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Report to shareholders for the fourth quarter and year ended 30 June 2015
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
Registration No.1895/000926/06
JSE share code: DRD
ISIN: ZAE 000058723
Issuer code: DUSM
NYSE trading symbol: DRD
("DRDGOLD" or "the company" or "the group")
REPORT TO SHAREHOLDERS
FOR THE FOURTH QUARTER AND YEAR ENDED 30 JUNE 2015
GROUP RESULTS: KEY FEATURES
Q4 FY2015 VS Q3 FY2015 FY2015 VS FY2014
- Gold production up 9% to 40 253oz - Gold production up 13% to 150 145oz
- All-in sustaining costs down 11% to US$987/oz - All-in sustaining costs down 7% to US$1 118/oz
- Operating profit up 26% to R122.6 million - Operating profit up 48% to R384.3 million
- Cash balance up 13% to R324.4 million - Cash balance up 55% to R324.4 million
Quarter Quarter Quarter 12 months 12 months
30 Jun 31 Mar % 30 Jun to 30 Jun to 30 Jun %
Group 2015 2015 change 2014 2015 2014 change
Gold production oz 40 253 36 877 9 34 143 150 145 132 909 13
kg 1 252 1 147 9 1 062 4 670 4 134 13
Gold sold oz 38 806 36 877 5 32 857 149 984 134 420 12
kg 1 207 1 147 5 1 022 4 665 4 181 12
Cash operating costs US$ per oz 954 1 009 (5) 1 120 1 013 1 118 (9)
R per kg 371 089 380 548 (2) 379 039 372 932 372 671 –
All-in sustaining costs US$ per oz 987 1 112 (11) 999 1 118 1 205 (7)
R per kg 385 579 420 195 (8) 339 315 411 548 401 691 2
Average gold price received US$ per oz 1 194 1 224 (2) 1 293 1 226 1 298 (6)
R per kg 464 170 461 683 1 437 770 451 297 432 775 4
Operating profit R million 122.6 97.6 26 52.6 384.3 260.0 48
Operating margin % 21.9 18.4 19 11.8 18.3 14.4 27
All-in sustaining costs margin % 13.8 9.0 53 19.6 8.7 8.3 5
EBITDA # R million 106.6 72.4 47 114.1 296.1 204.0 45
Headline earnings R million 30.4 9.2 230 37.4 38.7 0.7 –
R cents per share 7 2 250 10 10 * –
* Less than 1 cent
# EBITDA refers to earnings before interest, tax, depreciation, amortisation and impairments of subsidiaries and includes attributable share of earnings before interest, tax,
depreciation, amortisation and impairment of equity accounted investments
Rounding of figures may result in computational discrepancies.
SHAREHOLDERS INFORMATION
Issued capital
430 883 767 ordinary no par value shares
6 155 559 treasury shares held within the group
5 000 000 cumulative preference shares
Total ordinary no par value shares issued and committed: 431 651 117
MARKET CAPITALISATION
As at 30 Jun 2015 (Rm) 1 008.3
As at 30 Jun 2015 (US$m) 79.7
As at 31 Mar 2015 (Rm) 817.0
As at 31 Mar 2015 (US$m) 66.7
STOCK TRADED JSE NYSE*
Average volume for the quarter per day ('000) 328 614
% of issued stock traded (annualised) 20 37
Price - High R2.60 $0.206
- Low R2.02 $0.155
- Close R2.34 $0.185
* This data represents per share data and not ADS data – one ADS reflects
10 ordinary shares
DEAR SHAREHOLDER
Our very satisfactory results for the quarter and year ended 30 June
2015 reflect periods of challenges both tackled and successfully
resolved, and of ‘things coming together' as planned.
Specifically:
- work to integrate the new flotation/fine-grind (FFG) circuit
with the older carbon-in-leach (CIL) circuits at Ergo's Brakpan
plant was rewarded with an increasingly stable operational
environment during the year, and delivery of performance
from the FFG circuit within the parameters of what we had
anticipated at the outset;
- we weathered, quite literally, the impact of extraordinarily heavy
2014 summer rainfall on our reclamation activities, and have taken
measures at the reclamation sites to ensure we can better manage
possible recurrences going forward;
- we agreed with power utility Eskom an arrangement to better
deal with the vicissitudes of its load-shedding. Internally, we
developed our own system that provides constant monitoring of
power consumption across the whole of our operating footprint
and are able, when alerted by Eskom, to reduce our power
consumption by switching off non-essential equipment. The quid
pro quo is that Eskom keeps our power on, so we can maintain
an acceptable level of operation.
