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Audited Abridged Financial Results for the 12 months ended 30 June 2013
RARE Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 2002/025247/06)
Share Code: RAR ISIN: ZAE000092714
(“RARE” or “the Company” or “the Group”)
AUDITED ABRIDGED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 30
JUNE 2013
Condensed consolidated statement of comprehensive income
Audited Audited
12 Months 12 Months
June 2013 June 2012
R’000 R’000
Revenue 175 249 304 383
Cost of sales (149 613) (294 307)
Gross profit 25 636 10 076
Other income 2 788 4 333
Operating expenses (51 650) (99 973)
EBITDA (23 226) (85 564)
Depreciation and amortisation (2 488) (3 784)
Investment income 1 169 2 035
Finance costs (15 803) (22 323)
Loss before taxation (40 348) (109 636)
Income tax (2 372) (7 287)
Loss for the year from continuing
operations (42 720) (116 923)
Loss for the year from discontinued
operations - (102)
Attributable to:
Equity holders of the parent (42 720) (120 079)
Non-controlling interest - 3 054
Weighted average number of ordinary
shares in issue 1 566 378 415 443
Loss per ordinary share (cents) (basic
and diluted) (2.73) (28.90)
Loss per ordinary share from continuing
operations (2.73) (28.14)
Loss per ordinary share from
discontinued operations - (0.76)
Reconciliation of headline earnings
Loss attributable to equity holders of
the parent (42 720) (120 078)
Adjusted for:
Reversal of loan impairment (852) -
Impairment of goodwill - 457
Impairment of loans receivable 180 3 587
Impairment of investment in associate - 900
Profit on disposal on sale of business - (819)
Impairment on intangible asset - 5 031
(Profit)/loss on disposal of property,
plant and equipment 1 079 903
Headline loss attributable to ordinary
shareholders (42 313) (110 019)
Headline loss attributable to ordinary
shareholders from discontinued
operations - (3 155)
Headline loss per share from continuing
operations (2.70) (25.72)
Headline loss per share from
discontinued operations - (0.76)
Total headline loss per share from
continuing and discontinued operations (2.70) (26.48)
Total diluted headline loss per share from
Continuing and discontinued operations (2.70) (26.48)
Condensed consolidated statement of comprehensive income
Audited Audited
12 Months 12 Months
June 2013 June 2012
R’000 R’000
Loss for the year (42 720) (117 025)
Exchange difference on translating foreign
operations - 5
Realisation of revaluation reserve on
disposal - (506)
Total comprehensive loss for the year net
of taxation (42 720) (117 526)
Condensed consolidated statement of financial position
Audited Audited
12 Months 12 Months
June 2013 June 2012
R’000 R’000
Assets
Non-current assets
Property, plant and equipment 50 169 56 667
Intangible assets 620 511
Other financial assets 380 22
51 169 57 200
Current Assets
Inventories 110 227 60 059
Trade and other receivables 48 739 89 023
Other financial assets 421 -
Construction contracts and receivables - 15 193
Current taxation receivable - 1 208
Prepayments 9 984 2 234
Cash and equivalents 15 107 31 101
184 478 198 818
Total Assets 235 647 256 018
Equity and liabilities
Equity
Share capital 242 825 142 825
Reserves 5 350 5 355
Accumulated loss (230 000) (187 280)
18 174 (39 100)
Liabilities
Non-current liabilities
Other financial liabilities 134 890 146 641
Operating lease liability - 100
Deferred taxation 2 269 1 348
137 159 148 089
Current liabilities
Trade and other payables 70 237 115 240
Other financial liabilities 8 692 30 963
Current taxation payable 1 292 390
Provisions - -
Bank overdraft 93 436
80 314 147 029
Total liabilities 217 473 295 118
Total equity and liabilities 235 647 256 018
Condensed consolidated statement of changes in equity
Audited Audited
12 Months 12 Months
June 2013 June 2012
R’000 R’000
Opening balance as previously reported (39 100) 65 551
Prior period adjustment - (14 020)
Opening balance as restated (39 100) 51 531
Changes in equity
Loss for the year (42 720) (120 078)
Foreign currency revaluation reserve (5) 5
Revaluation reserve - (506)
(Purchase)/Sale of treasury shares - (52)
Non-controlling interest
Issue of shares 100 000 30 000
Total changes 57 275 (90 631)
Closing balance 18 174 (39 100)
Comprising of:
Share capital 132 884 32 884
