REG - Antofagasta PLC - 2014 PRELIMINARY RESULTS <Origin Href="QuoteRef">ANTO.L</Origin> - Part 4
17/03/2015 07:02
- Part 4: For the preceding part double click ID:nRSQ5979Hc
the attributable system.
The default position for the Group's operating companies is the partially-integrated system. The companies can each elect
to apply the attributable system, provided there is unanimous agreement from that company's shareholders.
Under the partially-integrated system the corporate tax rate will be 25.5% in 2017 and 27% from 2018 onwards. The company's
shareholders will pay withholding tax based on the cash distributions made by the company, as with the current tax system.
If the company's shareholders are not tax resident in countries with applicable tax treaties with Chile the withholding tax
rate will be 17.45%, and so if the company distributes all of its earnings the total corporate and withholding tax burden
will be 44.45%. If the company's shareholders are tax resident in countries with applicable tax treaties with Chile the
withholding tax will be 8%, and so if the company distributes all of its earnings the total corporate and withholding tax
burden will be 35%.
Under the attributable system the corporate tax rate will be 25% from 2017 onwards. The company's shareholders must pay
withholding based on the profits earned by the company in the period, rather than based on cash distributions, at a rate of
10%. The total tax burden will therefore be 35%.
In order for any of the Group's operating companies to apply the attributable system rather than the default
partially-integrated system, that company's shareholders must make a unanimous election to the Chilean Revenue Service by
November 2016. The attributable system will then apply to that company for 5 years before it is possible to make a further
election to move to the partially-integrated system if the company does not wish to continue with the attributable system
at that point.
The Group's deferred tax balances have been recalculated using the new tax rates which are expected to apply in the future
periods when the temporary differences are expected to reverse. Given that the partially integrated system is the default
system for the Group's operating companies, and is the system which will apply unless the companies' shareholders make a
unanimous election to adopt the attributable system, the partially integrated system rates have been used when
recalculating the deferred tax balances. This has resulted in an increase in the net deferred tax liabilities during 2014
of $220.6 million, which has been reflected via a deferred tax charge in the income statement. This has resulted in a total
effective tax rate for the Group in 2014 of 45.9%. Excluding this deferred tax charge, the effective tax rate for the Group
in 2014 would have been 31.9%. The impact on 2014 net earnings of this deferred tax charge is $142.2 million and the impact
on 2014 earnings per share is 14.4 cent per share.
The Group's mining operations are also subject to a mining tax (royalty). Production from Los Pelambres, the Tesoro Central
and Mirador pits at Centinela cathodes and Michilla are subject to a rate of 4% of taxable operating profit and Centinela
concentrates of 5%, and production from the Tesoro North East pit and the run-of-mine processing at Centinela cathodes is
subject to a rate of between 5-14%, depending on the level of operating profit margin.
In addition to first category tax and the mining tax, the Group incurs withholding taxes on any remittance of profits from
Chile and deferred tax is provided on undistributed earnings to the extent that remittance is probable in the foreseeable
future. Withholding tax is levied on remittances of profits from Chile at 35% less first category (i.e. corporation) tax
already paid in respect of the profits to which the remittances relate.
Year ended Year ended
31.12.2014 31.12.2013
$m % $m %
Profit before tax 1,573.5 2,083.5
Corporate (first category tax) (330.4) 21.0 (416.7) 20.0
Tax effect of share of results of associates and joint ventures (0.9) 0.1 (2.9) 0.1
Adjustment to deferred tax attributable to changes in tax rates (220.6) 14.0 - -
Items not subject to or deductible from first category tax (34.6) 2.2 (35.4) 1.7
Royalty (79.1) 5.0 (99.2) 4.8
Withholding tax (56.8) 3.6 (289.1) 13.9
Net other items (0.4) - (0.4) -
Tax expense and effective tax rate for the year (722.8) 45.9 (843.7) 40.5
The tax charge for 2014 was $722.8 million and the effective tax rate was 45.9%. This rate varied from the standard rate
(comprising first category tax) principally due to the deferred tax charge of $220.6 million reflecting the increase in tax
rates as a result of the Chilean tax reform, the effect of items not deductible from first category tax (mainly corporate
items which principally comprise exploration and evaluation costs), a withholding tax charge of $56.8 million and the
effect of the mining tax which resulted in a charge of $79.1 million.
