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Unaudited Group Results and cash dividend declaration for the six months ended 31 March 2014
REUNERT LIMITED
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")
UNAUDITED GROUP RESULTS
and cash dividend declaration
for the six months ended 31 March 2014
COMMENTARY
On 14 April 2014 Reunert announced that its subsidiary, Nashua Mobile, had entered into separate and distinct agreements with MTN and
Vodacom to dispose of its subscriber bases. As a consequence of this announcement, Nashua Mobile has been presented as a discontinuing
operation in these results.
Normalised headline earnings per share from the group, including Nashua Mobile, has decreased by 8% from 256,5 cents to 237,2 cents.
Revenue from continuing operations increased by 14% to R3,7 billion, whilst operating profit increased from R449,2 million to R477,2 million. Basic
earnings per share and headline earnings per share from continuing operations increased by 3% to 200,9 cents and 201,3 cents respectively.
Normalised headline earnings per share from continuing operations increased by 3% from 194,0 cents to 200,0 cents.
REVIEW OF OPERATIONS
CBI-ELECTRIC
Revenue from the electrical businesses increased by 12% to R1,8 billion, mainly as a result of increased sales by the energy cables business.
Although revenue increased, operating profit decreased by 8% to R214,6 million as a result of margin pressure and change in product mix.
The low voltage business delivered stable revenue from its local market, but offshore operations remained under pressure. Further, higher material
input costs due to the weaker rand resulted in lower margins. The solutions' business was awarded a number of contracts in the renewable energy
sector, which increased revenues, although the work was performed at relatively lower margins.
In the energy cable business the continued delays in infrastructure projects had a negative impact on the activity levels of the power installation
division. The tragic accident at the Ingula Pump Station site resulted in a halt in construction, which further affected this operation. The energy
cable manufacturing operation was negatively affected by industrial action, which delayed certain sales. Pleasingly, the contribution from revenues
recorded from the renewable energy sector more than offset the above adverse effects, although margin pressure continues to be experienced by
the business.
The telecommunications cables operation had another slow six months with revenue and operating profit remaining flat.
NASHUA
Revenue increased by 3% to R3,4 billion for the Nashua segment as a whole. However, excluding Nashua Mobile, revenue increased by 10%
to R1,6 billion. Operating profit from continuing operations increased by 11% to R204,4 million, whilst operating profit, including Nashua Mobile,
decreased by 8% to R290 million.
Nashua Office Automation reported an increase of 19% in revenue, which was principally due to the acquisition of Nashua North and Prodoc
Svenska AB, our acquisition in Sweden. Nashua Office Automation managed to limit the impact of the weakening Rand on its margins.
Revenue for Nashua Mobile decreased by 5%, as a result of continued price deflation in the mobile industry, as well as the impact of the reduced
incentives received from the service providers.
Nashua Communications reported a marginal decrease in revenue. The sales and installations of our VoIP solution continue to strengthen, while
the Siemens/Unify business remains subdued. The business of Nashua Communications was right-sized in October 2013, which resulted in once-
off restructuring costs being incurred. As a consequence of these costs, operating profits were slightly down on the prior year.
Pansolution's revenue and operating profit declined marginally as the market remained highly competitive.
Quince, the segment's financing operation, delivered a strong performance with increased revenue and operating profits. The rental book increased
to R1,9 billion over the prior reporting period due in the main to the rental book acquired from Nashua North.
REUTECH
Reutech revenues increased by 28% over the prior period from R380,5 million to R487,7 million. This growth was delivered by all operations in
the segment, with the exception of Fuchs. Operating profit increased by 58% to R77,9 million, due to the higher revenues as well as the once-off
integration costs associated with the SAAB Grintek acquisition in 2013 not being repeated.
PROSPECTS
Looking forward, Reunert will continue to pursue earnings growth, both organically and through synergistic acquisitions. However, given the
sluggish economy, organic growth is expected to remain challenging. Consequently, the group will also retain its focus on rigorous cost control,
effective cash management and the extraction of efficiencies from its businesses.
