Rlf - Rolfes - Abridged Audited Consolidated Results For The Year Ended 30 June Release Date: 14/09/2011 07:07:21 Code(s): RLF
RLF - Rolfes - Abridged Audited Consolidated Results for the year ended 30 June
2011, Dividend Announcement, Proposed Change of Name and Notice of Annual
ROLFES TECHNOLOGY HOLDINGS LIMITED
(Registration number 2000/002715/06)
Share Code: RLF
("Rolfes" or "the Group")
ABRIDGED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2011, DIVIDEND
ANNOUNCEMENT, PROPOSED CHANGE OF NAME AND NOTICE OF ANNUAL GENERAL MEETING
* Turnover increased by 24, 8%
* Headline earnings per share increased by 34, 5%
* Interest paid reduced by 22, 2%
* Interest bearing debt reduced by R8, 2 million
* Net Asset value increased to R162, 3 million from R140, 3 million in 2010
ABRIDGED STATEMENT OF FINANCIAL POSITION
as at 30 June
Non-current assets 97 526 98 594
Plant and equipment 37 352 38 296
Property 27 816 27 726
Intangible assets 32 358 32 357
Current Assets 179 582 144 616
Inventories 94 953 77 718
Trade and other receivables 74 454 60 771
Cash and cash equivalents 4 833 6 127
Tax asset 636 -
Value Added Tax asset 4 706 -
Total assets 277 108 243 210
EQUITY AND LIABILITIES
Capital and reserves 162 291 140 320
Share capital 1 036 1 036
Treasury shares (868) (868)
Share premium 28 603 28 603
Retained income 131 327 109 356
Revaluation reserve 2 193 2 193
Equity holders of the parent 162 291 140 320
Non-current liabilities 23 830 25 487
Interest-bearing liabilities 8 688 15 315
Deferred tax liability 11 799 7 036
Provision 3 343 3 136
Current liabilities 90 987 77 403
Trade and other payables 82 947 60 617
Current portion of interest-bearing
liabilities 7 213 8 825
Current portion of vendor loan - 5 220
Financial liability 184 100
Value Added Tax liability - 932
Tax liability - 1 239
Provisions 643 470
Total equity and liabilities 277 108 243 210
ABRIDGED STATEMENT OF COMPREHENIVE INCOME
for the year ended 30 June
Revenue 460 699 369 029
Cost of sales (373 675) (291 372)
Gross profit 87 024 77 657
Other operating income 4 075 907
Operating expenses (41 531) (40 289)
Operating profit before interest 49 568 38 275
Interest paid and finance charges (3 780) (4 861)
Income from investments 40 11
Net profit before taxation 45 828 33 425
Tax expenses (13 497) (9 572)
Profit for the year 32 331 23 853
Total comprehensive income for the year 32 331 23 853
Equity holders of the parent 32 331 23 853
Reconciliation of headline earnings
Attributable profit 32 331 23 853
Adjusted for the after-tax effect of:
(Gain)/Loss from sale of fixed asset (171) 8
Headline earnings 32 160 23 861
Earnings per share (cents)
- Basic 31,4 23,2
- Headline 31,2 23,2
- Diluted 31,4 23,2
- Diluted headline 31,2 23,2
ABRIDGED STATEMENT OF CASH FLOWS
for the year ended 30 June
Cash flow generated from
operating activities 40 311 47 938
Finance income 40 11
Finance cost (3 780) (4 861)
Tax paid (10 609) (4 143)
Dividends paid (10 360) (5 180)
Cash flow generated (utilised in) /from
investing activities (3 437) 4 378
Cash flow (utilised in) / generated from
financing activities (13 459) (32 368)
Cash surplus for the year (1 294) 5 775
Cash and cash equivalents
- beginning of the year 6 127 352
Cash and cash equivalents
- end of the year 4 833 6 127
ABRIDGED GROUP STATEMENTS OF CHANGES IN EQUITY
for the year ended 30 June
Opening balance 140 320 121 647
Total comprehensive income for the year 32 331 23 853
Dividends paid (10 360) (5 180)
Balance at the end of the year 162 291 140 320
for the year ended 30 June
Gross Net Liabili-
Revenue profit profit Assets ties
R`000 R`000 R`000 R`000 R`000
Chemicals 131 431 21 175 7 761 67 170 49 440
Silica 41 387 11 577 5 358 48 713 23 222
Pigments 285 675 52 214 22 358 130 644 49 502
Other 2 206 2 058 (3 146) 30 776 (7 147)
and other - - - (195) (200)
Total 460 699 87 024 32 331 277 108 114 817
Chemicals 99 968 16 324 5 805 61 876 54 490
Silica 37 418 10 872 5 348 49 349 27 823
Pigments 229 558 48 376 19 174 113 569 45 705
Other 2 085 2 085 (6 474) 42 649 (894)
and other - - - (24 233) (24 234)
Total 369 029 77 657 23 853 243 210 102 890
The basis of preparation of the segmental analysis, include certain intercompany
transactions being eliminated in the respective segmental results in the current
and previous year`s reporting.
