Report of the independent auditors

Transcription

1 Report of the independent auditors to the members of Randgold Resources Limited We have audited the accompanying financial statements of Randgold Resources Limited (the company) which comprise the statement of financial position of the company as of ember and the statement of changes in equity and statement of cash flows for the year then ended and consolidated statement of financial position of the company and its subsidiaries and joint ventures (the group) as of ember and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union. This report is made solely to the company s members, as a body, in accordance with Article 113A of the Companies (Jersey) Law Our audit work has been undertaken so that we might state to the company s members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the statement of directors responsibilities, the directors are responsible for the preparation of the financial statements in accordance with Companies (Jersey) Law 1991 and for being satisfied that they give a true and fair view. The directors are responsible for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The directors are required to comply with the requirements of rules and 9.8.7A of the Listing Rules of the UK Financial Conduct Authority in preparing this annual report. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council's Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at Opinion on financial statements In our opinion the financial statements: give a true and fair view of the state of the group s and the company s affairs as at ember and of the group s profit for the year then ended; have been properly prepared in accordance with IFRS as adopted by the European Union; and have been prepared in accordance with Companies (Jersey) Law Separate opinion in relation to IFRSs as issued by the IASB As explained in note 2 to the consolidated financial statements, the group, in addition to complying with its obligation to prepare consolidated financial statements in accordance with IFRS as adopted by the European Union, has also complied with IFRS as issued by the International Accounting Standards Board (IASB). In our opinion, the consolidated financial statements comply with IFRS as issued by the IASB. Our assessment of risks of material misstatement We identified the following risks that we believe to have had the greatest impact on our audit strategy and scope: as detailed in notes 3 and 19, the group s Malian operations are subject to taxation claims by the State of Mali totalling US$123.1 million which are fully disputed by the group. The group has taken professional advice with regards to the claims and has commenced international arbitration proceedings against the State of Mali disputing the validity of the claims. Given the material nature of the claims and ongoing nature of the disputes and international arbitration proceedings, the recognition and presentation of any liabilities or contingent liabilities arising as a result of the taxation claims represent key judgements and was a risk for our audit; as detailed in notes 3, 7 and 17, the group is carrying value added tax (TVA) receivables totalling US$125.7 million in respect of its Loulo and Gounkoto operations, in addition the equity accounted Kibali joint venture based in the Democratic Republic of Congo holds a further US$81.0 million of TVA receivables of which, given the group s 45% joint venture interest, US$36.4 million is attributable to the group. The group has experienced significant delays obtaining refunds for the amounts due from the State of Mali and is offsetting taxes payable against the receivables in Mali under the terms of its Mining Convention. A number of refunds have been received in respect of TVA by the Kibali joint venture, however these have not been on a timely basis. Given the delays in recovering the amounts due, the carrying value and presentation of TVA receivables represent key judgements and was considered to be a risk for our audit; the group has incurred substantial capital expenditure as part of its development of the Loulo Underground mine and has advanced significant funding to the Kibali joint venture for the development of the Kibali gold mine. The existence, accuracy and completeness of capital expenditure at these mines represented a risk for our audit given the material nature of capital expenditure. Additionally as discussed in note 3, judgement was required by management in the group s determination of the date certain Kibali assets were brought into use and when depreciation commenced during the year, together with the allocation of costs between operating expenditure, ore stockpiles and capital expenditure. This judgement added to the risk for our audit; Annual Report Randgold Resources 177

