TIDMKZG
RNS Number : 0171T
KazakhGold Group Ltd
21 September 2010
KazakhGold Group Limited
Interim condensed consolidated
financial statements
for the six months ended 30 June 2010
(unaudited)
kazakhgold group limited
interim condensed CONSOLIDATED FINANCIAL STATEMENTS
FOR the SIX MONTHS ENDED
30 june 2010
INDEX
Page
Statement of management's responsibilities for the preparation and approval
of
the unaudited interim condensed consolidated financial statements
for
the six months ended 30 June 2010
1
Report on the review of interim condensed consolidated financial statements
2-3
Interim condensed consolidated financial statements for the six months ended 30
June 2010:
Interim condensed consolidated income statement
4
Interim condensed consolidated statement of comprehensive income
5
Interim condensed consolidated statement of financial position
6
Interim condensed consolidated statement of cash flows
7
Interim condensed consolidated statement of changes in equity
8
Notes to the interim condensed consolidated financial statements
9-18
kazakhgold group limited
STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION
AND APPROVAL
OF THE unaudited interim condensed CONSOLIDATED
FINANCIAL STATEMENTS FOR the
six months ended 30 june 2010
The following statement, which should be read in conjunction with the report on
the review of interim condensed consolidated financial statements set out on
pages 2-3, is made with a view to distinguishing
the respective
responsibilities of management and those of the independent auditors in relation
to the unaudited interim condensed consolidated financial statementsof
KazakhGold Group Limited and its subsidiaries
(the "Group").
Management is responsible for the preparation of interim condensed consolidated
financial statements
that present fairly the financial position of the Group
as at 30 June 2010 and the related interim condensed consolidated statements of
income, comprehensive income, cash flows, changes in equity for the six months
then ended, and selected explanatory notes, in accordance with International
Accounting Standard 34 "Interim Financial Reporting" (IAS 34).
In preparing interim condensed consolidated financial statements, management is
responsible for:
· selecting suitable accounting principles and applying them consistently;
· making judgments and estimates that are reasonable and prudent;
· stating whether IAS 34 has been followed, subject to any material
departures disclosed and explained in the interim condensed consolidated
financial statements; and
· preparing the interim condensed consolidated financial statements on a
going concern basis, unless it is inappropriate to presume that the Group will
continue in business for the foreseeable future.
Management is also responsible for:
· designing, implementing and maintaining an effective and sound system of
internal controls, throughout the Group;
· maintaining statutory accounting records in compliance with local
legislation and accounting standards in the respective jurisdictions in which
the Group operates;
· taking steps to safeguard the assets of the Group; and
· detecting and preventing fraud and other irregularities.
The interim condensed consolidated financial statements of the Group for the six
months ended
30 June 2010 were approved by the Board of Directors on 15
September 2010:
On behalf of the Management:
_____________________________
Ivanov E.I.
Chief Executive Officer
KazakhGold Group Limited
17 September 2010
Report on the review of interim condensed consolidated financial statements
To shareholders of KazakhGold Group Limited:
Introduction
We have reviewed the accompanying interim condensed consolidated statement of
financial position of KazakhGold Group Limited and its subsidiaries (hereinafter
the "Group")
as at 30 June 2010 and the related interim condensed
consolidated statements of income, comprehensive income, cash flows, changes in
equity for the six months then ended, and selected explanatory notes. Management
is responsible for the preparation and fair presentation of these interim
condensed consolidated financial statements in accordance with International
Accounting Standard 34 "Interim Financial Reporting" ("IAS 34"). Our
responsibility is to express a conclusion on these interim condensed
consolidated financial statements based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements 2410 "Review of Interim Financial Information Performed by the
Independent Auditor of
the Entity". A review of interim condensed
consolidated financial statements consists of making inquiries, 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
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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that
the accompanying interim condensed consolidated financial statements are
not prepared,
in all material respects, in accordance with IAS 34.
Emphasis of Matter
We draw your attention to note 1 to the interim condensed consolidated financial
statements, which describes a series of events which occurred subsequent to 30
June 2010, the resolution of which is uncertain at the date of issuance of these
interim condensed consolidated financial statements and which may have a
material impact on the Group's future operations and which may cast significant
doubt about the Group's ability to continue as a going concern.
