integrated report 2012 › content › JSEAnnualReportsItems... · Brimstone investment Corporation...

i n t e g r a t e d r e p o r t 2 0 1 2

Mission stateMent

Brimstone investment Corporation seeks to be profitable, empowering and to have a

positive Social impact on the businesses and the individuals with whom it is involved,

including shareholders, e mployees, suppliers, customers and the greater community.

Corporate profile

Brimstone is a black controlled and managed investment company incorporated and

domiciled in the republic of South africa, employing in excess of 3 200 employees in

its subsidiaries and in excess of 16 000 in its associates and investments. Brimstone

seeks to achieve above average returns for its shareholders by investing in wealth

creating businesses and entering into strategic alliances to which it contributes capital,

innovative ideas, management expertise, impeccable empowerment credentials and a

values driven corporate identity.

Brimstone investment Corporation Limited 1

integrated report 2012

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contents

corporate overviewsalient Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Five Year Financial review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Corporate information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Five Year share price performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Combined market Capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Chairman’s review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Board of directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

executive directors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

tribute to professor Jakes Gerwel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Group profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

sustainabilityintegrated sustainability report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

corporate governanceintrinsic net asset value report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

social & ethics Committee report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

remuneration report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

audit & risk Committee report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

audited annual Financial statementsContents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

notes to the annual Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

notice of annual General meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

salient Features of the new Brimstone memorandum of incorporation (“moi”) (annexure 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Curriculum vitae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

proxy Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

2 Brimstone investment Corporation Limited

for the year ended 31 December 2012

2012 integrated report

salient Financial HigHligHts

Five year Financial review

restated 12 months 12 months 12 months 12 months 12 months ended ended ended ended ended 31 december 31 december 31 december 31 december 31 december 2012 2011 2010 2009 2008

operating results (r’000) revenue 1 946 472 1 867 915 1 796 904 855 731 260 566 operating profit 131 038 132 623 314 237 165 611 28 807 Headline earnings/(Loss) 844 362 429 883 415 418 311 298 (77 839) Financial position (r’000) total assets 5 725 464 4 604 804 3 619 830 5 596 248 3 774 555 net assets 2 929 986 2 113 630 1 673 122 2 568 462 2 191 161 performance per share (cents) Headline earnings/(Loss) 346 .0 176 .3 172 .7 130 .7 (33 .0)dividend 25 .0 18 .0 15 .0 32 .0 24 .0 net asset value 1 153 .1 819 .6 643 .9 1 030 .3 927 .3 intrinsic net asset value 1 473 .7 1 019 .7 777 .5 1 136 .6 954 .5 share statistics Weighted average number of shares in issue net of treasury shares 244 038 657 243 878 492 240 499 546 238 237 582 236 121 571 shares in issue at end of year net of treasury shares 244 108 075 243 873 731 243 891 472 239 323 989 236 301 759 Closing share price: ordinary (cents) 1 125 1 000 760 810 450Closing share price: “n” ordinary (cents) 1 195 820 510 780 400 market capitalisation: ordinary shares (r’000)* 481 364 428 298 355 491 365 404 197 271 market capitalisation: “n” ordinary shares (r’000)* 2 405 776 1 648 560 1 359 049 1 740 571 885 695

total (r’000) 2 887 140 2 076 858 1 714 540 2 105 975 1 082 966

*Net of treasury shares

percentager’000 2012 2011 Change

revenue 1 946 472 1 867 915 4%operating profit 131 038 132 623 (1%)Headline earnings 844 362 429 883 96%total assets 5 725 464 4 604 804 24% Weighted average number of shares in issue net of treasury shares (000’s) 244 039 243 878 shares in issue at end of year net of treasury shares (000’s) 244 108 243 874 performance per share (cents) Headline earnings 346 .0 176 .3 96%net asset value 1 153 .1 819 .6 41%




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corporate inFormation

registered office1st Floor, slade HouseBoundary terraces1 mariendahl Lane, newlands 7700po Box 44580, Claremont 7735

telephone number+27 21 683 1444

Fax number+27 21 683 1285

websitewww .brimstone .co .za

emailinfo@brimstone .co .za

bankersnedbank LtdFirst national Bank of southern africa Ltd

auditorsdeloitte & touche

internal auditorsKpmG

attorneysCliffe dekker Hofmeyr inc .edward nathan sonnenbergs

transfer secretariesComputershare investor services (pty) Ltd70 marshall street, Johannesburg 2001po Box 61051, marshalltown 2107+27 11 370 7700

directors prof GJ Gerwel (67) (Chairman) ^#∞ (passed away on 28 november 2012)F robertson (58) (executive deputy Chairman) † (appointed executive Chairman on 17 January 2013)ma Brey (58) (Chief executive officer) †∞LZ Brozin (57) (Financial director) †pL Campher (65) (Lead independent director) ^º*>#∞m Hewu (49) ^º#n Khan (56) ^º>*∞mK ndebele (63) ^º#Y pahad (63) ^º* (retired from Board effective 17 may 2012)La parker (59) ^º>aa roberts (60) ^º* (retired from Board effective 17 may 2012)Fd roman (49) ^º>

membership of committees at 31 december 2012Non-Executive ^Independent ºExecutive †Member: Audit Committee >Member: Human Resources and Nominations Committee #Member: Investment Committee *Member: Social and Ethics Committee ∞

company secretarytiloshani moodley Ba (Law) LLB

chief financial officermichael o’dea BCom (Ca)sa

sponsornedbank Capital(a division of nedbank Ltd)135 rivonia roadsandton 2196po Box 144, Johannesburg 2000+27 11 295 8602

company registration number1995/010442/06




Five year sHare price perFormance

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C o m B i n e d m a r K e t C a p i ta L i s at i o n o F o r d i n a rY a n d “ n ” o r d i n a rY s H a r e s

Based on total issued number of shares, including treasury shares.

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cHairman’s review

“ Like the butterfly evolves over its lifetime, initially at the mercy of the elements and predators, then maturing to a tough and agile species, so Brimstone has matured into an organisation with strong credentials .”

introductionif i was asked a year ago about the outlook for Brimstone for the year 2012, i would never have imagined, let alone predict with any reasonable degree of certainty, the current position . on 28 november 2012 we lost an icon, a visionary, a friend, a mentor and a leader of exceptional repute . no tribute would be able to fully encapsulate the many dimensions of the wisdom and immense leadership of professor Jakes Gerwel . it comes as no surprise when reflecting on the process of the birth of our democracy that prof Gerwel had to be a key part of shaping this democracy . as he left his mark on our democracy, so did he leave his mark on all our stakeholders . We are honoured and will always value the many lessons learnt from prof Gerwel . His diplomatic and insightful approach to often very tough situations would ease our entire team and allow us to focus on the technical aspects whilst he would seamlessly manage the qualitative issues at hand . With his unwavering counsel always rooted in fairness, we will make sure that the legacy of prof Gerwel lives on forever . Like the butterfly evolves over its lifetime, initially at the mercy of the elements and predators, then maturing to a tough and agile species, so Brimstone has matured into an organisation with strong credentials . it has firmly secured its place as a credible corporate citizen and preferred Bee partner . Brimstone has roots deeply anchored in the community with an agenda of profitability, transformation and restoration of social and economic justice . the financial results for 2012 in no uncertain terms also reflect the maturity, and vindicates the investment strategy, of Brimstone . We are proud to report excellent results to our shareholders . significant positive movements in all our key financial indicators herald the next phase in the existence of Brimstone . the results are stellar and are reflected in the growth of the Company’s share price over the period . shareholders will again receive a

cash dividend, our eleventh consecutive year of declaring dividends . the circumstances in the past year have further galvanized our team as we continue to deliver on our mandate to shareholders on both the economic and social fronts .

macro-economic overviewGlobally, economic uncertainty continued during the year under review . in the United states, long-term fiscal problems continued, with government debt still outgrowing the economy . this was not only driven by a combination of recession and stimulus spending – the Us healthcare system now costs more than twice as much per person compared to the average for other developed countries . this ratio is projected to deteriorate in the future . although south africa cannot be compared to the world’s largest economy, this is

an acute lesson for the implementation of a workable national Healthcare system .

in europe, continued weakness in the single currency area was experienced, with usually solid economies such as austria and the netherlands posting quarterly declines . Whilst austerity measures in italy were starting to ease, Greece was still heading towards the height of its financial distress, which is expected to lead to a more pronounced recession .

Locally, economic growth declined, especially in the latter part of 2012 with unrest in the mining and agricultural sectors, and national transport strikes leading to job losses . We directly felt the impact of similar industrial action at one of our subsidiaries .

the south african economy recorded a decline in competitiveness which reflected in wage settle-

ments above increases in productivity . infrastructure constraints contributed to a widening current account deficit . these factors contributed to the downgrade of south africa’s credit rating by two credit rating agencies . the rand also weakened against the major currencies during the year .

Fred robertsonExecutive Chairman



cHairman’s review (continued)

as a consequence, south africa’s economy expanded at its slowest pace in the third quarter since 2009 albeit that south african listed equities performed well on the Jse . according to statistics south africa, the unemployment rate stood at 24 .9% at the end of the fourth quarter of 2012 . Weak retail sales numbers suggest that inflation is likely to remain contained and commerical banks expect that the monetary policy Committee will keep monetary policy neutral over an extended period in order to balance weak growth prospects and rising inflationary pressures . against this backdrop, corporate south africa remained cautious about investment, with corporate deposits increasing to approximately r520 billion . though the global macro-economic outlook remains muted, we remain optimistic and will embrace the challenges the international and domestic economy presents in the year ahead . We are inspired by the national development plan’s foreword, “south africa belongs to all its people and the future of our country is our collective future . making it work is our collective responsibility .”

underpinning of investment sectorsBrimstone has evolved over the last number of years . the Company has become more focused and its key investment sectors are the defensive sectors of food, financial services and healthcare . Given Brimstone’s track record of unlocking value and its great partnership approach, we continue to see investment opportunities . Whilst pricing expectations remain unrealistic, Brimstone will continue to focus on its underlying investments and assist the management of those businesses to find new markets and strategic opportunities .

strategic updatethe Group is well resourced in terms of cash and immediate access to funding facilities . the Group has a diversified portfolio of investments in the food, financial services and healthcare sectors . We will continue to pursue opportunities that fit our criteria, such as strong cash flows, solid management, real assets and socially responsible policies . Brimstone has become a partner of choice and emerged as a credible player in the universe of black controlled entities .

taste Holdingsduring the review period, we finalised our investment in taste Holdings Limited (“taste”) . Brimstone acted as a catalyst to taste further acquiring the Fish & Chips Company . the synergy with Brimstone’s existing investments in the food sector is significant . Fish is south africa’s fourth largest fast food category, after burgers, pizza and chicken . the Fish & Chips Company is arguably the largest chain, by number of outlets, in the take-away fish category, with 295 franchised outlets . the brand is expanding across the sub-continent with franchises opening in namibia, Zambia, mozambique

and Botswana . taste is listed on the Jse’s main board with an impressive portfolio of brands including scooters pizza, st elmo’s, maxis and natal Wholesale Jewellers (nWJ) .

life Healthcarein July 2012 the Board and investment committee decided to dispose of a portion of Brimstone’s shareholding in Life Healthcare . the share performed exceptionally well to date and the Board felt that it was prudent to realise some value created by the increased share price of Life Healthcare . Brimstone realised r139 .6 million in cash from the disposal of a portion of this holding . Brimstone still holds 5 .04% of Life Healthcare’s issued share capital and remains one of the largest shareholders on its register . the Company remains supportive of Life Healthcare’s diversification strategy into india . as a result of the transaction, Brimstone has diversified its asset base by converting the value of a portion of its Life Healthcare shares into cash . this, together with Brimstone’s funding facilities, will be available to take advantage of new investment opportunities . Following the passing of professor Jakes Gerwel who also served as chairman of Life Healthcare, we are pleased that mustaq Brey has accepted the position of chairman of Life Healthcare .

afena capital Brimstone acquired a 25 .1% interest in afena Capital in march 2012 . afena is an investment management firm that offers specialist equity and balanced portfolios mainly serving the local institutional market .

regulatory environmentthere is concern around the annual surveys that monitor the marine resource . this is an important exercise and failure or any further delay in carrying out these surveys will affect the ability of all local fisheries to export their products to certain primary export markets . We continue to engage with the regulator through our subsidiaries and investments and have been assured that this is a priority and is receiving due attention .

csr and empowermentBrimstone was founded with the support of economically marginalised individuals, mainly from the Cape Flats . almost two decades on, most of these initial investors are still proud shareholders of Brimstone . the Company continues to provide a personal service to all shareholders, and particularly to many of those for whom Brimstone is their only investment . Brimstone has a proud track record in creating wealth for all shareholders by way of capital growth, a steady stream of dividends, and unbundling certain of the Company’s assets to its shareholders .



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it is not only our duty, but part of our overall sustainability as the largest employer and economic player on the Cape West Coast to incentivise and empower our people . For this reason, our businesses do not compete with the community . similarly, House of monatic remains one of the largest employers in the clothing industry in the Western Cape . House of monatic is now the premier manufacturer of high quality mens formal wear in the country . the vast majority of the employees at House of monatic are also shareholders in Brimstone . Whilst the clothing industry has experienced extremely challenging times in the last decade, seeing many factory closures or mass retrench-ments, House of monatic has re-engineered itself and gained traction; bucking the trend in a tough sector . increasing crime levels, violence against women, the poverty trap, poor quality of education and rising unemployment deserve further discussion and discourse at all levels . active citizenship and corporate south africa should further advance the discussion of a moral wage relative to a minimum wage . our support programmes are primarily directed at developing and empowering previously disadvantaged groupings . i am pleased to advise that the Brimstone empowerment share trust (Best) has allotted 100 000 shares to two new bene-ficiaries during the year . the aryan Benevolent Home Council in Kwa-Zulu natal and the al-Fidaa Foundation in the eastern Cape each received an award of 50 000 Brimstone “n” shares . the presentation of shares to the aryan Benevolent Home Council in durban was one of the last public engagements attended by professor Jakes Gerwel . Further information on these beneficiaries is presented in our fourth sustainability report which forms part of this integrated report .

governance and the boardthis is the second integrated report and we remain cognisant that corporate governance should be an integral part of the way Brimstone conducts its business . For this reason we continuously

review, modify or adapt our risk and governance policies to ensure a sustainable, responsible business . mr pL Campher will continue as lead independent non-executive director – a role he has fulfilled commendably .

dividend distributionthe excellent results of the Group is evident in the growth in intrinsic value and a solid increase in earnings . i am pleased to announce that total assets increased by r1 .1 billion to r5 .7 billion in the year under review . the Board considered these results and approved a final dividend of 25 cents per ordinary share, payable to shareholders on 22 april, 2013 .

appreciationthe support and guidance from the extended Brimstone family in dealing with the loss of prof Gerwel must be mentioned . i would especially like to thank mustaq Brey, Lawrie Brozin, and the Board of directors for this . i would like to thank the Gerwel family for having given us the opportunity of being a part of Jakes’ life . i also wish to thank all our shareholders who continue to support us and have a firm belief in Brimstone’s ability to deliver to their expectations . thank you to our executive team and staff of all our subsidiaries and investments for their continued delivery on our growth strategy . Brimstone will always remain true to its mission of being profitable, empowering, and having a positive social impact .

F robertsonExecutive Chairman

“south africa belongs to all its people and the future of our country is our collective future . making it work is our collective responsibility .” – National Development Plan



board oF directors

F robertson eXeCUtive CHairman length of service with the company: 17 years directorships: non-executive chairman of Lion of africa insurance Company Ltd; sea Harvest Holdings (pty) Ltd; House of monatic (pty) Ltd and serves on the boards of remgro Ltd; aon re africa (pty) Ltd; savings and investments association of south africa (asisa) and old mutual Life assurance Company (south africa) Ltd .

ma brey CHieF eXeCUtive oFFiCer length of service with the company: 17 years directorships: non-executive chairman of oceana Group Ltd; Life Health care Group Holdings Ltd: and serves on the boards of nedbank Ltd; Lion of africa insurance Company Ltd; aon re africa (pty) Ltd; House of monatic (pty) Ltd and the scientific Group (pty) Ltd .

lZ brozin FinanCiaL direCtor length of service with the company: 16 years directorships: the scientific Group (pty) Ltd; nandos Group Holdings Ltd and sea Harvest Holdings (pty) Ltd .

pl campher Lead independent direCtor date appointed to the board: 7 march 2006Qualification: Becon directorships: sun international Ltd; strate Ltd; savings and invest-ments association of south africa (asisa); serves on Financial sector Charter Council and BUsa Council; saFeX Clearing Company (pty) Ltd; international investment Funds association .

m Hewu date appointed to the board: 15 september 1997 Qualification: BComm (Hons) directorships: southern ambition trading; Kayamnandi investments; onyx Financial services and amahlathi Logistics .

n khan date appointed to the board: 1 november 1995 Qualifications: Bsc(Qs); maQs; aaarb directorships: stonefountain properties (pty) Ltd; perthpark properties (pty) Ltd; BtKm inc and proman project management services (pty) Ltd .

mk ndebele date appointed to the board: 7 march 2006 Qualifications: Ba (economics); msW (social planning) (Usa denver) directorships: imam abdullah Haron education trust (trustee); anglican diocese of Cape town and st Georges Cathedral (Chancellor) .

la parker date appointed to the board: 1 november 1995 directorships: FpG Group (pty) Ltd; suburban Cigarette distributors (pty) Ltd; investbrands CC; al amien Foods CC and is a member of the board of red Cross Childrens’ Hospital .

Fd roman date appointed to the board: 26 march 2008 Qualifications: Ba; post Graduate secondary teacher’s diploma directorship: direng investment Holdings .

independent non-executive directors

executive directors



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team brimstone

n Feleza t moodley tJ tapela c vanda s Hamit

F allie s dhansay l mavundla s patel d masango

t lebasa m brey n Jogee m o’dea l ramgopaul

n pangarker e visagie p sibanda g kotze F tima



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executive directors’ report

Highlightsmanagement is pleased to report a year of sterling performance across all key measures, despite difficult trading conditions . Headline earnings increased by 96% to r844 .4 million from the prior year’s r429 .9 million and basic headline earnings per share was up from 176 .3 cents in 2011 to 346 .0 cents . profit for the year of r842 .1 million increased by 80% on the previous year’s r468 .8 million and return on average equity increased to 35 .2% from 25 .7% in the previous year net profit before taxation increased to r1 .1 billion in the year under review from r598 million in 2011 . dividend income from underlying investments in the food sector for the first time exceeded that of the healthcare sector, which is indicative of a maturing and continuously evolving business . the food sector contributed 43% to intrinsic gross asset value, followed by healthcare at 34% and financial services at 15% . the balance comprises smaller investments across various sectors .

net asset valuetotal assets increased by 24% from r4 .6 billion to r5 .7 billion in the year under review . net asset value of r2 .8 billion for the current year compares well with the r2 .0 billion reported in the comparative year and translates to a net asset value per share of r11 .53 at year-end (2011 – r8 .20) an increase of 40 .6% . intrinsic net asset value (inav) calculated on a line-by-line basis, totalled r3 .6 billion, or r14 .74 per share (2011 – r2 .5 billion or r10 .20 per share) representing an increase of 44% from 2011 . on a fully diluted basis inav per share is r13 .99 which represents a 43% increase on the r9 .81 reported in 2011 . this is mainly as a result of increases in the market valuation of Life Healthcare and oceana shares . as at 31 december 2012, Brimstone ordinary shares were trading at a discount of 23 .7% to intrinsic net asset value (2011 – 1 .9%) . Brimstone “n” ordinary shares traded at a discount of 18 .9% to the Group’s intrinsic net asset value (2011 – 19 .6%) .

acquisitions and disposalsin January 2012, Brimstone acquired 24 million shares in taste Holdings Limited at r1 .54 per share . Brimstone acquired a further 540 000 shares at ruling market prices during the year . Brimstone acquired a 25 .1% interest in afena Capital in march 2012 . afena Capital is an investment management firm that offers specialist equity and balanced portfolios serving the south african institutional market . during July 2012, Brimstone disposed of 4 .5 million shares in Life Healthcare at an average price of r31 .04 per share for a total consideration of r139 .6 million .

investment portfolio review

Food sector

sea Harvestthe total allowable catch (taC) for hake increased by 10% in 2012 and sea Harvest’s quota was increased commensurately . the company holds hake fishing rights to 26 .8% of the taC . overall catch rates were approximately 20% lower than those experienced in 2011 . the good fishing conditions experienced in the previous year became sporadic in the first half of 2012 and deteriorated in the second half . sea Harvest suffered an unprotected strike in august 2012, and as a result approximately 5 weeks’ of production was lost . on the local market, sea Harvest maintained its status as the leading retail brand in frozen fish and increased market share . the expansion into other export markets has been successful and sales volumes are bedding down well . Good demand in serviced markets has enabled price increases despite continued austerity measures in most of sea Harvest’s traditional export markets . sales increased encouragingly by 6 .5% exceeding the r1 billion mark for the first time in the company’s history . eBitda, was however 18 .5% lower than the comparative period at r123 million . external debt was reduced by 12 .1% to r217 million and cash on hand increased by 88 .5% to r147 million . it is expected that a significant portion of sea Harvest’s longer term debt will be retired over the next 18 months . Capital expenditure is expected to remain stable for the foreseeable future . the weaker exchange rate and recovering global demand for hake should result in an improved performance in 2013, provided catch rates remain stable .

oceanaoceana recorded good results for its year ended 30 september 2012 with operating profit before abnormal items increasing by 39% . improved results were achieved across all the business segments on the back of a 27% increase in turnover . the canned fish business performed particularly well and together with the turnaround in the fishmeal operation was the main contributor to the rise in profit . oceana’s Lucky star is the country’s leading brand in canned pilchards and sells in excess of 700 000 cans per day . oceana accounts for 26 .5% of Brimstone’s intrinsic gross asset value . the Group received and accrued r60 .5 million in dividends from oceana and recorded r27 .7 million in equity accounted earnings on a closing share price of r69 .82 per share (2011 – r48 .00 per share) . oceana remains well positioned to take advantage of opportunities for further organic and acquisitive growth .



executive directors’ report (continued)

taste Holdingsas referred to earlier in this report, Brimstone acquired 24 540 099 ordinary shares in taste Holdings at an average price of r1 .57 per share during the year and received a dividend of r960 000 from the company in the review period . Brimstone recorded a fair value gain of r67 .1 million on a closing share price of r4 .30 per share . the acquisition of the Fish & Chips Company has now been fully integrated into taste . the group remains well positioned and focused on improving franchisee profitability and bedding down its warehousing and distribution business over the short term .

tiger brandsBrimstone’s rights to tiger Brands shares, accounted for as options, have been revalued at year end . the independently calculated option valuation was based on a closing share price of r325 .25 per share (2011 – r250 .88 per share) .

Financial services sector

lion of africa HoldingsLion of africa is the country’s largest black-owned short-term insurer and is the first insurance company to achieve a Level 1 Broad Based Black economic empowerment rating in terms of the BBBee act of 2003 . the group recently received an a(za) stable credit rating from the standard and poor’s rating agency with an endorsement on the organisation’s claims paying ability . Gross written premiums reduced by 2 .2% to r823 .0 million from r841 .9 million in the prior year . net written premiums reduced by 9 .4% from r552 .1 million in the previous year to r500 .0 million in the year under review . the underwriting result before expenses improved by 2 .3% and coupled with strong net investment returns, the net profit before tax for the year was r23 .3 million compared to r28 .3 million in the previous year . the short-term insurance sector was impacted by a number of abnormal weather patterns during the reporting year which adversely affected underwriting profit . net operating profit after tax for the year under review subsequently dropped by 7 .7% from r22 .1 million in 2011 to r20 .4 million . the company’s net loss ratio improved from 60 .9% in the prior year to 60% . net asset value increased to r214 million at 31 december 2012 . Brimstone received a dividend of r8 .9 million for the reporting period .

aon re africaaon re africa (pty) Ltd, trading as aon Benfield, continues to be the leading reinsurance broker licensed and operating in south africa and the rest of the continent . Brimstone received r5 .1 million in dividends from aon re africa which were utilised to settle the outstanding debt on the investment . Brimstone reported an equity accounted loss of r534 000 on the investment .

afena capitalas mentioned under “acquisitions and disposals” above, Brimstone acquired a 25 .1% interest in the company during the year under review at a cost of r45 .5 million . the Group received dividends totaling r2 .3 million from afena and reported equity accounted earnings of r700 000 .

nedbankBrimstone’s rights to nedbank shares, accounted for as options, have been revalued at year end . this independently calculated option valuation was based on a closing price of r188 .00 per share (2011 – r145 .00 per share) .

old mutual plcBrimstone’s rights to old mutual plc shares, accounted for as options, have been revalued at year end, based on a closing price of r24 .49 per share (2011 – r17 .04 per share) .

Healthcare sector

life Healthcare (lHc)Life Healthcare delivered strong financial results on the back of continued growth and improved operational efficiencies . LHC’s revenue increased by 11 .5% to r10 .9 billion (2011 – r9 .8 billion) . the group entered the fast growing indian healthcare market in January 2012 following an acquisition of a 26% stake in max Healthcare institute Limited, india . Brimstone received dividends totaling r57 .2 million from LHC . the share price increased from r20 .64 per share to r33 .70 per share at year end, resulting in the increase in the fair value of this investment of r732 million .

the scientific grouptrading conditions remained challenging on the back of muted government spending in the healthcare sector . the scientific Group nonetheless reported an improved performance following strong cost controls and remains well positioned to benefit from the implementation of government’s health insurance programme rollout .

other investments

House of monaticHouse of monatic’s turnover increased by 7 .2% to r174 million whilst net profit grew by 28 .8% to r4 .9 million . employment levels have stabilised at around 750 staff . dti incentives will further enable monatic to expand and modernise its plant . House of monatic owns leading brands viyella and Carducci, and manufactures under licence for other leading international and local brands .



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rex trueform and african & overseas (Queenspark)Brimstone holds a 33% effective economic ownership in rex trueform and african & overseas, which it acquired for a total consideration of r47 .3 million in 2007 . the value of this holding based on market value per share at year end was r113 .2 million, an increase of r6 .6 million for the year . dividends received for the year amounted to r3 .1 million .

galaxy gold miningGalaxy Gold is a junior south african gold mining and exploration company, focused on exploitation of the Barberton Greenstone Belt . Brimstone holds 10% of the ordinary shares in the company . this investment has been written down to its fair value by r32 million .

mtn ZakheleBrimstone’s mtn Zakhele shares, accounted for as options, have been revalued at year end . the independently calculated option valuation was based on a closing mtn share price of r177 .60 per share (2011 – r143 .72 per share) .

environment and the communitythis is Brimstone’s second integrated report which complies with the guidelines and recommendations of the King report on Governance for south africa 2009 (King iii) . the sustainability report included in this integrated report is based on guidelines provided by the Global reporting initiative (Gri) . the Group is proud to report continued improvement against applicable benchmarks set by these guidelines, which are continuously being refined and enhanced . this integrated report provides a snapshot of the Group’s activities and successes over the reporting year, least of which is the impact of its social programmes and the empowerment of communities . during the year under review, the Group introduced an additional two beneficiaries to its share participation scheme, the Brimstone empowerment share trust (Best) . there are currently 19 beneficiaries in the trust, each with an allocation of at least 50 000 Brimstone “n” ordinary shares each . these shares vest over a period of five years, but beneficiaries have immediate economic participation in the form of dividends . the net effects are measurable, sustainable and far reaching social programmes with a meaningful impact on society .

dividendBrimstone’s Board has declared a final dividend of 25 cents per share, the 11th consecutive year of dividend declaration . Based on the Group’s performance during the review period, the dividend is in line with levels prior to the unbundling of Life Healthcare in 2010, however the Board is cautious of paying dividends at the cost of asset growth and no formal dividend policy has been adopted .

our strategic focusthe Group’s focused investment strategy remain in the defensive sectors namely food, healthcare and financial services Brimstone’s rights to nedbank Group and old mutual plc shares mature in January and may 2015 respectively, providing further value unlocking opportunities . management is considering a number of earnings enhancing options .

looking aheadBrimstone remains well capitalised to pursue value enhancing transactions based on cash generative, quality assets . management takes cognisance of the market’s current high earnings multiples and will continue its prudent approach to investment opportunities . the Group has a solid track record of unlocking shareholder value, supported by an experienced team with proven deal-making ability . the Group maintains a long-term view on its underlying investments . the Board recognises the importance of succession planning, and a second generation of competent and committed management is being mentored with a view on the sustainability and growth of Brimstone . Brimstone will continue to do empowerment differently, for the benefit of all its stakeholders .

thanksthe executive directors, Fred robertson, mustaq Brey and Lawrie Brozin thank their fellow directors for their continued guidance, the executive team, staff, shareholders and all stake-holders for contributing to Brimstone’s continued success . in addition, the directors would like to pay a special tribute to the legacy of its former chairman, prof Jakes Gerwel who sadly passed away in november 2012 . His mentorship, support, guidance, and views on protecting our corporate dignity will always be remembered .



professor Jakes gerwel18 January 1946 – 28 november 2012

Brimstone is proud of its

association with a true

visionary and leader,

professor Jakes Gerwel .

may his legacy live on .

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e F F e C t i v ei n t e r e s t: 5 . 0 4 %

– Listed on the Jse– Chief executive officer: m Flemming– principal business is acute hospital care and comprises one of the

widest geographic spreads of acute care hospitals and day surgical centres in south africa .

– Website: www .lifehealthcare .co .za

e F F e C t i v ei n t e r e s t: 2 8 . 2 %

– Unlisted– Chief executive officer: s Landman– supplier of high quality science and medical equipment .– Website: www .scientificgroup .com

e F F e C t i v ei n t e r e s t: 1 0 0 %

– Unlisted– managing director : m maurer– Company involved in the design, marketing and manufacturing of

mens and ladies clothing and accessories .– Website: www .monatic .co .za

e F F e C t i v ei n t e r e s t: 3 3 %

– Listed on the Jse (rex trueform Clothing Company Ltd and african & overseas enterprises Ltd) .

– Chief executive officer: C radowsky– Group involved in the manufacturing, marketing and retailing of

mens and ladies clothing nationally and internationally .– Website: www .rextrueform .com

e F F e C t i v ei n t e r e s t: 5 8 . 1 %

– Unlisted– Chief executive officer: G Bezuidenhout– the principal business of sea Harvest is deep sea trawling of hake .

Largest employer on the West Coast .– Website: www .seaharvest .co .za

e F F e C t i v ei n t e r e s t: 1 6 . 8 3 %

– Listed on the Jse – Chief executive officer: F Kuttel– oceana engages in the catching, processing and procurement of

marine species including pilchard, sardine anchovy, redeye herring, lobster, horse mackerel, squid, tuna, hake and other deep sea species . products are sold through international and local marketing channels . in addition, oceana provides extensive cold storage and fruit handling facilities .

– Website: www .oceana .co .za

group proFile



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– Listed on the Jse – Chief executive officer: C Gonzaga– taste Holdings invests in a portfolio of mainly franchised, category

specialist and formula driven, quick service restaurant and retail brands, including st elmos, maxis, scooters pizza, nWJ and the Fish & Chips Co .

– Website: www .tasteholdings .co .zae F F e C t i v e

i n t e r e s t: 1 2 . 5 3 %

– Unlisted– Chief executive officer: s Chikumba– aon re africa is a leading reinsurance and retrocession

intermediary in sub saharan africa, based in Johannesburg, south africa with a subsidiary office in Harare, Zimbabwe .

– Website: www .aon .com e F F e C t i v ei n t e r e s t: 1 8 %

– Unlisted– Chief executive officer: a samie– Formed in august 1999, Lion of africa is an established, growing

insurance brand on the south african insurance landscape . it represents a new breed of insurer, founded on the premise of transformation and the provision of innovative insurance solutions for all south africans .

– Website: www .lionsure .come F F e C t i v e

i n t e r e s t: 1 0 0 %

– Unlisted– Chief executive officer: t naledi – afena Capital is an investment asset manager . they are active,

valuation driven long term investors and generate returns by adhering to a clearly defined investment philosophy .

– Website: www .afenacapital .co .zae F F e C t i v e

i n t e r e s t: 2 5 . 1 %

– Listed on the Jse – Chief executive officer: m Brown– nedbank Group Ltd is a bank holding company, which operates

as one of the four largest banking groups in south africa .– Website: www .nedbankgroup .co .za

e F F e C t i v e i n t e r e s t: 0 . 7 5 %

– Listed on the Jse and on the London, Zimbabwe, stockholm and malawi stock exchanges .

– Chief executive officer: J roberts– diversified financial services, including life insurance, investment

management and administration .– Website: www .oldmutual .com


– Listed on the Jse – Chief executive officer: p matlare– a branded FmCG (Fast moving Consumer Goods) company that

operates mainly in south africa and selected emerging markets .– Website: www .tigerbrands .co .za


re aFriCa

plc



integrated sustainability report

this is the fourth sustainability report prepared by Brimstone and its subsidiaries . it has recorded considerations from the Company and its three operating subsidiaries . the guidelines provided by the Global reporting initiative (Gri) Boundary protocol was used in determining the parameters of this report . disclosure is therefore limited to the underlying investments where the Company exercises control over the financial and operating policies of these investments . all core performance indicators have been referenced to this guideline by including the relevant codes in brackets next to the headings . standard performance indicators have been addressed in the order that has been suggested by this guideline . the King iii report on Corporate Governance (King iii) requires that the Company’s sustainability report be audited by an independent external professional . Brimstone’s sustainability report had not been audited but verification of certain key sustainability metrics have been obtained through agreed upon procedures performed by deloitte & touche . a copy of the agreed upon procedures report is available at the registered office of the Company . Brimstone is committed to conducting all its businesses in an environmentally, economically and socially responsible manner .

strategy and analysis as an investment holding company, Brimstone will continue to create value for its wide range of shareholders by expanding on the successful business model that has been followed since inception . its strategy will continue to be that of creating value for its shareholders in an environmentally responsible way by giving them exposure, either directly or indirectly, to a number of businesses that display great development and growth potential accompanied by good cash flows . the Group structure referred to later in this report shows the entities that we partner with as investments, associates, joint venture or subsidiaries . Brimstone will continue to play a role in the development of these investments into fully operational and meaningful businesses that contribute environmentally, economi-cally and socially . each of these entities are currently at different phases of this development cycle . at all stages Brimstone will act in a responsible manner, thereby creating value for all stake-holders . the focus of its strategy will continue to be the creation of multiple exposures for its shareholders to a variety of business sectors and decrease their dependency on Brimstone and the sector in which it operate . to enhance the above Brimstone will continue to search for solid businesses that generate strong cash flows in business sectors that it prefers . Brimstone’s track record has proven that it is a worthy partner in that it provides a network, management expertise and a culture of ethics and good corporate governance . this culture and track record has ensured that the Company has been able to secure a number of investments in large corporates in the mainstream economy .

organisational profile

brimstone investment corporation limitedregistration number: 1995/010442/06Head office: newlands, Cape town branch: sandton, Johannesburgthe Company operates as a listed investment holding company in south africa . the Group comprises of three operating subsidiaries and a number of associates, investments and options . it operates with the highest governance and subscribes to the principles of King iii . this ensures that it is governed by a board of directors and the relevant sub committees . operationally it consists of an executive team which performs governance, operational and evaluation roles in the Company and its subsidiaries and associates . all operations are south african although some of the investee companies serve international markets .

the three operating subsidiaries are:

sea Harvest Holdingsthe effective percentage held is 58 .1% . the principal business of sea Harvest is deep sea trawling of hake . sea Harvest is the largest employer on the West Coast of the Western Cape and serves local and international markets . it is the leading supplier of white fish in the country .

lion of africa insurance company Lion of africa is a wholly-owned subsidiary of Brimstone . it is a midsized short-term insurance company and services the corporate, commercial and parastatal market . it is the largest black-owned insurer and the only Level 1 BBBee rated insurer in the country . it was founded on the principle of transformation and premise of black ownership .

House of monatic House of monatic is a wholly-owned subsidiary of Brimstone . it is a leading manufacturer of high quality mens formal wear in south africa . the business is over 100 years old and has developed well-known brands such as Carducci and viyella . it also manufactures garments for leading local retailers and high-end fashion labels currently being sold in south africa .

for the year ended 31 december 2012

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the other investments held by Brimstone are:

other investmentsassociates investments option investments

the scientific Group (pty) Ltd Life Healthcare Group Holdings Ltd

old mutual plc

oceana Group Ltd rex trueform Clothing Company Ltd

nedbank Group Ltd

aon re africa (pty) Ltd african & overseas enterprises Ltd

tiger Brands Ltd

Hot platinum (pty) Ltd Galaxy Gold mining Company Ltd

mtn Zakhele

afena Capital (pty) Ltd taste Holdings Ltd

phuthuma nathi investments Ltd

scale of the operationnumber of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 267Group revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .r1 .9 billionmarket capitalisation* . . . . . . . . . . . . . . . . . . . . . . . . . .r3 .7 billiontotal debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .r2 .7 billionBlack beneficial economic interest . . . . . . . . . . . . . . . . . . . . 57 .74%Black voting rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 .09%

* Based on the total issued number of shares, including treasury shares.

organisational structureBelow is a schematic presentation of Brimstone and its operating subsidiaries, including information regarding their number of employees and ownership interest . only summarised “non-financial” disclosures relating to the social and environmental performance of Brimstone’s operating subsidiaries are provided in this report .

market capitalisation the market capitalisation of Brimstone at the beginning of the year was r2 .65 billion . this has grown steadily during the year to reach r3 .7 billion at the year end . We believe that this steady growth will continue as the market recognises Brimstone’s strategy of value creation .

report profile this report is for the year ended 31 december 2012 . this is the fourth integrated sustainability report produced by Brimstone . the inaugural report was presented three years ago . it is intended to continue along this journey of integrated reporting to enable the Company to refine the report to fully comply with King iii and the Jse Listings requirements . For any enquiries on this report please contact nisaar pangarker (npangarker@brimstone .co .za), michael o’dea (modea@brimstone .co .za) or tiloshani moodley (tmoodley@brimstone .co .za) at the e-mail addresses provided or telephone number +27 21 683 1444 .

report scope and boundary as an investment holding company Brimstone endeavours to report on all businesses where it exercises significant influence . Where it does not enjoy control it has chosen to influence the principles of sustainability within the context of that business, but will however not report the landscape and progress . Brimstone currently has three operating subsidiaries, i .e . sea Harvest, Lion of africa and House of monatic . these subsidiaries are unlisted and are operated and managed as independent entities with autonomous boards of directors . data relating to investments where Brimstone does not exercise operational control are not presented in this report . this approach has been determined using the Gri guidelines on boundary setting, as published .

stakeholders stakeholders are continually identified by a careful examination of the businesses and the effects they have on the wider economy and community . this is done at Group level and includes similar assessments at subsidiary level . By engaging with these stake-holders common issues emerge and these have been consolidated in the stakeholder table provided in this report . Brimstone considers all issues to be important but has prioritised them by the availability of the relevant resources and legislative deadlines . this report is not restrictive and it endeavours to include all areas raised in the economic, environmental and social spheres of our Group . as an investment holding company, Brimstone continues to emphasise the qualitative aspects of the triple bottom line (economic, environmental and social) and has started to develop measurement techniques on the quantitative measure-ments in the subsidiaries that are appropriately exposed .

ownership

58.1%number of employees

2 317

ownership

100%number of employees

166

ownership

100%number of employees

761

associates, investments, and option investments




governance, commitments and engagement

governance the highest governing body at Brimstone continues to be the Board of directors . the Board remains fully committed to the principles of integrity, transparency and accountability in its dealings with all its stakeholders . it endorses good corporate governance and ensures that the Company is compliant with the Code of Corporate practices and Conduct contained in the King iii report on Corporate Governance (King iii) . Brimstone is an investment holding company and accordingly all references to the “the Group’’ in this context denote the Company and its subsidiaries . the Board is satisfied that Brimstone has met the principles of King iii as legislatively required throughout the year under review . When a principle of King iii has not been adhered to as specified, this is explained where relevant . a summary of all the principles of King iii that were not applied is presented below: – the Chairman of the Board, prof GJ Gerwel, (until his

passing on 28 november 2012) while being a non-executive director, was not independent in terms of the King iii definition . after due consideration of prof Gerwel’s qualifications and business experience, attributes and interaction with the Board, the Board deemed his chairmanship in all circum-stances as satisfactory and appropriate . executive deputy Chairman, mr F robertson was appointed as executive Chairman of the Board, effective 17 January 2013 . in line with corporate goverance best practice and the Listings requirements of the Jse Limited, mr pL Campher serves as Lead independent director .

