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| NOTES |
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2006
R million
(Reviewed) |
|
|
2005
R million
(Restated) |
%
change |
| Note 1 |
|
|
|
|
|
|
| Operating profit |
|
|
|
|
|
|
| Operating profit is stated
after: |
|
|
|
|
|
|
| – Cost of sales |
|
5
647,9 |
|
|
4 826,6 |
|
| – Other expenses
excluding depreciation and amortisation |
|
1
325,5 |
|
|
1 233,4 |
|
| – Other income |
|
(72,9) |
|
|
(15,2) |
|
| Note 2 |
|
|
|
|
|
|
| Net interest and
dividend income |
|
|
|
|
|
|
| Interest received |
|
92,9 |
|
|
60,8 |
|
| – From RC&C
Finance Company |
|
57,2 |
|
|
30,1 |
|
| – External |
|
35,7 |
|
|
30,7 |
|
| Interest paid |
|
(34,9) |
|
|
(23,5) |
|
| Dividend income other
than from associate company |
|
6,9 |
|
|
12,8 |
|
| Total |
|
64,9 |
|
|
50,1 |
|
| Dividend income from associate
company included in |
|
|
|
|
|
|
| share of associate company’s
profit |
|
56,0 |
|
|
69,2 |
|
| Note 3 |
|
|
|
|
|
|
| Abnormal Items |
|
|
|
|
|
|
| Surplus on sale of investments |
|
5,0 |
|
|
6,4 |
|
| Impairment of goodwill |
|
(3,4) |
|
|
— |
|
| Impairment of plant and
equipment |
|
—
|
|
|
(4,9) |
|
| Negative goodwill taken
to profit |
|
—
|
|
|
2,4 |
|
| Total before taxation |
|
1,6 |
|
|
3,9 |
|
| Taxation |
|
—
|
|
|
1,4 |
|
| Total |
|
1,6 |
|
|
5,3 |
|
| Note 4 |
|
|
|
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| Taxation |
|
|
|
|
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|
The tax charge for 2006
includes Secondary Tax on Companies
in respect of the special dividend amounting
to R43,7 million
(2005: nil). |
|
|
|
|
|
|
| Note 5 |
|
|
|
|
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|
| Number of shares
used to calculate earnings per share |
|
|
|
|
|
|
Weighted average number
of shares in issue used to
determine basic earnings per share, headline
earnings
per share, normalised basic earnings per
share and
normalised headline earnings per share (millions
of shares) |
|
175,1 |
|
|
173,4 |
|
Adjusted by the dilutive
effect of unexercised share
options granted (millions of shares) |
|
1,5 |
|
|
2,1 |
|
Weighted average number
of shares used to determine
diluted basic, normalised diluted basic,
diluted headline,
and normalised diluted headline earnings
per share
(millions of shares) |
|
176,6 |
|
|
175,5 |
|
| Note 6.1 |
|
|
|
|
|
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| Headline earnings |
|
|
|
|
|
|
Headline earnings are
determined by eliminating the effect
of the following items in attributable earnings: |
|
|
|
|
|
|
| Profit attributable to
equity holders of Reunert Limited |
|
922,8 |
|
|
713,3 |
|
| Surplus on sale of investments |
|
(5,0) |
|
|
(6,4) |
|
| (Surplus)/loss on disposal
of property, plant and equipment |
|
(2,6) |
|
|
0,2 |
|
| Impairment of goodwill |
|
3,4 |
|
|
— |
|
| Negative goodwill reflected
in abnormal items |
|
—
|
|
|
(2,4) |
|
| Impairment of plant and
