UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUERS PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of October, 2010
Commission File Number 001-33983
Sims Metal Management Limited
(Translation of registrant’s name into English)
110 Fifth Avenue, Suite 700
New York, NY 10011

(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F þ           Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o                No þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):                     
 
 

 


 

     This report contains the following:
     
Exhibit No.    
 
   
99.1
  Notice of 2010 Annual General Meeting of the shareholders of Sims Metal Management Limited.
99.2
  Sims Metal Management Limited Annual Report 2010.

 


 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
October 19, 2010   SIMS METAL MANAGEMENT LIMITED
 
 
  /s/ Frank M. Moratti    
  Frank M. Moratti   
  Group Company Secretary and General Counsel   
 

 

exv99w1
Exhibit 99.1
(SIMS METAL MANAGEMENT LOGO)
     
(GRAPHIC)
  000001 000 SGM
MR SAM SAMPLE
FLAT 123
123 SAMPLE STREET
THE SAMPLE HILL
SAMPLE ESTATE
SAMPLEVILLE VIC 3030
(GRAPHIC)
18 October 2010
Dear Shareholder
I have pleasure in inviting you to attend the 2010 Annual General Meeting of Sims Metal Management Limited to be held in the Fort Macquarie Room, Hotel InterContinental, 117 Macquarie Street, Sydney NSW on Friday 19 November 2010 at 11:00 am (Sydney time).
Enclosed is the Notice of Annual General Meeting which sets out the items of business to be considered.
If you are attending, please bring this letter with you to facilitate registration into the meeting.
If you are unable to attend the meeting, you are encouraged to complete the enclosed proxy form. The proxy form should be returned in the envelope provided so that it is received no later than 48 hours before the commencement of the meeting.
Corporate shareholders will be required to complete a “Certificate of Appointment of Representative” to enable a person to attend on their behalf. A form of this certificate may be obtained from the Company’s share registry.
A copy of the address to be given by each of the Chairman and the Group Chief Executive Officer at the meeting will be available for viewing and downloading from the Company’s website at www.simsmm.com, following the meeting. You may also request a copy from the Company.
I look forward to your attendance at the meeting.
Yours sincerely
-s- Frank Moratti
Frank Moratti
Company Secretary

 


 

(GRAPHIC)

 


 

BUSINESS
1. ACCOUNTS AND REPORTS
To receive and consider the financial statements of the Company and its controlled entities for the year ended 30 June 2010 and the related Directors’ Report, Directors’ Declaration and Auditor’s Report.
2. RE-ELECTION OF DIRECTOR
MR CHRISTOPHER RENWICK
To consider and, if thought fit, pass the following resolution as an ordinary resolution:
“That Mr Christopher Renwick, who retires by rotation at the Annual General Meeting in accordance with the Company’s Constitution and the ASX Listing Rules and having offered himself for re-election and being eligible, be re-elected as an Independent Non-Executive Director of the Company.”
3. AMENDMENTS TO CONSTITUTION
To consider and, if thought fit, pass the following resolution as a special resolution:
“That the Constitution of Sims Metal Management Limited be amended as outlined in Annexure 1 to this Notice of Meeting.”
4. PARTICIPATION IN THE SIMS METAL MANAGEMENT LIMITED LONG TERM INCENTIVE PLAN BY MR DANIEL DIENST
To consider and, if thought fit, pass the following resolution as an ordinary resolution:
“That approval is given for the purposes of ASX Listing Rules 7.1 and 10.14 and for all other purposes, for Mr Daniel Dienst, the Group Chief Executive Officer, to have issued to him 271,865 Performance Rights and 203,908 Options, and the issue of any Sims Metal Management Limited ordinary shares or American Depositary Shares upon the exercise of those Performance Rights and Options under the terms of the Sims Metal Management Limited Long Term Incentive Plan as described in the Explanatory Memorandum to this Notice of Meeting.”
5. REMUNERATION REPORT
To consider and, if thought fit, pass the following resolution as a non-binding ordinary resolution:
“That the Remuneration Report for the year ended 30 June 2010 (as set out in the Directors’ Report) is adopted.”
By order of the Board
-s- Frank Moratti
Frank Moratti
Company Secretary
18 October 2010
VOTING EXCLUSION STATEMENT — RESOLUTION 4
In accordance with ASX Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 4 by any Director of the Company (other than a director who is ineligible to participate in any employee incentive scheme of the Company), and by any person who may participate in the proposed issues or obtain a benefit (except a benefit solely in the capacity as a shareholder), and any associate of such a director or other person.
However, the Company need not disregard such a vote if:
  it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
 
  it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.
VOTING ENTITLEMENTS
For the purpose of the Corporations Act 2001, the Company has determined that all securities of the Company that are quoted securities at 7:00 pm (Sydney time) on Wednesday, 17 November 2010 will be taken, for the purpose of the Meeting, to be held by the persons who held them at the time.
PROXIES
A shareholder has the right to appoint a proxy, who need not be a shareholder of the Company. If a shareholder is entitled to cast two or more votes they may appoint two proxies and may specify the percentage of votes each proxy is appointed to exercise.
The Proxy Form must be:
  deposited at the share registry of the Company, Computershare Investor Services Pty Limited, located at Level 4, 60 Carrington Street, Sydney NSW 2000 (or by mail to GPO Box 242 Melbourne Vic 3001);
 
  deposited at the Company’s Registered Office, Sir Joseph Banks Corporate Park, Suite 3, Level 2, 32-34 Lord Street, Botany NSW 2019;
 
  sent to the Company by mail to PO Box 651, Botany NSW 1456; or
 
  sent by facsimile to Computershare on 1800 783 447 or (03) 9473 2555 or to the Company on (02) 8113 1622.
To be effective, proxies must be lodged by 11:00 am (Sydney time) on Wednesday, 17 November 2010. Proxies lodged or received after that time will be invalid.
CORPORATE REPRESENTATIVES
A body corporate which is a Shareholder, or which has been appointed as a proxy, is entitled to appoint any person to act as its representative at the Meeting. The appointment of the representative must comply with the requirements under section 250D of the Corporations Act 2001 (“Corporations Act”). The representative should bring to the Meeting a properly executed letter or other document confirming their authority to act as the company’s representative.

2


 

SHAREHOLDER QUESTIONS
If you would like a question to be put to the Chairman of the Meeting or the Auditor and you are not able to attend the Meeting, please email your question to the Company Secretary at frank.moratti@simsmm.com.
To allow time to collate questions and prepare answers, questions are to be received by the Company Secretary by 11:00 am (Sydney time) on Wednesday, 17 November 2010.
EXPLANATORY MEMORANDUM FOR 2010 ANNUAL GENERAL MEETING (MEETING)
The Company’s shareholders (“Shareholders”) should read the Explanatory Statement accompanying, and forming part of, this Notice of Meeting (“Notice”) for more details on the resolutions to be voted on at the Meeting.
BUSINESS OF THE MEETING
ITEM 1: ORDINARY RESOLUTION 1 — ACCOUNTS AND REPORTS
The Financial Report, Directors’ Report and the Auditor’s Report for the financial year ended 30 June 2010 will be laid before the Meeting.
Together, the Financial Report, Directors’ Report and the Auditor’s Report constitute the Company’s 2010 Annual Report. Unless the Company’s Share Registry has been notified otherwise, Shareholders will not be sent a hard copy of the Annual Report. All shareholders can view the 2010 Annual Report on the Company’s website at www.simsmm.com.
Following the consideration of the Reports, the Chairman will give Shareholders a reasonable opportunity to ask questions about or comment on the management of the Company.
The Chairman will also give Shareholders a reasonable opportunity to ask the Auditor questions relevant to:
  the conduct of the audit;
 
  the preparation and content of the Auditor’s Report;
 
  the accounting policies adopted by the Company in relation to the preparation of the financial statements; and
 
  the independence of the Auditor in relation to the conduct of the audit.
The Chairman will also give the Auditor a reasonable opportunity to answer written questions submitted by shareholders that are relevant to the content of the Auditor’s Report or the conduct of the audit. A list of written questions, if any, submitted by shareholders will be made available at the start of the Meeting and any written answer tabled by the Auditor at the Meeting will be made available as soon as practicable after the Meeting.
ITEM 2: ORDINARY RESOLUTION 2 — RE-ELECTION OF DIRECTOR
CHRISTOPHER J RENWICK AM,
FAIM, FAIE, FTSE — BA, LLB
(AGE 68)
Mr Renwick retires by rotation and, being eligible, offers himself for re-election as an Independent Non-Executive Director.
The ASX Listing Rules require that the Company hold an election of Directors at least once per year. The Company’s Constitution requires that at least one Director, excluding the Managing Director, must retire each year. The retiring Director is then eligible to offer themself for re-election by shareholders.
Mr Renwick was appointed as a non-executive director in June 2007. He is Chairman of the Safety, Health, Environment & Community Committee and is a member of the Finance & Investment Committee. Mr Renwick was employed with the Rio Tinto Group for over 35 years rising, in 1997, to Chief Executive, Rio Tinto Iron Ore, a position he held until his retirement in 2004. He is Chairman and a director of Coal and Allied Industries Limited (since 2004), a director of Downer EDI Limited (since 2004) and Chairman of the Rio Tinto Aboriginal Fund (since 2004).
Directors’ recommendation
The Directors, with Mr Renwick abstaining, recommend you vote in favour of Resolution 2.
ITEM 3: SPECIAL RESOLUTION 3 — AMENDMENTS TO THE CONSTITUTION
Outlined below is a summary of the material changes to the Company’s Constitution if the special resolution in Item 3 is approved by shareholders.
(A) REPLACEMENT OF CLAUSE 29.3
New dividend laws which came into effect on 28 June 2010 under the Corporations Act apply to all Australian incorporated companies. The previous law, which required dividends to be only paid from profits (“Profits Test”), has been abolished.
This has now been replaced with a three tiered solvency test which requires:
  the Company’s assets to exceed its liabilities immediately before the dividend is declared and the excess to be sufficient for the payment of the dividend (Net Asset Test); and
 
  the payment of the dividend to be fair and reasonable to the Company’s shareholders as a whole (Fair and Reasonable Test); and
 
  the payment of the dividend to not materially prejudice the Company’s ability to pay its creditors (No Material Prejudice Test).
     
SIMS METAL MANAGEMENT LIMITED NOTICE OF MEETING 2010   3

 


 

EXPLANATORY MEMORANDUM FOR 2010 ANNUAL GENERAL MEETING (MEETING)
Although the Profits Test has been abolished under the Corporations Act, the Company may not be able to take advantage of the new dividend requirements because it would still be constrained by the Profit Test restriction contained in clause 29.3 of the Company’s Constitution. The Directors believe it is in the interests of the Company and its shareholders to have the flexibility to be able to take advantage of the new dividend requirements.
Therefore it is proposed that the clause 29.3 of the Constitution of the Company be amended as follows:
“Circumstances in which a dividend may be paid
29.3 Dividends of the Company may be paid in accordance with the Corporations Act 2001 (Cth).”
Shareholder approval of Resolution 3 will allow the Company to pay a dividend subject to satisfying the three tiered test set out above, without the requirement for the Company to pay a dividend only out of profits.
(B) AMENDMENTS TO CLAUSE 29.4 AND CLAUSE 29.6
Clause 29.1 of the Company’s Constitution enables the Directors to determine that a dividend is payable or to declare dividends.
Clause 29.4 of the Company’s Constitution currently outlines a number of circumstances applicable where Directors declare a dividend, such as the distribution of specific assets and directing that the dividend be payable to particular members (to the extent permitted by law). In order to extend the application of that clause to the determination of dividends, it is proposed that clause 29.4 of the Company’s Constitution be amended so that the words “determining or” are inserted before “declaring a dividend”.
Clauses 29.6(a) and 29.6(b) currently refer only to the declaration of dividends and, in order to extend the application of those clauses to the determination of dividends, the amendments to those clauses outlined in Annexure 1 are required.
The distinction between the declaration and determination of a dividend in the Company’s Constitution is the result of the Corporations Act. Section 254V of the Corporations Act distinguishes between determining a dividend and declaring a dividend, in that if the Company declares a dividend, the Company incurs a debt when the dividend is declared. However, if the Company determines the amount, and time, of payment of a dividend, the debt arises only when the time fixed for payment arrives, since the decision to pay the dividend may be revoked at any time before then.
The Directors believe that, just as clause 29.1 increases the Company’s flexibility in relation to dividends, the amendments to clause 29.4 and clause 29.6 should provide the same flexibility.
(C) REPLACEMENT OF REFERENCES TO “ASTC” WITH “ASX SETTLEMENT”
As a result of the re-branding of the ASX Group, the ASX Settlement and Transfer Corporation Pty Limited (“ASTC”) recently changed its name to “ASX Settlement Pty Limited”. Accordingly, the references to “ASTC” throughout the Company’s Constitution have been replaced with “ASX Settlement Pty Limited”.
(D) VOTING REQUIREMENTS
Section 136(2) of the Corporations Act requires that an amendment to the constitution of a company be approved by a special resolution of the shareholders of the company. For a special resolution to be passed, at least 75% of the votes cast by shareholders entitled to vote on Resolution 3 must be in favour of the resolution.
Directors’ recommendation
The Directors recommend you vote in favour of Resolution 3.
ITEM 4: ORDINARY RESOLUTION 4 IN RESPECT OF PARTICIPATION IN THE SIMS METAL MANAGEMENT LIMITED LONG TERM INCENTIVE PLAN (“PLAN”) BY MR DANIEL DIENST
Mr Dienst is the Group Chief Executive Officer (“CEO”) of the Company and an Executive Director.
The Board (with Mr Dienst absent and not voting) believes it is appropriate that Mr Dienst be entitled to be granted Performance Rights, subject to the performance hurdles described below, and Options (collectively “Equity Rights”), under the Plan.
The Board believes that the issue of Equity Rights, more fully described below, pursuant to the Plan which was introduced in 2007, is an important element of the Company’s remuneration strategy for the CEO, which involves fixed base compensation (“Base Salary”) and other benefits, a short-term incentive (“STI”) and a long-term incentive (“LTI”), as set out in the Company’s Annual Report. Mr Dienst’s total compensation currently comprises Base Salary of US$1,290,000 per annum, an annual STI opportunity of 130% of Base Salary (target) and 260% (maximum), and an annual LTI award equal to 300% of Base Salary. Mr Dienst is entitled to participate in the Plan.
Resolution 4 seeks approval for the grant to Mr Dienst of:
  271,865 Performance Rights with a relative Total Shareholder Return (“TSR”) performance hurdle set against a peer group of companies, and vesting conditions based on continued service; and
 
  203,908 Options with a market-price exercise price, with vesting conditions based on continued service.
More details regarding the terms of these Equity Rights are set out below.

4


 

Reasons for the Equity Rights structure for the 2011 fiscal year grant
The Company is an organisation with almost 70% of its Revenue generated from North America, and a significant number of its executive team are based there. Further, the Company has significant shareholding bases in the United States (“US”) and Australia, with both ordinary shares traded on the ASX in Australia and American Depositary Shares (“ADSs”) traded on the New York Stock Exchange in the US.
Consequently, the Company must ensure that its executive remuneration approach increasingly reflects US compensation systems/practices, while being cognisant of Australian practices.
If approved by shareholders, Mr Dienst will receive his LTI grant in two allotments:
1.   A grant of Performance Rights with a nil issue and exercise price, with vesting based on the TSR of the Company relative to the median performance of an international peer group of companies in Sims’ sector. The list of these comparators is in Annexure 2. While performance hurdles for vesting are common in Australia, they are only used in a minority of US plans. This grant would constitute two-thirds of Mr Dienst’s LTI grant.
 
2.   A grant of Options, with an exercise price based on the market value of the Company’s shares (calculated on the five trading days up to, but not including, the date of grant of the Options). Options will vest based on the continued service of Mr Dienst. While option grants without performance hurdles are uncommon in Australia, they are common practice in the US. Moreover, no gains will be available to Mr Dienst unless the share price of the Company increases above the exercise price for those Options. This grant would constitute one-third of Mr Dienst’s LTI grant.
The Company’s Plan grant for the 2011 fiscal year will:
  reward for strong performance relative to peers;
 
  reward for returns to shareholders; and
 
  have vesting based both on performance and on service.
Accordingly, the Company believes that the proposed grant under the Plan for Mr Dienst is an approach which will support both the business direction of the Company, and shareholder expectations.
Terms of 2011 fiscal year Performance Rights
(a)   271,865 Performance Rights will be issued to Mr Dienst under the terms of the Plan, conditional on obtaining shareholder approval pursuant to Resolution 4. A Performance Right is the right to receive an ordinary share upon satisfaction of all vesting conditions for a nil issue price. Under the terms of the Plan, once the terms and conditions of the Performance Rights have been satisfied and Mr Dienst is entitled to ordinary shares, those shares will be provided by way of acquisition of existing shares on-market on behalf of the executive, or by way of an issue of new shares. If Mr Dienst is resident in the US at the time of exercise, then he will be issued ADSs instead of ordinary shares, unless the Board determines otherwise.
 
(b)   Subject to the Plan Rules, Performance Rights will not vest or be exercised, and cannot be sold or otherwise dealt with by Mr Dienst, until the relevant performance terms and conditions have been satisfied.
 
(c)   Performance period
 
    The performance period for the Performance Rights is the three year period commencing 1 July 2010 and ending 30 June 2013. Re-testing applies to the Performance Rights for the four-year period ending 30 June 2014 and again for the five-year period ending 30 June 2015, to the extent that the Performance Rights have not all vested previously. Permitting re-testing effectively sets a new and more challenging hurdle as it requires a recovery from sub-median performance against the comparator group to an above-median performance.
 
    Any Performance Rights which have not vested with effect as at 30 June 2015 will immediately lapse.
 
(d)   TSR Performance Hurdle
 
    TSR measures the growth over a particular period in the price of shares plus dividends notionally reinvested in shares.
 
    In order for any or all of Mr Dienst’s Performance Rights to vest, the Company’s TSR for the relevant Performance Period must be at the 51st percentile or higher against the TSRs of an international peer group of 16 specified comparator companies in the Company’s sector. The list of these comparators is in Annexure 2.
 
    Based on the Company’s relative TSR performance over the relevant Performance Period, Mr Dienst’s Performance Rights will vest in accordance with the following table:
     
TSR OF THE COMPANY RELATIVE
TO TSRS OF COMPARATORS
  PROPORTION OF PERFORMANCE
RIGHTS VESTING
Less than the 51st percentile
  0%
51st percentile
  50%
Between 51st percentile and 75th percentile
  Straight-line vesting between 50% and 100%
75th percentile or higher
  100%
     
SIMS METAL MANAGEMENT LIMITED NOTICE OF MEETING 2010   5

 


 

EXPLANATORY MEMORANDUM FOR 2010 ANNUAL GENERAL MEETING (MEETING)
TSR is calculated in each case on the following basis:
    dividends are re-invested at the ex-dividend date;
 
    share prices are calculated as a volume weighted average sale price of shares for the three months preceding the start and end dates of the performance period;
 
    local currencies are used for non-Australian comparator companies, so currency movements are ignored; and
 
    tax and any franking credits (or similar) will be ignored.
(e)   Continued employment vesting condition
In addition to the Company meeting the applicable TSR performance condition specified above, Mr Dienst must also continue to be an employee or director of the Company or its related bodies corporate at the Vesting Date for his Performance Rights to vest. The Vesting Date will be the date the Company announces its results for the fiscal year ending 30 June 2013 (which is expected to be in August 2013).
Unvested Performance Rights lapse upon Mr Dienst ceasing to be an employee or a director, unless as a result of a Qualifying Cessation (as defined in the Plan Rules, which includes cessation of employment in circumstances such as death, total or permanent disablement, redundancy, and otherwise at the discretion of the Board) during the initial three year performance period. In the event of a Qualifying Cessation, the Performance Rights will be tested at the end of the initial Performance Period in line with other Plan participants. There will be no re-testing after that initial period, even where there has been a Qualifying Cessation.
All Performance Rights will lapse and be immediately forfeited in cases of fraud, gross dishonesty or termination of Mr Dienst’s employment for cause.
(f)   Performance Rights will vest and be automatically exercised upon a change of control of the Company, and (subject to Board discretion) upon a takeover bid for the Company, or similar transaction, which is recommended by the Board.
Terms of 2011 fiscal year Options
(a)   203,908 Options will be issued to Mr Dienst under the terms of the Plan, conditional on obtaining shareholder approval. An Option is the right to receive an ordinary share in the Company upon vesting conditions being met and payment of the exercise price. Options are issued at a nil issue price. Under the terms of the Plan, ordinary shares will be provided on exercise by way of acquisition of existing shares on-market on behalf of the executive or by way of an issue of new shares. If Mr Dienst is resident in the US at the time of exercise, then he will be issued ADSs instead of ordinary shares, unless the Board determines otherwise.
 
(b)   The exercise price of the Options will be the market value of the Company’s ordinary shares (calculated on the average of the Company’s closing share price on the five trading days up to, but not including, the date of grant, which will be the business day following shareholder approval under Resolution 4, if given, at the Meeting).
 
(c)   The Options will vest in three equal tranches over approximately three years. The three tranches will progressively vest, and become exercisable, on the date the Company announces its full year results to ASX for the 2011, 2012, and 2013 fiscal years.
 
(d)   The Options expire seven years after the date of grant, unless exercised or lapsed before that time.
 
(e)   Continued employment vesting condition
Mr Dienst must continue to be an employee or director of the Company or its related bodies corporate at the relevant vesting date for his Options to vest.
Unvested Options lapse upon Mr Dienst ceasing to be an employee or a director, unless as a result of a Qualifying Cessation (as defined in the Plan Rules, which includes cessation of employment in circumstances such as death, total or permanent disablement, redundancy, and otherwise at the discretion of the Board). In the event of a Qualifying Cessation, the Options will vest according to the original vesting schedule in line with other participants.
All Options will lapse and be immediately forfeited in cases of fraud, gross dishonesty or termination of Mr Dienst’s employment for cause.
(f)   Options will vest and become exercisable upon a change of control, and (subject to Board discretion) upon a takeover bid or similar transaction which is recommended by the Board. However, the expiry date will also be accelerated so that the Options can only be exercised within 30 days of that event occurring, after which they will expire, unless if otherwise determined by the Board.
Equity Rights generally
In relation to both Performance Rights and Options, the Plan Rules:
(a)   prohibit the executive from hedging unvested awards;
 
(b)   allow the Company to settle awards in cash upon vesting at the Board’s discretion;
 
(c)   state that if, prior to their exercise, the Company undergoes a reorganisation of capital (other than by way of a bonus issue or issue for cash), the terms of the Equity Rights will be changed to the extent necessary to comply with the ASX Listing Rules as they apply at the relevant time to a reorganisation of capital at the time of the reorganisation; and
 
(d)   state that the holder is not entitled to participate in a new issue of shares or other securities made by the Company to holders of its shares unless the Equity Rights are vested and exercised before the record date for the relevant issue.

6


 

ASX Listing Rules Requirements
Under ASX Listing Rule 10.14, the Company must not permit a director of the Company to acquire securities under the Plan without shareholder approval. In addition, under ASX Listing Rule 7.1, the Company may not issue more than 15% of its issued capital on a rolling 12-month basis, unless an issue is approved by shareholders and subject to other specific exceptions. If the issue of Equity Rights under Resolution 4 is approved for the purposes of Listing Rule 7.1, then those Equity Rights, and the issue of shares upon vesting and exercise of those Equity Rights, will not count towards the 15% allowance.
The following information is provided for the purposes of these ASX Listing Rules in connection with the approval sought in Resolution 4.
(a)   The Plan was introduced in 2007. Grants made to directors under the Plan since the date of the last shareholder approval, being 20 November 2009, were 197,006 Performance Rights and 178,037 Options to Mr Daniel Dienst at nil consideration.
 
(b)   All directors are eligible under the terms of the Plan to participate in awards of Performance Rights and Options (subject to shareholder approval), although there is no intention to make awards to non-executive directors. The names of the current directors are Mr Daniel Dienst, Mr Paul Varello, Mr Michael Feeney, Mr Christopher Renwick, Mr Paul Sukagawa, Mr Norman Bobins, Mr Robert Lewon, Mr Gerald Morris, Mr Geoffrey Brunsdon and Mr Jim Thompson.
 
(c)   The Performance Rights and Options will be issued, assuming shareholder approval is obtained, on the next business day following the Meeting, and in any event within three months after the date of the Meeting.
 
(d)   There is no specific intended use of the funds that may be raised from payment of the exercise price of the Options by Mr Dienst.
 
(e)   The maximum number of securities that may be acquired by Mr Dienst is 271,865 Performance Rights and 203,908 Options, with each Performance Right and each Option representing one Company ordinary share or ADS (as the case may be).
A voting exclusion statement is set out under the resolution in this Notice.
Directors’ recommendation
The Directors (with Mr Dienst absent and not voting) recommend you vote in favour of Resolution 4 which will complete the Company’s remuneration strategy for Mr Dienst for the 2011 fiscal year.
STATEMENT WITH REGARDS TO APPROVED GRANT OF SECURITIES
Details of any securities issued to Directors under the Plan will be published in each annual report of the Company relating to a period in which securities have been issued, together with a statement that approval for the issue of the securities was obtained under Listing Rule 10.14.
If additional Directors who were not named in this Notice become entitled to participate in the Plan after this Meeting, shareholder approval under Listing Rules 7.1 and 10.14 will, if required, be obtained before they are able to participate in the Plan.
ITEM 5: ADVISORY RESOLUTION 5 IN RELATION TO THE REMUNERATION REPORT
The Remuneration Report is contained in the Directors’ Report of the Company’s 2010 Annual Report. The Report explains the Company’s executive remuneration practices and the link between the remuneration of employees and the Company’s performance and sets out remuneration details for each Director and for each named Executive.
The Corporations Act requires listed companies to put the Remuneration Report for each financial year to a resolution of members at their Annual General Meeting. Under section 250R (3) of the Corporations Act, the vote is advisory only and does not bind the Directors.
The Chairman will give shareholders a reasonable opportunity to ask questions about or make comments on the Remuneration Report.
While there is no legal requirement to abstain from voting, the Company believes it appropriate that neither the Directors, the named Executives nor their associates should vote on the Advisory Resolution, except as directed by any proxies, and they make no recommendation in respect of it.
     
SIMS METAL MANAGEMENT LIMITED NOTICE OF MEETING 2010   7

 


 

ANNEXURE 1
AMENDMENTS TO THE CONSTITUTION OF SIMS METAL MANAGEMENT LIMITED
     
REFERENCE IN CONSTITUTION   AMENDMENT
Clause 1.1
  The definition of “ASTC” is deleted and the following definition inserted:
 
  ASX Settlement means ASX Settlement Pty Limited.
 
   
Clause 1.1
  References to “ASTC” are replaced with “ASX Settlement” in the definition of:
 
  “CHESS”;
 
  “CHESS approved securities”; and
 
  “Settlement Rules”.
 
   
Clause 4.4
  The words “generation of a proper ASTC transfer” are replaced with the words “registration of a transfer of quoted securities”.
 
   
Clause 8.4
  The words “Subject to the Act” are replaced with the words “Except as otherwise provided for in” and “ASTC” is replaced with “ASX Settlement”, and the words “a proper ASTC” are deleted.
 
   
Clause 8.5(b)
  Reference to “ASTC” is replaced with “ASX Settlement”.
 
   
Clause 15.1
  The words “adopting the remuneration report” are inserted as the new subparagraph (c) and the original subparagraphs (c) and (d) are now (d) and (e) respectively.
 
   
Clause 29.3
  This clause is deleted and replaced with the following new clause 29.3:
 
  Circumstances in which a dividend may be paid
 
  29.3 Dividends of the Company may be paid in accordance with the Act.
 
   
Clause 29.4
  The words “determining or” are inserted before “declaring a dividend”.
 
   
Clause 29.6(a)
  The words “Subject to this clause 29.6” are inserted before “dividends will be” and the word “paid” replaces “declared”.
 
   
Clause 29.6(b)
  The words “determination or” are inserted before “declaration of the dividend”.
ANNEXURE 2
COMPARATOR COMPANIES FOR TSR PERFORMANCE HURDLE
  AK Steel
 
  Allegheny Technologies
 
  ArcelorMittal
 
  BlueScope Steel
 
  Commercial Metals
 
  Mueller Industries
 
  Nucor
 
  OneSteel
 
  Posco
 
  Reliance Steel
 
  Schnitzer Steel
 
  Steel Dynamics
 
  The Timken Company
 
  Tokyo Steel
 
  U.S. Steel
 
  Worthington Industries


 

(PROXY)
000001 000 SGM R SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030 Lodge your vote: By Mail: Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555 For Intermediary Online subscribers only (custodians) www.intermediaryonline.com For all enquiries call: (within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000 For your vote to be effective it must be received by 11:00am (Sydney time) on Wednesday 17 November 2010 How to Vote on Items of Business All your securities will be voted in accordance with your directions. Appointment of Proxy Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item. Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%. Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf. A proxy need not be a securityholder of the Company. Signing Instructions Individual: Where the holding is in one name, the securityholder must sign. Joint Holding: Where the holding is in more than one name, all of the securityholders should sign. Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it. Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Attending the Meeting Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.computershare.com under the information tab, “Downloadable Forms”. Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form. Turn over to complete the form View your securityholder information, 24 hours a day, 7 days a week: www.investorcentre.com Review your securityholding Update your securityholding Your secure access information is: SRN/HIN: I9999999999 PLEASE NOTE: For security reasons it is important that you keep you SRN/HIN confidential. 916CR0_Sample_Proxy/000001/000003

 


 

(PROXY)
MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030 Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ‘X’) should advise your broker of any changes. Please mark to indicate your directions Appoint a Proxy to Vote on Your Behalf I/We being a member/s of Sims Metal Management Limited hereby appoint the Chairman OR of the Meeting PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s). or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Sims Metal Management Limited to be held in the Fort Macquarie Room, Hotel InterContinental, 117 Macquarie Street, Sydney NSW on Friday 19 November 2010 at 11:00am (Sydney time) and at any adjournment of that meeting. Important for Item 4: If the Chairman of the Meeting is your proxy and you have not directed him how to vote on item 4 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on item 4 and your votes will not be counted in computing the required majority if a poll is called on this item. The Chairman of the Meeting intends to vote undirected proxies in favour of item 4 of business. I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he has an interest in the outcome of that Item and that votes cast by him, other than as proxy holder, would be disregarded because of that interest. Items of Business PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority. To re-elect Mr Christopher Renwick as an Independent Non-Executive Director of the Company. To amend the Constitution. To approve the participation in the Sims Metal Management Long Term Incentive Plan by Mr Daniel Dienst. To adopt the Remuneration Report for the year ended 30 June 2010. For Against bstain The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business. Signature of Securityholder(s) This section must be completed. Individual or Securityholder 1 Securityholder 2 Securityholder 3 Sole Director and Sole Company Secretary Director Director/Company Secretary Contact Daytime Telephone Date Name S G M1 2 0 6 5 7 A

 

