6th Mar 2008 07:04
Kazakhmys PLC06 March 2008 Part 2 Balance sheet information At 31 December ------------------------- 2007 -------------------------------- $ million Kazakhmys MKM Kazakhmys Kazakhmys Total Copper Gold Petroleum ------------------------ --------- -------- --------- --------- ------- AssetsTangible and intangible 2,124.9 171.8 295.0 482.5 3,074.2assetsNon-current investments 9.9 2.0 0.3 - 12.2Operating assets 1 1,038.7 386.1 17.4 0.5 1,442.7Current investments 57.3 - - - 57.3Cash and cash equivalents 216.9 6.7 13.6 20.9 258.1------------------------ --------- ------- --------- --------- --------Segment assets 3,447.7 566.6 326.3 503.9 4,844.5------------------------ --------- ------- --------- --------- --------Unallocated assetsNon-current assets - 4,391.5CorporateDividends receivable - 142.6CorporateCurrent assets - 7.1CorporateCash and cash equivalents - 180.4CorporateElimination (2,212.5)------------------------ --------- ------- --------- --------- --------Total assets 7,353.6------------------------ --------- ------- --------- --------- --------LiabilitiesEmployee benefits and 112.3 8.8 1.6 26.4 149.1provisionsOperating liabilities (2) 304.2 40.9 2.2 0.9 348.2------------------------ --------- ------- --------- --------- --------Segment liabilities 416.5 49.7 3.8 27.3 497.3------------------------ --------- ------- --------- --------- --------Unallocated liabilitiesOther payables - 109.8CorporateDeferred tax liability - 283.0GroupBorrowings - Group 197.5Income tax payable - 65.3GroupElimination (232.5)------------------------ --------- ------- --------- --------- --------Total liabilities 920.4------------------------ --------- ------- --------- --------- -------- 1 Operating assets include inventories, trade and other receivables andprepayments and other current assets. 2 Operating liabilities include trade and other payables and dividends payableby subsidiaries to the Company. At 31 December 2006 --------- ---------$ million Kazakhmys MKM Total----------------------------------- Copper --------- --------- --------- AssetsTangible and intangible assets 1,816.1 166.1 1,982.2Non-current investments 3.5 2.7 6.2Operating assets 1 713.4 395.2 1,108.6Current investments 1,237.2 - 1,237.2Cash and cash equivalents 405.0 30.0 435.0----------------------------------- --------- --------- ---------Segment assets 4,175.2 594.0 4,769.2----------------------------------- --------- --------- ---------Unallocated assetsNon-current assets - Corporate 1,156.3Dividends receivable - Corporate 304.5Current assets - Corporate 6.0Cash and cash equivalents - Corporate 350.4Elimination (1,465.9)----------------------------------- --------- --------- ---------Total assets 5,120.5---------------------------------- --------- --------- ---------LiabilitiesEmployee benefits and provisions 85.0 7.0 92.0Operating liabilities 2 599.5 37.9 637.4---------------------------------- --------- --------- ---------Segment liabilities 684.5 44.9 729.4---------------------------------- --------- --------- ---------Unallocated liabilitiesOther payables - Corporate 12.0Deferred tax liability - Group 347.7Borrowings - Group 277.3Income tax payable - Group 176.9Elimination (314.6)---------------------------------- --------- --------- ---------Total liabilities 1,228.7---------------------------------- --------- --------- --------- 1 Operating assets include inventories, trade and other receivables andprepayments and other current assets. 2 Operating liabilities include trade and other payables and dividends payableby subsidiaries to the Company. Earnings before interest, tax, depreciation and amortisation (EBITDA) excludingspecial items 1 by business segments 2007------------------ ------ --------- --------- --------- -------$ million Kazakhmys MKM Kazakhmys Kazakhmys Corporate Total Copper Gold etroleum unallocated 2 ------------------ --------- ------ --------- --------- --------- ------- Profit/(loss) 1,976.9 10.3 0.8 (1.4) 61.8 2,048.4before taxation andfinance items Special items: Add: write off of 25.1 - - 1.1 - 26.2 property, plant and equipment ------------------ --------- ------ --------- --------- --------- ------- Less: gain on (1.8) - - - - (1.8) disposal of property, plant and equipment ------------------ --------- ------ --------- --------- --------- -------Profit/(loss)before taxation and 2,000.2 10.3 0.8 (0.3) 61.8 2,072.8finance itemsexcluding specialitems Add: depreciation 230.7 23.3 5.6 - 1.1 260.7 and depletion Add: amortisation 2.5 0.2 0.1 - - 2.8------------------ --------- ------ --------- --------- --------- -------EBITDA excluding 2,233.4 33.8 6.5 (0.3) 62.9 2,336.3special items ------------------ --------- ------ --------- --------- --------- ------- (1) EBITDA excluding special items is defined as profit before interest, taxation,depreciation and amortisation, as adjusted for special items. Special items arethose items which are non-recurring or variable in nature and which do notimpact the underlying trading performance of the business. (2) Includes dividend income of $93.9 million from ENRC PLC. 2006 --------------------------- Kazakhmys MKM Corporate Total------------------------------- Copper unallocated $ million --------- ------- ------- ------- Profit/(loss) before taxation, finance 2,082.1 21.6 (32.1) 2,071.6items and negative goodwillSpecial items:Add: write off of property, plant and 1.4 - - 1.4equipmentAdd: loss on disposal of property, 8.9 0.1 0.6 9.6plant and equipment --------- ------- --------- ---------------------------------------Profit/(loss) before taxation, finance 2,092.4 21.7 (31.5) 2,082.6items and negative goodwill excludingspecial itemsAdd: depreciation and depletion 200.8 21.8 0.4 223.0Add: amortisation 2.4 0.4 - 2.8------------------------------- --------- ------- --------- --------EBITDA excluding special items 2,295.6 43.9 (31.1) 2,308.4------------------------------- --------- ------- --------- -------- Net liquid funds/(debt) by business segments At 2007 -------- ---------- ----------- ---------- --------$ million Kazakhmys MKM Kazakhmys Kazakhmys Corporate Total Copper Gold Petroleum unallocated ---------- ---------- -------- ---------- ----------- ---------- -------- Cash and cash 216.9 6.7 13.6 20.9 180.4 438.5equivalents Current 57.3 - - - - 57.3investments Borrowings - (195.9) (1.6) - (1,265.0) (1,462.5)---------- ---------- -------- ---------- ----------- ---------- --------Inter-segment - - - - 1,265.0 1,265.0borrowings 1 ---------- ---------- -------- ---------- ----------- ---------- --------Net liquid 274.2 (189.2) 12.0 20.9 180.4 298.3funds/(debt) ---------- ---------- -------- ---------- ----------- ---------- -------- 1 Borrowings of Corporate unallocated include amounts borrowed from theKazakhmys Copper segment. At 2006 -------- --------- -------$ million Kazakhmys MKM Corporate Total------------------------------ Copper unallocated -------- -------- -------- --------- Cash and cash equivalents 405.0 30.0 350.4 785.4Current investments 1,237.2 - - 1,237.2Borrowings - (359.9) - (359.9) (359.9)Inter-segment borrowings 1 - 82.6 - 82.6------------------------------ --------- --------- -------- --------Net liquid funds/(debt) 1,642.2 (247.3) 350.4 1,745.3------------------------------ --------- --------- -------- -------- 1 Borrowings of MKM include amounts borrowed from the Kazakhmys Copper segment. Capital expenditure, depreciation, write offs and impairment losses by businesssegments 2007 ---------- ------------------------------------------------ -------- ---------- ----------- ---------- --------$ million Kazakhmys MKM Kazakhmys Kazakhmys Corporate Total Copper Gold Petroleum unallocated ---------- ---------- -------- ---------- ----------- ---------- -------- Property,plant andequipment 431.6 11.0 2.1 7.2 3.2 455.1Mining 27.6 - 2.0 - - 29.6assets ---------- -------- ---------- ----------- ---------- ------------------Intangibleassets 10.2 - 3.6 476.4 3.5 493.7 ---------- ---------- -------- ---------- ----------- ---------- --------Capitalexpenditure 469.4 11.0 7.7 483.6 6.7 978.4 ---------- ---------- -------- ---------- ----------- ---------- --------Depreciationanddepletion 230.7 23.3 5.6 - 1.1 260.7Amortisation 2.5 0.2 0.1 - - 2.8---------- ---------- -------- ---------- ----------- ---------- --------Depreciation,depletion andamortisation 233.2 23.5 5.7 - 1.1 263.5 ---------- ---------- -------- ---------- ----------- ---------- --------Write offs andimpairmentlosses 28.3 0.7 - 1.1 - 30.1 ---------- ---------- -------- ---------- ----------- ---------- -------- 2006 ------- --------- -------$ million Kazakhmys MKM Corporate Total------------------------------- Copper unallocated --------- ------ --------- ------- Property, plant and equipment 271.5 4.4 5.2 281.1Mining assets 63.6 - - 63.6Intangible assets 8.8 0.2 - 9.0------------------------------- --------- ------- --------- -------Capital expenditure 343.9 4.6 5.2 353.7------------------------------- --------- ------- --------- -------Depreciation and depletion 200.8 21.8 0.4 223.0Amortisation 2.4 0.4 - 2.8------------------------------- --------- ------- --------- -------Depreciation, depletion and 203.2 22.2 0.4 225.8amortisation --------- ------- --------- --------------------------------------Write offs and impairment losses 8.3 1.6 - 9.9------------------------------- --------- ------- --------- ------- (b) Segmental information in respect of revenues Revenues by product are as follows: $ million 2007 2006------------------------------------------ --------- ---------Kazakhmys CopperCopper cathodes 2,516.2 2,389.0Silver in granules 256.5 239.1Copper rods 250.6 196.1Zinc metal in concentrate 200.5 128.0Zinc metal 123.8 201.3Gold bullion 80.3 51.2Other by-products 86.4 38.1Other revenue 74.0 87.6------------------------------------------ --------- --------- 3,588.3 3,330.4------------------------------------------ --------- ---------MKMWire 763.2 925.8Sheet steel and steel strips 509.0 432.8Tubes and bars 318.8 272.9Metal trade 52.0 84.6------------------------------------------ --------- --------- 1,643.0 1,716.1------------------------------------------ --------- ---------Kazakhmys GoldGold dore 25.0 -Silver 0.3 ------------------------------------------- --------- --------- 25.3 ------------------------------------------- --------- ---------Total revenues 5,256.6 5,046.5------------------------------------------ --------- --------- (c) Provisional pricing Almost all copper sales agreements provide for provisional pricing of sales inthe month of sale with final pricing settlement based on the average LME copperprice for the month following the sale. For the year ended 31 December 2007 gains of $84.3 million (2006: $49.8million), relating to the difference between provisional pricing and finalpricing, have been included within revenues. At 31 December 2007, copper sales totalling 14,295 tonnes (2006: 4,262 tonnes)remained to be finally priced and were recorded at that date at an average