– the directors perform self evaluations annually, but have decided not to disclose the overview of the appraisal process, results and action plans in the integrated report due to the potentially sensitive nature thereof .

– the Board does not intend to institute a formal dispute resolution process as it believes that the existing processes within the Group operate satisfactorily and do not require a more formal and separate mechanism . shareholders have remedies in terms of the Companies act .

– the Board does not believe that directors should earn attendance fees in addition to a base fee . attendance at meetings has generally been very good and where directors are unable to attend a meeting, they nevertheless contributed to matters to be considered at the relevant meeting .

the Board is further satisfied that the Company has met the requirements of the Companies act and the Jse Listings requirements . during the year under review the Company focused on ensuring compliance with the new requirements of the Companies act, such as the establishment of a social and ethics Committee and the replacement of the memorandum and articles of

association of the Group’s companies with the newly required memorandum of incorporation (moi) . the Company’s moi will be presented to shareholders at the upcoming annual General meeting on 22 may 2013 . a summary of the salient features is included in the integrated report on pages 131 and 133 .

board of directorsthe Board has a formal charter setting out, inter alia, its compo-sition, meeting frequency, powers and responsibilities, particularly with regard to financial, statutory, administrative, regulatory and human resource matters .

Key responsibilities in terms of the charter include, the following: – determining the Company’s vision, mission and key

objectives; – determining the Group’s values and incorporating them into

the Code of Conduct; – appointment of new directors;– providing strategic direction to the Company, and taking

responsibility for the adoption of strategic plans; – monitoring compliance with laws and regulations and codes

of best business practice; – ensuring that relevant and accurate information is timeously

communicated to stakeholders; and– evaluating the Company and the Group as a going concern .

the Board is satisfied that it has discharged its duties and obligations as described in the Board charter, during the past financial year . to ensure a balance with no individual having unfettered powers of decision-making, a clear division of responsibilities exists between the Board and executive management . the Board provides effective leadership and vision, aiming to enhance shareholder value and ensure long-term sustainable development and growth of the Company for the benefit of shareholders and stakeholders over time . the Board meets at least four times a year . additional meetings are convened as and when necessary . all members of the Board have unlimited access to the services of the Company secretary and senior management, as well as all Company records .

composition of the boardthe composition of the Board reflects a balance of executive and non-executive directors . taking into account the size of the Board, diversity and demographics, the majority of directors are independent . as mentioned above, non-executive Chairman prof GJ Gerwel passed away on 28 november 2012 . executive deputy Chairman, mr F robertson was appointed as executive Chairman of the Company, effective 17 January 2013 . as at year end the Board consisted of three executive and six independent non-executive directors (one of whom is the Lead independent director) .

integrated sustainability report (continued)



non-executive directors are selected to serve on the Board for their broader knowledge and experience and are expected to contribute effectively to decision-making and the formulation of policy . the independence of non-executive directors, who have served on the Board for more than nine years, is subject to review by the Board . in terms of the moi of the Company at least one third of the directors must retire by rotation annually and may make them-selves available for re-election at an annual general meeting . the roles and responsibilities of the Chairman of the Board and the Chief executive officer are separated . one of the principles of King iii is that the Chairman of the Board be an independent non-executive director . mr F robertson was appointed executive Chairman early in 2013 . the Board believes that mr robertson (who previously served as executive deputy-Chairman since 2002) has the required level of expertise and experience to act as Chairman of the Group and oversee the strategy of unlocking shareholder value for the benefit of shareholders . as mentioned previously the Board has appointed mr pL Campher to serve as Lead independent director, in compliance with King iii and the Jse Listings requirements .

evaluation of the board, board committees and individual directorsthe Board and subcommittees are evaluated annually by its members . the results of these evaluations are not disclosed in the integrated report, but the nomination for reappointment of directors only occurs after the evaluation of the performance of the Board .

induction of directors to assist directors, the Board has established a formal orientation programme for new directors which include background material, meetings with executive directors and senior management and visits to the various Group Companies’ locations . in addition, new directors will also receive information on the Jse Listings requirements and the obligations it imposes on directors . should circumstances arise where a non-executive director needs to obtain independent professional advice in order to act in the best interest of the Company, that director is encouraged to seek such advice with all reasonable costs being borne by the Company .

company secretary’s role and responsibilitiesall directors have unlimited access to the services of the Company secretary, mrs t moodley, who is responsible to the Board for ensuring that proper corporate governance principles are adhered to and that Board orientation and training is provided where appropriate . the Board has considered and satisfied itself on the competence and qualifications of the Company secretary . the Company secretary is not a director of Brimstone and has an arm’s length relationship with the Board and the directors .

board committeesspecific responsibilities have been delegated to board committees with defined terms of reference set out in their respective charters . Copies of the Board and committee charters, which are reviewed annually, are available on request from the Company secretary . the current subcommittees of the Board are the audit & risk committee, investment committee, human resources and nomina-tions committee and the newly formed social and ethics committee . notwithstanding the delegation of functions to board committees, the Board remains ultimately responsible for the proper fulfilment of such functions, except for the functions of the audit & risk committee relating to the appointment, fees and terms of engagement of the external auditor .

Human resources and nominations committee Brimstone strives to be an employer of choice that reflects the rich potential of the whole of south african society . For part of the year under review, the human resources and nominations committee comprised non-executive Chairman prof GJ Gerwel, Lead independent director, pL Campher and non-executive directors m Hewu and mK ndebele . subsequent to the passing of the committee’s chairman, prof GJ Gerwel, the remuneration committee is now chaired by the Lead independent director, pL Campher and consists of non-executive directors, m Hewu and mK ndebele . the nominations committee is chaired by executive Chairman, F robertson and consists of non-executive directors, pL Campher, m Hewu and mK ndebele . the Board acknowledges that the Chairman of the Board should not be the chairman of the nominations committee, but given the level of expertise and experience of the executive Chairman deems this arrangement appropriate . the purpose of this committee is to discharge the Board’s responsibilities in respect of strategic human resources issues of the Group, with special focus on executive appointments, remu-neration and succession, and the management of the Company’s Code of ethics . the committee also approves any offers of shares to management and staff in terms of the share trust . the committee meets at least twice a year . the committee is also responsible for nominating directors for appointment and it annually evaluates the performance of executive and non-exec-utive directors . Brimstone relies on the extensive experience and networks that the members of the Board possess to recruit the requisite skills for the Board . on nomination and successful appointment new board members are subject to an initiation of paperwork which includes compliance with Jse schedule 21 requirements and the directors’ declarations that are standard . directors do not have long-term contracts or exceptional benefits associated with the termination of services .

audit & risk committeethe committee is governed by a mandate that includes the recommendations of King iii and the requirements of the

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Companies act . the committee consists of four independent non-executive directors, elected by shareholders on recommendation of the Board and is chaired by mr n Khan . the Board is satisfied it has an effective and independent audit & risk committee . the governance activities undertaken by the audit & risk committee, in terms of the Companies act, King iii and as requested by the Board, are detailed in the audit & risk committee report on pages 54 to 55 .

investment committeethe committee comprises of non-executive directors messrs pL Campher and n Khan . messrs Y pahad and aa roberts retired from the Board and as members of the investment committee during may 2012 . executive management makes recommendations to the committee who then submit investment decisions to the Board for approval . the committee meets at least twice a year and when the need arises .

the duties and responsibilities of the committee are:– to assist the directors to discharge their duties relating to the

development and recommendation of long-term investment opportunities for the Company;

– the investment committee does not relieve the directors of any of their responsibilities, but assists them in fulfilling those responsibilities; and

– the investment committee shall not perform any management functions or assume any management responsibilities and shall provide the Board with independent and objective oversight and review of the information provided by

executive management around investment decisions and make recommendations to the Board for its approval or final decision .

social and ethics committeethe Board established the social and ethics committee during may 2012 . the inaugural meeting of the committee was held on 1 november 2012 . the committee’s responsibilities are governed by a formal mandate as approved by the Board and the main objectives of the committee are to: – assist the Board in monitoring the Group’s performance as a

responsible corporate citizen by the monitoring of its sustainable development practices; and

– perform the statutory duties of a social and ethics committee in terms of the Companies act and other functions assigned to it by the Board .

the committee’s report describing how it has discharged its statutory duties in terms of the Companies act and its additional duties assigned to it by the Board in respect of the financial year ended 31 december 2012 is included in the integrated report on page 51 . (see table of directors’ attendance at meetings below .)

policy on trading in company securitiesin accordance with the Listings requirements of the Jse, the Company has adopted a code of conduct for insider trading . directors and employees are prohibited from trading in Company securities during prohibited and closed periods . directors and designated employees may only deal in the Company’s securities outside the closed period, with the approval of the Chairman or Chief executive officer .


directors’ attendance at meetings

board audit & risk committee investment committeeHuman resources and

nominations committeesocial and ethics

committee

attendance by directors possible attended possible attended possible attended possible attended possible attended

GJ Gerwel* 5 5 — — — — 2 2 1 1

F robertson 5 5 — — — — — — — —

LZ Brozin 5 5 — — — — — — — —

ma Brey 5 5 — — — — — — 1 1

pL Campher 5 5 3 3 5 5 2 2 1 1

mJ Hewu 5 5 — — — — 2 2 — —

n Khan 5 4 3 3 5 5 — — 1 0

mK ndebele 5 3 — — — — 2 2 — —

Y pahad ^ 3 3 — — 1 1 — — — —

La parker 5 5 3 3 — — — — — —

aa roberts ^^ 3 2 — — 1 1 — — — —

Fd roman 5 4 3 3 — — — — — —

* Prof GJ Gerwel passed away on 28 November 2012 ^ Mr Y Pahad retired from the Board effective 17 May 2012^^ Mr AA Roberts retired from the Board effective 17 May 2012




conflicts of interestsall directors of the Company and its subsidiaries and senior management, are reminded of the requirement to submit, at least annually, a list of all their directorships and interests in contracts with Brimstone . directors are required to disclose their personal financial interests, and those of persons related to them, in contracts or other matters in which Brimstone has a material interest or which are to be considered at a Board or committee meeting . Where a potential conflict exists; directors are expected to recuse them-selves from relevant discussions and decisions .

risk management the Board is responsible for governance and risk . the Board charter outlines the directors’ responsibilities for ensuring that an appropriate system and process of risk management is implemented and maintained .

communicationthe Board appreciates that it is required to provide timeous, relevant and accurate information to all its stakeholders . to this end it consistently strives to maintain direct dialogue with all of those who have a relationship with Brimstone on any level . reports and announcements are conveyed to all audiences through the media, the Brimstone website and through direct correspondence . the Company encourages transparent, objective and relevant communication with its shareholders, with members of the investment community and with its business associates and partners . While board members are expected to attend Brimstone’s annual general meetings, the Company encourages shareholder attendance at annual general meetings . these meetings offer an opportunity for shareholders to provide input into the running of their company, to raise issues of concern and to participate in discussions related to items included in the notice of meeting . these meetings are very well attended . all investee organisations are represented to enable the Company’s stakeholders to under-stand investee company products and services .

mission statement Brimstone seeks to be profitable, empowering and to have a positive social impact on the businesses and the individuals with whom it is involved, including shareholders, employees, suppliers, customers and the greater community . this is the way of conducting business at Brimstone . the deep effects of this mission statement have now become part of the ethos of the business . it is applied across all spheres together with the mindset of ethical behaviour and complete honesty and integrity . When examined carefully the elements of the triple bottom line become very visible .

stakeholder engagement stakeholders have been identified by involving all reporting subsidiaries .

Proud stakeholders attending the AGM.

Brimstone AGM – May 2012.

employees

suppliers

government and regulatorsshareholders

unionscommunities

providers of capitalmedia

investee companies

partners/business

associates

customers/clientsratings agencies

stakeholder engagement

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the list below has been developed over the four year period that this report has been presented . issues identified have all been considered and the concept of materiality has not been applied . all stakeholder issues are important to Brimstone and will be considered in the context of its business in one way or another .

stakeholder engagement frequency type of engagement material issues response to issues

shareholders annuallyQuarterlyWeeklyadhoc

aGmperformance publications shareholder interactionreport back meetings shareholder meetings

value creation Cash distributionsstrategic directionprofitability and long-term business existencemarine and resource sustainability

value creation and maintenance is foremost on our agendadividend distribution is part of our business model

employees ongoingWeeklymonthly Quarterly

interactive feedback meetingsmemos performance evaluationsWorkshops Conferences

employee wellbeingremuneration and benefitsWorking conditionsshort timeemployment equity and equal opportunityproductivity incentive schemeeconomic performance

Honest feedbackmarket related benefit surveysremuneration committees governed at highest level

Unions monthlyQuarterlyadhoc

meetings – Collective and individual

Labour relationsstate of work continuityproductivity incentive scheme

Honest and participative feedbackrelationship buildingregular communication with staff

providers of Capital annual reviewsmonthly submissions

meetingsproviding cash flow information monthly

affordabilityBusiness continuity

providing sufficient information to overcome risks

Government and regulators regulators meetings and inspectionsannual and quarterly returns

meetingssubmission of performance returnssite visits

Completeness of levies and taxesCompliance with governing lawspi claimsCompetitiveness Fund

audits of financial performanceQuality assurance auditsCompliance integration

investee Companies ongoingQuarterlyannually

meetingsWorkshopsFeedback evaluations

FundingBBBeemarket and trading conditions

resolved speedily with holding company executives feeding back market intelligenceWe provide feedback and strategic direction regularly to subsidiaries

Customers/Clients dailyongoing

telephonic meetings emailpersonal visits

pricingQualitydeliverypayment terms

regular interaction and assurance on these issues

suppliers ongoing all interactions payment termsdelivery schedulesCredit worthiness

assurance interaction

ratings agencies annually inspectionsmeetings

performance hurdle complianceCredit rating

executive interaction on inspectionsClarification of queries

partners/Business – associates including international licensors

Quarterlyannual

meetings and workshopsregular visits Quality audits

industry challengesBusiness expectations

industry compliancedelegation of responsibility for performance

media ongoing interviews presentationsmedia announcementssite visits

Financial results strategy and value creation

detailed financial results extensive disclosureContinuous demonstration of value creation strategymanagement of media relationship

Communities ad-hoc marketingCsi

effectiveness of Csi spend Core part of company values

integrated sustainability report (continued)for the year ended 31 december 2012



broad based black economic empowerment (bbbee)the Board and management of Brimstone has a firm belief in BBBee and supports and encourages its subsidiaries and investments to subscribe to the principles of BBBee . at Brimstone BBBee is a core part of our mission which is to be profitable, empowering and to have a positive social impact . during the period under review Brimstone engaged empowerdex (pty) Ltd to certify the “equity ownership” score of the

ownership indicators weighting targets achieved score

Black voting rights 3 25 .10% 65 .09% 3 .00

Black female voting rights 2 10 .00% 12 .54% 2 .00

Black economic interest 4 25 .00% 57 .74% 4 .00

Black female economic interest 2 10 .00% 11 .52% 2 .00

designated groups economic interest 1 2 .50% 2 .36% 0 .95

ownership fulfilment 1 Fulfilled Fulfilled 1 .00

net value 7 10 .00% 57 .74% 7 .00

Bonus: Black new entrants 2 10 .00% 26 .10% 2 .00

Black participants in employee ownership schemesBlack beneficiaries of broad based ownership schemesBlack participants in co-operatives

1 10 .00%2 .38%0 .00%0 .00%

0 .24

total score 22 .19

Company . verification of BBBee ownership is governed by the Codes of Good practice on BBBee which were gazetted on 9 February 2007 in terms of section 9(1) of the Broad-Based Black economic empowerment act (no . 53 of 2003) . the methodology followed for the verification and certification of Brimstone’s contributions to BBBee ownership was taken from the provisions of Code 100 of the Broad-Based Black economic empowerment Codes of Good practice . the BBBee equity ownership scorecard is represented below .

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26 Brimstone investment Corporation Limited26 Brimstone investment Corporation Limited




sea Harvest

core performance indicators for subsidiaries

climate change (ec2)one of the challenges in the climate change debate is determining whether a perceived effect is as a result of environmental changes brought about by climate change or whether this effect is caused by other factors . For example, in fisheries, how much catch varia-bility could be ascribed to the long-term effects of climate change; to fishing pressure through commercial exploitation; or indeed to the natural cyclical variation in environmental conditions . this is very difficult to determine with any degree of accuracy . the debate in recent years around the shift in biomass of anchovy, sardine and rock lobster from the west coast to the south coast is a good example of this complexity . there is consensus that the largest effect of long-term climate change is on the environment . Here, changes in sea water temperature, currents, wind dynamics, water conditions etc . can have knock-on effects on plankton production, feeding relation-ships, fish recruitment and migration and ultimately on species complexity . (Warm water intrusions bring in warm water species and displace cold water species .) it is considered that the greatest potential risk to sea Harvest from a climate change perspective would be the long-term effect it could have on fish stocks . Combined with fishing pressure, climate change could negatively impact on catch rates (one of the principle economic drivers in the fishing arena which impacts directly on profitability) and ultimately on the stock biomass and hake quotas . reductions in either catch rates and/or annual quota allocations will have a negative effect on the company’s financial performance . in sa’s second national Communication under the United nations Framework Convention on Climate Change 2010, the gov-ernment identified the need to ensure that the country’s strategies to protect marine and coastal biodiversity from climate change must be centred on sound ecosystem management practices . south africa recently adopted and committed to the new management regime that is “the ecosystem approach to Fisheries” or eaF . this fisheries management strategy combined with classic management tools, inter alia; individual quota rights, annual taC, closed seasons, fishing effort and gear limitations are designed to promote yield sustainability in fish stocks alongside ongoing fluctuations in environmental conditions . this implies that the potential effects of climate change are largely ‘built in’ to the fisheries management strategy . in addition, government identified effective observation and monitoring of environmental indicators as well as improved climate modelling techniques as important requirements to better understand climate change going forward . it is believed that these are positive developments and provided that they are followed through should mitigate a great deal of uncer-tainty around climate change and improve the ability of government

to manage its effects, particularly in the fishing arena . sea Harvest is well represented in industry, fisheries management and scientific forums where current and future environmental and sustainability challenges are debated in the interests of, amongst others; ensuring long-term biodiversity sustainability, maintaining healthy fish stocks and ensuring that our marine stewardship Council (msC) certification for our target quota specie is preserved . as a founding member of the responsible Fisheries alliance, sea Harvest together with other industry players actively participates in strategic initiatives aimed at supporting the implementation of eaF, promoting responsible fisheries practices and influencing policy on fisheries governance .

market presence

ratios of entry level wage and local minimum wage rates (ec5)the amendments to the wage agreement and wage increases for the shore based employees are done annually at plant level between management and the Food and allied Workers’ Union . the company’s minimum wage for the shore based employees is amended annually and was negotiated at r24 .05 per hour during the last annual wage negotiations . approximately 70% of the factory employees are currently on this rate . the amendments to the wage agreement and wage increases for the sea going employees are done annually at bargaining council level between the various fishing companies represented by the south african Fishing industry employer organisation and the various unions . sea Harvest is currently paying above the minimum rates in all the categories for the sea going employees .

policy, practices, and proportion of spending on locally based suppliers (ec6)in terms of the sea Harvest procurement policy, preference is given to saldanha based black businesses which are able to provide the necessary services or products at the right price . With regard to national services, a procurement manager evaluates all suppliers and appoints service providers after taking into account the reliability and speed of provision for perishable products . Where possible, entrepre-neurial black businesses are being afforded the opportunity to present their credentials to systematically merge them into the cycle .

procedures for local hiring and the proportion of senior management hired from the local community at locations of significant operation (ec7)all senior positions at sea Harvest are advertised internally and externally (local newspapers and employment agencies) simultane-ously . due to the nature of its business in saldanha, it is important for persons working at its plant to live in saldanha and the surrounding suburbs . this often means that successful applicants living beyond the West Coast have to relocate closer to saldanha . Where possible, candidates from the local community are given

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preference . during the year under review 12% of the successful applicants in senior positions were from the local community .

indirect economic impacts

understanding and describing significant indirect economic impacts and the extents thereof provided by the group’s business existence (ec9)during 2008 sea Harvest undertook a socio-economic impact


assessment through the University of Cape town, to indepen-dently verify sea Harvest’s contribution to the West Coast and the surrounding areas . the study confirmed the following;– sea Harvest is the largest single employer on the West Coast– sea Harvest created between 3 800 and 4 900 indirect jobs– sea Harvest accounted for about 15% of all the employment

in saldanha Bay municipal area– sea Harvest accounted for about 30% of all household

income in the saldanha Bay town .

labour practices and decent work workforce analysis (la1 and la2)employment type = 2 317 total

salaried employees 1 – male 2 – Female grand total

occupation Level african Coloured indian White african Coloured indian White

01 – top management 0 1 0 3 0 2 0 0 6

02 – senior management 0 5 1 10 0 3 0 1 20

03 – middle management 1 15 1 17 4 10 2 7 57

04 – Junior management 3 24 2 10 5 19 0 6 69

05 – semi skilled employees 0 5 1 0 4 33 1 2 46

06 – Unskilled employees 0 0 0 0 0 0 0 0 0

Grand total 4 50 5 40 13 67 3 16 198

waged employees 1 – male 2 – Female grand total


01 – top management 0 0 0 0 0 0 0 0 0




05 – semi skilled employees 332 419 0 3 373 618 0 1 1 746


Grand total 371 594 0 17 401 735 0 1 2 119

employment contract = 2 317 total

permanent employees 1 – male 2 – Female grand total


01 – top management 0 1 0 3 0 2 0 0 6




05 – semi skilled employees 254 268 1 1 300 505 1 1 1 331


perm total 289 443 5 50 334 651 3 13 1 788

temporary employees 1 – male 2 – Female grand total

occupation Lvl african Coloured indian White african Coloured indian White

01 – top management 0 0 0 0 0 0 0 0 0




05 – semi skilled employees 78 156 0 2 77 146 0 2 461


Grand total 86 201 0 7 80 151 0 4 529



1 – male 2 – Female grand total

age group african Coloured indian White african Coloured indian White

>55 10 37 0 21 5 16 0 1 90

46-55 41 143 0 15 28 130 0 10 367

36-45 118 156 2 14 110 203 0 4 607

26-35 172 195 3 7 232 288 2 2 901

<26 34 113 0 0 39 165 1 0 352

Grand total 375 644 5 57 414 802 3 17 2 317

employee benefits (la3)

benefits for all employeesprovident/pension Fund – membership is compulsory and the Company pays 7%

of basic salary .

medical aid – Company contributes 50% of the medical aid Contributions .

Funeral assistance r6 000 .00 is given to the family when:– a current employee dies . – an employee’s child under the age of 21 dies .– an employee’s spouse dies .

death cover – death on board or in service-3 times annual income . – death on board or in service due to an accident –

a further 3 times annual income .

disability coverFor sea going employees employees injured on board are covered by the Workman’s Compensation act as well as the company insurance . – receives 75% of average remuneration during the first

2 years if declared unfit for duty .– Will continue to receive 75% remuneration until retirement,

should they be declared unfit for duty in the open market after this time .

– Continuous contribution to the provident fund by the company to ensure a reasonable retirement income .

For all other employeesemployees who are declared disabled – covered by the Workman’s Compensation act as well as the company insurance (3 times annual salary) .

labour and management relations

percentage of employees covered by collective bargaining agreements (la4)92% of sea Harvest’s workforce is unionised and covered by Bargaining Council agreements .

minimum notice periods (la5)there are no set notice periods at sea Harvest . the time frame depends entirely on the issue . the notice periods for layoffs, short time and retrenchments are set out in the Labour relations act for the factory based employees and the Bargaining Council agreement for the sea going employees . short time, change in conditions of employment and retrenchments all have very well documented procedures that need to be followed before they are implemented . these proce-dures are agreed to with the relevant unions and are adhered to .

union representationat sea Harvest the following is the breakdown of the union representation:

Food and allied Workers Union 55 .49%

West Coast Workers Union 6 .20%

trawler and Line Fisherman Union 1 .69%

independent Labour Union of south africa 0 .59%

not Unionised 36 .03%

occupational health, safety and environment (oHse)sea Harvest operates a land based comprehensive risk management program . this program focuses on the aspect of health, safety, security, risk control, fire defence and emergency planning . the directors require an independent annual safety, Health and environmental (“sHe”) compliance audit to be conducted, which is performed by marsh incorporated risk Consulting . sea Harvest has achieved the targets set for the last 3 years .

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the sHe audit scores for the past 3 years were as follow:

year safety & Health environment

2010 96% 91%

2011 98% 96%

2012 96% 95%

medical assessments are done for all staff and are paid for by the company . monthly internal sHe audits are conducted to ensure compliance with applicable standards and legislation . elected sHe representatives participate in monthly sHe meetings and form part of the internal auditing team . the focus is on preventing injuries to staff, especially disabling injuries . all disabling injuries are investi-gated thoroughly to prevent reoccurrence . a quarterly risk steering committee meeting is held to deal with all oHse issues that cannot be resolved at a departmental level . this meeting is chaired by the operational director and attended by senior management .

rates of injury, occupational diseases, lost days, absenteeism and the number of work related fatalities (la7)

year-to-date per month

disabling (lost time) injuries 51 4 .25

Compensation for occupational injuries and deseases act (“Coid”) claims being entertained

49 4 .1

approximately 481 days (40 .1 per month) were lost this year with no fatalities and no occupational diseases .

sea Harvest conducted the following wellness programmes for the entire company, promoting lifestyle and eating habit changes and the benefits thereof . the programmes included:– Women’s month – Breast & Cervical examinations– Cancer awareness month – smoking cessation – 6 week program – sponsored cancer relay for life – Heart awareness month – Blood donation day– deaF south africa visited the plant to present an awareness

regarding the disability – alcohol awareness programmes– sessions on foetal alcohol syndrome

the programs are held in saldanha and include the majority of the factory working staff .

Health and safety topics covered in formal agreements with trade unions (la9)agreements exist between manufacturing organisations and unions with regards to the selection and training of safety representatives . Health and safety issues are discussed formally at monthly meetings which are minuted .

average hours of training per year per employee per category of employee (la10)during the year under review sea Harvest’s training focus shifted to in-house development of staff . the largest gap was in the area of first line management within processing and services . this skills gap was addressed with learnerships (national Certificate Fish and seafood, national Certificate First Line management) in order to develop the leadership and processing skills . 105 people attended these groups and further training in the area of logistics also at nQF Level 4 took place . a new challenge which has arisen is the need for further training of sea going staff . this will be informed by the new standards of training, Certification and Watch Keeping regula-tions which will be promulgated very soon . thus within the area of sea Harvest is preparing for the challenging development by conducting a full analysis of training needs, by recruiting persons with a better academic background even for entry level sea going staff . this will affect the deck staff as well as the marine engi-neering staff . even in the area of staff welfare onboard it is a requirement that all cooks receive suitable training not only in cooking methods but also in understanding food safety, food nutrition and the challenges of feeding persons with conditions such as, diabetes, hypertension, etc . the objective is to ensure that there are are sufficient people in sea Harvest who are able to enter different skills areas . in order to provide flexibility in the presen-tation of the programs, sea Harvest has successfully applied for its own accreditation to conduct certain learnerships . thus far the company are accredited by FoodBev seta to conduct the learnership at nQF Level 1 (GetC) and the Fish and seafood Learnership at Level 3 . south african maritime safety authority (“samsa”) has accredited the company to conduct pre-sea training, proficiency in life raft training, able bodied sea fearer training, and ordinary sea fearer training . sea Harvest shall continue to develop material and assessment tools even within those areas for which it is accredited so that it can ensure that best quality programs are presented, thus reducing the independence on outside recruitment . a further development has been sea Harvest’s partnership with further and higher education institutions . much groundwork has been laid in this area and this lead to us appointing 18 interns from West Coast College for a period of 9 months in partnership with the transport seta . this was in the area of office management and administration . it placed a further 12 persons who have basic qualifications in the technical fields (electrical fitting, diesel engineering and refrigeration) to expose them to industry based development and align their training with actual industry needs . the main objective with the partnership with West Coast Fet College is to jointly develop a maritime training program to address the samsa required training as well as developing a unit to address fish tech-nology and food safety . the recent appointment of a sea Harvest manager as the chairperson of the FoodBev processing Chamber




and Board member of FoodBev as well as involvement within the samsa Constituted national Fishing Forum will also assist in accessing support for these programs . a training need which has been addressed via the learnership has been the development of basic computer skills for a broad range of people in sea Harvest . this will need to grow in the new year, for example the cold store department requires all their staff to be trained in this area due to the adoption of new technology within this area .

programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings (la11)these are addressed above in terms of the learnerships .

examples of the areas focused on are as follows: in order to address scarce skills sea Harvest has awarded full bursaries in 2012 to 8 students in food technology . these were all enrolled at Cape peninsula University of technology . Five were first year students and three were second year students . the second year students are still at sea Harvest completing their required 12 month internships . they return to college in June 2013 to complete their diplomas .

percentage of employees receiving regular performance and career development reviews (la12)at sea Harvest 8% of employees (monthly & executive payrolls only) receive performance and career reviews .

composition of the highest governance body (la13)the table below depicts the composition of the board of directors . a complete analysis of the employees has been included in the table La1 and La2 above .

Gender split male 8

Female 3

total 11

age Group 30 – 40 4

40 – 50 2

50 – 60 3

>60 2

total 11

race Group african 2

White 5

Coloured 3

indian 1

total 11

environmental performance indicators

watertotal water withdrawal by source (en8)at sea Harvest between 360 000 – 375 000 cubic meters per annum of sea water is withdrawn from the sea . Water is initially treated for contaminants and disinfected before being used for slurry ice making and cleaning flumes within the processing area . all unused water returned to the sea is treated again prior to its return .

percentage and total volume of water recycled and reused (en10)this initiative is currently in the final stages of the investigation by sea Harvest .

biodiversity location and size of land owned, leased, managed, or adjacent to protected areas and areas of high biodiversity value outside protected areas (en11)sea Harvest operates in the hake trawl sector . Fishing occurs around the sa coast and at depths of between about 200m and 800m . Fishing is generally restricted to areas where the ocean bed is sandy or muddy . this comprises an area which is less than 5% of the sa territorial waters . through agreement within the south african deep-sea trawl industry association, the fishing grounds which have been fished for many years have been ring fenced and members are not allowed to move outside this area . this ensures the protection of the benthic habitat outside the ring fenced areas . the hake trawl sector has been certified by the world’s leading eco label namely msC . the industry underwent extensive audits and reviews by an international panel of experts on issues such as sustainability and biodiversity before certification was achieved . Certification was first achieved in 2006 and the industry was recertified in may 2010 for a further 5 years . the company complies with all regulations and permit conditions which include clauses relating to by-catch, benthic habitat, waste disposal, temporary and permanent closed areas, gear restrictions and catch restrictions amongst others .

emissions, effluents and waste total direct and indirect greenhouse emissions by weight (en16)sea Harvest fishing vessels’ diesel usage for the year 2012 was 10 .3 million litres, compared to 12 million litres in 2011 . the actual usage depends on weather conditions, fishing conditions and the distance from port to where fishing is taking place . the reduction of fuel consumed is a continuous focus including bi-annual vessel refits, when engines are overhauled and hulls are cleaned .

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total water discharge by quality and destination (en21)the total water discharge is estimated at approximately 2 500 cubic meters per day at sea Harvest .

sustainable fishing as a responsible corporate citizen, sea Harvest believes in conducting its business in a sustainable manner . not only does sea Harvest comply with the regulations and quotas imposed by the south african government and other international organisations, it also playes an active role in creating initiatives for furthering the sustainability of south africa’s marine resources . sea Harvest is currently certified by the msC . the msC certification is the gold standard in sustainable fishing and consumers can be assured that seafood carrying the msC label comes from a certified sustainable fishery and every company in the supply chain has passed a detailed traceability audit . in 2009 sea Harvest, together with three other south african fishing companies, launched the responsible Fisheries alliance in partnership with the World Wildlife Fund (WWFsa) to support the implementation of an ecosystems approach to marine resource management and thus further promoting responsible fisheries practice in south african waters .

total weight of waste (tons) by type and disposal method (en22)

wasteyear 2012

year 2011

municipal Waste 406 387 disposed to municipal dumping site via municipal truck

scrap metal 178 226 removed by Contractor to scrap yard (recycled)

Cardboard 235 276 removed by supplier for recycling

Fish offal 4 039 4 638 Collected by fishmeal processor

plastics 35 74 removed for recycling purposes

Cut tubs 11 34 removed for recycling purposes

210L drums 10 6 removed for recycling purposes

20L plastic containers 3 3 removed for recycling purposes

Light steel 2 5 removed for recycling purposes

office paper 15 18 removed for recycling purposes

pallets 48 37 donated to community

Waste diesel oil 201 187 removed for recycling purposes (safe disposal certificates provided)

added value dump Fish 887 805 disposed to pig farm for feed

Building rubble 41 31 disposed to municipal dumping site

stainless steel 14 2 removed for recycling purposes

scrap nets & ropes 11 13 sold to local contractor for harvesting of mussels

asbestos — 11 disposed to landfill site (safe disposal certificates provided)

scrap rubbers — — disposed to municipal dumping site

total number and volume of significant spills (en23)there were no significant spillages during 2012 at sea Harvest .

certifications sea Harvest follows a very intensive methodology to ensure that the standards covering safety, health, environment and quality are achieved and maintained . exceptionally high standards are set and maintained by subscribing to:– european Union and south african Board of standards

standards– responsible Fishing programme with WWFsa– Hazard analysis Critical Control point approval– msC Certification accreditation– British retail Consortium accreditation

customer health and safety life cycle stages in which health and safety impacts of products and services are assessed for improvement and percentage of significant products categories subject to such procedures (pr1)Health and safety impacts of products are assessed during the product development stages of the product and finalised during first and post first production stages . the various risks/hazards to health and safety are assessed by using the world renowned process of Hazard analysis Critical Control points . during this process the hazards (chemical, biological, physical and allergenic) are assessed for each stage of the product process from raw material intake to final product dispatch, and the necessary controls put in place to ensure that the hazards are controlled to avoid any potential harm to customers . shelf life testing is also conducted on the product to ensure the product is fit for human consumption during its entire shelf life .

total number of incidents on non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during the life cycle by types of outcomes (pr2)there has been one incident of non-compliance with regulations . this related to a particular product being labelled as ‘healthy’ . this word ‘healthy’ is not allowed on foodstuffs unless the foodstuff is registered as a medicine and there is sufficient scientific evidence to demonstrate the ‘health’ attributes . this was immediately remedied by redesigning labels . a second non-compliance of a voluntary code occurred when the labelling of a product stated that there are ‘no preservatives’ yet the list of ingredients listed sulphur dioxide, which is a commonly used as a preservative . it was found that during the processing of one of the ingre-dients in the product, sulphur dioxide was naturally produced and therefore listed in the list of ingredients of the product . at the level that the ingredient was added to the product, the sulphur dioxide would not pose a risk as it was an extremely low dose, and




chemical testing of the final product did not detect any sulphur dioxide present . a decision was nevertheless made to include ‘contains preservatives’ on the label .

type of product and service information required by procedures and the percentage of significant products and procedures subject to such information requirement (pr3)all product label design undergoes the scrutiny of the marketing department, product and process development department as well as the Quality assurance department . a total set of at least 3 qualified and highly skilled staff members study and analyse the packs and labels to ensure conformance with various regulations . prior to final approval these labels are circulated internally for approval .

total number of incidents of non-compliance with regula-tions and voluntary codes concerning product and service information and labelling by types of customers (pr4)sea Harvest had two such incidents which have been reported elsewhere in this report .

practices related to customer satisfaction, including results of surveys measuring customer satisfaction (pr5)at sea Harvest one of the measures of customer satisfaction is the rate of customer complaints per 100 000kgs sold . the current average monthly complaint rate is 7 .1/100 000 .

communitynature, scope and effectiveness of all programmes on communities (so1)sea Harvest has engaged in community upliftment initiatives for many years . of significance this year are the following:For the period January 2012 to december 2012 an amount of r524 000 was contributed to organisations and institutions within the spheres of education, health, sports development, community development and business development .

education58 Bursars benefitted in the amount of r133 000 . Bursaries are awarded to children of employees as well as to other candidates based on their matric results or tertiary results .

sports developmentsports development continue to be high on the agenda of community development and donations to a number of sport codes and clubs have continued . sea Harvest continues to commit over r200 000 in this regard . investment in school sports development was prioritised by the sea Harvest Foundation as it can benefit large numbers . sports equipment was donated to 23 schools . two local rugby clubs also received donations . Last year an amount of r160 000 was donated towards sports development .

community developmentrecipients that benefitted included churches, crèches and various other institutions . an amount of r161 000 was made available towards community development during 2012 .

business developmentthe sea Harvest Foundation partners with the West Coast Business development Centre in support of small business development and support of r20 000 was granted last year . the social investment program of sea Harvest is managed by the board of trustees of the sea Harvest Foundation trust . the social investment program includes education, sports development, health, business and community development . the effectiveness of the program is highlighted by the many beneficiaries it reaches . Feedback from the institutions clearly indicate that the program are making a difference in the community .

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34 Brimstone investment Corporation Limited34 Brimstone investment Corporation Limited




House oF monatic (Hom)

economic performance (ec1)

direct economic value generated and distributed

revenue r174 016 606

operational Costs r123 858 195

employee Compensation r63 647 988

profit for the year r4 939 531

payments to capital providers and government – sars emp201 (Jan 12 – dec 12) r7 097 389

payments to capital providers and government – sars vat (Jan 12 – dec 12) r8 764 019

climate change (ec2)there are no direct climate change implications for Hom . there may however be indirect implications on transportation of raw materials . the company orders raw materials up to 6 months in advance – this lowers the risk of climate impact . some of the raw materials are natural fabrics, such as cotton and wool for the shirts and suits respectively . Unless these are affected by dramatic climate changes, no other direct impact will affect the business .

Financial assistance from government (ec4)during the 2012 financial year Hom received financial assistance from the government, specifically from the department of trade and industry (dti) . the financial assistance received was in the form of a production incentive (pi) which is part of an overall Clothing and textile Competitiveness programme, administered on behalf of the dti by the industrial development Corporation . the pi consists of two components, namely an Upgrade of Capital equipment Grant Facility and an interest subsidy for working Capital Facility . Hom received r2 453 093 of approved Upgrade of Capital equipment Grant funding of which r1 865 510 has already been paid out to the company with the balance accrued in the 2012 financial statements . on the interest subsidy for Working Capital funding the company received an amount of r4 268 263, of which r1 739 310 was accrued in the 2012 financial statements and paid out in January 2013 . this initiative will be running for another two years . Hom has also applied for the Clothing and textile Competitiveness program whereby the company forms part of a cluster to focus on lean manufacturing principles . the company went through a fact finding process where 77 key improvement projects were identified within the organisation and allocated to various people in the organisation to champion . Hom also trained staff to identify waste within the company and have it addressed within one week . this is an on-going process and staff are encouraged to take responsibility for eradicating all waste .the production incentive grant from Government has helped the

company significantly . the aim of the scheme is to provide support for the industry and to address challenges to upgrade productivity, product design, the hardware and the capital equipment .

market presence (ec5, ec6 and ec7)– a new wage model has reduced the minimum wages for

employees who have never worked in the industry before or have been out of the industry for up to three years or more . this new wage is at 80% of the current gazetted wage rate, coupled to a productivity incentive . non-compliance remains a significant problem and threat to clothing companies paying the gazetted rates . the non-compliant factories employ about a third of the workers in the clothing industry .

– Hom spend 10% on local suppliers and the balance of its trims are sourced from abroad .

– Local recruitment is done via local newspaper advertisements or by the use of recruitment agencies . Hr department inter-views and selects all staff hired . all staff are hired from the larger community area .

indirect economic impacts (ec8) Hom has set up a training school to provide assistance for training of the unemployed . a program is specifically implemented to train up machinists . the training is done for free and allows family members of staff to be trained enabling them to sew from home or to equip themselves to become employable in the industry .

society/corruptionthe company follows a strict anti-corruption/anti-fraud policy . during 2012 there was one incident that was anonymously reported and Hom immediately addressed the matter, which resulted in an employee being dismissed .

employees (la1 and la2)(see table on following page .)

employee benefits (la3)– pension fund for permanent monthly employees:

(7 .5% of basic salary contribution from employer and employee) .

– provident fund for permanent and temporary contract weekly employees: national Bargaining Council for the Clothing industry (6 .25% of basic salary contribution from employer and 6 .03% of basic salary contribution from employee) .

