Wrap Text
Condensed consolidated provisional results for the year ended 30 June 2017
DRDGOLD Limited
(Incorporated in the Republic of South Africa)
Registration No.1895/000926/06
JSE share code: DRD
NYSE trading symbol: DRD
ISIN: ZAE 000058723
(DRDGOLD or the Company or the Group)
CONDENSED CONSOLIDATED PROVISIONAL RESULTS
for the year ended 30 June 2017
KEY FEATURES
Increase in
Mineral Reserves
from 1.8Moz to
3.0Moz
Operating profit
decreased 41% to
R256.8 million
All-in sustaining
costs margin
decreased to
3.2%
Headline earnings
0.2cps
Free cash outflow
(R45.1 million)
Dust exceedances
decreased to
0.44%
Externally sourced
potable water
usage decreased
by 26%
Final dividend
declared of
5cps
REVIEW OF OPERATIONS
Year ended Year ended %
30 Jun 2017 30 Jun 2016 change (1)
Gold production kg 4 265 4 462 (4)
oz 137 114 143 457 (4)
Gold sold kg 4 268 4 455 (4)
oz 137 211 143 232 (4)
Cash operating costs R per kg 489 549 446 153 10
US$ per oz 1 122 958 17
All-in sustaining costs R per kg 530 930 499 425 6
US$ per oz 1 216 1 072 13
Average gold price received R per kg 548 268 546 142 -
US$ per oz 1 254 1 165 8
Operating profit R million 256.8 434.8 (41)
Operating margin % 11.0 17.9 (39)
All-in sustaining costs margin % 3.2 8.4 (62)
Headline earnings R million 0.8 53.8 (99)
SA cents per share (cps) 0.2 12.7 (98)
(1) % Change is rounded to the nearest percent and is based on the rounded amounts as presented,
which is rounded to the nearest hundred thousand Rand.
SHAREHOLDER INFORMATION
Issued capital
431 429 767 ordinary no par value shares (30 June 2016: 431 429 767)
9 361 071 treasury shares held within the Group (30 June 2016: 9 361 071)
5 000 000 cumulative preference shares (30 June 2016: 5 000 000)
431 429 767 total ordinary no par value shares issued and committed
(30 June 2016: 431 463 842)
Stock traded JSE NYSE(2)
Price
- 12 month Intra-day high R12.62 $0.910
- 12 month Intra-day low R3.70 $0.284
- Close R4.15 $0.315
(2) This data represents per share data and not American Depository Receipt (ADR) data -
one ADR reflects ten ordinary shares.
Market capitalisation
As at 30 June 2017 Rm 1 790.4
As at 30 June 2017 US$m 135.9
As at 30 June 2016 Rm 3 680.1
As at 30 June 2016 US$m 254.5
RESULTS
The condensed consolidated financial statements of DRDGOLD for the
year ended 30 June 2017 are available on DRDGOLD's 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 2016, which we filed with the
United States Securities and Exchange Commission on 31 October 2016 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.
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
TVBN Mnyango
(Appointed 1 Dec 2016)
Company Secretary:
R Masemene
Sponsor
One Capital
FOR FURTHER INFORMATION
CONTACT NIËL PRETORIUS:
Tel: (+27) (0) 11 470 2600
Fax: (+27) (0) 11 470 2618
Website: www.drdgold.com
1 Sixty Jan Smuts Building,
2nd Floor - North Tower,
160 Jan Smuts Avenue,
Rosebank, 2196,
South Africa
DEAR SHAREHOLDER
We took a decision at the end of the 2016 financial year that the 2017
financial year would see us execute a set of necessary actions - involving
substantial effort and cost - to move our operational centre of gravity
firmly away from the western Witwatersrand to its centre and east and
to tie up a number of lingering loose ends or legacies.
Over a period of more than 30 years our resources to the west had
become depleted, so it made good sense to:
- complete the recovery of material from a number of legacy reclamation
sites and to close the Crown plant there - in full and timely compliance
with our environmental obligations; and
- commission three new reclamation sites in the centre and to the east
of the Witwatersrand which - with a fourth to be commissioned by the
third quarter of the 2018 financial year - would see us well into the
future.
