REG - Fresnillo Plc - Full Year 2016 Preliminary Results <Origin Href="QuoteRef">FRES.L</Origin> - Part 6
28/02/2017 07:08
- Part 6: For the preceding part double click ID:nRSb0000Ye
costs 33,019 41,913
Foreign exchange (gain)/loss (539) 18,991
Difference between pension contributions paid and amounts recognised in the income statement (944) (314)
Non cash movement on derivatives 40,345 (62,288)
Changes in fair value of Silverstream 14 (133,528) (27,720)
Working capital adjustments
(Increase)/decrease in trade and other receivables (39,526) 58,219
Decrease in prepayments and other assets 113 891
Decrease in inventories 23,725 5,037
Increase/(decrease) in trade and other payables 5,133 (12,820)
Cash generated from operations 1,012,774 588,648
Income tax paid (102,255) (34,517)
Employee profit sharing paid (12,561) (11,237)
Net cash from operating activities 897,958 542,894
30. Financial instruments
(a) Fair value category
As at 31 December 2016
US$ thousands
Financial assets: At fair value through profit or loss Available-for-sale investments at fair value through OCI Loans and receivables At fair value through OCI (cash flow hedges)
Trade and other receivables1 (note 16) - - 213,750 -
Available-for-sale financial assets (note 13) - 116,171 - -
Silverstream contract (note 14) 467,529 - - -
Derivative financial instruments (note 30) 145 - - 23,005
Financial liabilities: At fair value through profit or loss At amortised Cost At fair value through OCI (cash flow hedges)
Interest-bearing loans (note 20) - 798,027 -
Trade and other payables (note 23) - 70,442 -
Embedded derivatives within sales contracts1 (note 4) 2,750 - -
Derivative financial instruments (note 30) - - 646
1 Trade and other receivables and embedded derivative within sales contracts are presented net in Trade and other
receivables in the balance sheet.
As at 31 December 2015
US$ thousands
Financial assets: At fair value through profit or loss Available-for-sale investments at fair value through OCI Loans and receivables At fair value through OCI (cash flow hedges)
Trade and other receivables1 (note 16) - - 127,224 -
Available-for-sale financial assets (note 13) - 71,442 - -
Silverstream contract (note 14) 384,771 - - -
Derivative financial instruments (note 30) 1 - - 117,074
Financial liabilities: At fair value through profit or loss At amortised Cost At fair value through OCI (cash flow hedges)
Interest-bearing loans (note 20) - 797,032 -
Trade and other payables (note 23) - 97,440 -
Embedded derivatives within sales contracts1 (note 4) 532 - -
Derivative financial instruments (note 30) - - 1,427
1 Trade and other receivables and embedded derivative within sales contracts are presented net in Trade and other
receivables in the balance sheet.
(b) Fair value measurement
The fair value of financial assets and liabilities, together with the carrying amounts shown in the balance sheet are as
follows:
As at 31 December
Carrying amount Fair value
2016 2015 2016 2015
US$ thousands US$ thousands US$ thousands US$ thousands
Financial assets:
Available-for-sale financial assets 116,171 71,442 116,171 71,442
Silverstream contract (note 14) 467,529 384,771 467,529 384,771
Derivative financial instruments 23,150 117,075 23,150 117,075
Financial liabilities:
