Wrap Text
Results for the 12 months ended 30 June 2014
Village Main Reef Limited
(formerly Village Main Reef Gold Mining Company (1934) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1934/005703/06)
JSE code: VIL ISIN: ZAE000154761
("Village" or "the Company" or "the Group")
COMMENTARY
- Revenue, amounting to R1.5 billion, from continuing operations remained consistent year on year despite the
lower gold price.
- Earnings per share from continuing operations
down by 34.9% to 22.40 cents (2013: 34.46 cents);
- Loss per share from discontinued operations
down by 96.7% to 3.59 cents (2013: 109.70 cents);
- Headline earnings per share from continuing operations
down by 34.7% at 26.12 cents (2013: 40.00 cents);
- Headline loss per share from discontinuing operations;
up by 81.4% at 33.36 cents (2013: 18.39 cents);
- Operating profit from continuing operations
down by 19.6% at 236 million (2013: 293 million);
- Net asset value per share
up by 50.3% to 119.99 cents (2013: 79.85 cents).
The highlight of the past 12 months has been the restructuring and strengthening of our balance sheet which
culminated in the NAV per share increasing by 50% from 80 cents to 120 cents per share and positions Village to
transform itself into a resources investment holding company. We focused on the most pressing issues – setting
our position straight at Blyvoor, starting closure procedures at Buffelsfontein, following our placing the mine on care
and maintenance in August 2013 and initiating the sales process at Cons Murch.
The restructuring that Village has undergone in the past 12 months has been significant and would arguably, in other
instances, have taken other companies longer to achieve. What happens going forward? It is our intention to further
restructure our asset portfolio. We have previously referred to the potential disposal of Lesego. Our focus should is
extracting optimal value for our shareholders, which could include the acquisition of value-enhancing assets.
Furthermore, should it result in the disposal of Tau Lekoa or even of Village itself as a going concern, so be it. As
we move into the future Village's asset portfolio will be different from its present one.
Included in the financial results are significant costs associated with the restructuring of Buffels and losses from our
Cons Murch operations.
Tau Lekoa produced 3,436kg* (110,470 oz*) of gold during FY2014, which is a 4% increase on production in
FY2013*. All-in-sustainable cost per Au kg were well controlled and increased by 6%* year-on-year which is mainly
attributable to structural changes within the company subsequent to the closure of Buffels gold mine. Tau Lekoa
reported a 25% increase in mineral resources, up from 3.83 Moz to 4.78 Moz. Mineral reserves at Tau however decreased
approximately 2% from 1.2 Moz to 1.17 Moz, mainly due to depletion. As part of our current strategy, drilling is
underway that could confirm our confidence to increase our estimate of the life of mine to seven or eight years.
At Blyvoor we had to enforce the fact that our putative purchase of the mine had not been legally completed and
that, therefore, Village had no responsibility, financial or otherwise, for the property's closure.
At Buffels, which has been producing gold since 1954, the mine's closure was inescapable following the extraction
of the last remaining economically mineable reserves. We have made progress with the rehabilitation of this vast
surface mining area and believe that we have sufficient cash resources in the rehabilitation trust fund to complete
closure activities. During the financial year we finally initiated the process to transfer the slimes dams to AngloGold
Ashanti's Mine Waste Solutions in terms of the agreement entered into in 2006. This allowed for the transfer of
R115 million of rehabilitation liabilities associated with the closure of Buffels to Mine Waste Solutions. We have also
made good progress in dealing with the pumping of underground water at Buffels and are in discussions with
neighbouring mining companies on finding an affordable long-term solution on pumping costs and responsibilities.
Though the sale of Cons Murch had been considered before the start of the year under review, there are always
imponderables when the 'For Sale' sign is put up, particularly among employees who can, understandably, be
worried for their jobs. After a strike of almost a month in July 2013 the operation has not reached its pre-strike
production levels.
Following approval of the Cons Murch disposal by Village's shareholders on 19 September, the property's sale to
Stibium will be completed in two tranches with US$8.4 million being due in Q2 FY 2015 and the remaining
US$6.6 million when the transfer of mining rights has been approved by the Department of Mineral Resources (DMR).
In the interim, Village remains responsible for the necessary working and capital expenditure to sustain operations while,
once the sale has been completed, Stibium is committed to a capital spend of US$10 million to recapitalise the mine so
as to refurbish or replace ageing infrastructure, undertake the necessary underground development and gain access to
extensions to the Gravelotte ore body.
The question many shareholders might be asking is whether we are planning further sales. However, though we
intend to go on operating Tau Lekoa, it is inconceivable that we shall entertain any other deep-level mining
ventures. During the past year we carefully evaluated our Lesego platinum project and have completed a definitive
feasibility study (DFS) based on a large-scale mine. We have also completed a preliminary economic assessment
(PEA) and a process to complete a DFS for a small mine option is underway. The DFS and PEA both indicated that
developing a mine would be financially attractive, but we have approached this project realistically. Village alone
has neither the technical skills nor the financial capacity to manage such a project without partners. Our present
intention, then, is either to dispose of the asset or to find a development partner for this comparatively shallow and,
therefore, attractive quality deposit.