The financial information on which the above is based has not been reviewed or reported on by the company's external auditors.
DIRECTORATE
With effect from 21 November 2013 Messrs Alan Dickson and Mark Taylor were appointed to the board as executive directors.
With effect from 26 November 2013 Ms Sarita Martin was appointed to the board and the audit and risk committees.
Mr Johannes van der Horst retired from the board on 17 February 2014, having reached mandatory retirement age. The board extends its sincere
appreciation to him for his exemplary service over the years and wishes him and his wife all the best in their retirement.
Ms Louisa Mojela did not make herself available for re-election to the board at the AGM on 17 February 2014.
CASH DIVIDEND
Notice is hereby given that a gross interim cash dividend No 176 of 95 cents per ordinary share (2013: 95 cents per share) has been declared by
the directors for the six months ended 31 March 2014.
The dividend has been declared from income reserves and no secondary tax on companies' credits have been used.
A dividend withholding tax of 15% will be applicable to all shareholders who are not exempt from, or who do not qualify for a reduced rate of
withholding tax. The net dividend payable to shareholders subject to withholding tax at a rate of 15% thus amounts to 80,75 cents per share.
The issued share capital at the declaration date is 187 256 746 ordinary shares. Reunert's income taxation reference number is 9100/101/71/7P.
In compliance with the requirements of Strate, the following dates are applicable:
Last date to trade (cum dividend) Thursday, 12 June 2014
First date of trading (ex dividend) Friday, 13 June 2014
Record date Friday, 20 June 2014
Payment date Monday, 23 June 2014
Shareholders may not dematerialise or rematerialise their share certificates between Friday, 13 June 2014 and Friday, 20 June 2014, both days
inclusive.
On behalf of the board
Trevor Munday David Rawlinson Manuela Krog
Chairman Chief Executive Chief Financial Officer
Sandton
19 May 2014
FINANCIAL INFORMATION
Summarised group income statement
Six months ended 31 March Year ended
30 September
2013 2013
2014 (Unaudited) % (Audited)
R million Notes (Unaudited) (Restated)* change (Restated)*
Revenue 3 681,7 3 242,5 14 7 246,7
Earnings before interest, taxation, depreciation, amortisation, other income
and dividends 514,9 495,2 4 1 174,6
Other income 14,2 14,1 41,9
Earnings before interest, taxation, depreciation and
amortisation (EBITDA) 529,1 509,3 4 1 216,5
Depreciation and amortisation 51,9 60,1 114,0
Operating profit 1 477,2 449,2 6 1 102,5
Net interest and dividend income 2 (7,8) 9,3 11,6
Profit before taxation 469,4 458,5 2 1 114,1
Taxation 137,0 136,1 313,2
Profit after taxation 332,4 322,4 3 800,9
Share of joint ventures' profit 11 0,5 0,9 10,1
Profit for the period from continuing operations 332,9 323,3 3 811,0
Profit for the period from discontinuing operation 3 60,4 101,8 (41) 161,8
Profit for the period 393,3 425,1 (7) 972,8
Profit attributable to:
Non-controlling interests 3,7 4,6 (20) 13,8
Equity holders of Reunert - from continuing operations 329,2 318,7 3 797,2
Equity holders of Reunert - from discontinuing operation 60,4 101,8 (41) 161,8
Basic earnings per share from continuing operations (cents) 4&5 200,9 195,6 3 488,6
Diluted earnings per share from continuing operations (cents) 4&5 198,7 193,3 3 484,0
Basic earnings per share (cents) 4&5 237,8 258,1 (8) 587,8
Diluted earnings per share (cents) 4&5 235,1 255,2 (8) 582,3
* Restated to reflect the reallocation of the results of Nashua Mobile Proprietary Limited (Nashua Mobile) to profit from discontinuing operation
and the adoption of the consolidation suite of accounting standards. Refer to Notes 3, 10 and 11 for additional information. The results before
restatement reported for 30 September 2013 have been audited, although the restatements are unaudited.
