TIDMCEY
RNS Number : 3267H
Centamin PLC
31 July 2019
FOR IMMEDIATE RELEASE
31 July 2019
Centamin plc
("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Interim Results
for the six months ended 30 June 2019
Financial highlights
-- Gross revenue(1) for the six months ended 30 June 2019 ("H1")
was US$292.4 million from gold sales of 224,129 ounces at an
average realised gold price of US$1,305 per ounce;
-- Cash cost of production was US$692 per ounce produced, within
annual guidance of US$675-725 per ounce; All-in sustaining cost
("AISC") was US$940 per ounce sold, within annual guidance of
US$890-950 per ounce;
-- EBITDA(2,3) of US$117.1 million, a 41% EBITDA margin, and
profit before tax of US$59.6 million, offers competitive profit
margins;
-- Adjusted Group free cash flow(3,4) generated US$35.7 million,
after profit share with our partner, the Egyptian state; Total
direct financial payments in Egypt, by way of profit share and
royalties, US$ 48.1 million;
-- Total Group sustaining, development and growth capital and
exploration expenditure of US$58.4 million, in line with annual
guidance;
-- Strong and flexible balance sheet with no debt, no hedging
and cash and liquid assets(3) of US$326.6 million, as at 30 June
2019, after payment in May of US$34.7 million for the 2018 final
dividend; and
-- The Board declares an interim dividend of US$46.2 million
(4.0 US cents per share), bringing cumulative dividends paid to
shareholders to approximately US$500 million.
Outlook
-- Centamin maintains annual guidance for 2019: gold production
of 490,000-520,000 ounces, at cash cost(2,3) of US$675-725 per
ounce produced and AISC(2,3) of US$890-950 per ounce sold;
Production and free cash flow(3,4) expected to be stronger in the
second half ("H2") predominantly driven by improved grades from the
open pit; Costs to trend downwards in line with the expected
increased production in H2; and
-- Centamin baseline outlook for production in 2020 and 2021 of
510,000-540,000 ounces per annum, at cash cost of US$630-680 per
ounce produced and AISC of US$870-920 per ounce sold; Baseline
outlook excludes any upside from plant and open pit optimisation,
underground grade improvement, Cleopatra stoping, and regional
exploration; Full details of these baseline estimates and upside
drivers can be found in the Operation Review.
Andrew Pardey, CEO commented: "Six months into our tenth year of
commercial production, Centamin continues to make good progress
delivering on its corporate strategy. The Company is a high margin
gold producer, delivering reliable stakeholder returns through
strong free cash flow generation.
In-line with the Company's well-established strategy of
returning surplus cash to shareholders, the Centamin Board of
Directors are pleased to declare an interim dividend of US$46.2
million, bringing total returns to shareholders in dividends since
2014 to c.US$500 million. The Board's decision to increase the
interim dividend was based on the Company's strong financial
position, assessment of near and medium-term capital allocation and
confidence in future cash flow generation.
[1] Gross revenue from gold sales includes US$4.7 million in
pre-production gold sales from Cleopatra development ore.
2 Basic EPS, EBITDA, cash cost of production and AISC reflect a
provision against prepayments following the removal of fuel
subsidies in January 2012 (refer to note 2.4 of the financial
statements for further details).
3 Cash cost of production, AISC, EBITDA, Cash, bullion on hand,
gold sales receivables, financial assets at fair value through
profit and loss and Adjusted free cash flow are non-GAAP measures
and are defined at the end of the Financial Review section.
4 Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
Looking forward, as the outlook for the business continues to
improve, in the second half of 2019 we expect to deliver stronger
production and increasing free cash flow. Today, Centamin has
provided baseline estimates for Sukari's production and cost
guidance through to 2021 on a mining plan that is designed to
maximise returns to all of our stakeholders through the delivery of
profitable ounces.
We are confident in the delivery of this baseline outlook and
are focused on driving further future growth and value enhancing
opportunities."
Table 1. Group Financial Summary
Quarter on Quarter ("QoQ") comparative Year on Year ("YoY") comparative
units Q2 2019 Q2 2018 % H1 2019 H1 2018 %
-------------- -------------- ------------ ------------ ----------- ------------ ------------ ---------
Gold produced oz 117,913 92,803 27% 234,096 217,099 8%
Gold sold oz 112,764 97,628 16% 224,129 228,672 (2%)
Cash cost of
production
(2,3) US$'000 87,553 64,630 35% 159,445 135,942 17%
Unit cash
cost of US$/oz
production produced 752 714 5% 692 637 9%
AISC (2,3) US$'000 109,319 102,211 7% 207,361 209,150 (1%)
Unit AISC US$/oz sold 982 1,073 (8%) 940 930 1%
Average
realised
gold price US$/oz 1,307 1,298 1% 1,305 1,316 (1%)
-------------- -------------- ------------ ------------ ----------- ------------ ------------ ---------
Gross
revenue(1) US$'000 147,329 127,023 16% 292,406 301,099 (3%)
Revenue US$'000 145,671 123,929 18% 288,136 296,391 (3%)
EBITDA (2,3) US$'000 52,651 45,774 15% 117,109 129,728 (10%)
Profit before
tax US$'000 25,725 21,977 17% 59,627 80,376 (26%)
Basic EPS (2) US cents 0.54 0.97 (44%) 1.71 3.57 (52%)
Capital
expenditure US$'000 22,759 28,798 (21%) 47,987 53,877 (11%)
Operating
cash flow US$'000 57,459 37,247 54% 116,376 122,662 (5%)
Adjusted free
cash flow
(3,4) US$'000 19,117 1,594 1,099% 35,708 36,075 (1%)
-------------- -------------- ------------ ------------ ----------- ------------ ------------ ---------
Conference Call and Webcast Presentation
The Company will be hosting a conference call and webcast
presentation today, Wednesday, 31 July at 08.30 BST to discuss the
results with investors and analysts.
Please find below the required participation details for the
call:
Conference call
Dial-in telephone number: +44 203 936 2999
Participant access code: 629086
Webcast presentation
Follow this link to join the webcast:
https://www.investis-live.com/centamin/5d1b17539add6d1100e71d87/zpzp
A replay of the webcast will be made available on the Company
website by the close of business today.
Enquiries
For further information, please visit the website
www.centamin.com or contact:
Centamin plc
Andrew Pardey, Chief Executive Officer Buchanan
Alexandra Carse, Investor Relations Bobby Morse
alexandra.carse@centamin.je Chris Judd
centamin@buchanan.uk.com
______________________________________________________________________________________________________
[1] Gross revenue from gold sales includes US$4.7 million in
pre-production gold sales from Cleopatra development ore.
2 Basic EPS, EBITDA, cash cost of production and AISC reflect a
provision against prepayments following the removal of fuel
subsidies in January 2012 (refer to note 2.4 of the financial
statements for further details).
3 Cash cost of production, AISC, EBITDA, Cash, bullion on hand,
gold sales receivables, financial assets at fair value through
profit and loss and Adjusted free cash flow are non-GAAP measures
and are defined at the end of the Financial Review section.
4 Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
Disclaimers and forward-looking statements
This announcement contains forward-looking statements which may
include, but are not limited to, statements with respect to the
future financial or operating performance of the Company, its
subsidiaries and its projects (including the Sukari Gold Mine)
which include, but are not limited to, estimations on the future
price of gold, mineral reserves and resources, the realisation of
mineral reserve estimates, the timing and amount of estimated
future production, revenues and costs, government regulation of
mining and exploration operations, environmental risks, title
disputes or claims.
Often, but not always, forward-looking statements can be
identified by the use of words such as "plans", "hopes", "expects",
"is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", or "believes" or variations (including
negative variations) of such words and phrases, or state that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved.
Forward-looking information involves and is subject to known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company and/or
its subsidiaries to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking information. The material factors and assumptions
used to develop the forward looking statements include, among
others, general business, economic, competitive, political and
social consideration and assumptions concerning economic
evaluations, exchange rates, project parameters and gold and other
commodity prices.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking information,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking information contained herein is made as of the date
of this announcement, except as may be required by applicable law,
and the Company disclaims any obligation to update any
forward-looking information, whether as a result of new
information, future events or results or otherwise. There can be no
assurance that forward-looking information or statements will prove
to be accurate, as actual results and future events could differ
materially from those anticipated in such information or
statements. Accordingly, readers should not place undue reliance on
forward-looking statements.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
Operational Review
H1 2019 vs H1 2018
The first half of 2019 demonstrated a solid operating
performance. Sukari produced 234,096 ounces of gold, in-line with
the Company's stated 45:55 production weighted split for the year,
and annual production guidance has been maintained at
490,000-520,000 ounces.
In H1, the open pit performed well. Average open pit mined grade
increased by 41% YoY to 0.71 g/t and is scheduled to increase
quarter on quarter through H2, as mining progresses with Stage 4,
the primary source of ore for the next two years, and into the Hapi
Zone, host to the original underground. Total open pit material
mined increased 12% compared to the corresponding period in 2018
("YoY"). This was driven by continued stripping of Stage 4 and
commenced stripping of Stage 5. At the beginning of 2019, as per
the mine plan, we guided a 50% reduction in total annual open pit
ore tonnes mined. 6.7Mt of open ore was mined in H1, a 42%
reduction YoY, and in line with guidance.
During H1, the underground delivered 580kt of total ore mined at
an average grade of 5.53 g/t, a 3% decrease in tonnes and grade
YoY. Improvements to grade reconciliation as a result of improving
operational efficiencies, namely better dilution controls and
increased grade control drilling, resulted in a stronger ounce
contribution from stoping in H1. Confined within an area of the
Upper Amun, geotechnical issues impacted a secondary access at the
end of the period with remedial work currently underway to ensure
the area is secure. This work is on schedule to be completed during
Q3, permitting access to the planned stopes.
Due to waste material being reclassified as low-grade
development ore, more development tonnes were mined and processed
than planned in H1. This negatively impacted underground blended
grade and plant feed grade but benefitted output as higher grade
underground tonnes displaced lower grade open pit tonnes.
Underground development is ongoing and throughout H2 similar levels
of development ore-to-waste material movement is budgeted as
preparation of near-term stoping areas and access to new
medium-term production levels are opened. Consistent with what
happened in H1, it is possible that some of the waste material
could be mineralised and therefore be reclassified as development
ore, suitable for processing.
Table 2. Group Operations Summary
units H1 2019 H1 2018 % change
----------------------- ----------- --------- -------- ---------
Open pit
Total material mined kt 41,243 36,911 12%
Ore mined kt 6,741 11,579 (42%)
Ore grade mined g/t Au 0.71 0.50 41%
Strip ratio waste/ore 5.12 2.19 134%
----------------------- ------------ --------- -------- ---------
Underground
Ore mined kt 580 601 (3%)
Ore grade mined g/t Au 5.53 5.70 (3%)
----------------------- ------------ --------- -------- ---------
Processing
Ore processed kt 6,607 6,240 6%
Feed grade g/t Au 1.22 1.15 6%
Gold recovery % 88.4 88.6 (0%)
----------------------- ------------ --------- -------- ---------
Total gold production oz 234,096 217,099 8%
----------------------- ------------ --------- -------- ---------
Our organic growth pipeline progressed steadily throughout H1
with intensive exploration at Sukari as well as drilling programmes
targeting resource extensions at Doropo and ABC Projects in Côte
d'Ivoire. Sukari exploration is focused on underground resource
conversion and extensional drilling, Cleopatra exploration, Horus
Deeps drilling and Regional exploration. As part of our ongoing
underground reserve replacement strategy, we target replacement in
excess of underground production each year. The drilling results
returned in H1 provide confidence that we will be able to meet or
exceed this target. Quarter on quarter results returned from the
Osiris structure and Ptah, both proximal to existing
infrastructure, present attractive near-term upside with an updated
Mineral Resource and Reserve Statements expected in the first
quarter 2020.The Horus Deeps, located 400m vertical below the
current decline infrastructure, has returned excellent high-grade
results, supporting the long-term potential of the underground.
Further drilling scheduled for H2, combined with geo-seismic 3D
surveys will provide greater interpretation of the true underground
capabilities.
There remains a strong focus on workplace development to ensure
the right leadership team is in place which is suitable for our
culture and equipped to deliver on our strategy. Core to our
culture is health and safety. We target a zero-harm rate through
prioritising discussion of health and safety and promoting
conscious thought around safety measures to ensure that this
remains at the forefront of our decision making across the Group.
In H1, the Group Lost Time Injury Frequency Rate ("LTIFR") was 0.42
per 200,000 workplace hours, with seven Loss Time Injuries recorded
in the period.
During H1, we welcomed Dr. Sally Eyre as a Non-Executive
Director and Jeremy Langford as Chief Operating Officer. Throughout
the remainder of 2019, we expect to make further top-tier board and
site management appointments, in line with the Board Succession
Programme, and as the Group strengthens core technical
competencies.
Centamin is a low cost, highly cash generative business which
offers sector leading dividend returns to shareholders, balanced
with active investment to drive future growth. The Company has a
strong balance sheet with US$327 million cash and liquid assets as
at 30 June 2019, with no debt, hedging or streaming instruments,
thereby offering shareholders pure exposure to the gold price. The
Company continues to seek value opportunities in organic growth and
strategic acquisitions that would support the corporate strategy
and business objectives.
Looking forward, as the outlook for the business continues to
improve, we remain focused on delivering results against our
promises and driving superior returns.
