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RECM AND CALIBRE LIMITED - Unaudited unreviewed condensed interim financial results for the six months ended 30 September 2017

Release Date: 20/11/2017 09:00
Code(s): RACP     PDF:  
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Unaudited unreviewed condensed interim financial results for the six months ended 30 September 2017

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 Company”)
UNAUDITED UNREVIEWED CONDENSED INTERIM FINANCIAL RESULTS
for the six months ended 30 September 2017 
COMMENTARY
At 30 September, RAC's NAV per share (ordinary and participating 
preference) came to R27,86. This represents a gain of 1,9% over 
the first six months of the financial year, and 24,3% over the 
last 12 months. This compares to gains of 8,5% and 10,2% for the 
All Share Total Return index over the same periods. 
As at 30 September 2017, the make-up of our NAV on a look-through 
basis consists of:
                                                Direc-       %
                                                 tors’      of 
                               %                 fair      net
                           owner-     Cost      value    asset
                            ship        Rm         Rm    value
Core investments                     729,4    1 257,5     88,2
Goldrush                    53,3     386,9      896,4     62,9
Trans Hex                   25,5     103,2       74,6      5,2
JB Private Equity 
Investors Partnership      90,0      83,3      112,9      7,9
West Coast Resources       27,2      39,7       48,6      3,4
Outdoor Investment 
 Holdings                  28,3      41,1       59,9      4,2
College SA                 88,1      75,2       65,1      4,6
Portfolio investments               209,3      264,6     18,6
Conduit                     3,0      20,9       39,2      2,8
La Concorde                 5,1      32,3       35,1      2,5
Excellerate                 6,2      14,7       34,6      2,4
DAWN                       16,8     100,6      112,7      7,9
RECM Flexible Value 
 Hedge Fund                          40,8       43,0      3,0
Non-core investments                326,5      337,9     23,7 
Receivables                                      0,9      0,1
Cash and money market fund                      62,0      4,3
Liabilities (mainly CGT)                      (134,5)    (9,4)
Preference shares issued 
 to ABSA                                      (363,2)   (25,5)
Net asset value                              1 425,2    100,0 
NAV per share (“R”)       27,86
INCREASE IN NAV
The NAV per share growth of 1,9% for the 6 months equates to an 
increase of R26,4m. The composition of the increase on a look-
through basis is as follows:
                                      Unaudited      Unaudited
                                     Six months     Six months
                                          ended          ended
                                   30 September   30 September
                                           2017           2016
                                              R              R
Opening NAV                       1 398 789 332    983 101 316 
Increase in NAV                      26 446 481    136 140 558 
Interest and dividends               10 517 774      4 984 797
Realised profits on sale of 
 assets and other income              9 676 517      4 314 384
Adjustments to fair value 
 of assets                           49 785 371    152 332 460
Less: Tax paid                       (9 131 918)    (2 107 543)
Less: Tax provided for              (10 727 371)    (5 345 765)
Less: Financing expenses            (13 119 686)    (7 857 640)
Less: Operating expenses            (10 554 206)   (10 180 135)
Share Issue                                   –     50 996 000
Closing NAV                       1 425 235 813  1 170 237 874 
We have not changed our valuation method. All listed assets are 
held at market price, while unlisted assets are held at their OTC 
price – where one exists – or at fair value. For assets where 
there is no visible market price, we perform a valuation 
exercise, which culminates in a range of fair values, as required 
by International Financial Reporting Standards (“IFRS”). Due to 
the inherent uncertainty of valuing large stakes in unlisted, 
untraded assets, this range is necessarily quite wide. For some 
of our unlisted investments, this range includes the original 
cost price. Where we have purchased the investment in the last 12 
months and believe the cost price still approximates fair value, 
we continue to carry the investment at cost.
Where we have held the investment for longer than 12 months, we 
tend to value the investment towards the lower end of our fair 
value range.
We explicitly take account of the impact of capital gains tax, 
where applicable. We properly account for, and disclose this very 
real reduction in net realisable value in our intrinsic value 
calculation. As an aside, our gains include the associated tax 
effects, while the gains on the index we use for comparative 
purpose (the JSE ALSI total return index), doesn’t. Please bear 
in mind that we regard tax as a significant cost of doing 
business. As with all other costs we manage our exposure very 
carefully.  
Investors should also take our fee structure into account when 
estimating RAC’s value. RAC pays 1,14% (including VAT) p.a. of 
the portfolio value for investment management services. There are 
many views in the marketplace as to the capital value of such a 
contractual payment. We suggest you deduct your own estimate of 
this value from your opinion of our overall value – bearing in 
mind our consistently conservative approach to establishing a 
fair value for our assets. 
CORE INVESTMENTS
GOLDRUSH
The past six months saw the opening of the Menlyn Maine Casino – 
the second largest casino in South Africa by number of slot 
machines, in Pretoria. This impacted our three Pretoria 
properties significantly – as expected. During this period, we 
closed down one of these properties (Centurion Lake) and moved 
the license to the Morula complex. In the process we incurred 
some relocation expenses as the license was phased in at its new 
location. However, the relocation has now been completed and 
Goldrush at Morula, with 460 machines, is trading well. The other 
two Pretoria properties are still feeling the effect of the 
Casino.
