| Wed 9 Sep 2009, 7:05 | | RAR - Rare Holdings - Audited abridged financial results for the 12 months ended |
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RAR
RAR
RAR - Rare Holdings - Audited abridged financial results for the 12 months ended
30 June 2009 and notice of Annual General Meeting
Rare Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 2002/025247/06)
Share code: RAR
ISIN: ZAE000092714
("Rare" or "the Group")
Revenue up by 74%
Gross profit up by 58%
EBITDA up by 71%
Headline earnings per share up by 12%
AUDITED ABRIDGED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 30 JUNE 2009 AND
NOTICE OF ANNUAL GENERAL MEETING
CONSOLIDATED BALANCE SHEET
Audited Audited
12 months 12 months
ended ended
30 June 30 June
2009 2008
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 82 071 55 587
Goodwill 35 578 35 578
Intangible assets 10 560 8 407
Investment in associate 900 1
Other financial assets 554 455
Deferred taxation 1 645 3 098
Prepayments 1 050 -
132 358 103 126
Current assets
Inventories 163 486 102 877
Loans to associates 1 898 108
Other financial assets 7 405 1 669
Trade and other receivables 200 609 150 135
Current taxation receivable 1 278 -
Prepayments 729 -
Cash and cash equivalents 73 673 28 649
449 078 283 438
Total assets 581 436 386 564
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders of
the parent
Share capital 72 598 72 598
Reserves 6 460 3 157
Retained income 96 319 69 611
175 377 145 366
Minority interest 773 (3 887)
176 150 141 479
LIABILITIES
Non-current liabilities
Loans from minority shareholders in 1 934 2 389
subsidiaries
Other financial liabilities 128 619 25 938
Operating lease liability 102 130
Deferred tax 3 596 1 801
134 251 30 258
Current liabilities
Trade and other payables 223 084 121 114
Other financial liabilities 38 072 74 147
Current tax payable 4 851 9 775
Operating lease liability 93 -
Provisions 1 237 975
Bank overdraft 3 698 8 815
271 035 214 826
Total liabilities 405 286 245 084
Total equity and liabilities 581 436 386 564
CONSOLIDATED INCOME STATEMENT
Audited Audited
12 months 12 months
ended ended
30 June 2009 30 June 2008
R`000 R`000
Revenue 786 949 452 214
Cost of sales (606 331) (337 933)
Gross profit 180 618 114 281
Other income 5 754 7 865
Operating expenses (114 708) (80 318)
Earnings before interest, taxation 71 664 41 828
depreciation and amorisation
(EBITDA)
Depreciation and amortisation (8 647) (3 676)
Investment income 1 410 140
Finance costs (23 041) (9 526)
Profit before tax 41 386 28 766
Income tax expense (12 435) (7 296)
Profit for the year 28 951 21 470
Attributable to:
Equity holders of the parent 26 708 24 544
Minority interest 2 243 (3 074)
Basic and diluted earnings per share
- cents
Profit attributable to equity 26 708 24 544
holders of Rare Holdings Limited
Weighted average number of ordinary 88 750 88 750
shares in issue
Basic and diluted earnings per 30,09 27,66
ordinary share
Headline earnings per share - cents
Profit attributable to ordinary 26 708 24 544
shareholders
Loss on disposal of fixed assets 787 2
Headline earnings attributable to 27 495 24 546
ordinary shareholders
Headline earnings per share 30,98 27,66
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
R`000 R`000
Group
Balance at 1 July 2008 141 479 119 418
Changes in equity
Profit for the year 28 951 21 470
Foreign currency revaluation reserve 1 099 (2 295)
Revaluation of property 4 621 2 886
Total changes 34 671 22 061
Balance at 30 June 2009 176 150 141 479
CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
12 months 12 months
ended ended
30 June 2009 30 June 2008
R`000 R`000
Cash flows from operating activities
Cash generated from/(used in) 13 850 63 841
operations
Interest income 1 056 140
Dividends received 354 -
Finance costs (23 041) (9 526)
Tax paid (17 521) (1 930)
Net cash from operating activities (25 302) 52 525
Cash flows from investing activities
Purchase of property, plant and (28 022) (31 825)
equipment
Sale of property, plant and 638 35
equipment
