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ARI
ARIM
ARM - Provisional Results for the year ended 30 June 2006
African Rainbow Minerals Limited
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
(ISIN: ZAE000054045)
Provisional Results for the year ended 30 June 2006
Highlights
Headline earnings increased by 36% to R462 million
Record product sales achieved by PGM, iron ore, nickel and ferromanganese
operations benefiting fully from the current commodity price environment
ARM Coal transaction successfully concluded shortly after year-end with
Xstrata
Modikwa Platinum Mine reported operating profit of R153 million
ARM Broad-based Economic Empowerment Trust finalised
Two Rivers Platinum Project ahead of schedule and within budget
Progress toward a balanced diversified mining portfolio achieved through the
implementation of the ARM growth strategy
Commentary
The board of African Rainbow Minerals (ARM) is pleased to announce the
company"s results for the financial year ended 30 June 2006 which have been
prepared in accordance with International Financial Reporting Standards.
The past year"s performance has benefited from buoyant commodity prices, good
production results from the majority of our operations (iron ore and nickel in
particular) and a weaker exchange rate during May and June of this year.
Headline earnings rose by 36% from R339 million to R462 million for the year
ended 30 June 2006. Earnings were positively affected by Modikwa reporting its
first annual profit since commissioning. Our share of Harmony Gold Mining
Company Limited (Harmony) is now accounted for as an investment. Significant
price increases in nickel reduced the impact of participating in only 50% of
Nkomati"s earnings following the disposal of 50% to LionOre in May 2005.
Exploration expenses, through TEAL Exploration and Mining Incorporated (TEAL)
increased significantly to R47 million for this year, in line with ARM"s
increased focus on Africa.
Assmang reported lower earnings and has been accounted for on a proportionate
consolidation basis from 1 March 2006, as opposed to having been fully
consolidated, post the reduction of ARM"s stake from 50.35% to 50% and
following the restructuring of the shareholders" agreement and subsequent
delisting of Assmang.
Owing to the change to proportional accounting for Assmang the balance sheet at
30 June 2006 only includes 50% of the Assmang balance sheet items on a
line-by-line basis. This adjustment for Assmang has a concomitant reduction in
the value of minorities at 30 June 2006. Notwithstanding this adjustment, the
total assets have increased to R14.6 billion which results from the
mark-to-market increase of R3.6 billion for the investment in Harmony and the
group capital expenditure for the year. Total consolidated net borrowings
increased from R1.3 billion at 30 June 2005 to R1.8 billion at year-end,
retaining ARM"s net debt to equity ratio at a comfortable 17%.
In executing ARM"s organic growth programme together with our partners, total
consolidated capital expenditure for the year was R1.7 billion (largely
attributable to the Two Rivers Platinum Project), being 61% higher than that of
the prior year.
The Two Rivers Platinum Project was released in June 2005 and construction of
the plant and mining infrastructure was completed before the 1 September 2006
target date and within budget.
The 8.4 Mtpa Khumani iron ore export mine on the Bruce, King and Mokaning
properties, situated in the Northern Cape Province, was released for
construction in February 2006 and is progressing on schedule.
ARM and its partner have also successfully completed the Dwarsrivier
underground chrome mine situated in Mpumalanga Province, ahead of schedule and
below budget. The Nchwaning III manganese shaft system became fully operational
during the year under review.
During the year, Nkomati Nickel Mine announced that it would increase monthly
run-of-mine production from 30 000 tonnes to 100 000 tonnes per month,
maintaining current nickel production levels, as more fully explained later.
This project is on track to reach full production by December 2007.
ARM also continued with its acquisition and diversification strategy through
the formation of a major South African coal player, ARM Coal (with Xstrata),
announced in February 2006. ARM owns 51% of the issued share capital of ARM
Coal. ARM Coal holds participating rights in 20% of Xstrata Coal South Africa
and owns 51% of the Goedgevonden project. The ARM board has also approved the
exercise of an option held by ARM to acquire a further 10% in Xstrata"s South
African coal operations, directly, for R400 million as from 1 September 2006.
A more focused growth strategy into Africa and the unlocking of the value of
our exploration assets held in Namibia, Zambia and the Democratic Republic of
the Congo (DRC) was launched through the listing of TEAL Exploration and Mining
Inc. (TEAL) on the Toronto Stock Exchange during November 2005 and on the JSE
Limited in April 2006. At the time of its Canadian listing, TEAL raised $33
million and as a result ARM diluted its interest to 64.9%, thereby reporting an
exceptional profit of R132 million.
