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VIL
VIL
VIL - Village - Issue Of Audited Annual Financial Statements And Notice Of
Annual General Meeting
Village Main Reef Gold Mining Company (1934) Limited
("Village")
(Incorporated in the Republic of South Africa)
(Registration Number 1934/005703/06)
JSE Code: VIL & ISIN : ZAE000007720
ISSUE OF AUDITED ANNUAL FINANCIAL STATEMENTS AND NOTICE OF ANNUAL GENERAL
MEETING
Shareholders of Village are advised that the annual financial statements of
Village for the year ended 30 June 2008, incorporating the notice of annual
general meeting have been posted to shareholders today, Tuesday 30 September
2008.
The annual general meeting of Village will be held on Tuesday, 11 November
2008 at 11:00 at the offices of Investec bank, 100 Grayston Drive, Sandton,
2196
Village shareholders are also reminded of the general meeting to take place
on Friday, 10 October 2008 at 100 Grayston Drive, Sandton, 2196 to pass a
number of resolutions as detailed in the circular posted on 17 September
2008.
Directors` commentary
During June and July 2008, there was substantial activity at Village
providing the promise of potential value creation for all shareholders.
During June 2008 To The Point Growth Specialists Investments 2 (Pty) Ltd ("To
The Point Investments") acquired 606 809 shares (10.0%) from Mr Cobbett, a
long standing shareholder, for an amount of R606 809 at 100 cents per share.
Mr Cobbett remains a shareholder of Village with an approximate 13.0%
shareholding.
On 10 July 2008 To The Point Investments announced that it had acquired a
further 37.8% of the issued share capital of Village for an amount of R1 056
498.55. The stake was purchased from Harmony Gold Mining Company Limited at a
price of 46.0215 cents per share. To The Point Investments is a subsidiary of
To The Point Growth Specialists (Pty) Ltd ("To The Point") founded by Bernard
Swanepoel and Clinton Halsey and operates primarily in the resources and
resources-related space as advisor and co-investor.
This resulted in To The Point Investments holding a total of 47.8% in Village
obligating the company to issue an offer to minority shareholders of Village
in terms of the Securities Regulation Code on Take-overs and Mergers. This
offer was made at 100 cents per share. To The Point Investments acquired an
additional 12 812 shares at 27 July 2008 as a result of the minority offer.
At the time of publishing To The Point Investments holds a total of 2 915 284
shares, representing 48.0% of the issued share capital.
During this time there was also a change in directorate. The non-executive
chairman of Village, Cedric Savage, and non-executive directors Graham
Briggs, Bob Atkinson as well as Frank Abbott resigned from the board of
directors of Village during July 2008. Bernard Swanepoel, Clinton Halsey and
Dalubuhle Ncube were appointed as non-executive directors to the board to
replace them. On 31 July 2008 Mike Pleming was appointed as non-executive
chairman to the Village board. Georges Rawstorne and Ferdi Dippenaar were
appointed as independent non-executive directors at the same time. The
Village board currently consists of: Mike Pleming (Chairman), Bernard
Swanepoel, Clinton Halsey, Dalubuhle Ncube, Ferdi Dippenaar and Georges
Rawstorne.
Independent review by auditor`s
The financial statements have been audited by our auditors
PriceWaterhouseCoopers Inc., who have performed their audit in accordance
with the International Auditing Standards.
