| Thu 23 Sep 2010, 8:00 | | MVL - Mvelaphanda Resources Limited - Reviewed Results for the year ended 30 |
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MVL
MVL
MVL - Mvelaphanda Resources Limited - Reviewed Results for the year ended 30
June 2010
Mvelaphanda Resources Limited
(Registration number: 1980/001395/06
Incorporated in the Republic of South Africa
Share code: MVL
ISIN number: ZAE000050266
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2010
Features
- Debt repaid - down by R2,9 billion year-on-year
- Group cash of R1.2 billion (Mvela Resources R57 million)
- Northam posts solid results, underpinned by a creditable operating performance
from its Zondereinde mine
- Booysendal Project approved
- Optimisation study increases Booysendal production scope by 25%
Consolidated Statement of Financial Position
Notes Reviewed Audited
As at 30 June 30 June
R`000 2010 2009
ASSETS
Non-current assets 10,175,306 10,148,157
Investment in associates 211,556 180,056
- Trans Hex Group Ltd 81,815 49,950
- Northam`s interest
in the Pandora Joint
Venture 129,741 130,106
Deferred taxation 20,465
Property, plant and
equipment 9,782,593 9,800,901
Environmental and
social investments 181,157 146,735
Current assets 2,177,443 1,844,808
Pre-paid taxation 2,104
Inventories 521,462 468,254
Trade and other
receivables 318,407 227,689
Investment in escrow 91,458
Cash and cash equivalents 1,244,012 1,148,865
Non-current assets
classified as held
for sale 3,350,746 3,732,701
Listed investments 3 3,350,740 3,732,695
Unlisted investments 6 6
Total assets 15,703,495 15,725,666
EQUITY AND LIABILITIES
Total equity 13,319,829 10,616,804
Share capital and
share premium 4,811,054 4,796,295
Retained earnings 3,608,770 2,806,117
Equity compensation
reserve 279,402 251,833
Other reserves (391,559) (874,070)
Mvela Shareholders`
equity 8,307,667 6,980,175
Minority Shareholders`
equity in Northam
Platinum Limited 5,012,162 3,636,629
Non-current liabilities 1,485,047 3,487,819
`A` Ordinary shares 700 700
Preference share funding 4 2,000,000
Long-term provisions 134,278 100,440
Deferred taxation 5 1,350,069 1,386,679
Current liabilities 898,619 1,621,043
Short-term portion of
preference share funding 44,711
Bridging loan 6 904,171
Short-term provisions 105,086 73,088
Tax payable 33,897 989
Accounts payable 759,636 598,084
Total equity and
Liabilities 15,703,495 15,725,666
Consolidated Income Statement
Notes Reviewed Audited
12 months to 12 months to
30 June 30 June
R`000 2010 2009
Operating mining income
derived from Northam
Platinum Limited
Sales revenue 3,945,083 2,514,294
Cost of sales (3,378,961) (2,192,034)
Operational mining
profit derived from
Northam Platinum Limited
(June 2009: 10 months 566,122 322,260
Other operating
income/(expenditure) (108,984) (70,949)
Earnings from
associate companies 13,577 (65,532)
- Northam Platinum
Limited (June 2009:
equity accounted results
for two months) 27,033
- Trans Hex Group Limited 1,137 (165,171)
- Pandora 12,440 72,606
Exploration and project
development costs (14,008) (38,259)
Corporate expenses (36,153) (49,066)
Share-based employee
incentive costs (73,997) 76,893
Net other income 9,635 18,606
Costs incurred in
unbundling and pursuing
transaction opportunities (8,038) (13,591)
Investment income 225,373 498,676
Interest received 178,322 498,673
- Interest earned on
GFI-SA loan 309,779
- Other interest earned 178,322 188,894
Dividends received 47,051 3
Finance costs (198,728) (514,136)
- Senior bank loan
(GFI-SA) (13,660)
- Mezzanine finance
(GFI-SA) (218,551)
- Bridging loan (49,323) (59,325)
- Bridging loan -
cost of options 7 (9,210)
- Preference share
Funding (135,177) (221,899)
