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Audited Provisional Financial Results for the year ended 30 June 2014
Rare Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 2002/025247/06)
Share Code: RAR ISIN: ZAE000180626
("Rare" or "the Company" or “the group”)
AUDITED PROVISIONAL FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2014
Highlights
- Turnover increased by 51%
- Gross profit increased by 97%
- Gross profit percentage increased to 19% from 15%
- EBITDA loss of R2.3m compared to R23.2m loss in comparative
period
- A plastic pipe manufacturing facility was acquired
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
12 Months 12 Months
June June
2014 2013
R'000 R'000
Revenue 264 953 175 249
Cost of sales (214 365) (149 613)
Gross profit 50 588 25 636
Other income 2 221 2 788
Operating expenses (55 151) (51 650)
EBITDA (2 342) (23 226)
Depreciation and amortisation (5 303) (2 488)
Investment income 478 1 169
Finance costs (17 234) (15 803)
Loss before taxation (24 401) (40 348)
Income tax 1 236 (2 372)
Loss for the period (23 165) (42 720)
Attributable to:
Equity holders of the parent (23 165) (42 720)
Non-controlling interest - -
Weighted average number of ordinary
shares in issue ('000) 23 383 15 664
Loss per ordinary share (cents)
(basic and diluted) (99.07) (272.73)
Headline earnings reconciliation
Loss attributable to equity holders of
the parent (23 165) (42 720)
Impairment of loans receivable - 180
Reversal of loan impairment - (852)
Insurance claims received from
third parties (108) -
Loss on disposal of property,
plant and equipment 120 1 079
Headline loss attributable to ordinary
shareholders (23 153) (42 313)
Headline loss per ordinary share (cents)
(basic and diluted) (99.02) (270.00)
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Audited Audited
June June
2014 2013
R'000 R'000
Loss for the period (23 165) (42 720)
Loss on property revaluation
(Kliprivier) (1 242) -
Gain on property revaluation
(Meyerton) 4 498 -
Taxation related to components of
other comprehensive income (605) -
Total comprehensive loss for the year net
of taxation (20 514) (42 720)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
June June
2014 2013
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 86 513 50 169
Intangible assets 567 620
Other financial assets - 380
Current assets
Inventories 112 813 110 227
Trade and other receivables 47 490 48 739
Other financial assets 400 421
Current taxation receivable 112 -
Prepayments 1 041 9 984
Cash and cash equivalents 4 899 15 107
Total assets 253 835 235 647
Equity and liabilities
Equity
Share capital 391 336 242 825
Reserves 8 001 5 350
(Accumulated loss)/Retained income (253 165) (230 000)
Equity attributable to equity holders
of parent 146 172 18 175
Liabilities
Non-current liabilities
Other financial liabilities 50 277 134 890
Operating lease liability 11 -
Deferred taxation 2 440 2 269
Current liabilities
Trade and other payables 53 704 70 236
Other financial liabilities 1 174 8 692
Current taxation payable - 1 292
Bank overdraft 57 93
Total liabilities 107 663 217 472
Total equity and liabilities 253 835 235 647
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
June June
2014 2013
R'000 R'000
Opening balance 18 175 (39 100)
Loss for the year (23 165) (42 720)
Adjustments
Foreign currency revaluation reserve - (5)
Revaluation reserve 2 651 -
Issue of shares 149 000 100 000
Purchase of treasury shares (489) -
Total changes 127 997 57 275
Closing balance 146 172 18 175
Comprising of:
Share capital 282 395 132 884
Share premium 108 941 109 941
Foreign currency translation reserve - -
Revaluation reserve 8 001 5 350
Retained income (253 165) (230 000)
Total equity 146 172 18 175
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
June June
2014 2013
R'000 R'000
Cash flows from operating activities
Cash used in operations (11 667) (64 669)
Interest income 478 944
Dividends received - -
Finance costs (866) (2 847)
Tax received/(paid) (324) 659
Net cash from operating activities (12 379) (65 913)
Cash flow from investing activities
Purchase of property, plant
and equipment (38 754) (727)
Sale of property, plant and equipment 195 322
Sale of financial assets - -
Purchase of other intangible assets - (157)
Loans to group companies repaid - 60
Sale of other financial assets 401 80
Net cash from investing activities (38 158) (422)
Cash flows from financing activities
Underwriting fee paid (1 000) -
Proceeds from financial liabilities 44 640 54 996
Repayment of financial liabilities (3 276) (4 311)
Net cash from financing activities 40 364 50 685
Total cash movement for the period (10 173) (15 650)
Cash at the beginning of the period 15 015 30 665
Total cash at end of the period 4 842 15 015
*
CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS
SEGMENTS
For the 12 months ended 30 June 2014
Total
Water Pipeline Plastics Invest- Continuing
R'000 Trading Treat- Services ment operations
ment
Total
Revenue 186 777 1 601 33 774 57 208 3 970 283 330
Inter-
segmental
revenue - - - (14 407) (3 970) (18 377)
