| Thu 21 Sep 2006, 7:00 | | DRDGold Limited - Provisional condensed annual fin |
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DRD
DRDD
DRDGold Limited - Provisional condensed annual financial statements
DRDGold limited
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
ARB number 086 277 616
JSE trading symbol: DRD
ISIN Code: ZAE000058723
Issuer code: DUSM
Nasdaq trading symbol: DROOY
("DRDGOLD" or "the company")
PROVISIONAL CONDENSED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2006 (3.20; 3.16)
This provisional financial report does not include all the notes of the type
normally included in the annual financial statements. Accordingly, this report
is to be read in conjunction with the annual financial statements for the year
ended 30 June 2005.
REVIEW OF OPERATIONS
12 months to 12 months to
30 Jun 2006 30 Jun 2005
Group attributable production*
Australasian operations oz 211 425 317 134
kg 6 578 9 864
South African operations oz 315 976 251 902
kg 9 828 7 835
Discontinued operations oz - 199 850
kg - 6 216
Group oz 527 401 768 886
kg 16 406 23 915
* Attributable - Emperor Mines Limited ("Emperor") consolidated 100% from 6
April 2006 (previously 39.52% attributable (45.33% 30 June 2005)) and Crown Gold
Recoveries (Pty) Limited ("CGR") which included East Rand Proprietary Mines
Limited ("ERPM") consolidated 100% from 1 December 2005 (previously 40%
attributable).
For the year, total attributable gold production was 31% lower than the previous
year, at 527 401 ounces, reflecting the impact of a 33% decline in Australasian
gold production to 211 425 ounces and the liquidation of the North West
Operations. South African gold production rose by 25% to 315 976 ounces.
Gold production for Australasia included that attributable to the Group for the
entire year. Emperor"s preliminary Appendix 4E filed on the Australian Stock
Exchange ("ASX") on 13 September 2006 reflected only the attributable gold
production from the Vatukoula mine for the period after the acquisition of
DRDGOLD"s Australasian interests.
STOCK
ISSUED CAPITAL
320 035 078 ordinary no par value shares
5 000 000 cumulative preference shares
Total ordinary no par value shares issued and committed: 352 210 334
In November 2005 DRDGOLD fully incorporated Blyvoor, CGR and ERPM into a new
entity, DRDGOLD SA - 85% owned by DRDGOLD and 15% by its black economic
empowerment partner, Khumo Gold SPV (Pty) Limited.
In April 2006 the sale of DRDGOLD"s Australasian operations into Emperor was
concluded and the consequences of the transaction for DRDGOLD were an increased
stake in Emperor (now 78.9%), US$32.3 million in cash and a US$5.0 million
purchase price adjustment.
On 31 July 2006 the Group issued a trading statement indicating that the
company"s headline loss per share would be in the range of 15% to 20% greater
than the corresponding period and that the basic loss per share would be in the
range of 60% to 70% lower than that reported in the twelve months ended 30 June
2005.
At the time of the trading statement a view was taken by management on the
accounting for the Emperor transaction. A subsequent lengthy review of this
transaction and its accounting treatment under International Financial Reporting
Standards ("IFRS") resulted in a change in the accounting thereof. This, with a
review of the deferred stripping at Porgera, resulted in the current reviewed
position of the headline loss per share being 14% less than the previous period
and the basic loss per share 83% less than the previous period.
