TIDMCAML
RNS Number : 7677I
Central Asia Metals PLC
30 March 2015
30 March 2015
CENTRAL ASIA METALS PLC
("CAML" or the "Company" or "Group")
2014 Full Year Results
Central Asia Metals plc (AIM: CAML), a copper producing company,
today announces its full year results for the 12 months ended 31
December 2014. The Company proposes a 7.5 pence final* dividend
bringing 2014 full year dividend to 12.5 pence (5 pence interim
dividend paid in October 2014 and 7.5 pence final* dividend is a
50% increase on this interim dividend).
Financial update:
-- The transaction to acquire the sole ownership of Kounrad project completed in May 2014
-- Record gross revenue of $76.6 million (increase of 42%, 2013: $54.1 million)
-- Group EBITDA of $47.3 million (increase of 46%, 2013: $32.4 million)
-- C1 cash costs of $0.71/lb (reduction of 3%, 2013: $0.73/lb)
-- The proposed full year dividend represents 28% of attributable revenue for the year
-- Group cash balance as at 31 December 2014 of $46.3 million (2013: $44.5 million)
Operational update:
-- Kounrad record annual production of 11,136 tonnes of cathode
copper (increase of 6%, 2013: 10,509 tonnes)
-- Boiler-house capacity increased from 8.4MW to 14MW allowing higher winter treatment rates
-- SX-EW plant utilisation increased from 97.0% to 98.7%
-- Stage 1 plant expansion to 15,000 tonnes annual capacity commenced in June 2014
2015 Outlook
-- Kounrad production target of 13,000 tonnes increasing to 15,000 tonnes in 2016
-- Focus on cash costs to remain in lower quartile of industry cost curve
-- Stage 1 expansion is under budget and on schedule for completion in Q2
-- Continue to appraise business development opportunities to create further shareholder value
Nick Clarke, Chief Executive Officer of CAML, commented:
"2014 was yet another year of CAML meeting its targets as we
achieved both record revenues and production. This record
performance was accomplished against an increasingly challenging
commodity price environment for copper, as our SX-EW plant at
Kounrad delivered production in excess of our stated target of
11,000 tonnes. The expansion of the plant is firmly on track and
will increase our annual production capacity further to 15,000
tonnes by 2016. A continued focus on cost control by all our
employees has allowed us to remain in the lower quartile of the
industry's cost curve and we are confident that this position will
be maintained as we expand production. Our excellent performance in
2014 is reflected in the final dividend our Board has proposed, and
we remain committed to delivering returns to all our
shareholders."
Analyst presentation conference call
There will be an analyst presentation and conference call on 30
March 2015 at 09:30 (BST). The call can be accessed by dialling +44
(0) 203 427 1910 and quoting the confirmation code 5576202. The
results presentation slides will be available at
http://www.centralasiametals.com/ and a replay facility will be
available following the presentation.
For further information contact:
Tel: +44 (0) 20
Central Asia Metals plc 7898 9001
Nick Clarke, CEO
Nigel Robinson, CFO
Peel Hunt LLP (Nominated Adviser & Joint Tel: +44 (0) 20
Broker) 7418 8900
Matthew Armitt
Ross Allister
Tel: +44 (0) 20
Mirabaud Securities LLP (Joint Broker) 7878 3362
Peter Krens
Tel: +44 (0) 20
Bell Pottinger 3772 2500
Lorna Cobbett
Note to editors:
Central Asia Metals, an AIM-listed UK company based in London,
owns 100% of the Kounrad SX-EW copper facility in Kazakhstan. The
Company also has a 52% equity interest in Copper Bay Ltd, which is
a private company conducting a pre-feasibility study of the
Chañaral Bay Copper Project in Chile. At the 2014 UK Stock Market
Awards, CAML was named Best Basic Resources Plc. For further
information, please visit www.centralasiametals.com.
*subject to capital reduction scheme as summarised in note 20 in
the financial information below
CHAIRMAN'S STATEMENT
Having established the Kounrad project as a low cost copper
project in Kazakhstan, we now plan to increase production to 15,000
tonnes of copper per annum by 2016. We are also looking at
expanding the business where we see an opportunity to create value
for our shareholders.
Dear Shareholders,
Key Achievements
It is now over four years since the Company listed on AIM and
raised $60 million to implement its business plans. Thanks to the
hard work, dedication and skill of our staff we have achieved a lot
since that time and managed to deliver on all of our key promises
to shareholders.
Since September 2010, we have now produced over 30,000 tonnes of
cathode copper at Kounrad at extremely competitive cash costs of
production. The CAML Board intend to propose a final dividend for
2014 of 7.5 pence per Ordinary Share subject to shareholder
approval and to the proposed capital reduction as summarised in the
separate RNS announcement released today. This will take the total
dividend for 2014 to 12.5 pence per Ordinary Share. This latest
dividend will increase the amount returned to shareholders in
dividends and share buy backs since the listing to approximately
$53 million.
In addition, the Company has retained sufficient cash resources
to fund the $35 million expansion programme at Kounrad. Stage 1 of
this expansion programme will increase the SX-EW plant's capacity
to 15,000 tonnes per annum at a total capital cost of $15.5
million, inclusive of the boiler house expansion, whilst Stage 2
will commence on receipt of the relevant State approvals to enable
the resource from the Western dumps to be leached and processed.
The capital cost of the Stage 2 expansion is currently estimated at
$19.5 million.
In May 2014, the Company completed the transaction to acquire
100% ownership of the Kounrad project. This was a key milestone for
the Company and prompted the commencement of the expansion
programme mentioned above. As part of the completion of the
transaction, Mr Kenges Rakishev, a Non-Executive Director of the
Company, also became a 20% shareholder of the Company. We are
pleased to have such an influential Kazakhstan businessman as
Kenges as both a Board member and a supportive major
shareholder.
In recognition of the Company's achievements since the IPO, the
Company was awarded 'Best Basic Resources PLC' in the UK Stock
Market Awards in March 2014. The award was judged on the basis of
the Company's performance within the mining sector and in
comparison to its peer group and other larger mining companies.
Corporate Governance
Dr Michael Price retired from the Board in June 2014, having
served as a Director of the Company since 2006. During his time
with the Company, Mike served both as a valued independent
Non-Executive Director and as the Chairman of the Audit and
Remuneration Committees of the Board. In these roles he helped lead
the transition of the governance of the Company from the private
arena to the public market. The rest of the Board and I wish to
record our appreciation to Mike for his independent and insightful
input over many years.
Following Mike's departure, the Board has been strengthened by
the appointment of David Swan in June 2014 as an independent
Non-Executive Director of the Company and Chairman of the Audit
Committee. David is a chartered accountant with broad commercial
experience across a range of small to large companies. We are
delighted to welcome David to the Board and believe he will provide
great value to the Group as we continue developing CAML's controls
and procedures.
The Company is committed to improving corporate governance
wherever it can and the Board is well aware of the importance of
maintaining strong controls and procedures across the Group's
operations.
Strategy and Growth
Kazakhstan
The Company has an established presence in Kazakhstan and since
the commencement of operations at Kounrad, has paid almost $50
million in various taxes to the Kazakhstan authorities, contributed
close to $690,000 towards the local community and currently employs
approximately 330 staff on site, the majority of whom have been
recruited locally.
The Company is keen to grow its business and reputation in
Kazakhstan and the expansion of operations at Kounrad is testament
to this goal. As a responsible operator, we place the highest
priority on our obligations to protect the environment in the area
of our copper recovery operations and to comply with the applicable
health and safety regulations of Kazakhstan.
Alongside the main copper production facilities at Kounrad, the
Group has established a business development focus within
Kazakhstan which is tasked with seeking out additional
opportunities.
Outside of Kazakhstan
Elsewhere, based on our strong financial position and technical
experience, the Company is keen to consider other business
opportunities. Such opportunities will only be actively pursued by
management so long as they can be suitably incorporated into CAML
and would add significant shareholder value.
In determining this, the management team will consider a number
of factors from the strategic fit within the Group's operations to
the funding requirements and overall impact on Group profitability.
To support our business development activities we were delighted to
appoint Gavin Ferrar as our Business Development Director in June
2014. Gavin brings with him a wealth of commercial experience in
the natural resources sector and will be a valuable member of the
CAML team.
Outlook
During 2014, the copper price came under pressure due to
increasing supply and continued concerns over the outlook for the
growth of the Chinese economy. These price pressures became
particularly acute in January 2015 when the copper price fell to a
five and a half year low.
Whilst the current commodity price environment provides a
challenge to all copper producers, from which CAML is not immune,
our low operating cash costs of production at Kounrad places us in
an enviable position compared to our peers.
Nigel Hurst-Brown
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
Since the start of the project we have exceeded annual
production targets and our cash costs of production have remained
in the lowest quartile on the industry cost curve.
Kounrad Operations - Record Production in 2014
During 2014, the Company's production at the Kounrad project
continued to be a success. We produced 11,136 tonnes of copper
cathode and surpassed our production target of 11,000 tonnes whilst
maintaining a low cash cost base. During 2014, our C1 cash cost of
production was $0.71/lb (2013: $0.73/lb) and fully absorbed costs
within Kazakhstan were $1.30/lb (2013: $1.13/lb). The increase in
fully absorbed costs is due to increased depreciation and
amortisation charges as a result of the accounting treatment of the
acquisition of the additional 40% share in the Kounrad project in
2014.
A total of 11,163 tonnes of copper (2013: 10,689) were sold at
an average copper price of $6,794 per tonne (2013: $7,114)
resulting in annual 2014 gross revenue for CAML of $76.6 million
(2013: $54.1 million) and $161.4 million cumulative gross revenues
to 31 December 2014 since operations commenced. This revenue stream
combined with the low costs of production helped to generate a
Kounrad project EBITDA for the year ended 31 December 2014 of $56.0
million.
During 2014, the utilisation rate of the plant was 98.7%. The
performance and efficiency of the SX-EW plant continued to meet our
expectations and is further evidence of the reliability of the
plant design, equipment selection and construction methods employed
from the outset.
Similarly, the quality of the copper cathodes produced continued
to be of a high standard and met all contractual conditions and
London Metal Exchange (LME) specifications.
Our commitments to the local community and environment continued
to be a key focus during the year. Significant efforts have been
made to ensure that we comply with all the local environmental and
health and safety legislation.
Our Corporate Social Responsibility (CSR) Director, Nick
Shirley, is based on site in Kazakhstan to lead these activities
and is tasked with raising environmental and health and safety
standards to ensure they meet industry best practice.
Whilst health and safety is key to the welfare of our employees,
the Group did record its first lost time injury (LTI) since the
commencement of construction four years ago. The injury to the
employee was relatively minor and he made a quick and full recovery
and has since returned to duties.
Finally, Kounrad is a valuable contributor to the Kazakhstan
economy and specifically in the local area. We currently employ
approximately 330 staff on site and paid $24.8 million in taxation
to the Republic of Kazakhstan during 2014 whilst contributing
$280,000 to local causes through our voluntary and regulated
subsoil use contract (SUC) social contributions.
Kounrad Ownership and Expansion
During the year, and as part of the process of purchasing the
remaining 40% ownership of the Kounrad project, the Group received
all the necessary approvals from the State for the transfer of
ownership. On completion of the transaction in May 2014, Mr Kenges
Rakishev, a Non-Executive Director of the Company became a 20%
shareholder of the Company.
Following the completion of the transaction, the expansion plans
for the project commenced in May 2014. The Company plans to invest
$35 million into the project in two specific stages. Stage 1 is to
increase copper production at the SX-EW plant to 15,000 tonnes per
annum by 2016. The estimated cost for this stage is $15.5 million
inclusive of the capital costs for constructing the boiler house
extension. Stage 2, at an additional estimated capital cost of
$19.5 million, will extend the life of mine to enable the resource
from the Western dumps to be leached and processed. The programme
of works for Stage 1 will be completed in Q2 2015 using the same
CAML construction personnel that worked on the construction of the
current SX-EW plant.
Stage 1
An additional 5.6MW of boiler capacity was commissioned on
schedule in October 2014 to facilitate increased production
throughout the winter months. The total capital cost of building
and commissioning the boiler was $1.4 million. In June 2014, the
Company commenced the construction programme for the expansion of
the existing SX-EW plant. This involves the addition of a new mixer
settler unit (SX), a new 5,000 tonne per annum capacity
Electro-Winning (EW) facility and an upgrade to the existing
electrical sub-station. As at 31 December 2014, work was
progressing well and we remain on target for commissioning in Q2
2015.
Stage 2
The Stage 2 expansion will only commence upon receipt of all the
necessary approvals and mining permits required from the State to
allow leaching operations on the Western dumps. All the required
applications have been submitted and we hope to have obtained all
approvals by Q2 2015.
The Stage 2 expansion programme's focus is on the extraction of
copper from the Western dump area. Exploitation of the Western
Kounrad resource area will be facilitated by the construction of
two 12.6km pipelines from the expanded SX-EW plant in the East to
the Western dumps. This will allow for the transportation of
pregnant leach solution (PLS) and raffinate solution from the
Western leaching areas to the plant for processing. The Stage 2
expansion plans also involve the construction of three additional
boilers at the Western leaching area together with solution
collection and pumping facilities. The anticipated cost is
approximately $19.5 million, phased from late 2015 and completion
is planned for 2017.
