TIDMCAML
RNS Number : 7076U
Central Asia Metals PLC
11 April 2016
11 April 2016
CENTRAL ASIA METALS PLC
("CAML" or the "Company" or "Group")
2015 Full Year Results
Central Asia Metals plc (AIM: CAML) today announces its full
year results for the 12 months ended 31 December 2015.
Operational summary
-- Record copper production, 12,071 tonnes, an increase
of 8.4% vs. 2014 (11,136 tonnes);
-- Record copper sales, 12,040 tonnes, an increase
of 7.9% vs. 2014 (11,163 tonnes);
-- Kounrad Stage 1 Expansion of SX-EW plant commissioned
on time and under budget;
-- Kounrad Stage 2 Expansion to access the western
dumps on track for production in H1 2017;
-- Additional $3.0 million investment in Copper
Bay, increasing shareholding to 75% to fund Definitive
Feasibility Study ("DFS").
Financial summary
-- 8.0p final dividend proposed, bringing 2015 total
dividend per share to 12.5p (2014: 12.5p);
-- Proposed full year dividend represents 30% of
gross revenue for the year;
-- Gross revenue of $67.3 million (2014: $76.6 million);
-- C1 cash cost of $0.60/lb based on industry standard
(reduction of 3%, 2014: $0.62/lb);
-- Group EBITDA of $34.9 million (2014: $47.3 million);
-- Group cash balance as at 31 December 2015 of
$42.0 million (2014: $46.3 million).
2016 outlook
-- Kounrad production target of 13,000 to 14,000
tonnes;
-- Completion of Kounrad Stage 2 Expansion;
-- CAML Board changes provide continuity and further
strengthen management of the Company;
-- Continued appraisal of business development
opportunities to create further shareholder
value.
Nick Clarke, Chief Executive Officer of CAML, commented:
"We are pleased to report that, during a very challenging 2015
for the copper market, CAML has again reported robust financial
results. Indeed, while many resource companies are cutting
dividends, we are pleased to be able to honour and exceed our
dividend policy. Including the proposed 2015 final dividend of 8
pence per share, we will soon have distributed in excess of $73
million to shareholders, an amount significantly larger than the
$60 million raised at IPO in 2010. During 2015, we completed our
Stage 1 Expansion at Kounrad and we look forward to delivering the
Stage 2 Expansion to enable copper production from the western
dumps in 2017.
As we look to strengthen the business, we have taken the
opportunity to make a number of Board changes. After nine years as
Chairman, Nigel Hurst-Brown will step down to the role of Deputy
Chairman and I will assume the role of Executive Chairman, thereby
maintaining management continuity.
Due to personal reasons, Howard Nicholson will be stepping down
from the Board at the forthcoming AGM. Howard has been instrumental
in the success of the Company over the past seven years and we are
delighted that he will remain as an employee. His focus will remain
on delivery of the Kounrad Stage 2 Expansion as well as ensuring
the continued strong operational performance of the project."
Analyst presentation conference call
There will be an analyst presentation and conference call on
Monday 11 April 2016 at 09:30 (BST) at Bell Pottinger's offices.
The call can be accessed by dialling +44 (0)20 3059 8125 and
quoting the confirmation code 'Central Asia Metals Full Year
Results'. The results presentation slides will be available at
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
Louise Wrathall, Investor Relations louise.wrathall@centralasiametals.com
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
Bell Pottinger
Tel: +44 (0) 20
Greg Wood 3772 2587
Tel: +44 (0) 20
Aarti Iyer 3772 2468
Tel: +44 (0) 20
Richard Crowley 3772 2556
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 75% equity interest in Copper Bay Ltd, which is
a private company conducting a definitive feasibility study of the
Copper Bay Project in Chañaral, northern Chile. For further
information, please visit www.centralasiametals.com.
CHAIRMAN'S STATEMENT
Dear shareholders,
Key achievements
Over nine years ago, in December 2006, I was appointed the
Chairman of Central Asia Metals Limited, a small privately owned
resource company with six projects in various stages of development
across Mongolia and Kazakhstan. The Company has come a long way
since then through to the Initial Public Offering ("IPO") and
listing on the AIM market ("AIM") of the LSE in 2010 and the
subsequent commencement of copper cathode production at Kounrad in
2012.
During 2015, the Company reached a notable milestone and
returned over 100% of the funds raised at IPO to shareholders with
the announcement of the 2015 interim dividend. In addition, we
reported record copper cathode production and completed the Stage 1
Expansion at Kounrad during the period. Delivery of the Stage 2
Expansion is a primary objective for 2016 and further to our
Chilean investment in Copper Bay, we are also looking at expanding
the business where we see an opportunity to create value for our
shareholders. Further details on the key achievements during the
year are set out in the Chief Executive Officer's Statement
below.
We have now established ourselves as one of the top performers
on AIM with a profitable copper project at Kounrad, strong balance
sheet and a robust dividend policy. I am extremely proud of our
achievements since I became Chairman and want to thank all our
people and the management team in particular for their hard
work.
Board changes
After nine years, I feel it is appropriate for me to step down
from the role of Chairman. In order to provide continuity, I will
remain as a Non-Executive Director in the role of Deputy
Chairman.
Not only am I delighted to be staying with the Company and on
the Board, but I am also pleased to advise you that Nick Clarke,
our current Chief Executive Officer, will be assuming the role of
Executive Chairman. This appointment will provide further
continuity given Nick's close relationship with our shareholders
and his key involvement in the Company's IPO and subsequent
successful transition through to profitable production.
Due to personal reasons, Howard Nicholson, our Technical
Director, will be stepping down from the Board. Howard will remain
with the Company and will be focussed on delivering the western
expansion programme at Kounrad as well as ensuring the continued
strong operational performance of the project. Howard's exceptional
technical expertise and leadership of the local team has been
instrumental in the successful development of the Kounrad project.
We are pleased that Howard will remain with the Company and we wish
to express our gratitude for his continued dedication.
As we look to grow the business, we will be appointing Gavin
Ferrar, our existing Business Development Director, to the Board to
oversee this aspect of the Company's strategy.
During 2015, we further strengthened the CAML Board with the
appointment of Roger Davey. Roger is an experienced mining engineer
with over 45 years of experience in the industry and we are
delighted to secure his services.
I trust that as shareholders you will support the above changes
and recognise that they further strengthen the Board and management
of the Company.
All the above appointments and changes will take effect at
conclusion of the forthcoming Annual General Meeting ("AGM") on 8
June 2016.
Nigel Hurst-Brown
Chairman
CHIEF EXECUTIVE OFFICER'S STATEMENT
We have now returned to shareholders over 100% of the $60
million raised at IPO five years ago. With the proposed 2015 final
dividend of 8 pence per share, total returns to shareholders since
commencement of operations in 2012 represents 31% of the gross
revenue generated.
Maximising shareholder value
30 September 2015 marked the fifth anniversary of CAML joining
the AIM market of the London Stock Exchange and we have
accomplished a great deal since that time. The success we have
achieved is the result of the skill and hard work of every one of
our employees and I thank them for their contributions over the
past five years.
At IPO, the Company raised $60 million and soon thereafter
started construction of the Kounrad SX-EW plant which was completed
on time and under budget. Since production commenced in April 2012,
the plant has produced 40,302 tonnes of copper at an average C1
cash cost of $0.63/lb based on the industry definition as explained
in the Financial Review section below. This low cash cost of
production has enabled the Company to pay back to shareholders via
share buy-backs and dividends over $73 million including the
proposed 2015 final dividend of 8 pence per share. This was a
notable milestone for the Company and one of which we are extremely
proud.
(MORE TO FOLLOW) Dow Jones Newswires
April 11, 2016 02:00 ET (06:00 GMT)
It is all the more pleasing that these achievements have been
made in the current challenging market conditions where the copper
price fell to a six-year low of approximately $4,500/t during 2015.
Whilst the commodity price environment is outside our control,
CAML's low cash costs at Kounrad gives us the resilience to weather
a prolonged commodity downturn. The current market conditions are
challenging for all mining companies, many of whom, we note, have
cut or suspended dividend payments.
Kounrad operations - record production in 2015
During the year, we reported record copper cathode production of
12,071 tonnes (2014: 11,136 tonnes) representing an 8.4% increase
year on year.
Our continued focus on cost control together with the
devaluation of the Kazakh Tenge against the US Dollar since August
2015, has maintained Kounrad's position in the lowest quartile of
the industry cash cost curve. 2015 C1 cash costs were $0.60/lb
(2014: $0.62/lb) representing a 3% decrease year on year.
The production incident we reported in June 2015 impacted
adversely on our 2015 production, but nonetheless we have still
managed to increase our output compared to 2014. To 31 December
2015, the Kounrad SX-EW plant had been in operation for 44 months
at an average utilisation rate of 98.5% and produced 40,302 tonnes
of copper, and this was the first such major interruption to
operations.
The Company has an established presence in Kazakhstan and since
the start of commercial operations at Kounrad, has paid $68 million
in various taxes to the Kazakhstan authorities. We have contributed
close to $1 million towards social programmes and the local
community and currently employ approximately 276 staff, the
majority of whom have been recruited locally.
Regrettably, after three years of production at Kounrad with an
exemplary health and safety record, we experienced our first major
accident in July 2015. The accident resulted in injuries to two
employees, both of whom have received the appropriate medical
treatment and were given all of the necessary support to ensure a
swift recovery. Detailed internal and external investigations were
undertaken to ensure that the risk of a similar accident is
minimised.
