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RAR
RAR
RAR - Rare Holdings - Reviewed results for the six months ended 31 December 2007
Rare Holdings
(Incorporated in the Republic of South Africa)
(Registration number 2002/025247/06)
Share code: RAR ISIN: ZAE000092714
("Rare" or "the Group")
Reviewed results for the six months ended 31 December 2007
Revenue up by 63%
Profit after tax up by 14%
Headline earnings up by 224%
CONDENSED INCOME STATEMENT
Reviewed Reviewed Audited
six months six months 12 months
December December June
2007 2006 2007
R`000 R`000 R`000
Revenue 218 928 134 058 317 772
Cost of sales (162 852) (99 390) (234 972)
Gross profit 56 076 34 668 82 800
Other income 484 3 880 3 007
Operating expenses (42 462) (24 510) (57 692)
Investment income 13 9 31
Finance costs (4 074) (3 337) (6 521)
Profit before tax 10 037 10 710 21 625
Income tax expense (2 722) (4 274) (5 577)
Profit for the year 7 315 6 436 16 048
Attributable to:
Equity holders of the group 9 008 2 761 14 010
Minority interest (1 693) 3 675 2 038
Basic and diluted earnings per
share
Profit attributable to equity 9 008 2 761 14 010
holders of Rare Holdings Limited
Weighted average number of 88 850 24 264 49 368
ordinary shares in issue
Earnings per ordinary share - 10,1 11,4 28,4
cents (basic and diluted)
Headline earnings per share of 9 008 2 761 14 010
Rare Holdings Limited
Loss/(profit) on disposal of 3 17 (3)
fixed assets
Headline earnings attributable 9 011 2 778 14 007
to ordinary shareholders
Headline earnings per share - 10,1 11,5 28,4
cents
CONDENSED CASH FLOW STATEMENT
Reviewed Reviewed Audited
six months six months 12 months
December December June
2007 2006 2007
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated from/(used in) 8 747 (35 422) (46 477)
operations
Interest income 13 9 31
Finance costs (4 074) (3 337) (6 521)
Tax paid (1 423) (1 023) (1 811)
Net cash from operating 3 263 (39 773) (54 778)
activities
Cash flows from investing -
activities
Purchase of property, plant and (17 002) (5 106) (11 808)
equipment
Sale of property, plant and - - 461
equipment
Purchase of intangible assets (121) (69) (106)
Scrapping of intangible assets - - (17)
Loans repaid to (1 406) - -
subsidiaries/shareholders
Purchase of financial assets (1 178) - (116)
Net cash from investing (19 707) (5 175) (11 586)
activities
Cash flows from financing
activities
Proceeds on share issue - - 887
Proceeds on share issue - - - 71 711
premium
Proceeds from other financial 25 652 382 10 006
liabilities
Repayment of vendor loan - (169) (32 639)
Proceeds from shareholder`s loan - 1 686 3 038
Dividends paid - - (185)
Net cash from financing 25 652 1 899 52 818
activities
Total cash movement for the 9 208 (43 049) (13 546)
period
Cash at the beginning of the (8 686) 4 860 4 860
period
Effect of exchange rate 401 (148) -
movements
Total cash at end of the period 923 (38 337) (8 686)
CONDENSED STATEMENT OF CHANGES IN EQUITY
Reviewed Reviewed Audited
six months six months 12 months
December December June
2007 2006 2007
R`000 R`000 R`000
Opening balance 119 419 28 290 28 290
Changes in equity
Profit for the year 7 315 6 435 16 048
Issue of shares - - 75 253
Share issue costs - - (2 725)
Treasury shares - - (510)
Foreign currency revaluation 401 (148) 10
reserve
Revaluation of property - - 3 082
Dividends - - (184)
Business combinations - - 155
Total changes 7 716 6 287 91 129
Closing balance 127 135 34 577 119 419
Comprising of:
Share capital 885 0,1 885
Share premium 71 713 - 71 713
Foreign currency translation 214 (148) 9
reserve
Revaluation reserve 1 881 - 1 881
Retained income 54 074 17 074 45 067
Minority interest (1 632) 17 651 (136)
Total equity 127 135 34 577 119 419
CONDENSED SEGMENTAL INFORMATION -
PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
for the six months ending 31 December 2007
Energy Water Chemicals Other Total
External sales 150 839 61 226 42 250 260 254 575
Inter-segmental (34 830) (356) (461) - (35 647)
sales
Total revenue 116 009 60 870 41 789 260 218 928
Segment results 12 885 3 137 1 253 (3 177) 14 098
SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
for the six months ending 31 December 2006
Energy Water Chemicals Other Total
External sales 101 886 28 051 7 254 - 137 192
Inter-segmental (3 134) - - - (3 134)
sales
Total revenue 98 753 28 051 7 254 - 134 058
Segment results 14 031 1 832 208 (2 031) 14 039
CONDENSED BALANCE SHEET
Reviewed Reviewed Audited
six months six months 12 months
December December June
2007 2006 2007
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 39 220 14 469 24 111
Goodwill 35 578 29 946 35 578
Intangible assets 2 114 2 049 1 993
Other financial assets 1 339 256 372
Deferred taxation 2 259 256 226
80 510 46 976 62 280
Current assets
Inventories 89 381 51 868 72 888
Trade and other receivables 79 871 46 062 56 995
Current taxation receivable 3 - 4
Other financial assets 211
Cash and equivalents 4 034 145 1 211
173 500 98 075 131 098
Total assets 254 010 145 051 193 378
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity
holders of the group
Share capital 72 598 0,1 72 598
Reserves 2 095 (148) 1 243
Retained income 54 074 34 724 45 067
128 767 34 576 118 908
Minority interest (1 632) 0,8 511