* These amounts are unaudited
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
as at 30 June 2014
Group
30 June 30 June
2014 2013
Notes R'000 R'000
Assets
Non-current assets
Property, plant and equipment 1,251,767 1,447,557
Investment property 14,406 24,957
Investment in rehabilitation trust fund 12,454 200,303
Intangible assets – 60,401
Financial assets 8 34,259
Reimbursive asset 2 – 115,009
Total non-current assets 1,278,635 1,882,486
Current assets
Financial assets 2,697 1,906
Investment in rehabilitation trust fund 134,992 –
Trade and other receivables 85,136 135,762
Inventories 41,597 98,636
Cash and cash equivalents 153,428 207,314
Total current assets 417,850 443,618
Non-current assets held for sale 3 331,861 275
Total assets 2,028,346 2,326,379
Equity and liabilities
Equity
Stated capital 636,500 636,500
Treasury shares (73,316) (73,316)
Retained earnings 595,201 400,381
Fair value reserve 917 –
Non-distributable reserve 16,655 18,180
Transactions with non-controlling interest 29,252 29,252
Non-controlling interest 43,505 (180,044)
Total equity 1,248,714 830,953
Non-current liabilities
Financial and other liabilities 12,400 11,595
Deferred tax 126,786 151,889
Provision for environmental rehabilitation 47,729 101,039
Total non-current liabilities 186,915 264,523
Current liabilities
Financial and other liabilities 7,281 13,988
Trade and other payables 263,255 735,011
Retirement benefit obligations – 2,900
Provision for environmental rehabilitation 212,526 442,482
Bank overdraft – 36,522
Total current liabilities 483,062 1,230,903
Non-current liabilities held for sale 3 109,655 –
Total liabilities 779,632 1,495,426
Total equity and liabilities 2,028,346 2,326,379
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 30 June 2014
Group
Restated
Year ended Year ended
30 June 2014 30 June 2013
Notes R'000 R'000
Revenue 1,480,078 1,480,895
Cost of sales (1,120,463) (1,005,619)
Gross profit 359,615 475,276
Other income 11,626 11,429
Operating, administrative and general expenses (98,569) (99,690)
Impairment of assets (36,307) (55,599)
Share based payment expense 4,177 (9,808)
Restructuring cost (4,098) (4,388)
Fair value adjustment in respect of financial assets through profit and loss (718) (23,796)
Operating profit/(loss) 235,726 293,424
Investment income 6,982 40,533
Finance cost (7,266) (3,944)
Profit/(loss) from continuing operations 235,442 330,013
Profit/loss from discontinued operations net of tax 5 (66,813) (1,219,178)
Profit/(loss) before taxation 168,629 (889,165)
Taxation (31 978) (444)
Profit/(loss) for the period 136,651 (889,609)
Other comprehensive income that will be recycled through profit or loss:
Fair value adjustments to available for sale investments 1,831 (17,086)*
Recycling of fair value reserve – (3,101)*
Related tax – –
Other comprehensive income that will not be reclassified to profit or loss:
Remeasurement of the defined benefit liability (914)* –
Related tax – –
Other comprehensive income for the year 917 (20,187)
Total comprehensive income/(loss) for the period 137,568 (909,796)
Profit/(loss) attributable to:
Owners of the parent 171,747 (722,310)
Non-controlling interest (35,096) (167,299)
Profit/(loss) for the period 136,651 (889,609)
Total comprehensive income attributable to:
Owners of the parent 172,664 (742,497)
Non-controlling interest (35,096) (167,299)
Total comprehensive income/(loss) for the period 137,568 (909,796)
Total comprehensive income attributable to equity shareholders arises from:
Continuing operations 205,295 329,569
Discontinued operations (67,727) (1,239,365)
137,568 (909,796)
Basic earnings/(loss) per share
From continuing operations (cents per share) 6 22.40 34.46
From discontinued operations (cents per share) 6 (3.59) (109.70)
Total basic earnings/(loss) per share 18.81 (75.24)
Diluted earnings/(loss) per share
From continuing operations (cents per share) 6 21.48 33.70
From discontinued operations (cents per share) 6 (3.45) (107.28)
Total diluted earnings/(loss) per share 18.03 (73.58)
* These items of other comprehensive income relate to discontinued operations
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY
for the year ended 30 June 2014
Transactions
with Non- Equity Non-
Stated Treasury Retained Fair value non-controlling distributable attributable controlling Total
As at 30 June 2014 capital shares earnings reserve interest reserve to the Parent interest equity
Group R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance as at
1 July 2013 636,500 (73,316) 400,381 – 29,252 18,180 1,010,997 (180,044) 830,953
Profit for the period – – 171,747 – – – 171,747 (35,096) 136,651
Dilution of non-
controlling interest – – 23,073 – – – 23,073 (23,073) –
Deconsolidation of
Blyvoor NCI portion – – – – – – – 281,718 281,718
Other comprehensive
income – – – 917 – – 917 – 917
Fair value adjustment
on available for sale
investments – – – 1,831 – – 1,831 – 1,831
Revaluation of post
retirement benefit
obligation – – – (914) – – (914) – (914)
Share options expensed
during the period – – – – – (1,525) (1,525) – (1,525)
Balance as at
30 June 2014 636,500 (73,316) 595,201 917 29,252 16,655 1,205,209 43,505 1,248,714
As at 30 June 2013
Group
Balance as at
1 July 2012 636,500 – 1,122,691 20,187 29,252 8,595 1,817,225 (12,745) 1,804,480
Restated profit/(loss) for
the period – – (722,310) – – – (722,310) (167,299) (889,609)
Other comprehensive
income – – – (20,187) – – (20,187) – (20,187)
Fair value adjustments
on available-for-sale
investments – – – (17,086) – – (17,086) – (17,086)
Recycling of revaluation
reserve – – – (3,101) – – (3,101) – (3,101)
Share options expensed
during the period – – – – – 9,585 9,585 – 9,585
Shares repurchased – (73,316) – – – – (73,316) – (73,316)
Balance as at
30 June 2013 636,500 (73,316) 400,381 – 29,252 18,180 1,010,997 (180,044) 830,953
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS
for the year ended 30 June 2014
Group
Restated
Year Year
ended ended
30 June 30 June
2014 2013
Notes R'000 R'000
Cash generated from/(utilised in) operations from continuing operations 406,867 635,630
Finance cost (3,833) (822)
Investment income 6,689 13,983
Tax received/(paid) 6,050 (8,202)
Cash generated from continuing operations' operating activities 415,773 640,589