Share premium 109 941 109 941
Foreign currency translation reserve - 5
Revaluation reserve 5 350 5 350
Accumulated loss (230 000) (187 280)
Total equity 18 174 (39 100)
Condensed consolidated cash flow statement
Audited Audited
12 Months 12 Months
June 2013 June 2012
R’000 R’000
Cash flows from operating activities
Cash used in operations (64 669) (47 156)
Interest income 943 1 642
Dividends received - 93
Finance costs (2 847) (9 038)
Tax received/(paid) 659 (65)
Net cash from operating activities (65 914) (54 524)
Cash flow from investing activities
Purchase of property, plant and equipment (727) (16 079)
Sale of property, plant and equipment 322 6 889
Purchase of other intangible assets (157) (1 381)
Sale of intangible assets - 599
Sale of financial assets 80 -
Sale of business - 4 066
Loans to group companies repaid 60 258
Net cash from investing activities (422) (5 648)
Cash flows from financing activities
Proceeds from share issue - 30 000
Proceeds from other financial liabilities 54 997 242 431
Repayment of other financial liabilities (4 311) (189 158)
Net cash from financing activities 50 686 83 273
Total cash movement for the period (15 650) 23 102
Cash at the beginning of the period 30 665 7 563
Total cash at end of the period 15 014 30 665
Condensed segmental information - primary segment report business
segments
For the twelve months ending 30 June 2013
Total
contin-
Water Pipe- uing Discon-
Utili- line Invest- oper- tinued
R’000 Trading ty ser services ment ations operations
vices
Total
revenue 139 462 7 492 28 295 - 175 249 -
Inter-
segmental
revenue - - - - - -
External
revenue 139 462 7 492 28 295 - 175 249 -
Segment
results (8 829) (1 309) (14 208) (212) (24 558) -
Other
income - - - - 2 788 -
Bad debts - - - - (3 883) -
Movement in
Provision
for bad debt - - - - (61) -
Finance
cost - - - - (15 803) -
Investment
income - - - - 1 169 -
Income tax
expense - - - - (2 372) -
Net loss
for the
year - - - - (42 720) -
For the twelve months ending 30 June 2012
Total
contin-
Water Pipe- uing Discon-
Utili- line Invest- oper- tinued
R’000 Trading ty services ment ations operations
services
Total
revenue 189 994 31 063 136 894 3 775 361 726 33 045
Inter-
segmental
revenue - - (53 568) (3 775) (57 343) -
External
revenue 189 994 31 063 83 326 - 304 383 33 045
Segment
results (30 685) 5 393 (20 742) (1 768) (47 802) 3 814
Other
income - - - - 2 573 -
Profit on
disposal
of Congo - - - - (1 007) -
Impairment
of other
financial - - - -
assets
Impairment
of loan to
associates - - - - (266) -
Bad debts - - - - (14 896) -
Movment in
Provision for bad - - - (1938) -
Debts
Impairment
of invest-
ment in
associate - - - - (900) -
Write-down
of
inventory - - - - (18 053) (6 969)
Finance
cost - - - - (22 323) -
Impairment
of
goodwill - - - - (457) -
Investment
income - - - - 2 035 -
Impairment
of loan to
associate - - - - (3 331)
Income tax
expense - - - - (7 286) -
Profit on
disposal
of assets - - - - 1 759 -
Impairment
of
intangible
assets - - - - (5 031) -
Net loss
for the
year - - - - (116 923) (3 155)
BASIS OF PREPARATION
These condensed consolidated financial statements have been prepared
under the supervision of the Financial Director, Mr. R. Viljoen
CA(SA) in accordance with IAS 34 – Interim Financial Report, the SAICA
Financial Reporting Guides, the Listing Requirements of the JSE Limited and
the Companies Act , No. 71 of 2008 (as amended).
The accounting policies of the Group are in accordance with IFRS and are
consistent with those of the previous annual financial statements.
The audited annual financial statements and these abridged results were
audited by Greenwoods and their unmodified audit report as well as their
unmodified audit report on this set of condensed financial information is
available for inspection at the Company’s registered office.
PROFILE
RARE supplies a comprehensive range of services and products to the
fluid conveyance industry. Services include the design, manufacture,
installation and maintenance of pipelines for the mining sector and
for process plants across all sectors of industry.
The Company conducts business in three divisions, namely Trading,
Pipeline Services and Water Utility Services.
The trading division includes the Kliprivier and Durban branches.