Kounrad Stage 2 Expansion programme underway
In November 2015, the Ministry for Investment and Development of
the Republic of Kazakhstan approved an amendment to the project's
existing Subsoil Use Contract ("SUC"). This approval gives CAML the
right to exploit the copper contained in the western dumps with
commencement of production scheduled in 2017.
The procurement of materials and equipment for the Stage 2
Expansion is now underway, with the programme's capital cost
remaining within the $19.5 million estimate. The construction works
will be executed primarily by Company personnel.
Whilst a formality, this State approval offers a clear
indication of the Kazakhstan government's readiness to support
foreign investors, and enabled CAML to fully commit to the second
phase of the Kounrad project's expansion. The successful
commissioning of the additional SX-EW facilities in 2015 has
already had a positive impact on our unit cost of production, and I
have full confidence in our team at Kounrad successfully completing
this next stage of the projects' development in a diligent and
timely manner.
Copper Bay - Definitive Feasibility Study ("DFS") in
progress
In June 2015, we announced that we had increased our
shareholding in the Copper Bay project in Chile to 75%, following
an additional investment of $3 million. These funds are being used
for the DFS that is currently underway, which will provide more
accuracy and confidence regarding all aspects of the project. The
DFS should be completed in late 2016.
CAML management will continue to monitor the future technical
and economic viability of the project based on the outputs of the
DFS and the prevailing copper market environment.
Outlook and growth opportunities
We will focus our efforts on maintaining our low cash costs and
meeting our 2016 production target of 13,000 to 14,000 tonnes.
Consistent monitoring and analysis of the copper leaching rate
since production commenced in April 2012 indicates that the
recovery of copper from the dumps is taking slightly longer than
originally projected. The Company remains confident of producing
the same total tonnage of copper from the Kounrad resource as
previously estimated, thereby extending the life of the operation
beyond 2030.
Delivery on time and within the capital budget of the Stage 2
Expansion programme at Kounrad is a primary objective for 2016.
Further to our investment in Copper Bay, we continue to look for
only the very best investment opportunities to create value for our
shareholders. With CAML's strong balance sheet, the Company is
confident that it has sufficient funds available to finance the
dividend policy, complete the capital expansion at Kounrad and
provide the Company with the financial flexibility to support the
growth of the business.
Nick Clarke
Chief Executive Officer
FINANCIAL REVIEW
The financial performance during the year demonstrated the
Company's resilience to the fall in copper price.
Summary
-- Proposed 2015 final dividend of 8 pence per share
totalling 12.5 pence for the full year (2014:
12.5 pence);
-- EBITDA for the year of $34.9 million (2014: $47.3
million);
-- Unit operating costs at Kounrad remain competitive
with C1 cash costs of $0.60/lb (2014: $0.62/lb)
using industry basis (see below);
-- Fully inclusive cost of $1.58/lb (2014: $1.65/lb);
-- Cash balances as at 31 December 2015 of $42.0
million (2014: $46.3 million);
Overview
CAML's financial performance during the year was impacted by the
market downturn but also demonstrated the Company's resilience to
the weakening copper price. Despite the copper price falling to a
six-year low of close to $4,500/t in December 2015, the Company
continued to operate profitably at Kounrad due to sustained low
costs of copper production.
Group EBITDA margins throughout 2015 remained in excess of 50%
and with $42.0 million of cash and no debt, the Company is well
positioned to both maintain its dividend policy and continue its
plans for growth.
The combined strength of CAML's balance sheet and its low cost
operations at Kounrad will enable the Company to withstand any
prolonged downturn in the commodity markets.
Income statement
Group profit after tax from continuing operations was $22.4
million (2014: $59.7 million). The 2014 comparative year results
were impacted by a one-off gain of $33.0 million arising from the
completion of the Kounrad Transaction in May 2014. Earnings per
share from continuing operations were 20.21 cents (2014: 56.28
cents, or 24.91 cents excluding the one-off gain).
Revenue
A total of 11,750 tonnes (2014: 10,687 tonnes) of copper cathode
were sold as part of the Company's off-take arrangements with
Traxys at Kounrad and a further 290 tonnes (2014: 476 tonnes) were
sold locally. Total sales at Kounrad were 12,040 tonnes (2014:
11,163 tonnes) representing an 8% increase in volumes year on
year.
The average selling price achieved over the year was $5,336/t
(2014: $6,794/t) representing a 21% decrease in prices.
Consequently, the Group gross revenues for the year declined to
$67.3 million (2014: $76.6 million) or by 12%.
During the year, the Group's off-take arrangements at Kounrad
went to tender with Traxys being retained as CAML's off-take
partner following a competitive process. The revised off-take
commercial terms have been agreed through to 31 December 2018 and
will provide additional cost savings fixed for the three-year
period. The commitment is for a minimum of 90% of the Kounrad
copper cathode production.
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. During 2015 the fixed fee for the year was $2.9
million (2014: $3.4 million), a reduction of 15% despite the
increased export volumes.
Cost of sales
Cost of sales for the year were $25.5 million (2014: $26.0
million). This consists of the costs associated with the production
of copper cathode, the mineral extraction tax levied by the
Kazakhstan government and the depreciation and amortisation
charges.
The costs related to the physical production of copper cathode
are the production labour, reagents and electricity, plus any other
SX-EW site related costs. These costs amounted to $10.6 million
(2014: $9.4 million) with the 13% increase year on year due to a
combination of increased production output of 8% and higher
electricity costs.
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 $3.8 million (2014:
$4.4 million). The reduction was due to lower copper prices during
2015.
Total depreciation and amortisation charges recognised within
cost of sales for the year were $10.3 million (2014: $11.3
million). This included an amount of $5.7 million (2014: $6.6
million) as a result of the uplift to the asset values following
the completion of the Kounrad Transaction in May 2014. This amount
is denominated in Tenge and the devaluation of the currency during
2015 resulted in a reduction in the charge compared to the prior
year.
(MORE TO FOLLOW) Dow Jones Newswires
April 11, 2016 02:00 ET (06:00 GMT)
Following receipt of the regulatory approvals required for the
Kounrad Stage 2 Expansion in November 2015, management has extended
the useful economic lives of certain property, plant and equipment
and the fair value uplift on the Kounrad Transaction. The original
estimate of 10 years useful economic life has now been increased
through to 2034 which represents the end of the subsoil use
licence. This change in estimate will be applied from 1 January
2016. In future years, this change will result in a reduction in
the annual depreciation and amortisation charge of approximately
$4.0 million but this amount is dependent on the Tenge exchange
rate. Such changes are always subject to future periodic reviews of
the Group's depreciation policy.
Administrative expenses
During 2015, administrative expenses were $14.1 million (2014:
$10.9 million). The increase of $3.2 million is due to increased
business development activities and support for the Copper Bay
feasibility studies as well as increased share based payment
charges and withholding tax on dividend payments made between
subsidiaries within the Group.
C1 cash costs of production
C1 cash costs of production are a standard metric used in the
copper mining industry as a reference point to denote the basic
cash costs of running a mining operation to allow comparison across
the industry. Whilst there is no strict definition of C1, the most
widely accepted definition is that from consultants Wood Mackenzie
(formerly known as Brook Hunt).
CAML has historically calculated C1 by including all direct
costs of production at Kounrad (reagents, power, production labour
and materials) as well as mineral extraction tax and distribution
and selling costs. Local administrative expenses were excluded and
reported within the fully inclusive unit costs of production.
However, under the industry definition, all local taxes including
mineral extraction tax are excluded from C1 and local
administrative expenses are included.
Management believes that the industry definition is more
appropriate to enable better comparison across the mining industry.
The table below shows the C1 cash costs of production since
commencement of operations using both approaches and in future
periods the industry definition will be reported.
Comparison of C1 cash cost definitions
2012 Average
44 months
C1 cash cost 2015 2014 2013 $/lb $/lb
of production
$/lb $/lb $/lb (8 months)
------------------------ ------- ------- ------- ------------ -----------
CAML revised
(industry definition) 0.60 0.62 0.66 0.63 0.63
------------------------ ------- ------- ------- ------------ -----------
CAML historic
- reported 0.67 0.71 0.73 0.71 0.70
------------------------ ------- ------- ------- ------------ -----------
The table above shows that the C1 cash cost of production at
Kounrad, as measured by the industry methodology, is slightly lower
than previously reported by approximately 12%. The change in
reporting the Kounrad C1 cash cost has no impact on the fully
inclusive costs.
Kounrad's C1 cash costs of production remain in the lowest
quartile on the industry cost curve at $0.60/lb (2014: $0.62/lb).
This represents a 3% decrease year on year as a result of a
reduction in the off-taker's fixed buyers' fee and savings due to
the Kazakh currency devaluation.
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 including depreciation and amortisation
charges, all local taxes including mineral extraction tax and
corporate overheads associated with the Kounrad project. The
Group's fully inclusive unit costs were $1.58/lb (2014: $1.65/lb)
which includes a one-off charge of $0.6 million, equating to
$0.02/lb, arising from the write-off of organic inventory following
the incident on 26 June 2015. The reduction in the fully inclusive
unit cost is due to the lower C1 cash costs, mineral extraction tax
and depreciation and amortisation charges.
