Mission statement 1 - sabvest.com Reports/2003 SABVEST... · 1 Sabvest Limited Sabvest aims to...

Sabvest Limited

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C o n t e n t s

Mission statement 1

Corporate profile 1

Group salient features 2

Graphical review of assets 3

Profile of investment holdings 4

Seven year review 6

Eight year review 8

Directorate 9

Operating philosophy 10

Statement of corporate governance 11

Annual review 15

Directors’ approval of the annual financial statements 19

Declaration by company secretary 19

Report of the independent auditors 20

Directors’ report 21

Consolidated balance sheet 24

Consolidated income statement 25

Company balance sheet 26

Company income statement 26

Cash flow statements 27

Statements of changes in equity 28

Accounting policies 29

Notes to the financial statements 31

Annexure A1 – Schedule of consolidated subsidiaries 42

Annexure A2 – Company structure 43

Annexure B – Assets, liabilities and income of associates 44

Shares and shareholders 45

Notice to shareholders 46

Shareholders’ diary 50

Administration ibc

Form of proxy Attached

1

Sabvest Limited

Sabvest aims to enhance income and value for its shareholders

through growth in long-term investments in well managed

cash generative businesses that have competitive advantages

in their marketplaces.

Sabvest is an investment holding company that has been listed

on the JSE Securities Exchange South Africa since 1987.

Its ordinary and “N” ordinary shares are quoted in

the Financials – Investment Company Sector.

Sabvest has significant interests in two listed and five

unlisted companies, on all of whose boards Sabvest is represented.

It earns fees from most of these companies and from other

corporate finance transactions in which it may participate.

Sabvest’s Industrial, and Distribution & Services

portfolios comprise large minority or joint controlling interests

in businesses in which substantial stakes are held by management.

Sabvest’s investment portfolio comprises instruments or shares

arising from previous, existing or prospective investments.

2

G r o u p s a l i e n t f e a t u r e s

2003 2003 2002US RSA RSA

cents cents cents

Returns to shareholders6,7 Headline earnings per share 49,5 42,55,0 Earnings/(Loss) per share 36,8 34,50,5 Dividend proposed (after year-end) 3,0 –44 Net asset value per share 292 30742 Net tangible asset value per share 283 299

Net asset value per share with listed investments at44 market value 296 307

Net asset value per share with investments at directors’ valuation 349 375

US$’000 R’000 R’000

Income statement2 917 Headline attributable income 22 348 19 695

Income/(Loss) attributable to ordinary shareholders,after exceptional items, amortisation of goodwill and

2 241 impairments 16 615 15 981

Balance sheet19 700 Ordinary shareholders’ equity 131 495 139 03720 800 Total assets 138 841 152 56018 362 Investments 122 563 130 016

876 Interest-bearing debt 5 852 10 888

Rand/Dollar exchange rateIncome statement: US$1 = 7,4142.Balance sheet: US$1 = 6,6750.

Human resources

Assets per category expressed as a percentage of total assets at 31 December (R’000)

2000

R11 5788,3%

R99 42371,6%

R11 5628,3%

2003

2003

R24 22977,6%

R4 35213,9%

R2 6368,4%

R13 6939,9%

R2 5851,9%

Sabvest industrial

Sabvest distributionand services

Sabvest investments

Finance advances

Other

Sabvest industrial


Sabvest investments andother income

2000

R4 3392,8%

R111 22172,9%

R14 4569,5% 2002

R20 68113,6%

R1 8631,2%

2002

R25 86183,3%

R4 23713,6%

R9643,1%

2000

R11 5788,3%

R99 42371,6%

R11 5628,3%

2003

2003

R24 22977,6%

R4 35213,9%

R2 6368,4%

R13 6939,9%

R2 5851,9%

Sabvest industrial


Sabvest investments

Finance advances

Other

Sabvest industrial


Sabvest investments andother income

2000

R4 3392,8%

R111 22172,9%

R14 4569,5% 2002

R20 68113,6%

R1 8631,2%

2002

R25 86183,3%

R4 23713,6%

R9643,1%

Income per category expressed as a percentage of total income for the year ended 31 December (R’000)

3

Sabvest Limited

RSA Overseas Non-executive executive executive Totaldirectors management Staff directors 2003 2002

2 1 6 5 14 14

4

P r o f i l e o f i n v e s t m e n t h o l d i n g s

Number ofDate first Listed/ shares Economic

Company invested Unlisted held interest Nature of business

Sabvest Industrial

Flowmax Holdings Limited (BV1/UK) 1997 U 40,0% Manufacturers anddistributors of fluid handlingand measurement systems inthe United Kingdom.

