4th Quarter & Final Results
03 August 2000 - 4:24PM
UK Regulatory
RNS Number:9560O
Gold Fields Ld
3 August 2000
GOLD FIELDS LIMITED
Incorporated in the Republic of South Africa
Registration number 05/04181/06
Results for the quarter and 12 months ended 30 June 2000
www.goldfields.co.za
Highlights
* Net operating profit up 30%.
* Earnings up 57% to R370 million before exceptionals.
* Cash costs down from $217 to $207 per ounce.
* Beatrix, Tarkwa and Kloof had good quarters, Oryx substantially improved.
* Net earnings for the year are R651 million.
South African Rands United States Dollars
International Accounting Standards Basis
(Figures are in millions unless otherwise stated)
Salient features
Quarter Quarter
March June June March
2000 2000 2000 2000
29 818 28 623 kg Gold production* oz(000) 920 959
44 001 45 830 R/kg Cash costs* $/oz 207 217
5 520 5 815 000 Tons milled 000 5 815 5 520
58 911 62 093 R/kg Revenue $/oz 281 291
257 239 R/ton Operating costs $/ton 35 41
377 418 Rm Operating profit $m 61 60
Earnings before exceptional items
235 370 Rm - net of taxation $m 54 37
232 314 Rm Net earnings $m 46 37
51 69 SA c.p.s. US c.p.s. 10 8
* Attributable - All Companies wholly-owned except for Tarkwa (71.1%).
South African Rands
International Accounting Standards Basis
(Figures are in millions unless otherwise stated)
INCOME STATEMENTS
Year ended Quarter
June June June March June
1999 2000 1999 2000 2000
5 731.2 7 065.3 1 604.3 1 793.4 1 804.3 Revenue
5 676.8 6 986.3 1 575.0 1 793.4 1 804.3 Spot gold sales
54.4 79.0 29.3 0.0 0.0 Hedging profit
4 303.5 5 666.0 1 277.7 1 416.1 1 386.3 Operating cost
1 427.7 1 399.3 326.6 377.3 418.0 Operating profit
21.8 (63.0) 55.4 (13.7) (27.4) Gold inventory change
395.5 633.7 160.9 158.2 143.8 Amortisation and
depreciation
1 010.4 828.6 110.3 232.8 301.6 Net operating profit
221.2 117.1 33.8 35.9 47.1 Other income
(86.4) (74.3) (22.0) (22.7) (27.9) Business development
Profit before tax and
1 145.2 871.4 122.1 246.0 320.8 exceptional items
(2 706.7) (270.1) (2 696.1) (5.8) (108.0) Exceptional loss
(1 561.5) 601.3 (2 574.0) 240.2 212.8 Profit/(loss) before
taxation
(826.2) (38.5) (685.3) 4.4 (108.4) Mining and income taxation
181.8 193.8 (23.9) 26.5 93.5 - Normal taxation
(1 008.0) (232.3) (661.4) (22.1) (201.9) - Deferred taxation
(735.3) 639.8 (1 888.7) 235.8 321.2 Profit/(loss) after taxation
12.0 (10.9) 5.5 3.9 6.8 Minority interest
(747.3) 650.7 (1 894.2) 231.9 314.4 Net earnings/(loss)
EXCEPTIONAL ITEMS
(85.2) (101.8) (18.7) (7.1) (7.4) Retrenchment costs
(2 311.7) (100.0) (2 311.7) 0.0 (100.0) Impairment of assets
(368.0) 0.0 (368.0) 0.0 0.0 Goodwill write off
0.0 (66.3) 0.0 0.0 0.0 Hedge buy back costs
58.2 (2.0) 2.3 1.3 (0.6) Other
(2 706.7) (270.1) (2 696.1) (5.8) (108.0) Total exceptional items
704.1 72.0 695.5 2.5 51.8 Taxation
0.0 25.2 0.0 0.0 0.4 Minorities share of
exceptional items
Net exceptional items
(2 002.6) (172.9) (2 000.6) (3.3) (55.8) after tax & minorities
Net earnings/(loss)
(230) 144 (422) 51 69 per share (cents)
Net earnings (Rm) before
1 255.3 823.6 106.4 235.2 370.2 exceptional items, net
of tax
Earnings per share (cents)
before
386 183 24 52 82 exceptional items, net of
tax
SA Rand/US$ conversion rate
United States Dollars
International Accounting Standards Basis
(Figures are in millions unless otherwise stated)
Quarter Year ended
June March June June June
2000 2000 1999 2000 1999
Revenue 262.6 284.7 261.7 1 114.4 947.3
Spot gold sales 262.6 284.7 256.9 1 101.9 938.3
Hedging profit 0.0 0.0 4.8 12.5 9.0
Operating cost 201.8 224.8 208.5 893.6 711.3
Operating profit 60.8 59.9 53.2 220.8 236.0
Gold inventory change (4.0) (2.2) 9.0 (9.9) 3.6
Amortisation and depreciation 20.9 25.1 26.2 100.0 65.4
Net operating profit 43.9 37.0 18.0 130.7 167.0
Other income 6.9 5.7 5.5 18.5 36.6
Business development (4.1) (3.6) (3.6) (11.7) (14.3)
