on the TFR line to
Richards Bay Coal Terminal (RBCT) resulted in high levels of export
saleable product stock on the mines, placing the operations in a good
position to meet any improvement in TFR`s performance.
The API 4 coal prices increased from approximately US$93/t in June 2010 to
US$116/t in June 2011 but ARM Coal did not benefit from this as the major
portion of sales were concluded at previously negotiated long-term contract
prices and also as a result of lower quality coal sales to the Asian
markets.
The average export coal prices realised by ARM Coal did however increase by
17% from US$67/t in F2010 to US$78/t in F2011.
Goedgevonden Coal Mine (GGV)
Ramp-up continued during the year, increasing ROM production by 86%
compared to F2010. All coal processing plant modules were commissioned in
F2011 and although the plant did not consistently perform to design
capacity, saleable production increased by 115% from 2.7 million tonnes to
5.9 million tonnes.
Eskom and export sales volumes increased by 133% and 124% respectively
during F2011, but the challenges at TFR continue to have a negative impact
on sales volumes. During 2H F2011 approximately seven weeks of railing were
lost due to derailments, industrial action and the extended closure of the
line for maintenance.
Attributable cash operating profit increased by 92% from R112 million to
R214 million. The increase in sales volumes resulted in attributable
revenue being R258 million higher than F2010. Total on mine operating costs
increased by R300 million in line with the increase in production volumes.
The capitalisation of working costs and interest was terminated when the
mine reached steady state production during the review period. Operating
costs per saleable tonne increased by 18% to R166 per tonne (F2010: R141
per tonne).
Although attributable consolidated cash operating profit increased by just
over R100 million, headline earnings remained relatively constant at R32
million as a result of an increase in depreciation and finance costs. The
amortisation increased in line with the increase in ROM production and
sales volumes which form the basis for calculating the amortisation charge.
Goedgevonden operational statistics
100% basis 12 months ended 30 June
2011 2010 % change
Total production sales
Saleable production Mt 5.87 2.73 115
Export thermal coal sales Mt 2.67 1.19 124
Eskom thermal coal sales Mt 2.73 1.17 133
Attributable production and
sales
Saleable production Mt 1.53 0.71 115
Export thermal coal sales Mt 0.69 0.31 124
Eskom thermal coal sales Mt 0.71 0.30 133
Average received coal price
Export (FOB) $/tonne 77.00 67.84 14
Eskom (FOT) R/tonne 183.05 154.43 19
Local (FOR) R/tonne 251.26 467.72 (46)
Exchange rate R/US$ 6.99 7.59 (8)
On mine saleable cost R/tonne 165.85 141.03 (18)
Cash operating profit
Total R million 824 430 92
Attributable (26%) R million 214 112 92
Headline earnings R million 32 34 (6)
attributable to ARM
Attributable profit analysis
12 months ended 30 June
Reviewed Audited
2011 2010 % change
Operating profit 214 112 92
Less: interest paid (82) (5) >(100)
Less: amortisation (77) (47) (64)
Less: fair value adjustments (17) (13) (31)
Profit before tax 38 47 (19)
Tax (5) (13) 62
Headline earnings attributable to 32 34 (6)
ARM
Participating Coal Business (PCB)
ROM and saleable production during F2011 were 12% and 29% lower
respectively when compared to F2010. Almost all of the operations
comprising the PCB produced less ROM and saleable coal during F2011. F2010
attributable saleable production included 271kt of low quality product that
was sold to Eskom at a reduced price. From 1 March 2011 ARM commenced
treating the Mpumalanga assets as an asset held for sale and consequently
also excluded attributable ROM and saleable production of 128kt and 69kt
respectively from these two mines from its production figures.
Production was affected by excessive rain during December 2010, the late
commissioning of the iMpunzi East project, the planned rationalisation of
underground and opencast mining at the Tweefontein division and the
unplanned closure of the 5 seam operation. Both modules of the new coal
processing plant at ATCOM East were commissioned during 2H F2011 and it is
anticipated that the 1 700 tonnes/hour design capacity will be achieved in
1H F2012.
Attributable revenue was R90 million lower in F2011 compared to F2010
comprised of a negative volume variance of R210 million, a negative
exchange rate variance of R71 million offset to some degree by a favourable
price variance of R191 million.
Domestic demand continued to decline which resulted in a 33% reduction in
sales volumes. The continued underperformance of TFR resulted in a 14%
decrease in export sales volumes. During 2H F2011 several weeks were lost
due to derailments, industrial action and the extended closure of the line
for maintenance. Average Eskom prices achieved during F2011 reflected an
increase of R42.71 (68%) as 25% of the F2010 sales comprised volumes of
lower quality product sold to Eskom at a much reduced price.
Total on mine cash costs for F2011 was marginally lower than F2010 but the
average cost per saleable ton increased by 35% to R338 per tonne in F2011
compared to R250 in F2010 due to lower volumes and the transition of PCB to
open cast mining.
Attributable headline earnings declined from a R51 million loss to a R135
million loss mainly due to a decrease of R35 million in operating profit,
an increase in finance costs as a result of an increase in borrowings and
an increase in amortisation.
During F2011 Xstrata successfully negotiated the sale of the Mpumalanga
assets located in Ermelo. All agreements have been signed and the
transaction is subject to some conditions precedent which are expected to
be achieved by December 2011. ARM has treated these assets as "assets held
for sale" with effect from 1 March 2011.