Purchase of other intangible assets (3 763) (6 603)
Loans advanced to group companies (1 021) (108)
Purchase of financial assets (7 504) (2 876)
Sale of financial assets - 1 125
Net cash from investing activities (39 672) (40 252)
Cash flows from financing activities
Proceeds from other financial 116 041 22 963
liabilities
Repayment of other financial - (6 063)
liabilities
Repayment of shareholder`s loan (455) (1 189)
Net cash from financing activities 115 586 15 711
Total cash movement for the period 50 612 27 984
Effect of exchange rate movement on (470) 536
cash balances
Cash at the beginning of the period 19 834 (8 686)
Total cash at the end of the period 69 976 19 834
CONDENSED SEGMENTAL INFORMATION
PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
for the twelve months
ended 30 June 2009
R`000 Energy Water Chemicals
External sales 382 450 515 212 247 400 112 537 057
Inter-segmental sales (101 119 897) (7 249 845) -
Total revenue 281 330 618 204 997 555 112 537 057
Segment results 31 096 979 16 000 443 15 009 272
for the twelve months
ended 30 June 2008
R`000 Energy Water Chemicals
External sales 286 494 203 154 071 434 93 199 757
Inter-segmental sales (78 988 375) (5 580 216) (25 315)
Total revenue 207 505 828 148 491 218 93 174 442
Segment results 23 710 103 11 226 906 10 131 607
for the twelve months
ended 30 June 2009
R`000 Angola Investment Total
External sales 188 083 990 2 608 000 897 926 962
Inter-segmental sales - (2 608 000) (110 977
742)
Total revenue 188 083 990 - 786 949 220
Segment results 3 532 168 (2 621 858) 63 017 004
for the twelve months
ended 30 June 2008
R`000 Angola Investment Total
External sales 3 042 919 - 536 808 313
Inter-segmental sales - - (84 593
906)
Total revenue 3 042 919 - 452 214 407
Segment results (7 556 384) 836 350 38 348 582
NOTES
BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS), IAS 34 and the Companies Act of South
Africa. These accounting policies are consistent with the previous period.
DIVIDENDS
No dividends were declared or paid to shareholders during the year under review.
SECURITISATION TRANSACTION
The group implemented a securtisation transaction in October 2008. Term funding
of R100 000 000 was secured from the capital markets based on the strength of
its debtors which was independently rated as zaAA.
COMMENTARY
PROFILE
RARE supplies a comprehensive range of products and services to the fluid
conveyance industry. Services include design, manufacture, installation and
maintenance of pipelines and process plants across all sectors of industry
(particularly petrochemicals, mining and water) and local government. Products
include pipes, fittings and valves in materials such as steel, plastic and
ductile iron.
Sixty six percent of business is generated in South Africa and sub-Saharan
Africa contributes the balance; the bulk of which is generated through the
Angolan operation, where RARE has significant supply and logistical operations
serving the oil and gas industries as well as the water and sewerage utilities.
STRATEGIC OVERVIEW
RARE`s focus on the development of solutions for repair and renovation of ageing
pipelines is proving beneficial. Our use of trenchless technology, one of the
initiatives whereby pipelines are repaired and maintained in situ is being
expanded and we continue to receive significant interest in this product.
Technology in the form of pipe bursting and the "cured in place" solutions are
also being rolled out to further these repair and renovation opportunities.
RARE is also focused on power saving solutions and has developed products which
provide a gateway to previously unrecognised markets for group products.
Because a high proportion of RARE`s income has been dependent on project work,
we are working at building business that earns annuity income.
All of the above activities are conducted under our Xtender systems and brand,
which are designed to achieve better, more efficient and longer utilisation of
our customers` pipelines and process plants.
