Wednesday, 12 February 2020
MEDIA RELEASE
Half Year Profit Announcement
Mineral Resources Limited (ASX: MIN) ('MRL' or 'the Company') is pleased to announce its financial results for the half year ended 31 December 2019 (1H20), and to provide an update on initiatives carried out during the period to advance the Company's strategy to become Australia's leading integrated mining services provider.
During the period, MRL generated statutory Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $1,575 million. This result included a $1,290 million gain on the disposal of a 60% interest in the Wodgina Lithium Project (Wodgina). Underlying1 EBITDA was $330 million, up 224% on the prior corresponding period (pcp)2, underpinned by strong growth in the Mining Services segment and record iron ore sales.
Statutory net profit after tax (NPAT) amounted to $884 million and underlying NPAT was $129 million, up 279% on pcp. Statutory NPAT included $114 million of post-tax impairment charges ($164 million pre-tax) in relation to capitalised exploration and mine development expenditure, plant and equipment and stockpiles.
The Company's Directors have declared a fully franked interim dividend of 23.0 cents per share, an increase of 77% on the interim dividend for 1H19.
During 1H20, the Company delivered on a number of major initiatives including:
- Completion of the sale of a 60% interest in Wodgina to Albemarle Corporation (NYSE: ALB, Albemarle) and establishment of the 60:40 Albemarle/MRL unincorporated MARBL Lithium Joint Venture (MARBL JV)3. This transaction returned the Company to a net cash positive position;
- Ramp up of Koolyanobbing iron ore production, with plans to further increase production to 11 million tonnes per annum from February 2020;
- Acquisition of the Parker Range tenements from Cazaly Iron Pty Ltd4, which are scheduled to enter production in 2H20.
MRL's Managing Director Chris Ellison said, "The first half of this financial year has set MRL up to deliver another year of strong performance for all shareholders while delivering outcomes in line with our long-term goals. I am pleased to reaffirm the full-year guidance that we provided at our AGM in November.
- Underlying EBITDA has been derived from statutory EBITDA of $1,575 million by deducting $1,290 million gain on the Wodgina disposal, adding back a $32 million unrealised fair value loss on listed investments and a net $13 million unrealised foreign exchange loss on the Company's US$ denominated Bond and associated US$ cash holdings
- Comparison to pcp being the half year ended 31 December 2019 (H1 FY19) for profit and loss data and cash flow data, and to the balance as at 30 June 2019 for balance sheet data
- See ASX announcement 1 November 2019
- See ASX announcement 30 August 2019
Page 1 | 3
The Wodgina transaction with Albemarle enabled MRL to return to a net cash positive position, in line with our history of retaining a strong and healthy balance sheet through prudent and well-timed investments in long-term growth options. Our iron ore division, driven by the Koolyanobbing business, continues to outperform and we have had a very good half in our Mining Services business, including retaining existing contracts and winning new contracts, as we cement our position as the service provider of choice to Tier 1 mining companies.
The strength and quality of our workforce contributed to this very strong first-half performance. I thank them for their efforts and their focus on adhering to MRL's safety values. Notwithstanding an increase in our workforce, our overall safety performance continues to trend down and ranks us among the best in our sector.
I also want to acknowledge the impact on our workforce of the MARBL Lithium Joint Venture's decision during the half to place Wodgina on care and maintenance. This was a tough decision but the right one for MRL and our workforce in the long term, and I am pleased that we were able to find alternative employment for a majority of the affected team."
Financial performance | |||||||||||
1H20 Result | Comparison to pcp | ||||||||||
Revenue | $987m | Up 78% | |||||||||
EBITDA (statutory) | $1,575m | Up 2,088% | |||||||||
EBITDA (underlying) | $330m | Up 224% | |||||||||
Net Profit after tax (NPAT) (statutory) | $884m | Up 6,700% | |||||||||
NPAT (underlying) | $129m | Up 279% | |||||||||
Diluted earnings per share (EPS) | 470.1cps | Up 6,429% | |||||||||
Dividends declared | 23cps | Up 77% | |||||||||
Operating cash flow | $161m | Up $174m | |||||||||
Capex and investments | $192m | Down $302m | |||||||||
Net cash / (debt) | $79m | Up $951m | |||||||||
Net assets | $2,210m | Up $830m | |||||||||
Return on invested capital5 | 52% | Up 430% | |||||||||
Growth in both Revenue and EBITDA in 1H20 was driven by:
- Mining Services achieving a 95% growth in underlying EBITDA driven by the ramp up of Koolyanobbing as well as growth in external contracts; and
- Strong achieved iron ore prices coupled with record iron ore exports of 6.7 million wet tonnes (up 70% on pcp) due to the Koolyanobbing ramp up.
5 Return on Invested Capital (ROIC) calculated as per FY19 Remuneration Report definition on a rolling 12 month basis.
Page 2 | 3
This announcement dated 12 February 2020 has been authorised for release to the ASX by Mineral Resources Ltd's Board of Directors.
ENDS
For investor enquiries: | For media enquiries: |
Mark Wilson | Peter Klinger |
Chief Financial Officer/Company Secretary | Cannings Purple |
T: +61 8 9329 3600 | T: +61 (0)411 251 540 |
E:mark.wilson@mrl.com.au | E: pklinger@canningspurple.com.au |
About Mineral Resources
Mineral Resources Limited (ASX: MIN) is a Perth-based leading mining services provider, with a particular focus on the iron ore and hard-rock lithium sectors in Western Australia. Using technical know-how and an innovative approach to deliver exceptional outcomes, Mineral Resources has become one of the ASX's best-performing contractors since listing in 2006.
To learn more, please visit www.mrl.com.au.
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Page 3 | 3
HALF YEAR FINANCIAL REPORT
31 DECEMBER 2019
MINERAL RESOURCES LIMITED
ABN 33 118 549 910
www.mrl.com.au
Mineral Resources Limited
Appendix 4D
Half-year report
1. Company details
Name of entity: | Mineral Resources Limited | |||
ABN: | 33 118 549 910 | |||
Reporting period: | For the half-year ended 31 December 2019 | |||
Previous period: | For the half-year ended 31 December 2018 | |||
2. Results for announcement to the market | ||||
$'000 | ||||
Revenues from ordinary activities | up | 78% | to | 986,646 |
Profit from ordinary activities after tax attributable to the owners of | ||||
Mineral Resources Limited | up | 6,442% | to | 884,403 |
Profit for the half-year attributable to the owners of Mineral Resources | ||||
Limited | up | 6,442% | to | 884,403 |
Comments
Commentary on the results for the period is contained within the Financial Report as well as the Media Release that accompanies this announcement.
