SENS announcement – Summarised Consolidated Financial Statements for the year ended 31 December 2013

Commentary

General

The board of R&E is pleased to announce the audited results for the year ended 31 December 2013.
Mr Van Zyl Botha CA(SA), financial director, is responsible for the annual financial statements and these summarised annual results and has supervised the preparation thereof in conjunction with Mrs Mandrie Steyn.

Income

The majority of the income recognised is mainly as a result of settlements and recoveries
of R22 million, the profit on sale of prospecting rights of R1 million and interest earned of R11.4 million on cash investements.

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 R2.61 at 31 December 2013.

Cash flow

R&E started the year under review with a cash and cash equivalent balance of R214 million. Operating activities utilised net cash of R15 million, primarily as a result of interest received of R11 million offsetting cash utilised in operations of R26 million.
Investing activities yielded cash inflows of R2.3 million received, primarily from the proceeds on disposal of prospecting rights of R1.5 million and the net disposal of investments in equity securities of R0.7 million. R&E remains in a healthy cash position with R201 million in cash and cash equivalents at 31 December 2013.

Outlook

The outlook for 2014 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
Chairman

Marais Steyn
Chief executive officer

Johannesburg
20 March 2014

Summarised consolidated statement of comprehensive income for the year ended 31 December 2013

Audited
2013
R’000
Audited
2012
R’000
Notes
Revenue 75 29
Profit on disposal of investments 135 43
Recoveries 7 22 136 15 981
Other income 3 382 8 589
Personnel expenses (6 429) (10 015)
Profit on disposal of prospecting rights 6 1 076 5 037
Change in fair value of held-for-trading investments (127) 30
Other operating expenses (24 706) (21 690)
Loss from operating activities (4 458) (1 996)
Finance income 11 419 11 155
Profit before taxation 6 961 9 159
Taxation
Profit for the year 6 961 9 159
Other comprehensive income, net of tax
Actuarial gains/(losses) 4 073 (2 307)
Total comprehensive income for the year 11 034 6 852
Profit attributable to:
Owners of the company 6 961 9 159
Profit for the year 6 961 9 159
Total comprehensive income attributable to:
Owners of the company 11 034 6 852
Total comprehensive income for the year 11 034 6 852
Basic and diluted earnings per share (cents) 8 10 13

Summarised consolidated statement of financial position as at 31 December 2013

Audited
2013
R’000
Audited
2012
R’000
Notes
Assets
Non-current assets 124 661
Plant and equipment 75 187
Intangible assets 49 474
Current assets 204 360 217 311
Investment in equity securities 1 170 1 892
Trade and other receivables 2 030 1 502
Cash and cash equivalents
Total assets
201 160 213 917
204 484 217 972
Equity and liabilities
Shareholders’ equity 186 912 175 878
Issued capital 746 746
Retained earnings 186 166 175 132
Liabilities
Non-current liabilities
Post-retirement medical benefit obligation 15 547 40 768
Current liabilities
Trade and other payables 2 025 1 326
Total equity and liabilities 204 484 217 972

Summarised consolidated statement of changes in equity for the year ended 31 December 2013

Audited
31 December 2013
R’000
Audited
31 December 2012
R’000
Notes
Attributable to equity holders of the company
Share capital 746 746
Retained earnings 186 166 175 132
Balance at the beginning of the period 175 132 168 280
Profit and total comprehensive income for the period 11 034 6 852

Summarised consolidated statement of cash flows for the year ended 31 December 2013

Audited
31 December 2013
R’000
Audited
31 December 2012
R’000
Notes
Profit before taxation 6 961 9 159
Adjusted for:
Profit on disposal of investments (135) (43)
Profit on disposal of prospecting rights (1 076) (5 037)
Change in fair value of held-for-trading investments 127 (30)
Loss on impairment of other assets 65
Depreciation 50 73
Change in post-retirement medical benefit liability (25 221) 1 626
Finance income (11 419) (11 155)
Actuarial gains/(losses) 4 073 (2 307)
Dividends received (75) (29)
Working capital changes (13) (4 212)
Cash utilised in operations (26 663) (11 955)
Interest received 11 419 11 155
Taxation received 184
Cash flows from operating activities (15 060) (800)
Cash flows from investing activities 2 303 3 247
Dividends received 75 29
Proceeds on disposal of prospecting rights 1 500 5 037
Acquisition of investment in equity securities (464) (2 712)
Proceeds on disposal of investments in equity securities 1 192 893
Cash flow from financing activities
(Decrease)/increase in cash and cash equivalents (12 757) 2 447
Cash and cash equivalents at the beginning of the period 213 917 211 470
Cash and cash equivalents at the end of the period 201 160 213 917

Notes to the summarised consolidated financial statements for the year ended 31 December 2013

1. Reporting entity

R&E is a company domiciled and incorporated in the Republic of South Africa. The condensed consolidated annual financial statements of the company for the year ended 31 December 2013 include the company and its subsidiaries (together referred to as “the group”).

