Twin Center, Tour A, Angle Boulevards Zerktouni et Al Massira Al Khadra BP 5199, Casablanca Tél : +212 5 22 59 65 65 - Email : [email protected] : /Managemgroup : @Managem_group : groupe-managem
ANNUAL REPORT ANNUAL REPORT
The electronic version of our report is available on http://www.managemgroup.com/Media-Center Managem Annual Report 2016
Draa Sfar Mine
COMPANY OVERVIEW Managem is an integrated mining group managing a diversified portfolio of mineral resources, focusing on precious metals, base metals, Cobalt and Fluorite. Managem employs 5,660 employees across all its subsidiaries. The Group has operations in Morocco and throughout Africa in Gabon, Democratic Republic of Congo, Sudan, Guinea, Mali, Burkina Faso, Ivory Coast and Ethiopia. In addition Managem has trading activities based mainly in Switzerland and UAE. Managem is active across the entire value chain of mining activity. Managem is a leading player in the mining and hydrometallurgical industry in Morocco as well as in the African continent. The Group’s expertise and unwavering insistence on safety, ethics, performance and innovation fostered its growth and diversification, thanks to its business model developed for almost 90 years. The development of the Group’s activities was included in a responsible growth pattern through strong commitments to environment, risk management and development of neighbouring communities.
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KEY FIGURES 2016
TURNOVERTURNOVER 5,6605,660 4,3774,377MMADMMAD CONTRIBUTORSCONTRIBUTORS +1%+1%
ComparedCompared to 2015 to 2015
354,354, 000 000TONNESTONNES 5252%% OF COOF2 COSAVED2 SAVED VIA VIA OF THEOF THE ENERGY ENERGY CLEANCLEAN ENERGY ENERGY COMESCOMES FROM FROM 1,4881,488MMADMMAD 289289MMADMMAD (last 3 (lastyears) 3 years) WINDWIND ENERGY ENERGY (MANAGEM(MANAGEM MOROCCO) MOROCCO) GROSSGROSS OPERATING OPERATING NETNET INCOME INCOME SURPLUSSURPLUS GROUPGROUP SHARE SHARE +5%+5% +41+%41%
ComparedCompared to 2015 to 2015 ComparedCompared to 2015 to 2015 77 1515 PATENTSPATENTS MARKETEDMARKETED PRODUCTSPRODUCTS
930.5930.5MMADMMAD 88,966,966MMADMMAD VOLUMEVOLUME MARKETMARKET OF INVESTMENTSOF INVESTMENTS CAPITALISATIONCAPITALISATION ACHIEVEDACHIEVED AS OFAS DECEMBEROF DECEMBER 31st 31st 2121 2626 INDUSTRIALINDUSTRIAL INDUSTRIALINDUSTRIAL UNITSUNITS PROCESSESPROCESSES
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HISTORY
SINCE 2000’s 2010 90’s DEVELOPMENT INTERNATIONAL ACCELATION DEVELOPMENT 80’s LARGE-SCALE AND VENTURES PROJECTS DEVELOPMENT
1969 ACTIVITY 1973 STRUCTURING AND MODERNIZATION
MINING 1928 PRODUCT 1930 DIVERSIFICATION 2000 2012 INTRODUCTION OF MANAGEM LAUNCHING 1992 GOLD TO THE STOCK EXCHANGE OF THE OPENING PRODUCTION OF THE GUEMASSA START OF IN BAKADOU, 1982 POLYMETALLIC GABON COBALT-BASED OPENING MINE 2002 ACTIVITY OF THE BLEIDA OPENING COPPER MINE OF THE KINIERO GOLD 2013 MINE IN GUINEA 1969 1997 START OPENING PRODUCTION OF THE GOLD MINING OF THE IMITER 1988 OF HIGH-PURITY ACTIVITY IN SUDAN SILVER MINE ESTABLISHMENT COBALT CATHODES 2004 - 1928 OF REMINEX, - OPENING RE-OPENING DISCOVERY A SUBSIDIARY FOR IN-HOUSE FIRST OF THE SAMIRA HILL GOLD OF THE BLEIDA MINE OF THE BOU-AZZER 1973 ENGINEERING INTERNATIONAL MINE IN NIGER AND START OF THE COPPER COBALT DEPOSIT OPENING AND R&D PERMIT - OXYDE PRODUCTION OF THE EL HAMMAM ACQUISITIONS OPENING FLUORINE MINE N GUINEA OF THE POLYMETALLIC MINE 1930 IN DRAA SFAR, 2014 MOROCCO OPENING LAUNCHING OF THE GROUP’S OF THE COPPER FIRST MINE PRODUCTION (COBALT 2007 N THE OUMEJRANE PRODUCTION) OPENING OF MINE THE AKKA COPPER MINE IN MOROCCO 2016 ACQUISITION 2009 OF THE TRI-K LAUNCHING PROJECT OF THE SULFURIC IN GUINEA ACID PRODUCTION IN GUEMASSA
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Region neighbouring the Guemassa Complex
The group’s results in progression New presidency Turnover: and reinforcement 4,377 M MAD, of the Board up 60 M MAD of Directors from 2015 ———— Current operating income increase “VISION 2020”: of 66 M MAD New development compared with 2015 Strategy The Group’s share of the Group of net profit ———— increase of 84 M MAD ————
Positive discoveries of new mineral reserves around the operating mines SILVER + 653 tonnes Strong operational of discovered métal performance COPPER Strong • Successful start of production at Ouanssimi; + 4.5 millions tonnes engagement • Significant increase in Copper production; mixed grade consolidated • Improved SMI Silver production by means COBALT in sustainable of improved performance; 3,624 tonnes of métal development • Significant increase of treated Gold 2016 COP22 Branding in the Bakoudou Gold mine; POLYMETALLIC of two Managem • Exceeding 2,000 tonnes of Cobalt for the first time + 1.9 million tonnes HIGHLIGHTS projects in the hydrometallurgical complex of Guemassa. mixed-grade ———— ———— ————
Tri-K Project On October 7th 2016, Managem established a partnership agreement with Avocet and Elliot. The Tri-K Project is a gold mining project located in the Prefecture of Mandiana in Guinea. The project was initially developed by the company Avocet Mining, with an investment of 39 MUSD in research and feasibility study. This was then followed by the signing of a mining convention on December 19th 2016, between the Guinean state, Managem and Avocet Mining. Throughout 2017, a feasibility study will be completed in order to confirm the presence of reserves, which are estimated to reach 1 Moz. The start of the construction shall then begin early 2018.
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PRESIDENT’S STATEMENT
For Managem 2016 was a year of significant In the wider commodity market, it was also progress building on the foundations that had pleasing to note was that, after a year of decline, been put in place during 2015. base metal prices registered a sharp rise in 2016. Base metals and Cobalt experienced sustained Our operational performances were strong, Copper growth in the second half of the year, although production increased 19 per cent with cash costs precious metals did experience a relative decline decreasing 15 per cent, SMI silver production at the end of the year, following three consecutive improved 7 per cent, gold tonnage processed at quarters of increases. Bakoudou increased significantly by 21 per cent, the extraction rate at Draa Sfar was up by 6 per Whilst we are often judged by our financial and cent and we exceeded, for the first time, 2,000 operational performances, our business is built tonnes of Cobalt in Guemassa. New mineral upon Managem’s 10 commitments. These are at reserves have also been identified around our the core of everything we do at Managem and projects which will add to life of mine projections. we endeavour to ensure that as we carry out our operations we are seen as good corporate citizens Our strategy remains to become a diversified in all the areas we operate. In addition we strive to mining company both in Morocco and inter- maintain the well being of all our staff, contractors nationally. This is being successfully delivered and the environment that we operate in. This by forging strategic partnerships as we build a remains of the utmost importance. balanced portfolio varied geographically and by commodity. Our vision remains unchanged, and we are confident that in the coming year we will continue As such we continue to position Managem as one to make progress towards this. of the largest intermediate size Gold producers in Africa looking to achieve production in excess I would also like to take this opportunity to thank of 250,000 ounces a year by 2020 and, in line with our staff, contractors and stakeholders for their this, we were delighted to announce that we have continued efforts during the year. Thanks to all entered into the TRI-K, a Gold project in Conakry, their efforts and support the Board believe that Guinea. We believe this is an excellent project and Managem is set to deliver another strong year. much of this year will be devoted to completing the bankable feasibility study to confirm that the project has one million ounces of reserves. We hope to be able to start the construction M. Imad Toumi of the project in early 2018. President of Managem Group
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Silver ingot produced in SMI
Managem Annual Report 2016
Company Overview Page 3 Development Page 50 Key figures 2016 Page 4 Projects in Morocco Page 51 History Page 6 African Projects Page 53 2016 Highlights Page 8 Financial Overview Page 54 President’s Statement Page 11 SUSTAINABLE DEVELOPMENT Page 58 PRESENTATION of the 10 Commitments of Managem Page 60 MANAGEM GROUP Page 14 Awards 2016 Page 62 Strategy Page 15 Health and Safety Conditions Page 64 Organisation of the group Page 16 Environmental Engagement Page 66 Governance and Capital Structure Page 17 Waterfront Communities Page 70 Shareholding Structure Page 18 Managem projects for Cop22 Governing Structure Page 19 Groups energy policy Page 72 Management Committee Page 20 Development of Human Capital Page 74 Risk Management Page 22 2016 HR Strategy Stock Market Presence Page 25 Development of Skills Page 79 Projects in Morocco and in the World Page 26 2016 Highlights
2016 ACHIEVEMENTS Page 38 CONSOLIDATED FINANCIAL Market Review Page 39 STATEMENTS Page 86 Production Results Page 44 Production by Commodity Page 44 Production by Operation Page 47 Research Assessment Page 49
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Treatment factory in the Guemassa Complex
STRATEGY 2016 is a milestone for Managem as it announces the start of the “2020 Vision” as well as a new five-year development strategy.
2020 BEING A DIVERSIFIED REGIONAL LEADER, VISION MAINTAINING A SUSTAINED AND RESPONSIBLE GROWTH
By 2020, Managem plans on positioning itself as a referenced regional mining actor possessing a balanced portfolio in terms of metals and geographical presence.
The 2020 Vision is based on three pillars: Strengthen reserves and further develop existing projects Assure an organic growth by means of increasing mines’ exploitation capacities Accelerate growth through new acquisitions and partnerships notably in Africa
Targets and Objectives: Maintain a Resource and Reserves level for at least 10 years of metal production Silver: Achieve production of 300 tonnes by 2020 at the Imiter mine (SMI); Gold: Achieve a production of 250,000 ounces per year by 2020; Copper: Achieve a production level of 250,000 tonnes of Copper concentrate per year; Cobalt and Zinc: Maintain the current levels of production
The Group’s course of action entails: Operational excellence to assure good resilience Social and Societal responsibility, as well as respect for the environment R&D as a pillar for sustaining continuous improvement
In order to attain the growth objectives fixed within its new strategy, Managem plans on engaging in on various fronts including the development of current resources and projects, make new acquisitions PRESENTATION of the and continue its prospecting to assure sustenance and growth. Building on its gained experience in Sub-Saharan Africa, where it established itself in the late 1990s, Managem aims to accelerate its growth through the development of its activities in its historic mines MANAGEM GROUP in Morocco as well as through high-potential projects across the continent. STRATEGY ORGANISATION of the GROUP and its SUBSIDIARIES GOVERNANCE and CAPITAL STRUCTURE 2020 Vision - Focusing on the development of Gold in Africa RISK MANAGEMENT Managem aims to position itself amongst the most notable mid-cap gold producers in Sub-Saharan Africa by reaching a level of production exceeding 250,000 ounces per year by 2020. Such a strategy has been PROJECTS in MOROCCO and in the WORLD undertaken throughout the year and was achieved by the acquisition of the wide-ranging Tri-K project in Guinea’s capital, Conakry. Managem also leads an active strategy in East Africa, centered on ongoing exploration, allowing for the development of substantial projects, notably in Sudan and Ethiopia in addition to furthering the development of current productions. Currently, Managem is present in 9 African countries and continues its growth in order to expand its diversity and presence on the continent.
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ORGANISATION of the GROUP Organisation of the Group and its Subsidiaries and its SUBSIDIARIES Managem is a worldwide group, holding subsidiaries both domestically and internationally. Managem is a worldwide group, operating over three business sectors: Exploration and Support Services, Mining and Mining activity, and product distribution. Group Structure as of 31/12/2016
Managem Group operates in three business sectors
50 .02%
77.50 99 % .97% AGM
CMG SAGAX Maghreb 1 2 3
1 EXPLORATION MINING AND PRODUCT 00% 100% AND SUPPORT MINING DISTRIBUTION SERVICES EVALUATION SAMINE SMI
100% 98.46%
SOMIFER MANAGEM TECHSUB 1 2 3 Services supporting mining Mining and mining evaluation The distribution of the Group’s activities through three through seven subsidiary mining products through two 100 100 subsidiary companies: companies in Morocco (CMG, subsidiaries in Switzerland % % S REMINEX: SMI, Akka Gold Mining, CTT, (Manatrade and Manadist) and E M I SAGHRO CTT MINING CO. Exploration, project design and SAMINE, CMS and SOMIFER) a subsidiary based in Dubai O R R A O I project management as well as and internationally through the (Tradist). C D C S I R&D and industrial support companies REG in Gabon and A N B 100% 100% S U through the Research Center MANUB in Sudan. The deve- 100%
lopment of several projects is OUMEJRANE REMINEX TECHSUB: underway in Morocco and Africa, MINING CO. DADES Probing and mining executions particularly in Gabon, the 100% MINING CO. 100% operations Democratic Republic of Congo, I N E S Sudan, Burkina Faso, Mali, TRADIST T I MANATRADE E R A R N A D I SAGAX: 100 T S I Guinea, Côte d’Ivoire and Ethiopia % I O N A L S U B Geophysical services activity 10 0% Other MANADIST participants in africa
REG
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GOVERNANCE and CAPITAL STRUCTURE Managem is a Moroccan public limited company, acting as subsidiary of the Sociéte Nationale d’Investissement (SNI). It is listed on the stock exchange since July 2000. Specialized Committees For many years, the Executive Board has put in place specialized committees in order to assure efficient management. In accordance with the law on limited companies, such committees work within Shareholding structure delimited powers and mandates given by the Managem Board. These committees examine issues There were no major changes to Managem shareholding during the year 2016. By the end of 2016, submitted to them by the board to later on present their insight and recommendations. n Managem’s capital allocation is as follows:
Strategic Committee Audit and Risks Remuneration The Strategic Committee is Committee Committee in charge of preparing The Risks and Accounts This committee is in charge 81.4 % 7.1% 11.4% strategic decisions relative Committee’s mission is to of preparing the Board’s to the company’s investments ensure the integrity of all decisions, regarding the policy and general orientations. accounting and financial and HR orientations of the operations in the company Group as well as remuneration and ensuring that they are conditions of top management. compliant with the rules and SNI CIMR VARIOUS SHAREHOLDERS the interior control of the risk (FLOATING) management systems.
Governing Structure Management Committee Board of Directors The Group’s Management Committee consists of of 7 members, including the Chief Executive Officer. Managem’s Board of Directors consists of 7 Directors. Its mission is to ensure the social interest of The list of the principal managers of Managem is as follows on 31 December 2016. n the company. It defines the company’s strategic orientations and monitors their implementation. The Chief Executive Officer is a member of the Board of Directors and represents the company in its Executive committee Position Entry into service relations with third parties. The Chief Executive Officer, organizes and directs the Board’s achievements Imad TOUMI Chief Executive Officer 2016 in accordance with the law. n Ismail AKALAY General Manager of Mining and Industrial Activities in Morocco 2001
Youssef EL HAJJAM General Manager of international development and activities 2005 Board of Directors of Managem as of 31 December 31st 2016 Lhou MAACHA Executive Director of Exploration 1999 Chief Executive Officer Directors Naoual ZINE Executive Director of Strategy and Finance 2009 Imad TOUMI since 28/01/2016 Bassim JAI HOKIMI Hassan OURIAGLI Amine AFSAHI Executive Director of Marketing and Sales 2016 Ramses ARROUB Mohammed CHERRAT Executive Director of Human Resources, Communication and Sustainable Development 2004 Noufissa KESSAR SNI represented by Aymane TAUD ONHYM represented by Amina BENKHADRA SIGER represented by Hassan OURIAGLI
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MANAGEMENT COMMITTEE
des Ressources Humaines, de
Mr. Imad TOUMI Mr. Ismail AKALAY Mr. Youssef EL HAJJAM Mr. Mohammed CHERRAT Ms. Naoual ZINE Mr. Lhou MAACHA Mr. Mohamed Amine AFSAHI Chairman General Manager of mining and General Manger of Development Executive Director of Human Executive Director Finance Executive Director Executive Director Marketing and Chief Executive Officer industrial activities in Morocco and International Activities Resources, Communication & Strategy of Exploration & Sales and Sustainable Development
Mr. Imad TOUMI, 52, is a Mr. AKALAY has 31 years of He graduated from the École Ms. ZINE is a graduate of the Mr. MAACHA holds a diploma A graduate of the École Spéciale des graduate of the École Polytechnique experience in the research and Polytechnique in 1993 and then Mr. CHERRAT graduated from Mohammedia School of Engineers in engineering from the National Travaux Publics in Paris in 1992, (X 82), holds a Ph.D. from the development of mining recovery from the École des Mines de Paris the Mohammedia School of En- (1998). She joined Managem in Mineral Industry School (1989) Mr. AFSAHI holds an MBA from University of Paris 6 (Pierre processes. He holds a postgraduate in 1995. Mr. EL HAJJAM joined gineers in 1983 and immediately the same year and was in charge and a diploma in advanced studies the École des Ponts et Chaussées. and Marie Curie University), degree in mineral chemistry Managem the same year as an joined the Mine d’Imiter (SMI) of managing the project to extend at Cadi Ayyad University in Mar- Mr. AFSAHI joined the Managem and an MBA from the Hautes from the Pierre et Marie Curie engineer in charge of processing where he held the position of the plant of the SMI mine. One rakech. Mr. MAACHA assumed Group in March 1993 starting at Etudes Commerciales de Paris University (Paris 6). He has held at CTT Guemassa. He then held Head of Funds. In 1988, he was year later, she took charge of the position of Chief Geologist CMG as part of field maintenance (HEC) (MBA HEC 2000). He several positions of responsibility several senior positions in hydro- promoted to Mine Director. In mining planning at SMI. In 2001 of the Cobalt mine of Bou-Azzer and as the person in charge of has more than 20 years experience within Managem, including in metallurgy, in particular Hydro 1999, he joined the Bou-Azzer she was appointed Head of the (CTT) in 1993 and then Head of the methods. In 1997, he was in industrial project management the Research Department before II Project Manager and Cobalt Mine as the Operations Manager project “Implementation of a the exploration division within responsible for the development in the energy and mining sector. assuming the role of General II Plant Operations Manager. In of the Cobalt Hydrometallur- Management Kit at the level of the mine pole in 1996. In 1999, of economic intelligence and After starting his career at Manager of Hydrometallurgical 2002, he joined the engineering gical Mines and Works (CTT the Group’s subsidiaries” until he was appointed Director of the development of water and the Atomic Energy Commission units in 2001. He was also department as Project Manager. - CMBA). He was then in charge 2003 when she joined the General Exploration of the mines then environmental businesses. In (CEA), he joined AREVA in in charge of the Research and He was then in charge of the of the TECHSUB Operations Management of Mining Morocco Director of exploration within 2000, he was appointed Deputy 2002, where he held several Development Department. In SAMINE mine management. In Department. In 2001, he was as the Head of Business Manage- Managem. He is also in charge of Director of Water and Sanitation positions, including the General 2008, he was appointed Chief 2005, he was Technical Director seconded to AMENDIS, where ment Control. From 2005, she was the prospecting and evaluation of seconded to Véolia-Tétouan. In Management of AREVA South Executive Officer of the Cobalt of Mining before being appointed he was responsible for the Human appointed Deputy Director and international projects. Since May 2004, he returned to the group Africa and then AREVA Niger. Division and Specialties. Since Development Director. In 2008, Resources Department until 2004, then Director in charge of general 2016, Mr. MAACHA has been to take over the management risk He was also a member of the May 2016, Mr. AKALAY has he was appointed Managing when he returned to Managem as control, which brings together the appointed Executive Director of and the corporate management Executive Committee of the been the General Manager of Director of the Precious Metals Director of Human Resources and three functions: strategic manage- Exploration. control. In 2005 he was appointed Mining Division of AREVA mining and industrial activities Division. Since May 2016, Mr. Communication. He is also in ment control, internal audit and Director of Purchasing and Logis- and a director of several mining in Morocco. Mr. AKALAY is a EL HAJJAM has been the Director charge of sustainable development risk management. In May 2009, tics and then in 2008 Managing companies in Africa and Canada. member of the board of directors General of Development and and information systems. Since she was appointed Chief Financial Director of the support activities, of the Cobalt Development Institute International Activities. May 2016, Mr. CHERRAT Officer and Corporate Controlling bringing together REMINEX in London, a former corresponding has been appointed Executive Officer. Since May 2016, Ms. ingénierie and TECHSUB. In 2011, member of the Hassan II Academy Director of Human Resources, ZINE is the Executive Director he assumed responsibility for the of Sciences and Techniques of Communication and Sustainable of Finance & Strategy. management of major upgrading Morocco and Director of the Development. projects. Since 2013, he has been College of Engineering, Transfer responsible for the marketing and and Technological Innovation. marketing of Managem products.
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DiversitéPresentation of the Managem group Managem Annual Report 2016
Grinder in Guemassa complex
RISK MANAGEMENT The Risk Management policy within Managem aims to provide a framework for the identification, evaluation and and management of risks. It also ensures the improvement of the decision-making process. With such a policy, Managem Group works towards protecting its human, physical and intangible assets as well as its added-value areas. The Risk Management process is an integral part of the control environment of the group according to the COSO principles (Committee of Sponsoring Organizations of the Treadway Commission) and compliant with internal audit and control. The Audit and Risks Committee, mandated by the Board of Directors, ensures a regular review of the management, integrity and independence of the risk management body.
Risk Management Restructuring 2016 marked the redesigning of the risk management model as well as an internal modification of its content. This new model was based on the identification of risks through two different scopes (Top-Down and Bottom-Up), while adapting to the examined areas. In that respect, each risk is determined, evaluated and depending on the appropriate indicator. This restructuring was also marked by a shift from a qualitative risk assessment conducted by experts to a quantitative risk assessment through the group’s scientific tools and methods adapted to the Internal Audit: Efficient Lever audited parties and to facilitate the implementation scopes dealt with. n for Aid to Decision-Making of appropriate plans of action. In 2016, the audit Managem’s corporate governance system is based missions carried out resulted in the proposal of on a suitable internal assessment environment, nearly 60 recommendations to strengthen the whereby Internal Audit plays a crucial role. This internal assessment system and limit the level of is an essential element to ensure the success and exposure to risks. This allowed for a sharing the This restructuring also helped to reorganise Risk Management into three divisions: longevity of the organisation. After more than 10 good practices found during the audit missions years of existence, internal audit remains a cata- with the various subsidiaries in order to exploit lyst for efficiency and performance within the feedback. These missions also allowed for a transfer 1 2 3 Group. The internal audit function is responsible of simple and practical methods for self-assessment Corporate Risk Management Project Risk Management Industrial Risk Management for reviewing all the Group’s organisational pro- and overall performance measurement to Corporate Risk Management is Project Risk Management Industrial Risk Management cesses and activities, drawing on the expertise of operational staff. the result of a consolidation of follows the Directors and started with support from delegated auditors with complementary skills or, the risk maps of the operational Project Managers throughout external experts specialising in if necessary, on the contribution of external audi- Internal Assessment: and functional entities into the life cycle of the project from mining risks and hydrometal- tors. The management of the various audit enga- For Good Governance aggregates of the most signifi- orientation to feasibility. The lurgy. A transfer of knowledge gements is framed by the standardised framework Internal assessment is also a pillar of governance cant risks that are managed at risk analysis and assessment of this approach was provided of professional practices defined by the Institute within the Managem Group, and a fundamental corporate level. approach is based on scientific for the Managem teams. of Internal Auditors (IIA). These missions are the component for risk management. It presents tools for modelling and Industrial Risk Management is subject of a progress report presented to the Risk an overall process for securing operations and quantification of risks. The mainly aimed at securing the and Accounts Committee and the Management making information flows more reliable in order Lessons-Learned process is production tools and optimising Committee on a biannual basis. to assess the effectiveness of the organisation carried out after the projects the transfer of risks. and the systems. To this end, it was necessary have begun exploitation to As part of the continuous improvement of its per- to put in place appropriate assessment mana- evaluate the efficiency of formance, in 2016 the entity underwent changes gement devices. These, in turn, rely on infor- the monitoring of the Risk in the presentation of the results of its missions mation systems to supply process-monitoring Management Project. in order for them to be better understood by the dashboards. n
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STOCK MARKET PRESENCE Managem was listed on the stock market in July 2000 with 2,126,930 actions (25% of the capital). The aggregate amount of the operation established itself at 1,172 MMAD for a transfer price per unit of 551 MAD per share. Managem is listed in the 1st Section of the Casablanca Stock Exchange. The Group’s International Securities Identification Number (ISIN) is MA0000011058 and its ticker is MNG.