The acquisition of Boss Gaming, a predominantly Eastern Cape 
operator with six operational Bingo properties became fully 
unconditional during the period. The business and team has been 
integrated into Goldrush and has already contributed to the 
group.
The other significant development since our last communication 
has been that the KZN Provincial Government passed legislation 
late in September, which allows for the operation of Electronic 
Bingo Terminals in the Province. This opens up another large 
growth opportunity for Goldrush.
Goldrush is currently in the process of rolling out more than 30 
new Bingo and Sports betting properties. The rollout of LPM 
machines continues at a steady pace, although slower than the 
other parts.
TRANSHEX/WEST COAST RESOURCES
Transhex’s (TSX) main mining asset, the Lower Orange River 
Operations, which include the Baken and Bloedrif mines have come 
to the end of their useful life. The mines are being placed on 
care and maintenance at significant cost. Rehabilitation costs 
have been provided for. At West Coast Resources (WCR), recoveries 
have improved, but are not yet at desired levels. The mine is 
receiving a lot of attention from management. RAC has agreed to 
sell its stake in WCR to TSX, in return for additional TSX 
shares. The transaction should close over the next few months. 
After this, RAC will still have a loan outstanding to WCR, but 
its main mining exposure will be through TSX. Somiluana, the 
operation in Angola in which TSX has a 33% interest, is doing 
well. Cash repatriation has become somewhat easier, but still not 
completely frictionless. 
THE JB PRIVATE EQUITY PARTNERSHIP
The JB Private Equity Partnership (JB PE), of which RAC owns 90%, 
has Unicorn Capital Partners Limited (previously Sentula Mining 
Limited) as its only asset. JB PE added to its holding during the 
period under review, and it now owns 37,4% of Unicorn. Unicorn’s 
operating subsidiaries are performing in line with expectations 
while the last remnants of its contract mining operations have 
been exited successfully. Nkomati Anthracite remains on track to 
complete the re-opening of its underground mine and commissioning 
of its new wash plant in Q1 2018. Following the successful 
restructuring and ring-fencing of the operating subsidiaries, 
management will concentrate on growing and expanding Unicorn’s 
investment portfolio.
OUTDOOR INVESTMNENT HOLDINGS 
Outdoor Investment Holdings (OIH) and its subsidiaries Safari 
Outdoor, Formalito and Inyathi Sporting Supplies have been 
trading well in a very challenging environment. The roll out of 
Safari’s fourth mega store was successfully concluded and this 
group’s profitability continues to improve. Safari will continue 
its drive to open more stores with two additional stores planned 
for the next 18 months. 
COLLEGE SA
This group can be split roughly into three divisions:
– SA College of Home Study (Pty) Ltd (College SA), a registered 
  private Technical and Vocational Education and Training (TVET) 
  college offers qualifications and courses across a broad range 
  of subjects via distance-learning. Over the past six months we 
  have focused on cleaning up course material, strengthening the 
  academic team, and increasing the efficiency of the sales and 
  support teams. Students are feeling the pinch of a struggling 
  economy, which has affected student completion rates. 
– Tabaldi Online Accounting Classroom, houses the tuition support 
  and teaching for students studying towards professional 
  accountancy designations. We have built and trained an 
  experienced academic team for successful online course delivery 
  and support. The business will roll out its first full suite of 
  products for the 2018 academic year.
– IASeminars, specialises in international accounting training 
  for senior executives in financial centers across the globe 
  (including IFRS, IPSAS, US GAAP). Business has been strong with 
  high recurring business, and given increasing first time 
  adoption of IPSAS (public accounting standards) across the 
  world.
RAC continues to build on this business organically and has 
invested more capital into the business during the period under 
review. 
PORTFOLIO INVESTMENTS
Conduit Capital continues in its efforts to build a high quality 
diversified insurance business, supported by a value orientated, 
non-insurance related investment portfolio over the long-term. In 
this regard, it has recently announced a rights offer of R350m to 
fund its vision.
La Concorde Holdings (LCH) has become a cash shell since it sold 
its operating assets for in excess of R16 per share. Its ultimate 
holding company, HCI, recently proposed a transaction where it 
will inject Golden Arrow Bus Services (GABS) into this shell, in 
return for cash and shares. The GABS asset represents R10 per LCH 
share, while a dividend of up to R7 per LCH share will be paid as 
part of the transaction. LCH also paid a R1 dividend to 
shareholders recently. We value LCH at R10 per share, as per the 
OTC market price. The proposed transaction indicates an 
appreciably higher value. 
Excellerate Holdings, the private facilities management business 
continues to generate good results. In its financial year to June 
2017, earnings per share grew by 28% (aided by a 20% share 
buyback earlier in the year). We value our holding at R2,90 per 
share, the price of the last known transaction – the buyback. At 
this price, Excellerate is valued on a P/E of five times. 
