Financial results

Preliminary profit announcement, reviewed Group results
for the year ended 30 June 2014 and dividend declaration

Notes

Commitments and contingencies

As previously disclosed, legal proceedings have been instituted against Majuba Aviation Proprietary Limited, a subsidiary company of the Group providing aircraft charter services, for which there is insurance cover.

There are no material contingent assets or liabilities at 30 June 2014 in addition to the above.

Capital commitments at 30 June 2014 total R175 million (contracted: R68 million; authorised and not contracted:
R107 million).

Changes in accounting policies

The accounting policies adopted and methods of computation are in terms of International Financial Reporting Standards (“IFRS”) and consistent with those of the previous financial year except for the adoption of new and amended IFRS and IFRIC interpretations which became effective during the current financial year. The application of these standards and interpretations did not have a significant impact on the Group’s reported results and cash flows for the year ended 30 June 2014 and the financial position at 30 June 2014, but will result in additional disclosures.

Fair values of financial instruments

The Group does not fair value its financial assets or liabilities in accordance with quoted prices in active markets or market observables, as there is no material difference between their fair value and carrying value due to the short-term nature of these items. There were no transfers into or out of Level 3 during the period.

Sale of non-controlling interests in Cedar Point Trading 326 Proprietary Limited

As previously reported, the Group sold a 20% stake in Cedar Point Trading 326 Proprietary Limited to two new business partners during the period. This stake was sold at a cost of R14 million, and reduces the Group’s interest in this entity to 80%.

Purchase of non-controlling interests in TopT Ceramics Proprietary Limited

Subsequent to the financial year end, the Group acquired the 20% non-controlling stake held by the previous business partner of TopT Ceramics Proprietary Limited at a cost of R11 million. The Group is currently in the process of identifying new business partners for this business.

Discontinued operations

The Group disposed of the following non-core businesses (date of disposal disclosed in brackets):

–	Cladding Finance Proprietary Limited – the entity used to extend and manage credit to the contractors market (30 September 2013);
–	The seven store CTM retail operation in Australia (31 October 2013); and
–	Allmuss Properties Zambia Limited – a property holding company (31 December 2013).

The results of these businesses have thus been recorded as discontinued operations in these results.
Cladding Finance Proprietary Limited and Allmuss Properties Zambia Limited’s contribution to Group earnings is immaterial, although R4 million profit was realised on the sale of the latter. The sale of the Australian retail operations was concluded via a management buyout, and was preceded by fixed asset impairment and other rationalisation costs totalling R9 million. A further consequence of the sale of the Australia retail operations was the derecognition of deferred assets totalling R8 million, also included in the discontinued operations results.

Staff share scheme

During the year, the Group implemented a share incentive scheme for all employees of the Group and its franchisees in South Africa that had been in the employ of the Group and/or franchise network for a period of three uninterrupted years as at 31 August 2013. As a result 13 million of the Group’s shares were held by qualifying staff members at 30 June 2014 (the shares were previously held by the Italtile Empowerment Trust). The allotment is funded by the Group and the shares are restricted instruments which will vest with employees following a further three years of employment. Until vesting, the shares will continue to be accounted for as treasury shares, although they do have an impact on the diluted weighted average number of shares.

The scheme is classified as an equity settled scheme in terms of IFRS 2, Share-based Payment, and has resulted in a charge of R17 million to the Group’s income (R11 million thereof being a once-off charge for franchisee staff).

Impairment of Australian property

Given the continued restrained economic conditions in Australia, the Group has recorded a further R20 million impairment (2013: R5 million) on Australian property.

				Reviewed	Audited
				year to	year to
				30 June	30 June
				2014	2013


9.	Earnings per share
	Reconciliation of shares in issue (all figures in millions):
	– Total number of shares issued			1 033	1 033
	– Shares held by Share Incentive Trust			(24)	(26)
	– BEE treasury shares			(88)	(88)
	Shares in issue to external parties			921	919
	Share numbers used for earnings per share calculations (all figures in millions):
	– Weighted average number of shares			921	919
	– Diluted weighted average number of shares			929	921

		Total operations		Continuing operations
		Reviewed	Audited	Reviewed	Audited
		year to	year to	year to	year to
		30 June	30 June	30 June	30 June
		2014	2013	2014	2013


	Reconciliation of headline earnings: (Rand millions):
	– Profit attributable to equity shareholders	509	444	529	443
	– Profit on sale of property, plant and equipment	(8)	(13)	(8)	(13)
	– Impairment of Australian property, plant and equipment	29	5	20	5
	Headline earnings	530	436	541	435