| Thu 1 Apr 2010, 7:26 | | GDO - Gold One - Audited abridged consolidated financial report for the year |
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GDO
GDO
GDO - Gold One - Audited abridged consolidated financial report for the year
ended 31 December 2009
Gold One International Limited
(Previously BMA Gold Limited)
Registered in Western Australia under the Corporations Act 2001 (Cth)
Registration number ACN: 094 265 756
Registered as an external company in the Republic of South Africa
Registration number: 2009/000032/10
Share code on the ASX/JSE: GDO
ISIN: AU000000GDO5
OTCQX International: GLDZY
("Gold One" or the "company" or the "Group")
AUDITED ABRIDGED CONSOLIDATED FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER
2009
2009 Highlights:
- Establishment of the company`s Sub Nigel training centre
- Successful A$37,7 million capital raising
- First gold pour from underground ore on 21 July 2009
- Declaration of commercial and continuous production on 1 December 2009
- Production of 17,040 ounces
2010 Focus Areas:
- Focus on Modder East production delivery
- Restructure the balance sheet by implementing a debt facility
- Further improve shareholder spread and trading liquidity
CHIEF EXECUTIVE OFFICER`S REPORT
I was appointed Chief Executive Officer ("CEO") and President of Gold One
International Limited ("Gold One") in May 2009 following the inward listing of
Gold One (formerly BMA Gold Limited) on JSE Limited ("JSE") and the subsequent
acquisition of all the issued shares in Aflease Gold Limited ("Aflease Gold"),
a South African domiciled company. The transaction resulted in Gold One
holding primary listings on both the Australian Securities Exchange ("ASX")
and the JSE.
The year under review represented a watershed year for the company with the
achievement of several significant milestones. During the year ahead Gold One
will focus primarily on delivering on its production targets at Modder East
and on increasing its reserves and resources.
BUSINESS CONCEPT
Gold One`s strategy is to provide superior returns to investors in global
markets supportive of junior gold mining companies and it will achieve this by
exploring, developing and mining shallow, low technical risk, high margin
resources in mining friendly jurisdictions while actively reviewing
opportunities in its preferred jurisdictions, namely Australia, North America
and Southern Africa.
ACHIEVEMENTS
Gold One achieved several significant milestones during 2009. Foremost was the
declaration of commercial production at Modder East in December 2009 following
the first gold pour on 21 July 2009 from Modder East ore as well as the
successful commissioning of the new metallurgical plant in May 2009.
Modder East is expected to generate strong cash-flows from 2010 onwards as it
ramps up to full production of 150,000 to 180,000 ounces of gold at less than
U$300 per ounce cash costs and U$100 per ounce capital costs at steady state.
A contributing factor to the successful ramp up at Modder East has been the
establishment of an underground training centre at Sub Nigel which provides
fully trained teams who are able to start productive mining at Modder East
immediately.
It is gratifying that the operational results at both Modder East and Sub
Nigel have been achieved with an excellent safety record and with a lost time
injury frequency rate ("LTIFR") of 1.14 per 200 000 man hours which compares
well with the Australian benchmark and is also significantly better than the
South African benchmark.
EXPLORATION
Gold One has a significant project pipeline with prospecting rights adjoining
the Modder East and Sub Nigel mining rights and at Ventersburg in the Free
State. During 2009, exploration was focused primarily on Ventersburg where the
shallow ore body is a perfect fit to the company`s strategy of exploring,
developing and mining shallow, low technical risk high margin ore bodies. The
company has commenced with a scoping study at Ventersburg.
FINANCING
Gold One successfully raised A$37,700 million by way of a share placement in
August 2009 at A$0.3148 cents per share to fund exploration, corporate growth
projects and a partial redemption and cancellation of convertible bonds in
issue. The placement also provided working capital flexibility as the funding
of exploration and corporate growth projects was scaled back in the fourth
quarter to offset the slightly lower than forecast gold production. As a
result of the put option the convertible bondholders have to redeem their
bonds in December 2010. The company appointed a financial adviser to assist in
securing alternative funding to place Gold One in a position to redeem the
bonds should the bondholders exercise their put option. This process is
underway and it is expected that the alternative funding will be in place by
mid-2010.
PEOPLE
Gold One embarked on a recruitment drive in 2009 increasing the number of
employees from 272 to 933 at the end of that year. The company continues to
strive towards creating an environment that will attract high calibre
individuals who thrive in a challenging, self motivating no frills working
environment where team work and mutual respect are fundamental.
I would like to express my appreciation to the many loyal shareholders whose
support during the past year has been so important and to welcome our new
shareholders to this exciting time of growth. I would also like to thank my
fellow board members, management and all Gold One employees for their hard
work, dedication and commitment to the company as well as the support that
they have given me in my first year as CEO.
Neal Froneman
President and Chief Executive Officer
DIRECTORS
The names of the directors of the company in office at the date of this report
or during the year ended 31 December 2009 are:
Director Date of appointment
Mark Kenneth Wheatley 10 July 2006
Neal John Froneman 14 April 2009
Christopher Damon Chadwick 25 May 2009
Barry Erskine Davison 25 May 2009
Kenneth Victor Dicks 25 May 2009
William Bruce Harris 25 May 2009
Sandile Swana 25 May 2009
Kenneth John Winters 2 August 2005
NATURE OF BUSINESS
Gold One is an Australian and African gold resource company, with a primary
listing on the Australian Securities Exchange ("ASX") and a secondary listing
on the JSE Limited ("JSE"). The company has been developing the new Modder
East mine in South Africa which went into commercial production on 1 December
2009 in the East Rand, some 30 kilometres from Johannesburg, and also owns the
nearby existing Sub Nigel mine, which has recently been recommissioned. Gold
One`s other projects include Ventersburg and Bothaville, both in the Free
State goldfields, the Tulo concession in Mozambique and the Etendeka
greenfields project in Namibia.
The financial report covers both the separate financial statements of Gold One
as an individual entity and the consolidated financial statements for the
consolidated entity consisting of Gold One and its subsidiaries. The full
Annual Report has been released on the ASX Company Announcements platform and
is also available on the company`s website hosted at www.gold1.co.za. The
Annual Report is expected to be posted to shareholders who have requested that
hard copies be posted to them, on or about 6 April 2010.