- Other (5,018) (701)
Other income/(expenditure) (85,117) 850,977
Net effect of the
Booysendal Transaction 328
Impairment write-back 6,548 23,446
Net gain on revaluation
of financial instruments
- GFI-SA loan 865,000
Fair value loss on
disposal of Gold Fields
shares 8 (91,665) (37,797)
Profit before tax 398,666 1,086,828
Tax (257,168) 176,232
Profit for the year 141,498 1,263,060
Net profit/(loss)
attributable to:
- Owners of Mvelaphanda
Resources Limited (48,424) 1,591,421
- Minority interest in
Northam Platinum Limited 189,922 (328,361)
Profit for the year 141,498 1,263,060
(LOSS)/EARNINGS PER
ORDINARY SHARE (cents)
- Basic 9(a) (23) 742
- Headline 9(b) 10 1,663
- Diluted 9(c) (23) 738
Consolidated Statement of Comprehensive Income
Reviewed Audited
12 months to 12 months to
30 June 30 June
R`000 2010 2009
Profit for the year 141,498 1,263,060
Equity accounted
portion of:
- foreign currency
translation reserve
of associates 24,131 (1,076)
- reserve for available
for sale investment 49
Gain/(loss) on revaluation
of listed investments 458,331 (871,561)
Total comprehensive income
for the year 624,009 390,423
Total comprehensive income
/(loss) attributable to:
Owners of Mvelaphanda
Resources Limited 434,087 718,784
Minority interest in
Northam Platinum Limited 189,922 (328,361)
Total comprehensive income
for the year 624,009 390,423
Consolidated Cash Flow Statement
Reviewed Audited
12 months to 12 months to
30 June 30 June
R`000 2010 2009
Cash flows from
operating activities
Cash generated by
Operations 889,556 867,735
Interest received 178,322 498,673
Finance costs (234,229) (1,223,114)
Income tax paid (438,337) (428,335)
Net cash generated by/
(utilised to fund)
operating activities 395,312 (285,041)
Cash flows from investing
activities
Dividends received 47,051 1,080
Acquisition of property,
plant and equipment (377,016) (333,174)
- to maintain operations (231,506) (296,997)
- to expand operations (145,510) (36,177)
Acquisition of Booysendal
(Booysendal Transaction) (2,390,994)
Acquisition of Northam
Platinum Ltd shares (1,596,864)
GFI-SA loan repaid 4,139,000
Acquisition of 50 million
Gold Fields Ltd shares (4,139,000)
Net proceeds from the
disposal of Gold Fields
Ltd shares 814,023 1,161,507
Net proceeds from the
disposal of Northam
Platinum Ltd shares 2,188,938
Additions to township
development (Northam
Platinum Ltd) (4,460) (17,720)
Cash distribution
received from associate
(Pandora) 10,205 7,500
Increase in investments
held by Northam Platinum
Restoration Trust Fund (2,366)
Increase in investments
held by the Environmental
Contingency Fund (4,868)
Increase in investments
held by Toro Employee
Empowerment Trust (22,728) 5,432
Proceeds on disposal of
fixed assets and non-
strategic investments 5,519 5,336
Net cash generated by/
(utilised in) investing
Activities 2,654,298 (3,157,897)
Cash flows from financing
activities
Net proceeds from `A`
Preference shares issued 2,500,000
Bridging loan (refinanced
mezzanine debt) 2,023,600
Capital repayments in
respect of loans (2,904,171) (2,935,954)
- `A` Preference shares (2,000,000) (500,000)
- Senior bank loan GFI-SA (230,736)
- Mezzanine finance GFI-SA (1,085,788)
- Bridging finance
(refinanced mezzanine debt) (904,171) (1,119,430)
Net proceeds from shares
issued by Northam
Platinum Ltd 30,277 3,774
Dividends paid to Northam
Platinum Ltd`s minority
Shareholders (80,569) (298,443)
Net cash (utilised in)/
generated by financing
activities (2,954,463) 1,292,977
Net increase/(decrease) in
cash and cash equivalents 95,147 (2,149,961)
Take on cash balance from
Northam Platinum Ltd 1,379,240
Cash and cash equivalents
at beginning of the year 1,148,865 1,919,586
