· 1 board authorisation for release of the integrated report 2 group financial highlights 3...

20112011Integrated Report

ROLFES TECHNOLOGY HOLDINGS LIMITED

1 Board authorisation for release of the Integrated Report

2 Group financial highlights

3 Graphical representation of Group financial highlights

4 Directorate

6 Letter from the Chairman

7 Group structure

8 Chief Executive Officer’s report

13 Remuneration and Nomination Committee report

15 Corporate citizenship

43 Annual financial statements

108 Shareholders’ diary

109 Notice of annual general meeting

116 Annexure to notice of annual general meeting

Attached Form of proxy

Attached Form of surrender

ibc Corporate information

Rolfes Technology Holdings Limited | integrated report 2011

ContentsContents

Rolfes Technology Holdings Limited (“Rolfes” or “the Group”), listed on the Alternative Exchange of the JSE Limited,manufacturers, buys-in and distributes an extensive range of market-leading, high-quality, chemical products to diverseindustries including the coatings, plastics, vinyl, leather, ink, metallurgical, water filtration, fertiliser, cleaning, formulators, automotive, general chemicals and construction industries.

PRODUCT AND MARKET SCOPE

Rolfes distributes more than 800 products to approximately 2 750 customers through various divisions to diverse industries.

Rolfes Pigments is responsible for the distribution of resins, dispersions, organic and inorganic pigments, constructionchemicals and additives. Solvents, lacquer thinners, creosotes, waxes, cleaning solvents, surfactants and various othercommodity and specialty chemicals are distributed through Rolfes Chemicals, while Rolfes Silica distributes pure beneficiated silica.

GEOGRAPHIC SCOPE

Products are distributed across the globe, from manufacturing plants and distribution centres in Jet Park, Germiston,Alberton, Durban, Brits and Cape Town to customers. The international customer base consists of customers located onthe African, European and Asian continents. Recently formed, Rolfes Africa will be dedicated to distribute the Group’sproducts through regional branches (ie Zambia (established), Kenya and Ghana in the process of being established)throughout the continent in carefully selected African countries.

CHANNEL SCOPE

Positive brand perception, strong customer and supplier relationships, and effective pricing strategies, contribute toRolfes’ competitive edge. The Group’s products are distributed through its own fleet as well as through external serviceproviders.

ProfileProfile

Rolfes Technology Holdings Limited | integrated report 2011 1

The Board of Directors acknowledges its responsibility to ensure the integrity ofthe integrated report. We have accordingly applied our mind to the integratedreport and the recommendations of King III (principal 9.1). The Board realisesthe importance of an integrated report that is meaningful and contains accuratemeasurable data; fully promoting transparency and accountability as well as its responsibility and need to have controls to enable it to verify and safeguard theintegrity of the report, also having the report independently assured.Independent assurance was not obtained on this report. However, due to thesize of the Group, the extensive processes involved and the associated costs withpublishing a full integrated report during the 2011 financial year, we have disclosed as much as is currently possible by extending our corporate governance and sustainability reports (pages 17 to 42), to report on as many of the elements as possible regarding financial, social and economic performance as well as corporate governance and sustainability currently possible. We are positioning ourselves to present a fully integrated report by theend of the 2012 financial year. The Board has authorised the report for releaseon 13 September 2011.

Signed as duly authorised by the Board

BN Ngcuka Erhard van der MerweChairman of the Board Chief Executive Officer

IntegratedIntegratedreport

2005 2006 2007 2008 2009 2010 2011R’000 R’000 R’000 R’000 R’000 R’000 R’000

FINANCIAL RESULTSRevenue 100 423 164 003 224 727 314 898 375 512 369 029 460 699EBITDA 12 581 22 557 31 113 48 952 28 756 42 885 54 244Operating profit 12 260 21 482 28 846 45 107 24 454 38 275 49 568Headline earnings 7 507 11 750 19 040 29 954 10 739 23 861 32 160Cash and cash equivalents – (21 740) (8 116) (4 380) 352 6 127 4 833Total assets 55 336 94 797 140 987 230 605 238 760 243 210 277 108Total debt (interest-bearing

liabilities and bank overdraft) 9 695 34 202 17 754 33 634 35 042 24 140 15 901

2005 2006 2007 2008 2009 2010 2011% % % % % % %

RETURNS AND PRODUCTIVITYGross profit margin 24,1 21,5 23,5 22,5 18,0 21,0 18,9Operating profit margin 12,2 13,1 12,8 14,3 6,5 10,4 10,8Net profit margin (headline

earnings) 7,5 7,2 8,5 9,5 2,9 6,5 7,0Interest cover (times) 8,9 5,1 6,4 11,1 2,3 7,9 13,1

SOLVENCY AND LIQUIDITYCurrent ratio 2,1 1,2 1,7 1,7 1,8 1,9 2,0Acid-test ratio 1,1 0,6 1,0 0,8 0,8 0,9 0,9Interest-bearing debt: equity ratio 1,2 1,0 0,2 0,3 0,3 0,2 0,1

2005 2006 2007 2008 2009 2010 2011cents cents cents cents cents cents cents

PERFORMANCE PER SHAREFully diluted headline earnings 8,8 13,8 20,9 29,1 10,4 23,2 31,2Earnings 8,8 17,1 19,0 28,6 10,4 23,2 31,4Dividends declared and paid 2,5 2,8 2,2 – – 5,0 10,0Net asset value 29,2 44,2 75,5 107,3 117,4 135,4 156,6Net tangible asset value 29,2 35,5 66,8 93,6 81,0 104,0 125,4

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Rolfes AltX All share

Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11

for the year ended 30 June Group financial highlights

2 Rolfes Technology Holdings Limited | integrated report 20112

Graphical representation of

Group financial highlights

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Total interest-bearing debt

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DirectorateDirectorate

BProc (University of Fort Hare);LLB (UNISA); MA (WebsterUniversity, Geneva, Switzerland)

Appointed: 5 April 2007

Bulelani is the founder memberand Executive Chairman of VuwaInvestments and a former national director of PublicProsecutions. He was admitted asan attorney in 1980 and practised in his own practiceunder the name Ngcuka andAssociates. He played a criticalrole in the political transformation of South Africaand served in various institutionsincluding the ConstitutionalAssembly, the Judicial ServicesCommission and was also theDeputy Chair of the NationalCouncil of Provinces.

He served as Chairman on theboards of a number of listedcompanies and as a director onothers including Basil ReadHoldings Limited, TransnetLimited, Growthpoint PropertiesLimited and Mutual and FederalInsurance Company Limited. Hecurrently serves as Chairman ofCity Lodge Group, Top FixHoldings Limited, Amadlelo Agriand Rolfes Technology HoldingsLimited.

Bulelani T Ngcuka (56)Non-Executive Chairman

BCom (Hons) (Accounting) andCTA (University ofJohannesburg); MCom (BusinessManagement) (University ofJohannesburg); CA (SA)

Appointed: 1 February 2007

Erhard qualified during 1989 asa chartered accountant withPricewaterhouseCoopers Inc. He worked as a senior auditmanager on large national andinternational clients until 1991,following which he was seconded to the London officebefore returning to Johannesburgduring 1993. He spent a further13 years in the corporate financeindustry completing a number oflocal and international due diligence, corporate advisory,mergers and acquisitions, JSEand SRP transactions and assignments.

He joined the Rolfes Group during 2006, responsible for,inter alia, positioning the Groupfor a listing and completingstrategic acquisitions. He bringsa wealth of business and corporate finance experience inthe listed environment.

Erhard van der Merwe (49)Chief Executive Officer

BCompt (UNISA)Appointed: 25 June 2008

After completing her studies atUnisa and auditing articles,Lizette started her career at SAOil Mills. In 1997 she wasappointed Financial Manager atiafrica.com. She joinedDistribution and WarehousingNetwork Limited (DAWN) in 2001as financial director in a subsidiary and, rising through theranks, was appointed head ofGroup Internal Audit, with a seaton the SSD board of DAWN, andfulfilled the role of financial director in subsidiary businessesas the need arose. Lizette joinedRolfes in January 2008 as a consultant, appointed permanently in April 2008 andsubsequently appointed as Group Financial Director on 25 June 2008.

Lizette Lynch (45)Financial Director

BA Law; LLB (University of CapeTown); SEP (University ofWitwatersrand and HarvardBusiness Schools); Advocate ofHigh Court of South Africa

Appointed: 5 April 2007

Lungisa is the Chief ExecutiveOfficer of Vuwa Investments, aBlack Economic Empowermentcompany. He has extensiveknowledge of the public sector,having acted for six years for theNational Prosecuting Authority asa Strategy and Legal Advisor tothe National Director of PublicProsecutions. His current directorships are DCM Chrome,Tradelink Textiles, Afriglass,Indwe Aviation and AmadleloAgri. He also served as a director on the board of BasilRead Holdings Limited.

Lungisa Dyosi (40) #

Non-Executive Director


BAdmin (UNIN); HonsB (Admin)(Econ) (SA); MBL (SA); MAdmin(Econ) (University of Pretoria);FIBSA (SA); CPMM (University ofWitwatersrand); CM (SA), M.Inst.

Appointed: 25 February 2009

Takalani is an executive directorof Pinnacle Technology HoldingsLimited, since May 2003, after asuccessful and varied career ingovernment and commerce.During the past eight years hehas demonstrably contributed tothe growth and success of thePinnacle Group through the successful penetration of keyaccounts, operational management and strategic direction. His other directorshipsare as follows: executive directorof DataNet Infrastructure Group(Pty) Limited; Infrasol; PinnacleMicro (Pty) Limited; RentNetRentals (Pty) Limited;AxizWorkgroup; and ex-non-executive director of IntersiteManagement Services. Takalanichairs the Rolfes Audit and RiskCommittee.

Takalani AM Tshivhase (56) ^Lead Independent Non-Executive Director

BAcc (University of Natal);HdipAcc (University ofWitwatersrand); CA (SA) Appointed: 25 February 2009

Karabo is executive head corporate finance at VodacomGroup Limited. Previously, theChief Executive Officer of AWCAInvestment Holdings Limited andprior to this Rand RefineryLimited, a precious metals management company, whereshe was the Head of GlobalMarkets Operations. She is a former associate and executiveassistant to the executive chairman at Shanduka Group.She was seconded to ShandukaCoal, where she was a shareholder representative, andalso served on various boardsrepresenting Shanduka’s interests. She is a qualifiedChartered Accountant, havingcompleted her articles withPricewaterhouseCoopers Inc. She is a member of the SouthAfrican Institute of CharteredAccountants (SAICA) and AfricanWomen Chartered Accountants(AWCA). She is an independentnon-executive director of MerafeResources Limited and serves ontheir Audit and RemunerationCommittees. Karabo chairs theRolfes Remuneration andNomination Committee.

Karabo T Nondumo (33) ^#

Independent Non-Executive Director

BSc Chem Eng (University ofPotchefstroom); MSc Chem Eng(University of Witwatersrand)

Appointed: 22 November 2000

Arnold is the Chief ExecutiveOfficer of the listed ICT group,Pinnacle Technology Holdings.He founded Pinnacle in 1993.Arnold acquired Rolfes in 1999and was Chief Executive Officerof Rolfes Technology HoldingsLimited from 2000 until 2007.He continues to play a leadingrole in the strategic direction andfuture growth of the Group.

Arnold J Fourie (49) #

Non-Executive Director

BAcc (Central University ofTechnology, Free State) (CA(SA))

Johan was appointed as auditmanager at Du Toit Greeff andDu Plooy Inc, subsequent to thecompletion of his articles withthem. He joined the Rolfes Group during February 2007 as Groupfinancial manager after qualifying as a charteredaccountant. Johan was appointedas Company Secretary on 23June 2010. He is a member ofthe South African Institute ofChartered Accountants (SAICA).

Johan C Schlebusch (29)Company Secretary

5Rolfes Technology Holdings Limited | integrated report 2011

^ Audit and Risk Committee# Remuneration and Nomination

Committee

Bulelani T NgcukaChairman

Although we went into the current year cautiously buoyant

following last year’s remarkable accomplishment, the fluid

market condition abroad, particularly in Europe, continued

to present us with a daunting challenge.

The continual warnings by market analysts and economists

of the possibility of a second crash kept the world at the edge

of their seats always expecting the worst.

The foresight, however, of investing in a seasoned

management team and staff, a refined strategic plan and the

discipline that goes with its implementation, has once again

resulted in another incredible financial year.

Whilst the market conditions remained primarily adverse to

good business, the 35,5% growth in net profit to R32,3

million, is a significant achievement, particularly when

compared with 2010’s R23,9 million.

The increased growth in both the chemical and pigments

operations boosted the Group’s revenue by 24,8% to R460,7

million from R369 million in 2010. We, as the Board, remain

indebted to our outstanding management team and staff

who have, even during less than ideal trading conditions,

managed to put a smile on our faces for the

second consecutive year. This team remains the secret of our

success – we salute you!

While many companies have not survived the current

perennial storms of the market, we are able to demonstrate

that even during the worst of times, good plans still do shape

good decisions.

Once again on behalf of the Board, the shareholders and all

other stakeholders in the business, we congratulate the team

for another incredible achievement. It still feels good to be a

member of this family and we must all look forward to

reaching greater heights in the years ahead.

Bulelani T Ngcuka Chairman

ChairmanLetter from the

Chairman


100%

GERMISTON

CAPE TOWN

DURBAN

BRITS ZAMBIA

KENYA

GHANA

JET PARK

ALBERTON

CAPE TOWN

DURBAN

PIGMENTS CHEMICALS SILICA AFRICA

AFRICA

PRETORIA

PAARL

WELLINGTON

AGRO- CHEMICALS*

agchem

StructureGroup

Structure


* Transaction subject to fulfilment of certain conditions precedent.

Erhard van der MerweChief Executive Officer

Chief ExecutiveOfficer

Chief Executive Officer’sreport

NATURE OF BUSINESS

Rolfes manufactures, buys-in and distributes a wide range of market-leading,

high-quality chemical products through various divisions to diverse industries

including the coatings, plastics, vinyl, leather, ink, metallurgical, water filtration,

fertiliser, cleaning, formulators, automotive, general chemicals and construction

industries. Rolfes Colour Pigments is responsible for the distribution of resins,

dispersions, organic and inorganic pigments, construction chemicals and

additives. Solvents, lacquer thinners, creosotes, waxes, cleaning solvents,

surfactants and various other commodity and specialty chemicals are distributed

through Rolfes Chemicals, while Rolfes Silica distributes pure beneficiated silica.

Recently formed, Rolfes Africa will be dedicated to distribute the Group’s

products through regional branches (ie Zambia (established), Kenya and

Ghana in the process of being established) throughout the continent in

carefully selected African countries.


Chief Executive Officer’s report continued

The acquisition after year-end of a 70% stake in Agchem,

expands the Group’s chemicals offering now also into the

growing agro-chemicals industry. Agchem formulates, man-

ufactures, buys-in and distributes a number of agro-chemical

products, including plant nutrition, adjuvants and pesticides

(herbicides, insecticides and fungicides), soluble fertilisers

and specialty chemicals.

OVERVIEW

Although the recessionary climate continued for the year

under review resulting in market conditions remaining

difficult, the Group managed to deliver on its expected

targets.

The Group weathered the economic recession reasonably

well with Group performance enhanced by growth in both

the Pigments and Chemicals businesses. Significant energy

and other manufacturing cost increases were counteracted

by satisfactory performances and achievements in other

areas.

Achievements include turnover growth of 24,8%; overhead

cost being contained, a reduction in interest paid, a

significant reduction in Group debt (including settling the

final vendor payment for the Triangle Solvent acquisition in

cash) and two dividends paid to shareholders from cash

resources. Overall market share was sustained, with exports

comprising 12,1% of Group turnover. Rolfes exports to

mainly Sub-Saharan Africa, Europe and a few countries in

Asia.

Rolfes’ competitive advantage is its high barriers to entry,

expensive production plants and laboratories, and extensive

inhouse technology and intellectual property. The Group’s

brand is well established in various markets, both locally and

internationally, with constant effort and strategies underway

to further expand both its product offering and the markets it

serves. Establishing branches in Africa will significantly

improve accessibility to the various product offerings in high

demand throughout the African continent. Strong,

experienced and qualified management along with a proven

track record of profitability and asset growth will ensure

business growth.

The recent acquisition of Agchem, expands the Group’s

current product offering now also into agro-chemicals.

GROUP FINANCIAL PERFORMANCE

The 35,5% growth in profit for the year amounting to R32,3

million (2010: R23,9 million) suggests a healthy business in

a recessionary local and international economic

environment. Group revenue increased by 24,8% to R460,7

million (2010: R369,0 million), due to increased growth in

both the Chemicals and Pigments operations. Gross profit

margins decreased to 18,9% (2010: 21,0%) due to

increased trading activities at lower margins in the

Chemicals business as well as a competitive pricing

environment.

Operating profit increased by 29,5% to R49,6 million

(2010: R38,3 million) primarily due to an increase in gross

profit and other income, and overhead cost containment,

also resulting in an increase in the operating profit margin to

10,8% (2010: 10,4%). As a result, headline earnings

increased by 34,8% to R32,2 million (2010: R23,9 million).

Fully diluted headline earnings per share was 31,2 cents

(2010: 23,2 cents), an increase of 34,5% from 2010.

Group liquidity ratios remained stable and solvency

improved from 2010 with the total net asset value increasing

to R162,3 million (2010: R140,3 million). The net asset value

per share improved to 156,6 cents (2010: 135,4 cents)

while net tangible asset value per share increased to 125,4

cents (2010: 104,0 cents), based on 103 609 469 shares in

issue.

Interest cover increased to 13,1 times (2010: 7,9 times) with

the total debt (interest-bearing) equity ratio at 0,1 for 2011

(2010: 0,2). The favourable increase in interest cover is due

to the Group’s ability to significantly increase operating

profits, with improved cash management and a significant

reduction in long-term debt, all resulting in a lower interest

bill.

The Group incurred capital expenditure of R4,1 million

(2010: R2,8 million) spent to improve local production and

distribution facilities and compliance requirements with

various legislations.



CASH FLOW

The Group settled the final cash payment for the Triangle

Solvent acquisition of R5,2 million as well as paying cash

dividends of R10,4 million during the financial year

(excluding STC) (2010: R5,2 million) to shareholders, all

from current cash resources.

Loan repayments (excluding the vendor loan) for the

financial year amounted to R8,2 million.

Cash generated from operations amounted to R40,3 million

(2010: R47,9 million) for the period. The increase in net

working capital investment during the financial year of R6,9

million, represents an increase in inventory and accounts

receivable of R17,2 million and R6,5 million respectively,

and an increase in accounts payable and value added tax of

R16,8 million. Both the inventory and accounts receivable

investment supported increased export trading and related

manufacturing activities with debt collection days on exports

ranging between 90 and 120 days. Negotiation of credit

terms from certain key overseas suppliers provided the

Group with favourable long-term credit terms. Debtors’ days

decreased slightly to 52 days (2010: 53 days), while stock

days reduced to 93 days (2010: 98 days) and creditor days

increased to 71 days (2010: 67 days). Due to the nature of

capital expenditure incurred during the year, R3,0 million of

the R4,1m spent was financed through cash resources.

OPERATIONAL REVIEW

Rolfes Colour Pigments

Turnover increased by 24,4% to R285,7 million (2010:

R229,6 million) due to increased activities on certain

imported and manufactured product lines. The Pigments

business’ performance was supported by significant growth

in organic pigments sales, lead chromes into Africa, iron

oxides, resins and dispersions product groups. Excellent

growth in resins’ turnover was mostly due to market share

increase while growth in dispersions’ turnover was

attributable to increased volume demand and also market

share gain. The pigments’ turnover growth was due to

significant increases in organic pigment sales and titanium

dioxide. Raw material input prices levelled during the year

under review enabling stable pricing to the market.

The division’s gross profit margin decreased to 18,3%

(2010: 21,1%) due to increased activities on buy-in products

at lower margins, and very high energy cost increases and

other manufacturing costs placed additional pressure on

gross profit performance. The resins’ margins remained low

as a result of mainly market price pressures.

Operating expenses were contained with a slight decrease of

0,7 % (2010: 7,3 % increase) primarily due to the large

debtor write-off in the 2010 financial year in combination

with well-managed overhead cost control.

Capital expenditure incurred amounted to R0,8 million

(2010: R0,9 million) to maintain and improve production

capability to primarily support export market demand.

The business unit is constantly increasing its product offering

and range, expecting further increases in export activities,

especially into Europe and Africa. Local and international

market penetration with the new organic and other product

offerings have already commenced to allow for growth in

both the resin and dispersions product ranges.

Rolfes Chemicals

The wider product offering and expanded national presence

contributed to the increase in turnover of 31,5% to R 131,4

million (2010: R99,9 million). Oil prices remained relatively

stable for the year under review; hence limited selling price

increases were implemented. Market share increased in both

Gauteng and the Western Cape with Rolfes Chemicals

remaining a principal player in the Gauteng solvents market,

supplying from small to large customers. Exports into Africa

increased significantly during the period under review, albeit

from a low base.

Pricing strategies accommodated entry into the Western

Cape market while cost control assisted with margin

maintenance resulting in a slight reduction in gross profit

margins to 16,1% (2010: 16,3%).

Operating expenses increased by 7,4% mainly due to

expansion costs into the Western Cape and a further

investment in human resources, in line with new business

development initiatives.



Capital expenditure amounted to R1,4 million (2010: R0,1

million) spent on expanding and upgrading logistics and

manufacturing facilities and information technology system

upgrades.

Further volumes, African export growth and the current

expansion of Rolfes Chemicals’ national footprint into

KwaZulu-Natal and the Western Cape, along with new

product offerings in particular specialty chemicals, provide

strong prospects for upcoming growth.

As the crude oil price increases, solvent purchasing and

selling prices will increase.

Rolfes Silica

Turnover increased by 10,6% to R41,4 million (2010: R37,4

million). Slow market conditions in the government

infrastructural, construction, building and fertiliser industries

continued to hamper business performance. Volume

demands for silica fines increased by 5,3% while the

demand for aggregates reduced by 12,1%. Market share

was maintained with wider customer base growth, but lower

demand by larger aggregate customers negatively

influencing the results.

Gross profit margins at 28,0% (2010: 29,1%) declined

mainly as a result of a change in production and sales mix

to match market demands, with manufacturing and transport

costs contained at 2010 levels. Operating expenses

increased by 25, 0% (2010: 17,9% reduction) resulting from

increased salary costs and mining licence application fees.

Capital expenditure incurred of R1,8 million (2010: R1,2

million) remains high due to the nature of the business, and

is incurred to ensure mainly compliance to safety, security

and other Department of Mineral Resources regulations, and

upgrading certain equipment and housing.

Promised take off in the metallurgical and fertiliser sector

bodes well for the business in the year to come. Aggregate

products’ market conditions will remain challenging with the

anticipated oversupply, due to the expected reduction of

government spending on infrastructure.

MARKET CONDITIONS AND PROSPECTS

Local market conditions improved slightly during the 2011

financial year with both the Cape Town and Durban markets

responding well to the expanded Rolfes branches. The

European economic climate remained difficult; however, the

exports of newly developed organic pigments for the ink

industry will continue to grow exports to Europe. Efforts to

grow the African market have paid off while trading in Asia

remained limited due to fierce local competition.

Rolfes Africa, starting with a regional branch established in

Zambia and two other regional branches in Kenya and



Ghana in the planning will enhance growth in a market with

opportunities for the Group’s products on offer.

The current strategic acquisition of a controlling stake in

Agchem Holdings Limited (“Agchem”), a distributor and

manufacturer of agro-chemical products, will allow Rolfes to

realise its strategy of being able to offer a complete range of

chemicals to diverse markets and industries. Shareholders

are referred to the SENS announcements released on 12 July

2011 and 18 August 2011, respectively, detailing the terms

and conditions pertaining to the acquisition of Agchem.

The Group will continue to actively pursue new acquisition

opportunities in the chemicals sphere, especially in the

mining and specialty chemicals sectors.

None of the market conditions and prospects information in

this report have been reviewed or reported on by Rolfes’

auditors.

APPRECIATION

I extend my gratitude to management and staff for their

service, continued enthusiasm, loyalty, commitment and

determination to succeed in a demanding economic

environment. Your diligence and efforts are noted.

Invaluable insight and strategic contribution by my Board is

noted and appreciated.

Erhard van der MerweChief Executive Officer




The Group’s strategy is to ensure that remuneration matches

individual contribution to Group performance, within the

framework of market forces, while protecting shareholders’

interests and the Group’s financial health over the short- and

long-term.

The Group’s remuneration policy in respect of directors will

be tabled at the annual general meeting to be held on

28 October 2011 for approval by shareholders. Details of

the directors’ aggregate emoluments on an individual basis

are set out on page 92 of the integrated report.

The proceedings of the Remuneration and Nomination

Committee are governed by a charter as approved by the

Board.

Purpose

The Remuneration and Nomination Committee ensures thatemployees are rewarded for their contribution to the Group’soperating and financial performance at levels which takeaccount of industry, market and country benchmarks, as wellas the requirements of collective bargaining.

The Remuneration and Nomination Committee is responsiblefor the administration, assessment and approval of theBoard’s remuneration strategy for the Group, the determination of short- and long-term incentive pay structures for Group executives, general staff policy, remuneration, service contracts, the positioning of seniorexecutive pay levels relative to local and international industry benchmarks and the assessment and authorisationof specific reward proposals for the Group’s executive directors and independent non-executive directors, as well asreviewing Group retirement funds. The Remuneration andNomination Committee also provides input and assists withnew directors and senior executive appointments.

Membership

The Remuneration and Nomination Committee comprises

Ms KT Nondumo (Chairman and independent non-executive

director), L Dyosi and AJ Fourie, both being non-executive

directors.

The Committee met twice during the 2011 financial year. The

Chief Executive Officer and the Financial Director attend the

Committee meetings by invitation and assist the Committee in

its deliberation, except when issues relating to their own

compensation are discussed.

The Group’s auditors, BDO South Africa Incorporated, have

not provided advice to the Committee. However, in their

capacity as Group auditors, they performed normal audit

procedures on directors’ remuneration.

Attendance at meetings during the year was as follows:

Number ofmeetings

KT Nondumo 2 (2)

L Dyosi 2 (2)

AJ Fourie 2 (2)

E van der Merwe* 2 (2)

L Lynch* 2 (2)

* By invitation

Executive remuneration

Remuneration of executive directors is determined through a

process of benchmarking, utilising current market

information, as well as remuneration and reward practices

of the Group. This is complemented by performance

bonuses which may reach 20% of executives’ total packages.

Remuneration& Nomination

Remuneration and Nomination Committeereport

The Company adopts the principle of total ‘Cost toCompany’ in determining executive directors’ remunerationpackages. This includes basic remuneration, short-termincentives determined by fulfilment of performance targets,medical and other benefits.

The Board annually appraises the executive directors and theresults of these appraisals are considered by theRemuneration and Nomination Committee to guide it indetermining performance and remuneration.

The extent of managerial responsibility, together with actualworkplace location, determines basic remuneration of executive directors. Details of directors’ remuneration arelisted on page 92.

Terms of service

The Company complies with relevant legislation in determining minimum terms and conditions of employmentfor executive directors. Executive directors have employmentcontracts incorporating the same information and restrictions. The contract includes a restraint of trade paragraph to ensure the Group does not incur losses or lossof business due to the resignation of a director. The contractsdo not indicate any term of employment and employmentwill cease with the resignation or dismissal of the director.The contract does not specify any age or time period to regulate retirement of directors.

External appointment

Executive directors are not permitted to hold external directorships or offices without the approval of the Board. Ifsuch approval is granted, directors may retain the fees paidfrom such appointments.

