ARM: Record profits amid higher sales in iron ore, Mn ore and PGMs
ARM has reported record headline earnings of R13 064 million in F2021, a 136% increase compared to the F2020 headline earnings of R5 534 million. Its diversified portfolio of commodities again stood in good stead as significantly higher US dollar prices for PGMs and iron ore more than offset the negative impact of a stronger rand against the US dollar.
Increased US dollar prices were further augmented by higher sales volumes delivered for iron ore, manganese ore and PGMs.
The average realised rand strengthened by 1.8% versus the US dollar to R15.39/US$ compared to R15.68//US$ in F2020. For reporting purposes, the closing exchange rate was R14.27/US$ (30 June 2020: R17.36/US$).
At 30 June 2021, ARM’s net cash was R8 202 million (30 June 2020: R3 737 million restated), an improvement of R4 465 million compared to the end of the 2020 financial year. This amount excludes attributable cash and cash equivalents held at ARM Ferrous (50% of Assmang) of R4 099 million (F2020: R3 208 million). There was no debt at ARM Ferrous in either of these reporting periods.
Cash generated from operations increased by R3 936 million to R7 802 million (F2020: R3 866 million) after a R5 305 million increase in working capital requirements (F2020: R1 189 million).
This was mainly due to the increase in trade and other receivables, which in turn was due to higher revenue in the reporting period.
Net cash outflow from investing activities was R838 million (F2020: R2 343 million outflow) and includes a net transfer from investments in financial assets of R816 million (F2020: R1 539 million transfer to investments in financial assets).
Borrowings of R648 million (F2020: R264 million) were repaid during the period, resulting in gross debt of R1 469 million at 30 June 2021 (30 June 2020: R1 978 million restated). Modikwa Mine fully repaid its partner loans in F2021. Segmental capital expenditure was R4 105 million (F2020: R3 506 million) and included R426 million of capitalised waste stripping at the iron ore operations (F2020: R394 million).