exv99w2
Exhibit 99.2
(GRAPHIC)
TROY STUEWE DAMIEN COFFEY             CHRIS WILLIAMS            SALVADOR FREGOSO             JACQUELINE PENTON            KEVIN BRAY BOYDEN THOMAS             IAN SOMERVILLE            BRYAN HALE             MICHAEL LOWE DAVID REA             JONATHAN CHAPMAN            MIKI TAYLOR            MANUAL ARCHILA            JOHN SILVESTRE            STEFAN THOLL HARRISON SHAFFER            DIETER BOLSSENS        ;     YVONNE HUGHES            STEPHEN MATTHEWS ADRIANNA VASQUEZ            HOLLY SIEVERT            MANOJ KUMAR            TROY MOSS            DALE NIXON            JAMES COUSAR ROBERT SHARPE           & nbsp;ALLAN KOZAK            OSBALDO GARCIA            ELLEN AKEN-VERKLEIJ TERRY SCOTT            EDUARDO ACEBEDO            VITORINO CASTRO            VINCENT HILL            HECTOR PEREZ            ARMANDO REYES ANDREW EVANS          & nbsp; DAVID BUNGER            MICHAEL STOCKDALE            EARL BERRYMAN MARY HALLOCK            BRUCE CUMMING            ANTONIO VALENSUELA            DANIEL BECHER            CHRIS HECKMAN            DAVID HOLLAND DANNY PEHRSSON         & nbsp;  KEVIN EMPRINGHAM            BRAD POTTER            PAUL FOSTER EDWARD KWOLEK             JOHN DAVIDGE             ISIDRO SANDOVAL            STEVEN GREEN            ANTHONY MULLEN            JESSICA OSORIO CARLOS RODRIGUEZ          ;   JOSE MEDINA             THINTIZWE MAKHUNGA            JODA HAMIORA PAUL WHITE            MARIO MC COY            BENJAMIN TILLEY            DREW NICHOLS            DAVID SMITH            EVAN KRETSCHMER JOHN MOFFITT          &nbs p; JOSE MENDOZA            RENEE SCHNELL            WOLFF THOMAS WILLIAM KELLY            JOHN EPPERSON            MANSUR SIRAJUDEEN            LUIS GUZMAN-SOLANO            PAUL WHITMORE            RAFAEL CRESPO JR ROSA SILVA        &nb sp;   STEVEN MAUGHAN            JOHN POLK            JOSE CRUZ-GARCIA JOSE LOERA-TOVAR            JANUSZ SZMYD            CHARLEY WILLIAMS            DAVID RANDOLPH            APRIL HOLT            CHRISTIAN LENFERT ISIDORO ALVAREZ        &nb sp;   BRIAN BRANDT            ROBERT FILBERT            LAM NGUYEN JOSEPH RILEY            MARIA AFONSO            LESLIE JONES            RONALD HEDGECOTH            SPENCER QUINTERO            ADRIENNE SPENCE DARIO BADILLO         & nbsp;  MARK DUNN            FLAVIO AVILA            ELIZABETH BAKER ANDRE HUGGINS            KENNETH WEINERT            WALTER DOHNA            INEZ GARCIA            MITCHELL BEER            ARMANDO CARLOS PHILIP BENTLEY           ;  WILLIAM GIBBONS            ERIC BAKER            CHERYL FECKETT MOHAMED SILLAH            PABLO POL ROMERO            GERMAN MORALES            HARRY REEVES            HELLEN WERTH             DONNIE PHILLIPS SASHA SILVA            TYSHON BEY            JOSEPH PARKER            STEPHEN FISCHER LESTER DE L ROMERO            HANS-PETER BRAND            ARNULFO ZATE            AUGUSTO AVILA            HENRY BOWMAN            EDWIN DIAZ DOUGLAS WEAVER         &n bsp;  KEITH COOPER            JOHN BETTENCOURT            ARIS DE LOS SANTOS ROBERT TUCKER            CHANEL SMITH            JUSTIN MILLER            ANTHONY AGIUS            LUIS RAMOS            TAMEKA HENDERSON LINDA HARRIS          &n bsp; LEON LITTLEJOHN            ANDERSON CLARKE            FRANK V DEN DUNGEN ROBERT RUIZ            RODNEY NUNEZ            MICHAEL WARSEK            ROB CONNAUGHTON            DONALD GILLETTE            GABRIEL JIMENEZ CHRIS SARGENT         &n bsp;  JACKIE BARLEY            ERNEST OVERTON            ANN CROMIE JEFFREY SCHUTT            DAVID SOUTH            NANCY REID            TAKLEB BETTERE            LIAM CODY            CAROL CULLETON VASANA KHAMVONGSA          &n bsp; CAMILO T-CASTILLO            CARIDAD T-DAVILA            ALBERT POSEY STEVEN SAXBY            BIAGIO ADRAGNA            FRANK HOLT            PRAVEEN BANGERA            ALEXANDER MCKERLIE            ALONSO G-PULGARIN WILLIAM WEISEN        &nb sp;   ALAN DOCZEKALA            DAVID CHUA            DANNY DESA CORDULA KR MER            GARY CARROLL            GRAEME FERGUSSON            JOSE VILLA            STEVEN CORBETT            TOMASZ HOLOWNIA WENDY BOETTGER            WILLIAM BROOKFIELD            CHARLES WILLIAMS         & nbsp;  ANDRZEJ GLISZCZYNSKI SHITA ADEM            MANELOS TAGDALIDIS            LEOPOLDO GUZMAN            ROBERT HANCOCK            MICHAEL LARACUENTE            NIKLAS WEIBO OSCAR VILLAREAL        & nbsp;   WAYNE OSCROFT            CRAIG ADKINS            GUSTAVO SANDOVAL HERMINIA GARCIA            TOMMY IRVING            JOSE CASTANEDA            MAURICIO M-GONZALEZ            JAMES CHASTAIN            OSCAR SALGADO TERESA STRACHAN        & nbsp;   VICTOR RODRIGUEZ            AARON LOONE            DAVID JOHNSON DAVID COBLE            DAVON PADEN            DEREK MICHALOWSKI            RACHAEL OÕCONNOR            CRISTIAN VELAZQUEZ            MATTHEW WADLEY BARBARA RIDGE       &nbs p;    MICHAEL MOODIE            THAWANRAT OWEN            RUI GUIMARAES RAYMOND JENNINGS            JOHN THIGPEN            WITTMAN SPENCER            GREGORY MARGESON            JOHN GRAVES            PAUL SUTTON GARRY SKINNER         &nb sp;  EDDY STEENSELS            RANDALL INGRAM            CHARLIE ROBY OMAR GUZMAN            ROBERT WILSON            MIGUEL GONZALES            JOHNNY DILLON            BRIAN SANCHEZ            JUNIOR MEA RODNEY BONNETTE          & nbsp; SERAFIN VALENCIA            MILE KOLCEG             THOMAS SORCI TIMOTHY BUCKELS            JOHN ROBERTSON            HAYLEY ANDREWS            WALDEMAR HIPP            KIRT BOSWELL            LETICIA ARELLANO JAMES HODGE         &n bsp;  NICHOLAS ADAMS            PASQUALE DIBIASO            JOHN HAMPSON MICHAEL PIRES            QUAN WANG            GAIL HEINEMAN            JAN-P V DE REUTVAN            ALVARO TORRES            JONATHAN LEWIS MARK LAWSON             TRISTAN WALTERS            ANGEL VALLE            MICHAEL JAMIESON MILTHON MORALES            IAN PICKERING            BRIAN HENDERSON            VICKAL PRASAD            ANASTACIO DIAZ            LISA BREMNER HEIKO OLSCHWESKI          ;   JEFFERY COUNCIL            BRANDON GARDNER            NICHOLAS HORN SUQUIFA COE            PATRICIA HANNAGAN            RICHARD NICKENS            MARTIN WILCOX            KAREN DARNELL            JAMES FROST SCOTTIE DENTON         &nb sp;  DAVID ERWIN            DAVID WOODRIFF            ROBERT LARRY MICHAEL WHITE            JOSE MARTINEZ            MARK ROBINSON            SHANO SHYTI            GEORGE MALAMIS            BERNARD MONTALVO VICTOR VIVES           ;  ERIC FIGUEROA            JOSE CORDERO            PAULI FINAU IAN BALL            JOHN PETERS            RUBEN MALAVE            ROY HARVEY            ERHARD FREDE            STEPHEN LUCKETT CARLOS DE JESUS             WILLIAM SCHMIEDEL JR            LUKE MARTIN            NOLAN WALTERS APOLINAR RODRIGUEZ            PATRYCJUSZ HOMA            LINNEA BLEVINS            ROSS COLEY            SUKVINDER RAI            HENK NEUTKENS HARRY TOWNSON         & nbsp;  MARK RICE            CHENIER ISRAEL            NOLBERTO BARBOZA ALANA PATTERSON            KEVIN MENDOZA            ADRIAN LEWIS            ANTHONY DRAPER            DANNIELLE CROAN            MARK BETTS JULIE GOLEY          & nbsp; DEBORAH G-CLIFFORD            RONALD RYLANCE            HARRY PITTMAN CLINTON DUKES            ANDREW NEUBECK            NICHOLAS FONTE            WILLIAM AUSTIN            BOB VAN SCHIE            LOREN BELONE JOSUE MORENO           ;  JOSE RUIZ            MICHAEL OGARA            ALFONSO MERCADO JULIE KUCZERA            DANIEL GUZMAN            DAVID RITTER            MASSIMO SARDELLA            CHENG MASON            BOBBY JABINES CAROLINE GREEN           ;  CARLOS MARTINS            KELLY FERGUSON            MELVA PERRY-BOLT MICHAEL BROMLEY            ROYCE GREEN            PEDRO CASTILLO            KEVIN BOATNER            LUCKY NTOZAKHE            RASAQ HAMED SOFIA VASQUEZ             JOHN WOOLEY            MANUEL SANCHEZ            RICHARD BROOKS MARCO LIBERAL            KEIRAN MCVIE            DERRICK WYMES            PAUL HUTCHINGS             LUIS PEREZ            JAMES RADFORD ROBERT SHEPHERD            RYAN MOLONEY            ARMANDO RUIZ            ROBERTO MUNOZ CARLOS RESTREPO            DOUGLAS SANDERS            DAMARIS VELASQUEZ            DEAN KOLENC            JEMMA DAVIES            LENNARD NASH JACK LAMBERT         &nb sp;  RONALD PORTEOUS            JEAN SAINT-FLEUR            GARY OÕMALLEY TOM OUTERBRIDGE            VICTOR RAMOS            MIGUEL AYALA            LEE POWELL            NATALIE ZAMBUJO            ERNESTO FLORES JEFFREY MAYNARD         &nbs p;  DONALD MANALU            FREDERICK RILEY            MARCUS JONES JEFFREY HEKE            WILFREDO VADY            DAGOBERTO RODRIGUEZ            STEPHEN KERRY            MARK HARRISON            VIRGINIA BARRAZA PETER HAGEMANN        &nb sp;   KATRINA MARTIN            SHAUN CHUDLEY            ROBERT FLETCHER MATTHEW JAYS            STEVEN MCINTYRE            DANIEL BUTLER            WILLIAM BEEBE            LEMPP WADIM            RANDY WILLIAMS MANUEL DOS SANTOS         &n bsp;  NEIL WAITE            GIDEON BOTHA            DONNA SUBLETTE MICHELLE KOWALSKI            WILL-JAN AMERSFOORT            STEPHEN LEE            PAUL MEEHAN            PETER WEEKS            CASEY CAMPBELL MENGISTU YEGZAW          ;   DAVID ALLOWAY            ROBERT WICKER            VANESSA REPICE ANDRES FONSECA            ROB SEDA-MARTINEZ             JANE FENWICK            MICHAEL PALLAY            PAUL KAVANAGH            GUADALUPE PADILLA ANDREW BAFI            SAJI POTHEN            HUGO ADAO   &nbs p;        WENDY FAULKNER MICHAEL ST. ONGE            NATHAN SEGAL            TARAN STIRRAT            ANDREW BUTCHER            DAVID TAYLOR            RENE DE KONING WILLIAM JONES         &nb sp;  ROBERT MOORE            RAFAEL UNZUETA            RICHARD BAMBRIDGE VALERIE HARVEY            CASIMIRO PRESINAL            RUBEN VALLEJO            STEVE KEMP            JOHN BESS            MARTIN SCOTT SHARON BARTER          &nb sp; HECTOR MERAZ            PHILLIP SISK            ROMMEL BIGALBAL JOSE LOBOS            RAFAEL PINEDA            TAHI LEGG            DAVID BORG            CARLOS TOLENTINO            CRYSTAL BOHNER CHRISTIANA MANGUAL          & nbsp; KIRE BABADZOVSKI            ALIX CEBALLOS            GERALD BOHM PETER CSOLLANY            RAQUEL VELA            DEREK CAMPBELL            NICOLAS ALVAREZ            JOAN MALOLO            TAUFA MANUOFETOA CARLOS FERREIRA         & nbsp;  EDUARDO RUIZ            JONATHAN MORGAN            WAYNE CUNNINGHAM HENRY FISHER            CORRADO SPEZZACATENA            STEVEN HOCKEY            EILEEN PAYNE            MARVIN FERRELL JR            GARY CLEAVE MIROSLAW KUCHARSKI             GRAEME STEVENS            MELANIE NOU             SCOTT JACOBS EDMUND PRUETT            TED SISOPHA            ROWAN BURDESS            RICHARD OGDEN            OHLEN CORBETT            JASON HENDRIXSON DAVID FREAME             BERHANU LEMA            JACEK WYDRA            JOSE HERNANDEZ MICHAEL DUNBAR            STEVEN READ            STEPHEN BOSLEY            BLAS AMEZCUA            ROGER LAWRENCE            BOBBY HAWKINS MATTHEW XENOS             BERNARD EVANS            LANCE BROWN            TREVOR PATRICK JOSEPH SCAPPINI            WILKEMSON SEVERE            ANTONIO FAIR            JOZEF DUBCZYK            MARY PARGETER            VALENTINO CORONADO KEVIN KNOX             JOHN BOWMAN            PAUL HILLIER            JOHN GELDEART ALMA PEREZ            SIMONE DUNN            ANGELA NEWBELL            FIONA MORGAN            ISABEL VELEZ            SJEF DORELEIJERS MILTON KILGORE          &n bsp; DOUGLAS NEWMAN            GERARDA FREDERICKS            TIMOTHY ADAMS BERNARD MONTALVO            HECTOR FUENTES            HENNY BOES            VICTOR ALVARADO            SHAWN OGELVIE            ROBERT BAREFOOT JOSE HERNANDEZ             MIKE MOSKAL            JOHN PIERRI            VICTOR COMMONS JOSE CRUZ            DAVID BRATCHER            STACEY SPROAT            AMEUR HELAL            DONALD QUARLES            ALBERTO JIMENEZ RHETT GERARD             BONNIE FERRELL            RAHKIIM BURGESS            GIOVANNI UCCHEDDU PETER MALONEY            YAN NONG            JORGE PONCE            PAUL THOMPSON            JOHN BARKSBY            ANTHONY AMATO JASON PRICE           &nbs p;GUISEPPE COSTANZO            JUVENCIO CIENFUEGOS            GARY JENNINGS STEWART WAINWRIGHT            SHAWN COLE            ROBERT DUNBAR            SAMUEL PISANI            BRENNAN CORNELL            SAM ANTHONY PEARLEE ANDERSON         & nbsp;  GARY HILLS            ALAN KINGTON            TERRY MC COY MICHAEL ALVAREZ            JOSE MARTINEZ            LUIS SERRANO            JOHN VAN ZWIETEN            CARLOS BERNARDO            LEONARDY AMAYA GREGORIO ROMO          ;   LUKE MEILAK            CRAIG MARSHALL            WILLIAM SMITH NICHOLAS WILHELM            FELIX GALAN            FRANCISCO ORTEGA            JOSE DIAS            ANDREW BORG            JOHN MARSHALL SUDHIR YALAMANCHALI         &n bsp;  WILLIAM BRODIN            JAYSON WALSH            DIANE SCHWEIGER ANTONIO TOMBA            RICHARD HUNTE            FRANK MORATTI            JIMMY BAUM            ERMELINDO RODRIGUEZ            ARNULFO SANCHEZ NEIL KERR           ;  SHIU NARAIN            DAVID HEMMINGS            MICHAEL TAFUTO AMRIT JASWAL            PAUL PRIEST            ELOY HERNANDEZ            THIAGO DE OLIVEIRA             MINAVADY CHANTHARATH            GRIZELJ FRANK CARLOS COWAN            IVOR BROCKLEHURST            LAURA SIQUEIROS            ANDRE LOVETT DEREK BARBER            KENNETH BULLOCK            JOHN BAKER            DAVID MEYERS            ZACHARY THOMAS            CHARLES MARSHALL GEORGE ROSEN             COLIN MANNING            STEVEN BURNS            WILLIAM IVY CHUAN-HAI TEH            DENNIS FREEMAN            EMAD AL MOSAWI            DAVID FLEGEL            PAUL FRESKA            MIGUEL BERNAL JR BRIAN BRINK             CHRISTOPHER REES            RICHARD SHUTE            EMILYN RODRIGUEZ ANTHONY PLIMMER            JEFFREY MAXICK            JAMES WENDELL            MARKO RONOWSKI            JOSEPH ENRIGHT            PEDRO GARCIA JORGE HERNANDEZ             ERNEST WILSON            WILLIAM PEAVEY            PHILIP MILEWSKI RONALD BOEREMA            JONATHAN SNYDER            BEYER DAVID            JUAN RAMOS            MANGESH KAWALE            SANTOS AMAYA PHILLIP CHELL          &n bsp; MICHAEL HENDERSON            PAUL SNOECKX            JEREMY TREADWAY SKYLAR PRICE            DAVID APAP            JORGE RAMOS            MARTIN PARKINSON            OKTAY SEL            LUIS SARAMAGO JOHN KERR             ;ALEXANDER FIGUEROA            JAMIE FLETCHER            ANN DEAVIN MICHAEL SHAPIRO            CELIL G RE             OLIVER BENIT            JAMES LAWRENCE            NIGEL DRURY            ANDREW CARTLEDGE GER HINSEN            ALBERTINO BATISTA            JUDITH SOSSICH    &nb sp;       MICHAEL KISER ANTONIO MARTINEZ            JUAN ALVAREZ            THOMAS MULVANEY            JOSEPH MCCOOL            UPDASH SINGH            PETER HANSEN RICHARD GRANT         &nbs p;  GERWYN MORGAN            MUHAMMAD ZAMAN            JOSEPHINE LATELLA DAVID VAUGHN            ANTHONY SMITH            DOVIE JONES            ELVIN OÕGARRO            DANIEL WOLTMANN            CHAN THANADABOUTH RICKY KNIGHT          ;   JOAO SANTOS            SANDRA CAMPBELL            JAMES NORMAN PAULA ARAUJO            KENNETH LANGSDON            TOMMY DU            MARIA FERNANDEZ            JAVIER JARAMILLO            MARK WATERS MOISES GARCIA             VINCENT STAPLETON            MICHAEL MURPHY            MARTIN CLARKE CECILA RICE            RICHARD KYTE            JASON WALSH            GRAHAM MATTHEWS            SCOTT HURREN            GARY MCNEILL SHELLY PESSAGNO          &nb sp; MARTYN PATCH            JAMES WOOD            TOTHFALVY TORSTEN DAVID BRUMMELEN            UBALDO DIAZ            CHRISTINE LEMMEN            RYAN REYNOLDS            DEREK WERTH            GONZALO GONZALEZ MICHAEL ROBINSON          ;   JAIME GARCIA            ANNIKA PERSSON             LUIS RUIZ STEVEN DESA            JENELLE ROBINSON            GERALD HOLMAN            TROY DEGNAN            JOHAN VANDERSTEEN            TAKIVAHA TUPOU SUBASH WARRIER         & nbsp;  ALIEM ABDOEL            MARK WILLETTS            ROLAND VARGA CHARLOTTE DIGGS            STACEY TWIGG            DAVID BEARDMORE            RORY RINK            JAMIE SMITH            TAYLOR SKURNAC ROBERT GAUDINIER           ;  PAUL CURTIS            JESSE GARCIA            LOTHAR KRIEG DOUGLAS MCLEAN            COLEEN BOLIN            MALIK CERIC            BEN MEI            PHILLIP ONEILL            MICHEAL WILLIAMS ASHLEY WHICHELLO          & nbsp; CARLOS CROVELLA            ROBERT BACZONYI            NATHANIEL SARTAIN ROBERTO ARROYO            ERIC WITTE            HIEU DINH            WAYNE JACOBI            JOHN OÕMALLEY            BERT KATS TYRONE DENT           &n bsp;RICHARD CARLSON            REBECCA POWIS            DEWEY THOMAS VINCENT CHRISTOPHER            TONY RUDGE            BARBARA DIXON            KYLE JOHNSON            DOMINIC CAVILLOT            SABAS SAENZ JAMES BOBBITT         &nb sp;  JAMESON SMITH            FRED BENITEZ            CARLOS MONTANO HASON TURNER            KELLYANNE JONES            NECESSARL MYLES            BARTOLO GUERRERO            JIMMY ALBARRAN            ROBERTO NEGRON JUAN RIVERA             STEFON RICE            SCOTT OVERLAND            WILFRIDO C-MATEO LUKE OAKLEY            HEIKO SCHOEN            MIGUEL VALENZUELA            MARTIE KALF            ALANI TUPOU            BRAM V DER KLOOSTER JOSEPH BARLOW         &nb sp;  YORLENY ESPINOZA            ROSS DEATH            RUTH CUEVA BENJAMIN LEANDER            JAMES QUARLES            KENNETH HUCKEL            ROGER VAUGHAN            STEVE NADULEK            DANIEL ADAMS HANAI ELOYA           ;  WILLEM VAN DEN VEN            VERONICA HERRERA            OMAR BENTALEB NAGAVALLI V            YILMA BEKELE            MANUEL SILVA            HECTOR G-GONZALEZ            DANIEL BURNOP            BEATE WEISS CASSANDRA HARRIS           ;  MARTIN QUI ONES            KAMALJIT THANDI            CAROLINE MACDONALD MICHEL ACOSTA            RAY GAFFORD            WAYNE GILL            MARTIN PEREZ            SAROJ SINGH            HUMBERTO DACOSTA ZHAN CHEN           &nb sp;RUSSELL ODOWD            PATRICK MARTIN            IAN MCDOUGALL GEORGE CHONG-NEE            WILLIE DAVIS            AURELIO HERNANDEZ            LEE HUGHES            JEFFREY HEALEY            ANA GOMES MYLES PARTRIDGE         &nbs p;  TERRY RUCH            ELMER FERNER            VICTOR DELIZ JUSTIN LEFEBVRE            LOUIS FEDDELER            MICHAEL WILLETT            MARCOS MARTINEZ             CARLOS TORRES-CHAVEZ            TYRONE ATTEWELL SHAYNE ODONOGHUE            BRADLEY HUGHES            TEDDY NANGUARI            HELPPY FEBLES MICHAEL PERRETTA            BRIAN GALE            CARLOS AMOROSO            MARCELO PAIVA            RAFAEL SAYADIAN            ISIDRO GONZALEZ PETER LA BELLA             CHRIS WESTON            NICHOLAS REES            PETER NORMAN FELIX SANTIAGO            ROBERT ADAMCZYK            AMELIA BREADEN            GREGORY JACK            CASIMIRO DE ALMEIDA            ENNALS TOWE JOSE CORTEZ         & nbsp;  KEVIN THOMAS            JOAO REGO            KEVIN PEDLEY PAUL MCVEAN            WINFRED MITCHUM            DICK NAPIORKOWSKI            CORTEEN FOWLER            BRETT HARRISON            SIMON BAXTER JAUNI BETTERE         & nbsp;  ROBERT OBRIEN            AMILCAR CUNHA            VICTOR GONZALEZ JAMES CARRENO            JUAN PINEROS            EPIFANIA SIMO            CARISSA HAMMER            RAYMOND WALKER            PASCUEL A-GARCIA MIHWA CHOE           ;  LINDA PROBERT            JASON WHITAKER            MATTHEW SIMON LOUISTINE SHERROD            NICKEL CHRISTOF            PHILIP GREGORY            CONSTANTINO SIERRA            JILL DELOUISE            WILLIAM SAWYER ANDREW FRY        &n bsp;   JASON DREWS            CAROLINE BOND            FRANK CELESTIN EPIFANIO LEON            WILLET LANGLAIS             FERNANDO IRIQUI            MILTON HALL            ROBERT REYNOLDS            CURTIS KALTER THOMAS DOYLE            MARK SGROI            LEON WILSON     &nbs p;      GARY HENSLEY TYRONE KENT            CHRIS WILLIAMS            REINALDO VALDES            JUAN MARTIN            NICK VAN DIJK            MARJORY OLIVEIRA SIMON STONE             JOHN FELLONNEAU            JEFFREY CARTER            ANDREW WILLIAMS ANGELA BOTTO            CHRIS CREMONA            GABRIEL MONTANO            MARC FALLER            JAMES RICHARDSON            JOSHUA MACAULEY CHARLIE BLAIR         &n bsp;  LEANNE JARRETT            GERARDO GONZALEZ            LUIS GUTIERREZ PEDRO VILLANUEVA            JAMES BOWERS            JESUS BONILLA            JAMES CONNER            HEATHER RHEA            VERA HARO WILLIE FLEISCHMAN             CORTISSIA STEPHNEY            RONALD NUTTER            ALEXANDER NEGRON EDDIE CATHEY            FAAUUGA APINERU            RICKY GAUGATAO            CARMELO FANTINO            CAROL GOLBOURN            JUAN CASTILLO SHELBY BASKIN         & nbsp;  ANDREA TAYLOR            BARBARA ANDERSON            RIC BROWN REGGIE BATTLE            ADRIAN FLACHI            DAMIAN BOYD            MILAGROS LOPEZ            RONALD PROLER            GEORGE LYTLE DANILO VIERNEZA             GEORGE PARKES            MARJAN TONKICH             THOL PHON PHILLIP ROBERTSON            EDWARD OSTERMILLER            PEDRO SUAREZ            HERMINIO COLON            CHRIS DENNISON            JODIE MATSEN STEVEN OSTROZNIK             FRANK EILERS            MORIN BILLIAM            MIGUEL RUBIO CODY BRODIE            JEANNE GRIMMER            RICHARD MARTINEZ            PRESTON TINSLEY            BUCHELT ROBERT            GUSTAVO MONSALVE KATY PEGLER             DARREN BARTER            ROBERT JONES            JASON TYRRELL CHRISTOPHER CLARK            RIMA TE-WAITI            KEN MANKTELOW            GARLAND ASHWORTH            EDWARD PALONIS            JOKKON BUNGLIK RICHARD SELBY        &nb sp;   ROGER HARRIS            MIGUEL JENKINS            STEPHEN WILSON GARY JOSEPH            EMIDO DINATALE            CLARENCE JAKES            ULRIKE TAUCHE            MANUEL CORRAL            BOBBY BETTERE PETER VAN LOON           ;  STEVE LANDY            PAUL MAI            MARTIN BRUCE LUIS OSEGUERA            NORBERT KAROLY            STEFAN XUEREB            ROBERT ANDERSON            JAMES KIMBRELL            SUMAN ROBLES VICTOR RODRIQUEZ             JAMAINE ARNOLD            FREDERICK MCKEE            JENNIFER DOWNING MARIANITO PAMPOLINA            FRANCISCO ASTORGA            JOSEPH ARCADIPANE            ADAM WINCHESTER            JOSE RODRIGUEZ            ARMAND ARELLANO JOSE CUNHA             RAMIRO DE LA TORRE            CRAIG SCHANTZ            DANIEL RAULERSON JONATHAN PARRY            LAWRENCE WALTER            DAVID MAY            GAIL PARENT            CHRISTOPHER EMERY            ALEX LEIKAS LORREN BELL          &nb sp; THOMAS SANSONE            MICHAEL JOHNSON            JUAN CASILLAS ROBERT WATT            QUINTON POPE            WILLIE SALTER            ABRAM MARTINEZ            DAVID LLOYD            PETER FRANSEN TREVOR HODGINS          &nb sp; VINCENT MARASCO            RAYMOND CASTRO            CHRISTIAN HERNANDEZ CARLOS MARZAN            ANDREW ATHAS            ROBERT HANCOCK            JEFF TYLER            PETER BARCLAY            RAMON MOLINA ALEJANDRO PEDRAZA             LINDA FUERST            INEKE BREE-REYCKERS            ALAN CHAMBERS PAULO ROCHA            ALEJANDRO GUERRERO            WILLIAM ANDERSON            TONNIE VERBEEK            MANUEL FARMER-RUIZ            LYNETTE BUCHANAN JEFF MICK        & nbsp;   VINCENT TOBIN            STEVEN ROBBINS            PATRICK POPE MAURICE HUTCHINSON            KARIE CLARK            GHAFFAR NAZARI            CHRISTOPHER PERRY            PETER VANEMMERIK            MICHAEL LENTZ LUTHER PHILLIPS         ;    MYSZKO BOGDAN            KEITH MC CRAE            JOHANN LANGER CLIFFORD SESSAY            DANIEL EMERY            DIOMARIS LIZARDO            DAVID MILLER             CARLOS VAZQUEZ            SANTIAGO CALDERON PATRICK MCKAY            HOMMEL STEPHANIE            CODY PENDERS            JOEL JACOBSON RYAN HIBLER            JERRY BAILEY            MATTHEW GALT            NEIL BLACKFORD            MARCO JACQUEZ            COLIN STIRLAND LAWRENCE KING          &n bsp; ANDREAS MISCHKE            SHAUN EVANS            GREGORY STEWART GLORIA MTSHALI            IAN DAGGE            SUSAN HUCKLE            CHRISTOPHER PIETT            SCOTT SIMMONS            JOSE TORRES JOSEPH CARUSO          &n bsp; PAUL TSOUKALAS            JONATHAN HARVIN            THOMAS SCHAAD CHRISTOPHER GALIC            DANIEL MARTINEZ            PERNELL BOYKIN            MICHELLE HOLLY            WILLIAM FOSTER            RUBEN GARCIA NEIL DUCKWORTH        &nb sp;   DANA BASTIAN            SECUNDINO REYES            LUCIA DE RIVERA BAKI ZUNA            DAVID ZAPATA            WILLIAM LEDWELL            PETER CABALLERO            MARK RICHARDSON            FOTUAIKA LAUTEAU BOBBY INGRAM         &nb sp;  LAWAN LEAL            FRANK GARCIA            JOSHUA FELTON DAVID HOLBROOK            PETER KACIR            JOSE BLANCO            CHASE PANITZ            GRAHAM BENNETT            PIOTR KOZAK LINWOOD BEALE            ; WILLIAM ROSATO            THOMAS KOPCYK            KEITH KEENEY STANKO IGNJIC            MOUNIR FACI             DAVID SHAW            JORGE VILLATORO            DAVID HANSON            JAMES GILLESPIE RONALD WHITE            JAIME RIVERA            SUE LEE            STEPHEN MCQUINN ALLAN WIREMAN            PHILIP HUNT            ANTHONY SOUSA            RONNIE CREMONA            ANGELA FLORES            ARISTEO CRUZ MICHAEL SHINN          &n bsp; CHRISTOPHER GRAAF            DOGAN MUSTAFA            MARVIN MCPHERSON HEATH BUELL            MARICELA CASTILLO            THOMAS PEREA            DOMINGOS TAVARES            DANNING ZHANG            JOSE RODRIQUEZ LUIS RODRIGUEZ             JIMMY NGUYEN            KELLI ALO            SCOTT OSBORNE ZOLTAN SEKULA            AMANDA CRAFTON            JESUS HURTADO            ANDREW KEMP            LYTE WILLIAMS            VICTOR ESTRELLA NOE VENEGAS-ROSAS         & nbsp;  MARY COOK            HUTCHINSON OLIVER            LEON CLARIDGE SHERRYIE BROWNING            JAQULYNN JACKSON            PAUL STREPAY            MAREK GAJEWSKI            CHRIS BULLINGHAM            MIKE OTTERSBERG MELVIN BELCHER         ;    IMAN ELAJOUZ            RONNIE REDDEN            JAVIER SINTI NICHOLAS STAPLEY            DAVID MILLS            IVOR BROWN            BYRON GREEN            PAEA SANFT            JAYNE BALTIMORE PETER FARMER             JOHN HANNA            AUTUMN GALLELLO             AMED KHELILI ALEX VALENZUELA            DONALD HOLLAND            AMOS WISE            JERRY COOPER            DARREN RUNDELL            CALLUM MACDONALD CAROLINA NAVARRO         & nbsp;  CRAIG SHARROCK            JUAN CARMONA            TIMOTHY OÕSHEA HENRYK WIECZOREK            KANTNER OLIVER            RENEE ZASTRO            FRANK VADI            EDUARDO LOYOLA            THANH TRUONG JIMMY CHANDLER           ;  MARGARETA L VGREN            MICHAEL MANGANELLI            MARIA MOLON LAU LISON            MICHAEL OÕDRISCOLL            MANUEL CANTIGA            RONALD BASDEN            AUBREY EATON            BRIAN FRANKLIN STEVEN SOLOMON        &nbs p;   JAMES CLARK            WILFREDO DE JESUS            ROY HASLAM PETER CREMERS            JURIJ WINK            TAMMY HANNAHS            REBECCA COWAN            DELMIS PASTRANA            HOWARD FOSTER ROBERT DREWETT             JAMES BAILLIEZ            LARRY MORRIS            REBECCA BOZINOV BRUCE VAIL            KOBAYASHI LEANDER            LEROY FRUCHEY            DARON MACKEY            THOMAS KIM            MICHAEL ARNELL CATHERINE GRILLO           ;  LAURA PITCHER            NICHOLAS CROY            ALAN RATNER ALEATHEA MAIDENS            THERESA HOLLAND            FIRAS FARAHID            VIDAL BERNAL            GARY ARMSTRONG            PALEMON SANTANA ELIZABETH BULLOCK             KUHL CHRISTINE            MARIA BARRON            ARTHUR HUDSON TERENCE BIRD            MOTTY TOXEY            JOSE AGUAYO            VOTILE THSONONO            ROBERT FRANCE            RACIEL GATO RAYMOND WRIGHT          &nbs p; JOHN MONAHAN            HARVEY GONZALEZ            STEWART GIBBONS HARRIE ROMERS            ARRON STAFFORD            PAUL LAWRENCE            BRENT YAHRLING            CHRISTINE MCBEAN            ANGELA SINCERE ANIBAL OSORIO             SYMON DALTON            KEITH DANGERFIELD            SANG-JOON KIM DES ARMSTRONG            THOMAS DENTON            LAWONDA HADEN            REINALDO COSME            JAMES BREWER            VICTOR BONETT IRENE PEREZ          &n bsp; BARRY STEVENS            BENJAMIN MAY            SHAWNA CHAVEZ GEROME LEWIS            ALAN BELL            ERICK CONDE            JOHN MERRIMAN            LUIS SOTO            WILLIAM DE FOE LEONARDO VERDUGO           & nbsp;TRINIDAD GUTIERREZ            JASON LOWE            JANINE WILKS MICHAEL ANDERSON            DAVID BURROWS            LLOYD DEIR            GORDON BROWN            KEVIN CLAYTON            TREVOR PAGE ROBERT HANCK          &nbs p; CHARLIE GILBERT            JAVIER PLAZA            JAMES MCKENDRY DANYEL WOOD            JOSE BARAJAS            ANTONIO VAZQUEZ            TIMMY MILLER             MICHAEL GUILLORY            VIRGINIA A-AGUILAR MARCUS HINTON            DENNIS SMITH            JOHN CAREY            WILLIAM MARTINEZ JOSE MORANTE            ERNEST FRAZIER            IAN HARTLEY            MARK BISSELL            CARMEN ROBLES            ALAN THOMSETT PIOTR BRZANK          &nbs p; CHANCELOR FRAZIER            RASHAUGN JOHNSON            GREGORY MANUEL JEFFREY HAUGHTON            JAVIER BERMUDEZ            PHILIP JOHNSON            PAUL ZACE            TRACY CUNNINGHAM            BRAD MACDOUGALL PIERRE ELIZAIRE        &nb sp;   CARLOS RODRIGUEZ            JERMAINE LATDRIK            TREY BRACKIN PAUL WRIGHT            HECTOR C-LEYVA            ISABEL FERNANDES            JUAN BARRAZA            BRUCE WILHELM            FERNANDO D-AYALA MARCO ACUNA         &nbs p;  ERIC BROWN            DAVID PROLER            KAYLIN PAGE PAUL THOMAS            ROGELIO PONCE            TIMOTHY BOOTH            RONNIE MCGINITY            PAM COSBY            KEVIN FREEHILL KRISTINE RITCHIE             WIL BEAUCHAMP            WENDY COLLINS            DARYN COSTELLO CINDY COUTTS            BARTLETT FORSTER            ROY ANTOINE            KABIN JOSHI            ANTHONY GALLAGHER            LEIF NORDLINDER OTIS MALONE         &nbs p;  ANDREW MASON            WENDELL RAMIREZ            JONATHAN CERNA HARRY CRESCENTI            WADE GALLOWAY             SIMON HOLLIS            DEREK GRAF            SUSAN GERVASI            MARTIN BONK DANIEL BLUMKE            REBECCA LONGSWORTH            AUBREY STEPHEN             GILLIAM ELS MARIANNA PODKOWA            CHRIS WEBB            MARK BERGMAN            DIEGO SANCHEZ            MICHAEL LOPATECKI            GREGORY DIPUCCIO CHENIER P-CHARLES        &n bsp;   JOHN STANLEY            GUADALUPE GARCIA            SHARRON REED STEPHEN DARBY            KIRK LEWIS            ANTHONY CARRILLO            RUSHBURN BROWN            FELIX DE ARMAS            LEE HENNESSY LAQUITA HAYNES         &nbs p;  STEINER FLORENTINE            MIGUEL CASTANEDA            JACQUELIN EDWARDS WOLFGANG CHILDERS            FRANCES ROBINSON            CHESTER GOMES            MIKAEL LEKBECK            BRANDI TANNINEN            DAVID SMIT DAVID MATHERS          ;   LISA HICKS            MARK ELLIS            RICHARD MICHAEL JONATHON RICE            GREGORY HART            RODRIGO ARCINIEGAS            SHAUN ANLEZARK            MACIEJ BLASZCZYK            MINH TANG TERENCE PLANT         &n bsp;  WARREN OWER            LARRY DILLON            NIELS VAN STEENOVEN ENMA LOPEZ            GABRIELA CRUZ            MONTRELL JONES            GABRIEL RUIZ            VICENTE SANTA CRUZ            BERNADINO CARMONA ADRIAN MOORE         & nbsp;  JOSHUA BOHNEN            PABLO GUZMAN             PHILLIP DONNELLY GENARO MARQUEZ            STEPHAN SCHMELTER            DAVID WEDLOCK            KELVIN JOHNSON            EDWARD FLETCHER            MARK KERNAN RODOLFO DOMINGUEZ        &n bsp;   BRITTANY MAYBERRY            RENE MELDERS            ROGER DURAND HARVEY HELMS            LUANNE MANNOR            ROBERT COLE            STEVEN BENNETT            KEITH BROOKS            WILLIAM MCKEEN KELLY MCCRELESS             ABIGAIL HERNANDEZ            KEBER MICHAEL            MARK GOODKIND DEBRA SPEER            PAUL MAINOR            JOSE JAIME            DANIEL BURNELL            CRAIG HINCHLIFFE            GLENN WILLIAMS AMY SECONDINO          &n bsp; DYLAN POWELL            JOHN CONNELLEY            ANNA KARPATHIOS HERIBERTO MIRANDA            FREDDIE VAZQUEZ            PAMELA S COLVIN            KENNY GREER            MATTHEW GRIFFIN            JOSE VASQUEZ ANIL SETARAM             MICHELLE MEYER            JAMES MILLWARD            SHAUN DREWETT MIKEL YAMBAI            ELIUD TORRES            DONALD SWARTZ            EDWARD LAXTON            DAVID GUTIERREZ            JAN ANDERSSON HASSAN REID          &n bsp; GLENN LOGAN            JORGE FREYRE            WILLIAM CASTRO ANTONIO SILVA            HUW CUSHING            MATTHEW GRUTZA            DONALD REX            ACHILLEAS DOWNWARD            FIDEL S-NAJERA SOKPHOL PH ON            PAUL ABLES            ANDREW MILLARD            KAREN HARRIS PAUL JONES            ANDREW THOMAS            SHAWN READ            MICHAEL MITCHELL            CHARLOTTE K-LUCAS            EDWARD GONZALEZ DAVID WILLSOHN         &n bsp;  KEONAVY KOUR            WALTER RIVERA            MARTIN CONNOUR JEFFERY BAKER            LIMING FAN            FIDEL CARABEZ            NIKO AJAYI            CYRIL SWARTZ            RAYMOND WAMBAJA PHYLLIS WEEMS            ; RAMON CANALES            FRANCISCO PADILLA            FRANCISCO ANCERIZ ISELIN THOMAS            EVARISTO ROMERO            GREGORY MITKO            WENDY FORDE            JAY ATAYAN            CORNELEO MUNOZ MARK TIMOTHY          &nb sp; SCOTT SODENKAMP            FERNANDO CRUZ            JOSE ROMAN THE MOST ADVANCED RECYCLING TECHNOLOGY: OUR PEOPLE SIMS METAL MANAGEMENT LIMITED ANNUAL REPORT 2010

 


 