Short-term incentives

Performance bonus schemes are available for executivedirectors based on Group performance. Job level, businessunit and individual performance therefore determine individual awards. The aim of the bonus scheme is to reward performance in line with organisational objectives andachievements.

Non-executive directors and independent non-executive directors

Terms of service

Shareholders appoint non-executive and independent non-executive directors at annual general meetings, however, in

terms of Group policy, interim Board appointments may bemade between annual general meetings. Such interimappointees may not serve beyond the date of the followingannual general meeting, though they may make themselvesavailable for re-election by shareholders.

Fees

Independent non-executive directors are remunerated for

their contribution to the Board and Board Committees. Fees

to independent non-executive directors are payable per

meeting attendance based on a fee for membership and

assignment to sub-committees. Non-executive directors are

not remunerated for their services. Shareholders will be

requested to consider an ordinary resolution approving the

remuneration policy and the independent non-executive

directors’ fees at the annual general meeting.

There are no short- or long-term incentive schemes or

pension benefits for non-executive or independent

non-executive directors.

Executive directors review independent non-executive

directors’ remuneration and recommendations are made to

the Board which in turn proposes fees for approval by

shareholders at the annual general meeting. Independent

non-executive directors’ fees are listed on page 92.

Approval

This Remuneration and Nomination Committee report was

approved by the Board of directors.

Signed on behalf of the Remuneration and NominationCommittee

KT NondumoChairman of the Remuneration Committee

Remuneration and Nomination Committee reportcontinued



CitizenshipCorporatecitizenship

Corporate citizenship continued

INTEGRATED REPORT STRATEGY

Rolfes Technology Holdings Limited believes that through endorsement and active participation the enhancement of

sustainable development and business performance will be optimised. The Group fully supports and embraces King III and its

recommendations regarding the integrated sustainability reporting approach in line with business growth.

Rolfes believes that it acts in a socially responsible manner and embraces opportunities and manages risks appropriately as

well as advocating sound principles of responsible business practices to stakeholders. The Group is therefore working towards

producing a holistic and reliable report to stakeholders, containing required data, integrated across all areas of performance,

both financially and non-financially in the triple bottom line context; encompassing economic, social and environmental issues;

in accordance with Chapter 9 of King III. The current boundary and scope of the report do not fully address the full range of

material economic, environmental and social impacts on the organisation. The Group will drive the required processes to ensure

an integrated report completely addressing all relevant issues in the future.

Assurance

The Board recognises its responsibility to ensure the integrity of the Group’s integrated report. The authority to evaluate

sustainability disclosures and the oversight of assurance providers are delegated to the Audit and Risk Committee. The

sustainability reporting and disclosure are currently not independently assured. The Board is satisfied that current information

contained in the integrated report is reliable and does not contradict with the financial aspects of the report.



CORPORATE GOVERNANCE

Rolfes Technology Holdings Limited and its directors acknowledge their obligation and responsibility to fully support and

endorse the King Report of Corporate Governance for South Africa – 2009 (King III) and the Board of Directors is committed

to the principles of transparency, integrity and accountability. The Board is satisfied that the Group has, during the year under

review, complied on an “apply or explain” basis with King III as well as the JSE Listings Requirements.

1. Ethical leadership and corporate citizenship

Responsible leadership

The Board provides effective and responsible leadership based on an ethical foundation. It directs the strategy and

operations to build a sustainable business in consideration of the short- and long-term impacts of the strategy on the

economy, society and the environment. Business is conducted ethically, does not compromise the natural environment and

takes account of the Company’s impact on internal and external stakeholders.

Board responsibilities

The Board provides strategic direction and sets high values to which the Company adheres. This value set will be

formulated in its code of conduct which will be formalised during the next financial year. The Board ensures that its

conduct and that of management align to its values and is adhered to in all aspects of its business. A stakeholder-

inclusive approach of governance is promoted.

The Board ensures that all deliberations, decisions and actions are based on the five moral duties underpinning good

governance – conscience, care, competence, commitment, courage – and ensures that each director adheres to their

fiduciary duties.

King III Principle: Gap Identified Commitment

The board should: The Board places tremendous value on integrity and1.1.7 Set the values to which the company will operates at the highest standard; values have not been

adhere formulated in its code of conduct. formally documented in a code of conduct. This will beaddressed during the 2012 financial year.

The Board as a corporate citizen

The Board ensures that the Group is a responsible corporate citizen by considering both financial performance and the

impact of the Company’s operations on society and the environment. It endeavours to always protect, enhance and invest

in the well-being of the economy, society and the environment. The Board ensures that the Company’s performance and

interactions with stakeholders are guided by the Constitution and the Bill of Rights and ensures that collaborative efforts

with stakeholders are embarked upon to promote ethical conduct and good corporate citizenship.


The board should: The Board intends to document and implement1.2.5 ensure that measurable corporate measurable corporate citizenship programmes in

citizenship programmes are implemented; and the future as well as guiding management to1.2.6 ensure that management develops corporate develop corporate citizenship policies. The process will

citizenship policies. be embarked on during the 2012 financial year.




2. The Board of directors

Roles and function of the Board

The Board acts as the focal point for and custodian of corporate governance. A charter sets out its responsibilities and

the Board meets at least four times per year and monitors the relationship between management and stakeholders of the

Company. Strategy is aligned with the purpose of the Group to thrive and survive.

The Board appreciates that strategy, risk, performance and sustainability are inseparable. The strategy is approved by

the Board and is aligned with the purpose of the Group, the value drivers of its business and the legitimate interests and

expectations of its stakeholders. The Board is satisfied that the strategy and business plans are not encumbered by risks

that have not been thoroughly examined by management; and ensures that the strategy will result in sustainable

outcomes taking people, planet and profit into account.

The Board and its directors endeavour to always act in the best interest of the Company while adhering to the legal

standards of conduct. A director of the Board, with Board approval, is permitted to take independent advice in

connection with his/her duties. A policy regarding dealing in securities by directors, officers and selected employees is

in place. Directors declare interests in contracts at every Board meeting and there was no interest in contracts by

directors to declare during the year under review.

The chairman and the CEO

The Chairman of the Board, Bulelani Ngcuka, is a non-executive director. Although the chairman is not independent, the

Board believes that he adds tremendous value, displays the objectiveness required from a Chairman and

provides effective leadership and direction to facilitate an effective Board. The roles of the Chairman and Chief Executive

Officer are separate. The role of the Chairman is formalised in the Board Charter and the Chairman is assessed and

elected on an annual basis by the members of the Board. Mr Ngcuka holds chairmanships, fully considered by the Board,

as disclosed on page 4. The appointed lead independent director is Takalani Tshivhase.



The Board appoints the CEO and Board input is requested for senior management appointments. The Board defines its

own level of materiality and has approved a delegation of authority framework. The role and function of the CEO are

formalised and his performance is evaluated against specified specific criteria.


Composition of the Board

The Board comprises a balance of power, with a majority of non-executive directors of whom two are independent

non-executive directors, three non-executive directors and two executive directors. The two executive directors are

Mr Erhard van der Merwe, the Chief Executive Officer, and Ms Lizette Lynch, the Financial Director.

The Board believes that its size, diversity and demographics contribute to its effectiveness. The Board structure allows the

non-executive directors to provide their independent judgement on all relevant issues. The Board members complement

each other with a solid base of knowledge, skills and resources required for conducting the business of the Board and

the Group.

The Remuneration and Nomination Committee recommends the eligibility of prospective directors. The Board is

responsible for the appointment of qualifying Board members for ratification at the annual general meeting by the

shareholders of the Company. The Board is permitted to remove any director without shareholder approval.

Succession planning for the CEO and other seniorexecutives and officers is a regular agenda item on theannual Remuneration and Nomination Committee meeting.The Remuneration and Nomination Committee was satisfied with the succession plan suggested and the Boardaccepted its recommendation. A formal succession planwill be documented in the 2012 financial year.

2.16.9 The board should ensure succession planning for the role of the chairman.

2.17.5 The board should ensure succession planning for the CEO and other seniorexecutives and officers is in place.

The Board will ensure documentation of a dispute resolution procedure during the 2012 financial year.

2.14.4 Real or perceived conflicts should be disclosed to the board and managed.

A business rescue procedure will be documented duringthe coming financial year.

2.15 The board should consider business rescueproceedings or other turnaround mechanisms as soon as the company isfinancially distressed as defined in the Act.




Board appointment process

Directors are appointed through a formal process with appropriate background and reference checks conducted prior

to the nomination by the Remuneration and Nomination Committee and appointment by the Board.

The Board makes full disclosure regarding individual directors to enable shareholders to make their own assessment of

directors.


Director development

New directors are invited to do site visits and attend the AltX directors induction course with appropriate mentorship

taking place for new directors.


The majority of the Board is currently not independent non-executive directors. The Board will address the issue inthe 2012 financial year.

2.18.2 The majority of the non-executive directors should be independent.

The majority of the Board is currently not independent non-executive directors. The Board will address the issue inthe 2012 financial year.

All directors are subject to election by shareholders, retire by staggered rotation and stand for re-election inaccordance with the Company’s Memorandum ofIncorporation every three years.

2.18.6 At least one third of the non-executive directors should rotate every year.

This will be addressed in the 2012 financial year. 2.19.3 The appointment of non-executive directors should be formalised through aletter of appointment.

Partially compliant, although no documented induction programmes, are in place. Reliance is placed on the AltX

directors induction course, mentorship and business visitsfor induction. This will be addressed during the 2012financial year.

The board should ensure that:2.20.1 a formal induction programme is

established for new directors;

2.20.3 continuing professional development programmes are implemented;

Directors are expected to ensure that they keep up to datewith any changes and relevant applicable laws, rules,codes and standards. Briefings, to the extent applicable,take place at quarterly Board meetings. Rolfes executivemanagement will extend invitations to the Board to attendin-house presentations on changes.

2.20.4 directors receive regular briefings onchanges in risks, laws and the environment.



Company secretary

The Board is assisted by Mr Johan Schlebusch as company secretary who is a qualified CA(SA). The Board appoints and

is able to remove the company secretary. He is fully empowered to fulfil his duties and he has an arm’s length

relationship with the Board. He ensures that Board and committee charters are kept up to date; prepares and circulates

Board papers; elicits responses, input and feedback for Board and Board Committee meetings; assists in drafting yearly

plans; ensures the preparation and circulation of minutes of Board and committee meetings and performs all other duties

expected from a company secretary. The company secretary also assists with the nomination and appointment of directors.


Performance assessment

Executive directors’ performance appraisals are conducted and documented annually. Training needs are identified during performance evaluations. The nomination for the re-appointment of a director occurs after the evaluation of theperformance and attendance of the director at required meetings. Shareholders approve the Group’s remuneration policy, in particular the non-executive directors’ remuneration policy. The Group’s directors’ remuneration is put to shareholders’ vote as per the notice to shareholders on page 113.


The evaluation of the Board, its committees and the individual directors is performed annually, although notdocumented in detail. The detailed documenting of performance appraisals will take place during the nextassessment.

2.22 The evaluation of the board, its committeesand the individual directors should be performed every year.

Partially compliant with the Board determining its own rule,functions, duties and performance criteria as well as thatfor directors on the Board and Board Committees. Thebenchmarking thereof, assisting with performanceappraisals, has not been documented. This will be attended to during 2012.

2.22.1 The board should determine its own rule,functions, duties and performance criteria aswell as that for directors on the board andboard committees to serve as a benchmark for the performance appraisal.

The induction process is managed by the Chairman of theBoard and the CEO. Implementation in 2012 will be ensured.

The company secretary should:2.21.6 assist with the director induction and

training programmes;

Evaluations will be implemented by the Chairman of theBoard, assisted by the relevant executive, non-executive directors and the company secretary. This will be attendedto during 2012.

2.21.13 assist with the evaluation of the board,committees and individual directors.




3. Audit and Risk Committee

The Board is satisfied with the Audit and Risk Committee’s effectiveness and independence. The Board has approved theterms of the reference of the Audit and Risk Committee (“the Committee”). The Committee meets twice per annum or asoften as necessary to fulfil its function.

Membership

Refer to the Audit and Risk Committee Report outlined on pages 49 to 51 for disclosure on membership and attendance.

The Board elects the committee members with shareholders ratifying the appointment at the next annual general

meeting. The Chairman of the Committee participates in setting and agreeing the agenda of the Committee and attends

the annual general meeting. The members are permitted to consult with specialists or consultants subject to a

Board-approved process.


Responsibilities of the Audit and Risk Committee

The Committee oversees integrated reporting and assesses all factors and risks that may impact on the integrity of the

integrated report. The Committee reviews and comments on the financial statements included in the integrated report as

well as reviewing the disclosure of sustainability issues in the integrated report to ensure that it is reliable and does not

conflict with the financial information. (Refer pages 49 to 51 of the integrated report). The Committee may recommend

to the Board to engage an external assurance provider on the materiality of sustainability issues.

The Committee considers the need to issue interim results and reviews the content of the summarised information. The

external auditors may be engaged to provide assurance on the summarised financial information.

The appraisal process overview will be presented in the2012 integrated report.

2.22.4 An overview of the appraisal process,results and action plans should be disclosed in the integrated reports.

Currently two members, the Board is in the process of looking for a suitable candidate.

3.2.2 The audit committee should consist of atleast three members.

Partially compliant, directors’ remuneration is disclosed onpage 92 of the integrated report. Senior executives’ remuneration will be disclosed in the 2012 integratedreport.

2.26 Companies should disclose the remuneration of each individual director andcertain senior executives.


The relationship between the external assurance providers and the Group is monitored by the Committee.


Internal assurance providers and risk management

The Committee satisfies itself of the expertise, resources and experience of the Company’s finance function and performs

an annual review thereof. The result of the review is disclosed in the Audit and Risk Committee Report on pages 49 to

51 of the integrated report.

The Committee understands that it is an integral component of the risk management process. The Audit and Risk

Committee Charter sets out its responsibilities regarding risk management. Oversight is given to risks relating to

financial reporting, internal financial controls as well as fraud and IT risks as it relates to financial reporting.


External assurance providers

The Audit and Risk Committee is responsible for recommending the appointment of the external auditors and overseeingand reviewing the quality and effectiveness of the external audit process.

The Committee nominates the external auditor for appointment; approves the terms of engagement and remuneration forthe external audit engagement; monitors and reports on the independence of the external auditor and defines a policyfor non-audit services provided by the external auditors as well as approving the contracts for non-audit services. Theexternal auditors inform the Committee directly of any reportable irregularities identified and reported.

The Board is of the opinion that the auditors, BDO South Africa Incorporated, observe the highest level of business andprofessional ethics and that their independence is not in any way impaired. The auditors have the right of access to allinformation or personnel within the Group on any matter necessary to fulfil their duties. The external auditors attendAudit and Risk Committee meetings by invitation.

This matter will be fully addressed in the 2012 financialyear. The Committee will ensure that a combined assurancemodel is applied to provide a coordinated approach to allassurance activities and will ensure that the combinedassurance received is appropriate to address all the significant risks facing the Group.

3.4 The audit committee should oversee integratedreporting.

The internal audit function was only recently introduced.The Committee will be responsible for overseeing of internal audit and will approve the 2012 internal auditplan. The internal audit function will be subject to an independent quality review once fully established. A CAEhas not been appointed and this issue will be addressed inthe future.

3.7 The audit committee should be responsiblefor overseeing of internal audit.

3.7.1 The audit committee should be responsiblefor the appointment, performance assessment and/or dismissal of the ChiefAudit Executive (“CAE”).

3.7.2 The audit committee should approve theinternal audit plan.

3.7.3 The audit committee should ensure that theinternal audit function is subject to an independent quality review.




Reporting

The Audit and Risk Committee reports internally to the Board on it statutory duties and duties assigned to it by the Boardand to the shareholders on its statutory duties. Refer to the Audit and Risk Committee Report on pages 49 to 51 forrequired reporting.

4. Governance of risk

The Board’s responsibility for risk governance

The Board is responsible for the risk management process and governance thereof. A documented policy and plan forthe system and process of risk management is under development. The Board’s responsibility for risk governance isexpressed in the Board Charter. The Board also forms its own opinion on the effectiveness of the process and setting therisk strategy, which is based on the need to identify, assess, monitor, manage and mitigate all known forms of risk acrossthe Group, in liaison with the executive directors and senior management. The Board has set adequate limits for riskappetite as well as determining, monitoring and reviewing the Group’s risk tolerance level annually.

The Board believes that the Audit and Risk Committee, currently responsible for assisting the Board with risk management,is effective in its dual role. The Audit and Risk Committee is attended by selected invitees such as executive and non-executive directors, external auditors and the designated advisers, therefore consisting of an appropriate mix of executives and other skilled advisors to adequately assisting the Board with discharging its duties regarding risk management.

The Board is of the opinion that the current risk management plan and processes adequately assist with risk mitigation.


Management’s responsibility for risk management

The Board has delegated the responsibility to design, implement and monitor the risk management plan, to management.The Board’s risk strategy is executed by management by means of risk management systems and processes in the processof being documented. Management is accountable for integrating risk in the day-to-day activities of the Group. Policiesare clearly communicated to all employees to ensure that the risk strategy is incorporated into the language and cultureof the Group. Risk management and good internal control are practised throughout the Group and embedded in theGroup’s day-to-day activities.

Partially compliant, a plan and process are in place andall Board and Audit and Risk Committee responsibilitiesregarding risk are addressed in the various charters. Thepolicy and plan for risk management will be documented,approved by the Board and widely distributed during thenext financial year. Induction and training programmescurrently in place address the risk management processalthough these training programmes have not been formalised.

4.1 The board should be responsible for the governance of risk

4.1.1 A policy and plan for a system and processof risk management should be developed.

4.1.4 The induction and ongoing training programmes of the board should incorporate risk governance.

4.1.5 The board’s responsibility for risk governance should manifest in a documented risk management policy andplan.

4.1.6 The board should approve the risk management policy and plan.

4.1.7 The risk management policy should be widely distributed throughout the company.




Risk assessment

The Board ensures that effective and ongoing risk assessment is performed on a continuous basis. The risk assessmentprocess quantifies and involves the risks affecting various income streams of the Company, the critical dependencies ofthe business as well as the sustainability and the legitimate interest and expectations of stakeholders. A top-downapproach is followed and the Board regularly reviews and prioritises identified risks. The Board is currently made awareof material risks as and when they arise via e-mail or at relevant meetings with timeous responses being solicited by executive directors. The Board is satisfied that the current framework and processes in place are adequate to anticipateunpredictable risks.


Risk monitoring

The Board is satisfied of the continual risk monitoring by management. The responsibility for monitoring risks is documented in the Board Charter.


Risk assurance

The Board is satisfied with the effectiveness of the risk management process and management has provided assurance

that risk management is integrated in the daily activities of the Company. Internal audit will provide a written assessment

of the effectiveness of the system of internal controls and risk management to the Board. The Board has satisfied itself

that risk assessment responses and interventions are effective to adequately mitigate known risks. Presently undue,

unexpected or unusual risks; financial, economic or otherwise; resulting in material losses may, in future, impair

business operations. No undue, unexpected or unusual risks have come to light during the current reporting period.

Partially compliant, the management systems and processes have not been documented but will be done as amatter of urgency. A CRO has not been appointed; theBoard will give consideration to an appointment in thefuture.

4.4.1 The board’s risk strategy should be execut-ed by management by means of risk management systems and processes.

4.4.3 The Chief Risk Officer (“CRO”) should be asuitably experienced person who shouldhave access and interact regularly on strategic matters with the board and orappropriate board committee and executivemanagement.

Partially compliant, priority will be given to document therisk assessment process as well as the implementation of adocumented key risk register, during the 2012 financialyear.

4.5.2 A systematic, documented, formal riskassessment should be conducted at leastonce a year.

4.5.6 The board should regularly receive andreview a register of the company’s key risks.

The responsibility is currently described in the BoardCharter and will be documented in the risk managementplan document during the 2012 financial year.

4.8.2 The responsibility for monitoring risk shouldbe defined in the risk management plan.



The Group maintains systems of internal control, which include financial, operational and compliance controls. Thesecontrols are established, monitored and reviewed regularly, to provide reasonable assurance of the effective and efficient operation of the Group and its compliance with all relevant laws and regulations, as well as to the reliability ofthe annual financial reporting and to adequately safeguard, verify and maintain accountability for assets. Correctiveactions are taken to address control deficiencies and opportunities for improving the systems, as they are identified. TheBoard, operating through the Audit and Risk Committee, reviews these internal controls and provides oversight of thefinancial reporting process.

All processes have been in place for the year under review and, up to the date of the approval of the annual financial statements, nothing has come to the attention of the directors to indicate that any material breakdown in the functioningof the internal financial controls has occurred during the year under review.

Applied risk forms an integral part of the Group’s risk management process. The risk of non-compliance to applicablelaws, rules, codes and standards is identified, assessed and responded to through the risk management processes. The Group will consider establishing a compliance function at such time the Board believes that its size justifies theappointment.

The Group insures against losses arising from catastrophic or other events, which include fire, flood, explosion, earthquake and machinery breakdown, as well as business interruption from these events. The Group renews its insurance policies annually in July.


Risk disclosure

The Board ensures that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders. The Board is satisfied that the current risk management processes is effective. Material identified risks and the mitigation thereof are explained in detail in note 32 on pages 93 to 98 of the annual financial statements.


5. Information Technology governance

The Board is responsible for the governance of Information Technology (“IT”) and this forms part of the Board agenda.The Board will ensure that an IT charter and policy are documented during the 2012 financial year. The current policy,although not documented, ensures the promotion of an ethical IT governance culture and awareness. The IT strategy inplace aligns itself with the performance and sustainability objectives of the Group and is effectively integrated with theGroup’s strategic and business processes. The Board is satisfied that the current IT internal control framework is effective,that IT assets are managed effectively and will obtain independent assurance on the effectiveness of the IT internal controls, where appropriate. The Board is satisfied that adequate disaster recovery measures are in place to ensure business resilience and continuity in the event of a disaster. IT governance is a regular Board agenda item.

The function is newly established and will be developed toensure compliance.

4.9.2 Internal audit should provide a writtenassessment of the effectiveness of the systemof internal controls and risk management tothe board.

Partially compliant, the reporting of relevant risks to stakeholders will be addressed in the next integratedreport.

4.10 The board should ensure that there areprocesses in place enabling complete, time-ly, relevant, accurate and accessible risk disclosure to stakeholders.



The Board, through the Audit and Risk Committee, has delegated the responsibility for the implementation of an IT governance framework to the Financial Director, who is responsible for the implementation of the structure, processesand mechanism for the IT governance framework.

The Board monitors and evaluates significant IT investments and expenditure and oversees its value delivery. Intellectualproperties contained in information systems are sufficiently protected and managed, including information security andinformation privacy. IT is an integral part of the Company’s risk management. The Board is satisfied that the Companycomplies with IT laws and that IT-related rules, codes and standards are considered regarding IT-related matters.

The Audit and Risk Committee assists the Board in carrying out its responsibility regarding IT risks and the appropriateaddressing and mitigation thereof as well as IT risks relating to financial reporting.

IT laws and IT-related rules, codes and standards are considered on a regular basis. All personal information is treatedby the Company as an important business asset, identified as such, with an adequate Information Security ManagementSystem in place.


6. Compliance to relevant laws and regulations

Compliance is ethically imperative to the Group and the Board has therefore discharged its responsibility to establish an

effective compliance framework and processes as described below.

Partially compliant, the documentation of an IT charter andpolicies as well as independent assurance on IT controlswill be addressed during the 2012 financial year. Theappointment of an IT Steering Committee will also be considered by the Board. The current size of the Groupdoes not justify the appointment of a Chief InformationOfficer responsible for the management of IT. The FinancialDirector, along with a suitably qualified external consultant,currently manages IT.

5.1.2 The board should ensure that an IT charterand policies are established and implemented.

5.1.4 The board should ensure that an IT internalcontrol framework is adopted and implemented.

5.1.5 The board should receive independent assurance on the effectiveness of the IT internal controls.

5.3.3 The CEO should appoint a ChiefInformation Officer responsible for the management of IT.

5.4.3 The board should obtain independent assurance on the IT governance and controls outsourced IT services.

5.6.4 The board should approve the informationsecurity strategy and delegate and empower management to implement thestrategy.



The Board ensures that business performance is driven within regulatory frameworks thereby ensuring compliance by the

Group to all relevant laws, regulations and codes of business practices. Risks of non-compliance are considered as part

of the Group’s risk profile. The Board Charter includes the Board’s responsibility towards the compliance with all relevant

laws, consideration of rules, codes and standards. Exceptions permitted in laws, shortcomings and proposed changes

expected are dealt with ethically. The Board’s understanding of the context of the law and its various interactions with

other laws are well supported by the diversity in experience and knowledge of the Board members and invitees, all with

a range of expertise and a working knowledge in applicable laws. Individual directors are required to familiarise

themselves with the general content of applicable laws, rules, codes and standards to discharge their legal duties.

Compliance is a regular agenda item and forms part of risk management. The Board has delegated the implementationof an effective compliance framework and processes to management and will approve a legal compliance policy to beimplemented by management. The compliance with laws, rules, codes and standards is already embedded in the day-to-day activities of the Group and will also be incorporated in the code of conduct. Monthly Safety, Health,Environment and Quality management meetings are held by management and attended by executive directors on aquarterly basis to ensure the integration on a day-to-day activity basis. Applied risk is constantly assessed with the riskof non-compliance considered on an ongoing basis.

Management and staff have attended training sessions on the Competitions Act and the Consumer Protection Act. Groupmanagement has attended sessions on King III, the new Companies Act and a session on changes to JSE Regulationsduring the period under review.

Applied risk is constantly assessed with the risk of non-compliance considered on an ongoing day-to-day basis.


7. Internal audit

The Internal Audit function was initialised with the appointment of an Internal Auditor and we are looking forward to establishing the function in the 2012 financial year. The function will provide the Board and Audit and RiskCommittee with the necessary assistance in concluding that an effective system of internal controls exists. Additional assistance will be provided by the external auditors and the executive directors. The function will provide assurance ofstrategic, operational and financial risk mitigation and reliability of internal controls in the Group.

A formal induction programme has not been established.This will be attended to during 2012.

6.2.1 The induction and ongoing training programmes of directors should incorporatean overview of and any changes to applicable laws, rules, codes and standards.

Partially compliant, a formally documented legal compliance policy will be documented and approved bythe Board. Management, through the assistance of theexternal auditors and the Group’s legal advisors, currentlyensures that the Group identifies and complies with newlegislation and changes to current legislation.

6.4 The board should delegate to managementthe implementation of an effective compliance framework and processes.




8. Governance of stakeholder relationships

The Board appreciates that stakeholders’ perceptions affect the Group’s reputation and stakeholder communication andrelationship is a regular Board agenda item. The gap between stakeholders’ perceptions and the performance of theGroup is therefore managed and measured to enhance and protect the Group’s reputation. The Board strives to achievean appropriate balance between its various stakeholder groupings and the best interest of the Group.

The Board has identified its key stakeholders as employees, shareholders (equity providers), analysts, financial institutions (debt providers), community, producers and business partners, BEE partners, trade unions, media, credit rating agencies, insurers, regulatory bodies, suppliers and customers.

The Board manages communication and relationships with these stakeholders openly, promptly and with substance prevailing over form. The Board ensures that it takes account of legitimate expectations of stakeholders in its decision-making and endeavours to promote and ensure the equitable treatment of all its shareholders, ensuring the protection of non-controlling shareholder rights. Stakeholders are therefore engaged through the media, communicationthrough specifically designed forums and agencies or directly, using appointed representatives appropriate to circumstances. The CEO is the appointed spokesperson of the Group. Employees are addressed directly through management, either verbally, by electronic means or through proper notice boards placed strategically at their variousworkplaces. Stakeholder communication forms a regular part of the Board agenda and are encouraged to attend theannual general meeting.

