Profit and Loss Statements

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Profit and Loss Statements

  1. 1. Profit and Loss Statements Notes Consolidated Consolidated Pasminco Ltd Pasminco Ltd Pasminco Limited and its controlled entities for the year ended 30 June 2000 2000 $m 1999 $m 2000 $m 1999 $m Revenue from operating activities 2 1,984.0 1,596.1 100.7 20.0 Revenue from outside the operating activities 2 33.0 204.0 – – Total revenue 2,017.0 1,800.1 100.7 20.0 Operating profit/(loss) before abnormal items and income tax 2,3 31.0 (8.5) 22.4 7.6 Abnormal items before income tax 4(a) – – – (31.3) Operating profit/(loss) before income tax 31.0 (8.5) 22.4 (23.7) Income tax charge/(credit) attributable to operating profit/(loss) 5 (4.0) (0.2) 10.4 2.6 Abnormal income tax charge 4(b) 11.6 – – – Operating profit/(loss) after income tax attributable to the members of Pasminco Limited 23.4 (8.3) 12.0 (26.3) Retained profits/(Accumulated losses) at the beginning of the financial year (90.9) (87.2) 117.0 143.3 Total available for appropriation (67.5) (95.5) 129.0 117.0 Transfer from capital reserve 24 – 4.6 – – Transfer from foreign currency translation reserve 24 11.5 – – – Retained profits/(Accumulated losses) at the end of the financial year (56.0) (90.9) 129.0 117.0 The above Profit and Loss Statements should be read in conjunction with the accompanying notes. Pasminco Annual Report 2000 Page 58
  2. 2. Balance Sheets Notes Consolidated Consolidated Pasminco Ltd Pasminco Ltd Pasminco Limited and its controlled entities as at 30 June 2000 2000 $m 1999 $m 2000 $m 1999 $m Current Assets Cash 6 88.5 24.6 – – Receivables 7 276.8 542.7 319.3 319.1 Inventories 8 436.9 366.1 – – Investments in Associates 9 57.7 70.7 – – Other 10 36.9 107.5 – – Total current assets 896.8 1,111.6 319.3 319.1 Non-current Assets Receivables 11 2.4 0.4 850.0 822.2 Investments 12(a) – – 1,224.7 1,042.6 Mine property, property, plant and equipment 13 2,702.0 2,525.0 – – Future income tax benefit 5(b) 180.7 193.8 – – Intangibles 14 40.6 27.1 – – Other 15 67.1 31.0 – – Total non-current assets 2,992.8 2,777.3 2,074.7 1,864.8 Total assets 3,889.6 3,888.9 2,394.0 2,183.9 Current Liabilities Accounts payable 16 240.3 292.5 – – Borrowings 17 119.8 189.3 367.2 342.5 Provisions 18 147.8 235.1 – – Other 19 61.8 49.1 – – Total current liabilities 569.7 766.0 367.2 342.5 Non-current Liabilities Accounts payable 20 0.6 0.6 – – Borrowings 21 1,291.1 1,091.6 353.9 175.8 Provisions 22 318.3 262.7 – 5.5 Other 19 199.0 304.1 – – Total non-current liabilities 1,809.0 1,659.0 353.9 181.3 Total liabilities 2,378.7 2,425.0 721.1 523.8 Net assets 1,510.9 1,463.9 1,672.9 1,660.1 Shareholders’ Equity Share capital 23 1,543.9 1,543.1 1,543.9 1,543.1 Reserves 24 23.0 11.7 – – Retained profits/(Accumulated losses) (56.0) (90.9) 129.0 117.0 Total shareholders’ equity 1,510.9 1,463.9 1,672.9 1,660.1 The above Balance Sheets should be read in conjunction with the accompanying notes.
  3. 3. Statements of Cash Flows Notes Consolidated Consolidated Pasminco Ltd Pasminco Ltd Pasminco Limited and its controlled entities for the year ended 30 June 2000 2000 $m 1999 $m 2000 $m 1999 $m Cash Flows from Operating Activities Receipts from customers 1,887.9 1,870.5 – – Payments to suppliers and employees (1,591.7) (1,394.4) (0.1) – Net income taxes paid (11.5) (40.2) – – Net cash inflow/(outflow) from operating activities 38(a) 284.7 435.9 (0.1) – Cash Flows from Investing Activities Investment in mine property, property, plant and equipment (492.2) (810.0) – – Investment in infrastructure assets – (183.6) – – Investment in Savage Resources Limited, net of cash acquired (3.0) (406.1) – – Payments for major maintenance and repairs 1(o) (3.2) (10.9) – – Proceeds from sale of property, plant and equipment 1.4 12.7 – – Proceeds from sale of infrastructure assets 216.6 20.4 – – Proceeds from sale of coal assets 69.0 – – – Proceeds from liquidation of controlled entity – – 61.3 – Payments for acquisition of controlled entity – – (244.4) – Net loans repaid by associate 11.8 3.4 – – Net loans repaid by controlled entities – – 155.7 37.4 Net cash inflow/(outflow) from investing activities (199.6) (1,374.1) (27.4) 37.4 Cash Flows from Financing Activities Net proceeds from share issues 0.8 – 0.8 – Proceeds from borrowings 1,219.9 1,909.6 – – Repayments of borrowings (1,188.6) (925.0) – – Repayments of lease liabilities (0.2) (0.3) – – Interest and finance charges paid 3 (62.0) (43.4) (12.7) (12.4) Interest received 3 10.7 8.0 39.4 20.0 Dividends paid – (45.0) – (45.0) Net cash inflow/(outflow) from financing activities (19.4) 903.9 27.5 (37.4) Net increase/(decrease) in cash held 65.7 (34.3) – – Cash at the beginning of the reporting period 21.2 57.2 – – Effects of exchange rate changes on foreign currency denominated cash balances 1.4 (1.7) – – Cash at the end of the reporting period 1(r),6 88.3 21.2 – – The above Statements of Cash Flows should be read in conjunction with the accompanying notes. Pasminco Annual Report 2000 Page 60
  4. 4. Notes to the Financial Statements 1 Summary of Significant Accounting Policies (d) Taxation This general purpose financial report has been prepared in accordance with Tax effect accounting procedures are followed whereby income tax is regarded Accounting Standards, other authoritative pronouncements of the Australian as an expense and is matched with the accounting profit after allowing for Accounting Standards Board, Urgent Issues Group Consensus Views and permanent differences. Provisions for current and future income tax are the Corporations Law. It is prepared in accordance with the historical cost calculated on earnings using the “liability” method. Certain items of expenditure, convention, except for certain assets which, as noted, are at valuation. mainly depreciation and other provisions, may be deductible for income tax The accounting policies adopted are consistent with those of the previous purposes in years different from those in which they are charged against year except where noted. Comparative information is reclassified where earnings. The amount of the taxation difference due to such timing differences appropriate to enhance comparability. is classified as a deferred tax liability or future tax benefit. It is economic entity policy not to carry forward any part of future tax assets, arising from tax losses, (a) Principles of Consolidation including those arising as capital losses, unless their recovery is virtually certain