Cash and cash equivalents
at end of the year 1,244,012 1,148,865
Cash and cash equavalents
comprises:
- Held by Mvela Resources 57,303 227,962
- Held by Northam 1,186,709 920,903
Cash and cash equivalents
at end of the year 1,244,012 1,148,865
Consolidated Statement of Changes in Equity
Mvela Resources Minority
Shareholders` Shareholders` Total
R`000 equity equity equity
Audited balance at
30 June 2008 6,093,342 6,093,342
Northam purchase
price allocation 4,180,125 4,180,125
Net proceeds from
shares issued 147,171 147,171
Adjustment to Northam
purchase price
allocation 75,602 75,602
Purchase of Northam
Shares (2,572) (2,572)
Comprehensive income
for the year 718,784 (328,361) 390,423
Dividends paid to
Minorities (298,443) (298,443)
Equity compensation
Reserve 3,563 3,563
Shared-based payments
of subsidiary 17,315 10,278 27,593
Audited balance at
30 June 2009 6,980,175 3,636,629 10,616,804
Comprehensive income
for the year 434,087 189,922 624,009
Net gain on disposal
of Northam shares 840,565 1,227,161 2,067,726
Dilution due to
additional shares
issued by Northam 15,518 15,518
Dividend paid to
Minorities (80,569) (80,569)
Net proceeds from
shares issued 14,759 14,759
Equity compensation
Reserve 998 998
Shared-based payments
of subsidiary 37,083 23,501 60,584
Reviewed balance at
30 June 2010 8,307,667 5,012,162 13,319,829
Abridged Consolidated Segmental Results*
Reviewed Audited
12 months to 12 months to
30 June 30 June
R`000 2010 2009
Net profit/(loss)
after taxation
- Gold (36,279) 869,069
- Platinum 116,876 493,365
- Diamonds 7,395 (148,760)
- Other 53,506 49,386
Net profit for the year 141,498 1,263,060
* A detailed segmental income statement is available on the company`s website:
www.mvelares.co.za.
Notes
1. Basis of preparation
These condensed consolidated financial statements have been prepared on the
historical cost basis, except for financial instruments that are fair valued in
accordance with the group`s accounting policies which are consistent with those
adopted in the financial year ended 30 June 2010 and which are compliant with
International Financial Reporting Standards ("IFRS") and in accordance with IAS
34: "Interim Financial Reporting", the South African Companies Act,1973, as
amended, and the JSE Listings Requirements.
The group applied all the relevant new and revised standards and interpretations
that were in issue and effective for the year ended 30 June 2010. This had no
material impact on the financial statements of the group.
2. Going concern
The underlying assets of the group primarily comprise mining assets. Mining
assets have a finite life that depends on geological and technical factors as
well as commodity prices and other economic factors. Taking into account the
outlook for these factors as well as the group`s present financial resources,
the directors believe that the group is a going concern. The group`s financial
statements have accordingly been prepared on this basis.
3. Investment in Gold Fields Ltd
During the year ended 30 June 2010, approximately 7.7 million Gold Fields shares
were sold and the proceeds applied towards repaying the bridging finance raised
in March 2009. The remaining 32.2 million Gold Fields shares were fair valued
(using a closing share price of R104) at R3.4 billion at 30 June 2010.
4. Preference share funding (Booysendal)
The preference share funding, originally amounting to R2.5 billion, was advanced
by Nedbank Limited pursuant to the Booysendal Transaction that was concluded in
August 2008. The preference shares were redeemable over a period of 5.5 years at
a dividend rate of 73.3% nacs of the South African Prime Overdraft lending rate.