- In line with our stated intentions at the end of last quarter, we
have worked on and all but completed:
- a full overhaul of our asset management system to avoid
unnecessary interruptions to production due to breakdowns,
and institution of co-ordinated maintenance over the entire
circuit;
- refurbishment of the remaining five CIL tanks at Ergo. This
will raise the plant's volume capacity by approximately
300 000t per month to 2.1Mt per month;
- commissioning of the new Van Dyk and 4A6 reclamation sites;
- construction of the Rondebult water plant and pipeline
to supplement water supply to our operations from the
Rondebult sewage farm; and
- conversion of the high-grade carbon-in-pulp (CIP) circuit
to CIL, in order to optimise leaching and adsorption in the
high-grade circuit.
With regard to our Domestic Medium Term Note ("DMTN")
Programme, in terms of which we can issue notes from time to
time, on 7 April 2015 we settled R53 million of the R75.5 million
unsecured notes outstanding at 31 March 2015, in line with our
previously communicated intention to seek early redemption of
these unsecured notes. The remaining unsecured notes outstanding
at 30 June 2015 were redeemed on 3 July 2015.
CORPORATE ACTIVITY
During the year ended 30 June 2015 the roll-up of the non-
controlling interest of our BEE partners, Khumo Gold SPV
Proprietary Limited ("Khumo") and the DRDSA Empowerment
Trust ("the Trust") was finalised, and the 26% stake they held
were transferred to DRDGOLD against the issuance of 45.5 million
consideration shares and R0.9 million cash. The former non-
controlling interest in our financial statements are hence
something of the past.
Q4 FY2015 VS Q3 FY2015
OPERATIONAL REVIEW
Gold production increased by 9% to 40 253oz, reflecting a 9% rise
in throughput to 6 333 000t.
Key reasons for the higher volume treated were threefold: improved
availability of reclamation infrastructure resulting from virtual
completion of the asset maintenance system overhaul referred to
above; the positive impact on reclamation of winter's drier weather
conditions; and the start of reclamation from the 4A6 dump to
replace reclamation from the depleted Cason dump.
Yield was virtually unchanged at 0.198g/t, reflecting the continued
stable performance of the FFG circuit.
Gold sold was 5% higher at 38 806oz, in line with higher gold
production.
Cash operating costs were 2% lower at R371 089/kg due to the
rise in gold production and notwithstanding the R11 million impact
of power utility Eskom's winter tariff on electricity costs. All-in
sustaining costs (AISC) declined by 8% to R385 579/kg, again
due to higher gold production and in spite of a 49% rise in capital
expenditure to R36.8 million.
Capital expenditure was directed towards infrastructure upgrades
forming part of the afore-mentioned asset maintenance system
overhaul; completion of the Rondebult sewage water treatment
plant and associated pipeline; refurbishment of the Brakpan plant's
five remaining CIL tanks; and preparation and commissioning of the
Van Dyk dump reclamation site.
FINANCIAL REVIEW
Revenue rose by 6% to R560.3 million due to higher gold
production, sales and a slightly higher Rand gold price received
of R464 170/kg. After accounting for total cash operating costs,
6% higher at R464.6 million, operating profit was 26% higher
at R122.6 million.
The operating margin increased from 18.4% to 21.9% due mainly
to higher gold production and this, notwithstanding higher capex,
contributed to a rise in the AISC margin from 9.0% to 13.8%.
Earnings before interest, taxes, depreciation and amortisation
(EBITDA) rose to R106.6 million from R72.4 million, reflecting
higher operating profit and R2.2 million profit realised on the
disposal of redundant property, plant and equipment during
the quarter.
Headline earnings increased to R30.4 million from R9.2 million,
equivalent to 7 South African (SA) cents compared with 2 SA cents.
The cash balance rose by 13% to R324.4 million. This includes
R14.3 million in the form of guarantees and R11.4 million held
in escrow, pending resolution of a dispute with Ekurhuleni
Metropolitan Municipality regarding surcharges on top of Eskom
charges for the supply of electricity from Eskom.
FY2015 VS FY2014
OPERATIONAL REVIEW
While throughput was down slightly to 23 750 000t – a
consequence of heavy summer rainfall in the second quarter and
load-shedding in the second and third quarters – yield increased by
14% to 0.197g/t, reflecting a sharp turnaround in the performance
of the Ergo plant. Consequently, gold production rose by 13% to
150 145oz. Gold sold was 12% higher at 149 984oz.
