Wrap Text
Group results for the year ended 30 June 2016
DRDGOLD Limited
(Incorporated in the Republic of South Africa)
Registration No.1895/000926/06
JSE share code: DRD
ISIN: ZAE 000058723
NYSE trading symbol: DRD
("DRDGOLD" or "the Company" or "the Group")
GROUP
RESULTS
for the year ended 30 June 2016
KEY FEATURES
Operating profit
up 13% to
R434.8 million
Headline earnings
up 28% to
12.7cps
Free cash flow
up 25% to
R308.7 million
Dividend
up 520% to
62cps
REVIEW OF OPERATIONS
12 months to 12 months to
Group 30 Jun 2016 30 Jun 2015 % change(1)
Gold production oz 143 457 150 145 (4)
kg 4 462 4 670 (4)
Gold sold oz 143 232 149 984 (5)
kg 4 455 4 665 (5)
Cash operating costs US$ per oz 958 1 013 (5)
R per kg 446 153 372 932 20
All-in sustaining costs US$ per oz 1 072 1 118 (4)
R per kg 499 425 411 548 21
Average gold price received US$ per oz 1 165 1 226 (5)
R per kg 546 142 451 297 21
Operating profit R million 434.8 384.3 13
Operating margin % 17.9 18.3 (2)
All-in sustaining costs margin % 8.4 8.7 (3)
Headline earnings R million 53.8 38.7 39
SA cents per share (cps) 12.7 9.9 28
(1) % change is rounded to the nearest percent and is based on the rounded amounts as presented which are rounded to the nearest
hundred thousand rand.
Rounding of figures may result in computational discrepancies.
SHAREHOLDER INFORMATION
Issued capital
431 429 767 ordinary no par value shares
(30 June 2015: 430 883 767)
9 361 071 treasury shares held within the Group
(30 June 2015: 6 155 559)
5 000 000 cumulative preference shares
(30 June 2015: 5 000 000)
431 463 842 total ordinary no par value shares issued and
committed (30 June 2015: 431 651 117)
MARKET CAPITALISATION
As at 30 Jun 2016 (Rm) 3 680.1
As at 30 Jun 2016 (US$m) 254.5
As at 30 Jun 2015 (Rm) 1 008.3
As at 30 Jun 2015 (US$m) 79.7
STOCK TRADED JSE NYSE(1)
Price
- High R9.22 $0.595
- Low R1.53 $0.110
- Close R8.53 $0.590
(1) This data represents per share data and not ADS data - one ADS reflects ten
ordinary shares.
The auditor’s report does not necessarily report on all of the information
contained in this announcement / financial results. Shareholders are
therefore advised that in order to obtain a full understanding of the
nature of the auditor’s engagement they should obtain a copy of the
auditor’s report together with the accompanying financial information
from the issuer’s registered office.
DEAR SHAREHOLDER
In the 2016 financial year we see the beneficial effect of the
bringing together in a single strategic direction our various
efforts to create value in terms of the "five capitals" – financial,
manufactured, human, social and natural.
In terms of financial capital and manufactured capital, our monetary
and intellectual investments in plant and process have borne clear,
measurable results, reflected by increased throughput and improved
extraction efficiency. Both are important achievements, in helping to
address the diminishing grade of our reserves and resources.
While higher throughput was not sufficient to offset lower yield, and
our gold production was lower as a consequence, a stronger Rand
gold price boosted revenue and, in the face of rising costs, our profit.
In the comments below, we explain how all of our stakeholders have
benefited from our performance.
In April 2016 we announced the considerable progress we have
made in securing additional tailings deposition capacity for the
Ergo plant at the Brakpan/Withok Tailings Complex. This is a major
development in terms of leveraging the Ergo plant’s increased
throughput capacity in the future. With tailings deposition capacity
locked in, we are well placed both to optimise our 11.8 million
ounce resource base and to acquire additional resources within the
greater Johannesburg area.
12 MONTHS ENDED 30 JUNE 2016 VS
12 MONTHS ENDED 30 JUNE 2015
OPERATIONAL REVIEW
Gold production was 4% lower at 143 457oz due to a 9% decline
in the average yield to 0.180g/t. The lower average yield was a
consequence of various factors:
- depletion of higher grade JCC dump sand material, reporting to
the Crown plant, and of Cason dump material, reporting to the
Knights plant;
- lower grade slimes material from clean-up operations now
reporting to Crown and from the 4A6 and 5A9 dumps now
reporting to Knights; and
- the decrease in grade of material from the Elsburg reclamation
site, reporting to the Ergo plant.
