| Fri 29 Apr 2005, 17:27 | | Reviewed Preliminary Results |
|
Randgold - Reviewed Preliminary Results
Randgold & Exploration Company Limited
(Incorporated in the Republic of South Africa)
(Registration number1992/005642/06)
Share code: RNG
ISIN: ZAE000008819
Nasdaq trading symbol: RANGY
(`Randgold` or `the Company` or `the Group`)
REVIEWED PRELIMINARY RESULTS
For the year ended 31 December 2004
Group income statement
Reviewed Audited
Year ended Year ended
31 December 31 December
R000 Notes 2004 2003
Income
Dividends and
interest received 30 537 9 357
Profit on sale of portion
of investment in associate 1 133 745 241 429
Profit/(loss) on sale
of investments 15 546 (34 151)
Profit on sale of property,
plant and equipment 2 40 109 -
Fair value adjustment of
investment property 736 -
Other income 7 431 14 987
Expenses
Interest expense (7 401) (6 447)
Depreciation and amortisation (11 472) (994)
Impairment of goodwill - (24 398)
Foreign exchange loss (57 304) (132 067)
Exploration and
corporate expenditure (10 372) (27 972)
Profit before taxes, equity
income and minority interest 141 555 39 744
Taxation (43 156) (29 593)
Profit before equity income
and minority interest 98 399 10 151
Equity income from associate 1 40 944 166 351
Minority interest (19 089) 702
Profit for the year 120 254 177 204
Weighted number of shares
- Earnings per share and
headline earnings per share 62 609 48 237
- Diluted earnings per share and diluted headline
earnings per share 62 680 48 370
Earnings per share (cents) 192 367
Fully diluted earnings per
share (cents) 192 366
Headline loss per
share (cents) (59) (12)
Fully diluted headline loss
per share (cents) (59) (12)
Reconciliation between earnings
and headline earnings:
Earnings for the year 120 254 177 204
Add back:
Profit on sale of portion of
investment in associate (133 745) (241 429)
Impairment of goodwill - 24 398
Profit on sale of property, plant
and equipment (40 109) -
Profit on sale of investments (15 546) -
Tax effect of adjustments 32 094 33 810
Headline loss for the year (37 052) (6 017)
Group cash flow statement
Reviewed Audited
Year ended Year ended
31 December 31 December
R000 2004 2003
Cash utilised in operations (40 928) (4 267)
Dividends and interest
received 30 537 8 198
Interest paid (7 401) (6 447)
Taxation paid (694) (3 029)
Net cash utilised in
operations (18 486) (5 545)
Net cash from investing
activities 14 047 93 460
Net cash utilised in financing
activities (910) (98 716)
Net decrease in cash and
cash equivalents (5 349) (10 801)
Cash and cash equivalents
at beginning of year 11 202 22 003
Cash and cash equivalents
at end of year 5 853 11 202
Group balance sheet
Reviewed Audited
31 December 31 December
R000 Notes 2004 2003
ASSETS
Current assets
Cash and cash equivalents 5 853 11 202
Accounts receivable 31 323 3 466
Total current assets 37 176 14 668
Property, mineral rights
and prospecting rights 3 239 012 79 133
Investment in associate 1 334 495 432 339
Investments 4 541 784 431 209
Other long-term assets 5 268 410 200 871
1 383 701 1 143 552
Total assets 1 420 877 1 158 220
Liabilities and
shareholders` equity
Current liabilities
Accounts payable and
accrued liabilities 11 677 6 736
Taxation 81 587 39 170
Total current liabilities 93 264 45 906
Long-term liabilities
Provision for post
retirement benefits 44 669 58 670
Deferred taxation 45 -
44 714 58 670
Total liabilities 137 978 104 576
Shareholders` equity
Share capital 6 748 553
Share premium 928 005 614 120
Other reserves 7 398 701 632 077
Accumulated losses (104 827) (225 081)
Total shareholders`
equity 1 222 627 1 021 669
Outside shareholders`
interest 60 272 31 975
Total liabilities and
equity 1 420 877 1 158 220
Movement in shareholders`
equity
Reviewed Audited
Year ended Year ended
31 December 31 December
R000 2004 2003
Balance at beginning of
the year 1 021 669 547 629
Share options exercised - 16 719
Shares issued during
the year 314 080 304 588
Net movement in reserves (233 376) (24 471)
Profit for the year 120 254 177 204
Balance at end of
the year 1 222 627 1 021 669
