Randgold Resources Annual Report 2005 53
4 INCOME AND MINING TAXES (continued)
The tax on the group’s profit before tax differs from the theoretical amount that
would arise using the statutory tax rate applicable to the group’s Malian operations.
Profit before tax
45 222
18 793
Tax calculated at tax rate of 35%
15 828 6 577
Income not subject to tax:
Mali tax holiday differences
(11 493) (6 577)
Taxation charge
4 335
-
The company is not subject to income tax in Jersey. Morila SA benefited from a five year tax holiday until 14 November 2005.
Loulo SA also benefits from a five year tax holiday in Mali. The tax holiday commenced on 8 November 2005. The benefit
of the tax holiday to the group was to increase its net income by US$11.5 million (2004: US$6.6 million).
Accordingly, had the group not benefited from the tax holiday in Mali, earnings per share would have been reduced by
US$0.18 and US$0.11 for the years ended 31 December 2005 and 2004 respectively. Under Malian tax law, income tax is
based on the greater of 35 per cent of taxable income or 0.75 per cent of gross revenue.
The Morila and Loulo operations have no assessable capital expenditure carry forwards or assessable tax losses, as at
31 December 2005 and 2004 respectively, for deduction against future mining income.
Income Share Per share
(numerator) (denom- amount
US$000 inator) US$
5 EARNINGS PER SHARE
FOR THE YEAR ENDED 31 DECEMBER 2005
BASIC EARNINGS PER SHARE
Shares outstanding 1 January 2005
- 59 226 694
-
Weighted number of shares issued
- 2 475 088
-
Income available to shareholders
38 538 61 701 782
0.62
EFFECT OF DILUTIVE SECURITIES
Weighted stock options issued to employees
- 2 127 214
-
Fully diluted earnings per share
38 538 63 828 996
0.60
FOR THE YEAR ENDED 31 DECEMBER 2004
BASIC EARNINGS PER SHARE
Shares outstanding 1 January 2004
- 58 520 770*
-
Weighted number of shares issued
- 349 862
-
Income available to shareholders**
18 793 58 870 632
0.32**
EFFECT OF DILUTIVE SECURITIES
Weighted stock options issued to employees
- 1 125 625
-
Fully diluted earnings per share**
18 793 59 996 257
0.31**
* Reflects adjustments resulting from the sub-division of shares.
** Reflects adjustments resulting from the adoption of IFRS 2: Share-based payment.
6 CHANGES IN ACCOUNTING POLICIES
The company adopted IFRS 2 “Share-based payment” (“IFRS 2”) on 1 January 2005. The standard requires an entity to
recognise share-based payments transactions in its financial statements. In accordance with the Standard’s transitional
provisions, the company applied IFRS 2 to share options that were granted after 7 November 2002 and had not yet vested
at the effective date of 1 January 2005. This change in accounting policy has been accounted for retrospectively, and the
financial statements for 2004 have been restated. The effect of the change for the year ended 31 December 2005 is the
recognition of share-based payment expense of US$2.2 million (2004: US$1.3 million). No share options were granted from
7 November 2002 to 31 December 2003. This change impacted basic earnings per share by US$0.03 (2004: US$0.02) and
fully diluted earnings per share by US$0.03 (2004: US$0.02).
Share-based payments
The measurement of the fair value of employee services received as consideration for equity instruments of the company, is
calculated using the Black-Scholes option pricing model.
The key assumptions used in this model for options granted during the year were as follows:
Note
2005
2004
Expected life
3 years 3 years
Volatility
Risk free interest rate
3.72% 2.88%
Dividend yield
0%
0%
Weighted average share price on grant and valuation date
Weighted average exercise price
6.1 Volatility is based on the three year historical volatility of the company’s shares on each grant date.
6.2 Weighted average share price for the valuation is calculated taking into account the market price on all grant dates.
Group
Group
31 Dec
31 Dec
US$000
2005
2004