KPMG"s unmodified review report on the condensed consolidated ("IFRS") financial
statements contained in this announcement is available for inspection at the
company"s registered office. (8.60)
CONDENSED CONSOLIDATED INCOME STATEMENT (8.61)
12 months to 12 months to
30 Jun 2006 30 Jun 2005
IFRS IFRS
Notes Rm Rm
Continuing operations
Gold and silver revenue 1 575.2 1 151.9
Cash operating costs (1 292.2) (833.8)
Cash operating profit 283.0 318.1
Corporate administration and other
expenses (157.2) (133.2)
Share-based payments (13.3) (10.6)
Exploration costs (16.5) (11.5)
Care and maintenance costs (49.1) (10.6)
Cash profit from operations 46.9 152.2
Retrenchment costs (5.6) (26.1)
Investment income (4.1) (43.5)
Finance charge (50.1) (36.2)
Net operating (loss)/profit (12.9) 46.4
Rehabilitation (42.1) (18.1)
Depreciation (153.0) (137.1)
Profit on financial instruments 40.0 6.7
Movement in gold in process 3.5 10.7
Loss before taxation (164.5) (91.4)
Taxation (16.1) (78.1)
Deferred taxation (8.3) 62.6
Loss after taxation (188.9) (106.9)
Profit on sale of investments 2 89.6 3.0
Impairments 3 118.5 (72.1)
Loss from associates (152.0) (77.7)
Discontinued operations
Profit/(loss) for the period from discontinued
operations 18.3 (291.1)
Loss for the period (114.5) (544.8)
Attributable to minority interest 4.4 -
Attributable to equity holders of the parent (110.1) (544.8)
Reconciliation from IFRS to SA GAAP
Cash costs (15.0)
Share-based payments 10.6
Convertible loan notes 27.0
Rehabilitation 0.4
Deferred taxation (20.3)
Amortisation and depreciation of mining properties,
mine development costs and mine plant facilities 26.2
As reported under SA GAAP (515.9)
Headline loss per share-cents (8.58 (b))
From continuing operations (108.4) (70.0)
Total operations (108.4) (125.5)
Basic loss per share-cents (8.58 (b))
From continuing operations (41.3) (98.4)
Total operations (35.5) (211.4)
Calculated on the weighted average (8.58 (b))
ordinary shares issued of: 310 565 826 257 695 796
Diluted headline loss per share-cents (8.58 (b)) (108.4) (125.5)
Diluted basic loss per share-cents (8.58 (b)) (35.5) (211.4)
SEGMENTAL INFORMATION 12 months ending 30 Jun 2006
South Africa Australasia
Rm Rm
Gold and silver revenue 970.6 604.6
Cash operating costs (855.5) (436.7)
Cash operating profit 115.1 167.9
12 months ending 30 Jun 2005
South Africa Australasia
Rm Rm
Gold and silver revenue 426.3 725.6
Cash operating costs (442.6) (391.2)
Cash operating profit/(loss) (16.3) 334.4
CONDENSED CONSOLIDATED BALANCE SHEET (8.61)
As at As at
30 Jun 2006 30 Jun 2005
IFRS IFRS
Notes Rm Rm
Employment of Capital
Net mining assets 1 865.6 731.6
Investments 7.1 108.3
Environmental trust funds 60.4 42.9
Other non-current assets 251.1 215.2
Current assets 820.6 406.0
Inventories 208.7 110.7
Trade and other receivables 102.5 54.1
Derivative instruments 4 20.8 -
Cash and cash equivalents 488.6 241.2
3 004.8 1 504.0
Capital employed
Shareholders equity 1 015.2 483.1
Shareholders interest 782.1 477.3
Minority shareholders interest 233.1 5.8
Long-term liabilities 5 378.7 466.5
Post retirement health care provisions 20.6 -
Financial liability 6 27.9 -
Derivative instruments - 3.7
Rehabilitation 322.3 138.6
Deferred mining and income taxes 91.0 82.7
Current liabilities 1 149.1 329.4
Trade and other payables 346.1 226.4
Provisions 67.0 38.3
Derivative instruments 7 183.4 -
Current portion of long-term
borrowings 5 552.6 64.7
3 004.8 1 504.0
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
12 months to 12 months to
30 Jun 2006 30 Jun 2005
IFRS IFRS
Rm Rm
Balance at the beginning of the period 483.1 456.9
Minority shareholders interest now reflected
in shareholders equity - 5.8
Restated balance at the beginning of the year 483.1 462.7
Share capital issued 209.8 506.5
