OM HOLDINGS LIMITED OM HOLDINGS LIMITED
(ARBN 081 028 337)
No. of Pages Lodged: 6 Covering letter
22 ASX Appendix 4D
30 August 2017
ASX Market Announcements ASX Limited
4th Floor
20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
The Board of OM Holdings Limited ("OMH", or the "Company", and together with its subsidiaries, the "Group") is pleased to provide a copy of its interim financial statement for the half-year ended 30 June 2017. A copy of the Group's Appendix 4D and consolidated interim financial statements for the half-year ended 30 June 2017 are attached to this announcement.
HIGHLIGHTS- Positive Earnings Before Interest, Tax and Depreciation ("EBITDA") of A$41.5 million for the half-year ended 30 June 2017 ("1H 2017") compared with A$3.7 million achieved for the half-year ended 30 June 2016 ("1H 2016"), despite OM (Manganese) Ltd's ("OMM") manganese ore production and sales being at approximately 60% of its nameplate capacity and OM Materials (Sarawak) Sdn. Bhd.'s ("OM Sarawak") manganese alloy production and sales being at approximately 40% of its nameplate capacity in 1H 2017
- Reduced net loss after tax for 1H 2017 of A$21.3 million as compared to a net loss after tax of A$82.2 million for 1H 2016
- With the Group's operations in OMM at almost full nameplate capacity and OM Sarawak running 12 furnaces during the month of June 2017, the Group recorded a profit after tax of A$12.2 million for the month ended 30 June 2017
- Revenue from operating activities for 1H 2017 was A$263.1 million, representing a 43% increase over 1H 2016 (where revenue from ordinary activities was A$183.4 million). This increase was underpinned by higher tonnages of alloys traded, and a rebound in prices of manganese ores and ferro-manganese alloys
- Gross profit margin improved to approximately 19% in 1H 2017 from 16% in 1H 2016. This was mainly attributed to stronger ore and alloy prices, and higher volume of ferrosilicon and manganese alloys traded, coupled with the higher production efficiency of the OM Sarawak smelter
- Total borrowings decreased by 6% from A$617.6 million as at 31 December 2016 to A$583.3 million as at 30 June 2017 mainly from the partial repayment of the Group's mezzanine loan facility
- Net cash generated from operating activities was A$22.1 million for 1H 2017 as compared to net cash generated of A$15.2 million for 1H 2016
#08 - 08, Parkway Parade 1
80 Marine Parade Road, 449269 Singapore
Tel: 65-6346 5515 Fax: 65-6342 2242
Email address: om@ommaterials.com Website: www.omholdingsltd.com ASX Code: OMH
OM HOLDINGS LIMITED - GROUP KEY FINANCIAL RESULTSKEY DRIVERS (Tonnes) | Period Ended 30 Jun 2017 | Period Ended 30 Jun 2016 | Variance % |
Sales volumes of Ores | 301,415 | 720,607 | (58) |
Sales volumes of Alloys | 145,400 | 57,860 | >100 |
FINANCIAL RESULTS | |||
Total sales | 263.1 | 183.4 | 43 |
Gross profit | 49.6 | 29.7 | 67 |
Gross profit margin (%) | 18.8% | 16.2% | |
Other income | 2.8 | 17.3 | (84) |
Distribution costs | (14.8) | (8.4) | 76 |
Administrative expenses | (11.2) | (7.2) | 56 |
Other operating expenses | (16.1) | (7.7) | >100 |
Exchange loss | (11.5) | (83.2) | (86) |
Impairment charge | - | (0.6) | (100) |
Finance costs | (24.8) | (18.2) | 36 |
Share of results of associates | 5.1 | 1.9 | >100 |
Loss before income tax | (20.9) | (76.3) | (73) |
Income tax | (0.4) | (5.9) | (93) |
Loss for the period | (21.3) | (82.2) | (74) |
Non-controlling interests | 7.7 | 24.0 | (68) |
Loss after tax attributable to owners of the Company | (13.6) | (58.2) | (77) |
OPERATING RESULTS ADJUSTED FOR NON-CASH ITEMS | ||
Net loss after tax | (21.3) | (82.2) |
Adjust for non-cash items: | ||
Inventory write-down/(write-back)/, net | - | (5.2) |
Impairment charge | - | 0.6 |
Fair value gain | - | (3.4) |
Depreciation/amortisation(2) | 24.3 | 7.8 |
Unrealised exchange loss | 13.4 | 62.1 |
Finance costs (net of income) | 24.7 | 18.1 |
Income tax expenses | 0.4 | 5.9 |
Adjusted EBITDA(1) | 41.5 | 3.7 |
Adjusted EBITDA is defined as operating profit before depreciation and amortisation, impairment write- back/expense, non-cash inventory write-downs, deferring stripping, and other non-cash items. Adjusted EBITDA is not a uniformly defined measure and other companies in the mining industry may calculate this measure differently. Consequently, the Group's presentation of Adjusted EBITDA may not be readily comparable to other companies' figures.