Six months ended 31 March Year ended
30 September
2014 2013 % 2013
Cents Notes (Unaudited) (Unaudited) change (Audited)
Other measures of earnings per share from continuing operations
Headline earnings per share 4&5 201,3 195,7 3 484,0
Diluted headline earnings per share 4&5 199,1 193,4 3 479,5
Normalised headline earnings per share 4&5 200,0 194,0 3 469,9
Diluted normalised headline earnings per share 4&5 197,9 191,7 3 465,4
Other measures of earnings per share
Headline earnings per share 4&5 238,5 258,2 (8) 583,2
Diluted headline earnings per share 4&5 235,8 255,2 (8) 577,7
Normalised headline earnings per share 4&5 237,2 256,5 (8) 569,1
Diluted normalised headline earnings per share 4&5 234,6 253,5 (7) 563,7
Cash dividend per ordinary share declared 95,0 95,0 - 370,0
Summarised group statement of comprehensive income
Six months ended 31 March Year ended
30 September
2014 2013 2013
R million (Unaudited) (Unaudited) (Audited)
Profit for the period 393,3 425,1 972,8
Other comprehensive income, net of taxation:
Items that may be reclassified subsequently to profit or loss
(Losses)/Gains arising from translating the financial results of foreign subsidiaries (0,1) 3,2 4,9
Total comprehensive income 393,2 428,3 977,7
Total comprehensive income attributable to:
Non-controlling interests 3,7 4,6 13,8
Equity holders of Reunert 389,5 423,7 963,9
Summarised group balance sheet
31 March 30 September
31 March 2013 2013
2014 (Unaudited) (Audited)
R million Notes (Unaudited) (Restated)* (Restated)*
Non-current assets
Property, plant and equipment and intangible assets 724,3 637,6 712,5
Goodwill 7 859,3 695,2 792,2
Investments and loans 8 86,2 106,2 128,7
Investments in joint ventures 160,7 160,8 170,1
Rental and finance lease receivables 1 355,0 1 186,7 1 378,2
Deferred taxation 52,6 28,5 55,3
3 238,1 2 815,0 3 237,0
Current assets
Inventory and contracts in progress 1 062,0 972,6 1 083,9
Rental and finance lease receivables 642,7 722,2 792,5
Accounts receivable, derivative assets
and taxation 1 532,2 1 461,3 1 648,0
Cash and cash equivalents 463,1 754,7 611,2
Assets held for sale 3 874,7 - -
4 574,7 3 910,8 4 135,6
Total assets 7 812,8 6 725,8 7 372,6
Equity attributable to equity holders of Reunert
Ordinary 4 839,9 4 449,0 4 877,9
Preference - 0,7 -
4 839,9 4 449,7 4 877,9
Non-controlling interests 73,8 52,5 59,4
Total equity 4 913,7 4 502,2 4 937,3
Non-current liabilities
Deferred taxation 64,7 113,6 131,7
Long-term borrowings 9 24,9 26,7 24,9
89,6 140,3 156,6
Current liabilities
Accounts payable, derivative liabilities, provisions and taxation 1 496,8 1 857,3 1 908,7
Bank overdrafts, short-term loans and current portion of long-term borrowings
(including finance leases) 816,0 226,0 370,0
Liabilities associated with assets held for sale 3 496,7 - -
2 809,5 2 083,3 2 278,7
Total equity and liabilities 7 812,8 6 725,8 7 372,6
* Restated to reflect the adoption of the consolidation suite of accounting standards. Refer to Notes 10 and 11 for additional information.
The results before restatement reported for 30 September 2013 have been audited, although the restatements are unaudited.
