Wrap Text
Unaudited condensed consolidated interim results for the period ended 31 December 2018
ROLFES HOLDINGS LIMITED
(Registration number 2000/002715/06)
Incorporated in South Africa
Share code: RLF
ISIN: ZAE000159836
("Rolfes" or "the group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS
FOR THE PERIOD ENDED 31 december 2018
PERFORMANCE SUMMARY
Rolfes is a leading black empowered, industry-compliant supplier of agricultural, food, industrial and
water chemical management solutions for the local and international markets.
Key features
- Revenue from continuing operations increased by 13,5% to R833,1 million
(31 December 2017: R734,0 million)
- Headline earnings increased by 32,9% to 19,46 cents per share
(31 December 2017: 14,64 cents per share)
- Cash from operations increased by 19,9% to R71,8 million
(31 December 2017: R59,9 million)
- Interim dividend declared of 4 cents per share
- Proceeds received on the finalisation of the sale of the silica mine and foreign
operations rationalised
COMMENTARY
STRATEGIC OVERVIEW
Rolfes is a leading black empowered, industry-compliant supplier of agricultural, food, industrial and
water chemical management solutions for the local and international markets.
As part of its core organic growth strategy, the Group concentrates on the expansion of its product ranges.
While the Group will continue to seek acquisitions which have a high barrier to entry, management's priority
remains to focus on the core businesses, their stability, organic growth and real returns.
DIVISIONAL STRUCTURE
AGRICULTURAL
The Agricultural division develops, manufactures and distributes products that promote plant root and foliar
health, soil nutrition, disease prevention and control as well as various other agricultural remedies into
the agricultural industry.
FOOD CHEMICALS
Bragan Chemicals is an additive and ingredient supplier, the division imports and locally procures chemical
commodities. Through bulk importation and distribution of additives, ingredients and chemicals we supply
to our clients who focus on food manufacturing.
INDUSTRIAL CHEMICALS
The Chemicals division distributes various products and additives including solvents, lacquer thinners,
surfactants, cleaning solvents, water treatment products, creosotes and waxes into the industrial manufacturing,
construction and water industry. The division further develops, manufactures and provides leather chemicals
and treatment solutions into the leather tanning industry.
COLOUR
Rolfes Colour supplies organic and inorganic products, additives, in-plant and point-of-sale dispersions and
pigments to all sectors of the paint industry.
WATER
Rolfes Water provides total industrial water management solutions, including specialised water purification
solutions and products for the commercial cooling sector and the industrial sector. Opportunities exist
within petrochemical, primary metals, sugar and mining industries.
GROUP FINANCIAL REVIEW
Revenue increased by 13,5% to R833,1 million (December 2017: R734,0 million). Revenue was positively impacted
by increased volumes in certain divisions but these could only be achieved at a lower margin; the market was
tough and pricing was key so as to maintain, and in some areas gain, market share. Pressure on margins,
specifically in the Food Chemical division, resulted in a lower translation of revenue through to gross
profit. In terms of the general economic environment the Group saw a strong first four months followed by
a slow down thereafter.
Gross profit increased by 3,0% to R171,9 million (December 2017: R166,9 million) and resulted in a gross margin of
20,6% which represents a decline from the comparative period of 22,7%. The reduction in margin percentage was due
to pricing pressure in the food Chemical division and the decrease in sales relating to the higher margin
products in the Agri division.
Operating profit from continuing operations increased by 27,6% to R60,9 million (December 2017: R47,7 million) at an
operating margin of 7,3% of revenue (December 2017: 6,5%). It should, however, be noted that the comparative period was
impacted by once-off impairments and non-recurring costs without which the operating profit and margin would have been
R66,7 million and 9,1% respectively. The current period included a share-based payment expense of R2,1 million (December
2017: Rnil), trading losses of R4,1 million relating to the businesses in Zambia and Europe. The return on capital for
both businesses was unsatisfactory; the European business is in the final stages of being closed and the Zambia business
has been restructured as a distributorship by a local partner.
Headline earnings increased by 32,9% to 19,46 cents per share (31 December 2017: 14,64 cents per share) and earnings
per shares increased by 31,2% to 19,30 cents per share (31 December 2017: 14,71 cents per share).
The directors believe that, in the past, normalised headline earnings per share from continuing operations were the
most meaningful measure for evaluating the Group's operational performance. In the current year there were no items
having an affect on operating profit which required adjustment and therefore the term and reference to normalised
headline earnings is only utilised for comparative purposes. Headline earnings from continuing operations decreased
by 22,2% to 18,91 cents per share when compared to the prior year normalised result of 24,32 cents per share.