3. Net tangible assets
Reporting | Previous | ||||||
period | period | ||||||
Cents | Cents | ||||||
Net tangible assets per ordinary security | 1,103.94 | 618.03 | |||||
4. Dividends | |||||||
Cents | Franked % | $'000 | |||||
2020 | Financial Year interim dividend - declared 12 February 2020 | 23.00 | 100% | 43,174 | |||
2019 | Financial Year final dividend - paid 4 October 2019 | 31.00 | 100% | 58,099 | |||
2019 | Financial Year interim dividend - paid 17 April 2019 | 13.00 | 100% | 24,386 | |||
2018 | Financial Year final dividend - paid 27 September 2018 | 40.00 | 100% | 75,015 | |||
Record date for determining entitlements to the 2020 Financial Year interim dividend | 2 March 2020 | ||||||
Payment date for the 2020 Financial Year interim dividend | 26 March 2020 | ||||||
Mineral Resources Limited
Appendix 4D
Half-year report
5. Dividend reinvestment plans
Shareholders are able to elect to participate in the following Dividend Reinvestment Plan (DRP) for the 2020 Financial Year interim dividend:
Date of interim dividend declaration | 12 February 2020 | |
Record date for determining entitlements to the interim dividend | 2 | March 2020 |
Closing date for election to participate in the DRP | 3 | March 2020 |
Closing date for calculation of DRP share issue price, based on the Volume Weighted | 10 | March 2020 |
Average Price (VWAP) for Mineral Resources Limited shares sold on the ASX in the | ||
five business days following record date (rounded to the nearest whole cent) | ||
DRP discount to be applied | None | |
DRP to be underwritten | No | |
Payment date for interim dividend/issue of shares under the DRP | 26 | March 2020 |
DRP share ranking with existing Mineral Resources Limited shares | Equally in all respects | |
Date by which DRP participant's holdings will be updated with additional shares | 30 March 2020 | |
issued under the DRP |
Details of the DRP are available on the Mineral Resources Limited's website www.mrl.com.au
6. Audit qualification or review
The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report.
Mineral Resources Limited
ABN 33 118 549 910
Interim Report - 31 December 2019
Mineral Resources Limited Directors' report
31 December 2019
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Mineral Resources Limited (referred to hereafter as the 'Company' or 'MRL') and the entities it controlled at the end of, or during, the half-year ended 31 December 2019.
Directors
The following persons were Directors of the Company during the whole of the financial half-year and up to the date of this report, unless otherwise stated:
Peter Wade
Chris Ellison
Kelvin Flynn
James McClements
Xi Xi
Principal activities
During the half-year, the principal continuing activities of the Group consisted of the integrated supply of goods and services to the resources sector.
Dividends
Dividends paid during the financial half-year were as follows:
Cents | Franked % | $'000 | ||
2020 | Financial Year interim dividend - declared 12 February 2020 | 23.00 | 100% | 43,174 |
2019 | Financial Year final dividend - paid 4 October 2019 | 31.00 | 100% | 58,099 |
2019 | Financial Year interim dividend - paid 17 April 2019 | 13.00 | 100% | 24,386 |
2018 | Financial Year final dividend - paid 27 September 2018 | 40.00 | 100% | 75,015 |
On 12 February 2020, the Directors declared an interim fully franked dividend for the Financial Year ending 30 June 2020 (FY20) of 23 cents per ordinary share to be paid on 26 March 2020, a total estimated distribution of $43,174,000.
Review of operations
Financial performance
The Group generated statutory earnings before interest, tax, depreciation and amortisation (EBITDA) of $1,575 million for the financial half-year ended 31 December 2019 (1H20) and an underlying EBITDA of $330 million. The underlying result was 224% higher than prior corresponding period (pcp) of $228 million. Underlying EBITDA has been derived by excluding from statutory EBITDA a gain of $1,290 million generated on the disposal of a 60% interest in the Wodgina Lithium Project, a $32 million unrealised fair value loss on listed investments (pcp was a $30 million fair value loss), and a $13 million unrealised foreign exchange loss on the Group's US$ denominated bond and associated US$ cash holdings.
Statutory net profit after tax (NPAT) for 1H20 was $884 million and underlying NPAT was $129 million, an increase of 279% on pcp of $34 million. Statutory NPAT included $114 million of post-tax impairment charges ($164 million pre-tax) in relation to capitalised exploration and mine development expenditure, plant and equipment and stockpiles.
Depreciation and amortisation for 1H20 was $92 million, up $47 million (102%) on pcp. This was driven by an expanded fleet for increased production along with increased amortisation on capitalised strip activity at Koolyanobbing as a result of a revised mine plan.
On 1 November 2019, MRL successfully completed the sale of 60% of the Wodgina Lithium Project to Albemarle Corporation (Albemarle) and the establishment of the 60:40 Albemarle/MRL unincorporated MARBL Lithium Joint Venture (MARBL JV). As part of the transaction, MRL now also owns 40% of the lithium hydroxide modules being built by Albemarle in Kemerton. The net gain on disposal of this transaction was $1,290 million, with the net proceeds including a cash injection of $1,174 million. MARBL JV placed the Wodgina Lithium Project on care and maintenance on 1 November 2019, given the challenging global lithium market conditions currently being experienced and to preserve the value of the world-class Wodgina spodumene ore body.
1
Mineral Resources Limited Directors' report
31 December 2019
Group revenue for 1H20 was $987 million, up $432 million (78%) on pcp. This strong start to the year was driven by continued Mining Services growth and increased iron ore exports in a favourable pricing environment with a strong Platts index.
Volatility in commodity prices saw lithium prices fall over 23% during the half, and over 44% from pcp, with the 1H20 6% spodumene price average at US$565 per dry tonne (1H19 6% spodumene price average US$1,001 per dry tonne).
The Platts 62% Fines Index remained strong, averaging US$95 per dry tonne over the period (1H19 Platts 62% Fines Index average US$69 per dry tonne). The Group capitalised on the strong iron ore pricing in 1H20 by shipping a record
6.7 million wet tonnes of iron ore. Following the commencement of iron ore operations at Koolyanobbing in September 2018, Koolyanobbing is on track to ramp up to an expected annual run rate of 11 million wet tonnes (Mt).
Operational performance
Mining Services
Mining Services EBITDA of $172 million was $84 million (95%) higher than pcp, and Mining Services revenue of $613 million (internal and external) was $146 million (31%) higher than pcp.
Growth in Mining Services revenue and EBITDA was primarily driven by:
- Continued growth in operations at Koolyanobbing;
- Growth in existing external contracts; and
- Three new contracts won in the period.
