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Unaudited consolidated condensed interim results for 6 months ended 31 Dec 2012 and further cautionary announcement
ROLFES HOLDINGS LIMITED
(Registration number 2000/002715/06)
Share Code: RLF
ISIN:ZAE000159836
(“Rolfes” or “the Group” or “the Company”)
www.rolfesza.com
UNAUDITED CONSOLIDATED CONDENSED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 DECEMBER 2012 AND FURTHER CAUTIONARY ANNOUNCEMENT
Highlights
- Turnover increased by 35,5% to R410, 2 million
- Operating profit increased by 40,4% to R43,5 million
- Headline earnings increased by 21,9% to 21,1 cents per share
- Net asset value increased by 26,9% to 228,8 cents per share
- African drive results in exports now comprising 16% of total
turnover.
CONDENSED CONSOLIDATED GROUP STATEMENTS OF COMPREHENSIVE INCOME
for the period ended 31 December 2012
UNAUDITED UNAUDITED AUDITED
SIX MONTHS SIX MONTHS YEAR
31 DEC 31 DEC 30 JUNE
2012 2011 2012
R’000 R’000 R’000
Revenue 410 208 302 837 636 172
Cost of sales (323 578) (249 966) (508 970)
Gross profit 86 630 52 871 127 202
Gross profit margin 21,1% 17,5% 20,0%
Other operating income 2 450 7 864 10 112
Operating expenses (45 545) (29 719) (68 793)
Operating profit before
interest 43 535 31 016 68 521
Operating profit percentage 10,6% 10,2% 10,8%
Interest paid and finance
charges (5 628) (3 192) (9 068)
Income from investments - - 555
Net profit before taxation 37 907 27 824 60 008
Tax expenses (9 682) (8 124) (17 116)
Profit and total comprehensive income
for the period 28 225 19 700 42 892
Attributable to:
Owners of parent 21 750 17 632 37 268
Non-controlling interest 6 475 2 068 5 624
Attributable to:
Continuing operations 28 225 19 700 42 892
Reconciliation of headline
earnings
Attributable profit 21 750 17 632 37 268
Adjustment for the after-tax
effect of:
(Gain)/Loss from sale of
fixed assets (18) 191 (55)
Headline earnings 21 732 17 823 37 213
Weighted average number of
shares in issue (‘000) 102 968 102 968 102 968
Earnings per share (cents)
– Basic 21,1 17,1 36,2
– Headline 21,1 17,3 36,1
– Diluted 21,1 17,1 36,2
– Diluted headline 21,1 17,3 36,1
CONDENSED CONSOLIDATED GROUP STATEMENTS OF FINANCIAL POSITION
as at 31 December 2012
UNAUDITED UNAUDITED AUDITED
31 DEC 31 DEC 30 JUNE
2012 2011 2012
R’000 R’000 R’000
ASSETS
Non-current assets 161 363 140 433 150 775
Plant and equipment 59 285 45 540 52 398
Property 32 794 28 642 29 226
Intangible assets 69 284 66 251 69 151
Current assets 320 667 330 600 290 190
Inventories 161 106 161 554 170 251
Trade and other receivables 154 897 166 762 112 596
Short term loans - - 3 783
Cash and cash equivalents - 596 -
Value Added Tax asset 4 664 1 688 3 560
Total assets 482 030 471 033 440 965
EQUITY AND LIABILITIES
Capital and reserves 237 027 186 677 213 982
Share capital 1 036 1 036 1 036
Share premium 28 603 28 603 28 603
Treasury shares (868) (868) (868)
Retained income 175 857 145 972 159 287
Non controlling interest 32 399 11 934 25 924
Non-current liabilities 69 172 62 556 71 145
Interest-bearing
liabilities 42 171 40 714 46 757
Contingent consideration 6 455 5 547 6 191
Outside shareholders loans 1 099 1 207 -
Deferred tax liability 15 988 11 636 14 854
Provisions 3 459 3 452 3 343
Current liabilities 175 831 221 800 155 838
Trade and other payables 99 607 141 744 114 328
Cash and cash equivalents 33 281 - 1 833
Current portion of
interest-bearing liabilities 19 908 12 808 20 678
Derivative liability - 43 231
Tax liability 4 953 2 696 2 299