Harmony
Harmony reported a cash operating profit for the year ended 30 June 2006 of
R1.5 billion, some 68% higher than the previous year, as the company benefited
from a 28% higher Rand gold price. Gold produced for the year, however,
declined by 19,5% to 74 242 kg. After accounting for, amongst other,
amortisation and depreciation, interest paid and a loss on financial
instruments Harmony reported a headline loss of R1.0 billion compared to a loss
of R1.2 billion in the prior year. No dividend was declared. A significant
increase in the Harmony share price (increasing by 96% from R58.25 to R114.10
per share), resulted in a stronger ARM balance sheet with our investment in
Harmony having increased by R3.6 billion from June 2005.
Broad-based Economic Empowerment Trust
To date, trade unions and church groups as well as five provincial community
upliftment trusts and a women upliftment trust have been registered as
beneficiaries to the ARM Broad-based Economic Empowerment Trust, which is the
holder of 28.6 million ARM shares, equating to approximately 14% of the
company.
OPERATIONAL REVIEW
ARM Ferrous
The ARM Ferrous operations which are held through a 50% shareholding (2005:
50.35%) in the unlisted Assmang Limited ("Assmang") consist of three divisions
namely; iron ore, manganese and chrome.
Assmang"s turnover for the 2006 financial year was maintained at R4.4 billion.
However, Assmang"s earnings decreased by 30% to R667 million from R949 million
of the previous year, mainly as a result of lower ferromanganese and
ferrochrome prices and lower sales volumes for manganese ore and ferrochrome.
The iron ore division reported record sales tonnages and, assisted by
significant price increases, its contribution to earnings increased by 196% to
R399 million. A segmental analysis of the Assmang results, on a 100% basis, is
attached for additional information purposes.
Year ended 30 June
2006 2005
Assmang product
volumes sales `000 `000 Percentage
100% basis metric tonnes metric tonnes change
Iron ore 5 926 5 776 3
Manganese ore* 1 678 1 811 (7)
Manganese alloys 260 197 32
Charge chrome 210 262 (20)
Chrome ore* 178 35 409
*Excluding intra-group sales.
Earnings for Assmang - 100% basis
Year ended 30 June
R"million 2006 2005
Iron ore Division 399 135
Manganese Division 327 736
Chrome Division (59) 77
Total 667 948
Logistical and port capacity constraints remain key to Assmang"s growth
programme for bulk commodities, specifically for iron and manganese ore.
Discussions and negotiations with Transnet, in particular relating to iron and
manganese ore capacity allocations, are advancing well.
Major capital projects
During the year under review Assmang spent R705 million (2005: R699 million) on
capital as per the table below:
ARM Ferrous - capital expenditure
Year ended 30 June
100% basis Percentage
R"million 2006 2005 change
Iron ore 346 193 79
Manganese 239 353 (32)
Chrome 120 153 (22)
Total 705 699
Capital expenditure for the iron ore operations for the year under review
relate mainly to the Khumani project (R57 million); waste development to access
new reserves at Beeshoek (R143 million) and mining vehicles at Beeshoek (R66
million), which vehicles will be utilised at the new Khumani iron ore mine in
future. The manganese operations spent R157 million and the ferromanganese
works R82 million. The chrome division spent R57 million on the completion of
underground mining operations and R34 million on rebuilding furnaces at the
ferrochrome works.
Construction of the new 8.4 Mtpa export Khumani iron ore mine commenced in June
2006. The first phase, at an estimated capital cost of R3.2 billion (excluding
capitalised interest), will begin with first production during the 2008
calendar year. A second phase expansion (R1.6 billion estimated capital) to
expand production to 16 Mtpa export capacity, forms part of the current design
and incorporates some of the capital being spent in the first phase. The second
phase requires further approvals and is dependant on additional increases in
the capacity of Transnet"s Sishen - Saldanha export channel.
ARM Platinum
The ARM Platinum division consists of an effective 41.5% in Modikwa Platinum
Mine, 55% in the Two Rivers Platinum Project, 50% in the Nkomati Nickel Mine
and Expansion Project and 90% in Kalplats Exploration.
The profitability of the Modikwa Platinum Mine and Nkomati Nickel Mine improved
during the year as a result of increased production, the containment of costs
and a significant uptrend in commodity prices. With Modikwa reaching full
production and Two Rivers coming into production, this division is
well-positioned to exploit the current positive PGM pricing environment.