Cash utilised in discontinued operations' operating activities (296,041) (400,015)
Total cash flow from operating activities 119,732 240,574
Cash flow from investing activities
Purchase of property, plant and equipment (90,983) (194,459)
Proceeds on disposal of property, plant and equipment 60 –
Deconsolidation of Blyvoor (3,320) –
Receipt of dividend from First Uranium – 26,286
Additional contribution to rehabilitation trust (6,844) –
Proceeds from Mine Waste Solution Notes – 392,874
Increase in Investment in Conti Coal – (79,840)
Purchase of treasury shares – (73,316)
Cash flow (utilised in)/from continuing operations' investing activities (101,087) 71,545
Cash flow (utilised in)/from discontinued operations' investing activities (43,088) 13,756
Total cash flow (utilised in)/from investing activities (144,175) 85,301
Cash flow from financing activities
Payment of dividend to shareholders – (302,608)
Repayment of finance leases (1,521) (77)
Repayment of Deutsche Bank loan – –
Cash flow (utilised in) continuing operations financing activities (1,521) (302,685)
Cash flow generated from/(utilised in) discontinued operations' financing activities 12,521 (119,048)
Total cash flow generated from/(utilised in) financing activities 11,000 (421,733)
Net increase/(decrease) in cash and cash equivalents (13,443) (95,858)
Cash and cash equivalents at the beginning of the period 170,792 266,650
Cash and cash equivalents at the end of the period 10 157,349 170,792
NOTES TO THE CONDENSED CONSOLIDATED
ANNUAL FINANCIAL STATEMENTS
for the year ended 30 June 2014
SIGNIFICANT ACCOUNTING POLICIES
General information
Village is a South African mining company, which is listed on the Johannesburg Stock Exchange, with operating assets in one gold operation
Tau Lekoa and an antimony and gold producer in Cons Murch (which has been classified as held for sale); and a gold-processing plant at South
Plant. It also owns the Buffelsfontein operation which had been placed on care and maintenance (and classified as discontinued for accounting
purposes) in the previous financial year. Village also has an exciting brownfields platinum project, Lesego Platinum.
The company's registered head office is 210 Cumberland Avenue, Bryanston, Johannesburg.
1. Basis of preparation
The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings
Requirements for provisional reports and the requirements of the Companies Act of South Africa. The Listings Requirements require
provisional reports to be prepared in accordance with the framework concepts, the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum contain,
the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the condensed
consolidated financial statements, are in terms of IFRS and are consistent with those applied in the preparation of the previous consolidated
annual financial statements.
The condensed consolidated annual financial statements were prepared by Jacques Le Roux (qualified Chartered Accountant), in his
capacity as group financial manager, under the supervision of Clinton Halsey (qualified Chartered Accountant), in his capacity as Chief Financial Officer.
These condensed consolidated annual financial for the year ended 30 June 2014 have been reviewed by PricewaterhouseCoopers Inc (PwC)
who expressed an unmodified review conclusion. A copy of the auditors review report is available for inspection at the
companies registered office together with the financial statements identified in the auditors report.
2. Reimbursive asset
Group
2014 2013
R'000 R'000
Buffelsfontein Gold Mines Limited
On 20 December 2006, First Uranium (Proprietary) Limited (FUSA) entered into an agreement
to acquire 11 surface tailings from BGM, (the Buffelsfontein Tailings and Rights Agreement). It
was originally contemplated that the transaction would be recognised on the satisfaction of the
conditions precedent in the Buffelsfontein Tailings and Rights Agreement. While the conditions
had not yet been satisfied, Mine Waste Solutions (MWS) commenced processing the material
from the Buffelsfontein Tailings in December 2007. All the benefits thereof accrued to MWS,
and consequently, MWS assumed the asset retirement obligation related to the Buffelsfontein
Tailings and as a result a reimbursive asset was recognised. In July 2012 Anglo Gold Ashanti
Limited acquired the operations of First Uranium (Proprietary) Limited and its subsidiaries
(including Mine Waste Solutions) from First Uranium Corporation.
On 28 May 2013, Anglo Gold Ashanti lodged a section 102 acceptance of the surface rights
permits as well as the corresponding rehabilitation liability and on 17 June 2014 Buffelsfontein
Gold Mines Limited lodged a section 102 abandonment of the surface rights permits. As a
result of this, the rehabilitation liability and respective re-imbursive asset in respect of the
tailings was de-recognised. – 115,009
Cons Murch Mine (Proprietary) Limited
During March 2011, Village Main Reef Limited acquired the operations of Consolidated
Murchison Mine (previously a division of Metorex Limited) and formed the company Cons
Murch Mine (Pty) Limited.
Cons Murch Mine (Pty) Limited had applied to the DMR for the conversion of the mining right
from an old order mining to a new order mining right. Section 11 transfer was granted in
May 2012 and the mining right was transferred into the name of Cons Murch Mine (Pty)
Limited. A specific Section 37 compliant rehabilitation trust was established which will be used
to fund the rehabilitation obligations at Cons Murch Mine. During the prior year, the funds
were received from Metorex and the funds were paid into the bank account of the Cons Murch
Rehabilitation Trust.
Opening balance – 25,000
Transfer to Rehabilitation Trust – (25,000)
Total reimbursive asset – 115,009
3. Non-current assets and liabilities held for sale
Cons Murch Mine (Pty) Ltd
On 21 May 2014, Village entered into an agreement whereby it will dispose of 100% of its interest in Cons Murch (being 76.6%) in two
phases. The operation previously disclosed as part of the Limpopo (Antimony) segment was classified as held for sale.
The following criteria was considered in the classification of Cons Murch:
– The sale is highly probable, as an agreement has been entered into by both the seller and the purchaser.
