COMMENTARY
TO THE SUMMARSIED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012
General
The board of R&E is pleased to announce the audited results for the year ended 31 December 2012.
Income
The majority of the income recognised is mainly as a result of settlements and recoveries of R16 million, the disposal of prospecting rights to the value of R5 million and interest earned of R11.1 million on cash investments.
Financial position
R&E is liquid with no interest-bearing debt. R&E’s total assets consist primarily of cash and cash equivalents. R&E had a net asset value per share of R2.46 at 31 December 2012.
Cash flow
R&E started the year under review with a cash and cash equivalent balance of R211 million.
Operating activities utilised cash of R0.8 million, primarily as a result of interest received of R11.1 million offsetting operating expenses of R11.9 million.
Investing activities yielded cash inflows of R3.2 million received, primarily from the disposal of prospecting rights of R5 million offsetting the net acquisition of investments in equity securities of R1.8 million.
R&E remains in a healthy cash position with R214 million in cash and cash equivalents at 31 December 2012.
Outlook
The outlook for 2013 is similar to that for the previous year. Expenditure on litigation is expected to be at a similar level, which is likely to prevail until the claims in which the company is engaged have been finalised. Management will continue to focus on reducing the costs of its operations where possible.
DC Kovarsky Marais Steyn
Chairman Chief Executive Officer
Johannesburg
18 March 2013
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
|
2012 |
2011 |
|
|
Audited |
Audited |
||
| ASSETS |
|
|
|
| Non-current assets |
661 |
734 |
|
| Plant and equipment |
|
187 |
260 |
| Intangible assets |
|
474 |
474 |
|
|
|
||
| Current assets |
217 311 |
213 258 |
|
| Investment in equity securities |
|
1 892 |
– |
| Trade and other receivables |
|
1 502 |
1 788 |
| Cash and cash equivalents |
|
213 917 |
211 470 |
|
|
|
||
| Total assets |
217 972 |
213 992 |
|
|
|
|
||
| EQUITY AND LIABILITIES |
|
|
|
| Shareholders’ equity |
175 878 |
169 026 |
|
| Issued capital |
|
746 |
746 |
| Retained earnings |
175 132 |
168 280 |
|
|
|
|
||
| LIABILITIES |
|
|
|
| Non-current liabilities |
|
|
|
| Post-retirement medical benefit obligation |
|
40 768 |
39 142 |
|
|
|
||
| Current liabilities |
|
|
|
| Trade and other payables |
|
1 326 |
5 824 |
|
|
|
||
| Total equity and liabilities |
217 972 |
213 992 |
| SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||
|
31 December 2012 |
31 December 2011 |
|
|
Audited |
Audited |
|
|
R’000 |
R’000 |
|
| Attributable to equity holders of the company |
|
|
| Share capital |
746 |
746 |
| Balance at the beginning of the period |
746 |
748 |
| Shares repurchased during the year |
– |
(2) |
|
|
|
|
| Investment fair value reserve |
– |
– |
| Balance at the beginning of the period |
– |
62 011 |
| Change in fair value of available-for-sale investments |
– |
(9 537) |
| Realised gain reclassified to profit or loss |
– |
(52 474) |
|
|
|
|
| Retained earnings |
175 132 |
168 280 |
| Balance at the beginning of the period |
168 280 |
111 696 |
| Profit for the period |
6 852 |
47 651 |
| Shares repurchased |
– |
(604) |
| Remeasurement of shareholders for dividend |
– |
9 537 |
| SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS | ||
|
31 December 2012 |
31 December 2011 |
|
|
Audited |
Audited |
|
|
R’000 |
R’000 |
|
| Profit before taxation |
6 852 |
46 702 |
| Adjusted for: |
|
|
| Profit on disposal of investments |
(43) |
(52 474) |
| Profit on disposal of prospecting rights |
(5 037) |
(9 963) |
| Change in fair value of investments in equity securities |
(30) |
– |
| Depreciation |
73 |
76 |
| Change in post-retirement medical benefit liability |
1 626 |
2 713 |
| Finance income |
(11 155) |
(8 832) |
| Dividends received |
(29) |
(1 826) |
| Working capital changes |
(4 212) |
(1 775) |
| Cash utilised in operations |
(11 955) |
(25 379) |
| Interest received |
11 155 |
8 832 |
| Taxation paid |
– |
(10 455) |
| Cash flows from operating activities |
(800) |
(27 002) |
| Cash flows from investing activities |
3 247 |
11 762 |
| Dividends received |
29 |
1 826 |
| Proceeds on disposal of prospecting rights |
5 037 |
9 963 |
| Acquisition of investment in equity securities |
(2 712) |
– |
| Proceeds on disposal of investments in equity securities |
893 |
– |
| Acquisition of plant and equipment |
– |
(38) |
| Proceeds from disposal of plant and equipment |
– |
11 |
| Cash flow from financing activities |
– |
(65 087) |
| Dividends paid |
– |
(64 481) |
| Shares repurchased |
– |
(606) |
| Increase/(decrease) in cash and cash equivalents |
2 447 |
(80 327) |
| Cash and cash equivalents at the beginning of the period |
211 470 |
291 797 |
| Cash and cash equivalents at the end of the period |
213 917 |
211 470 |
NOTES
TO THE SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2012
1. Reporting entity
R&E is a company domiciled and incorporated in the Republic of South Africa. The summarised consolidated financial statements of the company for the year ended 31 December 2012 include the company and its subsidiaries (together referred to as “the group”).
