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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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