Wrap Text
Reviewed Condensed Consolidated Interim Financial Statements for the six months ended 31 December 2014
Village Main Reef Ltd
(Registration number 1934/005703/06)
Share code: VIL
ISIN: ZAE000192555
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
The condensed consolidated interim financial information was prepared by Jacques Le Roux CA (SA) in his
capacity as Group Financial Manager, under the supervision of Clinton Halsey CA (SA) as Chief Financial Officer.
Should shareholders wish to receive the Interim Results in another format they can contact Melinda Gous at
Fusion Corporate Secretarial Services on telephone number 087 550 1123 or by e-mail at melinda@fusioncorp.co.za.
Copies of the Interim Results booklet can also be obtained from Village's website, www.villagemainreef.co.za.
REVIEWED CONDENSED CONSOLIDATED INTERIM RESULTS
for the 6 months ended 31 December 2014
KEY FEATURES*
- The average gold price achieved during the 6 months ended 31 December 2014
increased by 3% to R435,839/kg from R421,701/kg for the 6 months ended
31 December 2013.
- Headline earnings per share from continuing operations decreased from 396.22 cents
per share for the 6 months ended 31 December 2013 to 145.73 cents per share for the
6 months ended 31 December 2014.
- Following the failure of Stibium to raise the funding to acquire Cons Murch, the company
was placed in business rescue and has been deconsolidated from the Village Group,
the effective date being 12 December 2014. Cons Murch was subsequently placed in
provisional liquidation on 5 February 2015.
- Firm intention received from Heaven-Sent to acquire the entire issued share capital
of Village at an all-cash offer of R12.25 per share. A shareholder meeting has been
provisionally scheduled for on or about 2 April 2015.
* Un-reviewed
REVIEWED CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
for the 6 months ended 31 December 2014
Group
Restated
6 months ended 6 months ended
31 December 31 December
2014** 2013*
Notes R'000 R'000
Revenue 763,154 810,088
Cost of sales (622,027) (572,863)
Gross profit 141,127 237,225
Other income 2,369 4,625
Operating, administrative and general expenses (41,082) (52,655)
Impairment of assets (124) (23,842)
Share-based payments (2,663) (3,194)
Operating profit 99,627 162,159
Investment revenue 3,740 3,501
Restructuring costs (2,312) (2,323)
Fair value adjustment – (354)
Finance costs (4,640) (2,346)
Profit from continuing operations 96,415 160,637
Loss from discontinued operations net of tax 2 (305,114) (32,057)
(Loss)/profit before taxation (208,699) 128,580
Taxation (30,685) (597)
(Loss)/profit for the period (239,384) 127,983
Other comprehensive income:
Fair value adjustments on available-for-sale financial
assets*** 565 –
Related tax – –
Total comprehensive (loss)/income for the period (238,819) 127,983
(Loss)/profit attributable to:
Owners of the parent (238,765) 162,630
Non-controlling interest (619) (34,647)
(Loss)/profit for the period (239,384) 127,983
Group
Restated
6 months ended 6 months ended
31 December 31 December
2014** 2013*
Notes R'000 R'000
Total comprehensive (loss)/income attributable to:
Owners of the parent (238,200) 162,630
Non-controlling interest (619) (34,647)
Total comprehensive (loss)/income for the period (238,819) 127,983
Total comprehensive (loss)/income attributable to
equity shareholders, arising from:
Continuing operations 66,295 160,040
Discontinued operations (305,114) (32,057)
Total comprehensive (loss)/income for the period (238,819) 127,983
Basic earnings/(loss) per share
From continuing operations (cents) 10 146.86 346.79
From discontinued operations (cents) 10 (675.37) 4.17
Total basic (loss)/earnings per share (cents) 10 (528.51) 350.96
Diluted earnings/(loss) per share
From continuing operations (cents) 10 142.11 327.90
From discontinued operations (cents) 10 (653.53) 3.94
Total diluted (loss)/ earnings per share (cents) 10 (511.42) 331.84
* The statement of comprehensive income for the period ended 31 December 2013 has been restated in order
to disclose Cons Murch Mine as a discontinued operation and to correctly account for the deconsolidation of
Blyvooruitzicht Gold Mining Company, as disclosed in note 2.
