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Rolfes Holdings Limited - Audited Summarised Preliminary Consolidated Results For The Year Ended 30 June 2014 And Notice Of The Annual General

Release Date: 18/09/2014 07:05:00      Code(s): RLF     
(Registration number 2000/002715/06)
Incorporated in South Africa
Share Code: RLF
(?Rolfes? or ?the Group?)

Audited Summarised Preliminary Consolidated Results For The Year Ended 30 June 2014 And Notice Of The
Annual General Meeting

* Turnover increased by 25% to R1 billion (June 2013: R802 million).
* Export turnover increased by 67% to R 215 million (June 2013: R129 million).
* Export turnover now comprises 21, 4% of turnover (June 2013: 16%).
* Gross profit margins improved to 22% (June 2013: 21%)
* Cash generated from operations increased to R69 million (June 2013: R 47 million).
* Headline earnings decreased by 7, 7% to 36, 2 cents per share (June 2013: 39, 2 cents per share).

                                                                       2014                      2013
                                                                       R?000                     R?000
Non-current assets                                                     260 933                   221 908
Plant and equipment                                                    69 525                    68 347
Property                                                               48 495                    27 512
Intangible assets                                                      142 913                   126 049
Current Assets                                                         456 990                   385 703
Inventories                                                            238 615                   210 148
Trade and other receivables                                            196 097                   166 841
Short term loans                                                       6 692                     4 975
Cash and cash equivalents                                              12 042                    -
Value Added Tax asset                                                  3 544                     3 739
Total assets                                                           717 923                   607 611
Capital and reserves                                                   337 095                   301 174
Share capital                                                          1 086                     1 086
Treasury shares                                                        (868)                     (868)
Share premium                                                          49 802                    49 802
Retained income                                                        222 853                   199 113
Revaluation reserve                                                    5 488                     2 193
Equity holders of the parent                                           278 361                   251 326
Non-Controlling interest                                               58 734                    49 848
Non-current liabilities                                                78 640                    72 358
Vendor loan                                                            7 379                     6 731
Interest-bearing liabilities                                           44 617                    40 656
Deferred tax liability                                                 23 244                    22 162
Provision                                                              2 602                     2 398
Loss in associate                                                      798                       411
Current liabilities                                                    302 188                   234 079
Trade and other payables                                               200 268                   152 149
Short term liabilities                                                 20 870                    16 885
Current portion of interest-bearing
liabilities                                                            19 850                    22 352
Cash and cash equivalents                                              54 631                    31 916
Tax liability                                                          5 708                     9 142
Provisions                                                             861                       1 635
Total equity and liabilities                                           717 923                   607 611

                                                  2014                2013
                                                  R?000               R?000
Revenue                                           1 001 407           801 716
Cost of sales                                     (777 865)           (634 406)
Gross profit                                      223 542             167 310
Other operating income                            6 020               28 463
Operating expenses                                (164 656)           (96 851)
Operating profit before interest                  64 906              98 922
Interest paid and finance charges                 (14 780)            (11 450)
Income from investments                           148                 412
Net profit before taxation                        50 274              87 884
Tax expenses                                      (12 219)            (23 660)
Profit for the year                               38 055              64 224
Profit for the year attributable to:
Continued operations                              45 125              67 398

Revenue                                           958 506             738 631
Cost of sales                                     (733 723)           (571 543)
Gross profit                                      224 783             167 088
Other operating income                            6 020               28 393
Operating expenses                                (156 077)           (92 151)
Finance cost                                      (14 780)            (11 450)
Finance income                                     148                412
Profit before tax                                  60 095             92 292
Tax expenses                                       (14 969)           (24 895)
Profit for the year                                45 126             67 398

Discontinued operations                            (7 071)            (3 175)
Revenue                                            42 901             63 085
Cost of sales                                      (44 142)           (62 863)
Gross Profit                                       (1 241)            222
Other operating income                             -                  70
Operating expenses                                 (8 579)            (4 700)
Finance cost                                       -                  -
Finance income                                     -                  -
Profit before tax                                  (9 821)            (4 408)
Tax expenses                                       2 750              1 235
Profit for the year                                (7 071)            (3 174)