Throughput was 5% higher, reflecting measures taken to mitigate
the decline in yield, most notably full commissioning of reclamation
operations at the Van Dyk dump.
Gold sold was 5% lower at 143 232oz due to lower production.
Cash operating costs rose 20% to R446 153/kg, again due to
various factors:
- lower gold production;
- the increase in throughput; and
- relatively high costs associated with the Crown clean-up and the
trucking of sand material from the Kleinfontein dump in Benoni to
the City Deep plant.
All-in sustaining costs (AISC) increased by 21% to R499 425/kg due
to a decrease in production and an increase in per kilogram cash
operating costs.
FINANCIAL REVIEW
Revenue rose by 16% to R2 433.1 million, reflecting a 21% increase
in the average Rand gold price received to R546 142/kg. After
accounting for a 14% increase in cash operating costs, operating
profit was 13% higher at R434.8 million.
The operating and AISC margins were virtually unchanged at 18%
and 8% respectively.
Headline earnings were higher – up 39% to R53.8 million, equivalent
to 12.7 South African cents per share, up 28%.
Free cash flow(1), an important measure to DRDGOLD, has increased
by 25% to R308.7 million, enabling us to repay liabilities as well as
declare total dividends of 62 cents per share for FY2016, amounting
to approximately R261 million.
SUSTAINABLE DEVELOPMENT
A detailed account of our performance in respect of the "five
capitals" will be contained in our integrated report to be published
in September. Summarised below are our key achievements.
Human Capital
Management: we remain committed to the advancement of
Historically Disadvantaged South Africans (HDSAs) into management
positions. In FY2016, 348 HDSAs – 66% of our total – filled
management positions, up from 334 (63%) in FY2015.
Women in mining: in FY2016, women in mining represented 17% of
our total workforce, up from 16% in FY2015.
(1) Net cash inflow from operating activities less net cash outflow
from investing activities.
Training: 1 171 individual training courses took place, in our various
training initiatives in FY2016, at a total cost to the company of R7.4
million; this compares with 1 062 individual training courses a cost
of R7.8 million, in FY2015.
Social Capital
Community support: we provide support for various projects of
benefit to the communities in which we conduct our business at a
total cost of R15.1 million in FY2016.
Natural Capital
Dust: 1 393 samples from sites spanning our entire footprint were
analysed during the financial year. There were 22 exceedances,
representing 1.6% of the total number of measurements. This
compares with 2.1% in the 2015 financial year. The improvement
is attributable substantially to our ongoing programme to vegetate
the top surfaces and sideslopes of the tailings dam for which we are
responsible. Some 36 hectares were rehabilitated in FY2016; this
compared with 34 hectares vegetated in FY2015. The vegetation
programme at Crown is on track for completion in 2022.
Water: our total usage was 30 293Ml, up 14% from the previous
year, mainly due to increased production, as well as increased
vegetation and dust suppression. While externally sourced potable
water was up 30% at 7 376Ml due to the increased irrigation
at Crown, process water recycled was 9% up at 18 825Ml. Our
new Rondebult plant retreated 942Ml of sewage water during the
year; further reducing our dependence on externally sourced
potable water.
Land: in FY2016, 62 hectares of land was rehabilitated after
reclamation and were given clearance by the National Nuclear
Regulator. This compares with 194 hectares in FY2015.
WAGE AGREEMENT
Wage negotiations were recently concluded with unions’
representatives of the company’s workforce. A two-year agreement
was reached on an increase in basic pay averaging 8.2%, with 10%
for employees in lower job categories and 7% for those in higher
job categories.
DIVIDEND
The DRDGOLD board has declared a final dividend of 12 SA
(South African) cents per ordinary share for the six months ended
30 June 2016 as follows:
- the dividend has been declared out of income reserves;
- the local Dividends Withholding Tax rate is 15% (fifteen per cent);
- the gross local dividend amount is 12 SA cents per ordinary share
for shareholders exempt from the Dividends Tax;
- the net local dividend amount is 10.2 SA cents per ordinary share
for shareholders liable to pay the Dividends Tax;
- DRDGOLD currently has 431 429 767 ordinary shares in issue
(which includes 9 361 071 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: 11 October 2016
- Ordinary shares trade ex-dividend: 12 October 2016
- Record date: 14 October 2016
- Payment date: 17 October 2016
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
12 and 14 October 2016, 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 17 October 2016.
