| Wed 4 Aug 2010, 11:18 | | RNG - Randgold & Exploration Company Limited - Reviewed results for the six |
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RNG
RNG
RNG - Randgold & Exploration Company Limited - Reviewed results for the six
months ended 30 June 2010
Randgold & Exploration Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1992/005642/06)
Share code: RNG
ISIN: ZAE000008819
("R&E" or "the company" or "the group")
Reviewed results for the six months ended 30 June 2010
Commentary to Condensed Consolidated Interim Financial Statements for the six
months ended 30 June 2010
General
The board of Randgold & Exploration Company Limited is pleased to announce
the interim results for the six months ended 30 June 2010. The company has
now fully implemented the JCI settlement as anticipated. Eligible
shareholders will be aware of the distribution of Gold Fields Limited (GFI)
and JCI Limited (JCI) shares made by the company on 5 July 2010.
Income
The majority of the income recognised in the period under review was a result
of two recoveries of R783,5 million and R25,2 million which flowed from the
settlement with JCI and the litigation settlement agreement, respectively.
Financial position
Excluding the effects of the settlement, R&E is liquid with no interest-
bearing debt. R&E`s total assets consist primarily of cash and an investment
in GFI shares. After the settlement distribution and unbundling of the
company`s holding of JCI shares R&E has a net asset value per share of R7,01.
Cashflow
R&E started the period under review with a cash balance of R295 million.
Operating activities (excluding the JCI settlement) generated cash inflow of
R15,8 million, primarily as a result of cash collected from outstanding
settlement receivables.
Investing activities yielded cash inflows of R85,5 million primarily as a
result of dividends received, proceeds from the disposal of recovered assets
and the repayment of loans receivable from JCI.
Dividends paid by Free State Investment and Development Corporation Limited
(FSD) to its non-controlling shareholder (JCI group) resulted in a cash
outflow from financing activities.
R&E remains in a strong cash position at 30 June 2010 with R323 million in
cash and cash equivalents.
Outlook
Given R&E`s liquid financial position and position in the resources industry,
management will focus on seeking out new opportunities, where appropriate,
for the benefit of R&E and its shareholders. As in the past, a pragmatic
commercial approach will be adopted in dealing with the outstanding legal
claims.
DC Kovarsky Marais Steyn
Chairman Chief Executive Officer
Johannesburg
30 July 2010
Condensed Consolidated Interim Statement of Comprehensive Income
For the six months ended
30 June 2010 30 June 2009
Reviewed Un-reviewed
Notes R`000 R`000
Revenue 12 048 9 890
Recoveries - JCI 6 783 549 -
- Other 25 205 14 207
Other income 10 353 211
Other operating expenses (38 592) (24 857)
Results from operating activities 792 563 (549)
Finance income 1 320 17 489
Profit before taxation 793 883 16 940
Taxation (1 052) (5 839)
Profit for the period 792 831 11 101
Other comprehensive income
Net change in fair value of available-7 11 618 3 234
for-sale investments
Total comprehensive income 804 449 14 335
Profit or loss attributable to:
Non-controlling interest 628 10 167
Owners of the company 792 203 934
Profit for the period 792 831 11 101
Total comprehensive income
attributable to:
Non-controlling interest 628 10 167
Owners of the company 803 821 4 168
Total comprehensive income 804 449 14 335
Basic and diluted earnings per share 9 1 103 1
(cents)
Condensed Consolidated Interim Statement of Financial Position
As at
30 June 2010 31 December 2009
Reviewed Audited
Notes R`000 R`000
Assets
Non-current assets 211 409 247 032
Plant and equipment 357 108
Intangible assets 474 474
Investments in equity securities 7 210 578 246 450
Current assets 1 151 066 549 096
Loans receivable - 207 543
Trade and other receivables 4 946 46 747
Financial asset - settlement 6 791 416 -
receivable
Investments held for distribution 7 32 026 -
Cash and cash equivalents 322 678 294 806
Total assets 1 362 475 796 128
Equity and liabilities
Shareholders` equity 503 633 484 152
Issued capital 748 748
Share premium 162 612 986 054
Reserves 23 755 12 137
Retained earnings/(Accumulated loss) 316 518 (514 787)
Non-controlling interest 9 396 250 378
Liabilities
Non-current liabilities
Post-retirement medical benefit 34 355 34 575
obligation
Current liabilities 815 091 27 023
Tax liabilities 16 302 15 579