Moscow, Russia
17 September 2010
Kazakhgold group limited
interim condensed CONSOLIDATED INCOME STATEMENT
FOR the six months ended 30 JUNE (unaudited)
(in thousands of US Dollars)
+--------------------------------------+-------+--+------------+--+------------+
| | Notes | | 2010 | | 2009 |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Gold sales | | | 42,385 | | 25,633 |
+--------------------------------------+-------+--+------------+--+------------+
| Other sales | | | 740 | | 468 |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Total revenue | | | 43,125 | | 26,101 |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Cost of gold sales | | | (36,193) | | (31,181) |
+--------------------------------------+-------+--+------------+--+------------+
| Cost of other sales | | | (1,449) | | (1,131) |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Gross profit/(loss) | | | 5,483 | | (6,211) |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Selling, general and administrative | | | (10,076) | | (22,656) |
| expenses | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Other expenses, net | 2 | | (9,315) | | (29,195) |
+--------------------------------------+-------+--+------------+--+------------+
| Finance costs | | | (17,478) | | (16,094) |
+--------------------------------------+-------+--+------------+--+------------+
| Foreign exchange gain/(loss), net | | | 1,573 | | (47,900) |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Loss before income tax | | | (29,813) | | (122,056) |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Income tax benefit | | | - | | 3,081 |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Loss for the period | | | (29,813) | | (118,975) |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Attributable to: | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Shareholders of the parent company | | | (28,472) | | (118,135) |
+--------------------------------------+-------+--+------------+--+------------+
| Non-controlling interests | | | (1,341) | | (840) |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| | | | (29,813) | | (118,975) |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Loss per share | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Weighted average number of ordinary | | | 52,941,666 | | 52,941,666 |
| shares in issue during | | | | | |
| the period | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| | | | | | |
+--------------------------------------+-------+--+------------+--+------------+
| Basic and diluted (US Dollars) | | | (0.54) | | (2.23) |
+--------------------------------------+-------+--+------------+--+------------+
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
kazakhgold group limited
interim condensed CONSOLIDATED statement of comprehensive income
for six months ended 30 JUNE (unaudited)
(in thousands of US Dollars)
+-----------------------------------------+--+------------+--+------------+
| | | 2010 | | 2009 |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Loss for the period | | (29,813) | | (118,975) |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Other comprehensive (loss)/income | | | | |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Effect of translation to presentation | | (1,765) | | 5,834 |
| currency | | | | |
+-----------------------------------------+--+------------+--+------------+
| Revaluation surplus on property, plant | | - | | 8,627 |
| and equipment, | | | | |
| net of tax in the amount of USD 1,598 | | | | |
| thousand | | | | |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Other comprehensive (loss)/income for | | (1,765) | | 14,461 |
| the period, net of tax | | | | |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Total comprehensive loss for the | | (31,578) | | (104,514) |
| period, net of tax | | | | |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Attributable to: | | | | |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| Shareholders of the parent company | | (30,239) | | (104,514) |
+-----------------------------------------+--+------------+--+------------+
| Non-controlling interests | | (1,339) | | - |
+-----------------------------------------+--+------------+--+------------+
| | | | | |
+-----------------------------------------+--+------------+--+------------+
| | | (31,578) | | (104,514) |
+-----------------------------------------+--+------------+--+------------+
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
kazakhgold group limited
interim condensed CONSOLIDATED statement of financial position
AT 30 JUNE 2010 (unaudited)
(in thousands of US Dollars)
+--------------------------------------+-------+--+-----------+--+-----------+
| | Notes | | 30 June | | 31 |
| | | | 2010 | | December |
| | | | | | 2009 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| ASSETS | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Non-current assets | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Property, plant and equipment | 3 | | 204,089 | | 197,051 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Inventories | 4 | | 3,189 | | 2,867 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | 207,278 | | 199,918 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Current assets | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Inventories | 4 | | 19,639 | | 14,265 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Trade and other receivables | | | 3,872 | | 2,124 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Advances paid to suppliers | | | 1,710 | | 1,905 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Income tax prepaid | | | 1,612 | | 3,057 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Other current assets | | | 2,605 | | 953 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Cash and cash equivalents | | | 7,517 | | 3,531 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | 36,955 | | 25,835 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| TOTAL ASSETS | | | 244,233 | | 225,753 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| EQUITY AND LIABILITIES | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Capital and reserves | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Share capital | | | 9 | | 9 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Additional paid-in capital | | | 220,950 | | 220,950 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Capital contribution | | | 12,686 | | 12,686 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Revaluation surplus | | | 7,787 | | 7,787 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Option premium on convertible debt | | | 15,598 | | 15,598 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Translation reserve | | | 23,634 | | 25,401 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Accumulated losses | | | (438,073) | | (409,601) |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Equity attributable to shareholders | | | (157,409) | | (127,170) |
| of the parent company | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Non-controlling interests | | | (1,339) | | - |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | (158,748) | | (127,170) |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Non-current liabilities | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Borrowings | 5 | | 21,913 | | 20,812 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Environmental obligations | | | 14,197 | | 13,356 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Other non-current liabilities | | | 6,129 | | 15,526 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | 42,239 | | 49,694 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Current liabilities | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| Borrowings | 5 | | 303,742 | | 257,816 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Trade payables | | | 1,312 | | 1,771 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Other payables and accrued expenses | | | 22,541 | | 18,897 |
+--------------------------------------+-------+--+-----------+--+-----------+
| Other taxes payable | | | 33,147 | | 24,745 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | 360,742 | | 303,229 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| TOTAL LIABILITIES | | | 402,981 | | 352,923 |
+--------------------------------------+-------+--+-----------+--+-----------+
| | | | | | |
+--------------------------------------+-------+--+-----------+--+-----------+
| TOTAL EQUITY AND LIABILITIES | | | 244,233 | | 225,753 |
+--------------------------------------+-------+--+-----------+--+-----------+
The accompanying notes are an integral part ofthese interim condensed
consolidated financial statements.