To holders of American Depositary Shares ("ADS"):
- Each ADS represents 10 ordinary shares:
- ADSs trade ex-dividend on NYSE: 12 October 2016
- Record date: 14 October 2016
- Approximate date of currency conversion: 21 October 2016
- Approximate payment date of dividend: 24 October 2016
Assuming an exchange rate of R14/$1, the dividend payable on an
ADS is equivalent to 7.3 US (United States) 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.
LOOKING AHEAD
The potential long term benefits of the Brakpan/Withok Tailings
Complex will be realised if Ergo’s volume throughput is stable and
recoveries consistent.
This in turn is inexorably linked to the enablers of our short term
production targets, namely steady volume throughput, costs and
extraction efficiencies.
Our continued focus remains to improve our systems and encourage
behaviours that will achieve these goals.
Niël Pretorius
Chief Executive Officer
26 August 2016
"We believe in mining responsibly and sustainably, and in creating value
for our stakeholders’ benefit."
CONDENSED CONSOLIDATED
Statement of Profit or Loss and Other Comprehensive Income
12 months to 12 months to
30 Jun 2016 30 Jun 2015
Rm Rm
Notes Reviewed Audited
Revenue 2 433.1 2 105.3
Cost of sales (2 236.9) (1 946.3)
Operating costs 2 (2 030.3) (1 786.8)
Depreciation (180.2) (193.3)
Retrenchment costs – (7.2)
Movement in provision for environmental rehabilitation (19.3) 20.4
Movement in gold in process (7.1) 20.6
Gross profit from operating activities 196.2 159.0
Impairments – (7.9)
Administration expenses and general costs (76.7) (56.2)
Results from operating activities 119.5 94.9
Finance income 36.8 51.5
Finance expenses (47.5) (49.6)
Profit before tax 108.8 96.8
Income tax 2 (46.9) (28.6)
Profit for the year 61.9 68.2
Attributable to:
Equity owners of the parent 61.9 67.8
Non-controlling interest – 0.4
Profit for the year 61.9 68.2
Other comprehensive income
Items that are or may be reclassified to profit or loss, net of tax
Fair value adjustment of available-for-sale investments 4.4 19.1
Reserves reclassified to profit or loss – (25.8)
Actuarial loss – (0.5)
Total comprehensive income for the year 66.3 61.0
Attributable to:
Equity owners of the parent 66.3 60.6
Non-controlling interest – 0.4
Total comprehensive income for the year 66.3 61.0
Earnings per share (1) 3 14.7 17.4
Diluted earnings per share (1) 3 14.7 17.4
(1) All per share financial information is presented in South African cents per share (cps) and is rounded to the nearest one decimal point
based on the results as presented which is rounded to the nearest hundred thousand Rand.
The accompanying notes are an integral part of the condensed consolidated financial statements.
These condensed consolidated financial statements for the year ended 30 June 2016 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
26 August 2016.
CONDENSED CONSOLIDATED
Statement of financial position
As at 30 Jun 2016 As at 30 Jun 2015
Rm Rm
Notes Reviewed Audited
Assets
Non-current assets 1 818.4 1 894.1
Property, plant and equipment 1 600.5 1 698.8
Non-current Investments and other assets 211.1 194.1
Deferred tax asset 6.8 1.2
Current assets 600.7 609.0
Inventories 160.7 168.7
Trade and other receivables 66.5 93.3
Current tax asset 6.7 13.2
Cash and cash equivalents 4 351.8 324.4
Assets held for sale 5 15.0 9.4
Total assets 2 419.1 2 503.1
Equity and Liabilities
Equity 1 339.6 1 529.9
Non-current liabilities 766.0 669.5
Provision for environmental rehabilitation 6 522.9 493.3
Post-retirement and other employee benefits 7 31.6 9.2
Deferred tax liability 194.7 147.8
Finance lease obligation 16.8 19.2
Current liabilities 313.5 303.7
Trade and other payables 288.9 258.4
Post-retirement and other employee benefits 7 6.6 2.6
Loans and borrowings 8 – 23.1
Finance lease obligation 2.4 2.0
Liabilities held for sale 5 15.6 17.6
Total liabilities 1 079.5 973.2
Total equity and liabilities 2 419.1 2 503.1
CONDENSED CONSOLIDATED
Statement of changes in equity
12 months to 12 months to
30 Jun 2016 30 Jun 2015
Rm Rm
Reviewed Audited
Balance at the beginning of the year 1 529.9 1 481.2
Total comprehensive income
Profit for the year attributable to owners of the parent 61.9 67.8
Profit for the year attributable to non-controlling interest – 0.4
