COMMENTARY TO THE SUMMARISED GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014
GENERAL
The board of R&E is pleased to announce the audited results for the year ended 31 December 2014. 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 CA(SA) (group financial manager).
INCOME
The majority of the income recognised is mainly as a result of settlements and recoveries of R158.9 million and interest earned of R13.3 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 R2.27 at 31 December 2014.
CASH FLOW
R&E started the year under review with a cash and cash equivalent balance of R201.1 million.
Operating activities yielded net cash of R124.6 million, primarily as a result of settlements received of R158.9 million offsetting cash utilised in operations of R34.3 million.
Investing activities utilised cash outflows of R1.3 million, primarily from the net acquisition of investments in equity securities of R1.3 million.
R&E remains in a healthy cash position with R173.9 million in cash and cash equivalents at 31 December 2014.
OUTLOOK
The outlook for 2015 is largely dependent on the progress and outcome of current legal matters. 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.
David Kovarsky
Chairman
Marais Steyn
Chief executive officer
Johannesburg
20 March 2015
SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2014
|
Notes
|
Audited
2014 R’000 |
Audited
2013 R’000 |
|
| Revenue |
64
|
75
|
|
| (Loss)/profit on disposal of investments |
(102)
|
135
|
|
| Recoveries |
7
|
158 903
|
22 136
|
| Other income |
60
|
3 027
|
|
| Personnel expenses |
(15 521)
|
(6 429)
|
|
| Profit on disposal of prospecting rights |
6
|
–
|
1 076
|
| Change in fair value of held-for-trading investments |
(191)
|
(127)
|
|
| Change in fair value of cash investments |
(2 364)
|
355
|
|
| Other operating expenses |
(17 743)
|
(24 706)
|
|
| Profit/(loss) from operating activities |
123 106
|
(4 458)
|
|
| Finance income |
13 341
|
11 419
|
|
| Profit before taxation |
136 447
|
6 961
|
|
| Taxation |
–
|
–
|
|
| Profit for the year |
136 447
|
6 961
|
|
| Other comprehensive income | |||
| Items of other comprehensive income that will not be subsequently reclassified to profit or loss Actuarial gains |
105
|
4 073
|
|
| Taxation |
–
|
–
|
|
| Total comprehensive income for the year |
136 552
|
11 034
|
|
| Profit attributable to: | |||
| Owners of the company |
136 447
|
6 961
|
|
| Profit for the year |
136 447
|
6 961
|
|
| Total comprehensive income attributable to: | |||
| Owners of the company |
136 552
|
11 034
|
|
| Total comprehensive income for the year |
136 552
|
11 034
|
|
| Basic and diluted earnings per share (cents) |
8
|
191
|
10
|
SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2014
|
Audited
2014 R’000 |
Audited
2013 R’000 |
|
| Assets | ||
| Non-current assets |
86
|
124
|
| Equipment |
37
|
75
|
| Intangible assets |
49
|
49
|
| Current assets |
177 348
|
204 360
|
| Investment in equity securities |
2 259
|
1 170
|
| Trade and other receivables |
1 134
|
2 030
|
| Cash and cash equivalents |
173 955
|
201 160
|
| Total assets |
177 434
|
204 484
|
| Equity and liabilities | ||
| Shareholders’ equity |
162 397
|
186 912
|
| Ordinary share capital |
746
|
746
|
| Retained earnings |
161 651
|
186 166
|
| Liabilities | ||
| Non-current liabilities | ||
| Post-retirement medical benefit obligation |
13 753
|
15 547
|
| Current liabilities | ||
| Trade and other payables |
1 284
|
2 025
|
| Total equity and liabilities |
177 434
|
204 484
|
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2014
|
Audited
31 December 2014 R’000 |
Audited
31 December 2013 R’000 |
|
| Attributable to equity holders of the company | ||
| Ordinary share capital |
746
|
746
|
| Retained earnings |
161 651
|
186 166
|
| Balance at the beginning of the period |
186 166
|
175 132
|
| Dividend paid (225 cents per share) |
(161 067)
|
–
|
| Profit and total comprehensive income for the year |
136 552
|
11 034
|
SUMMARISED GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2014
|
Audited
31 December 2014 R’000 |
Audited
31 December 2013 R’000 |
|
| Profit before taxation |
136 447
|
6 961
|
| Adjusted for: | ||
| Loss/(profit) on disposal of investments |
102
|
(135)
|
| Profit on disposal of prospecting rights |
–
|
(1 076)
|
| Change in fair value of held-for-trading investments |
191
|
127
|
| Loss on impairment of other assets |
–
|
65
|
| Depreciation |
38
|
50
|
| Post-retirement medical benefit obligation -interest cost |
1 119
|
2 391
|
| Interest received |
(13 341)
|
(11 419)
|
| Dividends received |
(64)
|
(75)
|
| Working capital changes |
155
|
(13)
|
| Cash generated/(utilised) in operations |
124 647
|
(3 124)
|
| Interest received |
13 341
|
11 419
|
| Taxation received |
–
|
184
|
| Cash flows from operating activities |
135 180
|
(15 060)
|
| Cash flows from investing activities |
(1 318)
|
2 303
|
| Dividends received |
64
|
75
|
| Proceeds on disposal of prospecting rights |
–
|
1 500
|
| Acquisition of investment in equity securities |
(2 458)
|
(464)
|
| Proceeds on disposal of investment in equity securities |
1 076
|
1 192
|
| Cash flow from financing activities |
(161 067)
|
–
|
| Dividend paid |
(161 067)
|
–
|
| Decrease in cash and cash equivalents |
(27 205)
|
(12 757)
|
| Cash and cash equivalents at the beginning of the year |
201 160
|
213 917
|
| Cash and cash equivalents at the end of the year |
173 955
|
201 160
|
NOTES TO THE SUMMARISED GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014
1.REPORTING ENTITY
R&E is a company domiciled and incorporated in the Republic of South Africa. The summarised group annual financial statements of the company for the year ended 31 December 2014 include the company and its subsidiaries
(together referred to as “the group”).
