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JCD
JCD
JCI - Provisional unaudited and unreviewed results for the six months ended 30
September 2005, and for the two years ended 31 March 2005
JCI Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1894/000854/06)
Share Code: JCD
ISIN: ZAE000039681 (Suspended)
PROVISIONAL UNAUDITED AND UNREVIEWED RESULTS FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2005, AND FOR THE TWO YEARS ENDED 31 MARCH 2005
COMMENTARY TO THE PROVISIONAL FINANCIAL RESULTS
Disclaimer by Directors of JCI Limited ("JCI" or "the Company") and Forward
Looking Statements
The present directors, comprising the new board appointed during August to
September 2005, have taken account of the forensic reports prepared by KPMG
Forensic and used their respective reasonable endeavours to make available the
information used in the preparation of these provisional financial results. The
provisional financial results have not been audited or reviewed. Notwithstanding
the reasonable endeavours of the directors and as described herein, attention of
shareholders is drawn to the fact that:
The new board was appointed during the period August to September 2005
subsequent to the material events and circumstances that had a direct effect on
the financial and other affairs of JCI;
The directors, comprising the new board, currently have no further knowledge of
the material circumstances and events that have affected the financial and other
affairs of JCI;
Due to the extent of the misappropriations described below, there may be other
material events and circumstances of which the directors are not currently
aware, which may have a material effect on JCI and which may affect the accuracy
and completeness of the information reflected in the provisional financial
results and/or may have the effect that the provisional financial results do not
reflect a true and complete account of the financial and other affairs of JCI;
and
Any additional recoveries not reflected in the provisional financial results
will be addressed in subsequent financial statements.
In these circumstances and due to the sustained and comprehensive failure and
manipulation of JCI"s internal administrative, financial and management
controls, the directors hereby disclaim any liability in respect of the
accuracy, correctness and/or completeness of the information reflected in the
provisional financial results.
The net asset value calculation set out below has been prepared subject to the
constraints described herein. Consequently, the contents of this disclaimer
should inform any assessment of that calculation. Also, attention is drawn to
the paragraph below dealing with the Randgold claim.
JCI will produce an annual report once the financial records have been properly
prepared.
Certain statements in this announcement, as well as oral statements that may be
made by the Company"s officers, directors or employees acting on its behalf
relating to such information, contain "forward-looking statements". All
statements, other than statements of historical facts, are "forward-looking
statements." This includes, without limitation, those statements concerning the
fraud and misappropriation that are alleged to have occurred and the time
periods affected thereby; the ability of the Company to recover any
misappropriated assets and investments; the outcome of any proceedings against
the Company, including, without limitation; the Company"s ability to complete
its forensic investigation and prepare audited financial statements; the time
period for completing its forensic investigation and audited financial
statements; and the ultimate impact on the Company"s previously released
financial statements and results, assets and investments, business, operations,
economic performance, financial condition, outlook, trading markets and JSE"s
willingness to lift its suspension of the trading of the Company"s securities on
that exchange. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, no assurance can be given that
such expectations will prove to be correct, particularly in light of the extent
of the frauds and misappropriations uncovered to date. Actual results could
differ materially from those implied by or set out in the forward-looking
statements.
All forward-looking statements attributable to the Company, or persons acting on
its behalf, are qualified in their entirety by these cautionary statements.
Introduction
In August 2005, the JCI Group found itself in a position of increasing financial
distress, mainly due to financial obligations that were due and payable. In
order to address the financial pressures, JCI entered into a refinancing
agreement with Investec that allowed the Company to meet its obligations. One of
the conditions, inter alia, of the Investec facility was the reconstitution of
the JCI board. This was done with the consent of the Company"s major independent
shareholder. The newly constituted board of JCI ("the new board") appointed KPMG
Forensic in October 2005 to undertake a forensic investigation into the
financial affairs of JCI and the JCI Group. This was done in parallel with a
similar forensic investigation at Randgold. KPMG Forensic was mandated to
investigate the financial affairs of JCI and the JCI Group from April 2002, with
the possibility of investigating prior periods in due course. KPMG Forensic has
now produced an interim report, and its investigations are ongoing.
As a consequence of not publishing audited financial results for the year ended
31 March 2005, JCI was suspended from the JSE on 19 August 2005.
As a result of KPMG"s initial forensic investigation, a formal statement was
issued by the new board on 10 November 2005 indicating that the previously
published audited financial statements did not fairly reflect the affairs of
JCI, and that a material misappropriation of the assets of JCI had occurred. The
full extent to which the accounting records of the various JCI companies had
been manipulated while under the direction of the prior board to conceal the
misappropriations, came to light as KPMG Forensic"s investigation progressed.
Accordingly, the preparation of these provisional financial results has taken
longer than originally anticipated.
KPMG Inc. ("KPMG") was appointed as the auditors of JCI by the new board in
October 2005. In view of the uncertainties relating to the provisional financial
results and the disclaimer by the directors, as discussed in the section above
"Disclaimer by Directors of JCI and forward looking statements", the auditors
are unable to and do not express an audit or review opinion on the provisional
financial results.
Net asset value ("NAV")
On a consolidated basis, the estimated NAV position of the JCI Group at 31 March
2006 is reflected below.
Net asset value at 31 March 2006 (R000)
Listed investments 2 100 945
38.3 million WAL shares1 1 733 075
6.2 million Randgold shares2 122 000
213.8 million Matodzi shares3 245 870
Unlisted investments 620 000
Letseng4 380 000
- Jaganda5 120 000
- Boschendal6 120 000
Other assets 220 000
- Properties7 120 000
- Other 100 000
Total assets 2 940 945
Claim: Randgold 8, 14 1 132 000
Investec facility9 387 329
Investec profit share10 361 400
Net current liabilities (including taxation) 11 250 000
Total liabilities 2 130 729
Net assets 810 216
Shares in issue 2 224 798 26512
Net asset value per share (cents) 36 13, 14
1. Based on WAL closing share price of R45.25 on 31 March 2006.
2. Based on NAV per the published provisional Randgold results on 31 March 2006.
3. Based on Matodzi"s closing share price of R1.15 on 31 March 2006.
4. Based on offers received of circa R950 million.
5. Based on offers received circa R120 million. Each Jaganda preference share
has a redemption price equal to the aggregate of R0.25 and 20% of the 30 day
weighted average traded price of the shares of Simmers on the JSE as at the date
of redemption, in excess of R0.25. Based on Simmers" closing share price of
R1.57 on 31 March 2006, the future redemption value is approximately R184
million.
6. Based on an offer received of R120 million from an independent third party.
7. The property portfolio has been sold for R120 million, with guarantees to be
issued shortly for the purchase consideration.
8. Based on the published provisional Randgold results on 31 March 2006.
9. Loans made available by Investec to JCIIF, excluding Letseng loans.
10. Per table below.
11. Best estimate based on information currently available.
12. No adjustment has been made for the shares issued pursuant to the fictitious
issue of JCI shares.
13. Based on the stated shares in issue. Any successful proceedings seeking
cancellation of shares issued pursuant to fictitious transactions will directly
impact on this calculation.
14. To the extent that the mediation process described below results in a
different outcome, such difference will impact directly on the net asset value.
Any recoveries not reflected in the provisional financial results as claims
receivable will further contribute towards JCI"s financial standing and will be
addressed in subsequent financial statements.
Furthermore, JCI continues to hold interests in a portfolio of mineral rights in
respect of which applications have been made to the Department of Minerals and
Energy in terms of new mining legislation. These assets are currently shown in
the accounts at a nominal value only.
Nature of the business
JCI is a mining investment company. Currently its principal investments are a
shareholding in WAL, a gold mining company listed on JSE that holds 50% of one
of the largest unexploited gold reserves in the world; an interest in Letseng
Diamonds. in Lesotho; a portfolio of other assets, in particular a property
portfolio including an interest in Boschendal, preference shares in Jaganda an
indirect investment in Simmers; a selection of minor industrial and technology
interests; and various mineral rights for which the necessary applications had
been submitted to the Department of Minerals and Energy in respect of the new
mining legislation.