Performance In 2016, the share price evolved between 489 MAD (lowest closing share price) and 1,035 MAD (highest closing share price). Managem’s 2016 stock market capitalization was established at nearly 9 KMAD by the end of 2016. The MNG share completed 2016 at 979 MAD with a 42% evolution compared to the end of 2015.
1,400
400 Jul.16 Jan.16 Jun.16 Sep.16 Oct.16 Feb.16 Dec.16 Apr.16 Nov.16 Aug.16 Mar.16 May.16
This year’s main Managem stock market indicators: 2016 Number of stocks 9,158,699 Highest closing price (MAD) 1,035 Lowest closing price (MAD) 489 Capitalisation as of 31 December (MMAD) 8,966 Source: Casablanca Stock Exchange
Dividends In the fiscal year of 2016, the Board of Directors held a meeting on march 14th 2017 and proposed a dividend of 21 MAD per action. This is an increase compared to the previous fiscal year.
2016 2016 + 2015 42% 20 21MAD SHARE PRICE MAD EVOLUTION DIVIDEND/ DIVIDEND/ ACTION ACTION
compared to the end of 2015
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Switzerland OPERATIONS in MOROCCO and AROUND the WORLD Managem currently extends itself over various mines across Africa and mainly in Morocco. This has allowed it to develop a diversified portfolio in terms of diversified metals.
Activity
Projects Mines Subsidiaries
Morocco
U.A.E.
Mali
Sudan
Burkina Faso Guinea Morocco
Ivory Ethiopia Coast
Gabon Democratic Republic of Congo
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OPERATIONS IN MOROCCO AGM (Akka Gold Mining) AKKA GOLD MINING (AGM) is located 280 kilometres south-east of Agadir. After initially extracting and recovering Gold, AKKA GOLD MINING currently produces copper from the Copper deposits of Agoujgal, Tazalakht and more recently (2016) from the Ouanssimi mine, Mine de Akka which will make it possible to reach a production level of 300,000 tonnes per year in the medium term.
Description of the deposit Methods of exploitation After the discovery of new copper-bearing and treatment resources in the regions of Agoujgal, Tazalakht The mining of the Agujgal copper deposit and Ouansimi, adjacent to the Akka mine, is carried out by open pit mining within RESOURCES the Managem management team decided several pits. The ore being selectively felled AND RESERVES COPPER to launch the exploitation and processing according to mineralised power and then ON 31-12-2016 of copper in 2007. transported to the AGM plant for processing. IN TONNE METAL CONTENT (Cu) 2016 SMI (Société Métallurgique d’Imiter) In order to do so, a new plant specifically The Ouanssimi deposit is exploited by Société RESOURCES Métallurgique designed to process gold resources was built underground mines within a loading d’Imiter Société Métallurgique d’Imiter (Silver Deposit), formed in 1969, is responsible for the in 2008 and commissioned in early 2009. room and operating level at 350 metres 54,681 t exploitation of the Imiter silver metal deposit located 150 kilometres east of Ouarzazate. The former gold-producing plant is now below sea level. Another project, termed SMI is one of the largest producers of primary silver in the world. The SMI is listed on the used for the processing of copper and now “downstream”, for extraction at a greater RESERVES Casablanca Stock Exchange. has a higher capacity. depth is currently under design. 103 ,777 t Copper production is carried out by a process of concentration by flotation in the Description of the deposit Methods of exploitation processing plant. n The Imiter mine is distinguished mainly by and treatment TOTAL the qualities of its ore, especially because The method of Mining used by the at SMI is 158,458 t silver is the main metal. entirely mechanised. Underground mining uses the backfilled upland (TMR) method RESOURCES AND RESERVES The Imiter site has four major operating with mechanical or cement backfill, which SILVER centres: guarantees in particular: ON 31-12-2016 1. The Imiter I deposit is the oldest pro- Optimal safety conditions; IN TONNE METAL CONTENT (Ag) duction centre. It was discovered in 1984 High productivity; 2016 through research carried out since the 1950s Excellent ore recovery; by mining companies, who were attrac- Minimal dilution. RESOURCES ted by the mining residues that have been SMI produces 99.5% pure metal silver 1,181 t revealing themselves in this region since ingots through a three-phase production the 8th century. process:
RESERVES 2. Discovered in 1995, the Imiter II deposit Working of the ore, a fully mechanised 4,381 t is exploited an underground mine and has operation carried out using explosives; seen an evolution of its downstream potential. Ore processing which takes place in several Its Extraction is ensured by a central well. stages: crushing, grinding, flotation, cya- 3. Exploited since 2005, wells E and F of niding and precipitation; TOTAL Imiter South are known to contain a high Fusion, the final step in the process of obtai- 5,562 t quality silver content. ning silver bullion. 4. Imiter East is composed of Well 4 and The recovery rate for silver, the main indica- Igoudrane. The latter started production in 2007. tor of productivity, is around 90 per cent. n 28 29 DiversitéPresentation of the Managem group Managem Annual Report 2016
CTT (Compagnie de Tifnout Tighanimine) Established in 1928, the Tifnout Tighanimine Company is based 120 kilometres south of the town of Ouarzazate, Bou-Azzer, and is the oldest mine owned by Managem. Its activity
includes research, exploitation, and treatment of primary Cobalt. It operates the Bou-Azzer mine Mine de and supplies the hydrometallurgical plants of Guemassa (Cobalt) for most of their supply of Bou-Azzer concentrated cobalt or Cobalt halides. At the Guemassa industrial complex, CTT carries out the valuation of certain minerals by hydrometallurgical processes through two channels structured around seven operating units: “Metal” (Cobalt, Arsenic, Nickel hydroxide and Copper sulphate) and “Metallic Derivatives” (Zinc oxide, Gold and Sulfuric acid).
SOMIFER (Société Minière de Bou-Gaffer) The SOMIFER Company operates the Bleida mine, located on the eastern part of the Bou-Azzer depression. In 1997, following the depletion of the Bleida Copper deposit and the price
Mine de Bleida collapse, mining activity was temporarily halted. As a result, the workforce was dispursed to other operating sites. However, the Company continued mining research and exploration activities that resulted in the development of a Gold deposit that was transferred to CTT. Currently, SOMIFER operates the Jbel Laasal Copper deposit.
Description of the deposit Conveyance is ensured by skips suspended The Bou-Azzer depression corresponds to in the shaft and operated by an extraction outcrops of Precambrian I and II under an machine from the surface. infracambrian cover. The ophiolitic series which characterises this depression contains Treatment exploitable mineralisations of Cobalt. The Gravimetry at Bouazzer includes ore from RESOURCES RESOURCES AND RESERVES Cobalt deposits are spatially and genetically Bou-Azzer being treated using a gravime- AND RESERVES COPPER associated with the Serpentine Massif and are tric process. The first stage of ore proces- COBALT ON 31-12-2016 ON 31-12-2016 Description of the deposit lower Cambrian base. The area occupies of the “hydrothermal vein type”. The Cobalt sing consists of primary and then secondary IN TONNE METAL The area of Bleida is located on the extreme the southeastern part of the Bou-Azzer El mineralisation is cobalt arsenides, with sulfo crushing, ensuring adequate particle size. IN TONNE METAL CONTENT (Cu) CONTENT (CO) 2016 eastern part o f the Bou-Azzer-El Grara Grara depression in a Precambrian stra- arsenides and sulphides in smaller amounts. Hydrometallurgy at Guemassa: The more 2016 depression, which is part of the Central tigraphic litho formation. The minerali- recent hydrometallurgical activity is the RESOURCES Anti Atlas of Morocco. This area It has sation exploited at Bleida is in the form of Methods of exploitation result of Managem’s downstream integration RESOURCES 15,700 t revealed several Copper-bearing indices, mineralised bodies of sulphides and Cop- The method of exploitation used at Bou-Azzer strategy. It is the culmination of an active 1,100 t notably at the level of the Adoudounnian per oxides. level is the cut-and-fill stope method. Access Research and Development policy launched
RESERVES cover (Jbel laasal type deposit) and at the to the deposit is through wells of up to 400 a few years ago with a view to improving RESERVES Socle level (former Bleida mine). The Jbel Methods of exploitation meters in depth, the deposit being cut into the value of mining products. 80,100 t 16,856 t Laasal deposit is located at an altitude of and treatment several panels of 40 to 50 meters. Downstream of the extraction and thanks 1,430 metres. It and is accessible through The mining method used for the Bleida Mine clearance and backfilling is done with to Research & Development efforts, Mana- a 27-kilometr e runway that runs nor- deposits, in particular Jbel Laasal, is an a scooping machine while ore is drawn off gem has been recovering certain minerals TOTAL th-east a few kilometres from Bleida. On optimised open pit method. Production of through ore collecting stacks constructed through hydrometallurgical process since TOTAL 95,800 t the geological level, the Jbel Laassel depo- the Copper concentrate goes through seve- over the course of the operation. Recovery 1996, obtaining high-value products such 17,956 t sit is located on the stratigraphic boundary ral stages (crushing, grinding, flotation, and haulage are carried out by tubs drawn as Cobalt cathodes, Copper sulphate and between the Upper Adoudounian and the thickening and filtration). n by a locotractor to the extraction shaft. Zinc oxide. n 30 31 PresentationDiversité of the Managem group Managem Annual Report 2016
The treatment of products is done through Description of the Deposit - Hajjar two units of production in the Guemassa Located 35 kilometres south of Marrakech on the complex: northern edge of the High Atlas at 800 meters The processing plant for mining products from in altitude, the Hajjar polymetallic deposit is a polymetallic deposits that has a capacity of 6,000 hydrothermal volcano-sedimentary type depo- tonnes per day. Hydrometallurgical activity is the sit, located in the eastern part of the Massif des most recent form of activity and is at the heart Guemassa. of Managem’s integration strategy. It constitutes It is encased in the formations of the upper Viséan, the fulfilment of strong R&D policies. corresponding to the southern continuity of the Thanks to the efforts made by Research and Deve- Massif des Jebilet where deposits and clues are lopment, Managem has been able to swiftly move already being exploited in Ketara and Draâ Sfar. on to the mining evaluation phase (since 1996) The Hajjar deposit, which has been in operation of certain products through hydrometallurgical since 1992, continues to produce an average of activity. This allows for the production of highly 30 per cent of the Company’s turnover thanks to CMG (Complexe Hydrométallurgique de Guemassa) anticipated final products such as Cobalt cathodes, the constant research efforts undertaken to signi- Complexe Established in 1988, the Compagnie Minière de Guemassa (Guemassa Mining Company) hydrométallurgique Copper sulfate and Zinc oxide. ficantly renew the mine’s potential. Guemassa (“CMG”) operates the Hajjar polymetallic deposit, located 30 kilometres outside of Marrakech. While the Company has been producing Zinc, Lead and Copper concentrates since Organised in operational structures and based Description of the Deposit - Draâ Sfar 1992, in 2002 CMG used the industrial site of Guemassa for the production of Zinc oxide by at the industrial complex of Guemassa near Located 13 kilometres north-west of Marrakech, hydrometallurgical means. In 2004, to strengthen and support production at the Hajar site, Marrakech, the Group’s hydrometallurgical straddling the northern edge of the Haouz, on CMG commissioned the Draâ Sfar polymetallic deposit located 15 kilometres outside of units consist of several units: the southern boundary of the Central Jebilet, the Marrakesh, as well as the Tighardine polymetallic deposit in 2007, located 70 kilometres south The first metallurgical unit is the roasting unit site of Draâ Sfar possesses significant potential of east of the Hajjar Mine. from which arsenic trioxide (As2O3) and roasted polymetallic ore. Exploration work began in 1988 concentrate from Bou-Azzer’s cobalt concentrate under the agreement between ONA-Mines and ore are produced. BRPM. The licenses were transferred in 1997 to The roasted concentrate as well as the Bou-azzer CMG which proceeded in 1998 to sink well II Cobalt hydroxide are treated at the Hydro Unit in 1998. 1 to produce Cobalt cathodes, Nickel hydroxide The Aval Draâ Sfar project involves the exploita- and Cobalt carbonates. The sterile waste contains tion of the downstream portion of the Aval 640 gold. Hydro unit 2 processes the Bou-Azzer’s waste deposit, with the objective of extending the life of RESOURCES RESOURCES RESOURCES AND RESERVES AND RESERVES AND RESERVES for the production of Cobalt hydroxide. the CMG mine by working a polymetallic deposit POLYMETALLIC POLYMETALLIC POLYMETALLIC SITES SITES SITES Using a crystallisation process, the Copper plant (Zinc, Copper and Lead). Over a kilometre deep, ZINC LEAD COPPER produces copper sulphate from Copper carbo- the Aval Draâ Sfar project is the deepest mine in AS OF 31-12-2016 AS OF 31-12-2016 AS OF 31-12-2016 nates and concentrates from the Bouskour and North Africa. IN TONNE METAL IN TONNE METAL IN TONNE METAL CONTENT (Zn) CONTENT (Pb) CONTENT (Cu) Tazelakht mines. 2016 2016 2016 The production of Gold bullion is made at the Description of Deposit - Tighardine gold factory from the sterile of the roasted concen- The objective of this project is to carry out the RESOURCES RESOURCES RESOURCES trate, the waste, and the Gold from the Bleida work on the development of the deposit on the 124,040 t 76,567 t 30,343 t region. In the Sodium Sulphate plant, the CTT exterior sites in order to compensate in part for liquid effluents are treated by evaporation and the decline in Hajar’s production. The Tighar-
RESERVES RESERVES RESERVES crystallisation for the production of sodium sul- dine deposit is located 70 kilometres South East phate (Na SO ). of the Hajjar Mine. 419,314 t 141,778 t 42,025 t 2 4 Finally, the sulfuric acid plant treats the pyrrhotite contained in the waste from the Guemassa mine. Methods of exploitation and treatment Roasting and recovery by sublimation of the sul- The operating methods used are mainly the cut- TOTAL TOTAL TOTAL fur make it possible to produce iron oxide (used in and-fill stope and open sub-level stoping that are 543,354 t 218,345 t 72,368 t the cement plant), sulfuric acid and steam which best suited to the morphology and mechanical feeds the CTT boiler and is used for the produc- characteristics of CMG deposits. Operations are tion of electricity. highly mechanised. n 32 33 DiversitéPresentation of the Managem group Managem Annual Report 2016
El Hammam Mine
SAMINE (Société Anonyme d’Entreprises Minières) CMO (Compagnie Minière d’Oumejrane) Mine d’El Hammam Established in 1961, the Société Anonyme d’Entreprises Minières (SAMINE) (Mining Enterprises The Compagnie Minière d’Oumejrane (CMO - Oumejrane Mining Company) holds Copper licenses PLC) operates the El Hammam deposit, located 80 kilometres from Meknes, and is one of the for the Tinghir region. The industrial site allows the production of Copper concentrate from five Mine d’Oumejrane world’s leading Fluorite-producing mining companies. SAMINE has an annual capacity of up to sites from underground mines and a flotation treatment plant built on the Bounhas site. 76,000 tonnes of Fluorite concentrates, the product of which is exported to many customers around the world.
Description of the deposit Methods of exploitation Description of the deposit Methods of exploitation The mineralisation sought in this area and treatment The Oumejrane deposit produces Copper and treatment sector is mainly Fluorite, Skarn minerali- The method of exploitation used is that of concentrate from the Copper prospects of Underground mining is carried out using RESOURCES RESOURCES sation, and Lead, Zinc and Copper sulfide cut-and-fill stoping, in trenches, on average, Bounhas, Rich Merzoug, Afilou N’khou, the cut and fill method with its three AND RESERVES AND RESERVES COPPER FLUORITE concentrations. of 150 meters on average, while the cutting Oumejrane Nord and Boukerzia, all located variants: mechanised, semi-mechanised and CONCENTRATE ON 31-12-2016 ON 31-12-2016 of the deposits is carried out on levels of 50 within a perimeter of 17 kilometres from conventional. IN TONNE METAL metres. Each deposit has collecting chim- Bounhas, south-east of the Ait Sâadane douar Copper production at Jbel Laasel is carried IN TONNE METAL CONTENT (CaF2) CONTENT (Cu) 2016 neys. Ore dumped into these chimneys is in the commune of Hssya, belonging to the out by a process of concentration by flotation 2016 taken over by an electric locomotive tractor, circle of Alnif in the province of Tinghir. in the processing plant. n RESOURCES towing wagons to the crushing located on The mineralisation is in the form of hydro- RESOURCES 449,869 t a lower level of the mine. Equipped with a metal Copper veins. 14,967 t conveyor belt, the 3,000-metre-long chute
RESERVES is used to extract the ore or the sterile at a RESERVES rate of 100 tonnes per hour. This It is the 455,893 t 65,056 t main access point for mining personnel and equipment. Finally, cross-cuts connect the downspout to the mineralised crate. The TOTAL extracted rock is then treated by flotation. TOTAL 905,762 t The Samine mine achieved a production 80,023 t of Fluorite concentrate of 66,584 tonnes in 2016. n 34 35 DiversitéPresentation of the Managem group Managem Annual Report 2016
INTERNATIONAL OPERATIONS
Bakoudou Mine
REG (Ressources Golden Gram Gabon) MANUB Bloc 15 Gabon The open-pit mine in Bakoudou, which began in 2012, was the first gold mine to have been Established in 2012, Manub operates the Block 15 Gold deposit in Sudan. In 2013, Managem
Mine inaugurated in Gabon. The construction of the mine required an investment of USD 39 million obtained Gold resource certification and carried out a feasibility study for the development Sudan de Bakoudou for a forecast production of 45,000 ounces of Gold per year throughout the life of the mine. of the project. In order to verify and confirm all the technical parameters and the processing Using gravimetry and CIL processes, the plant currently produces Gold bullion. The Bakoudou performance of the feasibility study, Managem invested USD 14 million in the construction project was initially part of a partnership between Managem International and Searchgold: of a pilot production plant which began operating in August 2012 under the legal entity which gave birth to the Gabonese company “REG” to develop the deposit. An agreement Manub. The pilot plant has a capacity of 16,000 ounces (500 kilogrammes) of Gold per year. with the Gabonese state allows REG to benefit from favourable legal, economic and fiscal 200 employees are employed by Manub on the site. guarantees, with a guarantee of stability for investment. The REG Company operating the project is 75 per cent owned by Managem and 25 per cent owned by the Gabonese government through CDC (Caisse des Dépôts et des Consignations - Deposit and Consignment Office). REG intends to develop the potential of the Bakoudou mine and has begun an exploration Description of the deposit Methods of exploitation RESOURCES program aimed at integrating new sites and extending the life of the mine, which was previously The Block 15 Gold deposit, owned by and treatment RESOURCES AND RESERVES AND RESERVES estimated at had been estimated at three years at the time of the construction phase. Manub, is located approximately 650 kilo- The exploitation of the mineralisation of GOLD GOLD ON 31-12-2016 metres north of Khartoum, the capital of Block 15 is carried out through the open ON 31-12-2016
Sudan, in the Nile River Wilayat (Nile river pit method. IN MILLION OUNCES METAL IN KILOGRAMME METAL CONTENT (Au) CONTENT (Au) 2016 2016 state). The mineralisation in the deposit is in The processing of the ore begins with the form of a shear zone whose mineralised mechanical preparation (crushing and
RESOURCES RESOURCES Description of the deposit Methods of exploitation structures are of a kilometric extension. The grinding). Next, a CIL leaching step makes The Bakoudou mine is located more than and treatment mineralisation breaches the surface and is it possible to dissolve the Gold content 2,474 t 0.563 Moz 650 kilometres south-east of the capital The Bakoudou mine is a quarried mine suitable for open pit mining. immediately absorbed on the activated Libreville in the region of Moanda. The (open pit). The processing of the ore begins carbon. Then Gold is extracted from the RESERVES RESERVES mineralisation exploited is in the form with mechanical preparation (crushing and activated carbon by elution and electrolysis. 631 t of granite and gneiss associated with the grinding). Then, a process of gravimetric This is followed by calcination and a final 1.874 Moz quartz veins. separation by passing over specific concen- melting step to produce Gold bullion with trators and shaking tables makes it pos- a content of more than 93 per cent, which TOTAL sible to obtain concentrates which are rich is directly marketable. TOTAL in Gold. These concentrates are fused to The current production capacity is 700 2.438 Moz 3,105t obtain ingots with a content greater than tonnes mixed grade per day. An extension 95 per cent Gold. The processing capacity project to reach a production rate of 3,600 is 360,000 tonnes per year. n tonnes per day has been launched. n 36 37 Managem Annual Report 2016
Bou Azzer mine
MARKET REVIEW Analysis of the market for the Group’s main metals in 2015-2016
4,863$/t 1,252$/oz 17.1$/oz
-11.5% +8% +9%
2,094$/t 1,871$/t 11.6$/Lb 2016 +8.6% +4.9% -10.5% ACHIEVEMENTS MARKET REVIEW
2016 PRODUCTION RESULTS Metal prices overview RESEARCH ASSESSMENT After a year of decline, base metal prices registered a sharp rise in 2016, with contrasting performances. Precious metals experienced a relative decline at the end of the year, following three consecutive DEVELOPMENT quarters of increase. Base metals and Cobalt experienced sustained growth from the second half MANAGEM PROJECTS in MOROCCO of the year. The underlying explanations for these price developments are complex. The overall economic situation remains uncertain, with recoveries in Europe and North America still fragile, the MANAGEM PROJECTS on the AFRICAN CONTINENT change of presidency in the United States, Britain’s decision to leave the European Union (Brexit), FINANCIAL OVERVIEW fluctuating demand, and China’s growth of more than 6.5 per cent - its lowest level for 26 years - and uncertainties in other emerging countries. n
38 39 2016 achievements Managem Annual Report 2016
Copper Silver Copper prices: Silver price: from 01/01/2015 to 31/12/2016 from 01/01/2015 to 31/12/2016
The average price was 2016 is USD 4,863 per tonne, which was 11.5 The average Silver price was USD 17.1 per ounce in 2016, up nine per cent lower than in 2015, when it was USD 5,494 per tonne. per cent from the average of USD 15.7 per ounce in 2015.
