REG - South32 Limited - Half Year Results: Ended 31 December 2024
13/02/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250213:nRSM9293Wa&default-theme=true
RNS Number : 9293W South32 Limited 13 February 2025
APPENDIX 4D
SOUTH32 LIMITED
(ABN 84 093 732 597)
Results for announcement to the market
This page and the accompanying 63 pages comprise the half year end financial
information given to the Australian Securities Exchange (ASX) under Listing
Rule 4.2A. This statement includes the unaudited consolidated results of the
South32 Group for the half year ended 31 December 2024 (H1 FY25) compared
with the half year ended 31 December 2023 (H1 FY24).
The half year report should be read in conjunction with the Financial Report
for the year ended 30 June 2024. Figures in italics indicate that an
adjustment has been made since the financial information was previously
reported.
US$M H1 FY25 H1 FY24 % Change
Revenue from continuing operations((a)) 3,123 2,507 25%
Profit/(loss) after tax attributable to members((1)) 360 53 579%
Other financial measures
Underlying revenue((a)) 3,850 3,881 (1%)
Underlying earnings((2)(a)) 375 40 838%
(a) On 29 August 2024, South32 sold its shareholding in Illawarra
Metallurgical Coal to an entity owned by Golden Energy and Resources Pte Ltd
and M Resources Pty Ltd((3)). As a result, Illawarra Metallurgical Coal was
classified as a discontinued operation in the H1 FY25 and H1 FY24 restated
results. Our Group underlying financial measures include the financial
contribution from Illawarra Metallurgical Coal prior to its sale.
Net tangible assets per share
Net tangible assets per ordinary share were US$1.99 as at 31 December 2024
(US$1.94 as at 30 June 2024)((4)).
Dividends
The Board has resolved to pay an interim dividend of US 3.4 cents per share
(fully-franked) for the half year ended 31 December 2024.
The record date for determining entitlements to dividends is 7 March 2025;
payment date is 3 April 2025.
FINANCIAL RESULTS AND OUTLOOK
HALF YEAR ENDED 31 DECEMBER 2024
ASX / LSE / JSE Share Code: S32; ADR: SOUHY
13 February 2025
South32 transforms portfolio, delivers earnings growth and increases
shareholder returns
"We delivered a strong start to FY25, off the back of our improved operating
performance and transformed portfolio.
"The sale of Illawarra Metallurgical Coal has unlocked significant value and
streamlined our portfolio to be focused on minerals and metals critical to the
world's energy transition. The sale has also simplified our business, lowered
our sustaining capital intensity and strengthened our balance sheet, enabling
us to self-fund our growth in zinc and copper.
"We invested to grow our future production during the period, as we continued
construction of our large-scale, long-life Taylor zinc-lead-silver project at
Hermosa in Arizona, United States, and expanded our pipeline of copper
exploration options in highly prospective regions.
"We achieved strong operating results across our portfolio in H1 FY25,
including increasing aluminium production by 5 per cent and copper production
by 16 per cent. This enabled the Group to capitalise on improved commodity
prices, with Underlying EBITDA increasing by 44 per cent to US$1 billion in H1
FY25.
"FY25 production guidance remains unchanged, except for Mozal Aluminium where
we have updated production guidance as we continue to mitigate the impact of
civil unrest in Mozambique. Our operating discipline and weaker producer
currencies are expected to support lower operating unit costs for the majority
of our guided operations in H2 FY25.
"Demonstrating our strong financial position, track record of returning excess
capital to shareholders and positive outlook for the business, today we
announced a fully-franked interim ordinary dividend of US$154 million (US 3.4
cents per share) and the continuation of our capital management program, with
US$171 million remaining to be returned to shareholders.
"We are focused on continuing our strong operating performance into the second
half, unlocking value from our growth pipeline and continuing to reward
shareholders as our financial performance improves."
Graham Kerr, South32 CEO
Financial Highlights
US$M H1 FY25 H1 FY24 % Change
Revenue from continuing operations((5)) 3,123 2,507 25%
Operating profit/(loss) from continuing operations((5)) 520 (52) N/A
Profit/(loss) after tax 359 53 577%
Profit/(loss) after tax attributable to members((1)) 360 53 579%
Basic earnings/(loss) per share (US cents)((6)) 8.0 1.2 567%
Ordinary dividends per share (US cents)((7)) 3.4 0.4 750%
Other financial measures
Underlying revenue((8)(9)) 3,850 3,881 (1%)
Underlying EBITDA((8)(10)) 1,018 708 44%
Underlying EBITDA margin((8)(11)) 27.5% 19.0% 8.5%
Underlying EBIT((8)(10)) 663 236 181%
Underlying EBIT margin((8)(12)) 18.0% 6.1% 11.9%
Underlying earnings((2)(8)(10)) 375 40 838%
Basic Underlying earnings per share (US cents)((6)(8)) 8.3 0.9 822%
ROIC((8)(13)) 9.0% 1.3% 7.7%
Ordinary shares on issue (million) 4,517 4,529 (0.3%)
Safety performance
On 17 September 2024, Mr José Luis Pérez was fatally injured in an incident
at Cerro Matoso where he was due to perform a scaffold maintenance task. Our
deepest sympathies remain with Mr Pérez's family and colleagues to whom we
are continuing to provide support. An investigation into the incident was
completed in Q2 FY25 and we are engaging with the relevant authorities. Key
learnings from the incident have been shared across our organisation, and
improvement actions are underway.
We remain united by our belief that everyone can go home safe and well every
day. We continued to implement our multi-year Safety Improvement Program
during H1 FY25. This includes our investment in safety leadership through our
LEAD Safely Every Day program which is being extended to frontline employees,
contractors that perform high-risk work at our operations, and functional
roles that support them.
Our LEAD Safely Every Day program has supported measurable improvements in our
safety performance, with total recordable injury frequency (TRIF)((14)) for H1
FY25 improving by 31% to 3.5 (FY24: 5.1), and lost time injury frequency
(LTIF)((15)) reducing to 1.3 in H1 FY25 (FY24: 1.9). Our leading indicator,
significant hazard frequency((16)), increased to 167.0 for H1 FY25 (FY24:
122.3), indicating improved hazard awareness and a positive reporting culture.
Health and safety performance
Performance metric H1 FY25 FY24
Fatalities from health and safety incidents 1 0
Total lost time injury frequency (LTIF) 1.3 1.9
Total recordable injury frequency (TRIF) 3.5 5.1
Total significant hazard frequency 167.0 122.3
People and culture
An inclusive culture and diverse workforce supports greater collaboration,
innovation and performance. Building and maintaining a workforce that
represents the communities in which we operate, especially recruiting more
women into operational roles, is an industry-wide challenge that we are
working to address.
We track our inclusion and diversity performance against a series of
measurable objectives as described in the table below.
Inclusion and diversity performance
Diversity representation (%) FY25 measurable objective H1 FY25 FY24
Women in our workforce Achieve at least 23.0% 22.7 20.6
Women on our Board Maintain at least 40% 55.6 50.0
Women in Lead Team Maintain at least 40% 50.0 50.0
Women in leadership roles((17)) Achieve at least 24.1% 23.4 23.6
Local workforce diversity((18)) Achieve at least 4 of 5 metrics 3 N/A
Addressing climate change
We have set a target to halve our operational greenhouse gas (GHG) emissions
(Scope 1 and 2) by 2035((19)), against our FY21 baseline((20)(21)), and a
long-term goal((22)) to achieve net zero GHG emissions across all scopes
(Scope 1, 2 and 3) by 2050. Our approach to climate change is focused on
reshaping our portfolio to commodities critical to a low-carbon future,
decarbonising our operations, working with others to decarbonise the value
chain, and understanding and responding to the potential physical impacts of
climate change.
Our second Climate Change Action Plan, to be released in August 2025, will
detail our approach and the actions we are taking to address the risks and
opportunities that climate change presents for our business.
Our estimated operational GHG emissions declined by 9% to 9.5Mt CO(2)-e in H1
FY25, reflecting the sale of Illawarra Metallurgical Coal in August 2024.
Greenhouse gas emissions
Million tonnes of CO(2) equivalent H1 FY25 H1 FY24
Operational GHG emissions 9.5 10.4
Business performance
Aluminium value chain
Alumina
Alumina production declined by 2% in H1 FY25 to 2.5Mt, as improved plant
availability at Brazil Alumina was offset by constrained bauxite supply at
Worsley Alumina due to delayed approvals for new mining areas. FY25 production
guidance remains unchanged at 5.1Mt.
Underlying EBITDA((23)) increased by US$364M to US$543M in H1 FY25, for an
operating margin of 41%, as a 53% increase in our average realised price of
alumina more than offset higher caustic soda costs at Worsley Alumina.
Worsley Alumina has now received primary State((24)) and Federal((25))
environmental approvals for the Worsley Mine Development Project (the
Project). The Project will enable access to bauxite to sustain production at
Worsley Alumina, with mining of bauxite areas located near our existing
operations expected to commence in Q4 FY25. We will now also commence the
development of new mining areas that are expected to sustain production to at
least FY36((26)).
Aluminium
Aluminium production increased by 5% to 604kt in H1 FY25, as Hillside
Aluminium continued to test its maximum technical capacity, and low-carbon
aluminium((27)) production from Brazil Aluminium and Mozal Aluminium increased
by 12%.
FY25 production guidance for Hillside Aluminium (720kt((28))) and Brazil
Aluminium (130kt) remains unchanged. FY25 production guidance for Mozal
Aluminium has been updated to 350kt((28)) (previously 360kt((28)(29))),
subject to further potential impacts of civil unrest in Mozambique.
Underlying EBITDA((23)) increased by US$160M to US$136M in H1 FY25, for an
operating margin of 8%, as a 16% increase in our average realised price of
aluminium and lower smelter raw material input prices (coke and pitch), more
than offset higher alumina prices.
Base metals
Copper
Sierra Gorda payable copper equivalent production((30)) increased by 21% to
46.4kt in H1 FY25, due to improved ore quality in the current phase of the
mine plan. FY25 production guidance remains unchanged at 84.8kt payable copper
equivalent (copper 70.0kt, molybdenum 1.3kt, gold 25.0koz and silver 550koz).
Underlying EBITDA increased by US$98M to US$215M in H1 FY25, for an operating
margin of 53%, due to higher average metals prices and lower labour costs.
Sierra Gorda continued to invest in studies and exploration to grow future
copper production, including a feasibility study for the fourth grinding line
project which has the potential to increase plant throughput by ~20% to
~58Mtpa (100% basis). The feasibility study and a final investment decision by
the joint venture partners is expected in H1 FY26.
Across our broader portfolio, we invested US$18M in greenfield exploration
programs in H1 FY25, as we work to discover our next generation of base metals
mines.
We also expanded our pipeline of copper exploration options in highly
prospective regions. We entered into a strategic alliance with Noronex Limited
to explore for copper in the Kalahari copper belt, Namibia, and acquired a
19.9% interest in American Eagle Gold Corp., which holds an option to acquire
a 100% interest in the Nakinilerak copper exploration prospect in British
Columbia, Canada.
Zinc
Cannington payable zinc equivalent production((31)) decreased by 17% to
129.9kt in H1 FY25, as the operation managed increased underground activity
and complexity which is expected to continue to drive variability in quarterly
performance. FY25 production guidance remains unchanged at 265.4kt payable
zinc equivalent (silver 11,300koz, lead 100.0kt and zinc 50.0kt).
Underlying EBITDA decreased by US$17M to US$130M in H1 FY25, for an operating
margin of 40%, as higher average realised metal prices were more than offset
by additional mining costs to deliver planned underground activity.
We invested US$248M at Hermosa in H1 FY25, as we progressed construction of
our large-scale, long-life Taylor zinc-lead-silver project, which is expected
to deliver attractive returns over multiple decades((32)) and unlock value for
future growth options at Hermosa.
These options include our Clark battery-grade manganese deposit, where we
progressed construction of an exploration decline which will enable access to
ore for future demonstration scale production, and further underground
exploration.
We also directed US$16M to capitalised exploration at Hermosa in H1 FY25 as we
continued to test the potential for a continuous copper system connecting the
Peake copper deposit((33)) and Taylor Deeps.
Nickel
Cerro Matoso payable nickel production increased by 1% to 18.5kt in H1 FY25.
FY25 production guidance remains unchanged at 35.0kt.
Underlying EBITDA increased by US$22M to US$39M in H1 FY25, for an operating
margin of 16%, as the realisation of cost efficiencies, lower price-linked
royalties and a weaker Colombian peso, more than offset local inflationary
pressures.
In Q2 FY24, we commenced a strategic review of Cerro Matoso in response to
structural changes in the nickel market that have placed pressure on both
nickel prices and discounts for our ferronickel product. While the strategic
review has identified improvement options that have the potential to enhance
the operation's competitive position, the expected returns from these
investments do not currently support the allocation of capital in accordance
with our capital management framework and strategy. As a result, we have
commenced a process to investigate the potential divestment of Cerro Matoso.
In parallel, we will continue to target further cost efficiencies to mitigate
the impact of lower planned nickel grades in accordance with the mine plan.
Manganese
Australia Manganese
Australia Manganese continued to implement its operational recovery plan
following the impact of Tropical Cyclone Megan in Q3 FY24.
A substantial dewatering program continued during H1 FY25, which has enabled
access to certain mining pits and a phased restart of mining activities.
Production from the primary concentrator resumed in Q2 FY25 with saleable
production of 639kwmt. FY25 production guidance remains unchanged at
1,000kwmt, with production expected to continue at limited rates in H2 FY25.
We also progressed the demolition of undersea structures and commenced
installing pilings for the new wharf. While we have experienced some weather
related delays, we are looking to mitigate these through pilings installation
productivity improvements.
Subject to further potential impacts from the wet season, export sales are
expected to progressively increase over Q4 FY25.
Capital expenditure was US$47M in H1 FY25 and guidance remains unchanged at
US$125M in FY25 as we invest in infrastructure to deliver the operational
recovery plan.
Australia Manganese has received external insurance payments of US$250M (100%
basis) to date((34)). We continue to work with our insurers to assess the
timing and value of further recoveries in relation to the impact of Tropical
Cyclone Megan.
Underlying EBITDA was a loss of US$31M in H1 FY25 due to the impact of
Tropical Cyclone Megan. Separately, we incurred idle capacity and other
remediation costs of US$74M that were excluded from Underlying EBITDA as an
earnings adjustment.
South Africa Manganese
South Africa Manganese production decreased by 3% to 1,082kwmt in H1 FY25, as
we reduced our use of higher cost trucking and undertook a temporary shut at
our Wessels mine in Q2 FY25, in response to market conditions. While FY25
production guidance remains unchanged at 2,000kwmt, we will continue to
monitor and respond to market conditions.
Underlying EBITDA((23)) increased by US$14M to US$28M in H1 FY25, for an
operating margin of 15%, as higher average realised manganese prices, more
than offset a stronger South African rand and local inflationary pressures.
Financial performance
Profit and Loss
The Group's profit after tax attributable to members((1)) increased by US$307M
to US$360M in H1 FY25, as we delivered strong operating results and
capitalised on improved commodity prices. Underlying earnings((2)) increased
by US$335M to US$375M in H1 FY25. A reconciliation of profit/(loss) to
Underlying earnings is set out on page 9.
Underlying EBITDA increased by US$310M (or 44%) to US$1,018M, for a Group
operating margin((11)) of 27.5% (H1 FY24: 19.0%). Our strong financial results
were driven by higher sales volumes of aluminium and copper (+US$203M) and
higher average commodity prices (+US$627M), which more than offset lower
contributions from steel-making commodities following the sale of Illawarra
Metallurgical Coal (-US$80M) and the impact of Tropical Cyclone Megan at
Australia Manganese (-US$101M).
Underlying EBIT increased by US$427M to US$663M in H1 FY25, as Underlying
depreciation and amortisation decreased by US$117M to US$355M following the
sale of Illawarra Metallurgical Coal and the temporary suspension of
operations at Australia Manganese.
Cash Flow
Group free cash flow from operations, excluding equity accounted investments
(EAIs), improved by US$361M for an outflow of US$116M in H1 FY25, as a
significant increase in profitability, and lower sustaining capital
expenditure following the sale of Illawarra Metallurgical Coal, more than
offset our investment in growth at Hermosa.
Separately, we received net distributions((35)) of US$86M from our Sierra
Gorda EAI in H1 FY25 (H1 FY24:US$18M), and provided US$63M of funding to our
manganese EAI in H1 FY25 to support the operational recovery plan at Australia
Manganese.
Group capital expenditure, excluding EAIs and exploration and intangibles,
decreased by US$110M to US$457M as lower sustaining capital expenditure
(-US$145M), more than offset an increase in growth capital expenditure at
Hermosa (+US$60M). We expect to invest US$895M in Group capital expenditure,
excluding EAIs and Illawarra Metallurgical Coal, in FY25.
Capital expenditure for our manganese EAI was US$72M in H1 FY25 and is
expected to be US$170M in FY25 as we continue our investment in infrastructure
to deliver the operational recovery plan at Australia Manganese.
Capital expenditure for our Sierra Gorda EAI was US$106M in H1 FY25 and is
expected to be US$210M in FY25 as the operation continues deferred stripping
activity and progresses the feasibility study for the fourth grinding line
project.
We returned US$169M to shareholders in H1 FY25, with US$140M in fully-franked
ordinary dividends in respect of H2 FY24, and US$29M via our on-market share
buy-back.
Balance Sheet
Group net debt decreased by US$715M to US$47M in H1 FY25, as improved
profitability, and the sale of Illawarra Metallurgical Coal (+US$938M((36))),
more than offset our investment in growth at Hermosa (-US$248M) and returns to
shareholders (-US$169M).
Our strong financial position was achieved despite a build in working capital
of US$267M in H1 FY25, predominantly due to an increase in inventories and
elevated trade receivables at period end due to higher commodity prices and
the timing of shipments in Q2 FY25.
Dividends and Capital Management
Our unchanged capital management framework supports investment in our business
and rewards shareholders as our financial performance improves. Consistent
with our policy to distribute a minimum 40% of Underlying earnings as ordinary
dividends, the Board has resolved to pay a fully-franked interim ordinary
dividend of US 3.4 cents per share (US$154M) in respect of H1 FY25,
representing 41% of Underlying earnings.
Reflecting our strong financial position and track record of returning excess
capital to shareholders, we will continue returns under our US$2.5B capital
management program via our on-market share buy-back in H2 FY25. Our capital
management program has US$171M remaining to be returned to shareholders ahead
of its extension or expiry on 12 September 2025((37)).
Earnings reconciliation
The Group's profit after tax attributable to members increased by US$307M to
US$360M in H1 FY25. Underlying earnings((2)) increased by US$335M to US$375M
in H1 FY25.
Consistent with our accounting policies, various items are excluded from the
Group's profit/(loss) to derive Underlying earnings. Total adjustments to
derive Underlying EBIT (US$143M), shown in the table below, include:
- Joint venture adjustments (US$22M): to reconcile the equity accounting
position to a proportional consolidation basis for Sierra Gorda (+US$51M) and
our manganese EAI (-US$29M). For Australia Manganese, this included
adjustments for idle capacity and other remediation costs (+US$74M), and
external insurance recoveries (-US$150M) in relation to the impact of Tropical
Cyclone Megan;
- Net loss on the disposal of subsidiaries and joint operations (US$47M):
recognition of loss on disposal of Illawarra Metallurgical Coal, which had
been previously recognised as a discontinued operation in FY24;
- Net impairment loss of financial assets (US$71M): periodic revaluation of the
shareholder loan receivable from Sierra Gorda. An offsetting amount is
recorded in the Sierra Gorda joint venture adjustments noted above; and
- Gains on non-trading derivative instruments, contingent consideration and
other investments measured at fair value through profit and loss (-US$4M):
revaluation of the contingent consideration receivable((38)) from the sale of
Illawarra Metallurgical Coal due to higher metallurgical coal prices
(-US$53M). This was largely offset by the revaluation of the contingent
consideration payable((39)) in relation to our acquisition of Sierra Gorda, as
we expect to make a contingent payment in relation to CY25 performance
(+US$50M).
