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Reviewed condensed group interim financial results for the six months ended 30 June 2012
Exxaro Resources Limited
(Incorporated in the Republic of South Africa)
Registration number: 2000/011076/06
South African Income tax registration number: 9218/098/14/4
JSE Share code: EXX
ISIN code: ZAE000084992
ADR code: EXXAY
(“Exxaro” or “the company” or “the group”)
Reviewed condensed group interim financial results and unreviewed
physical information for the six months ended 30 June 2012
Exxaro is one of the largest diversified South African-based resources
groups listed on the JSE Limited. Exxaro has a world-class commodity
portfolio in coal, mineral sands, iron ore and energy.
Delivering on our strategy
Zero fatalities
Core net operating profit up 42%
Headline earnings per share (HEPS) up 11% to 1 162 cents per share
Interim dividend of 350 cents per share
Replacement employee empowerment scheme approved
We are still working on
Lost time injury frequency rate (LTIFR) at 0,26 against 0,15 target
Condensed group statement of comprehensive income
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2012 2011 2011
(Restated) (Restated)
Rm Reviewed Reviewed Audited
Revenue 5 873 5 692 12 126
Operating expenses (4 609) (4 277) (9 571)
Gains/(losses) on disposal of
investments and non-core operations 40 1 (3)
Net operating profit (note 4) 1 304 1 416 2 552
Interest income (note 6) 66 116 261
Interest expense (note 6) (186) (207) (628)
Income from investments 2 2 4
Share of income from equity-accounted
investments 2 138 2 588 4 745
Excess of fair value of net asset value
over cost of the investment in
associates 707
Profit before tax 4 031 3 915 6 934
Income tax expense (339) (423) (871)
Profit for the period from continuing
operations 3 692 3 492 6 063
Profit/(loss) for the period from
discontinued operations (note 7) 5 336 (278) 1 594
Profit for the period 9 028 3 214 7 657
Other comprehensive income:
Exchange differences on translating
foreign operations (439) 201 800
Cash flow hedges (27) 28 (40)
Share of comprehensive income of
associates 252 59 (254)
Share of comprehensive income of non-
controlling interests (14) 35
(Loss)/gain recognised in other
comprehensive income (net of tax) (214) 274 541
Total comprehensive income for the
period 8 814 3 488 8 198
Profit attributable to:
Owners of the parent 9 046 3 205 7 653
– continuing operations 3 695 3 497 6 073
– discontinued operations 5 351 (292) 1 580
Non-controlling interests (18) 9 4
– continuing operations (2) (5) (10)
– discontinued operations (16) 14 14
Total profit for the period 9 028 3 214 7 657
Total comprehensive income attributable
to:
Owners of the parent 8 832 3 493 8 159
– continuing operations 3 760 3 709 6 641
– discontinued operations 5 072 (216) 1 518
Non-controlling interests (18) (5) 39
– continuing operations (2) (2) (6)
– discontinued operations (16) (3) 45
Total comprehensive income for the
period 8 814 3 488 8 198
Aggregate attributable earnings per
shares (cents)
– basic 2 555 921 2 199
– diluted 2 527 885 2 168
Attributable earnings per share
continuing operations (cents)
– basic 1 044 1 005 1 745
– diluted 1 032 966 1 720
Attributable earnings per share
discontinued operations (cents)
– basic 1 511 (84) 454
– diluted 1 495 (81) 448
Reconciliation of headline earnings
Rm Gross Tax Net
6 months ended 30 June 2012 Reviewed
Profit attributable to owners of the
parent 9 046
Adjusted for:
– IAS36 reversal of impairment of
property, plant and equipment (103) 29 (74)
– IAS16 gains on disposal of property,
plant and equipment (32) 1 (31)
– IAS27 gains on the disposal of
subsidiaries and other assets (4 121) (4 121)
– IAS28 excess of fair value of net
asset value over cost of investment in
associate (707) (707)
– IAS28 share of associates' gains or 3 (1) 2
losses on disposal of property, plant
and equipment
Headline earnings (4 960) 29 4 115
Headline earnings from continuing
operations 2 920
Headline earnings from discontinued
operations 1 195
6 months ended 30 June 2011 (Restated)
Reviewed
Profit attributable to owners of the
parent 3 205
Adjusted for:
– IAS36 impairment of property, plant
and equipment 439 439
– IAS16 gains on disposal of property,
plant and equipment (11) 3 (8)
– IAS27 gains on the disposal of
subsidiaries (1) (1)
– IAS28 share of associates' gains or
losses on disposal of property, plant
and equipment 2 2
Headline earnings 429 3 3 637
Headline earnings from continuing
operations 3 490
Headline earnings from discontinued
operations 147
12 months ended 31 December 2011
(Restated) Audited
Profit attributable to owners of the
parent 7 653
Adjusted for:
– IAS36 impairment of property, plant
and equipment 516 516
– IAS36 reversal of impairment of
property, plant and equipment (869) (869)
– IAS27 gains on the disposal of
subsidiaries (1) (1)
– IAS16 loss on disposal of property,
plant and equipment 3 (2) 1
– IAS28 share of associates' gains or
losses on disposal of property, plant
and equipment 2 2
Headline earnings (349) (2) 7 302
Headline earnings from continuing
operations 6 048
Headline earnings from discontinued
operations 1 254
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2012 2011 2011
(Restated) (Restated)
Cents Reviewed Reviewed Audited
Headline earnings per share
– basic 1 162 1 045 2 098
– diluted 1 149 1 005 2 069
Headline earnings per share from
continuing operations
– basic 825 1 003 1 738
– diluted 816 964 1 714
Headline earnings per share from
discontinued operations
– basic 337 42 360
– diluted 333 41 355
Condensed group statement of financial position
At
30 June At 30 June At 31 Dec
2012 2011 2011
(Restated) (Restated)
Rm Reviewed Reviewed Audited
Assets
Non-current assets 36 440 20 064 17 153
Property, plant and equipment 11 216 12 397 9 584
Biological assets 66 46 66
Intangible assets 3 580 185 128
Investments in associates (note 14) 18 566 4 506 4 545
Investments in joint ventures (note 14) 309 229 243
Deferred tax 314 419 227
Financial assets 2 389 2 282 2 360
Current assets 5 076 9 981 4 307
Inventories 746 2 928 560
Trade and other receivables 2 073 3 787 2 624
Current tax receivable 123 111 105
Cash and cash equivalents 2 134 3 155 1 018
Non-current assets classified as held-
for-sale (note 12) 804 14 979
Total assets 41 516 30 849 36 439
Equity and liabilities
Capital and reserves
Equity attributable to owners of the
parent 29 832 19 900 23 588
Non-controlling interests 76 (30) 20
Total equity 29 908 19 870 23 608
Non-current liabilities 8 449 7 000 6 048
Interest-bearing borrowings 3 422 3 315 2 102
Non-current provisions 2 184 2 111 2 111
Post-retirement employee obligations 129 91 133
Deferred tax 2 714 1 483 1 702
Current liabilities 3 159 3 692 4 218
Trade and other payables 2 823 2 744 3 181
Interest-bearing borrowings 800 836
Current tax payable 220 130 50
Current provisions 116 18 151
Non-current liabilities classified as
held-for-sale (note 12) 287 2 565
Total equity and liabilities 41 516 30 849 36 439
Condensed group statement of cash flows
Cash flows from operating activities 470 912 3 533
– cash retained from operations 2 485 2 227 6 189
– interest paid (218) (212) (127)
– interest received 141 162 325
– borrowing cost capitalised (3)
adjustments
– finance lease interest adjustment (232)
– tax paid (164) (207) (499)
– dividends paid (1 771) (1 058) (2 123)
Cash flows from investing activities (2 926) 290 (1 042)
– capital expenditure (2 352) (1 816) (4 858)
– proceeds from disposal of property,
plant and equipment 37 429 483
– decrease in cash and cash equivalents
on disposal of subsidiaries (1 052)
– proceeds on disposal of subsidiaries 931 51 51
– investments in intangible assets (1) (90) (119)
– decrease/(increase) in other non-
current assets 150 105 (110)
– acquisition of subsidiary (net of
cash) (2 744)