Our timing seemed appropriate:
- we had generated substantial free cash during the preceding financial
year, most of which had been distributed to shareholders by way of
three dividends;
- the gold price was firm, having averaged R546 142/kg for the 2016
financial year, and increased to R619 000/kg for May 2016; and
- we had enough cash in hand to do what we had to do.
In the event:
- the gold price decreased to average around R548 268/kg in the 2017
financial year, only slightly above the FY2016 average;
- the clean-up of the legacy sites proved more difficult and costly than
we had expected; and
- there was a bigger than expected knock-on effect on our treatment
system of treating the relatively low volumes of material from these sites.
To elaborate briefly on the latter two points: we had to resort in the
main to mechanical lifting of residual material from the legacy sites
- in quantum, this is more expensive than hydraulic reclamation.
Although low in volume the reclaimed material required high volumes
of water to treat. As a result, the treatment system contained more
water than material, leading to lower densities and with no capacity for
augmentation with material from our other operating sites.
By the end of the 2017 financial year, much of the pain had been
absorbed; most of the legacy sites had been cleared and substantial
progress had been made on the rehabilitation of the Crown plant site,
which is expected to be completed by the end of calendar year 2017. We
expect the cost benefit in the 2018 financial year of eliminating of the
overall Crown footprint to be of the order of R72 million.
We are encouraged that gold production in the final quarter met the
production target.
On the issue of cost savings, there is more to report.
During the financial year, work to centralise our water distribution
system adjacent to the Trans Caledon Tunnel Authority (TCTA) pumping
infrastructure, situated on the old East Rand Proprietary Mines Limited
(ERPM) footprint, was completed, as were adjustments to the Ergo plant's
water reticulation system. As a result, we expect to see a consequent
saving in the cost of the water we use of some R24 million a year.
A detailed review was undertaken of our procurement process. Contracts
for key consumables were reviewed, with some suppliers being replaced
where necessary, and the overall cost increase for these consumables
being contained at 2%.
We decided, early in the year, to sweat our core Ergo plant's electronic
monitoring system. This now provides management with continuous
information on every facet of the plant's performance. Prompt
interpretation of this information has resulted in faster, better
identification and remediation of problem issues and a consequent
improvement in plant efficiency. Flowing from this, there have been
more cost benefits - for example, a substantial saving of R1.3 million a
month in the cost of reagents.
My intention with the foregoing narrative is to properly contextualise
our 2017 financial year operating and financial performance which
was generally weaker when compared to the 2016 financial year.
Notwithstanding the challenges encountered, we have been able to
continue delivery into human, social and natural capitals, reported upon
briefly below, and to declare a modest dividend.
12 MONTHS ENDED 30 JUNE 2017 VS 12 MONTHS
ENDED 30 JUNE 2016
Operational review
While throughput was stable at 24 958 000t (24 842 000t), the average
yield was 5% lower at 0.171g/t and consequently, gold production was 4%
lower at 4 265kg.
Gold sold was 4% lower at 4 268kg due to the lower production.
Cash operating costs rose by 5% to R84/t.
All-in sustaining costs (AISC) were stable at R2 264.4 million (2016:
R2 229.0 million), but 6% higher at R530 930/kg due to the lower gold
production.
Financial review
Revenue declined by 4% to R2 339.9 million and, after accounting for a
5% increase in total cash operating costs to R2 087.9 million, operating
profit was 41% lower at R256.8 million.
The operating and AISC margins were 11% and 3% respectively.
Headline earnings were R0.8 million compared to R53.8 million for the
2016 financial year.
Free cash outflow was R45.1 million in comparison with free cash inflow
of R308.7 million generated in the previous financial year. The decline
in the free cash flow was partially due to significant working capital
movements in comparison with the prior financial year. Trade and other
receivables including gold debtors and VAT received subsequent to year
end, amounted to R34.5 million and R23.4 million respectively.
