Unaudited Abridged Financial Results for the Six Months Ended 31 December 2012 Rare Holdings Limited (Incorporated in the Republic of South Africa) (Registration Number: 2002/025247/06) Share Code: RAR ISIN: ZAE000092714 ("Rare" or "the Company") UNAUDITED ABRIDGED FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2012 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2012 2011 2012 R`000 R`000 R`000 Revenue 103 424 174 238 304 383 Cost of sales (86 452) (165 639) (294 307) Gross profit 16 972 8 599 10 076 Other income 2 439 577 4 333 Operating expenses (26 882) (48 198) (100 528) EBITDA (7 471) (39 022) (86 119) Depreciation and amortisation (577) (3 552) (3 735) Investment income 512 35 2 035 Finance costs (9 641) (11 450) (22 323) Loss before taxation (17 177) (53 989) (110 142) Income tax - 2 162 (7 287) Loss for the period from continuing operations (17 177) (56 151) (117 429) Loss for the period from discontinuing operations - (13 374) (102) Attributable to: Equity holders of the parent (17 177) (71 278) (120 585) Non-controlling interest - 1 753 3 054 Weighted average number of ordinary shares in issue 1 353 590 292 449 415 443 Loss per ordinary share (cents) From continuing and discontinued operations(basic and diluted) (1.27) (24.37) (29.03) From discontinued operations - (4.57) (0.76) Headline earnings per share Loss attributable to equity holders of the parent (17 177) (71 278) (117 429) Impairment of goodwill - 457 457 Impairment of loans receivable - 1 393 3 598 Reversal of loan impairment (60) - - Impairment of investment - - 900 Profit on disposal of sale of business - - (819) Impairment of intangible asset - - 5 031 (Profit)/Loss on disposal of property, plant and equipment (136) 571 (1 267) Headline loss attributable to ordinary shareholders from continuing and discontinuing operations (17 373) (68 857) (109 531) Discontinuing operations - (13 374) (3 155) Weighted average number of ordinary shares in issue 1 353 590 292 449 415 443 Headline loss per ordinary share (cents) From continuing and discontinued operations(basic and diluted) (1.28) (23.54) (27.12) From discontinued operations - (4.57) (0.76) CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2012 2011 2012 R`000 R`000 R`000 Loss for the period (17 177) (69 525) (117 531) Exchange difference on translating foreign - - 1 523 operations Realisation of revaluation reserve on disposal - - 506 Total comprehensive loss for the year net of taxation (17 177) (69 525) (117 025) CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2012 2011 2012 R`000 R`000 R`000 Assets Non-current assets Property, plant and equipment 53 845 68 013 56 667 Intangible assets 668 2 897 511 Investment in associates - 900 - Other financial assets 21 - 22 Deferred taxation - 5 671 - Current Assets Inventories 67 721 50 262 56 959 Loan to associates - 2 574 - Trade and other receivables 40 440 57 092 89 022 Other financial assets - 245 - Construction contracts and receivables - - 15 193 Current taxation receivable - 1 088 1 208 Prepayments 122 816 2 234 Cash and cash equivalents 40 300 14 626 31 101 Total Assets 203 117 204 184 252 917 Equity and liabilities Equity Share capital 242 824 142 525 142 825 Reserves 5 346 5 856 5 355 (Accumulated loss)/Retained income (204 456) (138 478) (187 280) Equity attributable to equity holders of parent 43 714 9 903 (39 100) Non-controlling interest - 2 281 - 43 714 12 184 (39 100) Liabilities Non-current liabilities Other financial liabilities 67 631 6 548 146 641 Operating lease liability 101 115 100 Deferred taxation 1 348 1 537 1 348 Current liabilities Trade and other payables 30 161 67 899 112 140 Other financial liabilities 59 771 115 271 30 962 Current taxation payable 391 391 390 Loans from minority shareholders - 239 - Bank overdraft - - 436 Total liabilities 159 403 192 000 292 017 Total equity and liabilities 203 117 204 184 252 917 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2012 2011 2012 R`000 R`000 R`000 Opening balance (39 100) 51 532 65 551 Prior