UNAUDITED GROUP RESULTS AND CASH DIVIDEND DECLARATION for the six months ended 31 March 2015

Incorporated in the Republic of South Africa
Reg. No 1913/004355/06
Ordinary share Code: RLO
ISIN code: ZAE000057428
(“Reunert”, “the group” or “the company”)

NOTES

R million   Six months ended   
31 March  
Year ended  
30 September   
2014  
(Audited) 
 
2015  
(Unaudited) 
2014  
(Unaudited) 
1.  
Operating profit  
       
  Operating profit includes:          
  – Cost of sales   2 642,2   2 436,0   5 143,4    
  – Realised (loss)/gain on foreign exchange and derivative instruments   (12,8)  8,6   (27,4)   
  – Unrealised gain on foreign exchange and derivative instruments   10,0   11,5   45,2    
           
2.  
Interest and dividends  
       
  Interest income   64,0   5,9   14,1    
  Interest expense   (6,5)  (13,7)  (24,6)   
  Dividend income   –   –   0,6    
  Total   57,5   (7,8)  (9,9)   
 

3.

Discontinued operation and assets held for sale

 

As announced in the prior year, Nashua Mobile, entered into sale agreements with the mobile network operators, in terms of which it disposed of its subscriber bases. Following unconditional approval from the Competition Tribunal on 29 September 2014, the sale was recognised. All conditions were met for the transfer of the subscriber bases to the network operators on 29 November 2014.

Arising out of this, the summarised group income statement and related notes exclude the results of Nashua Mobile.

Nashua Mobile is presented in the Nashua segment of the segmental analysis.

The summarised income statement, abridged cashflows and related notes of Nashua Mobile are presented below:

 
SUMMARISED INCOME STATEMENT  
   
  R million   Six months ended
31 March  
%  
change  
Year ended  
30 September  
2014  
(Audited) 
 
2015  
(Unaudited) 
2014  
(Unaudited) 
  Revenue   528,9   1 807,7   (71)  3 348,1    
  EBITDA   47,5   91,1   (48)  189,9    
  Operating profit   47,5   85,6   (45)  183,7    
  Profit for the period   67,0   60,4   11   1 584,2    

 
SUMMARISED CASH FLOW STATEMENT  
   
  R million   Six months ended
31 March  
Year ended  
30 September  
2014  
(Audited) 
 
2015  
(Unaudited) 
2014  
(Unaudited) 
  Net cash flows from:          
  Operating activities   (101,1)  110,7   183,1    
  Investing activities   1 971,2   (2,3)  4,3    
  Net cash flow   1 870,1   108,4   187,4    

 
SUMMARISED BALANCE SHEET

The major classes of assets and liabilities of Nashua Mobile at the end of the reporting period were as follows:

  R million   As at  
31 March   
2015  
(Unaudited) 
As at  
31 March   
2014  
(Unaudited) 
Year ended  
30 September  
2014  
(Unaudited) 
 
  Assets of discontinued operation   62,6   874,7   2 607,6    
  Non-current liabilities of discontinued operation   –   65,6   250,4    
  Current liabilities of discontinued operation   240,2   431,1   651,6    

  R million   As at  
31 March   
2015  
(Unaudited) 
As at  
31 March   
2014  
(Unaudited) 
Year ended  
30 September  
2014  
(Audited) 
 
4.  
Number of shares used to calculate earnings per share  
       
  Weighted average number of shares in issue used to determine basic earnings, headline earnings and normalised headline earnings per share (millions of shares)  164,4   163,8   164,0    
  Adjusted by the dilutive effect of unexercised share options granted (millions of shares)  2,4   1,9   2,0    
  Weighted average number of shares used to determine diluted basic, diluted headline and diluted normalised headline earnings per share (millions of shares)  166,8   165,7   166,0    
           
  R million   As at  
31 March   
2015  
(Unaudited) 
As at  
31 March   
2014  
(Unaudited) 
Year ended  
30 September  
2014  
(Audited) 
 
5.1  
Headline earnings  
       
  Profit attributable to equity holders of Reunert from continuing operations   404,1   329,2   386,1    
  Headline earnings are determined by eliminating the effect of the following items from attributable earnings:          
  Net gain on disposal of business (after a tax charge of R1,3 million) (2014 Rnil) (September 2014 Rnil)  (5,7)  –   –    
  Net (gain)/loss on disposal of property, plant and equipment and intangible assets          
  (after a tax charge of R0,1 million) (2014 credit of R0,1 million) (September 2014 credit of R0,1 million)  (0,3)  0,5   0,3    
  Impairment of goodwill in subsidiaries (after tax charge of Rnil) (2014 Rnil) (September 2014 Rnil)  –   –   245,9    
  Impairment of goodwill in equity accounted joint venture (after tax charge of Rnil) (2014 Rnil) (September 2014 Rnil)  –   –   10,8    
  Impairment reversal recognised for property, plant and equipment (after tax charge of Rnil) (2014 Rnil) (September 2014 charge of R0,6 million –   –   (1,7)   
  Headline earnings from continuing operations   398,1   329,7   641,4    
  Profit attributable to equity holders of Reunert from discontinued operation   67,0   60,4   1 584,2    
  Net gain on disposal of business (after a tax charge of R11,9 million) (2014 Rnil) (September 2014 charge of R264,4 million)  (29,8)  –   (1 397,1)   
  Net loss on disposal of property, plant and equipment and intangible assets          
  (after tax credit of R0,1 million) (2014 credit of R0,2 million) (September 2014 credit of R0,2 million)  0,1   0,5   0,5    
  Headline earnings from discontinued operation   37,3   60,9   187,6    
  Headline earnings   435,4   390,6   829,0    
5.2  
Normalised headline earnings  
       