Profit before tax and
exceptional items 46.7 39.1 19.9 137.5 189.3
Exceptional loss (15.7) (0.9) (439.8) (42.6) (447.4)
Profit/(loss) before taxation 31.0 38.2 (419.9) 94.9 (258.1)
Mining and income taxation (15.8) 0.7 (111.8) (6.1) (136.6)
- Normal taxation 13.6 4.2 (3.9) 30.5 30.1
- Deferred taxation (29.4) (3.5) (107.9) (36.6) (166.7)
Profit/(loss) after taxation 46.8 37.5 (308.1) 101.0 (121.5)
Minority interest 1.0 0.6 0.9 (1.7) 2.0
Net earnings/(loss) 45.8 36.9 (309.0) 102.7 (123.5)
EXCEPTIONAL ITEMS
Retrenchment costs (1.1) (1.1) (3.1) (16.1) (14.1)
Impairment of assets (14.6) 0.0 (377.1) (15.8) (382.1)
Goodwill write off 0.0 0.0 (60.0) 0.0 (60.8)
Hedge buy back costs 0.0 0.0 0.0 (10.5) 0.0
Other 0.0 0.2 0.4 (0.2) 9.6
Total exceptional items (15.7) (0.9) (439.8) (42.6) (447.4)
Taxation 7.5 0.4 113.5 11.4 116.4
Minorities share of
exceptional items 0.1 0.0 0.0 4.0 0.0
Net exceptional items
after tax & minorities (8.1) (0.5) (326.3) (27.2) (331.0)
Net earnings/(loss)
per share (cents) 10 8 (69) 23 (38)
Net earnings (Rm) before
exceptional items, net of tax 53.9 37.4 17.3 129.9 207.5
Earnings per share (cents)
before exceptional items,
net of tax 12 8 4 29 64
SA Rand/US$ conversion rate 6.87 6.30 6.13 6.34 6.05
* In reviewing the quarterly and financial year results against the
comparative periods, the following needs to be taken into account:
The results relating to Oryx were capitalized up to 30 June 1999;
Driefontein was proportionately accounted for (38%) to December 1998,
since then 100%; and The Tarkwa surface operation was in a build-up stage
South African Rands United States Dollars
International Accounting Standards Basis
(Figures are in millions unless otherwise stated)
BALANCE SHEETS
June June June June
1999 2000 2000 1999
7 417.6 8 214.4 Shareholders' equity 1 213.4 1 226.1
237.0 203.2 Outside shareholders' interest 30.0 39.1
3 767.6 3 535.3 Deferred taxation 522.2 622.7
99.1 135.4 Long-term loans 20.0 16.4
307.8 319.5 Environmental rehabilitation provisions 47.2 50.9
248.2 224.8 Post-retirement health care provisions 33.2 41.1
12 077.3 12 632.6 1 866.0 1 996.3
Represented by:
12 297.9 12 455.1 Mining and mineral assets 1 839.7 2 032.7
180.4 244.1 Investments 36.1 29.8
(401.0) (66.6) Working capital (9.8) (66.2)
255.5 514.9 - Cash and deposits 76.1 42.4
592.1 564.8 - Other current assets 83.4 97.9
(1 176.3) (1 146.3) - Current liabilities (169.3) (194.5)
(72.3) - - Short-term loan - (12.0)
12 077.3 12 632.6 Net assets 1 866.0 1 996.3
SA Rand/US$ conversion rate 6.77 6.03
South African Rands
International Accounting Standards Basis
(Figures are in millions unless otherwise stated)
Year ended Quarter
June June March June
1999 2000 2000 2000
1 064.7 1 224.3 327.3 369.9 Cash flow from operating activities
1 145.2 871.4 246.0 320.8 Profit before tax and exceptional items
(2 706.7) (270.1) (5.8) (108.0) Exceptional loss
395.5 633.7 158.2 143.8 Amortisation and depreciation
(18.6) 55.0 (25.7) (39.7) Change in working capital
(141.4) (178.3) (69.7) (55.8) Taxation paid
2 390.7 112.6 24.3 108.8 Other non cash items
(123.0) (225.2) (90.7) - Dividends paid
(1 029.9) (770.7) (157.4) (266.6) Cash utilised in investing activities
(1 056.7) (657.7) (156.5) (151.2) Capital expenditure - net
26.8 (63.3) (0.9) (65.7) (Purchase)/disposal of investments - net
- (49.7) - (49.7) Investments in trusts and
medical payments
(262.2) 31.0 (73.6) 11.3 Cash flow from financing activities
(350.4) 259.4 5.6 114.6 Net cash inflow/(outflow)
Translation adjustment
605.9 255.5 394.7 400.3 Cash at beginning of period
255.5 514.9 400.3 514.9 Cash at end of period
United States Dollars
International Accounting Standards Basis
(Figures are in millions unless otherwise stated)
Quarter Year ended
June March June June
2000 2000 2000 1999
Cash flow from operating activities 53.8 52.5 191.7 175.9
