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Unaudited Abridged Financial Results for the Six Months Ended 31 December 2012
Rare Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 2002/025247/06)
Share Code: RAR ISIN: ZAE000092714
("Rare" or "the Company")
UNAUDITED ABRIDGED FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER
2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2012 2011 2012
R`000 R`000 R`000
Revenue 103 424 174 238 304 383
Cost of sales (86 452) (165 639) (294 307)
Gross profit 16 972 8 599 10 076
Other income 2 439 577 4 333
Operating expenses (26 882) (48 198) (100 528)
EBITDA (7 471) (39 022) (86 119)
Depreciation and amortisation (577) (3 552) (3 735)
Investment income 512 35 2 035
Finance costs (9 641) (11 450) (22 323)
Loss before taxation (17 177) (53 989) (110 142)
Income tax - 2 162 (7 287)
Loss for the period from continuing
operations (17 177) (56 151) (117 429)
Loss for the period from discontinuing
operations - (13 374) (102)
Attributable to:
Equity holders of the parent (17 177) (71 278) (120 585)
Non-controlling interest - 1 753 3 054
Weighted average number of ordinary
shares in issue 1 353 590 292 449 415 443
Loss per ordinary share (cents)
From continuing and discontinued
operations(basic and diluted) (1.27) (24.37) (29.03)
From discontinued operations - (4.57) (0.76)
Headline earnings per share
Loss attributable to equity holders of
the parent (17 177) (71 278) (117 429)
Impairment of goodwill - 457 457
Impairment of loans receivable - 1 393 3 598
Reversal of loan impairment (60) - -
Impairment of investment - - 900
Profit on disposal of sale of business - - (819)
Impairment of intangible asset - - 5 031
(Profit)/Loss on disposal of property,
plant and equipment (136) 571 (1 267)
Headline loss attributable to ordinary
shareholders from
continuing and discontinuing operations (17 373) (68 857) (109 531)
Discontinuing operations - (13 374) (3 155)
Weighted average number of ordinary
shares in issue 1 353 590 292 449 415 443
Headline loss per ordinary share (cents)
From continuing and discontinued
operations(basic and diluted) (1.28) (23.54) (27.12)
From discontinued operations - (4.57) (0.76)
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2012 2011 2012
R`000 R`000 R`000
Loss for the period (17 177) (69 525) (117 531)
Exchange difference on translating foreign - - 1 523
operations
Realisation of revaluation reserve on
disposal - - 506
Total comprehensive loss for the year net
of taxation (17 177) (69 525) (117 025)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2012 2011 2012
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and equipment 53 845 68 013 56 667
Intangible assets 668 2 897 511
Investment in associates - 900 -
Other financial assets 21 - 22
Deferred taxation - 5 671 -
Current Assets
Inventories 67 721 50 262 56 959
Loan to associates - 2 574 -
Trade and other receivables 40 440 57 092 89 022
Other financial assets - 245 -
Construction contracts and receivables - - 15 193
Current taxation receivable - 1 088 1 208
Prepayments 122 816 2 234
Cash and cash equivalents 40 300 14 626 31 101
Total Assets 203 117 204 184 252 917
Equity and liabilities
Equity
Share capital 242 824 142 525 142 825
Reserves 5 346 5 856 5 355
(Accumulated loss)/Retained income (204 456) (138 478) (187 280)
Equity attributable to equity holders
of parent 43 714 9 903 (39 100)
Non-controlling interest - 2 281 -
43 714 12 184 (39 100)
Liabilities
Non-current liabilities
Other financial liabilities 67 631 6 548 146 641
Operating lease liability 101 115 100
Deferred taxation 1 348 1 537 1 348
Current liabilities
Trade and other payables 30 161 67 899 112 140
Other financial liabilities 59 771 115 271 30 962
Current taxation payable 391 391 390
Loans from minority shareholders - 239 -
Bank overdraft - - 436
Total liabilities 159 403 192 000 292 017
Total equity and liabilities 203 117 204 184 252 917
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2012 2011 2012
R`000 R`000 R`000
Opening balance (39 100) 51 532 65 551
