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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Evolution Mining Limited    EVN   AU000000EVN4

EVOLUTION MINING LIMITED

(EVN)
  Report
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Evolution Mining : EVN Tax Governance statement 2020

11/25/2020 | 04:59pm EST

2020 Tax Corporate Governance Statement

Introduction

Evolution Mining Limited (Evolution) is committed to building on existing relationships with our stakeholders based on trust, mutual respect and genuine partnership. Underpinning this is Evolution's objective that it will comply with all applicable laws, internal policies and other commitments to our stakeholders, including meeting all our tax responsibilities.

Evolution strives to ensure that every interaction with our stakeholders is positive and aligned with our values of Safety, Excellence, Accountability and Respect. We communicate regularly with our stakeholders with integrity in an open, timely and transparent way.

Evolution became tax payable during the 2017 income year following the utilisation of a significant portion of income tax losses. Tax losses commenced being utilised from the 2015 income years, demonstrating that Evolution commenced realising the benefits of its earlier capital investments from when the company was formed in 2011.

To ensure transparency with our stakeholders and the public, Evolution publishes this Tax Governance Statement on a voluntary basis. This report also includes information recommended to be disclosed under the Australian Voluntary Tax Transparency Code (TTC).

Evolution corporate structure

Evolution was formed in late 2011 through the merger of Catalpa Resources Ltd and Conquest Mining Ltd and the concurrent acquisition of Newcrest Mining Limited's interest in the Cracow and Mt Rawdon mines.

Evolution now owns and operates five gold operations. Two of the Company's operations are located in Queensland, one in New South Wales, one in Western Australia and one in Canada that was recently acquired late in the 2020 year. In addition, Evolution has an economic interest in the Ernest Henry mine, in Queensland.

Evolution also conducts exploration on its existing operations and other potentially prospective permits and tenements.

Financial and tax reporting

Evolution prepares a single consolidated set of financial statements that discloses the accounting profit before tax and tax expense.

Evolution and its wholly owned subsidiaries in Australia have formed a tax consolidated group for Australian income tax purposes. This means that a single consolidated income tax return is lodged by Evolution with the Australian Taxation Office for the entire Australian group.

Evolution's recently acquired Canadian operation is fully subject to Canadian taxes. Evolution will lodge Canadian tax returns for its Canadian operation. This Statement does not include commentary on Canadian taxes.

As all of Evolution's subsidiaries are wholly owned companies, the composition of Evolution's reporting group for accounting and tax purposes is the same.

Voluntary Tax Transparency Code

The Australian Government has endorsed the TTC that requires large business taxpayers to disclose certain tax information. The following tax information is voluntarily disclosed under the requirements of the TTC.

Australian tax-related contribution summary

A summary of Evolution's tax related contribution over the last 3 years is provided below. All of Evolution's tax related contributions are paid to State and Federal tax authorities in Australia.

A$ millions

Corporate

Government

State

Stamp

Total

income

royalties

payroll

duty(2)

tax

taxes &

other(1)

2020

92.5(3)

75.4

15.6

Nil

183.5

2019

43.6

63.0

13.6

0.7

120.9

2018

65.0

65.9

14.5

Nil

145.4

  1. Comprise of employer payroll taxes paid to State Governments and Fringe Benefits Tax (FBT).
  2. Stamp duty paid in relation to acquisitions
  3. Higher 2020 corporate income tax due to higher revenue from higher gold prices.

Note the table above excludes taxes withheld from employees or shareholders, as Evolution does not consider withholding taxes to be tax-related contributions made by the company.

The total taxes paid by Evolution since its formation in the 2012 income year to 2020 (inclusive) are as follows:

A$ millions

Corporate

Govt

Carbon

State

Stamp

Total

income

royalties

pricing

payroll

duty

tax

taxes &

other

237.3

443.0

15.6

95.9

72.8

864.6

Prior year tax-related contributions

Evolution's prior year tax-related contributions since the company's formation are as follows:

A$ millions

Year

Corp

Govt

Carbon

State

Stamp

Total

Tax

royalties

pricing

payroll

duty

(3)

taxes

&

other(4)

2017

36.2

62.5

-

16.5

3.3

118.5

2016

-

55.7

-

14.6

47.4

117.7

2015

-

35.1

-

6.8

-

41.9

2014

-

32.5

8.2

5.5

-

46.2

2013

-

30.4

7.4

5.7

21.4

64.9

2012

-

22.5

-

3.1

-

25.6

Total

36.2

238.7

15.6

52.2

72.1

414.8

  1. Comprise of net carbon liabilities plus fuel tax credits denied due to deemed carbon cost.
  2. Comprise of employer payroll taxes paid to State Governments and Fringe Benefits Tax.