(GRAPHIC)
STEFANIE MCVITTIE ISIDRO DE LA TORRE            DAMIEN RUSSELL            GARY HART            JAMES WEST            LIGIA OLIVEIRA MAT MCINERNEY            GARIN KNIGHT            PHILLIP RHODES MARCUS LEWIS            CHRIS HURST            JAIME PENA            ENDRIKAT TORSTEN            CHARLIE WEBB            DEBORAH GUNDY EDWIN HERNANDEZ          &n bsp; ROBERT URQUHART            BERNARD REDMOND CLYDE CHARLES            MARIA ALANO            TOMI WESSEL            MICHELLE DAWSON            RICHARD WESTERHUIS            KREUTER CHRISTINA HAMUERA WAIRAU        &nbs p;   BENNIE MCCLENDON            ELDRED LANGDON NATHAN KING            MIGUEL BERNAL            JUAN VALDEZ            JAMES ROBINSON            AMANDA EMSLIE            MARIO MORALES JUSTIN ADCOCK          &nb sp; DAVID DEL ORBE            MIKE VAN DER MERWE JOHN PISANO            SAUL CABRERA            TYRONE DAVIES            MELQUIS MEDINA            GREGORY LEBLANC            PAUL STEELE MARINO MOREL          &nb sp; KISAM JACK            PAUL HUGHES DESMOND STURZAKER            GARY PAYNE            URHAN HASAN            TUIFUA KEFU            ROAN ATELONIE            RODNEY KERRISON DAVID LAWSON          &n bsp; SERGIO AMORIM            JENNIFER ALBRECHT DANIEL GRAY            KEVIN WEPPLER            GLYN GOSSAN            NEIL CORDERY            PA UL URBONAS            CHRIS PRATER ALTE LEWIS            GLENN ASSER            KIRSTEN BENDURE ARTHUR HOLDER            BONITA KVASNICKA            PHILIP WYATT            ARTURO ENAMORADO            FRANCISCO MOREL            ANDREW POWELL TERRESITA FAGEL        &nb sp;   SIMON TUCKER            DANNY DAVENPORT REX WARNER            TERRY WRIGHT            MARK SHARP            ARTEMIO VILLANUEVA            DOMENICO SARDELLA            ANTONIO AGLIATA CLIFFORD LOCKHART        &nbs p;   ERIKA PAMA            REGINALD MOORE ARTURO AGUILAR            JOHN LEVAN            BERTHA PINTOR            MATEUSZ MALISZEWSKI            TREVOR JOSEPH            RICHARD DEVLIN SOLOMONE FANGUPO        &nbs p;   PETE WOMBLE            MICHAEL KELLY WILLIAM HAMILTON            DAVID THOMAS            DAVID COLLINS            CHARLES DOYLE            ANTHONY GONSALVES            SARAH HUNWICKS ALEXANDER FRIESEN        & nbsp;   EVERARDO MARTINEZ            KITIONE TUPOU KENNETH TONCIC            VENTURA RAMON            CRISTINNA BACOCCINI            MARC BOERSMA            STEVEN B-JACKSON            STEVEN FORD ARRON URRY         &n bsp;  MARCO HECKENWERTH            RAYNEIRO SANCHEZ TROY HIBBERT            TRUDI BEARDSLEY            HOWARD THEVENIN            JOHN GIBSON            JUAN FRANCO            FRANCISCO NEVAREZ STEVEN CLARK         &nbs p;  EDWIN FIGUEROA            GABRIEL PADILLA SHAUN BIRD             CRAIG BASSETT            VIVIAN BARNETT            STEVEN BLACK            CRAIG GREINER            ANGEL ALVAREZ VERONIKA RHODES            STUART JOHN STON            PAUL GRATTON ANDREW BARNETT            ARMENIO AMADOR            VICTORIA TELLY            ESELI TEU            PAUL FISHER            LAURENCE HILTON ERICO MONTORO          & nbsp; RICHARD WOODHOUSE            ISTVAN SPITZMULLER GARY STEWART            DALE MARALDO            DEVIN CALANDRIELLO            CHRISTOPHE GEUENS            LINWOOD BLOUNT JR            NILS-PATRIK EKLUND CHUY OUK        & nbsp;   DURAN BEATON            ROBERTO ALDANA ANDROS PARKER            SALVADOR DEL RIO            ANTHONY MORALES            GOCE JANKULOVSKI            SIMRANPREET GILL            ANTONIO ORNELAS MICHAEL COCHRANE       &n bsp;    CLARA BERNARD            JOHN TOTH SAMUEL FLORES            CLARENCE MELNIK            GEORGE CUNHA            GARY OSTROZNIK            ANDREAS BOLCHOWSKI            MARTIN GONZALEZ TIMOTHY PHILLIPS             NEIL LENAHAN            STEPHEN BLURTON TYRON CLEMONS            PETER ROTONDO            BALAMURU ARUMUGAM            DANIEL KRESTAN            JAMES HADLEY            ANTHONY BLUMKE JOHN KEITH         &nbs p;  MARIA HERNANDEZ            JOHNNY ROGERS GILLIAN WILSON            JOE SCHIAVELLO            SANTIAGO GUERRERO            PETER VAN EXTEL             MARK TAYLOR            STEFANIE GERDOM MICHELLE ROWLEY            EVELIN LIMA            JOSE CHAVEZ BLAS LLAMAS            CAROLYN WEAVER            OSCAR Q-PERAZA            JOHN SHINGLES            ANTHONY MILANO            ROBERT EVANS JUAN DIAZ          &nbs p; BRIAN KIRK            RAUL SALAS EFRIN MILHOUSE            RUDI MERTENS            KEITH HEDLEY            RACHAEL BOWTHORPE            ALVARO BORGE            ANTHONY MARINELLI MAO HIENG         &nbs p;  TROY SULLIVAN            GILDA AGUILAR DAVID EVANS            MARTIN KNIGHT            COLLICE GOLDTHREATE            ARTHUR DUBS            OLIN HALL            DAVID WHITTINGTON SAMUEL VALENZUELA             MICHELLE OSEI-BONSU            PARWEEN LUDEEN LEE WINTERBURN            CRAIG MADDEN            IGOR GRUBOV            FRANK CLEMONS            NEIL REIVE            IMTAZ HASIM MARIA STEIN           &nb sp;PATRICK POCOCK            JASON MAZEIKA KEITH HANDSCHU            LEE CHAPMAN            HOUSTON HUNT            FRANKLIN GUTIERREZ            LOREEN DALTON            ALFREDO HERNANDEZ MICHAEL WHITE SR        &n bsp;   JOSHUA DAY            DAVY RYALS FRANKIE MARTIN            WILLIAM NICHOLLS            WILLIAM GRAHAM            JOHN ANZELMO            ABRAHAM VARGAS            DEBRA SMITH RICHARD HOOPER         &n bsp;  ALAN GOLBOURN            BEV POWELL-HARVEY KIM HENNINGS            ROBERT MCKIE            OLANZA CHARLES            PATRICK KEKE            ALLEN JAMES            JOSHUA ROBBINS RICHARD COORE          &nb sp; MICHAEL BRYAN            PRESLEY OÕCONNELL EVELIO MURILLO            STAN LEMANCZYK            AIDAN JONES            RONNIE DOLLAR            WALTER HOUCHINS            CLAIRE SEARLE SCOTT FENECH           ;  JOSEPH FIEGLEMAN            CYNTHIA SINTI GILBERT LOPEZ            HELMO RIVES            BEN D ORBE PAULINO            PAUL BAGROWSKI            FELICITY BARTLETT            ROY BAKER KRYSTAL SHEEHY         & nbsp;  JOHN CONLIN            STEVEN UNKOVIC CARL BROWN            RONALD RAE            CHERYL CHESTER            ROD SHIELDS            TODD NORRIS            MICHELE BENTON DEBBIE JAMES           &nb sp;ALEXANDER ALT            FLORENTINO MARQUEZ MARC THOMAS            SANDRA GONZALES            FELIPE CASTRO            JON DE OLIVEIRA            STACY HUGHES            TROY RUEDIGER PETER HILL          &n bsp; JOSEPH NORMAN            DOUGLAS BAJADALI ROBERTO MARTINEZ            SHERIEL MEARS            KELVIN BUCK            NABIL HAWA            KRISTIAN WILLIAMS            DELICE SMITH JONATHAN MONJARAS         & nbsp;  TREVOR MARTIN            DEAN RICHARDS LAWRENCE HOLIHA            DARNELL MOSLEY            MARLON H-LOPEZ            DAVID OÕBRIEN            EVELYN CARDIN             JESSICA THY HERCULANO LOPES            RAINER WEISS            CESAR VASQUEZ JEFFERY BULL            CARL FINCH            JOSE PINEDA            LESTER JEFFRIES            JOHN GURA            JAMES PARR LEO COSTANZO             THOMAS WEEMS            MARIO DIAZ JOSEPH NATALE            NOURDIN ELMOURIDI            JAMES STEWART            DAVID BLACKARD            STEPHEN PEARCE            PETER RICKETTS FERNANDO CASIQUE        &n bsp;   GRAHAM FOXWELL            JOHN MONAGHAN KENNETH FOOT            EARL DANIELSON            JOE BAGULEY            CINDY ROBBINS            VERONICA WIGGINS            RENATO KENTISH PETER FARROW           ;  HONORIO MENDEZ            WAYNE KINGSNORTH RAVI RAMANUJAM            MIKE RUNNINGWOLF            MICHAEL QUARLES            JOSUE BARRAGAN            ANULFO ROMERO            JANUSZ MILAN MAUREEN CHARTERS        &nb sp;   BRIAN BUCHHEIT            ANDREW CZARKOWSKI JUAN GOMEZ            STEVE SMITH            STANTAGUS DARBY            JOSE RIVERA            MOISES MANCILLAS            CHERYL LORANCE ZBIGNIEW PONICHTERA         & nbsp;  GREGORY BROWN SR            RODNEY TEI MUNROE MCPHERSON            ANTHONY CUDDY            SURPRIS OPHILIEN            DAVID JACOBSON            EBONY FELIX            JULIAN SIMO DOUG BUFFENBARGER          ;   ROBERT SEAGRIM            RICHARD SHAW MARK HART            JOHN POWELL            AUGUSTO DA SILVA            TWILLA FORD            CLYDE JONES            JOSE SOLANO-OJEDA MARYANNE VELEZ          &n bsp; MARK COBBETT            GARETH OÕDELL DAVID GUTIERREZ            ANTONIO NAVARRO            ANTONIO ACEVES            LORENZO HEREDIA            JOSE SOTO            CRYSTAL STRICKLAND ROBERT VILLANUEVA             BRAXTON BERKLEY            KATHY NEGRON GREGORIO ESQUIVEL            JOSE CAVADAS            DANIEL BELONE            JOHNNY MILLER            TIMOTHY NYMAN            FRANCIS LAMB JUAN QUINONES         &nbs p;  VENKATESH RAJAN            PROMOD SINGH JEFFREY SCAPPINI            STEVE STRICKLAND            ARPITA RAY            SHU WAI TAM            GERALD HOLLAND            BENJAMIN PEREZ DARREN JONES         &nbs p;  TADEUSZ MALISZEWSKI            PAUL PEZZALI JEREMY ROBBINS            OLOMANU TUALA            RONALD LAKE            SHUJAATH MO ALI            MICHAEL SIKORSKI            FRANK GRASSO EMAD DANKHA           ;  TIM ANKNEY            STEPHEN DICKSON STEPHEN LAFRANKIE            SAMUEL GUIDO JR            WILLIAM COLLINGS            MARK CURLAND            MANUELA WOITE            BRUCE LAKE JOHN PARRY         &nbs p;  MICHAEL STELMACH            GRACE YUASALI DIANE BROMILOW            ANISHA WHITAKER            WAYNE FISHER            ROBERT RIVAS            JAN LUKASZCZYK             ROBERT GARDNER ALLISON PETZKO            STEPHEN POWELL            LAMONT JENNINGS REINHARD ROGALA            ANTHONY LONG            DAVID SUTTON            KELLY UMBEL            VALENTIM DE MATOS            DENNIS ZOCH FRANK HARNEY          & nbsp; SALVADOR HERNANDEZ            ARKEE HATTEN LAWRENCE ZITO            RAYMOND BUDD            JAMES ADAMS            MAYRA MUNOZ            JONATHAN GODFREY            ARURAN MAHESWARAN ROBERT BRODIE         &nbs p;  KRZYSZTOF DZIADOWICZ            MICHAEL MARTINEZ SHANE HEDDERSON            STEPHEN MARSHALL            MARK FOSTER            COLIN WARNER            VICENTE AGUAYO            RODELINE HATCH RAS-RA SHEEM-I         & nbsp;  TRUONG NGUYEN            JOAO RODRIGUES JANET SNYDER            MICHAEL MCKEOWN            BHASKAR CHICKNA            MALCOLM BILLINGTON            GEORGE WILSON            IAN THORBURN KEN KATOA         &nb sp;  TAYLOR FUAPAU            STORM SAMRETH JAY JARVIS            SABAS GOMEZ            MANOJLOVIC DUSAN            ANDY SCHAEFFER            MURAT CORUK            DEAN SANDERSON CHARLES COHN          &nb sp; NATALIO SANTIBANEZ            SAMUEL RAMOS ABDON PENA-GARCIA            KENNETH BOLOGNO            GERARDO OROZCO            MARIO LAGIDO            NEIJEN BENJAMIN            SUKHDEY GILL DARRYL MULCAHY        &nbs p;   VERONICA CABALLERO            KEUL VANESSA DARIO NOGUEIRA            ANTH ONY WILLIAMS            JEAN MOMPLAISIR            STEPHEN COWELL            EDUARDO V-LERMA            JANECE WIGGINS HUMBERTO CASTRO            ALLAN PEREZ         & nbsp;  LEDDREW STEWART ALAN CLARKE            GERMAN ALEMAN            MICHAEL GEORGE            MICHAEL PATTERSON            CHRISTOPHER BROWN            SIDDHARTH CHOPRA TROY PARHAM        &nbs p;   KEITH HIGGINS            DANIEL VAZQUEZ PAUL ROYAL            JAMES JONES            HENRYK RYGOCKI            VIRGIL PERRY            MARIE HANDSCOMB            STEVEN LLEWELLYN SAM LEVINE          &nb sp; MATTHEW DALY            MICHAEL MAYO ROBERT GLAVIN II            SHARON HEAD            RAMON LOPEZ            RODRIGO DOMINGUEZ            JOSEPH ALBINA            AGNES JACKSON ROCHESTER BRAXTON          ;   ANDY FELLOWS            BRENDA ADAMS MICHAEL WIN            WRIGHT JONES            ANGEL NIEVES            STEVEN SMITH            KAI BLOMENKEMPER            WILLIE FRED FOSTER NETTIE ELLIS         &nbs p;  ARTHUR DIXSON            JOHN OPPENHEIMER AMY HEAVENS            RANDY OWENS            MARCUS JOHANSSON            BLANCA QUINONEZ            SALVADOR CAMARGO            REED MILLER IVAN WILLIAMS         &nbs p;  RANDY MILFORD            CHRIS DEMPSTER PETER BROWN            STINETH TOBIN            PATRICK PALUMBO            MARC SERGEANT            RIEDEL STEVEN             DOUGLAS FOSS DAVID WILLIAMS            JOSEPH MCCURRY            MARIAN SKOWRONSKI RYAN SUGG            ROSA FIGUEIREDO            JAMES COCHRAN            PETER JULIEN            WILLIAM SASSE            FREDERIC PIRES CARNESEE WHITFIELD         &nb sp;  ANDREW FRANCE            JOHN DREYER SERGIO GERMAN            RANDALL MATHIAS            ROBERT KELMAN            DWAYNE WEBER            ANDREA FILLEY            SAIMALIE LUTU SID DUMAS          &nb sp; JAMES ONOFRIO            JEFFREY TEREBEY JULIO CANTILLO            RHYS ILES            NATALIE RAY            JAIME OSORTO            ALAN WHITE            MARK BLAKE SAL NGEAM            GERA LD LEE            WALTHER SLEGERS ANATOL KIRYLUK            EDLEMIRO GONZALEZ            MICHELE WILLIAMS            WILLIAM BETTS            MIGUEL MELERO            THOMAS PICKERING JASON GRAY        &nbs p;   STEVEN BROWNE            MILOVAN LALIC DEBORAH JOHNSON            JOEL FRANK            JAIME GOMEZ            LAURIE ARNOLD            CHRIS KOWALSKI            PAUL BLACK GARRY GOODWIN            ; JUSTIN FINCHUM            CLAUDIO ROSARIO DANIEL NUNES            STEVEN HART            COREY BRAID            JESUS RAMIREZ            THOMAS ROCKWELL            PATRIC EKLUNDH CARLOS MALDONADO           ;  JULIO SANDOVAL            JAMES CHEEVER JONATHAN GARRISON            CHRIS SALTIGERALD             ROBIN KIRBY            CHRISTINE GALIC            ANNE OBRIEN            RAFAEL ROCHA AARON DOWLING            SEBASTIAN JOOS            GERARDO GUERRERO ERIK RAMIREZ            MARY KEARNES            RIK KAO            ARMANDO SALGADO            JAMES NELSON            TERRELL JONES FLORA ACEVEDO           & nbsp;ANATOLIJUS SUSLOVAS            FERNANDO ESTRADA DAVID BRADLEY            CESAR REYES            KRZYSZTOF TURSKI            STEFANIA FLOREA            JASON YEMM            ULRIKE WAUE-LEIST DAWID WASZKOWIAK          ;   ROBERT ROWLAND            GEORGE BANGURA MALJKOVIC NEDJELJKO            JEFFREY COLGAN            MIKLOS CSONTOS            KINITONI LEAUSA            SERGIO RODRIGUEZ            JOSE VAZQUEZ HONGLING SUN        & nbsp;   MARK CASEY            FLORENTINO ORTIZ CHRISTOPHER BOYD            MARK WILLIAMS            JOSEPH GARRETT            JOHN PREW            THOMAS HEARD            WALTER LATIMER ROSAURO ROSALES         &nbs p;  RAMON COOLEN            REYNALDO PEREZ KATHRYN GUMLEY            DONALD WATTS            STEVE ALMADA            KIRSTY HURST            RUFINO OBLEA            TROY SHUPE WILFREDO VADY             LARRY WINEMILLER            JUAN BUSTAMANTE DAMON JULL            JAMES CARTER            ELOY CORRAL            MIKE M NNIG            LINDSEY KELLY            STEPHEN ZAHAREK JOSE CUTINO             CRYSTAL LY-ROWE            MEGAN PICARD KYLE MILLS            RINUS VAN DIJK            WALDER SCHLOTTHAUER            DAVID POWERS            SEMISI MATAELE            KASHIF HUMAYUN DOLORES CORDERO          ;   SHEILA JACKSON            LOWELL NOBLE RAMON QUIJADA            JOSE PAIVA            SHANE KELLY            GARY ROTHWELL            CHRIS COURTNEY            ROBERTO RICHARD FERNANDO TAVARES           ;  CIRILO SANCHEZ            JAMES KAUKAU MANDY KOMOROWSKI            ALMA MENDOZA            JOHN FENTON            PAUL QUEZADA            KEVIN FITZPATRICK            LAWRENCE PICKING SALVADOR HERNANDEZ        & nbsp;   STEVEN MARTIN            ALFREDO BASTOS JOSEPH BARCO            DAVID RUSSELL            RUSSEL MANSFIELD            ROBERT AUSTIN            KEVIN RIGGS            DAVID JOHNSON            FI DEL LUEVANO            PETER GATES            MAGNUS FLORESTIG GAMALIER ESTRADA            SHERON COBLER            RAMON CARRERA            MANUEL A JEREZ            MARK SMITH            JOAO AMORIM            SAL LY CLARKE            JOHN FAIRCHILD            JOSE SOTO ROBERTO CHICO            MANUEL TINIZARAY            JULIO ACEVEDO            NEZIRAJ BUJAR            OSMAN ISGIT            MICHAEL FRISCO             PETER WELSH            JOHN HEATH             STEPHEN FISHER RAYSHANDA BRIDGES            KING OQUENDO            OROMO KULALO            SANDRA SHALABI            DAVID MARSHALL            ROSWITHA S-DRESSEN            ; THEODORE GALLOWAY            PRAKASH RAJENDRAN            GINA FLOWERS LARRY ROBINSON            ILARIO RIVERA            ROGER LAMBERT            ADRIAN RALPH            CRAIG FERRITER            THOMAS ALSBROOK             ;PAUL FINGER            MAILAU KORI            JOSE MARTINEZ NEIL TOVEY            RICHARD MORGAN            J. MARTINEZ            DANIELLE SERVAS            JAMIE OÕCONNELL            JOANNE BEDNALL           &n bsp;ROBERT BRISCOE            PETER SOARES            JOCELYN HIKUROA SHARON GREENE            CARLOS FIGUEROA            BRIAN SACKETT            CARLOS DA SILVA            ASHLEY FALK            KAREN BLACK            DA RRON MCGREE            MICHAEL WALKER            TOMASZ IDZIASZEK RAYMOND FLOWER            ABBY FRANK            TIMOTHY MCKEEN            REBECCA HASKINS            MARK ZEIGER            HANS-OTTO HAGEMANN           &nbs p;PAUL CLARKE            OMAR MEDINA            JACOB TUDOR MANU PALMANS            MARK LACEY            THOMAS ANDERSON            DARREN TYLER            ARTUR L NGRIN            MARK TWIGG            DAVID RO BERTSON             MILIVETTE CLAUDIO            RANDY BAGWELL SARAH CLINGER            LEE HITE            OWENS NICKENS            MICHAEL COURT            ERIN GOLTZ            STEVEN WRIGHT            FRANCIS SA BATINO            NICK PIEL            DAVID SILVA TERENCE LEIST            WHITNEY AH TYE            BRIAN PRICE            PATRICK KOEHN            CHAD WALTER            VITALIS RUPPEL            BLAN CA VILLARREAL            ALEX WALDEMAR            LYNN HYDE BENITO HERNANDEZ            JACQUELINE GILCHRIST            ALAN MARCHBANK            MARCIA WALTZ            PAUL BURNELL            FEROZ SHIKDER            ; KARL WHITE            FERNANDO PEREZ            DEREK REES GERARDO RUIZ            VITOR FERREIRA            FREDERICK MILLER            RICHARD SCHAU            JOSEPH MCINTYRE            WILLIAM SKINNER           & nbsp;STEPHANIE CAMPBELL            AMBER POSA            LUKE WALLEY MICHAEL BARKHORN            ANITA GRUNDSTR M            JEREMY CUTHBERT            JOHN GRIFFIS JR            DANIEL RUIZ            ANTHONY ROSE           & nbsp;RICHARD FREEMAN            HENELI MATAELE            STUART JACOBS DIANA FUENTES            FAUSTO RUBIO            ROSEMARY PAGANO            BALAZS SZUK            BENJAMIN SUAREZ            DAVID MOLLER             MICHAEL ALLDRIT            BENJAMIN MAY            DEWAYNE WILDER RAFELINA AZCONA            ALLYSON RAYMOND            MARIO OLIVEIRA            MICHAEL HAIDER            GREGORIO CORDERO            RUDY MELENDEZ            ; BEATRIZ MEDINA            CHIT SOMASUNDARAM            MARK HENSON GENE HOWELL            ANDREW SKINNER            KEN BEAUCHENE            AUREA GONZALEZ            CHRISTINE WHARTON            ARTHUR ALVARADO           &n bsp;PAUL NEEDHAM            SUSAN EVANS            HUBERT THEISSEN JOEL AMERY            JOSE GRIMALDO            BRUCE MURRAY            MARK LINDER            J. SANTOS RAMIREZ            ANTHONY MURPHY            CON RADO BENNETT            DAVID MITCHELL            DOUG KENNEDY ROY SUNDERLAND            JUSTIN VALLELY            TIM SPURWAY            JOHN LODATO            JOHN EDWARDS            RICHARD NELSON            DAVI D DILLON            STEPHEN BALDWIN            RICHARD PEARCE LUIS RODRIGUEZ            PIOTR KLOS            LYN RICHARDS            WIESLAW SLOMINAY            LORRAINE WEBB            LAMONT BOWDEN            MA NUEL QUINTERO            JOSE ANDRADE            MARYANN SAVAGE DONALD FULLER            DANA LONG            ARTUR SCHLOTTHAUER            JAMES LACKERMEIER            WILLIAM TRAN             LECEADRICKE YOUNG            MELVIN DIAZ-ROSA            HELEN WALKER            JOHN DELUCA LEONARD BUMBER            BRANDON REYNOSO            VICTOR ORTIZ            ZORANA MANIGODICH            ARTHUR KNIGHT            RIZZO TOXEY           &nbs p;CURTIS FREER            RAUL NAVARRETE            GHAZWAN PETO RACHEL GEISELMAN            CATHY REEBENAKER            FRANCISCO CURET            CHARLES CORKRAN            LUKE POWELL            OSCAR ORELLANA            ; GERARD AUGUSTYNIAK            CLIFFORD RAMPTON            VIDHYA ASOKAN DAVID GALLEGOS            LIAM LITTLE            ROBERT MANSON            GERD L CHELT            RENATA MATO            JOSE ONTIVEROS            FRANK DÕJOOS            ENRIQUE HERRERA            ERIC MULLINS ROBERT FASTH            ROBERT CLEMONS            PETER GRABOWSKI            DARRYN PATTIE RODOLFO GARRIGA            CRAIG GIBBS            ALAN LEWIN          & nbsp; STUART WILCOX            ROBERT PAMPELL ROBERT TISDELL            GABRIEL GAMIZ            FRANCISCO ALVES            KEVIN KOCHO DAVID SMITH            SHADII SPEIGHT            TRACEY BATEMAN           ;  ANITA C-VAN HOUTUM            NIKI DENTON LEE TOMLINSON            MICHAEL WILKINSON            RICHARD BELLA            STEPHEN COTTON JACK HAYWARD            JASON BANKS             ROBERT RAPSEY            HILBRAND BAAR            MARIO MENDES IAN CLARK            GERARD V DEN EINDEN            BARTOLO AVALOS            LUC THI NEIL REAVEY            MELANIE FAWBUSH            MANUEL NICHOLS          &n bsp; CHRISTOPHER BUSHE            WILSON CORREA DECARLO SMITH            GARY CHACE            BRIDGET PAKE            ADRIAN OÕCLEMENTS ROBERT WIGMORE            OSVALDO COLLAZO            JOEY HENDERSON        &nb sp;   ROBERT PRICE            CHRIS KRUCEK ISIDORO RAMIREZ            JOHN LEWIN            STEVE STERN            JAMES DURHAM IV WAYNE TOMLINSON            GENARO HERNANDEZ            CHRISTIAN COLON             CHRISTOPHER GARNER            RAY VANDERHOOF ROBERT WITHERS            DANNY RUAN            PRABHU SRINIVASAN            J RGEN OSTWALD ANTHEA MILLHOUSE            THOMAS KING            SYLVAIN TIELENS             ELBERT MAPP            MICHAEL MCCREARY FALLAH KOKOIY            MARK MILTON            MANUEL VELOSO            YVONNE NEIL MIECZYSLAW CZERNIK            JAMES SHUFFIELD            AMADOR CARRICO         &n bsp;  DUNCAN REID            ZENOBIA PUCKETT DEAN MAXWELL            MICHAEL WEST            VINCENTE BRAVO            THANH-TUNG BUI ARTHUR DAVIES            SERGIO GOMEZ            ERNST DUVERNEAU           ;  SONIA TAYLOR            PAUL HAYTER MATEKWANE GINIS            ANDREW OÕNEILL             TADIC MILENA            MICHAEL COOK PEDRO VARGAS-PRADA            LASZLO JERGA            KIMBERLY ARMSTRONG            SCOTT NEIS            JONATHAN PERRY MALCOLM HEATH            SAMSON MASON            JULIO ROSERO            RHYS FITZMAURICE BOBBY KIMBRELL            DANIEL CRABTREE            TROY TOWNSEND         &n bsp;  FRANCISCO MARTINEZ            SRIRASACK SRISAVATH TRACY BARBEE            GUY FOX            TIFFANEY DOBY            MATTHEW JOLICOEUR GRAHAM MUIR            KAI-UWE STICHEL            ALBERT HENKIS          &nb sp; CHRIS MURPHY            ALAN ALLSOPP DEBORAH HAYS            WALTER MARTIN            STEPHEN TORRES            ZENA CARRUTHERS MARCO GUTIERREZ            DANIEL RICE            MELBA RODGERS         &nbs p;  COURTNEY SWANSON            MATTIAS ERKINANTII PEDRO S-CANGAS            ADELAIDO PEREZ            KURTIS JACKSON            ANA RODRIGUES GEORGETTE ROENELT            WILLIAM DELOACH            GARY REYNOLDS JR             MICHAEL BRENNAN            LEO HERNANDEZ DJURA KUCERKA            CHRISTOPH BOSS            WAYNE SIMMS            CHRISTINE GRIFFIN PATRICK SLADE            ROSTY ELKINWOR            MARC HEWITT         &nbs p;  TANISHA JONES            GEMMA BRYAN FRANK BRYANT JR            KEITH OÕHAGAN            ANGELA COX            JOSEPH WARNER KEITH RUFF            CHRISTOPHER KAYSER            CHRIS C OONEY            ANTONIO CARRANZA            OMAR QUINTERO PAULINO PAULINO            STEVE MCKEEVER            CHRISTIAN SANDOVAL            IAN EVANS RUI COSTA            JOSEPH MILLER            RICHARD FRYE          & nbsp; HOWARD MARKS            THOMAS SANTOS JAMES COE            PERSAUD RAMRISSOON            JAMES MOIR            ALAN BRODSKY KENNETH POWELL            CARMEN TEUBER            BELEI KUYALU          &nb sp; LEWANDA SIMS            ERAKPOWERI UWEJEYAN GEORGINA SIDNEY            VASILIOS LAPPAS            NAEEM PEARSON            JOHN ROBSON MICHAEL CARLYON            CARLOS LOURA            JUAN ROSARIO         &nbs p;  RAMON RAMIREZ            SAMUEL RODGERS BILLY SONNIER            MARLU TOLENTINO            VALENTINA PEREZ            SAMUEL ATILANO TIMOTHY BROWN            RICHARD OVERTON            IAN GIBBS         &nb sp;  HEATH PARSONS            ANNA MCCREADIE FEDERICO RANGEL            FAYE BRAND            DAVID PORTERFIELD            FRANK SEBER KATERINA XIONG-VANG FRANCISCO M-MARTINEZ            FRANCISCO PENATE            GEOFF STEPHENSON    &n bsp;       LYDIA COLE JOSE MARTINEZ            CLIFTON BELL            RAMON GRABAN            ARTIE NIEVES JEFFERY AGAN            STEVEN ELLISON            ELEANOR BETTAM          &n bsp; JERROLD HATCHETT            FRANCISCO CALDERON DANIEL FRIESEN            WILTON ELESHA            CARL LYNCH             BLAIR NICHOLLS KEVIN KIDMAN            FRANSCISCO CASTRO            BARRY HOAR            MARK HURLEY            HUGO SOSA MARK JEFFERSON            ALEJANDRO GOMEZ            HUGH MORRIS            NICOLE COWLES ANTONIO YBARRA            CHARLES BEAUMONT            ROBERTO PEREY         & nbsp;  JORGE AGUIRRE            JOHN CLUCK JAHDIEL PEREZ            GOI WANDAP            JAISH MESURIA            DANIEL ROBERTSON JAMES CLONINGER            CLIFFORD SKELDING            CAIRD HAY         &nbs p;  GLEN LEGGETT            JOSEPH MARTIN J RGEN BUDDE            RAMON FLORES            DOYLE VICK            JASON ELCHISAK JEFFREY WATTS            MICHAEL GLACY            JENNIFER LOWERY          &n bsp; ISAAC MEDINA            MARK FAIR PETER HOOPER            ROBERT DOMINGUEZ            JELLE BEHETS            TAMMY BRECKENRIDGE MARK BROCKS            RYAN MIHAICHUK            MARK COLLINS         &n bsp;  JASON KUMAR            MATTHEW ADAMS KEVIN BROWN            ERIC JONES            JOCELYN ODIGE            GEORGE HENDERSON JR CRISTINA ESTARIS            LINDSEY WHITMAN            JENARO SANDOVAL        &nbs p;   GARY HALL            ERIC CASTELLI KIRKWOOD CAMPBELL            KYRON WHEELER            GARY OSMAN            SEAN RAINEY RAMON PEREZ            ANDREW JESSE            RAFAEL MONTANO          &nb sp; JULIO DE JESUS             LINDACAROL HERRMANN BENIGNO CAZAREZ            MARCIA CANTARERO            RAFAEL RUIZ            BERNARDINO TLATELPA AMY EASON            COLE HERRON            PAUL DONOVAN         &nbs p;  KEITH BROWN            TERRY NORTHWOOD ALAN SHERIDAN            MARCO MARTINEZ            JILL ROXBURGH            JUVENAL SIDA ANDREW VAUGHAN            LEUNG CHEUNG            JOAO CASQUEIRA           ;  LEE HARRIS            IGNACIO DELRIO ERIC INMON            JAROSLAW KOWALCZYK            PHILIP TREAS            ROBERTO M-ACEVES MATTHEW HAYWARD            ANTHONY LEHESTE            FRANS TIMMERMANS        & nbsp;   MARCO ZOCH            JUSTIN MAYS ADAME HASSAN            JESUS ARREOLA-REYES            LEE EDMUNDS            JOHN PHILLIPS MORGAN JENKINS            ANTHONY KNIGHT            VISELAU LATU         &n bsp;  LYNN LIVINGSTONE            JOHN DROOGSMA CARLA BOYLES            ALAN COLES            BART VERHOEVEN            ANSELMO VALENZUELA ANIBAL CAJEIRA            STEPHANIE PORTER            NARCISO FERNANDES        &n bsp;   CLARENCE BAILEY            GRANVILLE REDWAY AMIT PATEL            MICHAEL HAVRILLA            STEVEN PLAZA            ROBERTO ALVAREZ BARRY MUNDAY            DAVID WRIGHT            KABIRA IMAM          &nb sp; TRUDY FLORES            ELIZABETH MACFADYEN ADELSO MORALES            MARIO MARCUS            ROBERT SPROUL            BRYAN RO GINSON BAKALOV-M SERGEJ            EDWARD BRADLEY            LUKE ROSENDALE            CLAIRE HAWKINS            DENISE SHELBOURNE DIETER B NSCH            RAIMONDO LYONS            MELANIE JACKSON            RUSSELL JOHNSON RUTH FAGG            KEITH DINE            DALE PUNDSACK          &n bsp; JUAN GONZALEZ            HOLLY JOBLING CARLOS RAMOS            DALJIT SOOD            TIMOTHY MURKIN            THERON CANNON JEREMY JOHNSON            JULIO CHEA            DONALD STEWART          &nb sp; SUNIL KUMAR RAY            KELVIN HUNTER CHRIS CRAFTON            ANGELO MUNNO            ALY MARIKO            RAYMOND WRIGHT TONY CLARK            MALDWYN DAVIES            ANTHONY WILLIAMS          &n bsp; DAVID HOLT            DARIO RAMIREZ FRANK RUIZ            OLIVIA JELFS            JORGE TEJEDA            ANGEL GREEN MARCO URESTI            EDWARD SCHNEIDER            SHAUN WEBSTER            ; RAYMOND EVANS            JENNIFER MCMAHON KEVIN SASSE            LUIS CORREDOR            GILBERTO PEREZ            QUENTINA DAVENPORT MANUEL ESPEJO            JEFFERY SMYTH            SERGIO RUIZ         &nbs p;  TRACY WYARD            JULIAN BOLT RHYS TALBOT            FELIPE VIVERO            JINSON MOORKATTIL            RAUL REYNES JAMES CALCAGNO            ALLAN CARSWELL            RICARDO MENDOZA         &n bsp;  QI LI            VANNIE STAL EY MINDY BIEGENWALD            BORIS JELITTO            HECTOR PEREZ            JOSE CRUZ KEVIN CHERRY            TERRANCE FRAZIER            BRIAN BAUR          &nb sp; ROGER TOOGOOD            MICHAEL KIWANIS PARISH SWANSON            GRANT BOLHUIS            ALBERTO JIMENEZ            DAVID SCHAU BRENDAN MARSH            THOMAS MCELHENY            JAMES EDMONDS         &nb sp;  TIM HASELHOFF            BARRY JONES PABLO CABRERA            BENJAMIN SAMUELS            ANTONY MORRIS            STEVE BIRD RICHARD WYNNE            MICHAEL PIROLLI            GARY DAVIES             MARC AFF PPER            JEFFREY TARITY YVONNE YSMM            ANTHONY JACKSON            KRISTY MURISON            WILLIAM SCHMIEDEL RAYMOND SPITERI            MARCO LUCCI            PRISCILLA GILL             ADAN RODRIGUEZ            KAMAL JOSHI IBRAHIMA JABBIE            NORMA PEREZ            SARA PHOK            ANN STEVENS SASHA DIMOVSKI            VERONICA FLORES            MARSHELL REED          &nb sp; MANUEL PADILLA            EVERARDO Z-RODRIGUEZ VALENT SCHLOTTHAUER            PETER BIRD            STEPHEN MCROBERT            JAMES HARRIS NATHANIEL LILLY            ERICA SALAZAR            MARTYN JONES             PARMJIT SINGH            CHRISTIAN NORDHAUSEN SIMS METAL MANAGEMENT LIMITED ABN 69 114 838 630

 


 

TO THE 5,600 DEDICATED AND HARD
WORKING MEN AND WOMEN OF
SIMS METAL MANAGEMENT
LISTED IN THIS REPORT — AND THOSE
IN OUR JOINT VENTURE OPERATIONS —
THANK YOU FOR MAKING OUR COMPANY
A TRUE INDUSTRY LEADER.
(GRAPHIC)
CONTENTS
         
Financial Summary
    1  
Chairman’s and Group Chief Executive Officer’s Review
    2  
Managing Sustainability
    8  
Corporate Governance Statement
    24  
Financial Report
    33  
Board of Directors
    34  
Directors’ Report
    36  
Financial Statements
    56  
Directors’ Declaration
    117  
Independent Auditor’s Report
    118  
Auditor’s Independence Declaration
    120  
Annual Financial Report Extracts presented in US dollars
    121  
Shareholder Information
    125  
Five Year Trend Summary
    127  
Corporate Directory
    128  

 


 

CHAIRMAN’S AND GROUP CHIEF EXECUTIVE OFFICER’S
REVIEW
(GRAPHIC)
In the 2010 fiscal year, our 5,600 employees working at our 230 facilities around the world successfully navigated the Company through the macroeconomic challenges of the year, including lingering turbulence from the global financial crisis as evidenced by concerns regarding a potential European sovereign debt crisis, and a struggling North American economy.
We are confident that with our technology and best-in-industry talent, Sims Metal Management is well positioned to take full advantage of our leading market position when economies stabilise and recover.
Sims Metal Management is committed to a long-term strategy of solidifying its competitive position — both through acquisitions and by enhancing returns through organic initiatives. We are proud to report that, even during the trying times of the last two years, we have remained true to the principles that have sustained the Company since 1917.
(GRAPHIC)
2

 


 

(GRAPHIC)
IN THE FACE OF SIGNIFICANT
CHALLENGES DURING THE PAST
FISCAL YEAR, OUR COMMITMENT AND
DEDICATION TO OUR CORE VALUES
ALLOWED THE COMPANY TO RETURN
TO PROFITABILITY.
We remain committed to the following ideals:
  First and foremost, we are committed to the safety of our employees, customers, suppliers and visitors to our facilities;
 
  We encourage teamwork and the transfer of knowledge between our businesses and locations worldwide to maximise the competitive advantage of our global footprint;
 
  We treat all employees, customers, visitors and communities in which we are located with courtesy, respect and the utmost integrity;
 
  We operate with an entrepreneurial spirit that promotes fiscal discipline while seeking to maximise return on investment for shareholders; and
 
  We remain focused on employing the most talented workforce in the industry.
In the face of significant challenges during the past fiscal year, our commitment and dedication to our core values allowed the Company to return to profitability. While we cannot predict if the global economies are finally emerging from economic malaise, we will continue to pursue smart growth and make full use of our most important asset — the talented employees of Sims Metal Management.
SAFETY
As we have emphasised in our previous annual reports and updates to the market, a top priority is, and will always be, the safety of our employees, contractors and visitors to our facilities. Our Board of Directors and management subscribe to the belief that there is a strong link between safety performance and the overall success of our Company when measured against all key parameters including production, quality and, ultimately, profitability. Well run businesses are also safe businesses.
Over the course of the past year we implemented new and improved safety procedures. Although our financial metrics significantly improved in fiscal 2010, our biggest gains have been in safety performance. We reduced our Lost Time Injury frequency rate from 4.8 to 3.2 and Medical Treated Incident frequency rate from 19.4 to 14.2 year-on-year. We are continuing our unrelenting effort to support a safety culture that will stand shoulder to shoulder with the safest manufacturing companies in the world.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   3

 


 

CHAIRMAN’S AND GROUP CHIEF EXECUTIVE OFFICER’S REVIEW
(GRAPHIC)
 
1.   Electronics recycling plant at Daventry, UK, part of the Wincanton assets acquisition in Aug 2010.
 
2.   A safety status sign at our North Haven, CT USA facility.
SUSTAINABILITY
While our metals recycling business is inherently ‘green’, Sims Metal Management strives to go beyond what is required and make lasting progress in the environmental impact and sustainability of our operations.
Use of the recycled materials sold by Sims Metal Management during fiscal 2010 saved almost 13 million MWh of energy as compared to the use of the same amount of virgin material. Our operations also reduced carbon emissions, pollution and energy consumption — 13.2 million tonnes of CO2 emissions were avoided by the use of scrap metal, a secondary raw material, instead of primary metallics.
Sims Metal Management was named, for the second year in a row, as one of the 100 Most Sustainable Corporations in the world, at the Davos World Economic Forum. We were honoured to again receive this award, which recognises companies that consistently demonstrate superior positioning and performance in environmental, social and governance issues relative to their industry peers.
We were also pleased when Sims Recycling Solutions (SRS), the world’s largest electronics recycler, was named as the top electronics recycler in North America in the July 2010 issue of Recycling Today magazine. Out of the 20 largest recycling companies, SRS maintained the highest volumes of electronic scrap recycled in calendar 2009.
We remain committed to our mission of enhancing the sustainability of our operations by continually improving safety, workplace conditions and environmental stewardship.
More information on Sims Metal Management’s commitment to sustainability can be found in this report under the heading ‘Managing Sustainability.’
FISCAL 2010 FINANCIAL RESULTS
As major Western economies attempted, with varying degrees of lack of success, to transition from recession to modest growth trajectories, our industry continued to encounter diminished flows of scrap metal and uneven demand from steel and metal producers. In spite of these difficult market conditions, Sims Metal Management saw improvement in many of our markets in fiscal 2010.
Our non-ferrous metals business achieved healthy margins and strong year-on-year growth. However, ferrous margins and scrap flows outside Australia continued to be disappointing, particularly in North America, our largest market, where the US economy continued (and continues) to struggle.
Revenue for fiscal 2010 was approximately $7.5 billion, which included an adverse effect from foreign exchange, and we recorded a net profit after tax on a statutory basis of $126.7 million. Our scrap intake and shipments for the year ended 30 June 2010 were 13.3 million tonnes and 12.9 million tonnes, respectively.

