OM HOLDINGS LIMITED (ARBN 081 028 337)
No. of Pages Lodged:
8 17 22
Covering Letter Appendix 4D – Half Yearly Report Interim Financial Report
24 August 2010 Company Announcements Office ASX Limited 4th Floor 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam
HALF YEAR CONSOLIDATED NET PROFIT OF A$16.1 MILLION – 50% HIGHER THAN THE PRECEDING HALF YEAR The Board of OM Holdings Limited and its subsidiaries (ASX Code: OMH) is pleased to advise of a consolidated net profit after tax and non-controlling interests of A$16.1 million for the half year ended 30 June 2010. This result represented an increase of 50% when compared with net profit after tax and non-controlling interests of A$10.8 million for the corresponding period in 2009. An interim dividend of 0.75 Australian cents per share has been declared.
HIGHLIGHTS BOOTU CREEK MANGANESE MINE (100%, Northern Territory, Australia)
The mining operation achieved a net operating profit after tax of A$4.6 million for the first half of 2010. Production of 370,468 tonnes grading 37.4% Mn achieved for the half year, representing an increase of 43% on the same period in 2009. C1 unit cash costs for H1 2010 of A$4.65/dmtu. The revised production strategy implemented in 2009 continued to deliver high value-inuse products for customers during the first half of 2010, ranging from 35% Mn to 38% Mn content.
MARKETING, TRADING AND LOGISTICS (100% Singapore) ●
The marketing and trading operations achieved a net operating profit after tax and noncontrolling interests of A$4.5 million for the first half of 2010. Ore and alloy tonnages traded during the period totaled 466,491 tonnes.
QINZHOU SMELTER (100%, Guangxi, China) ● ●
The smelting operation achieved a net operating profit after tax of A$4.8 million for the first half of 2010. Production of 14,154 tonnes and sales of 14,305 tonnes of High Carbon Ferro Manganese (“HC FeMn”) as well as the production of 40,001 tonnes of sinter ore for the first half of 2010.
#08 – 08, Parkway Parade 80 Marine Parade Road, 449269 Singapore Tel: 65-6346 5515 Fax: 65-6342 2242 Email address:
[email protected] Website: www.omholdingsltd.com ASX Code: OMH
1
CORPORATE AND STRATEGIC ● ● ● ● ●
Sales revenue increased to A$132 million. Cash reserves of A$56 million (included cash collateral of A$9.4 million). Consolidated cash flows generated from operating activities were A$32 million. External borrowings of A$75 million at balance date. EBIT margin and Return On Capital Employed of 17.69% and 6.98% respectively. Basic EPS of A$0.03 per share and NTA backing of A$0.56 per share. Total investments of A$137 million. Strategic investments in Ntsimbintle Mining (Proprietary) Limited and ASX listed entities NFE, SRR and SCR are integral to the execution of the Group’s manganese growth, exploration pipeline and commodity diversification strategies.
OM HOLDINGS LIMITED – GROUP KEY FINANCIAL RESULTS
Sales (third party only) – Manganese and Other Ores (Tonnes) Sales – Alloys (Tonnes) A$ million Total sales Gross profit Gross profit margin (%) Other income Distribution costs Administration and other operating costs Depreciation/amortisation Exploration expenditure Interest expense Northern Territory Government royalties Foreign exchange losses Operating profit before tax Income tax Operating profit after tax Non-controlling interests Operating profit after tax and non-controlling interests
6 months to 30 June 2010 381,594
6 months to 30 June 2009 445,955
Variance % -14
14,605
13,480
+8
132.1 52.5 39.7% 3.0 (11.7) (9.9) (5.6) (2.1) (0.6) (1.4) (0.7) 23.4 (4.8) 18.6 (2.5) 16.1
127.9 32.4 25.3% 29.3 (16.2) (8.7) (4.0) (0.8) (0.4) (6.5) (14.5) 10.6 0.2 10.8 10.8
+3 +62 -90 -28 +14 +40 +163 +50 -78 -95 +121 +2500 +72% +50
FINANCIAL ANALYSIS Consolidated revenue for the six months ended 30 June 2010 was A$132.1 million representing an increase of 3% compared to the six months ended 30 June 2009. The increase in revenue was contributed by higher realised selling prices of manganese ores but was offset by lower quantities sold into the Chinese market. The OMH Group’s gross operating profit increased by 62% from A$32.4 million in the first half of 2009 to A$52.5 million in the first half of 2010. Gross profit margin improved from 25.3% during the first half of 2009 to 39.7% in the first half of 2010. The increase in gross profit margin was largely attributable to higher realized selling prices and the unique value-in-use characteristics of Bootu’s siliceous Mn ores achieving attractive gross profit margins during the period. Other income of A$3 million in the first half of 2010 included a gain from the de-registration of a previous subsidiary, OM Materials (Tianjin) Ltd in China of A$0.8 million. Distribution costs decreased by A$4.5 million compared to the first half 2009 due to lower shipping activity during the period. Total administrative and other operating costs increased by A$1.2 million or 14%, attributable to professional fees associated with the investment in Ntsimbintle Mining (Proprietary) Limited (“Ntsimbintle”) as well as costs integral to the establishment of US$90 million banking facilities provided by Standard Chartered Bank Singapore. Depreciation and amortisation charges increased by A$1.6 million due to the commissioning of the secondary processing plant (“SPP”) at Bootu Creek and the sinter ore plant at Qinzhou. 2
Exploration costs increased from A$0.8 million for the first half of 2009 to A$2.1 million in the first half 2010. The increase was attributed to the increased exploration activities at Helen Springs and Renner Springs and the delineation drilling program at the Yaka deposit. Northern Territory Government royalties expensed in the first half of 2010 were A$1.4 million which represented a decrease of A$5.1 million when compared to the first half of 2009; which included a one-time adjustment of A$3.8 million associated with the re-assessment of OMM’s 2007 and 2008 royalty obligations. The OMH Group operating result equated to a basic earnings per share of 3.28 Australian cents in 2010 compared to 2.25 Australian cents in 2009. The net tangible asset backing per share was A$0.56 per share at 30 June 2010 compared to A$0.51 per share at 30 June 2009. FINANCIAL POSITION Total cash and bank balances (including cash collateral) stood at A$56 million as at 30 June 2010, after settling significant strategic investments in Ntsimbintle, Northern Iron Limited, and Scandinavian Resources Limited. Trade and other receivables decreased from A$22.3 million as at 31 December 2009 to A$19.7 million as at 30 June 2010. The decrease was largely attributed to the lower sales activity during the period. Financial assets available for sale totalled A$137 million and comprised the following:
26% interest in Ntsimbintle which holds a 50.1% interest in the Tshipi Project and was carried at a cost of A$65.5 million
ASX listed entities 6.8% interest in Territory Resources Limited (ASX Code: TTY) 12.4% interest in Shaw River Resources Limited (ASX Code: SRR) 15.6% interest in Northern Iron Limited (ASX Code: NFE) 19.6% interest in Scandinavian Resources Limited (ASX Code: SCR) The above listed investment holdings were valued at A$71.5 million, based on the closing market prices as at 30 June 2010. The above strategic investments lay the foundations for the Group’s (1) manganese growth, (2) exploration pipeline and (3) commodity diversification strategies. Inventories on hand totalled A$116.8 million as at 30 June 2010 influenced by slower market activity during June 2010, positioning the Group for recovering market demand during Q3 and Q4 of 2010. Trade and other payables totalled A$81.8 million and the increase was attributable to third party ore purchasing activities and increased contract mining activity during the period. External debt totalled A$75 million. The borrowings were used for the funding of strategic activities including the 26% investment in Ntsimbintle and the establishment of a credit line for the funding of the US$10 million loan extended to NFE during the month of July 2010. Non-controlling interests totalled A$2.5 million during the period attributed to OMS’ 50% interest in OM Hujin Science & Trading (Shanghai) Co., Ltd, a joint-venture established with the strategic objectives of marketing and trading the Group’s products in Northern China, the provision of smelting and sintering specific engineering and manganese technical marketing services as well as the identification and execution of furnace leasing, toll smelting and investment opportunities in China.