Profit for the year attributable to:
Equity holders of the parent                       29 170             52 379
Non-controlling interest                           8 885              11 845
                                                   38 055             64 224
Reconciliation of headline earnings
Attributable profit                                29 170             52 379
Adjusted for the after-tax effect of:
Loss/ (Gain) from sale of fixed asset              2 467              (11 968)
Loss from associate                                387                411
Loss from discontinued operations                  7 071               -
Headline earnings                                  39 095             40 822
Earnings per share (cents)
- Basic                                            27.0               50.3
- Headline                                         36.2               39.2


                                                   2014               2013
                                                   R?000              R?000
Cash flow generated from
operating activities                               68 848             47 437
Finance income                                     148                412
Finance cost                                       (14 780)           (11 450)
Tax paid                                           (17 576)           (14 846)
Dividends paid                                     (5 429)            (10 360)
Cash flow utilised in
investing activities                               (41 222)           (57 317)
Cash flow generated from financing
activities                                         (662)               16 041
Cash (deficit) for the year                        (10 673)           (30 083)
Cash and cash equivalents
- beginning of the year                            (31 916)           (1 833)
Cash and cash equivalents
- end of the year                                  (42 589)           (31 916)


               Share   Share  Treasury    Retained    Reval-
                                                      uation             Non-      Total
                Cap-    prem    shares      income   reserve      controlling     equity
                ital                                                 interest
               R'000   R'000     R'000       R'000     R'000            R'000      R'000
Balance at
30 June 2012   1 036  28 603     (868)     157 094     2 193           25 924    213 982
Recognising of
interest           -       -        -            -         -           12 079     12 079
Issue of new
shares            50  21 199        -            -         -                -     21 249
Total comprehensive
income for
the year           -       -        -       52 379         -           11 845     64 224
declared           -       -        -     (10 360)         -                -    (10 360)
Balance at
30 June 2013   1 086  49 802     (868)     199 112     2 193           49 848     301 174
Total comprehensive
income for
the year           -      -         -       29 170     3 295            8 885      41 350
declared           -      -         -       (5 429)        -                -     (5 429)
Balance at
30 June 2014   1 086  49 802     (868)      222 853    5 488           58 734     337 095


                                             Gross             Operating                           Liabili-
                           Revenue           profit            profit
                                                               before tax        Assets            ties
                           R?000             R?000             R?000             R?000             R?000
Chemicals                  509 060           73 135            28 327            265 196           146 539
Chemicals                  285 241           83 458            42 534            227 605           163 409
Mining and Water
Chemicals                  159 795           63 780            23 234            152 975           93 397
Industrial Chemicals
Discontinued               42 901            (1 241)           (9 821)           -                     -
Other                      4 410              4 410           (19 368)           46 723             3 582
Elimination of
and other                  -                 -                 -                 25 424            (26 099)
Total                      1 001 407         223 542           64 906            717 923           380 828
Chemicals                  439 861           75 523            41 135            280 994           147 630
Chemicals                  234 765           76 846            44 439            181 400           136 328
Mining and Water
Chemicals                  62 227            19 421            13 451            126 750           81 308
Industrial Chemicals
Discontinued               63 085            222               (4 408)           -                 -

Other                      1 778             (4 702)           4 305             42 497            (13 024)
Elimination of
and other                  ?                 ?                  ?                (24 030)          (45 805)
Total                      801 716           167 310           98 922            607 611           306 437

The basis of preparation of the segmental analysis, include certain intercompany transactions being eliminated in the
respective segmental results in the current and previous year?s reporting.


During the year under review, the Group focused its efforts on the consolidation of acquisitions, streamlining of divisional
structures, unlocking synergies and organic growth of the various niche acquisitions it has made since listing in 2007.
The Group performance and market share, and product diversity has exponentially increased through these acquisitions
and have resulted in turnover increasing from R164 million in 2006 (pre-listing) to R 1,0 billion for the year ended 30
June 2014 (June 2013: R 802 million).

