| Mon 8 Sep 2008, 17:13 | | RAR - Rare Holdings Limited - Audited Abridged Financial Results for the 12 |
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RAR
RAR
RAR - Rare Holdings Limited - Audited Abridged Financial Results for the 12
Months ended 30 June 2008
Rare Holdings Limited and its subsidiaries
(Incorporated in the Republic of South Africa)
(Registration number 2002/025247/06)
Share code: RAR ISIN: ZAE000092714
("Rare" or "the Group")
AUDITED ABRIDGED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 30 JUNE 2008
Revenue up 42%
Headline earnings up 75%
EBITDA before minorities up 40%
CONSOLIDATED BALANCE SHEET
Audited Audited
12 months 12 months
June 2008 June 2007
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 55 587 24 111
Goodwill 35 578 35 578
Intangible assets 8 407 1 993
Investment in associate 1 -
Other financial assets 455 372
Deferred taxation 3 099 226
103 127 62 280
Current assets
Inventories 102 877 72 888
Loan to associate 108 -
Other financial assets 1 669 -
Trade and other receivables 150 135 56 995
Current taxation receivable - 4
Cash and cash equivalents 28 649 1 211
283 438 131 098
Total assets 386 565 193 378
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders of
parent
Share capital 72 598 72 598
Reserves 3 157 1 243
Retained income 69 611 45 067
145 366 118 908
Minority interest (3 887) 511
141 479 119 419
LIABILITIES
Non-current liabilities
Loans from minority shareholders in 2 389 3 386
subsidiaries
Other financial liabilities 25 937 9 944
Operating lease liability 130 117
Deferred tax 1 802 477
30 258 13 924
Current liabilities
Loans from shareholders - 192
Trade and other payables 121 116 42 289
Other financial liabilities 74 147 3 424
Current tax payable 9 775 3 661
Provisions 975 572
Bank overdraft 8 815 9 897
214 828 60 035
Total liabilities 73 959
Total equity and liabilities 386 565 193 378
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
R`000 R`000
Group
Balance at 1 July 2007 119 418 28 290
Changes in equity
Profit for the year 21 470 16 048
Issue of shares 75 253
Share issue costs (2 725)
Treasury shares (510)
Foreign currency revaluation reserve (2 295) 10
Revaluation of property 2 886 3 082
Dividends (184)
Business combinations 155
Total changes 22 061 91 128
Balance at 30 June 2008 141 479 119 419
CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
12 months 12 months
June 2008 June 2007
R`000 R`000
Cash flows from operating activities
Cash generated from /(used in) operations 64 046 (46 477)
Interest income 140 31
Dividends received - -
Finance costs (9 728) (6 521)
Tax paid (1 930) (1 811)
Net cash from operating activities 52 528 (54 778)
Cash flows from investing activities
Purchase of property, plant and equipment (31 825) (11 808)
Sale of property, plant and equipment 35 461
Purchase of other intangible assets (6 603) (106)
Sale of other intangible assets - (17)
Loans advanced to group companies (108) -
Sale of financial assets 1 125 -
Purchase of investment in associate (1) -
Purchase of other financial assets (2 876) (116)
Net cash from investing activities (40 253) (11 586)
Cash flows from financing activities
Proceeds on share issue 887
Proceeds on share issue-premium 71 711
Proceeds of other financial liabilities 22 962 10 006
Repayment of other financial liabilities (6 063) -
Movement in vendor loans - (32 639)
Repayment of shareholders` loans (1 188) 3 038
Dividends paid 185
Net cash from financing activities 15 711 52 818
Total cash movement for the period 27 986 (13 546)
Effect of exchange rate movement on cash 534 -
balances
Cash at the beginning of the period (8 686) 4 860
Total cash at end of the period 19 834 (8 686)
CONSOLIDATED INCOME STATEMENT
Audited Audited
12 months 12 months
June 2007 June 2007
R`000 R`000
Revenue 452 214 317 772
Cost of sales (324 782) (234 972)
Gross profit 127 432 82 800
Other income 6 620 3 007
Operating expenses (95 698) (57 692)
Investment income 140 31
Finance costs (9 727) (6 521)
Profit before tax 28 766 21 625
Income tax expense (7 296) (5 577)
Profit for the year 21 470 16 048
Attributable to:
Equity holders of the parent 24 544 14 010
Minority interest (3 074) 2 038
Basic earnings per share - cents
Profit attributable to equity holders of the 24 544 14 010
parent
Weighted average number of ordinary shares 88 750 49 368
in issue
Earnings per ordinary share 27,6 28,4
Headline earnings per share - cents
Profit attributable to ordinary shareholders 24 544 14 010
Loss/(Profit)/ on disposal of property, 2 (3)
plant and equipment
Headline earnings attributable to ordinary 24 546 14 007
shareholders
Headline earnings per share 27,6 28,4
CONDENSED SEGMENTAL INFORMATION -
PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
for the twelve months ending 30 June 2008 (R`000)
Energy Water Chemicals
Total sales 286 494 154 071 93 200
Inter-segmental sales (78 988) (5 580) (25)
External revenue 207 506 148 491 93 175
Segment results 23 710 11 227 10 132
Angola Investment/ Total
holding
Total sales 3 043 - 536 808
Inter-segmental sales - (84 594)
External revenue 3 043 - 452 215
Segment results (7 556) 836 38 349
CONDENSED SEGMENTAL INFORMATION -
PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
for the twelve months ending 30 June 2007 (R`000)
Energy Water Chemicals
Total sales 231 115 70 670 34 279
Inter-segmental sales (17 605) (3 484) -
External revenue 213 510 67 186 34 279
Segment results 19 798 4 174 7 137
Angola Investment/ Total
holding
Total sales 2 797 - 338 861
Inter-segmental sales - - (21 089)
External revenue 2 797 - 317 772
Segment results (4 444) - 28 115
NOTES
HEADLINE EARNINGS PER SHARE
Headline earnings per share at 27,7 cents (2007: 28,4 cents) declined as a
consequence of the weighted average number of shares in issue in 2007 increasing
by some 3,6 times in the transition of the group from a private to a listed
company.