This unaudited condensed consolidated interim results announcement does not contain the full information
of the normalised headline earnings for the comparative period. The full information is included as an
annexure to the results booklet which is available on the Company's website hosted at www.rolfesza.com,
at the Company's registered office, as well as the offices of the sponsor, for inspection during normal
office hours at no charge. Any investment decisions by investors should be based on consideration of
the full results booklet.
The weighted average number of shares in issue for the year was 161 301 468 and remained unchanged from the
comparative period.
GROUP CASH FLOW PERFORMANCE
Cash generated from operations increased by 19,9% to R71,8 million (31 December 2017: R59,9 million).
Net working capital increased by R79,0 million and is represented by an increase in inventory of R3,1 million,
an increase in trade and other receivables of R50,3 million and a decrease in accounts and other payables of
R25,6 million. Subsequent to period end significant cash was received from debtors, in respect of peak season
sales, and will have a positive impact on the net working capital movement in the next reporting period.
Inventory levels as at 31 December 2018 are R338,6 million compared to R351,4 million for December 2017.
The management of working capital remains a key focus area with the priority of ensuring the businesses have
sufficient stock to trade over peak periods. Net finance costs amounting to R14,2 million increased by 8,7%
from R13,0 million in 2017; this is a direct result of the increased net debt which was R226,4 million as at
31 December 2018 compared to R202,1 million as at 31 December 2017. The increased debt arose due to the need
for more appropriate inventory levels being in place during the peak seasons in October and November 2018 and
the reduction in account payables.
Tax paid amounted to R11,1 million. Dividends paid amounting to R6,5 million represents the 4 cent paid as a final
dividend for the 2018 financial year. Cash utilised in investing activities comprised investment in product development,
predominantly relating to the Agricultural division, amounting to R3,1 million (31 December 2017: R3,6 million) and
additions to property, plant and equipment amounted to R5,0 million (31 December 2017: R2,5 million). Total proceeds
of R11,6 million were received in respect of the "sale of assets and liabilities held for sale" comprises R8,0 million
in respect of the Silica mine discontinued and subsequently sold and R3,6 million in respect of the properties owned
in Botswana.
There remains continued focus on managing the return on capital employed at a business unit level so as to maximise
returns for shareholders.
OPERATIONAL REVIEW
AGRICULTURAL
Revenue increased by 1,7% to R167,1 million (December 2017: R164,3 million). Gross profit margin was maintained at
29,4% (December 2017: 29,4%). The division's performance initially reflected an improved position due to the recovery
in the Western Cape but the lack of rain inland resulted in subdued sales in November and December 2018.
Operating profit declined by 10,5% to R17,5 million (December 2017: R19,5 million) due to general cost pressures and
closure of Agchem Europe. Management is focussing on efficiencies and revenue growth. The business has a fairly fixed
cost base and an increase in revenue would result in a flow through to operating profit.
FOOD CHEMICALS
Revenue increased by 13,6% to R395,6 million (December 2017: R348,2 million) mainly due to higher stock levels
available for sale and a drive to win deals and maintain/improve market share in a tough environment. Gross profit margins
decreased to 15,5% (December 2017: 17,9%) as a direct result of pricing strategies and exchange rate movement. The gross
profit amounted to R61,5 million compared to the prior year of R62,4 million. Management are continuously trying to balance
margin percentage with market share and believe the strategy applied to be appropriate.
Net operating profit for the year amounted to R38,9 million (December 2017: R38,7 million).
INDUSTRIAL CHEMICALS
Revenue increased by 15,1% to R221,5 million (December 2017: R192,4 million). Gross margin decreased to 17,9%
(December 2017: 20,0% ) resulting in a gross profit of R39,5 million (December 2017: R38,4 million); an increase
of R1,1 million. The decrease in gross margin was consistent across both the bulk industrial chemicals and the
more specialised leather solutions due to a competitive environment with pricing pressure across the board.
Operating costs remained well controlled and resulted in a net operating profit of R20,7 million (December 2017:
R20,5 million). The results are impacted by R0,9 million legal fees in preparation for court proceedings relating
to the case previously disclosed under provision for claims. The matter is ongoing and the court case proceeded
on 28 January 2019 but the matter has been postponed in favour of a binding arbitration process.
COLOUR
Revenue increased by 19,3% to R43,9 million (December 2017: R36,8 million) gross profit achieved was R7,2 million
representing a margin of 16,3%. The Colour division was previously impacted by inventory impairments. The focus
is on the reintroduction of a full basket of goods while targeting a reduced working capital requirement over a
period of time. The management team has made reasonable progress in this regard with inventory reducing to
R24,7 million (December 2017: R32,4 million).
The division delivered an operating profit for the first time in years and although modest at R1,2 million the
business is heading in the right direction. Improving working capital utilisation and the return on capital
remains a focus area.