Enhancing shareholder value remained a key driver of the strategic plan for the Group and will remain so in the future.
We have however reached a defining moment in our history, with reasonable but flat headline earnings this year. We are
looking forward to the next growth phase on which we believe our current strategy will set the Group.

We take cognisance of a fairly disappointing performance in our pigments business during the past two years. The
business performance was negatively influenced by specific challenges which we have swiftly acted on and resolved
with positive changes on all levels. Some of the significant changes were the closure of the loss making resin plant and
the sale of the plant and equipment, executive management changes and the discontinuation of low margin traded
product lines, resulting in an immediate turnaround in profitability. The executive directors and management have
invested considerable efforts in this business during the year to ensure a sustainable solution.

The Group acquired 100% of the shares in Agchem Properties for R17, 2 million thereby acquiring the Waltloo factory
premises, ensuring that all manufacturing operations are now conducted on Group owned premises.

Rolfes operates in various markets, locally and internationally, as a provider of industrial, agricultural, water and mining
chemicals. The Group manufactures and distributes a wide range of market-leading, high-quality chemical products to
diverse industries including the coatings, plastics, vinyl, leather tanning, ink, metallurgical, cleaning, formulators,
automotive, general manufacturing, agricultural, food, construction, home care, personal care, water filtration, water
treatment and water purification industries. The Group operates through three divisions.

The Industrial Chemicals division manufactures and distributes various organic and inorganic pigments, additives, in-
plant and point-of-sale dispersions, leather chemicals and solutions, food fragrances, food flavourings, solvents, lacquer
thinners, surfactants, cleaning solvents, creosotes, waxes and other industrial chemicals.

The Agricultural Chemicals division manufactures and distributes products that include herbicides, insecticides,
fungicides, adjuvants, foliar feeds, enriched compost pellets, and soluble fertilisers promoting general plant, root, and
foliage and soil health.

The Mining and Water Chemicals division distributes pure beneficiated silica to the mining, metallurgical, fertiliser, water-
filtration and construction industries. The division also provides specialised water purification solutions and products to
the industrial, agricultural, mining, home and personal care markets.
The Group?s international footprint now extends to North America, Asia, the rest of Africa, Eastern and Western Europe,
with owned operations in Botswana, Zambia, Nigeria, Tanzania and Romania.


Group revenue increased by 25% to R 1, 0 billion (June 2013: R 801, 7 million). The increase in revenue is mainly due to
the inclusion of the PWM acquisition for the full financial year to June 2014 and export growth. Exports, including also
sales and services rendered in the foreign subsidiaries, contributed R 214, 5 million (June 2013: R128, 6 million) to
revenue, comprising 21, 4% of total revenue to June 2014 (June 2013: 16, 0% of total revenue). This amounts to an
increase of 66, 8% over the prior year. The increase is attributed mainly to export growth into the rest of Africa and

Gross profit increased to R 223, 5 million (June 2013: R 167, 3 million) with gross profit margins increasing to 22, 3%
(June 2013: 20, 8%).The improvement in gross profit margins is mainly attributable to the higher margin water chemical

Operating costs increased partly due to the inclusion of the PWM companies for the full financial year and further
investment into Africa and Eastern Europe. Operating profit decreased to R 64, 9 million (June 2013: R 98, 9 million) at a
margin of 6, 5 % of turnover (June 2013: 12, 3%), mainly due to the loss from discontinued operations in 2014, and the
abnormal profit on the sale of land during 2013.

EBITDA decreased by R31, 8 million to R 75, 2 million (June 2013: R 107, 0 million) primarily as a result of the once off
profit on the sale of the Jet Park property during the prior year of R 16, 6 million (pre-tax), and the discontinued
operations and loss on sale of assets of R13, 3 million (pre-tax) during 2014. EBITDA is calculated as operating profits
plus depreciation and amortisation of R 10, 3 million (June 2013: R 8, 1 million).