Near-Term Outlook
Centamin has completed a thorough operational review of the
Sukari Gold Mine and reiterates its production guidance for 2019 of
490,000-520,000 ounce. The operational focus is to maximise value
by producing the most profitable ounces, grow operating margins and
maximise free cash flow generation. The strategy combines increased
innovation, delivery of new systems and technologies, minimising
working capital spend and further improvements in productivity,
thereby reducing the cost base.
For years 2020 and 2021, the Company guides to baseline gold
production of 510,000-540,000 ounces, at cash costs of production
of US$630-680 per ounce produced, and AISC of US$870-920 per ounce
sold. The baseline estimates underpin the solid foundation of the
business model, and do not include the impact of near-term upside
drivers that are expected to contribute to production increases and
cost reductions over and above current baseline estimates.
BASELINE ESTIMATES
The baseline estimates are calculated on the following annual
operating assumptions:
Baseline Assumption Upside (not included in Baseline
Estimates)
------------ ---------------------------- ------------------------------------------
PROCESSING 12.5Mt pa throughput Plant optimisation continues with
a focus on profitable ounces.
OPEN PIT 78-82Mt pa total Upside from ongoing optimisation
material moved work.
In-line with current
mining rate, includes
Stage 4 mining in
the higher grade
Hapi Zone, scheduled
through to end of
2021
UNDERGROUND 1.1-1.25Mt pa ore Upside potential from improved grade
AMUN/PTAH mining within Amun and/or Ptah underground
operations. Total underground capacity
is 1.5Mt including waste movement.
UNDERGROUND Development ore only Upside potential from commencing
CLEOPATRA stoping in the near-term.
DUMP LEACH Nil ounce contribution Marginal upside potential from Stage
From current low-cost 5 transitional and oxide material
dump leach operations delivered to the dump leach in 2020
and 2021.
REGIONAL Nil additional sources Upside potential from the regional
of high-grade ore surface exploration programme, including
seismic and surface drilling programme
at V Shear and Quartz Ridge.
SOLAR Forecast 2021 commissioning Up to 40MW(AC) solar plant feasibility
underway subject to Board approval
process, to follow in 2019. Significant
cost reduction upside potential.
Shareholder Returns
2019 INTERIM DIVID
Consistent with Centamin's strategy of returning surplus cash to
shareholders, the Board of Directors declares to pay an enhanced
interim dividend of 4.0 US cents per ordinary shares (totalling
approximately US$46.2 million) to shareholders.
In accordance with Listing Rule 9.7A.2, below is the Interim
Dividend timetable:
London Stock Exchange ("LSE") and Toronto Stock Exchange
("TSX")
EX-DIV DATE: 29 August 2019
RECORD DATE: 30 August 2019
LAST DAY FOR CURRENCY ELECTIONS: 6 September 2019
FX RATE DATE: 9 September 2019
PAYMENT DATE: 27 September 2019
The Interim Dividend will be paid on 27 September 2019 to
shareholders on the register on the Record Date of 30 August 2019.
The Final Dividend will be paid in US Dollars ("USD"), with an
option for shareholders to elect to receive the dividend in Pounds
Sterling ("GBP"). Currency elections should be made no later than 6
September 2019 with further details of how to do so on the
Company's website
http://www.centamin.com/investors/shareholder-services/dividend-information.
Payments in GBP will be based on the USD/GBP exchange rate on 9
September 2019 and the rate applied will be published on the
website on the 9 September 2019.
The Company's total issued share capital is 1,155,955,384
ordinary shares.
The dates set out above are based on the Directors' current
expectations and may be subject to change. If any of the dates
should change, the revised dates will be announced by press release
and will be available at www.centamin.com.
As a Jersey incorporated company, there is no requirement for
Centamin plc to make any withholding or deduction on account of
Jersey tax in respect of the dividend.
Financial Review
The unaudited interim condensed consolidated financial
statements have been prepared in accordance with IAS 34 "Interim
Financial Reporting" (IAS 34) as adopted by the European Union and
the requirements of the Disclosure and Transparency Rule sourcebook
(DTR) of the Financial Conduct Authority (FCA) in the United
Kingdom as applicable to interim financial reporting. These
unaudited interim condensed consolidated financial statements are
not affected by seasonality.
In conjunction with the operational performance, we are pleased
with the financial performance of H1. Generation of competitive
EBITDA and profit margins as well as significant free cash flow.
Further good progress was made delivering against our financial
strategy, particularly regarding cost management and driving cost
saving initiatives in a rising cost environment.
At the beginning of 2019, we guided an 11% increase in cash
costs per ounce and a 5% increase in AISC per ounce, driven by
increased lower grade volumes mined and processed and anticipated
inflationary pressures within the supply chain. Both cash cost of
production and AISC are tracking on budget and thereby within our
guidance range of US$675-725 per ounce produced and US$890-950 per
sold for 2019. Cash cost in H1 increased by 9% to US$692 per ounce
produced YoY, driven by a 12% increase in mined and 6% increase in
processed tonnes offset predominantly by an 8% increase in gold
ounces produced (excluding Cleopatra) and net increases in
low-grade stockpiles. AISC of US$940 per ounce sold increased 1%
YoY, mainly due to a 2% decrease in gold ounces sold (excluding
Cleopatra), increased production costs offset by lower sustaining
capital costs.
Ongoing efficiency and productivity initiatives, including
training, system upgrades and integration of new technology have
offset some of the YoY costs. For example, improved open pit load
and haul productivity has reduced the per tonne costs by
US$0.02/tonne, while other opportunities remain to be realised over
time.
We anticipate a stronger production profile in H2 and we expect
cash costs and AISC to trend downwards towards the lower end of our
guidance range.
Stringent cost and capital allocation management has delivered
another six months of meaningful cash generated from operations of
US$116.4 million. Group capital expenditure, including sustaining
capex, non-sustaining capex and exploration expenditure was US$58
million, in line with full year guidance.
The Group generated free cash flow(2,3) of US$35.7 million,
after profit share payments of US$39.4 million, unchanged YoY, to
our longstanding Egyptian partners, Egyptian Mineral Resource
Authority ("EMRA"), and royalty payments of US$8.8 million, a 2%
reduction YoY. We expect stronger production and consequently
improved free cash flow generation for the second half.
The Company is on track to achieve full year production and cost
guidance and looks forward to benefitting from improved operational
conditions within a promising gold price environment, and
maximising value through growing operating margins to drive free
cash flow generation and shareholder returns.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
Revenue US$'000 288,136 296,391 603,248
--------- --------- ------------- ------------- -----------
In H1, net revenue from gold and silver sales was US$288.1
million, a 3% decrease YoY, excluding US$4.7 million generated in
pre-production revenue from Cleopatra development in mineralisation
(offset against the balance sheet).
Gold sales of 224,129 ounces, a 2% decrease YoY, was 4% below
gold produced due to timing of the closing weekly gold shipment at
the end of the period.
Despite the recent gold price strengthening, volatility earlier
in H1 meant average realised gold price was US$1,305 per ounce,
approximately a 1% decrease YoY.
The Group's revenues and the majority of the operating cost
exposures are denominated in US dollars. Second to US dollar
exposure is Australian dollar exposure, accounting for 15% of Group
operating cost, predominantly due to contractor and service
agreements.
(1) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments following the removal of fuel
subsidies in January 2012 (refer to note 2.4 of the financial
statements for further details).
(2) Cash cost of production, AISC, EBITDA, Cash, bullion on
hand, gold sales receivables, financial assets at fair value
through profit and loss and Adjusted free cash flow are non-GAAP
measures and are defined at the end of the Financial Review
section.
3 Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
Cost of sales US$'000 (210,046) (191,879) (406,538)
--------------- --------- ------------- ------------- -----------
Cost of sales represents the cost of mining, processing,
refining, transport, site administration, depreciation,
amortisation and movement in production inventories. Total cost of
sales were US$210.0 million, up 9% YoY, and inclusive of US$14.0
million categorised as fuel pre-payments (refer to Note 2.4 of the
financial statements for further information).
Total mine production costs increased 11% YoY to US$173.8
million, primarily driven by volume-based increase in tonnes mined
and processed of 12% and 6%, respectively.
Depreciation and amortisation charges were US$60.4 million, a
17% increase, due to mine development within capital work in
progress being capitalised to mine development properties during
the period. Higher mining volumes impacted unit of production
amortisation charges and US$29.1million of additions (excl. capital
work in progress) increased the associated amortisation
charges.
Cost of sales were offset by a positive movement in inventory
adjustment of US$24.1 million compared to positive movement in
inventory adjustment of US$16.3 million in the six months ended 30
June 2018 reflecting the increase in mining inventory over H1.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
----------------------- --------- ------------- ------------- -----------
Other operating costs US$'000 (11,320) (14,574) (27,866)
----------------------- --------- ------------- ------------- -----------
Other operating costs comprise expenditure incurred for
communications, consultants, directors' fees, stock exchange
listing fees, share registry fees, employee entitlements, general
office administration expenses, the unwinding of the restoration
and rehabilitation provision, foreign exchange movements and the 3%
production royalty payable to the ARE. Other operating costs
decreased by US$3.3 million or 22% YoY to US$11.3 million. This was
predominantly as a result of a US$2.5 million decrease in corporate
and other costs due to reversals of share-based payment awards
following forfeiture or failure to satisfy vesting conditions.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
---------------- --------- ------------- ------------- -----------
Finance income US$'000 3,207 2,246 4,815
---------------- --------- ------------- ------------- -----------
Finance income comprises interest income applicable on the
Company's available cash and term deposit amounts. The movements in
finance income are in line with the movements in the Company's
available cash and term deposit amounts.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
---------------------------------- --------- ------------- ------------- -----------
Profit for the period before tax US$'000 59,627 80,376 152,702
---------------------------------- --------- ------------- ------------- -----------
As a result of the factors outlined above, Centamin recorded a
profit before tax for the six months ended 30 June 2019 of US$59.6
million, a 26% decrease YoY.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
--------------------------------- --------- ------------- ------------- -----------
Dividend paid - non-controlling
interest in SGM US$'000 (39,375) (39,266) (76,391)
--------------------------------- --------- ------------- ------------- -----------
During the six months ended 30 June 2019, US$39.4 million was
paid as dividends to the non-controlling interest ("NCI") in Sukari
Gold Mine ("SGM"), our Egyptian state partners, EMRA.
Dividends paid to EMRA, pursuant to the provisions of the
Concession Agreement ("CA"), are recognised as NCI attributable to
SGM at the base of the income statement of Centamin. EMRA does not
own shares in Centamin, therefore Group earnings per share is
calculated on the profit attributable to the owners of the parent.
The profit share payments during the year will be reconciled
against SGM's audited financial statements. Any variation between
payments made during the year (which are based on the Company's
estimates) and the audited financial statements, may result in a
balance due and payable to EMRA or advances to be offset against
future payments. SGM's June 2019 financial statements are currently
being audited.
(1) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments following the removal of fuel
subsidies in January 2012 (refer to note 2.4 of the financial
statements for further details).
(2) Cash cost of production, AISC, EBITDA, Cash, bullion on
hand, gold sales receivables, financial assets at fair value
through profit and loss and Adjusted free cash flow are non-GAAP
measures and are defined at the end of the Financial Review
section.
3 Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
Financial Position
Centamin has a strong and flexible financial position with no
debt and no hedging. Cash, bullion on hand, gold sales receivables
and financial assets at fair value through profit and loss were
valued at US$326.6 million as at 30 June 2019 (31 December 2018:
US$322.3 million).
31 December
30 June 30 June 2018
2019 2018 (Audited)
(Unaudited) (Unaudited)
Cash and cash equivalents (note
2.9(a)) US$'000 276,858 282,764 282,627
Bullion on hand (valued at the period-end
spot price) US$'000 26,610 11,565 11,431
Gold and silver sales debtor US$'000 13,669 8,926 28,234
Financial assets at fair value through US$'000 -
profit and loss (note 2.6) 9,442 -
------------------------------------------- --------- ------------- ------------- ------------
Cash and cash equivalents, bullion
on hand, gold sales receivables
and financial assets at fair value
through profit and loss US$'000 326,579 303,255 322,292
------------------------------------------- --------- ------------- ------------- ------------
The majority of funds have been invested in international
rolling short-term interest money market deposits. The financial
assets at fair value through profit and loss at period end relates
to an equity interest acquired in a listed public company.
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Current assets
Inventories US$'000 102,616 113,836 97,550
Financial assets at fair value through US$'000
profit and loss 9,442 - -
Trade and other receivables US$'000 18,301 12,328 33,443
Prepayments US$'000 6,526 11,131 6,696
Cash and cash equivalents US$'000 276,858 282,764 282,627
---------------------------------------- --------- ------------- ------------- ------------
Total current assets US$'000 413,743 420,059 420,316
---------------------------------------- --------- ------------- ------------- ------------
Current assets have decreased by US$6.6 million or 2% from
US$420.3 million at 31 December 2018 to US$413.7 million at 30 June
2019, as a result of:
-- US$5.1 million increase (+ve) in inventory driven by:
o US$5.2 million decrease in collective stores inventory (due to
cost reduction and minimisation initiatives) (-ve);
o US$8.9 million increase in overall combined mining stockpiles
and gold in circuit levels (+ve); and
o US$1.4 million decrease in the provision for obsolete stores
inventory (+ve).