7,000 25 6,500 20 6,000 5,400 15 5,000 4,500 10 4,000 5 3,500 3,000 0 July 2015 July 2016 July 2015 July 2016 June 2015 June 2016 May 2015 May 2016 June 2015 June 2016 May 2015 May 2016 April 2015 April 2016 April 2015 April 2016 March 2015 March 2016 March 2015 March 2016 August 2015 August 2016 October 2015 October 2016 August 2015 August 2016 January 2015 January 2016 October 2015 October 2016 January 2015 January 2016 February 2015 February 2016 February 2015 February 2016 Décember 2015 Décember 2016 December 2015 December 2016 September 2015 September 2016 November 2015 November 2016 September 2015 September 2016 November 2015 November 2016 With the market being in surplus, copper prices in 2016 were highly volatile. The main factors influencing the price trend in 2016 included an increase in worldwide demand for Copper, Purchasing At the end of December, Silver was up 17 per cent compared to the price at the beginning of 2016 Managers Index (PMI) in the U.S and China and the rise of stock prices. The Copper worldwide demand (USD 6.2 per ounce vs USD 13.8 per ounce) and it was one of the best performing commodities. has experienced an increase of around two per cent. Despite the slowdown in China’s growth that There are a few reasons for this increase. As with Gold, Silver prices have been strongly correlated was offset by the introduction of U.S government incentives to increase investment in infrastructure with the forecasts of EDF rate increases and, to a lesser extent, with the European Central Bank (ECB) (in particular the national electricity company - the biggest consumer of Copper worldwide) and to and the Bank of Japan (BoJ) announcements of economic support. Silver also caught up with Gold, promote the consumption of manufactured goods. Also, there has been a considerable increase in with a Gold/Silver ratio of 83 in March, 71 in June, 68 in September and 70 in December, while the the mining offer in 2016 (2 per cent), which is marked by the launching of new projects and the historical average of 1970-2015 stands at 55. increase in the production capacities of many existing mines. Despite fairly low stocks, the majority of the Copper producers wish to maintain their end of the market. The stocks are located at almost In terms of supply, 2016 will be the first year of decline in mining production for 14 years. This 9 weeks of consumption with a surplus of 380 Kt. In 2017, stocks are expected to merge under the is a consequence of the declines in investments made in previous years, encouraged by a favorable effect of supply and the recovery of demand, with the improvement of the global situation. n cash cost curve in comparison with other raw materials. Silver production was affected in 2016 by decreases in production at the Fresnillo and Cannington mines (the largest silver mines in the world), and the closures of Zinc-Lead mining complexes in China and Australia which produced Silver as Gold a by-product. Demand from investors has increased, while Indian and Chinese imports have fallen Gold prices: sharply due to the build-up of stocks in 2015 when prices were low. It should be noted that the US from 01/01/2015 to 31/12/2016 imports remain stable from one year to the next.
The average price for 2016 was up eight per cent, from USD 1,159 In the short and medium term, Silver prices will move in response to USD currency fluctuations per ounce at the end of 2015 to USD 1,252 per ounce at the end of 2016. according to US monetary policy and geopolitical risks and uncertainties. n
1,600 1,400 1,200 1,000 800 600 400 200 0 July 2015 July 2016 June 2015 June 2016 May 2015 May 2016 April 2015 April 2016 March 2015 March 2016 August 2015 August 2016 October 2015 October 2016 January 2015 January 2016 February 2015 February 2016 December 2015 December 2016 September 2015 September 2016 November 2015 November 2016 Gold delivered a strong performance in the first nine months of the year, although prices declined last October following the announcement of Donald Trump’s victory. The market has since under- gone a movement of transfer of investors from the yellow metal to the equity market in anticipation of the measures that will be put forward during the new presidency to support the economy and infrastructure.
40 41 Diversité2016 achievements Managem Annual Report 2016
Zinc Zinc prices: from 01/01/2015 to 31/12/2016 and adoption of start-stop technology. Finally, it is also in turn due to the transition from 4G to 5G in the USA and Europe and the extension of telecoms networks. 2016 saw a positive price increase of 9% from USD 1,928 Concerning the mining supply, it is declining, as affected as Zinc by mine closures (lack of compe- at the end of 2015 to USD 2,094 at the end of 2016. titiveness or non-compliance with environmental standards). Concurrently, the secondary market (Representing 53 per cent of the supply) continues to grow and benefits from the arrival of Chinese 3,500 “e-bike” batteries produced in the previous decade. 3,000 2,500 Stocks are nearly at a six-year low because of prices. Lead benefited from a seasonal rebuilding of 2,000 inventory by battery manufacturers. n 1,500 1,000 500 Cobalt 0 Cobalt prices: from 01/01/2015 to 31/12/2016 July 2015 July 2016 June 2015 June 2016 May 2015 May 2016 April 2015 April 2016 March 2015 March 2016 August 2015 August 2016 October 2015 October 2016 January 2015 January 2016 February 2015 February 2016 December 2015 December 2016 September 2015 September 2016 November 2015 November 2016 The average cobalt price at the end of 2016 was USD 11.6 per pound, The year started with fairly “low” price levels at around USD 1,500 before rising gradually to USD a decrease of 10.5 per cent compared to the 2015 average. 2,907 at the end of November, which is +94%. This rise in prices is explained by the positive fundamentals of the Zinc market since there was an 16 increase in worldwide Zinc consumption in 2016. In China, monetary stimuli from the central bank 14 12 encouraged the construction and automotive sectors. Regulatory and tax incentives as well as subsi- 10 dies driving consumers to purchase light and electric vehicles, thereby promoting demand for Zinc. 8 6 Also, demand fell by three per cent in Europe and a new EU standard has imposed the recycling of 4 85 per cent of automotive components since 2015, resulting in a gradual replacement of steel with 2 aluminium. US demand is falling due to anti-dumping measures imposed on Chinese steel, resulting 0 in a massive use of stocks. Finally, the Zinc mining supply saw a five per cent decline in 2016 due to July 2015 July 2016 June 2015 June 2016 May 2015 May 2016 April 2015 April 2016
production cuts in 2015 and the closure of mines in Canada and Ireland in addition to the closure of March 2015 March 2016 August 2015 August 2016 October 2015 October 2016 January 2015 January 2016 February 2015 February 2016 December 2015 December 2016 September 2015 September 2016 the Glencore and Nyrstar mines in 2015-2016. Consequently, the Zinc market has been in deficit November 2015 November 2016 since 2013, and supply is maintained thanks to the contribution of inventories. n Cobalt experienced a significant boost in the second half of the year, from USD 10.7 per pound at the end of June to USD 14.8 per pound at the end of December, an increase of 38 per cent. 2016 was also the first year of a supply deficit in seven years. Lead The factors behind this evolution are numerous. Cobalt consumption is driven by battery consumption, Lead prices: which is the main driver of demand growth (50 per cent). Half of China’s production is absorbed, with from 01/01/2015 to 31/12/2016 99 per cent of concentrate imports and 93 per cent of final consumption coming from the Democratic Republic of Congo. This country provides the majority of Cobalt exports and raises the question of the The annual average of the price of Lead changed from USD 1,782 per tonne at the end lack of geographical diversification of supply with the risk of increased shocks in supply. of 2015 to USD 1,871 per tonne at the end of 2016, a positive increase of 5 per cent. The annual supply growth of five per cent in recent years is expected to decrease as a result of the dif-
3,000 ficulties experienced by certain Nickel and Copper mines, which suffer from the decline in prices, and
2,500 who produce Cobalt as a by-product. After a six per cent increase in 2016, it will grow at an average
2,000 rate of three per cent for the coming years, gradually increasing the supply deficit from 2018 onwards.
1,500 In the longer term, a risk of substitution appears with the batteries and aerospace industries heavy
1,000 reliance on Cobalt, which encourages manufacturers to develop substitute materials (lithium-ion or
500 lead-acid batteries).
0 Cobalt offers good prospects, mainly supported by the development of lithium-ion batteries used in July 2015 July 2016 June 2015 June 2016 May 2015 May 2016 electric cars. Global efforts to reduce emissions from fossil fuels will increase demand for electric vehicles April 2015 April 2016 March 2015 March 2016 August 2015 August 2016 October 2015 October 2016 January 2015 January 2016 February 2015 February 2016 December 2015 December 2016 September 2015 September 2016 November 2015 November 2016 in the US, EU, China and India. According to CRU, the boom in electric vehicles will drive demand Lead prices were volatile in 2016, from a low of USD 1,600 per tonne at the beginning of the year and by 16 per cent annually until 2022. On the supply side, the lack of geographical dispersion of supply exceeding the USD 2,000 per tonne mark from September to a year high of USD 2,466 in November. (the DRC supplying the majority of Cobalt units worldwide) constitutes a significant risk of shock to This is due to a robust Lead consumption/demand in 2016 through the increase in automobile sales, the Cobalt market. Indeed, very few Cobalt mining projects will reach the exploitation phase in the driven by the decline in hydrocarbon prices. It is also due to favourable access to consumer credit, short term. Cobalt is a by-product of Copper and nickel operations. n 42 43 *CRU : xxxxxxxxxxxxxxxxxxxxx Diversité2016 achievements Managem Annual Report 2016
2016 PRODUCTION RESULTS Zinc Gold In 2016, Managem had a positive production for all metals, except for Gold and Fluorite, 2016 was marked by the consolidation of Zinc The group’s Gold production fell by 16 per cent which decreased slightly. production thanks to the increase in the treated (366 kilogrammes), due to the following reasons: tonnage of Draa Sfar (Downstream and Slim Zone), Firstly, the decrease in Gold production at Bakoudou fully offsetting the negative effect of the drop in by 22 per cent (281 kilogrammes) following the At the end of 2016, the following highlights emerged: tonnage coming from the Hajjar mine. decline in the average treated grade, partly offset by efforts to increase the tonnage processed. Also, the drop in Gold production in Morocco was 22 +0,3% per cent (96 kilogrammes) due to the non-recur- rence of Gold production in Bleida - this project COPPER GOLD SILVER ZINC FLUORITE COBALT 77,938 78,187 was stopped because of its high cash cost; +19 % -16 % +7 % +11 % -10 % +5% -16 % 2,251 1,884
GOLD INTERNATIONAL: Copper 2015 2016 1,804 1,532 The group’s Copper production increased significantly by 18.5 per cent, equivalent to 17,677 TC. Zinc Concentrates This excellent performance is explained by the progressions in Copper mines: (Tonnes) GOLD MOROCCO: Thanks to improved fundamentals (increase in tonnage and content treated), there was a significant 448 352 increase in production at Oumejrane of 26.4 per cent. There also has been a 40 per cent increase in 2015 2016 production at Bleida thanks to the attestation and start-up of the production of the “sulfur” yards; Gold production Last but not least, the good production performance at Akka, an increase of 21 per cent, marked Silver (Kilogrammes) by the increase in processed tonnage combined with an increase in the rate of returns from the Silver production improved at SMI by 7 per cent, processing plant. or approximately 15 tonnes of Silver, due to the combined effect of the increase in tonnage pro- cessed to saturate the plant, and improved plant performance. +19 %
+7 % 113,219 221,226 95,542 206,921 22,730 CMO : 17,989 33,309 SOMIFER : 25,301
AGM : 33,904 41,018
CMG : 18,348 16,163 2015 2016 Silver Concentrates 2015 2016 (Tonnes)
Copper Concentrates (Tonnes)
44 45 Diversité Managem Annual Report 2016
Techsub Employees
Production by operation MANAGEM shows steady results in Morocco, with a considerable increase in its results on Moroccan ground, especially when it comes to the production of Copper.
Company Country Type of ore Unit 2015 2016 Var. 15-16 CMG Morocco Zinc Concentrate (T) 77,938 78,187 0.3% Lead Concentrates (T) 16,325 15,744 -3.6% Copper Concentrates (T) 18,348 16,163 -11.9% SMI Morocco Silver (Kg) 206,921 221,226 6.9% AGM Morocco Copper Concentrate (T) 33,904 41,018 21.0% SOMIFER Morocco Copper Concentrate (T) 25,301 33,309 31.7% CMO Morocco Copper Concentrate (T) 17,989 22,730 26.4% SAMINE Morocco Fluorite (T) 73,879 66,584 -9.9% CTT Morocco Gold (Kg) 448 352 -21.4% Cobalt cathodes (T) 1,982 2,081 5.0% Arsenic (T) 7,566 6,122 -19.1% Nickel derivatives (T) 203 188 -7.4% Zinc Oxide (T) 4,892 5,180 5.9% Fluorite Cobalt (Broken Cathode) Sulfuric acid (T) 57,319 98,125 71.2% The 2016 fiscal year saw a 10 per cent decline in Production of Cobalt cathodes increased by five per Iron Oxide (T) 52,779 92,264 74.8% Fluorite production due to the decline in tonnages cent, mainly as a result of higher treated tonnage. REG Gabon Gold (Kg) 1,301 1,020 -21.6% and grades processed, mitigated by the develop- MANUB Sudan Gold (Kg) 503 512 1.8% ment of new sites, and the development of Fluorite in the dyke as well as the launch of new local +5% markets, in particular cement plants. 2,021 -10% 1,982 73,879 Breakdown of 2016 turnover by type 66,584
% % % % 2015 2016 41.3 40.8 12.8 5.2 Cobalt cathodes Concentrates (Tonnes) 2015 2016
Fluorite Concentrates PRECIOUS BASE METALS COBALT SERVICES (Tonnes) METALS AND FLUORITE AND SPECIALTIES AND OTHER PRODUCTS
46 47 Diversité Managem Annual Report 2016
RESEARCH ASSESSMENT 2016 was marked by a positive research report. The main findings of which have been outlined below concern:
Silver: Copper +653 tonnes metal +4.5 millions tonnes mixed-grade Discovery of new silver mining reserves (653 Discovery of new copper reserves, about 4.5 mil- tonnes at SMI), equivalent to over two additio- lion tonnes mixed-grade consolidated, confirming nal years of operation. the potential of this strategic metal for the Group and making it possible to extend the life of our Cobalt mines by an average of two more years. +3,624 tonnes metal Discovery of new cobalt reserves, i.e. 3,624 tonnes, Polymetallic which corresponds to about one and a half years +1.9 million tonnes mixed-grade of additional operations in Bou-Azzer. Discovery of new Polymetallic reserves at CMG, i.e. more than 1.9 million tonnes mixed-grade, corresponding to approximately one and a half years of additional operations.
Summary tables of resources in reserve
Metal content End 2015 End 2016
Copper Copper Total Reserves 275,155 290,958 Resources 108,856 115,691 CMG Copper Reserves TM 37,064 42,025 Resources TM 22,788 30,343 AGM Copper Reserves TM 103,377 103,777 Resources TM 47,614 54,681 SOMIFER Copper Reserves TM 66,056 80,100 Resources TM 21,396 15,700 CMO Copper Reserves TM 68,658 65,056 END 2016 Resources TM 17,058 14,967 COPPER RESERVES Polymetallic: Zinc, Lead Zinc Reserves TM 405,048 419,314 Resources TM 90,258 124,040 290,958 Lead Reserves TM 140,657 141,778 TM Resources TM 63,933 76,567 Silver SMI Silver Reserves TM 3,965 4,381 END 2016 Resources TM 1,082 1,181 COPPER RESOURCES Gold REG Gold Reserves Kg M 2,099 631 Resources Kg M 4,256 2,474 115,691 Fluorite TM SAMINE Fuorite Reserves TM 532,549 455,893 Resources TM 337,902 449,869 Cobalt CTT Cobalt Reserves TM 15,652 16,856 Resources TM 1,096 1,100
48 49 Diversité2016 achievements Managem Annual Report 2016
DEVELOPMENT Mine Development Stages.
1. Exploration
Strategic assessment of a potential mining gical, mineralogical and metal- Conducting mapping, geophy- project based on preliminary lurgical aspects. sical and/or geochemical surveys geological, technical and finan- n The design of mining methods on a large scale (about one hun- cial data. and development of the deposits. dred km2). n The evaluation of the regula- Valuation tory framework. Approach Certification of resources by n The evaluation of the envi- Determination of exploration tightening the drilling grid. ronmental, social and economic targets, taking samples and Launch of a pre-feasibility impacts. conducting surveys on a smaller study covering the economic n Estimates of development and scale (a few km2). assessment of the deposits to be operating costs. PROJECTS in MOROCCO developed, and including: n The results of the financial Conduct of the Concept Study: n The study of geotechnical, assessment. SMI extension project This is a preliminary economic hydrological and hydro-geolo- The Imiter mine has been producing primary silver since 1969 and still has considerable potential. The SMI expansion project aims to increase the silver production capacity to 300 metric tonnes from 2020 onwards.
This increase in capacity will take place in two stages: the first stage will aim to reach between 230 and 250 tonnes per year, and the second stage will reach 300 tonnes per year thanks to an exten- 2. sion of capacity of the current plant and the development of old dykes. Feasibility study 300 Preparation of the final economic evaluation, in line with best industrial practices. 221 TM TM
3. Construction of the mine Preparation of detailed engineering studies. Making orders for mining machines and plant equipment. Carrying out civil engineering works. Development of the mine. 2016 2020 Installation and commissioning of the plant.
Dyke Metals Mining Metals
SMI Production objectives
50 51 DiversitéRéalisations 2016 Managem Annual Report 2016
Region neighbouring the El Hammam mine
MANAGEM PROJECTS on the AFRICAN CONTINENT Since the end of the 90s, Managem has taken on an ambitious international development strategy. With solid realisations achievements resulting from these international projects, Managem is now fully engaged in new projects in the African continent.
Copper Managem aims plans to develop its Copper potential with the geological resources estimated activities in Morocco in order to achieve a at more than 600,000 tonnes of Copper contained production of 250,000 tonnes by 2020, through with an open lateral and downstream potential. the expansion of existing mines and by developing The pre-feasibility study of the project is in Étéké Gold Project 39 MUSD in research and feasibility. Avocet the Tizert project. progress. According to the preliminary data, The Etéké Gold deposits are located in the Mouila Mining’s feasibility study consists in exploiting The desire to strengthen its portfolio around the the project is targeting an estimated production region of Gabon. 2016 was marked by the conti- a reserve of 403 Koz through the Heap Leach Copper business has led the group to expand its capacity of 65,000 tonnes of concentrates per year. nuation of research on promising areas. treatment process. presence in other regions and to accelerate its research and exploration programs. Bouskour Copper Project Sudan Gold Project In 2016, Managem has led several audits of a The Bouskour Copper project southeast of Sudan has considerable Gold potential, and technical, legal and financial order to estimate the Tizert Copper Project Ouarzazate has reserves estimated at more than Managem holds three promising exploration blocks potential of such a project. On October 7th 2016, The mining site of Tizert is located in the commune nine million tonnes mixed grade at an average in addition to a pilot production unit at Block 15. Managem got a partnership deal with Avocet and of Igherm, which belongs to the province of copper content of 1.61 per cent. The year 2016 saw the continuation of the explo- Elliot for the development of the project according Taroudant which is 80 kilometres to the east of In a context of declining copper prices, the group’s ration programs, as well as the study of scenarios to the following terms: In 2016, Managem has Agadir and about 250 kilometres to the south-west objective is to enhance the economic profitabi- for the extension of the activity of the current pilot. led various technical, judicial and financial audits of Marrakech. lity of the project by reducing costs through the in order to evaluate the potential of the project. The year 2016 saw further exploration and certi- evaluation of new development scenarios using Assossa Gold Project in Ethiopia Managem created a partnership with AVOCET fication of resources. This exploration investment the significant regional copper potential and the The Assossa Gold project in Ethiopia has signifi- and ELLIOT concerning the transfer by Avocet made it possible to discover a deposit with great synergies within the group’s mines in the region. n cant potential, confirmed by the first geophysical of a part of its participations in the Tri-K Gold and geochemical stream as well as, alluvium and project. Managem consequently became the refe- soil studies carried out in 2016. renced operator of this project, with a two-phase participation with a capital between 60 percent 700,000 Other Gold Projects to 70 per cent. This agreement also allowed for a 600,000 in Sub-Saharan Africa mining agreement to be set between Managem, 500,000 Managem has other Gold projects at different Avocet Mining and the Guinean state. 400,000 stages of development. 2016 saw the continuation 300,000 of Gold exploration programs, notably in Gabon, Pumpi Project (Copper and Cobalt)
200,000 Mali, Burkina Faso, Guinea, Côte d’Ivoire, Sudan The Pumpi project is located in the Katanga province,
100,000 and Ethiopia. near the town of Kolwezi, in the Democratic Republic of Congo (DRC). The aim of this project 0 Tri-K Gold Project is to develop a Copper and Cobalt deposit. 2012 2013 2014 2015 2016 This Gold deposit, situated in Mandiana in Currently, several development scenarios are being Guinea, was initially developed by the company evaluated, including the concretisation of strategic Tizert Copper Resources (in tonnes metal) Avocet Mining with an investment of more than partnerships. n 52 53 Diversité2016 achievements Managem Annual Report 2016
CMG Employees FINANCIAL OVERVIEW Consolidated results (Under IFRS) Summary of key IFRS indicators
Evolution of key consolidated indicators (Under IFRS) at the end of 2016 compared to the end of 2015 Evolution Currency 31/12/2016 31/12/2015 in MMAD In % 30/06/2016 Vs 2015
Turnover MMAD 4,377 4,317 60 1% 2,011 Gross operating surplus MMAD 1,487.5 1,411 76 5% 633 Current operational income MMAD 675 610 65.5 11% 212 Operating income MMAD 672.5 617 55 9% 209 Financial result MMAD -148 -251 103 41% -82.5 Income before tax MMAD 525 366.5 158 43% 126 Consolidated net income MMAD 397 257.5 140 54% 83.5 Net income Group share MMAD 288.5 205 84 41% 52 The Group’s Net Income is 288.5 MMAD, an increase of 84 MMAD MBA MMAD 1,249 1,080 168.5 16% 515.7 compared to the end of 2015, due to the following effects:
29.6 Turnover and results: -38.9 Turnover at the end of 2016 amounted to 4,377 MMAD against 4,317 MMAD at the end of 2015, 39.4 an increase of 60 MMAD (+1.4 per cent). This is mainly due to: -119 9.2 - Increase in production, for an impact of 64 MMAD 180.3. 39 -56.1 - Consolidation of metal prices and exchange rates The increase in production is resulting mainly from the following effects: - Increase in volumes of Copper produced, by 19 per cent with an overall impact of 159 MMAD 288.4 - Increase in Silver production at SMI of 7 per cent with an impact of 72 MMAD 204.9 - Decrease in Group Gold production of 16 per cent, with an impact of 130 MMAD - Decrease in Fluorite production, i.e. an impact of 21 MMAD compared to 2015. Group's Good Rise in base Rise in Drop in Decline in Non-recurring Minority Other Group's Net operational Metal prices precious Fluorite production at currency varieties variations Net Income performance Metal prices price Bakoudo hedges Income 2015 Copper 2016 and Silver
Changes in turnover and results 31/12/2016 31/12/2015 Equity and Indebtedness Consolidated turnover MMAD 4,377 4,317 At the end of 2016, the equity of the whole had increased by 152 MMAD compared to the close Average parity of sale $/MAD 9.77 9.75 of 2015. Zinc MMAD 481 376 Lead MMAD 186 165 Financial position at the end of 2016 compared to the end of 2015 Copper group MMAD 966 858 In MMAD 31/12/2016 31/12/2015 Variation VS 2015 SMI Silver MMAD 1,095 1,026 Equity of the consolidated group 4,019 3,867 152 Gold group MMAD 713 837 Shareholders’equity, group share 3,548 3,433 115 Fluorite MMAD 152 201 Consolidated financial debt 3,961 3,854 107 Cobalt and by-product cathodes MMAD 558 585 Services and other products MMAD 226 269
54 55 Diversité2016 achievements Managem Annual Report 2016
Investissements Commitments for material and foreign exchange hedges Consolidated investments recognised at the end of 2016 (in IFRS) amount to 930.5 MMAD, as of 31/12/2016
which breaks down as follows: Underlying Year Protection Protection Commitment Commitment Research and development: 340 MMAD, including the development of new copper projects in (Oz/T) price (Oz/T) price Morocco, DRC and Gold internationally ($/T/Oz) ($/T/Oz) Physical replacement and maintenance investments: 274 MMAD; Silver 2017 1,890,000 18.07 1,890,000 18.73 Mining infrastructure: 276.5 MMAD; Finalisation of the construction of the Ouansimi project, for 41.5 MMAD Gold 2017 1,200 1,257 1,200 1,389 Copper 2017 5,880 5,094 5,880 5,321 Zinc 2017 4,530 2,312 4,530 2,477 Lead 2017 2,490 2,010 2,490 2,141 340 $/MAD 2017 78,500,000 8.64 78,500,000 8.64 MMAD 2018 99,024,873 8.56 99,024,873 8.56 41.5 Mark To Market of the Hedging Book as of 31/12/2016 MMAD At the end of December 2016, the Mark to Market of commodity hedging positions in KUSD is 1,795 KUSD against 1,574 KUSD at the end of December 2015, i.e. a change of +221 KUSD.