– acquisition of subsidiary (cash
acquired) 141
– dividends from investments and
equity-accounted investments 1 958 1 625 3 525
– other investing activities 6 (14) (14)
Net cash flow from financing activities 503 (92) (589)
– shares issued 9 10 15
– increase in non-controlling
interests’ loans 11
– net borrowings raised/(repaid) 494 (102) (615)
Net (decrease)/increase in cash and
cash equivalents (1 953) 1 110 1 902
Cash and cash equivalents at beginning
of period 4 118 2 058 2 058
Translation difference on movement in
cash and cash equivalents (31) 55 158
Total cash and cash equivalents end of
period 2 134 3 223 4 118
Cash and cash equivalents classified as
held-for-sale end of period 68 3 100
Cash and cash equivalents end of period
per statement of financial position 2 134 3 155 1 018
Total cash and cash equivalents end of
period 2 134 3 223 4 118
Group statement of changes in equity
Other components of equity
Equity
settled
Foreign Financial share-
Share currency instruments based
Rm capital translations revaluation payments
Balance at 1 January 2011
(Audited) 2 170 716 216 1 389
Profit for the period
Other comprehensive income 220 36
Issue of share capital1 10
Share-based payment
movements 18
Non-controlling interests
additional contributions
Dividends paid2
Balance at 30 June 2011
(Reviewed) 2 180 936 252 1 407
Profit for the period
Other comprehensive income 580 (76)
Share of associates’
comprehensive income 72 20
Issue of share capital1 5
Employee share scheme
(Mpower) vesting issue of
shares 174
Share-based payment
movements 5
Transfer to distributable
reserves (3)
Non-controlling interests
additional contributions
Dividends paid2
Balance at 31 December 2011
(Audited) 2 359 1 585 196 1 412
Profit for the period
Other comprehensive income (439) (27)
Share of associates’
comprehensive income 21 (21) 62
Issue of share capital1 9
Open market purchase of
treasury shares (297)
Share-based payment
movements 80
Acquisition of subsidiaries (13)
Acquisition of non-
controlling interest
Disposal of subsidiaries (459) (137)
Dividends paid3
Balance at 30 June 2012
(Reviewed) 2 368 695 11 1 257
Final dividend paid per
share (cents) in respect of
the 2011 financial year 500
Interim dividend paid per
share (cents) in respect of
the 2011 interim period 300
Dividend paid per share
(cents) in respect of the
2012 interim period 350
Group statement of changes in equity
Attributable
owners of
Other Retained the
Rm equity income parent
Balance at 1 January 2011 (Audited) 12 946 17 437
Profit for the period 3 237 3 237
Other comprehensive income 256
Issue of share capital1 10
Share-based payment movements 18
Non-controlling interests additional
contributions
Dividends paid2 (1 058) (1 058)
Balance at 30 June 2011 (Reviewed) 15 125 19 900
Profit for the period 4 416 4 416
Other comprehensive income 504
Share of associates’ comprehensive
income 9 (355) (254)
Issue of share capital1 5
Employee share scheme (Mpower)
vesting issue of shares 174
Share-based payment movements 5
Transfer to distributable reserves (3)
Non-controlling interests additional
contributions
Dividends paid2 (1 159) (1 159)
Balance at 31 December 2011 (Audited) 9 18 027 23 588
Profit for the period 9 046 9 046
Other comprehensive income (466)
Share of associates’ comprehensive
income 135 55 252
Issue of share capital1 9
Open market purchase of treasury
stock (297)
Share-based payment movements 80
Acquisition of subsidiaries (13)
Acquisition of non-controlling
interest
Disposal of subsidiaries (596)
Dividends paid3 (1 771) (1 771)
Balance at 30 June 2012 (Reviewed) 144 25 357 29 832
Group statement of changes in equity
Non-
controlling
Rm interests Total equity
Balance at 1 January 2011 (Audited) (23) 17 414
Profit for the period (5) 3 232
Other comprehensive income 256
Issue of share capital1 10
Share-based payment movements 18
Non-controlling interests additional
contributions (2) (2)
Dividends paid2 (1 058)
Balance at 30 June 2011 (Reviewed) (30) 19 870
Profit for the period 9 4 425
Other comprehensive income 35 539
Share of associates’ comprehensive income (254)
Issue of share capital1 5
Employee share scheme (Mpower) vesting issue
of shares 174
Share-based payment movements 2 7
Transfer to distributable reserves (3)
Non-controlling interests additional
contributions 10 10
Dividends paid2 (6) (1 165)
Balance at 31 December 2011 (Audited) 20 23 608
Profit for the period (18) 9 028
Other comprehensive income (466)
Share of associates’ comprehensive income 252
Issue of share capital1 9
Open market purchase of treasury stock (297)
Share-based payment movements 80
Acquisition of subsidiaries 213 200
Acquisition of non-controlling interest (134) (134)
Disposal of subsidiaries (5) (601)
Transfer to distributable reserves (13)
Dividends paid3 (1 771)
Balance at 30 June 2012 (Reviewed) 76 29 908
1 Issued to the Kumba Resources Management Share Trust due to options
exercised.
2 The STC on these dividends amounted to Rnil after taking into account
STC credits.
3 Withholding tax on these dividends amounted to Rnil due to STC credits
available.
Notes to the reviewed financial statements
1. Basis of preparation
This condensed group interim financial results for the six-month period
ended 30 June 2012 has been prepared under the supervision of WA de Klerk
(CA) SA, South African Institute of Chartered Accountants (SAICA)
registration number: 00133273, in accordance with International Accounting
Standards (IAS) 34 Interim Financial Reporting, the requirements of the
South African Companies Act No 71 of 2008, as amended, the AC 500 standards
as issued by the Accounting Practices Board or its successor and in
compliance with the Listings Requirements of the JSE Limited.
The condensed group interim financial results should be read in conjunction
with the annual financial statements for the year ended 31 December 2011,
which have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB). The condensed group interim financial results have
been prepared on the historical cost basis excluding financial instruments
and biological assets, which are fair valued.
During the first half of 2012 accounting pronouncement became effective:
Amended IFRS 7 Financial Instruments: Disclosures. The pronouncement had no
material impact on the accounting of transactions or the disclosure
thereof.
The accounting standards and amendments to issued accounting standards and
interpretations, other than those early adopted, which are relevant to the
group, but not yet effective at 30 June 2012, have not been adopted. It is
expected that where applicable, these standards and amendments will be
adopted on each respective effective date, except where specifically
identified. The group continuously evaluates the impact of these standards
and amendments.
2. Accounting policies
The accounting policies, methods of computation and presentation adopted
are consistent with those applied in the annual financial statements for
the year ended 31 December 2011, except as described below in note 9,
where joint ventures previously proportionately consolidated are now
equity accounted.
The group has early adopted the following standards, together with the
consequential amendments to other IFRSs, for the financial year ending 31
December 2012.
IFRS 10 Consolidated financial statements
IFRS 10 was issued in May 2011 and replaces all the guidance on control
and consolidation in IAS 27 Consolidated and separate financial
statements, and SIC-12 Consolidation – special purpose entities. Under
IFRS 10, subsidiaries are all entities (including structured entities)
over which the group has control. The group controls an entity when the
group has power over an entity, is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect
these returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the group.