Shareholders for dividend 9 790 419 -
Trade and other payables 8 370 11 444
Total equity and liabilities 1 362 475 796 128
Consolidated Interim Statement of Changes in Equity
For the six months ended
30 June 2010 30 June 2009
Reviewed Un-reviewed
Notes R`000 R`000
Share capital
Balance at the beginning and end of 748 748
the period
Share premium 162 612 986 054
Balance at the beginning of the 986 054 986 054
period
Distribution dividend 8 (823 442) -
Foreign currency translation reserve - -
Balance at the beginning of the - (19)
period
Movement for the period - 19
Investment fair value reserve 23 755 3 234
Balance at the beginning of the 12 137 -
period
Net change in fair value of 11 618 3 234
available-for-sale investments
Retained earnings/(Accumulated loss) 316 518 (548 596)
Balance at the beginning of the (514 787) (549 530)
period
Transaction with non-controlling 8 6 079 -
shareholders
Profit for the period 792 203 934
Distribution dividend 33 023 -
Non-controlling interest 9 396 242 930
Balance at the beginning of the 250 378 232 763
period
Transaction with non-controlling (168 034) -
shareholders
Dividends paid to non-controlling (73 576) -
shareholders
Profit for the period 628 10 167
Dividend per share (cents) 9 1 101 -
Group Condensed Statement of Cash Flows
For the six months ended
30 June 2010 30 June 2009
Reviewed Un-reviewed
R`000 R`000
Profit before taxation 793 883 16 940
Adjusted for:
Recoveries not settled in cash (808 754) -
Other non-cash items 5 277 (42)
Interest received (1 320) (17 489)
Dividends received (12 048) (9 890)
Working capital changes 38 727 (2 301)
Cash flows from operations 15 765 (12 781)
Interest received 478 940
Taxation paid (329) (5 756)
Cash flows from operating activities 15 914 (17 597)
Cash flows from investing activities 85 534 (55 407)
Dividends received 12 048 9 890
Proceeds from disposal of recovered assets 27 344 -
Acquisition of investment in equity - (5 129)
securities
Acquisition of plant and equipment (288) -
Loan payments received/(advanced) 46 430 (60 168)
Cash flow from financing activities -
Dividends paid to non-controlling (73 576) -
shareholders
Translation effect on foreign cash and cash - 19
equivalents
Net increase/(decrease) in cash and cash 27 872 (72 985)
equivalents
Cash and cash equivalents at the beginning 294 806 275 725
of the period
Cash and cash equivalents at the end of the 322 678 202 740
period
Notes to the Condensed Consolidated Interim Financial Statements for the six
months ended 30 June 2010
1. Reporting entity
R&E is a company domiciled and incorporated in the Republic of South Africa.
The condensed consolidated interim financial statements of the company for
the six months ended 30 June 2010 include the company and its subsidiaries
(together referred to as the "group").
2. Statement of compliance
These condensed consolidated interim financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting. They do not include
all of the information required for full annual financial statements and
should be read in conjunction with the consolidated financial statements of
the group as at and for the year ended 31 December 2009.
These condensed consolidated interim financial statements were approved by
the board of directors on 30 July 2010.
3. Significant accounting policies
The accounting policies applied by the group in these condensed consolidated
interim financial statements are the same as those applied by the group in
its consolidated financial statements as at and for the year ended 31
December 2009, except for the following standards and interpretations adopted
on 1 January 2010:
IAS 27 Amendment Consolidated and Separate Financial Statements
15 Amendments Improvements to International Financial Reporting
Standards 2009
IFRS 3 Business Combinations
IFRIC 17 Distribution of Non-cash Assets to Owners (IFRIC 17)
There was no significant impact on these condensed consolidated interim
financial statements as a result of adopting these standards and
interpretations, except for IFRIC 17.
IFRIC 17 addresses the accounting treatment for non-cash distributions made
to owners. In terms of IFRIC 17 a liability is recognised at the fair value
of the asset to be distributed when the distribution is authorised. The asset
to be distributed is reclassified as held for distribution and measured in
accordance with IFRS 5. Re-measurement of the liability at fair value of the
asset to be distributed will be recognised in equity. When the distribution
is made, the liability and the asset will be derecognised. IFRIC 17 has been
applied prospectively.
