Annual financial statements
Notes to the annual financial statements
| 1. |
ACCOUNTING POLICIES |
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Basis of preparation
The financial statements are prepared on the historical cost accounting basis, as modified by the revaluation of certain financial instruments to fair value.
The following accounting policies adopted by the Group are in accordance with South African Statements of Generally Accepted Accounting Practice and are consistent with those applied in the previous year, except for the adoption of South African Accounting Standard IFRS3 (AC 140): Business Combinations details of which are set out below.
The financial statements are presented in Rands ('000s) and cover the year ended 30 June 2004.
Change in accounting policies
The Group applied IFRS3 (AC 140): Business Combinations to business combinations for which the agreement date was on or after 31 March 2004. The statement was applied prospectively and no adjustment was made to comparative information presented. The adoption of this statement did not have a material impact on the results of the Group for the year under review.
For the year ended 30 June 2003, the Group adopted AC 133: "Financial Instruments: Recognition and Measurement" in respect of derivative financial instruments. A net adjustment of R582.0 million was made to opening shareholders' equity, comprising an adjustment of R249.4 million to the deferred tax opening balance, and R831.4 to the opening balance of derivative financial liabilities to account for the impact of the Group's derivative financial instruments at the beginning of the year.
Consolidation
The Group annual financial statements incorporate the annual financial statements of the Company, its wholly-owned subsidiaries, their associated environmental rehabilitation trust funds, associates and its proportionate interest in joint ventures. The results of the subsidiaries and joint ventures are included from the date on which effective control was acquired up to the date control ceased to exist.
All significant inter-company transactions and balances have been eliminated. Unrealised profits that arise between Group entities are also eliminated.
Foreign entities' assets and liabilities are translated using the closing rates at balance sheet date and income statement transactions are translated at the average exchange rates applicable for the year. Shareholders' equity is translated at historic rates. The differences arising from the translation are taken directly to shareholders' equity.
Investments in associates
Investments in associates are accounted for using the equity method of accounting. An associate is an entity over which the Group exercises significant influence, but which it does not control.
Equity accounting involves recognising in the income statement the Group's share of the associate's profit or loss after tax for the year. The Group's interest in the associate is carried in the balance sheet at an amount that reflects its share of the net assets of the associate and includes the unamortised portion of goodwill on acquisition. Adjustments for impairment in value are recorded when they occur.
Investments in joint ventures
A joint venture is an entity in which the Group holds a long-term interest and which is jointly controlled by the Group and one or more other venturers under a contractual arrangement. The Group's interest in a jointly controlled entity is accounted for using proportionate consolidation.
Goodwill
Goodwill represents the excess of the purchase consideration over the Group's interest in the fair value of the identifiable assets and liabilities of the acquired subsidiary, associate or joint venture at the date of acquisition.
Goodwill arising on the acquisition of subsidiaries, associates or joint ventures before 31 March 2004 is reported in the balance sheet as an asset and is amortised using the straight-line method over its estimated useful life, not exceeding twenty years.
Goodwill arising before 31 March 2004 is carried at cost less any accumulated
amortisation. The carrying amount of goodwill is reviewed annually and written down for impairment where considered necessary.
Goodwill arising on business combinations with an agreement date on or after 31 March 2004 is not amortised but subject to an annual impairment test.
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Mining assets
Mining assets, which comprise mining properties, mineral rights, development costs, mine plant facilities and decommissioning assets, are recorded at cost of acquisition less sales, recoupments and amounts written off. Development costs consist primarily of expenditure to expand the capacity of the mines. Ordinary mine development costs to maintain production and exploration costs are expensed as incurred.
Depreciation of mining properties, mineral rights, development costs, mine plant facilities and decommissioning assets is computed primarily by the units-of-production method based on estimated proven and probable ore reserves. Proven and probable ore reserves reflect estimated quantities of economically recoverable reserves which can be recovered in the future from known mineral deposits. Other assets are depreciated using the straight-line method, principally over estimated useful lives of two to five years.
Recoverability of the mining assets of the Group's operating mines, which include development costs, is reviewed annually. Estimated future net cash flows for each mine are calculated using estimates of proven and probable ore reserves, estimated future sales (considering historical and current prices, price trends and related factors), cash working costs, development costs and rehabilitation costs. Reductions in the carrying value of the mining assets of the Group's mines are recorded to the extent that the carrying value exceeds the estimate of future discounted net cash flows.