Kazakhstan Tenge devaluation
During August 2015, the Kazakhstan Tenge immediately devalued by
almost 37% when the government transitioned to a free-floating
exchange rate, allowing the market to determine its value. The
Tenge devalued further towards the end of 2015 resulting in a total
devaluation over the year of approximately 85%. The Board's
response was to increase salaries for staff at Kounrad by 25% from
1 January 2016 to compensate for the devaluation.
Given that the Group's operations in Kazakhstan generate their
income in US Dollars through the export of copper, the immediate
financial impact is positive as approximately 60% of the total cost
base in Kazakhstan is denominated in Tenge and 70% at the C1 cash
cost level using the industry basis.
The Group does not keep large amounts of cash in Tenge and as at
31 December 2015 held the US Dollar equivalent of $0.1 million
(2014: $0.4 million).
The Tenge ended the year at 339 Tenge per US Dollar which has
resulted in the recognition of foreign exchange gains through the
income statement of $9.0 million (2014: $1.9 million), arising
mostly on US Dollar denominated monetary assets and liabilities
held by the Group's Kazakhstan based subsidiaries whose functional
currency is the Tenge.
The fall in value of the Tenge has also resulted in a non-cash
foreign exchange loss of $77.4 million recognised within equity and
the statement of comprehensive income. This is primarily due to the
translation on consolidation of the Group's Kazakhstan based
subsidiaries whose functional currency is the Tenge as well as the
goodwill and fair value uplift adjustments to the carrying amounts
of assets and liabilities arising on the Kounrad Transaction which
are also denominated in Tenge.
Balance sheet
During 2015, there were additions to property, plant and
equipment of $7.8 million (2014: $11.3 million). The majority of
this expenditure was incurred on the construction work at Kounrad
for the Stage 1 Expansion which was commissioned in May 2015.
As at 31 December 2015, current trade and other receivables were
$2.6 million (31 December 2014: $3.2 million) and non-current trade
and other receivables were $4.3 million (31 December 2014: $6.4
million).
The Group's main receivable is the VAT incurred on purchases
within Kazakhstan. As at 31 December 2015, a total of $4.5 million
(2014: $6.4 million) of VAT receivable was still owed to the Group
by the Kazakhstan authorities. The decrease in this balance is as a
result of the devaluation of the Kazakh Tenge during 2015. In
February 2016, the authorities refunded a portion of this
outstanding amount totalling $1.7 million. The Group still remains
confident about its prospects to recover the remaining portion of
$2.8 million 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 copper cathode to
effectively offset VAT liabilities and by a successful appeal to
the authorities.
As at 31 December 2015, prepayments of $2.3 million had been
made towards the Stage 2 Expansion programme with construction
works commencing in early 2016.
The Group had $42.0 million of cash as at 31 December 2015 (31
December 2014: $46.3 million) including restricted cash of $0.5
million (31 December 2014: $0.1 million) and no debt.
As at 31 December 2015, current trade and other payables were
$6.3 million (31 December 2014: $4.3 million). During 2015,
instalment payments of $9.3 million were paid towards the 2015
corporate income tax liability in Kazakhstan and at 31 December
2015, approximately $0.6 million remained outstanding.
On 13 May 2015, the Company completed a court approved capital
reduction scheme, which resulted in $67.1 million being transferred
from the share premium account to distributable reserves. A
condition of the capital reduction scheme was to set aside an
amount into a restricted bank account, which would cover certain
creditors as of the effective date of the capital reduction. The
balance of the restricted bank account in relation to the capital
reduction scheme as at 31 December 2015 was $0.4 million.
Copper Bay investment
Following completion of the pre-feasibility study (PFS) on 30
June 2015, CAML subscribed for 135,621,610 newly allotted ordinary
shares in Copper Bay for a cash consideration of $3,000,000, which
increased CAML's shareholding from 50% to 75% and commenced
consolidation of Copper Bay Ltd
Previously this investment was treated as a mineral right. This
has resulted in a reduction in Group retained earnings at 30 June
2015 of $1,149,000. An intangible asset of $3,222,000 recognised in
2013 equal to the cash consideration paid for the initial 50%
shareholding has been reduced by $1,581,000. The resulting value of
the intangible exploration and evaluation assets acquired in the
Copper Bay Group on 30 June 2015 were $1,641,000.
Cash flows
The continued strong operational performance of the Kounrad
project and the associated low costs of production resulted in
strong cash flows for the Group. Cash generated from operations
decreased to $33.6 million (2014: $47.2 million) and during 2015
$20.4 million was returned to shareholders as dividends (2014:
$17.9 million) and a further $8.4 million was invested back into
the project (2014: $11.1 million).
$10.0 million of Kazakh corporate income tax was paid during
2015 (2014: $16.6 million). The reduction is a consequence of $8.1
million of 2013 corporate income tax paid in April 2014. As
mentioned previously, payments made during 2015 included $9.3
million towards the 2015 corporate income tax liability and $0.7
million of 2014 corporate income tax paid in April 2015.
Dividend
(MORE TO FOLLOW) Dow Jones Newswires
April 11, 2016 02:00 ET (06:00 GMT)
The Company's dividend policy is that it will return a minimum
of 20% of the gross revenues generated from the Kounrad project to
shareholders.
As part of these annual results, the Board will propose a final
dividend for 2015 of 8 pence per Ordinary Share, making a total
dividend for the year of 12.5 pence (2014: 12.5 pence). This
dividend equates to approximately 30% of the gross revenue for the
year and will be payable on 15 June 2016 to shareholders registered
on 20 May 2016.
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 over $73
million.
Growth opportunities
As of 31 December 2015, the Group has no debt and $42.0 million
of cash in the bank. The total capital cost for the Stage 2
Expansion at Kounrad is $19.5 million and is expected to be largely
completed by the end of 2016, with $3.1 million already spent up to
31 December 2015. This expenditure is in addition to the estimated
$3.0 million that will be spent each year on sustaining capital
expenditure for the operations at Kounrad.
With the cash reserves at its disposal and strong balance sheet,
the Company is in a strong position to support the growth of the
business in these challenging market conditions.
Nigel Robinson
Chief Financial Officer
CONDENSED FINANCIAL INFORMATION
Consolidated Income Statement
for the year ended 31 December
Group
----------------------------------------------- ----- ---------------------
2015 2014
Note $'000 $'000
----------------------------------------------- ----- --------- ----------
Continuing operations
Gross revenue 5 67,328 76,561
Revenue 5 64,412 73,141
Cost of sales 6 (25,510) (26,017)
----------------------------------------------- ----- --------- ----------
Gross profit 38,902 47,124
----------------------------------------------- ----- --------- ----------
Distribution and selling costs 7 (264) (292)
Administrative expenses 8 (14,087) (10,922)
Inventory write-off 9 (600) -
Other income/(expense) 66 (295)
Foreign exchange rate gain 12 8,992 1,895
----------------------------------------------- ----- --------- ----------
Operating profit 33,009 37,510
----------------------------------------------- ----- --------- ----------
Finance income 41 61
Finance costs (304) (334)
Gain on re-measuring to fair value the
existing interest on acquisition of control - 33,039
----------------------------------------------- ----- --------- ----------
Profit before income tax 32,746 70,276
Income tax 10 (10,365) (10,548)
----------------------------------------------- ----- --------- ----------
Profit for the year from continuing operations 22,381 59,728
----------------------------------------------- ----- --------- ----------
Discontinued operations
Loss for the year from discontinued operations (163) (257)
----------------------------------------------- ----- --------- ----------
Profit for the year 22,218 59,471
----------------------------------------------- ----- --------- ----------
Profit attributable to:
* Non-controlling interest (167) -
* Owners of the parent 22,385 59,471
----------------------------------------------- ----- --------- ----------
22,218 59,471
----------------------------------------------- ----- --------- ----------
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 11 20.21 56.28
From discontinued operations 11 (0.15) (0.24)
----------------------------------------------- ----- --------- ----------
From profit for the year 11 20.06 56.04
----------------------------------------------- ----- --------- ----------
Diluted earnings/(loss) per share From
continuing operations 11 19.79 55.15
From discontinued operations 11 (0.15) (0.24)
----------------------------------------------- ----- --------- ----------
From profit for the year 11 19.64 54.91
----------------------------------------------- ----- --------- ----------
The 2014 comparative figures include a reclassification of land
rental, property tax and contractual payments under the subsoil use
contract incurred at Kounrad from administrative expenses to cost
of sales totalling $914,000 (see notes 6 and 8).
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 $9,522,035 (2014: $9,703,595).