Management further invested R43.4 million in growth capital, related
mainly to the Centralised Water Facility, exploration and grade
verification. The latter resulted in an increase in our Mineral Reserves
and Measured Mineral Resources and the possible future expansion of
the Brakpan/Withok Tailings Deposition Facility.
Sustainable development
Human capital
We continued to grow the total number of historically disadvantaged
people in management, core and critical skills positions - from 230 in 2016
(66% of the total workforce) to 242 in 2017 (68% of the total workforce).
Women in mining rose to 20% of the total workforce, up from 17% in
2016. The percentage of women in core positions within the workforce is
11%, which exceeds the Mining Charter requirement of 10%.
Some 1 296 individual training courses took place at a total cost to
company of R10.3 million, compared with 1 259 at a total cost to
company of R6.9 million in 2016.
Social capital
In 2017, we spent R14.3 million on various community and skills
development projects of benefit to communities, mainly within our
operating footprint. This compares with R15.1 million in 2016.
Natural capital
Dust: 1 136 samples from sites spanning our total operating footprint
were analysed during 2017. There were five exceedances during this
period, representing 0.44% of the total number of measurements. This
is a marked improvement on the 22 exceedances reported in 2016,
representing 1.58% of the total number of measurements.
The improvement points mainly to the positive impact of our ongoing
programme to vegetate the top surfaces and side slopes of the tailings
dams for which we are responsible. Some 35 hectares were vegetated
in 2017 compared with 36 hectares in 2016. At Crown, the vegetation
programme remains on track for completion in 2022.
Our total cash spent on environmental rehabilitation for the 2017
financial year amounted to R41.9 million compared with R49.6 million
for the 2016 financial year.
Water: our total usage was 27 748Ml, down 8% from 30 293Ml in
2016, which illustrates another positive consequence of the completion
of our water distribution system mentioned above. We reduced our
usage of externally sourced potable water by 26% to 5 490Ml, and our
percentage of total externally sourced water by 4% to 20%. In terms of
our agreement with the TCTA, treated acid mine drainage (AMD) water
entered our system for the first time.
Land: in 2017, 90 hectares of land was rehabilitated after reclamation and
given clearance by the National Nuclear Regulator for redevelopment.
This compares with 62 hectares in 2016.
FINANCIAL YEAR 2018 PRODUCTION
AND COST GUIDANCE
During the 2018 financial year, we are planning gold production
of between 138 000 and 145 000 ounces at cash operating costs of
approximately R480 000 per kilogram.
DIVIDEND
The DRDGOLD board has declared a final dividend of 5 SA cents per
ordinary share for the year ended 30 June 2017 as follows:
- the dividend has been declared out of income reserves;
- the local Dividends Tax rate is 20% (twenty per cent);
- the gross local dividend amount is 5 SA cents per ordinary share for
shareholders exempt from the Dividends Tax;
- the net local dividend amount is 4 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, the salient dates for payment of the dividend
are as follows:
- last date to trade ordinary shares cum dividend:
Tuesday, 26 September 2017;
- ordinary shares trade ex-dividend: Wednesday, 27 September 2017;
- record date: Friday, 29 September 2017; and
- payment date: Monday, 2 October 2017.
On payment date, dividends due to holders of certificated securities
on the South African (SA) share register will either be electronically
transferred to 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 Central Securities Depository
Participant (CSDP) or broker.
To comply with the further requirements of Strate, between Wednesday,
27 September 2017 and Friday, 29 September 2017, 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 Monday, 2 October 2017.
To holders of American Depositary Shares (ADS):
- Each ADS represents 10 ordinary shares:
- ADSs trade ex-dividend on New York Stock Exchange (NYSE):
Thursday, 28 September 2017
- Record date: Friday, 29 September 2017
- Approximate date of currency conversion: Monday, 2 October 2017
- Approximate payment date of dividend: Thursday, 12 October 2017
Assuming an exchange rate of R13.20/$1, the dividend payable on
an ADS is equivalent to 3 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.