Cash operating costs were stable at R372 932/kg. Increased gold
production helped to offset the cost of running all three streams of
the float circuit and of general inflationary increases averaging 7.4%
year-on-year. AISC increased by 2% to R411 548/kg, a consequence
of a 65% increase in sustaining capital expenditure to R113.3 million,
and a reduction in the decrease in provision for environmental
provision from R86.6 million to R20.4 million, offset by higher gold
production. Non-sustaining capital expenditure decreased to almost
zero from R91.8 million in the prior year, reflecting completion of the
FFG circuit.
FINANCIAL REVIEW
Higher gold production and sales, and a higher average Rand
gold price received, resulted in a 16% increase in revenue to
R2 105.3 million. Operating profit was up 48% to R384.3 million,
after accounting for total cash operating costs, 13% higher at
R1 741.6 million.
The operating margin improved from 14.4% to 18.3% due mainly
to higher gold production. This, in spite of higher sustaining capex,
strengthened the AISC margin from 8.3% to 8.7%.
EBITDA increased by 45% to R296.1 million, a reflection mainly of
the improvement in operating profit and profit on the disposal of
redundant property, plant and equipment.
Headline earnings increased substantially from R0.7 million to
R38.7 million, equivalent to 10 SA cents per share compared with
0 SA cents per share.
RESERVES AND RESOURCES
DRDGOLD's total attributable mineral reserves were 22% higher
at 1.86 million ounces in 2015, while total attributable mineral
resources were 37% higher at 50.73 million ounces. These increases
are mainly as a result of the acquisition of the non-controlling
interest in Ergo Mining Operations Proprietary Limited ("EMO").
The FY2015 reserve and resource information was prepared in
compliance with the South African Code for Reporting Exploration
Results, Mineral resource and Mineral reserves (SAMREC) by
DRDGOLD's designated competent person, Mr GJ Viljoen.
SUSTAINABLE DEVELOPMENT
Our work over recent years to develop what was essentially Ergo's
old training centre into the Ergo Business Development Academy
(EBDA) has been enormously successful and thus, gratifying. In
the current 2015 academic year, some 595 scholars from six
East and West Rand schools are enrolled at EBDA for additional
mathematics and science classes. A total of 81 new community
learners are enrolled for various NATED courses and an additional 53
for National Certificate courses. A total of 56 community learners
from previous years' intakes graduated during 2014 with full trade
test qualifications and entered the job market. Now it is time for us
to put EBDA – a commercially viable entity – into the hands of a
representative trust and steps to do this are well advanced.
Also on the education front, as part of our Social and Labour Plan
commitment, we have funded the construction of a R1.6 million
administration block at the Palesa Primary School in Soweto. This
was completed and handed over earlier this year.
A logical extension to our focus on education in the communities
that share our footprint is local economic development and in this
area we have recently launched two new projects – a R6.9 million,
three-year, broad-based agricultural livelihood project on the East
Rand and the R2.1 million, two-year Kapono Ke Matla sewing
project, in Meadowlands, Soweto.
Our total environmental management spend for FY2015 was
R40.7 million. Dust monitoring and containment continued to be a
primary focus. For the year ended 30 June 2015, we achieved good
results with 31 exceedances of 1 500 measurements (2%).
We attribute this in no small part to our assiduous vegetation
programme – in FY2015, we vegetated a total of 34ha at the
Crown complex. We are on track to complete the vegetation
programme at Crown in 2022. This could be accelerated if additional
water is secured. Another key contributor is the land we clear for
redevelopment – in FY2015, the NNR cleared 194ha for alternative
use. The removal of these sites from the mining area by the DMR, so
that they can be developed, is now in progress.
In 2015, through development of the Rondebult water plant and
pipeline, we have sought to reduce our dependence on potable and
natural water for our operations by treating and using sewage water.
Having invested some R22 million in the necessary infrastructure,
we now look forward to the local utilities positioning themselves to
enable us to extract in excess of 10 megalitres of water for treatment
and reuse.
DIVIDEND
The DRDGOLD board has declared a final dividend of 10
South African (SA) cents per ordinary share for the year ended
30 June 2015 as follows:
- the dividend has been declared out of income reserves;
- the local Dividends Tax rate is 15% (fifteen per cent);
- the gross local dividend amount is 10 SA cents per ordinary
share for shareholders exempt from the Dividends Tax;
- the net local dividend amount is 8.5 SA cents per ordinary share
for shareholders liable to pay the Dividends Tax;
- DRDGOLD currently has 430 883 767 ordinary shares in issue
(which includes 6 155 559 treasury shares); and
- DRDGOLD's income tax reference number is 9160/013/60/4.
