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Rlf - Rolfes - Unaudited Consolidated Abridged Interim Results For The Six

Release Date: 23/02/2010 07:05:12      Code(s): RLF
RLF - Rolfes - Unaudited consolidated abridged interim results for the six      
months ended 31 December 2009                                                   
ROLFES TECHNOLOGY HOLDINGS LIMITED                                              
(Registration Number:  2000/002715/06)                                          
Share Code:  RLF                                                                
ISIN:  ZAE000096202                                                             
("Rolfes" or "the Group" or "the Company")                                      
www.rolfesza.com                                                                
UNAUDITED CONSOLIDATED ABRIDGED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31     
DECEMBER 2009                                                                   
Highlights                                                                      
- Headline earnings increased by 7,6% to R14,3 million                          
- Gross profit margins increased by 3,7% to 21,9%                               
- Net asset value increased by 9,5% to 131,2 cents per share                    
- Interest paid reduced by 48%                                                  
- Cash flow from operations R20,5 million                                       
- Overdraft reduced from R17,7 million to R3,3 million                          
ABRIDGED STATEMENT OF COMPREHENSIVE INCOME                                      
for the period ended 31 December 2009                                           
UNAUDITED      UNAUDITED       AUDITED                 
                        SIX MONTHS     SIX MONTHS          YEAR                 
                            31 DEC         31 DEC       30 JUNE                 
                              2009           2008          2009                 
R`000          R`000         R`000                 
Revenue                     193 438        211 305       375 512                
Cost of sales              (151 142)      (172 843)     (308 078)               
Gross profit                 42 296         38 462        67 434                
Gross profit margin            21,9%          18,2%         18,0%               
Other operating income          884          2 932         3 849                
Operating expenses          (21 117)       (18 675)      (46 829)               
Operating profit before                                                         
interest                     22 063         22 719        24 454                
Operating profit percentage    11,4%          10,8%          6,5%               
Interest paid and finance                                                       
charges                      (2 258)        (4 352)      (10 663)               
Income from investments           -            112         1 277                
Net profit before taxation   19 805         18 479        15 068                
Tax expenses                 (5 536)        (5 237)       (4 308)               
Total comprehensive income                                                      
for the period               14 269         13 242        10 760                
Attributable to:                                                                
Equity holders of parent     14 269         13 242        10 760                
Attributable to:                                                                
Continuing operations        14 269         16 255        21 601                
Discontinued operations           -         (3 013)      (10 841)               
Reconciliation of headline                                                      
earnings                                                                        
Attributable profit          14 269         13 242        10 760                
Adjustment for the after-tax                                                    
effect of:                                                                      
(Gain)/loss from sale of                                                        
fixed asset                      (9)            10           (21)               
Headline earnings            14 260         13 252        10 739                
Weighted average number of                                                      
shares in issue (`000)      103 255        103 348       103 255                
Earnings per share (cents)                                                      
- Basic                        13,8           12,8          10,4                
- Headline                     13,8           12,8          10,4                
- Diluted                      13,8           12,8          10,4                
- Diluted headline             13,8           12,8          10,4                
ABRIDGED STATEMENT OF FINANCIAL POSITION                                        
as at 31 December 2009                                                          
                         UNAUDITED      UNAUDITED       AUDITED                 
31 DEC         31 DEC       30 JUNE                 
                              2009           2008          2009                 
                             R`000          R`000         R`000                 
ASSETS                                                                          
Non-current assets          105 327        110 574       106 302                
Plant and equipment          39 792         40 482        40 787                
Property                     27 430         27 946        27 253                
Investments - Current           411              -           566                
Intangible assets            37 696         42 146        37 696                
Current assets              130 813        163 067       132 458                
Inventories                  68 639         89 392        71 000                
Trade and other receivables  61 470         73 325        58 858                
Financial asset                 493              -           483                
Short-term loans                  -            350             -                
Cash and cash equivalents         -              -           352                
Tax asset                       211              -         1 765                
Total assets                236 142        273 641       238 760                
EQUITY AND LIABILITIES                                                          
Capital and reserves        135 916        124 150       121 647                
Share capital                 1 036          1 036         1 036                
Share premium                28 603         28 603        28 603                
Treasury shares                (635)          (614)         (635)               
Retained income             106 912         95 125        92 643                
Non-current liabilities      32 493         73 074        43 902                
Interest-bearing                                                                
liabilities                  23 562         21 334        24 357                
Acquisition vendor                -         43 925        13 086                
Deferred tax liability        5 795          5 711         3 323                
Provisions                    3 136          2 104         3 136                
Current liabilities          67 733         76 417        73 211                
Trade and other payables     44 652         51 381        47 875                
Cash and cash equivalents     3 293         17 673             -                
Current portion of                                                              
interest-bearing liabilities  6 016          4 541        10 685                
Current portion of                                                              
vendor loan                  13 073              -        13 600                
Financial liability               -            193             -                
Value Added Tax liability       409            285           781                
Tax liability                     -          2 344             -                
Provisions                      290              -           270                
Total equity and                                                                