Group policy encourages dialogue pursuits with institutional investors based on constructive engagement and the mutual understanding of objectives taking due regard of statutory, regulatory and other directives regulating the dissemination of information by companies and their directors.

Transparent and effective communication with stakeholders is essential for building and maintaining trust and confidence.Complete, timely, relevant, accurate, honest, clear, understandable and accessible information is provided to its stakeholders whilst having regard to legal and strategic considerations. The Group is adopting formal and informal communication guidelines that support a responsible relationship management and communication programme witheach stakeholder grouping. The Board is currently unaware of any requests or refusals of requests for information lodgedwith the Company in terms of the Promotion of Access to Information Act, 2000.

The internal audit function is newly established and will bedeveloped to ensure compliance.

Currently management, in conjunction with external audit,provides the Audit and Risk Committee with assuranceregarding the effectiveness of internal controls. The internalaudit plan for the 2012 financial year will be approved bythe Audit and Risk Committee once finalised. A Complianceand Risk Officer has not been appointed as yet.

The need for and role of internal audit:7.1 The board should ensure that there is an

effective risk based internal audit.

7.2 Internal audit should follow a risk basedapproach to its plan.

7.3 Internal audit should provide a written assessment of the effectiveness of the company’s system of internal controls andrisk management.

7.4 The audit committee should be responsiblefor overseeing internal audit.

7.5 Internal audit should be strategically positioned to achieve its objectives.



The integrated report addresses material matters of significant interest and concern and presents a comprehensive andobjective assessment of the Group so that all relevant stakeholders with a legitimate interest in the Group’s affairs canobtain a full, fair and honest account of its performance.

Grindrod Bank Limited acts as the Group’s designated adviser in compliance with the JSE Listings Requirements.


Dispute resolution


9. Integrated reporting and disclosures


Partially compliant, a strategy and policy is in place butnot documented. This will be documented in the comingyear and consideration will be given by the Board to publish the policy.

8.2.1 Management should develop a strategy andformulate policies for the management ofrelationships with each stakeholder grouping.

8.2.2 The board should consider whether it isappropriate to publish its stakeholder policies.

8.5.3 The board should adopt communicationguidelines that support a responsible communication programme.

A formal dispute resolution processes policy is currentlybeing formulated, will be documented, approved andadopted by the Board.

Dispute resolution8.6 The board should ensure that disputes are

resolved as effectively, efficiently and expeditiously as possible.

8.6.1 The board should adopt formal dispute resolution processes for internal and external disputes.

8.6.2 The board should select the appropriateindividuals to represent the company inADR.

As reported on page 1, this matter will be fully addressedwith all relevant components during the 2012 financialyear.

9. Transparency and accountability regarding theintegrated report.



SUSTAINABILITY REPORT

The Group fully supports and embraces King III’s integrated sustainability reporting approach and will endeavour to apply the

requirements and principles fully in line with business growth.

Sustainability priorities and practices include:

• continuous development and marketing of innovative environmentally friendly products, such as its lead-free organic

pigments product range manufactured and distributed globally;

• constantly striving to improve employees’ health and welfare opportunities;

• responsible reputation management to assist with increasing market share and building the Rolfes brand;

• contributing authentically to the process of broad-based black economic empowerment;

• advocating socially responsible environmental practices;

• regular review of policies and procedures to ensure relevance, effectiveness and compliance to current regulatory

requirements, while new and improved measures are frequently developed and implemented to manage social and

environmental impact;

• understanding stakeholder requirements by providing platforms for regular, mutual, honest and transparent stakeholder

communication; and

• pro-active reputation management assisting with the strengthening of the Rolfes brand.

Vision

Rolfes strives to be the leading company in the markets it serves by:

• committing to add value to its customers by providing market-leading, globally competitive, quality products and

services on time at fair value;

• recognising suppliers, customers, employees, shareholders and all other associates as valuable stakeholders in the

Group;

• providing a work environment where staff can excel through equal opportunities and training;

• exercising responsible environmental practices and complying with relevant legislation; and

• rewarding shareholders with exceptional returns through endeavours to promote the future sustainability and growth of

the South African economy.

Corporate values

The Rolfes Group subscribes to a comprehensive value system supporting the following:

• Transparency and accountability

• Entrepreneurship, equal opportunity and development

• Fairness, integrity and honesty

• Respect and responsibility

• Environmental protection



Economic

Value added statement

2011 2011 2010 2010R’000 % R’000 %

Group

Revenue 460 699 369 029

Cost of material and services (347 788) (277 918)

Value added by operations 112 911 99,96 91 111 99,99

Interest income 40 0,04 11 0,01

Total wealth created 112 951 100,00 91 122 100,00

Applied as follows:

Employees’ salaries, wages and benefits 48 307 42,77 43 046 47,24

Government taxation 13 497 11,95 9 572 10,50

Providers of capital and interest 3 780 3,35 4 861 5,33

Dividends 10 360 9,17 5 180 5,68

Retained in the Group

Retained earnings 32 331 28,62 23 853 26,18

Depreciation 4 676 4,14 4 605 5,07

Amortisation – – 5 –

Total wealth distributed 112 951 100,00 91 122 100,00

2011 2010

42,8%

11,9%

12,5%

32,8%

47,2%

10,5%

11,0%

31,3%

Retained in the Group

Providers of capital

Government

Employees



Strategies to be undertaken to improve reporting on economic aspects include:

• Climate change implications and risks for activities.

Environmental

As manufacturers, Rolfes is aware of the fact that its activities could potentially cause environmental damage and recognisesthat it has a pivotal role to play by encouraging environmentally responsible behaviour. The Group companies collaborateclosely with local and environmental authorities to ensure that they operate well within national norms in terms of applicable legislation.

Products and services

Green products

The process of developing, adding and selling lead-free organic pigments as part of the product offering to replace and eventually phase out harmful lead containing pigments have been ongoing for a number of years. The Group’s organic products have been tested by European distributors and the revenue stream resulting therefrom has increased by 160,9% during the year under review, comprising 11,3% of the Pigment division’s revenue.

Packaging materials

Packaging material for the majority of the lead-free income stream is not reclaimed as the product is mostly exported toEuropean companies. Pigments supplies to manufacturers and therefore packaging is not returned to the company but ratherdisposed of by the customers who use the products in their own manufacturing. Silica’s customers also dispose of the packaging themselves while Chemicals’ products, supplied to both manufacturers and end-users, accept returns on all suppliedcontainers. Approximately 2% of Chemical sales is supplied in bulk and not in containers, while the balance is distributed incontainers that are accepted if returned, with approximately 90% of these returns being recycled.

Compliance

No fines or non-monetary sanctions for non-compliance to environmental laws and regulations have been issued to the Groupduring the year under review.

Strategies to be undertaken to facilitate future reporting on environmental aspects include:

Biodiversity

Rolfes is unable to report on the biodiversity value and the impact of its activities in this report. The reporting of biodiversity isa future focus area.



Emission, effluents and waste

A focus area for the coming year will be to properly report on direct and indirect greenhouse gas emissions as well as any possible ozone-depleting substances and other significant air emissions by type and weight. Water reporting will be focusedaround water discharge by quality and destination and waste water by type and disposal method. No significant spills werereported for the year under review.

Currently risk assessments are conducted on a regular basis to ensure compliance with relevant legislation. Registered andaccredited institutions supply the businesses with approved disposal certificates which verify that waste is properly separatedand disposed of. Effluent treatment plants treat effluents in line with local and national regulations. Waste water management processes have been upgraded to improve efficiencies.

Proactive measures to limit emissions and other harmful discharges from factories are in place. Dust extraction mechanisms toreduce atmospheric dust content and a scrubber system to reduce CO2 emissions to acceptable levels is in operation at the Silicamine in Brits. Route plans for vehicles, in all the Rolfes companies, are assessed to minimise distances; regular service and maintenance schedules are followed to maintain optimum energy consumption and limit plant emissions. Emissions from thePigments factory are constantly monitored to minimise pollution of the atmosphere.

Water

The total water withdrawal by source will be reported on in the next integrated report. Water shortages represent a significantlong-term risk to parts of the business, as well as to the communities in which Rolfes operates. Filtering and recycling initiativesalready in operation in the Silica business will be extended to other operations. Improvements to product washing achievereductions in water usage that will be reported on in the future.

Energy

Rolfes has been focusing on the identification of strategies and risks to optimise energy consumption. Reduction programmesinclude awareness training of the workforce to enable optimum energy-saving practices. The Group is committed to saving energy and achieving the South African national target of a 10% reduction in electricity consumption. Safety practices, in linewith the relevant acts, regulations and local authority guidelines have been implemented. Rolfes undertakes to report statistically in the next integrated report.



Social: Labour practices and decent work

Employment

Consolidated total workforce by employment type, gender, nationality and race as per the latest EmploymentEquity report submission

FOREIGN

MALE FEMALE NATIONAL

Occupation

levels

Top management 0 0 0 5 0 0 0 1 1 0 7

Senior management 1 1 3 6 1 0 0 2 1 0 15

Professionally qualified andexperienced specialists inmicro-management 0 0 2 4 0 0 0 10 0 0 16

Skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents 14 0 2 11 0 1 0 0 0 0 28

Semi-skilled and discretionarydecision-making 131 8 1 8 20 6 3 12 1 0 190

Unskilled and defined decision-making 20 0 0 0 6 0 0 0 0 0 26

Total permanent 166 9 8 34 27 7 3 25 3 0 282

Temporary employees 15 3 0 1 2 0 0 1 0 0 22

Grand total 181 12 8 35 29 7 3 26 3 0 304

Labour/management relations

% of employees covered by collective bargaining agreements

Total number % covered by collectiveCompany of employees bargaining agreements

Rolfes Chemicals 54 74,1

Rolfes Silica 75 0

Rolfes Colour Pigments International 155 61,9

Rolfes Asset Holding 12 91,6

Rolfes Technology Holdings 8 0

Total 304 48,4

The minimum notice period regarding operational changes is as per the Labour Relations Act and a clause relating thereto isnot included in collective bargaining agreements.

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Freedom of association and collective bargaining

Rolfes acknowledges the right of individuals to freedom of association and collective bargaining with Group companies actively participating in national bargaining forums. Certain companies occasionally experience industrial action within theiroperations. Procedures are in place to manage employee relations and trade union negotiations. None of the operations posea significant risk to freedom of association or collective bargaining.

Equity and practices

Rolfes acknowledges that effective human resources management is strategic to Group performance. The Group recognises the workplace needs to reflect a transformed society with equity barriers carefully considered in policy and decision-making.Employment equity practices focus on attracting competent employees, skills retention and staff performance development. TheGroup’s employment equity approach provides for equal opportunity and fair treatment in employment. While this enables compliance with South African employment equity legislation, the Group emphasises diversity by continuing to maximise its talent pool, strengthen capacity and increasing innovation by introducing different ways of thinking.

Employment Equity reports are submitted timeously to the Department of Labour on an annual or bi-annual basis dependingon regulatory submission requirements.

Diversity and equal opportunity

Consolidated analysis of basic salaries by gender as per the latest Employment Equity report submission

Number of Remunerationworkers R

OCCUPATIONAL LEVELS PROFILE

Workforce 304 36 011 533

Total permanent 282 35 142 952

Total temporary employees 22 865 671

Top management 7 7 739 063

Male 5 6 039 389

– African – –

– Coloured – –

– Indian – –

– White 5 6 039 389

Female 1 901 866

– African – –


– Indian – –

– White 1 901 866

Foreign national 1 797 808

– Male 1 797 808

– Female – –




Senior management 15 6 339 045

Male 11 4 914 765

– African 1 222 360

– Coloured 1 441 368

– Indian 3 1 131 541

– White 6 3 119 496

Female 3 910 680

– African 1 198 223


– Indian – –

– White 2 712 457


– Male 1 513 600

– Female – –

Professionally qualified and experienced specialists in mid-management 16 4 699 560

Male 6 1 312 350

– African – –


– Indian 2 440 568

– White 4 871 782

Female 10 3 387 210

– African – –


– Indian – –

– White 10 3 387 210

Foreign national – –

– Male – –

– Female – –




Skilled technical and academically qualified workers, juniormanagement, supervisors, foremen and superintendents 28 3 470 006

Male 27 3 384 202

– African 14 1 292 204


– Indian 2 296 621

– White 11 1 795 377

Female 1 85 804

– African – –


– Indian – –

– White – –


– Male – –

– Female – –

Semi-skilled and discretionary decision-making 190 11 911 919

Male 148 9 189 878

– African 131 6 432 020


– Indian 1 492 323

– White 8 1 756 234

Female 41 2 676 507

– African 20 544 160


– Indian 3 212 892

– White 12 1 366 342


– Male 1 45 534

– Female – –




Unskilled and defined decision-making 26 983 359

Male 20 792 255

– African 20 792 255


– Indian – –

– White – –

Female 6 191 104

– African 6 191 104


– Indian – –

– White – –


– Male – –

– Female – –

Temporary employees 22 868 581

Male 19 718 111

– African 15 564 067


– Indian – –

– White 1 45 534

Female 3 150 470

– African 2 64 737


– Indian – –

– White 1 85 733


– Male – –

– Female – –

Strategies to be undertaken to improve reporting on labour practises and decent work aspects include:

Health and Safety

Rolfes intends to publish a full health and safety report containing rates of injury, occupational diseases, lost days and absenteeism in the next integrated report. No fatalities due to workplace accidents were reported for the year under review.Measures to prevent workplace accidents and fatalities are in place and enforced through policies, strategies, procedures andinfrastructure in place to mitigate environmental, occupational health and safety risks. Regular risk assessments and monitoringassist with ongoing compliance with all relevant occupational health and safety regulations. In-house training on various safety precautions, industrial hygiene, codes of practice and safe operating procedures are conducted on a regular basis.



Surveillance programmes are in place at all sites with workers monitored for the potential health effects of products they areexposed to. Personnel are issued with required protective clothing and equipment and trained on prevention strategies to mitigate potentially harmful exposure risks as well as emergency treatment of accidental exposure.

Proper storage facilities are in place for raw materials and finished goods to ensure safety of employees and the environment.Appropriate precautions are taken to avoid potential explosions associated with dust clouds or flammable materials.Underground storage tanks are monitored for leaks and compliance to applicable legislation.

HIV/AIDS

Healthcare promotion in the Group concentrates on implementing preventative and corrective mitigation measures to reduceand eliminate underlying causes of HIV/AIDS, other serious diseases and identifiable health hazards. The Group promotes voluntary testing, non-discrimination and awareness about preventing the spread of the disease and mitigating its effects.

Training and education

Human resource development

Each employee is believed to be entitled to improve his/her personal potential. Human resource development programmes areimplemented to develop workforce competency levels and to ensure that these production skills are available outside the industry. All Group companies offer among others, through internal or external means; health and safety training, hazchemrequirements training, plant and equipment operation training, specialised sales force development programmes and product-related training courses.

Skills development

Human capital is key to the Group’s sustainability. Members of management and staff form the Skills Development andEmployment Equity Committee and evaluate the skills plans, monitor progress and conduct quarterly meetings. The Group complies with prevailing skills development legislation and provides a range of training, learning and career developmentopportunities for its people. Timeous submission of workplace skills and training reports are presented to CHIETA in accordancewith regulations.

Social: Human rights

Non-discrimination

The Group views all forms of discrimination in a very serious light and will not hesitate to take appropriate disciplinary actionagainst offenders. No incidents of discrimination were reported for the period under review.

Child and forced or compulsory labour

The Group rejects child and forced labour practices. It respects national cultures, local laws and traditions. As a responsibleemployer, the Rolfes Group undertakes to comply with regulatory requirements and rules of the various acts and governing bodies, including the Constitution, the Labour Relations Act, the Employment Equity Act, the Skills Development Act and theBasic Conditions of Employment Act. The Group will immediately terminate agreements and relationships with contractors orsuppliers who contravene the Constitution or the Universal Declaration of Human Rights standards. None of the operations practice child and forced or compulsory labour.

Strategies to be undertaken to facilitate future reporting on human rights aspects include:

Investment and procurement practices

Rolfes will endeavour to include human rights clauses in future investment contracts or ensure that the particular investment hasundergone human rights screening, where appropriate, as well as reporting on the percentage of significant suppliers and customers that have undergone human rights screening.



Social: Society

Corporate Social Investment (CSI)

A proper corporate social investment plan will be presented to the Board for approval during the 2012 financial year. Current

project undertaken during the year included donations of paint from suppliers to refurbish a children’s home in Lenasia,

Gauteng. No other significant projects were undertaken during the year. A Social and Ethics Committee will be established by

May 2012 to oversee the implementation of the CSI plan.

Bribery and corruption

The Rolfes Group is vehemently opposed to bribery and corruption. Employees are discouraged from accepting any gifts or

favours from suppliers that obligate them in any way to reciprocate. The Group endeavours to comply with all the requirements

of the Anti-Fraud and Corruption Act and the Protected Disclosures Act. The core of this commitment is to apply the highest

standard of ethical conduct in dealings with all stakeholders.

Compliance

No fines or non-monetary sanctions for non-compliance with laws and regulations have been issued to the Group during the

year under review.

Strategies to be undertaken to improve reporting on society aspects include:

• Successful implementation of a CSI plan.

Social: Product responsibility

Customer health and safety

Material and safety technical data sheets are published on our website for most products sold by the Group. These are

constantly updated and available to the customer base to ensure customer health and safety. Products supplied by the Pigments

businesses are constantly assessed for improvement in respect of quality, health and safety.

Quality

Rolfes Colour Pigments International (Pty) Limited is accredited with ISO 9001:2008 Quality Management Assurance

Standards.

Compliance

No fines or non-monetary sanctions for non-compliance with laws and regulations have been issued to the Group during the

year under review.

Strategies to be undertaken to improve reporting on product responsibility aspects include:

• Customer health and safety

Assessments are ongoing to ensure product improvement and the development of alternatives for lead-based products.

• Products services and labelling

Product labelling practices are currently being reviewed to ensure responsible labelling in accordance with legislation.



Broad-Based Black Economic Empowerment

The Group has aligned its efforts to the Department of Trade and Industry’s B-BBEE Codes of Good Practice, through VuwaInvestments (Proprietary) Limited (“Vuwa”), a 24,8% shareholder and the Group’s black empowerment partner, to ensure a sustainable contribution to the empowering of employees and historically disadvantaged individuals within local communities.Vuwa is owned and controlled by black people with the majority of the Group’s main Board members being black.

The Group obtained a level 5 rating and a procurement recognition of 80% on its B-BBEE scorecard. Target areas identified forimprovement are corporate social investment and procurement. Skills development and employment equity considerations areimportant to the Group’s commitment to diversity within its workforce.

B-BBEE scorecard

%

Black ownership 32,19Black female ownership 2,48

ElementsOwnership 17,98Top management 7,00Employment equity 11,51Skills development 0,69Preferential procurement 5,25Enterprise development 15,00Social responsibility n/a

Total 57,43

Annual financial statements

Page

Directors’ approval and responsibility statement 44

Declaration by company secretary 44

Report of the independent auditors 45

Directors’ report 46

Report of the Audit and Risk Committee 49

Consolidated statements of financial position 52

Consolidated statements of comprehensive income 53

Consolidated statements of changes in equity 54

Consolidated statements of cash flows 55

Notes to the annual financial statements 56

AUDITORSBDO South Africa Incorporated

Registered Auditors

LEVEL OF ASSURANCEThese annual financial statements have been audited in compliance with the applicable requirements of the South

African Companies Act.

PREPARERL Lynch

Financial Director

PUBLISHED20 September 2011



Directors’ approval and responsibility statement

The directors of Rolfes Technology Holdings Limited have pleasure in presenting the annual financial statements for theyear ended 30 June 2011.

In terms of the South African Companies Act, the directors are required to prepare annual financial statements thatfairly present the state of affairs and business of the Company and of the Group at the end of the financial year andof the profit or loss for that year. To achieve the highest standards of financial reporting, these annual financial statements have been drawn up to comply with International Financial Reporting Standards and the AC500 standardsas issued by the Accounting Practices Board or its successor body and have been prepared using appropriate accounting policies, supported by reasonable and prudent judgements and estimates.

The annual financial statements comprise:

• the directors’ report• the statements of financial position• the statements of comprehensive income • the statements of changes in equity• the statements of cash flows• the notes to the financial statements• the interest in subsidiaries• the analysis of shareholding

The reviews by the chairman and the chief executive officer are on the results of operations for the year and those matters which are material for an appreciation of the state of affairs and business of the Company and of the RolfesGroup.

Supported by the Audit Committee, the directors are satisfied that the internal controls, systems and procedures in operation provide reasonable assurance that all assets are safeguarded, that transactions are properly executed andrecorded, and that the possibility of material loss or misstatement is minimised. The directors have reviewed the appropriateness of the accounting policies, and concluded that estimates and judgements are prudent. They are of theopinion that the annual financial statements fairly present the state of affairs and business of the Company and Groupat 30 June 2011 and of the profit for the year to that date. The external auditors are responsible for reporting onwhether the financial statements are fairly presented.

In addition, the directors have also reviewed the cash flow forecast for the year to 30 June 2012 and believe that theRolfes Group has adequate resources to continue in operation for the foreseeable future.

Accordingly, the annual financial statements have been prepared on a going concern basis and the external auditorsconcur.

The annual financial statements were approved by the board of directors and were signed on their behalf by:

BT Ngcuka E van der Merwe L LynchChairman Chief Executive Officer Financial DirectorJet Park13 September 2011

Declaration by Company Secretary

In terms of section 88(2)(e) of the South African Companies Act, as amended (the Act), I certify that Rolfes TechnologyHoldings Limited has lodged with the Companies and Intellectual Property Commission all such returns as are requiredof a public company in terms of the Act. Further, that such returns are true, correct and up to date.

JC SchlebuschCompany SecretaryJet Park13 September 2011


Report of the independent auditors

TO THE SHAREHOLDERS OF ROLFES TECHNOLOGY HOLDINGS LIMITED

We have audited the annual financial statements and Group annual financial statements of Rolfes Technology HoldingsLimited, which comprise the directors’ report, the statement of financial position and the consolidated statement offinancial position as at 30 June 2011, the statement of comprehensive income and the consolidated statement of comprehensive income, the statement of changes in equity and the consolidated statement of changes in equity, thestatement of cash flows and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 46 to 107.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Company’s directors are responsible for the preparation and fair presentation of these financial statements inaccordance with International Financial Reporting Standards and the requirements of the Companies Act of SouthAfrica. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraudor error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our auditin accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

OPINION

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Companyand of the Group as of 30 June 2011, and their financial performance and their cash flows for the year then endedin accordance with International Financial Reporting Standards, the AC 500 standards as issued by the AccountingPractices Board or its successor body and the requirements of the Companies Act of South Africa.

BDO South Africa IncorporatedRegistered AuditorsPer: J Schoeman

13 Wellington RoadParktown 2193

Johannesburg13 September 2011


Directors’ report for the year ended 30 June 2011

The directors have pleasure in presenting their report onthe activities of the Company and the Group for the yearended 30 June 2011.

NATURE OF BUSINESS OF THE GROUP

Rolfes Technology Holdings Limited (Rolfes or the Group)is a holding company incorporated in the Republic ofSouth Africa that, through its divisions and subsidiaries,provides a wide range of market-leading products to customers through dedicated teams of industry specialistsin the silica, chemical and pigments industries. Rolfes’primary listing is under the Altx of the JSE Limited. Thisrepresents no change since the prior year.

RESULTS OF OPERATIONS

The results of the year’s operations are set out in the financial statements from pages 52 to 107 and incorporate the consolidated results of the Company andits subsidiaries.

POWER TO AMEND ANNUAL FINANCIALSTATEMENTS

The entity’s owners have the power to amend the annual financial statements.

YEAR UNDER REVIEW

The year under review is fully covered in the Chairman’sand the Chief Executive Officer’s reports.

EVENTS AFTER THE REPORTING PERIOD

The directors are not aware of any significant events,other than stipulated below, that have occurred betweenthe end of the financial year and the date of this reportthat may materially affect the results of the Company forthe period under review or their financial position as at30 June 2011.

The Group is in the process of acquiring a 70% shareholding in Agchem Holdings (Pty) Limited subject tocertain suspensive conditions being fulfilled as publishedon SENS on 12 July 2011 and 18 August 2011.

SHARE CAPITAL

Details of the authorised and issued share capitalappear in note 10 on page 81 of the annual financialstatements.

The Company’s authorised and issued share capitalremained unchanged during the year.

DIVIDENDS

The Group paid an interim dividend to shareholders of5 cents per share on 22 March 2011 and will pay a

final dividend of 5 cents per share on 24 October 2011of R5,2 million with a corresponding secondary tax oncompanies of R0,5 million.

The salient dates applicable to the final dividend are asfollows:

Last day to trade “CUM” dividend 14 October 2011First day to trade “EX” dividend 17 October 2011Record date 21 October 2011Payment date 24 October 2011

No share certificates may be dematerialised or rematerialised between Monday, 17 October 2011 andFriday, 21 October 2011, both days inclusive.

DIRECTORS

Biographical notes of the current directors are set out onpages 4 and 5.

Details of directors’ remuneration appear on page 92.

CHANGES IN DIRECTORATE

The Board of Directors remained unchanged for the2011 financial year.

In terms of the Company’s Articles of Association, directors retire by rotation every three years. Ms L Lynchretires as a director at the forthcoming annual generalmeeting and, being eligible, offers herself for re-election.

DIRECTORS’ INTERESTS IN CONTRACTS

No material contracts involving directors’ interests wereentered into in the current year.

COMPANY SECRETARY AND REGISTEREDOFFICE

The Company’s registered physical address has changed.From: To:

The Summit 12 Jet Park Road 269, 16th Street Jet ParkRandjespark BoksburgMidrand 14591685

The postal address remains unchanged as below.

Mr JC Schlebusch is the company secretary, his addressand the registered address of the Company is as aboveand below:

PO Box 8112Elandsfontein1406


Directors’ report continuedfor the year ended 30 June 2011

PROPERTY, PLANT AND EQUIPMENT

Details of additions to property, plant and equipment during the year are disclosed in notes 2 and 3 to the annualfinancial statements. There was no change in the nature of the property, plant and equipment of the Company or in thepolicy regarding their use during the year under review.

MATERIAL EVENTS

Litigation

Rolfes Colour Pigments International is currently in litigation relating to the retrenchment of a former agent in France,

which estimated expenses have been provided for.

The Group entered into litigation during the 2009 financial year to recover R7,1 million due to it by a previous

customer. An arbitration hearing was held on 8 August 2011 and a full and final settlement agreement amounting to

R3,3 million was signed by both parties. The amount, as agreed, has since been received from the customer.

Other than as reported above, no events material to the understanding of the report have occurred between the end

of the reporting period and the date of this report.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

Rolfes’ financial statements have been prepared in accordance with International Financial Reporting Standards.

MAJOR SHAREHOLDERS

Shareholders holding beneficially, directly or indirectly, in excess of 3% of the issued share capital of the Company is

detailed on page 81 of the annual financial statements.