Nutritional Foods (Pty) Limited 1989 U 40,0% Producers of spray-dried andblended powdered food and drink products.

SA Bias Industries Limited 1988 U 50,0% Global manufacturer ofprinted and woven labels,narrow fabric products andtrimmings throughInternational Trimmings, Narrowtex and The BitrimGroup.

Set Point Technology Holdings Limited 2000 L 50 000 000 21,2% Manufacturer, supplier andoperator of specialisedindustrial, analytical andallied technologicalequipment and distributors offluid handling andmeasurement systems.

Sabvest Distribution and Services

Korbitec Holdings (Pty) Limited 1999 U 17,3% Specialist software developersand distributors.

Midsouth Distributors (Pty) Limited 1997 U 30,0% Distributors of Polaroid andDurst photographic productsand image recognitiontechnology and software.

Primeserv Group Limited 1999 L 20 000 000 16,0% Education, training andlabour outsourcing group.

Other U

Sabvest Investments

SA Bias Industries Limited – preference shares 1997 U

Investment loans

*1 Investment accounted.*2 Directors’ valuation R148,5 million per note 6.2 to the balance sheet.

5

Sabvest Limited

Share of income of associates

Carryingvalue

includinggoodwill and

after Dividends Interest Retained Period forimpairments received received income Total purposes

2003 2003 2003 2003 2003 of equity BoardR’000 R’000 R’000 R’000 R’000 accounting representation

99 423 1 891 2 554 19 784 24 229

15 204 12 months to31 December 2003 �



13 870 12 months to31 August 2003 �

11 562 39 1 590 1 007 2 636

5 269 –*1 �


4 623 12 months to30 June 2003 �

58

11 578 118 118

1 000 –*1 �

10 578 1 576 1 576 –*1 �

122 563 2 048 5 720 20 791 28 559

Total per Other income 2 658balance sheet*2

Total per income statement 31 217

6

S e v e n y e a r r e v i e w

Balance sheets2003

US$’000

7 441 Ordinary share capital and premium12 259 Reserves

19 700 Ordinary shareholders’ equity876 Interest-bearing debt and debentures224 Accounts and dividends payable

20 800 Total funds

180 Fixed assets108 Deferred taxation asset

18 362 Investments

2 771 Listed15 042 Unlisted

549 Net goodwill on acquisition of associates

2 051 Finance advances and receivables99 Cash balances

20 800 Total assets

Income statementsGross income from operations

4 210 and investments

276 Dividends received772 Interest received358 Fees and other income

2 804 S h a re of equity retained earnings

296 Interest paid

Net income from operations and 3 914 investments

997 Less: Expenditure

938 Operating costs59 Depreciation

2 917 Net income before exceptional items(773) Exceptional gains/(losses)

(357) Group(217) Associates(199) Amortisation of goodwill

– Investment impairment (provision)/recovery

2 144 Net income/(loss) before taxation97 Taxation

2 241 Net income/(loss) after taxation– Minority interest

Income/(Loss) attributable to ordinary 2 241 shareholders

3 014 Headline attributable income

Returns to shareholders6,7 Headline earnings per share – cents5,0 Earnings/(Loss) per share – cents

– Dividends per share – cents paid or proposed44 Net asset value per share – cents42 Net tangible asset value per share – cents

45 109 Number of shares in issue – 000’s45 144 Weighted number of shares in issue – 000’s

*Restated to comply with AC110 revised.

