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Audited Provisional Consolidated Financial Results for the Year Ended 30 June 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" or “the group”)
AUDITED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2015
Highlights
- Revenue increased by 31%
- Gross profit increased to R54m from R51m
- Normalised EBITDA profit of R10.9m compared to R2.3m loss in
comparative period.
- Cash generated from operations of R28m
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
12 Months 12 Months
June June
2015 2014
R'000 R'000
Revenue 345 998 264 953
Cost of sales (291 727) (214 365)
Gross profit 54 271 50 588
Other income 6 083 2 221
Operating expenses (64 300) (60 455)
Operating loss (3 947) (7 646)
Investment income 163 478
Finance costs (5 829) (17 234)
Loss before taxation (9 613) (24 402)
Income tax (53) 1 236
Loss for the year (9 666) (23 166)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gain/loss on property revaluation
(Kliprivier) 2 513 (1 242)
Gain on property revaluation
(Meyerton) - 4 498
Taxation related to components of
other comprehensive income (469) (605)
Other comprehensive income for the year
net of taxation 2 045 2 651
Total comprehensive loss for the year (7 622) (20 514)
Net loss attributable to:
Equity holders of the parent (9 666) (23 166)
Non-controlling interest - -
Weighted average number of ordinary
shares in issue ('000) 42 802 23 383
Loss per ordinary share (cents)
(basic and diluted) (22.58) (99.07)
Headline earnings reconciliation
Loss attributable to equity holders of
the parent (9 666) (23 166)
Profit on sale of subsidiary (1 232) -
Insurance claims received from
third parties - (108)
(Profit)/loss on disposal of property,
plant and equipment (595) 120
Headline loss attributable to ordinary
shareholders (11 493) (23 154)
Headline loss per ordinary share (cents)
(basic and diluted) (26.85) (99.02)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
June June
2015 2014
R'000 R'000
Assets
Non-current assets
Property, plant and equipment 89 576 86 513
Intangible assets 516 567
Current assets
Inventories 99 571 112 813
Trade and other receivables 53 835 47 490
Other financial assets - 400
Current taxation receivable - 112
Prepayments 4 458 1 041
Cash and cash equivalents 24 129 4 899
Total assets 272 085 253 835
Equity and liabilities
Equity
Share capital 390 335 391 336
Reserves 9 788 8 001
Accumulated loss (262 573) (253 165)
Equity attributable to equity holders
of parent 137 550 146 172
Liabilities
Non-current liabilities
Other financial liabilities 58 979 50 277
Operating lease liability - 11
Deferred taxation 2 651 2 440
Current liabilities
Trade and other payables 59 369 53 704
Other financial liabilities 410 1 174
Current taxation payable 88 -
Bank overdraft 37 57
Income received in advance 13 001 -
Total liabilities 134 535 107 663
Total equity and liabilities 272 085 253 835
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
June June
2015 2014
R'000 R'000
Opening balance 146 172 18 175
Loss for the year (9 666) (23 165)
Adjustments
Underwriting fee (1 000) -
Revaluation reserve 2 044 2 651
Issue of shares - 149 000
Purchase of treasury shares - (489)
Total changes (8 622) 127 997
Closing balance 137 550 146 172
Comprising of:
Share capital 282 395 282 395
Share premium 107 940 108 941
Revaluation reserve 9 788 8 001
Accumulated loss (262 573) (253 165)
Total equity 137 550 146 172
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
June June
2015 2014
R'000 R'000
Cash flows from operating activities
Cash generated from/(used in) operations 28 031 (11 667)
Interest income 163 478
Finance costs (880) (866)
Tax paid - (324)
Net cash from operating activities 27 314 (12 379)
Cash flow from investing activities
Purchase of property, plant
and equipment (12 230) (38 754)
Sale of property, plant and equipment 1 801 195
Sale of subsidiary 114 -
Purchase of intangible assets (5) -
Proceeds from other financial assets 400 401
Net cash from investing activities (9 920) (38 158)
Cash flows from financing activities
Underwriting fee paid (1 000) (1 000)
Proceeds from financial liabilities 9 200 44 640
Repayment of financial liabilities (6 344) (3 276)
Net cash from financing activities 1 856 40 364
Total cash movement for the period 19 250 (10 173)
Cash at the beginning of the period 4 842 15 015
Total cash at end of the period 24 092 4 842
CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
For the 12 months ended 30 June 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 based on turnover. All transactions between reportable segments are accounted for at arms’ length so as to objectively evaluate the performance of the various segments.