DIRECTORS’ SHAREHOLDING

The direct and indirect beneficial shareholding of the directors in office at the date of this report is as follows:

2011 2010

Direct Indirect Direct Indirect

Executive directors

L Lynch 3 000 – 3 000 –

E van der Merwe 3 196 605 – 3 196 605 –

Non-executive directors

L Dyosi 1 355 400 – 1 355 400 –

AJ Fourie 21 511 943 2 230 000 21 511 943 1 600 000

BT Ngcuka 4 066 200 – 4 066 200 –

KT Nondumo – – – –

TAM Tshivhase 71 500 – 20 000 –

32 434 648 2 230 000 31 753 148 1 600 000

There has been no change in the directors’ interest in the issued share capital of the Company between 30 June 2011

and the date of this report.


Directors’ report continuedfor the year ended 30 June 2011

ATTENDANCE AT MEETINGS

The number of meetings attended by each of the directors of the Company during the period 1 July 2010 to 30 June

2011 is as follows, with the number in brackets reflecting the number of meetings held, whilst the director was in office.

Audit and Risk Remuneration

and Nomination

Board Committee Committee

meetings meetings meetings

BT Ngcuka 4 (4) – (2)** –

E van der Merwe 4 (4) 2 (2)** 2 (2)**

L Dyosi 2 (4) 1 (2)** 2 (2)

AJ Fourie 2 (4) 1 (2)** 2 (2)

L Lynch 4 (4) 2 (2)** 2 (2)**

KT Nondumo 3 (4) 2 (2) 2 (2)

TAM Tshivhase 4 (4) 2 (2) –

D Theodorou*** (representing the Designated Adviser) 4 (4)** 2 (2)** –

J Schoeman** – 1 (2)** –

JC Schlebusch* 4 (4)** 2 (2)** –

* Company Secretary

** Attended by invitation

*** Designated Adviser

SPECIAL RESOLUTIONS

Repurchase of securities

A general authority to repurchase ordinary shares in the Company was granted in terms of a special resolution passed

by the Company’s shareholders on 29 October 2010 and registered by the Registrar of Companies (“general

authority”). During the financial year under review the Company did not acquire ordinary shares on the open market

(2010: nil).

The directors will seek approval at the annual general meeting for authority to repurchase further shares. On approval,

at the annual general meeting, of the special resolution required to effect any repurchase of securities, the maximum

number of shares that the Company may repurchase is limited to 20%, or by a subsidiary is limited to 10%, of the

issued share capital of the Company. The maximum premium payable on any repurchase will be limited to 10% above

the weighted average market price of such shares over the five days immediately preceding the date of repurchase.

Such approval is valid until the next annual general meeting or 15 months from the date of approval of the resolution.

In considering any repurchase scheme the directors will take cognisance that after such repurchase, the Company and

the Group, will in the ordinary course of business, after the notice of the annual general meeting for the succeeding

12-month period, be able to pay its debts, the working capital requirements and the ordinary capital and reserves of

the Company and the Group will be adequate and the consolidated assets of the Group will be in excess of its

consolidated liabilities, fairly valued for cash.

AUDITORS

The auditors, BDO South Africa Incorporated (appointed during March 2007), have indicated their willingness to

continue in office for the ensuing year. The Audit and Risk Committee has satisfied itself of the independence of the

auditors and of the designated auditor, Mr J Schoeman. A resolution to reappoint them as auditors will be proposed

at the next annual general meeting scheduled to take place on 28 October 2011.


Report by the Audit and Risk committeefor the year ended 30 June 2011

The Audit and Risk Committee has clearly defined terms

of reference outlined in the Audit and Risk Committee

Charter which was approved by the Board of directors.

The Audit Charter is available for inspection at the reg-

istered office of the Company.

Purpose

The Audit and Risk Committee meets with the chief

executive officer, financial director and other members

of executive management (when and if required), as well

as the external auditors, to discuss issues of accounting,

risk, auditing, internal controls, financial reporting and

corporate governance.

The duties of the Audit and Risk Committee include:

• establishing the independence and objectivity of the

registered external auditors, the designated auditor

and their appointment;

• assessing the relevance, impact and resolution of

accounting or auditing issues identified by external

auditors;

• assessing the scope and results of the external audit

and determine the fees to be paid to the external

auditor;

• appraising the nature and extent of non-audit

services, seeking to balance the maintenance of

objectivity and value for money;

• pre-approving any proposed contract with the

auditor for the provision of non-audit services to the

Group to ensure that the fees for such services do not

become so significant to call to question the auditor’s

independence;

• ensuring that the appointment of the auditor complies

with the South African Companies Act and any other

legislation relating to the appointment of auditors;

• addressing appropriately any complaints (internal or

external) relating either to accounting practices and

internal audit of the Group or to the content or

auditing of its financial statements, or to any related

matter;

• reviewing and reporting on the functioning of the

internal control system;

• analysing risk areas of the Group’s operations,

taking cognisance of legal, operational and financial

factors;

• assessing Information Technology (“IT”) risks and

controls, business continuity and data recovery

relating to IT and information security and privacy;

• examining the reliability and accuracy of the

financial information provided to management and

other users of financial information;

• assessing the appropriateness of the expertise and

experience of the financial director of the Group;

• assisting the Board in reviewing the integrated

reports to ensure that the information is reliable and

that no conflicts or differences arise when compared

with the financial results or advise the Board of the

need to engage an external assurance provider;

• reviewing interim and provisional financial results

and price sensitive information; and

• assuring the Group’s compliance with legal and

regulatory provisions, its Articles of Association,

code of conduct, by-laws and rules established by the

Board.

The Audit and Risk Committee considers whether or not

the interim report should be subject to an independent

review by the auditors. It also reviews the annual

financial statements and the appropriateness of the

accounting policies adopted by the Group.

The Board confirmed that it is satisfied that the Audit and

Risk Committee has during the review year performed

the duties mandated to it by the Board.

Membership

Established with terms of reference from the Board, the

Audit and Risk Committee comprises TAM Tshivhase

(Chairman) and KT Nondumo; both are independent

non-executive directors on the Board with the required

skills and expertise. Shareholder approval for the

appointment of the existing members of the Audit and


Report by the Audit and Risk committee continuedfor the year ended 30 June 2011

Risk Committee will be sought at the annual general

meeting to be held on 28 October 2011.

The term of the Committee is one year and its

composition and membership are reviewed annually by

the Board.

Attendance at meetings during the year was as follows:

14 Sept 22 Feb

2010 2011

TAM Tshivhase √ √KT Nondumo √ √D Theodorou √ √

(representing the

Designated Adviser)*

* By invitation

The external auditors and appropriate members of

the Board attend the meetings by invitation.

External audit

In terms of section 90(1) of the Companies Act, the

Committee nominated BDO South Africa Incorporated

as the independent, external auditor and J Schoeman, a

registered auditor, as the designated partner, for

appointment for the 2011 audit. This appointment of the

independent auditor was approved by the shareholders at

the annual general meeting on 29 October 2010.

The Committee has satisfied itself through enquiry of the

independence of the auditor as required by the

Companies Act, as amended or replaced, and as per the

standards stipulated by the auditing profession.

Required assurance as to the support and demonstration

of the independence claims within the internal gover-

nance processes of the audit firm was obtained.

The Audit and Risk Committee agreed to the

engagement letter, terms, nature and scope of the audit

function and the audit plan for the 2011 financial year.

The budgeted fee is considered appropriate for the work

that could reasonably have been foreseen at that time.

Audit fees are disclosed in note 21 on page 87.

Non-audit services rendered by the auditor are

governed by a formal procedure and each engagement

letter for such services, where material, is reviewed and

approved by the Committee.

The external auditors have unrestricted access to thechairman of the Audit and Risk Committee and no matters of concern were raised during the review year.The Committee meets at least once a year with the auditors without the presence of executive directors ormanagement to ensure that the audit was performedaccording to plan and to obtain feedback as necessaryabout the conduct of the audit from key members of theCompany’s management, including the financial director.

The Committee has again nominated, for approval at the annual general meeting, BDO South AfricaIncorporated, as the external auditor and Mr J Schoeman as the designated auditor for the 2012financial year. The Committee confirms that the registered auditors and designated auditor are accredited by the JSE Limited.

Internal Audit

An internal audit function was established in the

beginning of the 2012 financial year. To assist the Board

and Audit and Risk Committee in concluding that an

effective system of internal controls exists, the external

auditors, along with the executive directors, provide

assurance of strategic, operational and financial risk

mitigation and reliability of internal controls in the

Group.

Risk management

The Audit and Risk Committee is an integral componentof the risk management process in the Group with the Audit and Risk Committee Charter detailing responsibilities of the Committee regarding risk management. The Committee supervises financialreporting risks, including fraud and IT risks. The Boardhas partly delegated responsibility for overseeing thedesign, implementation and maintenance of a soundsystem of internal control to the Audit and RiskCommittee. The Audit and Risk Committee ensures balance between the Group’s approach to risk management and the nature of the Company’s legal,operational and financial environment. Through understanding of the internal and external environmentand the related challenges, the Committee assures itselfthat the risk programme is appropriate to the Company.

Internal financial control evaluations are presentedannually in a formal document for review by the Auditand Risk Committee to enable it to adequately perform


Report by the Audit and Risk committee continuedfor the year ended 30 June 2011

its responsibilities to oversee the integrity of the Group’sfinancial information. Material financial control inadequacies are considered individually or in combination, if in existence. This includes actual material financial loss, fraud and/or material errors aswell as corrective action taken. Any inadequacies arereported to the Board for disclosure in the Board report.

To mitigate and limit fraud risk, the Audit and Risk Committee considers matters that may result in materialmisstatements in the financial statements.

Information Technology (IT) risks

The Audit and Risk Committee considers the identification of IT risk as a vital element in the effectivereview of risk management. As reported above, theBoard has accepted responsibility of the Group’s IT governance, with assistance from the Audit and RiskCommittee, who plays a supervisory role relating to ITrisks and controls.

The Audit and Risk Committee is appropriately assuredthat adequate controls are in place to mitigate risks.

Annual financial statements and accountingpractices

The Audit and Risk Committee has reviewed the accounting policies and the financial statements of theCompany and is satisfied that they are appropriate andcomply with International Financial ReportingStandards.

A process has been established to receive and dealappropriately with any concerns and complaints relatingto the reporting practices of the Company. No matters ofsignificance have been raised in the past financial year.

The Audit and Risk Committee fulfilled its mandate andrecommended the financial statements for the yearended 30 June 2011 for approval to the Board. TheBoard approved the financial statements on pages 52 to107 on 13 September 2011 and the financial statementswill be open for discussion at the annual general meeting.

Group financial director

The Audit and Risk Committee confirms that it has satisfied itself of the appropriateness of the expertise andexperience of the financial director, Ms Lizette Lynch, ofthe Group.

Approval

The Audit and Risk Committee Report has beenapproved by the Board of Directors of Rolfes.

Signed on behalf of the Audit and Risk Committee

TAM TshivhaseChairman of the Audit and Risk Committee


Group Company

2011 2010 2011 2010Notes R’000 R’000 R’000 R’000

ASSETSNon-current assets 97 526 98 594 199 798 200 018

Plant and equipment 2 37 352 38 296 311 531Property 3 27 816 27 726 – –Investment in subsidiaries 4 – – 199 487 199 487Intangible assets 5 32 358 32 572 – –

Current assets 179 582 144 616 42 212 40 091

Inventories 6 94 953 77 718 – –Trade and other receivables 7 74 454 60 771 25 48Short-term loans 8 – – 32 557 35 378Cash and cash equivalents 9 4 833 6 127 9 630 4 665Value Added Tax receivable 18 4 706 – – –Income tax receivable 18 636 – – –

Total assets 277 108 243 210 242 010 240 109

EQUITY AND LIABILITIESCapital and reserves 162 291 140 320 186 920 196 145

Share capital 10 1 036 1 036 1 036 1 036Treasury shares 11 (868) (868) – –Share premium 28 603 28 603 28 603 28 603Retained income/(loss) 131 327 109 356 (14 188) (4 963)Revaluation reserve 12 2 193 2 193 171 469 171 469

Interest of shareholders 162 291 140 320 186 920 196 145

Non-current liabilities 23 830 25 487 25 709 25 130

Interest-bearing liabilities 13 8 688 15 315 – 94Deferred tax liability 15 11 799 7 036 25 709 25 036Provisions 17 3 343 3 136 – –

Current liabilities 90 987 77 403 29 381 18 834

Trade and other payables 18 82 947 60 617 561 439Current portion of interest-bearing liabilities 13 7 213 8 825 94 1 893Current portion of vendor loan 14 – 5 220 – –Financial liability 19 184 100 – –Short-term loans 8 – – 28 007 16 492Value Added Tax liability 18 – 932 528 10Income tax payable 18 – 1 239 191 –Provisions 17 643 470 – –

Total equity and liabilities 277 108 243 210 242 010 240 109

Consolidated statements of financial positionas at 30 June 2011


Group Company

2011 2010 2011 2010Notes R’000 R’000 R’000 R’000

Revenue 20 460 699 369 029 11 083 7 776Cost of sales (373 675) (291 372) – –

Gross profit 87 024 77 657 11 083 7 776Other operating income 4 075 907 32 –Operating expenses (14 666) (13 064) (3 118) (2 871)

Material operating itemsProvision for bad debts 164 (2 568) – –Insurance (1 582) (2 079) (1 558) (1 442)Salaries and wages (including

directors’ remuneration) (25 447) (22 578) (4 873) (6 068)

Operating profit before interest 21 49 568 38 275 1 566 (2 605)Finance cost 24 (3 780) (4 861) (867) (5 307)Finance income 25 40 11 2 336 5 509

Profit before taxation 45 828 33 425 3 035 (2 403)Tax expenses 26 (13 497) (9 572) (1 900) 155

Profit for the year 32 331 23 853 1 135 (2 248)

Other comprehensive income for the year, net of tax – – – –

Total comprehensive income for the year 32 331 23 853 1 135 (2 248)

Profit for the year attributable to:Owners of the parent 32 331 23 853 1 135 (2 248)Non-controlling interest – – – –

32 331 23 853 1 135 (2 248)

Total comprehensive income attributable to:Owners of the parent 32 331 23 853 1 135 (2 248)Non-controlling interest – – – –

32 331 23 853 1 135 (2 248)

Profit for the year attributable to:Continued operations 32 331 23 853 – –

32 331 23 853 – –

Total comprehensive income attributable to:Continued operations 32 331 23 853 – –

32 331 23 853 – –

Earnings per share (cents) 29– Basic 31,4 23,2– Diluted 31,4 23,2

Consolidated statements of comprehensive incomefor the year ended 30 June 2011


Consolidated statements of changes in equityfor the year ended 30 June 2011

Reva-Share Share Treasury Retained luation Total

capital premium shares income reserve equityR’000 R’000 R’000 R’000 R’000 R’000

Group

Balance at 30 June 2009 1 036 28 603 (635) 90 450 2 193 121 647Net profit for the year – – – 23 853 – 23 853Transactions with owners

Dividends declared – – – (5 180) – (5 180)Reallocation of fair value – – (233) 233 – –

Balance at 30 June 2010 1 036 28 603 (868) 109 356 2 193 140 320Net profit for the year – – – 32 331 – 32 331Transactions with owners

Dividends declared – – – (10 360) – (10 360)

Balance at 30 June 2011 1 036 28 603 (868) 131 327 2 193 162 291

More information is disclosed in note: 10 11 12

Ordi- Reva-nary Share Retained luation Total

shares premium loss reserve equityR’000 R’000 R’000 R’000 R’000

Company

Balance at 30 June 2009 1 036 28 603 2 465 171 469 203 573Net loss for the year – – (2 248) – (2 248)Transactions with owners

Dividends declared – – (5 180) – (5 180)

Balance at 30 June 2010 1 036 28 603 (4 963) 171 469 196 145Net profit for the year – – 1 135 – 1 135Transactions with owners

Dividends declared – – (10 360) – (10 360)

Balance at 30 June 2011 1 036 28 603 (14 188) 171 469 186 920


Consolidated statements of cash flows for the year ended 30 June 2011

Group Company

2011 2010 2011 2010

Notes R’000 R’000 R’000 R’000

Cash generated from/(utilised

in) operating activities 15 602 33 765 (7 438) (8 311)

Cash received from customers and subsidiaries 454 179 366 148 11 106 7 866

Cash paid to suppliers and employees (413 868) (318 210) (8 617) (10 587)

Cash generated from/(utilised in)

operations 36.1 40 311 47 938 2 489 (2 721)

Finance income 40 11 2 336 5 509

Finance cost (3 780) (4 861) (867) (5 307)

Tax paid 36.2 (10 609) (4 143) (1 036) (612)

Dividends declared and paid (10 360) (5 180) (10 360) (5 180)

Cash (utilised in)/generated from

investing activities (3 437) 4 378 14 296 29 069

Additions to plant and equipment 2, 3 (4 110) (2 802) (40) (116)

Proceeds from disposal 459 207 – –

Loans received – – 14 336 29 185

Cost of acquisition of companies 36.3 214 6 407 – –

Decrease in investments – 566 – –

Cash utilised in financing activities (13 459) (32 368) (1 893) (4 231)

Decrease in long-term borrowings (6 627) (22 128) (94) (1 958)

Decrease in instalment sale agreements –

short-term portion (1 612) (1 860) (1 799) (2 273)

Decrease in acquisition vendor –

short-term portion (5 220) (8 380) – –

Cash (deficit)/surplus for the year (1 294) 5 775 4 965 16 527

Cash and cash equivalents

– beginning of the year 6 127 352 4 665 (11 862)

Cash and cash equivalents

– end of the year 9 4 833 6 127 9 630 4 665



Notes to the

annual financial statements

1. ACCOUNTING POLICIES

1.1 Basis of preparation

The annual financial statements have been prepared in accordance with International Financial ReportingStandards (IFRS and IFRIC – International Financial Reporting Interpretations Committee of the IASB –interpretations) issued by the International Accounting Standards Board (IASB), AC 500 standards asissued by the Accounting Practices Board and its successor and in accordance with the requirements ofthe Companies Act of South Africa.

The annual financial statements have been prepared on the historical cost basis, except for the measurement of financial assets and liabilities at fair value through profit and loss and incorporate theprincipal accounting policies set out below.

The accounting policies applied conform with IFRS and are consistent with those followed in the preparation of the annual financial statements for the year ended 30 June 2010, except for the adoptionof the following IFRSs, IFRICs, Circulars and amendments to IFRSs and IFRICs that are relative and thatbecame effective during the current period and of which had no significant impact on the reported resultsother than giving rise to additional disclosures and a revision to the relevant accounting policies.

The following standards and amendments to standards have been adopted in accordance with the transitional provisions of the standards:

IFRS 3 – Business Combinations. This standard brings amendments to the accounting for business combinations, transition requirements for contingent consideration from a business combination thatoccurred before the effective date of the revised IFRS. It brings clarification on the measurement of non-controlling interest and provides additional guidance on unreplaced and voluntarily replaced share-base payment awards.

IAS 12 – Income Taxes. This standard brings clarity that an investment property will be recovered in itsentirety through sale.

IAS 24 – Related Party Disclosure. This standard simplifies the disclosure requirements for government-related entities and clarifies the definition of a related party.

IAS 34 – Interim Financial Reporting. The standard brings clarity to the disclosure requirements around significant events and transactions including financial instruments.

1.2 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities(including special purpose entities) controlled by the Company (its subsidiaries). Control is achievedwhere the Company has the power to govern the financial and operating policies of an entity so as toobtain benefits from its activities.

Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to theowners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.



Notes to the

annual financial statements continued

1. ACCOUNTING POLICIES continued

1.2 Basis of consolidation (continued)

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing controlover the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests inthe subsidiaries. Any difference between the amount by which the non-controlling interests are adjustedand the fair value of the consideration paid or received is recognised directly in equity and attributed toowners of the Company.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the differencebetween –

• the aggregate of the fair value of the consideration received and the fair value of any retainedinterest; and

• the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary andany non-controlling interests.

When assets of the subsidiary are carried at revalued amounts of fair values and the related cumulativegain or loss has been recognised in other comprehensive income and accumulated in equity, the amountspreviously recognised in other comprehensive income and accumulated in equity are accounted for as ifthe Company had directly disposed of the relevant assets (ie reclassified to profit or loss or transferreddirectly to retained earnings as specified by applicable IFRSs). The fair value of any investment retainedin the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 36 – Financial Instruments: Recognition andMeasurement or, when applicable, the cost on initial recognition of an investment in an associate or ajointly controlled entity.

Investments in subsidiaries are accounted for as available-for-sale financial assets. Available-for-salefinancial assets are initially and subsequently measured at fair value as detailed in accounting policy 1.8.

1.3 Business combinations

Initial recognition and measurement

All business combinations are accounted for by applying the acquisition method. The cost of the businesscombination is the fair values at the date of exchange of the assets given, liabilities incurred or assumed,and equity instruments issued by the Group, in exchange for control of the acquiree. Costs directly attributable to the business combination are expensed as incurred, except the costs to issue debt whichare amortised as part of the effective interest and costs to issue equity which are included in equity.Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combinationare measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.

Contingent consideration is included in the cost of the business combination at fair value determined atthe date of acquisition. Subsequent changes to the assets, liabilities or equity which arise as a result ofthe contingent consideration are not effected against goodwill, unless they are valid measurement periodadjustments. The interest of non-controlling shareholders may be measured either at fair value or at thenon-controlling interest’s proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. When a business combination isachieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fairvalue on the date the Group attains control and the resulting gain or loss is recognised in profit or loss.



Notes to the



1.2 Basis of consolidation (continued)

Where the previously held interest was classified as an available-for-sale financial asset, the cumulativefair value adjustments recognised to other comprehensive income and accumulated in equity are recognised in profit or loss as a reclassification adjustment. At the acquisition date, the excess of the costof the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities is recognised as goodwill in accordance with the Group’s accountingpolicy for goodwill. The acquisition date is the date on which the Group effectively obtains control of theacquiree. The excess of the fair value of the net identifiable assets and contingent liabilities of the entityacquired over the cost of acquisition results in a bargain purchase which is recognised immediately inprofit or loss.

Subsequent measurement

If the initial accounting for business combinations has been determined provisionally, then these provisional amounts are adjusted during the measurement period to reflect new information obtainedabout facts and circumstances that existed as of the date of acquisition that, if known, would have affected the amounts initially recognised. The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date, subject to a maximum of one year.

1.4 Borrowings costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,which are assets that necessarily take a substantial period of time to get ready for their intended use orsale, are added to the cost of those assets, until such time as the assets are substantially ready for theirintended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit or loss in the period in which they areincurred.

1.5 Goodwill

Goodwill represents the excess of the cost of a business combination over the interest in the fair value ofidentifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair values of assetsgiven, liabilities assumed and equity instruments issued, plus any direct costs of acquisition. Goodwill iscapitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilitiesand contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to theconsolidated statement of comprehensive income on the acquisition date.

Internally generated goodwill is not recognised as an asset.

Goodwill is tested annually at the financial year end for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Goodwill is allocated tocash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash generating units that are expected to benefit from the businesscombination in which the goodwill arose identified according to operating segment.

1.6 Dividends

Dividend distribution to the Group’s shareholders is recognised in the statement of changes in equity inthe period in which the dividends are approved and paid.



Notes to the



1.7 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits (those payable within twelve months after the service is rendered,such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care)are recognised in the period in which the service is rendered and is not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absenceoccurs.

The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legalor constructive obligation to make such payments as a result of past performance.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense when incurred.

1.8 Financial instruments

Initial recognition

A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument in another entity. The group’s financial instruments consists primarily of thefollowing instruments: Loans and receivables, cash and cash equivalents, trade and other receivables andother current financial assets; and the following financial liabilities: borrowings, trade and other payablesand other current financial liabilities.

Fair value

Where financial instruments are recognised at fair value, the instruments are measured at the amount forwhich an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in anarm’s length transaction. Fair values have been determined as follows:

• Where market prices are available, these have been used;

• Where market prices are not available, fair values have been determined using valuation techniques incorporating observable market inputs or discounting expected cash flows at marketrates.

Fair value measurement hierarchy

IFRS 7 requires certain disclosures which require the classification of financial assets and financial liabilities measured at fair value using fair value hierarchy that reflects the significance of the inputs usedin making the fair value measurement. The fair value hierarchy has the following levels:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as a price) or indirectly (ie derived from prices) (Level 2); and

• Inputs for the asset or liability that are not based on observable market data (unobservable inputs)(Level 3).

The level in the fair value hierarchy within which the financial asset or financial liability is categorised isdetermined on the basis of the lowers level input that is significant to the fair value measurement. Financialassets and financial liabilities are classified in their entirety into only one of the three levels.



1.8 Financial instruments (continued)

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all feeson points paid or received that form an integral part of the effective interest rate, transaction cost andother premiums or discounts) through the expected life of the financial asset, or, where appropriate, ashorter period. Income is recognised on an effective interest basis for debt instruments other than thosefinancial assets designated as at fair value through profit or loss.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or lossrecognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend orinterest earned on the financial asset.

Financial assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as heldto maturity.

Financial assets and liabilities are recognised on the statement of financial position when it becomes partyto the contractual provisions of the instruments.

Financial asset and financial liabilities are offset and the net amount reported only when a legally enforceable right to set off the amounts exists and the intention is to either to settle on a net basis or torealise the asset and settle the liability simultaneously.

The Group’s accounting policy for each category is as follows:

Fair value through profit or loss – Held-for-trading

Financial assets classified as held-for-trading comprise the foreign forward exchange contracts which arenot designated as hedges in terms of IAS 39 – Financial Instruments: Recognition and Measurement.

Loans and receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quotedin an active market. They arise principally through the provision of goods and services to customers (eg.trade receivables), but also incorporate other types of contractual monetary asset.

They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest ratemethod, less provision for impairment.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group willbe unable to collect all of the amounts due under the terms receivable, the amount of such a provisionbeing the difference between the net carrying amount and the present value of the future expected cashflows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that thetrade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.


Notes to the





Loans to Group companies

These include loans to holding companies, fellow subsidiaries, subsidiaries, joint ventures and associatesand are recognised initially at fair value plus direct transaction costs. Subsequently these loans are measured at amortised cost using the effective interest rate method, less any impairment loss recognisedto reflect irrecoverable amounts.

On loans receivable an impairment loss is recognised in profit or loss when there is objective evidencethat it is impaired. The impairment is measured as the difference between the investment’s carryingamount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverableamount can be related objectively to an event occurring after the impairment was recognised, subject tothe restriction that the carrying amount of the investment at the date the impairment is reversed shall notexceed what the amortised cost would have been had the impairment not been recognised.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each end of the reporting period. Financial assets are impaired where there is objectiveevidence that, as a result of one or more events that occurred after the initial recognition of the financialasset, the estimated future cash flows of the investment have been impacted.

For financial assets, measured at amortised cost using the effective interest rate method, the followingobjective evidence is considered in determining when an impairment loss has been incurred:

• significant financial difficulty of the debtor,

• a breach of contract, such as a default or delinquency in interest or principal repayments, and

• it is becoming probable that the debtor will enter bankruptcy or other financial re-organisation.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to beimpaired individually are subsequently assessed for impairment on a collective basis. For financial assetscarried at amortised cost, the amount of the impairment is the difference between the asset’s carryingamount and the present value of estimated future cash flows, discounted at the financial asset’s originaleffective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount isreduced through the use of an allowance account.

Subsequent recoveries of amounts previously written off are credited against the allowance account.Changes in the carrying amount of the allowance account are recognised in profit or loss. With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after theimpairment was recognised, the previously recognised impairment loss is reversed through profit or lossto the extent that the carrying amount of the investment at the date the impairment is reversed does notexceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity securities, impairment losses previously recognised through profitor loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairmentloss is recognised directly in equity.


