| |
2008
R million |
|
2007
R million |
|
Year ended
30 Sept
2007
R million
(Audited) |
| Note 1 |
|
|
|
|
|
| EBITDA |
|
|
|
|
|
| EBITDA is stated after: |
|
|
|
|
|
| – Cost of sales |
3 670,5 |
|
3 355,5 |
|
6 763,1 |
| – Other expenses excluding depreciation and amortisation |
793,4 |
|
640,8 |
|
1 369,8 |
| – Other income |
89,8 |
|
26,4 |
|
52,4 |
| Commission income |
86,1 |
|
— |
|
— |
| Other |
3,7 |
|
26,4 |
|
52,4 |
| – Realised (profit)/loss on foreign exchange and derivative instruments |
(28,0) |
|
50,7 |
|
106,9 |
| – Unrealised (profit)/loss on foreign exchange and derivative instruments |
(30,2) |
|
(9,5) |
|
(6,0) |
| The commission income is in respect of commission earned from the Nokia Siemens Networks Group based on the sales revenue
for the Sub-region of which South Africa forms part. The commission is related to Reunert’s investment in Nokia Siemens Networks
South Africa (Pty) Limited (NSN). The current year’s share of associate companies’ profit does not include any income in respect of
NSN due to the change in the nature of the investment (refer to note 2 and 7). |
| Note 2 |
|
|
|
|
|
| Net interest and dividend income |
|
|
|
|
|
| Interest received |
48,6 |
|
40,0 |
|
104,3 |
| – From RC&C Finance Company (Pty) Limited (RCCF) up to date of transfer |
|
|
|
|
|
| (refer to note 14) |
— |
|
25,4 |
|
43,5 |
| – External |
48,6 |
|
14,6 |
|
60,8 |
| Interest paid |
(21,6) |
|
(16,6) |
|
(57,2) |
| Dividend income other than from associate companies |
3,6 |
|
3,7 |
|
7,7 |
| Total |
30,6 |
|
27,1 |
|
54,8 |
| Dividend income from associate companies included in share of associate companies’ profits |
— |
|
— |
|
146,0 |
| Note 3 |
|
|
|
|
|
| Abnormal items |
|
|
|
|
|
| Net surplus on dilution in (refer to note 14) and disposal of business |
1,5 |
|
— |
|
118,1 |
| Surplus on sale of non-current assets to the ATC/Aberdare joint venture |
— |
|
34,5 |
|
34,5 |
Black Economic Empowerment (BEE) expense – share-based payment
(refer to note 10) |
— |
|
(556,6) |
|
(556,6) |
| Share-based payment expense in terms of broad-based scheme to group employees (refer to note 10) |
— |
|
(50,3) |
|
(42,2) |
| Net impairments |
— |
|
— |
|
(1,4) |
| Total before taxation |
1,5 |
|
(572,4) |
|
(447,6) |
| Taxation |
— |
|
15,9 |
|
14,7 |
| Minority interest |
— |
|
— |
|
0,2 |
| Total |
1,5 |
|
(556,5) |
|
(432,7) |
| Note 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) |
177,7 |
|
176,5 |
|
176,7 |
| Adjusted by the dilutive effect of: |
|
|
|
|
|
| – Unexercised share options granted (millions of shares) |
1,3 |
|
2,1 |
|
1,5 |
| – The notional unemcumbered Reunert Limited (Reunert) shares held by Bargenel |
|
|
|
|
|
| Investments Limited – (Bargenel) (millions of shares)* |
— |
|
4,5 |
|
1,1 |
| Weighted average number of shares used to determine diluted basic, diluted headline and normalised diluted headline earnings per share (millions of shares) |
179,0 |
|
183,1 |
|
179,3 |
| *The notional unencumbered Reunert shares represent the number (based on the period’s million treasury shares held by Bargenel that could be settled out of the period-end equity value of Bargenel. |
| Note 5.1 |
|
|
|
|
|
| Headline earnings |
|
|
|
|
|
| Headline earnings are determined by eliminating the effect of the following items in |
|
|
|
|
|
| attributable earnings: |
|
|
|
|
|
| Profit/(loss) attributable to equity holders of Reunert – IAS 33 basic earnings |
526,3 |
|
(77,2) |
|
639,3 |
| Net surplus on dilution in and disposal of business |
(1,5) |
|
— |
|
(118,1) |
