| Wed 1 Apr 2009, 7:05 | | AFO - Aflease Gold - Audited Results For The Year Ended 31 December 2008 |
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AFO
AFO
AFO - Aflease Gold - Audited Results For The Year Ended 31 December 2008
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 RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
HIGHLIGHTS
- Focused cost reduction strategy and a fair value adjustment to the bond
liability results in a significant financial performance improvement;
- Funding shortfall reduced to R30 million following a post year-end R90
million capital raise;
- Modder East development successfully negotiates the water bearing
dolomites and intersects the reef horizon in all three developments;
- Modder East on track for first gold pour in Q4 2009;
- Sub Nigel re-commissioned in December 2008 and stoping operations begin
with first gold production expected in June 2009;
- The Ventersburg project moves into pre-feasibility phase with declaration
of first 1.437 million ounce indicated resource; and
- Strategic acquisition to create Gold One International Limited with a
dual primary listing on the JSE and ASX is well advanced.
GROUP INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2008
Audited Audited
31 December 31 December
2008 2007
12 months 12 months
Notes R`000 R`000
Revenue - -
Cost of Sales - -
Gross profit - -
Other income - 3
General and (23,147) (35,390)
administrative
expenditure
Share options 14 (13,108) (4,812)
expensed
Exploration and pre- 21 (29,914) (22,392)
feasibility
expenditure
Impairment of 12 - (3,055)
assets
Profit / (loss) on (49) -
sale of shares
Fair value 15 13,835 (22,040)
adjustment on
Financial liability
Operating loss 24 (52,383) (87,686)
Finance income 22 64,107 8,470
-Finance costs 23 (53,383) (226)
Loss before income (41,659) (79,442)
taxes
Income tax expense 19 (3,218) (2,547)
Net loss (44,877) (81,989)
Loss per share (cents)
- Basic 28 (8.51) (16.31)
- Diluted 28 (8.51) (11.68)
- Headline (8.51) (15.70)
GROUP BALANCE SHEETS AT 31 DECEMBER 2008
Audited Audited
31 December 31 December
2008 2007
Notes R`000 R`000
Restated
ASSETS
Non-current assets
Property, plant and 5 645,093 279,058
equipment
Held to maturity 6 7,434 5,916
investments
Investment in 7 - -
subsidiary
652,527 284,974
Current assets
Inventories 8 289 289
Trade and other 9 8,078 16,216
receivables
Taxation receivable 19 524 -
Short term 10 38,379 -
investments
Cash and cash 11 254,402 636,677
equivalents
301,672 653,182
Total assets 954,199 938,156
Share capital and 13 401,008 360,323
share premium
Share-based payment 14 19,682 6,574
reserve
Accumulated deficit (171,552) (126,676)
249,138 240,221
LIABILITIES
Non-current
liabilities
Financial 15 608,205 622,040
liabilities
Asset retirement 17 15,241 7,445
obligation
Deferred taxation 19 31,411 31,411
654,857 660,896
Current liabilities
Trade and other 18 50,190 35,034
payables
Taxation payable 19 14 2,005
50,204 37,039
Total equity and 954,199 938,156
liabilities
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2008
Share based
Share Share payment Accumulated
capital premium reserve deficit Total
R`000 R`000 R`000 R`000 R`000
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
Share issue - (165) - - (165)
costs
Net loss for
the period - - - (81,989) (81,989)
Balance at
31 December 64,676 295,647 6,574 (126,676) 240,221
2007
Share issues 18,251 23,171 - - 41,422
Share option - - 13,108 - 13,108
scheme
Share issue - (737) - - (737)
costs
Net loss for
the period - - - (44,877)
(44,877)
Balance at
31 December 82,927 318,081 19,682 (171,553) 249,137
2008
GROUP CASH FLOW STATEMENTS
31 December 31 December
2008 2007
Notes R`000 R`000
Restated
Cash flows from (21,947) (38,835)
operating activities
Cash receipts from
customers and related 8,138 (9,910)
parties
Cash paid to
suppliers, employees (35,076) (36,627)
and related parties
Cash generated from
operations 25 (26,938) (46,537)
Interest paid 23 (53,383) (226)
Interest received 22 64,107 8,470
Income taxes paid 26 (5,733) (542)
Net cash from
operating activities (21,947) (38,835)
Cash flow from
investment activities (360,585) (109,610)
Additions to property,
plant and equipment 27 (359,067) (104,399)
Increase in
investments (1,518) (5,211)
Cash flow from 257
financing activities 719,644
Proceeds from issue of 257
shares 140,277
Proceeds from long- - 579,367
term borrowings
Net increase
/(decrease) in cash
and cash equivalents (382,275) 571,199
Cash and cash
equivalents at 636,677 65,478
beginning of period
Cash and cash
equivalents at end of 254,402 636,677
period 11
NOTES TO THE FINANCIAL STATEMENTS
Basis of preparation
The consolidated financial statements of Aflease Gold Limited and its
subsidiaries have been prepared in accordance with, and containing the
information required by, International Financial Reporting Standard ("IFRS")
on Interim Financial Reporting (IAS 34), the Listings Requirements of JSE
Limited and the Companies Act, 1973.