** The statement of comprehensive income for the period ended 31 December 2014 includes Cons Murch Mine as a
discontinued operation until 12 December 2014. Cons Murch Mine was deconsolidated from the Village Group on
12 December 2014 as a result of being placed in business rescue, as disclosed in note 2.
*** These items will be recycled through profit and loss.
REVIEWED CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
at 31 December 2014
Group
31 December Audited 30 June
2014** 2014
Notes R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 1,256,405 1,251,767
Investment property 14,406 14,406
Investment in rehabilitation trust funds 15,637 12,454
Financial assets 33,336 8
Total non-current assets 1,319,784 1,278,635
Current assets
Financial assets 2,754 2,697
Investment in rehabilitation trust funds 114,616 134,992
Trade and other receivables 78,600 85,136
Inventories 36,894 41,597
Cash and cash equivalents 94,185 153,428
Total current assets 327,049 417,850
Non-current assets held for sale 3 5,992 331,861
Total assets 1,652,825 2,028,346
Group
31 December Audited 30 June
2014** 2014
Notes R'000 R'000
EQUITY AND LIABILITIES
Equity
Stated capital 636,500 636,500
Treasury shares (73,316) (73,316)
Retained earnings 356,436 595,201
Fair-value reserve 1,482 917
Non-distributable reserve 19,318 16,655
Transactions with non-controlling interest 29,252 29,252
Non-controlling interest 42,886 43,505
Total equity 1,012,558 1,248,714
Non-current liabilities
Financial liabilities 11,101 12,400
Deferred tax 157,453 126,786
Provision for environmental rehabilitation 49,427 47,729
Total non-current liabilities 217,981 186,915
Current liabilities
Financial liabilities 7,134 7,281
Trade and other payables 203,564 263,255
Provision for environmental rehabilitation 162,766 212,526
Bank overdraft 48,822 –
Total current liabilities 422,286 483,062
Non-current liabilities held for sale 3 – 109,655
Total liabilities 640,267 779,632
Total equity and liabilities 1,652,825 2,028,346
** Cons Murch Mine was deconsolidated from the Village Group on 12 December 2014 as a result of being placed in
business rescue, as disclosed in note 2.
REVIEWED CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
for the 6 months ended 31 December 2014
Equity
Transactions with attributable to
Retained Fair-value Non-distributable non-controlling owners of Non-controlling
Stated capital Treasury shares earnings reserve reserve interest the parent interest Total equity
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 – 18,180 29,252 1,010,997 (180,044) 830,953
Profit for the period – – 162,630 – – – 162,630 (34,647) 127,983
Share option expense for the period – – – – (4,136) – (4,136) – (4,136)
De-recognition of non-controlling interest on de- – – – – – – – 281,718 281,718
consolidation of Blyvoor
Dilution of non-controlling interest in Lesego – – 23,073 – – – 23,073 (23,073) –
Platinum
Restated balance as at 31 December 2013 636,500 (73,316) 586,084 – 14,044 29,252 1,192,564 43,954 1,236,518
Profit/(loss) for the period – – 9,117 – – – 9,117 (449) 8,668
Share option expense for the period – – – – 2,611 – 2,611 – 2,611
Other comprehensive income – – – 917 – – 917 – 917
Fair-value adjustments on available-for-sale – – – 1,831 – – 1,831 – 1,831
financial assets
Revaluation of post-retirement benefit obligation – – – (914) – – (914) – (914)
Balance as at 30 June 2014 636,500 (73,316) 595,201 917 16,655 29,252 1,205,209 43,505 1,248,714
Loss for the period – – (238,765) – – (238,765) (619) (239,384)
Share-option expense for the period – – – – 2,663 – 2,663 – 2,663
Other comprehensive income – – – 565 – – 565 – 565
Fair-value adjustments on available-for-sale – – – 565 – – 565 – 565
financial assets
Balance as at 31 December 2014 636,500 (73,316) 356,436 1,482 19,318 29,252 969,672 42,886 1,012,558
REVIEWED CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOW
for the 6 months ended 31 December 2014
Group
6 months Restated
ended 6 months ended
31 December 31 December
2014** 2013*
Notes R'000 R'000
Cash generated from continuing operations 94,692 316,140
Finance cost (2,944) (659)
Investment income 3,575 3,501
Tax paid (18) (597)
Cash generated from continuing operations'
operating activities 95,305 318,385
Cash utilised in discontinued operations' operating
activities 2 (112,307) (250,012)
Total cash (utilised in)/generated from operating
activities (17,002) 68,373
Cash flows from investing activities
Purchase of property, plant and equipment (46,491) (42,438)
Additional investment in Tau Lekoa Rehabilitation
Trust Fund (25,678) –
De-consolidation of subsidiaries (5,186) (3,320)
Cash utilised in continuing operations' investing
activities (77,355) (45,758)
Cash utilised in discontinued operations' investing
activities 2 (145) (29,994)
Total cash utilised in investing activities (77,500) (75,752)
Group
6 months Restated
ended 6 months ended
31 December 31 December
2014** 2013*
Notes R'000 R'000
Cash flows from financing activities
Loans granted (11,883) (3,600)
Re-payment of financial liabilities and finance
leases (1,446) (619)
Cash utilised in continuing operations' financing
activities (13,329) (4,219)
Cash utilised in discontinued operations' financing
activities 2 (4,155) (1,499)
Total cash utilised in financing activities (17,484) (5,718)
Net decrease in cash and cash equivalents (111,986) (13,097)
Cash and cash equivalents at the beginning of the
period*** 157,349 170,792
Cash and cash equivalents at the end of the
period**** 45,363 157,695
* The statement of cash flows for the period ended 31 December 2013 has been restated in order to disclose Cons
Murch Mine as a discontinued operation, as disclosed in note 2.