Summarised group cash flow statement
Six months ended 31 March Year ended
30 September
2013 2013
2014 (Unaudited) (Audited)
R million (Unaudited) (Restated)* (Restated)*
EBITDA 620,2 646,3 1 438,6
EBITDA from continuing operations 529,1 509,3 1 216,5
EBITDA from discontinuing operation 91,1 137,0 222,1
(Increase)/decrease in net working capital (75,3) 113,2 (149,2)
Other (net) (1,5) 1,9 (10,7)
Cash generated from operations 543,4 761,4 1 278,7
Net interest and dividend income (6,0) 13,3 15,7
Taxation paid (196,4) (188,2) (361,1)
Dividends paid (including to non-controlling interests) (452,0) (456,1) (612,8)
Net cash flows from operating activities (111,0) 130,4 320,5
Net cash flows from investing activities (422,0) (191,6) (692,1)
Capital expenditure (65,0) (50,7) (172,2)
Net cash flows arising from acquisition of businesses (222,9) - (238,6)
Movement in total rental and finance lease receivables (171,8) (146,7) (287,5)
Non-current loans granted (1,2) - (17,7)
Dividends received 38,4 - -
Other 0,5 5,8 23,9
Net cash flows from financing activities 10,2 21,6 44,9
Shares issued 10,6 20,5 46,0
Redemption of preference shares - - (0,7)
Other (0,4) 1,1 (0,4)
Decrease in net cash resources (522,8) (39,6) (326,7)
Net cash resources at the beginning of the period 241,8 568,5 568,5
Net (borrowings)/cash resources at the end of the period (281,0) 528,9 241,8
Cash and cash equivalents 463,1 754,7 611,2
Cash and cash equivalents of assets held for sale 71.7 - -
Bank overdrafts (815,8) (225,8) (369,4)
Net (borrowings)/cash resources at the end of the period (281,0) 528,9 241,8
* Restated to reflect the adoption of the consolidation suite of accounting standards. Refer to Notes 10 and 11 for additional information.
The results before restatement reported for 30 September 2013 have been audited, although the restatements are unaudited.
The cash flow statement includes the cash flows of all operations, including the discontinuing operation, which has been recorded in terms of IFRS
5 - Non-current Assets Held for Sale.
Summarised group statement of changes in equity
Six months ended 31 March Year ended
30 September
2014 2013 2013
R million (Unaudited) (Unaudited) (Audited)
Share capital and premium
Balance at the beginning of the period 288,1 242,8 242,8
Issue of shares 10,6 20,5 46,0
Redemption of preference shares - - (0,7)
Cancellation of issued shares (20,7) - -
Balance at the end of the period 278,0 263,3 288,1
Share-based payment reserve
Balance at the beginning of the period - 766,9 766,9
Share-based payment expense 12,0 11,0 29,6
Transfer to retained earnings (12,0) - (796,5)
Balance at the end of the period - 777,9 -
Equity transactions with empowerment partner
and non-controlling shareholder
Balance at the beginning of the period - (34,9) (34,9)
Acquisition of non-controlling interest - - (0,2)
Transferred to retained earnings - (0,4) 35,1
Balance at the end of the period - (35,3) -
Empowerment shares* (276,1) (276,1) (276,1)
Treasury shares
Balance at the beginning of the period (1 253,6) (1 253,6) (1 253,6)
Cancellation of issued shares 941,0 - -
Balance at the end of the period (312,6) (1 253,6) (1 253,6)
Non-distributable reserves
Balance at the beginning of the period - 3,9 3,9
Transfer to retained earnings - - (3,9)
Balance at the end of the period - 3,9 -
Foreign currency translation reserves
Balance at the beginning of the period 2,1 (2,8) (2,8)
Other comprehensive income (0,1) 3,2 4,9
Balance at the end of the period 2,0 0,4 2,1
Retained earnings
Balance at the beginning of the period 6 117,4 4 996,2 4 996,2
Profit after taxation attributable to equity holders of Reunert 389,6 420,5 959,0
Cash dividends declared and paid (450,1) (447,9) (603,1)
Cancellation of issued shares (920,3) - -
Transfer from reserves 12,0 0,4 765,3
Balance at the end of the period 5 148,6 4 969,2 6 117,4
Equity attributable to equity holders of Reunert 4 839,9 4 449,7 4 877,9
Non-controlling interests
Balance at the beginning of the period 59,4 56,1 56,1
Share of total comprehensive income 3,7 4,6 13,8
Dividends declared and paid (1,9) (8,2) (9,7)
Acquisition of non-controlling interest 12,6 - (0,8)
Balance at the end of the period 73,8 52,5 59,4
Total equity at end of the period 4 913,7 4 502,2 4 937,3
* These are shares held by Bargenel Investments Limited (Bargenel), a company sold by Reunert to an accredited empowerment partner in 2007.
