Business Context and Reporting Period
Company: Gold Fields Limited (JSE, NYSE: GFI)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Date: March 28, 2018
Reporting Period: Year ended December 31, 2017
Context: This filing announces the publication of the 2017 Integrated Annual Report (IAR) and audited financial statements. It details a material restatement of prior years' financial results due to a correction in the amortisation methodology for mineral rights assets at Australian operations, following an SEC comment letter.
Key Financial Metrics
Revenue (2017): US$2,761.8 million (Restated)
Profit/Loss (2017): Loss of US$7.7 million (Restated) vs. Loss of US$24.0 million (Preliminary)
Profit/Loss (2016): Profit of US$169.1 million (Restated) vs. Profit of US$173.7 million (Preliminary)
Earnings Per Share (2017): Basic loss of 4 cents (Restated) vs. 6 cents (Preliminary)
Headline Earnings Per Share (2017): 26 cents (Restated)
Mineral Reserves (Gold): 49 million ounces (as of Dec 31, 2017)
Mineral Resources (Gold): 104 million ounces (as of Dec 31, 2017)
Mineral Reserves (Copper): 764 million pounds
Mineral Resources (Copper): 4,881 million pounds
Note: The filing text does not provide specific values for total debt, liquidity ratios, or operating cash flow figures for the period.
Material Changes and Restatements
The filing highlights a significant correction to the preliminary financial statements released on February 14, 2018. The Company restated prior years' consolidated financial statements under IAS 8 to correct an understatement of amortisation for mineral rights assets at Australian operations.
- Methodology Change: Previously, total mineral rights assets were amortised over a useful life exceeding Proved and Probable reserves. The new methodology divides assets into depreciable and non-depreciable components, amortising the depreciable portion over estimated Proved and Probable reserves.
- 2017 Impact: A US$23.2 million amortisation charge (US$16.3 million after tax) previously booked in 2017 was reversed and reclassified to prior years. This reduced the 2017 loss from US$24.0 million to US$7.7 million.
- 2016 Impact: The 2016 profit was reduced from US$173.7 million to US$169.1 million due to the reclassification of US$6.7 million in amortisation charges.
- Cash Flow: The correction is non-cash and had no impact on the consolidated statements of cash flows.
Guidance, Outlook, and Risks
Management Commentary: The Company confirmed that KPMG Inc. has audited the financial statements with an unmodified audit report. The Integrated Annual Report covers operations in South Africa, West Africa, Australia, and South America.
Corporate Actions: The Annual General Meeting (AGM) is scheduled for May 22, 2018. The record date for voting is May 11, 2018.
Risks and Contingencies: The filing notes the risk of accounting errors regarding asset amortisation, which was addressed through the restatement. No specific forward-looking guidance on production volumes or financial targets for 2018 is provided in this text.
Investor Verification Checklist
- Verify the full details of the amortisation methodology correction in Note 40 of the audited financial statements.
- Confirm the impact of the restatement on the 2015 and prior year financial statements (Total prior years adjustment: US$6.4 million net effect).
- Review the Mineral Resources and Mineral Reserves Supplement for the breakdown of reserves by operation.
- Check the AGM notice for specific resolutions to be voted on by shareholders.
- Compare the restated 2017 and 2016 figures against the preliminary figures to understand the variance in profitability.