Other comprehensive income
Fair-value adjustment on available-for-sale investments 4.4 19.1
Reserves reclassified to profit or loss – (25.8)
Actuarial loss – (0.5)
Transactions with the owners of the parent
Acquisition of non-controlling interest without a change in control – (4.9)
Treasury shares acquired (6.5) –
Share options excercised 2.8 –
Dividends paid to owners of the parent (252.9) (7.6)
Share-based payments – 0.2
Balance as at the end of the year 1 339.6 1 529.9
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED
Statement of cash flows
12 months to 12 months to
30 Jun 2016 30 Jun 2015
Rm Rm
Notes Reviewed Audited
Net cash inflow from operating activities 415.9 283.7
Cash flows from operations 398.2 285.2
Interest received 22.3 13.9
Interest paid (5.0) (11.9)
Tax refunded/(paid) 0.4 (3.5)
Net cash outflow from investing activities (107.2) (37.7)
Proceeds on disposal of non-current investments and other assets – 46.4
Additions to property, plant and equipment (99.8) (90.9)
Proceeds on disposal of property, plant and equipment 7.0 17.4
Environmental rehabilitation payments (10.6) (9.0)
Other (3.8) (1.6)
Net cash outflow from financing activities (281.1) (130.5)
Loans and other borrowings (24.5) (122.9)
Treasury shares acquired (6.5) –
Share options excercised 2.8 –
Dividends paid to owners of the parent (252.9) (7.6)
Increase in cash and cash equivalents 27.6 115.5
Opening cash and cash equivalents 324.4 208.9
Foreign currency translation (0.2) –
Closing cash and cash equivalents 351.8 324.4
Reconciliation of cash inflow from operations
Profit before tax 108.8 96.8
Adjusted for:
Depreciation and impairment 180.2 200.0
Movement in gold in process 7.1 (20.6)
Movement in provision for environmental rehabilitation 19.3 (20.4)
Profit on disposal of property, plant and equipment (10.5) (13.1)
Share-based payments 7 29.9 1.8
Reversal of accrual 2, 10 (22.7) –
Environmental rehabilitation payments (11.2) –
Finance income (36.8) (51.5)
Finance expenses 47.5 49.6
Other non-cash items 4.6 0.2
Working capital changes 82.0 42.4
Change in trade and other receivables 33.7 1.9
Change in inventories 1.0 (1.0)
Change in trade and other payables 47.3 41.5
Cash flows from operations 398.2 285.2
The accompanying notes are an integral part of the condensed consolidated 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 the 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.
In line with the change in the reporting cycle from quarterly to
bi-annual reporting, management reconsidered the level of
aggregation of financial information to improve alignment with the
bi-annual reporting cycle.
Review of the Independent Auditor
These condensed consolidated financial statements of DRDGOLD
for the year ended 30 June 2016 have been reviewed by KPMG Inc,
who expressed an unmodified review conclusion. The auditor’s report
does not necessarily report on all of the information contained in
this announcement. Shareholders are therefore advised that in
order to obtain a full understanding of the nature of the auditor’s
engagement they should obtain a copy of the auditor’s report
together with the accompanying financial information from the
issuer’s registered office.
2. PROFIT FOR THE YEAR
Profit for the year includes:
A. Reversal of accrual
Operating costs includes a reversal of an accrual related to rates and
taxes of R22.7 million (30 June 2015: nil) discussed under Note 10.
B. Deferred tax rate adjustment
In South Africa, mining tax on mining income is determined based on
a formula which takes into account the profit and revenue from a
gold mining company during the year. The formula for determining the
South African gold mining tax rate for the years ended 30 June 2016
and 30 June 2015 is: Y = 34 - 170/X where Y is the percentage rate of
tax payable and X is the ratio of taxable income, net of any qualifying
capital expenditure that bears to mining income derived, expressed as
a percentage.
For deferred tax purposes the group applies the expected future
average effective tax rate. The average effective tax rates for the
respective operations are based on the group’s current estimate when
temporary differences will reverse. Depending on the profitability of
the operations, the tax rate can consequently be different from year
to year.