LOOKING AHEAD
The 2017 financial year was challenging but we have positioned
ourselves well for the 2018 financial year and beyond:
- we have erased the legacy overhang of two very important
rehabilitation sites, and yielded, in effect, a large nature dividend;
- the centre of gravity of our operations has now well and truly migrated
further east toward our Ergo plant with the commissioning of three
new reclamation sites and a fourth by the third quarter of the 2018
financial year, all of which will contribute to far more efficient and
cost-effective reclamation;
- we have rigorously addressed costs for the longer term;
- the core Ergo plant is stable; and
- as reported at the financial half-year, we have increased our Measured
Mineral Resources by 56.8% and our Mineral Reserves by 62.5% after
accounting for depletion in the second half of the financial year.
Niël Pretorius
Chief Executive Officer
5 September 2017
CONDENSED CONSOLIDATED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year ended Year ended
30 Jun 2017 30 Jun 2016
Rm Rm
Notes Reviewed Audited
Revenue 2 339.9 2 433.1
Cost of sales (2 307.9) (2 236.9)
Operating costs (2 109.3) (2 030.3)
Depreciation 2 (179.8) (180.2)
Retrenchment costs 2 (23.0) -
Movement in provision for environmental
rehabilitation 6 (0.6) (19.3)
Movement in gold in process 4.8 (7.1)
Gross profit from operating activities 32.0 196.2
Administration expenses and general costs 2 (69.4) (87.2)
Profit on disposal of property, plant and
equipment 12.9 10.5
Results from operating activities (24.5) 119.5
Finance income 40.0 36.8
Finance expenses (52.2) (47.5)
(Loss)/profit before tax (36.7) 108.8
Income tax 2 50.4 (46.9)
Profit for the year 13.7 61.9
Attributable to:
Equity owners of the parent 13.7 61.9
Profit for the year 13.7 61.9
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 (0.3) 4.4
Total comprehensive income for the year 13.4 66.3
Attributable to:
Equity owners of the parent 13.4 66.3
Total comprehensive income for the year 13.4 66.3
Earnings per share (1) 3 3.2 14.7
Diluted earnings per share (1) 3 3.2 14.7
(1) All per share financial information is presented in South African 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.
CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
As at As at
30 Jun 2017 30 Jun 2016
Rm Rm
Notes Reviewed Audited
Assets
Non-current assets 1 739.1 1 818.4
Property, plant and equipment 1 497.6 1 600.5
Investments in rehabilitation obligation
funds 227.7 202.1
Investment in other entities 8.8 9.0
Deferred tax assets 5.0 6.8
Current assets 548.3 600.7
Inventories 180.3 160.7
Trade and other receivables 114.3 66.5
Current tax asset - 6.7
Cash and cash equivalents 4 253.7 351.8
Assets held for sale 5 - 15.0
Total assets 2 287.4 2 419.1
Equity and Liabilities
Equity 1 302.4 1 339.6
Non-current liabilities 728.1 775.0
Provision for environmental
rehabilitation 6 531.8 522.9
Deferred tax liability 2 140.5 194.7
Post-retirement and other employee
benefits 39.0 38.2
Finance lease obligation 16.8 19.2
Current liabilities 256.9 304.5
Trade and other payables 251.7 288.9
Tax payable 5.2 -
Liabilities held for sale 5 - 15.6
Total liabilities 985.0 1 079.5
Total equity and liabilities 2 287.4 2 419.1
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
30 Jun 2017 30 Jun 2016
Rm Rm
Reviewed Audited
Balance at the beginning of the year 1 339.6 1 529.9
Total comprehensive income
Profit for the year attributable to owners of 13.7 61.9
the parent
Other comprehensive income
Fair-value adjustment on available-for-sale (0.3) 4.4
investments
Transactions with the owners of the parent
Dividends paid to owners of the parent (50.6) (252.9)
Treasury shares acquired - (6.5)
Share options exercised - 2.8
Balance as at the end of the year 1 302.4 1 339.6
The accompanying notes are an integral part of the condensed
consolidated financial statements.
