Go Back Email this Link to a friend


Rolfes Holdings Limited - Preliminary Reviewed Condensed Consolidated Results For The Year Ended 30 June 2015

Release Date: 21/09/2015 07:05:00      Code(s): RLF     
ROLFES HOLDINGS LIMITED
(Registration number 2000/002715/06)
Incorporated in South Africa
Share Code: RLF
ISIN:ZAE000159836
(?Rolfes? or ?the Group?)
www.rolfesza.com

PRELIMINARY REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 2015

PERFORMANCE SUMMARY
* Turnover increased by 13, 0% to R 1, 13 billion (June 2014: R1, 00 billion).
* Gross profit increased by 12, 4% to R 251.3 million (June 2014: R 223, 5 million).
* Export turnover increased by 20% to R 257, 4 million (June 2014: R 214, 5 million).
* Net asset value increased by 9.9 % to R309 million
* Headline earnings increased by 30, 4 % to 38, 2 cents per share (June 2014: 29, 3 cents per share - restated).

REVIEWED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2015


                                                                      REVIEWED                     AUDITED

                                                                          2015                      2014


                                                                          R?000                     R?000
ASSETS
Non-current assets                                                        287 227                  266 137
Plant and equipment                                                        73 023                   69 525
Property                                                                   57 412                   48 495
Intangible assets                                                         149 681                  142 913
Deferred taxation asset                                                     7 111                    5 204

Current assets                                                            531 026                  456 990
Inventories                                                               215 127                  238 615
Trade and other receivables                                               185 074                  196 097
Short term loans                                                            6 642                    6 692
Assets classified as held for sale                                         95 732                        -
Cash and cash equivalents                                                  11 873                   12 042
Value added tax asset                                                      11 240                    3 544
Tax asset                                                                   5 338                        -
Total assets                                                              818 253                  723 127
EQUITY AND LIABILITIES
Capital and reserves                                                      372 304                  337 095
Stated capital                                                             50 888                   50 888
Treasury shares                                                              (868)                    (868)


Retained income                                                           253 677                  222 853
Revaluation reserve                                                         5 488                    5 488
Foreign currency translation reserve                                         (141)                       -
Equity holders of the parent                                              309 044                  278 361
Non-controlling interest                                                   63 260                   58 734
Non-current liabilities                                                    77 606                   83 844
Vendor loan                                                                     -                    7 379
Interest-bearing liabilities                                               42 274                   44 617
Deferred tax liability                                                     32 496                   28 448
Provision                                                                   2 836                    2 602
Loss in associate                                                               -                      798
Current liabilities                                                       368 343                  302 188
Trade and other payables                                                  160 287                  200 268
Short term liabilities                                                     27 433                   20 870
Derivative liabilities                                                         17                        -
Current portion of interest-bearing
liabilities                                                                24 381                   19 850
Current portion of vendor loan                                             17 935                        -
Liabilities directly associated with
assets classified as held for sale                                         60 179                        -
Cash and cash equivalents                                                  71 586                   54 631
Value Added Tax liability                                                   2 958                        -
Tax liability                                                               3 567                    5 708
Provisions                                                                      -                      861
Total equity and liabilities                                              818 253                  723 127

REVIEWED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
                                                  REVIEWED            RESTATED

                                                      2015            2014
                                                  R?000                R?000
Revenue                                          1 131 954           1 001 407
Cost of sales                                     (880 678)           (777 865)
Gross profit                                       251 276             223 542
Other operating income                               5 769               6 020
Operating expenses                                (177 526)           (164 656)
Operating profit before interest                    79 519              64 906
Interest paid and finance charges                  (18 864)            (14 780)
Income from investments                                531                 148
Net profit before taxation                          61 186              50 274
Tax expenses                                       (13 836)            (12 219)
Profit for the year                                 47 350              38 055
Other comprehensive income
Revaluation of property                                  -               3 295
Exchange differences from
translating foreign operations                        (141)                  -
Total comprehensive income                          47 209              41 350


Profit for the year attributable to:
Equity holders of the parent                        39 371              29 170
Non-controlling interest                             7 979               8 885
                                                    47 350              38 055
Reconciliation of headline earnings
Attributable profit                                 39 371              29 170
Adjusted for the after-tax effect of:
(Gain)/Loss from sale of plant and equipment           (96)              2 467
Impairment of loans                                  1 951                   -
Headline earnings                                   41 226              31 637
Earnings per share (cents)
- Basic                                               36.5                27.0
- Headline                                            38.2                29.3

REVIEWED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015
                                                   REVIEWED            AUDITED

