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ARM - Restated results for the year ended 30 June 2004
African Rainbow Minerals Limited
(Formerly Anglovaal Mining Limited (`Avmin`))
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
JSE Share code: ARI
LSE Share code: AGM
ISIN: ZAE000054045
(`ARM` or the `Company`)
Restated results for the year ended 30 June 2004
Shareholders are referred to the reviewed results of ARM for the year ended 30
June 2004 published on the Stock Exchange News Service (`SENS`) on 17 August
2004.
Shareholders are advised that, for the reasons set out below, the results of
ARM for the year ended 30 June 2004 and the comparative 2003 results have been
restated.
Revised preliminary results to June 2004.
During the finalisation of ARM`s financial results for the year ended 30 June
2004 a number of complex accounting issues flowing from the African Rainbow
Minerals & Exploration Investments (Proprietary)Limited / Avmin /Avgold
Limited (`Avgold`) /Harmony Gold Mining Company Limited (`Harmony`)
transaction were considered. These issues included (i) confirmation of the
prior treatment of Avgold as a subsidiary, (ii) accounting for Harmony as an
associate and (iii) the correct application of business combination accounting
for all the linked transactions. Confirmation of the approach to accounting
for Harmony as an associate company results in the accounting deferral of a
portion of the profit attributable to the sale of Avgold by ARM to Harmony, as
it is considered to be unrealised. The preliminary results for the year to 30
June 2004, published on 17 August 2004, have been revised to reflect this
deferral as an adjustment to the exceptional profit on the sale with a
respective reduction in the carrying value of the investment in Harmony.
Owing to the deconsolidation of Avgold with effect from 1 May 2003 individual
line items in the 2004 income statement have been restated, as shown below.
There is no change to the previously reported headline earnings of R47
million.
The impact on the published preliminary June 2004 annual results is:
R`m Before Restated
Basic Earnings 1 360 1 108
Headline earnings 47 47
EPS (cps) 1 062 865
HEPS (cps) 37 37
Total assets 11 725 11 460
Shareholders interest 6 880 6 628
in capital and reserves
(attributable net assets)
Restated comparative figures for the year ended 30 June 2003
In April 2003 Avmin sold down a portion of its investment in Avgold from 55.9
percent to 42.2 percent. Avgold`s results continued to be consolidated after
that date as eight of the ten directors on the Avgold board were appointed by
Avmin and this situation remained after the dilution in interest.
International Accounting Standard IAS 27 paragraph 13(d) which refers inter-
alia to the `power to cast the majority of votes at meetings of the board of
directors` was interpreted by the board to mean that the group still
controlled Avgold.
During the current year there was new thinking and interpretation,
internationally, on the issue of ` effective control `, and it was concluded
that the power to appoint the majority of directors must be by legal or
contractual right and that effective control is not the type of control that
the statement intended. Therefore, although Avmin did actually have control of
the Avgold board, this does not constitute control as intended by IAS 27. This
has the result that Avgold is considered to be an associated company that is
equity accounted and not a subsidiary to be consolidated.
This revised accounting treatment has been applied in the 2004 annual
financial statements and as a result, the 30 June 2003 comparative financial
statements and notes thereto for the ARM Group have been restated to equity
account the results of Avgold as an associate from 1 May 2003.
Previously reported headline and basic earnings and attributable net asset
value for June 2003 are unchanged.