liabilities                 236 142        273 641       238 760                
Number of shares in                                                             
issue (`000)                103 609        103 609       103 609                
Net Asset Value per                                                             
share (cents)                 131,2          119,8         117,4                
Net tangible Asset Value                                                        
per share (cents)              94,8           79,1          81,0                
ABRIDGED CONSOLIDATED GROUP STATEMENTS OF CHANGES IN EQUITY                     
for the period ended 31 December                                                
                   Ordinary   Share Retained Treasury     Total                 
                     shares premium   income   shares    equity                 
R`000   R`000    R`000    R`000     R`000                 
Balance at                                                                      
30 June 2008           1 036  28 603   81 883     (368)  111 154                
Net profit for the                                                              
period                     -       -   13 242        -    13 242                
Increase in treasury                                                            
shares                     -       -        -     (246)     (246)               
Balance at                                                                      
31 December 2008       1 036  28 603   95 125     (614)  124 150                
Net profit for the                                                              
period                     -       -   (2 482)       -    (2 482)               
Increase in treasury                                                            
shares                     -       -        -      (21)      (21)               
Balance at                                                                      
30 June 2009           1 036  28 603   92 643     (635)  121 647                
Net profit for the                                                              
period                     -       -   14 269        -    14 269                
Balance at                                                                      
31 December 2009       1 036  28 603  106 912     (635)  135 916                
ABRIDGED CONSOLIDATED GROUP CASH FLOW STATEMENTS                                
for the period ended 31 December 2009                                           
                         UNAUDITED      UNAUDITED       AUDITED                 
                        SIX MONTHS     SIX MONTHS          YEAR                 
                            31 DEC         31 DEC       30 JUNE                 
2009           2008          2009                 
                             R`000          R`000         R`000                 
Cash and cash equivalents                                                       
at the beginning of the                                                         
period                          352         (4 380)       (4 380)               
Cash flow generated from                                                        
operating activities         24 371         29 820        34 521                
Cash utilised in working                                                        
capital                      (3 862)       (28 276)          (11)               
Net interest paid            (2 258)        (4 240)       (9 386)               
Taxation paid                (1 464)        (8 646)      (13 495)               
Cash flow utilised in                                                           
investing activities         (1 485)       (41 571)      (39 104)               
Treasury shares acquired          -           (246)         (267)               
Cash flow (utilised in)/                                                        
generated from financing                                                        
activities                  (18 947)        39 866        32 474                
Cash and cash equivalents                                                       
- end of the period          (3 293)       (17 673)          352                
SEGMENTAL ANALYSIS                                                              
Operating       Net                Liabi-                                    
                Revenue   Profit    Profit      Assets    lities                
                  R`000    R`000     R`000       R`000     R`000                
2009 - for the                                                                  
six months ended                                                                
31 December                                                                     
Chemicals                                                                       
-continued        48 522    4 977     3 081      73 330    76 676               
Silica            19 732    4 157     2 964      51 832    32 523               
Pigments         123 929   15 849    11 019     138 033    79 314               
Other              1 255   (2 920)   (2 795)    281 472    38 796               
Elimination                                                                     
of intergroup                                                                   
items                  -        -         -    (308 525) (127 083)              
Total            193 438   22 063    14 269     236 142   100 226               
   Operating       Net                Liabi-                                    
Revenue   Profit    Profit      Assets    lities                
                  R`000    R`000     R`000       R`000     R`000                
2008 - for the                                                                  
six months ended                                                                
31 December                                                                     
Chemicals                                                                       
-discontinued     72 315   (2 877)   (3 013)    127 497   115 497               
Silica            20 892    6 779     4 887      45 846    30 223               
Pigments         116 978   14 405     9 544     102 993    42 682               
Other              1 120    4 412     1 824     166 966    10 554               
Elimination                                                                     
of intergroup                                                                   
items                  -        -         -    (169 661)  (49 465)              
Total            211 305   22 719    13 242     273 641   149 491               
                       Operating       Net                Liabi-                
                Revenue   Profit    Profit     Assets     lities                
R`000    R`000     R`000      R`000      R`000                
2009 - for the                                                                  
twelve months ended                                                             
30 June                                                                         
Chemicals                                                                       
-continuing       50 540    5 252     3 392     78 052     74 158               
Chemicals                                                                       
-discontinued     72 960  (12 697)  (10 841)         -          -               
Silica            37 038    9 926     6 483     49 623     28 679               
Pigments         212 947   20 163    12 507    116 846     64 203               
Other              2 027    1 810      (781)    72 879     25 849               
Elimination of                                                                  
intergroup                                                                      
items and other        -        -         -    (78 640)   (75 776)              
Total            375 512   24 454    10 760    238 760    117 113               
The basis of preparation of the segmental analysis changed from what was        
reported in December 2008.  In the above segmental analysis, certain            
intercompany transactions have been eliminated.  Interest earned/(paid) on      
cash balances are accounted for under "other" as the group cash balances are    
managed under a single facility in the holding company.                         