WATER
Revenue decreased by 16,3% to R20,1 million (December 2017: R24,0 million) as the comparative period still had
a contribution from the Botswana business which has since closed. The lower revenue is disappointing as the
business relies significantly on tenders which in the current environment are continuously delayed. The quality
of business, however, has significantly improved and has resulted in an increase in gross profit of R1,0 million.
The Water business, which has a predominantly fixed cost base and strong intellectual property, had numerous
successes recently and despite the long lead time for tender awards, momentum is being gained.
OTHER
The Other division within the segmental analysis includes the Jet Park property, Zambia and head office expenses.
The operating loss for this segment amounted to R17,4 million (December 2017: R21,2 million); it should however
be noted that the comparative period included non-recurring costs.
OPERATING ENVIRONMENT AND PROSPECTS
Our strategy remains focused on developing sustainable businesses delivering long term growth. The group has
made good progress in a tough operating environment and have concentrated on maximising market share and working
capital management during this time. The rationalisation of foreign operations was the final step in refining our
strategy and going back to basics. We will continue to focus on our South African businesses by adding new products,
leveraging off our customer base and distribution capabilities, and increase our African revenues through direct
exports. In the current difficult economic environment the Board expects the Group to continue trading
satisfactorily.
Any forward looking statements in this announcement have not been reviewed and reported on by the Company's
auditors.
DIVIDENDS
Notice is given that an interim gross cash dividend of 4 cents per share in respect of the six months ended
31 December 2018 has been declared payable, from income reserves, to the holders of ordinary shares recorded
in the books of the Company on Friday, 5 April 2019. The details of the dividend are presented under
note 6 subsequent events.
CHANGES TO THE BOARD
No changes to the Board during the current period.
On behalf of the Board
MS Teke RM Buttle
Chairman Chief Executive Officer
4 March 2019
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at
Unaudited Unaudited Audited
31 December 31 December 30 June
2018 2017 2018
R'000 R'000 R'000
ASSETS
Non-current assets 354 536 398 853 356 432
Property, plant and equipment 88 118 103 443 86 612
Intangible assets and goodwill 251 284 269 985 251 688
Deferred tax asset 15 134 25 425 18 132
Current assets 704 979 737 606 667 216
Inventories 338 586 351 361 334 739
Trade and other receivables 299 923 304 162 250 533
Derivative asset 90 - 6 454
Cash and cash equivalents 57 295 76 800 43 148
Current tax asset 9 085 5 283 10 205
704 979 737 606 645 079
Assets classified as held for sale - - 22 137
Total assets 1 059 515 1 136 459 1 023 648
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 207 721 207 721 207 721
Retained earnings 284 993 299 056 260 313
Share-based payment reserve 4 548 - 2 496
Foreign currency translation reserve (1 062) (423) (1 679)
Owners of the parent 496 200 506 354 468 851
Non-controlling interest - (5 327) -
Total equity 496 200 501 027 468 851
Non-current liabilities 281 540 283 771 233 509
Interest-bearing liabilities 256 765 244 389 208 395
Deferred tax liability 16 698 25 676 17 155
Provisions 8 077 13 706 7 959
Current liabilities 281 775 351 661 321 288
Trade and other payables 253 982 304 365 284 143
Derivative liability 380 9 338 -
Interest-bearing liabilities 26 895 34 547 26 562
Current tax liability 518 3 411 835
281 775 351 661 311 540
Liabilities directly associated with
assets classified as held for sale - - 9 748
Total equity and liabilities 1 059 515 1 136 459 1 023 648
Ratios
NAV per share 3,08 3,11 2,91
Tangible NAV per share 1,52 1,43 1,35
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the period ended
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2018 2017 2018
R'000 R'000 R'000
Continuing operations
Revenue 833 084 734 015 1 421 648
Cost of sales (661 108) (567 068) (1 132 489)
Gross profit 171 976 166 947 289 159
Other income 5 920 5 789 13 988
Operating expenses (114 465) (123 024) (256 469)
Impairment of trade and other receivables (524) (2 023) (3 511)
Share-based payment expense (2 052) - (2 496)
Operating profit before interest 60 855 47 689 40 671
Finance income 763 430 1 309
Finance cost (14 947) (13 476) (29 558)
Profit before taxation 46 671 34 643 12 422
Income tax (15 771) (9 092) (12 717)
(Loss)/profit from continuing operations 30 900 25 551 (295)
Discontinued operations
Loss from discontinued operations, net of tax 232 (3 990) (583)
(Loss)/profit 31 132 21 561 (878)
Other comprehensive (loss)/income, net of taxation
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating of foreign operations 617 274 (982)
Total comprehensive (loss)/income 31 749 21 835 (1 860)