Forensic investigation
Funding of the JCI Group, related entities and third parties
JCI appears to have been the victim of fraudulent activities while under the
directorship of the previous board from April 2002, as far as the current
directors are aware. In circumstances where JCI struggled to obtain financing
from financial institutions, JCI participated in financing structures using its
primary liquid assets, that is, its listed investments and those of Randgold,
while under the directorship of the previous board. When these financing
structures were not available, or unable to release sufficient cash, the listed
investments of JCI and Randgold were sold to generate funds.
CMMS, acting as "Group Treasury".
CMMS was used to implement and maintain the financing structures of the broader
group, comprising JCI, Randgold and their affiliated companies, mainly through
its share trading activities. Cash flows of R2.944 million were matched by cash
outflows of R2.968 million in the period 1 April 2002 to 30 September 2005.
(Refer Appendix 1)
Sale of Randgold"s shares (RRL and Aflease)
The CMMS treasury arrangement resulted in the sale of RRL and Aflease shares,
belonging to Randgold being reflected in the trading accounts of CMMS. The table
below summarises the proceeds by year as reflected in the CMMS trading accounts:
Investment Number Proceeds
of shares (R million)
RRL
March 2004 575 000 92.6
March 2005 3 489 189 310.0
September 2005 3 061 811 260.9
7 126 000 663.5
Aflease
March 2004 - -
March 2005 8 000 000 10.8
September 2005 - -
8 000 000 10.8
In addition to the above, a further 2.729 million RRL shares were sold not
through CMMS"s trading accounts but on behalf of the JCI Group for a net amount
of R208.7 million. The proceeds of the shares sold set out in the table above,
together with the sale of the 2.729 million RRL shares are included in the
Randgold claim of R720 million, taking into account that a portion of the
proceeds was repaid to Randgold over the period.
Responses by previous directors to share trading losses and cash requirements of
the JCI Group entities.
An apparent need to generate cash and to cover the liability in respect of RRL
shares sold, caused CMMS continuously to borrow and sell listed shares by
entering into scrip lending arrangements (mainly with SocGen), that were not
hedged. The prolonged bull-run in the stock market during this period exposed
CMMS to significant trading losses.
These cash requirements and trading losses were, inter alia, funded as follows:
- The crediting of R663.5 million to CMMS"s share trading accounts, funded by
the sale of 7.126 million RRL shares that were owned by Randgold as set out in
the table above. No agreements or resolutions authorising these transactions by
the previous directors of JCI or Randgold have been found. In December 2003, a
back-to-back arrangement was entered into with Masupatsela, to provide some form
of audit evidence for the failure to disclose the transactions between JCI and
Randgold. This so-called solution carried a significant cost comprising monthly
payments made to Masupatsela that were capitalised as loans in the balance sheet
and not expensed. A series of documents were then drafted by the previous
directors during March 2005 between Randgold and Bookmark, which were aimed at
concealing the sale of the RRL shares. The professed Bookmark contract did not
reflect the true economic effect of the sale of the RRL shares. This was
exacerbated when the position relating to the RRL share sales and the
implications thereof were misrepresented to Investec when Investec agreed in
August 2005 to provide a funding facility to the JCI Group and to the new
directors;
- The sale of 8 million Aflease shares of Randgold and the crediting of the
proceeds thereof to CMMS"s share trading account as set out in the table above;
- The crediting of R20.7 million to CMMS"s share trading account, funded by the
sale of 1.493 million Randgold shares owned by a third party. These shares were
apparently misappropriated without the authorisation of the third party. The
effect of this transaction was to alleviate the pressure on collateral required
in terms of the treasury operations of CMMS;
- The crediting of R25 million to CMMS"s share trading account arising from the
sale to Topgold of 100 million Simmers shares made up as follows: 9 million
owned by JCI, 80 million held by Continental Goldfields and 11 million owned by
OrlyFunt. There appears to have been no agreements and authorisations underlying
such appropriations. Instead of advancing, as agreed, R20 million to Simmers on
behalf of Topgold, the cash generated from the sale of these shares was paid
towards the collateral requirements of CMMS"s share trading facilities. This
series of transactions also resulted in Continental Goldfields claiming
approximately R12.8 million from JCI;
- The crediting of 40 million JCI shares, derived from the issue of JCI listed
ordinary shares in transactions aimed at the acquisition of assets, as set out
below;
- The receipt of R173.4 million by CMMS, funded in cash from the Alibiprops
share trading account. These receipts appear to have been funded by, among
others, the misappropriation of RRL shares, owned by Randgold, in the Alibiprops
share trading account, with some of the proceeds having been paid to CMMS. The
Alibiprops trading account appears to have been a funding mechanism used by Mr.
RB Kebble; and
- The crediting of R432.4 million, derived from the sale of WAL and Randgold
shares owned by JCI Gold.
Funding of Randgold
Randgold received funding from CMMS, of R409.8 million for its activities, both
of an investment and operational nature. This included R205.0 million for the
purchase of the 5.269 million WAL shares from Anglo and for the purposes of
providing financial assistance of R128.8 million to Inkwenkwezi in support of
its failed purchase of WAL shares from Anglo. Similarly, Randgold"s failed
Angolan diamond ventures were funded by JCI. These transactions were accounted
for in the Randgold loan account in the books of the JCI Group.
Misappropriation of WAL shares
Prior to 31 March 2004, 1.703 million WAL shares were redirected from JCI to
other trading accounts and then sold, with the proceeds being paid to related
and third parties. This effectively reduced the holding in WAL from 35.2% to
33.5%. During the 2005 financial year, a further 1 million WAL shares owned by
the JCI Group were ostensibly lent to Letseng but appear to have been sold by a
third party. This loan was impaired during the 2005 financial year and efforts
are being made to recover the debt.
Issue of JCI shares
Various transactions were entered into in terms of which JCI shares were issued
ostensibly for assets acquired. In total, 573.6 million JCI shares were issued
to related parties in what appears to have been transactions without substance,
or transactions having as their purpose the conversion of misappropriated funds
into JCI equity. These transactions were:
- On 2 September 2002, 188.7 million JCI shares were issued to BNC in settlement
of a loan of some R85 million made to JCI by BNC. It is likely that the original
loan by BNC to JCI was funded by the proceeds of the sale of misappropriated RRL
and DRDGold shares. To the extent that this was the case, misappropriated funds
were converted into JCI equity;
- On 2 September 2002, 155.4 million JCI shares were issued to Investage in
settlement of a loan of approximately R70 million made to JCI by Investage. It
is likely that the loan by Investage to JCI was funded by the proceeds of
misappropriated RRL and DRDGold shares. To the extent that this was the case,
misappropriated funds were converted into JCI equity;
- On 21 July 2003, 89 million JCI shares were issued to Slipknot for the
acquisition by JCI of 3 million DRDGold shares, which were not acquired and did
not exist. On 18 October 2004, effective 31 March 2004, the non-existent DRDGold
shares were re-valued and sold to Alibiprops for R64.9 million, the purchase
price being treated as a loan to Alibiprops. The 89 million JCI shares issued to
Slipknot were distributed to various entities or sold in the market. The net
loss of this transaction for JCI, amounting to R41.4 million, has been raised as
claims against Messrs RB Kebble and GW Poole.
These claims have been impaired in the 2004 results;
- On 21 July 2003, 42.5 million JCI shares were issued to Paradise Creek for the
acquisition of Highland Night, a company without any substance. It appears that
these shares were held by Paradise Creek in escrow as suspended payment to
Graceford Holdings Limited for the sale of 3.4 million Skygistics shares to JCI.