OPERATING AND FINANCIAL REVIEW
The net loss after tax for the year ended 2009 for the consolidated entity was
A$31.064 million (2008: loss A$6.483 million). This was largely due to forex
losses incurred as a result of conversion of the South African rand
denominated convertible bonds to the US dollar denominated convertible bonds
as well as acquisition costs and goodwill impairment as a result of the
acquisition of BMA Gold Limited. These costs are included in the general and
administration costs of A$17.836 million (2008: A$3.344 million) and other
expenses of A$11.717 million (2008: income A$98 thousand). In addition, the
rise of the general and administration costs was due to the mine nearing
production phase, which commenced on 1 December 2009. Finance income saw a
decline from A$9.260 million in 2008 to A$1.822 million in 2009 as a result of
the lower cash balances throughout the period under review. The finance costs
decreased from A$7.711 million to A$7.264 million, largely, as a result of a
reduction in interest payments brought on by the repayment of a portion of the
convertible bonds.
DIVIDENDS
No amounts have been paid or declared by the company by way of dividends since
the commencement of the financial year.
EVENTS SUBSEQUENT TO BALANCE DATE
In the opinion of the directors, no other matter or circumstance has arisen
since 31 December 2009, other than initiatives by Gold One dealing with the
possibility of the bondholders exercising their right of put, the re-purchase
of 34 bonds by Gold One and the amendment of the status of Gold One on the
Main Board List of the JSE from a primary listing to a secondary listing. In
the December quarterly review, Gold One reported that it had proactively
initiated a process to pursue the implementation of a bank debt facility and
has engaged advisers with regards to this process. The facility is intended to
provide Gold One with sufficient liquidity to meet the potential obligation
arising from the put option at the election of the bondholders in December
2010. This process has resulted in Gold One selecting two banks from a short
list of four banks, one South African and one international bank, to finalise
a debt facility. The successful close of the facility will be subject to
agreeing final terms and conditions with the banks as well as the banks
obtaining final internal approvals. For avoidance of doubt the proposed
facility does not contain an equity component.
AUDITORS REVIEW REPORT
The abridged consolidated audited financial statements for the period ended 31
December 2009 contained in this financial report have been reviewed by
PricewaterhouseCoopers. The auditors unqualified review report is available
for inspection at the company`s registered and representative offices.
THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2009
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2009
Group Group Parent Parent
2009 2008 2009 2008
A$`000 A$`000 A$`000 A$`000
Revenue 8,863 9,260 4,593 95
Cost of sales (3,978) - - -
Gross profit 4,885 9,260 4,593 95
Other income 22 - - -
General and administrative
expenditure (15,502) (3,344) (13,306) (1,005)
Other expenses (9,057) 98 (9,406) (1,336)
Exploration and pre-feasibility (3,885) (4,321) (81) -
expenditure
Operating loss before finance
costs (23,537) 1,693 (18,280) (2,246)
Finance costs (7,264) (7,711) (4,067) (2)
Loss before income tax (30,801) (6,018) (22,347) (2,248)
Income tax expense 4,731 (465) - -
Loss for the year (26,070) (6,483) (22,347) (2,248)
Other comprehensive
(loss)/income (loss)/income:
Currency translation
differences on foreign (6,993) (3,225) - -
operations
Tax - - - -
Other comprehensive
(loss)/income for the year, net (6,993) (3,225) - -
of tax
Total comprehensive
(loss)/income for the year (33,063) (9,708) (22,347) (2,248)
Loss for the year attributable
to:
Non controlling interest - - - -
Owners of the Parent (26,070) (6,483) (22,347) (2,248)
Total comprehensive
(loss)/income for the year
attributable to:
Non controlling interest - - - -
Owners of Gold One (33,063) (9,708) (22,347) (2,248)
International Limited
Earnings per share for loss
attributable to ordinary equity
holders of the company:
Loss per share (cents)
Basic and dilutive (0.04) (0.01)
Average number of shares 645,254,6 527,381,1
32 80
Headline loss for the period is the loss per period adjusted for profits
and/or losses attributable to once-off expenses and capital gains or losses.
Headline loss per share (0.03) (0.01)
Reconciliation of basic loss
and headline loss for the
period:
Loss for the period (26,070) (6,483)
Impairment of assets 5,226 -
Gain on sale of assets (245) -
Headline loss for the period (21,089) (6,483)
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009
Group Group Parent Parent
31 Dec 31 Dec 31 Dec 31 Dec
2009 2008 2009 2008
A$`000 A$`000 A$`000 A$`000
ASSETS
Current assets
Cash and cash equivalents 15,268 39,254 5,920 948
Trade and other receivables 6,973 1,327 80,343 37
Inventories 2,244 45 - -
Available for sale assets - 5,922 - -
24,485 46,548 86,263 985
Non-current assets
Receivables 18 - 10,730 18
Held-to-maturity investments 1,293 1,147 - -
Investment in subsidiaries - - 295,633 -
Property, plant and 142,323 99,538 112 44
equipment
143,634 100,685 306,475 62
Total assets 168,119 147,233 392,738 1,047
LIABILITIES
Current liabilities
Trade and other payables 10,340 7,010 1,583 440
Provisions 1,597 736 111 14
Financial liabilities
designated at fair value 80,293 - 80,293 -
92,230 7,746 81,987 454
Non-current liabilities
Financial liabilities
designated at fair value - 93,846 - -
Deferred tax liability - 4,847 - -
Provisions 3,021 2,352 - -
3,021 101,045 - -
Total liabilities 95,251 108,791 81,987 454
NET ASSETS 72,868 38,442 310,751 593
EQUITY
Contributed Equity 130,215 66,179 388,925 62,908
Reserves (3,728) (188) 10,555 4,067
Accumulated deficit (53,619) (27,549) (88,729) (66,382)
Capital and reserves
attributable to owners of
Gold One International 72,868 38,442 310,751 593
Limited
Non-controlling interest - - - -
TOTAL EQUITY 72,868 38,442 310,751 593
STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER 2009
Group Group Parent Parent
31 Dec 31 Dec 31 Dec 31 Dec
2009 2008 2009 2008
A$`000 A$`000 A$`000 A$`000
Cash flows from operating
activities
Receipts from customers 7,041 - - -
Payments to suppliers and
employees (32,588) (3,891) (2,530) (957)
(25,547) (3,891) (2,530) (957)
Interest received 1,822 9,260 148 95
Interest paid (7,264) (7,711) (4,067) (2)
Income taxes paid (147) (828) - -
Net cash outflow from
operating activities (31,136) (3,170) (6,449) (864)
Cash flows from investing
activities
Payments for property, plant
and equipment (34,069) (61,868) (156) (31)
Proceeds from sale of
property, plant and 504 - 504 -
equipment
Increase/(Decrease) in
investments 5,631 (219) (10,164) -
(Payment)/Refund of
performance bonds - - - (18)
Increase in deposits (300) - - -
Net cash outflow from
investing activities (33,865) (62,087) (9,816) (49)
Cash flows from financing
activities
Proceeds from issue of 55,447 37 34,861 637
shares
Loan advanced to controlled
entity - - - (510)
Repayment of borrowings (13,481) - (13,481) -
Net cash inflow from
financing activities 46,446 37 25,860 127
Net increase/(decrease) in
cash and cash equivalents (23,035) (65,220) 5,115 (786)
Cash and cash equivalents at
beginning of period 39,254 105,879 948 1,734