By 30 June 2010 the preference shares and dividends were redeemed, in full,
primarily from the proceeds of the 44 million Northam shares sold.
5. Deferred tax
The deferred tax provision on the balance sheet mainly relates to the deferred
tax raised on the fair value adjustment on the Northam assets acquired pursuant
to the Booysendal Transaction as well as the fair value adjustment on the Gold
Fields shares.
6. Bridging finance
The mezzanine funding that was raised pursuant to the GFI-SA transaction had
rolled up to approximately R2 billion as at
17 March 2009 and was fully refinanced with a short-term bridging facility that
was repayable at Jibar plus 250 basis points. By 30 June 2010 the loan and
interest was repaid in full.
7. Bridging loan - cost of options
In terms of the funding agreement certain call options were granted to the
financial institution over some of the Gold Fields shares as part of their
compensation. During the year under review 1.5 million of these options were
exercised and the cost, being the difference between the option exercise price
and the market value on the day when the options were exercised, amounted to
R9.2 million. The balance of the options expired on 7 May 2010.
8. Fair value loss on the disposal of the Gold Fields investment
Fair value adjustments on the Gold Fields investment have been taken to the
income statement until 17 March 2009, the date on which the GFI-SA loan
converted into Gold Fields shares. A realised profit of R177 million (30 June
2009: realised profit of R326 million) (which represents the difference between
the actual selling price realised and a cost price of R82.78 per share) was
recognised on the disposal of some 7.7 million Gold Fields shares during the
year. From an IFRS perspective, however, a fair value loss of R91.7 million (30
June 2009: fair value loss of R37.8 million) on the sold shares has been
recognised, being the difference between the recorded fair vale of the shares on
17 March 2009 (at R118.90 per share) and the actual price realised on disposal.
9. Earnings per ordinary share are calculated as follows:
Reviewed Audited
30 June 30 June
R`000 2010 2009
(a) Basic (loss)/earnings
per ordinary share (cents) (23) 742
Attributable (loss)/profit (48,424) 1,591,421
Weighted average number of
shares in issue 215,064,169 214,510,049
(b) Headline (loss)/
earnings per ordinary
share (cents) 10 1,663
Attributable (loss)/profit (48,424) 1,591,421
Attributable impairment
(write-back)/write-downs (6,548) 1,973,445
Attributable income from
joint venture in prior periods (32,504)
Attributable loss on sale
of assets 76,409 34,706
Headline earnings 21,437 3,567,068
Weighted average number
of shares in issue 215,064,169 214,510,049
(c) Diluted (loss)/earnings
per ordinary share (cents) (23) 738
Attributable (loss)/profit (48,424) 1,591,421
Diluted weighted average
number of shares in issue 216,273,433 215,538,859
Due to the reported loss for the year ended 30 June 2010 there is no dilution,
accordingly, the basic loss per Ordinary share was used.
10. Capital commitments (Northam Platinum Limited)
Reviewed Audited
30 June 30 June
R`000 2010 2009
Authorised but not
contracted 3,851,192 191,504
Contracted 29,358 45,046
3,880,550 236,550
11. Directorate
Ms NS Ntsaluba resigned as financial director effective from 31 December 2009.
12. Subsequent events
Northam Platinum Limited declared an interim dividend of 20 cents per share and
Gold Fields Limited declared an interim dividend of 70 cents per share. The
combined dividends will result in an addtional cash inflow of R58.9 million for
Mvela Resources.
13. Audit review opinion
These interim financial results have been reviewed by the group`s external
auditors, PricewaterhouseCoopers Inc., and their unqualified review opinion is
available for inspection at the company`s registered office.