Until the amount owing by the empowerment partner is repaid to Reunert, Bargenel is consolidated by the group as the significant risks and
rewards of ownership of the equity have not passed to the empowerment partner.
Summarised segmental analysis
Six months ended 31 March Year ended
30 September
2013 2013
2014 % (Unaudited) % % (Audited) %
R million (Unaudited) of total (Restated) of total change (Restated) of total
Revenue*
CBI-electric 1 774,1 31 1 577,8 30 12 3 505,7 31
Nashua 3 379,8 60 3 276,8 63 3 6 748,4 60
Reutech 487,7 9 380,5 7 28 1 019,9 9
Other 7,4 - 5,6 - 32 12,9 -
Total operations 5 649,0 100 5 240,7 100 8 11 286,9 100
Revenue from equity accounted
joint ventures (159,6) (148,8) 7 (345,0)
Revenue from discontinuing
operation (1 807,7) (1 849,4) (2) (3 695,2)
Revenue as reported 3 681,7 3 242,5 14 7 246,7
* Inter-segment revenue is
immaterial and has not been
separately disclosed.
Operating profit
CBI-electric 214,6 38 233,8 40 (8) 505,5 38
Nashua 290,0 52 316,0 54 (8) 647,7 49
Reutech 77,9 14 49,3 9 58 207,0 15
Other (19,4) (3) (15,9) (3) (22) (29,9) (2)
Total operations 563,1 100 583,2 100 (3) 1 330,3 100
Operating profit from equity
accounted joint ventures (0,3) (1,5) (80) (15,7)
Operating profit from discontinuing
operation (85,6) (132,5) (35) (212,1)
Operating profit as reported 477,2 449,2 6 1 102,5
31 March 30 September
31 March 2013 2013
2014 % (Unaudited) % (Unaudited) %
R million (Unaudited) of total (Restated) of total (Restated) of total
Total assets
CBI-electric 2 037,3 26 1 715,7 26 1 935,4 26
Nashua 4 830,0 62 4 180,4 62 4 464,4 61
Reutech 701,3 9 604,9 9 727,2 10
Other 244,2 3 224,8 3 245,6 3
Total assets as reported 7 812,8 100 6 725,8 100 7 372,6 100
Notes
Six months ended 31 March 30 September
2013 2013
2014 (Unaudited) (Audited)
R million (Unaudited) (Restated) (Restated)
1. Operating profit
Operating profit includes:
- Cost of sales 2 436,0 2 143,8 4 637,4
- Realised gain on foreign exchange and derivative instruments 8,6 5,0 8,1
- Unrealised gain on foreign exchange and derivative instruments 11,5 9,8 30,8
2. Net interest and dividend income
Interest income 5,9 14,4 22,0
Interest expense (13,7) (5,1) (10,9)
Dividend income - - 0,5
Total (7,8) 9,3 11,6
3. Discontinuing operation and asset held for sale
As announced on the JSE Securities Exchange News Service on 14 April 2014, Nashua Mobile, a wholly-owned subsidiary of Reunert, has
entered into separate and distinct sale agreements with each of Mobile Telephone Networks Proprietary Limited (MTN) and Vodacom
Proprietary Limited (Vodacom), on 11 April 2014, in terms of which, inter alia, Nashua Mobile will dispose of its MTN and Vodacom subscriber
bases to MTN and Vodacom respectively. The culmination of these transactions will result in the disposal of the business of Nashua Mobile
and its operations. It is anticipated that the disposal will be completed within the next six months. Nashua Mobile is presented in the Nashua
segment of the segmental analysis.
Arising out of this the summarised group income statement and related notes have been restated to exclude the results of Nashua Mobile.