kazakhgold group limited
Interim condensed CONSOLIDATED statement of CASH FLOWs
FOR the six months ended 30 JUNE (unaudited)
(in thousands of US Dollars)
+--------------------------------------+------+--+----------+--+-----------+
| | | | 2010 | | 2009 |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Operating activities | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Loss before income tax | | | (29,813) | | (122,056) |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Adjustments for: | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Amortisation and depreciation | | | 11,150 | | 9,295 |
+--------------------------------------+------+--+----------+--+-----------+
| Finance costs | | | 17,478 | | 16,094 |
+--------------------------------------+------+--+----------+--+-----------+
| Foreign exchange (gain)/loss, net | | | (1,573) | | 47,900 |
+--------------------------------------+------+--+----------+--+-----------+
| Non-recoverable value added tax on | | | 9,625 | | 5,219 |
| construction, repair, maintenance | | | | | |
| and exploration works | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Bank guarantee provision | | | - | | 11,650 |
+--------------------------------------+------+--+----------+--+-----------+
| Loss on revaluation of property, | | | - | | 11,079 |
| plant and equipment | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Other | | | 201 | | 6,273 |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | 7,068 | | (14,546) |
+--------------------------------------+------+--+----------+--+-----------+
| Movements in working capital: | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Inventories | | | (5,906) | | 3,623 |
+--------------------------------------+------+--+----------+--+-----------+
| Trade and other receivables | | | (1,841) | | (3,492) |
+--------------------------------------+------+--+----------+--+-----------+
| Advances paid to suppliers | | | 395 | | (634) |
+--------------------------------------+------+--+----------+--+-----------+
| Other current assets | | | (1,856) | | (4,647) |
+--------------------------------------+------+--+----------+--+-----------+
| Trade payables | | | (470) | | 1,478 |
+--------------------------------------+------+--+----------+--+-----------+
| Other payables and accrued expenses | | | (3,319) | | 8,590 |
+--------------------------------------+------+--+----------+--+-----------+
| Other taxes payable | | | 1,580 | | 3,232 |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Cash flows used in operations | | | (4,349) | | (6,396) |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Interest paid | | | (9,911) | | (11,549) |
+--------------------------------------+------+--+----------+--+-----------+
| Income tax paid | | | (1,087) | | (1,022) |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Net cash used in operating | | | (15,347) | | (18,967) |
| activities | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Investing activities | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Purchase of property, plant and | | | (18,976) | | (467) |
| equipment | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Proceeds from sale of property, | | | 232 | | - |
| plant and equipment | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Net cash used in investing | | | (18,744) | | (467) |
| activities | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Financing activities | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Proceeds from borrowings | | | 49,960 | | 37,294 |
+--------------------------------------+------+--+----------+--+-----------+
| Repayments of borrowings | | | (6,262) | | (27,592) |
+--------------------------------------+------+--+----------+--+-----------+
| Repayment of bank guarantees | | | (5,930) | | - |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Net cash generated from financing | | | 37,768 | | 9,702 |
| activities | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Net increase/(decrease) in cash and | | | 3,677 | | (9,732) |
| cash equivalents | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Cash and cash equivalents at | | | 3,531 | | 13,966 |
| beginning of the period | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Effect of translation to | | | 309 | | (919) |
| presentation currency on cash and | | | | | |
| cash equivalents | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
| Cash and cash equivalents at end of | | | 7,517 | | 3,315 |
| the period | | | | | |
+--------------------------------------+------+--+----------+--+-----------+
The accompanying notes are an integral part ofthese interim condensed
consolidated financial statements.
kazakhgold group limited
interim condensed CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR the six months ended 30 june 2010 (unaudited)
(in thousands of US Dollars)
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | Equity attributable to shareholders of the parent company | | | | |
+------------------------+-------+---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+-----------------+----------+-----------+
| | Notes | Share | | Additional | | Capital | | Translation | | Revaluation | | Option | | Accumu-lated | | Total | | Non-controlling | | Total |
| | | capital | | paid-in | | contribution | | reserve | | surplus | | premium | | losses | | | | interests | | |
| | | | | capital | | | | | | | | on | | | | | | | | |
| | | | | | | | | | | | | convertible | | | | | | | | |
| | | | | | | | | | | | | debt | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Balance at 1 January | | 9 | | 220,950 | | 12,686 | | 11,840 | | - | | - | | (266,702) | | (21,217) | | - | | (21,217) |
| 2009 | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Loss for the period | | - | | - | | - | | - | | - | | - | | (118,135) | | (118,135) | | (840) | | (118,975) |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Revaluation surplus on | | - | | - | | - | | - | | 7,787 | | - | | - | | 7,787 | | 840 | | 8,627 |
| property, | | | | | | | | | | | | | | | | | | | | |
| plant and equipment, | | | | | | | | | | | | | | | | | | | | |
| net of tax in | | | | | | | | | | | | | | | | | | | | |
| the amount of USD | | | | | | | | | | | | | | | | | | | | |
| 1,598 thousand | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Effect of translation | | - | | - | | - | | 5,834 | | - | | - | | - | | 5,834 | | - | | 5,834 |
| to presentation | | | | | | | | | | | | | | | | | | | | |
| currency | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Total other | | - | | - | | - | | 5,834 | | 7,787 | | - | | - | | 13,621 | | 840 | | 14,461 |
| comprehensive income, | | | | | | | | | | | | | | | | | | | | |
| net of tax | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Total comprehensive | | - | | - | | - | | 5,834 | | 7,787 | | - | | (118,135) | | (104,514) | | - | | (104,514) |
| loss, net of tax | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Issuance of | 5 | - | | - | | - | | - | | - | | 13,371 | | - | | 13,371 | | - | | 13,371 |
| convertible debt | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Balance at 30 June | | 9 | | 220,950 | | 12,686 | | 17,674 | | 7,787 | | 13,371 | | (384,837) | | (112,360) | | - | | (112,360) |
| 2009 | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Balance at 1 January | | 9 | | 220,950 | | 12,686 | | 25,401 | | 7,787 | | 15,598 | | (409,601) | | (127,170) | | - | | (127,170) |
| 2010 | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Loss for the period | | - | | - | | - | | - | | - | | - | | (28,472) | | (28,472) | | (1,341) | | (29,813) |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Effect of translation | | - | | - | | - | | (1,767) | | - | | - | | - | | (1,767) | | 2 | | (1,765) |
| to presentation | | | | | | | | | | | | | | | | | | | | |
| currency | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Total other | | - | | - | | - | | (1,767) | | - | | - | | - | | (1,767) | | 2 | | (1,765) |
| comprehensive loss, | | | | | | | | | | | | | | | | | | | | |
| net of tax | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Total comprehensive | | - | | - | | - | | (1,767) | | - | | - | | (28,472) | | (30,239) | | (1,339) | | (31,578) |
| loss, net of tax | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
| Balance at 30 June | | 9 | | 220,950 | | 12,686 | | 23,634 | | 7,787 | | 15,598 | | (438,073) | | (157,409) | | (1,339) | | (158,748) |
| 2010 | | | | | | | | | | | | | | | | | | | | |
+------------------------+-------+---------+----------+------------+----------+--------------+----------+-------------+----------+-------------+----------+-------------+----------+--------------+----------+-----------+----------+-----------------+----------+-----------+
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
Kazakhgold group limited
NOTES TO THE interim CONdENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2010 (UNAUDITED)
1. GENERAL information
Organisation
KazakhGold Group Limited (the "Company" or "KazakhGold") was incorporated in
Jersey on
26 September 2005. The principal activities of the Company and its
subsidiaries (the "Group") are
the extraction, production and sale of cathodic
gold, free gold and other gold-bearing products. Mining and processing
facilities of the Group are located in the northern part of the Republic of
Kazakhstan. The Group also performs research and exploration works, primarily in
the existing production locations, in Central and Eastern Kazakhstan and in
Romania.
