integrated annual report - rare · ashin started his working career with the italtile group in...

INTEGRATED ANNUAL REPORT 2014

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GREYMATTER & FINCH # 8056

RARE HOLDINGS • INTEGRATED ANNUAL REPORT 2014 • 1

RARE is a designer, distributor, manufacturer and

service provider of piping and related products covering

the entire fluid conveyance cycle, across all fluid sectors.

Our vision is to become a leading supplier of innovative

fluid conveyance solutions with specific emphasis on the

African continent.

Group at a glance 2

Directorate 3

Chairman’s letter to stakeholders 4

Corporate governance 5 – 10

Audit committee report 11

Directors’ responsibilities and approval 12

Statement by the company secretary 12

Independent auditor report 13

Directors’ report 14 – 18

Statement of financial position 20

Statement of comprehensive income 21

Statement of changes in equity 22

Statement of cash flows 24

Accounting policies 25 – 36

Notes to the financial statements 37 – 68

Notice of annual general meeting 69 – 75

Proxy form insert

General information 76

CONTENTS

2 • RARE HOLDINGS • INTEGRATED ANNUAL REPORT 2014

GROUP AT A GLANCE

THE RARE GROUP

RARE is a manufacturer, distributor and service provider of piping and related products covering the entire fluid conveyance cycle, across all fluid sectors. The company has evolved through management buyout and acquisitions from a specialist pipe supplier in 1975 through to the listed entity, RARE Holdings, in 2007 and ultimately the current B-BBEE-accredited and transformed RARE Group.

RARE’s vision is to become the leading provider of complete fluid conveyance solutions in Africa.

The company is a JSE AltX-listed, level five B-BBEE company with an ISO 9001:2008 accreditation. The geographical footprint includes a head office in Kliprivier, Gauteng, an HDPE pipe manufacturing facility in Meyerton, Gauteng, and a sales branch in the KwaZulu-Natal province.

Furthermore RARE is represented in Angola, Zambia and Botswana. The company carries an extensive stock range for the petrochemical and water market sectors at its 11 hectare premises in Kliprivier.

As a complete fluid conveyance solution provider, RARE services the petroleum, chemical, mining, electricity-generating and water engineering markets. Geographical markets include South Africa, Zambia, Ghana, Botswana, Angola and the Democratic Republic of the Congo.

The group is structured into four operating divisions: RARE Trading, RARE Pipeline Services, RARE Water Treatment Technology and RARE Plastics.

RARE TRADING

RARE Trading sells a comprehensive range of products, combining steel and plastic pipes, couplings, fittings and valves in a complete package to the contractor or end user. All products represented by RARE conform to international and/or national quality standards. To enhance quality and traceability of the products, RARE also offers a cut-to-length, hot stamping and colour-coding service to the market.

RARE PIPELINE SERVICES

RARE Pipeline Services is a fully integrated provider of pipeline installations and pipelining solutions to the mining and industrial sectors. Rare Pipeline Services specialises in the supply and installation of various pipe systems, including:• Steel;• HDPE lined spool sections for slurry applications;• PVC/PVDF;• HDPE pipe installations;• Double containment HDPE piping for cyanide applications in gold mining; and• Cured in place pipe (CIPP) installations for pipeline rehabilitation.

The division makes use of the RARE Plastic linings system; the process allows a tight-fitting polyethylene (PE) liner to be rapidly installed in a pipeline without significantly reducing the diameter of the host pipe.

RARE WATER TREATMENT TECHNOLOGY

Electrochemical treatment, which uses electricity to treat water without the need for bulk liquid chemicals or large volumes of biomass, is a highly efficient, clean technology.

With no moving parts and adaptive software, system maintenance is straightforward and supervisory control can be carried out remotely.

Modular design, the ability to run off renewable or hybrid power sources, means plants can be easily configured and integrated with conventional treatment processes to offer ‘state-of-the-art’ treatment for a wide variety of applications, and installed and maintained with minimal impact and cost in a wide variety of environments.

RARE PLASTICS

RARE Plastics produces HDPE pipes ranging from 110mm to 1000mm in diameter at its manufacturing plant located in Meyerton. All pipes are manufactured in accordance with SANS ISO 4427 standards. RARE Plastics also distributes a wide range of HDPE fittings.


DIRECTORATE

T SIYOLO

Non-executive chairmanThemba obtained a sales diploma from the Ashridge Business School, a SEP from the University of Witwatersrand as well as an IRDP from the Stellenbosch Business School. He currently serves as an executive director of PG Bison Limited while his previous board positions include Sanlam Collective Investments and Emergent Office Furniture.

MT LATEGAN

Independent non-executive Theunie obtained a BAcc Honours, master’s degree in Commerce and doctorate in Commerce as well as a Higher Diploma in Banking. He qualified as a chartered accountant and served as a partner with Price Waterhouse Meyernel (now PricewaterhouseCoopers) specialising in taxation. His prior experience also includes positions as general manager at Rand Merchant Bank, chief executive officer of First National Bank Corporate Division and senior executive of the FirstRand Group. He served on numerous boards, including McCarthy Motor Group, Profurn, Relyant Retail and SA Rugby. He currently serves on the council of the University of Witwatersrand and on the board of Steinhoff International.

H ODENDAAL

Lead independent non-executiveAfter qualifying as a chartered accountant, Hein stayed with Arthur Young and Co (now Ernst & Young) as a manager until May 1987. He joined the South African Reserve Bank as a financial manager until January 1989 after which he joined Price Waterhouse Meyernel (now PricewaterhouseCoopers) as a partner. He left PricewaterhouseCoopers incorporated in February 1992 and joined Vleissentraal as General Manager Finance.

In February 1995 Hein joined Roadway Transport as financial director, a position he held until September 2001 when he was transferred to Steinhoff head office. (Roadway became a subsidiary company of Steinhoff during August 1998.) Hein is the managing director of Steinhoff Africa Holdings Proprietary Limited and also the managing director of Steinhoff Africa Group Services.

SJDT POTGIETER

Non-executiveStefan obtained his BAcc Honours degree in 2004 from the University of Stellenbosch and qualified as a chartered accountant in 2007. His prior experience includes positions as financial director of multiple privately held companies across a wide array of businesses including Mayfair Speculators Proprietary Limited and Stafric Investment and Management Services Proprietary Limited.

W VAN COLLER

CEO (Executive)Wally attended the University of Stellenbosch, achieving an Honours degree in Mechanical Engineering in 1978. In 1988 he was awarded a master’s degree in Business Leadership from UNISA. He also holds a Government Certificate of Competency as a mechanical engineer. Wally was previously managing director of various companies including, among others, William Tell Industries and DPI Plastics. He joined RARE in June 2011 as operations director.

R VILJOEN

CFO (Executive)Renier obtained his BAcc Honours degree in 2006 from the University of Stellenbosch. He served his articles at Greenwoods Chartered Accountants in Cape Town and qualified as a chartered accountant in 2009. Thereafter he became financial manager of a private company and joined RARE during July 2011 in the role of group accountant. He was appointed Group CFO in April 2012.

A TASDHARY

ExecutiveAshin started his working career with the Italtile Group in 1991, and left as an area manager in 2001. In 2004 he took up a position as managing director of APS GP, a division within the Amiantit Group of Companies. In late 2012, he started his career as national sales manager at The RARE Group.


CHAIRMAN’S LETTER TO STAKEHOLDERS

REVIEW

RARE acquired the assets and property of a high density polyethylene (HDPE) pipe extrusion plant in December 2013 and renamed it RARE Plastics, a division of The RARE Group Proprietary Limited. RARE Plastics largely contributed to changing the Group’s profile from being a trading and pipeline installation business to a plastic pipe manufacturing business that also trades in steel pipes, fittings and flanges and installs mining slurry pipelines. RARE Plastics immediately started to make a significant contribution to RARE’s results.

Trading conditions in the petro-chemical industry started to slow down in September 2013 and remained subdued for the rest of the financial year. A large order for the supply of steel pipes, fittings and flanges to a West African gold mine assisted in countering this situation.

The Pipeline Services division continued to supply and install plastic lined steel pipelines for slurry applications in the local mining industry. They managed to secure a large slurry pipeline order for a copper mine in Zambia, which will be executed in the next financial year.

The strategy going forward is to grow RARE Plastics by adding new products and to optimise trading stock in order to maintain the high service level to our petro-chemical customers. Pipeline Services will focus on plastic pipe lining projects in the mining industry.

This is our third integrated report in which we strive to improve our communication with all stakeholders and we are committed to conform to the JSE Listings requirements and the new Companies Act.

Another rights issue raised R150 million which significantly strengthened our balance sheet. We are confident that this will open up access to new funding for the business.

PROSPECTS

Opportunities in growing the sale of HDPE pipes and fittings locally and in the export markets in Southern Africa are being pursued.

APPRECIATION

I would like to acknowledge my co-directors, both executive and non-executive, for the effort and support that they have put in over the past year. Last but not least, we truly appreciate the loyalty and support of our management, staff, customers, suppliers and financiers.

Themba SiyoloChairman


CORPORATE GOVERNANCE

INTRODUCTION

RARE Holdings aspires to the highest level of corporate governance and best practices as enshrined in the King Report on Corporate Governance (King III). The Board not only sees value in subscribing to a system whereby King III ethics, personal and corporate integrity and governance practices set the standards of compliance, it also sees this as good business practice.

The Board recognises the responsibility of RARE to conduct its affairs with prudence and integrity, transparency, accountability and social responsibility and to account therefor in accordance with International Financial Reporting Standards to safeguard the interests of stakeholders.

The table detailing the company’s compliance with King III is available for inspection on the company’s website – www.rare.co.za.

BOARD OF DIRECTORS

The Board of seven directors comprises a majority of non-executive directors (four), of whom two are independent, who lead the company. This composition of the Board reflects the need to protect the best interests of the company.

Having regard for the fact that the chairman, T Siyolo, is not independent and in order to comply with the King III Report, H Odendaal has been appointed as the lead independent director.

A formal and transparent nominations process is followed when appointments to the Board are made, which is a matter for the Board as a whole. The main objective is to establish and maintain a balanced and ethical board.

The names and brief curriculum vitae of the directors are set out on page 3 of the annual report. The appointment process for new directors is conducted at Board level in a formal and transparent manner. There is an appropriate balance between the number of executive directors (three) and non-executive directors (four) to avoid any director exercising unrestricted powers of decision-making. No one director has unfettered control.

The Board has adopted a board charter which confers amongst others the following responsibilities to the Board:• Give strategic direction to the company;• Monitor management in implementing plans and strategies;• Identify and regularly monitor key risk areas and key performance indicators of the business;• Ensure that the company complies with relevant laws, regulations and codes of business practice;• Ensure that the company communicates with shareholders and relevant stakeholders openly and promptly; and• Regularly review processes and procedures to ensure effectiveness of internal systems of control and accept

responsibility for the total process of risk management.

Annually, the Board reviews the company’s strategy as proposed and recommended by the executive management team and monitors the execution and implementation thereof. The company’s chief executive officer is charged with the responsibility for the ongoing operations of the company. Together with the executive management team he develops the company’s long-term strategy and recommends the business plan and budgets to the Board for consideration.

In accordance with the memorandum of incorporation, one-third of the directors of the company are required to retire by rotation at every Annual General Meeting and their re-appointment is subject to shareholders’ approval. In addition, the appointments of all new directors are subject to confirmation by shareholders at the first Annual General Meeting after their initial appointment.

Four board meetings took place during the financial year and attendance is indicated in the schedule below.

13 September 2013 6 December 2013 25 February 2014 6 May 2014

T Siyolo √ √ √ √

T Lategan √ √ √

H Odendaal √ √ √ √

S Potgieter √ √ √ √

W van Coller √ √ √ √

A Tasdhary √ √

R Viljoen √ √ √ √


CORPORATE GOVERNANCE (continued)

BOARD COMMITTEESThree committees functioned during the year to assist the Board in discharging its responsibilities, namely the Audit and Risk Committee, Social and Ethics Committee and the Remuneration, Transformation and Sustainability Committee.

The committees have an important role in enforcing the high standards of governance and achieving increased effectiveness within the group. Whilst the Board has delegated certain of its functions to these committees, it remains fully accountable for the proper discharging of the responsibilities. Only non-executive directors are members of these committees of the Board. The chief executive and other members of executive management whose presence is required for such committees’ effective performance of their responsibilities are invited to be in attendance at committee meetings.

AUDIT AND RISK COMMITTEEThe committee held two meetings during the year and consisted of three members, H Odendaal (independent non-executive chairman), S Potgieter (non-executive). MT Lategan (independent non-executive).

The meetings of the committee were as follows:

13 September2013

25 February2014

H Odendaal √ √S Potgieter √ √MT Lategan √ √

Report of the Audit and Risk CommitteeThe information below constitutes the report of the Audit and Risk Committee in respect of the past financial year of the company, as required by section 94 of the Companies Act of South Africa.

The committee operates under written terms of reference, which have been confirmed by the Board, and has satisfied its responsibilities as set out in the terms of reference.

The purpose of the committee is to review the following:• The risk areas of the entity’s operations to be covered in the scope of external audits;• The adequacy, reliability and accuracy of financial information provided to management;• The accounting or auditing concerns identified as a result of the external audits;• The adequacy of policies and procedures considered necessary to comply with the requirements of the

Companies Act;• The company’s compliance with legal and regulatory provisions;• The adequacy of its terms of reference; • The scope and results of the external audit and its cost effectiveness;• To oversee internal audit processes; and• To oversee the preparation of the integrated report.

The committee has also been responsible for ensuring adequate segregation between non-audit services and the audit services, where these services were provided by the same accounting firm.

The policy on non-audit services, which is reviewed annually by the committee, sets out the detail of which services may or may not be provided to RARE by the external auditors.

The committee has assessed and positively endorsed the experience and expertise of the current financial director, as well as the company secretary.

The committee has nominated, subject to the endorsement of the Board and the approval of shareholders, the re-appointment of Baker Tilly Greenwoods Chartered Accountants and Mr DP Botha as the independent registered audit firm and the individual registered auditor of the company respectively. The committee has satisfied itself as to the independence of the external auditors.

Taking the size of the company into account the committee does not believe that it is cost effective to appoint a full time internal auditor as an employee of the company. The committee has engaged with a third party auditor who performs the internal audit function and reports its findings to the committee.

The committee has evaluated the annual financial statements of RARE Holdings Limited and its subsidiaries for the year ended 30 June 2014 and concluded that they comply with the recognition and measurement requirements of International Financial Reporting Standards (IFRS) in all material respects, the JSE Listings Requirements and with the requirements of the Companies Act of South Africa.


The committee concurs with the going concern premise in preparing the annual financial statements, and has recommended their adoption by the Board of Directors.

RARE is willing to take on risks at manageable levels for operations and finance, recognising that reward and opportunities flow from the acceptance of risk.

In the light of the difficult financial circumstances in which the company has been trading, the current risk appetite is naturally low. However, these circumstances make the company vulnerable to outside events and aggressive competition; hence the risk register identifies risks in excess of those acceptable in terms of the appetite.

This requires close monitoring and vigilance and the company has adopted a policy which requires every level of management to accept that risk management is an integral part of his/her job responsibilities.

The company has taken steps to reduce the risks in its operations by centralising controls, cutting costs through rationalisation of corporate and organisation structures as well as the implementation of a new ERP system. In addition, the company continually addresses the risks associated with its current funding structure and liaises closely with its major financier in this regard.

REMUNERATION, TRANSFORMATION AND SUSTAINABILITY COMMITTEEDuring the year this committee held two meetings and comprised two members, T Lategan (independent non-executive and chairman), T Siyolo (non-executive). W van Coller, the CEO, attended meetings by invitation.

Attendance of meetings is indicated in the schedule below

14 February2014

23 June 2014

T Lategan √ √T Siyolo √ √

The committee operates under written terms of reference which are reviewed annually. It assists the Board with various remuneration, transformation and sustainability matters, including the group’s short-, medium- and long- term incentive schemes, remuneration policy and strategy, executive succession planning, transformation and director nominations.

RemunerationRemuneration comprises three elements namely:• Guaranteed Remuneration Package;• Short-Term Incentive Scheme (Performance Bonus); and• Long-Term Incentive Scheme (Share Plan).

Guaranteed Remuneration Package (GRP)The GRP for executive board members for the period which they served during the current financial year is as follows:

Title Band2014

R2013

R

W van Coller CEO F 1 650 000 1 500 000R Viljoen CFO E 1 200 000 860 080A Tasdhary Executive E 1 129 920 –

Non-executive directors’ feesDue to the company’s current financial position, the non-executive directors elected not to earn any fees during the year.

Performance assessmentThe Remuneration, Transformation and Sustainability Committee also establishes the processes for the review of the performance of the Board, the directors, as well as the Board subcommittees and their members. A self-assessment process has been identified as the preferred means of performance assessment.



TransformationEmployment equityThe company’s approach to employment equity is set out in the company’s Human Resources Policy which outlines the company’s commitment to non-discriminatory employment practices. Each division is responsible for developing and submitting employment equity plans which outline employment equity goals in terms of hiring, training and promotion. The detailed employment equity plans are made available to employees of the respective operating entities. Further targets, strategies and specific action plans are agreed and are revised annually. Certain employment equity targets have been set and performance against these is monitored.

Community and broad-based black economic empowermentRARE Holdings acknowledges its social responsibility towards the communities in which it operates through a number of social investment programmes. RARE is an equal opportunity employer and there is no discrimination on the basis of ethnic origin or gender.

A number of programmes are in place to ensure that the group’s employee profile is more representative of the demographics of the regions in which it operates whilst maintaining the group’s high standards. The group received a level 5 rating in terms of the Department of Trade and Industry’s B-BBEE Codes of Good Practice (the Codes).

Preferential procurementPreferential procurement is dealt with via the company’s quality system, which sets out the company’s objective of annually increasing the proportion of procurement from suitably qualified vendors.

SustainabilityEthicsRARE is committed to an organisational integrity and code of ethics by:• Creating systems and procedures to introduce, monitor and enforce its ethical code;• Assessing the integrity of new appointees in selection and promotion procedures;• Exercising due care in delegating discretionary authority;• Communicating with and training all employees regarding enterprise values, standards and compliance

procedures; and• Providing, monitoring and auditing safe systems for reporting of unethical or risky behaviour.

Communication with stakeholdersThe Board accepts its duty to present a balanced and understandable assessment of the group’s position in reporting to stakeholders, taking into account the circumstances of the communities in which it operates and the greater demands for transparency and accountability regarding both financial and non-financial matters. RARE Holdings also maintains a website giving access to the company’s latest financial statements, operations and the annual report.

Enterprise developmentThe company assists smaller businesses through its enterprise development programme.

Skills development and trainingThe company is committed to ongoing training and development to further the skills base and empower employees to perform better in their current positions and so accelerate advancement. Total training spend for the year amounted to 0,81% of payroll.

SHEQ (Safety, health, environment and quality)RARE operates and complies with the related regulations defined in the OHS Act 85 of 1993 requirements. Operational risk assessments and safe work procedures (SWP) are developed to mitigate and eliminate potential hazards associated within a particular work environment, be it in a warehouse, factory or construction site. Scheduled internal location audits are performed annually to ensure compliance. Perpetual inspections are performed to detect any unsafe acts or equipment not safe for use. Group SHE audits are performed annually at all locations to ensure compliance to applicable regulations within the OHS Act.


RARE’s quality management systems are in compliance with the revised requirements of ISO 9001:2008. All locations are certified to ISO 9001:2008. Internal quality audits are performed which is a mandatory requirement within ISO. Group quality audits and external audits (UKAS accredited certification body) are performed annually. Only minor observations were noted and reported during our external audits performed to date by BM Trada (accredited certification body). No non-conformances (NCRs) were raised to date.