They are deconsolidated from the date that control ceases. The group has
applied IFRS 10 retrospectively in accordance with the transition
provisions of IFRS 10.
IFRS 11 Joint arrangements
IFRS 11 was issued in May 2011 and supersedes IAS 31 Interests in joint
ventures and SIC 13 Jointly controlled entities – Non monetary
contributions by ventures. On transition, adjustments in accordance with
the transition provisions of the standard are recorded at the beginning of
the earliest period presented.
Before 1 January 2012, the group’s interest in its jointly controlled
entities was accounted for using the proportional consolidation method.
The investments affected by the early adoption of this IFRS are Mafube
Coal Mining Proprietary Limited and South Dunes Coal Terminal Company
Proprietary Limited.
Changes in accounting policy
The group adopted IFRS 11 Joint arrangements, on 1 January 2012. This
resulted in the group changing its accounting policy for its interests in
the jointly controlled entities. Under IFRS 11, investments in joint
arrangements are classified either as joint operations or joint ventures,
depending on the contractual rights and obligations each investor has
rather than just the legal structure of the joint arrangement. Under IFRS
11, the above-mentioned jointly controlled entities have been assessed and
classified to be joint ventures. See note 9 – Adoption of IFRS 11, for
further details.
In respect of its interest in the joint operation, the group recognises
its share of assets, liabilities, revenues and expenses. The group
accounts for the assets, liabilities, revenues and expenses in accordance
with the IFRSs applicable to the particular assets, liabilities, revenues
and expenses.
The financial effects of the change in accounting policies at 30 June 2011
and 31 December 2011 are shown in note 9 below.
3. Restatement of comparative periods
The early adoption of the above-mentioned standards has resulted in
the restatement of comparative periods. Prior periods have been
represented for discontinued operations.
At At At 31 Dec
30 June 30 June 2011
2012 2011 (Restated)
(Restated) Audited
Rm Reviewed Reviewed 2011
4. Net operating profit is arrived
at after:
Continuing operations
Depreciation, and amortisation of
intangible assets (345) (327) (665)
Net realised foreign currency
exchange gains/(losses) 60 (14) 177
Net unrealised foreign exchange
(losses)/gains (17) 15 (20)
Derivative instruments held for
trading: gains/(losses) 165 70 (154)
Impairment reversals/(write-offs)
of trade and other receivables 13 47 228
Royalties (19) (30) (33)
Gains/(losses) on disposal of
investments and non-core
operations 40 1 (3)
Surplus/(deficit) on disposal of
property, plant and equipment 33 (5) 35
5. Impairment (charges)/reversals of
property, plant and equipment
Impairment of property, plant and
equipment (439) (516)
Reversal of impairment of
property, plant and equipment 103 869
Tax effect (29)
Net effect of impairment
reversals/(charges) on
attributable earnings 74 (439) 353
Impairment reversals/(charges)
attributable to discontinued
operations 74 (439) 353
The partial impairment reversal
in 2012 relates to the carrying
value of the property, plant and
equipment at KZN Sands. The major
part of this impairment was
reversed in 2011.
6. Net financing costs
Continuing operations
Interest income 42 85 203
Interest received from joint
ventures 24 31 58
Net interest income 66 116 261
Interest expense and loan costs (129) (144) (281)
Borrowing cost capitalised 24
Interest adjustment on non-
current provisions (81) (63) (347)
Net interest expense (186) (207) (628)
Net financing cost (120) (91) (367)
7. Discontinued operations
Rosh Pinah sale
On 1 June 2012, the conditions
precedent to the sale of Exxaro’s
50,04% shareholding in Rosh Pinah
mine operations to a subsidiary of
Glencore International plc were
met. Proceeds of the sale
transaction (R931 million) were
received on 16 June 2012.
Mineral Sands Operations
Further regulatory and approvals
related to the transaction between
Exxaro and Tronox Incorporated were
obtained and the transaction became
effective on
15 June 2012.
The transaction entails the
combination of Exxaro’s mineral
sands operations with the
businesses of Tronox under a new
Australian holding company, Tronox
Limited, which listed on the New
York Stock Exchange on 18 June 2012
under the ticker symbol TROX.
Exxaro holds 39,2% of the shares in
Tronox Limited and 26% each of the
KZN Sands and Namakwa Sands
operations.
Financial information relating to
the discontinued operations for the
period to the date of disposal is
set out below.
The financial performance and
cash flow information
Revenue 3 883 3 790 8 836
Operating expenses (2 027) (3 685) (7 264)
Profit on sale of subsidiaries 4 081 1 1
Net operating profit 5 937 106 1 573
Interest income 75 46 64
Interest expense (111) (100) 76
Income from investments 5
Profit before tax 5 901 52 1 718
Income tax (565) (330) (124)
Profit/(loss) for the period from
discontinued operations 5 336 (278) 1 594
Cash flow attributable to
operating activities 1 092 297 927
Cash flow attributable to
investing activities (684) 231 (286)
Cash flow attributable to
financing activities (1 065) 159 1 979
Cash flow attributable to
discontinued operations (657) 687 2 620
6 months ended 30 June 2012
(Reviewed)
Mineral Rosh
Rm Sands1 Pinah Total
8. Gains/(losses) on the disposal of
subsidiaries
Consideration received or receivable:
Cash 931 931
39,2% Shares in Tronox Limited at fair 10 605 10 605
value
26% Shares in SA mineral sands operations
at fair value 1 181 1 181
26% members interest in Tronox Sands LLP
at fair value 1 304 1 304
Total disposal consideration 13 090 931 14 021
Foreign currency translation reserve
realised 459 459
Hedging reserves realised 137 137
Carrying amount of net assets sold (10 149) (387) (10 536)
Gain on sale before and after income tax 3 537 544 4 081
1 Fair value adjustments are based on
preliminary fair value assessment.
12 months ended 31 Dec 2012
(Audited)
Glen
Turkey Douglas Total
Rm Rm Rm
Consideration received or receivable:
Cash 17 33 50
Total disposal consideration 17 33 50
Carrying amount of net assets sold (12) (37) (49)
Gain/(loss) on sale before and after
income tax 5 (4) 1
9.Early adoption of IFRS 11
Joint arrangements
The group had several interests in joint arrangements established as
limited liability companies. Under IAS 31, these were assessed as
jointly controlled entities and were consolidated in terms of IAS31. The
group has reassessed the classification of its joint arrangements under
IFRS 11.
Exxaro
shareholding
interest Previous Revised
(%) treatment treatment
Mafube Coal Proprietary 50 Proportionately Equity
Limited – joint venture with consolidated accounted
Anglo Operations Limited
South Dunes Coal Terminal 33 Proportionately Equity
Company Proprietary Limited – consolidated accounted
joint venture with Eskom
Enterprises Proprietary
Limited and Golang Coal
Proprietary Limited
Moranbah joint arrangement – 50 Proportionately Share of
joint operation with Anglo consolidated net income,
American assets and
liabilities
Cennergi Proprietary Limited 50 Not applicable Equity
(note 14) accounted
Impact on statement of
comprehensive income
Increase/(decrease) 6 months 12 months
ended ended
30 June 2011 31 Dec 2011
Revenues (134) (344)
Operating expenses 20 88
Net financing cost 30 65
Share of income from equity
accounted investments 61 76
Profit before tax (23) (115)
Tax expense 23 115
Profit after tax
Impact on statement of
financial position
Increase/(decrease)
Assets:
– Property, plant and
equipment (1 087) (1 111)
– Financial assets (147) (137)
– Deferred tax (1) (1)
– Investments in joint
ventures 1 031 983
– Trade and other receivables (114) (139)
– Cash and cash equivalents (47) (47)
– Inventories (39) (29)
Total assets (404) (481)
Liabilities:
– Interest-bearing borrowings (114) (100)
– Non-current provisions (41) (55)
– Deferred tax (53) (143)
– Trade and other payables (168) (153)
– Current interest-bearing
borrowings (28) (30)
Total liabilities (404) (481)
Impact on statement of cash
flows
Increase/(decrease)
Cash flows from operating
activities (168) (269)
Cash flows from investing
activities 149 271
Cash flows from financing
activities 35 14
Net increase in cash and cash
equivalents 16 16
Net decrease in cash and cash
equivalents - at the beginning
of the period (63) (63)
Net decrease in cash and cash
equivalents (47) (47)
10. Dividends
A dividend of R1 771 million that relates to the period to 31
December 2011 was paid in April 2012.