2.BASIS OF PREPARATION
The summarised group 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 summary
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 group financial statements, from which the summarised group 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 group annual financial statements. The accounting policies have been applied consistently by all group entities.
4.INDEPENDENT AUDIT BY THE AUDITOR
These summarised group financial statements for the year ended 31 December 2014 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 2015. 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
reportis 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.PROSPECTING RIGHTS
During 2013 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 two agreements for the sale of certain of its prospecting rights, with nil
carrying values, to third parties. In terms of the agreements, however, there were a number of conditions precedent outstanding at year-end and the disposals have therefore not been recognised as yet.
7.RECOVERIES
R&E concluded a settlement agreement with PricewaterhouseCoopers Incorporated (PwC) on 16 April 2014 in terms of which R150 million was payable by PwC to R&E. The settlement related to the group’s claim against PwC for
damages and was implemented. Shareholders are referred to the announcements made by the company on 16 April 2014 relating to this settlement as well as to the voluntary circular published by the company on 30 April 2014.
R&E recognised the final payment of R 150 million received in cash during June 2014.
8.EARNINGS PER SHARE
| Earnings per share |
2014
Per share (in cents) |
2013
Per share (in cents) |
| Basic earnings and diluted earnings per ordinary share
The calculation of basic and diluted earnings per ordinary share is based on earnings of |
191
|
10
|
| Headline earnings and diluted headline earnings per share
The calculation of the headline earnings and diluted headline earnings per share is based on Reconciliation between basic earnings for the year and headline earnings |
191
|
8
|
| Profit for the year attributable to equity holders of the company |
136 447
|
6 961
|
| Adjusted for: | ||
| Profit on disposal of prospecting rights |
–
|
(1 076)
|
| Headline earnings for the year attributable to equity holders of the company |
136 447
|
5 885
|
9.NET ASSET AND TANGIBLE NET ASSET VALUE PER SHARE
The net asset value per share is calculated using the following variables:
|
31 December
2014 |
31 December
2013 |
|
| Net asset value (R’000) |
162 397
|
186 912
|
| Ordinary shares outstanding |
71 585 172
|
71 585 172
|
| Net asset value per share (cents) |
227
|
261
|
| Net tangible asset value per share (cents) |
227
|
261
|
The number of shares outstanding at 31 December 2014 and 31 December 2013 has been adjusted for the 2 999 893 treasury shares held.
10.MATERIAL CHANGES
The directors declared a gross special cash dividend of 225 cents per share, funded by income reserves, on 26 June 2014, to be paid on 28 July 2014 to those shareholders of the company who were recorded in the
company’s register on 25 July 2014.
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 R12.4 million which includes bonus payments to executive directors of R8.4 million (2013: R4.1 million remuneration – no bonus payments).
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 Wednesday, 6 May 2015. A copy of the notice of the annual general meeting incorporating the summarised group financial statements will be distributed to shareholders on 24 March 2015. 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 Thursday, 30 April 2015, with last day to trade being Wednesday, 22 April 2015.
Directors
DC Kovarsky (Chairman)**, M Steyn (CEO)*, V Botha*, P Burton**, JH Scholes**
(*Executive, **Independent non-executive)
Company secretary
V Botha CA(SA)
Transfer secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
(Registration number 2004/003647/07)
Sponsor
PSG Capital
First Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600