7

Sabvest Limited

1997* 1998* 1999* 2000 2001 2002 2003R’000 R’000 R’000 R’000 R’000 R’000 R’000

57 979 57 979 59 625 54 360 53 040 49 909 49 66870 056 80 274 68 649 79 377 85 138 89 128 81 827

128 035 138 253 128 274 133 737 138 178 139 037 131 4957 138 35 923 59 631 49 114 29 034 10 888 5 852

10 782 10 877 18 010 5 830 4 935 2 635 1 494

145 955 185 053 205 915 188 681 172 147 152 560 138 841

1 277 641 2 081 1 781 1 282 934 1 202– – – – – – 724

108 259 158 978 157 992 179 977 150 206 130 016 122 563

26 584 55 834 58 300 66 573 38 422 10 664 18 49479 324 98 331 95 136 105 089 107 690 115 362 100 405

2 351 4 813 4 556 8 315 4 094 3 990 3 664

35 650 25 347 43 765 5 551 20 179 20 681 13 693769 87 2 077 1 372 480 929 659

145 955 185 053 205 915 188 681 172 147 152 560 138 841

26 970 27 309 33 914 29 967 25 758 31 062 31 217

9 892 8 819 5 606 4 356 3 599 1 674 2 0484 402 7 527 10 653 6 832 3 397 3 270 5 7201 077 1 442 4 278 1 311 2 833 2 722 2 658

11 599 9 521 13 377 17 468 15 929 23 396 20 791

5 570 3 142 8 087 9 429 7 713 3 528 2 191

21 400 24 167 25 827 20 538 18 045 27 534 29 0265 258 5 529 6 303 6 206 6 539 6 339 7 402

4 895 5 306 5 877 5 678 6 017 5 946 6 961363 223 426 528 522 393 441

16 142 18 638 19 524 14 332 11 506 21 195 21 624409 (5 045) (29 525) (7 541) (27 243) (5 214) (5 733)

1 021 627 (6 623) (5 329) (2 853) (6 408) (2 649)(488) 1 495 (2 615) (2 634) 3 997 1 331 (1 606)(124) (202) (1 335) (3 306) (8 673) (237) (1 478)

– (6 965) (18 952) 3 728 (19 714) 100 –

16 551 13 593 (10 001) 6 791 (15 737) 15 981 15 891– – – – – – 724

16 551 13 593 (10 001) 6 791 (15 737) 15 981 16 615– – – – – – –

16 551 13 593 (10 001) 6 791 (15 737) 15 981 16 615

16 142 18 638 19 524 14 332 11 506 19 695 22 348

31,3 36,1 37,3 27,5 24,3 42,5 49,532,1 26,3 (19,1) 13,0 (33,2) 34,5 36,8

5,0 8,0 8,0 – – – 3,0248 268 245 281 295 307 292243 258 236 263 286 299 283

51 640 51 640 52 328 47 664 46 898 45 217 45 10951 640 51 640 52 328 52 066 47 374 46 320 45 144

8

E i g h t y e a r r e v i e w

Eig

ht

yea

r re

vie

wat

31

Dec

ember

20

03

96 97 98 99 00 01 02 030

15

30

45

60

Cen

tsHeadline earnings per share

96 97 98 99 00 01 02 030

25 000

50 000

75 000

100 000

125 000

150 000

R’0

00

Ordinary shareholders’ funds

96 97 98 99 00 01 02 030

4 000

8 000

12 000

16 000

20 000

24 000

R’0

00

Headline attributable income

96 97 98 99 00 01 02 030

50

100

150

200

250

300

350

Cen

ts

Net asset value per share

1996 1997 1998 1999 2000 2001 2002 20030

50

100

150

200

250

300

Cen

ts

Closing price of ordinaryand “N” ordinary shares

Sabvest ordinary shares

Sabvest “N” ordinary shares

9

Sabvest Limited

Christopher Stefan Seabrooke (50)BCom, BAcc, MBA, FCMAChief Executive Joined the group in 1980 Appointed Chief Executive in 1987

Haroon Habib (63)*ChairmanAppointed to the board in 1996 andChairman in 2003Chairman, Financial Markets &Investments (Pty) Limited

Philip Coutts-Trotter (57) BCom, MBA Deputy ChairmanAppointed to the board in 1987Executive Chairman, SA Bias IndustriesLimited