Included in income tax is a tax rate adjustment of R21.7 million
(30 June 2015: R10.0 million).
3. EARNINGS PER SHARE
12 months to 12 months to
30 Jun 2016 30 Jun 2015
Rm Rm
Reviewed Audited
Profit for the year – attributable to 61.9 67.8
equity owners of the parent
Adjusted for:
– Impairments – 7.9
– Profit on disposal of property, (10.5) (13.1)
plant and equipment
– Fair value adjustment reclassified to – (19.9)
profit or loss
– Profit on disposal of equity – (5.9)
accounted investments
– Non-controlling interest in – 2.0
headline earnings adjustment
– Income tax thereon 2.4 (0.1)
Headline earnings 53.8 38.7
Earnings per share(1) 14.7 17.4
Diluted earnings per share(1) 14.7 17.4
Headline earnings per share(1) 12.7 9.9
Diluted headline earnings per share(1) 12.7 9.9
Weighted average number of
ordinary shares in issue adjusted for
treasury shares: 422 157 987 389 699 441
Number of staff options allocated(2) 34 075 –
Diluted weighted average number
of ordinary shares adjusted for
treasury shares 422 192 062 389 699 441
(1) All per share financial information is presented in South African cents per share
(cps) and is rounded to the nearest one decimal point based on the results as
presented which is rounded to the nearest hundred thousand Rand.
(2) At 30 June 2015, 0.8 million options were excluded from the diluted weighted
average number of ordinary shares calculation as their effect would have been
anti-dilutive.
4. CASH AND CASH EQUIVALENTS
Included in cash and cash equivalents is restricted cash of:
- R15.2 million (30 June 2015: R14.3 million) in the form of guarantees;
- R47.7 million (30 June 2015: R11.4 million) relating to cash held
in escrow relating to the electricity dispute with Ekurhuleni
Metropolitan Municipality discussed under Note 9; and
- R4.8 million (30 June 2015: R1.9 million) held on behalf of the
DRDGOLD Empowerment Trust.
5. ASSETS AND LIABILITIES HELD FOR SALE
All regulatory approvals required for the disposal of certain
underground mining and prospecting rights held by ERPM have now
been obtained, with the exception of the approval required under
Section 11 of the Mineral and Petroleum Resource Development
Act. Management has taken timely action and remains confident
that this last outstanding regulatory approval will be obtained in
due course.
DRDGOLD received a request from the purchaser to restructure
the payment terms following the lapse in time awaiting section
11 approval.
ERPM entered into an unrelated agreement to dispose of a property
with a carrying value of R5.0 million for R18.0 million during June
2016. The property has been classified as held for sale due to the
disposal being expected to be completed within the next 12 months.
6. MOVEMENT IN ENVIRONMENTAL PROVISION
The provision for environmental rehabilitation relating to the Ergo
operating segment increased by a net amount of R29.6 million due to:
- the unwinding of the liability amounting to R41.5 million; and
- an increase in the restoration liability charged to the statement
in profit or loss amounting to R21.4 million attributable to the
increase in the estimated costs to rehabilitate historical spills and
dumps that are not considered to be economically viable to mine.
These increases were partially offset by:
- adecrease in the decommissioning liability of R12.9 million,
mostly attributable to the decrease in the expected costs to
rehabilitate the Ego plant and the Elsburg tailings complex; and
- R20.4 million incurred on rehabilitation activities.
7. NEW LONG TERM INCENTIVE SCHEME ("LTI")
Post-retirement and other employee benefits mainly consists of
the liability for the cash settled LTI scheme. A R29.9 million charge
was recognised for the year ended 30 June 2016 (2015: 1.8 million)
which mainly relates to the grant made in November 2015 under
the new cash settled LTI scheme and has been influenced by the
increase in the DRDGOLD share price to R 8.53 at reporting date.
8. LOANS AND BORROWINGS
The remaining unsecured notes outstanding as at 30 June 2015
amounting to R22.5 million capital and R 0.6 million interest were
redeemed on 3 July 2015.
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 supply electricity to it.
Subsequent to December 2014 up to 30 June 2016, the Municipality
has invoiced Ergo for approximately R51.4 million in surcharges of
which R45.7 million has been paid into an attorney’s trust account
at 30 June 2016 pending the final determination of the dispute.
