COMMENTARY TO THE CONDENSED CONSOLIDATED REVIEWED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
General
The board of Randgold & Exploration Company Limited (R&E) is pleased to announce the interim results for the six months ended 30 June 2012.
Income
The majority of the income recognised in the period under review was a result of a legal settlement, profit realised on the disposal of prospecting rights and finance income.
Financial position
R&E is liquid with no interest-bearing debt. R&E’s total assets consist primarily of cash. R&E had a net asset value per share of R2.48 at 30 June 2012.
Cash flow
R&E started the period under review with a cash balance of R211 million. Operating activities generated cash of R0.5 million, primarily as a result of a legal settlement of R15.5 million and interest received of R5.6 million offsetting operating expenses of R19.9 million, which includes legal and forensic costs of R11.6 million.
Investing activities yielded cash inflows of R5 million received from the sale of prospecting rights.
R&E remains in a healthy cash position with R217 million in cash and cash equivalents at 30 June 2012.
Outlook
On 11 July 2012 the company announced the withdrawal of the cautionary announcement under which it was trading, as negotiations regarding a possible investment opportunity were terminated. The negotiations were conducted under a confidentiality agreement. Management continues to review investment opportunities for the benefit of R&E and its shareholders.
The group’s current asset base, comprising primarily of net cash reserves, provides the critical mass for the ongoing pursuit of civil claims for the recovery of allegedly misappropriated assets. It is the board’s opinion that R&E’s management, forensic and legal teams have the necessary experience and resilience to prosecute the legal claims. As in the past, a pragmatic commercial approach will be adopted in dealing with the outstanding legal claims.
DC Kovarsky Marais Steyn
Chairman Chief Executive Officer
Johannesburg
6 August 2012
| CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME | |||
|
For the six months ended |
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| 30 June 2012 | 30 June 2011 | ||
| Reviewed | Reviewed | ||
| Notes | R’000 | R’000 | |
| Revenue | – | 1 826 | |
| Profit on disposal of prospecting rights | 6 | 5 037 | 9 963 |
| Profit on distribution of Investments | – | 52 474 | |
| Recoveries | 7 | 15 521 | – |
| Foreign exchange gains | 532 | 1 513 | |
| Other income | 2 041 | 8 | |
| Other operating expenses | (19 879) | (14 505) | |
| Results from operating activities | 3 252 | 51 279 | |
| Finance income | 5 597 | 3 073 | |
| Profit before taxation | 8 849 | 54 352 | |
| Taxation | – | 954 | |
| Profit for the period | 8 849 | 55 306 | |
| Other comprehensive income | |||
| Change in fair value of available-for-sale investments | – | (9 537) | |
| Realised gain reclassified to profit or loss | – | (52 474) | |
| Total comprehensive income | 8 849 | (6 705) | |
| Profit attributable to: | |||
| Owners of the company | 8 849 | 55 306 | |
| Total comprehensive income attributable to: |
|||
| Owners of the company | 8 849 | (6 705) | |
| Basic and diluted earnings per share (cents) | 8 | 12 | 77 |
| CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION | |||
|
As at |
|||
| 30 June 2012 | 31 December 2011 | ||
| Reviewed | Audited | ||
| R’000 | R’000 | ||
| Assets | |||
| Non-current assets | 697 | 734 | |
| Plant and equipment | 223 | 260 | |
| Intangible assets | 474 | 474 | |
| Current assets | 218 250 | 213 258 | |
| Trade and other receivables | 1 289 | 1 788 | |
| Cash and cash equivalents | 216 961 | 211 470 | |
| Equity and liabilities | |||
| Shareholders’ equity | 177 875 | 169 026 | |
| Issued capital | 746 | 746 | |
| Retained earnings | 177 129 | 168 280 | |
| Liabilities | |||
| Non-current liabilities | |||
| Post-retirement medical benefit obligation | 39 361 | 39 142 | |
| Current liabilities | |||
| Trade and other payables | 1 711 | 5 824 | |
| Total equity and liabilities | 218 947 | 213 992 | |
| CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY | ||
|
For the six months ended |
||
| 30 June 2012 | 30 June 2011 | |
| Reviewed | Reviewed | |
| R’000 | R’000 | |
| Share capital balance at the beginning and end of the period | 746 | 748 |
| Investment fair value reserve | – | – |
| Balance at the beginning of the period | – | 62 011 |
| Change in fair value of available-for-sale investments | – | (9 537) |
| Realised gain reclassified to profit or loss | – | (52 474) |
| Retained earnings | 177 129 | 176 539 |
| Balance at the beginning of the period | 168 280 | 111 696 |
| Profit for the period | 8 849 | 55 306 |
| Remeasurement of shareholders for dividend | – | 9 537 |
| CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS | ||
|
For the six months ended |
||
| 30 June 2012 | 30 June 2011 | |
| Reviewed | Reviewed | |
| R’000 | R’000 | |
| Profit before taxation | 8 849 | 54 352 |
| Adjusted for: | ||
| Profit on distribution of Investments | – | (52 474) |
| Profit on disposal of prospecting rights | (5 037) | (9 963) |
| Other non-cash items | 256 | (277) |
| Interest received | (5 597) | (3 073) |
| Dividends received | – | (1 826) |
| Working capital changes | (3 614) | (178) |
| Cash flows from operations | (5 143) | (13 439) |
| Interest received | 5 597 | 3 073 |
| Taxation paid | – | (10 450) |
| Cash flows from operating activities | 454 | (20 816) |
| Cash flows from investing activities | 5 037 | 11 757 |
| Dividends received | – | 1 826 |
| Proceeds on disposal of prospecting rights | 5 037 | 9 963 |
| Acquisition of plant and equipment | – | (39) |
| Proceeds from disposal of plant and equipment | – | 7 |
| Cash flow from financing activities | – | (64 633) |
| Dividends paid | – | (64 633) |
| Net increase/(decrease) in cash and cash equivalents | 5 491 | (73 692) |
| Cash and cash equivalents at the beginning of the period | 211 470 | 291 797 |
| Cash and cash equivalents at the end of the period | 216 961 | 218 105 |
| NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2012 |
1. Reporting entity
R&E is a company domiciled and incorporated in the Republic of South Africa. The condensed consolidated interim financial statements of the company for the six months ended 30 June 2012 include the company and its subsidiaries (together referred to as “the group”).
