| Mon 31 Mar 2008, 17:50 | | AFO - Aflease Gold - Audited summarised results for the year ended |
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AFO
AFO
AFO - Aflease Gold - Audited summarised results for the year ended
31 December 2007
AFLEASE GOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1984/006179/06)
Share Code: AFO & ISIN Code: ZAE000075867
("Aflease Gold" or "the company")
AUDITED SUMMARISED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
CONSOLIDATED BALANCE SHEET
as at 31 December 2007
31 Dec 31 Dec
2007 2006
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 279,058 166,971
Asset retirement fund 6,682 705
Restricted cash 1,596 -
Investment in subsidiary - -
Amounts due from related parties 268 72
287,604 167,748
Current assets
Inventories 289 289
Accounts receivables and prepayments 15,948 5,973
Cash and cash equivalents 634,315 65,479
650,552 71,741
Total assets 938,156 239,489
SHAREHOLDERS` EQUITY
Share capital and share premium 360,323 220,046
Contributed surplus 6,574 1,762
Accumulated deficit (126,676) (44,687)
240,221 177,121
LIABILITIES
Non-current liabilities
Financial liabilities designated at fair 622,040 -
value
Asset retirement obligation 7,445 2,572
Deferred taxation 31,411 31,411
660,896 33,983
Current liabilities
Trade and other payables 30,358 25,235
Taxation payable 2,005 -
Amounts owing to related parties 249 1,265
Provisions 4,426 1,885
37,038 28,385
Total equity and liabilities 938,156 239,489
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2007
31 Dec 31 Dec
2007 2006
12 months 12 months
R`000 R`000
Revenue - -
Cost of Sales - -
Gross profit - -
Sundry income 3 301
General and administrative expenditure (35,390) (13,165)
Share options expensed (4,812) (1,762)
Exploration and pre-feasibility (22,391) (9,979)
expenditure
Impairment of assets (3,055) -
Fair value adjustment on Financial (22,040) -
liability
Operating loss (87,686) (24,605)
Finance income 8,470 1,804
Finance costs (226) (88)
Finance income - net 8,244 1,716
Loss before income taxes (79,442) (22,889)
Income tax expense (2,547) (333)
Net loss (81,989) (23,222)
Loss per share (cents)
- Basic (16.31) (5.16)
- Diluted (11.68) (5.14)
- Headline (15.70) (5.16)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2007
Share Share Contribu Accumula Total
ted ted
Capital Premium Surplus Deficit
R`000 R`000 R`000 R`000 R`000
Balance at 31 December 1,881 14,389 - (21,465) (5,195)
2005
Share issues 34,157 173,533 - - 207,690
Share option scheme - - 1,762 - 1,762
Transaction cost - (3,914) - - (3,914)
Net loss for the period - - - (23,222) (23,222)
Balance at 31 December 36,038 184,008 1,762 (44,687) 177,121
2006
Share issues 28,638 111,804 - - 140,442
Share option scheme - - 4,812 - 4,812
Transaction cost - (165) - - (165)
Net loss for the period - - - (81,989) (81,989)
Balance at 31 December 64,676 295,647 6,574 (126,676 240,220
2007 )
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2007
31 Dec 31 Dec
2007 2006
R`000 R`000
Cash utilised by operating activities (37,623) 2,190
Cash utilised by operations (36,097) (18,660)
Utilised to increase / (decrease) working (9,228) 19,467
capital
Cash utilised by operating activities (45,325) 807
Finance income 8,470 1,804
Finance costs (226) (88)
Taxation paid (542) (333)
Cash expended on investment activities (111,972) (51,136)
Additions to property, plant and equipment (104,399) (51,087)
Increase in investments (7,574) (49)
Cash flow from financing activities 718,432 114,206
Proceeds from issue of shares 140,277 110,473
Business combination - 11,820
Increase in financial liabilities 579,367 -
(Decrease) / increase in amounts (due to) / (1,212) (8,087)
due from related parties
Movement in cash and cash equivalents 568,837 65,260
Cash and cash equivalents at 65,478 218
beginning of period
Cash and cash equivalents at end of period 634,315 65,479
1. Basis of Preparation
The consolidated financial statements of Aflease Gold Limited and its
subsidiaries have been prepared in accordance with International Financial
Reporting Standards ("IFRS") and comply with IAS34: Interim Financial
Reporting.