RAC acquired a 17% shareholding in listed building support 
company DAWN by underwriting an emergency rights issue earlier 
this year. DAWN is a turnaround situation, similar to 
Sentula/Unicorn. Since we acquired the stake, new management has 
been appointed, the company has sold some assets, used the 
proceeds to repay the majority of debt and a restructuring 
process has been implemented. We think the turnaround process, 
like most others will be difficult, and take longer than 
expected. RAC acquired its shares at a price which we believe 
discounts these risks. We value DAWN at its listed market price 
of R1,12 per share. We are not sure what DAWN is worth, but the 
listed price is almost certainly wrong. 
Since year-end, RAC also invested in a new hedge fund managed by 
RECM, the RECM Flexible Value Prescient QI Hedge Fund. This is a 
deep value fund which is able to take long or short positions. 
RAC obtained its units by vending its holdings of ELB 
Engineering, KLK Landbou, York Timbers and Putprop, for units in 
the fund. This is in line with RAC’s strategy of focusing on 
acquiring influential stakes in unlisted businesses, and 
disposing of passive minority holdings. The fund is off to a good 
start, gaining 5,3% during its first five months of operation. 
PROSPECTS
For almost the first time since listing, we are seeing more 
investment opportunities than we have available capital. This is 
due to the negative sentiment surrounding the political and 
economic situation in South Africa. 
Our investment strategy remains simple. We aim to buy good 
businesses, managed by good people, at good prices. If you are 
involved in any business that meets these criteria, and it needs 
expansion or replacement capital, please give us a call. We can’t 
promise to add management expertise to your business (we most 
likely have none) but we can promise to be solid partners. And, 
if the phone were to ring, we definitely can promise a quick 
answer.
Signed on behalf of the board
Piet Viljoen                                   Jan van Niekerk
Cape Town
20 November 2017   
DIRECTORS: PG Viljoen (Chairman), T de Bruyn,  Z Matlala, 
T Rossini, JG Swiegers, JC van Niekerk
COMPANY SECRETARY: G Simpson
FINANCIAL RESULTS PREPARER: D Schweizer CA(SA)
REGISTERED OFFICE: 6th Floor Claremont Central, 8 Vineyard Road, 
Claremont, 7700 South Africa
TRANSFER SECRETARIES: Link Market Services South Africa (Pty) 
Ltd, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 
2004
SPONSOR: Questco Corporate Advisory (Pty) Ltd, First Floor, 
Yellowwood House, Ballywoods Office Park, 33 Ballyclare Drive, 
Bryanston
STATEMENT OF FINANCIAL POSITION
                       Unaudited        Audited      Unaudited
                    30 September       31 March   30 September
                            2017           2017           2016
            Notes              R              R              R
ASSETS
Non-current 
 assets            1 424 074 846  1 396 876 924  1 168 035 386
Investments     2  1 424 074 846  1 396 876 924  1 168 035 386
Current assets         1 572 553      2 681 458      2 861 324
Investments     2      1 341 591      2 409 514      2 704 177 
Loans and other 
 receivables                   –              –         75 530 
Current tax 
 receivable              218 802        223 307              –
Cash and cash 
 equivalents              12 160         48 637         81 617 
Total assets       1 425 647 399  1 399 558 382  1 170 896 710
EQUITY AND 
 LIABILITIES 
Equity         
Share capital 
 – ordinary 
 shareholders   4     18 206 250     18 206 250     50 000 000
Share capital 
 – preference 
 shareholders   4    506 296 000    506 296 000    450 000 000 
Other equity 
 reserve                       –              –     50 996 000
Retained income      900 733 563    874 287 082    619 241 874
Total equity       1 425 235 813  1 398 789 332  1 170 237 874
Liabilities         
Current 
 liabilities             411 586        769 050        658 836
Trade and 
 other payables          411 586        769 050        658 836
Total equity 
 and liabilities   1 425 647 399  1 399 558 382  1 170 896 710
Net asset value             
Net asset value 
 attributable to 
 ordinary 
 shareholders        104 489 429    102 550 538    112 091 750
Net asset value 
 attributable to 
 preference 
 shareholders      1 320 746 384  1 296 238 794  1 058 146 124 
Net asset value 
 per ordinary 
 share (cents)  6          2 786          2 735          2 242
Net asset value 
 per preference 
 share (cents)  6          2 786          2 735          2 242  
STATEMENT OF COMPREHENSIVE INCOME
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
            Notes              R              R              R
Revenue                   65 508     30 163 291      3 568 701
Operating 
 expenses               (797 877)    (1 517 457)    (1 144 154)
Operating 
 (loss)/profit          (732 369)    28 645 834      2 424 547
Fair value 
 gains on 
 subsidiary           27 197 922    362 590 140    133 748 602
Profit before 
 taxation             26 465 553    391 235 974    136 173 149
Taxation        5        (19 072)       (50 208)       (32 591)
Profit after 
 taxation             26 446 481    391 185 766    136 140 558 
Other 
 comprehensive 
 income for the 
 period net of 
 taxation                      –              –              –
Total 
 comprehensive 
 income               26 446 481    391 185 766    136 140 558
Earnings and 
 headline 
 earnings per 
 share
Per share 
 information 
 (ordinary and 
 preference)
Basic and 
 diluted 
 earnings per 
 share (cents)  7             52            765            271 
Headline and 
 diluted 
 headline 
 earnings per 
 share (cents)  7             52            765            271 
