01 August 2012 INTERIM RESULTS PRESENTATION

Transcription

1 01 August 2012 INTERIM RESULTS PRESENTATION 1

2 Overview Safety and sustainability Fatality free Increase in LTIFR* Integrated sustainability management Reputation Growing brand Various achievements and accolades People Mpower 2012 Portfolio improvement Mineral Sands: Tronox Limited Iron ore: African Iron Limited Energy: Cennergi JV U$20-billion market capitalisation by 2020 Operational excellence Record margins at mineral sands 42% increase in core net operating profit * Lost time injury frequency rate expressed per man hours worked 2

3 Safety and sustainability Fatalities 1H12 fatality free 12 rolling months fatality free on 12 July 2012 Safety LTIFR has increased to 0,26 30 LTIs* were recorded 10 business units were LTI-free Reportable fatalities H10 2H10 1H11 2H11 1H12 LTIFR Sustainability Legal compliance Water management 0,26 0,25 0,22 0,20 0,26 1H10 2H10 1H11 2H11 1H12 Target: 0,15 * Lost time injuries 3

4 Reputation Environment Zeeland water treatment works: Blue drop certification Communities Community outreach via social and labour plans: Absa Cape Epic Financial awards Financial Mail top company award 2012 People Mpower

5 Leadership and people Training 5,5% of payroll spent on training 80% of employees above NQF1* 100 management programmes 60 post graduate studies Employment equity Outperformed target in 4 of the 6 categories Number of women in Exxaro double that in South African mining industry Exxaro HDSA statistics (%) Top Snr Middle Jnr Women Disabled Management Target * National qualification framework grade nine 5

6 Portfolio improvement: coal Strategy Innovative, integrated and synergistic coal and reductants business with global footprint Excellence in people, processes and structures More than triple annual operating profit by 2020 Developments GMEP* within budget and on time First coal delilvered to Medupi power station Moranbah South PFS** completion in 2H12 Thabametsi mine phase 1 development BFS*** in 2013 Expected project timeline 2H12 Thabametsi: mining right applications CoAL option: decision 30 September Char 2: BFS complete GMEP: ramp-up Moranbah South: BFS Thabametsi mine: phase 1 BFS Market coke: BFS complete 2014 Char 2: construction start Tshikondeni: closure Inyanda closure Thabametsi mine: small scale mining Market coke: construction start 2015 Char 2: commissioning Moranbah South: construction Thabametsi mine: phase 2 PFS** 2016 Market coke: commissioning * Grootegeluk Medupi expansion project ** Pre-feasibility study *** Bankable feasibility study 6

7 Portfolio improvement: mineral sands Strategy Exposure to integrated value chain Increase shareholding in Tronox Limited Developments Sale of mineral sands in exchange for - 39,2% share in Tronox Limited* - 26% in KZN Sands and Namakwa Sands Tronox Limited listed on 18 June 2012 Tronox Limited to develop future projects including Fairbreeze and Namakwa Sands co-generation * 38,5% on fully diluted basis 7

8 Portfolio improvement: ferrous Iron ore Strategy and developments 10 million tonnes of iron ore by 2016 African Iron Limited acquisition Mayoko phased project development AlloyStreamTM Strategy and developments Alloy production capability of 50kt by 2016 Project Letaba JV with Assmang Beneficiation plant commissioned in 1Q12 Testing of commercial viability in 2012/2013 8

9 Portfolio improvement: energy Strategy Ensure energy security for own operations Lower carbon footprint Developments Cennergi JV with Tata Power awarded two wind projects with a combined capacity of 235MW - Tsitsikamma - Amakhala Emoyeni Construction of first co-generation plant at Namakwa Sands Coal bed methane exploration in Botswana with Sekaname 9

10 Portfolio improvement: base metals Strategy Divest of the zinc portfolio Developments Rosh Pinah interest sold to Glencore for R931 million Zincor plant closed on 13 December 2011, final decision on Zincor by 2H12 No immediate plan to divest of: - 26% interest in Black Mountain - 11,97% interest in Chifeng Evaluate opportunities in copper 10

11 FINANCIAL AND OPERATIONAL PERFORMANCE

12 Key events in 1H12 January 1 st : Restatement of prior year numbers as a result of the early adoption of new accounting standards (IFRS* 10, 11 and 12 as well as IAS27 and 28) February 14 th : African Iron acquisition consolidated subsidiary March 2 nd : Cennergi JV equity accounted joint venture May 30 th : KZN Sands partial impairment reversal June 1 st : Sale of Rosh Pinah derecognised subsidiary 15 th : Sale of Mineral Sands derecognised subsidiary and the acquisition of shareholding in Tronox Limited equity accounted associate * International financial reporting standards incorporating international accounting standards (IAS) 12