– Health care fund for permanent and temporary contract weekly employees: national Bargaining Council for Clothing industry (6 .25% of basic salary contribution from employer and 6 .03% of basic salary contribution from employee) .

– medical aid for permanent monthly employees: discovery medical aid (two thirds contribution by the employer up to a maximum determined by the employer) .

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labour management and relations (la4 and la5) approximately 80% of employees are covered by collective bargaining agreements .short-time: Consultation with the union organiser takes place, employees are informed well ahead of time, in order to prepare themselves for the financial impact it might have on them . short time consultation is done in accordance with the Clothing industry main agreement .change in conditions of employment: depending on the particular circumstance the notice period can range from 24 hours to 30 days . if an employee has to work in another department, 24 hours is sufficient notice period, whilst in the case where an employee has to relocate, 30 days notice period is given .retrenchments: in terms of the Labour relations act of 1995, it requires that the employer should have a 60 day consultation with the union and employees before the date of the actual retrenchment . the union and its members should be notified at

least 60 days before the actual retrenchment takes place .92% of Hom staff are members of the south african Clothing and textile Workers Unions (saCtWU) . Hom has a very good working relationship with the union . issues are addressed as and when they arise . When concerns are raised by the union organisers they send a formal letter and the company deals with it from there . Hom has regular monthly meetings with shop stewards, as well as with the union organisers .

occupational health and safety (la6 and la7)Hom has 5 safety committees . the following number of health and safety reps, first aiders and fire fighters are used to monitor and advise on health and safety:Health and safety representatives: 19First aiders: 18Fire fighters: 17


employees (la1 and la2)

Headcount2012 2011

total african White Coloured indian total african White Coloured indian

region sa 760 70 16 670 4 781 68 14 696 3

non sa 1 0 1 0 0 0 0 0 0 0

total 761 70 17 670 4 781 68 14 696 3

employment type

salaried 141 10 15 112 4 140 10 11 116 3

Waged 618 60 0 558 0 638 58 0 580 0

Commission 2 0 2 0 0 3 0 3 0 0

total 761 70 17 670 4 781 68 14 696 3

employment contract

permanent 731 64 17 648 4 722 59 14 646 3

temporary 30 6 0 22 0 59 9 0 50 0

total 761 70 17 670 4 781 68 14 696 3

Gender splitmale 163 10 14 137 2 165 12 12 140 1

Female 598 60 3 533 2 616 56 2 556 2

total 761 70 17 670 4 781 68 14 696 3

age Group

<26 91 10 0 81 0 92 10 0 82 0

26-35 114 23 0 89 2 111 18 0 92 1

35-45 160 21 2 137 0 160 22 1 136 1

45-55 294 13 3 276 2 307 14 3 289 1

>55 102 3 12 87 0 111 4 10 97

total 761 70 17 670 4 781 68 14 696 3

Level

normal 732 70 8 650 4 623 61 0 562 0

Junior management 10 0 1 9 0 128 6 5 114 3

middle management 13 0 3 10 0 12 1 1 10 0

senior management 6 0 5 1 0 18 0 8 10 0

total 761 70 17 670 0 781 68 14 696 3



the safety committee meets formally on a monthly basis .

rates of injuries average of 16 injuries per month (minor injuries like finger cuts)

occupational diseases none

Lost days/absenteeism 11 days per month

number of work related fatalities by region

none

Workmen’s Compensation act (WCa) cases for 2011

7 (needle penetration, minor soft tissue injuries to shoulder and back)

training and education (la9, la10, la12)

average hours of training per year per employee per category of employees occupational Level 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 .5 hours occupational Level 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .niloccupational Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 .5 hours occupational Level 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 hours occupational Level 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 hours occupational Level 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 530 hours

training provided:– Learnerships – machinists– sewing skills – multi skilling – production operations– machine maintenance – Health and safety – First-aid– Hiv/aids awareness– information technology– Financial training – education, training and development– Work experience– Clothing management internships – Core lean training

Health and safety topics are covered in formal agreements with trade unions . Health and safety issues are discussed formally at quarterly safety meetings with management and minutes are taken, signed off and filed . there are no formal agreements in place . performance reviews are done on operators by their supervisors and managers, as well as performance evaluations . Hom performs skills assessments on their employees, especially the matriculants . as from 2012 the company will commence bi-annual assessments of the monthly paid staff . Wellness days have been introduced for all staff belonging to the medical aid since 2009 and has been successfully run the last two years . a comprehensive report is handed to the company on the general health of employees . Hiv aids testing is promoted throughout the year with a special focus on World aids day . staff receive talks on other chronic illnesses such as diabetes, high blood pressure and heart disease .

pamphlets are regularly handed out for assistance for abused women . Hom is not highly mechanised, but rather labour intensive because of the manufacturing that is done . the company does however look at improved machinery to enhance the quality and efficiency of production . Hom has always balanced machine improvements with the social awareness of employment levels . during implementation of improved machinery with the pi scheme from government, the company is pleased to report that no staff were retrenched in 2012 . the company has a strict policy of no discrimination for Hiv/ aids employees . no staff member will have to undergo Hiv testing, but voluntary testing is made available by the company . Where testing is done at the insistence of the employee, this will be with his/her informed consent . Hom works very closely with the Clothing industry Bargaining Council on the Hiv/aids programs . regular training is given to the staff .

environmental issues materials materials used in the production or other process by weight or volume (en1)the total of fabric used for the year was 700 187 meters .

percentage of materials used that are recycled input materials (en2)Hom does not use recycled material .

energydirect energy consumption by primary energy source (en3)100%

indirect energy consumption by primary source (en4) 0% – the company uses direct energy (electric supply)

energy saved due to conservation and efficiency improvements (en5)Light fuel oil is now used in the boilers . daily consumption of boiler fuel has dropped by 20% from 1000 liters/day to 800 liters/day .

initiatives to provide energy efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives (en6)the company has conducted surveys on energy efficiency in the factory, as well as on the actual sewing machines used, which if implemented could reduce energy consumption of sewing machines by 50% . the change over from 8ft light fittings to the energy efficient 5ft light fittings has been completed .

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initiatives to reduce indirect energy consumption and reductions received (en7)the company continues to engage with esKom on ways to reduce its electricity consumption .

watertotal water withdrawal by source (en8)overall usage is unknown as it is included in the company’s rental . Boiler water usage was 400 000 litres for the year .

percentage and total volume of water recycled and reused (en10)Water is not recycled as the water is turned into steam .

emissions, effluents and wastetotal direct and indirect greenhouse emissions by weight (en16)over the last 90 working days of the year the company used 72 000 litres of light fuel oil, compared to 90 000 litres of heavy

fuel oil in the past . this year the company consumed approxi-mately 240 000 litres . the company aims to reduce consumption to about 200 000 litres in 2013 . By changing to light fuel oil, the company has also reduced the ash build inside the boilers .

initiatives to reduce greenhouse gas emissions and the reductions achieved (en18)samples are taken and tested during the year to make sure that emissions are as low as possible . With the increase in electrical costs, it is cheaper to keep running oil fired boilers .

no, so and other significant air emissions by type and weight (en20)most of the emissions are compressed or released as steam . the plant does not emit no or so into the environment .

transportall finished goods are shipped by road transport . as external service providers are used to transport finished goods, indirect carbon footprint has not been measured (en29) .

integrated sustainability report (continued)for the year ended 31 december 2012

Brimstone investment Corporation Limited 39 Brimstone investment Corporation Limited 39

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lion oF aFrica insurance company

economic considerations

economic performance Lion of africa insurance Company, as part of the broader short-term insurance industry, plays a significant role within the economy . the company’s contribution to the economy is high-lighted below:– economic growth which includes, but is not limited to,

employment creation, the purchase of goods and services from suppliers, contributions to the Fiscus, contributions to social development, the upliftment as well as distribution of wealth to providers of capital;

– the provision of financial protection against risks to customers, which in turn provides these individuals, entities and businesses with the security to invest in incremental infrastructure needed for future growth without the risk of financial loss from catastrophe, damage or litigation;

– the contribution to society through the Company’s products and services by encouraging our customers to adopt behav-iours that have environmental and social benefits, including innovation in risk management processes, the reduction of energy consumption and the promotion of safer driving .


Below is a summary of the company’s value-added statement for the year ended 31 december 2012 with the prior year comparatives:

2012 2011

rm % rm %

creation of value

net earned premiums 488 .0 451 .0% 540 .0 527 .5%

net investment returns 37 .9 35 .0% 25 .0 24 .4%

net claims incurred (292 .8) (270 .6%) (328 .7) (321 .1%)

Underwriting, policy acquisition, marketing and administration costs (124 .9) (115 .4%) (133 .9) (130 .8%)

total value created 108 .2 100 .0% 102 .4 100 .0%

distribution of wealth

employees (including employees’ tax) 79 .3 73 .3% 65 .8 64 .3%

Corporate social responsibility 1 .2 1 .1% 1 .0 1 .0%

Government (direct taxes and levies) 5 .7 5 .3% 6 .2 6 .1%

providers of debt (tier 2 capital and trade finance) 3 .7 3 .5% 7 .2 7 .0%

providers of equity capital 8 .9 8 .2% 17 .0 16 .6%

total wealth distributed 98 .8 91 .4% 97 .3 95 .0%

Wealth retained for investment 9 .4 8 .6% 5 .1 5 .0%

Financial assistance from governmentWhile Lion of africa insurance is not a direct beneficiary of any specific financial assistance from government, it does benefit from government incentive program and subsidisation of the following people development initiatives:– rebates received from the insurance sector education and

training authority (inseta) for short-term insurance skills development initiatives .

– a learnership allowance in terms of the income tax act in respect of the company’s approved learnership program .

procurement and related transformationLion of africa insurance has developed two policies; a General procurement policy as well as a preferential procurement policy . Both policies are in line with the nation’s Broad-Based Black economic empowerment (BBBee) objectives . the primary objectives of these policies are: – to validate the company’s commitment to preferential

procurement;– to achieve compliance with the Generic Code 500 of the

Codes of Good practice; and– to align with the guidelines as stated by the Financial sector

Charter (FsC) .



the policies have been designed and implemented to offer clear guidelines with respect to procurement matters . these aim to redress the imbalances of the past and they perpetuate the company’s overall commitment to the transformation of the south african economy . the implementation of the procurement policies is expressed, not only in terms of Code 500 of the Codes of Good practice of the BBBee act, but also in terms of the FsC of which Lion of africa insurance is a signatory . all procurement is done in support of the principles as outlined in the department of trade and industry’s (dti) Codes of Good practice for Bee and BBBee . Where a supplier has no Bee status, the company will seek to find alternative sources of supply . in the most recent review, 68 .0% of the company’s total procurement spend was recognised as ‘qualifying spend’ as determined by the dti . the company encourages current non-Bee suppliers to become Bee compliant in the interests of a fairer and more sustainable economy . While the policy aims to contain or reduce costs for the Company through strategic procurement, it is important to note that it will not compromise on health, safety, commercial quality and service standards in the pursuit of its BBBee objectives .

indirect economic impactsLion of africa insurance endeavours to produce sustainable growth in revenues and earnings to reward its parent and its stakeholders . during the year under review, dividends of r8 .9 million (2011 – r17 .0 million) were distributed, in many cases ending up in the poorest communities, helping to alleviate poverty and uplift individuals . Lion of africa insurance participates in the inseta Learnership & Graduate programme . this programme enables the company to contribute to skills development within south africa . in addition, Lion of africa insurance is committed to partnering with builders and vehicle repairers that are geared towards a transformed business environment . Lion of africa insurance undertakes to list, as part of its procurement strategy, small businesses that may not otherwise have functioned in structured partnerships within the developed business sector . the direct benefit to them is that they contract with the company and are listed on the preferred panel of service providers .

society matters

public policyLion of africa insurance is an active member of the south african insurance association (“saia”) . as such, the company elects various members of its staff to sit on committees and forums, whose objectives include providing commentary on proposed legislation and other public policy developments . internal forums are also held to collate feedback and commentary on pertinent

industry-related topics and pending legislative reforms . examples of these include solvency assessment and management, treating Customers Fairly, and the Fais act and related FsB notices . in addition to the above participation in public policy development, Lion of africa insurance also follows an apolitical approach to business . therefore any financial and in-kind contributions to political parties, politicians, and related institu-tions would contravene the company’s public policy . as the largest insurer of local authorities, the company also has a professional image to uphold when participating in the provision of insurance products to the public sector and state owned enterprises, and will therefore continue to ensure that the necessary checks and balances are in place to avoid prejudice and conflicts of interest in this regard .

corporate social investmentas a short-term insurance company, Lion of africa insurance’s business operations do not have any consequential adverse impacts on local communities . on a positive note, however, in order to ensure the sustainable empowerment and upliftment of our local communities, the company continues to support initiatives that embrace skills development, recreation and education . detailed below are the various community-based programs and other initiatives that Lion of africa insurance is involved within the continued growth of its contribution to the dynamic socio-economic transformation of south africa . Collaborative saia industry Consumer education initiativeas a member of saia, Lion of africa insurance has contributed over r400 000 towards the saia Consumer education initiative since its inception in 2004 . to date, through this important collab-orative initiative of the short-term insurance industry, over r50 .0 million has been spent on consumer financial literacy and generic insurance knowledge development in our country .

rally-to-readLion of africa insurance was involved in the multi-million rand rally-to-read initiative and to date, the company has contributed over r137 000 . this initiative is renowned nationally and designed to transform the currently woeful state of literacy in primary schools across south africa by empowering both educators and learners and creating awareness around the importance of literacy .

lion of africa Half marathonsince 2006, Lion of africa insurance has sponsored over r100 000 towards this premier race on the Cape town running calendar . as a consequence, the race has grown from 400 partici-pants in 2006 to over 3 000 . the Lion of africa Half marathon has become a festival of running and now includes a half marathon, a 10 kilometre run, a 10 kilometre “philip rabinowitz” walk (in honour of the legendary spartan Harriers club member who passed away at the age 104 in February 2008) and, for the not so fit, a 5 kilometre fun run/walk .the race is open to

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runners of all fitness levels and boasts a challenging but scenic marathon which starts and finishes in Constantia .

itheko sports athletic clubthe Lion of africa itheko sports athletic Club was set up to promote a healthy lifestyle through running, by introducing the activity to broader communities . in addition to being the only running club that specifically caters for people who have never participated in any kind of sport before, the club also has a squad of high performing athletes who inspire club members and further improve the image of the club . in its four short years of existence the club has become the largest of the 80 running clubs in Western province athletics, with a membership that continues to grow .

lion of africa ladies yacht racethe company has sponsored the annual Lion of africa insurance Women’s Yacht race for the 10th time during the year under review . the sponsorship has enabled the company to consistently recognise and empower south africa’s top and emerging female sailing talent through this event .

yabonga children, Hiv & aids in south africaLion of africa insurance has supported Yabonga since 2008 and thus far contributed over r350 000 towards its worthy initiatives, which aim to bring about meaningful change in the lives of women, men and children who are infected or directly affected by Hiv/aids . the objective of the initiative is to promote positive and healthy living by improving self-esteem, prospects for work and providing healthy meals for community mothers and children .

other donations and sponsorshipsthe company also continues to support various other ad-hoc worthy causes and has spent over r4 .2 million to assist and uplift its employees, partners and communities through various initia-tives such as those noted below .– the annual Jmpd metro awards– the van ryn’s Black Business Quarterly awards – Lion of africa post-Budget breakfast – Lion of africa insurance Golf day– 2012 saia/iisa/Fia insurance Conference

enterprise developmentthe Lion of africa enterprise development Fund, which was established in 2009, continued to support enterprise development initiatives during the year under review . this included the creation and transformation of sustainable emerging small business enter-prises, through financing, the donation of equipment, skills devel-opment and the provision of commercial opportunities through the Company’s preferential procurement policy .

corruptionLion of africa insurance is determined to live its values and be guided by a clear sense of ethics in all its business endeavours . We believe it is essential that the integrity of our people, processes and practices remain beyond reproach, and are we are proud of our long record of integrity in this regard . anti-corruption interventions are covered by the company’s policies and procedures and are regularly reinforced through ongoing training and development interventions directed at all employees . in 2013, some of these policies will continue to be reinforced in conjunction with the south african insurance Crime Bureau, of which the company was a founding member . Further, the activities of the Quality assurance division and outsourced internal audit function are directed at identifying, monitoring and mitigating the risk of corrupt activity . the company adopts a zero-tolerance approach to corruption and employees found guilty of corrupt practices face disciplinary action and dismissal . the company has two whistle-blowing programmes in place .


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employees

employee statisticsthe company’s staff equity matrix as at 31 december 2012 including the 2011 prior year comparative, is tabled below:

2012 2011

total african Coloured indian White total african Coloured indian White

employment contractpermanent 152 46 42 22 42 155 52 44 21 38

temporary 14 4 2 2 6 10 2 1 1 6

total 166 50 44 24 48 165 54 45 22 44

Gender splitmale 79 23 25 9 22 81 27 22 10 22

Female 87 27 19 15 26 84 27 23 12 22

total 166 50 44 24 48 165 54 45 22 44

age group

<26 15 8 4 2 1 14 5 3 4 2

26-35 53 22 9 12 10 63 30 15 8 10

35-45 40 13 9 4 14 40 10 10 4 16

45-55 36 4 17 2 13 33 5 15 3 10

>55 22 3 5 4 10 15 4 2 3 6

total 166 50 44 24 48 165 54 45 22 44

Level

Clerical 89 39 23 11 16 89 36 22 12 19

Junior management

50 8 12 10 20 49 14 14 8 13

middle management

21 2 8 2 9 22 3 8 1 10

senior management

6 1 1 1 3 5 1 1 1 2

total 166 50 44 24 48 165 54 45 22 44

occupational health and safetyLion of africa insurance’s occupational health and safety approach is to ensure a safe and healthy environment for all its employees . in 2012 the company continued with the training of its health and safety representatives . the representatives fulfil the following responsibilities:– Fire marshals (6)– evacuation officers (6)– First-aid administrators (8)– Health and safety representatives (5)

in keeping with the Business Continuity plan, the representatives were placed in strategic locations across the business to enable maximum efficiency where an occurrence has taken place .

learning and developmentas a BBBee Level 1 insurer, transformation is foremost to Lion of africa insurance’s continued success . to this end, the company invests generously in the development of its staff and of learners and graduates who join the company each year as part of the inseta training program . Central to its learning and devel-

opment strategy for 2012 was an encouragement for staff to take up learning opportunities that are job specific but also make staff compliant with the regulatory requirements of the industry . as the financial services industry and more specifically the insurance industry, continues to experience many changes in the regulatory landscape, increased pressure is put on staff to be compliant . one of the key outcomes of the regulatory changes is the minimum competency requirements for people working in the insurance industry is the regulatory exams for both representatives (re5) and Key individuals (re1), with a completion deadline of 30 June 2013 . most staff members have now successfully completed their Level 1 regulatory examinations .

performance and career developmentthe company’s objective is to assist employees in developing their careers and thereby contributing to the growth of a sufficiently skilled workforce in the insurance industry, as well as directly benefiting from the growing pool of skills . performance management is part of the dna at Lion of africa insurance and it is embedded in its approach to work .




careers Fair 2012part of Lion of africa insurance’s increased focus on learning and career development initiatives is to create awareness among young, up and coming students not only at universities but also Fet colleges and high schools . 2012 saw Lion’s first participation in the University of Witwatersrand’s careers fair on 4th october . this was a successful initiative which show-cased the company’s skills devel-opment initiatives and led to the creation of a database of students (500) from various areas of study who were interested in starting their careers at Lion of africa insurance .

environment mattersthe company recognises climate change as a significant risk to sustainability of the entire environment . present preventative actions by society at large can positively affect future generations . in a concerted endeavour to substantially diminish our carbon footprint, our goal is to continue to enhance and implement work place initiatives that will focus on better controlling the company’s impacts on natural resources, including water, electricity, waste and emissions .

achievements in 2012 include the following:– Low energy and electro-sensor controlled lighting throughout

our head office building and branch offices;– video conferencing and teleconferencing facilities . this has

substantially reduced the amount of air travel between head office and regional branches and between head office and the shareholder’s offices in Cape town;

– the implementation of a paperless document management system;

– the use of recyclable plastic water bottles for all areas of the business;

– the use of multiple waste paper storage bins throughout all of our offices, allowing for confidential destruction and subsequent recycling of paper products;

– electronic communication of newsletters, market announce-ments, greeting cards etc . as opposed to traditional paper-based methods; and

– participation and support of the saia solar Water Heater project .

in march 2011 the company started statistical monitoring of waste paper recycling initiatives . the company has reduced its tonnage of paper used by 212 kilograms, a year-on-year reduction of 5 .9% . Lion of africa insurance will be reporting on progress made with regard to this effort every year and will do the same with other initiatives that are still in their infancy stage .

the company anticipates a direct impact on the business in the coming years with respect to:– the level and types of cover provided;– pricing and underwriting criteria for environmental hazards;– the range of short-term insurance products .

the company seeks to differentiate itself in the industry by providing smart risk solutions to its clients, in contrast to the traditional insurer role of merely acting as a risk transfer vehicle . in the face of climate change, certain businesses will encounter significant new operational challenges and will be looking for risk partners to help eliminate, mitigate or reassign these risks . our client’s at Lion of africa insurance include some of the country’s largest recycling and waste disposal companies as well as leaders in environmental management . in the future, the company will work to collaborate with these companies, in order to strengthen its own understanding of the challenges faced by other entities thereby enabling it to respond, in most cases, to insurance needs around these new challenges and risks .

product responsibility

market locationsLion of africa insurance has branch offices in four of the nine provinces in the country, with the head office situated in Johannesburg . While the company operates nationally and provides insurance cover and risk solutions to clients on a national scale, it does have ambitions to extend its operations to the rest of africa in the future .

productsthe company’s short-term insurance products are classified into the following categories based on the profile of the policyholder:– personal insurance providing cover to individuals and their

personal property;– Commercial insurance, providing cover on the assets and

liabilities of business enterprises .

Within the abovementioned categories, the Company offers risk cover associated with damages to or losses in respect of the following:– property and structures;– motor vehicles;– all risks, such as money, theft of goods and computers

(miscellaneous);– machinery (engineering);– public liability; and– marine .


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the placement of insurance cover and the mitigation of underwriting risk are dependent on the following information:– type of risk;– values at risk;– past claims history;– spread of the risk; and– risk management procedures used to minimise potential loss

incidents .

the company further offers a risk improvement service to clients through periodic surveying of risks in an effort to mitigate potential loss . the various risks that insured clients are exposed to on a daily basis are identified and rated accordingly . each of these risks is subject to general and specific terms, exceptions and conditions, which will take into account the guidelines of the treating Customers Fairly (tCF) regulatory regime . it is expected that the tCF principles will be adopted across the product range during with plain language as a tCF standard .

customer satisfactionthrough constant engagement with the intermediaries and the broader client base, customer satisfaction is consistently attended to, measured and service improvements are continually made . all stakeholders are encouraged to provide feedback to the company . the principles of tCF are applied by the company . the company is represented at the saia tCF Committee .

marketing communications the company subscribes to the General Code of Conduct of Financial services providers (Fsp) and to the south african insurance association (saia) Code of Conduct . a general Lion of africa insurance Code of Conduct is modelled on these codes to ensure adherence to all relevant laws and standards in terms of marketing communications .

in compliance with the company Code of Conduct, the Lion of africa advertising policy ensures that:– advertising considers the best interest of consumers and is

not misleading in any way;– advertising is factual and verifiable;– advertising is in no way derogatory towards any individual

or entity, thus bringing any other party including the insurance industry into disrepute; and

– Fsp number is appended to all print advertising and that all radio advertisements mention that the company is an authorised financial service provider .

in order to ensure adherence to the above, the company, in con-junction with its external compliance officer, regularly inspect samples of advertisements as part of routine compliance checks . a compliance check-list is in the process of development to simplify and tighten the controls to ensure that each advertisement adheres to all relevant codes and laws . this will further mitigate the risk of damage to the company’s reputation through unintentional over-sights . no incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotions, and sponsorship have to date been reported .

customer privacythere have been no breaches in customer data privacy or com-plaints involving customer data . the company does not distribute customer information to third parties and always ensures that integrity and confidentiality of information to clients is maintained .




brimstone’s social commitment nature, scope and effectiveness of all programmes on communities (so1)Brimstone’s social commitment is an extension of its mission statement of being profitable, empowering and to have a positive social impact on the businesses and the individuals with whom it is involved . as reported on in this integrated report, the Group’s activities and its impacts, be it corporate, social or environmental are measured against these yardsticks to ensure long-term sustainability . as the largest employer on the Cape West Coast – and one of the largest in the Western Cape – Brimstone directly employees in excess of 3 300 individuals in its subsidiaries and more than 17 500 through its associates and investments . a large number of these employees have been shareholders in Brimstone since its early start-up days almost two decades ago, which makes the Group’s stakeholder community arguably unique among Jse listed companies . this inevitably means that the nature and scope of Brimstone’s involvement in the community also requires a unique approach .For this reason, Brimstone through its own corporate social initiatives and those of its subsidiaries and investments is involved in education, training and development, the arts and the support of specific charitable and social campaigns .apart from its internal corporate social investment programmes, Brimstone has established the Brimstone Foundation and the Brimstone empowerment share trust to extend the long-term reach and sustainable impact of its initiatives .

brimstone empowerment share trust (best) Best was established in 2005 with the intention of supporting a broad range of nGos and not-for-profit organisations through the allotment of Brimstone shares . these shares have a vested value and can be sold by the nominated beneficiaries after a period of five years, in increments of 20% per annum . recipients however participate fully in dividends declared from the date of receipt of shares . Best allocates Brimstone “n” ordinary shares (“Brn shares”) to various organisations (at no cost to the organisation) throughout south africa . at year end there were 19 beneficiaries in Best, each of which own a minimum of 50 000 Brn shares . during the review period, Best allocated 50 000 Brn shares each to two additional organisations, namely al Fidaa Foundation (www .alfidaa .co .za) and the aryan Benevolent Home Council (www .abh .org .za) . these organisations are based in the eastern Cape and KwaZulu-natal respectively . al Fidaa Foundation is a registered non-profit and public benefit organisation which was formed in august 2008 to assist impoverished individuals, regardless of race or culture in the eastern Cape . the Foundation’s soup Kitchen Feeding project comprises 35 kitchens in various areas in and around the greater port elizabeth area . in addition, several skills development

programmes have been initiated to provide employable skills within poor communities . Furthermore, several micro-enterprises have been funded to bring gainful employment to financially marginalised individuals . the aryan Benevolent Home Council is a registered non-profit organisation which takes care of children, the elderly and physically or mentally disabled people, who have no one else to provide for their needs . these services include residential homes for the aged, disabled and children, occupational therapy, physiotherapy, psycho-psychiatric services and other paramedical services . the organisation runs day care centres, sheltered workshops and other community outreach programmes . established more than 80 years ago, the organisation now has numerous homes, nursing schools and branches in the Western Cape, Gauteng and in Umzinto and Glencoe in KwaZulu-natal . to date Brimstone has allotted 950 000 Brn shares to 19 beneficiaries .

best beneficiaries are:1 al Fidaa Foundation2 aryan Benevolent Home Council (aBH)3 CaFda4 Chevra Kadisha Group5 ditikeni investment Company6 early Learning resource Unit (eLrU)7 Foodbank south africa8 Gift of the Givers Foundation9 imam abdullah Haron education trust10 League of Friends of the Blind (LoFoB)11 Leliebloem Foundation for Children from troubled Families12 mary Harding school for children with intellectual disability13 mustadafin Foundation14 nelson mandela Foundation15 sakhikamva investments16 shalamuka Foundation17 smile Foundation18 tsiBa19 Yabonga Children Hiv/aids project

Further information on these beneficiaries can be found on the company’s website .

corporate social initiatives

project winter warmevery winter, the Brimstone Foundation supports project Winter Warmth . in 2012, more than 3 700 blankets were distributed to various organisations, including children and old age homes, shelters and needy households in certain of Brimstone’s subsidiary companies operating throughout the Western Cape . the Foundation sponsored 1 000 of the total number of blankets distributed .


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bursary awardsHouse of monatic employees are able to apply for a bursary towards their children’s tertiary education on an annual basis . students are not limited to specific courses, although bursaries are awarded in varied increments, based on the type of studies and the year of study . students are currently enrolled in a variety of courses, including diplomas and post graduate degrees . during the financial year, the total spend on bursaries was r82 000 .

back to school shoe shine projectBrimstone assisted nedbank with its Back to school shoe shine project by donating school supplies to various school children in the Limpopo province . an amount of r40 000 was spent on this project during the year .

maths and science tuition projectsduring the review period, Brimstone supported the imam abdullah Haron education trust (www .iahet .com) which facili-tates various maths and science tuition projects in schools throughout the Western Cape . the principal aim of the trust is to provide funding across the entire spectrum of education, ranging from the provision of infrastructure for pre-primary educational institutions to grants for post-graduate study . an amount of r40 000 was spent on this project .

life Healthcare nursing collegein may 2011, Brimstone agreed to sponsor 10 students by covering their tuition costs and text books to study nursing at the Life Healthcare nursing College . the course runs over two years and is scheduled to end in may 2013, when students take their final exams . the class of 2012 had a 100% pass rate for the first year and look forward to the final year results when released later in the year . an amount of r179 920 was spent on this initiative during the year .

youth unemployment prevention project and the mitchells plain education ForumBrimstone supported this project with an amount of r12 500 and further co-ordinated a golf day to raise additional funds for the mitchells plain education Forum .

mapungubwe institute for strategic reflection (mistra)mistra (www .mistra .org .za) was founded by a group of south africans who recognised the need to create a platform for engagement around strategic issues facing south africa . its members have backgrounds in research, academia, policy-making and governance . Brimstone embarked on a two-year project of support to mistra, which commenced in 2011 . the amount spent on mistra during the second year was r125 000 .

supporting social campaigns and the arts

impumelelo2012 marks the first year of Brimstone’s association with the impumelelo social innovations Centre (www .impumelelo .org .za) . impumelelo is a nGo that was founded in 1999 with the aim of identifying, rewarding and promoting innovative public-private projects that improve the quality of life of the poor in south africa . Brimstone sponsored one of the awards for projects meeting the organisation’s criteria in an amount of r15 000 .

mandela dayall south africans were encouraged to devote 67 minutes of their time to society to commemorate the 67 years that nelson mandela dedicated to achieving social justice . (www .mandeladay .com) . Brimstone heeded the call and participated in mandela day events held in Cape town and Johannesburg by distributing Lucky star tinned fish to those in need . on mandela day, Brimstone dis-tributed approximately 2 500 cans of Lucky star fish to organisa-tions and individuals in need throughout Cape town and Gauteng .in Gauteng, Brimstone – in conjunction with nedbank – was part of the saFm mandela day Charity drive . the objective of this project was to collect perishable foods for those less fortunate . in Cape town, Brimstone dedicated their time to the etafeni day Care Centre in nyanga and assisted in moving furniture and playing with the children . this initiative was aired on saBC 2’s magazine programme, top Billing . Brimstone spent r25 000 on these mandela day initiatives during 2012 .

cochlear implantduring the review period, Brimstone assisted with sponsoring a cochlear implant for a two year old girl . the little girl was diagnosed at the red Cross hospital with a bilateral profound hearing loss in august 2011 . Brimstone’s contribution to this operation was r10 000 .

republishing of the book: “the killing of the imam”Brimstone sponsored the reprinting and official release of the book, the Killing of the imam facilitated by the imam abdullah Haron educational trust more than 30 years after it was first published . the book deals with imam abdullah Haron’s activism and the events that led to his detention and subsequent death on 27 september 1969 . it provides valuable perspectives on south africa’s history, especially in the Western Cape during the 1950s and 1960s . the total spend on this publication was r124 350 .





trafalgar High school centenary celebrationstrafalgar High shool (www .trafalgarhigh .co .za) celebrated its 100 years in existence and Brimstone contributed to this auspicious event by co-sponsoring the school’s commemorative magazine with an amount of r5 000 .

yabongaBrimstone annually sponsors the distribution of meat parcels to Yabonga (www .yabonga .com) staff during the month of december . Yabonga is a non-governmental organisation supporting people living with Hiv . they are based in Cape town and operate in twelve township communities around the city . Founded in 1998 the organisation currently has 100 staff members working at various support centres in the communities . the centres are located next to the local clinics where it provides Hiv education to patients in the waiting rooms . total spend on Yabonga was r18 000 .

refurbishment of ec primary schoolBrimstone sponsored the purchase of paint for the refurbishment of the eC primary school, based in Grassy park . the amount contributed was r20 400 .

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as at 31 december 2012

intrinsic net asset value report

the intrinsic net asset value (intrinsic nav) of Brimstone on 31 december 2012 was r3 604 .9 million (2011 – r2 491 .8 million), translating to 1 474 cents per share (2011 – 1 020 cents per share), based on 244 .6 million shares (2011 – 244 .4 million shares) in issue, net of treasury shares . Fully diluted intrinsic nav per share was 1 399 cents per share (2011 – 981 cents per share), based on 259 .4 million shares (2011 – 255 .6 million) in issue, net of treasury shares after taking into account the notionally realised shares issued in terms of the circular to shareholders dated 18 november 2010 and fully diluted for outstanding share options .

the Book net asset value (Book nav) of Brimstone on 31 december 2012 was r2 814 .9 million (2011 – r1 998 .8 million), translating to 1 153 cents per share (2011 – 820 cents per share), based on the respective number of shares in issue . the closing share prices on 31 december 2012 of Brimstone ordinary and “n” ordinary shares on the Jse Limited (Jse) were 1 125 cents and 1 195 cents (2011 – 1 000 cents and 820 cents) per share respectively .

sea Harvest– the intrinsic nav of the 58 .1% shareholding in sea Harvest

was based on an equally weighted average value using public market valuations as a proxy and the discounted cash flow valuation methodology .

– For the public market valuation an ev/eBitda multiple of 6 times, representing a 41% discount to the average ev/eBitda multiple at which listed peers traded at 31 december 2012, was applied .

lion of africa– the intrinsic nav of the 100% shareholding in Lion of

africa was based on a weighted average value using public market price: book multiples and public market price: earnings multiples as proxies .

– a price: book multiple of 1 .67 times was used, which equates to a 39% discount to the average price: book multiple at which listed peers traded at 31 december 2012 and a price: earnings multiple of 7 times, representing a 68% discount to the average price: earnings multiple at which listed peers traded at 31 december 2012 .

oceana– the intrinsic nav of the 20 .1 million shares in oceana was

based on the closing share price of oceana on the Jse at 31 december 2012 of r69 .82 per share .

life Healthcare– the 5 .04% interest was valued at the closing share price of

Life Healthcare on the Jse at 31 december 2012 of r34 .00 per share .

mtn Zakhele, nedbank, old mutual and tiger brands options– these rights are carried as options and were valued as

disclosed in appendix 4 to the annual financial statements .

31 dec 12 31 dec 11

intrinsic nav of Brimstone (r’m) 3 604 .9 2 491 .8

Book nav (r’m) 2 814 .9 1 998 .8

intrinsic nav per share (cents)* 1 474 1 020

Fully diluted intrinsic nav per share (cents)** 1 399 981

Book nav per share (cents) 1 153 820

market price per share (cents)– ordinary shares– “n” ordinary shares

1 1251 195

1 000820

discount to intrinsic nav:– ordinary shares– “n” ordinary shares

24%19%

2%

20%

* Based on 244.6 million shares (December 2011 – 244.4 million shares) in issue, net of treasury shares.

** Based on 259.4 million shares (December 2011 – 255.6 million shares) in issue, net of treasury shares after taking into account the notionally realised shares issued in terms of the circular to

shareholders dated 18 November 2010 and fully diluted for outstanding share options.



intrinsic nav analysis by assetan analysis of the intrinsic nav of Brimstone as at 31 december 2012 is set out below, including the valuation basis of each asset . Where applicable, intrinsic nav is net of ring-fenced debt and potential CGt relating to that asset .

r’000

asset % held valuation basis gross value debt cgt inav

Life Healthcare 5 .04% market value per share 1 785 227 — (322 185) 1 463 042

oceana 16 .83% market value per share 1 403 155 (334 127) (155 662) 913 366

sea Harvest 58 .10% dCF & ev/eBitda valuations *** 508 990 — (51 167) 457 823

Lion of africa 100 .00% price to book and price earnings valuations 312 685 — (23 248) 289 437

nedbank option 0 .75% option valuation 321 167 — (58 818) 262 349

tiger Brands option 0 .95% option valuation 268 137 — (47 376) 220 761

a&o / rex trueform 33% market value per share 113 150 — (12 246) 100 904

old mutual option 0 .35% option valuation 63 161 — (7 634) 55 527

mtn Zakhele option 1 .25% option valuation 88 288 — — 88 288

taste Holdings 12 .53% market value per share 105 522 — (12 482) 93 040

afena Capital 25 .1% aUm & pe valuations 51 581 — (740) 50 841

investment properties 100 .00% discount to market cap rate 43 754 (26 661) (5 934) 11 159

the scientific Group 28 .20% ev / eBitda valuation 29 914 — (886) 29 028

Galaxy Gold 10 .00% directors valuation 6 157 — 8 928 15 085

aon re africa 18 .00% price to earnings valuation 37 865 — (5 558) 32 307

other investments various Book value 7 130 — 465 7 595

House of monatic 100 .00% Book value 28 260 — 324 28 584

other Bee options various market value 35 490 — (2 313) 33 177

Funding Book value 76 547 (556 209) (67 798) (547 460)

5 286 180 (916 997) (764 330) 3 604 853

intrinsic net asset value per share (cents)* 2 161 (375) (312) 1 474

Fully diluted intrinsic net asset value per share (cents)** 2 047 (353) (295) 1 399

* Based on 244.6 million shares (December 2011 – 244.4 million shares) in issue, net of treasury shares.

** Based on 259.4 million shares (December 2011 – 255.6 million shares) in issue, net of treasury shares after taking into account the notionally realised shares issued in terms of the circular to

shareholders dated 18 November 2010 and fully diluted for outstanding share options.

*** After adjusting for the preference share funding structure.


intrinsic net asset value report (continued)

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the Board approved the formation of a social and ethics committee (“the committee”) in march 2012 in order to assist in monitoring the Group’s performance as a good and responsible corporate citizen and to perform the statutory functions required of a social and ethics committee in terms of the Companies act, 71 of 2008, as amended (‘’the Companies act’’) . this report is presented by the committee to describe how it has discharged its duties in terms of the Companies act as well as its additional duties assigned to it by the Board in respect of the financial year ended 31 december 2012 .

composition of the committeeFor the period under review the committee consisted of non- executive chairman, prof GJ Gerwel, lead independent director, mr pL Campher, non-executive director, mr n Khan and executive director, mr ma Brey . the chairman of the committee, prof GJ Gerwel, sadly passed away on 28 november 2012 . the committee subsequently appointed mr F robertson, executive chairman of the Company to serve as chairman of the committee, effective February 2013 . the chief executive officer and/or managing directors of the Group’s three operating subsidiary companies are invited to attend all committee meetings . as the committee was only established by the Board in march 2012, it has only met once during the period under review . in terms of the committee’s mandate at least two meetings should be held annually .

the committee’s role and responsibilitiesat the inaugural meeting of the committee held on 1 november 2012, the charter was approved and agreement was reached on the proposed committee structure and method of operation .

rolethe committee fulfils an oversight role with accountability to the Board . the main objective of the committee is to assist the Board in monitoring the Group’s performance as a good corporate citizen .

responsibilitiesthe committee performs all the necessary functions to fulfil its role as stated above, including the following statutory duties: (a) monitoring the Group’s activities, having regard to any

relevant legislation, other legal requirements or prevailing codes of best practice, with regard to matters relating to:

– social and economic development, including the Group’s standing in terms of the goals and purposes of:

•The10principlessetoutintheUnitedNationsGlobalCompact principles;

•TheOrganisationforEconomicCo-Operationanddevelopment (“oeCd”) recommendations regarding corruption;

•TheEmploymentEquityAct;and •TheBroad-BasedBlackEconomicEmpowermentAct.

– Good corporate citizenship, including the Group’s •Promotionofequality,preventionofunfairdiscrimi-

nation, and reduction of corruption; •Contributiontothedevelopmentofthecommunities

in which its activities are predominantly conducted or within which its products or services are predomi-nantly marketed; and

•Recordofsponsorship,donationsandcharitablegiving .

