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New Gold Issuer-Annual Financial Results For The Year Ended 31 March 2014.
NEWGOLD ISSUER (RF) LIMITED
Registration number 2004/014119/06)
Share code: GLD
ISIN: ZAE000060067
(“NewGold” or “the ETF”)
Share code: NGPLT
ISIN: ZAE000177580
(“NewPlat” or “the ETF”)
Share code: NGPLD
ISIN: ZAE000182507
(“NewPall” or “the ETF”)
Preparer / Compiler : The audited annual financial statements were independently compiled by:
Deloitte & Touche
Director: Shaun Govender
Supervised by :The NewGold ETF is managed by New Gold Manager (Pty) Ltd, a 100% owned subsidiary of Absa Bank Limited. All references to manager and management
relate to NewGold Managers (Pty) Ltd. These audited annual statements are under the direction and supervision of the Head of Financial and Regulatory
Control of Absa Corporate and Investment Banking (“CIB”), a division of Absa Bank Limited, Francois Rossouw CA(SA).
NEWGOLD ISSUER (RF) LIMITED
SUMMARISED AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2014
STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 MARCH 2014
2014 2013
R R
ASSETS
Current assets
Current tax receivable 8,873,489 25,660,931
Trade and other receivables 712,753 548,410
Bullion Investments 32,037,998,760 21,250,648,872
Cash and cash equivalents 48,503,655 15,623,753
Total assets 32,096,088,657 21,292,481,966
EQUITY AND LIABILITIES
Equity
Share capital 100 100
Retained income 4,890,424 6,422,369
Non-Current Liabilities
Deferred tax 55,010,068 40,109,249
Current liabilities
Debentures 32,027,237,369 21,243,416,640
Trade and other payables 8,950,696 2,533,608
Total Equity and Liabilities 32,096,088,657 21,292,481,966
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2014
2014 2013
R R
Revenue 109,764,870 78,030,590
Other income 3,975,116 177,517
Operating expenses (26,996,309) (15,023,440)
Fair value adjustment on Bullion Investments 588,420,466 2,623,647,841
Fair value adjustment on Debentures (588,420,466) (2,623,647,841)
Operating profit 86,743,677 63,184,667
Finance income 1,765,569 1,059,252
Profit before tax 88,509,246 64,243,919
Taxation (24,806,191) (15,788,248)
Profit for the year 63,703,055 48,455,671
Other comprehensive income - -
Total comprehensive income for the year 63,703,055 48,455,671
Total comprehensive income attributable to;
Owners of the Company 63,703,055 48,455,671
Earnings per share
Basic earnings per share (cents) 63,703,055 48,455,671
Diluted earnings per share (cents) 63,703,055 48,455,671
Headline earnings per share (cents) 63,703,055 48,455,671
Diluted headline earnings per share (cents) 63,703,055 48,455,671
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2014
Share Retained
Total equity
capital income
R R R
Balance at 1 April 2012 100 3,966,698 3,966,798
Changes in equity
Total comprehensive income for the year - 48,455,671 48,455,671
Dividends paid - (46,000,000) (46,000,000)
Total changes - 2,455,671 2,455,671
Balance at 01 April 2013 100 6,422,369 6,422,469
Changes in equity
Total comprehensive income for the year - 63,703,055 63,703,055
Dividends paid - (65,235,000) (65,235,000)
Total changes - (1,531,945) (1,531,945)
Balance at 31 March 2014 100 4,890,424 4,890,524
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2014
2014 2013
R R
Cash flows from operating activities
Cash generated from operations 87,348,586 61,380,184
Taxation refunded / (paid) 6,882,070 (7,839,954)
Interest received 2,009,246 611,040
Net cash from operating activities 96,239,902 54,151,270
Cash flows from investing activities
Sale of Bullion 3,788,876,000 904,300,000
Purchase of Bullion (15,270,882,066) (3,233,500,000)
Net cash from investing activities (11,482,006,066) (2,329,200,000)
Cash flows from financing activities
Issue of debentures 15,270,882,066 3,233,500,000
Debentures redeemed (3,788,876,000) (904,300,000)
Dividends paid (63,360,000) (46,000,000)
Net cash flow from financing activities 11,418,646,066 2,283,200,000
Total Cash and Cash Equivalents movement for the year 32,879,902 8,151,270
Cash and cash equivalents at the beginning of the year 15,623,753 7,472,483
Total cash and cash equivalents at end of the year 48,503,655 15,623,753
NOTES TO THE SUMMARISED FINANCIAL STATEMENTS FOR NEWGOLD ISSUER (RF) LIMITED FOR THE YEAR ENDED 31 MARCH 2014
Accounting policies
1. Presentation of the financial statements
The significant accounting policies applied in the preparation of these summarised financial statements are set out below. These policies have been consistently applied to all the years presented,
unless otherwise stated. The presentation and disclosures of the summarised financial statements are in accordance with IAS 34.