equipment |
|
—
|
|
|
4,9 |
|
| Taxation |
|
—
|
|
|
(1,5) |
|
| Headline earnings |
|
918,6 |
|
|
708,1 |
|
| Note 6.2 |
|
|
|
|
|
|
| Normalised earnings |
|
|
|
|
|
|
Normalised earnings are
determined by deducting from
attributable earnings the interest in profit
that is
economically attributable to BEE partners
(note 10): |
|
|
|
|
|
|
| Profit attributable to
equity holders of Reunert Limited |
|
922,8 |
|
|
713,3 |
|
| Interest in profit that
is economically attributable to BEE partners |
|
(51,4) |
|
|
(24,7) |
|
| Normalised earnings
(basic and diluted) |
|
871,4 |
|
|
688,6 |
27 |
Normalised headline earnings
are determined by deducting
from headline earnings the interest in profit
that is
economically attributable to BEE partners
(note 10): |
|
|
|
|
|
|
| Headline earnings |
|
918,6 |
|
|
708,1 |
|
| Interest in profit that
is economically attributable to BEE partners |
|
(51,4) |
|
|
(24,7) |
|
| Normalised headline
earnings (basic and diluted) |
|
867,2 |
|
|
683,4 |
27 |
| Note 7 |
|
|
|
|
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|
| Investments and
loans |
|
|
|
|
|
|
Unlisted associate company
– at cost plus equity-accounted
earnings excluding goodwill |
|
126,0 |
|
|
86,8 |
|
| Other unlisted investments
– at cost |
|
0,3 |
|
|
0,7 |
|
| Loans – at cost |
|
22,5 |
|
|
20,9 |
|
| Listed investments held
for sale – at market value |
|
—
|
|
|
7,8 |
|
| Total carrying values |
|
148,8 |
|
|
116,2 |
|
| Directors’ valuation
of unlisted investments |
|
|
|
|
|
|
| – Unlisted associate
company |
|
520,0 |
|
|
520,0 |
|
| – Other unlisted
investments |
|
0,3 |
|
|
0,7 |
|
| Note 8 |
|
|
|
|
|
|
| Long-term borrowings |
|
|
|
|
|
|
| Total long-term borrowing |
|
115,5 |
|
|
130,0 |
|
| Less: Short-term
portion |
|
(15,2) |
|
|
(18,6) |
|
| |
|
100,3 |
|
|
111,4 |
|
| Loan repaid by BEE partner |
|
14,5 |
|
|
— |
|
| Total finance leases |
|
0,4 |
|
|
0,9 |
|
| Less: Short-term
portion |
|
(0,2) |
|
|
(0,6) |
|
| |
|
115,0 |
|
|
111,7 |
|
|
The group entered into
an agreement with Powerhouse Utilities (Pty)
Limited (Powerhouse), whereby on 1 December
2004 , 25,1% of the shares of ATC (Pty)
Limited (ATC) were sold to Powerhouse at
a cost of R130 million. IFRS requires that
this transaction is not accounted for as
a sale, since the bank loan has not been
fully paid by Powerhouse and conditions
are attached to the unpaid portion, notwithstanding
that the economic reality of this transaction
is in fact a sale.
The long-term borrowing relates to funding
provided by Nedbank Limited (Nedbank) to
Powerhouse for their purchase of 25,1% of
ATC.The loan is guaranteed by Reunert Limited
and, in terms of current accounting practices
for this transaction, is recognised on the
balance sheet.
Repayment of the loan by the BEE partner
represents a portion of dividends paid by
ATC to
Powerhouse, which have been used to repay
part of the loan from Nedbank to Powerhouse.