With Wodgina Lithium Project being placed on care and maintenance, crushing volumes at that project reduced to 0.4 million wet tonnes, down 36% on pcp.
Commodities
Commodities in 1H20 performed strongly, largely driven by higher iron ore volumes and prices. During the period volumes from Mt Marion Lithium Project remained stable.
The Group's actual commodity export sales volumes in the period were as follows:
Commodity exports | 1H19 | 2H19 | FY19 | 1H20 | ||
('000 wet metric tonnes) | ||||||
Utah Point | ||||||
Iron Valley | 3,673 | 3,733 | 7,406 | 3,590 | ||
Wodgina | 422 | - | 422 | 3 | ||
Total Utah Point | 4,095 | 3,733 | 7,828 | 3,593 | ||
KBT2 | ||||||
Yilgarn | - | - | - | - | ||
Mt Marion1 | 185 | 192 | 377 | 194 | ||
Total KBT2 | 185 | 192 | 377 | 194 | ||
Esperance | ||||||
Koolyanobbing | 292 | 2,864 | 3,156 | 3,158 | ||
Total Esperance | 292 | 2,864 | 3,156 | 3,158 | ||
Total Iron Ore | 3,965 | 6,597 | 10,562 | 6,748 | ||
Total Lithium DSO | 422 | - | 422 | - | ||
Total Spodumene | 185 | 192 | 377 | 197 | ||
Total Commodity Exports | 4,572 | 6,789 | 11,361 | 6,945 | ||
1 Volumes presented as 100% for Mt Marion. MRL operates 100% of the Mt Marion Lithium Project, in which it owns a 50% interest.
2
Mineral Resources Limited Directors' report
31 December 2019
Iron Ore
The Group operates two iron ore projects being Iron Valley in the Pilbara and Koolyanobbing in the Yilgarn. Iron ore produced an EBITDA of $185 million, $183 million higher than pcp, reflecting increased tonnes shipped and higher prices following strong market conditions. Iron ore revenue of $696 million was $437 million (169%) higher than pcp.
Iron ore exports in 1H20 were higher than pcp at 6.7 million wet tonnes mainly as a result of the ramp up of Koolyanobbing following the commencement of operations in September 2018. Iron Valley exports were in line with pcp.
The Group's average iron ore price achieved for 1H20 was $103 per wet tonne, an increase of 58% on the pcp and a net 7% discount to Platts. This was driven by strong Platts pricing and a material narrowing of discounts during calendar year 2019 from 26% in pcp.
The Platts 62% Fines Index (adjusted for Fe grade) averaged $111 per wet tonne for 1H20, an increase of 25% on pcp, reflecting strong market conditions.
The Group is continuously looking at opportunities to sustain and develop its valued iron ore business.
- On 30 August 2019, the Group finalised the acquisition of the assets that comprise the Parker Range Project in the Yilgarn, pursuant to an agreement with Cazaly Iron Pty Ltd.
- On 20 November 2019, the Group announced an update on its Yilgarn operations with the reporting of Mineral Resources totalling 108.6Mt at 56.8% iron, including the Parker Range Project.
Mt Marion Lithium Project
The Mt Marion Lithium Project is operated by the Group under a life-of-mine Mining Services contract and is a joint project between the Group (50%) and one of the world's largest lithium producers, Jiangxi Ganfeng Lithium Co. Ltd. (Ganfeng) (50%).
Mt Marion produced an EBITDA of $16 million for the Group, 67% down on pcp. This is due mainly to:
- The achieved price for 6% and 4% spodumene products averaging A$674 per wet tonne for all tonnes exported, representing a decrease of 44% on pcp;
- Yields from mining activities reducing in 1H20, resulting in a decreased proportion of the higher grade 6% spodumene exported at 65%, compared to 75% in pcp. This change in yields is due to temporary mining conditions experienced in 1H20; and
Total sales volumes in 1H20 of 194,000 wet tonnes were broadly consistent with pcp.
Spodumene concentrate is not exchange traded, and the pricing for Mt Marion is linked to Chinese domestic and import lithium carbonate and hydroxide prices. The 6% spodumene price for quarter two of FY20 was agreed at US$521 per dry tonne CFR China (US$505 per wet tonne), a 44% reduction in pricing on pcp.
Wodgina Lithium Project
The Group currently owns 40% of the Wodgina Lithium Project, following the completion of the sale of 60% of the Wodgina Lithium Project to Albemarle Corporation and the establishment of the MARBL JV on 1 November 2019.
The MARBL JV placed the Wodgina Lithium Project on care and maintenance on 1 November 2019, given the challenging lithium market conditions currently being experienced.
3
Mineral Resources Limited Directors' report
31 December 2019
Cash and capital management
At 31 December 2019, the Group held cash and cash equivalents of $1,307 million, an increase of $1,042 million from the balance at 30 June 2019 of $265 million. In addition to its 31 December 2019 cash holdings, the Group has access to substantial undrawn debt facilities to support business development activities ($325 million as at 31 December 2019).
Net cash from operating activities before interest and tax of $317 million in 1H20 was up $295 million on pcp, reflecting a stronger underlying EBITDA and substantially in line with underlying EBITDA of $330 million.
Net cash from investing activities in 1H20 was $974 million, up $1,462 million on pcp, primarily relating to cash proceeds from completion of the sale of a 60% interest in Wodgina to Albemarle in the period. Capital outlays totalled $192 million during 1H20 on key investment projects including:
- Completion of Wodgina spodumene concentrate plant and related infrastructure;
- Acquisition of Parker Range tenements from Cazaly Resources Limited; and
- Mining assets and stripping activity to support the Group's commodity projects as well as accommodate expansions at Koolyanobbing and Iron Valley.
The Directors have resolved to distribute a fully franked interim dividend of 23 cents per ordinary share; declared for shareholders as at 12 February 2020 to be paid on 26 March 2020. This dividend represents an increase of 77% on the interim dividend of 13 cents per share in 1H19.
Rounding of amounts
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors' Reports) Instrument 2016/191 and in accordance with that Corporations Instrument, amounts in this report have been rounded off to the nearest thousand dollars, unless otherwise indicated.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out in this report.
This report is made in accordance with a resolution of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001.
On behalf of the Directors
Chris Ellison
Managing Director
12 February 2020
Perth
4
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www.rsm.com.au
AUDITOR'S INDEPENDENCE DECLARATION
As lead auditor for the review of the financial report of Mineral Resources Limited for the half-year ended
31 December 2019, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
- the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
- any applicable code of professional conduct in relation to the review.
