Financial results for the six months ended 31 December 2013 Rare Holdings Limited (Incorporated in the Republic of South Africa) (Registration Number: 2002/025247/06) Share Code: RAR ISIN: ZAE000180626 ("Rare" or "the Company") UNAUDITED ABRIDGED FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2013 Highlights - Turnover increased by 31.8% - Gross Profit increased by 84.0% - EBITDA profit of R8.4m compared to R7.5m loss in comparative period. - The group acquired a plastic pipe manufacturing facility. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2013 2012 2013 R'000 R'000 R'000 Revenue 136 334 103 424 175 249 Cost of sales (105 114) (86 452) (149 613) Gross profit 31 220 16 972 25 636 Other income 1 960 2 439 2 788 Operating expenses (24 804) (26 882) (51 650) EBITDA 8 376 (7 471) (23 226) Depreciation and amortisation (2 040) (577) (2 488) Investment income 81 512 1 469 Finance costs (10 029) (9 641) (15 803) Loss before taxation (3 612) (17 177) 40 048 Income tax - - (2 372) Loss for the period (3 612) (17 177) (42 420) Attributable to: Equity holders of the parent (3 612) (17 177) (42 420) Non-controlling interest - - - Weighted average number of ordinary shares in issue ('000) 17 888 13 536 15 664 Loss per ordinary share (cents) (basic and diluted) (20.19) (126.90) (270.81) Loss attributable to equity holders of the parent (3 612) (17 177) (42 420) Impairment of loans receivable - - 180 Reversal of loan impairment - (60) (852) Profit/(Loss) on disposal of property, plant and equipment - (136) 1 079 Headline loss attributable to ordinary shareholders (3 612) (17 373) (42 013) Headline loss per ordinary share (cents) (basic and diluted) (20.19) (128.35) (268.21) CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2013 2012 2013 R'000 R'000 R'000 Loss for the period (3 612) (17 177) (42 420) Total comprehensive loss for the year net of taxation (3 612) (17 177) (42 720) CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2013 2012 2013 R'000 R'000 R'000 Assets Non-current assets Property, plant and equipment 65 759 53 845 50 169 Intangible assets 620 668 620 Other financial assets 21 21 380 Current Assets Inventories 83 104 67 721 110 227 Trade and other receivables 57 141 40 440 48 739 Other financial assets 578 - 421 Construction contracts and receivables - - - Current taxation receivable - - - Prepayments - 122 9 984 Cash and cash equivalents 12 809 40 300 15 107 Total Assets 220 032 203 117 235 647 Equity and liabilities Equity Share capital 241 824 241 824 242 825 Reserves 5 350 5 346 5 350 (Accumulated loss)/Retained income (233 611) (204 456) (230 000) Equity attributable to equity holders of parent 13 563 43 714 18 175 Liabilities Non-current liabilities Other financial liabilities 183 368 67 631 134 890 Operating lease liability - 101 - Deferred taxation 2 269 1 348 2 268 Current liabilities Trade and other payables 15 355 30 161 70 237 Other financial liabilities 4 332 59 771 8 692 Current taxation payable 1 145 391 1 292 Bank overdraft - - 93 Total liabilities 206 469 159 403 217 472 Total equity and liabilities 220 032 203 117 235 647 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2013 2012 2013 R'000 R'000 R'000 Opening balance 18 175 (39 100) (39 100) Loss for the year (3 612) (17 177) (42 720) Adjustments (1 000) Foreign currency revaluation reserve - (9) (5) Revaluation reserve - - (506) Issue of shares - 100 000 100 000 Total changes (3 612) 82 814 57 275 Closing balance 13 563 43 714 18 175 Comprising of: Share capital 132 884 132 884 132 884 Share premium 108 940 109 940 109 941 Foreign currency translation reserve - (4) - Revaluation reserve 5 350 5 350 5 350 Retained income (233 611) (204 456) (230 000) Total equity 13 563 43 714 18 175 CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2013 2012 2013 R'000 R'000 R'000 Cash flows from operating activities Cash used in operations (17 447) (34 899) (64 669) Interest income 81 511 943 Dividends received - - - Finance costs (563) (1 862) (2 847) Tax received/(paid) (146) 1 208 659 Net cash from operating activities (18 076) (35 042) (65 914) Cash flow from investing activities Purchase of property, plant and equipment (17 941) (249) (727) Sale of property, plant and equipment 25 525 322 Sale of financial assets 200 - - Purchase of other intangible assets - (157) (157) Loans to group companies repaid - - 60 Sale of other financial assets - - 80 Net cash from investing activities (17 716) 119 (422) Cash flows from financing activities Outflow from share issue (1 000) 100 000 - Proceeds from financial liabilities 36 003 44 558 54 996 Repayment of financial liabilities (1 419) (100 000) (4 311) Net cash from financing activities 33 585 44 558 50 685 Total cash movement for the period (2 208) 9 635 (15 651) Cash at the beginning of the period 15 014 30 665 30 665 Total cash at end of the period 12 809 40 300 15 014 * CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS For the 6 months ending 31 December 2013 Total Water Pipeline Manu- continuing R'000 Trading Utilities services Investment facturing operations Total revenue 122 425 597 11 534 2 178 1 778 138 512 Inter- segmental revenue - - - (2 178) (2 178) External revenue 122 425 597 11 534 - 1 778 136 334 Segment results 7 910 (1 741) (1 807) (352) 368 4 378 Other income - - - - 1 960 Profit on sale Investment income - - - - 81 Finance cost - - - - (10 029) Net loss for the year - - - - (3 612) For the 6 months ending 31 December 2012 Total Water Pipeline continuing R'000 Trading Utilities services Investment operations Total revenue 71 244 7 182 24 998 1 980 105 404 Inter- segmental revenue - - - (1 980) (1 980) External revenue 71 244 7 182 24 998 - 103 424 Segment results (4 045) (1 948) (4 579) (305) (10 877) 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) For the 12 months ending 30 June 2013 Water Total Utility Pipeline continuing R’000 Trading services services Investment operations Total revenue 139 462 7 492 28 295 - 175 249 Inter- segmental revenue - - - - - External revenue 139 462 7 492 28 295 - 175 249 Segment results (8 529) (1 309) (14 208) (212) (24 258) Other income - - - - 2 788 Bad debts - - - - (3 883) Movement in provision for bad debt - - - - (61) Finance cost - - - - (15 803) Investment income - - - - 1 169 Income tax expense - - - - (2 372) Net loss for the year - - - - (42 420) NOTES BASIS OF PREPARATION The consolidated interim financial information for the six months ended 31 December 2013 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 Financial Reporting Pronouncement as issued by the Financial Reporting Accountants Council, the Listings Requirements of the JSE Limited and the requirements of the South African Companies Act, 2008, as amended. 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 2013. 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 2013. For a full list of standards and interpretations which have been adopted we refer you to the 30 June 2013 annual financial statements. COMMENTARY FINANCIAL RESULTS Revenue for the financial period increased by 31.82% to R136.3m (2012: R103.42m)as further explained under the Operational Review below. The gross profit margin improved to 22.9% (2012: 16.4%). Operating expenses continued its downward trend, reducing to R24.8m (2012: R26.9m) for the period under review. An EBITDA profit of R8.4m was realized during the period (2012 loss: R7.5m). Headline loss for the period reduced to R3.6m (2012: R17.4m). OPERATIONAL REVIEW The major reason for the increase in revenue is the supply of a large pipe and fittings order to Randgold Resources in Mali, West Africa. This project contributed R66.7m to revenue. Gross profit margins improved in all divisions as a result of improved stock holding(which resulted in less buyouts of material), improved productivity on pipeline installation projects and better cost control. In November 2013, Rare acquired the assets and property of a High Density Polyethylene (HDPE) pipe manufacturing facility in Meyerton, Midvaal. The factory obtained the SABS mark for HDPE pipes in January 2014 and has commenced with the manufacturing of HDPE pipes. Full scale testing of the new Electro Coagulation Water Treatment Technology is still in progress at a major coal mine in South Africa. Attention is drawn to the fact that, in the current reporting period, the weighted average number of shares in issue was 17,887,500 compared to a restated 13,535,900 for the previous comparable period, ended 31 December 2012, following the implementation of the share consolidation as initially announced on SENS on 25 July 2013 and effected on 25 November 2013. The Comparable Results disclosed has taken into account the restated number of shares. PROSPECTS Rare Plastics: The HDPE pipe factory is up and running and should make a significant contribution to revenue during the second half of the financial year. It is expected that the Trading Division will continue to deliver good results. STATUTORY Ashin Tasdhary was appointed as an Executive Director with effect from 23 January 2014. On behalf of the board W. van Coller R. Viljoen CEO CFO 20 March 2014 Designated Advisor: PSG Capital (Pty) Limited Date: 24/03/2014 01:27:00 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.