Mark To Market of the Hedging Book as of 31/12/2016
CONSOLIDATED INVESTMENTS Raw materials 31/12/2015 31/12/2016 Variation RECOGNISED Silver 982 4,010 3,027 Gold 155 132 -23 Copper 458 -1,715 -2,173 Zinc 0 -739 -739 Lead -21 107 128 276.5 MtM in K$ 1,574 1,795 221 MMAD 274 MMAD MtM impacting equity 1,574 2,089 515 MtM impacting the P&L 0 -294 -294 At the end of December 2016, the Mark to Market position of currency hedges in KMAD was -254,310 KMAD against -238,910 KMAD at the end of 2015; a change of -15,397 KMAD. This RESEARCH AND DEVELOPMENT PHYSICAL REPLACEMENT AND MAINTENANCE INVESTMENTS change is mainly attributable to the increase in USD/MAD.
MINING INFRASTRUCTURE FINALISATION OF THE CONSTRUCTION OF THE OUANSIMI PROJECT Evolution of Mark to Market commodities as of 31/12/2016 compared to 31/12/2015 in KMAD
Currency derivatives 31/12/2015 31/12/2016 Variation In Cash Flow Hedge (CFH) -246,259 -258,035 -11,777 MMAD 930.5 In Trading 7,345 3,725 -3,620 CONSOLIDATED INVESTMENTS Total MtM KMAD -238,914 -254,310 -15,397
56 57 Diversité Managem Annual Report 2016
Tinghir Mining Site School, constructed by SMI
The objectives of sustainable development are rooted in the policy of the National Investment Company (SNI), a pan-African investment fund, and deployed in the daily conduct of the affairs of all its subsidiaries, with a desire to be a player engaged in socially responsible investments, integrating CSR performance into the overall assessment of profitability.
The specificity of the mining industry essentially These continuous investments have made it possible requires a spirit of solidarity and responsibility, to achieve an advanced environmental performance placing humans at the heart of its development which is illustrated by the ISO 14001 environ- strategy, with mining sites located in enclaved mental certification of 11 of the Group’s sites and areas. As part of the overall vision of its key activities; the use of recycling to reduce water shareholder, the SNI, Managem has, since its consumption and clean energy to satisfy more than inception, placed the CSR approach at the heart half of the electricity consumption of farms. of its programs aimed at better risk management Managem was also a pioneer in its approach to for operational efficiency. integrating climate change risks and adopted a The strengthening of social cohesion and the voluntary climate strategy aimed at reducing its consolidation of the reputation of the Company greenhouse gas emissions by 10 per cent by 2020. are decisive assets for its various stakeholders. SUSTAINABLE Community Involvement: Managem has been improving its sustainable When it comes to its community involvement, development charter since 2008. Commitments Managem aims to, through its social program, DEVELOPMENT made by the highest levels of management have reinforce the capacities of the regional actors formalised a policy that meets international such as the government, local NGOs as well as ENGAGED IN sustainable development standards in terms of the civil society. economic, environmental and social dimensions. This investment strengthens the Company and SECURITY and HEALTH, its key shareholder as leaders in CSR, and stren- ENVIRONMENTAL PROTECTION, Protection of the Environment: gthens partnerships and trust with its partners. The Group makes environmental preservation The majority of Managem’s national subsidiaries WATERFRONT COMMUNITIES a major concern in order to limit its impacts have been awarded the CGEM CSR label and the DEVELOPMENT of HUMAN CAPITAL through, among other things, rationalisation and Company and its subsidiary SMI have already dis- reduction of water consumption, limiting and tinguished themselves in 2012 at the first edition recovering waste and promotion of renewable of the Vigeo Top Performers Trophies and have energies. not been lacking in awards since. n 58 59 Diversité Managem Annual Report 2016
Tinghir Region, close to SMI.
THE 10 COMMITMENTS of MANAGEM
Since 2008, Managem has been committed to participating in a policy of sustainable development through the creation of a charter established around “10 commitments” which reflect its respect for certain standards of conduct in all its operations.
9.Sustainably improve the quality of our products and our services according Seek continuous 4. Prevent all to the needs and expectations Respect the improvement of our 7. 1. forms of corruption of our customers. fundamental rights environmental performance and conflict of interests. of our employees, our and preserve biodiversity. subcontractors and all those affected by our activities. 3.Contribute to the socio-economic development of all sites, regions, and countries where we operate, and pay in full and good faith all 5.Integrate the goal our tax obligations. of reducing our air 6.Promote our waste reduction, emissions, including recovery, recycling, and disposal emissions of greenhouse while respecting our environment. 10.Implement gases, in all our processes engagement and communi- and throughout our cation devices and produce value chain. independent, efficient, and transparent reports. 2.Permanently seek ways of improving our performance in terms 8. Effectively identify and of occupational health manage our risks by integrating and security. the principles of social responsibility into making decisions related to our activities.
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AWARDS 2016
Managem’s efforts in terms of social, societal and environmental commitments have been recognised with numerous CSR awards received by the Group for the year 2016.
Diversity Trophy At the conference of the 12th International Meeting of Diversity, held on 29 and 30 Sep- Emerging Market 70 List tember at the ESC La Rochelle in France, Managem was awarded the Diversity Trophy Managem and SMI were listed in Vigeo Eiris’ in the category “Territory and Equality of Emerging Market 70 list, which recognised their Opportunities”, which recognises the Group’s CSR efforts. This list ranks the 70 companies with commitment to its effective and innovative trai- the most advanced social responsibility initiatives, ning policy, the promotion of gender equality chosen from a selection of 800 companies listed and its efforts to help young people from in 31 emerging or developing countries, without disadvantaged regions enter the labour market. n sector exclusion. ————
Two projects given the official label “COP22” Hub Africa Award Managem distinguished itself at the Hub Africa Through its participation in the COP22, organised from 7 to 18 November 2016 Awards 2016 by receiving the Hub Africa Trophy, in Marrakech, Managem wanted to underline its strong commitment to the which recognised the considerable contributions protection of the environment and climate. This was also the opportunity to made by the Group to development on the African present its 2 projects which were given the COP22 label continent. The Group was commended in particular These projects are: the acid plant of the CMG complex, which renews mining for its South-South strategy, the full integration of its waste and The Greenchip project, which recycles Waste Electrical and Electronic activities, its technological investments, the transfer Equipment. n of know-how to the countries where the Group ———— is operating, and its contributions to economic
62 development creating value for all stakeholders. n 63 DiversitéSustainable development Managem Annual Report 2016
Hydrometallurgical Complex in Guemassa
STRENGTHENING of HEALTH and SAFETY CONDITIONS
The safety of Managem’s employees at worksites is at the same time a fundamental ethical requirement and one of Managem’s primary performance criteria. Thanks to a safety programme and management system certified under the OHSAS 18001 standard, Managem has been able to reduce the number of accidents on its sites by more than 25% over the last 5 years.
Changes in the number of accidents between 2012 and 2016 To have better control of the hygiene, safety and health risks associated with its operations, Managem has formalised its own policy and practices in this area. Safety being the top priority for the group, a proactive approach is used at all sites. -21% In this context, Managem started an ambitious programme in 2016 to monitor the exposure and OF ACCIDENTS risks of biological contamination of the group’s workers. This programme will continue in 2017 VS 2015 with the creation of a prevention strategy and the development of tools to raise awareness among exposed workers.
Frequency Rate Severity Rate -85% OF ACCIDENT 4.92% SEVERITY 3.95% IN 2016 1.02% 0.15%
2015 2016 2015 2016
The year 2016 shows a 21% decrease in the frequency of accidents compared to 2015. Similarly, the number of days lost per accident is down 85% for the same period.
The majority of Managem group subsidiaries are OHSAS 18001 certified (occupational health and safety management system model).
CTT SAMINE CMG Centre de Recherche REMINEX AGM TECHSUB SOMIFER REG Gabon
64 65 DiversitéDéveloppement durable Managem Annual Report 2016
Carbon balance of the Cobalt sector Concerned about its impact on the environment, in 2012 the Managem group launched the Carbon balance of its cobalt sector, with the support of the Moroccan Clean Production Center, to assess the volume of GHG emissions generated by its various activities. Wishing to have a structured reading of the impacts of its various clusters, it was decided to carry out this mission in four stages: the mining activity of Bou-Azzer, balance sheet of ore transportation, sterile, purchases and personnel, hydro plants at Guemassa and administrations, and finally assessment of WEEE projects and sul- furic acid, also in Guemassa. Partnership with the This balance sheet carried out in compliance with Mohammed VI Foundation the requirements of ISO 14064, was a basis for for the Protection of the reflection necessary for the good orientation of the Environment sustainable development strategy of Managem and ENVIRONMENTAL ENGAGEMENT made it possible to identify the posts responsible for the largest emissions and then to establish the actions to be taken in order to reduce these emissions Managem works continuously to reduce the impact of its activities on the environment, and contribute to the fight against climate change. optimise its resources, extend its value chain and give a second life to waste, to Beyond the cobalt sector, the Managem group intends to generalise the carbon balances at the In February 2016, the Group signed the Foun- ensure the sustainability of its operations. The majority of Managem’s subsidiaries level of all its activities and operations from 2017 dation’s Air Quality Pact, consolidating its are ISO 14001 certified, a standard applied to environmental management systems onwards. commitment to protecting the environment to address environmental concerns. Managem works continuously to reduce the and mobilising all stakeholders to act in favour impact of its activities on the environment, to optimise its resources, to extend its Adoption of a Climate Strategy of the climate. Managem is particularly com- value chain and to give a second life to this wastes, in order to engage in sustainable Following the carbon assessment of the cobalt sector mitted to assessing and reducing the green- activity. For many years, the group has been taking action to reduce the impact of its and in line with the numerous actions implemented house gas emissions generated by its activi- activities on the environment, in particular the reduction of greenhouse gases (GHG). to reduce its GHG emissions, the Managem group ties, thanks to the GHGEB tool developed by formalised a voluntary strategy for climate in the Foundation. 2015, with the objective of reducing its emissions In June 2015, Managem entered into a CTT Centre de Recherche REMINEX by 10 per cent by 2020. partnership agreement with the Mohammed CMG (Hajjar et Draâ Sfar) SMI VI Foundation for the Protection of the Envi- AGM TECHSUB This multi-faceted strategy will allow for the deve- ronment. This concerns the extension of the SOMIFER SAMINE lopment of GHG emission factors for all Managem Greenhouse Gas Emissions Balance (GHGEB) CMO REG Gabon products, taking into account climate change methodology to all substances in the portfo- throughout the mining cycle, and promoting lio of resources managed by the Group, as well innovation and climate technologies. Actions will as the implementation of a plan to strengthen focus on various aspects of mining activities, such as capacities for Managem staff, and the orga- waste management, energy, transport and logistics, nisation of awareness-raising activities for and mining process design. n all stakeholders, at local and regional levels. 66 67 Sustainable development Annual Report Managem 2016
2016, MANAGEM’S YEAR of CONSECRATION at the COP22 The organisation of the COP22 in Morocco in 2016 was an opportunity for the group to reaffirm its proactive strategy to minimise its environmental impact and its real commitment to sustainable development, in line with the commitments of its main shareholder, the SNI (National Investment Company). This large-scale event facilitated connections with local communities through their involvement in consultations to develop strategies for adapting to climate change and its repercussions, particularly on water resources.
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Two MANAGEM PROJECTS “Nothing is lost, nothing is created, everything is transformed.” for the COP22 Antoine Lavoisier, Chemist
For several years, the Managem group has been working hard to increase its R&D and innovation for the protection of the environment. As a nod to the Group’s expertise, particularly in its development of the principle of eco-valorisation, two projects have CMG Mining Waste Reclamation Factory been given the official label “COP 22”, awarded by the Steering Committee.
The Managem research center has developed a units of the Guemassa industrial complex, which new industrial process that consists of producing generates annual fuel savings of about 4,000 sulphuric acid from pyrrhotite, one of the mining tonnes. wastes from Guemassa. The Guemassa mine, Greenchip: Electronics, a new deposit which produces Cobalt, Zinc, Lead and Copper, The pyrrhotite renewal plant is a perfect example has generated mine tailings stored in dykes since of environmental innovation: Its processes prevent The digital revolution and the democratisation The Greenchip program consists of a network of 1992. the emission of 12,000 tonnes of CO² each year. of access to mobile phones, computers and training workshops in Morocco, thus enabling electronic devices have led to a considerable nearly 100 young people to be trained each year, With an annual capacity of 120,000 tonnes of This plant contributes to social development leap in the consumption of the metals needed and to support the professional integration of sulphuric acid, the pyrrhotite renewal plant created through the creation of 200 new direct and indirect to manufacture this equipment. 50 young people, while equipping schools with by the Group allows the complete treatment of jobs, and to environmental development by enhanced computer hardware, thereby reducing the mining waste. This production unit not only reducing the carbon footprint, with a zero waste The issue of electronics recycling has become the digital divide. Thanks to the program, the allows the extraction of sulphuric acid but, also result. n pressing in recent years, with electrical and promotions of trained young people are also impre- that of iron oxide. electronic components rich in precious metals, gnated with the entrepreneurial spirit, and at the ferrous and non-ferrous metals that pose a threat end of their training they are equipped to develop Sulphuric acid is an essential component for to the environment when not treated. their own businesses. n the development of ores in the Group’s hydro- metallurgical units. Before this industrial unit was 120,000 T of CO2 The paradox brought by the global pressure set up, Managem imported this reagent. Today, PREVENTED on natural resources and this new situation of the production of sulphuric acid from pyrrhotite abundance of metal-rich waste led Managem to MORE THAN waste not only allows the Group to meet the needs consider the Waste of Electrical and Electronic of its industrial units, but also to sell production 1,178 KG Equipment (WEEE) as a potential deposit. The 100 OF COPPER surpluses to other Moroccan operators. YOUNG SCHOOL LEAVERS INGOTS idea of an urban mine was born. TRAINED/YEAR (production since 2011) 200 DIRECT The plant also produces nearly 95,000 tonnes of & INDIRECT JOBS Managem launched Greenchip in partnership iron oxide from the renewal of this same waste. with institutional and national and international This product, used notably in the steel and NGOs in 2009, with the aim of creating a training construction industries, is sold to several customers. centre for learning. This consisted of a workshop for the revaluation of used electronic equipment Creating through the use of clean energy waste: and dismantling and sorting electronic waste For Managem, Greenchip has laid the foundations for a new The chemical process used to renew and neutralise 120,000 T/YEAR OF SULFURIC collected from companies, thus enabling the training industrial sector, based on the valuation of WEEE, and the the pyrrhotite waste makes it possible to produce ACID of out-of-school youths, giving a second life to similarities between the recycling industry and the mining electrical energy without emitting carbon dioxide. the material collected through the upgrading or business in terms of material separation and metal recy- This innovative process not only allows the plant recycling of components. cling are multiple. For example, an industrial unit proces- to be self-sufficient in terms of energy needs, but sing WEEE would remove almost 85 tonnes of copper, 340 also ensures that other industrial units have partial Supported by the SNI, its main shareholder, kilogrammes of Silver, 85 kilogrammes of gold and 20 kilo- coverage of their needs. Managem initiated the GreenChip program, which grammes of Palladium from 10,000 tonnes of waste, while 95,000 T/YEAR makes it possible to enhance the value of WEEE, neutralising very harmful waste at a low energy cost and In addition, the low-pressure steam produced OF IRON OXIDE while training young people in a situation of with zero waste at the end of the process. during the same recovery process is also captured academic failure. A perfect example of circular economy and used. It replaces the use of fuel in the other 70 71 Sustainable development Managem Annual Report 2016
Region Neighboring the El Hammam Mine
GROUP ENERGY POLICY
Energy efficiency is at the heart of Managem’s sustainable development strategy. The Group is working to make positive contributions in this area by working on the energy efficiency of its installations and operations.
The Managem Group has an energy policy oriented around four axes:
1 2 3 4 Improving the Diversification The reduction The adoption Water, vector of the development of activities of Managem. energy performance of energy sources of greenhouse gas of clean Managem’s mining activities are generally found in arid or semi-arid zones, where water is an acute of activities. by promoting (GHG) emissions technologies. problem. Within this framework, the Group’s Environment and Institutional Relations Department renewable energies. from energy has set itself the following objectives: production sources.
Place “water” at the centre of the Group’s deve- These actions were mainly directed towards: lopment project in Morocco and abroad; Opt for an integrated, inclusive and sustainable Electrical Energy Wind Energy water management strategy; RECYCLING OF DYKE WATERS The overall specific consumption of Managem Since 2013, Managem has begun using wind en- Strengthen mutual trust with local populations ———— has decreased from 65 KWH/TT in 2014 to 60 ergy from the Nareva wind farms for part of its by encouraging their participation in water KWH/TT in 2016, both nationally and interna- operations. Since then, the proportion of wind management; tionally. This reflects the efforts made to increase energy consumed by the Group has been rising Encourage sustainable use of resources and OPTIMISATION OF CONSUMPTION productivity (increase in tonnage), but also the steadily, participating in a reduction of 354,000 promote non-conventional uses of water; ———— actions deployed by the various sites to optimise tonnes of CO2 over the last three years. Promote technologies and processes that consume consumption. less water. RECYCLING The energy bill decreased from a total amount of OF PUMP WATER 449 MMAD to 409 MMAD in 2016. Water consumption ratio ————
63KWH/TT THE USE OF STEP 1,6M3/TT 1,6M3/TT ———— 60KWH/TT % 52 THE USE OF DROPS FOR WATERING GREEN AREAS.
As of 2016, 52% of Managem Maroc’s electricity 2015 2016 consumption comes from wind energy. 2015 2016
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Continuous training in silver at the Imiter COMMUNITY SUPPORT Kasbah for WATERFRONT COMMUNITIES
MORE THAN MORE THAN MORE THAN MORE THAN 7,500 60 600 170 Fully assuming its role as a responsible leader, Ministry of Artisans, National Mutual Aid, STUDENTS VILLAGES WOMEN SOCIAL Managem aims to contribute to the socio-economic Ministry of Education) and civil society actors (Injaz TARGETED TARGETED BENEFICIARIES PROJECTS development of the regions where it operates AL Maghrib, Moroccan Preschool Foundation, IN 2016 IN 2016 through the implementation of a social program AL Jisr, regional and national associations and that has four areas of focus: the well-being of other local development associations). riparian communities, academic success, new opportunities and entrepreneurship. This aim Through these important collaborations, is achieved through the development of social Managemparticipated in the steering of 170 social projects that address the needs of riparian com- projects in in 2016, each falling into one of the munities, often located in isolated areas that do following categories: The objective is to bring not necessarily have the infrastructure necessary all human development players to play their role for sustainable development. and to draw additional funding to benefit the Several partnerships have thus been set up, in mining zones, working to structure the perennial
particular with institutional players (INDH, programs taken care of by the actors concerned. NUMBER OF PROJECTS UNDERTAKEN IN 2016 Social services 46
Continuous training in silver at the Imiter Kasbah Basic MORE THAN MORE THAN MORE THAN MORE THAN Agriculture services 6 28 7,500 60 600 170 Sponsoring STUDENTS VILLAGES WOMEN SOCIAL 3 Environment Capacity TARGETED TARGETED BENEFICIARIES PROJECTS 6 building IN 2016 IN 2016 4
MORE THAN MORE THAN MORE THAN MORE THAN Community well-being the ecology and reducing the dependence on fossil 7,500 60 600 170 Targeting more than 60 villages, 96 actions were fuels in communities, in particular through two STUDENTS VILLAGES WOMEN SOCIAL deployed to contribute to the well-being of the major programs, the ecological program and the TARGETED TARGETED BENEFICIARIES PROJECTS communities. Social services and basic services cover diagnosis of renewable energies, during which IN 2016 IN 2016 a wide range of actions, from the development of 25 projects were identified. The success of these basic infrastructure, in terms of roads and structures projects and the expected results are closely facilitating access to water, enhancing the cultural linked to the involvement of the communities heritage of the areas and medical services. In 2016, and partners who share the same concern for the environmental component aimed at preserving responsible development. n 74 75 SustainableDiversité development Managem Annual Report 2016
Help for academic success Supporting school success in the riparian areas, a guarantee for sustainable community involvement, is one of Managem’s priorities. In collaboration with nearly 54 local and national partners, we were able to reach more than 7,500 children and students in 2016 through such interventions. Providing new opportunities Actions in these priority areas are diversified and and developing entrepreneurship contribute to creating favourable conditions for Access to education for children of school going Managem also aims to promote the entrepre- reducing inequalities in educational opportunities, age is not always available, especially in secluded neurial spirit of women and young people in the notably through facilitating school transport, rural areas. In partnership with local community rural communities surrounding its mining sites. rehabilitating infrastructure and awarding scho- actors, Managem develops projects that enable Through our collaboration with about 10 local larships. n young people who are out of school to benefit from development associations, more than 600 women skills training or to access non-formal education benefitted from entrepreneurship programmes and pathways, providing them with new opportunities were encouraged to start businesses in 2016. n to access the job market. In 2016, these programmes NUMBER OF PROJECTS UNDERTAKEN IN 2016 benefited more than 200 young people. Secondary education Preschool NUMBER OF PROJECTS 10 20 UNDERTAKEN IN 2016
New Entrepreneurship opportunities Primary Extracurricular 12 education activities 6 16 13
MORE THAN 7,500 STUDENTS TARGETED SMI sponsors the Kelaât M’Gouna Rose Festival As part of its policy of promoting social and cultural activities in the regions where it operates, Managem, through its subsidiary SMI, sponsored the 54th edition of the Kelaât M’Gouna Rose Festival, organised from 12 to 15 May 2016 with the theme of “Valuing local products, encouraging sustainable development”.
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El Hammam mine operated by SAMINE
HUMAN RESSOURCE DEVELOPMENT
A Responsible Human Resources Policy Managem’s HR policy reflects the group’s ambi- tion to pursue its responsible development, com- bining performance improvement and exemplary social, societal and environmental behaviour by: This choice involves developing the group’s employees in the best possible way to make eve- ryone an actor and beneficiary of the Company’s evolution. To this end, Managem strives to create the condi- GENDER tions for listening to and respecting each one while offering professional support and development that meet the needs of the Company. 33% YOUTH OF WOMEN INTEGRATION Shared Founding Values ARE EXECUTIVES AGE MANAGER-STAFF The valuation of human capital is rooted in the RATE founding principles of respect, responsibility and 42% sharing that have guided the group’s manage- OF THE WORKFORCE ment. Promoting initiative and taking responsi- IS UNDER 35 9.3% bility and reinforcing the mutual commitment between employees and the group are the pillars of its HR policy. REMINEX The group’s commitments aim to strengthen the Research Center sense of belonging and individual and collective in Marrakech pride. The group’s distinguishing quality is the- BREAKDOWN OF THE MANAGEM GROUP'S refore based on the excellence and diversity of WORKFORCE BY CATEGORY GROUP its men and women who bring ideas, share their WORKFORCE talents and release a value-creating energy. Workers % 5,660 Promotion of human rights 72 The group aims to meet the best international stan- dards in terms of CSR practices and places the pro- motion of universally recognised rights and prin- ciples as the guiding principle for its HR policy. Managem’s engagement in this domain is based on the promotion of trade union freedoms and rights of association, the prohibition of child labour on Employees Managers farms and with subcontractors and the promo- % % Masterships tion of a gender-neutral approach and diversity 4.4 9.2 % in terms of recruitment, training, and access to 14.4 positions of responsibility.
78 79 SustainableDiversité development Managem Annual Report 2016
IMPLEMENTATION of a NEW HR STRATEGY...