The consolidated accounts incorporate the assets and liabilities of all entities through the economic entity’s ability to derive future assessable income controlled by Pasminco Limited (the chief entity) as at 30 June 2000, and or capital gains sufficient to enable the benefits to be realised, and for the the results of all controlled entities during the year ended 30 June 2000. economic entity to continue to comply with deductibility conditions imposed The effects of all transactions between entities in the consolidated entity by law. Dividend withholding tax is provided on the economic entity’s portion are eliminated in full. of earnings of certain foreign subsidiaries where it is intended to repatriate those earnings to Australia as dividends. Where control of an entity began or ceased during the financial year, its results are included only from the date on which control commenced or up to the (e) Inventories date control ceased. Stocks of ores, metals, concentrates and work in progress are valued at the Investments in associates are accounted for in the consolidated financial lower of cost and net realisable value. Cost includes expenditure incurred in statements using the equity method. Under this method, the consolidated acquiring and bringing the stock to its existing condition and location and entity’s share of the profits or losses of associates is recognised as revenue includes an appropriate portion of fixed and variable overhead expenses, in the consolidated profit and loss statement, and its share of movements including depreciation and amortisation. Stores are valued at cost with due in reserves is recognised in consolidated reserves. Associates are those allowance for obsolescence. In each case, cost is determined on an average entities over which the consolidated entity exercises significant influence, cost basis. but not control. A complete list of Pasminco Limited’s controlled entities is set out in note 12(c). (f) Investments The economic entity’s interest in joint ventures has been included in the Shares in companies held as long-term investments, including controlled economic entity’s accounts by taking up the economic entity’s share in entities, have been stated at Directors’ valuation or cost. Controlled entities, each of the individual assets and liabilities of the joint ventures. joint ventures and associates are accounted for in the consolidated accounts as set out in note 1(a). Dividend income is brought to account as it becomes (b) Financial Instruments receivable. Interest income is brought to account as it accrues on a daily basis. Hedging is undertaken in order to avoid or minimise possible adverse financial or cash flow effects of movements in exchange rates and commodity prices. (g) Leases (i) Foreign Exchange Leases of plant and equipment under which the economic entity assumes Refer note (c) Foreign Exchange substantially all the risks and benefits of ownership are classified as finance leases, whilst other leases are classified as operating leases. Finance leases (ii) Other are capitalised with a lease asset and liability equal to the present value of Gains and losses on derivatives used as hedges are accounted for on the minimum lease payments being recorded at the inception of the lease. the same basis as the underlying physical exposures they are hedging. Capitalised lease assets are amortised on a straight-line basis to their residual Accordingly, hedge gains and losses are included in the profit and loss value over the term of the lease, or where it is likely that the economic entity statement when the gains and losses arising on the related physical will obtain ownership of the asset, the life of the asset. Lease payments made exposures are recognised in the profit and loss statement. Gains and losses under operating leases are charged against profits in equal installments over related to qualifying hedges of firm commitments or anticipated transactions the accounting periods covered by the lease term. are deferred and recognised in income as adjustments to the underlying hedged transactions when they occur. (h) Mine Property, Property, Plant and Equipment Mine property, property, plant and equipment are carried at cost or at Directors’ (c) Foreign Exchange valuation. Any surplus on revaluation is credited directly to the asset revaluation Amounts payable and receivable in foreign currencies have been translated reserve and excluded from the profit and loss statement. All items of mine into Australian currency at the rates of exchange ruling at balance date. Gains property, property, plant and equipment, with the exception of freehold land, and losses on unhedged balances are recognised in the result of the period. and certain mine freeholds and leaseholds, are depreciated over their estimated Costs arising from forward exchange contracts are deferred and amortised remaining useful lives. Depreciation rates are reviewed regularly and reassessed over the term of the contracts. Costs and gains or losses arising on the hedging in light of commercial and technological developments. The expected useful contracts relating to sales commitments are deferred and included in the lives are as follows: measurement of the sales. All other transactions in foreign currencies during Buildings 40 years the year have been brought to account at the exchange rate ruling at the time of the transactions. Exchange gains and losses on designated borrowings, Plant and Equipment 5-15 years effectively hedging future revenues, are deferred and are recognised as the Capital spares purchased for particular plant are capitalised and depreciated underlying hedged transaction occurs. The accounts of self sustaining overseas on the same basis as the plant to which they relate. controlled entities are reported in Australian currency by translating assets and liabilities at the rates of exchange ruling at balance date and the revenue and (i) Exploration and Evaluation Expenditure expense items at the average of rates ruling during the year. Translation Expenditure on exploration and evaluation of individual projects is written off differences arising are included in the foreign currency translation reserve. against earnings as incurred except that, when a project reaches the stage where such expenditure is considered to be capable of being recouped through development or sale, all subsequent expenditures are capitalised and amortised against production from the area once mining commences.