Inclusive of depreciation and amortisation charges recorded through cost of sales.
The Group achieved revenue of A$263.1 million in 1H 2017, representing a 43% increase from the A$183.4 million achieved in 1H 2016. The increase in revenue was mainly from the Smelting and Marketing and Trading segments, predominantly as a result of improved ore and alloy prices, and higher ferrosilicon volumes traded from the Group's 75% owned smelter in Sarawak. In addition, with 4 modified furnaces at the smelter in Sarawak producing manganese alloy (high carbon ferromanganese and silico manganese) in 1H 2017, there was an increase in tonnages of manganese alloys traded of 58,462 tonnes. This resulted in A$79.2 million of revenue generated from manganese alloys in 1H 2017 as compared to only A$2.8 million in 1H 2016.
Prices of manganese ores and ferro-manganese alloys rebounded in 1H 2017 and this had a positive impact on the Group's sales revenue and gross profit margins. The Group recorded a gross profit of A$49.6 million in 1H 2017 as compared to A$29.7 million in 1H 2016, with an improved gross profit margin of approximately 19% achieved in 1H 2017 as compared to 16% for 1H 2016. As an indication, the index ore prices (44% Mn published by Metal Bulletin) for the 1H 2016 closed at US$3.17/dmtu CIF China as at 30 June 2016 as compared to 1H 2017, where the index price closed at US$5.87/dmtu CIF China as at 30 June 2017.
Distribution costs increased in 1H 2017 as compared to 1H 2016 mainly due to higher tonnages of ferrosilicon and manganese alloy shipped and sold in 1H 2017. Finance costs increased from A$18.2 million for 1H 2016 to A$24.8 million for 1H 2017 mainly due to the cessation in capitalisation of borrowing costs from OM Sarawak.
Administrative and other operating expenses for 1H 2017 increased to A$11.2 million and A$16.1 million respectively, from A$7.2 million and A$8.4 million in 1H 2016 mainly due to higher legal and professional fees incurred of A$3.9 million in 1H 2017 (1H 2016: A$1.3 million), and higher depreciation and amortization expenses in 1H 2017 mainly due to the inclusion of our Australian subsidiary's depreciation and amortization expenses as they were reconsolidated back into the Group when control was regained after the effectuation of the Deed of Company Arrangement in August 2016.
The exchange loss in 1H 2017 of A$11.4 million was predominantly contributed by the translation of MYR denominated payables to USD as a result of the strengthening of the MYR against the USD during the current period. However, this was offset by translation exchange gains from the strengthening of the Australian dollar ("AUD") against the USD in 1H 2017. The A$83.2 million exchange loss for 1H 2016 was mainly from the hedging contract settlement and losses for the period ended June 2016 of A$48.4 million, and translation of MYR denominated payables of A$28.5 million during the period in 2016.