These condensed consolidated financial statements for the year ended
30 June 2017 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
30 August 2017.
CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
Year ended Year ended
30 Jun 2017 30 Jun 2016
Rm Rm
Notes Reviewed Audited
Net cash inflow from operating activities 51.6 415.9
Cash generated by operations 21.5 398.2
Interest received 23.8 22.3
Interest paid (3.7) (5.0)
Tax refunded 10.0 0.4
Net cash outflow from investing activities (96.7) (107.2)
Additions to property, plant and
equipment (110.6) (99.8)
Proceeds on disposal of property, plant
and equipment 20.5 7.0
Environmental rehabilitation payments (11.6) (10.6)
Other 5.0 (3.8)
Net cash outflow from financing activities (53.0) (281.1)
Loans and other borrowings (2.4) (24.5)
Treasury shares acquired - (6.5)
Share options exercised - 2.8
Dividends paid to owners of the parent (50.6) (252.9)
(Decrease)/increase in cash
and cash equivalents (98.1) 27.6
Opening cash and cash equivalents 4 351.8 324.4
Foreign currency translation - (0.2)
Closing cash and cash equivalents 253.7 351.8
Reconciliation of cash generated by
operations
(Loss)/profit before tax (36.7) 108.8
Adjusted for:
Depreciation 2 179.8 180.2
Movement in gold in process (4.8) 7.1
Movement in provision for environmental
rehabilitation 0.6 19.3
Profit on disposal of property, plant and
equipment (12.9) (10.5)
Share-based payment expense 2 10.0 29.9
Environmental rehabilitation payments (7.9) (11.2)
Finance income (40.0) (36.8)
Finance expenses 52.2 47.5
Other non-cash items (1.0) (18.1)
Working capital changes (117.8) 82.0
Change in trade and other receivables 4 (57.6) 33.7
Change in inventories (14.8) 1.0
Change in trade and other payables 4 (45.4) 47.3
Cash generated by operations 21.5 398.2
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 (Listings Requirements) for provisional reports and
the requirements of the Companies Act of South Africa. The Listings
Requirements require provisional 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 Reporting Pronouncements as issued
by the Financial Reporting Standards Council and to also, at 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 financial statements
except as described below:
IAS 1 Disclosure Initiative
Changes to the presentation of the condensed consolidated financial
statements and notes on the condensed consolidated financial
statements
In order to facilitate improved reading of the condensed consolidated
financial statements, DRDGOLD has made various changes to the
presentation of the condensed consolidated financial statements and
notes to the condensed consolidated financial statements to give
prominence to material financial statement disclosures.
In applying materiality to the disclosures, we consider both the amount
and nature of each item. The main change to the presentation of
the condensed consolidated financial statements and notes thereon
is the disclosure of certain line items in the condensed consolidated
statement of profit or loss and other comprehensive income,
condensed consolidated statement of financial position and condensed
consolidated statement of cash flows being rationalised to focus on
material information and certain line items were renamed or added
where such presentation facilitate improved presentation of relevant
financial information.
2. PROFIT FOR THE YEAR
Year ended Year ended
30 Jun 2017 30 Jun 2016
Rm Rm
Reviewed Audited
Profit for the year includes:
A. DEPRECIATION 179.8 180.2
Depreciation expense remained flat despite the
following:
- Depreciation expense increased due to the
decision taken by management to perform
final clean up and closure of various sites that
previously formed part of the Crown operations.
The depreciation of the carrying value of these
assets have therefore been accelerated.
These assets are carried at scrap value at
reporting date.
- The net increase in the expected units-of-
production in Ergo's life of mine that became
effective on 1 January 2017 resulted in a net
decrease in the depreciation charge recognised
amounting to R13.9 million.
B. RETRENCHMENT COST 23.0 -
The final clean up and closure of various sites in
the Crown complex described above also resulted
in retrenchment costs of R23 million being
incurred.
Year ended Year ended
30 Jun 2017 30 Jun 2016
Rm Rm
Reviewed Audited
C. NEW LONG TERM INCENTIVE SCHEME (LTI) 10.0 29.9
Post-retirement and other employee benefits and
accordingly the share based payment expense
mainly consists of the liability for the settlement
of the grant made in November 2015 under the
amended cash settled LTI scheme. The decrease in
the expense is mainly due to the decrease in the
DRDGOLD share price to R4.15 at reporting date.