A copy of their unqualified audit report is available for inspection at the
registered office of the company
AUDITED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
2008 2007
Notes R`000 R`000
Revenue - -
Operating expenses (65) (336)
Other income 428 217
Investment income 281 217
Profit from sale of assets 147 -
Finance costs (1,870) (150)
Loss before taxation 2 (1,507) (269)
Taxation 3 - -
Net loss for the year (1,507) (269)
Basic loss per share - cents 7 (25) (4)
Headline loss per share - cents 7 (25) (4)
AUDITED BALANCE SHEET
AS AT 30 JUNE 2008
2008 2007
Notes R`000 R`000
ASSETS
Non-current assets
Environmental rehabilitation 4 3,816 3,439
trust
Total non-current assets 3,816 3,439
Current assets
Cash and cash equivalents 5 1,548 1,277
Total current assets 1,548 1,277
Non-current asset held for sale 6 - 250
Total assets 5,364 4,966
EQUITY AND LIABILITIES
Capital and reserves
Share capital issued 8 758 758
Accumulated (loss)/profit (430) 1,054
Total shareholders` equity 328 1,812
Non-current liabilities
Provision for environmental 9 5,020 3,150
rehabilitation
Total non-current liabilities 5,020 3,150
Current liabilities
Trade and other payables 10 16 4
Total current liabilities 16 4
Total equity and liabilities 5,364 4,966
AUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2008
Share Total
capital profits
issued
R `000 R `000 R `000
Balance at 1 July 2006 758 1,323 2,081
Net loss for the year - (269) (269)
Unclaimed dividends forfeited - -
Balance at 30 June 2007 758 1,054 1,812
Opening balance adjustment - 23 23
Net loss for the year - (1,507) (1,507)
Balance at 30 June 2008 758 (430) 328
AUDITED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2008
2008 2007
R`000 R`000
Cash flow from operating
activities
Cash utilised by operations (407) (769)
Interest received 281 217
Net cash utilised in operating (126) (552)
activities
Cash flow from investing
activities
Proceeds from sale of property, 397 -
plant and equipment
Net cash generated by/(utilised 397 -
in) investing activities
Increase/(Decrease) in cash and 271 (552)
cash equivalents
Cash and cash equivalents at 1,277 1,829
beginning of the year
Cash and cash equivalents at 1,548 1,277
the end of the period
Cash utilised by operations is
arrived at as follows:
Loss before interest received,
sundry income and
taxation per income statement (1,935) (485)
Adjustment for:
Interest earned on (377) (275)
rehabilitation trust funds
Net increase in provision for 1,870 150
rehabilitation
Other non-cash operating 24 -
expenses
Operating loss before working (418) (610)
capital changes
Decrease in trade and other - -
receivables
Increase/(Decrease in trade and 11 (159)
other payables
Cash utilised by operations (407) (769)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The principal accounting policies applied in the
preparation of these financial statements are set out
below. These policies have been consistently applied to
all the years presented, unless otherwise stated.
1.1 BASIS OF PREPARATION
These financial statements of Village Main Reef Mining
Company (1934) Limited have been prepared in accordance
with International Financial Reporting Standards (IFRS)
and the South African Companies Act of 1973. The
financial statements have been prepared under the
historical cost convention.
The preparation of financial statements in conformity
with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its
judgment in the process of applying the company`s
accounting policies. The areas involving a higher degree
of judgment or complexity, or areas where assumptions and
estimates are significant to the financial statements,
are disclosed in Note 1.10.
1.2 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at cost less
accumulated depreciation and any impairment in value.
Land is stated at cost less impairment and 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 IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that are subject to depreciation are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which
the asset`s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an
asset`s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that
suffered impairment are reviewed for possible reversal of
the impairment at each reporting date.
1.4 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.
1.5 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.
1.6 FINANCIAL ASSETS
1) Financial assets at fair value
through profit or loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is
classified in this category if acquired principally for
the purpose of selling in the short term. Derivatives are
classified as held for trading unless they are designated
as hedges. Assets in this category are classified as
current assets. The company does not own any assets of
this nature.
2) Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. They are included in current assets,
except for maturities greater than 12 months after the
balance sheet date. These are classified as non-current
assets. The company does not own any assets of this
nature.
3) Available-for-sale financial
assets
Available-for-sale financial assets are non-derivatives
that are either designated in this category or not
classified in any of the other categories. They are
included in non-current assets unless management intends
to dispose of the investment within 12 months of the
balance sheet date. Available for sale assets are
classified separately in the balance sheet.