Effects of exchange rate
changes on cash and cash
equivalents (951) (1,405) (143) -
Cash and cash equivalents at
end of period 15,268 39,254 5,920 948
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2009
Consolidated Contributed Reserves Accumulated Total
Equity
Deficit Equity
A$`000 A$`000 A$`000 A$`000
Balance at 1 January 59,922 1,093 (21,066) 39,949
2008
Total comprehensive loss
for the year - (3,225) (6,483) (9,708)
Transactions with owners in
their capacity as owners
Contributions of equity net
of transaction costs 6,257 - - 6,257
Employee share options - 1,944 - 1,944
Balance at 31 December 66,179 (188) (27,549) 38,442
2008
Total comprehensive loss for
the year - (5,702) (26,070) (31,772)
Transactions with owners in
their capacity as owners
Contributions of equity net
of transaction costs 56,667 - - 56,667
Shares issued on acquisition 7,355 - - 7,355
Employee share options 14 2,162 - 2,176
Balance as at 31 December
2009 130,215 (3,728) (53,619) 72,868
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2009 (CONTINUED)
Parent Contributed Reserves Accumulated Total
Equity
Deficit Equity
A$`000 A$`000 A$`000 A$`000
Balance at 1 January 2008 62,271 3,512 (64,134) 1,649
Total comprehensive loss for
the year - - (2,248) (2,248)
Transactions with owners in
their capacity as owners
Contributions of equity net of
transaction costs 636 - - 636
Employee share options 1 555 - 556
Balance at 31 December 62,908 4,067 (66,382) 593
2008
Total comprehensive loss for
the year - - (16,412) (16,412)
Transactions with owners in
their capacity as owners
Contributions of equity net of
transaction costs - - - -
Shares issued on acquisition 326,003 - - 326,003
Employee share options 14 6,488 - 6,502
Balance as at 31 December
2009 388,925 10,555 (88,729) 310,751
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2009
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial
report are set out below. These policies have been consistently applied to all
the years presented, unless otherwise stated. The financial report includes
separate financial statements for Gold One as an individual entity and the
consolidated entity consisting of Gold One and its subsidiaries. On 18 May
2009 Gold One, a company incorporated in Australia and listed on the ASX,
inward listed on the JSE and on 25 May 2009 acquired all the issued ordinary
shares in Gold One Africa Limited (Gold One Africa) (formerly Aflease Gold
Limited) (Refer Note 33). This transaction is accounted for as a reverse
acquisition in accordance with the policy set out in Note 1(c).
(a) BASIS OF PREPARATION
This general purpose financial report has been prepared in accordance with
Australian Accounting Standards, other authoritative pronouncements of the
Australian Accounting Standards Board, Urgent Issues Group Interpretations and
the Corporations Act 2001.
Compliance with IFRS
The financial report of Gold One also complies with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB).
Historical cost convention
These financial statements have been prepared under the historical cost
convention, as modified by the revaluation of available-for-sale financial
assets, financial assets and liabilities (including derivative instruments) at
fair value through profit or loss, certain classes of property, plant and
equipment and investment property.
Presentation of financial statements
The September 2007 revised AASB 101 requires the presentation of a statement
of comprehensive income and makes changes to the statement of changes in
equity, but will not affect any of the amounts recognised in the financial
statements. As a consequence, the group had to change the presentation of its
financial statements. If an entity has made a prior period adjustment or has
reclassified items in the financial statements, it will need to disclose a
third balance sheet (statement of financial position), this one being as at
the beginning of the comparative period. The group has applied the revised
standard from 1 January 2009. Comparative information has been re-presented so
that it is also in conformity with the revised standard.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the group`s accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
statements are disclosed in note 3. (b)
(b)PRINCIPLES OF CONSOLIDATION
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities
of all subsidiaries of Gold One (``company`` or ``parent entity``) as at 31
December 2009 and the results of all subsidiaries for the year then ended.
Gold One and its subsidiaries together are referred to in this financial
report as the group or the consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over
which the group has the power to govern the financial and operating policies,
generally accompanying a shareholding of more than one-half of the voting
rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the group
controls another entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the group. They are de-consolidated from the date that control
ceases.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the group (refer to note 33).
The group applies a policy of treating transactions with non controlling
interests as equity. This will no longer result in goodwill or gains and
losses. Refer to the change in accounting policy as a result of the adoption
of AASB 127 below.
Intercompany transactions, balances and unrealised gains on transactions
between group companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the group.
Non-controlling interests in the results and equity of subsidiaries are shown
separately in the consolidated statement of comprehensive income and statement
of financial position respectively.
Investments in subsidiaries are accounted for at cost in the individual
financial statements of Gold One.
Change in accounting policy
The amendments to AASB 5 Discontinued Operations and AASB 1 First-Time
Adoption of Australian-Equivalents to International Financial Reporting
Standards are part of the IASB`s annual improvements project published in May
2008. They clarify that all of a subsidiary`s assets for the year ended 31
December 2009 and liabilities are classified as held for sale if a partial
disposal sale plan results in loss of control. Relevant disclosures should be
made for this subsidiary if the definition of a discontinued operation is met.
The group will apply the amendments prospectively to all partial disposals of
subsidiaries from 1 July 2009.
In July 2008, the AASB approved amendments to AASB 1 First-time Adoption of
International Financial Reporting Standards and AABS 127 Consolidated and
Separate Financial Statements. The group will apply the revised rules
prospectively from 1 July 2009. After that date, all dividends received from
investments in subsidiaries, jointly controlled entities or associates will be
recognised as revenue, even if they are paid out of pre-acquisition profits,
but the investments may need to be tested for impairment as a result of the
dividend payment. Under the entity`s current policy, these dividends are
deducted from the cost of the investment. Furthermore, when a new intermediate
parent entity is created in internal reorganisations it will measure its
investment in subsidiaries at the carrying amounts of the net assets of the
subsidiary rather than the subsidiary`s fair value.