On 30 July 2009, 50.2% of the Group was acquired by Polyus Gold through its 100%
owned subsidiary Jenington International Inc ("Jenington"). Subsequent to the
acquisition, management has focused on investing in the mining infrastructure to
increase production and cost reduction. As a result of these actions, combined
with the increase in gold prices, the Group has increased the gross margin to
USD 5,483 thousand for the six months ended 30 June 2010 from a negative gross
margin of
USD 6,211 thousand for the six months ended 30 June 2009 and
decreased its selling, general
and administrative costs to USD 10,076
thousand for the six months ended 30 June 2010 from
USD 22,656 thousand for
the six months ended 30 June 2009. While there has been an increase in
profitability, the Group continued to incur cash outflows from its operations.
The Group has historically been financed by loans from third parties and with
loans from Polyus Gold since its agreement to acquire 50.2% of the Company. The
loans from third parties include various restrictive covenants including
limitations on additional indebtedness, reporting requirements and certain
financial covenants. At 30 June 2010, the Group is not in compliance with
certain of these covenants, and as a result has classified the USD 200 million
outstanding on the senior notes as
a current liability.
At 30 June 2010, due to (a) the classification of the USD 200 million of senior
notes as current,
(b) short-term borrowings entered into with Jenington of
USD 100 million and (c) the deficit generated from its operations, the Group has
a working capital deficit of USD 323,787 thousand.
In addition to financial uncertainty described above, there is a dispute between
the former and
current shareholders of the Company whereby the current
shareholders are asserting that the former shareholders were negligent in their
fiduciary responsibilities related to the Group. On 25 June 2010, the current
shareholders filed a lawsuit against the former controlling shareholders.
Subsequent to that date, the Government of the Republic of Kazakhstan has taken
various actions against the current management and directors that have had both
a direct and indirect impact on
the Group. These actions include the
following:
· on 12 July 2010, JSC "MMC Kazakhaltyn" ("Kazakhaltyn"), a major
production subsidiary of
the Company located in the Republic of Kazakhstan,
received notification from the Ministry of Industry and New Technologies of the
Republic of Kazakhstan indicating that the previous decisions of the competent
authorities in Kazakhstan providing a waiver of the state's pre-emptive right to
acquire the Company's securities had been annulled. These waivers were obtained
in connection with (a) the acquisition of 50.2% of the shares of the Company
in
July 2009, (b) the issuance of shares in July 2010 that resulted in
proceeds of USD 100 million to the Company and (c) the proposed combination
between Polyus Gold and the Company announced on 30 June 2010;
· on 2 August 2010, the Group was notified that a freeze had been placed by
the Agency on Economic and Corruption Crimes ("AECC") in Kazakhstan on certain
bank accounts held in Kazakhstan by Kazakhaltyn. This freeze is in connection
with an investigation by the AECC into allegations of fraud by three members of
its current Board of Directors. After clarification, Kazakhaltyn was permitted
limited access to make payments to employees and certain key suppliers;
· on 23 August 2010, an unscheduled tax audit of Kazakhaltyn commenced for
the fiscal years 2009 and 2010 and further the tax audit was extended for 2007
and 2008 years; and
· on 7 September 2010, major production assets owned by Kazakhaltyn were
frozen under AECC freezing order which had been made in the connection with the
investigation being processed by AECC. The restriction only refers to possible
disposal of property, plant and equipment and has no influence on current
operating activity.
Management of the Group believe that based on the rapid sequence of these
events, the actions of
the Government of the Republic of Kazakhstan is in
direct response to the legal proceedings brought by the current shareholders
against the former shareholders.
The directors have concluded that the factors described above related to the
financial position at
30 June 2010, and the actions taken by the Government
of the Republic of Kazakhstan represent
a material uncertainty that casts
significant doubt upon the Group's ability to continue as a going concern and
that therefore, the Group may be unable to realise its assets and discharge its
liabilities in the ordinary course of business.
Management has considered the following in determining whether or not these
interim condensed consolidated financial statements should be prepared on a
going concern basis:
· on 1 July 2010, the Company issued 66,666,667 of ordinary shares,
resulting in total proceeds of USD 100 million. Polyus Gold, through its
subsidiary Jenington, subscribed for 51,194,922 of the shares increasing its
ownership in the Company to 65% of the issued share capital;
· on 6 July 2010, the Company repaid a USD 50 million loan to Jenington.