Commentary
Corporate Activity
The Unbundling Strategy - Progress
Mvela Resources sold approximately 7.7 million Gold Fields shares during the
year under review, and used the proceeds to repay its bridging finance. Adverse
movement in Gold Fields` share price, particularly in January and February 2010,
meant that most of the sales took place during the first half of the financial
year. After briefly spiking to approximately R115 per share in early December
2009, Gold Fields fell sharply to below R100 per share by the end of that month,
reaching a low of about R83 per share in early February 2010. Low trading
volumes during the first quarter of the calendar year and an average price of
R92.52 per share for Gold Fields during the first quarter of the calendar year,
provided few opportunities for further sales.
The sale of 44 million Northam shares to ENRC in April 2010 for a net amount of
approximately R2.2 billion, gave Mvela Resources the opportunity to redeem all
of its debt without being exposed to further market pricing uncertainty in Gold
Fields. Mvela Resources has maintained its shareholding in Northam at over 50%
and is suitably positioning for the conclusion of its unbundling strategy.
Once the arbitration with the previous shareholders of Khumama Platinum (Pty)
Limited (Khumama) has been concluded, the unbundling will now comprise:
- The distribution of the company`s residual shareholding in Gold Fields (after
providing for unbundling related costs and runnng costs) as a dividend in
specie;
- The unbundling of the company`s remaining Northam shares; and
- Distributing the value of any remaining cash and the remaining assets.
The Khumama Arbitration
As referred to in Mvela Resources 2009 annual financial statements and the
Reviewed Interim Results for the six months ended 31 December 2009 (accessible
on www.mvelares.co.za), Mvela Resources and the former shareholders of Khumama
are involved in a contractual dispute.
Arbitration hearing sessions were held in May 2010 and July 2010 and the
management of Mvela Resources believes that good progress has been made in this
matter. The Group continues to believe in the merits of its case and will follow
due process in this regard. While it is difficult to anticipate when the matter
may be resolved, Mvela Resources will do its utmost to ensure a speedy
resolution to the arbitration.
Further arbitration dates have been set for the week of 18 October 2010 and the
two weeks from 1 November 2010. Mvela Resources will continue to keep the JSE
Limited informed as to the progress with the arbitration and the anticipated
conclusion of its unbundling strategy.
Financials
The results as presented for the year ended 30 June 2010 are not directly
comparable to those for the year ended 30 June 2009 as a result of the Mvela
Resources group (`the group") increasing its shareholding in Northam Platinum
Limited ("Northam") from 22% to 63% during the 2009 financial year, resulting in
Northam becoming a subsidiary of the group and therefore being fully
consolidated from the end of August 2008. In line with previous practice,
Northam was equity accounted until the end of August 2008. During May 2010 the
group disposed of 44 million Northam shares, decreasing its shareholding from
63% to 50%.
The financial results for the year ended 30 June 2009 therefore reflect equity
accounting of 22% of Northam for the first two months of the period (resulting
in Northam contributing R27 million to equity accounted "Earnings from associate
companies") and full consolidation of Northam`s financial results for ten months
for the period ended 30 June 2009 (resulting in fully consolidated "Operational
mining profit derived from Northam" of R322 million for the period ended 30 June
2009 compared to the R566 million for the year ended 30 June 2010).
Mvela Resources` earnings, which swung from basic earnings per share of 742
cents for the year ended 30 June 2009, to a loss of 23 cents per share for the
year ended 30 June 2010, were also impacted by a change in the accounting
treatment of the Gold Fields shares (2009: Loan to GFI-SA) from March 2009,
whereby the fair value adjustment (and related deferred tax) is accounted for in
the changes in equity as opposed to the accounting thereof in the income
statement.
The conversion of the GFI-SA loan to shares in Gold Fields and the subsequent
sale of part of the Gold Fields investment also has a meaningful impact on the
financial results. The most noticeable difference is apparent in the loss of
interest earned on the GFI-SA loan (from R310 million in the year ended 30 June
2009), finance costs associated with the GFI-SA investment (amounting to R232
million for the year ended 30 June 2009) and the R865 million net gain on
revaluation of the GFI-SA loan for the year ended 30 June 2009 (nil for the year
ended 30 June 2010).
