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Alumina Limited Annual Report 2010

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Alumina Limited Annual Report 2010 al umin A L imite D Annu A l REPORT 2010 Some statements in this report are forward-looking Alumina Limited statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements ABN 85 004 820 419 also include those containing such words as ‘anticipate’, Registered Corporate Head Office ‘estimates’, ‘should’, ‘will’, ‘expects’, ‘plans’ or similar Level 12, IBM Centre 60 City Road expressions. Forward-looking statements involve risks and Southbank Victoria 3006 Australia uncertainties that may cause actual outcomes to be different from the forward-looking statements. Important factors that GPO Box 5411 could cause actual results to differ from the forward-looking Melbourne Victoria 3001 Australia statements include: (a) material adverse changes in global economic, alumina or aluminium industry conditions and Telephone +61 (0)3 8699 2600 the markets served by AWAC; (b) changes in production Facsimile +61 (0)3 8699 2699 and development costs and production levels or to sales Website www.aluminalimited.com agreements; (c) changes in laws or regulations or policies; (d) changes in alumina and aluminium prices and currency exchange rates; and (e) the other risk factors summarised in Share Registry Alumina’s Form 20-F for the year ended 31 December 2009. Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Abbotsford Victoria 3067 Australia GPO Box 2975 Melbourne Victoria 3001 Australia Telephone +61 (0)3 9415 4027 or 1300 556 050 (for callers within Australia) Facsimile +61 (0)3 9473 2500 Email [email protected] American Depositary Receipts BNY Mellon Shareowner Services Jersey City – HEADQUARTERS 480 Washington Blvd. 27th Floor Jersey City, NJ 07310 1-888-BNY-ADRS (1-888-269-2377) (for callers within the United States) Telephone (for non-US callers) +1 201-680-6825 Website www.bnymellon.com/shareowner ALUMINA LIMITED Email [email protected] ANNUAL REPORT 2010 Alumina Annual Report 2010 P.89 ALUMINA LIMITED AND FINANCIAL HISTORY CONTROLLED ENTITIES 2010 20091 2008 2007 2006 AS At 31 DecembeR 2010 $uS million $uS million $A million $A million $A million Revenue from continuing operations 1.4 4.4 3.5 2.6 1.4 Other income 2.1 11.5 0.4 0.2 – Share of net profits of associates accounted for using the equity method 84.5 1.6 242.6 494.6 546.6 Finance costs (38.7) (31.0) (48.8) (45.7) (25.1) Change in fair value of derivatives – – (7.9) – – General and administrative expenses (14.7) (10.5) (19.2) (13.8) (10.7) Income tax credit/(expense) from continuing operations – 0.3 (2.6) (1.5) (1.1) Net profit attributable to owners of Alumina Limited 34.6 (23.7) 168.0 436.4 511.1 Non–operating non–cash items2 2.1 24.0 33.6 (30.8) 58.3 Underlying earnings2 36.7 0.3 201.6 405.6 569.4 Total assets 3,542.5 3,504.2 3,898.6 2,688.6 2,357.6 Total liabilities 471.0 585.9 1,105.8 1,024.7 603.0 Net assets 3,071.5 2,918.3 2,792.8 1,663.9 1,754.6 Shareholders’ funds 3,071.5 2,918.3 2,792.8 1,663.9 1,754.6 Dividends provided for or paid 91.6 – 273.8 275.6 233.2 Dividends received from AWAC 234.4 135.6 356.0 444.9 521.1 StatisticS Dividends declared per ordinary share uS 6c US1.8c 12c 24c 22c Dividend payout ratio (cash dividends) 271% – 146% 63% 46% Earnings per ordinary share 1.4c (1.1c) 11.3c 38.2c 43.8c Return on equity3 1.2% Negative 0.9% 8.5% 25.5% 31.1% Gearing (net debt to equity) 10% 8.7% 27% 36% 20% Net tangible assets backing per share $1.15 $1.09 $1.71 $1.21 $1.25 1 Alumina Limited’s functional and presentation currency is now US dollars. 2009 results have been restated to present them in US dollars. Prior years are disclosed in Australian dollars. 2 Underlying earnings has been calculated by adjusting reported net profit amounts relating to non-cash entries which do not reflect the operations of the Company. These non-cash entries related to mark-to market valuations of AWAC embedded derivatives, and adjustments resulting from actuarial assessment of market value of assets held in AWAC employee benefit plans. 3 Based on net profit attributable to members of Alumina Limited. 02 At a GlAnce CONTENTS 03 chAirmAn’s and Chief Executive Officer’s RepOrt 2010 07 ALUMINA PRICING 08 SUSTAINABILITY 11 CorpOrAte GOvernAnce 23 DIRECTORS’ REPORT 27 REMUNERATION REPORT 43 FINANCIAL SUMMArY 44 Statements of comprehensive income 45 Balance sheets 46 Statements of changes in equity 47 Statements of cash flows nOTES 48 1 Summary of significant accounting policies The financial report covers the consolidated 55 2 Financial risk management entity of Alumina Limited and its subsidiaries. 58 3 Critical accounting estimates and judgements The financial report is presented in the US dollars. 