In compliance with the requirements of Strate, given the company's
primary listing on the JSE Limited, the salient dates for payment of
the dividend are as follows:
- Last date to trade ordinary shares cum dividend 2 October 2015
- Ordinary shares trade ex dividend 5 October 2015
- Record date 9 October 2015
- Payment date 12 October 2015
On payment date, dividends due to holders of certificated securities
on the SA share register will either be electronically transferred
to the shareholders' bank accounts or, in the absence of suitable
mandates, dividend cheques will be posted to such shareholders.
Dividends in respect of dematerialised shareholdings will be credited
to shareholders' accounts with the relevant CSDP or broker.
To comply with the further requirements of Strate, between 5 and
9 October 2015, both days inclusive, no transfers between SA and
any other share register will be permitted and no ordinary shares
pertaining to the SA share register may be dematerialised or
rematerialised.
The currency conversion date for the Australian and United
Kingdom registers will be 12 October 2015.
To holders of American Depositary Shares:
- Each American Depositary Share ("ADS") represents 10 ordinary
shares:
- ADSs trade ex dividend on NYSE 7 October 2015
- Record date 9 October 2015
- Approximate date of currency conversion 19 October 2015
- Approximate payment date of dividend 19 October 2015
Assuming an exchange rate of R13/$1, the dividend payable on an
ADS is equivalent to 6.5 US cents for shareholders liable to pay the
dividend tax. However, the actual rate of payment will depend on
the exchange rate on the date for currency conversion.
For as long as market conditions remain favourable, we may buy
back shares.
LOOKING AHEAD
FY2015 was a year of many challenges. While not all were of our
making, we dealt with them all head-on. The conversion of the high
grade section to CIL is now completed, as is the upgrade to the
low grade CIL to increase its volume capacity by 300 000 tonnes
a month. We will now work to fully integrate these two circuits in
order to further optimise our operating circuit.
Niël Pretorius
Chief Executive Officer
1 September 2015
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Quarter Quarter Quarter 12 months to 12 months to
30 Jun 2015 31 Mar 2015 30 Jun 2014 30 Jun 2015 30 Jun 2014
Rm Rm Rm Rm Rm
Notes Unaudited Unaudited Unaudited Reviewed Audited
Gold and silver revenue 560.3 529.5 447.4 2 105.3 1 809.4
Net operating costs (437.7) (431.9) (394.8) (1 721.0) (1 549.4)
Cash operating costs (464.6) (436.5) (402.5) (1 741.6) (1 540.6)
Movement in gold in process 26.9 4.6 7.7 20.6 (8.8)
Operating profit 122.6 97.6 52.6 384.3 260.0
Depreciation (55.1) (49.3) (38.9) (193.3) (160.0)
Movement in provision for environmental rehabilitation 8 26.3 (1.9) 94.7 20.4 86.6
Environmental rehabilitation costs (16.9) (5.5) (0.7) (31.7) (30.0)
Retrenchment costs – (0.9) (1.0) (7.2) (6.7)
Care-and-maintenance costs (3.5) (3.3) (3.0) (13.8) (15.4)
Other operating (expenses)/income (2.0) 0.5 (9.0) 0.3 (12.3)
Gross profit from operating activities 71.4 37.2 94.7 159.0 122.2
Impairments 1.5 – (51.3) (7.9) (56.6)
Share of losses of equity accounted investments – – (0.3) – (0.3)
Corporate and administration expenses (21.0) (13.9) (19.1) (67.5) (75.9)
Share-based payments (1.1) (0.3) (1.4) (1.8) (3.3)
Profit on disposal of property, plant and equipment 2.2 0.1 1.0 13.1 1.0
Net finance income/(expense) 2 22.7 (7.0) (4.3) 1.9 (24.3)
Profit/(loss) before income tax 75.7 16.1 19.3 96.8 (37.2)
Income tax (15.7) (5.1) (11.4) (28.6) (17.5)
Net profit/(loss) for the period 60.0 11.0 7.9 68.2 (54.7)
Attributable to:
Equity owners of the parent 60.0 10.1 (3.8) 67.8 (45.8)
Non-controlling interest – 0.9 11.7 0.4 (8.9)
60.0 11.0 7.9 68.2 (54.7)
Other comprehensive income
Fair value adjustment of available-for-sale investments 1.7 17.4 (55.4) 19.1 (51.6)
Reserves reclassified to profit or loss 2 (25.8) – – (25.8) –
Actuarial loss (0.5) – – (0.5) –
Total comprehensive income for the period 35.4 28.4 (47.5) 61.0 (106.3)
Attributable to:
Equity owners of the parent 35.4 27.5 (57.4) 60.6 (95.6)
Non-controlling interest – 0.9 9.9 0.4 (10.7)