-- US$15.1 million decrease in trade and other receivables
(including gold sale receivables) (-ve);
-- US$0.2 million decrease in prepayments (-ve);
-- US$9.4 million increase in the financial assets at fair value
through profit and loss which relates to an equity interest
acquired in a listed public company (+ve); and
-- US$5.8 million decrease in net cash (net of foreign exchange
movements) (-ve) driven by the profit for the period less the
payment of the 2018 final dividend of US$34.7 million and a US$39.4
million payment to EMRA as distributions to the NCI during the half
year.
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Non--current assets
Property, plant and equipment US$'000 815,442 847,502 835,987
Exploration and evaluation asset US$'000 63,521 65,451 59,154
Inventories - mining stockpiles US$'000 47,629 - 32,424
Other receivables US$'000 91 92 88
---------------------------------- --------- ------------- ------------- ------------
Total non--current assets US$'000 926,683 913,045 927,653
---------------------------------- --------- ------------- ------------- ------------
Non--current assets have decreased by US$1.0 million or 0.1%
from US$927.7 million at 31 December 2018 to US$926.7 million, as a
result of:
-- US$40.0 million increase in the cost of property, plant and equipment (+ve);
-- US$60.6 million charge for depreciation and amortisation (-ve);
-- US$4.4 million increase in exploration and evaluation assets,
as a result of the drilling programmes in Sukari Hill (+ve);
and
-- US$15.2 million increase in inventory related to mine ROM stockpiles (+ve).
(1) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments following the removal of fuel
subsidies in January 2012 (refer to note 2.4 of the financial
statements for further details).
(2) Cash cost of production, AISC, EBITDA, Cash, bullion on
hand, gold sales receivables, financial assets at fair value
through profit and loss and Adjusted free cash flow are non-GAAP
measures and are defined at the end of the Financial Review
section.
3 Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Current liabilities
Trade and other payables US$'000 46,847 34,365 39,246
Tax liabilities US$'000 - 3 3
Provisions US$'000 8,559 8,001 8,155
--------------------------- --------- ------------- ------------- ------------
Total current liabilities US$'000 55,406 42,369 47,404
--------------------------- --------- ------------- ------------- ------------
Current liabilities have increased by US$8.0 million or 17% from
US$47.4 million at 31 December 2018 to US$55.4 million, as a result
of:
-- US$5.7 million increase in trade payables (+ve);
-- US$1.9 million increase in accruals (+ve);
-- US$0.4 million increase in current provisions (+ve).
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Non--current liabilities
Provisions US$'000 13,954 11,648 13,748
-------------------------------- --------- ------------- ------------- ------------
Total non--current liabilities US$'000 13,954 11,648 13,748
-------------------------------- --------- ------------- ------------- ------------
Non--current liabilities have increased by US$0.3 million from
US$13.7 million at 31 December 2018 to US$14.0 million as a result
of an increase in the rehabilitation provision.
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Equity
Issued capital US$'000 672,105 670,589 670,589
Share option reserve US$'000 2,886 4,178 5,688
Accumulated profits US$'000 596,075 604,320 610,540
---------------------- --------- ------------- ------------- ------------
Total equity US$'000 1,271,066 1,279,087 1,286,817
---------------------- --------- ------------- ------------- ------------
There has been a 1,232,400 increase in the number of issued
shares over the period due to share-based payment awards
vesting.
Share option reserves reported have decreased by US$2.8 million
to US$2.9 million as result of the vesting of the 2016 RSP awards
on 4 June 2019 and by the reversal of the 2016 RSP awards that
didn't meet the vesting conditions offset by the recognition of the
share--based payment expenses for the period and new share-based
payment awards granted in 2019.
Accumulated profits decreased by US$14.4 million to US$596.1
million. The key driving factors in this 2% YoY decrease in
accumulated profits were US$74.0 million of stakeholder
distribution by way of profit share with our Egyptian state
partners, EMRA, and payment of 2018 final dividend, offset by
profits after tax of US$59.6 million.
Cash flow
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
-------------------------------------------- --------- ------------- ------------- -----------
Cash flows from operating activities
Cash generated in operating activities US$'000 116,424 123,161 223,791
Income tax paid US$'000 (48) (499) (387)
Net cash generated by operating activities US$'000 116,376 122,662 223,404
-------------------------------------------- --------- ------------- ------------- -----------
Net cash flows generated by operating activities comprise
receipts from gold and silver sales and interest income, offset by
operating and corporate administration costs. Cash flows from
operating activities decreased by US$6.3 million to US$116.4
million for the six months ended 30 June 2019 compared to US$122.7
million for the six months ended 30 June 2018, primarily
attributable to the decrease in revenue, driven by a decrease in
ounces sold at a lower average realised price, as well as an
increase in costs as explained above.
(1) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments following the removal of fuel
subsidies in January 2012 (refer to note 2.4 of the financial
statements for further details).
(2) Cash cost of production, AISC, EBITDA, Cash, bullion on
hand, gold sales receivables, financial assets at fair value
through profit and loss and Adjusted free cash flow are non-GAAP
measures and are defined at the end of the Financial Review
section.
3 Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
--------------------------------------- --------- ------------- ------------- -----------
Cash flows from investing activities
Acquisition of financial assets at US$'000
fair value through profit and loss (9,364) - -
Acquisition of property, plant and
equipment US$'000 (40,133) (48,001) (83,454)
Brownfield exploration and evaluation
expenditure US$'000 (4,367) (1,566) (4,946)
Finance income US$'000 3,207 2,246 4,815
--------------------------------------- --------- ------------- ------------- -----------
Net cash used in investing activities US$'000 (50,657) (47,321) (83,585)
--------------------------------------- --------- ------------- ------------- -----------
Net cash flows used in investing activities comprise exploration
expenditure and capital development expenditures including the
acquisition of financial and mineral assets. Cash outflows have
increased by US$3.3 million for the six months ended 30 June 2019
to US$50.7 million from US$47.3 million in the six months ended 30
June 2018. The primary use of the funds in the period was for
purchase of property, plant and equipment, investment in
underground development at the Sukari site in Egypt and the
acquisition of an equity interest in a listed public company.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
------------------------------------------ --------- ------------- ------------- -----------
Cash flows from financing activities
Dividend paid - non-controlling interest
in SGM US$'000 (39,375) (39,266) (76,391)
Dividend paid - owners of the parent US$'000 (34,672) (115,629) (144,567)
Net cash used in financing activities US$'000 (74,047) (154,895) (220,958)
------------------------------------------ --------- ------------- ------------- -----------
Net cash flows used in financing activities decreased by US$80.8
million in the half year to US$74.1 million (from US$154.9 million
for 30 June 2018) due to US$80.9 million decrease in dividends
being paid in 2019, and a US$0.1 million increase in payments to
the NCI in SGM, being EMRA.
Free cash flow - Egypt
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
-------------------------------------------- --------- ------------- ------------- -----------
Net cash generated by operating activities US$'000 131,572 141,377 255,488
Less:
Net cash used in investing activities US$'000 (43,698) (49,338) (88,098)
-------------------------------------------- --------- ------------- ------------- -----------
Free cash flow US$'000 87,874 92,039 167,390
Dividend paid - non-controlling interest
in SGM US$'000 (39,375) (39,266) (76,391)
Dividend paid - controlling interest
in SGM US$'000 (48,125) (48,480) (93,855)
Net increase/(decrease) in cash and
cash equivalents US$'000 374 4,293 (2,856)
-------------------------------------------- --------- ------------- ------------- -----------
Dividend paid - non-controlling interest
in SGM % 45 43 46
Dividend paid - controlling interest
in SGM % 55 53 56
-------------------------------------------- --------- ------------- ------------- -----------
Free cash flows generated from Egypt decreased by US$4.2 million
in the half year to US$87.9 million (from US$92.0 million for 30
June 2018) due to US$9.8 million decrease in cash flows from
operating activities in 2019, and a US$5.6 million decrease in
payments to the owners of SGM in 2019, see the statement of cash
flows by operating segment in note 2.1 of the interim financial
statements for 30 June 2019 for further information.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
----------------------------------------- --------- ------------- ------------- -----------
Effect of foreign exchange rate changes US$'000 2,559 2,638 4,086
----------------------------------------- --------- ------------- ------------- -----------
Effects of exchange rate changes have decreased by US$0.1
million as a result of movements of the currencies used across the
operations in the year.
(1) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments following the removal of fuel
subsidies in January 2012 (refer to note 2.4 of the financial
statements for further details).
(2) Cash cost of production, AISC, EBITDA, Cash, bullion on
hand, gold sales receivables, financial assets at fair value
through profit and loss and Adjusted free cash flow are non-GAAP
measures and are defined at the end of the Financial Review
section.
3 Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
Capital expenditure
The following table provides a breakdown of the total capital
expenditure of the group:
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
------------------------------------------- --------- ------------- ------------- -----------
Underground exploration US$'000 3,214 3,383 6,048
Underground mine development US$'000 18,503 19,150 37,161
Other sustaining capital expenditure US$'000 21,540 28,851 45,982
------------------------------------------- --------- ------------- ------------- -----------
Total sustaining capital expenditure US$'000 43,257 51,384 89,191
------------------------------------------- --------- ------------- ------------- -----------
Non-sustaining exploration capitalised(1) US$'000 4,730 2,493 7,587
------------------------------------------- --------- ------------- ------------- -----------
(1) Includes US$4.7 million of Sukari expenditure relating to
Cleopatra in non-sustaining capital expenditure before the offset
of net pre-production gold sales.
Cumulative exploration expenditure capitalised for Cleopatra at
Sukari is US$19.9 million (project to date) offset by
pre-production net revenues of US$17.1 million (refer to notes 2.1
and 2.2 to the financial statements for further details) resulting
in US$2.8 million remaining on the statement of financial position
at 30 June 2019.
Exploration expenditure
The following table provides a breakdown of the total
exploration expenditure of the group:
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
------------------------------------------ --------- ------------- ------------- -----------
Greenfield exploration
Burkina Faso US$'000 1,892 3,664 5,223
Côte d'Ivoire US$'000 8,561 8,168 15,783
------------------------------------------ --------- ------------- ------------- -----------
Total greenfield exploration expenditure US$'000 10,453 11,832 21,006
Brownfield exploration
Sukari Tenement US$'000 3,214 3,383 6,048
Cleopatra(1) US$'000 4,730 2,493 7,587
Total brownfield exploration expenditure US$'000 7,944 5,876 13,635
Total exploration expenditure US$'000 18,397 17,708 34,641
------------------------------------------ --------- ------------- ------------- -----------
(1) Cleopatra expenditure before the offset of net
pre-production gold sales.
Furthermore, exploration and evaluation expenditure comprised
expenditure incurred for exploration activities in Côte d'Ivoire
and Burkina Faso. Exploration and evaluation costs decreased by
US$1.4 million, or 12% YoY, to US$10.5 million.
Exploration and evaluation assets - impairment
considerations
In consideration of the requirements of IFRS 6, management is
not aware of any information that would otherwise suggest that an
impairment trigger has occurred which would require a full
impairment test to be carried out at 30 June 2019.
Foreign Exchange
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
---------------------------- --------- ------------- ------------- -----------
Foreign exchange gain, net US$'000 2,846 2,934 6,372
---------------------------- --------- ------------- ------------- -----------
Foreign exchange gains, net have decreased YoY from a US$2.9
million gain to a US$2.8 million gain, resulting in a US$0.1
million decrease on the six months ended 30 June 2019.
(1) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments following the removal of fuel
subsidies in January 2012 (refer to note 2.4 of the financial
statements for further details).
(2) Cash cost of production, AISC, EBITDA, Cash, bullion on
hand, gold sales receivables, financial assets at fair value
through profit and loss and Adjusted free cash flow are non-GAAP
measures and are defined at the end of the Financial Review
section.
3 Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
Non--GAAP financial measures
Four non--GAAP financial measures are used in this report:
1) EBITDA and adjusted EBITDA
EBITDA is a non--GAAP financial measure, which excludes the
following from profit before tax:
-- Finance costs;
-- Finance income; and
-- Depreciation and amortisation.
Management believes that EBITDA is a valuable indicator of the
group's ability to generate liquidity by producing operating cash
flow to fund working capital needs and fund capital expenditures.
EBITDA is also frequently used by investors and analysts for
valuation purposes whereby EBITDA is multiplied by a factor or
"EBITDA multiple" that is based on an observed or inferred
relationship between EBITDA and market values to determine the
approximate total enterprise value of a company. EBITDA is intended
to provide additional information to investors and analysts and
does not have any standardised definition under 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 cost of production and income of financing
activities and taxes, and therefore is not necessarily indicative
of operating profit or cash flow from operations as determined
under IFRS. Other companies may calculate EBITDA differently. The
following table provides a reconciliation of EBITDA to profit for
the period before tax.
Reconciliation of profit before tax to EBITDA and adjusted
EBITDA:
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
-------------------------------------- --------- ------------- ------------- -----------
Profit for the period before tax(1) US$'000 59,627 80,376 152,702
Finance income US$'000 (3,207) (2,246) (4,815)
Interest expense US$'000 77 - -
Depreciation and amortisation(1) US$'000 60,612 51,598 110,047
-------------------------------------- --------- ------------- ------------- -----------
EBITDA(1) US$'000 117,109 129,728 257,934
Add back:
Impairments of non-current assets(2) US$'000 - - -
-------------------------------------- --------- ------------- ------------- -----------
Adjusted EBITDA US$'000 117,109 129,728 257,934
-------------------------------------- --------- ------------- ------------- -----------
(1) Profit before tax, depreciation and amortisation and EBITDA
includes a charge to reflect the removal of fuel subsidies (refer
to note 2.4 to the financial statements for further details).