– the environment, health and public safety, including the impact of the Group’s activities and of its products or services;

– Consumer relationships, including the Group’s advertising, public relations and compliance with consumer protection laws; and

– Labour and employment, including: •TheGroup’sstandingintermsoftheInternational

Labour organisation protocol on decent work and working conditions; and

•TheGroup’semploymentrelationships,andits contribution toward the educational development of its employees;

(b) ensure that the Group’s ethics risks and opportunities are assessed and that an ethics risk profile is compiled;

(c) ensure that the ethical standards guiding the Group’s relationships with internal and external stakeholders are clearly identified;

(d) ensure that the Group’s ethical standards are integrated into all the Group’s strategies and operations;

(e) ensure that the Group’s ethics performance is assessed, monitored, reported and disclosed;

(f) to draw matters within its mandate to the attention of the Board as may be required; and

(g) to report, through one of its members, to the shareholders at the Company’s annual general meeting on matters within its mandate .

in addition, the committee performs the following duties delegated by the Board:

– the Group’s integrated report contains a large amount of information reviewed and considered during the course of the committee’s activities . the committee will review the content of the integrated report that is relevant to the committee .

report to shareholdersthe committee has reviewed and is satisfied with the content in the integrated report that is relevant to the activities and responsibilities of the committee .

social & etHics committee report




remuneration report

this report deals with matters covered by the human resources and nominations committee .

remuneration policyit is the policy of the Company to attract and retain employees of the highest calibre through its remuneration practices . the committee annually reviews fixed remuneration to ensure that employees who contribute to the success of the Company receive market related remuneration . top and senior management receive short and long-term incentives which are based on the amount of shareholder value created . in order to qualify, management must meet or exceed targets set for profitability, growth in assets under management and other “softer” performance criteria . each performance criterion is measured independently . the short-term incentive, payable in cash, is limited to a maximum of 80% of annual cost to company depending on the level of seniority of the participant . the long-term incentive, equal to the short-term incentive, is in the form of share-option awards .

executive directors’ remunerationthe committee utilised the services of remuneration consultants to set the level of remuneration for executive directors . their earnings were benchmarked against recognised remuneration surveys .

r’000

paid by company other 2012 2011name Basic salary Bonus benefits* total total

ma Brey 2 046 2 093 254 4 393 4 287 F robertson 1 816 1 888 266 3 970 3 865 LZ Brozin 1 899 1 888 171 3 958 3 863

5 761 5 869 691 12 321 12 015

paid by subsidiariesma Brey 202 185 F robertson 507 325

709 510

total – executive directors 13 030 12 525

* Company contributions to retirement fund and medical aid.

non-executive directors’ remuneration non-executive directors receive fees for membership of the Brimstone investment Corporation Limited Board .they also receive fees for work done on committees of the Board .

paid by company Committee 2012 2011name Board fees fees total total

pL Campher 163 158 321 252 prof GJ Gerwel 657* 60 717 666 m Hewu 109 22 131 96 n Khan 109 124 233 175 mK ndebele 109 22 131 106 Y pahad 53 37 90 122 La parker 109 33 142 127 aa roberts 53 11 64 111 Fd roman 109 33 142 106

1 471 500 1 971 1 761

* Includes a salary component of R494 000.

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r’000paid by subsidiaries 2012 2011

pL Campher 11 —n Khan 11 —Y pahad 20 —

42 —

total – non-executive directors 2 013 176

total – directors’ remuneration 15 043 14 286

prescribed officersthe board has determined that there are no prescribed officers in the employ of the Company as defined by the Companies act no . 71 of 2008 .

share incentive schemeshare option allocations to directors, top and senior managers are considered periodically . the Brimstone investment Corporation Limited share trust makes allowances for the granting of options to directors of the Company who do not hold salaried employment or office to acquire shares in the Company . the options issued can only be exercised on the basis of a maximum of 20% per annum and must be exercised within 6 years from date of grant .

share option details of executive directors “n” ordinary shares

Gain on Balance Granted exercised exercise Balance exercisable at during exercise date of expiry during of share at at 31 dec 11 the year price grant date the year options 31 dec 12 31 dec 12

name number number Cents number r’000 number number

ma Brey 302 400 214 800 900 16 Feb 12 16 Feb 18 60 480 181 456 720 — LZ Brozin 272 200 193 300 900 16 Feb 12 16 Feb 18 54 440 163 411 060 — F robertson 272 200 193 300 900 16 Feb 12 16 Feb 18 54 440 163 411 060 —

846 800 601 400 169 360 1 278 840 —

share option details of staff“n’ ordinary shares

the following options were granted to staff during the year:

“n” ordinary shares exercise price no Cents

563 300 900




audit & risk committee report

introduction the Brimstone audit & risk committee is a formal committee of the Board . the responsibilities of the committee are outlined in its written terms of reference which are reviewed annually and are in line with the Companies act, King iii and the Jse Listings requirements . the committee has an independent role with accountability to the Board and shareholders . this report of the audit & risk committee is presented to the shareholders in terms of section 94(7)(f) of the Companies act and as recommended by King iii . the members of the committee were recommended by the Board and appointed by shareholders for the 2012 financial year .

committee members and attendance at meetingsthe Committee comprises four independent non-executive directors (as set out in the table below) and is chaired by mr n Khan . all the committee members are suitably skilled and experienced . the committee meets at least three times per year .

composition of the committee number of number of meetings held meetings attendedcommittee membern Khan (Chairman) 3 3pL Campher 3 3La parker 3 3Fd roman 3 3

the executive directors and senior management make themselves available to attend meetings and answer questions . representatives from Brimstone’s subsidiary companies attend the meetings by invitation .

roles and responsibilitiesthe committee has a charter approved by the Board . the charter is reviewed annually and was updated during the year under review . the committee’s roles and responsibilities include its statutory duties in accordance with the Companies act, as well as the responsibilities assigned to it by the Board . the audit or finance committees of Brimstone’s operating subsidiary companies, namely, Lion of africa, sea Harvest and House of monatic report to this committee at each meeting by way of report backs via the respective chairperson of the subsidi-ary’s audit or finance committee or invited representatives . in the case of Lion of africa, Brimstone’s wholly-owned subsidiary, its own audit committee comprises three independent non-executive directors and consequently fulfils its responsibilities independent of the committee .

statutory dutiesin the conduct of its duties, the committee has performed the following statutory duties: – nominated deloitte & touche and mr Lester peter Cotten,

who in the opinion of the committee, is independent of the Company, to the shareholders for appointment as the external auditor for the ensuing year;

– determined the fees to be paid to the external auditor and their terms of engagement;

– ensured that the appointment of the external auditor complies with the provisions of the Companies act and any other legislation relating to the appointment of auditors;

– determined the nature and extent of any non-audit services; and

– pre-approved any proposed agreement with the auditors for the provision of non-audit services .

appointment of external and internal auditorsthe committee is satisfied that the Company’s external auditor, deloitte & touche is independent of the Company and is able to conduct their audit functions without any influence from the Company . the committee has rules regulating the services and conditions of use of non-audit services provided by the external auditors . in terms of its charter this committee is responsible for the appointment of the Company’s internal auditors . KpmG performed this function for the past year and were reappointed as internal auditors for the 2013 financial year . the committee meets at least three times a year with the Company’s internal and external auditors together with man-agement to review accounting, internal and external auditing, internal control and financial reporting issues . Both the internal and external auditors enjoy unrestricted access to the audit & risk committee and vice versa . the committee approves the fees and scope of external and internal audit services . it is responsible for the maintenance of a professional relationship with both the external and internal auditors and oversees co-operation between these two parties .

internal financial controls Brimstone is responsible for ensuring that a sound system of internal control exists to safeguard our shareholders’ investments and the assets of the Group . the Group’s internal controls, systems and procedures are designed to provide reasonable, but not absolute assurance as to the integrity and reliability of the annual financial statements that assets are adequately safeguarded against material loss and that transactions are properly authorised and recorded .

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expertise and experience of the Financial director and finance function the committee has satisfied itself of the appropriateness and experience of the Financial director, mr LZ Brozin and the Chief Financial officer, mr m o’ dea . the committee has furthermore considered and has satisfied itself of the appropriateness of the expertise and adequacy of resources of the Company’s finance function and the experience of the senior members of management responsible for the finance function .

Financial statements and going concernthe committee reviewed the annual financial statements and Group annual financial statements and is satisfied that they comply with international Financial reporting standards and the Companies act, and that the accounting policies used are appropriate . the committee has also reviewed a documented assessment by management of the going concern premise of the Company before recommending to the Board that the Company will be a going concern in the foreseeable future . risk management in giving effect to risk management responsibilities the Group has implemented a continuous risk management review programme to ensure a coherent governance approach throughout the Group . the Group has ensured that no undue, unexpected or unusual risks have been undertaken in pursuit of reward .

compliancethe committee is responsible for reviewing any major breach of relevant legal, regulatory and other responsibilities . the committee is satisfied with the compliance to these standards and with the applicable laws and regulations . Furthermore, the committee is satisfied that it has complied with all its legal, regulatory and other responsibilities during the year under review .

recommendation of the integrated report for approval by the boardthe committee has reviewed and considered the integrated report, including the annual financial statements, and has recommended it for approval by the Board .

n khanChairman of the Audit & Risk Committee

contents

directors’ approval of annual Financial statements, preparation of annual Financial statements

and Certificate by secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

independent auditor’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

directors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

statements of Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

statements of Financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

statements of Changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

notes to the annual Financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

supplementary reports on investmentsinterest in subsidiary Companies (appendix 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

investments in associate Companies and Joint venture (appendix 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

investments (appendix 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

valuation of options (appendix 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

directors’ interest in shares (appendix 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

shareholding information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

notice of annual General meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

salient Features of the new Brimstone memorandum of incorporation (“moi”) (annexure 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Curriculum vitae . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

proxy Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135



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directors’ approval oF annual Financial statements, preparation oF annual Financial statements and certiFicate by secretary

the directors of the Company are responsible for the preparation, integrity and objectivity of the annual financial statements and Group annual financial statements as well as for all other information contained in this integrated report . to fulfil this responsibility, the C ompany and Group maintain controls to provide reasonable assurance that assets are safeguarded and that records accurately reflect the transactions of the Company and Group . the annual financial statements are prepared in terms of international Financial reporting standards and have been examined by our auditors in conformity with international standards on auditing . the annual financial statements and Group annual financial statements for the year ended 31 december 2012 which appear on pages 59 to 122 were approved by the Board and authorised for issue on 14 march 2013 .

on behalf of the Board:

F robertson ma breyExecutive Chairman Chief Executive Officer

preparation of financial statementsthe annual and Group annual financial statements of Brimstone investment Corporation Limited for the year ended 31 december 2012 have been prepared and supervised by LZ Brozin (Financial director) BCom Bacc Ca(sa) and m o’dea (Chief Financial officer) BCom Ca(sa) .

certificate by secretaryin terms of section 88 (2)(e) of the Companies act, i certify that the Company has lodged with the Commissioner all such returns and notices as are required by the Companies act, and that all such returns and notices are true, correct and up to date .

t moodleyCompany Secretary

14 march 2013



independent auditor’s reportto the shareholders of Brimstone investment Corporation Limited

We have audited the consolidated and separate annual financial statements of Brimstone investment Corporation Limited as set out on pages 60 to 122, which comprise the statements of financial position as at 31 december 2012, and the statements of compre-hensive income, statements of changes in equity, and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information .

directors’ responsibility for the consolidated and separate financial statementsthe company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with international Financial reporting standards and the requirements of the Companies act of south africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error .

auditor’s responsibilityour responsibility is to express an opinion on these consolidated and separate 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 consolidated and separate financial statements are free from material misstatement . an audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements . the procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error . in making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the 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 principles used and the reasona-bleness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion .

opinionin our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Brimstone investment Corporation

Limited as at 31 december 2012, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with international Financial reporting standards and the requirements of the Companies act of south africa .

other reports required by the companies act as part of our audit of the consolidated and separate financial statements for the year ended 31 december 2012, we have read the directors’ report, the audit & risk committee report and the certificate by the secretary for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements . these reports are the responsibility of the respective preparers . Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements . However, we have not audited these reports and accordingly do not express an opinion on these reports .

deloitte & toucheRegistered auditors

per GG FortuinPartner

14 march 2013

1st Floor the squareCape Quarter27 somerset roadGreenpoint, 8005 national executive: LL Bam (Chief executive); ae swiegers (Chief operating officer); Gm pinnock (audit); dL Kennedy (risk advisory); nB Kader (tax); tp pillay (Consulting); K Black (Clients & industries); JK mazzocco (talent & transformation); Cr Beukman (Finance); m Jordan (strategy); s Gwala (special projects); tJ Brown (Chairman of the Board); mJ Comber (deputy Chairman of the Board)regional Leader: mn alberts a full list of partners and directors is available on request BBBee rating: Level 2 contributor in terms of the Chartered accountancy profession sector Code member of deloitte touche tohmatsu Limited

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the directors are pleased to present their second integrated report .

directors’ report

principal activities of the groupBrimstone remains an investment holding company . the successful model of active partnership with well established players in the sectors of choice will continue to be our focus going forward .

review of operationsthe results for the year under review are set out in the attached financial statements .

dividendBrimstone’s Board declared a final dividend of 25 cents per share for the year ended 31 december 2012, payable on 22 april 2013 . the dividend has been declared out of income reserves . in compliance with the requirements of strate, the Company has determined the following salient dates for the payment of the dividend . the last day to trade cum dividend is Friday, 12 april 2013 . the dividend is payable to all shareholders of Brimstone recorded in the books of the Company at the close of business on Friday, 19 april 2013 . shares will commence trading ex-dividend from monday, 15 april 2013 . shares may not be rematerialised or dematerialised from monday, 15 april 2013 to Friday, 19 april 2013, both days inclusive . the dividend is subject to dividend withholding tax at 15% . in determining dividend withholding tax, secondary tax on companies (“stC”) credits must be taken into account . Brimstone has sufficient stC credits to cover the dividend withholding tax and the stC credits utilised as part of this declaration amount to r68 590 925 being 25 cents per share, and consequently no dividend withholding tax is payable by shareholders who are normally not exempt from dividend withholding tax . all shareholders will receive the dividend of 25 cents per share . the number of Brimstone ordinary and “n” ordinary shares eligible for dividends is 46 775 135 and 227 588 564 respectively (this excludes 39 140 000 “n” ordi nary shares held by the Brimstone Black executives investment trust, the Brimstone General staff investment trust and the Brimstone Broad-Based Bee trust which are not eligible to receive dividends) and the company’s tax reference number is 9397002719 .

voting rightsordinary shares carry 100 votes per share, while “n” ordinary shares carry one vote per share . “n” ordinary shares rank pari passu with ordinary shares in all other respects, including receipt of dividends and proceeds on the winding up of the Company .

share capitalthe following shares were issued during the year:30 march 2012 “n”ordinaryshare option scheme 248 360

there were no changes to the authorised ordinary and “n” ordinary share capital . the unissued shares are the subject of a general authority granted to the directors in terms of the Companies act, which authority remains valid only until the forthcoming annual general meeting .

general authoritythe Board is proposing that the general authority granted at the last annual general meeting held in may 2012, to permit the

Company or a subsidiary to acquire the Company’s own shares and to permit the Company to issue shares for cash, be renewed at the forthcoming annual general meeting . Full details are set out in the notice to members on page 126 .

interest in and earnings of subsidiariesdetails of the Company’s interests in and share of aggregate profits and losses of its subsidiaries are set out in appendix 1 on page 118 .

directors’ interests in contractsdetails of relevant transactions during the year are included in note 41 to the financial statements .

interests of directors in the shares of the companythe details of directors’ interest in the shares of the Company are set out on page 122 . details of the director’s interest in options held in terms of the Company’s share incentive scheme are set out on page 53 .

insurance, interest rate and currency risk managementthe Board utilises appropriate expertise in controlling and managing material identified risks in asset holdings, borrowings and foreign currency exposure both in the holding company and in advising and assisting subsidiaries and associates .

special resolutionat the annual general meeting held in may 2012, a special resolution was passed to enable the Company and/or any subsidiary to acquire its own issued shares from time to time on such terms and conditions and in such amounts as the directors from time to time decide, subject to certain statutory provisions and the Listings requirements of the Jse Ltd . the non-executive directors’ fees for the year ended 31 december 2012 were also approved by special resolution at the annual general meeting held in may 2012 .

going concernthe directors believe that the Group and Company will be a going concern for the foreseeable future .

directors and secretarythe names of the directors in office at the date of this report appear on page 3 . LZ Brozin, pL Campher and mK ndebele are due to retire by rotation in terms of the Company’s moi and, being eligible, offer themselves for re-election . the company secretary’s name and her business and postal address appear on page 3 .

audit & risk committee reportthe audit & risk committee report on the performance of its duties in terms of section 94(7) of the Companies act is set out on pages 54 to 55 of the integrated report .

events subsequent to 31 december 2012there are no significant subsequent events affecting these results .

litigationdetails of litigation are set out in note 35 .




group company

r’000 notes 2012 2011 2012 2011

statements oF compreHensive income

revenue 2 1 946 472 1 867 915 148 356 74 939

sales and fee income 1 795 026 1 759 846 16 029 18 474 dividends received 151 446 108 069 132 327 56 465

operating expenses 3 (1 815 434) (1 735 292) (60 328) (73 674)

operating profit 131 038 132 623 88 028 1 265 Fair value gains 4 1 053 311 476 858 206 063 130 987 exceptional items 5 (2 280) 36 441 (292) 1 951 share of profits of associates and joint venture 27 612 22 057 — —

profit before net finance costs 6 1 209 681 667 979 293 799 134 203 income from investments 8 26 410 23 735 7 311 4 642 Finance costs 9 (131 597) (93 345) (3 067) (2 943)outside unit holders’ interest (1 357) (475) — —

net profit before taxation 1 103 137 597 894 298 043 135 902 taxation 10 (261 021) (129 093) (58 035) (55 337)

profit for the year 842 116 468 801 240 008 80 565 other comprehensive income, net of tax (3 938) 13 211 — —

Cash flow hedges (Loss)/gain arising during the year (11 606) 10 974 — —net value gain on available-for-sale financial asset 7 668 2 237 — —

total comprehensive income for the year 838 178 482 012 240 008 80 565

profit attributable to: equity holders of the parent 849 398 450 751 non-controlling interests (7 282) 18 050

842 116 468 801

total comprehensive income attributable to: equity holders of the parent 847 110 458 427 non-controlling interests (8 932) 23 585

838 178 482 012

earnings per share (cents) Basic 12 348 .1 184 .8 diluted 297 .2 158 .3



group company

r’000 notes 2012 2011 2012 2011

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statements oF Financial position

assets non-current assets 4 344 407 3 310 127 1 624 493 1 351 060

property, plant, equipment and vehicles 13 266 663 285 665 2 021 1 670 Goodwill 12 140 12 140 — —intangible assets 14 152 169 158 230 — —deferred acquisition costs 15 50 524 39 610 — — interest in subsidiaries 16 — — 781 401 757 292investments in associate companies and joint venture 17 781 995 697 299 30 893 24 988 investments 18 3 080 415 2 114 843 809 677 567 110 deferred taxation 30 — 2 340 — —other financial assets 19 501 — 501 —

current assets 1 381 057 1 294 677 109 236 36 441

inventories 20 230 226 226 803 — —trade and other receivables 21 407 288 482 113 26 968 29 998 reinsurance contracts 22 418 432 443 028 — —taxation 9 090 1 685 2 000 1 592 Cash and cash equivalents 316 021 141 048 80 268 4 851

total assets 5 725 464 4 604 804 1 733 729 1 387 501

eQuity and liabilities capital and reserves 2 929 986 2 113 630 1 238 750 1 036 949

share capital 23 45 45 49 49 Capital reserves 24 310 132 316 904 369 622 358 444 revaluation reserves 25 14 331 9 876 1 730 1 730 Cash flow hedging reserve 26 (367) 6 376 — —Changes in ownership (11 839) (11 839) — —retained earnings 2 502 581 1 677 390 867 349 676 726

attributable to equity holders of the parent 2 814 883 1 998 752 1 238 750 1 036 949 non-controlling interests 115 103 114 878 — —

non-current liabilities 1 470 287 1 405 021 460 816 315 562

Long-term interest bearing borrowings 27 888 134 1 050 295 — —interest in subsidiaries 16 — — 340 987 254 301 Long-term provisions 28 20 882 20 169 — —other financial liabilities 29 125 — 125 —deferred taxation 30 561 146 334 557 119 704 61 261

current liabilities 1 325 191 1 086 153 34 163 34 990

short-term interest bearing borrowings 31 292 934 130 581 — 8 260 Bank overdrafts 32 15 434 13 363 — —trade payables 293 087 225 287 1 874 1 530 other payables 71 130 78 053 31 167 25 200 insurance contracts 22 616 860 606 077 — —outside unit holders’ interest 14 495 10 660 — —other financial liabilities 29 2 000 — 1 122 —short-term provisions 28 16 305 18 183 — —taxation 2 946 3 949 — —

total eQuity and liabilities 5 725 464 4 604 804 1 733 729 1 387 501

nav per share (cents) 1 153 .1 819 .6 shares in issue at end of year (000’s) 244 108 243 874



attri- Cash butable non- revalu- flow Changes to equity con- share Capital ation hedging in retained holders of trolling r’000 capital reserves reserves reserve ownership earnings the parent interests total

group Balance at 1 January 2011 45 304 322 8 576 — (11 839) 1 269 342 1 570 446 102 676 1 673 122

attributable profit for the year ended 31 december 2011 — — — — — 450 751 450 751 18 050 468 801 other comprehensive income — — 1 300 6 376 — — 7 676 5 535 13 211

total comprehensive income — — 1 300 6 376 — 450 751 458 427 23 585 482 012 recognition of share-based payments — 3 723 — — — — 3 723 — 3 723 dividend paid — — — — — (36 554) (36 554) (12 858) (49 412)subsidiary’s accrual for preference dividends and repurchase of shares — — — — — — — 1 475 1 475 treasury shares acquired — (107) — — — — (107) — (107)transfer to statutory contingency reserve — 6 149 — — — (6 149) — — —share of non-distributable reserves of associates transferred directly to equity — 2 817 — — — — 2 817 — 2 817

Balance at 31 december 2011 45 316 904 9 876 6 376 (11 839) 1 677 390 1 998 752 114 878 2 113 630

attributable profit for the year ended 31 december 2012 — — — — — 849 398 849 398 (7 282) 842 116 other comprehensive income — — 4 455 (6 743) — — (2 288) (1 650) (3 938)

total comprehensive income — — 4 455 (6 743) — 849 398 847 110 (8 932) 838 178 recognition of share-based payments — 9 815 — — — — 9 815 — 9 815 dividend paid — — — — — (43 890) (43 890) (840) (44 730)subsidiary’s accrual for preference dividends — — — — — — — 9 881 9 881 issue of share capital/trust units — 1 363 — — — — 1 363 631 1 994 repurchase of trust units — (752) — — — — (752) (1 567) (2 319)disposal of treasury shares — 292 — — — — 292 — 292 transfer from statutory contingency reserve — (19 683) — — — 19 683 — — —share of non-distributable reserves of associates transferred directly to equity — 2 193 — — — — 2 193 1 052 3 245

Balance at 31 december 2012 45 310 132 14 331 (367) (11 839) 2 502 581 2 814 883 115 103 2 929 986

company Balance at 1 January 2011 49 354 721 1 730 — — 637 278 993 778 — 993 778 attributable profit for the year ended 31 december 2011 — — — — — 80 565 80 565 — 80 565 dividend paid — — — — — (41 117) (41 117) — (41 117)recognition of share-based payments — 3 723 — — — — 3 723 — 3 723

Balance at 31 december 2011 49 358 444 1 730 — — 676 726 1 036 949 — 1 036 949 attributable profit for the year ended 31 december 2012 — — — — — 240 008 240 008 — 240 008 dividend paid — — — — — (49 385) (49 385) — (49 385)issue of share capital — 1 363 — — — — 1 363 — 1 363recognition of share-based payments — 9 815 — — — — 9 815 — 9 815

Balance at 31 december 2012 49 369 622 1 730 — — 867 349 1 238 750 — 1 238 750

statements oF cHanges in eQuityfor the year ended 31 december 2012




group company

r’000 notes 2012 2011 2012 2011

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operating activities net attributable profit 842 116 468 801 240 008 80 565 adjustments for: share of profits of associates and joint venture (103 455) (69 125) — — income from investments (102 013) (84 736) (139 638) (61 107) increase in fair value of investments (1 053 311) (476 858) (206 063) (130 987) impairment of investment in associate 252 428 — — amortisation of intangible assets 19 079 18 785 — — Finance costs 131 597 93 345 3 067 2 943 taxation 261 021 129 093 58 035 55 337 depreciation of property, plant, equipment and vehicles 71 189 65 563 595 459 share-based payment expense 9 815 13 348 9 815 13 348 net profit on disposal of associate — (36 855) — (1 969) realised loss on disposal of available-for-sale asset 292 — 292 — additional purchase consideration on acquisition of business 1 736 — — — (decrease)/increase in long and short-term provisions (1 165) 4 158 — — (profit)/loss on disposal of property, plant, equipment and vehicles (204) (456) 18 —

operating cash flows before movements in working capital 76 949 125 491 (33 871) (41 393)increase in inventories (3 423) (32 692) — —decrease in trade and other receivables 58 706 5 862 3 030 12 952 outside unit holders’ interest 3 835 51 — —increase in trade and other payables 60 877 10 218 5 433 4 458 net decrease/(increase) in reinsurance contracts 24 596 (42 552) — —net increase in deferred acquisition costs (10 914) (142) — —net increase in insurance contracts 10 783 42 428 — —

Cash generated from operations 221 409 108 664 (25 408) (23 983)income taxes paid 33 .1 (37 235) (24 168) — (3 611)Finance costs 33 .2 (108 359) (81 197) (1 443) (2 943)

net cash from/(used in) operating activities 75 815 3 299 (26 851) (30 537)

investing activities interest received 26 410 23 735 7 311 4 642 dividends received from associates and joint venture 75 843 47 068 — —dividends received from other equity investments 75 603 61 001 13 171 4 612 dividends received from subsidiaries — — 119 156 51 853Cash effects of change in investment in subsidiaries 33 .3 — — 64 313 63 271proceeds on disposal of investments 173 977 57 172 2 395 18 681 proceeds on disposal of property, plant, equipment and vehicles 773 497 — —acquisition of property, plant, equipment and vehicles (52 756) (44 868) (964) (1 538)acquisition of business (1 736) — (1 736) —acquisition of intangible assets (13 018) (2 886) — —acquisition of investments (131 705) (503 803) (45 096) (77 441)

net cash from/(used in) investing activities 153 391 (362 084) 158 550 64 080

Financing activities dividends paid by company and subsidiaries (44 730) (49 412) (49 385) (41 117)repayments of borrowings (196 555) (219 812) (8 260) (8 237)Loans raised 185 014 590 000 — —shares sold/(repurchased) 292 (107) — —proceeds on issue of trust units/shares 1 994 — 1 363 —Units/shares repurchased by subsidiaries (2 319) (4 983) — —increase/(decrease) in bank overdrafts 2 071 (190) — —

net cash (used in)/from financing activities (54 233) 315 496 (56 282) (49 354)

net increase/(decrease) in cash and cash equivalents 174 973 (43 289) 75 417 (15 811)Cash and cash equivalents at beginning of year 141 048 184 337 4 851 20 662

Cash and cash equivalents at end of year Bank balances and cash 316 021 141 048 80 268 4 851

statements oF casH Flows




notes to tHe annual Financial statements

1. accounting policies and basis of preparationthe annual financial statements and Group annual financial

statements are prepared in accordance with international

Financial reporting standards (iFrs) of the international

accounting standards Board, the saiCa Financial reporting

Guides as issued by the accounting practices Committee and

Financial reporting standards Council, the requirements of the

Jse Limited’s Listing requirements and the Companies act of

south africa .

the financial statements have been prepared on the historical

cost basis except for the revaluation of certain financial instru-

ments . the principal accounting policies set out below, have been

applied on a basis consistent with the previous year .

the principal accounting policies are:

1.1 basis of consolidationthe consolidated financial statements incorporate the financial

statements of the Company and entities (including special purpose

entities) controlled by the Company (its subsidiaries) . Control is

achieved where 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 acquired or disposed of during the

year are included in the consolidated statement of comprehensive

income from the effective date of acquisition and up to the

effective date of disposal, as appropriate .

Where necessary, adjustments are made to the financial state-

ments of subsidiaries to bring their accounting policies in line with

those used by other members of the Group .

all intra-group transactions, balances, income and expenses

are eliminated in full on consolidation .

non-controlllng interests in subsidiaries are identified sepa-

rately from the Group’s equity therein . the interests of non-con-

trolling shareholders may be initially measured either at fair value

or at the non-controlling interests’ proportionate share of the fair

value of the acquiree’s identifiable net assets . the choice of meas-

urement basis is made on an acquisition by-acquisition basis .

subsequent to acquisition, the carrying amount of non-controlling

interests is the amount of those interests at initial recognition plus

the non-controlling interests’ share of subsequent changes in

equity . Changes in the Group’s interests in subsidiaries that do not

result in a loss of control are accounted for as equity transactions .

the carrying amounts of the Group’s interests and the non-con-

trolling interests are adjusted to reflect the changes in their relative

interests in the subsidiaries . any difference between the amount

by which the non-controlling interests are adjusted and the fair

value of the consideration paid or received is recognised directly in

equity and attributed to owners of the Company .

When the Group loses control of a subsidiary, the profit or

loss on disposal is calculated as the difference between (i) the

aggregate of the fair value of the consideration received and the

fair value of any retained interest and (ii) the previous carrying

amount of the assets (including goodwill), and liabilities of the

subsidiary and any non-controlling interests . amounts previously

recognised in other comprehensive income in relation to the

subsidiary are accounted for (i .e . reclassified to profit or loss or

transferred directly to retained earnings) in the same manner as

would be required if the relevant assets or liabilities were disposed

of . the fair value of any investment retained in the former

subsidiary at the date when control is lost is regarded as the fair

value on initial recognition for subsequent accounting under las

39 Financial instruments: recognition and measurement or, when

applicable, the cost on initial recognition of an investment in an

associate or jointly controlled entity .

1.2 subsidiary companiessubsidiary companies are valued at cost less amounts written off

when the directors believe that there has been a permanent dimi-

nution in value . on consolidation any write off is apportioned and

deducted from the underlying assets of the subsidiary .

1.3 business combinations acquisitions of subsidiaries and businesses are accounted for using

the acquisition method . the consideration for each acquisition is

measured at the aggregate of the fair values (at the date of

exchange) of assets given, liabilities incurred or assumed, and

equity instruments issued by the Group in exchange for control of

the acquiree . acquisition-related costs are recognised in profit or

loss as incurred .

Where applicable, the consideration for the acquisition

includes any asset or liability resulting from a contingent consider-

ation arrangement, measured at its acquisition-date fair value .

subsequent changes in such fair values are adjusted against the

cost of acquisition where they qualify as measurement period

adjustments . all other subsequent changes in the fair value of a

contingent consideration classified as an asset or liability are

accounted for in accordance with relevant iFrss . Changes in the

fair value of a contingent consideration classified as equity are not

recognised .

Where a business combination is achieved in stages, the

Group’s previously held interests in the acquired entity are

remeasured to fair value at the acquisition date (i .e . the date the

Group attains control) and the resulting gain or loss, if any, is

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recognised in profit or loss . amounts arising from interests in the

acquiree prior to the acquisition date that have previously been

recognised in other comprehensive income are reclassified to profit

or loss, where such treatment would be appropriate if that interest

were disposed of .

the acquiree’s identifiable assets, liabilities and contingent

liabilities that meet the conditions for recognition under iFrs

3(2008) are recognised at their fair value at the acquisition date,

except that:

– deferred tax assets or liabilities and liabilities or assets related

to employee benefit arrangements are recognised and

measured in accordance with ias 12 income taxes and ias

19 employee Benefits respectively;

– liabilities or equity instruments related to the replacement by

the Group of an acquiree’s share-based payment awards are

measured in accordance with iFrs 2 share-based payment;

and

– assets (or disposal groups) that are classified as held for sale

in accordance with iFrs 5 non-current assets Held for sale

and discontinued operations are measured in accordance

with that standard .

if the initial accounting for a business combination is incomplete

by the end of the reporting period in which the combination

occurs, the Group reports provisional amounts for the items for

which the accounting is incomplete . those provisional amounts

are adjusted during the measurement period, or additional assets

or liabilities are recognised, to reflect new information obtained

about facts and circumstances that existed as of the acquisition

date that, if known, would have affected the amounts recognised

as of that date .

the measurement period is the period from the date of acqui-

sition to the date the Group obtains complete information about

facts and circumstances that existed as of the acquisition date –

and is subject to a maximum of one year .

1.4 investments in associatesan associate is an entity over which the Group has the ability to

exercise significant influence, but which it does not control or

jointly control .

the results and assets and liabilities of associates are incorpo-

rated in these financial statements using the equity method of

accounting . the carrying amount of such investments is reduced

to recognise any impairment in the value of individual investments .

When a group entity transacts with an associate of the Group,

unrealised profits and losses are eliminated to the extent of the

Group’s interest in the relevant associate, except where unrealised

losses provide evidence of an impairment of the asset transferred .

Where the Group’s share of losses of an associate exceeds the

carrying amount of the associate, the associate is carried at a

nominal amount . additional losses are only recognised to the

extent that the Group has incurred obligations in respect of the

associate .

the Company’s interest in associates is carried in the

statement of financial position at cost less amounts written off

when the directors believe that there has been a permanent

diminution in value .

1.5 interests in joint venturesa joint venture is a contractual arrangement whereby the Group

and other parties undertake an economic activity that is subject to

joint control, that is, the strategic financial and operating policy

decisions relating to the activities require the unanimous consent

of the parties sharing control .

the Group reports its interest in jointly controlled entities

using the equity method of accounting, except when the

investment is classified as held for sale, in which case it is

accounted for under iFrs 5 non-current assets Held for sale

and discontinued operations .

When a group entity transacts with a jointly controlled entity

of the Group, unrealised profits and losses are eliminated to the

extent of the Group’s interest in the joint venture .

1.6 goodwillGoodwill arising on consolidation represents the excess of the cost

of acquisition over the Group’s interest in the fair value of the

identifiable assets and liabilities of a subsidiary, associate or jointly

controlled entity at the date of acquisition . Goodwill is recognised

as an asset and is not amortised but subjected to an annual

impairment review .

Goodwill arising on the acquisition of an associate or jointly

controlled entity is included within the carrying amount of the

investment and is assessed for impairment as part of the

investment . Goodwill arising on the acquisition of a subsidiary is

presented separately in the statement of financial position .

on disposal of a subsidiary, associate or jointly controlled

entity, the attributable amount of goodwill is included in the

determination of the profit or loss on disposal .

1.7 negative goodwillnegative goodwill represents the excess of the Group’s interest in

the fair value of the identifiable assets and liabilities of a sub-

sidiary, associate or jointly controlled entity at the date of acqui-




notes (continued)

sition over the cost of the acquisition . negative goodwill, after

reassessment, is recognised immediately in profit or loss .

1.8 Financial assetsall financial assets are recognised and derecognised on a trade

date where the purchase or sale of a financial asset is under a

contract whose terms require delivery of the financial asset within

the time frame established by the market concerned, and are

initially measured at fair value, plus transaction costs, except for

those financial assets classified as at fair value through profit or

loss, which are initially measured at fair value .

Financial assets are classified into the following specified

categories: financial assets ‘at fair value through profit or loss’

(FvtpL), ‘held-to-maturity’ investments, ‘available-for-sale’

(aFs) financial assets and ‘loans and receivables’ . the classifi-

cation depends on the nature and purpose of the financial assets

and is determined at the time of initial recognition .

effective interest methodthe effective interest method is a method of calculating the

amortised cost of a financial asset and of allocating interest income

over the relevant period . the effective interest rate is the rate that

exactly discounts estimated future cash receipts through the expected

life of the financial asset, or, where appropriate, a shorter period .

income is recognised on an effective interest basis for debt

instruments other than those financial assets designated as at FvtpL .

Financial assets at FvtplFinancial assets are classified as at FvtpL where the financial

asset is either held for trading or it is designated as at FvtpL .

a financial asset is classified as held for trading if:– it has been acquired principally for the purpose of selling it in

the near future; or

– on initial recognition it is a part of an identified portfolio of

financial instruments that the Group manages together and

has a recent actual pattern of short-term profit taking; or

– it is a derivative that is not designated and effective as a

hedging instrument .

a financial asset other than a financial asset held for trading may be designated as at Fvtpl upon initial recognition if:– such designation eliminates or significantly reduces a meas-

urement or recognition inconsistency that would otherwise

arise; or

– the financial asset forms part of a group of financial assets or

financial liabilities or both, which is managed and its perfor-

mance is evaluated on a fair value basis, in accordance with

the Group’s documented risk management or investment

strategy, and information about the grouping is provided

internally on that basis; or

– it forms part of a contract containing one or more embedded

derivatives, and ias 39 Financial instruments: recognition

and measurement permits the entire combined contract (asset

or liability) to be designated as at FvtpL .

Financial assets at FvtpL are stated at fair value, with any gains

or losses arising on remeasurement recognised in profit or loss .

the net gain or loss recognised in profit or loss incorporates any

dividend or interest earned on the financial asset . Fair value is

determined in the manner described in note 40 .12 .

Held-to-maturity investmentsBills of exchange and debentures with fixed or determinable

payments and fixed maturity dates that the Group has the positive

intent and ability to hold to maturity are classified as held-to-

maturity investments . Held-to-maturity investments are recorded

at amortised cost using the effective interest method less

impairment, with revenue recognised on an effective yield basis .

aFs financial assets Unlisted shares and linked loans held by the Group are classified

as being aFs and are stated at fair value based on the most recent

traded prices . Gains and losses arising from changes in fair value

are recognised directly in equity in the investments revaluation

reserve with the exception of impairment losses and interest calcu-

lated using the effective interest method, which are recognised

directly in profit or loss . Where the investment is disposed of or is

determined to be impaired, the cumulative gain or loss previously

recognised in the investments revaluation reserve is included in

profit or loss for the period .

dividends on aFs equity instruments are recognised in profit

or loss when the Group’s right to receive the dividends is established .

loans and receivables trade receivables, loans, and other receivables that have fixed or

determinable payments that are not quoted in an active market are

classified as ‘loans and receivables’ . Loans and receivables are

measured at amortised cost using the effective interest method less

any impairment . interest income is recognised by applying the

effective interest rate, except for short-term receivables where the

recognition of interest would be immaterial .

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impairment of financial assetsFinancial assets, other than those at FvtpL, are assessed for indi-

cators of impairment at each reporting date . Financial assets are

impaired where there is objective evidence that, as a result of one

or more events that occurred after the initial recognition of the

financial asset, the estimated future cash flows of the investment

have been impacted . For financial assets carried at amortised cost,

the amount of the impairment is the difference between the asset’s

carrying amount and the present value of estimated future cash

flows, discounted at the original effective interest rate .

the carrying amount of the financial asset is reduced by the

impairment loss directly for all financial assets with the exception

of trade receivables where the carrying amount is reduced through

the use of an allowance account . When a trade receivable is

uncollectible, it is written off against the allowance account .

Changes in the carrying amount of the allowance account are

recognised in profit or loss .

With the exception of aFs equity instruments, if, in a subse-

quent period, the amount of the impairment loss decreases and the

decrease can be related objectively to an event occurring after the

impairment was recognised, the previously recognised impairment

loss is reversed through profit or loss to the extent that the

carrying amount of the investment at the date the impairment is

reversed does not exceed what the amortised cost would have

been had the impairment not been recognised .

in respect of aFs equity securities, any increase in fair value

subsequent to an impairment loss is recognised directly in equity .

derecognition of financial assetsthe Group derecognises a financial asset only when the con-

tractual rights to the cash flows from the asset expire; or it

transfers the financial asset and substantially all the risks and

rewards of ownership of the asset to another entity . if the Group

neither transfers nor retains substantially all the risks and rewards

of ownership and continues to control the transferred asset, the

Group recognises its retained interest in the asset and an asso-

ciated liability for amounts it may have to pay . if the Group

retains substantially all the risks and rewards of ownership of a

transferred financial asset, the Group continues to recognise the

financial asset and also recognises a secured borrowing for the

proceeds received .

1.9 Financial liabilities and equity instruments issued by the group

classification as debt or equitydebt and equity instruments are classified as either financial

liabilities or as equity in accordance with the substance of the

contractual arrangement .

equity instrumentsan equity instrument is any contract that evidences a residual

interest in the assets of an entity after deducting all of its liabilities .

equity instruments issued by the Group are recorded at the

proceeds received, net of direct issue costs .