The division"s earnings attributable to ARM have increased by 89% from R120
million for the prior year to R227 million for the current financial year.
Total capital expenditure for the division amounted to R1.2 billion as
detailed below:
ARM Platinum - capital expenditure
Year ended 30 June
100% basis Percentage
R"million 2006 2005 change
Modikwa 128 104 23
Two Rivers 946 170 456
Nkomati 78 20 290
Total 1 152 294
Modikwa capital related mainly to the completion of the mine construction and
the North shaft deepening from 4 to 5 level. At Nkomati capital expenditure was
for the Phase 1 extension as well as for feasibility work for Phase 2 of the
expansion.
Modikwa Platinum Mine
Modikwa has substantially completed its ramp-up to achieve full mill throughput
of 240 000 tonnes per month (tpm) by the end of the 2006 calendar year.
Furthermore, with the change in mining method (from down-dip mining to breast
mining on strike), now sufficiently advanced, the mine can focus more
aggressively on cost targets.
Modikwa Platinum Mine
Operational statistics Year ended 30 June
Percentage
100% basis 2006 2005 change
Cash operating profits R million 360 (173) 308
Tonnes milled Million tonnes 2.51 2.46 2
Head grade (4E) g/t 4.28 4.23 2
PGMs-in-concentrate ounces 293 313 281 177 4
Cash cost R/tonne 398 367 8
Cash cost R/PGM oz 3 394 3 136 8
Capex R million 128 104 23
Cash costs rose by 8% to R3 394 per PGM ounce mainly owing to the significant
effort in increasing mineable ore reserves from 8 to 13 months.
Two Rivers Platinum Project
Excellent progress has been achieved with the 220 000 PGMs oz per year Two
Rivers project, which will be brought into production in just 18 months from
project go-ahead. Trial mining on the property commenced during 2004 and the
project was officially released for construction in June 2005. Two Rivers has
built up a mining stock pile of 1.1 million tonnes of ore whilst construction
of the concentrator plant was in progress. Wet commissioning of the
concentrator plant commenced in July of this year, followed by ore
processing in August, well ahead of the targeted date of September. The Two
Rivers concentrator is expected to operate at full capacity from the last
quarter of the 2006 calendar year with the mine reaching full production
from underground operations in the last quarter of the 2007 calendar year.
Nkomati Nickel Mine
The mine has again reported excellent results for the year, increasing cash
operating profit by 57% to R547 million.
Year ended 30 June
Percentage
100% basis 2006 2005 change
Cash operating profit R million 547 349 57
Tonnes milled (`000) 373 346 8
Head grade (% nickel) 1.89 2.01 (6)
On-mine cash cost
per tonnes treated (R/tonne) 392 369 (6)
Cash cost
(net of by-products) US$/lb (0.36) 1.49 125
Year ended 30 June
Percentage
100% basis 2006 2005 change
Market sales
Nickel tonnes 5 616 5 291 6
Copper tonnes 3 398 3 260 4
Cobalt tonnes 257 97 165
PGMs ounces 49 437 39 370 26
Nkomati Nickel Expansion Project
The current MSB orebody will be depleted during 2008. The joint venture
partners have approved the construction of a new 100 000 tpm (increasing
run-of-mine production from the current 30 000 tpm) concentrator plant and
relevant infrastructure to mine the MMZ ore body and to maintain the current
metal production of 5 000 tonnes per annum nickel- in-concentrate. Mining will
take place from the current underground infrastructure as well as from two open
pits over a 10-year period. The estimated capital cost is R384 million and
construction will span 18 months to full production. The above forms part of
the final expansion project currently under review.
Nkomati Nickel Enhanced chromite reserve
On 7 July 2006 ARM and LionOre announced the approval of a 60 000 tpm chrome
ore mining and processing operation, following completion of a feasibility
study in June 2006.
A feasibility study investigated the viability of a low-cost mining and
processing operation to exploit the oxidised massive chromitite resource. This
resource overlies the nickel mineralisation and forms part of the planned Pit 3
pre-strip requirements for the future nickel exploitation of the large
disseminated nickel sulphide orebodies.
The results of the feasibility study undertaken indicates an extremely robust
project with a low capital requirement of R15.5 million which will be funded by
internal cash flow from Nkomati. The project, based on the current reserve
statement, will operate for at least five years. Construction commenced with an
anticipated rapid production ramp-up of two quarters to full production levels
expected in the first quarter of calendar year 2007. This ramp-up includes the
mining, crushing and screening of run-of-mine chromite ore to produce an
upgraded saleable product with a chrome content of 38% and a chrome to iron
ratio of approximately 1:65.