The revised AASB 127 requires the effects of all transactions with non-
controlling interests to be recorded in equity if there is no change in
control. These transactions will no longer result in goodwill or gains and
losses. It has been early adopted from annual reporting period beginning 01
January 2009. The standard also specifies the accounting when control is lost.
Any remaining interest in the entity is remeasured to fair value, and a gain
or loss is recognised in profit or loss. The group applies the revised
standards to all business combinations and transactions with non- controlling
interests.
(c) BUSINESS COMBINATION
A business combination is a transaction or other event in which an acquirer
obtains control of one or more subsidiaries. An acquirer shall be identified
for all business combinations. The acquirer is the combining entity that
obtains control of the other combining entities or businesses.
A reverse acquisition occurs when the acquirer is the entity whose equity
interests have been acquired and the issuing entity is the acquiree. This
might be the case when a private entity arranges to have itself `acquired` by
a smaller public entity as a means of obtaining a stock exchange listing.
Although legally the issuing entity is regarded as the parent and the private
entity is regarded as the subsidiary, the legal subsidiary is the acquirer if
it has the power to govern the financial and operating policies of the legal
parent so as to obtain benefits from its activities.
In a reverse acquisition, the cost of the business combination is deemed to
have been incurred by the legal subsidiary in the form of equity instruments
issued to the owners of the legal parent. The published price of the equity
instruments of the acquirer is used to determine the cost of the combination,
and a calculation shall be made to determine the number of equity instruments
the acquirer would have to issue to provide the same percentage ownership
interest of the combined entity to the owners/shareholder of the acquirer as
they have in the combined entity as a result of the reverse acquisition. The
fair value of the number of equity instruments so calculated shall be used as
the cost of combination.
On 25 May 2009, Gold One acquired 100% of the issued shares of Gold One Africa
(formerly Aflease Gold Limited). Under the principles of AASB 3 Business
combinations, Gold One Africa is the accounting acquirer in the business
combination. Therefore, the transaction has been accounted for as a reverse
acquisition. Accordingly, the consolidated financial statements of Gold One
have been prepared as a continuation of the consolidated financial statements
of Gold One Africa. Gold One Africa, as the acquirer, has accounted for the
acquisition of Gold One from 25 May 2009.
The impact of the reverse acquisition on each of the primary statements from
the date of acquisition is as follows:
i) Statement of comprehensive income
- The 2009 consolidated statement of comprehensive income comprises 12
months of Gold One Africa and 7 months of Gold One.
- The 2008 consolidated statement of comprehensive income comprises 12
months of Gold One Africa.
ii) Statement of financial position
- The 2009 consolidated statement of financial position represents both
Gold One Africa and Gold One as at 31 December 2009.
- The 2008 consolidated statement of financial position represents Gold One
Africa as at 31 December 2008.
iii) Statement of cashflows
- The 2009 consolidated statement of cashflows comprises the cash balance
of Gold One Africa at 1 January 2009, the cash transactions for the year
(12 months for Gold One Africa and 7 months for Gold One) and the cash
balance of Gold One Africa and Gold One at 31 December 2009.
- The 2008 consolidated statement of cashflows comprises 12 months of Gold
One Africa`s cash transactions
iv) Statement of changes in equity
- The 2009 consolidated statement of changes in equity comprises Gold One
Africa`s equity balance at 1 January 2009, its profit for the year, and
transactions with equity holders for 12 months. It also comprises Gold
One`s transactions with equity holders in the past 7 months and the
equity balance of both companies as at 31 December 2009.
- The 2008 consolidated statement of changes in equity comprises 12 months
of Gold One Africa`s changes in equity
Reverse acquisition accounting applies only to the consolidated financial
statements. The parent entity financial statements will continue to represent
Gold One as a stand-alone entity for the 2008 and 2009 financial year.
The consideration in a reverse acquisition is deemed to have been incurred by
the legal subsidiary, Gold One Africa in the form of equity instruments issued
to the shareholders of the legal parent, Gold One. The acquisition-date fair
value of the consideration transferred has been determined by reference to the
fair value of the issued shares of Gold One immediately prior to the business
combination.
Change in accounting policy
Gold One has chosen to early adopt the revised AASB 3 from the annual
reporting period beginning 01 January 2009, whereby all acquisition- related
costs are expensed in the period in which these costs are incurred and the
services are received, with one exception. The costs to issue debt or equity
securities shall be set off against equity, namely, against the share premium
in terms of the South African Companies Act and equity in terms of the
Australian requirements.
Acquisition-related costs are costs the acquirer incurs to effect the business
combination. These costs include finder`s fees, advisory, legal, accounting,
valuation and other professional or consulting fees, general administrative
costs, including the costs of acquisition and costs of registering and issuing
debt and equity securities. The acquirer has early adopted the revised AASB 3,
whereby all acquisition-related costs shall be expensed in the period in which
these costs are incurred and the services are received, with one exception.
The costs to issue debt or equity securities shall be set off against equity,
namely, against the share premium in terms of the South African Companies Act
and equity in terms of the Australian requirements.
Non-controlling interests in an acquiree are now recognised either at fair
value or at the non-controlling interest`s proportionate share of the
acquiree`s net identifiable assets. This decision is made on an acquisition-by-
acquisition basis. Under the previous policy, the non-controlling interest was
always recognised at its share of the acquiree`s net identifiable assets. If
the group recognises previous acquired deferred tax assests after the initial
acquisition accounting is completed there will no longer be any adjustment to
goodwill. As a consequence, the recognition of the deferred tax asset will
increase the group`s net profit after tax.
(d) SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
committee that makes strategic decisions.
The operating segments identified by Gold One, the parent entity, are
corporate and administrative activities, South African operations and
projects. Projects include exploration and feasability of the groups projects
in the Southern African region. The activities in the other regions were
immaterial and did not justify separate disclosure.
Change in accounting policy
The group has adopted AASB 8 Operating Segments from 1 January 2009. AASB 8
replaces AASB 114 Segment Reporting. The new standard requires a `management
approach`, under which segment information is presented on the same basis as
that used for internal reporting purposes. This has resulted in an increase in
the number of reportable segments presented. In addition, the segments are
reported in a manner that is consistent with the internal reporting provided
to the chief operating decision maker. There has been no impact on the
measurement of the company`s assets and liabilities.