** The statement of cash flows for the period ended 31 December 2014 includes Cons Murch Mine as a discontinued
operation until 12 December 2014. Cons Murch Mine was deconsolidated from the Village Group on 12 December
2014 as a result of being placed in business rescue, as disclosed in note 2.
*** Cash and cash equivalents at 1 July 2014 include an amount of R 3.9 million in respect of Cons Murch Mine,
which is included in non-current assets held for sale.
**** Cash and cash equivalents at 31 December 2014 is net of a bank overdraft of R48.8 million.
NOTES TO THE REVIEWED CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the 6 months ended 31 December 2014
1. SIGNIFICANT ACCOUNTING POLICIES
1.1 General information
Village Main Reef Limited (Village) is a South African-based mining and development company,
with its ordinary shares listed for trading on the main board of the Johannesburg Stock Exchange
Limited (JSE) under the share code VIL. The Company's assets comprise Lesego Platinum
Mining (a platinum exploration project), Buffelsfontein Gold Mines (a discontinued operation),
Tau Lekoa Gold Mining Company (a gold-producing mine) and the South Gold Plant.
1.2 Basis of preparation
The condensed consolidated interim financial statements are prepared in accordance with
International Financial Reporting Standards, (IAS) 34 Interim Financial Reporting, the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council, and the requirements
of the Companies Act of South Africa. The accounting policies applied in the preparation of these
interim financial statements are in terms of International Financial Reporting Standards and are
consistent with those applied in the previous consolidated annual financial statements."
These condensed consolidated interim financial statements for the six months ended
31 December 2014 have been reviewed by PricewaterhouseCoopers Inc, who expressed an
unmodified conclusion thereon.
A copy of the auditor's report on the condensed consolidated interim financial statements is available
for inspection at the Company's registered office, together with the financial statements identified in
the auditor's report.
1.3 Estimates and accounting policies
The preparation of the condensed consolidated interim financial statements requires
management to make judgements, estimations and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities and income and expenses.
Actual results may differ from these estimates. In preparing these condensed consolidated
interim financial statements, the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation uncertainty were the same as
those that applied to the consolidated financial statements for the year ended 30 June 2014.
1.4. Events after reporting period
Cons Murch Mine
Village has over the past year been involved in negotiations to sell the shares in Cons Murch Mine to
Stibium Mining (Pty) Ltd, an Australian company.
The negotiated transaction to sell the shares in Cons Murch Mine failed on Wednesday, 10 December
2014 as Stibium, the purchaser, was unable to obtain funding to implement the acquisition of the
shares of the company.
After it became clear that the aforementioned transaction would not be consummated, Village
resolved that it was unable to continue funding Cons Murch Mine, therefore resulting in Cons
Murch Mine becoming distressed. On 12 December 2014 the board of directors of Cons Murch
Mine resolved to place Cons Murch Mine under business rescue in terms of Section 129 of the
Companies Act.
Consequently, the Village Group lost control over the Cons Murch operation as Village no longer
had any influence over the operation. In view of the fact that a business rescue practitioner
was appointed and had taken control and management of the operation, Village deemed it
appropriate to deconsolidate the Cons Murch operation from the Village Group, due to a loss of
control. The effective date of the deconsolidation was 12 December 2014.
