TIDMAMBR
RNS Number : 2695L
Ambrian PLC
30 September 2016
LONDON, 30 September 2016
AMBRIAN PLC
Interim Results for the six months to 30 June 2016
Ambrian plc ("Ambrian" or the "Company" and, together with its
subsidiaries, the "Group") today announces its unaudited
consolidated results for the six months ended 30 June 2016.
Highlights
-- Final deferred consideration paid for the business
combination with Consolidated General Minerals completed
-- Impairment charge of US $13.70 million relating to the
investment in Mozambique reflecting poor economic conditions and
uncertain outlook combined with a sharp depreciation of the local
currency
-- Loss before tax and impairment charge of US $3.58 million
(1H2015: loss of US $8.78 million) reflects a continuous
challenging trading environment partly offset by the Group's
efforts to de-risk the trading and logistics business
-- After 7 months of production, Cimentos da Beira brands are
well accepted in the market, a tribute to efforts made to offer a
broad spectrum of quality products both to the residential and
non-residential sectors
-- Total equity at 30 June 2016: US $41.53 million (31 December
2015: US $53.43 million), the decrease attributable to the
impairment charge and the loss for 1H2016
-- Net asset value attributable to owners of the parent as at 30
June 2016 of US $36.52 million (31 December 2015: US $46.24
million) equivalent to US 15.42 cents per share (31 December 2015:
US 19.53 cents)
-- Structural deficiencies have been identified in the clinker
bay building at Cimentos da Beira and the Group is considering
various actions against the contractors involved in the design and
construction of the building to cover any remedial costs or
consequential losses
-- Cimentos da Beira is in advanced negotiations with its term
loan lender, the Industrial Development Corporation of South Africa
Ltd ("IDC"), to vary certain terms of its loan agreements
Commenting on the results, Martin Abbott, non-executive
Chairman, stated:
"We have been pleased with the technical performance of the
cement plant in its first 7 months of operation. The plant is
producing quality cement products which are proving to be in demand
but, similarly to most of the continent's economies, the overall
economic climate in Mozambique is challenging and affecting our
short term goals. However, we continue to believe in the long term
GDP growth in Mozambique and the likely significant increase in per
capita cement consumption driven by the current housing deficit and
ambitious infrastructure plans.
With regards to our metal activities, there are signs that
strategic changes implemented at the end of 2015 are taking effect,
most notably in reducing cash utilisation and financing costs of
inventories. However we recognise that achieving a base load has
been particularly challenging in the current economic environment
and will adapt our structures accordingly.
We continuously review our business model with a view to reduce
its risk profile and earnings volatility."
Enquiries
Ambrian plc
Roger Clegg + 44 (0)20 7634 4700
Cenkos Securities plc
Neil McDonald + 44 (0)20 7397 8900
Nick Tulloch
Notes to Editors
Ambrian is active is sourcing and marketing a range of
industrials metals, minerals and value added products to end users
worldwide. We pursue selective strategic acquisitions and ventures
which can demonstrate a compelling industrial, commercial and
financial justification and ultimately strengthen Ambrian's supply
chain and value added activities. Ambrian's services add the right
value at every stage of the supply chain; we plan procurement and
logistics to streamline and simplify transportation and deliver on
time commodities in the most cost efficient manner from remote
locations to wherever they are needed by our customers. Ambrian
also capitalizes on opportunities to improve margins and grow
shareholder value through diversifying into sourcing and
processing. This has enabled it to expand its business into the
manufacturing and distribution of branded cement products to
professional and individual customers in Mozambique.
Ambrian is quoted on the Alternative Investment Market of the
London Stock Exchange under the ticker symbol AMBR. Further
information on the Group is available on the Company's website:
www.ambrian.com or the website of Cimentos da Beira Lda:
www.cdb.co.mz.
Chairman's & Chief Executive's Statement
Gross profit for the Group for the six months ended 30 June 2016
was US $1.80 million on a turnover of US $0.57 billion (1H 2015:
negative US $3.37 million on a turnover of US $0.92 billion).
For the period under review EBITDA was a loss of US $0.49
million (1H2015: US $8.74 million loss), primarily a function of
corporate overheads. EBITDA is adjusted to exclude the foreign
exchange loss attributable to the conversion of the VAT receivable
denominated in local currency and created over the construction
period of the cement plant in Mozambique.
Group loss before tax and impairment charge for the six months
ended 30 June 2016 amounted to US $3.58 million (1H 2015: loss
before tax of US $8.78 million). Within this, trading and logistics
reported a loss before tax of US $0.95 million for the period (1H
2015: loss before tax of US $5.95 million). The cement business
reported a loss before tax and impairment charge of US $2.31
million for the period (1H 2015: loss before tax of US $2.53
million).
Trading & Logistics
Commodity markets saw varying degrees of recovery from 2015 amid
fleeting signs of a pickup in apparent consumption in China and
forecast global supply shortages. At the beginning of the year,
with opportunistic investors betting on China's economic stimulus
and industrial reforms and a shortage of construction materials,
there was a surge in prices for a number of commodities. As a
result, the Company benefited from an arbitrage window between
Chinese and offshore premiums. However, from the second quarter of
the year onwards, regulatory curbs on credit and a lack of
investment appetite from the private sector led to faltering
industrial output and slower than anticipated retail sales
growth.
Although some metal markets such as for zinc and nickel have
benefited from more balanced supply and demand drivers, the copper
market which remains a significant part of the Company's business
continues to be negatively affected by increasing forecast supply
of product from mines and significant Chinese exports of refined
metal. At the end of the first half, copper premiums in China were
down approximately 50% from the beginning of the year, with little
to no trading interest from market participants.