priceof $7,359 per tonne (2006: $6,761 per tonne) based on provisional invoices. Theloss arising in January 2008 of $1.2 million (2006: loss of $4.8 million)relating to contracts provisionally priced in December 2007 will be recognisedin the financial statements for the year ended 31 December 2008. (d) Revenues by destination 2007 ------------------------------ $ million Europe China Other Total---------------------------- --------- --------- --------- --------- 3,137.5 1,460.3 658.8 5,256.6Sales to third parties---------------------------- --------- --------- --------- --------- 2006 ------------------------------ $ million Europe China Other Total---------------------------- --------- --------- --------- --------- 3,770.1 641.8 634.6 5,046.5Sales to third parties---------------------------- --------- --------- --------- --------- 5. Write offs and impairment losses $ million 2007 2006------------------------------------------ --------- ---------Write off of property, plant and equipment 26.2 1.4Provisions against/(release of provisions for) trade and 2.3 (8.3)other receivablesProvisions against prepayments and other current assets 1.6 0.1Release of impairment of investments - (1.9)Provisions against obsolete inventories - 18.6------------------------------------------ --------- --------- 30.1 9.9 ------------------------------------------ --------- --------- 6. Finance income and finance costs $ million 2007 2006------------------------------------------ --------- ---------Finance incomeInterest income 93.9 78.5Foreign exchange gains 166.2 188.3------------------------------------------ --------- ---------Total finance income 260.1 266.8------------------------------------------ --------- ---------Finance costsInterest expense (13.7) (8.0)Interest on employee obligations (3.4) (3.0)Unwinding of discount on provisions (7.1) (4.2)------------------------------------------ --------- ---------Finance costs before foreign exchange losses (24.2) (15.2)Foreign exchange losses (258.4) (161.9)------------------------------------------ --------- ---------Total finance costs (282.6) (177.1)------------------------------------------ --------- --------- 7. Income tax (a) Income tax expense Major components of income tax expense for the years presented are: $ million 2007 2006------------------------------------------ --------- ---------Current income taxCorporate income tax - current period (UK) 17.7 5.2Corporate income tax - current period (overseas) 696.3 653.5Corporate income tax - prior periods (27.8) 0.4Excess profits tax - current period 51.7 77.3Excess profits tax - prior periods (9.0) (49.4)------------------------------------------ --------- --------- 728.9 687.0------------------------------------------ --------- ---------Deferred income taxCorporate income tax - current period (115.0) 63.0Corporate income tax - prior periods (8.5) 17.1Excess profits tax - current period (6.2) (12.4)------------------------------------------ --------- --------- (129.7) 67.7------------------------------------------ --------- ---------Income tax expense 599.2 754.7------------------------------------------ --------- --------- The tax assessed on the profit for the year is lower than the standard rate ofcorporation tax in the tax jurisdictions in which the Group operates,principally due to a non-recurring release of a deferred tax liabilitysubsequent to a Group restructuring in Germany and the lowering of the tax ratein Germany thereby releasing a further deferred tax liability. A reconciliation of income tax expense applicable to accounting profit beforeincome tax at the statutory income tax rate to income tax expense at the Group'seffective income tax rate for the periods presented is as follows: $ million 2007 2006------------------------------------------ --------- ---------Profit before taxation 2,025.9 2,167.8At statutory income tax rate of 30% 607.8 650.3(Over)/underprovided in previous years - current income (27.8) 0.4tax(Over)/underprovided in previous years - deferred income (8.5) 17.1tax(Use of previously unrecognised)/unrecognised tax losses (30.8) 10.4Effect of domestic tax rates applicable to individual (1.2) 0.5Group entitiesChange in tax rates (10.9) -Unremitted overseas earnings - 91.8Non deductible expenses/(non taxable income):Non taxable income on zinc plant (26.2) (46.4)Recognition of negative goodwill - (2.0)Non deductible expenses 60.3 17.1Excess profits tax 36.5 15.5------------------------------------------ --------- ---------At effective income tax rate of 29.6% (2006: 34.8%) 599.2 754.7------------------------------------------ --------- --------- Corporate income tax is calculated at 30% of the assessable profit for theperiod for the Company and operating subsidiaries in Kazakhstan. The MKM taxrate is calculated at 37.34% (2006: 35.98%) and relates to German corporateincome tax and trade tax. Excess profits tax is levied on profitable subsoil contracts where thecumulative internal rate of return for the current year exceeds 20% in a givenperiod. The effective rate for excess profits tax for those subsoil contractsliable to this tax is 15% (2006: 13%). 