The annual financial statements are prepared on the historical cost
convention, as modified by the revaluation of financial liabilities
(including derivative instruments) at fair value through profit or loss.
Preparation of the annual financial statements is consistent with the
previous year. The annual financial statements incorporate the accounting
policies set out below, which conform to International Financial Reporting
Standards (IFRS).
The preparation of financial statements in conformity with IFRS requires
the use of certain critical accounting estimates. It also requires
management to exercise its judgment in the process of applying the Group`s
accounting policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in the relevant notes to
the financial statements.
The accounting policies set out below have been applied consistently to all
years presented in these consolidated financial statements.
Standards, amendments and interpretations to existing standards that are
not yet effective and have not been early adopted by the Group
(i) IFRS 2 (Amendment). Share-based payments - Vesting conditions and
cancellations (effective from 1 January 2009) Earlier application is
permitted. On 17 January 2008, the IASB published final amendments to IFRS
2 Share-based Payment to clarify the terms `vesting conditions` and
`cancellations` as follows:
* Vesting conditions are service conditions and performance conditions
only. Other features of a share-based payment are not vesting conditions.
Under IFRS 2, features of a share-based payment that are not vesting
conditions should be included in the grant date fair value of the share-
based payment. The fair value also includes market-related vesting
conditions.
* All cancellations, whether by the entity or by other parties, should
receive the same accounting treatment. Under IFRS 2, a cancellation of
equity instruments is accounted for as an acceleration of the vesting
period. Therefore any amount unrecognised that would otherwise have been
charged is recognised immediately. Any payments made with the cancellation
(up to the fair value of the equity instruments) are accounted for as the
repurchase of an equity interest. Any payment in excess of the fair value
of the equity instruments granted is recognised as an expense.
(ii) IFRS 3 (Revised). Business combinations & IAS 27 (Revised).
Consolidated and separate financial statements (effective from 1 July 2009)
The revised IFRS 3 was a joint project of the IASB and the US FASB. The
objective was to achieve convergence in accounting for business
combinations.
There are still a few differences between IFRS and US GAAP but they have
been substantially aligned. The revisions made to IFRS 3: Business
Combinations and IAS 27: Consolidated and Separate Financial Statements
have brought the accounting in line with the economic entity model. The
Group will evaluate the impact on future business combinations as they
occur.
(iii) IFRS 8. Operating Segments (effective from 1 January 2009) The
standard requires an entity to adopt the `management approach` to reporting
on the financial performance of its operating segments. The Standard sets
out requirements for disclosure of information about an entity`s operating
segments and also about the entity`s products and services, the
geographical areas in which it operates, and its major customers. The
disclosure should enable users of its financial statements to evaluate the
nature and financial effects of the business activities in which it engages
and the economic environments in which it operates.
(iv) IAS 1. Presentation of financial statements (effective from 1 January
2009) The objective of this Standard is to prescribe the basis for
presentation of general purpose financial statements, to ensure
comparability both with the entity`s financial statements of previous
periods and with the financial statements of other entities. To achieve
this objective, this Standard sets out overall requirements for the
presentation of financial statements, guidelines for their structure and
minimum requirements for their content.
(v) IAS 23. Borrowing cost - Revised (effective from 1 January 2009) The
main change from the previous version of IAS 23 is the removal of the
option of immediately recognising as an expense borrowing costs that relate
to assets that take a substantial period of time to get ready for use or
sale.
(vi) IFRIC 11, Group and treasury share transactions (effective for annual
periods beginning on or after 1 March 2007).This interpretation addresses
the classification of a share-based payment transaction, in which equity
instruments of the parent or another group entity are transferred, in the
financial statements of the entity receiving the services.