TEAL Exploration and Mining Inc.
At the Konkola North Copper Project in Zambia, a review and audit of the
existing geological database was commissioned to reclassify and upgrade the
resource base. It is expected that an early indication of the capital required
for re-equipping the shaft and related infrastructure will be ready by calendar
year-end. The feasibility study to assess the mining of the south and east limb
areas is on schedule.
At the Mwambashi Copper Project in Zambia, the feasibility study for a 12 000
tonnes per annum copper producer remain positive, pending a favourable off-take
arrangement with a third party Zambian company with whom TEAL is currently in
discussion as well as a successful financing plan. Build-up to full production
is expected toward the end of the 2007 calendar year.
At the Otjikoto Gold Project in Namibia the integration and geological
interpretation of borehole results have motivated a continuation of the
resource expansion drilling to further determine the geometry and impact of
these high grade zones of gold mineralisation.
At the Kalumines Copper-Cobalt Project in the DRC, TEAL has acquired an
electric arc furnace with a capacity to produce approximately 5 000 tonnes per
annum (tpa) of `black copper" ingots, with a grading 85% to 95% copper. TEAL
intends to locate the furnace in Lubumbashi in the DRC.
In Zambia, exploration drilling continues within TEAL"s Copperbelt Joint
Venture and its Kafue Joint Venture with an objective of upgrading and
reclassifying current geological data.
Safety and Health
Regrettably, a fatal accident occurred at Modikwa Platinum Mine on 11 April
2006. Mr Zibonele Siphongo, aged 24, was fatally injured. The management and
employees of ARM extend our sincere condolences to the family and friends of
the deceased.
We are pleased to report the following safety milestones achieved during the
year:
Black Rock, Modikwa and Cato Ridge Works achieved a million fatality-free
shifts during the period under review;
Beeshoek was awarded the 3 000 Fatality-free Shifts Award by the Mine Health
and Safety Council in December 2005;
Beeshoek is the winner of the 2006 "Excellence in Safety"competition. With a
Lost Day Injury Frequency Rate (LDIFR) of 1.2 lost-day cases per million
man-hours worked, Beeshoek showed an impressive 70% improvement in its average
LDIFR for the previous three years; and
the Chrome Smelter at Machadodorp achieved its lowest LDIFR in its history.
Outlook
ARM has made significant progress in achieving a more diversified portfolio of
quality, long-life mining assets. The financial results as reported for this
year, good progress with our ferrous and platinum projects and the formation of
ARM Coal, is further testimony to the successful implementation of our
strategy. Our operations continue to strive for increased efficiencies and
lower costs in order to retain our competitiveness.
Dividends
The company is continuing its high expansion phase with significant and
exciting projects in the pipeline as well as a number of other growth
opportunities. As a result the board of directors has decided to conserve
resources and not to declare a dividend for the year ended 30 June 2006.
Review by independent auditors
The financial information has been reviewed by Ernst & Young whose unqualified
review opinion is available for inspection at the company"s registered office.
The annual report containing a detailed review of the operations of the company
together with the audited financial statements will be posted to shareholders
toward the end of October 2006.
Signed on behalf of the board
P T Motsepe A J Wilkens
Executive Chairman Chief Executive Officer
Johannesburg
30 August 2006
Balance Sheet
at 30 June 2006
Group
Reviewed** Restated*
2006 2005
Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 5 004 5 025
Intangible assets 2 5
Deferred tax assets 23 68
Other investments 7 276 3 708
12 305 8 806
Current assets
Inventories 707 1 144
Trade and other receivables 1 160 1 528
Cash and cash equivalents 439 288
2 306 2 960
Total assets 14 611 11 766
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 10 10
Share premium 3 557 3 497
Other reserves 2 307 (772)
Retained earnings 4 376 3 776
Shareholders" interest in
capital and reserves 10 250 6 511
Minority interest 143 1 461
Total shareholders" interest 10 393 7 972
Non-current liabilities
Long-term borrowings 1 449 962
Deferred tax liabilities 1 001 814
Long-term provisions 156 190
2 606 1 966
Current liabilities
Trade and other payables 627 861
Provisions 47 51
Taxation 135 304
Overdrafts and short-term borrowings 803 612
1 612 1 828
Total equity and liabilities 14 611 11 766
* Adoption of new accounting standards - refer Notes 1 and 2.