(Loss)/profit for the year attributable to:
Owners of the parent 31 132 23 719 1 494
Non-controlling interest - (2 158) (2 372)
31 132 21 561 (878)
Total comprehensive (loss)/income attributable to:
Owners of parent 31 749 23 993 512
Non-controlling interest - (2 158) (2 372)
31 749 21 835 (1 860)
RECONCILIATION OF EARNINGS HEADLINE EARNINGS AND DIVIDENDS PROPOSED/PAID
Unaudited Unaudited Audited
for the for the for the
period ended period ended period ended
31 December 31 December 30 June
2018 2017 2018
R'000 R'000 R'000
Continuing operations
Earnings 30 900 27 709 2 077
Adjusted for:
(Gain) from sale of property, plant and equipment (net) (423) (99) (756)
(Gain) from sale of property, plant and equipment (gross) (587) (139) (1 050)
(Gain) from sale of property, plant and equipment (tax) 164 40 294
Loss from sale of property, plant and equipment (net) 23 - -
Loss from sale of property, plant and equipment (gross) 32 - -
Loss from sale of property, plant and equipment (tax) (9) - -
Impairment property, plant and equipment (gross) - - 2 364
Impairment goodwill (gross) - - 16 652
Headline earnings 30 500 27 610 20 337
Opening balance (number of shares) ('000) 161 943 161 943 161 943
Treasury share (number of shares) ('000) (641) (641) (641)
Weighted average number of shares used in basic earnings
per share and headline earnings per share ('000) 161 302 161 302 161 302
Dilutive shares 1 763 - 648
Weighted average number of shares used in diluted earnings
per share and diluted headline earnings per share ('000) 163 065 161 162
- Earnings (basic) (cents) 19,16 17,18 1,29
- Earnings (diluted) (cents) 18,95 17,18 1,28
- Headline earnings (basic) (cents) 18,91 17,12 12,61
- Headline earnings (diluted) (cents) 18,70 17,12 12,56
Discontinued operations
Earnings 232 (3 990) (583)
Adjusted for:
(Gain) from sale of property, plant and equipment (net) - (4) (3)
(Gain) from sale of property, plant and equipment (gross) - (4) (4)
(Gain) from sale of property, plant and equipment (tax) - - 1
Loss from sale of property, plant and equipment (net) 655 - -
Loss from sale of property, plant and equipment (gross) 910 - -
Loss from sale of property, plant and equipment (tax) (255) - -
Headline earnings 887 (3 994) (586)
Opening balance (number of shares) ('000) 161 943 161 943 161 943
Treasury share (number of shares) ('000) (641) (641) (641)
Weighted average number of shares used in basic earnings
per share and headline earnings per share ('000) 161 302 161 302 161 302
Dilutive shares 1 763 - 648
Weighted average number of shares used in diluted earnings
per share and diluted headline earnings per share ('000) 163 065 161 302 161 950
- Earnings (basic) (cents) 0,14 (2,47) (0,36)
- Earnings (diluted) (cents) 0,14 (2,47) (0,36)
- Headline earnings (basic) (cents) 0,55 (2,48) (0,36)
- Headline earnings (diluted) (cents) 0,54 (2,48) (0,36)
GROUP
Unaudited Unaudited Audited
for the for the for the
period ended period ended period ended
31 December 31 December 30 June
2018 2017 2018
R'000 R'000 R'000
Earnings 31 132 23 719 1 494
Adjusted for:
(Gain) from sale of property, plant and equipment (net) (423) (103) (759)
(Gain) from sale of property, plant and equipment (gross) (587) (143) (1 054)
(Gain) from sale of property, plant and equipment (tax) 164 40 295
Loss from sale of property, plant and equipment (net) 679 - -
Loss from sale of property, plant and equipment (gross) 943 - -
Loss from sale of property, plant and equipment (tax) (264) - -
Impairment property, plant and equipment (gross) - - 2 364
Impairment intangible assets and goodwill (gross) - - 16 652
Headline earnings 31 388 23 616 19 751
Opening balance (number of shares) (?000) 161 943 161 943 161 943
Treasury share (number of shares) (?000) (641) (641) (641)
Weighted average number of shares used in basic earnings
per share and headline earnings per share (?000) 161 302 161 302 161 302
Dilutive shares 1 763 - 648
Weighted average number of shares used in diluted earnings
per share and diluted headline earnings per share (?000) 163 065 161 302 161 950
- Earnings (basic) (cents) 19,30 14,71 0,93
- Earnings (diluted) (cents) 19,09 14,71 0,92
- Headline earnings (basic) (cents) 19,46 14,64 12,24
- Headline earnings (diluted) (cents) 19,25 14,64 12,20
Dividends
- Interim proposed/paid (cents) 4 4 4
- Final paid (cents) - - 4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended
Reserves
Share- Foreign
based currency Non-
Stated Retained payment translation controlling Total
capital earnings reserve reserve interest equity
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 30 June 2017
(audited) 207 721 281 778 - (697) (3 169) 485 633
Total comprehensive
income for the year - 23 719 - 274 (2 158) 21 835
Dividends paid - (6 441) - - - (6 441)
Balance at 31 December 2017
(unaudited) 207 721 299 056 - (423) (5 327) 501 027
Total comprehensive
(loss)/income for the year - (22 225) - (1 256) (214) (23 695)
Share-based payment expense - - 2 496 - - 2 496
Dividends paid - (6 478) - - - (6 478)
Acquisition of non-controlling