Cons Murch Mine was classified as a disposal group held-for-sale and a discontinued operation
on 21 May 2014. This classification remains appropriate as at 31 December 2014. The
31 December 2013 comparative results have been restated to reflect Cons Murch Mine as a
discontinued operation.
On 5 February 2015 Cons Murch Mine was placed into provisional liquidation. A liquidator was
formally appointed on 10 February 2014.
Village Main Reef Limited
Village had previously announced that it was conducting a strategic review in that it had received
certain offers from interested parties to dispose of either the Company or certain of its assets. On
2 February 2015 Village received a firm intention from Heaven-Sent to acquire all of the issued
share capital for an all-cash offer of R12.25 per share. A provisional shareholders' meeting has
been scheduled for on or about 2 April 2015.
2. DISCONTINUED OPERATIONS
2.1. Buffelsfontein Gold Mines
On 14 May 2013, Village announced the intention to cease operations at the Buffelsfontein
Gold Mine. Buffelsfontein Gold Mines Limited is a separately identifiable cash-generating unit.
Buffelsfontein Gold Mines Limited is reported in the North-West Segment (discontinued).
During the six month period ended 31 December 2014, Buffels realised a profit of R19 million.
Included in this number is an amount of R27 million income , which is as a result of the
reversal of the environmental rehabilitation provision from an amount of R212 million to an
amount of R185 million, which is currently approved by the Department of Mineral Resources.
The amount is included in the line "Loss from discontinued operations net of tax" on the
statement of comprehensive income. The provision for environmental rehabilitation has been
further reduced to R163 million at 31 December 2014, due to rehabilitation activity during the
6 months ended 31 December 2014.
2.2. Blyvooruitzicht Gold Mining Company Limited
In 2012 Village effectively obtained control of Blyvooruitzicht when Village and DRD entered
into an agreement whereby Village would acquire 74% of Blyvooruitzicht through its holding
company Business Venture Investments 1557 (Pty) Ltd. Village issued 85,714,286 (4,285,714
post consolidation) shares which equated to R150 million as the purchase consideration. The
agreement made provision for the transaction to take place 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 Limited. Village effectively gained control over the operations at Phase A, as the
daily operations were effectively managed by Village and Village funded the operation. The
Blyvooruitzicht 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 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. Village not being the legal
owner of the mine as well as the fact that the appointed liquidator had taken over 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.
An amount of R204 million was recognised as a profit on the deconsolidation of Blyvoor. The
amount was included in the line item "Loss from discontinued operations net of tax" on the
statement of comprehensive income in the comparative period.
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 and was a separate geographical area of
operations. Blyvoor is reported under the Gauteng Blyvoor Segment, at 31 December 2013 in
the segmental report (refer to note 8).
2.3. Cons Murch Mine (Pty) Limited
On 21 May 2014, Village entered into an agreement whereby it would dispose of 100% of its
interest in Cons Murch Mine (being 76.6%) in two phases. The operation, previously disclosed
as part of the Limpopo (Antimony) segment, was classified as held for sale.
The negotiated transaction to sell the shares in Cons Murch Mine failed on 10 December
2014 when Stibium, the purchaser, was unable to obtain the necessary funding to implement
the acquisition of the shares of the company. As it became clear that the aforementioned
transaction would not be consummated, and due to the lack of cash resources available to
Village to continue funding the significant operational losses at Cons Murch, the Board of Village
resolved that it was unable to continue funding Cons Murch, resulting in Cons Murch becoming
financially distressed. Given the above factors the board of directors of Cons Murch met on
12 December 2014, and concluded that, although Cons Murch was financially distressed, there
appeared to be a reasonable prospect of rescuing Cons Murch due to the amount of interest shown
by potential buyers in the operation. Consequently, Cons Murch Mine voluntarily commenced
with business rescue proceedings, as provided for by Section 129 of the Companies Act on
12 December 2014.
On 5 February, 2015, the business rescue practitioner of Cons Murch applied to Court
in terms of section 141(2)(a)(i) of the Companies Act, 2008 (Act 71 of 2008) as amended
("the Companies Act"), to discontinue the business rescue proceedings of Cons Murch and
place Cons Murch in provisional liquidation. Village has committed a maximum amount of
R22 million, as post commencement finance to Cons Murch to fund certain business rescue
and liquidation expenses.