  Headline earnings from continuing operations (refer to note 6.1 398,1   329,7   641,4    
  Normalised headline earnings are determined by eliminating the effect of the following items from attributable headline earnings:          
  Settlement provided in respect of ATC (after a tax credit of Rnil)  –   –   81,0    
  Economic interest in the settlement provided in respect of ATC attributable to          
  non-controlling interests with outstanding equity related loan accounts   –   –   (8,2)   
  Net economic interest in profit attributable to non-controlling interests with outstanding equity related loan accounts (refer to note 6 (5,5)  (2,0)  5,5    
  Normalised headline earnings from continuing operations   392,6   327,7   719,7    
  Headline earnings attributable to equity holders of Reunert from discontinued operation   37,3   60,9   187,6    
  Normalised headline earnings   429,9   388,6   907,3    

  R million   As at  
31 March   
2015  
(Unaudited) 
As at  
31 March   
2014  
(Unaudited) 
Year ended  
30 September  
2014  
(Audited) 
 

6.  

Non-controlling interests with outstanding equity related loan accounts  

       
  Where the significant risks and rewards of ownership in respect of equity interests have not passed to the non-controlling shareholders, these are not recognised as non-controlling interests.          
  Had the non-controlling interests been recognised, the effect would be the following:          
 
Net economic interest in current period profit/(loss) that is attributable to all affected non-controlling shareholders  
5,5   2,0   (5,5)   
 
Balance sheet interest that is economically attributable to all affected non-controlling shareholders 
113,4   104,1   102,0    
           
  R million   As at  
31 March   
2015  
(Unaudited) 
As at  
31 March   
2014  
(Unaudited) 
Year ended  
30 September  
2014  
(Audited) 
 
7.  
Goodwill  
       
  Carrying value at the beginning of the period   649,3   792,2   792,2    
  Acquisition of businesses   –   225,2   263,1    
  Goodwill impaired during the period   –   –   (245,9)   
  Exchange differences on consolidation of foreign subsidiaries   (1,5)  –   (2,0)   
  Goodwill derecognised with discontinued operation   –   (158,1)  (158,1)   
  Carrying value at the end of the period   647,8   859,3   649,3    
           
  R million   As at  
31 March   
2015  
(Unaudited) 
As at  
31 March   
2014  
(Unaudited) 
Year ended  
30 September  
2014  
(Audited) 
 
8.  
Investments and loans  Loans
       
  Loans – at cost   77,5   75,4   76,4    
  Investment in insurance cells – at fair value   13,8   9,1   13,5    
  Other unlisted investments – at cost   1,7   1,7   1,7    
  Carrying value at the end of the period   93,0   86,2   91,6    
           
  R million   As at  
31 March   
2015  
(Unaudited) 
As at  
31 March   
2014  
(Unaudited) 
Year ended  
30 September  
2014  
(Audited) 
 
9.  
Long-term borrowings  
       
  Total long-term borrowings (including finance leases)1 414,6   25,1   434,4    
  Less: short-term portion (including finance leases)  (12,4)  (0,2)  (8,9)   
    402,2   24,9   425,5    
  1 Long term borrowings in respect of the Quince rental book amount to R401,7 million (September 2014 R403,7 million) 
   

10.

Basis of preparation

These summarised consolidated financial statements have been prepared in accordance with the framework concepts and the recognition and measurement criteria of IFRS and its interpretations adopted by the International Accounting Standards Boards (IASB) in issue and effective for the group at 1 October 2014 and the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committees and Financial Reporting pronouncements as issued by the Financial Reporting Standards Council. This summarised consolidated information has been prepared using the information as required by IAS 34 – Interim Financial Reporting, and complies with the Listings Requirements of the JSE Limited and the requirements of the Companies Act, No 71 of 2008, of South Africa. This report was compiled under the supervision of L de Jager (Acting Chief Financial Officer).

The group’s accounting policies, as per the audited annual financial statements for the year ended 30 September 2014, have been consistently applied. These accounting policies comply with IFRS.

   

11.

Unconsolidated subsidiary

The financial results of Cafca Limited (Cafca), a subsidiary incorporated in Zimbabwe, have not been consolidated in the group results as the group does not have management control. The amounts involved are not material to the group’s results.

At 31 March 2015 Cafca’s retained earnings amounted to US$13,2 million.

   

12.

Related party transactions

The group entered into various transactions with related parties, which occurred in the ordinary course of business and under terms that are no more favourable than those arranged with independent third parties.

   

13.

Events after balance sheet date

No events have occurred after the balance sheet date that require additional disclosure or adjustment to the results presented.