interest - (10 040) - - 5 541 (4 499)
Balance at 30 June 2018
(audited) 207 721 260 313 2 496 (1 679) - 468 851
Total comprehensive
income for the year - 31 132 - 617 - 31 749
Dividends paid - (6 452) - - - (6 452)
Share-based payment expense - - 2 052 - - 2 052
Balance at 31 December 2018
(unaudited) 207 721 284 993 4 548 (1 062) - 496 200
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended
GROUP
Unaudited Unaudited Audited
6 months 6 months 12 months
31 December 31 December 30 June
2018 2017 2018
Cash flow (utilised in)/generated from:
Cash generated from operations 71 827 59 895 102 688
Net working capital movement (79 042) (46 215) (38 446)
Operating activities (7 215) 13 680 64 242
Net finance cost paid (13 896) (13 115) (28 138)
Tax paid (11 146) (16 643) (26 334)
Cash (utilised in)/generated from operations
available for investment and redistribution (32 257) (16 078) 9 770
Dividends paid (6 452) (6 452) (12 919)
Cash flow from/(utilised in) investing activities 3 538 (6 157) (9 747)
- Investment in property, plant and equipment (5 041) (2 526) (3 895)
- Investment in intangible assets (3 071) (3 631) (5 852)
- Proceeds from sale of assets and
liabilities held for sale 11 650 - -
Cash flow from/(utilised in) financing activities 48 703 33 244 (14 486)
- Interest-bearing liabilities raised 62 823 43 244 10 537
- Interest-bearing liabilities repaid (14 120) (10 000) (20 523)
- Minority buy-outs - - (4 500)
Cash generated/(deficit) for the period 13 532 4 557 (27 382)
Effects of exchange rate fluctuations on
translation of foreign operations 615 273 (1 440)
Cash and cash equivalents
- Beginning of the period 43 148 71 970 71 970
- End of the period 57 295 76 800 43 148
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF ACCOUNTING AND PREPARATION
1.1 INTRODUCTION
The unaudited condensed consolidated interim financial statements are prepared in accordance with the requirements
of the JSE Limited's Listings Requirements for reports and the requirements of the Companies Act of South Africa.
The Listings Requirements require reports to be 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 Financial Pronouncements as
issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required
by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of these interim
financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated
audited financial statements, except for the changes noted below.
1.2 CHANGES IN ACCOUNTING POLICIES
The adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts from Customers, which became
effective from 1 July 2018 for the Group, has not had a material impact on the financial position or performance
of the Group. No transition adjustments have been recognised in retained earnings.
IFRS 9 Financial Instruments
IFRS 9 is the new financial instrument accounting standard and includes the requirements for classification and
measurement of financial assets, the impairment and derecognition of financial assets, as well as general
hedge accounting.
The classification and measurement of the Group's financial assets has remained the same as under IAS 39,
except for:
- the measurement of the loss allowances relating to trade and other receivables.
The Group has elected to measure loss allowances for trade receivables at an amount equal to lifetime expected
credit losses (ECLs).
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of
all cash shortfalls. ECLs are discounted at the effective interest rate of the financial asset.
Loss allowances for financial assets measured at amortised costs are deducted from the gross carrying amount
of the assets. Impairment losses related to trade receivables are presented separately in profit or loss.
As a result, the Group reclassified impairment losses amounting to R2,0 million (Jun 2018: R3,5 million),
recognised under IAS 39, from operating expenses to impairment loss on trade receivables in profit or loss.
The Group has taken an exemption not to restate comparative information for prior periods in respect of
measurement, i.e. impairment, requirements. Accordingly, there was no amount recognised in retained earnings
and the information presented in 2017 does not reflect the requirements of IFRS 9 but rather those of IAS 39.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a five-step model for entities to use in accounting for revenue arising from contracts with
customers. The new standard is based on the principle that revenue is recognised at an amount that reflects
the consideration to which the entity expects to be entitled in exchange for transferring goods or services
to a customer. The new standard supersedes all current revenue recognition requirements under IFRS.
The Group adopted IFRS 15 using the cumulative effect method (without practical expedients). Accordingly, the
information presented for 2017 has not been restated. A full analysis was performed on the revenue streams
of the Group, concluding that there is no material change to revenue recognition under IFRS 15 from IAS 18.