In 2016, the Managem group announced a new between operational managers and experts in the ambitious development strategy, based on Vision field of Human Resources. 2020 that will enable Managem to become a diver- sified regional leader with sustainable growth. ...Supported by a new HR organisational In support of this development plan, Managem structure... has implemented a Human Capital policy that The strategic transformation initiated by the group is tailored for its goals, with a HR 2020 strategy in 2016 was accompanied by operational changes developed through an extensive collaboration also aimed at encouraging synergies. The highest level has been reorganised - with a management integration and retention of local employees and committee representing of all the group’s acti- expatriates. vities - as have been the operational and human resources departments. A new HR structure has ...Always listening to employees. been implemented in 2016 with governance centred around four committees: the HR Mana- Continuous social dialogue gement Committee, HR Committee, HR Stee- Managem attaches great importance to main- ring Committee and HR Local Committee. This taining quality social dialogue with its social new organisational arrangement is more efficient partners. Each year, Memoranda of Understan- and oriented toward the business. ding, which incorporate the various points rela- ting to remuneration and welfare benefits, are ...and by strengthening signed with the staff representatives. HR policies internationally. Social responsibility With a wealth of experience internationally and In 2016, the group created a social barometer particularly in Africa, Managem regularly offers its - a tool for understanding employees’ expecta- employees the opportunity to deal with challen- tions and measuring the social climate. This sur- ges on the international level. vey involved the participation of more than 1,000 In 2016, the Human Resources Department wor- employees who expressed their opinions on their ked to improve its processes in order to support working conditions and environment as well as the growth of the group in Africa. their expectations. The results of the barome- ter, shared with the employees of each mine site, This strategy has 3 pillars The group wanted to provide local support to allow the group to develop action plans for 2017 expatriate employees in order to facilitate their in a congenial way. adaptation and integration in the host country, 1 2 3 as well as their eventual return. ...sustained communication Agility Innovation Mobilisation with Management in 2016. > Anticipate needs and & performance > Give meaning, empower and The improvement of these processes depends on develop skills > Develop creativity and involve employees local recruitment in the countries of operation. 2016 started with a tour by Management of the > Ensure the efficiency and challenge employees > Share a common culture It is developed through partnerships with trai- various work sites in Morocco and abroad. During flexibility of systems, staff and > Align with priorities, improve > Motivate and recognise each ning institutions in each country. Improvements the course of 2016, the Managem group orga- organisations performance one’s contributions to processes also require strengthening training nised several seminars that discussed the strate- > Develop the ability to adapt and > Enriching oneself by opening up > Foster trust and the transfer of know-how. gic vision in order to facilitate the reflection on change to others > Allow professional development To this end, an active policy of sharing expertise the group’s development actions in the short and has been put in place to guarantee a high level of medium terms. n 80 81 DiversitéSustainable development Managem Annual Report 2016
DEVELOPMENT of SKILLS and EMPLOYABILITY
Appeal Skills development Managem’s goal is to attract Training is a pillar of professional development talented individuals to, and an essential part of Managem’s HR strategy. often, challenging and The Group strives to develop the skills of its demanding jobs in order employees in all its locations through job trai- to develop their skills and ning, managerial training cycles to support the TRAINING BUDGET offer motivating and diverse IN 2016 FOR TRAINING career development of employees, internal trai- career opportunities. It is IN 2016 ning as well as the literacy program. The latter also a question of diver- 14,500 4,765 represents an important part of the training pro- sifying the talent pool of MAN-DAYS TRAINEES gramme and alone constitutes 35% of man-days the group, with an interna- 12,230 IN 2016 devoted to training in 2016. tional outlook, with better KMAD representation of women at Managem Campus the managerial level. To support its training strategy, Managem created As a local solidarity player, a campus in Marrakech in 2009, which benefits the group creates jobs and nearly 5,000 trainees each year. gives priority to young people from the regions These programs have been developed in where it operates, as is partnership with renowned organisations based on apparent by the increase a genuine skills needs and are reviewed each year in the Managem group’s to be adapted to the training priorities. In order to workforce at the end of carry out its programs, the centre makes use of trai- TRAINING BUDGET 2016 compared with the IN 2016 FOR TRAINING ning providers, universities and equipment sup- previous year in the table IN 2016 pliers, but it particularity benefits from a network below. 14,500 4,765of more than 40 recognised Managem experts and MAN-DAYS TRAINEES 12,230 IN 2016internal trainers whose mission is to transmit best KMAD practices both on the Marrakech campus and on the national and international exploitation sites. Thus, in the strategic context of the Group, the Managem training centre now represents a real opportunity for knowledge transfer.
Its training programmes cover all the aspects of our TRAINING workBUDGET (Geology, Mining, Processes, R&D, main- IN 2016 FORtenance) TRAINING while also paying attention to the deve- IN 2016 14,500 lopment of soft skills and cross-disciplinary4,765 skills. MAN-DAYS 12,230 TRAINEES In 2016,KMAD a large part of the programIN focused 2016 on actions with a strong impact on safety and opera- tional control. Thus, 66 per cent of the training courses targeted operators, thus enabling them to increase their qualification levels. n 82 83 DiversitéSustainable development Annual Report Managem 2016
Highlights in 2016
Each year, Managem organizes various social acti- vities benefiting employees and their children and allowing for team spirit as well as a sense of belonging to build up within the group.
Children are at the heart of our programmes. Managem has been running social Sport in the spotlight. Promoting cohe- programmes for the children of riparian communities and those of its employees for sion within its teams remains an impor- many years. In 2016, 3 key programmes were run. tant goal for the group. The year 2016 saw the participation of Managem teams in several sporting events.
Participation of Managem in 1st edition of the “Botola Managem” “15 km of Bouskoura” In May 2016, Managem organised the first edi- Effort, commitment and performance - just some tion of its inter-site football championship. On of the many values common to both the world of May 21 and 22, 12 teams representing 12 of the mining and of running. No fewer than 50 Mana- group’s sites in Morocco met in a friendly and gem employees took part in the 6th edition of the relaxed atmosphere, strengthening the cohesive- “15 km de Bouskoura” cross-country race through ness and teamwork between employees from diffe- the forest of Bouskoura, a race which had both rent regions of Morocco. n amateur and professional categories. n
Organisation of a summer camp During the summer of 2016, Managem organised a 10-day holiday camp for the children of employees across all age groups. This programme has the aim of contributing to the development of children at the individual and collective level, and has benefited more than 850 children. n
Achoura gift giving Awards for deserving students For the tenth consecutive year, on the occasion of the In 2016, some of the children of Managem festival of Achoura, Managem distributed toys to all employees had the opportunity to distinguish the children of employees under the age of 10. This themselves by their excellent academic results. year, close to 6,700 children of employees received Managem awarded the 40 most deserving stu- their gifts. n dents with a stay in Dar Bouazza. To reward their perseverance. The group also had the pleasure of receiving them at an award ceremony at the head office in the beginning of 2017, attended by Managem’s executive management. n 84 85 Diversité Managem Annual Report 2016
Silver ingots produced in SMI
CONSOLIDATED NOTES to the CONSOLIDATED FINANCIAL FINANCIAL STATEMENTS STATEMENTS (from January 1st to December 31st 2016)
86 87 DiversitéConsolidated financial statements Managem Annual Report 2016
CONSOLIDATED INCOME STATEMENT STATUS OF FINANCIAL POSITION Millions of MAD December 2016 December 2015 Millions of MAD 31/12/16 31/12/15 Turnover 4,376.9 4,317.0 ASSETS Other income from operations (12.7) (41.3) Goodwill 319.8 319.5 Income from standard activities 4,364.2 4,275.7 Intangible assets. net 1,960.1 1,467.4 Purchases (1,636.9) (1,727.9) Tangible assets. net 4,382.1 4,477.5 Other external costs (864.4) (897.0) Investment Properties. net 25.9 26.3 Personnel costs (945.4) (905.3) Other financial assets 304.2 279.8 Taxes and duties (56.0) (65.8) - Hedging derivative instruments 41.6 15.5 Depreciation and operational provisions (883.4) (876.9) - Loans and liabilities. net 4.3 3.7 Net other incomes and operational costs 697.1 807.0 - Financial assets available for sale 258.3 260.6 Tax liabilities for companies Current operational expenses (3,689.0) (3,666.0) Deferred tax assets 272.7 279.7 CURRENT OPERATIONAL INCOME 675.2 609.7 Other non-current receivables. net Disposal of assets 0.4 0.2 NON-CURRENT ASSETS 7,264.7 6,850.2 Disposals of subsidiaries and shareholdings 0.0 0.0 Other financial assets 3.7 7.3 Results on financial instruments (6.6) 5.3 - Financial derivative instruments 3.7 7.3 Other non-current operating costs and incomes 3.4 1.9 - Loans and receivables and investments. net PROFIT FROM OPERATIONAL ACTIVITIES 672.5 617.2 Stock and monies owed. net 594.8 622.0 Interest income 12.6 13.6 Client debts. net 422.3 608.4 Interest costs (206.0) (206.6) Other current receivables. net 1,721.3 1,663.1 Other financial income and expenses 45.5 (57.7) Cash account and cash account equivalents 502.5 384.3 FINANCIAL RESULT (147.9) (250.7) CURRENT ASSET 3,244.6 3,285.2 PRE-TAX INCOME OF INTEGRATED COMPANIES 524.6 366.5 TOTAL ASSET 10,509.3 10,135.3 Tax on profit (110.0) (95.9) Deferred taxes (17.3) (13.1) Millions of MAD 31/12/16 31/12/15 LIABILITY NET INCOME OF INTEGRATED COMPANIES 397.2 257.5 Equity share in the income from companies 0.0 0.0 Capital 915.9 915.9 Share and merger premiums 784.0 784.0 RESULT FROM ACTIVITIES ENGAGED IN 397.2 257.5 Reserves 1,328.5 1,325.1 Result from discontinued operations 0.0 0.0 Conversion rate adjustments 230.9 203.3 RESULT OF THE CONSOLIDATED GROUP 397.2 257.5 Net income group share 288.5 204.9 Of which minority interests 108.7 52.6 Shareholder equity attributable to ordinary shareholders of the parent company 3,547.7 3,433.1 Minority interests 471.6 434.0 OF WHICH NET RESULT - GROUP’S SHARE 288.5 204.8 EQUITY OF THE CONSOLIDATED GROUP 4,019.3 3,867.1 Provisions 54.4 54.6 STATEMENT OF OTHER COMPONENTS OF CONSOLIDATED TOTAL INCOME Employee benefits 156.1 127.5 Millions of MAD December 2016 December 2015 Non-current financial debts 1,988.4 2,271.4 INCOME FOR THE FINANCIAL YEAR 397.2 257.5 - Financial derivative instruments 18.7 - - Liabilities to credit institutions 867.2 1,104.4 Other elements of total income (before tax) - Debt evidenced by certificates 950.0 950.0 Conversion rate adjustment for overseas activities 29.8 115.9 - Liabilities related to finance leases 152.5 217.0 Losses and profits related to the re-evaluation of financial assets available for sale Companies’ tax debts Effective portion of income or loss on contingent cash flow hedging instruments -6.3 -147.7 Deferred tax liabilities 17.8 11.9 Other non-current creditors 12.6 18.1 Change in reserve from re-evaluation of fixed assets NON-CURRENT LIABILITY 2,229.3 2,483.6 Actuarial gains and losses on defined benefit regimes -13.3 -8.5 Provisions Tax on other elements of total income 4.5 41.4 Current financial debts 2,238.5 1,741.1 Quota of other elements of total income in associated companies - Financial derivative instruments 262.9 246.3 Costs of increasing capital in subsidiaries - Liabilities to credit institutions 1,975.6 1,494.8 Other elements of total income (after tax) 14.7 1.1 - Debt evidenced by certificates - - Current supplier debts 902.0 977.0 TOTAL INCOME FOR THE YEAR 411.9 258.5 Other current creditors 1,120.2 1,066.5 Of which minority interests 113.3 52.4 CURRENT LIABILITY 4,260.6 3,784.6 OF WHICH NET RESULT - GROUP’S SHARE 298.5 206.1 TOTAL LIABILITY 6,490.0 6,268.2 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITY 10,509.3 10,135.3
88 89 DiversitéConsolidated financial statements Managem Annual Report 2016
VARIATION OF TOTAL SHAREHOLDER’S EQUITY STATEMENT OF CONTINGENT CASH FLOW Millions of MAD Capital Reserves Currency Net result Total Minority Total Milions of MAD 31/12/16 31/12/15 Conversion rate group share group interest Net income of consolidated companies 397.2 257.5 On 1 january 2015 916 2,259 93 182 3,450 447 3,898 Adjustments for SE variation for 2010 Depreciation, depletion and amortisation, impairment loss 900.3 881.3 Net income for the period 205 205 53 257 Revaluation gains/losses (fair value) 6.6 (5.3) Cash flow hedge result -140 -140 -7 -148 Earnings from disposal and losses and profits of dilution 0.9 (0.2) Conversion losses and profits 110 110 6 116 Dividend income 0.0 0.0 Losses and profits of AFS re-evaluation 0 0 CASH FLOW AFTER COST OF NET FINANCIAL DEBT AND TAX 1,304.9 1,133.2 Actuariel gains/losses -8 -8 -1 -8 Elimination of tax charge (income) 127.4 109.0 Income taxes related to other elements of total income 40 40 1 41 Elimination of the cost of net financial debt 206.0 206.6 Other elements of total income 0 0 CASH FLOW BEFORE COST OF NET FINANCIAL DEBT AND TAX 1,638.3 1,448.9 TOTAL INCOME FOR THE YEAR 0 -108 110 205 207 52 259 Effect of changes in WCR (104.8) (41.9) Deferred taxes 0.0 0.0 Dividends paid -229 -229 -65 -294 Income taxes paid (110.0) (95.9) Increase in capital 5 5 5 NET CASH FLOW FROM OPERATING ACTIVITIES 1,423.5 1,311.1 Elimination of treasury shares 0 0 Impact of changes in consolidation scope 4.2 0.0 Other transactions with shareholders -0 -0 -0 Acquisition of tangible and intangible fixed assets (930.5) (1,110.7) Transfer to retained earnings 182 -182 0 0 0 Acquisition of financial assets (0.9) (9.6) Total transactions with shareholders 0 -42 0 -182 -224 -65 -289 Change in other financial assets 1.2 (1.2) On 31 December 2015 916 2,109 203 205 3,433 434 3,867 Investment subsidies received On 1 January 2016 916 2,109 203 205 3,433 434 3,867 Transfer of tangible and intangible fixed assets 8.0 1.3 Transfer of financial assets 0.0 0.0 SE variation for 2010 Dividends received 0.0 0.0 Net income for the period 288 288 109 397 Net financial interest paid (206.0) (206.6) Cash flow hedge result -9 -9 3 -6 NET CASH FLOWS FROM INVESTING ACTIVITIES (1,123.9) (1,326.8) Conversion losses and profits 28 28 2 30 Increase in capital 0.0 4.8 Losses and profits of AFS re-evaluation 0 0 Transactions between shareholders (acquisitions) 0.0 0.0 Actuariel gains/losses -13 -13 -1 -13 Transactions between shareholders (transfers) 0.0 0.0 Income taxes related to other elements of total income 5 5 -1 5 Issuance of new loans 0.0 517.5 Other elements of total income 0 0 Repayment of loans (300.9) (431.5) TOTAL INCOME FOR THE YEAR 0 -17 28 288 299 113 412 Change in receivables and payables arising from finance lease contracts Repayment of finance lease contracts (68.9) (65.8) Dividends paid -183 -183 -75 -258 Other cash flows from financing activities Increase in capital -0 -0 0 -0 Dividends paid to shareholders of parent company (183.2) (229) Elimination of treasury shares 0 0 Dividends paid to minority shareholders (75) (64.9) Other transactions with shareholders -1 -1 0 -1 Change in associated current accounts (104.6) (17.7) Transfer to retained earnings 205 -205 0 0 0 NET CASH FLOW FROM FINANCING ACTIVITIES (732.7) (286.7) Total transactions with shareholders 0 20 0 -205 -185 -75 -260 Effect of changes in exchange rates 6.9 5.9 On 31 december 2016 916 2,112 231 288 3,548 472 4,019 Impact of changes in accounting policies and principles CHANGES IN CASH AND CASH EQUIVALENTS (426.2) (296.4) Cash and cash equivalents at the opening* (748.4) (451.9) Cash and cash equivalents at closing* (1,174.6) (748.4) CHANGES IN CASH AND CASH EQUIVALENTS (426.2) (296.4)
90 91 Managem Annual Report 2016
CONTENTS
NOTE 1. Description of Activity 94 NOTE 2. Siginicant Events During the Financial Period 94 NOTE 3. Accounting Rules and Methods 94 NOTES ON NOTE 4. Segment Report 101 NOTE 5. Turnover 103 CONSOLIDATED NOTE 6. Purchases and External Expenses 103 ACCOUNTS NOTE 7. Staff Costs and Staffng 103 NOTE 8. Depriciation and Operational Provisions 104 NOTE 9. Other Incomes and Operational Costs 104 NOTE 10. Financial Result 105 NOTE 11. Assets Held For Sale and Related Liabilities 106 NOTE 12. Earnings Per Share 107 Goodwill 107 NOTE 13. Intangiable Assets 108 NOTE 14. Inventory and Work in Progress 111 NOTE 15. Trade and Other Receivables 112 NOTE 16. Cash and Cash Equivalents 112 NOTE 17. Equity 112 NOTE 18. Provisions 113 NOTE 19. Employee Benefts 114 NOTE 20. Financial Liabilities 116 NOTE 21. Accounts Payable and Other Creditors 117 NOTE 22. Financial Instruments 117 NOTE 23. Other Undertakings 120 NOTE 24. Possible Liabilities 120 NOTE 25. Related Parties 120 NOTE 26. Cash Flow Table 121 NOTE 27. Events Subsequent to the End of the Financial Year 121
92 93 Notes on consolidated accounts Managem Annual Report 2016
NOTE 1 below and have been applied for the year 2016 and the compara- With regard to the tests for impairment of tangible and intan- red the significant risks and benefits inherent in the ownership of DESCRIPTION OF ACTIVITY tive periods presented. gible assets, standard IAS 36 “Impairment of assets” specifies that the property to the buyer. The Managem group is a leading operator in the mining sec- when events or changes in the market environment indicate a risk tor in Morocco and the surrounding region, with two core 3.2. Basis of Evolution of impairing of these assets, they are reviewed in detail to deter- h) Fair Value of Derivatives and Other Financial Instruments businesses: mining and hydrometallurgy. The consolidated financial statements are presented in millions of mine whether their net worth is less than their recoverable amount The fair value of financial instruments that are not traded in an The group’s activities include exploration, extraction, development MAD, rounded to the nearest million. They are based on the his- (the highest going concern value and fair value reduce selling costs) active market is determined using valuation techniques. The group and marketing of minerals. torical cost convention with the exception of certain categories of that may lead to the recognition of an impairment loss. The going selects the methods and chooses the most appropriate projections In addition to these activities, the group is also involved in research assets and liabilities in accordance with the principles set out in concern value is estimated by calculating the present value of future based mainly on the prevailing market conditions on the date of & development and engineering for the development of new methods IFRS. The categories concerned are mentioned in the summary of cash flows. Fair value is based on the most reliable information avai- each balance sheet. and processes for the exploitation of mineral deposits. the notes below. lable (market data, recent transactions, etc.). The group mainly operates in Morocco, and is present in some other The planned closure of certain sites, additional staff reductions and 3.4. Principles of Consolidation African countries, with mines operating in Gabon and Sudan, pro- 3.3. Use of Estimates and Assumptions the downward revision of market prospects may in some cases be 3.4.1. Subsidiaries jects in development in the Democratic Republic of Congo and In accordance with international accounting standards currently considered as indications of impairment. Companies in which the group exercises exclusive de facto or de jure exploration projects in Sudan, Ethiopia and Guinea. in force, the preparation of the consolidated financial statements Assumptions and estimates are taken into account in determining control are consolidated using the full consolidation method. Control The group’s main products are: cobalt, silver, zinc, copper, cobalt has led the group to make estimates and assumptions that affect the recoverable amount of tangible assets, especially market out- is understood as the power to govern the financial and operating oxide, zinc oxide, fluorspar, gold and lead. the financial statements and accompanying notes. look, obsolescence and realisable value in the event of disposal or policies of an entity in order to obtain benefits from its activities. liquidation. Any change in these assumptions may have a signifi- The financial statements of the controlled companies are consoli- NOTE 2 a) Depriciaition of Stocks cant effect on the recoverable amount and could lead to a change dated as soon as control becomes effective and until control ceases. SIGNIFICANT EVENTS DURING Inventory and material being industrially produced are valued at in the amount of impairment losses entered into the account. Control is presumed to exist when the parent, directly or indirec- THE FINANCIAL PERIOD their lowest cost and net realisable value. The calculation of inven- tly through subsidiaries, owns more than half of the voting power Improved operational performance thanks in particular to tory depreciation is based on an analysis of foreseeable changes in d) Provisions of an entity unless, in exceptional circumstances, it can be clearly efforts to increase productivity across all operating sites: demand, technology or market to determine obsolete or excess The amount of provisions entered into the account by the group demonstrated that such ownership does not constitute control. • Increase in silver production (+7%), inventory. is based on the best estimate of the outflow of future economic The existence and effect of potential voting rights exercisable at • Exceeding the 2,000 tonne threshold for cobalt, Impairment losses are recorded as current operating expenses or as benefits on the date when the group entered this obligation into the balance sheet date is also taken into account in determining • Consolidation of copper production performance (+19%), restructuring costs, if any, depending on the nature of the amounts the account. The amount of provisions is adjusted at each balance whether an entity of the group exercises control over another. • Increase in the extraction rate at Draa Sfar by (+6%) concerned. sheet date, taking into account any changes in the estimation of However, the breakdown between the group’s interest percentage expected future benefits. and minority interests is determined on the basis of the current Discovery of new reserves: b) Impairment of Trade Receivables and Loans When the time effect is significant on the evaluation of an obligation percentage of interest. • Silver: +653 tons of metal at Imiter, A write-down of trade receivables and loans is recognised if the dis- of output of future benefits, the provisions are discounted, and the The share of net income and equity is presented under “minority • Copper: about 4.5 million tons all from Morocco counted value of future cash receipts is less than the nominal value. discounting effect is subsequently recognised as financial expenses. interests”. • Cobalt: 3,624 tonnes of metal at Bou-azzer The amount of the depreciation takes into account the capacity of • CMG polymetallic: more than 1.9 million tonnes, mixed grade the debtor to honour their debt and the age of the debt. A lower e) Deffered Taxes 3.4.2. Investments in Associates and Joint Ventures recoverability rate than estimated or defaulting of our major cus- Deferred tax assets entered into the account mainly relate to repor- Companies in which the group exercises significant influence over Acceleration of the development strategy focused on impro- tomers may have a negative impact on our future results. table tax losses and deductible temporary differences between the management and financial policy are consolidated using the equity ving the performance of sites in operation, the realisation of carrying and tax values of assets and liabilities. Assets relating to method; significant influence is presumed when the group holds projects with high potential for copper in Morocco and gold c) Capitalised Development Costs, Goodwill, Intangible the deferral of tax losses are recognised if it is probable that the more than 20 per cent of the voting rights. internationally: and Tangible Assets group will have future taxable profits on which these tax losses Under the equity method, participating securities are entered into • Increased profitability of copper projects in the feasibility study stage The group invests exploration and mining exploration expenses in can be imputed. the record at cost, adjusted for post-acquisition changes in the inves- • Prospecting for gold projects and continuing exploration work accordance with the accounting principles set out below. Estimates of future earnings are based on budgets and estimates tor’s interest in the investee, and any impairment losses on the net in Gabon and Ethiopia Activated exploration expenses are reviewed for impairment loss in of accounting results, adjusted for tax adjustments. These esti- investment. The losses of an entity consolidated under the equity • Conclusion of a partnership agreement between Managem and case of impairment loss indexes and are written down if the carrying mates are based on market assumptions that may not be confir- method that exceed the value of the group’s interest in that entity Avocet for the development of the Tri-K gold project in Guinea value of these assets exceeds their recoverable amount. med in the future. are not entered into the account unless; the group has a legal or The conditions for capitalisation of development costs are set out Deferred tax assets and liabilities, regardless of their maturity, must implicit obligation to hedge these losses; or the group has made NOTE 3 below. Once capitalised, these costs are amortised over the esti- be offset when they are levied by the same tax authority and relate payments on behalf of the associate. ACCOUNTING RULES AND METHODS mated life of the products concerned. to the same tax entity that has the right to offset chargeable tax Any excess of the cost of acquisition over the group’s quota in the 3.1. Primary Basis of Accounting The group must therefore assess the commercial and technical fea- assets and liabilities. As a result, each entity of the group has off- fair value of the identifiable assets, liabilities and contingent liabi- Pursuant to opinion No. 5 of the French National Accounting sibility of these projects and estimate the resulting product life- set these deferred tax assets and liabilities. lities of the associate at the acquisition date is recognised as good- Council (CNC) dated 26 May 2005 and in accordance with the times. Should this prove that a product was not able to meet the will but is not presented on the balance sheet with the group’s provisions of Article 6, Paragraph 6.2, of Circular No. 07/09 of initial expectations, the group could be obliged to depreciate all f) Provision for pensions and other post-employment benefits other goodwill. The latter is included in the carrying amount of the Ethics Council for Securities (CDVM), on 265 June 2009, the or part of the capitalised costs in the future or to modify the ini- The group participates in defined contribution pension schemes. In the equity investment and is tested for impairment in the total consolidated financial statements of the Managem group have been tial amortisation schedule. addition, certain other post-employment benefits such as medical carrying amount of the investment. Any excess of the group’s share prepared in accordance with the international accounting standards The group has also acquired intangible assets with cash or through coverage, retirement benefits and long service awards are subject in the net fair value of the entity’s identifiable assets, liabilities and adopted within the European Union, on 31 December 2016, and business combinations and the resulting goodwill. to provisions. All of these commitments are calculated on the basis contingent liabilities over the acquisition cost is immediately ente- as published on the same date. In addition to the annual write-down tests relating to goodwill, of actuarial calculations based on projections such as the discount red into the record as profit or loss. International accounting standards include International Finan- spot checks are carried out in the event of an indication of impair- rate, medical inflation rate, future wage increases, staff turnover and Investments in entities over which the group has ceased to exercise cial Reporting Standards (IFRS), International Accounting Stan- ment loss of intangible assets held. Impairment losses arise from mortality tables. These projections are generally updated annually. significant influence are no longer consolidated from that date and dards (IAS), and their Standards Interpretations Committee (SIC) the calculation of future discounted cash flows and/or market values are valued at the lower of their fair value at the date of removal from and International Financial Reporting Interpretations Committee of the assets concerned. Changes in market conditions or initially g) Revenue posting the scope of consolidation or their going concern value. (IFRIC) interpretations. estimated cash flows may therefore lead to a review and modifica- Revenues are entered into the accounts at the fair value of the The group has elected, as authorised by IAS 31 “Interests in joint The group’s accounting principles and methods are described tion of the impairment previously entered into the accounts. received or receivable counterpart once the business has transfer- ventures”, to consolidate the entities over which it exercises joint
94 95 Notes on consolidated accounts Managem Annual Report 2016