(2) Adjustments made to normalise earnings, for example
impairments on non-current assets (i.e. net realisable value,
stockpiles, exploration and evaluation assets etc.)
2) Cash cost of production per ounce produced and sold and
all-in sustaining costs per ounce sold calculation
Cash cost of production and AISC are non-GAAP financial
measures. Cash cost of production per ounce is a measure of the
average cost of producing an ounce of gold, calculated by dividing
the operating costs in a period by the total gold production over
the same period. Operating costs represent total operating costs
less administrative expenses, royalties, depreciation and
amortisation. Management uses this measure internally to better
assess performance trends for the Company as a whole. The Company
believes that, in addition to conventional measures prepared in
accordance with GAAP, certain investors use such non-GAAP
information to evaluate the Company's performance and ability to
generate cash flow. The Company believes that these measures
provide an alternative reflection of the group's performance for
the current period and are an alternative indication of its
expected performance in future periods. Cash cost of production is
intended to provide additional information, does not have any
standardised meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP. Other companies may calculate
these measures differently.
During June 2013 the World Gold Council ("WGC"), an industry
body, published a Guidance Note on the 'all in sustaining costs'
metric, which gold mining companies can use to supplement their
overall non-GAAP disclosure. AISC is an extension of the existing
'cash cost' metric and incorporates all costs related to sustaining
production and, in particular, recognising the sustaining capital
expenditure associated with developing and maintaining gold mines.
In addition, this metric includes the cost associated with
developing and maintaining gold mines. In addition, this metric
includes the cost associated with corporate office structures that
support these operations, the community and rehabilitation costs
attendant with responsible mining and any exploration and
evaluation costs associated with sustaining current operations.
AISC US$/oz is arrived at by dividing the dollar value of the sum
of these cost metrics, by the ounces of gold sold (as compared to
using ounces produced which is used in the cash cost of production
calculation).
On 14 November 2018 the World Gold Council published an updated
Guidance Note on 'all-in sustaining costs' and 'all-in costs'
metrics. Per their press release, it is expected that companies may
choose to use the updated guidance from 1 January 2019 or on
commencement of their financial year if later. The Group have
applied the updated guidance from 1 January 2019 with no impact on
our results or comparatives.
Reconciliation of cash cost of production per ounce
produced:
Full Year
H1 2019 2018
H1 2018
(Unaudited)(1) (Unaudited)(1) (Audited)(1)
Mine production costs (note 2.2) US$'000 173,760 156,739 328,090
Less: Refinery and transport US$'000 (677) (737) (1,508)
Movement of inventory(2) US$'000 (13,638) (20,060) (37,188)
----------------------------------------- --------- ---------------- ---------------- --------------
Cash cost of production - gold
produced US$'000 159,445 135,942 289,394
----------------------------------------- --------- ---------------- ---------------- --------------
Gold produced - total (oz.) (excluding
Cleopatra) oz 230,474 213,284 463,459
Cash cost of production per ounce
produced US$/oz 692 637 624
----------------------------------------- --------- ---------------- ---------------- --------------
(1) Mine production costs, cash cost of production, cash cost of
production per ounce, AISC and AISC per ounce sold includes
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to note 2.4 to the financial statements for
further details).
(2) The movement in inventory on ounces produced is only the
movement in mining stockpiles and ore in circuit while the movement
in ounces sold is the net movement in mining stockpiles, ore in
circuit and gold in safe inventory.
A reconciliation has been included below to show the cash cost
of production metric should gold sold ounces be used as a
denominator.
Reconciliation of cash cost of production per ounce sold:
Full Year
H1 2019 2018
H1 2018
(Unaudited)(1) (Unaudited)(1) (Audited)(1)
------------------------------------ ---------- ---------------- ---------------- --------------
Mine production costs (note 2.2) US$'000 173,760 156,739 328,090
Royalties paid US$'000 8,765 9,027 18,396
Movement of inventory(2) US$'000 (24,128) (16,308) (31,296)
------------------------------------- --------- ---------------- ---------------- --------------
Cash cost of production - gold
sold US$'000 158,397 149,458 315,190
------------------------------------- --------- ---------------- ---------------- --------------
Gold sold - total (oz.) (excluding
Cleopatra) oz 220,507 224,858 475,362
Cash cost of production per ounce
sold US$/oz 718 665 663
------------------------------------- --------- ---------------- ---------------- --------------
(1) Mine production costs, cash cost of production, cash cost of
production per ounce, AISC and AISC per ounce sold includes
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to note 2.4 to the financial statements for
further details).
(2) The movement in inventory on ounces produced is only the
movement in mining stockpiles and ore in circuit while the movement
in ounces sold is the net movement in mining stockpiles, ore in
circuit and gold in safe inventory.
Reconciliation of AISC per ounce sold:
Full Year
H1 2019 2018
H1 2018
(Unaudited)(1) (Unaudited)(1) (Audited)(1)
-------------------------------------- ---------- ---------------- ---------------- --------------
Mine production costs (note 2.2) US$'000 173,760 156,739 328,090
Movement in inventory US$'000 (24,128) (16,308) (31,296)
Royalties US$'000 8,765 9,027 18,396
Corporate administration costs US$'000 5,941 8,463 15,909
Rehabilitation costs US$'000 205 435 870
Sustaining underground development
and exploration US$'000 21,717 22,533 43,209
Other sustaining capital expenditure US$'000 21,540 28,851 45,982
By--product credit US$'000 (439) (590) (1,044)
--------------------------------------- --------- ---------------- ---------------- --------------
All--in sustaining costs(2) US$'000 207,361 209,150 420,116
--------------------------------------- --------- ---------------- ---------------- --------------
Gold sold - total (oz.) (excluding
Cleopatra) oz 220,507 224,858 475,362
AISC per ounce sold US$/oz 940 930 884
--------------------------------------- --------- ---------------- ---------------- --------------
(1) Mine production costs, cash cost of production, cash cost of
production per ounce, AISC and AISC per ounce sold includes
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to note 2.4 to the financial statements for
further details).
(2) Includes refinery and transport.
3) Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through profit and
loss
Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through profit and
loss is a non-GAAP financial measure of the available cash and
liquid assets at a point in time. Management uses this measure
internally to better assess performance trends for the Company as a
whole. The Company believes that, in addition to conventional
measures prepared in accordance with GAAP, certain investors use
such non-GAAP information to evaluate the Company's performance and
ability to generate cash flow. The Company believes that these
measures provide an alternative reflection of the group's
performance for the current period and are an alternative
indication of its expected performance in future periods. Cash and
cash equivalents, bullion on hand, gold sales receivables and
financial assets at fair value through profit and loss is intended
to provide additional information, does not have any standardised
meaning prescribed by GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP. This measure is not necessarily indicative
of cash and cash equivalents as determined under GAAP. This is a
non--GAAP financial measure and other companies may calculate these
measures differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold sales receivables and financial assets at fair value through
profit and loss:
31 December
30 June 30 June 2018
2019 2018 (Audited)
(Unaudited) (Unaudited)
Cash and cash equivalents (note
2.9(a)) US$'000 276,858 282,764 282,627
Bullion on hand (valued at the period-end
spot price) US$'000 26,610 11,565 11,431
Gold and silver sales debtor US$'000 13,669 8,926 28,234
Financial assets at fair value through US$'000 -
profit and loss (note 2.6) 9,442 -
------------------------------------------- --------- ------------- ------------- ------------
Cash and cash equivalents, bullion
on hand, gold sales receivables
and financial assets at fair value
through profit and loss US$'000 326,579 303,255 322,292
------------------------------------------- --------- ------------- ------------- ------------
4) Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP financial measure of the available
cash after distributions to the NCI in SGM, being EMRA, that the
group has at its disposal to use for capital reinvestment and to
distribute to shareholders of the parent as dividends in accordance
with the Company's dividend policy. Management uses this measure
internally to better assess performance trends for the Company as a
whole. The Company believes that, in addition to conventional
measures prepared in accordance with GAAP, certain investors use
such non-GAAP information to evaluate the Company's performance and
ability to generate cash flow. The Company believes that these
measures provide an alternative reflection of the group's
performance for the current period and are an alternative
indication of its expected performance in future periods. Free cash
flow is intended to provide additional information, does not have
any standardised meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP. This is a non-GAAP financial
measure and other companies may calculate these measures
differently.
Full Year
H1 2019 2018
H1 2018
(Unaudited) (Unaudited) (Audited)
Net cash generated by operating
activities US$'000 116,376 122,662 223,404
Less:
Net cash used in investing activities US$'000 (50,657) (47,321) (83,584)
Dividend paid - non-controlling
interest in SGM US$'000 (39,375) (39,266) (76,391)
--------------------------------------- --------- ------------- ------------- -----------
Free cash flow US$'000 26,344 36,075 63,429
Add back:
Acquisitions of financial assets US$'000 -
at fair value through profit and
loss(1) 9,364 -
--------------------------------------- --------- ------------- ------------- -----------
Adjusted free cash flow US$'000 35,708 36,075 63,429
--------------------------------------- --------- ------------- ------------- -----------
(1) Adjustments made to free cash flow, for example acquisitions
of financial assets at fair value through profit and loss, which
are completed through specific allocated available cash
reserve.
Principal Risks
MANAGING RISK
The management of risks through identification, monitoring and
mitigation allows the Group to improve its decision-making process,
deliver on its objectives and improve its performance as a mining
company.
The Board has overall responsibility for establishing a robust
risk management framework that allows for the assessment and
management of material strategic and operational risks. In
addition, the Board is responsible for articulating the Group's
risk appetite against the principal risks. The Board reviews
existing and emerging risks in the context of both opportunities
and potential threats. This is then applied when challenging the
strategic objectives of the Company that underpin the business
model.
Due in part to the nature of the business as an operating mining
company, the headline principal risks, whilst fundamental to the
ongoing operation, remain largely constant. The Audit and Risk
Committee and Board regularly review the principal risks as well as
the wider operational, corporate and general business risks.
Management consider the business reports and risk registers as well
as full details and corrective actions of all high-level incidents,
leading indicators hazard identification and any resulting
procedural changes.
There have been no changes in the Company's risks and
uncertainties during the half year ended 30 June 2019 from those
described on pages 38 to 49 of the 2018 Annual Report, available on
the Company website at www.centamin.com/investors/reports/2018, and
the Company does not anticipate any changes in the Company's risks
and uncertainties during the next six months to 31 December
2019.
Of the emerging risks published in the 2018 Annual Report, the
Company has since published on its website the latest details on
its Tailings Storage Facility in the prescribed information table
communicated to all mining companies at the request of the Church
of England Pensions Board and the Swedish Council on Ethics. This
can be found at
https://www.centamin.com/production/sukari/tailings-storage-facility.
The key principal risks relate to the following:
Strategic risks
-- Loss of revenue due to single project dependency
-- Sukari Project relationship with our Egyptian state partners EMRA
-- Jurisdictional taxation exposure
External risks
-- Gold price
-- Political risk - Sukari
-- Political risk - West Africa
-- Litigation
Operational risks
-- Failure to achieve exploration development success
-- Reserve and resource estimates
-- Failure to achieve production estimates
Centamin takes a number of measures to mitigate risks associated
with its underlying operational and exploration activity which are
monitored and evaluated regularly. Due to the nature of these
inherent risks, it is not possible to give absolute assurance that
mitigating actions will be wholly effective. The Company is exposed
to changes in the economic environment through its operations in
Egypt, as well as its operations in West Africa (Burkina Faso and
Côte d'Ivoire). Relationships with governments and the maintenance
of exploration permits and licence areas remain key risks and a key
focus for all exploration, development and operational
projects.
One of the Company's main objectives is to achieve a target of
zero injuries and for every employee to be safe every day. The
control environment and operating practices in place at the mining
and exploration operations helps reduce the likelihood of harm to
employees. Centamin is committed to attracting, energising,
developing and training its workforce to ensure they are highly
skilled and motivated.
Centamin recognises the value of being a socially responsible
employer and the importance of engaging with the wider community in
the areas in which it operates. By investing in the community and
engaging in projects that directly and positively impact local
people, Centamin can foster a cooperative working environment.
Legal Developments in Egypt
CONCESSION AGREEMENT APPEAL
All material has been submitted by the Company to the courts.
The appeal has been stayed pending the decision on Law No. 32 as
referred to below. Consequently, there will be no further hearings
on the Concession Agreement Appeal until a judgment is given on the
Law No. 32 Appeal in the Supreme Constitutional Court. Note. The
Law No. 32 Appeal is independent from the Group and neither Pharaoh
Gold Mine ("PGM") nor SGM are a party.
The Law No. 32 Appeal is awaiting the State Commissioner to
submit their report to the Supreme Constitutional Court. There is
no visibility at present on when this report will be submitted.
Law No. 32 is legislation, enforced and ratified by Parliament
in 2014. The law is designed to protect and encourage foreign
investment in the Arab Republic of Egypt ("ARE") by restricting the
capacity for third parties to challenge contractual agreements
between the Egyptian government and an investor.
