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Unaudited unreviewed interim financial results for the six months ended 30 September 2013
RECM and CALIBRE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/012403/06)
Preference share code: RACP
ISIN: ZAE000145041
("RAC" or "the Group")
Commentary on the group interim financial results for the six months ended
30 September 2013
During the period under review, we have sold R40mn of listed shares, for an
unsatisfactory gross return of 20% over the holding period. We have invested
R60mn into predominantly unlisted investments; invested R30mn into an operating
business in the retail sector and committed roughly R150mn to an unlisted
operating business in the gaming sector.
Our commitment to purchase Namaqualand Mines from De Beers Consolidated Mines
Limited as part of a consortium led by Trans Hex Group Limited remains in place,
but has still not yet been consummated. We have committed about R90 million to
this investment.
RACs NAV has increased to R11,87 per share (preference and ordinary) at the end
of the current reporting period. As we increase our exposure to operating assets
over which we have significant influence, NAV as a measure of value will become
less important, and earnings will increase in importance. We plan to have finalised
our major outstanding investment commitments by year end, at which stage we will
explain in more detail how we would think about measuring and evaluating the
intrinsic value of RAC.
RACs portfolio of investments is currently structured as follows:
Long term minority investments (listed and unlisted) R240mn 40% of NAV
Sovereign Foods
KWV
Fledge Capital (Dischem)
American Homes
And some smaller investments
Minority Investments held for sale (listed and unlisted) R95mn 15% of NAV
Operating assets with significant influence R30mn 5% of NAV
Retail (Safari and Outdoor)
Operating assets with significant influence (agreed but not closed) R240mn 40% of NAV
Gaming
Diamond mining
Minority investments are held at market price if there is an exchange traded or over
the counter traded price. If not, they are held at cost. Operating assets are held
at cost plus any equity accounted earnings.
Unaudited unreviewed consolidated group interim financial results for the six months
ended 30 September 2013
Notes Six months Twelve months Six months
ended 30 ended 31 ended 30
September 2013 March 2013 September 2012
Statement of Financial Position R R R
Assets
Non-current assets
Other financial assets 1 281 949 695 322 303 670 249 412 667
Investments in associates 90 037 314 - -
Current assets 234 501 354 283 849 122 322 811 555
Other financial assets 1 228 118 881 281 793 474 322 108 630
Trade and other receivables 6 207 811 556 890 474 513
Current tax receivable - 1 153 402 -
Cash and cash equivalents 174 662 345 356 228 412
Total assets 606 488 363 606 152 792 572 224 222
Equity and liabilities
Equity
Share capital 2 50 000 000 50 000 000 50 000 000
Reserves 3 40 820 620 46 225 052 26 132 274
Retained income 3 (31 491 568) (37 050 655) (19 850 891)
Total Equity 59 329 052 59 174 397 56 281 383
Liabilities
Non-current liabilities 544 728 594 545 860 718 513 396 479
Other financial liabilities 4 533 956 172 532 564 276 506 527 145
Deferred tax 6 10 772 422 13 296 442 6 869 334
Current liabilities 2 430 717 1 117 677 2 546 360
Trade and other payables 992 163 1 117 677 841 459
Current tax payable 1 438 554 - 1 704 901
Total equity and liabilities 606 488 363 606 152 792 572 224 222
Notes Six months Twelve months Six months
ended 30 ended 31 ended 30
September 2013 March 2013 September 2012
Statement of Comprehensive Income R R R
Revenue 10 193 911 20 834 955 11 916 015
Operating expenses (4 356 694) (7 970 802) (4 060 476)
Operating profit 5 837 217 12 864 153 7 855 539
Fair value adjustment on financial