4


 

IN RECOGNITION OF OUR DEDICATION
TO SUSTAINABILITY, THE COMPANY
WAS NAMED, FOR THE SECOND YEAR
IN A ROW, AS ONE OF THE 100 MOST
SUSTAINABLE CORPORATIONS IN
THE WORLD, AT THE DAVOS WORLD
ECONOMIC FORUM.
Scrap intake increased 6% and scrap shipments decreased 2% on the prior year.
Sims Metal Management is financially strong. As of 30 June 2010, we had net cash balances of approximately $15 million, undrawn lines of credit of approximately $1.3 billion, and shareholder equity of $3.3 billion at the end of fiscal 2010. The Company believes that the strength of its balance sheet is without peer in its industry and notes that credit facilities available to the Company have recently been increased to $1.5 billion. Capital may indeed be amongst the world’s most precious commodities, and we are proud of our financial strength and deeply value our long-standing relationships with our commercial banking partners.
Our Board of Directors determined a final dividend of $0.23 per share (74% franked) to be paid on 22 October 2010. Dividends for fiscal 2010, including the interim dividend of $0.10 per share and the final dividend of $0.23 per share, represent a payout ratio of 51% of net profit. We are pleased to once again uphold, consistent with our dividend policy, our commitment to providing dividends from our earnings to our shareholders.
OPERATIONAL RESULTS
NORTH AMERICA
Our North American metals business continued to face difficult conditions in fiscal 2010 as a result of inadequate scrap flows and tight ferrous margins associated with the weak and uneven US economic recovery. We have used this low point in the cycle to invest in our business and bolster our trading and processing capabilities.
Sales revenue was down 21% on the prior corresponding period to $5 billion. On a US dollar equivalent basis, sales revenue was down 7% to US$4.4 billion as compared to fiscal 2009. EBIT (earnings before interest and tax) was $80 million. Scrap intake in North America increased 4% on the prior corresponding period to 10.2 million tonnes.
During the year we created a new trading platform for ferrous metals called North America Trade that will further improve our penetration of the market. We anticipate that North America Trade will enhance our ability to market and trade third-party generated material in North America, complementing our already strong global ferrous trading platform. As always, we continue to seek opportunities to execute on our industry consolidation strategy in North America. We remain confident that Sims Metal Management will generate high returns on capital in this historically scrap rich market as economic conditions allow for improved flows of scrap metals and margins.
AUSTRALASIA
Our Australasian business performed extremely well in fiscal 2010 against the backdrop of a relatively healthy Australian economy. During fiscal 2010 we made significant investments in our processing capabilities and, in fiscal 2011, we expect to continue investing in this critical region, including improving the non-ferrous recovery technology downstream of our shredders, among other capital projects. We anticipate that such investments will generate high returns and further enhance our leadership position in this market.
Sales revenue for the region was up 5% on the prior corresponding period to $1.2 billion. EBIT was up 227% to $61 million. Scrap intake in the region increased by 14% for the 2010 fiscal year to 1.7 million tonnes, on a year-on-year basis.
(GRAPHIC)
New state-of-the-
art non-ferrous
shredder residue
plant at Claremont
Terminal, Jersey City,
NJ, USA.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   5

 


 

CHAIRMAN’S AND GROUP CHIEF EXECUTIVE OFFICER’S REVIEW
(GRAPHIC)
 
1.   New state-of-the-art non-ferrous shredder residue plant at St Marys, NSW, Australia.
 
2.   Similar plant under construction at Rocklea, QLD, Australia.
EUROPE
Despite the macroeconomic headwinds, our European division also delivered outstanding performance in fiscal 2010. These impressive results were led by strong contributions from SRS, our electronics recycling business, and solid performance by our UK metals recycling business.
Sales revenue was up 7% on the prior corresponding period to $1.2 billion. EBIT was $67 million. Scrap intake in the region increased by 4% to 1.4 million tonnes in fiscal 2010, on a year-on-year basis.
ACQUISITIONS
We continued our expansion efforts in fiscal 2010 through several quality acquisitions, including:
  Fairless Iron & Metal, a ferrous and non-ferrous recycler based in Pennsylvania on the East Coast of the United States, which closed in the beginning of the 2010 fiscal year. Through this acquisition, we added two major facilities including a state-of-the-art mega-shredder, non-ferrous recovery systems and a deep water port for the export of our products.
 
  In September 2009, Technorecycle GmbH, a leading German electronics scrap recycler and asset recovery specialist located in Hochheim am Main near Frankfurt, and the Company’s second recycling solutions operation in Germany.
 
  In November 2009, the remaining 50% of our previous joint venture operation Port Albany Ventures, LLC, a mixed-use bulk material stevedoring operation in the Albany region of New York, located on a 28 acre dock facility on the Hudson River.
In addition, we are excited about the recent acquisition of the UK electronics recycling assets of Wincanton PLC which closed after the 2010 fiscal year ended on 13 August 2010. The transaction enhanced our geographical footprint within the UK market, allowing us to provide a more localised service to our growing client base. The retailer led capability and logistics expertise of Wincanton’s recycling division, together with its infrastructure, ideally complements our business model and processing expertise. Furthermore, the addition of a collaborative arrangement in reverse logistics with Wincanton PLC will allow us to offer an unparalleled level of recycling excellence and service convenience to our UK customer base.
INVESTING IN TECHNOLOGY
Sims Metal Management will emerge from the economic downturn a safer, stronger, more nimble and more efficient company. Part of our strategy in this regard involves investing in new technologies.
In North America, we installed new non-ferrous separation and recovery systems at several East Coast locations — in Jersey City, New Jersey; North Haven, Connecticut; as well as Long Beach, California. In addition, investments were made to further improve our operational efficiency, environmental compliance and safety procedures.

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At our Canadian SRS operation, investment commenced on a new facility to process Ontario’s materials from that Province’s newly legislated e-recycling program.
In Australasia, we completed several major production and technology projects during the year. In Queensland, we significantly upgraded our Brisbane shredder which is delivering substantial capacity improvements while reducing energy consumption. We installed a state-of-the-art non-ferrous shredder residue plant at St Marys, New South Wales. This plant is already delivering substantially improved recoveries, and similar plants will be installed throughout Australasia during the 2011 and 2012 fiscal years.
In our Europe Division, the UK metals division has begun investment into technology for further separation to recover plastics and metals from residual waste streams; it is anticipated that these units will be commissioned in fiscal 2011. Sims Recycling Solutions has invested globally in value adding technologies including further investment in plastics and metals separation equipment. In Europe, SRS commissioned new TV and monitor glass recycling processes to automate processing and improve safety performance.
In all, as we continued to expand our infrastructure and invest in new technology, our capital expenditure in fiscal 2010 totalled $121 million. We will, given our growth plans and intention to sustain our industry leadership position, continue to invest in our facilities and technology to serve the long-term interests of Sims Metal Management.
THE BOARD OF DIRECTORS
At the November 2009 Annual General Meeting we had the pleasure of adding three new non-executive members to our Board of Directors: Geoff Brunsdon, Jim Thompson and Paul Sukagawa.
Geoff Brunsdon previously served on our Board for eight years, from 1999 until he voluntarily stepped down in 2007.
Jim Thompson has an impressive background in the steel industry and has Australian experience, having served as Chairman of the joint venture company North Star/BlueScope Steel.
Paul Sukagawa replaced Mike Iwanaga as a representative of Mitsui Group (Mike retired from the Board in November 2009). Paul has held various positions within Mitsui since 1973, including President & Managing Director of Mitsui Iron Ore Development from 2004 to 2007.
Geoff, Jim and Paul have already proven themselves to be valuable additions to our Board, and we look forward to their on-going contributions.
LOOKING FORWARD
Given our unique global metals and electronic recycling platform; and the best assets in our industry — our people; we are optimistic about our future prospects. We have taken steps to enhance our infrastructure and trading capabilities and we are confident that our operations will demonstrate tremendous operating leverage — particularly in North America — as and when scrap flows and margins normalise and macroeconomic trends demonstrate more meaningful economic recovery and growth characteristics. We will continue to grow and expand the leadership position enjoyed by our Sims Recycling Solutions division. Our solid balance sheet ensures that we have the financial flexibility to develop and implement new technologies, pursue acquisitions and expand and invest in our global business.
As always, we will continue to execute on our strategy to create substantial long-term value for our shareholders while meeting the needs of our customers and other stakeholders.
-s- Paul J. Varello
 
Paul J. Varello
Chairman
-s- Daniel W. Dienst
 
Daniel W. Dienst
Group Chief Executive Officer
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   7

 


 

MANAGING SUSTAINABILITY
2010 OVERVIEW
SIMS METAL MANAGEMENT REMAINS
COMMITTED TO THE VOLUNTARY
DISCLOSURE OF ITS KEY SUSTAINABILITY
PERFORMANCE FOR ALL STAKEHOLDERS
AND IS PLEASED TO PRESENT THE
FOLLOWING SUMMARY OF ITS EFFORTS
IN FISCAL 2010.
Since we commenced reporting on sustainability in 2006, our systems for collecting information, analysing the data and managing the many non-financial aspects of our business have grown significantly, both in scope and in application. This has presented many challenges, particularly considering that the number of Company sites has more than doubled in that period. The mergers and business acquisitions that the Company has been through bring the challenge not just of merging diverse information systems at various levels of maturity, but also of fostering a common culture, drawing on the very best of the skills, talents, views and beliefs of all our employees. It is great testimony to them that they continue to be committed to growing and improving our efforts in the areas of safety (which is now, and always will be, our number one priority), environmental management, energy and water use reduction, carbon emissions, waste generation, and the many other components that together form the basis for our journey towards being one of the world’s most sustainable businesses.
There is significant consensus among investors and analysts that companies that embrace sustainability as part of their management approach are better equipped to deal with the challenges of business and the ever-changing commercial, operational and political environment of the 21st century. While many continue to see sustainability reporting as a communications matter between a company and its stakeholders, Sims Metal Management has come to appreciate that sustainability provides a powerful tool to unite the men and women of our Company, continually inspiring us all to act with a common direction and determination to deliver excellence in all aspects of our business while further improving our internal management systems.
Of all the sustainability issues, the safety of our people, contractors and visitors remains the paramount goal at Sims Metal Management. Undertaking work safely is a non-negotiable work condition and, while we continue to make great improvements to our work environment and culture, we will never stop in our endeavour to create a zero harm workplace, where every person will go home in the same condition in which he or she came to work.
As the world increasingly focuses on the impact of global warming and how to mitigate its effects, it is inevitable that companies will need to change the way in which they do
 
1.   Upgraded shredder facility, Rocklea, QLD, Australia reducing energy consumption.
 
2.   The world’s largest and most modern WEEE plant at Newport, Wales, UK.
 
3.   An employee scans in an electronic device at the Dumfries, Scotland, UK Sims Recycling Solutions facility.
8

 


 

(GRAPHIC)
(GRAPHIC)
 
BEING A RECYCLING COMPANY,
OUR ENTIRE ETHOS IS ABOUT
RESOURCE EFFICIENCY AND
DOING MORE WITH LESS.
business. In a world where energy, water and waste disposal costs continue to rise — either as a direct result of diminishing availability of resources, or as an indirect result of policy measures designed to change how we use these resources — it makes prudent business sense to manage our resources in a clearly directed strategic framework. While many of the policy signals in the regions in which we operate may be mixed or unclear in the near term, there is no doubt that significant changes will occur in the longer term. Sims Metal Management is positioning itself to manage the impact that such changes, if they should arise, will have on its business environment.
Being a recycling company, our entire ethos is about resource efficiency and doing more with less. However, this of itself is not enough. In all of our regions, operational teams are formally tasked with finding ways to increase energy efficiency and reduce water usage and waste, thereby uniting our people in the common goal of finding better and more sustainable ways to conduct our operational activities. Our measuring and reporting on resource usage aspects of our business form a crucial basis for these efforts.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   9

 


 

SUSTAINABILITY AT A GLANCE
                             
                        PERCENTAGE  
KEY PARAMETER   REGION   F10     F09     CHANGE (+/-)  
 
Energy Use
  North America Total (GJ)     2,052,602       2,091,203       -2  
 
  Europe and UK Total (GJ)     443,711       398,581       11  
 
  Asia Pacific Total (GJ)     660,978       674,740       -2  
 
  Group Total (GJ)     3,157,291       3,164,524       0  
 
CO2 Emissions
  North America Total (tCO2e)     200,797       202,656       -1  
 
  Europe and UK Total (tCO2e)     39,429       37,200       6  
 
  Asia Pacific Total (tCO2e)     73,219       79,400       -8  
 
  Group Total (tCO2e)     313,445       319,256       -2  
 
  Scope 1 (tCO2e)     142,256       143,045       -1  
 
  Scope 2 (tCO2e)     171,189       176,211       -3  
 
Water Consumption
  North America Total (Cubic Metres)     1,062,125       895,150       19  
 
  Europe and UK Total (Cubic Metres)     62,335       55,238       13  
 
  Asia Pacific Total (Cubic Metres)     106,092       147,009       -28  
 
  Group Total (Cubic Metres)     1,230,552       1,097,397       12  
 
Waste Generation
  North America Total (Tonnes)     1,291,903       1,023,176       26  
 
  Europe and UK Total (Tonnes)     303,167       319,617       -5  
 
  Asia Pacific Total (Tonnes)     243,139       261,960       -7  
 
  Group Total (Tonnes)     1,838,209       1,604,753       15  
 
Key OH&S Indicators
  Group LTIFR (LTIx1,000,000/exposed hours)     3.2       4.8       -33  
 
  Group MTIFR (MTIx1,000,000/exposed hours)     14.2       19.4       -27  
 
Number of Employees
  Male     4,740       4,699       1  
 
  Female     878       855       3  
 
  Group Total     5,618       5,554       1  
 
Training
  Group Total Hours (Corporate training only)     238,728       42,387       463  
 
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LMS Generation’s
jointly owned landfill
gas renewable
energy facility at
Eastern Creek, NSW
-Australia’s largest
built this decade.

10


 

We were particularly pleased that our ongoing efforts were recognised for the second consecutive year by the World Economic Forum in Davos, Switzerland, where Sims Metal Management again was nominated as one of the Global Top 100 Most Sustainable Corporations in the World. Our efforts also were recognised at the Ninth Australian Sustainability Awards, where Sims Metal Management received the “Special Award for Environment” for establishing best-of-sector low carbon intensity and for structuring its own strategies around a framework of energy efficiency, green energy usage and carbon offsets. Additionally, it was pleasing that our efforts were recognised by many other analysts and research organisations.
The Company once again participated in the global Carbon Disclosure Project, our fifth year of participation, and in the Dow Jones Sustainability Index, our third year of participation. Further, our UK operations were privileged to join the Carbon Trust — an initiative of the UK Government.
One interesting measure of the contribution that Sims Metal Management makes to a sustainable future is the impact that the use of its recycled materials provides in reducing energy use and therefore carbon emissions. Based on research by the Imperial College in London, the tonnes of secondary metal materials that were recycled by Sims Metal Management in fiscal 2010, when compared to the use of virgin materials in the manufacture of steel and other metal products, saved close to 13 million MWh of energy. Further, and most importantly, it also avoided 13.2 million tonnes of CO2 being emitted to the atmosphere, more than that emitted by many small countries.
In addition, LMS Generation Pty Ltd (LMS), our 50% owned Australian based green energy provider, generated nearly 1.2 million tonnes of verified CO2 emissions abatement, while generating nearly 300 thousand MWh of 100% sustainable energy.
Thus, the contribution made by Sims Metal Management in preserving millions of tonnes of valuable and increasingly scarce recyclable materials that would otherwise have ended up in landfills, and reducing the energy and water used in the manufacture of raw materials, illustrates why it is one of the world’s most sustainable companies.
Nevertheless, in delivering these very sustainable outcomes, the Company uses energy and other resources in the collection, processing and ultimate sale of its recyclable materials.
As in prior years, the sustainability parameters presented in this report, together with its reporting on fiscal and corporate governance, form the Company’s core response to the benchmark guidelines set out in the Global Reporting Initiative (GRI). The GRI is a network based organisation that pioneered the world’s most widely used sustainability reporting framework and is committed to its continuous improvement and application worldwide. Our sustainability efforts are supported by a wide spectrum of corporate policies and initiatives, many of which are located on the Company’s website at www.simsmm.com.
As in previous years, this report is based around the key areas of environment, health and safety, and community, specifically broken into the sub-categories of:
  energy use and carbon footprint;
 
  water use;
 
  waste management and generation;
 
  key environmental indicators;
 
  key OH&S indicators;
 
  safety initiatives;
 
  employee retention and diversity;
 
  human rights; and
 
  training and development.
Key sustainability parameters are briefly summarised in the table on page 10, while further details are provided in the explanatory text.
As illustrated in the table on page 10, there has been a decrease in energy use and resulting carbon emissions in most regions, as well as for the Group as a whole. The exception is in Europe and the UK, where two large Sims Recycling Solutions (SRS) recycling plants (including the world’s largest and most modern e-recycling plant) were brought on line during the fiscal year. It also should be noted that the energy and carbon figures include data from SA Recycling, our 50% owned joint venture operation located in the Southwest of the United States comprising approximately 40 sites, with more than 1,000 employees. We chose to include the carbon profile of this operation for completeness and compatibility with last year’s data.
 
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   11

 


 

MANAGING SUSTAINABILITY
ENVIRONMENT
ENERGY AND CARBON
ENERGY AND CARBON POLICY
Our formal ‘Energy and Carbon Emissions Policy’ was revised during the fiscal year to provide clear goals and articulate formal requirements for management and employees to identify, pursue and implement energy initiatives and carbon reduction opportunities. These objectives fit into our continuing strategic hierarchy of:
  Efficient use of energy — Striving to employ production processes and transport activities that facilitate a commercially viable level of energy efficiency and associated carbon emissions profile.
  The use of renewable and cleaner forms of energy — Progressively striving, where commercially viable, to reduce the use of non-renewable energy sources and increase the use of energy sources with a lower carbon emissions profile.
  The use of verifiable and accredited carbon offsets — Although our view is that carbon offsets are a last resort measure to be employed only when other carbon reduction efforts have been exhausted, our affiliate LMS annually generates accredited carbon offsets nearly four times the size of the Company’s total fiscal year 2010 carbon footprint.
Formal energy teams have been working for several years in each operating region to reduce our energy consumption and examine alternative energy sources, including the use of renewable fuels and co-generation. Once a project or operational development has been identified, a project team, which includes a “site energy champion”, is nominated to undertake implementation. Overall progress is monitored by the energy steering team and reported through the regional Safety, Health, Environment and Community (SHEC) Committees and communicated to the Company Board of Directors via the global SHEC Committee. Examples of projects undertaken during fiscal year 2010 include:
  NORTH AMERICA — Shredder installations continue to be among our biggest users of electricity. The expanded use of capacitor banks at most of them, together with variable frequency drives for conveyors and higher efficiency motors, has provided improvements to power factors and energy efficiency. Where available and practical, energy demand-response programs are being used, and increased metering equipment is providing valuable data on energy usage and efficiency for the targeted equipment. Lighting audits have resulted in sweeping upgrades to more efficient lighting. A number of solar and wind energy proposals are under consideration. In addition, several initiatives with the potential for carbon reduction in
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12


 

    mobile equipment have been implemented or are under examination, including the use of higher efficiency engines, and policies and equipment to reduce motor idling.
 
  EUROPE — A number of energy initiatives produced a comparative overall reduction in electrical energy usage of 9.4% compared to fiscal 2009, although the new operations of Newport and Ellesmere Port waste electrical and electronics equipment (WEEE) plants, as well as an expansion of our transport fleet, resulted in a net increase in energy consumption for Europe of 11%. An annual carbon saving of 777 tCO2 was achieved through various efficiency measures at Stalybridge, while our plant at Dumfries reduced gas consumption by a very significant 53%. The general market downturn meant less feedstock and consequently a slight reduction in the energy efficiency of our UK shredders, but new operational measures such as idling policies and isolation of equipment provided for an absolute energy reduction.
 
  AUSTRALASIA — As in North America, our shredder operations represent the major energy users within our scrap processing activities and continue to be the main focus for maximising our energy efficiency. Specifically, the Rocklea, Queensland shredder was upgraded, resulting in energy reductions per tonne processed in the order of 10%. Similarly, potential energy saving measures have been identified at the St Mary’s, NSW shredder, and are scheduled for implementation over the coming 12 months. Unfortunately, the amount of energy required for processing has increased as a result of rising demand for high density scrap in the challenging market conditions. While this has increased our energy consumption, lesser melt losses and higher transport efficiency for our customers mean an overall better outcome for the environment. The tilting rotary furnace system was upgraded at our Laverton North, Victoria aluminium smelter, resulting in increased energy efficiency and a reduction in emissions profile. Overall electricity consumption was reduced via the replacement of two older air compressors with a high efficiency unit, while furnace temperature monitoring was expanded, allowing for better burner management and temperature control, resulting in increased energy efficiency.
The continuing uncertainty surrounding government responses to carbon reduction measures in most of the regions in which we operate, combined with the overall sporadic availability and relatively high cost of renewable energy sources, makes it difficult for Sims Metal Management to formulate an absolute carbon reduction strategy. However, our systems for collecting and analysing data, combined with the innovation and skills of our energy teams,
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SIMS METAL MANAGEMENT ANNUAL REPORT 2010   13

 


 

MANAGING SUSTAINABILITY
make us well prepared to respond quickly and efficiently to policy and economic drivers as they emerge. One example of this has been the CRC Energy Efficiency Scheme (previously known as the Carbon Reduction Commitment), which is a new, mandatory, energy saving and carbon emissions reduction scheme for the UK. Our systems and data allowed Sims Metal Management to smoothly engage with the UK Government on this issue, as well as sign up with the Carbon Trust to gain recognition for the considerable energy initiatives that the Company has achieved over the years.
FUEL AND ELECTRICITY
Total energy use for the Group in fiscal 2010 was 3,157,291GJ, down by 7,233GJ from that in fiscal 2009. This was achieved despite an 11% increase in energy consumption in the UK, primarily a result of the world’s largest and most modern WEEE plant being commissioned by the Company in Wales, and our new television and monitor glass treatment facility opening in Ellesmere Port. The reduction in overall energy use is testimony to the important and ongoing work being done by the energy teams in each region.
Diesel consumption remains the largest component of the Company’s energy profile, followed by electricity; gas used primarily in our Australian aluminium smelter and the SRS metals smelting operation in Franklin Park, Illinois, USA; and relatively small contributions from LPG and petrol.
CARBON FOOTPRINT
The energy profile of the operational activities at Sims Metal Management may be converted into a corresponding carbon profile. This has been done by independent external experts using the most recent factors that apply to the relevant operational region and in accordance with the procedures recommended under the international Greenhouse Gas Protocol.
The total CO2 equivalent profile for fiscal 2010 was 313,445 tonnes, down by 2% on fiscal 2009’s emissions profile. It should be noted that while diesel remains the highest component in terms of energy use, electricity accounts for the greatest contribution to the Company’s emissions profile. This is a result of the variation in the conversion factors applied under the Greenhouse Gas Protocol.
A company’s CO2 profile may be divided into three different types of emissions:
  Scope 1 — Emissions resulting from direct conversion of energy by the company, such as burning of fuels on site or in mobile equipment and transport;
 
  Scope 2 — Emissions resulting from indirect conversion of energy, such as externally supplied electricity; and
 
  Scope 3 — Emissions associated with activities under external control, such as independently operated service providers, air travel and so on.
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14


 

Due to ongoing ambiguity in respect of boundary conditions and the practical difficulties of collecting reliable information from externally controlled entities, Sims Metal Management does not currently collect and account for Scope 3 emissions, although it continues to examine the opportunities for doing so prospectively.
Compared to fiscal 2009, Scope 2 emissions were reduced by 3%, while Scope 1 emissions were reduced by 1%.
Various metrics are often applied to normalise a company’s energy and carbon profile, so as to allow a year-on-year comparison of performance, while allowing for changes to the operational scope of a company. Typically, such metrics are related to financial parameters such as earnings or revenue but, because of the extreme volatility of commodity prices, such metrics are not meaningful in the case of Sims Metal Management Limited. Equally, the complex interaction of transport, intake volumes, processing and distribution to market makes it difficult to define a simple, but adequate, alternative.
In the absence of an ideal metric, Sims Metal Management has historically reported on the amount of CO2 equivalent per shipped tonne.
Based on total shipped tonnes of 12.9 million tonnes, the CO2 emissions for fiscal 2010 were 24kg/tonne, unchanged from fiscal 2009. This is largely because, while sales and intake volumes continue to be under pressure as a result of the global downturn, operational activity does not decrease proportionally. This continues to present challenges to the Company, and we are evaluating appropriate mitigating alternatives. There are also additional factors to consider. For example, the increased demand for higher density products requires more energy to produce. This raises the Company’s energy profile and yet also assists in decreasing the energy profile of its customers, resulting, overall, in a benefit to the environment.
To put our emissions profile into context, it is worth noting that while the Company emitted 313,445 tonnes of CO2 equivalent as a result of its operational activities, the use of our secondary products avoided 13.2 million tonnes of CO2 equivalent being released to the atmosphere, a ratio of 1 in 42. This again illustrates the very significant benefit to the environment of recycling.
OBLIGATED EXTERNAL REPORTING
Sims Metal Management is not required to report under the European carbon trading scheme, or under the USEPA or state-specific carbon reporting schemes in the US.
The Company does report under the Australian Energy Efficiencies and Opportunities Act 2006 (EEO Act) and the National Greenhouse and Energy Reporting (NGER) Framework on matters relating to its Australian operations. Reports are prepared, with the assistance of qualified external specialists, and submitted annually. Not only do they identify energy initiatives covering 80% of the total energy profile, but the reports also discuss progress made against initiatives. The reports are available to the public on the Company’s website at www.simsmm.com.
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SIMS METAL MANAGEMENT ANNUAL REPORT 2010   15


 

MANAGING SUSTAINABILITY
The Company’s aluminium operation in Victoria, Australia also reports under that state’s Environment and Resource Efficiency Plan (EREP) and WaterMap, a state initiative to identify and act on water efficiency.
The Company’s UK operations are captured under the CRC Energy Efficiency Scheme (previously known as the Carbon Reduction Commitment). This scheme, which came into effect in April 2010, is a mandatory energy and climate change scheme administrated by the UK Environment Agency. The Company has registered with the scheme, and the systems it has developed for data collection and verification over several years, combined with the work undertaken by the energy teams, exceed the requirements of the legislation. Furthermore, Sims Metal Management has become the first metals and electronics recycling company in the UK to be awarded the Carbon Trust Standard, providing official recognition of our systems and the many energy initiatives undertaken to date.
VOLUNTARY EXTERNAL REPORTING
Sims Metal Management participated for the fifth consecutive year in the Carbon Disclosure Project (CDP). The CDP is an independent not-for-profit organisation which provides the largest database of corporate climate change information in the world. Since being formed in 2000, the CDP has become the global standard for carbon disclosure methodology and process, providing primary climate change data to the marketplace, institutional investors, purchasing organisations, analysts and government bodies. Details are available from the CDP website at www.cdproject.net, and, once the CDP completes its assessment, the annual submission will be available for viewing on our website as well.
The Company also completed its third submission to the Dow Jones Sustainability Index. While we were pleased with the results, the Company was not designated a ranking as this global index is weighted towards the dominant presence of very large turnover companies.
Due to changes in some of the assessment criteria, the Company was prevented from meeting the deadline for participation in the FTSE4Good index in fiscal 2010. However, as it has participated in this important index in previous years, the Company intends to resume participation going forward.
We continued our close working relationship with many external assessment and environmental research organisations, such as TruCost and Vigeo, which continue to rank us as a leading performer in our sector.
Most pleasing was the nomination of Sims Metal Management as one of the world’s 100 most sustainable companies for the second year running by the World Economic Forum in Davos, Switzerland.
Equally pleasing was receiving the Special Award for Environment at the ninth Australian Sustainability Awards in recognition of “best-of-sector” low carbon intensity and for developing our own strategy and systems in a framework of energy efficiency, green energy and carbon offsets.
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16


 

GREEN ENERGY
LMS, the Company’s 50% owned Australian based green energy provider, continues to be prominent in the renewable energy industry, becoming the leading supplier of Renewable Energy Certificates (RECs) in Australia from electricity generation. A total of 272,722 RECs and 881,733 NSW Greenhouse Abatement Certificates were generated during fiscal 2010, as well as 272,668MWh of green power. LMS also generated approximately 200,000 verified Emission Reduction Units under the Department of Climate Change, Greenhouse Friendly Program. Being involved since its inception a decade ago, LMS’s has, under the program, successfully created more than 1.3 million tonnes of verified abatement from the destruction of methane.
Major achievements of our affiliate LMS during fiscal 2010 included the commissioning of a 750kW renewable energy facility at the Birkdale, Queensland landfill and a 2200kW facility in NSW. Together with increases to existing facilities in NSW and Tasmania, LMS’s total generation capacity of green energy now stands at over 320,000MWh.
As articulated in our Energy and Carbon Emissions Policy, we regard carbon offsets as a last resort once other reduction measures have been exhausted. At present, the Company has no plans to utilise carbon credit offsets. The option is, however, available at any time as the certified offsets generated by our affiliate LMS represent 3.7 times the global carbon footprint of Sims Metal Management.
WATER USE
Water is used in the Company’s shredder operations and mechanical separation processes and is recycled and re-used wherever possible. Where site layout and topography allow, runoff is harvested and, together with “grey water”, is always used in preference to town water. Nevertheless, many of our operations are located in warm climates with low rainfall/high evaporation characteristics which, coupled with the loss of water in the process chain, necessitate augmentation of water from external sources.
While water consumption decreased by 28% in our Asia Pacific operations, it increased by 12% in Europe and the UK, primarily as a result of the new WEEE operations at Newport and Ellesmere Port being brought on stream. The apparent significant increase of 19% in water usage in North America is attributed to improved data collection, management and reporting. Previously, this information was collected manually at site level, but the introduction of new systems has meant that this data is centrally managed from information sourced directly from the providing utility, with increased data reliability.
WASTE MANAGEMENT AND GENERATION
The Company continues to invest significantly in new separation processes that increase the recovery of valuable materials and decrease the amount of waste generated as a by-product of recycling. In fact, the successful implementation of these downstream recovery projects is our second most important goal in fiscal year 2011, behind only safety. While we are well known for our processing capacity of metals, we have been increasing our focus on the recovery of valuable plastics as they are replacing metals in many consumer applications and therefore becoming a more significant portion of the waste stream. This, however, is a challenging area, as traditional metals separation technologies do not work for plastics. Furthermore, plastics need to be separated into primary polymers to have any real value in the marketplace and, with the proliferation of plastic types in modern-day life, require a number of sophisticated and expensive separation technologies. Nowhere is this seen quite as starkly as in the processing of waste electronics, which have a very high percentage of plastic material. Glass, such as from television and computer screens, is another significant element of waste electronics, and our investment in new glass recovery and separation technologies has transformed these materials from a waste product to a recovered commodity.
Unfortunately, the combination of material complexity, available technology, regulatory obstacles, and costs does not always make recovery feasible. Consequently, our activities do generate a waste stream. However, the great benefit of recycling to the environment becomes apparent when considering that the 1.8 million tonnes of waste generated in total resulted from the production of 12.9 million tonnes of saleable material.
Despite decreases at its European and Australasian operations, the waste generated by the Company increased slightly overall, compared to fiscal 2009. With fiscal 2010 shipped volumes being generally comparable to fiscal 2009, the increase is attributable to
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   17

 


 