Management's estimates of future cash flows are subject to risks and uncertainties. Therefore, it is reasonably possible that changes could occur which may affect the recoverability of the Group's mining assets.
Borrowing costs
Interest on borrowings utilised to finance qualifying capital projects under construction is capitalised during the construction phase as part of the cost of the project. Other borrowing costs are expensed as incurred. No borrowing costs were capitalised in the 2004 or 2003 financial years.
Financial instruments
Financial instruments recognised on the balance sheet include investments, derivative instruments, accounts receivable, cash and cash equivalents, long-term and short-term liabilities, accounts payable, bank overdrafts and accrued liabilities.
Financial instruments are initially measured at cost, including transaction costs, when the Group becomes a party to the contractual arrangements. The subsequent measurement of financial instruments is dealt with in the individual policy statements associated with the relevant item.
Investments
Investments comprise investments in listed and unlisted companies, which are classified as "held for trading" and are accounted for at fair value or at cost where fair value cannot be reliably measured. Realised and unrealised investment gains and losses are included in earnings for the relevant period.
Derivative instruments
Under AC133: "Financial Instruments: Recognition and Measurement", all derivative instruments that are not exempt from AC133, are recognised on the balance sheet at their fair value. At the inception of a derivative contract, the Group designates the contract as 1) a hedge of the fair value of a recognised asset or liability (fair value hedge), 2) a hedge of a forecasted transaction (cash flow hedge), 3) a hedge of a net investment in a foreign entity or 4) a derivative and is measured at fair value. Certain derivative transactions, while providing effective economic hedges under the Group's risk management policies, do not qualify for hedge accounting.
The Group does not currently hold or issue derivative instruments for trading or speculative purposes.
Changes in fair value of a derivative that is highly effective, and that is designated and qualifies as a fair value hedge are recorded in earnings, along with the change in the fair value of the hedged asset or liability that is attributable to the hedged risk.
Changes in fair value of a derivative that is highly effective, and that is designated as a cash flow hedge, are recognised directly in shareholders' equity. Amounts deferred in shareholders' equity are included in earnings in the same periods during which the hedged firm commitment or forecasted transaction affects earnings.
Hedges of net investments in foreign entities are accounted for similarly to cash flow hedges.
Changes in the fair value of derivatives that are not designated as hedges or that do not qualify for hedge accounting are recognised in the income statement.
As at 30 June 2004, the Group's derivative instruments are deemed to be "held for trading" as they currently do not meet hedge accounting criteria.
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Accounts receivable
Accounts receivable are carried at anticipated realisable value. Estimates are made for impairments. Irrecoverable amounts are written off during the year in which they are identified.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, metals on consignment and highly liquid investments with an original maturity of three months or less.
The carrying amount of cash and cash equivalents is stated at cost, which approximates fair value.
Financial liabilities
Financial liabilities, other than trading financial liabilities and derivatives, are subsequently measured at amortised cost being the original obligation less principal payments and
amortisations. Trading financial liabilities and derivatives are subsequently measured at fair value.
Convertible loan notes
On the issue of convertible instruments, the fair value of the conversion option is determined. This amount is recognised and presented separately in shareholders' equity. The Group does not recognise any change in the value of this option in subsequent periods. The obligation to make future payments of principal and interest to noteholders is calculated using a market interest rate for an equivalent non-convertible note and is carried as a long-term liability on the amortised cost basis until extinguished on conversion or maturity of the notes.
Inventories
Gold in process is stated at the lower of cost and net realisable value. Costs are assigned to gold in process on an average cost basis. Costs comprise all costs incurred to the stage immediately prior to smelting, including costs of extraction and processing. Selling, refining and general administration costs are excluded from inventory valuation.
Consumable stores are stated at the lower of cost or net realisable value.
Non-current inventory comprises ore stockpile. These in-process inventories are measured on the absorption cost method and valued at the lower of average production cost and net realisable value, after a reasonable allowance for further processing costs.
Deferred mining and income taxation
Deferred taxation is provided for by using the balance sheet liability method and represents the potential future liability for taxation at current tax rates on the temporary differences between the financial statement amounts and the tax bases of certain assets and liabilities. Account is taken of potential deferred tax assets only to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be
utilised. Changes in deferred tax assets and liabilities include the impact of any tax rate changes enacted during the year.