D. 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 2017 and 30 June
2016 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 a forecast
weighted average tax rate considering the expected
timing of the reversal of temporary differences.
Due to the forecast weighted average tax rate
being based on the expected future profitability,
the tax rate can vary significantly year on year
and can move contrary to current period financial
performance.
The forecast weighted average deferred tax rate
decreased from 23.1% to 18.6% as a result of a
decrease in forecast profitability of Ergo.
Tax (benefit)/charge due to the change in the
forecast weighted tax rate. (37.5) 21.7
3. EARNINGS PER SHARE
Reconciliation of headline earnings
Profit for the year attributable to equity owners of 13.7 61.9
the parent
Adjusted for:
- Profit on disposal of property, plant and
equipment (12.9) (10.5)
- Income tax thereon - 2.4
Headline earnings 0.8 53.8
Weighted average number of ordinary shares in
issue adjusted for treasury shares (1) 422 068 696 422 157 987
Number of staff options - 34 075
Diluted weighted average number of ordinary
shares adjusted for treasury shares (1) 422 068 696 422 192 062
Earnings per share (1) 3.2 14.7
Diluted earnings per share (1) 3.2 14.7
Headline earnings per share (1) 0.2 12.7
Diluted headline earnings per share (1) 0.2 12.7
(1) All per share financial information is presented in South African 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.
4. CASH AND CASH EQUIVALENTS
Year ended Year ended
30 Jun 2017 30 Jun 2016
Rm Rm
Reviewed Audited
The decrease in cash and cash equivalents was
influenced by an investment in distinct components
of working capital including the following:
- A VAT refund, contrary to the ordinary VAT cycle,
was included in Trade and other receivables. The
refund was received in July 2017. (23.4) -
- G old debtors for the last gold sale for the year
was included in Trade and other receivables at
30 June 2017 while no such gold debtors existed
at 30 June 2016. (34.5) -
- In addition, during the 2016 financial year gold
debtors relating to the last gold sale of the 2015
financial year was received. - 43.0
- Higher incentives were paid during the current
financial year than the comparative period. (34.5) (18.6)
Included in cash and cash equivalents is restricted
cash of:
- Cash held in escrow (including interest)
relating to the electricity dispute with
Ekurhuleni Metropolitan Municipality
(refer note 8) 92.7 47.7
- Guarantees 16.1 15.2
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 been obtained, with
the exception of the approval required under Section 11 of the Mineral
and Petroleum Resource Development Act (Section 11 Approval).
Based on recent regulatory developments in the South African mining
industry negatively impacting sentiment and impeding growth and
expansion in the South African mining industry, management believes
that the probability of obtaining the Section 11 Approval is no longer
"highly probable" as defined for the purpose of presenting the assets and
liabilities sold as a disposal group held for sale. These assets and liabilities
have therefore been reclassified based on their underlying nature.
Management remains committed to the disposal and will continue
to pursue its rights under the disposal agreement and the ultimate
conclusion of the transaction.
6. MOVEMENT IN PROVISION FOR ENVIRONMENTAL REHABILITATION
The provision for environmental rehabilitation increased by a net amount
of R8.9 million, mainly due to:
- the unwinding of the liability amounting to R45.3 million; and
- the reclassification of the environmental liability associated with the
disposal of certain of the underground assets and liabilities that are no
longer considered to be "highly probable" amounting to R16.8 million
(refer note 5).
These increases were partially offset by:
- adecrease in the decommissioning liability of R34.4 million, mostly
attributable to changes in estimates relating to the method of
rehabilitating reclamation sites and the change in the life of mine plan,
specifically Crown; and
- Cash payments of R19.5 million incurred on rehabilitation activities.