Provisions 1 203 709 1 065
Short term loans 16 879 63 800 15 404
Total equity and
liabilities 482 030 471 033 440 965
Number of shares in
issue (‘000) 103 609 103 609 103 609
Net Asset Value per
share (cents) 228.8 180.2 206,5
Net tangible Asset Value
per share (cents) 161.9 116.2 139,8
CONDENSED CONSOLIDATED GROUP STATEMENTS OF CHANGES IN EQUITY
for the period ended 31 December
Ordinary Share Retained Treasury Outside Total
shares premium income shares share equity
holders
R’000 R’000 R’000 R’000 R’000 R’000
Balance at
30 June 2011 1 036 28 603 133 520 (868) - 162 291
Outside shareholders
Obtained from purchase
Of subsidiaries - - - - 9 866 9 866
Net profit for the
period – – 17 632 - 2 068 19 700
Dividends paid - - (5 180) - - (5 180)
Balance at
31 December 2011 1 036 28 603 145 972 (868) 11 934 186 677
Recognising of non-
Controlling interest - - - - 11 867 11 867
Net profit for the
period – – 19 636 - 3 556 23 192
Dividends paid - - (5 180) - (324) (5 504)
Acquisition of
Remaining portion
Of Amazon Colours
(Pty) Ltd - - (1 141) - (1 109) (2 250)
Balance at
30 June 2012 1 036 28 603 159 287 (868) 25 924 213 982
Net profit for the
period – – 21 750 - 6 475 28 225
Dividends paid - - (5 180) - - (5 180)
Balance at
31 December 2012 1 036 28 603 175 857 (868) 32 399 237 027
CONDENSED CONSOLIDATED GROUP CASH FLOW STATEMENTS
for the period ended 31 December 2012
UNAUDITED UNAUDITED AUDITED
SIX MONTHS SIX MONTHS YEAR
31 DEC 31 DEC 30 JUNE
2012 2011 2012
R’000 R’000 R’000
Cash and cash equivalents
at the beginning of the
period (1 833) 4 833 4 833
Cash flow (utilised in) /
generated from
operating activities (929) (1 075) 63 753
Net interest paid (5 628) (3 191) (8 513)
Taxation paid (6 817) (3 250) (9 963)
Dividends paid (5 180) (5 180) (10 684)
Cash flow utilised in
investing activities (14 297) (62 867) (70 464)
Cash flow generated from
financing activities 1 403 71 326 29 205
Cash and cash equivalents
– end of the period (33 281) 596 (1 833)
SEGMENTAL ANALYSIS
Gross Operating Liabi-
Revenue profit Profit Assets lities
R’000 R’000 R’000 R’000 R’000
2012 – for the
six months ended
31 December
Colour
chemicals 151 078 21 683 10 653 171 498 48 241
Industrial
Chemicals 99 088 16 761 9 312 75 760 57 288
Agricultural
chemicals 135 285 42 026 22 700 134 917 66 023
Mining 23 481 4 884 2 594 54 411 27 411
Other 1 276 1 276 (1 724) 20 373 47 724
Elimination
of intergroup
items - - - 25 071 1 684
Total 410 208 86 630 43 535 482 030 245 003
Gross Operating Liabi-
Revenue profit Profit Assets lities
R’000 R’000 R’000 R’000 R’000
2011 – for the
six months ended
31 December
Colour
chemicals 155 045 22 039 10 655 204 192 99 233
Industrial
Chemicals 88 726 12 394 8 541 81 226 73 650
Agricultural
chemicals 35 008 11 734 6 852 116 000 84 875
Mining 22 581 5 227 3 323 53 240 26 408
Other 1 477 1 477 1 645 34 554 53 048
Elimination
of intergroup
items - - - (18 179) (52 858)
Total 302 837 52 871 31 016 471 033 284 356
Gross Operating Liabi-
Revenue profit Profit Assets lities
R’000 R’000 R’000 R’000 R’000
2012 – for the
twelve months ended
30 June
Colour
Chemicals 289 900 50 672 25 575 194 330 96 740
Industrial
chemicals 178 429 27 555 16 288 92 705 71 559
Agricultural
chemicals 120 021 38 710 23 019 100 768 42 387
Mining 45 199 11 754 8 107 54 067 23 984
Other 2 623 (1 489) (4 468) 37 187 7 882
Elimination of
intergroup
items and other - - - (38 092) (15 569)
Total 636 172 127 202 68 521 440 965 226 983
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.