                                                    2015                2014
                                                   R?000               R?000
Cash flow generated from
operating activities                                38 927             68 848
Finance income                                         531                148
Finance cost                                       (18 864)           (14 780)
Tax paid                                           (19 743)           (17 576)
Dividends paid                                           -             (5 429)
Cash flow (utilised in)
investing activities                               (27 248)           (40 519)
Cash flow generated from/(utilised in) financing
activities                                          18 168             (1 365)
Cash (deficit) for the year                         (8 229)           (10 673)
Cash and cash equivalents
- beginning of the year                            (42 589)           (31 916)
Effects of exchange rate fluctuations on
translation of cash held in foreign currency          (141)                 -
Cash and cash equivalents
- end of the year                                  (50 959)           (42 589)

REVIEWED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015

                 Share Share Treasury              Retained
                                                                                       Non-                  Total
                 Cap-   prem shares                income             Reserves         controlling           equity
                 ital                                                                  interest
                 R'000 R'000     R'000              R'000              R'000            R'000                 R'000
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
Dividends
declared            -       -       -                (5 429)               -                 -                 (5 429)
Balance at
30 June 2014 1 086 49 802 (868)                     222 853            5 488            58 734                337 095
Total comprehensive
income for
the year            -       -       -                39 371             (141)            7 979                 47 209
Acquisition of minority
Interest            -       -       -                (8 547)               -            (3 453)               (12 000)
Balance at
30 June 2015    1 086  49 802    (868)              253 677            5 347            63 260                372 304

SEGMENTAL ANALYSIS FOR THE YEAR ENDED 30 JUNE 2015

                                          Gross              Operating                            Liabili-
                        Revenue           profit             profit
                                                             before tax       Assets              ties
                        R?000             R?000              R?000            R?000               R?000
2015
Agricultural            404 413           107 327             40 770           316 068              161 971
Water                   188 810            74 661             29 627           103 585               28 943
Industrial              538 731            69 288             24 637           315 430              175 553
Other                         -                 -            (15 515)           83 170               79 482
Elimination of
intergroup
items
and other                     -                 -                  -                 -                    -
Total                 1 131 954           251 276             79 519           818 253              445 949


2014
Agricultural            285 241            83 458             42 534           227 605             163 409
Water                   159 795            63 780             23 234           152 975              93 397
Industrial              551 961            71 894             18 506           265 196             146 539
Other                     4 410             4 410            (19 368)           46 723               3 582
Elimination of
intergroup
items
and other                     -                 -                  -            25 424             (26 099)
Total                 1 001 407           223 542             64 906           717 923             380 828

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

ASSETS CLASSIFIED AS HELD FOR SALE

During the year, the company entered into agreements to sell its investment in Acacia Specialty Chemicals (Pty) Limited and
Introlab Chemicals (Pty) Limited, operating within the Agricultural segment, to the minority shareholders. The transactions are
expected to be finalised shortly after financial results have been published.

Acacia Specialty Chemicals (Pty) Limited and Introlab Chemicals (Pty) Limited (the disposal group) have been classified as held-
for-sale and measured at the lower of their carrying value or fair value less cost to sell at reporting date.

No impairment losses were recognised on reclassification of the subsidiaries as held-for-sale. The Group's directors expect that the
fair value less costs to sell of the disposal group will be higher than the carrying amount of the total related assets and liabilities for
the subsidiaries.

Assets and liabilities of non-current assets held-for-sale

                                                                             Acacia         Introlab      Total disposal
                                                                                                               Group
                                                                             R?000                R?000             R?000
Property, plant and equipment                                                  591                  113               703
Intangible assets                                                                -                    4                 4
Inventory                                                                   28 470               17 310            45 780
Trade and other receivables                                                 18 095               20 962            39 057
Deferred taxation liability                                                     88                   18               106
Derivative asset                                                                80                   -                 80
Cash and cash equivalents                                                    9 859                  143            10 002
Assets held-for-sale                                                        57 183               38 550            95 732


Long-term liabilities                                                          391                    -               391
Trade and other payables                                                    39 150                8 920            48 070
Short term loans                                                            10 362                    -            10 362
Current portion of interest-bearing liabilities                                108                    -               108
Bank overdraft                                                                   -                1 248             1 248
Liabilities related to assets held-for-sale                                 50 012               10 168            60 179
Reconciliation of non- current assets held for sale
Assets held-for-sale                                                        57 183               38 550            95 732
Liabilities related to assets-held for-sale                                 50 012               10 168            60 179
Total non-current assets classified as held-for-sale                         7 171               28 382            35 553


PRIOR PERIOD RESTATEMENT

Following a review of the Integrated Annual Report by the JSE through its Pro-Active Monitoring process and advice the JSE
received from the FRIP and shared with the company, the company decided to restate the transaction and include the discontinued
resins business as part of continued operations and headline earnings. In addition, the loss incurred by the group on the accounting
of its loss on associate is now added back in calculating headline earnings.