3
Capital and Dividend As at 30 June 2010, the Company had 498,485,150 ordinary shares and 43,020,000 unlisted options on issue at various exercise prices and expiry dates. The Board has declared an interim dividend of 0.75 Australian cents per share which is payable on 22 October 2010, with a Record Date for entitlements of 30 September 2010. Results Contributions The operating subsidiaries’ contributions to the OMH Group’s result for the first half of 2010 were as follows: A$ million
Six months to 30 June 2010 4.6 4.5 4.8 2.2 16.1
OM (Manganese) Ltd (“OMM”) OM Materials (S) Pte Ltd (‘OMS”) OM Materials (Qinzhou) Co Ltd (“OMQ”) OM Holdings Limited Net profit after tax and non-controlling interests
Six months to 30 June 2009 6.9 0.5 0.8 2.6 10.8
OM MANGANESE LTD (“OMM”) – 100% OWNED Bootu Creek Manganese Mine – Northern Territory, Australia The Bootu Creek Manganese Mine achieved 370,468 tonnes of production grading 37.4% Mn during the first half of 2010. The half yearly result was achieved with March 2010 quarterly production of 174,712 tonnes grading 37.6% Mn and June 2010 quarterly production of 195,756 tonnes grading 37.2% Mn. Production at the Bootu Creek Manganese Mine for the June 2010 half is summarised below: Unit
Six months to 30 June 2010
Six months to 30 June 2009
bcms dt %
5,419,245 939,779 21.81
5,442,968 981,348 23.16
Total Production – Mn grade
dt % dt % dt % dt %
219,701 37.26 65,567 39.65 85,200 36.05 370,468 37.40
208,445 37.74 50,081 42.27 258,526 38.61
Sales Lumps – tonnes Lumps – Mn grade Fines – tonnes Fines – Mn grade SPP Fines – tonnes SPP Fines – Mn grade Total Sales – tonnes (dry) Total Sales – Mn grade
dt % dt % dt % dt %
209,342 38.05 35,277 41.28 105,540 36.98 350,159 38.05
292,735 39.76 70,915 42.31 363,650 40.26
Mining Total Material Mined Ore Mined – tonnes Ore Mined – Mn grade Production Lumps – tonnes Lumps – Mn grade Fines – tonnes Fines – Mn grade SPP Fines – tonnes SPP Fines – Mn grade Total Production – tonnes
4
Mining Mining activities during the first half of 2010 focused on the Chugga South pit and advancing the Chugga North pit on the Eastern Limb of the Bootu Creek syncline and mining in the Tourag 1, 2 and Tourag #3 starter pits on the Western Limb of the Bootu Creek syncline. Approximately 5.4 million bank cubic metres (“bcm”) of material was mined during the June 2010 half. High grade ore stocks were low at the end of the June 2010 half as a result of high rain fall during the first quarter of 2010. This hampered access to higher grade ore zones requiring blending of lower grade ores resulting in reduced plant yields. In-pit broken ore stocks remained high in both the Chugga South and Tourag 2 pits at half year’s end. A third mining fleet was mobilised during March 2010 expanding mining capacity to facilitate an increase in the quantity and quality of ore feed stock. Processing Production rates for the first half of 2010 were impacted by the following factors:
Processing of lower yielding ores; and Lower feed rates into the secondary processing plant
Production for the June 2010 half year was adversely effected principally due to adverse weather conditions and the feeding of lower yielding ores. Whilst production for the June 2010 half was below budget expectations, it represented a significant improvement of 43% over the corresponding period last year. Logistics During the June 2010 half a total of 350,159 dry tonnes (368,188 wet tonnes) of manganese product was exported in 12 shipments through the Port of Darwin. Cash Operating Costs (C1) C1 unit cash operating costs for the June 2010 half were A$4.65/dmtu as a result of short term mine schedule disruptions and the impact of un-seasonally high rainfall, requiring the processing of lower yielding ores during the period. C1 unit cash costs continue to include the fully expensed direct cash operating costs associated with mining activities (including pre-strip and advanced mining development costs). Hedging and Financing As at 30 June 2010, OMM had no outstanding forward exchange contracts or external borrowings. Exploration The Bootu Creek Mineral Resource and Ore Reserve update as at 31 December 2009 was completed during the half and details were published on 25 February 2010. Changes related to depletion through mining and revised bulk density and product yield regressions, which in turn were largely balanced by the change in cut-off grade (from 18% Mn to 15% Mn to reflect production and ore processing trends) and through incremental drill extensions to some of the existing deposits.
Mineral Resource Ore Reserve (i)
31 December 2009 M % tonnes Mn 32.9 23.1 20.5 21.4
31 December 2008 M % tonnes Mn 30.5 24.1 22.4 22.1
Change M tonnes + 2.4 ‐ 1.9
Further information on the Mineral Resources and Ore Reserves was announced on 25 February 2010 5
In June 2010, The Bootu Creek 2010 delineation and exploration drill program commenced following delays due to an extended wet season. RC (Reverse Circulation) drilling commenced a delineation program to extend the existing Mineral Resource at Yaka deposit to the southeast with 110 drill holes (for 7,650 metres) were completed by the end of June 2010. Initial assay results are encouraging and confirm the south east extension of the Yaka deposit. Competent Person’s Statement The details contained in this report pertain to information compiled by Mr Craig Reddell, a full time employee of OM (Manganese) Ltd and who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Reddell has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 Edition of the “Australian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Reddell consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.
OM MATERIALS (QINZHOU) Co Ltd (“OMQ”) – Guangxi, China Production Production at the Qinzhou smelter for the first half of 2010 was as follows: Six months to 30 June 2010
Six months to 30 June 2009
Variance %
High Carbon Ferro Manganese (“HC FeMn”)
14,154
16,452
-14
Mn Sinter Ore
40,001
0
0
14,305
9,460
+51
Tonnes Production
Sales
High Carbon Ferro Manganese (“HC FeMn”)
During the first half of 2010, OMQ produced 14,154 tonnes of High Carbon Ferro Manganese (“HC FeMn”), which was 14% lower as compared to first half of 2009. The decline in production was due to furnace remodifications works. In the first half of 2010 OMQ achieved sales of 14,305 tonnes of HC FeMn which was 51% higher as compared to the first half of 2009. Despite the weakening market environment towards the end of second quarter of 2010 OMQ posted a net profit of A$4.8 million for the six month ended 30 June 2010. OMQ is on track to achieve an annual production target of 43,000 tonnes of HC FeMn for the year ending 31 December 2010. Since the commissioning of the sinter ore plant during the March 2010 quarter it has produced 40,001 tonnes of high grade sinter ore. OM MATERIALS (S) Pte Ltd (“OMS”) - Singapore Marketing and trading operations and market outlook The trading operations achieved a positive first half operating profit after tax and noncontrolling interests of A$4.5 million. Non-controlling interests totalled A$2.4 million attributed to OMS’ 50% interest in OM Hujin Science & Trading (Shanghai) Co. Ltd (“OMA”), an incorporated joint-venture established with the strategic and tactical objectives of marketing and trading the Group’s products in Northern China, the provision of professional smelting and sintering specific engineering, design and manganese technical marketing services to the Group and its external customers as well as the identification and execution of furnace leasing, toll smelting and/or other investment opportunities in China. During March 2010, OMA acquired a 75% interest in Guizhou Ferroalloys Co. Ltd with the objective of increasing its alloy smelting capacity and broadening its geographical coverage in the Chinese market. During the period, OMS traded 466,491 tonnes of ore and alloy products (including intercompany sales). 6
Chin nese crude steel s producttion reached d 51.74 millio on tonnes in July 2010, rrepresenting g 375 millio on tonnes off crude steel production ffor the first seven months s of the yearr, up 18.2 percent com mpared with the t same period in 2009 . The slow-d down in crude steel prod uction during g the first half of 2010 0 when comp pared to a ve ery strong H2 2 2009 is con nsidered pruudent and he ealthy and in line with the underlying demand conditions. Chinese ste eel products exports fell 19% durin ng July 2010 0, to 4.55 million tonnes, following the removal of export tax rebates on some s stee el products du uring July 20 010. While demand volatility v will continue c to b be a feature of the Chine ese steelmakking raw material mand landsca ape, OMS co ontinues to s upport the view that Chin na’s monthlyy steel production dem shou uld continue e to exceed 50 million tonnes per month or 600 6 million ttonnes for 2010, 2 unde erpinning a historically robust r dema and and priciing environm ment for impoorted high grade g man nganese ore products. In re esponse to the t weakenin ng demand environmentt industry co ommentatorss reported a 17% decrrease in BHPB’s B 44% % Mn lump p price from m US$8.70//dmtu for A August 2010 to US$ $7.20/dmtu fo or Septembe er 2010 ship pments. Follo owing this announcemennt more vigo orous transsaction activvity has retu urned to the e market an nd domestic c transactionns at ports have markedly increa ased. Movin ng forward the underly ying demand for imporrted high grade g man nganese ore es together with the co ompletion off the de-sto ocking cyclee by smelters is expe ected to conttinue to supp port a robustt demand as well as price e environme nt in the Chinese market. COR RPORATE Furtther to the Company’s C ASX A Announccement on 19 April 2010 0, the initial ffirst phase of o the due diligence investigation (“DDI”) by the Compa any on Con nsolidated M Mineral Limited’s (“Co onsMin”) Wo oodie Wood die mangane ese operatio on (“Woodie e Woodie”) has now been com mpleted. The parties havve recently met to revview the tec chnical and commerciall findings off the preliiminary DDI process on n Woodie W Woodie, and to continue discussionss with respe ect to iden ntifying the fu ull extent of potential p stra ategic and operational co o-operation oopportunities s and to de etermine wh hether a suita able structure re exists under which the ese opportunnities are cap pable of be eing realised d to mutual benefit. Whilst this proccess remains s ongoing th here remains s no obligattion by the C Company an nd/or Con nsMin to reacch and conc clude a forma al binding ag greement an nd there is nno undertakin ng to agre ee a valuation for Woodie e Woodie or provide a co ommitment with w respect tto structuring g any form m of transaction and/or co onsideration. The Company will w continue to inform th he market an nd provide appropriate a ddisclosure sh hould such h an agreement be forma ally conclude ed. Yours faithfully OM HOLDINGS LIMITED
Hen ng Siow Kwee e/Julie Wolse eley Com mpany Secre etary
7
BACKGROUND PROFILE OF OM HOLDINGS LIMITED OMH which was listed on the ASX in March 1998 has its foundations in metals trading – incorporating the sourcing and distribution of manganese ore products and subsequently in processing ores into ferro-manganese intermediate products. The OMH Group now operates commercial mining operations – leading to a fully integrated operation covering Australia, China and Singapore. Through its wholly owned subsidiary, OM (Manganese) Ltd (“OMM”), OMH controls 100% of the Bootu Creek Manganese Mine (“Bootu Creek”) located 110 km north of Tennant Creek in the Northern Territory. Bootu Creek has the capacity to produce over 1,000,000 tonnes of manganese product annually. Bootu Creek has further exploration potential given that its tenement holdings extend over 3,300 km2. Bootu Creek’s manganese product is exclusively marketed by the OMH Group’s own trading division with a proportion of the product consumed by the OMH Group’s wholly-owned Qinzhou smelter located in south west China. Through its Singapore based commodity trading activities, OMH has established itself as a significant manganese supplier to the Chinese market. Product from Bootu Creek has strengthened OMH’s position in this market. OMH is a constituent of the S&P/ASX 200 a leading securities index. OMH owns a 26% interest in Ntsimbintle Mining (Proprietary) Limited which holds a 50.1% interest in the Tshipi Manganese Project, a world class manganese project in the Kalahari basin in South Africa. OMH also holds the following strategic shareholding interests in ASX listed entities:
16% shareholding in Northern Iron Limited (ASX Code: NFE), a company presently producing iron ore from its Sydvaranger iron ore mine located in northern Norway;
12% shareholding in Shaw River Resources Limited (ASX Code: SRR), a company presently exploring for manganese in Western Australia and Ghana;
20% shareholding in Scandinavian Resources Limited (ASX Code: SCR), a company presently exploring for iron ore, manganese, gold and copper in Sweden and Norway; and
7% shareholding in Territory Resources Limited (ASX Code: TTY), a company operating the Frances Creek iron ore mine in the Northern Territory.