8. Earnings per share (a) Basic and diluted EPS Basic EPS is calculated by dividing profit for the year attributable to equityshareholders of the Company by the weighted average number of ordinary shares of20 pence each outstanding during the year. The Company has no dilutive potentialordinary shares. The following reflects the income and share data used in the EPS computations: $ million 2007 2006------------------------------------------ --------- ---------Net profit attributable to equity shareholders of 1,415.7 1,399.7the Company --------- --------------------------------------------------- Number 2007 2006------------------------------------------ --------- ---------Number of sharesWeighted average number of ordinary shares of 20 466,073,506 467,474,200pence each for EPS calculation --------- ---------------------------------------------------EPS - basic and diluted ($) 3.04 2.99------------------------------------------ --------- --------- (b) EPS based on Underlying Profit The Group's Underlying Profit is the profit for the year after adding back itemswhich are non-recurring or variable in nature and which do not impact theunderlying trading performance of the business and their resultant tax andminority interest effects, as shown in the table below. EPS based on UnderlyingProfit is calculated by dividing Underlying Profit by the weighted averagenumber of ordinary shares of 20 pence each outstanding during the year. TheDirectors believe EPS based on Underlying Profit provides a more consistentmeasure for comparing the underlying trading performance of the Group. The following shows the reconciliation of Underlying Profit from the reportedprofit and the share data used in the computations for EPS based on UnderlyingProfit: $ million 2007 2006------------------------------------------ --------- ---------Net profit attributable to equity shareholders of 1,415.7 1,399.7the CompanySpecial items:Recognition of negative goodwill - (6.5)Write off of property, plant and equipment 26.2 1.4(Gain)/loss on disposal of property, plant and (1.8) 9.6equipmentTax effect of non-recurring items 0.3 (1.5)Release of deferred tax liability following Group (30.8) -restructuringMinority interest effect of non-recurring items (0.1) ------------------------------------------- --------- ---------Underlying Profit 1,409.5 1,402.7------------------------------------------ --------- --------- Number 2007 2006------------------------------------------ --------- ---------Weighted average number of ordinary shares of 20 466,073,506 467,474,200pence each for EPS basedon Underlying Profit calculation------------------------------------------ --------- ---------EPS based on Underlying Profit - basic and diluted 3.02 3.00($) --------- --------------------------------------------------------------------------------------------- --------- --------- 9. Dividends paid and proposed (a) Dividends paid The dividends declared and paid during the years ended 31 December 2007 and 2006are as follows: Per share Amount US cents $ million ------------------------------------------ --------- ---------Year ended 31 December 2007Final dividend in respect of year ended 31 December 25.7 120.12006Interim dividend in respect of year ended 31 December 13.6 64.02007Special dividend in respect of year ended 31 December 50.0 235.02007 --------- --------------------------------------------------- 89.3 419.1 ------------------------------------------ --------- ---------Year ended 31 December 2006Final dividend in respect of year ended 31 December 36.0 168.32005Interim dividend in respect of year ended 31 December 12.8 59.82006 --------- --------------------------------------------------- 48.8 228.1 ------------------------------------------ --------- --------- (i) Year ended 31 December 2007 On 14 May 2007, the Company paid the final dividend of $120.1 million in respectof the year ended 31 December 2006 to shareholders on the register as at 13April 2007. This final dividend was sourced by way of payment of the interimdividend in respect of the year ended 31 December 2006 by Kazakhmys LLC. On 5 October 2007, the Company paid an interim and special dividend of $299.0million in respect of the year ended 31 December 2007 to shareholders on theregister as at 14 September 2007. These dividends were sourced by way of paymentof the final dividend in respect of the year ended 31 December 2006 and aninterim dividend in respect of the year ended 31 December 2007 by Kazakhmys LLC. (ii) Year ended 31 December 2006 On 26 May 2006 the Company paid the final dividend of $168.3 million in respectof the year ended 31 December 2005 to shareholders on the register as at 28April 2006. This final dividend was sourced by way of payment of the interimdividend in respect of the year ended 31 December 2005 by Kazakhmys LLC. On 27 October 2006, the Company paid an interim dividend of $59.8 million inrespect of the year ended 31 December 2006 to shareholders on the register as at29 September 2006. This interim dividend was sourced by way of payment of thefinal dividend in respect of the year ended 31 December 2005 by Kazakhmys LLC. (b) Dividends declared after the balance sheet date Per share Amount US cents $ million ------------------------------------------ --------- ---------Proposed by the Directors on 5 March 2008 (notrecognised as a liability as at 31 December 2007):Final dividend in respect of year ended 31 December 27.4 126.12007 --------- --------------------------------------------------- In relation to the dividends proposed by the Directors on 5 March 2008, the UKpounds sterling per ordinary share amount is 13.8073 pence. 