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1. Basis of preparation

The preliminary report has been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the AC 500 standards as issued by the Accounting Practices Board or its successor, Schedule 4 of the Companies Act, No. 61 of 1973 (as amended) and comply with the disclosure requirements of IAS 34: Interim Financial Reporting. The condensed consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain investments and investment property.

The accounting policies used in the preparation of these results are in accordance with IFRS and consistent in all material respects with those used in the audited annual financial statements for the year ended 30 June 2009, except for the following:

IAS 23 (Amendment), Borrowing Costs (effective for accounting periods beginning on or after 1 January 2009): Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset in terms of IAS 23 form part of the cost of the asset and should be capitalised. In prior financial periods borrowing costs were expensed when incurred. This change in accounting policy has no impact on prior financial periods as the amendment is applied prospectively.

IAS 1, as revised in 2007, has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements.

IFRS 8 is a disclosure standard and requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. Following the adoption, the identification of the Group’s reportable segments has changed. The prior year operating segments have been reclassified accordingly.

The auditors, Deloitte & Touche, have issued their opinion on the Group’s financial statements for the year ended 30 June 2010. The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified audit opinion. These summarised provisional financial statements have been derived and are consistent in all material respects with the Group financial statements. A copy of their audit report is available for inspection at the company’s registered office. Any reference to future financial performance included in this announcement has not been reviewed or reported on by the Group’s auditors.

2. Acquisitions

Acquisition of subsidiary
On 14 August 2009, Clough Limited (Clough) acquired a 70% interest in Ocean Flow International LLC (Ocean Flow), a SURF engineering company based in Houston, USA for consideration of US$9,1 million. Ocean Flow has contributed revenue of R73 million and attributable profit of R9 million to Clough.

  R millions 30.6.10  
  Net asset value acquired 22  
  Non-controlling interest* (4)  
  Fair value of net assets acquired 18  
  Goodwill 52  
  Purchase consideration 70  

Goodwill is attributable to Ocean Flow’s position and profitability in the subsea engineering and construction management market, skilled workforce, expertise and synergies expected to arise from the acquisition and is accounted for on a provisional basis.

*Non-controlling interest is measured at the proportionate share of their net identifiable assets.

2.2 Acquisition of associate
On 20 April 2010, Clough Limited (Clough) announced that it had acquired a 31% interest in Forge Group Limited (Forge) and subsequently entered into an alliance with Forge for long-term strategic co-operation that is expected to generate substantial benefits for both companies. At 30 June 2010 the carrying amount of Clough’s investment in Forge was A$51,6 million.
3. Exceptional items
  R millions 30.6.10   30.6.09  
  Property fair value adjustment 101    
  Profit on disposal of investments   20  
  Loss on disposal of land and buildings   (12)  
  Exceptional profit 101   8  
4. Profit from discontinued operations

A decision was taken to dispose of Johnson Arabia LLC, BRC Arabia FZC and BRC Arabia LLC. The Group has identified a buyer for the three businesses and expects the sale to be completed within the next 12 months. The Group has not recognised any impairment losses in respect of the reclassification of assets and liabilities, to assets and liabilities held-for-sale. The prior year includes financial information for Petrosea.

  R millions 30.6.10   30.6.09  
  Revenue 545   2 684  
  Earnings before interest and depreciation 36   314  
  Depreciation and amortisation (31)   (95)  
  Earnings before interest and taxation 5   219  
  Net interest expense (3)   (37)  
  Taxation   12  
  Profit from discontinued operations 2   194  
  Non-controlling interests relating to        
     discontinued operations 1   100  
  Cash flows from discontinued operations        
     include the following:        
  Cash flow from operating activities 72   163  
  Cash flow from investing activities (40)   (363)  
  Cash flow from financing activities (45)   149  
  Net decrease in cash and cash equivalents (13)   (51)  
5. Reconciliation of headline earnings
  R millions 30.6.10   30.6.09  
  Earnings attributable to owners of the parent 1 098   2 018  
  Property fair value adjustments (101)    
  Profit on disposal of subsidiaries (10)    
  Profit on disposal of investments   (20)  
  Loss on disposal of land and buildings   12  
  Other 1    
  Non-controlling interest effects on adjustments 4    
  Taxation effects on adjustments 13    
  Headline earnings 1 005   2 010  
6. Post balance sheet event

The Group received Competition Commission approval on 29 July 2010 for the disposal of investment properties. This had no impact on the financial position of the Group at 30 June 2010.

The directors are not aware of any other matter or circumstance arising since the end of the financial year, not otherwise dealt with in the Group annual financial statements, which significantly affects the financial position at 30 June 2010 or the results of its operations or cash flows for the year then ended.