Profit before tax and exceptional items 46.7 39.1 137.5 189.3
Exceptional loss (15.7) (0.9) (42.6) (447.4)
Amortisation and depreciation 20.9 25.1 100.0 65.4
Change in working capital (6.0) (3.9) 8.7 (3.0)
Taxation paid (8.2) (10.6) (29.7) (23.5)
Other non cash items 16.1 3.7 17.8 395.1
Dividends paid - (13.8) (36.6) (20.3)
Cash utilised in investing activities (39.3) (24.0) (121.6) (170.3)
Capital expenditure - net (22.3) (23.9) (103.7) (174.7)
(Purchase)/disposal of investments - net (9.7) (0.1) (10.0) 4.4
Investments in trusts and medical payments (7.3) - (7.9) -
Cash flow from financing activities 1.7 (11.2) 4.9 (43.3)
Net cash inflow/(outflow) 16.2 3.5 38.4 (58.0)
Translation adjustment (1.2) (6.7) (4.7) (1.9)
Cash at beginning of period 61.1 64.3 42.4 102.3
Cash at end of period 76.1 61.1 76.1 42.4
COMMENTARY
FINANCIAL
A small increase in revenue, a R30 million reduction in operating costs and a
R67 million tax gain quarter on quarter resulted in a 57 per cent increase in
earnings before exceptional items, from R235 million in the March quarter to
R370 million for the quarter ended 30 June 2000.
Revenue was R11 million higher than the previous quarter. The lower gold price
received of US$281 per ounce, as compared to the previous quarter's US$291 per
ounce, was more than offset by the exchange rate which weakened from an
average of US$1 = R6.30 to US$1 = R6.87, quarter on quarter. This resulted in
a realised price for the June quarter of R62 093 per kilogram compared to R58
911 per kilogram for the March quarter, an increase of 5 per cent. However,
increased revenue from the higher gold price was largely offset by a 4 per
cent reduction in gold produced to 920 000 attributable ounces.
The reduction in operating costs quarter on quarter, of R30 million, was due
mainly to continued tight cost control at Driefontein, whilst other operations
maintained their costs at the same levels as the previous quarter.
The operating margin improved to 23 per cent for the quarter compared to 21
per cent for the previous quarter, despite the lower production. The group is
striving to ensure that its operating margin is consistently maintained above
25 per cent.
Net operating profit after amortisation at R302 million was 30 per cent higher
than that achieved in the previous quarter.
Libanon reported an operating loss of R47 million for the June quarter. A
decision has been taken to downscale operations to reduce the drain on
profits. It has also been decided to write-down the carrying value of the
mining assets by R100 million. And this has been reflected as an exceptional
item. The net effect of this write-down on after tax earnings is R54 million.
Where possible employees will be redeployed elsewhere within the group.
Mining taxation increased from R27 million in the March quarter to R94 million
in the June quarter due to the progressive impact of the mining tax formula
and the consequent impact on the profit to revenue ratio. A reversal of
deferred taxation of R202 million was made during the quarter compared to a
reversal in the previous quarter of R22 million, mainly as a result of
releasing prior year deferred taxation at the Beatrix/Oryx tax entity of R162
million, which resulted from the lifting of ring fencing at these mines and
the reversal of R46 million deferred taxation resulting from the
R100 million write down at Libanon. The net tax impact for the June quarter
was a credit of R108 million. Earnings in the March quarter also included a tax
credit of R41 million relating to the removal of ring fencing at Beatrix and
Oryx. If these once-off tax adjustments and the write down of Libanon were
excluded from both quarters, normalised net earnings for the June and March 2000
quarters would have been R206 million and R191 million respectively.