8
Rules 4.2.A.3
Appendix 4D Half yearly report Name of entity
OM HOLDINGS LIMITED ABN or equivalent company reference ARBN 081 028 337
Half yearly (tick)
Preliminary final (tick)
Half year ended (‘current period’)
30 June 2010
Results for announcement to the market Extracts from this report for announcement to the market.
$A'000
Revenues from ordinary activities (item 1.1)
Up
3%
to
132,086
Profit (Loss) from ordinary activities after tax (item 1.8)
Up
73%
to
18,575
Profit (loss) from extraordinary items after tax attributable to members (item 2.5)
Nil
Nil
Net profit (Loss) for the period attributable to members (item 1.12)
Up
50%
to
16,141
Final dividend (Preliminary final report only - item 16.4) Interim dividend (Half yearly report only - item 16.6)
N/A A0.75¢
Franked amount per security N/A N/A
Previous corresponding period (Preliminary final report item 16.5; half yearly report - item 16.7)
A2¢ N/A
N/A N/A
Dividends (distributions)
Record date for determining entitlements to the dividend, (in the case of a trust, distribution) (see item 16.2)
Amount per security
30 September 2010
Brief explanation of any of the figures reported above and short details of any bonus or cash issue or other item(s) of importance not previously released to the market:
The consolidated financial statements of OM Holdings Limited are stated in Australian Dollars. This half yearly report is to be read in conjunction with the most recent annual financial report.
Page 1
Condensed consolidated statement of financial performance Current period $A'000
Previous corresponding period - $A'000
1.1
Revenues from ordinary activities (see items 1.24 -1.25)
132,086
127,851
1.2
(108,038)
(116,856)
(631) -
(448) -
1.5
Expenses from ordinary activities (see items 1.27 & 1.28) Borrowing costs Share of net profits (losses) of associates and joint venture entities (see item 18.1) Gain on dilution of interest on an associate
-
-
1.6
Profit (loss) from ordinary activities before tax
23,417
10,547
1.7
Income tax on ordinary activities
(4,842)
219
1.8
Profit (loss) from ordinary activities after tax
18,575
10,766
1.9
Profit (loss) from extraordinary items after tax (see item 2.5)
-
-
1.10
Net profit (loss)
18,575
10,766
1.11
Net profit (loss) attributable to outside equity interests
(2,434)
(1)
Net (loss) profit for the period attributable to members Non-owner transaction changes in equity
16,141
10,765
1.13 1.14 1.15
(4,820) 3,024
13,157 (14,205)
-
-
(1,796)
(1,048)
14,345
9,717
1.3 1.4
1.12
1.16 1.17 1.18
Increase (decrease) in revaluation reserves Net exchange differences recognised in equity Other revenue, expense and initial adjustments recognised directly in equity (attach details) Initial adjustments from UIG transitional provisions Total transactions and adjustments recognised directly in equity (items 1.13 to 1.16) Total changes in equity not resulting from transactions with owners as owners
Current period
Previous corresponding Period
(Loss)/earnings per security (EPS) 1.19
Basic EPS
3.28¢
2.25¢
1.20
Diluted EPS
3.10¢
2.15¢
Page 2
Notes to the condensed consolidated statement of financial performance Profit (loss) from ordinary activities attributable to members Current $A'000
period
-
Previous corresponding period $A'000
1.21
Profit (loss) from ordinary activities after tax (item 1.8)
18,575
10,766
1.22 1.23
Less (plus) outside equity interests (item 1.11) (Loss) profit from ordinary activities after tax, attributable to members
(2,434)
(1)
16,141
10,765
Revenue and expenses from ordinary activities Current $A'000 1.24
Revenue from sales or services
1.25 1.26 1.27 1.28
Interest revenue Other relevant revenue Details of relevant expenses Depreciation and amortisation excluding amortisation of intangibles (see item 2.3)
Capitalised outlays 1.29 Interest costs capitalised in asset values 1.30 Outlays capitalised in intangibles (unless arising from an acquisition of a business) (see item 5.2)
period
Please refer to Interim Financial Report
-
Previous corresponding period $A'000 Please refer to Interim Financial Report
-
-
-
-
Current period $A'000
Previous corresponding period - $A'000
137,470
125,078
Consolidated retained profits
1.31
(Accumulated losses)/retained profits at the beginning of the financial period
1.32
Net (loss) profit attributable to members (item 1.12)
16,141
10,765
1.33
Net transfers from (to) reserves - transfer to non-distributable reserves
-
-
1.34
Net effect of changes in accounting policies
-
-
1.35
Dividends and other equity distributions paid or payable
(9,950)
(14,541)
1.36
Retained profits (accumulated losses) at end of financial period
143,661
121,302
Page 3
Intangible and extraordinary items
Before tax $A'000
(a)
Consolidated - current period Related tax Related $A'000 outside equity interests $A'000 (b) (c)
Amount (after tax) attributable to members $A'000 (d)
2.1
Amortisation of goodwill
Nil
Nil
Nil
Nil
2.2
Amortisation of other intangibles
Nil
Nil
Nil
Nil
2.3
Total amortisation of intangibles
Nil
Nil
Nil
Nil
2.4
Extraordinary items (details)
Nil
Nil
Nil
Nil
2.5
Total extraordinary items
Nil
Nil
Nil
Nil
Current year - $A'000
Previous year - $A'000
Consolidated profit (loss) from ordinary activities after tax attributable to members reported for the 1st half year (item 1.22 in the half yearly report)
N/A
N/A
Consolidated profit (loss) from ordinary activities after tax attributable to members for the 2nd half year
N/A
N/A
Comparison of half year profits (Preliminary final report only) 3.1
3.2
Page 4
Condensed consolidated statement of financial position
4.2 4.3 4.4 4.5 4.6
Current assets Cash (includes cash collateral of (a) A$ 9,442,000 (b) A$9,392,000 (c) A$9,880,000) Receivables Investments Inventories Derivative financial instrument Other (provide details if material)
4.7
Total current assets
4.1
At end of current period $A’000
As shown in last annual report $A'000
As in last half yearly report $A'000
89,100 (b)
78,881 (c)
22,562 116,824 385 195,332
24,326 84,423 -
26,393 91,610 -
197,849
196,884
137,005 -
10,457 -
8,790 -
20,164
20,746
21,726
-
-
-
93,944
90,469
70,740
2,065 2,098
2,065 1,695
2,065 1,946
255,276 450,608
125,432 323,281
105,267 302,151
55,561
(a)
4.19 4.20
Non-current assets Receivables Financial assets available for sale Other investments Inventories Exploration and evaluation expenditure capitalised (see para .71 of AASB 1022) Mine development properties costs capitalised Development properties (+mining entities) Other property, plant and equipment (net) Intangibles (net) Tax assets Other (Prepaid lease payment on land use rights and long term prepayment) Total non-current assets Total assets
4.21 4.22 4.23 4.24 4.25 4.26 4.27
Current liabilities Payables Interest bearing liabilities Tax liabilities Obligations under finance leases Other Bank overdraft Total current liabilities
81,752 31,742 2,295 115,789
46,856 912 1,736 49,504
43,282 2,060 45,342
4.28 4.29 4.30 4.31 4.32
Non-current liabilities Payables Interest bearing liabilities Tax liabilities Obligations under finance leases Provisions
43,249 5,713 4,132
411 4,212 3,459
454 3,869 3,267
4.33
Total non-current liabilities
53,094
8,082
7,590
4.34
Total liabilities
4.35
Net assets
168,883 281,725
57,586 265,695
52,932 249,219
4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18
Page 5
Condensed consolidated statement of financial position continued
4.41
Equity Capital/contributed equity Reserves Retained profits (accumulated losses) Equity attributable to members of the parent entity Outside +equity interests in controlled entities Total equity
4.42
Preference capital included as part of 4.37
4.36 4.37 4.38 4.39 4.40
24,924 110,102 143,661
24,547 103,180 137,470
24,340 101,864 122,556
278,687
265,197
248,760
3,038 281,725
498 265,695
459 249,219
N/A
N/A
N/A
Notes to the condensed consolidated statement of financial position Exploration and evaluation expenditure capitalised (To be completed only by entities with mining interests if amounts are material. Include all expenditure incurred.)