Notes to the





Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the assetexpire; or it transfers the financial asset and substantially all the risks and rewards of ownership of theasset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards ofownership and continues to control the transferred asset, the Group recognises its retained interest in theasset and an associated liability for amounts it may have to pay. If the Group retains substantially all therisks and rewards of ownership of a transferred financial asset, the Group continues to recognise thefinancial asset and also recognises a collateralised borrowing for the proceeds received.

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with thesubstance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity afterdeducting all of its liabilities. Equity instruments issued by the Group, comprising ordinary shares, arerecorded at the proceeds received, net of direct issue costs.

Where the group or its subsidiaries purchase the company’s equity share capital (treasury shares), theamount paid, including any directly attributable incremental external costs net of income taxes, is deducted from total shareholders’ equity as treasury shares. When treasury shares are subsequently reissued or sold, the amount received, net of any directly attributable incremental transaction costs andthe related income tax effects is recognised as an increase in equity.

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for whichthe liability was acquired.

The Group’s accounting policy for each category is as follows:

Fair value through profit or loss – Held-for-trading

Financial liabilities classified as held-for-trading comprise the foreign forward exchange contracts whichare not designated as hedges in terms of IAS 39 – Financial Instruments: Recognition and Measurement.

Other financial liabilities

Other financial liabilities include the following items:

Bank overdrafts, borrowings and loans from Group companies

Bank overdrafts, borrowings and loans from Group companies are initially measured at fair value, andare subsequently measured at amortised cost, using the effective interest rate method. Any differencebetween the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.


Notes to the




1.9 Impairment of assets

The Group assesses at the end of each reporting period whether there is any indication that an asset may

be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset.

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the

individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the

recoverable amount of the cash-generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to

sell and its value in use. If the recoverable amount of an asset is less than its carrying amount, the

carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is

recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a

revaluation decrease.

An impairment loss is recognised for cash-generating units if the recoverable amount of a unit is less than

the carrying amount of collective units. The impairment loss is allocated to reduce the carrying amount of

the assets of the unit on the following basis:

• to the assets of the unit pro rata on the basis of the carrying amount of each asset in the unit.

An entity assesses at each reporting date whether there is any indication that an impairment loss

recognised in prior periods for assets may no longer exist or may have decreased. If any such indication

exists, the recoverable amounts of those assets are estimated.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation

other than goodwill is recognised immediately in profit and loss. Any reversal of an impairment loss of a

revalued asset is treated as a revaluation increase.

1.10 Inventories

Inventories are stated at the lower of cost and net realisable value. Costs comprise direct materials and,where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method.Net realisable value represents the estimated selling price less all estimated costs of completion and coststo be incurred in marketing, selling and distribution.

1.11 Intangible assets

Intangible assets are recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably.

Expenditure on research (or on the research phase of an internal project) is recognised as an expensewhen it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) isrecognised when:

• it is technically feasible to complete the asset so that it will be available for use or sale.

• there is an intention to complete and use or sell it.


Notes to the




• there is an ability to use or sell it.

• it will generate probable future economic benefits.

• there are available technical, financial and other resources to complete the development and to useor sell the asset.

• the expenditure attributable to the asset during its development can be measured reliably.

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

The residual value, amortisation period and the amortisation method for intangible assets are reviewedannually.

Intangible assets with finite useful lives are amortised on a straight-line basis over its estimated useful life.

The significant intangibles recognised by the Group, its useful economic life and the method used to determine the cost of the intangible is as follows:

Web site 3 years Cost

1.12 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental toownership. A lease is classified as an operating lease if it does not transfer substantially all the risks andrewards incidental to ownership.

The land and buildings elements of property leases are considered separately for the purposes of leaseclassification.

Finance leases

Finance leases are recognised as assets and liabilities in the statement of financial position at amountsequal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as afinance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rateimplicit in the lease. The lease payments are apportioned between the finance charge and reduction ofthe outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liability.

Lessors shall recognise assets held under finance lease in their statement of financial position and presentthem as a receivable at an amount equal to the net investment in the lease.

Operating leases

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Thedifference between the amounts recognised as an expense and the contractual payments are recognisedas an operating lease asset or liability. This amount is not discounted. Any contingent rent is expensed inthe period it is incurred.

Lease income from operating leases shall be recognised in income on a straight-line basis over the leaseterm, unless another systematic basis is more representative of the time pattern in which the use benefitderived from the leased asset is diminished.


Notes to the




1.13 Non-current assets held-for-sale and discontinued operations

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be

recovered primarily through sale rather than through continuing use are classified as held-for-sale and

are carried at the lower of carrying value and fair value less cost to sell. Immediately before

classification as assets held-for-sale, the measurement of the assets (and all assets and liabilities in a

disposal group) is brought up-to-date in accordance with applicable IFRS. Then, on initial classification

as assets held-for-sale, non-current assets and disposal groups are recognised at the lower of the

carrying amounts and fair value less costs to sell. Any impairment loss on a disposal group is first

allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss

is allocated to inventories, financial assets, deferred tax assets, and employee benefit assets, which

continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial

classification as held-for-sale and subsequent gains or losses on re-measurement are recognised in the

income statement. Gains are not recognised in excess of any cumulative impairment loss.

A discontinued operation results from the sale or abandonment of an operation that represents a

separate major line of business or geographical area of operations and of which the assets, net profit or

loss and activities can be distinguished physically, operationally and for financial reporting purposes. A

subsidiary acquired exclusively with the view to resale is also classified as a discontinued operation.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria

to be classified as held-for-sale, if earlier.

1.14 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:

• it is probable that future economic benefits associated with the item will flow to the entity; and

• the cost of the item can be measured reliably.

Property, plant and equipment is initially recognised at cost. Costs include costs incurred initially to

acquire an item of property, plant and equipment and costs incurred subsequently to add to or replace a

part. If a replacement cost is recognised in the carrying amount of an item of property, plant and

equipment, the carrying amount of the replaced part is derecognised.

Property, plant and equipment, excluding land and buildings, is carried at cost less accumulated

depreciation and any impairment losses.

Property, plant and equipment, excluding land and buildings, is depreciated on the straight-line basis at

rates considered appropriate to reduce book values to estimated residual values over their estimated

useful lives. Each part of an item of property, plant and equipment with a cost that is significant in

relation to the total cost of the item shall be depreciated separately. Depreciation ceases when residual

value equals to more than the carrying value of the specific item of property, plant and equipment.

The useful lives, depreciation method and residual values of the individual items of property, plant and

equipment are reviewed on an annual basis and any revision to these are accounted for as a change in

accounting estimate.


Notes to the




1.14 Property, plant and equipment (continued)

The estimated average useful lives of the classes of assets are as follows:

Furniture and fittings 6 years

Computer equipment 3 years

Earth-moving equipment 4 years

Vehicles 5 years

Plant and equipment 5 to 15 years

Rehabilitation asset 53 months

Property is carried at revalued amount, being the fair value at the date of revaluation less any subsequent

accumulated depreciation, based on periodic valuations by a professional qualified valuer. These

revaluations are made with sufficient regularity to ensure that the carrying amount does not differ

materially from that which would be determined using fair value at the end of the reporting period (at

least every five years). Any increase in an asset’s carrying amount, as a result of a revaluation, is

credited directly to equity in the revaluation reserve. The increase is recognised in profit or loss to the

extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. Any

decrease in an asset’s carrying amount, as a result of a recalculation, is recognised in profit or loss in the

current period. The decrease is debited directly to equity in the revaluation reserve to the extent of any

credit balance existing in the revaluation surplus in respect of that asset.

Rehabilitation cost

Restoration cost is recognised when a present legal obligation arises to restore the environment to its

previous status or according to stipulated requirements in the mining license. A rehabilitation provision is

recognised at the present value of the estimated obligation and is increased annually with finance charges

calculated at market-related discount rates and is recognised through the profit or loss.

An asset is recognised at the present value of the estimated rehabilitation obligation and is depreciated

in accordance with the policies applicable to equivalent items of property, plant and equipment and

investment property.

The estimated obligation will be evaluated annually and any increases or decreases in the obligation will

be recognised in profit or loss in the current year.

1.15 Provisions and contingencies

Provisions are recognised for liabilities of uncertain timing or amount that have arisen as a result of past

transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value

of money and the risks specific to the liability.

1.16 Revenue recognition

Sales

Revenue is measured at the fair value of the consideration received or receivable and represents amounts

receivable for goods and services provided in the normal course of business, net of trade discounts,

volume rebates and Value Added Tax.


Notes to the




1.16 Revenue recognition (continued)

Revenue from the sale of goods is recognised when all the following conditions have been satisfied:

• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the Group retains neither continuing managerial involvement to the degree usually associated withownership nor effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the Group; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Other revenue earned by the Group is recognised on the following basis:

Services

Revenue from the rendering of services will be recognised when the outcome of the transaction involvingthe service can be estimated reliably.

Monthly services rendered will be recognised on a monthly basis after the service has been performed.

Rentals

Rentals are recognised on the accrual basis in accordance with the substance of the relevant agreement.

Interest income

Interest is recognised, in profit and loss, using the effective interest rate method.

Dividend income

Dividend income is recognised when the shareholder’s right to receive payment is established.

1.17 Segmental reporting

Segment information is determined on the same basis as the information used by the chief operating decision maker for the purposes of allocating resources to segments and assessing segments’ performance. The chief operating decision maker has been identified as the chief executive officer in conjunction with the board of directors that makes strategic decisions. All intersegment transactions areeliminated.

1.18 Critical accounting estimates and assumptions

In preparing the financial statements, management is required to make estimates and assumptions thataffect the amounts represented in the financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates.

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. More information on the carrying value of provisions is included in note 17.

Provisions

Warranty provision

A warranty provision is raised based on prior experience for defective products sold, to be utilised by thereturning of defective products by customers.


Notes to the




1.18 Critical accounting estimates and assumptions (continued)

Bad debts provision

An estimate is made for doubtful receivables based on a review of all outstanding amounts at year-end,taking into account the difference between the carrying amount of assets and the present value of the estimated future cash flows discounted at the effective interest rate computed at initial recognition. Baddebts are recognised directly in profit and loss in the year in which they are identified.

Loans and receivables

The directors assess the loans and receivables for impairment at each end of the reporting period. Indetermining whether an impairment loss should be recorded in the statement of comprehensive income,the directors make judgements as to whether there is observable data indicating a measurable decreasein the estimated future cash flows from the financial asset.

The impairment of loans and receivables is based on the amounts outstanding, which management feels,will not be collected or only partially collected. Where possible, the impairment is estimated per debtor.The estimate is based on a review of all outstanding amounts at year-end. Refer to note 7.

Useful lives of items of property, plant and equipment

The directors estimate the useful lives of the classes of property, plant and equipment, taking into accountthe individual items of the class and the present condition along with any major capital expenditure thatis budgeted in the near future.

Residual values of items of property, plant and equipment

The residual values of the individual items of property, plant and equipment are reviewed annually by thedirectors. The estimate is made after taking into account the condition of the item, age and judgementrelating to useful lives.

Decommissioning and rehabilitation obligations

The directors estimate annually any decommissioning and rehabilitation obligations which might exist atyear-end. The estimate is made after taking into account the extent of the obligation and any requirementsrelating to the obligation.

Taxation

Judgement is required in determining the provision for income taxes due to the complexity of legislation.Where the final tax outcome of these matters is different from the amounts that were initially recorded,such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The Group recognises the net future tax benefit related to deferred tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing therecoverability of deferred tax assets requires the Group to make significant estimates related to expectations of future taxable income.

Estimates of future taxable income are based on forecast cash flows from operations and the applicationof existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets recorded at theend of the reporting period could be impacted.


Notes to the




1.18 Critical accounting estimates and assumptions (continued)

Estimated tax loss

The Group bases the tax expenses and deferred tax calculation on the estimated tax loss of the individual subsidiaries. The estimated tax loss is calculated as per the South African Revenue Service stipulations, indicated in the Income Tax Act No 58 of 1962. Once SARS has assessed the Company andagrees with the calculation of the estimated assessed loss, SARS grants the Company an assessed loss.Should the situation occur that SARS does not agree with the estimated assessed loss, it will be rectifiedin the first tax expense calculation being performed with clear indication of such an event.

Impairment testing

The recoverable amounts of individual assets have been determined based on the higher of value-in-usecalculations and fair values. These calculations require the use of estimates and assumptions. It is reasonably possible that the assumption may change which may then impact on estimates and may thenrequire a material adjustment to the carrying value of assets.

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in 1.5 for goodwill. The recoverable amounts of cash-generating units have beendetermined based on value-in-use calculations. These calculations require the use of estimates.

1.18.1 Critical judgements in applying the entity’s accounting policy

No critical judgements, apart from those involving estimations, have been made in the processof applying the Group’s accounting policies that will have a significant effect on the amountsrecognised in the financial statement.

1.19 Translation of foreign currencies

The Group’s functional and presentation currency is represented by South African Rand.

Foreign currency transactions

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their "functional currency") are recorded at the rates rulingwhen the transactions occur. Foreign currency monetary assets and liabilities are translated at the ratesruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assetsand liabilities are recognised immediately in profit or loss.

When a gain or loss on a non-monetary item is recognised in other comprehensive income, any exchangecomponent of that gain or loss shall be recognised in other comprehensive income.

Conversely, when a gain or loss on a non-monetary item is recognised in profit or loss, any exchangecomponent of that gain or loss shall be recognised in profit or loss.

1.20 Taxation

Tax expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for theperiod, except to the extent that the tax arises from:

• a transaction or event which is recognised, in the same or a different period, directly in equity, or

• a business combination.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items thatare credited or charged, in the same or a different period, directly to equity.


Notes to the




1.20 Taxation (continued)

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amountalready paid in respect of current and prior periods exceeds the amount due for those periods, the excessis recognised as an asset.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected tobe paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred taxation asset and liabilities

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in theconsolidated statement of financial position differs from its tax base, except for differences arising on:

• the initial recognition of goodwill;

• the initial recognition of an asset or liability in a transaction which is not a business combinationand at the time of the transaction affects neither accounting or taxable profit; and

• investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in theforeseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profitwill be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantivelyenacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax is charged or credited in profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is recognised in equity.

Secondary taxation on companies (STC) is provided for at a rate of 10% on the amount by which the dividends declared by the Group exceed dividends received. Deferred taxation on unutilised STC creditsis recognised to the extent that STC payable on future dividend payments is likely to be available for set-off.

1.21 Standards, interpretations and amendments for the year 2011

The following amendments and interpretations to standards are currently not relevant to the Group’s operations:

Interpretations issued but not yet effective, comprises:

IFRS 9 – Financial Instruments 1 January 2013

IFRS 10 – Consolidated Financial Statements 1 January 2013

IFRS 11 – Joint Arrangements 1 January 2013

IFRS 12 – Disclosure of Interests in Other entities 1 January 2013

IFRS 13 – Fair Value Measurement 1 January 2013


Notes to the




1.21 Standards, interpretations and amendments for the year 2011 (continued)

Amendments to existing standards issued, but not yet effective, comprises:

IAS 19 – Employee Benefits 1 January 2013

IAS 27 – Consolidated and Separate Financial Statements 1 January 2013

IAS 28 – Investments in Associates 1 January 2013

IFRS 1 – First-Time Adoption of IFRS 1 January 2013

IFRS 7 – Financial Instruments: Disclosures 1 January 2013

Standards and amendments adopted in current year with no significant impact:

IFRIC 19 – Extinguishing Financial Liabilities with Equity Investments July 2010

IAS 21 – Effect Changes in Foreign Exchange Rates July 2010

IAS 27 – Consolidated and Separate Financial Statements July 2010

IAS 28 – Investments in Associates July 2010

IAS 31 – Interest in Joint Ventures July 2010

1.22 Related Parties

Related parties are considered to be related if one party has the ability to control or jointly control theother party or exercise significant influence over the party in making financial and operational decisions.Key management personnel are also regarded as related parties. Key management personnel are thosepersons having authority and responsibility for planning.

1.23 Earnings per Share

The Company presents basic earnings per share (EPS) for its ordinary shares. Basic earnings per shareis calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by theweighted average number of ordinary shares outstanding during the period.

1.24 Headline Earnings per Share

Headline earnings per ordinary share are calculated using the weighted average number of ordinaryshares in issue during the period and are based on the earnings attributable to ordinary shareholders,after excluding those items as required by Circular 3/2009 issued by the South African Institute ofChartered Accountants (“SAICA”).


Notes to the



Earth- Plant

Furniture Computer moving and Rehabi-

and equip- equip- equip- litation

fittings ment Vehicles ment ment asset Total

R’000 R’000 R’000 R’000 R’000 R’000 R’000

2. PLANT AND EQUIPMENT

Group – 2011

Beginning of yearCost 1 030 1 459 11 016 6 094 44 887 266 64 752

Accumulated depreciation (876) (889) (5 748) (3 100) (15 578) (265) (26 456)

Net book value 154 570 5 268 2 994 29 309 1 38 296

Current year movement

Additions 57 645 867 171 2 280 – 4 020

Disposals – (7) (683) – (83) – (773)

Depreciation (58) (486) (1 194) (809) (2 129) – (4 676)

Depreciation of disposals – 7 462 – 16 – 485

Carrying value 30 June 2011 153 729 4 720 2 356 29 393 1 37 352

End of year

Cost 1 087 2 097 11 200 6 265 47 084 266 67 999

Accumulated depreciation (934) (1 368) (6 480) (3 909) (17 691) (265) (30 647)

Net book value 153 729 4 720 2 356 29 393 1 37 352

Estimated residual values 103 1 2 735 1 959 11 254 1 16 053

Group – 2010

Beginning of yearCost 986 1 338 11 038 6 094 43 032 266 62 754


Net book value 192 823 6 363 3 862 29 517 30 40 787

Current year movement

Additions 54 131 191 – 1 953 – 2 329

Disposals (10) (10) (213) – (98) – (331)

Depreciation (92) (380) (1 154) (868) (2 082) (29) (4 605)

Depreciation of disposals 10 6 81 – 19 – 116

Carrying value 30 June 2010 154 570 5 268 2 994 29 309 1 38 296

End of year

Cost 1 030 1 459 11 016 6 094 44 887 266 64 752


Net book value 154 570 5 268 2 994 29 309 1 38 296

Estimated residual values 23 1 2 922 2 646 11 407 1 17 000


Notes to the



Furniture Computer

and equip-

fittings ment Total

R’000 R’000 R’000

2. PLANT AND EQUIPMENTcontinued

Company – 2011Opening net book value 53 478 531

Current year movementAdditions 5 35 40

Depreciation (11) (249) (260)

Total movement 47 264 311

End of yearCost 73 778 851

Accumulated depreciation (26) (514) (540)

Net book value 47 264 311

Estimated residual values 1 1 2

Company – 2010Opening net book value 61 597 658

Current year movementAdditions 3 113 116

Depreciation (11) (232) (243)

Total movement 53 478 531

End of yearCost 68 743 811

Accumulated depreciation (15) (265) (280)

Net book value 53 478 531

Estimated residual values 1 1 2

Total plant and equipment held by the Group at 30 June 2011 amounted to R37,4 million (2010: R38,3 million), comprising

the amounts analysed above.

Plant and equipment with a carrying value of R6,7 million (2010: R6,8 million) have been pledged by way of a notarial bond

to the value of R1,4 million in favour of Engen Petroleum as security for trade creditors.

Additions include R1,1 million (2010: Rnil million) assets under instalment sale agreements and disposals with a cost of

R0,2 million (2010: R0,2 million) were settled under instalment sale agreements. The assets acquired under instalment sale

agreements are encumbered as security for repayment of the instalment sale liabilities. (Refer note 13)

Depreciation expense of R3,3 million (2010: R3,3 million) has been charged in the cost of goods sold and R1,4 million (2010:

R1,3 million) has been charged to overheads.

During the year under review the directors performed an impairment test on the assets of the Group and found that none of the

Group’s assets were impaired and no impairment loss was recognised.


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

3. PROPERTY

Cost 20 189 19 716 – –

Revaluation 7 537 7 537 – –

At beginning of year 27 726 27 253 – –

Addition – acquisitions 90 473 – –

At end of year 27 816 27 726 – –

Total property held by the Group at 30 June 2011 amounted to R27,8 million (2010: R27,7 million),

comprising the amounts analysed above.

Property of Rolfes Asset Holding (Pty) Limited and New Heights 390 (Pty) Limited to the amount of R12,6 million

(2010: R12,6 million) has been pledged as security for Group borrowings. A second mortgage bond of

R10 million over property held in the name of Rolfes Asset Holding (Pty) Limited was registered as

security in favour of Sasol Chemical Industries who also holds a first mortgage bond to the value of R2,5 million

on property registered in the name of New Heights 390 (Pty) Limited.

The directors are of the opinion that the property is stated at fair market value and not impaired.

During the current financial year, Anton Smit and Associated Valuers, an independent third party, performed a

revaluation on the Group property on 20 June 2011 based on discounted future cash flows, based on market-

related rentals and a capitalisation rate of 14%.

The entire amount disclosed above relates to property and as the value of office buildings in the Group is

immaterial, it is included in the plant and equipment note under plant and equipment. The value of

buildings amounted to R1,8 million (2010: R1,3 million).

The directors are of the opinion that the fair market value equals the estimated residual values and thus no

depreciation is recognised.

At Group level the majority of investment property are owner-occupied. The portion of the property that

generates rental income, as per note 20, is regarded as insignificant resulting in all investment property being

classified as property and not split between property and investment property.

Had the property not been revalued, the carrying amounts would equal the cost, as disclosed above.

The value of the property has been considered at the year-end and no change was deemed necessary.


Notes to the




Notes to the


Group Company

Number of 2011 2010 2011 2010

shares R’000 R’000 R’000 R’000

4. INVESTMENTS

Unlisted

At cost

Rolfes Colour Pigments International (Pty) Limited 1 000 – – 1 1

Rolfes Asset Holding (Pty) Limited 100 – – – –

Rolfes Chemicals (Pty) Limited 100 – – – –Rolfes Silica (Pty) Limited 200 000 – – 2 308 2 308Rolfes Europe Trading

(Pty) Limited 100 – – – –

– – 2 309 2 309

At fair value

Rolfes Colour Pigments International (Pty) Limited – – 67 955 67 955

Rolfes Asset Holding (Pty) Limited – – 47 710 47 710Rolfes Chemicals (Pty) Limited – – 67 183 67 183Rolfes Silica (Pty) Limited – – 16 639 16 639

– – 199 487 199 487

Fair values are determined annually at the end of the reporting period, using the discounted future cash flowmethod.

The directors believe that the fair value of the investments in subsidiaries did not materially change during theyear and the value presented approximates the fair value of the investment in subsidiaries. Consequently, thereis no impact on comprehensive income in the current year.

The fair value of investments in subsidiaries is based on a Level 3 for fair value hierarchy. Level 3 is inputs forthe asset or liability that are not based on observable market data (unobservable inputs).

Refer to page 106 for details of shareholding.

Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

5. INTANGIBLE ASSET

GoodwillGross 37 691 37 691 – –Impairment (5 119) – – –

Opening balance 32 572 37 691 – –Recognition of goodwill

– acquisition of New Heights 390 (Pty) Limited (214) (5 119) – –

Closing balance 32 358 32 572 – –


5. INTANGIBLE ASSET continued

Impairment of goodwill

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill maybe impaired. The Group’s goodwill was tested for impairment at year-end based on management’s assessment.

Goodwill acquired through business combinations has been allocated to the following significant individualcash-generating operations (after impairment testing) as follows:

• Rolfes Resins (arose on the acquisition of Chempoint Chemical Technologies (Pty) Limited) R7,5 million(2010: R7,5 million), effective 1 July 2005;

• Rolfes Silica (Pty) Limited R1,6 million (2010: R1,6 million), effective 1 August 2005;

• Rolfes Dispersion (arose on the acquisition of Leather-Chem (Pty) Limited) R5,1 million (2010: R5,1 million), effective 1 December 2007;

• Rolfes Chemicals (arose on the acquisition of New Heights 390 (Pty) Limited), R18,2 million (2010: R18,4million), effective 1 December 2008.

The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. These calculations use discounted cash flow projections based on financial forecasts, approved by management, overa five-year period. Key assumptions applied in value-in-use calculations of the cash-generating unit’s revenue,gross margin and cost forecasts are based on historical performance or, where not appropriate, management’sviews and estimates.

The discount rate used in the cash flow models is 20%. This rate reflects the current market assessments of thetime-value of money and specific risks of the cash-generating unit. The discount rate is arrived at after takinginto account the following factors:

• The level of risk of the cash-generating unit; and• The opportunity cost of capital.

The growth rates used, by management, in forecasting future cash flows are based on the economic environment in which the cash-generating unit operates and are as follows:

• Rolfes Resins – a compound annual growth rate of 13,5% per annum;• Rolfes Silica – a compound annual growth rate of 12,6% per annum;• Rolfes Dispersion – a compound annual growth rate of 14,7% per annum; and• Rolfes Chemicals – a compound annual growth rate of 13,5% per annum.

The average growth rate used to extrapolate the cash-generating units beyond the five-year forecast period is6,1%.

Management believes that any reasonable possible change in the key assumptions on which Rolfes Dispersion,Rolfes Resins, Rolfes Silica and Rolfes Chemicals recoverable amounts are based would not cause any of theindividual carrying amounts to exceed its recoverable amount.

The decrease in goodwill of New Heights 390 (Pty) Limited in 2010 and 2011 relates to adjustment of the purchase consideration due to profit warranties not being met.


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

5. INTANGIBLE ASSET continued

Web siteOpening balance – 5 – 5

Amortisation – (5) – (5)

Closing balance – – – –

The web site was acquired during the

year ended 30 June 2007 and is

amortised over a period of three years.

Due to the immateriality of the amount of

the amortisation, it is included in

depreciation.

Total intangible assets 32 358 32 572 – –

The directors review the intangible

assets annually to identify any impairment

losses to be recognised. No impairment

loss on goodwill was identified.

6. INVENTORIES

Raw materials 17 219 17 129 – –

Work-in-progress 8 065 6 706 – –

Finished goods 69 669 53 883 – –

94 953 77 718 – –

Stock written off during the year 486 238 – –

No inventories are currently carried at fair value less cost to sell.

The cost of inventories recognised as an expense during the year and included in cost of sales amounted to

R343,1 million (2010: R280,1 million).

Inventories of Rnil million (2010: Rnil) are expected to be recovered after more than 12 months.

Inventories of Rolfes Colour Pigments International (Pty) Limited have been encumbered with a notarial bond to

the value of R10 million as security in favour of Sasol solvents.


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

7. TRADE AND OTHER RECEIVABLES

Local trade receivables 63 182 59 512 25 48Foreign trade receivables

– US$ (2011: $209 610; 2010: $59 136) 1 421 451 – –

– Euro (2011: €1 002 639; 2010: €876 766) 9 846 8 426 – –

– Pound (2011: £37 637; 2010: £nil) 409 – –

Staff loans 34 74 – –Deposits 475 323 – –Sundry debtors – 61 – –Provision for bad debts (913) (8 076) – –

74 454 60 771 25 48

Trade receivables have been ceded to thebank as security for bank overdrafts. (Refer note 9)

A notarial bond to the value of R1,1 million has been obtained over one debtor of Rolfes Silica (Pty) Limited.

Included in trade receivables that relate to the discontinued operations and handed over for litigation to attorneys. 2 014 7 019 – –

Included in provision for bad debts relating to the trade receivables of the discontinued operations. – (4 143) – –

7.1 Trade receivables

Trade receivables (net of allowances) held by the Group amounted to R74,5 million (2010: R60,7 million) comprising the amounts as presented above. The average age of these receivables is 51,7 (2010:52,7) days. No interest is charged on trade receivables.

