COMMENTARY TO SUMMARISED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
General
The board of R&E is pleased to announce the interim results for the six months ended 30 June 2014. The period saw the conclusion of a further successful claim against third parties, resulting in settlement income of R150 million.
Income
The majority of the income recognised in the period under review derived from the settlement of a legal claim against the company’s former auditors.
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 of R179 million or R2.50 per share as at 30 June 2014 (net of the dividend declared, which amounted to R161 million or R2.25 per share).
Cash flow
R&E started the period under review with a cash and cash equivalent balance of R201 million.
Operating activities generated cash of R152 million, primarily as a result of the settlement of a legal claim of R150 million, recoveries of R8.9 million and interest received of R7.3 million, offsetting operating expenses of R14.2 million. Operating expenses include legal and forensic costs of R8.2 million. As at 30 June 2014, R&E held R353 million in cash and cash
equivalents. After paying the dividend of R161 million on 28 July 2014, the company’s cash position was R191 million.
Outlook
The company will continue to take a commercial and pragmatic approach towards legal claims against third parties and their relative legal costs, focus on containing the operational costs where possible and to maintain liquidity.
| David Kovarsky Chairman |
Marais Steyn Chief Executive Officer |
Johannesburg
18 August 2014
SUMMARISED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
| For the six months ended | |||
|
30 June 2014
|
30 June 2013
|
||
|
Unaudited
|
Reviewed
|
||
| Notes |
R ‘000
|
R ‘000
|
|
| Dividends received |
19
|
28
|
|
| Profit on disposal of prospecting rights |
–
|
1 076
|
|
| (Loss)/profit on sale of equity securities |
(7)
|
140
|
|
| Recoveries | 6 |
158 903
|
22 136
|
| Foreign exchange losses |
–
|
(35)
|
|
| Other income |
244
|
2 473
|
|
| Other operating expenses |
(14 215)
|
(14 621)
|
|
| Results from operating activities |
144 944
|
11 197
|
|
| Finance income |
7 322
|
5 357
|
|
| Profit before taxation |
152 266
|
16 554
|
|
| Taxation |
–
|
–
|
|
| Profit for the period |
152 266
|
16 554
|
|
| Actuarial losses |
690
|
–
|
|
| Dividends paid |
(161 067)
|
–
|
|
| Total comprehensive (loss)/income for the period |
(8 111)
|
16 554
|
|
| Profit attributable to: | |||
| Owners of the company |
152 266
|
16 554
|
|
| Total comprehensive (loss)/income attributable to: | |||
| Owners of the company |
(8 111)
|
16 554
|
|
| Basic and diluted earnings per share (cents) | 7 |
213
|
23
|
SUMMARISED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
| For the six months ended | |||
|
30 June 2014
|
30 June 2013
|
||
|
Unaudited
|
Reviewed
|
||
| Notes |
R ‘000
|
R ‘000
|
|
| Share capital balance at the beginning and end of the period |
746
|
746
|
|
| Retained earnings |
178 055
|
191 686
|
|
| Balance at the beginning of the period |
186 166
|
175 132
|
|
| (Loss)/profit for the period |
(8 111)
|
16 554
|
|
SUMMARISED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
| For the six months ended | |||
|
30 June 2014
|
31 December 2013
|
||
|
Unaudited
|
Audited
|
||
| Notes |
R ‘000
|
R ‘000
|
|
| Assets | |||
| Non-current assets |
105
|
124
|
|
| Plant and equipment |
56
|
75
|
|
| Intangible assets |
49
|
49
|
|
| Current assets |
356 274
|
204 360
|
|
| Trade and other receivables |
1 955
|
2 030
|
|
| Investment in equity securities |
1 645
|
1 170
|
|
| Cash and cash equivalents |
352 674
|
201 160
|
|
| Total assets |
356 379
|
204 484
|
|
| Equity and liabilities | |||
| Shareholders’ equity |
178 801
|
186 912
|
|
| Issued capital |
746
|
746
|
|
| Retained earnings |
178 055
|
186 166
|
|
| Liabilities | |||
| Non-current liabilities | |||
| Post-retirement medical benefit obligation |
14 665
|
15 547
|
|
| Current liabilities | |||
| Trade and other payables |
162 913
|
2 025
|
|
| Total equity and liabilities |
356 379
|
204 484
|
|
SUMMARISED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
| For the six months ended | |||
|
30 June 2014
|
31 June 2013
|
||
|
Unaudited
|
Reviewed
|
||
| Notes |
R ‘000
|
R ‘000
|
|
| Profit before taxation |
152 266
|
16 554
|
|
| Adjusted for: | |||
| Loss on sale of other assets |
–
|
65
|
|
| Profit on disposal of prospecting rights |
–
|
(1 076)
|
|
| Other non-cash items |
(146)
|
(1 426)
|
|
| Loss/(profit) on disposal of equity securities |
7
|
(140)
|
|
| Actuarial gains |
690
|
–
|
|
