Condensed Unaudited Abridged Financial Results for the 6 Months Ended 31 December 2015 Rare Holdings Limited (Incorporated in the Republic of South Africa) (Registration Number: 2002/025247/06) Share Code: RAR ISIN: ZAE000180626 ("Rare" or "the Company") CONDENSED UNAUDITED ABRIDGED FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 31 DECEMBER 2015 HIGHLIGHTS - Trading division net profit increased to R11.8m (2014: R0.3m) - Operating expenses reduced from R36.7m to R23.4m CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2015 2014 2015 R'000 R'000 R'000 Revenue 98 337 215 928 345 998 Cost of sales (81 496) (177 662) (291 727) Gross profit 16 841 38 266 54 271 Other income 3 752 1 444 6 083 Operating expenses (23 426) (36 658) (64 300) Operating (loss) / (profit) (2 833) 3 052 (3 946) Investment income 63 49 162 Finance costs (3 241) (2 794) (5 829) (Loss) / profit before taxation (6 011) 307 (9 613) Income tax (50) - (53) (Loss) / profit for the period (6 061) 307 (9 666) Other comprehensive income: Items that will not be reclassified to profit or loss: Gain on property revaluation (Kliprivier) - - 2 514 Taxation related to components of other comprehensive income - - (470) Other comprehensive income net of taxation - - 2 044 Total comprehensive (loss) / profit for the period (6 061) 307 (7 622) Net (loss) / profit attributable to: Equity holders of the parent (6 061) 307 (9 666) Non-controlling interest - - - Weighted average number of ordinary shares in issue ('000) 42 802 42 888 42 802 (Loss) / profit per ordinary share (cents) (basic and diluted) (14.16) 0.72 (22.58) Headline earnings reconciliation (Loss) / profitattributable to equity holders of the parent (6 061) 307 (9 666) Profit on sale of subsidiary - - (1 232) Profit on disposal of property, plant and equipment - - (595) Headline (loss) / profit attributable to ordinary shareholders (6 061) 307 (11 493) Headline profit/(loss) per ordinary share (cents) (basic and diluted) (14.16) 0.72 (26.85) CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2015 2014 2015 R'000 R'000 R'000 Assets Non-current assets Property, plant and equipment 90 562 85 753 89 576 Intangible assets 442 572 516 Current Assets Inventories 82 960 83 071 99 571 Trade and other receivables 18 321 71 798 53 835 Other financial assets - 160 - Current taxation receivable - 112 - Prepayments 18 49 4 458 Cash and cash equivalents 13 681 20 217 24 129 Total Assets 205 984 261 732 272 085 Equity and liabilities Equity Share capital 390 335 390 335 390 335 Reserves 9 788 8 001 9 788 Accumulated loss (268 634) (252 857) (262 573) Equity attributable to equity holders of parent 131 489 145 479 137 550 Liabilities Non-current liabilities Other financial liabilities 61 740 55 814 58 979 Operating lease liability - 11 - Deferred taxation 2 651 2 440 2 651 Current liabilities Trade and other payables 9 634 57 613 59 369 Other financial liabilities 382 375 410 Current taxation payable 88 - 88 Bank overdraft - - 37 Income received in advance - - 13 001 Total liabilities 74 495 116 253 134 535 Total equity and liabilities 205 984 261 732 272 085 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2015 2014 2015 R'000 R'000 R'000 Opening balance 137 550 146 172 146 172 (Loss)/ profit for the period (6 061) 307 (9 666) Adjustments Revaluation reserve - - 2 044 Underwriting fee - (1 000) (1 000) Total changes (6 061) (693) (8 622) Closing balance 131 489 145 479 137 550 Comprising of: Share capital 390 335 390 335 390 335 Revaluation reserve 9 788 8 001 9 788 Retained income (268 634) (252 857) (262 573) Total equity 131 489 145 479 137 550 CONDENSED CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited 6 Months 6 Months 12 Months December December June 2015 2014 2015 R'000 R'000 R'000 Cash flows from operating activities Cash (used in) / generated from operations (4 480) 17 260 28 031 Interest income 63 49 163 Finance costs (400) (444) (880) Net cash from operating activities (4 817) 16 865 27 314 Cash flow from investing activities Purchase of property, plant and equipment (5 417) (3 044) (12 230) Sale of property, plant and equipment - - 1 801 Sale of subsidiary - - 114 Purchase of other intangible assets - (5) (5) Proceeds from other financial assets - 240 400 Net cash from investing activities (5 417) (2 809) (9 920) Cash flows from financing activities Underwriting fees paid - (1 000) (1 000) Proceeds from financial liabilities - 4 000 9 200 Repayment of financial liabilities (177) (1 681) (6 344) Net cash from financing activities (177) 1 319 1 856 Total cash movement for the period (10 411) 15 375 19 250 Cash at the beginning of the period 24 092 4 842 4 842 Total cash at end of the period 13 681 20 217 24 092 CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS For the 6 months ending 31 December 2015 The performance of the various segments is measured based on segment gross profit less segment operating expenses directly attributable to each segment with an allocation of indirect operating expenses to the reporting segments. All transactions between reportable segments are accounted for at arm’s length so as to objectively evaluate the performance of the various segments. Water Pipeline Total R'000 Trading Treatment services Plastics Investment Total revenue 53 382 - 2 362 42 589 1 500 99 833 