Before accepting any new customers, the Group uses an external credit scoring system to assess the potential customer’s credit quality and credit limits are defined by customers. Limits and scoring attributable to customers are reviewed twice a year and on an ad hoc basis. 70% of the trade receivablesthat are neither past due nor impaired have good credit scoring attributable under the external creditscoring system used by the Group.

Included in the Group’s trade receivables with carrying amount of R1,9 million (2010: R4,1 million) whichare past due at the reporting date for which the group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The historic defaultrate for debtors that are not passed due and not impaired is less than 2%. The Group holds surety oversome of these balances. The Group has registered a notarial bond of R1,1 million over equipment of certain debtors as security over their balances.


Notes to the




Notes to the


Group Company

2011 2010 2011 2010R’000 R’000 R’000 R’000

7. TRADE AND OTHER RECEIVABLES continued

Not past due nor impaired 71 062 55 382 25 48

Ageing of past due but not impaired90 days 958 820 – –120 days 2 838 12 187 – –

Total 3 796 13 007 – –

Movement in the allowance for doubtful debt

Balance at beginning of the year 8 076 7 108 – –Movement in provision (164) 2 568 – –Amounts written off as uncollectible (6 999) (1 600) – –

Balance at the end of year 913 8 076 – –

Impairment losses recognised on receivables – – – –

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to a large and unrelated customer base. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

8. SHORT-TERM LOANS

Current assetsRolfes Chemicals (Pty) Limited – – 22 347 17 895Rolfes Silica (Pty) Limited – – 9 518 17 483New Heights 390 (Pty) Limited – – 692 –

– – 32 557 35 378

Current liabilitiesRolfes Colour Pigments International

(Pty) Limited – – (12 660) (4 049)Rolfes Asset Holding (Pty) Limited – – (15 347) (12 443)

– – (28 007) (16 492)

These loans are unsecured, carry interest at market rates with no fixed terms of repayment and represent loansto and from subsidiaries.

Interest paid and received on the above loans and further information about these loans are contained in note 25.



Notes to the


Group Company

2011 2010 2011 2010R’000 R’000 R’000 R’000

9. CASH AND CASH EQUIVALENTS

For the purpose of the cash flow statement, cash and cash equivalents include cash on hand and in banks, net of outstanding bank overdrafts.

Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:

Cash on hand/(bank overdraft) 4 637 (2 975) 9 628 4 663Call account 82 81 – –Dollar account

(2011: US$913; 2010: US$199 782) 6 1 524 – –Euro account

(2011: €5 825; 2010: €776 456) 57 7 462 – –Petty cash 51 35 2 2

4 833 6 127 9 630 4 665

The entity indicates cash on hand and bank overdraft accounting on a net basis due to a contractual right to settle on a net basis.

Banking facilities are available as follows:

– Multi-Optional Facility (35 000) (35 000) (35 000) (35 000)Available by way of overdraft and/or Letter of Credit/Guarantees.Shared with Rolfes Colour Pigments International (Pty) Limited, Rolfes Silica (Pty) Limited, Rolfes Chemicals (Pty) Limited, Rolfes Asset Holding (Pty) Limited. Rolfes Logistics (Pty) Limited shares in the letter of guarantee.

– Forward exchange facility (1 000) (1 000) – –

– Asset-based facility (Revolving credit line) (14 000) (14 000) – –Shared with Rolfes Colour Pigments International (Pty) Limited, Rolfes Chemicals (Pty) Limited, Rolfes Silica (Pty) Limited and Rolfes Asset Holding (Pty) Limited.

– Medium-term loan facility (4 041) (6 558) – –Reducing with a remaining term of 19 months

– Medium-term loan facility (8 429) (11 083) – –Reducing with a remaining term of 32 months



Notes to the


Group Company

2011 2010 2011 2010R’000 R’000 R’000 R’000

9. CASH AND CASH EQUIVALENTS continued

– Overdraft facility – 1 719 – 1 719Reducing at R340 000 per month and repayable over the remaining term of 5 months

Facilities are secured as follows:

– Unlimited cross suretyship (incorporating cession of loan funds) by Rolfes Asset Holding (Pty) Limited, RolfesSilica (Pty) Limited, Rolfes Chemicals (Pty) Limited, Rolfes Colour Pigments International (Pty) Limited, Rolfes Logistics (Pty) Limited and Rolfes Technology Holdings Limited.

– First covering mortgage bond of R4,6 million and a second covering mortgage bond of R1 million overremaining portion 273 I.R. Remaining extent of portion 174 and 147 of the farm Rietfontein 63 I.R.Edenvale, Modderfontein with Rolfes Asset Holding (Pty) Limited reflected as mortgagor and NedbankLimited reflected as mortgagee.

– Second covering mortgage bond of R7,5 million over Erf 1322 Germiston South Extension 2 with NewHeights 390 (Pty) Limited reflected as mortgagor and Nedbank Limited reflected as mortgagee.

– Cession of insurance policy required in terms of covering mortgage bond.

– Agreement of pledge, cession and set-off by Rolfes Technology Holdings Limited, Rolfes Colour PigmentsInternational (Pty) Limited, Rolfes Silica (Pty) Limited, Rolfes Chemicals (Pty) Limited, Rolfes Asset Holding(Pty) Limited and Rolfes Logistics (Pty) Limited, limited to R35 million.

– Cession of all present and future debtors.

– Cession of customer foreign currency account.

Group Company

2011 2010 2011 2010R’000 R’000 R’000 R’000

10. SHARE CAPITAL

Authorised

500 000 000 (2010: 500 000 000) ordinary shares of R0,01 each 5 000 5 000 5 000 5 000

Issued

103 609 469 (2010: 103 609 469) ordinary shares of R0,01 each 1 036 1 036 1 036 1 036

10.1 Fully paid ordinary shares

Number Share Shareof shares capital premium

‘000 R‘000 R‘000

Balance at 30 June 2009 103 609 1 036 28 603

Balance at 30 June 2010 103 609 1 036 28 603

Balance at 30 June 2011 103 609 1 036 28 603

Fully paid ordinary shares, which have a par value of R0,01, carry one vote per share and carry the rightto dividends.


Group Company

2011 2010 2011 2010R’000 R’000 R’000 R’000

11. TREASURY SHARES

Listed

At cost (2010: At cost)Rolfes Technology Holdings Limited 868 868 – –

Rolfes Asset Holding (Pty) Limited purchased shares in the Company.

The share purchase adheres to the requirements of the JSE Limited and the Memorandum of Incorporation of the Company.

12. REVALUATION RESERVE

Investment in shares

Revaluation – – 197 178 197 178Deferred tax – – (25 709) (25 709)

Carrying value at 30 June – – 171 469 171 469

Property

Revaluation 3 089 3 089 – – Deferred tax (896) (896) – –

Carrying value at 30 June 2 193 2 193 – –

Total carrying value at 30 June 2 193 2 193 171 469 171 469

13. INTEREST-BEARING LIABILITIES

Secured

Instalment sale agreements 15 901 24 140 94 1 987Short-term portion of instalment

sale agreements (7 213) (8 825) (94) (1 893)

8 688 15 315 – 94

Instalment sale agreements are secured over motor vehicles with a carrying amount of R1,3 million (2010: R1,1million) and equipment with a carrying amount of R5,4 million (2010: R5,2 million) and bear interest between6,80% and 9,37% (2010: 9,67% and 7,63%) per annum.

Instalment sale agreements relate to motors vehicles and equipment with lease terms of 4 years on average. TheGroup’s obligation under instalment sale agreements are secured by the lessor’s title to the leased assets. TheGroup has an option to purchase the motor vehicles and equipment for a nominal amount at conclusion of theagreement.

A medium-term loan was obtained for the purchase of Rolfes Logistics (Pty) Limited (previously Leather-Chem(Pty) Limited) with carrying amounts of R4,0 million (2010: R6,6 million). The instalment bears interest at 10,21%and is repayable over 60 months with the last payment being on 1 January 2013.

A medium-term loan was obtained for the purchase of New Heights 390 (Pty) Limited with carrying amounts ofR8,4 million (2010: R11,1 million). The instalment bears interest at 8,91% (2010: 9,94%) and is repayable over60 months with the last payment being on 1 February 2014.


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

13. INTEREST-BEARING LIABILITIEScontinued

Total minimum payments

Total payments– Lease payments 17 802 27 945 97 1 998

– Finance cost (1 901) (3 805) (3) (11)

Present value 15 901 24 140 94 1 987

Payments – up to one year– Minimum lease payments 8 462 10 707 97 1 901

– Finance cost (1 249) (1 882) (3) (8)

Present value 7 213 8 825 94 1 893

Payments – two to five years– Minimum lease payments 9 340 17 238 – 97

– Finance cost (652) (1 923) – (3)

Present value 8 688 15 315 – 94

The fair value of the medium-term loans

and instalment sale agreements

is approximately equal to their carrying

amount.

14. VENDOR LOAN Purchase of New Heights 390

(Pty) Limited

Current portion of vendor loan – 5 220 – –

– 5 220 – –

This represents the final payment of the purchase consideration of R45 million that was adjusted to R32,8

million due to profit warranties not being met by June 2010. After the first payment of R14 million in September

2008, an amount of R13,6 million was paid at the end of September 2009, and the balance of R5,2 million

was settled by September 2010.


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

15. DEFERRED TAX LIABILITY

Deferred tax is calculated in full on temporary differences under the balance sheet method using a tax rate of 28% (2010: 28%).

Movement on the deferred tax account is indicated below:

Opening balance 7 036 3 323 25 036 25 709Provisions 1 265 (185) – –Originating temporary difference on

tangible fixed assets (134) (211) – –Revaluation of property – 1 288 – –Decrease/(increase) in tax losses available

for set-off against future taxable income 1 541 820 673 (673)Unredeemable capital allowances 2 037 2 018 – –Capital loss 54 (17) – –

11 799 7 036 25 709 25 036

Reconciliation of deferred tax liability:

Provisions (1 719) (2 984) – – Property, plant and equipment 12 299 12 433 – –Revaluation reserve 1 991 1 991 – –Investments – – 25 709 25 709Tax losses available for set-off against

future taxable income (210) (1 751) – (673)Unredeemable capital allowances (529) (2 566) – –Capital loss (33) (87) – –

11 799 7 036 25 709 25 036

There are no time limits on the utilisation of unused tax losses.

16. ESTIMATED TAX LOSS ANDCAPITAL REDEMPTION FUND

Rolfes Chemicals (Pty) Limited 750 3 850 – –Rolfes Technology Holdings Limited – 2 404 – 2 404

Estimated tax loss 750 6 254 – 2 404

The estimated tax loss arose from losses incurred by trading circumstances of the individual companies and will be utilised in future periods against taxable profit.

Unredeemed capital expenditure– Rolfes Silica (Pty) Limited 1 889 9 164 – –


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

17. PROVISIONS

Warranty provisionOpening balance 1 July 470 270 – –

Increases 173 200 – –

Utilised during the year – – – –

Closing balance 30 June 643 470 – –

Rehabilitation provisionRecalculated opening balance 1 July 3 136 3 136 – –

Estimate – – – –

Finance charges 207 – – –

Closing balance 3 343 3 136 – –

Due within one year or less 643 470 – –

Due after more than a year 3 343 3 136 – –

Total provisions 3 986 3 606 – –

Details regarding the provisions are

indicated in the accounting policies

note 1.18.

18. TRADE AND OTHER PAYABLES

Local trade payables 56 199 39 949 561 439

Foreign trade payables

– US Dollar

(2011: $2 780 677;

2010: $2 039 803) 18 853 15 564 – –

– Euro

(2011: €358 569; 2010: €96 843) 3 521 931 – –

Accruals 2 434 2 980 – –

Deposits 166 142 – –

Leave day accrual 881 1 051 – –

Bonus accrual 586 – – –

Sundry creditors 307 – – –

Total trade and other payables 82 947 60 617 561 439

SARS: VAT (4 706) 932 528 10

SARS : Income tax (636) 1 239 191 –

77 605 62 788 1 280 449


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

19. FINANCIAL LIABILITIES

Forward exchange contracts 184 100 – –

The forward exchange contracts will be

settled within 12 months.

The notional principal amounts of the

outstanding forward foreign exchange

contracts at 30 June 2011 are

US$2 251 944 (2010: US$1 010 880);

€339 695 (2010: €nil).

20. REVENUE

Revenue arises from the following

activities:

Sale of goods 458 493 366 944 – –

Rentals 2 206 2 085 – –

Management fee – – 11 083 7 776

460 699 369 029 11 083 7 776

The management fee above represents

the intercompany management fee.

21. OPERATING PROFIT BEFORE INTEREST

Operating profit before interest is arrived

at after taking the following items

into account:

Gains in foreign currency transaction/translation (2 669) (366) – –

– Realised (2 086) 23 – –

– Unrealised (583) (387) – –

– Foreign currency translation – (2) – –

Depreciation and amortisation 4 676 4 610 260 248

– Cost of goods sold 3 291 3 339 – –

– Operating expenses 1 385 1 271 260 248


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

21. OPERATING PROFIT BEFORE INTEREST continued

Operating profit before interest is arrived

at after taking the following items

into account:

Audit fees 498 412 498 412

– for audit 478 408 478 408

– for other services 20 4 20 4

Legal fees 716 388 14 93

Research and development costs

expensed immediately 1 893 775 – –

Direct expenses relating to rental income 722 702 – –

Finance costs relating to rental income 38 80 – –

(Gain)/loss on disposal of property,

plant and equipment (171) 8 – –

Change in financial liability at fair

value through profit and loss – held for

trading (84) (583) – –

Directors’ emoluments for services as director 8 741 8 531 3 459 2 858

– Basic salaries 5 884 6 493 2 080 2 133

– Allowances 1 070 900 566 504

6 954 7 393 2 646 2 637

– Bonuses 1 787 1 138 813 221

Independent non-executive directors’ emoluments for services rendered 130 120 130 120


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

21. OPERATING PROFIT BEFORE INTEREST continued

Other staff costs 37 595 32 930 1 447 3 244

– Refreshments and entertainment 257 230 33 34– Salaries and wages 16 706 14 047 1 414 3 210– Salaries and wages (included in

cost of sales) 20 632 18 653 – –

Contributions to provident fund 259 321 – –

Contributions to pension fund 1 712 1 264 147 272

Operating lease arrangementsMinimum lease payments under operating

leases recognised in profit and loss for the year 556 527 – –

At the end of the reporting period, the Group had outstanding commitments for future minimum lease payments under fixed term operating leases, which fall due as follows:

Within one year 575 546 – –In the second to fifth years 1 716 2 113 – –

The rental payment for the lease of plant will continue for a further four years.

Intercompany transactions – – 11 060 7 718

– Management fees – – 11 083 7 776– Telephone and security – – (23) (58)

Lease costs, renewable annually, for theyear are represented by rentals payable by the subsidiaries for certain plant and equipment. 4 500 4 234 – –

– Premises 120 120 – –– Equipment 4 380 4 114 – –


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

22. THE GROUP AS A LESSOR

Leasing arrangements

Rental agreements relate to property owned by the Group with lease terms of one year, with an option to extend for a further one year. All contracts contain market reviewclauses in the event that the lessee exercises its option to renew.The lessee does not have an option to purchase the property at the expiry period.

Rental income earned by the Groupfrom property, which is leasedout under operating leases, amounted to 2 206 2 085 – –

Direct operating expenses arising fromthe leased property, amounted to 722 702 – –

Total future minimum rental income under fixed term operating leases for the following periods:– not later than on year 2 585 2 122 – –

23. CONTINGENT LIABILITIES

Court proceedings 250 606 – –

Rolfes Colour Pigments International is currently in litigation relating to the retrenchment of a former agent in France.

Rolfes Chemicals entered into litigation during the 2009 financial year to recover R7,1 million due by a previous customer. The case was referred to arbitration and was settled at R3,3 million on 10 August 2011.

24. FINANCE COST

Interest paid includes: 3 780 4 861 867 5 307

Creditors and outstanding balances 1 32 – –Finance charges 1 839 2 690 17 41Current account 1 733 2 139 850 5 266Rehabilitation provision 207 – – –


Notes to the



Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

25. FINANCE INCOME

Interest received including interest received from: 40 11 2 336 5 509

Subsidiaries’ loan accounts – – 2 336 5 509Current account 40 11 – –

Investment revenue earned on financial assets, categorised as loans and receivables (including cash and bank balances) 40 11 2 336 5 509

26. TAXATION

Taxation 13 497 9 572 1 900 (155)

South African normal taxation 7 698 6 775 191 –Deferred taxation 4 763 2 425 673 (673)South African secondary tax on

companies 1 036 518 1 036 518Prior year adjustment – (146) – –

Tax rate reconciliation % % % %

Effective rate 29,45 28,64 62,60 6,45

Statutory rate 28,00 28,00 28,00 28,00– (Exempt income)/non-allowable

expenditure (0,73) (0,37) 0,46 0,01– Tax allowances (0,08) (0,10) – –– STC on dividends 2,26 1,55 34,14 (21,56)– Prior year adjustment – (0,44) – –

27. TAX CONSEQUENCE OF UNDISTRIBUTED RESERVE

STC on remaining reserves 13 133 10,935 – –

28. OTHER GAINS AND LOSSES

Gain/(loss) on disposal of property, plant and equipment 171 (8) – –

Net foreign exchange gains 2 669 366 – –


Notes to the




Notes to the


Group

2011 2010

R’000 R’000

29. EARNINGS PER SHARE

NumeratorProfit for the year 32 331 23 853

Earnings used in basic earnings per share 32 331 23 853

Earnings used in diluted earnings per share 32 331 23 853

(Gain)/loss from sale of fixed asset (171) 8

Earnings used in headline earnings per share 32 160 23 861

2011 2010’000 ’000

DenominatorOpening balance 20 20Issue of shares on 1 July 2006 1 1Share capitalisationShare issue on 11 April 2007 89 979 89 979 Share issue on 23 May 2007 12 500 12 500Issue of shares on 12 December 2007 1 109 1 109Treasury shares (641) (641)

Weighted average number of shares used in basic earnings per share, diluted earnings per share and headline earnings per share and diluted headline earnings per share (‘000) 102 968 102 968

Earnings per share (cents)

– Basic 31,4 23,2– Headline 31,2 23,2– Diluted 31,4 23,2– Diluted headline 31,2 23,2

30. DIVIDENDS PER SHARE

Interim dividend declared on 23 March 2010 – 5 180Final dividend declared on 25 October 2010 5 180 –Interim dividend declared on 22 March 2011 5 180 –Cents per ordinary share 10,0 5,0

Issued number of shares (‘000) 103 609 103 609

A final dividend of R0,05 per share will be paid during October 2011 being R5,2 million with a relating STC ofR0,5 million.



Notes to the


E van der

L Lynch Merwe Total

R’000 R’000 R’000

31. DIRECTORS’ REMUNERATION

Executive directorsServices as directors

Remuneration– Basic 646 1 434 2 080

– Allowances 254 312 566

900 1 746 2 646

– Bonuses 163 650 813

For the year ended June 2011 1 063 2 396 3 459

Remuneration– Basic 646 1 487 2 133

– Allowances 245 259 504

891 1 746 2 637

– Bonuses 75 146 221

For the year ended June 2010 996 1 892 2 858

TAM KT

Tshivhase Nondumo Total

R’000 R’000 R’000

2011

Independent non-executive directorsRemuneration

– Basic 60 70 130

2010

Independent non-executive directorsRemuneration

– Basic 50 70 120

Non-executive directors did not receive any directors’ emoluments for the years presented.

The directors did not receive remuneration from subsidiaries.

Employment contracts of the individual executive directors all incorporate the same information and restrictions.

The contract includes a restraint of trade paragraph to ensure the Group does not incur losses or loss of

business due to the resignation of its directors. The contracts do not indicate any term of employment and

employment will cease with the resignation or dismissal of the director. The contract does not specify any age or

time period to indicate retirement of directors.



Notes to the


32. FINANCIAL RISK

The Group is exposed, through its operations, to one or more of the following financial risks:

– Interest rate risk

– Foreign currency risk

– Liquidity risk

– Credit risk

– Price risk

There have been no change to the objectives, policies and procedures for managing risk since the comparative

period.

Policy for managing these risks is set by the Board following recommendations from the Chief Executive Officer

and the Finance Director. Certain risks are managed centrally, while others are managed locally following

guidelines communicated from the Board. The policy for each of the above risks is described in more detail

below.

Capital managementThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern

while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s

overall strategy remains unchanged from the prior year.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 13, cash and

cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and

retained earnings as disclosed in notes 9, 10 and 12 respectively.

Gearing ratioThe Group’s directors review the capital structure on a semi-annual basis. As part of this review, the directors

consider the cost of capital and the risks associated with each class of capital.

Group

2011 2010

R’000 R’000

The gearing ratio at the year-end was as follows:

Interest-bearing debt 15 901 24 140

Net debt 15 901 24 140

Equity 162 291 140 320

Net debt to equity ratio 0,1 0,2

Debt is defined as long- and short-term interest-bearing borrowings and bank overdraft, as detailed in notes

13 and 9. Equity includes all capital and reserves of the Group.

The bank requires the Group to adhere to certain covenants and failure to comply will result in the

reduction of the multi-optional facility.

Significant accounting policiesDetails of the significant accounting policies and methods adopted, including the criteria for recognition, the

basis of measurement and the basis on which income and expenses are recognised, in respect of each class of

financial asset, financial liability and equity instrument as disclosed in note 1 to the financial statements.



Notes to the


Fair value

through

Loans Other profit and

and financial loss (held Fair

receivables liabilities for trading) value

R’000 R’000 R’000 R’000

32. FINANCIAL RISK continued

Group2011

Categories of financial instruments

Financial assetsTrade and other receivables 74 454 – – 74 454

Cash and cash equivalents 4 833 – – 4 833

Financial liabilitiesInterest-bearing liabilities – 15 901 – 15 901

Trade and other payables – 82 947 – 82 947

Financial liabilities* – forward

exchange contracts – – 184 184

2010


Financial assetsTrade and other receivables 60 771 – – 60 771

Cash and cash equivalents 6 127 – – 6 127

Financial liabilitiesInterest-bearing liabilities – 24 140 – 24 140

Vendor loan – 5 220 – 5 220

Trade and other payables – 60 617 – 60 617

Financial liabilities* – forward

exchange contracts – – 100 100

Current and future debtors are ceded to the bank. Refer note 9.

* The fair value of financial assets and financial liabilities relating to forward exchange contracts is based on aLevel 2 fair value measurement hierarchy. Level 2 uses inputs other than quoted prices included within Level 1that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is derived fromprices).



Notes to the


Fair valuethrough

Loans Other profit andAvailable- and financial loss (held Fair

for-sale receivables liabilities for trading) valueR’000 R’000 R’000 R’000 R’000


Company2011


Financial assetsTrade and other receivables – 25 – – 25Short-term loans – 32 557 – – 32 557Cash and cash equivalents – 9 630 – – 9 630Investment in subsidiaries 199 487 – – – 199 487

Financial liabilitiesInterest-bearing liabilities – – 94 – 94Short-term loans – – 28 007 – 28 007Trade and other payables – – 561 – 561

2010


Financial assetsTrade and other receivables – 48 – – 48Short-term loans – 35 378 – – 35 378Cash and cash equivalents – 4 665 – – 4 665

Investment in subsidiaries 199 487 – – – 199 487

Financial liabilitiesInterest-bearing liabilities – – 1 987 – 1 987Short-term loans – – 16 492 – 16 492Trade and other payables – – 439 – 439

Fair value of financial instrumentsThe fair values of financial assets and financial liabilities are determined as follows:• the fair value of financial assets and financial liabilities with standard terms and conditions and traded on

active liquid markets is determined with reference to quoted market prices;

• the fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined in accordance with generally accepted pricing models based on discounted cash flow analysisusing prices from observable current market transactions and dealer quotes for similar instruments; and

• The fair value of short-term receivables and short-term payables approximates their carrying amount.

At the reporting date there were no significant concentrations of credit risk for loans and receivables. The carrying amount of financial assets as reflected above represents the Group’s maximum exposure to credit risk.



Notes to the



Financial risk management objectivesThe Group’s financial department provides services to the business, co-ordinates access to domestic and

international financial markets, monitors and manages the financial risks relating to the operations of the Group.

These risks include market risk (including currency risk, and cash flow interest rate risk), credit risk, liquidity risk

and cash flow interest rate risk.

The Group seeks to minimise the effects of these risks by using derivative financial instruments to hedge these

risk exposures.

Compliance with policies and exposure limits is reviewed on a continuous basis. The Group does not enter into

or trade financial instruments, including derivative financial instruments, for speculative purposes.

There has been no change to the Group’s exposure to market risks or the manner in which it manages and

measures the risk.

Market riskThe Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and

interest rates. The Group enters into foreign exchange contracts to manage its exposure to foreign currency risk,

including:

• forward foreign exchange contracts to hedge the exchange rate risk arising on the import of goods from

Europe and China.

Foreign currency risk managementThe Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange

rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising

forward foreign exchange contracts.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at

the reporting date are as follows:

Liabilities Assets

2011 2010 2011 2010

‘000 ‘000 ‘000 ‘000

Euro (€) 359 97 1 008 1 653

Dollar (US$) 2 781 2 040 211 259

Pound (£) – – 38 –

The Group trades in Europe, Asia and Africa in Pound, Euros and US Dollars. It is Group policy that these

transactions are hedged locally by entering into foreign exchange contracts as set out below.

The Group reduced its currency risk by negotiating favourable payment terms with foreign suppliers and by

actively managing its banking facilities for foreign debt repayments.

It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency

payments and receipts within 50% to 60% of the exposure generated. The Group also enters into forward

foreign exchange contracts to manage the risk associated with anticipated sales and purchase transactions out

to two months within 40% to 50% of the exposure generated. Basis adjustments are made to the carrying

amounts of non-financial hedged items when the anticipated sale or purchase transaction takes place.

The Group has entered into contracts to purchase raw materials from suppliers in Europe and China with

relevant forward foreign exchange contracts (for terms not exceeding four months) to hedge the exchange rate

risk arising from these anticipated future purchases.



Foreign currency sensitivity analysisThe Group is mainly exposed to currency in Euro and US Dollars.

The following table details the Group’s sensitivity to a 10% increase and decrease against the relevant foreigncurrencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary items andadjusts their translation at the period-end for a 10% change in foreign currency rates. The sensitivity analysisincludes external loans as well as loans to foreign operations within the Group where the denomination of theloan is in a currency other than the currency of the lender or the borrower. A positive number below indicatesan increase in profit and other equity where the currency strengthens 10% against the relevant currency. For a10% weakening of the currency against the relevant currency, there would be an equal and opposite impact onthe profit and other equity, and the balances below would be negative.

The foreign currency sensitivity analysis is consistent with those methods and assumptions used in the prior year.

Group

2011 2010

R’000 R’000

Dollar (US$) (1 743) (1 359)

Euro (€) 638 1 496

Pound (£) 41 –

Profit or loss (1 064) 137

Interest rate risk

The Group limits its long-term interest-bearing liabilities as far as possible to limit the exposure to interest raterisk. The Group has made arrangements with its bankers to limit the exposure to interest rate risk, but this doesnot eliminate the risk, since the Group’s interest rate is linked to prime.

The Company limits its interest rate risk by carefully monitoring its cash requirements to limit unnecessary overdraft facilities resulting in unnecessary interest expenses.

The Group is exposed to cash flow interest rate risk as entities in the Group borrow funds at floating interestrates.

Interest rate sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to interest rates for both derivativesand non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate riskinternally to key management personnel and represents management’s assessment of the reasonably possiblechange in interest rates.