In addition to the above, in the Cash Flow Statement the company treated the entire value of its acquisition of Agchem Properties
(Pty) Limited gross of cash acquired as an investing activity. This amount is now reflected net of cash acquired.
The effects of the restatements are set out below:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year

                                                      Restated               As presented          Variance
                                                        2014                      2014
                                                         R?000                     R?000              R?000
Revenue                                                1 001 407                 1 001 407                 -
Cost of sales                                           (777 865)                 (777 865)                -
Gross profit                                             223 542                   223 542                 -
Other operating income                                     6 020                     6 020                 -
Operating expenses                                      (164 656)                 (164 656)                -
Operating profit before interest                          64 906                    64 906                 -
Interest paid and finance charges                        (14 780)                  (14 780)                -
Income from investments                                      148                       148                 -
Net profit before taxation                                50 274                    50 274                 -
Tax expenses                                             (12 219)                  (12 219)                -
Profit for the year                                       38 055                    38 055                 -
Profit for the year attributable to:
Continued operations                                                                45 125           (45 125)


Revenue                                                                            958 506          (958 506)
Cost of sales                                                                     (733 723)          733 723
Gross profit                                                                       224 783          (224 783)
Other operating income                                                               6 020            (6 020)
Operating expenses                                                                (156 077)          156 077
Finance cost                                                                       (14 780)           14 780
Finance income                                                                         148              (148)
Profit before tax                                                                   60 095           (60 095)
Tax expenses                                                                       (14 969)           14 969
Profit for the year                                                                 45 126            45 126


Discontinued operations                                                             (7 071)            7 071
Revenue                                                                             42 901           (42 901)
Cost of sales                                                                      (44 142)           44 142
Gross Profit                                                                        (1 241)            1 241
Other operating income                                                                   -                 -
Operating expenses                                                                  (8 579)            8 579
Profit before tax                                                                   (9 821)            9 821
Tax expenses                                                                         2 750            (2 750)
Profit for the year                                                                 (7 071)            7 071


Profit for the year attributable to:
Equity holders of the parent                                 29 170                 29 170                 -
Non-controlling interest                                      8 885                  8 885                 -
                                                             38 055                 38 055                 -
Reconciliation of headline earnings
Attributable profit                                          29 170                 29 170                 -
Adjusted for the after-tax effect of:
Loss from sale of
plant and equipment                                           2 467                  2 467                 -
Loss from associate                                                                    387              (387)
Loss from discontinued operations                                                    7 071            (7 071)
Headline earnings                                            31 637                 39 095            (7 458)
Earnings per share (cents)
- Basic                                                        27.0                   27.0                 -
- Headline                                                     29.3                   36.2              (6.9)


As displayed above, the impact of the restatement means there will not be discontinued operations, which is now included in
continuing operations. Therefore there is no requirement to reflect a split between continuing and discontinuing operations.



CONSOLIDATED STATEMENT OF CASH FLOWS for the year
                                                       Restated                    As presented          Variance
                                                         2014                         2014
                                                         R?000                        R?000              R?000
Cash flow (utilised in)
investing activities                                     (40 519)                     (41 222)               703
Cash flow (utilised in) financing
activities                                               (1 365)                         (662)              (703)

As displayed above the movement represents cash acquired that was reflected as part of financing activities and is now set off
against the total purchase consideration, reflected in investing activities.

The JSE through its Pro-active Monitoring process have highlighted certain disclosure deficiencies which the group have
incorporated in the 2015 Annual Report.

COMMENTARY

GROUP STRATEGY

The Group, as a competitive JSE-listed company, is on a track to build a black controlled industrial group, well positioned to provide
specialised niche and commodity chemicals and related products to contribute and support the global need for food, agricultural,
water, industrial products and infrastructure development in domestic and foreign emerging markets. The Group has positioned
itself to support these needs through its water, agricultural and industrial chemicals divisions, as well as through the pending food
division acquisition. The Group product offering includes value- add intellectual capital and technological innovation to further
support to the Groups? contribution.

The focus will be on organic and acquisitive growth with the former focussing on extending the product basket and range of
services through developing strategic distribution partnerships in Africa and other strategic target markets. The latter, with a
continuation of the acquisition drive of businesses within the chemicals and related products markets.

Mr Erhard van der Merwe, Group CEO since listing in 2007 has decided since the reporting date to relinquish his role as CEO and
Ms Lizette Lynch, the previous COO and Group FD, was appointed as CEO on 15 July 2015. Mr van der Merwe will continue to
add value to the Group as a director being responsible for Corporate Finance activities in the Group. Siegfried Sergel was
appointed to the board on 15 July 2015 as Group Financial Director. T Swanepoel resigned as company secretary on
18 September 2015 and Corp Stat Governance Services was appointed as company secretary with immediate effect.