for acquisition finance and cash 199.9 522.6
for share options exercised 3.5 0.5
for increase in share-based payment reserve 13.3 10.6
for costs (6.9) (27.2)
Net loss attributed to ordinary shareholders (110.1) (544.8)
Currency translation adjustment and other 205.1 58.7
Net loss attributed to minority shareholders (4.4) -
Increase in minorities 231.7 -
Balance as at the end of the period 1 015.2 483.1
Reconciliation of headline loss (8.58 (b))
Net (loss) (110.1) (544.8)
Adjusted for:
Impairment of assets and investments (118.5) 289.6
Profit on discontinued operations (18.3) (65.2)
Profit on sale of investments (89.6) (3.0)
Headline loss (336.5) (323.4)
Equity reconciliation of previous SA GAAP to IFRS
Shareholders equity as previously reported 620.6
Property, plant and equipment (26.7)
Convertible loan notes (107.2)
Translation of a foreign operation (3.6)
As reported under IFRS 483.1
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
12 months to 12 months to
30 Jun 2006 30 Jun 2005
IFRS IFRS
Rm Rm
Net cash outflow from operations (13.2) (114.2)
Working capital changes (136.6) (1.4)
Net cash outflow from investing activities (232.7) (298.1)
Net cash inflow from financing activities 538.7 526.7
Increase in cash and cash equivalents 156.2 113.0
Translation adjustment 91.2 (12.7)
Opening cash and cash equivalents 241.2 140.9
Closing cash and cash equivalents 488.6 241.2
Reconciliation of net cash outflow from operations
Net operating (loss)/profit (12.9) 46.4
Net operating profit/(loss) from discontinued
operations 18.3 (128.3)
5.4 (81.9)
Adjusted for:
Interest provision on convertible loan notes 28.5 27.3
Amortisation of convertible loan notes
issuance costs 9.9 7.5
Financial instruments (3.7) (9.9)
Unrealised foreign exchange loss 19.6 16.5
Growth in Environmental trust funds (5.6) (4.9)
Other non cash items 13.3 16.6
Interest paid (50.7) (24.6)
Taxation paid (29.9) (60.8)
Net cash outflow from operations (13.2) (114.2)
NOTES REGARDING FINANCIAL INFORMATION
Note 1 - Summary of significant accounting policies
Basis of preparation
The provisional condensed annual financial statements are based on our annual
financial statements for the twelve months ended 30 June 2005 prepared in
accordance with IFRS. DRDGOLD will be releasing US GAAP financial statements for
the twelve months ended 30 June 2006 on or before 31 December 2006, which it
will file with the US Securities and Exchange Commission ("SEC") on Form 20F.
(8.57)
Compliance with IFRS
Basis of preparation
DRDGOLD has adopted IFRS for the annual period beginning on 1 July 2004. These
provisional condensed annual financial statements for the year ended 30 June
2006 have been prepared in accordance with IFRS and International Accounting
Standards ("IAS") 34, "Interim Financial Reporting". (8.57)
The principal accounting policies adopted in the preparation of the condensed
annual financial statements have been consistently applied to all the years
presented, unless otherwise stated.
Transition to IFRS
The transition to IFRS has been implemented in accordance with IFRS 1, "First-
Time Adoption of International Financial Reporting Standards" and DRDGOLD"s
transition date is 1 July 2004. Comparative information has accordingly been
restated from this date. There are certain voluntary exemptions, as discussed
below, where the full retrospective restatement of comparatives is not required.
Voluntary exemptions
DRDGOLD has applied its accounting policies retrospectively from the date of
transition, with the exception of the following permitted exemptions:
Share-based payment transactions - DRDGOLD has elected not to apply IFRS 2,
"Share-based payments", to share options granted prior to 7 November 2002 as
well as those share options granted after that date which had vested before 1
January 2005.
