JSE-listed diversified miner African Rainbow Minerals (ARM) reports that its headline earnings for the first half of its 2021 financial year are expected to increase by between 129% and 138%, to between R4.93-billion and R5.12-billion.
This compares with the R2.15-billion in headline earnings posted for the corresponding six months ended December 31, 2019.
The increased earnings were underpinned by higher iron-ore and platinum group (PGM) prices, coupled with an increase in export iron-ore sales volumes.
As such, headline earnings a share are expected to be between R25.29 and R26.40, compared with the R11.14 posted for the prior comparable period.
Basic earnings for the six months under review are expected to increase by between 123% and 133%, to between R4.75-billion and R4.96-billion.
For the half-year to date, basic earnings a share are expected to be between R24.46 and R25.46.
Meanwhile, ARM reports that it has completed an investigation into an amount historically payable by Glencore Operations South Africa (Gosa) to ARM Coal of R452-million (ARM’s attributable portion being R230-million), as a long-term receivable.
The investigation also included the entries which gave rise to the long-term receivable having been identified and agreed between ARM Coal, ARM’s Goedgevonden mine and Gosa.
At the date of ARM’s previous report, which was for the financial year ended June 30, 2020, Gosa had not agreed the outstanding balance of the receivable and ARM Coal was unable at that time to provide sufficient evidence to validate this receivable in its accounting records.
However, the recent findings of the ARM investigation reveal that all the items included in the ARM Coal long-term receivable were valid receivables; however, R283-million should have been classified as trade and other receivables and R53-million should have been included in the long-term borrowings rather than being netted off against long-term receivables in the statement of financial position.
Going forward, ARM management proposes accounting for these receivables as a prior period error in terms of IAS 8, which is being considered for approval through the necessary governance structures. The restatement is expected to have no impact on the statement of profit or loss and other comprehensive income and no impact on the statement of cash flows.