(e) FOREIGN CURRENCY TRANSLATION
i) Functional and presentation currency
Items included in the financial statements of each entity in the group are
measured using the currency that best reflects the economic substance of the
underlying events and circumstances relevant to that entity ("the functional
currency"). The consolidated financial statements are presented in Australian
Dollars (AUD), which is the group`s presentation currency. The functional
currency of the company and its subsidiaries is the South African Rand (ZAR).
ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation of monetary assets and liabilities denominated in
foreign currencies are recognised in profit or loss.
Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss. Translation differences on
non-monetary assets and liabilities such as equities held at fair value
through profit or loss are recognised in profit or loss as part of the fair
value gain or loss. Translation differences on non-monetary assets such as
equities classified as available-for-sale financial assets are included in the
fair value reserve in equity.
iii) Group companies
The results and financial position of all the group entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
- Assets and liabilities for each balance sheet presented are translated at
the closing rate at the date of the balance sheet
- Income and expenses for each statement of comprehensive income are
translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at
the dates of the transactions), and for the year ended 31 December 2009
- All resulting exchange differences are recognized in other comprehensive
income.
On consolidation, exchange differences arising from the translation of any net
investment in foreign entities, and of borrowings and other financial
instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings
forming part of the net investment are repaid, a proportionate share of such
exchange differences are recognised in profit or loss, as part of the gain or
loss on sale where applicable.
(f) PROPERTY, PLANT AND EQUIPMENT
Mine development and plant facilities
Mine and plant development costs are capitalised to the extent that they
provide access to ore bodies and have future economic benefit. These costs
include the purchase price (including duties and non-refundable taxes) of
assets used in the construction of the mine, costs directly related to develop
the mine asset for its intended use and the present value of the initial
estimate of future costs of rehabilitating the land. Other costs capitalised
to the asset are direct costs incurred in the development of the mine and
plant and indirect costs that can be directly attributable to the development
of the mine and plant. Depreciation of other assets used in the development of
the mine and plant, and, borrowing costs directly attributable to the
development of the mine and plant are also capitalised. All mine and plant
start-up costs and incidental income earned during development are
capitalised. The above costs are capitalised until the ore body is available
for intended use, at which time the asset is depreciated and further costs are
expensed. Mine assets are initially recorded at cost, where after they are
measured at cost less accumulated depreciation and accumulated impairment.
i) Undeveloped properties
Undeveloped properties are initially valued at the fair value of resources
obtained through acquisitions. Capitalised exploration and evaluation
expenditure is reviewed for impairment at each balance sheet date. In the case
of undeveloped properties, there may be only inferred resources to form a
basis for the impairment review.
Subsequent recovery of the resulting carrying value depends on successful
development of the area of interest or sale of the project. If a project does
not prove viable, all irrecoverable costs associated with the project are
written off.
ii) Mineral and surface rights
Mineral and surface rights are recorded at cost of acquisition. When there is
little likelihood of a mineral right being exploited, or the value of mineral
rights have diminished below cost, an impairment loss is recognised against
income in the period that such determination is made.
iii) Mining exploration
Exploration costs are expensed as incurred. When a decision is made that
commercial production on a mining property should commence, all further pre-
production expenditures are capitalised. These costs include evaluation costs.
iv) Depreciation of mining assets
Depreciation of mine development and plant facilities and mineral and surface
rights are computed principally by the units of production method based on
estimated reserves. To the extent that these costs benefit the entire ore
body, they are depreciated over the estimated life of the ore body.
Depreciation is first charged on mining ventures from the date on which the
mining ventures are available for intended use.
Non-mining assets
i) Non-mining assets
Land is shown at cost and not depreciated. Other non-mining fixed assets are
shown at historical cost less accumulated depreciation and accumulated
impairment losses. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
ii) Depreciation of non-mining assets
Included in non-mining assets are motor vehicles, computer equipment and
office equipment. These assets are depreciated on a straight-line basis to
allocate their cost to their residual values over their estimated useful lives
as follows:
- Motor vehicles 3 - 10 years
- Computer equipment 3 years
- Office equipment 3 - 10 years
Subsequent costs are included in the asset`s carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the group and the cost
of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the
consolidated statement of comprehensive income during the financial period in
which they are incurred.
The assets` residual values and useful lives are reviewed, and adjusted if
appropriate, at each statement of financial position date.
An asset`s carrying amount is written down immediately to its recoverable
amount if the asset`s carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with
carrying amount and are recognised in the consolidated statement of
comprehensive income.
(g) INTANGIBLES
i) Goodwill
The costs of acquisition are allocated to the fair value of assets and
liabilities of the acquiree. The excess of the cost of acquisition over fair
value is recorded as goodwill. If the fair value of assets and liabilities
exceed the cost of acquisition, the cost will be reassessed and then recorded
in Profit and Loss in the consolidated statement of comprehensive income.
Deferred tax on the difference between the fair value and carrying value of
assets and liabilities are considered and accounted for.
(h) INVESTMENTS AND OTHER FINANCIAL ASSETS
Classification
The group classifies its financial assets in the following categories:
financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments and available-for-sale financial assets. The
classification depends on the purpose for which the investments were acquired.
Management determines the classification of its investments at initial
recognition and, in the case of assets classified as held-to- maturity, re-
evaluates this designation at each reporting date.
i) Financial assets and financial liabilities at fair value through profit or
loss
Financial assets and financial liabilities at fair value through profit or
loss are classified as financial assets and financial liabilities held for
trading. A financial asset or financial liability is classified in this
category if acquired principally for the purpose of selling in the short term.
The group has had short-term investments classified in this category. A
financial asset or financial liability may be designated at fair value through
profit or loss at initial recognition if it contains one or more embedded
derivatives. The group has designated the convertible bonds as a financial
liability through profit and loss.
ii) Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial assets with
fixed or determinable payments and fixed maturities that the group`s
management has the positive intention and ability to hold to maturity. If the
group were to sell other than an insignificant amount of held-to-maturity
financial assets, the whole category would be tainted and reclassified as
available for sale. Held-to-maturity financial assets are included in non-
current assets, except for those with maturities less than 12 months from the
balance sheet date, which are classified as current assets. The group has long-
term investments which are classified in this category.
iii) 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
group`s loans and receivables comprise trade and other receivables, cash and
cash equivalents and trade and other payables in the statement of financial
position.
iv) 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 statement of financial position
date.
v) Recognition of deferred day one profit and loss
The group has issued a convertible bond, which will mature 5 years after
issue, where fair value is determined using valuation models for which not all
inputs are market observable prices or rates. The convertible bond was
initially recognised at the transaction price. The difference between the
transaction price and the model value, commonly referred to as `day one profit
and loss`, is not recognised immediately in profit and loss.
