Annual Report 2013

Notes to the Financial Statements

for the year ended 31 December 2013

1. REVENUE
2. SEGMENT REPORTING
3. OTHER OPERATING COSTS
4. (LOSS)/PROFIT FOR THE YEAR
5. AUDITORS’ REMUNERATION

1. REVENUE

 

2013

2012

 

US$’000

US$’000

Sale of mineral products

137,868

234,638

 

 

 

During the year, the Group sold 677,900 tonnes (2012: 680,800) of finished products ilmenite, rutile and zircon to customers at a sales value of US$161.5 million (2012: US$234.6 million). US$23.6 million of revenue and US$28.3 million of operating costs were capitalised during the year in property, plant and equipment as part of the ramp-up and commissioning of the expansion plant.

2. SEGMENT REPORTING

Information on the operations of the Moma Titanium Minerals Mine in Mozambique is reported to the Board for the purposes of resources allocation and assessment of segment performance. Information regarding the Group’s operating segment is reported below.

Segment revenues and results

 

2013

2012

Moma Titanium Minerals Mine

US$’000

US$’000

Revenue

137,868

234,638

Cost of sales

(113,733)

(134,472)

Gross profit

24,135

100,166

Other operating costs

(16,062)

(14,032)

Segment operating profit

8,073

86,134

 

 

 

Other corporate operating costs

(3,412)

(5,698)

 

 

 

Group operating profit

4,661

80,436

 

 

 

Finance income

299

1,706

Finance expenses

(40,535)

(28,714)

Foreign exchange loss

(6,512)

(641)

(Loss)/profit before tax

(42,087)

52,787

Income tax charge

(2,033)

(3,301)

(Loss)/profit for the year

(44,120)

49,486

 

 

 

Segment assets

 

 

Moma Titanium Minerals Mine assets

1,028,039

957,805

Corporate assets

70,197

36,119

Total assets

1,098,236

993,924

 

 

 

Segment liabilities

 

 

Moma Titanium Minerals Mine liabilities

403,704

383,287

Corporate liabilities

30,320

5,040

Total liabilities

434,024

388,327

 

 

 

Other segment information

 

 

Depreciation and amortisation

 

 

Moma Titanium Minerals Mine

24,344

18,453

Corporate

-

3

Total

24,344

18,456

 

 

 

Additions to non-current assets

 

 

Moma Titanium Minerals Mine

103,941

190,618

Corporate

-

1,233

Total

103,941

191,851

 

 

 

Revenue from major products

 

2013

2012

 

US$’000

US$’000

Mineral products (ilmenite, zircon and rutile)

137,868

234,638

 

 

 

Geographical information

 

2013

2012

Revenue from external customers

US$’000

US$’000

Europe

63,427

93,923

Asia

43,711

105,462

USA

30,730

19,469

Rest of World

-

15,784

Total

137,868

234,638

 

 

 

The Group’s revenue from external customers is generated by the Moma Titanium Minerals Mine, the non-current assets of which are US$962.8 million (2012: US$888.0 million).

Information about major customers

Included in revenues are US$33.7 million (2012: US$71.6 million) from sales to the Group’s largest customer, US$32.8 million (2012: US$33.1 million) from sales to the Group’s second largest customer, US$30.7 million (2012: US$31.0 million) from sales to the Group’s third largest customer. All revenues are generated by the Moma Titanium Minerals Mine.

3. OTHER OPERATING COSTS

 

2013

2012

 

US$’000

US$’000

Distribution costs

11,005

9,140

Freight costs

3,364

3,230

Demurrage costs

393

716

Administration costs

3,412

6,644

Repair costs

1,300

-

 

19,474

19,730

 

 

 

Included in administration costs are:

 

 

Share-based payments

-

2,471

 

 

 

Freight costs of US$3.4 million (2012: US$3.2 million) are reimbursable by customers or factored into the sales price for product delivered to customers on a CIF (cost, insurance and freight) basis. Demurrage costs of US$0.4 million (2012: US$0.7 million) are incurred as a result of shipment delays. Distribution costs of US$11.0 million (2012: US$9.1 million) during the year represents the cost of running the Mine’s finished product storage, jetty and marine fleet. Included in distribution costs is depreciation of US$3.0 million (2012: US$1.7 million) increased from 2012 as a result of the capital additions and upgrade to the fleet and enhancement of the jetty in prior years. Administration costs of US$3.4 million (2012: US$6.6 million) are the group administration costs and include a share based payment expense of nil (2012: US$2.5 million). In October 2013 a fire occurred in the trommels section of WCP A. The costs of repair works and replacement parts amounted to US$1.3 million during 2013.

Total share-based payments for 2013 amounted to US$0.8 million (2012: US$3.5 million) of which US$0.6 million (2012: US$0.7 million) relate to staff at the Mine and is included as a production cost of inventories, US$0.2 million (2012: US$ 0.4 million) relate to staff working on the expansion project and has been capitalised in property, plant and equipment. Due to the number of share options lapsed in 2013 there is a share based payment of nil (2012: US$2.4 million) included in administration costs in the statement of comprehensive income.

4. (LOSS)/PROFIT FOR THE YEAR

The (loss)/profit for the year ended has been arrived at after charging items detailed below. Depreciation and amortisation and staff costs noted below have been included in cost of sales for the year or inventory at 31 December 2013.

 

2013

2012

 

US$’000

US$’000

Foreign exchange loss

6,512

641

Depreciation and amortisation of property, plant and equipment

24,344

18,456

Staff costs

51,249

42,069

 

 

 

5. AUDITORS’ REMUNERATION

The analysis of the auditors’ remuneration is as follows:

 

2013

2012

 

US$’000

US$’000

Audit fees

 

 

Fees payable to the Company’s auditors for audit of the Company’s annual accounts

15

15

Fees payable to the Company’s auditors for other services to the Group:

 

 

The audit of the Company’s subsidiaries

60

56

 

75

71

Fees payable to the Project Companies’ auditors for audit of the Project Companies’ accounts

90

76

Total audit fees

165

147

 

 

 

Non-audit fees

 

 

Audit related assurance services

 

 

Fees payable to the Company’s auditors for review of the Group’s Half Yearly Financial Report

19

17

Fees payable to the Project Companies’ auditors for review of the Project Companies’ Half Yearly Financial Reports

33

41

52

58

Taxation compliance services

 

 

Fees payable to the Company’s auditors for taxation compliance services

5

6

Fees payable to the Project Companies’ auditors for taxation compliance services

10

10

 

15

16

Other taxation advisory services

 

Fees payable to the Company’s auditor for tax advisory services

64

-

 

 

Other assurance services

 

 

Fees payable to the Project Companies’ auditors for preparation of statutory books under Mozambican
company law

30

-

 

 

 

Corporate finance, compliance and assurance services

 

 

Fees payable to the Company’s auditors for corporate finance, compliance and assurance services relating to funding activities

121

-

 

 

 

Other services

 

 

Fees payable to the Company’s auditor for employee pension advice

-

6

Total non-audit fees

282

80

 

 

 

Total fees

447

227

 

 

 

The Company’s auditors are Deloitte & Touche and the Project Companies’ auditors are KPMG. Details of the Company’s policy on the use of auditors for non-audit services, the reasons why the Company auditor was used rather than another supplier and how the auditors’ independence and objectivity was safeguarded are set out in the Audit Committee Report.