As a result and despite a good start to the year, reduced
premiums and volumes (down 20% compared to first half of 2015) in
the second quarter lead to a modest loss after overheads and
expenses. Against this uncertain economic backdrop, the business
has continued to build on the actions implemented at the end of
2015. These have included keeping inventories and stocks to a
minimum but more significantly emphasising repeat business with our
historical customer base whilst reducing our spot interventions in
a volatile market.
Cement
Cimentos da Beira Lda ("CDB"), a subsidiary of the Company, has
been provided with a US $13.5 million and a US $5.5 million term
loan facilities from the Industrial Development Corporation of
South Africa Ltd ("IDC") to assist in the financing of its cement
plant in Mozambique. At the reporting date both term loans had been
fully drawn down. These loans are repayable in 60 equal monthly
instalments from April 2016 onwards. No repayments of the loans had
been made by the CDB as at the date of publication of the Group's
condensed consolidated interim financial statements as at 30 June
2016. As a result, at the reporting date, CDB was in default under
the existing term loan agreements with the IDC.
Negotiations have been ongoing between CDB and the IDC over the
past months as to the deferral of the repayment of the term loans.
CDB and IDC have agreed to a tentative restructuring of the term
loans with the first semi-annual repayments under the term loans
starting in January 2018. Repayments will be in equal semi-annual
payments and the maturity date of both term loans will be in 2023.
The tentative restructuring of the term loans is subject to certain
approvals, final documentation and conditions precedent customary
for a transaction of this nature. At the date of publication of the
Group's condensed consolidated interim financial statements as at
30 June 2016 approvals, final documentation and conditions
precedent were still outstanding.
In light of market drivers that have significantly changed for
the worst since the Group acquired this business, it is felt
prudent that the carrying value of the plant be impaired by US
$13.70 million, reducing the carrying value to US $60.94 million.
It should be noted that the impairment charge of US $ 13.70 million
is significantly less than the US $26.17 million fair value uplift
on property, plant and equipment that was recognised at the time of
the business combination when the cement plant was acquired in
March 2015.
The factors that were relevant in making this decision were:
i) the sharp erosion of the local currency against the US
dollar, approximately 35% since the beginning of the year and
approximately 57% when compared to long term estimates made at the
time of the acquisition;
ii) the significant drop in cash margins, a function of lower
cement prices denominated in US dollar combined with a cost basis
which is largely US dollar denominated;
iii) the reduction in disposable income over the last twelve
months and the punitive credit conditions offered by local
commercial banks which are expected to have a negative impact on
the residential and commercial construction sector over the
mid-term;
iv) the lack of tangible evidence that the Mozambique government
will embark on a program that could stimulate economic growth in
the region; and
v) the difficulties for local producers to competitively export
or access other national markets due to the lack of efficient
infrastructure and transport.
We are satisfied with the technical performance of the cement
plant in its first few months of operations and believe that the
quality cement produced is proving attractive both to our retail
customers and the construction sector. However, we have encountered
bearing capacity failures below the clinker stockpile, settlement
and lateral movements of the ground, and slope instability around
the perimeter of the clinker bay building. The clinker is
stockpiled in a large covered bay that has now been severely
affected by these ground movements. An expert's assessment has been
completed and we are currently evaluating its conclusions. We have
also given notice to the contractors, including the Erection
Procurement and Construction Management contractor responsible for
the design, that their respective responsibilities could be
engaged. Based on the expert's and our preliminary findings,
remedial costs could be significant and the Company will assess its
options to claim such amounts from the contractors if
warranted.
Sales volumes for the first half of 2016 were lower than
forecasted as a result of increased competitive pressure combined
with reduced disposable income and difficult credit conditions
affecting the local residential and commercial construction
sectors. Infrastructure projects have also been affected by the
country's difficulties in securing funding and the drop in direct
foreign investment flows.
With respect to bulk sales, which are mostly tailored to the
commercial and infrastructure market segments, construction
activities over the first few months of the year were subdued but
improved significantly during the second quarter. Improving sales
are achieved with concrete product manufacturers and increasing
amounts of customised cement solutions are now being supplied to
customers engaged in the construction of infrastructure projects in
the region.
Sales of bagged cement have suffered from aggressive competition
as industry participants seek to maintain market share in Central
Mozambique. However our brand's acceptance and superior quality is
increasingly recognised and efforts are continuing by the sales
team to promote the products' advantages to block makers, concrete
product manufacturers and construction companies alike, a large
section of our customer base. We expect that our sales efforts for
bagged cement will prove more assertive as our new commercial
director stamps his mark on the organisation and we assist
wholesalers and retailers to drive point-of-sale traffic and sales
with a comprehensive marketing approach. Finally, we have made good
inroads with well-established building material retailers that are
showing strong interest to distribute our premium products into
Central Mozambique, thus offering their customers an alternative to
their traditional product portfolio.
Concrete sales were marginal during the first months of the year
primarily attributable to seasonality factors. Thereafter the
situation improved somewhat with the resumption of projects in the
port area. Unfortunately we are missing out on a number of
opportunities which are related to the scarcity of concrete mixer
and pump trucks in the area. This will be addressed with the
purchase or alternative arrangements to control our own fleet of
equipment.
Historically cement prices did not vary much due to the
competitive makeup of the industry and the relatively stable
Metical over the preceding five years. With our introduction into
the market in December 2015 and slower growth in the apparent
cement consumption, we noted a severe reduction in industry wide
selling prices in the first quarter of 2016 and some aggressive
selling tactics to maintain market share. Simultaneously the
Metical collapsed against the US dollar. More frequent and
successive industry wide price increases have yet to compensate for
the sharp drop of the local currency against the US dollar.
Raw material unit costs and usage factors have reduced over the
period. As we continue optimizing our process, we expect a further
reduction in unit costs. However this has not compensated for the
erosion of cement prices in US dollar equivalent. Margins have
further been put under pressure by a slower ramp up of production
to forecast levels, primarily a function of the weak market
fundamentals. We are currently working on solutions to increase
sales volumes.