  5. 5. Notes to the Financial Statements 1 Summary of Significant Accounting Policies (cont.) (p) Sales Revenue Sales revenue is stated on a gross basis, with freight and realisation expenses (j) Research & Development Expenditure included in the cost of sales. Sales revenue is stated net of the impact of gains Expenditure on research and development is written off against earnings as and losses arising on foreign exchange hedging contracts relating to sales incurred, except that, when a project reaches the stage where such commitments and designated borrowings effectively hedging future revenues. expenditure is considered capable of being recouped through development Sales of metals, concentrates, ores and by-products are recognised when the or sale, all subsequent expenditures are capitalised. Unamortised costs are product passes out of the physical control of the selling company to external reviewed at each balance date to determine the amount (if any) that is no customers pursuant to enforceable sales contracts. As the final value of longer recoverable and any amount so identified is written off. concentrate sales can only be determined from weights, assays, prices and exchange rates applying after a shipment has arrived at its destination, sales (k) Mine Development of concentrates are recorded at estimated values pursuant to contract terms, Mine development expenditure for the initial establishment of access to mineral with adjustments being subsequently recognised in the period when final reserves, together with capitalised exploration, evaluation and commissioning values are determined. expenditure, and financing costs on borrowings for a project prior to the commencement date of commercial production, are capitalised to the extent (q) Borrowing Costs that the expenditure results in significant future benefits. These amounts are Borrowing costs are recognised as expenses in the period in which they are amortised over the current estimated economic reserve of the mine on incurred, except where they are included in the costs of qualifying assets. To a unit of production output basis. This calculation includes consideration the extent that additional funds have been borrowed for the purpose of, and of appropriate estimates of the future costs to be incurred in developing are associated with the qualifying asset, the interest rate used is that applicable the estimated economic reserve, which includes the proven and probable to those funds. The interest rate for any funds utilised in excess of specified reserve, plus an estimate of the economic resource within the inferred borrowings is the weighted average for all other borrowings. category. Borrowing costs include: – interest on short-term and long-term borrowings (l) Recoverable Amount of Non-Current Assets – net debtors securitisation costs The values of assets are reviewed on an ongoing basis, and where necessary the carrying amount of non-current assets are revalued downwards to their – amortisation of discounts or premiums relating to borrowings recoverable amount. Where net cash flows are derived from a group of assets – amortisation of ancillary costs incurred in connection with the arrangement working together, recoverable amount is determined on the basis of the of borrowings; and relevant group of assets. The expected net cash flows included in determining – exchange differences arising from specific foreign currency borrowing recoverable amounts of non-current assets are discounted to their present hedge contracts. values using a market-determined, risk adjusted discount rate. (r) Cash (m) Employee Benefits For the purposes of the statement of cash flows, cash includes cash on hand Provision is made for expected benefits accruing to past and present and deposits at call which are readily convertible to cash and are subject to employees in relation to such items as annual leave, long service leave, sick an insignificant risk of changes in value, net of outstanding bank overdrafts. leave, medical benefits and workers’ compensation. These provisions are accrued on at least the basis of statutory or contractual obligations. A number (s) Trade and Other Creditors of employee superannuation funds exist which provide benefits for employees These amounts represent liabilities for goods and services provided to the and their dependents on retirement, disability, resignation, retrenchment or economic entity prior to the end of the financial year and which are unpaid. death (refer note 33). The value of the employee share scheme described The amounts are unsecured and are usually paid within 30 days of recognition. in note 39 is not being charged as an employee entitlement. (t) Trade Receivables (n) Restoration Expenditure Trade receivables represent assets for goods and services supplied by the (i) Mining Operations economic entity prior to the end of the financial year which remain unpaid. They Provision is made for the anticipated costs of future restoration and arise from transactions in the normal operating activities of the economic entity. rehabilitation of areas from which natural resources have been extracted. Trade receivables are carried at nominal amounts due less any provision for The provision is recognised on a gradual basis over the life of the mine as doubtful debts. A provision for doubtful debts is recognised when collection production occurs. The provision includes costs associated with reclamation, of