Participating Coal Business (PCB) operational statistics
100% basis 12 months ended 30 June
2011 2010 % change
Total production sales
Saleable production Mt 12.85 18.20 (29)
Export thermal coal sales Mt 9.20 10.67 (14)
Eskom thermal coal sales Mt 2.78 5.23 (46)
Local thermal coal sales Mt 1.22 1.80 (33)
Attributable production and
sales
Saleable production Mt 2.59 3.68 (29)
Export thermal coal sales Mt 1.86 2.15 (14)
Eskom thermal coal sales Mt 0.57 1.06 (46)
Local thermal coal sales Mt 0.24 0.36 (33)
Average received coal price
Export (FOB) $/tonne 79.30 66.88 19
Eskom (FOT) R/tonne 105.98 63.27 68
Local (FOR) R/tonne 296.59 263.50 13
Exchange rate R/US$ 6.99 7.59 (8)
On mine saleable cost R/tonne 338.07 250.00 (35)
Cash operating profit
Total R million 1 133 1 306 (13)
Attributable (20.2%) R million 229 264 (13)
(Loss)/Income from R million (135) (51) (165)
associate attributable to
ARM
Attributable profit analysis
12 months ended 30 June
Reviewed Audited
2011 2010 % change
Operating profit 229 264 (13)
Less: interest paid (107) (64) (67)
Less: amortisation (282) (234) (21)
Less: fair value adjustments (27) (37) 27
(Loss)/profit before tax (187) (71) (163)
Tax 52 20 160
Headline (loss)/earnings (135) (51) (165)
attributable to ARM
ARM`s economic interest in XCSA (PCB) as at 30 June 2011 remains at 20.2%.
PCB consists of 12 mines all situated in Mpumalanga. ARM has a 26%
effective interest in the GGV Thermal Coal Mine situated near Ogies in
Mpumalanga.
Attributable refers to 20.2% of Xstrata Coal South Africa (XCSA) Operations
whilst total refers to 100%.
ARM Copper
The Vale/ARM JV ("the JV") completed the bankable feasibility study for the
Konkola North Copper Project in June 2010 and approved the release of the
Konkola North Copper Project in August 2010. The project was subsequently
opened by his excellency, the President of the Republic of Zambia, Rupai B.
Banda, at a ground-breaking ceremony held on 14 October 2010.
The project capital expenditure in July 2010 terms is US$391 million. The
slight increase was attributable to increased safety measures deployed at
the mine. 82% of the total project value has already been contracted and
project progress is in accordance with the feasibility study with
commissioning of the concentrator plant expected in December 2012.
The mine`s throughput design is 2.5 mtpa of ore at an average mill head
grade of 2.3% copper, yielding 45 000 tonnes of contained copper in
concentrate to be toll smelted in Zambia. The expected life of mine will be
28 years. A further two year exploration programme to evaluate Area "A"
which has potential to double the output to 100 000 tonnes copper per annum
in concentrate is in progress. Initially the South and East Limb Mines will
be developed, after which the deeper, higher grade and wider reef areas
will be mined.
The Konnoco (ZAMBIA) Limited mining licence, LML20, has recently been
granted an extension to incorporate the Prospecting Licence of Area "A".
The revised licence, Licence 7061-HQ-LML, was issued in July 2011 and
covers an area of 240 km2. The mining licence is bound by the Zambia/DRC
border to the west, north and east and the KCM Konkola mining licence is
adjacent to the south.
ZCCM-Investment Holding PLC (ZCCM) notified the JV of its intention to
exercise their buy-in right into the project company of 20% with 5% thereof
being a free carry. In addition, ZCCM also elected to have their portion of
the non-free carry equity and project funding provided through their own
sourced financing.
The JV will continue with the extensive drilling programme in Area "A"
situated about 5 km south of the planned mine development on the Konkola
North property. Drilling in the recent past has defined a substantial
copper resource in Area "A", and the planned drilling will further enhance
this resource base.
ARM owns 100% of ARM Copper. ARM Copper owns 50% of the JV. Previously, ARM
owned 65% of TEAL which was listed on the Toronto Stock Exchange.
ARM Exploration
The JV exploration objective is to complete a feasibility study on the ore
bodies associated with the Kalumines mining licence property in the DRC.
The Kalumines property is located 23 km to the west of Lubumbashi and the
JV has outlined four ore bodies with copper mineralisation comprising a
total indicated copper oxide and mixed oxide/sulphides resource of 52.3 Mt
at a grade of 2.03% copper and an inferred resource of 17.9 Mt at a grade
of 1.74% copper. The JV undertook further metallurgical test work, mine
design, related engineering work and completed a feasibility study. This
study was submitted to the JV partners and Gecamines at the end of July
2011. This feasibility will be evaluated and a decision is expected within
the next year.
The JV has further exploration rights on an exclusive large scale
prospecting licence south of the town of Kabwe, Zambia. Geophysical and
geochemical surveys have outlined three target anomalies and a small
drilling programme was completed. Two of the three boreholes intersected
significant thicknesses of copper sulphides mineralisation. Further
geological work and drilling is planned in the next financial year.
In addition to the exploration work being done by the JV, the ARM
Exploration Division has signed an agreement with a Mozambican exploration
company, Rovuma Resources, for the prospecting in Mozambique for manganese
ore, nickel, PGMs and base metals. This ongoing exploration is estimated to
cost approximately US$7 million per annum. ARM Exploration will have
exclusive rights to exercise options to purchase prospecting/mining rights
to the resources.
The loss attributable to ARM increased to R173 million in F2011 (F2010:
R143 million loss) and is as a result of exploration drilling, feasibility
study, finance and administration costs.
Harmony Gold Mining Company Limited ("Harmony")
Harmony reported significantly improved headline earnings of R957 million
compared to R4 million in the previous financial year. This improvement was
mainly as a result of a higher realised gold price which increased 16% from
R266 009/kg to R307 875/kg. Harmony achieved a 22% increase in gold
production from its build-up operations, however total production was down
9% as a result of shafts that were closed as part of the strategy to
deliver safe, profitable and sustainable ounces.