control according to the proportionate consolidation method. The corresponding exchange differences are recorded in the income 3.8. Intangible assets Holdings in entities over which the group has ceased to exercise joint statement, changes in fair value of hedging instruments are recorded What is recognised as intangible assets are primarily mineral explo- Principles applicable from 1 January 2006: control or significant influence are no longer consolidated from that in accordance with the treatment described in note 3.17.3 “Deri- ration and exploration expenses, patents and software. In accordance with IAS 16, tangible assets are recorded at their his- date and are valued in accordance with the provisions of IAS 39. vative 410 instruments below”. torical acquisition cost or initial manufacturing cost minus accu- Holdings in subsidiaries, joint ventures and associates that are clas- a) Exploration and Mining Research Expenses mulated depreciation and, where applicable, accumulated impair- sified as intended for sale (or included in a disposal group that is 3.6. Business Combinations In accordance with IFRS 6 “Prospecting and valuation of mineral ment losses. classified as intended for sale in accordance with IFRS 5) are entered Rules specific to first-time adoption: business combinations prior resources”, the group maintains its accounting principles relating to The financial interest of the capital used to finance the investments into the record in accordance with the provisions of that standard. to the transition date (1 January 2006 have not been restated in the valuation and accounting of mineral exploration expenses. These during the period before they are put into operation are an inte- At present, the group does not have an associate or joint venture accordance with the option offered by IFRS 1. expenses primarily include costs directly related to the following: gral part of the historical cost. in its scope of consolidation. > General geological studies to assess the potential of an area or permit; Current maintenance costs are entered into the record as expenses Regroupings after 1 January 2006: > Detailed geology and geochemistry work; for the period, except for those that extend the useful life or increase 3.4.3. Exclusions from the Scope of Consolidation Acquisitions of subsidiaries are entered into the account according > Geophysical work; the value of the property concerned, which are then locked-in. In accordance with the provisions of IFRS, there is no exemption to the manner of acquisition. The acquisition cost includes, at the > Sounding work; Depreciation is carried out according to the useful lives of the tan- from the group’s scope of consolidation. Non-significant invest- date of the combination, the following items: > Mining work; gible assets or their components, within the lifetime of the depo- ments are treated as AFS securities. • The fair value, on the date of exchange, of the assets surrende- > Sampling; sit for equipment and other mining assets. red, liabilities incurred or assumed; > Treatment trials. > Buildings and real estate 3.4.4. Consolidation Restatements • Any equity instruments issued by the group in exchange for > Other tangible assets All intra-group transactions and significant reciprocal assets and control of the acquired entity; Exploration expenses also include costs incurred in obtaining or The method of amortisation used by the group is the straight-line liabilities between fully consolidated or proportionately consoli- • Any other costs attributable to the business combination. acquiring the rights to explore “mining research permits”. method. All provisions relating to tangible assets are also applied dated companies are eliminated. The same applies to internal results The identifiable assets, liabilities, contingent liabilities of the Exploration expenses are entered into the account: to tangible assets held through a finance lease. The depreciation (dividends, capital gains, etc.). acquired entity that meet the recognition criteria set out in IFRS > On the asset side, if these expenses make it possible to identify periods for these fixed assets are given below: The results of internal divestments carried out with companies 3 are recorded at fair value with the exception of assets (or groups new deposits; or accounted for under the equity method are eliminated within the of assets) which comply with the provisions of IFRS 5 for a qualifi- > As expenses of the period in which they are incurred, if they have 3.10. Investment Property limit of the group’s interest in these companies. cation of non-current assets intended for sale, then recognised and not led to the identification of new mining reserves. Investment properties are real estate held either to withdraw rent, measured at fair value, minus costs necessary for sale. Activated exploration expenditures are amortised over the term of for capital appreciation or both, rather than for use in the produc- 3.4.5. Closing Date In the event of the first consolidation of an entity, the group shall, the identified reserves and reviewed for impairment in the event tion and supply of goods and services or for administrative purpo- All group companies are consolidated from the annual accounts as within a period not exceeding one year from the date of acquisition, of an indication of impairment loss. ses, or to sell as part of ordinary activity. of closure on 31 December 2016. carry out an evaluation of all the assets, liabilities and contingent In accordance with the option offered by IAS 40, investment pro- liabilities at their fair value. b) Other Intangible Assets perties are entered into the record at cost minus accumulated depre- 3.5. Translation of financial statements Goodwill or “excess cost” is the difference between the acquisition Intangible assets are recorded at initial acquisition cost minus accu- ciation and any impairment losses. and transactions in foreign currencies cost and the acquirer’s interest in the net fair value of identifiable mulated depreciation and any impairment losses. As part of the first-time application of IFRS standards and in accor- The functional currency of Managem is MAD, which is also the assets, liabilities and contingent liabilities. It follows the principles Acquired identifiable intangible assets with a defined useful life dance with the provisions of IFRS 1, the group performed fair value reporting currency of the consolidated accounts of the group. defined in paragraph “2.7. Goodwill”. are amortised on the basis of their own useful lives as soon as they measurement on 1 January 2006 of certain investment properties are put into service. (land presented as investment property), and retained this valua- 3.5.1. Conversion of financial statements of foreign subsidiaries 3.7. Goodwill Acquired identifiable intangible assets with indefinite useful lives tion as deemed cost. The fair value measurements were carried out The accounts of self-sustaining foreign subsidiaries, whose functio- Goodwill is measured in the functional currency of the acquired are not amortised but are tested annually for impairment or as soon by independent experts. nal currency is not the dirham are converted into dirham as follows: entity. It is entered into the record as an asset in the balance sheet. as indications are available that could call into question the reco- • With the exception of capital and reserves for which historical It is not written off and tested for impairment annually or as soon gnised value on the balance sheet. If this is the case, an impair- 3.11. Biological Assets rates are applied, the balance sheet accounts are converted at the as indices are identified that may call into question the value reco- ment loss is recognised. In accordance with IAS 41, the group recognises as of 1st January exchange rates prevailing on the balance sheet date, gnised in the balance sheet. Recorded impairment losses cannot be Intangible assets with finite useful lives are amortised over the fol- 2009, biological assets, agricultural products related to them at • The income statements and the cash flow statements are converted reversed at a later date. lowing periods. the time of harvest and public subsidies. at the average exchange rates for the period, When the share of the fair value of the acquired assets, liabilities This method of amortisation accurately reflects the rate of utilisa- Biological assets are valued at initial recognition and on each balance • The resulting conversion rate adjustment is included in “Trans- and contingent liabilities exceeds the cost of acquisition, negative tion of economic benefits. sheet date at fair value minus costs to sell. Agricultural produc- lation rate adjustments” included in capital and reserves. goodwill is immediately entered into the account as profit or loss tion harvested from biological assets are also valued at its fair value Goodwill and fair value adjustments arising from the acquisition after re-estimating the evaluation of assets, liabilities and identi- 3.9. Tangible Assets minus the cost of sale. of a foreign entity are considered to be assets and liabilities of the fiable contingent liabilities. Specific rule for first adoption: In accordance with IAS 41, fair value is assimilated to the market foreign entity and are expressed in the functional currency of the Upon divestment of a subsidiary or jointly controlled entity, the As part of the first-time application of IFRS and in accordance price of a biological asset or an agricultural commodity in its cur- acquired entity and are converted into dirham at the closing rate. amount of goodwill attributable to the subsidiary is included in with the provisions of IFRS 1, the group performed a fair value rent situation and condition. The accounts of non-autonomous foreign entities, whose functio- the calculation of the gain or loss of the divestment. measurement on 1 January 2006 of some of its assets (mainly cer- For the first application of IAS 41, biological assets are valued at nal currency is different from the dirham and whose activity is an For acquisitions that took place prior to 1 January 2006, good- tain technical facilities), and retained this valuation as the presu- their cost, corresponding both to their market values and to their extension of the parent company, are converted into dirham using will is maintained at its deemed cost, which represents the amount med cost. The fair value measurements were carried out by inde- acquisition values. the historical method. recorded in accordance with Moroccan accounting principles (opi- pendent experts. nion No. 5 of the French National Accounting Board). The clas- 3.5.2. Conversion of transactions in foreign currencies sification and treatment of business combinations that took place TANGIBLE ASSETS Transactions in foreign currencies (i.e., in a currency other than the before 1 January 2006 have not been modified on the occasion of functional currency of the entity) are converted at the exchange rate the adoption of IFRS on the 1 January 2006 in accordance with Types of tangible assets Depreciation method Depreciation period prevailing on the date of the transaction. the provisions of IFRS 1. Mining infrastructure Linear Estimated operating life of the deposit Assets and liabilities denominated in foreign currencies are valued Technical Facilities Linear 5-10 years at the rate prevailing on the balance sheet date or during the hedge Material and tools Linear 5-10 years that is allocated to them, if any.
96 97 DiversitéNotes on consolidated accounts Managem Annual Report 2016
3.12. Leases less than the net carrying value, in which case an estimate of the 3.17.1. Valuation Of Trade Receivables investment is analysed as being held to maturity. For investments In accordance with IAS 17 “Leases”, leases are classified as finance going concern value is made. And Non-Current Financial Assets held for trading, changes in fair value are recognised consistently leases when the terms of the lease substantially transfer almost all Trade receivables, loans and other non-current financial assets are treated as income (other financial income and expense). For available-for- of the risks and rewards of ownership to the lessee. All other leases 3.14. Non-Current Assets Held For Sale as assets issued by the Company and are entered into the account using sale investments, changes in fair value are recognized directly as are classified as operating leases. and Discontinued Operations the amortised cost method. They may also be subject to a provision for equity or in income (in other financial income and expense) in the Assets held under finance leases are entered into the record as Assets or groups of assets that are to be divested are classed as such impairment if there is objective evidence of impairment. case of an objective indication of more than temporary impairment assets at the lower of the discounted value of the minimum lease if their carrying value will mainly be recovered through a sale tran- A provision for impairment of receivables is established when of the security or in the event of divestment. payments and their fair value determined at the beginning of the saction rather than through their continued use. This condition there is an objective indicator of the group’s inability to recover all lease. The corresponding liability owed to the lessor is recorded in is considered to be met when the sale is highly probable and the amounts due under the conditions originally foreseen at the time 3.19. Cash and Cash Equivalents the balance sheet as an obligation arising from the finance lease, asset (or group of assets to be sold) is available for immediate sale of the transaction. Significant financial difficulties encountered by In accordance with IAS 7 “Cash flow statement” cash and cash as financial liabilities. in its current condition. Management must be committed to a sales the debtor, the likelihood of bankruptcy or financial restructuring equivalents on the balance sheet include cash (cash in hand and These assets are depreciated over the shortest period between the plan, and the sale is expected to be completed within 12 months of the debtor or failure to pay are indicators of the depreciation overnight deposits) and cash equivalents (short-term, highly liquid useful life of the assets and the term of the finance lease when there of the date on which the asset or group of assets was qualified as a of a receivable. The amount of the provision represents the diffe- investments, which are readily convertible into a known amount of is reasonable assurance that there will be no transfer of ownership non-current asset to be sold. rence between the carrying amount of the asset and the value of cash and are subject to a negligible risk of change in value). Invest- at the end of the lease. The group assesses at each closing date whether it is engaged in an estimated discounted future cash flows if applicable. The amount ments in listed securities, investments with a short or medium term For operating leases where the group is the lessee, payments made exit process of assets or business and submits them, where appli- of the loss is recorded as an impairment of the accounts receivable initial maturity with no possibility of early exit, and bank accounts under operating leases (other than service costs such as insurance cable, as “assets to be divested”. and an impairment charge on current assets. subject to restrictions (blocked accounts) other than those related and maintenance) are recognised as an expense in the income sta- These assets held for sale are presented separately from other assets to regulations specific to certain countries or sectors (exchange tement on a linear basis over the term of the lease. in the balance sheet. Any liabilities related to these assets to be 3.17.2. Participating securities in non-consolidate control, etc.) are excluded from cash and cash equivalents in the Rental contracts signed by the group (lessor) with its customers divested are also presented on a separate line on the balance sheet. companies and other long-term investments cash flow statement. are operating leases. In these contracts, rent income is recorded on Assets held for sale and groups of assets to be divested are valued Participating securities in non-consolidated companies and other Bank overdrafts related to financing transactions are also excluded a linear basis over the firm terms of the leases. Consequently, the at the lower of their carrying value and their fair value minus sel- long-term investments are classified as available-for-sale (AFS) and from cash and cash equivalents. special provisions and advantages defined in the lease agreements ling costs. From the date of such classification, the asset ceases to are stated in the balance sheet at their fair value. Hidden profits and (franchises, landings, entrance fees) are spread over the fixed term be amortised. losses are recorded as a separate element to shareholders’ equity. For 3.20. Accounting for Financial Assets of the lease, without taking account of indexation. The reference A discontinued operation represents a significant activity or geo- listed securities, fair value corresponds to the market price. For other A financial asset as defined by lAS 32 “Financial instruments: dis- period is the first fixed period of the lease. Costs directly incur- graphical area for the group that is either disposed of or classified securities, if it is not possible to reliably estimate the fair value, it closures and presentation” is removed from the balance sheet in red and paid to third parties for the establishment of a lease are as held for sale. The results of discontinued operations are pre- corresponds to the net acquisition cost of any impairment losses. whole or in part when the group no longer expects future cash flow recorded as assets under “investment properties” or other items of sented separately from income from continuing operations in the Impairment is recognized in the event of objective signs of impair- from it and transfers almost all the risks and benefits attached to it. fixed assets concerned and amortised over the lease. income statement. ment of assets other than those classified as transactions. Subject to exceptions, the group considers that a significant or lasting decrease 3.21. Deferred Taxes 3.13. Testing Depreciation and Impairment 3.15. Stocks is assumed when the equity instrument has lost at least 20 per cent The group enters deferred taxes into the account for all temporary Losses of Assets Stocks are valued at the lower of cost or net realisable value. of its value over a period of six consecutive months. differences existing between the tax and accounting values of assets In accordance with the provisions of IAS 36, the group reviews at The cost price corresponds to the cost of acquisition or the cost of This criterion of a significant or lasting decrease in the value of the and liabilities on the balance sheet, with the exception of goodwill. least annually the carrying values of tangible and intangible assets production incurred in bringing the stocks into the state and place security is a necessary condition, but is not sufficient to justify the The tax rates used are those adopted or virtually adopted at the end with finite useful lives in order to assess whether there is any indi- where they are. These include, on the basis of a normal level of acti- recording of a provision. The latter is only constituted to the extent of the fiscal year, depending on the tax jurisdictions. cation that these assets may have lost value. If such an indication vity, direct and indirect production costs. Costs are generally cal- that the depreciation will result in a probable loss of all or part of The amount of deferred taxes is determined at the level of each exists, the recoverable amount of the asset is estimated to deter- culated using the weighted average cost method. the amount invested. The reversal of this impairment loss in the tax entity. mine the amount of the impairment loss, if any. The recoverable The net realisable value of stocks is the estimated selling price in income statement can only occur at the time of the disvestment of Tax assets related to temporary differences and carrying-over tax amount is the higher of an asset’s fair value minus selling costs and the normal course of business minus estimated costs to complete securities, with any prior reversal entered into the record as equity. loss are only entered into the account if it is probable that a future its going concern value. the revenue and estimated costs necessary to complete the sale. taxable profit will be determined with sufficient accuracy at the Goodwill and intangible assets with indefinite useful lives are tested 3.17.3. Derivative instruments level of the tax entity. for impairment annually. An additional impairment test is perfor- 3.16. Treasury Shares Derivative instruments are recorded in the balance sheet at fair Current and/or deferred taxes are entered into the income state- med whenever an indication of impairment is identified. Treasury shares held by the group are recorded as a reduction of value on derivative financial instruments as current or non-cur- ment for the period unless they are generated by a transaction or The group has determined that the lowest level at which assets consolidated shareholders’ equity at their acquisition cost. Subse- rent financial assets or current or non-current financial liabilities. event recognised directly as equity. can be tested for impairment is at the various mines operated by quent divestments are charged directly to shareholders’ equity and The accounting impact of changes in the fair value of these deri- the group. are not recorded as profit or loss. vative instruments can be summarised as follows: 3.22. Employee Benefits When the recoverable amount of a Cash Generating Unit (CGU) • Application of hedge accounting: The group’s commitments with regard to defined benefit health is less than its carrying amount, an impairment loss is recognised 3.17. Financial Assets > For future cash flow hedges, the effective part of the change in the insurance plans and retirement indemnities are determined, in in profit or loss. This impairment loss is allocated primarily to Financial assets should be classified in the following four categories: fair value of derivative instruments is recognised directly as equity accordance with IAS 19, on the basis of the projected unit credit the balance sheet value of goodwill. The remainder is allocated to • Assets measured at fair value through profit or loss: fair value and the ineffective part impacts other financial income and expenses; method, taking into account the specific economic conditions of the remaining assets included in the CGU in proportion to their with changes in fair value through profit or loss; > For hedge of net investment abroad, the gain or loss resulting each country (mainly Morocco for the group). Commitments are carrying values. • Assets held to maturity: amortised cost, provisions for impair- from the hedge will be deferred in equity until the total or partial covered by provisions recorded in the balance sheet as employees The recoverable amount of CGUs is determined on the basis of dis- ment are recognised in profit or loss. This category is not used by divestment of the investment. acquire the rights. Provisions are determined as follows: counted projections of future cash flows from operations over a period the group; • In cases where hedge accounting is not applied, the change in the • The actuarial method used is the so-called projected unit credit of three years extrapolated to the term of the deposit. The discount • Loans and receivables: amortised cost, any provisions for impair- fair value of derivative instruments is recognised as profit or loss. method, which stipulates that each period of service gives rise to rate used for these calculations and the weighted average cost of ment are recorded as profit or loss; the recognition of a benefit entitlement unit and separately eva- capital differs according to the CGUs and the sectors of activity in • Available-for-sale assets: fair value with changes in fair value in 3.18. Investments luates each of these units to obtain the final obligation. These cal- which they operate. These rates vary between 5 and 10 per cent. equity, or in profit or loss to provide for a long-term (six months) In accordance with IAS 39 “Financial Instruments: Recognition culations include mortality estimates, staff turnover and projec- For a listed subsidiary, the recoverable amount of the cash-gene- or significant (more than 20 per cent) objective decline in impair- and Measurement”, investments are valued at their fair value. No tions of future wages, etc. rating unit (CGU) retained is its market capitalisation unless it is ment, while any subsequent increase will be recorded in equity.
98 99 DiversitéNotes on consolidated accounts Managem Annual Report 2016
The group immediately recognises all actuarial gains and losses in Revenue from ordinary activity is measured at the fair value of the NOTE 4 other comprehensive income, as required by the revised IAS 19. consideration received or receivable. Lease income is recognised on SEGMENT REPORT Premiums paid on the occasion of the awarding of long-service a straight-line basis over the term of the leases. Rental costs re-in- 4.1. Levels of segment information medals throughout the entire working period of employees are sub- voiced to tenants are deducted from the corresponding expense The primary segmentation of the Managem group is based on ject to a provision. The latter is evaluated by taking into account accounts and are excluded from the turnover. business sectors, secondary segmentation is based on geographic the probability that the employees will reach the required senio- In general, ordinary revenues from the sale of goods and services sectors. rity for each step and is updated. are recognised when there is a formal agreement with the customer, Inter-sector transactions mainly relate to sales of the gold concen- Retirement benefits are also subject to a provision. This is evaluated when delivery has occurred, the amount of income can be measured trate and copper sulphate which are between CTT and certain sub- by taking into account the probability of the employees’ presence reliably and it is likely that the economic benefits associated with sidiaries in the mining sector, particularly AGM and CMG. These in the group on their retirement date. This provision is discounted. this transaction will accrue to the group. transactions are invoiced by CTT with reference to international market prices. 3.23. Provisions 3.27. Other Activity Revenue The group recognises a provision when there is a legal or implicit Other revenue from activity include non-recurring or non-recur- 4.1.1. First Level of Sector Information: Business Sectors obligation towards a third party which will result in an outflow of ring revenue related to the transactions described in the “reve- Mining resources, without any expected compensation, necessary to settle nue” section. This activity consists of the exploitation of several deposits by the the obligation and which can be reliably estimated. The amounts Managem group and producing concentrates as varied as concen- recognised in provisions take into account a schedule of disburse- 3.28. Cost of Net Financial Debt trates of zinc, copper, lead and fluorite. Precious metals such as ments and are discounted when the passage of time has a signifi- This includes interest income and expense on bank loans, bonds gold and silver are also produced. cant effect. This effect is recognised in financial income. and other financial debts (including finance lease liabilities). Restructuring provisions are recognised when the group has drawn Borrowing costs that are directly attributable to the acquisition, Hydrometallurgy up a formalised and detailed plan, which has been announced to construction or production of an asset should be included in the This activity deals with the processing and recovery of ores to obtain the parties concerned. cost of that asset. products with high added value, in particular metallic derivatives Where a legal, contractual or implicit obligation necessitates the and specialty chemicals, such as cobalt cathodes, cobalt oxide, redevelopment of sites, a provision for restoration costs is entered 3.29. Earnings Per Share nickel derivatives, copper sulphate, sodium sulphate, coal with into the record in other operating expenses. It is recognised over Basic earnings per share is calculated by dividing the group’s share embedded gold, and arsenic trioxide. Hydrometallurgy uses spe- the operating period of the site according to the level of produc- of net income by the average number of shares outstanding during cific techniques and technologies such as: liquid extraction, elec- tion and progress of the operation of the site. the financial year. The average number of shares outstanding for the trolysis, drying, calcination, roasting, etc. Costs incurred in limiting or preventing environmental risks and period and prior financial years presented is calculated excluding generating future economic benefits - such as extending the life of treasury shares and shares held under stock option plans. 4.1.2. Second Level of Sector Information: capital assets, increasing production capacity and improving the To date, the group has not issued any financial instrument that has Geographic Sectors level of security - are capitalized. a dilutive effect. As a result, basic earnings per share is equivalent The geographical breakdown of the group’s activities is as follows: to diluted earnings per share. > Morocco 3.24. Costs of Increasing Capital > Europe Costs of increasing capital are charged on the issue, merger or 3.30. New Standards and Interpretations > Others contribution premiums. Mandatory standards or amendments in 2016 The standards, amendments to standards and interpretations publi- 3.25. Financial Liabilities shed by the IASB and applicable from 2016 onwards are as follows: 3.25.1. Financial debts • Annual Improvements (2010-2012) to IFRS (European Union) Interest-bearing borrowings and other financial liabilities are • Amendments to IAS 16 and IAS 38 - Proportionate amortisa- measured using the amortised cost method using the effective interest tion of income rate of the loan. Fees and issue premiums impact the value at entry These new standards and interpretations are applicable to periods and are spread over the life of the loan via the effective interest rate. beginning on or after 1 January 2016. In the case of financial debts arising from the recognition of finance • Texts applied in advance in 2016 leases, the financial debt recognised as an offsetting item of tangible > None. assets is initially recognised at the fair value of the leased asset or dis- • Texts not applied in advance in 2016 counted minimum lease payments, if the latter is the lower of the two. > IFRS 9: Financial instruments > IFRS 15: Revenue from customer contracts 3.25.2. Other Financial Liabitilities • Texts not yet adopted by the European Union (not applicable Other financial liabilities mainly concern debts to suppliers and other in advance) creditors. These financial liabilities are recorded at amortised cost. > IFRS 14: Regulatory deferment accounts > IFRS 16: Leases 3.26. Income from Standard Activities The group’s revenue from ordinary activities consists mainly of the CHANGE IN SCOPE OF CONSOLIDATION following types of turnover: DURING THE PERIOD • Sale of goods and services produced 3.31. Divestments • Construction contracts No divestments were made in the fiscal year 2016. • Rental income. A product is entered into account as revenue when the business has transferred to the buyer the significant risks and rewards of ownership of the property.
