Annual Report 2012 CORPORATE INFORMATION
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CONTENTS Corporate Information 2 Chairman’s Statement 3 Management Discussion and Analysis 5 Directors and Management 29 Corporate Governance Report 34 Directors’ Report 44 Independent Auditor’s Report 50 Consolidated Statement of Comprehensive Income 52 Consolidated Balance Sheet 54 Balance Sheet 56 Consolidated Statement of Changes in Equity 57 Consolidated Statement of Cash Flows 62 Notes to the Consolidated Financial Statements 64 Financial Summary 134 ASX Additional Information 135 1 Annual Report 2012 CORPORATE INFORMATION BOARD OF DIRECTORS PRINCIPAL SHARE REGISTRARS Non Executive Directors AND TRANSFER OFFICE Kwai Sze Hoi (Chairman) Butterfield Fulcrum Group (Bermuda) Limited Liu Zhengui (Vice Chairman) Rosebank Centre Warren Talbot Beckwith 11 Bermudiana Road Ross Stewart Norgard Pembroke HM08 Bermuda Executive Directors Luk Kin Peter Joseph (Chief Executive Officer) BRANCH SHARE REGISTRARS Chan Kam Kwan, Jason AND TRANSFER OFFICE IN Chu Chung Yue, Howard HONG KONG Independent Non-executive Directors Tricor Secretaries Limited Lau Kwok Kuen, Eddie 26/F., Tesbury Centre Uwe Henke Von Parpart 28 Queen’s Road East Yip Kwok Cheung, Danny Wanchai, Hong Kong David Michael Spratt COMPANY SECRETARY BRANCH SHARE REGISTRARS AND TRANSFER OFFICE IN Chan Kam Kwan, Jason AUSTRALIA AUDITOR Computershare Investor Services Pty Ltd PricewaterhouseCoopers Level 2, Reserve Bank Building Certified Public Accountants 45 St Georges Terrace PERTH WA 6000 REGISTERED OFFICE (BERMUDA) PRINCIPAL BANKER Clarendon House Australia and New Zealand Banking Group 2 Church Street Limited (“ANZ”) Hamilton HM11 Hang Seng Bank Limited Bermuda Standard Chartered Bank (Hong Kong) Limited The Hongkong and Shanghai Banking PRINCIPAL PLACE OF BUSINESS IN Corporation Limited HONG KONG WEBSITE Suites 3812-13, www.brockmanmining.com Two International Finance Centre, www.irasia.com/listco/hk/brockmanmining 8 Finance Street, Central, Hong Kong T: 852 3978 2800 F: 852 3978 2818 STOCK CODE 159 PRINCIPAL PLACE OF BUSINESS (Main Board of The Stock Exchange of IN AUSTRALIA Hong Kong Limited) BCK Level 1, 117 Stirling Hwy, Nedlands WA 6009 (Australian Securities Exchange) T: +61 8 9389 3000 F: +61 8 9389 3033 2 CHAIRMAN'S STATEMENT Dear Shareholders, I am pleased to present the 2012 Annual Report name to better convey a positive corporate of Brockman Mining Limited (formerly known as image and help identify ourselves as a mining Wah Nam International Holdings Limited) (the company, thus open a fresh chapter in the “Company”) and its subsidiaries (collectively the development history of the Group. “Group”). Recently, we have focused our efforts in The past year represented a year of expediting and implementing the infrastructure extraordinary achievement for the Group. solutions for the Marillana project, and have achieved sound progress. In June 2011, upon the successful acquisition of 55.3% equity interests and thereby a In respect of the railway options, we have controlling interest in Brockman Resources entered into a strategic alliance agreement Limited (“Brockman Resources”, formerly an with QR Limited (a wholly-owned subsidiary ASX listed company), we have launched the of QR National Limited, the largest railway takeover offer to acquire the remaining interests transportation company in Australia) and Atlas in Brockman Resources in December 2011. Iron Limited (“Atlas”) on 20 August 2012. The Such offer was approved by the Australian three parties have committed to co-operate Government’s Foreign Investment Review Board in assessing the feasibility of working out a (FIRB) in February 2012. On 15 August 2012, we comprehensive mine, railway and port solution have strategically succeeded in the takeover of to the East Pilbara region, Western Australia, 100% of interests in Brockman Resources. where our Marillana project is located. The successful takeover represented a In September 2012, the Group has also received remarkable accomplishment in the expansion conditional environmental approval for the of our core mining business in the Australia. It development of its Marillana project and also marked an important milestone to develop associated rail spur from the Commonwealth the Group into a world famous mining resources Department of Sustainability, Environment, company. Water, Population and Communities (“DSEWPaC”), pursuant to the Environmental Following the acquisition, we have added key Protection and Biodiversity Act 1999. members to the Board, and have strengthened and streamlined the management and In respect of the port, the Minister of Transport executive team of the Group in both Hong Kong of Western Australia confirmed the ability for office as well as Brockman Resources’ office North West