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Write-ups in the upcoming semester accounts displayed
In preparing the financial statements for the half year ended 30 June 2010, OZ Minerals has concluded that an impairment reversal of $201.1 million, before tax, will be recognised in relation to property
, plant and equipment at its Prominent Hill operation. This will result
in an increase of $141.1 million to net profit after tax being reported
in the half year accounts due for release when finalised on 25 August
2010.
The impairment reversal is a non-cash adjustment and does not form part
of the operating earnings.
Accounting standard, AASB 136 Impairment of Assets requires an entity to
consider, at each reporting period, whether past impairments should be
reversed. In concluding that a reversal of impairment is appropriate, OZ
Minerals has considered a range of factors in accordance with the
accounting standard.
The major factors leading to the impairment reversal are the improvement
in the outlook since December 2008 for the global economy in general
and the copper market in particular, strong proven production and
financial performance from the Prominent Hill mine, the improvement in
the market valuation of Prominent Hill as reflected in the OZ Minerals’
share price and the robust financial position of the Company.
This impairment reversal is in respect of a $251.0 million impairment
recognised by the Company in its financial statements for the year ended
31 December 2008. The key factors contributing to the impairment in
2008 were significant global economic uncertainty, a then current copper
price of approximately $1.50/lb, the very early stage of commissioning
of the Prominent Hill project and the fact that the asset was classified
for accounting purposes as “held for sale” at that time.
The impairment of $251.0 million in 2008 has been adjusted for resource
evaluation expenditure included in the original impairment that will not
be reversed, and for notional depreciation on the original impairment.
After allowing for tax expense at a rate of 30 per cent, the impairment
reversal results in an increase to the net profit after tax of $141.1
million.
Source: Oz Minerals
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