Growth Opportunities
Copper Bay Project - Chile
During 2014, we progressed the Copper Bay project having
acquired a 50% shareholding in November 2013. As at 31 December
2014, significant progress had been made on the in-house developed
preliminary feasibility study (PFS) although a number of technical
aspects required additional work.
At the time of CAML's investment there was no approved JORC
resource despite several previous drilling campaigns and resource
calculations prepared by former owners. Consequently, a drilling
campaign was planned in consultation with Wardell Armstrong
International (WAI) and conducted in August 2014 during which a
total of 136 holes were drilled to an average depth of 9.2m. The
analysis of the data has enabled WAI to commence preparation of a
JORC compliant resource statement.
During much of the year the focus of the PFS work has been on
assessing the most efficient means of extracting the copper from
the resource. The preferred process route is for the tailings to be
reclaimed by dredging from the beach zone, with the reclaimed
solids then pumped to the processing plant for copper recovery
through an acid leaching process followed by froth flotation. The
treated waste tailings from the plant will then be either returned
to the beach zone as coarse backfill or sent to a tailings
management facility (TMF) as fine tailings.
During this period emphasis was placed on metallurgical testing
using the WAI laboratory facilities in Cornwall. The results from
the test programme have indicated that a copper recovery in the
range of 70% to 73% can be achieved using the process mentioned
above. Additional testing performed on a 7 tonne bulk sample taken
from the 2014 drilling programme is under consideration as part of
the next stage of the project.
These additional aspects of the work remain ongoing, together
with the environmental and social studies, and it is anticipated
that the PFS will be completed in Q2 2015. A decision whether to
then invest a further $3 million to increase CAML's stake to 75%,
in line with the Investment and Shareholder's Agreement, will be
made shortly thereafter.
Other Opportunities
Elsewhere, we continue to look for additional business
opportunities to enhance the value of the CAML portfolio. Whilst
the expansion at Kounrad and the 100% ownership of the project will
increase the cash generation capabilities of the Company, the CAML
Board is keen to further increase returns to shareholders by taking
advantage of the Group's balance sheet strength and technical
skills.
During the year the Company established a formal business
development function in its management structure to establish and
execute an accretive growth strategy. Underlying these objectives
is to ensure solid shareholder value by targeting only those
opportunities that will deliver profitable production and be
accretive to our shareholders.
CAML's management has well-established expertise in project
delivery, mining and processing operations, which together with the
financial strength afforded by strong cash flow and a debt-free
balance sheet, will allow the Company to assess a broad range of
opportunities.
CAML will assess opportunities in Kazakhstan as well as Europe,
Africa and the Americas. Although business development activities
are constant, there are currently no transactions in process.
Outlook
During 2014 the copper price fell by 18% and a further reduction
in prices was seen in January 2015. Indeed, by the end of January
2015 copper prices had fallen to a five and a half year low of
approximately $5,505 per tonne.
Whilst such price reductions are not ideal they are also outside
of our control. Consequently, we will focus our efforts on what we
can control and strive to maintain our low cash costs of production
and meet our production target for 2015 of 13,000 tonnes of copper.
Delivery on time and within the capital budget of the expansion
programme at Kounrad is a primary objective for the year.
Alongside all of the above operational objectives we will
continue to actively pursue additional business opportunities that
may arise from the challenging nature of the commodities market as
well as making some key decisions on the future of the Copper Bay
project in Q2 2015.
Nick Clarke
Chief Executive Officer
FINANCIAL REVIEW
2014 has proved to be another profitable year for CAML in a
difficult market. Our continued focus on the low cost of operations
at Kounrad and our increased ownership to 100% of the project has
further strengthened the balance sheet.
Summary:
-- Gross revenue for the year increased by 42% to $76.6 million (2013: $54.1 million)
-- Operating profit for the year increased by 34% to $37.5 million (2013: $27.9 million)
-- Unit operating costs at Kounrad remain competitive
- C1 cash costs of $1,566 per tonne (2013: $1,600), equates to $0.71/lb (2013: $0.73/lb)
- Fully inclusive cost of $3,642 (2013: $3,147), equates to $1.65/lb (2013: $0. $1.43/lb)
-- One-off gain in the period of $33.0 million as a result of
the completion of the Kounrad Transaction
-- Cash balances as at 31 December 2014 of $46.3 million (2013: $44.5 million)
-- Proposed 2014 final dividend of 7.5 pence per share - making
12.5 pence for the full year (2013: 9 pence), a 39% increase.
Overview
During 2014 the Company completed the Kounrad transaction and
became the 100% owner of the Kounrad Project. The continued strong
operational performance of the project and the associated low costs
of production, resulted in strong cash flows for the Group. Cash
generated from operations increased to $47 million (2013: $41
million) for the year of which $17.9 million was returned to
shareholders as dividend and a further $11 million was invested
back into the project.
Financial Performance - Project
Group vs Kounrad Project and
Reported Reported Project
2014 2013 2013
$'000 $'000 $'000
------------------------------- ---------- ---------- ---------------------
Gross Revenues 76,561 54,090 76,024
------------------------------- ---------- ---------- ---------------------
Cost of Producing Copper
Cathode 9,381 6,047 8,479
Mineral Extraction Tax 4,431 3,070 4,383
Selling Costs 3,667 2,964 4,200
------------------------------- ---------- ---------- ---------------------
Total C1 costs 17,479 12,082 17,062
Local Administrative expenses 3,123 2,494 3,751
Corporate Overheads 8,637 7,068 7,068
------------------------------- ---------- ---------- ---------------------
Total Costs 29,239 21,643 27,880
------------------------------- ---------- ---------- ---------------------
Group EBITDA 47,322 48,144
------------------------------- ---------- ---------- ---------------------
Depreciation and Amortisation 11,412 4,546 5,734
Excluded Above (1,600) (13)
------------------------------- ---------- ---------- ---------------------
Operating Profit 37,510 27,913
------------------------------- ---------- ---------- ---------------------
2014 2014 2013 2013
$ per $ $ $
tonne
per lb per tonne per lb
------------------------------- ---------- ---------- ----------- --------
C1 Unit Costs 1,566 0.71 1,600 0.73
Depreciation 1,022 0.46 538 0.24
Local Administrative
Expenses 280 0.13 352 0.16
------------------------------- ---------- ---------- ----------- --------
2,868 1.30 2,489 1.13
Corporate Overheads 774 0.35 663 0.30
------------------------------- ---------- ---------- ----------- --------
Fully Absorbed unit
costs 3,642 1.65 3,152 1.43
------------------------------- ---------- ---------- ----------- --------
Acquisition of 100% of the Kounrad Project
As previously mentioned, on 23 May 2014 the Kounrad transaction
was completed with Mr Rakishev resulting in the Group owning 100%
of the Kounrad project. Accordingly, the Group accounted for the
increased ownership of the Kounrad project by de-recognising its
previous interests held and recognising the fair value of the
assets and liabilities acquired at the time of completion.
This resulted in an uplift to the asset values of $54.0 million
and a one-off gain for the year of $33.0 million (2013: $27.8
million). There was an additional depreciation and amortisation
charge during 2014 of $6.6 million as a result of the uplift to the
asset values (2013: $1.3 million).
Details of the Kounrad Transaction and business combination
accounting treatment are contained in note 21 of the financial
information.
Income Statement
The Group operating profit for the 12 month period was $37.5
million (2013: $27.9 million) an increase of 34%. As mentioned
above, a one off exceptional gain from the completion of the
Kounrad Transaction boosted the Group's profit for the year from
continuing operations to $59.7 million (2013: $48.6 million).
Losses from discontinued operations reduced to $0.3 million
(2013: $14.1 million) following the full write down of all the
Mongolian assets during 2013.
The resulting Group profit for the year was $59.5 million (2013:
$34.5 million) which resulted in earnings per share of 56.04 cents
(2013: 38.89 cents) or 54.91 cents (2013: 37.36 cents) on a fully
diluted basis.
Revenue
10,687 (2013: 10,500) tonnes of copper cathode were sold to
Traxys as part of the Company's offtake arrangements at Kounrad and
a further 476 (2013: 189) tonnes were sold locally. The Group
achieved an average selling price of $6,794 (2013: $7,114) per
tonne and this generated reported gross revenues for the Group of
$76.6 million (2013: $54.1 million).
The offtake arrangement with Traxys is to sell a minimum of 90%
of its product through to 31 December 2015. As part of this
arrangement, Traxys takes the goods at the SX-EW plant at Kounrad
and is then responsible for transporting the goods to the end
customer.
The costs of marketing, distribution and selling associated with
this arrangement are borne by the Group at an agreed fixed fee.
During the start of 2014 the fixed fee was renegotiated with Traxys
from $350 to $320 per tonne of copper shipped.
The Group reports both a gross revenue and net revenue line
which reflects the offset of the fixed fee from the price of the
copper achieved.
Costs of Production
The Group commenced production of copper cathodes in April 2012.
The cathodes are produced by the SX-EW plant at Kounrad which is
owned and operated by Kounrad Copper Company LLP. Given the changes
in the business over the past two years as a result of the Kounrad
Transaction, comparisons between the 2013 and 2014 reported
statutory numbers can be difficult to interpret. A more meaningful
analysis of the reported revenues and costs can be obtained in the
table above.
The reported cost of sales for the year were $25.1 million
(2013: $13.8 million). This amount consists of the costs associated
with the production of copper cathodes, the associated mineral
extraction tax levied by the government and the depreciation and
amortisation charges.
The costs related to the physical production of copper cathodes
are the production labour, reagents and electricity, plus any other
SX-EW site related cost. These costs amounted to $9.4 million
(2013: $6.1 million). On a project basis, the equivalent comparable
cost in 2013 was $8.5 million which indicates an 11% increase. This
increase was primarily due to increased production and higher power
and production payroll costs at Kounrad.
Mineral Extraction Tax is charged by the Kazakhstan authorities
at the rate of 5.7% on the value of the metal recovered and during
the year this amounted to a further cost of $4.4 million (2013:
$3.1 million). On a project basis, the equivalent comparable cost
in 2013 was also $4.4 million.
During the year depreciation and amortisation charges amounted
to $11.4 million (2013: $4.6 million). This includes depreciation
and amortisation charges of $6.6 million (2013: $1.3 million) as a
result of the fair value accounting for the acquisition of the
additional 40% share in the Kounrad project. Again on a project
basis, the equivalent comparable charge in 2013 was $5.7 million
indicating an increase year on year of $5.7 million or 100%.
The ongoing annual depreciation and amortisation charges are
expected to remain at approximately the same level in future years
but are always subject to future periodic reviews of the Group's
depreciation policy.
Distribution and Selling Costs
The major portion of the sales and distribution costs consist of
the buyers fees paid to Traxys as part of the offtake agreements as
noted above. During 2014, the Company incurred costs of $3.7
million (2013: $3.0 million) and at project level the equivalent
comparable 2013 costs were $4.2 million. The 12% reduction in the
year at project level is primarily due to lower negotiated fees
with Traxys for the delivery of copper.
Administrative Expenses
During 2014, the Group employed an average of 46 staff (2013:
40) at Kounrad to oversee the technical and commercial management
of the operations in Kazakhstan together with a small office
headquarters in London of 8 staff including the Directors (2013:
7). Group administrative expenses for the year are $11.8 million
(2013: $9.6 million) reflecting the growth of the Group during the
period.
Unit Costs
The Group's C1 cash costs of production remains in the lowest
quartile on the industry cost curve at $1,566 per tonne throughout
the year (2013: $1,600) or $0.71/lb (2013: $0.73/lb). This
represents a 3% decrease year on year due a combination of strong
management controls and the devaluation of the local Kazakhstan
currency by 20% in February 2014. Given that the Group currently
only has one significant project, it seems reasonable to also
report the Group's unit cost base on a fully inclusive basis. The
Group's fully inclusive unit costs are $3,642 per tonne (2013:
$3,152) or $1.65/lb (2013: $1.43/lb). The main increase at the
fully inclusive level comes from increased depreciation and
amortisation charges in 2014 as a result of the fair value
accounting for the acquisition of the additional 40% share in the
Kounrad project.
Balance Sheet
As a result of the completion of the Kounrad Transaction there
has been a significant uplift to the Group's asset base during 2014
to $216.3 million (2013: $161.5 million).
Following the acquisition of the remaining 40% in the subsoil
user licence, intangibles assets increased to $81.6 million (2013:
$16.7 million) including a fair value uplift of $54.0 million and
additional goodwill arising on the transaction of $11.0 million
(2013: $9.3 million).
During 2014, there were additions to property, plant and
equipment of $11.3 million (2013: $1.9 million). The majority of
this spend was incurred on construction work at Kounrad for the
SX-EW plant expansion.
At 31 December 2014, non-current trade and other receivables
were $6.4 million (31 December 2013: $17.1 million). The large
reduction is a consequence of the change from joint operation
accounting to 100% consolidation of the Kounrad entities which
resulted in the removal of the amounts recoverable from related
parties (31 December 2013: $11.7 million).