Reconciliation of accounting profit to income tax expense

A reconciliation of accounting profit to income tax expense is provided below:

30 June 2020

(A$ millions)

Sales revenue

1,941.8

Cost of sales and other expenses

Mine operating costs

(777.6)

Depreciation and amortisation

(404.0)

Royalty and other selling costs

(75.4)

Fair value amortisation and expenses

(17.9)

Other expenses

(258.3)

Profit/(loss) before income tax expense

408.6

Tax at the Australian tax rate of 30%

122.6

Non-temporary differences (including

(15.6)

accounting gain on sale of subsidiary)

Income tax expense

107.0

Reconciled to income tax payable

Temporary differences

(28.0)

Adjustment for Canadian deferred taxes

13.3

Adjustment to current tax

0.8

Net capital gain on sale of subsidiary

1.9

Less: tax losses

(2.5)

Income tax payable

92.5

For further details, please refer to Evolution's 2020 Annual and Sustainability Report at the following link:

2020 Annual and Sustainability Report - Note 3 Income tax

expense

Reconciliation to income tax paid

The TTC prescribes that the effective tax rate of a company is calculated as income tax expense (company tax only) divided by accounting profit. Evolution's effective corporate tax rate is 26.2% for 2020. This is a less than the 2019-year due mine expansions and exploration carried out during the 2020 year that incurred higher deductible expenses. Evolution's effective tax rate over the last 3 years has been in line with the Australian corporate tax rate of 30%.

Evolution incurred significant tax losses during its early years. This was mainly due to the fall in gold prices from 2011 through to 2013 and the substantial investments in operations and exploration made by Evolution since formation. A significant portion of tax losses were utilised during the 2015 to 2019 years. The Australian taxation law provides for higher upfront deduction for mining and exploration expenditure, which in the main contributor to the tax losses in the early years.

The historical gold prices (in USD) over the last 5 years is illustrated in the chart below:

Source: goldprice.org

A summary of the tax losses incurred and utilised (including tax offsets) by Evolution since its formation is provided below.

A $millions (at 30% tax rate)

Year

Tax Losses

Tax Losses

Incurred

Utilised

2011

26.5

2012

12.4

2013

29.2

2014

41.7

2015

10.4

(3.8)

2016

1.0

(46.8)

2017

Nil

(27.3)

2018

Nil

(19.7)

2019

Nil

(8.4)

2020

Nil

(2.5)

Evolution has $11.6m of tax losses (at 30% tax rate) carried forward into the 2021 year. As these losses were acquired the utilisation of them will be on a proportional basis over a number of years.

In order for Evolution to carry forward prior year tax losses, it must satisfy strict legislative requirements. Evolution has self-assessed its tax losses against these rules, and as a result Evolution has cancelled approximately $54.0 million of tax losses over several years that it has self-assessed as no longer being available.

Material temporary and non-temporary differences

A summary of material non-temporary and temporary differences for the year ended 30 June 2020 is provided below:

(A $millions)

Non-temporary

Share-based

3.2

Not tax

differences

payments

deductible

Temporary

Difference in

(29.3)

Tax deductible

differences

accounting and

tax depreciation

The amounts in the table above are subject to the preparation and lodgment of the 2020 income tax return.

Tax Corporate Governance

Evolution is committed to complying with its obligation to pay the right amount of tax legally due federally or in any state or territory, in accordance with the laws set out by governments. To meet this commitment, Evolution has in place a Tax Risk Management Policy, Strategy and Procedures to manage tax risks.

The commercial needs of Evolution are paramount, and all tax outcomes will be undertaken in this context. All transactions must have a business purpose or commercial rationale.

Due consideration will be given to Evolution's reputation, brand, and corporate and social responsibility when considering tax engagements, as well as legal and fiduciary duties of directors and employees of Evolution. In line with these reputational considerations, Evolution pursues a tax strategy that is fair and transparent. This forms part of the overall decision-making and risk assessment process.