With the rebound in prices of manganese ore and ferro-manganese alloys during 1H 2017, coupled with the re-start of mining and production activities of the Group's mine in Australia, and the ramped up production capabilities and efficiency of the Groups smelter in Sarawak with 12 furnaces in production, the Group's loss after tax has been reduced from A$82.2 million in 1H 2016 to A$21.3 million in 1H 2017, a decrease of approximately 74%. The Group's loss per ordinary share has thus reduced to 1.87 cents in 1H 2017 from 7.95 cents in 1H 2016.
The Group also recorded a positive EBITDA of A$41.5 million in 1H 2017 as compared with A$3.7 million in 1H 2016, despite OMM's manganese ore production and sales being only at approximately 60% of its nameplate capacity, and OM Sarawak's manganese alloy production and sales being only at approximately 40% of its nameplate capacity for 1H 2017.
With the Group's operations in OMM at almost full nameplate capacity and OM Sarawak running 12 furnaces during the month of June 2017, the Group recorded a profit after tax of A$12.2 million for the month ended 30 June 2017.
Results ContributionsThe contributions from the Group's business segments were as follows:
A$ million | Period ended 30 Jun 2017 | Period ended 30 Jun 2016 | ||
Revenue* | Contribution | Revenue* | Contribution | |
Mining | 42.6 | 4.8 | - | - |
Smelting | 189.3 | (16.7) | 78.9 | (74.3) |
Marketing, logistics and trading | 236.6 | 5.3 | 152.6 | 19.5 |
Other | 15.9 | 5.3 | 0.4 | (5.3) |
Net loss before finance costs | (1.3) | (60.1) | ||
Finance costs (net of income) | (24.8) | (18.1) | ||
Share of results of associates | 5.1 | 1.9 | ||
Loss before tax ** | (20.9) | (76.3) | ||
* revenue contribution from segments is subsequently adjusted for intercompany sales on consolidation
** numbers may not add due to rounding
MiningThis category includes the contribution from the Bootu Creek Manganese Mine (the "Mine").
In late December 2016, OMM obtained the relevant approvals to re-start the Mine. Mining activity commenced in the middle of February 2017 and the first ore was processed in late February 2017.
The Mine (100% owned and operated by the Company's wholly owned subsidiary OMM) produced 287,830 tonnes of manganese ore with an average grade of 35.97% Mn in 1H 2017. There was no production from the Mine in 1H 2016 as OMM was in voluntary administration from the end of December 2015 to 24 August 2016. OMM shipped 211,429 dry tonnes of ore with an average grade of 35.97% Mn in 1H 2017.
Revenue for 1H 2017 amounted to A$42.6 million and OMM achieved a positive contribution of A$4.8 million for the period ended 30 June 2017. This was mainly contributed by the rebound of manganese ore prices in the current period.
The C1 unit cash operating cost for 1H 2017 was A$3.35/dmtu (US$2.53/dmtu). There was no comparative C1 unit cash operating cost for 1H 2016 as OMM was in voluntary administration with no mining and production activities during that period.
SmeltingThis business segment currently covers the operations of the ferrosilicon and manganese alloy smelter operated by OM Sarawak and the Qinzhou manganese alloy smelter operated by OM Materials (Qinzhou) Co Ltd ("OMQ").
The operations in OM Sarawak and OMQ (which resumed its production operations in the middle of February 2017) recorded revenue of A$189.3 million for 1H 2017 against A$78.9 million for 1H 2016. The increase in revenue was mainly due to higher tonnages of ferrosilicon and manganese alloy produced by OM Sarawak in 1H 2017 of 80,564 tonnes and 48,897 tonnes respectively (1H 2016: 61,858 tonnes of ferrosilicon and no manganese alloy) with a total revenue contribution of A$167.6 million for 1H 2017. OMQ produced 18,082 tonnes of manganese alloy in 1H 2017 but there was no production activity in OMQ during 1H 2016 as the plant ceased operations from October 2015 to October 2016). OMQ recorded a revenue contribution of A$21.7 million in 1H 2017 as compared to A$11.7 million from the sale of its
OM Holdings Limited published this content on 30 August 2017 and is solely responsible for the information contained herein.
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