In addition, an interim dividend of 350 cents per share (2011:
300 cents per share) was approved by the board of directors on
31 July 2012. The dividend is payable on 25 September 2012 to
shareholders who are on the register at 14 September 2012. This
interim dividend, amounting to approximately R1 253 million (2011:
R1 064 million), has not been recognised as a liability in this
interim financial information. It will be recognised in shareholders’
equity in the year ending 31 December 2012.
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2012 2011 2011
(Restated) (Restated)
Rm Reviewed Reviewed Audited
Local dividend tax rate (percentage) 15
Gross local dividend amount
represented (cents per share) 350 300 800
STC (secondary tax on companies)
credits utilised (cents per share) 350 300 800
Net local dividend amount (cents per
share)
Issued share capital as at
declaration date (number) 358 359 354
Company tax reference number 9218/098
/14/4
11. Share capital
Ordinary shares (million)
– in issue 358 359 354
– weighted average number of shares 354 348 348
– diluted weighted average number of
shares 358 362 353
12. Non-current assets classified as
held-for-sale
The major classes of assets and
liabilities of the assets classified
as held-for-sale are as follows:
Assets
Property, plant and equipment 316 6 771
Intangible assets 132
Financial assets 12 158
Investments in associates and joint
ventures 137
Deferred tax 465
Inventories 165 2 404
Trade and other receivables 106 1 931
Current tax receivable 18
Cash and cash equivalents 68 3 100
804 14 979
Liabilities
Interest-bearing borrowings (9) (834)
Non-current provisions (92) (682)
Deferred tax (96) (69)
Current provisions (10)
Trade and other payables (84) (968)
Current tax payable (6) (2)
(287) (2 565)
Net assets at end of reporting
period 517 12 414
The necessary regulatory and approvals related to the transaction
between Exxaro and Tronox were obtained and the sale of the Mineral
sands operations became effective on 15 June 2012. The sale of
Exxaro’s 50.04% interest in the Rosh Pinah operation to a subsidiary
of Glencore International plc was completed on 1 June 2012.
13. Business combinations
On 14 February 2012, the group acquired 67% of the issued share
capital of African Iron Ore Limited (AKI), a junior mining company
listed on the Australian Stock Exchange, which is included in the
“other” business segment. The acquisition is classified as an
acquisition of a business.
The acquired business is still in exploration and development state,
and thus has not contributed any revenues to the group results.
It has also contributed R78,5 million losses to the group operating
profit for the period from 14 February 2012 to 30 June 2012.
If the date of acquisition was 1 January 2012, revenue contribution
would have been Rnil, whilst the net operating loss R73,5 million.
For purposes of these condensed group interim financial statements,
the purchase consideration has been allocated on a preliminary basis
to the fair value of the assets acquired and liabilities assumed,
including the allocation of property, plant and equipment, based on
management’s best estimates and taking into account all available
information at the time of the business combination. The group will
complete a valuation of the acquired assets and liabilities using an
independent party and, therefore, this preliminary allocation is
subject to change.
Details of the acquired assets are
as follows: Rm
Purchase consideration:
– cash paid on acquisition on 14
February 2012 2 551
– subsequent acquisition of non-
controlling interests 193
– fair value of assets acquired 2 744
Goodwill
The assets and liabilities arising
from the acquisition are as follows:
– cash and cash equivalents 141
– property, plant and equipment 11
– intangible assets1 3 613
– trade and other receivables 6
– deferred tax liability (789)
– trade and other payables (25)
Total identifiable net assets (at
fair value) 2 957
Non-controlling interest (213)
2 744
Total purchase consideration 2 744
– less: cash and cash equivalents in
subsidiary acquired (141)
Cash outflow on acquisition of
subsidiary (refer to cash flow
statement) 2 603
1 Consisting of exploration rights and goodwill due to deferred tax
liability recognised on the business combination.
As part of the acquisition, Exxaro acquired AKI’s duty to pay a
deferred consideration in the form of a production royalty of
AUD1/ton of iron ore shipped.
Acquisition-related costs of R48 million have been charged to
operating expenses in the consolidated statement of comprehensive
income for the period ended 30 June 2012.
There are no contingent consideration arrangements with the former
owners of AKI Ltd.
The fair value of trade and other receivables is R6 million and
includes no trade receivables as the business is still in exploration
and development phase. The gross contractual amount for other
receivables due is R6 million, of which none is expected to be
uncollectible.
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2011 2011 2011
(Restated) (Restated)
Rm Reviewed Reviewed Audited
14. Investments
Market value of listed investments 50 43 44
Directors' valuation of unlisted
investments in associates and joint
ventures 34 690 19 021 23 698
Market value of listed investments
in associates and joint ventures 9 956
Directors' valuation of unlisted
investments included in other
financial assets 716 389 392
Directors' valuation of unlisted
investments in non-current assets
held for sale 4 2
On 2 March 2012, Exxaro Resources Limited and The Tata Power Company
Limited (Tata Power), through its subsidiary Khopoli Investments,
announced the formation of a 50:50 joint venture to create a new
energy company, Cennergi Proprietary Limited. Cennergi, which will be
based in South Africa, and will focus on the investigation of
feasibility, development, ownership, operation, maintenance,
acquisition and management of electricity generation projects in South
Africa, Botswana and Namibia. The initial project pipeline focuses on
renewable energy projects.
On 15 June 2012 Exxaro Resources Limited acquired 39.2% of the shares
in Tronox Limited (an Australian holding company) and a 26% members
interest in Tronox Sands LLP.
The consideration comprised the transfer of the following to Tronox
Limited and Tronox Sands LLP:
– 74% of the shares and intercompany debt in Exxaro’s South African
mineral sands operations (Namakwa Sands and KZN Sands mines and
smelters); and
– Exxaro’s 50% interest in the Tiwest Joint venture in Australia.
Exxaro retained a direct 26% shareholding in each of the South African
operations.
The investments in Tronox Limited and Tronox Sands LLP have been
accounted for as investment in associate using the equity method in
accordance with IAS 28 Investments in Associates and Joint Ventures.
Due to the transaction closing on 15 June 2012, Exxaro’s share of the
attributable earnings and reserves up to 30 June 2012 has been based
on preliminary Tronox Limited and Tronox Sands LLP results.