GROUP PRODUCT OFFERING AND DIVISIONAL STRUCTURE

The Group currently operates through three divisions being the Water, Agricultural and Industrial divisions, with the addition of a
Food division pending finalisation of the Bragan Chemicals acquisition. The acquisition will add value in the food, bakery, beverage,
dairy, pharmaceutical and cosmetics industries.

The Group presently manufactures and distributes a diverse range of market-leading, high-quality chemical products to diverse
industries. It operates in the coatings, plastics, vinyl, leather tanning, ink, metallurgical, cleaning, formulators, automotive, general
manufacturing, agricultural, ,construction, home care, personal care, water filtration, water treatment and water purification
industries.

The Agricultural division manufactures and distributes products that promote plant -, root-, and foliar health, soil nutrition, disease
prevention and - control and various other agricultural remedies.

The Water division provides specialised water purification solutions and products to the industrial, agricultural, mining, home and
personal care markets. The division distributes and manufactures pure beneficiated silica to the mining, metallurgical, fertiliser,
water-filtration and construction industries.

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

The Group?s international footprint and customer base extends to Asia, the rest of Africa, North America, Eastern and Western
Europe, with operations in Botswana, Zambia, Nigeria, and Romania.

GROUP OVERVIEW

During the year under review, the Group concentrated efforts on redefining the group strategy to drive shareholder value. The
restructuring and repositioning of its industrial businesses as well as the minority interest buy outs and disposals in the Agricultural
divisions. The minority shareholders buy outs of the water chemicals trading business, Tetralon, have also been completed and the
business is strategically repositioned in the Industrial division.

Further unlocking of synergies and expanding product offerings, contributed to improved divisional performance. However drought
conditions experienced in South Africa and neighbouring countries during the financial year described as the worst since 1992; had
an impact on the Agri business performance. Delays experienced with respect to finalisation of development projects in the Water
division had a negative impact on business performance.

Free cash flow improvement strategies implemented included the reduction of export credit terms without sacrificing the customer
base as well as concerted efforts to collect certain past due debtors. Slow moving stock has been significantly reduced.
Manufacturing facilities have been restructured and optimised without significant capital investment allowing for increased capacity
to accommodate future growth.

OPERATING ENVIRONMENT

The global economy continued to expand at a moderate and uneven pace as the prolonged recovery process from the global
financial crisis was still evident throughout Europe. Global recovery was further hampered by new and unexpected challenges,
including heightened geopolitical conflicts in several areas of the world. Among developing countries, Africa?s overall growth
momentum for the year under review was acceptable albeit slower than expected.

The Group?s current businesses require a certain level of infrastructure to be in place for business exports into developing
countries. This infrastructure creation has also been at a slower than expected pace. Overall, the South African manufacturing
environment remained weak for the period under review.

The weakening rand and global currency volatility, depreciation of the Nigerian currency, lower rerating of the Zambian currency
and the European debt crises all had an impact on Group results. However, import raw material and traded goods cost increases
were in most instances passed on to customers, resulting in a ripple effect with product demand reducing in some instances. Lower
oil prices and increases in export sales offered somewhat of a buffer against negative effects of the strengthening US dollar.
Limited currency availability in some African countries where the Group trades also had an impact on debt collection days.

GROUP FINANCIAL PERFORMANCE

Group revenue increased by 13, 0 % to R 1, 13 billion (June 2014: R 1, 00 billion). The increase in revenue is mainly due to export
growth which includes sales and services rendered by foreign subsidiaries. Exports contributed R 257, 4 million (June 2014: R214,
5 million) to revenue, comprising 22, 7 % of total revenue to June 2015 (June 2014: 21, 4% of total revenue). This amounts to an
increase of 20, 0 % over the prior year. The increase is attributed mainly to export growth into the rest of Africa and Europe.

Gross profit increased to R 251, 3 million (June 2014: R 223, 5 million) with gross profit margins remaining at 22% (June 2014:
22%).

Operating costs increased by 7, 8% partly due to further investment into Africa and Eastern Europe. Operating profit improved to R
79, 5 million (June 2014: R 64, 9 million) at a margin of 7, 0% of turnover (June 2014: 6, 5%).

EBITDA increased by R 13, 7 million to R 88, 9 million (June 2014: R 75, 2 million). EBITDA is calculated as operating profits plus
depreciation and amortisation of R 9, 4 million (June 2014: R 10, 3 million).

Headline earnings per share and fully diluted headline earnings per share increased by 30, 4 % to 38.2 cents from 29.3 cents
(restated) in June 2014. Earnings per share increased by 35, 2 % to 36.5 cents (June 2014: 27. 0 cents). The movement between
the earnings per share and headline earnings per share in the current year is attributable to the impairment of loans of R1, 95
million (after tax) as well as the gain on sale of fixed assets amounting to R 96 k (after tax). The weighted average number of
shares in issue for the period was 107 968 467 (June 2014: 107 968 467).