– The mine is available for immediate sale in its present condition.
– Management is committed to this sale and has consistently communicated to the market that the mine is actively marketed to be sold.
– The sale is highly likely to be complete within the next 12 months. Subsequent to year end a circular to
shareholders were distributed on 22 August 2014 (refer to SENS announcement dated 22 August 2014). A special shareholders' meeting
was held on 19 September 2014 where shareholders voted to approve the transaction.
– The selling price is reasonable to its fair value and the mine will be disposed of through the sale of the asset as in the terms of the
agreement.
Cons Murch Mine (Pty) Ltd is an Antimony and Gold producing mine. It has three operating shaft namely, Athens, Monarch and Beta shafts.
The disposal of Cons Murch is in line with Village's strategy to become a resources investment holding company.
No impairment has been recognised in the statement of comprehensive income due to the fact that the carrying value of Cons Murch Mine
was lower than the fair value less cost to sell at the date of initial classifications as well as at the 30 June 2014 (reporting date). The disposal
group is therefore shown at carrying value.
The non-current assets held for sale also consist of residential houses and property in Stilfontein, which is part of the Buffels north west (discontinued)
reporting segment. These houses are expected to be sold within the next 12 months.
Group
2014 2013
R'000 R'000
Analysis of the statement of financial position
Non-current assets 299,730 275
Property, plant and equipment 214,513 –
Intangible asset 55,138 –
Investment property 2,786 275
Environmental rehabilitation trust 27,293 –
Current assets 32,131 –
Inventories 15,586 –
Trade receivables 12,622 –
Cash and cash equivalents 3,923 –
Total assets 331,861 275
Non-current liabilities 56,275 –
Finance lease liability 5,754 –
Environmental liability 50,521 –
Current liabilities 53,380 –
Finance lease liability 9,921 –
Trade payables 40,392 –
Tax payable 3,067 –
Total liabilities 109,655 –
Measurement of fair values
A fair value measurement was applied to the cash-generating unit classified as held for sale. The value should be determined as the lower
of fair value less costs to sell and carrying value of the cash-generating unit.
The fair value was determined based on the actual price as mentioned in the sale agreement. This measurement would therefore be
seen as a level 2 measurement as the price can not be determined in an active quoted market, but rather from an actual price agreed upon
parties to the sale agreement. There were no unobservable inputs used in the determination of the valuation technique.
The costs to sell were determined based on actual prices agreed upon. There were no unobservable inputs used in the determination of
the valuation technique.
4. Discontinued Operations
Buffelsfontein Gold Mines Limited
On 14 May 2013, Village announced the intention to cease operations at the Buffelsfontein Mine. Buffelsfontein Gold Mines Limited is
a separately identifiable cash-generating unit. Buffelsfontein Gold Mines Limited is reported in the North-West Segment (Discontinued).
An amount of R414 million on the property, plant and equipment items was impaired in the prior year, under IAS 36 Impairment of Assets
as the cash-generating unit (Buffels) is seen to have no value in use as the operations have ceased, and there seems to be no active market
to determine a fair value of the assets.
Group
2014 2013
R'000 R'000
Analysis of discontinued operations in the statement of comprehensive income
Revenue 61,565 470,309
Expenses (114,611) (1,037,187)
Loss before tax from discontinued operations (53,046) (566,878)
Taxation (1,998) –
Loss for the year from discontinued operations (55,044) (566,878)
Other comprehensive income/(loss) – (20,187)
Taxation – –
Total comprehensive loss (55,044) (587,065)
Total comprehensive loss attributable to:
Owners of the parent (55,044) (587,065)
Non-controlling interest – –
Total comprehensive loss (55,044) (587,065)
Analysis of cash flows of the discontinued operations
Cash flows from operating activities (221,033) (198,953)
Cash flows from the investing activities 2,834 13,756
Cash flows from the financing activities (1,190) (139,634)
Cons Murch Mine
During the current year Cons Murch Mine was classified as a discontinued operation.
Refer to note 3.
Analysis of discontinued operations in the statement of comprehensive income
Revenue 183,005 336,997
Expenses (324,565) (343,130)
Loss before tax from discontinued operations (141,560) (6,133)
Taxation 56,421 1,072
Loss for the year from discontinued operations (85,139) (5,061)
Other comprehensive loss (914) –
Taxation – –
Total comprehensive loss (86,053) (5,061)
Total comprehensive income attributable to:
Owners of the parent (86,053) (5,061)
Non-controlling interest – –
Total comprehensive income (86,053) (5,061)
Analysis of cash flows of the discontinued operations
Cash flows from operating activities (77,595) 41,936
Cash flows from the investing activities (45,922) –
Cash flows from the financing activities 13,711 20,586
Blyvooruitzicht Gold Mining Company Limited
In 2012 Village effectively obtained control of Blyvooruitzicht (Blyvoor) when Village and DRDGold Limited (DRD) entered into an agreement whereby Village would
acquire 74% of Blyvooruitzicht through its holding company Business Venture Investments 1557 (Pty) Ltd. Village issued 85 million shares
which equated to R150 million as the purchase consideration. The agreement made provision for the transaction to happen in two phases,
Phase A and Phase B. Phase A made provision for the issuing of shares by Village to DRD for the Share and Loan claims. Phase B made
provision for the Mining right to be transferred to the name of Village Main Reef Ltd. Village effectively gained control over the operations
at Phase A, as the daily operations was effectively managed by Village and Village funded the operation. The Blyvoor operation was
consolidated as part of the Village Group.
On 30 July 2013, the Village Board informed the Blyvoor Board via the news service of the JSE that it would no longer financially support the
operations of Blyvoor. Blyvoor, through its Board, successfully obtained a provisional winding-up order from the South Gauteng High Court
on 6 August 2013. A provisional liquidator was appointed. Village is the single, largest, concurrent creditor but has no further exposure to
Blyvoor. At this point in time Village had not received legal ownership of the Mine as the Phase B of the Purchase transaction had not been
fulfilled as the New Order mining right had not been transferred to the name of Village Main Reef Limited.