Consolidated Statement of Comprehensive Income
2015 2014
for the year ended 31 December Note $'000 $'000
--------------------------------------------- ---- --------- -------------
Profit for the year 22,218 59,471
Other comprehensive expense:
Items that may be subsequently reclassified
to profit or loss:
Currency translation differences 18 (77,352) (10,291)
--------------------------------------------- ---- --------- -------------
Other comprehensive expense for the
year, net of tax (77,352) (10,291)
--------------------------------------------- ---- --------- -------------
Total comprehensive (expense)/income
for the year (55,134) 49,180
--------------------------------------------- ---- --------- -------------
Attributable to:
- Non-controlling interests (167) -
- Owners of the parent (54,967) 49,180
--------------------------------------------- ---- --------- -------------
Total comprehensive (expense)/income
for the year (55,134) 49,180
--------------------------------------------- ---- --------- -------------
Total comprehensive (expense)/income
attributable to equity shareholders
arises from:
- Continuing operations (54,971) 49,437
- Discontinued operations (163) (257)
--------------------------------------------- ---- --------- -------------
(55,134) 49,180
--------------------------------------------- ---- --------- -------------
Statements of Financial Position
as at 31 December
Group Company
--------------------------------- ------ ----------------------- -----------------------
2015 2014 2015 2014
Note $'000 $'000 $'000 $'000
--------------------------------- ------ ---------- ----------- ------------ ---------
Assets
Non-current assets
Property, plant and equipment 13 40,800 74,661 124 159
Intangible assets 14 40,267 81,605 - -
Investments - - 11,713 8,663
Other non-current receivables 15 4,250 6,393 - -
--------------------------------- ------ ---------- ----------- ------------ ---------
85,317 162,659 11,837 8,822
--------------------------------- ------ ---------- ----------- ------------ ---------
Current assets
Inventories 3,031 4,054 - -
Trade and other receivables 15 2,648 3,214 2,251 30,170
Restricted cash 16 494 148 400 -
Cash and cash equivalents 16 41,502 46,144 32,062 33,644
--------------------------------- ------ ---------- ----------- ------------ ---------
47,675 53,560 34,713 63,814
--------------------------------- ------ ---------- ----------- ------------ ---------
Assets of disposal group
classified as held for sale 83 80 - -
--------------------------------- ------ ---------- ----------- ------------ ---------
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47,758 53,640 34,713 63,814
--------------------------------- ------ ---------- ----------- ------------ ---------
Total assets 133,075 216,299 46,550 72,636
--------------------------------- ------ ---------- ----------- ------------ ---------
Equity attributable to owners
of the parent
Ordinary shares 17 1,121 1,121 1,121 1,121
Share premium 17 - 67,079 - 67,079
Treasury shares 17 (7,810) (9,644) (7,810) (9,644)
Other reserves 18 (88,469) (11,117) - -
Retained earnings 209,120 140,484 50,734 12,856
--------------------------------- ------ ---------- ----------- ------------ ---------
113,962 187,923 44,045 71,412
--------------------------------- ------ ---------- ----------- ------------ ---------
Non-controlling interests 264 - - -
--------------------------------- ------ ---------- ----------- ------------ ---------
Total equity 114,226 187,923 44,045 71,412
--------------------------------- ------ ---------- ----------- ------------ ---------
Liabilities
Non-current liabilities
Deferred income tax liability 24 10,240 20,567 - -
Provisions for other liabilities
and charges 1,916 3,093 - -
12,156 23,660 - -
--------------------------------- ------ ---------- ----------- ------------ ---------
Current liabilities
Trade and other payables 19 6,261 4,252 2,505 1,224
--------------------------------- ------ ---------- ----------- ------------ ---------
6,261 4,252 2,505 1,224
--------------------------------- ------ ---------- ----------- ------------ ---------
Liabilities of disposal
group classified as held
for sale 432 464 - -
--------------------------------- ------ ---------- ----------- ------------ ---------
6,693 4,716 2,505 1,224
--------------------------------- ------ ---------- ----------- ------------ ---------
Total liabilities 18,849 28,376 2,505 1,224
--------------------------------- ------ ---------- ----------- ------------ ---------
Total equity and liabilities 133,075 216,299 46,550 72,636
--------------------------------- ------ ---------- ----------- ------------ ---------
Consolidated Statement of Changes in Equity
for the year ended 31 December
Non-controlling
interests
Attributable Ordinary Share Treasury Other Retained Total $'000 Total
to owners of shares premium shares reserves earnings $'000 equity
the parent Note $'000 $'000 $'000 $'000 $'000 $'000
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Balance as
at 1 January
2014 862 - (4,100) 44,140 94,827 135,729 - 135,729
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Profit for
the year - - - - 59,471 59,471 - 59,471
Other
comprehensive
expense -
currency
translation
differences 18 - - - (10,291) - (10,291) - (10,291)
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Total
comprehensive
(expense)/income - - - (10,291) 59,471 49,180 - 49,180
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Transactions
with owners
Reserve transfer 18 - - - (5,557) 5,557 - - -
Share based
payments 8 - - - - 1,914 1,914 - 1,914
Promise of
shares to be
issued on
completion
of SUC*
acquisition 18 - - - 16,844 - 16,844 - 16,844
EBT shares
granted 17 35 9,110 (9,145) - - - - -
Ordinary shares
issued on
completion
of Kounrad
transaction 17 212 56,041 - (56,253) - - - -
Exercise of
warrants 17 12 1,928 - - - 1,940 - 1,940
Exercise of
options 17 - - 3,399 - (3,236) 163 - 163
Sale of EBT
shares 17 - - 202 - (194) 8 - 8
Dividends 21 - - - - (17,855) (17,855) - (17,855)
Total
transactions
with owners,
recognised
directly in
equity 259 67,079 (5,544) (44,966) (13,814) 3,014 - 3,014
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Balance as
at 31 December
2014 1,121 67,079 (9,644) (11,117) 140,484 187,923 - 187,923
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Profit for
the year - - - - 22,385 22,385 (167) 22,218
Other
comprehensive
expense -
currency
translation
differences 18 - - - (77,352) - (77,352) - (77,352)
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Total
comprehensive
(expense)/income - - - (77,352) 22,385 (54,967) (167) (55,134)
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Transactions
with owners
Capital reduction 17 - (67,079) - - 67,079 - - -
Share based
payments 8 - - - - 2,396 2,396 - 2,396
Exercise of
options 17 - - 1,663 - (1,546) 117 - 117
Sale of EBT
shares 17 - - 171 - (171) - - -
Dividends 21 - - - - (20,358) (20,358) - (20,358)
Copper Bay
acquisition 14 - - - - (1,149) (1,149) 431 (718)
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Total
transactions
with owners,
recognised
directly in
equity - (67,079) 1,834 - 46,251 (18,994) 431 (18,563)
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
Balance as
at 31 December
2015 1,121 - (7,810) (88,469) 209,120 113,962 264 114,226
------------------- -------- ----------- ---------- --------- ------------ ---------- ------------ ---------------- ------------
*Subsoil use contract
Company Statement of Changes in Equity
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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 2014 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 18 - - - (5,557) 5,557 -
Share based payments 8 - - - - 1,914 1,914
Promise of shares
to be issued on
completion of
SUC acquisition 18 - - - 16,844 - 16,844
EBT shares granted 17 35 9,110 (9,145) - - -
Ordinary shares
issued on completion
of the Kounrad
transaction 17 212 56,041 - (56,253) - -
Exercise of warrants 17 12 1,928 - - - 1,940
Exercise of options 17 - - 3,399 - (3,236) 163
Sale of EBT shares 17 - - 202 - (194) 8
Dividends 21 - - - - (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
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Loss for the year - - - - (9,522) (9,522)
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Total comprehensive
expense - - - - (9,522) (9,522)
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Transactions with
owners
Capital reduction 17 - (67,079) - - 67,079 -
Share based payments 8 - - - - 2,396 2,396
Exercise of options 17 - - 1,663 - (1,546) 117
Sale of EBT shares 17 - - 171 - (171) -
Dividends 21 - - - - (20,358) (20,358)
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Total transactions
with owners, recognised
directly in equity - (67,079) 1,834 - 47,400 (17,845)
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Balance as at
31 December 2015 1,121 - (7,810) - 50,734 44,045
--------------------------- ------- -------- -------- -------- --------- --------- -----------
Statements of Cash Flows
for the year ended 31 December
Group Company
---------------------------------- -------- --------------------- -----------------------
2015 2014 2015 2014
Note $'000 $'000 $'000 $'000
---------------------------------- -------- --------- ---------- --------- ------------
Cash flows from operating
activities
Cash generated from/(used
in) operations 20 33,595 47,152 (5,194) 10,485
Interest paid (121) (58) (53) (11)
Income tax paid (9,999) (16,624) - -
Net cash generated from/(used
in) operating activities 23,475 30,470 (5,247) 10,474
---------------------------------- -------- --------- ---------- --------- ------------
Cash flows from investing
activities
Purchases of property, plant
and equipment 13 (7,804) (11,004) (13) (7)
Purchase of intangible assets 14 (556) (115) - -
Investment in Kounrad project - - - (598)
Repayment of loan from subsidiary 23 - - 27,940 11,270
Loans to subsidiaries 23 - - (510) (135)
Interest received 41 61 18 -
Investment in Copper Bay,
net of cash acquired 14 1,053 327 (3,000) -
---------------------------------- -------- --------- ---------- --------- ------------
Net cash (used in)/generated
from investing activities (7,266) (10,731) 24,435 10,530
---------------------------------- -------- --------- ---------- --------- ------------
Cash flows from financing
activities
Dividends paid to owners
of the parent 21 (20,368) (17,932) (20,368) (17,932)
Payment on completion of
Kounrad transaction - (1,432) - (1,432)
Receipt on exercise of share
options 127 168 127 168
Exercise of warrants 17 - 1,942 - 1,942
Restricted cash 16 (346) 1,586 (400) 1,649
Net cash used in financing
activity (20,587) (15,668) (20,641) (15,605)
---------------------------------- -------- --------- ---------- --------- ------------
Effect of foreign exchange
losses on cash and cash
equivalents (257) (707) (129) (687)
Net (decrease)/increase
in cash and cash equivalents (4,635) 3,364 (1,582) 4,712
Cash and cash equivalents
at the beginning of the
year 16 46,159 42,795 33,644 28,932
---------------------------------- -------- --------- ---------- --------- ------------
Cash and cash equivalents
at the end of the year 16 41,524 46,159 32,062 33,644
---------------------------------- -------- --------- ---------- --------- ------------
Cash and cash equivalents at 31 December 2015 includes cash at
bank on hand included in assets held for sale of $22,000 (31
December 2014: $15,000) (see note 16).