100 101 DiversitéNotes on consolidated accounts Managem Annual Report 2016
4.2. Information by Activity Sector 4.3. Information by Geographical Sector AS OF 31 DECEMBER 2016 ON 31 DECEMBER 2016 In millions of MAD Mines Hydro Other TOTAL In millions of MAD Morocco Europe Other TOTAL External 4,247.4 121.8 7.8 4,376.9 Turnover 7.7 4,201.2 167.9 4,376.9 Inter sectors Other products (if applicable) -17.1 4.5 -12.7 Total turnover 4,247.4 121.8 7.8 4,376.9 Total -9.4 4,201.2 172.4 4,364.4 Profit from operational activities 492.4 93.2 86.9 672.5 Investments 774.3 0.0 148.1 922.4 Financial result 25.0 -70.6 -102.3 -147.9 Share in net income of companies accounted - - - - AS OF DECEMBER 2015 for by the equity method In millions of MAD Morocco Europe Other TOTAL Corporate taxes -98.6 -22.6 -6.2 -127.4 Income from activities engaged in 418.9 -0.0 -21.7 397.2 Turnover 273.7 3,596.8 446.5 4,317.0 Other products (if applicable) -21.3 -20.0 -41.3 Total 252.4 3,596.8 426.4 4,275.7 AS OF 31 DECEMBER 2015 Investments 920.1 0.8 189.3 1,109.4 In millions of MAD Mines Hydro Other TOTAL External 4,155.2 121.78 40.0 4,317.0 NOTE 5 Inter sectors TURNOVER Total turnover 4,155.2 121.78 40.0 4,317.0 Turnover (income from ordinary activities) of the Managem Group consists of the following items: > Sale of goods and services produced; Profit from operational activities 519.5 26.5 71.2 617.2 > Construction contracts; Financial result -121.1 -39.2 -90.4 -250.7 > Rental income Share in net income of companies accounted - - - - for by the equity method Turnover breaks down as follows: Corporate taxes -90.8 -7.3 -10.9 -109.4 ON 31 DECEMBER 2015 Income from activities engaged in 307.6 -20.0 -30.2 257.5 In millions of MAD December 2016 December 2015 Turnover 4,376.9 4,317.0 ON 31 DECEMBER 2016 Other products (if applicable) -12.7 -41.3 Various turnover corresponds mainly to sales made by the operational service sector, particularly Reminex and Techsub. Total revenue from ordinary activities 4,364.4 4,275.7 The main elements of the balance sheet can be allocated to the following sectors of activity: (a) Including provision of services. In millions of MAD Mines Hydro Other TOTAL b) Other income in the business mainly comprises the change in product inventories. At the end of 2016, consolidated turnover increased by 1.39 per cent compared to the year 2015, an increase of 59.9 MAD. Assets 5,574.6 1,542.8 3,391.9 10,509.3 Equity shares NOTE 6 Total consolidated assets 5,574.6 1,542.8 3,391.9 10,509.3 PURCHASES AND EXTERNAL EXPENSES Investments 759.3 133.4 29.6 922.4 Purchases and external charges break down as follows: Liabilities 5,230.1 1,208.9 50.9 6,490.0 In millions of MAD December 2016 December 2015 Total consolidated liabilities 5,230.1 1,208.9 50.9 6,490.0 Purchase of goods (18.9) (104.0) Purchase of supplies and consumable materials (1,618.0) (1,623.9) AS OF 31 DECEMBER 2015 Purchases (1,636.9) (1,727.9) In millions of MAD Mines Hydro Other TOTAL Operational rents (77.8) (87.4) Assets 8,277.4 1,601.5 256.4 10,135.3 Maintenance and repairs (34.0) (36.4) Equity shares Remuneration of personnel outside the company (60.9) (83.1) Total consolidated assets 8,277.4 1,601.5 256.4 10,135.3 Miscellaneous external costs (691.7) (690.2) Investments 918.1 156.0 35.3 1,109.4 Other external costs (864.4) (897.0) Liabilities 4,866.7 1,197.6 203.9 6,268.3 Total purchases and external expenses (2,501.4) (2,624.9) Total consolidated liabilities 4,866.7 1,197.6 203.9 6,268.3 a) Purchases and other external expenses were down 123.5 million dirhams over the previous year, due to the combined effects of: > Decrease of 25 MAD following the establishment of staff > Decrease in transport costs of 8 MAD
102 103 DiversitéNotes on consolidated accounts Managem Annual Report 2016
NOTE 7 NOTE 9 STAFF COSTS AND STAFFING OTHER INCOMES AND OPERATIONAL COSTS 7.1 Personal Costs Other operating income and expenses break down as follows: Staff costs for the year are detailed below, by type of cost: In millions of MAD December 2016 December 2015 In millions of MAD December 2016 December 2015 Divestment of assets 0.4 0.2 Wages and salaries (687.7) (646.0) Disposals of subsidiaries and shareholdings 0.0 0.0 Other social security costs (242.6) (252.6) Paper profit JV s/operations matters-trading 0.0 0.0 Net contributions towards provisions for employee benefits (15.2) (6.7) Results for derivatives - trading (3.0) 1.6 Employee profit-sharing 0.0 0.0 Foreign exchange derivatives - trading (3.6) 3.7 Total (945.4) (905.3) Other income and operational costs* 700.4 808.9 Note 19 lists other information relating to employee benefits Total operating income and expenses 694.3 814.5 Changes in value between the two periods are attributable to the change in the fair value of derivatives classified as Trading due to the following: 7.2 Average Staff Numbers a) Metal coverage: The average permanent workforce of consolidated companies breaks down as follows: a. Materials trading reflects the portion of financial instruments which are not eligible for hedge accounting corresponding to the time value of the tunnels and the asymmetric part of the “Call” sales, 7.3 Remuneration of Administrative and Management Bodies b. Exchange cover: corresponds to the time value and the asymmetric part of the tunnels The administrative and management bodies are composed of: > Board of Directors whose members are paid from attendance fees 9.1. Other Non-Current Operating Costs and Incomes > Management committee whose members receive wages Other non-current operating income and expenses are detailed as follows: In millions of MAD December 2016 December 2015 NOTE 8 Other non-current income 9.3 24.4 DEPRECIATION AND OPERATIONAL PROVISIONS Changes in amortisation and provisions affecting current operating income for the periods ended 31 December 2016 and 31 Other non-current expenses (5.9) (22.5) December 2015 break down as follows: Net other incomes and operational costs* 697.1 807.0 Total other operating income and expenses 700.4 808.9 In millions of MAD December 2016 December 2015 Other operating income and expenses primarily relates to the production of fixed assets on their own. Net amortisation impacting current operating income Intangible assets (183.8) (202.0) Tangible assets (754.1) (750.4) NOTE 10 Biological assets 0.0 0.0 FINANCIAL RESULT Investment Property (0.4) (0.4) The financial result as of 31 December 2016 and 2015 breaks down as follows: Total (938.4) (952.8) In millions of MAD December 2016 December 2015 Provisions and Net impairment losses impacting current operating income Financial expenses Fixed assets 53.2 79.8 Interest on borrowings (206.0) (206.6) Stocks 1.7 (2.2) Other financial expenses 0.0 0.0 Debts 0.0 0.0 Impairment losses of financial assets 0.0 0.0 Provisions for contingencies and expenses 0.0 (1.7) Net provisions (0.0) 0.0 Total 54.9 75.9 Total financial expenses (206.0) (206.6) Total (883.4) (876.9) Financial income (a) A description of changes in amortisation and impairment of fixed assets is included in note 14 of these financial statements. Interest & other financial income 12.5 13.6 (b) Details of changes in impairment losses relating to inventories and debts are included in notes 15 and 16 of these financial statements. Other income 2.0 11.4 Impairment losses of financial assets 0.0 0.0 Gains and losses on foreign exchange transactions 43.6 (69.1) Total financial income 58.0 (44.1) Financial result (147.9) (250.7) Improvement in the financial result of 102.8 MAD explained mainly by the non-recurrence of the negative currency balance achieved in 2015.
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10.1 Tax Charge NOTE 11 10.1.1 Recognise in Income Statement ASSETS HELD FOR SALE AND RELATED LIABILITIES The income tax expense for the years ended 31 December 2016 and 2015 breaks down as follows: At present, the Group does not have assets or liabilities held for sale. In millions of MAD December 2016 December 2015 NOTE 12 Current tax expense EARNINGS PER SHARE Costs for the year (110.0) (95.9) Basic earnings per share is calculated by dividing the Group’s share of net income by the average number of shares outstanding during the Adjustment of tax expense from prior periods 0.0 0.0 financial year. The average number of shares outstanding for the period and prior financial years presented is calculated excluding treasury (110.0) (95.9) shares and shares held under stock option plans. (Expenses)/deferred income tax Years ended December 31 31 December 2016 31 December 2015 Changes in temporary differences (5.6) (21.5) Changes in tax rates 0.0 0.0 Weighted average number: Change in previous tax losses (11.8) 8.3 - Common shares issued 9,158,699 9,158,699 (17.3) (13.1) - Shares held under stock option plans (Expense)/Total tax income (127.3) (109.0) - Treasury shares > The increase in current income taxes is linked to the increase in tax payable by subsidiaries SMI, REG and MANUB, following the rise in income at Number of shares used to calculate basic earnings per share 9,158,699 9,158,699 the end of December 2016; Number of dilutive instruments > The current tax expense corresponds to the amounts paid and/or outstanding in the short term to tax administrations for the 2016 fiscal year, according Number of shares used to calculate diluted earnings per share 9,158,699 9,158,699 to the rules in force in the different countries and specific agreements. > Deferred tax income arises from the recognition of a deferred tax asset on tax losses arising from amortisations that are indefinitely carried forward. To date, the Group has not issued any financial instrument that has a dilutive effect. As a result, basic earnings per share is equivalent to diluted earnings per share. 10.1.2 Deferred Taxes Recognised on Other Items of the Total Income Net income for the year attributable to shareholders of the parent company 288.5 204.9 Deferred taxes recognised on other items of total income are as follows: Number of shares used to calculate basic earnings per share 9,158,699 9,158,699 10.1.3 Deferred Taxes Recognised in Shareholders’ Equity Basic earnings per share 31.5 22.4 Deferred taxes recognised in equity break down as follows: of which from activities not engaged in Net tax assets are limited to the capacities of each tax entity to recover its assets in the near future. Diluted earnings per share 31.5 22.4 of which from activities not engaged in 10.1.4. Deferred Taxes Recognised on the Balance Sheet In millions of MAD December December December December December December Goodwill 2016 2015 2016 2015 2016 2015 In millions of MAD December 2016 December 2015 Deferred taxes Active Active Passive Passive Net Net On 1st january 319.5 318.2 From temporary differences 14.8 14.9 18.0 11.9 (3.4) 3.0 Gross value 812.8 811.6 From tax losses 253.0 264.8 0.0 0.0 253.0 264.9 Accumulated impairment losses (493.3) (493.3) From tax credits 5.2 0.1 0.0 0.0 5.2 0.1 Change in scope 0.0 0.0 Total 273.0 279.7 18.0 11.9 254.9 267.9 Currency conversion rate 0.3 1.2 Unrecognized deferred tax assets Divestments 0.0 0.0 Impairment losses 0.0 0.0 10.5.1. Tax Reconciliation Other movements 0.0 0.0 In millions of MAD December 2016 December 2015 At the end of the period 319.8 319.5 Net income of consolidated companies 397.2 257.5 Gross value 813.1 812.8 Share of income of equity-accounted affiliates 0.0 0.0 Accumulated impairment losses (493.3) (493.3) Consolidated net income (excluding EMS) 397.2 257.5 Tax on benefits (110.0) (95.9) On the Balance Sheet, goodwill relates to the following companies: Deferred taxes (17.3) (13.1) In millions of MAD December 2016 December 2015 Total tax expense (127.4) (109.0) IMITER 161.2 161.2 Consolidated result before taxes (excluding EMS) 524.6 366.5 CMG 130.9 130.9 Effective tax rate (Total tax/income before taxes) -24.28% -29.75% CTT 13.3 13.3 Tax on permanent differences 43.4 58.1 RGGG 14.4 14.1 Tax on non-activated tax losses 0.0 0.0 Total 319.8 319.5 Tax on utilisation of tax losses from prior years that did not give rise to direct investment 0.0 0.0 Non-activated tax credits Mother/Daughter difference (56.5) (36.8) Variation rate IS N/N-1 Other differences 14.6 14.5 Recalculated tax expense (157.6) (109.1) Legal tax rate in Morocco (Recalculated tax burden/Pre-tax accounting result) -30.04% -30.00%
106 107 DiversitéNotes on consolidated accounts Managem Annual Report 2016
NOTE 13 TANGIBLE ASSETS AND PLACEMENT PROPERTIES INTANGIABLE ASSETS The main variations are due to: The main variations are due to: In millions of MAD Land Buildings Material Construction Investment Other Total In millions of MAD Development Telecom and Concessions Concessions Other Total and tools in progress Property Fees Logistics patents and Gross values Licences similar rights On 1st january 2015 41.1 3,753.0 4,558.7 594.8 28.9 1,417.5 10,394.0 Gross Values Acquisitions 8.4 360.1 140.4 141.7 0.0 60.2 710.7 On 1st January 2015 3,699.9 1.0 167.5 0.0 400.3 4,268.7 Changes in scope 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Acquisitions 281.9 0.0 1.0 0.0 117.1 399.9 Disposals and assets classified Changes in scope 0.0 0.0 0.0 0.0 0.0 0.0 as held for sale 0.0 0.0 0.0 (1.1) 0.0 0.0 (1.1) Disposals and assets classified as held for sale 0.0 0.0 0.0 0.0 0.0 0.0 Conversion rate adjustments 0.2 11.2 31.6 23.4 0.0 15.9 82.3 Conversion rate adjustments 83.6 0.1 0.0 0.0 0.0 83.7 Other movements 0.0 153.2 (28.0) (134.3) 0.0 9.1 (0.1) Other movements 5.6 0.0 0.1 0.0 (5.6) 0.1 On 31 December 2015 49.7 4,277.4 4,702.6 624.5 28.9 1,502.6 11,185.7 On 31 December 2015 4,071.0 1.1 168.7 0.0 511.8 4,752.5 On 1st January 2016 49.7 4,277.4 4,702.6 624.5 28.9 1,502.6 11,185.7 On 1st January 2016 4,071.0 1.1 168.7 0.0 511.8 4,752.5 Acquisitions 0.0 353.5 53.7 158.3 0.0 42.0 607.5 Acquisitions 300.2 0.1 0.6 0.0 22.0 322.9 Disposals and assets classified Disposals and assets classified as held for sale 0.0 0.0 0.0 0.0 0.0 0.0 as held for sale 0.0 0.0 0.0 (5.4) 0.0 (5.5) (10.8) Conversion rate adjustments 28.2 0.0 0.0 0.0 0.0 28.2 Conversion rate adjustments 0.0 4.0 7.7 3.8 0.0 3.8 19.3 Other movements 30.1 0.0 28.0 0.0 (52.7) 5.3 Other movements 4.0 107.0 125.2 (288.3) 0.0 46.8 (5.3) As 31 December 2016 4,753.5 1.3 197.2 0.0 481.1 5,433.1 As 31 December 2016 53.7 4,742.1 4,892.3 493.0 28.9 1,598.9 11,809.0
Depreciation and impairment Depreciation and impairment On 1st January 2015 (2,783.1) (0.2) (105.7) 0.0 (181.6) (3,070.7) On 1st January 2015 (0.1) (2,102.9) (2,694.0) 0.0 (2.2) (1,178.1) (5,977.3) Impairment losses (204.0) (0.3) 2.2 0.0 0.0 (202.0) Impairment losses (0.0) (349.4) (297.8) 0.0 (0.4) (103.2) (750.8) Disposals and assets classified as held for sale 0.0 0.0 0.0 0.0 0.0 0.0 Take-over of impairment losses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Changes in scope 0.0 0.0 0.0 0.0 0.0 0.0 Disposals and assets classified 0.0 41.8 38.1 0.0 0.0 0.0 79.9 Other movements 0.0 0.0 0.0 0.0 0.0 0.0 Disposals and assets classified On 31 December 2015 (2,999.5) (0.5) (103.5) 0.0 (181.6) (3,285.3) as held for sale 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Conversion rate adjustments (0.0) (5.8) (18.4) 0.0 0.0 (9.5) (33.7) Change in scope 0.0 0.0 0.0 0.0 0.0 0.0 0.0 On 1st January 2016 (2,999.5) (0.5) (103.5) 0.0 (181.6) (3,285.3) Impairment losses (180.2) (0.2) (3.4) 0.0 0.0 (183.8) Other movements 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Take-over of impairment losses 0.0 0.0 0.0 0.0 0.0 0.0 On 31 December 2015 (0.1) (2,416.3) (2,972.1) 0.0 (2.6) (1,290.8) (6,682.0) Disposals and assets classified as held for sale 0.0 0.0 0.0 0.0 0.0 0.0 Other movements 0.0 0.0 0.0 0.0 0.0 0.0 On 31 December 2015 (0.1) (2,416.3) (2,972.1) 0.0 (2.6) (1,290.8) (6,682.0) On 31 December 2016 (3,183.7) (0.7) (106.9) 0.0 (181.6) (3,473.0) Depreciation (0.0) (389.9) (278.4) 0.0 (0.4) (85.9) (754.5) Impairment losses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net worth Take-over of impairment losses 0.0 25.6 27.6 0.0 0.0 0.0 53.2 On 31 December 2015 1,071.5 0.6 65.1 0.0 330.2 1,467.3 Disposals and assets classified As 31 December 2016 1,569.8 0.6 90.3 0.0 299.4 1,960.1 as held for sale 0.0 0.0 0.0 0.0 0.0 3.2 3.2 The depreciations for the period in question are recorded in the form of results in the “depreciation and provisions” chart. Conversion rate adjustments (0.0) (3.2) (6.3) 0.0 0.0 (2.8) (12.2) The Intangible Assets consists of essentially the mining research and exploration expenses. Change in scope 0.0 (0.1) (1.7) 0.0 0.0 (6.9) (8.7) Other movements 0.0 0.0 0.0 0.0 0.0 0.0 0.0 As 31 December 2016 (0.2) (2,783.8) (3,230.8) 0.0 (3.0) (1,383.2) (7,401.0) Net worth On 31 December 2015 49.5 1,861.1 1,730.6 624.5 26.3 211.8 4,503.8 As 31 December 2016 53.5 1,958.3 1,661.5 493.0 25.9 215.8 4,408.0 Finance Leases Fixed assets under finance leases are mainly comprised of land, constructions and technical facilities, amounting to 460.5 million MAD on 31 December 2016. Investment Property The Group did not revalue the fair value of investment properties at the end of December 2016, since virtually all of these properties are carried forward at market value in the context of leaseback transactions during the periods 2009 and 2016.