Interpretations to existing standards that are not yet effective and not
relevant for the Group`s operations
(i) IAS 1 & IAS 32. `Puttables` amendment to IAS 32, Financial
instruments: Presentation and IAS 1, Presentation of financial statements
(effective from 1 January 2009). The IASB published an amendment on
puttable instruments and limited life entities to IAS 32, Financial
instruments: Presentation, on 14 February 2008. Earlier adoption is
allowed. The impact would be most significant where issuers can be required
to redeem instruments such as in the case of partnerships, finite life
entities, co-operatives and entities in the investment management sector.
ii) IFRIC 12. Service concession arrangements (effective for annual
periods beginning on or after 1 January 2008). This interpretation provides
guidance to private sector entities on certain recognition and measurement
issues that arise in accounting for public-to-private service concession
arrangements.
(iii) IFRIC 13. Customer Loyalty programmes (effective from 1 July
2008) It addresses accounting by entities that grant loyalty award credits
to customers who buy other goods or services. Specifically, it explains how
such entities should account for their obligations to provide free or
discounted goods or services to customers who redeem award credits.
(iv) IFRIC 14. IAS19 - The limit on a Defined Benefit Asset, Minimum
Funding Requirements and their interaction (effective from 1 January 2008).
It provides general guidance on how to assess the limit in IAS 19 on the
amount of the surplus that can be recognised as an asset. It also explains
how the pension asset or liability may be affected when there is a
statutory or contractual minimum funding requirement.
2. Basic loss per share, diluted loss per share and headline loss per share
reconciliation
31 31
December December
2007 2006
Basic loss (81,989) (22,889)
Weighted average number of 502,681,9 443,166,9
shares outstanding of issued 03 65
Number of shares in issue 524,132,0 473,889,6
06 00
Diluted basic loss per share
The potential ordinary shares of the Group, which consists of the
convertible bonds and the employee share option scheme, have an
antidilutive effect on the Basic loss per share as the instruments
decrease the basic loss per share rather than increasing it, as
required to qualify as dilutive. The instruments could potentially
dilute basic earnings per share in the future.
Potentially Diluted basic (59,949) (22,889)
loss
Weighted average number of 513,215,9 444,939,1
shares outstanding of issued 20 71
Reconciliation of weighted average number of shares and
diluted average number of shares:
Weighted average number of 502,681,9 443,166,9
ordinary shares 03 65
Adjusted for:
Weighted average options 2,661,616 1,772,206
granted potentially issued
for no consideration
Weighted average convertible 7,872,401 -
bonds potentially convertible
Potentially diluted average 513,215,9 444,939,1
number of shares 20 71
Reconciliation of basic loss and
potentially diluted loss:
Loss before tax (81,989) (22,889)
Fair value adjustment on 22,040 -
Convertible bonds
Potentially diluted Loss (59,949) (22,889)
Headline loss
Net (loss) / profit (78,934) (22,889)
Weighted average number of 502,681,9 443,166,9
shares outstanding of issued 03 65
Reconciliation of basic loss
and headline loss for the
period:
Loss before tax (81,989) (22,889)
Impairment write-downs 3,055 -
Headline earnings (78,934) (22,889)
3. Contingent Liabilities and Commitments
31 Dec 31 Dec 2006
2007
12 months 12 months
R`000 R`000
Guarantees 21.790 1,325
Capital commitments 897,999 144,487
Operating lease commitments 3,926 4,025
4. Business combinations
In the prior financial year the merger between Sub Nigel Gold Mining
Company Ltd and the NKMC Group was accomplished through the issue of shares
to Aflease Gold and Uranium Ltd (now called Uranium One Africa Ltd) in
payment for all the issued and outstanding ordinary shares of NKMC Group
and all amounts due by NKMC Group to Aflease Gold and Uranium Ltd.
At a special meeting held on 10 January 2006 the shareholders voted in
favour of the merger of the New Kleinfontein Mining Company Ltd Group (NKMC
Group) of companies and Sub Nigel Gold Mining Company Ltd. The latter was
renamed Aflease Gold Ltd. 339 011 680 Sub Nigel Gold Mining Company Ltd
shares were issued as purchase consideration to Aflease Gold and Uranium
Ltd. Following the issue of these shares Sub Nigel gold Mining Company Ltd
became an 80% subsidiary of Aflease Gold and Uranium Ltd. In terms of
IFRS 3, Business combinations, this merger is accounted for as a reverse
acquisition.
In line with the guidance provided by IFRS 3 the financial results reported
prior to the effective date of the transaction are those of the acquirer
(NKMC Group) and those subsequent to the effective date of the transaction
are those of the combined entity.
