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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       
General Meeting                                                                 
ROLFES TECHNOLOGY HOLDINGS LIMITED                                              
(Registration number 2000/002715/06)                                            
Share Code: RLF                                                                 
ISIN: ZAE000096202                                                              
("Rolfes" or "the Group")                                                       
*    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                                                                   
2011         2010                
                                              R`000        R`000                
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                                                      
                                               2011         2010                
                                              R`000        R`000                
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               
Attributable to:                                                                
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                                                      
                                               2011         2010                
                                              R`000        R`000                
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                                                      
                                               2011         2010                
                                              R`000        R`000                
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               
SEGMENTAL ANALYSIS                                                              
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)               
Elimination of                                                                  
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)               
Elimination of                                                                  
 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   
expected targets.                                                               
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.                                         
Cash Flow                                                                       
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.                            
Operational Review                                                              
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.                                           
Rolfes Chemicals                                                                
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.                                    
Rolfes Silica                                                                   
Turnover increased by 10,6% to R41,4 million (2010: R37,4 million). Slow market 
conditions in the government infrastructural, construction, building and        
fertiliser industries                                                           
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).                                                           
Accounting policies                                                             
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.                              
Audit opinion                                                                   
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                                                               
Registered office:                                                              
12 Jetpark Road, Jetpark, Boksburg, 1459                                        
Transfer Secretaries:                                                           
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*#            
# Independent                                                                   
Designated adviser: Grindrod Bank Limited                                       
Registered auditors: BDO South Africa Incorporated                              
Date: 14/09/2011 07:07:21 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
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employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          

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