STATEMENT OF CHANGES IN EQUITY
                      Preference       Ordinary          Other
                           share          share         equity
                         capital        capital        reserve
                               R              R              R
Balance at 
 31 March 2016       450 000 000     50 000 000              –
Profit                         –              –              –
Equity reserve                 –              –     50 996 000
Balance at 
 30 September 2016   450 000 000     50 000 000     50 996 000
Profit                         –              –              –
Share issue           56 296 000              –    (50 996 000)
Share buy back                 –    (31 793 750)             –
Balance at 
 31 March 2017       506 296 000     18 206 250              –
Profit                         –              –              –
Other comprehensive 
 income                        –              –              –
Balance at 
 30 September 2017   506 296 000     18 206 250              –
Notes                          4              4
STATEMENT OF CHANGES IN EQUITY (continued)
                                                         Total
                                       Retained   shareholders’ 
                                         income         equity
                                              R              R
Balance at 
 31 March 2016                      483 101 316    983 101 316
Profit                              136 140 558    136 140 558
Equity reserve                                –     50 996 000
Balance at 
 30 September 2016                  619 241 874  1 170 237 874
Profit                              255 045 208    255 045 208
Share issue                                   –      5 300 000
Share buy back                                –    (31 793 750)    
Balance at 
 31 March 2017                      874 287 082  1 398 789 332
Profit                               26 446 481     26 446 481
Other comprehensive 
 income                                       –              – 
Balance at 
 30 September 2017                  900 733 563  1 425 235 813
STATEMENT OF CASH FLOWS
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
Cash flows from 
 operating activities 
Cash utilised in 
 operations           (1 155 341)    (2 252 759)    (1 989 670)
Interest income              431        169 541         68 701 
Dividends received             –      3 500 000      3 500 000 
Tax paid                 (14 567)      (339 784)      (174 390)
Net cash (outflow)/
 inflow from 
 operating 
 activities           (1 169 477)     1 076 998      1 404 641 
Cash flows from 
 investing activities
Sale of investments    1 133 000              –              –
Purchase of 
 investments                   –     (2 409 514)    (2 704 177)
Net cash inflow/
 (outflow) from 
 investing 
 activities            1 133 000     (2 409 514)    (2 704 177)
Total cash movement 
 for the period          (36 477)    (1 332 516)    (1 299 536)
Cash at beginning 
 of period                48 637      1 381 153      1 381 153
Total cash and cash 
 equivalents at 
 end of period            12 160         48 637         81 617
NOTES TO THE CONDENSED INTERIM RESULTS 
for the period ended 30 September 2017
GROUP STRUCTURE
RAC was established in 2009 as a closed-end investment entity 
that makes long-term investments, with the objective of 
generating high real returns. Investments can be listed or 
unlisted, public or private, and there are no limits as to the 
geographic location.
Given that the investment infrastructure of RAC has been set up 
to facilitate investments and funding in the most efficient 
manner, investments are made either through a fully owned 
subsidiary incorporated in South Africa, RAC Investment Holdings 
(Pty) Ltd, (RIH) or directly. Currently, the majority of 
investments are held through RAC Investment Holdings (Pty) Ltd. 
Given this structure, RAC has provided the fair value disclosure 
in two parts in note 2. Note 2.1 discloses the investment in RIH 
as required by IFRS as well as additional disclosures that the 
directors deem useful by looking through RIH to the underlying 
investments at the directors fair values. All fair value 
movements on the investment in RIH are recognised in profit or 
loss.
1.   ACCOUNTING POLICIES – PRESENTATION OF CONDENSED INTERIM 
     FINANCIAL STATEMENTS
     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 for the year ended 31 March 2017
     and are 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 and Financial 
     Pronouncements as issued by the Financial Reporting 
     Standards Council. 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 Listings 
     Requirements of the JSE and the Companies Act of South 
     Africa.
     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 
     finalisation of the annual financial statements for the year 
     ending 31 March 2018.
     ASSESSMENT AS INVESTMENT ENTITY
     Entities that meet the definition of an investment entity 
     within IFRS 10 are required to measure their subsidiaries at 
     fair value rather than consolidate them. The criteria which 
     define an investment entity are, as  follows:
     – an entity that obtains funds from one or more investors 
       for the purpose of providing those investors with 
       investment services;
     – an entity that commits to its investors that its business 
       purpose is to invest funds solely for returns from capital 
       appreciation, investment income or both; and
     – an entity that measures and evaluates the performance of 
       substantially all of its investments on a fair value basis 
       (refer to note 2 for additional disclosures relating to 
       fair value).