5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9
Opening balance Expenditure incurred during current period Impairment/expensing for the period Acquisitions, disposals, revaluation increments, etc. Expenditure transferred to Mine Development Costs Expenditure transferred to Development Properties Reimbursement from Co-venturers Exchange realignment Closing balance as shown in the consolidated balance sheet (item 4.12)
Current period $A'000
Previous corresponding period $A'000
2,072 (2,072) -
816 (816) -
-
-
-
-
-
-
Current period $A'000
Previous corresponding period $A'000
26,183 334 -
24,201 2,154 -
-
-
-
-
(6,353) 20,164
(4,629) 21,726
Mine development costs capitalised
6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8
Opening balance Expenditure incurred during current period Impairment written back during current period* Acquisitions, disposals, revaluation increments, etc. Expenditure transferred from Exploration and evaluation expenditure capitalised Amortisation Exchange realignment Closing balance as shown in the consolidated balance sheet (item 4.13)
Page 6
Development properties (To be completed only by entities with mining interests if amounts are material) Current period $A'000
7.1 7.2 7.3 7.4 7.5 7.6 7.7
Opening balance Expenditure incurred during current period Expenditure transferred from exploration and evaluation Expenditure written off during current period Acquisitions, disposals, revaluation increments, etc. Expenditure transferred to mine properties Closing balance as shown in the consolidated balance sheet (item 4.14)
N/A -
Previous corresponding period - $A'000 N/A -
-
-
N/A
N/A
Condensed consolidated statement of cash flows
8.6 8.7 8.8
Cash flows related to operating activities Receipts from customers Payments to suppliers and employees Dividends received from associates Other dividends received Interest and other items of similar nature received Interest and other costs of finance paid Income taxes paid Other (provide details if material)
8.9
Net operating cash flows
8.1 8.2 8.3 8.4 8.5
8.12 8.13 8.14 8.15 8.16
Cash flows related to investing activities Payment for purchases of property, plant and equipment Proceeds from sale of property, plant and equipment Payment for purchases of equity investments Proceeds from sale of equity investments Loans to other entities Loans repaid by other entities Other (provide details if material)
8.17
Net investing cash flows
8.10 8.11
Current period $A'000
Previous corresponding period - $A'000
Please refer to Interim Financial Report
Please refer to Interim Financial Report
Page 7
Condensed consolidated statement of cash flows (cont’d)
8.18 8.19 8.20 8.21 8.22
Cash flows related to financing activities Proceeds from issues of securities (shares, options, etc.) Proceeds from borrowings Repayment of borrowings Dividends paid Other (provide details if material) Net financing cash flows
8.23 8.24 8.25 8.26 8.27
Net increase (decrease) in cash held Cash at beginning of period (see Reconciliation of cash) Exchange rate adjustments to item 7.25. Cash at end of period (see Reconciliation of cash)
Non-cash financing and investing activities Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows. ( If an amount is quantified, show comparative amount.) N/A
Reconciliation of cash Reconciliation of cash at the end of the period (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
Current period $A'000
Previous corresponding period - $A'000
9.1
Cash on hand and at bank
24,633
32,579
9.2
Deposits at call
21,486
36,422
9.3
Bank overdraft
-
-
9.4
Other (provide details)
-
-
9.5
Total cash at end of period (item 8.27)
46,119
69,001
Page 8
Other notes to the condensed financial statements Ratios
10.1
10.2
Profit before tax / revenue Consolidated profit (loss) from ordinary activities before tax (item 1.6) as a percentage of revenue (item 1.1) Profit after tax / equity interests Consolidated net profit (loss) from ordinary activities after tax attributable to members (item 1.12) as a percentage of equity (similarly attributable) at the end of the period (item 4.39)
Current period
Previous corresponding Period
17.73%
8.25%
5.79%
4.33%
Earnings per security (EPS) 11.
Details of basic and diluted EPS reported separately in accordance with paragraph 9 and 18 of AASB 1027: Earnings Per Share are as follows. (a) Basic EPS: 3.28¢ (b) Diluted EPS: 3.10¢ (c) Number of ordinary shares outstanding during the period used in the calculation of the Basic EPS: 491,658,939 and Diluted EPS: 520,049,889
NTA backing
Current period
Previous corresponding Period
12.1
A 56.10 cents
A 50.77 cents
Net tangible asset backing per ordinary security
Discontinuing Operations (Entities must report a description of any significant activities or events relating to discontinuing operations in accordance with paragraph 7.5 (g) of AASB 1029: Interim Financial Reporting, or, the details of discontinuing operations they have disclosed in their accounts in accordance with AASB 1042: Discontinuing Operations.) 13.1
Discontinuing Operations
N/A
Page 9
Control gained over entities having material effect 14.1 Name of entity (or group of entities)
N/A
14.2 Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) since the date in the current period on which control was acquired
$ Nil
14.3 Date from which such profit has been calculated
N/A
14.4 Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the whole of the previous corresponding period
$ Nil
Loss of control of entities having material effect 15.1
Name of entity (or group of entities)
N/A
15.2
Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) for the current period to the date of loss of control
15.3
Date to which the profit (loss) in item 14.2 has been calculated
15.4
Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) while controlled during the whole of the previous corresponding period
15.5
Contribution to consolidated profit (loss) from ordinary activities and extraordinary items from sale of interest leading to loss of control
$ N/A N/A
$ N/A
$ N/A
Dividends (in the case of a trust, distributions) 16.1
Date the dividend (distribution) is payable
16.2
Record date to determine entitlements to the dividend (distribution) (ie, on the basis of proper instruments of transfer received by 5.00 pm if +securities are not +CHESS approved, or security holding balances established by 5.00 pm or such later time permitted by SCH Business Rules if securities are CHESS approved)
16.3
If it is a final dividend, has it been declared? (Preliminary final report only)
22 October 2010
30 September 2010
N/A
Page 10
Amount per security Amount per security
16.4 16.5 16.6
Franked amount per security at % tax
Amount per security of foreign source dividend
N/A ¢
N/A ¢
N/A ¢
A2.0 ¢
N/A ¢
N/A ¢
A0.75¢
N/A ¢
N/A¢
N/A¢
N/A ¢
N/A¢
(Preliminary final report only) Final dividend: Current year Previous year (Half yearly and preliminary final reports) Interim dividend: Current year
16.7
Previous year
Total dividend (distribution) per security (interim plus final) (Preliminary final report only) Current year
Previous year
16.8
Ordinary securities
N/A ¢
N/A ¢
16.9
Preference securities
N/A ¢
N/A ¢
Half yearly report - interim dividend (distribution) on all securities or Preliminary final report - final dividend (distribution) on all securities Current period $A'000
Previous corresponding period - $A'000
16.10
Ordinary securities (each class separately)
9,950
14,541
16.11
Preference securities (each class separately)
N/A
N/A
16.12
Other equity instruments (each class separately)
N/A
N/A
16.13
Total
9,950
14,541
The dividend or distribution plans shown below are in operation. N/A
The last date(s) for receipt of election notices for the dividend or distribution plans
N/A
Any other disclosures in relation to dividends (distributions). (For half yearly reports, provide details in accordance with paragraph 7.5(d) of AASB 1029 Interim Financial Reporting) N/A
Page 11
Details of aggregate share of profits (losses) of associates and joint venture entities Current period Previous corresponding period Group’s share of associates’ and joint venture $A'000 - $A'000 entities’: 17.1 Profit (loss) from ordinary activities before tax 17.2
Income tax on ordinary activities
17.3
Profit (loss) from ordinary activities after tax
17.4
Extraordinary items net of tax
17.5
Net profit (loss)
17.6
Adjustments
17.7
Share of net profit (loss) of associates and joint venture entities
-
-
-
-
-
-
-
-
-
-
-
-
Material interests in entities which are not controlled entities The economic entity has an interest (that is material to it) in the following entities. (If the interest was acquired or disposed of during either the current or previous corresponding period, indicate date of acquisition (“from dd/mm/yy”) or disposal (“to dd/mm/yy”).) Name of entity
18.1 Equity accounted associates and joint venture entities Territory Resources Limited Shaw River Resources Limited Northern Iron Limited Scandinavian Resources Limited
Percentage of ownership interest held at end of period or date of disposal Current Previous period corresponding period
Contribution to net profit (loss) (item 1.4) Current period $A’000
Previous corresponding period $A’000
6.8% (1)
10%
-
-
12.5% (2)
8%
-
-
15.6%(3)
-
-
-
19.6%(4)
-
-
-
Ntsimbintle Mining 25.9%(5) (Proprietary) Limited N/A N/A 18.2 Total N/A N/A 18.3 Other material interests N/A N/A N/A N/A N/A N/A 18.4 Total N/A N/A (1) As at 30 June 2010 the Company held 18,000,000 ordinary shares in Territory Resources Limited (ASX Code: TTY). (2) As at 30 June 2010 the Company held 24,628,949 ordinary shares in Shaw River Resources Limited (ASX Code: SRR). (3) As at 30 June 2010 the Company held 45,550,000 ordinary shares in Northern Iron Limited (ASX Code: NFE). (4) As at 30 June 2010 the Company held 12,227,218 ordinary shares in Scandinavian Resources Limited (ASX Code: SCR) (5) As at 30 June 2010 the Company held 35 ordinary shares in Ntsimbintle Mining (Proprietary) Limited.