Discontinued operations comprise the closure costs of the negative margin resin business. Headline earnings per share
and fully diluted headline earnings per share decreased by 7, 7 % to 36, 2 cents (June 2013: 39, 2 cents). Earnings per
share decreased by 46, 3 % to 27, 0 cents (June 2013: 50, 3 cents). The movement between the earnings per share and
headline earnings per share in the current year is attributable to the discontinued operations of R7, 1 million (after tax) as
well as the loss on sale of fixed assets amounting to R 2, 5 million (after tax). The weighted average shares for the
period was 107 968 467 (June 2013: 104 218 467).

The total net asset value (excluding non-controlling interest) increased to R 278, 4 million (June 2013: R 251, 3 million)
while net tangible asset value per share increased to 124, 7 cents (June 2013: 115, 3 cents), based on 108 609 467
(June 2013: 108 609 467) shares in issue.

Finance costs increased to R 14, 7 million (June 2013: R 11, 5 million) mainly due to higher interest paid on the Agchem
Group overdraft and interest paid on working capital funding in the PWM businesses for the full year. Interest cover
reduced to 4, 4 times (June 2013: 8, 6 times) with the total debt (interest-bearing) to equity ratio increasing to 0, 39 for
June 2014 (June 2013: 0, 35).

The Group improved its cash generated from operating activities to R68, 9 million (June 2013: R 47, 4 million). It paid
cash dividends of R 5, 4 million during the financial year (June 2013: R10, 4 million) to shareholders from current cash
resources. The increase in net working capital investment on 30 June 2014 of R 11, 5 million (June 2013: R40, 9
million), represents an increase in inventory of R 28, 5 million (June 2013: R33, 2 million) and an increase in accounts
receivable of R 28, 1 million (June 2013: R30, 2 million), respectively, set off by an increase in accounts payable and
value added tax of R 45, 0 million (June 2013: R22, 5 million).

Debtors? days increased to 62, 7 days (June 2013: 61, 9 days) mainly due to longer customer payment terms on exports,
an investment to allow market penetration and assist with market share gain. Stock days increased to 101, 7 days
(excluding stock in transit) (June 2013: 98 days (excluding stock in transit)). Investment in stock to enable the movement
of product to market in the upcoming high season, contributed to increased stock levels. Creditors? days increased to 73,
4 days (excluding stock in transit suppliers) (June 2013: 69, 3 days (excluding stock in transit suppliers), effectively
funding the increase in stock and debtors days. The net investment in working capital remained at 91 days (June 2013:
91 days).

Cash flow utilised in investing activities of R41, 2 million (June 2013: R57, 3 million) includes capex of R18, 0 million
(June 2013: R28, 8 million) for improvements and upgrades of manufacturing facilities, premises infrastructure upgrades
and vehicles to improve logistics capabilities. R10, 2 million was invested in product development activities (June 2013:
R 7. 7 million). The property, on which the agri-chemicals factory is situated, was acquired through the Agchem Property
acquisition for R17, 2 million of which R17, 0 million was funded by a bond registered over the property. Proceeds from
the sale of the resin plant amounted to R4, 6 and the disposal of other assets amounted to R 1, 5 million.

The cash flow utilised in financing activities of R 0, 6 million (June 2013: R16, 0 million - generated) is comprised of loan
repayments of R 24, 3 million (June 2013: R23, 5 million) and financing obtained for capital projects and other capital
expenditure of R 23, 8 million (June 2013:R17, 5 million) including the Agchem Property loan of R17, 0 million and a R6,
8 million increase in short term loans and instalment sales.



Turnover increased by 15, 7% to R 509, 1 million (June 2013: R 439, 8million). The increase is mainly due to the growth
in Africa and the newly established leather chemicals division. Gross profit margins decreased to 15, 3% (June 2013: 17,

The division?s achievements were negatively influenced by the weaker pigments results, production inefficiencies now
being addressed, and senior management changes. Local trading suffered due to the slow upturn of the economy and
short and late supply of certain key raw materials and traded products. The volatile Rand/USD exchange rate resulted in
higher raw material input costs somewhat counteracted by the exchange rate effect on exports. The Group decided to
discontinue the negative margin resin business and closed the resin plant during the year under review. In addition,
trading in certain low margin product lines was discontinued.

