Introduction
Shareholders are referred to the announcement on SENS on 12 May 2010 and to the circular distributed to shareholders on such date containing details regarding the exercise by R&E of the security provided by JCI Gold Limited (“JCI gold”) a subsidiary of JCI Limited, to R&E in respect of an outstanding loan due by JCI Gold to R&E of R 161 960 265. R&E as a result of the exercise of the security against such loan became the beneficial owner of 6 690 610 FSD shares (“FSD excussion”), the full and further details of which are set out in the aforementioned circular. The JSE Limited has requested R&E, following its ruling requiring the shareholders of R&E to ratify the FSD excussion by way of ordinary resolution, to publish, on SENS, the condensed audited historical financial information of FSD (registration number 1944/016931/06), for the years ended 31 December 2007, 2008 and 2009. Copies of the signed audited annual financial statements of the FSD Group are available for inspection at the registered office of R&E during normal business hours.
CONDENSED REPORT OF HISTORICAL FINANCIAL INFORMATION
This report has been extracted from the consolidated financial statements of FSD and its subsidiaries (“FSD Group”) which have been prepared in accordance with IFRS and in compliance with the Companies Act, as amended. The basis of preparation has been consistently applied, except where otherwise indicated. These financial statements were audited by KPMG Inc, who issued an unqualified audit opinion in respect of the financial statements.
Statement of financial position
| 31 December | 31 December | 31 December | |
| 2009 | 2008 | 2007 | |
| R’000 | R’000 | R’000 | |
| Assets | |||
| Non-current assets | 474 | 225 279 | 118 772 |
| Intangible assets | 474 | 474 | 474 |
| Loans receivable | – | 224 805 | 118 298 |
| Current assets | 556 370 | 294 323 | 433 660 |
| Trade and other receivables | 640 | 2 634 | – |
| Loans receivable | 261 629 | 19 957 | – |
| Cash and cash equivalents | 294 101 | 271 732 | 433 660 |
| Total assets | 556 844 | 519 602 | 552 432 |
| Equity and liabilities | |||
| Capital and reserves | 541 644 | 502 403 | 458 533 |
| Ordinary share capital | 2 223 | 2 223 | 2 223 |
| Share premium | 9 272 | 9 272 | 9 272 |
| Capital redemption reserves | 28 | 28 | 28 |
| Retained earnings | 530 121 | 490 880 | 447 010 |
| Current liabilities | 15 200 | 17 199 | 93 899 |
| Loans payable | – | 3 560 | 3 857 |
| Trade and other payables | 4 | – | 60 249 |
| Income tax payable | 15 196 | 13 639 | 29 793 |
| Total equity and liabilities | 556 844 | 519 602 | 552 432 |
Statement of comprehensive income
| 2009 | 2008 | 2007 | |
| R’000 | R’000 | R’000 | |
| Revenue | 15 200 | 6 730 | – |
| Other operating income | – | – | 395 000 |
| Operating expenses | (2 569) | (2 549) | (5 746) |
| Results from operations | 12 631 | 4 181 | 389 254 |
| Finance income | 38 257 | 56 271 | 17 009 |
| Profit before taxation | 50 888 | 60 452 | 406 263 |
| Income tax expense | (11 647) | (16 582) | (20 674) |
| Profit and total comprehensive income for the year | 39 241 | 43 870 | 385 589 |
Statements of changes in equity
| Ordinary share capital |
Share premium |
Capital redemp-tion reserves |
Retained earnings |
Total share-holders equity |
Non-controlling share-holders interest |
Total equity |
|
| R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | |
| Balance at 1 January 2007 | 2 223 | 9 272 | 28 | 56 279 | 67 802 | – | 67 802 |
| Loan acquired for no conside-ration | – | – | – | 5 142 | 5 142 | – | 5 142 |
| Profit for the year | – | – | – | 385 589 | 385 589 | – | 385 589 |
| Balance at 31 December 2007 | 2 223 | 9 272 | 28 | 447 010 | 458 533 | – | 458 533 |
| Profit for the year | – | – | – | 43 870 | 43 870 | – | 43 870 |
| Balance at 31 December 2008 | 2 223 | 9 272 | 28 | 490 880 | 502 403 | – | 502 403 |
| Profit and total comprehen-sive income for the year | – | – | – | 39 241 | 39 241 | – | 39 241 |
| 2 223 | 9 272 | 28 | 530 121 | 541 644 | – | 541 644 |
Statement of cash flows
| 2009 | 2008 | 2007 | |
| R’000 | R’000 | R’000 | |
| Cash flows from operating activities | (9 699) | (68 052) | 60 166 |
| Cash (utilised in)/generated by operating activities | (571) | (65 432) | 54 506 |
| Taxation paid | (10 090) | (32 736) | – |
| Interest received | 962 | 30 116 | 5 660 |
| Cash flows from investing activities | 35 628 | (93 876) | 369 761 |
| Dividends received | 15 200 | 6 730 | – |
| Loans advanced | (114 922) | (129 354) | (28 000) |
| Loans repaid | 135 350 | 28 748 | 2 761 |
| Proceeds from disposal of prospecting rights | – | – | 395 000 |
| Cash flows from financing activities | (3 560) | – | 3 733 |
| Loans repaid | (3 560) | – | – |
| Loan received from holding company | – | – | 3 733 |
| Increase/(decrease) in cash and cash equivalents | 22 369 | (161 928) | 433 660 |
| Cash and cash equivalents at beginning of the year | 271 732 | 433 660 | – |
| Cash and cash equivalents at end of the year | 294 101 | 271 732 | 433 660 |
COMMENTARY
The FSD Group results for the 2009 year were positive, showing net income of R50,9 million before taxation. This is mainly as a result of finance income earned on funds invested and loans to the JCI group.
The net profit for the 2009 year is R39,2 million (2008: R43,8 million; 2007: R385,6 million) resulting in earnings of 177 cents per share (2008: 197 cents; 2007: 1 735 cents). The earnings per share calculation takes into account an amount of 22 226 597 shares which remained unchanged during all periods. There was no change in the number of shares in issue during the reporting period.
No dividends were declared by the FSD Group during any of the periods reported on.
The major assets of the FSD Group at 31 December 2009 consist of cash and secured loans.
The FSD Group’s prospecting rights are stated at cost less impairments as there is currently insufficient geological information to allow FSD to declare the resources or reserves.
Total Group assets amount to R556,8 million (2008: R519,6 million; 2007: R552,4 million). The net asset value per share at 31 December 2009 was 2 437 cents (2008: 2 260 cents; 2007: 2 063 cents) and the net tangible asset value per share at 31 December 2009 was 2 435 cents (2008: 2 258 cents; 2007: 2 061 cents).
The Group was in a positive cash position at 31 December 2009, with cash and cash equivalents reaching R294,1 million at year-end (2008: R271,7 million; 2007: R433,7 million).
Johannesburg
21 May 2010
Sponsor and corporate advisor:
PSG Capital (Pty) Limited