COMMENTARY                                                                      
Brief overview                                                                  
Rolfes manufactures and distributes a wide range of market-leading, high-       
quality products through various divisions to diverse industries including the  
coatings, plastics, vinyl, leather, ink, metallurgical, water filtration,       
automotive, chemicals and construction industries.  Rolfes Colour Pigments is   
responsible for the manufacture and distribution of resins, dispersions,        
organic and inorganic pigments, pigments pastes, additives and dyes.  Drummed   
solvents, lacquer thinners, creosotes, waxes and other speciality chemicals     
are distributed through Rolfes Chemicals, while Rolfes Silica manufactures and  
distributes pure beneficiated silica.                                           
Rolfes achieved satisfactory performance as demonstrated by its results for     
the six months ended December 2009 despite difficult market conditions.         
Effective pricing strategies and cost containment largely counteracted reduced  
demand with group gross profit margins improving by 3,7%.  Market share         
remained stable during the period under review.  Lower solvent prices and       
reduced industry demand negatively influenced both the Chemicals and Silica     
divisions` performance.                                                         
Financial performance                                                           
The Group revenue for the six months decreased by 8,5% to R193,4 million        
(December 2008: R211,3 million).  Operating profit declined by only 2,9% to     
R22,1 million (December 2008: R22,7 million), however headline earnings         
increased by 7,6% to R14,3 million (December 2008: R13,2 million).  Fully       
diluted headline earnings per share was 13,8 cents per share (December 2008:    
12,8 cents per share), increasing by 7,8% over the comparative period.          
The net asset value per share strengthened to 131,2 cents per share (December   
2008: 119,8 cents per share) while the net tangible asset value per share       
increased to 94,8 cents (December 2008: 79,1 cents).  The current ratio for     
December 2009 is 1,9 and the acid test ratio is 0,9.                            
Interest cover improved to 9,8 times (December 2008: 5,2 times) while the       
total debt: equity ratio (interest-bearing debt, excluding the acquisition      
vendor where no interest is payable) reduced from 0,35 for the comparative      
period to 0,24 in December 2009.                                                
The Group incurred capital expenditure of R1,5 million (December 2008: R2,7     
million) mainly to maintain and improve current production facilities`          
capabilities.                                                                   
Group cash flow                                                                 
Sound working capital management continued for the six months since 30 June     
2009 with cash generated from operations amounting to R20,5 million.  The       
increase in the net working capital investment for the period to 31 December    
2009 of R3,8 million, primarily represents a further reduction in stock of      
R2,4 million, trade and other receivables increased by R2,6 million, while      
trade and other payables decreased by R3,2 million.  The stock days as at       
December 2009 decreased by 19 days from December 2008 to 88 days, while debt    
collection days remained in line with December 2008 at 48 days and creditor     
payment days for the same period increased by 4 days to 50 days.  The working   
capital balances achieved to December 2009 was in line with budget              
expectations.  The second acquisition vendor payment of R13,6 million was paid  
from the Group`s internal cash resources.                                       
Operational review                                                              
Rolfes Colour Pigments                                                          
Turnover increased by 5,9% to R123,9 million (December 2008: R116,9 million).   
Market share was maintained through brand loyalty and trust.  Although trading  
volumes into African, European and Asian markets decreased as a result of the   
global financial crises, trading gross profit margins were maintained.          
Operating profit increased by 10,0%, attributable to timeous price increases    
and effective cost containment.                                                 
Capital expenditure incurred to maintain production capacity amounted to R0,4   
million (December 2008: R0,3 million).                                          
A competitive trading environment is anticipated for 2010 due to the            
strengthening rand benefiting importers.  The division is in the process of     
establishing new agencies and introducing new product lines in the local and    
international markets.  The business remains focused on margin management,      
proactive procurement strategies, cost structures refinement and export         
growth.                                                                         
Rolfes Chemicals                                                                
The division was restructured during February 2009 and consists solely of the   
Triangle Solvents business which was acquired on 12 December 2008.  Turnover    
decreased by 32,9% from R72,3 million for December 2008 to R 48,5 million for   
the period to December 2009 primarily as a result of termination of the loss    
making bulk solvent business.  Solvent volumes increased by an average of 16%   
while solvent prices were still on average 30% lower than the previous          
reporting period.  The new products division (imported solvents) is growing     
rapidly while the Cape Town branch, established during the reporting period,    
is starting to contribute positively towards turnover and profit performance.   