Operating costs increased to R 45, 9 million (June 2013: R 35, 5 million) mainly due to continued investment on skills in
the leather chemicals division and into the rest of Africa.

Capital expenditure of R 7, 8 million included the expansion and improvement of production facilities, investment in
testing/laboratory facilities and transport fleet upgrades to extend logistics capabilities.
The Group decided to extend and upgrade the current pigment plant facilities to accommodate organic product take off in the
pigments business and to delay the building of a large new pigment plant for the time being. The extension and upgrading of
current facilities will more than accommodate revised planned take off for the next financial year.

The division will continue to improve its pigments operations, aggressively grow its European and African business and build
on the initial successes of the leather chemical business.


Turnover increased by 21, 5% to R 285, 2 million (June 2013: R 234, 8 million). Gross profit margins decreased to 29,
3% (June 2013: 32, 7%). Eastern Europe performed well for the year under review while the identification of new
distribution channels and an increase in consignment stock allocation to allow faster and increased access to certain
products assisted with the sales performance. National sales performance was however affected as the late agri-
chemical season and below average spring rainfall across the country, adverse weather conditions in the Orange River
region and dry pre-season conditions in the Western Cape resulted in a very low incidence of diseases with a
consequent loss in product sales and margin decline.
Operating costs increased to R 44, 3 million (June 2013: R 35, 9 million) due to increased marketing and expansion
costs into Eastern Europe and Africa and an investment into technical skills locally and internationally.

Capital expenditure of R17, 6 million included further upgrades of the existing production facility and investment into
research and product development amounting to R10, 2 million. Additional manufacturing and storage facilities will be
erected on the newly acquired vacant property adjacent to the Agchem factory in Waltloo during 2016, due to current
property lease agreements still in place until then.
The division is looking forward to reaping the benefits of new distribution channels in Ghana, Mozambique, Zimbabwe
and Zambia. The expansion into Eastern Europe proved successful and an investment into technical skills will cement
growth even further. The division will continue to distribute products in the USA through its current distribution channel.
New product registrations, including product registrations for the exciting new seed division established during the year
under review, are granted continuously both locally and internationally. The Stimuplant range of biological products
provided a foothold into the lucrative soya market. A natural flow of product to the substantial maize market not
previously targeted promises vast potential.

With green technology and products relating to global farming becoming a reality, an active drive for new biological
products exists in agriculture. New entrants into this market mainly focus on seed and soil applied products. As
previously reported, the division has partnered with the University of Pretoria (UP) in a research and product
development programme to identify and evaluate soil Plant Growth Promoting Rhizobacteria (PGPR) for biological
control of soil-borne plant diseases and as bio fertilisers. Agchem has now obtained the licencing from UP to
commercialise these bacterial strains worldwide. A research laboratory and pilot fermentation unit has been erected at
the premises in Waltloo for the development of PGPR products which not only screen new products but is also
responsible for the production of trial quantities. New product dossiers have been submitted in terms of the Registrar Act
36 of 1947 and registration is expected soon. Trial commercialisation is now in process, with full commercialisation of the
PGPR?s expected in 2016. The commissioning of a pilot plant as previously reported has become unnecessary as a
potential toll manufacturer has been identified to manufacture the PGPR?s in the interim period, until sufficient volumes
require new facilities.


Turnover increased by 156, 8% to R 159, 8 million (June 2013: R 62, 2 million) and gross profit margins increased to 39,
9% (June 2013: 31, 2 %), mostly attributable to the PWM acquisition which is now included for the full financial year.

Operating costs increased to R 41, 5 million (June 2013: R 8, 1 million) due to the inclusion of the acquisition for the full
year and investment in technical skills in the PWM business.

Capital expenditure incurred amounted to R 2, 8 million and comprised investments into upgrades required in terms of
regulations at the Silica mine in Brits and the extension of the water chemicals fleet to improve logistics capabilities.
Sustainable growth opportunities have been identified for the PWM business focused on the middle to large industrial
sector resulting in market share gains in the mining, food, automotive and textile industries. In addition to this, PWM is in
final negotiations to conclude an exclusive distribution, and royalty, manufacturing and licensing agreement with a global
water treatment company which will secure the technology to service the middle to large industrial sector in large parts of
Sub-Saharan Africa. The focus in the well positioned trading component of the division is on the expansion of the product
range and the improvement of service into the personal care, home care and foam/coatings industry.

