The future looks bright – Provisional results for the 12 months ended 30 June 2009
31 August 2009
“ARM is financially robust and continues to invest significant funds to grow the company despite the massive global economic crisis,” Patrice Motsepe, Executive Chairman.
Salient features of the annual results
- Headline earnings decrease 42% from R4.0 billion to R2.3 billion, impacted by the global economic recession
- Headline earnings per share of 1 094 (F2008: 1906) cents
- Profit from operations before exceptional items decreases 44% from R 6.7 billion to R 3.7 billion
- Record sales volumes for iron ore and PGMs
- Cash balances increase by R0.9 billion to R3.5 billion; net debt reduces to R231 million from R1.3 billion
- ARM corporate loan of R967 million refinanced; new facility increased to R1.75 billion and extended for three years
- Khumani 10 mtpa mine completed on time and within budget; a further 6 mtpa expansion approved
- Goedgevonden and Nkomati expansion projects commence commissioning
- TEAL’s shareholding restructured as ARM forms 50:50 joint venture with Vale
- The declaration of a dividend of 175 cps (F2008: 400 cps)
African Rainbow Minerals Limited announces satisfactory results for the year ended 30 June 2009 as the Company continues to deliver on its 2 x 2010 volume growth strategy amidst a global economic recession. Headline earnings have decreased by 42% to R2.3 billion (F2008: R4.0 billion), or 1 094 (F2008: 1 906) cents per share. The major contributor to ARM’s headline earnings for F2009 was the Ferrous Division where the contribution increased by 14% to R3 150 million (F2008: R2 775 million).
The massive global slowdown in the demand for resources, impacting three quarters of this financial year, resulted in lower US Dollar commodity prices and reduced sales volumes for most operations, most notably manganese ore, since October 2008. During this period, ARM’s results were bolstered by increased iron ore and Platinum Group Metal (“PGM”) sales volumes illustrating the benefit of our diversified portfolio of assets.
Operational features for the year include (100% basis, except for PGM production):
- 13% increase in iron ore sales to 7.4 million tonnes
- 6% increase in PGM production/sales to 323 259 ounces
- 42% decrease in external manganese ore sales to 2.15 million tonnes
- 12% decrease in nickel production to 4 495 tonnes
EBITDA decreased by R2.7 billion to R4.5 billion in F2009. The EBITDA margin for F2009 is lower at 44%, compared to 57% in F2008. Project investment continues as ARM’s balance sheet remains strong and with low gearing even after R3.3 billion capital expenditure in F2009. The corporate action involving TEAL, Modikwa and Two Rivers undertaken during the year, has further enhanced the value of ARM’s operations.
There has been an improvement of R1.1 billion in the ARM net debt position at 30 June 2009 to R231 million from the position at 30 June 2008 of R1.3 billion. The debt on the balance sheet includes an amount of R1.8 billion advanced by our partners (Implats: R539 million; Anglo Platinum: R132 million; Xstrata: R1 135 million).
Despite the uncertainty of the pace and timing of a sustained recovery from the prevailing local and international recession, ARM is well positioned for growth into the future. A strong balance sheet allows continuing expenditure on ARM’s growth projects in nickel, iron ore and coal while keeping gearing low. Subsequent to the economic lows experienced in the first quarter of calendar 2009, there have been some early signs of improvement in demand for certain commodities. ARM continues to evaluate the market on a quarter by quarter basis to ensure that its business plans remain robust.
The ARM board is pleased to declare a third annual cash dividend of 175 cents per share. The amount to be paid will be R371 million. This declaration of a dividend reflects the strength of the ARM cash position while the Board maintains its prudent approach in the current economic environment.
As a responsible South African corporate citizen, the health and safety of ARM’s employees is of paramount importance. Our performance in this area over the reporting period shows good progress in most areas but there is further room for improvement. Modikwa successfully completed 5 million fatality free shifts which marks a period of more than three years without a fatal accident occurring at the mine. Over the last four years, ARM has halved its Lost Time Injury Frequency Rate. Regrettably these achievements have been marred by five reported fatalities. ARM extends its sincere condolences to the families, friends and colleagues of the people who lost their lives.
ARM CEO Andr� Wilkens commented, “The restructuring exercises implemented in F2009 will stand ARM in good stead as the Company faces a new financial year which promises to be every bit as challenging. It is thanks to the commitment of the entire ARM team and our world-class partners, plus our resilient mix of resources and assets, and a strong balance sheet, that ARM faces 2010 with renewed confidence.”