Prospects for 2010 include expected increases in solvent prices from April      
onwards along with expected volume increases as the economy improves.  The      
imported solvent and speciality chemicals product lines indicate potential for  
future growth as market penetration increases.  The Cape Town branch is a       
forerunner for future branches to be established in other major cities.         
Rolfes Silica                                                                   
Turnover decreased by 5,6% to R19,7 million (December 2008: R20,9 million).     
Volumes on both fines and aggregates were lower than expected as a result of    
an industry downturn in demand due to the economic environment.  Market share   
remained in line with the previous period.                                      
Gross profit margins decreased to 30,0% (December 2008: 41,6%) due to a change  
in sales mix, increased transport costs while improved processes assisted with  
production cost containment.                                                    
Operating profit decreasing by 38,6% to R4,1 million includes a 12% reduction   
in overheads.                                                                   
Capital expenditure incurred to improve facilities and increase safety          
standards, amounted to R0,8 million (December 2008: R2,3 million).              
Management expects increased demand for aggregates in 2010 and continues to     
drive optimised unit costs.  Opportunities for expansion into new markets are   
exploited with strong potential for increased activity in both the local and    
African export market.  All required documents for the renewal of the mining    
licence were submitted during the period under review.                          
Corporate governance and sustainability                                         
The Group embraces and continues to be committed to the principles of sound     
corporate governance and sustainability.                                        
Human resources                                                                 
Staff turnover remained low for the period under review.  Rolfes continues to   
focus efforts on ensuring employment security and staff retention with          
succession planning remaining a focal point in the Group.  Rolfes continues to  
employ historically disadvantaged individuals to train into skilled positions.  
Accounting policies - Basis of preparation                                      
The Board acknowledges its responsibility for the preparation of the abridged   
consolidated interim financial statements in accordance with International      
Accounting Standard 34 (IAS 34 - Interim Financial Reporting) and the Listings  
Requirements of the JSE Limited.  These abridged consolidated interim           
financial statements are unaudited and prepared using accounting policies       
consistent with International Financial Reporting Standards (IFRS) and in       
compliance with the Listings Requirements of the JSE Limited and the South      
African Companies Act.  The unaudited abridged consolidated interim financial   
statements do not include all the information required by IFRS for full         
financial statements.  The accounting policies are consistent with the most     
recent annual financial statements.                                             
Dividends                                                                       
The directors are pleased to announce the declaration of an interim dividend    
of 5 cents per ordinary share for the six months ended 31 December 2009.  The   
salient dates are as follows:                                                   
Last date to trade "CUM" dividend           Friday, 12 March 2010               
Shares to commence trading "EX" dividend    Monday, 15 March 2010               
Record date                                 Friday, 19 March 2010               
Dividend payment date                       Tuesday, 23 March 2010              
Share certificates may not be dematerialised or rematerialised between Monday,  
15 March 2010 and Friday, 19 March 2010, both days inclusive.                   
Subsequent events                                                               
The Company is also currently finalising the legal process relating to the      
retrenchment of a former agent in France, which estimated expenses have been    
fully provided for.  Other than as reported above, no events material to the    
understanding of the report have occurred in the reporting period and the date  
of this announcement, other than a change in designated advisor announced on 1  
February 2010.                                                                  
For and on behalf of the Board                                                  
BT Ngcuka                                E van der Merwe                        
Chairman                                 Chief Executive Officer                
23 February 2010                                                                
Midrand                                                                         
Company secretary: L Lynch                                                      
Registered office: The Summit, 269 16th Road, Randjespark, Midrand              
Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70         
Marshall Street, Johannesburg 2001                                              
Directors: BT Ngcuka* (Chairman), E van der Merwe (Chief Executive Officer), L  
Dyosi*, AJ Fourie*, L Lynch (Financial Director), KT Nondumo**, T Tshivhase**   
*Non-executive                                                                  
** Independent non-executive                                                    
Designated advisor: Grindrod Bank Limited                                       
Registered auditors: BDO South Africa Inc.                                      
www.rolfesza.com                                                                
Date: 23/02/2010 07:05:11 Supplied by www.sharenet.co.za                     
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