On 6 August 2013 all control over the Blyvoor operations ceased as Village no longer had any influence in the day to day operations of
the Blyvoor operation. As Village is not the legal owner of the mine as well as the fact that the appointed liquidator had taken control and
management of the operations, management of Village deemed it appropriate to deconsolidate the Blyvoor operation from Village Group,
due to a loss of control.
Village will have no further interest in Blyvoor and therefore no remaining investment in the operation would be disclosed at fair value.
An amount of R204 million was recognised as a profit due to the deconsolidation of Blyvoor. The amount was included in the line item "profit/
(loss) from discontinued operations" in the statement of comprehensive income.
Blyvoor was classified as a discontinued operation due to the fact that the operation represented a separate line of business with its own
cash flows as well as the fact that it represented a separate geographical area of operations. Blyvoor was previously reported as the Gauteng
Blyvoor Segment.
Blyvoor was not previously classified as a discontinued operation. The comparative consolidated statement of comprehensive
income has been restated to present the discontinued operation separately from continuing operations.
Analysis of discontinued operations in the statement of comprehensive income
Group
2014 2013
R'000 R'000
Revenue 46,621 732,296
Expenses (177,343) (1,471,809)
Loss before tax from discontinued operations (130,722) (739,513)
Taxation – 92,274
Loss after tax from discontinued operations (130,722) (647,239)
Profit recognised on deconsolidation of Blyvooruitzicht due to loss of control* 204,092 –
Other comprehensive income – –
Taxation – –
Total comprehensive income/(loss) 73,370 (647,239)
Total comprehensive income attributable to:
Owners of the parent 107,358 (554,337)
Non-controlling interest (33,988) (92,901)
Total comprehensive income 73,370 (647,238)
Analysis of cash flows of the discontinued operations
Cash flows from operating activities 2,587 (243,262)
Cash flows from the investing activities – –
Cash Flows from the financing activities - –
Total discontinued operations
Analysis of total cash flows from discontinued operations
Cash flows from operating activities (296,041) (400 279)
Cash flows from investing activities (43,088) 13 756
Cash flows from financing activities 12,521 (119,048)
Analysis of discontinued operations in the statement of comprehensive income
Revenue 291,191 1,539,602
Expenses (616,519) (2,852,126)
Profit/(loss) before tax from discontinued operations (325,328) (1,312,524)
Taxation 54,423 93,346
Profit/(loss) for the year from discontinued operations (270,905) (1,219,178)
Profit/(loss) recognised on deconsolidation of Blyvooruitzicht due to loss of control 204,092 –
Total profit/(loss) from discontinued operations (66 813) (1,219,178)
Other comprehensive income/(loss) (914) (20,187)
Total comprehensive income/(loss) (67 727) (1,239,365)
Group
2014 2013
R'000 R'000
5. EARNINGS PER SHARE
Reconciliation between earnings/(loss) and headline earnings/(loss): Gross pre-tax Net Gross pre-tax Net
Net profit/(loss) from continuing operations 235,442 203,464 330,013 329,569
Net profit/(loss) from discontinuing operations (121,235) (66,813) (1,219,178) (1,219,178)
Net profit/(loss) for the year 114,207 136,651 (889,165) (889,609)
Less:
Non-controlling Interest-continuing operations (1,108) (1,108) (1,213) (1,213)
Non-controlling Interest-discontinued operations (33,988) (33,988) (166,086) (166,086)
attributable to the owners of the parent
– continuing operations 236,550 204,572 331,226 330,782
Impairment of property, plant and equipment 1,000 1,000 – –
Impairment of mining agreement – – 10,000 10,000
Profit on sale of assets (1,332) (1,332) (2,424) (2,424)
Impairment on financial assets available for sale 34,241 34,241 45,599 45,599
Headline profit/(loss) for the year from Continuing Operations 270 459 238,481 384 401 383,957
attributable to the owners of the parent
– discontinued operations (87,247) (32,825) (1,053,092) (1,053,092)
Fair value adjustment on investment property 895 895 165 165
Fair value reserve recycled through profit or loss – – (3 101) (3 101)
Impairment of property, plant and equipment – – 883,244 883,244
Profit on deconsolidation of Blyvoor (204,092) (204,092) – –
Profit on sale of assets (68,581) (68,581) (3,761) (3,761)
Headline profit/(loss) for the year from discontinued operations (359,025) (304,603) (176,545) (176,545)
Basic profit/(loss) per share (cents) from continuing operations 22.40 34.46
Basic profit/(loss) per share (cents) from discontinuing operations (3.59) (109.70)
Total basic profit/(loss) per share (cents) 18.81 (75.24)
Diluted profit/(loss) per share (cents) from continuing operations 21.48 33.70
Diluted profit/(loss) per share (cents) from discontinuing operations (3.45) (107.28)
Total diluted profit/(loss) per share (cents) 18.03 73.58
Headline profit/(loss) per share (cents) from continuing operations 26.12 40.00
Headline profit/(loss) per share (cents) from discontinuing operations (33.36) (18.39)
Total headline profit/(loss) per share cents (7.24) 21.61
Diluted headline profit/(loss) per share (cents) from continuing operations 25.04 39.11
Diluted headline profit/(loss) per share (cents) from discontinuing operations (31.98) (17.98)
Total diluted headline profit/(loss) per share cents (6.94) 21.13
Net asset value per share (cents) 119.99 79.85
Note: All earnings/(loss) per share calculations are based on a weighted
average number of shares. Net asset value per share is based on
the number of shares in issue.
