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RNG - Randgold & Exploration Company Limited - Abridged audited results for
the year ended 31 December 2011
Randgold & Exploration Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1992/005642/06)
Share code: RNG
ISIN: ZAE000008819
("R&E" or "the company" or "the group")
Abridged audited results for the year ended 31 December 2011
Commentary to condensed consolidated financial statements for year ended 31
December 2011
General
After significant distributions to shareholders in January 2011 arising from
the recoupment of value from third parties, the board consolidated the
affairs of the company during the year under review. Management continued
building shareholder value by investing in the outstanding legal claims
against third parties and by investigating various investment opportunities.
More importantly, the operational activities during the 2011 financial year
had a minimal effect on the net asset value of the company.
As previously stated, the R&E board of directors remains firmly committed to
the further recovery of the company`s assets, which were lost as a result of
the misappropriations during the Kebble era, while always retaining a
commercially pragmatic approach. No recoveries were made during the year
under review but considerable effort went into the pursuit of various
substantial claims.
The company`s strong asset base, comprising primarily cash reserves,
facilitates the bold and effective pursuit of claims while preserving
sufficient critical mass to take advantage of investment opportunities as
they arise.
The company`s prospecting rights portfolio, which has not materially changed
from the prior year, has not shown any potential to accommodate an
independent and economically viable mining operation. However, management
was able to dispose of certain selected rights, and is in the process of
finalising these transactions. Disposal agreements of prospecting rights
amounting to approximately R22 million were entered into, of which R10
million was concluded during the year under review and the balance scheduled
for conclusion in 2012. Certain other rights are now the subject of joint-
venture agreements, in terms of which the operational and funding
requirements are the responsibility of our partners.
Statement of comprehensive income
The group results for the 2011 year were positive, showing total profit of
R47.7 million (2010: R 741.5 million).This is mainly as a result of profit
realised on the distribution of investments to shareholders, the sale of
prospecting rights, and interest earned on cash invested. Continued
expenditure on consulting, forensic, legal, audit fees and tax advisors was
necessary to achieve the desired outcomes.
Statement of financial position
The major assets of the R&E group as at 31 December 2011 consisted of cash
and prospecting rights. The board has adopted a minimum risk approach to
protect the group`s cash investments, which are monitored daily in
conjunction with a specialist treasury firm to maintain optimal returns with
minimal associated risks. The group`s prospecting rights are stated at cost
less impairments as we do not have sufficient geological information to
allow us to declare the resources or reserves as stated in previously
published competent person`s reports. The group intends to retain its
prospecting rights unless it is commercially sound to dispose thereof and
negotiations in this regard are ongoing. Planned prospecting expenditure on
all rights currently held is R20.8 million over the course of the next four
years. R&E will progressively review the exploration programme to ensure
efficient application of the company`s resources.
The post-retirement medical benefit obligation is unfunded and the group
continues to fulfil its obligations. However, in managing the liability, we
have successfully offered some members of the medical aid scheme a
discounted cash amount in exchange for the renunciation of their benefits
under the scheme, an alternative that is proving to be beneficial for both
parties.
The R&E group has calculated tax losses as at 31 December 2011, but no
deferred tax assets were raised as it is not probable that there will be
future taxable profits against which to offset the tax losses. Certain tax
matters dating back to 1998 that were part of the Kebble legacy have now
been laid to rest with the South African Revenue Service.
Statement of cash flows
The group`s primary cash inflows were as a result of investing activities,
interest earned on cash and the disposal of prospecting rights. The group
utilised this cash to fund its operations during the year.
Outlook
The outlook for 2012 is similar to that for the previous year. Expenditure
on litigation and operations is expected to be at a similar level, which is
likely to prevail until all claims have been finalised.