10. Share capital and reserves (a) Authorised and allotted share capital Number £ million $ million --------------------------------- --------- --------- ---------Authorised - At 31 December 2007 and 31December 2006Ordinary shares of 20 pence each 750,000,000 150.0 ---------------------------------- --------- --------- --------- Allotted and called up share capital--------------------------------- --------- --------- ---------At 31 December 2006 467,474,200 93.5 173.3Shares issued 2,559,665 0.5 1.1Purchase of Company's issued share (9,910,577) (2.0) (4.1)capital --------- --------- ------------------------------------------At 31 December 2007 460,123,288 92.0 170.3--------------------------------- --------- --------- --------- In September 2007 the Company issued 2,559,665 ordinary shares of 20 pence eachand paid $11.5 million in consideration for the transfer to it of 227,959,211participation shares in Kazakhmys LLC by minority shareholders. As a result ofthis, the Company's interest in Kazakhmys LLC increased from 99.08% as at 31December 2006 to 99.73% as at 31 December 2007. Commencing from 24 October 2007, the Company began a share buy-back programme.As at 31 December 2007, 9,910,577 ordinary shares had been bought-back andcancelled at a total cost of $270.3 million including expenses. (b) Capital reserves---------------------------- --------- --------- --------- ---------$ million Reserve fund Net unrealised Currency gains reserve translation reserve Total ---------------------------- --------- --------- --------- ---------At 1 January 2006 9.4 - 147.9 157.3Transfer to reserve fund 28.2 - - 28.2Currency translation - - 80.7 80.7differences --------- --------- --------- -------------------------------------At 31 December 2006 37.6 - 228.6 266.2Currency translation - - 223.1 223.1differencesUnrealised gain on available - 1,594.7 - 1,594.7for sale investments --------- --------- --------- -------------------------------------At 31 December 2007 37.6 1,594.7 451.7 2,084.0---------------------------- --------- --------- --------- --------- (i) Reserve fund In accordance with legislation of the Republic of Kazakhstan the reserve fundcomprises prescribed transfers from retained earnings amounting to 15% ofKazakhmys LLC's charter capital. During the year ended 31 December 2006, thereserve fund was increased by $28.2 million as a result of the contributions tothe charter capital of Kazakhmys LLC. (ii) Net unrealised gains reserve The net unrealised gains reserve is used to record the fair value movements ofavailable for sale investments. (iii) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differencesarising from the translation of the financial statements of subsidiaries whosefunctional currency is not the US dollar into the Group's presentation currency. (c) Capital contributions to charter capital of Kazakhmys LLC Between 31 January 2006 and 14 March 2006, the Company made contributions of$186.8 million to its subsidiary, Kazakhmys LLC. Minority shareholderscontributed a further $1.6 million to the charter capital. As the Company tookup the rights of minority shareholders who did not subscribe to the initialcapital contribution, the Company's interest in Kazakhmys LLC increased from98.68% at 1 January 2006 to 99.08% at 31 December 2006. 11. Reconciliation of profit before taxation to net cash inflow fromoperating activities $ million 2007 2006------------------------------------------ --------- ---------Profit before taxation 2,025.9 2,167.8Interest income (93.9) (78.5)Interest expense 13.7 8.0Depreciation and depletion 260.7 223.0Amortisation 2.8 2.8Recognition of negative goodwill - (6.5)Write off and impairment losses 30.1 9.9Unrealised foreign exchange loss/(gain) 45.5 (39.2)Gain on disposal of assets held for trading (0.5) - (Gain)/loss on disposal of property, plant and equipment (1.8) 9.6------------------------------------------ --------- ---------Operating cash flows before changes in working capital and 2,282.5 2,296.9provisionsIncrease in inventories (31.3) (339.2)Increase in prepayments and other current assets (100.2) (64.8)Increase in trade and other receivables (45.8) (11.1)Increase in employee benefits 2.5 2.3Increase in provisions 14.9 2.1(Decrease)/increase in trade and other payables (122.8) 156.1------------------------------------------ --------- ---------Cash flows from operations before income taxes and 1,999.8 2,042.3interestInterest paid (13.7) (6.8)Income taxes paid (849.6) (623.3)------------------------------------------ --------- ---------Net cash inflow from operating activities 1,136.5 1,412.2------------------------------------------ --------- --------- 12. Movement in net liquid funds------------- --------- --------- -------- -------- ---------- ---------- At Net Other At 1 January Business exchange non-cash 31 December movements 1$ million 2007 acquisition Cash flow translation 2007------------- --------- --------- -------- -------- ---------- ----------Cash and cashequivalents 785.4 11.6 (396.9) 38.4 - 438.5Current 1,237.2 - (1,183.9) 45.0 (41.0) 57.3investmentsBorrowings (277.3) (5.9) 112.4 - (26.7) (197.5)------------- --------- --------- -------- -------- ---------- ----------Net liquid 1,745.3 5.7 (1,468.4) 83.4 (67.7) 298.3funds --------- --------- -------- -------- ---------- ----------------------- --------------------- -------- -------- -------- ---------- ---------- At Net Other At 1 January exchange non-cash 31 December$ million 2006 Cash flow translation movements 1 2006--------------------- -------- -------- -------- ---------- ----------Cash and cash 522.0 287.7 (24.3) - 785.4equivalentsCurrent investments 356.5 834.5 12.8 33.4 1,237.2Borrowings (48.8) (208.2) (13.8) (6.5) (277.3)Finance leases (0.2) 0.2 - - ---------------------- -------- -------- -------- ---------- ----------Net liquid funds 829.5 914.2 (25.3) 26.9 1,745.3--------------------- -------- -------- -------- ---------- ---------- (1) Other non-cash movements comprise foreign exchange losses/gainsincurred by Group entities and recognised in the consolidated income statement. 