The charge for taxation is based on the results for the year, as adjusted for items which are exempt or disallowed.
Environmental rehabilitation
Estimated rehabilitation costs, which are based on the Company's interpretation of current environmental and regulatory requirements, are accrued based on present obligations as environmental damage is incurred. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances.
Based on current environmental regulations and known rehabilitation requirements, management has included its best estimate of these obligations in its rehabilitation accrual. However, it is reasonably possible that the Company's estimates of its ultimate rehabilitation liabilities could change as a result of changes in regulations or cost estimates.
Annual contributions are made to dedicated rehabilitation trust funds to fund the estimated cost of rehabilitation during and at the end of the life of the relevant mine.
Provisions
Provisions are recognised when the Group has a present obligation, legal or constructive, resulting from past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
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Revenue recognition
Gold bullion revenue (and revenue from related by-products) is recognised when it is delivered to the relevant refinery, at which stage all risks and rewards of ownership pass from the Group.
Dividends are recognised when the right to receive payment is established. Interest is recognised on a time proportion basis taking account of the principal outstanding and the effective rate to maturity on the accrual basis.
Retirement and other employee benefits
Pension plans, which are multi-employer plans in the nature of defined contribution plans, are funded through annual contributions.
In addition, the Group makes long service bonus payments (long-service awards) for certain eligible employees, based on qualifying ages and levels of service, and accrues the cost of such liabilities over the service life of the employees on an actuarial basis.
The Group contributes to a defined contribution multi-employer medical fund for current employees and certain retirees on an annually determined contribution basis. No contributions are made for employees retiring after 31 December 1996.
(Loss)/profit per share
(Loss)/profit per share is calculated based on the net (loss)/profit after taxation for the year divided by the weighted average number of ordinary shares in issue during the year. Headline (loss)/profit per share is calculated based on the (loss)/profit after taxation but before certain items of a capital nature. Diluted (loss)/profit per share is presented when the inclusion of ordinary shares that may be issued in the future has a dilutive effect on (loss)/profit per share.
The resulting numbers are stated to the nearest cent.
Segment reporting
All segment revenue and expenses are directly attributable to the segments. Segment assets include all operating assets used by a segment, and consist principally of mining assets as well as current assets. Segment liabilities include all operating liabilities and consist principally of trade creditors and accrued liabilities. These assets and liabilities are all directly attributable to the segments. Segment revenue, expenses and results include transfers between the geographical segments. These transfers are eliminated on consolidation.
Foreign currencies
Transactions in currencies other than Rands, which is the Group's functional currency, are recorded at the rates of exchange ruling on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are retranslated at the rates ruling on the balance sheet date. Profits and losses arising are dealt with in the income statement.
Comparative figures
Where necessary comparative figures have been reclassified to comply with the current year's disclosure.
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| Group | | Company |
| 2003 | 2004 | | 2004 | 2003 |
| R'000 | R'000 | | R'000 | R'000 |
| | 2. | REVENUE | | |
| 2 366 922 | 2 161 738 | | Gold revenue | - | - |
| 41 676 | 30 404 | | By-product revenue | - | - |
| 2 408 598 | 2 192 142 | | Total revenue | - | - |
| | | | | |
| | 3. | (LOSS)/PROFIT FROM OPERATIONS INCLUDES
THE FOLLOWING AMONGST OTHER: | | |
| | | | | |
| 5 173 | 6 685 | | Auditors' remuneration | 4 540 | 3 912 |
| 1 911 | 3 233 | | - audit fees - current year | 1 737 | 814 |
| 653 | 1 684 | | - underprovision - prior year | 1 588 | 796 |
| 2 508 | 1 722 | | - fees for other services | 1 215 | 2 302 |
| 101 | 46 | | - expenses | - | - |
| | | Management, technical, administrative and | | |
| 14 933 | 14 683 | | secretarial service fees | 9 533 | 11 921 |
| | | Staff costs | | |
| | | Included in staff costs are: | | |