Further information on these adjustments is included on page 45.
Profit/(loss) to Underlying EBITDA reconciliation((8))
US$M H1 FY25 H1 FY24
Operating profit/(loss) from continuing operations 520 (52)
Operating profit/(loss) from a discontinued operation - 127
Adjustments to derive Underlying EBIT:
Joint venture adjustments((40)) 22 118
Net (gains)/losses on the disposal of subsidiaries and joint operations 47 -
Exchange rate (gains)/losses on the restatement of monetary items 7 13
Net impairment loss/(reversal) of financial assets 71 48
Gains on non-trading derivative instruments, contingent consideration and (4) (18)
other investments measured at fair value through profit and loss
Total adjustments to derive Underlying EBIT 143 161
Underlying EBIT 663 236
Underlying depreciation and amortisation 355 472
Underlying EBITDA 1,018 708
Profit/(loss) to Underlying earnings reconciliation((8))
US$M H1 FY25 H1 FY24
Profit/(loss) after tax attributable to members 360 53
Total adjustments to derive Underlying EBIT 143 161
Total adjustments to derive Underlying net finance costs (152) (109)
Total adjustments to derive Underlying income and royalty related tax expense 24 (65)
Underlying earnings((2)) 375 40
Earnings analysis
The following key factors influenced Underlying EBIT in H1 FY25, relative to
H1 FY24.
Reconciliation of movements in Underlying EBIT (US$M)((10)(41)(42)(43))
Earnings analysis US$M Commentary
H1 FY24 Underlying EBIT 236
Change in sales price 627 Higher average realised prices for our commodities, including:
Alumina (+US$282M)
Aluminium (+US$223M)
Copper (+US$39M), silver (+US$36M) and zinc (+US$16M)
Net impact of price-linked costs 84 Lower aluminium smelter raw material input prices (coke and pitch) (+US$56M)
Lower electricity prices at Brazil Aluminium (+US$18M)
Lower price-linked royalties at Cerro Matoso (+US$16M)
Change in exchange rates 11 Weaker Brazilian real (+US$29M) and Chilean peso (+US$13M)
Partially offset by a stronger South African rand (-US$28M) and Australian
dollar (-US$8M)
Change in inflation (72) Inflation-linked indexation of our Southern African aluminium smelter
electricity prices (-US$17M)
General inflation across Southern Africa (-US$20M), Australia (-US$18M) and
South America (-US$17M)
Change in sales volume 109 Higher volumes at Hillside Aluminium (+US$93M), Brazil Aluminium (+US$47M),
Sierra Gorda (+US$44M) and Mozal Aluminium (+US$19M)
Partially offset by lower volumes at Worsley Alumina (-US$61M) and Cannington
(-US$40M)
Controllable costs (177) Drawdown of finished goods inventory at Hillside Aluminium (-US$73M) and
Sierra Gorda (-US$7M), supporting higher sales volumes
Inventory and volume related movements at Brazil Aluminium (-US$42M) as the
smelter continues to ramp-up toward nameplate capacity
Additional planned maintenance and contractor costs (-US$64M), most notably at
Hillside Aluminium, Brazil Alumina and Mozal Aluminium
Higher caustic consumption at Worsley Alumina (-US$21M) primarily due to lower
quality bauxite in the current mining areas as a result of delayed mining
approvals
Partially offset by cost efficiencies at Cerro Matoso (+US$22M) and lower
labour costs at Sierra Gorda (+US$17M), following the prior period's one-off
workforce payment
Portfolio changes (75) Reduced contribution from Illawarra Metallurgical Coal following its sale in
August 2024 (-US$80M)
Lower costs following the divestment of our interest in Eagle Downs in August
2024 (+US$5M)
Other (80) Reduced contribution from Australia Manganese due to Tropical Cyclone Megan
(-US$101M)
Higher third party product and services EBIT (+US$10M)
H1 FY25 Underlying EBIT 663
Net finance income/(costs)
The Group's Underlying net finance costs decreased by US$26M to US$92M in H1
FY25. These costs primarily comprised the unwinding of the discount applied to
our closure and rehabilitation provisions (US$65M), interest on lease
liabilities (US$29M) largely for our multi-fuel co-generation facility at
Worsley Alumina, and interest on our US$700M of senior unsecured notes
(US$16M).
Underlying net finance costs reconciliation
US$M H1 FY25 H1 FY24
Unwind of discount applied to closure and rehabilitation provisions (65) (76)
Interest on lease liabilities (29) (28)
Interest on senior unsecured notes (16) (16)
Other 18 2
Underlying net finance costs (92) (118)
Add back earnings adjustment for exchange rate variations on net debt 37 (1)
Joint venture adjustments((40)) 115 110
Total adjustments to derive Underlying net finance costs 152 109
Remove net finance costs from a discontinued operation 3 3
Net finance income/(costs) 63 (6)
Tax expense
The Group's Underlying income tax and royalty related taxation expense, which
includes our material EAIs, increased by US$119M to US$197M in H1 FY25, for an
Underlying effective tax rate (ETR)((44)) of 33.7% (FY24: 38.8%). Our Group
Underlying ETR reflects the corporate tax rates((45)) and royalty related
taxes((46)) of the jurisdictions in which we operate and our geographical
earnings mix.
The Underlying ETR for our manganese business was 0% in H1 FY25, reflecting
the temporary suspension of operations at Australia Manganese due to Tropical
Cyclone Megan. The Underlying ETR for our Sierra Gorda EAI was 18.9% in H1
FY25, reflecting royalty related tax((46)), and the reversal of a prior period
accrual.
Underlying income tax and royalty related taxation expense reconciliation((8))
US$M H1 FY25 H1 FY24
Underlying EBIT 663 236
Include: Underlying net finance costs (92) (118)
Remove: Share of (profit)/loss of EAIs 13 11
Underlying profit/(loss) before tax 584 129
Income tax expense/(benefit) from continuing operations 210 (32)
Income tax expense/(benefit) from a discontinued operation 11 45
Tax effect of other adjustments to derive Underlying EBIT - 4
Tax effect of other adjustments to derive Underlying net finance costs (11) 1
Exchange rate variations on tax balances (20) 20
Joint venture adjustments relating to income tax((40)) (1) 18
Joint venture adjustments relating to royalty related tax((40)) 8 22
Total adjustments to derive Underlying income tax (expense)/benefit (24) 65
Underlying income tax expense/(benefit) 197 78
Underlying effective tax rate 33.7 % 60.5 %
Cash flow
Group free cash flow from operations, excluding EAIs, improved by US$361M for
an outflow of US$116M in H1 FY25, as a significant increase in profitability,
and lower sustaining capital expenditure (-US$145M) following the sale of
Illawarra Metallurgical Coal, more than offset our investment in growth at
Hermosa (+US$60M).
Working capital increased by US$267M due to an increase in inventories and
elevated trade receivables at period end due to higher commodity prices and
the timing of shipments in Q2 FY25.
Separately, we received net distributions((35)) of US$86M from our Sierra
Gorda EAI in H1 FY25 (H1 FY24: US$18M), and provided US$63M of funding to our
manganese EAI in H1 FY25 to support the operational recovery plan at Australia
Manganese.
Free cash flow from operations excluding EAIs
US$M H1 FY25 H1 FY24
Operating profit/(loss) from continuing and discontinued operations 520 75
Non-cash or non-operating items 280 421
Share of (profit)/loss from EAIs (80) 9
Loss from sale of operations 47 -
Change in working capital (267) (276)
Cash generated from operations 500 229
Total capital expenditure, excluding EAIs, including intangibles and (478) (584)
capitalised exploration
Operating cash flows generated from operations after capital expenditure 22 (355)
Net interest paid((47)) (22) (26)
Income tax paid (116) (96)
Free cash flow from operations (116) (477)
Working capital movement
US$M H1 FY25 Commentary
Trade and other receivables (10) Reflected elevated receivables at the end of the period due to higher
commodity prices and the timing of shipments
Inventories (115) Reflected an increase in inventories in our aluminium value chain due to
higher commodity prices
Trade and other payables (95) Reflected the timing of payments to suppliers
Provisions and other liabilities (47) Reflected the timing of payments and revaluation of provisions
Total working capital movement (267)
Capital expenditure
The Group's capital expenditure((48)), excluding EAIs, decreased by US$106M to
US$478M in H1 FY25, as lower sustaining capital expenditure following the sale
of Illawarra Metallurgical Coal was partially offset by our investment in
growth at Hermosa:
- Safe and reliable capital expenditure, including Illawarra
Metallurgical Coal (US$57M), decreased by US$145M to US$190M;
- Improvement and life extension capital expenditure decreased by
US$20M to US$19M, with activity for new mining areas at Worsley Alumina to
increase in H2 FY25 following the receipt of environmental approvals;
- Growth capital expenditure increased by US$60M to US$248M at
Hermosa, as we progressed construction of the Taylor zinc-lead-silver project
and an exploration decline for the Clark battery-grade manganese deposit; and
- Intangibles and capitalised exploration expenditure was US$21M,
as we completed multiple exploration programs across our portfolio focused on
base metals.
Our share of capital expenditure for our material EAIs increased by US$15M to
US$185M in H1 FY25:
- Capital expenditure for our Sierra Gorda EAI increased by US$9M
to US$113M, as the operation continued its investment in deferred stripping
and the feasibility study for the fourth grinding line project; and
- Capital expenditure for our manganese EAIs increased by US$6M to
US$72M, as Australia Manganese invested in infrastructure to deliver the
operational recovery plan.
Capital expenditure (South32 share)((43)(48))
US$M H1 FY25 H1 FY24
Safe and reliable capital expenditure (133) (155)
Improvement and life extension capital expenditure (19) (39)
Growth capital expenditure (248) (188)
Intangibles and the capitalisation of exploration expenditure (21) (17)
Discontinued operation - Illawarra Metallurgical Coal (57) (185)
Total capital expenditure (excluding EAIs) (478) (584)
EAIs capital expenditure (185) (170)
Total capital expenditure (including EAIs) (663) (754)
Balance sheet
Group net debt decreased by US$715M to US$47M in H1 FY25, as improved
profitability, and the sale of Illawarra Metallurgical Coal (+US$938M((36))),
more than offset our investment in growth at Hermosa (-US$248M) and returns to
shareholders (-US$169M).
We continue to prioritise a strong balance sheet and investment grade credit
rating through the cycle. Our current BBB+/Baa1 credit ratings were
re-affirmed by S&P Global Ratings and Moody's respectively during CY24. We
also retain access to significant liquidity, having successfully extended our
undrawn sustainability-linked revolving credit facility of US$1.4B to December
2028.
Net debt
US$M H1 FY25 FY24
Cash and cash equivalents 1,600 842
Lease liabilities (660) (710)
Other interest bearing liabilities (987) (894)
Net debt((a)) (47) (762)
(a) FY24 net debt includes Illawarra Metallurgical Coal and Eagle
Downs metallurgical coal which were classified as held for sale.
Dividends and capital management
Our unchanged capital management framework supports investment in our business
and is designed to reward shareholders as our financial performance improves.
Consistent with our policy to distribute a minimum 40% of Underlying earnings
as ordinary dividends, the Board has resolved to pay a fully-franked interim
ordinary dividend of US 3.4 cents per share (US$154M) in respect of H1 FY25,
representing 41% of Underlying earnings.
Reflecting our strong financial position and track record of returning excess
capital to shareholders, we will continue returns under our US$2.5B capital
management program via our on-market share buy-back in H2 FY25. Our capital
management program has US$171M remaining to be returned to shareholders ahead
of its extension or expiry on 12 September 2025((37)).
Dividends announced
Period Dividend per share US$M Franking Pay-out ratio
(US cents)
H1 FY23 4.9 224 100 % 40 %
H2 FY23 3.2 145 100 % 41 %
H1 FY24 0.4 18 100 % 45 %
H2 FY24 3.1 140 100 % 41 %
H1 FY25 3.4 154 100 % 41 %
South32 shareholders registered on the South African branch register will not
be able to dematerialise or rematerialise their shareholdings between 5 and 7
March 2025 (both dates inclusive), nor will transfers to/from the South
African branch register be permitted between 27 February and 7 March 2025
(both dates inclusive).
Details of the currency exchange rates applicable for the dividend will be
announced to the relevant stock exchanges. Further dividend information is
available on our website (www.south32.net (http://www.south32.net) ).
South32 American Depositary Receipts (ADRs) each represent five fully paid
ordinary shares in South32 and ADR holders will receive dividends accordingly,
subject to the terms of the Depositary Agreement.
Dividend timetable Date
Announce currency conversion into South African rand 28 February 2025
Last day to trade cum dividend on the Johannesburg Stock Exchange (JSE) 4 March 2025
Ex-dividend date on the JSE 5 March 2025
Ex-dividend date on the ASX and London Stock Exchange (LSE) 6 March 2025
Record date (including currency election date for ASX) 7 March 2025
Payment date 3 April 2025
OUTLOOK
Production
All FY25 production guidance remains unchanged, except for Mozal Aluminium
where production guidance has been updated to 350kt((28)) (previously
360kt((28)(29))), subject to further potential impacts of civil unrest in
Mozambique.
Production guidance (South32 share)((43))
H1 FY25 FY25e((a)) FY26e((a)) Key FY25 guidance assumptions
Worsley Alumina Guidance unchanged
Additional planned calciner maintenance in Q3 FY25
Alumina production (kt) 1,850 3,750 3,750
Brazil Alumina (non-operated) Guidance unchanged
Plant availability continuing to improve
Alumina production (kt) 682 1,350 1,380
Brazil Aluminium (non-operated) Guidance unchanged
Ramping up across all three potlines
Aluminium production (kt) 64 130 160
Hillside Aluminium((28)) Guidance unchanged
Expected to continue to test maximum technical capacity
Aluminium production (kt) 362 720 720
Mozal Aluminium((28)) Guidance updated to 350kt (from 360kt((29)))
Subject to further potential impacts of civil unrest in Mozambique
Aluminium production (kt) 178 350 370
Sierra Gorda (non-operated) Guidance unchanged
Benefitting from the plant de-bottlenecking project and improved ore quality
in the current phase of the mine plan
Ore processed (Mt) 11.1 21.8 22.0
Payable copper equivalent production (kt)((30)) 46.4 84.8 86.1
Payable copper production (kt) 36.7 70.0 74.0
Payable molybdenum production (kt) 0.9 1.3 1.0
Payable gold production (koz) 15.9 25.0 20.0
Payable silver production (koz) 301 550 600
Cannington Guidance unchanged
Continuing to manage increased underground activity and complexity
Ore processed volumes weighted to H2 FY25
Ore processed (kdmt) 982 2,100 2,200
Payable zinc equivalent production (kt)((31)) 129.9 265.4 282.2
Payable silver production (koz) 5,615 11,300 12,000
Payable lead production (kt) 49.6 100.0 110.
Payable zinc production (kt) 22.9 50.0 50.0
Cerro Matoso Guidance unchanged
Lower planned nickel grades in accordance with the mine plan
Ore processed (kdmt) 1,396 2,750 Subject to potential divestment
Payable nickel production (kt) 18.5 35.0
Australia Manganese Guidance unchanged
Limited production rates in H2 FY25 as we progress the recovery plan
Manganese ore production (kwmt) 639 1,000 3,200
South Africa Manganese Guidance unchanged
Continuing to monitor and respond to market conditions
Manganese ore production (kwmt) 1,082 2,000 2,00
(a) The denotation (e) refers to an estimate or forecast year.
Costs and capital expenditure
Operating unit costs performance and guidance
We remain focused on delivering stable operating performance and cost
efficiencies to offset inflationary pressures. Our operating discipline
combined with weaker producer currencies is expected to support lower
Operating unit costs for the majority of our guided operations in H2 FY25.
While Operating unit cost guidance is not provided for our aluminium smelters,
their cost profile will continue to be influenced by producer currencies, and
the prices of raw material inputs and energy.
Operating unit cost((49))
H1 FY24 H1 FY25 FY25 prior guidance((a)) FY25 new guidance((b)) H1 FY25 to H1 FY24 commentary
FY25 new guidance to FY25 prior guidance commentary
Worsley Alumina
(US$/t) 258 306 290 305 H1 FY25: higher caustic soda consumption in current mining areas, and
increased gas consumption as part of the refinery's energy transition
FY25e guidance increased by 5%, with higher caustic soda consumption more than
offsetting a weaker Australian dollar
Brazil Alumina (non-operated)
(US$/t) 325 320 Not provided Not provided H1 FY25: improved operating performance and a weaker Brazilian real, more than
offset higher maintenance and bauxite costs
FY25e: will continue to be influenced by energy and the price of raw material
inputs
Brazil Aluminium (non-operated)
(US$/t) 4,025 3,377 Not provided Not provided H1 FY25: higher volumes and lower energy prices,
more than offset higher alumina prices
FY25e: benefitting from higher volumes, while continuing to be influenced by
the price of raw material inputs and energy
Hillside Aluminium
(US$/t) 2,135 2,351 Not provided Not provided H1 FY25: higher sales volumes and lower raw material input prices (coke and
pitch), more than offset by higher alumina and energy prices, and a stronger
South African rand
FY25e: will continue to be influenced by the price of raw material inputs, the
South African rand and inflation-linked indexation energy costs
Mozal Aluminium
(US$/t) 2,461 2,425 Not provided Not provided H1 FY25: higher volumes and lower raw material input prices (coke and pitch),
more than offset by higher alumina and energy prices, and a stronger South
African rand
FY25e: will continue to be influenced by the price of raw material inputs, the
South African rand and inflation-linked indexation energy costs
Sierra Gorda (non-operated)
(US$/t)((c)) 18.8 17.1 16.0 16.0 H1 FY25: improved throughput and lower labour costs, more than offset
additional planned maintenance and a drawdown of finished goods inventory
FY25e guidance unchanged, with H2 FY25 costs expected to be lower (from H1
FY25) following a drawdown of inventory in H1 FY25
Cannington
(US$/t)((c)) 150 197 170 175 H1 FY25: additional mining costs to deliver the planned increase in
underground activity and lower ore processed
FY25e guidance increased by 3%, with H2 FY25 costs expected to be lower (from
H1 FY25) due to higher ore processed and a weaker Australian dollar
Cerro Matoso
(US$/lb) 5.57 5.13 5.65 5.35 H1 FY25: cost efficiencies, lower price-linked royalties and a weaker
Colombian peso
FY25e guidance lowered by 5%, due to cost efficiencies and a weaker Colombian
peso
Australia Manganese
(US$/dmtu, FOB) 2.15 N/A Not provided Not provided Subject to the operational recovery plan
South Africa Manganese
(US$/dmtu, FOB) 2.59 3.13 3.00 3.00 H1 FY25: stronger South African rand and local inflationary pressures
FY25e guidance unchanged, with H2 FY25 costs expected to be lower (from H1
FY25) as we target further cost efficiencies, and lower price-linked royalties
(a) FY25 prior Operating unit cost guidance includes royalties
(where appropriate) and commodity price and foreign exchange rate forward
curves or our internal expectations (refer to page 33 footnote 50).
(b) FY25 new Operating unit cost guidance includes royalties (where
appropriate) and commodity price and foreign exchange rate forward curves or
our internal expectations (refer to page 33 footnote 51).
(c) US dollar per tonne of ore processed. Periodic movements in
finished product inventory may impact Operating unit costs.