1.1 Statement of compliance
The audited annual financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS"), Interpretations issued by the International Financial Reporting
Interpretation Committee ("IFRIC"), and in the manner required by the Companies Act, 71 of 2008, JSE Listings Requirements and the SAICA Financial Reporting Guides.
1.2 Basis of accounting and measurement
The annual financial statements have been prepared on an accrual basis of accounting. The measurement basis used is the historical cost basis, unless otherwise stated in the detailed accounting
policies below.
1.3 Functional and presentation currency
The annual financial statements are presented in South African Rand, which is the Company’s functional currency. All financial information is presented to the nearest Rand.
1.4 Use of estimates, assumptions and judgements
The preparation of financial information requires the use of estimates and assumptions about future conditions. Use of available information and application of judgement are inherent in the formation
of estimates. Actual results in the future may differ from those current estimates reported. The accounting policies that are deemed critical to the Company’s results and financial position, in terms of
the materiality of the items to which the policy is applied, and which involve a high degree of judgement including the use of assumptions and estimation, are included in the individual notes in the
annual financial statements.
1.4.1 Deferred tax assets
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary differences can be utilised. The recognition of a
deferred tax asset relies on management’s judgements surrounding the probability and sufficiency of future taxable profits, future reversals of existing taxable temporary differences and ongoing tax
planning strategies.
The amount of deferred tax assets recognised is based on the evidence available about conditions at the reporting date. Management’s judgement takes into consideration the impact of both positive
and negative evidence, including historical financial performance and the availability of assessed losses. The recognition of the deferred tax asset is mainly dependent upon the projection of future
taxable profits.
Management’s projections of future taxable profit are based on business plans, future capital requirements and ongoing tax planning strategies.
Management’s forecasts support the assumption that it is probable that the results of future operations will generate sufficient taxable profit to utilise the deferred tax assets.
1.5 Financial instruments
Financial instruments are initially measured at fair value and are subsequently measured on the basis as set out below. Transaction costs of instruments carried at fair value through profit or loss are
recognised immediately through the profit and loss component of the statement of comprehensive income. For other categories of financial instruments, transaction costs (incremental costs directly
attributable to the acquisition, issue or disposal of a financial instrument) and transaction income (i.e. initiation fees) are capitalised to the initial carrying amount.
Financial instruments are recognised on the date when the Company enters into contractual arrangements with counterparties to purchase or sell the financial instruments.
The Company is required to group financial instruments into classes that are appropriate to the nature of the information disclosed and take into account the characteristics of those financial
instruments. Classes of financial instruments have been determined by referring to the nature and extent of risks arising from the financial instruments and how these are managed.
The Company generally adopts an approach of not reclassifying financial instruments between different categories subsequent to initial recognition. In exceptional circumstances, where such
reclassifications do occur, the Company will apply the requirements of the IAS 39 amendments for reclassifications together with the IFRS 7 required disclosures.
Financial instruments at fair value through profit or loss
Financial assets and financial liabilities classified in this category are those that have been designated by management upon initial recognition. Management may only designate an instrument at fair
value through profit or loss upon initial recognition when the following criteria are met:
• The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognising gains
or losses on them on a different basis.
• The assets and liabilities are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment
strategy which significantly modify the cash flows that would otherwise be required by the contract.
Financial assets and financial liabilities at fair value through profit or loss are recorded in the statement of financial position at fair value. Changes in fair value are recorded in the profit or loss section in
the statement of comprehensive income. Included in this classification are debentures which are linked to Gold, Platinum and Palladium Bullion which is managed on a fair value basis.
Loans and receivables
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are
subsequently measured at amortised cost using the effective interest rate method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance income in the statement of comprehensive income. The losses arising
from impairments are recognised in profit or loss. Included in this classification are trade and other receivables and cash and cash equivalents.
