| Fri 28 Sep 2007, 13:02 | | VIL - Village Main Reef - Village Main Reef issues |
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VIL
VIL
VIL - Village Main Reef - Village Main Reef issues annual financial statements
and annual general meeting details
Village Main Reef Gold Mining Company (1934) Limited
(Incorporated in the Republic of South Africa)
(Registration number 1934/005703/06)
JSE Share Code: VIL
ISIN: ZAE000007720
("Village Main Reef")
Village Main Reef issues annual financial statements and annual general meeting
details
Village Main Reef`s annual report, containing its financial statements for the
year ended 30 June 2007, prepared in accordance with International Accounting
Standards, has been issued.
To the members of Village Main Reef Gold Mining Company (1934) Limited
We have audited the annual financial statements of Village Main Reef Gold Mining
Company (1934) Limited, which comprise the directors` report, the balance sheet
as at 30 June 2007, the income statement, the statement of changes in equity,
the cash flow statement for the year then ended, and a summary of significant
accounting policies and other explanatory notes, as set out on pages 4 to 5 and
pages 9 to 18 of the 2007 annual report.
Directors` Responsibility for the Financial Statements
The company`s directors are responsible for the preparation and fair
presentation of these financial statements in accordance with International
Financial Reporting Standards and in the manner required by Companies Act of
South Africa. This responsibility includes: designing , implementing and
maintaining internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Auditor`s Responsibility
Our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit in accordance with International Standards
on Auditing. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditor`s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control
relevant to the entity`s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity`s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material
respects, the financial position of the Village Main Reef Gold Mining Company
(1934) Limited as of 30 June 2007, and its financial performance and its cash
flows for the year then ended in accordance with international Financial
Reporting Standards and in the manner required by the Companies Act of South
Africa.
Emphasis of matter - environmental rehabilitation issues
Without qualifying our opinion, we draw your attention to the environmental and
rehabilitation paragraph on page 4, and to Note 11 of the financial statements,
on Contingent Liabilities. The full cost and extent to which the company has to
rehabilitate its mining properties is uncertain. The company plans to engage
Technical and Legal Consultants in resolving all of its environmental
rehabilitation issues. The ultimate outcome of the matter cannot presently be
determined, and consequently only a provision for care and maintenance has been
recorded in the financial statements.
PRICEWATERHOUSECOOPERS INC.
Director: HP Odendaal
Registered Auditor
Johannesburg
27 September 2007
Income Statement
For the year ended 30 June
Notes 2007 2006
Revenue R`000 R`000
- -
Operating expenses (336) (446)
Other income 217 154
Investment income 217 154
Finance costs (150) -
Loss before taxation 2 (269) (292)
Taxation 3 - -
Net loss for the year (269) ( 292)
Basic loss per share - cents 4 (4.4) (4.8)
Balance Sheet 2007 2006
As at 30 June Notes R`000 R`000
ASSETS
Non-current assets
Environmental rehabilitation trust 5 3,439 3,165
Total non-current assets 3,439 3,165
Current assets
Cash and cash equivalents 6 1,277 1,829
Total current assets 1,277 1,829
Non-current asset held for sale 7 250 250
Total assets 4,966 4,994 .