There remains a
USD 50 million loan, convertible at the option of the
holder, and, if converted prior to the proposed combination of KazakhGold and
Polyus Gold, is subject to regulatory approval from the Government of the
Republic of Kazakhstan and given the situation described in this note such
approval may not be received;
· Polyus Gold has guaranteed the USD 200 million of senior notes;
· Polyus Gold has provided the Group a commitment that it will provide the
necessary financial support to ensure the Group is able to finance its
operations and obligations;
· on 27 July 2010, the Company received the bondholders' waiver of the
breaches existed at
30 June 2010 under the terms and conditions of senior
notes and pre-emptively certain breaches of the terms and conditions of senior
notes that are expected to arise in connection with
the Proposed Combination
of KazakhGold and Polyus Gold; and
· the importance of the survival of the business to the particular region
in Kazakhstan.
Based on this assessment, the directors have concluded that it is reasonable
that they will be able to finance their operation and meet their obligations for
a period no less than twelve months from the date of issuance of these interim
condensed consolidated financial statements and accordingly have continued to
adopt the going concern basis of accounting in preparing the interim condensed
consolidated financial statements.
The Group is unable to predict the outcome of the actions taken by the
Government of the Republic of Kazakhstan and therefore cannot reasonably predict
the impact on its operations, ability to meet its obligations or ability to
realise its assets that may result from the ultimate resolution between the
Group and the Government of the Republic of Kazakhstan. Should the outcome be
unfavourable to the Group, there is a risk of significant material adjustment to
the financial statements.
Basis of presentation
The interim condensed consolidated financial statements have been prepared using
accounting policies consistent with International Accounting Standard ("IAS") 34
Interim Financial Reporting.
The statement of financial position at 31 December 2009 has been derived from
the statement of financial position included in the Group's consolidated
financial statements for the year ended
31 December 2009.
The financial information for the six months ended 30 June 2009 has not
previously been published and therefore has not been audited or reviewed.
These interim condensed consolidated financial statements do not include all of
the information and disclosures required in the annual consolidated financial
statements and should be read in conjunction with the Group's annual
consolidated financial statements for the year ended 31 December 2009,
which
have been prepared in accordance with IFRS.
The same accounting policies, presentation and methods of computation have been
followed in
these interim condensed consolidated financial statements as
were applied in the Group's financial statements for the year ended 31 December
2009, except as described below.
Foreign currency exchange rates
The individual financial statements of the Group's subsidiaries are prepared in
their functional currency.
Exchange rates used in the preparation of the interim condensed consolidated
financial statements were as follows:
+------------------------------+----------+--+----------+--+----------+
| | 30 June | | 30 June | | 31 |
| | 2010 | | 2009 | | December |
| | | | | | 2009 |
+------------------------------+----------+--+----------+--+----------+
| | | | | | |
+------------------------------+----------+--+----------+--+----------+
| KZT/USD | | | | | |
+------------------------------+----------+--+----------+--+----------+
| Period-end rates | 147.46 | | 150.41 | | 148.36 |
+------------------------------+----------+--+----------+--+----------+
| Average for the period | 147.24 | | 144.69 | | 147.51 |
+------------------------------+----------+--+----------+--+----------+
| | | | | | |
+------------------------------+----------+--+----------+--+----------+
| Romanian Lei/USD | | | | | |
+------------------------------+----------+--+----------+--+----------+
| Period-end rates | 3.56 | | 2.98 | | 2.94 |
+------------------------------+----------+--+----------+--+----------+
| Average for the period | 3.13 | | 3.17 | | 3.05 |
+------------------------------+----------+--+----------+--+----------+
| | | | | | |
+------------------------------+----------+--+----------+--+----------+
| Kyrgyz Som/USD | | | | | |
+------------------------------+----------+--+----------+--+----------+
| Period-end rates | 46.39 | | 43.28 | | 44.09 |
+------------------------------+----------+--+----------+--+----------+
| Average for the period | 45.15 | | 42.02 | | 42.99 |
+------------------------------+----------+--+----------+--+----------+
Critical accounting judgments, estimates and assumptions
The critical accounting judgments, estimates and assumptions made by management
of the Group and applied in the accompanying unaudited interim condensed
consolidated financial statements for the six months ended 30 June 2010 are
consistent with those applied in the preparation of annual consolidated
financial statements of the Group for the year ended 31 December 2009.
Adoption of new and revised Standards and Interpretations
In the preparation of these interim condensed consolidated financial statements
the Group has adopted all new International Financial Reporting Standards and
Interpretations issued by International Financial Reporting Committee ("IFRIC")
that are mandatory for adoption in annual periods beginnings on or after 1
January 2010.
The principal changes arising from adoption of these Standards and
Interpretations are as follows:
IAS 27 Consolidated and Separate Financial Statements (as revised in 2008 and
effective 1 July 2009)
The revisions to IAS 27 principally affect the accounting for non-controlling
interests. Under
the revised Standard total comprehensive income is
attributed to the owners of the parent and to
the non-controlling interests
even if this results in the non-controlling interests having a deficit balance.
In the current period, these changes have affected the accounting for
non-controlling interests, resulting in a decrease of non-controlling interests
in the amount of USD 1,339 thousand as a result of allocating losses to the
non-controlling interests.
Adoption of the revised Standard had no effect neither on the financial position
nor the performance of the Group.