7. CONTINGENT LIABILITY: SILICOSIS
In January 2013, DRDGOLD, ERPM (the DRDGOLD Respondents) and 23
other mining companies ("the Other Mining Companies") were served
with a court application for a class action by alleged former mineworkers
and dependants of deceased mineworkers. In the pending application the
applicants allege that the Other Mining Companies and the DRDGOLD
Respondents conducted underground mining operations in a negligent
manner that caused occupational lung diseases.
On 17 January 2017, the DRDGOLD Respondents and the Other Mining
Companies filed an appeal against the judgement handed down by the
South Gauteng High Court, Johannesburg (Court) on 13 May 2016,
in which the Court ordered the certification of a single class action
comprising two separate and distinct classes - a silicosis class and a
tuberculosis class. The appeal in respect of the matter has been set down
for hearing from 19 to 23 March 2018.
DRDGOLD is not a member of the larger working group and at this stage
does not contemplate a settlement of the matter. It is not possible at
this stage to ascertain what the probable outcome of the matter will be.
8. CONTINGENT LIABILITY: EKURHULENI METROPOLITAN MUNICIPALITY ELECTRICITY DISPUTE
In December 2014, an application (in the 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 (Main
Application). 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.
The hearing in respect of the Main Application has been set down for
hearing on 5 December 2018.
Subsequent to December 2014 up to 30 June 2017, the Municipality
has invoiced Ergo for approximately R91.8 million in surcharges of
which R86.1 million has been paid into an attorney's trust account at
30 June 2017 pending the final determination of the dispute.
The Municipality is prohibited from forcing the discontinuation of power
supply pending the final resolution of the dispute in terms of an interdict
obtained by Ergo in the Court, provided cover is maintained for payment
of the amount in dispute in the aforementioned trust account.
Subsequent to year end the Municipality was successful in their appeal
of this prohibition before a full bench of the Court, who overturned the
interdict. Ergo is currently petitioning the Supreme Court of Appeal to
set aside this ruling. Pending this petition, the disputed amount will
remain in the trust account.
9. FINANCIAL RISK MANAGEMENT FRAMEWORK
Commodity price sensitivity
The Group's profitability and cash flows are primarily affected by
changes in the market price of gold which is sold in US Dollar and then
converted to Rand.
Gold is sold at spot prices and forward sales of gold production, as well
as derivatives or other hedging arrangements to establish a price in
advance for the sale of future gold production are not entered into.
10. FAIR VALUES
The group's assets that are measured at fair value at reporting date consist
of available for sale financial instruments and are included in Investments
in other entities on the statement of financial position. Of this line item,
R8.6 million (2016: R8.9 million) relate to Fair value hierarchy Level 1
instruments and R0.2 million (2016: R0.1 million) relate to Fair value
hierarchy Level 3 instruments.
11. SUBSEQUENT EVENTS
There were no subsequent events between the reporting date of
30 June 2017 and the date of issue of these condensed consolidated
financial statements other than included in the notes above and
described below:
Dividend: On 30 August 2017, the board declared a final dividend for the
2017 financial year of 5 SA cents per share, payable on 2 October 2017.
12. REPORT OF THE INDEPENDENT AUDITOR
These condensed consolidated financial statements for the year ended
30 June 2017 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.
13. 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 goldfields. The operation comprises four plants. The Ergo and Knights plants continue to operate as metallurgical
plants. The City Deep plant continues to operate as a pump/milling station feeding the metallurgical plants. The Crown plant operated as a
pump/milling station feeding the metallurgical plants until March 2017 when it ceased all operations.
Corporate office and other reconciling items are taken into consideration in the strategic decision-making process of the chief operating decision
maker and are therefore included in the disclosure here, even though they do not earn revenue. They do not represent a separate segment.