It appears that the beneficial owners of these Skygistics shares were the
Diamond Trust, the Rogerwermel Trust, Mr RAR Kebble, Mr RB Kebble and other
parties. These shares would have accrued to these parties had Skygistics
achieved certain sales targets. Skygistics did not in fact achieve these targets
and approximately 24.9 million JCI shares held by Paradise Creek, should have
been cancelled. In fact, Paradise Creek distributed all 42.5 million JCI shares
to beneficiaries including BNC and related parties. Some were transferred to
CMMS; and
- On 11 May 2005, 98 million JCI shares were issued to Moregate for the
acquisition from Citation by Clifton Dunes of 20% of the issued share capital in
Boschendal. Clifton Dunes and Citation were related parties to the extent that
JCI was the beneficial owner of both companies; hence JCI was made to buy an
asset already owned by it. R24.5 million was credited to the share capital and
share premium accounts of JCI. The JCI shares were then distributed to Aculsha
(32.6 million shares), Continental Goldfields (52.8 million shares) and Moregate
(12.6 million shares).
Transactions with previous directors and officers and with entities related to
previous directors
Direct and indirect payments to previous directors, officers and related
entities amounted to R199.8 million for the period April 2002 to September 2005.
These included:
- R84.4 million paid to Mr RAR Kebble, Mr RB Kebble and to entities related to
them. In addition, Mr RB Kebble appears to have benefited directly or indirectly
from an amount of R172.4 million that was under the control of Mr RB Kebble
and/or Mr GW Poole in companies including Paradigm Shift (R4.1 million), Tuscan
Mood (R7.1 million), Baobab Aviation (R9.3 million), Alibiprops and Pilgrims
Rest (co-recipients of the proceeds of misappropriated WAL shares), Kirstenberry
Lodge (which purportedly settled debts due to the JCI Group by Mr RB Kebble,
resulting in a loss of approximately R24.9 million), and the Slipknot and
Paradise Creek transaction described above.
- R12.7 million was paid to Mr J Stratton and related entities;
- R15.7 million was paid to other previous directors, staff and functionaries of
the JCI Group and its subsidiaries; and
- R32.5 million paid in settlement of the dispute between, inter alia, the
previous directors, JCI and Randgold with DRDGold and Mark Wellesley-Wood. A
further R34 million was paid to consultants, lawyers and others in connection
with the dispute. A total of approximately R90.9 million was spent in respect of
the DRDGold dispute.
Recovery of assets and other actions
As a consequence of the forensic investigations, several claims are being
prepared. These relate to entities that have been involved, either directly or
indirectly, in the alleged misappropriation of JCI"s assets, and will in due
course, form part of court actions for the recovery of such assets, and/or
seeking criminal action. Additionally, JCI is now obtaining independent advice
on possible claims against previous directors and officers.
Randgold claim
Randgold has reported that the preliminary forensic report prepared by Umbono
Financial Advisory Services (Proprietary) Limited ("Umbono") indicates that
Randgold has claims against various entities in the JCI Group amounting to
approximately R720 million at 31 December 2005. Randgold further reported that
it is in the process of formulating its potential claims against the JCI Group
and will report further once Randgold"s legal advisers have finally assessed
such claims. JCI believes, at this stage, that it will be capable of settling
the Randgold claims if these are proven. Attention is drawn to the Disclaimer
and the NAV table.
Resolution of the Randgold claim
While the JCI Group has not admitted that Randgold has claims against it, the
Boards of Directors of both JCI and Randgold have resolved that formal
litigation between them, as a means of resolving the claims, will not be in the
best interests of the shareholders of either company. Court actions between the
two companies are likely to result in costly and protracted litigation and
destroy value.
For this reason, the Boards of Directors of both JCI and Randgold have decided
that an alternative dispute resolution mechanism is warranted, with the
objective of resolving the claims as expeditiously as possible and curtailing
legal costs.
Both JCI and Randgold have resolved that:
- It is in the best interests of the JCI and Randgold shareholders that such
claims be resolved by way of mediation;
- Failing the successful mediation of the claims, JCI and Randgold are agreed
that the claims should be arbitrated;
- A specialist panel of mediators be appointed to adjudicate the claims and make
recommendations to JCI and Randgold regarding the claims;
- Once recommendations have been made by the mediators, it is envisaged that a
meeting of JCI"s shareholders be held at which the mediator"s recommendations
will be put to the shareholders and the shareholders will be asked to vote
thereon; and
- Should the shareholders of both JCI and Randgold not vote in favour of the
mediator"s proposed recommendations or the mediation fail, JCI and Randgold
shall engage in formal arbitration in order to resolve the claims. The outcome
of such arbitration shall be binding on the parties, subject to the right of
each of the parties to appeal the arbitration award.
JCI will seek to complete the mediation process as expeditiously as possible
and, to the extent that is possible, plans to finalise this process by the 3rd
quarter of 2006. JCI believes that the action will have the desired result and
is in the best interest of its shareholders.
Financial results
In preparing the provisional financial results, the following principles and
assumptions were applied:
- The sale of investments belonging to Randgold, for which the proceeds were
credited to the accounts of the JCI Group, have provisionally been brought to
account as a loan claim owing to Randgold, subject to the requisite legal
processes confirming the enforceability of this claim in due course against the
JCI Group. No interest has been provided on the potential claims;
- Investments were written-off through the income statement on the date on which
the various shares held by JCI and its subsidiaries were disposed of;
- Concurrent with the write-off of the investments, a claim receivable, which
excludes any interest, was raised through the income statement as claim revenue;
- Because of the ongoing legal processes to recover funds, a provision was
raised through the income statement for impairment of certain of the above
claims; and
If any receivables previously provided for are recovered in subsequent periods,
the proceeds will be raised through the income statement, with a corresponding
asset on the balance sheet, at that time, positively impacting on the net asset
value of JCI.
Financial year ended March 2004
Slipknot Transaction
In recognition of the fictitious nature of the Slipknot transaction, all
elements relating to Slipknot have been eliminated from the restated financial
results, thus reversing the fictitious purchase of investments previously
reflected as having been acquired in terms of the transaction. As 89 million JCI
shares were issued for no consideration, approximately R41.4 million of claims
have been raised in the accounts against Messrs RB Kebble and GW Poole. In
addition, R12 million of treasury shares have been raised for the shares that
were received into the JCI Group trading accounts. An impairment of R41.4
million has been raised against these claims. Furthermore, the profit raised of
R11.5 million on the revaluation of the fictitious shares has been reversed.
Paradise Creek
In recognition of the fictitious nature of the Paradise Creek transaction, all
elements relating to Highland Night have been eliminated from the restated
financial results thus reversing the fictitious purchase of investments
previously reflected as having been acquired in terms of the transaction. This
has resulted in the reduction of the goodwill balance of R25.5 million as
previously reported. As 42.5 million JCI shares were issued for no
consideration, approximately R25.5 million of claims have been raised in the
accounts, primarily against BNC and Mr GW Poole. An impairment of R25.5 million
has been raised against these claims.
WAL shares
In recognition of the misappropriation of 1.703 million WAL shares, the
investment has been reduced by the weighted average cost of the shares and the
equity accounting thereof has been restated for the correction in the percentage
held. Claims totalling R38.7 million have been raised primarily against Mr RB
Kebble and Bullish Props. This amount has been impaired.
RRL Shares
On the basis that funds from the sale of RRL shares were received by the JCI
Group, a claim owing to Randgold has been provisionally raised. No interest has
been accounted for.
Short position in finance structures
The short position on the finance structures was understated at 31 March 2004
with an amount of R39.1 million, which has accordingly been adjusted.
Financial year ended March 2005
The losses incurred for the year are mainly attributable to:
Consulting and management fees R74 million
Goodwill impaired R135 million
Impairment of mineral rights R123 million
Impairment of investments and loans R120 million
Impairment of property, plant and equipment R46 million
Loss on disposal of investments and mining assets R184 million
RRL Shares
On the basis that funds from the sale of RRL shares were received by the JCI
Group, a claim owing to Randgold has been provisionally raised. No interest has
been accounted for.