| 877 812 | 788 125 | | - Salaries and wages | 24 936 | 11 021 |
| 13 599 | 54 946 | | - Retrenchment and restructuring costs | - | 4 911 |
| 57 552 | 59 990 | | - Pension fund contributions | - | - |
| | | Income from subsidiaries: | | |
| | | - administration and management fees | (50 100) | (35 592) |
| (15 663) | 382 | | Loss/(profit) on sale of mining assets | - | (9 759) |
| 133 001 | 108 770 | | Impairments | 698 274 | 1 010 784 |
| 48 029 | (1 818) | | - mining assets | - | - |
| - | (670) | | - other assets | - | - |
| - | - | | - investments in and loans to subsidiaries | 611 667 | 925 812 |
| 84 972 | 88 855 | | - loans to associates | 79 555 | 84 972 |
| - | 15 332 | | - other loans | 7 052 | - |
| - | 7 071 | | - goodwill | | |
| - | - | | Operating lease | 600 | 600 |
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| Group | | Company |
| 2003 | 2004 | | 2004 | 2003 |
| R'000 | R'000 | | | | R'000 | R'000 |
| | 4. | DIRECTORS' EMOLUMENTS | | |
| | | Executive directors | | |
| | | Services rendered as directors of the Company | | |
| 12 924 | 6 971 | | Salaries and bonuses to directors | 6 971 | 12 924 |
| 3 410 | - | | Retirement package | - | 3 410 |
| 85 | - | | Restraint of trade payments amortised | - | 85 |
| - | 1 748 | | Change
in terms of employment payment (refer to page 53) | 1
748 | - |
| | | Non-executive directors | | |
| 943 | 925 | | Directors' fees | 925 | 943 |
| 17 362 | 9 644 | | Included in administration and general costs | 9 644 | 17 362 |
| | | Executive directors | | |
| 15 496 | 1 522 | | Share options gains | 1 522 | 15 496 |
| | | Non-executive directors | | |
| 2 146 | 500 | | Share options gains | 500 | 2 146 |
| 35 004 | 11 666 | | Total emoluments | 11 666 | 35 004 |
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| | 5. | INVESTMENT INCOME | | |
| 826 | - | | Dividends from listed investments | - | 822 |
| 4 762 | 1 539 | | Dividends from unlisted investments | 104 | 321 |
| 156 | 298 | | Royalties received | 298 | 156 |
| 1 | 766 | | Sundry income | - | - |
| 59 341 | 31 201 | | Interest received | 32 085 | 67 634 |
| 1 376 | 434 | | Surplus on realisation of listed and unlisted investments | - | - |
| 10 858 | 7 594 | | Growth in environmental rehabilitation trust funds | 1 139 | 1 217 |
| 1 500 | - | | Option fee | - | 500 |
| 37 107 | 58 634 | | Unrealised foreign exchange gain | 57 997 | 36 886 |
| (15 929) | 30 383 | | Write up/(down) of investments | - | - |
| 99 998 | 130 849 | | | 91 623 | 107 536 |
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| Group | | | Company |
| 2003 | 2004 | | 2004 | 2003 |
| R'000 | R'000 | | R'000 | R'000 |
| | 6. | TAXATION CHARGE | | |
| (3 041) | (474 312) | | Mining tax | | - | - |
| (234) | - | | Share of tax of associates | - | - |
| (3 275) | (474 312) | | | | - | - |
| | | Comprising | | | |
| | | South African | | |
| (234) | - | | Current tax | - current year | - | - |
| - | (1 540) | | | - prior year | - | - |
| (167 196) | (414 295) | | Deferred tax | - current year | - | - |
| 167 147 | - | | | -
prior year rate change | - | - |
| | | Foreign | | |
| - | (26 796) | | Current tax | - current year | - | - |
| - | (22 646) | | | - prior year | - | - |
| (2 992) | (9 035) | | Deferred tax | - current year | - | - |
| (3 275) | (474 312) | | | | - | - |
| | | 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. Non-mining income, which consists primarily of interest, is
taxed at a standard rate of 30%. The tax rates applicable to the mining and
non-mining income of a gold mining company depends on whether the company
has elected to be exempt from the Secondary Tax on Companies, or STC. STC is
a tax on dividends declared, which is payable by the company declaring the
dividend, and, at present, the STC tax rate is equal to 12.5%. In 1993, all
existing gold mining companies had the option to elect to be exempt from
STC. If the election was made, a higher tax rate would apply for both mining
and non-mining income. In 2004 and 2003, the tax rates for taxable mining
and non-mining income for companies that elected the STC exemption were 46%
and 38%, respectively. During those same years the tax rates for companies
that did not elect the STC exemption were 37% and 30%, for taxable mining
and non-mining income, respectively. | | |
| 518 683 | 389 300 | |
In
1993, the Company elected not to be exempt from STC, as this would have
meant that the Company would be subject to normal taxation at the higher
rates of 46% for mining income and 38% for non-mining income. The Company,
having chosen not to be subject to the STC exemption, is subject to 37% tax
on mining income and 30% for non-mining income. With the exception of
Blyvoor, all of the South African subsidiaries elected to be subject to the
STC exemption.