period adjustment - - (14 020) Opening balance Changes in equity - 51 532 51 531 Loss for the year (17 177) (71 278) (120 078) Foreign currency revaluation reserve (9) - 5 Revaluation reserve - - (506) Non-controlling interest - 1 752 - Issue of shares 100 000 29 700 30 000 Investment in subsidiary - 529 - Purchase of treasury shares - (51) (52) Total changes 82 814 (39 348) (90 181) Closing balance 43 714 12 184 (39 100) Comprising of: Share capital 132 884 5 385 32 884 Share premium 109 940 137 140 109 940 Foreign currency translation reserve (4) - 5 Revaluation reserve 5 350 5 856 5 350 Retained income (204 456) (138 478) (187 280) Non-controlling interest - 2 281 - Total equity 43 714 12 184 (39 100) CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2012 2011 2012 R`000 R`000 R`000 Cash flows from operating activities Cash generated from/(used in)operations (34 899) (16 060) (47 156) Interest income 511 35 1 642 Dividends received - - 93 Finance costs (1 862) (11 450) (8 428) Tax received/paid) 1 208 (2 162) (65) Net cash from operating activities (35 042) (29 637) (53 914) Cash flow from investing activities Purchase of property, plant and equipment (249) (7 570) (16 079) Sale of property, plant and equipment 525 - 6 889 Sale of intangible assets - 3 196 599 Sale of business - - 4 066 Purchase of other intangible assets (157) - (1 381) Loans advanced to group companies - - - Loans to group companies repaid - 612 258 Sale of other financial assets - 10 081 - Purchase of other financial assets - - - Net cash from investing activities 119 6 319 (5 648) Cash flows from financing activities Proceeds from share issue 100 000 29 700 30 000 Proceeds from financial liabilities 44 558 680 231 839 Repayment of financial liabilities (100 000) - (179 175) Net cash from financing activities 44 558 30 380 82 664 Total cash movement for the period 9 635 7 062 23 102 Cash at the beginning of the period 30 665 7 564 7 563 Total cash at end of the period 40 300 14 626 30 665 CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS For the 6 months ending 31 December 2012 R`000 Trading Water Pipeline Invest- Total Discontinued Utilities services ment continuing operations operations Factories Total revenue 71 244 7 182 24 998 1 980 105 404 - Inter- segmental revenue - - - (1 980) (1 980) - External 71 244 7 182 24 998 - 103 424 - revenue Segment (4 045) (1 948) (4 579) (305) (10 877) - results Other income - - - - 2 439 Profit on sale of assets - - - - 189 - Investment income - - - - 513 - Reversal of impairment - - - - 60 - Provision Bad debts recovered - - - - 140 - Finance cost - - - - (9 641) - Net loss for the year - - - - (17 177) - CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS For the 6 months ending 31 December 2011 R`000 Trading Water Pipeline Invest- Total Discontinued Utilities services ment continuing operations operations Factories Total revenue 102 986 16 540 54 712 1 888 176 126 - Inter- segmental revenue - - - (1 888) (1 888) - External 102 986 16 540 54 712 - 174 238 - revenue Segment (11 584) 321 7 733 (1 127) (4 567) (13 374) results Impairment of goodwill - - - - (457) - Profit on sale of assets - - - - 571 - Impairment of other financial assets - - - - (1 968) - Angola Write down of stock - - - - (24 215) - Provision For bad debt - - - - (26 131) - Finance cost - - - - (11 323) - Investment - - - - 171 - income Income tax expense - - - - (2 161) - Net loss for the year - - - - (70 170) (13 374) CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS For the twelve months ending 30 June 2012 Total contin- Water Pipe- uing Discon- Utili- line Invest- oper- tinued R’000 Trading ties services ment ations operations Total revenue 189 994 31 063 136 894 3 775 362 726 33 045 Inter- segmental revenue - - (53 567) (3 775) (57 343) - External revenue 189 994 31 063 83 327 - 304 383 33 045 Segment results (30 991) 5 353 (20 902) (1 768) (48 309) 3 814 Other income - - - - 2 573 - Profit on disposal of Congo - - - - (1 007) - Impairment of loan to