COMMENTARY
GROUP OVERVIEW
Revenue increased by 35, 5% to R 410, 2 million (December 2011: R
302, 8 million). Overall gross margins and volumes improved, and
EBITDA increased to R 47, 6 million (December 2011: R 33, 7
million). Headline earnings per share increased to 21,1 cents
(December 2011: 17,3).
Local product demand in the Colour Chemicals division remained low
due to import pricing pressures and sluggish local market
conditions. The Industrial and Agricultural Chemicals divisions
performed satisfactorily, with performance for most divisions
being negatively influenced by the transport strike in September
2012.
Exports amounted to R 64,4 million (December 2011: R 34,7
million) comprising 15, 7% of total revenue for the six months to
December 2012 (December 2011: 11,5% of total revenue). The
increase is largely attributable to high growth in new business
into Africa.
The Rolfes Group manufactures and distributes a wide range of
market-leading, high-quality chemical products to diverse
industries including the coatings, plastics, vinyl, leather, ink,
metallurgical, water filtration, cleaning, formulators,
automotive, general manufacturing, agricultural, food and
construction industries through its product focussed Colour
Chemicals, Industrial Chemicals, Agricultural Chemicals and Mining
divisions.
Products are exported into Eastern and Western Europe, South East
Asia, North America, and Africa which includes exports to Zambia,
Kenya, Uganda, Mauritius, Madagascar, Malawi, Nigeria, Tanzania,
Zimbabwe, Botswana, Swaziland and Namibia.
GROUP FINANCIAL PERFORMANCE
Group revenue for the financial year to 31 December 2012 increased
by 35,5% to R 410,2 million (December 2011: R 302,8 million
with the Agchem and Amazon acquisition included from 1 November
2011 only). Gross profit increased to R 86,6 million (December
2011: R 52,8 million) with gross profit margins increasing to 21,
1% (December 2011: 17,5%).
Operating profit increased to R 43,5 million (December 2011: R
31,0 million) constituting 10,6% of turnover to December 2012
and 10,2% to December 2011.
Headline earnings per share and fully diluted headline earnings
per share increased by 21,9 % to 21,1 cents (December 2012: 17,3
cents). The total net asset value increased to R 237,0 million
(December 2011: R 186,7 million). The net asset value per share
increased to 228,8 cents (December 2011: 180.2 cents) while net
tangible asset value per share increased to 161,9 cents (December
2011: 116,2 cents),based on 103 609 469 shares in issue.
Finance costs increased to R 5,6 million (December 2011: R 3,2
million) mainly due to interest paid on acquisition funding which
amounted to R 1,7 million for the six months to December 2012. In
addition to this was interest paid on the Agchem Group overdraft
and short term debtors’ funding facilities of R 1, 0 million.
Interest cover reduced to 7,7 times (December 2011: 9, 7 times)
with the total debt (interest-bearing) equity ratio improving to
0, 47 for December 2012 (December 2011: 0, 63).
GROUP CASH FLOW PERFORMANCE
The Group paid cash dividends of R 5, 2 million during the six
month period (December 2011: R 5, 2 million) to shareholders, from
current cash resources. The increase in net working capital
investment since 30 June 2012 of R 49 million includes a decrease
in inventory of R 9, 1 million and an increase in accounts
receivable of R 42,3 million. Accounts payable and value added
tax represent a decrease of R 15,8 million. Debtors’ days
increased to 60,9 days (June 2012: 51,3 days) due to an
investment in certain agri-chemicals export debtors to facilitate
African, European and North American market penetration, as well
as a large Colour Chemicals debtor settling its account in January
2013 only. Stock days decreased to 91,6 days (June 2012: 109,5
days) as a result of Agri-chemicals moving out of its high season
and Colour Chemicals’ improved stock holding strategies
implemented by new management. Creditor days decreased to 49,7
days (June 2012: 66,7 days).