The timing of recognition of deferred day one profit and loss is determined
individually. It is either amortised over the life of the transaction,
deferred until the instrument`s fair value can be determined using market
observable inputs, or realised through settlement. The financial instrument is
subsequently measured at fair value, adjusted for the deferred day one profit
and loss. Subsequent changes in fair value are recognised immediately in
profit or loss. The group has elected to amortise the deferred day one profit
and loss over the life of the bond to maturity.
vi) Recognition and de-recognition
Regular purchases and sales of financial assets and financial liabilities are
recognised on the trade date - the date on which the group commits to purchase
or sell the asset. Investments are initially recognised at fair value plus
transaction costs for all financial assets and financial liabilities not
carried at fair value through profit or loss. Financial assets and financial
liabilities carried at fair value through profit or loss are initially
recognised at fair value and transaction costs are expensed in the statement
of comprehensive income. Available-for-sale financial assets and liabilities;
and financial assets and financial liabilities 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. Financial assets and
financial liabilities are derecognised when the rights to receive cash flows
from the investments have expired or have been transferred and the group has
transferred substantially all risks and rewards of ownership.
vii) Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at
amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through
profit and loss are subsequently carried at fair value. 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 statement of
comprehensive income within other income or other expenses in the period in
which they arise. Dividend income from financial assets at fair value through
profit and loss is recognised in the income statement as part of revenue from
continuing operations when the group`s right to receive payments is
established.
Changes in the fair value of monetary securities denominated in a foreign
currency and classified as available-for-sale are analysed between translation
differences resulting from changes in amortised cost of the security and other
changes in the carrying amount of the security. The translation differences
related to changes in the amortised cost are recognised in profit or loss, and
other changes in carrying amount are recognised in equity. Changes in the fair
value of other monetary and non-monetary securities classified as available-
for-sale are recognised in equity.
(i) INVENTORIES
i) Raw materials, stores, work in progress and finished goods
Inventories include spares and consumables stated at the lower of cost or net
realisable value. Cost of spares and consumables include the purchase price,
import duties and other taxes, transport, handling and all other costs
directly attributable in to the acquisition of the spares and consumables.
Spares and consumables are valued on the weighted average basis. Net
realisable value is the estimated selling price in the ordinary course of
business, less applicable variable selling expenses.
(j) TRADE RECEIVABLES
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision
for impairment.
A provision for impairment of trade receivables is established when there is
objective evidence that the group will not be able to collect all amounts due
according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy
(or similar work out or windup procedure) or financial reorganisation, and
default or delinquency in payments (more than 30 days overdue) are considered
indicators that the trade receivable is impaired. The amount of the provision
is the difference between the asset`s carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest
rate.
The carrying amount of the asset is reduced through the use of an allowance
account and the amount of the loss is recognised in profit or loss. When a
trade receivable is uncollectible, it is written off against the allowance
account for trade receivables. Subsequent recoveries of amounts previously
written off are credited in the consolidated statement of comprehensive
income.
(k) CASH AND CASH EQUIVALENTS
For cash flow statement presentation purposes, cash and cash equivalents
includes cash on hand, deposits held at call with financial institutions,
other short-term, highly liquid investments with original maturities of three
months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities on the
balance sheet.
(l) IMPAIRMENT OF NON-FINANCIAL ASSETS
Goodwill and intangible assets that have an indefinite useful life are not
subject to amortisation and tested annually for impairment. 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.
(m) CONTRIBUTED EQUITY
Ordinary shares are classified as equity. 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. Equity instruments issued by the
group are recorded at the proceeds received, net of direct issue costs.
(n) PROVISIONS
i) Asset retirement obligations
The group recognises the best estimate of the future asset retirement
obligation as a liability in the year in which it incurs a legal or
constructive obligation associated with the retirement of tangible long-lived
assets that results from the acquisition, construction, development, and/or
normal use of the assets. The group concurrently recognises a corresponding
increase in the carrying amount of the related long-lived asset that is
depreciated over the life of the asset. The present value of the asset
retirement obligation is reviewed annually using the expected cash flow
approach that reflects a range of possible outcomes discounted at credit
adjusted risk-free interest rate. The present value is provided for in full
for the estimated future costs of pollution control and rehabilitation, in
accordance with environmental and regulatory requirements.
Subsequent to the initial measurement, the asset retirement obligation is
adjusted at the end of each year to reflect the passage of time and changes in
the estimated future cash flows underlying the obligation. Changes in
obligation due to damage caused during the production phase are recognised in
profit and loss.
Changes in the obligation due to the passage of time are recognised in profit
or loss as a financing cost using the discounted cash flow method. Changes in
the obligation due to changes in estimated cash flows are recognised as an
adjustment to the carrying amount of the long-lived asset that is depreciated
over the remaining life of the asset.
The rehabilitation asset is being amortised over the life of the mine.
(o) CURRENT AND DEFERRED INCOME TAX
The income tax expense or revenue for the period is the tax payable on the
current period`s taxable income based on the applicable income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However,
the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor
taxable profit nor loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the reporting
date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and
unused tax losses only if it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of investments in
controlled entities where the parent entity is able to control the timing of
the reversal of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognised directly
in equity are also recognised directly in equity.
i) Tax consolidation legislation
Gold One and its wholly-owned Australian controlled entities have implemented
the tax consolidation legislation.
The head entity, Gold One, and the controlled entities in the tax consolidated
group account for their own current and deferred tax amounts. These tax
amounts are measured as if each entity in the tax consolidated group continues
to be a stand-alone taxpayer in their own right.
In addition to its own current and deferred tax amounts, Gold One also
recognises the current tax liabilities (or assets) and the deferred tax assets
arising from unused tax losses and unused tax credits assumed from controlled
entities in the tax consolidated group.
(p) TRADE PAYABLES
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
(q) REVENUE RECOGNITION
Revenue is measured at the fair value of the consideration received or
receivable. Amounts disclosed as revenue are net of returns, trade allowances,
rebates and amounts collected on behalf of third parties. The group 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 group`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 group bases its
estimates on historical results, taking into consideration the type of
customer, the type of transaction and the specifics of each arrangement.
i) Interest income
Interest income is recognised on a time proportion basis, taking account of
the principal outstanding and the effective rate over the period to maturity,
when it is determined that such income will accrue to the group.
ii) Sale of goods and Mine production
Goods revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer and can be measured reliably.