The summarised income statement, abridged cashflows and related notes of Nashua Mobile are presented below:
Summarised income statement
Six months ended 31 March Year ended
30 September
2014 2013 % 2013
R million (Unaudited) (Unaudited) change (Audited)
Revenue 1 807,7 1 849,4 (2) 3 695,2
EBITDA 91,1 137,0 (34) 222,1
Operating profit 85,6 132,5 (35) 212,1
Profit for the period 60,4 101,8 (41) 161,8
Summarised cash flow statement
Six months ended 31 March Year ended
30 September
2014 2013 2013
R million (Unaudited) (Unaudited) (Audited)
Net cash flows from:
Operating activities 110,7 348,6 330,4
Investing activities (2,3) (27,4) (95,4)
Financing activities - - -
Net cash flow 108,4 321,2 235,0
The major classes of assets and liabilities of Nashua Mobile at the end of the reporting period were as follows:
As at
31 March
2014
R million (Unaudited)
Non-current assets classified as held for sale 293,2
Current assets classified as held for sale 581,5
Assets classified as held for sale 874,7
Liabilities associated with asset classified as held for sale 496,7
Six months ended 31 March Year ended
30 September
2013 2013
2014 (Unaudited) (Audited)
R million (Unaudited) (Restated) (Restated)
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) 163,8 162,9 163,1
Adjusted by the dilutive effect of unexercised share options granted (millions of shares) 1,9 1,9 1,6
Weighted average number of shares used to determine diluted basic, diluted headline and
diluted normalised headline earnings per share (millions of shares) 165,7 164,8 164,7
5.1 Headline earnings
Profit attributable to equity holders of Reunert from continuing operations 329,2 318,7 797,2
Headline earnings are determined by eliminating the effect of the following items from
attributable earnings:
Net loss/(gain) on disposal of property, plant and equipment and intangible assets (after tax
charge of R0,1 million (2013: R0,1 million) (September 2013: R0,8 million)) 0,5 0,1 (7,4)
Gain on change in shareholding in investment (after tax charge of Rnil) - - (0,2)
Impairment charge recognised for property, plant and equipment
(after tax credit of Rnil (2013: Rnil) (September 2013: R0,1 million)) - - 0,3
Gain on disposal of subsidiary (after tax charge of Rnil (2013: Rnil)
(September 2013: R0,5 million)) - - (0,2)
Headline earnings from continuing operations 329,7 318,8 789,7
Profit attributable to equity holders of Reunert from discontinuing operation 60,4 101,8 161,8
Net loss on disposal of property, plant and equipment and intangible assets
(after tax credit of R0,2 million (2013: Rnil)(September 2013: Rnil)) 0,5 - -
Headline earnings from discontinuing operation 60,9 101,8 161,8
Headline earnings 390,6 420,6 951,5
Six months ended 31 March Year ended
30 September
2013 2013
2014 (Unaudited) (Audited)
R million (Unaudited) (Restated) (Restated)
5.2 Normalised headline earnings from continuing operations
Headline earnings from continuing operations (refer to note 5.1) 329,7 318,8 789,7
It is the group's policy to determine normalised headline earnings by eliminating the effect of
the following items from attributable headline earnings:
Net economic interest in profit attributable to minority interests with outstanding equity
related loan accounts (refer to note 6) (2,0) (2,8) (23,0)
Share of headline and normalised headline earnings adjustments - - (0,1)
Normalised headline earnings from continuing operations 327,7 316,0 766,6
Headline earnings attributable to equity holders of Reunert from discontinuing operation 60,9 101,8 161,8
Normalised headline earnings 388,6 417,8 928,4
6. Minority interests with outstanding equity related loan accounts
It is the group's policy that where the significant risks and rewards of ownership in respect of
equity interests have not passed to the minority 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 that is attributable to all affected minority
shareholders 2,0 2,8 23,0
- Balance sheet interest that is economically attributable to all affected minority shareholders 104,1 118,3 147,3
Six months ended 31 March Year ended
30 September
2013 2013
2014 (Unaudited) (Audited)
R million (Unaudited) (Restated) (Restated)
7. Goodwill
Carrying value at the beginning of the period 792,2 696,2 696,2
Acquisition of businesses 225,2 - 97,0
Adjustment to goodwill on finalisation of acquisitions made in the prior period - (1,0) (1,0)
Goodwill associated with non-current asset held for sale (158,1) - -
Carrying value at the end of the period 859,3 695,2 792,2
8. Investments and loans
Loans - at cost 75,4 59,9 74,3
Investment in insurance cells - at fair value 9,1 44,6 52,7
Other unlisted investments - at cost 1,7 1,7 1,7
Carrying value at the end of the period 86,2 106,2 128,7
9. Long-term borrowings
Total long-term borrowings (including finance leases) 25,1 26,9 25,5
Less: short-term portion (including finance leases) (0,2) (0,2) (0,6)
24,9 26,7 24,9
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 30 September 2013 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
MC Krog (Chief Financial Officer).