| Movement in post-retirement medical aid benefit liability |
(882)
|
(1 710)
|
|
| Depreciation |
19
|
27
|
|
| Loss on fair value of equity instruments |
20
|
397
|
|
| Interest received |
(7 322)
|
(5 357)
|
|
| Dividends received |
(19)
|
(28)
|
|
| Working capital changes |
160 962
|
1 198
|
|
| Cash flows from operations |
305 741
|
9 930
|
|
| Interest received |
7 322
|
5 357
|
|
| Dividends paid |
(161 067)
|
–
|
|
| Cash flows from operating activities |
151 996
|
15 287
|
|
| Cash flows from investing activities |
(482)
|
2 211
|
|
| Dividends received |
19
|
28
|
|
| Proceeds from disposal of prospecting rights |
–
|
1 500
|
|
| Proceeds from disposal of equity securities |
299
|
721
|
|
| Acquisition of investment in equity securities |
(800)
|
(38)
|
|
| Net increase in cash and cash equivalents |
151 514
|
17 498
|
|
| Cash and cash equivalents at the beginning of the period |
201 160
|
213 917
|
|
| Cash and cash equivalents at the end of the period |
352 674
|
231 415
|
|
NOTES TO THE SUMMARISED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2014
1. Reporting entity
R&E is a company domiciled and incorporated in the Republic of South Africa. The summarised consolidated interim financial statements of the company for the six months ended 30 June 2014 include the company and its subsidiaries (together referred to as the “group”).
2. Statement of compliance
The summarised consolidated 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, the requirements of the Companies Act of South Africa (Act 71 of 2008) and the Listings Requirements of the JSE Limited. These summarised consolidated interim financial statements were approved by the board of directors on 12 August 2014.
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 summarised consolidated interim financial statements are the same as those applied by the group in its consolidated financial statements for the year ended 31 December 2013.
4. No independent review by the auditor
The company’s auditor has not reviewed or audited the summarised consolidated interim financial statements of R&E for the six months ended 30 June 2014.
5. Segment reporting
The Group operates in a single operating segment as an investment holding company with assets in the mining industry.
6. Recoveries
R&E concluded a settlement agreement with PriceWaterHouseCoopers (“PwC”) on 16 April 2014 in terms of which R150 million was payable by PwC to R&E. The settlement relates to the group’s claims against PwC for damages arising from PwC’s audit of the group during the period 1999 to 2003. Shareholders are referred to the
announcement made by the company on 16 April 2014 relating to this settlement. R&E recognised the payment of R150 million received in cash during June 2014.
7. Earnings per share
| For the six months ended | |||
|
30 June 2014
|
30 June 2013
|
||
|
Unaudited
|
Reviewed
|
||
| Notes |
R ‘000
|
R ‘000
|
|
| Basic and diluted earnings for the period (R’000) |
152 266
|
16 554
|
|
| Weighted average number of ordinary shares in issue |
71 585 172
|
71 585 172
|
|
| Earnings per share (cents) |
213
|
23
|
|
| Headline and diluted headline earnings per ordinary share | |||
| Headline and diluted headline earnings for the period (R’000) |
152 266
|
15 338
|
|
| Weighted average number of ordinary shares in issue |
71 585 172
|
71 585 172
|
|
| Headline earnings per share (cents) |
213
|
21
|
|
| 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 |
152 266
|
16 554
|
|
| Adjusted for: | |||
| Profit on disposal of prospecting rights |
–
|
( 1 076)
|
|
| Profit on disposal of available-for-sale investments |
–
|
(140)
|
|
|
152 266
|
15 338
|
||
| Tax effect of adjustments |
–
|
–
|
|
| Headline earnings for the period attributable to equity holders of the company |
152 266
|
15 338
|
|
8. Net asset and tangible net asset value per share
| For the six months ended | |||
|
30 June 2014
|
30 June 2013
|
||
|
Unaudited
|
Reviewed
|
||
| Notes |
R ‘000
|
R ‘000
|
|
| Net asset value (R’000) | 178 801 | 192 432 | |
| Ordinary shares outstanding | 71 585 172 | 71 585 172 | |
| Net asset value per share (cents) | 250 | 269 | |
| Net tangible asset value per share (cents) | 250 | 269 | |
The number of shares outstanding at 30 June 2014 and 30 June 2013 has been adjusted for the 2,999,893 treasury shares held.
9. Material changes
The final settlement received from PwC is material in its totality.
10. 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.
11. 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) 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, 35 Kerk Street, Stellenbosch, 7600