Risks and rewards are considered passed to the buyer at the time of delivery
to the customer, being when the gold leaves the processing plant.
(r) EMPLOYEE BENEFITS
i) Wages and salaries
Liabilities for wages and salaries, including non-monetary benefits, annual
leave and accumulating sick leave expected to be settled within 12 months of
the reporting date are recognised in other payables in respect of employees`
services up to the reporting date and are measured at the amounts expected to
be paid when the liabilities are settled.
ii) Long service leave
The liability for long service leave is recognised in the provision for
employee benefits and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the
reporting date using the projected unit credit method. Consideration is given
to expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market
yields at the reporting date on national government bonds with terms to
maturity and currency that match, as closely as possible, the estimated future
cash outflows.
iii) Share based payments
Share-based compensation benefits are provided to employees via the Gold One
International Employee Option Plan, Replacement Option Terms and the Gold One
International Share Incentive Scheme. Information relating to these schemes is
set out in note 29. The fair value of options granted under the Gold One
International Employee Option Plan, Replacement Option Terms and the Gold One
International Share Incentive Scheme is recognised as an employee benefit
expense with a corresponding increase in equity. The fair value is measured at
grant date and recognised over the period during which the employees become
unconditionally entitled to the options.
The fair value at grant date is independently determined using a the Binomial
option pricing model that takes into account the exercise price, the term of
the option, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the
risk free interest rate for the term of the option.
The fair value of the options granted is adjusted to reflect market vesting
conditions, but excludes the impact of any non-market vesting conditions (for
example, profitability and sales growth targets). Non-market vesting
conditions are included in assumptions about the number of options that are
expected to become exercisable. At each reporting date, the entity revises its
estimate of the number of options that are expected to become exercisable. The
employee benefit expense recognised each period takes into account the most
recent estimate. The impact of the revision to original estimates, if any, is
recognised in the statement of comprehensive income with a corresponding
adjustment to equity.
If shares were issued by the Gold One International Limited Share Incentive
Scheme to employees for no cash consideration, these shares would vest
immediately on grant date and on this date, the market value of the shares
issued would be recognised as an employee benefits expense with a
corresponding increase in equity.
Change in accounting policy
AASB 2008-1 clarifies that vesting conditions are service conditions and
performance conditions only and that other features of a share-based payment
are not vesting conditions. It also specifies that all cancellations, whether
by the entity or by other parties, should receive the same accounting
treatment. The group has applied the revised standard from 1 January 2009, but
it does not affect the accounting for the group`s share-based payments.
iv) Termination benefits
Termination benefits are payable when employment is terminated before the
normal retirement date, or when an employee accepts voluntary redundancy in
exchange for these benefits. The group recognises termination benefits when it
is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of
withdrawal or providing termination benefits as a result of an offer made to
encourage voluntary redundancy. Benefits falling due more than 12 months after
reporting date are discounted to present value.
(s) LEASES
Leases of property, plant and equipment where the group has substantially
transferred all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the inception of the lease at the
lower of the fair value of the leased property or the present value of the
minimum lease payments. Each lease payment is allocated between the liability
and finance charges so as to achieve a constant rate on the finance balance
outstanding. The corresponding rental obligations, net of finance charges, are
included in other long-term payables. The interest element of the instalment
is charged to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each
period. The property, plant and equipment acquired under finance leases are
depreciated over the shorter of the useful life of the asset or the lease
term.
Leases in which a significant portion of the risks and rewards of ownership
are retained by the lessor are classified as operating leases. Payments made
under operating leases (net of any incentives received from the lessor) are
charged to profit or loss on a straight-line basis over the period of the
lease.
(t) EARNINGS OR LOSS PER SHARE
i) Basic earnings or loss per share
Basic earnings or loss per share is computed by dividing the profit
attributable to owners of the company, excluding any costs of servicing equity
other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary
shares during the year and excluding treasury shares.
ii) Diluted earnings or loss per share
Diluted earnings or loss per share adjusts the figures used in the
determination of basic earnings or loss per share to take into account the
after income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares, and the weighted average number of
additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
(u) DIVIDENDS
Provision is made for the amount of any dividend declared, being appropriately
authorised and no longer at the discretion of the entity, on or before the end
of the financial year but not distributed at balance date.
(v) GST AND VAT
Revenues, expenses and assets are recognised net of the amount of associated
GST and VAT, unless the GST and VAT incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST and VAT
receivable or payable. The net amount of GST and VAT recoverable from, or
payable to, the taxation authority is included with other receivables or
payables in the balance sheet.
Cash flows are presented on a gross basis. The GST and VAT components of cash
flows arising from investing or financing activities which are recoverable
from, or payable to the taxation authority, are presented as operating cash
flows.
(w) GOING CONCERN
The consolidated entity has incurred a net loss of A$26.070 million for the
year ended 31 December 2009 and operating cash outflows of A$31.136 million.
The financial position of Gold One at 31 December 2009 reflects a net current
liability of A$67.745 million, due to the classification of the company`s
convertible bonds liability (A$80.293 million) as a current liability.
The holders of the convertible bonds have the option to put the bonds to the
group at the accreted principal amount plus accrued interest on the third
anniversary of the closing date, being 12 December 2010. The ability of the
group to continue as a going concern is dependent on the mining operations
generating sufficient free operating cash and or the obtaining of additional
funding to finance the put option.
The mining operations during 2010 are estimated to produce between 100,000 and
120,000 ounces of gold at an average cash cost below U$400/oz. Whilst the
directors are confident the mining operations will generate sufficient free
cash during 2010 to repay convertible bonds should the bond holders exercise
the put option at 12 December 2010, they are of the considered opinion it is
both prudent and preferable the funds required to finance the put option be
raised by way of a pure debt facility as opposed to using cash reserves and or
equity.
Gold One reported in its December 2009 quarterly review, that it had
proactively initiated a process to pursue the implementation of a bank debt
facility and that it had engaged advisors in this regard. An independent
review of the mine operations and mine plan has been completed as part of the
due diligence undertaken in seeking additional debt facilities. The findings
of the independent review support the opinion of the directors that the mine
plan is achievable. The debt funding process is now at an advanced stage and
has resulted in Gold One selecting two banks, one South African and one
international, from a short list of four, to provide the debt facility.