13 Main features Healthy financial metrics: 1H12 vs 1H11 3% increase in revenue 42% increase in core net operating profit 11% increase in headline earnings per share Revenue (Rb) 7,9 9,3 9,5 11,7 9,8 Operations Volumes under pressure Record mineral sands prices 1H10 2H10 1H11 2H11 1H12 HEPS* (cps) Dividend Interim dividend of 350 cents 17% increase on 1H11 at 3,02 cover** H10 2H10 1H11 2H11 1H12 Dividend paid/declared (cps) H10 2H10 1H11 2H11 1H12 * Headline earnings per share ** Excluding non-core items 13

14 Financial overview: IFRS* R million 1H12 1H11 Restated % Change 1H12 vs 1H11 2H11 Restated % Change 1H12 vs 2H11 Revenue (15) Operating expenses (6 636) (7 962) 17 (8 877) 25 Profit on sale of subsidiaries/assets Net operating profit Operating margin (%) Post-tax equity-accounted income Attributable earnings: owners of parent Headline earnings ** Cash retained from operations (37) Capital expenditure (30) Average ZAR/USD rate: Realised 7,88 7,21 7,33 Spot 7,93 6,78 7,61 Average USD/AUD rate: Realised 0,97 0,96 0,91 Spot 0,96 1,03 0,95 * Including discontinued operations ** Non-IFRS numbers 14

15 Non-core profit adjustments R million 1H12 1H11 2H11 Net operating profit (316) 921 Coal: Profit on sale of assets 40 (7) 42 Mineral sands Impairment reversal Insurance claim received 26 Held for sale adjustments Profit on sale: 50% of pigment plant and other PPE* (56) Write down of intercompany loan (315) Base metals 570 (433) (49) Impairment charge (439) (77) Held for sale adjustments Profit on sale: subsidiaries 544 Other Insurance claim received 41 Profit on sale: subsidiaries and other PPE Write down of intercompany loan 315 Equity accounted income: Tronox and other associates 704 Tax on headline earnings adjustments (29) (3) 5 Total non-core profit adjustment impact (319) 926 * Property, plant and equipment 15

16 Financial overview: core R million 1H12 1H11 % Change 1H12 vs 1H11 2H11 % Change 1H12 vs 2H11 Revenue (15) Operating expenses (7 145) (7 644) 7 (9 798) 27 Net operating profit Operating margin (%) Post-tax equity-accounted income (17) (1) Attributable earnings: owners of parent Headline earnings Attributable earnings per share (cents) Headline earnings per share (cents)

17 Coal financial performance R million 1H12 1H11 % Change 1H12 vs 1H11 2H11 % Change 1H12 vs 2H11 Revenue (14) Tied operations (14) Commercial operations (14) Net operating profit (14) (14) Tied operations (6) 227 (66) Commercial operations (14) (5) Operating margin (%) (15) 23 Capital expenditure (19) Headline earnings contribution to group (26) 889 (8) HEPS contribution (cents) (27) 255 (9) 1 Based on group weighted average number of shares (WANOS) of 354 million at 30 June

18 Coal production Total coal production (Mt) Power station coal production (Mt) 8,5 8,3 6,5 6,2 6,3 8,4 8,1 6,4 6,1 6,1 13,4 14,2 13,2 14,0 13,2 9,4 9,9 8,9 10,4 9,1 1H10 2H10 1H11 2H11 1H12 1H10 2H10 1H11 2H11 1H12 Steam coal production (Mt) Coking coal production (Mt) 3,0 3,2 3,1 2,8 2,9 0,1 1,1 0,2 1,0 0,1 1,1 0,2 0,1 1,1 0,7 1H10 2H10 1H11 2H11 1H12 1H10 2H10 1H11 2H11 1H12 Commercial Tied 18

19 Coal market and sales Power station coal sales (Mt) Steam coal sales (Mt) 8,4 8,1 6,4 6,1 6,1 1,8 2,3 2,1 2,8 1,8 9,5 9,5 9,1 10,1 9,0 1,4 1,6 1,6 1,5 1,6 1H10 2H10 1H11 2H11 1H12 1H10 2H10 1H11 2H11 1H12 Domestic Export Coking coal sales (Mt) Steam coal and market coke prices (USD/t-FOB)* ,1 0,2 0,1 0,9 0,9 0,9 0,2 0,6 0,1 0, H10 2H10 1H11 2H11 1H12 Commercial Tied RBCT steam Chinese market coke HCC 0 19