In terms of current accounting practice
for this transaction, this is to be reflected
as a long-term liability on the Reunert
balance sheet.When the significant risks
and rewards of ownership in the equity of
ATC are deemed to have passed to the BEE
partner, then this portion of the loan repaid
by Powerhouse will be transferred to minority
interest. |
| Note 9 |
| RC&C Finance
Company bank borrowings |
| RC&C Finance Company
has total bank borrowing facilities of R1,2
billion (2005: R1,2 billion).The banks which
have granted these facilities are contractually
bound to provide these on a long-term basis,
but they may give notice to run down these
facilities. Once notice has been given,
these facilities reduce to zero in line
with the reduction in the underlying rental
debtors over a maximum of five years. |
|
| Note 10 |
|
|
|
|
| Black
economic empowerment (BEE) transactions |
|
2006
R million
(Reviewed) |
|
2005
R million
(Restated) |
As referred to in note
8, certain BEE transactions involving the
disposal
of equity interests have not been recognised
because the significant risks
and rewards of ownership of the equity has
been deemed not to have
passed to the BEE partners. Accordingly,
the equity interests in subsidiaries
have not been recognised in the group income
statement and balance sheet. |
|
|
|
|
| The effect of this has
been to not recognise the following: |
|
|
|
|
| – Interest in current
year profit that is economically attributable
to BEE partners |
|
51,4 |
|
24,7 |
| – Balance sheet
interest that is economically attributable
to BEE partners |
|
106,3 |
|
96,0 |
|
| Note 11 |
| Basis of preparation |
The prior year financial
statements were prepared in accordance with
SA GAAP. The accounting policies have been
applied consistently with the prior year,
except for the fact that the group has adopted
International Financial Reporting Standards
(IFRS) in the current year.
The financial statements for the year ended
30 September 2006 will be the group's first
consolidated IFRS-compliant financial statements
and hence IFRS 1 "First-time adoption
of IFRS" has been applied in preparing
this announcement. The group's opening balance
sheet on 1 October 2004 and the comparative
information for 2005 have been restated
to comply with IFRS.The same accounting
policies and methods have been followed
in the condensed financial statements.
These condensed financial statements have
been prepared in terms of IAS 34 "Interim
Financial Reporting" as well as in
compliance with IFRS and International Financial
Reporting Interpretations Committee (IFRIC)
Interpretations, the Companies Act of South
Africa,Act 61 of 1973, as amended and the
Listings Requirements of the JSE Limited.
The impact of the IFRS adoption and conversion
is detailed in note 12 to this announcement. |
|
| Note 12 |
|
|
|
|
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| Reconciliation
between SA GAAP and IFRS |
|
|
|
|
|
|
|
| |
Notes |
|
|
30
Sept
2005
R million |
|
|
1
Oct
2004
R million |
| Reconciliation
of profit for the year |
|
|
|
|
|
|
|
| () = reduction
of profit |
|
|
|
|
|
|
|
| As previously reported
under SA GAAP |
|
|
|
719,7 |
|
|
|
| – Profit attributable
to equity holders of Reunert Limited |
|
|
|
709,2 |
|
|
|
| – Profit attributable
to minority interest |
|
|
|
10,5 |
|
|
|
| Adjusted for: |
|
|
|
|
|
|
|
| SA GAAP restatements
|
|
|
|
1,2 |
|
|
|
– IAS 16 –
Property, plant & equipment –
reversal of depreciation on
land |
12.1 |
|
|
0,7 |
|
|
|
| – IAS 38 –
Intangible assets |
12.2 |
|
|
(0,2) |
|
|
|
| – IAS 17 –
Leases |
12.3 |
|
|
—
|
|
|
|
| – IAS 11 –
Construction contracts |
12.4 |
|
|
0,7 |
|
|
|
| IFRS adjustments
|
|
|
|
|
|
|
|
| – IAS 16 –
Property, plant and equipment |
12.1 |
|
|
10,5 |
|
|
|
| – Deferred tax
effect of all adjustments |
|
|
|
(7,4) |
|
|
|
| As reported under IFRS |
|
|
|
724,0 |
|
|
|
| – Profit attributable
to equity holders of Reunert Limited |
|
|
|
713,3 |
|
|
|
| – Profit attributable
to minority interest |