EQUITY AND LIABILITIES
Capital and reserves
Share capital issued 8 758 758
Accumulated profits 1,054 1,323
Total shareholders` equity 1,812 2,081
Non-current liabilities
Provision for environmental
rehabilitation 9 3,150 3,000
Total non-current liabilities 3,150 3,000
Current liabilities
Trade and other payables 4 163
Total current liabilities 4 163
Total equity and liabilities 4,966 5,244
Statement of Changes in Equity
For the year ended 30 June
Share Accumulated Total
capital
issued profits
R`000 R`000 R`000
Balance at 1 July 2005 758 1,318 2,076
Net loss for the year - (292) (292)
Unclaimed dividends - 297 297
forfeited
Balance at 30 June 758 1,323 2,081
2006
Net loss for the year - (269) (269)
Balance at 30 June 758 1,054 1,812
2007
Cash Flow Statement
For the year ended 30 June
2007 2006
Notes R`000 R`000
Cash flow from operating
activities
Cash utilised by operations (770) (513)
Interest received 218 154
Net cash utilised in operating
activities (552) (359)
Cash flow from investing
activities
Increase investment in
rehabilitation trust fund - (2,160)
Net cash generated
by/(utilised in)
investing activities - (2,160)
Decrease in cash and cash (552) (2,519)
equivalents
Cash and cash equivalents at
beginning of the year 1,829 4,348
Cash and cash equivalents at
the end of the period 1,277 1,829
Note to the cash flow
statement
Cash utilised by operations is
arrived at as follows:
Loss after finance costs
before interest received,
sundry income and taxation per
income statement (486) (446)
Adjustment for:
Interest earned on
rehabilitation trust funds (275) (136)
Net increase in provision for
rehabilitation 150 -
Operating loss before working
capital changes (611) (582)
Decrease in trade and other
receivables - 29
(Decrease)/Increase in trade
and other payables (159) 40
Cash utilised by operations (770) (513)
Notes to the Financial Statements
For the year ended 30 June 2007
1. ACCOUNTING POLICIES
1.1 BASIS OF PREPARATION
The annual financial statements are prepared on the historical cost basis except
for certain financial instruments, which are carried at fair value. The
accounting policies as set out have been consistently applied, and comply with
the accounting standards issued by the International Financial Reporting
Standards Board, and the South African Companies Act.
1.2 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less accumulated depreciation
and any impairment in value. Land is not depreciated.
The carrying values of property, plant and equipment are reviewed for impairment
when events or changes in circumstances indicate the carrying value may not be
recoverable. If any such indication exists and where the carrying values exceed
the estimated recoverable amount, the assets or cash generating units are
written down to their recoverable amount. Recoverable amount is the higher of
fair value less cost to sell and the value in use. Value in use is determined by
estimated future cash flows discounted at a pre tax discount rate.
Assets held for sale
An asset is classified as held for sale when its carrying amount will be
recovered principally through a sale transaction rather than through continuing
use.
Assets classified as held for sale are carried at the lower of carrying amount
and fair value less costs to sell.
When the sale is expected to occur beyond one year, the entity measures the
costs to sell at their present value. Any increase in the present value of the
costs to sell that arises from the passage of time are presented in profit or
loss as a financing cost.
The entity does not depreciate non-current assets while they are classified as
held for sale. Impairment losses for any initial or subsequent write down of a
held for sale to fair value less cost to sell is recognised in the income
statement.
1.3 ENVIRONMENTAL OBLIGATIONS
Estimated long-term environmental obligations, comprising pollution control,
rehabilitation and mine closure, are based on the Company`s environmental
management plans in compliance with current technological, environmental and
regulatory requirements.
The net present value of future rehabilitation cost estimates are recognised and
provided for in full in the financial statements. The estimates are reviewed
annually and are discounted using rates that reflect the time value of money.
Changes in the provision consist of finance cost relating to the change in the
present value of the provision and inflationary increases in the provision
estimate, as well as changes in estimates, and are charged to the income
statement.
1.4 ENVIRONMENTAL TRUST FUNDS
Contributions are made to the Company`s trust funds, created in accordance with
statutory requirements, to fund the estimated cost of pollution control,
rehabilitation and mine closure at the end of the life of the Company`s mines.
Contributions are determined on the basis of the estimated environmental
obligation over the life of the mine. Income earned on monies paid to
environmental trust funds is accounted for as investment income. The funds
contributed to the trust plus growth in the trust funds are included under
investments on the balance sheet.
1.5 PROVISIONS
Provision are recognised when the Company has a present legal or constructive
obligation as a result of past events where it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation,
and a reliable estimates of the amount of the obligation can be made.
1.6 REVENUE RECOGNITION
(a) Revenue
Revenue represents gold sales and is recognised when the risks and rewards of
ownership has passed to the buyer with delivery from the refinery. Sales revenue
excludes value-added tax but includes the net profit and losses arising from
financial derivatives that meet
the definition of normal sale to the extent that they relate to that metal and
have been matched at the date of the financial statements.
(b) Interest income
Interest is recognised on a time proportion basis, taking into account the
principal outstanding and the effective rate over the period to maturity, when
it is determined that such income will accrue to the Company.