DIESEL FUEL OIL CASE
All required documentation has been submitted by the Company to
the courts. EGPC, the counterparty, has the opportunity to submit
the requested documentation before the Court can deliver a
judgment.
Andrew Pardey
Chief Executive Officer
31 July 2019
Set out below are the unaudited consolidated Financial
Statements for the Group, including notes thereto, for the six
months ended 30 June 2019.
DIRECTORS' RESPONSIBILITY STATEMENT
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE SIX
MONTHSED 30 JUNE 2019 FINANCIAL REPORT
We confirm that to the best of our knowledge:
(a) the condensed set of interim consolidated financial
statements for the six months ended 30 June 2019 has been prepared
in accordance with International Accounting Standard 34 'Interim
Financial Reporting' as adopted by the European Union;
(b) the condensed set of interim consolidated financial
statements, which has been prepared in accordance with the
applicable set of accounting standards, gives a true and fair view
of the assets, liabilities, financial position and profit or loss
of the issuer, or the undertakings included in the consolidation as
a whole as required by DTR 4.2.4;
(c) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(d) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
The board of directors that served during all or part of the six
month period ended on 30 June 2019 and their respective
responsibilities can be found on pages 84 to 95 of the 2018 annual
report of Centamin plc.
By order of the Board,
Chief Executive Officer Chief Financial Officer
Andrew Pardey Ross Jerrard
31 July 2019 31 July 2019
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE SIX MONTHSED
30 JUNE 2019
Independent review report to Centamin plc
Report on the interim financial statements
Our conclusion
We have reviewed Centamin plc's unaudited interim condensed
consolidated financial statements (the "interim financial
statements") in the interim results of Centamin plc for the six
month period ended 30 June 2019. Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the unaudited interim condensed consolidated statement of
financial position as at 30 June 2019;
-- the unaudited interim condensed consolidated statement of
comprehensive income for the six month period then ended;
-- the unaudited interim condensed consolidated statement of
cash flows for the six month period then ended;
-- the unaudited interim condensed consolidated statement of
changes in equity for the six month period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results
for the six month period ended 30 June 2019 have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 4.4 to the interim financial statements,
the financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim results for the six month period ended 30 June 2019,
including the interim financial statements, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the interim results for the six month
period ended 30 June 2019 in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results for the six month
period ended 30 June 2019 based on our review. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
results for the six month period ended 30 June 2019 and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial
statements.
Other matter
We have not audited nor reviewed the unaudited interim condensed
consolidated statement of comprehensive income for the quarters
ended 31 March 2019 and 30 June 2019; the unaudited interim
condensed consolidated statement of cash flows for the quarters
ended 31 March 2019 and 30 June 2019; or any notes to the financial
statements presenting information for the quarters ended 31 March
2019 and 30 June 2019.
PricewaterhouseCoopers LLP
Chartered Accountants
London
31 July 2019
Unaudited interim condensed consolidated statement of
comprehensive income
for the six months ended 30 June 2019
Half year Half year Year ended
ended ended 30 31 December
30 June June
2019 2018
(Unaudited) 2018 (Unaudited) (Audited)
Notes US$'000 US$'000 US$'000
------------------------------------------ ------ ------------- ----------------- -------------
Revenue 2.1 288,136 296,391 603,248
Cost of sales 2.2 (210,046) (191,879) (406,538)
------------------------------------------ ------ ------------- ----------------- -------------
Gross profit 78,090 104,512 196,710
Profit on financial assets at
fair value through profit and
loss (net of tax) 78 - -
Other income 25 24 49
Finance income 2.2 3,207 2,246 4,815
Other operating costs 2.2 (11,320) (14,574) (27,866)
Exploration and evaluation expenditure (10,453) (11,832) (21,006)
Profit for the period before tax 59,627 80,376 152,702
Tax (45) (10) (53)
------------------------------------------ ------ ------------- ----------------- -------------
Profit for the period after tax 59,582 80,366 152,649
------------------------------------------ ------ ------------- ----------------- -------------
Profit for the period after tax
attributable to:
- the owners of the parent 19,667 41,100 74,845
- non-controlling interest in
SGM 2.3 39,915 39,266 77,804
------------------------------------------ ------ ------------- ----------------- -------------
Other comprehensive expense
Items that may be reclassified
subsequently to profit or loss:
Loss on financial assets at fair
value through other comprehensive
income (net of tax) - (125) (125)
------------------------------------------ ------ ------------- ----------------- -------------
Other comprehensive expense for
the period - (125) (125)
------------------------------------------ ------ ------------- ----------------- -------------
Total comprehensive income for
the period 59,582 80,241 152,524
------------------------------------------ ------ ------------- ----------------- -------------
Total comprehensive income attributable
to:
- the owners of the parent 19,667 40,975 74,720
- non-controlling interest in
SGM 2.3 39,915 39,141 77,679
------------------------------------------ ------ ------------- ----------------- -------------
Earnings per share attributable
to owners of the parent:
Basic (US cents per share) 4.4 1.707 3.572 6.497
Diluted (US cents per share) 4.4 1.698 3.548 6.444
------------------------------------------ ------ ------------- ----------------- -------------
The above unaudited interim condensed consolidated statement of
comprehensive income should be read in conjunction with the
accompanying notes.
Unaudited interim condensed consolidated statement of financial
position
as at 30 June 2019
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Notes US$'000 US$'000 US$'000
---------------------------------------- ------- ------------- ------------- ------------
Non--current assets
Property, plant and equipment 2.5 815,442 847,502 835,987
Exploration and evaluation asset 63,521 65,451 59,154
Inventories - mining stockpiles 47,629 - 32,424
Other receivables 91 92 88
---------------------------------------- ------- ------------- ------------- ------------
Total non--current assets 926,683 913,045 927,653
---------------------------------------- ------- ------------- ------------- ------------
Current assets
Inventories 102,616 113,836 97,550
Financial assets at fair value through
profit and loss 2.6 9,442 - -
Trade and other receivables 18,301 12,328 33,443
Prepayments 2.4 6,526 11,131 6,696
Cash and cash equivalents 2.9(a) 276,858 282,764 282,627
---------------------------------------- ------- ------------- ------------- ------------
Total current assets 413,743 420,059 420,316
---------------------------------------- ------- ------------- ------------- ------------
Total assets 1,340,426 1,333,104 1,347,969
---------------------------------------- ------- ------------- ------------- ------------
Non--current liabilities
Provisions 2.7 13,954 11,648 13,748
---------------------------------------- ------- ------------- ------------- ------------
Total non--current liabilities 13,954 11,648 13,748
---------------------------------------- ------- ------------- ------------- ------------
Current liabilities
Trade and other payables 46,847 34,365 39,246
Tax liabilities - 3 3
Provisions 2.7 8,559 8,001 8,155
---------------------------------------- ------- ------------- ------------- ------------
Total current liabilities 55,406 42,369 47,404
---------------------------------------- ------- ------------- ------------- ------------
Total liabilities 69,360 54,017 61,152
---------------------------------------- ------- ------------- ------------- ------------
Net assets 1,271,066 1,279,087 1,286,817
---------------------------------------- ------- ------------- ------------- ------------
Equity
Issued capital 672,105 670,589 670,589
Share option reserve 2.8 2,886 4,178 5,688
Accumulated profits 596,075 604,320 610,540
---------------------------------------- ------- ------------- ------------- ------------
Total equity attributable to:
- owners of the parent 1,270,796 1,280,770 1,287,087
- non-controlling interest in SGM 270 (1,683) (270)
Total equity 1,271,066 1,279,087 1,286,817
---------------------------------------- ------- ------------- ------------- ------------
The above unaudited interim condensed consolidated statement of
financial position should be read in conjunction with the
accompanying notes.
The unaudited interim condensed consolidated financial
statements were approved by the board of directors on 31 July 2019
and signed on its behalf by:
Andrew Pardey Ross Jerrard
Chief executive officer Chief financial officer
31 July 2019 31 July 2019
Unaudited interim condensed consolidated statement of changes in
equity
for the six months ended 30 June 2019
Share
Issued option Accumulated Non-controlling Total
capital reserve profits Total interests equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------- ------ ------------- ------------- ------------- ------------- ---------------- -------------
Balance as at 1
January 2019 670,589 5,688 610,810 1,287,087 (270) 1,286,817
Profit for the
period after
tax - - 19,667 19,667 39,915 59,582
Other
comprehensive
income for the
period - - - - - -
----------------- ------ ------------- ------------- ------------- ------------- ---------------- -------------
Total
comprehensive
income for the
period - - 19,667 19,667 39,915 59,582
Recognition of
share based
payments - (1,286) - (1,286) - (1,286)
Transfer of
share
based payments 1,516 (1,516) - - - -
Dividend paid -
non-controlling
interest in SGM 2.3 - - - - (39,375) (39,375)
Dividend paid -
owners of the
parent - - (34,672) (34,672) - (34,672)
Balance as at 30
June 2019 672,105 2,886 595,805 1,270,796 270 1,271,066
----------------- ------ ------------- ------------- ------------- ------------- ---------------- -------------
Share
Issued option Accumulated Non-controlling Total
capital reserve profits Total interests equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------- ------ ------------- ------------- ------------- ------------- ---------------- -------------
Balance as at 1
January 2018 668,732 4,323 785,604 1,458,659 (1,683) 1,456,976
Impact of change
in accounting
policy - - (104,947) (104,947) - (104,947)
----------------- ------ ------------- ------------- ------------- ------------- ---------------- -------------
Restated balance
as at 1 January
2018 668,732 4,323 680,657 1,353,712 (1,683) 1,352,029
Profit for the
period after
tax - - 41,100 41,100 39,266 80,366
Other
comprehensive
expense for the
period - - (125) (125) - (125)
----------------- ------ ------------- ------------- ------------- ------------- ---------------- -------------
Total
comprehensive
income for the
period - - 40,975 40,975 39,266 80,241
Recognition of
share based
payments - 1,712 - 1,712 - 1,712
Transfer of
share
based payments 1,857 (1,857) - - - -
Dividend paid -
non-controlling
interest in SGM 2.3 - - - - (39,266) (39,266)
Dividend paid -
owners of the
parent - - (115,629) (115,629) - (115,629)
Balance as at 30
June 2018 670,589 4,178 606,003 1,280,770 (1,683) 1,279,087
----------------- ------ ------------- ------------- ------------- ------------- ---------------- -------------
The change in accounting policy occurred at 30 June 2018 and
relates to exploration and evaluation assets, see note 1.2.1 of the
31 December 2018 annual report for details.
Share
Issued option Accumulated Non-controlling Total
capital reserve profits Total interests equity
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------ ------ ----------- ----------- ------------ ----------- ---------------- -----------
Balance as at 1
January 2018 668,732 4,323 785,604 1,458,659 (1,683) 1,456,976
Impact of change
in accounting policy - - (104,947) (104,947) - (104,947)
Restated balance
as at 1 January
2018 668,732 4,323 680,657 1,353,712 (1,683) 1,352,029
Profit for the period
after tax - - 74,845 74,845 77,804 152,649
Other comprehensive
expense for the
period - - (125) (125) - (125)
------------------------ ------ ----------- ----------- ------------ ----------- ---------------- -----------
Total comprehensive
income for the period - - 74,720 74,720 77,804 152,524
Recognition of share
based payments - 3,222 - 3,222 - 3,222
Transfer of share
based payments 1,857 (1,857) - - - -
Dividend paid -
non-controlling
interest in SGM 2.3 - - - - (76,391) (76,391)
Dividend paid -
owners of the parent - - (144,567) (144,567) - (144,567)
Balance as at 31
December 2018 670,589 5,688 610,810 1,287,087 (270) 1,286,817
------------------------ ------ ----------- ----------- ------------ ----------- ---------------- -----------
The change in accounting policy occurred at 30 June 2018 and
relates to exploration and evaluation assets, see note 1.2.1 of the
31 December 2018 annual report for details.
The above unaudited interim condensed consolidated statement of
changes in equity should be read in conjunction with the
accompanying notes.
Unaudited interim condensed consolidated statement of cash
flows
for the quarter and six months ended 30 June 2019
Half year Half year Year ended
ended 30 ended 30 31 December
June June
2018 2018
2019 (Unaudited) (Unaudited) (Audited)
Notes US$'000 US$'000 US$'000
---------------------------------------- ------- ----------------- ------------- -------------
Cash flows from operating activities
Cash generated in operating activities 2.9(b) 116,424 123,161 223,791
Income tax paid (48) (499) (387)
Net cash generated by operating
activities 116,376 122,662 223,404
---------------------------------------- ------- ----------------- ------------- -------------
Cash flows from investing activities
Acquisition of financial assets
at fair value through profit and
loss 2.6 (9,364) - -
Acquisition of property, plant
and equipment (40,133) (48,001) (83,454)
Brownfield exploration and evaluation
expenditure (4,367) (1,566) (4,946)
Finance income 2.2 3,207 2,246 4,815
---------------------------------------- ------- ----------------- ------------- -------------
Net cash used in investing activities (50,657) (47,321) (83,585)
---------------------------------------- ------- ----------------- ------------- -------------
Cash flows from financing activities
Dividend paid - non-controlling
interest in SGM 2.3 (39,375) (39,266) (76,391)
Dividend paid - owners of the
parent (34,672) (115,629) (144,567)
Net cash used in financing activities (74,047) (154,895) (220,958)
---------------------------------------- ------- ----------------- ------------- -------------
Net decrease in cash and cash
equivalents (8,328) (79,554) (81,139)
Cash and cash equivalents at the
beginning of the period 282,627 359,680 359,680
Effect of foreign exchange rate
changes 2,559 2,638 4,086
---------------------------------------- ------- ----------------- ------------- -------------
Cash and cash equivalents at the
end of the period 2.9(a) 276,858 282,764 282,627
---------------------------------------- ------- ----------------- ------------- -------------
The above unaudited interim condensed consolidated statement of
cash flows should be read in conjunction with the accompanying
notes.