8. Earnings per share
Basic and diluted earnings per share is calculated on profit after tax and non-controlling interests giving net earnings of
$459.8 million (2013 - $659.6 million) and amounted to 46.6 cents and based on 985,856,695 ordinary shares. There was no
potential dilution of ordinary shares in either year.
9. Dividends
The Board has recommended a final dividend of 9.8 cents per ordinary share, which amounts to $96.6 million. The interim
dividend of 11.7 cents per share was an ordinary dividend and was paid on October. Together, this gives total dividends
proposed in relation to 2014 of 21.5cents per share which amounts to $212.0 million.
The dividend proposed in relation to 2013 was 95.0 cents, which comprised an interim ordinary dividend of 8.9 cents per
share and a final ordinary dividend of 86.1 cents per share
Dividends per share actually paid in the year and recognised as a deduction from net equity under IFRS were 97.8 cents
(2013 -98.9 cents) being the interim dividend for the year and the final dividend proposed in respect of the previous
year.
If approved at the Annual General Meeting, the final dividend of 9.8 cents will be paid on 22 May 2015 to ordinary
shareholders on the register at the close of business on 24 April 2015. Shareholders can elect (on or before 27 April 2015)
to receive this interim dividend in US Dollars, Pounds Sterling or Euro, and the exchange rate to be applied to interim
dividends to be paid in Pounds Sterling or Euro will be set as soon as reasonably practicable after that date (which is
currently anticipated to be on 30 April May 2015).
Dividends are paid gross without deduction of United Kingdom income tax. As at the date of this preliminary announcement,
Antofagasta plc is not resident in the United Kingdom for tax purposes. However, Antofagasta plc is expected to become
resident in the United Kingdom for tax purposes before the final dividend of 9.8 cents per ordinary shares is paid on 22
May 2015 (if approved at the Company's Annual General Meeting). Accordingly, that dividend and all subsequent dividends
will be treated in the same way as dividends received from any other company that is tax resident in the United Kingdom.
Further details of the currency election timing and process (including the default currency of payment) are available on
the Antofagasta plc website (www.antofagasta.co.uk) or from the Company's registrar, Computershare Investor Services PLC on
+44 870 702 0159.
10. Intangible assets
Year ended 31.12.2014 Year ended 31.12.2013
$m $m
Balance at the beginning of the year 133.0 157.6
Additions 14.1 -
Amortisation (10.9) (11.7)
Foreign currency exchange difference (17.6) (12.9)
Balance at the end of the year 118.6 133.0
The balance relates to a 30 year concession to operate the water rights and facilities in the Antofagasta Region of Chile
which the Group's wholly-owned subsidiary, Aguas de Antofagasta S.A., acquired in December 2003 and any other subsequent
additions or acquisitions subject to the terms of the concession. This intangible asset is being amortised on a
straight-line basis over the life of the concession, or the useful life of any component part if less.
11. Property, plant and equipment
Mining Railway and other transport Water Concession Year ended 31.12.2014 Year ended 31.12.2013
$m $m $m $m $m
Balance at the beginning of the year 7,173.8 214.0 37.0 7,424.8 6,513.2
Additions 1,534.8 21.2 25.0 1,581.0 1,458.7
Reclassification (0.8) - - (0.8) (4.8)
Adjustment to capitalised decommissioning provisions (48.1) - - (48.1) 31.8
Depreciation (569.7) (22.5) (2.9) (595.1) (506.0)
Depreciation capitalised (26.4) - - (26.4) (39.9)
Assets derecognized due to loss of control of subsidiary (94.4) - - (94.4) -
Asset disposals (5.2) (1.1) - (6.3) (23.0)
Foreign currency exchange difference (0.6) (0.1) (6.9) (7.6) (5.2)
Balance at the end of the year 7,963.4 211.5 52.2 8,227.1 7,424.8
Depreciation of $26.4 million (31 December 2013 - $39.9 million) has been capitalised within property, plant & equipment or
inventory, and accordingly excluded from the depreciation charge recorded in the income statement as shown in note 3(a).