FINANCIAL RESULTS
RARE has once again been able to produce significant growth. Despite the
economic and financial difficulties of the period, RARE has achieved 74% growth
in revenue at R786,9 million (2008: R452,2 million). Gross profit is up by 58%
at R180,6 million (2007: R114,3 million) and operating costs before depreciation
and amortisation of R114,7 million increased by 43% (2008: R80,3 million).
EBITDA improved by 71% to R71,7 million (2008: R41,8 million). We had to make
additional investment in infrastructure, people resource and working capital to
achieve these higher levels of activity. As a consequence, higher depreciation
and the increased cost of financing prevented us from converting this
improvement into headline earnings, which were restricted to 12% at R27,5
million (2008: R24,5 million).
Increased trading activity led to higher demands on cash flow, which was
financed by additional medium-term facilities. RARE enjoyed a build up of cash
at year-end but this is committed to operations (particularly in Angola) and
growth in the new year.
RARE`s auditors are Greenwoods who have issued an unmodified opinion on RARE`s
financial statements. A copy of their report is available for inspection at the
company`s registered office. These summarised financial statements were derived
from the group`s financial statements.
REVIEW OF OPERATIONS
RARE Energy`s growth of 36% at R281,3 million (2008: R207,5 million) continues
to play a major part in group revenue. Budgeted sales were not realised as a
result of continued delays in capex projects held back by the dramatic collapse
in commodity prices during 2008.
RARE Water`s drive to develop infrastructure maintenance opportunities was
sustained resulting in revenue growth of 26% to R205 million (2007: R148,5
million).
RARE Chemical was able to successfully complete a number of installation
projects in both the DRC and Zambia, resulting in revenue growth of 14% at
R112,5 million (2008: R93,2 million).
It is pleasing to report that RARE Angola was able to generate revenue of R188,1
million (2008: R3,0 million) for the year and turned profitable. With the
realisation of critical mass in this operation, we anticipate a significant
improvement in the profit contribution from this business.
DIRECTORS
In March 2009 Ms KC van Heerden resigned from the main board of RARE. Karin`s
participation as a board member and executive commercial director will be
missed, and I thank her as a founding member of the business for her
contribution to the success of RARE.
PROSPECTS
The consolidation of RARE Park in Kliprivier as the group`s logistical hub is
progressing well and although the present levels of activity leave us with
considerable capacity for expansion, we are seeing the benefits of the
efficiencies that this facility has provided. Additional development on the site
including a new state of the art storage and distribution facility in 2010 will
allow more effective leverage of the supply chain side of our business. With an
increased South African footprint, these developments will provide for cost
effective distribution within group activities.
Having achieved compound growth of 42% and 49% in revenue and earnings
respectively since 2005, we have recognised the need to streamline decision-
making and reduce overheads. Current management structures and reporting
processes are being reviewed to ensure the growth of the business. The new
structure is intended to provide the platform for sustained growth through the
development of technically superior products and solutions.
Revenue and income growth as forecast in the group`s 2007 listing prospectus has
been achieved through organic growth and we are confident of continuing the
development of the business. RARE is now well positioned to take advantage of
the expected economic recovery.
SUBSEQUENT EVENTS
No matters which are material to the financial affairs of the Group have
occurred between the balance sheet date and the date of this report.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of shareholders will be
held at 14h00 on Tuesday, 3 November 2009 at 22 Old Vereeniging Road,
Kliprivier, Midvaal, Johannesburg, to transact the business stated in the notice
of the Annual General Meeting contained in the Annual Report, which Annual
Report is in the process of being prepared and which will be posted to
shareholders by no later than 2 October 2009.
For and on behalf of the Board
Directors:
DMJ Ncube (Non-executive) - Chairman
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 61051, Marshalltown, 2107)
Johannesburg
9 September 2009
Designated advisor: PSG Capital (Pty) Limited
Date: 09/09/2009 07:05:19 Produced by the JSE SENS Department.
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