Net asset value (`NAV`)
Fair value
Price per 31 December
Shares share Percent 2004
DESCRIPTION held R held R000
Listed investments
Aflease Gold and
Uranium
Resources
Limited (formerly The
Afrikaner
Lease Limited) 77 811 781 1.79 22.97 139 283
Anglo American
Platinum
Corporation Limited 235 000 210.00 0.11 49 350
Harmony Gold Mining
Company
Limited 315 000 51.75 0.08 16 301
JCI Limited -
ordinary shares 51 560 613 0.27 2.43 13 921
JCI Limited -
debentures 50 651 0.83 0.01 42
Kelgran Limited 2 324 830 0.16 2.47 372
Pan Palladium Limited 13 100 000 2.15 12.38 28 165
Randgold Resources
Limited 18 358 000 67.35 30.921 236 411
Simmer and Jack Mines
Limited 40 000 000 0.21 18.57 8 400
Western Areas Limited 9 816 613 25.00 9.32 245 415
1 737 660
Other assets 585 131
Current assets 37 176
Property, mineral
rights
and prospecting permits 279 545
Other long-term assets
(Group`s holding) 268 410
Liabilities and outside
shareholders interest
(198 250)
Net assets 2 124 541
Shares in issue (000) 74 813 128
NAV per share (cents) 2 840
Segmental
analysis
Geographical
segments South African
Business Non- Investments
segments South African and
Mining Exploration corporate
R000 activities activities activities Total
Year ended 31
December 2004
Income
Net dividends
and interest - 7 112 16 024 23 136
Depreciation and
amortisation - (85) (11 387) (11 472)
Foreign exchange
differences (57 304) - - (57 304)
Profit on sale
of
investments - - 15 546 15 546
Profit due to
decrease in
holding
in associate 133 745 - - 133 745
Exploration and
corporate
expenditure (3 256) (1 893) (5 223) (10 372)
Profit on sale
of property,
plant
and equipment - 39 921 188 40 109
Fair value
adjustment of
investment
property - - 736 736
Other income - 535 6 896 7 431
Profit before
tax,
equity income
and minority
interest 73 185 45 590 22 780 141 555
Equity income
from
associate 40 944 - - 40 944
Minority
interest 341 (14 377) (5 053) (19 089)
Taxation - (14 158) (28 998) (43 156)
Profit/(loss)
for the year 114 470 17 055 (11 271) 120 254
Assets 124 632 86 256 1 209 989 1 420 877
External
liabilities and
minority
interest 12 433 67 417 118400 198 250
Financial review
The net profit of R120 million for the year ended 31 December 2004, which is a
decrease of 32% from the net profit of R177 million for the previous year, was
mainly as a consequence of the lesser income from Randgold Resources Limited
(`Randgold Resources`), both in terms of the attributable earnings and sale of
shares in Randgold Resources.
Randgold Resources attributable production declined to 204 194 ounces of gold
in 2004 from 317 597 in 2003 and cash costs increased to $158/oz in 2004 from
$76/oz in 2003. Randgold Resources` net profit declined on the back of the
poorer production results to $20.1 million in 2004 from $47.5 million in 2003.
Randgold`s attributable earnings from Randgold Resources declined in line with
the fall in earnings of Randgold Resources, and also because of the decline in
shareholding from 37% to 31%. Randgold disposed of 3.2 million Randgold
Resources shares during the year at a net profit of R134 million. Randgold`s
interest in Randgold Resources now stands at 31%. As a consequence of the
further appreciation of the Rand during 2004, the investment in Randgold
Resources was affected by an unrealised foreign exchange loss on conversion of
R57 million.
On the back of the increased funding provided to the Angolan joint venture
partners, the interest earnings of Randgold have increased to R30 million
relative to 2003`s R9 million. Following the acquisition of Free State
Development and Investment Corporation Limited (`FSD`) last year, FSD
finalised the mineral swap with Anglogold Ashanti and realised a profit of R39
million on the transaction. FSD is subject to tax on the transaction, but the
retention of the rights is still subject to Ministerial approval under the new
Minerals and Energy Bill. JCI`s retention of its interest in FSD, accounts for
the increased minority interest following the Anglogold Ashanti mineral right
swap.