Business combinations - DRDGOLD has elected not to apply IFRS 3,"Business
Combinations" to past business combinations that occurred before the date of
transition to IFRS and DRDGOLD has not applied IAS 21,"The Effects of Changes in
Foreign Exchange Rates", retrospectively to fair value adjustments and goodwill
arising in business combinations that occurred before the date of transition to
IFRS.
Fair value or revaluation as deemed cost - Certain items of mining assets have
been measured at their fair value at the transition date and that fair value has
been used as their deemed cost at that date.
IFRS and other adjustments
Share-based payments
Under SA GAAP, DRDGOLD did not recognise any expense for share options granted
to employees. Under IFRS 2, options to acquire the entity"s equity instruments
that were granted post 7 November 2002 and which remained unvested at 1 January
2005 are measured at fair value at grant date. The expense is recognised over
the vesting period, adjusted to reflect actual levels of vesting.
The cumulative effect of DRDGOLD"s equity-settled schemes on opening accumulated
loss at 1 July 2004 is an increase in accumulated loss of R6.0 million. The
corresponding credit is to the share-based payments reserve. The effect on the
loss for the 2005 financial year is an increase in the loss of R10.6 million.
There are no taxation implications of these adjustments.
Property, plant and equipment
Previously IAS 16, "Property, plant and equipment" did not clearly set out the
requirement for separate depreciation of significant components of property,
plant and equipment. The revised IAS 16 requires significant components of an
asset, with useful lives that differ significantly from the asset as a whole, to
be depreciated separately over their useful lives.
Translation of a foreign operation
Previously IAS 21, "The effects of changes in foreign exchange rates" allowed an
entity to translate the financial statements of a foreign operation that was
integral to the operations of the entity as if the transactions of the foreign
operation had been those of the reporting enterprise. This allowed non-monetary
assets and liabilities of the foreign operation to be translated at historical
exchange rates and monetary assets and liabilities to be translated at closing
exchange rates. The revised IAS 21 does not contain a distinction between an
"integrated foreign operation" and a "foreign entity" and all assets and
liabilities of a foreign operation are translated at closing exchange rates.
Convertible bond
In December 2003 the revisions to IAS 32 Financial Instruments added another
part to the definition of a financial liability as follows:
"(b) a contract that will or may be settled in the entity"s own equity
instruments and is:(i) a non-derivative for which the entity is or may be
obliged to deliver a variable number of the entity"s own equity instruments; or
(ii) a derivative that will or may be settled other than by the exchange of a
fixed amount of cash or another financial asset for a fixed number of the
entity"s own equity instruments. For this purpose the entity"s own equity
instruments do not include instruments that are themselves contracts for the
future receipt or delivery of the entity"s own equity instruments".
The International Financial Reporting Interpretations Committee ("IFRIC")
considered whether a fixed amount of foreign currency represents a fixed amount
of cash or other financial asset. IFRIC concluded that although the issue is
not directly addressed in IAS 32, when addressing the question in conjunction
with guidance in other Standards (more specifically IAS 39), it is clear that
any obligation denominated in a foreign currency represents a variable amount of
cash.
Consequently, IFRIC noted that contracts, whether embedded in a bond or
freestanding, that will be settled by an entity delivering a fixed number of its
own equity instruments in exchange for a fixed amount of foreign currency should
be classified as liabilities.
Therefore, the conversion feature in a convertible bond denominated in a foreign
currency with a conversion option to convert a fixed amount of bond into a fixed
number of shares denominated in the functional currency, should be entirely
classified as a liability.