Year ended 30 Jun 2017 Year ended 30 Jun 2016
Reviewed Audited
Corporate
office and other Corporate
reconciling office and other
Ergo items Total Ergo reconciling items Total
Rm Rm Rm Rm Rm Rm
Revenue 2 339.9 - 2 339.9 2 433.1 - 2 433.1
Cash operating costs (2 087.9) - (2 087.9) (1 991.2) - (1 991.2)
Movement in gold in process 4.8 - 4.8 (7.1) - (7.1)
Operating profit 256.8 - 256.8 434.8 - 434.8
Interest income 6.8 16.8 23.6 2.8 19.6 22.4
Interest expenses (3.3) (2.4) (5.7) (4.1) (0.4) (4.5)
Retrenchment costs (23.0) - (23.0) - - -
Administration expenses and general costs (4.5) (64.9) (69.4) (4.5) (82.8) (87.3)
Income tax (1) (1.9) - (1.9) (0.5) (5.1) (5.6)
Working profit before capital expenditure 230.9 (50.5) 180.4 428.5 (68.7) 359.8
Additions to property, plant and equipment (116.2) (0.1) (116.3) (99.9) (0.1) (100.0)
Additions to listed investments - (0.1) (0.1) - (1.3) (1.3)
Working profit after capital expenditure and additions 114.7 (50.7) 64.0 328.6 (70.1) 258.5
(1) Income tax excludes deferred tax.
Reconciliation of Profit for the year
Working profit before capital expenditure 230.9 (50.5) 180.4 428.5 (68.7) 359.8
- Depreciation (179.7) (0.1) (179.8) (180.1) (0.1) (180.2)
- Movement in provision for environmental rehabilitation (0.6) - (0.6) (21.4) 2.1 (19.3)
- Growth in environmental rehabilitation trust funds and
reimbursive right 10.9 5.5 16.4 9.8 4.7 14.5
- Profit on disposal of property, plant and equipment 0.2 12.7 12.9 9.3 1.2 10.5
- Unwinding of provision for environmental rehabilitation (45.3) (1.2) (46.5) (41.5) (1.5) (43.0)
- Ongoing rehabilitation expenditure (22.4) - (22.4) (27.8) - (27.8)
- Other operating (costs)/income including care and
maintenance costs (30.3) 31.3 1.0 (29.6) 18.3 (11.3)
- Deferred tax 54.2 (1.9) 52.3 (46.9) 5.6 (41.3)
Profit for the year 17.9 (4.2) 13.7 100.3 (38.4) 61.9
Reconciliation of All-in sustaining costs (unaudited)
Cash operating costs (2 087.9) (1 991.2)
Movement in gold in process 4.8 (7.1)
Administration expenses and general costs (69.4) (87.3)
Other operating (costs)/income excluding care and
maintenance costs 8.1 (0.6)
Movement in provision for environmental rehabilitation (0.6) (19.3)
Unwinding of provision for environmental rehabilitation (46.5) (43.0)
Capital expenditure (sustaining) (72.9) (80.5)
All-in sustaining costs (2 264.4) (2 229.0)
Care and maintenance costs (7.1) (10.5)
Retrenchment costs (23.0) -
Ongoing rehabilitation expenditure (22.4) (27.8)
Capital expenditure (non-sustaining) (43.4) (19.5)
Capital recoupment 5.0 0.2
All-in costs (2 355.3) (2 286.6)
Operational performance
Ore milled
Metric (000't) 24 958 24 842
Imperial (000't) 27 512 27 382
Yield
Metric (g/t) 0.171 0.180
Imperial (oz/t) 0.005 0.005
Gold produced
Metric (kg) 4 265 4 462
Imperial (oz) 137 114 143 457
Cash operating costs
(R/t) 84 80
(US$/t) 6 5
Cash operating costs R per kg 489 549 446 153
Cash operating costs US$ per oz 1 122 958
All-in sustaining costs* R per kg 530 930 499 425
All-in sustaining costs* US$ per oz 1 216 1 072
All-in cost * per kg R 552 243 512 353
All-in cost * per oz US$ 1 264 1 095
* All-in cost definitions based on the guidance note on non-GAAP Metrics issued by the World Gold Council on 27 June 2013.
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 announcement published on
SENS on 2 February 2017. Investors are advised to read the said announcement with the Company's annual reports for the year ended 30 June 2016.
The competent person for the Company, Mr Gary Viljoen, has reviewed and approved the information contained in this announcement as it pertains to
mineral resources and mineral reserves.
Date: 05/09/2017 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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