13. Related party disclosures Option agreement with Chairman Following approval of the transaction from the independent shareholders on 19October 2007, and receipt of regulatory approval from the Government, the Groupexercised the call option over Vladimir Kim's interest in Eurasian NaturalResources Corporation PLC (ENRC) for a total consideration of $806.3 million on26 October 2007. This represented 100% of the initial investment of $751 millionplus a 10% margin (reflecting the risk of the initial investment) and the actualfinancing and transaction costs incurred by him less any dividends paid to himas a result of holding the stake. 14. Events after the balance sheet date (a) Share buy-back programme At the end of January 2008, the Company completed its share buy-back programmeof up to $400 million, which commenced on 24 October 2007. The total number ofordinary shares purchased and cancelled was 15,079,577. At an average price of£12.73 per share, this equated to a total cost of $390.1 million, includingexpenses. The average closing price and the value weighted average price overthe same period was £13.21 per share and £13.08 per share, respectively. Theissued capital of the Company, after completion of the buy-back programme, is454,954,288 ordinary shares. (b) Acquisition of the Ekibastuz coal-fired power plant and the MaikubenWest coal mine On 5 February 2008 the Company announced that it had signed an agreement withAES Corporation to acquire the Ekibastuz coal-fired power plant and the MaikubenWest coal mine. Completion is subject to certain conditions, including obtainingthe necessary regulatory approvals from the Government. The total cost of up to $1.5 billion includes an initial cash consideration of$1.1 billion and a deferred cash consideration and other payments of up to $381million, payable under earnout provisions. Completion of the acquisition isexpected to occur by mid 2008. (c) Pre-export finance debt facility On 29 February 2008 the Company signed a five year pre-export finance debtfacility of $2.1 billion with a syndicate of banks to be used for generalcorporate purposes, including the acquisition of the Ekibastuz power plant. (d) Post year-end dividend The Directors recommend a final ordinary dividend in respect of the year ended31 December 2007 of 27.4 US cents per share. Subject to approval of shareholdersat the Annual General Meeting to be held on 30 April 2008, this dividend shallbe paid on 8 May 2008. Production and sales figures SUMMARY OF SIGNIFICANT PRODUCTION AND SALES FIGURES kt (unless otherwise stated) 2007 2006--------------------------------------- ---------- ----------Kazakhmys CopperOre mined 33,967 39,240Copper content in ore mined (%) 1.22 1.17Copper cathode production:From own concentrate 341 368From purchased concentrate 39 37--------------------------------------- ---------- ----------Total copper cathodes produced (excluding tolling) 380 405Tolling 1 2--------------------------------------- ---------- ----------Total copper cathodes produced (including tolling) 381 407--------------------------------------- ---------- ----------Total copper cathodes and copper rods sold 386 368--------------------------------------- ---------- ----------MKMWire sales 155 167Flat sales 66 63Tubes and bars sales 44 43--------------------------------------- ---------- ----------Total MKM sales 265 273--------------------------------------- ---------- ----------Kazakhmys Gold 1Ore extraction 1,206 -Gold ore grade (g/t) 1.52 ---------------------------------------- ---------- ----------Total gold dore produced (koz) 32.5 ---------------------------------------- ---------- ----------Total gold dore sold (koz) 34.1 ---------------------------------------- ---------- ---------- 1 Kazakhmys Gold was acquired on 5 July 2007 KAZAKHMYS COPPER - MINING METAL MINING Ore mined Copper Zinc Gold Silver ----------- ----------- ----------- ----------- ----------- 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 kt kt % % % % g/t g/t g/t g/t ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Zhezkazgan ComplexNorth 2,375 3,143 0.65 0.66 - - - - 8.25 7.36South 5,220 6,818 0.69 0.72 - - - - 16.86 14.08Stepnoy 2,849 3,200 0.80 0.79 - - - - 11.81 16.58East 5,615 5,502 0.82 0.88 - - - - 16.82 19.29West 2,054 2,585 0.37 0.41 - - - - 11.11 14.26Annensky 3,360 4,225 1.03 1.10 - - - - 21.86 23.75Zhomart 2,882 2,203 1.27 1.16 - - - - 8.15 5.78------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Total Zhezkazgan Complex 24,355 27,676 0.82 0.82 - - - - 14.59 15.47------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Balkhash ComplexKounrad 403 2,267 0.30 0.35 - - - - 0.86 1.81Shatyrkul 351 441 2.05 2.03 - - 0.30 0.31 1.71 2.59Sayak I and III 1,372 1,663 1.02 1.11 - - 0.34 0.27 5.22 6.12------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Total Balkhash Complex 2,126 4,371 1.05 0.81 - - 0.33(1) 0.28(1) 3.82 3.53------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------East RegionOrlovsky 1,231 1,542 5.24 4.69 4.60 3.72 0.59 0.58 55.90 52.35Belousovsky 163 246 0.85 1.00 2.87 3.52 0.46 0.50 