Nigel Stuart Hamilton Hughes (49)*BCom, CA(SA), FCMADirectorAppointed to the board in 1987Chairman, Mertrade (Pty) Limited

Ages at 31 December 2003*Independent non-executive directors

Raymond Pleaner (49) BCompt(Hons), CA(SA)Financial Director and Company SecretaryJoined the group in 1985, appointedcompany secretary in 1988 and appointedto the board in 1996

Graham Ernest Nel (56)Pr Eng, BSc Eng, MBL, MSAICEDirectorAppointed to the board in 1997Executive Chairman, Flowmax HoldingsLimited

Ronald Sydney Price (59)*CA, MBADirectorAppointed to the board in 1998Chairman, Eureka Industrial Limited

Executive directors

Non-executive directors

Left to right

Back rowP Coutts-TrotterGE NelNSH Hughes

Front rowH HabibCS SeabrookeR PleanerRS Price

10

O p e r a t i n g p h i l o s o p h y

The philosophies and strategies that guide our approach to our existing holdings and tothe growth in our investment base are as follows:

• We wish to have equity holdings or a meaningful interest in a spread of businesses thatgenerate cash and earn above average returns on capital over a period. The businessesshould have distinct competitive or management advantages in their marketplaces andcompanies with potential for foreign earnings will be favoured.

• Our interests will usually be large minority holdings with sizeable interests held bymanagement with whom we interact as partners.

• We may hold equity interests that are small in percentage terms, but where we are ableto exert influence through board representation and shareholder agreements.Conversely we may hold majority or joint controlling interests but without directmanagement responsibility. Accordingly, we participate in good businesses with first-class management without being restricted by the size of the percentage holding.

• Our approach to our interests is similar to that of a diversified holding company.However, each business in which we are invested is free standing in financial terms, ring-fenced as to risk and separately assessed.

• We do not follow a trading approach to our holdings. We do not acquire or dispose ofinvestments in accordance with a “private equity” type philosophy, nor are weconstrained by any required balance between listed and unlisted holdings. We hold ourinvestments on a long-term basis subject only to continual review of the quality of theunderlying businesses, and to any constraints or obligations in shareholder agreements.

• We will, when necessary, make changes to our holdings or within the businesses in whichwe are invested notwithstanding any short-term accounting consequences.

• We will be reluctant to issue shares for acquisitions or for the purposes of raising fundsunless the value received meaningfully exceeds the value given.

• We respond proactively to under-performance, either by instituting appropriatemeasures together with our partners, or by disposing of our interests in the businessesconcerned.

11

Sabvest Limited

The company and its directors are fully committed to group corporate governance and tothe principles of openness, integrity and accountability in dealing with shareholders and allother stakeholders.

All directors endorse the code of corporate practices and conduct recommended in theKing Report on Corporate Governance in South Africa 2003.

A detailed written review of the company’s compliance with King II was completed duringthe fourth quarter and considered by the board. All the recommendations arising from thereview that applied to Sabvest as an investment holding company, have been or are in theprocess of being implemented, or the reasons for electing non-compliance are stated in thisreport.

Board of directors

The board consists of seven directors, five of whom are non-executive and three of whomare independent. Mr Price is regarded as independent despite the size of his minorityshareholding as the group has a controlling shareholder which is represented on the boardby the Chief Executive.

The roles of the Chairman and Chief Executive have been split. The Chairman is now anindependent non-executive director. The directors consider the mix of technical,entrepreneurial, financial and business skills of the directors to be balanced, thus ensuringthe effectiveness of the board.

The board retains full and effective control over the company and its subsidiaries andmonitors the performance of and decisions of executive management. In addition, thecompany is represented on the boards of all of its associates and investments.

All directors have access to management, including the Company Secretary and to suchinformation as is needed to carry out their duties and responsibilities fully and effectively.All directors are entitled to seek independent professional advice concerning the affairs ofSabvest at the company’s expense.

Directors are subject to election by shareholders at the first opportunity following theirappointment. Directors retire by rotation and stand for re-election by shareholders at leastonce every three years, in accordance with the company’s articles of association.

The board meets at least three times a year. Additional meetings are held when non-scheduled matters arise. In addition, because of the nature of its business, the company hasestablished an effective communication process to facilitate consultation with all directorson an ongoing basis.