The notes below are an integral part of this condensed
consolidated financial information.
Notes to the Condensed Financial Information
for the year ended 31 December 2015
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 ("UK").
The Group's principal business activity is the production of
copper cathode at its Kounrad operations in Kazakhstan. The Group
also owns two exploration projects in Mongolia which are held for
sale and holds a 75% interest in the Copper Bay tailings project in
Chile.
CAML is a public limited company, which is listed on the AIM
market of the London Stock Exchange 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 2015
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 2015, but is derived from the Group's audited full
financial statements. The auditors have reported on the 2015
financial statements and their reports were unqualified and did not
contain statements under s498(2) or (3) Companies Act 2006. The
2015 Annual Report was approved by the Board of Directors on 8
April 2016, and will be mailed to shareholders in April 2016. 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.
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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 2015. 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.
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 2015 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 foreseeable future.
The Group sells and distributes its copper cathode product
primarily through an off-take arrangement with 90% of the SX-EW
plant's forecasted output committed as sales for the period up
until 31 December 2018.
The Group therefore continues to adopt the going concern basis
in preparing its consolidated financial information. Please refer
to notes 5, 16 and 19 for information on the Group's revenues, cash
balances and trade and other payables.
Copper Bay investment
Following completion of the pre-feasibility study ("PFS") on 30
June 2015, CAML subscribed for 135,621,610 newly allotted ordinary
shares in Copper Bay for a cash consideration of $3,000,000, which
increased CAML's shareholding from 50% to 75% and commenced
consolidation of Copper Bay Ltd.
Previously this investment was treated as a mineral right. This
has resulted in a reduction in Group retained earnings at 30 June
2015 of $1,149,000. An intangible asset of $3,222,000 recognised in
2013 equal to the cash consideration paid for the initial 50%
shareholding has been reduced by $1,581,000. The resulting value of
the intangible exploration and evaluation assets acquired in the
Copper Bay Group on 30 June 2015 were $1,641,000 (see note 14).
3. Critical accounting estimates and judgments
The Group has six key areas where critical accounting estimates
and judgements are required that could have a material impact on
the financial information:
Impairment
As mentioned above estimates are required periodically to assess
assets for impairment. The critical accounting estimates are future
commodity prices, ore reserves, discount rates 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 in May 2014 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.
Functional currency
The functional currency of the Kazakhstan subsidiaries is Kazakh
Tenge, which is the primary economic environment in which the
entity operates. Determination of functional currency may involve
certain judgments to determine the primary economic environment and
this is re-evaluated for each new entity, or if conditions
change.
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 the financial information.
The Kounrad 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 7.22% (2014: 8.65%)
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 which completed in two stages during
2013 and 2014, 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 in prior periods
and the statement of financial position of the business.
Further details on the accounting treatment of the business
combination are set out in the 2014 Annual Report and note 33 of
the 2014 financial statements.
VAT recoverability
The Group's main receivable is the VAT incurred on purchases
within Kazakhstan as explained in note 15. As at 31 December 2015 a
total of $4,423,000 (2014: $6,392,885) of VAT receivable was still
owed to the Group by the Kazakhstan authorities. The decrease in
this balance is as a result of the devaluation of the Kazakh Tenge
during 2015. In February 2016, the authorities refunded a portion
of this outstanding amount totalling $1,666,060. The Group still
remains confident about its prospects to recover the remaining
portion of $2,757,000 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.
4. Segmental information
The Board is the Group's chief operating decision maker.
Management have 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 perspective.
The Group has two business segments consisting of an SX-EW
copper plant at Kounrad in Kazakhstan and the Copper Bay project in
Chile. The Copper Bay project has been reported as a segment for
the first time for the year ended 31 December 2015 following the
additional 25% investment made by CAML on 30 June 2015. The Group
operations are controlled from a head office in London, UK, but
this does not represent a separate business segment.
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 Kounrad and Copper Bay
projects are closely monitored and controlled.
The segmental results for the year ended 31 December 2015 are as
follows:
Copper
Kounrad Bay Unallocated Total
$'000 $'000 $'000 $'000
-------------------------------------- ------------- --------- ----------------- -----------
Gross revenue 67,328 - - 67,328
Off-take buyers' fees (2,916) - - (2,916)
-------------------------------------- ------------- --------- ----------------- -----------
Revenue 64,412 - - 64,412
-------------------------------------- ------------- --------- ----------------- -----------
Kounrad EBITDA 46,068 - - 46,068
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Copper Bay administrative expenses - (475) - (475)
Unallocated costs including corporate - - (10,656) (10,656)
-------------------------------------- ------------- --------- ----------------- -----------
Group continuing operations EBITDA 46,068 (475) (10,656) 34,937
-------------------------------------- ------------- --------- ----------------- -----------
Depreciation and amortisation (10,339) - (47) (10,386)
Exchange rate differences gain/(loss) 8,744 (253) 501 8,992
Other income 66 - - 66
Inventory write-off (600) - - (600)
Finance income 23 - 18 41
Finance costs (304) - - (304)
-------------------------------------- ------------- --------- ----------------- -----------
Profit/(loss) before income tax 43,658 (728) (10,184) 32,746
-------------------------------------- ------------- --------- ----------------- -----------
Income tax (10,365)
-------------------------------------- ------------- --------- ----------------- -----------
Profit for the year from continuing
operations 22,381
-------------------------------------- ------------- --------- ----------------- -----------
Loss from discontinued operations (163)
-------------------------------------- ------------- --------- ----------------- -----------
Profit for the year 22,218
-------------------------------------- ------------- --------- ----------------- -----------
The segmental results for the year ended 31 December 2014 are as
follows:
Kounrad Unallocated Total
$'000 $'000 $'000
-------------------------------------- ------------- ----------------- -----------
Gross revenue 76,561 - 76,561
Off-take buyers' fees (3,420) - (3,420)
--------------------------------------- ------------- ----------------- -----------
Revenue 73,141 - 73,141
--------------------------------------- ------------- ----------------- -----------
Kounrad EBITDA 55,960 - 55,960
Unallocated costs including corporate - (8,638) (8,638)
--------------------------------------- ------------- ----------------- -----------
Group continuing operations EBITDA 55,960 (8,638) 47,322
--------------------------------------- ------------- ----------------- -----------
Gain on re-measuring to fair value
the existing interest on acquisition
of control 33,039 - 33,039
Depreciation and amortisation (11,366) (46) (11,412)
Exchange rate differences gain/(loss) 2,215 (320) 1,895
Other expense (295) - (295)
Finance income 61 - 61
Finance costs (323) (11) (334)
--------------------------------------- ------------- ----------------- -----------
Profit/(loss) before income tax 79,291 (9,015) 70,276
--------------------------------------- ------------- ----------------- -----------
Income tax (10,548)
--------------------------------------- ------------- ----------------- -----------
Profit for the year from continuing
operations 59,728
--------------------------------------- ------------- ----------------- -----------
Loss from discontinued operations (257)
--------------------------------------- ------------- ----------------- -----------
Profit for the year 59,471
--------------------------------------- ------------- ----------------- -----------
The total production at Kounrad for 2015 was 12,071 tonnes
(2014: 11,136 tonnes) whilst the total quantity of copper sold was
at 12,040 tonnes (2014: 11,163 tonnes). The average gross price
achieved from the sale of copper was $5,335 per tonne (2014: $6,794
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;
-- Exceptional items such as inventory write-off;
-- Finance income and expense;
-- Depreciation and amortisation; and
-- Discontinuing 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:
2015 2014
$'000 $'000
------------------------------------------------- ------- ----------
Profit for the year 22,218 59,471
------------------------------------------------- ------- ----------
Plus/(less):
Gain on re-measuring to fair value the existing
interest on acquisition of control - (33,039)
Depreciation and amortisation 10,386 11,412
Exchange rate differences gain (8,992) (1,895)
Inventory write-off 600 -
Other (income)/expenses (66) 295
Finance income (41) (61)
Finance costs 304 334
Income tax expense 10,365 10,548
Loss from discontinued operations 163 257
Group continuing operations EBITDA 34,937 47,322
------------------------------------------------- ------- ----------
Corporate and Copper Bay administrative expenses 11,131 8,638
------------------------------------------------- ------- ----------
Kounrad EBITDA 46,068 55,960
------------------------------------------------- ------- ----------
Group segmental assets and liabilities for the year ended 31
December 2015 are as follows:
Segmental
Segmental assets liabilities
----------------------
31 Dec 31 Dec 31 Dec 31 Dec
15 14 15 14
$'000 $'000 $'000 $'000
-------------------------------- ------- ---------- ---------- ----------
Kounrad 94,666 173,154 (15,536) (26,688)
Copper Bay 5,369 - (330) -
Assets held for sale 83 80 (432) (464)
Unallocated including corporate 32,957 43,065 (2,551) (1,224)
-------------------------------- ------- ---------- ---------- ----------
133,075 216,299 (18,849) (28,376)
-------------------------------- ------- ---------- ---------- ----------
5. Revenue 2015 2014
Group $'000 $'000
-------------------------------- ------- ---------- ---------- ----------
International customers 65,794 73,532
Domestic customers 1,534 3,029
-------------------------------- ------- ---------- ---------- ----------
Total gross revenue 67,328 76,561
-------------------------------- ------- ---------- ---------- ----------
Less: Off-take buyers' fees (2,916) (3,420)
-------------------------------- ------- ---------- ---------- ----------
Revenue 64,412 73,141
-------------------------------- ------- ---------- ---------- ----------
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The Group sells and distributes its copper cathode product
primarily through an off-take arrangement with Traxys, which has
been retained as CAML's off-take partner through to 31 December
2018. The off-take arrangements are for a minimum of 90% of the
SX-EW plant's output. The copper cathodes are delivered from the
Kounrad site by rail under an FCA (Incoterms 2010) contractual
basis and delivered to the end customers primarily in Turkey. As
part of the off-take 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.