Inter- segmental revenue - - - (1 500) (1 500) External revenue 53 382 - 2 362 42 593 - 98 337 Segment Results before separately disclosable items 8 224 (616) (1 133) (8 605) - (2 130) Other income 3 697 - 56 - - 3 753 Investment income - - - - 63 63 Depreciation and Amortisation (98) (214) (1 484) (1 906) (804) (4 506) Finance cost - - - - (3 241) (3 241) Net profit/(loss) for the period 11 823 (830) (2 561) (10 511) (3 982) (6 061) CONDENSED SEGMENTAL INFORMATION - PRIMARY SEGMENT REPORT BUSINESS SEGMENTS For the 6 months ending 31 December 2014 Water Pipeline Total R'000 Trading Treatment services Plastics Investment Total revenue 50 348 - 34 792 130 788 2 396 218 324 Inter- segmental revenue - - - - (2 396) (2 396) External- revenue 50 348 - 34 792 130 788 - 215 928 Segment results before separately disclosable items 1 639 (1 106) 3 271 3 558 - 7 362 Other income - - - - 954 954 Profit on sale of assets - - 490 - 490 Investment income - - - - 49 49 Termination Benefits (1 249) - (673) - - (1 922) Depreciation and amortisation (86) (203) (1 365) (1 376) (802) (3 832) Finance cost - - - - (2 794) (2 794) Net profit/(loss) for the period 304 (1 309) 1 233 2 672 (2 593) 307 For the 12 months ending 30 June 2015 Water Pipeline Total R’000 Trading Treatment services Plastics Investment Total revenue 97 202 - 77 988 202 917 3 652 381 759 Inter- segmental revenue - - (25 531) (6 578) (3 652) (35 761) External revenue 97 202 - 52 457 196 339 - 345 998 Segment results before separately disclosable items 6 917 (1 554) 7 213 (1 465) - 11 111 Interest received 81 - 76 - 6 163 Termination benefits (1 715) - (925) - - (2 640) Legal Settlement costs (702) - (379) (1 419) - (2 500) Inventory Impairment (160) - - (68) - (228) Depreciation And amor- tisation (195) (428) (3 378) (4 075) (1 613) (9 689) Finance cost (92) - (151) - (5 586) (5 829) Income tax - - (312) - 258 (54) Net profit/(loss) for the year 4 134 (1 982) 2 144 (7 027) (6 935) (9 666) NOTES BASIS OF PREPARATION The condensed consolidated interim financial information for the six months ended 31 December 2015 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 Committee, the interpretations adopted by the International Accounting Standards Board (IASB), the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the Listings Requirements of the JSE Limited and the requirements of the South African Companies Act 71 of 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 2015. These financial results were internally compiled by R Viljoen CA(SA) and have not been reviewed or audited by the Company’s auditors. ACCOUNTING POLICIES The accounting policies adopted in the preparation of the abridged interim financial information are consistent with those of the annual financial statements for the year ended 30 June 2015. For a full list of standards and interpretations which have been adopted we refer you to the 30 June 2015 annual financial statements. COMMENTARY FINANCIAL RESULTS Revenue for the financial period decreased by 54.4% to R98.3m (2014: R215.9m) as further explained under the Operational Review below. The gross profit margin showed a small decrease to 17.1% (2014: 17.7%). The trading division showed an increase in profit margins, this was however eroded by under recoveries due to low volumes in the Rare Plastics factory. Operating expenses decreased by 36.2% to R23.4m (2014: R36.7m) for the period under review. This was as a result of savings in employee costs following the rationalisation of operations in the 2015 financial year. There was also a concerted effort by management to reduce operating expenses in light of the tough market conditions during the period. Even though there were significant savings in operating expenses, this was not enough to offset the loss in Gross Profit due to reduced volumes. EBITDA of R1.7m was realized during the period (2014: R6.9m). Headline loss for the period was R6m (2014 profit: R0.3m). OPERATIONAL REVIEW The mining sector remains under pressure, this had a direct negative effect on the market activity experienced by both Rare Plastics and Pipeline Services. A significant decline in the HDPE piping market negatively affected Rare Plastics. Rare Plastics contributed R42.6m towards turnover whereas it contributed R130.8m to the comparative figure for the six months ended 31 December 2014. The Pipeline Services division also experienced a decrease in activity which resulted in turnover decreasing to R2.4m (2014: 34.8m). The trading division performed well in a tough market and recorded a 6% increase in turnover to R53.4m (2014: R50.3m). The division also delivered a strong improvement in operating margin. PROSPECTS Rare will continue to grow its core trading business organically. The Company had started to reap the rewards of managements’ efforts during the period under review. The South African HDPE market for large bore pipe remains under severe pressure given the slump in SA mining sector and global commodity prices. Mining spend in Africa, excluding South Africa, remains an opportunity for Rare. DIVIDENDS No dividend was declared for the period. On behalf of the board W. van Coller R. Viljoen CEO CFO Kliprivier 31 March 2016 Designated Advisor: PSG Capital (Pty) Limited Date: 31/03/2016 01:00:00 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.