     - Based on the above, the Company is considered to meet all 
       three conditions of the definition and, hence, qualifies 
       as an investment entity. Consolidated Financial Statements 
       are therefore not prepared.
       In line with RAC carrying its investment in RIH at fair 
       value, RAC has also elected the exemption in IAS 28 to 
       carry any interests in associates and joint ventures at 
       fair value through profit or loss. Such election is 
       applied consistently due to the fact that the Company is 
       an investment entity and evaluates its investments on a 
       fair value basis. The Company reports to its investors via 
       annual and semi-annual results and to its management, via 
       internal management reports, on a fair value basis. All 
       investments are reported at fair value to the extent 
       allowed by IFRS in the Company’s annual reports.
       The Board of Directors (the Board) has also concluded that 
       the Company meets the additional characteristics of an 
       investment entity, in that it has exposure, directly or 
       indirectly, to more than one investment; the investments 
       are predominantly in the form of equities and similar 
       securities; and its investors are not related parties. 
       These conclusions will be reassessed on an annual basis, 
       if any of these criteria or characteristics change.
       SEGMENTAL ANALYSIS
       The Board 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 single aggregated business and 
       therefore there is no additional reporting requirements in 
       terms of IFRS 8. 
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
2.   INVESTMENTS
     Fair value 
      hierarchy of 
      financial assets   
     Level 2 
     Class 4 – 
      Unit trust 
      – money market 
      fund             1 341 591      2 409 514      2 704 177
                       1 341 591      2 409 514      2 704 177
     Level 3 
     Class 5 – 
      Unlisted 
      shares – 
      Unquoted – 
      fair value 
      through profit 
      and loss 
      – RIH        1 424 074 846  1 396 876 924  1 168 035 386 
                   1 424 074 846  1 396 876 924  1 168 035 386 
     Total 
      financial 
      assets at 
      fair value   1 425 416 437  1 399 286 438  1 170 739 563
     Non-current 
      assets       1 424 074 846  1 396 876 924  1 168 035 386 
     Current 
      assets           1 341 591      2 409 514      2 704 177
     Total 
      investments  1 425 416 437  1 399 286 438  1 170 739 563
     AVAILABLE CASH
     Cash is held both directly and indirectly on call, along 
     with indirectly through a money market unit trust 
     investment.
     The cash holdings are reflected in Class 4 above, where 
     applicable.                       
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
     Level 3 
      reconci-
      liation
     Opening 
      balance      1 396 876 924    983 290 784    983 290 784 
     Acquisitions 
     (including 
     capital 
     contribution 
     to RIH)                   –     50 996 000     50 996 000  
     Gains on 
      investments 
      recognised in 
      profit and 
      loss            27 197 922    362 590 140    133 748 602 
     Closing 
      balance      1 424 074 846  1 396 876 924  1 168 035 386  
     LEVEL 1 
     Class 1 financial assets are valued at the listed price per 
     the exchange on which they trade.
     Class 2 financial assets are valued at the quoted price 
     based on the latest over the counter trades.
     LEVEL 2 
     Class 3 financial assets are valued based on the price of 
     the underlying assets.
     Class 4 financial assets are valued by taking the following 
     market observable data into account and applying them to the 
     holdings:
     – credit spread of the institution at which the funds are 
       held;
     – any difference in the interest rate earned and what is 
       available in the market.
     Class 6 financial assets are unlisted shares valued at the 
     last traded price between third parties if the transaction 
     occurred within the last 6 months.
     LEVEL 3 
     Class 5 financial assets are valued using a number of 
     valuation techniques based on the following unobservable 
     market data for each investment:
     - Net profit of investee
     - Equity and net debt of investee
     - Return on capital
     - Price/Earnings ratio
     - Expected cash flows; and
     - NAV of the investee if it recognises its assets and 
       liabilities at fair value.
     Management uses the above information in multiple valuation 
     techniques by comparing the investee information to similar 
     type entities in the listed market. The nature of the fair 
     value calculations means that fair values range greatly and 
     are sensitive to indirect and direct quantifiable and 
     unquantifiable inputs.
     There have been no significant changes to the inputs to the 
     fair valuation calculations of the investments to which RAC 
     is exposed. RIH has continued to be valued based on its NAV 
     which is driven by the valuation of the underlying 
     investments.
     In terms of IFRS, RAC is an Investment Entity, and therefore 
     no consolidated results are required to be prepared. IFRS 
     requires the fair value disclosure to be prepared at the 
     Unit of Account Level (i.e. at the level of shares that RAC 
     owns and those are shown above). The Board of Directors has 
     decided to provide the following voluntary disclosures 
     looking through the 100% held subsidiary, RIH, to the 
     underlying investments. In addition, a summary of the NAV of
     RIH as well as the underlying valuation techniques and 
     sensitivities have been provided.