2 Report of the independent auditors (continued) as detailed in note 3, the assessment of any impairment to the carrying value of mining assets requires significant estimation by management, including estimates relating to key assumptions included in impairment models. Key assumptions include future gold prices, future production volumes, future production costs and appropriate discount rates. The carrying value of mining assets is considered to represent a risk for our audit given the 29% reduction in the spot gold price during the year and the impairments recorded by other gold producers in ; as detailed in note 2, the group has adopted IFRS 11 Joint arrangements in the year and restated prior periods accordingly. While not requiring significant judgement or estimation, the accounting treatment and presentation of joint ventures following the group s adoption of IFRS 11 had a pervasive impact on the financial statements and was therefore considered to be a risk for our audit; and the risk of management override of internal control exists in any entity and the presence of significant estimates and judgements as detailed in note 3 increase this risk. In addition, International Standards on Auditing (UK & Ireland) state that this risk must always be treated as significant. The report of the audit committee describes the audit committee s assessment of each of these risks. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. We determined materiality for the financial statements as a whole to be US$30.2 million, which equated to 7.5% of profit before income tax and represents 0.1% of equity. We consider profit before income tax to be the most significant determinant of the group s financial performance and therefore an appropriate basis for materiality. On the basis of our risk assessment, together with our assessment of the group s control environment, our judgment is that performance materiality for the financial statements should be 75% of materiality, which equates to US$22.7 million for the financial statements as a whole. Our objective in adopting this approach is to ensure that total detected and undetected audit differences do not exceed our materiality of US$30.2 million for the financial statements as a whole. We agreed with the audit committee that we would report to the committee all individual audit differences identified during the course of our audit in excess of US$0.8 million. We also agreed to report differences below these thresholds that, in our view, warranted reporting on qualitative grounds. An overview of the scope of our audit Our group audit scope focused on the group s five principle operating locations, each of which is subject to a full scope audit for the year ended ember. The five principle operating locations include two joint ventures. Our audit includes a combination of tests of controls and substantive procedures at each location. Together with the parent company and its group consolidation, which were also subject to a full scope audit for the year ended ember, these locations represent the principal business units of the group and account for 100% of the group s revenue, approximately 98% of the group s profit before income tax and approximately 98% of the group s total assets. Audits of these locations are performed at a materiality level calculated by reference to a proportion of group materiality appropriate to the relative scale of the business concerned. The audits of each of these locations are principally performed in Mali, the Democratic Republic of Congo and the Côte d Ivoire, as well as the audit of corporate accounting functions in Jersey and South Africa. The audits are conducted by BDO LLP. As part of our audit strategy, the Responsible Inividual or his senior audit managers visit each of the five operating locations each year. The remaining components of the group include nonsignificant holding companies and these components were principally subject to analytical review procedures. The way in which we scoped our response to the risks identified above was as follows: we critically reviewed the group s mining conventions, arbitration filings and correspondence with the State of Mali to consider the extent to which the directors assessment that any contingent liabilities associated with the taxation claims was remote remained appropriate. We verified the completeness and accuracy of the claim values to the group s tax correspondence, and evaluated the competence and objectivity of professional advisors relied upon by management. We obtained confirmations from those local and international legal and tax advisors which supported the directors assessment that the claims were without legal merit; we obtained and considered the group s correspondence with tax authorities in respect of TVA for indicators that such taxes were irrecoverable under local tax rules and we verified that taxes claimed during the year had been approved by the tax authority or were not subject to a formal dispute. We considered and challenged management s assessment of the carrying value and presentation of the receivables, together with the appropriateness of the assumptions made in reaching those conclusions. In particular, this included consideration by us of the payment 178 Annual Report Randgold Resources