1.5.1 Financial liabilities
After initial recognition, loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit and loss when the
liabilities are derecognised as well as through the effective interest rate amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and any fees
or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included as finance costs. Included in this classification are trade and other payables.
The debentures are held at fair value and this fair value is referenced to the price of Gold, Platinum and Palladium Bullion.
1.5.2 Impairment of financial assets at amortised cost
The Company assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is
deemed to be impaired if there is objective evidence of impairment as a result of one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) and that loss
event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the
probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in
arrears or economic conditions that correlate with defaults.
For financial assets carried at amortised cost, the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively
for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not,
it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for
which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred, the
amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet
been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for
measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in profit or loss.
Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment
loss. The interest income is recorded as finance income.
Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Company. If, in a
subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss
is increased or reduced by adjusting the allowance account. If a write off is later recovered, the recovery is credited to finance costs.
1.5.3 Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or a part of a group of similar financial assets) is derecognised where:
• the rights to receive cash flows from the asset have been discharged, cancelled or have expired; or
• the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under
a pass through arrangement; or
• the Company has transferred its rights to receive cash flows from the asset and either:
- has transferred substantially all of the risks and rewards of the asset; or
- has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
Where the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the
asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset. Continuing involvement that takes the
form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of the consideration that the
Company could be required to repay.
Where continuing involvement takes the form of a written and/or purchased option (including a cash settled option or similar provision) on the transferred asset, the extent
of the Company’s continuing involvement is the amount of the transferred asset that the Company may repurchase, except that in the case of a written put option (including
a cash settled option or similar provision) on an asset measured at fair value, the extent of the Company’s continuing involvement is limited to the lower of the fair value of
the transferred asset and the option exercise price.
1.5.4 Derecognition of financial assets
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Where an existing financial liability is replaced by another from the same party on
substantially different terms, or the terms of an existing liability are substantially modified (taking into account both quantitative and qualitative factors), such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit and loss component of the statement of
comprehensive income.
Where the terms of an existing liability are not substantially modified, the liability is not derecognised. Costs incurred on such transactions are treated as an adjustment to the carrying amount of the
liability and are amortised over the remaining term of the modified liability.
1.5.5 Fair value
The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions
and ask price for short positions), without any deduction for transaction costs.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market
transactions, reference to the current fair value of another instrument that is substantially the same, a discounted cash flow analysis or other valuation models. An analysis of fair values of financial
instruments and further details as to how they are measured are provided in note 20 in the complete set of financial statements.
1.5.5 Offsetting
Financial instruments are offset and the net amount reported in the statement of financial position when the entity holds a current legally enforceable right to set off the recognised amounts and has an
intention to either settle on a net basis, or realise the asset and settle the liability simultaneously.
1.6 Share capital
Ordinary share capital
Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity.
1.7 Revenue
Revenue is recognised at the fair value of consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably
measured. The following criteria are applicable to the following significant revenue categories:
Net finance income
Finance income and expense for all interest bearing financial instruments, except for those held at fair value through profit or loss, are recognised in ‘Net interest income’ in the statement of
comprehensive income using the effective interest rates of the financial assets or financial liabilities to which they relate.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period.
The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to
the net carrying amount on initial recognition. When calculating the effective interest rate, the Company estimates the cash flows considering all contractual terms of the financial instrument but does
not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate and includes the
following:
• Origination fees relating to the creation or acquisition of a financial asset which may include compensation for activities such as evaluating the
borrower’s financial condition, evaluating and recording guarantees, collateral and other security arrangements, negotiating the terms of the
instruments, preparing and processing documents and closing the transaction.
• Origination fees received on issuing financial liabilities measured at amortised cost.
• Commitment fees received by the Company to originate a loan and the commitment fee received are regarded as compensation for an ongoing involvement with the acquisition
of the financial instrument.
In calculating effective interest, the Company estimates cash flows using projections based on its experience of customer behaviour considering all contractual terms of the financial instrument but
excluding future credit losses. Where these estimates are revised, the carrying amount of the financial asset or liability is adjusted to reflect the change in estimated cash flows. Cash flows arising
from the transaction costs of issuing financial instruments are also taken into account in the calculation.
Interest is accrued in respect of the residual of impaired advances, based on the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
Interest, including interest income from non derivative financial assets at fair value through profit and loss, is recognised by using the effective interest method.