2. Basis of preparation

The summarised consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for abridged reports, and the requirements of the Companies Act applicable to summarised financial statements. The Listings Requirements require abridged reports to be prepared in accordance with the framework concepts and 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.

3. Significant accounting policies

The accounting policies applied in the preparation of the consolidated financial statements, from which the summarised consolidated financial statements were derived, are in terms of International Financial Reporting Standards and are consistent with the accounting policies applied in the preparation of the previous consolidated annual financial statements, except
for the revised IAS 19 Employee Benefits that was adopted on 1 January 2013. The impact of IAS 19 on the financial statements is presented in note 10. The accounting policies have been applied consistently by all group entities.

4. Independent audit by the auditor

These summarised consolidated financial statements for the year ended 31 December 2013 have been extracted from the complete set of annual financial statements on which the auditors, KPMG Inc,
have expressed an unqualified audit opinion, dated 20 March 2014. The auditor’s report and annual financial statements, which have been summarised in this report, are available for inspection at the registered office of the company. This abridged report is extracted from audited information, but is not itself audited. The Directors take full responsibility for the preparation of this report and that the financial information has been correctly extracted from the underlying annual 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. 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 are R5.9 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

2013
Per share
(in cents)
2012
Per share
(in cents)
Earnings per share
Basic earnings and diluted earnings per ordinary share
10 13
The calculation of basic and diluted earnings per ordinary share is based on earnings
of R6.9 million (2012: earnings of R9.1 million) attributable to ordinary shareholders of the
company and a weighted average of 71 585 172
(2012: 71 585 172) shares in issue.
Headline earnings and diluted headline earnings per share 8 6
The calculation of the headline earnings and diluted headline earnings per share is based on headline
earnings of R5.8 million (2012: headline earnings of R4.1 million) attributalbe to equity holders
of the company and a weighted average of 71 585 172 (2012: 71 585 172)
ordinary shares in issue during the year.
Reconciliation between basic earnings for the year and headline earnings
Profit for the year attributable to equity holders of the company 6 961 9 159
Adjusted for:
Profit on disposal of prospecting rights (1 076) (5 037)
Headline earnings for the year attributable to equity
holders of the company
5 885 4 122

9. Net asset and tangible net asset value per share

The net asset value per share is calculated using the following variables:

31 December
2013
31 December
2012
Notes
Net asset value (R’000) 186 912 175 878
Ordinary shares outstanding 71 585 172 71 585 172
Net asset value per share (cents) 261 246
Net tangible asset value per share (cents) 261 245

The number of shares outstanding at 31 December 2013 and 31 December 2012 has been adjusted for the 2 999 893 treasury shares held.

10. Material changes

Post-retirement medical benefit obligation

During 2013, R&E concluded settlements with a number of pensioners. The main drivers of the movement in the post-retirement medical obligation are due to the settlements of R19.9 million and actuarial gains of R4 million.

IAS 19 change in accounting policy

2013
R’000
2012
R’000
All actuarial gains and losses are recognised through other
comprehensive income.During the prior year the policy was to
recognise gains and losses through profit and loss. As this
change in accounting police does not affect the balance sheet,
a third balance sheet is not required.
Income statement
Personnel costs (2 356) (12 322)
Transfer to Other comprehensive income (4 073) 2 307
Restated Personnel costs (6 429) (10 015)
Profit before reclassification 11 034 6 852
Transfer to Other comprehensive income (4 073) 2 307
Restated profit for the year 6 961 9 159
Other Comprehensive Income
Actuarial gains/(losses) 4 073 (2 307)
Other comprehensive income for the year 4 073 (2 307)
Basic earnings and diluted earnings per ordinary share
Before change in accounting policy 15 10
After change in accounting policy 10 13

11. Related party transactions

There were no related party transactions during the period under review other than in the normal course of business. Key management remuneration for the current year was R4.064
million (2012: R4.792 million).

12. Events after reporting date

There were no significant events between the reporting date and the approval date of these results.

13. Notice of annual general meeting

Shareholders are advised that the annual general meeting of R&E will be held at MW Business Centre, Michelangelo Hotel, Mandela Square, Sandton, at 11:00 on Thursday, 8 May 2014.
A copy of the notice of the annual general meeting incorporating the summarised financial
statements will be distributed to shareholders on 24 March 2014.

The date on which shareholders must be recorded in the Share Register maintained by the
transfer secretaries, for purposes of being entitled to attend and vote at the annual general meeting is Friday, 2 May 2014, with last day to trade being Wednesday, 23 April 2014.

Directors
DC Kovarsky (Chairman)**, M Steyn (CEO)*, V Botha*, P Burton#, JH Scholes** (*Executive, **Independent non-executive, #Appointed 23 May 2013 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
24 March 2014

Posted in Company Announcements.