The full responsibilities of the board are set out in a written charter adopted by the board.

During the year directors’ attendance at the three board meetings held, in person or byaudio conference, was as follows:

P Coutts-Trotter 3 R Pleaner 3H Habib 3 RS Price 3NSH Hughes 2 CS Seabrooke 3GE Nel 2

The profiles of directors are set out on page 9, shareholdings on page 22, remunerationdetails on page 38 and share scheme allocations on page 40.

12

S t a t e m e n t o f c o r p o r a t e g o v e r n a n c e (continued)

The board has the following committees to assist it with its duties:

• Audit, Governance and Risk Committee; and

• Remuneration and Nominations Committee.

Audit, Governance and Risk committee

The Committee operates within defined terms of reference and authority granted to it bythe board in terms of a written charter. It meets at least twice a year, when the externalauditors and CFO are invited to attend. The Chief Executive also attends by invitation ongovernance and risk issues. The external auditors have unrestricted access to theCommittee.

The principle functions of the Committee are to review the interim and annual financialstatements and accounting policies, monitor the effects of internal controls, assess the risksfacing the business, discuss the findings and recommendations of the auditors and reviewcorporate governance procedures. The audit committee also has the responsibility forrecommending the appointment of auditors to shareholders and for ensuring that there isappropriate independence relating to non-audit services provided by the auditors. Thesenon-audit services are presently taxation, corporate finance, risk and human resources.

The committee comprises the following members:

NSH Hughes (Independent Chairman – Non-executive)GE Nel (Non-executive)

Both members attended in person or by audio conference the two meetings held during theyear.

Remuneration and Nominations committee

The Remuneration and Nominations Committee operates within defined terms of referencegranted to it by the board and meets once or twice annually as required.

The committee determines executive remuneration and incentives, reviews staff costs andrecommends non-executive directors’ fees to shareholders. It conducts appropriate marketreviews relative to these assessments. It also considers the composition and performance ofthe board and its committees and makes recommendations on new appointments.

The committee comprises the following members:

P Coutts-Trotter (Non-executive)NSH Hughes (Independent Chairman – Non-executive)

Both members attended the meeting held during the year in person or by audioconference.

Remuneration of executives and staff

The Remuneration and Nominations Committee ensures that the packages approved forexecutives and staff are competitive in the South African marketplace.

Sabvest’s remuneration policy strives for fixed remuneration in the upper quartiles forcomparable positions with incentives based on qualitative and quantative criteria to afurther 50% of cost to company packages. The committee has the discretion to furtherreward superior individual performance.

13

Sabvest Limited

Both of the executive directors participate in the share incentive scheme by way of interest-free loans for sharespurchased. No options are presently issued or expected to be issued.

E xecutive directors who take the responsibilities of non-executive appointments on the boards of the gro u p ’ sassociates are permitted to receive directors fees’ from those companies (refer page 38). In addition the gro u p ’ sassociates pay consulting fees directly to Sabvest. Mr Seabro o ke also holds other non-executive directorships notd i rectly connected to the group. We believe these enhance the group’s influence and improve the group’s access tonew investments. In addition these appointments also result in additional fee income to the group from time tot i m e .

Non-executive directors receive fees for their role as directors and for their roles on board committees.

Shareholder communication

Sabvest reports formally to shareholders twice a year when its half year and full year results are announced onSENS, in the press and in printed form to shareholders and other parties.

Shareholders are invited to Sabvest’s annual general meeting and encouraged to interact with management inthat forum.

Sabvest’s website www.sabvest.com provides up-to-date financial and business information about the group andincludes electronic copies of all recent formal announcements, statements and financial results.

Share buy-back programme

The company has authority from its shareholders to purchase its own shares through the market up to amaximum of 20% of the issued shares at a price not greater than 10% of that of the preceding five day weightedaverage. These purchases are subject to the Listings Requirements of the JSE Securities Exchange South Africa.

During the financial year, 11 765 ordinary shares and 95 195 “N” ordinary shares have been repurchased. 130 565 ordinary shares and 1 066 075 “N” ordinary shares remain uncancelled and held as treasury shares atthe year-end.