1.7 DIVIDENDS DECLARED
Dividends proposed and the related transactions thereon are recognised when
declared by the Board of directors.
1.8 FINANCIAL INSTRUMENTS
Financial instruments carried on the balance sheet include cash and cash
equivalents, trade and other receivables and other payables.
Financial instruments are measured at fair value, including transaction cost
when the Company becomes party to a contractual arrangement.
Trade and other receivables are subsequently measured at amortised cost using
the effective interest Yate method. Trade and other receivables are recognised
and carried at original invoice amount as the effect of imputing interest is
considered to be insignificant less an allowance for any uncollectible amounts.
Impairment losses are recognised in the income statement when collection of the
full amount is no longer probable.
Trade and other payables are non-interest bearing, and are stated at their
nominal value.
A financial instrument will be derecognised and a gain or loss recognised when
the Company losses contractual rights or extinguishes the obligation associated
with such an instrument.
Cash and cash equivalents are measured at fair value. Cash subject to legal or
contractual restrictions or use is classified separately.
1.9 CASH AND CASH EQUIVALENTS
Cash and cash equivalents are defined as cash on hand, deposits held at call
with banks and short-term highly liquid investments with insignificant interest
rate risk and original maturities of three months or less. Cash and cash
equivalents are measured at fair value.
1.10 ACCOUNTS PAYABLE
Accounts payable are stated at cost, adjusted for payments made to reflect the
value of the anticipated economic outflow of resources.
1.11 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
Decommissioning and rehabilitation obligations
Estimating the future costs of environmental and rehabilitation obligations is
complex and requires management to make estimates and judgments because most of
the obligations will be fulfilled in the future and contracts and laws are often
not clear regarding what is required. The resulting provisions are further
influenced by changing technologies and political , environmental, safety,
business and statutory considerations.
Impairment of assets
Property, plant and equipment and intangible assets are considered for
impairment if there is a reason to believe that impairment may be necessary.
Factors taken into consideration in reaching such a decision include the
economic viability of the asset itself and where it is a component of a larger
economic unit, the vialibility of that unit itself. Future cash flows expected
to be generated by the assets are projected, taking into account market
conditions and the expected useful lives of the assets. The present value of
these cash flows, determined using an appropriate discount rate, is compared to
the current net asset value and, if lower, the assets are impaired to the
present value.
Sources of estimation uncertainty
There are no key assumptions concerning the future and other key sources of
estimation uncertainty at the balance sheet date that management have assessed
as having a significant risk of causing material adjustment to the carrying
amounts of the assets and liabilities within the next financial year.
Definitions
Cash and cash equivalents
Cash and cash equivalents are defined as cash on hand, on deposit and short -
term highly liquid investments readily convertible to known amounts of cash and
subject to insignificant risk of changes in value.
Loss per share
Loss per share represents the loss in cents attributable to each equity share
based on loss after taxation.
The following new standards were issued at balance sheet date but are only
effective in the future. No financial effect can be calculated at this stage.
Title
New Standards
IFRS 7 - Financial instruments: Disclosures, and a complementary *Financial
year commencing on or after 1 January, 2007
Amendments to IAS 1, Presentation of financial statements
- capital disclosures
IFRS 8 - Operating segments *Financial year commencing on or after 1 January,
2009
Amendments
IFRS 3 - Implementation Guidance *Financial year commencing on or after 1
January, 2007
IAS 23 - (Revised) Borrowing costs (Revised March 2007) *Financial year
commencing on or after 1 January, 2009
New Interpretations
IFRIC Interpretation 11 - Group and Treasury Share Transactions *Financial year
commencing on or after 1 March, 2007
IFRIC Interpretation 12 - Service Concession Arrangements *Financial year
commencing on or after 1 January, 2008
*Not yet assessed
2. LOSS BEFORE TAX
Loss before taxation is stated after 2007 2006
: R`000 R`000
Auditor`s remuneration - 51
Remuneration for technical,
advisory, secretarial and
administrative services 143 123
Increase in rehabilitation provision 150 162
No director`s fees were paid
in the current year. -
Director`s emoluments for services
as directors ceded to ARM in 2006 - 17
RP Menell - 5
F Abbott - 3
A N Lewis - 3
J C Steenkamp - 3
M Arnold - 3
3. TAXATION
No taxation has been provided as the
Company has no taxable income
Reconciliation of rate of taxation % %
Standard rate of company taxation (29) (29)
Deferred tax asset not raised 29 29
Effective rate of taxation - -
4. BASIC AND HEADLINE LOSS PER SHARE
The calculation of basic loss per share is based on basic loss of R 268 817
(2006:R292 000) and a weighted average of 6 068 446 (2006: 6 068 446) shares in
issue during the period.