3 history, the nature of ongoing correspondence, ongoing taxation disputes (refer to previous point), terms of the mining conventions in Mali that confer rights to offset such taxes claimed against other taxes due, and challenging the appropriateness of assumptions and estimates made regarding the value and timing of eligible future taxes available for offset under the terms of such conventions; we performed tests of controls and substantive procedures to obtain assurance as to the authorisation, accuracy and completeness of the recording and classification of capital expenditure. We also undertook verification testing on expenditure to supporting documentation such as contracts. We evaluated management s assessment that commercial production commenced at Kibali from 1 October by reference to throughput and recovery levels being achieved by the mine. We critically reviewed management s allocation of costs between operating expenditure, ore stockpiles and capital expenditure to assess the allocation of such costs based on the nature of the underlying activity, supported by sample based verification and tests of controls; we evaluated management s impairment models against Life of Mine plans and our understanding of the operations, and critically challenged the key estimates and assumption used by management in each discounted cash flow model. Our testing included comparison of the gold price forecasts to forward gold price data and analyst forecasts, recalculation of discount rates for the assets by our valuation specialists and critical review of the forecast cost and production profiles against approved mine plans and empirical performance. The impairment models and sensitivity analysis prepared by management indicated that no impairment charges were required and that each had headroom. We challenged management s sensitivity assessments and performed our own sensitivity calculations along with considering the appropriateness of related disclosures given in note 3; we performed tests of controls and additional substantive procedures in respect of the accounting treatment and presentation of the group s joint venture interests as equity accounted joint ventures. This included critical assessment of the structure, legal form and contractual rights and obligations of the group for the joint ventures in assessing management s conclusion that the joint ventures should be equity accounted. We assessed the appropriateness of the detailed disclosures relating to the presentation of financial information; we assessed the overall control environment of the group, including staff whistleblowing arrangements. We interviewed senior management including the groups internal audit manager. We remained sceptical and considered the risk of fraud and management bias when evaluating significant accounting estimates and arrangements. We also carried out journal entry testing and considered the appropriateness of accounting policy selections for evidence of management override or bias; and our audit also included evaluation of the appropriateness of management assumptions and estimates used within the life of mine plans and their impact on mining asset depreciation, rehabilitation provisions and asset recoverability. We challenged the assumptions and estimates and, where internal management experts and external experts were used by management, we assessed the scope of work, objectivity and competence of the experts and assessed their findings. The audit committee s consideration of these areas is set out on page 132 to 134. Matters on which we are required to report by exception We have nothing to report in respect of the following: Under the Companies (Jersey) Law 1991 we are required to report to you if, in our opinion: proper accounting records have not been kept, or proper returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or we have not received all the information and explanations we require for our audit. Under the Listing Rules we are required to review the part of the corporate governance statement relating to the company s compliance with the nine provisions of the UK Corporate Governance Code specified for our review. Under the ISAs (UK and Ireland), we are required to report to you if, in our opinion, information in the annual report is: materially inconsistent with the information in the audited financial statements; or apparently materially incorrect based on, or materially inconsistent with, our knowledge of the company acquired in the course of performing our audit; or is otherwise misleading. In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors statement that they consider the annual report is fair, balanced and understandable and whether the annual report appropriately discloses those matters that we communicated to the audit committee which we consider should have been disclosed. Scott McNaughton (Responsible Individual) For and on behalf of BDO LLP Chartered accountants and recognised auditors London 14 March 2014 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Annual Report Randgold Resources 179

4 Consolidated statement of comprehensive income for the year ended ember Note (Restated) + Revenue Gold sales on spot Total revenue Other income Total income Costs and expenses Mining and processing costs Transport and refining costs Royalties Exploration and corporate expenditure Total costs Finance income Finance costs 24 (7 737) (984) Finance (costs)/income net 24 (6 495) Share of profits of equity accounted joint ventures Profit before income tax Income tax expense 4 (76 714) (37 054) Profit for the period Other comprehensive expense Loss on available-for-sale financial assets (1 173) (2 919) Share of equity accounted joint ventures other comprehensive expense 10 (400) (182) Total other comprehensive expense (1 573) (3 101) Total comprehensive income Profit Attributable to: Owners of the parent Non-controlling interests Total comprehensive income Attributable to: Owners of the parent Non-controlling interests Basic earnings per share (US$) Diluted earnings per share (US$) Average shares in issue (000) Following the introduction and adoption of IFRS11 Joint arrangements, the group changed its accounting policy on joint ventures from 1 January with prior periods restated accordingly. Refer to page 186 of this annual report for further details. The notes on pages 185 to 223 are an integral part of these consolidated financial statements. 180 Annual Report Randgold Resources