Randgold disposed of some surplus equipment acquired in Angola and is due to
receive the proceeds in the third quarter of 2005, representing the bulk of
the outstanding accounts receivable. In line with Randgold`s strategy of
investing in Angolan diamond projects, the acquisitions and loans are mirrored
in the additions to fixed assets. During 2004, Randgold entered into various
transactions with Aflease Gold and Uranium Resources Limited (`Aflease`), and
on the 31 December 2004 held some 78 million shares in
Aflease worth R139 million. During the year, the Company lent 9.9 million
shares in Randgold Resources to Bookmark Holdings, an Empowerment Entity. This
transaction was structured to finance the purchase by Inkwenkwezi Gold (Pty)
Limited (`Inkwenkwezi`) of 19 million shares in Western Areas Limited
(`Western Areas`) from Anglo American Plc (`Anglo`). Inkwenkwezi is currently
in the process of finalising this transaction with Anglo and exercising its
option against Randgold for 5.3 million Western Areas shares. Bookmark
Holdings is due to return the shares by June 2006. In addition to this loan,
Randgold had provided funding for the Angolan initiatives of R150 million and
JCI`s loan to FSD is still owing, accounting for the R268 million of other
assets.
The issuance of 9.4 million Randgold shares to Aflease and 2.1 million shares
to Pan Palladium account for the increase in share capital and premium of R314
million during 2004. The market value of the Western Areas shares at 31
December 2004 was some R233 million less than the acquisition price. The
directors are of the view that this diminution in value is not permanent, and
have accounted for this against the equity reserves, in accordance with fair
value accounting standards.
Notes to financial statements
The preliminary results for the year ended 31 December 2004 have been prepared
in terms of the International Financial Reporting Standards of the
International Accounting Standards Board and the South African Statements of
Generally Accepted Accounting Practice, including accounting standard AC127,
`Interim Financial Reporting`, and in accordance with the Group`s accounting
policies which are consistent with those used in the audited financial
statements for the year ended 31 December 2003.
The preliminary results have been reviewed by our auditors, Charles Orbach &
Company, and a copy of their unmodified review report on the financial
statements contained in this preliminary report is available for inspection at
the Company`s registered office.
1. Investment in Associate:
a. The Group`s shareholding in Randgold Resources decreased from 36.86% to
30.92% due to shares being sold.
Carrying amount R000
Carrying amount at beginning of the year 432 339
Net loss on share capital movements in associate (516)
Decrease in Group`s holding due to shares sold (66 464)
Movement on cash flow hedges (15 571)
Unrealised exchange losses on conversion (56 237)
Equity accounted earnings of associate 40 944
Carrying amount at end of the year 334 495
b. Reconciliation of the Group`s shareholding
in Randgold Resources:
Shareholding at beginning of the year Note i 21 570 000 36.9%
Disposed of during the year Note ii (3 212 000) (6.0%)
Shareholding at end of the year 18 358 000 30.9%
Lent to an Empowerment Entity Note iii 9 890 500 16.7%
Held in escrow to secure Angolan
diamond concession option Note iv 2 000 000 3.3%
Held directly and indirectly at end of
the year Note v 6 467 500 10.9%
Shareholding at end of the year 18 358 000 30.9%
Notes:
i During 2004 Randgold Resources did a two-for-one share split. The
shareholding at 31 December 2003 was 10 785 000 and after the split equates to
21 570 000.
ii Shares sold during 2004, reducing the shareholding from 36.9% to 30.9%.
iii Lent to an Empowerment Entity, primarily for the purchase of the Anglo
shareholding in Western Areas (19 million shares) by Inkwenkwezi. Inkwenkwezi
is currently finalising this transaction with Anglo and exercising its option
against Randgold for 5.3 million Western Areas shares.
iv Shares held in escrow by a vendor of a potential Angolan diamond
concession as security for first right of refusal. Following completion of a
due diligence, Randgold has elected not to pursue the opportunity and the
shares are required to be returned.
v Shares held by Randgold directly and indirectly at year-end.
In terms of the shares lent out under the script lending arrangements,
Randgold retains the beneficial interest in the shares, and is entitled to the
return of the shares in due course, at which time the shares will be
registered in Randgold`s name.