Capital expenditure guidance (excluding exploration and intangibles)
FY25 Group capital expenditure guidance, excluding EAIs, has been revised to
US$895M((b)) (from US$990M), with:
- Group safe and reliable capital expenditure, excluding EAIs,
revised to US$295M (from US$310M), while spend will reduce in H2 FY25 (from H1
FY25) following the sale of Illawarra Metallurgical Coal;
- Group improvement and life extension capital expenditure,
excluding EAIs, revised to US$70M (from US$80M), with spend for the Worsley
Mine Development Project increasing in H2 FY25 following the receipt of
environmental approvals; and
- Growth capital expenditure at Hermosa revised to US$530M((52))
(from US$600M) with spend re-phased to FY26 as we negotiated favourable down
payment terms for long lead items for surface infrastructure and the Taylor
processing plant.
Capital expenditure for our EAIs has been held largely unchanged at US$380M
(from US$385M) as we invest to support copper production at Sierra Gorda and
the operational recovery plan at Australia Manganese.
Capital expenditure excluding exploration and intangibles (South32
share)((43))
US$M H1 FY25 FY25e((a)(b))
Worsley Alumina 38 90
Brazil Alumina 22 50
Brazil Aluminium 6 10
Hillside Aluminium 19 55
Mozal Aluminium 12 25
Cannington 23 45
Cerro Matoso 13 20
Safe and reliable capital expenditure (excluding EAIs) 133 295
Worsley Alumina 12 35
Brazil Alumina 5 7
Other operations 2 28
Improvement and life extension capital expenditure (excluding EAIs) 19 70
Hermosa 248 530
Growth capital expenditure 248 530
Total capital expenditure (excluding EAIs) 400 895
Total capital expenditure (including EAIs) 578 1,275
Capital expenditure for EAIs excluding exploration and intangibles (South32
share)((43))
US$M H1 FY25 FY25e((a))
Sierra Gorda 90 185
Australia Manganese 47 125
South Africa Manganese 16 30
Safe and reliable capital expenditure (EAIs) 153 340
Sierra Gorda 16 25
South Africa Manganese 9 15
Improvement and life extension capital expenditure (EAIs) 25 40
Total capital expenditure (EAIs) 178 380
(a) The denotation (e) refers to an estimate or forecast year.
(b) FY25 capital expenditure guidance was not provided for Illawarra
Metallurgical Coal due to the sale process.
Capitalised exploration guidance
FY25 Group capitalised exploration, including EAIs, is unchanged at US$50M as
we continue base metals exploration programs across our portfolio. This
includes exploration programs at the Peake copper deposit at our Hermosa
project, and the Catabela Northeast copper porphyry exploration prospect((53))
at Sierra Gorda.
Capitalised exploration (South32 share)((43))
US$M H1 FY25 FY25e((a))
Capitalised exploration (excluding EAIs) 19 40
EAIs capitalised exploration 7 10
Capitalised exploration (including EAIs) 26 50
(a) The denotation (e) refers to an estimate or forecast year.
Other expenditure guidance
Other expenditure items presented below are on a proportional consolidation
basis including our manganese and Sierra Gorda EAIs.
H1 FY25 FY25e((a)) Commentary
Group and unallocated expense in Underlying EBIT (excluding Hermosa,
greenfield exploration and third party products and services EBIT)
(US$M) 83 100 Guidance unchanged
H1 FY25 reflected unfavourable inter-group inventory adjustments in our
aluminium value chain (-US$38M)
Normalised run-rate expected in H2 FY25
Hermosa expenses included in Underlying EBIT
(US$M) 17 30 Guidance unchanged
Underlying depreciation and amortisation
(US$M) 355 720 Guidance revised to US$720M (from US$810M)
Lower depreciation at Australia Manganese recognised in Underlying earnings
Underlying net finance costs
(US$M) 92 190 Guidance unchanged
Greenfield exploration
(US$M) 18 30 Guidance unchanged
(a) The denotation (e) refers to an estimate or forecast year.
OPERATIONS ANALYSIS
A summary of the underlying performance of the Group's operations is presented
below and a more detailed analysis is presented on pages 22 to 31. Unless
otherwise stated: all metrics reflect South32's share; Operating unit cost is
Underlying revenue less Underlying EBITDA excluding third party products and
services divided by sales volumes; Operating cost is Underlying revenue less
Underlying EBITDA excluding third party products and services; and Realised
sales price is calculated as Underlying revenue excluding third party products
and services divided by sales volume.
Operations table (South32 share)((43))
Underlying revenue Underlying EBIT
US$M H1 FY25 H1 FY24 H1 FY25 H1 FY24
Worsley Alumina 916 653 280 68
Brazil Alumina 408 234 146 (9)
Brazil Aluminium 153 91 (55) (74)
Hillside Aluminium 986 758 89 27
Mozal Aluminium 488 397 33 (48)
Sierra Gorda 405 322 128 49
Cannington 323 318 89 109
Hermosa - - (17) (9)
Cerro Matoso 239 238 27 (14)
Australia Manganese - 318 (34) 67
South Africa Manganese 191 152 18 3
Third party products and services((54)) 190 156 10 -
Inter-segment / Group and unallocated (593) (382) (101) (63)
South32 Group (excluding Illawarra Metallurgical Coal) 3,706 3,255 613 106
Illawarra Metallurgical Coal((55)) 144 626 50 130
South32 Group 3,850 3,881 663 236
WORSLEY ALUMINA
Location: Western Australia, Australia
South32 share: 86 per cent
Worsley Alumina is an integrated bauxite mining and alumina refining operation
in the South West of Western Australia. Alumina from Worsley Alumina is
exported to our Hillside Aluminium and Mozal Aluminium smelters and other
smelters around the world.
Volumes
Worsley Alumina saleable production decreased by 4% (or 84kt) to 1,850kt in H1
FY25, as we managed constrained bauxite supply due to delayed approvals for
new mining areas, and completed planned calciner maintenance. FY25 production
guidance remains unchanged at 3,750kt. Further planned calciner maintenance is
scheduled in Q3 FY25.
Worsley Alumina has now received primary State((24)) and Federal((25))
environmental approvals for the Worsley Mine Development Project (the
Project). The Project will enable access to bauxite to sustain production at
Worsley Alumina, with mining of bauxite areas located near our existing
operations expected to commence in Q4 FY25. We will now also commence the
development of new mining areas that are expected to sustain production to at
least FY36((26)).
Operating costs
Operating unit costs increased by 19%, to US$306/t in H1 FY25, due to
increased caustic soda consumption in the current bauxite mining areas (H1
FY25: 134 kg/t, H1 FY24: 110 kg/t) coupled with higher caustic soda prices (H1
FY25: US$483/t, H1 FY24: US$460/t), and higher gas consumption as the refinery
transitions toward lower carbon((56)) energy supply.
Our operating margin increased to 40% (H1 FY24: 25%) as a 49% increase in the
average realised price of alumina more than offset higher costs. Our average
realised price of alumina of US$512/t was a ~11% discount to the Platts
Alumina index((57)), which reflected market based prices except for legacy
supply contracts with Mozal Aluminium which reference the LME aluminium price.
We have revised FY25 Operating unit cost guidance to US$305/t (previously
US$290/t) with higher caustic soda consumption to more than offset a weaker
Australian dollar. Exchange rate and price assumptions for FY25 Operating unit
cost guidance are detailed on page 33, footnote 51.
Financial performance
Underlying EBIT increased by 312% (or US$212M), to US$280M in H1 FY25, as
higher average realised alumina prices (+US$300M) more than offset lower sales
volumes (-US$37M), higher caustic soda costs (-US$27M), and energy costs
following the conversion of the first coal-fired boiler to natural gas in the
prior period (-US$10M).
Capital expenditure
Safe and reliable capital expenditure increased by US$4M to US$38M in H1 FY25
and is expected to be US$90M in FY25 as we invest in infrastructure to access
new mining areas and additional bauxite residue disposal capacity.
Improvement and life extension capital expenditure decreased by US$12M to
US$12M in H1 FY25 as we converted the first coal-fired boiler to natural gas
in the prior period. We expect to invest US$35M (previously US$45M) in FY25
with activity for the Project to increase in H2 FY25 following the receipt of
environmental approvals.
South32 share H1 FY25 H1 FY24
Alumina production (kt) 1,850 1,934
Alumina sales (kt) 1,789 1,898
Realised alumina sales price (US$/t) 512 344
Operating unit cost (US$/t) 306 258
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 916 653
Underlying EBITDA 369 164
Underlying EBIT 280 68
Net operating assets((a)) 1,847 1,813
Capital expenditure 50 58
Safe and reliable 38 34
Improvement and life extension 12 24
(a) H1 FY24 reflects the balance as at 30 June 2024.
BRAZIL ALUMINA
Location: Pará and Maranhão, Brazil
South32 investment: Bauxite - 33 per cent
South32 share: Alumina - 36 per cent
Brazil Alumina includes our 33% interest in the Mineração Rio do Norte (MRN)
bauxite mine and a 36% interest in the Alumar alumina refinery. Our share of
bauxite produced from MRN is supplied to the Alumar refinery. The alumina
produced from Alumar refinery is supplied to the co-located Alumar aluminium
smelter and exported to other smelters around the world.
Volumes
Brazil Alumina saleable production increased by 7% (or 42kt) to 682kt in H1
FY25 as the refinery benefitted from improved plant availability. FY25
production guidance remains unchanged at 1,350kt.
Operating costs
Operating unit costs decreased by 2%, to US$320/t in H1 FY25, as the
refinery's improved operating performance and a weaker Brazilian real more
than offset higher planned maintenance and bauxite costs.
Our operating margin increased to 43% (H1 FY24: 6%) as our average realised
price of alumina increased by 63% and costs were largely unchanged.
While Operating unit cost guidance is not provided for this non-operated
facility, the refinery will continue to be influenced by energy and raw
material input prices.
Financial performance
Underlying EBIT increased by US$155M, from a loss of US$9M, to US$146M in H1
FY25, as higher sales volumes (+US$16M) and average realised alumina prices
(+US$158M), more than offset additional maintenance costs (-US$13M) and higher
bauxite costs from MRN linked to alumina and aluminium prices on a trailing
basis (-US$5M).
Our share of the loss from our equity interest in MRN was US$13M in H1 FY25
(H1 FY24: loss of US$9M).
Capital expenditure
Capital expenditure decreased by US$24M to US$27M in H1 FY25 following the
refinery's investment in plant de-bottlenecking in the prior period. We expect
to invest US$57M (previously US$63M) in FY25 as we continue our investment in
additional bauxite residue disposal capacity.
The partners of MRN continue to progress a feasibility study for the West Zone
project, which has the potential to extend the life of the bauxite mine by
more than 20 years((58)). A preliminary environmental license for the West
Zone project was received in Q1 FY25. In Q2 FY25, the partners made a final
investment decision to construct a transmission line to connect the MRN
bauxite mine to the Brazilian power grid. The transmission line will enable
MRN to reduce operating costs by replacing its diesel-powered generation with
cost efficient renewable energy sources. Our share of capital expenditure for
the transmission line is expected to be ~US$70M (33% share) over FY25 to FY27.
South32 share H1 FY25 H1 FY24
Alumina production (kt) 682 640
Alumina sales (kt) 691 647
Realised sales price (US$/t) 590 362
Operating unit cost (US$/t)((a)) 320 325
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 408 234
Underlying EBITDA 174 15
Underlying EBIT 146 (9)
Net operating assets((b)) 732 736
Capital expenditure 27 51
Safe and reliable 22 38
Improvement and life extension 5 13
(a) Excludes the profit/(loss) from our equity interest in MRN.
(b) H1 FY24 reflects the balance as at 30 June 2024.
BRAZIL ALUMINIUM
Location: Maranhão, Brazil
South32 share: 40 per cent
The Brazil Aluminium smelter was restarted during FY22 after being on care and
maintenance since 2015.
Brazil Aluminium produces aluminium for domestic and export markets, with
alumina supplied by the co-located Alumar refinery. Our share of Brazil
Aluminium production is powered by 100% renewable power.
Volumes
Brazil Aluminium saleable production increased by 28% (or 14kt) to 64kt in H1
FY25 as the smelter continued to ramp-up all three potlines. FY25 production
guidance remains unchanged at 130kt.
Operating costs
Operating unit costs decreased by 16%, to US$3,377/t in H1 FY25, as the
smelter continued to ramp-up and benefitted from lower renewable energy
prices, more than offsetting higher alumina prices.
While Operating unit cost guidance is not provided for this non-operated
facility, Operating unit costs are expected to continue to moderate with
planned production growth of 25% in FY25 and 23% in FY26 as the smelter
ramps-up toward nameplate capacity.
Financial performance
Underlying EBIT improved by US$19M, to a loss of US$55M in H1 FY25, as higher
sales volumes (+US$47M) and average realised aluminium prices (+US$15M), a
weaker Brazilian real (+US$18M) and lower energy prices (+US$18M), more than
offset higher alumina prices (-US$31M), and inventory and volume related
movements (-US$42M) as the smelter continued to ramp-up.
Capital expenditure
Capital expenditure was US$6M in H1 FY25 and is expected to be US$10M
(previously US$12M) in FY25.
South32 share H1 FY25 H1 FY24
Aluminium production (kt) 64 50
Aluminium sales (kt) 61 40
Realised sales price (US$/t) 2,508 2,275
Operating unit cost (US$/t) 3,377 4,025
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 153 91
Underlying EBITDA (53) (70)
Underlying EBIT (55) (74)
Net operating assets((a)) 74 68
Capital expenditure 6 4
Safe and reliable 6 4
Improvement and life extension - -
(a) H1 FY24 reflects the balance as at 30 June 2024.
HILLSIDE ALUMINIUM
Location: KwaZulu-Natal, South Africa
South32 share: 100 per cent
Hillside Aluminium is located in Richards Bay, South Africa, and is the
largest aluminium smelter in the southern hemisphere. The smelter produces
high-quality, primary aluminium for domestic and export markets.
Volumes
Hillside Aluminium saleable production increased by 1% (or 3kt) to 362kt in H1
FY25 as the smelter continued to test its maximum technical capacity, despite
the impact of load-shedding. FY25 production guidance remains unchanged at
720kt((28)).
Operating costs
Operating unit costs increased by 10%, to US$2,351/t in H1 FY25, as the
smelter's strong operating performance and lower raw material input prices
(coke and pitch), was more than offset by higher alumina prices, a stronger
South African rand and inflation-linked indexation of energy costs.
Our operating margin increased to 12% (H1 FY24: 8%) as a 16% increase in the
average realised price of aluminium more than offset higher costs.
While Operating unit cost guidance is not provided, the cost profile of the
smelter will continue to be heavily influenced by the price of smelter raw
material inputs, including alumina supplied by our Worsley Alumina refinery,
and other external factors including the South African rand and
inflation-linked indexation energy costs.
Financial performance
Underlying EBIT increased by 230% (or US$62M), to US$89M in H1 FY25, as higher
sales volumes (+US$93M) and average realised aluminium prices (+US$135M), and
lower smelter raw material input prices (coke and pitch) (+US$35M), more than
offset higher alumina prices (-US$81M), a stronger South African rand
(-US$18M) and a drawdown in inventory to support a 12% increase in sales
volumes (-US$65M).
95 pots were relined at a cost of US$305k per pot in H1 FY25 (H1 FY24: 52 pots
at US$350k per pot), with ~140 pots scheduled to be relined in FY25. The
smelter is deploying AP3XLE energy efficiency technology in its pot relining
activity to further enhance the smelter's energy efficiency and reduce GHG
emissions. At the end of H1 FY25, ~50% of the pots had been relined using
AP3XLE technology.
The smelter's energy costs increased by US$6M in H1 FY25, as energy efficiency
benefits delivered by AP3XLE technology (+US$6M) were more than offset by the
inflation-linked indexation of energy costs (-US$12M).
Capital expenditure
Capital expenditure decreased by US$6M to US$19M in H1 FY25. We expect to
invest US$55M (previously US$65M) in FY25 as we invest in fleet replacements
and progress work to replace the smelter's pot tending assemblies. Capital
expenditure is expected to be elevated over FY25 and FY26 as we continue work
to replace the pot tending assemblies.
South32 share H1 FY25 H1 FY24
Aluminium production (kt) 362 359
Aluminium sales (kt) 367 327
Realised sales price (US$/t) 2,687 2,318
Operating unit cost (US$/t) 2,351 2,135
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 986 758
Underlying EBITDA 123 60
Underlying EBIT 89 27
Net operating assets((a)) 889 805
Capital expenditure 19 25
Safe and reliable 19 24
Improvement and life extension - 1
(a) H1 FY24 reflects the balance as at 30 June 2024.
MOZAL ALUMINIUM
Location: Maputo, Mozambique
South32 share: 63.7 per cent
Mozal Aluminium is located near Maputo, Mozambique, and is a significant
industrial employer in the country. The smelter produces high-quality,
primary aluminium for domestic and export markets.
Volumes
Mozal Aluminium saleable production increased by 7% (or 12kt) to 178kt in H1
FY25 as the smelter approached nameplate capacity following completion of its
operational recovery plan, despite the impact of load-shedding.
In December 2024, following the impacts of civil unrest in Mozambique, we took
the decision to reduce amperage to the smelter to preserve raw materials and
maintain operational stability((59)). In recent weeks, we have re-built
alumina stocks at the smelter as we successfully implemented contingency plans
and road blockages eased. As a result, we have updated FY25 production
guidance to 350kt((28)) (previously 360kt((28)(29))), subject to further
potential impacts of civil unrest in Mozambique.
FY26 production guidance has been reinstated at 370kt((28)), subject to the
extension of the current power supply agreement for Mozal Aluminium, which
expires in March 2026.
We continue to work with Eskom and the Government of the Republic of
Mozambique to extend the smelter's hydro-electric power supply beyond March
2026, as there are currently no viable alternative suppliers of renewable
energy at the required scale. We remain focused on finalising a new energy
supply agreement during CY25 to enable the smelter to continue to operate and
maintain its substantial contribution to the economy of Mozambique.
Operating costs
Operating unit costs decreased by 1%, to US$2,425/t in H1 FY25, as the smelter
completed the operational recovery plan and benefitted from lower raw material
input prices (coke and pitch), more than offsetting higher alumina prices, a
stronger South African rand and inflation-linked indexation of energy costs.
Our operating margin increased to 14% (H1 FY24: -4%) as our average realised
price of aluminium increased by 18% and costs were largely unchanged.
While Operating unit cost guidance is not provided, the cost profile of the
smelter will continue to be heavily influenced by the price of smelter raw
material inputs, including alumina supplied by our Worsley Alumina refinery,
and other external factors including the South African rand and
inflation-linked indexation of energy costs.
Financial performance
Underlying EBIT increased by US$81M, from a loss of US$48M, to US$33M in H1
FY25, as higher sales volumes (+US$19M) and average realised aluminium prices
(+US$72M), and lower smelter raw material input prices (coke and pitch)
(+US$18M), more than offset higher alumina prices (-US$16M), a stronger South
African rand (-US$6M) and inflation-linked indexation energy costs (-US$5M).
86((60)) pots were relined at a cost of US$368k per pot in H1 FY25 (H1 FY24:
50((60)) pots at US$367k per pot), with ~150((60)) pots scheduled to be
relined in FY25. The smelter completed the roll-out of the AP3XLE energy
efficiency technology in its pot relining program in the prior period.
Capital expenditure
Safe and reliable capital expenditure was US$12M in H1 FY25 and is expected to
be US$25M in FY25.