The outstanding balance of $6.4 million (2013: $5.4 million)
represents the amount owed to the Group by the Kazakhstan
authorities for recoverable VAT. The amount has been audited by the
tax authorities on a number of occasions. The conclusion from the
authority's audit work was that the VAT amount claimed has been
determined correctly and was supported by the required documentary
evidence. Despite this, the amount remained unpaid as at 31
December 2014.
The Group is working closely with its advisors and local
partners to recover the outstanding VAT. The planned means of
recovery will be through a combination of the local sales of
cathode copper to effectively offset VAT liabilities and by a
successful appeal to the authorities. Following an unsuccessful
appeal in 2014, a further appeal was lodged in January 2015 by the
local tax advisors and the final outcome may not be known for a
further 12 months. During 2014, 476 tonnes of copper were sold
locally (2013: 189 tonnes).
At 31 December 2014, current trade and other payables were $4.3
million (31 December 2013: $11.9 million). The large decrease is a
consequence of $8.1 million of 2013 corporate income tax paid in
April 2014. During 2014, instalment payments of $8.5 million were
paid towards the 2014 corporate income tax liability and at 31
December 2014 approximately $0.8 million remained outstanding. The
deferred tax liability has increased to $20.6 million (31 December
2013: $9.7 million) and this relates primarily to the completion of
the Kounrad transaction during 2014.
Significant changes to equity occurred during the period as a
direct consequence of the completion of the Kounrad transaction and
the subsequent issue of 21,211,751 Ordinary Shares to Mr Kenges
Rakishev on 23 May 2014 as consideration for the transaction. On 23
July 2014 the Company allotted and issued 3,500,000 Ordinary Shares
to the trustee of the Central Asia Metals Limited Share Trust (the
Employee Benefit Trust). These Ordinary Shares were issued to
satisfy current awards granted under the Company's Employee Share
Plans together with any future awards that may be granted by the
Company.
Cash Flows
During the year the Group generated $47.2 million (2013: $41.1
million) from operations which resulted in the Group's cash
balances increasing to $46.3 million (2013: $44.5 million) as at 31
December 2014.
The return of $17.9 million of funds (2013: $19.7 million) to
shareholders through dividends was the main outflow of cash during
the year within the Group.
As mentioned previously, $16.6 million of corporate income tax
was paid during 2014. This included $8.1 million of 2013 corporate
income tax paid in April 2014 and payments of $8.5 million towards
the 2014 corporate income tax liability.
The Group purchased property, plant and equipment of $11.0
million (2013: $2.5 million) of which $1.4 million (2013: nil) was
in relation to the commissioning of the boiler at Kounrad and $8.0
million (2013: nil) in relation to the Stage 1 SX-EW expansion
programme. The remaining balance of $1.6 million (2013: $2.5
million) was in relation to sustaining capex at Kounrad.
Foreign Exchange
The Group operates overseas and is exposed to foreign currency
movements. During 2014, the Kazakhstan Tenge devalued by almost
20%. Given that the Group's operations in Kazakhstan generate their
income in US dollars through the export of copper, the immediate
impact of the devaluation in 2014 and of any future devaluation
should be positive in relation to the Group's cost base in
Kazakhstan. It is estimated that approximately 60% of the cost base
in Kazakhstan is denominated in Kazakhstan Tenge.
The Board will continue to monitor the situation and respond
accordingly should a further devaluation occur. During 2014, the
Board's response was to increase salaries for staff in the country
by 10%.
The Group does not keep large amounts of cash in Kazakhstan
Tenge and as at 31 December 2014 held the US dollar equivalent of
$0.4 million (2013: $0.6 million). During 2014, the Group reported
a $1.9 million foreign exchange gain (2013: $0.2 million), relating
to the transactional gains of foreign currency assets and
liabilities at the reporting date.
Copper Price
During 2014, the copper price came under pressure and fell by
18% over the course of the year. Indeed, this reduction in copper
prices was exacerbated in early January 2015 by a further reduction
in copper prices. Despite these reductions, the Group remains
profitable due to the low costs of production at Kounrad.
The Group policy has always been to sell the cooper at 'spot'
prices in line with the contractual conditions associated with the
offtake arrangements. A review of this policy during the year by
the Board concluded that, whilst such an approach is still felt to
be appropriate for the Group due to the lack of any debt financing
and the low costs of production, the ability of the management team
to respond to movements in the copper price was considered
appropriate.
Consequently, the Board has approved a minor change to the
Group's Treasury policy that allows limited hedging up to a maximum
of 30% of the Group's rolling 12-month production. It is felt that
this policy would allow management to combine the benefits of an
exposure to the copper price for its shareholders whilst also
facilitating the ability for management to put in place limited
hedging to cover the cost base.
As at the time of writing this report no hedges were in
place.
Dividend
As part of these annual results, the Board has the intention to
propose a 7.5 pence per Ordinary Share final dividend for 2014,
making a total dividend for the year of 12.5 pence (2013: 9 pence).
Having raised $60 million at IPO in September 2010, this latest
dividend will increase the amount returned to shareholders in
dividends and share buy backs since the listing to approximately
$53 million.
The Company's dividend policy is that it will return a minimum
of 20% of the attributable revenues generated from the Kounrad
project to shareholders. During 2014, inclusive of the proposed
2014 final dividend, the Company returned 28% of attributable
revenues to shareholders (2013: 29%).
The Directors recognise that there are currently insufficient
reserves available in the Company for distribution and are
proposing to rectify this by completing a court approved capital
reduction scheme by cancelling the Company's share premium account
and transferring such reserves to retained earnings. This process
is expected to become effective on or around 13 May 2015. The
Company undertook a previous capital reduction scheme in 2013.
On completion of the capital reduction scheme it is expected
that the 2014 final dividend will then be paid in June 2015.
Financing Growth
The total capital cost for the Kounrad expansion is estimated at
$35 million phased over the next three years, including
approximately $9.4 million already spent up to 31 December 2014.
This expenditure is in addition to the estimated $6.5 million that
will be spent on sustaining capital expenditure for the plant and
Kounrad site during the three-year period.
As at 31 December 2014, the Group had $46.3 million of cash in
the bank of which $33.6 million was held in London and $12.7
million in Kazakhstan to cover the expansion costs and working
capital requirements in country and instalment payments of
Corporate Income Tax.
The Group has no debts outstanding as at 31 December 2014 and
with the cash reserves at its disposal is confident that it has
sufficient funds available to finance the dividend policy in the
coming years, complete the capital expansion plans at Kounrad and
provide the Company with the financial flexibility to support the
growth of the business.
Nigel Robinson
Chief Financial Officer
CONDENSED FINANCIAL INFORMATION
Consolidated Income Statement
for the year ended 31 December
Group
------------------------------------------------ ----------------------------
2014 2013
Note $'000 $'000
------------------------------------------------ ------ --------- ---------
Continuing operations
Gross revenue 5 76,561 54,090
------------------------------------------------ ------ --------- ---------
Revenue 5 73,141 51,483
Cost of sales 6 (25,103) (13,778)
------------------------------------------------ ------ --------- ---------
Gross profit 48,038 37,705
------------------------------------------------ ------ --------- ---------
Distribution and selling costs 7 (292) (357)
Administrative expenses 8 (11,836) (9,562)
Other expenses (295) (32)
Foreign exchange rate gain 1,895 159
------------------------------------------------ ------ --------- ---------
Operating profit 37,510 27,913
------------------------------------------------ ------ --------- ---------
Finance income 61 17
Finance costs (334) (412)
Gain on re-measuring to fair value the
existing interest on acquisition of control 21 33,039 27,835
------------------------------------------------ ------ --------- ---------
Profit before income tax 70,276 55,353
Income tax 9 (10,548) (6,712)
------------------------------------------------ ------ --------- ---------
Profit for the year from continuing operations 59,728 48,641
------------------------------------------------ ------ --------- ---------
Discontinued operations
Loss for the year from discontinued operations (257) (14,149)
------------------------------------------------ ------ --------- ---------
Profit for the year 59,471 34,492
------------------------------------------------ ------ --------- ---------
Profit attributable to:
- Owners of the parent 59,471 34,492
------------------------------------------------ ------ --------- ---------
Earnings/(loss) per share from continuing
and discontinued operations attributable
to owners of the parent during the year
(expressed in cents per share)
Basic earnings/(loss) per share
From continuing operations 10 56.28 54.85
From discontinued operations 10 (0.24) (15.96)
------------------------------------------------ ------ --------- ---------
From profit for the year 10 56.04 38.89
------------------------------------------------ ------ --------- ---------
Diluted earnings/(loss) per share
From continuing operations 10 55.15 52.69
From discontinued operations 10 (0.24) (15.96)
------------------------------------------------ ------ --------- ---------
From profit for the year 10 54.91 37.36
------------------------------------------------ ------ --------- ---------
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the parent Company Income
Statement or Statement of Comprehensive Income. The loss for the
parent Company for the year was $9,703,595 (2013: $21,086,497).
Consolidated Statement of Comprehensive Income
2014 2013
for the year ended 31 December Note $'000 $'000
--------------------------------------------- ---- --------- ---------
Profit for the year 59,471 34,492
Other comprehensive expense:
Items that may be subsequently reclassified
to profit or loss Currency translation
differences 25 (10,291) (722)
--------------------------------------------- ---- --------- ---------
Other comprehensive expense for the
year, net of tax (10,291) (722)
--------------------------------------------- ---- --------- ---------
Total comprehensive income for the
year 49,180 33,770
--------------------------------------------- ---- --------- ---------
Attributable to:
- Owners of the parent 49,180 33,770
- Non-controlling interests - -
--------------------------------------------- ---- --------- ---------
Total comprehensive income for the
year 49,180 33,770
--------------------------------------------- ---- --------- ---------
Total comprehensive income attributable
to equity shareholders arises from:
- Continuing operations 49,437 48,702
- Discontinuing operations (257) (14,932)
--------------------------------------------- ---- --------- ---------
49,180 33,770
--------------------------------------------- ---- --------- ---------
During 2014 the Group had no balances attributable to
non-controlling interests (2013: nil). Items in the statement above
are disclosed net of tax.
Statements of Financial Position
at 31 December
Group Company
--------------------------------- ------ ----------------------- --------------------------
2014 2013 2014 2013
Note $'000 $'000 $'000 $'000
--------------------------------- ------ ---------- ----------- ------------- -----------
Assets
Non-current assets
Property, plant and equipment 11 74,661 77,716 159 198
Intangible assets 12 81,605 16,693 - -
Investments - - 8,663 7,990
Trade and other receivables 13 6,393 17,090 - 11,216
--------------------------------- ------ ---------- ----------- ------------- -----------
162,659 111,499 8,822 19,404
--------------------------------- ------ ---------- ----------- ------------- -----------
Current assets
Inventories 4,054 3,916 - -
Trade and other receivables 13 3,214 1,402 30,170 30,131
Restricted cash 14 148 1,734 - 1,649
Cash and cash equivalents 14 46,144 42,774 33,644 28,932
--------------------------------- ------ ---------- ----------- ------------- -----------
53,560 49,826 63,814 60,712
--------------------------------- ------ ---------- ----------- ------------- -----------
Assets of disposal group
classified as held for
sale 80 186 - -
--------------------------------- ------ ---------- ----------- ------------- -----------
53,640 50,012 63,814 60,712
--------------------------------- ------ ---------- ----------- ------------- -----------
Total assets 216,299 161,511 72,636 80,116
--------------------------------- ------ ---------- ----------- ------------- -----------
Equity attributable to
owners of the parent
Ordinary Shares 15 1,121 862 1,121 862
Share premium 15 67,079 - 67,079 -
Treasury shares 15 (9,644) (4,100) (9,644) (4,100)
Other reserves 16 (11,117) 44,140 - 44,966
Retained earnings 140,484 94,827 12,856 36,374
--------------------------------- ------ ---------- ----------- ------------- -----------
187,923 135,729 71,412 78,102
--------------------------------- ------ ---------- ----------- ------------- -----------
Non-controlling interests - - - -
--------------------------------- ------ ---------- ----------- ------------- -----------
Total equity 187,923 135,729 71,412 78,102
--------------------------------- ------ ---------- ----------- ------------- -----------
Liabilities
Non-current liabilities
Deferred income tax liability 24 20,567 9,652 - -
Provisions for other liabilities
and charges 3,093 3,667 - -
23,660 13,319 - -
--------------------------------- ------ ---------- ----------- ------------- -----------
Current liabilities
Trade and other payables 17 4,252 11,860 1,224 2,014
--------------------------------- ------ ---------- ----------- ------------- -----------
4,252 11,860 1,224 2,014
--------------------------------- ------ ---------- ----------- ------------- -----------
Liabilities of disposal
group classified as held
for sale 464 603 - -
--------------------------------- ------ ---------- ----------- ------------- -----------
4,716 12,463 1,224 2,014
--------------------------------- ------ ---------- ----------- ------------- -----------
Total liabilities 28,376 25,782 1,224 2,014
--------------------------------- ------ ---------- ----------- ------------- -----------
Total equity and liabilities 216,299 161,511 72,636 80,116
--------------------------------- ------ ---------- ----------- ------------- -----------
During 2014 the Group had no balances attributable to
non-controlling interests (2013: nil). Items in the statement above
are disclosed net of tax.