DC Kovarsky Marais Steyn Van Zyl Botha
Chairman Chief Executive Officer Financial Director
Johannesburg
6 March 2012
Condensed consolidated statement of comprehensive income
For the year ended
31 December 2011 31 December 2010
Notes R`000 R`000
Revenue 1 826 20 408
Recoveries - JCI - 783 549
- Other - 25 204
Profit on disposal of 6 52 474 2 165
investments/distribution
Profit on disposal of prospecting 7 9 963 -
rights
Other income 2 688 7 640
Other operating expenses (29 081) (80 826)
Results from operating activities 37 870 758 140
Finance income 8 832 1 519
Profit before taxation 46 702 759 659
Taxation 949 (18 200)
Profit for the year 47 651 741 459
Other comprehensive income
Net change in fair value of 6 (9 537) 49 874
available-for-sale investments
Realised gain reclassified to profit (52 474) -
or loss
Total comprehensive income (14 630) 791 333
Profit or loss attributable to:
Non-controlling interest - 54
Owners of the company 47 651 741 405
Profit for the year 47 651 741 459
Total comprehensive income
attributable to:
Non-controlling interest - 54
Owners of the company (14 630) 791 279
Total comprehensive income (14 630) 791 333
Basic and diluted earnings per share 8 66 1 032
(cents)
Condensed consolidated statement of financial position
As at
31 December 2011 31 December 2010
Notes R`000 R`000
Assets
Non-current assets 734 782
Plant and equipment 260 308
Intangible assets 474 474
Current assets 213 258 568 291
Trade and other receivables 1 788 2 649
Investments held for distribution 6 - 273 845
Cash and cash equivalents 211 470 291 797
Total assets 213 992 569 073
Equity and liabilities
Shareholders` equity 169 026 174 455
Issued capital 746 748
Reserves - 62 011
Retained earnings/(accumulated loss) 168 280 111 696
Liabilities
Non-current liabilities
Post-retirement medical benefit 39 142 36 429
obligation
Current liabilities 5 824 358 189
Tax payable - 11 220
Shareholders for dividend 6 - 338 477
Trade and other payables 5 824 8 492
Total equity and liabilities 213 992 569 073
Condensed consolidated statement of changes in equity
For the year ended
31 December 2011 31 December 2010
Notes R`000 R`000
Share capital 746 748
Balance at the beginning and end of 748 748
the year
Shares repurchased (2) -
Share premium - -
Balance at the beginning of the year - 986 054
Settlement distribution - (803 804)
GFI and cash distribution - (182 250)
Investment fair value reserve - 62 011
Balance at the beginning of the year 62 011 12 137
Realised gain reclassified to profit (52 474) -
of loss
Net change in fair value of (9 537) 49 874
available-for-sale investments
Retained earnings/(Accumulated loss) 168 280 111 696
Balance at the beginning of the year 111 696 (514 787)
Change in fair value of shareholders 6 9 537 -
for dividend
Transaction with non-controlling - 9 074
shareholders
Profit for the year 47 651 741 405
Shares repurchased (604) -
Settlement distribution - 32 231
GFI and cash distribution - (156 227)
Non-controlling interest - -
Balance at the beginning of the year - 250 378
Transaction with non-controlling 8 - (171 051)
shareholders
Dividends paid to non-controlling - (79 381)
shareholders
Profit for the year - 54
Dividend per share (cents) 8 - 1 546
Condensed consolidated statement of cash flows
For the year ended
31 December 2011 31 December 2010
R`000 R`000
Profit before taxation 46 702 759 659
Adjusted for:
Profit on sale of Mineral Rights (9 963) -
Recoveries not settled in cash - (808 754)
Other non-cash items (49 685) 26 420
Finance income (8 832) (1 519)
Dividends received (1 826) (20 408)
Working capital changes (1 775) 41 146
Cash untilised in operations (25 379) (3 456)
Finance income 8 832 635
Taxation paid (10 455) (22 559)
Cash flows from operating activities (27 002) (25 380)
Cash flows from investing activities 11 762 101 752
Dividends received 1 826 20 408
Proceeds from disposal of recovered assets - 27 344
Proceeds on disposal of investment in - 7 859
equity securities
Proceeds on disposal of property, plant 11 -
and equipment
Proceeds on disposal of mineral rights 9 963 -
Acquisition of plant and equipment (38) (285)
Loan payments received - 46 426
Cash flow from financing activities (65 087) (79 381)
Dividends paid to non-controlling - (79 381)
shareholders
Dividends paid (64 481) -
Shares repurchased (606) -
Net decrease in cash and cash equivalents (80 327) (3 009)
Cash and cash equivalents at the beginning 291 797 294 806
of the year
Cash and cash equivalents at the end of 211 470 291 797
the year
Notes to the condensed consolidated interim financial statements for the
year ended 31 December 2011
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 year ended 31 December 2011 include the company and its subsidiaries
(together referred to as "the group").
2. Statement of compliance
The condensed consolidated interim financial statements for the year ended
31 December 2011 have been prepared in compliance with the Listings
Requirements of the JSE Limited, International Financial Reporting Standards
(IFRS) (in particular International Accounting Standard 34 Interim Financial
Reporting), the AC 500 Standards as issued by the Accounting Practices Board
or its successor and the Companies Act of South Africa.
These consolidated annual financial statements were approved by the board of
directors on 06 March 2012.
3. Significant accounting policies
The accounting policies applied by the group in these condensed consolidated
financial statements are the same as those applied by the group in its
consolidated financial statements for the year ended 31 December 2010,
except for the following standards and interpretations adopted on 1 January
2011:
- Revised IAS 24 - Related Party Disclosures
- IFRIC 14 amendment - Prepayments of minimum funding requirements; and
- Various improvements to IFRSs 2010 - excluding amendments to IFRS 3
Business Combinations and IAS 27 Consolidated and Separate Financial
Statements.