liabilities (1 391 896) (31 953 289) (5 916 158)
Income from associate 700 895 - -
Realised gain on the sale of investment 3 203 754 6 217 664 2 307 665
Other income - 545 944 -
Profit / (loss) before taxation 8 349 970 (12 325 528) 4 247 046
Taxation (2 790 883) (3 128 904) (2 501 714)
Net profit / (loss) after taxation 5 559 087 (15 454 432) 1 745 332
Other comprehensive income (5 404 432) 19 004 797 (1 087 981)
Available-for-sale financial assets
adjustment (4 442 419) 30 680 213 1 122 676
Realised gain on the sale of
investments reclassified (3 203 754) (6 217 664) (2 307 665)
Taxation related to components of other
comprehensive income 2 241 741 (5 457 752) 97 008
Total comprehensive income attributable
to ordinary shareholders 154 655 3 550 365 657 351
Adjusted comprehensive income 7 1 546 551 35 503 654 6 573 509
Adjusted comprehensive income
attributable to:
Ordinary shareholders 7 154 655 3 550 365 657 351
Preference shareholders 7 1 391 896 31 953 289 5 916 158
Per share information(ordinary)
Basic earnings per share (cents) 8 111 (309) 35
Headline earnings per share (cents) 8 47 (433) (11)
Statement of Changes in Equity
Share Share Total Fair value Retained Total Equity
capital premium share adjustment assets income
capital available-for-
sale reserve
R R R R R R
Balance at 31 March 2012 50 000 49 950 000 50 000 000 27 220 255 (21 596 223) 55 624 032
Changes in equity
Total comprehensive
(loss)/income - - - (1 087 981) 1 745 332 657 351
Balance 30 September 2012 50 000 50 000 000 50 000 000 26 132 274 (19 850 891) 56 281 383
Changes in equity
Total comprehensive income - - - 20 092 778 (17 199 764) 2 893 014
Balance 31 March 2013 50 000 49 950 000 50 000 000 46 225 052 (37 050 655) 59 174 397
Changes in equity
Total comprehensive
(loss)/income - - - (5 404 432) 5 559 087 154 655
Balance 30 September 2013 50 000 49 950 000 50 000 000 40 820 620 (31 491 568) 59 329 052
(Note 2) (Note 2) (Note 2) (Note 3) (Note 3)
Six months Twelve months Six months
ended 30 ended 31 ended 30
September 2013 March 2013 September 2012
Statement of Cash Flows R R R
Cash flows from operating activities
Cash (utilised in) / received from operations (11 548 295) 280 729 1 948 168
Interest income 6 592 475 17 680 235 13 572 368
Dividends received 7 096 307 3 154 720 2 173 534
Tax paid (196 056) (4 671 592) (2 049 335)
1 944 431 16 444 092 15 644 735
Cash flows from investing activities
Purchase of investments in associates (89 336 419) - -
Net disposals / (additions) to other financial assets 87 221 294 (16 990 620) (16 308 207)
(2 115 125) (16 990 620) (16 308 207)
Total cash movement for the period (170 694) (546 528) (663 472)
Cash at beginning of period 345 356 891 884 891 884
Total cash and cash equivalents end of period 174 662 345 356 228 412
Notes to the interim results for the period ended 30 September 2013
Six months Twelve months Six months
ended 30 ended 31 ended 30
September 2013 March 2013 September 2012
R R R
1 Other financial assets
Available-for-sale financial instruments
Non-current assets
Listed - Quoted 202 999 473 241 745 861 207 925 265
Unlisted Quoted 29 750 772 34 319 355 12 358 301
Unlisted - Unquoted 49 199 450 46 238 454 29 129 101
281 949 695 322 303 670 249 412 667
Current assets
Money Market Funds 228 118 881 281 793 474 322 108 630
Total other financial assets 510 068 576 604 097 144 571 521 297
2 Ordinary Share Capital
Authorised
5 000 000 Ordinary shares of R0.01 each 50 000 50 000 50 000
Issued
5 000 000 Ordinary shares of R0.01 each 50 000 50 000 50 000
Share premium 49 950 000 49 950 000 49 950 000
50 000 000 50 000 000 50 000 000
3 Reserves and Retained Income
The reserves comprise all fair value adjustments on available-for-sale financial instruments. When an asset
or liability is derecognised, the fair value adjustment relating to that asset or liability is transferred to
profit or loss.