There have been changes in the management of the cement plant in
recent months with a number of new appointments. These include the
commercial director, the plant manager and the finance and
administration director. All of the appointees have experience in
the cement sector and we expect that they will contribute
positively to our business performance in the near future.
The challenges that the country faces are not unique for an
emerging economy. We remain confident of the long-term growth
prospects in Central Mozambique and more particularly of the Beira
corridor a natural gateway for the hinterland and landlocked
countries such as Zambia, Malawi and Zimbabwe.
Board Changes
It was announced at the Annual General Meeting that Robert Adair
who had served as Chairman and a member of the board of directors
since February 2015, resigned as a non-executive director of the
Company. Robert decided that after steering the company through the
merger with Consolidated General Minerals and the start-up of the
cement plant in Mozambique it was an opportune time to step down.
We would like to thank Robert for his valuable contribution to the
Company over the last years and in particular during the time
running up to the merger and wish him well in the future.
Martin Abbott has agreed to become the interim Chairman whilst a
Nominations Committee comprised of non-executive directors seeks a
candidate for the position of Chairman on a permanent basis.
Current Trading and Future Prospects
Trading and Logistics
During the last few months we have introduced some significant
changes in the way we conduct our business. The Company is more
focused on matched business flows with its existing supplier and
client base, whilst reducing arbitrage activities and
inventories.
Cement
We expect unit costs to further reduce over the remainder of the
year as a result of a decrease in input unit costs, feed
optimisation and a ramp up in volumes. An area of focus will be
packing costs and the proportion of returned pallets. The Central
Mozambique market is not mature enough and pallets are not an
option at this stage. We are therefore considering a direct truck
loading section in the packing plant.
Finally we are actively exploring the purchase or lease of a
fleet of trucks or similar arrangements to improve our cement
distribution capabilities and refine our pricing strategy. More
importantly part of the fleet will secure our transport and pumping
capacity for our concrete products.
Strategy
We constantly review our strategic targets and the necessity to
preserve and free up capital to build a portfolio of businesses
with a balanced risk profile and defensive income drivers. This has
proven to be difficult in the current environment. We are currently
assessing a number of strategies, investments and corporate
transactions which we believe could assist the Group in achieving
these targets. Finally we seek to adapt our business model so as to
reduce earnings' volatility and protect our capital base going
forward.
Martin Abbott Jean-Pierre Conrad
Chairman Chief Executive
Financial Review
Overview
Gross profit for the Group was US $1.80 million on turnover of
US $0.57 billion for the six months ended 30 June 2016 (1H 2015: US
$3.37 million gross loss on turnover of US $0.92 billion).
The loss before impairment charge and tax was US $3.58 million,
compared with a loss of US $8.78 million for the same period last
year, reflecting a loss from cement operations.
In light of market drivers that have significantly changed for
the worst since the Group acquired the cement business, it is felt
prudent that the carrying value of the plant be impaired by US
$13.70 million, reducing the carrying value to US $60.94 million.
It should be noted that the impairment charge of US $ 13.70 million
is significantly less than the US $26.17 million fair value uplift
on property, plant and equipment that was recognised at the time of
the business combination when the cement plant was acquired in
March 2015.
The factors that were relevant in making this decision were:
i) the sharp erosion of the local currency against the US
dollar, approximately 35% since the beginning of the year and 57%
when compared to long term estimates made at the time of the
acquisition;
ii) the significant drop in margins, a function of lower cement
prices denominated in US dollar combined with a cost basis which is
largely US dollar denominated;
iii) the reduction in disposable income over the last twelve
months and the punitive credit conditions offered by local
commercial banks which are expected to have a negative impact on
the residential and commercial construction sector over the
mid-term;
iv) the lack of any tangible evidence that the Mozambique
government will embark on a program that could stimulate economic
growth in the region; and
v) the difficulties for local producers to competitively export
or access other national markets due to the lack of efficient
infrastructure and transport.
Trading and Logistics
This activity reported a loss before tax for the period under
review of US $0.95 million (1H 2015: Loss before tax of US $5.95
million), the result of continued challenging market conditions in
the first half of 2016 but without the requirement for any
provisions as was the case in the first half of 2015.
Turnover of US $562 million (1H 2015: US $921 million) reflects
lower commodity prices and volumes traded, approximately 38 per
cent lower compared to the same period in 2015. The period has seen
average copper prices per tonne drop from US $5,923 in the first
half of 2015 to US $4,793 in the first half of 2016.
Cement
Turnover of US $5.44 million for the period under review shows
the cement plant coming into production compared to the comparative
period in 2015 when cement production had not commenced and
turnover related only to concrete with turnover of US $0.13 million
for that period.
The business reported a loss before tax of US $16.01 million
which included an impairment charge of US $13.70 million (1H 2015:
Loss before tax of US $2.53 million with no impairment charge). The
impairment charge, depreciation of the plant and interest payable
on the long term loan finance on the plant contributed
significantly to these losses. In fact EBITDA for the period was a
profit of US $ 0.95 million (1H 2015: Loss US $2.53 million)
excluding the foreign exchange effect on the VAT receivable created
at the time the plant was under construction.
Expenses
Group administrative expenses excluding foreign exchange
gains/(losses) were US $3.20 million for the six months to 30 June
2016 (1H 2015: US $2.94 million), of which US $0.39 million (1H
2015: US $0.85 million) was represented by Group corporate
overheads. Higher administrative expenses are a result of the
commencement of commercial operations at the cement plant. Total
headcount at 30 June 2016 was 124, an increase since 31 December
2015 of 62, due to the commencement of commercial operations at the
cement plant.
Balance Sheet
Total assets were US $282 million at 30 June 2016 compared with
US $419 million at 31 December 2015. The majority of the decrease
is due to impairment charge on the cement plant and the reduction
in working capital assets in the trading business.