The fair value adjustment on the Gold Fields investment has been taken to the
income statement until 17 March 2009, the date on which the GFI-SA loan
converted into Gold Fields shares. An unrealised fair value gain of R865 million
is therefore reflected for the year ended 30 June 2009 (due to the increase in
the share price of Gold Fields, from R99.50 at 30 June 2008 to R118.90 on 17
March 2009). The sale of 7.7 Gold Fields shares during the year ended 30 June
2010, realised a profit of
R177 million for the group, which represents the difference between the price
realised on the Gold Fields shares sold and the R82.78 cost price per share when
the Transaction was entered into in March 2004 (R326 million on some 11 million
shares for the year ended 30 June 2009). From an IFRS perspective however, a
fair value loss of R91.7 million (2009: R37.8 million) on the sold shares has
been recognised, being the difference between the recorded fair value of the
shares on 17 March 2009 (at R118.90 per share) and the selling value realised on
disposal of the shares.
Mvela Resources` key investment, Northam, continues to produce consistent
operating results from its Zondereinde mine and has embarked on a new phase of
growth at Booysendal. On conclusion of the unbundling strategy, Mvela Resources
shareholders will be directly exposed to the exciting potential inherent in the
Northam group.
Sales by Northam were 18.8% higher at 395 876 oz, benefiting from a 6.3% year on
year increase in metal concentrate production from Northam`s Zondereinde Mine
and higher metal purchases from third parties. Together with a 2.7% increase in
the average 3PGE+Au basket price realised, Northam`s sales revenue increased by
23.8% to R3,945 million. The solid production result was driven by a 2% higher
combined head grade, with both Merensky and UG2 grades improving due to a
relative increase in Merensky potholed facies mined as well as improved control
of the stoping width. The additional cost of acquiring third party material
however, as well as inflation related cost increases, resulted in operating
profit decreasing by 4% to R784 million. Northam remains strongly cash
generative with cash and cash equivalents at year end of R1,186 million and no
debt.
An optimisation study at Booysendal has recently confirmed the potential of the
first phase mine to support production of 187,500 tonnes per month, 25% higher
than previously planned, with first production of concentrate some 4 months
earlier, in January 2013. The Northam board has approved the R3.6 billion
project and the establishment of infrastructure has commenced. Initial funding
will be from internal resources, with the board giving approval for funding
using a combination of convertible bonds and senior bank debt in the longer
term. Greater detail on Northam`s results for the period ended 30 June 2010 is
available on Northam`s website: www.northam.co.za.
Outlook
Mvela Resources has redeemed all of its debt and on 30 June 2010, had cash of
R57 million. Dividends declared by Gold Fields and Northam post year end, will
result in further cash of R59 million for Mvela Resources. The group is
committed to concluding its unbundling strategy in a timeous manner as soon as
the Khumama Arbitration has been concluded.
For and on behalf of the board
Chairman - PL Zim
Deputy Chairman - BR van Rooyen
Sponsor:
J.P. Morgan Equities Limited
23 September 2010
Johannesburg
Full details of our results are available at www.mvelares.co.za
Directors
PL Zim (Chairman)
SW Mofokeng*
BR van Rooyen*
ME Beckett (British)**
PM Buthelezi
CK Chabedi**
YZ Cuba
R Moonsamy
MJ Willcox
MSMM Xayiya
(* Executive Directors)
(**Independent)
Registration number: 1980/001395/06
Incorporated in the Republic of South Africa
Share code: MVL
ISIN number: ZAE000050266
Registered Office
1A Albury Park
Dunkeld West, 2196
Magalieszicht Avenue
P O Box 413420, Craighall, 2024
Transfer Secretaries
Computershare Investor Services
(Pty) Limited
70 Marshall Street
P O Box 61051, Marshalltown, 2107
Date: 23/09/2010 08:00:02 Produced by the JSE SENS Department.
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