Prior period adjustment - - (14 020)
Opening balance
Changes in equity - 51 532 51 531
Loss for the year (17 177) (71 278) (120 078)
Foreign currency revaluation reserve (9) - 5
Revaluation reserve - - (506)
Non-controlling interest - 1 752 -
Issue of shares 100 000 29 700 30 000
Investment in subsidiary - 529 -
Purchase of treasury shares - (51) (52)
Total changes 82 814 (39 348) (90 181)
Closing balance 43 714 12 184 (39 100)
Comprising of:
Share capital 132 884 5 385 32 884
Share premium 109 940 137 140 109 940
Foreign currency translation reserve (4) - 5
Revaluation reserve 5 350 5 856 5 350
Retained income (204 456) (138 478) (187 280)
Non-controlling interest - 2 281 -
Total equity 43 714 12 184 (39 100)
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2012 2011 2012
R`000 R`000 R`000
Cash flows from operating activities
Cash generated from/(used in)operations (34 899) (16 060) (47 156)
Interest income 511 35 1 642
Dividends received - - 93
Finance costs (1 862) (11 450) (8 428)
Tax received/paid) 1 208 (2 162) (65)
Net cash from operating activities (35 042) (29 637) (53 914)
Cash flow from investing activities
Purchase of property, plant
and equipment (249) (7 570) (16 079)
Sale of property, plant and equipment 525 - 6 889
Sale of intangible assets - 3 196 599
Sale of business - - 4 066
Purchase of other intangible assets (157) - (1 381)
Loans advanced to group companies - - -
Loans to group companies repaid - 612 258
Sale of other financial assets - 10 081 -
Purchase of other financial assets - - -
Net cash from investing activities 119 6 319 (5 648)
Cash flows from financing activities
Proceeds from share issue 100 000 29 700 30 000
Proceeds from financial liabilities 44 558 680 231 839
Repayment of financial liabilities (100 000) - (179 175)
Net cash from financing activities 44 558 30 380 82 664
Total cash movement for the period 9 635 7 062 23 102
Cash at the beginning of the period 30 665 7 564 7 563
Total cash at end of the period 40 300 14 626 30 665
CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
For the 6 months ending 31 December 2012
R`000 Trading Water Pipeline Invest- Total Discontinued
Utilities services ment continuing operations
operations Factories
Total
revenue 71 244 7 182 24 998 1 980 105 404 -
Inter-
segmental
revenue - - - (1 980) (1 980) -
External 71 244 7 182 24 998 - 103 424 -
revenue
Segment (4 045) (1 948) (4 579) (305) (10 877) -
results
Other income - - - - 2 439
Profit on sale
of assets - - - - 189 -
Investment income - - - - 513 -
Reversal of
impairment - - - - 60 -
Provision
Bad debts recovered - - - - 140 -
Finance cost - - - - (9 641) -
Net loss
for the year - - - - (17 177) -
CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS
SEGMENTS
For the 6 months ending 31 December 2011
R`000 Trading Water Pipeline Invest- Total Discontinued
Utilities services ment continuing operations
operations Factories
Total
revenue 102 986 16 540 54 712 1 888 176 126 -
Inter-
segmental
revenue - - - (1 888) (1 888) -
External 102 986 16 540 54 712 - 174 238 -
revenue
Segment (11 584) 321 7 733 (1 127) (4 567) (13 374)
results
Impairment
of goodwill - - - - (457) -
Profit on sale
of assets - - - - 571 -
Impairment
of other
financial
assets - - - - (1 968) -
Angola
Write down
of stock - - - - (24 215) -
Provision
For bad debt - - - - (26 131) -
Finance cost - - - - (11 323) -
Investment - - - - 171 -
income
Income tax
expense - - - - (2 161) -
Net loss
for the year - - - - (70 170) (13 374)
CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS
SEGMENTS
For the twelve months ending 30 June 2012
Total
contin-
Water Pipe- uing Discon-
Utili- line Invest- oper- tinued
R’000 Trading ties services ment ations operations
Total
revenue 189 994 31 063 136 894 3 775 362 726 33 045
Inter-
segmental
revenue - - (53 567) (3 775) (57 343) -
External
revenue 189 994 31 063 83 327 - 304 383 33 045
Segment
results (30 991) 5 353 (20 902) (1 768) (48 309) 3 814
Other
income - - - - 2 573 -
Profit on
disposal
