ABRIDGED GROUP FINANCIAL STATEMENTS 2015
COMMENTARY TO THE SUMMARISED GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 AND NOTICE OF ANNUAL GENERAL MEETING
GENERAL
The board of R&E is pleased to announce the audited results for the year ended 31 December 2015. 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 recoveries of R7.5 million, the sale of prospecting rights realising a profit of R3.9 million and interest of R11.6 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 R2.34 at 31 December 2015.
CASH FLOW
R&E started the year under review with a cash and cash equivalent balance of R173.9 million. Operating activities utilised net cash of R8.6 million, primarily as a result of recoveries of R7.5 million offsetting cash utilised in operations of R16.1 million. Investing activities generated cash flows of R0.4 million, primarily from the proceeds on disposal of prospecting rights of R4 million less the net acquisition of investments in listed equity securities of R3.7 million. R&E remains in a healthy cash position with R175.9 million in cash and cash equivalents at 31 December 2015.
OUTLOOK
The outlook for 2016 is largely dependent on the progress and outcome of current legal matters. Expenditure on litigation is expected to be at a similar level as 2015. Until the claims in which the company are engaged in have been finalised, this pattern of expenditure is likely to prevail.
David Kovarsky
Chairman
Marais Steyn
Chief executive officer
Johannesburg
18 March 2016
SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015
| Audited 2015 |
Audited 2014 |
||
| Notes | R’000 | R’000 | |
| Revenue | 207 | 64 | |
| Profit/(loss) on disposal of investments | 288 | (102) | |
| Recoveries | 7 | 7 528 | 158 903 |
| Other income | 163 | 60 | |
| Personnel expenses | (6 089) | (15 521) | |
| Profit on disposal of prospecting rights | 6 | 3 951 | – |
| Change in fair value of listed equity securities | (571) | (191) | |
| Change in fair value of cash investments | 1 118 | (2 364) | |
| Other operating expenses | (13 304) | (17 743) | |
| (Loss)/profit from operating activities | (6 709) | 123 106 | |
| Finance income | 11 681 | 13 341 | |
| Profit before taxation | 4 972 | 136 447 | |
| Taxation | (20) | – | |
| Profit for the year | 4 952 | 136 447 | |
| Other comprehensive income | |||
| Items of other comprehensive income that will not be subsequently reclassified to profit or loss | |||
| Actuarial gains | 414 | 105 | |
| Total comprehensive income for the year | 5 366 | 136 552 | |
| Profit attributable to: | |||
| Owners of the company | 4 952 | 136 447 | |
| Profit for the year | 4 952 | 136 447 | |
| Total comprehensive income attributable to: | |||
| Owners of the company | 5 366 | 136 552 | |
| Total comprehensive income for the year | 5 366 | 136 552 | |
| Basic and diluted earnings per share (cents) | 8 | 7 | 191 |
SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2015
| Audited 2015 |
Audited 2014 |
||
| Notes | R’000 | R’000 | |
| Assets | |||
| Non-current assets | 9 | 86 | |
| Equipment | 7 | 37 | |
| Intangible assets | 2 | 49 | |
| Current assets | 181 862 | 177 348 | |
| Investment in listed equity securities | 5 702 | 2 259 | |
| Trade and other receivables | 222 | 1 134 | |
| Cash and cash equivalents | 175 938 | 173 955 | |
| Total assets | 181 871 | 177 434 | |
| Equity and liabilities | |||
| Shareholders’ equity | 167 763 | 162 397 | |
| Ordinary share capital | 716 | 746 | |
| Retained earnings | 167 047 | 161 651 | |
| Liabilities | |||
| Non-current liabilities | |||
| Post-retirement medical benefit obligation | 12 872 | 13 753 | |
| Current liabilities | |||
| Trade and other payables | 1 236 | 1 284 | |
| Total equity and liabilities | 181 871 | 177 434 |
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015
| Audited 31 December 2015 |
Audited 31 December 2014 |
||
| Notes | R’000 | R’000 | |
| Attributable to equity holders of the company | |||
| Ordinary share capital | 716 | 746 | |
| Retained earnings | 167 047 | 161 651 | |
| Balance at the beginning of the period | 161 651 | 186 166 | |
| Dividend paid (225 cents per share) | – | (161 067) | |
| Treasury share reclassified | 30 | – | |
| Profit and total comprehensive income for the year | 5 366 | 136 552 |
SUMMARISED GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2015
| Audited 31 December 2015 |
Audited 31 December 2014 |
||
| Notes | R’000 | R’000 | |
| Profit before taxation | 4 972 | 136 447 | |
| Adjusted for: | |||
| (Profit)loss on disposal of listed equity securities | (288) | 102 | |
| Profit on disposal of prospecting rights | (3 951) | – | |
| Change in fair value of listed equity securities | 571 | 191 | |
| Depreciation | 30 | 38 | |
| Post-retirement medical benefit obligation – interest cost | 994 | 1 119 | |
| Interest received | (11 681) | (13 341) | |
| Dividends received | (207) | (64) | |