Share dealings

A written code of share dealing has been approved by the board.

No director, executive or employee may deal directly or indirectly in Sabvest shares where that person may beaware of unpublished price sensitive information. In addition, there is a closed period where dealings are notpermitted. This commences at the end of the interim and final reporting periods until the release of the group’sresults or at any time when Sabvest has issued a cautionary announcement.

Sabvest’s directors are similarly restricted relative to its listed associates.

Directors require prior approval from the Chairman or CEO in order to deal in Sabvest shares or those of listedassociates.

BEE

Sabvest is an equal opportunity employer and is committed to non-discriminatory employment and thedevelopment of its staff. It also encourages black economic empowerment practices in all of its associates.

Financial and internal controls

The group’s internal control and accounting systems are designed to provide reasonable, but not absolute,assurances as to the integrity and reliability of the financial information and to safeguard, verify and maintain

14

accountability of its revenue and assets.

The board has considered the group’s major business risks and the control environmentand an independent risk review has been conducted.

The directors are not aware of any material breakdowns in the system of internal financialcontrol during the year.

An internal audit function is not considered appropriate due to the nature and size of thegroup’s business.

Environment

Sabvest encourages the businesses with which it is associated to operate in a manner thatminimises negative effects on the environment and enhances their surroundings, whereverpossible.

Ethics

Sabvest has subscribed to a written code of ethics. It is specifically committed to the higheststandard of integrity and behaviour in dealing with all its stakeholders and those of itsassociates, and with society as a whole.

Disclosure

The annual report deals adequately with disclosures pertaining to financial statements,auditor’s responsibility, accounting records, internal control, risk management, accountingpolicies, adherence to accounting standards, going concern issues, codes of corporategovernance and the JSE Listings Requirements.

Sabvest complies with Section 3.84 of the JSE Listings Requirements relating to corporategovernance.

S t a t e m e n t o f c o r p o r a t e g o v e r n a n c e (continued)

15

The year in retrospect

2003 was a satisfactory year for Sabvest. All seven of the group’s investments made progresswith their strategic plans and either entered new markets or made sound acquisitions.

No new investments were made during the year. Sabvest is once again responsive to newopportunities.

Earnings were lower in both the group’s listed investments, but the unlisted investmentsperformed well notwithstanding the effects of the strong Rand on the translation ofoverseas operations and reduced margins in export divisions.

Continued emphasis has been given to improving the share of earnings from associatespaid to Sabvest in cash and the repayment to Sabvest of non-core investment loans.Additional fee earning activities were also undertaken for third parties.

2003 financial results

Headline earnings increased by 16,5% to 49,5 cents per share. Most of the increase inearnings is attributable to the effects of the introduction of AC133 and the raising of adeferred tax credit relative to STC credits held. The maintenance of earnings on acomparable basis to the prior year is satisfactory in light of the significant reduction of theRand translated earnings of associates. The strong Rand has also resulted in currencytranslation losses which, together with the charge to opening reserves arising from theimplementation of AC133, are reflected in the statement of changes in equity.

Sabvest’s balance sheet remains conservatively structured and the group has borrowingcapacity and free cash flows from investment loans and finance advances to allocate to newopportunities.

Exceptional losses totalled R5,7 million of which R3,8 million related to the restructuring ofthe group’s holdings in Flowmax SA and Set Point Technology Holdings in terms of whichthe investment in Flowmax SA was sold to Set Point in exchange for Set Point shares.

The group is actively involved in seeking the recovery of some of the losses and defendingits rights, where appropriate, arising from former finance operations. The group expects toincur legal costs for at least a further two years in finalising these matters.

Finance advances and receivables have been maintained at an appropriate level to ensurethat the group’s free cash resources are invested at satisfactory interest rates.

Accounting policies

Results for the year have been prepared in accordance with South African Statements ofGenerally Accepted Accounting Practice. The accounting policies used are consistent withthose in the previous financial year other than the introduction of accounting standardAC133 with effect from 1 January 2003.

Strategic overview

The philosophies and strategies that guide our approach to our business interest are set outon page 10 of this report.