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
     Fair value 
      hierarchy of 
      financial 
      assets held 
      by RIH
     Level 1 
     Class 1 – 
      Listed shares 
      – Quoted       219 552 537    205 119 811    193 708 663 
     Class 2 – 
      Unlisted shares 
      – Quoted        35 099 830     55 550 183     68 046 300  
                     254 652 367    260 669 994    261 754 963 
     Level 2         
     Class 3 – 
      Derivative 
      instruments    337 931 666    130 879 183              – 
     Class 4 – 
      Money market 
      fund            56 680 906    158 886 872     44 291 111 
     Class 6 – 
      Unlisted 
      shares – last 
      traded price 
      – available for 
      sale            34 629 034     34 031 981              –
     Class 6 – 
      Unlisted 
      shares – last 
      traded price 
      – fair value 
      through profit 
      or loss                  –     49 736 932              – 
     Class 3 – 
      Hedge Fund      42 958 457              –              – 
                     472 200 063    373 534 968     44 291 111 
    Level 3         
    Class 5 – 
     Unlisted shares 
     – Unquoted 
     – available-
     for-sale          4 306 964      4 038 769     45 081 286 
    Class 5 – 
     Unlisted shares 
     – Unquoted – fair 
     value through 
     profit and 
     loss          1 107 545 096    993 249 079  1 082 827 457 
                   1 111 852 060    997 287 848  1 127 908 743 
     Total 
      financial 
      assets at 
      fair value   1 838 704 490  1 631 492 810  1 433 954 817
     Non-current 
      assets       1 782 023 584  1 472 605 938  1 250 889 389
     Current 
      assets          56 680 906    158 886 872    183 065 428
     Total 
      investments  1 838 704 490  1 631 492 810  1 433 954 817
     Summary of net 
      asset value of 
      RIH 
     Total 
     investments 
     from 
      above        1 838 704 490  1 631 492 810  1 433 954 817 
     Loans and 
      receivables     78 705 924     56 749 640    103 802 715 
     Cash and cash 
      equivalents      3 951 779      4 665 742      4 767 304 
     Deferred tax   (130 797 666)  (117 389 895)   (80 807 975)
     Accruals and 
      contingent 
      consideration            –    (22 123 176)  (143 063 047)
     Loans and 
      payables        (3 250 772)    (6 518 197)      (618 428)
     Preference 
      shares        (363 238 909)  (150 000 000)  (150 000 000)
     Net asset 
      value of 
      RIH          1 424 074 846  1 396 876 924  1 168 035 386
DESCRIPTION OF SIGNIFICANT UNOBSERVABLE INPUTS AND THEIR 
SENSITIVITIES
30 September 2017 
2.1 DESCRIPTION OF SIGNIFICANT UNOBSERVABLE INPUTS AND 
    SENSITIVITIES OF RAC (LEVEL 3 INVESTMENT)
                             Signifi-
              Valua-            cant
               tion    Fair  unobser-
               tech-  value  vable     Input
              nique     R’m  inputs    value     Sensitivity
    RAC         NAV 1 424,1  Earnings  n/a       A change in the
    Invest-                  and                 multiple of the
    ment                     multiple            underlying 
    Holdings                 of the              investment by 1
                             underlying          would result in 
                             investments         an increase or
                            (refer to            decrease in fair
                             the break-          value of 
                             down below)         approximately 
                                                 R107m.
    The below table shows the sensitivities per underlying 
    investment as if these were held directly by RAC (level 3 
    investment) 
    Retail:   Multi-   49,9  EBITDA,   4 – 8     A change in 
    Safari     ples          Sales, PE           multiple up by
    and                                          1 would result
    Outdoor                                      in an increase 
    (excluding                                   in fair value of
    non-equity                                   approximately 
    investments)                                 R14m.
    Goldrush  Multi-  896,4  EBITDAR   6,5       A change in the 
    Group      ples                              EBITDAR multiple 
                                                 by 1 would 
                                                 result in an 
                                                 increase or 
                                                 decrease in fair 
                                                 value of 
                                                 approximately 
                                                 R86,5m.
    JB Private  NAV     102  n/a       n/a      The NAV of the JB 
    Equity                                      Private Equity 
    Investors                                   Investors 
    Partnership                                 Partnership is 
                                                directly linked 
                                                to the underlying 
                                                investment in 
                                                Unicorn Capital 
                                                Partners Limited   
                                                (previously 
                                                called Sentula 
                                                Mining Limited) 
                                                which is listed 
                                                on the JSE and is 
                                                not currently 
                                                significantly 
                                                impacted by any 
                                                fair value 
                                                adjustment to 
                                                trade and other 
                                                payables and 
                                                therefore NAV of 
                                                the JB Private 
                                                Equity Investors 
                                                Partnership is 
                                                considered to be 
                                                fair value. A 10% 
                                                movement in the 
                                                Unicorn Capital 
                                                share price would 
                                                have a R8.8m 
                                                impact on the 
                                                Partnership NAV.