35.4 28.4 (47.5) 61.0 (106.3)
Reconciliation of headline earnings
Net profit/(loss) 60.0 10.1 (3.8) 67.8 (45.8)
Adjusted for:
– Impairments (1.5) – 51.3 7.9 56.6
– Profit on disposal of property, plant and equipment (2.2) (0.1) (1.0) (13.1) (1.0)
– Fair value adjustment reclassified to profit or loss 2 (19.9) – – (19.9) –
– Profit on disposal of equity accounted investments 2 (5.9) – (2.5) (5.9) (2.5)
– Share of losses on equity accounted investments
(impairments) – – 0.3 – 0.3
– Non-controlling interest in headline earnings
adjustment – (0.8) (3.6) 2.0 (3.6)
– Income tax thereon (0.1) – (3.3) (0.1) (3.3)
Headline earnings 30.4 9.2 37.4 38.7 0.7
Earnings/(loss) per share – cents 14 3 (1) 17 (12)
Headline earnings per share – cents 7 2 10 10 *
Diluted earnings/(loss) per share – cents 14 3 (1) 17 (12)
Diluted headline earnings per share – cents 7 2 10 10 *
Calculated on the weighted average ordinary shares
issued of: 421 228 208 379 228 208 379 228 208 389 699 441 379 209 441
* Less than 1 cent
The accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
30 Jun 2015 31 Mar 2015 30 Jun 2014
Rm Rm Rm
Notes Reviewed Unaudited Audited
Assets
Non-current assets 1 894.1 1 930.2 1 970.3
Property, plant and equipment 1 698.8 1 693.4 1 755.5
Non-current Investments and other assets 5.9 49.0 36.9
Environmental rehabilitation trust funds and investments 188.2 186.3 176.5
Deferred tax asset 1.2 1.5 1.4
Current assets 609.0 532.5 470.4
Inventories 168.7 140.6 147.2
Trade and other receivables 93.3 96.7 99.5
Tax receivable 13.2 – 5.9
Cash and cash equivalents 3 324.4 286.0 208.9
Assets held-for-sale 4 9.4 9.2 8.9
Total assets 2 503.1 2 462.7 2 440.7
Equity and liabilities
Equity 1 529.9 1 499.4 1 481.2
Equity of the owners of the parent 5 1 529.9 1 499.4 1 249.1
Non-controlling interest 5 – – 232.1
Non-current liabilities 669.5 635.0 652.0
Loans and borrowings 6 – – 75.5
Finance lease obligation 7 19.2 19.8 –
Post-retirement and other employee benefits 9.2 8.0 9.3
Provision for environmental rehabilitation 8 493.3 484.0 451.2
Deferred tax liability 147.8 123.2 116.0
Current liabilities 303.7 328.3 307.5
Trade and other payables 258.4 224.4 211.8
Post-retirement and other employee benefits 2.6 2.2 2.0
Loans and borrowings 6 23.1 77.5 73.2
Finance lease obligation 7 2.0 1.8 –
Liabilities held-for-sale 4 17.6 22.4 20.5
Total liabilities 973.2 963.3 959.5
Total equity and liabilities 2 503.1 2 462.7 2 440.7
The accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Quarter Quarter Quarter 12 months to 12 months to
30 Jun 2015 31 Mar 2015 30 Jun 2014 30 Jun 2015 30 Jun 2014
Rm Rm Rm Rm Rm
Notes Unaudited Unaudited Unaudited Reviewed Audited
Balance at the beginning of the period 1 499.4 1 471.0 1 528.7 1 481.2 1 643.7
Net profit/(loss) attributable to equity owners
of the parent 60.0 10.1 (3.8) 67.8 (45.8)
Net profit/(loss) attributable to non-controlling
interest – 0.9 11.7 0.4 (8.9)
Acquisition of non-controlling interests 5 (4.9) – – (4.9) –
Dividends declared on ordinary share capital – – – (7.6) (53.1)
Fair-value adjustment on available-for-sale
investments 1.7 17.4 (55.4) 19.1 (51.6)
Reserves reclassified to profit or loss 2 (25.8) – – (25.8) –
Actuarial losses (0.5) – – (0.5) –
Increase in share-based payment reserve – – 0.1 0.2 0.5
Share Option Scheme buy-out – – – – (2.7)
Treasury shares recognised/acquired – – – – 0.2
Other – – (0.1) – (1.1)
Balance at the end of the period 1 529.9 1 499.4 1 481.2 1 529.9 1 481.2
The accompanying notes are an integral part of the condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Quarter Quarter Quarter 12 months to 12 months to
30 Jun 2015 31 Mar 2015 30 Jun 2014 30 Jun 2015 30 Jun 2014
Rm Rm Rm Rm Rm
Notes Unaudited Unaudited Unaudited Reviewed Audited
Net cash inflow from operations 73.8 72.4 19.3 283.7 80.7
Net cash inflow/(outflow) from investing
activities 14.2 (28.7) (17.4) (37.7) (171.9)
Net cash (outflow)/inflow from financing
activities (49.6) – 0.3 (130.5) (76.6)
Loans and other (49.6) – 0.3 (122.9) (20.8)
Share options acquired – – – – (2.7)
Dividends paid to owners of the parent – – – (7.6) (53.1)
Increase/(decrease) in cash and cash equivalents 38.4 43.7 2.2 115.5 (167.8)
Opening cash and cash equivalents 286.0 242.3 206.7 208.9 376.7