5 Consolidated and company statements of financial position at ember Assets Note (Restated) + 1 Jan (Restated) + Company Non-current assets Property, plant and equipment Deferred tax Trade and other receivables Long term ore stockpiles Investments in joint ventures and subsidiaries Loans to subsidiaries and joint ventures Investment in equity accounted joint ventures Other investments in joint ventures Total investments in joint ventures Total non-current assets Current assets Inventories and ore stockpiles Trade and other receivables Available-for-sale financial assets Cash and cash equivalents Total current assets Total assets Equity and liabilities Share capital Share premium Retained earnings Other reserves Equity attributable to owners of the parent Non-controlling interests Total equity Non-current liabilities Loans from minority shareholders in subsidiaries Deferred tax Provision for rehabilitation Loans from subsidiaries and joint ventures Total non-current liabilities Current liabilities Trade and other payables Current tax payable Total current liabilities Total equity and liabilities Following the introduction and adoption of IFRS 11 Joint arrangements, the group changed its accounting policy on joint ventures from 1 January with prior periods restated accordingly. Refer to page 186 of this annual report for further details. The notes on pages 185 to 223 of this annual report are an integral part of these consolidated financial statements. The financial statements were approved and authorised for issue by the board on 14 March Annual Report Randgold Resources 181

6 Consolidated statements of changes in equity for the year ended ember Number of ordinary shares Share capital Share premium Other reserves Retained earnings Total equity attributable to owners of parent Noncontrolling interests + Total equity + Balance (as previously reported) Change in accounting policy (7 435) (7 435) Balance (restated) Share of other comprehensive expense of joint ventures * (182) - (182) - (182) Fair value movement on availablefor-sale financial assets * (2 919) - (2 919) - (2 919) Other comprehensive expense (3 101) - (3 101) - (3 101) Net profit for the period Total comprehensive income/ (expense) for the period (3 101) Share-based payments Share options exercised Reserve transfer on exercise of options previously expensed under IFRS (3 498) Shares vested # (4 088) Dividend relating to (36 737) (36 737) - (36 737) Non-controlling interest share of Gounkoto dividend (24 823) (24 823) Balance - (restated) Share of other comprehensive expense of joint ventures * (400) - (400) - (400) Fair value movement on availablefor-sale financial assets * (1 173) - (1 173) - (1 173) Other comprehensive expense (1 573) - (1 573) - (1 573) Net profit for the period Total comprehensive income/ (expense) for the period (1 573) Share-based payments Share options exercised Reserves transfer on exercise of options previously expensed under IFRS (464) Shares vested # (10 841) Dividend relating to (46 137) (46 137) - (46 137) Non-controlling interest share of Gounkoto dividend (27 225) (27 225) Balance * Share of other comprehensive expense of joint ventures and fair value movement on available-for-sale assets may be recycled through the income statement in the future if certain future conditions arise. # Restricted shares were issued as remuneration to executive directors, non-executive directors and senior management. Shares were also issued to executive directors following approval of their and 2011 annual bonuses. The transfer between other reserves and share premium in respect of the shares vested represents the cost calculated in accordance with IFRS 2. + Following the introduction and adoption of IFRS 11 Joint arrangements, the group changed its accounting policy on joint ventures from 1 January with prior periods restated accordingly. Refer to page 186 of this annual report for details. Share capital The share capital comprises the issued ordinary shares of the company at par. Share premium The share premium comprises the excess value recognised from the issue of ordinary shares at par. Retained earnings Retained earnings comprise the group s cumulative accounting profits and losses since inception. Other reserves Other reserves comprise the cumulative charge recognised under IFRS 2 in respect of share-based payment awards (net of amounts transferred to share capital and share premium), as well as cumulative fair value movements in current available-for-sale financial assets. At ember, the balance of the share-based payment reserve amounted to US$65.1 million (ember : US$50.1 million). The foreign currency translation reserve was US$1.4 million at ember (ember : US$1.4 million) and the cumulative net losses in current available-for-sale financial assets amounted to US$2.1 million at ember (ember : cumulative net loss of US$0.5 million). Refer to note 12 for further details on available-for-sale financial assets. Non-controlling interests Non-controlling interests comprise the non-controlling interests share of cumulative profits and losses in the group, less their share of dividends paid. 182 Annual Report Randgold Resources