|
|
|
10,7 |
|
|
|
| |
|
|
|
|
|
|
|
| Reconciliation
of total equity |
|
|
|
|
|
|
|
| () = reduction
of total equity |
|
|
|
|
|
|
|
| As previously reported
under SA GAAP |
|
|
|
1
496,0 |
|
|
1 022,8 |
| – Equity attributable
to equity holders of Reunert Limited |
|
|
|
1
453,5 |
|
|
983,1 |
| – Minority interest |
|
|
|
42,5 |
|
|
39,7 |
| Adjusted for: |
|
|
|
|
|
|
|
| SA GAAP restatements
|
|
|
|
5,8 |
|
|
4,6 |
– IAS 16 –
Property, plant and equipment –
reversal of depreciation on
land |
12.1 |
|
|
5,6 |
|
|
4,9 |
| – IAS 38 –
Intangible assets |
12.2 |
|
|
0,6 |
|
|
0,8 |
| – IAS 17 –
Leases |
12.3 |
|
|
(1,5) |
|
|
(1,5) |
| – IAS 11 –
Construction contracts |
12.4 |
|
|
1,1 |
|
|
0,4 |
| IFRS adjustments
|
|
|
|
|
|
|
|
| – IAS 16 –
Property, plant and equipment |
12.1 |
|
|
138,3 |
|
|
127,8 |
| – Deferred tax
effect of all adjustments |
|
|
|
(35,4) |
|
|
(28,0) |
| As reported under IFRS |
|
|
|
1
604,7 |
|
|
1,127,2 |
| – Equity attributable
to equity holders of Reunert Limited |
|
|
|
1
561,7 |
|
|
1,087,2 |
| – Minority interest |
|
|
|
43,0 |
|
|
40,0 |
|
|
|
|
|
|
|
|
| The
effect on basic earnings per share and headline
earnings per share is an increase of 2,5
cents. |
|
| |
|
| 12.1 |
IAS 16 –
Property,plant and equipment |
| |
The useful lives,
residual values, capitalisation of
subsequent expenditure and componentisation
of property, plant and equipment have
been assessed and resulted in a substantial
adjustment to the group’s carrying
amount of property, plant and equipment.
The useful lives and residual values
of property, plant and equipment will
be reassessed annually. |
| |
|
| 12.2 |
IAS 38 –
Intangible assets |
| |
Intangible assets
consisting of computer software and
a customer list have been separated
from property, plant and equipment.The
depreciation on these intangible assets
is now reflected as amortisation of
intangible assets in the income statement. |
| |
|
| 12.3 |
IAS 17 –
Leases |
| |
Income and expenses
under operating leases with fixed
escalation clauses are now recognised
on a straight-line basis in line with
Circular 7/2005 issued by The South
African Institute of Chartered Accountants
(SAICA). Previously operating lease
income and expenses were recognised
on a cash basis. A finance lease has
also been capitalised. |
| |
|
| 12.4 |
IAS 11 –
Construction contracts |
| |
The group’s
accounting policy on the recognition
of contract revenue and contract costs
have been aligned with IAS 11 to recognise
contract revenue and contract costs
by reference to the stage of completion
of the contract at the balance sheet
date. |
|
| Note 13 |
| Restatement |
| The group has previously
recorded discount to customers as an expense.The
group now accounts for discount to customers
as part of revenue in terms of Circular
9/2006 issued by SAICA.The prior year revenue
and other expenses have been restated to
reflect the change.The adjustment has no
impact on profit or the balance sheet. |
|
| Effect
on the income statement: |
2005
R million |
| Reduction in revenue |
25,3 |
| Decrease in other expenses |
(25,3) |
|
| Note 14 |
| Unconsolidated
subsidiary |
| The financial results
of Cafca Limited (Cafca), a subsidiary incorporated
in Zimbabwe, have not been consolidated
in the group results as the directors believe
there is a lack of control as defined in
IAS 27 “Consolidated and Separate
Financial Statements”, and the amounts
involved are not material. |
| Note 15 |
| Acquisitions |
| In March 2006, various
assets of Dynatrack were purchased for R4,3
million and combined into the business of
Acuo.Also in March 2006, the assets and
liabilities of Black Dot IT company were
purchased for R2,1 million (including R0,1
million cash) and combined into the business
of Nashua Mobile. In the opinion of the
directors the disclosure requirements of
IFRS 3 are not warranted in this announcement
to shareholders due to the immateriality
of these acquisitions. |
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