Infrastructure, a jointly controlled in Australia to enhance effective operation incorporated joint venture company (“NWI”) of the Group. We have relocated our Hong (of which Brockman Resources is a founding Kong headquarter and changed our company member) to develop two berths for iron ore export in Port Hedland. We are currently working 3 Annual Report 2012 CHAIRMAN'S STATEMENT (continued) closely with NWI to finalize the South West Creek I would like to take this opportunity to express infrastructure Port Lease with the Port Hedland my heartfelt gratitude to all the staff of the Port Authority (“PHPA”). Group for their contribution and unwavering dedication during the past year, and as well In respect of the mines, we strive to work out a thank our shareholders and partners for their most economical yet favourable infrastructure strong support. solution following up with the Bankable Feasibility Study (“BFS”). Despite the uncertainties of the world economy, I strongly believe that in the mid- to long-term, Above all, we have been actively seeking for the demand for mineral ore products and suitable strategic partners and investors to fill other resources around the world, especially the capital requirements for the infrastructure China will remain robust. Leveraging on the and development of the project, and we aim unique advantages of the Marillana project, at long-term cooperation with our strategic we look forward to bring lucrative returns to our investors to enhance synergy for our investments. shareholders. We know that the coming twelve months will be both exciting and challenging for the Group. I am confident that the board of directors and Kwai Sze Hoi the entire executive team of the Company will Chairman continuously demonstrate their professionalism and selfless dedication to capture opportunities, 25 September 2012 address challenges ahead and deliver excellence in their duties. 4 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW AND CORPORATE ACTIVITIES FINANCIAL HIGHLIGHTS The Company has undertaken significant steps For the eighteen months ended 30 June 2012, in acquisition of quality mining assets to enrich the Group recorded consolidated revenue of its resource base during the eighteen months approximately HK$200.8 million (2010 (12-month): ended 30 June 2012. Two takeover offers were HK$132.0 million). The consolidated revenue concluded and the outcome is summarised as consisted of HK$28.6 million (2010 (12-month): follows: HK$17.4 million) from the sales of copper ore concentrates, HK$153.6 million (2010 (12-month): (1) Takeover offer for Brockman Resources HK$99.9 million) from the provision of limousine and FerrAus Limited (“FerrAus”) rental services and HK$18.6 million (2010 (12-month): HK$14.7 million) from the provision The Company launched two takeover of airport shuttle bus services. As at 30 June offers simultaneously to acquire both 2012, the Group’s net asset value amounted Brockman Resources and FerrAus through to HK$3,099.0 million (31 December 2010: all-scrip bids on 10 November 2010. On 16 HK$2,349.9 million) whereas cash and bank June 2011, the Company had successfully balances amounted to HK$336.4 million (31 accumulated a total of 55.33% equity December 2010: HK$135.6 million). interest in Brockman Resources, thus it has become a subsidiary of the Company Loss attributable to equity holders of the on that date. As a result of the takeover Company for the eighteen months ended of Brockman Resources, a total of 30 June 2012 was HK$1,579.7 million (2010 1,432,980,840 ordinary shares were issued (12-month): loss of HK$210.6 million). Basic loss and allotted to Brockman Resources per share for the eighteen months ended 30 shareholders who had accepted the offer June 2012 is HK29.77 cents (2010 (12-month): loss (representing approximately 32.99% of the of HK5.99 cents). The loss of the current period equity interest of Brockman Resources). was mainly due to the impairment losses from the revaluation of mining properties in Australia The FerrAus offer lapsed on 15 July 2011. and in the People’s Republic of China (“PRC”). FerrAus announced the asset acquisition Impairment losses on the revaluation of mining and placement transactions to Atlas Iron properties in Australia and the PRC recorded Limited (“Atlas”). As a result following during the eighteen months ended 30 June 2012 the placement transactions to Atlas, the amounted to approximately HK$2,391.9 million Company’s relevant interests were diluted and HK$114.0 million respectively. from 16.4% to 10.01%. A counter offer by 5 Annual Report 2012 MANAGEMENT DISCUSSION AND ANALYSIS (continued) Atlas followed after the asset acquisition Subscription of Shares and Convertible and placement to Atlas. The Company Bonds has accepted the offer and disposed the Atlas consideration shares