the full nominal amount is no longer probable. plant closure, waste site closure, monitoring, demolition and decontamination. Under the terms of a receivables acquisition arrangement, eligible trade debtors These costs have been determined on an undiscounted current cost basis with are sold on a continuous basis to a bank at a discount representing a financing reference to current legal requirements and current technology. The restoration cost. Under the conditions of the sales agreement, the bank is entitled to retain provision is separated into current (estimated costs arising within 12 months) a percentage of the gross sales proceeds as a provision against default. This and non-current components. Any change in the provision estimate is dealt amount is recorded as a trade debtor and is paid to the economic entity with on a prospective basis. The extent of the restoration provision is, in part, following the collection of trade debtor balances sold under this agreement dependent upon the remaining life of each mine as calculated by reference (refer note 7). to the economic reserve. (ii) Smelting Operations (u) Goodwill Provision is made for the anticipated costs of future restoration and On acquisition of some or all, of the assets of another entity or, in the case rehabilitation of smelting sites to the extent that a legal obligation exists of an investment in a controlled entity, on acquisition of some, or all, of the and that the anticipated expenditure is not capital in nature. The provision equity of that controlled entity, the identifiable net assets acquired are measured includes costs associated with reclamation, monitoring, water purification and at fair value. In determining the fair value of any identifiable exploration assets coverage and permanent storage of historical residues. The provision is based acquired, and in allocating the cost of acquisition to them, all risks relating upon current costs and has been determined on an undiscounted basis with to such assets are considered. The excess of the fair value of the cost of reference to the current legal framework and current technology. Any change acquisition over the fair value of the identifiable net assets acquired, including in the provision estimate is dealt with on a prospective basis. The restoration any liability for restructuring costs, is brought to account as goodwill and provision is separated into current (estimated costs arising within 12 months) amortised on a straight line basis over twenty years, being the period during and non-current components. which the benefits are expected to arise. (o) Major Maintenance and Repairs Expenditure The costs of major overhauls of operating plant are considered to constitute increases in assets. Accordingly, the accounting treatment adopted is to recognise overhaul expenditure as an asset to be amortised over the period in which benefits are expected to arise (typically 3-4 years). Pasminco Annual Report 2000 Page 62
  6. 6. Notes to the Financial Statements Consolidated Consolidated Pasminco Ltd Pasminco Ltd 2000 $m 1999 $m 2000 $m 1999 $m 2 Revenue Revenue from operating activities (a) Sales revenue (note 1(p)) 1,878.3 1,564.4 – – (b) Other operating revenue (i) Interest received/receivable (note 3) 10.7 8.0 39.4 20.0 (ii) Proceeds from sale of coal assets 69.0 – – – (iii) Proceeds from sales of non-current assets 1.5 12.6 61.3 – (iv) Share of net profits of associates (note 9(b)) 2.8 1.9 – – (v) Insurance revenue receivable 15.8 2.1 – – (vi) Other 5.9 7.1 – – Total Operating Revenue 1,984.0 1,596.1 100.7 20.0 Revenue from outside the operating activities Proceeds from sales of infrastructure assets 33.0 204.0 – – Total Revenue 2,017.0 1,800.1 100.7 20.0 3 Operating Profit/(Loss) The operating profit/(loss) before abnormal items and income tax is arrived at after charging and crediting the following specific items: Charges Amortisation (a) Deferred expenditure 8.8 8.1 – – (b) Mine properties and development 77.8 42.7 – – (c) Leased plant and equipment – 0.1 – – (d) Goodwill 2.5 0.6 – – 89.1 51.5 – – Depreciation of property, plant and equipment 137.8 111.9 – – Less: Depreciation capitalised 3.4 5.1 – – Depreciation expensed 134.4 106.8 – – Borrowing costs (a) Interest paid/payable (i) Controlled entities – – 12.7 12.4 (ii) Other persons and/or corporations 86.0 58.1 – – (b) Realised hedge losses on foreign currency borrowings/contracts 6.1 100.2 – – (c) Net debtors securitisation costs (note 1(t)) 1.0 – – – (d) Other finance charges 4.2 9.5 – – Total borrowing costs 97.3 167.8 12.7 12.4 Less: borrowing costs capitalised 35.3 124.4 – – Borrowing costs expensed 62.0 43.4 12.7 12.4 Rent expense relating to operating leases 31.3 15.3 – – Decrement in value of inventories 0.2 0.2 – – Exploration and evaluation expenditure 18.9 21.4 – – Research and development costs 6.7 7.1 – – Government mining royalties 15.4 5.7 – – Superannuation 21.2 16.9 – – Net foreign exchange loss 0.4 3.8 3.2 – Net loss on disposal of property, plant and equipment 0.3 1.0 – – Loss on liquidation of controlled entity – – 1.1 – Bad and doubtful debts written off/provided for 2.0 0.2 – – Provisions – (a) Employee entitlements 37.9 34.9 – – (b) Workers’ compensation 12.5 7.8 – – (c) Restoration 2.6 1.4 – – (d) Sundry 2.0 0.8 – – Provisions expensed 55.0 44.9 – – Credits Interest received/receivable (a) Controlled entities – – 39.4 20.0 (b) Other persons and/or corporations 10.7 8.0 – – Net profit on disposal of coal assets 4.2 – – – Applicable income tax expense (4.2) – – – Net profit on disposal of coal assets (after tax) – – – –