1 Current reporting period amendments
1.1 Changes in policies and estimates
The financial position and performance of the Group was
particularly affected by the following events and transactions
during the reporting period:
-- Adoption of the following new and revised accounting standards:
o IFRS 16 'Leases' has been applied since 1 January 2019, the
impact of which has been disclosed.
For further information, see note 1.1.1 below:
1.1.1 IFRS 16 Leases
Nature of change
IFRS 16 was issued in January 2016. It has resulted in almost
all leases being recognised on the balance sheet by lessees, as the
distinction between operating and finance leases is removed. Under
the new standard, an asset (the right to use the leased item) and a
financial liability to pay rentals are recognised. The only
exceptions are short term and low-value leases.
Impact
In the year ended 31 December 2018 the Group set up a project
team which reviewed all the Group's leasing arrangements in light
of the new lease accounting rules in IFRS 16. The standard affects
primarily the accounting for the Group's operating leases.
The team performed an impact assessment of IFRS 16 on the
Group's contracts and financial statements. All active contracts
were assessed under the requirements of IFRS 16 to determine
whether they had arrangements that contained a lease. Under IAS 17
'Leases' and IFRIC 4 'Determining whether an arrangement contains a
lease' contracts were initially assessed on the date of their
inception to determine whether or not they should be accounted for
under those standards. If, on initial assessment, they didn't meet
the requirements of IAS 17 or IFRIC 4, but on reassessment do meet
the requirements of IFRS 16, they have been excluded from this
assessment by application of paragraph C3(b) of IFRS 16. Management
have elected to apply the paragraph C3(b) and therefore paragraph
C4 of IFRS 16 as a practical expedient to not apply this standard
to all the Group's existing contracts.
Mandatory application date and date of adoption by Group
The Group has applied the standard from its mandatory adoption
date of 1 January 2019. The Group has applied the simplified
transition approach and has not restated comparative amounts for
the year or period prior to the current reporting period.
Right-of-use assets for property leases have been measured on
transition as if the new rules had always been applied. All other
right-of-use assets will continue to be measured at the amount of
the lease liability on adoption (adjusted for any prepaid or
accrued lease expenses).
As at 31 December 2018 the reporting date, the Group had
non-cancellable operating lease commitments of US$3.2 million, see
note 5.2 of the 2018 annual report. Of these commitments,
approximately US$1.1 million related to low value leases which are
and will be recognised on a straight-line basis as an expense in
profit or loss.
For the remaining lease commitments, the Group recognised
right-of-use assets of approximately US$1.6 million on 1 January
2019, lease liabilities of US$1.6 million (after adjustments for
prepayments and accrued lease payments recognised as at 31 December
2018). Overall net assets have changed, and net current assets are
US$0.3 million lower due to the presentation of a portion of the
liability as a current liability.
Due to these IFRS 16 adjustments at 1 January 2019 and the
consequential transactions in the half year not being material, the
full disclosure of the impact of the new standard has been excluded
from these results.
2 How numbers are calculated
2.1 Segment reporting
The Group is engaged in the business of exploration for and
mining of precious metals, which represents three operating
segments, two in the business of exploration and one in mining of
precious metals. The Board is the Group's chief operating
decision-maker within the meaning of IFRS 8 'Operating segments'.
Management has determined the operating segments based on the
information reviewed by the Board for the purposes of allocating
resources and assessing performance.
The Board considers the business from a geographic perspective
and a mining of precious metals versus exploration for precious
metals perspective. Geographically, management considers separately
the performance in Egypt, Burkina Faso, Côte d'Ivoire and Corporate
(which includes Jersey, United Kingdom and Australia). From a
mining of precious metals versus exploration for precious metals
perspective, management separately considers the Egyptian mining of
precious metals from the West African exploration for precious
metals in these geographies. The Egyptian mining operations derive
its revenue from sale of gold while the West African entities are
currently only engaged in precious metal exploration and do not
produce any revenue.
The Board assesses the performance of the operating segments
based on profits and expenditure incurred as well as exploration
expenditure in each region. Egypt is the only operating segment
mining precious metals and therefore has revenue and cost of sales
whilst the remaining operating segments do not. All operating
segments are reviewed by the Board as presented and are key to the
monitoring of ongoing performance and assessing plans of the
Company.
Non--current assets other than financial instruments by
country:
30 June 30 June 31 December
2019 (Unaudited) 2018 2018
(Unaudited) (Audited)
US$'000 US$'000 US$'000
------------------- ---------------- ------------ -----------
Egypt 889,574 876,417 891,131
Burkina Faso 35,896 36,023 35,959
Côte d'Ivoire 617 584 543
Corporate 596 21 20
926,683 913,045 927,653
------------------- ---------------- ------------ -----------
Statement of financial position by operating segment:
30 June 2019 Total Egypt Burkina Côte Corporate
Faso d'Ivoire
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------- --------- --------- ------- --------- ---------
Statement of financial
position
Total assets 1,340,426 1,022,161 36,903 1,062 280,300
Total liabilities (69,360) (63,164) (449) (1,715) (4,032)
---------------------------------- --------- --------- ------- --------- ---------
Net assets/total equity/(deficit) 1,271,066 958,997 36,454 (653) 276,268
---------------------------------- --------- --------- ------- --------- ---------
30 June 2018 Total Egypt Burkina Côte Corporate
Faso d'Ivoire
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------- --------- --------- ------- --------- ---------
Statement of financial
position
Total assets 1,333,104 1,021,477 37,556 1,707 272,364
Total liabilities (54,017) (51,219) (261) (861) (1,676)
---------------------------------- --------- --------- ------- --------- ---------
Net assets/total equity 1,279,087 970,258 37,295 846 270,688
---------------------------------- --------- --------- ------- --------- ---------
31 December 2018 Total Egypt Burkina Côte Corporate
Faso d'Ivoire
(Audited) US$'000 US$'000 US$'000 US$'000 US$'000
------------------------ --------- --------- ------- --------- ---------
Statement of financial
position
Total assets 1,347,969 1,032,284 36,876 909 277,900
Total liabilities (61,152) (57,843) (477) (85) (2,747)
------------------------ --------- --------- ------- --------- ---------
Net assets/total equity 1,286,817 974,441 36,399 824 275,153
------------------------ --------- --------- ------- --------- ---------
2.1 Segment reporting (continued)
Statement of comprehensive income by operating segment:
Half year ended 30 Total Egypt Burkina Côte Corporate
June 2019 Faso d'Ivoire
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------- --------- --------- ------- --------- ---------
Statement of comprehensive
income
Gold sales (Including
pre-production gold
sales related to Cleopatra) 292,406 292,406 - - -
Less: Pre-production
gold sales related
to Cleopatra - transferred
to exploration and
evaluation asset (4,709) (4,709) - - -
------------------------------- --------- --------- ------- --------- ---------
Gold sales (Excluding
pre-production gold
sales related to Cleopatra) 287,697 287,697 - - -
Silver sales 439 439 - - -
------------------------------- --------- --------- ------- --------- ---------
Revenue 288,136 288,136 - - -
Cost of sales (210,046) (210,046) - - -
Gross profit 78,090 78,090 - - -
Financial assets at
fair value through
profit and loss 78 - - - 78
Other income 25 25 - - -
Finance income 3,207 21 - - 3,186
Other operating costs (11,320) (5,260) (24) (396) (5,640)
Exploration and evaluation
costs (10,453) - (1,892) (8,561) -
Profit/(loss) for the
period before tax 59,627 72,876 (1,916) (8,957) (2,376)
Tax (45) (45) - - -
------------------------------- --------- --------- ------- --------- ---------
Profit/(loss) for the
period after tax 59,582 72,831 (1,916) (8,957) (2,376)
------------------------------- --------- --------- ------- --------- ---------
Profit/(loss) for the
period after tax attributable
to:
- owners of the parent
(1) 19,667 32,916 (1,916) (8,957) (2,376)
- non-controlling interest
in SGM (1) 39,915 39,915 - - -
------------------------------- --------- --------- ------- --------- ---------
(1) Please note that the cost recovery model on which profit
share is based under the Concession Agreement is different to the
accounting results presented above due to various adjustments and
as such the share of profit disclosed above is not reflective of
the 55%:45% split that occurs in practice, refer to the statement
of cash flows by operating segment (below and the free cash flow -
Egypt note in the financial review section for further
information.)
All gold and silver sales during the year were made to a single
customer in North America.
Half year ended 30 Total Egypt Burkina Côte Corporate
June 2018 Faso d'Ivoire
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------- --------- --------- ------- --------- ---------
Statement of comprehensive
income
Gold sales (Including
pre-production gold
sales related to Cleopatra) 301,099 301,099 - - -
Less: Pre-production
gold sales related
to Cleopatra - transferred
to exploration and
evaluation asset (5,298) (5,298) - - -
Gold sales (Excluding
pre-production gold
sales related to Cleopatra) 295,801 295,801 - - -
Silver sales 590 590 - - -
------------------------------- --------- --------- ------- --------- ---------
Revenue 296,391 296,391 - - -
Cost of sales (191,879) (191,879) - - -
Gross profit 104,512 104,512 - - -
Other income 24 24 - - -
Finance income 2,246 22 - - 2,224
Other operating costs (14,574) (7,310) (139) (449) (6,676)
Exploration and evaluation
costs (11,832) - (3,664) (8,168) -
Profit/(loss) for the
period before tax 80,376 97,248 (3,803) (8,617) (4,452)
Tax (10) (10) - - -
------------------------------- --------- --------- ------- --------- ---------
Profit/(loss) for the
period after tax 80,366 97,238 (3,803) (8,617) (4,452)
------------------------------- --------- --------- ------- --------- ---------
Profit/(loss) for the
period after tax attributable
to:
- owners of the parent 41,100 57,972 (3,803) (8,617) (4,452)
- non-controlling interest
in SGM 39,266 39,266 - - -
------------------------------- --------- --------- ------- --------- ---------
All gold and silver sales during the year were made to a single
customer in North America.
2.1 Segment reporting (continued)
Statement of comprehensive income by operating segment
(continued):
Year ended 31 December Total Egypt Burkina Côte Corporate
2018 Faso d'Ivoire
(Audited) US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------- --------- --------- ------- --------- ---------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
------------------------------- --------- --------- ------- --------- ---------
Statement of comprehensive
income
Gold sales (Including
pre-production gold
sales related to Cleopatra) 613,727 613,727 - - -
Less: Pre-production
gold sales related
to Cleopatra - transferred
to exploration and
evaluation asset (11,523) (11,523) - - -
------------------------------- --------- --------- ------- --------- ---------
Gold sales (Excluding
pre-production gold
sales related to Cleopatra) 602,204 602,204 - - -
Silver sales 1,044 1,044 - - -
------------------------------- --------- --------- ------- --------- ---------
Revenue 603,248 603,248 - - -
Cost of sales (406,538) (406,538) - - -
Gross profit 196,710 196,710 - - -
Other income 49 49 - - -
Finance income 4,815 44 - - 4,771
Other operating costs (27,866) (13,433) (481) (644) (13,308)
Exploration and evaluation
costs (21,006) - (5,223) (15,783) -
Profit/(loss) for the
period before tax 152,702 183,370 (5,704) (16,427) (8,537)
Tax (53) (53) - - -
------------------------------- --------- --------- ------- --------- ---------
Profit/(loss) for the
period after tax 152,649 183,317 (5,704) (16,427) (8,537)
------------------------------- --------- --------- ------- --------- ---------
Profit/(loss) for the
period after tax attributable
to:
- owners of the parent 74,845 105,513 (5,704) (16,427) (8,537)
- non-controlling interest
in SGM 77,804 77,804 - - -
------------------------------- --------- --------- ------- --------- ---------
All gold and silver sales during the year were made to a single
customer in North America.
Statement of cash flows by operating segment:
Half year ended 30 Total Egypt Burkina Côte Corporate
June 2019 Faso d'Ivoire
(Unaudited) US$'000 US$'000 US$'000(1) US$'000(1) US$'000(1)
-------------------------------- -------- -------- ---------- ---------- ----------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
-------------------------------- -------- -------- ---------- ---------- ----------
Statement of cash flows
Net cash generated
by operating activities 116,376 131,572 (137) 467 (15,526)
Net cash used in investing
activities (50,657) (43,698) - (160) (6,799)
Net cash used in financing
activities
Dividend paid - non-controlling
interest in SGM (39,375) (39,375) - - -
Dividend paid - controlling
interest in SGM - (48,125) - - 48,125
Dividend paid - owners
of the parent (34,672) - - - (34,672)
-------------------------------- -------- -------- ---------- ---------- ----------
Net increase/(decrease)
in cash and cash equivalents (8,328) 374 (137) 307 (8,872)
Cash and cash equivalents
at the beginning of
the period 282,627 3,714 28 241 278,644
Effect of foreign exchange
rate changes 2,559 2,078 143 (296) 634
-------------------------------- -------- -------- ---------- ---------- ----------
Cash and cash equivalents
at the end of the period 276,858 6,166 34 252 270,406
-------------------------------- -------- -------- ---------- ---------- ----------
(1) Please note that the cash generated by operating activities
for Burkina Faso and Cote d'Ivoire are affected by the movements in
working capital, specifically intercompany loans, with its direct
parent entity Centamin West Africa Holdings Limited which is
included within the corporate segment.