Six months ended September 2005
The losses incurred for the period are mainly attributable to:
Loss on disposal of investments and mining assets R50 million
Consulting and management fees R22 million
Fair value of loans R31 million
Moregate Transaction
In recognition of the fictitious nature of the Moregate transaction, all
elements relating to Clifton Dunes 67 have been eliminated from the financial
results thus reversing the fictitious purchase of investments previously
reflected as having been acquired in terms of the transaction. As 98 million JCI
shares were issued for no consideration, approximately R22.2 million of claims
have been raised in the accounts against Aculsha Nominees and Continental
Goldfields. In addition, R3.2 million of treasury shares has been raised for the
shares that were received into the JCI Group trading accounts. These claims have
not been impaired as the new board are of the opinion that the proceeds from the
85.3 million shares issued are recoverable.
RRL Shares
On the basis that funds from the sale of RRL shares were received by the JCI
Group, a claim owing to Randgold has been provisionally raised. No interest has
been accounted for.
Investec facility
Investec granted a loan facility in August 2005 of up to R460 million ("the
facility") to a newly formed special purpose vehicle, JCIIF, and Letseng. The
facility enabled JCI to meet immediate cash flow requirements; restructure
existing facilities; follow JCI"s rights in terms of the WAL rights offer ("the
WAL rights offer"); and to underwrite a portion of the WAL rights offer.
Amongst other purposes, the facility was used, inter alia to:
- Subscribe for 8 871 931 WAL shares in terms of the WAL rights offer;
- Underwrite 163 438 WAL shares in terms of the WAL rights offer;
- Refinance an equity-financing facility with SocGen, releasing 13 154 031 WAL
shares pledged as security to JCIIF;
- Refinance an equity-financing facility with Barnard Jacob Mallet, releasing
2,9 million WAL shares pledged as security to JCIIF; and
- Pay a judgement debt of R67 546 991 granted against JCI in favour of Benoryn
relating to a claim against Kabusha, in respect of which JCI had bound itself as
co-surety with Trinity.
The following assets, were transferred to JCIIF in terms of the facility:
- All JCI"s shares in and loan account claims of R35 485 837 against Letseng;
- 200 million unsecured, redeemable convertable participating "B" preference
shares in Matodzi, subsequently "redeemed" into 200 million new Matodzi ordinary
shares on 30 March 2006;
- 9 035 369 WAL shares received in terms of the WAL rights offer;
- R246 462 256 received from WAL as a repayment of the WAL underwriting loan as
a consequence of the subscription of WAL shareholders of their entitlements in
terms of the WAL rights offer;
- 13 154 031 WAL shares previously pledged to SocGen;
- 12 000 debentures in Kovacs Investment 608 (Proprietary) Limited and all
rights relating to those debentures in respect of Boschendal
- 357 374 000 Redeemable 50% Secured preference shares in Jaganda;
- 6 510 045 million WAL shares pledged to the IDC for a loan granted to Letseng;
and
- The property portfolio of JCI and its subsidiary companies valued at R243.5
million.
The assets transferred to JCIIF, as well as JCI"s shares in and loan account
claims against JCIIF, and the loan account claims of all entities selling the
assets to JCIIF, were ceded and pledged to Investec as security for the
facility. JCI and such entities bound themselves to Investec as guarantors for
JCIIF in respect of its obligations in terms of the facility. Interest on the
facility is charged at Investec"s prime rate. Capital and interest is to be
repaid from the proceeds of the sale of the JCIIF assets.
The facility is to be repaid by the later of 18 months after the final draw down
date, or such other date (not being later than 24 months after the final draw-
down date) as the parties may agree. JCIIF is entitled to repay the facility
early, subject to the payment of break costs.
A profit share is payable to Investec in respect of the facility, being the
greater of:- R50 million; or
- The aggregate of 30% of the increase in value of the JCIIF assets and 10% of
the increase in the price of approximately 2.2 billion JCI shares, up to, but
not later than 18 months after the date on which the facility is repaid.
JCI had an obligation to redeem 307 300 024 JCI Debentures, with a redemption
value of R1.25 (R384.1 million) on the 16 January 2006.
Following the conclusion of the WAL rights offer, and the subsequent repayment
of the JCIIF underwriting loan of R246 462 256, JCI and Investec agreed to an
amendment to the terms of the facility, inter alia that:
- Investec advanced JCIIF a further R375 million to fund the redemption of the
307 300 024 JCI Debentures;
- The 5 500 000 WAL shares released by Sasfin as JCI Debenture Trustees be
transferred to JCIIF;
- Investec be granted the authority to sell 5 500 000 WAL shares received from
Sasfin to partially repay the additional R375 million advanced in terms of the
facility; and
- JCIIF sell such of its assets to reduce the capital amount outstanding in
terms of the facility to R280 million by 28 February 2006 andR180 million by 31
March 2006.
As a consequence of all the above arrangements, the status of the facility at 31
March 2006 is as follows:
Description Fair value/Loan Investec profit share
(R000) (R000)
Security
33 306 402 WAL shares (1) 1 466 390 269 200
40% Letseng (2) 380 000 76 500
200 000 000 Matodzi shares (3) 230 000 3 300
357 374 000 Jaganda preference 120 000 9 000
shares (4)
Property portfolio (5) 120 000 3 400
Boschendal interest (6) 120 000 -
Total 2 439 420 361 4009
Loan outstanding
JCIIF 387 329
Letseng (7) 182 693
Letseng (8) 44 927
Total 614 949
1. Based on WAL closing share price of R45.25 on 31 March 2006.
2. Based on offers received of circa R950 million.
3. Based on Matodzi"s closing share price of R1.15 on 31 March 2006.
4. Based on offers received circa R120 million. Each with a redemption price
equal to the aggregate of R0.25 and 20% of the 30 day weighted average traded
price of the shares of Simmers on the JSE as at the date of redemption, in
excess of R0.25.
5. Based on Simmers" closing share price of R1.57 on 31 March 2006, the future
redemption value is approximately R184 million.
6. Based on an offer received of R120 million from an independent third party.
7. Additional loans made available to Letseng by Investec.
8. The residual of the IDC loan to Letseng ceded to Investec and guaranteed by
JCI.
9. This excludes any profit share on the 2,2 billion JCI shares and guaranteed
by JCI.
With reference to the revised repayment terms agreed with Investec in January
2006, JCI did not reduce the amount outstanding in terms of the JCIIF facility
to R180 million by 31 March 2006 and Investec has formally requested JCI to
remedy this position. This came about in part because, although the property
portfolio had been sold for R120 million, delays in the transfer of the
properties, and therefore payment, was delayed. It is believed all the
outstanding issues have now been resolved, and the purchase consideration will
be credited to the JCIIF account shortly.
This, in conjunction with another minor asset sale of R25 million, will reduce
the amount owing to R242 million.
Furthermore, at the time of agreeing to the revised payment terms, an offer of
R110 million had been received for JCIIF"s interest in the Jaganda preference
share, payment of which would have achieved the required repayment schedule.
Following the public dispute between the shareholders of Jaganda, the
transaction could not be consummated as agreed.
Accordingly, an offer of R120 million for JCIIF"s interest in Boschendal has
been accepted and the net proceeds will remedy the debt position.
The intention is still to dispose of the interest in the Jaganda preference
shares. This will be applied to reduce the debt position.
Post balance sheet events
During 2005, JCI advanced WAL R401.4 million in terms of a loan prior to the WAL
rights offer in 2005. In terms of the offer, which closed on 15 December 2005,
JCI was allotted 8.872 million WAL shares and took up an additional 0.163
million WAL shares as underwriter. JCI also received R2.42 million in terms of
its 0.5% underwriting fee for the rights offer. The 9.035 million WAL shares
received by JCI were transferred to JCIIF in terms of the Investec facility.
JCI had a portfolio of residential and commercial properties with a net book
value of R115 million. In view the necessity to fund the redemption of the JCI
Debentures, and at a time when no additional facility was yet available from
Investec, it was decided to sell the property portfolio for R120 million.
At the same time negotiations were under way to sell the 8.4 million WAL shares
pledged as security for the JCI Debentures for the purposes of the redemption.
Offers were received from several parties, and after consideration by the
current JCI board, the highest offer of R120 million was accepted. This disposal
was also in line with the commitment to reduce the Investec facility to R180
million by 31 March 2006.