South African deferred tax is provided at the estimated effective mining
rate applicable in terms of the mining tax formula to the relevant
operations at either 37% or 46% (2003: 37% or 46%), while the Australian
deferred tax is provided at the Australian statutory tax rate of 30% (2003:
30%).
Each company is taxed as a separate entity and no tax set-off is allowed
between the companies.
No provision has been made for income taxation in the company as it did
not earn any taxable income in the current year.
Deferred tax assets totalling R414.3 million were reversed during the year,
as the Group companies in which they were held were making losses and some
doubt existed as to whether the related tax benefit will be realised.
Unredeemed capex at year-end (available for deduction against future mining income)
| 132 293 | 135 756 |
| 1 021 564 | 1 436 618 | | Estimated tax losses at year-end (available to reduce
the future taxable income) | 103 305 | 184 013 |
| (782 035) | (1 307 989) | | Applied to reduce deferred tax | - | - |
| 758 212 | 517 929 | | Tax losses and unredeemed capex carried forward | 235 598 | 319 769 |
| 315 477 | 187 578 | | Estimated future tax relief at applicable statutory rate | 70 679 | 95 931 |
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Tax reconciliation | | |
| | | Major items causing the Group's income tax provision to | | |
| | | differ from the applicable statutory rates were: | | |
| (140 600) | 97 658 | | Taxation benefit/(charge) on net income at applicable statutory rates | | |
| - | (414 295) | | Reversal of deferred tax asset previously recognised | | |
| (3 259) | (131 693) | | Temporary difference for which deferred tax assets not recognised | | |
| (89 703) | (4 911) | | Disallowable expenditure | | |
| 64 122 | 3 116 | | Exempt income | | |
| - | (24 187) | | Additional tax expense relating to the prior year | | |
| 167 147 | - | | Rate change in rate at which deferred tax recognised | | |
| (234) | - | | Share of tax of associates | | |
| (748) | - | | Other | | |
| (3 275) | (474 312) | | Taxation charge | | |
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| Group | | | Company |
| 2003 | 2004 | | 2004 | 2003 |
| R'000 | R'000 | | R'000 | R'000 |
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| | 7. | (LOSS)/PROFIT PER ORDINARY SHARE | | |
| | | Basic | | |
| | | The calculation of (loss)/profit per ordinary share is based on the | | |
| | | (loss)/profit for the year attributable to ordinary shareholders | | |
| 370 905 | (716 430) | | of (R'000) | | |
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Headline | | |
| | | The basic (loss)/profit has been adjusted by the following | | |
| | | to arrive at a headline (loss)/profit: | | |
| 370 905 | (716 430) | | Basic (loss)/profit attributable to ordinary shareholders | | |
| 48 029 | 5 253 | | Impairments of mining assets and goodwill | | |
| (15 663) | 382 | | Loss/(profit) on sale of mining assets | | |
| (89 333) | - | | Profit on sale of subsidiary | | |
| 313 938 | (710 795) | | Headline (loss)/profit attributable to ordinary shareholders | | |
| | |
Diluted | | |
| 370 905 | (716 430) | | Basic (loss)/profit attributable to ordinary shareholders | | |
| 27 452 | 33 587 | | Interest paid on convertible loan notes | | |
| 398 357 | (682 843) | | Diluted basic (loss)/profit | | |
| (56 967) | 5 635 | | Headline earnings adjustments | | |
| 341 390 | (677 208) | | Diluted headline (loss)/profit attributable to ordinary shareholders | | |
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Reconciliation of weighted average ordinary shares to diluted | | |
| Number | Number | | weighted average ordinary shares | | |
| 183 300 665 | 216 509 843 | | Weighted number of average issued ordinary shares | | |
| 2 943 230 | 621 713 | | Number of staff options allocated | | |
| 14 827 839 | 17 600 000 | | Convertible loan notes | | |
| 201 071 734 | 234 731 556 | | Diluted weighted average number of ordinary shares | | |
| 202 | (331) | | Basic (loss)/profit per ordinary share (cents) | | |
| 171 | (328) | | Headline (loss)/profit per ordinary share (cents) | | |
| 198 | (331) | | Diluted basic (loss)/profit per ordinary share (cents) | | |
| 170 | (328) | | Diluted headline (loss)/profit per ordinary share (cents) | | |
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There is no dilution in loss per share for 2004 as the effect
of dilutive securities in issue would be anti-dilutive, as
the Group recorded a loss for the year. | | |