The annual financial statements are prepared on the historical cost
convention, as modified by the revaluation of financial assets and liabilities
(including derivative instruments) at fair value through profit or loss. The
preparation of the annual financial statements is consistent with the previous
year unless otherwise stated. The annual financial statements incorporate the
accounting policies set out below, which conform to 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 Group has amended its balance sheet and cash flow presentation in the 2008
financial statements which has resulted in the reclassification of prior year
numbers. Management believes that the current presentation provides more
concise information. The details of the reclassification are as follows:
The asset retirement fund as disclosed in prior year was reclassified as held-
to-maturity investments or cash and cash equivalents as appropriate.
Restricted cash as disclosed in prior year has been disclosed as part of cash
and cash equivalents.
Amounts due from related parties and amounts owing to related parties has now
been disclosed as trade and other receivables and trade and other payables
respectively.
Provisions have been reclassified as trade and other payables.
The cash flow presentation was changed to the direct method and the
comparatives restated accordingly.
The above reclassifications have been detailed in the notes to the financial
statements.
The accounting policies set out below have been applied consistently to all
years presented in these consolidated financial statements.
Interpretations of International Financial Reporting standard effective for
the first time as at 31 December 2008
IFRIC 11: `IFRS 2 Group and treasury share transactions`, provides guidance on
whether share-based transactions involving treasury shares or involving group
entities (for example, options over a parent`s shares) should be accounted for
as equity-settled or cash-settled share-based payment transactions in the
stand-alone accounts of the parent and group companies. The guidance in this
interpretation was used to account for the share-based payments.
IFRIC 12 - Service Concession Arrangements addresses how service concessions
operators should apply existing IFRSs to account for the obligations they
undertake and rights they receive in service concession arrangements. This
interpretation does not have an impact on the group`s financial statements.
IFRIC 14 - `IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their interaction` 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. This
interpretation does not have an impact on the group`s financial statements.
Standards, amendments and interpretations to existing standards that are not
yet effective and have not been early adopted by the Group
IFRS 8 - Operating Segments (effective 1 January 2009) 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. The Group will apply IFRS 8 from 1 January 2009.
IAS 23 (Amendment) - Borrowing Costs (effective 1 January 2009) - The
amendment requires an entity to capitalise borrowing costs directly
attributable to the acquisition, construction or production of a qualifying
asset (one that takes a substantial period of time to get ready for use or
sale) as part of the cost of that asset. The option of immediately expensing
those borrowing costs will be removed. The group will apply IAS 23 (Amendment)
retrospectively from 1 January 2009.
IAS 1 Presentation of Financial Statements (Revised) (effective 1 January
2009) - The changes made to IAS 1 are to require information in financial
statements to be aggregated on the basis of shared characteristics and to
introduce a statement of comprehensive income. This will enable readers to
analyse changes in a company`s equity resulting from transactions with owners
in their capacity as owners separately from `non-owner` changes. The
revisions include changes in the titles of some of the financial statements to
reflect their function more clearly. The new titles are not mandatory for use
in financial statements. The group will apply the changes as appropriate.
IAS 27 Consolidated and Separate Financial Statements (Revised) (effective 1
July 2009) - IAS 27 (revised) requires the effects of all transactions with
non-controlling interests to be recorded in equity if there is no change in
control. They will no longer result in goodwill or gains and losses. The
standard also specifies the accounting when control is lost. Any remaining
interest in the entity is remeasured to fair value and a gain or loss is
recognised in profit or loss. The group will apply IAS 27 (Revised) from 1
July 2009.
IFRS 3 Business Combinations (Revised) (effective 1 July 2009) - The new
standard continues to apply the acquisition method to business combinations,
with some significant changes. For example, all payments to purchase a
business are to be recorded at fair value at the acquisition date, with some
contingent payments subsequently re-measured at fair value through income.