A circular containing the requisite surrender form was sent on 30 November 2005
to the holders of JCI Debentures, together with the following recommendation
from the board of directors:
"Debenture holders are referred to the recent Company announcements published on
11 October 2005 and 10 November 2005 respectively, relating to the forensic
investigation currently being conducted, and the delay in the publication of the
Company"s audited annual financial results for the year-ended 31 March 2005. In
light of the aforementioned, the board of directors recommend that debenture
holders take all necessary steps to redeem their debentures and NOT to elect
conversion to ordinary shares."
On 16 January 2006, 6.3 million debenture holders elected to convert into
ordinary shares, and the holders of the balance of 301 million debentures
holders elected to redeem at R1.25. This was funded by the grant of an
additional Investec facility of R375 million.
As discussed above in the restructuring of the Investec facility, 4.8 million
WAL shares were sold as agreed when the R375 million was made available to fund
the redemption of JCI Convertible Redeemable 50% Secured Debentures. The sale of
the WAL shares realised R237.7 million, which together with the R246.5 million
net received from the repayment of the WAL loan following the conclusion of the
WAL rights offer, ensured the Investec facility did not exceed the R460 million
limit originally agreed.
On 16 January 2006, SocGen sold the remaining 4 million RRL shares in terms of a
scrip lending agreement for a consideration of some R412 million. The scrip
lending structure was put in place by JCI, under the direction of the prior
board. Randgold has indicated that it believes it is entitled to recover this
amount from the JCI Group, which is in addition to the provisional claim against
the JCI Group of R720 million at 30 September 2005.
On 30 March 2006, Matodzi and JCI announced that:
- Matodzi had acquired 200 million cumulative preference shares owned by JCI in
Witnigel Investments (Proprietary) Limited ("Witnigel") for R13.3 million,
payable in the form of 13.8 million new ordinary Matodzi shares. Witnigel is a
wholly owned subsidiary of Matodzi. The only asset of Witnigel is 83.3 million
JCI shares.
- 200 million unsecured redeemable convertible participating "B" preference
shares owned by JCIIF in Matodzi were converted into ordinary Matodzi shares on
a one-for-one basis.
JCI now controls an effective 58,8% of the issued share capital of Matodzi and
JCI"s effective interest in Letseng Diamonds Matodzi"s principal asset,
increased from 30.4% to 52.7%.
Appendix 1: CMMS cash flows 1 April 2002 to 30 Amount (R000)
September 2005
Inflows
Share trading activities (including sale of shares 1 659 150
owned by the JCI Group and shares acquired or borrowed
from other entities)
Received from Western Areas Limited ("WAL") 82 965
Received from other JCI Group entities 261 976
Received from Randgold 64 927
Received from previous directors and related entities 134 258
Received from Alibiprops (shares sold) 173 409
Received from financial institutions (excluding 535 307
financing structures)
Sundry 32 338
2 944 330
Outflows
Share trading and administrative expenses 179 710
Loans to and rights issues by WAL 601 261
Loans to other JCI Group entities 485 099
Funding of Randgold activities 409 785
Previous directors and related entities 199 785
Paid to Alibiprops 3 925
Other investments and loans to JCI Group companies 338 486
Financial institutions (excluding financing structures) 314 159
Corporate expenditure 436 290
2 968 500
From the above table it is clear that the funding of the activities of JCI,
Randgold and other related entities, was facilitated by CMMS.
Notice of intention to call general meeting
JCI intends to convene a General Meeting of its shareholders as soon as
practicably possible, to address the issue of mediation between JCI and
Randgold, as discussed above. An Annual General Meeting will be called, in due
course. Shareholders will be notified of the dates for these meetings.
CAUTIONARY ANNOUNCEMENT
Shareholders are advised, that until such time as JCI publishes audited annual
financial statements for the year ended 31 March 2005, and due to the fact that
JCI is currently the subject of an ongoing forensic investigation, shareholders
are therefore advised to exercise caution when dealing in their JCI shares (Over
the-Counter).
Johannesburg
7 April 2006
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Directors: DM Nurek (Chairman), PH Gray (Chief Executive Officer),
JC Lamprecht (Financial Director), DE Jowell, AC Nissen and PRS Thomas.
Legal Advisor and Secretary: Ms BE Morton
Registered office: 28 Harrison Street, Johannesburg, 2001P.O. Box 11165,
Johannesburg, 2000, Republic of South Africa, Telephone: +27(11) 688-5100 Fax:
+27(11) 492-1070,e-mail: bmorton@jci.co.za
South African Transfer Secretaries: Computershare Investor Services 2004
(Proprietary) Limited70 Marshall Street, Johannesburg, 2001P.O Box 61051,
Marshalltown, 2107, Republic of South AfricaTelephone: +27(11) 370-5000 Fax:
+27(11) 688-7721/2
Investor relations: For further information contact Brian GibsonTelephone: +
27(11) 880-1510, Fax: +27(11) 880-3192, e-mail: gibson@icon.co.za
Website: www.jci.co.za
PROVISIONAL UNAUDITED AND UNREVIEWED RESULTS FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2005, AND FOR THE TWO YEARS ENDED 31 MARCH 2005
CONSOLIDATED INCOME STATEMENTS(Unaudited and unreviewed)
Provisional
six months Provisional Previously
ended Provisional restated audited
30 year ended year ended year ended
September 31 March 31 March 31 March
2005 2005 2004 2004
Notes R"000 R"000 R"000 R"000
Revenue 2 40 216 342 000 227 790 227 790
Cost of sales (14 723) (215 090) (133 128) (133 128)
Gross profit 25 493 126 910 94 662 94 662
Other operating 881 658 068 167 449 151 716
income
Operating costs (129 280) (1 290 522) (549 012) (347 166)
Operating loss 3 (102 906) (505 544) (286 901) (100 788)
Investment income 4 9 290 74 554 5 956 5 956
Finance costs 5 (54 485) (220 510) (131 521) (131 521)
Share of 6 (11 799) (83 927) 173 870 184 325
(losses)/earnings
from associates
Net loss before (159 900) (735 427) (238 596) (42 028)
taxation
Taxation 7 132 (4 088) (13 350) (13 350)
Net loss after (159 768) (739 515) (251 946) (55 378)
taxation
Loss attributable - (19) 95 95
to minorities
Loss attributable (159 768) (739 534) (251 851) (55 283)
to ordinary
shareholders as
previously
reported
Profit on 4 648
misappropriated
WAL shares
Reversal of (11 460)
profit realised
on revalue of
shares held-for-
resale
Impairment of (82 177)
claims raised
Impairment of (25 500)
goodwill
Fair value (39 134)
adjustment to
short position on
finance
structures
Provision for (32 490)
claim by Randgold
for RRL"s shares
sold
Adjustment to (10 455)
share of losses
from associated
Loss attributable (159 768) (739 534) (251 851) (251 851)