Harmony continued to make excellent headway in its exploration in Papua New
Guinea and in the year under review increased the Wafi Golpu deposit
resources by 57% to 1 billion tonnes. Golpu`s copper grade is now over 1%
confirming that it is one of the highest grade copper gold porphyry in
South East Asia. On 100% basis Golpu hosts a resource of 869 million tonnes
containing 19.3 million ounces of gold and 9.0 million tonnes of copper.
For the financial year ended 30 June 2011 Harmony declared an increased
dividend of 60 cents per share (Harmony F2010: 50 cents per share). ARM
will account for this dividend in its F2012 results.
The ARM statement of financial position at 30 June 2011 reflects a mark-to-
market investment in Harmony of R5.8 billion which is based on a Harmony
share price of R89.95 per share. Changes in the value of the investment in
Harmony are accounted for by ARM through the statement of comprehensive
income net of deferred capital gains tax. Dividends are recognised in the
ARM income statement on the last day of registration following dividend
declaration.
Harmony`s results for the quarter and six months ended 30 June 2011 can be
viewed on Harmony`s website at www.harmony.co.za
ARM owns 14.8% of Harmony`s issued share capital.
Outlook
The past financial year has seen a continuing recovery in commodity markets
across most of ARM`s commodities. Prices for manganese ore have however
fallen during the past six months and remain subdued largely due to
increased inventories.
The past quarter has once again seen increased uncertainty and thus short-
term volatility around sovereign debt issues in Europe and the United
States. In particular the United States debt ceiling issue which was
resolved shortly before key deadlines has brought that economy`s recovery
into sharp focus.
ARM nevertheless expects most commodity prices to remain robust over the
medium term supported by demand from China, India and other emerging
economies. In addition it is likely that supply constraints from producers
will also bolster prices.
Over the past three years ARM has spent R9.5 billion on capital expenditure
and did not curtail any growth projects during the economic crisis of 2008.
As ARM is confident about the future and attributable capital spend of more
than R10 billion is planned over the next three years to June 2014. This
amount is expected to be largely funded from operating cash flows and
existing funding resources.
Dividends
The Board is pleased to declare a significantly increased fifth annual
dividend of 450 cents per share. The amount to be paid will be
approximately R960 million. This dividend represents a 125% increase
compared to the F2010 dividend of 200 cents per share and is consistent
with ARM`s commitment to return cash to shareholders while simultaneously
maintaining the ability to fund growth of the Company in the future.
The last day to trade ARM shares to participate in this dividend (cum-
dividend) will be Friday, 16 September 2011 and ARM shares will trade ex-
dividend from Monday, 19 September 2011. The record date will be Friday, 23
September 2011 with payment of the dividend occurring on Monday, 26
September 2011. No dematerialisation or rematerialisation of share
certificates may occur between Monday, 19 September 2011 and Friday, 23
September, 2011 both days inclusive.
Review by independent auditors
The financial information has been reviewed by Mr EAL Botha of Ernst &
Young Inc. whose unqualified review opinion is available for inspection at
the Company`s registered office.
The Integrated 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 2011.
Signed on behalf of the board:
PT Motsepe AJ Wilkens
Executive Chairman Chief Executive Officer
Johannesburg
31 August 2011
Group statement of financial position
as at 30 June 2011
Reviewed Audited
2011 2010
Note Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 15 500 13 256
Investment property 12 12
Intangible assets 202 212
Deferred tax asset 87 44
Loans and long-term receivables 186 51
Financial assets 45 84
Inventories 130 148
Investment in associate 1 331 1 292
Other investments 5 798 5 191
23 291 20 290
Current assets
Inventories 2 162 1 834
Trade and other receivables 3 113 3 026
Taxation 75 44
Cash and cash equivalents 5 3 668 3 039
9 018 7 943
Total assets 32 309 28 233
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 11 11
Share premium 3 840 3 803
Other reserves 1 201 728
Retained earnings 16 105 13 223
Equity attributable to equity 21 157 17 765
holders of ARM
Non-controlling interest 958 764
Total equity 22 115 18 529
Non-current liabilities
Long-term borrowings 6 2 337 2 582
Deferred tax liabilities 3 571 2 961
Long-term provisions 549 500
6 457 6 043
Current liabilities
Trade and other payables 2 448 2 315
Short-term provisions 287 268
Taxation 270 314
Overdrafts and short-term 7 732 764
borrowings
3 737 3 661
Total equity and liabilities 32 309 28 233
Group income statement
for the year ended 30 June 2011
Reviewed Audited
2011 2010
Note Rm Rm
Revenue 15 357 11 425
Sales 14 893 11 022
Cost of sales (8 952) (7 480)
Gross profit 5 941 3 542
Other operating income 511 408
Other operating expenses (1 130) (1 030)
Profit from operations before 5 322 2 920
exceptional items
Income from investments 216 209
Finance costs (216) (192)
Loss from associate (135) (51)
Profit before taxation and 5 187 2 886
exceptional items
Exceptional items 3 (11) 97
Profit before taxation 5 176 2 983
Taxation 8 (1 671) (1 009)
Profit for the year 3 505 1 974
Attributable to:
Non-controlling interest 194 162
Equity holders of ARM 3 311 1 812
3 505 1 974
Additional information
Headline earnings (R million) 4 3 319 1 714
Headline earnings per share 1 559 807
(cents)
Basic earnings per share (cents) 1 555 854
Diluted headline earnings per 1 552 798
share (cents)
Diluted basic earnings per share 1 548 844
(cents)
Number of shares in issue at end 213 133 212 692
of year (thousands)
Weighted average number of shares 212 889 212 289
in issue (thousands)
Weighted average number of shares 213 871 214 763
used in calculating diluted
earnings per share (thousands)
Net asset value per share (cents) 9 927 8 352
