Notes

1.

Basis of preparation

These preliminary summarised consolidated financial statements were 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 2015 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 was prepared using the information as required by IAS 34 – Interim Financial Reporting, and complies with the Listings Requirements of the JSE Ltd and the requirements of the Companies Act, 71 of 2008, of South Africa. This report was compiled under the supervision of NA Thomson CA(SA) (chief financial officer).


The group’s accounting policies, as per the audited financial statements for the year ended 30 September 2015, were consistently applied with those used in the prior year financial statements. These accounting policies comply with IFRS.


R million

2015

2014

2.

Operating profit

Operating profit includes:

– Cost of sales

5 416

5 144

– Other expenses excluding depreciation and amortisation

1 652

1 591

– Other income

31

68

– Realised loss on foreign exchange and derivative instruments

(13)

(27)

– Unrealised gain on foreign exchange and derivative instruments

34

45


R million

2015

2014

3.

Net Interest

Interest income

150

14

Interest expense

(16)

(25)

Other

1

1

Total

135

(10)


4.

Discontinued operation

As announced in the prior year, Nashua Mobile, entered into sale agreements with the mobile network operators, in terms of which it disposed of its subscriber bases. Following the major conditions precedent in the sale agreement being met, including an unconditional approval from the Competition Tribunal on 29 September 2014, the sale was recognised in the prior financial year. The customers were transferred to the purchasers with effect from December 2014.


Arising out of this, the group income statement and related notes, which are for continuing operations only, exclude the results of the Nashua Mobile discontinued operation.


Nashua Mobile is presented in the Nashua segment of the segmental analysis.


The income statement, abridged cash flows and related notes of Nashua Mobile are presented below:

 

Summarised income statement

R million

2015

2014

%
change

Revenue

530

3 348

(84)

EBITDA

45

190

(76)

Profit for the year

42

1 584

(97)


Summarised statement of cash flow

R million

2015

2014

Net cash flows from:

Operating activities

(92)

183

Investing activities

1 789

4

Financing activities

Net cash inflow

1 697

187


Summarised balance sheet

   
The major classes of assets and liabilities of Nashua Mobile at the end of the year were as follows:    

Assets of discontinued operation

51

2 607

Non-current liabilities of discontinued operation

251

Current liabilities of discontinued operation

49

651

R million

2015

2014

5.

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)

165

164

Adjusted by the dilutive effect of unexercised share options granted (millions of shares)

2

2

Weighted average number of shares used to determine diluted basic, headline and normalised headline earnings per share (millions of shares)

167

166

6.

Headline earnings

6.1

Profit attributable to equity holders of Reunert from continuing operations

952

387

Headline earnings are determined by eliminating the effect of the following items from attributable earnings:

Net gain on disposal of property, plant and equipment and intangible assets (after tax charge of R1 million)

(4)

Impairment of goodwill in subsidiaries (2014: after tax charge of Rnil)

246

Impairment of goodwill in equity accounted joint venture (2014: after tax charge of Rnil)

11

Impairment reversal recognised for property, plant and equipment (2014: charge of R1 million)

(2)

Headline earnings from continuing operations

948

642

Profit attributable to equity holders of Reunert from
discontinued operation

42

1 584

Net gain on disposal of business (after tax charge of R18 million) (2014: charge of R264 million)

(22)

(1 397)

Headline earnings from discontinued operation

20

187

Headline earnings

968

829

6.2

Normalised headline earnings

Headline earnings from continuing operations (refer to note 6.1)

948

642

Normalised headline earnings are determined by eliminating the effect of the following items from attributable headline earnings:

Settlement provided in respect of ATC (after a tax credit of Rnil)

81

Economic interest in the settlement provided in respect of ATC attributable to non-controlling interests with outstanding equity-related loan accounts

(8)

Net economic interest in profit attributable to non-controlling interests with outstanding equity-related loan accounts (refer to note 7)

(13)

5

Normalised headline earnings from continuing operations

935

720

Headline earnings attributable to equity holders of Reunert from discontinued operation

20

187

Normalised headline earnings

955

907

R million

2015

2014

7.

Non-controlling interests with outstanding equity-related loan accounts

Where the significant risks and rewards of ownership in
respect of equity interests have not passed to the non-controlling 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 year profit/(loss) that is attributable to all affected non-controlling shareholders

13

(5)


R million

2015

2014

8.

Goodwill

Carrying value at the beginning of the year

649

792

Acquisition of businesses

13

263

Disposals of businesses and subsidiaries

(6)

Goodwill impaired during the year

(246)

Exchange differences on consolidation of foreign subsidiaries

(3)

(2)

Goodwill derecognised with discontinued operation

(158)

Carrying value at the end of the year

653

649


R million

2015

2014

9.

Investments and loans

Loans – at cost

81

76

Investment in insurance cells – at fair value

14

14

Other unlisted investments – at cost

2

Carrying value at the end of the year

95

92


R million

2015

2014

10.

Fair Value classification and measurement

During the year under review, the only financial instruments that the group held at fair value were:

Derivative assets

22

8

Derivative liabilities

7

4

These were classified as Level 2 instruments in the fair value hierarchy and comprise forward exchange contracts and interest rate swaps. The fair value of these derivative financial instruments is calculated using a discounted cash flow model with the major variables being the discount rate and the spot exchange rate. The calculations were performed by major financial institutions.


R million

2015

2014

11.

Long-term borrowings

Total long-term borrowings (including finance leases)1

440

434

Less: short-term portion (including finance leases)

(201)

(9)

239

425

1

Long-term borrowings in respect of the Quince rental book amount to R200 million (2014: R404 million).


12.

Unconsolidated subsidiary

The financial results of Cafca Ltd (Cafca), a subsidiary incorporated in Zimbabwe, have not been consolidated in the group results as the group does not have management control:

  • Reunert does not have a majority vote on the board of directors of Cafca and therefore does not control the board; and
  • The difficult economic circumstances in Zimbabwe have resulted in a major liquidity crisis which renders Reunert’s access to economic benefits from Cafca (e.g. dividends) such that it does not have the ability to affect its variable returns through its powers over Cafca.

The amounts involved are not material to the group’s results. At 30 September 2015, Cafca’s retained earnings amounted to US$14 million (2014: US$12 million).


13.

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.


14.

Events after the reporting date

No events occurred after the reporting date that require additional disclosure or adjustment to the results presented.


15.

Audit opinion

These summarised consolidated financial statements were derived from the group’s consolidated financial statements and are consistent in all material respects with the group’s consolidated financial statements. The directors take full responsibility for the preparation of the summarised consolidated financial statements. The auditors, Deloitte & Touche, issued unmodified audit opinions on the group’s consolidated financial statements and on these summarised consolidated financial statements for the year ended 30 September 2015 and the audit opinions are available for inspection at Reunert’s registered office. The audit was conducted in accordance with the International Standards on Auditing. The auditors’ report does not necessarily report on all information contained in this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy of that report together with the accompanying financial information from the issuers registered office. Any reference to future performance included in this announcement has not been reviewed or reported on by the auditors.