During 2015, the Group sold 11,750 tonnes (2014: 10,687 tonnes)
of copper through the off-take arrangements. Some of the copper
cathodes are also sold locally and during 2015, 290 tonnes (2014:
476 tonnes) were sold to local customers.
6. Cost of sales
2015 2014
Group $'000 $'000
-------------------------------------- --------- ----------
Mineral extraction tax 3,834 4,431
Taxes and duties 813 914
Reagents and materials 6,229 5,041
Depreciation and amortisation 10,264 11,291
Employee benefit expense 3,333 3,321
Consulting and other services 1,037 1,019
-------------------------------------- --------- ----------
25,510 26,017
-------------------------------------- --------- ----------
The 2014 comparative figures include a reclassification
of land rental, property tax and contractual payments
under the subsoil use contract incurred at Kounrad
from administrative expenses to cost of sales totalling
$914,000.
7. Distribution and selling costs 2015 2014
Group $'000 $'000
-------------------------------------- --------- ----------
Transportation costs 31 15
Employee benefit expense 83 80
Taxes and duties 30 52
Depreciation and amortisation 36 45
Materials and other expenses 84 100
-------------------------------------- --------- ----------
264 292
-------------------------------------- --------- ----------
The above distribution and selling costs are those incurred at
the Kounrad site in addition to the costs associated with the
off-take arrangements. Note 5 refers to the costs associated with
the off-take arrangements.
8. Administrative expenses
2015 2014
Group $'000 $'000
----------------------------------- ------- --------
Employee benefit expense 6,077 5,848
Share based payments 2,396 1,914
Consulting and other services 3,359 1,527
Office related costs 1,170 1,445
Taxes and duties 999 112
Depreciation and amortisation 86 76
----------------------------------- ------- --------
Total from continuing operations 14,087 10,922
----------------------------------- ------- --------
Total from discontinued operations 163 249
----------------------------------- ------- --------
14,250 11,171
----------------------------------- ------- --------
The 2014 comparative figures include a reclassification of land
rental, property tax and contractual payments under the subsoil use
contract costs incurred at Kounrad from administrative expenses to
cost of sales totalling $914,000.
9. Inventory write-off
An incident occurred on site on 26 June 2015, which resulted in
approximately a third of the organic inventory being lost to the
dumps within a very short time frame. The incident resulted in the
write-off of inventory totalling $600,000 (2014: nil).
Following the incident an insurance claim was submitted. In
March 2016, the Group received notification that the merits of the
claim had been accepted and negotiations are ongoing as to the
quantum. The Group has not recognised a receivable for the
claim.
10. Income tax
Group Company
------------------------------- ------------------------ --------------
2015 2014 2015 2014
$'000 $'000 $'000 $'000
------------------------------- ----------- ----------- ------ ------
Current tax:
------------------------------- ----------- ----------- ------ ------
Current tax on profits for the
year 10,386 10,588 - -
------------------------------- ----------- ----------- ------ ------
Total current tax 10,386 10,588 - -
Deferred tax (note 24) (21) (40) - -
------------------------------- ----------- ----------- ------ ------
Income tax expense 10,365 10,548 - -
------------------------------- ----------- ----------- ------ ------
From 1 April 2015, the main UK Corporation tax rate reduced from
21% to 20% and UK corporate income tax is therefore calculated at
an average annual rate of 20.25% (2014: 21.5%) 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
------------------------------------------------ -------- ---------
2015 2014
$'000 $'000
------------------------------------------------ -------- ---------
Profit before taxation including loss from
discontinued operations 32,583 70,019
------------------------------------------------ -------- ---------
Tax calculated at domestic tax rates applicable
to profits in the respective countries 7,432 13,858
Tax effects of:
Gain on re-measuring to fair value to existing
interest on acquisition of control - (7,103)
Expenses not deductible for tax purposes 2,224 2,771
Tax losses for which no deferred income
tax asset was recognised 1,187 1,592
Utilisation of previously unrecognised
tax losses (478) (570)
Income tax expense 10,365 10,548
------------------------------------------------ -------- ---------
11. 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 17).
2015 2014
$'000 $'000
----------------------------------------------- ----------- -----------
Profit from continuing operations attributable
to owners of the parent 22,548 59,728
Loss from discontinued operations attributable
to owners of the parent (163) (257)
----------------------------------------------- ----------- -----------
Total 22,385 59,471
----------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares
in issue 111,558,091 106,126,062
----------------------------------------------- ----------- -----------
2015 2014
$ 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 20.21 56.28
From discontinued operations (0.15) (0.24)
---------------------------------------------------- -------- --------
From profit for the year 20.06 56.04
---------------------------------------------------- -------- --------
(b) Diluted
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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.
2015 2014
$'000 $'000
----------------------------------------------- ----------- -----------
Profit from continuing operations attributable
to owners of the parent 22,548 59,728
Loss from discontinued operations attributable
to owners of the parent (163) (257)
Total 22,385 59,471
----------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares
in issue 111,558,091 106,126,062
----------------------------------------------- ----------- -----------
Adjusted for
* Share options 2,396,361 2,183,927
Weighted average number of Ordinary Shares
for diluted earnings per share 113,954,452 108,309,989
----------------------------------------------- ----------- -----------
2015 2014
Diluted earnings/(loss) per share $ cents $ cents
---------------------------------- -------- --------
From continuing operations 19.79 55.15
From discontinued operations (0.15) (0.24)
---------------------------------- -------- --------
From profit for the year 19.64 54.91
---------------------------------- -------- --------
12. Foreign exchange rate gains
Group 2015 2014
Exchange rate gain from: $'000 $'000
-------------------------------- -------- --------
Continuing operations 8,992 1,895
-------------------------------- -------- --------
The Tenge ended the year at 339.47 Tenge per US Dollar which has
resulted in the recognition of exchange gains through the income
statement of $8,992,000 (2014: $1,895,000), arising mostly on US
Dollar denominated monetary assets and liabilities held by the
Group's Kazakhstan based subsidiaries whose functional currency is
the Tenge.
13. Property, plant and equipment
Motor
Mining vehicles
Construction Plant assets and
in and $'000 office
progress equipment equipment Total
Group $'000 $'000 $'000 $'000
------------------------------ -------------- ------------- ---------- -------------- -------------
Cost
At 1 January 2014 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 (260) (3,510) - (231) (4,001)
Acquisition of subsidiary
100% 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
Additions 6,416 935 - 486 7,837
Disposals - (76) - (65) (141)
Change in estimate - asset
retirement obligation - 207 - - 207
Transfers (9,668) 9,658 - 10 -
Acquisition of Copper Bay - 3 - - 3
Transfer from intangible
assets - - 1,601 - 1,601
Exchange differences (2,428) (43,309) - (845) (46,582)
------------------------------ -------------- ------------- ---------- -------------- -------------
At 31 December 2015 2,003 49,408 1,601 1,301 54,313
------------------------------ -------------- ------------- ---------- -------------- -------------
Accumulated depreciation
At 1 January 2014 - 7,445 - 539 7,984
Provided during the year - 9,307 - 169 9,476
Disposals - (778) - (58) (836)
Derecognition of previously
held interests - (1,315) - (169) (1,484)
Acquisition of subsidiary
100% - 2,192 - 281 2,473
Exchange differences - (851) - (35) (886)
------------------------------ -------------- ------------- ---------- -------------- -------------
At 31 December 2014 - 16,000 - 727 16,727
------------------------------ -------------- ------------- ---------- -------------- -------------
Provided during the year - 7,630 - 164 7,794
Disposals - (69) - (56) (125)
Transfer from intangible
assets - - 62 - 62
Exchange differences - (10,608) - (337) (10,945)
------------------------------ -------------- ------------- ---------- -------------- -------------
At 31 December 2015 - 12,953 62 498 13,513
------------------------------ -------------- ------------- ---------- -------------- -------------
Net book value at 1 January
2015 7,683 65,990 - 988 74,661
------------------------------ -------------- ------------- ---------- -------------- -------------
Net book value at 31 December
2015 2,003 36,455 1,539 803 40,800
------------------------------ -------------- ------------- ---------- -------------- -------------
The Company had $124,465 of office equipment at net book value
as at 31 December 2015 (2014: $158,916).
The fall in value of the Tenge has resulted in non-cash foreign
exchange losses within property, plant and equipment. This is due
to the translation on consolidation of the Group's Kazakhstan based
subsidiaries whose functional currency is the Tenge as well as the
goodwill and fair value uplift adjustments to the carrying amounts
of assets and liabilities arising on the Kounrad Transaction which
are denominated in Tenge. Further details on the accounting
treatment of the Kounrad Transaction business combination are set
out in note 33 of the 2014 financial statements.
The change in estimate in relation to the asset retirement
obligation of $207,000 is as a result of adjusting the provision
recognised at the net present value of future expected costs using
an inflation rate of 5.68% (2014: 6.6%) and discount rate of 7.22%
(2014: 8.65%) representing the risk free rate (pre-tax) for
Kazakhstan.