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| | 8. | MINING ASSETS | | |
| | | Mining properties, mineral rights, mine | | |
| | | development and mine plant facilities | | |
| 1 650 865 | 2 032 368 | | Cost | 426 994 | 426 964 |
| 1 907 371 | 1 650 865 | | Opening balance | 426 964 | 426 781 |
| - | 422 716 | | Acquired through purchase of subsidiaries | - | - |
| 121 483 | 185 732 | | Additions | 30 | 186 |
| (16 887) | (24 013) | | Disposals | - | (3) |
| (312 796) | - | | Disposed through sale of subsidiary | - | - |
| (48 306) | (202 932) | | Foreign exchange movement | - | - |
| 1 077 126 | 1 115 383 | | Accumulated depreciation and amortisation | 385 384 | 374 120 |
| 1 141 844 | 1 077 126 | | Opening balance | 374 120 | 362 705 |
| - | - | | Acquired through purchase of subsidiaries | - | - |
| 48 029 | (1 818) | | Impairment of assets | - | - |
| 104 929 | 199 427 | | Current depreciation and amortisation | 11 264 | 11 415 |
| - | (626) | | Disposals | - | - |
| (183 929) | - | | Disposed through sale of subsidiary | - | - |
| (33 747) | (158 726) | | Foreign exchange movement | - | - |
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| 573 739 | 916 985 | | Net book value | 41 610 | 52 844 |
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Decommissioning asset |
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| 93 742 |
132 412 |
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Cost |
7 951 |
7 951 |
| 99 218 |
93 742 |
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Opening balance |
7 951 |
7 951 |
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25 888 |
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Acquired through purchase of subsidiaries |
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17 512 |
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Additions |
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| (4 996) |
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Disposed through sale of subsidiary |
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| (480) |
(4 730) |
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Foreign exchange movement |
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| 88 953 |
93 346 |
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Accumulated amortisation |
7 951 |
7 951 |
| 92 858 |
88 953 |
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Opening balance |
7 951 |
7 951 |
| 746 |
5 163 |
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Current amortisation |
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| (4 322) |
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Disposed through sale of subsidiary |
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| (329) |
(771) |
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Foreign exchange movement |
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| 4 789 |
39 066 |
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Net book value |
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| 578 528 |
956 051 |
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Total assets net book value |
41 610 |
52 844 |
Included in net book value is an amount of R22 million (2003: R33
million) in respect of Argonauts mineral rights not yet in use
acquired from Randgold & Exploration Company Limited in 1997.
The value of the mineral rights is being written off over a
five-year period and the remaining value of the mineral rights will
be written down in full over the next two years.
Certain assets have been encumbered as security for specified
liabilities (refer
Note 19).
In assessing the recoverability of the assets where possible
impairment is indicated, the estimated cash flows have been
calculated using the following estimates: |
- recoverable proven and probable reserves;
- sales price estimates are based on a sales price estimate of R83 370 per
kilogram of gold (US$400 per ounce) and a base exchange rate of R6.48 =
US$1.00, with the rand weakening in future years based on the expected
differential between the local South African interest rate over the United
States interest rate in those years;
- working cost estimates are based on current working costs per kilogram at
30 June 2004, escalated for expected South African inflationary increases of
approximately 6% per annum; and
- capital cost estimates are based on current estimates of future
development costs to mine the current proven and probable reserves,
escalated for expected South African inflationary increases of approximately
6% per annum.