South32 share H1 FY25 H1 FY24
Aluminium production (kt) 178 166
Aluminium sales (kt) 174 167
Realised sales price (US$/t) 2,805 2,377
Operating unit cost (US$/t) 2,425 2,461
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 488 397
Underlying EBITDA 66 (14)
Underlying EBIT 33 (48)
Net operating assets((a)) 500 498
Capital expenditure 12 11
Safe and reliable 12 11
Improvement and life extension - -
(a) H1 FY24 reflects the balance as at 30 June 2024.
SIERRA GORDA
Location: Antofagasta, Chile
South32 share: 45 per cent
Sierra Gorda is a large scale, open-pit mine in the prolific Antofagasta
copper mining region, that produces copper, molybdenum, gold and silver.
Volumes
Sierra Gorda payable copper equivalent production((30)) increased by 21% (or
8.0kt) to 46.4kt in H1 FY25, with higher planned copper grades and a
significant increase in molybdenum recoveries due to improved ore quality.
FY25 production guidance remains unchanged at 84.8kt payable copper equivalent
(copper 70.0kt, molybdenum 1.3kt, gold 25.0koz and silver 550koz).
Operating costs
Operating unit costs decreased by 9%, to US$17.1/t ore processed in H1 FY25,
as improved plant throughput delivered by the de-bottlenecking project, and
lower labour costs following a one-off workforce payment in the prior period,
more than offset additional planned maintenance, and a drawdown of finished
goods inventory.
Our operating margin increased to 53% (H1 FY24: 36%) as we realised higher
average metal prices and costs decreased.
FY25 Operating unit cost guidance is unchanged at US$16.0/t ore processed,
with H2 FY25 costs expected to be lower (from H1 FY25) following a drawdown of
finished goods inventory in H1 FY25. Exchange rate and price assumptions for
FY25 Operating unit cost guidance are detailed on page 33, footnote 51.
Financial performance
Underlying EBIT increased by 161% (or US$79M), to US$128M in H1 FY25, as
higher sales volumes (+US$44M) and average realised metal prices (+US$39M), a
weaker Chilean peso (+US$13M) and lower labour costs (+US$17M), more than
offset additional planned maintenance (-US$15M) and a drawdown of finished
goods inventory (-US$7M).
Depreciation and amortisation increased by US$19M to US$87M in H1 FY25 in line
with recent capital investments.
Capital expenditure
Safe and reliable capital expenditure was US$90M in H1 FY25 and is expected to
be US$185M in FY25 as the operation continues deferred stripping activity and
invests in additional tailings infrastructure.
Improvement and life extension capital expenditure was US$16M in H1 FY25 and
is expected to be US$25M in FY25, as the operation continues additional
engineering studies and a feasibility study for the fourth grinding line
project. The project has the potential to increase processing capacity by ~20%
to ~58Mtpa (100% basis). Completion of the feasibility study and a final
investment decision by the joint venture partners is expected in H1 FY26.
South32 share H1 FY25 H1 FY24
Ore mined (Mt) 12.6 11.9
Ore processed (Mt) 11.1 10.9
Ore grade processed (%, Cu) 0.42 0.37
Payable copper equivalent 46.4 38.4
production (kt)((30))
Payable copper production (kt) 36.7 31.6
Payable molybdenum production (kt) 0.9 0.5
Payable gold production (koz) 15.9 13.4
Payable silver production (koz) 301 295
Payable copper sales (kt) 37.9 32.5
Payable molybdenum sales (kt) 0.7 0.7
Payable gold sales (koz) 16.2 13.8
Payable silver sales (koz) 317 300
Realised copper sales price (US$/lb) 3.83 3.56
Realised molybdenum sales price 21.68 20.82
(US$/lb)
Realised gold sales price (US$/oz) 2,593 1,957
Realised silver sales price (US$/oz) 31.5 23.3
Operating unit cost 17.1 18.8
(US$/t ore processed)((61))
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 405 322
Underlying EBITDA 215 117
Underlying EBIT 128 49
Net operating assets((a)) 1,708 1,664
Capital expenditure 106 98
Safe and reliable 90 83
Improvement and life extension 16 15
Exploration expenditure 7 6
Exploration expensed - -
(a) H1 FY24 reflects the balance as at 30 June 2024.
CANNINGTON
Location: Queensland, Australia
South32 share: 100 per cent
Cannington is an underground mine located in north-west Queensland, Australia,
that produces high-grade lead and zinc concentrates with a high silver
content.
Volumes
Cannington payable zinc equivalent production((31)) decreased by 17% to
129.9kt in H1 FY25, as the operation managed increased underground activity
and complexity which is expected to continue to drive variability in quarterly
performance. Production improved by 56% in Q2 FY25 as silver and lead grades
increased in accordance with the mine plan.
FY25 production guidance remains unchanged at 265.4kt payable zinc equivalent
(silver 11,300koz, lead 100.0kt, zinc 50.0kt)
Operating costs
Operating unit costs increased by 31%, to US$197/t in H1 FY25, due to
additional mining costs to deliver the planned increase in underground
activity, and lower ore processed in the period.
Our operating margin decreased to 40% (H1 FY24: 46%) as higher average metal
prices were more than offset by additional mining costs.
FY25 Operating unit costs have been revised to US$175/t ore processed
(previously US$170/t) with H2 FY25 costs expected to be lower (from H1 FY25)
due to higher ore processed and a weaker Australian dollar. Exchange rate and
price assumptions for FY25 Operating unit cost guidance are detailed on page
33, footnote 51.
Financial performance
Underlying EBIT decreased by 18% (or US$20M), to US$89M in H1 FY25, as higher
average metal prices (+US$45M) were more than offset by lower sales volumes
(-US$40M) and additional mining costs to deliver a planned increase in
underground activity (-US$10M).
Capital expenditure
Capital expenditure was US$23M in H1 FY25 and is expected to be US$45M in FY25
as we invest in underground development.
South32 share H1 FY25 H1 FY24
Ore mined (kwmt) 999 1,150
Ore processed (kdmt) 982 1,139
Ore grade processed (g/t, Ag) 206 211
Ore grade processed (%, Pb) 5.9 6.0
Ore grade processed (%, Zn) 3.2 3.4
Payable zinc equivalent production (kt)((31)) 129.9 156.3
Payable silver production (koz) 5,615 6,704
Payable lead production (kt) 49.6 58.8
Payable zinc production (kt) 22.9 29.0
Payable silver sales (koz) 5,469 6,529
Payable lead sales (kt) 54.3 56.6
Payable zinc sales (kt) 23.0 28.3
Realised silver sales price (US$/oz) 29.4 22.5
Realised lead sales price (US$/t) 1,823 1,979
Realised zinc sales price (US$/t) 2,739 2,085
Operating unit cost 197 150
(US$/t ore processed)((61))
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 323 318
Underlying EBITDA 130 147
Underlying EBIT 89 109
Net operating assets((a)) 112 150
Capital expenditure 23 23
Safe and reliable 23 23
Improvement and life extension - -
Exploration expenditure 3 5
Exploration expensed 1 3
(a) H1 FY24 reflects the balance as at 30 June 2024.
CERRO MATOSO
Location: Córdoba, Colombia
South32 share: 99.9 per cent
Cerro Matoso is an integrated nickel laterite mine and smelter located in
northern Colombia that produces ferronickel used to make stainless steel.
In Q2 FY24, we commenced a strategic review of Cerro Matoso in response to
structural changes in the nickel market that have placed pressure on both
nickel prices and discounts for our ferronickel product. While the strategic
review has identified improvement options that have the potential to enhance
the operation's competitive position, the expected returns from these
investments do not currently support the allocation of capital in accordance
with our capital management framework and strategy. As a result, we have
commenced a process to investigate the potential divestment of Cerro Matoso.
In parallel, we will continue to target further cost efficiencies to mitigate
the impact of lower planned nickel grades in accordance with the mine plan.
Volumes
Cerro Matoso payable nickel production increased by 1% (or 0.2kt) to 18.5kt in
H1 FY25. FY25 production guidance remains unchanged at 35.0kt.
Operating costs
Operating unit costs decreased by 8%, to US$5.13/lb in H1 FY25, due to cost
efficiencies, lower price-linked royalties and a weaker Colombian peso.
Our operating margin increased to 16% (H1 FY24: 7%) as our average realised
price of nickel increased by 2% and costs declined.
FY25 Operating unit costs have been revised to US$5.35/lb (previously
US$5.65/lb) reflecting the realisation of cost efficiencies and a weaker
Colombian peso. Exchange rate and price assumptions for FY25 Operating unit
cost guidance are detailed on page 33, footnote 51.
Financial performance
Underlying EBIT increased by US$41M, from a loss of US$14M, to US$27M in H1
FY25, as cost efficiencies (+US$22M), lower price-linked royalties (+US$16M),
and a weaker Colombian peso (+US$5M) more than offset local inflationary
pressures (-US$6M).
Capital expenditure
Capital expenditure was US$13M in H1 FY25 and is expected to be US$20M in
FY25.
South32 share H1 FY25 H1 FY24
Ore mined (kwmt) 2,648 2,183
Ore processed (kdmt) 1,396 1,317
Ore grade processed (%, Ni) 1.48 1.55
Payable nickel production (kt) 18.5 18.3
Payable nickel sales (kt) 17.7 18.0
Realised nickel sales price (US$/lb)((62)) 6.12 6.00
Operating unit cost (US$/lb) 5.13 5.57
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 239 238
Underlying EBITDA 39 17
Underlying EBIT 27 (14)
Net operating assets((a)) 97 91
Capital expenditure 13 21
Safe and reliable 13 21
Improvement and life extension - -
Exploration expenditure 1 1
Exploration expensed 1 1
(a) H1 FY24 reflects the balance as at 30 June 2024.
AUSTRALIA MANGANESE
Location: Northern Territory, Australia
South32 share: 60 per cent
Australia Manganese consists of Groote Eylandt Mining Company (GEMCO) in the
Northern Territory, Australia. GEMCO is an open-cut mining operation that
produces high-grade manganese ore.
Volumes
Australia Manganese continued to implement its operational recovery plan
following the impact of Tropical Cyclone Megan in Q3 FY24.
We continued a substantial dewatering program which has enabled access to
certain mining pits and a phased restart of mining activities. We resumed
production from the primary concentrator in Q2 FY25 with saleable production
of 639kwmt.
FY25 production guidance remains unchanged at 1,000kwmt, with production
expected to continue at limited rates in H2 FY25 as we progress the
operational recovery plan and complete further dewatering.
We also progressed the demolition of undersea structures and commenced
installing pilings for the new wharf. While we have experienced some weather
related delays, we are looking to mitigate these through pilings installation
productivity improvements.
Subject to further potential impacts from the wet season, export sales are
expected to progressively increase over Q4 FY25.
Australia Manganese has received external insurance payments of US$250M (100%
basis) to date((34)). We continue to work with our insurers to assess the
timing and value of further recoveries in relation to the impact of Tropical
Cyclone Megan.
Financial performance
Underlying EBIT was a loss of US$34M in H1 FY25 due to the impact of Tropical
Cyclone Megan.
Separately, idle capacity and other remediation costs (US$74M) and insurance
recoveries (US$150M) were excluded from Underlying EBIT as earnings
adjustments. Our share of costs are expected to be included in Underlying
earnings from Q4 FY25, while insurance recoveries will continue to be
classified as a significant item in accordance with our accounting policies.
Depreciation and amortisation recognised in Underlying earnings decreased by
U$55M to US$3M in H1 FY25, with US$39M capitalised to inventory and US$11M
recognised as earnings adjustments. Underlying depreciation and amortisation
is expected to increase in FY26 as we increase sales volumes and drawdown
inventory.
Capital expenditure
Capital expenditure was US$47M in H1 FY25 and guidance remains unchanged at
US$125M in FY25 as we invest in infrastructure to deliver the operational
recovery plan.
South32 share H1 FY25 H1 FY24
Manganese ore production (kwmt) 639 1,679
Manganese ore sales (kwmt) - 1,864
Realised external manganese ore sales price (US$/dmtu, FOB)((63)(64)) - 3.79
Ore operating unit cost (US$/dmtu, FOB)((64)(65)) - 2.15
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue - 318
Underlying EBITDA (31) 125
Underlying EBIT (34 67
Net operating assets((a)) 248 166
Capital expenditure 47 40
Safe and reliable 47 24
Improvement and life extension - 16
Exploration expenditure 3 -
Exploration expensed 3 -
(a) H1 FY24 reflects the balance as at 30 June 2024.
SOUTH AFRICA MANGANESE
Location: Northern Cape and Gauteng, South Africa
South32 share: Ore - 54.6 per cent, Alloy - 60 per cent
South Africa Manganese consists of two manganese mines in the Kalahari Basin,
and the Metalloys manganese alloy smelter which was placed on care and
maintenance in FY20.
In Q4 FY24, South Africa Manganese entered into a binding agreement to divest
the Metalloys manganese alloy smelter((66)). South African competition
approval of the transaction was received in Q2 FY25. The transaction is
expected to complete in Q4 FY25, subject to the satisfaction of the remaining
conditions.
Volumes
South Africa Manganese saleable production decreased by 3% (or 29kwmt) to
1,082kwmt in H1 FY25, as we reduced our use of higher cost trucking and
undertook a temporary shut at our Wessels mine in Q2 FY25, in response to
market conditions.
FY25 production guidance remains unchanged at 2,000kwmt, subject to market
conditions.
Operating costs
Operating unit costs increased by 21%, to US$3.13/dmtu in H1 FY25, due to a
stronger South African rand and local inflationary pressures.
Our operating margin increased to 15% (H1 FY24: 11%) as a 27% increase in the
average realised price of manganese more than offset higher costs.
FY25 Operating unit cost guidance is unchanged at US$3.00/dmtu, with H2 FY25
costs expected to be lower (from H1 FY25) as we target further cost
efficiencies, and lower price-linked royalties. Exchange rate and price
assumptions for FY25 Operating unit cost guidance are detailed on page 33,
footnote 51.
Financial performance
Ore Underlying EBIT increased by US$13M, to US$19M in H1 FY25, as higher
average realised manganese prices (+US$35M) more than offset a stronger South
African rand (-US$5M), additional planned maintenance (-US$4M), local
inflationary pressures (-US$5M), and an unfavourable inventory movement
(-US$15M).
Capital expenditure
Safe and reliable capital expenditure was US$16M in H1 FY25 and is expected to
be US$30M (previously US$35M) in FY25 as we invested in rail infrastructure to
improve safety and efficiencies, and new mobile fleet.
Improvement and life extension capital expenditure was US$9M in H1 FY25 and is
expected to be US$15M in FY25.
South32 share H1 FY25 H1 FY24
Manganese ore production (kwmt) 1,082 1,111
Manganese ore sales (kwmt) 1,088 1,082
Realised external manganese ore sales price (US$/dmtu, FOB)((63)(67)) 3.85 3.03
Ore operating unit cost (US$/dmtu, FOB)((65)(67)) 3.13 2.59
South32 share (US$M) H1 FY25 H1 FY24
Underlying revenue 191 152
Manganese ore 191 152
Manganese alloy - -
Underlying EBITDA 28 14
Manganese ore 29 17
Manganese alloy (1) (3)
Underlying EBIT 18 3
Manganese ore 19 6
Manganese alloy (1) (3)
Net operating assets/(liabilities)((a)) 191 200
Manganese ore 254 271
Manganese alloy (63) (71)
Capital expenditure 25 26
Safe and reliable 16 20
Improvement and life extension 9 6
Exploration expenditure - -
Exploration expensed - -
(a) H1 FY24 reflects the balance as at 30 June 2024.
NOTES
(1) Members are equity holders of South32 Limited. Amounts reported as
attributable to members are stated net of amounts attributable to
non-controlling interests.
(2) Refers to Underlying earnings attributable to members.
(3) Refer to market release "Completion of Illawarra Metallurgical Coal Sale"
dated 29 August 2024.
(4) Net tangible assets as at 31 December 2024 includes all right-of-use assets
and lease liabilities, in accordance with AASB 16 Leases.
(5) On 29 August 2024, South32 sold its shareholding in Illawarra Metallurgical
Coal to an entity owned by Golden Energy and Resources Pte Ltd and M Resources
Pty Ltd. As a result, Illawarra Metallurgical Coal was classified as a
discontinued operation in the H1 FY25 and H1 FY24 restated results.
(6) Basic earnings per share is calculated as Profit/(loss) after tax attributable
to members divided by the weighted average number of shares for the period.
Basic Underlying earnings per share is calculated as Underlying earnings
attributable to members divided by the weighted average number of shares for
the period. The weighted average number of shares for the H1 FY25 is 4,515
million (H1 FY24: 4,523 million).
(7) H1 FY25 ordinary dividends per share is calculated as H1 FY25 ordinary
dividend announced (US$154M) divided by the number of shares on issue at
31 December 2024 (4,517 million).
(8) H1 FY24 and H1 FY25 includes discontinued operation Illawarra Metallurgical
Coal.
(9) Underlying revenue includes revenue from third party products and services.
(10) The underlying information reflects the Group's interest in material equity
accounted joint ventures and is presented on a proportional consolidation
basis. Underlying EBIT is profit/(loss) before net finance income/(costs),
tax and any earnings adjustments, including impairments. Underlying EBITDA is
Underlying EBIT before Underlying depreciation and amortisation. Underlying
earnings attributable to members is Profit/(loss) after tax attributable to
members and earnings adjustment items. Underlying earnings attributable to
members is the key measure that South32 uses to assess the performance of the
South32 Group, make decisions on the allocation of resources and assess senior
management's performance. In addition, the performance of each of the South32
operations and operational management is assessed based on Underlying EBIT. In
order to calculate Underlying earnings attributable to members, Underlying
EBIT and Underlying EBITDA, the following items are adjusted as applicable
each period, irrespective of materiality:
• Exchange rate (gains)/losses on restatement of monetary
items;
• Impairment losses/(reversals);
• Net (gains)/losses on disposal and consolidation of
interests in operations;
• (Gains)/losses on non-trading derivative instruments,
contingent consideration and other investments measured at fair value through
profit or loss;
• Major corporate restructures;
• Joint venture adjustments;
• Exchange rate variations on net cash/(debt);
• Tax effect of earnings adjustments; and
• Exchange rate variations on tax balances
In addition, items that do not reflect the underlying operations of South32,
and are individually, or in combination with other related earnings
adjustments, significant to the financial statements, are excluded to
determine Underlying earnings. When applicable, significant items are detailed
in the Financial Information.
(11) Comprises Underlying EBITDA excluding third party products and services
EBITDA, divided by Underlying revenue excluding third party products and
services revenue. Also referred to as operating margin.
(12) Comprises Underlying EBIT excluding third party products and services EBIT,
divided by Underlying revenue excluding third party products and services
revenue.
(13) Return on invested capital (ROIC) is a key measure that South32 uses to assess
performance. ROIC is calculated as Underlying EBIT less the discount on
rehabilitation provisions included in Underlying net finance costs, tax
effected by the Group's Underlying effective tax rate (ETR) including our
material equity accounted investments on a proportional consolidation basis,
divided by the sum of fixed assets (excluding any rehabilitation assets, the
impact of any impairments or impairment reversals, and unproductive capital)
and inventories.
(14) Total Recordable Injury Frequency (TRIF): (The sum of recordable injuries x
1,000,000) ÷ exposure hours, for employees and contractors. This is stated in
units of per million hours worked for employees and contractors. We adopt the
United States Government Occupational Safety and Health Administration (OSHA)
guidelines for the recording and reporting of occupational injuries and
illnesses.
(15) Lost Time Injury Frequency (LTIF): (The sum of Lost Time injuries x 1,000,000)
÷ exposure hours, for employees and contractors. This is stated in units of
per million hours worked for employees and contractors. We adopt the United
States Government Occupational Safety and Health Administration (OSHA)
guidelines for the recording and reporting of occupational injuries and
illnesses.