Following receipt of the regulatory approvals in November 2015
required for the Kounrad Stage 2 Expansion to exploit the copper
contained in the Western dumps, management have transferred
deferred exploration and evaluation costs within intangible assets
(note 19) to mining assets within property, plant and equipment at
net book value $1,539,000.
Following receipt of the regulatory approvals required for the
Kounrad Stage 2 Expansion in November 2015, management has extended
the useful economic lives of certain property, plant and equipment
and the fair value uplift on the Kounrad Transaction. The original
estimate of 10 years useful economic life has now been increased
through to 2034 which represents the end of the subsoil user
licence. This change in estimate will be applied from 1 January
2016. In future years, this change will result in a reduction in
the annual depreciation and amortisation charge of approximately
$4.0 million, but this amount is dependent on the Tenge exchange
rate. Such changes are always subject to future periodic reviews of
the Group's depreciation policy.
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14. 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 2014 9,278 1,941 5,535 47 16,801
Additions 11,013 98 - 17 11,128
Disposals - (92) - (11) (103)
Derecognition of previously
held interests - (1,649) (1,947) (16) (3,612)
Acquisition of subsidiary
100% - 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
------------------------------ --------- ------------------- --------- ---------- ---------
Additions - 542 - 14 556
Transfers to property, plant
and equipment - (1,601) - - (1,601)
Acquisition of Copper Bay - 1,641 (3,222) - (1,581)
Exchange differences (10,185) (1,348) (26,546) (31) (38,110)
------------------------------ --------- ------------------- --------- ---------- ---------
At 31 December 2015 10,106 2,039 30,631 38 42,814
------------------------------ --------- ------------------- --------- ---------- ---------
Accumulated amortisation
At 1 January 2014 - 51 29 28 108
Provided during the year - 65 1,857 14 1,936
Disposal - (92) - (11) (103)
Derecognition of previously
held interests - (42) (22) (9) (73)
Acquisition of subsidiary
100% - 70 37 15 122
Exchange differences - 12 (51) (6) (45)
------------------------------ --------- ------------------- --------- ---------- ---------
At 31 December 2014 - 64 1,850 31 1,945
Provided during the year - 41 2,668 11 2,720
Transfers to property, plant
and equipment - (62) - - (62)
Exchange differences - (43) (1,994) (19) (2,056)
------------------------------ --------- ------------------- --------- ---------- ---------
At 31 December 2015 - - 2,524 23 2,547
------------------------------ --------- ------------------- --------- ---------- ---------
Net book value at 1 January
2015 20,291 2,741 58,549 24 81,605
------------------------------ --------- ------------------- --------- ---------- ---------
Net book value at 31 December
2015 10,106 2,039 28,107 15 40,267
------------------------------ --------- ------------------- --------- ---------- ---------
The Company had no intangible assets as at 31 December 2015
(2014: nil).
The fall in value of the Tenge has resulted in non-cash foreign
exchange losses within intangible assets. This is due to the
translation on consolidation of the Group's Kazakhstan based
subsidiaries whose functional currency is the Tenge as well as the
goodwill and fair value uplift adjustments to the carrying amounts
of assets and liabilities arising on the Kounrad Transaction which
are denominated in Tenge. Further details on the accounting
treatment of the Kounrad Transaction business combination are set
out in note 33 of the 2014 financial statements.
Deferred exploration and evaluation costs
Following receipt of the regulatory approvals in November 2015
required for the Kounrad Stage 2 Expansion to exploit the copper
contained in the western dumps, the deferred exploration and
evaluation costs at Kounrad have been reclassified to mining assets
within property, plant and equipment (note 13). The net book value
of deferred exploration and evaluation costs of $2,039,000 as at 31
December 2015 relates solely to the Copper Bay project.
Copper Bay investment
Following completion of the pre-feasibility study ("PFS") on 30
June 2015, CAML subscribed for 135,621,610 newly allotted ordinary
shares in Copper Bay for a cash consideration of $3,000,000, which
increased CAML's shareholding from 50% to 75% and commenced
consolidation of Copper Bay Ltd
Previously this investment was treated as a mineral right. This
has resulted in a reduction in Group retained earnings at 30 June
2015 of $1,149,000. An intangible asset of $3,222,000 recognised in
2013 equal to the cash consideration paid for the initial 50%
shareholding has been reduced by $1,581,000. The resulting value of
the intangible exploration and evaluation assets acquired in the
Copper Bay Group on 30 June 2015 were $1,641,000.
Impairment test for goodwill
The Kounrad project located in Kazakhstan 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"). A CGU is the smallest
identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups
of assets.
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 $6,000 per tonne and a discount rate of 8%. Assumptions in
relation to operational and capital expenditure are based on the
latest budget approved by the Board.
The carrying value of the net assets is not currently sensitive
to any reasonable changes in key assumptions.
Group Company
-------------------- --------------------
15. Trade and other receivables 31 Dec 31 Dec 31 Dec 31 Dec
15 $'000 14 $'000 15 $'000 14 $'000
Current portion
--------- --------- --------- ---------
Trade receivables - 41 - -
Less: provision for impairment - (41) - -
of trade receivables
Receivables from related parties
(note 23) - - 1,914 29,571
Prepayments 836 2,695 255 222
VAT receivable 1,769 73 82 73
Other receivable 43 446 - 304
--------------------------------- --------- --------- --------- ---------
2,648 3,214 2,251 30,170
--------------------------------- --------- --------- --------- ---------
Non-current portion
--------------------------------- --------- --------- --------- ---------
Prepayments 1,493 - - -
VAT receivable 2,757 6,393 - -
4,250 6,393 - -
--------------------------------- --------- --------- --------- ---------
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 apart from
the VAT receivable balance as explained below. 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 becomes known that the
amounts due will not be recovered.
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As at 31 December 2015 a total of $4,423,000 (2014: $6,392,885)
of VAT receivable was still owed to the Group by the Kazakhstan
authorities. In February 2016, the authorities refunded a portion
of this outstanding amount totalling $1,666,060, which is
classified within current receivables. The Group still remains
confident about its prospects to recover the remaining portion of
$2,757,000 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.
16. Cash and cash equivalents
Group Company
---------------------------------- -------------------- --------------------
31 Dec 31 Dec 31 Dec 31 Dec
15 14 15 14
$'000 $'000 $'000 $'000
---------------------------------- ---------- -------- ---------- --------
Cash at bank and on hand 33,498 46,144 24,058 33,644
Short term deposits 8,004 - 8,004 -
---------------------------------- ---------- -------- ---------- --------
41,502 46,144 32,062 33,644
---------------------------------- ---------- -------- ---------- --------
Cash at bank and on hand included
in assets held for sale 22 15 - -
---------------------------------- ---------- -------- ---------- --------
Total cash and cash equivalent 41,524 46,159 32,062 33,644
---------------------------------- ---------- -------- ---------- --------
Restricted cash 494 148 400 -
---------------------------------- ---------- -------- ---------- --------
Total cash and cash equivalent
including restricted cash 42,018 46,307 32,462 33,644
---------------------------------- ---------- -------- ---------- --------
On 13 May 2015, the Company completed a court approved capital
reduction scheme (see note 17), which resulted in $67,079,000 being
transferred from the share premium account to distributable
reserves. A condition of the capital reduction scheme was to set
aside an amount into a restricted bank account, which would cover
certain creditors as of the effective date of the capital
reduction. The balance of the restricted bank account in relation
to the capital reduction scheme as at 31 December 2015 was
$400,297. The remaining amount of $93,553 is held to cover SUC
legislation requirements (2014: $148,072).
The average fixed interest rate on short-term deposits during
the year was 0.3% (2014: nil).
66% of the Group's cash and cash equivalents including
restricted cash at the year-end were held by an AA- rated bank
(2014: 73% by an AA- bank). The rest of Group's cash was held
within mix of institutions with credit rating between A+ to B-
(2014: B to B-).
17. Share capital and premium
Ordinary Share Treasury
Number shares premium shares
of $'000 $'000 $'000
shares
------------------------- ------------------ ------------ --------------- --------------
At 1 January 2014 86,165,934 862 - (4,100)
-------------------------- ------------------ ------------ --------------- --------------
Ordinary shares issue 21,211,751 212 56,041 -
EBT shares granted 3,500,000 35 9,110 (9,145)
Exercise of warrants 1,192,053 12 1,928 -
Exercise of options - - - 3,399
Sales of EBT shares - - - 202
-------------------------- ------------------ ------------ --------------- --------------
At 31 December 2014 112,069,738 1,121 67,079 (9,644)
-------------------------- ------------------ ------------ --------------- --------------
Exercise of options - - - 1,663
Sales of EBT shares - - - 171
Capital reduction scheme - - (67,079) -
------------------------- ------------------ ------------ --------------- --------------
At 31 December 2015 112,069,738 1,121 - (7,810)
-------------------------- ------------------ ------------ --------------- --------------
The par value of Ordinary Shares is $0.01 per share and all
shares are fully paid.
On 13 May 2015, the Company completed a court approved capital
reduction scheme, which resulted in $67,079,000 being transferred
from the share premium account to distributable reserves.