RSM AUSTRALIA PARTNERS
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Dated: 12 February 2020 | Partner |
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Mineral Resources Limited
Contents
31 December 2019
Consolidated statement of profit or loss and other comprehensive income | 7 |
Consolidated statement of financial position | 8 |
Consolidated statement of changes in equity | 9 |
Consolidated statement of cash flows | 10 |
Notes to the consolidated financial statements | 11 |
Directors' declaration | 24 |
Independent auditor's review report to the members of Mineral Resources Limited | 25 |
General information
The financial statements cover Mineral Resources Limited as a consolidated entity consisting of Mineral Resources Limited and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is Mineral Resources Limited's functional and presentation currency.
Mineral Resources Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:
1 Sleat Road
Applecross WA 6153
A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 12 February 2020.
6
Mineral Resources Limited
Consolidated statement of profit or loss and other comprehensive income
For the half-year ended 31 December 2019
Group | |||||
Note | 31 Dec 2019 | 31 Dec 2018 | |||
$'000 | $'000 | ||||
Revenue | 3 | 986,646 | 554,695 | ||
Other income | 4 | 1,299,041 | 2,070 | ||
Expenses | |||||
Changes in closing stock | 92,405 | 37,725 | |||
Raw materials and consumables | (106,341) | (60,659) | |||
Equipment costs | (49,896) | (25,020) | |||
Subcontractors | (88,569) | (37,395) | |||
Employee benefits expense | (187,482) | (120,529) | |||
Transport and freight | (262,934) | (195,448) | |||
Depreciation and amortisation | (92,494) | (45,791) | |||
Impairment charges | 5 | (163,478) | - | ||
Other expenses | 6 | (103,229) | (82,844) | ||
Finance costs | (50,597) | (8,046) | |||
Profit before tax | 1,273,072 | 18,758 | |||
Income tax expense | (389,031) | (5,651) | |||
Profit after tax for the half-year | 884,041 | 13,107 | |||
Other comprehensive income | |||||
Items that may be reclassified subsequently to profit or loss | |||||
Net loss on cash flow hedges | (3,437) | - | |||
Other comprehensive income for the half-year, net of tax | (3,437) | - | |||
Total comprehensive income for the half-year | 880,604 | 13,107 | |||
Profit for the half-year is attributable to: | |||||
Non-controlling interest | (362) | (412) | |||
Owners of Mineral Resources Limited | 884,403 | 13,519 | |||
884,041 | 13,107 | ||||
Total comprehensive income for the half-year is attributable to: | |||||
Non-controlling interest | (362) | (412) | |||
Owners of Mineral Resources Limited | 880,966 | 13,519 | |||
880,604 | 13,107 | ||||
Earnings per share for profit attributable to owners of Mineral Resources Limited: | |||||
Cents | Cents | ||||
Basic earnings per share | 470.06 | 7.20 | |||
Diluted earnings per share | 470.06 | 7.20 |
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes
7
Mineral Resources Limited
Consolidated statement of financial position
As at 31 December 2019
Group | |||||
Note | 31 Dec 2019 | 30 Jun 2019 | |||
$'000 | $'000 | ||||
Assets | |||||
Current assets | |||||
Cash and cash equivalents | 1,306,875 | 265,399 | |||
Trade and other receivables | 156,375 | 167,446 | |||
Inventories | 163,698 | 180,126 | |||
Current tax assets | - | 54,413 | |||
Other | 44,350 | 35,421 | |||
1,671,298 | 702,805 | ||||
Assets held for sale | 7 | - | 503,970 | ||
Total current assets | 1,671,298 | 1,206,775 | |||
Non-current assets | |||||
Trade and other receivables | 7(c) | 644,171 | 39,976 | ||
Inventories | 35,345 | - | |||
Financial assets | 51,172 | 75,149 | |||
Property, plant and equipment | 8 | 1,328,757 | 1,300,578 | ||
Intangibles | 89,001 | 84,811 | |||
Exploration and mine development | 416,112 | 408,512 | |||
Deferred tax | 73,226 | 45,456 | |||
Total non-current assets | 2,637,784 | 1,954,482 | |||
Total assets | 4,309,082 | 3,161,257 | |||
Liabilities | |||||
Current liabilities | |||||
Trade and other payables | 267,265 | 259,441 | |||
Borrowings | 9 | 83,814 | 55,269 | ||
Current tax liabilities | 345,116 | - | |||
Employee benefits | 38,473 | 35,565 | |||
Provisions | 13,558 | 11,422 | |||
748,226 | 361,697 | ||||
Liabilities directly associated with assets classified as held for sale | - | 63,092 | |||
Total current liabilities | 748,226 | 424,789 | |||
Non-current liabilities | |||||
Borrowings | 9 | 1,143,752 | 1,081,715 | ||
Deferred tax | 105,921 | 185,572 | |||
Provisions | 101,137 | 88,975 | |||
Total non-current liabilities | 1,350,810 | 1,356,262 | |||
Total liabilities | 2,099,036 | 1,781,051 | |||
Net assets | 2,210,046 | 1,380,206 | |||
Equity | |||||
Issued capital | 10 | 515,558 | 507,855 | ||
Reserves | 13,337 | 16,110 | |||
Retained profits | 1,662,527 | 837,255 | |||
Equity attributable to the owners of Mineral Resources Limited | 2,191,422 | 1,361,220 | |||
Non-controlling interest | 18,624 | 18,986 | |||
Total equity | 2,210,046 | 1,380,206 | |||
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
8
Mineral Resources Limited
Consolidated statement of changes in equity
For the half-year ended 31 December 2019
Non- | ||||||||||||||
Issued | Retained | controlling | ||||||||||||
capital | Reserves | profits | interest | Total equity | ||||||||||
Group | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||||
Balance at 1 July 2018 | 511,188 | 1,442 | 772,987 | 17,810 | 1,303,427 | |||||||||
Profit/(loss) after tax for the half-year | - | - | 13,519 | (412) | 13,107 | |||||||||
Other comprehensive income for the half- | ||||||||||||||
year, net of tax | - | - | - | - | - | |||||||||
Total comprehensive income for the half-year | - | - | 13,519 | (412) | 13,107 | |||||||||
Employee share awards issued | 5,702 | - | - | - | 5,702 | |||||||||
Purchase of shares under employee share | ||||||||||||||
plans | (13,020) | - | - | - | (13,020) | |||||||||
Share issued under Dividend Reinvestment | ||||||||||||||
Plan | 3,821 | - | - | - | 3,821 | |||||||||
Other | - | - | - | (145) | (145) | |||||||||
Dividends paid (Note 11) | - | - | (75,015) | - | (75,015) | |||||||||
Balance at 31 December 2018 | 507,691 | 1,442 | 711,491 | 17,253 | 1,237,877 | |||||||||
Non- | ||||||||||||||
Issued | Retained | controlling | ||||||||||||
capital | Reserves | profits | interest | Total equity | ||||||||||
Group | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||||
Balance at 1 July 2019 | 507,855 | 16,110 | 837,255 | 18,986 | 1,380,206 | |||||||||
Prior period re-measurement on adoption of | ||||||||||||||
AASB 16 (Note 1) | - | - | (1,032) | - | (1,032) | |||||||||
Balance at 1 July 2019 - restated | 507,855 | 16,110 | 836,223 | 18,986 | 1,379,174 | |||||||||
Profit/(loss) after tax for the half-year | - | - | 884,403 | (362) | 884,041 | |||||||||
Other comprehensive income for the half- | ||||||||||||||
year, net of tax | - | (3,437) | - | - | (3,437) | |||||||||