Monthly sales
The monthly sales consists of income earned from the sale of Gold, Platinum or Palladium Bullion which is permitted to be sold in order to cover the monthly expenses of the Company. The monthly
sales charge equals the gross sale proceeds on the disposal of physical Gold, Platinum or Palladium Bullion.
Revenue from the precious metals sales is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when the
significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably,
there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
1.8 Cash and cash equivalents
For the purposes of the statement of cash flows, cash comprises cash on hand and demand deposits. Cash equivalents comprise highly liquid investments that are convertible into cash with an
insignificant risk of changes in value with original maturities of less than three months.
1.9 Tax
Current tax
The current tax liability or asset is the expected tax payable or recoverable, using tax rates and tax laws enacted or substantively enacted at the reporting date, and any adjustment to tax payable in
respect of prior years.
The taxation charge in the financial statements for amounts due to fiscal authorities in the various territories in which the Company operates, includes estimates based on a judgement of the
application of law and practice in certain cases to determine the quantification of any liability arising. In arriving at such estimates, management assesses the relative merits and risks of the tax
treatment for similar classes of transactions, taking into account statutory, judicial and regulatory guidance and, where appropriate, external advice.
Deferred tax
Deferred income tax is provided, using the balance sheet method, on temporary differences arising between the tax bases and carrying amounts of property and equipment, certain financial
instruments including derivative contracts, provisions for pensions and other post retirement benefits and tax losses carried forward. In relation to acquisitions, deferred tax is raised on the difference
between the fair values of net assets acquired and their tax bases in the annual financial statements. 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.
The rates enacted or substantially enacted at the reporting date are used to determine deferred income tax. 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 and loss.
The tax effects of income tax losses available for carry forward are recognised as an asset when it is probable that future taxable profits will be available against which these losses can be utilised.
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income
taxes relate to the same taxable entity and the same taxation authority.
Value added tax (VAT)
Revenues, expenses and assets are recognised net of the amount of VAT, except:
• where the VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the VAT is recognised as
part of the asset; and
• receivables and payables that are stated with the amount of VAT included.
1.10 Gold, Platinum and Palladium Bullion
Gold, Platinum and Palladium Bullion are commodities that the Company buys and/or sells for others or on their own account. They are principally acquired with the purpose of selling in the near future
and generating a profit from fluctuations in price. The Bullion (inventory) is therefore measured at fair value less costs to sell. The fair value of Bullion is affected by the market and is determined with
reference to the exchange quoted selling price of gold / platinum / palladium per ounce known as
Gold PM fix, Platinum PM fix and Palladium PM fix.
2. New standards and interpretations
2.1 Standards and interpretations effective and adopted in the current period
The application of the Company's accounting policies are consistent with those adopted in the prior year, except for those standards and amendments which became effective in the current year. All
other standards and amendments that became effective in the current year were assessed and have no impact on the annual financial statements:
IFRS 13 Fair Value Measurement
This standard which is applicable to financial periods beginning on or after 1 January 2013, replaces guidance on fair value measurement in existing IFRS accounting standards by providing a single
source of guidance to prescribe how fair value should be measured. The standard requires (with some exceptions) entities to classify fair value measurements into a ‘fair value hierarchy’ based on the
nature of the inputs. The standard also requires entities to make various disclosures depending on the nature and level of the fair value measurement.
IFRS 7 Financial Instruments: Disclosure (amendments) (2011)
IFRS 7 (amendments) (2011) Offsetting Financial Assets and Financial Liabilities, was issued in December 2011 and is effective for annual periods beginning on or after 1 January 2013. The
amendments require the disclosures to include information that will enable users of an entity’s annual financial statements to evaluate the effect or potential effect of netting arrangements, including
rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s statement of financial position. These disclosures are intended to facilitate
comparison between entities preparing IFRS annual financial statements and entities preparing annual financial statements under US GAAP. An entity shall provide the disclosures required by these
amendments retrospectively.
This amendment has not had a material impact on the Company's annual financial statements.
Annual improvements project May 2012
The following improvement was issued in terms of the annual improvements project in May 2012. It is effective for annual periods beginning on or after 1 January 2013 and it is to be applied
retrospectively:
Amendments to IAS 32 Financial Instruments: Presentation - The amendment clarifies that the income tax relating to distributions to equity holders, is required to be accounted for in accordance with IAS 12.