The group's accounting policies, as per the audited annual financial statements for the year ended 30 September 2013, have been
consistently applied except where the group adopted new or revised accounting standards. These accounting policies comply with IFRS.
11. Changes in accounting policies
The group has adopted the new, revised or amended accounting pronouncements as issued by the IASB which became effective to the group
on 1 October 2013, including some of the more significant changes listed below:
IFRS 10 - Consolidated Financial Statements
IFRS 10 replaces IAS 27 - Consolidated and Separate Financial Statements, that addresses the accounting for consolidated financial
statements and SIC 12 - Consolidation - Special Purpose Entities. IFRS 10 provides a single basis for consolidation with new criteria to
determine whether entities, in which the group has an interest, should be consolidated.
The adoption of IFRS 10 has resulted in the groups' interest in insurance cell captives being recognised as long term investments instead of
consolidated special purpose entities of the group. The change from full consolidation to accounting for investments at fair value is not
considered material. No other material subsidiaries within the group were affected.
As the majority of the insurance cell captives' assets consist of cash and cash equivalents the carrying amounts approximate fair value
because of the short-term nature of these instruments.
IFRS 11 - Joint Arrangements
IFRS 11 replaces IAS 31 - Interests in Joint Ventures and SIC 13 - Jointly-controlled Entities - Non-monetary Contributions by Ventures and
changes the classification for joint operations.
Under IFRS 11, a joint arrangement is classified as either a joint operation or a joint venture based on the rights and obligations of the parties
to the arrangement, the legal form of the joint arrangement and when relevant, other facts and circumstances. IFRS 11 removes the option to
proportionately consolidate joint ventures and instead, all interests in joint arrangements that meet the definition of a joint venture under IFRS
11 must be accounted for using the equity method.
The application of IFRS 11 has resulted in changes in accounting for the group's jointly controlled entities previously accounted for using the
proportionate consolidation method and now will be accounted for using the equity method under IFRS 11.
Both these accounting standards have to be applied retrospectively in terms of their transitional provisions and accordingly the reported results
of both comparative periods were restated.
The quantitative changes resulting from adopting these standards to the prior year summarised consolidated financial statements are set out
below:
Adjustments to the summarised group balance sheet
As at As at
R million 31 March 30 September
() = decrease 2013 2013
Non-current assets 146,0 165,2
Current assets (189,5) (235,6)
Non-current liabilities (9,1) (8,0)
Current liabilities (34,4) (62,4)
Adjustments to the summarised group income statement
For the six For the year
months ended ended
R million 31 March 30 September
() = decrease 2013 2013
Revenue (180,3) (408,7)
EBITDA (5,1) (22,6)
Operating profit (1,3) (14,9)
Profit after taxation (0,9) (10,1)
Share of joint venture's profits 0,9 10,1
Adjustments to the summarised group cash flow statement
For the six For the year
months ended ended
R million 31 March 30 September
() = decrease 2013 2013
Cash generated from operations (19,8) (51,7)
Net cash flows from operating activities (13,8) (40,0)
Net cash flows from investing activities 1,9 4,2
Net cash flows from financing activities - -
Change in net cash resources (11,9) (35,8)
The adoption of the new, revised or amended accounting pronouncements did not have a significant impact on the Statement of Changes in
Equity or the Statement of Comprehensive Income for the six months ended 31 March 2013 and the year ended 30 September 2013.