Net earnings, after taking account of the write-down of Libanon mining assets,
was R314 million for the June quarter compared to R232 million in the March
quarter, an increase of 35 per cent.
A term of the recently announced merger with Franco-Nevada Mining Corporation
is that neither group is to declare any dividends pending finalisation of the
transaction. Accordingly, Gold Fields will not declare a final dividend for
the year ended 30 June 2000. The intention is that the inaugural dividend of
Gold Fields International will take account of this deferral.
OPERATIONS
Management deeply regrets the methane gas explosion at Beatrix on 15 May 2000,
in which seven employees tragically lost their lives. This incident masked a
quarter of otherwise exceptional improvements in the group's overall safety
record. Attributable gold produced in the June quarter was 920 000 ounces
compared to 959 000 ounces in the March quarter.
Cost per ton of ore milled declined from R257 in the March quarter to R239 in
the current quarter. This improvement was assisted by the increase in surface
tonnage at Driefontein and Tarkwa.
The lower operating cost, assisted by the weakening in the exchange rate,
resulted in a decrease in attributable cash costs from US$217 per ounce in the
March quarter to US$207 per ounce in the June quarter.
COMMENTARY
Production at Driefontein was lower than the previous quarter due to lower
face grades at the high grade No 4 East Shaft, which are now improving. At
Kloof, tons milled increased marginally whilst the grade was steady at 15.2
grams per ton, ignoring the benefit of the plant clean-up in the previous
quarter of 552 kilograms. At Leeudoorn the increase in tons milled resulted in
a decline in grades but a small increase in gold produced. The cost per ton
milled at Leeudoorn improved considerably quarter on quarter from R575 per ton
to R489 per ton. At Libanon the lack of pay face has resulted in a lower yield
at 4.3 grams per ton compared to 5.6 grams per ton in the previous quarter,
and thus gold output declined 20 per cent to 1 202 kilograms.
Beatrix Mine had an excellent quarter showing increased production due to a
return to more normal yields, while at Oryx the increased production and
higher gold price led to a breakeven operating profit for the quarter. Both
mines increased production as a result of an improvement in mining mix. St
Helena again reported a loss due to a lower yield associated with a lack of
mining flexibility. The mine is being restructured and development increased
to provide more and improved mining flexibility.
Tarkwa again reported an increase in production and earnings to record levels.
With the impact of the recently announced transaction with Ashanti regarding
the Teberebie operations, production is set to increase to an annualised rate
of more than 400 000 ounces. In addition, investigations continue into the
feasibility of a carbon in leach expansion, which would further increase
production.
PROPOSED MERGER WITH FRANCO-NEVADA
As announced on 13 June 2000, the group plans to merge with Franco-Nevada
Mining Corporation Limited. The merged group will be renamed Gold Fields
International. The approvals of the South African Minister of Finance and the
South African Reserve Bank are awaited. Upon receipt of these approvals
documentation will be sent to shareholders for their approval of the
associated scheme of arrangement. Agreement has been reached with the
Securities Regulation Panel on a reduced break fee of US$15 million plus a fee
equivalent to one per cent of the market value of Gold Fields Limited as at 12
June 2000, equivalent to a total break fee of US$32.4 million. Shareholders
will be kept advised of developments regarding the transaction.
OUTLOOK
The group's key value drivers are safety, productivity and cost performance.
Increased production provides the most leverage for the group due to the
labour intensive nature of the group's operations. To this end, the group is
actively investigating ways of removing barriers to improved safety and higher
production, including enhanced mining flexibility through increased
development, improved environmental conditions, education and training and a
gradual move away from longwall to sequential grid mining.
Development to increase reserves, and thus flexibility, has become a group
focus and already positive results are beginning to emerge.
In addition, as mentioned previously, the group is investigating opportunities
for investment in cost reduction and, specifically, investigations continue
into future options regarding metallurgical facilities at the West Wits
operations. A decision in this regard will be made during the September
quarter. These initiatives are all expected to bear fruit, but not in the
short term.
GENERAL
The unaudited results for the quarter have been prepared on the International
Accounting Standards basis. The detailed financial, operational and
developmental results for the June 2000 quarter are submitted in this report.
ACCOUNTING POLICIES
These consolidated quarterly condensed financial statements are prepared in
accordance with IAS 34, Interim Financial Reporting.
Chris Thompson
Chairman and Chief Executive Officer
Investor and Media Enquiries
Willie Jacobs
Tel: (011) 644-2460 Fax: (011) 484-0639
E-mail: williej@goldfields.co.za
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