10. UPDATE OF PREVIOUSLY DISCLOSED CONTINGENT
LIABILITY: RATES AND TAXES DISPUTE
In 2010 the Municipality brought an action against ERPM claiming
an amount of R43 million in respect of outstanding rates and taxes
which were allegedly owing. ERPM employed experts to investigate
the allegations and concluded that this claim was without merit and
therefore that an outflow of resources was remote. ERPM deferred
payment of rates and taxes for which it recognised an accrual of
R22.7 million.
The February and March 2016 statements issued by the Municipality
reflected that all rates and taxes and interest thereon had been
written off and the balance owing by ERPM was reduced to zero. As
a result the accrual was reversed.
11. CONTINGENT LIABILITY: SILICOSIS
On 13 May 2016, the Johannesburg High Court ("Court") handed
down judgment in respect of the class action certification in terms
of which the applicants sought certification of two industry-wide
classes: a silicosis class and a tuberculosis class, both of which cover
current and former underground mineworkers who have contracted
the respective diseases (or the dependants of mineworkers who died
of those diseases). In terms of the judgment, the Court ordered the
certification of a single class action comprising two separate and
distinct classes – a silicosis class and a tuberculosis class.
An application for leave to appeal to the SCA (Supreme Court of
Appeal) was filed and served at the Johannesburg Court by the
DRDGOLD Respondents (as well as the other mining companies) on
03 June 2016 in respect of inter alia the transmissibility of damages.
On 23 June 2016, the Court granted leave to appeal to the SCA
against inter alia the transmissibility of damages as envisaged in
paragraph 8 of the order dated 13 May 2016.
On 15 July 2016, the DRDGOLD Respondents filed and served its
petition to the SCA in respect of the certification issue. The notice
of appeal in respect of the transmissibility of damages was filed and
served on 25 July 2016.
It is premature at this stage to make any assumptions and/or
estimates on the certification action and other potential claims. It
is not possible at this stage to make any estimates on the outcome
of the matter and, as such, no costs estimation can as yet be made
for the possible liability.
12. FAIR VALUES
The carrying values of financial instruments approximate their
fair values.
13. SUBSEQUENT EVENTS
There were no subsequent events between the year end reporting
date of 30 June 2016 and the date of issue of these condensed
consolidated financial statements.
14. OPERATING SEGMENTS
The following summary describes the operations in the Group’s
reportable operating segment:
- Ergo is a surface retreatment operation and treats old slime and
sand dumps to the south of Johannesburg’s central business
district as well as the East and Central Rand gold fields. The
operation comprises four plants. The Ergo and Knights plants
continue to operate as metallurgical plants but the Crown and
City Deep plants have been converted to pump/milling stations.
- Corporate office and other reconciling items are taken into
consideration in the strategic decision-making process of the
chief operating decision maker ("CODM") and are therefore
included in the disclosure here, even though they do not earn
revenue. They do not represent a separate segment.
The reportable segments, as described below, are the Group’s strategic divisions. The strategic divisions reflect different operational locations
reported on separately to the executive committee (CODM). The Group’s revenue stream consists of the sale of gold bullion.
12 months to 30 Jun 2016 Reviewed 12 months to 30 Jun 2015 Audited
Corporate Corporate
office and other office and other
reconciling reconciling
Ergo items Total Ergo items Total
Rm Rm Rm Rm Rm Rm
Revenue 2 433.1 – 2 433.1 2 105.3 – 2 105.3
Cash operating costs (1 991.2) – (1 991.2) (1 741.5) – (1 741.5)
Movement in gold in process (7.1) – (7.1) 20.6 – 20.6
Operating profit 434.8 – 434.8 384.4 – 384.4
Interest income 2.8 19.6 22.4 0.8 13.6 14.4
Interest expense (4.1) (0.4) (4.5) (3.1) (7.5) (10.6)
Retrenchment costs – – – (2.8) (4.4) (7.2)
Administration expenses and general costs (4.5) (82.8) (87.3) (3.5) (66.1) (69.6)
Income tax (1) (0.5) (5.1) (5.6) (1.1) 4.4 3.3
Working profit before capital expenditure 428.5 (68.7) 359.8 374.7 (60.0) 314.7
Additions to property, plant
and equipment (99.9) (0.1) (100.0) (113.2) (0.1) (113.3)
Additions to listed investments – (1.3) (1.3) – – –
Additions to reimbursive right – – – (0.8) – (0.8)
Working profit after capital expenditure
and additions 328.6 (70.1) 258.5 260.7 (60.1) 200.6
(1)Income tax excludes deferred tax.