The Group's cash resources totalled US $3.96 million at 30 June
2016 compared with US $9.82 million at 31 December 2015. The
Group's cash resources can fluctuate significantly on a daily basis
due to haircuts and margin calls in the trading business.
As already reported in the Chairman's and Chief Executive's
Statement, there are ongoing negotiations between CDB and the IDC
regarding deferral of the repayment of the term loans. Although the
negotiations have progressed well, at the date of publication of
the Group's condensed consolidated interim financial statements as
at 30 June 2016, approvals, final documentation and conditions
precedent were still outstanding. The Group is therefore required
to categorise all liabilities with the IDC as Current Liabilities,
which would normally be reported as Non-Current Liabilities.
These conditions indicate the existence of a material
uncertainty which may cast doubt about the Group's ability to
continue as a going concern. The Directors are confident that the
revised terms regarding the deferral of the loan repayments to
January 2018 will be formally approved by the IDC without undue
delay.
Total equity before non-controlling interests was US $36.52
million at 30 June 2016 compared with US $46.24 million at 31
December 2015. Tangible net asset value per share which is equity
attributable to the owners of the parent was US 15.42 cents per
share (31 December 2015: US 19.53 cents). Tangible net asset value
per share is based on 236,810,651 ordinary shares outstanding at 30
June 2016, excluding treasury shares, non-treasury shares and
shares held by the Ambrian Employee Benefit Trust (31 December
2015: 236,810,651 ordinary shares outstanding). The reduction in
tangible net asset per share is attributable to the losses incurred
by the Group in the six months to 30 June 2016.
Ambrian plc
Condensed Consolidated Statement of Comprehensive Income
(unaudited) (unaudited) (audited)
Six Six
months months Year
to 30 to 30 to 31
June June December
2016 2015 2015
US $000's US $000's US $000's
(restated)
Turnover 567,689 920,691 1,897,528
Cost of Sales (565,889) (924,647) (1,902,214)
------------ ------------ ------------
Net revenue 1,800 (3,956) (4,686)
Investment portfolio gains - 590 676
------------ ------------ ------------
Gross profit / (loss) 1,800 (3,366) (4,010)
Administrative expenses (3,198) (5,378) (4,742)
Depreciation and amortisation
expense (1,315) (38) (435)
Impairment charge (note
3) (13,703) - -
Operating loss (16,416) (8,782) (9,187)
Finance income 530 - 428
Finance costs (1,400) - (601)
Loss before tax (17,286) (8,782) (9,360)
Taxation 5,384 (23) 2,339
Loss after tax (11,902) (8,805) (7,021)
------------ ------------ ------------
Other comprehensive (loss)/profit
Items that may be subsequently
reclassified to
profit/(loss)
Exchange profit arising
from translation of
foreign operations - 59 59
------------ ------------ ------------
Total other comprehensive
(loss)/profit - 59 59
------------ ------------ ------------
Total comprehensive loss (11,902) (8,746) (6,962)
============ ============ ============
(Loss)/profit attributable
to:
Owners of parent (9,723) (8,526) (7,324)
Non-controlling interest (2,179) (279) 303
(11,902) (8,805) (7,021)
------------ ------------ ------------
Total comprehensive (loss)/profit
attributable to:
Owners of parent (9,723) (8,467) (7,265)
Non-controlling interest (2,179) (279) 303
(11,902) (8,746) (6,962)
------------ ------------ ------------
Loss per share in USD cents:
Basic and diluted earnings
per share (note 5) (4.11) (7.15) (3.87)
Ambrian plc
Condensed Consolidated Statement of Financial Position
(unaudited) (unaudited) (audited)
As at As at As at
30 June 30 June 31 December
2016 2015 2015
US $000's US $000's US $000's
ASSETS (restated)
Non-current assets
Property, plant and equipment 62,064 70,024 76,036
Deferred tax asset 3,305 167 2,459
------------ ------------ -------------
65,369 70,191 78,495
Current assets
Financial assets at fair
value through profit or
loss 162 3,908 7,495
Inventory 163,404 325,228 262,541
Trade and other receivables 49,132 31,833 60,083
Current tax receivable 44 - 250
Cash and cash equivalents 3,962 11,985 9,823
------------ ------------ -------------
216,704 372,954 340,192
Total assets 282,073 443,145 418,687
LIABILITIES
Non-current liabilities
Long-term borrowings (844) (20,175) (21,376)
Deferred tax liability (3,001) (8,492) (7,554)
------------ ------------ -------------
(3,845) (28,667) (28,930)
Current liabilities
Financial liabilities at
fair value through profit
or loss (5,340) - (2,675)
Short-term borrowings (161,624) (251,475) (225,219)
Short-term liabilities under
sale and repurchase agreements (23,312) (79,167) (43,745)
Trade and other payables (46,427) (32,769) (64,691)
------------ ------------ -------------
(236,703) (363,411) (336,330)
Total liabilities (240,548) (392,078) (365,260)
Total net assets 41,525 51,067 53,427
============ ============ =============
Capital and reserves
Share capital 4,222 4,222 4,222
Share premium 18,044 18,044 18,044
Capital redemption reserve 15,898 15,898 15,898
Merger relief reserve 24,770 24,770 24,770
Shares to be issued 1,477 1,678 1,477
Treasury shares (1,986) (1,986) (1,986)
Other reserves (4,980) (5,181) (4,980)
Retained losses (16,545) (8,024) (6,822)
Employee benefit trust (10,870) (11,446) (10,870)
Share based payment reserve 8,052 8,052 8,052
Exchange reserve (1,567) (1,567) (1,567)
------------ ------------ -------------
Total equity attributable
to the owner of the parent 36,515 44,460 46,238
Non-controlling interest 5,010 6,607 7,189
Total equity 41,525 51,067 53,427
============ ============ =============
Ambrian plc
Condensed Consolidated Statement of Changes in Equity
Total
equity
attributable
Shares Share to the
Share Capital Merger to based Employee owner
Share premium redemption relief be Treasury Other Retained payments benefit Exchange of the Non-controlling Total
capital account reserve reserve issued shares reserve losses reserve trust reserve parent interest equity
US US US US US US US US US $000's US US US $000's US $000's US
$000's $000's $000's $000's $000's $000's $000's $000's $000's $000's $000's
Balance at 31
December 2014 17,665 18,044 - - - (1,986) - 502 8,052 (11,446) (1,626) 29,205 (58) 29,147
---------- -------- ----------- --------- -------- --------- ---------- -------------------- ---------- --------- --------- ------------- ----------------- ----------
