Reviewed results for the six months ended 30 June 2013 COMMENTARY TO THE CONDENSED CONSOLIDATED REVIEWED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
General
The board of R&E is pleased to announce the interim results for the six months ended 30 June 2013.
Income
The majority of the income recognised in the period under review derived from the settlement of a legal claim, profit realised on the disposal of prospecting rights and finance income.
Financial position
R&E is liquid with no interest-bearing debt. R&E’s total assets consist primarily of cash. R&E has a net asset value per share of R2.69 at 30 June 2013 (which represents an increase of 8.5% from 30 June 2012).
Cash flow
R&E started the period under review with a cash balance of R214 million. Operating activities generated cash of R15.3 million, primarily as a result of the settlement of a legal claim of R19.5 million and interest received of R5.4 million against operating expenses of R14.6 million (which included legal and forensic costs of R8.9 million).
Investing activities yielded cash inflows of R1.5 million received from the sale of prospecting rights.
R&E remains in a healthy cash position with R231 million in cash and cash equivalents at 30 June 2013.
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 the company has initiated have been are finalised. Management will continue to focus on reducing the operational costs of its operations where possible
and to maintain liquidity.
David Kovarsky
Chairman
Marais Steyn
Chief Executive Officer
Johannesburg
8 August 2013
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
| For the six months ended | |||
|
30 June 2013
Reviewed |
30 June 2012
Reviewed |
||
| Notes |
R’000
|
R’000
|
|
| Dividends received |
28
|
–
|
|
| Profit on disposal of prospecting rights | 6 |
1 076
|
5 037
|
| Profit on sale of equity securities |
140
|
–
|
|
| Recoveries | 7 |
22 136
|
15 521
|
| Foreign exchange (losses)/gains |
(35)
|
532
|
|
| Other income |
2 473
|
2 041
|
|
| Other operating expenses |
(14 621)
|
(19 879)
|
|
| Results from operating activities |
11 197
|
3 252
|
|
| Finance income |
5 357
|
5 597
|
|
| Profit before taxation |
16 554
|
8 849
|
|
| Taxation |
–
|
–
|
|
| Profit for the period |
16 554
|
8 849
|
|
| Other comprehensive income |
–
|
–
|
|
| Total comprehensive income |
16 554
|
8 849
|
|
| Profit attributable to: Owners of the company |
16 554
|
8 849
|
|
| Total comprehensive income attributable to: Owners of the company |
16 554
|
8 849
|
|
| Basic and diluted earnings per share (cents) | 8 |
23
|
12
|
| CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY | |||
| For the six months ended | |||
|
30 June 2013
Reviewed R’000 |
30 June 2012
Reviewed R’000 |
||
| Share capital balance at the beginning and end of the period |
746
|
746
|
|
| Retained earnings |
191 686
|
177 129
|
|
| Balance at the beginning of the period |
175 132
|
168 280
|
|
| Profit for the period |
16 554
|
8 849
|
|
| CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION | |||
| As at | |||
|
30 June 2013
Reviewed R’000 |
31 December 2012
Audited R’000 |
||
| Assets | |||
| Non-current assets |
145
|
661
|
|
| Plant and equipment |
96
|
187
|
|
| Intangible assets |
49
|
474
|
|
| Current assets |
233 555
|
217 311
|
|
| Trade and other receivables |
1 188
|
1 502
|
|
| Investment in equity securities |
952
|
1 892
|
|
| Cash and cash equivalents |
231 415
|
213 917
|
|
| Total assets |
233 700
|
217 972
|
|
| Equity and liabilities | |||
| Shareholders’ equity |
192 432
|
175 878
|
|
| Issued capital |
746
|
746
|
|
| Retained earnings |
191 686
|
175 132
|
|
| Liabilities | |||
| Non-current liabilities | |||
| Post-retirement medical benefit obligation |
39 058
|
40 768
|
|
| Current liabilities | |||
| Trade and other payables |
2 210
|
1 326
|
|
| Total equity and liabilities |
233 700
|
217 972
|
|
| CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS | |||
| For the six months ended | |||
|
30 June 2013
Reviewed R’000 |
30 June 2012
Reviewed R’000 |
||
| Profit before taxation |
16 554
|
8 849
|
|
| Adjusted for: | |||
| Loss on sale of other assets |
65
|
–
|
|
| Profit on disposal of prospecting rights |
(1 076)
|
(5 037)
|
|
| Other non-cash items |
(1 426)
|
256
|
|
| Profit on disposal of equity securities |
(140)
|
–
|
|
| Movement in post-retirement medical aid benefit liability |
(1 710)
|
219
|
|
| Depreciation |
27
|
37
|
|
| Loss on fair value of equity instruments |
397
|
–
|
|
| Interest received |
(5 357)
|
(5 597)
|
|
| Dividends received |
(28)
|
–
|
|
| Working capital changes |
1 198
|
(3 614)
|
|
| Cash flows from operations |
9 930
|
(5 143)
|
|
| Interest received |
5 357
|
5 597
|
|
| Cash flows from operating activities |
15 287
|
454
|
|
| Cash flows from investing activities |
2 211
|
5 037
|
|
| Dividends received |
28
|
–
|
|
| Proceeds from disposal of prospecting rights |
1 500
|
5 037
|
|
| Proceeds from disposal of equity securities |
721
|
–
|
|
| Acquisition of investment in equity securities |
(587)
|
–
|
|
| Investment in mark to market |
549
|
–
|
|
| Net increase in cash and cash equivalents |
17 498
|
5 491
|
|
| Cash and cash equivalents at the beginning of the period |
213 917
|
211 470
|
|
| Cash and cash equivalents at the end of the period |
231 415
|
216 961
|
|
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
1. Reporting entity
R&E is a company domiciled and incorporated in the Republic of South Africa. The condensed consolidated interim financial statements of the company for the six
months ended 30 June 2013 include the company and its subsidiaries (together referred to as the “group”).