The Group continues to focus on cash generation through intense
working capital management by ensuring that traded product
payments terms are matched as far as possible and inventory
management is optimal by applying effective procurement
strategies. The investment in debtors’ days is due to the granting
of favourable terms to certain export debtors facilitating market
share growth in Africa, Europe and North America.
The Group incurred capital expenditure of R 14,3 million
(December 2011: R 3,1 million) mainly to improve, upgrade and
increase the capacity of the agricultural and colour production
and logistics facilities, and further investment in agricultural
product development. Agricultural product development costs
capitalised for the period amounted to R 3,9 million. Investment
in the upgrading of the Pretoria Agchem factory amounted to R5,8
million.
OPERATIONAL REVIEW
Colour Chemicals
Turnover declined by 2,6% to R 151,1 million (December 2011: R
155,0 million) mainly due to certain local product demand
declining in pigments and dispersions, and a decline in resin
sales although partly off-set by increased sales into Africa.
Pigments and dispersions turnover performance displayed mixed
results with marginal growth in some product lines and a decline
in certain other product groups for the period under review.
Trading continued to be hampered by weaker local trading
conditions in the coatings industry and the transport strike in
September 2012. Export volumes of organic pigments into Europe
increased during the latter part of the period under review
indicating a positive turnaround in the European market. The
division’s gross profit margin remained disappointingly at 14,4%
(December 2011: 14,2%).
Operating costs amounted to R 12,5 million (December 2011: R 12,
5 million). A focus on cost management resulted in the cost base
remaining at 2011 levels compensating for the lack of revenue
growth in the division.
With the new management team settling in and the division
constantly exploring opportunities to optimise and increase its
product basket, along with expectations of local market
improvements, increased export activities into the rest of Africa,
as well as volume growth from Europe (organic pigments),
indications are that the prospects for the division are
favourable.
Industrial Chemicals
Turnover increased by 11,7% to R 99,1 million (December 2011:
R88,7 million). Gross profit margins increased to 16,9% (December
2011: 14,0%), as a result of improved buying and product mix
changes.
The division’s achievements were negatively influenced by the
month-long transport strike in September 2012, untimely refinery
shutdowns for routine maintenance and safety reasons and key local
and international product shortages for prolonged periods.
Favourable growth was noted in both KwaZulu-Natal and the Western
Cape regions.
Operating costs increased in total to R 8,4 million (December
2011: R 5,9 million). Investment in strategic management and
staff to promote new products and facilitate the entry into new
markets and the inclusion of Acacia Specialty Chemicals for the
full six months contributed to the operating cost growth.
With product basket expansion, including a wider range of
specialty and commodity chemicals, Acacia’s focus on the food
sector, a new leather chemicals division, increasing exports into
Africa and the ongoing extension of its national footprint, the
division looks forward to stimulating further growth.
Agricultural Chemicals
The Agchem group companies have contributed R 135,3 million to
Group turnover and R 42,0 million to gross profit (gross profit
margin 31,1%) with its high season expected to continue to
February 2013. Operating costs amounted to R19,2 million.
The Pretoria factory upgrade has ensured improved product quality,
expanded capacity and modernised production facilities.
New product development initiatives including the development of
biological based products and efforts to increase export
opportunities to North America, Eastern Europe and African
countries, are well underway to compensate and assist with
counteracting slower performance during the February to July local
low season.
Mining
Turnover increased by 4% to R 23,5 million (December 2011: R 22,6
million). Volume demands for silica fines decreased by 17,8%
while the demand for aggregates increased by 26, 9%. Market share
was maintained with the demand by larger aggregate customers
continuing to influence the results. Gross profit margins at 20,8%
(December 2011: 23,2%) declined as a result of changes in the
customer, production and sales mix adjusted to match market
demands.
Effective cost management and a focus on reducing stock levels
resulted in production costs increasing marginally by 1,9%.
Operating costs increased by 20,2% due to increases in outside
service provider’s costs incurred to ensure ongoing compliance
with legal requirements and costs incurred to obtain the new order
mining licence which was granted during October 2012.
Growth opportunities are constantly explored to drive the
development and performance of this division. The company has made
further application to the DMR to expand its mining resources to
the adjacent land owned next to the current mining operation.