to ordinary
shareholders
Loss per share
(cents)
- headline 8 (5.6) (11.7) (19.2) (10.6)
- attributable (7.3) (35.1) (14.0) (3.1)
CONSOLIDATED BALANCE SHEETS(Unaudited and unreviewed)
Provisional
Provisional restated Previously
30 Provisional year ended audited
September 31 March 31 March 31 March
2005 2005 2004 2004
Notes R"000 R"000 R"000 R"000
ASSETS
Non-current 1 494 378 1 292 997 1 612 229 1 689 308
assets
Property, plant 9 22 119 37 672 58 411 58 411
and equipment
Mineral rights 10 - - 122 623 122 623
Goodwill 11 - - 17 400 42 900
Investments 12 881 103 853 641 996 208 1 047 787
Loans 13 590 985 401 513 416 896 416 896
Deferred tax 14 171 171 691 691
Current assets 546 251 681 490 826 418 818 463
Inventories 15 68 322 72 261 153 828 153 828
Investment 16 117 523 127 523 60 565 60 565
properties -
held-for-resale
Development 17 67 188 94 172 107 589 107 589
Properties
Trade and other 65 017 72 124 155 698 155 698
receivables
Short-term 112 021 187 040 221 132 213 177
loans
Taxation in 16 16 186 186
advance
Cash and cash 18 116 164 128 354 127 420 127 420
equivalents
Total assets 2 040 629 1 974 487 2 438 647 2 507 771
EQUITY AND
LIABILITIES
Capital and (317 842) (194 162) 496 126 701 735
reserves
Share capital 19 22 185 21 205 20 895 20 895
Share premium 1 746 650 1 722 237 1 709 421 1 709 421
Non- 205 137 205 137 238 848 238 848
distributable
reserves
Foreign (58 839) (56 813) - -
translation
reserve
Accumulated (2 179 169) (2 035 409) (1 421 838) (1 228 229)
losses
Treasury shares 20 (54 487) (51 200) (51 200) (39 200)
(318 523) (194 843) 496 126 701 735
Minorities 681 681 - -
Non-current 1 448 591 1 116 550 780 921 683 571
liabilities
Interest- 21 559 418 484 027 455 102 677 078
bearing
borrowings
Non-interest 22 884 506 627 823 325 170 5 844
bearing
borrowings
Deferred tax 14 4 667 4 700 649 649
Current 909 880 1 052 099 1 161 600 1 122 465
liabilities
Trade and other 291 685 303 016 186 329 186 329
payables
Taxation 35 499 35 499 35 003 35 003
Short-term 23 582 683 713 325 940 268 901 133
borrowings
Bank overdrafts 13 259 - -
Total equity 2 040 629 1 974 487 2 438 647 2 507 771
and liabilities
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Unaudited and unreviewed)
Provisional
six months Provisional Previously
ended Provisional restated audited
30 year ended year ended year ended
September 31 March 31 March 31 March
2005 2005 2004 2004
Notes R"000 R"000 R"000 R"000
Share capital 22 185 21 205 20 895 20 895
Balance at 21 205 20 895 17 506 17 506
beginning of
the period
Issued during 980 310 3 389 3 389
the period
Share premium 1 746 650 1 722 237 1 709 421 1 709 421
Balance at 1 722 237 1 709 421 1 498 097 1 498 097
beginning of
the period
Issued during 24 413 12 816 211 647 211 647
the period
Share issue - - (323) (323)
expenses
written-off
Non- 205 137 205 137 238 848 238 848
distributable
reserve
Balance at 205 137 238 848 247 612 247 612
beginning of
the period
Transfer to - (33 711) (8 764) (8 764)
accumulated
losses
Foreign (58 839) (56 813) - -
translation
reserve
Balance at (56 813) - - -
beginning of
the period
Movement in (2 026) (56 813) - -
reserve
Accumulated (2 179 169) (2 035 409) (1 421 838) (1 228 229)
losses
Balance at (2 035 409) (1 421 838) (940 693) (940 693)
beginning of
the period
Change in - 55 617 (46 657) (46 657)
accounting
policy/
negative
goodwill
adjustment
Restated (2 035 409) (1 366 221) (987 350) (987 350)
balance
Net loss for (159 768) (739 534) (251 851) (55 283)
the period
Transfer from - 33 711 8 764 8 764
non-
distributable
reserve
Dilution of - - 32 128 32 128
holding in
associate
companies
Share of fair 16 008 36 635 (223 529) (226 488)
value
adjustments of
associate
companies
Treasury shares (54 487) (51 200) (51 200) (39 200)
Balance at (51 200) (51 200) (54 416) (54 416)
beginning of
the period
Acquisitions (3 287) - (12 000) -
Disposals - - 15 216 15 216
Total capital (318 523) (194 843) 496 126 701 735
and reserves
BASIS OF ACCOUNTINGThe provisional financial results for the two years ended 31
March 2005 and for the six months ended 30 September 2005, have been prepared in
accordance with the Group"s accounting policies which are consistent with those
used in the audited financial statements for the year ended 31 March 2004. The
Company has not yet adopted International Financial Reporting Standards.
The provisional financial results have not been audited or reviewed.
NOTES TO THE PROVISIONAL CONSOLIDATED FINANCIAL RESULTS
Provisional Provisional Previously
six months Provisional restated audited
ended year ended year ended year ended
30 September 31 March 31 March 31 March
2005 2005 2004 2004
R"000 R"000 R"000 R"000
2 REVENUE
Sales of goods 18 549 240 880 154 154 154 154
and shares
Interest 750 3 008 43 337 43 337
Dividends 2 - 1 608 1 608
Fees 19 222 60 387 11 130 11 130
Rentals 1 693 37 725 17 561 17 561
40 216 342 000 227 790 227 790
3 OPERATING LOSS
STATED AFTER
TAKING INTO
ACCOUNT:
Income
Profit /(loss) 12 509 (5 388) 1 660 1 660
on disposal of
property, plant
and equipment
Translation 799 (41 979) (3 397) (3 397)
profit/(loss
(Loss)/Profit (49 747) (183 791) 120 058 120 058
on disposal of
investments and
mining assets
Profit on - - 8 558 8 558
liquidation
Unclaimed - - 425 425
dividends written
back
Expenditure
Auditors 1 915 3 385 2 255 2 255
remuneration-fees-
current year
Consulting and 21 604 74 452 54 052 54 052
management fees
Depreciation 15 032 19 084 16 024 16 024
Impairment on - 46 228 - -
property, plant
and equipment
Impairment of - 122 623 - -
mineral rights
Fair value
adjustments
- shares held - - 332 332
for resale
- loans 30 773 125 132 6 679 (18 821)
- investments (390) (111 599) 73 933 (8 244)
- short-term (100 094) (169 425) 63 940 63 940
borrowings
Goodwill - - 24 957 24 957
amortisation
Goodwill - 134 614 47 066 21 566
impaired
Impairment of 2 754 120 384 28 703 28 703
investment and
loans
Restructuring 11 436 187 506 506
costs
Lease rentals
- premises 1 747 1 190 1 130 1 130
- equipment 27 - 30 30
- vehicles 199 403 405 405
Option fees - - 17 190 17 190
Additional - - 15 000 15 000
costs in terms of
the restructuring
of JCI Gold
effective 1 July
1998
Retirement - 4 3 022 3 022
benefit costs
Staff costs 28 944 38 757 47 162 47 162
4 INVESTMENT
INCOME
Interest 9 290 74 554 5 956 5 956
received
5 FINANCE COSTS
Debenture (41 224) (42 833) (42 206) (42 206)
interest
Other (13 261) (17 677) (89 315) (89 315)
borrowings
(54 485) (220 510) (131 521) (131 521)
6 SHARE OF (11 799) (83 927) 173 870 184 325
(LOSSES)/EARNINGS
FROM ASSOCIATES
7 TAXATION
SA Normal
taxation
Current
taxation
- current year - 2 941 12 500 12 500
Deferred
taxation
- current year (132) 1 147 850 850
(132) 4 088 13 350 13 350
No provision has
been raised for
normal taxation.
No deferred tax
has been raised
except for in
certain
subsidiaries. No
CGT liability has
been raised for
capital profits
realised,
relating to share
sales.