Reconciliation of number of shares issued '000 '000
Total number of shares 1 040 697 1 040 697
Reported at 1 July 987,289 987,289
Shares in issue at 30 June 987,289 987,289
Weighted average number of ordinary shares in issue 987,289 987,289
Adjust for:
Treasury Shares (74,101) (27,292)
Weighted average number of ordinary shares for earnings per share 913,188 959,997
Weighted average forfeitable share scheme shares issued 39,318 21,668
Weighted average number of ordinary shares for diluted earnings per share 952,506 981,665
Notes: Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary
shares in issue during the year, which is net of the FSP shares issued.
6. Events after the reporting date
On 12 July 2014 , Village received R24 million in cash from Harmony Gold Mining Company in settlement of claim against Harmony in
settling certain dewatering costs incurred on behalf of Harmony by the Buffelsfontein operation. This balance was included in the trade
receivable balance as at the reporting date.
On 19 September 2014 shareholders voted in favour of the sale of Cons Murch Mine. The conditions precendent is expected to be fulfilled
in the first quarter of the 2015 financial year. Shareholders also voted in favour of the 20:1 share consolidation.
The directors are not aware of any matters or circumstances arising after the reporting period up to the date of this report, not otherwise
dealt with in this report that require an adjustment to the financial results at reporting date.
Shareholders are referred to the announcement released on 21 February 2014 regarding Village's key features for the six months ended
31 December 2013 as well as the withdrawal of cautionary announcement dated 3 December 2012, wherein shareholders were advised that the
Company had successfully established a R1 billion domestic medium term note program ("DMTN") to be listed on the JSE. Village did not seek
to issue any notes under the program during January 2013 due to the market circumstances at the time. Shareholders are advised that the
JSE has approved Village's application to deregister the DMTN.
7. Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is
the Chief Executive Officer.
All inter-segment transfers are carried out at arm's length prices.
The accounting policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements.
The Group's mining and exploration activities are conducted mainly in the Gauteng, Limpopo and North West provinces of South Africa.
An analysis of the Group's operating segments is geographically set out below. The segments have been determined from a geographical and
product perspective. The Group includes operating assets in one gold operation, Tau Lekoa (the ‘North West' segment) and a brownfields
platinum exploration project in Lesego Platinum Limited (the ‘Limpopo-Lesego' segment).
The group also has segments in an antimony/gold producer, Cons Murch (the ‘Limpopo-Cons Murch' segment) as well as a segment in
gold, Buffelsfontein (Also part of the 'North-West' segment), which both these operations have been classified as discontinued operations
in the current year.
In the prior year the group also reported a Gauteng segment, which comprised of Blyvooruitzicht, which was a gold producer. In the current
year, the operation was classified as a discontinued operation and the segment was deconsolidated from the Group.
All the group's Gold was sold to the Rand Refinery, while Cons Murch exports its antimony to customers in India and China.
The Chief Executive Officer has determined the operating segments, based on reports that are used to make strategic decisions. An analysis
of the Group's operating segments is geographically set out below based on the requirements of IFRS 8: Segment Reporting. When
assessing performance, the CEO considers the revenue, cost of sales, administrative and general expenditure of each segment. Products
produced by the operations are not sold internally between operations. Sales between operations are limited and in such events comprise
of plant and equipment and consumables.
Discontinued Discontinued Discontinued
North West operations operations operations
Limpopo North West Nicolor/South Continuing operations North West Limpopo Gauteng
Lesego Tau Lekoa Plant Corporate Total Buffels Cons Murch Blyvoor Total
2014 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Revenue – 1,480,078 – – 1,480,078 61,565 183,005 46,621 1,771,269
Cost of sales (5,348) (1,129,894) 14,947 (168) (1,120,463) (189,173) (306,324) (175,561) (1,791,521)
Gross profit/(loss) (5,348) 350,184 14,947 (168) 359,615 (127 608) (123,319) (128,940) (20,252)
Other income – 351 952 10,323 11,626 77,380 1,432 519 90,957
General administrative and overhead expenditure and
share based payment expense (274) (59,697) (6,154) (28,267) (94,392) (2,731) (15,792) (981) (113,896)
Impairment of assets – – – (36,307) (36,307) 2,684 – – (33,623)
Operating profit/(loss) (5,622) 290,838 9,745 (54,419) 240,542 (50,275) (137,679) (129,402) (76,814)
Finance income 586 (36) 2 6,430 6,982 3,331 198 4 10,515
Restructuring costs – (4,098) – – (4,098) (776) – (211) (5,085)
Net movement in fair value – – – (718) (718) (895) – – (1,613)
Finance charges – (5,574) (1,667) (25) (7,266) (4,431) (4,079) (1,113) (16,889)
Profit/(loss) before tax (5,036) 281,130 8,080 (48,732) 235,442 (53,046) (141,560) (130,722) (89,886)
Taxation – (31,382) – (596) (31,978) (1,998) 56,421 – 22,445
Profit/(loss) for the year (5,036) 249,748 8,080 (49,328) 203,464 (55,044) (85,139) (130,722) (67,441)
Other comprehensive income – 322 – 1,509 1 831 – (914) – 917
Fair value adjustments to available for sale investments – –
Total comprehensive profit/(loss) for the year (5,036) 250,070 8,080 (47,819) 205,294 (55,044) (86,053) (130,722) (66,524)