EBITDA (R million) 6 434 3 907
Dividend declared after year end 450 200
(cents per share)
Group statement of comprehensive income
for the year ended 30 June 2011
Available-
for-sale Retained
reserve Other earnings
Group Rm Rm Rm
For the year ended 30 June 2010
(audited)
Profit for the year to 30 June 2010 - - 1 812
Other comprehensive income
Revaluation of listed investment 89 - -
Deferred tax on revaluation of listed (13) - -
investment
Net impact of revaluation of listed 76 - -
investment
Foreign exchange on loans to foreign - (6) -
Group entity
Cashflow hedge reserve - 16 -
Foreign currency translation - (2) -
Total comprehensive income for the 76 8 1 812
year
For the year ended 30 June 2011
(reviewed)
Profit for the year to 30 June 2011 - - 3 311
Other comprehensive income
Revaluation of listed investment 544 - -
Deferred tax on revaluation of listed (76) - -
investment
Net impact of revaluation of listed 468 - -
investment
Foreign exchange on loans to foreign - (82) -
Group entity
Deferred tax on foreign exchange on - 11 -
loans to foreign Group entity
Cashflow hedge reserve - (4) -
Foreign currency translation - 40 -
Total comprehensive income for the 468 (35) 3 311
year
Total
share- Non-
holders controlling
of ARM interest Total
Group Rm Rm Rm
For the year ended 30 June 2010
(audited)
Profit for the year to 30 June 2010 1 812 162 1 974
Other comprehensive income
Revaluation of listed investment 89 - 89
Deferred tax on revaluation of listed (13) - (13)
investment
Net impact of revaluation of listed 76 - 76
investment
Foreign exchange on loans to foreign (6) - (6)
Group entity
Cashflow hedge reserve 16 - 16
Foreign currency translation (2) - (2)
Total comprehensive income for the 1 896 162 2 058
year
For the year ended 30 June 2011
(reviewed)
Profit for the year to 30 June 2011 3 311 194 3 505
Other comprehensive income
Revaluation of listed investment 544 - 544
Deferred tax on revaluation of listed (76) - (76)
investment
Net impact of revaluation of listed 468 - 468
investment
Foreign exchange on loans to foreign (82) - (82)
Group entity
Deferred tax on foreign exchange on 11 - 11
loans to foreign Group entity
Cashflow hedge reserve (4) - (4)
Foreign currency translation 40 - 40
Total comprehensive income for the 3 744 194 3 938
year
Group statement of changes in equity
for the year ended 30 June 2011
Share
capital Available-
and for-sale Retained
premium reserve Other* earnings
Group Rm Rm Rm Rm
Balance at 30 June 2009 3 770 370 230 11 779
(audited)
Profit for the year to 30 - - - 1 812
June 2010
Other comprehensive - 76 8 -
income
Total comprehensive - 76 8 1 812
income for the year
Share-based payments - - 47 -
Share options exercised 44 - - -
Dividend paid - - - (371)
Other - - (3) 3
Balance at 30 June 2010 3 814 446 282 13 223
(audited)
Profit for the year to 30 - - - 3 311
June 2011
Other comprehensive - 468 (35) -
income
Total comprehensive - 468 (35) 3 311
income for the year
Share-based payments - - 37 -
Share options exercised 37 - - -
Dividend paid - - - (426)
Other - - 3 (3)
Balance at 30 June 2011 3 851 914 287 16 105
(reviewed)
Total
share- Non-
holders controlling
of ARM interest Total
Group Rm Rm Rm
Balance at 30 June 2009 16 149 602 16 751
(audited)
Profit for the year to 30 1 812 162 1 974
June 2010
Other comprehensive 84 - 84
income
Total comprehensive 1 896 162 2 058
income for the year
Share-based payments 47 - 47
Share options exercised 44 - 44
Dividend paid (371) - (371)
Other - - -
Balance at 30 June 2010 17 765 764 18 529
(audited)
Profit for the year to 30 3 311 194 3 505
June 2011
Other comprehensive 433 - 433
income
Total comprehensive 3 744 194 3 938
income for the year
Share-based payments 37 - 37
Share options exercised 37 - 37
Dividend paid (426) - (426)
Other - - -
Balance at 30 June 2011 21 157 958 22 115
(reviewed)
2011 2010 2009
* Other reserves consist of the following: Rm Rm Rm
General reserve 32 32 32
Insurance contingency 18 15 18
Share-based payments 304 267 220
Cashflow hedge reserve 12 16 -
Foreign exchange on loans to foreign Group (77) (6) -
entity
Foreign currency translation reserve (FCTR) 12 (28) (26)
Premium paid on purchase of non-controlling (14) (14) (14)
interest
Total 287 282 230
Statement of cash flows
for the year ended 30 June 2011
Reviewed Audited
2011 2010
Note Rm Rm
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers 15 409 9 992
Cash paid to suppliers and employees (9 511) (6 562)
Cash generated from operations 9 5 898 3 430
Interest received 181 176
Interest paid (117) (135)
Dividends received 33 33
Dividend paid (426) (371)
Taxation paid (1 240) (612)
Net cash inflow from operating activities 4 329 2 521
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (797) (519)
to maintain operations
Additions to property, plant and equipment (2 151) (1 981)
to expand operations
Proceeds on disposal of property, plant 3 13
and equipment
Proceeds on disposal of Otjikoto - 107
Investment in associate (178) -
Investment in RBCT (63) -
(Increase)/decrease in loans and (106) 56
receivables
Net cash outflow from investing activities (3 292) (2 324)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds on exercise of share options 37 44
Long-term borrowings raised 283 848
Long-term borrowings repaid (596) (834)
Decrease in short-term borrowings (312) (787)
Net cash outflow from financing activities (588) (729)
Net increase/(decrease) in cash and cash 449 (532)
equivalents
Cash and cash equivalents at beginning of 2 791 3 325
year
Foreign currency translation on cash (13) (2)
balance
Cash and cash equivalents at end of year 5 3 227 2 791
Notes to the financial statements
for the year ended 30 June 2011 (reviewed)
1. STATEMENT OF COMPLIANCE
The Group provisional financial statements are prepared in accordance with
and containing the information required by International Financial
Reporting Standards (IFRS) and interpretations of those standards as
adopted by the International Accounting Standards Board (IASB), the AC 500
standards as issued by the Accounting Practice Board or its successor,
requirements of the South African Companies Act and the Listings
requirements of the JSE Limited.