Any benefit to
be derived from
the Group"s
estimated income
tax losses
carried forward
is dependent on
the Company and
its subsidiaries
earning taxable
income in the
future
8 LOSS PER SHARE
The calculation
of attributable
loss per share is
based on a loss
of
R159 768 000 at
30 September 2005
and R739 534 000
at 31 March 2005
(2004:
R251 851 000) and
a weighted
average number of
2 175 635 198
shares at 30
September 2005
and 2 105 898 878
shares at 31
March 2005 (2004:
1 793 477 247)
shares in issue
throughout the
year
The calculation
of the headline
loss earnings per
share is based on
a loss of
R122 530 000 at
30 September 2005
and R246 890 000
at 31 March 2005
(2004:
R344 648 000) and
a weighted
average number of
2 175 635 198
shares at 30
September 2005
and 2 105 898 878
shares at 31
March 2005 (2004:
1 793 477 247)
shares in issue
throughout the
year
Headline losses
are calculated as
follows:
Net loss for (159 768) (739 534) (251 851) (55 283)
the period
Profit on
liquidation and
sale of
subsidiaries
- Group - - (8 558) (8 558)
- Associates - - (33 530) (33 530)
Unclaimed - - (425) (425)
dividends written
back
Impairment of - 46 228 - -
property, plant
and equipment
Impairment of - 122 623 - -
mineral rights
Profit/(loss)
on sale of
investments
- Group 49 747 183 791 (120 058) (120 058)
- Associates - - (34 501) (50 234)
Additional - - 15 000 15 000
costs in terms of
the restructuring
of JCI Gold
effective 1 July
1998
Goodwill - - 24 957 24 957
amortised
Goodwill
impaired
- Group - 134 614 47 066 21 566
- Associates - - 5 577 5 577
(Profit)/loss
on disposal of
property, plant
and equipment
- Group (12 509) 5 388 (1 660) (1 660)
- Associates - - 835 835
Gross (122 530) (246 890) (357 148) (201 813)
Taxation - - 12 500 12 500
effect(1)
Headline loss (122 530) (246 890) (344 648) (189 313)
(1) No tax effect
as no provision
for normal tax
was made.
9 PROPERTY, PLANT
AND EQUIPMENT
At cost 132 054 87 586 56 452 56 452
Additions 3 626 55 568 31 628 31 628
Disposals (4 183) (11 100) (494) (494)
Impairments (46 228) (46 228) - -
Foreign 22 (14) (119) (119)
currency
translation
Accumulated (63 172) (48 140) (29 056) (29 056)
depreciation
22 119 37 672 58 411 58 411
10 MINERAL RIGHTS
Mineral and
surface rights at
cost less amounts
written-off
Balance at - 122 623 1 584 1 584
beginning of year
Acquisition of - - 70 441 70 441
subsidiaries
Additions - - 50 598 50 598
Impairments - (122 623) - -
Balance at end - - 122 623 122 623
of year
11 GOODWILL
Goodwill - - 73 018 98 518
At cost - 310 836 278 062 278 062
Accumulated - (237 818) (206 316) (206 316)
amortisation
Book value at - 73 018 71 746 71 746
beginning of year
Acquisition 61 596 79 840 79 840
Goodwill (134 614) (47 066) (21 566)
written-off
Current - - (31 502) (31 502)
amortisation
Negative - - (55 618) (55 618)
goodwill
Book value at - (55 618) - -
beginning of year
Acquisition - - (57 536) (57 536)
Current - 55 618 1 918 1 918
amortisation/
adjustment
against retained
income
- - 17 400 42 900
12 INVESTMENTS - -
12.1 Listed 65 611 76 675 85 013 85 013
includes:
Randgold 55 146 65 723 - -
The shares in
Randgold were
valued at the
market price on
date of
suspension for
both September
and March 2005
(R8,90 per share)
12.2 Associate
companies
Listed shares 352 833 417 993 556 901 608 480
WAL 352 833 417 993 323 384 374 963
Randgold - - 233 517 233 517
Unlisted 186 433 173 349 197 668 197 668
shares
Letseng 183 598 170 514 166 136 166 136
Freddev - - 21 592 21 592
Cape Verde 11 11 1 280 1 280
Onshelf One - - 315 315
Hundred and One
Mvela - - 8 357 8 357
properties
JCI - - (12) (12)
Technology
Safety, 2 824 2 824 - -
Security and
Justice
Total 539 266 591 342 754 569 806 148
associate
companies
12.3 Unlisted - 276 226 185 624 156 626 156 626
at directors"
valuation
Total 881 103 853 641 996 208 1 047 787
investments
The Company"s
major associate
company, WAL, is
listed on JSE and
copies of their
financial
statements are
obtainable from
the Company
Secretary of WAL.
A subsidiary of
JCI, Moregate,
holds an
effective
interest of
approximately 20%
in Boschendal.
Moregate has not
been consolidated
in the results of
JCI due to
unavailability of
financial
information.
13 LOANS
Associate 401 420 164 138 105 218 105 218
companies
Other 189 565 237 375 311 678 311 678
590 985 401 513 416 896 416 896
The other loans
are unsecured and
have no fixed
terms of
repayment
14 DEFERRED TAX
Acquisition of 4 364 5 677 892 892
subsidiaries
Change to 132 (1 147) (850) (850)
income statement
Balance at end 4 496 4 529 42 42
of year
Deferred tax 171 171 691 691
asset
Deferred tax (4 667) (4 700) (649) (649)
liability
Balance at end (4 496) (4 529) 42 42
of year
The balance
principally
represents
short-term timing
differences.
15 INVENTORIES
Shares held-for- 52 753 40 233 137 876 137 876
resale
Mark-to-market - 5 841 (17 118) (17 118)
adjustments
52 753 46 074 120 758 120 758
Crops 3 873 10 404 11 342 11 342
Merchandise 11 285 15 318 21 298 21 298
Raw material 411 465 430 430
and consumables
68 322 72 261 153 828 153 828
Market value of 52 753 46 074 120 758 120 758
shares held-for-
resale
16 INVESTMENT
PROPERTIES HELD-
FOR-RESALE
Investment
properties at
fair value
West Street 2 508 2 508 - -
Houghton
Bishopscourt 22 500 22 500 - -
properties
Consolidated 6 000 6 000 - -
Building
Monterey 20 000 20 000 10 152 10 152
Melrose House - 10 000 - -
The Stables 8 095 8 095 - -
28 Harrison 58 420 58 420 50 413 50 413
Street
117 523 127 523 60 565 60 565
Land and
buildings having
a book value at
30 September
2005; R53 103 000
(31 March
R63 103 000)
(2004:
R56 058 000) are
mortgaged as
security for
borrowings.
17 DEVELOPMENT
PROPERTIES
Development 94 172 107 589 - -
properties at the
beginning of
period
Acquisitions - 19 583 107 589 107 589
Disposals (26 984) - - -
Impairments - (33 000) - -
Development 67 188 94 172 107 589 107 589
properties at the
end of period
18 CASH AND CASH
EQUIVALENTS
R94,1 million
(2005 and 2004:
R94,1 million)
has been pledged
as collateral for
short-term loans.
19 SHARE CAPITAL
Authorised
2 700 000 000 27 000 27 000 27 000 27 000
ordinary shares
of 1 cent each
Issued
30 September 22 185 21 205 20 895 20 895
2005:
2 218 476 728; 31
March 2005:
2 120 476 728
(2004:
2 089 503 652)
ordinary shares
of 1 cent each
Certain of the
issued shares
may, due to
fraudulent
transactions, be
cancelled in
future.
20 TREASURY
SHARES
JCI shares held 54 487 51 200 51 200 39 200
by the share
incentive trust
and subsidiary
companies - at
cost less amounts
written off
21 INTEREST
BEARING
BORROWINGS
30 September 384 125 384 125 384 125 384 125
2005:
307 300 024 (31
March 2004 and
2005:
307 300 024) (JCI
debentures,
bearing interest
at prime)
The debentures
have been
redeemed at their
issue price of
R1,25, during
January 2006
Collateral - - - 221 976
received from the
borrower of
listed
securities. The
collateral bears
interest at rates
varying between
9,65% and 9,71%
and is repayable
upon the return
of the shares
which will be on
dates varying
between 24
January 2006 and
24 May 2006. This
amount is
included in the
R720 million
provisional
Randgold claim
accounted for.
Loans bearing 25 550 34 734 49 130 49 130
interest at
varying interest
rates per annum,
secured by
mortgage bonds
over investment
and development
properties owned
by the Group
These
properties have
subsequently been
sold and the
agreements are
currently being
finalised
Loans bearing - - 49 647 49 647
interest at 0,5%
below the prime
bank overdraft
rate (2004: 0,5%)
The loans were
repaid during the
year ended 31
March 2005
Loan from 79 550 - - -
Investec bearing
interest at the
prime bank
overdraft rate.