Total net asset value (excluding non-controlling interest) increased to R 309, 0 million (June 2014: R 278, 4 million) while net
tangible asset value per share increased to 146, 7 cents (June 2014: 124, 7 cents), based on 108 609 467 (June 2014: 108 609
467) shares in issue.

Net finance costs increased to R 18, 3 million (June 2014: R 14, 6 million) mainly due to higher interest paid on the Agchem Group
overdraft, operating at higher utilisation levels due to higher stock holding. Interest cover reduced to 4, 3 times (June 2014: 4, 4
times) with the total debt (interest-bearing) to equity ratio increasing to 0.41 for June 2015 (June 2014: 0, 39).

GROUP CASH FLOW PERFORMANCE

Cash generated from operating activities reduced to R 38, 9 million (June 2014: R 68, 8 million).

Net working capital decreased by R 10, 3 million (June 2014: R11, 5 million). Inventories decreased by R23, 4 million (June 2014:
R28, 5 million) and accounts receivable decreased by R 3, 3 million (June 2014: R 28, 1 million), while accounts payable and value
added tax decreased by R 37, 0 million (June 2014: R 45, 0 million). Assets held for sale are excluded from the above calculations
and disclosed separately on the statement of financial positions as separate line items under current assets and current liabilities.
Assets and liabilities held for sale include inventories of R45, 8 million, trade and other receivables of R39, 1 million and accounts
payable of R48, 1 million with the net working capital investment effect being R36, 8 million.

Debtors? days improved to 52, 4 days (June 2014: 62, 7 days), stock days decreased to 89, 2 days (June 2014: 111, 9 days) and
creditors? days decreased to 58, 2 days (June 2014: 82, 4 days) with the net investment in working capital being 83, 2 days (June
2014: 92, 2 days). Assets held for sale being inventory, trade and other receivables and trade and other payables are excluded
from the above calculations.

Cash flow utilised in investing activities of R 27, 2 million (June 2014: R40, 5 million) includes capex of R 21, 3 million (June 2014:
R18, 0 million) for improvements and upgrades of manufacturing facilities, premises infrastructure upgrades and vehicles to
improve logistics capabilities. R 8, 0 million was invested in product development activities (June 2014: R 10, 2 million). The
Botswana warehouse facilities, in progress prior to acquisition in June 2013 and now completed was funded by a bond registered
over the property.

Cash flow generated by financing activities of R 18, 2million (June 2014: R 1, 4 million - utilised) mainly comprised of additional
short term funding raised.

OPERATIONAL REVIEW

AGRICULTURAL DIVISION

Turnover increased by 41, 7% to R 404, 4 million (June 2014: R 285, 2 million) due to improved performance in the Eastern
European business and the agri trading businesses. Gross profit margins decreased to 26, 5% (June 2014: 29, 3%) as a result of
the improved performance in the trading businesses. The drought conditions experienced in the Western Cape region in the 2014
financial year season was followed by a national drought during the latter part of the financial year with consequent loss in product
sales and margin decline. The divisions? geographic spread and product range diversity does however provide a risk mitigation
buffer against drought conditions.

Operating costs increased to R 66, 6 million (June 2014: R 41,1 million) due to the inclusion of Agchem Europe costs of R3, 5
million included for the full financial year, certain once off insurance costs, increased marketing and expansion costs into Eastern
Europe and Africa. The balance of the increase in costs related to Galltec Western Cape and the impairment of certain assets and
loan accounts amounting to R5, 3 million. The Agchem Africa cost structure is undergoing a review to ensure optimisation and
effective structuring thereof.

Capital expenditure of R 13, 2 million included further upgrades of the existing production facility and investment into research and
product development of PGPR?s and other products, amounting to R 8, 0 million. Manufacturing facilities were effectively
restructured to create additional capacity to accommodate growth.

With green technology and products relating to global farming becoming a reality, an active drive for new biological products exists
in agriculture. 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. Trial commercialisation is progressing well, with full commercialisation of the PGPR?s
expected in 2016 pending registration with Act 36. Conversion of the market to the usage of natural, biological products will take a
certain amount of time with expected benefits being progressively visible within the next five years.

Agricultural product distribution in Africa was dependent on certain product registrations and distribution channels being put in
place. The process is on-going with registrations concluded and distribution channels secured. Manufacturing capacity has been
restructured is now adequate to support growth in the next year. Key macro drivers for agricultural product distribution is the
contribution to food security, increased productivity, improved farming work methods, increased investment in commercial and rural
farming activities in countries like Mozambique, Kenya, Tanzania, Nigeria, Zambia, Ghana and others. The local agri market
remains competitive and sophisticated. New tools to facilitate product sales include the ?Absolute Farming? concept that provides
precision farming analysis methods whereby scientific analysis of farmland and crop health is assessed through the use of drones
and infrared technology.

