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Currently viewing: Reviewed condensed consolidated interim financial statements / Next: Income statement |
Reviewed preliminary condensed consolidated financial statementsNotes to the condensed consolidated financial statements Basis of preparation The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports and the requirements of the Companies Act of South Africa. The Listings Requirements require preliminary reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. These condensed consolidated financial statements were authorised by the Board of Directors for issue on 15 February 2019. The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual financial statements except for the adoption of IFRS 9 Financial Instruments (IFRS 9) and IFRS 15 Revenue from Contracts with Customers (IFRS 15). Auditor's review The condensed consolidated financial statements of Gold Fields Limited for the year ended 31 December 2018 have been reviewed by the company's auditor, KPMG Inc. The auditor's report does not necessarily report on all of the information contained in this media release. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should refer to the media release for a copy of the auditor's report. Changes in significant accounting policies The group adopted IFRS 15 and IFRS 9 with effect from 1 January 2018. IFRS 15 This IFRS introduces a new revenue recognition model for contracts with customers and establishes a comprehensive framework for determining whether, how much and when revenue is recognised. The Group assessed the impact of adopting IFRS 15 and determined the impact as follows:
The Group has adopted IFRS 15 using the cumulative effect method (without practical expedients), with the effect of initially applying this standard at the date of initial application (i.e. 1 January 2018). Accordingly, the information presented for prior periods has not been restated. The impact on opening retained earnings has been disclosed in the statement of changes in equity (this had no impact on the non-controlling interest). There was no material impact on the Group's income statement and statements of financial position and cash flows for the year ended 31 December 2018. IFRS 9 This IFRS sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement. This IFRS contains a new classification and measurement approach for financial assets that reflects the business model in which the assets are managed and their cash flow characteristics. The three principal classification categories for financial assets are: amortised cost, fair value through profit or loss (FVTPL) and fair value through other comprehensive income (FVOCI). The new classification does not have a significant impact on the Group accounting for financial assets. The Group's available-for-sale financial assets will be designated as FVOCI. Given the historically low risk of impairment in respect of receivables and the nature of receivables, the change from the “incurred loss” model to the “expected credit loss” model did not have a material impact on the measurement of financial assets. There was no material impact on the Group's income statement and statements of financial position and cash flows for the year ended 31 December 2018. Credit facilities successfully refinanced R1,500 million Nedbank revolving credit facility On 13 April 2018, Gold Fields Operations Limited and GFI Joint Venture Holdings (Proprietary) Limited entered into a R1,500 million revolving credit facility with Nedbank Limited which became available on 8 May 2018. The purpose of this facility was to fund (i) capital expenditure of the Gold Fields group, and (ii) general corporate and working capital requirements of the Gold Fields group. The final maturity date of this facility is five years from the financial close date, namely 8 May 2023. US$100 million Senior Secured revolving credit facility On 12 June 2017, Gold Fields Ghana Limited and Abosso Goldfields Limited (as Borrowers) entered into a US$100 million senior secured revolving credit facility with the Standard Bank of South Africa Limited (acting through its Isle of Man branch) (as Original Lender and Agent) and Stanbic Ghana Limited (as Security Agent) which became available on 17 July 2017. The purpose of this facility was (i) to refinance the outstanding balance of US$45 million under the US$70 million senior secured revolving credit facility (which matured on 17 July 2017); (ii) to finance working capital requirements; (iii) for general corporate purposes; and (iv) for capital expenditure purposes of each borrower. The final maturity date of this facility is three years from the financial close date, namely 17 July 2020. On 22 March 2018, the Borrowers, the Original Lender and the Security Agent entered into an Amendment and Restatement Agreement to release any and all security interests created in favour of the Security Agent (the Security). The effective date of the release of the Security was 22 March 2018. On 23 November 2018, Gold Fields Ghana Limited and Abosso Goldfields Limited and The Standard Bank of South Africa Limited (acting through its Isle of Man branch) entered into the Fifth Amendment and Restatement Agreement which further amended the facility agreement. The effective date of the Fifth Amendment and Restatement Agreement was 30 November 2018. The final maturity date is the date falling three years after the effective date, namely 30 November 2021. US$1,290 million term loan and revolving credit facilities
Non-recurring items Asset impairments and write-offs Asset impairments and write-offs recognised by the Group during 2018 include: South Deep
There were no further impairments at 31 December 2018 using the following assumptions:
Impairment of investments and assets The impairment of US$39 million related mainly to the impairment of FSE which was based on the fair value less cost of disposal of the investment which was directly derived from the market value of Lepanto Consolidated Mining Company. Loss on sale of inventory and assets The loss on sale of inventory and assets related to the sale of mining fleet and heavy machinery equipment and inventory at Tarkwa as part of the transition to contractor mining and amounted to US$9 million and US$38 million, respectively. Restructuring costs The restructuring costs of US$114 million comprised restructuring costs at Tarkwa of US$89 million with the transition to contractor mining as well as restructuring costs at Damang and South Deep of US$14 million and US$11 million, respectively. Acquisition of a 45 per cent interest in Asanko On 29 March 2018, the Group entered into certain definitive agreements (the JV Transaction) with Asanko Gold Inc. (Asanko) pursuant to which, among other things:
On 20 June 2018, Gold Fields and Asanko received approval of the JV Transaction from the Ghanaian Minister of Lands and Natural Resources and the JV Transaction closed on 31 July 2018 once all conditions precedent were met. In consideration for its interests in the Joint Arrangement, Gold Fields:
Recognition and measurement Gold Fields and Asanko have joint control as each party has 50 per cent of the voting rights. The Asanko transaction is structured as a separate vehicle and the Group has a residual interest in the net assets of Asanko. Accordingly, the Group has classified its interest in Asanko as a joint venture. Fair value measured on a provisional basis The fair value of identifiable net assets acquired has been performed on a provisional basis, pending completion of review and sign off of the life of mine model, including the Reserves and Resources, by the Group Competent Person. Any changes to the acquisition life of mine model and/or Reserves and Resources could result in a material change to the cash flows used to determine the fair value of the identifiable net assets acquired. If new information is obtained within one year from the date of acquisition about facts and circumstances that existed at the date of acquisition and adjustments are required to be made to the provisional fair values of the identifiable net assets, or if any additional provisions that existed at the date of acquisition are identified, then the accounting for the acquisition will be revised. Consideration transferred The following table summarises the acquisition date fair value of the consideration transferred: 2018
Gain on acquisition of Asanko The gain on acquisition was determined as follows: 2018
Silicosis and tuberculosis class and individual actions As previously reported, the Gold Working Group (comprising African Rainbow Minerals, Anglo American SA, AngloGold Ashanti, Gold Fields, Harmony and Sibanye-Stillwater) (the “GWG Parties”) concluded a settlement agreement (the “Settlement Agreement”) with the attorneys representing claimants in the silicosis and tuberculosis class action litigation on 3 May 2018. The Settlement Agreement provides meaningful compensation to all eligible workers suffering from silicosis and/or tuberculosis who worked in the GWG Parties' mines from 12 March 1965 to the effective date of the Settlement Agreement. The Settlement Agreement is subject to certain suspensive conditions, including that an unconditional order of court, sanctioning the Settlement Agreement to make the Settlement Agreement an order of court, is obtained from the High Court of South Africa (Gauteng Local Division, Johannesburg) (the “Court”). The first stage of the Court approval application comprised an ex parte application which was heard on 13 December 2018. Following this hearing, the Court issued an order setting out how members of the settling classes and other interested parties should be informed of the proposed settlement and how they may make representations to the Court regarding the settlement, should they wish. The second stage of the approval application makes provision for members of the settling classes and interested parties to make submissions to the Court, if they so wish, on the settlement. The hearing of the second stage of the approval application will take place from 29 to 31 May 2019. Should there be no notifications of objections to the settlement, this hearing will take place on 3 April 2019. If and when the Court has approved the settlement, there will then be a period in which members of the settling classes may indicate whether they wish to opt out of the settlement. The Settlement Agreement provides that any member of the settlement classes who doesn't opt out is automatically eligible to submit a claim. In terms of the settlement, a settlement trust will be constituted. A website (www.SilicosisSettlement.co.za) and a Facebook page (www.facebook.com/silicosissettlement) were established where miners, ex-miners or their dependants can register an interest in making a claim from the settlement trust once it is established, and learn more about the settlement. Provision raised Gold Fields has provided for the estimated cost of the above settlement based on actuarial assessments and the provisions of the Settlement Agreement. At 31 December 2018, the provision for Gold Fields' share of the settlement of the class action claims and related costs amounts to US$25 million (R368 million). The nominal value of this provision is US$35 million (R507 million). This provision compares to the initial amount raised in June 2017 of US$30 million (R390 million). The decrease is due to a change in the timing of expected cash flows. The ultimate outcome of this matter remains uncertain, with a possible failure to fulfil all the suspensive conditions, including the Settlement Agreement being approved by the Court. The provision is consequently subject to adjustment in the future. South Deep tax dispute During the September 2014 quarter, the South African Revenue Service (SARS) issued a Finalisation of Audit Letter stating that SARS has disallowed GFI Joint Venture Holdings (Pty) Ltd's (GFIJVH) additional capital allowance claim. The Group objected to SARS' decision and vigorously defended its position. After no resolution was achieved during a Tax Court sitting in 2017, GFIJVH appealed to the High Court. The Group announced that on 30 May 2018 GFIJVH and SARS entered into a confidential settlement agreement (as provided for in the Tax Administration Act) in full and final settlement of this matter. As a result of the settlement GFIJVH has recognised an additional R2,708 million (US$185 million) of capital allowances with a tax effect on this amount of R785 million (US$54 million). Segment reporting The net (loss)/profit per the income statement reconciles to the net (loss)/profit in the segmental operating and financial results as follows: 2018
2017
Additional notes include
N.J. Holland |
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