BASIS OF PREPARATION
The Group provisional financial statements for the year under review have
been prepared under the supervision of the financial director, Mr M Arnold
CA(SA). The Group provisional financial statements have been prepared on
the historical cost basis, except for certain financial instruments that
are fairly valued by mark to market. The accounting policies used are in
terms of IFRS and are consistent with those in the recent annual financial
statements except for those listed below and are in terms of the disclosure
requirements of IAS 34: Interim financial reporting.
The Group has adopted the following new and revised standards and
interpretations, issued by the International Financial Reporting
Interpretation Committee (IFRIC) of the IASB, that became effective during
the course of the year.
Standard Subject
IFRS 1 First-time adoption of International Financial Reporting
Standards - Additional exceptions for first time adoption
(Amendment)
IFRS 2 Share-based payments - Group cash settled share-based payment
arrangement (Amendment)
IFRS 3 Transition requirements for contingent consideration from a
business combination that occurred before the effective date
of the revised IFRS (Amendment)
Measurement of non-controlling interest (Amendment)
Un-replaced and voluntarily replaced share-based payment
awards (Amendment)
IFRS 5 Disclosures of non-current assets (or disposal groups) held
for sale and discontinued operations (Amendment)
IFRS 8 Disclosure of information about segment assets (Amendment)
IAS 1 Current/non-current classification of convertible instruments
(Amendment)
IAS 7 Classification of expenditures on unrecognised assets
(Amendment)
IAS 17 Classification of leases of land and buildings (Amendment)
IAS 27 Transition requirements for amendments made as a result of IAS
27 consolidated and separate financial statements (Amendment)
IAS 32 Financial instruments presentation - Classification of rights
issued (Amendment)
IAS 36 Unit of accounting for goodwill impairment test (Amendment)
IAS 39 Assessment of loan repayment penalties as embedded derivatives
(Amendment)
Scope exception for business combinations contract (Amendment)
Cash flow hedge accounting (Amendment)
IFRIC 19 Extinguishing financial liabilities with equity instruments
The adoption of these amendments, standards and interpretations only
resulted in changes to the manner in which the annual financial statements
are presented as well as additional disclosures in the annual financial
statements.
In addition the following amendments, standards or interpretations have
been issued but are not yet effective. The effective date refers to
reporting periods beginning on or after, unless otherwise indicated.
Standard Subject Effective date
IFRS 1 Amendments to IFRS 1 Severe hyperinflation 1 July 2011
and removal of fixed dates for first time
adopters
Replacement of fixed dates for certain 1 July 2011
exceptions with the date of transition to
IFRSs (Amendment)
Accounting policy changes in the year of 1 January 2011
adoption (Amendment)
Revaluation basis as deemed cost (Amendment) 1 January 2011
Use of deemed cost for operations subject to 1 January 2011
rate regulations (Amendment)
IFRS 7 Financial instruments disclosures - 1 July 2011
Amendments enhancing disclosures about
transfers of financial assets
Clarifications of disclosures (Amendment) 1 January 2011
IFRS 9 Financial instruments (Phase 1 - Financial 1 January 2013
assets)
Financial instruments (Phase 1 - Financial 1 January 2013
liabilities)
IFRS 10 Consolidated financial statements - New 1 January 2013
definition of control
IFRS 11 Joint arrangements 1 January 2013
IFRS 12 Disclosure of interest in other entities 1 January 2013
IFRS 13 Fair value measurement 1 January 2013
IAS 1 Clarification of statement of changes in 1 January 2011
equity (Amendment)
IAS 1 Presentation of other comprehensive income 1 January 2012
(Amendment)
IAS 12 Income taxes - Recovery of underlying assets 1 January 2012
(Amendment)
IAS 19 Employee benefits (Revised) 1 January 2013
IAS 24 Related party disclosures 1 January 2011
IAS 27 Separate financial statements 1 January 2013
IAS 28 Investment in associate (Amended) 1 January 2013
IAS 34 Significant events and transactions 1 January 2011
(Amendment)
IFRIC 13 Fair value of award credit (Amendment) 1 January 2011
IFRIC 14 Prepayments of minimum funding requirement 1 January 2011
(Amendment)
The Group does not intend early adopting any of the above amendments,
standards or interpretations.
