Results presentation for the half-year ended 31 December 2017 * 21 & 22 February 2018 * Results for the half-year ended 31 December 2017 released on SENS on 21 February 2018
EXECUTIVE MANAGEMENT TEAM 2 Charles Walters Chief Executive Officer Ross Davies Chief Financial Officer Tiaan van Aswegen Director : Operations and growth Patrick Sacco Director : Marketing www.assore.com Results for the half-year ended 31 December 2017
GROUP STRUCTURE 3 Fricker Rd & Oresteel Investments Boleng Trust Public Shareholders Assore Employee Trusts (Pty) Ltd 52% 12% 14% 22% Assore Ltd 50% 100% 100% 29% Assmang Assore Operations Assore Services IronRidge Khumani Dwarsrivier Beeshoek Ore & Metal RMDC Black Rock (56%) Minerais (51%) Exploration Cato Ridge ZCM African Mining Machadodorp and Trust (AMT) Sakura (54%) Wonderstone CRA (50%) www.assore.com Results for the half-year ended 31 December 2017
GROUP PROFILE 4 Assmang (50%) Iron Ore Mines SA 17.5 million mt Iron ore 85% export Beeshoek and Khumani Manganese Ore Mines SA 3.3 million mt Manganese ore 90% export Nchwaning and Gloria Cato Ridge Works SA 70 kt High carbon FeMn 95% export Cato Ridge Alloys (50%) SA 60 kt Med carbon FeMn 90% export Sakura Ferro Alloys (54%) Malaysia 220 kt High carbon FeMn 99% export Assore Operations (100%) Dwarsrivier Mine SA 1.5 million mt Chrome ore 95% export Wonderstone SA 5,000 mt Pyrophyllite 90% export Assore Services (100%) Ore & Metal Sales marketing and logistics services to Assmang and Assore operations AMT Technical and management services to Assmang and Assore operations Iron Ridge (29.5%) Iron Ridge AIM-listed exploration company www.assore.com Results for the half-year ended 31 December 2017
SAFETY HIGHLIGHTS 5 ➢ Zero fatalities in the period ➢ 6 million fatality-free shifts at Black Rock manganese mines ➢ Assmang safety awards (2017) • Black Rock Manganese Mine 1 st place for best safety performance in underground mines* • 2 nd place for bet environmental performance for its rehabilitation project on the Gamagara riverbank* • • Beeshoek Iron Ore Mine 1 st place for best safety performance for base metal mines* • 2 nd place for best year-on-year safety improvement* • • Best safety performance award for achieving 16,000 fatality-free production shifts # • Khumani Iron Ore Mine 1 st place in the health and wellness category for its wellness peer educators’ programme* • *Awarded at the annual Mine Safe conference, arranged by the industry, the DMR and labour # Awarded by the DMR www.assore.com Results for the half-year ended 31 December 2017
RESULTS HIGHLIGHTS 6 ➢ Headline earnings down 5% on 2016 (first half of 2017 financial year ( refer Note below )) ➢ Synchronised growth in the group’s markets ➢ Prices for iron and manganese ores marginally better than 2016, but Rand 6% stronger ➢ Black Rock expansion project still on track for completion in 2020 (84% complete, 4 million mt) ➢ Capital Expenditure (for 6 months) • Assmang R1 166 million (2016: R1 154 million) • Assore Operations R167 million (2016: R38 million) ➢ Mining cost increases per ton below inflation in all operations ➢ Free cash flow after capex R1 554 million (2016: R1 730 million) ➢ Dividend increased to R10 per share (2016: R6 per share) Note: unless otherwise stated, 2016 refers to the half-year ended 31 December 2016 www.assore.com Results for the half-year ended 31 December 2017
RESULTS HIGHLIGHTS 7 10% Revenue Profit before tax 17% R3 842 m R1 024 m 5% Attributable earnings Headline earnings 11% R2 454 m R2 429 m Free cash flow 3% Cash generated by operations (before dividends) 4% R983 m R2 314 m EPS DPS 11% 67% R23.79 R10.00 www.assore.com Results for the half-year ended 31 December 2017
SALES VOLUMES (‘000 metric tons, 100% basis) 8 Half – year ended 31 Half – year ended 31 Commodity % change December 2017 December 2016 Iron Ore 9 130 8 805 +4% Manganese Ore* 1 556 1 417 +10% * excluding sales to Cato Ridge Works 162 139 Manganese Alloys +17% Chrome Ore 794 733 +8% www.assore.com Results for the half-year ended 31 December 2017