Interest-bearing loans1 (note 20) 798,027 797,032 840,904 805,352
Embedded derivatives within sales contracts 2,750 532 2,750 532
Derivative financial instruments 646 1,427 646 1,427
1 Interest-bearing loans are categorised in Level 1 of the fair value hierarchy.
The financial assets and liabilities measured at fair value are categorised into the fair value hierarchy as at 31 December
as follows:
As of 31 December 2016
Fair value measure using
Quoted prices in active markets Level 1 Significant observable Level 2 Significant unobservable Level 3 Total
US$ thousands US$ thousands US$ thousands US$ thousands
Financial assets:
Derivative financial instruments:
Options commodity contracts - 23,005 - 23,005
Options and forward foreign exchange contracts - 145 - 145
Silverstream contract - - 467,529 467,529
- 23,150 467,529 490,679
Financial investments available-for-sale:
Quoted investments 116,171 - - 116,171
116,171 23,150 467,529 606,850
Financial liabilities:
Derivative financial instruments:
Embedded derivatives within sales contracts - - 2,750 2,750
Options commodity contracts - 66 - 66
Options and forward foreign exchange contracts - 580 - 580
- 646 2,750 3,396
As of 31 December 2015
Fair value measure using
Quoted prices in active markets Level 1 Significant observable Level 2 Significant unobservable Level 3 Total
US$ thousands US$ thousands US$ thousands US$ thousands
Financial assets:
Derivative financial instruments:
Options commodity contracts - 116,995 - 116,995
Option and forward foreign exchange contracts - 80 - 80
Silverstream contract - - 384,771 384,771
- 117,075 384,771 501,846
Financial investments available-for-sale:
Quoted investments 71,442 - - 71,442
71,442 117,075 384,771 573,288
Financial liabilities:
Derivative financial instruments:
Embedded derivatives within sales contracts - - 532 532
Options commodity contracts - - - -
Options and forward foreign exchange contracts - 1,427 - 1,427
- 1,427 532 1,959
There have been no significant transfers between Level 1 and Level 2 of the fair value hierarchy, and no transfers into and
out of Level 3 fair value measurements.
A reconciliation of the opening balance to the closing balance for Level 3 financial instruments other than Silverstream
(which is disclosed in note 14) is shown below:
2016 2015
US$ thousands US$ thousands
Balance at 1 January: (532) (2,911)
Changes in fair value (1,718) (11,511)
Realised embedded derivatives during the year (500) 13,890
Balance at 31 December (2,750) (532)
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced or liquidation sale.
The following valuation techniques were used to estimate the fair values:
Option and forward foreign exchange contracts
The Group enters into derivative financial instruments with various counterparties, principally financial institutions with
investment grade credit ratings. The foreign currency forward (Level 2) contracts are measured based on observable spot
exchange rates, the yield curves of the respective currencies as well as the currency basis spreads between the respective
currencies. The foreign currency option contracts are valued using the Black Scholes model, the significant inputs to which
include observable spot exchange rates, interest rates and the volatility of the currency.
Option commodity contracts
The Group enters into derivative financial instruments with various counterparties, principally financial institutions with
investment grade credit ratings. The option commodity (Level 2) contracts are measured based on observable spot commodity
prices, the yield curves of the respective commodity as well as the commodity basis spreads between the respective
commodities. The option contracts are valued using the Black Scholes model, the significant inputs to which include
observable spot commodities price, interest rates and the volatility of the commodity.
Silverstream contract
The fair value of the Silverstream contract is determined using a valuation model including unobservable inputs (Level 3).
This derivative has a term of over 20 years and the valuation model utilises a number of inputs that are not based on
observable market data due to the nature of these inputs and/or the duration of the contract. Inputs that have a
significant effect on the recorded fair value are the volume of silver that will be produced and sold from the Sabinas mine
over the contract life, the future price of silver, future foreign exchange rates between the Mexican peso and US dollar,
future inflation and the discount rate used to discount future cash flows.
The estimate of the volume of silver that will be produced and sold from the Sabinas mine requires estimates of the
recoverable silver reserves and resources, the related production profile based on the Sabinas mine plan and the expected
recovery of silver from ore mined. The estimation of these inputs is subject to a range of operating assumptions and may
change over time. Estimates of reserves and resources are updated annually by Peñoles, the operator and sole interest
holder in the Sabinas mine and provided to the Company. The production profile and estimated payable silver that will be
recovered from ore mined is based on the latest plan and estimates, also provided to the Company by Peñoles. The inputs
assume no interruption in production over the life of the Silverstream contract and production levels which are consistent
with those achieved in recent years
Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs
described above, and determines their impact on the total fair value. The significant unobservable inputs are not
interrelated. The fair value of the Silverstream is not significantly sensitive to a reasonable change in future exchange
rates, however, it is to a reasonable change in future silver price, future inflation and the discount rate used to
discount future cash flows.
For further information relating to the Silverstream contract see note 14. The sensitivity of the valuation to the inputs
relating to market risks, being the price of silver, foreign exchange rates, inflation and the discount rate is disclosed
in note 31.