2. FINANCIAL PREPARATION AND REVIEW
The unaudited condensed consolidated interim financial statements for the period ended 31 December 2018 have
been prepared by Rolfes Holding Limited's Group financial reporting team. This process was supervised by the
Group's Chief Financial Officer, Mr AP Broodryk, and approved by the Rolfes Holdings Limited Board of
directors on 4 March 2019.
3. SEGMENT REPORT
Segmental analysis for the year ended 31 December 2018
Dis-
Agri- Total continued
culture Food Chemicals Colour Water Other (continuing) (Silica) Total
Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Total revenue 167 062 395 568 221 502 43 883 20 138 18 258 866 411 - 866 411
- External revenue 165 405 390 082 197 885 41 395 20 059 18 258 833 084 - 833 084
- Inter-segment
revenue 1 657 5 486 23 617 2 488 79 - 33 327 - 33 327
Gross profit 49 256 61 519 39 547 7 158 12 905 1 591 171 976 - 171 976
EBITDA 20 366 39 659 21 179 1 706 800 (13 962) 69 748 (25) 69 723
HEPS adjustments 255 (18) 147 (14) 177 8 555 (910) (355)
Depreciation
and amortisation (3 144) (788) (643) (509) (953) (1 357) (7 394) - (7 394)
Share-based
payment expense - - - - - (2 052) (2 052) - (2 052)
PBIT 17 477 38 853 20 683 1 183 24 (17 363) 60 857 (935) 59 922
Total assets 324 543 440 996 162 463 54 654 37 431 37 500 1 057 587 1 928 1 059 515
Total liabilities (65 674) (143 240) (69 901) (10 922) (11 657) (261 563) (562 957) (358) (563 315)
NAV 258 869 297 756 92 562 43 732 25 774 (224 063) 494 630 1 570 496 200
Inventories 97 804 157 145 56 311 24 667 3 789 (1 129) 338 587 - 338 587
Trade receivables 65 969 143 297 59 226 15 209 6 210 6 882 296 793 416 297 209
Trade payables (46 328) (136 104) (56 260) (8 321) (8 959) 23 323 (232 649) (176) (232 825)
Net working capital 117 445 164 338 59 277 31 555 1 040 29 076 402 731 240 402 971
Segmental analysis for the year ended 31 December 2017
Dis-
Agri- Total continued
culture Food Chemicals Colour Water Other (continuing) (Silica) Total
Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Total revenue 164 301 348 187 192 431 36 757 24 046 15 537 781 259 1 263 782 522
- External revenue 160 859 336 761 167 582 31 857 21 419 15 537 734 015 1 263 735 278
- Inter-segment
revenue 3 442 11 426 24 849 4 900 2 627 - 47 244 - 47 244
Gross profit/(loss) 48 292 62 437 38 419 3 760 11 899 2 139 166 946 (2 327) 164 619
EBITDA 22 386 39 152 21 223 (3 483) (4 897) (20 554) 53 827 (4 149) 49 678
HEPS adjustments - (64) - 125 79 - 140 4 144
Depreciation
and amortisation (2 853) (411) (701) (654) (1 030) (628) (6 277) (645) (6 922)
IFRS 2 expense - - - - - - - - -
PBIT 19 533 38 677 20 522 (4 012) (5 848) (21 182) 47 690 (4 790) 42 900
Total assets 337 986 414 241 180 758 69 498 54 715 58 230 1 115 428 21 031 1 136 459
Total liabilities (105 293) (137 525) (90 872) (18 919) (18 340) (247 382) (618 331) (17 101) (635 432)
NAV 232 693 276 716 89 886 50 579 36 375 (189 152) 497 097 3 930 501 027
Inventories 100 018 139 189 61 124 32 379 4 244 3 871 340 825 10 537 351 362
Trade receivables 80 850 133 463 70 783 11 012 11 356 (18 339) 289 125 657 289 782
Trade payables (74 913) (124 423) (78 755) (16 446) (7 380) 32 293 (269 624) (1 557) (271 181)
Net working capital 105 955 148 229 53 152 26 945 8 220 17 825 360 326 9 637 369 963
Segmental analysis for the year ended 30 June 2018
Dis-
Agri- Total continued
culture Food Chemicals Colour Water Other (continuing) (Silica) Total
Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Total revenue 285 810 673 108 396 301 74 713 41 944 29 900 1 501 776 1 307 1 503 083
- External revenue 276 502 656 779 355 410 63 244 39 812 29 900 1 421 647 1 307 1 422 954
- Inter-segment
revenue 9 308 16 329 40 891 11 469 2 132 - 80 129 - 80 129
Gross profit 67 080 110 217 77 609 7 928 22 758 3 568 289 160 - 289 160
EBITDA 18 029 64 171 39 918 (3 700) (7 628) (35 265) 75 525 (77) 75 448
HEPS adjustments (714) (76) (83) (5 621) (5 328) (6 144) (17 966) 4 (17 962)
Depreciation
and amortisation (6 353) (1 192) (1 386) (1 386) (2 300) (1 775) (14 392) (753) (15 145)
IFRS 2 expense (317) (319) (476) - (239) (1 145) (2 496) - (2 496)
PBIT 10 645 62 584 37 973 (10 707) (15 495) (44 329) 40 671 (826) 39 845
Total assets 276 479 383 922 198 724 52 851 39 882 50 978 1 002 836 20 812 1 023 648
Total liabilities (60 430) (137 646) (96 780) (7 331) (11 227) (229 713) (543 127) (11 670) (554 797)
NAV 216 049 246 276 101 944 45 520 28 655 (178 735) 459 709 9 142 468 851
Inventories 82 430 127 288 86 306 29 790 3 726 5 198 334 738 - 334 738
Trade receivables 45 721 111 506 58 677 11 629 6 162 (289) 233 406 638 234 044
Trade payables (35 872) (129 510) (82 021) (4 632) (5 355) 8 285 (249 105) (716) (249 821)
Net working capital 92 278 109 284 62 962 36 787 4 533 13 194 319 039 (78) 318 961
4. REVENUE
The Group manufactures or procures and sells:
- Speciality fertilisers, adjuvants and remedies from its Agriculture division.