(16) Significant hazard frequency: (The sum of significant hazards x 1,000,000) ÷
exposure hours. This is stated in units of per million hours worked for
employees and contractors. A significant hazard is something that has the
potential to cause harm, ill health or injury, or damage to property, plant or
the environment.
(17) A "Leader" is defined as an employee occupying a Leadership Role, where a
Leadership Role is a position in the organisational structure flagged as the
head of an organisational unit.
(18) Local workforce diversity is a metric consisting of five equally weighted
sub-performance metrics measuring local workforce diversity across the regions
in which we operate. This includes Black People in the total workforce in
South Africa, Black People in Management Roles in South Africa, workforce in
Mozambique, neighbouring community employees hired into ''Unionised Positions"
in Colombia, and Aboriginal and Torres Strait Islander (ATSI) Peoples
representation in the Australian workforce.
(19) Target is defined as an intended outcome in relation to which we have
identified one or more pathways for delivery of that outcome, subject to
certain assumptions or conditions. Our target is to halve our operational
greenhouse gas (GHG) emissions by 2035 compared to our FY21 baseline. Further
details about the assumptions and conditions on which our target are based,
and our plans to achieve them, are provided in our 2022 Climate Change Action
Plan, available at www.south32.net. Our operational decarbonisation pathway
consists of three steps: efficiency initiatives in the near term, transition
to lower-carbon energy in the medium-term, and technology solutions in the
longer-term. As Hillside Aluminium and Worsley Alumina utilise energy sources
that are dependent on fossil fuels, including energy coal, their
decarbonisation is largely tied to a transition to lower-carbon energy. We
continue to work closely with governments and other stakeholders to transition
to lower-carbon energy alternatives at these operations and have established a
framework to integrate just transition planning into our decarbonisation
planning and decision making to support a fair and equitable transition for
our people, communities and other stakeholders.
(20) This is a medium-term target as defined in the Climate Action 100+ Net Zero
Company Benchmark Disclosure Framework Assessment Methodology V2.0 - 2023.
(21) FY21 baseline adjusted to exclude GHG emissions from divested operations,
including South Africa Energy Coal, TEMCO, Illawarra Metallurgical Coal and
Eagle Downs.
(22) Goal is defined as an aspiration to deliver an outcome for which we have not
identified a pathway for delivery, but for which efforts will be pursued
towards achieving that outcome, subject to certain assumptions or conditions.
(23) Excludes third party products and services EBITDA.
(24) Refer to market release "Worsley Mine Development Project Receives State
Approval" dated 20 December 2024.
(25) Refer to market release "Worsley Mine Development Project Receives Federal
Approval" dated 12 February 2025.
(26) Subject to receipt of any necessary secondary approvals. The information in
this announcement that refers to Production Target and forecast financial
information for Worsley Alumina is based on Proved (84%) and Probable (16%)
Ore Reserves disclosed in South32 Annual report released on 29 August 2024 and
is available to view on www.south32.net. The Ore Reserve estimate underpinning
the Production Target has been prepared by a Competent Person and reported in
accordance with the JORC Code.
(27) Refers to aluminium produced in a process that results in less than 4t CO2-e
Scope 1 and Scope 2 greenhouse gas (GHG) emissions per tonne of aluminium.
(28) Production guidance for Hillside Aluminium and Mozal Aluminium does not assume
any load-shedding impact on production.
(29) FY25 production guidance was set at 360kt prior to being withdrawn in December
2024. Refer to market release "Mozal Aluminium Update" dated 10 December 2024.
(30) Payable copper equivalent production (kt) was calculated by aggregating
revenues from copper, molybdenum, gold and silver, and dividing the total
Revenue by the price of copper. FY24 realised prices for copper (US$3.86/lb),
molybdenum (US$20.60/lb), gold (US$2,129/oz) and silver (US$24.8/oz) have been
used for FY24, H1 FY25, FY25e and FY26e.
(31) Payable zinc equivalent (kt) was calculated by aggregating revenues from
payable silver, lead and zinc, and dividing the total Revenue by the price of
zinc. FY24 realised prices for zinc (US$2,230/t), lead (US$2,002/t) and
silver (US$24.8/oz) have been used for FY24, H1 FY25, FY25e and FY26e.
(32) Refer to market release "Final Investment Approval to Develop Hermosa's Taylor
Deposit" dated 15 February 2024.
(33) Exploration Results: The information in this announcement that relates to the
Exploration Results for the Peake deposit is extracted from the market release
"Final Investment Approval to Develop Hermosa's Taylor Deposit" dated 15
February 2024, and updated for the Peake deposit in the market release "2024
Full Year Results Presentation" dated 29 August 2024. The information was
prepared by D Bertuch, Competent Person in accordance with the requirements of
the JORC Code. South32 confirms that it is not aware of any new information or
data that materially affects the information included in the original market
announcements. South32 confirms that the form and context in which the
Competent Person's findings are presented have not been materially changed
from the original market announcements.
(34) Reflects insurance payments of US$215M and US$35M received in H1 FY25 and Q3
FY25, respectively.
(35) Net distributions from our material equity accounted investments (manganese
and Sierra Gorda) includes dividends, capital contributions and net
repayments/drawdowns of shareholder loans, which should not be considered as
an indication of or alternative to an IFRS measure of profitability, financial
performance or liquidity.
(36) Upfront cash proceeds (US$964M) less transaction costs and cash disposed as
part of the sale. A final adjustment to the purchase price is now expected to
be determined in H2 FY25. The total Transaction consideration includes
deferred cash consideration of US$250M, payable in March 2030, and contingent
price-linked cash consideration of up to US$350M.
(37) Since inception of our capital management program, US$1.8B has been allocated
to our on-market share buy-back (806M shares at an average price of A$3.06 per
share) and US$525M returned in the form of special dividends.
(38) Applicable for five years from the date of completion of the sale of Illawarra
Metallurgical Coal, with no annual cap. The first two years will be calculated
and paid on the second anniversary of completion and annually thereafter. The
contingent price-linked consideration will be calculated as 50% of incremental
metallurgical coal revenue from equity production, net of royalties, based on
the following metallurgical coal price thresholds: Year 1: US$200/t, Year 2:
US$200/t, Year 3: US$190/t, Year 4: US$180/t, Year 5: US$180/t.
(39) Contingent price-linked consideration of up to US$500M, payable at threshold
copper production rates and prices in the years 2022 to 2025. Specifically,
50% of incremental revenue realised above the following copper price
threshold, only where payable copper production exceeds the agreed threshold:
CY25: US$3.80/lb and 158kt Cu.
(40) The underlying information reflects the Group's interest in material equity
accounted joint ventures and is presented on a proportional consolidation
basis, which is the measure used by the Group's management to assess their
performance. The joint venture adjustments reconcile the proportional
consolidation to the equity accounting position included in the Group's
consolidated financial statements.
(41) Sales price variance reflects the revenue impact of changes in commodity
prices, based on the current period's sales volume. Price-linked costs
variance reflects the change in royalties together with the change in input
costs driven by changes in commodity prices or market traded consumables.
Foreign exchange reflects the impact of exchange rate movements on local
currency denominated costs and sales. Sales volume variance reflects the
revenue impact of sales volume changes, based on the comparative period's
sales prices. Controllable costs variance represents the impact from changes
in the Group's controllable local currency cost base, including the variable
cost impact of production volume changes on expenditure, and period-on-period
movements in inventories. The controllable cost variance excludes earnings
adjustments including significant items.
(42) Underlying net finance costs and Underlying income tax expense are actual H1
FY25 results, not half-on-half variances.
(43) South32's ownership shares of operations are presented as follows: Worsley
Alumina (86% share), Brazil Alumina (36% share), Brazil Aluminium (40% share),
Hillside Aluminium (100%), Mozal Aluminium (63.7% share), Sierra Gorda (45%
share), Cannington (100%), Hermosa (100%), Cerro Matoso (99.9% share),
Australia Manganese (60% share), South Africa Manganese ore (54.6% share) and
South Africa Manganese alloy (60% share). Prior to the divestment of
Illawarra Metallurgical Coal on 29 August 2024, South32's ownership was 100%.
(44) Underlying ETR is Underlying income tax expense, including royalty related
tax, divided by Underlying profit subject to tax.
(45) The corporate tax rates of the geographies where the Group operates include:
Australia 30%, South Africa 27%, Colombia 35%, Mozambique 0%, Brazil 34% and
Chile 27%.
(46) Australia Manganese is subject to a royalty related tax equal to 20% of
adjusted EBIT. Sierra Gorda is subject to a royalty related tax based on the
amount of copper sold and the mining operating margin, the rate is between 5%
and 14% for annual sales over 50kt of refined copper. These royalties are
included in Underlying tax expense.
(47) Net interest paid excludes amounts reported as distributions from material
equity accounted investments.
(48) Total capital expenditure comprises capital expenditure, capitalised
exploration and the purchase of intangibles. Capital expenditure comprises
safe and reliable capital expenditure, improvement and life extension capital
expenditure (including decarbonisation), and growth capital expenditure.
(49) Operating unit cost is Underlying revenue less Underlying EBITDA, excluding
third party products and services, divided by sales volumes. Operating cost is
Underlying revenue less Underlying EBITDA excluding third party products and
services. Additional manganese disclosures are included in footnotes 64 and
67.
(50) FY25 prior Operating unit cost guidance includes royalties (where appropriate)
and the influence of exchange rates, and includes various assumptions for
FY25, including: an alumina price of US$480/t; a manganese ore price of
US$7.80/dmtu for 44% manganese product; a nickel price of US$7.50/lb; a silver
price of US$27.8/oz; a lead price of US$2,070/t (gross of treatment and
refining charges); a zinc price of US$2,750/t (gross of treatment and refining
charges); a copper price of US$4.40/lb (gross of treatment and refining
charges); a molybdenum price of US$17.50/lb (gross of treatment and refining
charges); a gold price of US$2,300/oz; an AUD:USD exchange rate of 0.65; a
USD:ZAR exchange rate of 18.50; a USD:COP exchange rate of 4,100; USD:CLP
exchange rate of 900; and a reference price for caustic soda; which reflect
forward markets as at August 2024 or our internal expectations.
(51) FY25 new Operating unit cost guidance includes royalties (where appropriate)
and the influence of exchange rates, and includes various assumptions for
FY25, including: an alumina price of US$520/t; a manganese ore price of
US$5.10/dmtu for 44% manganese product; a nickel price of US$7.10/lb; a silver
price of US$30.5/oz; a lead price of US$2,070/t (gross of treatment and
refining charges); a zinc price of US$3,000/t (gross of treatment and refining
charges); a copper price of US$4.30/lb (gross of treatment and refining
charges); a molybdenum price of US$20.50/lb (gross of treatment and refining
charges); a gold price of US$2,550/oz; an AUD:USD exchange rate of 0.64; a
USD:ZAR exchange rate of 18.50; a USD:COP exchange rate of 4,200; USD:CLP
exchange rate of 950; and a reference price for caustic soda; which reflect
forward markets as at February 2025 or our internal expectations.
(52) Hermosa growth capital expenditure guidance excludes lease payments of ~US$25M
for self generated power assets directly attributable to construction of
infrastructure at the Taylor deposit. These self generated power costs were
included in our capital cost estimate provided in market release "Final
Investment Approval to Develop Hermosa's Taylor Deposit" dated 15 February
2024.
(53) Exploration Results: The information in this announcement that relates to the
Exploration Results for Catabela Northeast prospect is extracted from the
market release "Sierra Gorda Site Tour" dated 21 November 2024. The
information was prepared by Miroslaw Wozga and Omar Enrique Cortes Castro,
Competent Persons in accordance with the requirements of the JORC Code.
South32 confirms that it is not aware of any new information or data that
materially affects the information included in the original market
announcement. South32 confirms that the form and context in which the
Competent Person's findings are presented have not been materially changed
from the original market announcement.
(54) H1 FY25 Third party products and services sold comprises US$87M for aluminium,
US$6M for alumina, US$26M for freight services, US$52M for raw materials
and US$19M for manganese. Underlying EBIT on third party products and services
comprises US$2M for aluminium, US$10M for alumina, US$(2)M for freight
services, nil for raw materials and nil for manganese. H1 FY24 Third party
products and services sold comprises US$42M for aluminium, US$3M for alumina,
US$43M for freight services, US$53M for raw materials and US$15M for
manganese. Underlying EBIT on third party products and services comprises nil
for aluminium, US$2M for alumina, US$(2)M for freight services, nil for raw
materials and nil for manganese.
(55) Illawarra Metallurgical Coal's H1 FY25 and restated H1 FY24 underlying results
include third party products and services. H1 FY25 Third party products and
services sold was US$28M and Underlying EBIT was nil. H1 FY24 Third party
products and services sold was US$106M and Underlying EBIT was US$14M.
(56) Refers to lower levels of GHG emissions when compared to the current state.
Where used in relation to South32's products or portfolio, it refers to
enhancement of existing methods, practices and technologies to substantially
lower the level of embodied GHG emissions as compared to the current state.
(57) The sales volume weighted average of the Platts Alumina index (FOB) on the
basis of a one-month lag to published pricing (Month minus one or "M-1") was
US$577/t in H1 FY25.
(58) The information in this announcement that refers to Production Target and
forecast financial information for MRN is based on Proved (8%) and Probable
(1%) Ore Reserves and Measured (91%) Mineral Resources. The Mineral Resources
and Ore Reserves underpinning the Production Target have been prepared by
Competent Persons in accordance with the requirement of the JORC Code and is
available to view in South32's 2024 Annual Report (www.south32.net) published
on 29 August 2024. South32 confirms that all material assumptions underpinning
the Production Target and forecast financial information derived from the
Production Target continues to apply and have not materially changed.
(59) Refer to market release "Mozal Aluminium Update" dated 19 December 2024.
(60) Presented on a 100% basis.
(61) Sierra Gorda and Cannington Operating unit cost is Underlying revenue less
Underlying EBITDA divided by ore processed. Periodic movements in finished
product inventory may impact Operating unit costs.
(62) Cerro Matoso realised nickel sales price is inclusive of by-products.
(63) Volumes and prices do not include any third party trading that may be
undertaken independently of equity production. Realised ore prices are
calculated as external sales Underlying revenue less freight and marketing
costs, divided by external sales volume.
(64) No ore sales in H1 FY25. Manganese Australia H1 FY24 average manganese content
of external ore sales was 42.5% on a dry basis. 97% of H1 FY24 external
manganese ore sales were completed on a CIF basis. H1 FY24 realised FOB ore
prices and Operating unit costs have been adjusted for freight and marketing
costs of US$30M, consistent with our FOB cost guidance.
(65) FOB Ore Operating unit cost is Underlying revenue less Underlying EBITDA,
freight and marketing costs, divided by ore sales volume.
(66) Refer to media release "Agreement to divest Metalloys manganese alloy smelter"
dated 13 June 2024.
(67) Manganese South Africa H1 FY25 average manganese content of external ore sales
was 39.0% on a dry basis (H1 FY24: 38.7%). 89% of H1 FY25 external manganese
ore sales
(H1 FY24: 90%) were completed on a CIF basis. H1 FY25 realised FOB ore
prices and Operating unit costs have been adjusted for freight and marketing
costs of US$30M (H1 FY24: US$28M), consistent with our FOB cost guidance.
Figures in Italics indicate that an adjustment has been made since the figures
were previously reported. The denotation (e) refers to an estimate or forecast
year.
The following abbreviations may be used throughout this report: US$ million
(US$M); US$ billion (US$B); financial year (FY); calendar year (CY); grams per
tonne (g/t); tonnes (t); thousand tonnes (kt); thousand tonnes per annum
(ktpa); million tonnes (Mt); million tonnes per annum (Mtpa); ounces (oz);
thousand ounces (koz); million ounces (Moz); thousand wet metric tonnes
(kwmt); million wet metric tonnes (Mwmt); thousand dry metric tonnes (kdmt);
dry metric tonne unit (dmtu); pound (lb); megawatt (MW); Australian
Securities Exchange (ASX); London Stock Exchange (LSE); Johannesburg Stock
Exchange (JSE); equity accounted investment (EAI); and American Depositary
Receipts (ADR).
SOUTH32 FINANCIAL INFORMATION
For the half year ended 31 December 2024
Contents
Consolidated income statement 36
Consolidated statement of comprehensive income 37
Consolidated balance sheet 38
Consolidated cash flow statement 39
Consolidated statement of changes in equity 40
Notes to financial statements
1. Reporting entity 41
2. Basis of preparation 41
3. Segment information 42
4. Dividends 48
5. Earnings per share 48
6. Net finance income/(costs) 49
7. Financial assets and financial liabilities 49
8. Equity accounted investments 52
9. Disposal of subsidiaries and joint operations 52
10. Subsequent events 54
Directors' declaration 55
Directors' report 56
Lead auditor's independence declaration 58
Independent auditor's review report 60
Consolidated income statement
for the half year ended 31 December 2024
US$M Note H1 FY25 H1 FY24
Restated((1))
Continuing operations
Revenue:
Group production 2,920 2,307
Third party products and services 203 200
3 3,123 2,507
Other income 62 54
Expenses excluding finance costs (2,745) (2,606)
Share of profit/(loss) of equity accounted investments 8 80 (7)
Operating profit/(loss) from continuing operations 520 (52)
Comprising:
Group production 510 (52)
Third party products and services 10 -
Operating profit/(loss) from continuing operations 520 (52)
Finance income 132 115
Finance costs (69) (121)
Net finance income/(costs) 6 63 (6)
Profit/(loss) before tax from continuing operations 583 (58)
Income tax (expense)/benefit (210) 32
Profit/(loss) for the period from continuing operations 373 (26
Discontinued operation
Profit/(loss) after tax from a discontinued operation 9 (14) 79
Profit/(loss) for the period 359 53
Attributable to:
Equity holders of South32 Limited 360 53
Non-controlling interests (1) -
Profit/(loss) for the period from continuing operations attributable to equity
holders of South32 Limited:
Basic earnings/(loss) per share (cents) 5 8.3 (0.6)
Diluted earnings/(loss) per share (cents) 5 8.3 (0.6)
Profit/(loss) for the period attributable to equity holders of South32
Limited:
Basic earnings/(loss) per share (cents) 5 8.0 1.2
Diluted earnings/(loss) per share (cents) 5 8.0 1.2
(1) Refer to note 9 Disposal of subsidiaries and joint operations.
The accompanying notes form part of the half year consolidated financial
statements.
Consolidated statement of comprehensive income
for the half year ended 31 December 2024
US$M H1 FY25 H1 FY24
Profit/(loss) for the period 359 53
Other comprehensive income
Items that may be reclassified to the Consolidated income statement:
Translation of foreign operations (2) -
Share of other comprehensive income/(loss) of equity accounted investments 2 -
Total items that may be reclassified to the Consolidated income statement - -
Items that will not be reclassified to the Consolidated income statement:
Investments in equity instruments designated as fair value through other
comprehensive income (FVOCI):
Net fair value gains/(losses) 19 (19)
Income tax (expense)/benefit (6) (1)
Total items that will not be reclassified to the Consolidated income statement 13 (20)
Total other comprehensive income/(loss) 13 (20)
Total comprehensive income/(loss) 372 33
Attributable to:
Equity holders of South32 Limited 374 33
Non-controlling interests (2) -
The accompanying notes form part of the half year consolidated financial
statements.