associates - - - - (266) - Bad debts - - - - (16 835) - Impairment of invest- ment in associate - - - - (900) - Write-down of inventory - - - - (18 053) (6 969) Finance cost - - - - (22 323) - Impairment of goodwill - - - - (456) - Investment income - - - - 2 034 - Impairment of loan to associate - - - - (3 330) - Income tax expense - - - - (7 286) - Profit on disposal of assets - - - - 1 759 - Impairment of intangible assets - - - - (5 030) - Net loss for the year - - - - (117 429) (3 155) NOTES BASIS OF PREPARATION The consolidated interim financial information for the six months ended 31 December 2012 from which these financial statements have been derived has been prepared in accordance with International Financial Reporting Standards (IFRS), the SAICA financial reporting guides as issued by the Accounting Practices Board, the interpretations adopted by the International Accounting Standards Board (IASB), the Listings Requirements of the JSE Limited and the requirements of the South African Companies Act. These condensed interim financial results are presented in compliance with IAS 34 - Interim Financial Reporting and should be read in conjunction with the annual financial statements for the year ended 30 June 2012. These financial results were internally compiled by R Viljoen CA(SA). ACCOUNTING POLICIES The accounting policies adopted in the preparation of the abridged interim financial information are consistent with those of the annual financial statements of the year ended 30 June 2012. For a full list of standards and interpretations which have been adopted we refer you to the 30 June 2012 annual financial statements. COMMENTARY FINANCIAL RESULTS Revenue for the financial period is down by 40% to R103.4m (2011: R174.2m) as further explained under the Operational Review below. The gross profit margin improved to 16.4% (2011: 4.9%) as a result of an improvement in stock management and control. Operating expenses during the period were reduced to R26.8m (2011: R48.2m). The closure of branches and right sizing of operations resulted in a decrease in staff costs. Headline loss for the period reduced to R17.4m (2011: R68.8m). OPERATIONAL REVIEW The major reason for the reduction in sales volumes can be attributed to the transport and mining strikes which affected trading sales and delayed the award of new pipeline contracts. The disposal of the Rare Congo subsidiary on 1 July 2012 also contributed to the decrease in turnover. A further consolidation of operations included the closure of the Polokwane sales branch. The sale of Rare Congo resulted in the reduction in non current assets by R15.0m. The board decided to dispose of Rare Congo due to the high risks associated with pipeline projects in the Democratic Republic of Congo. Better access to financing resulted in an increase in inventory levels to R67.7m, management believes this level is the optimum requirement for current market conditions. The reduced revenue levels as well as improved debt collections resulted in a decrease in trade and other receivables to R40.4m. PROSPECTS The Pipeline Services Division was recently awarded two pipeline contracts in Zambia and South Africa. Prospects are good that more pipeline installation tenders in Zambia and South Africa will be converted to orders in the next six months. The Trading Division received a large pipe order from a mining house in South Africa which will be delivered in the second half of the financial year. During the period under review Rare secured the sole right to water treatment technology that can successfully remove suspended and dissolved solids from acid mine drainage water. In November 2012 a modular treatment plant was installed at a coal mine to demonstrate this technology. POSTING These results will be distributed to shareholders on 19 March 2013. On behalf of the board W. van Coller R. Viljoen CEO CFO 18 March 2013 Designated Advisor: PSG Capital (Pty) Limited Date: 18/03/2013 05:15:00 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.