WATER DIVISION

Turnover increased by 18, 2% to R 188, 8 million (June 2014: R 159, 8 million) and gross profit margins reduced slightly to 39, 5%
(June 2014: 39, 9%). Performance was influenced by certain delays in contract completions in Botswana resulting in a delay in
profit recognition. The contacts will be completed during the 2016 financial year.

Operating costs increased by 9% to R 45, 0 million (June 2014: R 40, 4 million). The increased costs are as a result of an
investment in capabilities to manufacture and sell the Solenis product range which will give the division entry into among others, the
petrochemical industry. Solenis is a leading global manufacturer of speciality chemicals for the pulp, paper, oil and gas, chemical
processing, mining and bio- refining, power and municipal markets. The company?s products includes an array of process,
functional and water treatment chemistries as well as state of the art monitoring control systems. With its head office in Delaware
the company operates 30 manufacturing facilities strategically located around the world. The royalty, manufacturing and distribution
agreement concluded with Solenis positions the water division to compete in large industrial sectors which previously proved to be
difficult.

Capital expenditure incurred amounted to R 11, 3 million and included the Botswana property under construction at acquisition, 
which was completed during the year and capitalised at R7.3m. The balance of the investments included upgrades required in terms of
regulations at the Silica mine in Brits and the extension of the water chemicals fleet to improve logistics capabilities.

The silica operation has yielded acceptable results for the period under review although performance was affected by the mining
industry crisis. New customers in the water filtration market have however largely counteracted the resultant effect on performance.
The operation continued to implement plant upgrades to comply with DMR and other relevant legislation.

The Water division footprint in Africa currently extends into Botswana only. The team with the new product range is now well
positioned to take advantage of contract opportunities in Africa. Distribution channels in Zimbabwe, Ghana, Nigeria and Tanzania
aimed at descaling products for irrigation and for the Solenis product range, are being explored with some identified and others
already in the negotiation phase. Botswana is well established with new contract opportunities not far from being concluded. Macro
drivers in Africa are increased manufacturing and economic activity, increased infrastructure development and the availability of
new suitable technology to service the African market.

INDUSTRIAL DIVISION

Turnover decreased by 2.4% to R 538, 7million (June 2014: R 551, 9 million). The marginal decreases in top line performance is
mainly due to the resin turnover now excluded and lower than expected exports into the European market, counteracted by
excellent performance in the Rolfes Chemicals business. Gross profit margins decreased marginally to 12, 9 % (June 2014: 13,
0%).

The volatile Rand/USD exchange rate resulted in higher raw material input costs effect somewhat counteracted through exports.

Operating costs reduced by 16, 1 % to R 44, 7 million (June 2014: R 53, 3 million) due to restructuring and rights sizing of the cost
base towards the latter part of the financial year. The volatile Rand/USD exchange rate resulted in higher raw material input costs
somewhat counteracted by the exchange rate effect on exports.

Capital expenditure of R 4, 7 million included the continued improvement of production facilities, quality management systems,
investment into testing/laboratory facilities and transport fleet upgrades.

The industrial chemical business continues on its path to add new products to the basket and extend its product range. Current
distribution channels and critical evaluation to optimise the product range being distributed into Africa have been completed and
strategies to ensure improved performance on margin have been implemented. New distribution channel in Tanzania was
established. The identified macro drivers include oil and commodity prices, increased manufacturing activity and infrastructure
development within target countries.

The pigments division continue to show improvement with the employment of a technical industry specialist as MD in the business. The
business will continue on its path to driving niche, high margin, organic dispersion products and explore opportunities sin the middle east
and in the rest of Africa.

FORWARD LOOKING

The global economy is expected to continue on a slow growth and recovery path.. Sluggish trade growth in developed countries is
expected to see some improvement albeit in a challenging macroeconomic environment, as weaknesses in their domestic
economies interact with external financial vulnerabilities. Average inflation for developing economies is expected to fall slowly,
owing to increasingly prudent monetary policies. Growth in private consumption and investment are expected to remain the key
drivers of GDP growth across all five African sub regions and all economic groupings. The dominant discussion on foreign
exchange markets has been the appreciation of the United States dollar, expected to remain volatile especially against currency
rates of emerging economies resulting in some short term risks and concerns.