2. Statement of compliance
The summarised consolidated financial statements for the year ended 31 December 2012 have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRSs), the presentation and disclosure requirements of IAS34 Interim Financial Reporting applied to year end reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, as well as the requirements of the South African Companies Act.
Mr Van Zyl Botha CA (SA), financial director, is responsible for these summarised consolidated financial statements and has supervised the preparation thereof in conjunction with Ms Marleen Schalkwijk.
3. Significant accounting policies
The accounting policies set out below are the same as those applied by the company in its separate financial statements and the group in its consolidated financial statements as at and for the year ended 31 December 2011, except for IAS 12 Deferred Tax – Recovery of underlying assets that was adopted on 1 January 2012. There was no significant impact on these financial statements as a result of adopting this standard.
4. Independent audit by the auditor
These summarised consolidated financial statements for the year ended 31 December 2012 have been extracted from the complete set of annual financial statements on which the auditors, KPMG Inc, have expressed an unqualified audit opinion, dated 18 March 2013. The auditor’s reports and annual financial statements, which have been summarised in this report, are available for inspection at the registered office of the company.
5. Segment reporting
The group operates in a single operating segment as an investment holding company with assets in the mining industry.
6. Profit on disposal of prospecting rights
R&E disposed of certain of its prospecting rights which had a Rnil carrying value for R5 million. R&E has entered into various agreements for the sale of certain of its prospecting rights, with nil carrying values, to third parties. In terms of the agreements, however, there are still a number of conditions precedent outstanding at year-end and as a result the disposals have not been recognised as yet. The proceeds (and profit) which are expected to be realised from these transactions is R 7 million.
7. Recoveries
On 23 March 2012 Paul Main agreed to pay R&E USD 4 million, of which USD 2 million has been paid to date. The payment of the remaining amount has been postponed as announced and shareholders will be kept up to date of any further developments via SENS.
8. Earnings per share
|
2012 |
2011 |
|
| Earnings per share |
Per share |
Per share |
| Basic earnings and diluted earnings per ordinary share |
10 |
66 |
|
|
|
|
| The calculation of basic and diluted earnings per ordinary share is based on earnings of R6,9 million (2011: earnings of R47,7 million) attributable to ordinary shareholders of the company and a weighted average of 71 585 172 (2011: 71 756 219) shares in issue. |
|
|
|
|
|
|
| Headline earnings/(loss) and diluted headline earnings/(loss) per share |
2 |
(21) |
|
|
|
|
| The calculation of the headline earnings and diluted headline earnings per share is based on a headline earnings of R1,8 million (2011: headline loss of R14,8 million) attributable to equity holders of the company and a weighted average of 71 585 172 (2011: 71 756 219) ordinary shares in issue during the year. |
|
|
|
|
|
|
|
2012 |
2011 |
|
| Reconciliation between basic profit for the year and headline earnings/(loss) |
|
|
| Profit for the year attributable to equity holders of the company |
6 852 |
47 651 |
| Adjusted for: |
|
|
| Profit on disposal/distribution of investments |
(43) |
(52 474) |
| Profit on disposal of prospecting rights |
(5 037) |
(9 963) |
| Headline earnings/(loss) for the year attributable to equity holders of the company |
1 772 |
(14 786) |
9. Net asset and tangible net asset value per share
The net asset value per share is calculated using the following variables:
|
31 December 2012 |
31 December 2011 |
|
| Net asset value (R’000) |
175 878 |
169 026 |
| Ordinary shares outstanding |
71 585 172 |
71 585 172 |
| Net asset value per share (cents) |
246 |
236 |
| Net tangible asset value per share (cents) |
245 |
235 |
The number of shares outstanding at 31 December 2012 and 31 December 2011 has been adjusted for the 2,999,893 treasury shares held.
10. Material changes
Settlement with Paul Main
R&E and ASI (African Strategic Investment (Holdings) Limited) concluded a settlement agreement with Paul Main on 23 March 2012. In terms of the settlement agreement, Main agreed to pay R&E USD4 million, of which USD2 million (R 15.3 million) has been paid to date and recognised as “Recoveries” in profit. The remaining USD2 million will be recognized on receipt or when the company is virtually certain of receipt. As a consequence of various extensions granted to Main to make payment of the second instalment, Main has paid extension payments to the company amounting to R 7.4 million, which have been recognised in profit and included in “Other income” in the Statement of Comprehensive Income.
Disclosure of Contingent Liabilities
In December 2012, an application by current and former mineworkers (who claim to have contracted silicosis on certain gold mines in South-Africa) was issued against R&E and twenty nine other Respondents. A notice of intention to oppose the application was filed by R&E in February 2013, and in due course an answering affidavit will be served. At this stage, no damages have been quantified by the Applicants against R&E and R&E is not able to determine its potential liability if any, arising from the application.
11. Related party transactions
There were no related party transactions during the period under review other than in the normal course of business,
i.e. key management remuneration.
12. Events after reporting date
There were no significant events between the reporting date and the approval date of these results.
Directors
DC Kovarsky (Chairman)**, M Steyn (CEO)*, V Botha*, MB Madumise#, JH Scholes**
(*Executive, **Independent non-executive, #Resigned 23 March 2012 independent non-executive)
Company Secretary
V Botha CA (SA)
Transfer secretaries
Computershare Investor Services (Pty) Ltd
(Registration number 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
Sponsor
PSG Capital
First Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600