MANAGING SUSTAINABILITY
the Company’s North American operations, primarily due to business acquisitions, as well as improved data collection procedures in fiscal 2010.
Of the Company’s total waste stream, 99.76% consists of simple waste or beneficial use material from our shredding operations. This material is classified as non-hazardous, and is considered beneficial in many landfill uses ranging from hygienic daily cover control to drainage and methane recovery.
It remains of particular concern that increasingly higher government taxes are being applied to this residual waste stream. While it is accepted that government taxes applied to waste disposal in general act as a driver towards recycling, the same taxes when applied to the unavoidable recycling residuals are a bottom line cost to the recycler, thus reducing the recycling outcome that otherwise could be delivered. By way of example, this report highlights the enormous energy and carbon savings that recycling can deliver, along with the preservation of resources and landfill, and governments should consider more sophisticated means of assisting, rather than hindering, the efforts of the recycling industry.
Sims Metal Management does generate a small portion of wastes classified as hazardous, accounting for 0.24% of its global waste stream. These wastes originate from the Company’s WEEE plants in the UK, the CFCs collected from our dedicated fridge recycling plants in Wales, UK, and certain residuals collected for specialised disposal in the USA. The UK fridge units are recycled in a fully enclosed environment and all refrigerants in the cooling circuit, as well as other chlorofluorocarbon compounds trapped in the insulation foam, are collected and sent to special government approved facilities for audited destruction.
KEY ENVIRONMENTAL INDICATORS
ENVIRONMENTAL POLICIES
The Company revised its formal Environmental Policy during fiscal 2010 to more clearly articulate its commitment to protection of the natural environment and to its environmental performance, objectives and targets, as well as the continual improvement of standards and the training and education of all its employees.
While the vast majority of the Company’s operations are located in heavily industrialised or urban areas, and the very nature of its activities aids the conservation of resources and thus biodiversity, the Company recognises that the management of biodiversity is a fundamental part of its public responsibilities. Therefore, it was appropriate that the Company articulated a Biodiversity Policy which, together with its environmental policy and operational guidelines, sets standards for the protection of the environment, habitats and waterways.
Both policies are available on the Company’s website at www.simsmm.com.
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ACCREDITATION
Sims Metal Management continues to pursue feasible and appropriate environmental accreditation across all its operating regions.
NORTH AMERICA — All metal recycling facilities are covered by a rolling five year SHEC plan which is consistent with the core elements of ISO 14001. In fiscal 2011, North America is considering initial implementation at some facilities of a US-based ISO-modelled quality, environmental and safety accreditation system designed specifically for the scrap industry incorporating most ISO parameters. Ten of the 12 SRS facilities in North America have ISO 14001 certification, while the remaining two are scheduled for certification in fiscal 2011.
EUROPE — All metal shredder operations have ISO 14001 accreditation, while all feeder yards meet ISO 9001 standards. The progressive upgrading of these operations to ISO 14001 accreditation is currently under consideration. All SRS operations in the UK and Europe have ISO 14001 accreditation.
AUSTRALASIA — Six of the metal recycling operations have ISO 14001 certification, while all other operations meet the requirements of ISO 9001. All but two of the most recent SRS acquisitions have ISO 14001 accreditation and these are scheduled for accreditation in fiscal 2011. Our aluminium facility also has ISO 14001 accreditation.
AUDIT PROGRAM
All Sims Metal Management sites have an Environmental Management Plan that details, for each facility, the environmental issues that need consideration, the regulatory triggers for those issues, and the measures needed to respond appropriately. While these plans are based around a generic format developed over many years, each plan is tailored to the specific operational, compliance and environmental risk profile of the actual site.
These plans form an important part of our environmental monitoring and control systems that aim to prevent harm from our operations occurring. A central concept is our belief that the primary responsibility for good environmental performance lies firmly with the site, and that site management are the most appropriate persons to deal with such. In doing so, site management has the ability to draw on substantial internal resources available from environmental professionals across the Company, as well as external expertise as required.
To this end, each line manager is tasked with performing periodic environmental audits of his or her site. At many locations, the data is entered into a real-time interactive database which automatically generates follow-up actions, delegates responsibilities and deadlines, and informs responsible management of any deficiencies and corrective actions required. In turn, professionally trained environmental specialists audit these line management audits and conduct independent assessments to ensure comprehensive compliance.
(PERFORMANCE GRAPH)
     
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MANAGING SUSTAINABILITY
(GRAPHIC)
The frequency of these audits is determined based on the site’s risk profile and compliance rating. Discussion with line management is initiated to resolve discrepancies or issues that are identified, identifying the root cause and preventing a recurrence. The system is based around using the audit process as an ongoing education of the Company’s employees, rather than being seen as a punitive measure. The system is fully supported by line management taking ownership of its own operation.
Overall progress and results are reported and discussed monthly by senior management in the region and shared via the regional SHEC committees.
This key environmental management system is supported by several other tools, including a comprehensive and global electronic environmental (and safety) incident reporting system. This system utilises a computer-based data management system that allows information to be shared for learning purposes across the entire Sims Metal Management community. It also allocates responsibilities for corrective actions and deadlines which, if not met, result in the automatic commencement of notification to progressively senior management up to the Group CEO who may, if necessary, communicate same to the Board SHEC Committee.
Each region also operates a rolling five year environmental plan that identifies issues of an environmental nature that are considered of strategic importance for the continual improvement of the Company’s operations.
STATUTORY ENVIRONMENTAL BREACHES
While some environmental incidents did occur within our North American, European and Asia Pacific operations, there were no material statutory breaches.
OCCUPATIONAL HEALTH & SAFETY: KEY INDICATORS AND SAFETY INITIATIVES
Safety is our number one priority. It is a non-negotiable condition of employment and we are committed to a “zero harm” workplace, where every employee, contractor or visitor will return home in the same condition as he or she arrived. These objectives are clearly articulated in our Safety and Health Policy, available on our website at www.simsmm.com and supported by our SHEC “Golden Rules” — 10 key rules which all employees are required to observe.
After many years of reducing our lost time and medically treated injury frequency rates year-on-year, we recognised that a new approach was needed to take the next step towards safety excellence.
Crucial to health and safety is the engagement of the employee and a genuine change in the culture and safety behaviour of every individual. This is not an easy task, nor something that is achieved in a short period of time.
After engaging DuPont Safety Resources (DSR) more than two years ago, the Company embarked on a fundamental revision of all its OH&S systems and core philosophy. While this journey is now well underway, it is by no means complete. Known throughout Global SRS and UK/Europe as the SimsMMway, in North America as SAAFE (Safe Acts Are For Everyone) and in Asia Pacific as TOM — Towards One Million (hours without a reportable injury), the core philosophy is based around the Observational Behaviour Audit (OBA) process — a “felt leadership” tool in which everybody from the Group CEO to shop floor employee engages in observing and discussing safe behaviour in a positive, empowering and non-threatening manner.
Based on the premise that for each lost time injury there are 30,000 unsafe acts, the aim is to identify these unsafe acts and eliminate them so as to prevent an accident before it can occur.
At all our operations, OBAs are conducted throughout the day and recorded at the end of each shift, using the global SHEC database. Root cause analyses are performed for identified unsafe acts and for injuries, and corrective actions are allocated, together with deadlines and responsibilities, Firmly aimed at a “No Repeat” outcome. If a deadline is missed, or a proposed action is not completed, the system automatically elevates the issue to the next in line manager, continuing up to senior executive management level. While this system ultimately ensures that appropriate measures are actioned,
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it also provides for comprehensive reports to be generated in any format. This provides many ways for examining the collected data, resulting in an excellent tool for sharing safety information among all our employees.
While our safety culture is based on an open sharing of ideas in a positive and supportive environment, all employees can, if desired, report any safety concerns anonymously using the Company’s whistleblower reporting systems. Each report triggers a thorough investigation and, in cases where our safety culture is not being recognised and respected by employees or others at a facility, appropriate action is considered and taken.
This framework is complemented by hazard identification (HazReps), job cycle analysis, safety audits and pre-work assessment checks, as well as many other safety initiatives. Collectively, this allows the Company to concentrate on what is known as leading safety indicators — predicting what may happen — as opposed to the traditional lagging indicators — telling what has happened.
The leading indicators are continuously analysed to provide real-time information about possible safety hazards, and to structure inductions, toolbox talks, safety training and other safety communication with a direct and immediate relevance to the safety issues of the day. During fiscal 2010, a total of more than 60,000 OBAs were conducted and analysed, providing valuable insight into where to concentrate our safety efforts and supporting our ongoing efforts in creating a safe working environment.
While we can never stop in striving for a safer workplace, it is pleasing to note that, after many years of little or no change in our safety statistics, the lagging indicators are again reducing. The Lost Time Frequency Rate (LTIFR) — the number of lost time injuries multiplied by one million and divided by the number of hours worked — dropped from 4.8 in fiscal 2009 to 3.2 in fiscal 2010. Equally, the Medically Treated Injury Frequency Rate (MTIFR), similarly defined, fell from 19.4 in fiscal 2009 to 14.2 in fiscal 2010.
The Company also has in place a comprehensive occupational health regime, where pre-employment and regular medical assessments are performed by doctors or qualified occupational hygienists. Specific tests such as audiometry, lung function, blood pressure, repetitive strain and others, are undertaken as needed to identify possible latent injuries or injuries.
In addition to this Company-wide framework, each region continues to add specific initiatives that enhance that region’s particular circumstances.
NORTH AMERICA — The main focus for safety was the continuing implementation of SAAFE, working in consultation with DSR. The program is developed and refined through five process improvement teams (PITs). One PIT has implemented the North America OBA process, while another PIT has implemented the Incident Investigation process, including the use of root cause analysis and the closing out of incidents. The remaining PITs are for the development of rules and procedures, communication tools, and means for identifying and addressing organisational stress and Performance Management issues. The program has been successful in focusing accountability on line managers and supervisors, together with having employees accept responsibility for safety, with a significantly enhanced focus on safe work practices and injury reduction. North America has continued the highly successful “Bootcamp” program, aimed at providing hands-on training in the many SHEC responsibilities that face our front-line management and workers, and how to act on those in a constructive manner.
In North America we achieved a 14% reduction in the All Accident Frequency Rate (AAFR) in fiscal 2010, when compared with fiscal 2009. The AAFR comprises the LTI, MTI and minor injuries frequency rate (minor injuries being those only requiring first aid).
(GRAPHIC)
     
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MANAGING SUSTAINABILITY
EUROPE — Two years ago, the UK metals division and SRS global set themselves a target of achieving a 50% reduction in the AAFR. It is a great testament to all our employees and safety professionals that this goal was achieved. A new strategic safety plan has been formulated for the coming two year period and another 50% reduction in the AAFR has been set as the safety target. The two year safety plan is cascaded into safety plans for each individual operation and further into personal safety plans which are reviewed and discussed on a regular basis and are linked to each employee’s Key Performance Indicators and, consequently, remuneration.
Many employees find conducting peer-to-peer OBAs challenging at a personal level. Therefore, it was decided to identify employees who were comfortable in undertaking them, and have them available as mentors — or “OBA champions” — to the broader workforce. This has proven to be a very positive initiative and has assisted in an accelerated uptake of this important safety tool.
At the end of fiscal 2010, 12 sites within Europe and SRS Global had attained OHSAS 18001 accreditation, the highest safety standard in Europe, with plans for further sites to be accredited in fiscal 2011.
AUSTRALASIA — A new electronic induction system for truck drivers and contractors has been implemented throughout Australasia, allowing the tracking of any driver’s induction record before he or she is allowed to enter an operation.
A program of Safety Champions has been developed and implemented in the yards in conjunction with training, induction and toolbox tools to further the safety message among all employees.
(PHOTO)
The “Hearts and Minds” project Towards One Million (TOM) hours without a reportable incident continues to be on track, supporting our SHEC Golden Rules and emphasising that safety is a condition of employment.
PEOPLE AND DIVERSITY
EMPLOYEE RETENTION
The strength of Sims Metal Management lies firmly with the approximately 5,600 people who make up the Company. Their skills, dedication and pursuit of excellence, together with the cultural and social diversity they represent, are key components in the performance culture that has served the Company well over many years and which continues to make it stand out among its peers.
While the economic environment remains challenging in developed economies around the world, it did not result in a contraction of our workforce in fiscal 2010. Total turnover remained relatively steady, mostly due to staff leaving voluntarily in basic production related activities.
Talent management and employee satisfaction are major priorities for Sims Metal Management. All salaried staff participate in annual performance assessments where job performance and career aspirations are constructively discussed with the one-up manager, and opportunities identified along with any training and/or further education that may be required. Many of our employees have been with the Company for 15 years or more, with several commencing in one of our trainee programs and working their way up into senior management positions, supported by both internal and externally delivered education programs, as well as mentoring schemes. While the Company has a policy of promoting from within, it supplements this with external recruitment. The relatively unique nature of our business means that there is often not a sufficient pool of experienced people to draw from. The Company therefore operates a number of well established programs to identify, hire and develop talented graduates in conjunction with tertiary education institutions.
Our formal grievance and fair treatment policy and procedures, together with its confidential complaints hotline, ensure that any employee concern is handled promptly, constructively and professionally without fear of retribution.

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DIVERSITY
Close to 70% of our workforce is employed directly in production and, while gender equality and its promotion are priorities for Sims Metal Management, allowances must be made for the undeniably physical nature of this work, which presents an ongoing challenge in attracting female staff to yard positions.
HUMAN RIGHTS
Sims Metal Management is committed to being a respected and responsible corporate citizen by working constructively with its communities and other stakeholders and engaging in the honest and ethical conduct of its business. In this regard, we recognise that each employee is a representative of the Company and is required to act with courtesy, respect and integrity in all internal and external dealings. Furthermore, we are committed to respecting, promoting and upholding fundamental human rights, as set out in the UN Declaration of Human Rights and further defined in the OECD Guidelines for Multinational Enterprises. These commitments, as well as their specific application to our employees, are articulated in our Human Rights Policy, our Community Policy and our Code of Conduct, all available on our website at www.simsmm.com. Specifically, we recognise and uphold:
  the right to equal opportunity and non-discrimination;
 
  the right to security of persons;
 
  the right to a safe and healthy workplace;
 
  the right to adequate remuneration; and
 
  the legal rights of our people pertaining to the workplace in the regions in which we operate.
Sims Metal Management is also specifically committed to the prohibition and elimination of child and forced and compulsory labour throughout the communities in which it operates, and does not, to the extent of its ability, support products that rely on inappropriate labour processes.
TRAINING AND DEVELOPMENT
In support of our people, their careers and our corporate vision, Sims Metal Management provides a range of comprehensive and ongoing training programs.
(PHOTO)
When joining the Company, all employees receive comprehensive induction training in the critical aspects of safety, environment and community. As an employee progresses through his or her career, refresher courses are provided on a regular basis, along with other job relevant training, allowing the employee to pursue professional enhancement and work skills.
During fiscal 2010, close to 240,000 hours of training was delivered, covering a range of issues. It should be noted that these training hours relate to corporate training only and exclude specific operational enhancement skills, which comprises many more training hours. The significant increase in the reported training hours delivered in fiscal 2009, as indicated in the table on page 10, reflects better tracking of these hours. A very large portion of this training (218,478 hours) was specifically related to safety training, again reflecting the high emphasis that Sims Metal Management places on the safety of its workers and in developing a genuine safety conscious culture.
Other training ranged from compliance matters such as Code of Conduct and Anti-Corruption Code training, to job enhancement training such as performance management, leadership and conflict resolution, and time management skills.
     
SIM METAL MANAGEMENT ANNUAL REPORT 2010   23

 


 

CORPORATE GOVERNANCE STATEMENT
The directors and management of Sims Metal Management Limited are committed to operating the Company’s business ethically and in a manner consistent with high standards of corporate governance. The directors consider the establishment and implementation of sound corporate governance practices to be a fundamental part of promoting investor confidence and creating value for shareholders, through prudent risk management and a culture which encourages ethical conduct, accountability and sound business practices. Sims Metal Management Limited’s corporate governance statement for the 2010 financial year has been prepared with reference to the Australian Securities Exchange (ASX) Corporate Governance Council Corporate Governance Principles and Recommendations, 2nd edition (August 2007) (Recommendations). Sims Metal Management Limited has complied with the Recommendations.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
1.1 BOARD OF DIRECTORS
The board is responsible for the corporate governance and overall performance of the Company and the Group and for providing strategic guidance for the Group. The board’s responsibilities encompass the setting of key objectives, monitoring performance and ensuring the Group’s internal control, risk management and reporting procedures are adequate and effective.
1.2 THE ROLE AND RESPONSIBILITIES OF THE BOARD AND SENIOR EXECUTIVES
The role and responsibilities of the board are formally set out in its charter. The board charter identifies the functions reserved for the board and those delegated to senior executives.
The board’s key responsibilities include:
  overall corporate governance of the Group, including oversight of its control and accountability systems;
  appointing, removing and appraising the performance of the Group Chief Executive Officer (CEO);
  monitoring senior management’s performance and implementation of strategy, and ensuring appropriate resources are available;
  enhancing and protecting the reputation of the Company by reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct, and legal compliance; and
  approving and monitoring the progress of major capital expenditure, capital management, acquisitions and divestitures, and financial and other reporting.
The board has delegated general authority to manage the businesses of the Company to the CEO, who in turn may delegate functions to other senior management. However, the CEO remains answerable to the board and must comply with any limits on his authority established by the board from time to time.
Letters of appointment have been provided to all non-executive directors, covering responsibilities, time commitments, performance evaluation, indemnity and insurance arrangements, and induction and development. The responsibilities and terms of employment of the CEO, the Group Chief Financial Officer (CFO) and certain other senior executives of the Group are also set out in formal contracts of employment.
1.3 PERFORMANCE EVALUATION OF SENIOR EXECUTIVES
Annual performance objectives are set each financial year for all senior executives of the Group. These performance objectives include both financial and non-financial measures. A year-end appraisal is conducted to assess performance against the executive’s personal priorities and the responsibilities and demands of their role. The outcome of the performance review process is reflected in tailored training and development programs and succession planning for each executive, as well as an annual remuneration review. For the 2010 financial year, annual performance reviews were completed in August 2010, in accordance with the process disclosed.
The Remuneration Report on pages 38 to 55 contains further information regarding the process for evaluating the performance of senior executives for the purpose of determining their fixed and variable remuneration.
1.4 EXECUTIVE INDUCTION PROGRAMS
Senior executives are able to attend formal induction programs which provide an overview of the Group, and its key policies and processes. Meetings are arranged with other senior executives in the Group to brief the new executives on the Group’s businesses, strategic objectives, risk management practices and other information necessary to meet the requirements of their roles. Site visits are also arranged to familiarise the executives with the Group’s operations and key operating personnel.
A copy of the board charter is available from the corporate governance section on the Company’s website.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
2.1 COMPOSITION OF THE BOARD
The board charter sets out the composition of the board and relevant criteria for assessing the independence of directors.
The board currently comprises nine non-executive directors and one executive director. Details of board members, including their skills, experience, qualifications and terms in office, are set out on pages 34 and 35.
2.2 BOARD ACCESS TO INFORMATION AND INDEPENDENT ADVICE
A director may, at the Company’s expense and subject to prior approval of the Chairperson, obtain independent professional advice relating to his or her duties and obligations as a board member. Board committees may also seek such independent professional advice. To the extent required to enable them to carry out their duties, all directors and board committees also have access to Company information and records and may consult senior management as required.

 


 

2.3 INDEPENDENCE OF DIRECTORS
The board charter states that board members shall be considered independent if they do not have any of the relationships identified in Box 2.1 of the Recommendations, and have been determined by the board to be independent, as defined in and to the extent required by the applicable rules of the United States Securities and Exchange Commission (SEC), the listing standards of the New York Stock Exchange, Inc. (NYSE) and other applicable laws and regulations, as they may be amended from time to time.
Having regard to these criteria, the board has determined that Messrs Paul Varello, Michael Feeney, Gerald Morris, Robert Lewon, Geoffrey Brunsdon and Jim Thompson were independent non-executive directors of the Company during the 2010 financial year. Mr Daniel Dienst, the CEO, is currently an executive director of the Company.
Mr Norman Bobins held the positions of President and Chief Executive Officer of LaSalle Bank Corporation (LaSalle) from 2002 to May 2007 and of Chairman from May 2007 until October 2007, at which time LaSalle was acquired by Bank of America (BoA). The Company has a US$200 million credit facility with BoA that was established by the former Sims Group Limited in September 2006. The Company also has a cash management services agreement in place with BoA, and processes cheque transactions and utilises lockbox services from BoA for certain of its subsidiaries in the United States. Transfer agent services previously utilised at LaSalle by the former Metal Management, Inc. were discontinued in March 2008. The board has determined that Mr Bobins is an independent non-executive director based on the fact that he was appointed a director of the Company in March 2008, well after the former Sims Group Limited had established the credit facility with BoA and that, in any event, he has no relationship with those responsible within BoA for that facility and, further, that the cash management systems relied upon at BoA by certain subsidiaries of the Company are non-material and routine in nature, and are determined by the Company acting at arm’s-length with BoA.
Mr Paul Sukagawa, a non-executive director, is not considered to be an independent director of the Company as a result of his association with Mitsui & Co., Ltd, which, through its affiliates, owns an 18% shareholding in the Company.
Notwithstanding the fact that Mr Christopher Renwick is a nominee of Mitsui & Co., Ltd, the board has determined that he is an independent non-executive director. This view has been reached as Mr Renwick is not, and may not be, in accordance with the constitution of the Company, an Associate of the Mitsui Group (as those terms are defined in the constitution of the Company), and because Mr Renwick regards himself as an independent director.
In accordance with Recommendation 2.1, the board has a majority of directors who are independent.
The independence of the directors is regularly reviewed. In accordance with the board charter, all directors must disclose to the board any actual or perceived conflicts of interest, whether of a direct or indirect nature, of which the director becomes aware and which the director reasonably believes may compromise the reputation or performance of the Company.
2.4 CHAIRPERSON
Mr Paul Varello, an independent non-executive director, has held the position of Chairperson of the board since 1 August 2009. Prior to that, Mr Paul Mazoudier, an independent non-executive director, held that position.
The roles of CEO of the Company and Chairperson of the board are separate, and the Chairperson must not also be the CEO. The Chairperson is responsible for the leadership of the board, establishing the agenda for board meetings, ensuring the board is effective, and chairing board and shareholders’ meetings.
2.5 BOARD PROCESSES
The board holds at least four scheduled meetings a year, and otherwise as it considers necessary. Details of directors’ attendances at board meetings in the 2010 financial year are reported on page 36.
To assist directors in enhancing their understanding of the Company’s business, directors are briefed from time to time by members of the executive team on divisional performance and key operational and strategic issues, financial matters, risk management, compliance and governance. The directors are also provided with an explanation of those proposed activities of the Group which require board approval.
The Group Company Secretary is responsible for ensuring that board procedures and policies are followed, and provides advice to the board on corporate governance and regulatory matters. All directors have unrestricted access to the advice and services of the Group Company Secretary.
2.6 BOARD COMMITTEES
The board has established five board committees to assist in the execution of board functions. Each committee has a written charter which is approved by the board and reviewed periodically. The charters of each of the board committees are available on the Company’s website.
Membership of the board committees is set out in the biographies of directors on pages 34 and 35.
Details of directors’ attendance at each committee meeting in the 2010 financial year are set out on page 36.
To enable each of the committees to discharge its responsibilities adequately and effectively, each committee has the authority to retain advisers and external legal counsel as required.
Each committee reports to the board and, following preparation of the minutes of each committee meeting, provides the board with copies of those minutes at the next occasion the board meets.
2.7 NOMINATION/GOVERNANCE COMMITTEE
The Nomination/Governance (Nom/Gov) Committee is responsible for recommending new nominees for membership of the board in accordance with the
     
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CORPORATE GOVERNANCE STATEMENT
committee’s Policy and Procedures for the Selection and Appointment of New Directors and the Re-election of Incumbent Directors. The Nom/Gov Committee also assesses necessary and desirable competencies of board members.
The Nom/Gov Committee is also responsible for reviewing the corporate governance procedures of the Company and recommending changes to the board as appropriate; developing a plan for Board succession, including the succession of the Chairperson of the Board and the CEO of the Company, and monitoring succession plans for the Company’s management levels and key resources; and establishing procedures for and overseeing the evaluation of the board.
The Nom/Gov Committee has a formal charter, a copy of which is available from the corporate governance section on the Company’s website, approved by the board.
COMPOSITION
The Nom/Gov Committee shall comprise at least three directors of the Company, with a majority being independent. The current members of the Nom/Gov Committee are Messrs Robert Lewon (Chairperson), Paul Varello, Gerald Morris and Michael Feeney, all independent non-executive directors, and Mr Daniel Dienst. The board may appoint additional directors to the Nom/Gov Committee or remove and replace members of the Nom/Gov Committee by resolution. The Nom/Gov Committee Chairperson shall not be the Chairperson of the board.
MEETINGS OF THE NOMINATION/GOVERNANCE COMMITTEE
The committee charter provides that the Nom/Gov Committee shall meet at least twice each year on a formal basis and additionally as circumstances may require. The Nom/Gov Committee met four times during the 2010 financial year.
2.8 BOARD PERFORMANCE EVALUATION
The Nom/Gov Committee is responsible for establishing procedures and overseeing the evaluation of the board. A formal performance evaluation was conducted involving the directors self-assessing the collective performance of the board. As part of the review process, directors were also asked to assess the board’s composition and structure, and any areas where the board’s effectiveness could be improved. The results of the evaluation, and individual committee assessments, were independently documented and will form the basis for the development of appropriate action plans under the guidance of the Nom/Gov Committee for the 2011 financial year.
2.9 RETIREMENT AND RE-ELECTION OF DIRECTORS
The Nom/Gov Committee considers and nominates to the board candidates for election as directors. The Company’s constitution requires that non-executive directors appointed by the board during the year must offer themselves for election by shareholders at the next Annual General Meeting of the Company. In addition, a non-executive director may not serve without seeking re-election beyond the third Annual General Meeting following the meeting at which the director was last elected or re-elected, or three years, whichever is longer. At least one director, other than the CEO, must retire at each Annual General Meeting. Retiring directors may offer themselves for re-election by the shareholders. The board does not impose a pre-determined restriction on the tenure of directors as it considers that this restriction may result in the loss of vital experience and expertise.
2.10 DIRECTOR EDUCATION
A new board member orientation process has been established to provide new directors with an understanding of, and insight into, the industry, Company, management and control environment of the Group. As part of this process, directors receive a new board member orientation binder, meet with key senior executives and are given the opportunity to conduct site visits at significant operational facilities in various locations.
PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING
3.1 CODE OF CONDUCT
The Company’s Code of Conduct applies to all directors, officers and employees of the Group. It underpins Sims Metal Management Limited’s commitment to integrity, fair dealing and compliance with the law in its business affairs, and sets out expected standards of conduct with respect to all stakeholders, including fellow employees, customers, suppliers, shareholders and the community.
The Code of Conduct is designed to encourage ethical and appropriate behaviour by all Group personnel, and addresses a wide range of responsibilities to stakeholders, including conflicts of interest, security of information, use of Company assets and resources, discrimination and harassment, occupational health and safety, and the prohibition of corrupt conduct and the consequences in the event thereof.
The Code of Conduct encourages employees to raise any matters of concern without fear of retribution. The Company has implemented the Sims Metal Management Limited Ethics & Compliance Hotline to enable employees to report serious misconduct or unethical behaviour within the Group to an external third party. The Company also conducts employee education and compliance programs on a regular basis to help ensure compliance with various laws around the world.
3.2 ANTI-CORRUPTION CODE
In addition to the Code of Conduct, the Company has adopted an Anti-Corruption Code which has been developed to aid Sims Metal Management Limited employees, agents, contractors, consultants and partners in ensuring that they comply at all times with applicable anti-corruption laws and policies. Among other matters, the Code of Conduct sets out the Company’s policy in relation to conflicts of interests, gifts and hospitality, relationships with governments and political contributions.

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Copies of the Company’s Code of Conduct and Anti-Corruption Code are available from the corporate governance section on the Company’s website.
3.3 DEALING IN COMPANY SECURITIES
Directors and employees of the Group are bound by the Company’s policy on dealing in the securities of the Company. Under the policy, directors, senior executives and other designated persons may only buy or sell Company securities during the period 24 hours to 28 days after the release of the Company’s yearly, half-yearly or quarterly results announcements or during such period following the conclusion of the Company’s Annual General Meeting, or during the currency of any capital raising prospectus issued by the Company or takeover bid for the Company.
A copy of the Company’s policy titled ‘Dealing in Sims Metal Management Limited Securities’ is available from the corporate governance section on the Company’s website.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
4.1 RISK, AUDIT & COMPLIANCE COMMITTEE
The Risk, Audit & Compliance (RAC) Committee assists the board in fulfilling its responsibility to oversee the quality and integrity of accounting, auditing and reporting practices of the Company. In particular, the primary role of the RAC Committee is to assist the board in fulfilling its corporate governance and oversight responsibilities in relation to the Company’s accounting and financial reporting, internal control structure, risk management systems (including the review of risk mitigation, which includes commercial insurance coverage), internal and external audit functions, and compliance with legal and regulatory requirements.
The RAC Committee has a formal charter approved by the board. The RAC Committee reports to the board on all matters relevant to the RAC Committee’s role and responsibilities. The specific functions of the RAC Committee are set out in its charter and include:
  reviewing and assessing the internal and external reporting of financial information;
 
  assessing management processes supporting the integrity and reliability of the Company’s financial and management reporting systems and its external reporting;
 
  overseeing the relationship with and performance of the external auditor and assessing the independence of the external auditor; and
 
  overseeing the performance of the internal audit function.
The RAC Committee charter establishes a framework for the RAC Committee’s relationship with the internal and external auditor, and a policy has been adopted for the selection and appointment of the external auditor and for rotation of external audit engagement partners.
A copy of the RAC Committee charter is available from the corporate governance section on the Company’s website.
4.2 COMPOSITION
The RAC Committee charter provides for the RAC Committee to have at least three members, all of whom must be non-executive independent directors. The current members of the RAC Committee are Messrs Gerald Morris (Chairperson), Michael Feeney, Jim Thompson and Geoffrey Brunsdon, all of whom are non-executive independent directors. Further, all members must be financially literate and at least one member must have accounting or related financial management expertise. Messrs Morris, Feeney and Brunsdon satisfy this requirement. Under the RAC Committee charter, a director may not be both the Chairperson of the RAC Committee and the Chairperson of the board.
4.3 MEETINGS OF THE RAC COMMITTEE
In accordance with its charter, the RAC Committee is required to meet at least four times each year on a formal basis, and holds additional meetings as necessary. Meetings are attended by invitation by the other directors, the CEO, the CFO, internal auditors and the external auditor, PricewaterhouseCoopers (PwC).
The RAC Committee met seven times during the 2010 financial year. Details of attendance at meetings of the RAC Committee are set out on page 36.
4.4 EXTERNAL AUDITOR
The external auditor is responsible for planning and carrying out the audit of the Group’s annual financial reports and reviewing the Group’s half-yearly financial reports. The auditor provides a written confirmation to the Company of its independence in connection with the Company’s financial reports for each half-year and financial year.
The external auditor, PwC, was appointed in 1991. The lead external audit engagement partner is next due for rotation after the 2012 financial year.
The RAC Committee may meet with the external auditor without management being present at any time during each financial year. The external auditor is also provided with the opportunity, on request, to meet with the board of directors without management being present.
The Company has adopted a policy titled ‘Procedures for the Selection and Appointment of the External Auditors and for the Rotation of External Audit Engagement Partners’, a copy of which is available from the corporate governance section on the Company’s website.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
5.1 CONTINUOUS DISCLOSURE
The Company is committed to ensuring that the market and its shareholders are provided with complete and timely information. The Company has adopted a Market Disclosure Policy, supplemented by specific procedures, to ensure that it complies with the continuous disclosure obligations imposed by the ASX, and with its disclosure obligations under the rules and regulations of the SEC and the NYSE. A copy of the policy is available from the corporate governance section on the Company’s website.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   27


 

CORPORATE GOVERNANCE STATEMENT
The Company has formed a Disclosure Committee comprising the CEO (as Chairperson), the CFO and the Group Company Secretary. The committee has a formal charter approved by the board. The primary role of the committee is to manage the Company’s compliance with its continuous disclosure obligations by implementing reporting processes and controls and determining guidelines for the release of disclosable information.
The Group Company Secretary has been appointed as the person responsible for communications with the ASX, SEC and NYSE, which includes overseeing and co-ordinating information disclosure to the ASX, SEC and NYSE.
All announcements provided to the ASX are posted on the Company’s website as soon as practicable after release to the market.
5.2 COMMENTARY ON FINANCIAL RESULTS AND PERIODIC DISCLOSURE
Sims Metal Management Limited strives to provide investors with sufficient information to make an informed assessment of the Company’s activities and results. Results announcements and media/analyst presentations are released to the ASX, SEC and NYSE and made available on the Company’s website. The Annual Report contains an operating and financial review to assist shareholders in understanding the Company’s operating results, business strategies, prospects and financial position.
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
6.1 COMMUNICATION WITH SHAREHOLDERS
The Company has adopted a statement on communication with shareholders which is designed to promote effective communication with shareholders and to encourage informed shareholder participation at the Annual General Meeting. A copy of the statement is available from the corporate governance section on the Company’s website.
Where practical, the Company uses technology to facilitate communication with shareholders. The Company’s website includes links to announcements to the ASX and copies of the annual, half-yearly and quarterly reports, notices of meetings, presentations and other information released to the market. By registering with the Company’s registrar, shareholders can receive email notifications when the Company makes an announcement to the ASX, including the release of financial reports. Sims Metal Management Limited’s Annual Report currently remains one of the principal means of communicating with shareholders. The Company also files a report on Form 20-F annually with the SEC.
The Company continues to review and enhance its website and to consider other ways to utilise technology to improve shareholder communication. Webcasts of results briefings allow access by all interested parties.
6.2 SHAREHOLDER MEETINGS
Shareholders have the opportunity to raise matters with the members of the board at the Company’s Annual General Meeting. The external audit firm partner in charge of the Sims Metal Management Limited audit also attends the Annual General Meeting and is available to answer questions from shareholders on audit-related matters.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
7.1 RISK MANAGEMENT FRAMEWORK
The board recognises that the effective management of risk is essential to achieving the Group’s objectives of maximising Group performance and creating long-term shareholder value while meeting its commitments to other stakeholders, including its employees, customers and the wider community.
The Company has adopted a Risk Management Policy and a statement on internal compliance and control systems.
The board is responsible for ensuring that there are adequate policies in place with respect to risk management. The board and senior management are responsible for determining the level of risks acceptable to Sims Metal Management Limited.
To help ensure all risks relevant to the Company are considered, a systematic approach to risk identification is followed. Identifiable risk areas which are considered include:
  maintaining a safe work environment for the Company’s employees;
 
  the safeguarding and efficient use of assets;
 
  management of human resources;
 
  ensuring the Company complies with its environmental obligations;
 
  achieving established objectives and goals;
 
  the reliability and integrity of financial and operational information;
 
  compliance with internal policies and procedures;
 
  compliance with laws and regulations; and
 
  changes in the Company’s internal and external environments.
Measures of consequence and likelihood have been determined and are used on a consistent basis.
The Company’s primary risk assessment process comprises a comprehensive annual risk review.
The board is responsible, on the recommendations of the RAC Committee, for ensuring that there are adequate policies in place in relation to internal control systems over financial reporting. The board places considerable importance on maintaining a strong internal control environment. The internal control system is based upon written procedures, policies, guidelines, job descriptions and organisational structures that provide an appropriate division of responsibility. It also relies upon the careful selection and training of key personnel.