Page 12
Issued and quoted securities at end of current period (Description must include rate of interest and any redemption or conversion rights together with prices and dates) Category of securities
Total number
Number quoted
Issue price per security
Amount paid up per security
19.1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
498,485,150 shares of A$0.05¢ each on issue as at 30 June 2010
498,485,150
N/A
N/A
800,000 750,000 3,000,000 3,000,000
800,000 750,000 3,000,000 3,000,000
A$0.30 A$0.365 A$1.405 A$1.52
Fully paid Fully paid Fully paid Fully paid
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
19.2
19.3
19.4
19.5
19.6
Preference securities (description) Changes during current period (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions Ordinary securities
Changes during current period (a) Increases through issues
(b) Decreases through returns of capital, buybacks Convertible debt securities (description and conversion factor) Changes during current period (a) Increases through issues (b) Decreases through securities matured, converted
Page 13
19.7
Options (description and conversion factor)
Exercise price
Expiry date (if any)
A$0.30 A$0.72 A$2.49 A$2.49 A$1.405 A$1.52 A$1.64 A$1.755 A$1.87 A$2.49 A$2.49 A$2.49 A$2.49 A$2.49 A$2.49 A$2.58
31 May 11 31 Mar 11 01 Jan 12 01 Jan 13 30 Sept 10 03 Sept 11 03 Sept 12 03 Sept 13 03 Sept 14 31 Oct 10 01 Jan 11 01 Jan 12 01 Jan 13 01 Jan 14 01 Jan 15 31 Aug 11 N/A
Unlisted Options 620,000 1,000,000 3,200,000 3,200,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 1,000,000 43,020,000 N/A
N/A
N/A
N/A
19.8
Issued during current period
19.9
Exercised during current period
800,000 750,000 3,000,000 3,000,000
800,000 750,000 3,000,000 3,000,000
A$0.30 A$0.365 A$1.405 A$1.52
19.10
Expired/lapsed during current period
2,000,000 2,000,000 2,000,000 500,000 500,000
N/A
A$1.64 A$1.755 A$1.87 A$2.49 A$2.49
19.11
Debentures (description)
N/A
N/A
19.12
Changes during current period (a) Increases through issues
N/A
N/A
(b) Decreases through securities matured, converted
N/A
N/A
19.13
Unsecured notes (description)
N/A
N/A
19.14
Changes during current period
N/A
N/A
N/A
N/A
01 Aug 12 01 Aug 13 01 Aug 14 01 Jan 12 01 Jan 13
(a) Increases through issues (b) Decreases through securities matured, converted
Segment reporting (Information on the business and geographical segments of the entity must be reported for the current period in accordance with AASB 1005: Segment Reporting and for half year reports, AASB 1029: Interim Financial Reporting. Because entities employ different structures a pro forma cannot be provided. Segment information in the layout employed in the entity’s accounts should be reported separately and attached to this report.)
Page 14
Please refer to Interim Financial Report Comments by directors (Comments on the following matters are required by ASX or, in relation to the half yearly report, by AASB 1029: Interim Financial Reporting. The comments do not take the place of the directors' report and statement (as required by the Corporations Act) and may be incorporated into the directors' report and statement. For both half yearly and preliminary final reports, if there are no comments in a section, state NIL. If there is insufficient space to comment, attach notes to this report.) Basis of financial report preparation 20.1 If this report is a half yearly report, it is a general purpose financial report prepared in accordance with the listing rules and AASB 1029: Interim Financial Reporting. It should be read in conjunction with the last +annual report and any announcements to the market made by the entity during the period. The financial statements in this report are “condensed financial statements” as defined in AASB 1029: Interim Financial Reporting. This report does not include all the notes of the type normally included in an annual financial report. [Delete if preliminary final report.] 20.2
Material factors affecting the revenues and expenses of the economic entity for the current period. In a half yearly report, provide explanatory comments about any seasonal or irregular factors affecting operations.
Please refer to Interim Financial Report
20.3
A description of each event since the end of the current period which has had a material effect and which is not already reported elsewhere in this Appendix or in attachments, with financial effect quantified (if possible).
N/A
20.4
Franking credits available and prospects for paying fully or partly franked dividends for at least the next year.
N/A
Page 15
20.5
Unless disclosed below, the accounting policies, estimation methods and measurement bases used in this report are the same as those used in the last annual report. Any changes in accounting policies, estimation methods and measurement bases since the last annual report are disclosed as follows. (Disclose changes and differences in the half yearly report in accordance with AASB 1029: Interim Financial Reporting. Disclose changes in accounting policies in the preliminary final report in accordance with AASB 1001: Accounting Policies-Disclosure).
Please refer to Interim Financial Report
20.6
Revisions in estimates of amounts reported in previous interim periods. For half yearly reports the nature and amount of revisions in estimates of amounts reported in previous +annual reports if those revisions have a material effect in this half year.
N/A
20.7
Changes in contingent liabilities or assets. For half yearly reports, changes in contingent liabilities and contingent assets since the last + annual report.
N/A
Additional disclosure for trusts 21.1
21.2
Number of units held by the management company or responsible entity or their related parties.
N/A
A statement of the fees and commissions payable to the management company or responsible entity.
N/A
Identify: initial service charges management fees other fees Annual meeting (Preliminary final report only) The annual meeting will be held as follows: N/A
Place
N/A
Date
N/A
Time Approximate date the available
+
annual report will be
N/A
Page 16
Compliance statement 1
This report has been prepared in accordance with AASB Standards, other AASB authoritative pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX. Identify other standards used
International Accounting Standards ("IAS") 34 "Interim Financial Reporting" (As permitted by the ASX)
2
This report, and the accounts upon which the report is based on, use the same accounting policies.
3
This report does give a true and fair view of the matters disclosed.
4
This report is based on accounts to which one of the following applies. (Tick one) The accounts have been subject The accounts have been to review. audited.
The accounts are in the process of being audited or subject to review.
The accounts have not yet been audited or reviewed.
5
If the audit report or review by the auditor is not attached, details of any qualifications are attached/will follow immediately they are available* (delete one). (Half yearly report only - the audit report or review by the auditor must be attached to this report if this report is to satisfy the requirements of the Corporations Act.)
6
The entity has/does not have* (delete one) a formally constituted audit committee.
Sign here:
Date: 24 August 2010 (Director/Company Secretary)
Print name:
Heng Siow Kwee & Julie Wolseley
Page 17
OM Holdings Limited ARBN 081 028 337 (Incorporated in Bermuda) and its subsidiaries Interim Financial Report For the six months ended 30 June 2010
This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2009 and any public announcements made by OM Holdings Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Australian Securities Exchange (“ASX”) Listing Rules.
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010
Contents
Page Directors' report
1
Statement by Directors
2
Review report to the members of OM Holdings Limited
3
Condensed consolidated statement of financial position
4
Condensed consolidated statement of comprehensive income
5
Condensed consolidated statement of changes in equity
6
Condensed consolidated statement of cash flows
7
Notes to the condensed interim consolidated financial statements
9
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010
Directors’ report
The Directors present their report and the condensed interim financial statements of OM Holdings Limited (the “Company”) and its controlled entities (together the “Group”) for the six months ended 30 June 2010. DIRECTORS The Directors of the Company during the period were as follows: Low Ngee Tong (Executive Chairman) Peter Ivan Toth (Chief Executive Officer) Julie Anne Wolseley (Non-Executive Director and Joint Company Secretary) Tan Peng Chin (Independent Non-Executive Director) Wong Fong Fui (Independent Non-Executive Director) Thomas Teo Liang Huat (Independent Non-Executive Director) Ong Beng Chong (Chief Financial Officer resigned on 30 June 2010) REVIEW OF OPERATIONS The Board of OM Holdings Limited (ASX Code: OMH) is pleased to advise of a consolidated net profit after tax and non-controlling interests of A$16.1 million for the six months ended 30 June 2010, compared with A$10.8 million for the previous corresponding period. Subsequent to 30 June 2010, the Board declared an interim dividend of A0.75¢ per share. Signed in accordance with a resolution of the Directors. On Behalf of the Directors
LOW NGEE TONG Executive Chairman
PETER IVAN TOTH Chief Executive Officer Singapore Dated: 24 August 2010
1
OM Holdings Limited and its subsidiaries
Statement by Directors
In the opinion of the Directors, the accompanying condensed consolidated statement of financial position, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows, together with the notes thereon, are drawn up so as to give a true and fair view of the state of affairs of the Group as at 30 June 2010 and of the results of the business, changes in equity and cash flows of the Group for the six month period ended on that date and as at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
On behalf of the Directors
.................................................................. LOW NGEE TONG Executive Chairman
.................................................................. PETER IVAN TOTH Chief Executive Officer Dated: 24 August 2010
2
3
Review report to the members of OM Holdings Limited
Introduction We have reviewed the accompanying condensed consolidated statement of financial position of OM Holdings Limited. (“the Company”) and its subsidiaries (“the Group”) as at 30 June 2010, and the related statements of comprehensive income, changes in equity and cash flows for the six months period then ended, and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of this interim financial information in accordance with the provisions of the International Financial Reporting Standards. Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of Review We conducted our review in accordance with the International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of financial information consists of making inquiries, 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 International Standards on Auditing 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. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information does not present fairly, in all material respects, the financial position of the Group as at 30 June 2010, and of the Group’s financial performance for the six months then ended and its cash flows for the six months then ended in accordance with the International Financial Reporting Standards.