Regular purchases and sales of financial assets are
recognised on trade-date - the date on which the company
commits to purchase or sell the asset. Investments are
initially recognised at fair value plus transaction costs
for all financial assets not carried at fair value
through profit and loss. Financial assets carried at fair
value through profit or loss are initially recognised at
fair value, and transaction cost are expensed in the
income statement. Financial assets are derecognised when
the rights to receive cash flows from the investments
have expired or have been transferred and the company has
transferred substantially all risks and rewards of
ownership. Available-for-sale financial assets and
financial assets at fair value through profit or loss are
subsequently carried at fair value. Loans and receivables
are carried at amortised cost using the effective
interest method.
Gains or losses arising from changes in the fair value of
the `financial assets at fair value through profit or
loss` category are presented in the income statement
within other (losses)/gains - net, in the period in which
they arise. Dividend income from financial assets at fair
value through profit or loss is recognised in the income
statement as part of other income when the company`s
right to receive payments is established.
Changes in the fair value of financial assets classified
as available for sale are recognised in equity. When
securities classified as available for sale are sold or
impaired, the accumulated fair value adjustments
recognised in equity are included in the income statement
as gains and losses from investment securities.
The company assesses at each balance sheet date whether
there is objective evidence that a financial asset or a
group of financial assets is impaired. In the case of
equity securities classified as available for sale, a
significant or prolonged decline in the fair value of the
security below its cost is considered as an indicator
that the securities are impaired. If any such evidence
exists for available-for-sale financial assets, the
cumulative loss - measured as the difference between the
acquisition cost and the current fair value, less any
impairment loss on that financial asset previously
recognised in profit or loss - is removed from equity and
recognised in the income statement. Impairment losses
recognised in the income statement on equity instruments
are not reversed through the income statement.
1.7 PROVISIONS
Provisions are recognised when the Company has a present
legal or constructive obligation as a result of past
events, it is more likely than not that an outflow of
resources will be required to settle the obligation, and
the amount has been reliably estimated. Provisions are
not recognised for future operating losses.
Provisions are measured at the present value of the
expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current
market assessments of the time value of money and the
risks specific to the obligation. The increase in the
provision due to passage of time is recognized as
interest expense.
1.8 REVENUE AND INCOME RECOGNITION
Revenue comprises the fair value of the consideration
received or receivable for the sale of goods in the
ordinary course of the company`s activities. Revenue is
shown net of value-added tax, returns, rebates and
discounts. Revenue is recognised as follows:
The company recognises revenue when the amount of revenue
can be reliably measured, it is probable that future
economic benefits will flow to the entity and specific
criteria have been met for each of the company`s
activities as described below. The amount of revenue is
not considered to be reliably measurable until all
contingencies relating to the sale have been resolved.
The company bases its estimates on historical results,
taking into consideration the type of customer, the type
of transaction and the specifics of each arrangement.
(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.
1.9 FINANANCIAL RISK MANAGEMENT
(1) Financial risk factors
The following financial risks should be considered:
market risk (including currency risk, fair value interest
rate risk, cash flow interest rate risk and price risk),
credit risk and liquidity risk.
Risk management is carried out by management under
policies approved by the Board of Directors. Management
identifies, evaluates and hedges financial risks. The
Board provides written principles for overall risk
management, as well as written policies covering specific
areas, such as interest rate risk, credit risk and
investment of excess liquidity.
a) Market risk
As a result of the company being a listed shell company,
the market risk is therefore deemed insignificant as
there are no trading in the entity at present.
b) Credit risk
Credit risk arises from cash and cash equivalents with
banks and financial institutions. The company`s cash
equivalents are placed with high credit quality financial
institutions. Accordingly the company has no significant
concentration of credit risk.
c) Liquidity risk
The table below analyses the company`s financial
liabilities into relevant maturity groupings based on the
remaining period at the balance sheet to the contractual
maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows. Balances due within
12 months equal their carrying balances as the impact of
discounting is not significant.
Less Between
than 1 2 and 5
year. years
At 30 June 2008
Trade and other payables 16 -
At 30 June 2007
Trade and other payables 4 -
(2) Fair value estimation
The carrying value of trade payables are assumed to
approximate their fair values due to the short-term
nature of trade payables. The fair value of financial
liabilities for disclosure purposes is estimated by
discounting the future contractual cash flows at the
current market interest rate that is available to the
company for similar financial instruments.