Standards and interpretations adopted with no effect on the financial statements
The revisions and amendments to the following Standards and Interpretations
presented below did not have any impact on the accounting policies, financial
position or performance of the Group:
· IFRS 2 Share-based Payments;
· IFRS 3 Business combinations;
· IFRS 5 Non-current Assets Held for Sale and Discontinued Operations;
· IFRS 8 Operating Segments;
· IAS 1 Presentation of Financial Statements;
· IAS 7 Statement of Cash Flows;
· IAS 17 Leases;
· IAS 28 Investments in Associates;
· IAS 31 Investments in Joint Ventures;
· IAS 36 Impairment of Assets;
· IAS 38 Intangible Assets;
· IAS 39 Financial Instruments: Recognition and Measurement.
Kazakhgold group limited
NOTES TO THE interim CONdENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2010 (UNAUDITED)
(in thousands of US Dollars)
2. OTHER expenses, NET
+-------------------------------------------+----------+--+----------+
| | Six | | Six |
| | months | | months |
| | ended | | ended |
| | 30 June | | 30 June |
| | 2010 | | 2009 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Non-recoverable value added tax on | 9,625 | | 5,219 |
| construction, repair, | | | |
| maintenance and exploration works | | | |
+-------------------------------------------+----------+--+----------+
| Bank guarantee provision | - | | 11,650 |
+-------------------------------------------+----------+--+----------+
| Loss on revaluation of property, plant | - | | 11,079 |
| and equipment | | | |
+-------------------------------------------+----------+--+----------+
| Other | (310) | | 1,247 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Total | 9,315 | | 29,195 |
+-------------------------------------------+----------+--+----------+
3. PROPERTY, PLANT AND EQUIPMENT
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | Exploration | | Mining | | Non-mining | | Capital | | Total |
| | and | | assets | | assets | | construction- | | |
| | evaluation | | | | | | in-progress | | |
| | assets | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Cost | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Balance at 31 | 3,872 | | 160,693 | | 2,984 | | 49,552 | | 217,101 |
| December 2009 | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Additions | 6,030 | | 5,610 | | 4 | | 7,774 | | 19,418 |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Transfers | - | | 684 | | - | | (684) | | - |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Disposals | - | | (200) | | - | | - | | (200) |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Effect of | 15 | | 300 | | 18 | | (913) | | (580) |
| translation to | | | | | | | | | |
| presentation | | | | | | | | | |
| currency | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Balance at 30 June | 9,917 | | 167,087 | | 3,006 | | 55,729 | | 235,739 |
| 2010 | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Accumulated | | | | | | | | | |
| amortisation, | | | | | | | | | |
| depreciation and | | | | | | | | | |
| impairment | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Balance at 31 | - | | (19,843) | | (207) | | - | | (20,050) |
| December 2009 | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Charge for the | - | | (11,582) | | (51) | | - | | (11,633) |
| period | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Disposals | - | | 31 | | - | | - | | 31 |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Effect of | - | | 4 | | (2) | | - | | 2 |
| translation to | | | | | | | | | |
| presentation | | | | | | | | | |
| currency | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Balance at 30 June | - | | (31,390) | | (260) | | - | | (31,650) |
| 2010 | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| Net book value | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| 31 December 2009 | 3,872 | | 140,850 | | 2,777 | | 49,552 | | 197,051 |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| | | | | | | | | | |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
| 30 June 2010 | 9,917 | | 135,697 | | 2,746 | | 55,729 | | 204,089 |
+---------------------+-------------+-+----------+-+------------+-+---------------+-+----------+
Amortisation and depreciation capitalised during the six months ended 30 June
2010 amounted to
USD 483 thousand.
At 30 June 2010, property, plant and equipment with a carrying value of USD
11,803 thousand
were pledged to secure borrowings of the Group (refer to
note 5).
4. INVENTORIES
+-------------------------------------------+----------+--+----------+
| | 30 June | | 31 |
| | 2010 | | December |
| | | | 2009 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Inventories expected to be recovered | | | |
| after twelve months | | | |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Stockpiles | 3,189 | | 2,867 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Total | 3,189 | | 2,867 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Inventories expected to be recovered in | | | |
| the next twelve months | | | |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Gold-in-process at net production cost | 8,388 | | 5,462 |
+-------------------------------------------+----------+--+----------+
| Finished goods at net production cost | 6,240 | | 4,926 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Total metal inventories | 14,628 | | 10,388 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Stores and materials at cost | 6,399 | | 4,954 |
+-------------------------------------------+----------+--+----------+
| Less: allowance for obsolescence | (1,388) | | (1,077) |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| | 19,639 | | 14,265 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Total | 22,828 | | 17,132 |
+-------------------------------------------+----------+--+----------+
The Group consumed USD 7,729 thousand of stores and materials during the six
months ended
30 June 2010, which have been recognised as cost of gold sales
(six months ended 30 June 2009:
USD 7,190 thousand).