Foo Kon Tan Grant Thornton LLP Public Accountants and Certified Public Accountants Henry Lim Partner in charge of the audit Date of appointment: Financial year commencing 1 January 2006 Singapore, 24 August 2010
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010
4
Condensed consolidated statement of financial position
Notes
Assets Non-Current Goodwill Property, plant and equipment Prepaid lease payments on land use rights Long term prepayments Exploration and evaluation costs Mine development costs Financial assets available-for-sale
2,065 93,944 1,487 611 20,164 137,005 255,276
2,065 90,469 1,092 603 20,746 10,457 125,432
116,824 19,682 2,880 385 9,442 46,119 195,332 450,608
84,423 22,265 2,061 9,392 79,708 197,849 323,281
10
24,924 (1,006) 254,769 278,687 3,038 281,725
24,547 (1,006) 241,656 265,197 498 265,695
11 12
43,249 4,132 5,713 53,094
411 3,459 4,212 8,082
11
31,742 81,752 2,295 115,789 450,608
912 46,856 1,736 49,504 323,281
5 6
7 8 9
Current Inventories Trade and other receivables Prepayments Derivative financial assets Cash collateral Cash and bank balances Total assets
EQUITY Capital and Reserves Share capital Treasury shares Reserves Non-controlling interests Liabilities Non-Current Borrowings Provisions Deferred tax liabilities Current Borrowings Trade and other payables Current tax payable Total equity and liabilities
The Group 6 months to Year to 30 June 2010 31 December 2009 A$’000 A$’000
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010
5
Condensed consolidated statement of comprehensive income
Notes Revenue Cost of sales Gross profit Other revenue Distribution costs Administrative expenses Other operating expenses Finance costs Profit before taxation Taxation Profit after taxation
13 14
Other comprehensive income after tax: Available-for-sale financial assets - current period (losses)/gains - reclassification to profit or loss Translation differences on consolidation Other comprehensive income for the period, net of tax Total comprehensive income for the period
Profit attributable to: Owners of the parent Non-controlling interests
Total comprehensive income attributable to: Owners of the parent Non-controlling interests
Earnings per share - Basic - Diluted
15
6 months to 30 June 2010 A$’000
6 months to 30 June 2009 A$’000
132,086 (79,589) 52,497 3,016 (11,696) (7,022) (12,747) (631) 23,417 (4,842) 18,575
127,851 (95,448) 32,403 29,283 (16,214) (5,027) (29,450) (448) 10,547 219 10,766
(5,406) 586 3,024 (1,796) 16,779
13,157 (14,205) (1,048) 9,718
16,141 2,434 18,575
10,765 1 10,766
14,345 2,434 16,779
9,717 1 9,718
Cents 3.28 3.10
Cents 2.25 2.15
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010
6
Condensed consolidated statement of changes in equity Share option reserve A$’000
Exchange fluctuation reserve A$’000
Retained profits A$’000
Total attributable to equity holders of the parent A$’000
Noncontrolling interests A$’000
Total equity A$’000
125,078 10,765 -
248,178 9,717 2,811 -
2,552 1 -
250,730 9,718 2,811 2,595
Nondistributable reserve A$’000
Capital reserve A$’000
2,275 -
637 -
-
-
-
2,595
-
-
-
2,595
-
-
-
-
-
-
-
-
-
(2,552)
(2,552)
(1,006)
2,275
637
14,168
518
633
(14,541) 121,302
(14,541) 248,760
458 459
458 (14,541) 249,219
87,575 8,911 6,330 -
(1,006) -
2,275 -
637 -
22,278 (6,330) -
243 (4,820) -
(8,822) 3,024 -
137,470 16,141 -
265,197 14,345 9,288 -
498 2,434 106
265,695 16,779 9,288 106
102,816
(1,006)
(715) 1,560
15,948
(4,577)
(5,798)
(9,950) 143,661
(715) 522 (9,950) 278,687
3,038
(715) 522 (9,950) 281,725
Share capital A$’000
Share premium A$’000
Balance at 1 January 2009 Total comprehensive income for the period Share options exercised Share premium arising from share options exercised Value for employee services received for grant of share options Elimination of non-controlling interest arising from disposal of subsidiary Capital injection from non-controlling interest due to incorporation of subsidiary Dividend paid (Note 16) Balance at 30 June 2009
23,879 461 -
76,850 2,350 6,693
-
-
-
-
24,340
85,893
Balance at 1 January 2010 Total comprehensive income for the period Share options exercised Share premium arising from share options exercised Acquisition of subsidiary Reversal of non-distributable reserve arising from de-registration of subsidiary Capital incentive granted for technology innovation Dividend paid (Note 16) Balance at 30 June 2010
24,547 377 24,924
Treasury shares A$’000
(1,006) -
522 1,159
18,266 (6,693)
Fair value reserve A$’000
(12,639) 13,157 -
14,838 (14,205) -
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010
7
Condensed consolidated statement of cash flows
Cash Flows from Operating Activities Profit before taxation Adjustments for: Amortisation of long term prepayments and prepaid lease payments on land use rights Amortisation of mine development Depreciation of property, plant and equipment Equity-settled share-based payments Loss on disposal of financial asset available for sale Loss on disposal of property, plant and equipment Negative goodwill arising from acquisition of subsidiary Gain on de-registration/disposal of subsidiary Exploration and evaluation costs written off Exchange differences on translation Inventories written back Fair value gains on derivative instruments Interest expense Interest Income Operating profit/(loss) before working capital changes (Increase)/Decrease in inventories Decrease in trade and bill receivables Increase in prepayments, deposits and other receivables Increase in trade and bill payables Decrease/(Increase) in other payables and accruals Increase in long term liabilities Cash generated from/(used in) operations Interest paid Overseas income tax paid Net cash generated from/(used in) operating activities Cash Flows from Investing Activities Payments for exploration and evaluation Payments for mine development costs Prepaid lease payments on land use rights Purchase of property, plant and equipment Proceeds from disposal of property, plant and equipment Purchase of financial assets available for sale Proceeds from disposal of financial assets available for sale Proceeds from de-registration/disposal of a subsidiary (Note A) Acquisition of a subsidiary company (Note B) Interest received Net cash used in investing activities Cash Flows from Financing Activities Dividends paid Repayment of bank and other loans Proceeds from bank loans Capital contribution by non-controlling interests (Increase)/Decrease in cash collateral Proceeds from the issue of shares following from the exercise of options Net cash generated from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Exchange differences on translation of cash and bank balances at beginning of period Cash and cash equivalents at end of period
6 months to 30 June 2010 A$’000
6 months to 30 June 2009 A$’000
23,417
10,547
29 916 5,505 445 13 (63) (775) 2,072 127 (385) 631 (687) 31,245 (32,401) 2,702 (972) 37,441 (2,724) 673 35,964 (631) (2,782) 32,551
32 812 3,627 2,595 39 (872) 816 (10,229) (26,356) 448 (1,922) (20,463) 16,232 7,701 (11,963) 362 2,294 3,066 (2,771) (448) (12,654) (15,873)
(2,072) (334) (358) (6,397) 104 (133,285) 1,472 (900) 687 (141,083)
(816) (2,154) (8,086) 18 (2,076) 579 443 1,922 (10,170)
(9,950) (4,341) 78,531 397 (50) 9,288 73,875
(14,541) (24) 458 12,437 2,811 1,141
(34,657) 79,708
(24,902) 96,961
1,068 46,119
(3,058) 69,001
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010
8
Condensed consolidated statement of cash flows (cont’d)
Note: A. De-registration/Disposal of a subsidiary The fair value of assets disposed of and liabilities discharged were as follows: Net assets disposed of
Goodwill Property, plant and machinery Land occupancy rights Trade and other receivables Inventories Cash and bank balances Trade and other payables Interest bearing loans and borrowings Non-controlling interest Gain on disposal Proceeds received Cash balance in subsidiary disposed of Reserves written off on disposal of a subsidiary Cash inflow on disposal
6 months to 30 June 2010 A$’000 1,724 (60) 775 2,439 (1,724) (715) -
6 months to 30 June 2009 A$’000 125 2,001 132 4,773 4,786 1,472 (5,809) (2,146) (2,552) 872 3,654 (1,472) (1,739) 443
B. Acquisition of a subsidiary (Refer Note 18) Net assets acquired
Property, plant and machinery Cash and bank balances Trade and other payables Negative goodwill arising on consolidation Non-controlling interest Purchase consideration Less: Cash and bank balances in subsidiary acquired Cash outflow on acquisition
6 months to 30 June 2010 A$’000
6 months to 30 June 2009 A$’000
1,465 3 (180) (63) (322) 903
-
3 900
-
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010
Notes to the Condensed Interim Consolidated Financial Statements
1
Nature of operations
The condensed interim financial report of OM Holdings Limited (“the Company”) and its subsidiaries (“the Group”) for the period ended 30 June 2010 were authorised for issue in accordance with a resolution of the Directors on the date of the Statement by Directors. The principal activities of the Company and the Group comprise the following: -
production of manganese product from the Bootu Creek Manganese Mine processing and sales of sinter ore and ferro alloy products trading of ore and ferro alloy products exploration and development activities aimed at further extending the mine life of the Bootu Creek Manganese Mine evaluation and assessment of strategic investment and project opportunities investment holding
2
General information and basis of preparation
The condensed interim consolidated financial statements are for the six months ended 30 June 2010. They have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with IFRS, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2009. The condensed interim consolidated financial statements are presented in currency (AUD), which is also the functional currency of the parent company. OM Holdings Limited is the Group’s ultimate parent company. The company is a limited liability company and domiciled in Bermuda. The address of OM Holdings Limited’s registered office is located at Clarendon House, 2 Church Street Hamilton, HM11 Bermuda. OM Holdings Limited’s shares are listed on the Australian Securities Exchange (“ASX”). The condensed interim consolidated financial statements have been approved for issue by the Board of Directors on 23 August 2010.