Future capital commitments at 31 December 2014 were $253.2 million (31 December 2013 - $842.8 million) of which $65.6
million were related to the development of Antucoya project.
12. Investment property
Year ended Year ended
31.12.14 31.12.13
$m $m
Balance at the beginning of the year 3.3 3.5
Foreign currency exchange difference (0.7) (0.2)
Balance at the end of the year 2.6 3.3
Investment property represents the Group's forestry properties, which are held for long-term potential and accordingly
classified as investment property held at cost.
13. Investment in associates and joint ventures
Inversiones Hornitos ATI El Arrayan Alto Maipo Twin Metals Energía Andina Tethyan Copper Year ended Year ended
31.12.14 31.12.13
$m $m $m $m $m $m $m $m $m
Balance at the beginning of the year 91.9 6.7 24.4 51.9 - 1.1 (0.8) 175.2 106.5
Capital contribution - - 2.6 - 2.8 7.7 8.5 21.6 81.2
Gains/(losses) in fair value of cash flow hedges deferred in reserves of associates - 2.0 (1.7) (42.3) - - - (42.0) 1.9
Fair value of investment in associate upon reclassification from subsidiary - - - - 67.4 - - 67.4 -
Share of profit/(loss) before tax 10.7 0.7 (0.6) (3.5) (2.8) 2.4 (8.1) (1.2) (11.5)
Share of tax (4.3) (0.6) (0.2) 2.2 - - - (2.9) (2.9)
Share of income/(loss) from associate 6.4 0.1 (0.8) (1.3) (2.8) 2.4 (8.1) (4.1) (14.4)
Dividends received (20.0) - - - - - - (20.0) -
Balance at the end of the year 78.3 8.8 24.5 8.3 67.4 11.2 (0.4) 198.1 175.2
The investments which are included in the $198.1 million balances at 31 December 2014 are set out below:
Investment in associates
(i) The Group's 40% interest in Inversiones Hornitos S.A., which owns the 165MW Hornitos thermoelectric power
plant operating in Mejillones, in Chile's Antofagasta Region.
(ii) The Group's 30% interest in ATI, which operates a concession to manage installations in the port of
Antofagasta.
(iii) The Group´s 30% interest in El Arrayan, which operates an 115MW wind-farm project, which entered into
operation in June 2014. During the year, the Group contributed $2.6 million (2013 - nil).
(iv) The Group's interest in Alto Maipo SPA ("Alto Maipo"), which will develop, construct, own and operate two
run-of-river hydroelectric power stations located in the upper section of the Maipo River, approximately 50 kilometres to
the southeast of Santiago, with a total installed capacity of 531MW. In July 2013, the Group exercised an option to acquire
a 40% interest in Alto Maipo for a consideration of $50.2 million, and is responsible for its share of development costs.
During 2013 the Group made capital contributions of $2.4 million, with no further contributions made during 2014, resulting
in a cumulative equity investment as at 31 December 2013 of $52.6 million. Alto Maipo has used derivatives financial
instrument to reduce its exposure to interest rate movements in relation to the project financing and foreign exposure. A
fair value loss of US$42.3 million (2013 - US$0.4 million loss) was recognised in relation to the mark-to-market of these
derivative financial instruments,with this amount deferred in reserves at it forms part of a designated cash flow hedging
relationship. During the year the Group provided $105.4 million of funding (2013 - $47.0 million) to Alto Maipo. The
balance due from Alto Maipo to the GroupRecent news on Antofagasta
See all newsREG - Antofagasta PLC - FINAL DIVIDEND PAYABLE
AnnouncementREG - Antofagasta PLC - Q1 2024 PRODUCTION REPORT
AnnouncementREG - Antofagasta PLC - NOTIFICATION OF TRANSACTIONS
AnnouncementREG - Antofagasta PLC - 2023 REPORTING SUITE, 2024 AGM & CORPORATE UPDATE
AnnouncementREG - Antofagasta PLC - CENTINELA SECOND CONCENTRATOR FINANCING
Announcement