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Condensed Unaudited Abridged Financial Results for the 6 Months Ended 31 December 2015
Rare Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 2002/025247/06)
Share Code: RAR ISIN: ZAE000180626
("Rare" or "the Company")
CONDENSED UNAUDITED ABRIDGED FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2015
HIGHLIGHTS
- Trading division net profit increased to R11.8m (2014: R0.3m)
- Operating expenses reduced from R36.7m to R23.4m
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2015 2014 2015
R'000 R'000 R'000
Revenue 98 337 215 928 345 998
Cost of sales (81 496) (177 662) (291 727)
Gross profit 16 841 38 266 54 271
Other income 3 752 1 444 6 083
Operating expenses (23 426) (36 658) (64 300)
Operating (loss) / (profit) (2 833) 3 052 (3 946)
Investment income 63 49 162
Finance costs (3 241) (2 794) (5 829)
(Loss) / profit before taxation (6 011) 307 (9 613)
Income tax (50) - (53)
(Loss) / profit for the period (6 061) 307 (9 666)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gain on property revaluation (Kliprivier) - - 2 514
Taxation related to components of other
comprehensive income - - (470)
Other comprehensive income net of taxation - - 2 044
Total comprehensive (loss) / profit for the period (6 061) 307 (7 622)
Net (loss) / profit attributable to:
Equity holders of the parent (6 061) 307 (9 666)
Non-controlling interest - - -
Weighted average number of ordinary
shares in issue ('000) 42 802 42 888 42 802
(Loss) / profit per ordinary share (cents)
(basic and diluted) (14.16) 0.72 (22.58)
Headline earnings reconciliation
(Loss) / profitattributable to equity holders of
the parent (6 061) 307 (9 666)
Profit on sale of subsidiary - - (1 232)
Profit on disposal of property,
plant and equipment - - (595)
Headline (loss) / profit attributable to ordinary
shareholders (6 061) 307 (11 493)
Headline profit/(loss) per ordinary share (cents)
(basic and diluted) (14.16) 0.72 (26.85)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2015 2014 2015
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 90 562 85 753 89 576
Intangible assets 442 572 516
Current Assets
Inventories 82 960 83 071 99 571
Trade and other receivables 18 321 71 798 53 835
Other financial assets - 160 -
Current taxation receivable - 112 -
Prepayments 18 49 4 458
Cash and cash equivalents 13 681 20 217 24 129
Total Assets 205 984 261 732 272 085
Equity and liabilities
Equity
Share capital 390 335 390 335 390 335
Reserves 9 788 8 001 9 788
Accumulated loss (268 634) (252 857) (262 573)
Equity attributable to equity holders
of parent 131 489 145 479 137 550
Liabilities
Non-current liabilities
Other financial liabilities 61 740 55 814 58 979
Operating lease liability - 11 -
Deferred taxation 2 651 2 440 2 651
Current liabilities
Trade and other payables 9 634 57 613 59 369
Other financial liabilities 382 375 410
Current taxation payable 88 - 88
Bank overdraft - - 37
Income received in advance - - 13 001
Total liabilities 74 495 116 253 134 535
Total equity and liabilities 205 984 261 732 272 085
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2015 2014 2015
R'000 R'000 R'000
Opening balance 137 550 146 172 146 172
(Loss)/ profit for the period (6 061) 307 (9 666)
Adjustments
Revaluation reserve - - 2 044
Underwriting fee - (1 000) (1 000)
Total changes (6 061) (693) (8 622)
Closing balance 131 489 145 479 137 550
Comprising of:
Share capital 390 335 390 335 390 335
Revaluation reserve 9 788 8 001 9 788
Retained income (268 634) (252 857) (262 573)
Total equity 131 489 145 479 137 550
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
December December June
2015 2014 2015
R'000 R'000 R'000
Cash flows from operating activities
Cash (used in) / generated from operations (4 480) 17 260 28 031
Interest income 63 49 163
Finance costs (400) (444) (880)
Net cash from operating activities (4 817) 16 865 27 314
Cash flow from investing activities
Purchase of property, plant
and equipment (5 417) (3 044) (12 230)
Sale of property, plant and equipment - - 1 801
Sale of subsidiary - - 114
Purchase of other intangible assets - (5) (5)
Proceeds from other financial assets - 240 400
Net cash from investing activities (5 417) (2 809) (9 920)
Cash flows from financing activities
Underwriting fees paid - (1 000) (1 000)
Proceeds from financial liabilities - 4 000 9 200
Repayment of financial liabilities (177) (1 681) (6 344)
Net cash from financing activities (177) 1 319 1 856
Total cash movement for the period (10 411) 15 375 19 250
Cash at the beginning of the period 24 092 4 842 4 842
Total cash at end of the period 13 681 20 217 24 092
CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
For the 6 months ending 31 December 2015
The performance of the various segments is measured based on segment gross profit less
segment operating expenses directly attributable to each segment with an allocation of
indirect operating expenses to the reporting segments. All transactions between
reportable segments are accounted for at arm’s length so as to objectively evaluate the
performance of the various segments.