    Mining:     NAV   19,7  Valua-     19%      A multi-period 
    West Coast              tion of             excess earnings 
    resources               mining              method was used 
    (excluding              rights              to calculate the 
    non-equity                                  mining rights in 
    investments)                                WCR. A change in 
                                                the value of the 
                                                mining rights by 
                                                10% would result 
                                                in a R33m change 
                                                in the NAV of 
                                                WCR.
    Educa-    Multi- 39,6   EBIT,    0,8 – 5    A change in 
    tion:      ples         Sales,              multiple up by 1
    SA College              PE                  would result in 
    (excluding                                  an increase in 
    non-equity                                  fair value of 
    investments)                                approximately 
                                                R37m.
    Other             4,3
    level 3 
    investments
    Total         1 111,9
30 September 2017 
2.2 DESCRIPTION OF SIGNIFICANT UNOBSERVABLE INPUTS AND 
    SENSITIVITIES OF RAC (LEVEL 3 INVESTMENT)
                             Signifi-
              Valua-            cant
               tion    Fair  unobser-
               tech-  value  vable     Input
              nique     R’m  inputs    value     Sensitivity
    RAC         NAV   1 397  Earnings    n/a     A change in the 
    Investment               and                 multiple of the 
    Holdings                 multiple            underlying 
                             of the              investment by 1 
                             underlying          would result in 
                             investments         an change in 
                             (refer to           value of R106m.
                             breakdown 
                             below)
    The below table shows the sensitivities per underlying 
    investment as if these were held directly by RAC (level 3 
    investment) 
    Retail:   Multi-   49,9  EBITDA,   4 – 8     A change in 
    Safari     ples          Sales,              multiple up by 1 
    and                      PE                  would result in 
    Outdoor                                      an increase in 
   (excluding                                    fair value of 
    non-equity                                   approximately 
    investments)                                 R14m.
    Goldrush  Multi-  816,4  EBITDAR   6,5       An increase or 
    Group      ples                              decrease in the 
                                                 EBITDAR multiple 
                                                 by 1 would 
                                                 result in a 
                                                 change in fair 
                                                 value of 
                                                 approximately 
                                                 R122m.
    JB Private  NAV   100,9  n/a       n/a       The NAV of the 
    Equity                                       JB Private 
    Investors                                    Equity Investors 
    Partnership                                  Partnership is 
                                                 directly linked 
                                                 to the 
                                                 underlying 
                                                 investment in 
                                                 Sentula Mining 
                                                 Limited which is 
                                                 listed on the 
                                                 JSE and is not 
                                                 currently 
                                                 significantly 
                                                 impacted by any 
                                                 fair value 
                                                 adjustment to 
                                                 trade and other 
                                                 payables and 
                                                 therefore NAV of 
                                                 the JB Private 
                                                 Equity Investors 
                                                 Partnership is 
                                                 considered to be 
                                                 fair value. A 
                                                 10% movement in 
                                                 the Sentula 
                                                 share price 
                                                 would have a 
                                                 R8,7m impact on 
                                                 the Partnership 
                                                 NAV.
    Mining:    NAV   26,1  Valuation   9%        A multi-period 
    West Coast             of mining   discount  excess earnings 
    resources              rights      rate      method was used 
    (excluding                                   to calculate the 
    non-equity                                   mining rights in 
    investments)                                 WCR. A change in 
                                                 the value of the 
                                                 mining rights by 
                                                 10% would result 
                                                 in a R24,7m 
                                                 change in the 
                                                 NAV of WCR.
    Other             4,0
    level 3 
    investments
    Total           997,3
    Factors that were taken into account by management in all 
    valuations include the current market conditions, the 
    invested market segment and interest rate certainty. The 
    market for these instruments often has significant barriers 
    to entry making the comparison pool of similar entities very 
    shallow. Specifically, the hunting equipment industry has few 
    market entrants with little reliable comparative data. The 
    nature of the fair value calculations means that the 
    calculated fair values could range greatly and are sensitive 
    to indirect and direct quantifiable and unquantifiable 
    inputs. Where we have influence over our investee companies 
    we plan to play an active role in the long-term strategy of 
    the company, ensuring that our interests are aligned.
3.  RELATED PARTY TRANSACTIONS
    There were no significant changes to related parties or
    related party transactions since the year ended 31 March 
    2017.
4.  SHARE CAPITAL
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
    Authorised   
     5 000 000 
     ordinary 
     shares of 
     R0,01 each            50 000         50 000        50 000 
    200 000 000 
     non-cumulative 
     redeemable 
     participating 
     preference shares 
     of no par value            –              –             – 
    250 000 000 
     redeemable 
     preference 
     shares of no 
     par value                  –              –             –
    1 500 000 000 
     perpetual 
     preference 
     shares of no 
     par value                  –              –             – 
                           50 000         50 000        50 000 
    The 250 000 000 redeemable preference shares will have 
    the rights and privileges, restrictions and conditions as 
    determined by the Directors upon issue thereof, but which 
    are intended to rank in priority to the participating 
    preference shares, the perpetual preference shares and 
    ordinary shares in respect of dividends and on winding up.