Consolidated statement of changes in equity
for the year ended 31 December
Attributable Ordinary Share Treasury Other Retained Total
to owners of Shares Premium Shares Reserves Earnings Equity
the parent Note $'000 $'000 $'000 $'000 $'000 $'000
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Balance as at
1 January 2013 862 61,431 (4,236) 4,347 8,626 71,030
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Profit for the
year - - - - 34,492 34,492
Other comprehensive
expense - currency
translation
differences 16 - - - (722) - (722)
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Total comprehensive
(expense)/income - - - (722) 34,492 33,770
Transactions
with owners
Share based
payments 16 - - - 1,588 - 1,588
Forfeited options 16 - - - (346) - (346)
Capital reduction 15 - (61,431) - - 61,431 -
Promise of
shares to be
issued to Kenges
Rakishev (KR)
on completion
of KCC acquisition 16 - - - 39,409 - 39,409
Dividends - - - - (10,204) (10,204)
Sale of Mongolian
assets - - - - 482 482
Correction to
treasury shares 16 - - 136 (136) - -
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Total transactions
with owners,
recognised directly
in equity - (61,431) 136 40,515 51,709 30,929
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Balance as at
31 December
2013 862 - (4,100) 44,140 94,827 135,729
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Profit for the
year - - - - 59,471 59,471
Other comprehensive
income - currency
translation
differences 16 - - - (10,291) - (10,291)
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Total comprehensive
(expense)/income - - - (10,291) 59,471 49,180
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Transactions
with owners
Reserve transfer(*) 16 - - - (5,557) 5,557 -
Share based
payments - - - - 1,914 1,914
Promise of shares
to be issued
to KR on completion
of SUC acquisition 16 - - - 16,844 - 16,844
EBT shares granted 15 35 9,110 (9,145) - - -
Ordinary shares
issue to KR
on completion
of Kounrad transaction 15 212 56,041 - (56,253) - -
Exercise of
warrants 15 12 1,928 - - - 1,940
Exercise of
options 15 - - 3,399 - (3,236) 163
Sale of EBT
shares 15 - - 202 - (194) 8
Dividends - - - - (17,855) (17,855)
Total transactions
with owners,
recognised directly
in equity 259 67,079 (5,544) (44,966) (13,814) 3,014
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
Balance as at
31 December
2014 1,121 67,079 (9,644) (11,117) 140,484 187,923
------------------------ -------- ----------- -------- --------- ---------- ----------- ----------
* The Group and Company made a reserve transfer during 2014 to
include the share option reserve as part of retained earnings as
permitted by IFRS.
During 2014 the Group had no balances attributable to
non-controlling interests (2013: nil).
Company Statement of Changes in Equity
for the year ended 31 December
Ordinary Share Treasury Other Retained Total
Shares Premium Shares Reserves Earnings Equity
Company Note $'000 $'000 $'000 $'000 $'000 $'000
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Balance as at
1 January 2013 862 61,431 (4,236) 4,451 6,234 68,742
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Loss for the year - - - - (21,087) (21,087)
Total comprehensive
expense - - - - (21,087) (21,087)
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Transactions with
owners Share based
payments 16 - - - 1,588 - 1,588
Forfeited options 16 - - - (346) - (346)
Capital reduction 15 - (61,431) - - 61,431 -
Promise of shares
to be issued to
KR on completion
of KCC acquisition 16 - - - 39,409 - 39,409
Dividends - - - - (10,204) (10,204)
Correction to
treasury shares 16 - - 136 (136) - -
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Total transactions
with owners, recognised
directly in equity - (61,431) 136 40,515 51,227 30,447
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Balance as at
31 December 2013 862 - (4,100) 44,966 36,374 78,102
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Loss for the year - - - - (9,704) (9,704)
Total comprehensive
expense - - - - (9,704) (9,704)
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Transactions with
owners
Reserve transfer(*) 16 - - - (5,557) 5,557 -
Share based payments - - - - 1,914 1,914
Promise of shares
to be issued to
KR on completion
of SUC acquisition 16 - - - 16,844 - 16,844
EBT shares granted 15 35 9,110 (9,145) - - -
Ordinary shares
issue to KR on
completion of
the Kounrad transaction 15 212 56,041 - (56,253) - -
Exercise of warrants 15 12 1,928 - - - 1,940
Exercise of options 15 - - 3,399 - (3,236) 163
Sale of EBT shares 15 - - 202 - (194) 8
Dividends - - - - (17,855) (17,855)
Total transactions
with owners, recognised
directly in equity 259 67,079 (5,544) (44,966) (13,814) 3,014
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Balance as at
31 December 2014 1,121 67,079 (9,644) - 12,856 71,412
--------------------------- ------- -------- -------- -------- --------- --------- -----------
* The Group and Company made a reserve transfer during 2014 to
include the share option reserve as part of retained earnings as
permitted by IFRS.
Statements of Cash Flows
for the year ended 31 December
Group Company
---------------------------------- ------- -------------------- --------------------
2014 2013 2014 2013
Note $'000 $'000 $'000 $'000
---------------------------------- ------- --------- --------- --------- ---------
Cash flows from operating
activities
Cash generated from/(used
in) operations 18 47,152 41,080 10,485 (6,281)
Interest paid (58) (190) (11) (9)
Income tax paid (16,624) (5,533) - -
Net cash generated from/(used
in) operating activities 30,470 35,357 10,474 (6,290)
---------------------------------- ------- --------- --------- --------- ---------
Cash flows from investing
activities
Purchases of property, plant
and equipment 11 (11,004) (2,464) (7) (207)
Proceeds from sale of property, - 9 - -
plant and equipment
Purchase of intangible assets 12 (115) (5,750) - (50)
Investment in Kounrad project - - (598) (502)
Investment in Copper Bay
project - - - (3,222)
Repayment of loan from subsidiary 23 - - 11,270 32,360
Loans to subsidiaries 23 - - (135) -
Interest received 61 17 - -
Acquisition of subsidiary,
net of cash acquired 21 327 3,293 - -
---------------------------------- ------- --------- --------- --------- ---------
Net cash (used in)/generated
from investing activities (10,731) (4,895) 10,530 28,379
---------------------------------- ------- --------- --------- --------- ---------
Cash flows from financing
activities
Dividends paid to owners
of the parent 20 (17,932) (19,739) (17,932) (19,739)
KR payment on completion
of Kounrad transaction 21 (1,432) - (1,432) -
Receipt on exercise of share 15,
options 16 168 - 168 -
Exercise of warrants 15 1,942 - 1,942 -
Restricted cash 14 1,586 (1,734) 1,649 (1,649)
Net cash used in financing
activity (15,668) (21,473) (15,605) (21,388)
---------------------------------- ------- --------- --------- --------- ---------
Effect of foreign exchange
(losses)/ gains on cash and
cash equivalents (707) (65) (687) -
Net increase in cash and
cash equivalents 3,364 8,924 4,712 701
Cash and cash equivalents
at the beginning of the year 14 42,795 33,871 28,932 28,231
---------------------------------- ------- --------- --------- --------- ---------
Cash and cash equivalents
at the end of the year 46,159 42,795 33,644 28,932
---------------------------------- ------- --------- --------- --------- ---------
The notes below are an integral part of this consolidated
financial information.
Notes to the Condensed Financial Information for the year ended
31 December 2014
1. General information
Central Asia Metals plc (CAML or the Company) and its
subsidiaries (the Group) are a mining and exploration organisation
with operations primarily in Kazakhstan and a parent holding
company based in the United Kingdom.
The Group's principal business activity is the production of
copper cathode at its Kounrad operations in Kazakhstan. The Group
also owns various exploration projects in Mongolia which are held
for sale and has an investment in a copper tailings project in
Chile.
CAML is a public limited company, which is listed on AIM and
incorporated and domiciled in the UK. The address of its registered
office is Masters House, 107 Hammersmith Road, London, W14 0QH. The
Company's registered number is 5559627.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
this consolidated financial information are set out in the 2014
Annual Report. These policies have been consistently applied to all
the years presented, unless otherwise stated.
Basis of Preparation of the Condensed Financial Information
The financial information set out above does not constitute the
Group's statutory financial statements for the year ended 31
December 2014, but is derived from the Group's audited full
financial statements. The auditors have reported on the 2014
financial statements and their reports were unqualified and did not
contain statements under s498(2) or (3) Companies Act 2006. The
2014 Annual Report was approved by the Board of Directors on 27
March 2015, and will be mailed to shareholders in April 2015. The
financial information in this statement is audited but does not
have the status of statutory accounts within the meaning of Section
434 of the Companies Act 2006.
The Group's consolidated financial information has been prepared
in accordance with International Financial Reporting standards
(IFRS) and IFRS Interpretations Committee (IFRSIC) interpretations
as adopted by the European Union, and the Companies Act 2006
applicable to companies reporting under IFRS. The consolidated
financial information has been prepared under the historical cost
convention with the exception of assets held for sale which have
been held at fair value. The accounting policies which follow set
out those policies which apply in preparing the financial
information for the year ended 31 December 2014. The Group's
financial information is presented in US dollars ($) and rounded to
the nearest thousand.
The preparation of financial information in conformity with 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 information are explained in note 3.
Comparative results
The Group commenced production of copper cathodes on 30 April
2012. The cathodes are produced by the SX-EW plant at Kounrad which
is owned and operated by Kounrad Copper Company LLP (KCC). On 21
October 2013, the ownership of KCC increased from 60% to 100%
following the acquisition of 40% of KCC. Consequently, the
comparative results for the year ended 31 December 2013 comprise
only 60% of the revenues and costs associated with the Kounrad
project for the first nine months of the year but 100% for the
final three months of the year. In contrast, the results for the
year ended 31 December 2014 account for 100% of the revenue and
costs associated with the Kounrad project throughout the year.
The impact of the above event makes annual comparisons difficult
from the annually reported numbers in several of the notes to this
financial information. A more meaningful analysis of the reported
revenues and costs can be obtained from the Financial Review
section.
Going concern
The Group meets its day-to-day working capital requirements
though its profitable operations at Kounrad. The Group has
substantial cash balances as at 31 December 2014 and on the date of
issue of this financial information. The Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the forseeable future.
The Group sells and distributes its copper cathode product
primarily through an offtake arrangement with 90% of the SX-EW
plant's output committed as sales for the period up until 31
December 2015.
The Group therefore continues to adopt the going concern basis
in preparing its consolidated financial information. Please refer
to notes 5, 14 and 17 for information on the Group's revenues, cash
balances and trade and other payables.
Basis of Consolidation
Joint Venture Accounting - Kounrad Project
The Kounrad project ownership changes have taken a significant
amount of time to complete. Throughout the periods of joint
ownership and under the terms of the Joint Operating Agreement
(JOA), both of the parties had an equal vote on all significant
operational, financial and planning matters. Consequently, it was
concluded that Joint Control existed over the Kounrad project and
so, whilst the various transactions have been negotiated and
submitted for government approval, the Kounrad project has been
accounted for in the following manner;
1. The subsoil user licence operations (SUC) under Sary Kazna
LLP (SK) are classified as a jointly controlled asset. The assets,
liabilities, income and expenditure have been proportionately
consolidated on a 60:40 basis.
2. All of the operations conducted under Kounrad Copper Company
LLP (KCC) have also been proportionately consolidated on a 60:40
basis as it has been a jointly owned legal entity.
The Kounrad transaction resulted in CAML obtaining control over
the Kounrad project in two transactions:
1. The first transaction (KCC) was effected in October 2013 by
CAML's wholly owned subsidiary, CAML Kazakhstan BV (CAML BV),
acquiring the remaining 40% share capital of KCC.
2. The second and final part of the transaction (SUC) was
effected in May 2014 by CAML's wholly owned subsidiary SK acquiring
the remaining 40% economic interest in the SUC.
Following the completion of the Kounrad Transaction on 23 May
2014, the Group now owns 100% of the Kounrad project and during the
year ended 31 December 2014 has accounted for 100% of the income
and expenditure together with 100% of the assets and liabilities of
the legal entities associated with the Kounrad project.
Business Combinations - Kounrad Project
The completion of both transactions, being the acquisition of
the remaining 40% of KCC and the SUC, resulted in a change in
control of the Kounrad project from joint control to control by
CAML. As such an IFRS 3 Business Combination was deemed to have
taken place upon completion.
Details of the accounting treatment for the business combination
are contained in note 21.
3. Critical accounting estimates and judgments
The Group has five key areas where critical accounting estimates
and judgements are required that could have a material impact on
this financial information:
Impairment
As mentioned above estimates are required periodically to assess
assets for impairment. These estimates will incorporate the
expected future commodity prices, estimates of the ore reserves and
projected future costs of development and production. This includes
an assessment of the carrying values of assets held for sale.