Comprehensive
income
Loss for the
period (restated) - - - - - - - (8,526) - - - (8,526) (279) (8,805)
Foreign currency
adjustments
(restated) - - - - - - - - - - 59 59 - 59
---------- -------- ----------- --------- -------- --------- ---------- -------------------- ---------- --------- --------- ------------- ----------------- ----------
Total comprehensive
loss for the
period (restated) - - - - - - - (8,526) - - 59 (8,467) (279) (8,746)
Arising on issuance
of convertible
securities - - - - - - (5,181) - - - - (5,181) - (5,181)
Arising on acquisition
fair value - - - - - - - - - - - - 6,944 6,944
Share issuance
costs - - - (1,296) - - - - - - - (1,296) - (1,296)
Issuance of
Convertible
securities 2,455 - - 26,066 1,678 - - - - - - 30,199 - 30,199
---------- -------- ----------- --------- -------- --------- ---------- -------------------- ---------- --------- --------- ------------- ----------------- ----------
Transactions
with owners 2,455 - - 24,770 1,678 - (5,181) - - - - 30,199 - 30,199
Balance at 30
June 2015
(unaudited)(restated) 20,120 18,044 - 24,770 1,678 (1,986) (5,181) (8,024) 8,052 (11,446) (1,567) 44,460 6,607 51,067
========== ======== =========== ========= ======== ========= ========== ==================== ========== ========= ========= ============= ================= ==========
Comprehensive
income
Profit for the
period - - - - - - - 1,202 - - - 1,202 582 1,784
---------- -------- ----------- --------- -------- --------- ---------- -------------------- ---------- --------- --------- ------------- ----------------- ----------
Total comprehensive
income for the
period - - - - - - - 1,202 - - - 1,202 582 1,784
Redemption of
Deferred 9p
shares (15,898) - 15,898 - - - - - - - - - - -
Reclassification
of convertible
securities - - - - (201) - 201 - - - - - - -
Exercise of
options - - - - - - - - 576 - 576 - 576
---------- -------- ----------- --------- -------- --------- ---------- -------------------- ---------- --------- --------- ------------- ----------------- ----------
Transactions
with owners - - - - - - - - 576 - 576 - 576
---------- -------- ----------- --------- -------- --------- ---------- -------------------- ---------- --------- --------- ------------- ----------------- ----------
Balance at 31
December 2015 4,222 18,044 15,898 24,770 1,477 (1,986) (4,980) (6,822) 8,052 (10,870) (1,567) 46,238 7,189 53,427
========== ======== =========== ========= ======== ========= ========== ==================== ========== ========= ========= ============= ================= ==========
Comprehensive
income
Loss for the
period - - - - - - (9,723) - - - (9,723) (2,179) (11,902)
---------- -------- ----------- --------- -------- --------- ---------- -------------------- ---------- --------- --------- ------------- ----------------- ----------
Total comprehensive
loss for the
period - - - - - - (9,723) - - - (9,723) (2,179) (11,902)
Balance at 30
June 2016 (unaudited) 4,222 18,044 15,898 24,770 1,477 (1,986) (4,980) (16,545) 8,052 (10,870) (1,567) 36,515 5,010 41,525
========== ======== =========== ========= ======== ========= ========== ==================== ========== ========= ========= ============= ================= ==========
Ambrian plc
Condensed Consolidated Statement of Cashflows
(unaudited) (unaudited) (audited)
(restated)
Six months Six
to 30 months Year to
June to 30 31 December
2016 June 2015
2015
US $ US $ US $ 000's
000's 000's
Loss for the period (11,902) (8,805) (7,021)
Adjustments for:
Depreciation of property, plant
and equipment 1,315 38 435
Impairment of property, plant
and equipment 13,703 - -
Share-based payment expense - - 72
Foreign exchange gains 328 2,406 (825)
Taxation (5,384) 23 (2,339)
Realised gain on financial assets
designated at fair value - - (676)
Decrease in inventories 99,137 4,317 67,004
Decrease in trade and other receivables 9,840 49,143 22,377
Unrealised gains/(losses) on
financial liabilities at fair
value 2,665 - (428)
Unrealised gains on financial
assets at fair value 7,333 13,911 11,115
(Increase)/decrease in trade
and other payables (17,430) (19,025) 12,545
------------ ------------ --------------
Cash generated in operations 99,605 42,008 102,259
Taxation received/(paid) 191 (216) (362)
Net cash flow generated in operating
activities 99,796 41,792 101,897
------------ ------------ --------------
Investing activities
Purchase of property, plant and
equipment (1,046) (3,504) (8,955)
Acquisition of subsidiary, net
of cash acquired - 424 424
------------ ------------
Net cash used in investing activities (1,046) (3,080) (8,531)
------------ ------------ --------------
Financing activities
Proceeds from issue of convertible
loan notes - - 4,121
Proceeds received from the exercise
of options in Employee Benefit
Trust - - 576
(Decrease)/Increase in short
term liabilities under sale and
repurchase agreements (20,433) 33,466 (1,956)
Decrease in short term borrowings (84,192) (66,046) (89,846)
Increase/(decrease) in long term
borrowings 65 (2,521) (4,793)
Share issue costs on acquisition - (1,296) (1,296)
Net cash used in financing activities (104,560) (36,397) (93,194)
------------ ------------ --------------
Net (decrease)/increase in cash
and cash equivalents (5,810) 2,315 172
Cash and cash equivalents at
the beginning of the year 9,823 9,661 9,661
Effect of foreign exchange rate
differences on cash and cash
equivalents (51) 9 (10)
Cash and cash equivalents at
the end of the year 3,962 11,985 9,823
============ ============ ==============
Notes to the Condensed Consolidated Interim Financial
Statements
1. Basis of preparation
The condensed interim financial statements are for the six
months ended 30 June 2016. The financial information set out in
these condensed interim financial statements does not constitute
statutory accounts as defined in Section 434(3) of the Companies
Act 2006. The comparative financial information for the year ended
31 December 2015 in this interim report does not constitute
statutory financial statements for that year. The statutory
financial statements for 31 December 2015 have been delivered to
the Registrar of Companies. The auditor's report on those financial
statements was unqualified, did not draw attention to any matters
by way of emphasis, and did not contain a statement under s.498(2)
or s.498(3) of the Companies Act 2006.