HIV/AIDSThe purpose of the AIDS policy is to reassure employees that HIV/AIDS is not spread through casual contact during normal work practices and to reduce unrealistic fears about contracting an HIV/AIDS virus-related condition. This policy also protects the legal right to work of employees who are diagnosed with an HIV/AIDS virus-related condition and provides guidelines for situations where infection with the HIV/AIDS virus is suspected. Our policy is to encourage sensitivity to and understanding for employees affected with a condition of the HIV/AIDS virus.

SOCIAL AND ETHICS COMMITTEEThe committee has two permanent members, namely T Siyolo (non-executive chairman) and S Potgieter (non-executive). R Viljoen (CFO) and A Tasdhary (Executive) are invited to attend these meetings. The committee is mandated to focus on social and ethics concerns and report its findings to the Board.

The committee has been responsible for the implementation of an independent fraud hotline for all of RARE’s divisions. The committee had two meeting during the year.

Attendance of meetings is indicated in the schedule below:

13 September2013

6 December2014

T Siyolo √ √SJDT Potgieter √ √

OTHER CORPORATE GOVERNANCE MATTERSCOMPANY SECRETARYR Viljoen attended all Board and Board committee meetings and provides advice and guidance to directors on governance and related issues. He has the responsibility for the induction of new directors and assists the CEO and chairman in determining the annual Board plan and meeting agendas. The Board understands that in the spirit of good corporate governance it is advisable to have an independent company secretary. The Board is satisfied of the competence and expertise of the company secretary.

Due to financial constraints the company had not made use of an external company secretary. This will be corrected when the financial position of the company allows it.

DESIGNATED ADVISERThe Board is also supplemented by the services of a designated adviser, PSG Capital Proprietary Limited, whose representatives attend all Board and Audit and Risk Committee meetings.

INFORMATION TECHNOLOGYThe Board is aware of the importance of proper governance with regard to information technology. N Siweya acts as the chief information officer and is responsible for proper governance regarding the IT environment as a whole.

SHARE DEALINGRARE Holdings has a policy which precludes directors and staff with access to price-sensitive information from dealing in the group’s shares during closed and prohibited periods.

CORPORATE GOVERNANCE (COMPLIANCE WITH KING CODE)

PrincipleStatement addressing the extent of the application / reason for non-compliance

Role and function of the board

Principle 2.1: The board should act as the focal point for and custodian of corporate governance.

The board as a whole is fully committed to complying with corporate governance principles.



PrincipleStatement addressing the extent of the application / reason for non-compliance

Principle 2.2: The board should appreciate that strategy, risk, performance and sustainability are inseparable.

The board agrees with this and regularly reviews these topics.

Principle 2.3: The board should provide effective leadership based on an ethical foundation.

The board fully complies with this principle.

Principle 2.4: The board should ensure that the company is and is seen to be a responsible corporate citizen.


Principle 2.5: The board should ensure that the company’s ethics are managed effectively.

The Social and Ethics committee has been tasked to perform this function and complies fully.

Principle 2.6: The board should ensure that the company has an effective and independent audit committee.

Currently the company has 3 non executives on the Audit and risk committee of which 2 are independent.

Principle 2.7: The board should be responsible for the governance of risk.

The Audit and Risk Committee presents the risk register to the board for approval and review on a continuing basis and takes appropriate action when necessary.

Principle 2.8: The board should be responsible for information technology (IT) governance.

The Audit and Risk Committee have been tasked with this function and reports to the board.

Principle 2.9: The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards.


Principle 2.10: The board should ensure that there is an effective risk-based internal audit.

The board has engaged with an independent registered auditor to perform the function of internal audit.

Principle 2.11: The board should appreciate that stakeholders’ perceptions affect the company’s reputation.


Principle 2.12: The board should ensure the integrity of the company’s integrated report.


Principle 2.13: The board should report on the effectiveness of the company’s system of internal controls.


Principle 2.14: The board and its directors should act in the best interests of the company.

The board as a whole and the directors individually fully comply with this principle.

Principle 2.15: The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act.

The board is fully aware of this principle and will comply if necessary.

Principle 2.16: The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfill the role of chairman of the board.

Due to the fact that the Chairman of the board is not independent, Hein Odendaal was appointed as the lead independent Non-Executive Director. The role of CEO and Chairman are not fulfilled by the same person.

Principle 2.17: The board should appoint the chief executive officer and establish a framework for the delegation of authority.


T SiyoloChairman

19 September 2014


AUDIT COMMITTEE REPORT

This report is compiled by the Audit Committee appointed in respect of the 2014 financial year of RARE Holdings Limited and its subsidiaries.

1. MEMBERS OF THE AUDIT COMMITTEE

Name QualificationH Odendaal (Chairman) CA(SA)MT Lategan CA(SA)SJDT Potgieter CA(SA)

The committee is satisfied that the members thereof have the required knowledge and experience as set out in Section 94(5) of the Companies Act No. 71 of 2008, as amended, and Regulation 42 of the Companies Regulations, 2011.

2. MEETINGS HELD BY THE AUDIT COMMITTEE

The Audit Committee performs the duties prescribed by Section 94(7) of the Companies Act No. 71 of 2008, as amended, by holding meetings with the key role players on a regular basis and by providing unrestricted access to the external auditors.

The committee held two scheduled meetings during the 2014 financial period on 13 September 2013 and 25 February 2014 respectively. All the Audit Committee members were present at the meetings.

3. EXTERNAL AUDITOR

The Audit Committee has nominated Baker Tilly Greenwoods Chartered Accountants as the independent auditors and Mr DP Botha as the designated partner, who is a registered independent auditor, for appointment in respect of the 2014 audit.

The committee satisfied itself through enquiry that the external auditors are independent as defined by the Companies Act No. 71 of 2008, as amended, and as per the standards stipulated in terms of the auditing profession. Requisite assurance was sought and provided by the Companies Act No. 71 of 2008, as amended, that internal governance processes within the firm support and demonstrate the claim to independence.

The Audit Committee, in consultation with executive management, agreed to the terms of the engagement. The audit fee for the external audit has been considered and approved taking into consideration such factors as the timing of the audit, the extent of the work required and the scope.

4. FINANCIAL STATEMENTS

Following the review of the group annual financial statements the Audit Committee recommends Board approval thereof.

5. INTERNAL AUDIT FUNCTION

The group has appointed an external audit company to perform the internal audit function. The internal auditors will report to the Audit Committee.

6. ACCOUNTING PRACTICES

The Audit Committee has evaluated the group annual financial statements of RARE Holdings Limited and its subsidiaries for the year ended 30 June 2014 and concluded that they comply with the recognition and measurement requirements of International Financial Reporting Standards in all material respects, the JSE Listings Requirements and with the requirements of the Companies Act No. 71 of 2008, as amended.

On behalf of the Audit Committee

H OdendaalChairman Audit Committee

19 September 2014


The directors are required in terms of the Companies Act No. 71 of 2008, as amended, to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the group as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the financial statements.

The financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the directors set standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the group and all employees are required to maintain the highest ethical standards in ensuring the group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the group is on identifying, assessing, managing and monitoring all known forms of risk across the group. While operating risk cannot be fully eliminated, the group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the group’s cash flow forecast for the year to 30 June 2015 and, in the light of this review and the current financial position, they are satisfied that the group has or has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently reviewing and reporting on the group’s financial statements. The financial statements have been examined by the group’s external auditors and their report is presented on page 13.

The financial statements set out on pages 14 to 68, which have been prepared on the going concern basis, were approved by the directors on 19 September 2014 and were signed on their behalf by:

H Odendaal R ViljoenChairman Audit Committee Financial director

STATEMENT BY THE COMPANY SECRETARY

I, R Viljoen, company secretary of RARE Holdings Limited and its subsidiaries, hereby certify that the company has, for the year under review, lodged with the Registrar of Companies all such returns as are required of a public company in terms of the Companies Act 71 of 2008, as amended, and that all such returns are true, correct and up to date.

R ViljoenCompany secretary

19 September 2014

DIRECTORS’ RESPONSIBILITIES AND APPROVAL


INDEPENDENT AUDITOR REPORT

TO THE SHAREHOLDERS OF RARE HOLDINGS LIMITED AND ITS SUBSIDIARIES

We have audited the accompanying group annual financial statements of RARE Holdings Limited and its subsidiaries, which comprise the separate and consolidated statement of financial position as at 30 June 2014, the separate and consolidated statement of comprehensive income, the separate and consolidated statement of changes in equity and the separate and consolidated statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory information, as set out on pages 20 to 68.

DIRECTORS’ RESPONSIBILITY FOR THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS

The company’s directors are responsible for the preparation and fair presentation of these group annual financial statements in accordance with International Financial Reporting Standards, the JSE Listing Requirements, the requirements of the Companies Act 71 of 2008, as amended, and for such internal controls as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR RESPONSIBILITY

Our responsibility is to express an opinion on these group annual financial statements based on our audit. We conducted our audit in 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 group annual financial statements are free from material misstatement.

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

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

OPINION

In our opinion, the group annual financial statements present fairly, in all material respects, the separate and consolidated financial position of the company and the group as at 30 June 2014, and of its separate and consolidated financial performance and its separate and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards, the JSE Listing Requirements, and the requirements of the Companies Act 71 of 2008, as amended.

OTHER REPORTS REQUIRED BY THE COMPANIES ACT

As part of our audit of the group annual financial statements for the year ended 30 June 2014 , we have read the Audit Committee Report, Statement by the Company Secretary and Directors’ Report for the purpose of identifying whether there are material inconsistencies between these reports and the audited group annual financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistences between these reports and the audited group annual financial statements. However, we have not audited these reports and accordingly do not express an opinion thereon.

Baker Tilly GreenwoodsPartner: DP BothaRegistered Auditor

19 September 2014Cape Town


DIRECTORS’ REPORT

The directors submit their report for the year ended 30 June 2014.

1. REVIEW OF ACTIVITIES

MAIN BUSINESS AND OPERATIONS

RARE Holdings Limited is an investment and management company.

The group supplies a comprehensive range of services and products to the fluid conveyance industry. Services include design, installation and maintenance of pipelines for the mining sector and process plants across several sectors of industry. The group operates principally in South Africa, Zambia, The Democratic Republic of the Congo, Botswana and Ghana.

The group conducts business in five divisions, namely Trading, Pipeline Services, Water Treatment, Investment and Plastics.

The Trading division includes the Kliprivier and Durban branches.

FINANCIAL RESULTS

Revenue for the financial period increased by 51% to R265 million (2013: R175 million) as further explained under the Operational Review below.

The gross profit margin improved to 19% (2013: 15%).

Operating expenses increased to R55 million (2013: R52 million) for the period under review. This is largely attributable to the acquisition of the HDPE Pipe manufacturing plant as explained in the Operational Review.

An EBITDA loss of R2,3 million was incurred during the period (2013 loss: R23,2 million). Headline loss for the period reduced to R23 million (2013: R42,7 million).

OPERATIONAL REVIEW

The major reason for the increase in revenue is the supply of a large pipe and fittings order to Randgold Resources in Mali, West Africa. This project contributed R66,7 million to revenue. Gross profit margins improved in all divisions as a result of improved stock holding (which resulted in fewer buyouts of material), improved productivity on pipeline installation projects and better cost control.

In November 2013, Rare acquired the assets and property of a high density polyethylene (HDPE) pipe manufacturing facility in Meyerton, Midvaal. The factory obtained the SABS mark for HDPE pipes in January 2014 and has commenced with the manufacturing of HDPE pipes.

Full scale testing of the new Electro Coagulation Water Treatment Technology is still in progress at a major coal mine in South Africa.

FUNDING

During the year under review the group successfully renegotiated its working capital facilities. The facilities have been combined into a R50 million combined facility that is repayable on 31 July 2015. The directors are of the opinion that based on forecasted results and cash flows this facility will be adequate for short-term cash flow requirements of the group.

2. GOING CONCERN

We draw attention to the fact that at 30 June 2014, the group and company had accumulated losses of R253 million (2013: R230 million) and R258 million (2013: R243 million) respectively.

The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The directors have considered the operational budget and cash flow forecasts for the ensuing year which are based on the current expected economic and market conditions, as well as the funding lines in place. The directors believe that RARE Holdings Limited and its subsidiaries have adequate financial resources to continue as a going concern during the ensuing year.


Accordingly, the directors have adopted the going concern basis in the preparation of the annual financial statements.

3. EVENTS AFTER THE REPORTING PERIOD

The directors are not aware of any matter or circumstance since the end of the financial year until the date of the financial statements.

4. AUTHORISED AND ISSUED SHARE CAPITAL

RARE was recapitalised during April 2014 by raising equity of R150 million by way of a subscription by Doculate Investments Proprietary Limited. Shareholders were offered the opportunity to participate by way of a claw-back offer. 25 million no par value shares were issued at a consideration of R6,00 each.

During the year the authorised share capital was decreased from 10 000 000 000 ordinary shares to 100 000 000 ordinary shares following a share consolidation of 100:1.

Attention is drawn to the fact that, in the current reporting period, the weighted average number of shares in issue was 23 383 208 compared to a restated 15 663 775 for the previous comparable period, ended 30 June 2013, following the implementation of the share consolidation as initially announced on SENS on 25 July 2013 and effected on 25 November 2013. The comparable results disclosed has taken into account the restated number of shares.

5. BORROWING LIMITATIONS

In terms of the Articles of Association of the company, the directors may exercise all the powers of the company to borrow money, subject to the JSE Listing Requirements and any regulation made from time to time by the company at a general meeting.

6. NON-CURRENT ASSETS

There were no major changes in the nature of the non-current assets of the group during the year or in the policy relating to their use during the year under review. Refer to notes 2 to 7 of these financial statements for details regarding additions, impairments and disposals made during the year.

7. DIVIDENDS

No dividends were declared or paid to shareholders during the year.

8. DIRECTORS

The directors of the company during the year and to the date of this report are as follows:

Name Executive/Non-executive ChangesT Siyolo Non-executive chairman P du Plessis Lead independent non-executive Resigned 9 September 2013MT Lategan Independent non-executive H Odendaal Independent non-executive SJDT Potgieter Non-executive W van Coller Executive R Viljoen Executive A Tasdhary Executive Appointed 23 January 2014

9. SECRETARY

The company secretary is R Viljoen of:

Business address Postal address22 Old Vereeniging Road PO Box 124186Kliprivier AlrodeMidvaal Johannesburg1851 1451


10. INTEREST IN SUBSIDIARIES AND ASSOCIATE

Issued share capitalPercentage

holdingShares at carrying

value

Amount due (to)/by entities after

impairments

2014 2013 2014 2013 2014 2013 2014 2013R R % % R R R R

2014Directly heldRARE Group Proprietary Limited 188 180 100 100 134 394 729 – – –

Indirectly heldRARE Construction Zambia 100 100 99 99 100 100 – – RARE Tech Proprietary Limited 100 100 100 100 834 419 834 419 – – Isici Trading and Investments Proprietary Limited 100 100 100 100 100 100 – – Xylo Pipe Proprietary Limited 100 100 75 75 75 75 – – RARE Botswana 100 100 100 100 – – – – Zeta Training Solutions Proprietary Limited 100 100 49 49 – – – – RARE Capital Proprietary Limited 100 100 100 100 – – 100 100

135 229 571 834 842 – –

The aggregate amount of net losses incurred by subsidiaries for the year from continuing and discontinuing operations amounted to R24,7 million (2013: R42,2 million).

The company’s voting power is in direct proportion to its percentage holding.

Details of the company’s investment in subsidiaries and associate are set out in notes 4 and 5 of the financial statements, respectively.

DETAILS OF SUBSIDIARIES’ AND ASSOCIATE OPERATIONS:

The RARE Group Proprietary Limited is engaged in sourcing, supplying and distributing pipes, valves, fittings and associated commodities within the engineering, energy and resources sector as well as logistics relating to the supply of the valves, fittings and associated commodities, manufacturing and installation of plastic engineering projects and civil maintenance work.

RARE Tech Proprietary Limited’s primary business is that of a property holding company.

Xylo Pipe Proprietary Limited is engaged in the development of solutions for rehabilitation of pipeline infrastructure.

Isici Trading and Investments Proprietary Limited and RARE Botswana were dormant in the year under review.

RARE Construction Zambia is engaged in the sourcing, supply and distribution of pipes, valves, fittings and associated commodities in Zambia.

Zeta Training Solutions Proprietary Limited is engaged in providing training solutions.

The following subsidiaries are not incorporated in South Africa:

Name of subsidiary Country of incorporationRARE Construction Zambia (indirectly held via The RARE Group Proprietary Limited) ZambiaRare Botswana (indirectly held via The RARE Group Proprietary Limited) Botswana

DIRECTORS’ REPORT (continued)


11. LIQUIDITY AND SOLVENCY

The directors have performed the required liquidity and solvency tests required by the Companies Act No. 71 of 2008, as amended.

12. INDEPENDENT AUDITORS

Baker Tilly Greenwoods will continue in office in terms of section 90 of the Companies Act No. 71 of 2008, as amended.

13. SPECIAL RESOLUTIONS

At the annual general meeting of the shareholders on 24 January 2014 it was resolved that:• The company and its subsidiaries be authorised to repurchase shares. • Financial assistance in terms of section 45 be granted to The RARE Group Proprietary Limited. The directors

were satisfied that all criteria as per Section 45 of the Companies Act No. 71 of 2008, as amended, were met. • Non-executive directors’ fees for the year ended 30 June 2014 be approved.

At a general meeting of shareholders held on 27 March 2014 it was resolved that the company be authorised to issue the claw-back shares of R150 million.