Cons Murch Mine was effectively deconsolidated from the Village Group on 12 December as
control over the operation ceased and the business rescue practitioner effectively dealt with
the day-to-day operations of the company. Included in the loss from discontinued operations of
R305 million are operational losses amounting to R396 million, which includes an impairment of
property, plant and equipment and the mining right amounting to R266 million, and an impairment
of inventory amounting to R13 million. A profit on derecognition of Cons Murch amounting to
R73 million is also included in the loss from discontinued operations.
Analysis of the results of discontinued operations
Group
6 months Restated
ended 6 months ended
31 December 31 December
2014 2013
Notes R'000 R'000
Revenue 112,312 153,388
Expenses (208,314) (389,537)
Loss before tax from discontinued
operations (96,002) (236,149)
Taxation (22) –
Loss for the period from discontinued
operations (96,024) (236,149)
Re-measurements/Impairments (281,788) –
Taxation – –
Loss after tax on re-measurements/
impairments (377,812) (236,149)
Profit on de-consolidation of subsidiary 72,698 204,092
Taxation – –
Profit after tax on de-consolidation of
subsidiary 72,698 204,092
Total loss for the period on discontinued
operations (305,114) (32,057)
Other comprehensive income – –
Total comprehensive loss from discontinued
operations (305,114) (32,057)
Total comprehensive loss attributable to:
Owners of the parent (305,114) 1,931
Non-controlling interest – (33,988)
Total comprehensive loss from discontinued
operations (305,114) (32,057)
Analysis of the results of discontinued operations
Cash flows from operating activities (112,307) (250,012)
Cash flows from investing activities (145) (29,994)
Cash flow from financing activities (4,155) (1,499)
3. NON-CURRENT ASSETS HELD FOR SALE
Assets of disposal group classified as held for sale
31 December Audited
2014 30 June 2014
R'000 R'000
Non-current assets
Property, plant and equipment – 214,513
Intangible asset – 55,138
Investment property 5,992 2,786
Environmental rehabilitation trust fund – 27,293
Financial assets – –
Current assets
Inventories – 15,586
Trade and other receivables – 12,622
Cash and cash equivalents – 3,923
Total assets 5,992 331,861
Liabilities of disposal group classified as held for sale
Non-current liabilities
Finance lease liability – 5,754
Provision for environmental rehabilitation – 50,521
Deferred tax liability – –
Current liabilities
Finance lease liability – 9,921
Trade and other payables – 40,392
Tax payable – 3,067
Total liabilities – 109,655
4. RELATED PARTY TRANSACTIONS
During the six months ended 31 December 2014 the following related-party transactions were
recorded:
Transactions with directors
No further share options under the FSP plans were issued to the directors or key management
for the period ended 31 December 2014.
For the period ended 31 December 2013, Village granted an additional 12,317,263 share
options under the FSP share scheme to the directors at a strike price of R0.46. An amount of
R62,935 was expensed specifically relating to this issuing of shares.
Group
Restated
6 months ended 6 months ended
31 December 31 December
2014 2013
R'000 R'000
Transactions with other related parties
To The Point Growth Specialist Properties (Pty) Limited 171 75
To The Point Growth Specialist (Pty) Limited – 272
Umbono Financial Services (Pty) Limited Consulting Services – 150
Transactions with key management
Salaries, bonuses and fees 16,793 19,504
Share option expenses 2,662 4,136
5. MINERAL RESOURCES AND RESERVES
Village reports in terms of the South African Code for the Reporting of Exploration Results, Mineral
Resources and Mineral 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. There have been no material changes in the mineral reserves as
declared in our Annual Report as at 30 June 2014, except for the fact that Cons Murch Mine
has been deconsolidated from the Village Group. In 2013 Blyvoor was deconsolidated from
the Village Group. The total reserves of 0.12 Moz gold (Au) and 28,380 tonnes antimony (Sb)
(2013: Blyvoor 3.61Moz gold) will therefore be excluded from the Group's total reserves.
6. SHARE CONSOLIDATION
At a general meeting on 19 September 2014, the shareholders of Village Main Reef Limited
approved the 1 for 20 consolidation of the Company's share capital and the concomitant
conversion of the consolidated shares into shares of no par value.