1.10 compound instruments the component parts of compound instruments (re deemable pref-

erence shares) issued by the Group are classified separately as

financial liabilities and equity in accordance with the substance of

the contractual arrange ment . at the date of issue, the fair value of

the liability component is estimated using the prevailing market

interest rate for a similar redeemable instrument . this amount is

recorded as a liability on an amortised cost basis using the

effective interest method until the instrument’s redemption date .

the equity component is determined by deducting the amount of

the liability component from the fair value of the compound

instru ment as a whole . this is recognised and included in equity,

net of tax effects, and is not subsequently remeasured .

Financial liabilitiesFinancial liabilities are classified as either financial liabilities at

FvtpL or other financial liabilities .

Financial liabilities at FvtplFinancial liabilities are classified as at FvtpL where the financial

liability is either held for trading or it is designated as at FvtpL .

a financial liability is classified as held for trading if:

– it has been incurred principally for the purpose of repur-

chasing in the near future; or

– on initial recognition, it is a part of an identified portfolio of

financial instruments that the Group manages together and

has a recent actual pattern of short-term profit taking; or

– it is a derivative that is not designated and effective as a

hedging instrument .

a financial liability other than a financial liability held for trading

may be designated as at FvtpL upon initial recognition if:

– such designation eliminates or significantly reduces a

measurement or recognition inconsistency that would

otherwise arise; or

– the financial liability forms part of a group of financial assets

or financial liabilities or both, which is managed and its




notes (continued)

performance is evaluated on a fair value basis, in accordance

with the Group’s documented risk management or investment

strategy, and information about the grouping is provided

internally on that basis; or

– it forms part of a contract containing one or more embedded

derivatives, and ias 39 Financial instruments: recognition

and measurement permits the entire combined contract (asset

or liability) to be designated as at FvtpL .

Financial liabilities at FvtpL are stated at fair value, with any

gains or losses arising on remeasurement recognised in profit or

loss . the net gain or loss recognised in profit or loss incorporates

any interest paid on the financial liability . Fair value is determined

in the manner described in note 40 .12 .

other financial liabilitiesother financial liabilities, including borrowings, are initially

measured at fair value, net of transaction costs .

other financial liabilities are subsequently measured at

amortised cost using the effective interest method, with interest

expense recognised on an effective yield basis .

the effective interest method is a method of calculating the

amortised cost of a financial liability and of allocating interest

expense over the relevant period . the effective interest rate is the

rate that exactly discounts estimated future cash payments

through the expected life of the financial liability, or, where

appropriate, a shorter period, to the net carrying amount on initial

recognition .

insurance liabilitiesone of the purposes of insurance is to enable policyholders to

protect themselves against uncertain future events . this uncer-

tainty as reflected in the financial statements of the insurer princi-

pally arises in respect of the insurance liabilities of the Group .

the estimation of the ultimate liability arising from claims made

under insurance contracts is a critical accounting estimate . there

are several sources of uncertainty that need to be considered in the

estimate of the liability that the Group will ultimately pay for such

claims . these sources of uncertainty include:

– Judicial decisions – courts may set new levels of award or

compensation for existing claim categories which may be

difficult to predict;

– decisions relating to imprecise policy wordings may lead to

the admission of new claim types not currently allowed for in

pricing; and

– Changes in attitudes to policyholders claiming .

refer to note 40 .14 for the processes used to decide on assump-

tions for outstanding claims and claims incurred but not reported .

derecognition of financial liabilitiesthe Group derecognises financial liabilities when, and only when,

the Group’s obligations are discharged, cancelled or they expire .

1.11 derivative financial instrumentsthe Group enters into a variety of derivative financial instruments

to manage its exposure to interest rate and foreign exchange rate

risks, including foreign exchange forward contracts and interest

rate swaps .

Further details of derivative financial instruments are

disclosed in notes 19, 29 and 40 .6 .

derivatives are initially recognised at fair value at the date a

derivative contract is entered into and are subsequently

remeasured to their fair value at each reporting date . the resulting

gain or loss is recognised in profit or loss immediately unless the

derivative is designated and effective as a hedging instrument, in

which event the timing of the recognition in profit or loss depends

on the nature of the hedge relationship .

(a) Hedge accountingthe Group designates certain hedging instruments, which include

derivatives, embedded derivatives and derivatives in respect of

foreign currency risk, as either fair value hedges, cash flow

hedges, or hedges of net investments in foreign operations . Hedges

of foreign exchange risk on firm commitments are accounted for

as cash flow hedges .

at the inception of the hedge relationship, the entity

documents the relationship between the hedging instrument and

the hedged item, along with its risk management objectives and its

strategy for undertaking various hedge transactions . Furthermore,

at the inception of the hedge and on an ongoing basis, the Group

documents whether the hedging instrument that is used in a hedging

relationship is highly effective in offsetting changes in fair values

or cash flows of the hedged item attributable to the hedged risk .

(b) cash flow hedgesthe effective portion of changes in the fair value of derivatives

that are designated and qualify as cash flow hedges are deferred in

equity . the gain or loss relating to the ineffective portion is recog-

nised immediately in profit or loss .

amounts previously recognised in other comprehensive

income and accumulated in equity are reclassified to profit or loss

in the periods when the hedged item is recognised in profit or loss,

in the same line of the statement of comprehensive income as the

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recognised hedged item . However, when the forecast transaction

that is hedged results in the recognition of a non-financial asset or

a non-financial liability, the gains and losses previously recognised

in other comprehensive income and accumulated in equity, are

transferred from equity and included in the initial measurement of

the cost of the non-financial asset or liability .

Hedge accounting is discontinued when the Group revokes

the hedging relationship, the hedging instrument expires or is sold,

terminated, or exercised, or no longer qualifies for hedge accounting .

any gain or loss recognised in other comprehensive income and

accumulated in equity at that time remains in equity and is

recognised when the forecast transaction is ultimately recognised

in profit or loss . When a forecast transaction is no longer expected

to occur, the gain or loss accumulated in equity is recognised

immediately in profit or loss .

1.12 borrowing costsinterest costs are charged against income in the period in which

incurred, unless they are directly attributable to the acquisition,

construction or production of a qualifiying asset, in which case

they are capitalised to the cost of the asset . dividends on pref-

erence shares, classified as liabilities, are recognised as finance

costs .

1.13 revenue recognitionincluded in revenue are net invoiced sales, excluding vat, to

customers for goods delivered, where title has passed .

management fees, performance fees and royalties are recog-

nised on an accrual basis in accordance with the substance of the

relevant agreements . Cash dividends and the full cash equivalent

of capitalisation share awards are recognised when the right to

receive payment or transfer is established . interest is recognised

on a time proportion basis, taking account of the principal out-

standing and the effective rate over the period to maturity, when it

is determined that such income will accrue to the Group .

Fee income from insurance contracts arises from adminis-

tering alternative risk transfer policies . the income is recognised

in profit or loss, as the service is provided on a straight-line basis .

Fee income is included as part of the premium income .

1.14 property, plant, equipment and vehiclesFixed property utilised for manufacturing and administration is

stated at its deemed cost less accumulated depreciation . plant,

equipment and vehicles are stated in the Group financial statements

at cost to the Group less accumulated depreciation . depreciation is

calculated on the straight line method to write assets down to

estimated net residual values at the end of their useful lives at the

following rates: Fishing trawlers (including refits) 5 .5% – 50%,

plant and machinery and computers 20% – 33 .3%, office furniture

and equipment 10% – 17%, motor vehicles 20% and improvements

to leasehold premises 20% . the residual value of fixed property

utilised for manufacturing and administration is estimated and the

difference between cost and the estimated residual value is written

off on the straight line method at 10% per annum . the depreciation

methods, estimated remaining useful lives and residual values are

reviewed at each reporting date with the effect of any changes

accounted for on a prospective basis .

1.15 other intangible assetsintangible assets acquired in a business combination are identified

and recognised separately from goodwill where they satisfy the

definition of an intangible asset and their fair values can be

measured reliably . the cost of such intangible assets is their fair

value at the acquisition date .

subsequent to initial recognition, intangible assets with finite

useful lives, acquired in a business combination are reported at

cost less accumulated amortisation and accumulated impairment

losses and at cost less accumulated impairment losses in the case of

such assets with indefinite useful lives . amortisation is charged on

a straight-line basis over the assets estimated useful lives . the

estimated useful lives and amortisation methods are reviewed at

the end of each reporting period, with the effect of any changes in

estimate being accounted for on a prospective basis .

1.16 computer software(a) acquired computer softwarethe cost of acquired computer software licences consists of the

purchase price and any directly attributable costs of preparing the

asset for its intended use .

(b) developed computer softwaredevelopment costs, other than research costs, that are directly

attributable to the design, implementation and testing of identi-

fiable and unique software products controlled by the Group are

recognised as intangible assets when the following criteria are met:

– it is technically feasible to complete the software product so

that it will be available for use .

– management intends to complete the software product and

use or sell it .

– management is able to use or sell the software product .

– it can be demonstrated how the software product will

generate probable future economic benefits .

– adequate technical, financial and other resources to complete

the development and to use or sell the software product are

available .




notes (continued)

– the expenditure attributable to the software product during

its development and implementation can be reliably measured .

directly attributable costs, which are capitalised as part of the

software product, include the software development employee

costs, and an appropriate portion of directly attributable

overheads . other development expenditures that do not meet

these criteria are recognised as an expense when incurred .

development costs previously recognised as an expense are not

recognised as an asset in a subsequent period . developed

computer software costs recognised as assets are amortised over

their useful lives, which does not exceed three years .

(c) subsequent costssubsequent costs are capitalised at cost only when they increase

the future economic benefits embodied in the specific asset to

which they relate . all other expenditure is recognised in profit or

loss when incurred .

Costs associated with maintaining computer software

products are recognised as an expense as incurred .

(d) amortisation amortisation is calculated on the cost of the asset less its residual

value, from the date it is available for use .

1.17 assets acquired under suspensive sale agreements

Finance costs are accrued and expensed annually, based on the

effective rate of interest applied consistently to the remaining

balance on the liability .

1.18 impairment of assetsthe carrying amounts of the Group’s assets are reviewed at each

reporting date to determine whether there is any indication of

impairment, except for goodwill and other intangible assets with

indefinite useful lives, which are tested for impairment annually .

if any such indication exists, the recoverable amount is estimated

as the higher of fair value less costs to sell and value in use .

in assessing value in use, the expected future cash flows are

discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money

and the risks specific to the asset . an impairment loss is recog-

nised whenever the carrying amount of the cash-generating unit

exceeds its recoverable amount .

a previously recognised impairment loss is reversed if there

has been a change in the estimates used to determine the recov-

erable amount, however not to an amount higher than the carrying

amount that would have been determined (net of depreciation/

amortisation) had no impairment loss been recognised in

prior years . For goodwill a recognised impairment loss is not

reversed in a subsequent period .

1.19 inventoriesinventories are stated at the lower of cost and estimated net

realisable value . Cost is determined on the first-in, first-out basis .

Finished goods and work-in-progress include labour costs and

an appropriate portion of related fixed and variable overhead

expenses based on the normal level of activity . the comments in

1 .2 above relating to write-downs in value of investments in

subsidiaries, apply here as well .

1.20 cash and cash equivalentsactual bank balances are reflected . outstanding cheques and

deposits are included in accounts payable and accounts receivable

respectively . For the purpose of the statement of cash flows, cash and

cash equivalents includes cash on hand and deposits held with banks .

1.21 deferred taxationdeferred taxation is provided for at the tax rates that are expected

to apply in the period in which the liability is settled or the asset

realised, based on tax rates (and tax laws) that have been enacted

or substantively enacted by the reporting date . Full provision is

made for all temporary differences between the tax base of an

asset or liability and its carrying amount . Where the tax effects of

temporary differences arising from computed tax losses give rise to

a deferred tax asset, the asset is recognised only to the extent that

it is probable that future taxable income will be sufficient to realise

the tax benefit of the losses .

1.22 retirement benefit costspayments to defined contribution retirement benefit plans are

charged as an expense as they fall due . payments made to

industry-managed retirement benefit schemes are dealt with as

defined contribution plans where the Group’s obligations under

the schemes are equivalent to those arising in a defined

contribution retirement benefit plan .

1.23 government grantsGovernment grants are not recognised until there is reasonable

assurance that the Group will comply with the conditions

attaching to them and that the grants will be received .

Government grants are recognised in profit or loss on a

systematic basis over the periods in which the Group recognises as

expenses the related costs for which the grants are intended to

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compensate . specifically, government grants whose primary

condition is that the Group should purchase, construct or

otherwise acquire non-current assets are recognised as deferred

revenue in the consolidated statement of financial position and

transferred to profit or loss on a systematic and rational basis over

the useful lives of the related assets .

Government grants that are receivable as compensation for

expenses or losses already incurred or for the purpose of giving

immediate financial support to the Group with no future related

costs are recognised in profit or loss in the period in which they

become receivable .

1.24 earnings per shareBasic – is based on net attributable profit .

Headline – is based on basic earnings adjusted for capital items

specified in Circular 3/2009 – Headline earnings issued by the

south african institute of Chartered accountants .

the above earnings measures are calculated on the weigh ted

average number of shares in issue during the year .

1.25 Foreign currenciestransactions denominated in foreign currencies are translated at

the rate of exchange ruling at the transaction date . Balances

denominated in foreign currencies are translated at the rate of

exchange ruling at the reporting date . Gains or losses arising on

translation are credited to or charged against income .

1.26 segment reportingthe primary business segments of the Group are fishing,

insurance, clothing and investments . the basis of segment

reporting is representative of the internal structure used

for management reporting purposes .

1.27 share-based paymentsequity-settled share-based payments to certain employees are

measured at fair value (excluding the effect of non market-based

vesting conditions) at the date of grant . the fair value determined

at the grant date of the equity-settled share-based payments is

expensed on a straight-line basis over the vesting period, based on

the Group’s estimate of the shares that will eventually vest and

adjusted for the effect of non market-based vesting conditions .

Fair value is measured using the Binomial tree pricing model

and Finite difference method . the expected life used in the model

is adjusted, based on management’s best estimate, for the effects of

non-transferability, exercise restrictions and behavioural conditions .

For cash-settled share-based payments, a liability is recog-

nised for the goods and services acquired, measured initially at the

fair value of the liability . at the end of each reporting period until

the liability is settled, and at the date of settlement, the fair value

of the liability is remeasured, with any changes in fair value recog-

nised in profit or loss for the year .

Fair value is measured using the Black scholes method .

1.28 operating leasesrentals payable under operating leases are charged to profit or

loss on a straight-line basis over the term of the relevant lease .

1.29 comparative figuresWhen an accounting policy is changed, comparative figures are

restated in accordance with the new policy where material to the

comparison .

1.30 key sources of estimation uncertainty and critical judgements

management use their judgement in selecting an appropriate

valuation technique for financial instruments not quoted in an

active market . valuation techniques commonly used by market

practitioners are applied . the estimation of fair value of unlisted

shares and options includes some assumptions not supported by

observable market prices, indicators or rates . in addition, refer

below for details of judgements made in the determination of

insurance liabilities .

except for the aforegoing, and as disclosed in the relevant

notes or appendices, management has not made any critical judge-

ments or estimations that have a significant effect on the amounts

recognised in the financial statements .

1.31 insurance contractsthe Group issues insurance contracts where it accepts significant

insurance risk from another party by agreeing to compensate the

policyholder if a specified uncertain future event adversely affects

the policyholder . insurance contracts entered into by the Group,

under which the contract holder is another insurer (inwards

reinsurance), are included with insurance contracts .

insurance risk is risk other than financial risk, transferred

from the holder of a contract to the issuer .

short-term insurance provides benefits under short-term

policies, which include engineering, liability, motor, property,

marine and miscellaneous business classes . short-term insurance

contracts are further classified into the following categories:

– personal insurance, consisting of insurance provided to

individuals and their personal property .

– Commercial insurance, providing cover on the assets and

liabilities of business enterprises .




notes (continued)

the Group continues to apply its existing accounting policies for

the recognition and measurement of obligations arising from

insurance contracts and reinsurance that it holds . the Group

developed its accounting policies for insurance contracts before

the adoption of iFrs 4 insurance Contracts (iFrs 4) and in the

absence of a specific standard for insurance contracts . the existing

accounting policies implemented by the Group are in accordance

with the policies for recognition and measurement of short-term

insurance contracts as outlined in Circular 2/2007 issued by the

south african institute of Chartered accountants and iFrs 4 .

recognition and measurement(a) short-term insurance contractsthese contracts are casualty and property contracts . Casualty

insurance contracts protect the Group’s customers against the risk of

causing harm to third parties as a result of their legitimate activities .

damages covered include both contractual and non-contractual

events . property insurance contracts mainly compensate the

Group’s customers for damage suffered to their properties or for

the value of property lost . Customers who undertake commercial

activities on their premises could also receive compensation for the

loss of earnings caused by the inability to use the insured

properties in their business activities (business interruption cover) .

Claims and loss adjustment expenses are charged to income

as incurred based on the estimated liability for compensation owed

to contract holders or third parties damaged by the contract

holders . they include direct claims settlement costs and arise from

events that have occurred up to the end of the reporting period

even if they have not yet been reported to the Group . the Group

does not discount its liabilities for unpaid claims other than for

disability claims . Liabilities for unpaid claims are estimated using

the input of assessments for individual cases reported to the Group

and statistical analyses for the claims incurred but not reported,

and to estimate the expected ultimate cost of more complex claims

that may be affected by external factors (such as court decisions) .

(b) premiumsFor all insurance contracts underwritten by the Group, premiums

are recognised as revenue over the period of coverage, which is in

line with the risk profile of the contracts . premiums are shown

before deduction of commission .

outward reinsurance premiums are recognised as an expense

in accordance with the pattern of indemnity received .

(c) unearned premiums provisionthe portion of premium received on in-force contracts that relates

to unexpired risks at the reporting date is reported as the

unearned premiums provision . Unearned premium is calculated

using the 365th method or released over the risk profile .

premiums are recognised as revenue (earned premiums)

proportionally over the period of coverage . premiums are shown

before deduction of commission and are gross of any taxes or

duties levied on premiums .

(d) provision for unexpired riskWhere it is anticipated that unearned premiums will be insufficient

to cover future claims and expenses attributable to the unexpired

periods of policies in force at the reporting date, a provision is

raised for unexpired risks .

(e) claims incurredinsurance claims and loss adjustment expenses are recognised in

profit or loss as incurred based on the estimated liability for

compensation owed to contract holders or third parties damaged by

the contract holders . the costs include direct claims settlement costs

and arise from events that have occurred up to the reporting date,

even if they have not yet been reported to the Group .

(f) provision for outstanding claimsprovision is made for the estimated final cost of all claims that had

not been settled by the reporting date, less amounts already paid .

Liabilities for unpaid claims are estimated using the input of assess-

ments for individual cases reported to the Group and statistical

analyses to estimate the expected ultimate cost of more complex claims

that may be affected by external factors (such as court decisions) . the

Group does not discount its liabilities for unpaid claims .

(g) provision for claims incurred but not reported (ibnr)provision is also made for claims arising from insured events that

occurred before the end of the reporting period, but which had not

been reported to the Group at that date . statistical analysis is used

to estimate the claims incurred but not reported .

deterministic methods project the value of ultimate losses

with no probability of occurrence . stochastic methods project a

range of ultimate losses with each value having a probability of

occurrence . iBnr reserves were projected using both claims paid

and incurred claims development patterns .

(h) deferred acquisition costs (dac)

Commissions and other acquisition costs that vary with and are

related to securing new contracts and renewing existing contracts

are capitalised as an intangible asset (daC) and are amortised

over the term of the policies as premiums are earned . all other

costs are recognised as expenses when incurred .

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(i) income from reinsurance contracts

Commissions received on reinsurance contracts are deferred and

recognised as revenue evenly over the life of the reinsurance

contract .

(j) liability adequacy test

at each reporting date, liability adequacy tests are performed to

ensure the adequacy of the contract liabilities net of related daC .

in performing these tests, current best estimates of premiums to be

collected, outstanding claims and future claims handling and

administration expenses are discounted . any deficiency is immedi-

ately recognised in profit or loss initially by writing off daC and

by subsequently establishing a provision for losses arising from

liability adequacy tests . any daC written off as a result of this

test cannot subsequently be reinstated .

(k) reinsurance contracts held

Contracts entered into with reinsurers, under which the Group is

compensated for losses on one or more contracts issued by the

Group and that meet the classification requirements for insurance

contracts, are classified as reinsurance contracts held .

the benefits to which the Group is entitled under its

reinsurance contracts held are recognised as reinsurance assets .

these assets consist of short-term balances due from reinsurers, as

well as longer term receivables that are dependent on the expected

claims and benefits arising under the related reinsured insurance

contracts . amounts recoverable from or due to reinsurers are

measured consistently with the amounts associated with the

reinsured insurance contracts and in accordance with the terms of

each reinsurance contract . reinsurance liabilities are primarily

premiums payable for reinsurance contracts and are recognised as

an expense when due .

the Group assesses its reinsurance assets for impairment on

an annual basis . the Group follows the same process adopted for

impairment of financial assets described in note 1 .8 .

Contracts that do not meet the classification requirements are

classified as financial assets .

(l) receivables and payables related to insurance contracts receivables and payables are recognised when due . these include

amounts due to and from agents, brokers and insurance contract

holders .

if there is objective evidence that the insurance receivable is

impaired, the Group follows the same process adopted for

impairment of financial assets described in note 1 .8 .

(m) salvage and subrogation reimbursementsinsurance contracts allow the Group to sell property acquired

when settling a claim . the Group may also have the right to

pursue third parties for payment of some or all costs incurred in

the settlement of any claim . recoveries of this nature are recog-

nised as reimbursements and set off against claims incurred when

recoverable .

(n) contingency reservea reserve in equity is no longer required to be made for the full

amount of the contingency reserve, which was in accordance with

the provisions of the short-term insurance act of 1998 in south

africa . this reserve was released to retained earnings .

1.32 adoption of new and revised standardsno new and revised standards were adopted by the Group or

Company in the current year .

at the date of approval of these financial statements, the following

relevant new or revised standards were in issue, but not yet

effective:

– iFrs 7: Financial instruments: disclosure

– iFrs 10: Consolidated Financial statements

– iFrs 11: Joint arrangements

– iFrs 12: disclosure of interests in other entities

– iFrs 13: Fair value measurement

– ias 1: presentation of Financial statements

– ias 19: employee Benefits

– ias 27: Consolidated and separate Financial statements

– ias 28: investments in associated Joint ventures

– ias 31: interests in Joint ventures

the Group is in process of evaluating the effects of these

standards . these standards will be effective for the year ending

december 2013 . the Group has decided not to early adopt any of

these new or revised standards .

group company

r’000 2012 2011 2012 2011




notes (continued)

2. revenue the Group’s revenue comprises sales of insurance products, fish, formal and casual clothing, rentals, dividends, royalties and management performance and other fees received .

revenue from industrial and other operations sales 1 202 553 1 128 738 — — management and performance fees received 13 248 17 629 15 183 17 629 rental income 1 169 1 530 — — royalties for use of trademarks 115 134 846 845 other 16 000 — — —

total revenue from industrial and other operations 1 233 085 1 148 031 16 029 18 474

revenue from insurance operations short-term insurance contracts – Gross written premiums 822 976 841 868 — — – Change in unearned premium provision (27 177) (16 338) — —

insurance premium revenue 795 799 825 530 — —

short-term reinsurance contracts – premium payables (322 964) (289 728) — — – Change in unearned premium provision 15 164 4 217 — —

premium ceded to reinsurers on insurance contracts issued (307 800) (285 511) — —

net insurance premium revenue 487 999 540 019 — — Fee income from insurance contracts 73 942 71 796 — —

total revenue from insurance operations 561 941 611 815 — —

total sales and fee income 1 795 026 1 759 846 16 029 18 474

dividends received: – associate companies and joint venture 75 843 49 559 — — – listed investments 74 403 54 661 12 788 2 762 – unlisted investments 1 200 3 849 383 1 849 – subsidiaries — — 119 156 51 854

total dividends received 151 446 108 069 132 327 56 465

business and geographic segments: the clothing and fish products mentioned above are processed and manufactured in the Group’s factories in the Western Cape and

sold throughout south africa, as well as the United states of america, Great Britain, italy, Germany, the netherlands, spain, australia, France, the sadC countries and other parts of africa . all other revenue is sourced from within south africa . the table below shows the geographical breakdown of the clothing and fish sales .

group company

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sales revenue by geographical market: south africa 757 453 678 525 — — other sadC countries 26 817 22 305 — — United states of america 6 500 6 416 — — Great Britain 1 504 10 008 — — italy 140 065 132 562 — — Germany 68 253 40 172 — — netherlands 17 271 25 324 — — spain 35 905 53 140 — — australia 110 567 115 549 — — France 26 840 34 813 — — other 11 378 9 924 — —

1 202 553 1 128 738 — —

3. operating expenses operating expenses industrial and other operations selling and administration expenses 297 779 310 916 60 328 73 674 raw materials and consumables used 865 211 761 475 — — Changes in inventories of finished goods and work in progress (805) (2 523) — — staff costs 41 386 40 039 — — depreciation 1 933 2 660 — — other overheads 18 652 19 257 — —

total operating expenses industrial and other operations 1 224 156 1 131 824 60 328 73 674

operating expenses insurance operations net insurance claims 292 803 345 674 — —

insurance claims and loss adjustment expenses 440 613 590 190 — — insurance claims and loss adjustment expenses recovered from insurers (147 810) (244 516) — —

expenses expenses for the acquisition of insurance contracts 137 844 139 040 — — selling and administration expenses 158 315 116 949 — — asset management services received 2 316 1 805 — —

total operating expenses insurance operations 591 278 603 468 — —

total operating expenses 1 815 434 1 735 292 60 328 73 674

4. Fair value gains/(losses) Changes in fair value of financial assets designated as at fair value through profit or loss – mark-to-market revaluation of listed investments 835 520 361 176 14 674 23 973 – mark-to-market revaluation of unlisted investments (5 542) (6 649) (31 944) (15 317) – revaluation of options 223 333 122 331 223 333 122 331

1 053 311 476 858 206 063 130 987

group company

r’000 2012 2011 2012 2011




notes (continued)

5. exceptional items Gain – on disposal of associate — 36 869 — 1 969

Losses – impairment in value of loans to subsidiaries — — — (18) – additional purchase consideration on acquisition of business (1 736) — — — – impairment in value of investment in associate (252) (428) — — – on disposal of available-for-sale asset (292) — (292) —

total losses (2 280) (428) (292) (18)

net exceptional items (2 280) 36 441 (292) 1 951

6. profit before net finance costs profit before net finance costs includes the following items of income and expenditure not shown separately in the statement of comprehensive income:

6.1 income profit on disposal of property, plant, equipment and vehicles 244 470 — — Foreign exchange gains 3 925 — — — Government grants – production incentive 5 846 7 347 — — – training refunds 2 623 971 — —

6.2 expenditure auditors’ remuneration Fees – current year 4 438 3 970 1 059 946

– under/(over) provided previous year 342 105 (55) 87 other services 610 731 540 598

5 390 4 806 1 544 1 631

depreciation property, plant, equipment and vehicles 71 189 65 563 595 459 amortisation of intangible assets 19 079 18 785 — — Loss on disposal of equipment and vehicles 40 14 18 — Foreign exchange losses 20 319 3 256 — — rentals under operating leases Land and buildings 14 119 13 195 854 989 plant, machinery and vehicles 13 012 10 554 64 81 staff costs 441 523 433 258 28 724 32 124

retirement benefit plan contributions defined contribution plans 24 415 20 723 1 451 1 299 royalties paid for use of trademarks 3 986 3 737 — — Fees for services secretarial 324 380 324 380 other professional 20 729 13 279 6 597 10 958 Write down of inventory to net realisable value 3 426 12 628 — —

group company

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7. directors’ emoluments directors’ emoluments – paid by Company

Fees for services as directors executive directors — — non-executive directors 1 539 1 229

1 539 1 229

management and other services executive directors 12 321 12 015 non-executive directors 494 532

12 815 12 547

gain on exercise of options executive directors 507 — non-executive directors — —

507 —

total paid by Company 14 861 13 776

– paid by subsidiaries

Fees for services as directors executive directors 709 610 non-executive directors 7 —

total paid by subsidiary company 716 610

total paid by Company and subsidiaries 15 577 14 386

executive directors do not have fixed term contracts . they have employment agreements with the Company which are subject to a one month notice period by either party . detailed information appears in the remuneration report on page 52 .

8. income from investments interest received on bank deposits and loans to associates and subsidiaries 26 410 23 735 7 311 4 642

9. Finance costs interest on borrowings 40 252 47 485 1 443 2 943 Listed bond 3 156 6 320 — — interest rate swap 1 624 — 1 624 — preference and participation dividends 86 565 39 540 — —

131 597 93 345 3 067 2 943

group company

r’000 2012 2011 2012 2011

notes (continued)




10. taxation10.1 taxation charge sa normal taxation 260 764 87 472 58 035 24 740

Current – current year 29 043 23 315 — —– (over)/under provision prior year (472) 2 599 (407) 774

deferred – current year 161 530 56 387 39 093 16 810 – (over)/under prior year (1 658) 5 171 (1 558) 7 156– rate change 72 321 — 20 907 —

dividends tax Current – current year 257 — — —

secondary tax on companies — 41 621 — 30 597

Current – current year — 1 700 — — deferred – current year — 40 098 — 30 597

– over provision prior year — (177) — —

261 021 129 093 58 035 55 337

Unutilised computed tax losses carried forward 36 964 28 642 15 311 5 701 saving in taxation attributable thereto at current rate 10 350 8 020 4 287 1 596

10.2 reconciliation of taxation charge net profit before taxation 1 103 137 597 894 298 043 135 902

tax at statutory rates (28%-40%) 311 978 168 810 83 452 38 053 (over)/under provided prior year (2 130) 7 594 (1 965) 7 930 tax effect of change in tax rate 72 321 — 20 907 — tax effect of share of results of associates and joint venture (3 334) (6 181) — — tax effect of non-deductible expenses 38 759 28 261 10 225 12 231 tax effect of non-taxable income (341 449) (182 447) (94 668) (53 148) tax effect of utilisation of prior year losses — 636 — — deferred tax assets (458) (661) — — dividends tax – current year 257 — — — secondary tax on companies — 42 109 — 30 597 Capital gains tax 185 077 70 972 40 084 19 674

taxation charge 261 021 129 093 58 035 55 337

11. dividends on 7 may 2012, a cash dividend of 18 cents per share (total dividend r49 385 466) was paid to shareholders . in may 2011, the

dividend was 15 cents per share (total dividend r41 117 301) . in respect of the current year, a dividend of 25 cents per share will be paid to shareholders on 22 april 2013 . the proposed dividend will be paid to shareholders recorded in the books of the Company on 19 april 2013 . the total dividend paid will be r68 590 925 . the Company has unutilised stC credits of r343 420 886 which will be utilised for the benefit of shareholders in accordance with the new dividends tax rules .

group company

r’000 2012 2011 2012 2011



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12. earnings per share the following is a reconciliation of the profit figures used in the earnings per share calculations: basic earnings net profit attributable to equity holders of the parent 849 398 450 751

Headline earnings calculation net profit attributable to equity holders of the parent 849 398 450 751 profit on disposal of property, plant, equipment and vehicles (456) (459) Loss on disposal of available-for-sale asset 292 — realised profit on disposal of associate — (21 130) impairment of intangible asset of associate 2 647 — impairment of investment in associate 252 428 additional purchase consideration on acquisition of business 1 736 — adjustments relating to results of associates (9 584) — total tax effects of adjustments 77 293

Headline earnings 844 362 429 883

Headline earnings per share (cents) 346 .0 176 .3 diluted headline earnings per share (cents) 295 .4 151 .0

Weighted average number of shares on which earnings and headline earnings per share is based is 244 038 657 (2011 – 243 878 492)

Weighted average number of shares on which diluted earnings and diluted headline earnings per share is based is 285 813 384 (2011 – 284 672 898)

reconciliation of weighted average number of shares between basic and diluted earnings per share and headline earnings and diluted headline earnings per share . Basic 244 038 657 243 878 492 dilutive share options 41 774 727 40 794 406

diluted 285 813 384 284 672 898

no share options treated as anti-dilutive (2011 – nil) . — —

13. property, plant, equipment and vehicles13.1 land and buildings – freehold Carrying value 1 January and 31 december 24 567 24 567 — —

deemed cost 24 682 24 682 — — accumulated depreciation and impairment losses 115 115 — —

depreciation rate: 10%

group company

r’000 2012 2011 2012 2011

notes (continued)




13. property, plant, equipment and vehicles (continued)13.2 land and buildings – leasehold improvements Carrying value 1 January 17 614 20 143 367 124

deemed cost 25 392 24 913 757 429 accumulated depreciation and impairment losses 7 778 4 770 390 305

additions 1 044 479 — 328 disposals 1 024 — — — depreciation for the year 2 555 3 008 98 85 accumulated depreciation on disposals 1 024 — — — Carrying value 31 december 16 103 17 614 269 367

deemed cost 25 412 25 392 757 757 accumulated depreciation and impairment losses 9 309 7 778 488 390


13.3 plant and machinery Carrying value 1 January 66 459 68 016 — —

Cost 110 834 102 466 — — accumulated depreciation and impairment losses 44 375 34 450 — —

additions 7 716 9 687 — — disposals 2 677 1 319 — — depreciation for the year 11 737 11 239 — — accumulated depreciation on disposals 2 259 1 314 — — Carrying value 31 december 62 020 66 459 — —


depreciation rates: 20 – 33 .33%

13.4 Fishing trawlers (including refits) Carrying value 1 January 164 307 180 912 — —


additions 37 764 29 150 — — depreciation for the year 51 525 45 755 — — Carrying value 31 december 150 546 164 307 — —


depreciation rates: 5 .5 – 50%

13.5 computers Carrying value 1 January 1 911 1 341 254 199

Cost 7 037 5 636 775 518 accumulated depreciation and impairment losses 5 126 4 295 521 319

additions 1 702 1 416 169 257 disposals 661 15 168 — depreciation for the year 988 846 164 202 accumulated depreciation on disposals 641 15 150 — Carrying value 31 december 2 605 1 911 241 254

Cost 8 078 7 037 776 775 accumulated depreciation and impairment losses 5 473 5 126 535 521

depreciation rates: 20 – 33 .33%

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13.6 office furniture and equipment Carrying value 1 January 9 943 10 597 1 049 268

Cost 20 735 17 172 1 490 537 accumulated depreciation and impairment losses 10 792 6 575 441 269

additions 3 202 3 774 38 953 disposals 517 211 — — depreciation for the year 3 925 4 406 211 172 accumulated depreciation on disposals 386 189 — — Carrying value 31 december 9 089 9 943 876 1 049

Cost 23 420 20 735 1 528 1 490 accumulated depreciation and impairment losses 14 331 10 792 652 441

depreciation rates: 10 – 17%

13.7 motor vehicles Carrying value 1 January 864 824 — —


additions 1 328 362 758 — disposals 238 237 — — depreciation for the year 459 308 122 — accumulated depreciation on disposals 238 223 — — Carrying value 31 december 1 733 864 636 —

Cost 3 063 1 973 758 — accumulated depreciation and impairment losses 1 330 1 109 122 —


13.8 leased motor vehicles Carrying value 1 January — — — —

Cost 126 126 — — accumulated depreciation 126 126 — —

additions — — — — disposals 126 — — — depreciation for the year — — — — accumulated depreciation on disposals 126 — — — Carrying value 31 december — — — —

Cost — 126 — — accumulated depreciation — 126 — —

group company

r’000 2012 2011 2012 2011

notes (continued)




13. property, plant, equipment and vehicles (continued) total property, plant, equipment and vehicles Carrying value 1 January 285 665 306 401 1 670 591

Cost 459 759 416 673 3 022 1 484 accumulated depreciation and impairment losses 174 094 110 272 1 352 893

additions 52 756 44 868 964 1 538 disposals 5 243 1 782 168 — depreciation for the year 71 189 65 563 595 459 accumulated depreciation on disposals 4 674 1 741 150 — Carrying value 31 december 266 663 285 665 2 021 1 670

Cost 507 272 459 759 3 818 3 022 accumulated depreciation and impairment losses 240 609 174 094 1 797 1 352

details of land and buildings are contained in a register which is open for inspection by shareholders or their duly authorised representatives at the registered office of the Company .

details of encumbered assets other items of plant, equipment and vehicles with a net book

value of r230 .3 million (2011 – r250 .5 million) are encumbered by a notarial bond (refer note 27) .

14. intangible assets long-term fishing rights Carrying value 1 January 156 789 172 876 — —

Cost 198 437 198 437 — — accumulated amortisation 41 648 25 561 — —

amortisation 16 087 16 087 — — Carrying value 31 december 140 702 156 789 — —


computer software development Carrying value 1 January 1 441 1 253 — —


additions 13 018 2 886 — — amortisation 2 992 2 698 — — Carrying value 31 december 11 467 1 441 — —


total intangible assets Carrying value 1 January 158 230 174 129 — —


additions 13 018 2 886 — — amortisation 19 079 18 785 — — Carrying value 31 december 152 169 158 230 — —


group company

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15. deferred acquisition costs Commissions related to securing new insurance contracts and renewing existing contracts are deferred when incurred and recognised in profit or loss over the terms of the policies as premiums are earned .

Balance at 1 January 39 610 39 468 — — Costs deferred during the year 48 955 36 299 — — Costs amortised during the year (38 041) (36 157) — —

Balance at 31 december 50 524 39 610 — —

16. interest in subsidiaries shares at cost less amounts written off 441 447 439 703 Loans owing by subsidiaries less amounts written off 339 954 317 637

781 401 757 340

Loans owing to subsidiaries 340 987 254 349

the loans owing by/to subsidiaries are interest free, unsecured and have no fixed terms of repayment except for a loan of r22 .2 million (2011 – r6 .1 million) from a subsidiary which bears interest at the prime bank overdraft rate minus 1% . the intention of the directors is not to call on these loans within the next 12 months .

refer to appendix 1 for details of subsidiary companies .

Brimstone has written down its investment in the clothing subsidiary to what it considers to be the recoverable amount . For Group purposes, this write-down has been applied proportionately to the subsidiary’s assets as follows:

plant and machinery 2 623 2 623 — — inventory 14 477 14 477 — —

17 100 17 100 — —

details of encumbered assets – Brimstone has ceded and pledged all of its ordinary and preference shares in oceana spv (pty) Ltd and all of its claims held in

and against the subsidiary as security for the a preference shares issued by oceana spv (pty) Ltd (refer note 27) . – Brimstone has ceded its loan to a subsidiary of r28 077 136 as security for overdraft facilities granted to the subsidiary

(refer note 32) .

group company

r’000 2012 2011 2012 2011

notes (continued)




17. investments in associate companies and joint venture Cost of investment in associate companies and joint venture less amounts written off 668 654 623 111 7 056 7 056 Loans to associate companies less amounts written off 26 363 18 067 23 837 17 932 share of non-distributable reserves of associate 8 417 5 171 — — share of post acquisition profit, net of dividends received 78 561 50 950 — —

total carrying value 781 995 697 299 30 893 24 988

refer to note 27 for the loan secured by a cession and pledge of the shares in aon re africa (pty) Ltd .

associates refer to appendix 2 for full details of associate companies . the

aggregate assets, liabilities and results of operations of associate companies are summarised below:

non-current assets 725 376 667 743 deferred taxation 31 293 18 628 Current assets 5 589 761 4 523 986

total assets 6 346 430 5 210 357

deferred taxation 39 530 39 055 Long-term liabilities 248 182 169 627 Current liabilities 4 475 543 3 582 131

total liabilities 4 763 255 3 790 813

revenue 5 283 779 4 298 030 operating profit before taxation 714 616 722 616 taxation 234 100 241 624 net attributable profit 463 398 461 331

the financial year-ends of the companies are shown in appendix 2 .