9
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 3
10
Significant accounting policies
The condensed interim consolidated financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2009, except for the adoption of the following standards as of 1 January 2010:
IFRS 3 Business Combinations (Revised 2008) IAS 27 Consolidated and Separate Financial Statements (Revised 2008) Improvements to IFRSs 2009
Significant effects on the current period or prior periods arising from the first-time adoption of these new requirements are described below. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed interim consolidated financial statements. 3.1
Adoption of IFRS 3 Business Combination (Revised 2008)
The revised standard (IFRS 3R) introduced major changes to the accounting requirements for business combinations. It retains the major features of the purchase method of accounting, now referred to as the acquisition method. The most significant changes in IFRS 3R that had an impact on the Group’s acquisitions in 2010 are as follows:
Acquisition-related costs of the combination are recorded as an expense in the income statement. Previously, these costs would have been accounted for as part of the cost of the acquisition.
The assets acquired and liabilities assumed are generally measured at their acquisition-date fair values unless IFRS 3R provides an exception and provides specific measurement rules.
Any contingent consideration is measured at fair value at the acquisition date. If the contingent consideration arrangement gives rise to a financial liability, any subsequent changes are generally recognised in the profit or loss. Previously, contingent consideration was recognised at the acquisition date only if its payment was probable.
IFRS 3R has been applied prospectively to business combinations for which the acquisition date is on or after 1 January 2010. For the six months ended 30 June 2010, the adoption of IFRS 3R has affected the accounting for the Group’s acquisition of Guizhou Jiahe Weiye Ferroalloys Co Limited (Refer Note 18). Business combinations for which the acquisition date is before 1 January 2010 have not been restated. 3.2
Adoption of IAS 27 Consolidated and Separate Financial Statements (Revised 2008)
The adoption of IFRS 3R required that the revised IAS 27 (IAS 27R) is adopted at the same time. IAS 27R introduced changes to the accounting requirements for transactions with non-controlling (formerly called ‘minority’) interests and the loss of control of a subsidiary. Similar to IFRS 3R, the adoption of IAS 27R is applied prospectively. The Group did not have transactions with non-controlling interests in the current period and did not dispose of any of its equity interests in its subsidiaries. Therefore, the adoption of IAS 27R did not have an impact in the current period financial statements.
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 3
Significant accounting policies (cont’d)
3.3
Adoption of Improvements to IFRSs 2009 (issued in April 2009)
4
Segment reporting
11
The Improvements to IFRSs 2009 (‘2009 Improvements’) made several minor amendments to IFRSs. The only amendment relevant to the Group relates to IAS 17 Leases. The amendment requires that leases of land are classified as finance or operating applying the general principles of IAS 17. Prior to this amendment, IAS 17 generally required a lease of land to be classified as an operating lease. The Group has reassessed the classification of the land elements of its unexpired leases at 1 January 2010 on the basis of information existing at the inception of those leases and has determined that none of its leases require reclassification.
In identifying its operating segments, management generally follows the Group’s products type, which represents the main products provided by the Group. The Group operates two main business segments: Ore and Ferroalloys. These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating results. During the six month period to 30 June 2010, there have been no changes from prior periods in the measurement methods used to determine operating segments and reported segment profit or loss. The revenues and profit generated by each of the Group’s operating segments and segment assets are summarised as follows:
6 Months to June 2009 Revenue External sales Inter-segment sales
Ores 2009 A$’000
Ferroalloys 2009 A$’000
Elimination 2009 A$’000
Consolidated 2009 A$’000
105,765 131,304 237,069
22,086 22,086
(131,304) (131,304)
127,851 127,851
Segment results
7,506
1,567
-
9,073
Segment assets
249,956
52,195
-
302,151
Elimination 2010 A$’000
Consolidated 2010 A$’000
6 Months to June 2010 Revenue External sales Inter-segment sales
Ores 2010 A$’000
Ferroalloys 2010 A$’000
113,581 171,070 284,651
18,505 18,505
(171,070) (171,070)
132,086 132,086
Segment results
20,088
3,273
-
23,361
Segment assets
387,479
63,129
-
450,608
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 4
12
Segment reporting (cont’d)
The Group’s segment operating profit reconciles to the Group’s profit before tax as presented in its financial statement as follows: 6 months to 30 June 2010 A$’000 Profit or loss Segment results Finance costs Finance income Group profit before tax
5
23,361 (631) 687 23,417
6 months to 30 June 2009 A$’000 9,073 (448) 1,922 10,547
Goodwill
Cost At beginning of period/year Disposal of a subsidiary At end of period/year
6 months to 30 June 2010 A$’000 2,065 2,065
Year to 31 December 2009 A$’000 2,190 (125) 2,065
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 6
13
Additions and disposals of property, plant and equipment
The following tables show the significant additions and disposals of property, plant and equipment:
Construction in-progress A$’000
Leasehold buildings and improvements A$’000
Plant and machinery A$’000
Computer equipment, office equipment and furniture A$’000
Cost At 1 January 2009 Additions Transfers Disposals Disposal of a subsidiary Exchange realignment At 31 December 2009 Additions Transfers Disposals Acquisition of a subsidiary Exchange realignment At 30 June 2010
8,336 18,669 (10,125) (2) (49) 16,829 5,858 (16,921) 142 656 6,564
8,056 1 134 (15) (1,862) (1,401) 4,913 19 6,340 496 230 11,998
72,513 14,200 9,842 (2,978) (1,840) 91,737 481 10,373 747 539 103,877
2,350 27 149 (138) (53) 2,335 39 208 5 7 2,594
1,383 497 (241) (411) (220) 1,008 (154) 75 43 972
92,638 33,394 (394) (5,253) (3,563) 116,822 6,397 (154) 1,465 1,475 126,005
Accumulated depreciation At 1 January 2009 Depreciation Disposals Disposal of a subsidiary Exchange realignment At 31 December 2009 Depreciation Disposals Exchange realignment At 30 June 2010
-
2,303 311 (15) (982) (335) 1,282 240 71 1,593
19,127 6,982 (1,984) (688) 23,437 4,908 150 28,495
984 570 (92) (38) 1,424 252 6 1,682
491 135 (76) (286) (54) 210 105 (37) 13 291
22,905 7,998 (183) (3,252) (1,115) 26,353 5,505 (37) 240 32,061
6,564
10,405
75,382
912
681
93,944
16,829
3,631
68,300
911
798
90,469
Net book value At 30 June 2010 At 31 December 2009
7
Motor vehicles A$’000
Total A$’000
Exploration and evaluation costs 6 months to 30 June 2010 A$’000
At cost At beginning of period/year Costs incurred during the period/year Costs written off during the period/year At end of period/year
2,072 (2,072) -
Year to 31 December 2009 A$’000 3,084 (3,084) -
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 8
14
Mine development costs 6 months to 30 June 2010 A$’000
Year to 31 December 2009 A$’000
At cost At beginning of period/year Costs incurred during the period/year At end of period/year
26,183 334 26,517
24,201 1,982 26,183
Accumulated amortisation/impairment losses At beginning of period/year Amortisation for the period/year At end of period/year Net book value
5,437 916 6,353 20,164
3,817 1,620 5,437 20,746
9
Financial assets available-for-sale
Available for sale financial assets Quoted equity investments Unquoted equity investment Net fair value (loss)/gain transferred to equity Net fair value gain transferred to income statement
6 months to 30 June 2010 A$’000
Year to 31 December 2009 A$’000
76,293 65,532 (5,406) 586 137,005
7,842 2,615 10,457
6 months to 30 June 2010 A$’000 At fair value
Year to 31 December 2009 A$’000 At fair value
71,473 65,532 137,005
10,457 10,457
Available for sale financial assets carried at fair value are as follows:
Quoted equity investments Unquoted equity investments
The fair value of quoted equity investments is determined by reference to stock exchange quoted bid prices. During the period ended 30 June 2010, the Group invested A$65.5 million to acquire a 26% stake in Ntsimbintle Mining (Proprietary) Limited (“Ntsimbintle”). Ntsimbintle has a 50.1% interest in Tshipi é Ntle Manganese Mining (Proprietary) Limited (“Tshipi”). Pursuant to the envisaged Ministerial consent in terms of section 11 of the Minerals and Petroleum Resources Development Act, 2002, the Group’s shareholding in Ntsimbintle will be transferred to Ntsimbintle NewCo, which is a holding company for the Tshipi interest. Thereafter the Group will have the right to appoint a director to the Tshipi board of directors. As at 30 June 2010, this has not been effected. Accordingly this investment had been accounted for as an available-for-sale financial asset. The directors have determined the fair value of this investment to approximate the cost of acquisition as the Tshipi project has yet to commence operations.