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
2012 2011 2011
(Restated) (Restated)
Rm Reviewed Reviewed Audited
15. Segment results
Revenue
Coal 5 825 5 653 12 420
Tied operations 1 453 1 445 3 140
Commercial operations 4 372 4 208 9 280
Mineral sands 3 594 2 889 6 587
KZN Sands 855 575 1 196
Namakwa Sands 1 589 1 123 2 904
Australia Sands 1 150 1 191 2 487
Base metals 288 900 1 846
Rosh Pinah 217 291 698
Zincor 71 826 1550
Inter-segmental (217) (402)
Other 49 40 109
Total external revenue 9 756 9 482 20 962
Net operating profit
Coal 1 352 1 513 3 083
Tied operations 79 83 309
Commercial operations 1 273 1 430 2 774
Mineral sands 1 925 652 2 678
KZN Sands1 680 (6) 753
Namakwa Sands 1 009 280 987
Australia Sands 236 378 938
Base metals 448 (564) (1 145)
Rosh Pinah (7) 86 102
Zincor1 (65) (638) (1 239)
Other2 520 (12) (8)
Other2 3 516 (79) (491)
Total net operating profit 7 241 1 522 4 125
1 Includes a partial impairment reversal of R103 million in 2012 of
the carrying value of property, plant and equipment at KZN Sands, as
well as an impairment of R439 million of the carrying value of
property, plant and equipment at Zincor refinery in 2011.
2 Includes the profit on sale of subsidiaries of R3 537 million, R544
million and R40 million for Mineral Sands, Rosh Pinah and Northfield
respectively.
16.Net debt/(cash)
Net debt/(cash) is calculated as being interest-bearing borrowings less
cash and cash equivalents.
17.Contingent liabilities
Include guarantees in the normal course of business from which it is
anticipated that no material liabilities will arise. This includes
guarantees to banks and other institutions. The decrease in operational
guarantees is due to the sale of the mineral sands operations and Rosh
Pinah, partially offset by new issues in respect of renewable energy
projects. Possible claims that may follow from ongoing litigations were
marginally higher at the end of June 2012.
Included is the group’s share of contingent liabilities of associates
and joint ventures of R198 million (2011: R116 million). These
contingent liabilities have no tax impacts. Timing and occurrence of any
possible outflows are uncertain.
18.Contingent assets
A surrender fee of R80 million (2011: R70 million) in exchange for the
exclusive right to prospect, explore, investigate and mine for coal
within a designated area in central Queensland and Moranbah, Australia,
conditional to the grant of a mining lease. An outstanding insurance
claim of R7 million for the furnance incident at Exxaro TSA Sands
Proprietary Limited for which it is probable that settlement will be
received in the second half of 2012.
19.Related party transactions
The company and its subsidiaries, in the ordinary course of business,
entered into various sale and purchase transactions with associates and
joint ventures. These transactions were subject to terms that are no
less favourable than those arranged with third parties.
20.Financial instruments
No reclassification of financial instruments occurred during the period
under review.
21.Going concern
Taking into account the global economy, the group’s liquidity position
as well as internal budgets for the short to medium term, it is expected
that the group will continue to trade as a going concern within the next
12 months.
22.JSE Limited Listings Requirements
The interim results announcement has been prepared in accordance with
the Listings Requirements of the JSE Limited.
23.Corporate governance
The group complies in all material respects with the Code of Corporate
Practice and Conduct published in the King III Report on Corporate
Governance.
24.Mineral resources and mineral reserves
No material changes to the mineral resources and mineral reserves
disclosed in the Exxaro annual report for the year ended 31 December
2011 have occurred, other than depletion due to continued mining
activities as well as reserves relating to subsidiaries acquired and
disposed.
25.Events after the reporting period
Details of the interim dividend proposed are given in Note 10.
The directors are not aware of any other matter or circumstance arising
after the reporting period up to the date of this report, not otherwise
dealt within this report.
26.Review conclusion
The condensed group interim financial results for the six-months ended 30
June 2012 have been reviewed by the company’s auditors,
PricewaterhouseCoopers Incorporated, in accordance with International
Standards on Review Engagements 2410 – “Review interim financial
information performed by the Independent Auditors of the entity”. The
unmodified conclusion report is available for inspection at the company’s
registered office.
Salient features
At
At 30 June At 31 Dec
30 June 2011 2011
2012 (Restated) (Restated)
Rm Reviewed Reviewed Audited
Net debt/(cash) 1 288 901 (346)
Net asset value per share (Rand) 84 55 67
Net tangible asset value per share (Rand) 73 55 66
Capital expenditure
– incurred 2 352 1 816 4 858
– contracted 3 071 3 671 7 614
– authorised but not contracted 1 233 2 535 2 413
Capital expenditure contracted relating
to captive mines
Tshikondeni, Arnot and Matla, which will
be financed by
ArcelorMittal South Africa Limited and
Eskom respectively 574 613 90
Contingent liabilities (note 17) 993 980 1 198
Contingent assets (note 18) 87 70 82
Operating lease commitments 14 69 60
Comments
Comparability of results
Comments are based on a comparison of the group’s reviewed financial
results and unreviewed physical information for the six-month periods ended
30 June 2012 and 2011 respectively. These results are not comparable due to
profits realised on the sale of certain mineral sands, zinc and other
assets of R4 121 million in 2012, the partial impairment reversal of the
carrying value of property, plant and equipment at KZN Sands of R103
million in 2012, as well as R439 million impairment of the carrying value
of property, plant and equipment at the Zincor refinery in 2011. The
conclusion of two sale transactions also results in the mineral sands and
base metals commodity businesses’ results effectively being included in the
six-month results for approximately five and half and five months
respectively. Where relevant, comments exclude transactions which make the
results under review not comparable.
The group early adopted the new suite of consolidating standards IAS 27, 28
and IFRS 10, 11 and 12. As such the Mafube and South Dunes Coal Terminal
(SDCT) joint ventures, which were previously proportionately consolidated,
are now equity accounted. This has resulted in the restatement of prior
periods’ financial results to reflect the new accounting method.
Portfolio improvement through delivery of the group’s strategy
Coal
The construction of the Grootegeluk Medupi Expansion Project (GMEP)
continues to progress as planned and within budget. The first coal has
already been delivered to Eskom.
Mineral sands
The group announced that all regulatory and other approvals related to the
transaction between Exxaro and Tronox Incorporated had been obtained and
the transaction became effective on 15 June 2012. The transaction entails
the combination of Exxaro’s mineral sands operations with the businesses of
Tronox under a new Australian holding company, Tronox Limited, which listed
on the New York Stock Exchange on 18 June 2012 under the ticker symbol
TROX. Exxaro currently holds 39,2% of the shares in Tronox Limited and 26%
directly in each of the South African based KZN Sands and Namakwa Sands
operations. The formation of Tronox Limited is expected to result in a
strong platform for future growth as it is uniquely positioned to
capitalise on favourable market dynamics and serve the needs of the ever-
growing pigment and zircon customer base across the globe.
Ferrous
In line with the group’s strategy to establish an Exxaro controlled iron
ore business, Exxaro and African Iron Limited (AKI) jointly announced on
11 February 2012 a successful market cash takeover offer by Exxaro through
its wholly owned subsidiary, Exxaro Australia Iron Investments Pty Ltd
(Exxaro Australia), for all of the shares and listed options in AKI. AKI
was an Australian-listed and domiciled iron ore development company
involved in the exploration and evaluation of the Mayoko Iron Ore and
Ngoubou-Ngoubou Projects, located in the Republic of Congo in Central West
Africa.
The total purchase consideration paid in cash for this acquisition was
R2 744 million.
Energy
Exxaro continues to explore opportunities in the energy market with a focus
on cleaner energy initiatives. Exxaro and Tata Power (through its wholly
owned subsidiary Khopoli Investments), formed a 50:50 joint venture to
create Cennergi Proprietary Limited (Cennergi) when the parties signed the
shareholders agreement and Memorandum of Incorporation on 2 March 2012.