If interest rates had been 50 basis points higher and all other variables were held constant, the Group’s profitfor the year ended 30 June 2011 would decrease by R1,9 million (2010: R2,4 million). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings.

For a 50 basis point weakening in the interest rates, there would be an equal and opposite impact on the profit and other equity, and the balances would be negative.


Notes to the



Notes to the



Credit riskFinancial assets potentially subject to Group concentrations of credit risk consist principally of trade receivables,ie credit sales, which was R74,5 million (2010: R60,8 million).

It is Group policy to assess the credit risk of new customers before entering into contracts. Such credit ratings,take into account local business practices, are factored into a credit risk profile. The Group uses Kreditinform, apart of Experian SA, to determine the credit rating of its new applicants. The credit risk, with respect to tradereceivables, is limited due to the fact that the customer base is spread over a wide variety of small and largereceivables. The Group does not enter into complex derivatives to manage credit risk. The Group insures trading into Africa and Asia through Credit Guarantee Insurance Company.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financialloss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss fromdefaults. This information is supplied by independent rating agencies where available and, if not available, theGroup uses other publicly available financial information and its own trading records to rate its major customers.Collateral held by the group consist of sureties signed by certain customers.

Trade receivables consist of a large number of customers, spread across diverse industries and geographicalareas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.

Liquidity risk

The Group has minimised its liquidity risk by ensuring it has adequate banking facilities and reserve borrowingcapacity with high quality financial institutions or related companies.

The liquidity risk of the Group is managed centrally by the Chief Executive Officer and Financial Director. Thebudgets are set and agreed by the board annually in advance, enabling the Group's cash requirements to beanticipated. Where facilities for Group need to be increased, approval must be sought in accordance withauthority limits set by the Board.

The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowingfacilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included in note 9 is a listing of additional undrawn facilities that the Group hasat its disposal to further reduce liquidity risk.

The Group has access to financing facilities, the total unused amount which is R51 million at the end of thereporting period. The Group expects to meet its other obligations from operating cash flows and proceeds ofmaturing financial assets.

The following table sets out contractual maturities analysis:

Up to 3 to 12 1 to 2 2 to 53 months months years years

2011

Forward exchange contracts – 184 – –Trade and other payables 70 000 12 947 – –Loans and borrowings – 7 213 5 586 3 102

2010

Forward exchange contracts – 100 – –Trade and other payables 51 904 8 713 – –Loans and borrowings – 8 825 7 213 8 102

DerivativesForeign currency forward exchange contracts are measured using quoted forward exchange rates and yieldcurves derived from quoted interest rates matching maturities of the contracts.

98 Rolfes Technology Holdings Limited | integrated report 2011



Notes to the


Group Company

2011 2010 2011 2010

Relationship R’000 R’000 R’000 R’000

33. RELATED PARTIES

Transactions between the Company and its

subsidiaries, as listed in note 39 which are related

parties of the Company, have been eliminated on

consolidation and are not disclosed in

this note. Details of transactions between

the Group and other related parties

are now disclosed. All related party transactions

occur at arm’s length on the same terms and

conditions that are available commercially.

Trading transactions

Management fees

Rolfes Colour Pigments International

(Pty) Limited Subsidiary – – 5 005 4 343

Rolfes Chemicals (Pty) Limited Subsidiary – – 3 872 2 172

Rolfes Asset Holding (Pty) Limited Subsidiary – – 1 599 1 261

New Heights 390 (Pty) Limited Subsidiary – – 607 –

Rolfes Technology Holdings Limited

performed certain administrative services

for the Company, for which a management

fee is charged, as disclosed above.

Management fees were based on an

appropriate allocation of costs incurred

by relevant administrative departments.

Interest received and (paid)


(Pty) Limited Subsidiary – – 364 3 560

Rolfes Asset Holding (Pty) Limited Subsidiary – – 1 120 (1 379)

Rolfes Chemicals (Pty) Limited Subsidiary – – (2 397) 1 395

Rolfes Silica (Pty) Limited Subsidiary – – (1 423) 1 933

TelephonesRolfes Asset Holding (Pty) Limited Subsidiary – – 23 58



Notes to the


Group Company

2011 2010 2011 2010Relationship R’000 R’000 R’000 R’000

33. RELATED PARTIES continued

Other

Loans

Rolfes Colour Pigments International (Pty) Limited Subsidiary – – (12 660) (4 049)

Rolfes Asset Holding (Pty) Limited Subsidiary – – (15 347) (12 443) Rolfes Chemicals (Pty) Limited Subsidiary – – 22 347 17 895Rolfes Silica (Pty) Limited Subsidiary – – 9 518 17 483New Heights 390 (Pty) Limited Subsidiary – – 692 –

Refer note 8 for terms and conditions of loans.

Compensation

The remuneration of executive directors during the year was as follows:

Short-term benefits 8 741 8 531 3 459 2 858

The remuneration of directors is determined by the remuneration committee having regard to the performance of individuals and related market trends.

Additions to computer equipmentPinnacle Micro

AJ Fourie Director 107 23 7 16

Group Company

2011 2010 2011 2010R’000 R’000 R’000 R’000

34. RETIREMENT BENEFIT SCHEMES

The Group is a member of a defined contribution plan that is defined as post-employment benefit plans under which an enterprise pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

Contributions made

– Pension fund 1 712 1 264 147 272– Provident fund 259 321 – –

1 971 1 585 147 272



Notes to the


34. RETIREMENT BENEFIT SCHEMES continued

The Group is a member of the Crystal Pension Fund and the contributions to the fund are calculated as follows:

– The Group 9,0% (including 1,5% administrative fees)– The employees 7,5%

The Group is also a member of the Chemical Industry National Provident Fund and the contributions to the fund are calculated as follows:

– The Group 6,0%– The employees 6,0%

The Group is also a member of the Liberty Life Provident Fund and the contributions to the fund are calculated as follows:

– The Group 7,5%– The employees 7,5%

In the above funds the Group has a broker and is represented by trustees and has a management board thatensures the Group’s interest in the above funds are not dismissed. The funds’ trustees invest the assets of the fundsto obtain the best results.

The total expense recognised in the statement of comprehensive income of R2 million (2010: R1,6 million) represents contributions payable to these plans by the Group at rates specified in the rules of the plans. As at30 June 2011, all contributions to the retirement benefit schemes were paid in full.

35. SEGMENT REPORTING

The principal source of the Group’s risk and rates of return are as follows:

Business segmentsFor management purposes the entity is organised on an international basis on four operating divisions, ie.Pigments, Chemicals, Silica and other. These divisions are the basis on which the entity report its primary information. Only three of the four operating divisions qualify as reportable segments namely:

• Pigments – involving the production, purchase and sale of organic and inorganic colour pigments for thecoatings, plastics, vinyl, leather, ink and construction markets;

• Chemicals – involving the production, purchase and sale of commodities and other speciality chemicals forthe coatings, automotive, general chemical, plastics, fertiliser and construction industries; and

• Silica – involving the quarrying and processing of pure beneficiated silica for the metallurgical, filtration andconstruction industries

Other non-reportable segments include the letting of property, plant and equipment.

Geographical segmentsThe Group primarily operates in South Africa and the two geographical segments that could be identified wouldhave been Johannesburg and Brits districts, but these geographical segments will not be identified due to theproximity of the districts and the similarity of economic and political conditions.

The only other two geographical segments that could be identified would be Cape Town and Durban, but thesegeographical segments will not be identified due to their insignificant contributions.



Notes to the


35. SEGMENT REPORTING continued

Certain intergroup management fees were eliminated in the separate segments to ensure comparability with the prior year.The following table provides financial information on the forementioned segments:

Elimina-

tion of

intergroup

Chemicals Silica Pigments Other items Total

2011 2011 2011 2011 2011 2011

R’000 R’000 R’000 R’000 R’000 R’000

Revenue

– External 131 431 41 387 285 675 2 206 – 460 699

– Intercompany – – – – – –

Total revenue 131 431 41 387 285 675 2 206 – 460 699

Total cost of sales (110 256) (29 810) (233 461) (148) – (373 675)

Gross profit 21 175 11 577 52 214 2 058 – 87 024

Gross profit (%) 16 28 18 93 – 19

Other income 318 544 2 735 8 254 (7 776) 4 075

Operating expenses (9 296) (4 220) (23 263) (12 528) 7 776 (41 531)

Profit before interest 12 197 7 901 31 686 (2 216) – 49 568

Profit before interest (%) 9 19 11 – – 11

Interest paid (1 428) (498) (1 191) (906) 243 (3 780)

Interest received 1 79 36 167 (243) 40

Profit before tax 10 770 7 482 30 531 (2 955) – 45 828

Tax expenses (3 009) (2 124) (8 173) (191) – (13 497)

Profit after tax 7 761 5 358 22 358 (3 146) – 32 331

Profit after tax % 6 13 8 – – 7

Equity holders of the parent 7 761 5 358 22 358 (3 146) – 32 331

Total assets 67 170 48 713 130 644 30 776 (195) 277 108

Total liabilities 49 440 23 222 49 502 (7 147) (200) 114 817

Capital expenditure incurred 1 424 1 773 783 130 – 4 110

Depreciation (323) (2 924) (1 169) (260) – (4 676)

Bad debt provision 401 – 512 – – 913



Notes to the


35. SEGMENT REPORTING continued

Elimina-tion of

intergroupChemicals Silica Pigments Other items Total

2011 2011 2011 2011 2011 2011R’000 R’000 R’000 R’000 R’000 R’000

Geographical areasRevenue from external customers can be allocated to identifiable countries as follow:

Africa 5 443 158 12 509 – – 18 110Asia – – 7 249 – – 7 249Europe – – 30 310 – – 30 310South Africa 125 988 41 229 235 607 2 206 – 405 030

131 431 41 387 285 675 2 206 – 460 699

All non-current assets are domiciled in South Africa.

Major customersRevenues form transactions with single customers does not exceed 10% of the above reporting segments revenue and is thus not disclosed.

Basis of measurement for inter-segment transactionsIntersegment transactions are eliminated on presentation of the segment report to present a more feasible segment. All related partytransactions occur at arm’s length on same terms and conditions that are available commercially.

Elimina-tion of

intergroupChemicals Silica Pigments Other items Total

2010 2010 2010 2010 2010 2010R’000 R’000 R’000 R’000 R’000 R’000

Revenue– External 99 968 37 418 229 558 2 085 – 369 029– Intercompany – – – – – –

Total revenue 99 968 37 418 229 558 2 085 – 369 029Total cost of sales (83 644) (26 546) (181 182) – – (291 372)

Gross profit 16 324 10 872 48 376 2 085 – 77 657Gross profit (%) 16 29 21 – – 21Other income 10 121 283 8 269 (7 776) 907Operating expenses (8 658) (3 375) (23 022) (13 010) 7 776 (40 289)

Profit before interest 7 676 7 618 25 637 (2 656) – 38 275Profit before interest (%) 8 20 11 (127) – 10Finance cost (1 375) (365) (882) (2 239) – (4 861)Finance income 1 855 181 1 443 (3 468) – 11

Profit before tax 8 156 7 434 26 198 (8 363) – 33 425Tax expenses (2 351) (2 086) (7 024) 1 889 – (9 572)

Profit after tax 5 805 5 348 19 174 (6 474) – 23 853Profit after tax % 6 14 8 (311) – 6

Equity holders of the parent 5 805 5 348 19 174 (6 474) – 23 853

Total assets 61 876 49 349 113 569 42 649 (24 233) 243 210

Total liabilities 54 490 27 823 45 705 (894) (24 234) 102 890

Capital expenditure incurred 31 1 235 939 597 – 2 802

Depreciation (125) (3 040) (739) (706) – (4 610)

Bad debt provision 4 441 78 3 557 – – 8 076

The 2011 additional disclosure are not presented for the prior period due to the fact that all the information is not available and the costto develop would outway the benefit.



Notes to the


Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

36.1 RECONCILIATION OF PROFIT BEFORE INTEREST TO CASH GENERATED FROM/(UTILISED IN) OPERATIONS

Operating profit before interest 49 568 38 275 1 566 (2 605)

Adjustments for non-cash items:– Depreciation 4 676 4 610 260 248

– Movement in bad debt provision (7 163) 968 – –

– Movement in warranty provision 173 200 – –

– Movement in leave day accrual (170) 239 – –

– Movement in bonus accrual 586 – – –

– (Profit)/loss on sale of asset (171) 8 – –

– Finance charges on rehabilitation

provision 207 – – –

– Unrealised exchange rate fluctuations (583) 387 – –

– Foreign exchange loss with

currency translation – (2) – –

Change in working capital: (6 812) 3 253 663 (364)

– Increase in inventories (17 235) (6 718) – –

– Foreign exchange loss with

currency translation – 2 – –

– (Increase)/decrease in receivables (6 520) (2 881) 23 90

– Increase in forward exchange

contract liability 84 583 – –

– Increase/(decrease) in payables

and Value Added Tax 16 859 12 267 640 (454)

40 311 47 938 2 489 (2 721)

36.2 TAX PAID

Opening balance: SARS (1 239) 1 765 – (94)

Tax liability for the year (7 698) (6 629) (191) –

STC liability for the year (1 036) (518) (1 036) (518)

Closing balance: SARS (636) 1 239 191 –

Tax paid during the year (10 609) (4 143) (1 036) (612)



Notes to the


Group Company

2011 2010 2011 2010R’000 R’000 R’000 R’000

36.3 COST WITH ACQUISITION OF COMPANY

Deferred tax – 1 288 – –

Goodwill 214 5 119 – –

214 6 407 – –

Cash with acquisition – – – –

Net liabilities obtained 214 6 407 – –

Cost – – – –

Cash cost 214 6 407 – –

37. RECLASSIFICATION

In the current year the Group’s intercompany loans were reclassified between current assets and current liabilities in the Company’s separate statement of financial position. During the prior year, the Group’s intercompany loans were disclosed as a net amount under current assets. The details of intercompany loanaccounts making up the net amount disclosed in the Company’s separate statement of financial position weredisclosed in note 8 to the annual financial statements.

2011 2010 2009

R’000 R’000 R’000

Short-term loansRolfes Chemicals (Pty) Limited 22 347 17 895 5 398

Rolfes Silica (Pty) Limited 9 518 17 483 20 516

New Heights 390 (Pty) Limited 692 – –


(Pty) Limited (12 660) (4 049) 35 951

Rolfes Asset Holding (Pty) Limited (15 347) (12 443) (13 794)

4 550 18 886 48 071

The reclassification had the following effect in the Company’s separate statement of financial position for the

years ended:

2010 2009

Increase in current assets 16 492 13 794

Increase in current liabilities 16 492 13 794

Other than as shown above the reclassification had no other financial effect in the prior or current year’s

financial results. The reclassification has no effect on the Group’s consolidated results.

The above was done to bring presentation in line with IFRS.



Notes to the


Effective

holding Investment

Amount owingby/(to)

subsidiaries

39. INTEREST IN SUBSIDIARIES

Share

Activity and capital 2011 2010 2011 2010 2011 2010

Name description R % % R’000 R’000 R’000 R’000

Rolfes Colour The manufacturing and 1 000 100 100 67 955 67 955 (12 660) (4 049)

Pigments distribution of resins,

International dispersions organic and

(Pty) Limited inorganic pigments,

pigments pastes,

additives and dyes.

Rolfes Chemicals The distribution of

(Pty) Limited drummed solvents, 100 100 100 67 183 67 183 22 347 17 895

lacquer thinners,

creosotes, waxes and

other speciality

chemicals.

Rolfes Silica The manufacturing and 200 000 100 100 16 639 16 639 9 518 17 483

(Pty) Limited distribution of pure

beneficiated silica.

Rolfes Asset The company invests in 100 100 100 47 710 47 710 (15 347) (12 443)

Holding (Pty) and lets out property,

Limited plant and equipment.

Rolfes Europe Dormant 100 100 100

Trading (Pty)

Limited

Rolfes Logistics Dormant 100 100* 100*

(Pty) Limited

New Heights 390 Property holding 100 100* 100* 692 –

(Pty) Limited) company

4 550 18 886

Amounts owing by subsidiaries 32 557 35 378

Amounts owing to subsidiaries (28 007) (16 492)

4 550 18 886

All subsidiaries are incorporated in South Africa.

* Indirect



Notes to the


40. ANALYSIS OF SHAREHOLDINGas at 30 June 2011

Number of Number ofshareholders % shares %

Shareholder spread

1 to 5 000 274 60,09 527 701 0,515 001 to 10 000 56 12,28 451 146 0,44

10 001 to 50 000 80 17,54 1 786 986 1,7250 001 to 100 000 18 3,95 1 387 113 1,34

100 001 to 1 000 000 16 3,51 6 663 247 6,431 000 001 shares and over 12 2,63 92 793 274 89,56

456 100,00 103 609 467 100,00

Distribution to shareholdersBanks 1 0,22 23 369 0,02Brokers 1 0,22 472 008 0,46Close Corporations 7 1,54 71 500 0,07Individuals 391 85,75 5 903 056 5,70Insurance Companies 1 0,22 592 022 0,57Investment Companies 5 1,10 15 243 733 14,71Mutual Funds 2 0,44 549 462 0,53Nominees and Trusts 31 6,80 61 654 810 59,51Other Corporations 2 0,44 78 743 0,08Pension Funds 1 0,22 5 256 861 5,07Private Companies 14 3,05 13 763 903 13,28

456 100,00 103 609 467 100,00

Public/non-public shareholders

Non-public shareholders 13 2,85 73 967 238 71,40

Directors and associates of the Company holdings 9 1,97 34 239 738 33,05

Strategic holdings (more than 10%) 4 0,88 39 727 500 38,35

Public shareholders 443 97,15 29 542 239 28,60

456 100,00 103 609 467 100,00

Beneficial shareholders holding 5% or more

Vuwa Investments (Pty) Limited 25 727 500 24,83Carmen Fourie Family Trust 21 511 943 20,76Elandre Fourie Trust 14 000 000 13,51Louis Fourie Trust 8 654 080 8,35Badenhorst Family Trust 6 073 549 5,86Investec Employee Benefits Limited 5 256 861 5,07


Shareholders’ diary

Interim results published Wednesday, 23 February 2011

Audited results published Wednesday, 14 September 2011

Integrated report mailed to shareholders Friday, 30 September 2011

Dividend declaration

Last day to trade “CUM” dividend Friday, 14 October 2011

Ordinary shares trade “EX” dividend Monday, 17 October 2011

Record date to be recorded in the register to participate in the dividend distribution Friday, 21 October 2011

Payment to shareholders in respect of the dividend distribution Monday, 24 October 2011Posting of cheques or electronic bank transfers in respect of certificated shareholders.Accounts credited at CSDP or broker in respect of dematerialised shareholders.

No share certificates may be dematerialised or re-materialised between Monday, 17 October 2011 and Friday, 21 October 2011, both days inclusive.

Where applicable, payment in terms of certificated shareholders will be transferred electronically to the shareholder bankaccounts on the payment date. In the absence of specific mandates, payment cheques will be posted to certificated shareholders at their risk on the payment date.

Shareholders who have dematerialised their shares will have their share accounts and their Central Securities DepositoryParticipant or broker credited on the payment date.

Annual general meeting

Record date to receive notice of the annual general meeting Friday, 23 September 2011

Record date to participate and vote at the annual general meeting Friday, 21 October 2011

Forms of proxy for annual general meeting of shareholders to be received by 12:00 Wednesday, 26 October 2011

Annual general meeting of the shareholders held at 12:00 Friday, 28 October 2011

Results of annual general meeting announcement published on SENS Friday, 28 October 2011

Salient dates and times of the proposed name change

Last day to trade in order to be eligible to vote at the annual general meeting Friday, 14 October 2011

Record date in order to vote at the annual general meeting Friday, 21 October 2011

Last day to lodge forms of proxy for the annual general meeting by 12:00 on Wednesday, 26 October 2011

Annual general meeting of shareholders to be held at12:00 on Friday, 28 October 2011

Results of annual general meeting published on the Securities Exchange News Service (SENS) and on he Company’s website on Friday, 28 October 2011

Publication of finalisation information Friday, 11 November 2011

Last day to trade under the name “Rolfes Technology Holdings Limited”, and short name “Rolfes” and ISIN code: ZAE000096202 on Friday, 18 November 2011

Trade under the new name “Rolfes Holdings Limited” with short name“Rolfes” and ISIN code: ZAE000159836 on Monday, 21 November 2011

Record date for change of name Friday, 25 November 2011


Notice of

annual general meeting for the year ended 30 June 2011

ROLFES TECHNOLOGY HOLDINGS LIMITEDRegistration number: 2000/002715/06Share Code: RLFISIN: ZAE000096202(“the Company” or “the Rolfes Group” or “the Group”)

This document is important and requires your immediateattention. If you are in any doubt as to what action youshould take in respect of the resolutions contained in thisnotice, please consult your Central Securities DepositoryParticipant (“CSDP”), broker, banker, attorney, account-ant or other professional adviser immediately.

If you have sold or otherwise transferred all your ordinaryshares in the Company, please send this document together with the accompanying form of proxy at once tothe relevant transferee or to the stockbroker, bank or otherperson through whom the sale or transfer was effected,for transmission to the relevant transferee.

Until the Companies Act, No 71 of 2008, as amended(“the Act”), came into effect on 1 May 2011, theMemorandum of Incorporation (“MOI”) of the Companycomprised its Memorandum of Association and itsArticles of Association. On the date that the Act came intoeffect, the Memorandum of Association and Articles ofAssociation of the Company automatically converted intothe Company’s MOI. Accordingly, for consistency of ref-erence in this notice of annual general meeting, the term“MOI” or “Memorandum of Incorporation” is usedthroughout to refer to the Company’s Memorandum ofIncorporation (which previously comprised theCompany’s Memorandum of Association and its Articlesof Association, as aforesaid).

All references in this notice of annual general meeting(including all of the ordinary and special resolutions contained herein) to the Company’s MOI refer to provisions of that portion of the Company’s MOI that waspreviously called the Company’s Articles of Association.

Section 63(1) of the Act – Identification of meetingparticipants

Kindly note that meeting participants (including proxies)are required to provide reasonably satisfactory identification before being entitled to attend or participate in a shareholders’ meeting. Forms of identification include valid identity documents, driver’slicenses and passports.

Notice is hereby given to the shareholders of RolfesTechnology Holdings Limited as at 23 September 2011,being the record date to receive notice of the annualgeneral meeting in terms of section 59(1)(a) of the Act,that the annual general meeting of shareholders of theCompany will be held in the boardroom at 12 Jet ParkRoad, Jet Park, Boksburg, on Friday, 28 October 2011,at 12:00 for the purposes of the matters set out below,which meeting is to be participated in and voted at byshareholders registered as such on Friday, 21 October2011, being the record date to participate in and voteat the annual general meeting in terms of section62(3)(a), read with section 59(1)(b) of the Act, and toconsider and, if deemed fit, to pass the following ordinary and special resolutions, with or without amendment:

ORDINARY BUSINESS

ORDINARY RESOLUTION 1

Annual financial statements

“RESOLVED THAT the audited annual financial statementsfor the Company and the Group for the year ended 30 June 2011, including the directors’ report and thereport of the independent auditors, be adopted.”

Reason for and effect of ordinary resolution 1

To receive, consider and adopt the annual financial statements for the year ended 30 June 2011 of theCompany and the Group, together with the directors’ andindependent auditors’ reports contained therein.

A majority of more than 50% (fifty percent) of votes castby those shareholders present or represented and votingat the annual general meeting is required for this resolution to be adopted.


Re-election of director

“RESOLVED THAT the re-election of Ms L Lynch, as anexecutive director of the Company, for a further term ofoffice be and it is hereby authorised and confirmed.”


To re-elect Ms L Lynch (Financial Director), who retires byrotation in terms of Article 87 of the Company’s MOI, for


Notice of

annual general meeting continuedfor the year ended 30 June 2011

a further term of office. A brief curriculum vitae of thedirector appears on page 4 of the integrated report ofwhich this notice forms part.

A majority of more than 50% (fifty percent) of votes castby those shareholders present or represented and votingat the Annual General Meeting is required for this resolution to be adopted.


Appointment of auditors

“RESOLVED THAT the re-appointment of BDO SouthAfrica Incorporated as independent auditors to theCompany, and Mr J Schoeman as the designated auditpartner, until the next annual general meeting be confirmed, and that their remuneration be determined bythe Audit and Risk Committee in terms of the Audit andRisk Committee Charter, which amount the directors shallbe empowered to ratify.”


To confirm the re-appointment of BDO South AfricaIncorporated as independent auditors to the Company, asnominated by the Audit and Risk Committee, for the ensuing financial year, and that the directors shall be empowered to ratify their remuneration, as determined bythe Audit and Risk Committee in terms of the Audit andRisk Committee Charter, of which amount shall beapproved and endorsed by the directors.



Appointment of the Audit and Risk Committee members for the year ending 30 June 2012

“RESOLVED that TAM Tshivhase (Chairman) and KT Nondumo be appointed as the Company’s Audit andRisk Committee members for the year ending 30 June2012.”


To appoint the members of the Audit and Risk Committee,proposed by the Board of Directors and as set out above,for the year ending 30 June 2012.



Control of authorised but unissued shares

“RESOLVED THAT all of the unissued shares in the

authorised share capital of the Company be and are

hereby placed under the control of the directors, who are

authorised to allot and issue the same to such persons and

on such terms and conditions as they may determine in

their sole and absolute discretion, subject to the

applicable legislation and the Listings Requirements of the

JSE Limited (“JSE”), until the next annual general meeting

of the Company.


To place the unissued ordinary shares in the capital of the

Company under the control of the directors.

A majority of more than 50% (fifty percent) of votes cast

by those shareholders present or represented and voting

at the annual general meeting is required for this

resolution to be adopted.


Authority to action all ordinary and special resolutions

“RESOLVED THAT any one director of the Company or

the Company Secretary be and is hereby authorised to do

all such things as are necessary and to sign all such

documents issued by the Company so as to give effect to

such ordinary resolutions and special resolutions with or

without amendment and where applicable, registered.”


General authority to issue shares or other equitiesfor cash

“RESOLVED THAT the directors of the Company be and

are hereby authorised by way of general authority to

issue (which shall for the purposes of the JSE Listings

Requirements include the sale of treasury shares) for cash,

all or any of the authorised but unissued shares in the

capital of the Company, including options and convertible

securities, as and when the directors in their discretion

deem fit, subject to the requirements of the Act, the MOI

and the JSE Listings Requirements as presently constituted

and which may be amended from time to time, and

provided that such issues for cash may not, in the

aggregate, in any one financial year exceed 50% (fifty

percent) of the number of the shares of the relevant class

of shares issued prior to such issue.”

111

Notice of



It is recorded that the Company may only make an issue

of shares for cash if the following JSE Listings

requirements are met:

• The shares, which are the subject of the issue for

cash, must be of a class already in issue, or where

this is not the case, must be limited to such shares or

rights that are convertible into a class already in

issue;

• The general authority shall only be valid until the

Company’s next annual general meeting or for 15

(fifteen) months from the date of passing of this

ordinary resolution, whichever period is shorter;

• An announcement will be published giving full

details, including the number of shares issued, the

average discount to the weighted average traded

price of the shares over the 30 days prior to the date

that the price of the issue was agreed in writing

between the Company and party/ies subscribing for

such shares and the effect on the net asset value per

share, net tangible asset value per share, earnings

per share and headline earnings per share, at the

time of issue representing, on a cumulative basis

within 1 (one) financial year, 5% (five percent) or

more of the number of shares in issue prior to that

issue in accordance with the JSE Listings

Requirements;

• That issues in the aggregate in any 1 (one) financial

year may not exceed 50% (fifty percent) of the

number of shares of the Company in issue of that

class of equity securities before such issue, taking into

account the dilution effect of convertible equity

securities and options in accordance with the JSE

Listings Requirements;

• In determining the price at which an issue of shares

may be made in terms of this general authority, the

maximum discount permitted will be 10 % (ten

percent) of the weighted average traded price on the

JSE of those shares measured over the 30 (thirty)

business days prior to the date that the price of the

issue is agreed to between the Company and the

party/ies subscribing for the shares; and

• Any issue will only be made to public shareholders,

as defined in the JSE Listings requirements and not

related parties.