Due to the reasons listed above, the comparative information published in
these financial statements differ from those previously published.
Except for the cash taken over, this transaction has been excluded from the
cash flow statement, as it did not result in an exchange for cash.
The aggregate fair values of the assets acquired and liabilities assumed
were as follows:
2006
R`000
Property, plant and equipment 4,755
Undeveloped properties 108,313
Loan account 9,281
Receivables and payments 406
Cash and cash equivalents 11,820
Asset retirement obligation (213)
Accounts payable and accrued liabilities (6,533)
Future taxation liabilities (31,411)
Value of business combination 96,418
5. Subsequent events
On 27 February 2008 the Minister of Minerals and Energy granted Aflease
Gold a mining right for Sub Nigel 1, for gold ore and associated minerals.
Mali Holdings (Pty) Ltd and Morris Mining (Pty) Ltd were deregistered on 4
January 2008.
6. Audit opinion
These summarised group financial statements are based on the audited group
financial statements for the year ended 31 December 2007 as audited by the
Group`s auditors, PricewaterhouseCoopers Inc.
Their unqualified audit opinion is available for inspection at the
Company`s registered office.
7. Commentary for the year ended 31 December 2007
On the 10th September 2007, Aflease Gold announced that it had upgraded its
Level 1 American Depository Receipts (ADR)program to list on the International
PrimeQX tier of the OTCQX, a new market in the United States for international
listed companies, operated by Pink Sheets LLC.
The OTCQX market provides a gateway to U.S. securities markets for international
companies which are already listed on a qualified foreign stock exchange. The
decision to pursue an International PrimeQX listing was prompted by the desire
to enhance the trading liquidity of Aflease Gold`s shares in the United States,
to attract a larger foreign investor base and to increase the capital markets
profile of the Company.
Following a fully revised audited feasibility study on the Modder East Gold
Project ("Modder East") carried out by Turgis Consulting (Pty) Ltd. and
independently audited by SRK Consulting (South Africa)(Pty) Ltd., Aflease Gold
on 3 October 2007 announced an enlarged 180 000 oz per annum Modder East
Project.
Based on the original feasibility study assumptions of a gold price of US$ 629
per ounce and an exchange rate of US$ 1.00: ZAR 6.585, the highlights of the
revised feasibility study were:
- A 27% increase in probable reserves to 1.36 million ounces of gold
(contained within 7.7 million tonnes of ore at an average head grade of
5.51 g/t) from 1.07 million ounces of gold (contained within 6.68 million
tonnes of ore at an average head grade of 5.00 g/t) in the original
feasibility study.
- Average production at steady state (2012 to 2014) increases by 65% to
181,000 ounces of gold per annum from 110,000 ounces of gold per annum.
- Life of mine average cash operating cost have decreased by 3% to US$211 per
ounce from US$217 per ounce.
- Remaining construction capital expenditure, including contingencies, is
estimated at ZAR 687 million (US$ 104 million).
- A 91% improvement in NPV at an 8% discount rate, from ZAR 484 million (US$
73 million) to ZAR 925 million (US$ 140 million).
- A 34.5% improvement in after-tax IRR, from 31% to 41.7%.
Project payback is 4.3 years and slightly less than 3 years from the start
of on-reef development.
On 19 October 2007 Aflease Gold announced that, subject to the fulfillment of
certain conditions, it has placed ZAR 400 million of convertible bonds
due 2012 to international institutional investors and that it could place a
further ZAR 200 million on the same pricing terms, taking the maximum notional
amount of the bonds to ZAR 600 million. Aflease Gold subsequently announced that
it had placed a further ZAR 200 million.
The ordinary resolution approving the convertible bond issue as set out in the
notice to shareholders dated 27 November 2007, was passed by the requisite
majority at the general meeting of the Company held on 12 December 2007.
This financing represents another significant achievement and milestone in that
the Modder East project is now fully funded.
Signed on behalf of the Board
N J Froneman P B Kruger
Chief Executive Officer Company Secretary
Johannesburg
31 March 2008
Sponsor
Nedbank Capital
Date: 31/03/2008 17:50:01 Produced by the JSE SENS Department.
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