Discontinued Discontinued Discontinued
North West operation operation operation
Limpopo North West Nicolor/South Continuing operations North West Limpopo Gauteng
Lesego Tau Lekoa Plant Corporate Total Buffels Cons Murch Blyvoor Total
2013 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Revenue – 1,480,895 – – 1,480,895 470,309 336,997 732,296 3,020,497
Cost of sales (3,718) (1,001,603) (250) (48) (1,005,619) (663,528) (316,852) (962,318) (2,948,317)
Gross profit/(loss) (3,718) 479,292 (250) (48) 475,276 (193,219) 20,145 (230,022) 72,180
Other income – 4,476 80 6,873 11,429 26,991 288 7,976 46,684
General administrative and overhead expenditure and
share based payment expense (3,414) (79,008) (315) (26,761) (109,498) (70,438) (24,862) 708 (204,090)
Impairment of assets – – – (55,599) (55,599) (419,779) – (469,158) (944,536)
Operating profit/(loss) (7,132) 404,760 (485) (75,535) 321,608 (656 445) (4,429) (690,496) (1,029,762)
Finance income 1,280 – – 39,253 40,533 22,842 2,386 1,770 67,531
Restructuring costs – (2,903) – (1,485) (4,388) (62,763) – (28,379) (95,530)
Net movement in fair value – – – (23,796) (23,796) 198,460 – – 174,664
Finance charges – (3,928) – (16) (3,944) (68,972) (4,090) (22,408) (99,412)
Profit/(loss) before tax (5,852) 397,929 (485) (61,579) 330,013 (566,878) (6,133) (739,513) (982,509)
Taxation – (444) – – (444) – 1,072 92,274 92,901
Profit/(loss) for the year (5,852) 397,485 (485) (61,579) 329,569 (566,878) (5,061) (647,239) (889,609)
Other comprehensive income – – – – – (20,187) – – (20,187)
Fair value adjustments to available for sale investments –
Total comprehensive profit/(loss) for the year (5,852) 397,485 (485) (61,579) 329,569 (587,065) (5,061) (647,239) (909,796)
Group
12 Months 12 Months
ended ended
30 June 30 June
2014 2013
R'000 R'000
Reconciliation of information on reportable segments to IFRS measures
i). Revenue
Total revenue for reportable segments 1,771,269 3,020,497
Elimination of discontinued operations (291,191) (1,539,602)
Consolidated revenue per statement of comprehensive income 1,480,078 1,480,895
ii). Total Comprehensive income(/loss)
Profit before tax for reportable segments (66,524) (909,796)
Profit on deconsolidation of Blyvoor 204,092 –
Total Comprehensive income/(loss) for the year 137,568 (909,796)
8. Restatement
8.1 Restatement of the Cash flow statement
The cash flow statement for 30 June 2013 has been restated in order to reclassify the dividend paid of R302.6 million from investing
activities to financing activities in order to correctly reflect the nature of the cash flow.
8.2 Restatement of Headline Earnings per share
The headline earnings per share for 30 June 2013 was restated to include an amount of R5,6 million, relating to an impairment of a
loan receivable, in the headline earnings per share calculation, which was incorrectly excluded as previously reported. Furthermore,
a recycling gain of R3.1 million relating to an available for sale financial asset, has been, excluded from headline earnings, which was
incorrectly included as previously reported.
9. Mineral resources and reserves
Village reports in terms of the South African code for the reporting of Exploration results, Mineral Resources and Ore Reserves (SAMREC).
Village employs a Group ore reserve manager who is responsible for reporting mineral resources and reserves. He is assisted by an ore
reserve manager at each operation. With the exception of the reduction in mineral resources, as a result of the deconsolidation of Blyvoor
as previously reported. In the current year mineral reserves decreased by 51,9% attributable to the derecoginition of 1.96 Moz, as a result
of Buffelsfontein placed on care and maintenance. Mineral resources increased by 20,7% in total due to a 24,8% increase in the resource base
at TAU Lekoa.
10. RECONCILIATION OF CASH AND CASH EQUIVALENTS Group
2014 2013
R'000 R'000
Cash and cash equivalents per the statement of financial position 153,428 207,314
Bank overdraft – (36 522)
Cash and cash equivalents classified as non-current assets held for sale 3,921 –
Cash and cash equivalents per the statement of cash flows 157,349 170,792
11. CONTINGENT LIABILITIES
In February 2012, an agreement titled "Sale of Shares and Claims Agreement" was concluded amongst VMR, DRDGOLD Limited (‘DRD'),
VMR Investments 02 (Pty) Ltd (previously known as Business Venture Investments No 1557 Proprietary Limited) ("BVI")) and Blyvooruitzicht
Gold Mining Company Limited ("Blyvooruitzicht") in terms of which DRD would sell 37,572,178 (thirty seven million five hundred and
seventy two thousand one hundred and seventy eight) ordinary shares in the issued ordinary share capital of Blyvooruitzicht having a par
value of R0.25, constituting 74% (seventy four percent) of the entire issued ordinary share capital of Blyvooruitzicht ("Sale Shares") in, and
all amounts owing by Blyvooruitzicht to DRD ("Sale Claims") to BVI. The first phase of the sale was implemented, being the disposal of the
Sale Claims to BVI, for a purchase consideration of R150,000,000 (one hundred and fifty million Rand), settled by the issue of 85,714,286
shares in the issued share capital of the Company at R1.75 per share, 20,000,000 of which shares are being held in escrow ("Escrow
Shares"), however, the second phase of the sale, being the disposal of the Sale Shares for a purchase consideration of R1.00 (one rand)
was not implemented as certain conditions precedent were not fulfilled timeously or at all. There is currently a dispute between VMR and
DRD, which is subject to arbitration proceedings, regarding whether the failure to fulfil the conditions precedent was due to a prejudicial act
by VMR and which dispute will determine to which party the Escrow Shares should be released.