28


 

Internal control systems are reviewed on an ongoing basis to ensure that the systems are updated to reflect changes in Sims Metal Management Limited’s operations and the environment in which the Company operates. The Company has detailed written documentation covering critical areas. Internal Audit carries out regular systematic monitoring of control activities and reports to the RAC Committee and senior management. In the 2009 and 2010 financial years, the Company validated its internal controls over financial reporting as required under the Sarbanes-Oxley Act of 2002.
An internal audit plan is prepared, with input from the RAC Committee and senior management, annually by the Global Head of Internal Audit. This annual internal audit plan takes into consideration the findings of an annual risk assessment report prepared by senior management. The RAC Committee approves this annual internal audit plan.
Sustainability reporting is part of, and is integrated into, the Group’s risk management framework. The Group’s sustainability report, which provides stakeholders with an overview of Sims Metal Management Limited’s sustainability performance, is found on pages 8 to 23. The CEO has overall responsibility for Group sustainability matters, and a number of initiatives have been implemented to better enable the Group to measure, monitor and report on its sustainability performance.
SAFETY, HEALTH, ENVIRONMENT & COMMUNITY COMMITTEE
The board has established a Safety, Health, Environment & Community (SHEC) Committee.
The primary role of the SHEC Committee is to provide additional focus and advice to the board on key SHEC issues and to assist the board to fulfil and discharge its SHEC obligations.
The SHEC Committee shall comprise at least three directors of the Company, of whom one at least shall be independent. The SHEC Committee is composed of Messrs Christopher Renwick (Chairperson), Robert Lewon, Jim Thompson, Paul Sukagawa and Daniel Dienst.
FINANCE & INVESTMENT COMMITTEE
The board has established a Finance & Investment (FIC) Committee. The primary role of the FIC Committee is to review, advise and report to the board on the management of the Company’s financial resources and invested assets, shareholder dividend policy and shareholder dividends, the Company’s capital plan and capital position, debt levels, hedging policies and other financial matters. The FIC Committee also reviews broad investment policies and guidelines for the Group and makes recommendations to the board.
The FIC Committee shall comprise at least three directors of the Company, of whom one at least shall be independent. The FIC Committee is composed of Messrs Norman Bobins (Chairperson), Robert Lewon, Paul Sukagawa, Christopher Renwick, Geoffrey Brunsdon and Daniel Dienst.
FINANCIAL REPORTING AND INTERNAL CONTROLS
The board has responsibility for reviewing and ratifying internal compliance and control systems.
The RAC Committee reviews the effectiveness and adequacy of internal control processes relating to financial reporting on a regular basis and reports its findings to the board.
Management assumes the primary responsibility for implementing internal controls and for the internal control environment. In accordance with the Company’s policy, each regional President and regional Chief Financial Officer reports every six months to the CEO and the CFO and, if any exceptions, to the RAC Committee, on the operation and effectiveness of key internal controls. Any identified deficiencies in internal controls are followed up and addressed by division management.
In addition, the Company maintains an internal audit function to conduct internal audits and reviews of the Group’s operations.
The RAC Committee reviews the reports from the internal audit function on a regular basis, monitors its scope and resources, and approves the annual internal audit plan.
The Company monitors its control system on a continual basis and, where appropriate, enhances internal control processes to improve their effectiveness.
7.2 RISK MANAGEMENT ASSURANCE
The CEO and the CFO have stated in writing to the board in respect of the 2010 financial year that the Company’s financial reports present a true and fair view, in all material respects, of the Company’s financial condition and operational results and are in accordance with relevant accounting standards.
The board has also received a written statement of assurance from the CEO and the CFO that, in respect of the 2010 financial year, to the best of their knowledge and belief:
1.   the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal compliance and control which, in all material respects, implements the policies adopted by the board; and
 
2.   the Group’s risk management and internal compliance and control system for the financial year is operating effectively in all material respects in relation to financial reporting risks.
Due to the geographic spread of the Group’s operations and the extensive delegation of authority and responsibility granted to senior business unit management, the CEO and the CFO, when attesting to the adequacy of the Company’s risk management and internal compliance and control system, rely significantly upon internal audit and the control certification reports received from each regional President and regional Chief Financial Officer regarding compliance with the
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   29

 


 

CORPORATE GOVERNANCE STATEMENT
various risk management, compliance and internal control policies and procedures in the region for which each is responsible.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
8.1 REMUNERATION COMMITTEE
The primary role of the Remuneration Committee (Remco) is to support and advise the board on the implementation and maintenance of coherent, fair and responsible remuneration policies at Sims Metal Management Limited which are observed and which enable it to attract and retain executives and directors who will create value for shareholders of the Company.
Remco has responsibility for, among other things, reviewing and making recommendations to the board on the:
  remuneration and incentive performance packages of the CEO and direct reports to the CEO;
 
  Company’s recruitment, retention and termination policies and procedures;
 
  introduction and application of equity-based schemes, including allocations; and
 
  level of annual fees paid to the non-executive directors.
8.2 COMPOSITION
Remco shall comprise at least three directors of the Company, with a majority being independent. The Remco Chairperson is appointed by the board, and must be independent. Remco is composed of three independent non-executive directors, Messrs Michael Feeney (Chairperson), Paul Varello and Gerald Morris. The board may appoint additional directors to Remco or remove and replace members of Remco by resolution.
8.3 MEETINGS OF THE REMUNERATION COMMITTEE
Remco has a charter, which provides for Remco to meet at least twice each year on a formal basis and additionally as circumstances may require. Details of the number of Remco meetings held, and attendance at those meetings, during the 2010 financial year are set out on page 36.
A copy of the Remco charter is available from the corporate governance section on the Company’s website.
8.4 DIRECTORS’ REMUNERATION
The Remuneration Report sets out the total remuneration of non-executive and executive directors of the Company. Each of the non-executive directors is entitled to a fee for serving as a director of the Company and an additional fee for serving as Chairperson of a board committee. These fees are inclusive of any compulsory superannuation contributions (where applicable) and any retirement benefits. In general, no additional fees are payable to non-executive directors for other services performed outside the scope of their ordinary duties as a director or committee member.
The maximum aggregate remuneration of non-executive directors is determined by a resolution of shareholders and is then divided between the directors as agreed by the board. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned among non-executive directors is reviewed annually by Remco and recommendations are then made to the board. The board considers advice as to the fees paid to non-executive directors of comparable companies when undertaking the annual review process. When considered appropriate to do so, it will also obtain advice from external consultants.
8.5 REMUNERATION REPORT
The Company’s remuneration policy and procedures in respect of senior executives of the Company and Group are discussed in its Remuneration Report for the 2010 Financial year, which is set out on pages 38 to 55.
The Company’s statement prohibiting designated persons from entering into transactions in products associated with Company securities which operate to limit the economic risk of their security holding in the Company over unvested entitlements under any Company equity incentive plans, may be found in the Company’s policy titled ‘Dealing in Sims Metal Management Limited Securities’, available from the corporate governance section on the Company’s website.

30


 

ASX CORPORATE GOVERNANCE COUNCIL’S CORPORATE GOVERNANCE PRINCIPLES AND RECOMMENDATIONS
         
    Reference   Comply
Principle 1: Lay solid foundations for management and oversight
       
1.1 Establish and disclose the functions reserved to the board and those delegated to senior executives
  1.1, 1.2   ü
 
       
1.2 Disclose the process for evaluating the performance of senior executives
  1.3,    
 
  Remuneration    
 
  Report   ü
 
       
1.3 Provide the information indicated in the Guide to reporting on Principle 1
  website, 1.1-1.4   ü
 
       
Principle 2: Structure the board to add value
       
2.1 A majority of the board should be independent directors
  2.3   ü
 
       
2.2 The chair should be an independent director
  2.4   ü
 
       
2.3 The roles of chair and CEO should not be exercised by the same individual
  2.4   ü
 
       
2.4 The board should establish a nomination committee
  2.6, 2.7, 2.9   ü
 
       
2.5 Disclose the process for evaluating the performance of the board, its committees and individual directors
  2.8, 2.10   ü
 
       
2.6 Provide the information indicated in the Guide to reporting on Principle 2
  website,    
 
  Directors’    
 
  Report, 2.1-2.10   ü
 
       
Principle 3: Promote ethical and responsible decision-making
       
3.1 Establish a code of conduct and disclose the code or a summary of the code as to the practices necessary to maintain confidence in the company’s integrity, the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders, and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices
  3.1, 3.2   ü
 
       
3.2 Establish and disclose a policy concerning trading in company securities by directors, senior executives and employees
  3.3   ü
 
       
3.3 Provide the information indicated in the Guide to reporting on Principle 3
  website, 3.1-3.3   ü
 
       
Principle 4: Safeguard integrity in financial reporting
       
4.1 The board should establish an audit committee
  4.1   ü
 
       
4.2 The audit committee should be structured to consist only of non-executive directors, a majority of independent directors and an independent chair (who is not chair of the board), and to have at least three members
  4.2   ü
 
       
4.3 The audit committee should have a formal charter
  4.1   ü
 
       
4.4 Provide the information indicated in the Guide to reporting on Principle 4
  website, 4.1-4.5   ü
 
       
Principle 5: Make timely and balanced disclosure
       
5.1 Establish and disclose written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance
  5.1, 5.2   ü
 
       
5.2 Provide the information indicated in the Guide to reporting on Principle 5
  website, 5.1, 5.2   ü
 
       
Principle 6: Respect the rights of shareholders
       
6.1 Design and disclose a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings
  6.1, 6.2   ü
 
       
6.2 Provide the information indicated in the Guide to reporting on Principle 6
  website, 6.1, 6.2   ü
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   31

 


 

CORPORATE GOVERNANCE STATEMENT
         
    Reference   Comply
Principle 7: Recognise and manage risk
       
7.1 Establish policies for the oversight and management of material business risks and disclose a summary of those policies
  7.1   ü
 
       
7.2 The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively and should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks
  7.1, 7.2   ü
 
       
7.3 The board should disclose whether it has received assurance from the CEO and CFO that the declaration provided in accordance with section 295A of the Corporations Act 2001 is founded on a sound system of risk management and internal control which is operating effectively in all material respects in relation to financial reporting risks
  7.2   ü
 
       
7.4 Provide the information indicated in the Guide to reporting on Principle 7
  website, 7.1, 7.2   ü
 
       
Principle 8: Remunerate fairly and responsibly
       
8.1 The board should establish a remuneration committee
  8.1   ü
 
       
8.2 Clearly distinguish the structure of non-executive director remuneration from that of executive directors and senior executives
  8.4,
Remuneration Report
  ü 
 
       
8.3 Provide the information indicated in the Guide to reporting on Principle 8
  website, 8.1-8.5   ü

32


 

FINANCIAL REPORT
CONTENTS
             
Board of Directors     34  
Directors’ Report     36  
Consolidated Income Statements     56  
Consolidated Statements of Comprehensive Income     57  
Consolidated Statements of Financial Position     58  
Consolidated Statements of Changes in Equity     59  
Consolidated Statements of Cash Flows     60  
Notes to the Consolidated Financial Statements        
1
  Summary of significant accounting policies     61  
2
  Financial risk management     72  
3
  Critical accounting estimates and judgements     77  
4
  Segment information     78  
5
  Revenue     81  
6
  Other income     81  
7
  Expenses     82  
8
  Income tax and deferred tax     83  
9
  Trade and other receivables     86  
10
  Inventory     87  
11
  Other financial assets and liabilities     87  
12
  Property, plant and equipment     88  
13
  Goodwill     89  
14
  Intangible assets     90  
15
  Trade and other payables     91  
16
  Borrowings     91  
17
  Provisions     91  
18
  Retirement benefit obligations     92  
19
  Contributed equity     95  
20
  Reserves and retained earnings     96  
21
  Dividends     97  
22
  Contingencies     98  
23
  Commitments     98  
24
  Share ownership plans     99  
25
  Key management personnel disclosures     103  
26
  Remuneration of auditors     106  
27
  Business combinations and disposals     106  
28
  Subsidiaries     108  
29
  Investments in associates and jointly controlled entities     111  
30
  Related party transactions     113  
31
  Parent entity financial information     114  
32
  Earnings per share     115  
33
  Cash flow information     115  
34
  Events occurring after the reporting period     116  
Directors’ Declaration     117  
Independent Auditor’s Report     118  
Auditor’s Independence Declaration     120  
Annual Financial Report Extracts presented in US Dollars     121  
Shareholder Information     125  
Five Year Trend Summary     127  
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   33

 


 

BOARD OF DIRECTORS
                 
 
          Appointed as a director    
 
  Executive Director and       in November 2009.    
 
  Group Chief Executive       Member of the Risk, Audit    
 
  Officer since March 2008.       & Compliance Committee    
 
  Member of the Safety,       and Finance & Investment    
 
  Health, Environment &       Committee. Until June    
 
  Community Committee,   Appointed as a director in   2009, Mr Brunsdon was    
 
  Nomination/Governance   March 2008. Chairman of   Managing Director and    
 
  Committee and Finance &   the Finance & Investment   Head of Investment    
 
  Investment Committee.   Committee. He was   Banking of Merrill    
 
  Mr Dienst was formerly   formerly a director of   Lynch International    
 
  a director (since June   Metal Management, Inc   (Australia) Limited. He is    
 
  2001), Chairman (since   (since 2006). Mr Bobins is   Chairman of ING Private    
 
  April 2003), Chief   the Chairman of Norman   Equity Access Limited    
 
  Executive Officer   Bobins Consulting LLC   (since 2004), a director of    
 
  (since January 2004)   (since 2008). From May   APN Funds Management    
 
  and President (since   2007 until October   Limited (since November    
 
  September 2004) of   2007, Mr Bobins was   2009), a director of    
 
  Metal Management, Inc   the Chairman of the   Macquarie University    
 
  which entity merged   Board of LaSalle Bank   Hospital and is a member    
 
  with the Company on   Corporation. From 2002   of the Takeovers Panel.    
Appointed as a
  14 March 2008. From   to 2007, he was President   He was a member of    
director in November
  January 1999 to January   and Chief Executive   the listing committee    
2005, appointed
  2004, he served in   Officer of LaSalle Bank   of the Australian Stock    
Deputy Chairman in
  various capacities   Corporation. From 2006   Exchange between   Appointed as a
November 2008 and
  with CIBC World   to 2007, he was President   1993 and 1997 and was   director in September
Chairman in August
  Markets Corp., lastly   and Chief Executive   a Director of Sims   1991. Chairman of
2009. Member of the
  as Managing Director   Officer of ABN AMRO   Group Limited between   the Remuneration
Remuneration Committee
  of the Corporate and   North America. From   1999 and 2007. He is a   Committee and member
and Nomination/
  Leveraged Finance Group.   2002 to 2007, he was   Chartered Accountant,   of the Risk, Audit &
Governance Committee.
  From 2002 to 2005, he   Senior Executive Vice   a Fellow of the Financial   Compliance Committee
Mr Varello is Chairman
  was Chairman of the   President at ABN AMRO   Services Institute of   and Nomination/
of Commonwealth
  Board of Metals USA,   Bank N.V., the Dutch   Australia and a Fellow of   Governance Committee.
Engineering and
  Inc., a NASDAQ-listed   parent of LaSalle Bank   the Institute of Company   Mr Feeney was formerly
Construction (CEC),
  steel service center   Corporation. Mr Bobins   Directors. Mr Brunsdon   an Executive Director
located in Houston, Texas.
  company until its sale   is the Non-Executive   is also involved in several   of Collins Partners
Prior to founding CEC in
  to a private entity. He   Chairman of The   non-profit organisations,   Corporate Advisory and
2003, he was Chairman
  is a director of other   PrivateBank and Trust   including as Chairman   prior to that Finance and
and CEO of American
  Sims Metal Management   Company. He is also a   of Redkite (supporting   Strategy Director for
Ref-Fuel Company. He is
  Limited subsidiaries and   director of NICOR, Inc.,   families who have   Philip Morris, Executive
a registered professional
  associated companies.   Transco, Inc., and AAR   children with cancer),   Director, Strategy &
engineer and a member
  He is a graduate of   CORP. He earned his BS   and is a director of the   Corporate Affairs for
of the American Society
  Washington University   from the University of   Wentworth Group of   Elders IXL and Executive
of Civil Engineers and the
  and received a Juris   Wisconsin and his MBA   Concerned Scientists and   Director, Corporate
American Institute of
  Doctorate from The   from the University of   Purves Environmental   Strategy of Elders
Chemical Engineers.
  Brooklyn Law School.   Chicago.   Custodians.   Resources NZFP.
                 
(PHOTO OF PAUL J VARELLO)
  (PHOTO OF DANIEL W DIENST)    (PHOTO OF NORMAN R BOBINS)    (PHOTO OF GEOFFREY N BRUNSDON)    (PHOTO OF MICHAEL FEENEY) 
PAUL J VARELLO
BCE(CIVIL ENGINEERING)
CHAIRMAN AND
INDEPENDENT
NON-EXECUTIVE
DIRECTOR
(AGE 66)
  DANIEL W DIENST
JD
GROUP CHIEF 
EXECUTIVE OFFICER
(AGE 45)
  NORMAN R BOBINS
BS, MBA
INDEPENDENT
NON-EXECUTIVE
(AGE 67)
  GEOFFREY N BRUNSDON
B COM
INDEPENDENT 
NON-EXECUTIVE
(AGE 52)
  J MICHAEL FEENEY
B COM (MARKETING)
INDEPENDENT
NON-EXECUTIVE
(AGE 64)

34 


 

                 
 
              Appointed as a director
 
              in November 2009.
 
              Member of the Safety,
 
              Health, Environment &
 
              Community Committee
 
              and the Risk, Audit &
 
              Compliance Committee.
Appointed as a director
              Mr Thompson was, from
in March 2008. Chairman
              2004 until his retirement
of the Nomination/
              in 2007, Executive Vice
Governance Committee.
              President-Commercial
Member of the Safety,
              for The Mosaic Company,
Health, Environment &
              one of the world’s largest
Community Committee
              fertiliser companies with
and Finance & Investment
              sales of US$8 billion and
Committee. He was
  Appointed as a           some 7,500 employees,
formerly a director
  director in March 2008.           which is publicly traded
(since March 2004) of
  Chairman of the Risk,           on the New York Stock
Metal Management, Inc.
  Audit & Compliance           Exchange. Prior to that,
Mr Lewon has over 40
  Committee and member           he was engaged for
years of experience in
  of the Remuneration           30 years in the steel
the scrap metal industry
  Committee and           industry from 1974 to
and has served as an
  Nomination/Governance           2004 in various roles at
executive of scrap
  Committee. He was           Cargill, Inc of Minnesota,
companies, including
  formerly a director   Appointed as a       United States leading to
President of Simsmetal
  (since January 2004)   director in June 2007.   Appointed as a director   the position of President
USA Corp. He has been
  of Metal Management,   Chairman of the Safety,   in November 2009.   of Cargill Steel Group
active in the Institute
  Inc. Mr Morris   Health, Environment &   Member of the Finance &   from 1996 to 2004.
of Scrap Recycling
  currently serves as   Community Committee   Investment Committee   During that period he
Industries, Inc. and its
  President and CEO of   and member of the   and the Safety,   also served for a time
predecessor ISIS, serving
  Intalite International   Finance & Investment   Health, Environment &   as Co-Chairman of the
as director and national
  N.V., a diversified   Committee. Mr Renwick   Community Committee.   North Star BlueScope
officer, among other
  holding company with   was employed with the   Mr Sukagawa joined   Steel joint venture, and
positions. Additionally,
  investments primarily in   Rio Tinto Group for over   Mitsui & Co., Ltd in 1973   was a member of various
he has served as a
  the metals fabrication   35 years rising, in 1997, to   and has held various   industry boards including
consultant to scrap
  industry. He also   Chief Executive, Rio Tinto   positions within that   AISI (American Iron and
metal companies since
  serves as Chairman and   Iron Ore, a position he   company, including   Steel Institute), SMA
his retirement from
  director of Beacon Trust   held until his retirement   President & Managing   Steel Manufacturers
Simsmetal in 1993, and,
  Company. He previously   in 2004. He is Chairman   Director of Mitsui Iron   Institute) and MSCI
prior to his appointment
  served as a director of   and director of Coal and   Ore Development 2004   Metals Service Center
as a director of the
  Metals USA, Inc., Rexel,   Allied Industries Limited   to 2007), President & CEO   Institute). Mr Thompson
company, he was a
  Inc. and Tivoli Industries,   (since 2004), a director of   of PT. Mitsui Indonesia   is currently a director
long-time advisor/
  Inc.; and as trustee of   Downer EDI Limited (since   (2007 to 2009) and, most   of Hawkins Chemical,
consultant to TAMCO,
  the Blanchard Group of   2004) and Chairman of   recently, since April 2009,   Inc. He has a BS from
the only steel mill in
  Funds. He is a Certified   the Rio Tinto Aboriginal   Senior Adviser of Mitsui   the University of
California.
  Public Accountant.   Fund (since 2004).   Iron Ore Development.   Wisconsin-Madison.
                 
(PHOTO OF ROBERT LEWON)
  (PHOTO OF GERALD E MORRIS)    (PHOTO OF CHRIS J RENWICK)    (PHOTO OF M PAUL SUKAGAWA)    (PHOTO OF JAMES T THOMPSON) 
ROBERT LEWON
  GERALD E MORRIS   CHRIS J RENWICK   PAUL SUKAGAWA   JAMES T THOMPSON
BS
  BA   AM, FAIM, FAIE,
FTSE — BA, LLB
  BA   BS
INDEPENDENT
  INDEPENDENT   INDEPENDENT   NON-INDEPENDENT   INDEPENDENT
NON-EXECUTIVE
  NON-EXECUTIVE   NON-EXECUTIVE   NON-EXECUTIVE   NON-EXECUTIVE
DIRECTOR
  DIRECTOR   DIRECTOR   DIRECTOR   DIRECTOR
(AGE 67)
  (AGE 78)   (AGE 67)   (AGE 59)   (AGE 60)
 
               
The following persons
  Masakatsu Iwanaga —   Paul K Mazoudier —   Jeremy L Sutcliffe —`    
were directors during
  retired   retired   agreement terminated    
the 2010 financial year:
  20 November 2009   20 November 2009   by way of redundancy    
 
          on 26 August 2009    
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   35


 

DIRECTORS’ REPORT
Your directors present their report on the consolidated entity (Group) consisting of Sims Metal Management Limited (Company) and the entities it controlled at the end of, or during, the year ended 30 June 2010.
NAMES AND PARTICULARS OF DIRECTORS
The names of the directors of the Company in office at the date of this report together with their qualifications and experience are set out on pages 34 and 35 of this annual report.
COMPANY SECRETARIES
FRANK MORATTI
B COM, LLB, MBA (EXECUTIVE)
Mr Moratti was appointed to the position of Company Secretary in 1997. Before joining the Company, he held positions of assistant company secretary/legal counsel in a number of publicly listed companies over a period of some 12 years and, prior to that, worked as a solicitor with a major legal practice.
SCOTT MILLER
BS, MS, JD, PE
Mr Miller was appointed to the position of Company Secretary in 2008. Since joining the Company in 1997, Mr Miller has held positions as legal counsel and manager for environmental affairs for North American operations. Before joining the Company, he held positions at an environmental mediation firm, as an attorney with a major legal practice, and as a consulting engineer.
DIRECTORS’ MEETINGS
The following table shows the actual board and committee meetings held during the financial year and the number of meetings attended by each director.
                                                 
                    SAFETY,                      
                    HEALTH,                      
            RISK, AUDIT &     ENVIRONMENT             FINANCE &     NOMINATION/  
    BOARD OF     COMPLIANCE     & COMMUNITY     REMUNERATION     INVESTMENT     GOVERNANCE  
    DIRECTORS2     COMMITTEE3     COMMITTEE     COMMITTEE4     COMMITTEE5     COMMITTEE6  
 
Meetings held
    11       7       5       6       6       4  
 
P Varello
    11                   2       4       4  
D Dienst
    10             5             6       4  
N Bobins
    10                         6        
G Brunsdon
    4       5                   2        
JM Feeney
    11       6             6             4  
M Iwanaga
    5                                
R Lewon
    8             5             6       3  
P Mazoudier
    7       2       2       2              
G Morris
    10       7             6             3  
C Renwick
    9             5             2        
M Sukagawa
    3             2             1        
J Sutcliffe1
                                   
J Thompson
    4       4       2                    
 
 
1   Mr Sutcliffe’s agreement was terminated by way of redundancy on 26 August 2009.
 
2   Messrs Iwanaga and Mazoudier retired from, and Messrs Sukagawa, Thompson and Brunsdon were appointed to, the Board of Directors on 20 November 2009.
 
3   Messrs Thompson and Brunsdon were appointed to the Risk, Audit & Compliance Committee on 20 November 2009.
 
4   Mr Varello was appointed to the Remuneration Committee on 20 November 2009.
 
5   Mr Varello resigned from, and Messrs Renwick, Sukagawa and Brunsdon were appointed to, the Finance & Investment Committee on 20 November 2009.
 
6   Mr Lewon was appointed to the Nomination/Governance Committee on 28 August 2009.

36


 

DIRECTORS’ INTERESTS
As at the date of this report, the interests of the directors in the shares, options, or performance rights of the Company are set forth below. Shares owned by each director are either in the form of ordinary shares or American Depositary Shares (ADS).
                         
    SHARES     OPTIONS OVER SHARES     PERFORMANCE RIGHTS  
 
P Varello (ADS)
    52,125              
D Dienst (ADS)
    601,293       769,691       258,098  
N Bobins (ADS)
    54,600              
G Brunsdon
    3,870              
JM Feeney
    27,789              
R Lewon (ADS)
          91,000        
G Morris (ADS)
    25,000       205,000        
C Renwick
    3,144              
M Sukagawa
                 
J Thompson
                 
PRINCIPAL ACTIVITIES
The Group operates predominantly in the secondary metal recycling industry. Its core businesses include:
  Ferrous secondary recycling, which comprises the collection, processing and trading of iron and steel secondary raw material.
 
  Non-ferrous secondary recycling, which comprises the collection, processing and trading of other metal alloys and residues, principally aluminium, copper and nickel bearing materials.
 
  Recycling solutions, which comprises the provision of environmentally responsible solutions for the disposal of post-consumer electronic products.
 
  Secondary processing, which comprises a value-added process involving the melting, refining and ingoting of certain non-ferrous metals; the reclamation and reprocessing of plastics; and landfill gas renewable energy.
REVIEW OF OPERATIONS
A review of the operations of the Company during the financial year and the results of those operations are set out in the Chairman’s and Group Chief Executive Officer’s Review on pages 2 to 7 of this annual report .
DIVIDENDS
The board determined a 74% franked final dividend of 23 cents per share for the financial year to be paid on 22 October 2010. The interim dividend for the financial year was 10 cents per share fully franked and was paid on 9 April 2010.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the financial year not otherwise disclosed elsewhere in this annual report.
SUBSEQUENT EVENTS AFTER THE BALANCE SHEET DATE
The directors are not aware of any other matter or circumstance that has arisen since the end of the financial year which will significantly affect, or may significantly affect, the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in subsequent financial years.
LIKELY DEVELOPMENTS
Information as to the likely developments in the operations of the consolidated entity is set out in the Chairman’s and Group Chief Executive Officer’s Review on pages 2 to 7 of this annual report.
ENVIRONMENTAL REGULATION AND GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS
The Group has licences and consents in place at each of its operating sites as prescribed by environmental laws and regulations that apply in each respective location. Further information on the consolidated entity’s performance in relation to environmental regulation is set out on pages 8 to 23 of this annual report.
The Group’s Australian operations are subject to the reporting requirements of both the Energy Efficiency Opportunities Act 2006 and the National Greenhouse and Energy Reporting Act 2007 of Australia.
The Energy Efficiency Opportunities Act 2006 requires the Company to assess the energy usage of its Australian operations, including the identification, investigation and evaluation of energy saving opportunities, and to report publicly on the assessments undertaken, including what action the Company intends to take as a result. As required under this Act, the Company has registered with the Department of Resources, Energy and Tourism as a participant entity and submitted its assessment plan and reporting schedule prior to 31 December 2009. The assessment is available for review on the Company’s website at www.simsmm.com.
The National Greenhouse and Energy Reporting Act 2007 requires the Company to report its annual greenhouse gas emissions and energy use of its Australian operations. The Company has implemented systems and processes for the collection and calculation of the data required to enable it to prepare and submit its report to the Greenhouse and Energy Data Officer by 31 October 2010.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   37

 


 

DIRECTORS’ REPORT
INSURANCE AND INDEMNIFICATION OF OFFICERS
During the financial year, the Company had contracts in place insuring all directors and executives of the Company (and/or any subsidiary companies in which it holds greater than 50% of the voting shares), including directors in office at the date of this report and those who served on the board during the year, against liabilities that may arise from their positions within the Company and its controlled entities, except where the liabilities arise out of conduct involving a lack of good faith. The directors have not included details of the nature of the liabilities covered or the amount of the premium paid as such disclosure is prohibited under the terms of the contracts.
SHARE OPTIONS AND RIGHTS
UNISSUED SHARES
As of the date of this report, there are 3,275,367 share options outstanding and 1,395,186 rights outstanding in relation to the Company’s ordinary shares. Refer to Note 24 of the consolidated financial statements for further details of the options and rights outstanding as at 30 June 2010. Option and right holders do not have any right, by virtue of the option or right, to participate in any share issue of the Company.
SHARES ISSUED AS A RESULT OF THE EXERCISE OF OPTIONS AND VESTING OF RIGHTS
During the financial year, there were 32,000 ordinary shares issued upon the exercise of share options and 192,361 ordinary shares issued in connection with the vesting of rights. Refer to Note 24 of the consolidated financial statements for further details of shares issued pursuant to share-based awards. Subsequent to the financial year, 10,021 ordinary shares were issued in connection with vesting of rights.
NON-AUDIT SERVICES
The Company may decide to employ its external auditor (PricewaterhouseCoopers) on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to the auditor for audit and non-audit services provided during the financial year are set out in Note 26 of the consolidated financial statements.
The board has considered the position and, in accordance with advice received from the Risk, Audit & Compliance Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set forth in Note 26 of the consolidated financial statements, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
  All non-audit services have been reviewed by the Risk, Audit & Compliance Committee to ensure they do not impact the impartiality and objectivity of the auditor; and
 
  None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 120 of this annual report.
ROUNDING OF AMOUNTS
The amounts in this report, where appropriate and unless otherwise stated, have been rounded off to the nearest hundred thousand dollars in accordance with ASIC Class Order 98/100.
REMUNERATION REPORT
REMARKS BY THE CHAIRMAN OF THE REMUNERATION COMMITTEE
Dear Shareholder,
We are pleased to present your Company’s 2010 Remuneration Report and hope that you will find it to be clear, informative and easy to comprehend.
During the past year, we engaged in conversations with key shareholders and shareholder advisory groups to solicit feedback on last year’s remuneration report. We have taken this feedback into consideration in the development of this year’s report and executive remuneration framework and will continue to liaise with shareholders and their advisors in the future.
In light of the above, and as part of our objective to provide simple transparent information, we have made the following enhancements to the remuneration report for the 2010 financial year:
  A table of contents has been added to page 40.
 
  The new “Target Remuneration Components” chart on page 42 provides a summary of fixed, Short Term Incentive (STI) and Long Term Incentive (LTI) remuneration as a percentage of total target remuneration.
 
  We have moved to a tabular formatting of the STI and LTI Plan information on pages 43 to 46 and added expanded commentary on the STI “Financial measures and Targets”.
 
  Two new charts on page 48 provide more transparency around the STI plan performance and reward for the 2010 financial year.
 
  The presentation of executive contract information on pages 50 and 51 has been simplified.
 
  A new table on page 52 provides full transparency on current year Option activity.
 
  The Rights activity table (also found in the financial section) on page 53 provides a more complete picture of equity activity within the remuneration report.

38


 

In the 2010 financial year, the Company completed the successful integration of executive remuneration practices and adopted a formal remuneration philosophy. This philosophy is designed to provide a remuneration program that:
  attracts, motivates and retains the best and brightest in its senior executive, leadership and staff positions;
 
  drives the Company’s business strategy of continued growth and success as a major global corporation; and
 
  aligns reward opportunities with shareholder interests.
The Company continues to use demanding financial and non-financial performance criteria focused on delivering short-term and long-term value to shareholders.
The Company endeavours to achieve simplicity and transparency in remuneration design while balancing the complexities of Australian and US based incentive practices.
The following provides a summary of remuneration activity in the 2010 financial year:
  Fixed remuneration merit increases were suspended in the 2010 financial year due to poor market conditions. The only exceptions to this suspension were increases in fixed remuneration based on promotions, significant market benchmark deficiencies or increased scope of responsibility.
 
  A new global STI Plan, approved by the Remuneration Committee, was introduced for the 2010 financial year. The Financial goals for this plan were determined using the Company’s strategic plan and were in alignment with the Company’s cost of capital. Overall, the STI plan performance against such goals came in below target, although, as shown on page 48, some regions did out-perform their targets.
 
  The Company made LTI Plan awards, to selected Company executives, in the form of Total Shareholder Return (TSR) based Performance Rights (Rights) and Share Options (Options), consistent with the awards made to the executive director as approved by shareholders in November 2009. These awards provide meaningful remuneration opportunities aligned with the Company’s performance, and reflect the importance of retaining the Company’s world class management team. We note that one of the specific areas of feedback from key shareholders and shareholder advisory groups was with regard to the use of re-testing in the LTI Plan. The Company and the Remuneration Committee maintain a firm belief that re-testing motivates executives to exert an extra level of effort in the years subsequent to the failed performance period to bring performance above the median (or higher) of the comparator group. This extra effort translates to enhanced shareholder value in those subsequent years.
 
  The Committee retained the services of Mercer, an outside consultant, to perform an external benchmarking review of senior executives’ remuneration. The analysis revealed Messrs Davy’s and McGree’s total remuneration to be below regional market data. This was addressed by increasing their LTI targets from 75% to 100% of fixed remuneration. In addition, to align with benchmark data and in recognition of an expansion of his role to include the Australian Manufacturing business, Mr McGree’s Fixed remuneration was increased by approximately 7.5%.
 
  A special bonus was paid to Mr Larry to recognise his extraordinary efforts in the successful and timely implementation of Sarbanes-Oxley requirements (SOX 404) and his integral role in managing the Company’s capital structure during a tumultuous period in financial markets.
 
  There was no increase in the fees paid to non-executive directors (NEDs) in the 2010 financial year.
We will keep our remuneration policy and practices under constant review as we continue to strive to achieve “best practice” in the alignment of remuneration with corporate strategy and shareholder wealth.
We welcome and value your feedback as we continue to find ways to improve communications with our shareholders.
Yours sincerely,
-s- Michael Feeney
Michael Feeney
Remuneration Committee Chair
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   39

 


 

DIRECTORS’ REPORT
CONTENTS AND SCOPE OF THIS REMUNERATION REPORT (AUDITED)
The directors of Sims Metal Management Limited present the Remuneration Report for the Company and the Group for the 2010 financial year. The information provided in this Remuneration Report has been audited.
The Remuneration Report forms part of the Directors’ Report and is set out as follows:
         
PAGE #   SECTION   DESCRIPTION
41
  A   The Role of the Remuneration Committee
41
  B   Executive Remuneration Policy
42
  C   Executive Remuneration Framework
47
  D   Remuneration outcomes for executives during the 2010 financial year, including discussion of remuneration and Company performance linkages
50
  E   Executive contracts
51
  F   Additional executive disclosures
54
  G   Non-executive director remuneration
As required, the scope of this Remuneration Report is limited to Key Management Personnel (KMP) as defined by Australian Accounting Standard (AASB) 124 (Related Party Disclosures), and the five most highly remunerated executives of the Group and Company as defined in the Corporations Act 2001. KMP consist of the executive and non-executive directors (NEDs) and other key management personnel who are referred to as ‘senior executives’ in this report, as outlined below:
The following persons were directors of the Company during the financial year:
     
NAME   POSITION
Paul Varello
  Independent Non-Executive Director, and Chairman (since 1 August 2009)
Paul Mazoudier
  Independent Non-Executive Director (Chairman up to 1 August 2009 retired 20 November 2009)
Daniel W Dienst
  Executive Director and Group Chief Executive Officer
Jeremy Sutcliffe
  Executive Director (terminated by way of redundancy on 26 August 2009)
Norman Bobins
  Independent Non-Executive Director
Geoff Brunsdon
  Independent Non-Executive Director (since 20 November 2009)
Michael Feeney
  Independent Non-Executive Director
Mike Iwanaga
  Non-Independent Non-Executive Director (retired 20 November 2009)
Robert Lewon
  Independent Non-Executive Director
Gerald Morris
  Independent Non-Executive Director
Chris Renwick
  Independent Non-Executive Director
Paul Sukagawa1
  Non-Independent Non-Executive Director (since 20 November 2009)
Jim Thompson
  Independent Non-Executive Director (since 20 November 2009)
 
1   Mr Sukagawa was appointed to the board as Mitsui’s nomination to replace Mr Iwanaga upon his retirement on 20 November 2009.
The following persons were senior executives of the Company during all or part of the financial year:
     
NAME   POSITION
Thomas Bird
  Managing Director — United Kingdom Metals (resigned 17 August 2009)
Graham Davy
  Chief Executive Officer — European Metals and Sims Recycling Solutions, Global Operations
Robert Kelman
  President — Commercial North America
Robert Larry
  Group Chief Financial Officer
Darron McGree
  Managing Director Australia and New Zealand
Alan Ratner
  President — Operations North America

40


 

A. THE ROLE OF THE REMUNERATION COMMITTEE
The primary role of the Remuneration Committee (Committee) is to support and advise the board on the implementation and maintenance of coherent, fair and responsible remuneration policies and practices which are observed by the Company and which enable the Company to attract and retain executives and directors who will create value for shareholders of the Company. The Committee reviews and makes recommendations to the board on:
  executive remuneration philosophy;
 
  executive remuneration policies;
 
  executive remuneration and incentive performance packages;
 
  introduction and application of equity-based schemes;
 
  the establishment and review of performance goals for the Group Chief Executive Officer;
 
  executive recruitment, retention and termination policies; and
 
  the non-executive directors’ remuneration framework.
In fulfilling these responsibilities, the Committee engages external advisers from time to time. The relevant advisers report directly to the Committee in completing this work.
Members of the Committee during the financial year were:
  Michael Feeney — Chairman;
 
  Gerald Morris — Member;
 
  Paul Varello — Member (since 20 November 2009); and
 
  Paul Mazoudier — Member (from 1 July 2009 to 20 November 2009).
The Committee’s charter, which is available on the Company’s website at www.simsmm.com, provides further information on the role of the Committee.
B: EXECUTIVE REMUNERATION POLICY
Approach to determining executive remuneration policy and framework
The Committee recognises that the Company operates in a global environment and that the Company’s performance depends on the quality of its people. The Committee considers recommendations presented by management in developing an executive remuneration philosophy, policy and framework aligned to the Company’s overall strategic direction. The Committee seeks input directly from external advisors, as appropriate, to assist in its reviews. Final recommendations are approved by the board.
The policy and framework are continually reviewed by the Committee to ensure alignment to the Company’s remuneration philosophy, business strategy and the needs of its shareholders. The Company also undertakes an annual remuneration review to determine the total remuneration positioning of its executives against the market.
Aims of the executive remuneration policy and framework
The overall aim of the Company’s remuneration policy and framework is to attract, motivate and retain high calibre executives. To do so, the Company provides executive remuneration packages that are competitive, referencing market data, and commensurate with employee duties, responsibilities and accountabilities. The Committee also recognises that remuneration for the executive director and senior executives should:
  reward capability, experience and performance against business strategy;
 
  provide a competitive reward for contribution to growth in shareholder wealth;
 
  provide a clear structure for earning rewards;
 
  provide recognition for non-financial contributions in areas key to best business practice, such as safety, talent management, corporate social responsibility and sustainability; and
 
  support the Company’s core values of safety, teamwork, respect, integrity, financial discipline and entrepreneurialism.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   41


 

DIRECTORS’ REPORT
The executive remuneration framework has three components. These remuneration components, and the factors that determine them, are summarised in the table below:
                 
COMPONENT   PROVIDED AS   VARIABLES DETERMINING REWARD   PURPOSE
Fixed Remuneration   Annual salary and benefits   Set with reference to market data for role, experience and performance   Reward based on capability, experience, responsibilities and accountability commensurate with role.
 