Total comprehensive income for the half-year | - | (3,437) | 884,403 | (362) | 880,604 | |||||||||
Employee share awards issued | 3,687 | (2,703) | - | - | 984 | |||||||||
Share issued under Dividend Reinvestment | ||||||||||||||
Plan | 4,016 | - | - | - | 4,016 | |||||||||
Equity-settledshare-based payments | - | 3,367 | - | - | 3,367 | |||||||||
Dividends paid (Note 11) | - | - | (58,099) | - | (58,099) | |||||||||
Balance at 31 December 2019 | 515,558 | 13,337 | 1,662,527 | 18,624 | 2,210,046 | |||||||||
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
9
Mineral Resources Limited
Consolidated statement of cash flows
For the half-year ended 31 December 2019
Group | |||||
Note | 31 Dec 2019 | 31 Dec 2018 | |||
$'000 | $'000 | ||||
Cash flows from operating activities | |||||
Receipts from customers | 1,055,231 | 531,171 | |||
Payments to suppliers and employees | (737,984) | (509,555) | |||
317,247 | 21,616 | ||||
Interest received | 4,185 | 910 | |||
Interest and other finance costs paid | (48,377) | (6,812) | |||
Income taxes paid | (112,550) | (28,739) | |||
Net cash from/(used in) operating activities | 160,505 | (13,025) | |||
Cash flows from investing activities | |||||
Payments for property, plant and equipment | (97,424) | (428,009) | |||
Proceeds from disposal of property, plant and equipment | 5,767 | 7,694 | |||
Proceeds from sale of disposal group | 7(c) | 1,173,901 | - | ||
Payments for exploration and evaluation | (29,832) | (38,114) | |||
Payments for mine development | (56,787) | (20,215) | |||
Payments for investments and subsidiaries | (8,134) | (2,150) | |||
Amounts (advanced to)/received from joint operations | (5,894) | 6,754 | |||
Amounts advanced to other parties | - | (10,000) | |||
Payments for intangibles | (7,927) | (7,838) | |||
Proceeds from disposal of investments | - | 4,000 | |||
Net cash from/(used in) investing activities | 973,670 | (487,878) | |||
Cash flows from financing activities | |||||
Proceeds from borrowings | 11,752 | 515,000 | |||
Repayment of borrowings | (4,619) | (3,844) | |||
Dividends paid | (54,086) | (71,195) | |||
Payment of lease liabilities | (34,363) | (30,766) | |||
Purchase of shares under employee share plans | - | (13,042) | |||
Net cash (used in)/from financing activities | (81,316) | 396,153 | |||
Net increase/(decrease) in cash and cash equivalents | 1,052,859 | (104,750) | |||
Cash and cash equivalents at the beginning of the financial half-year | 265,399 | 240,406 | |||
Effects of exchange rate changes on cash and cash equivalents | (11,383) | 546 | |||
Cash and cash equivalents at the end of the financial half-year | 1,306,875 | 136,202 | |||
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
10
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 1. Significant accounting policies
These general purpose financial statements for the interim half-year reporting period ended 31 December 2019 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.
These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2019 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.
The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below.
New or amended Accounting Standards and Interpretations adopted
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The nature and the effect of the adoption of new Accounting Standards and Interpretations that are most relevant to the Group are described below:
AASB 16 Leases
The Group has adopted AASB 16 'Leases' (AASB 16) from 1 July 2019. The standard replaces AASB 117 'Leases' (AASB 117) and for lessees, eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position.
Lease accounting policy (applied from 1 July 2019)
Right-of-use assets
- right-of-useasset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any re-measurement of lease liabilities.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
11
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 1. Significant accounting policies (continued)
Transition
Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss.
For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.
In accordance with the transition provisions of AASB 16, the Group has adopted the modified retrospective transition approach to implementing the new standard. Under this approach, comparatives are not restated. Instead, the reclassifications and adjustments arising from the new leasing rules are recognised in the statement of financial position on 1 July 2019.
Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of AASB 117. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 July 2019. The weighted average lessee's incremental borrowing rate applied to these lease liabilities on 1 July 2019 was 4.7%.
For leases previously classified as finance leases the Group recognised the carrying amount of the lease asset and lease liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date of initial application. The measurement principles of AASB 16 are only applied after that date.
$'000 | |
Operating lease commitments disclosed 30 June 2019 | 44,247 |
(Exclude): Committed leases not commenced | (38,690) |
(Less): Short-term leases recognised on a straight-line basis as an expense | (155) |
Add: Adjustments as a result of different treatment of extension and termination options | 4,188 |
Add: Contracts reassessed to contain leases | 2,267 |
Add: Finance leases recognised at 30 June 2019 | 178,736 |
Discounted using the lessee's incremental borrowing rate | (142) |
Lease liability recognised at 1 July 2019 | 190,451 |
Right-of-use assets were measured on a retrospective basis as if AASB 16 had been applied since the commencement date, but discounted using the lessee's incremental borrowing rate at the date of initial application.
The recognised right-of-use assets relate to the following types of assets: | |||
31 Dec 2019 | 1 Jul 2019 | ||
$'000 | $'000 | ||
- Buildings | 43,396 | 10,242 | |
- Plant and equipment | 232,868 | 188,269 | |
Total right-of-use assets | 276,264 | 198,511 | |
12
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 1. Significant accounting policies (continued)
The change in accounting policy impacted the following items in the statement of financial position on 1 July 2019:
1 July 2019 | |
$'000 | |
Property, plant and equipment - increase | 10,242 |
Deferred tax asset - increase | 442 |
10,684 | |
Borrowings (Lease liability) - increase | (11,716) |
Net impact on retained earnings, tax effected | (1,032) |
Impact of adoption on the current reporting period
The impact on the Group's consolidated statement of profit or loss and other consolidated income, compared with the amount that would have been reflected under AASB 117, for the 6 months to 31 December 2019 is:
Decrease in operating lease expense
Increase in finance cost expense
Increase in right-of-use asset depreciation
Decrease in profit before tax
Increase in income tax expense
Decrease in profit after tax
The impact of the adoption on segment disclosures was principally in the Central segment.