Consolidated balance sheet
as at 31 December 2024
US$M Note H1 FY25 FY24
ASSETS
Current assets
Cash and cash equivalents 1,600 842
Trade and other receivables 714 634
Other financial assets 7 13 1
Inventories 1,043 985
Current tax assets 64 69
Other assets 45 43
Assets held for sale - 1,825
Total current assets 3,479 4,399
Non-current assets
Trade and other receivables 2,166 2,083
Other financial assets 7 286 89
Inventories 63 63
Property, plant and equipment 6,661 6,503
Intangible assets 220 221
Equity accounted investments 544 396
Deferred tax assets 430 481
Other assets 6 10
Total non-current assets 10,376 9,846
Total assets 13,855 14,245
LIABILITIES
Current liabilities
Trade and other payables 723 805
Interest bearing liabilities 314 223
Current tax payables 46 15
Provisions 142 179
Deferred income 4 49
Liabilities directly associated with assets held for sale - 573
Total current liabilities 1,229 1,844
Non-current liabilities
Trade and other payables - 1
Interest bearing liabilities 1,333 1,343
Other financial liabilities 7 68 17
Deferred tax liabilities 170 165
Provisions 1,877 1,904
Total non-current liabilities 3,448 3,430
Total liabilities 4,677 5,274
Net assets 9,178 8,971
EQUITY
Share capital 13,187 13,216
Treasury shares (21) (43)
Reserves (3,583) (3,575)
Accumulated losses (418) (638)
Total equity attributable to equity holders of South32 Limited 9,165 8,960
Non-controlling interests 13 11
Total equity 9,178 8,971
The accompanying notes form part of the half year consolidated financial
statements.
Consolidated cash flow statement
for the half year ended 31 December 2024
US$M Note H1 FY25 H1 FY24
Restated((1))
Operating activities
Profit/(loss) before tax from continuing operations 583 (58)
Profit/(loss) before tax from a discontinued operation 9 (3) 124
Adjustments for:
Significant items((2)) (50) 48
Depreciation and amortisation expense 255 335
Net impairment loss/(reversal) of financial assets 3 71 48
Employee share awards expense 10 12
Net finance (income)/costs (60) 9
Share of (profit)/loss of equity accounted investments (80) 9
Net (gains)/losses on disposal of subsidiaries and joint operations 9 47 -
Other non-cash or non-operating items (6) (22)
Changes in assets and liabilities:
Trade and other receivables (10) (88)
Inventories (115) (84)
Trade and other payables (95) (84)
Provisions and other liabilities (47) (20)
Cash generated from operations 500 229
Interest received 119 49
Interest paid (55) (57)
Income tax paid (116) (96)
Dividends received 2 2
Dividends received from equity accounted investments - 76
Net cash flows from operating activities 450 203
Investing activities
Purchase of property, plant and equipment (457) (563)
Exploration expenditure (39) (47)
Exploration expenditure expensed and included in operating cash flows 20 26
Purchase of intangible assets (2) -
Proceeds from sale of intangible assets - 18
Investment in financial assets (21) (84)
Proceeds from financial assets 29 42
Payments for the acquisition of subsidiaries and joint operations, net of (4) (3)
their cash
Proceeds from the disposal of subsidiaries and joint operations, net of their 9 954 -
cash
Investments in equity accounted investments (63) -
Net cash flows from investing activities 417 (611)
Financing activities
Proceeds from interest bearing liabilities 121 149
Repayment of interest bearing liabilities (59) (110)
Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts (5) (8)
Share buy-back (29) (35)
Dividends paid 4 (140) (145)
Contributions from non-controlling interests 4 -
Net cash flows from financing activities (108) (149)
Net increase/(decrease) in cash and cash equivalents 759 (557)
Cash and cash equivalents, net of overdrafts, at the beginning of the period 842 1,258
Effect of foreign exchange rate changes on cash and cash equivalents (1) 1
Cash and cash equivalents, net of overdrafts, at the end of the period 1,600 702
(1) Refer to note 9 Disposal of subsidiaries and joint operations.
(2) Includes cash flows from significant items recognised in prior
periods.
The accompanying notes form part of the half year consolidated financial
statements.
Consolidated statement of changes in equity
for the half year ended 31 December 2024
Attributable to equity holders of South32 Limited
US$M Share capital Treasury shares Financial assets reserve((1)) Employee share awards reserve((2)) Other reserves((3)) Accumulated losses Total Non-controlling interests((4)) Total equity
Balance as at 1 July 2024 13,216 (43) (43) 58 (3,590) (638) 8,960 11 8,971
Profit/(loss) for the period - - - - - 360 360 (1) 359
Other comprehensive income/(loss) - - 13 - 1 - 14 (1) 13
Total comprehensive income/(loss) - - 13 - 1 360 374 (2) 372
Transactions with owners:
Dividends - - - - - (140) (140) - (140)
Shares bought back and cancelled (29) - - - - - (29) - (29)
Employee share entitlements for unvested awards, net of tax - - - 7 - - 7 - 7
Employee share awards vested and lapsed, net of tax - 27 - (29) - - (2) - (2)
Purchase of shares by ESOP Trusts - (5) - - - - (5) - (5)
Equity issued to holders of non-controlling interest - - - - - - - 4 4
Balance as at 31 December 2024 13,187 (21) (30) 36 (3,589) (418) 9,165 13 9,178
Balance as at 1 July 2023 13,251 (51) (14) 52 (3,591) (271) 9,376 (1) 9,375
Profit/(loss) for the period - - - - - 53 53 - 53
Other comprehensive income/(loss) - - (20) - - - (20) - (20)
Total comprehensive income/(loss) - - (20) - - 53 33 - 33
Transactions with owners:
Dividends - - - - - (145) (145) - (145)
Shares bought back and cancelled (35) - - - - - (35) - (35)
Employee share entitlements for unvested awards, net of tax - - - 14 - - 14 - 14
Employee share awards vested and lapsed, net of tax - 19 - (20) - (7) (8) - (8)
Purchase of shares by ESOP Trusts - (8) - - - - (8) - (8)
Balance as at 31 December 2023 13,216 (40) (34) 46 (3,591) (370) 9,227 (1) 9,226
(1) Represents the fair value movement of investments in equity
instruments designated as FVOCI.
(2) Represents the accrued employee entitlements to share awards
that have not yet vested.
(3) Primarily consists of the common control transaction reserve of
US$3,569 million, which reflects the difference between consideration paid and
the carrying value of assets and liabilities acquired, as well as the
gains/losses on disposal of entities as part of the demerger of the Group in
2015.
(4) Primarily relates to the minority shareholder (49.9 per cent) of
Minera Sud Argentina S.A. (MSA), which holds the Chita Valley copper porphyry
exploration project in Argentina. The Group acquired a 50.1 per cent interest
in MSA in April 2024.
The accompanying notes form part of the half year consolidated financial
statements.
Notes to financial statements - Basis of preparation
The consolidated financial statements of South32 Limited (referred to as the
Company) and its subsidiaries and joint arrangements (collectively, the Group)
for the half year ended 31 December 2024 were authorised for issue in
accordance with a resolution of the Directors on 13 February 2025.
1. Reporting entity
South32 Limited is a for-profit company limited by shares incorporated in
Australia. South32 Limited has a primary listing on the Australian Securities
Exchange (ASX), a secondary listing on the Johannesburg Stock Exchange (JSE),
is admitted to listing in the equity shares (international commercial
companies secondary listing) category of the Official List of the UK Financial
Conduct Authority and its ordinary shares are traded on the London Stock
Exchange (LSE).
The nature of the operations and principal activities of the Group are
described in note 3 Segment information.
2. Basis of preparation
The half year consolidated financial statements are general purpose condensed
financial statements which:
- Have been prepared in accordance with AASB 134 Interim Financial Reporting,
IAS 34 Interim Financial Reporting and the Corporations Act 2001;
- Have been prepared on a historical cost basis, except for post-retirement
assets and obligations, derivative financial instruments and certain other
financial assets and liabilities which are required to be measured at fair
value;
- Are presented in US dollars, which is the functional currency of the majority
of the Group's operations, and all values are rounded to the nearest million
dollars (US$M or US$ million) unless otherwise stated, in accordance with ASIC
Corporations Instrument 2016/191; and
- Have been prepared on the basis of accounting policies and methods of
computation consistent with those applied in the consolidated financial
statements for the year ended 30 June 2024.
The preparation of the half year consolidated financial statements has
required management to apply accounting policies and methodologies that are
based on complex and subjective estimates, assumptions and judgements.
Management based its estimates and judgements on historical experience and
assumptions it believes to be reasonable and realistic based on the current
environment. Actual results may differ from those reported in these statements
due to the uncertainties that characterise the assumptions and conditions on
which the estimates are based. The significant judgements made by management
in applying the Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial
statements for the year ended 30 June 2024, with the following update to the
key assumptions applied by management in respect of the Mozal Aluminium cash
generating unit's recoverable amount.
Mozal Aluminium
The Group has been closely monitoring the potential risks and impacts of the
ongoing political situation and related civil unrest in Mozambique following
Mozambique's general election in October 2024. The Group has implemented
contingency plans and Mozal Aluminium has continued to operate and export
aluminium to customers.
Since December 2024, the transport of raw materials to the Mozal Aluminium
smelter has experienced periods of disruption and as a result, the Group
reduced amperage to the potlines to preserve raw materials and maintain
operational stability. Whilst the Group continues to monitor and respond to
the evolving situation, no material financial impacts have been observed at
the operation as a result of the civil unrest, and no indicators were observed
that the Mozal Aluminium cash generating unit's carrying value may not be
recoverable.
Separately, and consistent with the key estimates, assumptions and judgements
disclosed in the Group's consolidated financial statements for the year ended
30 June 2024, the Group continues to make the reasonable assumption that an
agreement to extend the supply of power from Hidroeléctrica de Cahora Bassa
to Mozal Aluminium beyond March 2026 can be achieved. While negotiations are
ongoing, the progress of negotiations have been impacted by the civil unrest.
The extension and pricing of the existing power agreement remains uncertain
and failure to extend the supply of power, consistent with the Group's current
assumptions, would have a material impact on the recoverable amount of Mozal
Aluminium.
For a full understanding of the financial performance and financial position
of the Group, it is recommended that the half year consolidated financial
statements be read in conjunction with the consolidated financial statements
for the year ended 30 June 2024.
Notes to financial statements - Results for the period
3. Segment information
(a) Description of segments
The operating segments (also referred to as operations) are organised and
managed separately according to their location and the nature of products
produced.
The Lead Team (the chief operating decision makers) and the Board of Directors
monitor the segment results regularly for the purpose of making decisions
about resource allocation and assessing performance.
The principal activities of each operating segment are summarised as follows:
Operating segment Principal activities
Worsley Alumina Integrated bauxite mine and alumina refinery in Australia
Brazil Alumina Integrated bauxite mine and alumina refinery in Brazil
Brazil Aluminium Aluminium smelter in Brazil
Hillside Aluminium Aluminium smelter in South Africa
Mozal Aluminium Aluminium smelter in Mozambique
Sierra Gorda Copper mine in Chile
Cannington Silver, lead and zinc mine in Australia
Hermosa Base metals exploration and development project in the United States
Cerro Matoso Integrated laterite ferronickel mine and smelting complex in Colombia
Illawarra Metallurgical Coal((1)) Metallurgical coal mines in Australia
Australia Manganese Manganese ore mine in Australia
South Africa Manganese Manganese ore mines in South Africa
(1) On 29 August 2024, the Group completed the sale of Illawarra
Metallurgical Coal. Refer to note 9 Disposal of subsidiaries and joint
operations.
All operations are operated by the Group except Brazil Alumina, Brazil
Aluminium and Sierra Gorda.
(b) Segment results
The underlying information presented in the Group's segment results include
non-IFRS financial measures and differs from the statutory financial
information as it reflects the Group's interest in material equity accounted
joint ventures on a proportional consolidation basis.
The Group's material equity accounted joint ventures are Australia Manganese
and South Africa Manganese, inclusive of an allocation of Manganese Marketing,
and Sierra Gorda. Refer to note 8 Equity accounted investments.
Segment performance is measured by Underlying revenue, Underlying EBIT and
Underlying EBITDA. Underlying revenue is revenue, adjusted to reflect material
equity accounted joint ventures on a proportional consolidation basis.
Underlying EBIT is profit/(loss) before net finance income/(costs), income tax
(expense)/benefit, and other earnings adjustment items, all adjusted to
reflect material equity accounted joint ventures on a proportional
consolidation basis. Underlying EBITDA is Underlying EBIT before depreciation
and amortisation, adjusted to reflect material equity accounted joint ventures
on a proportional consolidation basis.
Reconciliations of the underlying information to the statutory information
included in the Group's consolidated financial statements are set out in note
3(b)(i) Underlying results reconciliation, including joint venture adjustments
which reconcile the proportional consolidation of the material equity
accounted joint ventures back to their statutory equity accounting positions.
The Group separately discloses sales of group production from sales of third
party products and services because of the significant difference in profit
margin earned on these sales.
It is the Group's policy that inter-segment transactions are made on an arm's
length basis.
Group and unallocated items/eliminations represent group centre functions and
consolidation adjustments.
Group financing and income taxes are primarily managed on a Group basis and
are not allocated to operating segments.
Total assets and liabilities for each continuing operating segment represent
operating assets and liabilities which predominantly exclude the carrying
amount of non-material equity accounted investments, cash, interest bearing
liabilities, tax balances and certain other financial assets and liabilities.
Notes to financial statements - Results for the period
3. Segment information continued
(b) Segment results continued
Continuing operations Discontinued operation
H1 FY25 Worsley Alumina Brazil Alumina Brazil Aluminium Hillside Aluminium Mozal Aluminium Sierra Gorda((1)) Cannington Hermosa Cerro Matoso Australia Manganese((1)) Group and unallocated items/ eliminations Group underlying results from continuing operations Illawarra Metallurgical Coal((2)) Group underlying results((1))
US$M
South Africa Manganese((1))
Revenue from customers 915 405 153 985 487 419 332 - 239 - 203 (403) 3,735 145 3,880
Other revenue((3)) 1 3 - 1 1 (14) (9) - - - (12) - (29) (1) (30)
Total underlying revenue 916 408 153 986 488 405 323 - 239 - 191 (403) 3,706 144 3,850
Comprising:
Group production 451 280 153 986 488 405 323 - 239 - 191 - 3,516 116 3,632
Third party products and services((4)) - - - - - - - - - - - 190 190 28 218
Inter-segment revenue 465 128 - - - - - - - - - (593) - - -
Total underlying revenue 916 408 153 986 488 405 323 - 239 - 191 (403) 3,706 144 3,850
Underlying EBITDA 369 174 (53) 123 66 215 130 (15) 39 (31) 28 (77) 968 50 1,018
Underlying depreciation and amortisation (89) (28) (2) (34) (33) (87) (41) (2) (12) (3) (10) (14) (355) - (355)
Underlying EBIT 280 146 (55) 89 33 128 89 (17) 27 (34) 18 (91) 613 50 663
Comprising:
Group production 280 159 (55) 89 33 128 90 (17) 28 (31) 18 (83) 639 50 689
Exploration expensed - - - - - - (1) - (1) (3) - (18) (23) - (23)
Third party products and services((4)) - - - - - - - - - - - 10 10 - 10
Share of profit/(loss) of equity accounted investments - (13) - - - - - - - - - - (13) - (13)
Underlying EBIT 280 146 (55) 89 33 128 89 (17) 27 (34) 18 (91) 613 50 663
Underlying net finance costs (90) (2) (92)
Underlying income tax expense (175) (14) (189)
Underlying royalty related tax expense (8) - (8)
Underlying earnings 340 34 374
Total adjustments to profit/(loss)((5)) 33 (48) (15)
Profit/(loss) for the period 373 (14) 359
Underlying exploration expenditure - - - - - 7 3 16 1 3 - 18 48 1 49
Underlying capital expenditure((6)) 50 27 6 19 12 106 23 248 13 47 25 2 578 57 635
Underlying equity accounted investments - 8 - - - - - - - - - - 8 - 8
Total underlying assets((7)) 2,969 878 134 1,195 684 1,939 514 1,859 337 721 375 3,326 14,931 - 14,931
Total underlying liabilities((7)) 1,122 146 60 306 184 231 402 147 240 473 184 2,258 5,753 - 5,753
(1) The segment information reflects the Group's interest in
material equity accounted joint ventures and is presented on a proportional
consolidation basis, which is the measure used by the Group's management to
assess their performance. The Group's underlying results includes the
proportional elimination of revenue and corresponding expenses relating to
freight services provided by the Group to material joint ventures of US$32
million and third party product revenue of US$19 million included in Group and
unallocated items/eliminations. Refer to note 3(b)(i) Underlying results
reconciliation for the joint venture adjustments that reconcile the underlying
proportional consolidation to the statutory financial information.
(2) The Illawarra Metallurgical Coal operating segment has been
classified as a discontinued operation. Refer to note 9 Disposal of
subsidiaries and joint operations.
(3) Underlying other revenue relates to fair value movements on
provisionally priced contracts.
(4) Underlying revenue on third party products and services sold
from continuing operations comprises US$87 million for aluminium, US$6 million
for alumina, US$19 million for manganese, US$26 million for freight services
and US$52 million for raw materials. Underlying EBIT on third party products
and services sold from continuing operations comprises US$2 million aluminium,
US$10 million for alumina and (US$2) million for freight services.
(5) Represents the total of all adjustments made to operating
profit/(loss), net finance income/(costs) and income tax (expense)/benefit.
Refer to note 3(b)(i) Underlying results reconciliation for further details.
(6) Underlying capital expenditure excludes the purchase of
intangibles and capitalised exploration expenditure.
(7) Total underlying assets and liabilities for each continuing
operating segment represent operating assets and liabilities which
predominantly exclude the carrying amount of non-material equity accounted
investments, cash, interest bearing liabilities, tax balances and certain
other financial assets and liabilities.
3. Segment information continued
(b) Segment results continued
Continuing operations Discontinued operation
H1 FY24 Restated((1)) Worsley Alumina Brazil Alumina Brazil Aluminium Hillside Aluminium Mozal Aluminium Sierra Gorda((2)) Cannington Hermosa Cerro Matoso Australia Manganese((2)) Group and unallocated items/ eliminations Group underlying results from continuing operations Illawarra Metallurgical Coal((1)) Group underlying results((2))
US$M
South Africa Manganese((2))
Revenue from customers 653 234 91 757 397 319 313 - 238 328 158 (224) 3,264 628 3,892
Other revenue((3)) - - - 1 - 3 5 - - (10) (6) (2) (9) (2) (11)
Total underlying revenue 653 234 91 758 397 322 318 - 238 318 152 (226) 3,255 626 3,881
Comprising:
Group production 318 187 91 758 397 322 318 - 238 318 152 - 3,099 520 3,619
Third party products and services((4)) - - - - - - - - - - - 156 156 106 262
Inter-segment revenue 335 47 - - - - - - - - - (382) - - -
Total underlying revenue 653 234 91 758 397 322 318 - 238 318 152 (226) 3,255 626 3,881
Underlying EBITDA 164 15 (70) 60 (14) 117 147 (7) 17 125 14 (50) 518 190 708
Underlying depreciation and amortisation (96) (24) (4) (33) (34) (68) (38) (2) (31) (58) (11) (13) (412) (60) (472)
Underlying EBIT 68 (9) (74) 27 (48) 49 109 (9) (14) 67 3 (63) 106 130 236
Comprising:
Group production 68 - (74) 27 (48) 49 112 (9) (13) 67 3 (44) 138 121 259
Exploration expensed - - - - - - (3) - (1) - - (19) (23) (3) (26)
Third party products and services((4)) - - - - - - - - - - - - - 14 14
Share of profit/(loss) of equity accounted investments - (9) - - - - - - - - - - (9) (2) (11)
Underlying EBIT 68 (9) (74) 27 (48) 49 109 (9) (14) 67 3 (63) 106 130 236
Underlying net finance costs (115) (3) (118)
Underlying income tax expense (17) (39) (56)
Underlying royalty related tax expense (22) - (22)
Underlying earnings (48) 88 40
Total adjustments to profit/(loss)((5)) 22 (9) 13
Profit/(loss) for the period (26) 79 53
Underlying exploration expenditure - - - - - 6 5 14 1 - - 20 46 7 53
Underlying capital expenditure((6)) 58 51 4 25 11 98 23 188 21 40 26 1 546 181 727
Underlying equity accounted investments((7)) - 20 - - - - - - - - - - 20 6 26
Total underlying assets((7)) 3,009 898 119 1,100 663 1,878 569 1,571 334 596 390 2,325 13,452 1,794 15,246
Total underlying liabilities((7)) 1,196 162 51 295 165 214 419 136 243 430 190 2,216 5,717 558 6,275
(1) The Illawarra Metallurgical Coal operating segment has been
reclassified as a discontinued operation. Refer to note 9 Disposal of
subsidiaries and joint operations.