Tax Governance Framework

The Directors believe that Tax Corporate Governance is an important element in maintaining high standards of corporate responsibility and adhering to Evolutions set values of Safety, Excellence, Accountability and Respect. These principles are reflected in Evolution's Corporate Governance standards and policies: http://evolutionmining.com.au/corporate-governance/,which have been in place since the formation of the Company. These principles are regularly reviewed to ensure that they reflect current best practices. All staff at every one of Evolution's operations are expected to adhere to these values.

Evolution has a formal tax governance framework that is driven by its Audit Committee (which comprises of independent non- executive directors), managed by a proactive internal tax function and supported by diligent finance teams at each of its business units and function areas. External reviews of Evolution's tax position are carried out regularly by independent advisers to ensure that Evolution continues to act responsibly and meet its tax obligations.

Evolution does not engage in any aggressive tax planning. It does not host any offshore special purpose entities or marketing hubs. It has not engaged in any cross-border transactions. Upon completion of the Canadian asset acquisition in 2020, some cross- border transaction is expected, which will be entered into on an arm's length basis in compliance with applicable tax laws.

Evolution has invested comprehensively in information technology, an integrated accounting platform and tax compliance software to ensure integrity in its financial data and tax reporting.

Furthermore, the operations of Evolution are subject to an annual Internal Audit Review program carried out by an independent consultancy firm to ensure (amongst other things) that the procedures and practices at Evolution are appropriate and complied with, and reflect its high standards of corporate governance.

Tax and Revenue Office engagement

Evolution has proactively sought private binding rulings from the Australian Taxation Office on areas of the tax law that are not clear. Evolution has been, and continues to be, subject to risk reviews by the Australian Taxation Office and other State Revenue Offices in relation to all taxes and royalties, which it has complied with in a transparent and collaborative way.

Evolution is committed to complying with all relevant tax disclosure and approval requirements in the future. Required disclosure will be clearly presented to the tax authorities or other relevant bodies, as appropriate. Openness, honesty and transparency are paramount in all the Company's dealings with the tax authorities and other relevant bodies.

Overview of Evolution's approach to tax governance

Audit

Sets the overall tax risk / reward

Committee

philosophy and the ethos of how risk

is assessed;

Periodically monitors and provides

guidance for the improvement of the

Evolution Tax Risk Management

Policy and Strategy;

Independently assesses material

transactions and material tax matters

that are reported to the Audit

Committee and makes decisions in

relation to these items when required.

Senior

Provides high level input into the

Management

Evolution Tax Risk Management

Policy and Strategies design;

Makes decisions in relation to material

transactions and material tax matters

within its limit of authority.

Monitors how tax is being managed

and the performance of tax resources,

both internal and external.

Internal Tax

Involved in all areas of tax risk

Function

management including primarily:

o Preparation of annual tax returns;

o Review and seeking of tax advice

on transactions and tax matters;

o The allocation of sufficient and

appropriate resources to manage

tax risks; and

o Ensuring effective tax processes

and procedures are in place and

periodically reviewing the

effectiveness of those controls

and procedures.

Business

Responsible for providing accurate

Units &

and complete information to the

Function

Internal Tax Function and external tax

Areas

advisors in a timely manner;

Assist the Internal Tax Function in

mitigating tax risks when required.

Supported by a comprehensive information technology and integrated accounting platform and tax compliance software

External

Regular reviews by independent

support

advisers

Tax Office

Regular engagement with tax

engagement

authorities

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Evolution Mining Limited published this content on 26 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 November 2020 21:58:03 UTC


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P/E ratio 2021 17,0x
Yield 2021 2,97%
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EV / Sales 2021 3,94x
EV / Sales 2022 3,59x
Nbr of Employees -
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Chart EVOLUTION MINING LIMITED
Duration : Period :
Evolution Mining Limited Technical Analysis Chart | EVN | AU000000EVN4 | MarketScreener
Technical analysis trends EVOLUTION MINING LIMITED
Short TermMid-TermLong Term
TrendsBearishBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 15
Average target price 5,31 AUD
Last Close Price 4,61 AUD
Spread / Highest target 51,8%
Spread / Average Target 15,2%
Spread / Lowest Target -4,56%
EPS Revisions
Managers and Directors
NameTitle
Jacob Klein Executive Chairman
Robert Fulker Chief Operating Officer
Lawrie Conway CFO, Finance Director & Executive Director
Evan Elstein Secretary, Vice President-IT & Community Relations
James Edward Askew Non-Executive Director
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