47.89 52.60Irtyshsky 390 449 1.39 1.26 3.24 2.80 0.37 0.31 53.66 44.10Nikolayevsky 532 578 1.75 1.47 3.07 2.48 0.71 0.26 38.60 24.50Yubileyno-Snegirikhinsky 429 344 3.31 4.20 3.27 3.05 0.70 0.57 49.23 37.41Artemyevsky 1,395 1,282 1.65 1.74 5.19 6.91 1.28 1.66 95.99 143.23------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Total East Region 4,140 4,441 2.85 2.83 4.27 4.32 0.82 0.82 65.97 72.98------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Karaganda RegionAbyz - 210 - 1.67 - 3.47 - 3.67 - 47.89Akbastau 40 - 3.91 - 2.84 - 1.80 - 33.43 -Nurkazgan 1,842 1,670 1.11 1.17 - - 0.32 0.31 2.77 3.71Kosmurun 1,464 872 3.55 5.53 2.77 - 2.46 1.87 36.72 31.97------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Total Karaganda Region 3,346 2,752 2.21 2.59 2.77(2) 3.47(4) 1.27 1.06 17.99 16.04------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------Total Kazakhmys Copper 33,967 39,240 1.22 1.17 3.87(3) 4.28(5) 0.96(6) 0.77(6) 20.52 20.69 ------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------(1) Production only from Shatyrkul, and Sayak I and III mines in Balkhash Complex.(2) Production only from Kosmurun and Akbastau mines.(3) Production only from East Region, Kosmurun and Akbastau mines of Karaganda Region.(4) Production only from Abyz mine.(5) Production only from East Region and Abyz mine of Karaganda Region.(6) Production only from Balkhash Complex (excluding Kounrad mine), East Region and Karaganda Region (excluding Akbastau mine). COAL MINING Coal mined Waste stripped Strip ratio --------------- --------------- --------------- 2007 2006 2007 2006 2007 2006 kt kt kbcm kbcm bcm:t bcm:t ----------------- -------- -------- -------- -------- -------- --------Molodezhny 6,650 6,400 11,730 9,330 1.76 1.46Kuu-Chekinsky 850 872 3,854 4,045 4.53 4.64----------------- -------- -------- -------- -------- -------- --------Total Kazakhmys 7,500 7,272 15,584 13,375 2.08 1.84Copper -------- -------- -------- -------- -------- ------------------------- KAZAKHMYS COPPER - PROCESSING Copper Copper in concentrate concentrate produced 2007 2006 2007 2006 kt kt % %-------------------------- --------- --------- --------- ---------Zhezkazgan Complex:Zhezkazgan No.1 195 189 39.4 40.0Zhezkazgan No.2 173 205 39.0 39.6Satpayev 123 147 27.8 28.8-------------------------- --------- --------- --------- ---------Total Zhezkazgan Complex 491 541 36.4 36.8-------------------------- --------- --------- --------- ---------Balkhash Complex:Balkhash 188 257 17.3 16.9-------------------------- --------- --------- --------- ---------Total Balkhash Complex 188 257 17.3 16.9-------------------------- --------- --------- --------- ---------East Region:Orlovsky 284 309 20.9 21.1Belousovsky 18 20 16.4 13.7Irtyshsky 29 26 15.3 13.4Nikolaevsky 175 179 16.7 15.1-------------------------- --------- --------- --------- ---------Total East Region 506 534 18.9 18.5-------------------------- --------- --------- --------- ---------Karaganda Region:Karagaily (Abyz) - 47 - 4.0Karagaily (Akbastau) 3 - 14.1 -Karagaily (Kosmurun) 229 184 14.4 17.3-------------------------- --------- --------- --------- ---------Total Karaganda Region 232 231 14.4 14.6-------------------------- --------- --------- --------- ---------Own copper concentrate processed by 29 33 26.4 24.6third party --------- --------- --------- -----------------------------------Total Kazakhmys Copper (own 1,446 1,596 24.1 24.0concentrate) --------- --------- --------- -----------------------------------Purchased concentrate 152 214 27.6 23.5-------------------------- --------- --------- --------- ---------Total Kazakhmys Copper (own and 1,598 1,810 24.4 24.0purchased concentrate) --------- --------- --------- ----------------------------------- KAZAKHMYS COPPER - ZINC AND PRECIOUS METALS PROCESSING Zinc Zinc in Silver 1 Gold 1 concentrate concentrate produced ------------- ------------- ------------- ------------- 2007 2006 2007 2006 2007 2006 2007 2006 kt kt % % g/t g/t g/t g/t ----------- -------- -------- -------- -------- -------- -------- -------- --------ZhezkazganComplexZhezkazganNo.1 - - - - 677.0 712.5 - -ZhezkazganNo.2 - - - - 660.6 733.5 - -Satpaev - - - - 600.7 636.7 - ------------ -------- -------- -------- -------- -------- -------- -------- --------Total - - - - 652.1 699.8 - -Zhezkazgan -------- -------- -------- -------- -------- -------- -------- --------Complex-----------BalkhashComplex:Balkhash - - - - 56.5 53.4 3.6 2.7----------- -------- -------- -------- -------- -------- -------- -------- --------Total - - - - 56.5 53.4 3.6 2.7Balkhash -------- -------- -------- -------- -------- -------- -------- --------Complex-----------East RegionOrlovsky 91 88 45.1 45.3 103.8 101.4 1.2 1.1Belousovsky 10 14 40.4 41.8 220.2 398.8 3.1 3.7Irtyshsky 17 13 35.9 39.0 561.2 467.8 2.4 2.2Nikolaevsky 84 55 41.8 39.5 200.7 157.1 2.7 1.6Artemyevsky 86 106 52.8 51.8 2,523.0(3) 2,369.5(3) 14.1(3) 20.8(3)(KazZinc) -------- -------- -------- -------- -------- -------- -------- -------------------Total East 288 276 42.72 42.7(2) 295.2(2) 149.3(2) 2.5(2) 1.4(2)Region -------- -------- -------- -------- -------- -------- -------- -------------------KaragandaRegionKaragaily 3 5 29.5 33.4 96.1 103.3 4.0 5.4----------- -------- -------- -------- -------- -------- -------- -------- --------Total 3 5 29.5 33.4 96.1 103.3 4.0 5.4KaragandaRegion ----------- -------- -------- -------- -------- -------- -------- -------- --------Total 291 281 42.6(2) 42.4(2) 353.5(2) 317.2(2) 2.0(2) 2.7(2)Kazakhmys Copper----------- -------- -------- -------- -------- -------- -------- -------- -------- (1) Grade in grammes per tonne of copper concentrate.