Total equity 127 135 34 577 119 419
LIABILITIES
Non-current liabilities
Loans from minority 1 980 129 3 386
shareholders in subsidiaries
Other financial liabilities 36 906 2 038 9 944
Operating lease liability 130 48 117
Deferred taxation 1 887 191 477
Vendor loan - 32 469 -
40 903 34 875 13 924
Current liabilities
Loans from shareholders 192 2 098 192
Trade and other payables 74 633 31 500 42 289
Other financial liabilities 2 114 1 707 3 424
Current taxation payable 5 582 1 799 3 661
Provisions 340 13 572
Bank overdraft 3 111 38 482 9 897
85 973 75 599 60 035
Total liabilities 126 876 110 474 73 959
Total equity and liabilities 254 010 145 051 193 378
NOTES
Basis of preparation
The interim financial information for the half year ended 31 December 2007 has
been prepared in accordance with IAS34, "Interim financial reporting". The
interim financial report should be read in conjunction with the annual financial
statements for the year ended 30 June 2007.
Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 30 June 2007, as described in the annual
financial statements for the year ended 30 June 2007.
IFRS 7, "Financial instruments: Disclosures", and IAS 1,"Amendments to capital
disclosures" are effective for annual periods beginning on or after 1 January
2007. The Group will apply the disclosure requirements of the said standards in
the annual financial statements for year ended 30 June 2008.
Dividends
No dividends were declared or paid to shareholders during the half year under
review.
Commentary
Financial Results
Group revenue for the six months ended 31 December 2007 increased by 63% to R219
million (2006: R134 million) and gross profit by 62% to R56,1 million (2006:
R34,7 million). Attributable net profit amounted to R9 million compared with
R2,8 million for the previous year.
Cash generated from operating activities improved substantially largely due to
enhanced working capital management and increased profits. The once off impact
through the company`s strategic purchasing objectives in developing its Chinese
supply base, requiring up-front payments, has now been absorbed.
Headline earnings per share at 10,1 cents (2006: 11,5 cents) declined as a
consequence of the weighted number of shares in issue increasing by some 3,6
times in the transition of the Group from a private to a listed company.
The increase in plant and equipment to R39 million, from R24 million as at the
end of the previous financial year was largely due to the purchase of a property
which is intended to house the logistical activities of all divisions.
There has been no change in RARE`s dividend policy, and as such, no dividends
have been declared.
Review of Operations
RARE is a distributor and manufacturer of piping and related products covering
the entire fluid conveyance cycle, across all sectors. Its three divisions are
focused on the energy, water and chemical markets respectively, and cover both
trading and manufacturing. RARE is represented in Angola through a partnership
with a local Angolan enterprise.
The success of the Xtender programme, which provides enhanced supply chain and
asset management initiatives within the Group`s target market, is reflected in
the growth across all divisions.
RARE Energy continues to generate consistent growth, with revenue increasing by
48% over the comparable period. Projected infrastructure spend within both the
Power Generation and Petrochemical sectors bodes well for the continued growth
of this division.
RARE Water (118%) and RARE Chemicals (482%) have shown gratifying growth,
reconfirming the value in the acquisition of these businesses. Growth has been
organic, and with the continued drive in the development of Xtender, their
positive contribution to the company will be underpinned, particularly through
sustainable annuity revenue streams. We continue to tweak our business model
from a commodity to a service to a solution driven focus.
RARE Angola has attained operational status, and is now poised to benefit from
economies of scale due to business infrastructure investments made in the first
six months of this financial year. It is recognised that with current Oil and
Gas exploration activities positively boosted by the high oil price, this
investment augurs well for the future.
Current compromises through power rationing do not pose a material threat to the
business, in operational capacity or market prospects. On the contrary, the
Xtender initiatives incorporate strategic growth opportunities within the
current energy crisis.
Prospects
All divisions are performing to expectations and RARE remains confident in
achieving the earnings forecast as per the listing prospectus.
On behalf of the board
DMJ Ncube DE Scheepers
Chairman CEO
20 March 2008
Directors:
DMJ Ncube* (Chairman),
S Pather*, KC van Heerden,
DE Scheepers (CEO), PJ Willemse (FD),
*Non-executive director
Registered office:
35 Potgieter Street
Alrode
Johannesburg
(PO Box 124186, Alrode, 1451)
Transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107)
Reporting accountants:
Greenwoods
Sponsor:
PSG Capital (Pty) Ltd
Date: 20/03/2008 08:51:48 Produced by the JSE SENS Department.
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