Joint venture refer to appendix 2 for full details of the joint venture company .

the aggregate assets, liabilities and income and expenses of the joint venture company are summarised below:

Joint venture statement of Financial position assets non-current assets 11 872 28 764 Current assets 11 084 26 881

total assets 22 956 55 645

equity and liabilities share capital 37 457 37 457 distributable reserves 573 (1 293)

total capital and reserves 38 030 36 164

non-current liabilities 3 220 6 392 Current liabilities 7 826 13 089

total liabilities 11 046 19 481

Joint venture statement of comprehensive income income 65 839 113 167 expenses 62 176 103 121

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18. investments available-for-sale investments Unlisted investments: shares at fair value 28 245 19 578 2 429 2 679 Linked loan at fair value — 1 898 — 1 898

total available-for-sale investments 28 245 21 476 2 429 4 577

investments designated as at fair value through profit or loss Listed investments: shares at fair value 2 062 957 1 365 555 113 143 106 574 debt securities at fair value 62 149 54 550 — —

total listed investments 2 125 106 1 420 105 113 143 106 574

Unlisted investments: shares and units at fair value 35 483 36 377 35 483 36 377 Fixed deposit accounts at fair value 129 670 143 416 — — money market at fair value 15 000 12 000 — — Linked loan at fair value 6 157 111 6 157 111 options at fair value 740 754 481 358 652 465 419 471

total unlisted investments 927 064 673 262 694 105 455 959

total investment designated as at fair value through profit or loss 3 052 170 2 093 367 807 248 562 533

total investments 3 080 415 2 114 843 809 677 567 110

refer to appendix 3 for full details of the investments .

19. other financial assets Financial assets carried at fair value through profit or loss interest rate swap – not designated in hedge accounting relationship 501 — 501 — derivatives designated and effective as hedging instruments – foreign currency forward contracts (refer note 21) — 15 241 — —

501 15 241 501 —

non-current 501 — 501 — Current — 15 241 — —

501 15 241 501 —

interest rate swap agreements linked to prime and for a period of five years have been concluded to convert floating rates to fixed rates . the notional value of the two swaps are r250 million and r121 .03 million and the fixed rate is 9 .737% and 9 .187% respectively .

20. inventories raw materials 50 913 35 957 — — Work in progress 27 555 50 096 — — Finished goods 134 255 119 791 — — Consumable stores 17 503 20 959 — —

230 226 226 803 — —

inventories with a net book value of r169 .6 million (2011 – r163 .3 million) are encumbered by a notarial bond (refer note 27) . inventories have been stated at the lower of cost and net realisable value by the Group’s subsidiaries with a total amount in their books of r28 484 821 (2011 – r29 586 611) being shown at net realisable value .

group company

r’000 2012 2011 2012 2011

notes (continued)




21. trade and other receivables amounts receivable from the sale of goods or insurance and reinsurance contracts 329 012 382 854 — — Less: allowance for irrecoverable amounts (5 919) (6 185) — —

trade receivables 323 093 376 669 — — other financial asset (refer note 19) — 15 241 — — other receivables 84 195 90 203 26 968 29 998

407 288 482 113 26 968 29 998

the average credit period on sales of goods is 54 days (2011 – 69 days) . no interest is charged on the trade receivables within agreed credit terms . thereafter, interest is charged at prime bank overdraft rates on the overdue balance . the Group has provided fully for all receivables over 180 days, except where recovery is considered probable and where recovery is considered doubtful following inves-tigations into the specific debtor whose debt is outstanding for less than 180 days .

Before accepting any new customer, the Group uses credit agency reports to assess creditworthiness together with reports from agents, visits to and interviews with the customer when deemed necessary . Credit limits are set and debtor balances are reviewed monthly . in some instances, security by way of personal surety, cession of debtors or notarial bond over assets is obtained . there are no uninsured cus-tomers who represent more than 5% of the total balance of trade receivables .

included in the Group’s trade receivable balance are receivables with a carrying value of r29 205 002 (2011 – r63 435 043) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable . the Group does not hold any collateral over these balances .

age analysis of trade receivables past due but not provided for: 31 to 60 days 16 184 10 219 61 to 90 days 1 299 33 045 91 to 120 days — 4 266 over 120 days 11 722 15 905

29 205 63 435

age analysis of trade receivables past due and provided for: 31 to 60 days — — 61 to 90 days 95 — 91 to 120 days 34 — over 120 days 5 790 6 185

5 919 6 185

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movement in the allowance for doubtful debts Balance at beginning of the year 6 185 5 207 — — amounts received/(written off) during the year 501 (198) — — amounts recovered during the year (8) (65) — — (decrease)/increase in allowance recognised in profit or loss (759) 1 241 — —

Balance at end of the year 5 919 6 185 — —

in determining the recoverability of the trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date . the concentration of credit risk is limited because of the customer base being large and unrelated and large credit risks are insured against irrecoverability . accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts .

included in the allowance for doubtful debts are specific trade receiv-ables with balances of r12 073 165 (2011 – r231 770) which have been placed under liquidation . the impairment recognised represents the dif-ference between the carrying amount of the specific trade receivable and the present value of the expected liquidation proceeds .

trade receivables with a book value of r63 388 018 (2011 – r67 580 046) have been ceded as security for a discounting facility (refer note 31) .

trade receivables with a book value of r145 015 545 (2011 – r191 735 682) are encumbered by a notarial bond (refer note 27) .

22. insurance contract liabilities and reinsurance contract assets

gross short-term insurance contracts: – claims reported and loss adjustment expenses 289 864 327 032 — — – claims incurred but not reported 66 401 45 627 — — – unearned premiums provision 260 595 233 418 — —

total insurance liabilities, gross 616 860 606 077 — —

recoverable from reinsurers short-term insurance contracts: – claims reported and loss adjustment expenses 266 961 319 606 — — – claims incurred but not reported 28 414 15 529 — — – unearned premiums provision 123 057 107 893 — —

total reinsurers’ share of insurance liabilities 418 432 443 028 — —

net short-term insurance contracts: – claims reported and loss adjustment expenses 22 903 7 426 — — – claims incurred but not reported 37 987 30 098 — — – unearned premiums provision 137 538 125 525 — —

total insurance liabilities, net 198 428 163 049 — —

notes (continued)




22. insurance contract liabilities and reinsurance contract assets (continued)22.1 process used to estimate insurance liabilities insurance risks are unpredictable and the Group recognises that it is impossible to forecast with absolute precision, future claims

payable under existing insurance contracts . over time the Group has developed methodologies that are aimed at establishing insur-ance provisions that have a reasonable likelihood of being adequate to settle all its insurance obligations . these liabilities comprise of reported claims not yet paid (outstanding claims), a provision for claims incurred but not yet reported (iBnr) and a provision for unexpired risks at the reporting date (unearned premium provision) .

outstanding claims Claims on liability contracts are payable on a claims-made basis . this means that the Group is liable for all insured events that

occurred and for which the claim is first made in writing, during the term of the contract . the outstanding liability in respect of claims is the Group’s best estimate of the current commitment to its shareholders at any particular time .

the estimated cost of claims includes direct expenses to be incurred in settling claims, net of the expected subrogation value and other recoveries . the Group takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures . However, given the uncertainty in establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established .

initial estimates of outstanding claims are based on historical trends per class of business and are updated as soon as new informa-tion is available and the value reduced commensurate to any interim payments that may be made . on settlement of the claim, the esti-mate is reduced to “nil” .

claims incurred but not yet reported (“ibnr”) the iBnr reserve relates to the uncertainty concerning the eventual outcome of claims that have occurred but have not been reported . the iBnr provision is arrived by calculating the ultimate claims reserve using a deterministic chain-ladder method to paid losses

to statistically estimate the best estimate position of triangulated data by modelling development factors (alternatively known as link ratios) which are derived from the data .

the chain ladder method is based upon the assumption that the paid losses will continue in a similar manner in the future for all accident years . that is, the method assumes that the development factor of two successive cumulative loss amounts of each accident year from one evaluation point to the next is similar in size for all accident years considered . this method is extended by curve fitting to predict tail development . a stochastic bootstrapping method is applied over the best estimate so that the iBnr reserves are held to be at least sufficient at the 75th percentile .

the bootstrapping method involves a model-free method of estimating variability based on stochastic techniques applied to devel-opment factor models . this method produces full probability distributions of reserve estimates . to arrive at the iBnr reserve figures as at 31 december 2012, the outstanding claims (including estimates) have then been subtracted from the ultimate claims reserve . the projected liabilities were not discounted and consequently no allowance was made for the expected investment returns on assets matching the liabilities . the iBnr rate, determined by dividing the iBnr by net written premium, simulates the solvency assessment and management (sam) interim measures iBnr rate .

Based on these assumptions, the iBnr liability as a percentage of net written premiums has been set at 7 .6% for the 2012 financial year (2011 – 5 .5%) . a 10% upward adjustment in the level of sufficiency of the iBnr reserve would result in an additional charge of approximately r22 million (2011 – r9 .9 million), while an equivalent downward adjustment in the level of sufficiency would result in a release of reserves on the statement of comprehensive income of approximately r13 .5 million before taxation (2011 – r8 .3 million) .

Based on the methodologies outlined above, the following iBnr results were estimated for selected levels of confidence:

iBnr liability percentage of pre-tax Level of net written rand value sufficiency of premium for of iBnr iBnr liability 2012 year (r’000)

55% 3,1% 15 527 65% 5,0% 25 202 75% 7,6% 37 988 85% 12,2% 60 844 95% 23,3% 116 652

unearned premiums provision the Group raises provisions for unearned premiums on a basis that reflects the underlying risk profile of its insurance contracts . an

unearned premium provision is created at the commencement of each insurance contract and is then released as the risk under the contract expires . the majority of the Group’s insurance contracts have an even risk profile and therefore the unearned premium pro-visions are released evenly over the period of insurance using the 365th time proportionate basis . For the remainder of the insurance portfolio, for example the engineering class, the unearned premium is released on a basis consistent with the increasing, decreasing or uneven risk profile of the contracts . the provisions for unearned premiums are first determined on a gross level and thereafter the reinsurance impact is recognised .

group company

r’000 2012 2011 2012 2011



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23. share capital23.1 authorised 500 000 000 ordinary shares of 0 .1 cents each 500 500 500 500 1 000 000 000 “n” ordinary shares of 0 .001 cents each 10 10 10 10

510 510 510 510

23.2 issued and fully paid ordinary shares at beginning and end of year 46 775 135 (2011 – 46 775 135) ordinary shares of 0 .1 cents each 47 47 47 47

“n” ordinary shares at beginning of year 266 480 204 (2011 – 266 480 204) “n” ordinary shares of 0 .001 cents each 2 2 2 2 issued in terms of employee share option plan 248 360 (2011 – nil) “n” ordinary shares of 0 .001 cents each — — — —

at end of year 266 728 564 (2011 – 266 480 204) “n” ordinary shares of 0 .001 cents each 2 2 2 2

23.3 Held as treasury shares ordinary shares at beginning of year 3 945 291 (2011 – 3 940 291) ordinary shares of 0 .1 cents each (4) (4) — — repurchased for cash 41 940 (2011 – 5 000) ordinary shares of 0 .1 cents each — — — —

at end of year 3 987 231 (2011 – 3 945 291) ordinary shares of 0 .1 cents each (4) (4) — —

“n” ordinary shares at beginning of year 65 436 317 (2011 – 65 423 576) “n” ordinary shares of 0 .001 cents each — — — — (sold)/repurchased for cash (27 924) (2011 – 12 741) “n” ordinary shares of 0 .001 cents each — — — —

at end of year 65 408 393 (2011 – 65 436 317) “n” ordinary shares of 0 .001 cents each — — — —

total at end of year 45 45 49 49

23.4 unissued shares (number) Under option in terms of the Company’s share option scheme “n” ordinary shares at 590 cents exercisable until 1 July 2016 603 378 767 458 “n” ordinary shares at 550 cents exercisable until 16 February 2017 1 139 260 1 511 600 “n” ordinary shares at 820 cents exercisable until 31 december 2017 200 000 200 000 “n” ordinary shares at 900 cents exercisable until 16 February 2018 1 063 700 —

3 006 338 2 479 058

the directors are authorised, by resolution of the shareholders and until the forthcoming annual general meeting, to dispose of the unissued shares for any purpose and upon such terms and conditions as they see fit .

group company

r’000 2012 2011 2012 2011

notes (continued)




24. capital reserves share premium Balance at 1 January 266 409 266 516 336 459 336 459 issue of share capital 1 370 — 1 370 — share issue expenses (7) — (7) — repurchase of trust units (752) — — — decrease/(increase) in treasury shares 292 (107) — —

Balance at 31 december 267 312 266 409 337 822 336 459

share options reserve Balance at 1 January 9 275 182 9 275 182 recognition of share-based payments 9 815 3 723 9 815 3 723 transfer (to)/from share options exercised reserve (2 118) 5 370 (2 118) 5 370


share options exercised reserve Balance at 1 January 12 710 18 080 12 710 18 080 transfer from/(to) retained earnings 2 118 (5 370) 2 118 (5 370)


capital redemption reserve fund Balance at 1 January and 31 december 3 655 3 655 — —

statutory contingency reserve Balance at 1 January 19 683 13 534 — — transfer distributable reserves (19 683) 6 149 — —

Balance at 31 december — 19 683 — —

share of non-distributable reserves of associates Balance at 1 January 5 172 2 355 — — Current year movement 3 245 2 817 — — Less non-controlling shareholders’ share of reserves (1 052) — — —

Balance at 31 december 7 365 5 172 — —

total capital reserves 310 132 316 904 369 624 358 444

25. revaluation reserves properties revaluation reserve Balance at 1 January and 31 december 2 297 2 297 — —

investments revaluation reserve Balance at 1 January 7 579 6 279 1 730 1 730 Current year movement 8 917 2 601 — — Less deferred taxation (1 249) (364) — — Less non-controlling shareholders’ share of investments revaluation reserve (3 213) (937) — —


total revaluation reserves 14 331 9 876 1 730 1 730

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26. cash flow hedging reserve Balance at 1 January 6 376 — — — Current year movement (16 119) 15 241 — — Less deferred taxation 4 513 (4 267) — — Less non-controlling shareholders’ share of cash flow hedging reserve 4 863 (4 598) — —

Balance at 31 december (367) 6 376 — —

27. long-term interest bearing borrowings Loan from financial institution to the property owning subsidiary

secured by first mortgage bond over the property . the loan bears interest at a rate of .75% below prime and is repayable in 12 years from date of registration of the bond . interest only was payable until 28 February 2010, thereafter monthly instalments

of interest and capital . the loan was repaid during the year . — 10 132 — — Loan from a financial institution to the property owning sub-

sidiary secured by a second mortgage bond over the property . the loan bears interest at prime minus 1% . interest only was payable until august 2009, thereafter monthly instalments of

interest and capital . the loan was repaid during the year . — 6 085 — — Loan from financial institution to property owning subsidiary

secured by first mortgage bond over the property . the loan bears interest at a rate of .75% below prime and is repayable by

1 June 2017 . at 31 december 2012 the instalment payable was r263 225 . 21 187 — — — Loan from a financial institution to the property owning

subsidiary secured by a second mortgage bond over the property . the loan bears interest at prime minus .75% and is repayable by

1 June 2017 . at 31 december 2012 the instalment payable was r60 576 . 5 150 — — — redeemable preference shares issued by a subsidiary,

Brimsure (pty) Ltd, on 2 october 2007 for the acquisition of the investment in aon re africa (pty) Ltd . the preference dividend rate is 75% of the prime bank overdraft rate, payable annually within 30 days of the year end . the preference shares were secured by a pledge of the investment in aon re africa (pty) Ltd and are redeemable from dividends received from the investment

(refer note 17) . the preference shares were redeemed during the year . — 2 911 — —

issued by its subsidiary, oceana spv (pty) Ltd, for investment in oceana Group Limited:

– Class a cumulative redeemable preference shares issued on 26 september 2006 and bear interest at an effective rate of 6 .48% . Brimstone has ceded and pledged all of its ordinary and preference shares and all of its claims held in and against the subsidiary as security for the a preference shares . the preference shares are repayable as follows:

after the third anniversary of the issue date reduce to r63 000 000; after the fourth anniversary of the issue date reduce to r59 000 000; after the fifth anniversary of the issue date reduce to r53 000 000; after the sixth anniversary of the issue date reduce to r47 000 000; after the seventh anniversary of the issue date reduce to r39 000 000; after the eighth anniversary of the issue date reduce to rnil . 28 889 28 764 — — (refer note 16)

group company

r’000 2012 2011 2012 2011

notes (continued)




27. long-term interest bearing borrowings (continued) – Class B cumulative redeemable preference shares issued on

26 september 2006 . the preference shares have no specified date of repayment and bear interest at a rate of 95% of the

prime interest rate . the preference shares are unsecured . 132 708 133 868 — —

interest free shareholders’ loans to subsidiary . the shareholders may vary such rate, provided it does not exceed the prime rate . these loans are unsecured and are repayable only if and to the extent that such payment is permissible under the third party Funding agreements and the directors resolve that they shall be

repaid . 23 099 27 099 — —

Loans from financial institution to sea Harvest Corporation (pty) Ltd:

– Loan bearing interest at a fixed rate of 12 .46% n .a .c .q . until april 2010 . after april 2010 the fixed portion decreases in line with the amortised capital balance until 1 June 2012 when r30 million reverts to a variable interest rate of JiBar plus 4 .05% . repayments of r6 .7 million are made quarterly in arrears until this balance is fully amortised in may 2014 . overall the average quarterly repayment over the remaining term of the debt is r9 .5 million . the loan is secured by a general notarial bond over all of sea Harvest Corporation

(pty Ltd’s moveable assets (refer notes 13 and 20) . 37 312 91 083 — — – Loan repayable in full on expiry thereof (4 may 2014),

interest payments are made quarterly in arrears . on 1 october 2009, the interest rate was fixed at 17 .3% until June 2012, after which r50 million of the outstanding capital will revert to a variable interest rate of JiBar plus 8 .5% n .a .c .q . the loan is secured by a general notarial bond over all of sea Harvest Corporation (pty) Ltd’s moveable assets

(refer notes 13 and 20) . 103 877 155 635 — — – Loan repayable in quarterly instalments, inclusive of interest,

as from 1 July 2012 . Until such time, interest payments are made quarterly in arrears . interest is charged at variable rates linked to a 3 month JiBar and the loan matures on 29 may 2014 . the loan is secured by a general notarial bond over all

of sea Harvest Corporation (pty) Ltd’s moveable assets (refer notes 13 and 20) . 24 059 — — — – Loan repayable in quarterly instalments, inclusive of interest,

as from 1 July 2012 . Until such time, interest payments are made quarterly in arrears . interest is charged at variable rate linked to a 3 month JiBar and the loan matures on 29 may 2014 . the loan is secured by a general notarial bond over all

of sea Harvest Corporation (pty) Ltd’s moveable assets (refer notes 13 and 20) . 51 736 — — —

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Lion of africa insurance Company Ltd’s bond listed on the Bond exchange of south africa (Besa) . the bond is unsecured and has a nominal value of r50 million with a fixed interest rate of 12 .27% per annum, payable bi-annually on 29 June and 29 december . the legal maturity date is 29 June 2017, but it is callable by the Group from 29 June 2012 . the bond was called

and redeemed during the year . — 49 914 — — Unsecured loan from financial institution bearing interest at a

rate of prime plus 1% . interest is repayable quarterly in arrears . Capital is repayable in six instalments, the first being six months after granting of the loan and thereafter every six months . the

loan was repaid during the year . — 8 260 — 8 260 Class d fixed rate cumulative redeemable non-participating

preference shares of r100 million issued by a subsidiary, newshelf 831 (pty) Ltd, on 15 december 2010 . the preference shares are redeemable in full in 3 years and 1 day from date of issue . the dividend rate is 8 .1% nominal annual compounded semi-annually . preference share dividends are payable on 15 January and 15 July of each year . the Class d fixed rate prefer-ence shares (together with the other preference shares issued by newshelf 831 (pty) Ltd) are secured by a cession and pledge in security of 46 000 000 shares in Life Healthcare Group

Holdings Limited held by newshelf 831 (pty) Ltd . 103 917 103 335 — — Class d floating rate cumulative redeemable non-participating

preference shares of r100 million issued by a subsidiary, newshelf 831 (pty) Ltd, on 15 december 2010 . the preference shares are redeemable in full in 3 years and 1 day from date of issue . the dividend rate is 80% of the prime bank lending rate . preference share dividends are payable on 15 January and 15 July of each year . the Class d floating rate preference shares (together with the other preference shares issued by newshelf 831 (pty) Ltd) are secured by a cession and pledge in security of 46 000 000 shares in Life Healthcare Group Holdings Limited

held by newshelf 831 (pty) Ltd . 73 470 93 129 — — Class e fixed rate cumulative redeemable non-participating

preference shares of r50 million issued by a subsidiary, newshelf 831 (pty) Ltd, on 6 June 2011 . the preference shares are redeemable in full in 3 years and 1 day from date of issue . the dividend rate is 9 .65% nominal annual compounded semi-annual-ly . preference share dividends are payable on 15 January and 15 July of each year . the Class e fixed rate preference shares (together with the other preference shares issued by newshelf 831 (pty) Ltd) are secured by a cession and pledge in security of 46 000 000 shares in Life Healthcare Group Holdings Limited

held by newshelf 831 (pty) Ltd . 58 262 52 520 — —

group company

r’000 2012 2011 2012 2011

notes (continued)




27. long-term interest bearing borrowings (continued) variable rate cumulative redeemable preference shares of

r390 million issued by a subsidiary, newshelf 1063 (pty) Ltd on 21 december 2011 . the preference shares are redeemable in full in 5 years and 1 day from date of issue . the dividend rate in respect of the preference shares is 92 .5% of the prime bank lending rate nominal annual compounded monthly . the company is not obliged (but is entitled) to declare and pay any scheduled preference share dividends that are deemed to accrue during the first three years after the subscription date on 1 march and 1 september of these years . the company is obliged to declare and pay any scheduled preference share dividends that are deemed to accrue during the fourth and fifth years after the subscription date on 1 march and 1 september of these years . Brimstone has agreed to guarantee to the holders of the prefer-ence shares the due and full performance by the company of the guaranteed liabilities and to pay all guaranteed amounts and gross

up amounts to the holders . 320 413 390 978 — — Floating rate cumulative redeemable non-participating

preference shares of r170 million issued by a subsidiary, newshelf 1064 (pty) Ltd, on 1 november 2012 . the preference shares are redeemable in full in 35 years and 1 day from date of issue . the dividend rate is 100% of the prime bank lending rate . the preference shares are secured by a cession and pledge of all present and future investments of newshelf 1064 (pty) Ltd .

the preference shares are redeemable on 1 november 2017 . 172 384 — — —

total 1 156 463 1 153 713 — 8 260 Less: amount transferred to short-term borrowings (note 31) (268 329) (103 418) — (8 260)

888 134 1 050 295 — —

28. provisions long-term provisions post-retirement medical assistance present value of unfunded obligations 20 882 20 169 — —

total carrying value – long term 20 882 20 169 — —

refer to note 39 for details of the post-retirement medical assistance plan .

short-term provisions product claims Carrying value 1 January 100 650 — — additional provision 52 — — — provision utilised — (550) — —

Carrying value 31 december 152 100 — —

pension fund holiday Carrying value 1 January — 4 124 — — provision utilised — (4 124) — —

Carrying value 31 december — — — —

group company

r’000 2012 2011 2012 2011



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bonus Carrying value 1 January 4 000 — — — additional provision — 4 000 — — provision utilised (4 000) — — —

Carrying value 31 december — 4 000 — —

leave pay Carrying value 1 January 14 082 9 969 — — additional provision 13 573 13 839 — — provision utilised (11 502) (9 725) — —

Carrying value 31 december 16 153 14 083 — —

total carrying amount – short-term 16 305 18 183 — —

29. other financial liabilities Financial liabilities carried at fair value through profit or loss Forward exchange contracts – designated and effective in hedge accounting relationship 878 — — — interest rate swap – not designated in hedge accounting relationship 1 247 — 1 247 —

2 125 — 1 247 —

non-current 125 — 125 — Current 2 000 — 1 122 —

2 125 — 1 247 —

refer note 19 for further disclosure regarding the interest rate swap agreements .

30. deferred taxation deferred taxation asset — (2 340) — — deferred taxation liability 561 146 334 557 119 704 61 261

net deferred taxation liability 561 146 332 217 119 704 61 261

the major components of the deferred tax provision together with movements during the year were as follows:

difference between tax wear and tear allowances and depreciation charges on assets 46 841 47 994 106 81 difference between doubtful debt allowance and amount allowable for tax purposes (1 243) 1 120 — — taxation allowance for future trawler repairs 26 095 24 726 — — Fair value adjustment on fishing rights 38 923 43 368 — — other (58) — — — differences on revaluation of investments 3 798 2 549 — — revaluation of properties (taken directly to equity) 3 856 3 856 — — arising from cash flow hedging reserve (taken directly to equity) (246) 4 267 — — prepayments 376 828 — — investments 461 329 219 021 124 019 62 972 provisions (13 100) (13 899) (134) (196) Utilisation of estimated tax losses (5 424) (1 613) (4 287) (1 596)

deferred tax liability – 31 december 561 146 332 217 119 704 61 261

group company

r’000 2012 2011 2012 2011

notes (continued)




30. deferred taxation (continued) reconciliation between deferred taxation opening and and closing balances: deferred tax liability – 1 January 332 217 225 912 61 261 6 699 over/(under) provided prior year (1 658) 5 901 (1 558) 7 156 effects of change in tax rate 72 321 — 20 907 — statement of comprehensive income effect of temporary differences in value of assets (7 181) (5 995) 25 33 statement of comprehensive income effect of temporary differences in doubtful debt allowance (2 173) 1 248 — — provisions 670 (3 681) 62 (1 026) prepayments deducted for normal tax (452) 44 — — investments 169 926 67 010 40 140 19 399 Cash flow hedging reserve (246) 4 267 — — Fair value adjustment on fishing rights — 364 — — estimated tax losses (2 279) (1 613) (1 133) (1 596) transferred to Group company — — — (1) secondary tax on companies — 38 760 — 30 597

deferred tax liability – 31 december 561 146 332 217 119 704 61 261

31. short-term interest bearing borrowings Current portion of long-term borrowings (note 27) 268 329 103 418 — 8 260

amount owing to bank resulting from the discounting of a subsidiary company’s sales invoices to its customers, secured by a cession of its debtors book and limited guarantee (note 32) by the holding company and bearing interest at the bank’s prime overdraft rate . 24 605 27 163 — —

292 934 130 581 — 8 260

32. bank overdrafts the Company has an overdraft facility amounting to r50 million (2011 – r50 million) . the facility bears interest at the bank’s prime

lending rate . as security for the facility, the Company’s wholly-owned subsidiary, septen investments (pty) Ltd, has pledged and ceded 1 799 700 (2011 – 1 799 700) ordinary shares and 19 851 279 (2011 – 19 851 279) “n” ordinary shares in Brimstone .

the Company has guaranteed the overdraft facility of a wholly-owned subsidiary to the extent of r21 500 000 and has also ceded its loan to the subsidiary to the bank concerned as security for the overdraft . at the end of the year, the overdraft secured by this guarantee was r15 433 670 (2011 – r13 362 656) .

group company

r’000 2012 2011 2012 2011



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33. notes to the cash flow statements33.1 taxation paid income tax owing/(prepaid) at the beginning of the year 2 169 (1 167) (1 592) 1 244 other (1) 1 (1) 1

2 168 (1 166) (1 593) 1 245 provided during year 28 571 25 914 (407) 774 prepaid/(owing) at the end of the year 6 123 (2 169) 2 000 1 592

income tax paid 36 862 22 579 — 3 611

dividends tax dividends tax paid 257 — — —

stc owing/(prepaid) at the beginning of the year 95 (16) — — provided during year — 1 700 — — prepaid/(owing) at the end of the year 21 (95) — —

stC paid 116 1 589 — —

total taxes paid 37 235 24 168 — 3 611

33.2 Finance costs Finance costs recognised in profit or loss 131 597 93 345 3 067 2 943 adjustment for non-cash items (23 238) (12 148) (1 624) —

Finance costs paid 108 359 81 197 1 443 2 943

33.3 cash effect of change in investment in subsidiaries net decrease in investment 64 313 63 289 non-cash write-down of investment — (18)

net loan recoveries from subsidiaries 64 313 63 271

34. segmental information information reported to the Group’s operating decision makers for the purpose of resource allocation and assessment of segment

performance is specifically focused on the individual entity in which Brimstone has invested . the Group’s reportable segments under iFrs 8 are therefore fishing, insurance, clothing and investments (previously investment management) . investments include invest-ments in associates, available-for-sale investments, investments at fair value through profit or loss and the Group’s property portfolio .

notes (continued)




group

r’000 2012 2011

34. segmental information (continued)34.1 segment revenues and results segment revenue Fishing 1 037 707 970 861 insurance 581 144 615 368 Clothing 174 394 163 283 investments 153 227 118 403

total revenue 1 946 472 1 867 915

segment profit/(loss) from operations Fishing 49 511 65 890 insurance (10 134) 11 900 Clothing 8 377 7 211 investments 83 284 47 622

total profit from operations 131 038 132 623 Fair value gains 1 053 311 476 858 exceptional items (2 280) 36 441 share of profits of associates and joint venture 27 612 22 057 income from investments 26 410 23 735 Finance costs (131 597) (93 345) outside unit holders’ interest (1 357) (475)

profit before taxation 1 103 137 597 894

r’000 2012 2011 segment assets and liabilities Gross net Gross net

segment assets Fishing 879 564 879 564 911 918 911 918 insurance 988 065 988 065 958 476 958 476 Clothing 149 804 149 804 154 317 154 317

2 017 433 2 017 433 2 024 711 2 024 711 investments 4 100 747 3 708 031 2 954 616 2 580 093 intergroup balances 392 716 — 374 523 — other 3 708 031 3 708 031 2 580 093 2 580 093

total segment assets 6 118 180 5 725 464 4 979 327 4 604 804

segment liabilities Fishing 780 759 547 463 797 417 585 565 insurance 864 410 774 476 846 367 756 433 Clothing 122 726 53 240 132 174 59 437

1 767 895 1 375 179 1 775 958 1 401 435 investments 1 420 299 1 420 299 1 089 739 1 089 739

total segment liabilities 3 188 194 2 795 478 2 865 697 2 491 174

group company

r’000 2012 2011 2012 2011



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other segmental information depreciation and amortisation Fishing 82 840 76 503 insurance 4 315 4 192 Clothing 2 520 3 195 investments 595 458

total segment depreciation and amortisation 90 270 84 348

additions to non-current assets Fishing 46 623 36 310 insurance 2 239 1 995 Clothing 2 930 5 025 investment management 964 1 538

total segment additions to non-current assets 52 756 44 868

the Group’s revenue by geographical area is set out in note 2 . all operations are based in the republic of south africa .

35. contingent liabilities the Company has guaranteed the invoice discounting facility

operating in wholly-owned subsidiary, House of monatic (pty) Ltd, to a maximum amount of r40 million (2011 – r40 million) but limited to any shortfall in collection of the debtors ceded in terms of the facility . the amount owing on the facility at 31 december 2012 was r24 604 846 (2011 – r27 163 148) .

Canterbury international south africa (pty) Ltd, o’neill sa (pty) Ltd and Fifth element marketing (pty) Ltd were subsidiar-ies of Brimstone which were placed into liquidation by Brimstone . an action for an amount of r21 .4 million has been instituted against Brimstone and certain of its executives by two creditors of the companies in liquidation . these creditors seek to hold Brimstone and certain of its executives liable for the manner in which the affairs of the companies in liquidation were conducted . Brimstone and its executives who are being sued deny that they are liable . the action is being defended .

36. capital commitments Commitments for the acquisition of property, plant, equipment and vehicles: Contracted for but not provided in the financial statements 30 205 18 372 — — authorised by directors but not contracted 2 787 3 460 — —

total commitments 32 992 21 832 — —

the commitments will be funded from internal cash resources .

37. lease commitments at the reporting date the Group and Company had outstanding commitments under non-cancellable operating leases with a term of more than one year, which fall due as follows: Within one year 12 976 12 548 639 639 in the second to fifth years inclusive 49 329 48 466 635 635

62 305 61 014 1 274 1 274

notes (continued)




38. share-based payments the Company has a share option scheme for its employees . options are exercisable at a price equal to the middle market price of the

share on the most recent trading day on the Jse immediately preceding the date on which the option is granted . no options are exercisable in the first year from the date of granting of the options . thereafter, options up to a maximum of 20% may be exercised annually . the sale arising from the exercise of options must be implemented by not later than 6 years from the date on which an option is granted .

2012 2 011 Weighted Weighted number average number average of share exercise price of share exercise price options (cents) options (cents)

details of share options outstanding are as follows:

“n” ordinary shares outstanding at beginning of year 2 479 058 584 .2 767 458 590 .0 awarded during year 1 164 700 900 .0 1 711 600 581 .5 Forfeited (214 760) 714 .6 — — exercised during the year (422 660) 565 .5 — —

outstanding at end of year 3 006 338 699 .8 2 479 058 584 .2

exercisable at the end of the year 226 643 —

the options outstanding at the end of the year have a weighted average remaining contractual life of 3 .41 years (2011 – 4 years) .

the following options were awarded to executive directors and staff during the year:

“n” ordinary shares 16 February 2012 – 900 cents per share 1 164 700

the estimated fair values of the options were calculated using the Binomial tree option pricing model . the results of the calculations and inputs into the model are set out below:



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“n” ordinary shares

options issued 18 February 2010 Fair value (cents) 125 exercise price (cents) 250 expected volatility (%) 73% expected life 5 .0 risk free rate (%) 7 .459% dividend forecast (cents) 2011 10 2012 11 2013 12 2014 13 2015 14

options issued 1 July 2010 Fair value (cents) 139 exercise price (cents) 270 expected volatility (%) 73% expected life 5 .0 risk free rate (%) 7 .824% dividend forecast (cents) 2011 10 2012 11 2013 12 2014 13 2015 14

options issued 16 February 2011 Fair value (cents) 167 exercise price (cents) 550 expected volatility (%) 23 .82% expected life 5 .0 risk free rate (%) 8 .02% dividend forecast (cents) 2012 18 2013 17 2014 17 2015 17 2016 17

options issued 31 december 2011 Fair value (cents) 285 exercise price (cents) 820 expected volatility (%) 27 .76% expected life 5 .0 risk free rate (%) 7 .12% dividend forecast (cents) 2012 15 2013 15 2014 15 2015 15 2016 15

notes (continued)




38. share-based payments (continued)

“n” ordinary shares

options issued 16 February 2012 Fair value (cents) 304 exercise price (cents) 900 expected life 5 .0 expected volatility (%) 26 .27% risk free rate (%) 7 .05% dividend forecast (cents) 2013 15 2014 15 2015 15 2016 15 2017 15

expected volatility was determined calculating the historical volatility of the Company’s share price over the previous five years . the expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations . the Company recognised total expenses of r15 446 650 (2011 – r7 955 388) related to equity and cash-settled share-based payment transactions during the year .

on 31 december 2010, a new share scheme, Cocoon, was introduced for employees of Brimstone . in terms of the scheme, participants subscribed for 39 140 000 newly issued Brimstone “n” ordinary shares at a subscription price of r0 .5075 per share . the scheme involves three distinct participants, namely:

1 . the Brimstone Black executives investment trust, an executive equity investment scheme established for the benefit of the sec-ond tier management of Brimstone which holds 35 140 000 “n” ordinary shares;

2 . the Brimstone General staff investment trust, an employee equity investment scheme established in line with the requirements of the Bee codes for the benefit of the broader staff of Brimstone which holds 1 500 000 “n” ordinary shares; and

3 . the Brimstone Broad-based Bee trust, a broad-based equity investment scheme, which holds 2 500 000 “n” ordinary shares .

the difference between the subscription price and the subscription vWap (the volume weighted average price of traded securities at the close of business on the day before any particular date) are notionally funded by Brimstone through notional vendor funding . the outstanding balance of the notional vendor funding accrues interest at the hurdle rate (8 .5% fixed nominal rate) and any distributions received (including interest, dividends and capital contributions) will be used to reduce the notional funding .

at the relevant final date, Brimstone will, in terms of a call option, be entitled to repurchase that number of subscription shares which, at the then market value, have a value equal to the then outstanding notional vendor funding . this will occur in three tranches:

1 . the first tranche comprises 50% of the subscription shares and has a final date of 31 october 2016; 2 . the second tranche comprises 40% of the subscription shares and has a final date of 31 october 2017; 3 . the third tranche comprises 10% of the subscription shares and has a final date of 31 october 2018 . the participants will retain the balance of the subscription shares .

Fair value

2012 2011

Brimstone Black executives investment trust equity-settled 42 049 42 049 Brimstone General staff investment trust equity-settled 2 556 2 556 Brimstone Broad-based Bee trust Cash-settled 15 256 9 624

the equity-settled schemes were valued at inception of the schemes, while the fair value of the cash-settled scheme is re-measured each year . Fair value is measured using the Black scholes method .

the value of the Brimstone Black executives investment trust and the Brimstone General staff investment trust is expensed over the 6 year vesting period . the Brimstone Broad-based Bee trust scheme has no vesting conditions, the full value was therefore expensed immediately and any changes in fair value are expensed in the year of the change .



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39. retirement benefit plans the Company contributes to the twilight Group provident Fund, a defined contribution fund . the fund is underwritten by old

mutual employee Benefits and administered by Lion of africa administration services (pty) Ltd, in terms of the pension Funds act, 1956 . Contributions payable to the fund and charged against income amounted during the year to r1 450 913 (2011 – r1 298 646) . Wholly-owned subsidiary, House of monatic (pty) Ltd, is a member of the Clothing industry national Bargaining Council and as such, it is compulsory for all qualifying employees to be members of the Clothing industry Bargaining Council provident Fund . employees of House of monatic (pty) Ltd who do not qualify for membership of the provident Fund are members of the House of monatic pension Fund . the fund is administered by Lion of africa administration services (pty) Ltd, in terms of the pension Funds act, 1956 . the assets of the fund are held separately from those of the company, under the control of the fund’s trustees . the contributions payable to the funds by the employer in terms of the rules of the funds are charged against income and during the year amounted to r3 495 369 (2011 – r3 495 135) . the contributions vest immediately upon payment in the members of the funds . all permanent staff of Brimstone investment Corporation Limited and its subsidiaries were members of a retirement fund .

sea Harvest Holdings (pty) ltd contribution plans sea Harvest provident Fund and sea Harvest trawlermen’s provident Fund . these defined benefit schemes have been set up as a

result of negotiations with employees . a total of 1 445 (2011 – 1 857) employees of the group were members of these funds at the year end . the group’s only obligation under these funds is to meet the agreed level of contributions . Both these funds require actuarial valuations every three years .

sea Harvest twilight group management provident Fund the group has 27 (2011 – 20) employees who are members of this fund . this defined contribution fund is not exempt from actuarial

valuations .

sea Harvest twilight group pension Fund the group has 115 (2011 – 50) employees who are members of this fund . this defined contribution fund is not exempt from actuarial

valuations . the contributions payable to these funds by the employer in terms of the rules of the fund and that are charged against income during the year amounted to r11 397 613 (2011 – r10 379 110) .

post-retirement medical assistance the group has undertaken to subsidise a portion of medical aid subscriptions for certain employees who meet specific criteria .

the projected unit credit method was used to value the liability, as prescribed by ias 19: employee Benefits . the latest full actuarial valuation was performed on 31 december 2011 . the group has no separately identified plan assets to fund the liability . at 31 december 2012 there were 48 employees who qualified for the benefit .

group company

r’000 2012 2011 2012 2011

notes (continued)




39. retirement benefit plans (continued) amounts recognised in profit or loss in respect of these defined

benefit schemes are as follows:

Current service cost 155 211 — — interest cost 1 506 1 769 — — actuarial loss/(gain) recognised 43 (142) — —

1 704 1 838 — —

Changes in the present value of the defined benefit obligation are as follows:

defined benefit obligation at beginning of year 20 169 19 451 — — Current service cost 155 211 — — interest cost 1 506 1 769 — — actuarial loss/(gain) arising in the current year 43 (142) — — Benefits paid (991) (1 120) — —

defined benefit obligation at year end 20 882 20 169 — —

the principal assumptions of the actuarial valuation are: discount rate (%) 8 .25% 8 .25% Health care cost inflation (%) 7% 6 .75 – 7 .25% retirement age 63 63 or 65

lion of africa Holdings company (pty) ltd the group operates a pension scheme on a defined contribution basis . this pension scheme is governed by the pensions Fund

act,1956 . a defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity . the scheme is funded through payments to trustee-administered funds on a mandatory basis . the group has no legal or constructive obligations to pay further contributions once the contributions have been paid . the contributions are recognised as an employee benefit expense when they are due . Contributions of r8 070 864 (2011 – r5 549 992) were paid during the year .

