CY2023 - H1.2023 = H2.2023orH2.2023 / H1.2023 for all the...

CY2023 - H1.2023 = H2.2023
or
H2.2023 / H1.2023 for all the reconciliation items (At 31/12/23 vs at 30/06/23)

Revenue : 589.2 - 319.7 = 269.5m$US
Gross profit : 94.8 - 68.4 = 26.4m$US
Gross profit margin for H2.2023 = ~ 10%
Other income : 23.5 - 2 = 21.5 m$US
Distribution costs : 29 - 12.9 = 16.1 m$US
Admin expenses : 14.8 - 7.2 = 7.6 m$US
Other Operating expenses : 24 - 16.1 = 7.9 m$US
Exchange gain : 4.6 - 6.2 = -1.6 m$US
Finance costs : 27.5 - 13.1 = 14.4 m$US
Share of results of associates : 5.1 - 3.2 = 1.9 m$US
Profit before tax : 32.7 - 30.5 = 2.2 m$US
Income tax expense : 14.3 - 11.2 = 3.1 m$US
Profit after tax : 18.4 - 19.3 = -0.9 m$US

Adjust for non - cash items
Depreciation/Amortisation : 35.7 - 13.8 = 21.9 m$US
Finance costs (net of income) : 26.5 - 12.6 = 13.9 m$US
Income tax expense : 14.3 - 11.2 = 3.1 m$US

Adjusted EBITDA : 94.9 - 49.8 = 45.1 m$US
Adjusted EBIT : 59.2 - 36.0 = 23.2 m$US

Consolidated cash : 69.7 / 60.7
Net cash generated from operating activities : 30.3 - (-3.6) = 33.9 m$US
Inventories : 292.3 / 285.8
Trade and receivables : 38.5 / 31.8
Trade and payables : 190.3 / 171.9
Total borrowings : 265.5 / 290.2
Principal repayments : 47.6 - 18.5 = 29.1 m$US

Gearing ratio : 0.64 / 0.71
Net asset backing per share : 55.39 / 54.25

Operating profit before working capital changes : 69.7 - 59.3 = 10.4 m$US
(Increase)/decrease in inventories : (-59.0) - (-51.0) = (-8.0) m$US

Other income increased by US$19.5 million mainly due to a US$20.2 million gain recognized in 4Q 2023from the disposal of 90% of a subsidiary, OM Materials (Qinzhou) Co Ltd (“OMQ”). Sales proceeds from thedivestment were US$25.8 million, of which US$10.4 million were received in 2023 and the residual balanceof the proceeds are scheduled to be received in 2024.

=> 15.4 m$US still to be received from the Qinzhou sale

Personal comments :

Not a great result but not catastrophic either.
Total borrowings went down 25 m$US, total assets up 10 m$US with cash up 9 m$US.
Of course, that was helped by the 9 m$US from the Share Issue and the 10.4 m$US received from the Qinzhou divestment.

So there wasn't actually much cash generated by the business in H2.2023 after the tax, finance and admin costs.
The fact that the 5.1 m$US in dividends from our 13% Tshipi holding hit in the first half doesn't help the second half year balance as well.
It was to be expected considering how subdued prices have been and how poorly the major maintenances have been timed.

The remaining proceeds from the Qinzhou sale should help deleveraging a bit further and reduce finance costs a bit.

Not much we can do except wait for a better macro environment and hope management bring the MetSi furnaces online in a timely manner.

All in all, I still think this is a considerably undervalued business at 85c au$ backing per share, 906 m$AU revenue, still making a bit of money in a downturn and sitting at 320 m$AU market cap.

Hopefully the market won't keep it undervalued forever.