FORWARD-LOOKING
The Group is actively pursuing new acquisition opportunities in
the chemicals sphere, especially, water and specialty chemicals
sectors.
The Group will also continue to grow its turnover through more
exports with regional African offices now in place in Lusaka and
Lagos. An office in Nairobi is planned. Export activities into
Europe and North America are also expected to increase.
On an operational level activities include constant cost control,
the current building of a new dispersion factory in Jet Park
(thereby merging the two leased dispersion factories in Benrose
and Cape Town into one) and the sale of excess land in Jet Park to
fund future acquisitions. Further, we continue to upgrade and
increase our manufacturing, storage, mixing, blending and filling
facilities in Jet Park, Germiston and Pretoria, as well as
improving on the Group’s safety, health and environmental
programmes and initiatives.
New product development in the Agricultural and Colour Chemicals
divisions present exciting growth prospects while an extended
product offering in the Industrial Chemicals division will assist
in delivering further growth in this division.
Statements contained throughout this announcement regarding the
prospects of the Group have not been reviewed or reported on by
the Group’s external auditors.
DIVIDENDS
The Group paid a final dividend to shareholders of 5 cents per
share on 12 October 2012 and will pay an interim dividend of 5
cents per share on 25 March 2013.
The salient dates of the dividend payment are as follows: 2013
Last date to trade “cum” the Thursday, 14 March
dividend
Shares to commence trading "ex" Friday, 15 March
the dividend
Record date Friday, 22 March
Payment date Monday, 25 March
Share certificates may not be dematerialised or rematerialised
between Friday, 15 March 2013 and Friday, 22 March 2013, both days
inclusive.
In terms of the dividend tax effective 1 April 2012, the following
additional information is disclosed:
• The local dividend tax rate is 15%;
• No STC credits will be utilised for the final ordinary dividend;
• 103 609 469 ordinary shares are in issue;
• The net ordinary dividend is 4.25000 cents per share for
ordinary shareholders who are not exempt from dividends tax; and
• Rolfes Holdings Limited’s tax reference number is 9492089140.
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 unaudited condensed consolidated interim financial statements.
The unaudited condensed consolidated interim financial statements
for the six months ending 31 December 2012 have been prepared in
accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting
Standards (IFRS) and the SAICA Financial Reporting Guides as
Issued by the Accounting Practices Committee and the International
Accounting Standard 34 (IAS 34); the interpretations adopted by
the International Accounting Standards Board (IASB), the JSE
Listings Requirements, the South African Companies Act.
ACCOUNTING POLICIES
Accounting policies
The unaudited condensed consolidated interim financial statements
do not include all the information required by IFRS for full
financial statements. The accounting policies adopted in the
preparation of the unaudited condensed consolidated interim
financial statements are in terms of IFRS and consistent with
those applied in the preparation of the annual financial
statements for the year ended 30 June 2012.
Related party transactions
The Group companies entered into various related party
transactions in the ordinary course of their business. These
transactions are no less favourable than those entered into with
third parties and occur on an arm’s length and commercial basis.
Trade and other receivables
Trade and other receivables of Agchem Africa (Pty) Ltd are ceded
to Nedbank Limited under a debtor financing agreement with
recourse.
Short term loans
The loan represents the Nedbank Limited loan and is secured by
debtors.
Further cautionary announcement
Shareholders are referred to the cautionary announcement published
by the company on SENS on 11 January 2013 and are advised that the
Company negotiation mentioned therein are continuing and if
successfully concluded may have a material effect on the price of
the Company`s securities. Accordingly, shareholders are advised to
exercise caution when dealing in the Company`s securities until a
further announcement is made.
For and on behalf of the Board
BT Ngcuka E van der Merwe
Chairman Chief Executive Officer
22 February 2013
Jetpark
Company secretary: J Schlebusch
Registered office: 12 Jet Park Road, Jet Park, Boksburg, 1459
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*#, S Mafoyane*#
*Non-executive
#Independent
Sponsor: Grindrod Bank Limited
Registered auditors: BDO South Africa Incorporated
Preparer: L Lynch
www.rolfesza.com
Date: 25/02/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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