Goodwill may be calculated based on the parent`s share of net assets or it may
include goodwill related to the minority interest. All transaction costs will
be expensed. The Group will apply IFRS 3 (Revised) from 1 July 2009.
Amendment to IFRS 2 - Share-Based payment: Vesting Conditions and
Cancellations (effective 1 January 2009) - The amendment deals with two
matters. It clarifies that vesting conditions are service conditions and
performance conditions only. Other features of a share-based payment are not
vesting conditions. It also specifies that all cancellations, whether by the
entity or by other parties, should receive the same accounting treatment. The
Group will apply the amendment to IFRS 2 from 1 January 2009.
Amendments to IFRS 1 and IAS 27 (effective 1 January 2009) - IFRS 1 First Time
Adoption of International Financial Reporting Standards and IAS 27
Consolidated and Separate Financial Statements: Cost of an Investment in a
Subsidiary, Joint Controlled Entity or Associate. The amendment allow first-
time adopters to use a deemed cost of either fair value or the carrying amount
under previous accounting practice to measure the initial cost of investments
in subsidiaries, jointly controlled entities and associates in the separate
financial statements. The amendment also removed the definition of the cost
method from IAS 27 and replaced it with a requirement to present dividends as
income in the separate financial statements of the investor. The Group will
apply the amendments to IFRS 1 and IAS 27 from 1 January 2009.
Improvement to IFRSs - This is a collection of amendments to IFRSs. These
amendments are the result of conclusions the IASB reached on proposals made in
its annual improvements project. The annual improvements project provides a
vehicle for making non-urgent but necessary amendments to IFRSs. Some
amendments involve consequential amendments to the IFRSs.
Standards, amendments and interpretations to existing standards that are not
yet effective and not relevant to the Group
Amendment to IAS 32 and IAS 1 - IAS 32 Financial Instruments: Presentation and
IAS 1 Presentation of financial statements (effective 1 January 2009) -
Puttable Financial Instruments and Obligations Arising on Liquidation. The
amendments require entities to classify the following types of financial
instruments as equity, provided they have particular features and meet
specific conditions: a) puttable financial instruments (for example, some
shares issued by co-operative entities); b) instruments, or components of
instruments, that impose on the entity an obligation to deliver to another
party a pro rata share of the net assets of the entity only on liquidation
(for example, some partnership interest and some shares issued by limited life
entities). Additional disclosures are required about the instruments affected
by the amendments.
Amendments to IAS 39 (effective 1 July 2009) - Financial Instruments:
Recognition and Measurement Exposures Qualifying for Hedge Accounting - The
amendment makes two significant changes. It prohibits designating inflation
as a hedgeable component of a fixed rate debt. It also prohibits including
time value in the one-sided hedged risk when designating options as hedges.
IFRIC 13 - Customer Loyalty Programmes (effective 1 July 2008) 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. This interpretation does not have an
impact on the group`s financial statements.
IFRIC 15. Agreements for the Construction of Real Estate (effective 1 January
2009) - IFRIC 15 addresses diversity in accounting for real estate sales.
IFRIC 15 clarifies how to determine whether an agreement is within the scope
of IAS 11 - Construction contracts or IAS 18 - Revenue and when revenue from
construction should be recognised. The guidance replaces example 9 in the
appendix to IAS 18.
IFRIC 16. Hedges of a Net Investment in a Foreign Operation (effective 1
October 2008) - IFRIC 16 provides guidance on identifying the foreign currency
risks that qualify as a hedged risk (in the hedge of a net investment in a
foreign operation). It secondly provides guidance on where, within a group,
hedging instruments that are hedges of a net investment in a foreign operation
can be held to qualify for hedge accounting. Thirdly, it provides guidance on
how an entity should determine the amounts to be reclassified from equity to
profit or loss for both the hedging instrument and the hedged item.
IFRIC 17. Distributions of Non-cash Assets to Owners - IFRIC 17 applies to the
accounting for distributions of non-cash assets (commonly referred to as
dividends in specie) to the owners of the entity. The interpretation
clarifies that: a dividend payable should be recognised when the dividend is
appropriately authorised and is no longer at the discretion of the entity; an
entity should measure the dividend payable at the fair value of the net assets
to be distributed; and an entity should recognise the difference between the
dividend paid and the carrying amount of the net assets distributed in profit
or loss.