Sabvest Limited

16

A n n u a l r e v i e w (continued)

Long-term investments are financed by Sabvest’s equity funds. Borrowings and surplusfunds are utilised for interest-bearing finance advances. Corporate finance and advisory feeswill continue to be earned from associates and clients.

Sabvest has been concentrating on assisting its existing investees in the growth of theiroperations and the implementation of expansion strategies. In addition, Sabvest hasactively tackled any under-performance and disposed of interests in the relevant businesseswhere no other course of action was appropriate. Sabvest’s returns on capital and assets areimproving as a result.

Shareholders’ attention is drawn in particular to Annexure B which gives details of theoperating performance of listed and unlisted associates.

Sabvest has financial and management capacity available and is once again considering newinvestments.

Investment overview

The details of Sabvest’s holdings and a description of their businesses are set out on pages4 and 5 and graphically represented on page 3 of this report.

Sabvest industrial

• Flowmax Holdings Limited (BVI/UK) continues to grow its fluid handling businesses in theUnited Kingdom. These comprise, Alpeco, Action-Sealtite, Central Tank Services (CTS)and Industrial Flow Controls (IFC). The business of Action Hose was acquired duringthe year. These businesses all traded satisfactorily. There was, however, no growth inearnings due to the depressed industrial market in the UK and the rationalisation costsof the two new businesses, IFC and Action Hose.

• Nutritional Foods (Pty) Limited traded exceptionally well during the year with improvedmargins and a material increase in attributable income.

• SA Bias Industries recorded lower earnings than the prior year due to the effects of thestrong Rand on the translation of foreign subsidiaries income and reduced exportmargins in South Africa.

A significant achievement during the year was the increase by SA Bias of its holding inglobal label manufacturer, International Trimmings and Labels plc (ITL) in the UKfrom 55% to 88%. ITL has in turn expanded its international manufacturing operationsinto Turkey and China which will support the group’s manufacturing and sales offices inthe United Kingdom, North America, Sri Lanka, Hong Kong, Turkey and Morocco.

ITL South Africa’s operations continue to benefit from the transfer of internationalexpertise and international chain store accreditations.

The Narrowtex operations in South Africa, which specialise in industrial narrowfabric products such as seat belts and strapping, increased its sales but felt theeffects of the stonger Rand.

The group’s thread business, American & Efird SA (Pty) Limited, had adisappointing year but satisfactory returns were made by other companies in theBitrim division which manufacture and distribute a number of trimmings forthe clothing industry.

17

Sabvest Limited

Overall, SA Bias, which is Sabvest’s largest holding, is in a sound position to reflect continuing improvementsin results over a period and to expand its international footprint.

• Set Point Technology Holdings Limited acquired Flowmax SA and its three operating divisions during the year.The Flowmax acquisitions performed satisfactorily as did Set Point’s Wearcheck division. Its Instrumentsdivision missed its targets and the group recorded reduced earnings for the year. However, cash generationremains sound and dividends were declared for the first time in a number of years.

Management is implementing revised strategies and an improvement is expected in the coming year.

Sabvest distribution and services

• Korbitec Holdings has now reached a break square position after a number of years of steadily reducing itslosses. Its GhostFill and related software businesses have become industry standards in South Africa and arenow being rolled out in the United States. Its Motornostix division which specialises in condition monitoringdevices has completed its technology upgrades and expects improved market penetration in the coming year.

Overall, we have high hopes for Korbitec’s prospects in the years ahead.

• Midsouth Distributors has implemented a new strategic plan and operating efficiencies which have resulted in areturn to sound profitability and growth.

Expansion opportunities and joint ventures are being considered.

• Pr i m e s e rvre c o rded disappointing results during the year due to poor performances from its training andsolutions divisions and a slower than expected turn-around in its outsourcing division. However, its primaryt a rget, namely the strengthening of its balance sheet, has been achieved and the company has resumed dividendp a y m e n t s .

Primeserv expects improved results in the coming year.

Sabvest investments

Investment loans and preference shares are held as a consequence of previous investments. These are expectedto be repaid as scheduled.

Investments sold

Sabvest sold its interest in Flowmax SA to Set Point during the year in exchange for 24 million Set Point shares.