Although the recessionary climate continued for the year under review resulting
in market conditions remaining difficult, the Group managed to deliver on its
The Group weathered the economic recession reasonably well with Group
performance enhanced by growth in both the Pigments and Chemicals businesses.
Significant energy and other manufacturing cost increases were counteracted by
satisfactory performances and achievements in other areas.
Achievements include turnover growth of 24,8%; overhead cost being contained, a
reduction in interest paid, a significant reduction in Group debt (including
settling the final vendor payment for the Triangle Solvent acquisition in cash)
and two dividends paid to shareholders from cash resources. Overall market share
was sustained, with exports comprising 12,1% of Group turnover. Rolfes exports
to mainly Sub-Saharan Africa, Europe and a few countries in Asia.
Rolfes` competitive advantage is its high barriers to entry, expensive
production plants and laboratories, and extensive in-house technology and
intellectual property. The Group`s brand is well established in various markets,
both locally and internationally, with constant effort and strategies underway
to further expand both its product offering and the markets it serves.
Establishing branches in Africa will significantly improve accessibility to the
various product offerings in high demand throughout the African continent.
Strong, experienced and qualified management along with a proven track record of
profitability and asset growth will ensure business growth.
The recent acquisition of Agchem Holdings Limited ("Agchem"), expands the
Group`s current product offering now also into agro-chemicals.
Group Financial Performance
The 35,5% growth in profit for the year amounting to R32,3 million (2010: R23,9
million) suggests a healthy business in a recessionary local and international
economic environment. Group revenue increased by 24,8% to R460,7 million (2010:
R369,0 million), due to increased growth in both the Chemicals and Pigments
operations. Gross profit margins decreased to 18,9% (2010: 21,0%) due to
increased trading activities at lower margins in the Chemicals business as well
as a competitive pricing environment.
Operating profit increased by 29,5% to R49,6 million (2010: R38,3 million)
primarily due to an increase in gross profit and other income, and overhead cost
containment, also resulting in an increase in the operating profit margin to
10,8% (2010: 10,4%). As a result, headline earnings increased by 34,8% to R32,2
million (2010: R23,9 million). Fully diluted headline earnings per share is 31,2
cents (2010: 23,2 cents), an increase of 34,5% from 2010.
Group liquidity ratios remained stable and solvency improved from 2010 with the
total net asset value increasing to R162,3 million (2010: R140,3 million). The
net asset value per share improved to 156, 6 cents (2010: 135,4 cents) while net
tangible asset value per share increased to 125,4 cents (2010: 104,0 cents),
based on 103 609 469 shares in issue.
Interest cover increased to 13,1 times (2010: 7,9 times) with the total debt
(interest-bearing) equity ratio at 0,1 for 2011 (2010: 0,2). The favourable
increase in interest cover is due to the Group`s ability to significantly
increase operating profits, with improved cash management and a significant
reduction in long-term debt, all resulting in a lower interest bill.
The Group incurred capital expenditure of R4,1 million (2010: R2,8 million)
spent to improve local production and distribution facilities and compliance
requirements with various legislations.
The Group settled the final cash payment for the Triangle Solvent acquisition of
R5,2 million as well as paying cash dividends of R10,4 million during the
financial year (excluding STC) (2010: R5,2 million) to shareholders, all from
current cash resources. Loan repayments (excluding the vendor loan) for the
financial year amounted to R8,2 million.
Cash generated from operations amounted to R40,3 million (2010: R47,9 million)
for the period. The increase in net working capital investment during the
financial year of R6,9 million, represents an increase in inventory and accounts
receivable of R17,2 million and R6,5 million respectively, and an increase in
accounts payable and value added tax of R16,8 million. Both the inventory and
accounts receivable investment supported increased export trading and related
manufacturing activities with debt collection days on exports ranging between 90
and 120 days. Negotiation of credit terms from certain key overseas suppliers
provided the Group with favourable long-term credit terms. Debtors` days
increased slightly to 52 days (2010: 53 days), while stock days reduced to 93
days (2010: 98 days) and creditor days increased to 71 days (2010: 67 days). Due
to the nature of capital expenditure incurred during the year, R3,0 million of
the R4,1m spent was financed through cash resources.