PRIMARY ARM Platinum ARM ARM
SEGMENTAL Platinum Nickel Ferrous Coal
INFORMATION Rm Rm Rm Rm
2.1 Year to 30 June 2011
(reviewed)
Total sales 3 355 1 499 9 538 505
Inter-group sales to ARM - 4 - -
Ferrous
Sales 3 355 1 495 9 538 505
Cost of sales (2 477) (1 122) (5 009) (381)
Other operating income 20 11 125 -
Other operating expenses (96) (236) (425) (2)
Segment result 802 148 4 229 122
Income from investments 25 8 71 -
Finance cost (43) (2) (13) (85)
Finance cost Implats: (16) - - -
Shareholders` loan Two Rivers
Finance cost ARM: Shareholders` (20) - - -
loan Two Rivers
Loss from associate - - - (135)
Exceptional items - (4) (7) -
Taxation (186) (43) (1 388) (5)
Non-controlling interest (212) - - -
Contribution to basic earnings 350 107 2 892 (103)
Contribution to headline 350 110 2 897 (103)
earnings
Other information
Segment assets, including 5 903 2 640 11 923 3 544
investment in associate
Investment in associate - - - 1 331
Segment liabilities 1 585 226 1 271 1 924
Unallocated liabilities (tax
and deferred tax)
Consolidated total liabilities
Cash inflow/(outflow) from 988 405 3 413 174
operating activities
Cash outflow from investing (293) (393) (1 822) (427)
activities
Cash (outflow)/inflow from (329) - (3) 78
financing activities
Capital expenditure** 429 404 1 967 85
Amortisation and depreciation 304 203 499 95
Impairment - 4 - -
EBITDA 1 106 351 4 728 217
ARM *Corpor-
PRIMARY Explora- ate and
SEGMENTAL tion other Gold Total
INFORMATION Rm Rm Rm Rm
2.1 Year to 30 June 2011
(reviewed)
Total sales - - - 14 897
Inter-group sales to ARM - - - 4
Ferrous
Sales - - - 14 893
Cost of sales - 37 - (8 952)
Other operating income - 355 - 511
Other operating expenses (151) (220) - (1 130)
Segment result (151) 172 - 5 322
Income from investments - 80 32 216
Finance cost (47) 10 - (180)
Finance cost Implats: - - - (16)
Shareholders` loan Two Rivers
Finance cost ARM: Shareholders` - - - (20)
loan Two Rivers
Loss from associate - - - (135)
Exceptional items - - - (11)
Taxation (2) (47) - (1 671)
Non-controlling interest 27 (9) - (194)
Contribution to basic earnings (173) 206 32 3 311
Contribution to headline (173) 206 32 3 319
earnings
Other information
Segment assets, including 683 1 892 5 724 32 309
investment in associate
Investment in associate - - - 1 331
Segment liabilities 209 1 138 - 6 353
Unallocated liabilities (tax 3 841
and deferred tax)
Consolidated total liabilities 10 194
Cash inflow/(outflow) from (136) (515) - 4 329
operating activities
Cash outflow from investing (313) (44) - (3 292)
activities
Cash (outflow)/inflow from - (334) - (588)
financing activities
Capital expenditure** 475 44 - 3 404
Amortisation and depreciation 6 5 - 1 112
Impairment - - - 4
EBITDA (145) 177 - 6 434
* Corporate, other companies and consolidation adjustments
** Capital expenditure in the ARM exploration segment relates to the ARM
Copper development of the Konkola North Copper Project.
PRIMARY
SEGMENTAL ARM Platinum ARM ARM
INFORMATION Platinum Nickel Ferrous Coal
(continued) Rm Rm Rm Rm
2.2 Year to 30 June 2010
(audited)
Total sales 3 156 1 224 6 435 212
Inter-group sales to ARM - 6 - -
Ferrous
Sales 3 156 1 218 6 435 212
Cost of sales (2 294) (896) (4 160) (157)
Other operating income per 11 37 148 -
income statement
Other operating expenses per (79) (72) (423) (1)
income statement
Segment result 794 287 2 000 54
Income from investments 23 7 86 -
Finance cost (38) (2) (7) (7)
Finance cost Implats: (41) - - -
Shareholders` loan Two Rivers
Finance cost ARM: (50) - - -
Shareholders` loan Two Rivers
Income from associate - - - (51)
Exceptional items - (2) 3 -
Taxation (199) (85) (715) (13)
Non-controlling interest (174) - - -
Contribution to basic 315 205 1 367 (17)
earnings
Contribution to headline 315 206 1 364 (17)
earnings
Other information
Segment assets, including 5 717 2 385 9 572 3 270
investment in associate
Investment in associate - - - 1 292
Segment liabilities 1 540 213 1 171 1 746
Unallocated liabilities (tax
and deferred tax)
Consolidated total
liabilities
Cash inflow/(outflow) from 760 365 1 322 23
operating activities
Cash (outflow)/inflow from (116) (557) (1 534) (259)
investing activities
Cash (outflow)/inflow from (295) (150) 1 239
financing activities
Capital expenditure 148 601 1 601 339
Amortisation and depreciation 316 144 459 60
Impairment - 3 - -
EBITDA 1 110 431 2 459 114
PRIMARY ARM *Corpor-
SEGMENTAL Explora- ate and
INFORMATION tion other Gold Total
(continued) Rm Rm Rm Rm
2.2 Year to 30 June 2010
(audited)
Total sales 1 - - 11 028
Inter-group sales to ARM - - - 6
Ferrous
Sales 1 - - 11 022
Cost of sales - 27 - (7 480)
Other operating income per - 212 - 408
income statement
Other operating expenses per (120) (335) - (1 030)
income statement
Segment result (119) (96) - 2 920
Income from investments - 61 32 209
Finance cost (46) (1) - (101)
Finance cost Implats: - - - (41)
Shareholders` loan Two Rivers
Finance cost ARM: - - - (50)
Shareholders` loan Two Rivers
Income from associate - - - (51)
Exceptional items 96 - - 97
Taxation 1 2 - (1 009)
Non-controlling interest 21 (9) - (162)
Contribution to basic (47) (43) 32 1 812
earnings
Contribution to headline (143) (43) 32 1 714
earnings
Other information
Segment assets, including 348 1 761 5 180 28 233
investment in associate
Investment in associate - - - 1 292
Segment liabilities 59 1 700 - 6 429
Unallocated liabilities (tax 3 275
and deferred tax)
Consolidated total 9 704
liabilities
Cash inflow/(outflow) from (137) 188 - 2 521
operating activities
Cash (outflow)/inflow from 149 (7) - (2 324)
investing activities
Cash (outflow)/inflow from (8) (516) - (729)
financing activities
Capital expenditure 44 5 - 2 738
Amortisation and depreciation 6 2 - 987
Impairment 7 - - 10
EBITDA (113) (94) - 3 907
* Corporate, other companies and consolidation adjustments
The ARM platinum segment is analysed further into Two Rivers Platinum (Pty)
Limited and ARM Mining Consortium Limited which includes Modikwa Platinum
Mine.