    The 1 500 000 000 perpetual preference shares will have 
    the rights and privileges, restrictions and conditions as 
    determined by the Directors upon issue thereof, but which 
    are intended to rank in priority to the participating 
    preference shares and ordinary shares in respect of 
    dividends and on winding up.
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
    Issued   
    3 750 000 
   (March 2017: 
    3 750 000, 
    Sepember 2016: 
    5 000 000) 
    ordinary shares 
    of R0,01 each          37 500         37 500        50 000 
    Share premium      18 168 750     18 168 750    49 950 000 
                       18 206 250     18 206 250    50 000 000 
    47 400 000 
   (March 2017: 
    47 400 000, 
    September 2016: 
    45 000 000) 
    non-cumulative 
    redeemable 
    participating 
    preference 
    shares            506 296 000    506 296 000   450 000 000 
                      506 296 000    506 296 000   450 000 000  
5.  CURRENT AND DEFERRED TAXATION
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
    Taxation expense
    Current taxation     (19 072)       (50 208)       (32 591)
    Taxation expense     (19 072)       (50 208)       (32 591) 
    Deferred tax has not been recognised on the fair value 
    gains on the investment in RIH as the manner of expected 
    recovery of the investment is unlikely to result in future 
    tax consequences. Temporary differences not recognised in 
    terms of IAS 12 amount to R535 449 932 (March 2017: 
    R508 252 010, September 2016: R279 410 472). 
    Deferred tax has been recognised in RIH on the 
    investments that it expects to incur taxes on when 
    realising their value.
6.  NET ASSET VALUE
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
    Net asset value 
     attributable to 
     ordinary 
     shareholders    104 489 429    102 550 538    112 091 750  
     Net asset value 
      attributable 
      to preference 
      share-
      holders      1 320 746 384  1 296 238 794  1 058 146 124 
     Number of 
      shares in 
      issue         
     Ordinary 
      shares           3 750 000      3 750 000      5 000 000  
     Preferences 
      shares          47 400 000     47 400 000     47 200 000  
     Net asset 
      value per 
      ordinary share 
     (cents)               2 786          2 735          2 242 
     Net asset value 
      per preference 
      share (cents)        2 786          2 735          2 242 
7.   EARNINGS AND HEADLINE EARNINGS PER SHARE
     Earnings and headline earnings per share are based on the 
     profit attributable to ordinary and preference shareholders 
     in issue during the year.               
                       Unaudited        Audited      Unaudited
                      Six months  Twelve months     Six months
                           ended          ended          ended
                    30 September       31 March   30 September
                            2017           2017           2016
                               R              R              R
     Number of 
      shares in 
      issue
     Ordinary shares   3 750 000       4 606 164     5 000 000
     Preferences 
      shares          47 400 000      46 534 795    45 183 333
     Earnings 
     Net profit 
      after tax       26 446 481     391 185 766   136 140 558 
     Headline 
      earnings        26 446 481     391 185 766   136 140 558 
     Basic and 
      diluted 
      earnings per 
      ordinary and 
      preference 
      share (cents)           52             765           271 
     Headline and 
      diluted 
      headline earnings 
      per ordinary 
      and preference 
      share (cents)           52             765           271 
    The Company has no dilutive instruments in issue as at 
    30 September 2017.
8.  EVENTS AFTER THE REPORTING PERIOD
    The directors are not aware of any matter or circumstance 
    arising since the end of the reporting period that needs to 
    be disclosed in the interim results.
9.  DIVIDENDS
    No dividend has been declared.
10. GUARANTEE, CESSION AND PLEDGE
    During the current period, RIH issued another 200 preference 
    shares at R1m each to ABSA Bank Limited (“ABSA”). As at 30 
    September 2017 the capital balance of R350m was outstanding. 
    A preference dividend is payable on the preference shares on 
    31 March and 30 September each year at a rate equivalent to 
    115% of the prime overdraft rate and they are redeemable in 
    R50m tranches during December 2018, May 2019, August 2019, 
    July 2020, August 2020, September 2020 and October 2020. 
    RAC and RIH provided the following securities to ABSA in 
    terms of the Preference Share Agreement:
    – RAC pledged its shares held in RIH to ABSA
    – RAC provided a guarantee in favour of ABSA for the full, 
      complete and punctual payment and performance by RIH of all 
      its obligations under the Preference Share Agreement
    – RIH pledged its shares held in Goldrush to ABSA
    The securities will remain in full force until such time as 
    the preference shares issued to ABSA have been fully redeemed 
    and all payments made.
    As at 30 September 2017, both the value of RAC’s pledged 
    shares in RIH as well as RIH’s pledged shares in Goldrush 
    exceeded the value of the preference shares issued to ABSA. 
    The directors of RAC foresee the possibility of RAC needing 
    to make any payments under the guarantee as being highly 
    remote.
    RIH may not pay any distribution in excess of R1,5m to RAC 
    without the prior consent of ABSA.


Date: 20/11/2017 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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