The Group will continue to pursue strategic acquisitions and organic growth opportunities in the chemicals and related products
markets to the mining, pharmaceutical, petrochemicals, animal health and feeds, and personal care sectors. Acquisitions to be
pursued will include those with footprints in Africa and abroad. Larger acquisitions with higher barriers to entry possessing owned
intellectual property, infrastructural development capabilities or product registrations and those with exclusive distribution, agency
or equivalent attributes will take priority.

Organic growth strategies remain the addition of new product lines, the pursuit of new customers, new local and export markets for
its current range and entries into new industries. The Bragan acquisition, once concluded will add new industry entry points for
current businesses and the ability to gain immediate entry to supply current products into its customer base. Bragan will also add
significant value to the Group given its product lines and market positioning. The Group in turn will provide the Bragan business
with the necessary BBBEE credentials to sell into the beverage and other industries. Regional expansion and export market
development for the Bragan products will be a focal point for the year ahead.

Group import consolidation strategies have been implemented to improve buying power and actively assist with the identification of
new products to add to the product offering and are well underway. Good progress has been made to conclude exclusive
distribution rights in Africa with global manufacturers of certain chemical products, which will add noteworthy value to the group?s
product offering. Restructuring of the agri manufacturing facility with minimal capital investment, optimising current industrial space
and property to maximise utilisation across the Group will allow for a reduction in capital expenditure and the resultant improvement
in free cash flow. Critical reviews of productivity and the current cost base is in progress to ensure that businesses are right sized
for optimal performance. The further alignment of ERP systems will ensure further optimal material and stock holding planning. The
development and launches of organic and biological product ranges and solutions in both water and agri are envisaged towards the
end of the 2016 financial year.

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

DIVIDENDS

The Board has reviewed the dividend policy and decided 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.

BASIS OF PREPARATION

The reviewed condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for preliminary reports, and the requirements of the Companies Act applicable to condensed financial
statements. The Listings Requirements require preliminary 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 the Financial
Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34, Interim Financial Reporting.

The reviewed condensed consolidated financial statements do not include all the disclosure required for complete annual financial
statements prepared in accordance with IFRS as issued by the International Accounting Standards Board. These reviewed
condensed consolidated financial statements have been prepared in accordance with the historic cost convention except that
certain items, including derivative instruments, financial assets and available-for-sale financial assets, are stated at fair value.

The reviewed condensed consolidated financial statements appearing in this announcement are the responsibility of the directors.
The directors take full responsibility for the preparation of the condensed consolidated financial statements. This set of condensed
consolidated financial statements has been prepared under the supervision of the financial director, Siegfried Sergel CA (SA).

The preliminary reviewed condensed consolidated financial statements comprise the condensed consolidated statement of
financial position as at 30 June 2015 and the condensed consolidated statements of comprehensive income, changes in equity
and cash flows for the year then ended.

ACCOUNTING POLICIES

The reviewed condensed consolidated 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 2015 are consistent with those applied in the preparation of the consolidated annual financial statements for the year
ended 30 June 2014. These accounting policies have been adopted in all material aspects during the preparation of the
reviewed condensed consolidated financial statements.

New standards and interpretations, which became effective during the current period, have been adopted but there
has been no material effect on the consolidated results.

BUSINESS COMBINATIONS AND CORPORATE ACTIONS

Acquisitions and disposals during the period

The acquisition of subsidiaries is accounted for using the acquisition method when control is transferred to the Group. The cost of
the acquisition is measured at 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, plus any costs directly attributable to
the business combination. Transaction costs are expensed as incurred, except if they relate to the issue of debt or equity
instruments. 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, except for non-current assets (or disposal
groups) that are classified as held for sale in accordance with IFRS 5: Non-current Assets Held for Sale and Discontinued
Operations, which are recognised and measured at fair value less costs to sell.

Acquisition of minority shareholders in Tetralon (Pty) Ltd (?Tetralon?)

As disclosed in the SENS announcement released on 23 February 2015 the Group purchased 30% of the remaining share capital
of Tetralon from its minority shareholders for an amount of R12 million. The effective date of the transaction was 1 January 2015.
The operations of Tetralon were then incorporated into Rolfes Chemicals (Pty) Ltd a wholly owned subsidiary of Rolfes. This
transaction was between related parties.

SUBSEQUENT EVENTS

Acquisition of 100% of the shares in Bragan Chemicals (Pty) Ltd (?Bragan?)

As disclosed in the SENS announcement released on 15 July 2015 the Group entered into an agreement for the acquisition of
100% of the share capital of Bragan for a total purchase consideration of R213, 1 million. The effective date of the acquisition is
the first business day of the month following the month during which the last of the conditions precedent to the Acquisition were
fulfilled or waived. This is expected to be 1 October 2015. The acquisition has been approved at a general meeting of
shareholders on 31 August 2015 as reflected on the SENS announcement released on 31 August 2015.