(2) The segment information reflects the Group's interest in
material equity accounted joint ventures and is presented on a proportional
consolidation basis, which is the measure used by the Group's management to
assess their performance. The Group's underlying results includes the
proportional elimination of revenue and corresponding expenses relating to
freight services provided by the Group to material joint ventures of US$59
million and third party product revenue of US$15 million included in Group and
unallocated items/eliminations. Refer to note 3(b)(i) Underlying results
reconciliation for the joint venture adjustments that reconcile the underlying
proportional consolidation to the statutory financial information.
(3) Underlying other revenue relates to fair value movements on
provisionally priced contracts.
(4) Underlying revenue on third party products and services sold
from continuing operations comprises US$42 million for aluminium, US$3 million
for alumina, US$15 million for manganese, US$43 million for freight services
and US$53 million for raw materials. Underlying EBIT on third party products
and services sold from continuing operations comprises US$2 million for
alumina and US$(2) million for freight services.
(5) Represents the total of all adjustments made to operating
profit/(loss), net finance income/(costs) and income tax (expense)/benefit.
Refer to note 3(b)(i) Underlying results reconciliation for further details.
(6) Underlying capital expenditure excludes the purchase of
intangibles and capitalised exploration expenditure.
(7) Underlying equity accounted investments, total underlying assets
and total underlying liabilities for each operating segment are as at 30 June
2024. Total underlying assets and liabilities for each operating segment
represent operating assets and liabilities which predominantly exclude the
carrying amount of non-material equity accounted investments, cash, interest
bearing liabilities, tax balances and certain other financial assets and
liabilities.
Notes to financial statements - Results for the period
3. Segment information continued
(b) Segment results continued
(i) Underlying results reconciliation
The following tables reconcile the underlying segment information to the
statutory information included in the Group's half year consolidated financial
statements:
H1 FY25 Continuing operations Discontinued operation((1)) Total
US$M
Underlying EBIT 613 50 663
Joint venture adjustments((2)(3)) (22) - (22)
Exchange rate gains/(losses) on restatement of monetary items((4)) (4) (3) (7)
Net impairment (loss)/reversal of financial assets((4)(5)) (71) - (71)
Net gains/(losses) on the disposal of subsidiaries and joint operations((1)) - (47) (47)
Gains/(losses) on non-trading derivative instruments, contingent consideration 4 - 4
and other investments measured at fair value through profit or loss
(FVTPL)((4)(6))
Operating profit/(loss) 520 - 520
Underlying net finance costs (90) (2) (92)
Joint venture adjustments((2)(3)) 115 - 115
Exchange rate variations on net debt 38 (1) 37
Net finance income/(costs) 63 (3) 60
Underlying income tax expense (175) (14) (189)
Underlying royalty related tax expense (8) - (8)
Joint venture adjustments relating to income tax expense((2)(3)) (1) - (1)
Joint venture adjustments relating to royalty related tax expense((2)(3)) 8 - 8
Tax effect of other adjustments to derive Underlying EBIT (1) 1 -
Tax effect of other adjustments to derive Underlying net finance costs (11) - (11)
Exchange rate variations on tax balances (22) 2 (20)
Income tax (expense)/benefit (210) (11) (221)
Underlying earnings 340 34 374
Total adjustments to profit/(loss) 33 (48) (15)
Profit/(loss) for the period 373 (14) 359
Underlying earnings attributable to:
Equity holders of South32 Limited 341 34 375
Non-controlling interests (1) - (1)
(1) Refer to note 9 Disposal of subsidiaries and joint operations.
(2) The segment information reflects the Group's interest in
material equity accounted joint ventures and is presented on a proportional
consolidation basis, which is the measure used by the Group's management to
assess their performance. Joint venture adjustments reconcile the proportional
consolidation to the statutory equity accounting positions, recognised in
share of profit/(loss) of equity accounted investments in the Consolidated
income statement.
(3) The net impact of all joint venture adjustments to the Group's
profit/(loss) for the period amounts to US$100 million of which US$53 million
relates to the Sierra Gorda segment and US$47 million relates to the
Australia Manganese segment. The Sierra Gorda joint venture adjustments
include a revaluation gain of US$71 million (US$52 million post-tax) relating
to the shareholder loan payable that was eliminated from the Group's
Underlying earnings upon proportional consolidation. The Australia Manganese
joint venture adjustments include a significant item of US$76 million (US$48
million post-tax) as outlined in note 3(b)(ii) Significant items.
(4) Recognised in expenses excluding finance costs in the
Consolidated income statement.
(5) Refer to note 3(b)(iii) Impairment of financial assets.
(6) Includes a gain of US$53 million on the revaluation of the
contingent consideration receivable from the divestment of Illawarra
Metallurgical Coal and a loss of US$50 million on the revaluation of the
contingent consideration payable for the acquisition of Sierra Gorda.
3. Segment information continued
(b) Segment results continued
(i) Underlying results reconciliation continued
H1 FY24 Restated((1)) Continuing operations Discontinued operation((1)) Total
US$M
Underlying EBIT 106 130 236
Joint venture adjustments((2)(3)) (118) - (118)
Exchange rate gains/(losses) on restatement of monetary items((4)) (10) (3) (13)
Net impairment (loss)/reversal of financial assets((4)(5)) (48) - (48)
Gains/(losses) on non-trading derivative instruments, contingent consideration 18 - 18
and other investments measured at FVTPL((4))
Operating profit/(loss) (52) 127 75
Underlying net finance costs (115) (3) (118)
Joint venture adjustments((2)(3)) 110 - 110
Exchange rate variations on net debt (1) - (1)
Net finance income/(costs) (6) (3) (9)
Underlying income tax expense (17) (39) (56)
Underlying royalty related tax expense (22) - (22)
Joint venture adjustments relating to income tax expense((2)(3)) 18 - 18
Joint venture adjustments relating to royalty related tax expense((2)(3)) 22 - 22
Tax effect of other adjustments to derive Underlying EBIT 3 1 4
Tax effect of other adjustments to derive Underlying net finance costs 1 - 1
Exchange rate variations on tax balances 27 (7) 20
Income tax (expense)/benefit 32 (45) (13)
Underlying earnings (48) 88 40
Total adjustments to profit/(loss) 22 (9) 13
Profit/(loss) for the period (26) 79 53
Underlying earnings attributable to:
Equity holders of South32 Limited (48) 88 40
Non-controlling interests - - -
(1) The Illawarra Metallurgical Coal operating segment has been
reclassified as a discontinued operation. Refer to note 9 Disposal of
subsidiaries and joint operations.
(2) The segment information reflects the Group's interest in
material equity accounted joint ventures and is presented on a proportional
consolidation basis, which is the measure used by the Group's management to
assess their performance. Joint venture adjustments reconcile the proportional
consolidation to the statutory equity accounting positions, recognised in
share of profit/(loss) of equity accounted investments in the Consolidated
income statement.
(3) The net impact of all joint venture adjustments to the Group's
profit/(loss) for the year amounts to US$32 million of which US$39 million
relates to the Sierra Gorda segment and (US$7) million relates to the South
Africa Manganese segment. The Sierra Gorda joint venture adjustments include a
revaluation gain of US$48 million (US$35 million post-tax) relating to the
shareholder loan payable that was eliminated from the Group's Underlying
earnings upon proportional consolidation.
(4) Recognised in expenses excluding finance costs in the
Consolidated income statement.
(5) Refer to note 3(b)(iii) Impairment of financial assets.
3. Segment information continued
(b) Segment results continued
(i) Underlying results reconciliation continued
H1 FY25 Group underlying results Joint venture adjustments Discontinued operation adjustments((1)) Group statutory results
US$M
Total revenue 3,850 (583) (144) 3,123
Depreciation and amortisation 355 (100) - 255
Share of profit/(loss) of equity accounted investments (13) 93 - 80
Exploration expenditure((2)) 49 (10) - 39
Capital expenditure((2)) 635 (178) - 457
Equity accounted investments 8 536 - 544
Total assets 14,931 (1,076) - 13,855
Total liabilities 5,753 (1,076) - 4,677
(1) Refer to note 9 Disposal of subsidiaries and joint operations.
(2) The Group statutory results include the cash flows from
discontinued operations, consistent with the Consolidated cash flow statement.
H1 FY24 Restated((1)) Group underlying results Joint venture adjustments Discontinued operation adjustments((1)) Group statutory results
US$M
Total revenue 3,881 (748) (626) 2,507
Depreciation and amortisation 472 (137) (60) 275
Share of profit/(loss) of equity accounted investments (11) 2 2 (7)
Exploration expenditure((2)) 53 (6) - 47
Capital expenditure((2)) 727 (164) - 563
Equity accounted investments((3)) 26 376 (6) 396
Total assets((3)) 15,246 (1,001) - 14,245
Total liabilities((3)) 6,275 (1,001) - 5,274
(1) The Illawarra Metallurgical Coal operating segment has been
reclassified as a discontinued operation. Refer to note 9 Disposal of
subsidiaries and joint operations.
(2) The Group statutory results include the cash flows from
discontinued operations, consistent with the Consolidated cash flow statement.
(3) Equity accounted investments, total assets and total liabilities
are as at 30 June 2024.
(ii) Significant items
Significant items are those items, not separately identified in note 3(b)(i)
Underlying results reconciliation, whose nature and amount are considered
significant to the Group's consolidated financial statements.
The only significant item recognised within the Group's consolidated financial
statements for the half year ended 31 December 2024 relates to the Tropical
Cyclone Megan impacts at the Groote Eylandt Mining Company Pty Ltd (GEMCO)
operation within the Australia Manganese equity accounted investment, which is
presented on a proportional consolidation basis in the Group's segment
results. The significant item adjustment is included in the joint venture
adjustments in the Underlying results reconciliation.
Tropical Cyclone Megan impacts
In March 2024, Tropical Cyclone Megan severely impacted operations at GEMCO.
The weather system resulted in widespread flooding and significant damage to
infrastructure, including the wharf, port and a critical bridge, resulting in
the temporary suspension of operations. Amounts incurred directly or
indirectly as a result of Tropical Cyclone Megan, including insurance income,
do not reflect the performance of the underlying operation and have been
classified as significant items.
Australia Manganese recorded a significant item as a result of Tropical
Cyclone Megan of US$76 million (US$48 million post-tax) which was recognised
in the Group's share of profit/(loss) of equity accounted investments in the
Consolidated income statement. The net gain of US$48 million included
insurance income, partially offset by expenses related to idle capacity
charges, repairs and clean-up costs. The net gain of US$48 million was
included in the joint venture adjustments in the Underlying results
reconciliation.
The Group expects to incur further costs and considers it probable to recover
further amounts through insurance, which will also be classified as
significant items. No contingent asset has been disclosed for any further
anticipated insurance recoveries as a reliable estimate cannot be made at
present.
There were no significant items within the Group's consolidated financial
statements for the half year ended 31 December 2023.
3. Segment information continued
(b) Segment results continued
(iii) Impairment of financial assets
The Group recognised the following net impairment of financial assets:
US$M H1 FY25 H1 FY24
Trade and other receivables 71 48
Net impairment of financial assets((1)) 71 48
(1) Relates to the purchased credit impaired receivable from Sierra
Gorda.
Shareholder loan receivable from Sierra Gorda
The loan has a contractual interest rate of 8 per cent and the repayment of
the loan by Sierra Gorda is dependent on its financial performance. At
31 December 2024, the Group updated its estimated timing of the loan
repayments and as a result recognised an impairment of US$71 million (H1 FY24:
impairment of US$48 million) which is included in expenses excluding finance
costs in the Consolidated income statement. The net present value of the
expected future cash flows of the loan were informed by, and are sensitive to,
the Group's copper price assumption, with a range of US$4.37/lb - US$4.51/lb
used, in real terms, and a production profile and costs based on management's
planning processes. An effective interest rate of 9 per cent, as determined on
the date of acquisition, was applied to discount the future loan repayments.
4. Dividends
US$M H1 FY25 H1 FY24
Prior year final dividend((1)) 140 145
Total dividends declared and paid during the period 140 145
(1) On 29 August 2024, the Directors resolved to pay a fully franked
final dividend of US 3.1 cents per share (US$140 million) in respect of the
2024 financial year. The dividend was paid on 17 October 2024.
5. Earnings per share
Basic earnings/(loss) per share amounts are calculated based on profit or loss
attributable to equity holders of South32 Limited and the weighted average
number of shares outstanding during the period.
Diluted earnings/(loss) per share amounts are calculated based on profit or
loss attributable to equity holders of South32 Limited and the weighted
average number of shares outstanding after adjustment for the effects of all
dilutive potential shares.
The following reflects the profit or loss and share data used in the basic and
diluted earnings/(loss) per share computations:
Profit/(loss) attributable to equity holders H1 FY25 H1 FY24
Restated((1))
US$M
Continuing operations 374 (26
Discontinued operation((1)) (14) 79
Profit/(loss) attributable to equity holders of South32 Limited (basic) 360 53
Profit/(loss) attributable to equity holders of South32 Limited (diluted) 360 53
(1) Refer to note 9 Disposal of subsidiaries and joint operations.
Weighted average number of shares H1 FY25 H1 FY24
Restated((1))
Million
Basic earnings/(loss) per share denominator((2)) 4,515 4,523
Shares contingently issuable under employee share ownership plans 13 -
Diluted earnings/(loss) per share denominator((1)) 4,528 4,523
(1) The diluted earnings/(loss) per share calculation for H1 FY24
has been restated to exclude 14,096,221 shares contingently issuable under
ESOP plans, subject to service and performance conditions, which are
considered anti-dilutive due to the numerator being restated to reflect a loss
from continuing operations, refer to note 9 Disposal of subsidiaries and joint
operations.
(2) The basic earnings/(loss) per share denominator is the aggregate
of the weighted average number of shares after deduction of the weighted
average number of treasury shares outstanding and shares permanently cancelled
through the on-market share buy-back program.
Earnings/(loss) per share H1 FY25 H1 FY24
Restated((1))
US cents
Continuing operations
Basic earnings/(loss) per share 8.3 (0.6)
Diluted earnings/(loss) per share 8.3 (0.6)
Attributable to ordinary equity holders of South32 Limited
Basic earnings/(loss) per share 8.0 1.2
Diluted earnings/(loss) per share 8.0 1.2
(1) Refer to note 9 Disposal of subsidiaries and joint operations.
Notes to financial statements - Capital structure and financing
6. Net finance income/(costs)
US$M H1 FY25 H1 FY24
Restated((1))
Finance income
Interest on loans to equity accounted investments 91 90
Other interest income 41 25
Total finance income 132 115
Finance costs
Interest on borrowings (29) (35)
Interest on lease liabilities (27) (26)
Discounting on provisions and other liabilities (49) (58)
Net interest expense on post-retirement employee benefits (2) (1)
Exchange rate variations on net debt 38 (1)
Total finance costs (69) (121)
Net finance income/(costs) 63 (6)
(1) Refer to note 9 Disposal of subsidiaries and joint operations.
7. Financial assets and financial liabilities
The following table presents the financial assets and liabilities by class at
their carrying amounts:
H1 FY25 Held at FVTPL Designated as FVOCI Amortised cost Total
US$M
Financial assets
Cash and cash equivalents - - 1,600 1,600
Trade and other receivables((1)(2)) 86 - 550 636
Other financial assets:
Derivative contracts 2 - - 2
Investments in equity instruments designated as FVOCI - 11 - 11
Total current financial assets 88 11 2,150 2,249
Trade and other receivables((1)(2)) - - 2,043 2,043
Other financial assets:
Investments in equity instruments designated as FVOCI - 118 - 118
Contingent consideration receivable 168 - - 168
Total non-current financial assets 168 118 2,043 2,329
Total financial assets 256 129 4,193 4,578
Financial liabilities
Trade and other payables((3)) 6 - 706 712
Interest bearing liabilities - - 314 314
Total current financial liabilities 6 - 1,020 1,026
Interest bearing liabilities - - 1,333 1,333
Other financial liabilities:
Contingent consideration payable 68 - - 68
Total non-current financial liabilities 68 - 1,333 1,401
Total financial liabilities 74 - 2,353 2,427
(1) Includes current loans to equity accounted investments of
US$50 million and non-current loans to equity accounted investments of
US$1,848 million.
(2) Excludes current input taxes of US$78 million and non-current
input and other taxes of US$123 million included in other receivables.
(3) Excludes current input taxes of US$11 million included in other
payables.
7. Financial assets and financial liabilities continued
FY24 Held at FVTPL Designated as FVOCI Amortised cost Total
US$M
Financial assets
Cash and cash equivalents - - 842 842
Trade and other receivables((1)(2)) 120 - 403 523
Other financial assets:
Derivative contracts 1 - - 1
Total current financial assets 121 - 1,245 1,366
Trade and other receivables((1)(2)) - - 1,951 1,951
Other financial assets:
Investments in equity instruments designated as FVOCI - 89 - 89
Total non-current financial assets - 89 1,951 2,040
Total financial assets 121 89 3,196 3,406
Financial liabilities
Trade and other payables((3)) 3 - 782 785
Interest bearing liabilities - - 223 223
Total current financial liabilities 3 - 1,005 1,008
Interest bearing liabilities - - 1,343 1,343
Other financial liabilities:
Contingent consideration payable 17 - - 17
Total non-current financial liabilities((3)) 17 - 1,343 1,360
Total financial liabilities 20 - 2,348 2,368
(1) Includes current loans to equity accounted investments of
US$73 million and non-current loans to equity accounted investments of
US$1,933 million.
(2) Excludes current input taxes of US$111 million and non-current
input and other taxes of US$132 million included in other receivables.
(3) Excludes current input taxes of US$20 million and non-current
input and other taxes of US$1 million included in other payables.
(i) Fair value measurement
The carrying values of the Group's financial assets and liabilities measured
at amortised cost are equal to or approximate their respective fair values,
except for senior unsecured notes with a carrying value of US$692 million
(FY24: US$692 million), which have a fair value of US$643 million (FY24:
US$636 million), and lease liabilities with a carrying value of US$660 million
(FY24: US$672 million), for which a fair value has not been determined. The
fair value of the Group's senior unsecured notes is estimated based on quoted
market prices at the reporting date and are classified as Level 1 on the fair
value hierarchy as shown below.
For financial assets and liabilities measured at fair value, the Group uses
quoted marked prices in active markets for identical assets where available.
Where no price information is available from a quoted market source,
alternative market mechanisms or recent comparable transactions, the fair
value is estimated based on the Group's views on relevant future prices, net
of valuation allowances to accommodate liquidity, modelling, credit and other
risks implicit in such estimates.
The following table shows the Group's financial assets and liabilities carried
at fair value with reference to the nature of valuation inputs used:
Level 1 Valuation is based on unadjusted quoted prices in active markets for identical
financial assets and liabilities.
Level 2 Valuation is based on inputs (other than quoted prices included in Level 1)
that are observable for the financial asset or liability, either directly
(i.e. as unquoted prices) or indirectly (i.e. derived from prices).