7 Company statements of changes in equity for the year ended ember Number of ordinary shares Share capital Share premium Retained earnings Other reserves Balance Fair value movement on available-for-sale financial assets * (2 919) (2 919) Total other comprehensive expense (2 919) (2 919) Net profit for the period Total comprehensive income/(expense) for the period (2 919) Share-based payments Share options exercised Shares vested # (4 088) 558 Reserve transfer on exercise of options previously expensed under IFRS (3 498) - Dividends relating to (36 737) - (36 737) Balance Fair value movement on available-for-sale financial assets * (1 173) (1 173) Total other comprehensive expense (1 173) (1 173) Net profit for the period Total comprehensive income/(expense) for the period (1 173) Share-based payments Share options exercised Shares vested # (10 841) Reserves transfer on exercise of options previously expensed under IFRS (464) - Dividends relating to (46 137) - (46 137) Balance * Fair value movement on available-for-sale assets may be recycled through the income statement in the future if certain future conditions arise. # Restricted shares were issued as remuneration to executive directors, non-executive directors and senior management. Shares were also issued to executive directors following approval of their and 2011 annual bonuses. The transfer between other reserves and share premium in respect of the shares vested represents the cumulative charge calculated in accordance with IFRS 2. Total Share capital The share capital comprises the issued ordinary shares of the company at par. Share premium The share premium comprises the excess value recognised from the issue of ordinary shares at par. Retained earnings Retained earnings comprises the company s cumulative accounting profits and losses since inception. Other reserves Other reserves comprises the cumulative charge recognised under IFRS 2 in respect of share-based payment (net of amounts transferred to share capital and share premium) that amounted to US$65.1 million (: US$50.1 million) and cumulative movements in current available-for-sale financial assets that amounted to a loss of US$0.6 million at ember (: gain of US$0.6 million). Refer to note 12 for further details on available-for-sale financial assets. Annual Report Randgold Resources 183

8 Statements of consolidated and company cash flows for the year ended ember (Restated) + Company Cash flow from operating activities Profit after tax Income tax expense Profit before income tax Share of profits of equity accounted joint ventures (54 257) (40 927) - - Net finance cost/(income) (1 931) 166 (1 646) Unwind of discount on provisions for environmental rehabilitation Depreciation and amortisation Share-based payments Share-based payments related to operations - - (21 931) (19 021) Non-cash adjustment on royalties Effects of changes in operating working capital items Receivables (62 738) ( ) Inventories and ore stockpiles (49 816) (81 602) - - Trade and other payables Cash generated from operations before interest and tax Interest received Interest paid (6 422) (117) (1 092) (5) Dividends received from equity accounted joint ventures Income tax paid (22 249) (11 182) - - Net cash generated by operating activities # Cash flow from investing activities Additions to property, plant and equipment ( ) ( ) (8 173) (2 838) Increases in inter-company loans - - ( ) ( ) Decreases in inter-company loans Decrease in available-for-sale insurance asset Funds invested in equity accounted joint ventures ( ) ( ) - - Loans repaid by equity accounted joint ventures Net cash used in investing activities # ( ) ( ) ( ) ( ) Cash flow from financing activities Proceeds from issue of ordinary shares Dividends paid to company s shareholders (46 137) (36 737) (46 137) (36 737) Dividends paid to non-controlling interests (27 225) (24 823) - - Net cash used by financing activities (72 178) (47 483) (44 953) (22 660) Net decrease in cash and equivalents ( ) (89 352) ( ) ( ) Cash and equivalents at beginning of year Cash and cash equivalents at end of year Following the introduction and adoption of IFRS 11 Joint arrangements, the group changed its accounting policy on joint ventures from 1 January with prior periods restated accordingly. Refer to page 186 of this annual report for further details. * Non-cash items include changes in rehabilitation provision estimates of US$4.7 million (: US$16.9 million), as well as non-cash capital expenditure accruals of US$5.1 million (: US$ nil). # The comparatives include reclassifications between cash generated from operating activities and cash used in investing activities for the company related to dividends received from group companies and joint ventures. The dividends received totalled US$128.1 million in and US$174.7 million in and are now included within net cash generated by operating activities. The effective interest rate on cash and cash equivalents was 0.54% (: 0.41%). These funds have an average maturity of less than 90 days. 184 Annual Report Randgold Resources