The calculation of diluted headline loss per share is based on headline loss of
R 268 817 (2006: R292 000) and a weighted average of 6 068 446 (2006: 6 068 446)
shares in issue during the period.
Headline loss
Loss per income statement (269) (292)
(269) (292)
Headline loss per share - cents (4.4) (4.8)
5. ENVIRONMENTAL REHABILITATION
TRUST
The Village Main Reef Gold Mining
Company Nature Conservation Trust
was created to provide for the
estimated cost of pollution control
and rehabilitation at the end of the
life of the mine in accordance with
statutory requirements. The company
did not make any contribution in the
current year to the trust fund.
(2005:R 2160 000)
Balance at beginning of the year 3,165 869
Interest earned 276 177
Operating cost (1) (41)
Funds transferred to the Trust - 2 160
Balance at the end of the year 3,439 3,165
6. CASH AND CASH EQUIVALENTS
Cash on hand and on deposit 1,277 1,829
1,277 1,829
7. ASSET HELD FOR SALE
The asset held for sale comprises
the remaining extent of Portion 97
(A Portion of Portion 51) of the
farm Turfontein 96IR, Gauteng
Province purchased during 2001 for
the storage of waste materials. 250 250
During December 2005, the directors reported that the Company had
disposed of its remaining freehold property for a consideration of
R350 000. Certain suspensive conditions of sale have not been met.
The profit on sale of property of R100 000 that was reported in the
interim financial statements was therefore reversed in June 2006 and the
property
is classified as held for sale. An impairment test was performed using
fair value less cost to sell. The entity is still committed to the plan to
sell the asset.
8. SHARE CAPITAL
Authorised
8 000 000 shares of 12,5 cents 1,000 1,000
each
Issued
6 068 446 fully paid up shares
of 12,5 cents each 758 758
9. PROVISION FOR ENVIRONMENTAL
REHABILITATION
Balance at beginning of the year 3,000 3,000
Change in estimate increase - 162
Time value of money & inflation 150 -
increase
Work completed - (162)
Balance at the end of the year 3,150 3,000
The provision is for the ongoing care and maintenance of tailings
storage facilities and other dump footprints.
10 RELATED PARTY TRANSACTIONS
Related party transactions can exist between the holding company, fellow
subsidiaries and associated companies. These transactions are concluded at arm`s
length and under terms and conditions that are no less favourable than those
arranged with third parties.
African Rainbow Minerals Limited
- Director`s fees - 17
There are no other related party entities.
Only the director`s of the company are viewed as being key management personnel.
11 CONTINGENT LIABILITY
The Company may have a potential exposure to rehabilitate groundwater and
radiation that may exist where the Company used to operate. In addition the
company may have an exposure in relation to obtaining a full closure certificate
for the rehabilitation of these areas.
The ultimate outcome of the matter cannot presently be determined, and no
provision for any liability that may result has been made in the financial
statements. It is further not certain that the company would be held liable for
any or all of these exposures.
Should the company determine, by virtue of the investigation which is going to
commission, that any part of these contingencies require them being recorded and
accounted for as liabilities i.e where they become quantifiable and probable,
could have a material impact on the financial status of the company.
Copies of the annual report will be posted to shareholders and the JSE Limited
on 28 September 2007.
The annual general meeting of members of Village Main Reef will be held at 10:00
on 7 November 2007 at Cliffe Dekker`s offices, 1 Protea Place, Sandown,Sandton
to transact the business stated in the notice of the annual general meeting.
Johannesburg
28 September 2007
Sponsor
Merrill Lynch South Africa (Pty) Limited
Date: 28/09/2007 13:02:01 Produced by the JSE SENS Department.
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