Acquisition of minority shareholders in Agchem Holdings (Pty) Ltd (?Agchem?)

As disclosed in the SENS announcement released on 4 June 2015 the Group entered into an agreement for the acquisition of 30%
of the remaining share capital of Agchem from its minority shareholders for a maximum total purchase consideration of R47,9
million of which R10 million is deferred to 30 September 2017 based on certain profit warranties. The effective date of this
transaction is 1 July 2015 and is subject to certain conditions as disclosed in the SENS announcement released on 4 June 2015.
This transaction is between related parties.

Disposal of Agchem Holdings (Pty) Ltd (?Agchem?) 50% shareholding in Introlab Chemicals (Pty) Ltd (?Introlab?)

As disclosed in the SENS announcement released on 4 June 2015. Agchem has entered into an agreement for the sale of its 50%
share in Introlab for a consideration of R12, 4 million. The effective date of this transaction is 1 July 2015 and is subject to certain
conditions as disclosed in the SENS announcement released on 4 June 2015. The Asset has been accounted for as ?Non ?
current assets classified as Held for Sale? in the Annual Financial Statements in terms of IFRS 5. This transaction is between
related parties.

Disposal of Agchem Holdings (Pty) Ltd (?Agchem?) 51% shareholding in Acacia Speciality Chemicals (Pty) Ltd (?Acacia?)

As disclosed in the SENS announcement released on 4 June 2015. Agchem entered into an agreement for the sale of its 51%
share in Acacia for a consideration of R6,3 million. The effective date of this transaction is 1 July 2015 and is subject to certain
conditions as disclosed in the SENS announcement released on 4 June 2015. The asset has been accounted for as ?Non ?
current assets classified as Held for Sale? in the Annual Financial Statements in terms of IFRS 5. This transaction is between
related parties.

Issue of shares to fund 50% of the Bragan transaction and the minority shareholding acquisitions.

Masimong Group, a company owned by Mr Mike Teke, will subscribe for 45 million new Rolfes shares via a subsidiary company.
Mike Teke is currently a non-executive director of the Group. He was appointed to the board in April 2013. Mr Dinga Mncube will
subscribe for 3,33 million new Rolfes shares. Dinga Mncube is currently a non-executive director of the Group since June 2014.
The aforementioned 48, 33 million shares will be acquired at R3 per share for an aggregate subscription consideration of R145
million. The issue price is equivalent to the 30-day VWAP for Rolfes up to 12 June 2015 when the price of the issue was approved
by the Rolfes Board. The issue of shares was subject to the approval of Rolfes? shareholders (75% - specific issue of shares for
cash). The approval was granted at a general meeting held on 31 August 2015. These transactions are between related parties.

Under a general authority to issue shares a further 5 million shares at R3 per share will be issued to Westbrooke Capital
Management to fund the acquisitions detailed above.

RELATED PARTY TRANSACTIONS

The Group companies entered into various other related party transactions. These transactions are no less favourable than those
entered into with third parties and occurred on an arm?s length and commercial basis. All significant related party transactions are
disclosed in the business combination as well as the subsequent events notes above.

GOODWILL AND INTANGIBLE ASSETS

An annual impairment test on the balance of goodwill and intangible assets at the end of the reporting year has been performed at
30 June 2015. No impairment loss has occurred.

REVIEW OPINION

These preliminary condensed consolidated financial statements have been reviewed by SizweNtsalubaGobodo Inc. in terms of
International Standards on Review Engagements. A copy of this review report is available for inspection at the Company?s
registered office. The review 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 review report together with the accompanying financial information from the Group?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 other than those events referred to in this
announcement.

NOTICE OF THE ANNUAL GENERAL MEETING AND MAILING OF INTEGRATED ANNUAL REPORT

Shareholders are advised that the integrated annual report for the financial year ended 30 June 2015 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, 6 November 2015.

On behalf of the Board
BT Ngcuka                                             L Lynch
Chairman                                              Chief Executive Officer

21 September 2015

Registered office: 12 Jetpark Road, Jetpark, Boksburg, 1459

Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg 2001

Directors: BT Ngcuka* (Chairman), L Lynch (Chief Executive Officer), E van der Merwe (Director: Corporate Finance), SA Sergel
(Group Financial Director), M Teke*, KT Nondumo*#, SS Mafoyane *#, Dr MM Dyasi*#, DM Mncube *#
*Non-executive
# Independent

Preparer financial information: SA Sergel CA (SA)
Preparer commentary: L Lynch
Company secretary: CorpStat Governance Services (Pty) Ltd
Sponsors: Grindrod Bank Limited
Registered auditors: SizweNtsalubaGobodo Incorporated
Investor Relations: J de Bie

Date: 21/09/2015 07:05:00 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             . The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.


                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2017 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.