20 Coal contribution to group performance Revenue contribution (Rm) Net operating profit variance analysis (Rm) (17) (285) 249 (60) (103) H10 2H10 1H11 2H11 1H12 Net operating profit contribution (Rm) Headline earnings contribution (%) H10 2H10 1H11 2H11 1H12 1H10 2H10 1H11 2H11 1H12 20

21 Coal capital expenditure GMEP Project delivered on time and on budget First coal dispatched to Medupi power station 160kt of coal to be delivered during 2012 to commission delivery systems New ramp-up and commercial settlement subject to Eskom Board approval in August 2012 GMEP forecast capital and ramp up Rm Mt Capital Ramp-up Mt Capital expenditure (Rb) 2,18 2,69 1,95 1,27 1,60 1,66 1,71 0,21 0,35 0,17 1H11 2H11 1H12 2H12* FY13* Expansion Sustaining 21

22 Mineral sands financial performance R million 1H12 1H11 % Change 1H12 vs 1H11 2H11 % Change 1H12 vs 2H11 Revenue (3) KZN Sands Namakwa Sands (11) Australia Sands (3) (11) Net operating profit KZN Sands 455 (113) (87) Namakwa Sands Australia Sands (13) Operating margin (%) Capital expenditure (112) Headline earnings contribution to group (19) HEPS contribution (cents) (20) 1 Based on group weighted average number of shares (WANOS) of 354 million at 30 June

23 Mineral sands production Slag tapped (kt) Zircon (kt) H10 2H10 1H11 2H11 1H H10 2H10 1H11 2H11 1H12 9 Furnace downtime (days) Pigment (kt) H10 2H10 1H11 2H11 1H12 1H10 2H10 1H11 2H11 1H12 KZN sands Namakwa sands Australia sands: Exxaro s attributable share 23

24 Mineral sands market and sales Total slag (kt) Pigment kt) H10 2H10 1H11 2H11 1H12 1H10 2H10 1H11 2H11 1H12 Zircon (kt) Mineral sands prices (USD/t-FOB)* H10 2H10 1H11 2H11 1H H12 0 KZN Sands Namakwa Sands Australia Sands: Exxaro s attributable share Pigment Zircon Prime CP Slag (RHS) * Source TZMI 24

25 Mineral sands contribution to group performance Revenue (Rm) Net operating profit variance analysis (Rm) (1 097) (61) H10 2H10 1H11 2H11 1H12 2H11 Price Volume Exchange Inflation Cost 1H12 Net operating profit contribution (Rm) Contribution to HEPS (%) (127) (121) 1H10 2H10 1H11 2H11 1H (4) 1H10 2H10 1H11 2H11 1H12 KZN Sands Australia Sands Namakwa Sands 25

26 Mineral sands capital expenditure Fairbreeze Commencement of construction subject to outstanding authorisations Commissioning planned for March 2015 Namakwa Sands co-generation Project progress to date: 29,6% Commissioning scheduled for May 2013 Capital expenditure (Rm) H11 2H11 1H12 Sustaining Expansion 26

27 Ferrous SIOC equity contribution 1H11 vs 1H12: decrease of 18% 2H11 vs 1H12: decrease of 7% African Iron Limited Acquisition price: R2,74bn Fast tracking development of Mayoko An estimated capital expenditure of R1,7bn by 2013 SIOC contribution to group HEPS (%) Prices (USD/t FOB)* H10 2H10 1H11 2H11 1H H11 1H12 2H12 1H13 2H13 1H14 2H14 Fine ore Lump ore * Source: Macquarie 27

28 Group financial performance R million 1H12 1H11 % Change 1H12 vs 1H11 2H11 % Change 1H12 vs 2H11 Revenue (15) Coal (14) Mineral sands (3) Base metals (68) 946 (70) Other (29) Net operating profit Coal (14) (14) Mineral sands Base metals (132) (131) (1) (532) 75 Other (397) (79) (359) (412) 4 28

29 Attributable earnings: core R million 1H12 1H11 % Change 1H12 vs 1H11 2H11 % Change 1H12 vs 2H11 Net operating profit Net financing cost (156) (145) 8 (82) 90 Income from investments (71) Post-tax equity-income (17) (1) Sishen Iron Ore Company (18) (7) Tronox Limited 118 Mafube Cennergi (25) Black Mountain (69) 63 (29) Chifeng 5 (2) Tax (875) (751) (17) (247) 219 Profit after tax Non-controlling interest 18 (9) 5 Attributable earnings: owners of parent Attributable earnings per share (cents) Dividend per share declared (cents) (30) 29

