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RAR
RAR
RAR - Rare - Unaudited Abridged Financial Results For The 6 Months Ended 31
December 2008
Rare Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/025247/06)
Share code: RAR & ISIN: ZAE000092714
("Rare" or "the Group")
UNAUDITED ABRIDGED FINANCIAL RESULTS
for the 6 months ended 31 December 2008
Revenue up by 66%
Gross profit up by 66%
Profit after tax up by 81%
Earnings per share up by 40%
Headline earnings per share up by 51%
CONSOLIDATED INCOME STATEMENT
Unaudited Reviewed Audited
6 months ended 6 months ended 12 months ended
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
Revenue 362 467 218 928 452 214
Cost of sales (269 245) (162 852) (324 782)
Gross profit 93 222 56 076 127 432
Other income 1 077 484 6 620
Operating expenses (63 520) (40 572) (87 939)
EBITDA 30 779 15 988 46 113
Depreciation and
amortisation (3 738) (1 890) (7 765)
Investment income 85 13 140
Finance costs (8 463) (4 074) (9 722)
Profit before tax 18 663 10 037 28 766
Income tax expense (5 422) (2 722) (7 297)
Profit for the period 13 241 7 315 21 469
Attributable to:
Equity holders of the parent 12 646 9 008 24 544
Minority interest 595 (1 693) (3 074)
Basic earnings per share
Profit attributable
to equity holders
of Rare Holdings Limited 12 646 9 008 24 544
Weighted average
number of ordinary shares in
issue - `000 88 750 88 750 88 750
Earnings per ordinary
share - cents 14,25 10,15 27,66
Headline earnings per share
Profit attributable
to ordinary shareholders 12 646 9 008 24 544
Loss/(profit) on
disposal of property,
plant and equipment
net of taxation 963 3 2
Headline earnings
attributable to
ordinary shareholders 13 609 9 011 24 546
Headline earnings per
share - cents 15,33 10,15 27,66
CONSOLIDATED BALANCE
SHEET
Unaudited Reviewed Audited
as at as at as at
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and
equipment 90 701 39 220 55 587
Goodwill 35 578 35 578 35 578
Intangible assets 7 949 2 114 8 407
Investment in
associate - - -
Other financial assets 11 235 1 339 455
Deferred taxation 2 868 2 259 3 099
148 331 80 510 103 126
Current assets
Inventories 154 250 89 381 102 877
Loan to associate 183 - 108
Other financial assets 1 752 211 1 669
Trade and other
receivables 177 557 79 871 150 134
Current taxation
receivable 172 3 -
Cash and equivalents 39 404 4 034 28 649
373 318 173 500 283 437
Total assets 521 649 254 010 386 563
EQUITY AND LIABILITIES
EQUITY
Equity attributable
to equity
holders of parent
Share capital 72 598 72 598 72 598
Reserves 4 946 2 095 3 157
Retained income 82 256 54 074 69 611
159 800 128 767 145 366
Minority interest (3 357) (1 632) (3 887)
156 443 127 135 141 479
LIABILITIES
Non-current
liabilities
Loans from minority
shareholders
in subsidiaries 2 810 1 980 2 389
Other financial
liabilities 141 219 36 906 25 937
Operating lease
liability 1 378 130 130
Deferred tax 5 001 1 887 1 801
150 408 40 903 30 257
Current liabilities
Loans from
shareholders - 192 -
Trade and other
payables 168 771 74 633 121 115
Other financial
liabilities 38 146 2 114 74 147
Current tax payable 6 380 5 582 9 775
Provisions 795 340 975
Bank overdraft 706 3 111 8 815
214 798 85 972 214 827
Total liabilities 365 206 126 875 245 084
Total equity and
liabilities 521 649 254 010 386 563
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Reviewed Audited
6 months ended 6 months ended 12 months ended
31 December 31 December 30 June
2008 2007 2008
Group R`000 R`000 R`000
Opening balance 141 479 119 419 119 419
Changes in equity
Profit for the period 13 241 7 315 21 469
Foreign currency
revaluation reserve (4 365) 401 (2 295)
Revaluation of
property 6 088 - 2 886
Total changes 14 964 7 716 22 060
Closing balance 156 443 127 135 141 479
Comprising:
Share capital 885 885 885
Share premium 71 713 71 713 71 713
Foreign currency
translation reserve (2 887) 214 (962)
Revaluation reserve 7 833 1 881 4 119