40. Financial instruments40.1 capital risk management the Group manages its capital to ensure that entities within the group will be able to continue as a going concern while maximising

the return to stakeholders through the optimisation of the debt and equity balance . the capital structure of the Group consists of debt, which includes the borrowings disclosed in notes 27 and 31, cash and cash

equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in notes 23 to 26 . the Group’s board reviews the capital structure on a regular basis and in particular when an acquisition of an invest-ment is planned . as a part of this review, the board considers the cost of capital and the risks associated with each class of capital . the Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt . the Group’s overall strategy remains unchanged from the previous year .

the Financial services Board (FsB), sets and monitors capital requirements for short-term insurers registered in south africa . effective 1 January 2012, the prescribed requirements for the calculation of the value of the assets, liabilities, and the capital adequa-cy requirement (Car) of short-term insurers were amended in terms of Board notice 169 of 2011 . this was done as an interim measure pending the final implementation of the solvency assessment and management (sam)/international solvency ii risk based capital regime . prior to this amendment the FsB prescribed a minimum adjusted capital ratio of 25% of net written premium (total capital adjusted to exclude intangible assets, prepaid expenses and non-approved reinsurance assets and liabilities .

on a sam interim measures basis, the Group’s capital at 31 december 2012 exceeded its Car by 45 .6%, i .e . a Car cover ratio of 1 .5 times that is is well in excess of the FsB’s prescribed minimum of 1 .0 times as the Board imposed a threshold of 1 .4 times . in addition, the Group refers to the international basis of solvency and strives to achieve a ratio of total capital to net written premium of at least 40% . at 31 december 2012 the Group’s international solvency ratio was 40 .0% (2011 – 45 .4%)

group company

r’000 2012 2011 2012 2011



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40.2 significant accounting policies details of the significant accounting policies and methods

adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements .

40.3 categories of financial instruments Financial assets designated as at fair value through profit or loss 3 052 170 2 093 367 807 248 562 533 derivative designated and effective as hedging instrument carried at fair value — 15 241 — — derivative not in a hedge accounting relationship carried at fair value 501 — 501 — Loans and receivables (including cash and cash equivalents) 749 672 625 987 131 073 52 781

trade and other receivables 407 288 466 872 26 968 29 998 Cash and cash equivalents 316 021 141 048 80 268 4 851 Loans to associates and investments less amounts written off 26 363 18 067 23 837 17 932

Loans owing by subsidiaries — — 339 954 317 589 available-for-sale investments 28 245 21 476 2 429 4 577

Financial liabilities amortised cost (long and short-term borrowings, bank overdrafts, trade and other payables) 1 560 719 1 497 579 33 039 34 990 Loans owing to subsidiaries — — 340 987 254 301 derivative not in a hedge accounting relationship carried at fair value 1 247 — 1 247 — derivative designated and effective as hedging instrument carried at fair value 878 — — —

40.4 Financial risk management objectives a committee consisting of executives of the holding company and of the Group’s subsidiaries monitors and manages the Group’s

financial risks relating to the operations of the Group . these risks include market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk . the recommendations of this committee are presented to the audit and risk Committee and, if necessary, the Board of directors for approval . the Group does not enter into or trade in financial instruments, including derivative instruments, for speculative purposes .

40.5 market risk the Group’s activities expose it primarily to the financial risks of changes in foreign exchange (see 40 .6 below) and interest rates

(see 40 .7) . there has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk .

group company

r’000 2012 2011 2012 2011

notes (continued)




40. Financial instruments (continued)40.6 Foreign currency risk management the Group undertakes certain transactions denominated in

foreign currencies which give rise to exchange rate fluctuations . the carrying amount of the Group’s uncovered foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows:

liabilities Us $ 286 5 842 — — EuropeanUnion€ 1114 1452 — —

the Group has a foreign denominated bank account .

current asset Cash (United states dollar, Usd) 1 782 307

exchange rate used for conversion of foreign item Usd 8 .47 8 .12

Foreign currency sensitivity analysis the following table details the Group’s sensitivity to a 10%

increase and decrease in the rand against the respective foreign currencies . the sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates . a positive number indicates an increase in profit where the rand strengthens by 10% against the relevant currency . For a 10% weakening in the rand against the relevant currency, there would be an equal and opposite effect on the profit .

us $ profit 29 584 European Union € profit 111 145

all profits or losses are attributable to the exposure on outstand-ing receivables and payables at year end in the group .

Forward exchange contracts the Group enters into forward exchange contracts to buy and sell specified amounts of various foreign currencies in the future at a

predetermined exchange rate . the contracts are entered into to manage the Group’s exposure to fluctuations in foreign currency exchange rates on specific transactions . the contracts are matched by anticipated future cash flows in foreign currencies, primarily from sales . it is the Group’s policy to enter into forward exchange contracts for all net foreign currency trade or capital items .

Where a relatively short settlement period is involved and risk is minimal, no forward exchange contract is entered into . the Group does not use derivative financial instruments for speculative purposes .



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the following table details the forward foreign currency contracts outstanding at the reporting date:

at 31 december 2012, the Group had contracted to sell the following amounts under forward exchange contracts in respect of future receivables:

average contract Contractual Foreign currency r’000 exchange rate expiry dates

aUd 132 658 8 .6461 11 January 2012 3 – 28 march 2014 eUr 254 978 11 .6901 7 January 2013 – 28 February 2014 Usd 1 392 8 .6612 17 January 2013 – 30 January 2013

at 31 december 2011, the Group had contracted to sell the following amounts under forward exchange contracts in respect of future receivables:


aUd 124 638 8 .1193 11 January 2012 – 28 march 2013 eUr 265 940 11 .383 4 January 2012 – 22 February 2012 GBp 2032 13 .0048 18 January 2012 – 17 February 2012 Usd 3 691 8 .2717 17 January 2012 – 23 march 2012

at 31 december 2012, the Group had contracted to buy the following amounts under forward exchange contracts in respect of future payables:


dKK 913 1 .4609 10 January 2013 – 15 may 2013 eUr 865 11 .4411 7 January 2013 – 15 march 2013 noK 53 1 .5482 25 January 2013 – 15 march 2013 seK 7 060 1 .2579 2 January 2013 – 1 February 2013 Usd 5 661 8 .5968 4 January 2013 – 15 march 2013

at 31 december 2011, the Group had contracted to buy the following amounts under forward exchange contracts in respect of future payables:


eUr 2 732 10 .7528 3 January 2012 – 22 February 2012 noK 2 635 1 .4680 30 march 2012 – 16 april 2012 Usd 21 261 8 .2336 3 January 2012 – 26 april 2012 dKK 613 1 .5451 17 January 2012 – 28 February 2012 seK 4 017 1 .2233 11 July 2012 – 27 august 2012

group company

r’000 2012 2011 2012 2011

notes (continued)




40. Financial instruments (continued)40.6 Foreign currency risk management (continued) Hedge accounting applied in respect of foreign currency risk cash flow hedges – Fair value of (liability)/asset – foreign currency forward exchange contracts (878) 15 241 — —

the foreign currency contracts have been acquired to hedge the underlying currency risk arising from firm commitments received from customers for the purchase of goods as well as forecast sales . all cash flows are expected to occur and affect profit or loss within the next twelve months .

40.7 interest rate risk management the Group is exposed to interest rate risk as entities in the

Group borrow funds at both fixed and floating interest rates . the Group’s exposure to interest rate risk on financial liabilities are detailed in the liquidity risk management section .

interest rate sensitivity the sensitivity analysis below has been determined based on the

exposure to interest rates for non-derivative instruments at the reporting date . For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the reporting date was outstanding for the whole year .

if interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit for the year would decrease/increase by r3 032 101 (2011 – decrease/increase by r3 376 970) in the Group and increase/decrease by r237 243 (2011 – decrease/increase r6 432) in the Company as a result of their exposure to interest rates on their variable rate borrowings .

40.8 credit risk management Credit risk refers to the risk that a counterparty will default on

its contractual obligations resulting in financial loss to the Group . Financial assets which potentially subject the Group to concentrations of credit risk consist of cash and receivables . the Group’s cash is placed with recognised financial institutions . trade receivables comprise a large, widely spread customer base, avoiding an excessive concentration of risk with a small number of customers . the Company, prior to advancing funds to subsidiaries, associates and investments, reviews through its investment Committee the entity’s ability to repay the funds .

40.9 liquidity risk management Ultimate responsibility for liquidity risk management rests with

the Board of directors, which has developed an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements . the Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities . included below is a listing of additional undrawn facilities to further reduce liquidity risk .

unutilised banking facilities total banking and loan facilities 1 406 901 1 320 250 50 000 58 260 actual interest-bearing borrowings (1 196 502) (1 194 238) — (8 260) Cash and cash equivalents 316 021 141 048 80 268 4 851

Unutilised banking facilities 526 420 267 060 130 268 54 851



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40.10 interest rate management the factors which would be considered in the decision on fixed versus floating interest rates in respect of the Group’s borrowings are: – the perceived stage in the interest rate cycle – the nature and characteristics of the borrowings concerned – the nature of the assets financed by the borrowings in question

interest rate swap contracts are entered into should conditions be such that it would be advantageous to switch from a fixed to a variable rate or vice versa . such contracts are entered into for speculative reasons .

liquidity and interest rate risk tables the following tables detail the Group’s remaining contractual maturity for non-derivative financial liabilities and assets . the liability

tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the liabilities can be repaid and includes both interest and principal cash flows . the asset tables have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where it is anticipated that the cash flow will occur in a different period .

the Group’s exposure to liquidity and interest rate risk and the effective rates of interest at reporting date are as follows: Weighted average effective Less than interest rate 1 year 1-5 years over 5 years total % r’000 r’000 r’000 r’000

2012 assets Loan to associate company 25 — 19 137 — 19 137 Loan to associate company prime — — 1 700 1 700 Loans to associate companies interest free 356 2 170 3 000 5 526 Linked loan included in investments prime plus 5% 5 119 — — 5 119 Linked loan included in investments prime plus 6% 1 038 — — 1 038 debt securities included in investments 5 .48 13 731 16 517 81 117 111 365 interest bearing deposits included in investments 5 .52 144 670 — — 144 670 trade receivables interest free 323 093 — — 323 093 other receivables interest free 84 195 — — 84 195 reinsurance contracts interest free 418 432 — — 418 432 Cash and cash equivalents Bank deposit rates 316 021 — — 316 021

1 306 655 37 824 85 817 1 430 296

liabilities Long-term interest bearing borrowings 9 .98 — 888 245 235 405 1 123 650 Long-term interest bearing borrowings interest free — — 23 099 23 099 short-term interest bearing borrowings 8 .93 331 660 — — 331 660 trade payables interest free 293 087 — — 293 087 other payables interest free 71 130 — — 71 130 insurance contracts interest free 616 860 — — 616 860 Bank overdraft prime 15 434 — — 15 434

1 328 171 888 245 258 504 2 474 920

notes (continued)




40. Financial instruments (continued)40.10 interest rate management (continued) liquidity and interest rate risk tables (continued)

Weighted average effective Less than interest rate 1 year 1-5 years over 5 years total % r’000 r’000 r’000 r’000

2011 assets Loans to associate companies 25 — 14 932 — 14 932 Loans to associate companies interest free — — 3 000 3 000 Linked loans included in investments interest free — — 1 898 1 898 debt securities included in investments 5 .50 12 428 13 469 53 922 79 819 interest bearing deposits included in investments 5 .71 155 416 — — 155 416 trade receivables interest free 376 669 — — 376 669 other receivables interest free 105 444 — — 105 444 reinsurance contracts interest free 443 028 — — 443 028 Cash and cash equivalents Bank deposit rates 141 048 — — 141 048

1 234 033 28 401 58 820 1 321 254

liabilities Long-term interest bearing borrowings 9 .43 65 158 578 850 717 874 1 361 882 Long-term interest bearing borrowings interest free — — 27 099 27 099 short-term interest bearing borrowings 10 .42 109 457 — — 109 457 trade payables interest free 225 287 — — 225 287 other payables interest free 78 053 — — 78 053 insurance contracts interest free 606 077 — — 606 077 Bank overdraft prime 13 363 — — 13 363

1 097 395 578 850 744 973 2 421 218

the Company’s exposure to liquidity and interest rate risk and the effective rates of interest at reporting date are as follows:

2012 assets Loan to associate company 25 — 19 137 — 19 137 Loan to associate company prime — 1 700 — 1 700 Loan to associate company interest free — — 3 000 3 000 Linked loan included in investments prime plus 5% 5 119 — — 5 119 Linked loan included in investments prime plus 6% 1 038 — — 1 038 Loans to subsidiaries interest free — — 339 954 339 954 other receivables interest free 26 968 — — 26 968 Cash and cash equivalents Bank deposit rates 80 268 — — 80 268

113 393 20 837 342 954 477 184

liabilities Loans from subsidiaries prime less 1% 3 600 14 400 11 673 29 673 Loans from subsidiaries interest free — — 318 764 318 764 trade payables interest free 1 874 — — 1 874 other payables interest free 30 289 — — 30 289

35 763 14 400 330 437 380 600



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Weighted average effective Less than interest rate 1 year 1-5 years over 5 years total % r’000 r’000 r’000 r’000

2011 assets Loan to associate company 25 — 14 932 — 14 932 Loan to associate company interest free — — 3 000 3 000 Linked loan included in investments interest free — — 1 898 1 898 Loans to subsidiaries interest free — — 317 477 317 477 other receivables interest free 29 998 — — 29 998 Cash and cash equivalents Bank deposit rates 4 851 — — 4 851

34 849 14 932 322 375 372 156

liabilities short-term interest bearing borrowings prime plus 1% 8 260 — — 8 260 Loans from subsidiaries prime less 1% 3 000 4 815 — 7 815 Loans from subsidiaries interest free — — 246 486 246 486 trade payables interest free 1 530 — — 1 530 other payables interest free 25 200 — — 25 200

37 990 4 815 246 486 289 291 40.11 equity price risk the portfolio of listed equities and equities held through subsidiaries which are carried in the statement of financial position at fair

value, has exposure to significant equity price risk, being the potential loss in market value resulting from an adverse change in prices . the Group’s holdings are diversified across more than one company . material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the investment committee . the primary goal of the Group’s investment strategy is to maximise investment returns without incurring undue market risk .

at 31 december, the exposure to equity price risk resulted from the financial assets listed below: – investments – directly held equities – indirectly held equities

40.12 Fair value of financial instruments the estimated net fair values at 31 december 2012 have been determined using available market information and appropriate

valuation methodologies and are not necessarily indicative of the amounts that the Group could realise in the ordinary course of busi-ness . the fair values of financial instruments in both the Group and the Company approximate the amounts reported in the statements of financial position .

the following methods and assumptions were used by the Company in establishing fair values:

investments these investments are valued each 6 months on the basis considered most appropriate to the investment concerned .

cash and cash equivalents the carrying amounts reported in the statements of financial position approximate fair values .

trade receivables the carrying value of trade receivables reported in the statements of financial position approximate fair values .

other receivables the carrying amounts reported in the statements of financial position approximate fair values .

long-term interest bearing borrowings the carrying amounts reported in the statements of financial position approximate fair values .

short-term interest bearing borrowings the carrying amounts reported in the statements of financial position approximate fair values .

trade and other payables the carrying amounts reported in the statements of financial position approximate fair values .

notes (continued)




40. Financial instruments (continued)40.13 Fair value measurements recognised in the consolidated statement of financial position the following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,

grouped into Levels 1 to 3 based on the degree to which fair value is observable . – Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities . – Level 2 fair value measurements are those from inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly (i .e . as prices) or indirectly (i .e . derived from prices) . – Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are

not based on observable market data (unobservable inputs) .

group (r’000) 2012 Level 1 Level 2 Level 3 total

Financial assets at Fvtpl derivative financial assets — 741 254 — 741 254 Listed shares 2 062 957 — — 2 062 957 Unlisted shares and loan — 41 635 5 41 640 other investments 77 149 — — 77 149 available-for-sale financial assets Unlisted shares and loan — — 28 245 28 245

total 2 140 106 782 889 28 250 2 951 245

Financial liabilities at Fvtpl derivative financial liabilities — 2 125 — 2 125

2011 Level 1 Level 2 Level 3 total

Financial assets at Fvtpl derivative financial assets — 496 599 — 496 599 Listed shares 1 365 555 — — 1 365 555 Unlisted shares and loan — 4 122 32 366 36 488 other investments 66 550 — — 66 550 available-for-sale financial assets Unlisted shares and loans — — 21 476 21 476

total 1 432 105 500 721 53 842 1 986 668

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company (r’000) 2012 Level 1 Level 2 Level 3 total

Financial assets at FvtpL derivative financial assets — 652 966 — 652 966 Listed shares 113 143 — — 113 143 Unlisted shares and loan — 41 635 5 41 640 available-for-sale financial assets Unlisted shares and loan — — 2 429 2 429

total 113 143 694 601 2 434 810 178

Financial liabilities at Fvtpl derivative financial liabilities — 1 247 — 1 247

2011 Level 1 Level 2 Level 3 total

Financial assets at Fvtpl derivative financial assets — 419 471 — 419 471 Listed shares 106 574 — — 106 574 Unlisted shares and loan — 4 122 32 366 36 488 available-for-sale financial assets Unlisted shares and loan — — 4 577 4 577

total 106 574 423 593 36 943 567 110

there were no financial liablilities at FvtpL in 2011 .

40.14 risks that arise from insurance contracts insurance risk the Group issues contracts that transfer insurance risk . Underwriting is the term used to describe the process of transfer of risk from the insured to the insurer in return for payment of

an appropriate consideration, termed premium . this process carries the risk of incorrect or inappropriate assumptions leading to drafting of incorrect insurance contracts .

the risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty of the amount of the resulting claim . By the very nature of an insurance contract, this risk is random and therefore unpredictable . Changing risk parameters and unforeseen factors, such as patterns of crime, economical and geographical circumstances, may result in unexpectedly large claims . these risks are controlled through a system of underwriting mandates and guidelines more thoroughly described below .

For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the actual claims and benefit payments exceed the estimated amount of the insurance liabilities . this could occur because the frequency or severity of claims and benefits are greater than estimated . insurance events are random and the actual number and amount of claims and benefits will vary from year to year .

experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected outcome will be . in addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the portfolio .

the various types of insurance contracts, which can be grouped into a number of business classes, that have a material effect on the amount, timing and uncertainty of future cash flows arising from insurance contracts in the Group are described below:

– property: property insurance contracts compensate the Group’s customers for damage suffered to their immovable or movable properties or for the value of property lost . Customers who undertake commercial activities on their premises could also receive compensation for the loss of earnings caused by the inability to use the insured properties in their business activities (business interruption cover) .

– motor: motor insurance contracts provide indemnity for loss or damage to the insured motor vehicle . this cover is normally on an all risks basis providing a wide scope of cover following an accident or a theft of the vehicle but the insured can select restricted forms of cover such as cover for fire and theft only . Legal liabilities arising out of the use or ownership of the motor vehicle fol-lowing an accident for damage to third party property or death or injury to a third party are also covered by this class of business .

notes (continued)




40. Financial instruments (continued)40.14 risks that arise from insurance contracts (continued) insurance risk (continued) – engineering: engineering insurance contracts provide indemnity for loss suffered through the use of machinery and equipment

or the erection of buildings or structures . this type of contract includes contract works, removal of support, project delay, construction plant, machinery breakdown, loss of profits, deterioration of stock, dismantling, transit and erection, works damage and electronic equipment .

– marine: marine insurance contracts provide indemnity for both cargo and hull classes of business . Cargo covers physical loss of or damage to cargo, with a project delay option . Hull covers loss or damage to pleasure craft or commercial vessels as a result of accidents and also includes legal liability as a result of the accident .

– Liability: Liability insurance contracts provide indemnity for actual or alleged breach of professional duty arising out of the insured’s activities, indemnify directors and officers of a company against court compensation and legal defence costs, provide indemnity for the insured against damages consequent to a personal injury or property damage .

– miscellaneous: these insurance contracts provide indemnity for any loss or damage in respect of insurance contracts that do not fall into any of the above classes .

management of insurance risk this section summarises these risks and the way the Group manages them . an advanced internal model is applied to ensure

appropriate and accurate implementation of acceptable risk levels with regard to underwriting, reserving, credit risk and concentration of risk within the Group . this model has not changed since the previous year .

underwriting strategy the underwriting strategy seeks diversity to ensure a balanced portfolio in terms of type and amount of risk, industry and geography .

the underwriting strategy is managed through exercising strict underwriting controls to ensure that the acceptance criteria for which risks are accepted meet both its underwriting guidelines and fall within its reinsurance acceptance limits .

Underwriting limits are in place to enforce appropriate risk selection criteria . For example, the Group has the right not to renew individual policies, it can impose deductibles or it can impose special conditions that may require the insured to enforce certain risk reduction measures (for example a burglar alarm) before it will accept the risk .

the insurance services division issues underwriting guides for the use of both internal staff (when policies are issued) and sales staff to utilise as guides when accepting risks or processing changes to policies already renewed with the Group . the underwriting guide-lines cover all lines of business underwritten by the Group and include such matters as:

– rating tables; – reinsurance risk categories and limits; – standard endorsements; – acceptance criteria; and – details of undesirable risks or risks for which the Group has no reinsurance facilities .

Underwriters and sales staff are given various levels of mandates that specify which risks they may accept, the degree to which the standard rates may be varied and the levels to which they may commit the Group’s reinsurance facilities . these mandates are set after taking into account the staff member’s qualifications, seniority and experience in dealing with various insurance risks .

in the development of the Group’s it platform for underwriting, many of these controls have been automated in the system . this allows the Group even tighter control over the business underwritten and will be closely managed through the automatic production of exception reports generated by the system . these exception reports will be subjected to audit by the Group’s Quality assurance department .

reinsurance strategy the Group has an extensive proportional and non-proportional reinsurance programme, comprising share and surplus treaties and

FaC placements, which are aimed at reducing the volatility of the Group’s underwriting results and protecting its capital . the Group purchases catastrophe reinsurance to protect itself from losses arisng from major catastrophes . the level of catastrophe reinsurance purchased is based on the Group’s maximum possible loss and capital adequacy exercise, which is performed annually .

the Group selects its reinsurers from a panel of international and local reinsurers that meet criteria laid down by the Board of directors for their ability to meet their claims obligations in terms of the reinsurance treaties . in setting these criteria the Group makes use of specialist consulting services of its reinsurance consultants as well as the reports issued by international rating agencies . the Group’s senior management meets with its reinsurance partners on a regular basis to discuss matters relating to the Group’s underwriting accounts and to keep abreast with developments in the global reinsurance market .



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in addition to the overall Group reinsurance treaty programme, individual business units are permitted to purchase additional reinsurance protection or to provide additional reinsurance capacity .

the Group’s reinsurance program is reviewed at least once annually and adjustments are made commensurate with the Group’s ability to absorb additional risk for its own account .

concentration of insurance risk and policies mitigating the concentrations Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount of risk, geographical location

and type of industry covered . the Group’s insurance risks are well spread throughout south africa and its exposure in one centre is relatively small and well

within the limitations of its reinsurance treaties for both catastrophes and losses arising from a single event . the Group’s exposure to extreme losses arising out of concentration of risks is considered remote . nonetheless, its actual exposure is measured at least annual-ly using statistics of its actual exposures as determined from the statistics of its live insurance policies in its it database .

the Group has exposure to most major lines of insurance business with limited exposure to specialised areas of insurance, such as marine and engineering . this exposure is consistent with the market and the Group’s reinsurance policy limits the losses in any one class of business .

the above lines of business can be stratified into two groups based on the counterparty, namely commercial and personal . the commercial unit underwrites the risks of enterprises from small businesses to large corporations . the personal unit provides insurance to the general public in their individual capacities .

the personal lines portfolio is small and well spread and thus the concentration risk is negligible . the commercial unit does have individual risk representing significant values as well as aggregated sums insured from all risk

situations . the Group implements a conservative reinsurance policy and thus calculates its aggregated values at risk in any one area or region . it also maintains a check on the highest values at an individual location with an area or region . the Group’s reinsurance strategy takes these individual and aggregated values into account when purchasing reinsurance facilities to protect the Group’s reserves in the event of losses emanating from these locations or risks .

exposure relating to catastrophe events the Group sets out the total aggregate exposure that it is prepared to accept in certain territories to a range of events such as natural

catastrophes . the aggregate position is reviewed annually . the Group uses a number of modelling tools to monitor aggregation and to simulate catastrophe losses in order to measure the effectiveness of the reinsurance programmes and the net exposure to the Group .

the Group considers that its most significant exposure would arise in the event of an earthquake in the Gauteng region . this analysis has been performed through identifying key concentration of risks based on different classes of business exposed in the event of such an incident . the Group’s policies for mitigation of catastrophe risk exposure include the use of both excess and catastrophe coverage . the effect of such reinsurance arrangements is that the Group should not suffer total net insurance losses of more than r10 000 000 (2011 – r10 000 000) in any one insurance event .

other risks and policies for mitigation of these risks insurance companies are exposed to the risk of false, invalid and exaggerated claims . the Group has the right to reject the payment of a claim where the insured has not complied with any of the conditions specified

in the policy contract or where the claim is fraudulent in some aspect . insurance contracts also entitle the Group to pursue third parties for payment of some or all costs (i .e . subrogation) . all claims are subject to reasonable investigation to establish that the loss is indemnifiable and that the quantum of the claim is reasonable and is commensurate with the damage suffered or awarded .

the Group employs its own legal team to investigate claims involving third parties and has an internal procurement team to procure replacement goods on terms that are fair and reasonable to both the Group and the insured . in addition the Group makes use of external loss adjusters and attorneys for specialist or complex claims .

notes (continued)




company

r’000 2012 2011

40. Financial instruments (continued)40.14 risks that arise from insurance contracts (continued) claims development the Group is liable for all insured events that occur during the term of the contract, even if the loss is discovered after the end of the

contract term, subject to pre-determined time scales dependent on the nature of the insurance contract . the Group is therefore exposed to the risk that claims reserves will not be adequate to fund historic claims (run-off risk) . to manage run-off risk the Group takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures and adopts sound reserving practices . Consequently, the Group has a history of positive claims development, i .e . the reserves created over time proved to be sufficient to fund the actual claims paid .

claims development triangles

gross r % % % % %

reporting year 2012 457 006 142 100 .0 39 .9 13 .2 2 .2 0 .7 2011 564 099 413 60 .1 39 .6 10 .4 8 .5 2010 448 442 019 47 .2 30 .9 19 .0 2009 445 103 514 56 .5 26 .2 2008 391 392 149 45 .6

2 306 043 237 100 .0 100 .0 100 .0 100 .0 100 .0

net reporting year 2012 269 435 745 100 .0 27 .0 4 .7 3 .0 1 .3 2011 357 918 076 73 .0 36 .5 8 .5 4 .1 2010 237 394 918 58 .8 43 .3 5 .1 2009 153 301 333 45 .2 31 .7 2008 242 138 353 57 .8

1 260 188 425 100 .0 100 .0 100 .0 100 .0 100 .0

41. related party transactions and directors’ interests Compensation of key management personnel the remuneration of executive directors and other key members of management during the year was as follows: short-term benefits 26 268 25 157 post-employment benefits 1 338 1 341 share-based payments 9 389 7 955

36 995 34 453

F robertson, an executive director of the Company, is the majority shareholder in three companies, acting as short-term insurance brokers, employee benefits consultants and property managing agents respectively to the Company and certain of its subsidiaries . the services are performed on a strictly market related arms’ length basis and total fees paid for the services during the year amounted to r2 565 088 (2011 – r1 823 113) .

the Lion of africa insurance Company Ltd owns the majority of the issued units in two collective investment schemes namely,

Lion of africa – General equity Fund and Lion of africa – real return Fund, which are consolidated as they are deemed to constitute special purpose entities, and therefore these are related parties .

Lion of africa insurance Company Ltd owns a 41% interest in auxis (pty) Ltd (“auxis”) . the company exercises significant

influence over this associate and accordingly, auxis is also considered a related party .

group company

r’000 2012 2011 2012 2011



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Brimsure (pty) Ltd, which held a 30% stake in aon south africa (pty) Ltd and holds a 30% stake in aon re africa (pty) Ltd, is jointly controlled by Brimstone (60%) and Commlife Holdings (pty) Ltd (40%), a company controlled by F robertson .

Lion of africa Fund managers (pty) Ltd, an investment management company, manages the investment portfolio of the Lion of africa insurance Company Ltd including its cash investments . this company is a wholly-owned subsidiary of Commlife Holdings (pty) Ltd .

the balances owing (to)/by subsidiaries are disclosed in appendix 1 on page 118 .

the balances owing by associate companies are disclosed in appendix 2 on page 119 .

the balances with subsidiaries and associates will be settled by the transfer of funds .

related party transactions are concluded on an arm’s length basis .

transactions between the company, its subsidiaries, associates and director:

subsidiaries dividends received — — 119 156 51 854 dividends paid (treasury shares) – subsidiary — — 4 595 3 829 – share trust — — 811 660 royalties received — — 846 845 interest paid — — 792 664 management fees received — — 1 934 2 197

associates and Joint venture dividends received 75 843 49 559 — — management fees (refunded)/received (370) 370 (370) 370 interest received 4 320 3 025 4 320 3 025 impairment of loan to associate 252 — — —

director additional purchase consideration on acquisition of business 1 736 — 1 736 —

42. group borrowing powers in terms of the articles of the Company, borrowings of the

Company and its subsidiaries are unlimited, subject to authorisation by the Board of directors of the holding company .




supplementary report on investments

appendix 1interest in subsidiaries issued percentage shares net share capital holding at cost indebtedness

2012 2011 2012 2011 2012 2011 2012 2011Held directly r r % % r’000 r’000 r’000 r’000

company Brimco (pty) Ltd 1 1 100 100 — 154 234 154 501 Holds investment in sea Harvest Holdings (pty) Ltd House of monatic (pty) Ltd 30 572 408 30 572 408 100 100 32 427 32 427 28 077 31 014manufacturer and distributor of clothing septen investments (pty) Ltd 1 1 100 100 — — (134 565) (2 711) Holds treasury shares and investment in Life Healthcare Group Holdings Limited Brimstone properties (pty) Ltd 100 100 100 100 — — — —dormant Brimstone Commodities trading (pty) Ltd 100 100 100 100 — — — —dormant Brimstone securities trading (pty) Ltd 100 100 100 100 — — — —dormant Brimbrands (pty) Ltd 1 1 100 100 — — — —dormant Brimsure (pty) Ltd 100 100 60 60 — — 171 18 Holds investment in aon re africa (pty) Ltd newshelf 831 (pty) Ltd 15 335 15 335 98 98 258 283 258 283 (186 433) (245 669) Holds investment in Life Healthcare Group Holdings Limited oceana spv (pty) Ltd 100 100 100 100 39 000 39 000 21 998 21 960 Holds investment in oceana Group Limited H investments no 219 (pty) Ltd 100 100 100 100 18 646 18 646 (19 989) (5 921) property owning Lion of africa Holdings Company (pty) Ltd 1 100 1 100 100 100 95 509 93 773 89 934 89 934 Holds investment in short-term insurer Lion of africa insurance Company Ltd newshelf 1062 (pty) Ltd 100 100 100 100 — — 20 264 20 210 Holds investment in mtn Zakhele newshelf 1063 (pty) Ltd 8001 — 100 — 8 — 25 324 —Holds investment in newshelf 1064 (pty) Ltd

443 873 442 129 (985) 63 336

Less: amounts written off (2 426) (2 426) (48) (48)

441 447 439 703 (1 033) 63 288

Held indirectly newshelf 1055 (pty) Ltd 100 100 100 100 — — — —dormant newshelf 831 (pty) Ltd 15 335 15 335 2 2 — — — —Holds investment in Life Healthcare Group Holdings Limited newshelf 1064 (pty) Ltd 17 000 1 100 100 — — — —Holds investment in oceana Group Limited sea Harvest Holdings (pty) Ltd 1 000 1 000 58 .1 58 .1 569 569 233 296 211 558 investment holding sea Harvest Corporation (pty) Ltd 100 100 100 100 — — — —deep sea fishing atlantic trawling (pty) Ltd 1 000 000 1 000 000 100 100 1 000 1 000 — —dormant sea Harvest Corporation of namibia (pty) Ltd n$100 000 n$100 000 100 100 — — — —dormant newshelf 1168 (pty) Ltd 1 — 100 — — — — —Holds investment in taste Holdings Limited newshelf 1169 (pty) Ltd 1 — 100 — — — — —Holds investment in afena Capital (pty) Ltd

consolidated special purpose entities Brimstone investment Corporation Limited share trust — — — — — — 6 924 14 234 the Brimstone Black executives investment trust — — — — — — 9 951 8 330 the Brimstone General staff investment trust — — — — — — 404 336 the Brimstone Broad-Based Bee trust — — — — — — 1 269 1 269

the Company’s interest in the aggregate profits and losses after taxation of consolidated subsidiaries was as follows:

2012 2011 r’000 r’000

profits 772 346 378 653 Losses (30 350) (1 450)

all subsidiaries are incorporated in the republic of south africa with the exception of sea Harvest Corporation of namibia (pty) Ltd which is incorporated in namibia .

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appendix 2investments in associate companies and joint venture share of retained share of non- effective earnings/ distributable reporting percentage shares at cost/ (accumulated losses) reserves date holding valuation since acquisition since acquisition indebtedness

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011Unlisted % % r’000 r’000 r’000 r’000 r’000 r’000 r’000 r’000

Held directly:– by Company:the scientific Group (pty) Ltd 30 sept . 28 .2 28 .2 6 768 6 768 6 144 — — — 19 137 14 932(medical equipment distributors)Hot platinum (pty) Ltd 28 Feb . 20 .66 20 .66 288 288 (288) (288) — — 4 700 3 000(manufacturer of machinery for jewellery industry)

total held by Company 7 056 7 056 5 856 (288) — — 23 837 17 932

Held indirectly:– by subsidiaries:aon re africa (pty) Ltd 31 dec . 18 .0 18 .0 13 359 13 359 14 963 15 496 2 631 — — —(insurance industry)oceana Group Limited* 30 sept . 20 .1 20 .1 566 264 566 264 78 611 50 906 5 786 5 171 — —(Food industry )vuna Fishing Company (pty) Ltd 31 dec . 49 .8 49 .8 36 432 36 432 (21 574) (15 164) — — — —(Fishing and fish processing)afena Capital (pty) Ltd 28 Feb . 25 .1 — 45 543 — 705 — — — 2 170 — (asset management) auxis (pty) Ltd 31 dec . 41 .0 41 .0 — — — — — — 356 135 (Underwriter)

total associates and joint venture held via subsidiaries 661 598 616 055 72 705 51 238 8 417 5 171 2 526 135

totaL GroUp 668 654 623 111 78 561 50 950 8 417 5 171 26 363 18 067

valuations are carried out every six months using bases considered appropriate to the underlying investment .

* At 31 December 2012 the fair value of the investment in Oceana Group Ltd. was R1 403.2 million (2011 – R964.6 million). 8.5 Million shares held in Newshelf 1064 (Pty) Ltd have been pledged as stated in

note 27. In addition a call option over these shares has been granted to Oceana Group Limited and is exercisable should a share cover ratio of two times not be maintained.




supplementary report on investments (continued)

appendix 3investments number of valuation valuation total shares/units of shares of loans investment

2012 2011 2012 2011 2012 2011 2012 2011 r’000 r’000 r’000 r’000 r’000 r’000

available-for-sale assetsHeld by companyUnlistedafrican Legends Ltd 2 842 204 2 842 204 2 429 2 429 — — 2 429 2 429Capricorn Business and technology park (pty) Ltd — 854 — 250 — 1 898 — 2 148

total company 2 429 2 679 — 1 898 2 429 4 577Held by subsidiarydesert diamond Fishing (pty) Ltd 12 12 25 816 16 899 — — 25 816 16 899

total group 28 245 19 578 — 1 898 28 245 21 476

valuations are carried out every six months using bases considered appropriate to the underlying investment .

investments at fair value through profit or lossHeld by companylistedrex trueform Clothing Company Limited ordinary shares 242 554 242 554 4 245 4 123 — — 4 245 4 123rex trueform Clothing Company Limited n ordinary shares 2 646 254 2 646 254 43 663 39 693 — — 43 663 39 693african & overseas enterprises Limited ordinary shares 254 026 254 026 4 445 3 810 — — 4 445 3 810african & overseas enterprises Limited n ordinary shares 3 684 257 3 684 257 60 790 58 948 — — 60 790 58 948

unlistedWelkom Yizani investments Limited 430 430 5 5 — — 5 5phuthuma nathi investments Limited 491 343 5 324 29 223 250 — — 29 223 250emthunzini Bee Business partners trust (santam) 73 508 73 508 6 255 4 122 — — 6 255 4 122Galaxy Gold mining Company Limited 16 000 000 16 000 000 — 32 000 6 157 111 6 157 32 111

rights to acquire sharesold mutual plc — — 63 161 60 654 — — 63 161 60 654nedbank Limited — — 321 167 187 380 — — 321 167 187 380tiger Brands — — 268 137 171 437 — — 268 137 171 437

total company 801 091 562 422 6 157 111 807 248 562 533

Held by subsidiariesUnit trust equity securities — — 32 016 27 834 — — 32 016 27 834Unit trust debt securities — — — 25 265 — — — 25 265Fixed deposit accounts — — 129 670 143 416 — — 129 670 143 416money market — — 15 000 12 000 — — 15 000 12 000debt securities — — 62 149 54 550 — — 62 149 54 550nedcor Limited 134 481 134 481 25 282 19 500 — — 25 282 19 500rex trueform Clothing Company Limited ordinary shares 100 100 2 2 — — 2 2rex trueform Clothing Company Limited n ordinary shares 100 100 2 2 — — 2 2african & overseas enterprises Limited ordinary shares 100 100 2 2 — — 2 2african & overseas enterprises Limited n ordinary shares 100 100 2 2 — — 2 2taste Holdings Limited 24 540 099 — 105 522 — — — 105 522 — Life Healthcare Group Holdings Ltd 53 021 681 57 479 430 1 786 986 1 186 374 — — 1 786 986 1 186 374rights to acquire sharesmtn Zakhele — — 88 289 61 887 — — 88 289 61 887

total group 3 046 013 2 093 256 6 157 111 3 052 170 2 093 367

total investments 3 074 258 2 112 834 6 157 2 009 3 080 415 2 114 843

the loans are unsecured have no fixed terms of repayment and are interest free .a register of investments is available for inspection at the registered offfice of the Company .