Quoted investments:
Fair value of available-for-sale financial assets is derived from quoted market prices in active markets. (Level 1)
Interest-bearing loans
Fair value of the Group's interest-bearing loan, is derived from quoted market prices in active markets. (Level 1)
Embedded derivatives within sales contracts:
Sales of concentrates, precipitates and doré bars are 'provisionally priced' and revenue is initially recognised using this
provisional price and the Group's best estimate of the contained metal. Revenue is subject to final price and metal content
adjustments subsequent to the date of delivery (see note 2 (p)). This price exposure is considered to be an embedded
derivative and is separated from the sales contract.
At each reporting date, the provisionally priced metal content is revalued based on the forward selling price for the
quotational period stipulated in the relevant sales contract. The selling price of metals can be reliably measured as these
metals are actively traded on international exchanges but the estimated metal content is a non-observable input to this
valuation (Level 3).
At 31 December 2016 the fair value of embedded derivatives within sales contracts was US$(2.7) million (2015: US$(0.5)
million). The revaluation effects of embedded derivatives arising from these sales contracts are recorded as an adjustment
to revenues.
(c) Derivative financial instruments
The Group enters into certain forward and option contracts in order to manage its exposure to foreign exchange risk
associated with costs incurred in Mexican pesos and other currencies. The Group also enters into option contracts to manage
its exposure to commodity price risk as described in note 2 (s).
The following tables summarise the fair value of derivative financial instruments held as of 31 December 2016 and 2015.
Financial assets As at 31 December
2016 2015
US$ thousands US$ thousands
Currency contracts
Forward contracts:
Euro 145 1
Swedish krona - 1
Option Contracts1:
US dollar - 78
Commodity contracts
Option Contracts1:
Gold 23,005 113,000
Lead - 1,060
Zinc - 2,935
Total derivative related assets 23,150 117,075
Less - Current portion 6,618 19,602
Non-current portion2 16,532 97,473
Financial liabilities As at 31 December
2016 2015
US$ thousands US$ thousands
Currency contracts
Forward contracts:
Euro 570 -
Canadian dollar 10 -
Option Contracts1:
US dollar - 1,427
Commodity contracts
Option Contracts1:
Gold 16 -
Lead 2 -
Zinc 48 -
Total derivative related liabilities 646 1,427
Less - Current portion 630 1,427
Non-current portion2 16 -
1 Option contracts operate as zero cost collars.
2 Non-current portion corresponds to Gold option contracts that mature in a period over one year from the reporting date
until 30 December 2019.
The following table summarises the movements in deferred gains or losses on foreign exchange and price commodity derivative
instruments qualifying for hedge accounting, net of tax effects, recorded in other comprehensive income for the year:
As at 31 December
2016 2015
US$ thousands US$ thousands
Beginning balance 36,214 (9,946)
Gains recycled to revenue during the year (1,586) (2,167)
Losses recycled to cost of sales during the year 2,770 28,589
Unrealised (losses)/gains before tax arising during the year (52,918) 39,521
Deferred tax effect recorded in other comprehensive income during the year 15,520 (19,783)
Ending balance - 36,214
31. Financial risk management
Overview
The Group's principal financial assets and liabilities, other than derivatives, comprise trade receivables, cash,
available-for-sale financial assets, interest-bearing loans and trade payables.
The Group has exposure to the following risks from its use of financial instruments:
Market risk, including foreign currency, commodity price, interest rate, inflation rate and equity price risks
Credit risk
Liquidity risk
This note presents information about the Group's exposure to each of the above risks and the Group's objectives, policies
and processes for assessing and managing risk. Further quantitative disclosures are included throughout the financial
statements.
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management
framework.
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training
and management standards and procedures, aims to develop a disciplined and constructive control environment in which all
employees understand their roles and obligations.
The Fresnillo Audit Committee has responsibility for overseeing how management monitors compliance with the Group's risk
management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced
by the Group. The Audit Committee is assisted in its oversight role by Internal Audit, which undertakes both regular and ad
hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
(a) Market risk
Market risk is the risk that changes in market factors, such as foreign exchange rates, commodity prices or interest rates
will affect the Group's income or the value of its financial instruments.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while
optimising the return on risk.