Statement of cash flows by operating segment (continued):
Half year ended 30 Total Egypt Burkina Côte Corporate
June 2018 Faso d'Ivoire
(Unaudited) US$'000 US$'000 US$'000(1) US$'000(1) US$'000(1)
-------------------------------- --------- -------- ---------- ---------- ----------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
-------------------------------- --------- -------- ---------- ---------- ----------
Statement of cash flows
Net cash generated
by operating activities 122,662 141,377 (48) 1,195 (19,862)
Net cash used in investing
activities (47,321) (49,338) - (205) 2,222
Net cash used in financing
activities
Dividend paid - non-controlling
interest in SGM (39,266) (39,266) - - -
Dividend paid - controlling
interest in SGM - (48,480) - - 48,480
Dividend paid - owners
of the parent (115,629) - - - (115,629)
-------------------------------- --------- -------- ---------- ---------- ----------
Net increase/(decrease)
in cash and cash equivalents (79,554) 4,293 (48) 990 (84,789)
Cash and cash equivalents
at the beginning of
the period 359,680 1,614 132 335 357,599
Effect of foreign exchange
rate changes 2,638 2,556 56 (371) 397
-------------------------------- --------- -------- ---------- ---------- ----------
Cash and cash equivalents
at the end of the period 282,764 8,463 140 954 273,207
-------------------------------- --------- -------- ---------- ---------- ----------
(1) Please note that the cash generated by operating activities
for Burkina Faso and Cote d'Ivoire are affected by the movements in
working capital, specifically intercompany loans, with its direct
parent entity Centamin West Africa Holdings Limited which is
included within the corporate segment.
Year ended 31 December Total Egypt Burkina Côte Corporate
2018 Faso d'Ivoire
(Audited) US$'000 US$'000 US$'000(1) US$'000(1) US$'000(1)
-------------------------------- --------- -------- ---------- ---------- ----------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
-------------------------------- --------- -------- ---------- ---------- ----------
Statement of cash flows
Net cash generated
by operating activities 223,404 255,488 (304) 628 (32,408)
Net cash used in investing
activities (83,585) (88,098) (2) (248) 4,763
Net cash used in financing
activities
Dividend paid - non-controlling
interest in SGM (76,391) (76,391) - - -
Dividend paid - controlling
interest in SGM - (93,855) - - 93,855
Dividend paid - owners
of the parent (144,567) - - - (144,567)
-------------------------------- --------- -------- ---------- ---------- ----------
Net increase/(decrease)
in cash and cash equivalents (81,139) (2,856) (306) 380 (78,357)
Cash and cash equivalents
at the beginning of
the period 359,680 1,614 132 335 357,599
Effect of foreign exchange
rate changes 4,086 4,955 202 (474) (597)
-------------------------------- --------- -------- ---------- ---------- ----------
Cash and cash equivalents
at the end of the period 282,627 3,713 28 241 278,645
-------------------------------- --------- -------- ---------- ---------- ----------
(1) Please note that the cash generated by operating activities
for Burkina Faso and Cote d'Ivoire are affected by the movements in
working capital, specifically intercompany loans, with its direct
parent entity Centamin West Africa Holdings Limited which is
included within the corporate segment.
Exploration expenditure by operating segment
The following table provides a breakdown of the total
exploration expenditure of the group by operating segment:
Half year Half year Year ended
ended ended 31 December
30 June 30 June
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
------------------------------------------------- ------------ ------------ ------------
Burkina Faso 1,892 3,664 5,223
Côte d'Ivoire 8,561 8,168 15,783
Egypt (Sukari tenement including Cleopatra
excluding pre-production gold sales adjustment) 7,944 5,876 13,635
Total exploration expenditure 18,397 17,708 34,641
------------------------------------------------- ------------ ------------ ------------
2.2 Profit before tax
Profit for the period has been arrived at after
crediting/(charging) the following gains/(losses) and
income/(expenses):
Half year Half year Year ended
ended 30 ended 31 December
June 30 June
2018 2018
2019 (Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
------------------ ---------------- ------------ ------------
Finance income
Interest received 3,207 2,246 4,815
------------------ ---------------- ------------ ------------
Half year Half year Year ended
ended 30 ended 31 December
June 30 June
2018 2018
2019 (Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
------------------------------------------ ---------------- ------------ ------------
Expenses
Cost of sales
Mine production costs (Including costs
related to gold produced from Cleopatra) (174,893) (157,727) (330,924)
Mine production costs related to gold
produced from Cleopatra - offset against
exploration and evaluation asset 1,133 988 2,834
------------------------------------------ ---------------- ------------ ------------
Mine production costs (173,760) (156,739) (328,090)
Movement in inventory 24,128 16,308 31,296
Depreciation and amortisation (60,414) (51,448) (109,744)
------------------------------------------ ---------------- ------------ ------------
(210,046) (191,879) (406,538)
------------------------------------------ ---------------- ------------ ------------
Other operating costs
Corporate costs (5,941) (8,463) (15,909)
Other provisions - (283) 58
Net movement on provision for stock obsolescence 949 920 1,353
Office related depreciation (198) (150) (301)
Royalty - attributable to the ARE government (8,765) (9,027) (18,396)
Foreign exchange gain, net 2,846 2,934 6,372
Finance charges (151) (70) (142)
Gain/(loss) on disposal of asset 145 - (31)
Provision for restoration and rehabilitation
- unwinding of discount (205) (435) (870)
-------------------------------------------------- --------- -------- --------
(11,320) (14,574) (27,866)
-------------------------------------------------- --------- -------- --------
2.3 Non-controlling interest in SGM
EMRA is a 50% shareholder in SGM and is entitled to a share of
50% of SGM's net production surplus which can be defined as
'revenue less payment of the fixed royalty to the Arab Republic of
Egypt ("ARE") and recoverable costs'. However, in accordance with
the terms of the CA, in the first and second years in which there
is a profit share, PGM will be entitled to an additional 10% of net
production surplus and an additional 5% in the third and fourth
years.
Earnings attributable to the NCI in SGM (i.e. EMRA) are pursuant
to the provisions of the CA and are recognised as profit
attributable to the NCI in SGM in the attribution of profit section
of the statement of comprehensive income of the Group. The profit
share payments during the year will be reconciled against SGM's
audited financial statements. The SGM financial statements for the
year ended 30 June 2019 have not been signed off at the date of
this report and are in the process of being audited.
Certain terms of the CA and amounts in the cost recovery model
may also vary depending on interpretation and management and
the
Board making various judgements and estimates that can affect
the amounts recognised in the financial statements.
2.3 Non-controlling interest in SGM (continued)
a) Statement of comprehensive income and statement of financial position impact
Half year Half year Year ended
ended 30 ended 31 December
June 30 June
2018 2018
2019 (Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
------------------------------------------------- ----------------- ------------ ------------
Statement of comprehensive income
Profit for the year after tax attributable
to the non-controlling interest in SGM(1) 39,915 39,266 77,804
-------------------------------------------------- ---------------- ------------ ------------
Statement of financial position
Total equity attributable to the non-controlling
interest in SGM(1) (opening) (270) (1,683) (1,683)
Profit for the year after tax attributable
to the non-controlling interest in SGM(1) 39,915 39,266 77,804
Dividend paid - non-controlling interest
in SGM (39,375) (39,266) (76,391)
-------------------------------------------------- ---------------- ------------ ------------
Total equity attributable to the non-controlling
interest in SGM(1) (closing) 270 (1,683) (270)
-------------------------------------------------- ---------------- ------------ ------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively. From 1 July 2018 this changed to a 55:45
split for the next two-year period until 30 June 2020, after which
all net production surpluses will be split 50:50.
Any variation between payments made during the year (which are
based on the Company's estimates) and the SGM audited financial
statements, may result in a balance due and payable to EMRA or
advances to be offset against future distributions. This will be
reflected as an amount attributable to the NCI in SGM on the
statement of financial position and statement of changes in
equity.
b) Statement of cash flow impact
Half year Half year Year ended
ended 30 ended 31 December
June 30 June
2018 2018
2019 (Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
----------------------------------------- ---------------- ------------ ------------
Statement of cash flows
Dividend paid - non-controlling interest
in SGM(1) (39,375) (39,266) (76,391)
----------------------------------------- ---------------- ------------ ------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively. From 1 July 2018 this changed to a 55:45
split for the next two-year period until 30 June 2020, after which
all net production surpluses will be split 50:50.
EMRA and PGM benefit from advance distributions of profit share
which are made on a weekly or fortnightly basis and proportionately
in accordance with the terms of the CA. Future distributions will
take into account ongoing cash flows, historical costs that are
still to be recovered and any future capital expenditure. All
profit share payments will be reconciled against SGM's audited June
financial statements for current and future periods.
2.4 Prepayments
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
----------------- ------------ ------------ -----------
Current
Prepayments 4,916 12,048 5,149
Fuel prepayments 1,610 (917) 1,547
----------------- ------------ ------------ -----------
6,526 11,131 6,696
----------------- ------------ ------------ -----------
Diesel Fuel Oil ("DFO") dispute
As more fully described in note 5.1 of the 2018 annual report
and financial statements, the Group is currently involved in court
action concerning the price at which it is supplied with DFO. Since
January 2012, the Group has had to pay for DFO at the international
price rather than the subsidised price which it believes it is
entitled to. It is seeking recovery of the funds advanced since
2012 through court action. However, management recognises the
practical difficulties associated with reclaiming funds from the
Egyptian government and for this reason has fully provided against
the prepayment of US$348.5 million to 30 June 2019, of which
US$21.5 million was provided for during 2019.
In order to allow a better understanding of the interim
financial statements presented within the interim results, and
specifically the Group's underlying business performance, the
effect of the Diesel Fuel Oil dispute is shown below.
2.4 Prepayments (continued)
Movement in fuel prepayments
Half year Half year Year ended
ended 30 ended 30 31 December
June June
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
--------------------------------------- ------------ ------------ ------------
Balance at the beginning of the period 1,547 2,247 2,247
Fuel prepayment recognised 21,533 24,043 49,711
Less: Provision charged to:
Mine production costs (19,549) (23,550) (45,017)
Property, plant and equipment (2,232) (3,152) (5,175)
Inventories 311 (505) (219)
Balance at the end of the period 1,610 (917) 1,547
--------------------------------------- ------------ ------------ ------------
Cumulative fuel prepayment and provision recognised
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
------------------------------ ------------ ------------ -----------
Fuel prepayment recognised 348,499 301,297 326,967
Less: Provision charged to:
Mine production costs (321,596) (280,580) (302,047)
Property, plant and equipment (24,287) (20,032) (22,055)
Inventories (1,006) (1,603) (1,317)
------------------------------ ------------ ------------ -----------
This has resulted in a net charge of US$14.0 million in the
profit and loss for the six months ended 30 June 2019.
Half year ended 30 June Half year ended 30 June
2019 2018
---------------------------------------- ----------------------------------------
Before Before
Adjustment Adjustment Total Adjustment Adjustment Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
Expenses
Cost of sales
Mine production costs (154,211) (19,549) (173,760) (133,189) (23,550) (156,739)
Movement in inventory 18,621 5,507 24,128 17,364 (1,056) 16,308
Depreciation and amortisation (60,414) - (60,414) (51,448) - (51,448)
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
(196,004) (14,042) (210,046) (167,273) (24,606) (191,879)
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
Year ended 31 December
2018
------------------------------------
Before
Adjustment Adjustment Total
(Audited) (Audited) (Audited)
US$'000 US$'000 US$'000
------------------------------ ----------- ---------- -----------
Expenses
Cost of sales
Mine production costs (283,073) (45,017) (328,090)
Movement in inventory 35,821 (4,525) 31,296
Depreciation and amortisation (109,744) - (109,744)
------------------------------ ----------- ---------- -----------
(356,996) (49,542) (406,538)
------------------------------ ----------- ---------- -----------
2.5 Property, plant and equipment
Mine Capital
Half year ended 30 June Office Plant Mining development work
2019 (Unaudited) and in
equipment Buildings equipment equipment properties progress Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Cost
Balance at 31 December
2018 7,307 2,347 604,158 309,788 517,629 23,482 1,464,711
Transfers from capital
work in progress 287 2 2,634 2,672 14,283 (19,878) -
Additions 78 1,228 414 7,533 - 30,880 40,133
Disposals - (67) - (22) - - (89)
Balance at 30 June 2019 7,672 3,510 607,206 319,971 531,912 34,484 1,504,755
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Accumulated depreciation
and amortisation
Balance at 31 December
2018 (6,384) (695) (185,075) (205,103) (231,467) - (628,724)
Depreciation and amortisation (315) (200) (14,236) (22,388) (23,473) - (60,612)
Disposals - 1 - 22 - - 23
Balance at 30 June 2019 (6,699) (894) (199,311) (227,469) (254,940) - (689,313)
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Year ended 31 December
2018 (Audited)
Cost
Balance at 31 December
2017 6,796 2,051 591,101 274,976 457,113 37,998 1,370,035
Additions 72 - 126 9,496 - 73,760 83,454
Increase in rehabilitation
asset - - - - 1,854 - 1,854
Transfers from capital
work in progress 440 296 13,080 25,476 48,984 (88,276) -
Transfers from exploration
and evaluation asset - - - - 9,678 - 9,678
Disposals (1) - (149) (160) - - (310)
Balance at 31 December
2018 7,307 2,347 604,158 309,788 517,629 23,482 1,464,711
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Accumulated depreciation
and amortisation
Balance at 31 December
2017 (5,890) (548) (156,921) (163,902) (191,675) - (518,936)
Depreciation and amortisation (495) (147) (28,252) (41,361) (39,792) - (110,047)
Disposals 1 - 98 160 - - 259
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Balance at 31 December
2018 (6,384) (695) (185,075) (205,103) (231,467) - (628,724)
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Net book value
As at 31 December 2018 923 1,652 419,083 104,685 286,162 23,482 835,987
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
As at 30 June 2019 973 2,616 407,895 92,502 276,972 34,484 815,442
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
In 2018 the production downgrade and corresponding devaluation
of the share price of the Company was considered and it was
concluded that this was an impairment indicator. An impairment
review was performed in 2018, refer to note 1.1.2 of the 2018
annual report, however no impairment resulted from the review. No
impairment review has been performed in 2019 as no impairment
indicators were identified in the period.