** Assmang proportionately consolidated with effect from 1 March 2006.
Income Statement
for the year ended 30 June 2006
Group
Reviewed** Restated*
2006 2005
Rm Rm
Sales 4 622 5 485
Cost of sales (3 304) (3 743)
Gross profit 1 318 1 742
Other operating income 167 226
Other operating expenses (373) (372)
Retrenchment costs - (8)
Profit from operations before exceptional items 1 112 1 588
Income from investments 24 22
Finance costs (134) (172)
Loss from associate - (150)
Profit before taxation and exceptional items 1 002 1 288
Exceptional items 139 155
Profit before taxation 1 141 1 443
Taxation (377) (530)
Profit for the period 764 913
Attributable to:
Minority interest 163 451
Equity holders of the parent 601 462
764 913
Additional information
Headline earnings (R million) 462 339
Headline earnings per share (cents) 225 166
Basic earnings per share (cents) 293 225
Fully diluted basic earnings per share (cents) 291 226
Fully diluted headline earnings per share (cents) 223 166
Net asset value per share (cents) 4 967 3 185
Number of shares in issue at
end of year (thousands) 206 367 204 437
Weighted average number of
shares in issue (thousands) 205 072 204 370
Weighted average number of shares
used in calculating
fully diluted earnings per share (thousands) 206 470 204 794
* Adoption of new accounting standards - refer Notes 1 and 2.
** Assmang proportionately consolidated with effect from 1 March 2006.
Statement of Changes in Equity
for the year ended 30 June 2006
Share Revaluation
capital and Minority of listed
premium interest investments
Group Rm Rm Rm
Restated
Balance at 30 June 2004 3 505 1 326 -
Basic earnings - 451 -
Dividends paid to minorities - (45) -
Re-allocation risk
funding Two Rivers - (271) -
Realisation of
land and buildings - - -
Revaluation of
listed investments - - (962)
Deferred tax on
revaluation of
listed investment - - 141
Reversal of associate"s
other reserves - - -
Share-based payments - - -
Share options exercised 2 - -
Other - - -
Balance at 30 June 2005 3 507 1 461 (821)
Basic earnings - 163 -
Dividends paid to minorities - (60) -
Revaluation of
listed investments - - 3 556
Deferred tax on
revaluation of
listed investment - - (516)
Transfer out of
minority interest,
Assmang now accounted for as
a joint venture - (1 504) -
Share-based payments - - -
Share options exercised 60 - -
Teal minorities at listing - 83 -
Re-alignment of currency - - -
Other - - -
Balance at 30 June 2006 3 567 143 2 219
Retained
Other* earnings Total
Group Rm Rm Rm
Restated
Balance at 30 June 2004 (193) 3 316 7 954
Basic earnings - 462 913
Dividends paid to minorities - - (45)
Re-allocation risk
funding Two Rivers - - (271)
Realisation of
land and buildings (6) - (6)
Revaluation of
listed investments - - (962)
Deferred tax on
revaluation of
listed investment - - 141
Reversal of associate"s
other reserves 235 - 235
Share-based payments 11 - 11
Share options exercised - - 2
Other 2 (2) -
Balance at 30 June 2005 49 3 776 7 972
Basic earnings - 601 764
Dividends paid to minorities - - (60)
Revaluation of
listed investments - - 3 556
Deferred tax on
revaluation of
listed investment - - (516)
Transfer out of
minority interest,
Assmang now accounted for as
a joint venture - - ( 1 504)
Share-based payments 34 - 34
Share options exercised - - 60
Teal minorities at listing - - 83
Re-alignment of currency 3 - 3
Other 2 (1) 1
Balance at 30 June 2006 88 4 376 1 0 393
* Other reserves consist of revaluation of land and buildings R nil (2005: R
nil; 2004: R6 million); insurance contingency R8 million (2005: R6 million;
2004: R4 million); general reserve of R32 million (2005: R32 million; 2004: R32
million); share of associate reserves R nil (2005: R nil; 2004: R(235)
million); share-based payments R45 million (2005: R11 million; 2004 R nil);
foreign currency translation reserve R3 million (2005: nil; 2004: nil).