The distribution of the JCI settlement assets, as discussed in note 6 and the
unbundling of R&E`s existing holding of 305 million JCI shares, as discussed
in note 7, have been accounted for in terms of IFRIC 17.
4. Independent review by the auditor
The condensed consolidated interim financial statements of R&E were reviewed
by the group`s auditor, CH Basson of KPMG Inc. The unmodified review report
is available for inspection at the company`s registered office.
The comparative financial information presented in these interim financial
statements has not been reviewed by the group`s auditor as the group did not
publish interim financial statements for the six months ended 30 June 2009.
The company obtained dispensation from the Registrar of Companies and the JSE
Limited not to lodge interim financial statements for the six months ended 30
June 2009.
5. Segment reporting
The group operates in a single operating segment as an investment holding
company with assets in the mining industry.
6. Settlement with JCI Limited and distribution of shares
On 28 May 2010, the shareholders of R&E approved the settlement agreement
with JCI as well as the distribution of the shares received as part of the
settlement to R&E shareholders. The JCI shareholders also approved the
settlement with R&E on 4 June 2010.
The settlement circular, containing full details of the settlement, was
distributed to shareholders on 12 May 2010. As a result of the settlement,
the JCI group transferred the following assets to the R&E group on 4 July
2010:
- 6 051 632 GFI shares; and
- 1 555 710 220 JCI shares (a fresh issue).
On 5 July 2010 R&E distributed the above shares to its shareholders.
No tax liability is expected to arise from the settlement transaction as all
the affected entities within the group have sufficient income tax and capital
gains tax losses to absorb the recovery. There are also no tax consequences
as a result of the distribution, as it is made partially out of share premium
and partially as an unbundling in terms of section 46 of the Income Tax Act.
A recovery and a financial asset were recognised in profit or loss and in the
statement of financial position, respectively, on 23 June 2010 (the date on
which the last suspensive condition contained in the settlement agreement was
met) at fair value of the shares receivable. A corresponding liability to
shareholders was raised on the same day with the charge being taken directly
to equity (distribution dividend) for the shares to be distributed to the
ordinary shareholders of R&E.
At the reporting date, the financial asset was revalued with reference to the
value of the underlying securities, with the fair value movement being
recognised in profit or loss. The liability to shareholders was revalued on
the same criteria with the change in fair value recognised directly in equity
(distribution dividend).
Financial asset - Number Price Value (R`000)
settlement receivable of shares (ZAR/cents)
At 23 June 2010 -
settlement date
Recovery 783 549
GFI 6 051 632 10 250 620 293
JCI 1 555 710 220 10,5 163 256
Movement to profit or 7 867
loss (included in `Other
income`)
At 30 June 2010 791 416
GFI 6 051 632 10 380 628 160
JCI 1 555 710 220 10,5 163 256
JCI was suspended from trading on the JSE at a price of R0,16 per share on 1
August 2005. Having regard to the JCI group net asset value (NAV) statement
at 31 December 2009, as published on 9 February 2010, adjusted for the
settlement and other known variables, i.e. fair value movements in assets and
liabilities and based on information available to the directors of R&E, the
directors have calculated JCI group`s NAV at R0,15 per share at 30 June 2010.
After applying a discount factor of 30% to the calculated NAV per share due
to the illiquidity of JCI`s shares and nature of its assets, a fair value of
R0,105 was arrived at. The directors of R&E believe that R0,105 represents
their best estimate of JCI`s fair value based on currently available
information.
7. Investments in equity securities and investments held for distribution
As part of the settlement transaction mentioned above, R&E also unbundled its
current holding of 305 million JCI shares (the unbundling shares) on 5 July
2010. These shares were re-valued at R0,105 per share (refer note 6 for basis
of valuation) and were re-classified as `investments held for distribution`
in accordance with IFRIC 17 at 30 June 2010. The revaluation of the shares
resulted in a R15,6 million impairment being recognised in profit or loss. A
liability at fair value of this asset to be distributed to shareholders was
also recognised in equity (distribution dividend).