The carrying value of the goodwill generated by accounting for
the business combination of the Group acquiring an additional 40%
in the Kounrad project requires an annual impairment review. This
review will determine whether the value of the goodwill can be
justified by reference to the carrying value of the business assets
and the future discounted cash flows of the business.
Mineral reserves and resources
The major value associated with the Group is the value of its
mineral resources. The value of the resources have an impact on the
Group's accounting judgements in relation to depreciation and
amortisation, impairment of assets and the assessment of going
concern. These resources are the Group's best estimate of product
that can be economically and legally extracted from the relevant
mining property. The Group's estimates are supported by geological
studies and drilling samples to determine the quantity and grade of
each deposit.
Significant judgement is required to generate an estimate based
on the geological data available. Ore resource estimates may vary
from period to period. This judgement has a significant impact on
impairment consideration and the period over which capitalised
assets are depreciated within this financial information.
The resources have been independently verified by Wardell
Armstrong International and were classified as JORC Compliant in
2013.
Decommissioning and site rehabilitation estimates
Provision is made for the costs of decommissioning and site
rehabilitation costs when the related environmental disturbance
takes place. Provisions are recognised at the net present value of
future expected costs using a discount rate of 8.65% (2013: 6.40%)
representing the risk free rate (pre-tax) for Kazakhstan.
The provision recognised represents management's best estimate
of the costs that will be incurred, but significant judgement is
required as many of these costs will not crystallise until the end
of the life of the mine. Estimates are reviewed annually and are
based on current contractual and regulatory requirements and the
estimated useful life of mines. Engineering and feasibility studies
are undertaken periodically; however significant changes in the
estimates of contamination, restoration standards and techniques
will result in changes to provisions from period to period.
Business combination
The Kounrad Transaction resulted in the Group acquiring the 40%
of the joint venture project at Kounrad that it did not previously
own. The assessment of the fair value uplift of the underlying
assets acquired and the treatment of the two legal entities
involved in the project required a high degree of judgement.
The assessment of the overall project as a business combination
for both legal entities, Kounrad Copper Company LLP and Sary Kazna
LLP, and the impact on that judgement caused by the different
stages of completion required a careful review of the overall
transaction as opposed to the specific nature of the assets being
acquired.
The fair value uplift of the assets acquired as a result of that
judgement and the resulting accounting treatment have resulted in a
significant change to both the income statement and the statement
of financial position of the business. The details are explained in
note 21.
VAT recoverability
The Group's main receivable is the VAT incurred on purchases
within Kazakhstan as explained in note 13. As at 31 December 2014 a
total of $6,392,885 (2013: $5,436,475) of VAT receivable was still
owed to the Group by the Kazakhstan authorities. The Group still
remains confident about its prospects to recover this outstanding
debt and is working closely with its advisers and local partners to
achieve this.
The planned means of recovery will be through a combination of
the local sales of cathode copper to effectively offset VAT
liabilities and by a successful appeal to the authorities.
Following an unsuccessful appeal in 2014, a further appeal was
lodged in January 2015 by the local tax advisers and the final
outcome may not be known for a further 12 months. As a result of
the above and the uncertainty regarding timing, the Group has
classified the VAT receivable as non-current.
4. Segmental information
The Board is the Group's chief operating decision-maker.
Management has determined the operating segments based on the
information reviewed by the Board for the purposes of allocating
resources and assessing performance. The Board considers the
business from a geographic prospective.
As at 31 December 2014, the Group only had one operating and
reporting segment consisting of an SX-EW copper plant at Kounrad in
Kazakhstan. The head office in London, where the Group operations
are controlled, and Copper Bay project (Chile), being an
exploration asset in its early stages, do not represent separate
operating and reporting segments.
Previously reported segments within the Group, namely all the
Mongolian operations, are classified as held for sale as at 31
December 2014. In June 2014, Bayanresources LLC, a Mongolian
incorporated company owned 70% by the Group was sold for nil
consideration.
The Board assesses the performance of the Kounrad project based
on a number of key operational and financial measures which relate
to copper production output, revenues from the sales of copper and
the overall costs of producing the copper. All capital related
expenditure at the project is also closely monitored and
controlled.
The segmental results for the year ended 31 December 2014 are as
follows:
2014 2013
$'000 $'000
----------------------------------------------- ---------- ----------
Gross revenue 76,561 54,090
Traxys buyers' fees (3,420) (2,607)
----------------------------------------------- ---------- ----------
Revenue 73,141 51,483
----------------------------------------------- ---------- ----------
Kounrad EBITDA 55,960 39,486
Unallocated costs including corporate (8,638) (7,068)
----------------------------------------------- ---------- ----------
Group continuing operations EBITDA 47,322 32,418
Gain on re-measuring to fair value the
existing interest on acquisition of control 33,039 27,835
Depreciation and amortisation (11,412) (4,632)
Exchange rate differences gain 1,895 159
Other expenses, net (295) (32)
Finance income 61 17
Finance costs (334) (412)
----------------------------------------------- ---------- ----------
Profit before income tax 70,276 55,353
----------------------------------------------- ---------- ----------
Income tax (10,548) (6,712)
----------------------------------------------- ---------- ----------
Profit for the year from continuing operations 59,728 48,641
----------------------------------------------- ---------- ----------
Loss from discontinued operations (257) (14,149)
----------------------------------------------- ---------- ----------
Profit for the year 59,471 34,492
----------------------------------------------- ---------- ----------
The total production at Kounrad for 2014 was 11,136 tonnes
(2013: 10,509 tonnes) whilst the total quantity of copper sold was
slightly higher at 11,163 tonnes (2013: 10,689 tonnes). The average
price achieved from the sale of copper was $6,794 per tonne (2013:
$7,114 per tonne).
EBITDA is a non-IFRS financial measure. CAML calculates EBITDA
as profit or loss for the year excluding the following items:
-- Income tax expense;
-- Finance income and expense;
-- Depreciation and amortisation; and
-- Discontinued operations; and Gain on re-measuring to fair
value and other income or expenses.
EBITDA is intended to provide additional information to
investors and analysts. It does not have any standardised meaning
prescribed by IFRS and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with IFRS. EBITDA excludes the impact of cash costs of financing
activities and taxes, and the effects of changes in operating
working capital balances, and therefore is not necessarily
indicative of operating profit or cash flow from operations as
determined under IFRS. Other companies may calculate EBITDA
differently.
A reconciliation between net profit for the year and EBITDA is
presented below:
2014 2013
$'000 $'000
Profit for the year 59,471 34,492
--------------------------------------------- -------- ---------
Plus/(less):
Gain on re-measuring to fair value the
existing interest on acquisition of control (33,039) (27,835)
Depreciation and amortisation 11,412 4,632
Exchange rate differences gain (1,895) (159)
Other expenses, net 295 32
Finance income (61) (17)
Finance costs 334 412
Income tax expense 10,548 6,712
Loss from discontinued operations 257 14,149
Group continuing operations EBITDA 47,322 32,418
--------------------------------------------- -------- ---------
Unallocated costs including corporate 8,638 7,068
--------------------------------------------- -------- ---------
Kounrad EBITDA 55,960 39,486
--------------------------------------------- -------- ---------
Group segmental assets and liabilities for the year ended 31
December 2014 are as follows:
Segmental Segmental
assets liabilities
--------------------
31 Dec 31 Dec 31 Dec 31 Dec
14 13 14 13
$'000 $'000 $'000 $'000
----------------------------------- ------- ---------- ---------- --------
Kounrad - Kazakhstan 173,154 130,473 (26,688) (23,165)
Assets held for sale - Mongolia 80 186 (464) (603)
Unallocated including UK corporate 43,065 30,852 (1,224) (2,014)
----------------------------------- ------- ---------- ---------- --------
Total 216,299 161,511 (28,376) (25,782)
----------------------------------- ------- ---------- ---------- --------
5. Revenue
2014 2013
Group $'000 $'000
----------------------------------- ------- ---------- ---------- --------
Main plant
International customers 73,532 53,197
Domestic customers 3,029 796
----------------------------------- ------- ---------- ---------- --------
76,561 53,993
----------------------------------- ------- ---------- ---------- --------
Pilot plant
Domestic customers - 97
----------------------------------- ------- ---------- ---------- --------
- 97
----------------------------------- ------- ---------- ---------- --------
Total Gross Revenue 76,561 54,090
----------------------------------- ------- ---------- ---------- --------
Less: Traxys buyers' fees (3,420) (2,607)
----------------------------------- ------- ---------- ---------- --------
Revenue 73,141 51,483
----------------------------------- ------- ---------- ---------- --------
The Group sells and distributes its copper cathode product
primarily through an offtake arrangement with Traxys. The offtake
arrangements are for a minimum of 90% of the SX-EW plant's output
for the period up until 31 December 2015. The copper cathodes are
delivered from the Kounrad site by rail under an FCA (Incoterms
2010) contractual basis and delivered to the end customers in
Turkey. As part of the offtake arrangements, the Group sells the
copper cathodes at a price linked to the London Metal Exchange
(LME) copper price based on an agreed quotational period.
The costs of delivery to the end customers have been effectively
borne by the Group through means of an annually agreed buyer's fee
which is offset from the selling price (note 7).
During 2014 the Group sold 10,687 tonnes (2013: 10,500 tonnes)
of copper through the offtake arrangements. Some of the copper
cathodes are also sold locally and during 2014 a total of 476
tonnes (2013: 189 tonnes) were sold to local customers.
6. Cost of sales
2014 2013
Group $'000 $'000
---------------------------------- -------- -------
Main plant
Mineral extraction tax 4,431 3,070
Reagents and materials 5,041 3,192
Depreciation and amortisation 11,291 4,546
Employee benefit expense 3,321 2,021
Consulting and other services 1,019 835
---------------------------------- -------- -------
25,103 13,664
---------------------------------- -------- -------
Pilot plant - 114
---------------------------------- -------- -------
Total 25,103 13,778
---------------------------------- -------- -------
7. Distribution and selling costs
2014 2013
Group $'000 $'000
----------------------------------
Transportation costs 15 123
Employee benefit expense 80 60
Taxes and duties 52 45
Depreciation and amortisation 45 37
Materials and other expenses 100 92
---------------------------------- -------- -------
292 357
---------------------------------- -------- -------
The above distribution and selling costs are those incurred at
the Kounrad site in addition to the costs associated with the
offtake arrangements. Note 5 refers to the costs associated with
the offtake arrangements with Traxys.
8. Administrative expenses
2014 2013
Group $'000 $'000
----------------------------------- ------- -------
Employee benefit expense 5,848 4,459
Share based payments 1,914 1,588
Consulting and other services 1,527 1,522
Office related costs 1,445 1,087
Taxes and duties 1,026 857
Depreciation and amortisation 76 49
----------------------------------- ------- -------
Total from continuing operations 11,836 9,562
----------------------------------- ------- -------
Total from discontinued operations 249 348
----------------------------------- ------- -------
Total 12,085 9,910
----------------------------------- ------- -------
9. Income tax
Group Company
------------------------------- ----------------------- --------------
2014 2013 2014 2013
$'000 $'000 $'000 $'000
------------------------------- ----------- ---------- ------ ------
Current tax:
------------------------------- ----------- ---------- ------ ------
Current tax on profits for the
year 10,588 6,778 - -
------------------------------- ----------- ---------- ------ ------
Total current tax 10,588 6,778 - -
Deferred tax (note 24) (40) (66) - -
------------------------------- ----------- ---------- ------ ------
Income tax expense 10,548 6,712 - -
------------------------------- ----------- ---------- ------ ------
UK corporate income tax is calculated at 21.5% (2013: 23.25%) of
the estimated assessable profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the consolidated entities as
follows:
Group
----------------------------------------- ---------------------
2014 2013
$'000 $'000
restated
----------------------------------------- -------- -----------
Profit before taxation and discontinued
operations 70,019 41,204
----------------------------------------- -------- -----------
Tax calculated at domestic tax rates
applicable to profits in the respective
countries 13,858 9,362
Tax effects of:
Gain on re-measuring to fair value
to existing interest on acquisition
of control (7,103) (6,472)
Expenses not deductible for tax purposes 2,771 2,856
Tax losses for which no deferred income
tax asset was recognised 1,592 966
Utilisation of previously unrecognised
tax losses (570) -
Income tax expense 10,548 6,712
----------------------------------------- -------- -----------
From 1 April 2014, the main UK Corporation tax rate reduced from
23% to 21%. Further reductions in the main tax rate to 20% from 1
April 2015 have been announced.
The rate reductions were substantively enacted on 3 July 2013
and have been reflected in the calculation of deferred tax at the
statement of financial position date.
10. Earnings/(loss) per share
(a) Basic
Basic earnings/(loss) per share is calculated by dividing the
profit/(loss) attributable to owners of the Company by the weighted
average number of Ordinary Shares in issue during the year
excluding Ordinary Shares purchased by the Company and held as
treasury shares (note 15).