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 10
15
Share issue
During the six months ended 30 June 2010, 7,550,000 shares were issued upon the exercise of share options previously granted under the Group’s employee share option scheme or as previously approved by shareholders in a general meeting. During this period, the weighted average exercise price at the date of exercise was A$1.23 (during the six months ended 30 June 2009: A$0.30). Each share issued has the same right to receive dividends and the repayment of capital and represents one vote at any shareholders’ meeting of OM Holdings Limited. Shares issued and authorised are summarised as follows: No. of ordinary shares (amounts in thousand shares) Year to 6 months to 31 December 30 June 2010 2009 Authorised: Ordinary shares of A$0.05 (2009 - A$0.05) each
Amount
6 months to 30 June 2010 A$’000
Year to 31 December 2009 A$’000
2,000,000
2,000,000
100,000
100,000
490,935
477,579
24,547
23,879
7,550
13,356
377
668
498,485
490,935
24,924
24,547
6 months to 30 June 2010 A$’000
Year to 31 December 2009 A$’000
Current Bank loans (Note 12.1)
31,742
912
Non-current Bank loans (Note 12.1) Total borrowings
43,249 74,991
411 1,323
6 months to 30 June 2010 A$’000
Year to 31 December 2009 A$’000
Issued and fully paid: Ordinary shares of A$0.05 (2009 - A$0.05) each as at beginning of period/year Options exercised during the period/year Ordinary shares of A$0.05 (2009 - A$0.05) each as at end of period/year
11
11.1
Borrowings
Bank loans
Loans - unsecured [Note (a)] Loans - secured [Note (b)] Amount repayable within one year Amount repayable after one year
860 74,131 (31,742) 43,249
1,323 (912) 411
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 11
16
Borrowings (cont’d)
Note: (a) The unsecured loan is repayable at year ended 31 December 2011. (b) The secured loans are repayable in 34 monthly instalments commencing from 8 April 2010. The loans are secured by: - charges over certain bank deposit accounts; and - irrevocable and unconditional corporate guarantees provided by the Company and a subsidiary. The amount repayable within one year is included under current liabilities whilst the amount repayable after one year is included under non-current liabilities. 12
Provisions
Rehabilitation At beginning of period/year Movement for the period/year Payment during the period/year At end of period/year Employee long service leave At beginning of period/year Movement for the period/year At end of period/year
6 months to 30 June 2010 A$’000
Year to 31 December 2009 A$’000
3,379 701 (63) 4,017
622 3,521 (764) 3,379
80 35 115 4,132
35 45 80 3,459
According to the mine management plan submitted to The Northern Territory Government in Australia, OM (Manganese) Ltd is obligated for the restoration of the disturbed areas arising from its mining activities conducted at the Bootu Creek Manganese Mine. Employees of a subsidiary are entitled, under the labour law of the country of its incorporation, to additional leave over and above their annual leave if they stay employed with the subsidiary beyond 10 years. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. 13
Profit before taxation 6 months to 30 June 2010 A$’000
6 months to 30 June 2009 A$’000
Profit before taxation is arrived at after charging/(crediting): Amortisation of mine development Amortisation of long term prepayments and prepaid lease payments on land use rights Depreciation of property, plant and equipment Equity settled share-based transactions Interest expense Loss on disposal of financial asset available for sale Exchange losses Royalty expense Negative goodwill arising from acquisition of subsidiary Write back of inventories Gain on de-registration/disposal of subsidiary Fair value gains on derivative instruments
916 29 5,505 631 445 717 1,392 (63) (775) (385)
812 32 3,627 2,595 448 39 14,453 6,452 (26,356) (872) -
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 14
17
Taxation
Current taxation Overprovision of current taxation in respect of prior years
6 months to 30 June 2010 A$’000
6 months to 30 June 2009 A$’000
4,987 (145) 4,842
(219) (219)
Taxation has been provided at the appropriate tax rates prevailing in the countries in which the Group operates on the estimated assessable profits for the period/year. These rates range from 10% to 30% (30 June 2009 - 10% to 30%). Provision for enterprise income tax of the subsidiaries operating in the People's Republic of China (the "PRC") is made in accordance with the Income Tax Law of the PRC concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws. The Singapore Ministry of Trade and Industry has approved the award of Global Trade Programme Status to OM Materials (S) Pte Ltd (“OMS”). Accordingly, OMS was entitled to a concessionary rate of 10% for a period of 5 years with effect from 1 July 2004, subject to fulfilment of the specific conditions. At the reporting date, OMS was awarded the Global Trade Programme for a further five year period from 1 July 2009. Excluding the effect of the concessionary rates the effective Singapore income tax rate is 17% on the estimated assessable profits. The income tax expense for the period can be reconciled to the profit before income tax per the statement of comprehensive income as follows: 6 months to 30 June 2010 A$’000
6 months to 30 June 2009 A$’000
Profit before taxation
23,417
10,547
Tax at applicable tax rates Income tax at concessionary tax rate Tax effect of non-taxable revenue Tax effect of non-deductible expenses Overprovision of current taxation in respect of prior years
6,719 (1,645) (242) 155 (145) 4,842
2,387 (420) (2,569) 383 (219)
15
Earnings per share
Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the parent company (OM Holdings Limited) as the numerator, ie no adjustments to profits were necessary during the six months period to 30 June 2010 and the half year ended 30 June 2009. The weighted average number of shares for the purposes of the calculation of diluted earnings per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic earnings per share as follows: Amounts in thousand shares: Weighted average number of shares used in basic earnings per share Effect of dilutive potential ordinary shares in respect of share options Weighted average number of shares used in diluted earnings per share
6 months to 30 June 2010
6 months to 30 June 2009
491,659 28,391 520,050
479,369 20,606 499,975
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 16
18
Dividend
During the six months to 30 June 2010, OM Holdings Limited paid dividends of A$9,950,000 to its equity shareholders (six months to 30 June 2009: A$14,541,000). This represents a payment of A$0.02 per share (six months to 30 June 2009: A$0.03). Subsequent to 30 June 2010, the Board declared an interim dividend of A0.75¢ per share. The dividend will be paid on 22 October 2010 based on entitlements as at 30 September 2010. These dividends have not been provided for. 17
Related parties transactions
During the interim period, Group entities entered into the following transactions with related parties: (A)
Related parties transactions
Company secretarial fees paid to a company of which a director is a director and beneficial shareholder Legal fees paid to a firm of which a director is a director and beneficial owner
(B)
6 months to 30 June 2010 A$’000
6 months to 30 June 2009 A$’000
123
142
55
26
6 months to 30 June 2010 A$’000
6 months to 30 June 2009 A$’000
1,082 940 72
844 809 50
564 49
570 47
Compensation of directors and key management personnel
The remuneration of directors being members of key management is set out below:
Directors - Directors of the Company - Directors of the subsidiaries - Defined contribution plans Key Management personnel (other than directors) - Salaries, wages and other related costs - Defined contribution plans
18
Business combination
On 16 March 2010, the Group acquired 75% of the issued share capital and voting rights of Guizhou Jiahe Weiye Ferroalloys Co Limited, a company incorporated in China. The objective of the acquisition is to further increase the Group’s alloy production capacity. The purchase price, which was settled in cash, amounted to A$900,000. The amounts recognised for each class of the acquiree's assets, liabilities and contingent liabilities recognised at the acquisition date are as follows:
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 18
Business combination (cont’d)
Property, plant and machinery Inventories Trade and other receivables Cash and bank balances Trade and other payables Non-controlling interest Negative goodwill on acquisition Consideration transferred, satisfied in cash Cash and cash equivalents acquired Net cash outflow on acquisition
19
19
Pre-acquisition carrying amount A$’000
Adjustment to fair value A$’000
Recognised at acquisition date A$’000
1,767 1,087 1,230 3 (3,587) -
(302) (1,087) (1,230) 3,407 -
1,465 3 (180) (322) (63) 903 (3) 900
Contingent liabilities
A subsidiary of the Group engaged Londsdale Investments Pty Ltd (previously trading as ProMet Engineers Pty Ltd) (“ProMet”) to design a process plant for the subsidiary’s mining operation at Bootu Creek Manganese Mine. The subsidiary has refused to pay A$645,000 of the invoices claimed by ProMet in respect to the design services performed, and Supreme Court proceedings were commenced against the subsidiary in August 2006 seeking recovery of these monies. In December 2006, the subsidiary commenced a counterclaim against ProMet and two of ProMet’s directors, for alleged breaches of contract, the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (WA) and negligence. The subsidiary’s damages claim against ProMet and the two directors are for monies paid to ProMet under the contract; the cost of rectification of ProMet’s defective work; additional costs to complete and commission the plant; additional charges payable by the subsidiary as a result of the plant not producing at the required production volumes; and the loss of the benefit of revenue resulting from the inability to make sales of manganese product at the designed production volumes. The quantum of the subsidiary’s claim was reduced to A$8 million and has proceeded to be heard in the Supreme Court of Western Australia. No provision is made in the financial statements as the Directors are confident of succeeding in its counter claim against ProMet. 20
Events after the reporting date
On 5 July 2010, a subsidiary entered into a Short Term Consultancy and Marketing Agency Agreement (“Agreement”) with Sydvaranger Gruve AS (“SVG”), a wholly owned subsidiary of Northern Iron Limited (“NFE”). Under the terms of the Agreement SVG appointed the subsidiary to provide short term consultancy and marketing agency services including the marketing of uncommitted iron ore product from SVG’s Sydvaranger Iron Ore Project into the Asian market for a period up to 31 March 2011. The subsidiary also executed a Loan Facility Agreement with SVG, whereby the subsidiary agreed to provide a U$10 million loan facility to SVG for the purpose of providing ongoing working capital funding for NFE’s Sydvaranger Iron Ore Project. The facility was guaranteed by NFE and was provided on commercial terms. The total facility was drawn down by SVG in July 2010 and is repayable within twelve (12) months of the draw down date.
OM Holdings Limited and its subsidiaries Interim Financial Report for the six months ended 30 June 2010 20
20
Events after the reporting date (cont’d)
On 2 August 2010, the Company announced the implementation of an On-Market Share Buy-Back (“BuyBack”) of up to 15 million ordinary shares, representing approximately 3% of the Company’s issued capital. Subsequent to 30 June 2010, the Company has acquired 950,000 of its own ordinary shares through the Buy-Back. A total of 1,933,295 ordinary shares are now held as “treasury shares” by the Company. During August 2010, a subsidiary has drawn-down U$30 million from a facility with Standard Chartered Bank, Singapore.