Base metals
Exxaro also announced that it has completed the sale of its 50,04% interest
in the Rosh Pinah operation to a subsidiary of Glencore International plc
for a consideration of R931 million after final adjustments for net debt
and working capital changes. The effective date of the transaction was
1 June 2012. The sale forms part of Exxaro’s strategic plan to divest from
the group’s zinc assets.
Safety, health and environment
On 12 July 2012, Exxaro achieved 12 months without any fatalities. However,
the average lost time injury frequency rate per two hundred thousand man-
hours worked increased to 0,26 from 0,22 in the corresponding six-month
period in 2011, reflecting an 18% increase in the rate and is higher than
the group’s target of 0,15. Ten business units achieved no lost time
injuries in the six-month period ended 30 June 2012 compared to five in the
corresponding period in 2011.
During the reporting period, six incidents of noise-induced hearing loss
were recorded and reported to the Department of Mineral Resources (DMR).
The HIV/AIDS educators training programme has also been extended into the
Waterberg region in the first half of 2012.
Exxaro’s operations have applied for all requisite environmental
authorisations in terms of the Mineral and Petroleum Resources Development
Act, the National Water Act and the National Environmental Management Act.
The group continues to strive to find a balance between the environmental,
social and economic impacts of mining, and to aspire to more than mere
compliance.
Reputation
Exxaro is fully aware that an organisation is only as prosperous as the
communities in which it operates. Several community development projects
are in various stages of development. These projects are aimed at ensuring
that Exxaro is able to maximise community benefits by focusing on
sustainable initiatives for surrounding communities.
The R100 million upgrade of the Zeeland water treatment works plant which
supplies potable water to more than 21 000 residents in the Lephalale Local
Municipality in Limpopo, was completed and commissioned in the second
quarter of 2012. The water treatment works is operated by Exxaro’s
Grootegeluk mine as part of the mine’s contribution to the local
infrastructure and has been awarded Blue Drop Certification by the
Department of Water Affairs (DWA).
Exxaro has partnered with the Absa Cape Epic mountain bike race through its
non-profit organisation, Exxaro mountain bike Academy, to become the
official development partner to the Absa Cape Epic. The focus of the
Academy is the transformation of mountain biking as a sport in South Africa
by enabling talented and disadvantaged riders in our communities to
participate in this gruelling sport.
Leadership and people
Exxaro continues to be committed to long term sustainability by empowering
its employees. The board and shareholders of Exxaro have approved, at the
Annual General Meeting held on 22 May 2012, the new employee share
ownership plan (ESOP), commonly referred to as MPower 2012, for employees
below management level. The scheme replaces the initial employee share
ownership scheme which expired on 27 November 2011. The new scheme will
also run for a period of five years. Each employee will receive 387 Exxaro
shares for no consideration. The economic cost of implementing the new ESOP
was approximately R584 million.
Operational and financial excellence
An average exchange rate of R7,88 (spot average of R7,93) to the US dollar
(USD) was realised for the six-month period ended 30 June 2012 compared to
R7,21 (spot average of R6,78) for the six-month period ended 30 June 2011.
Unrealised foreign currency losses, on the revaluation of monetary items
denominated in a foreign currency, were recorded based on the relative
strength of the local currency to the USD at 30 June 2012. The relative
strength of the Australian dollar (AUD) also continued to impact negatively
on the financial results of the mineral sands business in Australia, albeit
only marginally. An average rate of USD0,97 (spot average of USD0,96) to
the AUD was realised compared with USD0,96 (spot average of USD1,03) in
2011.
Group
Revenue and net operating profit
Group consolidated revenue increased marginally by 3% to R9 756 million,
mainly as a result of higher mineral sands prices at lower volumes, a
weaker relative local currency realised, as well as lower coal volumes at
lower export prices.
Group consolidated net operating profit was R1 096 million higher at
R3 057 million after exclusion of the 2012 R103 million partial reversal of
the impairment of the carrying value of property, plant and equipment at
KZN Sands, the profits recognised on the sale of the mineral sands and Rosh
Pinah mine subsidiaries of R3 537 million and R544 million respectively, as
well as the R439 million impairment of the carrying value of property,
plant and equipment at the Zincor refinery in 2011.
Earnings
Attributable earnings, inclusive of Exxaro’s equity accounted investment in
associates, amounted to R9 046 million or 2 555 cents per share, up 177%
from 2011’s 921 cents per share.
Headline earnings recorded, which exclude, inter alia, the impact of the
impairment and partial impairment reversal as well as profits realised on
the sale of the subsidiaries, were R4 115 million or 1 162 cents per share.
This represents a 11% increase on the corresponding 2011 earnings of
R3 637 million or 1 045 cents per share.
Cash flow
Cash retained from operations was R2 485 million for the group. This was
primarily used to fund net financing charges of R80 million, taxation
payments of R164 million and the final dividend for the 2011 financial year
of R1 771 million. A total of R1 677 million of the capital expenditure was
invested in new capacity with R675 million applied towards sustaining and
environmental capital. R1 556 million of the capital investment in new
capacity was for the expansion of GMEP to supply Eskom’s Medupi power
station.
After the receipt of R1 958 million, primarily received from Sishen Iron
Ore Company Proprietary Limited (SIOC) as dividends, the group had a net
cash outflow before financing activities of R2 456 million for the period
under review. The acquisition of AKI contributed to the net cash outflow
and the net debt reported at 30 June 2012 of R1 288 million, reflecting a
debt to equity ratio of 4%.
Capital expenditure
The group continues to take due cognisance of the macro-economic
fundamentals and the challenges experienced by the industry in its
evaluation of growth projects while ensuring alignment with the group’s
approved commodity strategy.
Equity accounted investments
Equity-accounted income in the post-tax profits of associates consists
primarily of Exxaro’s 19,98% interest in SIOC of R1 935 million and 26% in
Black Mountain Mining Proprietary Limited (Black Mountain) of R45 million.
Exxaro’s effective shareholding in Chifeng Zinc refinery has been diluted
from 22% to 11,97% as a result of Exxaro not participating in the Phase IV
expansion project. As such, Chifeng is no longer accounted for as an
associate but rather as a financial asset with effect from the first half
of 2012.
The Tronox Limited investment has been equity accounted for effectively 15
days in the six-month period ended 30 June 2012, contributing R118 million
post-tax in equity income for this period. Moreover, an excess of R707
million was accounted for being the best estimate of the fair value of the
net assets over the cost of the investment in Tronox Limited and 26%
investment in South African mineral sands operations. This amount will be
finalised in the second half of 2012.
Coal
Revenue and net operating profit
Revenue remained stable at R5 825 million, mainly due to higher average
domestic prices, partially offset by lower export prices.
The marginal increase in revenue was not enough to counter inflationary
cost increases, resulting in a decrease in net operating profit to
R1 352 million at an operating margin of 23%.
Production and sales volumes
Total coal production volumes decreased by 3% mainly as a result of lower
steam coal volumes.
The power station coal production at the Eskom tied operations was 4% lower
due to production difficulties at Matla and Arnot. Commercial mines’ power
station coal production was, however, higher mainly due to improved run of
mine tonnage at NBC, partially offset by lower production volumes at
Grootegeluk due to conveyor belt breakdowns.
Sales to Eskom were 2% lower as a result of lower power station coal
production at Arnot and Matla.
Other domestic sales were 13% lower due to lower sales at Leeuwpan and NBC
marginally offset by higher steam coal sales from Grootegeluk and Inyanda.
Steam coal production was 7% lower as a result of poor run of mine tonnage
at Leeuwpan.
Export sales tonnes declined by 13% primarily as a result of lower
availability on the Transnet Freight Rail (TFR) line as well as production
challenges experienced at the Mafube mine.