The Group's earnings per share was not materially impacted.
31 Dec 2019
$'000
3,966
(1,051)
(3,246)
(331)
99
(232)
Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
- applying a single discount rate to a portfolio of leases with reasonably similar characteristics;
- accounting for operating leases with a remaining term of less than 12 months as at 1 July 2019 as short-term leases;
- using hindsight in determining the lease term where the contract contains options to extend or terminate the lease; and
- for contracts entered into before the transition date, the Group chose to 'grandfather' previous assessments made applying AASB 117 and Interpretation 4 Determining whether an Arrangement contains a Lease, instead of reassessing whether existing contracts were or contained a lease.
Note 2. Operating segments
Business segment
The Group has identified its operating segments based on internal management reports that are reviewed by the Board (the Chief Operating Decision Makers) in assessing performance and in determining the allocation of resources.
The Group continues to report its business results as three operating segments being Mining Services & Processing, Commodities (previously reported as 'Mining') and Central. All are operating within the Australian resources sector.
The measurement of segment results is in line with the basis of information presented to management for internal management reporting purposes and the performance of each segment is measured based on EBITDA contribution.
The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of the financial statements.
13
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 2. Operating segments (continued) | ||||||||||||||||
Operating segment information | ||||||||||||||||
Mining | ||||||||||||||||
Services & | Commodities* | Central | Inter- | |||||||||||||
Processing | segment | Total | ||||||||||||||
Group - 31 Dec 2019 | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||||||
Revenue | ||||||||||||||||
External sales | 216,167 | 770,462 | 17 | - | 986,646 | |||||||||||
Intersegment sales | 396,404 | - | - | (396,404) | - | |||||||||||
Total revenue | 612,571 | 770,462 | 17 | (396,404) | 986,646 | |||||||||||
Other income | 2,309 | 1,290,099 | 2,448 | - | 1,294,856 | |||||||||||
Expenses | (443,334) | (586,585) | (58,568) | 382,441 | (706,046) | |||||||||||
EBITDA | 171,546 | 1,473,976 | (56,103) | (13,963) | 1,575,456 | |||||||||||
Depreciation and amortisation | (61,862) | (26,828) | (3,804) | - | (92,494) | |||||||||||
Impairment charges | (58,942) | (104,536) | - | - | (163,478) | |||||||||||
Interest income | 5 | 1,310 | 3,723 | (853) | 4,185 | |||||||||||
Finance costs | (2,910) | (1,993) | (46,547) | 853 | (50,597) | |||||||||||
Profit/(loss) before tax | 47,837 | 1,341,929 | (102,731) | (13,963) | 1,273,072 | |||||||||||
Income tax expense | (389,031) | |||||||||||||||
Profit after tax | 884,041 | |||||||||||||||
Assets | ||||||||||||||||
Segment assets | 1,175,505 | 1,718,644 | 1,456,870 | (41,937) | 4,309,082 | |||||||||||
Liabilities | ||||||||||||||||
Segment liabilities | 390,344 | 278,296 | 1,430,396 | - | 2,099,036 | |||||||||||
Segment net assets | 785,161 | 1,440,348 | 26,474 | (41,937) | 2,210,046 | |||||||||||
*Previously reported as Mining |
14
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 2. Operating segments (continued)
Mining | ||||||||||||||||
Services & | Commodities* | Central | Inter- | |||||||||||||
Processing | segment | Total | ||||||||||||||
Group - 31 Dec 2018 | $'000 | $'000 | $'000 | $'000 | $'000 | |||||||||||
Revenue | ||||||||||||||||
External sales | 146,573 | 408,070 | 52 | - | 554,695 | |||||||||||
Intersegment sales | 320,502 | - | - | (320,502) | - | |||||||||||
Total revenue | 467,075 | 408,070 | 52 | (320,502) | 554,695 | |||||||||||
Other income | 600 | - | 560 | - | 1,160 | |||||||||||
Expenses | (380,125) | (362,949) | (33,022) | 291,926 | (484,170) | |||||||||||
EBITDA | 87,550 | 45,121 | (32,410) | (28,576) | 71,685 | |||||||||||
Depreciation and amortisation | (37,545) | (7,882) | (892) | 528 | (45,791) | |||||||||||
Interest income | 1 | 165 | 1,359 | (615) | 910 | |||||||||||
Finance costs | (3,009) | (1,225) | (4,427) | 615 | (8,046) | |||||||||||
Profit/(loss) before tax | 46,997 | 36,179 | (36,370) | (28,048) | 18,758 | |||||||||||
Income tax expense | (5,651) | |||||||||||||||
Profit after tax | 13,107 | |||||||||||||||
Group - 30 Jun 2019 | ||||||||||||||||
Assets | ||||||||||||||||
Segment assets | 928,748 | 930,503 | 1,326,971 | (24,965) | 3,161,257 | |||||||||||
Liabilities | ||||||||||||||||
Segment liabilities | 384,539 | 340,444 | 1,056,068 | - | 1,781,051 | |||||||||||
Segment net assets | 544,209 | 590,059 | 270,903 | (24,965) | 1,380,206 | |||||||||||
*Previously reported as Mining |
15
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 3. Revenue
Disaggregation of revenue
Set out below is the disaggregation of the Group's revenue from contracts with customers:
Mining | ||||||||||||
Services & | ||||||||||||
Processing | Commodities* | Central | Total | |||||||||
Group - 31 Dec 2019 | $'000 | $'000 | $'000 | $'000 | ||||||||
Type of goods or service | ||||||||||||
Sale of iron ore | - | 696,020 | - | 696,020 | ||||||||
Sale of lithium | - | 74,221 | - | 74,221 | ||||||||
Contract and operational revenue | 215,763 | - | - | 215,763 | ||||||||
Other | 404 | 221 | 17 | 642 | ||||||||
Total external revenue from contracts with customers | 216,167 | 770,462 | 17 | 986,646 | ||||||||
Geographical information (by location of customer) | ||||||||||||
Australia | 216,108 | 221 | 17 | 216,346 | ||||||||
China | - | 224,336 | - | 224,336 | ||||||||
Singapore | - | 545,905 | - | 545,905 | ||||||||
Other | 59 | - | - | 59 | ||||||||
Total external revenue from contracts with customers | 216,167 | 770,462 | 17 | 986,646 | ||||||||
Mining | ||||||||||||
Services & | ||||||||||||
Processing | Commodities* | Central | Total | |||||||||
Group - 31 Dec 2018 | $'000 | $'000 | $'000 | $'000 | ||||||||
Type of goods or service | ||||||||||||
Sale of iron ore | - | 258,654 | - | 258,654 | ||||||||