5. Borrowings
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| | | | | 30 June 2010 | | 31 December 2009 |
+-----------------------+-------+----------+----------+-----------------------------------+----------+-----------------------------------+
| | | Currency | | Rate,% | | Outstan-ding | | Rate,% | | Outstan-ding |
| | | | | | | balance | | | | balance |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| | | | | | | | | | | |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Guaranteed senior | (i) | USD | | 9.375 | | 200,000 | | 9.375 | | 200,000 |
| notes | | | | | | | | | | |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Loan received from | (ii) | USD | | 9.27 | | 49,960 | | n/a | | - |
| Jenington | | | | | | | | | | |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Convertible loan | (ii) | USD | | LIBOR+6 | | 49,310 | | LIBOR+6 | | 47,892 |
| received from | | | | | | | | | | |
| Jenington | | | | | | | | | | |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Convertible loans |(iii) | USD | | 10.0 | | 21,913 | | 10.0 | | 19,783 |
| received from | | | | | | | | | | |
| Gold Lion Holdings | | | | | | | | | | |
| Limited | | | | | | | | | | |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Secured bank loan | (iv) | USD | | 13.75 | | 2,728 | | 13.75 | | 4,751 |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Unsecured bank loan | (v) | USD | | 11.0 | | 1,744 | | 11.0 | | 4,348 |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Secured bank loan | (iv) | KZT | | n/a | | - | | 16.0 | | 1,854 |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| | | | | | | | | | | |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Total | | | | | | 325,655 | | | | 278,628 |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| | | | | | | | | | | |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Less: current portion due within twelve months | | (303,742) | | | | (257,816) |
+---------------------------------------------------------------+----------+--------------+----------+---------+----------+--------------+
| | | | | | | | | | | |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
| Long-term borrowings | | | | | | 21,913 | | | | 20,812 |
+-----------------------+-------+----------+----------+---------+----------+--------------+----------+---------+----------+--------------+
Summary of borrowing agreements
(i) Guaranteed senior notes
In November 2006, the Company issued USD 200,000 thousand 9.375% senior notes
(the "Notes"). The Notes were issued at par with an interest payable
semi-annually in arrear on 6 May and 6 November of each year, with the principal
due on 6 November 2013. At the date of issuance the Notes were unconditionally
and irrevocably guaranteed by JSC "MMC Kazakhaltyn" and its subsidiaries.
On
30 July 2009, in connection with the acquisition by Jenington of 50.2% of issued
shares of KazakhGold Group Limited, Polyus Gold became an additional limited
liability guarantor of
the Notes.
The Group is obliged to comply with a number of restrictive financial and other
covenants, including maintaining of certain financial ratios. At 30 June 2010
and 31 December 2009, the Group is not in compliance with the covenants, and
accordingly, the Notes are classified as a current liability.
On 27 July
2010, the Company received the bondholders' waiver of the breaches
existed
at 30 June 2010 under the terms and conditions of the Notes.
(ii) Loans received from Jenington
On 14 August 2009, the Company signed a USD 50,000 thousand unsecured loan
agreement with Jenington, a related party. The loan bears interest at a floating
rate of LIBOR+6% per annum.
The principal amount together with accrued
interest is payable within three months of the Company completing an anticipated
capital raising of USD 100 million. The principal amount of the loan together
with accrued interest can be converted by Jenington into ordinary shares of the
Company
at a rate of USD 1.5 per one share at any point during the life of
the loan. Conversion right may be exercised by Jenington at any date following
the loan agreement date and is subject to several restrictions, including
regulatory approval from the Government of the Republic of Kazakhstan.
The
Company expects Jenington to convert the loan into Company's ordinary shares.
The net proceeds received under the convertible loan agreement have been split
between a liability component and an equity component, representing the residual
attributable to the option (option premium) to convert the liability into equity
of the Group, as follows:
+----------------------------------+---------+--+---------+--+----------+
| Proceeds from issue | | | | | 49,310 |
+----------------------------------+---------+--+---------+--+----------+
| Fair value of liability | | | | | (47,083) |
| component at date of issue | | | | | |
+----------------------------------+---------+--+---------+--+----------+
| | | | | | |
+----------------------------------+---------+--+---------+--+----------+
| Equity component | | | | | 2,227 |
+----------------------------------+---------+--+---------+--+----------+
The interest charged for the period is calculated by applying an effective
interest rate of 14.5%.
On 4 February 2010, the Company signed a USD 50,000 thousand unsecured loan
agreement with Jenington, a related party. The loan bears interest at a rate of
9.27% per annum. The principal amount together with accrued interest is payable
within three months of the Company completing an anticipated capital raising of
USD 100 million, but in any event no later than in nine months from the date of
the loan agreement. The Company has an option to convert the loan and accrued
interest into its shares or GDRs at the price equal to the average of the
closing prices of the GDRs on London Stock Exchange for the period of 20 trading
days ending on a trading day immediately preceding the date on which the
conversion notice is provided to Jenington. Conversion right may be exercised at
any date following the loan agreement date and is subject to several
restrictions, including regulatory approval from the Government of the Republic
of Kazakhstan. The USD 100 million equity capital raising was completed on 1
July 2010, and as a result this loan together with accrued interest was fully
repaid in July 2010.
(iii) Loans received from Gold Lion Holdings Limited
On 11 June 2009, the Company signed two loan agreements with Gold Lion Holdings
Limited,
a related party. The loans bear interest at a rate of 10% per
annum. Principal amounts
of USD 21,650 thousand and USD 9,375 thousand
together with accrued interest are payable on
6 November 2014. Until their
maturity date, these loans are convertible wholly or in part into
the
Company's ordinary shares at a rate of USD 1.5 per one share. Conversion is
subject to several restrictions, including the Republic of Kazakhstan regulatory
approval and approval from
the Company. In June 2009, Gold Lion Holdings
Limited granted a call option to Jenington and any other direct or indirect
subsidiary of Polyus Gold to acquire all rights and interests under these loan
agreements, including the conversion right.
The net proceeds received under the convertible loan agreements have been split
between
a liability component and an equity component, representing the
residual attributable to the option to convert the liability into equity of the
Group, as follows:
+----------------------------------+---------+--+---------+--+----------+
| Proceeds from issue | | | | | 31,025 |
+----------------------------------+---------+--+---------+--+----------+
| Fair value of liability | | | | | (17,654) |
| component at date of issue | | | | | |
+----------------------------------+---------+--+---------+--+----------+
| | | | | | |
+----------------------------------+---------+--+---------+--+----------+
| Equity component | | | | | 13,371 |
+----------------------------------+---------+--+---------+--+----------+
The interest charged for the period is calculated by applying an effective
interest rate of 22.1%.