However, based on the assumption that the restructure of the company, as fully
detailed in the 2007 listing prospectus, had been effective for the full
financial year ending June 2007, the headline earnings per share would have been
21 cents in 2007.
ACCOUNTING POLICIES
Basis of preparation of financial statements:
The financial statements have been prepared in accordance with the recognition
and measurement requirements of International Financial Reporting Standards
(IFRS) and IAS 34. During the current year, RARE adopted IFRS 7 - Financial
Instruments: Disclosure and the consequential amendments to IAS1 - Presentation
of Financial Statements.
The impact of the adoption of IFRS 7 has been to expand the disclosures provided
in the group`s financial statements regarding the group`s financial instruments
and management of capital. These new statements have not had an impact on the
results as reported. The accounting policies are consistent with those of prior
year.
DIVIDENDS
No dividends were declared or paid to shareholders during the year under review.
COMMENTARY
PROFILE
RARE`s strategy is centred on the design, manufacture, marketing and
distribution of Fluid Conveyance products and systems. Significant value is
added to the supply chain through the provision of complementary products and
solutions.
STRATEGIC OVERVIEW
RARE continues to enjoy strong earnings through its robust business plan that
extends beyond the supply of products, and focuses on solutions and
infrastructure management. As a group, RARE continues to seek markets higher up
the value chain, moving more of its service and product offerings into the
provision of solutions and infrastructure management.
The increased and continuing infrastructure spend in the energy, water and
mining sectors provides RARE with the opportunity to expand its product and
service offering and to make its next evolutionary step to the management of
pipeline infrastructure. This strategy places RARE`s various divisions at the
forefront of their particular sectors. RARE`s approach diversifies its sources
of revenue and increases annuity income.
FINANCIAL RESULTS
RARE`s financial performance has achieved its forecast in the pre-listing
statement of February 2007.
AUDITED FORECAST
2008 (Rm) 2008 (Rm)
Revenue 452,2 405,1
Profit attributable to equity
shareholders
24,5 24,1
HEPS 27,6 cents 27,1 cents
Revenue at R452,2 million reflects growth of 42% (2007: R317,7 million). This
has been achieved through aggressive organic growth within the business. The
success of Xtender, the group`s value based infrastructure management
initiative, is being realised through synergies within the various divisions,
allowing for optimisation of RARE`s brand and product range.
Of significance is the 54% improvement in gross profit at R127,4 million (2007:
R82,8 million), which has resulted in reported NPAT attributable to ordinary
shareholders of R24,5 million, a 75% growth over 2007 (R14,0 million).
Operating costs of R95,7 million (2007: R57,7 million) were affected by the
costs of establishing Angola at R9 million (2007: R5,1 million) and the cost of
the relocation of the Alrode based business to RARE`s new logistics operation at
Midvaal, estimated at R1,8 million (2007: nil). These once off costs were
incurred in creating efficiencies and capacity which will lead to considerable
future growth.
Rare auditors are Greenwoods who have issued an opinion on Rare`s financial
statements. A copy of their unqualified report is available for inspection at
the company`s registered office. These summarised financial statements were
derived from the group`s financial statements.
CASH FLOW
The Group has generated positive cash flow from operations, primarily due to
improved credit terms negotiated with its strategic suppliers, in particular the
Chinese.
REVIEW OF OPERATIONS
Revenue growth of RARE Energy at 24% was satisfactory, given the delay in
execution of a number of projected contracts.
RARE Chemical achieved a 172% revenue growth validating the division`s entry
into a solutions based operation. With the realisation of our competency in
pipeline rehabilitation, the groundwork of 2007 is now being realised, placing
RARE as a reputable and innovative player in this fast expanding market.
Similarly, RARE Water has grown in stature with the roll out of the division`s
national footprint, with growth of 117% providing a sustainable platform for
RARE to make further inroads within the infrastructure management opportunities
in the industry.
The establishment of the Angolan operations which commenced in 2006 and 2007
continues to make substantial progress but has only become revenue generating
post 2008 financial year end. This operation incurred operating losses of R7,5
million in 2008 (2007: R4,4 million).
PROSPECTS
RARE remains confident about its prospects and the continued activity in the
infrastructure market bodes well for future business. All divisions including
Angola are performing according to plan as the Xtender programme becomes an
integral part of everyday business. Whilst focused, RARE is diversifying to
access a broader spectrum of the market, both organically and through the
development of innovative technology.
Directors:
DMJ Ncube (Non-executive) - Chairman
KC Van Heerden
DE Scheepers (CEO)
PJ Willemse (FD)
M Meehan (Non-executive)
S Masinga (Non-executive)
AZ Dlamini (Non-executive)
Registered Offices :
22 Old Vereeniging Road, Kliprivier, Midvaal, 1870
Transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107)
Sponsor:
PSG Capital (Pty) Limited
Date: 08/09/2008 17:13:01 Produced by the JSE SENS Department.
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