A decline in the Char plant production was reported due to lower demand
from customers, mainly resulting from softening Ferrochrome markets. Stock
levels were proactively managed down to match the demand.
The decrease in demand from Ferrochrome customers led to a 49% decrease in
sales from the Char business.
Coking coal production increased by 3% due to a higher demand from
ArcelorMittal South Africa Limited (AMSA) and higher production from the
Tshikondeni mini pits that operated for the full six months.
Capital expenditure
To date the total project expenditure on GMEP is R5,93 billion, while total
funds committed amount to approximately R7 billion. The first coal based on
a revised ramp up schedule agreed with Eskom was already delivered to
Eskom. The new agreement is still subject to the approval of the Eskom
Board in early August 2012, failing which the terms of the current coal
supply agreement will apply. In terms of the revised agreement, 160kt of
coal will be delivered during 2012 for the commissioning of the respective
coal handling systems while the coal supply ramp-up will commence during
March 2013 and endure until mid-2016.
Mineral sands
Revenue and net operating profit
An increase in revenue was recorded at all the mineral sands operations
although only accounted for five and a half months due to the sale of the
business to Tronox Limited. Revenue increased 24% to R3 594 million mainly
as a result of higher prices achieved on all products. Higher slag sales
volumes due to higher furnace uptime was offset by lower sales volumes of
pigment, zircon, rutile and pig iron.
The higher revenue recorded translated into a higher net operating profit
of R1 822 million after excluding the partial impairment reversal of
property, plant and equipment at KZN Sands of R103 million.
Production and sales volumes
Production volumes at the KZN Sands mine continued to decline significantly
due to lower grades as the mine comes to end of life in 2013. Furnace 1 was
back on line at the end of February 2012. No furnace incidents were
reported in the six-month period under review, resulting in high production
of slag products at the furnaces. The deficit in furnace feedstock
requirements due to the declining production from Hillendale was
supplemented by existing ilmenite stock piles.
Namakwa Sands’ zircon production was managed against full stock piles and
weak customer demand, while slag production increased mainly due to
increased furnace uptime.
The proactive management of pigment stock piles in a softening market at
Australia Sands led to pigment production being 41% lower than the
corresponding period in 2011. Included in the 2011 production numbers are
tonnages relating to the Kwinana pigment plant expansion. Tronox bought
back into the expansion on 30 June 2011, contributing to the reduction of
Exxaro’s proportionate share of pigment production. Zircon production was
significantly lower due to lower demand as well as lower dry mill feed
rates from lower grades. Synthetic rutile production remained stable in
comparison to the corresponding period as a result of good plant stability
and improved ilmenite feed rates.
The slow down in the market continued to have a negative impact on the
demand for zircon. As such sales tonnes were 59% lower than the
corresponding period in 2011. Pig iron and pigment sales declined by 16%
and 53% respectively, also due to softening market demand. The demand for
slag products, however, remained strong.
Capital expenditure
R49 million was spent on the Fairbreeze project in the six-month period
ended 30 June 2012, bringing the total cost capitalised to the project to
date to R75 million.
Base metals
Revenue and net operating profit
The cessation of zinc production at Zincor refinery was the main
contributor to the decrease in revenue and net operating losses in the base
metals business. Lower average selling prices were realised for zinc and
lead at US$ 1 976 and US$ 2 087 per tonne respectively (2011: US$ 2 325 and
US$ 2 602). Sales recognised at Zincor were as a result of closing stock,
recorded at the end of the 2011 financial year, being realised.
A consolidated net operating profit of R448 million was reported for the
base metals business as the profit realised on the sale of Rosh Pinah was
partially offset by Zincor’s continued care and maintenance costs.
Production and sales
No production was recorded at Zincor in the first half of 2012. Zinc and
lead concentrate production at Rosh Pinah was 10kt lower mainly due to
lower feed grades. This in turn led to lower sales volumes.
Unreviewed physical information
6 months 12 months
Owner-controlled 6 months ended ended
Operations ended 30 Jun 2011 31 Dec 2011
(’000 tonnes) 30 Jun 2012 (Restated) (Restated)
Coal
Production and buy-ins
Power station coal 15 236 15 326 31 765
Tied operations1 6 142 6 370 12 441
Commercial operations 9 094 8 956 19 324
Coking coal 1 274 1 241 2 161
Tied operations1 149 134 299
Commercial operations 1 125 1 107 1 862
Steam coal 2 936 3 141 5 966
Buy-ins 460 868 1 636
Char 38 77 142
Total 19 944 20 653 41 670
Sales
Eskom 15 125 15 496 31 681
Tied operations1 6 136 6 376 12 443
Commercial operations 8 989 9 120 19 238
Other domestic coal 2 493 2 577 4 841
Tied operations1 141 166 325
Commercial operations 2 352 2 411 4 516
Export 1 816 2 084 4 898
Char 38 74 129
Total 19 472 20 231 41 549
Mineral sands2
Production
Ilmenite 403 367 771
Zircon 74 94 195
Rutile 32 32 67
Synthetic rutile 54 54 110
Pig iron (LMPI) 104 68 160
Scrap iron 5 4 8
Slag tapped 173 124 277
Chloride slag 134 150 281
Sulphate slag 25 26 49
Leucoxene 4 5 10
Pigment 26 44 76
Sales
Ilmenite 15 15
Zircon 37 91 173
Rutile 24 33 66
Synthetic rutile 12 16 37
Pig iron (LMPI) 66 79 170
Scrap iron 1 1 4
Chloride slag 137 126 274
Sulphate slag 28 28 50
Leucoxene 4 4 8
Pigment 20 43 71
Base Metals
Production
Zinc concentrate (Rosh Pinah) 33 43 89
Zinc metal (Zincor) 41 73
Lead concentrate (Rosh Pinah) 6 9 16
Sales
Zinc concentrate (Rosh Pinah) 37
Zinc metal (Zincor) 4 46 86
Lead concentrate (Rosh Pinah) 7 18
1 Tied operations refer to mines that supply their entire production to
either Eskom or AMSA in terms of contractual agreements.
2 Includes Exxaro Sands Australia’s 50% interest in the Tiwest joint
venture.
6 months 12 months
Non-controlled 6 months ended ended
Operations ended 30 Jun 2011 31 Dec 2011
(’000 tonnes) 30 Jun 2012 (Restated) (Restated)
Coal
Mafube production tonnes 878 1 035 2 137
Mafube sales tonnes 901 1 018 2 085
Iron ore
SIOC production 4 307 3 831 8 253
SIOC sales 4 677 4 405 8 714
1 Exxaro’s share in non-controlled operations.
Capital expenditure and project pipeline
Exxaro’s growth initiatives continue to focus on diversifying the business
with carbon, reductants, ferrous and energy projects, aligned with the
group’s approved commodity strategy.
Coal
The total capital expenditure to completion of GMEP is still forecast at
R9,5 billion.
Exxaro continues to engage with the relevant stakeholders for the
conclusion of implementation plans for an integrated infrastructure for the
Waterberg coalfields which will include the supply of water, rail, and road
and housing requirements. This infrastructure is deemed crucial to the
developments of projects such as Thabametsi, a greenfields project that is
geared at both the domestic and export markets. It is expected that this
project will provide Exxaro with the opportunity to produce additional
volumes of between 13Mtpa and 15Mtpa.
Exxaro Coal and Coal of Africa Limited (CoAL) continue to progress on the
valuation of the Makhado Project in the Greater Soutpansberg area. The
project represents a potential development of high quality metallurgical
coal assets. Exxaro Coal is still in the process of reviewing CoAL’s
definitive feasibility study and is expected to reach a decision on whether
to proceed to exercise its option in the third quarter of 2012.