FINANCIAL RESULTS
Revenue from continued operations is 42.42% lower than in the prior year,
mainly caused by a decrease of 26.6% in Trading activities and a decrease
of 66.00% in Pipeline Services turnover. This decline was mainly caused by
mining and transport strikes which disrupted the market and reduced demand
during the negotiation periods.
The decrease in the Pipeline Services turnover was as a result of the
labour unrest in the mining section and a reduction in commodity prices.
During the prior year the company executed a large contract in Zambia and
during the current year Rare did not manage to secure a project of this
magnitude, hence the drop in divisional revenue.
The gross profit margin improved to 14.63% (2012: 3.3%).
The current year gross profit margins were negatively affected by the low
margins in the Pipeline Services division due to the low activity levels.
Operating expenses decreased to R51.65m. This was due to concerted efforts
to right size the business as well as various cost saving initiatives
during the year.
The Polokwane trading branch was closed during the year as it was not
deemed to be economically feasible. The branch’s activities were
consolidated into the Kliprivier branch.
OPERATIONAL REVIEW
Trading conditions remained tough on the back of various strikes that
disrupted the mining industry in South Africa.
Trading results should improve as a result of an improved inventory
combination on the back of a secure funding structure.
The Pipeline Services division designs, supplies, installs and
commissions pipe systems and pipelines. It operates within RSA with
cross border activities in Botswana, Zambia and Ghana. The client
base is primarily from the private sector. Where the current trend is
towards small pipeline projects given the downturn in the mining sector.
The Company is pleased to report that the implementation of a well
supported accounting package was successfully concluded during the year.
CORPORATE ACTIVITIES
R100m Capital Raising
The Company was recapitalised during September 2012 by raising equity
of R100 million.
EVENTS AFTER THE REPORTING PERIOD
No events occurred after year end that require disclosure in terms of
IAS10.
FUNDING
Debtors financing
RARE successfully refinanced its debtors facility during the 2013 financial
year and secured a new R40m facility until 1 July 2014, subject to certain
conditions and covenants. R60m of the prior year outstanding debtor
facility was repaid following the issue and application of the proceeds
from the R100m Claw-Back Offer.
Stock financing
RARE refinanced it’s stock facility during the 2013 financial year, the new
facility will expire on 1 July 2014.
Short term loan financing
The Company refinanced a R50m short term facility during September 2013.
R40m of the prior year outstanding short term facility was repaid following
the issue and application of the proceeds from the R100m Claw-Back Offer.
The facility becomes due and payable on 1 July 2014.
RESTRUCTURING PLAN
Overheads
A right sizing exercise reduced overheads during the year under
review. The Company will continue to interrogate each cost item to
ensure that the overheads structure is aligned to the level of income
generation.
Human Resources and Manpower
The level of staff was significantly reduced during the financial year.
Management is of the opinion that the current staff compliment is better
aligned with the income levels generated by the business, without
negatively impacting on operational efficiencies.
GOING CONCERN
The directors have considered the operational budget and cash flow
forecasts for the ensuing year which are based on the current
expected economic and market conditions, as well as the funding lines
in place, as further detailed in ‘Funding’ above. The directors
believe that RARE and its subsidiaries have adequate financial
resources to continue as a going concern during the ensuing year.
Accordingly, the directors have adopted the going concern basis in
the preparation of the annual financial statements.
PROSPECTS
Rare was awarded a large contract to the gross value of R77m for the supply
of steel pipes and fittings to a gold mine in West Africa. The impact of
this contract will reflect in the results for the first six months of the
2014 financial year.
Prospects for the use of the new electro coagulation water treatment
technology are still pursued.
CHANGES TO THE BOARD OF DIRECTORS AND BOARD COMMITTEES
Pierre du Plessis resigned as director of the board with effect from 5
September 2013.
Hein Odendaal was appointed as Chairman of the Audit Committee and Lead
Independent Non-Executive director on 13 September 2013.
On behalf of the board
T Siyolo W van Coller
Chairman CEO
CORPORATE INFORMATION
Directors:
T Siyolo (Chairman), W van Coller (CEO), R Viljoen (FD), H Odendaal
(Lead Independent Non-executive), S Potgieter (Independent Non-executive), MT Lategan
(Independent Non-executive)
Registered Offices:
22 Old Vereeniging Road, Kliprivier, Midvaal, 1870
Transfer Secretaries:
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown, 2107)
Company Secretary: R Viljoen
Designated Advisor: PSG Capital Proprietary Limited
Johannesburg
30 September 2013
Date: 30/09/2013 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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