Sale of lithium | - | 149,416 | - | 149,416 | ||||||||
Contract and operational revenue | 145,419 | - | - | 145,419 | ||||||||
Other | 1,154 | - | 52 | 1,206 | ||||||||
Total external revenue from contracts with customers | 146,573 | 408,070 | 52 | 554,695 | ||||||||
Geographical information (by location of customer) | ||||||||||||
Australia | 146,521 | - | 52 | 146,573 | ||||||||
China | - | 327,658 | - | 327,658 | ||||||||
Singapore | - | 80,412 | - | 80,412 | ||||||||
Other | 52 | - | - | 52 | ||||||||
Total external revenue from contracts with customers | 146,573 | 408,070 | 52 | 554,695 | ||||||||
*Previously reported as Mining |
16
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 4. Other income
Group | ||||
31 Dec 2019 | 31 Dec 2018 | |||
$'000 | $'000 | |||
Net fair value gain on investments held at fair value through profit or loss | 2,433 | 568 | ||
Net gain/(loss) on disposal of property, plant and equipment | 1,635 | (97) | ||
Net gain on sale of disposal group | 1,290,047 | - | ||
Interest income | 4,185 | 910 | ||
Other | 741 | 689 | ||
Other income | 1,299,041 | 2,070 | ||
Note 5. Impairment charges | ||||
Group | ||||
31 Dec 2019 | 31 Dec 2018 | |||
$'000 | $'000 | |||
Exploration and mine development | (71,174) | - | ||
Property, plant and equipment | (79,964) | - | ||
Inventory | (10,888) | - | ||
Intangibles | (1,452) | - | ||
(163,478) | - | |||
As part of the Group's accounting policy, non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
Accordingly, a pre-tax total of $163,478,000 of impairments and write-offs has been recognised in relation to various classes of assets that were assessed for impairment, being:
- $71,174,000 of capitalised exploration and mine development expenditure. Following a reassessment during the half-year to 31 December 2019 of the Group's future iron ore operating plans in the Yilgarn region, the Group updated its Yilgarn Iron Ore Strategy which it announced to the ASX on 20 November 2019. The Yilgarn Iron Ore Strategy no longer places dependency on the need to mine at several deposits in which the Group had previously conducted significant exploration and development work. As a result, an impairment charge was recorded in the half-year to 31 December 2019 to fully write-off associated accumulated exploration and mine development expenditure;
- $79,964,000 of various idle plant and equipment was impaired to reflect a change in management's future operational plans which no longer required utilisation of these assets; $22,475,000 related to infrastructure associated with the Yilgarn tenements noted above;
- $10,888,000 of ore stockpiles impaired to net realisable value; and
- $1,452,000 of capitalised development costs where no further development activities are expected to be conducted in the future.
17
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 6. Other expenses
Group | |||
31 Dec 2019 | 31 Dec 2018 | ||
$'000 | $'000 | ||
Profit before tax includes the following specific expenses: | |||
Other expenses | |||
Net foreign exchange loss | (13,095) | - | |
Fair value loss on investment held at fair value through profit or loss | (34,544) | (30,315) | |
Other expenses | (55,590) | (52,529) | |
Total other expenses | (103,229) | (82,844) |
Note 7. Assets held for sale
Sale of 60% interest in Wodgina Lithium Project
In June 2019, management committed to selling a 60% interest in certain tenements, assets and related infrastructure, together comprising the Wodgina Lithium Project within the Commodities segment under a binding Asset Sale and Share Subscription Agreement (Sale Agreement) with Albemarle Corporation (NYSE: ALB, Albemarle). Accordingly, the 60% interest in the assets and associated liabilities was presented as a disposal group held for sale as at 30 June 2019.
The transaction was completed on 1 November 2019. The Group recognised a pre-tax gain on disposal of $1,290 million (post-tax $901 million) in the half-year to 31 December 2019.
(a) Assets and liabilities of disposal group at date of disposal | |
Group | |
$'000 | |
Assets | |
Inventories | 54,756 |
Property, plant and equipment | 348,022 |
Exploration and mine development | 128,356 |
Total assets disposed | 531,134 |
Liabilities | |
Lease liability | 13,278 |
Provisions - site rehabilitation | 16,510 |
Total liabilities associated with assets disposed | 29,788 |
Net assets disposed | 501,346 |
18
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 7. Assets held for sale (continued)
(b) Gain on disposal | ||
Note | Group | |
$'000 | ||
Proceeds | 7(c) | 1,821,963 |
Net of transaction costs and other items | (30,570) | |
Less carrying amount of net assets disposed | (501,346) | |
Gain on disposal before tax | 1,290,047 | |
Income tax expense | (389,224) | |
Gain on disposal after tax | 900,823 | |
(c) Proceeds from sale of disposal group
Disposal proceeds recognised in the half-year to 31 December 2019 included:
- Cash proceeds of $1,174 million net of disposal costs, reflected in 'cash flows from investing activities') on the statement of cash flows;
- Non-cashproceeds $602 million, recognised in 'non-current trade and other receivables'; and
- Completion adjustments totalling $33 million recognised in 'current trade and other receivables' on the statement of financial position.
Note 8. Property, plant and equipment
Acquisitions and disposals
During the half-year to 31 December 2019, the Group continued to progress construction on the Wodgina spodumene concentrate plant and related infrastructure up until the 1 November 2019 when the Wodgina Lithium Project was placed on care and maintenance. Costs capitalised to the construction project during the half-year to 31 December 2019 totalled $57,000,000.
Property, plant and equipment increased by $10,242,000 as a result of right-of-use assets for property leases recognised on a retrospective basis on the adoption of AASB 16 on 1 July 2019 (refer Note 1).
Property, plant and equipment with a carrying amount of $348,022,000 were disposed of as part of sale of a 60% interest in the Wodgina Lithium Project (refer Note 7).
Capital commitments
Refer Note 12 for capital commitments.