External
revenue 186 777 1 601 33 774 42 801 - 264 953
Segment
results 6 278 (3 268) (6 583) (309) (1 087) (4 968)
Other income - - - - 2 221
Profit on sale
Investment
income - - - - 478
Inventory
Impairment - - - - (3 925)
Bad debt - - - - (2 958)
Movement in
Provision for
doubtful debt 1 985
Finance cost - - - - (17 234)
Income tax - - - - 1 236
Net loss
for the year - - - - (23 165)
For the 12 months ended 30 June 2013
Water Total
Utility Pipeline continuing
R’000 Trading services services Investment operations
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) (211) (24 557)
Other
income - - - - 2 788
Bad debts - - - - (3 883)
Movement in
provision
for bad debt - - - - (62)
Finance
cost - - - - (15 803)
Investment
income - - - - 1 169
Income tax
expense - - - - (2 372)
Net loss
for the
year - - - - (42 720)
NOTES
Basis of Preparation
The audited provisional consolidated financial information for
the year ended 30 June 2014 which have been derived from the
consolidated audited annual financial statements 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 Pronouncement as issued by the Financial Reporting
Accountants Council, IAS:34 Interim Financial Reporting, the
Listings Requirements of the JSE Limited and the requirements
of the South African Companies Act, No. 71 of 2008, as amended.
These audited provisional financial results were internally
compiled by the company’s financial director, R Viljoen CA(SA)
and were audited by the Company’s external auditor, Baker Tilly
Greenwoods. A copy of their unmodified audit report is available
from Rare’s registered office.
Accounting policies
The accounting policies adopted in the preparation of the
provisional year end financial information are consistent with
those of the annual financial statements of the year ended 30
June 2013. During the year under review, the group adopted all
the standards and interpretations that were effective and deemed
applicable to the group. The adoption of these standards did not
have an effect on the prior year results and only resulted in
additional disclosure requirements. Full details of the new
standards and interpretations and the related disclosures will be
included in the consolidated audited annual financial statements
of the group.
Commentary
Financial results
Revenue for the financial period increased by 51% to R265m (2013:
R175m) as explained in the Operational Review below.
The gross profit percentage improved to 19% (2013: 15%).
Operating expenses increased to R55m (2013: R52m) for the period
under review. This is largely attributable to the acquisition of
the HDPE Pipe manufacturing plant as explained in the operational
review. An EBITDA loss of R2.3m was incurred during the period
(2013 loss: R23.2m). Headline loss for the period reduced to R23m
(2013: R42m).
Operational Review
The major reason for the increase in revenue is the supply of a
large pipe and fittings order to Randgold Resources in Mali, West
Africa. This project contributed R66.7m to revenue. Gross profit
margins improved in all divisions as a result of improved stock
holding (which resulted in less buyouts of material), improved
productivity on pipeline installation projects and better cost
control.
In November 2013, Rare acquired the assets and property of a High
Density Polyethylene (HDPE) pipe manufacturing facility in Meyerton,
Midvaal. The factory obtained the SABS mark for HDPE pipes in
January 2014 and has commenced with the manufacturing of HDPE pipes.
Full scale testing of the new Electro Coagulation Water Treatment
Technology is still in progress at a major coal mine in South
Africa.
Funding
During the year under review the group successfully renegotiated
its working capital facilities. The facilities have been combined
into one combined facility that is repayable on 31 July 2015. The
directors are of the opinion that based on forecasted results
and cash flows this facility will be adequate for short term cash
flow requirements of the group.
Attention is drawn to the fact that, in the reported period, the
weighted average number of shares in issue was 23,383,208 compared
to a restated 15,663,775 for the previous comparable period, ended
30 June 2013.
Prospects
The increased spending towards capital projects in Zambia has
resulted in Rare Zambia securing a turnkey pipeline project. The
project will be executed during the 2015 financial year. Rare has
also managed to secure a maintenance contract with a client on the
Zambian Copperbelt. Management hopes to secure further projects in
Zambia in the future.
Statutory
Ashin Tasdhary was appointed as an Executive Director with effect
from 23 January 2014.
Dividends
No dividend has been declared for the period.
On behalf of the board
W. van Coller R. Viljoen
CEO CFO
CORPORATE INFORMATION
Directors:
T Siyolo (Chairman), W van Coller (CEO), R Viljoen (FD), A Tasdhary,
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
19 September 2014
Date: 19/09/2014 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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