The accounts for the period have been prepared in accordance
with International Accounting Standard 34 "Interim Financial
Reporting" ("IAS 34") and the accounting policies are consistent
with those of the annual financial statements for the year ended 31
December 2015, unless otherwise stated, and those envisaged for the
financial statements for the year ended 31 December 2016.
These condensed interim financial statements have been reviewed
by BDO LLP, but not audited.
The Group's results are not materially affected by seasonal
variations.
Cimentos da Beira Lda ("CDB"), a subsidiary of the Company, has
been provided with a US $13.5 million and a US $5.5 million term
loan facilities from the Industrial Development Corporation of
South Africa Ltd ("IDC") to assist in the financing of its cement
plant in Mozambique. At the reporting date both term loans had been
fully drawn down. These loans are repayable in 60 equal monthly
instalments from April 2016 onwards. No repayments of the loans had
been made by the CDB as at the date of publication of the Group's
condensed consolidated interim financial statements as at 30 June
2016. As a result, at the reporting date, CDB was in default under
the existing term loan agreements with the IDC.
Negotiations have been ongoing between CDB and the IDC over the
past months as to the deferral of the repayment of the term loans.
CDB and IDC have agreed to a tentative restructuring of the term
loans with the first semi-annual repayments under the term loans
starting in January 2018. Repayments will be in equal semi-annual
payments and the maturity date of both term loans will be in 2023.
The tentative restructuring of the term loans is subject to certain
approvals, final documentation and conditions precedent customary
for a transaction of this nature. At the date of publication of the
Group's condensed consolidated interim financial statements as at
30 June 2016 approvals, final documentation and conditions
precedent were still outstanding. The Group is therefore required
to categorise all liabilities with the IDC as Current Liabilities,
which would normally be reported as Non-Current Liabilities.
The IDC has also advanced a US $4m junior convertible loan to
CDB which is either repayable or convertible into an equity
interest in CDB within a six month period following the full
amortisation of both term loans.
These conditions indicate the existence of a material
uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern. However, the Directors are
confident that the revised terms regarding the deferral of the loan
repayments to January 2018 will be formally approved by the IDC
without undue delay.
The Directors have a reasonable expectation that the Group has
adequate resources to continue its operational existence for the
foreseeable future. For this reason they continue to adopt the
going concern basis in preparing the condensed consolidated interim
financial statements and the condensed consolidated interim
financial statements do not include the adjustments that would
result if the Group was unable to continue as a going concern.
The interim financial statements were approved by the Directors
on 29 September 2016 and copies are available to the public free of
charge from the Company at 62-64 Cornhill, London EC3V 3NH during
normal office hours, Saturdays, Sundays and Bank Holidays except,
for 14 days from today.
Whilst preparing the condensed consolidated interim financial
statements, the directors noted that foreign exchange losses were
disclosed as exchange (loss)/profit arising from translation of
foreign operations in the six months to 30 June 2015. In hindsight
these items should have been taken to the income statement rather
than directly to reserves.
The below extract of the condensed consolidated interim
financial statements reflect the changes made as a result of this
error:
Condensed Consolidated Statement of Comprehensive Income
(unaudited)
Six months to 30 June
2015
After Before
correction correction
US $ 000's US $ 000's
Administrative expenses (5,378) (2,946)
Other comprehensive (loss)/profit
Exchange profit arising from
translation of
foreign operations 59 (2,373)
------------ ------------
Total comprehensive loss 8,746 8,746
Loss attributable to:
Owners of parent (8,526) (6,352)
Basic and diluted loss per
share (7.15) (5.33)
Condensed Consolidated Statement of Financial Position
(unaudited)
Six months to 30 June
2015
After Before
correction correction
US $ 000's US $ 000's
Retained losses (8,024) (5,850)
Exchange reserve (1,567) (3,741)
Total equity attributable to
the owner of the parent 44,460 44,460
Opening balances for the period have not been restated as the
correction does not affect opening equity.
2. Segmental Analysis
The Group has three reportable segments attributable to its
continuing operations including Head office:
-- Trading & logistics: comprises Ambrian Metals Limited and
its subsidiary companies, a physical metals and minerals
merchant.
-- Cement operations: comprises Cimentos da Beira, a cement mill located in Beira, Mozambique.
-- Head office: principally relates to overheads incurred in
operating the public limited company, providing support functions
to the operating businesses, and includes the remuneration of the
Directors of Ambrian plc.
Total income disclosed below includes investment and other
income. Head office includes realised and unrealised gains on
financial assets as a result of the investment portfolio.