2014 2013
$'000 $'000
----------------------------------------------- ----------- ----------
Profit from continuing operations attributable
to owners of the parent 59,728 48,641
Loss from discontinued operations attributable
to owners of the parent (257) (14,149)
----------------------------------------------- ----------- ----------
Total 59,471 34,492
----------------------------------------------- ----------- ----------
Weighted average number of Ordinary Shares
in issue 106,126,062 88,681,029
----------------------------------------------- ----------- ----------
$ cents $ cents
------------------------------------------ ------- -------
Earnings/(loss) per share from continuing
and discontinued operations attributable
to owners of the parent during the year
(expressed in $ cents per share)
From continuing operations 56.28 54.85
From discontinued operations (0.24) (15.96)
------------------------------------------ ------- -------
From profit for the year 56.04 38.89
------------------------------------------ ------- -------
(b) Diluted
The diluted earnings/(loss) per share is calculated by adjusting
the weighted average number of Ordinary Shares outstanding after
assuming the conversion of all outstanding granted share options
and exercise of outstanding security warrants.
2014 2013
$'000 $'000
----------------------------------------------- ----------- ----------
Profit from continuing operations attributable
to owners of the parent 59,728 48,641
Loss from discontinued operations attributable
to owners of the parent (257) (14,149)
Total 59,471 34,492
----------------------------------------------- ----------- ----------
Weighted average number of Ordinary Shares
in issue 106,126,062 88,681,029
----------------------------------------------- ----------- ----------
Adjusted for
* Share options 2,183,927 2,439,060
* Mirabaud Securities warrants (note 15) - 1,192,053
----------------------------------------------- ----------- ----------
Weighted average number of Ordinary Shares
for diluted earnings per share 108,309,989 92,312,142
----------------------------------------------- ----------- ----------
Diluted earnings/(loss) per share $ cents $ cents
---------------------------------- ------- -------
From continuing operations 55.15 52.69
From discontinued operations (0.24) (15.96)
---------------------------------- ------- -------
From profit for the year 54.91 37.36
---------------------------------- ------- -------
11. Property, plant and equipment
Motor
Plant Vehicles
Construction and and Office
In Progress Equipment Equipment Total
Group $'000 $'000 $'000 $'000
------------------------------ -------------- ------------ --------------- ---------------
Cost
At 1 January 2013 44 21,617 863 22,524
Additions 933 617 412 1,962
Disposals - (160) (43) (203)
Transfers (526) 483 - (43)
Change in JV accounting - 4,508 - 4,508
Derecognition of previously
held interests(1) (44) (16,194) (530) (16,768)
Acquisition of Subsidiary
100%(1) 73 73,381 884 74,338
Exchange differences (4) (589) (25) (618)
------------------------------ -------------- ------------ --------------- ---------------
At 31 December 2013 476 83,663 1,561 85,700
Additions 9,496 1,602 227 11,325
Disposals - (1,292) (38) (1,330)
Transfers (856) 856 - -
Derecognition of previously
held interests(2) (260) (3,510) (231) (4,001)
Acquisition of Subsidiary
100%(2) 434 6,900 385 7,719
Exchange differences (1,607) (6,229) (189) (8,025)
------------------------------ -------------- ------------ --------------- ---------------
At 31 December 2014 7,683 81,990 1,715 91,388
------------------------------ -------------- ------------ --------------- ---------------
Accumulated depreciation
At 1 January 2013 - 1,926 311 2,237
Provided during the year - 3,937 195 4,132
Disposals - (210) (29) (239)
Change in JV accounting - 1,336 - 1,336
Derecognition of previously
held interests(1) - (803) (105) (908)
Acquisition of Subsidiary
100%(1) - 1,338 175 1,513
Exchange differences - (79) (8) (87)
------------------------------ -------------- ------------ --------------- ---------------
At 31 December 2013 - 7,445 539 7,984
Provided during the year - 9,307 169 9,476
Disposals - (778) (58) (836)
Derecognition of previously
held interests(2) - (1,315) (169) (1,484)
Acquisition of Subsidiary
100%(2) - 2,192 281 2,473
Exchange differences - (851) (35) (886)
------------------------------ -------------- ------------ --------------- ---------------
At 31 December 2014 - 16,000 727 16,727
------------------------------ -------------- ------------ --------------- ---------------
Net book value at 1 January
2014 476 76,218 1,022 77,716
------------------------------ -------------- ------------ --------------- ---------------
Net book value at 31 December
2014 7,683 65,990 988 74,661
------------------------------ -------------- ------------ --------------- ---------------
1. On completion of the KCC Transaction on 21 October 2013, the
Group derecognised its previously held 60% interest and recognised
its 100% interest in property, plant and equipment together with
the fair value uplift associated with the transaction of
$46,392,000. On completion of the whole Kounrad Transaction on 23
May 2014, the Group updated the purchase price allocation and as a
result the fair value uplift increased by $1,049,798 as explained
in note 21.
2. On completion of the SUC Transaction on 23 May 2014, the
Group derecognised its previously held 60% interest and recognised
its 100% interest at cost. There was no fair value uplift to
property, plant and equipment associated with the SUC
transaction.
3. There was an additional depreciation charge during 2014 of
$5,345,806 (2013: $1,335,856) as a result of the fair value uplift
in property, plant and equipment.
The Company had $158,916 of office equipment at net book value
as at 31 December 2014 (2013: $198,119).
12. Intangible assets
Deferred
Exploration Mining
and Licences
Evaluation and Computer
Goodwill Costs Permits Software Total
Group $'000 $'000 $'000 $'000 $'000
------------------------------- --------- ------------------- --------- ---------- --------
Cost
At 1 January 2013 - 6,408 1,050 57 7,515
Additions - 260 5,476 14 5,750
Addition Goodwill (note
21) 9,278 - - - 9,278
Disposals - - (1) (32) (33)
Joint Venture adjustment - - 33 9 42
Transfer of Bayanresources
to disposal group classified
as held for sale - (4,505) (1,000) - (5,505)
Exchange differences - (222) (23) (1) (246)
------------------------------- --------- ------------------- --------- ---------- --------
At 31 December 2013 9,278 1,941 5,535 47 16,801
Additions - 98 - 17 115
Addition Goodwill (note
21) 11,013 - - - 11,013
Disposals - (92) - (11) (103)
Derecognition of previously
held interests(1) - (1,649) (1,947) (16) (3,612)
Acquisition of Subsidiary
100%(1) - 2,748 57,261 27 60,036
Exchange differences - (241) (450) (9) (700)
------------------------------- --------- ------------------- --------- ---------- --------
At 31 December 2014 20,291 2,805 60,399 55 83,550
------------------------------- --------- ------------------- --------- ---------- --------
Accumulated amortisation
At 1 January 2013 - - 1 40 41
Provided during the year - 52 4 12 68
Disposal - - 24 (26) (2)
Change in JV accounting - - 1 3 4
Exchange differences - (1) (1) (1) (3)
------------------------------- --------- ------------------- --------- ---------- --------
At 31 December 2013 - 51 29 28 108
Provided during the year - 65 1,857 14 1,936
Disposal - (92) - (11) (103)
Derecognition of previously
held interests(1) - (42) (22) (9) (73)
Acquisition of Subsidiary
100%(1) - 70 37 15 122
Exchange differences - 12 (51) (6) (45)
------------------------------- --------- ------------------- --------- ---------- --------
At 31 December 2014 - 64 1,850 31 1,945
------------------------------- --------- ------------------- --------- ---------- --------
Net book value at 1 January
2014 9,278 1,890 5,506 19 16,693
------------------------------- --------- ------------------- --------- ---------- --------
Net book value at 31 December
2014 20,291 2,741 58,549 24 81,605
------------------------------- --------- ------------------- --------- ---------- --------
1. On completion of the SUC Transaction on 23 May 2014, the
Group derecognised its previously held 60% interest and recognised
its 100% interest at cost together with the fair value uplift
associated with the transaction of $54,015,555.
2. There was an additional amortisation charge during the year
of $1,209,344 as a result of the fair value uplift in intangible
assets.
As a result of the Kounrad Transaction, the Group has recognised
goodwill of $20,291,000.
The Company had no intangible assets as at 31 December 2014
(2013: nil).
Impairment test for goodwill
The Group currently only has one business segment, namely the
Kounrad project located in Kazakhstan which has an associated
goodwill balance.
In accordance with IAS 36 'Impairment of assets' and IAS 38
'Intangible Assets', a review for impairment of goodwill is
undertaken annually or at any time an indicator of impairment is
considered to exist and in accordance with IAS 16 'Property, plant
and equipment', a review for impairment of long-lived assets is
undertaken at any time an indicator of impairment is considered to
exist.
The discount rate applied to calculate the present value is
based upon the real weighted average cost of capital applicable to
the Cash Generating Unit (CGU). The discount rate reflects equity
risk premiums over the risk-free rate, the impact of the remaining
economic life of the CGU and the risks associated with the relevant
cash flows based on the country in which the CGU is located. These
risk adjustments are based on observed equity risk premiums,
historical country risk premiums and average credit default swap
spreads for the period.
The value in use (VIU) of a CGU is generally lower than its fair
value less costs of disposal (FVLCD), due primarily to the fact
that the optimisation of the mine plans has been taken into account
when determining its FVLCD. Consequently, the recoverable amount of
a CGU for impairment testing purposes is determined based on its
FVLCD.
The key economic assumptions used in the review were:
- copper price $6,614 per tonne
- discount rate 8%
The carrying value of the net assets is not currently sensitive
to any reasonable changes in key assumptions.
Group Company
--------------------------------- -------------------- --------------------
31 Dec 31 Dec 31 Dec 31 Dec
13. Trade and other receivables 14 $'000 13 $'000 14 $'000 13 $'000
--------------------------------- --------- --------- --------- ---------
Trade receivables 6,953 5,715 377 58
Less: provision for impairment
of trade receivables (41) (33) - -
--------------------------------- --------- --------- --------- ---------
Trade receivables, net 6,912 5,682 377 58
Receivables from related parties - 11,654 29,571 41,216
Prepayments 2,695 1,156 222 73
--------------------------------- --------- --------- --------- ---------
9,607 18,492 30,170 41,347
--------------------------------- --------- --------- --------- ---------
Less: non - current portion
Trade receivables (6,393) (5,436) - -
Receivables from related parties - (11,654) - (11,216)
--------------------------------- --------- --------- --------- ---------
Current Portion 3,214 1,402 30,170 30,131
--------------------------------- --------- --------- --------- ---------
The carrying value of all the above receivables is a reasonable
approximation of fair value. There are no amounts past due at the
end of the reporting period that have not been impaired.
The Group amount receivable from related parties in 2013 had
arisen as a consequence of the joint venture accounting treatment
required at the Kounrad project and was reduced to nil during 2014
on completion of the transaction to acquire 100% of the project
(note 21).
The Group's non-current receivable is the VAT incurred on
purchases within Kazakhstan. As at 31 December 2014 a total of
$6,392,885 (2013: $5,436,475) of VAT receivable was still owed to
the Group by the Kazakhstan authorities. The Group still remains
confident about its prospects to recover this outstanding debt and
is working closely with its advisers and local partners to achieve
this. The planned means of recovery will be through a combination
of the local sales of cathode copper to effectively offset VAT
liabilities and by a successful appeal to the authorities.
Following an unsuccessful appeal in 2014, a further appeal was
lodged in January 2015 by the local tax advisers and the final
outcome may not be known for a further 12 months. As a result of
the above and the uncertainty regarding timing, the Group has
classified the VAT receivable as non-current.
Management's policy is to assess all trade and other receivables
for recoverability on a regular basis. A provision is made where
doubt exists and amounts are fully written off when information
comes to light that the amounts due will not be recovered.
The Group did not have any slow moving, obsolete or defective
inventory as at 31 December 2014 (2013: nil).
14. Cash and cash equivalents
Group Company
---------------------------------- -------------------- ------------------------
31 Dec 31 Dec 31 Dec 31 Dec
14 13 14 13
$'000 $'000 $'000 $'000
---------------------------------- ---------- -------- ---------- ------------
Cash at bank and on hand 46,144 32,774 33,644 28,932
Short term deposits - 10,000 - -
---------------------------------- ---------- -------- ---------- ------------
46,144 42,774 33,644 28,932
---------------------------------- ---------- -------- ---------- ------------
Cash at bank and on hand included
in assets held for sale 15 21 - -
---------------------------------- ---------- -------- ---------- ------------
Total cash and cash equivalent 46,159 42,795 33,644 28,932
---------------------------------- ---------- -------- ---------- ------------
Restricted cash 148 1,734 - 1,649
---------------------------------- ---------- -------- ---------- ------------
Total cash and cash equivalent
including restricted cash 46,307 44,529 33,644 30,581
---------------------------------- ---------- -------- ---------- ------------
$1,649,000 of money in the restricted account was released upon
the completion and payment of the final consideration of the
Kounrad transaction. The remaining amount of $148,072 is held to
cover SUC legislation requirements (2013: $85,324).
An amount of nil (2013: $10.0 million) was held in a short term
deposit account as at 31 December 2014.
73% of the Group's cash and cash equivalents including
restricted cash at the year end were held by an AA- rated bank
(2013: 68.7% by an AA- bank). The rest of Group's cash was held
within mix of institutions with credit rating between B to B-
(2013: B to B1).