14. ANALYSIS OF SHAREHOLDERS AS AT 30 JUNE 2014

Number of share-holdings

% of totalshareholdings

Number ofshares

% of sharesin issue

SIZE OF HOLDINGS1 – 1000 shares 380,00 72,24 86 043 0,201001 – 10000 shares 107,00 20,34 377 367 0,8810001 – 100000 shares 31,00 5,89 980 213 2,29100001 – 1000000 shares 6,00 1,14 1 483 741 3,461000001 shares and over 2,00 0,38 39 960 144 93,17

Total 526 100,00 42 887 508 100,00

DISTRIBUTION OF SHAREHOLDERSClose corporations 8 1,52 13 601 0,03Trusts 57 10,84 835 403 1,95Retail shareholders 437 83,08 1 496 267 3,49Other corporations 9 1,71 383 269 0,89Private companies 15 2,85 40 158 968 93,64

Total 526 100,00 42 887 508 100,00

SHAREHOLDER TYPENon-public shareholders 4 95 40 733 989 94,98

Directors and associates of company holdings 4 95 40 733 989 94,98

Public shareholders 522 5 2 153 519 5,02

Total 526 100,00 42 887 508 100,00

BENEFICIAL SHAREHOLDERS WITH A HOLDING GREATER THAN 5% OF THE SHARES IN ISSUEStafric Investments and Management Services Proprietary Limited 1 3 287 343 7,67Doculate Investments Proprietary Limited 1 36 672 801 85,51

Total 39 960 144 93,17


14. ANALYSIS OF SHAREHOLDERS AS AT 30 JUNE 2014 (CONTINUED)

DIRECTORS’ INTEREST

Director

Indirect interestheld through

Entry perregister

Number of shares

2014

% of shares

in issue2014

Number of shares

2013

% of shares

in issue2013

Mr Thembinkosi Siyolo

Doculate Investments (Pty) Ltd

Doculate Investments (Pty) Ltd 36 672 801 85,51 1 210 341 482 67,66

Mr Stefanus Johannes Du Toit Potgieter

Stafric Investments and Management Services (Pty) Ltd

Stafric Investments and Management Services (Pty) Ltd 3 287 343 7,67 328 734 335 18,38

Dr Marthinus Theunis Lategan

The Lategan Family Trust

Die Lategan Familie Trust 751 480 1,75 75 147 985 4,20

Mr Hein OdendaalThe Roadbel Trust Roadbel Trust 22 365 0,05 2 236 508 0,13

Mr Pierre Du PlessisMr Pierre du Plessis 2 364 481 0,13

Total 40 733 989 94,98 1 618 824 791 90,50

Subsequent to year end and to the date of this report all interests remained unchanged

DIRECTORS’ REPORT (continued)


Statement of financial position 20

Statement of comprehensive income 21

Statement of changes in equity 22

Statement of cash flows 24

Accounting policies 25 – 36

Notes to the financial statements 37 – 68

Notice of annual general meeting 69 – 75

Proxy form insert

General information 76

CONTENTS


STATEMENT OF FINANCIAL POSITION at 30 June 2014

GROUP COMPANY

2014 2013 2014 2013Note R R R R

ASSETSNON–CURRENT ASSETSProperty, plant and equipment 2 86 513 477 50 169 351 – – Intangible assets 3 566 677 619 829 – – Investment in subsidiary 4 – – 134 394 729 – Other financial assets 7 – 379 811 – –

87 080 154 51 168 991 134 394 729 –

CURRENT ASSETSInventories 11 112 812 820 110 227 057 – – Trade and other receivables 12 47 489 889 48 738 510 502 667 504 928Other financial assets 7 399 645 420 927 – – Current tax receivable 112 303 – – – Prepayments 10 1 040 552 9 983 643 – – Cash and cash equivalents 13 4 899 252 15 107 496 1 743 2 315

166 754 461 184 477 633 504 410 507 243

TOTAL ASSETS 253 834 615 235 646 624 134 899 139 507 243

EQUITY AND LIABILITIESEQUITYShare capital 15 391 335 306 242 824 295 393 108 495 243 108 495Reserves 8 001 318 5 350 154 – – Accumulated loss (253 164 942) (230 000 096) (258 239 818) (243 066 481)

146 171 682 18 174 353 134 868 677 42 014

LIABILITIESNON–CURRENT LIABILITIESOther financial liabilities 18 50 276 894 134 889 975 – – Operating lease liability 10 959 – – – Deferred tax 8 2 440 076 2 269 147 – –

52 727 929 137 159 122 – –

CURRENT LIABILITIESTrade and other payables 19 53 703 910 70 236 333 30 462 318 831Other financial liabilities 18 1 173 565 8 692 159 – – Current tax payable – 1 291 818 – 146 398Bank overdraft 13 57 529 92 839 – –

54 935 004 80 313 149 30 462 465 229

TOTAL LIABILITIES 107 662 933 217 472 271 30 462 465 229

TOTAL EQUITY AND LIABILITIES 253 834 615 235 646 624 134 899 139 507 243


GROUP COMPANY

2014 2013 2014 2013Note R R R R

Revenue 21 264 953 067 175 249 351 – – Cost of sales 22 (214 364 533) (149 613 100) – –

GROSS PROFIT 50 588 534 25 636 251 – – Other income 2 221 155 2 788 080 848 447 583 085Operating expenses (60 455 064) (54 137 956) (16 021 775) (99 628 653)

OPERATING LOSS 23 (7 645 375) (25 713 625) (15 173 328) (99 045 568)Investment income 24 478 292 1 169 155 – 709Finance costs 25 (17 233 947) (15 803 305) (9) (139 481)

LOSS BEFORE TAX (24 401 030) (40 347 775) (15 173 337) (99 184 340)Income tax expense 26 1 236 184 (2 372 318) – (305 301)

LOSS FOR THE YEAR (23 164 846) (42 720 093) (15 173 337) (99 489 641)

OTHER COMPREHENSIVE INCOME:Loss on property revaluation (Kliprivier) (1 242 450) – – – Gain on property revaluation (Meyerton) 4 498 676 – – – Taxation related to components of other comprehensive income (605 062) – – –

OTHER COMPREHENSIVE PROFIT FOR THE YEAR NET OF TAXATION 28 2 651 164 – – –

TOTAL COMPREHENSIVE LOSS (20 513 682) (42 720 093) (15 173 337) (99 489 641)

NET LOSS ATTRIBUTABLE TO:OWNERS OF THE PARENT:Loss for the year from continuing operations (23 164 846) (42 720 093) (15 173 337) (99 489 641)

TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO:Owners of the parent (20 513 682) (42 720 093) (15 173 337) (99 489 641)

EARNINGS PER SHAREFROM CONTINUING AND DISCONTINUED OPERATIONSBasic loss per share (c) (99,07) (272,73) – – Diluted loss per share (c) (99,07) (272,73) – – FROM CONTINUING OPERATIONSBasic loss per share (c) (99,07) (272,73) – – Diluted loss per share (c) (99,07) (272,73) – –

STATEMENT OF COMPREHENSIVE INCOME for the year ended 30 June 2014


STATEMENT OF CHANGES IN EQUITY for the year ended 30 June 2014

Share capitalR

Sharepremium

R

Total sharecapital

R

Foreigncurrency

translationreserve

R

Revaluationreserve

R

Totalreserves

R

Accumulatedloss

RTotal equity

R

GROUPBalance at 1 July 2012 32 883 730 109 940 565 142 824 295 5 106 5 350 154 5 355 260 (187 280 003) (39 100 448)Changes in equityTotal comprehensive loss for the year – – – (5 106) – (5 106) (42 720 093) (42 725 199)Issue of shares 100 000 000 – 100 000 000 – – – – 100 000 000

Total changes 100 000 000 – 100 000 000 (5 106) – (5 106) (42 720 093) 57 274 801

Balance at 1 July 2013 132 883 730 109 940 565 242 824 295 – 5 350 154 5 350 154 (230 000 096) 18 174 353Changes in equityTotal comprehensive loss for the year – – – – 2 651 164 2 651 164 (23 164 846) (20 513 682)Issue of shares 150 000 000 (1 000 000) 149 000 000 – – – – 149 000 000Sale of treasury shares (488 989) – (488 989) – – – – (488 989)

Total changes 149 511 011 (1 000 000) 148 511 011 – 2 651 164 2 651 164 (23 164 846) 127 997 329

Balance at 30 June 2014 282 394 741 108 940 565 391 335 306 – 8 001 318 8 001 318 (253 164 942) 146 171 682

COMPANYBalance at 1 July 2012 32 887 500 110 220 995 143 108 495 – – – (143 576 840) (468 345)Changes in equityTotal comprehensive loss for the year – – – – – – (99 489 641) (99 489 641)Issue of shares 100 000 000 – 100 000 000 – – – – 100 000 000

Total changes 100 000 000 – 100 000 000 – – – (99 489 641) 510 359

Balance at 1 July 2013 132 887 500 110 220 995 243 108 495 – – – (243 066 481) 42 014Changes in equityTotal comprehensive loss for the year – – – – – – (15 173 337) (15 173 337)Issue of shares 150 000 000 – 150 000 000 – – – – 150 000 000

Total changes 150 000 000 – 150 000 000 – – – (15 173 337) 134 826 663

Balance at 30 June 2014 282 887 500 110 220 995 393 108 495 – – – (258 239 818) 134 868 677

Note 15 15 15 28 17&28


Share capitalR

Sharepremium

R

Total sharecapital

R

Foreigncurrency

translationreserve

R

Revaluationreserve

R

Totalreserves

R

Accumulatedloss

RTotal equity

R

GROUPBalance at 1 July 2012 32 883 730 109 940 565 142 824 295 5 106 5 350 154 5 355 260 (187 280 003) (39 100 448)Changes in equityTotal comprehensive loss for the year – – – (5 106) – (5 106) (42 720 093) (42 725 199)Issue of shares 100 000 000 – 100 000 000 – – – – 100 000 000

Total changes 100 000 000 – 100 000 000 (5 106) – (5 106) (42 720 093) 57 274 801

Balance at 1 July 2013 132 883 730 109 940 565 242 824 295 – 5 350 154 5 350 154 (230 000 096) 18 174 353Changes in equityTotal comprehensive loss for the year – – – – 2 651 164 2 651 164 (23 164 846) (20 513 682)Issue of shares 150 000 000 (1 000 000) 149 000 000 – – – – 149 000 000Sale of treasury shares (488 989) – (488 989) – – – – (488 989)

Total changes 149 511 011 (1 000 000) 148 511 011 – 2 651 164 2 651 164 (23 164 846) 127 997 329

Balance at 30 June 2014 282 394 741 108 940 565 391 335 306 – 8 001 318 8 001 318 (253 164 942) 146 171 682

COMPANYBalance at 1 July 2012 32 887 500 110 220 995 143 108 495 – – – (143 576 840) (468 345)Changes in equityTotal comprehensive loss for the year – – – – – – (99 489 641) (99 489 641)Issue of shares 100 000 000 – 100 000 000 – – – – 100 000 000

Total changes 100 000 000 – 100 000 000 – – – (99 489 641) 510 359

Balance at 1 July 2013 132 887 500 110 220 995 243 108 495 – – – (243 066 481) 42 014Changes in equityTotal comprehensive loss for the year – – – – – – (15 173 337) (15 173 337)Issue of shares 150 000 000 – 150 000 000 – – – – 150 000 000

Total changes 150 000 000 – 150 000 000 – – – (15 173 337) 134 826 663

Balance at 30 June 2014 282 887 500 110 220 995 393 108 495 – – – (258 239 818) 134 868 677

Note 15 15 15 28 17&28


STATEMENT OF CASH FLOWS for the year ended 30 June 2014

GROUP COMPANY

2014 2013 2014 2013Note R R R R

CASH FLOWS FROM OPERATING ACTIVITIESCash (used in)/generated from operations 29 (11 666 827) (64 668 566) 145 583 (1 746)Interest income 478 292 943 493 – 709Finance costs (866 344) (2 847 303) (9) (139 481)Tax received/(paid) 30 (324 356) 658 902 (146 398) (549 499)

Net cash from operating activities (12 379 235) (65 913 474) (824) (690 017)

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment 2 (38 753 614) (727 563) – – Sale of property, plant and equipment 3 194 900 322 442 – – Purchase of intangible assets – (157 037) – – Repayment of other financial assets 401 093 80 147 – – Loans advanced to group companies – – – (1 394 714)Loans to group companies repaid – 60 000 252 2 085 571

Net cash from investing activities (38 157 621) (422 011) 252 690 857

CASH FLOWS FROM FINANCING ACTIVITIESUnderwriting fee paid (1 000 000) – – – Proceeds from other financial liabilities 44 640 389 54 996 516 – – Repayment of other financial liabilities (3 276 466) (4 311 255) – –

Net cash from financing activities 40 363 922 50 685 261 – –

TOTAL CASH MOVEMENT FOR THE YEAR (10 172 934) (15 650 224) (572) 840Cash at the beginning of the year 15 014 657 30 664 881 2 315 1 475

Total cash at end of the year 13 4 841 723 15 014 657 1 743 2 315


1. PRESENTATION OF FINANCIAL STATEMENTSThe financial statements have been prepared in accordance with International Financial Reporting Standards and the Companies Act No. 71 of 2008, as amended. The financial statements have been prepared on the historical cost basis, except for the measurement of land and buildings at revalued amounts and certain financial instruments at fair value, and incorporate the principal accounting policies set out below. They are presented in South African rands.

These accounting policies are consistent with the previous period, except for the changes set out in note 41: Changes in accounting policies.

1.1 CONSOLIDATION

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and all entities, including special purpose entities, which are controlled by the company.

Control exists when the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries are included in the consolidated financial statements from the effective date of acquisition to the effective date of disposal.

Adjustments are made when necessary to the financial statements of subsidiaries to bring their accounting policies in line with those of the group.

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

Non-controlling interests in the net assets of consolidated subsidiaries are identified and recognised separately from the group’s interest therein, and are recognised within equity. Losses of subsidiaries attributable to non-controlling interests are allocated to the non-controlling interest even if this results in a debit balance being recognised for non-controlling interest.

Transactions which result in changes in ownership levels, where the group has control of the subsidiary both before and after the transaction are regarded as equity transactions and are recognised directly in the statement of changes in equity.

The difference between the fair value of consideration paid or received and the movement in non-controlling interest for such transactions is recognised in equity attributable to the owners of the parent.

Where a subsidiary is disposed of and a non-controlling shareholding is retained, the remaining investment is measured at fair value with the adjustment to fair value recognised in profit or loss as part of the gain or loss on disposal of the controlling interest.

Business combinations

The group accounts for business combinations using the acquisition method of accounting. The cost of the business combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed and equity instruments issued.

Costs directly attributable to a business combination acquired on or after 30 June 2010 are expensed as incurred, except the costs to issue debt which are amortised as part of the effective interest and costs to issue equity which are included in equity. Costs directly attributable to a business combination acquired before 30 June 2009, formed part of the cost of the business combination.

Contingent consideration is included in the cost of the combination at fair value as at the date of acquisition. Subsequent changes to the assets, liabilities or equity which arise as a result of the contingent consideration recognised as part of a business combination acquired on or after 30 June 2010 are not effected against goodwill, unless they are valid measurement period adjustments. Subsequent changes within twelve months of the acquisition date to the assets, liabilities or equity which arise as a result of the contingent consideration recognised as part of a business combination acquired before 30 June 2009, were effected against goodwill.

ACCOUNTING POLICIES for the year ended 30 June 2014


ACCOUNTING POLICIES for the year ended 30 June 2014 (continued)

The acquiree’s identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3 Business Combinations are recognised at their fair values at acquisition date, except for non-current assets (or disposal group) that are classified as held-for-sale in accordance with IFRS 5 Non-current Assets Held-For-Sale and Discontinued Operations, which are recognised at fair value less costs to sell.

Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is a present obligation at acquisition date.

On acquisition, the group assesses the classification of the acquiree’s assets and liabilities and reclassifies them where the classification is inappropriate for group purposes. This excludes lease agreements and insurance contracts, whose classification remains as per their inception date.

Non-controlling interest arising from a business combination is measured at their share of the fair value of the assets and liabilities of the acquiree.

In cases where the group held a non-controlling shareholding in the acquiree each transaction was treated separately by the acquirer, using the cost of the transaction and fair value information at the date of each exchange transaction to determine the amount of any goodwill associated with the transaction. The cost of the individual investments was compared with the acquirer’s interest in the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities.

Goodwill recognised in a business combination is measured at its cost, being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.

Goodwill is not amortised but is tested on an annual basis for impairment. If goodwill is assessed to be impaired, that impairment is not subsequently reversed.

Goodwill arising on acquisition of foreign entities is considered an asset of the foreign entity. In such cases the goodwill is translated to the functional currency of the group at the end of each reporting period with the adjustment recognised in equity through other comprehensive income.

Investment in associate

An associate is an entity over which the group has significant influence and which is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

An investment in associate is accounted for using the equity method, except when the investment is classified as held-for-sale in accordance with IFRS 5 Non-current Assets Held-For-Sale and discontinued operations. Under the equity method, the investment in associate is carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the group’s share of net assets of the associate, less any impairment losses.

Losses in an associate in excess of the group’s interest in that associate are recognised only to the extent that the group has incurred a legal or constructive obligation to make payments on behalf of the associate.

Any goodwill on acquisition of an associate is included in the carrying amount of the investment, however, a gain on acquisition is recognised immediately in profit or loss.

Profits or losses on transactions between the group and an associate are eliminated to the extent of the group’s interest therein.

When the group reduces its level of significant influence or loses significant influence, the group proportionately reclassifies the related items which were previously accumulated in equity through other comprehensive income to profit or loss as a reclassification adjustment. In such cases, if an investment remains, that investment is measured to fair value, with the fair value adjustment being recognised in profit or loss as part of the gain or loss on disposal.

1.2 SIGNIFICANT JUDGEMENTS AND SOURCES OF ESTIMATION UNCERTAINTY

Trade receivables

The group assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or loss, the group makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. The impairment for trade receivables is calculated on an individual basis.


Allowance for slow moving, damaged and obsolete stock

Including an allowance for stock to write stock down to the lower of cost or net realisable value and an allowance for slow moving stock. Management has made estimates of the selling price and direct cost to sell on certain inventory items.

Impairment testing

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the assumptions may change which may then impact our estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including supply and demand, together with economic factors such as exchange rates, inflation rate and interest rate. Management uses value in use to identify assets that may have been impaired.

Valuation of land and buildings

At each reporting date the group assesses whether there is any objective evidence that the carrying value of land and buildings has increased/decreased.

Valuations are performed and management determines a carrying value for land and buildings based on the valuations available. Additional disclosure of these valuations of land and buildings is included in note 2.

Tax

The group recognises the net future tax benefit related to deferred income tax assets to the extent that there is convincing evidence that the group will have taxable income against which the assessed losses can be utilised. Assessing the recoverability of deferred income 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 application of 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 the end of the reporting period could be impacted.

Asset useful lives and residual values

Property, plant and equipment is depreciated over its useful life, taking into account residual values where appropriate. The actual useful lives of assets and residual values are assessed annually.

Residual value assessments consider issues such as future market conditions, remaining useful life and projected disposal values.

Through the assessment of the residual value of the building at the Kliprivier property as further detailed in note 2, it was found that the residual value exceeds the cost of the asset, resulting in no depreciation charge for the year under review.

1.3 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.

Revaluation model – land and buildings

Items of land and buildings are initially recognised at cost. Subsequent to initial recognition, land and buildings are carried at revalued amounts, being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are made with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the statement of financial position date.


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 revaluation, 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.

Cost model - all other items of property, plant and equipment except for land and buildings

Property, plant and equipment is initially measured at cost.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. 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 is carried at cost less accumulated depreciation and any impairment losses, except for land and buildings, which is carried at the revalued amount being the fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.

Property, plant and equipment is depreciated on the straight-line basis over the expected useful lives to the estimated residual value.

The useful lives of items of property, plant and equipment have been assessed as follows:Item Average useful lifeLand IndefiniteBuildings 50 yearsPlant and machinery 5 – 10 yearsFurniture and fixtures 5 – 10 yearsMotor vehicles 4 – 7 yearsOffice equipment 5 yearsComputer equipment 3 yearsLeasehold improvements Lease termLaboratory equipment 5 – 10 yearsTools 2 – 5 years

The residual value, useful life and depreciation method of each asset is reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

The Kliprivier building’s residual value exceeds the cost thereof, therefore no depreciation is charged on the building.

The depreciation charge for each period is recognised in profit or loss, unless it is included in the carrying amount of another asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.4 INTANGIBLE ASSETS

An intangible asset is recognised when:• 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.

Intangible assets are initially recognised at cost.

Research costs are recognised in profit or loss when they are incurred.



Development costs are capitalised only when they meet the criteria for capitalising development expenditure, i.e:• 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;• 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 use or sell

the asset; and• 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.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for, on these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight-line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed every period end.

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows:Item Average useful lifeLicences 25 yearsComputer software 2 – 5 years

1.5 INVESTMENT IN SUBSIDIARY

Company financial statements

In the company’s separate financial statements, the investment in the subsidiary is carried at cost less any accumulated impairment losses. The cost of an investment in a subsidiary is the aggregate of:• the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity

instruments issued by the company; plus• any costs directly attributable to the purchase of the subsidiary.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.