AVERAGE INDEX PRICES (USD) 9 Half – year ended 31 Half – year ended 31 Commodity % change December 2017 December 2016 Iron Ore 68 65 +5% (62% Fe CFR China) USD/mt Manganese Ore 6.30 6.02 +5% (44% Mn CIF China) USD/dmtu Chrome Ore 195 224 -13% (44% Cr CIF China) USD/mt www.assore.com Results for the half-year ended 31 December 2017
ATTRIBUTABLE EARNINGS ( R’m ) 10 Assmang 50% Assore Services Assore Operations 6 000 5 000 1 108 4 000 515 647 3 000 428 2 000 299 3 572 3 266 340 372 1 000 1 727 1 317 1 281 - -82 -114 -254 -1 000 June 2014* June 2015* June 2016* June 2017* December 2017 * full-year results www.assore.com Results for the half-year ended 31 December 2017
HEADLINE EARNINGS ( R’m ) v IRON ORE PRICE (USD/mt) 11 H1 H2 Iron ore index price (RHS) 6 000 140 123 120 5 000 100 4 000 2 664 80 1 803 72 3 000 70 68 60 51 2 000 40 986 2 545 1 006 2 427 2 429 1 000 20 990 738 - - June 2014 June 2015 June 2016 June 2017 December 2018 www.assore.com Results for the half-year ended 31 December 2017
HEADLINE EARNINGS & DIVIDEND DECLARED ( R’m ) 12 Headline Earnings Dividend (Gross) 6 000 5 000 4 000 3 000 5 209 4 230 2 000 2 429 1 000 1 976 1 954 1 744 1 396 1 396 977 838 - June 2014* June 2015* June 2016* June 2017* December 2017 * full-year results www.assore.com Results for the half-year ended 31 December 2017
ATTRIBUTABLE EARNINGS BY COMMODITY 13 R’ million December 2017 (2017*) 6 000 Iron Ore Manganese Chrome Ore Other 5 000 224 2%(5%) 1 058 4 000 197 401 21% (21%) 39% (48%) 1 296 3 000 506 2 000 84 3 484 39% (26%) 122 128 950 2 443 1 000 1 415 1 362 952 - June 2014* June 2015* June 2016* June 2017* December 2017 -1 000 * full-year results * full-year results www.assore.com Results for the half-year ended 31 December 2017
CASH FLOW ANALYSIS 14 9 000 8 000 825 1 000 6 601 220 7 000 213 42 445 983 6 000 5 047 R’million 5 000 4 000 3 000 2 000 1 000 - Net cash Operating cash Working capital Net interest Assmang Dividends paid Taxation paid Net additions to Net cash 30 Jun 2017 flows before WC earned dividends (net) PPE and 31 Dec 2017 intangibles www.assore.com Results for the half-year ended 31 December 2017
MARKET TRENDS Description of picture
World crude steel output increases by 5.3% in 2017 World Rest of World China 1800 1600 1400 1200 1000 Mt 800 600 400 200 0 2010 2011 2012 2013 2014 2015 2016 2017 www.assore.com Results for the half-year ended 31 December 2017 Source: Worldsteel.org
Crude steel production annual growth trend World Rest of World China 25 20 15 Percentage 10 5 0 2010 2011 2012 2013 2014 2015 2016 2017 -5 www.assore.com Results for the half-year ended 31 December 2017 Source: Worldsteel.org
IRON ORE PRICE (Fe 62% Fines CFR China USD / mt) 18 Fe 62% 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Source: Platts www.assore.com Results for the half-year ended 31 December 2017
IRON ORE LUMP PREMIUM (USD / mt – monthly average) 19 Lump Prem $/ton 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 Source: Platts www.assore.com Results for the half-year ended 31 December 2017
MANGANESE ORE PRICES (USD / dmtu) 20 37% Semi Carbonate (FOB PE) 44% Oxide (CIF China) 10 9 8 7 6 5 4 3 2 1 0 Source: Metal Bulletin www.assore.com Results for the half-year ended 31 December 2017
MANGANESE ALLOY PRICES (USD / mt) 21 HCFeMn MCFEMn SiMn 2300 2100 1900 1700 1500 1300 1100 900 700 500 Source: CRU www.assore.com Results for the half-year ended 31 December 2017
CHROME ORE PRICES (USD / mt) 22 44% Conc UG2 450 400 350 300 250 200 150 100 50 0 Source: CRU www.assore.com Results for the half-year ended 31 December 2017
OUTLOOK Description of picture
OUTLOOK 24 ➢ Improved world economic growth (expected 3,7%) ➢ World economic growth appears to be well synchronised ➢ Prices in the short-term are expected to remain strong ➢ Good demand expected for high-quality raw materials ➢ Recent political events perceived to be positive for South Africa - regulatory uncertainty negative for the industry www.assore.com Results for the half-year ended 31 December 2017
QUESTIONS Description of picture
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