There are no tax consequences as a result of the unbundling, as it is in
terms of section 46 of the Income Tax Act.
R`000
Investment in equity securities - 1 January 2010 246 450
Increase in fair value of available-for-sale GFI shares to 11 618
other comprehensive income
Decrease in fair value of JCI shares taken to profit or loss (15 653)
(included in `Other operating expenses`)
Increase in fair value of GFI shares held for trading taken 189
to profit or loss
Transfer of investment JCI shares to `Investments held for (32 026)
distribution`
Investment in equity securities - 30 June 2010 210 578
The remaining investment in equity securities of R210,6 million represents an
investment in GFI of 2 028 684 shares.
8. Excussion of FSD shares from JCI
At 30 December 2009, R&E had a loan receivable from the JCI group of R207,5
million. This loan was secured by a pledge of shares in FSD. On 14 January
2010 (the agreed settlement date), JCI was unable to make a full repayment of
the loan. As a result, R&E exercised its security and became the beneficial
owner of a further 6 690 610 FSD shares at an agreed value of R161,9 million,
increasing its shareholding in FSD by 30,10% to 85,21%.
In terms of R&E`s accounting policies, the acquisition of a non-controlling
interest is accounted for as a transaction with equity holders in their
capacity as equity holders.
9. Earnings per share and dividend per share
For the six months ended
30 June 2010 30 June 2009
Basic earnings and diluted earnings per Reviewed Un-reviewed
ordinary share
Basic and diluted earnings for the period 792 203 934
(R`000)
Weighted average number of ordinary shares 71 813 128 74 313 128
in issue
Earnings per share (cents) 1 103 1
Headline and diluted headline earnings per
ordinary share
Headline and diluted headline earnings for 805 717 934
the period (R`000)
Weighted average number of ordinary shares 71 813 128 74 313 128
in issue
Headline earnings per share (cents) 1 122 1
Reconciliation between basic and headline R`000 R`000
earnings for the period
Profit for the period attributable to the 792 203 934
equity holders of the company
Adjusted for:
Profit on disposal of available-for-sale (2 139) -
investments
Impairment of investment held for 15 653 -
distribution
805 717 934
Tax effect of adjustments - -
Portion attributable to non-controlling - -
interest
Headline earnings for the period 805 717 934
attributable to equity holders of the
company
Dividend per share
Total dividend declared 790 419 -
Eligible shares in issue 71 813 128 -
Dividend per share (cents) 1 101 -
The distribution dividend payable to ordinary shareholders of the company, as
approved on 28 May 2010, of R790,4 million comprises of the JCI settlement
assets amounting to R791,4 million and the unbundling shares of R32,0 million
adjusted for the portion which will be returned to the company by virtue of
its 3 million treasury shares.
Total dividend payable from R&E`s share 823 442 -
premium
Dividend payable to group entities (33 023) -
recognised in retained earnings
Shareholders for dividend per statement of 790 419 -
financial position
10. Net asset and tangible net asset value and per share
The net asset value per share is calculated using the following variables:
30 June 2010 31 December 2009
Reviewed Audited
Net asset value (R`000) 503 633 484 152
Ordinary shares outstanding 71 813 128 71 813 128
Net asset value per share (cents) 701 674
Net tangible asset value per share (cents) 701 674
The number of shares outstanding at 31 December 2009 and 30 June 2010 has
been adjusted for the 3 million treasury shares held.
11. Material changes
There have been no material changes to the information contained in the
independent mineral asset valuation reports that were disclosed to
shareholders in the settlement circular.
12. Related-party transactions
Refer notes 6 and 8 for transactions with JCI, a related party.
13. Events after reporting date
Refer notes 6 and 7 for significant events occurring after 30 June 2010.
Directors:
DC Kovarsky (Chairman)**, M Steyn (CEO)*, V Botha*, MB Madumise**,
JH Scholes**
(* Executive, ** Independent non-executive)
Secretary and Registered office:
RP Pearcey FCIS, 7th Floor Fredman Towers, Fredman Drive, Sandown, 2196
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
(Registration number 2004/003647/07) 70 Marshall Street, Johannesburg 2001
Sponsor: PSG Capital
Date: 04/08/2010 11:18:01 Produced by the JSE SENS Department.
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