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RLF - Rolfes - Acquisition of AgChem and withdrawal of cautionary announcement

Release Date: 18/08/2011 07:05:01      Code(s): RLF
RLF - Rolfes - Acquisition of AgChem and withdrawal of cautionary announcement  
ROLFES TECHNOLOGY HOLDINGS LIMITED                                              
(Incorporated in the Republic of South Africa)                                  
(Registration Number:  2000/002715/06)                                          
JSE Share Code:  RLF                                                            
ISIN:  ZAE000096202                                                             
("Rolfes" or "the Company")                                                     
1.   Introduction                                                               
Shareholders are referred to the announcement published by Rolfes on 12     
    July 2011 wherein shareholders were advised that Rolfes had made a firm     
    offer to acquire 70% of the issued ordinary share capital of, and           
    shareholders loan accounts (if any) against, AgChem ("the Acquisition"),    
which firm offer had been duly accepted.                                    
2.   Fulfilment of various conditions precedent                                 
    Further to the aforementioned announcement of 12 July 2011, Rolfes has      
*    a commercial, legal and financial due diligence on AgChem to its       
         satisfaction; and                                                      
    *    a sale of shares and claims agreement with the respective vendors,     
         which incorporated:                                                    
-    Andre Dafel (including the HAD Family Trust) and Andre Shoeman    
              (including   entering into 3 year restraint of trade agreements,  
              to ensure that they do not and will not in the future for the     
              period of the restraint, compete materially with the existing     
business of AgChem;                                               
         -    Andre Dafel granting AgChem the right to commercialise certain    
              products formulated and/or manufactured by Andre Dafel, and       
              AgChem agreeing to purchase future packaging from Andre Dafel;    
         -    warranties that are standard for a transaction of this nature.    
3.   Outstanding conditions precedent                                           
The Acquisition remains subject to the fulfilment of the following          
    principal conditions precedent:                                             
    *    Rolfes entering into a shareholders` agreement with the remaining      
*    Each of the remaining shareholders, Johan Pretorius and Stephan Naude, 
         entering into new employment contracts with AgChem;                    
    *    AgChem entering into lease agreements in respect of two properties     
         currently occupied by AgChem and its subsidiaries;                     
*    Nedbank Limited, or any other registered bank or financial             
         institution, granting Rolfes the required credit facilities in respect 
         of the purchase consideration;                                         
    *    the transfer of all banking arrangements to Nedbank, excluding fixed   
term asset finance arrangements;                                       
    *    the unconditional approval of the Acquisition by the Competition       
         Commission, as required, and if such approval is conditional, to such  
         conditions being acceptable to the parties concerned;                  
*    any other regulatory approvals as may be required to implement the     
         Acquisition; and                                                       
    *    subject to certain specified exceptions, no circumstance, event or     
         matter, or combination of circumstances, events or matters, which has  
or might reasonably be expected to have a material adverse effect on   
         the affairs, business, financial condition (including assets,          
         liabilities, prospects, results of operations or revenues), operations 
         and/or property of AgChem and its subsidiaries (taken as a whole),     
having occurred before the effective date, being the date upon which   
         the last of the conditions precedent has been fulfilled or waived.     
    Rolfes shareholders will be advised as and when each of these conditions    
    precedent has been fulfilled.                                               
4.   Pro forma financial effects                                                
    The unaudited pro forma financial effects, for which the directors are      
    responsible, are provided for illustrative purposes only to show the effect 
of the Acquisition on the earnings, headline earnings, diluted earnings and 
    diluted headline earnings per share as if the Acquisition had taken effect  
    on 1 July 2010 and on the net asset value and net tangible asset value per  
    share as if the Acquisition had taken effect on 31 December 2010.  Because  
of their nature, the unaudited pro forma financial effects may not give a   
    fair presentation of the Company`s financial position and performance.  The 
    unaudited pro forma financial effects have been compiled from the unaudited 
    consolidated financial statements for the six months ended 31 December 2010 
and are presented in a manner consistent with the format and accounting     
    policies adopted by Rolfes and have been adjusted as described in the       
                         Before the    After the        Notes     Change        
Acquisition   Acquisition                (%)           
                         (Note 1)      (Note 2 and 3)                           
    Earnings per share   14.8          16.8             4,6,7     13.5          
    Diluted earnings     14.8          16.8             4,6,7     13.5          
per share                                                                   
    Headline earnings    14.9          16.8             4,6,7     12.8          
    per share                                                                   
    Diluted headline     14.9          16.8             4,6,7     12.8          
earnings per share                                                          
    Net asset value      145.2         155.6            5,6,7     7.2           
    per share                                                                   
    Tangible net asset   114.0         101.5            5,6,7     (11.0)        
value per share                                                             
    Weighted average     102 968       102 968                    -             
    number of shares                                                            
    in issue (`000)                                                             
Shares in issue      103 609       103609                     -             
    1.   The "Before the Acquisition" column reflects the unaudited results of  
Rolfes for the six months ended 31 December 2010.                      
    2.   The "After the Acquisition" column reflects what the results would     
         have been had the Acquisition been effective for the full six month    
         period, for income statement purposes and as at 31 December 2010 for   
balance sheet purposes.                                                
    3.   The results for the 6 months ended 28 February 2011 pertaining to      
         AgChem have been extracted with adjustment from AgChem`s audited       
         annual financial statements for the twelve months ended 28 February    
2011.  The AgChem results for the six months to 28 February 2011 have  
         been adjusted in respect of the 30% shareholding in AgChem that Rolfes 
         is not acquiring.                                                      
    4.   Interest has been provided for using a rate of 9% p.a. (pre-tax) in    
respect of the facilities to be utilised to fund the full              
         consideration in respect of the Acquisition.                           
    5.   The maximum future vendor liability of R8,25 million has been provided 
         for.  Interest has been accrued for using a rate of 9% p.a. (pre-tax)  
in respect of this liability.                                          
    6.   Once off transaction costs in respect of the Acquisition of R2 million 
         (pre-tax) have been provided for.                                      
    7.   Tax has been provided for using a rate of 28%.                         
8.   Based on the audited results of AgChem for the six months ended 28     
         February 2011, the net assets of AgChem that are the subject of the    
         Acquisition amount to R29,6 million and the attributable earnings      
         amount to R5,2 million (i.e. Rolfes` 70% shareholding).                
Shareholders should note that the results of AgChem have been extracted     
    from the audited results of AgChem for the year ended 28 February 2011 but  
    that these results have themselves not been audited or reviewed. Rolfes is, 
    however, satisfied with the quality of these accounts and the related       
procedures adopted by AgChem and its incumbent auditors in extracting the   
    six months results to 28 February 2011 from the audited annual financial    
    statements of AgChem for the year ended 28 February 2011.                   
5.   Withdrawal of cautionary announcement                                      
Rolfes shareholders are advised that the cautionary announcement which was  
    last renewed on 12 July 2011 is hereby withdrawn.                           
18 August 2011                                                                  
Corporate Advisor and Designated Advisor:                                       
Grindrod Bank Limited                                                           
Legal Advisor:                                                                  
Werksmans Inc.                                                                  
Date: 18/08/2011 07:05:01 Supplied by www.sharenet.co.za                     
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