2. Profit on a mineral right swap concluded by FSD with Anglogold Ashanti.
3. The increase in property, mineral rights and prospecting rights is
attributable to the increased investment in alluvial diamond mining interests
in Angola. During the year Randgold acquired an effective 45.5% interest in
the Cassanguidi alluvial diamond mining venture in the Lunda Norte, Angola.
The Cassanguidi concession has a history of successful mining and the mining
operation commenced in December 2004. Randgold further acquired
interests in the Luxinge mining concession and Dando Cuanza prospecting
concession in Angola. These concessions were selected on the basis of
preliminary geological evaluations and are currently under development and are
expected to start producing in 2005. In particular, the Dando Cuanza
concession has several known kimberlite pipes and ongoing geological work is
being undertaken to evaluate their potential.
4. The Group acquired an additional 5.8 million Western Areas shares and a
net amount of 47.5 million Aflease shares during the year.
5. Other long-term assets comprise funding advanced to the Angolan joint
venture partners, Inkwenkwezi and JCI Limited.
6. During the period under review, the Company made application to the JSE
Securities Exchange South Africa for the following listings of ordinary
shares:
# 9 September 2004 - listing of 9.4 million ordinary shares of 1
cent each in terms of a Share Swap Agreement between Randgold, JCI Limited and
Aflease, in terms of which Aflease issued Randgold 94 million Aflease ordinary
shares of 2 cents each.
# 26 October 2004 - listing of 2 159 343 ordinary shares of 1 cent
each in terms of a Share Subscription Agreement between Pan Palladium and
Randgold, in terms of which Pan Palladium issued 13 100 000 shares to
Randgold.
Randgold`s authorised and issued share capital is currently as follows:
Authorised: 75 000 000 shares of 1 cent each
Issued: 74 813 128 shares of 1 cent each
7. The decrease in other reserves is primarily attributable to mark-to-
market adjustments made to the investments in Western Areas and Aflease
in accordance with AC133.
R B Kebble
Chief Executive Officer
H C Buitendag
Financial Director
Johannesburg
29 April 2005
Disclaimer:
Certain statements in this announcement, as well as oral statements that may
be made by Randgold`s officers, directors or employees acting on its behalf
related to such information, contain `forward-looking statements` regarding
Randgold`s operations, economic performance and financial condition within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995,
specifically Section 27A of the U.S. Securities Act of 1933 and Section 21E of
the U.S. Securities Exchange Act of 1934. All statements, other than
statements of historical facts, are `forward-looking statements.` This
includes those concerning the economic outlook for the mining industry,
expectations regarding commodity prices, the completion and commencement of
commercial operations of certain of the Company`s exploration and production
investments, its liquidity, and capital resources and expenditure. Although
the Company is of the opinion that the expectations reflected in such forward-
looking statements are reasonable, no assurance can be given that such
expectations will prove to be correct. Actual results could differ materially
from those implied by or set out in the forward-looking statements. Among
other factors, this could be as a result in changes in economic and market
conditions, the success of business and operating initiatives, including
development of mining operations, changes in regulatory environment and other
government actions, fluctuations in commodity prices and exchange rates,
business and operational risk management and the risks identified in Item 3 of
the Company`s most recent annual report on Form 20-F filed with the U.S.
Securities Exchange Commission and its other filings and submissions with the
SEC. All forward-looking statements attributable to the Company, or persons
acting on its behalf, are qualified in their entirety by these cautionary
statements.
Registered office: 28 Harrison Street, Johannesburg, 2001,
P.O. Box 11165,Johannesburg, 2000 Republic of South Africa,
Telephone: +27(11) 688-5000
Fax:+27(11) 834-5086, e-mail: tbeale@jci.co.za
South African Transfer Secretaries: Computershare Investor Services 2004 (Pty)
Limited,
70 Marshall Street, Johannesburg, 2001,
P.O Box 61051, Marshalltown,2107, Republic of South Africa
Telephone: +27(11) 370-5000
Fax: +27(11) 688-7721/2
United States Depository: American Depository Receipts, The Bank of New York,
Shareholder Relations Department, 101 Barclay Street, New York, NY 10286
Telephone: +91 212 815-3326
Fax: +91 212 571-3050
Investor relations: For further information contact David Barritt on
Telephone: + 27(21) 761-0549,
Fax : +27(21) 797-0467,
e-mail:david@barritt.co.za
Website: www.randgold.co.za