15. Share capital and premium
Ordinary Share Treasury
Number Shares Premium Shares
of $'000 $'000 $'000 Total
Shares $'000
---------------------- ----------------- ------------ --------------- -------------- -------------
At 1 January 2013 86,165,934 862 61,431 (4,236) 58,057
---------------------- ----------------- ------------ --------------- -------------- -------------
Capital reduction - - (61,431) - (61,431)
Sale of treasury
shares - - - 136 136
---------------------- ----------------- ------------ --------------- -------------- -------------
At 31 December 2013 86,165,934 862 - (4,100) (3,238)
---------------------- ----------------- ------------ --------------- -------------- -------------
Ordinary shares issue 21,211,751 212 56,041 - 56,253
Issue of EBT shares 3,500,000 35 9,110 (9,145) -
Exercise of warrants 1,192,053 12 1,928 - 1,940
Exercise of options - - - 3,399 3,399
Sales of EBT shares - - - 202 202
---------------------- ----------------- ------------ --------------- -------------- -------------
At 31 December 2014 112,069,738 1,121 67,079 (9,644) 58,556
---------------------- ----------------- ------------ --------------- -------------- -------------
The par value of Ordinary Shares is $0.01 per share (2013:
$0.01) and all shares are fully paid.
On 23 May 2014, on the completion of the Kounrad transaction, a
total of 21,211,751 Ordinary Shares were issued to Kenges Rakishev
(note 33). The shares were allocated in two tranches with one
tranche of 15,336,096 Ordinary Shares at a share price of $2.57
each for the transfer of the 40% share capital of Kounrad Copper
Company LLP to CAML Kazakhstan BV. The remaining 5,875,655 Ordinary
Shares were issued at a share price of $2.87 each for the transfer
of the 40% economic interest in the subsoil use contract to Sary
Kazna LLP.
On 23 July 2014 the Company allotted and issued 3,500,000
Ordinary Shares to the trustee of the Central Asia Metals Limited
Share Trust (the Employee Benefit Trust). These Ordinary Shares
were issued to satisfy current awards granted under the Company's
Employee Share Plans together with any future awards that may be
granted by the Company.
Upon the successful completion of the Initial Public Offering
(IPO) on 30 September 2010, Mirabaud Securities (MS) were granted
1,192,053 warrants. These warrants had an exercise price of 96
pence and on 30 June 2014, MS exercised a total of 260,000 for
which the Company received GBP249,600. MS exercised their remaining
932,053 warrants on 31 July 2014 for which the Company received
GBP894,771.
16. Other reserves Shares
Group Share Reserve Currency
Option to be Translation Total
Reserve Issued Reserve Group
$'000 $'000 $'000 $'000
--------------------------------- ------------ ------------- ------------ ----------
At 1 January 2013 4,451 - (104) 4,347
--------------------------------- ------------ ------------- ------------ ----------
Currency translation differences - - (722) (722)
Share based payments 1,588 - - 1,588
Exercise of options (346) - - (346)
Correction of treasury shares (136) - - (136)
Promise of shares to be issued
to KR on completion of KCC
acquisition (note 21) - 39,409 - 39,409
At 31 December 2013 5,557 39,409 (826) 44,140
--------------------------------- ------------ ------------- ------------ ----------
Reserve transfer (5,557) - - (5,557)
Currency translation differences - - (10,291) (10,291)
Promise of shares to be issued
to KR on completion of SUC
acquisition (note 21) - 16,844 - 16,844
Ordinary shares issued to
KR on completion of Kounrad
transaction (note 21) - (56,253) - (56,253)
At 31 December 2014 - - (11,117) (11,117)
--------------------------------- ------------ ------------- ------------ ----------
The $10,291,000 currency translation reserve movement (2013:
$722,000) is primarily as a result of the 18.7% devaluation of the
Kazakhstan Tenge from 31 December 2013 to 31 December 2014.
Company Shares
Share Reserve
Option to be Total
Reserve Issued Group
$'000 $'000 $'000
-------------------------------------- ------------- -------------- --------------
At 1 January 2013 4,451 - 4,451
--------------------------------------- ------------- -------------- --------------
Share based payments 1,588 - 1,588
Exercise of options (346) - (346)
Correction of treasury shares (136) - (136)
Promise of shares to be issued
to KR on completion of KCC
acquisition (note 21) - 39,409 39,409
------------- -------------- --------------
At 31 December 2013 5,557 39,409 44,966
--------------------------------------- ------------- -------------- --------------
Reserve transfer (5,557) - (5,557)
Promise of shares to be issued
to KR on completion of SUC
acquisition (note 33) - 16,844 16,844
Ordinary shares issue to KR
on completion of Kounrad transaction
(note 21) - (56,253) (56,253)
At 31 December 2014 - - -
--------------------------------------- ------------- -------------- --------------
Prior to the completion of the Kounrad Transaction, the shares
not issued to Kenges Rakishev (KR) were classified within Shares
Reserve to be issued as contingent equity consideration.
The Group and Company made a reserve transfer during 2014 to
include the share option reserve as part of retained earnings as
permitted by IFRS.
17. Trade and other payables
Group Company
--------------------------------- -------------------- --------------------
31 Dec 31 Dec 31 Dec 31 Dec
14 $'000 13 $'000 14 $'000 13 $'000
--------------------------------- --------- --------- --------- ---------
Trade payables 1,041 222 439 208
Dividends payable - 1,012 - 1,012
Corporation tax, social security
and other taxes 3,211 10,626 785 794
--------------------------------- --------- --------- --------- ---------
4,252 11,860 1,224 2,014
--------------------------------- --------- --------- --------- ---------
The carrying value of all the above payables is equivalent to
fair value.
As at 31 December 2014, the main liabilities of the Group are
the Corporate Income tax liability at Kounrad for the 12 months
ending 31 December 2014. The Group made a net provision for this
liability of $803,940 (2013: $8,367,253) having paid an amount of
$8,505,272 in advance during the year (2013: $1,302,000).
18. Cash generated from/(used in) operations
Group Company
------------------------------ ------ ----------------------- -----------------------
2014 2013 2014 2013
Note $'000 $'000 $'000 $'000
------------------------------ ------ --------- ------------ --------- ------------
Profit/(loss) before income
tax including discontinued
operations 70,019 41,204 (9,704) (21,087)
------------------------------ ------ --------- ------------ --------- ------------
Adjustments for:
Depreciation 11 9,476 4,564 46 18
Amortisation 12 1,936 68 - -
Loss on disposal of property,
plant and equipment 494 - - -
Foreign exchange gain/(loss) 1,887 594 850 (1,111)
Gain on re-measuring
to fair value the existing
interest on acquisition
of control 21 (33,039) (27,835) - -
Change in provision for
doubtful receivables 13 8 33 - -
Impairment of Mongolian
intercompany receivables - - 206 13,691
Impairment of Mongolian
intangible assets and
investments - 12,879 60 1,927
Share based payments 1,914 1,588 1,914 1,588
Cash settled share options
and EBT shares 16 - (482) - (482)
Finance income (61) (17) - (391)
Finance costs 334 581 (11) 9
Changes in working capital:
Inventories 83 306 - -
Trade and other receivables 13 (1,740) 10,444 16,314 82
Trade and other payables 17 (2,842) (2,969) 810 (525)
Movement in provisions (1,317) 122 - -
Cash generated from/(used
in) operations 47,152 41,080 10,485 (6,281)
------------------------------ ------ --------- ------------ --------- ------------
19. Contingencies
The Group has disclosed a contingent liability of $159,793
(2013: nil) representing an estimate of amounts that may become
payable towards research and development activities under the terms
of subsoil use contract (SUC) agreement with a subsidiary of the
Group.
The extent to which an outflow of funds will be required is yet
to be determined and is considered to be a contingent
liability.
20. Dividend per share
In line with the Company dividend policy, the Company paid
$17,932,000 in 2014 (2013: $14,306,000) which consisted of a 2014
interim dividend of 5 pence per share and an annual dividend for
2013 of 5 pence per share (2013: special dividend of 3.7 pence per
share and an annual dividend for 2012 of 7 pence per share).
The Directors have the intention to propose a final dividend in
respect of the year ended 31 December 2014 of 7.5 pence per share
at the forthcoming Annual General meeting (AGM). The Directors
recognise that there are currently insufficient reserves available
in the Company for distribution and are proposing to rectify this
by completing a court approved capital reduction scheme by
cancelling the Company's share premium account and transferring
such reserves to retained earnings. This process is expected to
become effective on or around 13 May 2015. The Company undertook a
previous capital reduction scheme in 2013.
In September 2013 the Company declared dividends amounting to
$5.3 million. Although the Company had sufficient distributable
reserves to make the dividend payments, the relevant interim
accounts had not been filed with the Registrar of Companies as
required. Consequently payment of the dividends was a technical
infringement of the Companies Act 2006.
The Directors will propose at the upcoming AGM to appropriate
distributable profits of the Company to these payments of dividends
and to release the relevant shareholders from any claims that the
Company may have in relation to such payments. These financial
statements have been drawn up on the basis that the technical
infringement described above has been regularised in the manner
described.
21. Business combination
The Company has been working on the completion of the
acquisition of the remaining 40% of the Kounrad project since early
2012. The acquisition (collectively known as the Kounrad
Transaction) consisted of two key parts;
-- The first transaction involving the transfer of an additional
40% ownership of Kounrad Copper Company LLP (KCC) was completed on
21 October 2013.
-- The second transaction involving the transfer of the
remaining 40% economic interest in the subsoil use contract (SUC)
remained outstanding as at 31 December 2013. This was completed on
23 May 2014.
On completion of the Kounrad Transaction and in line with the
agreements, a total of 21,211,751 Ordinary Shares were issued to Mr
Kenges Rakishev (KR) on 23 May 2014. In addition a cash payment of
$1,432,047 was paid to KR on that date in line with the agreements
to reflect the entitlement to dividends payable.
As a consequence of the completion of both transactions, the
Group became 100% owner of the Kounrad project and, in accordance
with IFRS 3 Business Combinations, recognized the acquired assets
and liabilities of both KCC and the SUC based upon their fair
values.
Consideration
The fair value of the 21,211,751 Ordinary Shares issued as part
of the consideration for the Kounrad Transaction was determined
based on the published share price of the Company on the relevant
dates. In the case of KCC this was 21 October 2013 when the
remaining 40% of KCC Shares were re-registered and in the case of
the SUC transfer it was deemed to be 23 May 2014 when the Kounrad
Transaction was finally completed and the agreed consideration paid
to KR.
In addition an agreed cash consideration of $1,432,047 was paid
on 23 May 2014. This was all allocated as consideration for the
additional 40% shares in KCC as per the legal agreements resulting
in a minor adjustment of $1,049,798 to the fair values associated
with the assets and liabilities of KCC as reported at 31 December
2013.
The total purchase consideration amounted to $57,685,494 plus an
adjustment for settlement of intercompany borrowings of
$9,471,000.
The table below summarises the consideration paid for both KCC
and the SUC together with the fair value of all the assets acquired
and the liabilities assumed for both the KCC and SUC parts of the
Kounrad Transaction;
Subsoil
Use
Contract
-
Kounrad
Copper Company
LLP - 21
October
23 May 2014 2013 Total
Consideration $'000 $'000 $'000
---------------------------- --- --- ------------- ---------------- -------
Equity instrument 16,845 39,409 56,254
Cash consideration - 1,432 1,432
------------- ---------------- -------
Total consideration 16,845 40,841 57,686
-------------------------------------- ------------- ---------------- -------
Settlement of intercompany
borrowings 9,471 - 9,471
-------------------------------------- ------------- ---------------- -------
Adjusted consideration 26,316 40,841 67,157
-------------------------------------- ------------- ---------------- -------
Subsoil
Use Contract
-
Kounrad
Copper Company
LLP - 21
23 May October
2014 2013
Recognised amounts of
identifiable assets
acquired and liabilities
acquired 100% $'000 $'000 Total
------------------------------- --- -------------- ---------------- ---------
Property, plant and
equipment 4,196 73,875 78,071
Intangible assets 59,914 - 59,914
Inventories 554 4,075 4,629
Cash and cash equivalents 816 8,233 9,049
Trade and other receivables 2,225 35,855 38,080
Trade and other payables (1,556) (9,853) (11,409)
Other liabilities
and charges (359) (10,083) (10,442)
Deferred tax liabilities (10,803) (9,488) (20,291)
Total identifiable
net assets at fair
value 54,987 92,614 147,601
------------------------------------ -------------- ---------------- ---------
Derecognition of
previously held interests
60%
Removal of book value (7,064) (32,796) (39,860)
Removal of fair value
uplift (32,409) (28,465) (60,874)
------------------------------------ -------------- ---------------- ---------
Total interests acquired
40% 15,513 31,353 46,866
Purchase consideration 26,316 40,841 67,157
Provisional goodwill 10,803 9,488 20,291
------------------------------------ -------------- ---------------- ---------
Completion of the SUC Transaction
As stated above, the second transaction involving the transfer
of the remaining 40% economic interest in the SUC completed on 23
May 2014. In accordance with IFRS 3 Business Combinations, the
Group recognised the assets and liabilities based upon their fair
values. The fair value uplift applied to the assets acquired as
part of the SUC transaction has all been applied to the intangible
assets of the SUC under Mining Licences and Permits resulting in an
uplift of $54,015,555.
