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MMG delivers solid profit and announces dividend

11 Mar 2014 12:00 AMExchange Announcement

MMG Limited (MMG) (Stock Code 1208.HK) is pleased to report its annual financial results for the year ended 31 December 2013.

Key points

  • Revenue of US$2,469.8 million decreased 1% with average copper and zinc prices 8% and 2% lower respectively compared to 2012.
  • Despite higher production volumes, total operating expenses were flat compared with 2012, demonstrating MMG’s sharp focus on extracting value.
  • EBITDA of US$750.9 million, 2% higher than 2012.
  • Profit of US$122.5 million, 48% lower than 2012.
  • Gearing ratio of 0.45 positions MMG to fund its existing commitments and future growth strategy.
  • Commodity markets continue to improve with supporting economic data showing improved outlook for developed economies, adding confidence to long-term commodity market growth projections.
  • The MMG Board has recommended a dividend of 1.0 US cent per share.
YEAR ENDED 31 DECEMBER  2013 US$ MILLION  2013 US$ MILLION (RESTATED)  CHANGE %
       
 Revenue  2,469.8  2,499.4  (1)
 EBITDA  750.9  737.9  2
 EBIT  278.3  429.2  (35)
 Profit  122.5  234.1  (48)
 EBITDA margin  30.4%  29.5%  
 Net cash generated from operating activities  554.5  557.9  (1)
 Dividends per share  US 1.00 cent  —  100
 Diluted earnings per share  US 1.95 cents  US 3.95 cents  (51)

Commentary from the Chief Executive Officer:

Safety

“Safety is our first value at MMG and we continue to embed this in our employment standards and day-to-day actions. It is therefore with great sadness that we reflect on the tragic death of Daola Phoumixay at our Sepon operation in Laos in June 2013. Our deepest sympathy goes to Daola’s family, relatives, friends and colleagues. This tragedy is a sad reminder of the critical importance of our commitment to safety and no fatality is acceptable for our business.

The people of MMG consistently strive to realise the vision of a ‘zero harm and fatality free’ workplace and during the year we improved our TRIFR (Total recordable injury frequency rate) from 3.0 to 2.4.  The lost-time injury rate reduced from 0.7 to 0.5, a significant reduction from the previous year.

Performance

As the global economy continued its pattern of volatility and a downward pressure on commodity prices, the operational focus for MMG during 2013 was extracting maximum value from our operating assets.

The second half of 2013 was particularly strong, resulting in annual production records achieved at our Sepon, Rosebery and Kinsevere operations.

The outstanding performance of both Sepon and Kinsevere during the year contributed to 23% higher total copper production compared to 2012.

Total zinc production of 600,221 tonnes was above annual guidance, following a continued focus on efficiency and simplicity across our zinc operations.

Lower average London Metal Exchange (LME) base metals prices in 2013 compared with 2012, however, had an unfavourable impact on total revenues.  Despite an increase in total copper sales, lower zinc and gold sales volumes and price impacts contributed to a 1% annual decrease in total revenue to US$2,469.8 million.

All MMG sites reported excellent cost performance, with total operating expenses flat compared to 2012, demonstrating our sharp focus on extracting value.

The Group delivered US$750.9 million in EBITDA (earnings before interest, taxes, depreciation and amortisation) and profit of US$122.5 million. Net operating cash flows decreased by 1% to US$554.5 million.

Given the performance in 2013 and consideration of alternative uses of capital, we are pleased to advise that the Board has recommended a dividend of US 1.0 cent per share.

Growth

MMG invested US$257.0 million in major growth development projects including the Dugald River and Izok Corridor projects in 2013.

In 2014 we will continue to progress the trial stoping program at Dugald River which will provide practical mining experience, enabling optimisation of the underground mine design and help define the future development plan.

MMG also invested US$71.9 million in exploration in 2013. Our exploration program continued in the Democratic Republic of the Congo, where MMG divested the Mutoshi copper/cobalt project and acquired the exploration and mining rights over eight tenements adjacent to the Kinsevere operation. By adding near-mine exploration in this highly prospective region, we are supporting our strategy to leverage additional value and extend the life of our operations.

MMG will invest a further US$400.0–US$500.0 million and US$70.0 million in capital expenditure and exploration respectively in 2014.

Our growth strategy is unchanged.  We will continue to identify opportunities to extract maximum value from our existing assets, pursue organic opportunities through our projects and seek external opportunities by targeting value focused acquisitions.
On behalf of the MMG Management team, I would like to express thanks and gratitude to our shareholders, employees and our local communities for the continued support and loyalty. It is with confidence that I look to our future and the continued drive to meet our objectives.”

Andrew Michelmore, Chief Executive Officer, MMG Limited

 YEAR ENDED 31 DECEMBER  2013 US$ MILLION REVENUE 2012 US$ MILLION   CHANGE %  2013 US$ MILLION  EBITDA 2012 US$ MILLION (RESTATED)  CHANGE %
             
 Sepon  746.2  806.2  (7)  396.5  491.4  (19)
 Kinsevere (i)  455.3  279.9  63  198.0  131.1  51
 Century  721.0  752.9  (4)  176.5  192.6  (8)
 Rosebery  253.3  267.5  (5)  84.3  85.7  (2)
 Golden Grove  294.0  392.9  (25)  73.0  67.9  8
 Other  -  -  N/A  (177.4)  (230.8)  (23)
 Total  2,469.8  2,499.4  (1)  750.9  737.9  2

(i) MMG acquired Kinsevere as part of the acquisition of Anvil Mining Limited in February 2012. The financial results of Kinsevere have been consolidated from 17 February 2012.

Download this media release as a PDF.

Download the 2013 Annual Results presentation.

Download the 2013 full Annual Results announcement.

-Ends-

Media enquiries:

English language
Kathleen Kawecki   
Senior Group Communications Advisor 
T +61 3 9288 0996   
M +61 400 481 868   
E kathleen.kawecki@mmg.com

Chinese language
Christine Chan
T +852 2801 6090
M +852 6173 9039
E christine@corporatelink.com.hk

Investor enquiries:

Colette Campbell
Group Manager Investor Relations & Communications
T +852 2216 9610 (Hong Kong)
T +61 3 9288 9165 (Australia)
M +61 422 963 652
E colette.campbell@mmg.com 

Maggie Qin
Manager Stakeholder Relations China
T +852 2216 9603 (Hong Kong)
T +61 3 9288 0818 (Australia)
M +61 411 465 468
E maggie.qin@mmg.com

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