  7. 7. Notes to the Financial Statements Consolidated Consolidated Pasminco Ltd Pasminco Ltd 2000 $m 1999 $m 2000 $m 1999 $m 4 Abnormal Items The following abnormal items were charged in arriving at the operating profit/(loss) after tax: (a) Accounting charge Provision for diminution in investment in controlled entity* – – – (23.1) Provision for diminution in controlled entity receivable* – – – (8.2) Abnormal items before income tax – – – (31.3) Applicable income tax (charge)/credit – – – – Abnormal items after income tax – – – (31.3) *Reduction in the carrying value of Pasminco Limited’s investment and intercompany receivable with Pasminco Pacific Pty Ltd. (b) Income tax charge Charge arising from the restatement of Australian deferred tax balances due to a reduction in the Australian tax rate. 11.6 – – – Legislation reducing the Australian company tax rate from 36% to 34% in respect of the 2000-2001 income tax year and then to 30% from the 2001-2002 income tax year was announced on 21 September 1999 and received Royal Assent on 10 December 1999. As a consequence, deferred tax balances which are expected to reverse in the 2000-2001 or a later income tax year have been remeasured using the appropriate new rates, depending on the timing of their reversal. 5 Income Tax (a) The prima facie tax payable on the operating profit/(loss) differs from the income tax provided in the accounts and is reconciled as follows: Operating profit/(loss) before income tax 31.0 (8.5) 22.4 (23.7) Prima facie tax charge/(credit) at 36% 11.1 (3.0) 8.1 (8.5) Taxation charge/(credit) on profit/(loss) for the year (4.0) (0.2) 10.4 2.6 Variation from prima facie tax (15.1) 2.8 2.3 11.1 The following major items caused the charge/(credit) for income tax to vary from the prima facie tax charge/(credit) on reported profit/(loss): Permanent differences – Century mine development and other allowances (58.0) – – – Research and development allowance (1.6) (2.8) – – Non-allowable depreciation and amortisation 22.2 21.6 – – Non-assessable capital (profit)/loss 7.1 (0.8) – – Non-allowable demolition expenditure – 0.5 – – Loss on liquidation of controlled entity – – 1.1 – Non-assessable foreign exchange losses 2.1 – 5.1 – Provision against investment in controlled entity – – – 23.1 Provision against receivable in controlled entity – – – 8.2 Other (0.5) (3.2) – – Total permanent differences (28.7) 15.3 6.2 31.3 Tax effect of these differences at 36% (10.3) 5.5 2.2 11.2 Tax on overseas income at lower rates (0.6) (1.4) – – Overseas tax losses not brought to account 2.4 – – – Unbooked overseas tax losses now brought to account (7.2) – – – Under/(over) provision for previous years 0.6 (1.3) 0.1 (0.1) Consequent increase/(decrease) in tax charge (15.1) 2.8 2.3 11.1 (b) Analysis of future income tax benefits: Future income tax benefits arising from tax losses of controlled entities which have been brought to account amount to: 180.7 143.9 – – Future income tax benefits arising from timing differences amount to: – 49.9 – – Future income tax benefits recognised 180.7 193.8 – – Future income tax benefits arising from tax losses of controlled entities which have been offset against the provision for deferred income tax amount to: 122.1 84.6 – – (c) Deferred income tax liability arising from timing differences net of the offset of future income tax benefit, amounts to: 65.1 86.8 – 5.5 (d) The Directors’ estimate that the potential future income tax benefit at 30 June 2000, in respect of tax revenue losses not brought to account is: 7.1 13.5 – – The benefit of these tax revenue losses will only be obtained if: (i) the economic entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; (ii) the economic entity continues to comply with the conditions for deductibility imposed by tax legislation; and (iii) no changes in tax legislation adversely affect the economic entity in realising the benefit from the deductions for the losses. Pasminco Annual Report 2000 Page 64
  8. 8. Notes to the Financial Statements Consolidated Consolidated Pasminco Ltd Pasminco Ltd 2000 $m 1999 $m 2000 $m 1999 $m 6 Current Assets – Cash Cash at bank and on hand 16.9 19.2 – – Short term deposits 71.6 4.0 – – Bank bills – 1.4 – – 88.5 24.6 – – The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows as follows: Balances as above 88.5 24.6 – – Less Bank overdrafts (note 17) 0.2 3.4 – – Balances per statement of cash flows 88.3 21.2 – – 7 Current Assets – Receivables Trade debtors 146.7 235.9 – – Less provision for doubtful debts (a) 3.4 1.5 – – 143.3 234.4 – – Loan to associate – secured (note 9(b)) 99.8 104.6 – – Other debtors 33.7 203.7 – – Loans receivable from controlled entities – – 319.3 319.1 276.8 542.7 319.3 319.1 During the year, Pasminco commenced arrangements to sell trade debtors to a limit of USD $150 million. As a result, at 30 June, the value of trade debtors was reduced by AUD $107.5 million (refer note 1(t)). At 30 June 1999, other debtors includes $183.6 million of Century’s infrastructure assets sold to third parties during June and included in revenue from outside the operating activities (refer note 2). (a) Reconciliation of provision for doubtful debts Opening balance 1.5 0.6 – – Translation difference 0.2 – – – Acquisition of Savage Resources Limited Group – 1.2 – – Doubtful debts previously provided for written back during the year – (0.1) – – Bad and doubtful debts provided for during the year 2.0 0.3 – – Bad debts written off against the provision (0.3) (0.5) – – Closing balance 3.4 1.5 – – 8 Current Assets – Inventories Raw materials and stores (at cost) 179.7 102.8 – – Less provision for diminution in value 1.0 0.9 – – 178.7 101.9 – – Work in progress At cost 156.1 102.4 – – At net realisable value 11.9 45.5 – – 168.0 147.9 – – Finished goods At cost 88.3 114.2 – – At net realisable value 1.9 2.1 – – 90.2 116.3 – – 436.9 366.1 – –