               
Short-term incentives
  Cash   Financial
performance
targets
measured by
Return on
Controlled
Capital
Employed
(ROCCE)
  Personal performance goals; e.g. safety, operational efficiencies, talent management, corporate social responsibility   To reward for business performance and individual contribution to annual financial performance. To drive alignment with Company values through achievement of non-financial goals.
 
               
Long-term incentives   Equity   Relative TSR targets and continued service   Retain executives and ensure they focus on delivering long-term value to shareholders through sustained growth in shareholder wealth, consisting of dividends and growth in share price and superior market performance relative to a relevant peer group.
Fixed and variable (“at risk”) remuneration mix
In line with the Company’s intent to ensure the executive remuneration framework is aligned to the Company’s performance, a significant portion of an individual’s remuneration is “at risk”. The following chart sets out the target remuneration mix; that is, fixed remuneration (salary/package), target short-term incentive and long-term incentive for the Group Chief Executive Officer, Group Chief Financial Officer and other senior executives.
TARGET REMUNERATION COMPONENTS
AT RISK
                         
    FIXED     STI     LTI  
Group CEO
    19 %     25 %     56 %
Group CFO
    31 %     31 %     38 %
Other Senior Executives
    34 %     33 %     33 %
Securities Trading Policy
The trading by the non-executive directors, executive director and senior executives of securities issued pursuant to the Company’s LTI Plan is subject to, and conditional upon, compliance with the terms of the Company’s policy titled ‘Dealings in Sims Metal Management Limited Securities’ (a copy of which is available on the Company’s website at www.simsmm. com). Executives are prohibited from entering into any hedging arrangements over unvested awards under the Company’s LTI Plan.
C: EXECUTIVE REMUNERATION FRAMEWORK
(a) Fixed remuneration policy
Fixed remuneration comprises base salary and benefits. Base salary is determined on an individual basis, taking into consideration the individual’s capability, experience, responsibilities and accountability, as well as external market factors.
Benefits programs may include health insurance, life and disability insurance, retirement programs (depending on national government and tax regulations) and car allowances.
Fixed remuneration generally does not vary over the course of a year based on an individual’s performance. However, remuneration packages (including fixed components of base salaries and benefits) are reviewed annually. The Committee references market-based comparable positions in public surveys and obtains advice from external remuneration consultants where necessary, in reviewing any changes to executive remuneration. There are no guaranteed increases to any components of fixed remuneration for senior executives.
(b) At-risk remuneration policy
At-risk remuneration comprises both short-term (annual) and long-term incentives. “At-risk” means an absence of certainty regarding the payment of a particular component of remuneration in the event agreed-upon performance hurdles or employment conditions are not met during the performance period. The remuneration of the executive director and senior executives is linked to performance through short- and long-term incentives as follows:
42

 


 

(b)(1)(i) Short Term Incentive Plan (STI Plan)
The Company’s executives are eligible to participate in the Company’s STI Plan.
The table below summarises the key aspects of the STI Plan.
         
Frequency, timing and form of award
    Executives have an opportunity to receive an annual cash-based incentive based on the achievement of targets over the financial year.
 
 
    Individual targets are set on an annual basis.
 
 
    Payment is made in September following the finalization of the audited financial results.
 
       
Financial measures and targets
    Group or business unit performance is based on achievement of ROCCE targets.
 
 
    ROCCE is computed as Profit Before Interest and Taxes (PBIT) divided by Average Controlled Capital Employed (CCE).
 
 
    ROCCE has been approved by the Committee as the appropriate measure for the STI as the Committee believes that ROCCE is a key performance driver of the Group. ROCCE focuses on the effective management of invested capital while encouraging maximisation of operating profits.
 
 
    The Company understands the desire for greater transparency of specific targets. However, given the Company’s size and position in the industry, we believe disclosing precise financial targets would put us at a competitive disadvantage due to commercial sensitivity. The Company’s practice is to take into account Group or business unit cost of capital when setting payout targets.
 
 
    In the 2010 financial year the Company’s overall financial performance, along with the performance of its business units, significantly improved versus the 2009 financial year.
 
 
    The financial component of the STI payments and business unit performance compared to target are discussed in section D.
 
 
    Financial targets are determined by taking into consideration stretch performance targets in the context of the economic cycle.
 
 
    The financial targets for senior executives are recommended each year by the Group Chief Executive Officer and reviewed by the Committee for recommendation to the board for approval. The financial targets for the Group Chief Executive Officer are recommended by the Committee and approved by the board.
 
 
       
Individual measures and targets
    Individual goals are set in several key performance areas, which focus on individual initiatives which are critical to the overall success of the Company. Individual targets may include safety, succession planning, management development, as well as shareholder and community relations.
 
 
    Individual measures and targets are recommended on an annual basis by the Group Chief Executive Officer, and approved by the Committee, taking into consideration the Company’s stretch performance targets. The targets for the Group Chief Executive Officer are recommended by the Committee for approval by the board.
 
 
       
Weighting of performance measures
    Payments from the STI Plan are determined based on the Financial performance of the Group or business unit, and individual performance. Approximately 80% of the STI payment is determined by Group or business unit financial performance and approximately 20% of the STI payment is determined by individual performance. The financial component for Group executives is based wholly on overall Group performance. The financial component for the Regional Executives is based wholly on the results of their own business units.
 
 
    Executives may receive a payment of up to 20% of their target STI for achievement of individual performance goals regardless of ROCCE achievement, as the Company seeks to drive and reinforce the desired individual behaviors and outcomes even in difficult economic and Financial times.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   43

 


 

DIRECTORS’ REPORT
Key aspects of the STI Plan (continued)
         
Assessment of performance against measures
    Threshold, target and maximum individual award opportunities have been established and vary by position.
 
 
    A minimum ROCCE target and individual level of performance must be met for individuals to be eligible for payment. Payment between threshold and maximum is then determined by reference to ROCCE and individual performance outcomes against pre-defined targets.
 
 
    At the end of the financial year, each executive’s individual performance is assessed based on appropriate ROCCE performance (e.g., overall Company performance or the relevant business unit) and a review of individual performance achievement against defined key performance areas. The individual’s performance is rated on a scale of 0 to 4.0. Participants must receive a rating of at least 2.0 (meets expectations) to receive a payment based on the individual performance component. Senior executive performance is assessed by the Group Chief Executive Officer, and recommended payments are considered and, if appropriate, approved by the Committee. For the Group Chief Executive Officer, performance is assessed by the Committee and a recommended payment is approved by the board.
 
 
    The STI target is expressed as a percentage of fixed remuneration. The payout for performance ranges from 0% to 200% of target.
 
       
Service condition
    A voluntary termination or termination for cause prior to the annual assessment date will result in no STI being paid for the year unless the Committee determines otherwise. Upon termination due to death, disability or redundancy, STI performance for the relevant period will be assessed and paid.
(b)(1)(ii) Other bonuses
From time to time, the board, following recommendations from the Committee, chooses to pay bonuses outside the scope of the annual STI Plan to recognise significant performance of individual executives which the STI structure does not adequately address.
In February 2010, a special bonus in the amount of US$800,000, consisting of US$500,000 in a cash award and a share award equivalent to US$300,000, was awarded to Mr Larry in recognition of his extraordinary efforts in the successful implementation of Sarbanes-Oxley requirements (SOX 404) as well as his integral role in managing the Company’s capital structure during an extremely tumultuous period in the global financial markets. The share award vests annually in three equal installments, provided that Mr Larry remains an employee of the Company, subject to a qualifying cessation, at the date of vesting. A qualifying cessation is ceasing to be an employee by reason of death, permanent disability, termination without cause, or other circumstances determined at the discretion of the board.
(b)(2) Long-term incentives
The Committee believes that executive participation in equity-based incentive plans is a key element which aligns executive and shareholder objectives. The Company’s Long-Term Incentive (LTI) Plan is the principal means of allowing the Group Chief Executive Officer and senior executives the opportunity to be rewarded for the Company’s growth in share price and total shareholder return.
The LTI Plan creates a direct link between the value created for shareholders, and the reward earned by the Group Chief Executive Officer and senior executives. In addition, the LTI Plan assists in retention of the Group Chief Executive Officer and senior executives.
The LTI Plan allows for grants of Rights and Options. The LTI Plan structure is designed to focus on two key aspects of future performance. First, Rights recognise shareholder value creation relative to companies within the Company’s industry, as measured by TSR. Second, Options reflect creation of absolute shareholder value, as recognized by growth in the Company’s share price.
Due to the strong correlation with the peer group used in the Company’s relative TSR measure, the Company must outperform its peers regardless of how the broader stock market is performing. The second part of the award consists of Options, which require continuous service in order to vest, and require a higher share price than the exercise price in order to generate value.
It is common practice in Australia for Rights to be issued subject to a relative TSR hurdle. However, in the US, where the Company competes for much of its talent and business, Options are more commonly utilised and based only on a continuous service vesting condition. The board believes that the combined Rights/Options structure provides an appropriate balance in terms of ensuring that rewards for the Group Chief Executive Officer and senior executives are competitive, aligned to the business and shareholders, and reflect market practice in both Australia and the US.
44

 


 

In the 2010 financial year the following changes were made to the LTI Plan:
  All awards were granted after the Annual General Meeting in November 2009 to enable the grant date of all awards to be aligned with that of the Group Chief Executive Officer’s grant.
 
  The award structure was standardised so that all LTI Plan participants received a mix of TSR hurdled Rights and service-based Options. Previously, some executives below senior executive level had received only Option awards.
The following table summarises the details of the LTI Plan as they relate to grants made in the 2010 Financial year.
             
        OPTIONS   RIGHTS
 
Form of award
     
   An Option is a contract that gives the holder the right, but not the obligation, to acquire an ordinary share at a fixed price over a specified period of time. US participants may have their Options settled in American Depositary Shares.
 
   A Right is a contractual right to acquire an ordinary share for nil consideration. US participants may have their Rights settled in American Depositary Shares.
 
           
Frequency and timing of awards  
   The Company’s shareholders approved an LTI award for the Group Chief Executive Officer at the Company’s 2009 Annual General Meeting. In conjunction with that meeting, the Committee approved and granted LTI awards for other senior executives.
 
     
   Awards are typically made on an annual basis.
   
 
           
Valuation of grants  
   The fair value of Options and Rights are calculated by Mercer, the Company’s external valuation consultant, at their grant date using a Black-Scholes, Binomial or Monte Carlo simulation option pricing model as appropriate. See Note 24 of the financial report for assumptions used in determining the fair value.
 
           
Treatment of dividends  
   Holders of Rights or Options are not entitled to dividends over the term of the relevant vesting period (and in the case of Options, until exercised).
 
           
Performance conditions
  Performance measure and rationale  
   In order for Options to deliver value to participants, the Company’s share price must increase above the exercise price. This aligns the award’s value to absolute growth in shareholder wealth, as measured by share price.
 
   In order for Rights to vest, the Company’s TSR must be at the 51st percentile or higher against a comparator group of companies. Above 51% vesting is prorated. TSR aligns the vesting of executive awards to relative shareholder wealth creation.
 
           
 
  Performance period  
   All Options granted in the 2010 financial year vest in three equal instalments over a three year period. This vesting schedule reflects common US practice. Each instalment vests following the date the Company announces its annual financial results to the Australian Securities Exchange (ASX) for its 2010, 2011 and 2012 financial years. Options expire seven years after the date of grant.
 
   Performance is measured during a three-year period, starting at the beginning of the financial year of the award. The initial performance period is the three-year period from 1 July 2009 through 30 June 2012.

   If any Rights remain unvested at the end of year three, they will be re-tested at the end of year four using the four-year performance period.

   If any Rights remain unvested at the end of year four, they will be re-tested at the end of year five using the Five-year performance period.
 
 
         
   Any unvested Rights outstanding after the final re-test will immediately lapse.
 
 
         
   Re-testing is limited to two re-tests, each over the extended performance period.
 
 
         
   Re-testing may require the executive to exert considerable effort to bring performance above the median of the comparator group and higher.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   45


 

DIRECTORS’ REPORT
Details of the LTI Plan as they relate to grants made in the 2010 Financial year (continued)
                 
        OPTIONS   RIGHTS    
 
Performance conditions (continued)
  Exercise price  
   The exercise price of Options is set at grant, and is equal to the volume weighted average price for the five days preceding the grant date. For US executives, Option awards are not Incentive Stock Options for the purposes of section 422 of the United States Internal Revenue Code.
 
   Nil
   
 
               
    Comparator group  
   N/A
 
   The following companies comprise the
current comparator group, chosen
from comparable industry sectors:
 
               
 
          AK Steel   Posco
 
          Allegheny Technologies   Reliance Steel
 
          ArcelorMittal   Schnitzer Steel
 
          BlueScope Steel   Steel Dynamics
 
          Commercial Metals   The Timken Company
 
          Gerdau Ameristeel   Tokyo Steel
 
          Mueller Industries   U.S. Steel
 
          Nucor   Worthington
 
              Industries
 
          OneSteel    
 
               
    Vesting schedule  
   N/A
 
   The vesting schedule for those Rights measured against relative TSR is set out below:
 
               
 
         
TSR GROWTH RELATIVE TO
 
PROPORTION OF TSR
 
         
THE COMPARATOR GROUP
 
GRANT VESTING
 
               
 
          Less than   0%
 
          51st percentile    
 
          51st percentile   50%
 
          51st percentile to   Pro-rata
 
          75th percentile   straight line
 
          75th percentile or    
 
          higher   100%
 
               
Sales restrictions post vesting  
  Australian residents are restricted from selling or disposing of any shares issued on exercise of Rights and Options until the board approves the release of shares, the executive ceases to be an employee, or seven years from the grant date.
 
               
Treatment of awards on  
  Where participants resign, or are terminated for cause, awards are forfeited.
cessation of employment  
   
  Where cessation of employment is as the result of death, total or permanent disablement, or other circumstances at the discretion of the board, participants will be entitled to unvested awards in accordance with the original vesting schedule.
 
       
  Unvested awards will continue to be held by participants and tested at the end of the performance period. However, no additional re-testing will be permitted. Any unvested awards lapse at the end of the initial performance period, subject to the board’s discretion.
 
               
Treatment of awards on change of control  
  Typically a change in control of the Company may trigger full vesting of awards, subject to board discretion.

46


 

D: REMUNERATION OUTCOMES FOR EXECUTIVES DURING THE 2010 FINANCIAL YEAR, INCLUDING DISCUSSION OF REMUNERATION AND COMPANY PERFORMANCE LINKAGES
Overview of the link between remuneration and performance
The board believes that, notwithstanding the impact of the more difficult external environment in the 2009 and 2010 financial years, the operational and financial performance of the Company over the last five years has been strong relative to industry benchmarks. The board is of the view that the financial rewards provided to executives are consistent with the Company’s performance. The Company’s performance over the last five years is summarised in the table below:
                                         
    2010     20091     2008     2007     2006  
Total revenue (A$m)
    7,458.5       8,641.0       7,670.5       5,550.9       3,754.5  
Profit/(Loss) after tax (A$m)
    126.7       (150.3 )     440.1       239.9       184.9  
Diluted EPS (cents)2
    64.5       (82.5 )     306.3       191.0       163.4  
Total dividends (cents)
    33.0       38.0       130.0       120.0       105.0  
Share price at 30 June A$
  17.11       26.51       41.69       26.50       20.00  
 
1   A $191 million non-cash goodwill impairment charge was made in the 2009 financial year.
 
2   Diluted EPS for the prior periods have been adjusted to reflect the shares issued in connection with the institutional placement and share purchase program in November and December 2009. See Note 32 of the financial report.
The TSR graph below compares the Company’s TSR against the comparator group (as referenced above) for the five year period ending 30 June 2010. TSR is the return to shareholders provided by share price appreciation plus dividends (which are assumed to be reinvested in the Company’s shares) expressed as a percentage of the share price at the beginning of the measurement period, adjusted where appropriate for bonus issues, capital consolidation or equivalents. Relative TSR is the Company’s TSR divided by the mean of the comparator group expressed as a percentage.
(PERFORMANCE GRAPH)
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   47


 

DIRECTORS’ REPORT
Short-term incentives
As noted previously in this report, STI measures are based on financial ROCCE and individual targets. The table below outlines business unit performance against STI ROCCE targets.
     
AREA   ROCCE PERFORMANCE AGAINST TARGET
Group
  Under target
North America Metals
  Under target
Australia/New Zealand Metals
  Above target
United Kingdom Metals and Global SRS
  Above target
The following table outlines the proportion of the target STI that was paid and forfeited in relation to the 2010 financial year. Both ROCCE and individual performance influences individual STI payments.
                 
    PROPORTION OF TARGET STI PAID DURING   PROPORTION OF TARGET STI FORFEITED DURING
NAME   THE 2010 FINANCIAL YEAR   THE 2010 FINANCIAL YEAR
D Dienst
    20 %     80 %
G Davy
    168 %     0 %
R Kelman
    20 %     80 %
R Larry
    20 %     80 %
D McGree
    148 %     0 %
A Ratner
    20 %     80 %
Long-term incentives
Performance Rights awards vesting in the 2010 financial year had up to three performance metrics: TSR, Earnings Per Share (EPS) and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA). Rights based on a TSR performance of 55.6% vested at 59.6% and Rights based on EBITDA performance vested at 56.2%. No Rights vested based on EPS performance. All the Performance Rights contain re-testing provisions for two years subsequent to the initial performance period.
48

 


 

Remuneration disclosure for the 2010 financial year (and comparatives)
Certain executive directors and senior executives (as disclosed below) are not residents of Australia. Their respective remuneration paid in foreign currency has been converted to Australian dollars at an average exchange rate for the year. Both the amount of any remuneration and any movement in comparison to the prior year may be influenced by changes in the respective currency exchange rates.
                                                                                 
                                            POST-                          
                                            EMPLOYMENT                          
                                            BENEFITS                          
                    SHORT-TERM BENEFITS     PENSION &     OTHER     TERMIN-     SHARE-        
                    CASH     CASH     OTHER     SUPER-     LONG-TERM     ATION     BASED        
(A$)   LOCATION     YEAR     SALARY1     BONUS2     BENEFITS3     ANNUATION     BENEFITS4     BENEFITS     PAYMENTS6     TOTAL  
Executive Directors:
                                                                               
D Dienst6
  USA     2010       1,417,073       368,439       394,689       7,507       13,657             2,574,459       4,775,824  
 
            2009       1,328,038       2,665,438       195,796             15,915             1,357,334       5,562,521  
J Sutcliffe7
  Australia     2010       449,095       387,000       35,209       484,290       1,981,054       1,551,200       1,328,297       6,216,145  
 
            2009       1,347,284       2,630,160       144,071       219,798       43,554             (613,272 )     3,771,595  
R Cunningham10
  Australia     2010                                                  
 
            2009       255,915       192,545       2,809       51,550       26,437       3,130,316       364,243       4,023,815  
 
                                                                               
Senior Executives:
                                                                               
T Bird6,9
  UK     2010       56,192             5,714       5,878                   (664,803 )     (597,019) )
 
            2009       451,112       272,664       41,441       42,631       28,229             476,240       1,312,317  
G Davy6
  UK     2010       483,361       943,588       34,288       35,273                   899,728       2,396,238  
 
            2009       584,198       440,969       41,441       42,631                   765,199       1,874,438  
R Kelman6,8
  USA     2010       708,536       141,707       204,684       22,257                   724,993       1,802,177  
 
            2009       835,875       1,221,782       43,031       15,373                   682,840       2,798,901  
R Larry6
  USA     2010       708,536       708,536       113,461       20,006       14,001             867,373       2,431,913  
 
            2009       835,875       417,938       50,068             15,915             398,833       1,718,629  
D McGree
  Australia     2010       573,743       1,029,977       21,449       100,580       27,328             712,110       2,465,187  
 
            2009       536,651       315,870       17,513       105,772       20,379             578,093       1,574,278  
A Ratner6,8
  USA     2010       708,536       141,707       34,091       7,507       14,001             807,306       1,713,148  
 
            2009       835,875       1,434,696       36,683             15,915             1,098,471       3,421,640  
Total
            2010       5,105,072       3,720,954       843,585       683,298       2,050,041       1,551,200       7,249,463       21,203,613  
 
            2009       7,010,823       9,592,062       572,853       477,755       166,344       3,130,316       5,107,981       26,058,134  
 
1   Cash salary includes amounts sacrificed in lieu of other benefits at the discretion of the individual.
 
2   Cash bonus amount for 2010 reflects the amount accrued for the 2010 STIP for all executives, except Mr Sutcliffe, as well as a special bonus for Mr Larry. Cash bonus amount for 2009 reflects the amount accrued for the “bridge” bonus for all executive and the integration bonuses paid to Messrs Dienst, Sutcliffe, Kelman and Ratner. The “bridge” payment plan enabled the Company to offer a retention incentive for the first half of the 2009 financial year to participants who assisted in the early and smooth integration of MMI and Sims Group into Sims Metal Management.
 
3   Other short-term benefits include auto allowances, health and life insurance benefits, and amounts accrued for annual leave during the period. The amount for Messrs Dienst, Larry and Kelman includes a one-time payment to buy out accrued annual leave from a discontinued plan for all US employees. The amount for Mr Dienst also includes payments for personal security and a $172,236 reimbursement for a redundant state tax payment (including gross-up) made due to a state tax jurisdiction dispute.
 
4   Other long-term benefits include amounts accrued for cash-based long-term incentive plans, long service leave and deferred compensation plans.
 
5   Share-based payments represent the accounting expense (as computed pursuant to AASB 2, Share-based Payment) recognised by the Company for share-based awards. Certain share-based awards made in the 2007 and 2008 financial years only vest upon satisfaction of non-market based performance hurdles. These performance hurdles were not expected to be achieved and therefore previously recognised share-based payments were reversed in the 2009 financial year and resulted in a reduction in total 2009 remuneration for the impacted individuals, consistent with the accounting policy outlined in Note 1(x)(iv) of the financial report.
 
6   Messrs Dienst, Larry, Ratner and Kelman are residents of the United States and receive their cash payments in US dollars. Messrs Bird and Davy are residents of the United Kingdom and receive their cash payments in pounds sterling.
 
7   Mr Sutcliffe’s agreement was terminated by way of redundancy on 26 August 2009. Please refer to Section E — Service Agreements for further information on termination benefits paid to Mr Sutcliffe.
 
8   Share-based payments for Messrs Kelman and Ratner in 2009 include the value of 30,048 American Depositary Shares that they each received as part of their integration bonuses.
 
9   The Company accepted the resignation of Mr Bird on 17 August 2009. Under the terms of his resignation, Mr Bird forfeited any entitlement to an STI “bridge” bonus payment and unvested LTI awards.
 
10   Mr Cunningham retired on 21 November 2008. Termination benefits represent payments for severance, but do not include payments for unused leave as these accruals were previously disclosed as remuneration. In addition, share-based payments for Mr Cunningham in 2009 represent the acceleration of expense for awards which have not yet vested, but contain “good-leaver” provisions.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   49

 


 

DIRECTORS’ REPORT
Fixed and actual At Risk remuneration for the 2010 financial year
The table below sets out, for the executive directors and senior executives, the percentage of their actual financial year annual remuneration which was At-Risk versus Fixed, and the percentage of the value of their total remuneration that consisted of Options and Rights.
                                 
                    REMUNERATION     REMUNERATION  
    FIXED REMUNERATION     AT-RISK REMUNERATION     CONSISTING OF RIGHTS     CONSISTING OF OPTIONS  
    %     %     %     %  
Executive Directors:
                               
D Dienst
    38       62       37       17  
 
                               
Senior Executives:
                               
G Davy
    23       77       27       11  
R Kelman
    52       48       19       22  
R Larry
    35       65       16       20  
D McGree
    29       71       18       11  
A Ratner
    45       55       24       23  
E: EXECUTIVE CONTRACTS
Group Chief Executive Officer
The Group Chief Executive Officer’s contract with Metal Management, Inc. (MMI), entered into as of 26 July 2007, was amended as of 1 August 2009 and expires on 30 June 2012. The contract may be extended thereafter on an annual basis, provided however that the Company may terminate the contract at any time for Cause.
Consistent with the underlying agreement with MMI, if Mr Dienst is terminated involuntarily other than for Cause, then the Company will continue to pay Mr Dienst his fixed remuneration and target bonus for 24 months following termination. All unvested share options, share grants, and LTI Plan awards vest upon involuntary termination.
Prior to the merger between MMI and the former Sims Group Limited, the MMI board amended certain grants of restricted stock pursuant to Mr Dienst’s previous employment contract with MMI which caused vesting of such restricted stock upon a change of control.
The amended employment contract with the Company requires that Mr Dienst pays back up to US$3 million (Clawback Amount), amortising over a four-year period, should he resign or terminate his agreement other than for good reason, as defined by the agreement. The amortisation of the Clawback Amount for the 2010 financial year was A$800,229 and has been included as part of Mr Dienst’s remuneration under the heading “Share-Based Payments” in the remuneration table. As at 30 June 2010, the remaining Clawback Amount is A$1,605,757.
Other senior executives
The details of executive contracts, other than the Group Chief Executive Officer, are summarised in the following table.
         
Contract term
    Messrs Davy and McGree have fixed term contracts with automatic renewal.
 
 
    Mr Larry’s contract expires on 30 June 2012 with no automatic renewal.
 
 
    Messrs Kelman and Ratner do not have employment contracts.
 
 
       
Notice period
    Contracts typically may not be terminated during the fixed term, other than for Cause.
 
 
    For Messrs Davy and McGree, after the expiration of the term, the Company must typically provide 12 months prior written notice or payment in lieu of notice. The executive is typically required to provide three months prior written notice to terminate the agreement.
 
       
Termination provisions
(other than for Cause)
    Mr Larry is entitled to receive an amount equivalent to 12 months base salary and all unvested share awards will vest.
 
       
Change of control
    Mr Larry is entitled to an amount equal to two times his fixed remuneration, and all unvested share awards will vest, if his employment is terminated within 12 months of a result of change in control. This is a carryover from Mr Larry’s contract with MMI.
 
 
    Mr McGree is entitled to a payment equivalent to six months total annual remuneration if he remains in the employ of the employer six months after a takeover of the Company (or if he is terminated within six months of such a takeover).
 
       
Redundancy
    In the event of redundancy, Messrs Davy and McGree are each entitled to the greater of 12 months’ notice or payment in lieu, or a benefit calculated by reference to the Sims Metal Management Redundancy Policy up to a maximum of 18 months’ remuneration depending upon years of service.
50

 


 

         
Additional legacy
contractual entitlements
    In recognition of Mr Davy’s contribution to the growth of the Company and the Company’s desire to retain his services, a grant of Rights in respect of Sims Metal Management shares was provided to Mr Davy on 1 July 2007. This grant vested in March 2010.
 
       
 
    In recognition of Mr McGree’s contribution to the growth of the Company and the Company’s desire to retain his services, a grant of Rights in respect of Sims Metal Management shares was provided to Mr McGree on 17 September 2007. This grant vested in April 2010.
Former executives
Executive Director
The Executive Director Mr Sutcliffe’s Agreement was terminated by way of redundancy on 26 August 2009.
As disclosed in last year’s report, Mr Sutcliffe received a lump-sum redundancy payment of A$1,551,000, comprising his notice period, salary for a three month period of A$337,000 and a pro-rated STI payment for the 2010 financial year of A$387,000. He was also paid a cash settlement of A$1,273,000 for performance rights scheduled to vest on 31 August 2009 and A$700,000 for performance rights scheduled to vest on 31 October 2010, pursuant to an employment contract amendment made in September 2007. All other outstanding equity awards were retained as a result of “good-leaver” provisions which resulted in the Company recognising an accelerated share-based payment expense of A$870,000 in the 2010 financial year. Mr Sutcliffe received statutory entitlements under long service leave and annual leave, and entitlement to defined benefit plans, as if employment continued through 31 October 2009 and 31 October 2010, respectively. Mr Sutcliffe also received a Superannuation payment in the amount of A$467,436 on 1 July 2010.
Managing Director United Kingdom Metals
The Company accepted the resignation of Mr Bird on 17 August 2009. Under the terms of the Company’s LTI Plans, equity awards that were unvested at the time of his resignation were forfeited by Mr Bird.
F: ADDITIONAL EXECUTIVE DISCLOSURES
(a) Share based remuneration
(a)(l) Options provided as remuneration
Details of Options affecting remuneration of senior executives in the previous, this or future reporting periods are as follows:
  No options were exercised or lapsed in the 2009 or 2010 financial years, other than Mr Bird’s 39,347 Options which lapsed in August 2009 on ceasing his employment.
 
  No Options will vest if the conditions are not satisfied; hence, the minimum value of unvested awards is nil.
 
  The maximum value of the unvested awards has been determined as the amount of the grant date fair value that is yet to be expensed.
The following table summarises the terms of Options grants with shares remaining unvested.
                                                         
                                                    MAXIMUM  
                                    DATE NEXT             TOTAL VALUE  
            NUMBER     EXERCISE     FAIR VALUE AT     TRANCHE CAN     EXPIRY     OF UNVESTED  
NAME   GRANT DATE     GRANTED     PRICE     GRANT DATE     BE EXERCISED     DATE     GRANT  
 
Ordinary shares (A$)
                                                       
J Sutcliffe1
  24 Nov 08     135,435     $ 13.11     $ 2.78-$3.35     31 Aug 10   24 Nov 15      
G Davy
  23 Nov 09     37,231     $ 21.95     $ 6.06-$7.53     31 Aug 10   23 Nov 16     146,450  
 
  02 Apr 09     48,950     $ 17.79     $ 5.12-$6.43     31 Aug 10   02 Apr 16     62,377  
D McGree
  23 Nov 09     46,908     $ 21.95     $ 6.06-$7.53     31 Aug 10   23 Nov 16     184,514  
 
  02 Apr 09     47,534     $ 17.79     $ 5.12-$6.43     31 Aug 10   02 Apr 16     60,573  
 
ADS(US$)
                                                       
D Dienst
  23 Nov 09     178,037     $ 20.57     $ 6.13-$7.70     31 Aug 10   23 Nov 16     715,394  
 
  24 Nov 08     181,654     $ 8.39     $ 2.33-$2.82     31 Aug 10   24 Nov 15     87,404  
R Kelman
  23 Nov 09     44,914     $ 20.57     $ 6.13-$7.70     31 Aug 10   23 Nov 16     180,475  
 
  02 Apr 09     87,664     $ 12.19     $ 4.11-$5.25     31 Aug 10   02 Apr 16     91,196  
R Larry
  23 Nov 09     56,142     $ 20.57     $ 6.13-$7.70     31 Aug 10   23 Nov 16     225,591  
 
  02 Apr 09     109,580     $ 12.19     $ 4.11-$5.25     31 Aug 10   02 Apr 16     113,997  
A Ratner
  23 Nov 09     44,914     $ 20.57     $ 6.13-$7.70     31 Aug 10   23 Nov 16     180,475  
 
  02 Apr 09     87,664     $ 12.19     $ 4.11-$5.25     31 Aug 10   02 Apr 16     91,196  
 
1   Mr Sutcliffe’s agreement was terminated by way of redundancy on 26 August 2009. Please refer to Section E — Executive Contracts for further information relating to “good-leaver” provisions in Mr Sutcliffe’s share grants.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   51

 


 

DIRECTORS’ REPORT
The following table summarises the Option holdings of Key Management Personnel for the 2010 financial year.
                                                                 
                                                            VALUE OF  
                                                            OPTIONS  
                                                            GRANTED  
                                                            AS PART OF  
                                                            REMUNERATION  
            OPTIONS     OPTIONS                     NUMBER             AND THAT WERE  
    NUMBER     GRANTED     EXERCISED     OPTIONS     NUMBER OF     OF OPTIONS     NUMBER     EXERCISED OR  
    OF OPTIONS     DURING THE     DURING THE     LAPSED DURING     OPTIONS     VESTED DURING     OF OPTIONS     SOLD DURING  
    HELD AT     FINANCIAL     FINANCIAL     THE FINANCIAL     HELD AT     THE FINANCIAL     VESTED AT     THE FINANCIAL  
NAME   1 JULY 2009     YEAR     YEAR     YEAR     30 JUNE 2010     YEAR     30 JUNE 2010     YEAR  
 
Ordinary shares (A$)
                                                               
J Sutcliffe
    135,435                         135,435       45,145       45,145        
T Bird
    39,347                   39,347                          
G Davy
    48,950       37,231                   86,181       16,317       16,317        
D McGree
    47,534       46,908                   94,442       15,845       15,845        
 
ADS(US$)
                                                               
D Dienst
    591,654       178,0371                   769,691       60,551       470,551        
R Kelman
    87,664       44,914                   132,578       29,221       29,221        
R Larry
    109,580       56,142                   165,722       36,526       36,526        
A Ratner
    87,664       44,914                   132,578       29,221       29,221        
 
1   Approval for this issue was obtained under ASX Listing Rule 10.14.
(a)(2) Rights provided as remuneration
Details of Rights affecting remuneration of executive directors and senior executives in the previous, this or future reporting periods are as follows. For each grant of Rights, the percentage of the available grant that was vested in the financial year, and the percentage that was forfeited because the person did not meet the service and performance criteria, are set out below.
  No Rights will vest if the conditions are not satisfied; hence, the minimum value of Rights yet to vest is nil.
 
  The maximum value of the Rights yet to vest has been determined as the amount of the grant date fair value that is yet to be expensed.
(a)(3) Additional retention awards
  Special retention awards granted in 2007 to Messrs Davy and McGree vested in the 2010 financial year.
 
  Mr McGree’s vesting of 21,044 rights occurred as scheduled on 30 April 2010.
 
  Mr Davy’s vesting of 44,803 rights was accelerated by 30 days to 31 March 2010. The vesting acceleration allowed the preservation of some of the intended award value and resulted in an insignificant additional accounting expense for the Company.
52

 


 

The table below summarises the terms of outstanding grants of Rights.
                                                                 
                                                            MAXIMUM  
                                            DATE NEXT             TOTAL VALUE  
            NUMBER     FAIR VALUE AT     VESTED     FORFEITED     TRANCHE     EXPIRY     OF UNVESTED  
NAME   GRANT DATE     GRANTED     GRANT DATE     %     %     VESTS     DATE     GRANT  
 
Ordinary shares (A$)
                                                               
J Sutcliffe1
  25 Sep 07     59,492     $ 28.04                 31 Aug 10   31 Aug 10      
 
  25 Sep 07     44,218     $ 24.03                 31 Aug 10   31 Aug 10      
 
  24 Nov 08     44,440     $ 9.04                 31 Aug 11   31 Aug 11      
G Davy
  01 July 07     44,803     $ 22.26       100                          
 
  25 Sep 07     13,703     $ 29.78       72.1       27.9                    
 
  25 Sep 07     13,100     $ 28.04                 31 Aug 10   31 Aug 12      
 
  25 Sep 07     9,737     $ 24.03                 31 Aug 10   31 Aug 12      
 
  02 Apr 09     18,312     $ 15.46                 31 Aug 11   31 Aug 13     104,482  
 
  23 Nov 09     16,928     $ 15.97                     31 Aug 12   31 Aug 14     185,129  
D McGree
  17 Sep 07     21,044     $ 27.28       100                          
 
  25 Sep 07     12,664     $ 29.78       72.1       27.9                    
 
  25 Sep 07     12,107     $ 28.04                 31 Aug 10   31 Aug 12      
 
  25 Sep 07     8,998     $ 24.03                 31 Aug 10   31 Aug 12      
 
  02 Apr 09     16,313     $ 15.46                     31 Aug 11   31 Aug 13     93,076  
 
  23 Nov 09     20,728     $ 15.97                 31 Aug 12   31 Aug 14     226,687  
ADS(US$)
                                                               
D Dienst
  24 Nov 08     61,092     $ 5.70                 31 Aug 11   31 Aug 13     128,515  
 
  23 Nov 09     197,006     $ 11.99                     31 Aug 12   31 Aug 14     1,617,571  
R Kelman
  01 Nov 05     14,931     $ 10.26       100                          
 
  25 Sep 07     14,137     $ 24.33                 31 Aug 10   31 Aug 12      
 
  25 Sep 07     10,507     $ 20.84                 31 Aug 10   31 Aug 12      
 
  02 Apr 09     38,580     $ 10.32                 31 Aug 11   31 Aug 13     146,939  
 
  23 Nov 09     25,531     $ 11.99                     31 Aug 12   31 Aug 14     209,629  
R Larry2
  02 Apr 09     48,225     $ 10.32                 31 Aug 11   31 Aug 13     183,674  
 
  23 Nov 09     31,914     $ 11.99                 31 Aug 12   31 Aug 14     262,038  
 
  18 Feb 10     5,260     $ 17.45                 28 Feb 11   28 Feb 11     59,320  
 
  18 Feb 10     5,261     $ 16.76                 28 Feb 12   28 Feb 12     72,348  
 
  18 Feb 10     5,261     $ 16.11                 28 Feb 13   28 Feb 13     74,572  
A Ratner
  14 Mar 08     25,625     $ 25.27       67           14 Mar 11   14 Mar 11     52,552  
 
  02 Apr 09     38,580     $ 10.32                 31 Aug 11   31 Aug 13     146,939  
 
  23 Nov 09     25,531     $ 11.99                     31 Aug 12   31 Aug 14     209,629  
 
1   Mr Sutcliffe’s agreement was terminated by way of redundancy on 26 August 2009. Please refer to Section E — Executive Contracts for further information relating to “good leaver” provisions in Mr Sutcliffe’s share grants.
 