1.6 FINANCIAL INSTRUMENTSClassificationThe group and company classifies financial assets and financial liabilities into the following categories:• Loans and receivables; • Available-for-sale financial assets; and• Financial liabilities measured at amortised cost.

Classification depends on the purpose for which the financial instruments were obtained/incurred and takes place at initial recognition. Classification is re-assessed on an annual basis.

A financial asset classified as available-for-sale that would have met the definition of loans and receivables may be reclassified to loans and receivables if the entity has the intention and ability to hold the asset for the foreseeable future or until maturity.

Initial recognition and measurement

Financial instruments are recognised initially when the group becomes a party to the contractual provisions of the instruments.

The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.


Financial instruments are measured initially at fair value, except for equity investments for which a fair value is not determinable, which are measured at cost and are classified as available-for-sale financial assets.

For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument.

Financial instruments are initially measured on transaction date at fair value plus transaction costs when the related contractual rights or obligations exist. Transaction costs in respect of financial instruments classified as fair value through profit or loss are expensed.

Regular way purchases of financial assets are accounted for at settlement date.

Subsequent measurement

Dividend income is recognised in profit or loss as part of other income when the group’s right to receive payment is established.

Loans and receivables are subsequently measured at amortised cost, using the effective interest rate method, less accumulated impairment losses.

Available-for-sale financial assets are subsequently measured at fair value. This excludes equity investments for which a fair value is not determinable, which are measured at cost less accumulated impairment losses.

Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated in equity until the asset is disposed of or determined to be impaired. Interest on available-for-sale financial assets calculated using the effective interest method is recognised in profit or loss as part of other income. Dividends received on available-for-sale equity instruments are recognised in profit or loss as part of other income when the group’s right to receive payment is established.

Changes in fair value of available-for-sale financial assets denominated in a foreign currency are analysed between translation differences resulting from changes in amortised cost and other changes in the carrying amount. Translation differences on monetary items are recognised in profit or loss, while translation differences on non-monetary items are recognised in other comprehensive income and accumulated in equity.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest rate method.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership.

Fair value determination

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.

Impairment of financial assets

At each reporting date the group assesses all financial assets, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

For amounts due to the group, significant financial difficulties of the counterparty, probability that the counterparty will enter bankruptcy and default of payments are all considered indicators of impairment.

In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator of impairment. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity as a reclassification adjustment to other comprehensive income and recognised in profit or loss.

Impairment losses are recognised in profit or loss.



Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss except for equity investments classified as available-for-sale.

Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost because fair value was not determinable.

Loans to group companies

These include loans to the subsidiary of the company and the associate of the group and are recognised initially at fair value plus direct transaction costs.

Loans to group companies are classified as available-for-sale financial assets and are measured at fair value.

Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss within operating expenses. When a trade receivable is uncollectable, it is written off to the bad debt account in operating expenses. Subsequent recoveries of amounts previously written off are recognised as other income in profit or loss.

Trade receivables are classified as loans and receivables.

Other receivables are classified as available-for-sale financial assets and are measured at fair value.

Trade and other payables

Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially measured at fair value, and are subsequently measured at amortised cost.

Bank overdraft and borrowings

Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between 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.

1.7 TAX

Current tax assets and liabilities

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

Current tax liabilities and assets for the current and prior periods are measured at the amount expected to be (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 tax assets and liabilities

A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profit or loss nor taxable profit/(tax loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profit nor taxable profit/(tax loss).

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Tax expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from:• a transaction or event which is recognised, in the same or a different period, to other comprehensive

income, or • 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 to other comprehensive income if the tax relates to items that are credited or charged, in the same or a different period, to other comprehensive income.

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

1.8 LEASES

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease liability. This liability is not discounted.

1.9 INVENTORY

Inventory is measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The cost of inventory comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventory to their present location and condition.

The cost of inventory is assigned using the weighted average cost formula. The same cost formula is used for all inventories having a similar nature and use to the entity.

When inventory is sold, the carrying amount of the inventory is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories is recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.10 CONSTRUCTION CONTRACTS AND RECEIVABLES

Where the outcome of a construction contract can be estimated reliably, contract revenue and costs are recognised by reference to release certificates signed by the customer.

Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with the customer.



When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent that contract costs incurred are recoverable. Contract costs are recognised as an expense in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profit less recognised losses, the surplus is shown as the amounts due to customers for contract work. Amounts received before the related work is performed are included in the statement of financial position as a liability, as advance received. Amounts billed for work performed but not yet paid by the customer are included in the statement of financial position under construction contract receivable.

1.11 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.

Irrespective of whether there is any indication of impairment, the group also:• tests intangible assets with an indefinite useful life or intangible assets not yet available for use for

impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period and at the same time every period; and

• tests goodwill acquired in a business combination for impairment annually.

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.

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination.

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying amount of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the following order:

• first, to reduce the carrying amount of any goodwill allocated to the cash-generating unit and • then, to the other 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 other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.


1.12 SHARE CAPITAL AND EQUITY

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

If the group reacquires its own equity instruments, those treasury shares are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the group’s own equity instruments. Consideration paid or received shall be recognised directly in equity.

1.13 EMPLOYEE BENEFITS

Short-term employee benefits

The cost of short-term employee benefits (those payable within 12 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 are 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 absence occurs.

The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or 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 as they fall due. Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the group’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

1.14 PROVISIONS AND CONTINGENCIES

Provisions are recognised when:• the group has a present obligation as a result of a past event; • it is probable that an outflow of resources embodying economic benefits will be required to settle the

obligation; and • a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 32.

1.15 REVENUE

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 with

ownership 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.

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:



• the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the group; • the stage of completion of the transaction at the end of the reporting period can be measured reliably; and • the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable.

Service revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period. Stage of completion is determined by the proportion of costs incurred to date bear to the total estimated costs of the transaction.

Contract revenue comprises:• the initial amount of revenue agreed in the contract; and • variations in contract work, claims and incentive payments:

– to the extent that it is probable that they will result in revenue; and – they are capable of being reliably measured.

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax.

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

1.16 COST OF SALES

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

The related cost of providing services recognised as revenue in the current period is included in cost of sales.

Contract costs comprise:• costs that relate directly to the specific contract; • costs that are attributable to contract activity in general and can be allocated to the contract; and • such other costs as are specifically chargeable to the customer under the terms of the contract.

1.17 BORROWING COSTS

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows:• actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less

any temporary investment of those borrowings; and • weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the

purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when:• expenditures for the asset have occurred; • borrowing costs have been incurred; and • activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation is suspended during extended periods in which active development is interrupted.

Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

All other borrowing costs are recognised as an expense in the period in which they are incurred.


1.18 TRANSLATION OF FOREIGN CURRENCIES

Foreign currency transactions

A foreign currency transaction is recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

At the end of the reporting period:• foreign currency monetary items are translated using the closing rate; • non-monetary items that are measured in terms of historical cost in a foreign currency are translated using

the exchange rate at the date of the transaction; and • non-monetary items that are measured at fair value in a foreign currency are translated using the exchange

rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognised in profit or loss in the period in which they arise.

When a gain or loss on a non-monetary item is recognised to other comprehensive income and accumulated in equity, any exchange component of that gain or loss is recognised to other comprehensive income and accumulated in equity. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss is recognised in profit or loss.

Cash flows arising from transactions in a foreign currency are recorded in the functional currency by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the cash flow.

1.19 SEGMENT REPORTING

An operating segment is a component of the group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the group’s other components.

All operating segments’ operating results are reviewed regularly by the group’s CEO to make decisions about the resources to be allocated to the segment and assess its performance and for which discrete information is available.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the CEO that makes strategic decisions.

1.20 RELATED PARTIES

Related parties are considered to be related if one party has the ability to control or jointly control the other party or exercise significant influence over the other party in making financial and operating decisions. Key management personnel are also regarded as related parties. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the group, directly or indirectly including all executive and non-executive directors.

Related party transactions are those where a transfer of resources or obligations between related parties occurs, regardless of whether or not a price is charged.



2. PROPERTY, PLANT AND EQUIPMENT

GROUP 2014 2013

Cost/Valuation

R

Accumulateddepreciation

andimpairment

R

Carryingvalue

R

Cost/Valuation

R

Accumulateddepreciation

andimpairment

R

Carryingvalue

R

Land and buildings 50 298 676 (98 676) 50 200 000 32 800 000 – 32 800 000Plant and machinery 44 427 571 (13 660 781) 30 766 790 21 535 642 (6 585 134) 14 950 508Furniture and fixtures 673 304 (401 522) 271 782 668 553 (333 142) 335 411Motor vehicles 4 573 122 (2 530 873) 2 042 249 3 802 129 (1 986 128) 1 816 001Office equipment 379 535 (329 081) 50 454 363 409 (309 778) 53 631Computer equipment 465 920 (418 488) 47 432 450 891 (371 433) 79 458Leasehold improvements 187 630 (109 924) 77 706 187 630 (88 770) 98 860Laboratory equipment 3 318 936 (424 156) 2 894 780 – – – Tools 179 021 (16 737) 162 284 228 519 (193 037) 35 482

Total 104 503 715 (17 990 238) 86 513 477 60 036 773 (9 867 422) 50 169 351

RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT – GROUP – 2014

Openingbalance

RAdditions

R

Disposalsand

scrappingsR

RevaluationsR

TransfersR

DepreciationR

Impairmentloss

recognisedin other

compre-hensiveincome

RTotal

R

Land and buildings 32 800 000 14 242 450 – 4 498 676 – (98 676) (1 242 450) 50 200 000Plant and machinery 14 950 508 20 388 073 (311 315) – (230 564) (4 029 912) – 30 766 790Furniture and fixtures 335 411 4 750 – – – (68 379) – 271 782Motor vehicles 1 816 001 587 507 (50 676) – 230 564 (541 147) – 2 042 249Office equipment 53 631 16 126 – – – (19 303) – 50 454Computer equipment 79 458 16 751 – – – (48 777) – 47 432Leasehold improvements 98 860 – – – – (21 154) – 77 706Laboratory equipment – 3 318 936 – – – (424 156) – 2 894 780Tools 35 482 179 021 – – – (52 219) – 162 284

50 169 351 38 753 614 (361 991) 4 498 676 – (5 303 723) (1 242 450) 86 513 477

RECONCILIATION OF PROPERTY, PLANT AND EQUIPMENT – GROUP – 2013

Openingbalance

RAdditions

R

Disposals and

scrappingsR

DepreciationR

TotalR

Land and buildings 32 800 000 – – – 32 800 000Plant and machinery 19 533 420 92 000 (1 005 896) (3 669 016) 14 950 508Furniture and fixtures 627 756 789 (170 289) (122 845) 335 411Motor vehicles 2 840 377 428 688 (642 730) (810 334) 1 816 001Office equipment 66 447 42 986 (1 450) (54 352) 53 631Computer equipment 161 626 63 572 – (145 740) 79 458Leasehold improvements 16 772 98 421 – (16 333) 98 860Tools 620 450 1 107 – (586 075) 35 482

56 666 848 727 563 (1 820 365) (5 404 695) 50 169 351

NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2014


GROUP COMPANY

2014 2013 2014 2013R R R R

2. PROPERTY, PLANT AND EQUIPMENT (continued)ENCUMBERED AS SECURITYCarrying value of property, plant and equipment encumbered as security:

Land and buildings 32 800 000 32 800 000 – – Encumbered as security for the mortgage bonds as further detailed in note 18 as well as a third mortgage bond in favour of Mayfair Speculators Proprietary Limited.

Motor vehicles 475 626 751 048 – – Encumbered as security for instalment sale agreements as further detailed in note 18.

Plant and machinery 2 904 418 5 361 110 – – Encumbered as security for instalment sale agreements as further detailed in note 18.

CHANGES IN ESTIMATESThe useful lives and residual values of certain items of property, plant and equipment were revised by management during the current financial year. The effect of this revision on profit or loss is a decrease in the depreciation charge for the current period of R245 571 and an increase in future periods of R245 571.

GROUP COMPANY

2014 2013 2014 2013R R R R

DETAILS OF PROPERTIESKliprivierBeing the remainder of portion 22 of the farm Waterfall 150IR situated in the municipality of Midvaal held under Title Deed No T168191/2007.– At cost 12 000 000 12 000 000 – – – Accumulated revaluation 5 413 624 6 656 074 – – – Capitalised expenditure 15 386 376 14 143 926 – –

32 800 000 32 800 000 – –

Meyerton

This relates to the HDPE pipe manufacturing plant.

Being Erf No 1061 situated in the municipality of Meyerton, held under Title Deed No T37765/2014.– Purchase price: 23 October 2013 13 000 000 – – – – Accumulated revaluation 4 498 676 – – – – Accumulated impairments and depreciation (98 676) – – –

17 400 000 – – –

NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2014 (continued)


2. PROPERTY, PLANT AND EQUIPMENT (continued)

Kliprivier

The effective date of the valuation was 30 June 2014. The valuation was performed by the directors. The valuation was based on the capitalised earnings method by determining the property’s maintainable earnings and using a capitalisation rate of 10,90% per annum (2013: 11,40%). The following significant assumptions were used:1. A vacancy provision of 3,00% (2013: 2,00%); 2. Expenses have been prepared based on the principles of a triple net lease; 3. Market related gross annual rental of R3 863 576 (2013: R3 748 877); and 4. Occupation of property by only one tenant.

Had the group’s land and buildings been measured on a historical cost basis, the carrying amounts of the Kliprivier property would have been as follows:

GROUP COMPANY

2014 2013 2014 2013R R R R

Land 12 000 000 12 000 000 – – Buildings 15 386 376 14 143 926 – –

27 386 376 26 143 926 – –

MeyertonThe effective date of the valuation was 22 August 2014. The valuation was performed by an independent registered professional associated valuer. The valuation was based on the capitalised earnings method by determining the property’s maintainable earnings and using a capitalisation rate of 12,00% per annum. The following significant assumptions were used:1. A vacancy provision of 2,00%;2. Expenses have been prepared based on properties similar in size and nature; and3. Market related gross annual rental of R2 484 559.

Had the group’s land and buildings been measured on a historical cost basis, the carrying amounts of the Meyerton property would have been as follows:

GROUP COMPANY

2014 2013 2014 2013R R R R

Land 1 158 919 – – – Buildings and improvements 11 742 405 – – –

12 901 324 – – –

3. INTANGIBLE ASSETS

2014 2013

CostR

Accumulatedamortisation

andimpairment

R

Carryingvalue

RCost

R

Accumulatedamortisation

andimpairment

R

Carryingvalue

R

GroupLicences 581 455 (117 260) 464 195 581 455 (94 002) 487 453Computer software 157 037 (54 555) 102 482 157 037 (24 661) 132 376

Total 738 492 (171 815) 566 677 738 492 (118 663) 619 829


Openingbalance

RAmortisation

RTotal

R

3. INTANGIBLE ASSETS (continued)RECONCILIATION OF INTANGIBLE ASSETS – GROUP – 2014Licences 487 453 (23 258) 464 195Computer software 132 376 (29 894) 102 482

619 829 (53 152) 566 677

RECONCILIATION OF INTANGIBLE ASSETS – GROUP – 2013Openingbalance

R Additions Amortisation Total

Licences 510 712 – (23 259) 487 453Computer software – 157 037 (24 661) 132 376

510 712 157 037 (47 920) 619 829

Name of companyListed/

unlisted

%holding

2014

%holding

2013

Carryingvalue2014

R

Carryingvalue2013

R

4. INVESTMENT IN SUBSIDIARYThe RARE Group Proprietary Limited Unlisted 100 100 439 538 417 289 538 417Impairment of investment in subsidiary (305 143 688) (289 538 417)

134 394 729 –

The carrying amount of the subsidiary is shown net of any impairment losses. An impairment loss of R15 605 271 (2013: R100 000 000) was recognised during the year under review.

The reason for the impairment of the investment in The Rare Group Proprietary Limited is due to the recurring operating losses incurred by the company.

GROUP COMPANY

2014 2013 2014 2013R R R R

Reconciliation of impairment in subsidiaryOpening balance – – 289 538 417 189 538 417Impairment recognised – – 15 605 271 100 000 000

– – 305 143 688 289 538 417

Name of companyListed/

unlisted

%holding

2014

%holding

2013

Carryingamount

2014R

Carryingamount

2013R

5. INVESTMENT IN ASSOCIATEZeta Training Solutions Proprietary Limited Unlisted 49 49 49 49

Impairment of investment in associate (49) (49)

– –

The carrying amount of the investment in the associate is shown net of any impairment losses. The reason for the impairment of the investment in the associate was due to a decrease in the fair value of the assets and liabilities of the entity.



GROUP COMPANY

2014 2013 2014 2013R R R R

5. INVESTMENT IN ASSOCIATE (continued)Summary of the financial information of the associateTotal liabilities (1 414 700) (1 414 700)

6. LOANS TO GROUP COMPANIESSubsidiaryThe RARE Group Proprietary Limited – – 6 163 676 6 620 611

This unsecured loan does not bear interest and is not subject to any fixed terms of repayment. The loan is not expected to be recovered within 12 months after year end.

– – 6 163 676 6 620 611Impairment of loan to subsidiary – – (6 163 676) (6 620 611)

– – – –

AssociateZeta Training Solutions Proprietary Limited 1 414 700 1 414 700 – –

This loan is unsecured, interest free and not subject to any fixed terms of repayment.

1 414 700 1 414 700 – – Impairment of loan to associate (1 414 700) (1 414 700) – –

– – – –

Credit quality of loans to group companies

The credit quality of loans to group companies is assessed with reference to the financial position of the relevant companies, past experience and other factors. During the reporting period there has not been a significant change in the financial position of the companies. The financial position of the companies was determined by assessing the companies’ solvency, liquidity and profitability.

Fair value of loans to group companies

The carrying amount of the loans to group companies approximates the fair value.

GROUP COMPANY

2014 2013 2014 2013R R R R

Loans to group companies impaired

As at 30 June 2014, the following loans were impaired and provided for as follows:

Zeta Training Solutions Proprietary Limited 1 414 700 1 414 700 – – The RARE Group Proprietary Limited – – 6 163 676 6 620 611

1 414 700 1 414 700 6 163 676 6 620 611

Reconciliation of loans to group companies impairedOpening balance 1 414 700 4 170 102 6 620 611 7 573 863Impairment losses recognised – 179 925 – – Amounts written off as uncollectable – (2 083 327) – – Impairment losses reversed – (852 000) (456 935) (953 252)

1 414 700 1 414 700 6 163 676 6 620 611


GROUP COMPANY

2014 2013 2014 2013R R R R

7. OTHER FINANCIAL ASSETSAvailable–for–saleInvestment: RARE Group Angola SARL 64 435 64 435 – –

The investment comprises 10,00% of the unlisted shares in Rare Group Angola SARL, a company incorporated in Angola.

Other loan receivable – 21 485 – –

This loan was unsecured, interest free and was not subject to any fixed terms of repayment. The loan was written off during the financial year under review.

RARE Petrochemical Angola Energy SARL 11 262 117 11 262 117 – –

This unsecured loan bears interest at the prime overdraft lending rate, being 9,00% per annum (2013: 8,50%). Interest is recognised to the extent that it is probable that future economic benefits will flow to the group. The loan is not subject to any fixed terms of repayment.

RARE Group Angola SARL 48 718 215 48 718 215

This unsecured loan bears interest at the prime overdraft lending rate, being 9,00% per annum (2013: 8,50%). Interest is recognised to the extent that it is probable that future economic benefits will flow to the group. The loan is not subject to any fixed terms of repayment.