The successful close of the facility will be subject to agreeing final terms
and conditions with the banks as well as the latter obtaining final internal
credit approvals. Gold One is in the process of settling and signing a mandate
letter and it is expected that the facility will be in place by mid 2010.
The directors are of the considered opinion that the group will be successful
in achieving the mine plan and in securing the debt facility. The directors
are further of the opinion that no asset is likely to be realised for an
amount less than the amount at which it is recorded in the financial report at
31 December 2009. Accordingly, no adjustments have been made to the financial
report relating to the recoverability and classification of the asset carrying
amounts or the amounts and classification of liabilities that might be
necessary should the group not continue as a going concern. Therefore, these
financial statements have been prepared on a going concern basis, which
contemplates continuity of normal business activities and realisation of
assets and settlement of liabilities in the ordinary course of business.
(x) ROUNDING
The company is of a kind referred to in Class Order 98/100, issued by the
Australian Securities and Investments Commission, relating to the ``rounding
off`` of amounts in the financial report. Amounts in the financial report have
been rounded off in accordance with that Class Order to the nearest thousand
dollars, or in certain cases, the nearest dollar.
(y) ADOPTION OF NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 December 2009 reporting period. The group`s and the
parent entity`s assessment of the impact of these new standards and
interpretations is set out below:
i) AASB 2009-8 Amendments to Australian Accounting Standards - Group Cash-
Settled Sharebased Payment Transactions (AASB 2) (effective from 1 January
2010)
The amendments made by the AASB to AASB 2 confirm that an entity receiving
goods or services in a group share-based payment arrangement must recognise an
expense for those goods or services regardless of which entity in the group
settles the transaction or whether the transaction is settled in shares or
cash. They also clarify how the group share-based payment arrangement should
be measured, that is, whether it is measured as an equity- or a cash-settled
transaction. The group will apply these amendments retrospectively for the
financial reporting period commencing on 1 January 2010. There will be no
impact on the group`s or the parent entity`s financial statements.
ii) AASB 2009-10 Amendments to Australian Accounting Standards -
Classification of Rights Issues (AASB 132) (effective from 1 February 2010) In
October 2009 the AASB issued an amendment to AASB 132 Financial Instruments:
Presentation which addresses the accounting for rights issues that are
denominated in a currency other than the functional currency of the issuer.
Provided certain conditions are met, such rights issues are now classified as
equity regardless of the currency in which the exercise price is denominated.
Previously, these issues had to be accounted for as derivative liabilities.
The amendment must be applied retrospectively in accordance with AASB 108
Accounting Policies, Changes in Accounting Estimates and Errors. The group
will apply the amended standard from 1 February 2010. As the group has not
made any such rights issues, the amendment will not have any effect on the
group`s or the parent entity`s financial statements.
iii) AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian
Accounting Standards arising from AASB 9 (effective from 1 January 2013) AASB
9 Financial Instruments addresses the classification and measurement of
financial assets and is likely to affect the group`s accounting for its
financial assets. The standard is not applicable until 1 January 2013 but is
available for early adoption. The group is yet to assess its full impact.
However, initial indications are that it may affect the group`s accounting for
its available-for-sale financial assets, since AASB 9 only permits the
recognition of fair value gains and losses in other comprehensive income if
they relate to equity investments that are not held for trading. Fair value
gains and losses on available for sale debt investments, for example, will
therefore have to be recognised directly in profit or loss. The group has not
yet decided when to adopt AASB 9.
iv) Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to
Australian Accounting Standards (effective from 1 January 2011) In December
2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is
effective for accounting periods beginning on or after 1 January 2011 and must
be applied retrospectively. The amendment removes the requirement for
government-related entities to disclose details of all transactions with the
government and other government-related entities and clarifies and simplifies
the definition of a related party. The group will apply the amended standard
from 1 January 2011. Neither the group nor the company has investments in
associates and therefore there is no impact on the existing related party
disclosures.
v) AASB Interpretation 19 Extinguishing financial liabilities with equity
instruments and AASB 2009-13 Amendments to Australian Accounting Standards
arising from Interpretation 19 (effective from 1 July 2010) AASB
Interpretation 19 clarifies the accounting when an entity renegotiates the
terms of its debt with the result that the liability is extinguished by the
debtor issuing its own equity instruments to the creditor (debt for equity
swap). It requires a gain or loss to be recognised in profit or loss which is
measured as the difference between the carrying amount of the financial
liability and the fair value of the equity instruments issued. The group will
apply the interpretation from 1 January 2011. It is not expected to have any
impact on the group or the parent entity`s financial statements since it is
only retrospectively applied from the beginning of the earliest period
presented (1 January 2010) and the group has not entered into any debt for
equity swaps since that date.
vi) AASB 2009-14 Amendments to Australian Interpretation - Prepayments of a
Minimum Funding Requirement (effective from 1 January 2011) In December 2009,
the AASB made an amendment to Interpretation 14 The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their Interaction. The amendment
removes an unintended consequence of the interpretation related to voluntary
prepayments when there is a minimum funding requirement in regard to the
entity`s defined benefit scheme. It permits entities to recognise an asset for
a prepayment of contributions made to cover minimum funding requirements. The
group does not make any such prepayments and does not have any post-employment
defined benefit plans.
On behalf of the Board
Neal Froneman
Chief Executive Officer
Dated: 1 April 2010
Johannesburg, South Africa
BOARD OF DIRECTORS
Mark Wheatley* (Chairman), Neal Froneman (CEO), Christopher Chadwick (CFO),
Izak Marais (COO), Barry Davison*, Ken Dicks*, William Harris*, Sandile
Swana*, Ken Winters*
*Non-executive Directors
CORPORATE DIRECTORY
REGISTERED OFFICE
Level 3
100 Mount Street
NORTH SYDNEY NSW 2060
Telephone: +61 2 9963 6400
Facsimile: +61 2 9963 6499
JOHANNESBURG REPRESENTATIVE OFFICE
45 Empire Road, First Floor,
Parktown, 2193
Gauteng, South Africa
Telephone: +27 11 726 1047
Facsimile: +27 11 726 1087
AUDITORS
PricewaterhouseCoopers (Australia)
SHARE REGISTRY (Australia)
Registries Limited
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
SPONSOR
Macquarie First South Advisers (Pty) Ltd
Date: 01/04/2010 07:26:02 Produced by the JSE SENS Department.
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