9 Notes to the consolidated financial statements for the year ending ember 1. Nature of operations The company and its subsidiaries together with its joint ventures (the group) carry out exploration and gold mining activities. Currently there are three operating mines in Mali, West Africa: the Morila gold mine (equity accounted joint venture), which started production in October 2000, the Loulo gold mine (subsidiary), which commenced production in November 2005 and the Gounkoto mine (subsidiary), which began production in June The group also operates a mine in Côte d Ivoire, Tongon (subsidiary), which started production in December The group also holds an effective interest of 45% in the Kibali gold mine (equity accounted joint venture) in the Democratic Republic of Congo (DRC). Production commenced at Kibali in October. The group has a portfolio of exploration projects in West and Central Africa. The interests of the group in its operating mines are held through Société des Mines de Morila SA (Morila) which owns the Morila mine, Société des Mines de Loulo SA (Somilo) which owns the Loulo mine, Société des Mines de Tongon SA (Tongon) which owns the Tongon mine, Société des Mines de Gounkoto SA (Gounkoto) which owns the Gounkoto mine and Kibali Goldmines (Kibali) SPRL, which owns the Kibali mine. Randgold holds an effective 40% interest in Morila, following the sale to AngloGold Ashanti Limited on 3 July 2000 of one-half of Randgold s subsidiary, Morila Limited. Management of Morila Limited, the 80% shareholder of Morila SA, is effected through a joint venture committee, with Randgold and AngloGold Ashanti each appointing one-half of the members of the committee. Randgold holds an effective 80% interest in Somilo and Gounkoto. The remaining 20% interest is held by the State of Mali. Randgold holds an effective 89% interest in Tongon, 10% is held by the State of Côte d Ivoire while the remaining 1% is held by a local Ivorian company. Randgold is the operator of the Morila, Loulo, Gounkoto, Tongon and Kibali mines. Randgold acquired its effective interest in Kibali following the acquisition by the company of a joint venture interest in Moto Goldmines Limited (Moto) in 2009, in conjunction with AngloGold Ashanti. Société Miniére de Kilo-Moto SARL (SOKIMO) holds the remaining 10% in Kibali. The group has various exploration programmes ranging from substantial to early stage in the DRC, Mali, Senegal and Côte d Ivoire. 2. Significant accounting policies The principal accounting policies applied in the preparation of these consolidated and company financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. Basis of preparation The consolidated financial statements of Randgold Resources Limited and its subsidiaries and joint ventures have been prepared in accordance with International Financial Reporting Standards and Interpretations (collectively (IFRS)) issued by the International Accounting Standards Board (IASB) as adopted by the European Union and in accordance with Article 105 of the Companies (Jersey) Law The consolidated financial statements also comply with IFRS as issued by the IASB, as is required as a result of our listing on NASDAQ in the US. IFRS 11 is effective for under IFRS as issued by the IASB and will become effective in the European Union from the 2014 financial year, however, early adoption is permitted. The group has early adopted IFRS 11 from 1 January in accordance with the rules on application set out by the IASB ensuring no material differences existed in the two IFRS bases used. The new standard has been applied retrospectively. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of availablefor-sale financial assets, and various financial assets. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company s accounting policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. After reviewing the group s and the company s budget for the next financial year, and other longer term plans, the directors are satisfied, at the time of approving the financial statements, it is appropriate to adopt the going concern basis in preparing the financial statements. The directors have no reason to believe that the group and the company will not be a going concern in the foreseeable future based on forecasts and available cash resources and available facilities. The viability of the company and the group is supported by the financial statements. Refer to page 136 of the audit committee report for further detail. New standards and interpretations applied The IASB has issued the following new standards, amendments to published standards and interpretations to existing standards with effective dates on or prior to 1 January which have been adopted by the group for the first time this year. Annual Report Randgold Resources 185