2006 2005
Rm Rm
Note 2 - Profit on sale of investments
Profit on sale of investments 1.2 3.0
Profit on reduction of interest in Emperor from
88.3% to 78.9% 88.4 -
89.6 3.0
Note 3 - Impairments
Write-off on IDC Loan purchased (28.9) -
Reversal of prior impairment investment in Emperor 74.4 (72.1)
Reversal of prior year impairment on investments 73.0 -
118.5 (72.1)
Note 4 - Derivative instruments
Gold call options at fair value 20.8 -
This current asset represents the positive
mark-to-market on gold call options to the value
of R20.8 million.
Note 5 - Long-term liabilities
ANZ Banking Group Limited - Emperor loan facility 407.2 -
Industrial Development Corporation of South
Africa Limited 19.4 26.9
Investec Bank (Mauritius) Limited - 67.0
Convertible loan notes 490.1 437.3
Leases and other 14.6 -
931.3 531.2
Less: Payable within one year shown under
current liabilities (552.6) (64.7)
378.7 466.5
Note 6 - Financial liability
Class A Preference shares issued to Khumo Gold
SPV (Pty) Limited 27.9 -
Note 7 - Derivative Instruments
Gold forward contracts 183.4 -
The liability in relation to derivative instruments
represents the mark-to-market on the gold forward
contracts of the consolidated Emperor entity of
R183.4 million (A$34.5 million) at 30 June 2006.
The total ounces to be delivered under the gold
forward contracts is 145,695 ounces and the delivery
into these derivative instruments will be in
accordance with the maturity schedule agreed with
the corresponding bank as follows:
Period 30 June 2007 30 June 2008 30 June 2009
Committed ounces 41 526 82 992 21 177
The fair value of the derivative instruments that is expected to
mature within the coming year is R52.5 million (A$9.9 million)
relating to 41,526 ounces.
Note 8 - Contingencies
The Inland Revenue Commission of Papua New Guinea ("IRC") has issued tax
assessments to Tolukuma Gold Mines Limited ("TGM") for the years 1996 to 2004.
The IRC has reduced the amount of allowable capital expenditure ("ACE") claimed
in the statement of taxable income for the above years. The IRC has reduced the
amortisation claim by estimating the life of mine to be eight years for the year
ended 30 June 1996 and six years for the years ended 30 June 1997 to 30 June
2004. The mine life used by TGM and our tax advisors to calculate the
amortisation of ACE was, five years for 30 June 1996, four years for 30 June
1997 and from 30 June 1998 to 30 June 2004 the mine life used was two years.
The result of these adjustments are a tax payable amount of PGK6.8 million
(R15.8 million). TGM has lodged an objection with the IRC in relation to this
matter based on the grounds that the mine life of TGM based on its reserves and
annual production was in accordance with claims in the tax return. The IRC have
allowed TGM to defer payment of the assessment until such time as the matter is
resolved. No provision has been recorded in the financial statements as
presented.
Note 9 - Subsequent events
DRDGOLD has concluded an agreement with Anglogold Ashanti Limited to purchase
the remaining extent of Erf 1 Park Central Township or better known as Top Star
dump in central Johannesburg.
INVESTOR INFORMATION
DIRECTORS - (*British)(**Australian)(***American)
Executives:
MM Wellesley-Wood (Chief Executive Officer)*
JWC Sayers (Chief Financial Officer)
Non-executives:
J Turk ***
Independent non-executives:
DJM Blackmur** (Senior Non-Executive Director); GC Campbell*(Non-Executive
Chairman); RP Hume
Group Company Secretary:
TJ Gwebu
INVESTOR RELATIONS
For further information, contact Ilja Graulich at:
Tel: (+27-11) 219-8700, Fax: (+27-11) 476-2637,
e-mail: ilja.graulich@za.drdgold.com,
website: http://www.drdgold.com
Ebsco House 4, 299 Pendoring Avenue,
Blackheath, Randburg, South Africa.
PO Box 390,
Maraisburg, 1700,
South Africa.
21 September 2006
Johannesburg
Date: 21/09/2006 07:00:14 AM Produced by the JSE SENS Department