Assets that have been cost recovered under the terms of the CA
in Egypt are included on the statement of financial position under
property, plant and equipment due to the Company having right of
use of these assets. These rights will expire together with the
CA.
2.6 Financial assets at fair value through profit and loss
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
------------------------------------------ ------------ ------------ -----------
Balance at the beginning of the period - - -
Additions 9,364
Gain on fair value of investment - profit
or loss 183
Loss on foreign exchange movement (105) - -
Balance at the end of the period 9,442 - -
------------------------------------------ ------------ ------------ -----------
The financial assets at fair value through profit and loss at
period end relates to an equity interest in a listed public
company.
2.7 Provisions
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
------------------------------------------- ------------ ------------ -----------
Current
Employee benefits(1) 1,478 422 1,855
Fuel - 7,050 -
Egypt health insurance(2) 1,549 - 805
Other current provisions(3) 5,532 529 5,495
8,559 8,001 8,155
------------------------------------------- ------------ ------------ -----------
Non--current
Restoration and rehabilitation(4) 13,797 11,302 13,591
Other non-current provisions 157 346 157
------------------------------------------- ------------ ------------ -----------
13,954 11,648 13,748
------------------------------------------- ------------ ------------ -----------
Movement in restoration and rehabilitation
provision
Balance at beginning of the year 13,591 10,868 10,868
Additional provision recognised - - 1,854
Interest expense - unwinding of discount 206 434 869
------------------------------------------- ------------ ------------ -----------
Balance at end of the period 13,797 11,302 13,591
------------------------------------------- ------------ ------------ -----------
(1) Employee benefits relate to annual, sick and long service leave entitlements and bonuses.
(2) Egypt health insurance relates to Law no. 2 of the 2018
Comprehensive Health Insurance Law that requires 0.25% of revenues
and an additional 4% of social insurance contributions to be paid
by the Egyptian company effective from 1 July 2018.
(3) Provision held for in-country disputes including customs, rebates and withholding taxes.
(4) The provision for restoration and rehabilitation represents
the present value of the Directors' best estimate of the future
outflow of economic benefits that will be required to decommission
infrastructure, restore affected areas by ripping and grading of
compacted surfaces to blend with the surroundings, closure of
project components to ensure stability and safety at the Group's
sites. This has all been discounted by 3.02% (2018: 3.02%) and
inflation applied at 2.49% (2018: 2.49%).
2.8 Share option reserve
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
--------------------------------------- ------------ ------------ -----------
Share option reserve
Balance at beginning of the period 5,688 4,323 4,323
Share--based payments expense 1,346 1,712 3,520
Share--based payments expense reversal (2,632) - (298)
Transfer to issued capital (1,516) (1,857) (1,857)
--------------------------------------- ------------ ------------ -----------
Balance at the end of the period 2,886 4,178 5,688
--------------------------------------- ------------ ------------ -----------
The share option reserve arises on the grant of share options to
employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the
options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and
warrants are forfeited and when vesting conditions are not met on
the vesting of awards.
2.9 Cash flow information
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
-------------------------- ------------ ------------ -----------
Cash and cash equivalents 276,858 282,764 282,627
-------------------------- ------------ ------------ -----------
(b) Reconciliation of profit for the year to cash flows from
operating activities
Half year ended Half year Year ended
30 June ended 31 December
30 June
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
---------------------------------------- --------------- ------------ ------------
Profit for the period before tax 59,627 80,376 152,702
Adjusted for:
Depreciation/amortisation of property,
plant and equipment 60,611 51,598 110,047
Inventory written off 417 297 451
Inventory obsolescence provision (1,366) (1,217) (1,804)
Foreign exchange gain (2,844) (2,934) (6,373)
Share--based payments (income)/expense (1,286) 1,712 3,222
Finance income (3,207) (2,246) (4,815)
(Gain)/loss on disposal of property,
plant and equipment (145) - 31
Changes in working capital during
the period:
Decrease in trade and other receivables 15,142 22,138 1,023
Increase in inventories (18,905) (7,410) (22,959)
Decrease/(increase) in prepayments 167 (1,334) 3,105
Increase/(decrease) in trade and
other payables 7,603 (17,220) (12,340)
Increase/(decrease) in provisions 610 (599) 1,501
---------------------------------------- --------------- ------------ ------------
Cash flows generated from operating
activities 116,424 123,161 223,791
---------------------------------------- --------------- ------------ ------------
(c) Non--cash financing and investing activities
During the period there have been no non--cash financing and
investing activities.
3 Unrecognised items
3.1 Contingent liabilities
Fuel supply and Concession Agreement court cases
There have been no significant changes in the period ended 30
June 2019, for further information and disclosure on these matters
please refer to the 31 December 2018 Annual Report.
3.2 Subsequent events
The Directors declared an interim dividend of 4.0 US cents per
share on Centamin plc ordinary shares (totalling approximately
US$46.2 million). The interim dividend for the half year period
ended 30 June 2019 will be paid on 27 September 2019 to
shareholders on the register on the Record Date of 30 August
2019.
Other than the above, there were no other significant events
occurring after the reporting date requiring disclosure in the
financial statements.
4 Other information
4.1 Contributions to Egypt
Gold sales agreement
On 20 December 2016, SGM entered into a contract with the
Central Bank of Egypt ("CBE"). The agreement provides that the
parties may elect, on a monthly basis, for the CBE to supply SGM
with its local Egyptian currency requirements for that month (to a
maximum value of EGP50 million). In return, SGM facilitates the
purchase of refined gold bullion for the CBE from SGM's refiner,
Asahi Refining. This transaction has been entered as SGM requires
local currency for its operations in Egypt (it receives its revenue
for gold sales in US dollars). Twenty transactions have been
entered into at the date of this report, six of which in the six
months ended 30 June 2019, pursuant to this agreement, and the
values related thereto are as follows:
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
--------------- ------------ ------------ -----------
Gold purchased 17,353 17,028 33,821
Refining costs 10 10 20
Freight costs 26 22 48
--------------- ------------ ------------ -----------
17,389 17,060 33,889
--------------- ------------ ------------ -----------
30 June 30 June 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Oz Oz Oz
--------------- ------------ ------------ -----------
Gold purchased 13,343 12,892 26,621
--------------- ------------ ------------ -----------
At 30 June 2019 the net receivable in EGP owing from the Central
Bank of Egypt is US$89,623 (30 June 2018: US$16,169 and 31 December
2018: US$40,618).
4.2 Earnings per share ("EPS") attributable to owners of the
parent
Half year Half year Year ended
ended ended 31 December
30 June 30 June
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US cents US cents US cents
per share per share per share
--------------------------- ------------ ------------ ------------
Basic earnings per share 1.707 3.572 6.497
Diluted earnings per share 1.698 3.548 6.444
--------------------------- ------------ ------------ ------------
Basic earnings per share attributable to owners of the
parent
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
Half year Half year Year ended
ended ended 31 December
30 June 30 June
2019 2018 2018
(Unaudited) (unaudited) (Audited)
US$'000 US$'000 US$'000
------------------------------------------ ------------ ------------ ------------
Earnings used in the calculation of basic
EPS 19,667 41,100 74,845
------------------------------------------ ------------ ------------ ------------
Half year Half year Year ended
ended ended 31 December
30 June 30 June
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Number Number Number
------------------------------------------- ------------- ------------- -------------
Weighted average number of ordinary shares
for the purpose of basic EPS 1,152,129,402 1,150,661,102 1,151,925,674
------------------------------------------- ------------- ------------- -------------
Diluted earnings per share attributable to owners of the
parent
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
Half year Half year Year ended
ended ended 31 December
30 June 30 June
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
-------------------------------------------- ------------ ------------ ------------
Earnings used in the calculation of diluted
EPS 19,667 41,100 74,845
-------------------------------------------- ------------ ------------ ------------
Half year Half year Year ended
ended ended 31 December
30 June 30 June
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
Number Number Number
------------------------------------------------ ------------- ------------- -------------
Weighted average number of ordinary shares
for the purpose of basic EPS 1,152,129,402 1,150,661,102 1,151,925,674
Shares deemed to be issued for no consideration
in respect of employee options 6,246,287 7,725,168 9,589,301
------------------------------------------------ ------------- ------------- -------------
Weighted average number of ordinary shares
used in the calculation of diluted EPS 1,158,375,689 1,158,386,270 1,161,514,975
------------------------------------------------ ------------- ------------- -------------
No potential ordinary shares were excluded from the calculation
of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
4.3 Going concern
These financial statements for the period ended 30 June 2019
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations.
As discussed in Note 5.1 of the 2018 annual financial
statements, during 2012 the operation of the mine was affected by
two legal actions. The first of these followed from a decision
taken by Egyptian General Petroleum Corporation ("EGPC") to charge
international, not local (subsidised) prices for the supply of
Diesel Fuel Oil ("DFO"), and the second arose as a result of a
judgment of the Administrative Court in relation to, amongst other
matters, the Company's 160km(2) exploitation lease. In relation to
the first decision, the Company remains confident that in the event
that it is required to continue to pay international prices, the
mine at Sukari will remain commercially viable. Similarly, the
Company remains confident that the appeal it has lodged in relation
to the decision of the Administrative Court will ultimately be
successful, although final resolution of it may take some time. On
20 March 2013 the Supreme Administrative Court upheld the Company's
application to suspend the decision until the merits of the
Company's appeal were considered and ruled on, thus providing
assurance that normal operations will be able to continue during
this process.
In the unlikely event that the Group is unsuccessful in either
or both of its legal actions, and that the operating activities are
restricted to a reduced area, it is the directors' belief that the
Group will be able to continue as going concern.
The directors have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for
twelve months from the date of approval of this report. Thus they
continue to adopt the going concern basis of accounting in
preparing these interim condensed consolidated financial
statements.
4.4 Summary of significant accounting policies
Basis of preparation
These unaudited interim condensed consolidated financial
statements have been prepared in accordance with IAS 34 "Interim
Financial Reporting" (IAS 34) as adopted by the European Union and
the requirements of the Disclosure and Transparency Rule sourcebook
(DTR) of the Financial Conduct Authority (FCA) in the United
Kingdom as applicable to interim financial reporting. These
unaudited interim condensed consolidated financial statements are
not affected by seasonality.
The unaudited interim condensed consolidated financial
statements represent a 'condensed set of financial statements' as
referred to in the DTR issued by the FCA. Accordingly, they do not
include all of the information required for a full annual financial
report and are to be read in conjunction with the Group's financial
statements for the year ended 31 December 2018, which were prepared
in accordance with International Financial Reporting Standards
("IFRS") as adopted for use by the European Union. The financial
statements for the year ended 31 December 2018 have been filed with
the Jersey Financial Services Commission. The financial information
contained in this report does not constitute statutory accounts
under the Companies (Jersey) Law 1991, as amended. The financial
information for the year ended 31 December 2018 is based on the
statutory accounts for the year ended 31 December 2018. Readers are
referred to the auditor's report to the Group financial statements
as at 31 December 2018 (available at www.centamin.com).
The accounting policies applied in these interim financial
statements are consistent with those used in the annual
consolidated financial statements for the year ended 31 December
2018 except for the adoption of new standards and endorsed by the
EU which apply for the first time in 2019 as referred to in the 31
December 2018 Annual Report. The new standard, IFRS 16, has been
applied by the Group from its mandatory adoption date of 1 January
2019, although its impact was not material. The Group has not early
adopted any amendments, standards or interpretations that have been
issued but are not yet effective.
The preparation of these interim condensed consolidated
financial statements requires the use of certain significant
accounting estimates and judgements by management in applying the
Group's accounting policies. There have been no changes to the
areas involving significant judgement and estimates that have been
set out in Note 1 of the Group's annual audited consolidated
financial statements for the year ended 31 December 2018.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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