10 Notes to the consolidated financial statements (continued) IFRS as issued by IASB IFRS as issued by EU Effective period commencing on or after Impact on group IAS 1 Amendment presentation of items of other comprehensive income 1 July 1 July No material impact, disclosures amended IFRS 10 Consolidated financial statements 1 January 1 January 2014 No material impact IFRS 11 Joint arrangements 1 January 1 January 2014 Yes, early adopted IFRS 12 Disclosure of interests in other entities 1 January 1 January 2014 No material impact, disclosures amended IFRS 13 Fair value measurement 1 January 1 January No material impact IFRS 7 Disclosures offsetting financial assets and financial liabilities 1 January 1 January No material impact, disclosures amended IAS 27 Amendment separate financial statements 1 January 1 January 2014 No material impact IAS 28 Amendment investments in associates and joint ventures 1 January 1 January 2014 No material impact IFRS 1 Amendment - government loans 1 January 1 January No material impact IAS 19 Amendment employee benefits 1 January 1 January No material impact Annual improvements to IFRSs ( cycle) 1 January 1 January No material impact IFRS 11 Joint arrangements The group changed its accounting policy on joint ventures from 1 January following the introduction of IFRS 11 Joint arrangements which applies to the current period. The new standard is applicable under IFRS as issued by the IASB from 1 January, while it has been early adopted for the purposes of the preparation of these financial statements under IFRS as issued by the European Union. The joint venture agreements and structures for Kibali and Morila, together with the asset leasing joint ventures (KAS 1 Limited and RAL 1 Limited) provide the group with interests in the net assets of those companies, rather than interests in underlying assets and obligations. Accordingly, under IFRS 11, the group s share of joint ventures have been accounted for using the equity method rather than proportionately consolidated, from the beginning of the earliest period presented (being 1 January 2011 owing to requirements of the group s US listing). Comparatives have been restated accordingly using IFRS 11 transition rules. The group s share of its joint ventures has been disclosed as a single line item as total investments in joint ventures on the consolidated statement of financial position, measured at the aggregate of the carrying amounts of the assets and liabilities that had previously been proportionately consolidated (shown on each line of the statement of financial position) at 1 January 2011, excluding minorities, together with the group s subsequent share of profits and losses of the joint ventures, its share of other comprehensive income and expense, additional investment and loans less joint venture dividends. The group s share of profits and other comprehensive income and expense of the joint ventures are accounted for in the statement of comprehensive income as share of profits of equity accounted joint ventures and share of other comprehensive income of equity accounted joint ventures. In the consolidated cash flow statement, the group s cash flows from the joint ventures have been disclosed separately. The nature of the adjustments involved equity accounting for our share in Kibali gold mine at an effective 45%, whereas previously it was 50% proportionately consolidated, including 5% non-controlling interest. The impact on the primary statements is shown on pages 187 to 189 of this annual report. The adjustments include presenting the primary financial statements as if we have always been equity accounting our share in our joint ventures and associates from the start of the earliest period presented (1 January 2011) with key changes summarised as follows: On the statement of comprehensive income, the key changes relate to accounting for our attributable share in the profits and losses of the equity accounted joint ventures being shown in a single line item share of profits of equity accounted joint ventures which represents the post-tax profits and losses of the joint ventures; Other income now includes 100% of management fees charged to equity accounted joint ventures with the group s share of the cost included in share of profits of equity accounted joint ventures ; The group s share of the equity accounted joint ventures income and expenditure has been removed from the individual line items; Changes on the statement of financial position relate to the group s share of its equity accounted joint ventures net assets being accounted for in a single line total investments in joint ventures ; The group s share of the equity accounted joint ventures assets and liabilities have been removed from the individual line items; and Changes on the cash flow statement include disclosing dividends received from equity accounted joint ventures in a separate line under operating activities, as well as disclosing additional invested funds in separate lines under investing activities. Other loans advanced and repaid (where applicable) are recognised within investing activities. The effects of the change in accounting policies on the consolidated statement of financial position, consolidated comprehensive income and the consolidated cash flows of the group at ember are summarised on pages 187 to 189 of this annual report. Refer to note 10 for further details of joint ventures. 186 Annual Report Randgold Resources