Foreign currency risk
The Group has financial instruments that are denominated in Mexican peso, euro and Swedish krona which are exposed to
foreign currency risk. Transactions in currencies other than the US dollar include the purchase of services, fixed assets,
spare parts and the payment of dividends. As a result, the Group has financial assets and liabilities denominated in
currencies other than functional currency, and holds cash and cash equivalents in Mexican Peso.
In order to manage the Group's exposure to foreign currency risk on expenditure denominated in currencies other than the US
dollar, the Group has entered into certain forward and option derivative contracts with maturity dates from 2017 (see note
30 for additional detail).
The following table demonstrates the sensitivity of financial assets and financial liabilities (excluding Silverstream) to
a reasonably possible change in the US dollar exchange rate compared to the Mexican peso, reflecting the impact on the
Group's profit before tax and equity, with all other variables held constant. It is assumed that the same percentage change
in exchange rates is applied to all applicable periods for the purposes of calculating the sensitivity with relation to
derivative financial instruments.
Year ended 31 December Strengthening/ Effect on Effect on equity:
(weakening) profit before tax: increase/ increase/
of US dollar (decrease) (decrease)
US$ thousands US$ thousands
2016 15% 78 -
(10%) (67) -
2015 10% (4,235) 7,809
(10%) 5,192 (2,213)
The following table demonstrates the sensitivity of financial assets and financial liabilities to a reasonably possible
change in the US dollar exchange rate compared to the Swedish krona on the Group's profit before tax and equity, with all
other variables held constant. It is assumed that the same percentage change in exchange rates is applied to all applicable
periods. There is no impact on the Group's equity, other than the equivalent change in retained earnings.
Year ended 31 December Strengthening/ Effect on profit before tax: increase/
(weakening) of (decrease)
US dollar US$ thousands
2016 10% (63)
(10%) 94
2015 5% 213
(10%) (78)
The following table demonstrates the sensitivity of financial assets and financial liabilities (excluding Silverstream) to
a reasonably possible change in the US dollar exchange rate compared to the euro on the Group's profit before tax and
equity, with all other variables held constant. It is assumed that the same percentage change in exchange rates is applied
to all applicable periods.
Year ended 31 December Strengthening/ Effect on Effect on equity:
(weakening) profit before tax: increase/ increase/
of US dollar (decrease) (decrease)
US$ thousands US$ thousands
2016 5% 459 -
(10%) (1,024) -
2015 10% - -
(10%) - -
Foreign currency risk - Silverstream
Future foreign exchange rates are one of the inputs to the Silverstream valuation model. The following table demonstrates
the sensitivity of the Silverstream contract valuation to a reasonably possible change in the Mexican peso as compared to
the US dollar, with all other inputs to the Silverstream valuation model held constant. It is assumed that the same
percentage change in exchange rates is applied to all applicable periods in the valuation model. There is no impact on the
Group's equity, other than the equivalent change in retained earnings.
Year ended 31 December Strengthening/ Effect on profit before tax:
(weakening) of increase/
US dollar (decrease)
US$ thousands
2016 15% (1,436)
(10%) 1,223
2015 10% (1,622)
(10%) 1,982
Commodity risk
The Group has exposure to changes in metals prices (specifically silver, gold, lead and zinc) which have a significant
effect on the Group's results. These prices are subject to global economic conditions and industry-related cycles.
The Group uses derivative instruments to hedge against an element of gold price.
The table below reflects the aggregate sensitivity of financial assets and liabilities (excluding Silverstream) to a
reasonably possible change in gold and silver prices, reflecting the impact on the Group's profit before tax with all other
variables held constant.
The sensitivity shown in the table below relates to changes in fair value of commodity derivatives financial instruments
contracts and embedded derivatives in sales.
Year ended 31 December Increase/(decrease) in commodity prices Effect on Effect on equity:
profit before tax: increase/ increase/
(decrease) (decrease)
US$ thousands US$ thousands
Gold Silver Zinc Lead
2016 10% 25% 40% 40% (28,516) -
(15%) (20%) (30%) (15%) (36,031) 120,715
2015 15% 20% 25% 20% (51,326) 50,764
(10%) (15%) (25%) (15%) 52,915 136,469
Commodity price risk - Silverstream
Future silver price is one of the inputs to the Silverstream valuation model. The following table demonstrates the
sensitivity of the Silverstream contract valuation to a reasonably possible change in future silver prices, with all other
inputs to the Silverstream valuation model held constant. It is assumed that the same percentage change in silver price is
applied to all applicable periods in the valuation model. There is no impact on the Group's equity, other than the
equivalent change in retained earnings.