Rolfes Colour Pigments
Turnover increased by 24,4% to R285,7 million (2010: R229,6 million) due to
increased activities on certain imported and manufactured product lines. The
Pigments business` performance was supported by significant growth in organic
pigments sales, lead chromes into Africa, iron oxides, resins and dispersions
product groups. Excellent growth in resins` turnover was mostly due to market
share increase while growth in dispersions` turnover was attributable to
increased volume demand and also market share gain. The pigments` turnover
growth was due to significant
increases in organic pigment sales and titanium dioxide. Raw material input
prices levelled during the year under review enabling stable pricing to the
The division`s gross profit margin decreased to 18,3% (2010: 21,1%) due to
increased activities on buy-in products at lower margins, and very high energy
cost increases and other manufacturing costs placed additional pressure on gross
profit performance. The resins` margins remained low as a result of mainly
market price pressures.
Operating expenses were contained with a slight decrease of 0,7 % (2010: 7,3 %
increase) primarily due to the large debtor write-off in the 2010 financial year
in combination with well-managed overhead cost control.
Capital expenditure incurred amounted to R0,8 million (2010: R0,9 million) to
maintain and improve production capability to primarily support export market
The business unit is constantly increasing its product offering and range,
expecting further increases in export activities, especially into Europe and
Africa. Local and international market penetration with the new organic and
other product offerings have already commenced to allow for growth in both the
resin and dispersions product ranges.
The wider product offering and expanded national presence contributed to the
increase in turnover of 31,5% to R 131,4 million (2010: R99,9 million). Oil
prices remained relatively
stable for the year under review; hence limited selling price increases were
implemented. Market share increased in both Gauteng and the Western Cape with
Rolfes Chemicals remaining a principal player in the Gauteng solvents market,
supplying from small to large customers. Exports into Africa increased
significantly during the period under review, albeit from a low base.
Pricing strategies accommodated entry into the Western Cape market while cost
control assisted with margin maintenance resulting in a slight reduction in
gross profit margins to 16,1% (2010: 16,3%).
Operating expenses increased by 7,4% mainly due to expansion costs into the
Western Cape and a further investment in human resources, in line with new
business development initiatives.
Capital expenditure amounted to R1,4 million (2010: R0,1 million) spent on
expanding and upgrading logistics and manufacturing facilities and information
technology system upgrades.
Further volumes, African export growth and the current expansion of Rolfes
Chemicals` national footprint into KwaZulu-Natal and the Western Cape, along
with new product offerings in particular specialty chemicals, provide strong
prospects for upcoming growth. As the crude oil price increases, solvent
purchasing and selling prices will increase.
Turnover increased by 10,6% to R41,4 million (2010: R37,4 million). Slow market
conditions in the government infrastructural, construction, building and
continued to hamper business performance. Volume demands for silica fines
increased by 5,3% while the demand for aggregates reduced by 12,1%. Market share
was maintained with wider customer base growth, but lower demand by larger
aggregate customers negatively influencing the results.
Gross profit margins at 28,0% (2010: 29,1%) declined mainly as a result of a
change in production and sales mix to match market demands, with manufacturing
and transport costs contained at 2010 levels. Operating expenses increased by
25, 0% (2010: 17,9% reduction) resulting from increased salary costs and mining
licence application fees.
Capital expenditure incurred of R1,8 million (2010: R1,2 million) remains high
due to the nature of the business, and is incurred to ensure mainly compliance
to safety, security and other Department of Mineral Resources regulations, and
upgrading certain equipment and housing.
Promised take off in the metallurgical and fertiliser sector bodes well for the
business in the year to come. Aggregate products` market conditions will remain
challenging with the anticipated oversupply, due to the expected reduction of
government spending on infrastructure.
Market Conditions and Prospects
Local market conditions improved slightly during the 2011 financial year with
both the Cape Town and Durban markets responding well to the expanded Rolfes
branches. The European economic climate remained difficult; however, the exports
of newly developed organic pigments for the ink industry will continue to grow
exports to Europe. Efforts to grow the African market have paid off while
trading in Asia remained limited due to fierce local competition.
Rolfes Africa, starting with a regional branch established in Zambia and two
other regional branches in Kenya and Ghana in the planning will enhance growth
in a market with opportunities for the Group`s products on offer.