Cash Flow Statement
for the year ended 30 June 2006
Group
Reviewed** Restated*
2006 2005
Rm Rm
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers 4 856 5 297
Cash paid to suppliers and employees (3 615) (3 636)
Cash generated from operations 1 241 1 661
Interest received 24 22
Interest paid (137) (183)
Dividends received 1 19
Dividends paid to minorities (60) (45)
Taxation paid (384) (168)
Net cash inflow from operating activities 685 1 306
CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and equipment
to maintain operations (636) (705)
Additions to property, plant and equipment
to expand operations (859) (297)
Proceeds on disposal of property, plant and
equipment 45 39
Proceeds on disposal of investments - 9
Net cash effects of disposal of 50 per cent of
Nkomati - 136
Net cash effects of disposal of 0.35 per cent of
Assmang 18 -
Investment acquired (12) (8)
Net cash outflow from investing activities (1 444) (826)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds on exercise of share options 61 2
Net cash effects of listing of TEAL 226 -
Long-term borrowings raised 881 110
Long-term borrowings repaid (183) (215)
Decrease in short-term borrowings (91) (446)
Net cash inflow/(outflow) from financing activities 894 (549)
Net increase/(decrease) in cash and cash
equivalents 135 (69)
Cash and cash equivalents at beginning of year
as previously stated 47 328
Add: Rehabilitation trust fund - 29
Less: Overdrafts - (241)
Restated opening balance 47 116
Foreign currency translation on cash balance 10 -
Cash and cash equivalents at end of year 192 47
Cash generated from operations per share (cents) 605 813
* From this year the group includes overdrafts in the cash and cash
equivalents for cash flow purposes and the environmental trust funds have been
consolidated from this year.
** Assmang proportionately consolidated with effect from 1 March 2006.
Notes to the Financial Statements for the year ended 30 June 2006
1. Basis of preparation
The provisional results for the year have been prepared in accordance with
International Financial Reporting Standards (IFRS) on an historical cost basis
except for certain derivative financial instruments that have been measured at
fair value.
The financial information for the year ended 30 June 2006 has been prepared
adopting the same accounting policies used in the most recent annual financial
statements, except for the adoption of various new and or revised IFRS
standards.
Impact of new accounting standards
1.1 Adopting IFRS 4 - Insurance Contracts, resulted in reclassification in the
income statement and segmental report of June 2005. There is no impact on
earnings.
1.2 Adopting IFRS 2 - Share-based Payments.
This new standard has been applied retrospectively by the group and results in
a restatement of prior year financial information. See below.
1.3 Other: There have been a number of other new and revised accounting
standards issued by the International Accounting Standards Board. These had
no impact on the financial statements.
2. Implications of adopting IFRS 2 - share-based payments
The group grants share options to employees under employee share incentive
schemes. In accordance with the requirements of IFRS 2, the group now
recognises an expense in the income statement with a corresponding credit to
equity. The fair value at the date of granting the options is charged to income
on a straight-line basis over the relevant option vesting periods, adjusted to
reflect actual and expected levels of vesting.
The prior and current reporting period adjustments are:
Year ended 30 June 2006: R34 million - charge to income statement.
Year ended 30 June 2005: R11 million - charge to income statement and
restatement of comparitives.
Group
Reviewed Restated
2006 2005
Rm Rm
3. Exceptional items
Profit on dilution in TEAL 132 -
Profit on disposal of 0.35 per cent of Assmang 25 -
Impairment of property, plant and equipment (10) (35)
Loss on disposal of 50 per cent of Nkomati (6) (82)
Profit on disposal of Avgold - 265
Other (2) 7
Exceptional items per income statement 139 155
Taxation (3) (41)
Minority interest - 5
Profit on sale of property, plant and equipment 3 -
Profit on sale of property, plant
and equipment in associate - 4
Net exceptional items 139 123
4. Headline earnings
Basic earnings per income statement 601 462
- Profit on dilution in TEAL (132) -
- Impairment of property, plant and equipment 10 35
- Profit on disposal of 0.35 per cent in Assmang (25) -
- Loss/(Profit) on disposal of
- property, plant and equipment (3) 6
- Loss on disposal of 50 per cent in Nkomati 6 82
- Profit on disposal of Chambishi - (7)
- Loss on dilution of associate - 2
- Profit on disposal of Avgold - (265)
- Profit on disposal of property,
- plant and equipment in associate - (4)
- Other 2 (8)
459 303
- Taxation 3 41
- Minority interest - (5)
Headline earnings 462 339
5. COMMITMENTS AND CONTINGENT LIABILITIES
Commitment in respect of future capital expenditure which will be funded from
cash generated and available borrowing resources are summarised below:
2006 2005
Commitments Rm Rm
Commitments in respect of capital expenditure:
Approved by directors
- contracted for 673 251
- not contracted for 1 641 272
Total commitments 2 314 523
6. Contingent liabilities
Shareholders are advised that the only significant change to the contingent
liabilities of the group as disclosed in the June 2005 annual report relates to
a contingent liability in respect of an indemnity granted in connection with
the funding of the ARM shares acquired by the ARM BBEE Trust in an amount of
R107 million.