Retained income 82 256 54 074 69 611
Minority interest (3 357) (1 632) (3 887)
Total equity 156 443 127 135 141 479
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Reviewed Audited
6 months ended 6 months ended 12 months ended
31 December 31 December 30 June
2008 2007 2008
R`000 R`000 R`000
Cash flows from
operating activities
Cash generated from
(used in) operations 2 069 8 747 64 038
Interest income 85 13 140
Dividends received - - -
Finance costs (8 463) (4 074) (9 723)
Tax paid (8 295) (1 423) (1 930)
Net cash from
operating activities (14 604) 3 263 52 525
Cash flow from
investing activities
Purchase of property,
plant and equipment (30 367) (17 002) (31 825)
Sale of property,
plant and equipment 36 - 35
Purchase of other
intangible assets (35) (121) (6 603)
Purchase of financial
assets (10 780) (1 178) (2 876)
Sale of financial assets - - 1 125
Net cash from
investing activities (41 146) (18 301) (40 144)
Cash flows from
financing activities
Proceeds from other
financial liabilities 74 936 25 652 22 963
Repayment of other
financial liabilities - - (6 063)
Repayment of
shareholder loan (500) (1 406) (1 297)
Net cash from
financing activities 74 436 24 246 15 603
Total cash movement
for the period 18 686 9 208 27 984
Cash at beginning of
the period 19 834 (8 686) (8 686)
Effect of exchange
rate movements 178 401 536
Total cash at end of
the period 38 698 923 19 834
CONDENSED SEGMENTAL INFORMATION
PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
for the six months ended 31 December 2008
Energy Water Chemicals
External sales 164 187 84 755 70 802
Inter-segmental sales (16 930) - (2 786)
Total revenue 147 257 84 755 68 016
Segment results 14 530 1 923 9 895
Interest expense
Interest income
Income taxes
Net profit for the period
for the six months ended 31 December 2007
Energy Water Chemicals
External sales 150 839 61 226 42 250
Inter-segmental sales (34 830) (356) (461)
Total revenue 116 009 60 870 41 789
Segment results 12 885 3 137 1 253
Interest expense
Interest income
Income taxes
Net profit for the period
for the twelve months ended 30 June 2008
Energy Water Chemicals
External sales 286 494 154 071 93 200
Inter-segmental sales (78 989) (5 580) (25)
Total revenue 207 505 148 491 93 175
Segment results 23 709 11 227 10 132
Interest expense
Interest income
Income taxes
Net profit for the year
Angola Other Total
External sales 62 439 - 382 183
Inter-segmental sales - - (19 716)
Total revenue 62 439 - 362 467
Segment results 772 (79) 27 041
Interest expense (8 463)
Interest income 85
Income taxes (5 422)
Net profit for the period 13 241
for the six months ended 31 December 2007
Angola Other Total
External sales - 260 254 575
Inter-segmental sales - (35 647)
Total revenue - 260 218 928
Segment results - (3 177) 14 098
Interest expense (4 074)
Interest income 13
Income taxes (2 722)
Net profit for the period 7 315
for the twelve months ended 30 June 2008
Angola Other Total
External sales 3 043 - 536 808
Inter-segmental sales - - (84 594)
Total revenue 3 043 - 452 214
Segment results (7 556) 836 38 348
Interest expense (9 722)
Interest income 140
Income taxes (7 297)
Net profit for the year 21 469
NOTES
ACCOUNTING POLICIES
Basis of preparation
This condensed consolidated interim financial information for the six months
ended 31 December 2008 has been prepared in accordance with IAS 34, `Interim
financial reporting`.
The condensed consolidated interim financial information should be read in
conjunction with the annual financial statements for the year ended 30 June
2008, which have been prepared in accordance with IFRS.
Accounting policies
The accounting policies applied are consistent with those of the annual
financial statements for the year ended 30 June 2008, as described in those
annual financial statements.
DIVIDENDS
No dividends were declared or paid to shareholders during the period under
review.