| Loss/(surplus) on disposal of property, plant and equipment and intangible assets |
0,9 |
|
(36,1) |
|
(35,2) |
| Net impairments |
— |
|
— |
|
1,4 |
| Taxation effect of adjustments |
0,5 |
|
(4,1) |
|
(6,1) |
| Headline earnings/(loss) |
526,2 |
|
(117,4) |
|
481,3 |
| Note 5.2 |
|
|
|
|
|
| Normalised headline earnings |
|
|
|
|
|
| Normalised headline earnings are determined by eliminating the effect of the |
|
|
|
|
|
| following items in attributable headline earnings: |
|
|
|
|
|
| Headline earnings/(loss) |
526,2 |
|
(117,4) |
|
481,3 |
| BEE expense – share-based payment |
— |
|
556,6 |
|
556,6 |
| Share-based payment expense in terms of broad-based scheme to group employees |
— |
|
50,3 |
|
42,2 |
| BEE share of headline and normalised headline earnings adjustments |
— |
|
— |
|
8,2 |
| Contribution by Reunert to employees of joint venture and associate |
— |
|
— |
|
2,1 |
| Minority effect of adjustments |
— |
|
— |
|
(0,1) |
| Taxation effect of adjustments |
— |
|
(11,4) |
|
(9,1) |
| |
526,2 |
|
478,1 |
|
1 081,2 |
| Interest in profit that is economically attributable to BEE partners (note 10) |
(33,0) |
|
(22,2) |
|
(73,5) |
| Normalised headline earnings (basic and diluted) |
493,2 |
|
455,9 |
|
1 007,7 |
| Note 6 |
|
|
|
|
|
| Goodwill |
|
|
|
|
|
| Carrying value at the beginning of the year |
372,8 |
|
326,8 |
|
326,8 |
| Acquisitions of businesses and minority interests |
13,7 |
|
10,1 |
|
45,7 |
| Negative goodwill taken to profit in terms of IFRS 3 |
— |
|
— |
|
1,1 |
| Impairments |
— |
|
— |
|
(0,8) |
| Unamortised goodwill arising in a previous period on a further acquisition of NSN now |
|
|
|
|
|
| transferred to investment in NSN (refer to note 7) |
(94,6) |
|
— |
|
— |
| Carrying value at the end of the year |
291,9 |
|
336,9 |
|
372,8 |
| Note 7 |
|
|
|
|
|
| Investments and loans |
|
|
|
|
|
| Unlisted associate companies – at cost plus equity-accounted earnings excluding |
|
|
|
|
|
| goodwill |
297,7 |
|
190,4 |
|
400,3 |
| actuarially |
|
|
|
|
|
| – NSN |
— |
|
190,4 |
|
119,7 |
| – Quince (refer to note 14)* actuarially |
297,7 |
|
— |
|
280,6 |
| Other unlisted investments – at cost |
7,0 |
|
7,1 |
|
7,0 |
| Loans – at cost |
52,4 |
|
13,8 |
|
54,5 |
| Long-term accounts receivable |
319,4 |
|
— |
|
266,1 |
| Financial instruments – investment in NSN – at fair value* |
806,0 |
|
— |
|
— |
Carrying value of NSN at 1 October 2007, previously an unlisted company, now
a financial instrument |
119,7 |
|
— |
|
— |
Unamortised goodwill arising on a further acquisition in a previous period
(refer to note 6) |
94,6 |
|
— |
|
— |
| Fair value adjustment (refer to statement of changes in equity) |
591,7 |
|
— |
|
— |
| |
|
|
|
|
|
| Total carrying value |
1 482,5 |
|
211,3 |
|
727,9 |
| Directors’ valuation of unlisted investments |
|
|
|
|
|
| – Unlisted associate companies (2008: Quince, 2007. NSN) |
404,0 |
|
520,0 |
|
908,0 |
| – Other unlisted investments (2008 includes NSN at R806,0 million) actuarially |
813,0 |
|
7,1 |
|
7,0 |
* The nature of the investment in NSN and the income received from this investment (refer to note 1) has changed, following post-merger restructuring within the Nokia Siemens Networks Group, with effect from 1 October 2007. Significant influence ceased as Reunert no longer has representation on the board of directors, even though Reunert retained a 40% legal ownership. The investment in NSN has consequently been reclassified as a financial instrument, and designated as ”available for sale”, as defined in IAS 39 – Financial Instruments: Recognition and Measurement.