of Congo - - - - (1 007) -
Impairment
of loan to
associates - - - - (266) -
Bad debts - - - - (16 835) -
Impairment
of invest-
ment in
associate - - - - (900) -
Write-down
of
inventory - - - - (18 053) (6 969)
Finance
cost - - - - (22 323) -
Impairment
of
goodwill - - - - (456) -
Investment
income - - - - 2 034 -
Impairment
of loan to
associate - - - - (3 330) -
Income tax
expense - - - - (7 286) -
Profit on
disposal
of assets - - - - 1 759 -
Impairment
of
intangible
assets - - - - (5 030) -
Net loss
for the
year - - - - (117 429) (3 155)
NOTES
BASIS OF PREPARATION
The consolidated interim financial information for the six months ended 31
December 2012 from which these financial statements have been derived has
been prepared in accordance with International Financial Reporting
Standards (IFRS), the SAICA financial reporting guides as issued by the
Accounting Practices Board, the interpretations adopted by the
International Accounting Standards Board (IASB), the Listings Requirements
of the JSE Limited and the requirements of the South African Companies Act.
These condensed interim financial results are presented in compliance with
IAS 34 - Interim Financial Reporting and should be read in conjunction with
the annual financial statements for the year ended 30 June 2012.
These financial results were internally compiled by R Viljoen CA(SA).
ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the abridged interim
financial information are consistent with those of the annual financial
statements of the year ended 30 June 2012. For a full list of standards and
interpretations which have been adopted we refer you to the 30 June 2012
annual financial statements.
COMMENTARY
FINANCIAL RESULTS
Revenue for the financial period is down by 40% to R103.4m (2011: R174.2m)
as further explained under the Operational Review below.
The gross profit margin improved to 16.4% (2011: 4.9%) as a result of an
improvement in stock management and control.
Operating expenses during the period were reduced to R26.8m (2011: R48.2m).
The closure of branches and right sizing of operations resulted in a
decrease in staff costs.
Headline loss for the period reduced to R17.4m (2011: R68.8m).
OPERATIONAL REVIEW
The major reason for the reduction in sales volumes can be attributed to
the transport and mining strikes which affected trading sales and delayed
the award of new pipeline contracts. The disposal of the Rare Congo
subsidiary on 1 July 2012 also contributed to the decrease in turnover.
A further consolidation of operations included the closure of the Polokwane
sales branch.
The sale of Rare Congo resulted in the reduction in non current assets by
R15.0m. The board decided to dispose of Rare Congo due to the high risks
associated with pipeline projects in the Democratic Republic of Congo.
Better access to financing resulted in an increase in inventory levels to
R67.7m, management believes this level is the optimum requirement for
current market conditions.
The reduced revenue levels as well as improved debt collections resulted in
a decrease in trade and other receivables to R40.4m.
PROSPECTS
The Pipeline Services Division was recently awarded two pipeline contracts
in Zambia and South Africa. Prospects are good that more pipeline
installation tenders in Zambia and South Africa will be converted to orders
in the next six months.
The Trading Division received a large pipe order from a mining house in
South Africa which will be delivered in the second half of the financial
year.
During the period under review Rare secured the sole right to water
treatment technology that can successfully remove suspended and dissolved
solids from acid mine drainage water. In November 2012 a modular treatment
plant was installed at a coal mine to demonstrate this technology.
POSTING
These results will be distributed to shareholders on 19 March 2013.
On behalf of the board
W. van Coller R. Viljoen
CEO CFO
18 March 2013
Designated Advisor: PSG Capital (Pty) Limited
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