60 044 767 60 066 252 – – Available-for-sale (impairments) (60 044 767) (60 044 767) – –

– 21 485 – –

Loans and receivablesRonald Greg Adcock 133 215 259 751 – – Harry Rosen 133 215 259 751 – – John Schulkins 133 215 259 751 – –

These loans bear interest at 10,00% per annum and are repayable in fixed monthly instalments of R13 333 per loan. The shares of Tasonline Software Proprietary Limited are held as security for these loans.

399 645 779 253 – –

Total other financial assets 399 645 800 738 – –



GROUP COMPANY

2014 2013 2014 2013R R R R

7. OTHER FINANCIAL ASSETS (continued)Non–current assetsAvailable-for-sale – 21 485 – – Loans and receivables – 358 326 – –

– 379 811 – –

Current assetsLoans and receivables 399 645 420 927 – –

399 645 800 738 – –

Other financial assets are denominated in Rand.

Credit quality of other financial assets

The credit quality of financial assets is assessed with reference to the financial position of the relevant parties, past experience and other factors.

During the reporting period under review, except for the companies mentioned below, there has not been a significant change in the financial position of the parties. The financial position of the parties was determined by assessing their solvency, liquidity and profitability.

Fair value of available–for–sale financial assets

The carrying amount of the available-for-sale financial assets approximates the fair value.

Other financial assets impaired

As at 30 June 2014 other financial assets of R60 044 767 (2013: R60 044 767) were impaired and provided for as follows:

GROUP COMPANY

2014 2013 2014 2013R R R R

Investment RARE Group Angola SARL 64 435 64 435 – – Loan: RARE Group Angola SARL 48 718 215 48 718 215 – – Loan: RARE Petrochemical Angola Energy SARL 11 262 117 11 262 117 – –

60 044 767 60 044 767 – –

Reconciliation of other financial assets impairedOpening balance 60 044 767 60 044 767 – –

60 044 767 60 044 767 – –


GROUP COMPANY

2014 2013 2014 2013R R R R

8. DEFERRED TAXDeferred tax liabilityUnrecognised portion of tax losses and/or other temporary differences available for set off against future taxable income (69 002 994) (62 904 015) (383 482) (376 314)Tax losses available for set off against future taxable income 72 362 626 55 201 678 383 482 376 314Accelerated capital allowances for tax purposes (2 839 870) (2 028 205) – – Revaluation of land and buildings (3 263 111) (2 304 495) – – Provisions and accruals for bonuses, leave pay, credit notes and doubtful debts 491 757 1 384 919 – – Lease liability 3 071 – – – Income received in advance – 8 380 971 – Service contracts in progress (191 555) – – –

(2 440 076) (2 269 147) – –

Reconciliation of deferred tax liabilityAt beginning of the year (2 269 147) (1 347 552) – – Reversing temporary difference on prepayments – 561 224 – –Originating temporary differences on tax losses available for set off against future taxable income 17 160 948 4 499 081 7 168 376 482Originating temporary differences on the portion of tax losses and/or other temporary differences not recognised as a deferred tax asset (6 098 979) (10 840 995) (7 168) (376 482)Originating temporary difference on property, plant and equipment (811 665) (1 590 325) – –Originating/(reversing) temporary difference on income received in advance (8 380 971) 7 174 642 – – Originating/(reversing) temporary difference on operating lease liability 3 071 (28 264) – –Originating temporary difference on service contracts in progress (191 555) – – –Originating/(reversing) temporary difference on provisions and accruals for bonuses, leave pay, credit notes and doubtful debts (893 162) 202 615 – –Originating temporary difference on revaluation of land and buildings (958 616) (899 573) – –

(2 440 076) (2 269 147) – –

Deferred tax liability (2 440 076) (2 269 147) – –

Use and sales rate

The deferred tax rate applied to the revaluation adjustments of land and buildings is determined by the expected manner of recovery. Where the expected manner of recovery of the land and buildings is through sale the capital gains tax rate of 18,65% (2013: 18,65%) is used. If the expected manner of recovery is through indefinite use the normal tax rate of 28,00% (2013: 28,00%) is applied.

As the manner of recovery of the buildings is through a combination of sale and indefinite use, the normal and capital gains tax rates are used as the deferred tax rate. The expected manner of recovery of the land is through sale, therefore the capital gains tax rate is used.



8. DEFERRED TAX (continued)Use and sales rate (continued)

The deferred tax on land and buildings comprises:Land: R1 278 679 (2013: R1 241 225) at the capital gains tax rate; andBuildings: R1 984 432 (2013: R1 063 270) at the normal and capital gains tax rate.

Unrecognised deferred tax asset

Unused tax losses and temporary differences not recognised as deferred tax assets are detailed in note 26. The deferred tax asset which relates to assessed losses amount to R72 362 626 (2013: R55 201 678).

The asset is only recognised to the extent that sufficient taxable temporary differences are available which will result in taxable amounts against which the unused tax losses can be utilised.

The unrecognised deferred tax asset amounts to R69 002 994 (2013: R62 904 015) and could be recognised again when trading conditions improve, which will make it more probable that future taxable profit will allow the tax losses to be utilised. Due to the history of losses, the deferred tax asset was not recognised during the current year.

9. RETIREMENT BENEFITSDefined contribution plan

It is the policy of the group to provide retirement benefits to all its employees. A number of defined contribution provident funds, all of which are subject to the Pensions Fund Act, of 1956, exist for this purpose.

The group is under no obligation to cover any unfunded benefits.

GROUP COMPANY

2014 2013 2014 2013R R R R

The total group contributions to such schemes 3 808 351 3 993 113 – –

10. PREPAYMENTSPrepayments relate to upfront payments made to suppliers

11. INVENTORIESRaw materials 28 554 673 – – – Work-in-progress 684 129 – – – Finished goods and merchandise 87 169 357 113 818 334 – –

116 408 159 113 818 334 – –

Provision for slow moving inventory and net realisable value adjustments (3 595 339) (3 591 277) – –

112 812 820 110 227 057 – –

During the current financial year inventory to the amount of R3 925 494 was written down and included in cost of sales.

Inventory encumbered as security

The Mayfair Speculators Proprietary Limited (Mayfair) inventory facility required 120.00% inventory to loan coverage. All inventory was encumbered as security for the Mayfair inventory facility up to 30 June 2014. From 1 July 2014 inventory purchased will be encumbered as security for the Mayfair consolidated loan to the extent that qualifying debtors including intergroup loan account does not cover 120% of the consolidated loan facility from Mayfair. Refer to note 18.


GROUP COMPANY

2014 2013 2014 2013R R R R

12. TRADE AND OTHER RECEIVABLESTrade receivables 36 274 444 31 349 046 – – Deposits 1 687 953 1 519 083 – – Value added taxation 1 491 806 6 231 089 67 069 69 330Other receivables 1 850 427 2 222 141 435 598 435 598Retention debtors 6 185 259 7 417 151 – –

47 489 889 48 738 510 502 667 504 928

Trade and other receivables encumbered as security

Trade receivables securitisation

In October 2011 RARE Holdings Limited and its subsidiaries collectively entered into a trade receivables securitisation funding programme as further detailed in note 18. A new facility agreement was entered into during the year under review and will remain in force until 31 July 2015. The security requirements of the new facility are set out in note 18 – Other financial liabilities.

Credit quality of trade receivables

The average credit period granted to customers is 30 days from statement (2013: 30 days from statement), except for certain of the government and municipal trade receivables, which is 30 days from certification date. In the prior year, certain government and municipal customers had open account certification agreements with the group. Furthermore one specific government and municipal debtor had a 120 day term. No interest is charged on the non-parastatal customers for the first 60 days from the date of the invoice. Thereafter, interest is charged at the prime overdraft lending rate on the outstanding balance. No interest is charged on the government and municipal customers. The company assesses whether or not to pursue legal collection for debtors exceeding 120 days from date of statement.

Of the trade balance at the end of the year, R17 504 494 (2013: R11 144 212) is due from individual debtors who represent more than 20% of the total balance of trade receivables.

GROUP COMPANY

2014 2013 2014 2013R R R R

Trade receivablesThe ageing of total trade debtors is as follows:Current to 60 days 26 753 722 27 211 758 – – 60 – 90 days 7 082 554 915 286 – – 90 – 120 days 892 135 33 026 – – 120+ days 1 546 033 3 188 976 – –

36 274 444 31 349 046 – –

The ageing of government and municipal counterparties is as follows:Current to 60 days – 167 358 – – 90 – 120 days – 20 721 – – 120+ days 336 089 1 492 283 – –

336 089 1 680 362 – –



GROUP COMPANY

2014 2013 2014 2013R R R R

12. TRADE AND OTHER RECEIVABLES (continued)Trade receivables that are neither past due nor impairedThe credit quality of trade receivables that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates and external ratings:

Counterparties with credit guarantee insurance 12 573 258 14 343 430 – – Counterparties without credit guarantee insurance 13 844 375 7 354 362 – – Government and municipal counterparties 336 089 721 694 – –

26 753 722 22 419 486 – –

Fair value of trade and other receivablesThe carrying amount of trade and other receivables approximates the fair value.

Trade receivables past due but not impairedAt 30 June 2014, R9 520 723 (2013: R8 929 560) were past due but not impaired. These relate to customers from whom there has not been a significant change in credit quality and the amounts are still considered recoverable.

The ageing of amounts past due but not impaired is as follows:30 – 60 days – 5 319 823 – – 60 – 90 days 7 082 554 915 286 – – 90 – 120 days 892 135 12 305 – – 120+ days 1 546 034 2 682 146 – –

9 520 723 8 929 560 – –

Trade receivables impairedAn impairment provision of Rnil (2013: R1 985 810) was recognised against trade receivables. The ageing of these impaired trade receivables is as follows:Current – 60 days – 26 785 – – 120+ days – 1 959 025 – –

– 1 985 810 – –

Reconciliation of provision for impairment of trade receivablesOpening balance 1 985 810 1 937 882 – – Impairment losses recognised – 47 928 – – Amounts written off as uncollectable (1 156 817) – – – Amounts recovered during the year (828 993) – – –

– 1 985 810 – –


GROUP COMPANY

2014 2013 2014 2013R R R R

12. TRADE AND OTHER RECEIVABLES (continued)CurrenciesThe carrying amount of trade and other receivables is denominated in the following currencies:Rand 40 654 430 28 949 152 435 598 435 598Euro 8 180 – – – Zambian kwacha 642 020 13 954 759 – – US dollar 6 185 259 5 834 599 – –

47 489 889 48 738 510 435 598 435 598

The creation and release of the provision for impaired receivables have been included in operating expenses in the statement of comprehensive income. When there is no expectation of recovering additional cash, amounts charged to the allowance account are generally written off.

Furthermore, trade receivables of R2 958 276 (2013: R3 883 303) were written off as irrecoverable during the year under review. The related write-down was included in operating expenses in the statement of comprehensive income.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of trade and other receivables mentioned above. The group does not hold any collateral as security. Insurance cover is taken out for trade debtors.

GROUP COMPANY

2014 2013 2014 2013R R R R

13. CASH AND CASH EQUIVALENTSCash and cash equivalents consist of:Cash on hand 27 799 26 080 – –Bank balances 4 871 453 15 081 416 1 743 2 315Bank overdraft (57 529) (92 839) – –

4 841 723 15 014 657 1 743 2 315

Current assets 4 899 252 15 107 496 1 743 2 315Current liabilities (57 529) (92 839) – –

4 841 723 15 014 657 1 743 2 315

Currencies

The carrying amounts of cash and cash equivalents are denominated in the following currencies:Rand 4 096 443 14 883 753 – – US dollar 661 568 43 373 – – Zambian kwacha 83 712 87 531 – –

4 841 723 15 014 657 – –



13. CASH AND CASH EQUIVALENTS (continued)

The banking facilities of the group are secured as follows:

A general notarial bond of R40 000 000 (2013: 40 000 000) over the moveable assets of the company in favour of Mayfair Speculators Proprietary Limited.

A general notarial bond of R30 000 000 (2013: R30 000 000) over the moveable assets of the company in favour of First National Bank.

A general notarial bond of R12 000 000 (2013: R12 000 000) over the moveable assets of the company in favour of ArcelorMittal South Africa Limited.

A general notarial bond of R550 000 (2013: R550 000) over the moveable assets of the company in favour of Spes Machines Proprietary Limited.

An unlimited cession and pledge of book debts of The RARE Group Proprietary Limited further detailed in note 18. Unlimited cross suretyship by RARE Holdings Limited.

Loans andreceivables

R

Available-for-sale

RTotal

R

14. FINANCIAL ASSETS BY CATEGORYThe accounting policies for financial instruments have been applied to the line items below:Group – 2014Other financial assets 399 645 – 399 645Trade and other receivables 42 459 703 3 538 380 45 998 083Cash and cash equivalents 4 899 252 – 4 899 252

47 758 600 3 520 584 51 296 980

Group – 2013Other financial assets 779 253 21 485 800 738Trade and other receivables 38 766 197 3 741 224 42 507 421Cash and cash equivalents 15 107 496 – 15 107 496

54 652 946 3 762 709 58 415 655

Company – 2014Other receivables – 435 598 435 598Cash and cash equivalents 1 743 – 1 743

1 743 435 598 437 341

Company – 2013Other receivables – 435 598 435 598Cash and cash equivalents 2 315 – 2 315

2 315 435 598 437 913


GROUP COMPANY

2014 2013 2014 2013R R R R

15. SHARE CAPITALAuthorised100 000 000 ordinary shares of no par value (2013: 3 000 000 000) – – – – 100 000 000 preference shares of no par value (2013: 100 000 000) – – – –

Issued42 887 500 ordinary shares of no par value (2013: 1 788 750 000) 282 887 500 132 887 500 282 887 500 132 887 500Share premium 112 665 126 112 665 126 112 945 556 112 945 556Share issue costs written off against share premium (3 724 561) (2 724 561) (2 724 561) (2 724 561)Treasury shares (492 759) (3 770) – –

391 335 306 242 824 295 393 108 495 243 108 495

Reconciliation of number of shares issued:Opening balance 1 788 750 000 538 750 000 – – Share consolidation (100 to 1) (1 770 862 500) – – – Issue of shares – ordinary shares 25 000 000 1 250 000 000 – –

42 887 500 1 788 750 000 – –

16. CAPITAL DISCLOSURESThe group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. This is achieved inter alia through budget setting and monitoring of results against these. Capital comprises all components of equity.

17. REVALUATION RESERVEThe revaluation reserve arises on the revaluation of the Kliprivier and Meyerton premises further detailed in note 2.

GROUP COMPANY

2014 2013 2014 2013R R R R

Balance at the beginning of the year 5 350 154 5 350 154 – – Decrease in revaluation of property (Kliprivier) (1 010 758) – – – Increase in revaluation of property (Meyerton) 3 661 922 – – –

8 001 318 5 350 154 – –

18. OTHER FINANCIAL LIABILITIESHeld at amortised costInstalment sale agreements 1 677 787 4 185 459 – –

Instalment sale agreements repayable over 1 to 34 months (2013: 1 to 42 months) at effective interest rates ranging from prime plus 0,50% to prime plus 2,00% per annum (2013: prime to prime plus 2,35%), prime being 9,00% at year end (2013: 8,50%). These loans are secured by assets with a carrying amount of R3 380 044 (2013: R6 112 158) and are repayable in monthly instalments of R186 885 (2013: R344 681). Refer to note 2.



GROUP COMPANY

2014 2013 2014 2013R R R R

18. OTHER FINANCIAL LIABILITIES (continued)Mayfair Speculators Proprietary Limited – general facility – 32 308 964 – – This unsecured loan carried interest at 20,00% per annum. The loan was settled during the year under review.

Mayfair Speculators Proprietary Limited – inventory loans – 69 543 081 – – These loans carried interest at the prime overdraft lending rate plus 2,00% per annum, prime being 8,50% in the prior year. These loans were settled during the year under review.

Loans secured by mortgage bond: ABSA Bank Limited 7 045 076 7 176 882 – – The mortgage bond over property as detailed in note 2. Interest is payable at the prime overdraft lending rate less 0,50% per annum, prime being 9,00% (2013: 8,50%) at year end. The loan is repayable in monthly instalments of R17 000 which commenced on 1 May 2013 with annual escalations resulting in the loan to be fully repaid after 10 years.

Employee funds in share incentive scheme trust 284 200 284 200 – – These unsecured funds do not bear interest and are not subject to any fixed terms of repayment.

Mayfair Speculators Proprietary Limited – consolidated facility (debtors facility in the prior year). 42 443 396 30 083 548 – – This loan bears interest at the prime overdraft lending rate plus 1,00% per annum (2013: prime plus 0,50%), prime being 9,00% at year end (2013: 8,50%). The loan requires 120,00% coverage of the qualifying debtors of a subsidiary in relation to the loan amount. Qualifying debtors of a subsidiary company include the intergroup loan claim held. From the date upon which the qualifying debtors are insufficient to cover 120,00% of the loan, inventory acquired from such date will also be held as security. The facility is repayable on 31 July 2015.