Level 3 Valuation includes inputs that are not based on observable market data.
7. Financial assets and financial liabilities continued
(i) Fair value measurement continued
H1 FY25 Level 1 Level 2 Level 3 Total
US$M
Financial assets and liabilities
Trade and other receivables - 86 - 86
Trade and other payables - (6) - (6)
Derivative contract assets 2 - - 2
Investments in equity instruments designated as FVOCI 119 - 10 129
Contingent consideration receivable - - 168 168
Contingent consideration payable - - (68) (68)
Total 121 80 110 311
FY24 Level 1 Level 2 Level 3 Total
US$M
Financial assets and liabilities
Trade and other receivables - 120 - 120
Trade and other payables - (3) - (3)
Derivative contract assets 1 - - 1
Investments in equity instruments designated as FVOCI 80 - 9 89
Contingent consideration payable - - (17) (17)
Total 81 117 (8) 190
The following table shows the movements in the Group's Level 3 financial
assets and liabilities:
US$M H1 FY25 H1 FY24
At the beginning of the period (8) (20)
Addition of financial assets 115 -
Net unrealised gains/(losses) recognised in the Consolidated income 3 19
statement((1))
At the end of the period((2)) 110 (1)
(1) Recognised in expenses excluding finance costs in the
Consolidated income statement.
(2) The fair value of the Level 3 financial assets and liabilities
are determined using appropriate valuation models, including discounted cash
flow modelling, with inputs such as forecast commodity prices and production
volumes. The only Level 3 input which is considered significant to the fair
value measurement of these financial assets and liabilities is the forecast
metallurgical coal prices used in the determination of the contingent
consideration receivable from the divestment of Illawarra Metallurgical Coal.
The effect of using reasonably possible alternative metallurgical coal prices
in the fair value calculation, based on changing this assumption favourably or
unfavourably by 10 per cent while holding all other variables constant, is an
increase of US$72 million, or a decrease of US$166 million respectively, to
the Group's profit/(loss) after tax in the Consolidated income statement.
Notes to financial statements - Other notes
8. Equity accounted investments
The Group's material interests in equity accounted investments are as
follows:
Ownership interest %
Material joint ventures Country of incorporation Principal activity H1 FY25 FY24
Australia Manganese((1)(2)) Australia Manganese ore mine 60 60
South Africa Manganese((1)(3)) South Africa Manganese ore mines 60 60
Manganese Marketing((1)(4)) Singapore Sales, marketing and distribution 60 60
Sierra Gorda((1)(5)) Chile Copper mine 45 45
(1) Joint control is contractually achieved as joint venture parties
unanimously consent on decisions over the joint venture's relevant activities.
(2) Australia Manganese consists of an investment in GEMCO.
(3) The Group holds a 60 per cent interest in Samancor Holdings
(Pty) Ltd (Samancor). Samancor indirectly owns 74 per cent of Hotazel
Manganese Mines (Pty) Ltd (HMM), which gives the Group its indirect legal
ownership interest of 44.4 per cent. The remaining 26 per cent of HMM is owned
by B-BBEE entities, of which 17 per cent of the interests were acquired using
vendor finance, with the loans repayable via distributions attributable to
these parties, pro rata to their share in HMM. Until these loans are repaid,
the Group's interest in HMM is accounted for at 54.6 per cent.
(4) Manganese Marketing consists of an investment in Samancor
Marketing Pte Ltd.
(5) Sierra Gorda consists of an investment in Sierra Gorda Sociedad
Contractual Minera.
Share of profit/(loss) of equity accounted investments H1 FY25 H1 FY24
Restated((1))
US$M
Australia Manganese 7 7
South Africa Manganese 7 (12)
Manganese Marketing (1) 4
Sierra Gorda 80 3
Individually immaterial (13) (9)
Total 80 (7)
(1) Refer to note 9 Disposal of subsidiaries and joint operations.
9. Disposal of subsidiaries and joint operations
Non-current assets and disposal groups (inclusive of directly associated
liabilities) are reclassified to current assets held for sale if their
carrying amount is highly probable to be recovered through sale rather than
through continuing use, and are available for immediate sale in their present
condition.
A discontinued operation is a component of the Group's business that
represents a separate major line of business or geographical area of
operations that has been disposed of or is classified as held for sale. When
an operation is classified as discontinued, the comparative financial results
are restated as if the operation had been discontinued from the start of the
comparative period.
Illawarra Metallurgical Coal
In February 2024, the Group announced its decision to enter into a binding
agreement for the sale of its shareholding in Illawarra Metallurgical Coal to
an entity owned by Golden Energy and Resources Pte Ltd (GEAR) and M Resources
Pty Ltd (M Resources). The sale completed on 29 August 2024 and resulted in a
loss on disposal of US$47 million. The sale consideration included an upfront
and deferred cash consideration of US$1,300 million and contingent
price-linked consideration of up to US$350 million. The consideration is
subject to customary working capital, net debt and capital expenditure
adjustments that is expected to be finalised during H2 FY25.
Illawarra Metallurgical Coal was classified as held for sale and presented
separately on the Group's FY24 Consolidated balance sheet. The disposal group
represents the entire Illawarra Metallurgical Coal segment, which comprises
Illawarra Coal Holdings Pty Ltd and its subsidiaries, a 16.7 per cent interest
in the Port Kembla Coal Terminal, and certain associated external contractual
arrangements held by South32 Marketing Pte Ltd which were novated to Illawarra
Metallurgical Coal prior to completion. As a separate major component of the
Group, Illawarra Metallurgical Coal has also been presented as a discontinued
operation in the Group's Consolidated income statement.
9. Disposal of subsidiaries and joint operations continued
The results of the discontinued operation are as follows:
US$M H1 FY25 H1 FY24
Revenue:
Group production 116 520
Third party products and services 28 106
144 626
Other income - 7
Expenses excluding finance costs (97) (504)
Profit/(loss) on disposal of the discontinued operation (47) -
Share of profit/(loss) of equity accounted investments - (2)
Operating profit/(loss) from a discontinued operation - 127
Finance income - 1
Finance costs (3) (4)
Net finance income/(costs) (3) (3)
Profit/(loss) before tax from a discontinued operation (3) 124
Income tax (expense)/benefit (11) (45)
Profit/(loss) for the period from a discontinued operation (14) 79
Total comprehensive income/(loss) from a discontinued operation attributable (14) 79
to the equity holders of South32 Limited
Basic earnings/(loss) per share (cents) (0.3) 1.8
Diluted earnings/(loss) per share (cents) (0.3) 1.8
The cash flows from the discontinued operation are as follows:
US$M H1 FY25 H1 FY24
Net cash flows from operating activities 86 179
Net cash flows from investment activities 880 (185)
Net cash flows from financing activities (1) (2)
The effect of disposal on the results and financial position of the Group is
as follows:
US$M H1 FY25
Consideration
Upfront consideration, net of transaction costs 1,010
Deferred consideration((1)) 170
Contingent price-linked consideration((2)) 115
Total consideration 1,295
Net assets disposed of
Cash and cash equivalents 17
Trade and other receivables 94
Inventories 166
Property, plant and equipment 1,577
Equity accounted investments 6
Other assets 10
Trade and other payables (199)
Interest bearing liabilities (31)
Provisions (278)
Deferred tax liabilities (20)
Total net assets disposed of 1,342
Net gain/(loss) on disposal (47)
Consideration received, net of transaction costs, satisfied in cash 955
Cash and cash equivalents disposed of (17)
Net cash inflow 938
(1) Present value of the US$250 million deferred consideration
payable in March 2030, recognised in trade and other receivables on the
Consolidated balance sheet.
(2) Fair value of the contingent price-linked consideration,
recognised in other financial assets on the Consolidated balance sheet. The
contingent consideration is payable at 50 per cent of incremental
metallurgical coal revenue above certain price thresholds, capped at US$350
million over a five year period.
9. Disposal of subsidiaries and joint operations continued
Eagle Downs Metallurgical Coal
In February 2024, the Group announced its decision to enter into a binding
agreement to sell its 50 per cent interest in Eagle Downs Metallurgical Coal
to a subsidiary of Stanmore Resources Limited. The sale completed on 12 August
2024 and did not result in a gain or loss on disposal. The sale consideration
included upfront consideration of US$15 million, adjusted for customary
working capital and net debt, a contingent payment of US$20 million subject to
the project reaching metallurgical coal production of 100,000 tonnes, and a
price-linked royalty of up to US$100 million.
Eagle Downs Metallurgical Coal was classified as held for sale and presented
separately on the Group's FY24 Consolidated balance sheet. Eagle Downs
Metallurgical Coal is not considered a separate major component of the Group
and therefore was not classified as a discontinued operation, with its results
remaining within continuing operations in the Group's Consolidated income
statement.
The effect of disposal on the results and financial position of the Group is
as follows:
US$M H1 FY25
Consideration
Upfront consideration, net of transaction costs 16
Total consideration 16
Net assets disposed of
Property, plant and equipment 31
Interest bearing liabilities (8)
Provisions (7)
Total net assets disposed of 16
Net gain/(loss) on disposal -
Consideration received, net of transaction costs, satisfied in cash 16
Net cash inflow 16
10. Subsequent events
Capital management
On 13 February 2025, the Directors resolved to pay a fully-franked interim
dividend of US 3.4 cents per share (US$154 million) in respect of the 2025
financial half year. The dividend will be paid on 3 April 2025. The dividend
has not been provided for in the half year consolidated financial statements
and will be recognised in the second half of the 2025 financial year.
No other matters or circumstances have arisen since the end of the period that
have significantly affected, or may significantly affect, the operations,
results of operations or state of affairs of the Group in subsequent
accounting periods.
Directors' declaration
In accordance with a resolution of the Directors of the Company, we state
that:
In the opinion of the Directors:
(a) The consolidated financial statements and notes that are set out on
pages 36 to 54 for the half year ended 31 December 2024 are in accordance
with the Corporations Act, including:
(i) Giving a true and fair view of the Group's financial position as
at 31 December 2024 and of its performance for the half year ended on that
date; and
(ii) Complying with Australian Accounting Standard AASB 134 Interim
Financial Reporting and Corporations Regulations 2001.
(b) There are reasonable grounds to believe that the Company will be
able to pay its debts as and when they become due and payable.
Signed in accordance with a resolution of the Board of Directors.
Karen Wood
Chair
Graham Kerr
Chief Executive Officer and Managing Director
Dated 13 February 2025
Directors' report
The Directors of the Group present the consolidated financial statements for
the half year ended 31 December 2024 and the auditor's review report thereon.
Directors
The Directors of the Company, both during and since the end of the period,
are:
Ms Karen Wood
Mr Graham Kerr
Mr Frank Cooper AO
Dr Xiaoling Liu
Mr Carlos Mesquita
Dr Ntombifuthi (Futhi) Mtoba
Ms Jane Nelson
Mr Wayne Osborn
Mr Keith Rumble (retired 24 October 2024)
Ms Sharon Warburton
Mr Stephen Pearce (appointed 1 February 2025)
Ms Mandlesilo (Mandla) Msimang (appointed 1 February 2025)
The company secretary of the Company, both during and since the end of the
period, is Claire Tolcon.
Review and results of operations
A review of the operations of the consolidated entity during the period and of
the results of those operations is contained on pages 3 to 33.
Strategic risks and uncertainties
Due to the international scope of the Group's operations and the industries in
which it is engaged, there are a number of risk factors and uncertainties
which could have an effect on the Group's results and operations over the next
six months.
The following information outlines the most significant strategic exposures
identified across the Group. The risks are not listed in any particular order:
- Keeping our people safe and well
- Portfolio reshaping
- Climate change and environment
- Maintaining, realising or enhancing the value of our Mineral
Resources and Ore Reserves
- Major external events or natural catastrophes
- Maintaining competitiveness through technology and innovation
- Predictable operational performance
- Delivering our project portfolio
- Supply chain security
- Shaping our culture and managing diverse talent
- Evolving societal expectations
- Political risks, actions by government and/or authorities
- Global economic uncertainty and liquidity
Further information on these risks and how they are managed can be found on
pages 29 to 38 of the Annual Report for the year ended 30 June 2024, a copy
of which is available on the Group's website at www.south32.net
(http://www.south32.net) .
Events subsequent to the balance sheet date
Refer to note 10 Subsequent events to the consolidated financial statements on
page 54.
No other matters or circumstances have arisen since the end of the period that
have significantly affected, or may significantly affect, the operations,
results of operations or state of affairs of the Group in subsequent
accounting periods.
UK responsibility statements
The Directors state that to the best of their knowledge the Financial Results
and Outlook on pages 3 to 33 is compliant with DTR 4.2.7R and DTR 4.2.8R of
the Disclosure Guidance and Transparency Rules in the United Kingdom, namely:
(a) Includes an indication of important events that have occurred during the first
six months of the financial year, and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
(b) Disclosure has been made for related party transactions that have taken place
in the first six months of the current financial year and that have materially
affected the financial position or performance of the enterprise during that
period, and any changes in the related party transactions described in the
last annual report that could have a material effect on the financial position
or performance of the enterprise in the first six months of the current
financial year.
Lead Auditor's Independence Declaration
A copy of the lead auditor's independence declaration as required under
Section 307C of the Corporations Act is set out on page 58.
Rounding of amounts
The Australian Securities and Investments Commission (ASIC) Corporations
(Rounding in Financial/Directors' Reports) Instrument 2016/191 applies to the
Group and amounts in the half year consolidated financial statements and this
Directors' Report have been rounded in accordance with this instrument to the
nearest million US dollars, unless stated otherwise.
This Directors' Report is made in accordance with a resolution of the Board.
Karen Wood Graham Kerr
Chair Chief Executive Officer and Managing Director
Dated 13 February 2025
KPMG
Lead Auditor's Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of South32 Limited
I declare that, to the best of my knowledge and belief, in relation to the
review of South32 Limited for the half year ended 31 December 2024 there have
been:
i. no contraventions of the auditor independence
requirements as set out in the Corporations Act 2001 in relation to the
review; and
ii. no contraventions of any applicable code of
professional conduct in relation to the review.
KPMG Jane Bailey
Partner
Perth
13 February 2025
KPMG, an Australian partnership and a member firm of the KPMG global
organisation of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved.
The KPMG name and logo are trademarks used under license by the independent
member firms of the KPMG global organisation. Liability limited by a scheme
approved under Professional Standards Legislation.
KPMG
Independent Auditor's Review Report
To the shareholders of South32 Limited
Conclusion
We have reviewed the accompanying Half-year Consolidated Financial Statements The Half-year Consolidated Financial Statements comprises:
of South32 Limited.
• Consolidated balance sheet as at 31 December 2024;
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the Half-year Consolidated Financial • Consolidated income statement, Consolidated statement of
Statements of South32 Limited does not comply with the Corporations Act 2001, comprehensive income, Consolidated statement of changes in equity and
including: Consolidated cash flow statement for the Half-year ended on that date;
• Giving a true and fair view of the Group's financial position as • Notes 1 to 10 comprising a summary of material accounting
at 31 December 2024 and of its performance for the Half-year ended on that policies and other explanatory information; and
date; and
• The Directors' Declaration.
• Complying with Australian Accounting Standard AASB 134 Interim
Financial Reporting and the Corporations Regulations 2001. The Group comprises South32 Limited (the Company) and the entities it
controlled at the Half year's end or from time to time during the Half-year.
Basis for Conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial
Report Performed by the Independent Auditor of the Entity and ISRE 2410 Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity. Our responsibilities are further described in the Auditor's
Responsibilities for the Review of the Financial Report section of our report.
We are independent of the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the annual financial report in Australia. We
have also fulfilled our other ethical responsibilities in accordance with
these requirements.
Responsibilities of the Directors for the Half-year Consolidated Financial
Statements
The Directors of the Company are responsible for:
• The preparation of the Half-year Consolidated Financial
Statements that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001; and
• Such internal control as the Directors determine is necessary to
enable the preparation of the Half-year Consolidated Financial Statements that
gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
Auditor's Responsibilities for the Review of the Half-year Consolidated
Financial Statements
Our responsibility is to express a conclusion on the Half-year Consolidated
Financial Statements based on our review. ASRE 2410 and ISRE 2410 require us
to conclude whether we have become aware of any matter that makes us believe
that the Half-year Consolidated Financial Statements does not comply with the
Corporations Act 2001 including giving a true and fair view of the Group's
financial position as at 31 December 2024 and its performance for the
Half-Year ended on that date, and complying with Australian Accounting
Standard AASB 134 Interim Financial Reporting and the Corporations Regulations
2001.
A review of Half-year Consolidated Financial Statements consists of making
enquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with
Australian Auditing Standards and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
KPMG Jane Bailey
Partner
Perth
13 February 2025
Forward-looking statements
This release contains forward-looking statements, including statements about
trends in commodity prices and currency exchange rates; demand for
commodities; production forecasts; plans, strategies and objectives of
management; capital costs and scheduling; operating costs; anticipated
productive lives of projects, mines and operations; and provisions and
contingent liabilities. These forward-looking statements reflect expectations
at the date of this release, however they are not guarantees or predictions of
future performance. They involve known and unknown risks, uncertainties and
other factors, many of which are beyond our control, and which may cause
actual results to differ materially from those expressed in the statements
contained in this release. Readers are cautioned not to put undue reliance on
forward-looking statements. Except as required by applicable laws or
regulations, the South32 Group does not undertake to publicly update or review
any forward-looking statements, whether as a result of new information or
future events. Past performance cannot be relied on as a guide to future
performance. South32 cautions against reliance on any forward looking
statements or guidance.
Non-IFRS financial information
This release includes certain non-IFRS financial measures, including
Underlying earnings, Underlying EBIT and Underlying EBITDA, Underlying
revenue, Underlying net finance costs, Underlying depreciation and
amortisation, Underlying operating costs, Underlying income tax expense,
Underlying royalty related tax expense, Basic Underlying earnings per share,
Underlying effective tax rate, Underlying EBIT margin, Underlying EBITDA
margin, Underlying return on capital, Free cash flow, net debt, net operating
assets and ROIC. These measures are used internally by management to assess
the performance of our business, make decisions on the allocation of our
resources and assess operational management. Non-IFRS measures have not been
subject to audit or review and should not be considered as an indication of or
alternative to an IFRS measure of profitability, financial performance or
liquidity.
No offer of securities
Nothing in this release should be read or understood as an offer or
recommendation to buy or sell South32 securities, or be treated or relied upon
as a recommendation or advice by South32.
No financial or investment advice - South Africa
South32 does not provide any financial or investment 'advice' as that term is
defined in the South African Financial Advisory and Intermediary Services Act,
37 of 2002, and we strongly recommend that you seek professional advice.
FURTHER INFORMATION
Investor relations Media relations
Ben Baker Jamie Macdonald Miles Godfrey
M +61 403 763 086
M +61 408 925 140
M +61 415 325 906
E Ben.Baker@south32.net E Jamie.Macdonald@south32.net
E Miles.Godfrey@south32.net
Further information on South32 can be found at www.south32.net
(http://www.south32.net) .
South32 Limited (ABN 84 093 732 597)
Registered in Australia
(Incorporated in Australia under the Corporations Act 2001)
Registered Office: Level 35, 108 St Georges Terrace
Perth Western Australia 6000 Australia
ISIN: AU000000S320
Approved for release by Graham Kerr, Chief Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited
13 February 2025
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR DDGDDXBBDGUDRecent news on South32
See all newsREG - South32 Limited - Total Voting Rights and Issued Capital
AnnouncementREG - South32 Limited - Daily Buy-Back Notification
AnnouncementREG - South32 Limited - Quarterly Report: March 2025
AnnouncementREG - South32 Limited - Daily Buy-Back Notification
AnnouncementREG - South32 Limited - Daily Buy-Back Notification
Announcement