Year ended 31 December Increase/ Effect on profit before tax: increase/
(decrease) in (decrease)
silver price US$ thousands
2016 25% 157,406
(20%) (125,925)
2015 20% 104,659
(15%) (78,494)
Interest rate risk
The Group is exposed to interest rate risk from the possibility that changes in interest rates will affect future cash
flows or the fair values of its financial instruments, principally relating to the cash balances and the Silverstream
contract held at the balance sheet date. Interest-bearing loans are at a fixed rate, therefore the possibility of a change
in interest rate only impacts its fair value but not its carrying amount. Therefore, interest-bearing loans and loans from
related parties are excluded from the table below.
The following table demonstrates the sensitivity of financial assets and financial liabilities (excluding Silverstream) to
a reasonably possible change in interest rate applied to a full year from the balance sheet date. There is no impact on the
Group's equity other than the equivalent change in retained earnings.
Year ended 31 December Basis point increase/ Effect on profit before tax: increase/
(decrease) (decrease)
in interest rate US$ thousands
2016 65 5,943
(20) (1,829)
2015 50 2,525
(10) (505)
The sensitivity shown in the table above primarily relates to the full year of interest on cash balances held as at the
year end.
Interest rate risk - Silverstream
Future interest rates are one of the inputs to the Silverstream valuation model. The following table demonstrates the
sensitivity of the Silverstream contract valuation to a reasonably possible change in interest rates, with all other inputs
to the Silverstream valuation model held constant. It is assumed that the same change in interest rate is applied to all
applicable periods in the valuation model. There is no impact on the Group's equity, other than the equivalent change in
retained earnings.
Year ended 31 December Basis point increase/ Effect on profit before tax: increase/
(decrease) (decrease)
in interest rate US$ thousands
2016 65 (35,908)
(20) 12,051
2015 50 (17,853)
(10) 3,729
Inflation rate risk
Inflation rate risk-Silverstream
Future inflation rates are one of the inputs to the Silverstream valuation model. The following table demonstrates the
sensitivity of the Silverstream contract to a reasonably possible change in the inflation rate, with all other inputs to
the Silverstream valuation model held constant. It is assumed that the same change in inflation is applied to all
applicable periods in the valuation model. There is no impact on the Group's equity, other than the equivalent change in
retained earnings.
Year ended 31 December Basis point (increase/ Effect on profit before tax: increase/
(decrease) (decrease)
in inflation rate US$ thousands
2016 100 190
(100) (188)
2015 100 389
(100) (382)
Equity price risk
The Group has exposure to changes in the price of equity instruments that it holds as available-for-sale assets.
The following table demonstrates the sensitivity of available-for-sale financial assets to a reasonably possible change in
market price of these equity instruments, reflecting the effect on the Group's profit before tax and equity:
Year ended 31 December Increase/ Effect on Effect on equity: increase/
(decrease) profit before tax: increase/ (decrease)
in equity price (decrease) US$ thousands
(US$ thousands)
2016 100% - 116,171
(50%) - (58,086)
2015 50% - 35,721
(30%) (5,135) (16,297)
(b) Credit risk
Exposure to credit risk arises as a result of transactions in the Group's ordinary course of business and is applicable to
all financial assets and derivative financial instruments. The financial assets are trade and other receivables, cash and
cash equivalents, short-term investments, the Silverstream contract and available-for-sale financial assets.
The Group's policies are aimed at minimising losses as a result of counterparties' failure to honour their obligations.
Individual exposures are monitored with customers subject to credit limits to ensure that the Group's exposure to bad debts
is not significant. The Group's exposure to credit risk is influenced mainly by the individual characteristics of each
counter party. The Group's financial assets are with counterparties with what the Group considers to have an appropriate
credit rating. As disclosed in note 27, the counterparties to a significant proportion of these financial assets are
related parties. At each balance sheet date, the Group's financial assets were neither impaired nor past due, other than
'Other receivables' as disclosed in note 16. The Group's policies are aimed at minimising losses from foreign currency
hedging contracts. The Company's foreign currency hedging contracts are entered into with large financial institutions with
strong credit ratings.