Closing cash and cash equivalents 324.4 286.0 208.9 324.4 208.9
Reconciliation of net cash inflow from
operations
Profit/(loss) before tax 75.7 16.1 19.3 96.8 (37.2)
Adjusted for:
Movement in gold in process (26.9) (4.6) (7.7) (20.6) 8.8
Depreciation and impairment 53.6 49.3 90.2 201.2 216.6
Movement in provision for environmental
rehabilitation 8 (26.3) 1.9 (94.7) (20.4) (86.6)
Profit on disposal of property, plant and
equipment (2.2) (0.1) (1.0) (13.1) (1.0)
Fair value adjustment reclassified to profit or loss 2 (19.9) – – (19.9) –
Profit on disposal of equity accounted investee 2 (5.9) – (2.5) (5.9) (2.5)
Share of losses of equity accounted investments – – 0.3 – 0.3
Finance expense and unwinding of provisions 9.8 9.8 10.5 39.0 38.0
Growth in Environmental Trust Funds (1.5) (1.4) (1.2) (5.6) (4.6)
Share-based payments 1.1 0.3 1.4 1.8 3.3
Other non-cash items (6.1) 0.1 (3.9) (8.4) (8.8)
Tax paid (4.3) – (4.2) (3.6) (6.2)
Working capital changes 26.7 1.0 12.8 42.4 (39.4)
Net cash inflow from operations 73.8 72.4 19.3 283.7 80.7
The accompanying notes are an integral part of the financial statements.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The condensed consolidated financial statements are prepared
in accordance with the requirements of the JSE Limited Listings
Requirements for preliminary reports and the requirements of
the Companies Act of South Africa. The Listings Requirements
require preliminary reports to be prepared in accordance with
the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards
(IFRS) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements
as issued by Financial Reporting Standards Council and to also,
as a minimum, contain the information required by IAS 34
Interim Financial Reporting. The accounting policies applied in the
preparation of the condensed consolidated financial statements
are in terms of IFRS and are consistent with those applied in the
previous consolidated annual financial statements.
The condensed consolidated financial statements of DRDGOLD
Limited for the year ended 30 June 2015 have been reviewed by
Mr J Le Roux of KPMG Inc, the group's auditor. In their review
report dated 27 August 2015, which is available for inspection at
the Company's Registered Office, KPMG Inc state that their review
was conducted in accordance with the International Standard
of Review Engagements 2410, Review of Interim Information
Performed by the Independent Auditor of the Entity, which applies
to a review of consolidated preliminary financial information,
and have expressed an unmodified conclusion on the condensed
consolidated financial statements.
These condensed consolidated financial statements for the year
ended 30 June 2015 have been prepared under the supervision
of DRDGOLD's Chief Financial Officer, Mr AJ Davel CA(SA).
The condensed consolidated financial statements were authorised
for issue by the directors on 27 August 2015.
2. NET FINANCE INCOME / (EXPENSE)
Included in net finance income / (expense) during the quarter and
year to date are the following:
- R19.9 million fair value adjustment on available-for-sale
investments reclassified to profit or loss on the disposal of the
investment in Village Main Reef Limited shares; and
- R5.9 million foreign exchange translation reserve reclassified to
profit or loss on the disposal of Chizim.
3. CASH AND CASH EQUIVALENTS
Included in cash and cash equivalents is restricted cash of
R14.3 million (31 March 2015: R14.1 million) in the form of
guarantees and R11.4 million (31 March 2015: nil) relating to cash
held in escrow relating to the electricity dispute with Ekurhuleni
Metropolitan Municipality discussed under Note 9.
4. ASSETS AND LIABILITIES HELD-FOR-SALE
In line with the group's strategy to exit underground mining operations,
management committed to a plan to sell certain of the underground
mining and prospecting rights held by East Rand Proprietary Mines
Limited ("ERPM") including the related liabilities during the last quarter
of the financial year ended 30 June 2014. These assets and liabilities
have been presented as a disposal group held-for-sale from this date
due to a sale being expected within 12 months.