Due to a change in the shareholders agreement, Reunert now earns commission on sales of NSN products. Future commissions are expected to replace dividend flows.
Previously income relating to the investment in NSN was recognised in terms of the equity method and included in share of associate companies’ profits in the income statement.
* The fair value of the investment was obtained using a discounted cash flow methodology on the amount the agreement specifies as the minimum value to be placed on Reunert’s Networks Group, together with an estimation of future commissions. The first time a sale may take place in terms of the agreement is 31 December 2010. |
| Note 8 |
|
|
|
|
|
| Long-term borrowings |
|
|
|
|
|
| Total long-term borrowings (including finance leases) retained earnings were previously transferred to a non-distributable |
475,4 |
|
108,1 |
|
386,9 |
| Less: Short-term portion (including finance leases) |
(164,1) |
|
(16,0) |
|
(130,4) |
| |
311,3 |
|
92,1 |
|
256,5 |
| Loan repaid by BEE partner* |
22,3 |
|
22,3 |
|
22,3 |
| |
333,6 |
|
114,4 |
|
278,8 |
The long-term borrowings in the current year and at 30 September 2007 are an obligation to RCCF, which is currently owned by Quince
Capital Holdings (Pty) Limited (Quince), an equity-accounted associate. Various operations in the group dealing in office equipment
discounted debtors with RCCF on the basis that the risk of bad debts is carried by the Reunert group operations. In terms of current
accounting practice, these debtors cannot be derecognised by the Reunert group operations, accordingly the long-term portion of
the debtors are included in long-term accounts receivable (refer to note 7), the short-term portion in accounts receivable and the
outstanding balance of cash received from RCCF in long-term borrowings.
The group entered into an agreement with Powerhouse Utilities (Pty) Limited (Powerhouse), whereby on 1 December 2004, 25,1% of
the A shares of ATC were sold to Powerhouse at a cost of R130 million. IFRS requires that this transaction is not accounted for as a
sale, since the loan has not been fully paid by Powerhouse and conditions are attached to the unpaid portion, notwithstanding that
the economic reality of this transaction is, in fact, a sale.
The long-term borrowings in March 2007 related to funding provided by Nedbank Limited (Nedbank) to Powerhouse for their purchase
of 25,1% of the A shares of ATC. The loan was guaranteed by Reunert and in terms of current accounting practice for this transaction,
was recognised on the Reunert balance sheet. The Nedbank loan was repaid by Reunert on 1 June 2007, with the effect that the loan is
now payable by Powerhouse to Reunert and is disclosed as an investment in subsidiary.
* Loan repaid by the BEE partner represents a portion of the dividends paid by ATC to Powerhouse, which were used to repay a
portion of the loan. In terms of current accounting practice, this is to be reflected as a long-term liability on the Reunert balance
sheet. When the significant risks and rewards of ownership in the equity of ATC are deemed to have passed to the BEE partner, this
portion of the loan repaid by Powerhouse will be transferred to minority interest. |
| |
2008
R million |
|
2007
R million |
|
Year ended
30 Sept
2007
R million
(Audited) |
| Note 9 |
|
|
|
|
|
| Group cash resources/borrowings |
|
|
|
|
|
| Total RCCF borrowings at the end of the period (refer to note 14) |
— |
|
1 469,0 |
|
— |
| Less: Funded out of other Reunert cash resources (see below) |
— |
|
(271,0) |
|
— |
| RCCF bank borrowings at the end of the period (refer to note 14) |
— |
|
1 198,0 |
|
— |
| Total Reunert net cash resources at the end of the period |
294,1 |
|
343,5 |
|
482,8 |
| Less: Utilised to fund RCCF (see above) (refer to note 14) |
— |
|
(271,0) |
|
— |
| |
294,1 |
|
72,5 |
|
482,8 |
| Add: Bank overdrafts |
— |
|
— |
|
47,8 |
| Cash and cash equivalents |
294,1 |
|
72,5 |
|
530,6 |
| Note 10 |
|
|
|
|
|
| BEE transactions |
|
|
|
|
|
Reunert’s BEE deal was approved by shareholders on 6 February 2007. Due to of Peotona Group Holdings (Pty) Limited (Peotona) and the Rebatona Educational Trust, a share-based payment expense (IFRS 2) of R556,6 million was recognised in the previous financial year. The sale by Bargenel, which holds 18,5 million shares in Reunert was done at a 10% discount to the Reunert share price. IFRS requires that this disposal is not accounted for as a sale, since the preference shares issued by Bargenel to Reunert, financing the purchase of Bargenel, have not been fully repaid and conditions are attached to the unpaid portion, notwithstanding that the economic reality of this transaction is, in fact, a sale.