- Food ingredient chemicals and personal care chemicals from its Food as well as Other divisions.
- Industrial solvents and commodity chemicals, speciality chemicals as well as water treatment chemicals
from its Chemicals and Other divisions.
- Solvent and water-based products as well as traded products from its Colour and Other divisions.
- The Water division provides value-added services and solutions (including chemicals products) to its
customers in the commercial cooling and industrial and mining industries.
Sales from these products are recognised when control is transferred to the customer. Transfer of control is
dependent on each contract. In some contracts, transfer of control of the product takes place when the product
is collected from Group entities while in others it is upon delivery to the customer.
The Group does not have any contracts where the period between the transfer of the promised goods to the
customer and payment by the customer exceeds one year. As a consequence, as allowed by the practical expedient
in IFRS 15, the Group does not adjust any of the transaction prices for the time value of money.
Revenue from providing services (in the Water division) is recognised over a period of time. Revenue is
recognised based on the actual services and goods provided to the customer as a proportion of the total
services to be provided because the customer receives and uses the benefits simultaneously. Invoicing is
done monthly on actual services provided to date and the consideration is payable when invoiced. There is
not a practice to invoice in advance for performance obligations and accordingly at the reporting date
there are no outstanding performance obligations.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change.
Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the
period in which the circumstances that give rise to the revision become known by management.
Revenue per regions for the period ended 31 December 2018
Continuing
Agricultural Food Chemicals Colour Water Other operations
Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018
R'000 R'000 R'000 R'000 R'000 R'000 R'000
South Africa 153 541 353 241 212 375 41 753 20 138 - 781 048
Africa 5 222 42 327 9 127 2 130 - 18 258 77 064
International 8 299 - - - - - 8 299
Total (gross) 167 062 395 568 221 502 43 883 20 138 18 258 866 411
- Inter-segment
revenue 1 657 5 486 23 617 2 488 79 - 33 327
- External revenue 165 405 390 082 197 885 41 395 20 059 18 258 833 084
Revenue per regions for the year ended 31 December 2017
Continuing
Agricultural Food Chemicals Colour Water Other operations
Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017
R'000 R'000 R'000 R'000 R'000 R'000 R'000
South Africa 139 988 311 103 179 513 32 968 22 016 - 685 588
Africa 11 927 37 084 12 918 3 208 2 030 15 537 82 704
International 12 386 - - 581 - - 12 967
Total (gross) 164 301 348 187 192 431 36 757 24 046 15 537 781 259
- Inter-segment
revenue 3 442 11 426 24 849 4 900 2 627 - 47 244
- External revenue 160 859 336 761 167 582 31 857 21 419 15 537 734 015
Revenue per regions for the year ended 30 June 2018
Continuing
Agricultural Food Chemicals Colour Water Other operations
Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018
R'000 R'000 R'000 R'000 R'000 R'000 R'000
South-Africa 243 509 598 297 369 511 64 905 40 011 - 1 316 233
Africa 18 302 74 811 26 673 8 019 1 933 29 900 159 638
International 23 999 - 117 1 789 - - 25 905
Total (gross) 285 810 673 108 396 301 74 713 41 944 29 900 1 501 776
- Inter-segment
revenue 9 308 16 329 40 891 11 469 2 132 - 80 129
- External revenue 276 502 656 779 355 410 63 244 39 812 29 900 1 421 647
Revenue (timing of recognition) for the period ended 31 December 2018
Continuing
operations
Agricultural Food Chemicals Colour Water Other Group
Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018 Dec 2018
R'000 R'000 R'000 R'000 R'000 R'000 R'000
At a point in time 167 062 395 568 221 502 43 883 - 18 258 846 273
Over a period - - - - 20 138 - 20 138
Total 167 062 395 568 221 502 43 883 20 138 18 258 866 411
- Inter-segment
revenue 1 657 5 486 23 617 2 488 79 - 33
- External revenue 165 405 390 082 197 885 41 395 20 059 18 258 833 084
Revenue (timing of recognition) for the period 31 December 2017
Continuing
operations
Agricultural Food Chemicals Colour Water Other Group
Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017 Dec 2017
R'000 R'000 R'000 R'000 R'000 R'000 R'000
At a point in time 164 301 348 187 192 431 36 757 - 15 537 757 213
Over a period - - - - 24 046 - 24 046
Total 164 301 348 186 192 431 36 757 24 046 15 537 781 259
- Inter-segment
revenue 3 442 11 426 24 849 4 900 2 627 - 47 244
- External revenue 160 859 336 761 167 582 31 857 21 419 15 537 734 015
Revenue (timing of recognition) for the period ended 30 June 2018
Agricultural Food Chemicals Colour Water Other Group
Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018 Jun 2018
R'000 R'000 R'000 R'000 R'000 R'000 R'000
At a point in time 285 810 673 108 396 301 74 713 - 29 900 1 459 832
Over a period - - - - 41 944 - 41 944
Total 285 810 673 108 396 301 74 713 41 944 29 900 1 501 776
- Inter-segment
revenue 9 308 16 329 40 891 11 469 2 132 - 80 129
- External revenue 276 502 656 779 355 410 63 244 39 812 29 900 1 421 647
5. FAIR VALUE DISCLOSURE
The Group does not have any material items reported at fair value at the year end. Certain financial
instruments, being forward exchange contracts are measured using level 2 inputs, and presented under
derivative assets and liabilities.
6. SUBSEQUENT EVENTS
Cash dividend declaration
In accordance with Board policy to review dividend payments to shareholders at the end of each reporting
period, notice is hereby given that the Board declared an interim gross cash dividend of 4 cents per
ordinary share for year ended 31 December 2018. The dividend will be payable to shareholders recorded
in the register of the Company at the close of business on the record date appearing below.
The number of ordinary shares in issue at the date of this declaration is 161 942 800 (which includes
641 332 treasury shares).
The salient dates applicable to the final dividend are as follows:
Declaration date Monday, 4 March 2019
Last date to trade cum dividend Tuesday, 2 April 2019
Shares commence trading ex-dividend Wednesday, 3 April 2019
Record date Friday, 5 April 2019
Payment date Monday, 8 April 2019
In accordance with paragraphs 11.17(c)(i) to (x) and 11.17(c) of the JSE Listings Requirements, the
following additional information is disclosed:
- The local dividend tax rate is 20%;
- The dividends will be paid from cash reserves;
- The gross dividend to be used in determining the dividend tax is 4 cents per ordinary share;
- The dividend tax to be withheld by the Company is equal to 0,8 cents per ordinary share;
- The gross dividend amount is 4 cents per ordinary share for shareholders exempt from dividend tax;
- The net dividend amount is 3,2 cents per ordinary share for shareholders not exempt from dividend
tax; and
- Rolfes Holdings Limited's income tax reference number is 9492/089/14/0.
Where applicable, payment in respect of certificated shareholders will be transferred electronically
to shareholders' bank accounts on the payment date. In the absence of specific mandates, payment cheques
will be posted to certificated shareholders at their risk on the payment date. Shareholders who have
dematerialised their shares will have their accounts at their Central Securities Depository Participant
or broker credited on the payment date.
No share certificates may be dematerialised or rematerialised between Wednesday, 3 April 2019 and
Friday, 5 April 2019 both days inclusive.
There are no additional material events, other than those reported in this announcement, that have
occurred between 31 December 2018 and the date of this report which may have a material impact
on the understanding of this report and the financial information presented.
CORPORATE INFORMATION
REGISTERED OFFICE
First floor, The Oval West, Wanderers Office Park 52 Corlett Drive, Illovo, 2196
TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
DIRECTORS
MS Teke*, (Chairman), RM Buttle (Chief Executive Officer), AP Broodryk (Chief Financial Officer),
SS Mafoyane *# (Lead Independent Director), MM Dyasi*#, DM Mncube*#, MG Mokoka*#, CS Seabrooke*,
JR Winer*
* Non-executive # Independent
COMPANY SECRETARY
CorpStat Governance Services Proprietary Limited
PREPARED BY
RM Buttle and AP Broodryk
SPONSORS
Grindrod Bank Limited
REGISTERED AUDITORS
KPMG Inc.
www.rolfesza.com
Date: 04/03/2019 01:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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