2.2 Standards and interpretations not yet effective
A number of new standards, amendments to standards and interpretations issued are not yet effective for the current reporting period and have not been applied in preparing these annual financial
statements. Only those standards, amendments and interpretations which were assessed to be applicable to the Company are disclosed below:
IFRS 9 Financial Instruments
This standard was initially published in November 2009 as the first step in replacing IAS 39 and contains new requirements for the classification and measurement requirements for financial assets.
The classification and measurement requirements of financial liabilities were added to IFRS 9 in October 2010. In July 2011, the International Accounting Standards Board (IASB) communicated in an
Exposure Draft its intention to postpone the mandatory application of IFRS 9 to annual periods beginning no earlier than 1 January 2017 with early application of certain paragraphs permitted.
The IASB decided not to require the restatement of comparative financial statements for the initial application of the classification and measurement requirement of IFRS 9, but instead to require
modified disclosures on transition from the classification and measurement requirements of IAS 39 to those of IFRS 9.
IFRS 9 as issued reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39.
The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in
December 2011, moved the mandatory effective date to 1 January 2015. In November 2013, the IASB issued IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7
and IAS 39) amending IFRS 9 to include the new general hedge accounting model, allow adoption of the treatment of fair value changes due to own credit on liabilities designated at fair value through
profit or loss to be recognised through other comprehensive income, and remove the 1 January 2015 effective date.
Accordingly, the current version of IFRS 9 does not include an effective date but is available for adoption (subject to local endorsement requirements). An effective date will be added once the
standard is complete with a new impairment model and finalisation of any limited amendments to classification and measurement.
The Company is still evaluating the impact of this standard and shall adopt this standard when it becomes effective.
IFRS 15 Revenue from Contracts with Customers - The core principle of the new Standard is for companies to recognise revenue to depict the transfer of goods or services to customers in amounts that reflect the
consideration (that is, payment) to which the company expects to be entitled in exchange for those goods or services. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer
regardless of the type of revenue transaction or industry. The standard’s requirements will also apply to the recognition of some gains and losses of some non-financial assets that are not an output of the entity’s ordinary
activities.
The new Standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and
contract modifications). The standard also improves guidance for multiple-element arrangements. Extensive disclosures will be required including the disaggregation of total revenue, information about
performance obligations, changes in contract asset and liability account balances between periods and key judgements and estimates.
The standard is effective for annual periods beginning on or after 1 January 2017.
The Company is still evaluating the impact of this standard and shall adopt this standard when it becomes effective.
IAS 32 Financial Instruments: Presentation (amendments) (2011)
IAS 32 (amendments) (2011) Offsetting Financial Assets and Financial Liabilities, was issued in December 2011 and is effective for annual periods beginning on or after 1 January 2014. The offsetting
requirements in IAS 32 have been retained, such that a financial asset and a financial liability shall be offset and the net amount presented in the statement of financial position when, and only when,
an entity currently has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. The
amendment to IAS 32 provides more application guidance on when the criterion for offsetting would be considered to be met. The amended standard is applicable to financial periods beginning on or
after 1 January 2014. An entity shall apply the amendments retrospectively.
This amendment is not expected to have a material impact on the Company’s annual financial statements.
Amendments from Annual Improvement Projects
Amendments resulting from Annual Improvements 2011-2013 Cycle
In December 2013, the IASB issued Annual Improvements to IFRSs 2011-2013 Cycle, a collection of amendments to IFRSs. The amendments are effective for annual periods beginning on or after 1
July 2014, although entities are permitted to adopt them earlier.
IFRS 13 Fair Value Measurement: Amendments to scope of the portfolio exception - The objective of this amendment is to clarify that the portfolio exception applies to all contracts within the scope of
IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments, regardless of whether they meet the definitions of financial assets or financial liabilities as defined in IAS
32 Financial Instruments: Presentation. The amendment requires prospective adoption.
This amendment is not expected to have a material impact on the Company's annual financial statements.
Amendments resulting from Annual Improvements 2010-2012 Cycle
In December 2013, the IASB issued Annual Improvements to IFRSs 2010-2012 Cycle, a collection of amendments to IFRSs. With limited exception, the amendments below are effective for annual
periods beginning on or after 1 July 2014, although entities are permitted to apply them earlier.