Six months to
30 June 2016 Cost
(unaudited) Turnover of Sales Revenue Gross profit
US $000's US $000's US $000's US $000's
Trading & Logistics 562,246 (561,084) - 1,162
Cement 5,443 (4,805) - 638
Head office - - - -
Total 567,689 (565,889) - 1,800
========== ============ ========== ====================
Six months to
30 June 2015 Cost
(unaudited) Turnover of Sales Revenue Gross (loss)/profit
US $000's US $000's US $000's US $000's
Trading & Logistics 920,561 (924,528) (3,966)
Cement 130 (119) - 11
Head office - - 590 590
Total 920,691 (924,647) 590 (3,366)
========== ============ ========== ====================
Year to 31 December Cost
2015 Turnover of Sales Revenue Gross (loss)/profit
US $000's US $000's US $000's US $000's
Trading & Logistics 1,895,451 (1,900,327) - (4,876)
Cement 2,077 (1,887) - 190
Head office - - 676 676
Total 1,897,528 (1,902,214) 676 (4,010)
========== ============ ========== ====================
(unaudited) (unaudited) (audited)
(restated)
Six months Six months Year to
to 30 June to 30 June 31 December
2016 2015 2015
Adjusted Earnings US $000's US $000's US $000's
before interest,
tax, depreciation
and amortisation
("Adjusted EBITDA")
Trading & Logistics (905) (5,907) (8,824)
Cement 946 (2,535) 1,501
Head office (533) (302) (1,429)
(492) (8,744) (8,752)
============ ============ =============
(unaudited) (unaudited) (audited)
(restated)
Six months Six months Year to
to 30 June to 30 June 31 December
2016 2015 2015
Loss before tax US $000's US $000's US $000's
Trading & Logistics (952) (5,945) (8,917)
Cement (16,011) (2,535) 669
Head office (323) (302) (1,112)
(17,286) (8,782) (9,360)
============ ============ =============
(unaudited) (unaudited) (audited)
(restated)
Six months Six months Year to
to 30 June to 30 June 31 December
2016 2015 2015
Reconciliation of US $000's US $000's US $000's
Adjusted EBITDA
to Loss before tax
Adjusted EBITDA (492) (8,744) (8,752)
Foreign exchange
gains on working
capital (906) - -
Depreciation (1,315) (38) (435)
Impairment (13,703) - -
Finance income 530 - 428
Finance costs (1,400) - (601)
Loss before tax (17,286) (8,782) (9,360)
============ ============ ===============
(unaudited) (unaudited) (audited)
As at 30 As at 30 Year to
June 2016 June 2015 31 December
2015
US $000's US $000's US $000's
Total assets
Metals trading 212,202 376,143 336,194
Cement operations 69,420 66,643 82,170
Head office 451 359 323
282,073 443,145 418,687
============ ============ =============
Total liabilities
Metals trading 203,118 360,661 322,863
Cement operations 34,382 30,932 38,538
Head office 3,048 485 3,859
240,548 392,078 365,260
============ ============ =============
(unaudited) (unaudited) (audited)
Six months Six months Year to
to 30 June to 30 June 31 December
2016 2015 2015
Turnover US $000's US $ 000's US $000's
Eastern Asia 245,633 395,841 1,035,593
Western Asia 176,008 349,813 533,706
South East Asia 38,711 101,262 151,244
Other 107,337 73,645 176,985
(unaudited) (unaudited) (audited)
Six months Six months Year to
to 30 June to 30 June 31 December
2016 2015 2015
Customer Turnover US $000's US $000's US $000's
Customer A 73,273 172,145 302,002
Customer B 69,154 - 12,969
Other 425,262 748,546 1,582,557
Adjusted EBITDA is adjusted to exclude the foreign exchange
differences attributable to the VAT receivable created over the
construction period of the cement plant in Mozambique.
3. Impairment of Cement plant
During the period, the carrying value of the Cement plant held
in Mozambique was reviewed for impairment due to the following:
- The sharp erosion of the local currency against the US dollar,
approximately 35% since the beginning of the year and 57% when
compared to long term estimates made at the time of the
acquisition;
- The significant drop in margins, a function of lower cement
prices denominated in US dollar combined with a cost basis largely
US dollar denominated;
- The reduction in disposable income over the last twelve months
and the punitive credit conditions offered by local commercial
banks which are expected to have a negative impact on the
residential and commercial construction sector over the
mid-term;
- The lack of any tangible evidence that government will embark
on any program that could stimulate economic growth in the region;
and
- The difficulties for local producers to competitively export
or access other national markets due to the lack of efficient
infrastructure and transport.
Based on this evaluation, the Directors have determined that the
cement plant and related assets with a carrying amount of US $75
million were no longer recoverable and were in fact impaired and
wrote them down to their estimated value in use of US $60.0 million
with the impairment charge of US $13.7 million being recognised in
the Condensed Consolidated Statement of Comprehensive Income.
The recoverable amount for the cement plant has been assessed
using a value in use calculation based on expected future cash
flows generated by the cement operations segment, discounted to the
present value using a discount rate of 15.18% (2015: 15.18%).
4. Cash and cash equivalents
Within cash and cash equivalents there is restricted cash of US
$1,383,633 (30 June 2015: US $9,021,131). No cash (30 June 2015:
$2,500,000) was held as security for a letter of credit granted for
the benefit of the cement operations. The residual is deposits held
with banks and brokers in the metals trading business to cover any
potential adverse market price movements.
5. Earnings per share
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year,
excluding shares held in the Employee Benefit Trust on 30 June 2016
of 6,259,046 (2015: 6,259,046), Treasury shares of 30 June 2016 of
4,500,058 (2015: 4,500,058) and Non-treasury shares on 30 June 2016
of 28,812,192 (30 June 2015: 28,812,192).
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below. Diluted earnings
per share has not been calculated as the Group is loss making.