Water Pipeline Plastics Invest- Total
R'000 Trading Treat- Services ment
ment
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)
Loss
for the year 4 134 (1 982) 2 144 (7 027) (6 935) (9 666)
CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS
For the 12 months ended 30 June 2014
Water Pipeline Plastics Invest- Total
R'000 Trading Treat- Services ment
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 before
separately
disclosable
items 8 298 (2 850) (3 781) 1 056 (1086) 1 637
Investment
Income - - - - 478 478
Finance
Costs - - - - (17 234) (17 234)
Inventory
impairment (3 549) - - (376) - (3 925)
Depreciation
& amortisation(725) (424) (2 686) (1 522) - (5 357)
Income tax - - - - 1 236 1 236
Loss
for the year 4 024 (3 274) (6 467) (842) (16 606) (23 165)
Segment
Results
previously
reported 6 278 (3 268) (6 583) (309) (1 086) (4 968)
Allocation
adjustments
made:
Other income 1 981 - 240 - - 2 221
Investment
income - - - - 478 478
Inventory
impairment (3 549) - - (376) - (3 925)
Movement in
provision for
doubtful debt 145 (6) 325 1 522 - 1 986
Bad debt (831) - (449) (1 679) - (2 959)
Finance cost - - - - (17 234) (17 234)
Income tax - - - - 1 236 1 236
Loss for the year
(segment allocation
restated) 4 024 (3 274) (6 467) (842) (16 606) (23 165)
NOTES
Basis of Preparation
The audited provisional consolidated financial results for
the year ended 30 June 2015 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 Financial Reporting Pronouncements as issued by the Financial Reporting Standards 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 reports on this set of provisional financial results as well as on the consolidated annual financial
statements is available for inspection from Rare’s registered office. The directors take full responsibility for this report and that the information has been correctly extracted from the audited consolidated
annual financial statements.
Shareholders are advised that in order to obtain a full understanding of the nature of the auditor’s engagement they should obtain a copy of their report with the accompanying financial information from the
company’s registered office.
Accounting policies
The accounting policies adopted in the preparation of the provisional financial results are in terms of IFRS and are consistent with those of the consolidated annual financial statements for the year ended 30 June
2014. 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 annual financial
statements
of the group.
JSE proactive monitoring process
The 2014 annual report of the group was selected for review by the JSE as part of the JSE’s proactive monitoring process, and certain matters were identified which required the restatement or adjustment of the
following items:
Segment results restated - Certain items included in profit or loss, that were not allocated to segments in the 2014 consolidated annual financial statements, should have been allocated as all assets and
liabilities of the group were allocated to segments. The restatement of the segment results have been presented in the condensed segmental information for the 12 months ended 30 June 2014.
Depreciation of Kliprivier buildings adjusted - A net amount of R1,103,969 relating to depreciation and deferred tax has been adjusted prospectively in profit or loss during the current financial year, as the net
amount was not considered to be material as per the requirements of IAS 8. The Kliprivier property consists mainly of an office building and is carried at a revalued carrying amount of R33,700,000 (R15,527,414
land and R18,172,586 buildings). The buildings included on the property has not been depreciated in previous financial years as it is the group’s policy to maintain the buildings in its present condition.
Therefore, the residual value was considered to exceed the carrying amount of the buildings. At the request of the JSE, a residual value of R4,676,226 was calculated, after consulting with an independent
professional associated valuer who has relevant knowledge and experience in calculating residual values of similar properties in the area where the property is situated. The cumulative amount of the depreciation
that was not recognised as at 30 June 2014 was calculated to be R1,357,027 and the resultant deferred tax movement to be (R253,058).
Financial results
Revenue for the financial period increased by 31% to R346m (2014: R265m) as explained in the Operational Review below.
Gross profit increased from R51m to R54m. The gross profit margin decreased to 16% (2014: 19%).This was attributable to the larger contribution made to turnover by Rare Plastics which operates in a market with
lower margins.
Operating expenses excluding the once-off retrenchment costs of R2.6m and legal settlement of R2.5m decreased to R59.2m (2014: R60.5m) for the period under review.
A normalised EBITDA profit of R10.9m was realised during the period (2014 loss: R2.3m). Headline loss for the period reduced to R11.5m (2014: R23.2m).
Operational Review
The major reason for the increase in revenue comes from Rare Plastics’ contribution having completed its first full financial year in the Group. The Pipeline Services division which constructs slurry pipelines for
the Mining Industry, also made a significant contribution to revenue by executing a large pipeline installation in Zambia. The Trading division continued to deliver a solid performance.
Gross margins improved in the Trading and Pipeline Services divisions mainly due to improved productivity and better cost control, but declined in Rare Plastics due to a slump in the HDPE piping market in the
second half of the financial year.
Funding
During the year under review the group successfully extended
its working capital facility. The facility is repayable on 31 July 2016. The directors are of the opinion that based on forecast results and cash flows this facility will be adequate for the short term cash flow
requirements of the group.
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
30 September 2015
Date: 30/09/2015 05:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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