There was no significant impact on these condensed consolidated financial
statements as a result of adopting these standards and interpretations.
4. Independent review by the auditor
The condensed consolidated financial statements were extracted from the
audited annual consolidated financial statements of R&E for the year ended
31 December 2011. The annual consolidated financial statements of R&E were
audited by the group`s auditor, CH Basson of KPMG Inc. The unmodified audit
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. Distribution of 2 270 687 GFI shares and special cash dividend of 90
cents per R&E share
On 30 November 2010, R&E shareholders approved the distribution of R&E`s
remaining listed investment in GFI (amounting to 3.16193 GFI shares per 100
R&E shares held), as well as a cash dividend of 90 cents per share. These
distributions were effected on 17 January 2011. STC was paid on the portion
of the distribution not made out of share premium.
As a result of this distribution, the investment fair value reserve at 17
January 2011 of R52.4 million was reclassified to profit or loss.
R`000
Investment held for distribution - 1 January 2011 273 845
Value of GFI shares at distribution date - 17 January 2011 (264 308)
Decrease in fair value of investment held for distribution 9 537
recognised in other comprehensive income
Investment fair value reserve - 1 January 2011 (62 011)
Realised gain reclassified to profit or loss 52 474
R`000
Shareholders for dividend - 1 January 2011 338 477
Remeasurement - 17 January 2011 (9 537)
Distribution 328 940
GFI Shares 264 307
Cash 64 633
7. Profit on sale of prospecting rights
During the year under review, R&E disposed of certain of its prospecting
rights which had a nil carrying value to a third party for R10 million
(refer to note 10).
8. Earnings per share and dividend per share
For the year ended
31 December 2011 31 December 2010
Basic earnings and diluted earnings per
ordinary share
Basic and diluted earnings for the year 47 651 741 405
(R`000)
Weighted average number of ordinary shares 71 756 219 71 813 128
in issue
Earnings per share (cents) 66 1 032
Headline and diluted headline earnings per
ordinary share
Headline and diluted headline (loss) / (14 786) 754 893
earnings for the year (R`000)
Weighted average number of ordinary shares 71 756 219 71 813 182
in issue
Headline (loss) / earnings per share (21) 1 051
(cents)
Reconciliation between basic and headline R`000 R`000
earnings for the year
Profit for the year attributable to the 47 651 741 405
equity holders of the company
Adjusted for:
Profit on disposal of available-for-sale (52 474) (2 165)
investments
Profit on disposal of prospecting rights (9 963) -
Impairment of investment held for - 15 653
distribution
(14 786) 754 893
Tax effect of adjustments - -
Headline (loss) / earnings for the year (14 786) 754 893
attributable to equity holders of the
company
Dividend per share
Total dividend declared (R`000) - 1 110 050
Eligible shares in issue 71 756 219 71 813 128
Dividend per share (cents) - 1 546
Total dividend payable from R&E`s share - 803 804
premium (R`000)
Dividend payable to group entities - (32 231)
recognised in retained earnings (R`000)
Shareholders for dividend per statement of - 338 477
financial position (R`000)
9. Net asset and tangible net asset value and per share
The net asset value per share is calculated using the following variables:
31 Dec 2011 31 Dec 2010
Audited Audited
Net asset value (R`000) 169 026 174 455
Ordinary shares outstanding 71 585 172 71 813 235
Net asset value per share (cents) 236 243
Net tangible asset value per share (cents) 235 242
The number of shares outstanding at 31 December 2010 and 31 December 2011
has been adjusted for the 3 million treasury shares held.
10. Material changes
There have been no material changes to the information contained in the
independent mineral asset valuation reports that were disclosed to
shareholders in the settlement circular, however, two prospecting rights
over various farms (collectively known as the Jeanette Prospecting Right and
Weltevreden Prospecting Right) were disposed of during the reporting period
(refer to note 7).
11. Related party transactions
There were no related party transactions during the period under review.
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)
(#MB Madumise resigned from the board with effect from 23 March 2012)
Secretary and Registered office: Van Zyl Botha, 3rd Floor Sandton Office
Towers, 158 5th Street, Sandhurst, Sandton, 2196
Transfer secretaries: Computershare Investor Services (Pty) Ltd
(Registration number 2004/003647/07) 70 Marshall Street, Johannesburg, 2001
Sponsor: PSG Capital
29 March 2012
Date: 29/03/2012 17:03:35 Supplied by www.sharenet.co.za
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