59 4 Revenue 59 5 Other income Alumina Limited is a company limited by shares, 59 6 Expenses incorporated and domiciled in Australia. Its 60 7 Income tax expense registered office and principal place of business is: 61 8 Earnings per share Alumina Limited, Level 12, IBM Centre, 60 City Road, 62 9 Dividends Southbank Victoria 3006. BAlANCE SHEET A description of the nature of the consolidated 62 10 Current assets – cash and cash equivalents entity’s operations and its principal activities is 63 11 Current assets – receivables included in the review of operations and activities on pages 2–6 and in the Directors’ report on page 63 12 Investments in associates 23, both of which are not part of this financial report. 66 13 Non–current assets – property, plant & equipment 67 14 Current liabilities – payables The financial report was authorised for issue by the 67 15 Interest–bearing liabilities Directors on 3 March 2011. The Company has the 68 16 Current liabilities – provisions power to amend and reissue the financial report. 69 17 Non–current liabilities – deferred tax liabilities Through the use of the internet, we have ensured 69 18 Non–current liabilities – provisions that our corporate reporting is timely, complete, and eQUITY available globally at minimum cost to the Company. 69 19 Contributed equity All press releases, financial reports and other 71 20 Share–based payments information are available at our Investor Centre on 72 21 Reserves, retained profits and treasury shares our website: www.aluminalimited.com. OTHER 73 22 Notes to the statements of cash flows 74 23 Financing facilities 74 24 Financial instruments 76 25 Investments in controlled entities 78 26 Contingent liabilities 78 27 Commitments for expenditure 78 28 Related party transactions 79 29 Key management personnel disclosures 82 30 Remuneration of auditors 82 31 Financial reporting by segment 83 32 Parent entity financial information 84 33 Events occurring after the balance sheet date 85 Directors’ declaration 86 Independent audit report to the members 88 Shareholder information 89 Financial history P.2 AT A GLANCE Alumina Limited reported Alumina Results improved profitability and a strong turn around in cashflow generation for the 2010 year as the global $34.6m $36.7m economy began to recover Net profit US$34.6 million Underlying earnings of anddemand for aluminium (2009: net loss US$23.7 million) US$36.7 million and alumina increased. (2009: US$0.3 million) With predicted increases in the demand for aluminium and alumina, Alumina Limited’s investment in 6cents $86.6m AWAC with long-life bauxite deposits and 17 million tonnes of alumina Fully franked dividends Share of AWAC underlying production design capacity, is of USD 6 cents per share profit US$86.6 million positioned well for the future. (2009: US$ 1.8 cents per share) (2009: US$25.6 million) 10% $234m Gearing 10 per cent AWAC dividends of (2009: 9 per cent) US$234 million received (2009: US$136 million) Alumina Limited’s functional AWAC Results and presentation currency is now US dollars. Prior period results have been restated to present them in US dollars. $335m $714m AWAC net profit after tax AWAC cash from operations AWAC — A GLOBAL JOINT VENTURE US$335.3 million US$714 million Alumina Limited is a leading Australian (2009: US$106.4 million) (2009: US$(64) million) company listed on the Australian Securities Exchange (ASX) and the New York Stock Exchange (NYSE). We invest worldwide in bauxite mining, alumina refining and selected 15.2m aluminium smelting operations through our 40 per cent ownership Record alumina production of Alcoa World Alumina and of 15.2 million tonnes Chemicals (AWAC), the world’s (2009: 13.5 million) largest alumina business. Our partner, Alcoa, owns the remaining 60 per cent of AWAC, and is the manager. The AWAC joint venture was formed in 1994 and our relationship with Alcoa dates back to 1961. Alumina Annual Report 2010 P.3 Stronger market conditions resulted in improved pricing, CHAIRMAN AND with realised alumina prices up 28 per cent on the prior year. The resulting profit increase was reduced by the CHIEF EXECUTIVE strengthening Australian dollar (which impacts 60 per cent of AWAC’s global production), and additional costs in the OFFICER’S REPORT commissioning of the expanded Brazilian assets. AWAC responded to improving demand with record alumina 2010 production of 15.2 million tonnes. This was achieved by restarting some of the production capacity that was idled in late 2008 at the height of the Global Financial Crisis and also includes increased production from the recently expanded Alumina Limited reported improved Brazilian operations.
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