18. Other reserves Shares
Group Share reserve Currency
option to be translation Total
reserve issued reserve Group
$'000 $'000 $'000 $'000
------------------------------------- ------------ ------------- ------------ ----------
At 1 January 2014 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
on completion of SUC acquisition - 16,844 - 16,844
Ordinary shares issued on completion
of Kounrad transaction - (56,253) - (56,253)
At 31 December 2014 - - (11,117) (11,117)
Currency translation differences - - (77,352) (77,352)
------------------------------------- ------------ ------------- ------------ ----------
At 31 December 2015 - - (88,469) (88,469)
------------------------------------- ------------ ------------- ------------ ----------
The fall in value of the Tenge has resulted in a non-cash
foreign exchange loss of $77,352,000 recognised within equity. This
is primarily due to the translation on consolidation of the Group's
Kazakhstan based subsidiaries whose functional currency is the
Tenge as well as the goodwill and fair value uplift adjustments to
the carrying amounts of assets and liabilities arising on the
Kounrad Transaction which are denominated in Tenge.
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. The share option reserve continues to be
recognised within retained earnings as at 31 December 2015.
19. Trade and other payables
Group Company
--------------------------------- -------------------- ------------------
31 Dec 31 Dec 31 Dec 31 Dec
15 $'000 14 $'000 15 14 $'000
$'000
--------------------------------- --------- --------- ------- ---------
Trade payables 3,907 1,041 2,163 439
Corporation tax, social security
and other taxes 2,354 3,211 342 785
--------------------------------- --------- --------- ------- ---------
6,261 4,252 2,505 1,224
--------------------------------- --------- --------- ------- ---------
The carrying value of all the above payables is equivalent to
fair value.
The Group made a net provision for the 2015 corporate income tax
liability at Kounrad of $638,000 (2014: $803,940) having paid an
amount of $9,324,934 in advance during the year (2014: $8,505,272).
$674,149 was also paid during the year in relation to 2014
corporate income tax.
All Group and Company trade and other payables are payable
within less than one year for both reporting periods.
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20. Cash generated from/(used in) operations
(Group) (Company)
----------------------------------- ------ --------------------- ----------------------
2015 2014 2015 2014
Note $'000 $'000 $'000 $'000
----------------------------------- ------ --------- ---------- --------- -----------
Profit/(loss) before income
tax including discontinued
operations 32,583 70,019 (9,522) (9,704)
----------------------------------- ------ --------- ---------- --------- -----------
Adjustments for:
Depreciation 13 7,666 9,476 47 46
Amortisation 14 2,720 1,936 - -
Loss on disposal of property,
plant and equipment 16 494 - -
Foreign exchange (gain)/loss 12 (8,992) 1,887 (657) 850
Gain on re-measuring to
fair value the existing - -
interest on acquisition
of control - (33,039)
Change in provision for
doubtful receivables 15 (41) 8 - -
Impairment of Mongolian
intercompany receivables - - 138 206
Impairment of Mongolian
intangible assets and investments - - 38 60
Share based payments 2,396 1,914 2,396 1,914
Write-off of inventory 9 600 - -
Finance income (41) (61) (18) -
Finance costs 304 334 53 (11)
Changes in working capital:
Inventories (1,454) 83 - -
Trade and other receivables 15 (1,647) (1,740) 263 16,314
Trade and other payables 19 (515) (2,842) 2,068 810
Movement in provisions - (1,317) - -
Cash generated from/(used
in) operations 33,595 47,152 (5,194) 10,485
----------------------------------- ------ --------- ---------- --------- -----------
21. Dividend per share
In line with the Company dividend policy, the Company paid
$20,368,000 in 2015 (2014: $17,932,000) which consisted of a 2015
interim dividend of 4.5 pence per share and a final dividend for
2014 of 7.5 pence per share (2014: interim dividend of 5 pence per
share and a final dividend for 2013 of 5 pence per share). The
dividend declared amount recognised in the statement of changes in
equity of $20,358,000 is different to the dividend paid recognised
in the cash flow statement of $20,368,000 due to foreign exchange
differences on the GBP declared dividend.
The Directors will propose a final dividend in respect of the
year ended 31 December 2015 of 8 pence per share at the forthcoming
Annual General meeting ("AGM").
22. Events after the reporting period
VAT recoverability
The Group's main receivable is the VAT incurred on purchases
within Kazakhstan as explained in note 15. As at 31 December 2015 a
total of $4,423,000 (2014: $6,392,885) of VAT receivable was still
owed to the Group by the Kazakhstan authorities. An amount of
$1,666,060 was refunded from the authorities in February 2016 and
has been reclassified from non-current to current trade and other
receivables as at 31 December 2015.
Off-take arrangements at Kounrad
During 2015, the Group's off-take arrangements at Kounrad were
put out to tender with Traxys being retained as CAML's off-take
partner following a competitive process. The revised off-take
contract has been agreed through to 31 December 2018 and will
provide additional cost savings fixed for the three-year period.
The commitment is for a minimum of 90% of the Kounrad copper
cathode production.
Insurance claim
Following the incident at Kounrad in June 2015 an insurance
claim was submitted. In March 2016, the Group received notification
that the merits of the claim had been accepted and negotiations are
ongoing as to the quantum. No receivable was recognised for the
claim at 31 December 2015.
23. Related party transactions
The Group had the following related party balances and
transactions during the year ended 31 December 2015. 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 within one year: 31 Dec 31 Dec
15 14
$'000 $'000
------------------------------------------ ------------ -------------
CAML Kazakhstan BV - following completion
of the Kounrad Transaction 1,631 29,571
Sary Kazna LLP - management service fees 252 -
Copper Bay Limited - management service 31 -
fees
------------------------------------------ ------------ -------------
1,914 29,571
------------------------------------------ ------------ -------------
During 2015, CAML Kazakhstan BV repaid $27,940,000 to the
Company (2014: $11,270,000). As at 31 December 2015, $176,272 of
intercompany loans and management fee receivable with the Mongolian
subsidiaries has been written off during the year as part of the
Group impairment testing (2014: $206,000).
The Company also received management fee income from Sary Kazna
LLP of $312,916 (2014: $60,000) and from Copper Bay Limited of
$26,288 (2014: nil).
Directors' remuneration, EBT shares and options
Directors' remuneration, including Non-Executive Directors,
during the year is disclosed in the Remuneration Committee Report
of the 2015 Annual Report.
Kenges Rakishev
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. Consequently, KR
is considered a related party in any dealings he has with the
Group.
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.
On 29 December 2015, JSC Kazkommertsbank ("KKB") announced that
KR, a director of KKB, completed a transaction with Alnair
Investment Company to purchase its parent company, JSC Alnair
Capital Holding ("Alnair"), which owns 28.08% of KKB's issued and
outstanding share capital.
As a result of the transaction, KR became the General Partner of
the Alnair investment group and effectively acquired full control
over the voting and other rights of a combined 56.75% stake in
KKB's issued and outstanding share capital, made up of shares in
KKB held by KR directly and indirectly, through Alnair. Alnair has
subsequently been renamed Qazaq Financial Group JSC.
The Group uses the facilities of KKB within Kazakhstan for its
normal day-to-day banking and has insurance agreements with a
subsidiary of KKB. As at 31 December 2015 the Group held $6,107,000
with KKB (2014: $12,479,000).
24. Deferred income tax liability
Group
The movements in the Group's deferred tax assets and liabilities
which are expected to be recovered or settled more than 12 months
after the reporting period are as follows:
Currency Credited to At 31
At 1 January translation income December
2015 $'000 Acquisition $'000 differences $'000 statement $'000 2015 $'000
Other timing
differences (276) - 121 21 (134)
Deferred tax
liability on fair
value adjustment
on Kounrad
Transaction (20,291) - 10,185 - (10,106)
Deferred tax
liability, net (20,567) - 10,306 21 (10,240)
Currency Credited to At 31
At 1 January translation income December
2014 $'000 Acquisition $'000 differences $'000 statement $'000 2014 $'000
Other timing
differences (374) - 58 40 (276)
Deferred tax
liability on fair
value adjustment
on Kounrad
Transaction (9,278) (11,013) - - (20,291)
Deferred tax
liability, net (9,652) (11,013) 58 40 (20,567)
The fall in value of the Tenge has resulted in a currency
translation difference on the deferred tax liability of
$10,306,000. This is primarily due to the translation of the
goodwill arising on the Kounrad Transaction which is denominated in
Tenge.
(MORE TO FOLLOW) Dow Jones Newswires
April 11, 2016 02:00 ET (06:00 GMT)
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.
Further reductions to the UK corporation tax rate have been
announced which will reduce the rate to 17% by April 2020. However,
these changes had not been substantially enacted at the balance
sheet date and, therefore, are not recognised in this financial
information.
The Group did not recognise other potential deferred tax assets
arising from losses of $5,385,000 (2014: $3,700,000) as there is
insufficient evidence of future taxable profits within the entities
concerned. Unrecognised losses can be carried forward
indefinitely.
At 31 December 2015, the Group had other deferred tax assets of
$934,000 (2014: $1,222,000) in respect of 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 2015 and 2014, respectively.
Company
At 31 December 2015 and 2014 respectively, the Company had no
recognised deferred tax assets or liabilities.
At 31 December 2015, the Company had not recognised potential
deferred tax assets arising from losses of $5,385,000 (2014:
$3,345,000) as there is insufficient evidence of future taxable
profits. The losses can be carried forward indefinitely.
At 31 December 2015, the Company had other deferred tax assets
of $934,000 (2014: $1,222,000) 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
FR AKFDNABKDFQK
(END) Dow Jones Newswires
April 11, 2016 02:00 ET (06:00 GMT)
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