51 450 459 143 582 134 – –

Non–current liabilitiesAt amortised cost 50 276 894 134 889 975 – – Current liabilitiesAt amortised cost 1 173 565 8 692 159 – –

51 450 459 143 582 134 – –


GROUP COMPANY

2014 2013 2014 2013R R R R

19. TRADE AND OTHER PAYABLESTrade payables 40 653 068 25 649 280 29 631 318 000Amounts received in advance – 29 932 038 – – Value added taxation 375 949 6 547 375 – – Sundry creditor 2 583 684 – – – Accrued leave pay 1 038 902 866 219 – – Accrued expenses 9 052 307 7 241 421 831 831

53 703 910 70 236 333 30 462 318 831

CurrenciesThe carrying amounts of trade and other payables are denominated in the following currencies:Rand 53 180 696 60 006 777 30 462 318 831US dollar – 4 834 913 – – Euro – 47 873 – – Pound sterling – 22 898 – – Zambian kwacha 523 214 5 323 872 – –

53 703 910 70 236 333 30 462 318 831

Financialliabilities at

amortisedcost

RTotal

R

20. FINANCIAL LIABILITIES BY CATEGORYThe accounting policies for financial instruments have been applied to the line items below:

Group – 2014Other financial liabilities 51 450 459 51 450 459Trade and other payables 53 327 961 53 327 961Bank overdraft 57 529 57 529

104 835 949 104 835 949

Group – 2013Other financial liabilities 143 582 134 143 582 134Trade and other payables 33 756 920 33 756 920Bank overdraft 92 839 92 839

177 431 893 177 431 893

Company – 2014Trade and other payables 30 464 30 464

Company – 2013Trade and other payables 318 831 318 831

GROUP COMPANY

2014 2013 2014 2013R R R R

21. REVENUESale of goods 255 903 212 142 514 336 – – Rendering of services 3 097 041 8 561 811 – – Construction contracts 8 290 633 25 664 198 – – Discount allowed (2 337 819) (1 490 994) – –

264 953 067 175 249 351 – –



GROUP COMPANY

2014 2013 2014 2013R R R R

22. COST OF SALESSale of goodsCost of goods sold and services rendered 203 091 601 133 558 364 – – Transport costs 5 140 291 4 512 688 – – Employee costs 871 697 7 755 451 – – Depreciation 1 335 450 2 964 719 – – Loss on disposal of property, plant and equipment – 821 878 – – Write-down of stock 3 925 494 – – –

214 364 533 149 613 100 – –

23. OPERATING LOSSOperating loss for the year is stated after accounting for the following:Operating lease chargesPremises• Straight-lined amounts 838 104 686 114 – – Equipment• Straight-lined amounts 1 735 349 1 851 209 – –

2 573 453 2 537 323 – –

Loss on sale of property, plant and equipment 167 091 676 408 – – Loss on sale of property, plant and equipment recognised as part of cost of sales – 821 878 – – Impairment of investment in subsidiary (refer to note 4) – – 15 605 271 100 000 000Reversal of impairment of loan to subsidiary (refer to note 6) – – (456 935) (953 252)Impairment of loan to associate (refer to note 6) – 179 925 – – Reversal of impairment of loan to associate (refer to note 6) – (852 000) – – Impairment of trade and other receivables 2 958 276 3 883 303 – – Movement in provision for doubtful debts (refer to note 12) (1 985 810) 61 497 – – Profit on exchange differences (1 459 344) (2 124 104) – – Amortisation on intangible assets (refer to note 3) 53 152 47 919 – – Depreciation on property, plant and equipment (refer to note 2) 3 968 273 2 439 973 – – Depreciation on property, plant and equipment recognised as part of cost of sales (refer to notes 2 and 22) 1 335 450 2 964 719 – – Employee costs 34 401 190 26 668 462 17 850 102 165Employee costs recognised as part of cost of sales (refer to note 22) 871 697 7 755 451 – – Defined contribution fund contributions (refer to note 9) 3 808 351 3 993 113 – – Consulting and professional fees 3 555 288 3 570 519 – 370 596Legal fees 472 838 654 412 – –


GROUP COMPANY

2014 2013 2014 2013R R R R

24. INVESTMENT INCOMEInterest revenueAssociate – 225 661 – – Other interest – 2 776 – – Bank 417 901 940 718 – 709Other interest 60 391 – – –

478 292 1 169 155 – 709

Investment income per financial asset category:Loans and receivables 417 901 940 718 – 709Available-for-sale financial assets 60 391 228 437 – –

478 292 1 169 155 – 709

25. FINANCE COSTSOther financial liabilities 16 122 573 13 505 202 – – Trade and other payables 345 752 251 258 – – Bank 585 935 582 706 9 1 889Instalment sale agreements 122 755 1 086 658 – – Other interest paid 56 932 377 481 – 137 592

17 233 947 15 803 305 9 139 481

Finance costs per financial instrument category:Amortised cost financial liabilities 17 177 015 15 425 824 9 1 889

26. TAXATIONMajor components of the tax (income)/expenseCurrentLocal income tax – current period 64 076 – – – Local income tax – recognised in current tax for prior periods – 305 301 – 305 301Foreign withholding tax – current period (866 127) 1 145 420 – –

(802 051) 1 450 721 – 305 301

DeferredOriginating and reversing temporary differences (refer to note 8) (434 133) 921 597 – –

(1 236 184) 2 372 318 – 305 301

% % % %

Reconciliation of the tax expenseReconciliation between statutory tax rate and average effective tax rate.Statutory tax rate 28,00 28,00 28,00 28,00Exempt income 1,28 1,31 0,84 0,27Assessed losses and/or other temporary differences not recognised as a deferred tax asset (25,43) (28,96) (0,05) – Disallowable expenditure (2,24) (1,36) (28,79) (28,27)Capital gains tax (0,10) (0,02) – – Foreign withholding tax 3,55 (2,84) – – Tax relating to previous years – (2,01) – (0,31)

5,06 (5,88) – (0,31)



26. TAXATION (continued)Tax losses available to the group for set-off against future taxable income resulting from continued and discontinued operations is R258 437 949 (2013: R197 148 849). Tax losses available to the company for set-off against future taxable income is R1 369 578 (2013: R1 344 577).

GROUP COMPANY

2014 2013 2014 2013R R R R

27. AUDITORS’ REMUNERATIONFees 950 573 1 349 489 104 690 83 585

GrossR

TaxR

NetR

28. OTHER COMPREHENSIVE INCOMEComponents of other comprehensive income Group – 2014Gains and losses on property revaluationLoss on property valuation (Kliprivier) (1 242 450) 231 692 (1 010 758)Gain on property valuation (Meyerton) 4 498 676 (836 754) 3 661 922

3 256 226 (605 062) 2 651 164

GROUP COMPANY

2014 2013 2014 2013R R R R

29. CASH (USED IN)/GENERATED FROM OPERATIONSLoss before taxation (24 401 030) (40 347 775) (15 173 337) (99 184 340)Adjustments for:Loss on sale of assets 167 091 1 497 914 – – Movement in FCTR – (5 106) – – Interest income (478 292) (1 169 155) – (709)Finance costs 17 233 947 15 803 305 9 139 481Reversal of impairment on loan – – (456 935) (953 253)Reversal of impairment on loan to associate – (693 593) – – Movements in operating lease accruals 10 959 (100 943) – – Impairment of investment – – 15 605 271 100 000 000Unrealised forex (profit)/loss – 310 280 – – Impairment loss on trade receivables: bad debts 2 958 276 3 883 303 – – (Reversal)/write-down of inventory 3 925 494 (26 149) – – Depreciation and amortisation 5 356 875 5 452 615 – – Movement in provision for credit notes (2 155 770) 1 705 273 – – Non-cash items via loan accounts 136 800 136 800 456 683 262 396Movement in provision for slow moving stock 4 063 (197 813) – – Movement in provision for payables 130 077 – – – Movement in debtors provisions (1 302 260) – – – Movement in provision for doubtful debts (1 985 810) 47 928 – – Changes in working capital:Inventories (6 515 318) (47 696 826) – – Trade and other receivables 2 967 482 34 647 522 2 261 (69 330)Prepayments 8 943 091 (7 750 032) – – Construction contracts and receivables – 15 193 417 – – Trade and other payables (16 662 502) (45 359 531) (288 369) (195 991)

(11 666 827) (64 668 566) 145 583 (1 746)


GROUP COMPANY

2014 2013 2014 2013R R R R

30. TAX (PAID)/REFUNDEDBalance at beginning of the year (1 291 818) 817 805 (146 398) (390 596)Current tax for the year recognised in profit or loss (65 655) – – – Current tax for the year relating to prior periods – (305 301) – (305 301)Withholding tax current year 1 145 420 (1 145 420) – – Balance at end of the year (112 303) 1 291 818 – 146 398

(324 356) 658 902 (146 398) (549 499)

31. COMMITMENTSOperating leases – as lessee (expense)Minimum lease payments due– within one year 719 960 27 600 – – – in second to fifth year inclusive 1 487 042 – – –

2 207 002 27 600 – –

Operating lease payments represent rentals payable by the group for certain of its office premises and equipment. Leases are negotiated for an average term of three years (2013: one year). No contingent rent is payable.

32. CONTINGENCIESContingent liabilitiesThe group is involved in legal action relating to claims for alleged irregularities. The total claim initiated against the group is R2,3 million. It is however not possible to accurately determine the probable loss as the matter is still subject to active litigation. A court date has been set for 18 November 2014. Based on legal advice and the opinion of management, it is unlikely that the outcome of the action will have a material effect on the company’s financial position.

No other significant contingent liabilities existed at year end.

Guarantees issued by banks in favour of third parties

GROUP COMPANY

2014 2013 2014 2013R R R R

Customs and Excise 352 500 352 500 – –

33. RELATED PARTIESRelationshipsSubsidiaries Refer to note 4Associate Refer to note 5Non-executive directors T Siyolo

P du Plessis (resigned)MT LateganH OdendaalSJDT Potgieter

Executive directors and members of key management A TasdharyW van CollerR Viljoen

Members of key management and prescribed officers T DeanH RoetsA Tasdhary (prescribed officer during 2013)C von Graszouw



33. RELATED PARTIES (continued)Subsidiaries

During the year in the ordinary course of business certain companies within the group entered into various transactions with related parties. These transactions occurred under terms and conditions no more favourable to those entered into with third parties. These intragroup transactions have been eliminated on consolidation.

Directors

The remuneration for non-executive and executive directors of the holding company paid during the year by subsidiaries within the group has been disclosed in note 34. No loans have been made to directors.

No directors had a material interest in any contract of significance with any group company during the year under review.

Key management (prescribed officers)

Key management personnel (prescribed officers) are those having authority and responsibility for planning, directing and controlling activities, directly or indirectly, including any director of that entity. No key management personnel (prescribed officers) had a material interest in any contract of significance with any group company during the year under review. The remuneration for key management or prescribed officers of the group has been disclosed in note 34.

GROUP COMPANY

2014 2013 2014 2013R R R R

Related party balances

Investments in related partySubsidiary – – 134 394 729 –

Related party transactionsInterest received from related partyAssociates – (225 661) – –

Management fees received from related partySubsidiary – – (848 447) (583 085)

Impairment/(reversal of impairment) of loans to related partiesAssociate – 179 925 – – Subsidiary – – (456 935) 953 253Associate – (852 000) – –

– (672 075) (456 935) 953 253

Impairment of investment in related partySubsidiary – – 15 605 271 100 000 000

Compensation to directors and other key managementDirectors (as detailed in note 34) 3 997 770 2 452 245 17 850 102 165Key management (as detailed in note 34) 3 480 000 3 135 194 – –

7 477 770 5 587 439 17 850 102 165


EmolumentsR

AllowancesR

TotalR

34. DIRECTORS’ AND PRESCRIBED OFFICER’S EMOLUMENTSExecutive2014W van Coller 1 629 233 20 767 1 650 000A Tasdhary 1 129 920 – 1 129 920R Viljoen 1 188 774 11 226 1 200 000

3 947 927 31 993 3 979 920

2013W van Coller 1 461 036 38 964 1 500 000R Viljoen 841 702 8 378 850 080

2 302 738 47 342 2 350 080

Securities issuedNo shares were issued to executive directors during the current year under review.

Service contractsExecutive directors are subject to written employment agreements. The employment agreements regulate duties, remuneration, allowances, restraints, leave and notice periods of these executives.

Directors’fees

RTotal

R

Non–executive2014P du Plessis 17 850 17 850

2013P du Plessis 102 165 102 165

Securities issuedNo shares were issued to non-executive directors during the current year under review.

EmolumentsR

AllowancesR

BonusR

TotalR

Prescribed officers2014H Roets 1 260 000 – – 1 260 000T Dean 960 000 – 120 000 1 080 000C von Graszouw 1 086 568 53 432 – 1 140 000

3 306 568 53 432 120 000 3 480 000

EmolumentsR

Other benefits*R

BonusR

TotalR

2013A Tasdhary 744 434 45 000 – 789 434H Roets 1 200 000 – – 1 200 000A Khaas^ 192 398 23 894 30 425 246 717C von Graszouw 732 994 166 049 – 899 043

2 869 826 234 943 30 425 3 135 194

* Other benefits comprise travel allowance, provident fund and medical benefits ^ Resigned during the year

Securities issuedNo shares were issued to individuals holding a prescribed office or individuals related to them in the year under review.



34. DIRECTORS’ AND PRESCRIBED OFFICER’S EMOLUMENTS (continued)Service contractsMembers of key management are subject to written employment agreements. The employment agreements regulate duties, remuneration, allowances, restraints, leave and notice periods of these executives.

35. RISK MANAGEMENTThe group’s activities expose it to a variety of financial risks: market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The group’s approach to managing liquidity risk is to ensure that sufficient liquidity is available to meet its liabilities when due. The group ensures it has sufficient cash on demand or access to facilities to meet expected operational expenses for the next 12 months, including the servicing of financial obligations as further detailed in the directors’ report.

The group’s exposure to liquidity risk is a result of funds available to cover future commitments. The group manages liquidity risk through an ongoing review of future commitments and credit facilities.

Cash flow forecasts are prepared regularly, there is strict control over working capital utilisation and adequate utilised borrowing facilities are monitored.

The table below analyses the group’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

Less than 6 months

R

Between 6 months

and 1 yearR

Between 1 and 2

yearsR

Between 2 and

3 yearsR

Over3 years

RTotal

R

GroupAt 30 June 2014Trade and other payables 53 327 961 – – – – 53 327 961Other financial liabilities 1 003 179 830 198 44 242 016 1 281 966 7 602 070 54 959 429Bank overdraft 57 529 – – – – 57 529

At 30 June 2013Other financial liabilities 1 953 660 7 535 649 144 526 854 1 471 709 8 595 749 164 083 621Trade and other payables 33 756 920 – – – – 33 756 920Bank overdraft 92 839 – – – – 92 839

CompanyAt 30 June 2014Trade and other payables 30 464 – – – – 30 464

At 30 June 2013Trade and other payables 318 831 – – – – 318 831

Interest rate riskThe group’s interest rate risk at statement of financial position date arises from cash and cash equivalents, bank overdraft, loans receivable and payable. The interest rate applicable to these financial instruments is mainly variable rates in line with those currently available in the market, hence exposing the group to cash flow interest rate risk.


35. RISK MANAGEMENT (continued)Sensitivity analysisThe sensitivity analysis below presents the interest rate risks in accordance with IFRS 7. It has been determined based on the exposure to interest rates for financial instruments at the statement of financial position date and shows the effects of changes in market interest rates on interest payments, interest income and expenses and if appropriate, shareholders’ equity. For variable rate liabilities, the analysis is prepared assuming the average liability was outstanding for the whole year. A 100 basis point increase or decrease represents management’s assessment of the reasonable possible change in interest rate.

GroupDuring the year ended 30 June 2014, if interest rates on rand-denominated borrowings had increased/decreased by 100 basis points with all other variables held constant, net profit for the year would have increased/decreased by R617 373 (2013: R1 044 901) only as a result of higher/lower interest expenses on variable borrowings, cash and cash equivalent, loans receivable and trade and other payables.

CompanyDuring the year ended 30 June 2014, if interest rates on Rand-denominated borrowings had been 100 basis points higher/lower with all other variables held constant, net profit for the year would have increased/decreased by Rnil (2013: R11 660), mainly as a result of the higher/lower interest expense on variable rate loan receivables and cash and cash equivalents.

Financial instrument

Current interest rate

%

Due in lessthan a year

R

Due in 1 to 2years

R

Due in 2 to 3 years

R

Due in more than 3 years

R

Cash flow interest rate riskGroupInstalments sale agreements 9,90 897 565 526 210 254 013 – Mayfair Speculators Proprietary Limited – consolidated facility 10,00 – 42 443 396 – – Mortgage bond 8,50 276 000 372 000 495 000 5 902 076Cash in current banking institutions 3,90 4 899 252 – – – Overdraft facility 9,00 57 529 – – –

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the group.

Credit risk consists mainly of cash deposits, cash equivalents, loan receivables and trade debtors. The group only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables comprise a widespread customer base. Management evaluates credit risk relating to customers, on an ongoing basis. The utilisation of credit limits is regularly monitored.

All new counterparties are subject to credit verification with the Credit Guarantee Insurance Corporation of Africa Limited (CGIC) where allowable. Otherwise, if there is no credit verification rating, management assesses the credit quality of the counterparty, taking into account its financial position, past experience and other factors. Credit exposure is controlled by counterparty limits that are reviewed and approved by management with reference to limits imposed by CGIC. CGIC can not be purchased for government organisations and municipalities.

Foreign exchange riskThe group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar, Euro, GB pound and the Zambian kwacha. Foreign exchange risk arises from future commercial transactions.

The group does not hedge exchange fluctuations for customer supply contracts.

The group had certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.



35. RISK MANAGEMENT (continued)Sensitivity analysisFor the purpose of the sensitivity analysis the movement in the value of the rand against major foreign currencies was assessed on an individual basis. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for the deemed change in foreign currency rates.GroupAt 30 June 2014, if the rand had weakened/strengthened by 10,00% (2013: 10,00%) against the US dollar with all other variables held constant, post-tax profit for the year would have been increased/decreased by R492 972 (2013: R344 991) mainly as a result of foreign exchange gains or losses on translation of US dollar denominated trade receivables, trade payables and loans payable.

At 30 June 2014, if the rand had weakened/strengthened by 10.00% (2013: 10.00%) against the Euro with all other variables held constant, post-tax profit for the year would have been increased/decreased by R589 (2013: R2 721), mainly as a result of foreign exchange gains or losses on translation of Euro denominated trade payables.

At 30 June 2014, if the rand had weakened/strengthened by 10,00% (2013: 10,00%) against the GB pound with all other variables held constant, post-tax profit for the year would have been increased/decreased by Rnil (2013: R1 649) mainly as a result of foreign exchange gains or losses on translation of GP pound denominated trade receivables and payables.

At 30 June 2014, if the rand had weakened/strengthened by 10,00% (2013: 10,00%) against the Zambian kwacha with all other variables held constant, post-tax profit for the year would have been increased/decreased by R26 106 (2013: R977 617) mainly as a result of foreign exchange gains or losses on translation of Zambian kwacha denominated trade receivables and payables.

GROUP COMPANY

2014 2013 2014 2013R R R R

Foreign currency exposure at the end of the reporting period

The company does not hedge foreign exchange fluctuations. The following items were uncovered:Current assetsTrade and other receivables and construction contract receivables USD583 460 (2013: USD583 460) 6 185 259 5 834 599 – – Trade and other receivables EUR565 (2013: EUR6 574) 8 180 85 668 – – Trade and other receivables ZMW379 894 (2013: ZMW7 811 669) 642 020 13 954 759 – – Cash and cash equivalents USD62 406 (2013: USD4 345) 661 568 43 373 – – Cash and cash equivalents ZMW49 578 (2013: ZMW48 144) 83 712 87 531 – – Current liabilities – – Trade and other payables USDnil (2013: USD483 129) – (4 834 913) – – Trade and other payables EURnil (2013: EUR3 664) – (47 873) – – Trade and other payables GBPnil (2013: GBP1 503) – (22 898) – – Trade and other payables ZMW309 594 (2013: ZMW2 983 902) (523 214) (5 323 872) – –


GROUP COMPANY

2014 2013 2014 2013R R R R

35. RISK MANAGEMENT (continued)Foreign currency exposure at the end of the reporting period (continued)

Exchange rates used for conversion of foreign items were:US dollar (USD) 10,62 10,00Euro (EUR) 14,50 13,05GB pound (GBP) 18,11 15,24Zambian kwacha (ZMW) 1,69 1,82

36. GOING CONCERNWe draw attention to the fact that at 30 June 2014, the group and the company had accumulated losses of R253 164 942 and R258 239 818 respectively.

The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The directors have considered the operational budget and cash flow forecasts for the ensuing year which are based on the current expected economic and market conditions, as well as the funding lines in place. The directors believe that RARE Holdings Limited and its subsidiaries have adequate financial resources to continue as a going concern during the ensuing year. Accordingly, the directors have adopted the going concern basis in the preparation of the annual financial statements.

37. FAIR VALUE INFORMATIONFair value hierarchy

The table below analyses assets and liabilities carried at fair value. The different levels are defined as follows:

Level 1: Quoted unadjusted prices in active markets for identical assets or liabilities that the group can access at measurement date.

Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

GROUP COMPANY

2014 2013 2014 2013Note R R R R

Level 2Recurring fair value measurements AssetsAvailable–for–sale financial assetsOther financial assets 7 – 21 485 – – Trade and other receivables 12 3 520 584 3 741 224 435 598 435 598

3 520 584 3 762 709 435 598 435 598

Loans and receivablesTrade and other receivables 12 42 459 703 38 766 197 – – Other financial assets 7 399 645 779 253 – – Cash and cash equivalents 13 4 899 252 15 107 496 1 743 2 315

47 758 600 54 652 946 1 743 2 315



GROUP COMPANY

2014 2013 2014 2013Note R R R R

37. FAIR VALUE INFORMATION (continued)Liabilities Financial liabilities at amortised costOther financial liabilities 18 51 450 459 143 582 134 – – Trade and other payables 19 53 327 958 33 756 920 30 462 318 831Bank overdraft 13 57 529 92 839 – –

104 835 946 177 431 893 30 462 318 831

Level 3Property, plant and equipmentLand and buildings 2 50 200 000 32 800 000 – –

The carrying value of the available-for-sale assets approximates the fair values thereof.The carrying value of the financial assets and liabilities at amortised cost approximates the fair value thereof. Valuation techniques to derive level 2 and 3 fair values can be obtained from the note disclosures.