To authorise the directors of the Company to issue shares

or other equities for cash, as and when they in their

discretion deem fit.

A 75% (seventy five percent) majority of votes cast by

those shareholders present or represented and voting at

the Annual General Meeting is required for this resolution

to be adopted.

SPECIAL BUSINESS

SPECIAL RESOLUTION 1

To change the name of the Company

“RESOLVED THAT subject to the provisions of the Act and

the Listings Requirements of the JSE, the name of the

Company be and is hereby changed from “Rolfes

Technology Holdings Limited” to “Rolfes Holdings

Limited”, with effect from the commencement of trade on

21 November 2011.”

Reason for and effect of special resolution 1

The reason for Special Resolution Number 1 is to avoid

creating the impression that Rolfes is an IT company and

for the new name to more closely reflect the main business

of the Group. The effect of Special Resolution Number 1

is that the Company will in future be known as “Rolfes

Holdings Limited”.

In this regard, shareholders’ attention is drawn to the

following should the proposed change of name of the

Company be approved at the annual general meeting:

• the Company’s long name will change from “Rolfes

Technology Holdings Limited” to “Rolfes Holdings

Limited”

• the Company’s short name on the JSE list will remain

as “Rolfes”;

• the Company’s ISIN code will change from

“ZAE000096202” to “ZAE000159836”;

• the Company’s JSE share code “RLF” will remain the

same;

• certificated shareholders need to surrender their

share certificates to the Company’s transfer

secretaries, as current share certificates reflecting the

name “Rolfes Technology Holdings Limited” are not

good for delivery;


Notice of


• no action need be taken by dematerialised shareholders as their accounts will be updated withthe new long name at their CSDP or broker.

Process and approvals

1. A special resolution will be proposed to change thename from ““Rolfes Technology Holdings Limited” to“Rolfes Holdings Limited” at the annual general meeting to be held at 12:00 on Friday, 28 October2011.

2. For a period of not less than one year, the Companywill reflect the former name “Rolfes TechnologyHoldings Limited” on all documents of title and anyannouncement released on the Securities ExchangeNews Service (“SENS”) of the JSE Limited (“JSE”), inbrackets beneath the new name of “Rolfes HoldingsLimited”.

3. All new share certificates issued subsequent to thename change will bear the new long name “RolfesHoldings Limited”.

4. Approval has been granted by the JSE for the changeof name and for the abbreviated name “Rolfes” to beused with the share code “RLF” and the ISIN codeZAE000159836.

5. The new name “Rolfes Holdings Limited” has beenreserved at the Companies and Intellectual PropertyCommission.

6. Certificated shareholders need to complete the formof surrender attached to this notice and return it,together with their share certificates or other documents of title, to the transfer secretaries,Computershare Investor Services Proprietary Limited,Ground Floor, 70 Marshall Street, Johannesburg2001 (P O Box 61051, Marshalltown, 2107). Newshare certificates reflecting the change of name willbe posted, by registered post in South Africa, to thosecertificated shareholders who have surrendered theirshare certificates or other documents of title on orbefore 12:00 on Friday, 25 November 2011, on orabout Monday, 28 November 2011.

7. Shareholders who surrender their existing share

certificates or other documents of title after 12:00 on

Friday, 25 November 2011 will have their new share

certificates mailed within 5 (five) business days of

receipt thereof by the transfer secretaries, by

registered post in South Africa, at the risk of the

shareholders concerned.

Salient dates and times of the proposed namechange

The salient dates and times of the proposed name changeare set out below:

2011

Last day to trade in order to be eligible to vote at the annual Friday,general meeting 14 October

Record date in order to vote at Friday,the annual general meeting 21 October

Last day to lodge forms of proxy for the annual general meeting Wednesday,by 12:00 on 26 October

Annual general meeting of Friday,shareholders to be held at 12:00 on 28 October

Results of annual general meeting published on the Securities Exchange News Service (SENS) and on Friday,the Company’s website on 28 October

Publication of finalisation Friday,information 11 November

Last day to trade under the name “Rolfes Technology Holdings Limited”, and short name “Rolfes” and Friday,ISIN code: ZAE000096202 on 18 November

Trade under the new name “Rolfes Holdings Limited” with short name “Rolfes” and ISIN code: Monday, ZAE000159836 on 21 November

Record date for change Friday,of name 25 November

New share certificates reflecting the change of name posted by registered post to certificated shareholders who have surrendered their documents of title on or before 12:00 on the Monday, record date (see note 3 on page 113) 28 November

Dematerialised shareholders’ accounts with their CSDPs or brokers updated Monday,with the new name on 28 November

Note

1. The dates and times provided for above are subjectto amendment. Any such amendment will be releasedon SENS.

2. Shareholders will not be able to dematerialise orrematerialise shares in the Company’s name after thelast day to trade for the name change and may onlydematerialise their new shares in the Company fromthe first business day after the record date.


Notice of


3. Certificated shareholders, who surrender their

existing documents of title after 12:00 on the record

date, will have their new share certificates mailed

within 5 (five) business days of receipt thereof by the

transfer secretaries, by registered post in South

Africa, at the risk of the shareholders concerned.

Opinions and recommendations

The directors of the Company are of the opinion that the

implementation of the name change will be to the

long- term benefit of Rolfes’ shareholders and more

closely reflects the main business of the Company.

Accordingly, the Board of Directors recommends that

shareholders vote in favour of the special resolution to be

proposed at the annual general meeting of shareholders.

The directors of the Company who have direct and

indirect interests in the issued share capital of the

Company support the name change and intend to vote in

favour of it in respect of all their shares.



the annual general meeting is required for this resolution

to be adopted.


Remuneration of executive directors

“RESOLVED THAT with effect from 1 July 2011, the

executive directors be paid remuneration as determined

by their respective contracts of employment, or otherwise

as determined by the Remuneration and Nomination

Committee from time to time in accordance with the

Company’s remuneration policy.”


The reason for special resolution 2 is to, in compliance

with the provisions of the Act, confirm that the Company

may pay remuneration to its directors. The effect of the

special resolution is that, if approved by the shareholders

at the annual general meeting, the remuneration payable

to directors for the year 1 July 2011 to 30 June 2012 will

be approved.



the Annual General Meeting is required for this resolution

to be adopted.


Remuneration of independent non-executive directors

“RESOLVED THAT the fees payable to the independentnon-executive directors for the year 1 July 2011 to 30 June 2012, as set out below be approved:

Per meeting attended:

Board meeting R10 500

Audit and Risk Committee meeting R10 500

Remuneration and Nomination Committee meeting R10 500


The reason for special resolution 3 is to, in compliance

with the provisions of the Act, determine the remuneration

of independent non-executive directors for the financial

year commencing 1 July 2011. The effect of the special

resolution is that, if approved by the shareholders at the

annual general meeting, the fees payable to the

independent non-executive directors until the next annual

general meeting will be as set out above.



the annual general meeting is required for this resolution

to be adopted.


General authority to repurchase issued shares

“RESOLVED THAT the Company and/or any of its

subsidiaries, be and are hereby authorised, by way of a

general approval in terms of section 48 of the Act to

acquire from time to time the issued ordinary shares of

the Company, upon such terms and conditions and in

such amounts as the directors of the Company may from

time to time determine, but subject to the Company’s MOI,

the provisions of the Act and the JSE Listings Requirements

(“JSE Listings Requirements”), when applicable, and

provided that:

• the repurchase of securities will be effected through

the order book operated by the JSE trading system

and done without any prior understanding or

arrangement between the Company and the

counterparty;


Notice of


• this general authority shall only be valid until theCompany’s next annual general meeting, providedthat it shall not extend beyond fifteen months from thedate of passing this special resolution;

• in determining the price at which the Company’sordinary shares are acquired by the Companyand/or subsidiary of the Company, in terms of thisgeneral authority, the maximum premium at whichsuch ordinary shares may be acquired will be 10% ofthe weighted average of the market price at whichsuch ordinary shares are traded on the JSE, as determined over the five days immediately precedingthe date of the repurchase of such ordinary shares;

• the acquisitions of ordinary shares in the aggregatein any one financial year do not exceed 20% of theCompany’s issued ordinary share capital from thebeginning of the financial year;

• the Company and its subsidiaries will be able to paytheir debts as they become due in the ordinary courseof business for a period of 12 (twelve) months afterthe transaction;

• the consolidated assets of the Company and its subsidiaries, being fairly valued in accordance withthe accounting policies used in the Company’s latestaudited Group annual financial statements, will be inexcess of the consolidated liabilities of the Companyand its subsidiaries for a period of 12 (twelve)months after the date of the transaction;

• the issued share capital and reserves of the Companyand its subsidiaries will be adequate for the purposes of the business of the Company and its sub-sidiaries for a period of 12 (twelve) months after thedate of the transaction;

• the working capital available to the Company and itssubsidiaries will be adequate for ordinary businesspurposes for a period of 12 (twelve) months after thedate of the transaction;

• upon entering the market to proceed with the repurchase, the Company’s sponsor/designatedadviser has confirmed the adequacy of theCompany’s working capital for the purposes ofundertaking a repurchase of shares in writing to theJSE;

• after such repurchase the Company will comply withthe JSE Listings Requirements concerning shareholderspread requirements;

• the Company or its subsidiaries are not repurchasingsecurities during a prohibited period as defined in theJSE Listings Requirements unless they have in place arepurchase programme where the dates and quantities of the securities to be traded during the relevant period are fixed (not subject to any variation) and full details of the programme havebeen disclosed in an announcement over SENS priorto the commencement of the prohibited period;

• when the Company has cumulatively repurchased 3%(three percent) of the initial number of the relevantclass of securities, and for each 3% (three percent) inaggregate of the initial number of that class acquiredthereafter, an announcement will be made; and

• the Company only appoints one agent to effect anyrepurchase(s) on its behalf.”


The reason for and the effect of the special resolution is togrant the Company’s directors a general authority, up toand including the date of the following annual generalmeeting of the Company, to approve the Company’s purchase of shares in itself, or to permit a subsidiary ofthe Company to purchase shares in the Company.

A repurchase of shares is not contemplated at the date ofthis notice. However, the board of directors believes it tobe in the best interest of the Company that shareholdersgrant a general authority to provide the Board with optimum flexibility to repurchase shares as and when anopportunity that is in the best interest of the Companyarises.

A 75% (seventy five percent) majority of votes cast bythose shareholders present or represented and voting atthe annual general meeting is required for this resolutionto be adopted.


Approval of financial assistance

"RESOLVED THAT to the extent required by the Act, theboard of directors of the Company may, subject to compliance with the requirements of the MOI and sections44 and 45 of the Act, each as presently constituted andas amended from time to time, authorise the Company toprovide direct or indirect financial assistance by way ofloan, guarantee, the provision of security or otherwise, to:

• any of its present or future subsidiaries and/or anyother company or corporation that is or becomesrelated or inter-related to the Company for any purpose or in connection with any matter, including,


Notice of


but not limited to, acquisition of or subscription forany option or any securities issued or to be issued bythe Company or a related or inter-related company,or for the purchase of any securities of the Companyor a related or inter-related company; and

• any of its present or future directors or prescribedofficers (or any person related to any of them or toany company or corporation related or inter-relatedto any of them), or to any other person who is a participant in any of the Company’s or group of companies' share or other employee incentiveschemes, for the purpose of, or in connection with,the acquisition of or subscription for any option orany securities issued or to be issued by the Companyor a related or inter-related company, or for the purchase of any securities of the Company or a related or inter-related company, where such financial assistance is provided in terms of any suchscheme that does not satisfy the requirements of section 97 of the Act, such authority to endure untilthe annual general meeting of the Company for theyear ending 30 June 2012.


The reason for special resolution 5 is to comply with the

provisions of the Act. The effect of the special resolution is

that, if approved by the shareholders at the annual

general meeting, the provision of financial assistance to

the categories of persons indicated will be approved.

A 75% (seventy five percent) majority of votes cast bythose shareholders present or represented and voting atthe annual general meeting is required for this resolutionto be adopted.

To transact any other business capable of beingtransacted at an annual general meeting

Certain information relating to the Company as requiredby the JSE Listings Requirements is set out in the attachedannexure which forms part of this notice of annual general meeting.

VOTING AND PROXIES

Shareholders who hold their shares in certificated form orwho are own name registered shareholders holding theirshares in dematerialised form who are unable to attendthe annual general meeting but who wish to be represented thereat, are required to complete and returnthe attached Form of Proxy so as to be received by theCompany’s registrars by not later than 12:00 onWednesday, 26 October 2011.

Shareholders who have dematerialised their shares

through a Central Securities Depository Participant or

broker, other than by own name registration, who wish to

attend the annual general meeting should instruct their

CSDP or broker to issue them with the necessary

authority to attend the meeting, in terms of the custody

agreement entered into between such shareholders and

their CSDP or broker. Shareholders who have

dematerialised their shares through a CSDP or broker,

other than by own name registration, who wish to vote by

way of proxy, should provide their CSDP or broker with

voting instructions, in terms of the custody agreement

entered into between such shareholders and their CSPD

or broker. These instructions must be provided to their

CSPD or broker by the cut-off time or date advised by

their CSDP or broker for instructions of this nature.

Shareholders who have any doubt as to the action

they should take, should consult their stockbroker,

accountant, attorney, banker or other professional

adviser immediately.

By order of the Board

JC SchlebuschCompany Secretary

13 September 2011

Registered address Rolfes Technology Holdings Limited12 Jet Park Road, Jet Park, Boksburg 1406

Transfer secretaries

Computershare Investor Services (Pty) Limited

PO Box 61051, Marshalltown 2107


ANNEXURE TO

notice of annual general meeting

GENERAL INFORMATION ON THE COMPANY TO SUPPORT THE RESOLUTION PROPOSED IN THENOTICE OF ANNUAL GENERAL MEETING

The following information is required by the JSE Limited (“JSE”) Listings Requirements (“JSE Listings Requirements”) withregard to the resolution granting a general authority to the Company to repurchase its securities.

The JSE Listings Requirements require the following disclosures, some of which are elsewhere in the integrated report ofwhich this notice forms part as set out below:

• Directors and management – page(s) 4 and 5;

• Major shareholders of the Company – page(s) 107;

• Directors’ interests in securities – page(s) 47;

• Share capital of the Company – page(s) 81.

Litigation statement

There are no legal or arbitration proceedings, either pending or threatened against the Company or its subsidiaries, ofwhich the Company is aware, which may have, or have had in the last twelve months, a material effect on the financialposition of the Company or its subsidiaries.

Material change

Other than the facts and developments reported on in the integrated report, there have been no material changes in theaffairs or financial position of the Company and Group since the date of signature of the audit report and the date of thisnotice.

The Board of Directors has no immediate intention to use this authority to repurchase Company shares. However, theBoard of Directors is of the opinion that this authority should be in place should it become apparent to undertake a sharerepurchase in the future.

Directors' responsibility statement

The directors whose names are given on pages 4 and 5 of the integrated report, collectively and individually accept full responsibility for the accuracy of the information given in this notice of annual general meeting and certify that to the bestof their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the notice contains allinformation required by law and the JSE Listings Requirements.

Statement by the Company’s Board of Directors in respect of repurchases of securities:

Pursuant to and in terms of the JSE Listings Requirements, the directors of the Company hereby state that the intention ofthe directors is to utilise the authority at their discretion during the course of the period so authorised.

The directors are of the opinion that, after considering the effect of the maximum repurchase permitted and for a periodof 12 (twelve) months after the date of this annual general meeting:

1. the Company and its subsidiaries will be able to pay their debts as they become due in the ordinary course of business for a period of 12 (twelve) months after the date of the transaction;

2. the consolidated assets of the Company and its subsidiaries, fairly valued in accordance with the accounting policiesused in the Company’s latest audited group annual financial statements, will be in excess of the consolidated liabilities of the Company and its subsidiaries for a period of 12 (twelve) months after the date of the transaction;

3. the issued share capital and reserves of the Company and its subsidiaries will be adequate for the purposes of thebusiness of the Company and its subsidiaries for a period of 12 (twelve) months after the date of the transaction;

4. the working capital available to the Company and its subsidiaries will be adequate for ordinary business purposesfor a period of 12 (twelve) months after the date of the transaction; and

5. the Company will provide its sponsor and the JSE with all documentation as required in schedule 25 of the JSE ListingsRequirements, and will not undertake any such repurchase until the sponsor has signed off on the adequacy of itsworking capital, advised the JSE accordingly and the JSE has approved this documentation.


Form of proxy

Rolfes Technology Holdings Limited(Registration number 2000/002715/06

Share code: RLF • ISIN: ZAE000096202(“the Company” or “the Rolfes Group” or “the Group”)

Only to be completed by certificated and dematerialised shareholders with “own name” registration.If you are a dematerialised shareholder, other than with “own name” registration, do not use this form. Dematerialised shareholdersother than those with “own name” registration who wish to attend the annual general meeting, must inform their CSDP or broker of theirintention to attend and request their CSDP or broker to issue them with the relevant Letter of Representation to attend the annual generalmeeting in person and vote, or, if they do not wish to attend the meeting in person, but wish to be represented thereat, provide their CSDPor broker with their voting instructions in terms of the relevant custody agreement entered into between them and their CSDP or broker inthe manner and cut-off time stipulated therein.

An ordinary shareholder entitled to attend and vote at the annual general meeting to be held in the Rolfes Technology Holdings Limitedboardroom at 12 Jet Park Road, Jet Park, Boksburg, on Friday, 28 October 2011 at 12:00, is entitled to appoint a proxy to attend, speakor vote thereat in his/her stead. A proxy need not be a shareholder of the Company.

All forms of proxy must be lodged at the Company’s transfer secretaries, Computershare Investor Services Proprietary Limited, Ground Floor, 70 Marshall Street, Johannesburg 2001, (PO Box 61051, Marshalltown 2107), by no later than 12:00 on Wednesday, 26 October 2011.

I/We

of (address)

being an ordinary shareholder(s) of the Company holding ordinary shares in the Company do hereby appoint

1. or failing him/her

2. or failing him/her

3. the chairman of the annual general meetingas my/our proxy to vote on my/our behalf at the abovementioned annual general meeting (and any adjournment thereof) to be held at 12:00 in the Rolfes Technology Holdings Limited boardroom at 12 Jet Park Road, Jet Park, Boksburg, on Friday, 28 October 2011, forthe purpose of considering and, if deemed fit, passing with or without modifications, the following resolutions to be considered at such meeting:

Number of votes (one per share)In favour of Against Abstain

Special resolutions1. To change the name of the Company

2. Remuneration of executive directors

3. Remuneration of non-executive directors

4. Authority to acquire issued shares of the Company

5. Approval of financial assistance

Ordinary resolutions1. Adopt the annual financial statements of the year ended 30 June 2011

2. Confirm the re-appointment of L Lynch as an executive director

3. Approval to appoint BDO South Africa Incorporated and J Schoeman as auditors

4. Confirm the election of the Audit and Risk Committee members

5. General authority for allotment of unissued shares

6. Authority to action all ordinary and special resolutions

7. General authority to issue shares for cash

Insert an “X” in the appropriate block. If no indications are given, the proxy will vote as he/she deems fit. Each member entitled to attendand vote at the meeting may appoint one or more proxies (who need not be a member of the Company) to attend, speak and vote inhis/her stead.

Signed at on 2011

Signature

Assisted by (where applicable)

Please indicate whether you elect to receive documents electronically at the e-mail address inserted below by ticking the appropriate box

YES NO

E-mail:

Please read the notes on the reverse side hereof.


Notes to the

proxy form

1. A shareholder may insert the names of a proxy or

the names of two alternative proxies of the member’s

choice in the space provided, with or without

deleting “the chairman of the meeting”, but any such

deletion must be initialled by the shareholder. The

person whose name appears first on the proxy and

which has not been deleted shall be entitled to act as

proxy to the exclusion of those names following.

2. A shareholder is entitled to one vote on a show of

hands and, on a poll, one vote in respect of each

ordinary share held. A shareholder’s instructions to

the proxy must be indicated by inserting the relevant

number of votes exercisable by the shareholder in

the appropriate box. Failure to comply with this will

be deemed to authorise the proxy to vote or to

abstain from voting at the annual general meeting

as he/she deems fit in respect of all the

shareholder’s votes.

3. A vote given in terms of an instrument of proxy shall

be valid in relation to the annual general meeting

notwithstanding the death, insanity or other legal

disability of the person granting it, or the revocation

of the proxy, or the transfer of the ordinary shares in

respect of which the proxy is given, unless notice as

to any of the aforementioned matters shall have

been received by the transfer secretaries or by the

chairman of the annual general meeting before the

commencement of the annual general meeting.

4. If a shareholder does not indicate on this form that

his/her proxy is to vote in favour of or against any

resolution or to abstain from voting, or gives

contradictory instructions, or should any further

resolution(s) or any amendment(s) which may

properly be put before the general meeting, be

proposed, the proxy shall be entitled to vote as

he/she thinks fit.

5. The authority of a person signing a proxy in a

representative capacity must be attached to the

proxy unless that authority has already been

recorded with the Company’s transfer secretary or

waived by the chairman of the annual general

meeting.

6. A minor or any other person under legal incapacity

must be assisted by his/her parent or guardian

as applicable, unless the relevant documents

establishing capacity are produced or have been

registered with the transfer secretaries.

7. Where there are joint holders of ordinary shares:

• any one holder may sign the form of proxy;

• the vote(s) of the senior shareholders (for that

purpose seniority will be determined by the

order in which the names of ordinary

shareholders appear in the Company’s register)

who tender a vote (whether in person or by

proxy) will be accepted to the exclusion of the

vote(s) of the other joint shareholder(s).

8. Proxies must be lodged at or posted to the

Company’s transfer secretaries, Computershare

Investor Services Proprietary Limited, Ground Floor,

70 Marshall Street, Johannesburg 2001

(PO Box 61051, Marshalltown 2107), to be

received not later than 12:00 on Wednesday,

26 October 2011.

9. Any alteration or correction made to this form of

proxy other than the deletion of alternatives, must be

initialled by the signatory/ies.

10. The completion and lodging of this proxy shall not

preclude the relevant shareholder from attending the

meeting and speaking and voting in person thereat

to the exclusion of any proxy appointed in terms

hereof.

11. The chairman of the meeting may reject or accept a

proxy that is completed other that in accordance

with these instructions, provided that he is satisfied

as to the manner in which a shareholder wishes

to vote.


Form of surrender

Rolfes Technology Holdings Limited(Registration number 2000/002715/06

Share code: RLF • ISIN: ZAE000096202(“Rolfes” or “the Company”)

For use only by ordinary shareholders who hold ordinary shares in certificated form onlyPlease read the notes and instructions overleaf. Non-compliance with these instructions may result in the rejection of this form of surrender (“form”). If you are in any doubt as to how to complete this form, please contact your broker, banker, attorney, accountant orother professional adviser.

Note: A separate form is required for each shareholder.

To: Rolfes Technology Holdings Limitedc/o Computershare Investor Services Proprietary LimitedGround Floor, 70 Marshall Street, Johannesburg, 2001(P O Box 61763, Marshalltown, 2107)

PART A: TO BE COMPLETED BY CERTIFICATED SHAREHOLDERS

I/We irrevocably and in rem suam authorise you to produce the signature of such documents that may be necessary to complete thereplacement of my/our certificated shares in Rolfes in the new name of Rolfes Holdings Limited. I/We hereby instruct you to forwardthe replacement share certificate(s) to me/us, by registered post in South Africa, at my/our own risk, to the address overleaf and confirm that, where no address is specified, the share certificate(s) will be forwarded to my/our address recorded in the share registerof the Company.My/Our signature(s) on this form constitutes my/our execution of this instruction.In terms of the provisions set out in pages 111 and 112 of the financial statements to which this form is attached and of which it formspart, I/we surrender and enclose the undermentioned share certificate(s).Documents of title surrendered

Certificate number(s) Number of Rolfes shares covered by each certificate

Total:

Signed this day of 2011 at

Signature

Assisted by (where applicable state name and capacity)

Surname or name of Body Corporate

First name (in full, if applicable)

Title

Postal address (preferably a PO Box)

Telephone number ( )

Cell phone number

Stamp and address of agent lodging this form, (if any)

Please see Part B (for emigrants and non-residents) and notes on the reverse side of this form.


PART B: TO BE COMPLETED BY EMIGRANTS FROM AND NON-RESIDENTS OF THE COMMON MONETARY AREA

Nominated authorised dealer in the case of a shareholder who is an emigrant from or a non-resident of the common monetary area(see note 2 below).

Name of authorised dealer

Account number

Title

Postal address (preferably a PO Box)

Notes

1. No receipts will be issued for share certificates lodged, unless specifically requested. In compliance with the

requirements of the JSE Limited (“JSE”), lodging agents are requested to prepare special transaction receipts, if

required. Signatories may be called upon for evidence of their authority or capacity to sign this form.

2. Persons whose registered addresses in the share register are outside the common monetary area, or whose shares

are restrictively endorsed, should nominate an authorised dealer in Part B of this form.

3. Any alteration to this form must be signed in full and not initialled.

4. If this form is signed under a power of attorney, then such power of attorney or a notarially certified copy thereof,

must be sent with this form for noting (unless it has already been noted by the Company or its transfer secretary).

5. Where the shareholder is a company or a close corporation, unless it has already been registered with the

Company or its transfer secretary, a certified copy of the directors’ or members’ resolution authorising the signing of

this form must be submitted if so requested by the Company.

6. Note 5 does not apply in the event of this form bearing a recognised JSE broker’s stamp.

7. Where there are joint holders of any shares in the Company, only that holder whose name stands first in the

register in respect of such shares need sign this form.


Corporate information

ROLFES TECHNOLOGY HOLDINGS LIMITEDIncorporated in the Republic of South Africa

Registration number 2000/002715/06

Share code: RLF

ISIN: ZAE000096202

COMPANY SECRETARY AND REGISTERED ADDRESSJC Schlebusch (CA(SA))

12 Jet Park Road

Jet Park

Boksburg 1459

(PO Box 8112, Elandsfontein 1406)

Telephone number (011) 874 0634

Facsimile number (011) 874 0784

DESIGNATED AND CORPORATE ADVISERGrindrod Bank Limited

1st Floor, Building Three

Commerce Square

39 Rivonia Road

Sandton 2196

(PO Box 78011, Sandton 2196)



AUDITORS AND REPORTING ACCOUNTANTSBDO South Africa Incorporated

Practice number 905526E

13 Wellington Road

Parktown 2193

(Private Bag X60500, Houghton 2041)



TRANSFER SECRETARIESComputershare Investor Services

Proprietary Limited


Ground Floor

70 Marshall Street

Johannesburg 2001

(PO Box 61051, Marshalltown 2107)



ATTORNEYSVan der Merwe du Toit Inc.


Brooklyn Place

Corner Bronkhorst and Dey Streets

Brooklyn 0181

(PO Box 499, Pretoria 0001)



COMMERCIAL BANKERNedbank Limited


1st Floor, Emerald Place

Stoneridge Office Park

8 Greenstone Place

Edenvale 1609

(PO Box 282, Edenvale 1610)



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