| Working capital changes | 864 | 155 | |
| Cash (utilised)/generated in operations | (8 696) | 124 647 | |
| Interest received | 11 681 | 13 341 | |
| Post-retirement medical benefit liability – benefits paid | (1 461) | (1 503) | |
| Post-retirement medical benefit liability – settlements paid | – | (1 305) | |
| Taxation paid | (20) | – | |
| Cash flows from operating activities | 1 504 | 135 180 | |
| Cash flows from investing activities | 479 | (1 318) | |
| Dividends received | 207 | 64 | |
| Proceeds on disposal of prospecting rights | 4 000 | – | |
| Acquisition of investment in listed equity securities | (5 852) | (2 458) | |
| Proceeds on disposal of listed equity securities | 2 124 | 1 076 | |
| Cash flow from financing activities | – | (161 067) | |
| Dividend paid | – | (161 067) | |
| Increase/(decrease) in cash and cash equivalents | 1 983 | (27 205) | |
| Cash and cash equivalents at the beginning of the year | 173 955 | 201 160 | |
| Cash and cash equivalents at the end of the year | 175 938 | 173 955 |
NOTES TO THE SUMMARISED GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015
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 2015 includes 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 IFRS 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 2015 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 2016. 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. PROSPECTING RIGHTS
During 2015, R&E group disposed of certain of its prospecting rights that had a carrying value of R1 to a third party realising a profit of R3.9 million. Certain prospecting rights with a carrying value of R49 435 expired during 2015. R&E has entered into an agreement for the sale of a certain prospecting right for R5.9 million with a nil carrying value to third parties. In terms of the agreement, however, there were a number of conditions precedent outstanding at year-end and the disposal have therefore not been recognised as yet.
7. RECOVERIES
R&E received liquidation dividends from BNC Investments Proprietary Limited and The Insolvent Deceased Estate of Roger Brett Kebble during 2015.
8. EARNINGS PER SHARE
| 2015 Per share (in cents) |
2014 Per share (in cents) |
||
| Earnings per share | |||
| Basic earnings and diluted earnings per ordinary share | 7 | 191 | |
| The calculation of basic and diluted earnings per ordinary share is based on earnings of R4.9 million (2014: earnings of R136.4 million) attributable to ordinary shareholders of the company and a weighted average of 71 585 172 (2014:71 585 172) shares in issue. |
|||
| Headline earnings and diluted headline earnings per share | 1 | 191 | |
| The calculation of the headline earnings and diluted headline earnings per share is based on headline earnings of R1 million (2014: headline earnings of R136.4 million) attributable to equity holders of the company and a weighted average of 71 585 172 (2014: 71 585 172) ordinary shares in issue. |
|||
| Reconciliation between basic earnings for the year and headline earnings | |||
| Profit for the year attributable to equity holders of the company | 4 952 | 136 447 | |
| Adjusted for: | |||
| Profit on disposal of prospecting rights | (3 951) | – | |
| Headline earnings for the year attributable to equity holders of the company | 1 001 | 136 447 |
9. NET ASSET AND TANGIBLE NET ASSET VALUE PER SHARE
The net asset value per share is calculated using the following variables:
| 31 December 2015 |
31 December 2014 |
||
| Net asset value (R’000) | 167 763 | 162 397 | |
| Ordinary shares outstanding | 71 585 172 | 71 585 172 | |
| Net asset value per share (cents) | 234 | 227 | |
| Net tangible asset value per share (cents) | 234 | 227 |
The number of shares outstanding at 31 December 2015 and 31 December 2014 has been adjusted for the 2 999 893 treasury shares held.
10. MATERIAL CHANGES
No material changes occurred during 2015.
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 R4.2 million (2014: R12.4 million remuneration which includes bonus payments to executive directors of R8.4 million). JH Scholes, a director of R&E, is also a director of Malan Scholes Attorneys, which provides legal prospecting right consulting services to R&E on an ad hoc basis. The cost of these services amounted to R253 045 during 2015 (2014: R 173 966).
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, 18 May 2016. A copy of the notice of the annual general meeting incorporating the summarised group financial statements will be distributed to shareholders on 23 March 2016. 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, 13 May 2016, with last day to trade being Friday, 6 May 2016.
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 Proprietary Limited,70 Marshall Street, Johannesburg, 2001.
Sponsor: PSG Capital Proprietary Limited, First Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600 (Registration number 2004/003647/07).
23 March 2016