  9. 9. Notes to the Financial Statements 9 Current Assets – Investments in Associates The associated companies shown below were acquired as a result of the February 1999 acquisition of the Savage Resources Limited Group. The investment in Ernest Henry Mining Pty Limited has been accounted for in the consolidated financial statements using the equity method of accounting. It is Pasminco’s intention to sell its investment in Ernest Henry Mining Pty Limited therefore this investment has been shown as a current asset. The balance date of Ernest Henry Mining Pty Limited is 30 June 2000. Effective 1 July 1999, the remaining associated companies were sold to Glencore International AG. Principal Consolidated Consolidated Activity Ownership Ownership Interest Interest 2000 % 1999 % (a) Associated companies Ernest Henry Mining Pty Limited Copper/Gold Mining 49.0 49.0 Liddell Power Generation Sales Pty Limited Dormant – 67.5 Liddell Collieries Pty Limited Coal Mining – 67.5 Liddell Coal Preparation Pty Limited Coal Preparation – 67.5 Liddell Coal Marketing Pty Limited Coal Marketing – 67.5 Liddell Tenements Pty Limited Tenement Holding – 67.5 Liddell Southern Tenements Pty Limited Tenement Holding – 67.5 Foybrook Tenements Pty Limited Tenement Holding – 67.5 Glendell Tenements Pty Limited Tenement Holding – 67.5 Togara Coal Sales Pty Limited Coal Marketing – 33.3 Consolidated Consolidated Equity Equity Accounted Accounted Amount Amount 2000 $m 1999 $m (b) Equity Information Movements in carrying amounts of investments in Ernest Henry Pty Limited Directors’ valuation at acquisition (note 12(b)) 68.8 68.8 Acquisition fair value adjustment (note 9(d)) (15.8) – Directors’ value of investment 53.0 68.8 Share of operating profits after income tax since acquisition 4.7 1.9 Equity carrying amount at the end of the financial year 57.7 70.7 Loan to associate (note 7) 99.8 104.6 Carrying value at the end of the financial year 157.5 175.3 Results Attributable to Associate Operating profits before income tax 4.1 3.1 Income tax expense 1.3 1.2 Operating profits after income tax (note 2(b)) 2.8 1.9 Accumulated (losses) attributable to associate at acquisition (2.6) (2.6) Retained profits/(accumulated losses) attributable to associate at the end of the financial year 0.2 (0.7) Summary of the Performance and Financial Position of Associate The consolidated entity’s share of the assets and liabilities of associate in aggregate are as follows: Current assets 41.3 29.0 Non-current assets 151.8 160.2 Current liabilities (20.9) (18.8) Non-current liabilities (46.0) (46.4) Net Assets 126.2 124.0 The consolidated entity’s share of associate’s commitments and contingent liabilities are disclosed in notes 28 and 27 respectively. (c) Transactions with Ernest Henry During the year a controlled entity purchased concentrates for $100.5 million (1999 - $52.2 million) from Ernest Henry at market prices. The loan to Ernest Henry is a USD denominated facility amortising over 7 years with a final maturity date of 30 June 2007. This loan is secured by a charge over 49% of the assets of Ernest Henry Mining Pty Limited. Net loan repayments made by Ernest Henry to a controlled entity totalled $11.8 million (1999 - $3.4 million). The total outstanding loan with Ernest Henry at 30 June 2000 is $99.8 million (1999 - $104.6 million). Interest charged on this loan for the financial year totalled $7.8 million (1999 - $3.1million). Interest is calculated using a market determined interest rate. (d) Acquisition fair value adjustment During the year, the fair value of the investment in Ernest Henry Mining Pty Limited at acquisition date was reviewed. As a result, a fair value adjustment to write down the investment by $15.8 million was made. The goodwill recognised on acquisition was correspondingly increased by $15.8 million (note 14). Pasminco Annual Report 2000 Page 66
  10. 10. Notes to the Financial Statements Country of Class of Investment of Investment of Notes Incorporation Share Pasminco Ltd Pasminco Ltd 2000 ($’000) 1999 ($’000) (c) Unquoted investments of the chief entity in controlled entities which are all wholly owned, except Pasminco Sogem LLC and Pasminco Taylor Chemicals, Inc., which are 80% owned, SPC Nominees Pty Ltd (50% owned) and Lawn Hill and Riversleigh Pastoral Company Pty Ltd which is 51% owned, comprise the following: American Zinc Company B USA Ordinary Budel Management BV A Netherlands Ordinary Budel Zink BV A Netherlands Ordinary Budelco BV A Netherlands Ordinary Buzifac BV A Netherlands Ordinary Buzipon BV A Netherlands Ordinary Buzisur BV A Netherlands Ordinary Lawn Hill and Riversleigh Pastoral Company Pty Ltd D Australia Ordinary Pasminco Australia Limited H Australia Ordinary 354,444 354,444 Pasminco Broken Hill Mine Pty Limited H Australia Ordinary 105,027 105,027 Pasminco Century Mine Limited H Australia Ordinary 172,985 172,985 Pasminco Cockle Creek Smelter