COMMENTARY
PROFILE
RARE provides fluid conveyance solutions within the Mining, Energy, Chemical
and Government sectors. Piping and related products are manufactured,
distributed, installed and commissioned, providing innovative ways to optimise
cost of ownership and total life cycle cost solutions to the customer.
Xtender is a recognised tool for both pipeline maintenance and supply chain
management activities. This programme provides cost reduction solutions to RARE
customers.
Operations are conducted throughout South Africa, Angola, Ghana, Zambia,
Zimbabwe and the DRC.
STRATEGIC OVERVIEW
With the Government highlighting the need for an effective roll-out of
infrastructure spending, Xtender provides an optimum solution for pipeline
maintenance to Municipal and Local Authorities participating in Government`s
infrastructure programme.
With current market conditions placing private sector capital expenditure
activity under strain, the need for an effective and cost efficient process to
maintain pipeline infrastructure integrity offers Xtender additional
opportunities.
FINANCIAL RESULTS
Organic growth of 66% increased Group revenue to R362,5 million (2007: R218,9
million) with gross profit up by 66% to R93,2 million (2007: R56,1 million).
This growth has been achieved through consistent performance in 2008, with
Angola for the first time reporting a positive contribution to operating
profit.
Net cash and cash equivalents of R38,7 million (2007: R1 million) have been
achieved as a result of restructuring both short- and long-term debt.
The EBITDA increased by 93% (2007: 52%) which is indicative of RARE`s capacity
to generate cash.
Earnings per share of 14,25 cents is up by 40% (2007: 10,15 cents) however with
the effect of asset write-offs amounting to R963 000, HEPS increased 51% to
15,33 cents.
OPERATIONAL REVIEW
The momentum of Group performance in 2007 and 2008 has been sustained in the
first half of 2009. Profit margins have been maintained despite difficult
market conditions in a number of sectors. This is due to the resilience of the
Group`s diversified strategy and its positioning in key growth markets such as
infrastructure spend, niche mining applications, petro-chemical and water.
Notwithstanding depressed oil prices resulting in a temporary suspension of a
number of large projects in the petrochemical industry, RARE Energy has
achieved 26,9% revenue growth to R147,3 million (2007: R116,0 million). The
renewal of the Sasol Supply Chain Management contract for a further five years
and a similar contract for three years with the Engen Refinery in Durban has
enabled this division to increase its market share.
The 39.2% revenue increase in RARE Water to R84,8 million (2007: R60,9 million)
has been achieved despite tough market conditions which have been compounded by
volatility in commodity prices and delays in roll out of large projects. Whilst
revenue growth has been achieved, market conditions remain depressed, placing
pressure on margins.
RARE Chemical has shown pleasing results, with Revenue growth of 62,8% at R68,0
million (2007: R41,8 million) proving Xtender a positive contributor to this
business. This has resulted in an exceptional performance in operating income
of R9,9 million, a growth of 690% (2007: R1,3 million).
RARE Angola has for the first time since establishment in 2006 contributed to
operating profit. However, RARE Angola requires further critical mass to achieve
consistent returns and bottom line profitability. Revenue was R62,4 million
(2007 Rnil) despite the sudden drop in crude oil prices over this period. The
Group, together with its strong Angolan business partners is confident that the
risk profile of RARE Angola has been adequately addressed to ensure a
sustainable platform.
PROSPECTS
The South African Government`s commitment to R800 billion in infrastructure
investment over the next three years continues to provide opportunities that
benefit all RARE`s businesses.
RARE remains confident about its future prospects, as its range of products and
services gives it strategically balanced access to the various markets in which
it operates. Demand for the Group`s products and services is expected to
remain strong, despite global economies placing an increased strain on resource
based industries.
POST BALANCE SHEET EVENTS
No significant events have occurred in the period between the reporting date and
the date of this report.
On behalf of the board
DMJ Ncube DE Scheepers
Chairman CEO
9 March 2009
Directors: DMJ Ncube (Non-executive Chairman), KC van Heerden,
DE Scheepers (CEO) PJ Willemse (FD), MG 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)
Designated advisor: PSG Capital (Pty) Limited
Date: 09/03/2009 07:05:02 Produced by the JSE SENS Department.
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