Village, the Company, and some its directors and previous directors, both in their personal capacities and in their capacities as directors of
the Company are involved as parties in legal proceedings, including criminal prosecution, regulatory and other governmental proceedings
and including discussions on potential remedial actions, relating to such matters as environmental degradation at Blyvooruitzicht Gold
Mining Company Limited. In particular, the Company and some of its directors and previous directors, both in their personal capacities and
in their capacities as directors of the Company and/or its subsidiaries (the"Relevant Parties"), have been notified of criminal investigations
having been initiated and draft charges having been formulated by the Department of Environmental Affairs ("DEA") for alleged statutory
contraventions that have caused or is likely to cause significant pollution or degradation of the environment at Blyvooruitzicht Gold Mining
Company Limited. The DEA has requested an opportunity to take statements from the Relevant Parties. Before agreeing to do so, the
Relevant Parties have advised the DEA that they will first seek legal advice. The Relevant Parties are in the process of consulting with
Edward Nathan Sonnenbergs ("ENS") and ENS has corresponded with the DEA to confirm having accepted the mandate. Due to the
considerable uncertainty associated with these matters, on the basis of current knowledge, the Company has concluded that potential
losses cannot be reliably estimated with respect to these matters. These investigations and legal proceedings could have a materially
adverse effect on the Company's consolidated financial position, results of operations and cash flows."
VMR and its wholly-owned subsidiary, Buffelsfontein Gold Mines Limited ("Buffelsfontein"), are two of thirty-two respondents to a consolidated
application brought in the Johannesburg High Court against all companies holding South African gold mining assets. The application seeks
certification of a class action in respect of alleged liability for silicosis and tuberculosis contracted by mineworkers in the gold mining
industry since 1956. The breadth and scale of the proposed class action is enormous in scope and complexity, and without precedent in
South Africa and perhaps anywhere. Under South African law, any proposed class action must first be certified by a competent court before
it may be pursued. For purposes of the application, the relevant assets within VMR's group structure are the Buffelsfontein Gold Mine and
Tau Lekoa Gold Mine. VMR will continue to take all necessary steps to oppose the class certification as well as any subsequent action, in
whatever form. To this end, VMR has recently, together with the other respondents, filed answering papers which resist certification of the
proposed class action on grounds that are specific to Village, in view of its relatively recent entry into the South African mining industry
(since 2010), as well as on grounds that are common to other participants in the gold mining industry in South Africa. However these legal
proceedings could have a materially adverse effect on the Company's consolidated financial position, results of operations and cash flows.
Buffelsfontein Gold Mines had been discontinued during the 2013 financial year. Buffelsfontein is however obligated, by a directive from
the Department of Water Affairs, to incur water pumping costs. The Company is engaging with other parties to find a long term solution.
12. Fair value measurement of financial instruments
The following table discloses financial instruments measured at fair value in the statement of financial position in accordance with the fair
value hierarchy.
The hierarchy groups financial instruments into three levels baed on the significance of inputs used in measuring fair value of these financial
instruments.
There are no financial liabilities measured at fair value.
The fair value hierarchy has the following levels:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices)
or indirectly (ie derived from prices); and
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable input)
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value
measurement.
30 June 2014 Level 1 Level 2 Level 3 Total
Available for sale financial assets
Investment in Continental Coal Limited – – – –
Financial Assets at fair value through profit or loss
Investment in Algold Limited 2 697 – – 2 697
30 June 2013 Level 1 Level 2 Level 3 Total
Available for sale financial assets
Investment in Continental Coal Limited 34 242 – – 34 242
Financial Assets at fair value through profit or loss
Investment in First Uranium Corporation 1 906 – – 1 906
Valuation Methodology
Investment in Continental Coal Limited
The fair value of the investment in Continental Coal Limited is determined with reference to the closing quoted Australian dollar share price
on the Australian Stock Exchange at each reporting date.
The quoted share price is converted to South African Rands by applying the closing Australian dollar to South African Rand exchange rate
at reporting date to the share price quoted in Australian dollars. The fair value of the investment is obtained by multiplying the South African
Rand denominated share price by Village's shareholding in Continental Coal Limited.
At 30 June 2014 the investment in Continental Coal Limited was impaired to its recoverable value of nil.
Investment in Algold Resources
The fair value of the investment in Algold Resources Limited is determined with reference to the closing quoted Canadian dollar share price
on the Toronto Stock Exchange at each reporting date.
The quoted share price is converted to South African Rands by applying the closing Canadian dollar to South African Rand exchange rate
at reporting date to the share price quoted in Canadian dollars. The fair value of the investment is obtained by multiplying the South African
Rand denominated share price by Village's shareholding in Algold Resources Limited.
Sponsors:
Bravura Capital (Pty) Ltd
23 Fricker Road
Ground Floor, Suite 2,
Illovo, 2196
(PO Box 2070, Parklands, 2121)
Auditor:
PricewaterhouseCoopers (PWC) Inc
Registered Accountants and Auditors
Private Bag x 36,
Sunninghill, 2157
Transfer Secretaries:
Link Market Services South Africa (Pty) Limited
13th Floor, Rennie House,
19 Ameshoff Street
Braamfontein, 2004
(PO Box 4844, Johannesburg, 2000)
Investor and Public Relations:
Russell and Associates
42 Glenhove Road
Melrose Estate, 2121
(PO Box 1457, Parklands, 2121)
Charmane Russell/Janice Kennedy
Tel: +27 11 880 3924
Fax: +27 11 880 3788
Email: charmane@rair.co.za/jan@rair.co.za
VILLAGE MAIN REEF LIMITED
Registered office: 210 Cumberland Avenue, Bryanston, Johannesburg
Telephone: +27 86 186 7333
Email: info@villagemainreef.co.za
Directors:
- Non-executive: Bernard Swanepoel (Chairman) - Gerard Kemp - Phiway Mbuyazi - Khethiwe McClain - Baba Njenje - Octavia Matloa
- Executive: Ferdi Dippenaar (CEO) - Clinton Halsey (CFO) - Dalubuhle Ncube
- Company Secretary: Fusion Corporate Secretarial Services (Pty) Limited
www.villagemainreef.co.za
Date: 01/10/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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