The Group has a high concentration of trade receivables with one counterparty Met-Mex Peñoles, the Group's primary customer
throughout 2016 and 2015. A further concentration of credit risk arises from the Silverstream contract. Both Met-Mex and
the counterparty to the Silverstream contract are subsidiaries in the Peñoles group which currently owns 75 per cent of the
shares of the Company and is considered by management to be of appropriate credit rating.
The Group's surplus funds are managed by Servicios Administrativos Fresnillo, S.A. de C.V., which manages cash and cash
equivalents, including short-term investments investing in a number of financial institutions. Accordingly, on an ongoing
basis the Group deposits surplus funds with a range of financial institutions, depending on market conditions. In order to
minimise exposure to credit risk, the Group only deposits surplus funds with financial institutions with a credit rating of
MX-1 (Moody´s) and mxA-1+ (Standard and Poor's) and above. As at 31 December 2016, the Group had concentrations of credit
risk as 24 percent of surplus funds were deposited with one financial institution of which 47 percent was held in short
term Mexican government paper.
The maximum credit exposure at the reporting date of each category of financial asset above is the carrying value as
detailed in the relevant notes. See note 13 for the maximum credit exposure to available-for-sale financial assets, note 17
for short-term investments and cash and cash equivalents and note 27 for related party balances with Met-Mex. The maximum
credit exposure with relation to the Silverstream contract is the value of the derivative as at 31 December 2016, being
US$467.5 million (2015: US$384.8 million).
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
The Group monitors its risk of a shortage of funds using projected cash flows from operations and by monitoring the
maturity of both its financial assets and liabilities.
The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted
payments.
US$ thousands
Within 1 year 2-3 years 3-5 years > 5 years Total
As at 31 December 2016
Interest-bearing loans (note 20) 46,267 92,534 92,534 892,534 1,123,869
Trade and other payables 71,389 - - - 71,389
Derivative financial instruments - liabilities 630 16 - - 646
Embedded derivatives within sales contracts - liability 2,750 - - - 2,750
US$ thousands
Within 1 year 2-3 years 3-5 years > 5 years Total
As at 31 December 2015
Interest-bearing loans (note 20) 46,267 92,534 92,534 938,801 1,170,137
Trade and other payables 57,440 - - - 57,440
Derivative financial instruments - liabilities 342,108 730,303 317,359 - 1,389,770
Embedded derivatives within sales contracts - liability 532 - - - 532
The payments disclosed for financial derivative instruments in the above table are the gross undiscounted cash flows.
However, those amounts may be settled gross or net. The following table shows the corresponding estimated inflows based on
the contractual terms:
US$ thousands
Within 1 year 2-3 years 3-5 years > 5 years Total
As at 31 December 2016
Inflows 10,932 - - - 10,932
Outflows (11,229) - - - (11,229)
Net (297) - - - (297)
US$ thousands
Within 1 year 2-3 years 3-5 years > 5 years Total
As at 31 December 2015
Inflows 347,301 746,924 319,165 - 1,413,390
Outflows (342,108) (730,303) (317,359) - (1,389,770)
Net 5,193 16,621 1,806 - 23,620
The above liquidity tables include expected inflows and outflows from currency option contracts which the Group expects to
be exercised during 2017 as at 31 December 2016 and from 2016 to 2019 as at 31 December 2015, either by the Group or
counterparty.
Management considers that the Group has adequate current assets and forecast cash from operations to manage liquidity risks
arising from current liabilities and non-current liabilities.
Capital management
The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and healthy
capital ratios that support its business and maximise shareholder value. Management considers capital to consist of equity
and certain interest-bearing loans, including loans from related parties, as disclosed in the balance sheet, excluding net
unrealised gains or losses on revaluation of cash flow hedges and available-for-sale financial assets. In order to ensure
an appropriate return for shareholder's capital invested in the Group management thoroughly evaluates all material projects
and potential acquisitions and approves them at its Executive Committee before submission to the Board for ultimate
approval, where applicable. The Group's dividend policy is based on the profitability of the business and underlying growth
in earnings of the Group, as well as its capital requirements and cash flows, including cash flows from the Silverstream.
This information is provided by RNS
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