For financial assets and liabilities with maturities of
less than one year, the face value less any estimated
credit adjustments are assumed to approximate their fair
values.
1.10 CASH AND CASH EQUIVALENTS
Cash and cash equivalents are carried in the balance
sheet at cost. Cash and cash equivalents comprise cash
on hand, deposits held at call with banks and bank
overdrafts. Bank overdrafts are included within
borrowings in current liabilities on the balance sheet.
For the purpose of the cash flow statement, cash and cash
equivalents comprise cash on hand, deposits held with
banks and net of bank overdrafts. In the balance sheet,
bank overdrafts are included in borrowings, in current
liabilities.
1.11 TRADE PAYABLES
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the
effective interest method.
1.12 CRITICAL ACCOUNTING JUDGMENTS AND
ESTIMATES
Estimates and judgements are continually evaluated and
are based on historical experience and other factors,
including expectations of future events that are believed
to be reasonable under the circumstances.
The company makes estimates and assumptions concerning
the future. The resulting accounting estimates will, by
definition, rarely equal the related actual results. The
estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are
discussed below.
a) 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.
b) 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.
c) 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.
Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
R`000 R`000
2. LOSS BEFORE TAX 2008 2007
Loss before taxation is stated after
:
Auditor`s remuneration 16 -
Remuneration for technical, advisory, - 143
secretarial and administrative
services
Increase in rehabilitation provision 1,870 150
No director`s fees were paid in the - -
current year.
3. TAXATION
Reconciliation of rate of taxation % %
Standard rate of company taxation (28) (29)
Deferred tax asset not raised 28 29
Effective rate of taxation - -
4 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.
(2006:R 0)
Balance at beginning of the year 3,439 3,164
Interest earned 377 276
Operating cost - (1)
Funds transferred to the Trust - -
Balance at the end of the year 3,816 3,439
5 CASH AND CASH EQUIVALENTS
Cash on hand and on deposit 1,548 1,277
6 ASSET HELD FOR SALE
The asset held for sale in the - 250
previous year comprised 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. This was sold in the
current year for a profit of R 147
448.
7 BASIC AND HEADLINE LOSS PER SHARE
The calculation of basic loss per
share is based on basic loss of R 1
507 000 (2007:R269 000) and a
weighted average of 6 068 446 (2007:6
068 446) shares in issue during the
period.
The calculation of diluted headline
loss per share is based on headline
loss of 1 507 000 (2007: R269 000)
and a weighted average of 6 068 446
(2007: 6 068 446) shares in issue
during the period.
Headline loss
Loss per income statement (1,507) (269)
Adjustments - -
Headline loss for the year (1 507) (1 507)
(25) (4.4)
Headline loss per share - cents
8 SHARE CAPITAL
Authorised
8 000 000 shares of 12,5 cents each 1,000 1,000
Issued
6 068 446 fully paid up shares of 758 758
12,5 cents each
9 PROVISION FOR ENVIRONMENTAL
REHABILITATION
Balance at beginning of the year 3,150 3,000
Change in estimate and inflation 1,870 150
increase
Balance at the end of the year 5,020 3,150
The provision is for the ongoing care
and maintenance of tailings storage
facilities and other dump footprints.
10 TRADE AND OTHER PAYABLES
Accruals 16 4
11 FINANCIAL INSTRUMENTS
(a) Financial instruments by category
Loans and receivables
Assets as per balance sheet
Trade and other receivables - -
Cash and cash equivalents 1,548 1,277
Liabilities as per balance sheet
16 4
Trade and other payables 16 4
(b) Credit quality of financial
assets
Cash at bank and short term deposits
All cash and cash equivalents are
held with First National Bank.
12 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, that any part of these
contingencies require them being recorded and accounted
for as liabilities i.e. where they become quantifiable
and probable, such accounting could have a material
impact on the financial status of the company.
Johannesburg
30 September 2008
Sponsor to Village
Investec Bank
Date: 30/09/2008 16:12:01 Produced by the JSE SENS Department.
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