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valuation oF optionsas at 31 december 2012

appendix 4Brimstone acquired rights to shares that have been valued as options . the results of the calculations and inputs into the models are set out below:

old mutual plc

method Black-scholesnumber of option shares 16 954 350 Fair value r63 161 338spot price per share r24 .49 risk free rate 5 .2% (naca)dividend yield 3 .5%volatility 24 .4%exercise date 1 may 2015debt at reporting date r366 868 376interest rate on debt 8% compounded semi-annually plus 1 .5% on subscription amount

approximate value – 19 .4% volatility r51 949 408– 24 .4% volatility r63 161 338– 29 .4% volatility r74 318 884

repayment termsa portion of the debt will be settled by dividends and a portion of performance fees . the balance at the exercise date will be settled either by sale of certain of the old mutual shares or a refinancing of the debt then outstanding .

nedbank group limited

method Black-scholesnumber of option shares 3 824 680 Fair value r321 167 188spot price per share r188 .00risk free rate 5 .01% (naca)dividend yield 0%volatility 21 .17%exercise date 1 January 2015debt at reporting date r372 144 560interest rate on debt 8% compounded semi-annually plus 1 .5% on initial market amount (notional)


repayment termsdividends will be received in the form of capitalisation shares . the notional term value at the exercise date is calculated by taking the initial market value less the deposit increased each year by a notional 8% p .a . compounded semi-annually plus 1 .5% on the initial market value amount . at the exercise date, nedbank Group Limited, in terms of a call option, will have the right to acquire that number of shares at r1 .87 per share that at the then market value equates to the terminal value . as an alternative to the call option, Black Business partner shareholders will have the option to refinance this obligation at the exercise date .

tiger brands limited

method monte Carlonumber of option shares 1 813 613 Fair value r268 137 239spot price per share r325 .25risk free rate 5 .80%dividend yield 2 .83%volatility 20 .44%exercise date 31 december 2017debt at reporting date r289 665 191interest rate on debt 93 .5% of prime n .a .c .m .


repayment termsvendor financing at date of transaction of r255 109 837 bearing interest at a rate of 85% of prime n .a .c .m . and repayable from dividends which are split between servicing the debt and a trickle dividend in the ratio of 85%:15% .

mtn Zakhele

method monte Carlonumber of option shares 1 010 500 Fair value r88 288 370spot price per share r177 .60risk free rate 5 .51%dividend yield 5 .67%volatility 21 .74%exercise date 26 november 2016debt at reporting date r63 229 134interest rate on debt a preference shares from 31 december 2010 – 30 april 2013: 7 .35% a preference shares from 30 april 2013 – 26 november 2016: 84 .7% of prime B preference shares – 96 .8% of prime notional funding – 93 .5% of prime


repayment termsdividends received by mtn Zakhele from mtn will be used to repay outstanding preference share funding . at the end of the transaction, sufficient mtn shares will be bought back by mtn from mtn Zakhele in order to settle outstanding preference share funding and notional funding .



directors’ interest in sHares

appendix 5 direct indirect non- non-directors Beneficial Beneficial Beneficial Beneficial total

as at 31 december 2012ordinary shares ma Brey 1 299 039 — 3 458 157 65 164 4 822 360 LZ Brozin 58 714 — 1 811 368 1 870 082 F robertson 485 414 — 4 890 257 300 000 5 675 671 m Hewu 103 000 — — — 103 000 n Khan 128 136 — 126 712 — 254 848 La parker — — 403 000 — 403 000

2 074 303 — 10 689 494 365 164 13 128 961

“n” ordinary shares ma Brey 414 617 — 15 759 178 238 870 16 412 665 LZ Brozin 91 756 — 13 371 696 — 13 463 452 F robertson 73 742 — 14 286 675 100 000 14 460 417 m Hewu 212 650 — — 5 000 217 650 n Khan 123 227 — 1 062 039 — 1 185 266 mK ndebele 102 554 — — — 102 554 La parker — — 2 103 366 — 2 103 366

1 018 546 — 46 582 954 343 870 47 945 370

as at 31 december 2011ordinary shares ma Brey 1 299 039 — 3 428 102 65 164 4 792 305 LZ Brozin 358 714 — 1 686 313 2 045 027 F robertson 485 414 — 5 140 262 7 000 5 632 676 prof GJ Gerwel 791 799 — 1 152 063 — 1 943 862 m Hewu 103 000 — — — 103 000 n Khan 128 136 — 126 712 — 254 848 Y pahad 210 529 — 49 100 250 000 509 629 La parker — — 403 000 — 403 000 aa roberts 55 000 — — — 55 000

3 431 631 — 11 985 552 322 164 15 739 347

“n” ordinary shares ma Brey 414 617 — 15 658 984 238 870 16 312 471 LZ Brozin 316 756 — 13 201 503 — 13 518 259 F robertson 73 742 — 14 147 381 119 835 14 340 958 prof GJ Gerwel 1 675 701 — 12 530 992 — 14 206 693 m Hewu 212 650 — — 5 000 217 650 n Khan 123 227 — 1 180 043 — 1 303 270 mK ndebele 102 554 — — — 102 554 Y pahad 175 397 — 1 918 525 187 500 2 281 422 La parker — — 2 103 366 — 2 103 366 aa roberts 660 000 — — — 660 000

3 754 644 — 60 740 794 551 205 65 046 643

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sHareHolding inFormationas at 31 december 2012

shareholder spread no . of shareholders no . of shareholders total in s .a . other than in s .a . shareholdersordinary shares no . % no . % no . %

public 1 189 99 .17 3 100 1 192 99 .17directors 6 0 .50 — — 6 0 .50other 4 0 .33 — — 4 0 .33

total 1 199 100 .00 3 100 1 202 100 .00

no . of shareholders no . of shareholders total in s .a . other than in s .a . shareholders“n” ordinary shares no . % no . % no . %

public 2 331 99 .28 16 100 .00 2 347 99 .28directors 7 0 .30 — — 7 0 .30other 10 0 .42 — — 10 0 .42

total 2 348 100 .00 16 100 .00 2 364 100 .00

share trading statistics

ordinary “n” ordinary shares shares

market price per share (cents) High 1 300 1 195 Low 805 785 Year-end 1 125 1 195 volume of shares traded (number) 8 679 893 42 214 536 volume of shares traded as a % of issued shares 18 .56% 15 .83%value of shares traded (r) 78 203 566 373 671 195 number of transactions 578 2 401



sHareHolding inFormation (continued)

combined ordinary and “n” ordinary shareholdings at 31 december 2012

% of issuedmajor shareholders ordinary “n” ordinary total share capital

the Brimstone Black executive investment trust — 35 140 000 35 140 000 11 .21septen investments (pty) Ltd (treasury shares) 3 629 700 21 898 143 25 527 843 8 .14ma Brey (direct and indirect, beneficial and non-beneficial) 4 822 360 16 412 665 21 235 025 6 .77F robertson (direct and indirect, beneficial and non-beneficial) 5 675 671 14 460 417 20 136 088 6 .42GJ Gerwel (direct and indirect, beneficial and non-beneficial) 1 968 917 14 301 887 16 270 804 5 .19LZ Brozin (direct and indirect, beneficial and non-beneficial) 1 870 082 13 463 452 15 333 534 4 .8936one Hedge Fund — 13 623 737 13 623 737 4 .35ellerine Bros (pty) Ltd — 10 785 000 10 785 000 3 .44psG — 10 100 042 10 100 042 3 .22Government employee pension Funds — 8 254 451 8 254 451 2 .63old mutual Group 7 314 354 7 314 354 2 .33

17 966 730 155 654 106 173 620 836 58 .59

public vs non-public shareholding

number of % of issuedordinary shares shares share capital

public shareholders 23 901 269 51 .10non-public shareholders directors and associates 13 128 961 28 .06 shareholder holding more than 10% of issued share capital – Corocapital Ltd 5 757 674 12 .31treasury shares septen investments (pty) Ltd 3 629 700 7 .76 Brimstone investment Corporation Limited staff share trust 357 531 0 .76

total 46 775 135 100 .00

number of % of issued“n” ordinary shares shares share capital

public shareholders 153 374 801 57 .50non-public shareholders directors and associates 47 945 370 17 .98treasury shares the Brimstone Black executives investment trust 35 140 000 13 .17 septen investments (pty) Ltd 21 898 143 8 .21 Brimstone investment Corporation Limited staff share trust 3 872 861 1 .45 the Brimstone Broad-Based Bee trust 2 500 000 0 .94 the Brimstone General staff investment trust 1 500 000 0 .56 Lion of africa insurance Company Ltd 497 389 0 .19

total 266 728 564 100 .00

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number of shareholders

ordinary shares number of % of total number of % of shares size of Holding shareholders shareholders shares issued

1 – 5 000 823 68 .46 1 476 390 3 .165 001 – 10 000 152 12 .65 1 255 828 2 .6810 001 – 100 000 172 14 .31 5 676 734 12 .14100 001 – 1 000 000 46 3 .83 15 256 075 32 .61over 1 000 000 9 0 .75 23 110 108 49 .41

1202 100 .00 46 775 135 100 .00

major shareholders Corocapital Ltd 1 0 .08 5 757 674 12 .31african monarch 710 investment Holdings (pty) Ltd 1 0 .08 4 694 711 10 .04septen investments (pty) Ltd 1 0 .08 3 629 700 7 .76max Broxin investment Corporation 1 0 .08 3 136 799 6 .71Lion of africa Life assurance Company Ltd 1 0 .08 2 400 000 5 .13the mushaky Family trust 1 0 .08 1 901 400 4 .06tantalum 1 0 .08 1 763 384 3 .77rand merchant Bank 1 0 .08 1 614 824 3 .45

8 0 .64 24 898 492 53 .23

analysis of shareholders individuals 1 035 86 .11 9 734 324 20 .81nominee companies or trusts 96 7 .99 19 122 564 40 .88public companies 1 0 .08 2 400 000 5 .13Close corporations and private companies 70 5 .82 15 518 247 33 .18

1 202 100 .00 46 775 135 100 .00

“n” ordinary shares number of % of total number of % of shares size of Holding shareholders shareholders shares issued

1 – 5 000 1 622 68 .61 2 512 637 0 .945 001 – 10 000 236 9 .98 1 842 712 0 .6910 001 – 100 000 326 13 .79 10 945 832 4 .10100 001 – 1 000 000 139 5 .88 46 218 492 17 .33over 1 000 000 41 1 .73 205 208 891 76 .94

2 364 100 .00 266 728 564 100 .00

major shareholders african monarch 710 investment Holdings (pty) Ltd 1 0 .01 50 405 508 18 .90the Brimstone Black executive investment trust 1 0 .01 35 140 000 13 .17septen investments (pty) Ltd 1 0 .01 21 898 143 8 .2136one Hedge Fund 1 0 .01 13 623 737 5 .11ellerine Bros (pty) Ltd 1 0 .01 10 785 000 4 .04psG 1 0 .01 10 100 042 3 .79Government employee pension Funds 1 0 .01 8 254 451 3 .09old mutual Group 1 0 .01 7 314 354 2 .74

8 0 .34 157 521 235 59 .05

analysis of shareholders individuals 1 936 81 .90 21 281 049 7 .98nominee companies or trusts 283 11 .97 119 333 811 44 .74public companies 14 0 .59 11 551 105 4 .33Close corporations and private companies 131 5 .54 114 562 599 42 .95

2 364 100 .00 266 728 564 100 .00




notice oF annual general meeting

Brimstone investment Corporation Ltd (incorporated in the republic of south africa)(reg . no . 1995/010442/06), share Code: Brt isin number: Zae000015277, share Code: Brn isin number: Zae000015285(“Brimstone” or “the Company”)

notice of annual general meetingnotice is hereby given that the seventeenth annual general meeting of shareholders of Brimstone will be held at old mutual Business school, presentation room, West Campus Building, Jan smuts drive, pinelands, Cape town at 18h30, on Wednesday, 22 may 2013 to conduct the business set out below:

1 . to receive, consider and adopt the Company and Group annual financial statements, the directors’ report, audit and risk Committee report and social and ethics Committee report, for the year ended 31 december 2012 .

2 . to confirm annual dividend number 12, in the amount recommended by the directors of 25 (twenty five) cents per share, payable to those shareholders recorded in the register of the Company on Friday, 19 april 2013 . the dividend will be paid on monday, 22 april 2013 .

3. ordinary resolution number 1: re-election of directors in terms of the Company’s moi, the following directors

retire by rotation, and, being eligible, offer themselves for re-election .

3 .1 LZ Brozin 3 .2 pL Campher 3 .3 mK ndebele each re-election will be put to shareholders in a separate res-

olution . a brief Cv of each director to be re-elected appears on page 134 of this report .

4. ordinary resolution number 2: appointment of members of the audit & risk committee to approve the appointment of the following members of the

audit & risk Committee, each by way of a separate resolution: 4 .1 n Khan 4 .2 pL Campher (subject to his re-election as a director) 4 .3 La parker 4 .4 Fd roman

5. non-binding resolution number 3: remuneration policy to approve, as a non-binding advisory vote in terms of the

recommendations of the King report on Governance for south africa (“King iii”), the remuneration policy of the Company as set out in the remuneration report .

6. ordinary resolution number 4: reappointment of auditors to re-appoint deloitte & touche (with the designated auditor

being mr Lester peter Cotten) as auditors for the ensuing year .

7. ordinary resolution number 5: to place the unissued shares under the directors’ control. “resoLved tHat the entire authorised but unissued

ordinary and “n” ordinary share capital of the Company from time to time be placed under the control of the directors of the Company until the next annual general meeting, provided it shall not extend beyond 15 (fifteen) months from the date of passing of this ordinary resolution; with the authority to allot and issue all or part thereof in their discretion, subject to the Companies act, no 71 of 2008, as amended (“the act”) and the Jse Limited (“Jse”) Listings requirements .”

8. ordinary resolution number 6: approval to issue shares for cash “resoLved tHat the directors of the Company be and are

hereby authorised by way of a general authority, to issue all or any of the authorised but unissued ordinary and “n” ordinary shares (“securities”) in the capital of the Company for cash, as and when they in their discretion deem fit, subject to the act, the memorandum of incorporation (“moi”) of the Company, the Jse Listings requirements, when applicable, and the following limitations, namely that:

– the securities which are the subject of the issue for cash must be of a class already in issue, or where this is not the case, must be limited to such securities or rights that are convertible into a class already in issue;

– any such issue will be made only to “public shareholders” as defined in the Jse Listings requirements and not related parties, unless the Jse otherwise agrees;

– the number of securities issued for cash shall not in the aggregate in any one financial year exceed 15% (fifteen percent) of the Company’s issued share capital of ordinary and “n” ordinary shares respectively . the number of ordinary and “n” ordinary shares which may be issued shall be based on the number of shares of that class in issue, added to those in the relevant class that may be issued in future (arising from the conversion of options/convertible shares) at the date of such appli-cation, less any shares in the relevant class issued, or to be issued in future arising from options/convertible shares issued during the current financial year; plus any

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shares in the relevant class to be issued pursuant to a rights issue which has been announced, is irrevocable and is fully underwritten, or an acquisition which has had final terms announced;

– this authority be valid until the Company’s next annual general meeting, provided that it shall not extend beyond 15 (fifteen) months from the date that this authority is given;

– a paid press announcement giving full details, including the impact on net asset value and earnings per share, will be published at the time of any issue representing, on a cumulative basis within 1 (one) financial year, 5% (five percent) or more of the number of ordinary or “n” ordinary shares in issue prior to the issue; and

– in determining the price at which an issue of securities may be made in terms of this authority, the maximum discount permitted will be 10% (ten percent) of the weighted average traded price on the Jse of the relevant class of shares over the 30 (thirty) business days prior to the date that the price of the issue is determined or agreed to by the directors of the Company .

ordinary resolution number 6 is required, under the Jse Listings requirements, to be passed by achieving a 75% majority of the votes cast in favour of such resolution by all members present or represented by proxy and entitled to vote, at the annual general meeting .

9. special resolution number 1: adoption of memorandum of incorporation “resoLved tHat the existing memorandum of incorpo-

ration of the Company be and is hereby substituted and replaced in its entirety by the new memorandum of incorpo-ration, the salient features of which are set out in annexure 1 to the notice of annual general meeting .”

the new memorandum of incorporation is available for inspection at the Company’s registered office during normal office hours from date of issue of this notice of annual general meeting up to an including the date of the annual general meeting or any adjourned meeting .

reason for and effect of special resolution number 1 the reason for and effect of the special resolution number 1

is that the Company wishes to adopt a new memorandum of incorporation to replace the existing memorandum of incor-poration as required by the act .

10. special resolution number 2: non-executive directors’ fees to approve the non-executive directors’ fees for the year

ending 31 december 2013 as set out below: 1/1/2013 1/7/2013 to to total 30/6/2013 31/12/2013 2013 board (annual fee)

Lead independent director 84 270 89 326 173 596 member 56 180 59 551 115 731 committees audit Committee Chairman 20 225 42 876 63 101 member 11 236 23 820 35 056 investment committee Chairman 16 854 17 865 34 719 member 11 236 11 910 23 146 Human resources and nominations committee

Chairman 16 854 17 865 34 719 member 11 236 11 910 23 146 social and ethics committee Chairman 16 854 17 865 34 719 member 11 236 11 910 23 146

11. special resolution number 3: approval to repurchase ordinary and “n” ordinary shares “resoLved tHat, as a general approval contemplated in

section 48 of the act, the acquisition by the Company, and/or any subsidiary of the Company, from time to time of the issued ordinary and “n” ordinary shares (“securities”) of the Company, upon such terms and conditions and in such amounts as the directors of the Company may from time to time determine, but subject to the moi of the Company, the provisions of the act and the Jse Listings requirements, where applicable, and provided that;

a) the repurchase of securities will be effected through the main order book operated by the Jse trading system and done without any prior understanding or arrangement between the Company and the counter party;

b) this general authority shall only be valid until the Company’s next annual general meeting, provided that it shall not extend beyond 15 (fifteen) months from the date of passing of this special resolution;




c) in determining the price at which the Company’s secu-rities are to be acquired by the Company in terms of this general authority, the maximum premium at which such securities may be acquired will be 10% (ten percent) of the weighted average of the market price at which such securities are traded on the Jse, as determined over the 5 (five) trading days immediately preceding the date of the repurchase of such securities by the Company;

d) the acquisitions of securities in the aggregate in any one financial year do not exceed 20% (twenty percent) of the Company’s issued share capital of each class from the date of the grant of this general authority;

e) the Company and the Group are in a position to repay their debts in the ordinary course of business for a period of 12 months from the Company first acquiring securities under this general approval and subject to (i) below;

f) the assets of the Company and the Group, being fairly valued in accordance with international Financial reporting standards, are in excess of the liabilities of the Company and the Group for a period of 12 months from the Company first acquiring securities under this general approval and subject to (i) below;

g) the ordinary capital and reserves of the Company and the Group are adequate for a period of 12 months from the Company first acquiring securities under this general approval and subject to (i) below;

h) the available working capital is adequate to continue the operations of the Company and the Group for a period of 12 months from the Company first acquiring securities under this general approval and subject to (i) below;

i) upon entering the market to proceed with the repur-chase, the Company’s sponsor has complied with its responsibilities contained in schedule 25 of the Jse Listings requirements;

j) the Company or its subsidiaries will not repurchase secu-rities during a prohibited period as defined in paragraph 3 .67 of the Jse Listings requirements unless they have in place a repurchase programme where the dates and quantities of securities to be traded during the relevant period are fixed (not subject to any variation) and full details of the programme have been disclosed in an announcement over sens prior to the commencement of the prohibited period;

k) when the Company has cumulatively repurchased 3% of the initial number of the relevant class of securities, and for each 3% in aggregate of the initial number of that class acquired thereafter, an announcement will be made;

l) the Company only appoints one agent to effect any repurchase(s) on its behalf; and

m) prior to entering the market to repurchase the Company’s shares, a company resolution passing the repurchase will

have been passed in accordance with the requirements of the act, stating that the board has applied the solvency and liquidity test and has reasonably concluded that the Company will satisfy the solvency and liquidity test immediately after the repurchase .

the Jse Listings requirements require the following addi-tional disclosure for purposes of this general authority, some of which is disclosed in this report of which this notice forms part as set out below:

– directors and management – page 3 – major shareholders of Brimstone – page 124 – directors’ interest in shares – page 122 – share capital of Brimstone – page 89

material change other than the facts and developments as reported in the

notes to the condensed Group annual financial statements, there have been no material changes in the affairs or financial position of Brimstone and its subsidiaries since the date of signature of this report and the date of this notice .

directors’ responsibility statement the directors, whose names appear on page 3 of the

integrated report, collectively and individually accept full responsibility for the accuracy of the information pertaining to special resolution number 3 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 have been made and that this resolution contains all such information .

litigation statement in terms of section 11 .26 of the Jse Listings requirements,

the directors, whose names appear on page 3 of the integrated report, of which this notice forms part, are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous 12 months, a material effect on the Group’s financial position, save for the details set out in note 35 of the financial statements .

reason for and effect of special resolution number 3 the reason for and effect of the special resolution number 3

is to authorise the Company and/or its subsidiaries and trusts by way of a general authority to acquire its own issued secu-rities on such terms, conditions and such amounts determined from time to time by the directors of the Company, subject to the limitations set out above .

the directors of the Company have no specific intention to effect the provisions of the special resolution number 2 but

notice oF annual general meeting (continued)

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will, however, continually review the Company’s position, having regard to prevailing circumstances and market conditions, in considering whether to effect the provisions of the special resolution number 3 .

12. special resolution number 4: general authority for financial assistance in terms of

section 44 of the companies act “resoLved tHat the Company is hereby authorised,

subject to compliance with its moi and the applicable provisions of the act, including, but not limited to, the Board of the Company being satisfied that immediately after providing the financial assistance, the Company would satisfy the solvency and liquidity test (as contemplated in section 4 of the act) and that the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company, to provide direct or indirect financial assis-tance, by way of loans, guarantees, the provision of security or otherwise, in an aggregate amount not exceeding r1 500 000 000 .00 (one and a half billion rand), to any person for the purpose of or in connection with the sub-scription of any option, or any securities (as such term is defined in the act) issued or to be issued by the Company or a related or inter-related company (as such term is defined in section 2 of the act) of the Company, or for the purchase of any securities of the Company or a related or inter-related company of the Company, such authority to endure for a period of 2 (two) years from the date of this resolution .”

reason for and effect of special resolution number 4 the reason for, and effect of, special resolution number 4 is

to permit the Company to provide direct or indirect financial assistance in connection with the issue or purchase of any securities of the Company or a related or inter related company to the Company .

13. special resolution number 5: general authority for financial assistance in terms of

section 45 of the companies act “resoLved tHat the board of directors of the Company

may, subject to compliance with the requirements of the Company’s moi and the applicable provisions of the act, including, but not limited to, the Board being satisfied that immediately after providing the financial assistance, the Company would satisfy the solvency and liquidity test (as contemplated in section 4 of the act) and that the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company, and the Jse Listings requirements, each as presently constituted and as amended from time to time, authorise the Company to provide direct or indirect financial assistance by way of loans, guarantees, the provision of security or otherwise to:

– any of its present or future related or inter-related (as con-templated in section 2 of the act) companies or corporations (the “Group”), or to a member of such related or inter related corporation or to any person related to any such company, corporation or member, for any purpose in an aggregate amount not exceeding r1 000 000 000 .00 (one billion rand);

– any of its present or future directors or prescribed officers, or the present or future directors or prescribed officers of any related or inter-related company, or to a member of a related or inter-related company, or to any person related to any such director, prescribed officer or member, for any purpose; and

– any other person who is a participant in any of the Company’s or Group’s share or other employee incentive schemes, for the purpose of, or in connection with, the sub-scription of any option, or any securities, issued or to be issued by the Company or a related or inter-related company, or for the purchase of any securities of the Company or a related or inter-related company, where such financial assis-tance is provided in terms of any such scheme that does not satisfy the requirements of section 97 of the act, in an amount not exceeding r20 000 000 .00 (twenty million rand), being the aggregate of financial assistance in respect of the above two paragraphs, such authority to endure for a period of 2 (two) years from the date of this resolution .

reason for and effect of special resolution number 5 the reason for and effect of special resolution number 5 is

to permit the Company to provide direct or indirect financial assistance to the persons referred to above .

14. to transact such other business as may be transacted at an annual general meeting

voting and proxies the record date in terms of section 59 of the act for

shareholders to be recorded on the securities register of the Company in order to be able to attend, participate and vote at the annual general meeting is Friday, 17 may 2013, and the last day to trade in the Company’s shares in order to be recorded on the securities register of the Company in order to be able to attend, participate and vote at the annual general meeting is Friday, 10 may 2013 .

a member entitled to attend and vote at the annual general meeting is entitled to appoint a proxy or proxies to attend, speak and vote in his/her stead . a proxy need not be a member of the Company . For the convenience of certificated members and dematerialised members with “own name” registration of the Company, a form of proxy is enclosed herewith . on a show of hands, every member of the Company present in person or represented by proxy shall have one vote only . on a poll, every member of the Company present in person or represented by proxy shall have 100 votes for every ordinary share and 1 vote for every “n” ordinary share held in Brimstone by such member .




notice oF annual general meeting (continued)

the attached form of proxy is only to be completed by those shareholders who are:– holding shares in certificated form; or– dematerialised with “own name” registration .

all other beneficial owners who have dematerialised their shares through a Central securities depository participant (“Csdp”) or broker other than “own name” and who wish to attend the annual general meeting, must instruct their Csdp or broker to provide them with a Letter of representation or they must provide the Csdp or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the Csdp or broker .

Forms of proxy should be lodged with or mailed to Computershare investor services (pty) Ltd:

Hand deliveries to: postal deliveries to:Ground Floor po Box 6105170 marshall street marshalltown 2107Johannesburg 2001

to be received no later than 17h00 on monday, 20 may 2013

By order of the board

t moodleyCompany Secretary

newlands14 march 2013

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salient Features oF tHe new brimstone memorandum oF incorporation (“moi”)

annexure 1

theme or clause content of moi

definitions Capitalised terms contained herein shall bear the meaning ascribed thereto in the moi .

amendments to the moi subject to the provisions of the Jse Listings requirements, the moi may only be altered or amended by way of a special resolution of the ordinary shareholders in accordance with section 16(1)(c), except if such amendment is in compliance with a Court order as contemplated in section 16(1)(a) .

authorised shares the Company is authorised to issue 500,000,000 (five hundred million) ordinary shares, all of the same class and each of which ranks pari passu and 1 000 000 000 (one billion) n ordinary shares, all of the same class and each of which ranks pari passu . the authorisation and classification of shares can only be amended by a special resolution of the ordinary shareholders .

votes of shareholders subject to any special rights or restrictions as to voting attached to any shares by or in accordance with this memorandum of incorporation, at a meeting of the Company:(a) every person present and entitled to exercise voting rights at a shareholders’ meeting shall be entitled to

1 (one) vote on a show of hands, irrespective of the number of voting rights that person would otherwise be entitled to exercise .

(b) should voting be by means of a poll, any person who is present at the meeting, whether as a shareholder or as proxy for a shareholder, has the number of votes determined in accordance with the voting rights associated with the securities held by that shareholder .

(c) the holders of securities other than ordinary shares and “n” ordinary shares shall not be entitled to vote on any resolution at a meeting of shareholders, except as provided in the moi .

shareholders acting other than at a meeting

in accordance with the provisions of section 60, but subject to the moi, a resolution that could be voted on at a shareholders’ meeting (other than in respect of the election of directors) may instead be submitted by the Board for consideration to the shareholders entitled to exercise the voting rights in relation to the resolution; and voted on in writing by such shareholders within a period of 20 (twenty) business days after the resolution was submitted to them .

authority to issue unissued shares

subject to what may be authorised by the act, the Jse Listings requirements and at meetings of the ordinary shareholders in accordance with the moi, the Board may only issue unissued shares if such shares have first been offered to existing ordinary shareholders in proportion to their shareholding on such terms and in accordance with such procedures as the Board may determine, unless such shares are issued for the acquisition of assets by the Company .

repurchase of shares subject to the Jse Listings requirements and the act, the Company may repurchase its own shares .

Holding of beneficial interest

the Company’s issued securities may be held by and registered in the name of one person for the beneficial interest of another person as set out in section 56(1) .

audit committee and auditor

the Company must appoint an audit committee in the manner and for the purposes set out in part d of Chapter 3 of the act .

the Company shall appoint an auditor each year at its annual general meeting . if the Company appoints a firm as its auditor, any change in the composition of the members of that firm shall not by itself create a vacancy in the office of auditor .

shareholders’ meetings the Company is not required to hold any other shareholders’ meetings other than those specifically required by the act and the Jse Listings requirements .

any shareholder may at any time appoint any natural person/s as a proxy/ies as contemplated in the act, provided that a shareholder may appoint more than 1 (one) proxy to exercise voting rights attached to different securities held by the shareholder .

the quorum for a shareholders’ meeting to begin or for a matter to be considered is as required in terms of the act .

subject to the provisions of the Jse Listings requirements, the Company may conduct a shareholders’ meeting entirely by electronic Communication or provide for participation in a meeting by electronic Communication .

salient Features oF tHe new brimstone memorandum oF incorporation (“moi”) (continued)




record date the record date for the purpose of determining which shareholders participate in and vote at a shareholders’ meeting, decide any matter by written consent or by electronic Communication, receive a distribution, or be allotted or exercise other rights, shall be determined by the Board in accordance with the Jse Listings requirements .

election of directors and alternate directors and filling of vacancies

in addition to the minimum number of directors, if any, that the Company must have to satisfy any requirement in terms of the act to appoint an audit committee and a social and ethics committee, the Board must comprise at least 4 (four) directors and the shareholders shall be entitled, by ordinary resolution, to determine such maximum number of directors as they from time to time shall consider appropriate .

TheCompanyshallonlyhaveelectedDirectorsandthereshallbenoappointedorexoffıcioDirectorsas contemplated in section 66(4) . no director shall be appointed for life or for an indefinite period and the directors shall rotate .

the Board has the power to fill any vacancy on the Board on a temporary basis, as set out in section 68(3), provided that such appointment must be confirmed by the shareholders at the next annual general meeting of the Company .

eligibility of directors apart from satisfying the qualification and eligibility requirements set out in section 69, a person need not satisfy any eligibility requirements or qualifications to become or remain a director or a prescribed officer of the Company .

remuneration of directors

the Company may pay remuneration to the directors for their services as directors in accordance with a special resolution approved by the shareholders within the previous 2 (two) years, as set out in section 66(8) and (9), and the power of the Company in this regard is not limited or restricted by the moi .

any director who serves on any executive or other committee; devotes special attention to the business of the Company; goes or resides outside south africa for the purpose of the Company; or otherwise performs or binds himself to perform services which, in the opinion of the directors, are outside the scope of the ordinary duties of a director, may be paid such extra remuneration or allowances in addition to or in substitution of the remuneration to which he may be entitled as a director, as a disinterested quorum of the directors may from time to time determine .

the directors may also be paid all their travelling and other expenses properly and necessarily incurred by them in connection with the business of the Company; and attending meetings of the directors or of committees of the directors of the Company .

retirement of directors in rotation

no director shall be appointed for life or for an indefinite period and the directors shall rotate .

at each annual general meeting, 1/3 (one third) of the directors for the time being, or if their number is not 3 (three) or a multiple of 3 (three), the number nearest to 1/3 (one third), but not less than 1/3 (one third), shall retire from office .

executive directors the directors may from time to time appoint 1 (one) or more executive directors for such term and at such remuneration as they may think fit (subject only to the requirements of section 66(8) and (9)), and may revoke such appointment subject to the terms of any agreement entered into in any particular case .

personal financial interest the directors, prescribed officers and members of Board committees must comply with the act with regard to the disclosure of personal financial interests .

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proceedings of directors a majority of the directors must be present at a meeting before a vote may be called at any meeting of the directors, each director has 1 (one) vote on a matter before the Board, and a majority of the votes cast in favour of a resolution is sufficient to approve that resolution . in the case of a tied vote the chairperson may cast a deciding vote . if the quorum is two directors the chairperson shall not have a deciding vote if only two directors are present and the matter being and the matter being voted on fails .

the Board has the power to consider any matter and/or adopt any resolution other than at a meeting contemplated in section 74 and, accordingly, any decision that could be voted on at a meeting of the Board may instead be adopted by the written consent of a majority of the directors, given in person or by electronic Communication, provided that each director has received notice of the matter to be decided . a majority of the directors must be present at a meeting before a vote may be called at any meeting of the directors .

distributions subject to the provisions of the act, the Company may make a proposed distribution if such distribution is pursuant to an existing legal obligation of the Company, or a court order; or is authorised by resolution of the Board, in compliance with the Jse Listings requirements .

no distribution shall bear interest against the Company, except as otherwise provided under the conditions of issue of the shares in respect of which such distribution is payable .

any distribution, interest or other sum payable in cash to the holder of a share be paid by cheque or warrant or by eFt .

notices all notices shall be given by the Company to each shareholder of the Company and simultaneously to the issuer services division of the Jse, and shall be given in writing in any manner authorised by the Jse Listings requirements, the act and the regulations, and particularly table Cr 3 annexed to the regulations . all notices shall, in addition to the above, be released through sens provided that, in the event that the shares or other securities of the Company are not listed on the Jse, all the provisions of this memorandum of incorporation relating to the publication of notices via sens shall no longer apply and such notices shall thereafter only be published in accordance with the provisions of the act .

indemnification of directors

the Company shall advance expenses to a director or directly or indirectly indemnify a director in respect of the defence of legal proceedings, as set out in section 78(4); indemnify a director in respect of liability as set out in section 78(5); and/or purchase insurance to protect the Company or a director as set out in section 78(7), and the power of the Company in this regard is not limited, restricted or extended by the moi .

the above provisions shall apply mutatis mutandis in respect of any former director, prescribed officer or member of any committee of the Board, including the audit committee .

Committees the Board must appoint such committees as it is obliged to do in terms of the act and the Jse Listings requirements which includes a social and ethics committee, a remuneration committee, risk committee and audit committee .

restrictive Conditions the moi does not contain any restrictive conditions applicable to the Company as contemplated in section 15(2)(b) or (c) or prohibit the amendment of any particular provision hereof as contemplated in section 15(2)(c) .

Financial assistance (acquisition of securities)

the Board may authorise the Company to provide financial assistance to any person for the purpose of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the Company or a related or inter-related company, or for the purchase of any such securities, as set out in section 44 . any decision by the Company to provide such financial assistance must satisfy the requirements of section 44 .

Financial assistance (specific persons)

the Board may authorise the Company to provide financial assistance to a director, prescribed officer or any other person contemplated in section 45 . any decision by the Company to provide such financial assistance must satisfy the requirements of section 45 .




curriculum vitae

curriculum vitae of each director retiring by rotation and offering himself/herself for re-election is as follows:

lawrie Zev brozin Lawrie joined the Brimstone management team in october 1996 and played a valuable role in growing Brimstone to the stage of its listing in July 1998 . Lawrie was appointed Financial director of Brimstone in 2007 . Lawrie served articles with arthur andersen in Johannesburg and after qualifying as a chartered accountant became involved in managing his family’s business interests . He was involved in the acquisition of the spareco Group by his family in 1990 and assisted in its management back to profitability . in 1993 the group was listed on the Jse as varex and in 1994 varex was elected by the financial mail as the top industrial company . varex was then sold to Federal mogul, south africa Limited . Lawrie remained with the company until october 1996 as managing director of its retail division . Lawrie is a non-executive director of nando’s Group Holdings Limited, the scientific Group (proprietary) Limited and alternate director at sea Harvest Holdings (proprietary) Limited .

philip leon campherafter graduating from stellenbosch University, Leon joined old mutual in the investment division in 1973 . during the thirteen years with old mutual he was an investment analyst and portfolio manager . in 1985 he left old mutual to form syfrets managed assets where he was portfolio manager and Ceo . in 1993 Leon left syfrets and was one of the founding members of Coronation where he was Ceo of Coronation Fund managers and executive director of Coronation Holdings . during his time with Coronation he was also one of the founders of african Harvest and served as a director of african Harvest . in 2002 Leon Campher retired due to ill health . in 2003 Leon was instrumental in the formation of the investment management association south africa (imasa) where he served as Ceo until 2008 . in 2008 he was instrumental in the formation of the association for savings and investment south africa (asisa) and was appointed Ceo on 1 october 2008 . Leon currently holds the following directorships, asisa, asisa academy, international investment Fund association, sun international, Brimstone, saFCom and strate . He also serves on the Financial sector Charter Council and the BUsa Council .

mpho kathleen ndebele mpho was educated in south africa, Lesotho and the United states of america and attained a Ba (economics) from UBLs and msW (social planning) from the University of denver . she is a past director of the trans-Caledon tunnel authority, siphumelele investment Corporation and the Black sash . mpho is currently a trustee of the social Change assistance trust and the imam abdullah Haron education trust and she also serves as Canon of the diocese of Cape town and Chancellor of st . Georges Cathedral .

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proxy Form

For use only by Brimstone ordinary and “n” ordinary certificated shareholders or ordinary and “n” ordinary dematerialised shareholders with “own name” registration, at the annual general meeting of the Company, to be held at old mutual Business school, presentation room, West Campus Building, Jan smuts drive, pinelands, Cape town at 18h30 on Wednesday, 22 may 2013 and at any adjournment thereof . dematerialised ordinary and “n” ordinary shareholders holding shares other than with “own name” registration, must inform their Csdp or broker of their intention to attend the annual general meeting and request their Csdp or broker to issue them with the necessary Letter of representation to attend the annual general meeting in person and vote or provide their Csdp or broker with their voting instructions should they not wish to attend the annual general meeting in person, but who wish to be represented thereat . these share-holders must not use this form of proxy .

i/We . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (name/s in block letters)

of (address) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

being a shareholder/shareholders of Brimstone and holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ordinary shares in the Company,

being a shareholder/shareholders of Brimstone and holding . . . . . . . . . . . . . . . . . . . . “n” ordinary shares in the Company, do hereby appoint

1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or failing him/her

2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . or failing him/her3 . the chairman of the annual general meeting,as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering and, if deemed fit, passing, with or without modification, the special and ordinary resolutions to be proposed thereat and at any adjournment thereof; and to vote for and/or against the special and ordinary resolutions and/or abstain from voting in respect of the Brimstone ordinary shares and “n” ordinary shares registered in my/our name(s), in accordance with the following instructions:

number of ordinary shares*

number of “n” ordinary shares*

For against abstain For against abstain

1 . to receive, consider and adopt the Company and Group annual financial statements, the directors’ report audit & risk Committee report and social and ethics Committee report for the year ended 31 december 2012

2 . to confirm annual dividend number 12

3 . ordinary resolution number 1: the re-election of the following directors who retire by rotation

3 .1 LZ Brozin

3 .2 pL Campher

3 .3 mK ndebele

4 . ordinary resolution number 2: appointment of members of the audit & risk Committee

4 .1 n Khan

4 .2 pL Campher

4 .3 La parker

4 .4 Fd roman

5 . non-binding resolution 3: remuneration policy

6 . ordinary resolution number 4: to re-appoint deloitte & touche as auditors for the ensuing year

7 . ordinary resolution number 5: to place the unissued shares under the directors’ control

8 . ordinary resolution number 6: approval to issue shares for cash

9 . special resolution number 1: adoption of new memorandum of incorporation

10 . special resolution number 2: non-executive directors fees

11 . special resolution number 3: approval to repurchase ordinary and “n” ordinary shares

12 . special resolution number 4: General authority for financial assistance in terms of section 44 of the act

13 . special resolution number 5: General authority for financial assistance in terms of section 45 of the act

* please indicate with an “X” in the appropriate spaces above how you wish your votes to be cast . Unless otherwise instructed, my/our proxy may vote as he/she thinks fit .

signed at (place) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (on date) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2013

Please read the notes on the reverse side hereof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . shareholder’s signature

Brimstone investment Corporation Ltd (incorporated in the republic of south africa)(reg . no . 1995/010442/06), share Code: Brt isin number: Zae000015277, share Code:

Brn isin number: Zae000015285 (“Brimstone” or “the Company”)




important notes about the annual general meeting:1 . the annual general meeting will start promptly at 18h30 . shareholders wishing to attend are advised to be in the presentation

room no later than 18h20 . the campus courtyard area will be open from 17h45, from which time refreshments will be served . 2 . shareholders and others attending the annual general meeting are asked to register at the registration desk at the entrance of the

campus courtyard area from 17h45 onwards . registration of shareholders will close at 18h30 . 3 . this form of proxy must only be used by certificated ordinary and “n” ordinary shareholders or dematerialised ordinary and

“n” ordinary shareholders who hold dematerialised ordinary and “n” ordinary shares with “own name” registration .4 . dematerialised ordinary and “n” ordinary shareholders are reminded that the onus is on them to communicate with their Csdp or

broker .5 . each shareholder is entitled to appoint one or more proxies (who need not be a shareholder(s) of the Company) to attend, speak and,

on a poll, vote in place of that shareholder at the annual general meeting .6 . a shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space provided,

with or without deleting “the chairman of the annual general meeting” . the person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow .

7 . a shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the appropriate box(es) provided . Failure to comply with the above will be deemed to authorise the chairman of the annual general meeting, if the chairman is the authorised proxy, to vote in favour of the ordinary and special resolutions at the annual general meeting, or any other proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit, in respect of all the shareholder’s votes exercisable thereat .

8 . 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 office or waived by the chairman of the annual general meeting .

9 . the chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received other than in accordance with these instructions, provided that he is satisfied as to the manner in which a shareholder wishes to vote .

10 . any alterations or corrections to this form of proxy must be initialled by the signatory(ies) .11 . the completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting

and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so .12 . a minor must be assisted by his/her parent guardian unless the relevant documents establishing his/her legal capacity are produced or

have been registered by the Company .13 . Where there are joint holders of any shares: – any one holder may sign this form of proxy; – the vote(s) of the senior shareholders (for that purpose seniority will be determined by the order in which the names of shareholders

appear in the Company’s register of shareholders) who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the vote(s) of the other joint shareholder(s) .

14 . section 63 (1) of the Companies act requires that a person wishing to participate in the annual general meeting (including any representative or proxy) must provide reasonably satisfactory identification before they may attend or participate at such annual general meeting .

Forms of proxy should be lodged with or mailed to Computershare investor services (pty) Ltd:

Hand deliveries to: postal deliveries to:Ground Floor po Box 6105170 marshall street marshalltown 2107Johannesburg 2001

to be received no later than 17h00 on monday, 20 may 2013 .

proxy Form

S i x t y p e r C e n t S u g a r C a n e f i B r e . C h l o r i n e f r e e . S u S ta i n a B l e a f f o r e S tat i o n .

C o v e r p r i n t e d o n

z e ta l i n e n B r i l l i a n t w h i t e

C o n t e n t p r i n t e d o n

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Boundary terraces, 1 Mariendahl lane,

newlands 7700, po Box 44580, Claremont 7735

www.brimstone.co.za

Profitable. Empowering. Making a difference.

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