The Group recognised a gain of $32,409,333 as a result of
measuring at fair value its 60% interest in the SUC held before the
business combination. This gain is included in the consolidated
income statement, as a line item "Gain on re-measuring to fair
value the existing interests on acquisition of control", in the
Group's income statement for the year ended 31 December 2014.
Amendments to provisional purchase price allocated in relation
to the KCC Transaction as reported at 31 December 2013
As at 31 December 2013, the cash consideration had been
apportioned to both the KCC and SUC parts of the Kounrad
Transaction. This assumption was revised following a review of the
detailed legal agreements associated with the transaction.
Consequently, the adjustment and revised allocation of the cash
consideration to the KCC part of the transaction resulted in an
additional gain of $629,798 through the income statement for the
year ended 31 December 2014.
As a result the Group reported a total gain through the income
statement, under the line item "Gain on re-measuring to fair value
the existing interests on acquisition of control", for the year
ended 31 December 2014 of $33,039,131. This reported gain is in
addition to the $27,835,000 gain reported by the Group in the year
ended 31 December 2013 making a reported total gain for the
completion of the Kounrad Transaction of $60,874,131.
This minor amendment to the allocation of the cash consideration
also resulted in an additional fair value uplift associated with
the property, plant and equipment of KCC. The fair value uplift
reported as at 31 December 2013 was $46,392,000 giving a total on
completion of $47,441,797.
Goodwill
The goodwill arising on the completion of the Kounrad
Transaction amounted to $20,291,043 which includes a minor
adjustment of $209,933 resulting from the reallocation of the cash
consideration assigned to KCC as mentioned
above. The goodwill is not deductible for tax purposes.
This is the amount of the deferred tax liability which arises on
the difference between the assigned fair value of the acquired
assets and liabilities and their tax base.
The acquisition costs related to the completion of the
transaction in the year ended 31 December 2014 are approximately
$105,161 (2013: $221,264). These have been charged to
administrative expenses in the consolidated income statement.
22. Events after the reporting period
As explained in note 20, the Directors recognise that there are
currently insufficient reserves available in the Company for
distribution and are proposing to rectify this by completing a
court approved capital reduction scheme by cancelling the Company's
share premium account and transferring such reserves to retained
earnings. This process is expected to become effective on or around
13 May 2015. The Company undertook a previous capital reduction
scheme in 2013.
23. Related party transactions
The Group had the following related party balances and
transactions during the year ended 31 December 2014. Related
parties are those entities owned or controlled by the Company,
which is the ultimate controlling party of the Group.
Transactions between the Company and subsidiaries
Amounts receivable based on the 31 Dec 31 Dec
Kounrad Transaction 14 13
$'000 $'000
-------------------------------- ------------- -------------
CAML Kazakhstan BV
Current portion 29,571 30,000
Non-current portion - 11,216
-------------------------------- ------------- -------------
Total 29,571 41,216
-------------------------------- ------------- -------------
On 21 October 2013, the transfer of the remaining 40% in Kounrad
Copper Company LLC was registered. The acquisition was registered
under the ownership of CAML Kazakhstan BV which is a 100%
controlled subsidiary of the Company. The agreed consideration for
the acquisition was 15,336,096 Ordinary Shares in the Company and
the value of the 2013 interim dividend associated with those
shares. The adjustment and revised allocation of the cash
consideration to the KCC part of the transaction (note 21) resulted
in an increase to the cash consideration and therefore the amount
receivable from CAML Kazakhstan BV of $420,000. During 2014, CAML
Kazakhstan BV repaid $11,270,000 to the Company (2013: nil).
As at 31 December 2014, all the intercompany loans together with
all the outstanding interest receivable from both Sary Kazna LLP
and Kounrad Copper Company LLP had been fully repaid to the
Company.
As at 31 December 2014, $206,000 of intercompany loans and
management fee receivable with the Mongolian subsidiaries had been
written off during the 12 month period as part of the Group
impairment testing (2013: $13,691,176).
The Company also received interest income during the year of nil
(2013: $391,348) and management fee income from Sary Kazna LLP of
$60,000 (2013: $60,000).
Directors' Remuneration, EBT shares and options
Directors' remuneration, including Non-Executive Directors,
during the year was as follows:
2014 2014 2014
Basic Annual Benefits 2014 2013
salary/fees Bonus in kind Total Total
Group $ $ $ $ $
---------------------------- ---------------------- ------------ ----------------- ------------- --------------
Executive Directors:
Nick Clarke 453,122 453,122 6,115 912,359 818,917
Nigel Robinson 288,350 288,350 9,357 586,057 526,342
Howard Nicholson 288,350 288,350 3,960 580,660 519,831
Non-Executive Directors:
Dr Michael Price (resigned
16 June 2014) 41,193 - - 41,193 75,183
Nigel Hurst-Brown 82,386 - - 82,386 70,389
Robert Cathery 65,909 - - 65,909 54,747
Nurlan Zhakupov 65,909 - - 65,909 74,747
Kenges Rakishev 65,909 - - 65,909 5,214
David Swan (appointed
16 June 2014) 43,253 - - 43,253 -
---------------------------- ---------------------- ------------ ----------------- ------------- --------------
Directors' aggregate
emoluments 1,394,381 1,029,822 19,432 2,443,635 2,145,370
---------------------------- ---------------------- ------------ ----------------- ------------- --------------
The aggregate emoluments of the highest paid Director totalled
$912,359 in 2014 (2013: $818,917). Details of the Directors'
interests in the Ordinary Shares of the Company are set out in the
Governance Report and below. No Director has a service agreement
with the Company that is terminable on more than 12 months'
notice.
Directors' EBT share awards As at 31
As at 31 Dec
Dec 2013
2014 Number Number
----------------------------------- ------------------- ---------
Nigel Hurst-Brown 250,543 250,543
Dr Michael Price (resigned 16 June
2014) - 300,543
Nick Clarke 1,342,887 1,342,887
Howard Nicholson 446,715 446,715
Nigel Robinson 646,715 646,715
----------------------------------- ------------------- ---------
Total Directors' Interests 2,686,860 2,987,403
----------------------------------- ------------------- ---------
The above shares were awarded to the Directors of the Company as
part of the EBT incentive scheme. All the share awards were made
prior to the IPO and vested upon its successful completion.
Directors' Options awards
During 2014 the Company awarded the following New Scheme options
to the Directors of the Company.
2014 2013
Group Number Number
----------------- --------- --------
Nick Clarke 299,597 110,403
Nigel Robinson 179,937 70,063
Howard Nicholson 179,937 70,063
Nurlan Zhakupov 50,000 -
Total 709,471 250,529
----------------- --------- --------
During 2014 the Directors exercised the following New Scheme
options.
2014 2013
Group Number Number
----------------- --------- --------
Nick Clarke 400,000 -
Nigel Robinson 269,737 -
Howard Nicholson 377,764 -
Total 1,047,501 -
----------------- --------- --------
The number of options exercised in the table above includes the
number of shares covered by such awards increased by up to the
value of dividends as if these were reinvested in Company shares at
the dates of payment.
Kounrad Transaction
Mr Kenges Rakishev (KR) became a major shareholder of CAML on 23
May 2014 following completion of the Kounrad Transaction. He was
appointed to the CAML Board on 9 December 2013 following the
completion of the first part of the transaction. As a consequence,
KR is considered a related party in any future dealings he has with
the Group.
KR owns 16.02% and is a Director of JSC Kazkommertsbank. The
Group uses the facilities of JSC Kazkommertsbank within Kazakhstan
for its normal day-to-day banking.
On 2 July 2014, the Company announced that the SDB Group LLP, an
entity 100% owned and controlled by KR, a Non-Executive Director of
the Company, had entered into a loan agreement whereby security
over 21,211,751 Ordinary Shares of US$0.01 each in the capital of
the Company (the Pledged Shares) held by KR was granted in favour
of JSC CenterCredit Bank.
There is no change in KR's legal or beneficial shareholding in
the Company and he continues to have an interest and voting rights
in 21,211,751 Ordinary Shares. The Pledged Shares will remain
subject to the restricted dealing provisions originally agreed with
KR and CAML as part of the Kounrad Transaction.
The Company has obtained an undertaking from JSC CenterCredit
Bank that should the security be enforced, the Company will be
granted a priority right to place the shares.
As far as the Group is aware, they do not have any other
dealings with companies associated with KR. As part of the
obligations on KR for completing the Kounrad Transaction, he signed
a relationship agreement with CAML setting out the terms of the
relationship between KR and the Group.
24. Deferred income tax
Group
The movements in the Group's deferred tax assets and liabilities
are as follows:
Group
-------------------------- -------------- ----------- ------------- ----------- ------------------
At 1 Currency Credited At 31
January translation to income December
2014 Acquisition differences statement 2014
$'000 $'000 $'000 $'000 $'000
-------------------------- -------------- ----------- ------------- ----------- ------------------
Other timing differences (374) - 58 40 (276)
Deferred tax liability
on fair value adjustment
(note 21) (9,278) (11,013) - - (20,291)
Deferred tax liability,
net (9,652) (11,013) 58 40 (20,567)
-------------------------- -------------- ----------- ------------- ----------- ------------------
Reflected in the
statement of financial
position as:
Deferred tax assets - - - - -
Deferred tax liabilities (9,652) (11,013) 58 40 (20,567)
-------------------------- -------------- ----------- ------------- ----------- ------------------
Deferred tax liability,
net (9,652) (11,013) 58 40 (20,567)
-------------------------- -------------- ----------- ------------- ----------- ------------------
Group
--------------------------- -------------- ----------- ------------- ----------- ------------------
At 1 Currency Credited At 31
January translation to income December
2013 Acquisition differences statement 2013
$'000 $'000 $'000 $'000 $'000
--------------------------- -------------- ----------- ------------- ----------- ------------------
Other timing differences (272) (179) 11 66 (374)
Deferred tax liability
on fair value adjustment - (9,278) - - (9,278)
Deferred tax liability,
net (272) (9,457) 11 66 (9,652)
--------------------------- -------------- ----------- ------------- ----------- ------------------
Reflected in the statement
of financial position
as:
Deferred tax assets - - - - -
Deferred tax liabilities (272) (9,457) 11 66 (9,652)
--------------------------- -------------- ----------- ------------- ----------- ------------------
Deferred tax liability,
net (272) (9,457) 11 66 (9,652)
--------------------------- -------------- ----------- ------------- ----------- ------------------
During 2014, a deferred tax liability of $10.8 million has been
recognised in respect of the SUC acquisition that occurred in the
year. The net assets of SUC were recognised in the consolidated
financial information at their fair values at the date of
acquisition.
During 2013, a deferred tax liability of $9.3 million was
recognised in respect of the Kounrad Copper Company LLP acquisition
that occurred in the year. The net assets of KCC were recognised in
the consolidated financial information at their fair values at the
date of acquisition. The adjustment and revised allocation of the
cash consideration to the KCC part of the transaction (note 21)
resulted in an increase to the deferred tax liability during 2014
of $210,000.
On both parts of above transaction, the tax base of the
individual assets and liabilities remains the same as the
pre-acquisition tax base as the transaction is considered to be
non-taxable. A taxable temporary difference arises as a result of
the acquisition of the long term assets where the carrying amount
is increased to fair value at the date of acquisition but its tax
base remains at cost.
The deferred tax liability arising from this taxable temporary
difference is recognised in the consolidated financial information
to reflect the future tax consequences of recovering the long term
assets recognised at fair value. The resulting deferred tax
liability affects goodwill.
Where the realisation of deferred tax assets is dependent on
future profits, the Group recognises losses carried forward and
other deferred tax assets only to the extent that the realisation
of the related tax benefit through future taxable profits is
probable.
The Group did not recognise other potential deferred tax assets
arising from losses of $3.7 million (2013: $2.7 million) as there
is insufficient evidence of future taxable profits within the
entities concerned. Unrecognised losses can be carried forward
indefinitely.
At 31 December 2014, the Group had other deferred tax assets of
$6.0 million (2013: $4.9 million) in respect of the exploration
assets pool, depreciation, share based payments and other temporary
differences which had not been recognised because of insufficient
evidence of future taxable profits within the entities
concerned.
There are no significant unrecognised temporary differences
associated with undistributed profits of subsidiaries at 31
December 2014 and 2013, respectively.
Company
At 31 December 2014 and 2013 respectively, the Company had no
recognised deferred tax assets or liabilities.
At 31 December 2014, the Company had not recognised potential
deferred tax assets arising from losses of $3.3 million (2013: $2.2
million) as there is insufficient evidence of future taxable
profits. The losses can be carried forward indefinitely.
At 31 December 2014, the Company had other deferred tax assets
of $6.0 million (2013: $4.9 million) in respect of share based
payments and other temporary differences which had not been
recognised because of insufficient evidence of future taxable
profits.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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