IFRS 13 Fair Value Measurement: Short-term receivables and payables - The IASB clarified that short-term receivables and payables with no stated interest rates can be held at invoice amounts
when the effect of discounting is immaterial. The amendment is effective as from the date of publication.
IAS 24 Related Party Disclosures: Amendment regarding management entities - The amendment clarifies that a management entity, which is defined as an entity that provides key management personnel services,
may be a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. The amendments are required to be
applied retrospectively.
2014 2013
3. Bullion Investment R R
Gold
Fair value of gold at the beginning of the year 21,250,648,872 16,374,167,326
Gold acquisitions 1,279,378,000 3,233,500,000
Gold redemptions (3,412,700,000) (904,300,000)
Proceeds on gold sales (74,637,496) (76,366,296)
Fair value adjustment for the year (1,471,548,490) 2,623,647,842
17,571,140,886 21,250,648,872
Platinum
Fair value of platinum at the beginning of the year - -
Platinum acquisitions 13,917,340,000 -
Platinum redemptions (376,176,000) -
Proceeds on platinum sales (31,598,216) -
Fair value adjustment for the year 884,566,959 -
14,394,132,743 -
Palladium
Fair value of palladium at the beginning of the year - -
Palladium acquisitions 74,164,066 -
Fair value adjustment for the year (1,438,935) -
72,725,131 -
Total Bullion Investments 32,037,998,760 21,250,648,872
4. Deferred tax
Deferred tax liability (55,010,068) (40,109,249)
Reconciliation of deferred tax liability
Opening balance (40,109,249) (12,693,075)
Deferred tax realised ? audit fee provision (84,588) (111,720)
Fair value movements on Precious Metals 164,757,731 734,621,396
Fair value movements on Precious Metals debentures (164,757,731) (734,621,396)
Deferred tax liability on unrealised cost of sales - Precious Metals (705,628,266) (151,262,015)
Deferred tax asset on unrealised cost of sales - Precious Metals Debentures 690,678,450 141,003,359
Prior year under provision on unrealised cost of sales - Gold Bullion (263,307) -
Prior year under provision on unrealised cost of sales - Gold debenture 306,382 -
Deferred tax asset - audit fee provision 90,510 84,588
Prior year under provision - (17,130,386)
(55,010,068) (40,109,249)
Tax effects of temporary differences between tax and book value for:
Fair value on Bullion Investment (3,577,275,594) (3,742,033,324)
Fair Value on Debentures 3,577,275,594 3,742,033,324
Audit fee provision (90,510) (84,588)
Unrealised cost of sales - Precious Metals 2,788,093,564 2,082,201,991
Unrealised cost of sales - Debenture (2,732,992,986) (2,042,008,154)
55,010,068 40,109,249
5. Debentures
The unsecured debenture values are linked to the gold price and are listed on the Exchange Traded Index Funds sector of the Johannesburg Stock Exchange. The date of initial issue of the
debentures was 2 November 2004.
The debentures do not bear interest and rank pari passu among each other. The debenture holders have not acquired any ownership, right or beneficial interest in or to any Gold, Platinum or
Palladium Bullion held by the Company. The holder can redeem a debenture as long as the conditions for redemption as set out in the prospectus have been met. The Company can redeem
debentures in certain situations as set out in the prospectus.
Fair value movements on debentures
The carrying value of the liability at fair value and the amount which the Company is contractually required to pay the holder on redemption, approximate each other.
Fair value gain in the current year equals R588,420,466 (2013: R2,623,647,841) and the cumulative fair value movement is a loss of R12,775,984,264 (2013: R13,364,404,730).
The changes in fair value of the liability attributable to changes in credit risk is Rnil (2013: Rnil). The constant credit spread approach was applied from the date the liabilities were originated. No
changes in the credit risk of the liabilities and the applicable credit spreads were observed after origin.