38. BASIC EARNINGS PER SHAREThe calculation of basic earnings per share at 30 June 2014 was based on loss for the year attributable to ordinary shareholders of RARE Holdings Limited, divided by the weighted average number of ordinary shares issued. Due to the consolidation of the issued share capital of the group on a basis of 100:1, the 2013 weighted average number of ordinary shares in issue was restated from 1 566 378 464 to 15 663 785 shares in issue and consequently the earnings per ordinary share from continuing operations changed from (2,73) to (272,73) cents.

GROUP COMPANY

2014 2013 2014 2013R R R R

Loss attributable to equity holders of RARE Holdings Limited from continuing operations (23 164 846) (42 720 093) – – Weighted average number of ordinary shares in issue 23 383 208 15 663 785 – – Earnings per ordinary share from continuing operations (cents) (99,07) (272,73) – –

39. DILUTED EARNINGS PER SHAREThe calculation of diluted earnings per share at 30 June 2014 was based on loss for the year attributable to ordinary shareholders of RARE Holdings Limited, divided by the fully diluted weighted average number of ordinary shares issued. Due to the consolidation of the issued share capital of the group on a basis of 100:1, the 2013 weighted average number of ordinary shares in issue was restated from 1 566 378 464 to 15 663 785 shares in issue and consequently the earnings per ordinary share from continuing operations changed from (2,73) to (272,73) cents.

GROUP COMPANY

2014 2013 2014 2013R R R R

Loss attributable to equity holders of RARE (23 164 846) (42 720 093) – –Holdings Limited from continuing operationsFully diluted weighted average number of ordinary shares in issue

23 383 208 15 663 785 – –

Diluted earnings per ordinary share from continuing operations (cents)

(99,07) (272,73) – –


40. HEADLINE EARNINGS PER SHAREDue to the consolidation of the issued share capital of the group on a basis of 100:1, the 2013 weighted average number of ordinary shares in issue was restated from 1 566 378 464 to 15 663 785 shares in issue and consequently the earnings per ordinary share from continuing operations changed from (2,73) to (272,73) cents. The calculation of headline earnings per share is calculated on the basis of adjusted loss attributable to ordinary shareholders divided by the weighted number of ordinary shares in issue during the year as follows:

2014 2013

GrossR

NetR

GrossR

NetR

Loss attributable to ordinary shareholders of RARE Holdings Limited – (23 164 846) – (42 720 093)Impairment of loans receivable – – – 179 925Insurance claims received from third parties (150 022) (108 015) – – Reversal of loan impairment – – – (852 000)Loss on disposal of property, plant and equipment 167 091 120 305 1 498 286 1 078 766

Consisting of:Headline earnings attributable to ordinary shareholders from continuing operations – 23 152 556 – (42 313 402)Weighted average number of ordinary shares in issue – 23 383 208 – 15 663 785Headline earnings per share – (99,01) – (270,14)

41. CHANGES IN ACCOUNTING POLICIESThe financial statements have been prepared in accordance with International Financial Reporting Standards on a basis consistent with the prior year except for the adoption of the new or revised standards as set out in note 42.1 New Standards and interpretations effective and adopted in the current year.

42.42.1

NEW STANDARDS AND INTERPRETATIONSStandards and interpretations effective and adopted in the current year

In the current year, the group has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:

IFRS 10 Consolidated Financial Statements

Standard replaces the consolidation sections of IAS 27 Consolidated and Separate Financial Statements and SIC 12 Consolidation – Special Purpose Entities. The standard sets out a new definition of control, which exists only when an entity is exposed to, or has rights to, variable returns from its involvement with the entity, and has the ability to effect those returns through power over the investee.

The effective date of the standard is for years beginning on or after 1 January 2013.

The company has adopted the standard for the first time in the 2014 annual financial statements.

The impact of the standard is not material.

IAS 27 Separate Financial StatementsConsequential amendment as a result of IFRS 10. The amended Standard now only deals with separate financial statements.

The effective date of the amendment is for years beginning on or after 1 January 2013.

The company has adopted the amendment for the first time in the 2014 annual financial statements.

The impact of the amendment is not material. IFRS 12 Disclosure of Interests in Other Entities

The standard sets out disclosure requirements for investments in subsidiaries, associates, joint ventures and unconsolidated structured entities. The disclosures are aimed to provide information about the significance and exposure to risks of such interests. The most significant impact is the disclosure requirement for unconsolidated structured entities or off balance sheet vehicles.



The impact of the standard is not material.



42. 42.1

NEW STANDARDS AND INTERPRETATIONS (continued)Standards and interpretations effective and adopted in the current year (continued)

IFRS 13 Fair Value Measurement

New standard setting out guidance on the measurement and disclosure of items measured at fair value or required to be disclosed at fair value in terms of other IFRS’s.



The adoption of this standard has not had a material impact on the results of the company, but has resulted in more disclosure than would have previously been provided in the annual financial statements. Refer to note 37 where the additional information was disclosed.

IAS 1 – Annual Improvements for 2009 – 2011 cycle

Clarification is provided on the requirements for comparative information. Specifically, if a retrospective restatement is made, a retrospective change in accounting policy or a reclassification, the statement of financial position at the beginning of the previous period is only required if the impact on the beginning of the previous period is material. Related notes are not required, other than disclosure of specified information.

The effective date of the amendment is for years beginning on or after 1 January 2013.

The company has adopted the amendment for the first time in the 2014 annual financial statements.

The impact of the amendment is not material.42.2 Standards and interpretations not yet effective

The group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the group’s accounting periods beginning on or after 1 July 2014 or later periods:

IFRS 9 Financial Instruments

This new standard is the first phase of a three phase project to replace IAS 39 Financial Instruments: Recognition and Measurement. To date, the standard includes chapters for classification, measurement and derecognition of financial assets and liabilities. The following are main changes from IAS 39:• Financial assets will be categorised as those subsequently measured at fair value or at amortised cost. • Financial assets at amortised cost are those financial assets where the business model for managing the

assets is to hold the assets to collect contractual cash flows (where the contractual cash flows represent payments of principal and interest only). All other financial assets are to be subsequently measured at fair value.

• Under certain circumstances, financial assets may be designated as at fair value. • For hybrid contracts, where the host contract is an asset within the scope of IFRS 9, then the whole

instrument is classified in accordance with IFRS 9, without separation of the embedded derivative. In other circumstances, the provisions of IAS 39 still apply.

• Voluntary reclassification of financial assets is prohibited. Financial assets shall be reclassified if the entity changes its business model for the management of financial assets. In such circumstances, reclassification takes place prospectively from the beginning of the first reporting period after the date of change of the business model.

• Financial liabilities shall not be reclassified. • Investments in equity instruments may be measured at fair value through other comprehensive income.

When such an election is made, it may not subsequently be revoked, and gains or losses accumulated in equity are not recycled to profit or loss on derecognition of the investment. The election may be made per individual investment.

• IFRS 9 does not allow for investments in equity instruments to be measured at cost. • The classification categories for financial liabilities remain unchanged. However, where a financial liability

is designated as at fair value through profit or loss, the change in fair value attributable to changes in the liabilities credit risk shall be presented in other comprehensive income. This excludes situations where such presentation will create or enlarge an accounting mismatch, in which case, the full fair value adjustment shall be recognised in profit or loss.


42.42.2

NEW STANDARDS AND INTERPRETATIONS (continued)Standards and interpretations not yet effective (continued)The effective date of the standard is for years beginning on or after 1 January 2018.

The company expects to adopt the standard for the first time in the 2018 annual financial statements.

43. SEGMENTAL INFORMATIONThe group currently has five (2013: four) reportable segments, as described below, which are the group’s strategic business units. The strategic business units offer different products and services and are reviewed by management. For each of the strategic business units, the group’s CEO reviews internal management reports on at least a monthly basis. The following summary describes the operations of each of the group’s reportable segments for the year ended 30 June 2014:• Trading segment – Supply and distribution of pipes, valves, fittings and associated commodities from the

Kliprivier and Durban trading branches.• Water Treatment segment – Manufacturing of pipe fittings, couplings and civil engineering work;• Pipeline Services segment – Manufacturing and installation of plastic engineering projects and project work

in Sub Saharan Africa;• RARE Plastics segment – Manufacturing of HDPE pipe (acquired during the year); and• Investment – Provides services to other segments.

TradingR

Water Treatment

R

Pipeline Services

RPlastics

RInvestment

RTotal

R

2014Total revenue 186 777 006 1 600 803 33 774 329 57 207 838 3 969 900 283 329 876Inter-segmental revenue (14 406 909) (3 969 900) (18 376 809)

External revenue 186 777 006 1 600 803 33 774 329 42 800 929 – 264 953 067

Segment results 6 278 004 (3 267 890) (6 583 341) (308 749) (1 086 594) (4 968 570)Other income 2 221 155Investment income 478 291Inventory impairment (3 925 494)Movement in provision for doubtful debt 1 985 810Bad debts (2 958 276)Finance cost (17 233 947)Income tax 1 236 184

Net loss for the year (23 164 846)

Total assetsTotal segment assets 99 526 263 2 963 221 28 908 169 83 835 398 38 601 564 253 834 615Inter-segmental assets – – – – – –

Reportable segment operating assets 99 526 263 2 963 221 28 908 169 83 835 398 38 601 564 253 834 615

Total liabilitiesTotal segment liabilities 22 395 153 – 2 200 997 28 418 195 54 648 588 107 662 933Intersegmental liabilities – – – – – –

Reportable segment operating liabilities 22 395 153 – 2 200 997 28 418 195 54 648 588 107 662 933

Capital expenditure 1 553 901 3 318 936 267 889 33 612 888 38 753 614Depreciation and amortisation 725 480 424 156 2 685 701 1 521 538 – 5 356 875



43. SEGMENTAL INFORMATION (continued)

Revenue from external customers

Continued operationsGeographical

information

South Africa 255 671 238DRC 2 093 104Mozambique 429 338Botswana 934 565Zambia 5 824 822

264 953 067

2014Location of non–current assetsSouth Africa 81 506 364Ghana 175 193Zambia 4 831 920

86 513 477

TradingWater

TreatmentPipeline

Services Investment Total

2013Total revenue 139 461 593 7 492 437 28 295 321 – 175 249 351Inter-segmental revenue – –

External revenue 139 461 593 7 492 437 28 295 321 – 175 249 351

Segment results (8 828 813) (1 309 125) (14 207 802) (211 164) (24 556 904)Other income 2 788 080Investment income 1 169 155Movement in provision for doubtful debt (61 497)Bad debts (3 883 303)Finance cost (15 803 305)Income tax (2 372 318)

Net loss after tax for the year (42 720 092)

Total assetsTotal segment assets 150 844 598 1 089 087 34 436 731 49 276 208 235 646 624Inter-segmental assets – – – – –

Reportable segment operating assets 150 844 598 1 089 087 34 436 731 49 276 208 235 646 624

Total liabilitiesTotal segment liabilities 199 426 781 109 333 8 484 807 9 451 350 217 472 271Intersegmental liabilities – – – – –

Reportable segment operating liabilities 199 426 781 109 333 8 484 807 9 451 350 217 472 271

Capital expenditure 394 776 – 489 824 – 884 600Depreciation and amortisation 1 630 579 – 3 822 036 – 5 452 615Geographical informationRevenue from external customersContinued operationsSouth Africa 159 037 422Zambia 16 211 929

175 249 351


43. SEGMENTAL INFORMATION (continued)

TradingWater

TreatmentPipeline

Services Investment Total

Location of non–current assetsSouth Africa 45 075 672Ghana 314 017Zambia 4 779 670

50 169 359

All divisions within the group operate in an established market and are therefore considered to be subject to similar risks and rewards.

Segment revenue and expenses

Revenue and expenses that are directly attributable to segments are allocated to those segments. Those that are not directly attributable to segments are allocated on a reasonable basis.

Segment assets and liabilities

Segment assets and liabilities comprise those operating assets and liabilities that are directly attributable to the segment or can be allocated to the segment on a reasonable basis.

Capital expenditure represents the local costs incurred during the period to acquire segment assets that are expected to be used during more than one period, namely, property, plant and equipment, and intangible assets other than goodwill.



NOTICE OF ANNUAL GENERAL MEETING

RARE HOLDINGS LIMITED(Incorporated in the Republic of South Africa)Registration Number: 2002/025247/06Share Code: RAR ISIN: ZAE000092714(“RARE” or “the company” or “the group” or “the RARE group”)

Notice is hereby given that the annual general meeting (the AGM) of the shareholders will be held at the company’s offices, 22 Old Vereeniging Road, Kliprivier, Midvaal on 24 February 2015 at 14h00, for the purpose of dealing with the following business and, if deemed fit, of passing, with or without modification, the resolutions set out below.

PURPOSEThe purpose of the meeting is to transact the business set out in the agenda below and to consider and, if deemed fit, approve, with or without modification, the following ordinary and special resolutions:

In order for the proposed ordinary resolutions, to be adopted, with the exception of ordinary resolution 10, more than 50% of the voting rights exercised on each such ordinary resolution must be exercised in favour thereof. In respect of the special resolutions set out below and in respect of ordinary resolution 8, the support of at least 75% of the total numbers of votes which the shareholders present or represented by proxy are entitled to cast is required.

For the avoidance of doubt, the memorandum and articles of association of the company are referred to as the memorandum of incorporation (MOI) in accordance with the terminology used in the new Companies Act, 2008 (No. 71 of 2008), as amended (the Companies Act). It should however be noted, that a new MOI (the New MOI), as detailed in a circular to shareholders, dated 25 July 2013 (the Circular), was approved by shareholders at a general meeting held on 23 August 2013, and is pending registration at the Companies and Intellectual Property Commission (the CIPC). Shareholders are referred to Annexure 2 of the Circular for a summary of the new MOI.

AGENDAORDINARY BUSINESS

1. Consideration of the audited annual financial statements of the company, including the reports of the directors and the Audit Committee for the year ended 30 June 2014 as required in terms of section 61(8) of the Companies Act and set out in the company’s annual report 2014 of which this notice forms part.

2. REAPPOINTMENT OF AUDITORS

Ordinary resolution number 1

“Resolved that the appointment of Greenwoods as independent auditors of the company with David Botha, being the individual registered auditor who has undertaken the audit of the company for the ensuing financial year, be confirmed on the recommendation of the company’s Audit and Risk Committee.”

The reason for the ordinary resolution number 1 is that the company, being a public listed company, must have its financial results audited and such auditor must be appointed or reappointed each year at the AGM of the company as required by section 90 of the Companies Act.

3. REELECTION OF RETIRING DIRECTORS

Reason for ordinary resolutions 2 – 3 below: The reason for the below-mentioned individual stand-alone resolutions is to afford shareholders the

opportunity to elect in the aggregate at least 50% of the directors and one-third of the non-executive directors to the company’s board of directors (the Board) in terms of various prescribed election and rotation criteria relating to:

• the provisions of the Listings Requirements of the JSE Limited (the JSE Listing Requirements) and the third King Report on Governance for South Africa and the King Code of Governance Principles (jointly “King III”) – at least one third of the non-executive directors in office must retire at every AGM of a company;

• article 85 of the company’s memorandum of incorporation – at least one third of the directors in office must retire at every AGM of the company; and

• in terms of section 66(4)(b) of the Companies Act – elect in aggregate at least 50% of the directors to the Board.


NOTICE OF ANNUAL GENERAL MEETING (continued)

Notes:

It is confirmed that the independent status of the non-executive directors has been assessed. With the exception of Mr Thembinkosi Siyolo and Mr Stefanus Johannes Du Toit Potgieter, in each case, the director’s independence was found to be undiminished, uncompromised and untainted.

The abbreviated curriculum vitae of the directors are set out on page 3 of the annual report and for purposes of these resolutions, is regarded as forming an integral part of this notice of the AGM.

Ordinary resolution number 2 “Resolved that, in terms of the rotation requirements of article 85 of the company’s MOI, King III and the

JSE Listings Requirements, to and herewith elect Mr Hein Odendaal a non-executive director of the company.”

Ordinary resolution number 3 “Resolved that, in terms of the rotation requirements of article 85 of the company’s MOI, King III and the

JSE Listings Requirements, to and herewith elect Mr Stefanus Johannes Du Toit Potgieter as an independent non-executive director of the company”

4. ELECTION OF THE MEMBERS TO THE AUDIT AND RISK COMMITTEE Reason for ordinary resolutions 4 – 6 below: The reason for the below-mentioned individual stand-alone resolutions is that the company, being a public

listed company, must appoint at each AGM an Audit Committee comprising at least three independent non-executive directors who, as a collective body, must be suitably qualified, skilled and experienced to fulfill the obligations of an audit committee as set out in the Companies Act.

Notes: It is confirmed that, except insofar as it relates to of Mr Stefanus Johannes Du Toit Potgieter, the

independence status of the below-mentioned non-executive directors has been assessed. In each case, the director’s independence was found to be undiminished, uncompromised and untainted.

The Board is satisfied that the below-mentioned directors collectively have the appropriate qualifications, skills and experience to fulfill their audit committee obligations as set out in the Companies Act.

The abbreviated curriculum vitae of the directors are set out on page 3 of the annual report and for purposes of these resolutions, is regarded as forming an integral part of this notice of the AGM.

Ordinary resolution number 4 “Resolved that Mr Hein Odendaal be re-elected as a member of the Audit and Risk Committee, with effect

from the conclusion of this AGM in terms of section 94(2) of the Companies Act.”

Ordinary resolution number 5 “Resolved that Mr Marthinus Theunis Lategan be elected a member of the Audit and Risk Committee, with

effect from the conclusion of this AGM in terms of section 94(2) of the Companies Act.”

Ordinary resolution number 6 “Resolved that Mr Stefanus Johannes Du Toit Potgieter be reelected as a member of the Audit and Risk

Committee, with effect from the conclusion of this AGM in terms of section 94(2) of the Companies Act.”

5. UNISSUED SHARES PLACED UNDER THE CONTROL OF THE DIRECTORS Ordinary resolution number 7 “Resolved that the unissued shares in the company, limited to 50% of the number of shares in issue at

30 June 2014, be and are hereby placed under the control of the directors until the next AGM and that they be and are hereby authorised to issue any such shares as the directors may deem fit, subject to the Companies Act, the memorandum of incorporation of the company, and the provisions of the Listings Requirements of the JSE Limited, save that the aforementioned 50% limitation shall not apply to any shares issued in terms of a rights offer.”

The reason for ordinary resolution number 9 is that the board requires authority from shareholders in terms of its memorandum of incorporation to issue shares in the company. This general authority, once granted, allows the Board from time to time, when it is appropriate to do so, to issue ordinary shares as may be required inter alia in terms of capital raising exercises, to maintain a healthy capital adequacy ratio that may be required from time to time. This general authority is subject to the restriction that it is limited to 50% of the number of shares in issue at 30 June 2014, on the terms, and subject to the further restrictions, set out in ordinary resolution number 10 below.