All employees in the Reunert group who did not participate in any other share incentive scheme were awarded 100 Reunert shares each, which will be held in trust for a period of five years. The employees will only be able to sell the shares after five years, but have full rights to receive all dividends declared during the five-year period. The resultant expense to the Reunert group has been raised on the difference between the fair value of a Reunert share on 6 February 2007 (R83,90) and its cost price of 10 cents each. A deferred tax asset has been raised as a result of the tax deduction, which occurs in the future.
As referred to in note 8 certain BEE transactions involving the disposal of equity interests have not been recognised because the significant risk and rewards of ownership of the equity have been deemed not to have passed to the BEE partners, until the shares have been fully paid for. Accordingly, the equity interests in the affected subsidiaries have not been recognised in the group income statement and balance sheet. |
| – Interest in current period profit that is economically attributable to BEE partners |
33,0 |
|
32,0 |
|
73,5 |
| – Balance sheet interest that is economically attributable to BEE partners |
194,8 |
|
122,7 |
|
161,8 |
| Note 11 |
|
|
|
|
|
| Basis of preparation |
|
|
|
|
|
These condensed interim group financial statements have been prepared in terms of IAS 34-Interim Financial Reporting as well as in compliance with the Companies Act of South Africa, Act 61 of 1973, as amended, and the Listings Requirements of the JSE Limited. The group’s accounting policies, as set out in the audited annual financial been consistently applied. However, due to the change in the nature of the investment in NSN, the accounting treatment for this investment has changed. (Refer to notes 1 and 7).
These condensed interim financial statements have not been reviewed or audited by the group’s auditors. |
| Note 12 |
|
|
|
|
|
| Unconsolidated subsidiary |
|
|
|
|
|
| The financial results of Cafca Limited (Cafca), a subsidiary incorporated in Zimbabwe, have not been consolidated in the group results as the directors believe there is a lack of control as defined in IAS 27 – Consolidated and Separate Financial Statements, and the amounts involved are not material to the group’s results. |
| Note 13 |
|
|
|
|
|
| Major corporate activity |
|
|
|
|
|
| Acquisition of Nashua franchise |
|
|
|
|
|
| With effect from 1 November 2007 Nashua Holdings (Pty) Limited (Nashua) purchased 51% of the West Rand Nashua franchise. Nashua provided R20,4 million of loan finance to the other shareholders. The minority shareholders provided R1,0 million of equity. |
| |
Nashua
franchise
R million |
|
|
|
|
| Net assets acquired: |
|
|
|
|
|
| Property, plant and equipment |
2,4 |
|
|
|
|
| Goodwill |
13,7 |
|
|
|
|
| Inventory |
4,8 |
|
|
|
|
| Accounts receivable |
3,9 |
|
|
|
|
| Payables and provisions |
(4,4) |
|
|
|
|
| Cost of investment |
20,4 |
|
|
|
|
| Loss since acquisition |
(0,9) |
|
|
|
|
| Revenue for the period ended 31 March 2008 as though the acquisition |
|
|
|
|
|
| date had been 1 October 2007 |
25,5 |
|
|
|
|
| Loss for the period ended 31 March 2008 as though the acquisition date |
|
|
|
|
|
| had been 1 October 2007 |
(0,9) |
|
|
|
|
| Note 14 |
|
|
|
|
|
| Subsequent events |
|
|
|
|
|
On 1 May 2007 RCCF was sold to Quince in exchange for equity in Quince. From that time Quince has been treated as an equity-accounted associate in the Reunert group results. Agreement has been reached with the other shareholders of Quince for Reunert to acquire the share capital of Quince not already owned by Reunert, for approximately R433 million. The valuation was on the same basis on which the original transaction was concluded. Simultaneously the other shareholders will acquire the businesses they sold to Quince last year, namely Scripfin and Quince Property Finance, for approximately R17 million. RCCF will remain a 100%-held subsidiary of Quince. Competition Commission approval of the transaction is awaited and is expected by the end of May 2008. Until that time the results of Quince will continue to be equity-accounted in the Reunert group results.
With effect from 1 April 2008 Moeller South Africa was acquired for R24,3 million. This purchase will enhance the product range of CBI-electric: low voltage. |
|
|
|