7. SEGMENTAL INFORMATION
Primary segmental information
Business segments
For management purposes, the Group is organised into four major operating
divisions. These are: ARM platinum (which includes platinum and nickel), ARM
ferrous, ARM exploration and gold.
The nickel segment includes Nkomati (reflected under ARM platinum in the
Corporate structure) at 100% for the period to 31 May 2005 and 50% thereafter.
The ARM ferrous segment includes Assmang as a subsidiary up to 28 February
2006 and as a 50 per cent joint venture proportionately consolidated
thereafter.
The gold segment includes Harmony which was treated as an associate from 3 May
2004 to 30 November 2004 after which it is accounted for as an investment.
The Group"s products predominantly reflect the risks and rewards of trading and
the operating divisions are therefore identified as the primary reporting
segments.
ARM exploration segment consists of TEAL (2005: Included under ARM Corporate).
ARM Platinum ARM ARM
Platinum Nickel Ferrous Exploration
Reviewed Rm Rm Rm Rm
Year to 30 June 2006
Sales
External sales 767 444 3 411 -
Cost of sales (608) (191) (2 505) -
Other operating
income
per income statement - 25 78 2
Other
operating expenses
per income statement (6) (16) (179) (74)
Segment result 153 262 805 (72)
Income
from investments 4 1 4 4
Finance cost (87) - (15) -
Exceptional items - - - -
Taxation (20) (78) (277) -
Minority interest (8) - (176) 21
Contribution to
basic earnings 42 185 341 (47)
Contribution to
headline earnings 42 185 338 (47)
Other information
Segment assets 3 710 396 2 731 195
Taxation - - - -
Consolidated
total assets 3 710 396 2 731 195
Segment liabilities 1 810 29 367 18
Unallocated
liabilities
(tax and
deferred tax)
Consolidated
total liabilities
Cash in/(out)
flow from
operating activities (45) 224 723 (44)
Cash in/(out)
flow from
investing activities (878) (41) (540) (2)
Cash in/(out)
flow from
financing activities 507 - (117) 226
Capital expenditure 1 064 50 554 2
Amortisation
and depreciation 121 31 288 -
Corporate
and other
companies Gold Total
Reviewed Rm Rm Rm
Year to 30 June 2006
Sales
External sales - - 4 622
Cost of sales - - (3 304)
Other operating
income
per income statement 62 - 167
Other
operating expenses
per income statement (98) - (373)
Segment result (36) - 1 112
Income
from investments 11 - 24
Finance cost (32) - (134)
Exceptional items 139 - 139
Taxation (2) - (377)
Minority interest - - (163)
Contribution to
basic earnings 80 - 601
Contribution to
headline earnings (56) - 462
Other information
Segment assets 296 7 261 14 589
Taxation 22 - 22
Consolidated
total assets 318 7 261 14 611
Segment liabilities 858 - 3 082
Unallocated
liabilities
(tax and
deferred tax) - 1 136
Consolidated
total liabilities - 4 218
Cash in/(out)
flow from
operating activities (173) - 685
Cash in/(out)
flow from
investing activities 17 - (1 444)
Cash in/(out)
flow from
financing activities 278 - 894
Capital expenditure 1 - 1 671
Amortisation
and depreciation - - 440
ARM Platinum ARM ARM
Platinum Nickel Ferrous Exploration
Restated Rm Rm Rm Rm
Year to 30 June 2005
Sales
External sales 456 623 4 406 -
Cost of sales (532) (295) (2 916) -
Other operating income - 46 166 -
Other
operating expenses (7) (63) (193) (25)
Segment result (83) 311 1 463 (25)
Income
from investments 2 2 2 -
Finance cost (104) - (41) -
Loss from associate - - - -
Exceptional items - - (10) -
Taxation 66 (94) (465) -
Minority interest 20 - (471) -
Contribution to
basic earnings (99) 219 478 (25)
Contribution to
headline earnings (99) 219 480 (25)
Other information
Segment assets 2 295 269 5 069 -
Taxation - - - -
Consolidated
total assets 2 295 269 5 069 -
Segment liabilities 1 138 17 790 -
Unallocated liabilities
(tax and deferred tax)
Consolidated
total liabilities
Cash in/(out)