Platinum
SEGMENTAL Two Rivers Modikwa Total
INFORMATION Rm Rm Rm
2.3 Year to 30 June 2011 (Reviewed)
Sales
External sales 2 274 1 081 3 355
Cost of sales (1 634) (843) (2 477)
Other operating income 12 8 20
Other operating expenses (30) (66) (96)
Segment result 622 180 802
Income from investments 8 17 25
Finance cost (41) (2) (43)
Finance cost Implats: Shareholders` (16) - (16)
loan Two Rivers Platinum (Pty)
Limited
Finance cost ARM: Shareholders` (20) - (20)
loan Two Rivers Platinum (Pty)
Limited
Taxation (138) (48) (186)
Non-controlling interest (187) (25) (212)
Contribution to basic earnings 228 122 350
Contribution to headline earnings 228 122 350
Other information
Segment and consolidated assets 3 173 2 730 5 903
Segment liabilities 1 001 584 1 585
Unallocated liabilities (tax and 923
deferred tax)
Consolidated total liabilities 2 508
Cash inflow from operating 669 319 988
activities
Cash outflow from investing (174) (119) (293)
activities
Cash outflow from financing (329) - (329)
activities
Capital expenditure 304 125 429
Amortisation and depreciation 228 76 304
EBITDA 850 256 1 106
SEGMENTAL Platinum
INFORMATION Two Rivers Modikwa Total
(continued) Rm Rm Rm
2.4 Year to 30 June 2010 (Audited)
Sales
External sales 2 099 1 057 3 156
Cost of sales (1 507) (787) (2 294)
Other operating income 10 1 11
Other operating expenses (23) (56) (79)
Segment result 579 215 794
Income from investments 3 20 23
Finance cost (35) (3) (38)
Finance cost Implats: Shareholders` (41) - (41)
loan Two Rivers Platinum (Pty)
Limited
Finance cost ARM: Shareholders` (50) - (50)
loan Two Rivers Platinum (Pty)
Limited
Taxation (130) (69) (199)
Non-controlling interest (146) (28) (174)
Contribution to basic earnings 180 135 315
Contribution to headline earnings 180 135 315
Other information
Segment and consolidated assets 3 046 2 671 5 717
Segment liabilities 1 007 533 1 540
Unallocated liabilities (tax and 871
deferred tax)
Consolidated total liabilities 2 411
Cash inflow from operating 551 209 760
activities
Cash outflow from investing (75) (41) (116)
activities
Cash outflow from financing (275) (20) (295)
activities
Capital expenditure 97 51 148
Amortisation and depreciation 238 78 316
EBITDA 817 293 1 110
Additional information
Pro forma
analysis of the
Ferrous segment
on a 100% basis
SEGMENTAL Iron ore Manganese Chrome Attributable
INFORMATION Division Division Division Total to ARM
(continued) Rm Rm Rm Rm Rm
2.5 Year to 30
June 2011
(Reviewed)
Sales 10 342 6 466 2 267 19 075 9 538
Other operating 378 147 36 561 125
income
Other operating 691 317 152 1 160 425
expense
Operating profit 6 485 2 289 (315) 8 459 4 229
Contribution to 4 650 1 369 (234) 5 785 2 892
earnings
Contribution to 4 654 1 377 (234) 5 797 2 897
headline
earnings
Other
information
Consolidated 15 051 7 902 1 460 24 413 11 923
total assets
Consolidated 4 203 1 984 718 6 905 1 271
total
liabilities
Capital 3 225 656 216 4 097 1 967
expenditure
Amortisation and 593 287 148 1 028 499
depreciation
Cash 5 996 (980) (189) 4 827 3 413
inflow/(outflow)
from operating
activities
Cash outflow (2 788) (649) (207) (3 644) (1 822)
from investing
activities
Cash outflow - - (6) (6) (3)
from financing
activities
EBITDA 7 078 2 576 (167) 9 487 4 728
2.6 Year to 30
June 2010
(Audited)
Sales 4 993 6 287 1 590 12 870 6 435
Other operating 119 187 29 335 148
income
Other operating 201 436 248 885 423
expense
Operating profit 2 003 2 235 (239) 3 999 2 000
Contribution to 1 437 1 480 (185) 2 732 1 367
earnings
Contribution to 1 436 1 478 (185) 2 729 1 364
headline
earnings
Other
information
Consolidated 8 729 8 922 1 920 19 571 9 572
total assets
Consolidated 2 532 2 596 722 5 850 1 171
total
liabilities
Capital 2 304 743 289 3 336 1 601
expenditure
Amortisation and 544 250 142 936 459
depreciation
Cash 1 985 (122) (219) 1 644 1 322
inflow/(outflow)
from operating
activities
Cash outflow (2 133) (666) (267) (3 066) (1 534)
from investing
activities
Cash - 4 (1) 3 1
inflow/(outflow)
from financing
activities
EBITDA 2 547 2 485 (97) 4 935 2 459
Reviewed Audited
2011 2010
Rm Rm
3 EXCEPTIONAL ITEMS
Profit on sale of Otjikoto - 103
(Loss)/profit on sale of fixed assets (7) 3
Capital portion of insurance claim at Nkomati - 1
Impairments of property, plant and equipment (4) (10)
Exceptional items per income statement (11) 97
Taxation 3 1
Total amount adjusted for headline earnings (8) 98
4 HEADLINE EARNINGS
Basic earnings per income statement 3 311 1 812
- Impairments of property, plant and equipment 4 10
- Capital portion of insurance claim at - (1)
Nkomati
- Profit on sale of Otjikoto - (103)
- Loss/(profit) on disposal of property, plant 7 (3)
and equipment
3 322 1 715
- Taxation (3) (1)
Headline earnings 3 319 1 714
5 CASH AND CASH EQUIVALENTS
- African Rainbow Minerals Limited 962 903
- Assmang Limited 1 473 897
- ARM Platinum (Pty) Limited 285 248
- Kingfisher Insurance Co Limited 139 126
- Nkomati 176 82
- Two Rivers Platinum (Pty) Limited 4 7
- Vale/ARM joint venture 36 115
- Venture Building Trust 5 -
- Restricted cash 588 661
Total as per statement of financial position 3 668 3 039