(iv) Secured bank loans
In 2009, a subsidiary of the Group obtained a USD 4,751 thousand secured loan
denominated in USD from JSC SB "Sberbank" at a fixed rate of 13.75% per annum.
The loan is to be repaid
on 5 December 2010. Interest is payable monthly.
In 2009, a subsidiary of the Group obtained a USD 1,854 thousand secured loan
denominated in KZT from JSC "Kazkommertsbank" at a fixed rate of 16% per annum.
The loan was fully repaid
in February 2010.
(v) Unsecured bank loan
In 2009, a subsidiary of the Group obtained a USD 4,348 thousand unsecured loan
denominated in USD from JSC SB "HSBC Bank Kazakhstan" at a fixed rate of 11% per
annum. The loan is to be repaid on 16 October 2010. Interest is payable monthly.
Pledges
Property, plant and equipment with book value of USD 11,803 thousand were
pledged to secure borrowings.
6. RELATED PARTIES
Related parties include shareholders, entities under common ownership and
control with the Group and companies presumed by management to be under control
of members of the Company's Board of Directors. During the six months ended 30
June 2010 and 2009, the Company and its subsidiaries entered into transactions
with related parties in relation to the provision of financing agreements from
its parent entities or entities under common ownership.
As a result of change of shareholders of the Company, OJSC "Polyus Gold" and its
subsidiaries became related parties to the Group from 30 July 2009.
Outstanding balances with related parties as at 30 June 2010 and 31 December
2009 were as following:
+-------------------------------------------+----------+--+----------+
| | 30 June | | 31 |
| | 2010 | | December |
| | | | 2009 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Jenington | | | |
+-------------------------------------------+----------+--+----------+
| Borrowings | 99,270 | | 47,892 |
+-------------------------------------------+----------+--+----------+
| Interest payable | 3,486 | | 644 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Gold Lion Holdings Limited | | | |
+-------------------------------------------+----------+--+----------+
| Borrowings | 21,913 | | 19,783 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Total | 124,669 | | 68,319 |
+-------------------------------------------+----------+--+----------+
The above amounts include USD 49,310 thousand together with accrued interest
that the holder can choose to convert into shares at a rate of USD 1.5 per one
share. However, the conversion is subject to regulatory approval from the
Government of the Republic of Kazakhstan and given the situation described in
note 1 such approval may not be received.
During the six months ended 30 June 2010 and 30 June 2009, Group entered into
the following transactions with related parties:
+-------------------------------------------+----------+--+----------+
| | Six | | Six |
| | months | | months |
| | ended | | ended |
| | 30 June | | 30 June |
| | 2010 | | 2009 |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Jenington | | | |
+-------------------------------------------+----------+--+----------+
| Loans received | 49,960 | | - |
+-------------------------------------------+----------+--+----------+
| | | | |
+-------------------------------------------+----------+--+----------+
| Gold Lion Holdings Limited | | | |
+-------------------------------------------+----------+--+----------+
| Loans received | - | | 31,025 |
+-------------------------------------------+----------+--+----------+
Loans were provided from related parties at the rates from LIBOR+6% to 10%.
Compensation of key management personnel for the six months ended 30 June 2010
amounted to USD 689 thousand (six months ended 30 June 2009: USD 2,086
thousand).
7. CONTINGENCIES
Litigation
The Group has a number of insignificant claims and litigation relating to sales
and purchases of goods and services from suppliers. Management believes that
none of these claims, individually or
in aggregate, will have a material
adverse impact on the Group. Refer to note 1 for description of
the claims
and litigations arisen after the reporting date with former shareholders of the
Company and with the Government of the Republic of Kazakhstan.
Taxation contingencies in the Republic of Kazakhstan
The taxation system in the Republic of Kazakhstan is relatively new and is
characterised by frequent changes in legislation, official pronouncements and
court decisions, which are often unclear, contradictory and subject to varying
interpretation by different tax authorities. Taxes are subject to review and
investigation by various levels of authorities, which have the authority to
impose severe fines, penalties and interest charges. A tax year generally
remains open for review by the tax authorities for ten subsequent calendar years
under newly amended tax law but under certain circumstances a tax year may
remain open longer.
These circumstances may create tax risks in the Republic of Kazakhstan that are
more significant than in other countries. Management believes that it has
provided adequately for tax liabilities based on its interpretations of
applicable tax legislation, official pronouncements and court decisions.
However, the interpretations of the relevant authorities could differ and the
effect on these interim condensed consolidated financial statements, if the
authorities were successful in enforcing their interpretations, could be
significant.
8. Principal risks and uncertainties
Republic of Kazakhstan
Although in recent years there has been a general improvement in economic
conditions in
the Republic of Kazakhstan, the country continues to display
certain characteristics of an emerging market. These include, but are not
limited to, currency controls and convertibility restrictions, relatively high
level of inflation and continuing efforts by the Government to implement
structural reforms.
As a result, laws and regulations affecting businesses in the Republic of
Kazakhstan continue to change rapidly, and the application of such laws and
regulations is unpredictable. Tax, currency and customs legislation within the
Republic of Kazakhstan is subject to varying interpretations, and other legal
and fiscal impediments contribute to the challenges faced by entities currently
operating in
the Republic of Kazakhstan. The future economic direction of
the Republic of Kazakhstan is largely dependent upon the effectiveness of
economic, fiscal and monetary measures undertaken by
the Government,
together with legal, regulatory, and political developments.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DMGZLKMLGGZG
Kazera Global (LSE:KZG)
過去 株価チャート
から 6 2024 まで 7 2024
Kazera Global (LSE:KZG)
過去 株価チャート
から 7 2023 まで 7 2024