The summarised impacts on the June 2003 annual financial statements are:
R`m Before Restated
Basic Earnings -191 -191
Headline earnings 197 197
EPS (cps) -170 -170
HEPS (cps) 176 176
Total assets 7 161 5 468
Shareholders interest 2 511 2 511
in capital and reserves
(attributable net assets)
The restated balance sheet, income statement, statement of changes in equity
and cash flow statement follows:
BALANCE SHEET - at 30 June 2004 Group Group
2004 2003
Rm Rm
ASSETS
Non-current assets
Tangible assets 4 674 2 278
Intangible assets 5 6
Deferred tax assets 7 12
Environmental rehabilitation trust funds 29 22
Investment in associates 4 338 925
Other Investments 3 212
9 056 3 455
Current assets
Inventories 914 849
Trade and other receivables 1 162 900
Cash and cash equivalents 328 264
2 404 2 013
Total assets 11 460 5 468
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 10 6
Share premium 3 495 79
Other reserves ( 193) 218
Retained earnings 3 316 2 208
Shareholders interest in capital and 6 628 2 511
reserves
Minority interest 1 326 1 141
Total shareholders` interest 7 954 3 652
Non-current liabilities
Long-term borrowings 857 -
Deferred tax liabilities 853 519
Long-term provisions 151 111
1 861 630
Current liabilities
Trade and other payables 567 439
Provisions 41 32
Taxation 63 28
Overdrafts and short-term borrowings 974 687
1 645 1 186
Total equity and liabilities 11 460 5 468
Income statement - for the year ended 30 Group Group
June 2004
2004 2003
Rm Rm
Revenue 3 885 4 728
Cost of sales (3 064) (3 733)
Gross profit 821 995
Other operating income 73 358
Other operating expenses (343) (698)
Retrenchment costs (23) (35)
Profit from operations 528 620
Income from investments 26 80
Finance costs (80) (169)
Loss from associate (120) (42)
Profit before taxation and exceptional 354 489
items
Exceptional items 1 148 (395)
-Profit / (loss) on disposal of 1 057 (649)
discontinued operations
-Other exceptional items 91 254
Profit / (loss) before taxation 1,502 94
Taxation (291) (147)
Profit / (loss) after taxation 1 211 (53)
Minority interest (103) (138)
Basic earnings / (loss) 1 108 (191)
Statement of Share Foreign Revaluation Other Retained Total
changes in equity Capital currency of land and * earnings
(revised) and trans- buildings
For the year Premium lation
ended 30 June
2004
Rm Rm Rm Rm Rm Rm
Group
Balance at 30 68 (42) 6 146 2 401 2 579
June 2002
Loss - - - - (191) (191)
Revaluation of - - - 39 - 39
listed
investments
Translation of - 24 - - - 24
foreign
subsidiary
Reversal of - - - 26 - 26
derivitive
instruments
Realisation of - 18 - - - 18
reserve on
disposal of
Chambishi
Share options 17 - - - - 17
exercised
Transfer to - 2 ( 2) -
insurance
contingency
reserve
Other - - - (1) - ( 1)
Balance at 30 85 - 6 212 2 208 2 511
June 2003
Basic - - - - 1 108 1 108
earnings
Investment - - - (133) - (133)
sold
Revaluation of - - - (45) - ( 45)
listed
investments
Share options 54 - - - - 54
exercised
Share`s issued 3 366 - - - - 3 366
for acquisitions
Share of - - - (235) - (235)
associate`s other
reserves
Other - - - 2 - 2
Balance at 30 3 505 - 6 (199) 3 316 6 628
June 2004
Cash flow statement (revised) for the year ended 30 Group Group
June 2004
2004 2003
Rm Rm
CASH FLOW FROM OPERATING ACTIVITIES
Cash receipts from customers 3 838 4 777
Cash paid to suppliers and employees (3 235) (3 967)
Cash generated from operations 603 810
Interest received 24 76
Interest paid (70) (169)
Dividends received 1 3
Dividends paid to minorities (13) (21)
Taxation paid (70) (101)
Net cash inflow from operating activities 475 598
CASH FLOW FROM INVESTING ACTIVITIES
Additions to fixed assets to maintain operations (472) (414)
Additions to fixed assets to expand operations (101) (110)
Net cash effects of acquisitions (32) -
Proceeds on disposal of fixed assets 7 8
Proceeds on disposal of investments 167 -
Purchase of remaining portion in Nkomati (260) -
Net cash effect on sale of Chambishi - ( 67)
Net cash effect on sale of Avgold - 426
Net cash outflow from investing activities (691) (157)
CASH FLOW FROM FINANCING ACTIVITIES
Proceed on exercise of share options 54 17
Funding received from minority shareholders 42 11
Long-term borrowings raised 280 -
Long-term borrowings repaid (127) (745)
Increase / (decrease) in short-term borrowings 31 (239)
Net cash inflow / (outflow) from financing 280 (956)
activities
Net increase / (decrease) in cash and cash 64 (515)
equivalents
Cash and cash equivalents at beginning of year 264 779
Cash and cash equivalents at end of year 328 264
Cash generated from operations per share (cents) 471 723
Johannesburg
14 December 2004
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
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