| 1. |
Basis of preparation |
|
This preliminary report has been prepared and presented in accordance with IAS34: Interim Financial
Reporting, the Companies Act, No. 61 of 1973 (as amended) and is derived from a set of Annual
Financial Statements that are in compliance with International Financial Reporting Standards (IFRS).
The accounting policies used in the preparation of these results are consistent in all material respects
with those used in the annual financial statements for the year ended 30 June 2006 except for
those listed below. The condensed financial statements have been prepared under the historic cost
convention, except for the revaluation of certain investments and investment property.
There are no standards that are currently in issue but not yet effective which would result in a change
in accounting policy.
The Group’s 2007 annual financial statements were audited by the Group’s external auditors, Deloitte
& Touche, whose unqualified audit opinion is available for inspection at the company’s registered
office. |
| |
|
Change in accounting policy |
|
During the year the company changed its accounting policy for the valuation of investment property
from depreciated historic cost to fair value. Management judges that this policy provides reliable
and more relevant information and is in accordance with the international trends towards fair value
accounting.
The effect of the change in accounting policy is as follows: |
|
R millions |
2007 |
2006 |
|
Decrease in depreciation costs |
– |
4,9 |
|
Fair value adjustment |
253 |
(4,9) |
|
Taxation effect |
(25) |
– |
|
Net increase in profit |
228 |
– |
| 2. |
Earnings from discontinued operations |
|
|
|
On 31 March 2007 the Group disposed of its Foundries business for R333 million. The comparative numbers also include the disposal of Criterion Equipment, a forklift truck distribution business. |
|
R millions |
30.6.07 |
Restated
30.6.06 |
|
Earnings from the discontinued operations are analysed as follows: |
|
|
|
(Loss)/profit on disposal/closure |
(61) |
16 |
|
Earnings after taxation for the period |
13 |
43 |
|
|
(48) |
59 |
|
Earnings after taxation for the period is analysed as follows: |
|
|
|
Revenue |
715 |
868 |
|
Earnings before interest and depreciation |
68 |
123 |
|
Depreciation |
(42) |
(41) |
|
Earnings before interest, exceptional items and taxation |
26 |
82 |
|
Exceptional items |
– |
(7) |
|
|
26 |
75 |
|
Net interest expense |
(9) |
(15) |
|
Earnings before taxation |
17 |
60 |
|
Taxation |
(4) |
(17) |
|
Earnings after taxation |
13 |
43 |
|
Included in the 2007 cash flow statements are the following which relates to the discontinued operation: |
|
R millions |
30.6.07 |
30.6.06 |
|
Cash flow from operating activities |
(5) |
88 |
|
Cash flow from investing activities |
(24) |
(65) |
|
Cash flow from financing activities |
(39) |
18 |
|
Net (decrease)/increase in cash and cash equivalents |
(68) |
41 |
|
The fair value of assets sold and liabilities released are: |
|
|
|
Net assets |
555 |
132 |
|
Net liabilities |
(222) |
(39) |
|
Proceeds received |
333 |
93 |
|
Cash balances in business |
(1) |
(45) |
|
|
332 |
48 |
| 3. |
Headlease and other property activities |
14 |
4 |
|
Provision released to income statement |
– |
14 |
|
Property fair value adjustment |
253 |
– |
|
Settlement of structured finance liability |
(261) |
(4) |
|
Other property activities |
22 |
(6) |
| 4. |
Post balance sheet event |
|
|
| |
The Group has reached agreement with Clough Limited (“Clough”) and the Clough Family (McRae)
on a recapitalisation package, including support for strategic vessel acquisition. Key aspects of the
transaction are: |
| |
| – |
The agreed price for the total transaction is A$36.8 cents per share. |
| – |
McRae will sell to Murray & Roberts 3% of issued shares (15.3 million shares). |
| – |
Murray & Roberts will underwrite a Rights Issue to raise about A$40 million. |
| – |
McRae will cede all its Rights Issue rights in the A$40 million raising to Murray & Roberts and
Murray & Roberts will take up its own rights |
| – |
McRae will sell its convertible notes to Murray & Roberts including the outstanding coupons for
A$10.2 million. |
|
| |
The estimated total cash outflow is R290 million. |
| |
The consequence (where certain transactions are subject to Clough shareholder approval) is that
Murray & Roberts reaches more than 60% ownership in Clough within 2 years. The Group will
consolidate Clough into its accounts from 1 July 2007. |
Financials