The consolidation applied to the 5 billion authorised shares of R0.125 each and the issued 1.04
billion ordinary shares each of the same par value. Following consolidation, Village had 250
million authorised shares and 52 million issued shares.
7. RESTATEMENTS
7.1. Statement of comprehensive income
7.1.1. Restatement in respect of discontinued operations
The statement of comprehensive income for the period 31 December 2013 has been restated
to reflect the reclassification of Cons Murch as a discontinued operation.
7.1.2. Restatement in respect of correction of profit on deconsolidation of Blyvooruitzicht
The profit on deconsolidation of Blyvooruitzicht has been restated to reflect the amount as
R204 million instead of the R421.4 million as previously stated in the interim results for the six
months ended 31 December 2013. This is consistent with that disclosed in the 30 June 2014
consolidated annual financial statements of the Group.
The loss from discontinued operations for the period 31 December 2013 has been restated from
R298 million to R32 million. This restatement includes the effects of reclassifying Cons Murch
Mine as a discontinued operation.
7.2. Statement of cash flows
The statement of cash flows for the six months ended 31 December 2013 has been restated in
order to reflect Cons Murch Mine as a discontinued operation.
7.3. Earnings per share disclosure
Earnings per share disclosures have been restated to account for the effect of the abovementioned
restatements, as well as the impact of the share consolidation, as detailed in note 6 above.
8. SEGMENTAL REPORTING
Discontinued operations
North West
North West Nicolor/ Continuing North West Limpopo Gauteng
Limpopo Lesego Tau Lekoa South Plant Corporate operations total Buffels Cons Murch Blyvoor Total
31 December 2014 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Revenue – 763,154 – – 763,154 59,044 53,268 – 875,466
Cost of sales (2,790) (621,826) 2,589 – (622,027) (87,909) (160,854) – (870,790)
Gross profit/(loss) (2,790) 141,328 2,589 – 141,127 (28,865) (107,586) – 4,676
Other income – 78 436 1,855 2,369 48,794 1,062 – 52,225
Operating, administrative and general expenses (137) (23,648) (2,795) (17,165) (43,745) (730) (9,269) – (53,744)
Impairment of assets – (20) (104) – (124) (2,525) (279,262) – (281,911)
Operating profit /(loss) (2,927) 117,738 126 (15,310) 99,627 16,674 (395,055) – (278,754)
Investment revenue 111 120 – 3,509 3,740 2,380 800 – 6,920
Restructuring costs – (2,312) – – (2,312) – – – (2,312)
Fair value adjustments – – – – – 10 – – 10
Finance costs – (4,405) (230) (5) (4,640) (323) (2,276) – (7,239)
Profit/(loss) before tax (2,816) 111,141 (104) (11,806) 96,415 18,741 (396,531) – (281,375)
Taxation – (30,685) – – (30,685) (22) – – (30,707)
Profit/(loss) after tax (2,816) 80,456 (104) (11,806) 65,730 18,719 (396,531) – (312,082)
Profit/(loss) on derecognition of Cons Murch – – – – – – 72,698 – 72,698
Profit/(loss) for the period (2,816) 80,456 (104) (11,806) 65,730 18,719 (323,833) – (239,384)
Other comprehensive income
Fair-value adjustments to available-for-sale
investments – 507 – 58 565 – – – 565
Total comprehensive profit/(loss) for the year (2,816) 80,963 (104) (11,748) 66,295 18,719 (323,833) – (238,819)
Discontinued operations
North West
Limpopo Limpopo Nicolor/ Continuing North West Limpopo Gauteng
Lesego Cons Murch South Plant Corporate operations total Buffels Cons Murch Blyvoor Total
31 December 2013 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Revenue – 810,088 – – 810,088 2,471 104,297 46,620 963,476
Cost of sales (2,673) (574,862) 4,840 (168) (572,863) (94,503) (143,725) (175,563) (986,654)
Gross profit/(loss) (2,673) 235,226 4,840 (168) 237,225 (92,032) (39,428) (128,943) (23,178)
Other income – 263 652 3,710 4,625 57,888 392 519 63,424
Operating, administrative and general expenses – (33,105) (4,954) (17,790) (55,849) (14,945) (8,083) (981) (79,858)
Impairment of assets – – – (23,842) (23,842 ) (2,286) – – (26,128)
Operating profit /(loss) (2,673) 202,384 538 (38,090) 162,159 (51,375) (47,119) (129,405) (65,740)
Investment revenue 321 – – 3,180 3,501 (706) 125 4 2,924
Restructuring costs – (2,323) – – (2,323) – – (211) (2,534)
Fair-value adjustments – – – (354) (354) (754) – – (1,108)
Finance costs – (2,099) (237) (10) (2,346) (3,794) (1,801) (1,113) (9,054)
Profit/(loss) before tax (2,352) 197,962 301 (35,274) 160,637 (56,629) (48,795) (130,725) (75,512)
Taxation – – – (597) (597) – – – (597)
Profit/(loss) after tax (2,352) 197,962 301 (35,871) 160,040 (56,629) (48,795) (130,725) (76,109)
Profit/(loss) on derecognition of Blyvooruitzicht – – – – – – – 204,092 204,092
Profit/(loss) for the period (2,352) 197,962 301 (35,871) 160,040 (56,629) (48,795) 73,367 127,983
Other comprehensive income – – – – – – – – –
Total comprehensive profit/(loss) for the year (2,352) 197,962 301 (35,871) 160,040 (56,629) (48,795) 73,367 127,983
9. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
The following table presents financial assets measured at fair value in the statement of financial
position in accordance with the fair value hierarchy. This hierarchy groups financial assets into
three levels based on the significance of inputs used in measuring the fair value of the financial assets.