19
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 9. Borrowings
Group | ||||||||
31 Dec 2019 | 30 Jun 2019 | |||||||
$'000 | $'000 | |||||||
Current liabilities | ||||||||
Other borrowings | 8,226 | 1,144 | ||||||
Lease liability | 75,588 | 54,125 | ||||||
Total current | 83,814 | 55,269 | ||||||
Non-current liabilities | ||||||||
Senior unsecured notes | 999,144 | 998,146 | ||||||
Less: capitalised transaction costs | (14,549) | (15,487) | ||||||
Lease liability | 159,157 | 99,056 | ||||||
Total non-current | 1,143,752 | 1,081,715 | ||||||
Total borrowings | 1,227,566 | 1,136,984 | ||||||
Note 10. Issued capital | ||||||||
Group | ||||||||
31 Dec 2019 | 30 Jun 2019 | 31 Dec 2019 | 30 Jun 2019 | |||||
Shares | Shares | $'000 | $'000 | |||||
Ordinary shares | 188,381,231 | 188,098,571 | 525,394 | 519,593 | ||||
Less: Treasury shares | (666,452) | (795,359) | (9,836) | (11,738) | ||||
187,714,779 | 187,303,212 | 515,558 | 507,855 | |||||
20
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 10. Issued capital (continued)
Movements in issued capital | ||||||||
Details | Less: | |||||||
Ordinary | Treasury | |||||||
shares | shares | Total | ||||||
Number | Number | Number | ||||||
Balance at 1 July 2018 | 187,701,751 | (304,559) | 187,397,192 | |||||
Shares issued under Dividend Reinvestment Plan | 396,820 | - | 396,820 | |||||
Purchase of shares under employee share plans | - | (1,245,000) | (1,245,000) | |||||
Employee share awards issued | - | 754,200 | 754,200 | |||||
Balance at 30 June 2019 | 188,098,571 | (795,359) | 187,303,212 | |||||
Shares issued under Dividend Reinvestment Plan | 282,660 | - | 282,660 | |||||
Employee share awards issued | - | 128,907 | 128,907 | |||||
Balance at 31 December 2019 | 188,381,231 | (666,452) | 187,714,779 | |||||
Details | Less: | |||||||
Treasury | ||||||||
Ordinary | shares | Total | ||||||
$'000 | $'000 | $'000 | ||||||
Balance at 1 July 2018 | 514,413 | (3,225) | 511,188 | |||||
Shares issued under Dividend Reinvestment Plan | 5,879 | - | 5,879 | |||||
Purchase of shares under employee share plans | - | (18,922) | (18,922) | |||||
Employee share awards issued | (699) | 10,409 | 9,710 | |||||
Balance at 30 June 2019 | 519,593 | (11,738) | 507,855 | |||||
Shares issued under Dividend Reinvestment Plan | 4,013 | - | 4,013 | |||||
Employee share awards issued | 1,788 | 1,902 | 3,690 | |||||
Balance at 31 December 2019 | 525,394 | (9,836) | 515,558 | |||||
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Treasury shares
Movements in treasury shares represent acquisition of the Company's shares on market to be reissued to the Company's employees from the vesting of awards and exercise of rights under the employee share-based payment plans. These re-acquired shares are disclosed as treasury shares and deducted from contributed equity.
21
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 11. Dividends
31 Dec 2019 | 31 Dec 2018 | ||||||
Dividend per | Total | Dividend per | Total | ||||
share | share | ||||||
Cents | $'000 | Cents | $'000 | ||||
Declared and paid during the period | |||||||
Final franked dividend | 31.00 | 58,099 | 40.00 | 75,015 | |||
Proposed | |||||||
Interim franked dividend | 23.00 | 43,174 | 13.00 | 24,386 | |||
Note 12. Commitments and contingencies
Contingent liabilities
Since the last annual report, there has been no material change to contingent liabilities.
Commitments
At 31 December 2019, the Group had capital commitments of $15,803,000 (30 June 2019: $77,149,000) relating to the completion of the Wodgina Spodumene Development Project placed on care and maintenance on 1 November 2019.
Operating lease commitments were reclassified to lease liabilities on adoption of AASB 16 on 1 July 2019 (Note 1).
There has been no other material change to capital commitments since the last annual report.
Note 13. Fair value measurement
Fair value hierarchy
The following tables detail the Group's assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability.
Level 1 | Level 2 | Level 3 | Total | ||||
Group - 31 Dec 2019 | $'000 | $'000 | $'000 | $'000 | |||
Assets | |||||||
Financial assets held at fair value through profit or loss | 51,172 | - | - | 51,172 | |||
Foreign exchange forward contracts in cash flow hedges | 1,470 | - | - | 1,470 | |||
Total assets | 52,642 | - | - | 52,642 |
Level 1 | Level 2 | Level 3 | Total | ||||
Group - 30 Jun 2019 | $'000 | $'000 | $'000 | $'000 | |||
Assets | |||||||
Financial assets held at fair value through profit or loss | 75,149 | - | - | 75,149 | |||
Foreign exchange forward contracts in cash flow hedges | 6,011 | - | - | 6,011 | |||
Total assets | 81,160 | - | - | 81,160 |
Fair value of financial assets and financial liabilities that are not measured at fair value
Unless otherwise stated, the carrying amount of all of the Group's financial assets and financial liabilities recognised in the financial statements are considered to approximate their fair values.
22
Mineral Resources Limited
Notes to the consolidated financial statements 31 December 2019
Note 14. Events after the reporting period
Proposed interim dividend for the year ended 30 June 2020
On 12 February 2020, the directors declared an interim fully franked dividend for the year ended 30 June 2020 of 23 cents per share to be paid on 26 March 2020, a total estimated distribution of $43,174,000 based on the number of ordinary shares on issue as at 2 March 2020.
No other matter or circumstance has arisen since 31 December 2019 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
23
Mineral Resources Limited Directors' declaration
31 December 2019
In the Directors' opinion:
- the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;
- the attached financial statements and notes give a true and fair view of the Group's financial position as at 31 December 2019 and of its performance for the financial half-year ended on that date; and
- 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 Directors made pursuant to section 303(5)(a) of the Corporations Act 2001.
On behalf of the Directors
Chris Ellison
Managing Director
12 February 2020
Perth
24
RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR'S REVIEW REPORT
TO THE MEMBERS OF
MINERAL RESOURCES LIMITED
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of Mineral Resources Limited which comprises the statement of financial position as at 31 December 2019, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year.
Directors' Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2019 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Mineral Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report 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.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Mineral Resources Limited, would be in the same terms if given to the directors as at the time of this auditor's review report.
Conclusion
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 financial report of Mineral Resources Limited is not in accordance with the Corporations Act 2001, including:
- giving a true and fair view of the consolidated entity's financial position as at 31 December 2019 and of its performance for the half-year ended on that date; and
- complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
RSM AUSTRALIA PARTNERS
Perth, WA | TUTU PHONG |
Dated: 12 February 2020 | Partner |
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Mineral Resources Limited published this content on 12 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 February 2020 23:53:10 UTC