Studies relating to the evaluation of the Phase 2 expansion of the Sintel
Char plant to produce an additional 140ktpa of char as well as the
bankable feasibility study for the production of market coke at
Grootegeluk, continue to progress and are expected to be completed in the
first quarter of 2013.
The Belfast project continues to progress and a bankable feasibility study
is now only expected to be completed in the second half of 2012.The
colliery, if feasible and fully operational, will produce both export and
power station coal.
The pre-feasibility study on the Moranbah South project commenced in 2011
and is now planned to be completed in the second half of 2012. Exxaro,
jointly with Anglo Coal Australia, plans to embark on a bankable
feasibility study in 2013.
Ferrous
Exxaro has assumed full management and operational control over the entire
group of companies that were acquired as part of the acquisition of AKI. A
broad-based review of the operations and technical aspects of the Mayoko
project is currently being conducted and is expected to be completed during
the second half of 2012. The project has advanced significantly since
acquisition with emphasis on the Phase I mining. The intent is to develop
the project in phases, eventually producing and exporting 10mtpa of iron
ore by 2016.
AlloyStreamTM’s large scale demonstration facility to commercialise the
technology for beneficiation of manganese ore into high carbon
ferromanganese alloy, together with Assmang Limited, was successfully
commissioned in the first quarter of 2012. Testing of commercial viability
will continue in 2012 and 2013.
Energy
Cennergi submitted five renewable energy projects (two solar projects and
three wind projects) through the Department of Energy’s (DoE) Request for
Qualification and Proposals for new Generation Capacity under the
Independent Power Producer Procurement Programme (IPPPP). The joint venture
was granted preferred bidder status on two wind projects and plans to
achieve financial close by February 2013 in terms of the current IPPPP
milestones. The first of these projects, Amakhala Emoyeni Wind Farm
project, is a 140MW wind farm located near the town of Bedford in the
Eastern Cape. The second successful wind project is the Tsitsikamma
Community Wind Farm, which Cennergi is developing together with Watt Energy
and the Tsitsikamma Development Trust. This project entails a 95MW wind
farm located on the Mfengu community land, in the Eastern Cape.
The construction of the 14MW co-generation power plant at Namakwa Sands
commenced in the second quarter of 2012. This project now falls within the
ambit of Tronox Limited.
The facilitation for the development of a 600MW coal-fired base load power
station, at Thabametsi in the Waterberg continues. The preferred
Independent Power Producer (IPP) partner for the base load power station
will be selected during the second half of 2012. The Thabametsi greenfields
development project is expected to reach first coal production by 2017,
dependant on the Waterberg IPP and water supply development schedule.
The exploration programme for the Botswana gas initiative is progressing
well and security of tenure of the leases has been secured; moreover the
project is in the process of acquiring an extension to the prospecting
license.
Conversion of mining rights
The execution of the mining rights for Tshikondeni, Matla, Strathrae, Arnot
and Glisa has still not been scheduled by the DMR. Exxaro continues to
engage and consult with the different regional offices of the DMR to
expedite the execution process.
Outlook
The safety of our people remains the highest priority for the Exxaro group.
As such, Exxaro will continue to focus on creating and maintaining a safe
and healthy environment for our people to work in.
The financial and operational results are expected to be relatively stable
in the second half of 2012.
The coal export price index is anticipated to remain under pressure for the
remainder of 2012, while domestic prices are expected to be at marginally
higher levels. Power station coal demand is expected to remain robust along
with strong steam coal demand. Overall coal production volumes are expected
to be higher in the second half but are likely to be offset by weaker
international coal prices. The Char plant has been put on care and
maintenance until market conditions improve. TFR performance is expected to
remain stable.
Exxaro’s future equity income is expected to be influenced by the mineral
sands and iron ore industry due to Exxaro’s interests in Tronox Limited and
SIOC respectively.
The trading levels of the local currency to the US dollar will invariably
impact on the financial results in the second half of 2012.
The financial information on which the outlook statement is based has not
been reviewed or reported on by the group’s external auditors. These
forward-looking statements are based upon management’s current beliefs and
expectations and are subject to uncertainty and changes in circumstances.
The forward-looking statements involve risks that may affect the company’s
operations, markets, products, services and prices. Exxaro undertakes no
obligation to update or revise any forward-looking statements, whether as a
result of new information or future developments.
Changes to the board
Ms N Langeni resigned as non-executive director effective 18 January 2012.
The board expressed its sincere appreciation for her contribution during
her term of office. As a result Ms S Dakile-Hlongwane was appointed as non-
executive director of the board on 21 February 2012 as the Basadi Ba Kopane
Investments Proprietary Limited nominated representative.
Dr Mahomed Fazel Randera was appointed to the Exxaro board as a non-
executive director on 13 June 2012 as the second Eyesizwe Mining
Proprietary Limited nominated representative. The board welcomes Dr Randera
to the team.
The following board committee changes also became effective from 13 June
2012:Mr JJ Geldenhuys was appointed to the Audit Committee to replace Mr NL
Sowazi; Dr D Konar was appointed as a member of the Remuneration and
Nomination Committee; and Ms S Dakile-Hlongwane was appointed to the
Sustainability, Risk and Compliance Committee.
Interim dividend
Notice is hereby given that a gross interim cash dividend Number 19 of 350
cents per share for the six-month period ended 30 June 2012 has been
declared payable to shareholders of ordinary shares. The STC credits
utilised amount to 350 cents per share. The number of ordinary shares in
issue at the date of this declaration is 357 611 115. Although the local
dividend tax rate is 15%, no withholding tax will be due as a result of the
STC credits utilised.
The salient dates relating to the payment of the dividend are as follows:
Last day to trade cum dividend on the JSE Friday, 14 September 2012
First trading day ex dividend on the JSE Monday,17 September 2012
Record date Friday, 21 September 2012
Payment date Tuesday, 25 September 2012
No share certificates may be dematerialised or rematerialised between
Monday, 17 September 2012 and Friday, 21 September 2012, both days
inclusive. Dividends in respect of certificated shareholders will be
transferred electronically to shareholders` bank accounts on payment date.
In the absence of specific mandates, dividend cheques will be posted to
shareholders. Shareholders who hold dematerialised shares will have their
accounts at their Central Securities Depository Participant (“CSDP”) or
broker credited on Tuesday, 25 September 2012.
On behalf of the board
Sipho Nkosi Wim de Klerk
Len Konar
Chairman Chief Executive Officer Finance Director
31 July 2012
Registered office
Exxaro Resources Limited, Roger Dyason Road, Pretoria West, 0183
Telephone +27 12 307 5000, Fax +27 12 323 3400
Transfer Secretaries
Computershare Investor Services Proprietary Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Directors
Dr D Konar‡ (Chairman), SA Nkosi* (Chief Executive Officer),
WA de Klerk*(Finance Director), S Dakile-Hlongwane^, JJ Geldenhuys‡,
CI Griffith^, U Khumalo^, VZ Mntambo^, RP Mohring‡, Dr MF Randera^,
J van Rooyen‡, NL Sowazi^, D Zihlangu^
*Executive ^Non-executive ‡Independent non-executive
Prepared under supervision of:
WA de Klerk, CA (SA) South African Institute of Chartered Accountants
(SAICA) Registration Number 00133273.
Group Company Secretary
CH Wessels
Investor relations
P Lebina (+27 12 307 3081)
If you have any queries regarding your shareholding in Exxaro Resources
Limited, please contact the Transfer Secretaries at +27 11 370 5000.
Pretoria
1 August 2012
Sponsor
Deutsche Securities SA Proprietary Limited (+27 11 775 7000)
Date: 01/08/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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