    As a result, a share-based payment expense has been recognised for all awards scheduled to vest.
 
2   The Company made a one-time award to Mr Larry on 18 February 2010 as part of a special bonus as described in section (b)(1)(ii).
The following table summarises the Rights holdings of Key Management Personnel for the 2010 financial year.
                                                 
    BALANCE AT                             OTHER     BALANCE AT  
NAME   30 JUNE 2009     GRANTED     VESTED     FORFEITED     CHANGES     30 JUNE 2010  
 
Executive Directors:
                                               
D Dienst (ADS)
    61,092       197,0061                         258,098  
J Sutcliffe2
    258,344                   (23,982 )     (86,212 )     148,150  
 
Senior Executives:
                                               
T Bird3
    62,773                   (62,773 )            
G Davy
    99,655       16,928       (54,683 )     (3,823 )           58,077  
R Kelman (ADS)
    78,155       25,531       (14,931 )                 88,755  
R Larry (ADS)
    48,225       47,696                         95,921  
D McGree
    71,126       20,728       (30,175 )     (3,533 )           58,146  
A Ratner (ADS)
    55,664       25,531       (8,542 )                 72,653  
 
1   Approval for this issue was obtained under ASX Listing Rule 10.14.
 
2   Mr Sutcliffe’s service agreement was terminated by way of redundancy on 26 August 2009. Pursuant to the good-leaver provisions in his award agreement, Mr Sutcliffe retained his rights. Other changes represent rights which were cash-settled as part of Mr Sutcliffe’s redundancy.
 
3   The Company accepted Mr Bird’s resignation on 17 August 2009 and, as a result, he forfeited his unvested rights.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   53

 


 

DIRECTORS’ REPORT
G: NON-EXECUTIVE DIRECTOR REMUNERATION
Approach to determining NED fees
Remuneration for NEDs reflects the Company’s desire to attract, motivate and retain high quality directors and to ensure their active participation in the Company’s affairs for the purposes of corporate governance, regulatory compliance and other matters to maximise shareholder value. The Company aims to provide a level of remuneration for NEDs taking into account, among other things, fees paid for similar roles in comparable companies, the time commitment, risk and responsibility accepted by NEDs, and recognition of their commercial expertise and experience.
Approved fee pool
Annual NED fees are determined within an aggregate directors’ fee pool limit which is periodically recommended for approval by shareholders. The current pool limit is A$3,000,000, as approved at the Annual General Meeting of the Company held on 20 November 2009. At that time, the pool was increased from A$2,500,000 to enable the appointment of an additional NED and to respond to foreign exchange fluctuations in the payment of fees to existing NEDs who are paid in currency other than Australian dollars: i.e. US dollars or Japanese yen. The Committee believes that the current pool limit is adequate and that no changes are necessary at this time.
Base and committee fee policy
NEDs receive an annual fee, paid either monthly or quarterly, for their services.
NED fees are inclusive of superannuation, where applicable, and are made up of a base fee for each NED, and a base fee for the Chairman of the board. In addition, the Chairman of each board committee receives a fee for acting in such capacity. All of those fees are as outlined in the table below.
         
NED FEES IN A$ (EFFECTIVE 1 JULY 2009)        
 
Base fee (Chairman)
    433,200  
Base fee (Non-Executive Director)
    195,600  
Chairman Risk, Audit & Compliance Committee
    60,000  
Chairman Safety, Health, Environment & Community Committee
    30,000  
Chairman Remuneration Committee
    30,000  
Chairman Finance & Investment Committee
    30,000  
Chairman Nomination/Governance Committee
    30,000  
 
A NED does not receive a fee for being a member (other than as a chair) of a board committee.
NEDs also receive reimbursement for reasonable travel, accommodation and other expenses incurred in travelling to or from meetings of the board or when otherwise engaged in the business of the Company in accordance with board policy.
NEDs are not currently covered by any contract of employment and therefore have no contract duration, notice period for termination or entitlement to termination payments other than as noted below under Retirement benefits.
NED equity arrangements
NEDs may participate in the Sims Metal Management Deferred Tax Director and Employee Share Plan (NED Plan). Under the NED Plan, a NED agrees to contribute a nominated percentage of the annual fees received from the Company to fund the acquisition of shares in the Company by the NED Plan trustee. There was no participation in this plan during the 2010 financial year.
NEDs do not participate in any incentive (cash or equity-based) arrangements. Messrs Lewon and Morris hold stock options as a result of grants made by MMI prior to the merger with Sims in 2008.
Retirement benefits
The Company’s NEDs’ Retirement Allowance Scheme was discontinued effective 30 June 2006. The accrued amounts in respect of the remaining NEDs who had participated (Messrs Mazoudier and Feeney) were frozen and have been indexed at 5% per annum until payment. For Australian resident NEDs, the Company withholds 9% of their fees and contributes on behalf of each such NED to a complying superannuation fund, as required by legislation. Mr Mazoudier received A$977,123 from the Company’s NED Retirement Allowance Scheme upon retirement.
54

 


 

Fees paid to NEDs during the 2010 financial year (and comparatives]
Details of the fees paid to NEDs are set out below. Fees for the financial year that were paid in US dollars were converted at a rate of A$1 to US$.9626. Fees paid in Japanese yen were converted at a rate of A$l to ¥101.04, both being the exchange rates set by the board in July 2008. For NEDs who receive payments in foreign currencies, the tables below reflect the Australian dollar equivalent of the fees paid to each such NED based on the exchange rate at the date of payment.
                                                     
                SHORT-TERM                     SHARE-BASED        
                BENEFITS     POST-EMPLOYYMENT BENEFITS     PAYMENTS        
                        SUPER-             NED        
                CASH     ANNUATION     RETIREMENT     SHARE        
(A$)   LOCATION   YEAR     FEES8     BENEFITS     BENEFITS     PLAN     TOTAL  
P Varello1,9
  USA     2010       511,861                         511,861  
 
        2009       284,897                         284,897  
 
N Bobins1,9
  USA     2010       279,017                         279,017  
 
        2009       284,897                         284,897  
 
G Brunsdon2
  Australia     2010       109,993       10,878                   120,871  
 
        2009                                
 
J DiLacqua1,3,9
  USA     2010                                
 
        2009       87,768                         87,768  
 
JM Feeney
  Australia     2010       205,296       20,304       22,150             247,750  
 
        2009       173,504       17,389       21,096       19,708       231,697  
 
M Iwanaga4,9
  Japan     2010       97,101                         97,101  
 
        2009       293,526                         293,526  
 
R Lewon1,9
  USA     2010       262,853                         262,853  
 
        2009       247,013                         247,013  
 
P Mazoudier5
  Australia     2010       87,239       8,628       18,773             114,640  
 
        2009       397,432       35,769       45,636             478,837  
 
G Morris1,9
  USA     2010       316,120                         316,120  
 
        2009       322,782                         322,782  
 
C Renwick
  Australia     2010       205,296       20,304                   225,600  
 
        2009       167,351       18,628             39,622       225,601  
 
P Sukagawa6
  Japan     2010       119,533                         119,533  
 
        2009                                
 
J Thompson1,7,9
  USA     2010       125,325                         125,325  
 
        2009                                
 
Total
        2010       2,319,634       60,114       40,923             2,420,671  
 
        2009       2,259,170       71,786       66,732       59,330       2,457,018  
 
 
1   Messrs Bobins, DiLacqua, Lewon, Morris, Thompson and Varello are residents of the United States and received their payments in US dollars.
 
2   Mr Brunsdon retired from the board on 21 November 2007 and was re-appointed 20 November 2009.
 
3   Mr DiLacqua retired from the board on 21 November 2008.
 
4   Mr Iwanaga is a resident of Japan and received his payments in Japanese yen. He retired from the board 20 November 2009. Mr Mazoudier retired from the board on 20 November 2009.
 
6   Mr Sukagawa was appointed to the board on 20 November 2009 as a representative director of Mitsui. He is currently employed by a subsidiary of Mitsui and as a result his director fees are paid to a Mitsui affiliate.
 
7   Mr Thompson was appointed to the board on 20 November 2009.
 
8   Figure shown is after fee sacrifice to either superannuation and/or NED Share Plan.
 
9   Fees for the financial year that were paid in US dollars were converted at a rate of A$1 to US$.9626. Fees paid in Japanese yen were converted at a rate of A$1 to ¥101.04, both being the exchange rates set by the board in July 2008. For NEDs who receive payments in foreign currencies, the table reflects the Australian dollar equivalent of the fees paid to each such NED based on the exchange rate at the date of payment.
This report is made in accordance with a resolution of the board of directors and is signed for and on behalf of the board of directors.
       
(-s- P J Varello)
  (-s- D W Dienst)  
 
     
P J Varello
  D W Dienst  
Chairman
  Group Chief Executive Officer  
 
     
Houston
  Sydney  
26 August 2010
  27 August 2010  
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   55

 


 

CONSOLIDATED INCOME STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
                                 
            2010     2009     2008  
    NOTE     A$M     A$M     A$M  
Revenue
    5       7,458.5       8,641.0       7,670.5  
Other income
    6       25.2       33.7       55.7  
Raw materials used and changes in inventories
    10       (5,344.3 )     (6,272.6 )     (5,324.6 )
Freight expense
            (716.0 )     (919.3 )     (778.7 )
Employee benefits expense
            (433.0 )     (592.4 )     (404.9 )
Depreciation and amortisation expense
    7       (143.9 )     (170.8 )     (95.1 )
Repairs and maintenance expense
            (111.7 )     (147.8 )     (126.2 )
Other expenses
            (538.4 )     (542.2 )     (363.0 )
Finance costs
    7       (16.4 )     (21.5 )     (34.4 )
Goodwill impairment charge
    13             (191.1 )     (3.3 )
Share of pre-tax profit of investments accounted for using the equity method
    29       14.5       60.8       64.6  
 
Profit/(loss) before income tax
            194.5       (122.2 )     660.6  
Income tax expense
    8       (67.8 )     (28.1 )     (220.5 )
 
Profit/(loss) for the year
            126.7       (150.3 )     440.1  
 
 
                   
 
Earnings/(loss) per share:
                               
Basic
    32       64.9       (82.5 )     309.3  
Diluted
    32       64.5       (82.5 )     306.3  
 
The consolidated income statements should be read in conjunction with the accompanying notes.

56 


 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2010
                                 
            2010     2009     2008
    NOTE     A$M     A$M     A$M  
 
Profit/(loss) for the year
            126.7       (150.3 )     440.1  
Other comprehensive (loss)/income
                               
Other financial assets
    20       (1.4 )            
Cash flow hedge instruments
    20       (1.5 )     0.6       (14.3 )
Exchange differences on translation of foreign operations
    20       (121.3 )     337.1       (130.8 )
Actuarial losses on defined benefit plans
    18 (c)     (3.8 )     (8.2 )     (11.2 )
Income tax on other comprehensive income
    8       2.1       3.1       8.0  
 
Other comprehensive (loss)/income for the year, net of tax
            (125.9 )     332.6       (148.3 )
 
Total comprehensive income for the year
            0.8       182.3       291.8  
 
The consolidated statements of comprehensive income should be read in conjunction with the accompanying notes.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   57

 


 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2010
                         
            2010   2009
    NOTE   A$M   A$M
 
Assets
                       
Current assets
                       
Cash and cash equivalents
    33     132.3     69.5
Trade and other receivables
    9     576.2     350.3
Current tax receivable
                96.2
Inventory
    10     776.9     469.2
Other financial assets
            8.7     0.7
 
Total current assets
            1,494.1     985.9
 
Non-current assets
                       
Receivables
    9     7.9     17.6
Investments accounted for using the equity method
    29     369.5     400.2
Other financial assets
            21.4    
Property, plant and equipment
    12     925.8     947.7
Deferred tax assets
    8     74.1     71.6
Goodwill
    13     1,151.7     1,146.8
Other intangible assets
    14     195.2     238.8
 
Total non-current assets
            2,745.6     2,822.7
 
Total assets
            4,239.7     3,808.6
 
Liabilities
                       
Current liabilities
                       
Trade and other payables
    15     614.2     521.8
Borrowings
    16     0.6     0.8
Other financial liabilities
            5.0     10.5
Current tax liabilities
            23.2     5.9
Provisions
    17     31.1     38.0
 
Total current liabilities
            674.1     577.0
 
Non-current liabilities
                       
Payables
            3.3     4.3
Borrowings
    16     116.6     174.3
Deferred tax liabilities
    8     133.7     148.8
Provisions
    17     22.2     34.0
Retirement benefit obligations
    18     11.0     11.2
 
Total non-current liabilities
            286.8     372.6
 
Total liabilities
            960.9     949.6
 
Net assets
            3,278.8     2,859.0
 
Equity
                       
Contributed equity
    19     2,795.2     2,352.9
Reserves
    20     58.1     166.0
Retained earnings
    20     425.5     340.1
 
Total equity
            3,278.8     2,859.0
 
The consolidated statements of financial position should be read in conjunction with the accompanying notes.

58


 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2010
                                         
            CONTRIBUTED             RETAINED     TOTAL  
            EQUITY     RESERVES     EARNINGS     EQUITY  
    NOTE     A$M     A$M     A$M     A$M  
 
Balance at 1 July 2007
            812.0       (64.6 )     424.7       1,172.1  
Total comprehensive income for the year
                  (140.5 )     432.3       291.8  
Transactions with owners in their capacity as owners:
                                       
Dividends provided for or paid
    21                   (174.7 )     (174.7 )
Share-based payments
            5.7       30.8             36.5  
Acquisition of Metal Management Inc
            1,490.1                   1,490.1  
Dividend Reinvestment Plan
    21       18.1                   18.1  
 
 
            1,513.9       30.8       (174.7 )     1,370.0  
 
Balance at 30 June 2008
            2,325.9       (174.3 )     682.3       2,833.9  
Total comprehensive income for the year
                  338.0       (155.7 )     182.3  
Transactions with owners in their capacity as owners:
                                       
Dividends provided for or paid
    21                   (186.5 )     (186.5 )
Share-based payments
            0.4       2.3             2.7  
Dividend Reinvestment Plan
    21       26.6                   26.6  
 
 
            27.0       2.3       (186.5 )     (157.2 )
 
Balance at 30 June 2009
            2,352.9       166.0       340.1       2,859.0  
Total comprehensive income for the year
                  (123.2 )     124.0       0.8  
Transactions with owners in their capacity as owners:
                                       
Dividends provided for or paid
    21                   (38.6 )     (38.6 )
Share-based payments
            0.5       15.3             15.8  
Issue of shares under Institutional Placement
    19       391.4                   391.4  
Issue of shares under Share Purchase Plan
    19       41.2                   41.2  
Dividend Reinvestment Plan
    21       9.2                   9.2  
 
 
            442.3       15.3       (38.6 )     419.0  
 
Balance at 30 June 2010
            2,795.2       58.1       425.5       3,278.8  
 
The consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   59

 


 

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2010
                                 
            2010     2009     2008  
    NOTE     A$M     A$M     A$M  
 
Cash flows from operating activities
                               
Receipts from customers (inclusive of goods and services tax)
            7,230.3       9,232.8       7,353.9  
Payments to suppliers and employees (inclusive of goods and services tax)
            (7,305.1 )     (8,475.6 )     (6,943.1 )
Interest received
            2.8       2.3       2.9  
Interest paid
            (16.2 )     (20.9 )     (34.4 )
Dividends from associates and jointly controlled entities
    29       19.6       41.5       5.1  
Insurance recoveries
            1.0       12.3       7.6  
Income taxes refunded (paid)
            20.1       (238.0 )     (144.5 )
 
Net cash (outflow)/inflow from operating activities
    33       (47.5 )     554.4       247.5  
 
Cash flows from investing activities
                               
Payments for property, plant and equipment
    12       (120.9 )     (187.5 )     (129.7 )
Payments for acquisition of subsidiaries, net of cash acquired
    27       (113.4 )     (76.0 )     (58.5 )
Payments for other financial assets
            (22.8 )            
Proceeds from sale of property, plant and equipment
            8.1       5.5       2.0  
Proceeds from sale of subsidiaries
                  39.7        
Return of capital from jointly controlled entities
    29       0.4       3.6       48.5  
 
Net cash outflow from investing activities
            (248.6 )     (214.7 )     (137.7 )
 
Cash flows from financing activities
                               
Proceeds from borrowings
            3,009.9       1,847.3       815.7  
Repayment of borrowings
            (3,051.1 )     (2,112.6 )     (678.3 )
Fees paid for loan facilities
            (3.2 )     (2.0 )      
Proceeds from issue of shares
            441.9       0.4       5.7  
Transaction costs associated with issue of shares
            (8.8 )            
Dividends paid
    21       (29.4 )     (159.9 )     (156.6 )
 
Net cash inflow/(outflow) from financing activities
            359.3       (426.8 )     (13.5 )
 
Net increase/(decrease) in cash and cash equivalents
            63.2       (87.1 )     96.3  
Cash and cash equivalents at the beginning of the financial year
            69.5       133.5       38.6  
Effects of exchange rate changes on cash and cash equivalents
            (0.4 )     23.1       (1.4 )
 
Cash and cash equivalents at the end of the financial year
    33       132.3       69.5       133.5  
 
The consolidated statements of cash flows should be read in conjunction with the accompanying notes.

60


 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements are for the consolidated entity consisting of Sims Metal Management Limited (the “Company”) and its subsidiaries (collectively, the “Group”).
(A) BASIS OF PREPARATION
These general purpose financial statements have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards, Urgent Issues Group Interpretations (“UIGI”) and other authoritative pronouncements of the Australian Accounting Standards Board (“AASB”).
COMPLIANCE WITH IFRS AS ISSUED BY THE IASB
The consolidated financial statements also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.
HISTORICAL COST CONVENTION
The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain derivative contracts, available-for-sale financial assets and post-retirement assets and liabilities. The Group’s policy in respect of these items is set out in the notes below.
RECLASSIFICATIONS
Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation with no significant impact effect on the previously reported consolidated financial statements. The Group reclassified legal provisions of A$16.2 million which were included within trade and other payables as at 30 June 2009 to current provisions to be consistent with the presentation as at 30 June 2010.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with Australian Accounting Standards and IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 3.
FINANCIAL STATEMENT PRESENTATION
The Group adopted revised AASB 101 (IAS 1) Presentation of Financial Statements on 1 July 2009. The revised standard requires the separate presentation of a statement of comprehensive income and a statement of changes in equity. All non-owner changes in equity must now be presented in the statement of comprehensive income. As a consequence, the Group had to change the presentation of its consolidated financial statements. Comparative information has been re-presented so that it is also in conformity with the revised standard.
(B) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2010 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.
(I) AASB 2009-5, FURTHER AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS ARISING FROM THE ANNUAL IMPROVEMENTS PROJECT (IMPROVEMENTS TO IFRS ISSUED IN APRIL 2009)
Various accounting standards have been amended for minor changes in presentation, disclosure, recognition and measurement purposes. The amendments, which will become mandatory for the Group’s 30 June 2011 financial statements, are not expected to have a significant impact on the consolidated financial statements.
(II) AASB 2009-8 (AMENDMENT TO IFRS 2), AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS — GROUP CASH-SETTLED SHARE-BASED PAYMENT TRANSACTIONS
The amendments clarify the scope of AASB 2 (IFRS 2) as well as accounting for cash-settled (by the parent) share-based payment transactions in the separate or individual financial statements of a subsidiary receiving the goods or services when another subsidiary or shareholder has the obligation to settle the award. The amendments, which will become mandatory for the Group’s 30 June 2011 financial statements, are not expected to have a significant impact on the consolidated financial statements.
(III) AASB 124 (IAS 24) RELATED PARTY DISCLOSURES
A revised AASB 124 (IAS 24) was issued to primarily simplify the definition of a related party and clarify its intended meaning. The standard is effective for accounting periods beginning on or after 1 January 2011. The Group will apply the amended standard from 1 July 2011. The amendments are not expected to have a significant impact on the consolidated financial statements.
(IV) AASB 2009-14 (IFRIC 14) AMENDMENTS TO AUSTRALIAN INTERPRETATIONS — PREPAYMENTS OF A MINIMUM FUNDING REQUIREMENT
The amendments remove an unintended consequence of the interpretation related to voluntary prepayments when there is a minimum funding requirement in regard to the entity’s defined benefit scheme. It permits entities to recognise an asset for a prepayment of contributions made to cover minimum funding requirements. The amendments are effective for annual periods beginning on or after 1 January 2011, and must be applied retrospectively. The amendment is not expected to have a significant impact on the Group’s consolidated financial statements. The Group intends to apply the amendment from 1 July 2011.
     
SIMS METAL MANAGEMENT ANNUAL REPORT 2010   61

 


 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(B) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)
(V) AASB 9 (IFRS 9) FINANCIAL INSTRUMENTS
AASB 9 (IFRS 9) addresses the classification and measurement of financial assets. This new standard represents the first phase of the AASB’s (lASB’s) project to replace AASB 139 (IAS 39) Financial Instruments: Recognition and Measurement. The new standard is effective for annual periods beginning on or after 1 January 2013 but is available for early adoption. AASB 9 (IFRS 9) introduces new requirements for classifying and measuring financial instruments, including:
  The replacement of the multiple classification and measurement models in AASB 139 (IAS 39) with a single model that has only two classification categories: amortised cost and fair value.
 
  The replacement of the requirement to separate embedded derivatives from financial assets with a requirement to classify a hybrid contract in its entity at either amortised cost or fair value.
 
  The replacement of the cost exemption for unquoted equities and derivatives on unquoted equities with guidance on when cost may be an appropriate estimate of fair value.
The Group has not yet completed its assessment of AASB 9 (IFRS 9).
(VI) AASB 2010-3 AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS ARISING FROM THE ANNUAL IMPROVEMENTS PROJECT AND AASB 2010-4 FURTHER AMENDMENTS TO AUSTRALIAN ACCOUNTING STANDARDS ARISING FROM THE ANNUAL IMPROVEMENTS PROJECT (IASB IMPROVEMENTS TO IFRS ISSUED IN MAY 2010)
The AASB has made a number of amendments to Australian Accounting Standards as a result of the lASB’s annual improvements project. The Group will apply the amendments from 1 July 2010. The Group has not yet completed its assessment of the amendments.
(C) PRINCIPLES OF CONSOLIDATION
(I) SUBSIDIARIES
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
(II) ASSOCIATES
An associate is an entity, that is neither a subsidiary nor a joint venture, over whose operating and financial policies the Group exercises significant influence. Significant influence is presumed to exist where the Group has between 20% and 50% of the voting rights, but can also arise where the Group holds less than 20% if it has the power to be actively involved and influential in policy decisions affecting the entity. The Group’s share of the net assets, post-tax results and reserves of associates are included in the financial statements using the equity method. This involves recording the investment initially at cost to the Group, which therefore includes any goodwill on acquisition, and then, in subsequent periods, adjusting the carrying amount of the investment to reflect the Group’s share of the associate’s results less any impairment of goodwill and any other changes to the associate’s net assets such as dividends.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
(III) JOINT VENTURES
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. Joint control is the contractually agreed sharing of control such that significant operating and financial decisions require the unanimous consent of the parties sharing control. In some situations, joint control exists even though the Group has an ownership interest of more than 50% because of the veto rights held by joint venture partners. The Group has two types of joint ventures:
Jointly controlled entities
A jointly controlled entity is a joint venture that involves the establishment of a corporation, partnership or other entity in which each venture has a long-term interest. Jointly controlled entities are accounted for using the equity method. In addition, for both associates and jointly controlled entities, the carrying value will include any long-term debt interests that in substance form part of the Group’s net investment.
Joint venture operations
A joint venture operation is a joint venture in which the venturers have joint control over assets contributed to or acquired for the purpose of the joint venture. A joint venture operation does not involve the establishment of a corporation, partnership or other entity. This includes situations where the participants derive benefit from the joint activity through a share of the production, rather than by receiving a share of the results of trading. The Group’s proportionate interest in the assets, liabilities, revenues, expenses and cash flows of joint venture operations are incorporated into the Group’s financial statements under the appropriate headings.

62


 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
(IV) CHANGES IN OWNERSHIP INTERESTS
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of the Company.
When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
If the ownership interest in a jointly-controlled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.
(V) CHANGE IN ACCOUNTING POLICY
The Group has changed its accounting policy for transactions with non-controlling interests and the accounting for loss of control, joint control or significant influence from 1 July 2009 when a revised AASB 127 (IAS 27) Consolidated and Separate Financial Statements became operative. The revisions to AASB 127 (IAS 27) contained consequential amendments to AASB 128 (IAS 28) Investments in Associates and AASB 131 (IAS 31) Interests in Joint Ventures.
Previously transactions with non-controlling interests were treated as transactions with parties external to the Group. Disposals therefore resulted in gains or losses in profit or loss and purchases resulted in the recognition of goodwill. On disposal or partial disposal, a proportionate interest in reserves attributable to the subsidiary was reclassified to profit or loss or directly to retained earnings. The revised standard affected the acquisition of a jointly controlled entity which is detailed in Note 29.
Previously when the Group ceased to have control, joint control or significant influence over an entity, the carrying amount of the investment at the date control, joint control or significant influence ceased became its cost for the purposes of subsequently accounting for the retained interests as associates, jointly controlled entity or financial assets.
The Group has applied the new policy prospectively to transactions occurring on or after 1 July 2009. As a consequence, no adjustments were necessary to any of the amounts previously recognised in the consolidated financial statements.
(D) BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred to the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets of the subsidiary acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of the exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
CHANGE IN ACCOUNTING POLICY
A revised AASB 3 (IFRS 3) Business Combinations became operative on 1 July 2009. Accordingly, while its adoption has no impact on previous acquisitions made by the Group, the revised standard has affected the accounting for the acquisitions disclosed in Note 27.
The revised standard introduces significant changes in the accounting for business combinations. Changes affect the valuation of non-controlling interests (previously “minority interests”), the accounting for transaction costs, the initial recognition and subsequent measurement of contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognised, the reported results in the period when an acquisition occurs and future reported results.
         
 
       
SIMS METAL MANAGEMENT ANNUAL REPORT 2010
    63  

 


 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(E) FOREIGN CURRENCY TRANSLATION
(I) FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in Australian dollars (“A$”), which is the Company’s functional and presentation currency.
(II) TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are included in the fair value reserve in equity.
(III) GROUP COMPANIES
The results and financial position of all Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
  statement of financial position items are translated at the closing rate at the date of that statement of financial position;
 
  income statement items and statement of comprehensive income items are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case they are translated at the date of the transaction); and
 
  all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, borrowings and other financial instruments designated as hedges of such investments, or borrowings that qualify as quasi-equity loans, are recognised in other comprehensive income. When a loss of control occurs over a foreign operation, a proportionate share of such exchange differences is reclassified to profit or loss as part of the gain or loss on disposal where applicable. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
(F) REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns and trade allowances. Amounts billed to customers in respect of shipping and handling are classified as sales revenue where the Group is responsible for carriage, insurance and freight. All shipping and handling costs incurred by the Group are recognised as operating costs.
The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved.
Revenue is recognised for the major business activities as follows:
(I) SALE OF GOODS
Revenue from the sale of goods is recognised when there is persuasive evidence, usually in the form of an executed sales agreement at the time of delivery of goods to the customer, indicating that there has been a transfer of risks and rewards to the customer, no further work or processing is required, the quantity and quality of the goods has been determined, the price is fixed and generally title has passed.
(II) SERVICE REVENUE
Service revenue principally represents revenue earned from the collection of end-of-life post-consumer products for the purpose of product recycling. Service revenue is recognised when the services have been provided. Service revenue received in advance of the service being rendered is deferred.
(III) INTEREST INCOME
Interest income is recognised on a time proportion basis using the effective interest method.
(IV) DIVIDEND INCOME
Dividends are recognised when the right to receive payment is established.

64


 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
(G) GOVERNMENT GRANTS
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets.
(H) INCOME TAX
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Group’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates provisions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
Entities within the Group may be entitled to claim special tax deductions for investments in qualifying assets (investment allowances). The Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable and current tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward as deferred tax assets.
(I) LEASES
Leases of property, plant and equipment in which the Group, as lessee, has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance leases is depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease. Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term. The respective leased assets are included in the statement of financial position based on their nature.
(J) SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the Group Chief Executive Officer (“CEO”) who is the chief operating decision maker. Details on the Group’s segments are set out in Note 4.
     
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(K) IMPAIRMENT OF ASSETS
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate a potential for impairment. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash generating units “CGUs”). Non-financial assets, other than goodwill, that suffered impairment are reviewed for possible reversal of the impairment at each reporting period.
(L) CASH AND CASH EQUIVALENTS
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(M) TRADE AND OTHER RECEIVABLES
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Trade receivables are generally due for settlement within 30 to 60 days following shipment, except in the case of ferrous shipments made to export destinations which are generally secured by letters of credit that are collected within 10 days of shipment.
Collectibility of trade receivables is reviewed on an ongoing basis. Individual debts which are known to be uncollectible are written-off by reducing the carrying amount directly. An allowance account (a provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivable. Indicators of impairment would include significant financial difficulties of the debtor, likelihood of the debtor’s insolvency, default or delinquency in payment or a significant deterioration in credit worthiness. The amount of the impairment provision is recognised in profit or loss within other expenses.
When a trade receivable for which an impairment provision had been recognised becomes uncollectible in a subsequent period, it is written-off against the provision for impairment account. Subsequent recoveries of amounts previously written-off are credited against other expenses in profit or loss.
(N) INVENTORY
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditures, the latter being allocated on the basis of normal operating capacity. Costs are assigned to inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Stores consist of consumable and maintenance stores and are valued at the lower of cost and net realisable value. Cost is determined using weighted average costs.
(O) NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD FOR SALE AND DISCONTINUED OPERATIONS
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits and financial assets that are carried at fair value, which are specifically exempt from this requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in profit or loss.

66


 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
(P) INVESTMENTS AND OTHER FINANCIAL ASSETS
CLASSIFICATION
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at the end of each reporting date.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on financial assets held for trading are recognised in profit or loss and the related assets are classified as current assets in the consolidated statement of financial position.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the consolidated statement of financial position.
(iii) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any other category. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the end of the reporting period. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium-to long-term.
FINANCIAL ASSETS — RECLASSIFICATION
The Group may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near-term. Financial assets other than loans and receivables are permitted to be reclassified out of the held-for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if the Group has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification. Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.
RECOGNITION AND DERECOGNITION
Regular purchases and sales of financial assets are recognised on the trade date — the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value and transaction costs are expensed in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss.
SUBSEQUENT MEASUREMENT
Loans and receivables are carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in profit or loss within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in profit or loss as part of revenue from continuing operations when the right to receive payments is established.
Details on how the fair value of financial instruments is determined are disclosed in Note 2.
IMPAIRMENT
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is reclassified from equity and recognised in profit or loss as a reclassification adjustment. Impairment losses recognised in profit or loss on equity instruments classified as available-for-sale are not reversed through profit or loss.
     
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED]
(P) INVESTMENTS AND OTHER FINANCIAL ASSETS (CONTINUED)
IMPAIRMENT (CONTINUED)
If there is evidence of impairment for any of the Group’s financial assets carried at amortised cost, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in profit or loss.
(Q) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at historical cost less accumulated depreciation and accumulated impairment. Historical cost includes expenditures that are directly attributable to the acquisition and installation of the items. Cost may also include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost net of their residual values, over their estimated useful lives, as follows:
  Buildings — 25 to 40 years
 
  Plant and equipment — 3 to 20 years
 
  Leasehold improvements — lesser of life of asset or life of the lease
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written-down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount as set out in Note 1(k). Gains and losses on disposals are determined by comparing proceeds with carrying amounts and recognised in profit or loss.
(R) DERIVATIVES AND HEDGING ACTIVITIES
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either: [i] hedges of the fair value of recognised assets or liabilities or a firm commitment (“fair value hedges”); or [ii] hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions [“cash flow hedges”].
Certain derivative instruments do not qualify for hedge accounting, despite being valid economic hedges of the relevant risks. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in profit or loss and are included in other income or other expenses and are classified in the statement of financial position as a current asset or liability.
The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative financial instruments used for hedging purposes are disclosed in Note 11. Movements in the hedging reserve in equity are shown in Note 20. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity is less than 12 months. Trading derivatives are classified as a current asset or liability.
(I) FAIR VALUE HEDGE
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
(II) CASH FLOW HEDGE
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income and accumulated in the hedging reserve in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of forward foreign exchange contracts hedging export sales is recognised in profit or loss within revenue.
Where the hedged item is the cost of a non-financial asset or liability, such as a forecast transaction for the purchase of property, plant and equipment, the amounts recognised within other comprehensive income are transferred to the initial carrying amount of the non-financial asset or liability.

68


 

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gains or losses that were deferred in equity are immediately transferred to profit or loss.
(S) GOODWILL AND INTANGIBLE ASSETS
(I) GOODWILL
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary/ associate at the date of acquisition. Goodwill on acquisitions of associates is included in investments accounted for under the equity method. Goodwill is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to CGUs for the purpose of impairment testing to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose.
(II) TRADE NAME
Trade name relates principally to the “Metal Management” trading name. This intangible asset has a finite useful life and is carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of the trade name over its estimated useful life, which is 20 years.
(III) SUPPLIER RELATIONSHIPS AND CONTRACTS
Supplier relationships and contracts acquired as part of a business combination are recognised separately from goodwill. The supplier relationships and contracts are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated based on the timing of projected cash flows of the supplier relationships or straight-line method (as appropriate) over their estimated useful lives, which currently vary from 1 to 19 years.
(IV) PERMITS
Permits acquired as part of a business combination are recognised separately from goodwill. Permits are issued by state and local governments and are renewable at little or no cost and are thus considered to have an indefinite life. Permits are carried at their fair value at the date of acquisition and are not amortised. Instead, permits are tested for impairment annually or more frequently if events or changes in circumstances indicate that they might be impaired, and are carried at cost less accumulated impairment losses. Permits that relate to facilities that close or relocate are written-off to nil at the time the facility is closed or relocated.
(T) TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services provided to the Group prior to the end of a financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(U) BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised to finance costs on a straight-line basis over the term of the loan facility.
Borrowings are removed from the consolidated statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has the unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
(V) BORROWING COSTS
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time required to complete and prepare the asset for its intended use. Other borrowing costs are recognised as expenses in the period in which they are incurred.
(W) PROVISIONS
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
     
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED]
[X] EMPLOYEE BENEFITS
[I] SALARIES AND ANNUAL LEAVE
Liabilities for salaries and annual leave expected to be settled within 12 months of the end of the period in which employees render the related service are recognised in other payables in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
[II] LONG SERVICE LEAVE
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period in which the employees render the related service. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
[III] SUPERANNUATION, PENSIONS AND OTHER POST-RETIREMENT BENEFITS
The Group operates or participates in a number of pension [including superannuation] schemes throughout the world. The funding of the schemes complies with local regulations. The assets of the schemes are generally held separately from those of the Group and are administered by trustees or management boards.
For defined contribution schemes or schemes operated on an industry-wide basis where it is not possible to identify assets attributable to the participation by the Group’s employees, the cost is calculated on the basis of contributions payable.
For defined benefit schemes, the cost of providing pensions is charged to profit or loss so as to recognise current and past service costs, interest cost on defined benefit obligations, and the effect of any curtailments or settlements, net of expected returns on plan assets. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. An asset or liability