Six months Six months Year to
to 30 to 30 31 December
June 2016 June 2015 2015
US $000's US $000's US $000's
(unaudited) (unaudited) (audited)
Loss attributable to shareholders (9,723) (8,526) (7,324)
Diluted loss attributable
to shareholders (9,723) (8,526) (7,324)
Weighted average number
of shares 236,810,651 119,218,898 189,044,366
Dilutive effect of share
options 66,675,000 - 66,675,000
Basic earnings per share
US $ cents (4.11) (7.15) (3.87)
Diluted earnings per share
US $ cents (4.11) (7.15) (3.87)
6. Financial instruments
(unaudited) (unaudited)
As at 30 June 2016 As at 30 June 2015
Loans At fair Loans At fair
and Receivables value and Receivables value
at amortised through at amortised through
cost profit cost profit
or loss Total or loss Total
US $000's US $000's US $000's US $000's US $000's US $000's
Financial assets
Cash and cash
equivalents 3,962 - 3,962 11,985 - 11,985
Trade receivables
- current 44,790 - 44,790 31,438 - 31,438
Other receivables
- current 4,342 - 4,342 395 - 395
Financial assets
at fair value
through profit
or loss - equities - 162 162 - 191 191
Financial assets
at fair value
through profit
or loss - derivatives - - - - 3,717 3,717
Total 53,094 162 53,256 43,818 3,908 47,726
================= ========== ========== ================= ========== ==========
(unaudited) (unaudited)
As at 30 June 2016 As at 30 June 2015
Trade and At fair Trade At fair
other payables value and other value
at amortised through payables through
cost profit at amortised profit
or loss Total cost or loss Total
US $000's US $000's US $000's US $000's US $000's US $000's
Financial
liabilities
Trade payables 17,958 - 17,958 9,181 - 9,181
Other payables
- current 65 - 65 2,855 - 2,855
Short term
borrowings 161,624 - 161,624 251,475 - 251,475
Accruals and
deferred income 525 27,878 28,403 - 20,733 20,733
Short term
liabilities
under sale
and repurchase
agreements 23,312 - 23,312 79,167 - 79,167
Financial
liabilities
at fair value
through profit
or loss- derivatives - 5,340 5,340 - - -
Long term
borrowings 844 - 844 20,175 - 20,175
Total 204,328 33,218 237,546 362,853 20,733 383,586
================ ========== ========== ============== ========== ==========
Financial assets and financial liabilities are classified in
their entirety into only one of three levels.
The fair value hierarchy has the following levels:
-- Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities
-- Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices)
-- Level 3 - inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
Level 1 Level 2 Level 3
As at 30 2016 2015 2016 2015 2016 2015
June
(unaudited) US $000's US $000's US $000's US $000's US $000's US $000's
Financial
assets
Equity investments - - - 162 191
Derivative - 3,717 - - - -
financial
assets
Total - 3,717 - - 162 191
============ ========== ========== ========== ========== ==========
US $000's US $000's US $000's US $000's US $000's US $000's
Financial
liabilities
Accruals
and deferred
income 27,878 20,733 - - - -
Derivative 5,340 - - - - -
financial
liabilities
Total 33,218 20,733 - - - -
========== ========== ========== ========== ========== ==========
7. Non-controlling interest
The non-controlling interest ("NCI") disclosed in the condensed
consolidated statement of comprehensive income and condensed
consolidated statement of financial position represents a 20%
economic interest in Cimentos da Beira ("CdB"), whose principal
asset is in Mozambique. This 20% interest is held by the Industrial
Development Corporation of South Africa Limited ("IDC") by means of
a convertible loan agreement whereby the IDC has an option to
subscribe for 20% of the issued share capital of CdB.
8. Share Capital and Share Premium
As at As at As at 31
30 June 30 June December
2016 2015 2015
Authorised Number Number Number
Ordinary shares at 1p
each 424,727,841 424,727,841 424,727,841
Deferred shares at 9p 111,361,208 111,361,208 111,361,208
Called up, allotted Number US $000's
and fully paid
Ordinary shares at 1p each
At 1 January 2015 111,361,208 17,665
Subdivision of shares - (15,898)
Shares issued arising from business
combination of Consolidated
General Minerals (Schweiz) AG 165,020,740 2,455
-------------- ------------
At 31 December 2015 and 30 June
2016 (unaudited) 276,381,948 4,222
============== ============
Deferred shares at 9p
At 1 January 2015 - -
Subdivision of shares 111,361,208 15,898
Redemption of Deferred shares (111,361,208) (15,898)
-------------- ------------
At 31 December 2015 and 30 June - -
2016 (unaudited)
============== ============
Shares to be issued
Convertible Securities
At 1 January 2015 - -
Second Tranche Deferred Convertible
Securities 9,707,102 1,678
Less: Portion to be issued to
Ambrian Metals Limited (1,160,454) (201)
-------------- ------------
At 31 December 2015
and 30 June 2016 (unaudited) 8,546,648 1,477
============== ============
9. Related party disclosures
Related party transactions during the period are as follows:
Transaction amount Balance Owed
Six Six As at As at
Related party Type of months months Year 30 June 30 June
relationship transaction to 30 to 30 to 31 2016 2015 As at
June June December 31 December
2016 2015 2015 2015
US $000's US $000's US $000's US $000's US $000's US $000's
Convertible
loan note
Directors interest 78 - 32 - - 32
Convertible
Key management loan note
personnel interest 7 - 3 - - 3
Companies in
which directors
or their immediate
family have
a significant Convertible
/ controlling loan note
interest interest 40 - 17 - - 17
Convertible
Director loan note - - 1,552 1,552 - 1,552
Key management Convertible
personnel loan note - - 145 145 - 145
Companies in
which directors
or their immediate
family have
a significant
/ controlling Convertible
interest loan note - - 800 800 - 800
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BIGDCCXDBGLC
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