108 109 DiversitéNotes on consolidated accounts Managem Annual Report 2016
13.1. Other Financial Assets 13.2.2. Deriatives Classified By Type and Currency The Group’s other financial assets break down as follows: In millions of MAD Euros USD 31 dec 2016 31 dec 2015 In millions of MAD December 2016 December 2015 Material instruments -9.8 27.9 18.0 Non-current portion Commodities -9.8 27.9 18.0 - Derivative financial instruments 41.6 15.5 Other material instruments - Total financial assets at fair value by profit 0.0 0.0 Means of exchange -254.3 -254.3 - Loans and receivables 4.2 3.7 Forward exchange -254.3 -254.3 - Financial assets held -to-maturity 0.0 0.0 Foreign exchange swaps - Financial asset savailable-for-sale 258.3 260.5 Currency options Other Total 304.2 279.8 Current share Other derivative instruments Interest rate swaps - Derivative financial instruments 3.7 7.3 Interest rate options - Total financial assets at fair value by profit 0.0 0.0 Equity derivatives - Assets available for sale 0.0 0.0 Other 0.0 0.0 - Financial assets held -to-maturity TOTAL -9.8 -226.4 -236.3 - Loans and receivables 0.0 0.0 Total 3.7 7.3 13.3. Available-For-Sale Financial Assets or Available-For-Sale Securities Other financial assets 307.9 287.2 Available-for-sale assets include non-consolidated investments, other long-term investments and investment securities and securities not reclassified to cash equivalents. 13.2. Derivative Financial Instruments All of these items are measured at fair value on the Balance Sheet date. Available-for-sale financial assets break down as follows on 31 December 2016 and 31 December 2015: 13.2.1. Financial Assets Derivative financial instruments with a positive fair value are recognised as assets and are broken down as follows: In millions of MAD Fair value % interest Equity Result Closing Date In millions of MAD 31 december 2016 31 december 2015 On 31 December 2016: 258.3 31/12/2016 JV JV Entity 1: Manacongo 2.9 Entity: Other (BT) 243.9 Financial assets at fair value by profit 5.9 7.3 On 31 December 2015: 260.6 31/12/2015 Total 5.9 7.3
13.4. Loans and Receivables Derivative instruments with a negative fair value are recorded as liabilities and break down as follows: Loans and receivables on 31 December 2016 are essentially composed of deposits and guarantees. In millions of MAD National 31 december 2016 31 december 2015 JV JV NOTE 14 Material instruments -281.6 -246.3 INVENTORY AND WORK IN PROGESS Commodities Inventory and work in progress break down as follows for the periods ended 31 December 2016 and 31 December 2015: Other material instruments -281.6 -246.3 In millions of MAD December 2016 December 2015 Means of exchange Merchandise inventory 6.3 6.3 Forward exchange Stocks of consumable materials and supplies 357.7 370.4 Other currency instruments Under production 10.7 1.5 Other derivative instruments Finished intermediate product inventories 237.2 262.6 Tax derivatives Gross value of total inventories 611.9 640.8 Other derivatives Amount of impairment at beginning of period (18.8) (16.6) Total -281.6 -246.3 Impairment loss recognised over the period (17.1) (18.8) Reversal of impairment losses on disposals and withdrawals 16.3 6.8 Reversal of impairment loss becomes irrelevant 2.5 9.8 Other movements (0.0) 0.0 Amount of impairment at end of period (17.1) (18.8) Total Stocks, net 594.8 622.0 In the year 2016: > The amount of provisions is down 17.1 MAD million; > The amount of recoveries amounts to 18.8 MAD million
110 111 DiversitéNotes on consolidated accounts Managem Annual Report 2016
NOTE 15 17.2. Group’s Share of Changes in Shareholder’s Equity TRADE AND OTHER RECEIVABLES In millions of MAD 31 december 2016 31 december 2015 The gross value and the realisable value of trade receivables as of 31 December 2016 and 31 December 2015 are detailed in the table below: Consolidated shareholder’s equity Group’s share beginning of year 3,433.0 3,450.3 In millions of MAD December 2016 December 2015 Dividends paid -183.2 -229.0 Trade accounts receivable 424.0 610.1 Currency conversion rate 28.0 109.9 Depreciation of trade accounts receivable (1.7) (1.7) Net change in JV of financial instruments -9.0 -140.3 Total trade receivables 422.3 608.4 Other variances -14.0 -7.8 Other receivables 28.9 50.2 Increase in capital 0.0 4.8 Prepayment account - Asset 70.4 59.4 Net income (Group share) for the period 288.5 204.9 Associated accounts receivable 253.2 354.8 Income taxes related to other elements of total income 5.0 40.2 Receivables on disposals of assets 0.0 0.0 Consolidated shareholder’s equity Group share 3,548.0 3,433.0 Impairment of other receivables 0.0 0.0 Depreciation of associated accounts receivable 0.0 0.0 17.3. Changes in Minority Interests Impairment of accounts receivable - av & acptes 0.0 0.0 In millions of MAD 31 december 2016 31 december 2015 Depreciation of staff receivables 0.0 0.0 Minority interest at beginning of year 434.1 447.2 Depreciation of receivables on disposals of assets 0.0 0.0 Dividends paid -75.0 -64.9 Accrued interest on receivables on disposal of assets 0.0 0.0 Net change in JV of financial instruments 3.0 -7.4 State - debtor 1,333.9 1,167.7 Conversion losses and profits 2.0 6.0 Suppliers receivable - advance payments 17.3 16.0 Other variances 0.0 -0.7 Staff - debtor 17.6 15.1 Increase in capital 0.0 0.0 Total other receivables 1,721.3 1,663.1 Income for the year 109.0 52.6 Decrease in trade receivables of 186.1 MAD. Income taxes related to other elements of total income -1.0 1.3 Increase in other receivables from 58.2 MAD mainly explained by: Minority interests 472.0 434.1 - Decrease in the CCA explained by the consolidation of subsidiaries Managem Gabon and Lamilu - Increase in VAT credits of 166 MAD NOTE 18 PROVISIONS NOTE 16 Current and non-current provisions can be broken down as follows: CASH AND CASH EQUIVALENTS -In millions of MAD December 2016 December 2015 Cash and cash equivalents consist of cash, bank balances and short-term investments in money market instruments. These investments, with a maturity of less than 12 months, are easily convertible into a known amount of cash and are subject to a negligible risk of change in value. Environmental provision 1.1 0.8 In millions of MAD December 2016 December 2015 Restructuring - - Disputes - - Securities and investment securities 0.0 0.0 Assurances - - Bank 496.0 344.6 Other Risks 53.4 53.8 Other cash accounts 6.5 39.7 Total 54.4 54.6 Total 502.5 384.3 In millions of MAD December Currency Changes Charge Reversal Reversal Rerouting Other Total NOTE 17 2015 conversion in scope of for the of used of unused movements 2016 EQUITY rate consolidation year provisions provisions 17.1 Capital Management Policy Environmental provision 0.8 0.0 0.0 0.3 0.0 0.0 0.0 0.0 1.1 As part of managing its capital, the Group’s objective is to maintain its operating continuity in order to provide shareholder returns, to Restructuring 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 provide benefits to other partners and to maintain an optimal capital structure that can reduce the cost of capital. To maintain or adjust the capital structure, the Group can either: Disputes 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Assurances 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 To maintain or adjust the capital structure, the Group can either: Other Risks 53.8 0.0 0.1 42.9 (38.1) (5.0) (0.4) 0.0 53.4 > Adjust the amount of dividends paid to shareholders; Total 54.6 0.0 0.1 43.1 (38.1) (5.0) - (0.4) 0.0 54.4 > Repay capital to shareholders; Of which: > Issue new shares; or - Non-current part 54.6 0.0 0.1 43.1 (38.1) (5.0) (0.4) 0.0 54.4 > Sell assets to reduce the amount of debt. - Current part 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
The Group uses various indicators, whose financial leverage (net debt/equity), provides investors with a view of the Group’s debt compared Provisions made on 31 December 2016 relate mainly to the risks related to occupational diseases not covered by the insurance company during the period 2003 to 2006, ie to total equity. Such capital includes, in particular, the reserve for changes in the value of cash flow hedges and the change in the value of 42.9 MAD million. available-for-sale financial assets (AFS).
112 113 DiversitéNotes on consolidated accounts Managem Annual Report 2016
NOTE 19 On 31 December 2016 EMPLOYEE BENEFITS Other long-term employee benefits The assumptions used on 1 January 2016 and 31 December 2016 are as follows: In millions of MAD Retirement Post-employment and related allowances benefits other than pensions On 1 January 2016 31 december 2016 31 december 2016 Economic assumptions: Market value of assets allocated to plans at the opening 43.2 80.7 - Date of assessment: 01/01/2016 Cost of services 7.4 12.5 - Inflation rate: 1.50% Interest charges 1.9 3.5 - Medical inflation rate: 4% Employee contributions 0.0 0.0 - Discount Rate Changes in plans (Past service cost) 0.0 0.0 - Healthcare costs: 6.20% ou 6.95% depending on the entities Changes in scope / 0.0 0.0 - End-of-career allowance: 6.20% Business Combination (only if meaningful) 0.0 0.0 - Average rate of social security contributions: 15% Deduction 0.0 0.0 - Rate of increase in compensation (gross of inflation): 3.50% Liquidation of plans 0.0 0.0 - Rate of revaluation of fixed allowances: 1.50% Completed Payments -3.2 -2.1 Actuarial gains/losses 15.6 -6.3 Demographic assumptions: Currency spreads 0.0 0.0 - Mortality TVF 88-90 Other: IFRS 5 Reclassification (groups to be divested) 0.0 0.0 - Invalidité Not taken into account Amount of commitments at the end of the financial year 64.8 88.3 - Mobility rate by age groups Age groups Executives Non-Executive In millions of MAD Retirement Avantages sociaux accordés and related allowances benefits other than pensions 29 years-old and younger 20% 10% 31 december 2016 31 december 2016 30 to 34 years-old 10% 5% Market value of assets allocated to plans at the opening 0.0 0.0 35 to 39 years-old 7.50% 3.75% Expected return on assets 0.0 0.0 40 to 44 years-old 5% 2.50% Employer contributions 0.0 0.0 45-49 years-old 2% 1% Employee contributions -3.2 -2.1 50 years-old and over 0% 0% Changes in scope/ 0.0 0.0 - Occupancy rate until retirement Same as on the valuation date Business Combination (only if meaningful) 0.0 0.0 - Age of retirement Non-mining staff: 60 years old Deduction 0.0 0.0 Mining staff: 55 years old Liquidation of plans 0.0 0.0 On 31 December 2014 Completed Payments 3.2 2.1 - Date of assessment: 31/12/2014 Actuarial gains/losses 0.0 0.0 - Discount Rate Conversion rate adjustments 0.0 0.0 Healthcare costs: 4% Other 0.0 0.0 Termination benefit: 6.30% Market value of assets allocated to plans at closing 0.0 0.0
The rest of the economic and demographic assumptions remained unchanged from the 1 January 2006. In millions of MAD Retirement Post-employment In accordance with revised IAS 19, the Group immediately recognises all actuarial gains and losses in other parts of the comprehensive income. and related allowances benefits other than pensions The Group considers that the actuarial assumptions adopted are appropriate and justified, but the changes made in the future may have a 31 december 2016 31 december 2016 significant impact on the amount of commitments and the Group’s income. The sensitivity test to the discount rate is carried out on the Cost of services 7.4 12.5 annual closing date. Interest charges 1.9 3.5 Expected return on assets 0.0 0.0 Effect of limiting surplus 0.0 0.0 Amortisation of prior services costs 0.0 0.0 Amortisation of actuarial gains and losses 0.0 0.0 Deduction 0.0 0.0 Liquidation of plans 0.0 0.0 Other 0.0 0.0 Charge for the period 9.3 16.0
114 115 DiversitéNotes on consolidated accounts Managem Annual Report 2016
NOTE 21 In millions of MAD Retirement Post-employment ACCOUNTS PAYABLE AND OTHER CREDITORS and related allowances benefits other than pensions In millions of MAD December 2016 December 2015 31 december 2016 31 december 2016 Trade payables 902.0 977. 0 Net commitment 64.8 88.3 Other payables (excluding financial instruments) 1,132. 8 1,084. 6 Limitation on retirement assets 0.0 0.0 Total trade payables and other payables 2,034.8 2,061. 6 Unrecognised past service costs 0.0 0.0 Unrecognised actuarial gains/losses 0.0 0.0 By maturity in millions of MAD - 1 year (*) 1 to 5 years +5 years End Net Assets/Provisions on the balance sheet 64.8 88.3 Trade payables 901.59 - - 902.00 Other payables 1,121.92 2.60 - 1,132.81 In millions of MAD 31 December 2016 On 31 December 2015 2,023.51 2.60 - 2,034.82 Amount (Provisions) at opening -123.9 As of 31 December 2016 2,045.91 - - 2,061.68 Charges for the period/Expenses for the period (including reversals of provisions) -25.3
Recoveries for use/services paid 5.3 NOTE 22 Change in scope 0.0 FINANCIAL INSTRUMENTS Business combination (only if meaningful) 0.0 22.1. Fair Value of Financial Assets Currency conversion rate 0.0 Due to their short-term nature, the carrying value of operating receivables, cash and cash equivalents is an estimate of their fair value. Other: IFRS 5 Reclassification (groups to be divested) 0.0 The fair value of other financial instruments is determined by reference to the market price resulting from trading on a national stock OIC (first application IAS 19 R) -9.2 exchange or an over-the-counter market. Amount (Provisions) at closing -153.1 When no quoted market price is available, fair value is estimated using other valuation methods, such as the present value of cash flows. In any event, the estimation of market values is based on a certain interpretation of the market information required for valuation. The Sensitivity of the Commitment to the Discount Rate use of different estimates, methods and assumptions can have a significant effect on estimated amounts of fair value. Methods used are:
31 dec 2016 Investments in non-consolidated companies: Sensitivity of engagement -11.3% > For equities of listed companies, the fair value is determined on the basis of the market price published on the closing date. Sensitivity of the cost of services -16% > For shares in unlisted companies, where fair value cannot be reliably determined, the securities are valued at the IFRS share of net assets, Sensitivity of interest expense (discount rate) -11.3% or, if there is no such fair value, the share of the net position established according to Moroccan regulations. In the absence of information on the net IFRS or Maroc Gaap, securities are valued at their cost. Sensitivity of the Commitment to Medical Information > Derivative instruments: the market value of interest rate, foreign exchange and commodities transactions is estimated using valuations from banking counterparts or financial models commonly used in financial markets on the basis of market data on the date of the close of 31 dec 2016 the year. Sensitivity of engagement 14.5% Sensitivity of the cost of services 21.6% The following table details the carrying amount and fair value of the financial assets recognised in the Balance Sheet for which Sensitivity of interest expense (discount rate) -12.7% these two values are identical:
NOTE 20 In millions of MAD 31 December 2016 31 December 2015 FINANCIAL LIABILITIES Carrying amount <=> Fair value The Group’s current and non-current borrowings break down as follows: Cash and cash equivalents 502.5 384.3 In millions of MAD December 2016 December 2015 Trade and other receivables 2,143.6 2,271.5 Other financial assets 307.9 287.2 Bond loans 950.0 950.0 Loans from financial institutions 867.2 1,104.4 Total 2,954.0 2,943.0 Finance leases 152.5 217.0 22.2. Fair Value of Financial Liabilities Other financial liabilities - - Due to their short-term nature, the carrying value of current bank borrowings, trade and other payables and short-term borrowings is an Derivative financial instruments 18.7 - estimate of their fair value. Non-current financial debts 1,988.4 2,271.4 The fair value of other financial instruments is determined by reference to the market price resulting from trading on a national stock Bond loans - - exchange or an over-the-counter market. Loans from financial institutions 1,975.6 1,494.9 When no quoted market price is available, fair value is estimated using other valuation methods, such as the present value of cash flows. Finance leases - - In any event, the estimation of market values is based on a certain interpretation of the market information required for valuation. The Derivative financial instruments 262.9 246.3 use of different estimates, methods and assumptions can have a significant effect on estimated amounts of fair value. Methods used are: Non-current financial debts 2,238.5 1,741.1 > Financing liabilities: The fair value of financing liabilities (bonds, debts from credit institutions, etc.) corresponds to their amortised Total 4,226.9 4,012.5 cost (nominal value minus the cost of issuing the loan if it represents at least 1 per cent of this value). > Derivative instruments: the market value of interest and foreign exchange rate transactions is estimated using valuations from banking Non-current financial liabilities increased by 283.0 Million MAD, which can be explained by the repayment of debts. counterparts or financial models commonly used in financial markets on the basis of market data on the date of the close of the year. The following table details the carrying value and fair value of the financial assets recognised in the Balance Sheet for which these two values are identical:
116 117 DiversitéNotes on consolidated accounts Managem Annual Report 2016
The chart shows the book value and the net value of the financial liabilities on the balance sheet. Both those values are equal: 24.4.2.2. Foreign Exchange Risks As of 31 December 2016, the recording on the balance sheet of derivatives related to currency hedging resulted in a loss of -254.3 million In millions of MAD 31 December 2016 31 December 2015 MAD of which -258.0 million MAD were recorded as equity and +3.7 million MAD recorded as profit or loss. Carrying amount <=> Fair value Current bank financing 1,975.6 1,494.9 In millions of MAD 31 December 2016 31 December 2015 Suppliers and other creditors 2,034.8 2,061.6 Mtm Total Mtm Total Bond loans 950.0 950.0 Cash flow hedge -258.0 -246.3 Finance leases 152.5 217.0 Derivatives not qualified as hedges 3.7 7.3 Other financial liabilities 262.9 246.3 Total -254.3 -238.9 Put options granted to minority shareholders Financial debts 867.2 1,104.4 24.4.3. Sensitivity Analysis Total 6,243.0 6,074.2 24.4.3.1. Raw Material Risk 22.3. Risk Management The level of fair value of derivatives on the Group’s commodities as of 31 December 2016 is 18.0 million MAD. The Group uses derivative financial instruments to manage its exposure to fluctuations in exchange rates and commodity prices. In millions of MAD Mtm on Mtm -10% Total Change Effect on Impact on The foreign exchange and commodity risks are subject to decentralised management at the level of the subsidiaries which manage, in 31/12/2016 (a) variation (b) in Mtm (b-a) the result equity consultation with the holding company, their market risks. +10% underlying 18.0 -56.1 -74.1 -2.3 -53.8 22.4. Covered Price Risks Silver 40.3 11.3 -29.0 2.7 8.6 Given the nature of its activities, the Managem Group is exposed to fluctuations in the costs of raw materials, which it markets at the Gold 1.3 0.2 -1.1 0.1 0.1 exchange rates with which its sales are denominated. Zinc -7.4 -17.6 -10.2 -1.8 -15.8 The hedging policy aims to protect the Managem Group from price risks likely to have a significant impact on its profitability in the short Lead 1.1 -3.2 -4.3 -0.9 -2.3 and medium term. Copper -17.2 -46.8 -29.6 -2.4 -44.4 In order to manage these market risks, the use of derivative financial instruments (commodities and foreign exchange) is allowed under the exclusive hedging objective. The scenario corresponds to fluctuations in the price of metals by 10 per cent, maximising the Group’s risk for raw materials, i.e. a 10 The derivatives used by the Group are classified as cash flow hedges or Trading, in accordance with IAS 39. per cent increase in the price of silver, gold, zinc, lead and copper versus spot closing prices would result in a loss of 56.1 million MAD recorded as equity for an amount of 53.8 million MAD and 2.3 million MAD in profit or loss, representing a change of -74.1 million MAD. 24.4.1.1. Metal Prices Risks The scenario corresponds to changes in the prices of metals of -10 per cent, minimising the Group’s risk in raw materials, i.e. a decrease Managem hedges risk from changes in the selling price of metals, which are expressed in US dollars. of 10 per cent of the price of silver, gold, zinc, lead and copper compared to spot closing prices would lead to a loss of 90.2 million MAD The hedging relationship corresponds to the hedging of future cash flows arising from future sales of raw materials (zinc, lead, copper, sil- recorded as equity as 85.8 million MAD and 4.4 million MAD in the income statement, a change of +72.2 million MAD. ver and gold) determined on the basis of a production schedule. Derivative instruments are intended to hedge a projected budget or future cash flows. It is a cash-flow hedge relationship. In millions of MAD Mtm on Mtm -10% Total Change Effect on Impact on 31/12/2016 (a) variation (b) in Mtm (b-a) the result equity 24.4.1.2. Currency Risks - 10% sous-jacent 18.0 90.2 72.2 4.4 85.8 The Group’s foreign exchange risk policy aims to hedge highly probable foreign currency exposures and/or firm commitments to imports Silver 40.3 68.5 28.2 1.2 67.3 and exports. Gold 1.3 2.6 1.2 0.0 2.6 Future foreign exchange exposures are determined in the context of a regularly updated budgetary procedure. Zinc -7.4 2.6 10.0 1.3 1.3 The current hedging horizon does not exceed the year on each Balance Sheet date. Exchange hedging instruments are intended to hedge a projected budget or future cash flows. It is a cash-flow hedge relationship. Lead 1.1 5.4 4.3 0.7 4.7 Copper -17.2 11.3 28.5 1.3 10.0 24.4.2. Recognition on 31 December 2016 24.4.3.2. Foreign Exchange Risk 24.4.2.1. Raw Materials Risk The fair value of the Group’s foreign exchange derivatives on 31 December 2016 is approximately -254.3 million MAD. As of 31 December 2016, the recognition in the balance sheet at fair value of derivatives related to the hedging of raw materials amounts to a gain of 18.0 million MAD recorded for 21.0 million MAD in cash flow hedge and -2.9 million MAD in trading. In millions of MAD Mtm on Mtm -10% Total Change Effect on Impact on 31/12/2016 (a) variation (b) in Mtm (b-a) the result equity In millions of MAD 31 December 2016 31 December 2015 Mtm Total Mtm Total +10% underlying -254.3 -428.8 -174.5 7.4 -436.3 Managem -254.3 -428.8 -174.5 7.4 -436.3 Cash flow hedges (a) 21.0 15.5 Silver 38.2 9.7 The scenario corresponds to exchange rate fluctuations +10 per cent maximising the Managem Group’s foreign exchange risk, i.e. a 10 per Gold 1.2 1.5 cent increase in the US dollar against the dirham, which would result in a foreign exchange -254.3 million MAD of which +7.4 million MAD as profit/loss, and -436.3 million MAD in equity, representing a change of -174.5 million MAD. Zinc -4.6 - Lead 0.8 -0.2 In millions of MAD Mtm on Mtm -10% Total Change Effect on Impact on Copper -14.8 4.5 31/12/2016 (a) variation (b) in Mtm (b-a) the result equity Derivatives classified as trading (b) -2.9 - -10% underlying -254.3 -79.8 174.5 -0.0 -79.7 Total (a) + (b) 18.0 15.5 Managem -254.3 -79.8 174.5 -0.0 -79.7
118 119 DiversitéNotes on consolidated accounts Managem Annual Report 2016
in millions of MAD December 2016 December 2015 The scenario corresponds to exchange rate fluctuations -10 per cent minimising the foreign exchange risk of the Managem Group, i.e. a Turnover 10 per cent drop in the value of the USD against the MAD, which would result in a foreign exchange loss of 79.8 million MAD, inclu- Other income ding a loss of 0.0 million MAD in profit/loss and a loss of 79.7 million MAD in equity, representing a change of +174.5 million MAD. Purchases and external expenses 15.2 14.5 As of 31 December 2016, undiscounted contractual flows (principal and interest) on the outstanding amount of financial liabilities by Other (FF) 32.6 32.3 maturity date are as follows: 47.8 47.0 in millions of MAD December 2016 December 2015 Other related parties include parent company SNI Transactions relate to interest on current account advances and management fees. Bond loans 950.0 950.0 Loans from financial institutions 867.2 1,104.4 NOTE 26 Finance leases 152.5 217.0 CASH FLOW TABLE Other financial liabilities 0.0 0.0 26.1. Details of the impact of the change in WCR on the cash position for the year Derivative financial instruments 18.7 0.0 in millions of MAD December 2016 December 2015 Non-current financial debts 1,988.4 2,271.4 Changes in inventories 29 .3 29 .9 Bond loans 0.0 0.0 Change in assets 51.3 -175.3 Loans from financial institutions 1,975.6 1,494.9 Change in liabilities -185.4 103.5 Finance leases 0.0 0.0 Changes in WCR -104.8 -41.9 Derivative financial instruments 262.9 246.3 Non-current financial debts 2,238.5 1,741.1 26.2. Reconciliation of cash on balance sheet and TFT Total 4,226.9 4,012.5 in millions of MAD December 2016 December 2015 Net cash and cash equivalents - balance sheet -748.4 -451.9 NOTE 23 OTHER UNDERTAKINGS Cash and cash equivalents - TFT -748.4 -451.9 Commitments Given NOTE 27 in millions of MAD December 2016 December 2015 EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR Guarantees, sureties and securities 71.2 39.4 Company name December 2016 December 2015 Consolidation Debt secured by pledged or mortgaged assets % interest % interest Method Other commitments given* - - Managem Morocco 100.00% 100.00% Consolidating Total 71.2 39.4 Compagnie Minière des Guemmassas Morocco 76.91% 76.91% GI(*) Commitments Received Compagnie de Tifnout Tighanimine Morocco 99.77% 99.77% GI in millions of MAD December 2016 December 2015 Akka Gold Mining Morocco 88.46% 88.46% GI Guarantees, sureties and securities Manatrade Switzerland 100.00% 100.00% GI 20.1 20.1 Debt secured by pledged or mortgaged assets Manadist Switzerland 100.00% 100.00% GI * Other commitments given - - Managem International Switzerland 100.00% 100.00% GI Total 20.1 20.1 Société Métallurgique d’Imiter Morocco 80.26% 80.26% GI Société Anonyme d’entreprise Minière Morocco 99.77% 99.77% GI NOTE 24 POSSIBLE LIABILITIES Somifer Morocco 99.77% 99.77% GI None Reminex Morocco 100.00% 100.00% GI Techsub Morocco 99.87% 99.87% GI NOTE 25 Cie minière SAGHRO Morocco 100.00% 100.00% GI RELATED PARTIES REG Gabon 75.00% 75.00% GI 25.1. Transactions with related parties Transactions with other related parties break down as follows: Lamikal DRC 81.30% 85.50% GI in millions of MAD December 2016 December 2015 Cie minière de DADES Morocco 100.00% 100.00% GI Cie minière d’OUMJRANE Morocco 100.00% 100.00% GI Actif Trade receivables (net) - - MANUB Sudan 69.42% 69.42% GI Other current receivables MCM Sudan 89.00% 89.00% GI Other non-current assets MANAGOLD UAE 100.00% 100.00% GI Passive TRADIST UAE 100.00% 100.00% GI Trade payables 12.9 11.0 Managem Gabon Gabon 100.00% - GI Other current liabilities (CCA) 670.0 670.0 Lamilu DRC 75.00% - GI Other long-term debt (*)GI: Global integration 682.9 681.0
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