Water Pipeline Total
R'000 Trading Treatment services Plastics Investment
Total
revenue 53 382 - 2 362 42 589 1 500 99 833
Inter-
segmental
revenue - - - (1 500) (1 500)
External
revenue 53 382 - 2 362 42 593 - 98 337
Segment
Results
before
separately
disclosable
items 8 224 (616) (1 133) (8 605) - (2 130)
Other income 3 697 - 56 - - 3 753
Investment income - - - - 63 63
Depreciation and
Amortisation (98) (214) (1 484) (1 906) (804) (4 506)
Finance cost - - - - (3 241) (3 241)
Net profit/(loss)
for the period 11 823 (830) (2 561) (10 511) (3 982) (6
061)
CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
For the 6 months ending 31 December 2014
Water Pipeline Total
R'000 Trading Treatment services Plastics Investment
Total
revenue 50 348 - 34 792 130 788 2 396 218 324
Inter-
segmental
revenue - - - - (2 396) (2 396)
External-
revenue 50 348 - 34 792 130 788 - 215 928
Segment
results
before
separately
disclosable
items 1 639 (1 106) 3 271 3 558 - 7 362
Other income - - - - 954 954
Profit on sale
of assets - - 490 - 490
Investment income - - - - 49 49
Termination
Benefits (1 249) - (673) - - (1 922)
Depreciation
and amortisation (86) (203) (1 365) (1 376) (802) (3 832)
Finance cost - - - - (2 794) (2 794)
Net profit/(loss)
for the period 304 (1 309) 1 233 2 672 (2 593) 307
For the 12 months ending 30 June 2015
Water Pipeline Total
R’000 Trading Treatment services Plastics Investment
Total
revenue 97 202 - 77 988 202 917 3 652 381 759
Inter-
segmental
revenue - - (25 531) (6 578) (3 652) (35 761)
External
revenue 97 202 - 52 457 196 339 - 345 998
Segment
results
before
separately
disclosable
items 6 917 (1 554) 7 213 (1 465) - 11 111
Interest
received 81 - 76 - 6 163
Termination
benefits (1 715) - (925) - - (2 640)
Legal
Settlement
costs (702) - (379) (1 419) - (2 500)
Inventory
Impairment (160) - - (68) - (228)
Depreciation
And amor-
tisation (195) (428) (3 378) (4 075) (1 613) (9 689)
Finance cost (92) - (151) - (5 586) (5 829)
Income tax - - (312) - 258 (54)
Net profit/(loss)
for the
year 4 134 (1 982) 2 144 (7 027) (6 935) (9 666)
NOTES
BASIS OF PREPARATION
The condensed consolidated interim financial information for the six months ended 31
December 2015 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 Committee, the
interpretations adopted by the International Accounting Standards Board (IASB), the
Financial Reporting Pronouncements as issued by the Financial Reporting Standards
Council, the Listings Requirements of the JSE Limited and the requirements of the South
African Companies Act 71 of 2008, as amended.
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 2015.
These financial results were internally compiled by R Viljoen CA(SA) and have not been
reviewed or audited by the Company’s auditors.
ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the abridged interim financial
information are consistent with those of the annual financial statements for the year
ended 30 June 2015. For a full list of standards and interpretations which have been
adopted we refer you to the 30 June 2015 annual financial statements.
COMMENTARY
FINANCIAL RESULTS
Revenue for the financial period decreased by 54.4% to R98.3m (2014: R215.9m) as further
explained under the Operational Review below.
The gross profit margin showed a small decrease to 17.1% (2014: 17.7%). The trading
division showed an increase in profit margins, this was however eroded by under
recoveries due to low volumes in the Rare Plastics factory.
Operating expenses decreased by 36.2% to R23.4m (2014: R36.7m) for the period under
review. This was as a result of savings in employee costs following the rationalisation
of operations in the 2015 financial year. There was also a concerted effort by
management to reduce operating expenses in light of the tough market conditions during
the period.
Even though there were significant savings in operating expenses, this was not enough to
offset the loss in Gross Profit due to reduced volumes. EBITDA of R1.7m was realized
during the period (2014: R6.9m). Headline loss for the period was R6m (2014 profit:
R0.3m).
OPERATIONAL REVIEW
The mining sector remains under pressure, this had a direct negative effect on the
market activity experienced by both Rare Plastics and Pipeline Services.
A significant decline in the HDPE piping market negatively affected Rare Plastics. Rare
Plastics contributed R42.6m towards turnover whereas it contributed R130.8m to the
comparative figure for the six months ended 31 December 2014.
The Pipeline Services division also experienced a decrease in activity which resulted in
turnover decreasing to R2.4m (2014: 34.8m).
The trading division performed well in a tough market and recorded a 6% increase in
turnover to R53.4m (2014: R50.3m). The division also delivered a strong improvement in
operating margin.
PROSPECTS
Rare will continue to grow its core trading business organically. The Company had
started to reap the rewards of managements’ efforts during the period under review.
The South African HDPE market for large bore pipe remains under severe pressure given
the slump in SA mining sector and global commodity prices.
Mining spend in Africa, excluding South Africa, remains an opportunity for Rare.
DIVIDENDS
No dividend was declared for the period.
On behalf of the board
W. van Coller R. Viljoen
CEO CFO
Kliprivier
31 March 2016
Designated Advisor: PSG Capital (Pty) Limited
Date: 31/03/2016 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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