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| Group | | | Company |
| 2003 | 2004 | | 2004 | 2003 |
| R'000 | R'000 | | R'000 | R'000 |
| | 9. | NON-CURRENT INVESTMENTS AND
OTHER ASSETS | | |
| 59 213 | 77 387 | | Listed investments (see below) | - | - |
| 1 063 | 59 213 | | Opening balance | - | - |
| 2 688 | (12 209) | | Exchange differences | - | - |
| 71 792 | - | | Additions | - | - |
| (401) | - | | Disposals | - | - |
| (15 929) | 30 383 | | Mark-to-market adjustment | - | - |
| 12 889 | 15 006 | | Unlisted investments | 1 107 | 1 138 |
| 133 736 | 143 330 | | Investments in environmental rehabilitation trust funds | 12 975 | 9 836 |
| 125 928 | 133 736 | | Opening balance | 9 836 | 8 619 |
| (4 695) | - | | Disposed through sale of subsidiary | - | - |
| 1 704 | 2 000 | | Contributions | 2 000 | - |
| 10 858 | 7 594 | | Growth in environmental rehabilitation trust funds | - | 1 217 |
| (59) | - | | Rehabilitation payments from fund | 1 139 | - |
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| 205 838 | 235 723 | | Total non-current investments and other assets | 14 082 | 10 974 |
| 12 889 | 15 006 | | | Directors' valuation of the unlisted investments | 1 107 | 1 451 |
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Listed investments consist of:
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| Detail | | Number | Market value | Carrying value | Carrying value |
| | % | of | 2004 | 2004 | 2003 |
| | held | shares | R'000 | R'000 | R'000 |
| Drillsearch Energy Limited | # | 1 820 000 | 433 | 433 | 499 |
| Emperor Mines Limited(1) | 19.78% | 22 208 038 | 76 901 | 76 901 | 58 654 |
| Startrack Communications Limited | # | 1 125 000 | 44 | 44 | 50 |
| | Cape Tel Limited | # | 100 000 | 9 | 9 | 10 |
| | | | | 77 387 | 77 387 | 59 213 |
| # |
Represents a less than 1% shareholding. |
|
(1) |
Shareholding increased to 45.33% on 30 July 2004. |
The monies in the environmental rehabilitation trust funds are invested primarily in interest-bearing securities and equity-limited unit trusts and may be used only for environmental rehabilitation purposes.
Unlisted investments comprise investments in various unlisted companies in South Africa for which a fair value is not readily determinable.
The directors of the Company perform independent valuations of these unlisted investments on an annual basis to ensure that no significant decline, other than of a temporary nature, in value of the investments has occurred. |
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| Group | | | Company |
| 2003 |
2004 | | 2004 | 2003 |
| R'000 | R'000 | | R'000 | R'000 |
| | 10. | INVESTMENTS IN SUBSIDIARIES | | |
| | | Shares at cost, less provisions for diminution | 488 747 | 543 541 |
| | | Amounts owing by subsidiaries, less provision for diminution | 651 082 | 282 905 |
| | | | 1 139 829 | 826 446 |
| | | Amounts owing to subsidiaries | 223 507 | 237 411 |
| | | Net investment in subsidiaries | 916 322 | 589 035 |
| | | | | |
| | | The interest of the Company in the (loss)/profit
after taxation of its subsidiaries is: | | |
| | | Aggregate losses | (141 601) | (42 721) |
| | | Aggregate profits | 222 241 | 658 557 |
| | | A schedule showing the Company's financial interest in each
subsidiary is given in the Directors Report on page 54 | | |
| | | | | | |
| | 11. | INVESTMENT IN ASSOCIATE | | |
| - | - | | Opening carrying amount | - | - |
| 43 908 | - | | Acquired during year through the sale of a subsidiary company | - | - |
| (43 908) | - | | Net share of loss in associate | - | - |
| (43 674) | - | | Share of results before tax | - | - |
| (234) | - | | Share of tax
(refer to Note 6) | - | - |
| | | | | | |
| - | - | | Closing carrying amount | - | - |
| 33 500 | - | | Directors' valuation of shares | - | - |
| | |
The Group's effective share of income, expenses, assets, | | |
| | | liabilities and cash flows of the associate, is as follows: | | |
| | |
Income statement | | |
| | | Revenue | 257 444 | 228 758 |
| | | Cost of sales | (260 114) | (233 123) |
| | | Operating profit from gold | (2 670) | (4 365) |
| | | Other | |