flow from
operating activities (179) 304 1 307 -
Cash in/(out)
flow from
investing activities (265) (20) (655) -
Cash in/(out)
flow from
financing activities (30) - (577) -
Capital expenditure 280 20 699 -
Amortisation and
depreciation 85 54 285 -
Corporate
and other
companies Gold Total
Restated Rm Rm Rm
Year to 30 June 2005
Sales
External sales - - 5 485
Cost of sales - - ( 3 743)
Other operating income 61 - 273
Other
operating expenses (139) - (427)
Segment result (78) - 1 588
Income
from investments 16 - 22
Finance cost (27) - (172)
Loss from associate - (150) (150)
Exceptional items 167 (2) 155
Taxation (37) - (530)
Minority interest - - (451)
Contribution to
basic earnings 41 (152) 462
Contribution to
headline earnings (81) (155) 339
Other information
Segment assets 359 3 706 11 698
Taxation 68 - 68
Consolidated
total assets 427 3 706 11 766
Segment liabilities 731 - 2 676
Unallocated liabilities
(tax and deferred tax) - 1 118
Consolidated
total liabilities - 3 794
Cash in/(out)
flow from
operating activities (126) - 1 306
Cash in/(out)
flow from
investing activities 114 - (826)
Cash in/(out)
flow from
financing activities 58 - (549)
Capital expenditure 38 - 1 037
Amortisation and
depreciation 2 - 426
Additional information
Assmang - Segment information (100% basis)
Iron Ore Manganese Chrome
R"million Division Division Division Total
Year to 30 June 2006
Turnover 1 411 2 008 939 4 358
Contribution to earnings 399 327 (59) 667
Contribution to headline earnings 399 326 (64) 661
Other information
Consolidated total assets 1 409 2 413 1 662 5 485
Consolidated total liabilities 278 162 1 231 1 671
Capital expenditure 346 239 120 705
Depreciation 121 127 112 360
Net cash inflow from
operating activities 527 124 89 739
Cash outflow from
investing activities (338) (236) (86) (660)
Cash (outflow)/inflow
from financing activities 27 (24) (22) (73)
Year to 30 June 2005
Turnover 838 2 409 1 160 4 406
Contribution to earnings 135 736 77 949
Contribution to headline earnings 134 738 86 959
Other information
Consolidated total assets 1 097 2 230 1 742 5 069
Consolidated total liabilities 365 115 1 251 1 731
Capital expenditure 193 353 153 699
Depreciation 113 93 79 285
Net cash inflow from
operating activities 218 958 86 1 262
Cash outflow from
investing activities (192) (344) (119) (655)
Cash (outflow)/inflow
from financing activities 21 (554) (44) (577)
Contact details and administration
Registered office
ARM House
29 Impala Road
Chislehurston
Sandton 2196
PO Box 786136
Sandton
2146
Telephone: +27 11 779 1300
Telefax: +27 11 779 1312
E-mail: ir.admin@arm.co.za
Website: http://www.arm.co.za
Investor relations
Pieter Rorich
Executive Director: Investor Relations and
New Business Development
Telephone: +27 11 779 1476
pieter.rorich@arm.co.za
Corne Bobbert
Corporate Development
Telephone: +27 11 779 1478
corne.bobbert@arm.co.za
Portia Sebulela
Investor Relations Officer
Telephone: +27 11 779 1300
portia.sebulela@arm.co.za
Company Secretary
Pat Smit
Telephone: +27 11 779 1480
patricia.smit@arm.co.za
Transfer secretaries
South Africa
Computershare Investor Services 2004 (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg 2001
PO Box 61051
Marshalltown
2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5222
E-mail: web.queries@computershare.co.za
Website: http://www.computershare.co.za
Directors
PT Motsepe (Executive Chairman)
RP Menell (Deputy Chairman)*
AJ Wilkens (Chief Executive Officer)
F Abbott
Dr MMM Bakane-Tuoane**
JA Chissano (Mozambican)**
WM Gule
MW King**
AK Maditsi**
KS Mashalane
JR McAlpine**
PC RArich
Dr PS Sibisi**
Dr RV Simelane**
MV Sisulu**
JC Steenkamp
ZB Swanepoel*
*Non-executive
**Independent non-executive
Date: 31/08/2006 08:00:44 AM Produced by the JSE SENS Department
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