Reconciliation - Gold 2014 2014 2013 2013
Number of debentures R Number of debentures R
Fair value at the beginning of the year 149,236,300 21,243,416,640 132,036,300 16,368,599,389
Creation of debentures 10,400,000 1,279,378,000 24,000,000 3,233,500,000
Redemption of debentures (26,000,000) (3,412,700,000) (6,800,000) (904,300,000)
Gold sales - (73,425,612) - (78,030,590)
Fair value adjustment - (1,471,548,490) - 2,623,647,841
133,636,300 17,565,120,538 149,236,300 21,243,416,640
Reconciliation - Platinum 2014 2014 2013 2013
Number of debentures R Number of debentures R
Fair value at the beginning of the year - - - -
Creation of debentures 98,800,000 13,917,340,000 - -
Redemption of debentures (2,400,000) (376,176,000) - -
Platinum sales - (36,339,258) - -
Fair value adjustment - 884,566,959 - -
96,400,000 14,389,391,701 - -
Reconciliation - Palladium 2014 2014 2013 2013
Number of debentures R Number of debentures R
Fair value at the beginning of the year - - - -
Creation of debentures 884,696 74,164,066 - -
Redemption of debentures - - - -
Palladium sales - - - -
Fair value adjustment - (1,438,935) - -
884,696 72,725,131 - -
32,027,237,371 21,243,416,640
The fair value is derived from multiplying the number of ounces with the PM fix (price of an ounce of gold / platinum / palladium) and also with the ZAR / USD exchange rate applicable on 31 March
2014.
Quarterly review of the gold prices per ounce US $ R/$ R
30 June 2013 1,192 10.0148 11,938
30 September 2013 1,327 10.0505 13,337
31 December 2013 1,202 10.5090 12,632
31 March 2014 1,292 10.5660 13,651
Comparative quarterly review of the gold prices per ounce US $ R/$ R
30 June 2012 1,599 8.2063 13,122
30 September 2012 1,776 8.2872 14,718
31 December 2012 1,664 8.4703 14,095
31 March 2013 1,598 9.2115 14,720
Quarterly review of gold debenture values per debenture R
30 June 2013 116.53
30 September 2013 129.32
31 December 2013 122.09
31 March 2014 130.90
Comparative quarterly review of gold debenture values per debenture R
30 June 2012 132.00
30 September 2012 143.49
31 December 2012 137.45
31 March 2013 142.37
Quarterly review of the platinum prices per ounce US $ R/$ R
30 June 2013 1,317 10.0148 13,189
30 September 2013 1,411 10.0505 14,181
31 December 2013 1,358 10.5090 14,271
31 March 2014 1,418 10.5660 14,983
Quarterly review of platinum debenture values per debenture R
30 June 2013 132.20
30 September 2013 142.55
31 December 2013 143.38
31 March 2014 150.34
Review of palladium price per ounce US $ R/$ R
31 March 2014 778 10.5660 8,220
Review of palladium debenture values per debenture R
31 March 2014 82.50
NewGold Issuer (RF) Limited debentures are primary listed the Johannesburg Stock exchange and secondary listed on various other exchanges. The details are given below:
Precious Metals debentures Number of listed debentures Stock Exchange
Platinum 400,000 Stock Exchange of Mauritius
Gold 150,000 Nigerian Stock Exchange
Gold 50,000 Ghana Stock Exchange
Gold 2,250,000 Botswana Stock Exchange
Gold 150,000 Stock Exchange of Mauritius
6. Taxation 2014 2013
R R
Major components of the tax expense
South African normal tax
Current year 9,838,695 7,702,509
Prior year over provision 66,677 (19,330,435)
9,905,372 (11,627,926)
Deferred tax
Current year 14,943,894 10,285,788
Prior year under provision (43,075) 17,130,386
14,900,819 27,416,174
Total taxation 24,806,191 15,788,248
Reconciliation of the tax expense
Reconciliation between accounting profit and tax expense.
Operating profit before tax 88,509,246 64,243,919
Tax at the applicable tax rate of 28% (2013: 28%) 24,782,589 17,988,297
Tax effect of adjustments on taxable income
Prior year over provision ? current tax 66,677 (19,330,435)
Prior year under provision ? deferred tax (43,075) 17,130,386
24,806,191 15,788,248
7. Dividends paid
Dividends (65,235,000) (46,000,000)
Balance at end of the year 1,875,000 -
(63,360,000) (46,000,000)
8. Fair value of financial instruments
Financial instruments at amortised cost carried on the statement of financial position include cash and cash equivalents, trade and other receivables and trade and other payables. As at 31 March
2014, for all these instruments, the carrying amounts approximate the fair values of the respective assets and liabilities because the instruments are short term.