30 Net cash/(debt) variance R million (80) (164) (1 771) 346 (1 535) (1 288) (1 710) Net cash Jan 2012* Cash generated Net financing costs Tax Dividends Capex Investing activities Dividend received Net debt Jun 2012 * Restated for the adoption of new accounting standards 30

31 Capital funding structure Ratios: 1H12 2H11 1H11 Net financing cost cover (times): core EBITDA Return on equity: attributable income (%) Return on capital employed (%) R million Facilities available Maturity profile of debt Drawn Undrawn Repayment year Interest-bearing borrowings Capitalised transaction cost (78) Total interest-bearing borrowings Cash and cash equivalents (2 134) Net debt Net debt/equity ratio (%) 4 2H12-1H13 2H13-1H14 2H14-1H H15-1H After 1H

32 Dividend Interim dividend 30 June 2012 Interim dividend 30 June 2011 Final dividend 31 December 2011 Total dividend 31 December 2011 Attributable earnings per share* (cents) Dividend declared per share (cents) Dividend cover (times) 3,02 3,00 2,56 2,75 Dividend declared (Rm) BEE Holdco Anglo Public Mpower * Excluding non-core items 32

33 OUTLOOK

34 Future outlook Coal Buoyant Eskom demand Export level dependent on TFR* performance Depressed local demand Develop project pipeline Iron ore SIOC performance as per KIO guidance Fast track Mayoko project development Mineral sands Performance as per Tronox guidance Future contribution part of equity income * Transnet Freight Rail 34

35 ADDITIONAL INFORMATION Disclaimer has been restated as a result of the early adoption of IAS 27 and 28 as well as IFRS 10, 11 and Net operating profit has been adjusted to reflect only core performance to be in line with financial performance reported earlier in this presentation. 3. The non-core adjusted information has not been reviewed or reported on by the group s external auditors. 35

36 Group net operating profit: 2H11 VS 1H12 R million (921) 904 (1 878) (175) 2H11 Non-core adjustments Core NOP 2H11 Price Volume Exchange Inflation Cost Core NOP 1H12 Non-core adjustments 1H12 Coal (42) (17) (285) 249 (60) (103) Mineral Sands (928) (1 097) 388 (61) Base metal (581) 49 (532) (454) (40) (28) 922 (132) Other (412) (412) 2 (42) 18 (26) 63 (397) Total (921) (1 878) 615 (175)

37 Group net operating profit: 1H11 VS 1H12 R million (1 570) 502 (335) H11 Non-core adjustments Core NOP 1H11 Price Volume Exchange Inflation Cost Core NOP 1H12 Non-core adjustments 1H12 Coal (172) 224 (183) (265) Mineral sands 652 (124) (783) 334 (116) Base metals (564) 433 (131) (1) (613) (65) (15) 693 (382) Other (79) (79) 4 (2) 9 (21) (307) (397) Total (1 570) 502 (335)

38 Group cash flow R million 1H12 1H11 2H11 Cash retained from operations Net financing cost (80) (50) 16 Interest income Interest expense (218) (212) 127 Interest adjustment borrowing cost and finance leases (3) (232) Tax (164) (207) (292) Dividends paid (1 771) (1 058) (1 065) Net cash from operating activities Fixed assets (2 352) (1 816) (3 042) Intangible assets (1) (90) (29) Increase in non-current financial assets (150) 105 (215) Dividend income from investments Proceeds from disposal of PPE Acquisition of subsidiary (2 603) Decrease in cash and cash equivalents on disposal of subsidiaries (1 052) Other 6 (14) Net cash (outflow)/inflow (2 456)

39 Group depreciation and amortisation: core R million 1H12 1H11 2H11 Coal Tied operations Commercial operations Mineral sands KZN Sands Namakwa Sands Australia Sands Base metals Rosh Pinah Zincor 1 27 Other Total

40 Group EBITDA: core R million 1H12 1H11 2H11 Coal Tied operations Commercial operations Mineral sands KZN Sands 546 (57) 2 Namakwa Sands Australia Sands Base metals (106) (78) (505) Rosh Pinah (7) Zincor (65) (172) (524) Other (34) (18) (24) Other (355) (47) (375) TOTAL EBITDA

41 Group headline earnings reconciliation R million 1H12 1H11 2H11 Attributable earnings: owners of parent Headline earnings adjustments: Impairment of PPE Reversal of impairment of PPE (103) (869) Gains on disposal of subsidiaries and other assets (4 121) (12) 11 Net gains or losses on disposal of PPE (32) Excess of fair value of net asset value over cost of investment in associate (707) Share of associate s gains or losses on disposal of PPE 3 2 Tax effect of adjustments 29 3 (5) Headline earnings Less: Non-core adjustments Held-for-sale adjustments (309) (6) (142) Insurance claim received (67) Profit in sale: 50% pigment plant and other assets (108) Core headline earnings Headline earnings per share (cents) Core headline earnings per share (cents) Weighted average number of shares (million)