Pty Limited H Australia Ordinary 151,497 151,497 Pasminco Europe Limited A,E UK Ordinary – 62,400 Pasminco Europe (ISC Alloys) Limited A,E UK Ordinary Pasminco Europe (Smelting) Limited A,E UK Ordinary Pasminco Exploration (Canada) Limited E Canada Ordinary – ($1 only) Pasminco Exploration & Mining BV A Netherlands Ordinary Pasminco Exploration Private Limited A India Ordinary Pasminco Europe (UK) BV A,E UK Ordinary Pasminco Finance Limited H Australia Ordinary 20,000 20,000 Pasminco Global Trading Pty Limited D Australia Ordinary Pasminco Hong Kong Limited A Hong Kong Ordinary Pasminco Incorporated B USA Ordinary Pasminco Insurance Private Limited A Singapore Ordinary 1,935 1,935 Pasminco International Pty Limited Australia Ordinary 42,077 42,077 Pasminco International (Holdings) Pty Limited Australia Ordinary 40 40 Pasminco Investments Holdings Pty Limited H Australia Ordinary ($12 only) ($12 only) Pasminco Investments Pty Limited H Australia Ordinary Pasminco Metals Pty Limited H Australia Ordinary 2 2 Pasminco Netherlands (Holdings) BV A Netherlands Ordinary Pasminco Pacific Pty Limited Australia Ordinary 23,101 23,101 Pasminco Pakistan (Private) Limited A Pakistan Ordinary Pasminco Port Pirie Smelter Pty Limited H Australia Ordinary 129,265 129,265 Pasminco Superannuation Pty Limited Australia Ordinary ($12 only) ($12 only) Pasminco UK (Holdings) Limited A UK Ordinary Pasminco UK Limited A UK Ordinary Pasminco Zinc Limited B,G Cayman Islands Ordinary 244,431 – PCML SPC Pty Limited D Australia Ordinary SPC Nominees Pty Limited Australia Ordinary The Emu Bay Railway Company Limited H Australia Ordinary 2,959 2,959 Warmframe Limited A,E UK Ordinary Savage Resources Group controlled entities acquired Gabume Pty Limited C,F Australia Ordinary Liddell Coal Loader Pty Limited C,F Australia Ordinary Liddell Coal Operations Pty Limited C,F Australia Ordinary Ramala Holdings Pty Limited C,H Australia Ordinary Savage Australian Exploration Pty Limited C Australia Ordinary Pasminco Canada Holdings, Inc. A,B,C USA Ordinary Savage Coal Pty Limited C,F Australia Ordinary Savage EHM Finance Pty Limited C,H Australia Ordinary Savage EHM Pty Limited C,H Australia Preference Pasminco International Exploration, Inc. A,B,C USA Ordinary Pasminco Marketing Company A,B,C USA Ordinary Savage Minerals Limited C,F Australia Ordinary Pasminco Resources Canada Company A,B,C Canada Ordinary Savage Resources Limited C,H Australia Ordinary Pasminco Resources (US), Inc. A,B,C USA Ordinary Pasminco Sogem LLC A,B,C USA Ordinary Pasminco South East Asian Ventures, Inc. A,B,C USA Ordinary Pasminco Taylor Chemicals, Inc. A,B,C USA Ordinary Savage Togara Coal Pty Limited C,F Australia Ordinary Pasminco Zinc, Inc. A,B,C USA Ordinary Savox Pigments Pty Limited C Australia Ordinary 1,247,763 1,065,732
  11. 11. Notes to the Financial Statements Consolidated Consolidated Pasminco Ltd Pasminco Ltd 2000 $m 1999 $m 2000 $m 1999 $m 10 Current Assets – Other Prepayments 26.2 16.8 – – Deferred net option premiums 4.1 4.4 – – Deferred foreign exchange hedge loss (note 1(c)) 6.6 7.2 – – Land held for resale at written down value (a) – 4.1 – – Property, plant and equipment held for resale at written down value (b) – 60.0 – – Other – 15.0 – – 36.9 107.5 – – (a) Land held for resale Cost of acquisition of the land – 4.1 – – Carrying value at 30 June – 4.1 – – (b) Property, plant and equipment held for resale At cost and valuation – 71.8 – – Accumulated depreciation – 11.8 – – Carrying value at 30 June – 60.0 – – 11 Non-current Assets – Receivables Loans receivable from controlled entities – – 858.2 830.4 Less provision for diminution in value – – 8.2 8.2 – – 850.0 822.2 Other receivables 2.4 0.4 – – 2.4 0.4 850.0 822.2 12 Non-current Assets – Investments (a) The investments include: Unlisted investments Shares in controlled entities (note 12(c)) – – 1,247.8 1,065.7 Less provision for diminution in value – – 23.1 23.1 – – 1,224.7 1,042.6 (b) Effective 1 February 1999, Pasminco acquired 100% of the Savage Resources Limited Group. Details of the acquisition are as follows: Fair Value of Identifiable Net Assets of Controlled Entities Acquired Cash and deposits 47.7 Receivables 173.0 Inventories 35.5 Associated investments (note 9) 68.8 Future income tax benefit 77.6 Mine property, property, plant and equipment 355.8 Other assets 16.1 Provisions (140.9) Creditors and accruals (63.5) Borrowings (141.2) 428.9 Goodwill on consolidation (note 14) 27.7 Cash consideration paid/payable 456.6 Outflow of cash to acquire the Savage Group net of cash acquired Cash consideration paid/payable 456.6 Less: Cash balance acquired 47.7 Outflow of cash 408.9 Less: Acquisition costs accrued 2.8 Outflow of cash as shown in the cashflow statement 406.1