The loan
agreement
stipulates a
facility of R460
million to be
repaid by the
later of 18
months after the
final draw-down
date, or such
other date as the
parties may
agree. Secured by
various shares
and loan assets
Instalment 70 193 65 168 1 874 1 874
sales agreements
secured by
property, plant
and equipment
bearing interest
at rates varying
between 11% and
11.71% (2004:
rates varying
between 11% and
11.71%) and
repayable in
monthly
instalments
varying between
R1 900 and
R40 000 (2004:
R2 000 and
R41 000)
559 418 484 027 484 766 706 752
Current portion - - (29 674) (29 674)
included in
short-term loans
559 418 484 027 455 102 677 078
22 NON-INTEREST
BEARING
BORROWINGS
Unsecured 884 506 627 823 325 170 5 844
loans, having no
fixed terms of
repayment.
Included in
non-interest
bearing
borrowings is a
provision for
claims by
Randgold of R720
million (March:
R461 million) for
which no
settlement terms
have been
concluded at the
reporting date.
This provisional
claim was
determined by
Randgold with
reference to the
Umbono forensic
findings
23 SHORT-TERM
BORROWINGS
Included in
short-term loans
are the following
secured amounts
owed to associate
companies
Freddev 71 603 68 884 61 849 61 849
- Loan bearing
interest at prime
(2004: prime)
Randgold - - 129 816 129 816
- Loan bearing
interest at prime
plus 1% (2004:
prime plus 1%)
Short 432 813 561 970 484 820 445 686
position relating
to the SocGen
finance
structure.
- This facility
was closed out
during January
2006
24 CONTINGENT LIABILITIES
Randgold has intimated a claim of R720 million against the Company. While the
JCI Group has not admitted that Randgold has claims against it, the Boards of
Directors of both companies have resolved that formal litigation between them,
as a means of resolving the claims, will not be in the best interest of the
shareholders of either company. Both Randgold and JCI have resolved that it is
in the best interest of the companies that such claims be resolved by means of
mediation. The claim as determined by Randgold, has been provided for and is the
subject of ongoing forensic investigation.
The Company has a potential liability to SARS for penalties on unpaid amounts
relating to PAYE on payments made to directors, employees, contractors and sub-
contractors. These amounts have not been quantified and are dependant on further
forensic investigations.
The Company has received a summons from Trinity Holdings to compel delivery of 4
598 214 WAL shares in exchange for 7 million Randgold shares in terms of alleged
agreements entered into. The Company"s advice is that the plaintiff has no right
to demand this exchange of shares.
The Company has granted a mandate letter in respect of the possible sale of the
Company"s 76% interest in Letseng. Should the Interested Party acquire the whole
or a portion of the saleable interest, either directly or indirectly from the
Company within a period of 12 months, the mandate holder will be paid a fee
calculated at 0.5% of the transaction value, exclusive of VAT.
DRDGold and its associated companies have served summons on the Company as co-
defendant with Messrs RAR Kebble,J Stratton and HC Buitendag, claiming payment
jointly and severally from the Company, and co-defendants of R77.8 million and
AUS$6 million. This matter has been settled and inter alia, both companies are
committed to the payment of R2.5 million over the next five years. JCI has
already paid R500 000. The plaintiffs are alleging that the settlement agreement
was not finally concluded.
25 SURETYSHIPS
The Company has signed suretyship to Investec on behalf of a related company,
Safco - 30 September and 31 March 2005: R40 000 000.
In addition to the pledge of the shares the Company owns in Letseng and other
listed investments, the Company has also pledged all the assets held by JCIF as
security for the Investec Bank loan facility.
The Company has signed suretyship for facilities at 30 September 2005; R6 875
000, (31 March 2005: R10 875 000);(2004: R10 875 000) in favour of the
mortgagors of property owned by subsidiary companies.
The Company has signed suretyships for facilities at 30 September 2005; R14 000
000, (31 March 2005: R14 000 000); (2004: R14 000 000) granted to associated
companies.
26 POST BALANCE SHEET EVENTS
Refer to paragraph headed up Post balance sheet events in the Commentary above.
GLOSSARY TO THE PROVISIONAL FINANCIAL RESULTS AND COMMENTARY THERETO
Aconcaqua - Aconcaqua 24 Share Block Company
Aculsha - Aculsha Nominees Limited
Aflease - The Afrikander Lease Limited
Alibiprops - Alibiprops (Proprietary) Limited
Anglo - Anglo South Africa Capital (Proprietary)
Limited (a subsidiary of Anglo American
Corporation Limited
AngloGold - AngloGold Limited
Boabab Aviation - Boabab Aviation (Proprietary) Limited
Bioprospect - Bioprospect Africa (Proprietary) Limited
BNC - BNC Investments (Proprietary) Limited
Bookmark - Bookmark Holdings (Proprietary) Limited
Boschendal - Boschendal wine estate
Cape Verde - Cape Verde (Proprietary) Limited
Catalyst - Catalyst Props (Proprietary) Limited
Citation - Citation SA
Clifton Dunes - Clifton Dunes 67 (Proprietary) Limited
CMMS or the Group - Consolidated Mining Management Services
Treasury Limited (a subsidiary of the JCI Group)
Continental - Continental Goldfiels NL
CGT - Capital Gains Tax
DRDGold - DRDGold Limited (formerly Durban -
Roodepoort Deep Limited)
Freddev - Free State Development and Investment
Corporation Limited
Highland Night - Highland Night 157 (Proprietary) Limited
IDC - Industrial Development Corporation of South
Africa Limited
Investage - Investage 170 (Proprietary) Limited
Investec - Investec Bank Limited
Inkwenkwezi - Inkwenkwezi Gold Consortium (Proprietary)
Limited
Jaganda - Jaganda (Proprietary) Limited
JCI Debentures - Convertible Redeemable 50% Secured
Debentures of R1,25 each
JCI or the Company - JCI Limited
JCIIF - JCI Investment Finance (Proprietary)
Limited (a wholly-owned subsidiary of JCI)
JCI Gold - JCI Gold Limited (a wholly-owned subsidiary
of JCI)
JCI Group - JCI Limited (JCI Group and its
subsidiaries)
JCI Technology - JCI Technology (Proprietary) Limited
JSE - JSE Limited
Kirstenberry Lodge - Kirstenberry Lodge (Proprietary) Limited
KPMG Forensic - KPMG Services (Proprietary) Limited
Laverton - Laverton Gold NL
Letseng Diamonds - Letseng Diamonds Limited
Letseng - Letseng Investments (South Africa)
(Proprietary) Limited
Masupatsela - Masupatsela Investment Holdings Limited
Matodzi - Matodzi Resources Limited
Moregate - Moregate Investments (Proprietary) Limited
Mvela Props - Mvelaphanda Infrastructure Development
Company (Proprietary) Limited
NAV - Net Asset Value
Onshelf 74 - Onshelf Property Seventy Four (Proprietary)
Limited
Onshelf 101 - Onshelf Investments One Hundred and One
(Proprietary) Limited
OrlyFunt - OrlyFunt Holdings (Proprietary) Limited
Paradigm Shift - Paradigm Shift CC
Paradise Creek - Paradise Creek Investments 83 (Proprietary)
PAYE - Pay As You Earn
Pilgrims Rest - Pilgrims Rest Estates Limited
Randgold or Randgold - Randgold & Exploration Company Limited
Group
Rapivest - Rapivest 18 (Proprietary) Limited
RRL - Randgold Resources Limited
Safco - South African Fisheries (Proprietary)
Limited
SARS - South African Revenue Services
Simmers - Simmer and Jack Mines Limited
Skygistics - Skygistics (Proprietary) Limited
Slipknot - Slipknot Investments 203 (Proprietary)
Limited
SocGen - Societe Generale
Topgold - Topgold AG mvk
Tuscan Mood - Tuscan Mood 1224 (Proprietary) Limited
WAL - Western Areas Limited
Witnigel - Witnigel Investments (Proprietary) Limited
Date: 07/04/2006 05:46:31 PM Produced by the JSE SENS Department
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