2. Statement of compliance
The condensed consolidated reviewed interim financial statements are prepared and presented in accordance with International Financial Reporting Standards, which include International Accounting Standard (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the requirements of the Companies Act of South Africa (Act 71 of 2008). These condensed consolidated interim financial statements were approved by the board of directors on 5 August 2013.
Mr Van Zyl Botha CA(SA), the financial director of R&E, is responsible for these interim financial statements and has supervised the preparation thereof.
3. Significant accounting policies
The accounting policies applied by the group in these condensed consolidated interim financial statements are the same as those applied by the group in its consolidated financial statements for the year ended 31 December 2012.
4. Independent review by the auditor
The condensed consolidated interim financial statements of R&E for the six months ended 30 June 2013 have been reviewed by the company’s auditor, KPMG Inc. In their review report dated 5 August 2013, which is available for inspection at the company’s registered office, KPMG Inc state that their review was conducted in accordance with the International Standard on Review Engagements 2410, Review of Interim Information Performed by the Independent Auditor of the Entity, and have expressed an unmodified conclusion on the condensed consolidated interim financial statements.
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 R0.4 million carrying value for R1.5 million.
7. Recoveries
R&E concluded a settlement agreement with Mr Paul Main on 23 March 2012 in terms of which USD4 million was payable by Mr Main to R&E. The settlement relates to the group’s claim against him for damages in respect of 2 million Randgold Resources Limited shares. Shareholders are referred to the announcements made by the company on 30 May 2013 relating to this settlement. R&E recognised the final payment of R22 million received in cash during June 2013.
8. Earnings per share
| For the six months ended | |||
| Basic earnings and diluted earnings per ordinary share |
30 June 2013
Reviewed |
30 June 2012
Reviewed |
|
| Basic and diluted earnings for the period (R’000) |
16 554
|
8 849
|
|
| Weighted average number of ordinary shares in issue |
71 585 172
|
71 585 172
|
|
| Earnings per share (cents) |
23
|
12
|
|
| Headline and diluted headline earnings per ordinary share | |||
| Headline and diluted headline earnings for the period (R’000) |
15 338
|
3 812
|
|
| Weighted average number of ordinary shares in issue |
71 585 172
|
71 585 172
|
|
| Headline earnings per share (cents) |
21
|
5
|
|
| Reconciliation between basic and headline earnings for the period |
R’000
|
R’000
|
|
| Profit for the period attributable to the equity holders of the company |
16 554
|
8 849
|
|
| Adjusted for: | |||
| Profit on disposal of prospecting rights |
(1 076)
|
(5 037)
|
|
| Profit on disposal of available-for-sale investments |
(140)
|
–
|
|
|
15 338
|
3 812
|
||
| Tax effect of adjustments |
–
|
–
|
|
| Headline earnings for the period attributable to equity holders of the company |
15 338
|
3 812
|
|
9. Net asset and tangible net asset value per share
The net asset value per share is calculated using the following variables:
|
30 June 2013
Reviewed |
30 June 2012
Reviewed |
||
| Net asset value (R’000) |
192 432
|
177 875
|
|
| Ordinary shares outstanding |
71 585 172
|
71 585 172
|
|
| Net asset value per share (cents) |
269
|
248
|
|
| Net tangible asset value per share (cents) |
269
|
247
|
The number of shares outstanding at 30 June 2013 and 30 June 2012 has been adjusted for the 2,999,893 treasury shares held.
10. Material changes
The final settlement received from Mr Paul Main is material in its totality.
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*, P Burton#**, JH Scholes** (*Executive, **Independent non-executive, #Appointed 23 May 2013)
Company secretary and financial director: V Botha CA(SA)
Transfer secretaries: Computershare Investor Services (Pty) Ltd (Registration number 2004/003647/07), 70 Marshall Street, Johannesburg, 2001
Sponsor: PSG Capital, 1st Floor, Ou Kollege Building, 35 Kerk Street, Stellenbosch, 7600