The current strategic acquisition of a controlling stake in Agchem, a
distributor and manufacturer of agro-chemical products, will allow Rolfes to
realise its strategy of being able to offer a complete range of chemicals to
diverse markets and industries. Shareholders are referred to the SENS
announcements released on 12 July 2011 and 18 August 2011, respectively,
detailing the terms and conditions pertaining to the acquisition of Agchem.
The Group will continue to actively pursue new acquisition opportunities in the
chemicals sphere, especially in the mining and specialty chemicals sectors.
None of the market conditions and prospects information in this report have been
reviewed or reported on by Rolfes` auditors.
Dividends and share liquidity
The Group paid an interim dividend to shareholders of 5 cents per share on 22
March 2011 and will pay a final dividend of 5 cents per share on 24 October
The salient dates of the dividend payment are as follows:
Last date to trade "cum" the dividend Friday, 14 October
Shares to commence trading "ex" the dividend Monday, 17 October
Record date Friday, 21 October
Payment date Monday, 24 October
Share certificates may not be dematerialised or rematerialised between Monday,
17 October 2011 and Friday, 21 October 2011, both days inclusive.
Continued efforts to improve share liquidity will remain a focus. Regular
investor and stockbroker visits as well as continued creation of communication
platforms will keep the investment community informed on corporate activity and
developments within the Group.
Corporate governance and sustainability
The Group recognises the recommendations of King III and remains committed to
sound corporate governance and sustainability practices.
Basis of preparation
The Board acknowledges its responsibility for the preparation of the abridged
consolidated annual financial statements. The abridged consolidated annual
financial statements for the year ended 30 June 2011 have been prepared in
accordance with the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS) and the AC500
Standards; the interpretations adopted by the International Accounting Standards
Board (IASB), the JSE Listings Requirements and the South African Companies Act
and are presented and disclosed in compliance with International Accounting
Standard 34 (IAS 34).
The abridged consolidated annual financial statements do not include all the
information required by IFRS for full financial statements.
The accounting policies adopted in the preparation of the abridged consolidated
annual financial statements are consistent with those applied in the preparation
of the annual financial statements for the year ended 30 June 2010. However, the
following Standards and amendments to standards have been adopted in the current
financial year in accordance with the transitional provisions of the standards:
* IFRS 3 - Business combinations
* IAS 12 - Income taxes
* IAS 24 - Related party disclosure
* IAS 34 - Interim financial reporting
There is no material effect on the financial results as a result of the adoption
of the above standards.
Goodwill and intangible assets
An annual impairment test on the balance of goodwill and intangible assets at
the beginning of the reporting year has been performed at 30 June 2011. No
impairment loss has occurred.
Goodwill decreased during the year due to the profit warranties not being met as
per the purchase agreement of New Heights 390 (Pty) Limited (Triangle Solvents).
Related party transactions
The Group companies entered into various related party transactions. These
transactions are no less favourable than those entered into with third parties
and occur on an arm`s length and commercial basis.
These abridged consolidated annual financial statements have been audited by the
Group`s auditors, BDO South Africa Inc, Registered Auditors, and their
unmodified report is available for inspection at the Company`s registered
Notice of annual general meeting and mailing of Integrated Report
Shareholders are advised that the Integrated Report for the financial year ended
30 June 2011 will be mailed in due course. This report will contain the notice
and related details of the annual general meeting of shareholders to be held at
12 Jetpark Road, Jetpark, Boksburg at 12h00 on Friday, 28 October 2011. A
further announcement will be released on SENS confirming the posting of the
Integrated Report and notice of annual general meeting.
Proposed Change of Name
The notice of the annual general meeting will contain a proposed special
resolution to change the name of the Company from "Rolfes Technology Holdings
Limited" to "Rolfes Holdings Limited", subject to shareholder and regulatory
approvals. Further details and salient dates of the proposed name change will be
contained in the Integrated Report to be mailed to shareholders in due course.
On behalf of the Board
BT Ngcuka E van der Merwe
Chairman Chief Executive Officer
14 September 2011
12 Jetpark Road, Jetpark, Boksburg, 1459
Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg
BT Ngcuka* (Chairman), E van der Merwe (Chief Executive Officer), L Dyosi*, AJ
Fourie*, L Lynch (Financial Director), KT Nondumo*#, TAM Tshivhase*#
Designated adviser: Grindrod Bank Limited
Registered auditors: BDO South Africa Incorporated
Date: 14/09/2011 07:07:21 Supplied by www.sharenet.co.za
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