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 (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
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.
31 December 2014 Level 1 Level 2 Level 3 Total
Financial assets held for sale – – – –
Investment in Tau Lekoa
Rehabilitation Trust 30,799 – – 30,799
Investment in Algold
Resources Limited 2,754 – – 2,754
Investment in Continental – – – –
Coal Limited
33,553 – – 33,553
31 December 2013
Financial assets held for sale – – – –
Investment in Continental 10,399 – – 10,399
Coal Limited
Investment in Algold 1,552 – – 1,552
Resources Limited
11,951 – – 11,951
Valuation methodology
Financial assets held for sale
The financial assets held for sale relates to the investment held by Village Main Reef Limited in
Cons Murch Mine. Cons Murch Mine was placed in business rescue on 12 December 2014
and thereafter in provisional liquidation on 5 February 2015. Consequently, the fair value of the
investment was considered to be impaired to nil.
Investment in Tau Lekoa Rehabilitation Trust
The fair value of the investment in Tau Lekoa Rehabilitation Trust is determined with reference to
the closing quoted share price of the equity investments included in the Momentum portfolio at
each reporting date.
Investment in Algold Resources Limited
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.
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 Securities 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. The investment
was impaired to nil in the year ended 30 June 2014.
10. EARNINGS PER SHARE
Restated
6 months ended 6 months ended
31 December 31 December
2014 2013
R'000 R'000
Net profit/(loss) from continuing operations 65,730 160,040
Net profit/(loss) from discontinued operations (305,114) (32,057)
Net profit/(loss) for the year (239,384) 127,983
Net profit from continuing operations 65,730 160,040
Less:
Profit /(loss) attributable to non-controlling interest from
continuing operations (619) (659)
Profit /(loss) attributable to non-controlling interest from
discontinued operations – (33,988)
Basic earnings from continuing operations 66,349 160,699
Impairment of available-for-sale financial assets – 23,842
Profit on sale of assets (514) (938)
Headline earnings from continuing operations 65,835 183,603
Basic earnings from discontinued operations (305,114) 1,931
Impairment of assets 281,788 2,286
Profit on sale of assets (18,309) (52,906)
Fair value adjustment on investment property 10 –
Gain on loss of control of Subsidiary (72,698) (204,092)
Headline loss from discontinued operations (114,323) (252,781)
Basic earnings per share (cents) from continuing operations 146.86 346.79
Basic earnings/(loss) per share (cents) from discontinued
operations (675.37) 4.17
Total basic earnings per share (cents) (528.51) 350.96
Diluted earnings per share (cents) from continuing operations 142.11 327.90
Diluted earnings/(loss) per share (cents) from discontinued
operations (653.53) 3.94
Total diluted earnings per share (cents) (511.42) 331.84
Restated
6 months ended 6 months ended
31 December 31 December
2014 2013
R'000 R'000
Headline earnings per share (cents) from continuing
operations 145.73 396.22
Headline loss per share (cents) from discontinued operations (253.05) (545.51)
Total headline earnings/(loss) per share (cents) (107.32) (149.29)
Diluted headline earnings per share (cents) from continuing
operations 141.01 374.63
Diluted headline loss per share (cents) from discontinued
operations (244.87) (515.79)
Total diluted headline profit/(loss) per share (cents) (103.86) (141.16)
Reconciliation of number of shares issued (thousands)
Total number of shares 52,035 52,035
Reported at 1 July 49,364 49,364
Shares in issue at 30 June 49,364 49,364
Weighted average numbers of shares in issue 49,364 49,364