(2) Production only from own concentrators within East Region.(3) Includes gold and silver content in gravity concentrate toll processed by KazZinc from Artemyevsky ore. KAZAKHMYS COPPER - COPPER CATHODES PRODUCTION Concentrate Copper in Copper cathodes smelted concentrate --------------- --------------- --------------- 2007 2006 2007 2006 2007 2006 kt kt % % kt kt ----------------- -------- -------- -------- -------- -------- --------Zhezkazgan ComplexOwn concentrate 569 632 33.7 34.0 183 215Purchased 7 26 33.8 31.1 4 6concentrateOther 1 70 101 1.1 0.7 1 ------------------ -------- -------- -------- -------- -------- --------Total Zhezkazgan 646 759 30.2 29.5 188 221Complex -------- -------- -------- -------- -------- -------------------------Balkhash ComplexOwn concentrate 931 990 18.2 16.9 156 153Purchased 163 170 26.7 22.0 35 31concentrateOther 1 82 85 2.8 3.1 1 ------------------ -------- -------- -------- -------- -------- --------Total Balkash 1,176 1,245 18.3 16.6 192 184Complex -------- -------- -------- -------- -------- -------------------------Total Kazakhmys 1,822 2,004 22.5 21.5 380 405Copper (excluding -------- -------- -------- -------- -------- --------tolling)-----------------Tolling 1 2 66.2 73.5 1 2Total Kazakhmys 1,823 2,006 22.6 21.6 381 407Copper (including -------- -------- -------- -------- -------- --------tolling)----------------- 1 Includes materials (slag, scrap, etc.) and ore used directly in smeltingprocess reprocessed at both the Zhezkazgan and Balkhash Complexes. KAZAKHMYS COPPER - COPPER ROD AND ACID PRODUCTION Copper rod Acid production --------------- --------------- 2007 2006 2007 2006 kt kt kt kt----------------------------- --------- --------- --------- ---------Total Kazakhmys Copper (Zhezkazgan 36 29 149 202Complex) --------- --------- --------- -------------------------------------- KAZAKHMYS COPPER - ZINC METAL PRODUCTION Zinc Zinc in Zinc metal concentrate concentrate smelted --------------- --------------- --------------- 2007 2006 2007 2006 2007 2006 kt kt % % kt kt----------------- -------- -------- -------- -------- -------- --------Total Kazakhmys 137 155 43.8 45.4 45 60Copper (Balkhash -------- -------- -------- -------- -------- --------Complex)----------------- KAZAKHMYS COPPER - PRECIOUS METAL PRODUCTION Silver Gold ----------------- ----------------- 2007 2006 2007 2006 koz koz koz koz-------------------------- --------- --------- --------- ---------Kazakhmys Copper 18,985 21,530 113 107Tolling 10 40 24 59-------------------------- --------- --------- --------- ---------Total Kazakhmys Copper (including 18,995 21,570 137 166tolling) --------- --------- --------- ----------------------------------- KAZAKHMYS COPPER - OTHER PRODUCTION 2007 2006--------------------------------------- ---------- ----------Electricity power space (GWh) 6,409 6,589Heating power (KGcal) 4,343 4,153Enamel wire (t) 843 558Lead dust (t) 8,773 12,622--------------------------------------- ---------- ---------- KAZAKHMYS COPPER - SALES 2007 2006 kt 1 $ million kt 1 $ million -------------------------- --------- --------- --------- ---------Copper cathodes 351 2,516.2 340 2,389.0Copper rod 35 250.6 28 196.1-------------------------- --------- --------- --------- ---------Total copper sales 386 2,766.8 368 2,585.1-------------------------- --------- --------- --------- ---------Zinc metal in concentrate 89 200.5 67 128.0Zinc metal 38 123.8 64 201.3Silver (koz) 19,323 256.5 20,962 239.1Gold (koz) 116 80.3 84 51.2-------------------------- --------- --------- --------- --------- 1 Kilotonnes (unless otherwise stated). AVERAGE REALISED PRICES 2007 2006--------------------------------------- ---------- ----------Copper ($/t) 7,175 7,025Zinc ($/t) 3,237 3,145Silver ($/oz) 13.27 11.41Gold ($/oz) 695 610--------------------------------------- ---------- ---------- MKM - PRODUCTION AND SALES 2007 2006 ----------------- ------------- Production Sales Production Sales kt kt kt kt -------------------------- --------- --------- --------- ---------Wire rod 117 115 129 129Drawn wire 40 40 39 38-------------------------- --------- --------- --------- ---------Total wire 157 155 168 167-------------------------- --------- --------- --------- ---------Pre-rolled 2 2 2 2Sheets 15 15 15 15Strips 49 49 45 46-------------------------- --------- --------- --------- ---------Total flat 66 66 62 63-------------------------- --------- --------- --------- ---------Tubes 19 19 21 20Bars 25 25 23 23-------------------------- --------- --------- --------- ---------Total tubes and bars 44 44 44 43-------------------------- --------- --------- --------- ---------Total MKM 267 265 274 273-------------------------- --------- --------- --------- --------- KAZAKHMYS GOLD PRODUCTION AND SALES July - December----------------------------------------- 2007 (1) -----------------Ore extraction (kt) 1,206Gold ore grade (g/t) 1.52Gold precipitation (koz) 32.7----------------------------------------- ----------------- Gold dore production (koz) 32.5Silver production (koz) 20.7----------------------------------------- ----------------- Gold dore sales (koz) 34.1----------------------------------------- ----------------- (1) Kazakhmys Gold was acquired on 5 July 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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