Less: Overdrafts (included in note 7) 441 248
Total as per statement of cash flows 3 227 2 791
6 LONG-TERM BORROWINGS
- African Rainbow Minerals Limited 410 784
- Assmang Limited - 3
- ARM Platinum (Pty) Limited 1 1
- ARM Coal (Pty) Limited 1 781 1 657
- Two Rivers Platinum (Pty) Limited 145 137
2 337 2 582
7 OVERDRAFTS AND SHORT-TERM BORROWINGS
- Assmang Limited 2 4
- ARM Platinum (Pty) Limited 129 123
- ARM Coal (Pty) Limited 27 4
- Two Rivers Platinum (Pty) Limited - Bank 464 252
financing
- Two Rivers Platinum (Pty) Limited - Implats 73 343
- Other 37 38
732 764
Reviewed Audited
2011 2010
Rm Rm
8 TAXATION
South African normal taxation
- current year 975 271
- mining 875 213
- non-mining 100 58
- prior year - (52)
State`s share of profits 93 80
Deferred taxation 503 659
Secondary Tax on Companies 100 51
1 671 1 009
9 CASH GENERATED FROM OPERATIONS BEFORE
WORKING CAPITAL MOVEMENTS
Cash generated from operations before working 6 538 4 028
capital movement
Working capital changes (640) (598_
Movement in receivables (10) (1 393)
Movement in payables and provisions (216) 756
Movement in inventories (414) 39
Cash generated from operations (per cash flow) 5 898 3 430
10 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 3 383 2 921
- not contracted for 600 505
Total commitments 3 983 3 426
11 CONTINGENT LIABILITIES
There have been no significant changes in the contingent liabilities of the
Group as disclosed in the 30 June 2010 annual report.
The Company is in discussion with the South African Revenue Services on
progressing the 1998 tax dispute concerning the claim of a loan stock
redemption premium.
12 EVENTS AFTER REPORTING DATE
Since the year-end the portion of the insurance claim relating to the
furnace explosion at the Cato Ridge Works, claimable against the local
insurers, was settled on 26 August 2011. The portion attributable to ARM
will be approximately R60 million after tax. The results to 30 June 2011
have not been adjusted as the impact is not considered material.
Shareholder information
Issued share capital at 30 June 2011 213 132 540 shares
Market capitalisation at 30 June 2011 ZAR40.2 billion
Market capitalisation at 30 June 2011 US$5.95 billion
Closing share price at 30 June 2011 R188.50
12 month high (1 July 2010 - 30 June 2011) R236.00
12 month low (1 July 2010 - 30 June 2011) R146.25
Average daily volume traded for the 12 months 484 444 shares
Primary listing JSE Limited
Ticker symbol ARI
Investor relations
Jongisa Klaas
Head of Investor Relations and Corporate Development
Telephone: +27 11 779 1507
Fax: +27 11 779 1312
E-mail: jongisa.klaas@arm.co.za
Corne Dippenaar
Corporate Development
Telephone: +27 11 779 1478
Fax: +27 11 779 1312
E-mail: corne.dippenaar@arm.co.za
Company secretary
Alyson D`Oyley
Telephone: +27 11 779 1480
Fax: +27 11 779 1318
E-mail: alyson.doyley@arm.co.za
Registered office
ARM House
29 Impala Road
Chislehurston, Sandton, 2196
South Africa
PO Box 786136, Sandton, 2146
South Africa
Telephone: +27 11 779 1300
Fax +27 11 779 1312
E-mail: ir.admin@arm.co.za
Website: http://www.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
Forward-looking statements
Certain statements in this report constitute forward-looking statements
that are neither reported financial results nor other historical
information. They include but are not limited to: statements that are
predictions of or indicate future earnings, savings, synergies, events,
trends, plans or objectives. Such forward-looking statements may or may not
take into account and may or may not be affected by known and unknown
risks, uncertainties and other important factors that could cause the
actual results, performance or achievements of the Company to be materially
different from the future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks, uncertainties and
other important factors include, among others: economic, business and
political conditions in South Africa; decreases in the market price of
commodities; hazards associated with underground and surface mining; labour
disruptions; changes in government regulations, particularly environmental
regulations; changes in exchange rates; currency devaluations; inflation
and other macro-economic factors; and the impact of the AIDS crisis in
South Africa. These forward-looking statements speak only as of the date of
publication of these pages. The Company undertakes no obligation to update
publicly or release any revisions to these forward-looking statements to
reflect events or circumstances after the date of publication of these
pages or to reflect the occurrence of unanticipated events.
Directors
PT Motsepe (Executive Chairman)
AJ Wilkens (Chief Executive Officer)
F Abbott*
M Arnold
Dr MMM Bakane-Tuoane**
TA Boardman**
AD Botha**
JA Chissano (Mozambican)**
WM Gule
MW King**
AK Maditsi**
KS Mashalane
LA Shiels
Dr RV Simelane**
JC Steenkamp
ZB Swanepoel**
*Non-executive
**Independent non-executive
Sandton
31 August 2011
Sponsor to ARM: Deutsche Securities (SA) (Proprietary) Limited
Date: 31/08/2011 07:05:14 Produced by the JSE SENS Department.
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