Available-for-sale financial instruments 51 593 042 56 834 733 33 001 608
Deferred tax on available-for-sale financial
instruments (10 772 422) (10 609 681) (6 869 334)
Reserves 40 820 620 46 225 052 26 132 274
Retained income (31 491 568) (37 050 655) (19 850 891)
Total Reserves and Retained Income 9 329 052 9 174 397 6 281 383
4 Other financial liabilities
Held at fair value through profit or loss
Non current liabilities
Redeemable, participating, non cumulative
preference shares 450 000 000 450 000 000 450 000 000
Cumulative fair value adjustment on financial
liability 83 956 172 82 564 276 56 527 145
533 956 172 532 564 276 506 527 145
5 Net asset value
Net asset value attributable to the ordinary
shareholders 59 329 052 59 174 397 56 281 383
Fair value of preference shareholding 533 956 172 532 564 276 506 527 145
Number of shares in issue
Ordinary shares 5 000 000 5 000 000 5 000 000
Preference shares 45 000 000 45 000 000 45 000 000
50 000 000 50 000 000 50 000 000
Net asset value per ordinary share (cents) 1 187 1 183 1 126
Net asset value per preference share (cents) 1 187 1 183 1 126
6 Deferred Tax
Recognised in other comprehensive income 10 772 422 13 296 442 6 869 334
Reconciliation of deferred tax liability
At beginning of year 13 296 442 6 966 433 6 966 433
Temporary difference on available-for-sale
instruments adjustment (2 524 020) 6 330 009 (97 099)
10 772 422 13 296 442 6 869 334
7 Adjusted comprehensive income
Adjusted comprehensive income has been calculated as follows:
Total comprehensive income 154 655 3 550 365 657 351
Adjusted for:
Fair value adjustment on financial liabilities 1 391 896 31 953 289 5 916 158
Adjusted comprehensive income 1 546 551 35 503 654 6 573 509
Adjusted comprehensive income attributable to:
Ordinary shareholders 154 655 3 550 365 657 351
Preference shareholders 1 391 896 31 953 289 5 916 158
1 546 551 35 503 654 6 573 509
Adjusted comprehensive income information has been disclosed to allow users to see that ordinary and preference
shares each earn the same comprehensive income during any reporting period.
8 Earnings and headline earnings per share
Earnings and headline earnings are calculated as follows:
Net profit / (loss) after taxation 5 559 087 (15 454 432) 1 745 332
Earnings 5 559 087 (15 454 432) 1 745 332
Adjusted to headline earnings as follows:
IAS 16 Profit on asset disposal (3 203 754) (6 217 664) (2 307 665)
Headline earnings 2 355 333 (21 672 096) (562 333)
Basic earnings per share (cents) 111 (309) 35
Headline earnings per share (cents) 47 (433) (11)
No diluted per share information is disclosed as no dilutive, or potentially dilutive, instruments exist in the
Group. Thus, any diluted per share information is equal to the above per share information.
9 Events after the reporting period
The directors are not aware of any matter or circumstances arising since the end of the reporting period.
Basis of accounting preparation
The accounting policies applied for the six months are consistent, in all material respects, with those used in the Annual
Financial Statements of the prior period in accordance with the recognition and measurement criteria of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee.
In addition, these interim results have been prepared in accordance with the presentation and disclosure requirements of
International Accounting Standard 34, Interim Financial Reporting, as well as the listing requirements of the JSE and the
Companies Act 71 of 2008.
The Group had early adopted IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities
and amendments to IAS 27 Consolidated and Separate Financial Statements with a date of initial application 1 April 2012.
As a result of the adoption of IFRS 10, the Group has changed its accounting policy with respect to determining whether
it has control over and consequently whether it consolidates its investees. As a consequence, the Group has changed its
control conclusion in respect of its investment in the RECM Institutional Worldwide Flexible Fund, as the directors have
determined that it has de facto control over the investee. The Group had also changed its accounting policy with respect
to the preference shares and reclassified these as financial liabilities at fair value through profit and loss. As a
result of these changes, the September 2012 comparative figures are not comparable to the 30 September 2012 interim results
released in the prior period.
The interim results have been prepared in accordance with the IFRS and IFRIC interpretations at the time of the preparation
of the information. As these standards and interpretations are the subject of ongoing review, they may be amended between
the date of this report and the finalization of the annual financial statements for the year ending 31 March 2014.
Segmental analysis
The directors considered the implications of IFRS 8 Operating Segments and are of the opinion that the operations of the
company are substantially similar and that the risks and returns of these operations are likewise similar. Resource allocation
and the management of the operations are performed on an aggregated basis, and as such the company is considered to be a singly
aggregated business and therefore there are no additional reporting requirements in terms of IFRS 8.
Signed on behalf of the board
PG Viljoen JC van Niekerk
Cape Town, 16 October, 2013
Directors: PG Viljoen (Chairman), MVP Davis, T de Bruyn, G Pretorius, JG Swiegers, JC van Niekerk
Company Secretary: G Simpson
Financial results preparer: Duncan W. Block CA(SA)
Registered Office:
7th Floor
Claremont Central
8 Vineyard Road
Claremont, 7700
South Africa
Transfer Secretaries: Sponsor:
Link Market Services South Africa (Pty) Limited Questco (Pty) Ltd
13th Floor The Pivot
Rennie House 1 Montecasino Boulevard
19 Ameshoff Street Entrance D, 2nd Floor
Braamfontein, 2004 Fourways, 2055
Date: 17/10/2013 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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