Vedanta Resources plc Interim Results for the Six Months ... ... Vedanta Resources plc Page 5 of 62
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Vedanta Resources plc 16 Berkeley Street London W1J 8DZ
Tel: +44 (0) 20 7499 5900 Fax: +44 (0) 20 7491 8440
15 November 2013
Vedanta Resources plc Interim Results for the Six Months Ended 30 September 2013
� Revenue of US$6.2 billion, down 17%
� EBITDA¹ of US$2.2 billion, EBITDA margin of 44.5%² despite volatile commodity prices
� Underlying EPS³ of 29.3 US cents, down 70%
� Free cash flow of US$1.0 billion before growth capex and US$417 million after growth capex
� Net Debt reduced by US$1.6 billion over the last 18 months
� Interim dividend of 22 US cents per share, up 5%
� Group simplification completed
� Record oil & gas production
� Increased production of refined zinc, lead and silver at Zinc India
� Continued strong performance at Aluminium
� Karnataka iron ore mine awaiting final clearances to resume mining; Supreme Court’s interim order on Goa iron ore mining permits sales from inventory
� Engaged with various stakeholders, including the Zambian Government, to drive productivity, cost improvements and an overall turnaround of the Copper Zambia business
� Strong cost performance despite industry-wide inflationary trends (in $ millions, except as stated)
Consolidated Group Results H1 FY2013-14 H1 FY2012-13 % Change
Revenue 6,164.0 7,451.9 (17)%
EBITDA¹ 2,207.1 2,571.7 (14)%
EBITDA margin (%) 35.8% 34.5% -
EBITDA margin excluding custom Smelting² (%) 44.5% 47.0% -
Operating Profit before Special Items 1,114.6 1,439.7 (23)%
(Loss)/ Profit attributable to equity holders (217.0) 173.6 (225)%
Underlying attributable Profit³ 80.0 266.6 (70)%
Basic (Loss)/Earnings per Share (US cents) (79.4) 63.7 (225)%
Earnings per Share on Underlying Profit (US cents) 29.3 97.8 (70)%
ROCE (excluding project capital work in progress) (%) 15.3% 17.3% -
Total Dividend (US cents per share) 22.0 21.0 5%
1. Earnings before interest, taxation, depreciation, amortisation /impairment and special items. 2. Excludes custom smelting at Copper and Zinc-India operations. 3. Based on profit for the period after adding back special items and other gains and losses, and their resultant tax and non-controlling
interest effects (refer to note 6 of Condensed financial statements). Underlying attributable profit includes the net tax benefit from the SesaSterlite merger offset by a deferred tax charge due to the change in tax rates at Cairn India as set out on page .
Vedanta Resources plc Page 2 of 62 Results For The Year Ended 30 September 2013
Mr Anil Agarwal, Chairman of Vedanta Resources plc said, “The successful completion of the Sesa Sterlite merger during this half year is a significant milestone. Operational performance has been particularly strong in our high margin Oil & Gas and Zinc India businesses, with record production achieved at Cairn India. We continue to focus on driving value-accretive growth across our diversified portfolio of Tier-1 assets and this, combined with efficient cost management and our strong position in fast growing emerging markets has positioned us well to sustainably create long term value for our shareholders.”
For further information, please contact:
Senior Vice President – Investor Relations
Vedanta Resources plc
Tel: +44 20 7659 4732 / +91 22 6646 1531
Tel: +44 20 7251 3801
About Vedanta Resources plc
Vedanta Resources plc (“Vedanta”) is a London listed FTSE-100 diversified global resources major. The group produces Aluminium, Copper, Zinc, Lead, Silver, Iron ore, Power, and Oil and Gas. Vedanta has world-class assets in India, Zambia, South Africa, Namibia, Ireland, Liberia, Australia and Sri Lanka and a strong organic growth pipeline of projects. With an empowered talent pool globally, Vedanta places strong emphasis on partnering with all its stakeholders based on the core values of entrepreneurship, excellence, trust, inclusiveness and growth. For more information, please visit: www.vedantaresources.com.
This press release contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “should” or “will.” Forward–looking statements by their nature address matters that are, to different degrees, uncertain. For us, uncertainties arise from the behaviour of financial and metals markets including the London Metal Exchange, fluctuations in interest and or exchange rates and metal prices; from future integration of acquired businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different that those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
Vedanta Resources plc Page 3 of 62 Results For The Year Ended 30 September 2013
We have continued to make strong progress towards achieving our strategic priorities in the first half of the financial year (H1 FY2014). Specifically, the completion of the group structure simplification is a significant milestone. It has consolidated Vedanta’s holdings in its subsidiaries, created a more efficient capital structure by better aligning operating cash flows and debt across the group, and has delivered significant financial synergies.
Vedanta’s portfolio of Tier-1 assets with low all-in costs is well diversified across base metals, oil & gas, bulks and commercial power, and has enabled us to consistently deliver industry- leading profit margins, with our EBITDA margin¹ remain strong at 44.5% in H1, demonstrating the resilience of our low-cost diversified portfolio.
Operationally, we have continued to deliver profitable production growth at our two largest businesses, Zinc-India and Oil & Gas, which have consistently delivered lowest quartile costs, and achieved record oil & gas production in the first half. Our Aluminium operations continued to operate at lower half operating costs despite having to source third-party bauxite and alumina. Our Iron Ore operations continued to be affected by state-wide mining restrictions, but recent developments have been in the right direction and we expect to restart mining in Karnataka soon. Our Copper Zambia operations were affected by lower volumes and higher costs. We are committed to delivering an operational turnaround of the Copper Zambia business and remain engaged with various stakeholders including the Government of Zambia to improve productivity, volumes and profitability.
We continued to deliver strong free cash flows after capex during the first half as assets utilizations increased and production volumes ramped-up. We continue to carefully monitor allocation of capital to various businesses and projects. A significant part of our near term capex will be allocated to phased, brown-field projects at high-margin businesses. Our key projects include the 20% growth, to 1.2mtpa, of mined metal at Zinc-India, and exploration in the prolific Rajasthan block to realize our vision of 300kbopd. We will continue to use our strong and growing free cash flows to further deleverage the balance sheet.
Sustainability and safety remains core to our business and we have consistently reduced our lost time injury frequency rate, by more than half over the last 5 years. We need to work further to eliminate fatalities and are focused on implementing our unsafe conditions elimination programme. We are also committed to building strong relationships with our local stakeholders in order to directly and indirectly develop the local economy and communities where we operate. We have more than 250 partnerships with NGOs, local governments, academic institutions and private hospitals in place, and our community programmes benefit around 3.7 million people in India and Africa, across 2,200 villages. We have also had success in reducing our specific consumption of water and energy and continue to implement further projects. We continue to be one of the largest employers and contributors to Government exchequers in the countries where we are located, and in H1 our contribution to Government exchequers was $2.6 billion.
We have maintained a progressive dividend since the listing in 2004, and this year the Board has recommended an interim dividend of 22 US cents per share, an increase of 5%.
On behalf of the Board, I thank our 87,000 direct and indirect employees for their contribution to these results. Their commitment and efforts, combined with the strength of our management team, continue to drive our performance.
We remain positive on the prospects for our diversified portfolio of Tier-1 assets, which we believe will generate strong returns across business cycles. The strength of our portfolio and our focus on disciplined capital allocation to phased, low-risk projects with high returns will enable u