6. GENERAL AUTHORITY TO ISSUE SHARES FOR CASH


“Resolved that the directors of the company be and are hereby authorised by way of a general authority, to allot and issue for cash, not more than 28 556 250 of the company’s authorised but unissued ordinary shares under the control of the directors, equivalent to 50% of the company’s authorised but unissued ordinary shares, as they in their discretion may deem fit, subject to the provisions of the JSE Listings Requirements and the company’s MOI, provided that:

• the approval shall be valid until the date of the next AGM of the company, provided it shall not extend beyond fifteen months from the date of this resolution;

• a SENS announcement giving full details, including the impact on net asset value and earnings per share, will be published after any issue representing, on a cumulative basis within any one financial year, 5% or more of the number of shares in issue prior to such issue;

• the general issues of shares for cash in the aggregate in any one financial year may not exceed 50% of the applicant’s issued share capital (number of securities) of that class. The number of securities of a class which may be issued shall be based on the number of securities of that class in issue at the date of such application less any securities of the class issued during the current financial year, provided that any securities of that class to be issued pursuant to a rights issue (announced and irrevocable and underwritten) or acquisition (concluded up to the date of application) may be included as though they were securities in issue at the date of application;

• in determining the price at which an issue of shares will be made in terms of this authority the maximum discount permitted will be 10% of the weighted average traded price of such shares, as determined over the 30 trading days prior to the date that the price of the issue is agreed between the issuer and the party subscribing for the securities. The JSE should be consulted for a ruling if the securities have not traded in such 30 business day period;

• any such issue will only be made to public shareholders as defined in paragraphs 4.25 to 4.27 of the Listings Requirements of the JSE and not to related parties; and

• any such issue will only be securities of a class already in issue or, if this is not the case, will be limited to such securities or rights that are convertible into a class already in issue.”

For listed entities wishing to issue shares for cash, it is necessary for the Board not only to obtain the prior authority of the shareholders as may be required in terms of their memorandum of incorporation contemplated in ordinary resolution number 9 above but it is also necessary to obtain the prior authority of shareholders in accordance with the Listings Requirements of the JSE. The reason for ordinary resolution number 10 is accordingly to obtain a general authority from shareholders to issue shares for cash in compliance with the Listings Requirements of the JSE.

7. AUTHORISED DIRECTORS AND/OR THE COMPANY SECRETARY


“Resolved that any one director of the company and/or the company secretary is hereby authorised to do all such things and sign all such documents as deemed necessary to implement the ordinary and special resolutions as set out in this notice convening the AGM at which these resolutions will be considered.”

The reason for ordinary resolution number 11 is to ensure that the resolutions voted favourably upon is duly implemented through the delegation of powers provided for in terms of article 96 of the company’s MOI.

SPECIAL BUSINESS

To consider and, if deemed fit, pass, with or without modification, the following special resolutions:

8. REMUNERATION OF NON-EXECUTIVE DIRECTORS TO 30 JUNE 2015

Special resolution number 1

“Resolved that the remuneration of non-executive directors for the year ending 30 June 2015 be approved on the following basis:

• Chairman of the Board: R120 000 per annum, payable monthly; • Non-executive directors’ fee: R105 000 per annum, payable monthly; • Members of the Audit and Risk Committee; R80 000 per annum, payable monthly; • Members of the Remuneration, Transformation and Sustainability Committee; R80 000 per annum, payable

monthly.”



Reasons for and effect of special resolution number 1

The reason for the proposed special resolution, is to comply with section 66(9) of the Companies Act, which requires the approval of directors fees prior to the payment of such fees.

The effect of special resolution number 1 is that the company will be able to pay its non-executive directors for the services they render to the company as directors without requiring further shareholder approval until the next AGM.

9. AUTHORITY TO REPURCHASE SHARES BY THE COMPANY


“Resolved that as a special resolution that the company be and is hereby authorised, as a general approval, to repurchase any of the shares issued by the company, upon such terms and conditions and in such amounts as the directors may from time to time determine, but subject to the provisions of section 46 and 48 of the Companies Act, the MOI of the company, the Listings Requirements of the JSE and the requirements of any other stock exchange on which the shares of the company may be quoted or listed, namely that:

• the general repurchase of the shares may only be implemented on the open market of the JSE and done without any prior understanding or arrangement between the company and the counterparty;

• this general authority shall only be valid until the next AGM of the company, provided that it shall not extend beyond fifteen months from the date of this resolution;

• an announcement must be published as soon as the company has acquired shares constituting, on a cumulative basis, 3% of the number of shares in issue prior to the acquisition, pursuant to which the aforesaid 3% threshold is reached, containing full details thereof, as well as for each 3% in aggregate of the initial number of shares acquired thereafter;

• the general authority to repurchase is limited to a maximum of 20% in the aggregate in any one financial year of the company’s issued share capital at the time the authority is granted;

• a resolution has been passed by the Board of directors approving the purchase, that the company has satisfied the solvency and liquidity test as defined in the Companies Act and that since the solvency and liquidity test was applied there have been no material changes to the financial position of the group

• the general repurchase is authorised by the company’s memorandum of incorporation; • repurchases must not be made at a price more than 10% above the weighted average of the market value of

the shares for five business days immediately preceding the date that the transaction is affected. The JSE should be consulted for a ruling if the applicants securities have not traded in such five business day period;

• the company may at any point in time only appoint one agent to effect any repurchase(s) on the company’s behalf;

• the company may not effect a repurchase during any prohibited period as defined in terms of the JSE Listings Requirements unless there is a repurchase programme in place as contemplated in terms of 5.72(g) of the Listings Requirements of the JSE; and

• the company must ensure that its sponsor provides the JSE with the required working capital letters before it commences the repurchase of any shares.”


The reason for and effect of special resolution number 2 is to grant the directors a general authority in terms of its MOI of the company and the JSE Listing Requirements for the acquisition by the company of shares issued by it on the basis reflected in the special resolution.

In terms of the JSE Listings Requirements, any general repurchase by the company must, inter alia, be limited to a maximum of 20% of the company’s issued share capital in any one financial year of that class at the time the authority is granted.

10. AUTHORITY TO REPURCHASE SHARES BY A SUBSIDIARY OF A COMPANY


“Resolved that as a special resolution that the company, insofar as it may be necessary to do so, hereby approves, as a general approval, and authorises the acquisition by any subsidiary of the company (the subsidiary or the acquiree) of shares issued by such subsidiary and/or shares issued by the company, upon such terms and conditions and in such amounts as the directors of any such subsidiary may from time to time determine, but subject to the provisions of section 46 and 48 of the Companies Act, the MOI of the company, the JSE Listings Requirements and the requirements of any other stock exchange on which the shares of the subsidiary may be quoted or listed, including, inter alia, that:


• the general repurchase of shares may only be implemented on the open market of the JSE and done without any prior understanding or arrangement between the acquiree and the other counterparty;

• this general authority shall only be valid until the next AGM of the company, provided that it shall not extend beyond fifteen months from the date of this resolution;

• an announcement must be published as soon as the acquiree has acquired shares constituting, on a cumulative basis, 3% of the number of shares of the acquiree company in issue prior to the acquisition, pursuant to which the aforesaid 3% threshold is reached, containing full details thereof, as well as for each 3% in aggregate of the initial number of shares acquired thereafter;

• this general authority to repurchase is limited to a maximum of 20% in the aggregate in any one financial year of the acquiree’s issued share capital at the time the authority is granted, subject to a maximum of 10% in the aggregate in the event that it is the company’s share capital that is repurchased by a subsidiary;

• a resolution has been passed by the Board of directors approving the purchase, that the company has satisfied the solvency and liquidity test as defined in the Companies Act and that since the solvency and liquidity test was applied there have been no material changes to the financial position of the group;

• the general purchase is authorised by the company’s memorandum of incorporation; • repurchases must not be made at a price more than 10% above the weighted average of the market value

of the shares for the five business days immediately preceding the date that the transaction is effected. The JSE should be consulted for a ruling if the securities have not traded in such five business day period;

• the company and/or subsidiary may at any point in time only appoint one agent to effect any repurchase(s) on the subsidiary company’s behalf; and

• the subsidiary company may not effect a repurchase during any prohibited period as defined in terms of the JSE Listings Requirements unless there is a repurchase programme in place as contemplated in terms of 5.72(g) of the Listings Requirements of the JSE;

• the company must ensure that its sponsor provides the JSE with the required working capital letters before it commences the repurchase of any shares.”


The reason for and effect of special resolution number 3 is to grant the Board of directors of any subsidiary of the company a general authority in terms of the Listings Requirements of the JSE to acquire shares issued by such subsidiary and/or to acquire shares issued by the company on the basis reflected in the special resolution.

In terms of the JSE Listings Requirements and the relevant provisions of the Companies Act, any general purchase by a subsidiary of shares must, inter alia, be limited to a maximum of 20% of the issued share capital of the acquiree company in any one financial year of that class at the time the authority is granted, subject to a maximum of 10% in the event that it is the company’s share capital that is repurchased by a subsidiary.

11. FINANCIAL ASSISTANCE TO SUBSIDIARIES AND OTHER INTER-RELATED ENTITIES


“Resolved that, the company be and is hereby authorised to provide direct or indirect financial assistance to any subsidiary or inter-related company (as defined in the Companies Act) of the company by way of a general authority in favour of that category of recipients as contemplated in section 45(3)(a)(ii) of the Companies Act, on terms and conditions and for amounts that the Board of directors may determine from time to time.”


The reason for, and effect of this special resolution number 4 is, in compliance with the requirements of section 45 of the Companies Act, to permit the company to provide direct or indirect financial assistance to entities within the RARE group of companies.

12. OTHER BUSINESS

To transact such other business as may be transacted at an AGM or raised by shareholders with or without advance notice to the company.



INFORMATION RELATING TO THE SPECIAL RESOLUTIONS

1. The directors of the company or its subsidiaries will only utilise the general authority to purchase shares of the company and/or the subsidiary as set out in special resolutions numbers 2 and 3 to the extent that the directors, after considering the maximum shares to be purchased, are of the opinion that the company and its subsidiaries’ (RARE group) position would not be compromised as to the following:

• the RARE group’s ability, in the ordinary course of business, to pay its debts for a period of 12 months after the date of this AGM and for a period of 12 months after the purchase;

• the consolidated assets of the RARE group will at the time of the AGM and at the time of making such determination be in excess of the consolidated liabilities of the RARE group. The assets and liabilities should be recognised and measured in accordance with the accounting policies used in the latest audited annual financial statements of the RARE group;

• the ordinary capital and reserves of the RARE group after the purchase will remain adequate for the purpose of the business of the RARE group for a period of 12 months after the AGM and after the date of the share purchase; and

• the working capital available to the RARE group after the purchase will be sufficient for the RARE group’s requirements for a period of 12 months after the date of the notice of the AGM

and the directors have passed a resolution authorising the repurchase, resolving that the company has satisfied the solvency and liquidity test as defined in the Companies Act and resolving that since the solvency and liquidity test had been applied, there have been no material changes to the financial position of the RARE group.

2. For the purposes of considering special resolution number 2 and special resolution number 3, and in compliance with paragraph 11.26 of the Listings Requirements, the information listed below has been included in the Annual Report, in which this notice of AGM is included, at the places indicated:

• Directors and management (page 56); • Major shareholders (page 17); • Directors’ interests in securities(page 18); • Share capital of the company (page 50); • Contingent liabilities (page 56); • Responsibility statement (page 12); • Litigation statement (page 56); and • Material changes (page 14 – 18).

3. For purposes of special resolution number 4, the Board of directors of the company will only utilise the general authority bestowed upon them to provide direct or indirect financial assistance related to inter related companies to the extent that the directors, after considering the amount of financial assistance to be granted, are of the opinion that:

• immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test (as defined in the Companies Act, 2008);

• the terms under which the financial assistance is proposed to be given are fair and reasonable to the company; and

• all conditions or restrictions regarding the granting of financial assistance as set out in the company’s memorandum of incorporation have been satisfied

and that the Board of directors have passed a resolution authorising the grant of the said financial assistance (the board resolution) under their general authority so granted, the company which will then provide written notice of the Board resolution to all shareholders:

• within 10 days after adoption of the Board resolution, if the total value of all loans, debts, obligations or assistance contemplated in that resolution, together with any previous such resolution(s) during the financial year, exceeds one-tenth of 1% of the company’s net worth at the time of the Board resolution; or

• within 30 business days after the end of the financial year, in any other case.

4. The company is not involved in any legal or arbitration proceedings, nor are any proceedings pending or threatened of which the company is aware that may have or have had in the previous 12 months, a material effect on the company’s financial position.

5. The directors, whose names are reflected in this annual report of which this notice forms part, collectively and individually accept full responsibility for the accuracy of the information given and certify that to the best of 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 that have been made and that the notice contains all information required by the Listings Requirements of the JSE.

VOTING

1. The date on which shareholders must be recorded as such in the share register maintained by the transfer secretaries of the company (the share register) for purposes of being entitled to receive this notice is Friday, 12 December 2014.

2. The date on which shareholders must be recorded in the share register for purposes of being entitled to attend and vote at this meeting is Friday, 13 February 2015 with the last day to trade being Friday, 6 February 2015

3. Meeting participants will be required to provide proof of identification to the reasonable satisfaction of the chairman of the AGM and must accordingly bring a copy of their identity document, passport or drivers’ license. If in doubt as to whether any document will be regarded as satisfactory proof of identification, meeting participants should contact the transfer secretaries for guidance.

4. Shareholders entitled to attend and vote at the AGM may appoint one or more proxies to attend, speak and vote thereat in their stead. A proxy need not be a member of the company. A form of proxy, in which are set out the relevant instructions for its completion, is enclosed for the use of a certificated shareholder or own-name registered dematerialised shareholder who wishes to be represented at the AGM. Completion of a form of proxy will not preclude such shareholder from attending and voting (in preference to that shareholder’s proxy) at the AGM.

5. The instrument appointing a proxy and the letter of representation (if any) under which it is signed must reach the transfer secretaries of the company at the address given below by not later than 14h00 on Friday, 20 February 2015.

6. Dematerialised shareholders, other than own-name registered dematerialised shareholders, who wish to attend the AGM in person will need to request their Central Securities Depository Participant (CSDP) or broker to provide them with the necessary authority in terms of the custody agreement entered into between such shareholders and the CSDP or broker.

7. Dematerialised shareholders, other than own-name registered dematerialised shareholders, who are unable to attend the AGM and who wish to be represented thereat, must provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between themselves and the CSDP or broker in the manner and time stipulated therein.

8. Shareholders present in person, by proxy or by authorised representative shall, on a show of hands, have one vote each and, on a poll, will have one vote in respect of each share held.

Renier ViljoenCompany secretary

REGISTERED OFFICE22 Old Vereeniging Road, Kliprivier, Midvaal1451

TRANSFER SECRETARIESComputershare Investor Services (Pty) LtdGround Floor70 Marshall StreetJohannesburg, 2001(PO Box 61051, Marshalltown, 2107)

SPONSORPSG Capital (Pty) Ltd1st floor, building 8Inanda Greens Business Park54 Wierda Road WestWierda ValleySandton,2196


GENERAL INFORMATION

Country of incorporation and domicile South Africa

Nature of business and principal activities The group’s principal activities are those of a fully integrated provider of complete fluid conveyance products and services to the energy, water and chemical industries

Directors W van Coller R Viljoen T Siyolo H Odendaal SJDT Potgieter A Tasdhary MT Lategan

Registered office 22 Old Vereeniging Road Kliprivier Midvaal 1871

Business address 22 Old Vereeniging Road Kliprivier Midvaal 1871

Postal address PO Box 124186 Alrode Johannesburg 1451

Independent Auditors Baker Tilly Greenwoods Registered Auditors

Secretary R Viljoen

Company registration number 2002/025247/06

Level of assurance These financial statements have been audited in compliance with the applicable requirements of the Companies Act No. 71 of 2008, as amended.

Preparer The financial statements were internally compiled by: Juan Greyvenstein CA(SA)

Published 19 September 2014

PROXY FORM

RARE HOLDINGS LIMITED(Incorporated in the Republic of South Africa)Registration Number: 2002/025247/06Share Code: RAR ISIN: ZAE000092714(“RARE” or “the company” or “the group”)

FORM OF PROXY – FOR USE BY CERTIFICATED AND OWN–NAME DEMATERIALISED SHAREHOLDERS ONLY

For use at the AGM of ordinary shareholders of the company to be held at 22 Old Vereeniging Road, Kliprivier, Midvaal on 24 February 2015 at 14h00

I/We (Full name in print)

of (address)

being the registered holder of ordinary shares hereby appoint:

1. or failing him/her,

2. or failing him/her,

3. the chairman of the meeting,

as my proxy to vote for me/us at the AGM for purposes of considering and, if deemed fit, passing, with or without modification, the special resolutions and ordinary resolutions to be proposed thereat and at each adjournment thereof and to vote for and/or against the resolutions and/or abstain from voting in respect of the shares registered in my/our name(s) in accordance with the following instructions (see Notes):

Number of sharesIn favour of Against Abstain

1. To consider the presentation of the audited annual financial statements

2. Ordinary resolution 1 – Reappointment of auditors3. Reelection of retiring directors 4.1 Ordinary resolution 2 – Reappointment of H Odendaal4.2 Ordinary resolution 3 – Reappointment of SJDT Potgieter5. Election of members to the audit and risk committee 5.1 Ordinary resolution 4 – Reappointment of H Odendaal5.2 Ordinary resolution 5 – Reappointment of MT Lategan5.3 Ordinary resolution 6 – Reappointment of SJDT Potgieter6. Ordinary resolution 7 – Unissued shares placed under the control of

the directors7. Ordinary resolution 8 – General authority to issue shares for cash8. Ordinary resolution 9 – Authorised directors and/or company

secretary9. Special resolution 1 – Remuneration of non-executive director10. Special resolution 2 – Authority to repurchase shares by the company11. Special resolution 3 – Authority to repurchase shares by a subsidiary

of the company12. Special resolution 4 – Financial assistance to subsidiaries and other

inter-related entities.

Please indicate your voting instruction by way of inserting the number of shares or by a cross in the space provided.

Signed at on this day of 2015

Signature(s)

Assisted by (where applicable) (state capacity and full name)

Each RARE shareholder is entitled to appoint one or more proxy(ies) (who need not be a shareholder(s) of the company) to attend, speak and vote in his stead at the AGM.

NOTES TO THE PROXY FORM

NOTES

1. A RARE shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space(s) provided, with or without deleting “the chairman of the AGM”. The person whose name appears first on the form of proxy and who is present at the meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. A RARE shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of shares to be voted on behalf of that shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the chairman of the AGM, if he/she is the authorised proxy, to vote in favour of the resolutions at the meeting, or any other proxy to vote or to abstain from voting at the meeting as he/she deems fit, in respect of all the shares concerned. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder or his/her proxy, but the total of the votes cast and in respect whereof abstentions are recorded may not exceed the total of the votes exercisable by the shareholder or his/her proxy.

3. When there are joint registered holders of any shares, any one of such persons may vote at the meeting in respect of such shares as if he/she was solely entitled thereto, but, if more than one of such joint holders be present or represented at any meeting, that one of the said persons whose name stands first in the register in respect of such shares or his/her proxy, as the case may be, shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member, in whose name any shares stand, shall be deemed joint holders thereof.

4. Forms of proxy must be completed and returned to be received by the transfer secretaries of the company, Computershare Investor Services Proprietary Limited (PO Box 61051, Marshalltown, 2107), by not later than Friday, 20 February 2015.

5. Any alteration or correction made to this form of proxy must be initialled by the signatory(ies).

6. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the company’s transfer secretaries or waived by the chairman of the AGM.

7. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the AGM and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so.

GREYMATTER & FINCH # 8056

INTEGRATED ANNUAL REPORT 2014

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