Adjust for:
Treasury shares (4,187) (3,026)
Weighted average number of ordinary shares for earnings
per share 45,177 46,338
Adjust for:
Weighted average forfeitable share scheme shares issued* 1,510 2,670
Weighted average number of ordinary shares for diluted
earnings per share 46,687 49,008
* The forfeitable share scheme shares are dilutive for continuing operations and hence are also considered
dilutive for discontinued operations
11. CONTINGENCIES AND COMMITMENTS
Village Main Reef 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 the Village Group structure are the Buffelsfontein Gold
Mine and Tau Lekoa Gold Mine. Village will continue to take all necessary steps to oppose the
class certification as well as any subsequent action, in whatever form. To this end, Village 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. On 6 February 2015,
Village received notification from Abrahams Kiewitz Incorporated (the attorneys of applicants
to the class action) of the intention to withdraw proceedings against Village and Buffelsfontein
Gold Mines Limited, in respect of alleged liability for tuberculosis. The legal proceedings in
respect of the alleged liability for silicosis could potentially have a materially adverse effect on
the Company's consolidated financial position, results of operations and cash flows.
In February 2012, an agreement titled "Sale of Shares and Claims Agreement" was concluded
between Village, 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 (4,285,714 post consolidation) shares in the issued
share capital of the Company at R1.75 per share, 20,000,000 (1,000,000 post consolidation)
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 Village and DRD, which is subject to arbitration proceedings,
regarding whether the failure to fulfil the conditions precedent was due to a prejudicial act by
Village 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 are 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.
CORPORATE INFORMATION
DIRECTORS
Ferdi Dippenaar,
Chief Executive Officer
Executive
Clinton Halsey,
Chief Financial Officer
Executive
Godfrey Ntoele
Independent Non-Executive
Director
Bernard Swanepoel,
Chairman
Non-Executive Director
Gerard Kemp
Independent Non-Executive
Director
Octavia Matloa
Deputy Chairman and Lead
Independent Non-Executive
Director
Phiway Mbuyazi
Non-Executive Director
COMPANY SECRETARY
Fusion Corporate Secretarial
Services (Pty) Ltd
1st Floor, The Greens Office Park
Charles de Gaulle Street
Highveld, Centurion
Pretoria 0157
(PO Box 68528 Highveld 0169)
Tel: 087 550 1123
Fax: +27 (0) 86 218 2919
REGISTERED OFFICE
210 Cumberland Avenue
Bryanston, 2191
(Postnet Suite 352,
Private Bag X21,
Bryanston, 2021)
Tel: 0861 867 333
E-mail: info@villagemainreef.co.za
TRANSFER SECRETARIES
Link Market Services South
Africa (Pty) Ltd
13th Floor, Rennie House
19 Ameshoff Street
Braamfontein, 2001
(P.O. Box 4844, Johannesburg, 2000)
Tel: +27 11 713 0800
Fax: +27 86 674 4381
SPONSOR
Bravura Equity Services (Pty) Ltd
23 Fricker Road
Ground Floor
Suite 2
Illovo, 2196
(P.O. Box 2070, Parklands, 2121)
Tel: +27 11 459 5037
AUDITORS
PricewaterhouseCoopers Inc
Registered Accountants and Auditors
Chartered Accountants (SA)
2 Eglin Road
Sunninghill, 2157
(Private Bag x36, Sunninghill, 2157)
Tel: +27 11 797 4000
BANKERS
ABSA Bank Ltd
15 Alice Lane
Sandton, 2196
(Private Bag X18,
Johannesburg 2000)
Tel: +27 11 895 6989
LISTING PARTICULARS
Village Main Reef Ltd
(Registration number 1934/005703/06)
Share code: VIL
ISIN: ZAE000192555
INVESTOR AND PUBLIC RELATIONS
Ferdi Dippenaar
Tel: 0861 867 333
Email: ferdi@villagemainreef.co.za
www.villagemainreef.co.za
Date: 25/02/2015 10:15:00 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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