The silica operation has yielded acceptable results for the period under review although performance was affected by the
recent five month long AMCU strike. The effect of the strike was counteracted by new customers coming on board. The
operation continued to implement plant upgrades to comply with DMR and other relevant legislation.

The rand weakened to the USD during the last six months of the financial year. This affected the Group positively
regarding exports but had a negative impact on input costs. We constantly take our Group net foreign exchange
exposure into account and follow a consistent approach to hedging of short term foreign exchange exposures to
defend our margins and cash flows. The net effect was a foreign exchange profit of R 0, 8 million (June 2013: R1,
7 million).

The general South African manufacturing environment remained weak for the period under review, the negative
effects thereof being partially offset by an increase in our export business.


The fundamental approach for the forthcoming year will be the building of strategic alliances locally and
internationally. The rest of Africa continues to be a key growth area for all divisions with the focus being on
establishing new businesses according to our current business model of appointing key staff and leveraging on
strategic relationships in African countries through various vehicles while carefully monitoring and mitigating the
associated risks. A focus on improved product and service offerings through current and new alliances will unlock
further growth potential.

Eastern Europe has performed well beyond expectation since inception this year and further market share growth is
expected in Eastern and Western Europe. The newly established Nigerian operation has yielded exceptional results,
and the new Tanzanian operation is now established.

Projects to leverage the purchasing power and procurement synergies within the Group have been undertaken. On
an operational level, focus remains on optimising and improving working capital investment, the
consolidation/reduction of overheads, as well as improving on the Group?s safety, health and environmental
programmes and initiatives.

Statements made throughout this announcement concerning the future performance of the Group have not been
reviewed or reported on by the Group?s auditors.


Standards have been set and initiatives have been implemented and fast tracked to ensure delivery on annual
transformation targets.

Non-compliance in a highly regulated industry can lead to personal injury, reputational damage, fines and the loss of
certain operating licences. We have a well-engrained compliance culture balanced with an understanding of our
rights under the relevant laws where we operate

The Group recognises the fundamental role of human capital in securing sustainable success and
remains committed to protecting, motivating and incentivising this critical asset. The Group
further recognises that transformation is crucial to future growth and steps are underway to improve our
transformation performance.

The Group recognises the recommendations of King III and remains committed to sound corporate governance and
sustainability practices.


A dividend of 5 cents per share was paid on 21 October 2013. After careful consideration, the Board has decided
that the dividend policy be amended for the current year and that no dividend be declared. The Group wishes to
preserve its cash resources to ensure that it invests into growth areas of the business. This decision will be
reviewed at each reporting period.


The audited summarised preliminary consolidated annual financial statements are prepared as a going concern
on a historical cost basis except for items stated at fair value, as applicable.

The Board acknowledges its responsibility for the preparation of the audited summarised preliminary
consolidated annual financial statements which were prepared by Mr Andre Hanekom CA(SA), the Chief
Financial Officer of Rolfes Holdings Limited. The audited summarised preliminary consolidated annual financial
statements for the year ended 30 June 2014 have been prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and
the International Accounting Standard 34 (IAS 34); the South African Institute of Chartered Accountants (SAICA)
financial reporting guidelines as issued by the Accounting Practices Committee (APC) and financial reporting
pronouncements as issued by the Financial Reporting Standards Committee, the interpretations adopted by the
International Accounting Standards Board (IASB), the JSE Listings Requirements and the South African
Companies Act, as amended.

The audited summarised preliminary consolidated annual financial results do not include all the information
required by IFRS for full financial statements.
The accounting policies adopted in the preparation of the consolidated annual financial statements for the year
ended 30 June 2014 are consistent with those applied in the preparation of the annual financial statements for
the year ended 30 June 2013.