9. Fair value hierarchy
The table below shows the Company’s assets and liabilities that are recognised and subsequently measured at fair value and are analysed by valuation techniques. The classification of assets and
liabilities is based on the lowest level input that is significant to the fair value measurement in its entirety. A description of the nature of the techniques used to calculate valuations based on observable
inputs and valuations based on unobservable inputs is set out in the table below:
2014 Valuations with Valuations with Valuations with
reference to observable prices reference to reference to un-
Level 1 observable prices observable prices
Total
Level 2 Level 3
R R R R
Assets
Bullion Investment 32,037,998,760 - - 32,037,998,760
Total assets 32,037,998,760 - - 32,037,998,760
Liabilities
Debentures - 32,027,237,369 - 32,027,237,369
Total Liabilities - 32,027,237,369 - 32,027,237,369
2013 Valuations with Valuations with Valuations with
reference to observable prices reference to reference to un-
Level 1 observable prices observable prices
Total
Level 2 Level 3
R R R R
Assets
Bullion Investment 21,250,648,872 - - 21,250,648,872
Total assets 21,250,648,872 - - 21,250,648,872
Liabilities
Debentures - 21,243,416,640 - 21,243,416,640
Total Liabilities - 21,243,416,640 - 21,243,416,640
Level 1
Financial instruments valued with reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted price is readily available and the price represents actual and
regularly occurring market transactions on an arm’s length basis.
An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis.
Level 2
Financial instruments valued using inputs other than quoted prices as described above for Level 1 but which are observable for the asset or liability, either directly or indirectly, such as:
• quoted price for similar assets or liabilities in an active market;
• quoted price for identical or similar assets or liabilities in inactive markets;
• quoted price for similar assets or liabilities in an active market;
• valuation model using observable inputs; and
• valuation model using inputs derived from/corroborated by observable market data.
The valuation technique applied in order to value the level 2 financial instrument is with reference to the value of the underlying bullion investment after deducting the current monthly sales charge.
The bullion investments and the monthly sales charge values are calculated with reference to the rand vale of the underlying precious metal.
Level 3
Financial instruments valued using inputs that are not based on observable market data (unobservable data) such as an entity’s own assumptions about assumptions of market participants in pricing
the asset or liability.
10. Related parties
Key management personnel:
? Maitland Group South Africa Limited
? NewGold Managers Proprietary Limited
Holding Company of NewGold Managers Proprietary Limited:
? NewGold Owner Trust
Holding company of Absa Investment Management Services Proprietary Limited:
? Absa Bank Limited
Ultimate holding company of Absa Investment Management Services Proprietary Limited:
? Barclays Bank Plc.
Related party balances
Absa Bank Limited
Cash and cash equivalents 48,503,655 15,623,753
Sundry creditors (25,551) (41,262)
Sundry debtors 229,965 -
Barclays Bank Plc
Barclays creditors (6 321 634) -
Maitland Group South Africa Limited
Fees payable (89,983) (52,319)
NewGold Managers Proprietary Limited
Sundry debtors 190,237 10,242
NewGold Owner Trust
Dividends payable (1,875,000) -
Related party transactions
NewGold Owner Trust
Dividends declared (65,235,000) (46,000,000)
NewGold Managers Proprietary Limited
Operating expenditure (20,191) (24,817)
Maitland Group South Africa Limited
Fees paid for directors' and trustees' services (213,893) (142,040)
Barclays Bank Plc
Custodian fees (24,171,784) (8,925)
Absa Bank Limited
Interest received 1,765,569 675,535
11. Events after the reporting period
No events, which are likely to have a material effect on the Company’s results in the current year, have occurred between the year-end date and the date of this report. A dividend of R11,550,000
(R115,500 per share) has been declared by the company (2013: R4,500,000 (R45,000 per share)).
The annual financial statements were approved by the directors on xx/xx/xx in the statement of directors' responsibility and approval.
Audit report
Ernst & Young, NewGold's independent auditor, has audited the annual financial statements of NewGold Issuer (RF) Limited from which the summarised results contained in this announcement have
been derived, and has expressed an unmodified opinion on the annual financial statements. Their audit report is available for inspection at the NewGold's registered office.
The complete set of financial statements are available on Absa Capital’s website (www.absacapitaletfs.com).
Copies of the full announcement may be requested by emailing etf@absacapital.com
30/06/2014
Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking division)
Date: 30/06/2014 04:38:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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