11 Consolidated statement of comprehensive income (impact of accounting policy change) 12 months ended (as previously reported) 12 months ended (as per new accounting policy) Adjustment Revenues Gold sales on spot ( ) Total revenues ( ) Other income Total income ( ) Cost and expenses Mine production costs (21 991) Movement in production inventory and ore stockpiles (31 970) (43 716) (11 746) Depreciation and amortisation (13 750) Other mining and processing costs (8 412) Mining and processing costs (55 899) Transport and refining costs (270) Royalties (8 092) Exploration and corporate expenditure (1 608) Other expenses (5 437) Total costs (71 306) Finance income (2) Finance costs (1 200) (984) 216 Finance income - net Share of profits of equity accounted joint ventures Profit before income tax (20 456) Income tax expense (57 510) (37 054) Profit for the period Other comprehensive expense Gain/(loss) on available-for-sale financial assets (3 101) (2 919) 182 Share of equity accounted joint ventures other comprehensive expense - (182) (182) Total other comprehensive expense (3 101) (3 101) - Total comprehensive income Profit attributable to: Owners of the parent Non-controlling interests Total comprehensive income attributable to: Owners of the parent Non-controlling interests Basic earnings per share (US$) Diluted earnings per share (US$) Average shares in issue (000) Annual Report Randgold Resources 187

12 Notes to the consolidated financial statements (continued) Consolidated statement of financial position (impact of accounting policy change) At (as previously reported) At (as per new accounting policy) Adjustment Assets Non-current assets Property, plant and equipment ( ) Cost ( ) Accumulated depreciation and amortisations ( ) ( ) (71 373) Deferred tax (708) Investment in equity accounted joint ventures Other investments in joint ventures Total investments in joint ventures Trade and other receivables (7 969) Mineral properties ( ) Total non-current assets (1 513) Current assets Inventories and ore stockpiles (19 690) Trade and other receivables (83 157) Cash and cash equivalents (13 420) Available-for-sale financial assets (473) Total current assets ( ) Total assets ( ) Equity attributable to owners of the parent Non-controlling interests (7 435) Total equity (7 435) Non-current liabilities Loans from minority shareholders Deferred tax Long term borrowings (13 296) Provision for rehabilitation (7 466) Total non-current liabilities (20 762) Current liabilities Trade and other payables (82 320) Current tax payable (6 258) Short term portion of long term borrowing (1 478) Total current liabilities (90 056) Total equity and liabilities ( ) 188 Annual Report Randgold Resources

13 Consolidated cash flow statement (impact of accounting policy change) 12 months ended (as previously reported) 12 months ended (as per new accounting policy) Adjustment Profit after tax Income tax expense (20 456) Profit before income tax (20 456) Share of profits of equity accounted joint ventures - (40 927) (40 927) Adjustment for non-cash items (13 354) Effects of change in operating working capital items ( ) ( ) Receivables ( ) ( ) Inventories and ore stockpiles (73 349) (81 602) (8 253) Trade and other payables (40 158) Dividends received from equity accounted joint ventures Income tax paid (35 818) (11 182) Net cash generated from operating activities Additions to property, plant and equipment ( ) ( ) Decrease in available-for-sale insurance assets Funds invested in equity accounted joint ventures - ( ) ( ) Loans repaid by equity accounted joint ventures Net cash used by investing activities ( ) ( ) (4 738) Proceeds from issue of ordinary shares Increase/(decrease) in long term loans (14 774) Dividends paid to company s shareholders (36 737) (36 737) - Dividends paid to non-controlling interests (24 823) (24 823) - Net cash used by financing activities (32 709) (47 483) (14 774) Net decrease in cash and cash equivalents ( ) (89 352) Cash and cash equivalents at beginning of period (24 424) Cash and cash equivalents at end of period (13 420) IFRS 12 Disclosure of interests in other entities The new accounting standard is applicable under IFRS as issued by the IASB from 1 January, while it has been early adopted for the purposes of the preparation of these financial statements under IFRS as issued by the European Union. IFRS 12 includes the disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The standard requires the disclosure of information that helps users to assess the nature and financial effects of the group s relationship with other entities, including assisting users to: understand the judgements and assumptions made by the group when deciding how to classify its involvement with its subsidiaries and joint ventures; understand the interest that non-controlling interests have in consolidated entities; and assess the nature of the risks associated with interests in other entities. The group has provided the relevant disclosures in notes 1 and 10 associated with the assessment of joint venture relationships and relationships with investees. IFRS 7 Disclosure - offsetting financial assets and financial liabilities The amendment to IFRS 7 introduces disclosures in respect of the effect of offsetting associated with the group s recognised financial assets and recognised financial liabilities. Refer to notes 7 and 17 for details of the offsetting. Standards effective in future periods Certain new standards, amendments and interpretations to existing standards have been published that are relevant to the group s activities and are mandatory for the group s accounting periods beginning after 1 January or later periods and which the group has decided not to adopt early. These appear overleaf: Annual Report Randgold Resources 189