2. Statement of compliance
The condensed consolidated interim financial statements for the six months ended 30 June 2012 have been prepared in compliance with the Listings Requirements of the JSE Limited, IAS 34 Interim Financial Reporting, the AC 500 series as issued by the Accounting Practices Board or its successor and the South African Companies Act, 71 of 2008, as amended. These condensed consolidated interim financial statements were approved by the board of directors on 6 August 2012.
Mr Van Zyl Botha CA(SA), financial director, is responsible for these interim financial statements and has supervised the preparation thereof in conjunction with the group accountant, Ms Marleen Schalkwijk.
3. Significant accounting policies
The accounting policies applied by the group in these condensed consolidated interim financial statements are the same as those applied by the group in its consolidated financial statements as at and for the year ended 31 December 2011.
4. Independent review by the auditor
The condensed consolidated interim financial statements of R&E were reviewed by KPMG Inc. The unmodified review report is available for inspection at the company’s registered office.
5. Segment reporting
The group operates in a single operating segment as an investment holding company with assets in the mining industry.
6. Profit on disposal of prospecting rights
R&E disposed of certain of its prospecting rights which had a nil carrying value for R5 million.
7. Recoveries
R&E entered into a settlement agreement with Paul Main in terms of which USD4 million is payable by Paul Main to R&E. The settlement relates to the group’s claim against him for damages in respect of two million Randgold Resources Limited shares. Shareholders are referred to the announcements made by the company on 23 May and 6 July 2012 relating to this settlement. R&E recognised only R15.5 million (USD2 million) of the settlement received in cash at 30 June 2012 and will recognise the remaining USD2 million on receipt or when the company is virtually certain of receipt thereof.
8. Earnings per share
|
For the six months ended |
|||
| Basic earnings and diluted earnings per ordinary share |
30 June 2012 Reviewed |
30 June 2011 Reviewed |
|
| Basic and diluted earnings for the period (R’000) | 8 849 | 55 306 | |
| Weighted average number of ordinary shares in issue | 71 585 172 | 71 813 235 | |
| Earnings per share (cents) | 12 | 77 | |
| Headline and diluted headline earnings per ordinary share |
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| Headline and diluted headline earnings/(loss) for the period (R’000) | 3 812 | (7 131) | |
| Weighted average number of ordinary shares in issue | 71 585 172 | 71 813 235 | |
| Headline earnings/(loss) per share (cents) | 5 | (10) | |
| Reconciliation between basic and headline earnings for the period | R’000 | R’000 | |
| Profit for the period attributable to the equity holders of the company | 8 849 | 55 306 | |
| Adjusted for: | |||
| Profit on distribution of available-for-sale investments | – | (52 474) | |
| Profit on disposal of prospecting rights | (5 037) | (9 963) | |
| 3 812 | (7 131) | ||
| Tax effect of adjustments | – | – | |
| Headline earnings/(loss) for the period attributable to equity holders of the company | 3 812 | (7 131) | |
9. Net asset and tangible net asset value per share
The net asset value per share is calculated using the following variables:
| 30 June 2012 | 30 June 2011 | ||
| Reviewed | Reviewed | ||
| Net asset value (R’000) | 177 875 | 177 287 | |
| Ordinary shares outstanding | 71 585 172 | 71 813 235 | |
| Net asset value per share (cents) | 248 | 247 | |
| Net tangible asset value per share (cents) | 247 | 246 |
The number of shares outstanding at 30 June 2012 and 30 June 2011 has been adjusted for the 2,999,893 treasury shares held.
10. Material changes
The settlement with Paul Main is material in its totality but as only 50% of the settlement amount has been received and the other 50% is payable by 31 August 2012, the payments are viewed as two separate transactions.
11. Related party transactions
There were no related party transactions during the period under review other than in the normal course of business, i.e. key management remuneration.
12. Events after reporting date
There were no significant events between the reporting date and the approval date of these results.
Directors: DC Kovarsky (Chairman)**, M Steyn (CEO)*, V Botha*,
MB Madumise#, JH Scholes** (*Executive, **Independent non-executive, #Resigned 23 March 2012 independent non-executive)
Secretary and Registered officer: V Botha CA(SA)
Transfer secretaries: Computershare Investor Services (Pty) Ltd (Registration number 2004/003647/07), 70 Marshall Street, Johannesburg, 2001
Sponsor: PSG Capital, 1st Floor, Ou Kollege Building, 35 Kerk Street, Stellenbosch, 7600
17 August