Acquisitions during the period
Purchase of 100% of the shares in Agchem Property (Pty) Limited
On 1 January 2014 the Group acquired 100% of the voting equity instruments of Agchem Property (Pty) Limited.
The acquisition was funded with a bank loan. The company?s principal activities comprise property holding of the
premises occupied by Agchem Africa (Pty) Limited and the adjacent property next to the factory. On acquisition
the book value of the assets and liabilities acquired were considered to equal the fair value.
                                                                                        Book value
Investment Property                                                                         17 930
Investment                                                                                   2 184
VAT asset                                                                                      139
Tax asset                                                                                       46
Long term liabilities                                                                       (5 115)
Short term liabilities                                                                      (1 482)
Sundry loans                                                                                (2 892)
Deferred Tax                                                                                (2 297)
Goodwill on acquisition                                                                      8 027
Total purchase consideration                                                                16 540
Plus: Cash and cash equivalents                                                                703
                                                                                            17 243

Goodwill in the business combinations arose from the cost of combination including a control premium paid to
acquire 100% of Agchem Property (Pty) Limited. The consideration paid for the combination effectively included
amounts in relation to the benefit of expected synergies. These benefits are not recognised separately from
goodwill as the future economic benefit arising from them cannot be measured reliably. No amount of goodwill is
expected to be deducted for tax purposes.

The Group also acquired the customer lists and customer relationship as part of the acquisition. These assets
could not be reliably measured and separately recognised from goodwill because they are not capable of being
separated from the Group and sold, transferred, rented or exchanged, either individually or together with any
related contracts.

Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the
business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given,
liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the
acquiree. The acquiree?s identifiable assets, liabilities and contingent liabilities that meet the conditions for
recognition under IFRS 3 Business Combinations are recognised at their fair values at the acquisition date.

An annual impairment test on the balance of goodwill and intangible assets at the beginning of the reporting year
has been performed at 30 June 2014. No impairment loss has occurred.
Goodwill increased during the year as a result of the purchase of 100% shares in Agchem Property (Pty) Limited.

The acquisition of Agchem Property was a related party transaction and is disclosed in the business combination
note above. The Group companies entered into various other related party transactions. These transactions are
no less favourable than those entered into with third parties and occur on an arm?s length and commercial basis.

The auditor, SizweNtsalubaGobodo Inc., has issued its opinion on the group?s financial statements for the year
ended 30 June 2014. The audit was conducted in accordance with International Standards on Auditing.
SizweNtsalubaGobodo has issued an unmodified audit opinion. These audited summarised preliminary
consolidated financial results have been extracted from the group financial statements and are consistent in all
material respects with the group financial statements. A copy of the audit report is available for inspection at the
Company?s registered office. The auditor?s report does not necessarily report on all the information contained in
this announcement. Shareholders are therefore advised that in order to obtain a full understanding of the nature
of the auditor?s engagement they should obtain a copy of the audit report together with the accompanying
financial information from the Company?s registered office. Any reference to future financial performance included
in this announcement has not been reviewed or reported on by the Company?s auditor. There were no material
subsequent events that required disclosure.

Shareholders are advised that the annual report for the financial year ended 30 June 2014 will be mailed in due
course. This report will contain the notice and related details of the annual general meeting of shareholders to be
held at Corporate Business Park North, 404 Roan Crescent, Midrand, at 9h00 on Friday, 31 October 2014.

On behalf of the Board
BT Ngcuka                                            E van der Merwe
Chairman                                             Chief Executive Officer
18 September 2014

Registered office: 12 Jetpark Road, Jetpark, Boksburg, 1459
Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg 2001
BT Ngcuka* (Chairman), E van der Merwe (Chief Executive Officer), L Lynch (Chief Operating Officer and
Company Secretary), A Hanekom (Chief Financial Officer), AJ Fourie*, M Teke*, KT Nondumo*#, TAM
Tshivhase*#, SS Mafoyane *# , MM Dyasi*#, DM Mncube *#
# Independent
Preparer: A Hanekom CA (SA)
Sponsors: Grindrod Bank Limited
Registered auditors: SizweNtsalubaGobodo Incorporated

Date: 18/09/2014 07:05:00 Supplied by www.sharenet.co.za                     
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