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Supplemental to the condensed consolidated financial statements, a reconciliation from SA GAAP to US GAAP results. This reconciliation is provided for illustrative purposes only, as we prepare consolidated financial statements prepared in accordance with US GAAP, together with related notes, which are included under Item 18 in Durban Roodepoort Deep, Limited's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission on or about 30 September 2004. |
Statements of operations information for the years ended 30 June
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| | 2004 | 2003 | 2002 |
| | Notes | R'000 | R'000 | R'000 |
| (Loss)/profit after taxation determined under SA GAAP | | (716 430) | 370 905 | (510 534) |
| Adjusted for: | | | | |
| Convertible debt instruments | A | 16 587 | 72 387 | - |
| Derivative instruments | B | - | - | (211 134) |
| Financial instruments - listed investments | C | (30 383) | 15 929 | (27 245) |
| Accounting for business combinations | D | (1 917) | 13 033 | (33 636) |
| Stock based compensation costs | E | (15 936) | (39 060) | (25 372) |
| Impairment of assets | F | (23,819) | 35 503 | - |
| Argonaut ore reserves | G | 11 100 | 11 100 | 11 100 |
| Other | | - | (3 352) | 7 407 |
| Deferred taxation | 376 121 | (375 220) | 253 456 |
| Effect of US GAAP Adjustments | 331 753 | (269 680) | (25 424) |
| Net (loss)/profit determined under US GAAP | (384 677) | 101 225 | (535 958) |
| Net (loss)/profit determined under US GAAP ($'000) | (55 750) | 11 374 | (51 709) |
| Balance Sheet information as at 30 June | | | | |
| Stockholders' equity determined under SA GAAP | | 564 057 | 456 066 | 438 022 |
| Adjusted for: | | | | |
| Convertible debt instruments | A | (66 656) | (84 262) | - |
| Derivative instruments | B | - | - | (831 399) |
| Financial instruments - listed investments | C | - | - | 469 |
| Accounting for business combinations | D | 41 487 | 56 707 | (12 639) |
| Impairment of assets | F | (23 819) | (35 503) | - |
| Argonaut ore reserves | G | 11 100 | 22 200 | 33 300 |
| Other | | 2 | 2 | 7 258 |
| Deferred taxation | - | (376 121) | 248 519 |
| Effect of US GAAP Adjustments | (37 886) | (416 977) | (554 492) |
| Stockholders' equity/(deficit) determined under US GAAP | 526 171 | 39 089 | (116 470) |
| Stockholders' equity/(deficit) determined under US GAAP ($'000) | 83 852 | 5 236 | (15 471) |
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| Notes |
| A |
Accounting for convertible debt instruments
Under SA GAAP, on the issue of convertible debt instruments, the issuer of the financial instrument is required to classify the instrument's component parts as a liability or as equity in accordance with the substance of the contractual arrangement. The fair value of the conversion option is determined accordingly and is recognised and presented separately in shareholders' equity. The obligation to make future payments of principle and interest to note holders is calculated by discounting the stream of future payments at the prevailing market rate for a similar liability that does not have an associated equity component as a long-term liability on the amortized cost basis until extinguished on conversion or maturity. Under US GAAP no separate value is attributed to the equity component and consequently the total face value of the loan notes is recognized as debt. The interest rate is calculated using the coupon rate and any premium/discount on redemption.
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| B |
Accounting for financial instruments - derivatives
Under SA GAAP, AC133 was adopted with effect from 1 July 2002, whereby certain financial instruments are recorded at fair value. This is consistent with US GAAP.
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| C |
Accounting for listed investments
Under SA GAAP, DRDGOLD has elected that listed investments are classified as held for trading investments and are recorded at fair value with unrealised gains and losses included in earnings for the relevant period. Under US GAAP, listed investments are carried at fair value with unrealised gains and losses reflected as a component of stockholders' equity.
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| D |
Accounting for business combinations
Under SA GAAP, the fair value of the purchase consideration given in a business combination is determined at the date of acquisition. Under US GAAP the fair value is determined in accordance with paragraph 74 of APB opinion 16, such that the market prices for a reasonable period before and after the date on which the terms of the acquisition are agreed to and announced are considered in determining the fair value of the securities issued.
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| E |
Stock based compensation costs
Under US GAAP, the cost of compensatory plans are recognised as an expense over the periods in which the employee performs the related services. SA GAAP does not require the recognition and measurement of stock based compensation benefits.
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| F |
Impairment of assets
Under SA GAAP, mining assets are evaluated for impairment based on the latest available information. For US GAAP purposes only impairment indicators in existance at the balance sheet date, are considered. Accordingly there is a timing difference in impairments as recorded under SA GAAP and US GAAP.
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G |
Argonaut ore reserves
In August 1997, DRDGOLD acquired the mineral rights represented by the Argonaut project. During 1998 exploration activities were suspended, however these were resumed in 2001. Since 2001 DRDGOLD has been depreciating these rights under SA GAAP, however, for US GAAP purposes the suspension of exploration activities in 1998 triggered an irreversible impairment of the mineral rights.
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