While significant progress has been made in the fulfilment of the
regulatory approvals required for the completion of this transaction
since 30 June 2014, not all of the required approvals have been
obtained at 30 June 2015 as a result of circumstances beyond the
entity's control. Management has taken timely action and remains
confident that the outstanding regulatory approvals will be obtained
in due course as it is customary for approvals of this nature to be
delayed in excess of a 12 month period from application date.
5. NON-CONTROLLING INTEREST ("NCI")
All the suspensive conditions for DRDGOLD's acquisition of the 20%
and 6% interest in the issued share capital of EMO held by Khumo
and the Trust, EMO's broad based empowerment shareholders
were fulfilled on 26 March 2015. As a result DRDGOLD acquired
the remaining 26% of EMO making it a wholly-owned subsidiary
of DRDGOLD.
The R4.9 million cash component of the acquisition of NCI consists
of the purchase consideration amounting to R0.9 million as well
as transaction costs of R4 million. 45 500 000 new ordinary shares
in DRDGOLD with a fair value of R96.5 million were issued and
listed for the equity component of the purchase consideration, NCI
amounting to R232.5 million at this time was derecognised with
the balance of these being recognised directly in retained earnings.
Other than the R4.9 million described above, the transaction had a
zero impact on total equity.
6. LOANS AND BORROWINGS
Included in loans and borrowings is a DMTN Programme under
which DRDGOLD can issue notes from time to time.
On 7 April 2015, DRDGOLD settled R53 million of the R75.5 million
unsecured notes outstanding as at 31 March 2015 in line with its
previously communicated intention to seek the early redemption of
these unsecured notes.
The remaining unsecured notes outstanding as at 30 June 2015
amounting to R22.5 million were redeemed on 3 July 2015.
7. FINANCE LEASE OBLIGATION
Backup generators were acquired by way of finance lease during
the year.
8. MOVEMENT IN ENVIRONMENTAL PROVISION
The provision for environmental rehabilitation relating to the Ergo
operating segment increased by a net amount of R42 million due to:
- the unwinding of the liability amounting to R37.3 million; and
- an increase in the decommissioning liability of R29.7 million
mostly attributable to the increase of the capacity of the
Brakpan deposition site that was debited to property, plant
and equipment.
These increases were partially offset by:
- a decrease in the restoration liability of R15.8 million;
mostly attributable to the decrease in the oversized material
management expects to rehabilitate; and
- R9 million rehabilitation costs incurred to reduce the
rehabilitation liability.
9. CONTINGENT LIABILITY: EKURHULENI METROPOLITAN
MUNICIPALITY ELECTRICITY DISPUTE
In December 2014, an application (in the South Gauteng
High Court) was filed and served on inter alia the Ekurhuleni
Metropolitan Municipality ("Municipality") and Eskom Holdings
SOC Limited ("Eskom") in terms of which Ergo Mining Proprietary
Limited ("ERGO") contends, amongst other things, that the
Municipality does not "supply" electricity to ERGO from a "supply
main" as contemplated in the Municipality's Electricity By-Laws of
2002. The Municipality is not licensed to supply electricity to ERGO
in terms of the Municipality's Temporary Distribution Licence.
The Municipality is not entitled to render tax invoices to ERGO for
the supply and consumption of electricity from the substation. The
Municipality is furthermore not competent to add a surcharge or
premium of approximately 40% (forty percent) of the rate at which
Eskom ordinarily charges ERGO on its Megaflex rate. ERGO is not
indebted to the Municipality for the supply and consumption of
electricity and is not obliged to tender payment for any amounts
claimed in the invoices rendered by the Municipality in excess
of its actual consumption therefore as determined by Eskom on
a monthly basis. The Municipality is indebted to ERGO in the
amount of approximately R43 million in respect of the surcharges
and premiums that were erroneously paid to the Municipality
in the bona fide and reasonable belief that the Municipality was
competent to suppy electricity to it.
Subsequent to December 2014 up to 30 June 2015, the
Municipality has invoiced ERGO for approximately R13.4 million in
surcharges of which R11.4 million has been paid into an attorney's
trust account at 30 June 2015 pending the final determination of
the dispute.
10. SUBSEQUENT EVENTS
There were no significant subsequent events between the quarter
end reporting date of 30 June 2015 and the date of issue of these
condensed consolidated financial statements other than outlined
in Note 6.