  12. 12. Notes to the Financial Statements 12 Non-current Assets – Investments (continued) Notes (A) These controlled entities had other member firms of Ernst & Young International acting as their auditors. (B) The accounts of these controlled entities have been reviewed by the auditors for inclusion in the consolidated accounts as a statutory audit is not required in the country of incorporation. (C) All companies were acquired as a result of the acquisition of the Savage Resources Limited Group in February 1999. Details of the acquisition are set out in note 12(b). (D) These controlled entities were incorporated/acquired during the year. (E) These controlled entities were liquidated or deregistered during the year. (F) These controlled entities were sold with effect from 1 July 1999 to Glencore International AG. (G) As part of the restructure of the UK Group, Pasminco Zinc Limited was purchased by Pasminco Limited from Pasminco Europe Limited and Pasminco Europe (Smelting) Limited during the year. (H) Pursuant to Class Order 98/1418, (as amended by Class Orders 98/2017 and 00/0321) issued by the Australian Securities and Investments Commission, relief has been granted to these identified controlled entities of the parent entity from the Corporations Law requirements for preparation, audit and lodgement of its financial report. As a condition of the Class Order, the parent entity and the identified controlled entities, (the ‘Closed Group’), have entered into a deed of cross guarantee. Under the deed of cross guarantee, all of the named companies guarantee the debts of the other named companies. This guarantee is conditional upon the winding up of any companies which are a party to the deed. The Consolidated profit and loss statements and balance sheets of the entities which are members of the ‘Closed Group’ are as follows: 2000 $m 1999 $m Operating (loss) before abnormal items and income tax (47.0) (33.1) Abnormal items before income tax – (31.3) Operating (loss) before income tax (47.0) (64.4) Income tax (credit) attributable to operating (loss) (25.2) (6.9) Abnormal tax item 11.3 – Operating (loss) after income tax (33.1) (57.5) Accumulated (losses) at the beginning of the financial year (310.8) (257.9) Total available for appropriation (343.9) (315.4) Aggregate of amounts transferred from reserves 7.5 4.6 Accumulated (losses) at the end of the financial year (336.4) (310.8) Current Assets Cash 75.2 14.2 Receivables 545.0 676.2 Inventories 310.9 281.5 Investments in Associates 57.7 70.7 Other 34.7 19.5 Total Current Assets 1,023.5 1,062.1 Non-current Assets Receivables 216.4 231.4 Investments 408.3 303.6 Property, plant and equipment 1,080.3 709.8 Mine properties & development 1,176.3 1,397.9 Exploration expenditure 1.7 1.7 Future income tax benefit 124.0 148.2 Other 106.5 51.3 Total Non-current Assets 3,113.5 2,843.9 Total Assets 4,137.0 3,906.0 Current Liabilities Accounts payable 370.1 451.7 Borrowings 119.8 172.4 Provisions 119.5 188.1 Other 61.8 49.1 Total Current Liabilities 671.2 861.3 Non-current Liabilities Borrowings 1,274.6 1,091.6 Accounts payable 627.7 291.3 Provisions 157.9 126.2 Other 199.0 304.1 Total Non-current Liabilities 2,259.2 1,813.2 Total Liabilities 2,930.4 2,674.5 Net Assets 1,206.6 1,231.5 Equity Share capital 1,543.9 1,543.1 Reserves (0.9) (0.8) Accumulated (losses) (336.4) (310.8) Total Equity 1,206.6 1,231.5
  13. 13. Notes to the Financial Statements Consolidated Consolidated Pasminco Ltd Pasminco Ltd 2000 $m 1999 $m 2000 $m 1999 $m 13 Non-current Assets – Mine Property, Property, Plant and Equipment Freehold and leasehold land and buildings (13(a)) 81.1 132.5 – – Plant and equipment (13(b)) 1,329.7 765.6 – – Mine properties and development (13(c)) 1,205.2 1,418.8 – – Exploration expenditure (13(d)) 1.7 1.7 – – Construction in progress (at cost) 84.3 206.4 – – Total mine property, property, plant and equipment 2,702.0 2,525.0 – – (a) Freehold and leasehold land and buildings At cost 98.0 151.8 – – Less: Accumulated depreciation 19.0 21.5 – – 79.0 130.3 – – At Directors’ valuation 1979 4.3 4.4 – – Less: Accumulated depreciation 2.2 2.2 – – 2.1 2.2 – – Total freehold and leasehold land and buildings 81.1 132.5 – – (b) Plant and equipment At cost 2,190.6 1,514.3 – – Less: Accumulated depreciation 868.3 760.0 – – 1,322.3 754.3 – – At Directors’ valuation 1979 70.3 70.3 – – Less: Accumulated depreciation 67.4 66.4 – – 2.9 3.9 – – At Directors’ valuation 1992 27.8 27.8 – – Less: Accumulated depreciation 23.3 20.5 – – 4.5 7.3 – – Plant and equipment under finance lease – 0.2 – – Less: Accumulated amortisation – 0.1 – – – 0.1 – – Total plant and equipment 1,329.7 765.6 – – (c) Mine properties and development At cost 1,560.6 1,684.1 – – Less: Accumulated depreciation 367.6 278.7 – – 1,193.0 1,405.4 – – At Directors’ valuation 1992 23.0 23.0 – – Less: Accumulated depreciation 10.8 9.6 – – 12.2 13.4 – – Total mine properties and development 1,205.2 1,418.8 – – (d) Capitalised Expenditure in the Exploration and Evaluation Phase Cost brought forward 1.7 29.7 – – Acquisition of Savage Resources Limited – 8.3 – – Expenditure incurred during current year 18.9 23.9 – – Less Expenditure written off during current year 18.9 21.4 – – Less Expenditure transferred to mine properties and development – 32.2 – – Less Expenditure transferred to property, plant and equipment held for resale – 6.6 – – Cost carried forward 1.7 1.7 – – The market value of the economic entity’s operations is subject to cyclical variation because of changes in internationally determined metal prices and exchange rates. It is the economic entity’s policy to assess the recoverable amount of non-current assets using long-term metal price and exchange rate parameters. No assets are carried in excess of their recoverable amount. This basis of valuation is consistent with the existing use of the assets to the business as a going concern and does not purport to show the current market value of assets. Where this assessment indicates a loss in value of the assets of an operation, an appropriate write down is made. Pasminco Annual Report 2000 Page 70

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