Reconciliation of profit for the year
Working profit before capital expenditure 428.5 (68.7) 359.8 374.7 (60.0) 314.7
– Depreciation (180.1) (0.1) (180.2) (193.1) (0.2) (193.3)
– Movement in provision for
environmental rehabilitation (21.4) 2.1 (19.3) 15.8 4.6 20.4
– Impairments – – – (3.1) (4.8) (7.9)
– Fair value adjustment on available-for-sale
investment reclassified to profit or loss – – – – 19.9 19.9
– Profit on disposal of equity accounted
investment – – – – 5.9 5.9
– Growth in environmental rehabilitation
trust funds and reimbursive right 9.8 4.7 14.5 7.6 3.7 11.3
– Profit on disposal of property, plant and
equipment 9.3 1.2 10.5 2.3 10.8 13.1
– Unwinding of provision for environmental
rehabilitation (41.5) (1.5) (43.0) (37.3) (1.7) (39.0)
– Ongoing rehabilitation expenditure (27.8) – (27.8) (30.6) (1.1) (31.7)
– Other operating costs including care
and maintenance costs (29.6) 18.3 (11.3) (0.9) (12.4) (13.3)
– Deferred tax (46.9) 5.6 (41.3) (31.7) (0.2) (31.9)
Profit for the year 100.3 (38.4) 61.9 103.7 (35.5) 68.2
Reconciliation of all-in sustaining cost
(unaudited)
Cash operating costs (1 991.2) (1 741.5)
Movement in gold in process (7.1) 20.6
Administration expenses and general costs (87.3) (69.6)
Other operating (costs)/income
excluding care and maintenance costs (0.6) 0.7
Movement in provision for
environmental rehabilitation (19.3) 20.4
Unwinding of provision for
environmental rehabilitation (43.0) (39.0)
Capital expenditure (sustaining) (80.5) (113.3)
All-in sustaining costs (2 229.0) (1 921.7)
Retrenchment costs – (7.2)
Care and maintenance costs (10.5) (13.8)
Ongoing rehabilitation expenditure (27.8) (31.7)
Capital expenditure (non-sustaining) (19.5) –
Capital recoupment 0.2 3.4
All in costs (2 286.6) (1 971.0)
12 months to 12 months to
30 Jun 2016 30 Jun 2015
Operational performance
Ore milled
Metric (000t) 24 842 23 750
Imperial (000t) 27 382 26 179
Yield
Metric (g/t) 0.180 0.197
Imperial (oz/t) 0.005 0.006
Gold produced
Metric (kg) 4 462 4 670
Imperial (oz) 143 457 150 145
Cash operating costs
(R/t) 80 73
(US$/t) 5 6
Cash operating costs (R per kg) 446 153 372 932
Cash operating costs (US$ per oz) 958 1 013
All-in sustaining costs (R per kg) 499 425 411 548
All-in sustaining costs (US$ per oz) 1 072 1 118
All-in cost (R per kg) 512 353 422 095
All-in cost (US$ per oz) 1 095 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.
FOR FURTHER INFORMATION,
CONTACT NIËL PRETORIUS 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
There has been no material change to the technical information relating to, inter alia, the Group’s reserves and resources, legal title to its
mining and prospecting rights and legal proceedings relating to its mining and exploration activities as disclosed in the Company’s annual
reports of 30 June 2015 and subsequent public announcements. The technical information referred to in this report has been reviewed
by Vivian Labuschagne (PLATO), mineral and resource manager, a full time employee of the Company. He approved this information in
writing before the publication of the report.
DIRECTORS (*British) (**American)
Executives: DJ Pretorius (Chief Executive Officer), AJ Davel (Chief Financial Officer)
Independent non-executives: GC Campbell* (Non-Executive Chairman), EA Jeneker, J Turk **, JA Holtzhausen
Company Secretary: TJ Gwebu (Resigned effective 31 December 2015), R Masemene (Appointed 9 March 2016)
Sponsor: One Capital
RESULTS
The condensed consolidated financial statements of DRDGOLD for the year ended 30 June 2016 are available on the DRDGOLD
website as well as at the Company’s Registered Office.
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 2015, which we filed with the United States Securities and Exchange Commission on 30 October 2015 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 has not been reviewed and reported on by DRDGOLD’s auditors.
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