ALL-IN SUSTAINING COSTS RECONCILIATION (UNAUDITED)
R million unless specified otherwise Jun 2015 Qtr Mar 2015 Qtr Jun 2015 Ytd
Net operating costs 437.7 431.9 1 721.0
Corporate, administration and other expenses 24.1 13.7 69.0
Rehabilitation and remediation (accretion and amortisation) (16.6) 11.7 18.5
Capital expenditure (sustaining) 37.5 24.8 113.3
All-in sustaining costs * 482.7 482.1 1 921.8
Retrenchment costs – 0.9 7.2
Rehabilitation and remediation 16.9 5.5 31.7
Care and maintenance costs 3.5 3.3 13.8
Capital expenditure (non-sustaining) (0.4) (0.1) (3.4)
All-in costs * 502.7 491.7 1 971.1
All-in sustaining costs (R/kg) 385 579 420 195 411 548
All-in sustaining costs (US$/oz) 987 1 112 1 118
All-in costs (R/kg) 401 505 428 591 422 095
All-in costs (US$/oz) 1 029 1 134 1 147
* All-in cost definitions based on the guidance note on non-GAAP Metrics issued by the World Gold Council on 27 June 2013.
ERGO KEY OPERATING AND FINANCIAL RESULTS (UNAUDITED) #
Metric/Rand Imperial/US$
Jun 2015 Mar 2015 Jun 2015 Jun 2015 Mar 2015 Jun 2015
Qtr Qtr Ytd Qtr Qtr Ytd
Ore milled (000't) (Metric)(Imperial) 6 333 5 826 23 750 6 981 6 422 26 179
Yield (g/t)(oz/t) (Metric)(Imperial) 0.198 0.197 0.197 0.006 0.006 0.006
Gold produced (kg)(oz) (Metric)(Imperial) 1 252 1 147 4 670 40 253 36 877 150 145
Cash operating costs (R/kg)(US$/oz) 371 089 380 548 372 932 954 1 009 1 013
Cash operating costs (R/t)(US$/t) 73 75 73 6 6 6
Gold and Silver revenue (R million)(US$ million) 560.3 529.5 2 105.3 46.3 45.1 183.9
Operating profit (R million)(US$ million) 122.6 97.6 384.3 10.3 8.4 33.6
Profit before tax (R million)(US$ million) * 83.8 23.9 136.6 7.2 2.1 12
Capital expenditure (R million)(US$ million) 37.1 24.7 109.9 3.1 2.1 9.6
# Note – The group only has one segment – Ergo
* Note – The difference between the profit before tax on the statement of profit or loss and other comprehensive income relates to corporate head office and all other
reconciling items
FORWARD LOOKING STATEMENTS
Many factors could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements that
may be expressed or implied by such forward-looking statements, including, among others, adverse changes or uncertainties in general economic conditions in the
markets we serve, a drop in the gold price, a sustained strengthening of the Rand against the Dollar, regulatory developments adverse to DRDGOLD or difficulties in
maintaining necessary licenses or other governmental approvals, changes in DRDGOLD's competitive position, changes in business strategy, any major disruption in
production at key facilities or adverse changes in foreign exchange rates and various other factors.
These risks include, without limitation, those described in the section entitled "Risk Factors" included in our annual report for the fiscal year ended 30 June 2014,
which we filed with the United States Securities and Exchange Commission on 31 October 2014 on Form 20-F. You should not place undue reliance on these
forward-looking statements, which speak only as of the date thereof. We do not undertake any obligation to publicly update or revise these forward-looking
statements to reflect events or circumstances after the date of this report or to the occurrence of unanticipated events. Any forward-looking statement included in
this report have not been reviewed and reported on by DRDGOLD's auditors.
RESULTS
The condensed consolidated financial statements of DRDGOLD Limited for the year ended 30 June 2015 are available on the DRDGOLD Limited
website as well as at the Company's Registered Office.
DIRECTORS (*British)(**American)
Executives: DJ Pretorius (Chief Executive Officer), AJ Davel (Chief Financial Officer) –
appointed 6 January 2015, TJ Meyer (Acting Chief Financial Officer) – appointed
29 July 2014, resigned 31 December 2014, FD van der Westhuizen (Chief Financial
Officer) – resigned 18 July 2014
Independent non-executives: GC Campbell* (Non-Executive Chairman), EA Jeneker,
J Turk **, JA Holtzhausen, R Hume – retired 31 October 2014
Company Secretary: TJ Gwebu
Sponsor: One Capital
FOR FURTHER INFORMATION,
CONTACT NIËL PRETORIUS OR
RIAAN DAVEL AT:
Tel:(+27) (0) 11 470 2600
Fax: (+27) (0) 11 470 2618
Website: http://www.drdgold.com
Off Crownwood Road, Crown Mines 2092
PO Box 390, Maraisburg, 1700, South Africa
Date: 01/09/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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