12. Restatement of summarised group cash flow statement
It is the group's view that rental and finance leases provided to customers are investing activities due to the long-term nature of these
advances.
Accordingly the summarised group cash flow statement for the six months ended 31 March 2013 was restated to reflect the movement in
these amounts from operating activities to investing activities.
The impact of the restatement is R146,7 million and is detailed below:
Previously
reported* Restated
(Increase)/decrease in net working capital (33,5) 113,2
Cash generated from operations 614,7 761,4
Net cash (outflow)/inflow from operating activities (16,3) 130,4
Movement in total rental and finance lease receivables - (146,7)
Net cash outflow from investing activities (44,9) (191,6)
* Cash flow as previously reported taking into account amendments arising from the adoption of IFRS 10 and 11. Refer to notes 10 and 11.
The 30 September 2013 financial statements were reported on the above basis and therefore do not require restatement.
13. 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 2014 Cafca's retained earnings amounted to US$10,9 million.
14. Other matters
In our annual financial statements for the year ended 30 September 2013, note 24 we referred to a formal complaint initiated against the
cables' industry and that ATC (Pty) Ltd was included as a named party.
The allegations contained in the complaint are legacy issues that relate to tenders and contracts awarded in periods before December 2009.
ATC (Pty) Ltd is co-operating fully with the Competition Commission on this matter. Since the date of our annual financial statements we have
engaged in settlement negotiations with the Competition Commission, which are expected to be finalised in due course.
15. 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.
16. Events after balance sheet date
No events have occurred after the balance sheet date that require additional disclosure or adjustment to the results presented.
Supplementary information
31 March 30 September
31 March 2013 2013
2014 (Unaudited) (Audited)
R million (unless otherwise stated) (Unaudited) (Restated) (Restated)
Net worth per share (cents) 2 953 2 728 2 980
Current ratio (:1) 1,6 1,9 1,8
Net number of ordinary shares in issue (million) 163,9 163,1 163,7
Number of ordinary shares in issue (million) 187,2 200,8 201,4
Less: Empowerment shares (million) (18,5) (18,5) (18,5)
Less: Treasury shares (million) (4,8) (19,2) (19,2)
Capital expenditure 65,0 50,7 172,2
- expansion 53,8 23,1 137,5
- replacement 11,2 27,6 34,7
Capital commitments in respect of property, plant and equipment 48,4 88,5 126,0
- contracted 32,9 80,2 50,5
- authorised not yet contracted 15,5 8,3 75,5
Commitments in respect of operating leases 121,3 82,2 127,6
Directors
TS Munday (Chairman)*, DJ Rawlinson (Chief Executive), AE Dickson, SD Jagoe*, MC Krog (Chief Financial Officer), S Martin*, TJ Motsohi*,
NDB Orleyn**, SG Pretorius*, MAR Taylor, R Van Rooyen*
* Independent non-executive; ** Non-executive
Registered office
Lincoln Wood Office Park
6 - 10 Woodlands Drive
Woodmead, Sandton
PO Box 784391
Sandton, 2146
Telephone +27 11 517 9000
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown, 2107
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Secretaries' certification
In terms of section 88(2)(e) of the Companies Act, 71 of 2008, we certify that, to the best of our knowledge and belief, the company has lodged
with the Companies and Intellectual Property Commission for the financial period ended 31 March 2014 all such returns and notices as are
required of a public company in terms of the aforesaid Act and that all such returns and notices appear to be true, correct and up to date.
Karen Louw
for Reunert Management Services Proprietary Limited
Group Company Secretaries
Enquiries
Carina de Klerk +27 11 517 9000 or e-mail invest@reunert.co.za
For more information log on to the Reunert website at www.reunert.com
20 May 2014
www.reunert.co.za
Date: 20/05/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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