42 Capital expenditure R million Estimate Actual FY13 1 2H12 1 1H12 2H11 1H11 Sustaining and environmental Coal Mineral sands Ferrous 35 Base metals Other Expansion Coal GMEP Mineral sands Ferrous Other Total capex Based on latest forecast 2 Excluding capitalised interest 42

43 Power station coal: volumes and sales 000 tonnes 1H12 1H11 1H10 FY11 FY10 Production Grootegeluk Leeuwpan Matla Arnot NBC Sales Grootegeluk Leeuwpan Matla Arnot NCC NBC

44 Steam coal: volumes and sales 000 tonnes 1H12 1H11 1H10 FY11 FY10 Production Grootegeluk Leeuwpan NCC NBC Inyanda Sales Domestic Export

45 Coking coal: volumes and sales 000 tonnes 1H12 1H11 1H10 FY11 FY10 Production Grootegeluk Tshikondeni Sales ArcelorMittal Export 14 Other Char: volumes and sales 000 tonnes 1H12 1H11 1H10 FY11 FY10 Production Sales

46 KZN Sands: volumes and sales 000 tonnes 1H12 1H11 1H10 FY11 FY10 Production Ilmenite Zircon Rutile Pig iron Scrap iron Slag tapped Chloride slag Sulphate slag Sales Zircon Rutile Pig iron Scrap iron Chloride slag Sulphate slag

47 Namakwa Sands: volumes and sales 000 tonnes 1H12 1H11 1H10 FY11 FY10 Production Ilmenite Zircon Rutile Pig iron Scrap iron 1 Slag tapped Chloride slag Sulphate slag Sales Zircon Rutile Pig iron Scrap iron 1 Chloride slag Sulphate slag

48 Australia Sands: volumes and sales 000 tonnes 1H12 1H11 1H10 FY11 FY10 Production Ilmenite Zircon Rutile Synthetic rutile Leucoxene Pigment Sales Ilmenite Zircon Rutile Synthetic rutile Leucoxene Pigment Exxaro s attributable share in Tiwest joint venture with Tronox Inc. 48

49 Base metals: volumes and sales 000 tonnes 1H12 1H11 1H10 FY11 FY10 Production Zinc concentrate Rosh Pinah Black Mountain Zinc metal Zincor Chifeng Lead concentrate Rosh Pinah Black Mountain Zinc metal sales Domestic Export Lead concentrate sales Export Exxaro's 26% interest in Black Mountain Mining (Pty) Ltd 2 Exxaro s effective interest in Chifeng 49

50 Salient dates Last day to trade cum dividend Friday 14 September 2012 Shares trade ex-dividend Monday 17 September 2012 Record date Friday 21 September 2012 Payment date Tuesday 25 September

51 Definitions Operating margin Net operating profit as a percentage of revenue. Net financing cost cover EBITDA Net operating profit (before interest, tax, depreciation, amortisation, impairment charges and net deficit/surplus on sale of investments and assets) divided by net financing cost. Return on equity attributable income Attributable earnings attributable to owners of the parent as a percentage of equity attributable to owners of the parent. Return on capital employed Net operating profit plus income from non-equity-accounted investments plus income from investments in associates as a percentage of average capital employed. Net debt to equity ratio Interest-bearing debt less cash and cash equivalents as a percentage of total equity. Net debt to net debt plus total shareholders equity Interest-bearing debt as a percentage of interest-bearing debt plus total equity. 51

52 Index Title Slide number* Adjustments 15 Attributable earnings 29 Commodities Base metals 10 Coal 6; Energy 9 Ferrous 8,27 Mineral sands 7; Cash flow 38 Capital expenditure 42 Capital funding 31 Definitions 51 Depreciation 39 Dividend 32 EBITDA 40 Financial performance Coal 17 Core 16 IFRS 14 Group 28 Mineral sands 22 Title Slide number* Headline earnings 14, 16,17, 22, 41 Key events 12 Leadership and people 5 Mpower trust Net debt variance 30 Net operating profit 36, 37 Outlook 34 Overview 2, 14, 16 Portfolio improvement 6-10 Production: volumes and sales Base metals 49 Coal Mineral sands Reputation 4 Revenue 14, 20, 25 Safety and sustainability 3 Salient dates 50 Strategy 2-10 * Not referring to page number 52