IFRIC 18. Transfers of assets from customers - IFRIC 18 clarifies the
accounting treatment for transfers of property, plant and equipment received
from customers. This Interpretation applies to agreements with customers in
which the entity receives cash from a customer when that amount of cash must
be used only to construct or acquire an item of property, plant and equipment
and the entity must then use the item of property, plant and equipment either
to connect the customer to a network or to provide the customer with ongoing
access to a supply of goods and services, or to do both.
Basic loss per share, diluted loss per share and headline loss per share
reconciliation
Audited Audited
31 December 31 December
2008 2007
12 months 12 months
R`000 R`000
Basic loss per share (cents) (8.51) (16.31)
Diluted loss per share
(cents)* (8.51) (11.68)
Headline loss per share
(cents) (8.51) (15.70)
Weighted average number of
shares outstanding 527,381,180 502,681,903
Number of shares in issue 556,151,869 524,132,006
Reconciliation of basic loss and headline loss for the period:
Loss before tax (44,877) (81,989)
Impairment write-downs - 3,055
Headline earnings (44,877) (78,934)
*The convertible bond and share options granted to employees were excluded
from the diluted loss per share calculation as they were anti-dilutive
Contingent liabilities and commitments
Audited Audited 31
31 December 2008 December 2007
2008 2007
Notes R`000 R`000
Guarantees 26,295 21,790
Capital commitments 69,557 897,999
Operating lease
commitments 3,864 3,925
Subsequent events
Aflease Gold shareholders have unanimously approved a transaction in terms of
which the Australian Stock Exchange ("ASX") listed company, BMA Gold Limited
("BMA Gold") will, after its inward listing on the JSE, acquire all the shares
in Aflease Gold through a scheme of arrangement ("BMA transaction"). The
combined business will be known as Gold One International Limited ("Gold One")
and will have a dual primary listing on the ASX and the JSE. One of the final
material conditions precedents outstanding for the implementation of the BMA
transaction is approval by Aflease Gold bondholders, which is currently being
sought.
Auditor`s report
PricewaterhouseCoopers Inc ("PWC") has audited the financial information set
out in these results. PWC`s unqualified audit report is available for
inspection at the company`s registered address.
Commentary for the year ended 31 December 2008
The reduction in headline loss from R81.9 million to R44.8 million, was as a
result of a reduction in general and administrative costs as well as a fair
value adjustment to the bond liability which resulted in a significant
financial performance improvement.
While operationally Modder East is on track for its first gold pour at the end
of 2009, Aflease Gold continued its advances to become a global mid-tier gold
producer, by announcing a reverse-takeover of Australian listed BMA Gold
Limited. The deal - subject to, inter alia, bondholder approval after all
regulatory and shareholder approvals were met - will bring significant
benefits to the company.
The newly formed company, to be known as Gold One International Limited, will
create an attractive international gold business with a new mine on the cusp
of production and a portfolio of growth prospects, coupled with a combined
resource of more than 13 million ounces of gold across the portfolio of assets
in Australia, Mozambique, Namibia and South Africa.
Modder East gold project
During 2008, Modder East successfully completed the development of all three
of the main access ends (main decline, return airway and decline west) through
the water bearing dolomites with the first gold pour expected to take place in
the last quarter of 2009.
Annual production during 2009 will be 20,000 oz and 140,000 oz in 2010 with
steady-state production of 180,000 oz being achieved by 2011.
Sub Nigel gold project
During June 2008, the Company approved the first phase of the recommissioning
of Sub Nigel at a capital cost of R28.9 million after a detailed study showed
a reasonable return for a relatively small investment in infrastructure. In
March 2009, Sub-Nigel began to hoist its first ore, to be treated at Modder
East, as the mine`s plant is commissioned towards the middle of 2009. Sub-
Nigel will also provide a valuable training ground for employees earmarked for
Modder East.
BY ORDER OF THE BOARD
Johannesburg
31 March 2009
NJ Froneman PB Kruger
Chief Executive Officer Company Secretary
DIRECTORS
CD Chadwick, Ken Dicks*, NJ Froneman, PB Kruger, WA Lupien*, IJ Marais, S
Maziya*, S Zungu*, S Swana*
*Non-executive
REGISTERED OFFICE
First Floor, 45 Empire Road, Parktown, 2193 (Postnet Suite 345, Private Bag
X30500, Houghton, 2041)
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
SPONSOR
Macquarie First South Advisers (Pty) Limited
AUDITORS
PricewaterhouseCoopers Inc
Date: 01/04/2009 07:05:24 Produced by the JSE SENS Department.
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