It was concluded on a value-for-value basis and with the intention of improving the critical mass and marketreach of both businesses.

Dividend policy

Dividend payments are considered annually and may vary or be waived depending on the group’s cashrequirements. The extent of dividends will be influenced by operating cash flows and receipts from the non-corecomponents of long-term investments that are not earmarked for new projects.

Sabvest is now resuming dividend payments and hopes to re-establish its previous record as a consistent payer ofcash dividends.

Legal actions

Shareholders’ attention is drawn to the legal actions referred to in note 17.

18

A n n u a l r e v i e w (continued)

Prospects

Sabvest expects a moderate improvement in headline earnings per share in the year ahead,and further growth and enhancement of the core earnings ability of its underlyinginvestments.

Appreciation

We record our appreciation to our co-directors and staff, our legal advisors, banker anauditors for their assistance and support. Our special thanks go to our partners in ourassociated companies for the rewarding and constructive relationships maintained duringthe year.

H Habib CS SeabrookeNon-executive Chairman Chief Executive

Sandton11 March 2004

19

Sabvest Limited

To the members of Sabvest Limited

The directors of the company are responsible for the preparation and integrity of the annualfinancial statements and related financial information included in this report. The financialstatements have been pre p a red in accordance with South African Statements of GenerallyAccepted Accounting Practice. It is the responsibility of the independent auditors to re p o r ton the financial statements. Their report to the members of the company is set out on page20 of the annual report. The financial statements incorporate full and responsible disclosurein line with the accounting philosophy of the group. There is no reason to believe that thebusiness will not continue as a going concern for the foreseeable future. These financialstatements have been approved by the board of directors and are signed on its behalf by:

CS Seabrooke R PleanerChief Executive CFO


The secretary certifies that the company has lodged with the Registrar of Companies allsuch returns as are required of a public company, in terms of the Companies Act, No 61 of1973, as amended, and that all such returns are true, correct and up to date.

R PleanerSecretary


20

R e p o r t o f t h e i n d e p e n d e n t a u d i t o r s

To the members of Sabvest Limited

We have audited the annual financial statements and group annual financial statements ofSabvest Limited set out on pages 4 and 5 and pages 21 to 45 for the year ended 31 December 2003. These financial statements are the responsibility of the company’sdirectors. Our responsibility is to express an opinion on these financial statements based onour audit.

Scope

We conducted our audit in accordance with Statements of South African Auditing Standard s .Those standards re q u i re that we plan and perform the audit to obtain reasonable assurancethat the annual financial statements are free of material misstatement. An audit includes:

• examining, on a test basis, evidence supporting the amounts and disclosures in theannual financial statements;

• assessing the accounting principles used and significant estimates made bymanagement; and

• evaluating the overall annual financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

Audit opinion

In our opinion, the annual financial statements fairly present, in all material respects, thefinancial position of the company and the group at 31 December 2003 and the results oftheir operations and cash flows for the year then ended in accordance with South AfricanStatements of Generally Accepted Accounting Practice, and in the manner required by theCompanies Act in South Africa.

Deloitte & ToucheChartered accountants (SA)


21

Sabvest Limited

Nature of business

Sabvest Group’s main activities are set out in the corporate profile on page 1.

Results of operations

The results of operations for the year ended 31 December 2003 are reflected in theattached annual financial statements.

Subsidiaries

Details of the company’s interest in its consolidated subsidiaries appear in Annexure A1,which forms part of this report.

Going concern

The directors are of the opinion that the business will be a going concern in the year ahead.In reaching this decision, the directors considered the following factors:

• There have been no recurring operating losses.

• Working capital remains well controlled and receivables are of sound quality.

• Investment impairment tests are up to date and no investments appear over-valued.

• Cash flows are positive.

• The budget reflects a continuation of positive trading and financial performance.

• The group has sufficient borrowing capacity.

• The group has no need to dispose of any assets or undertake a capital restructuring.

• Key executive management is in place.

• The board is not aware of any material changes that may adversely impact the grouprelative to customers, suppliers, services or geographic markets.

• The group is not aware of any non-compliance with statutory or regulatory requirementsand there are no pending legal proceedings other than in the normal course of businessor where the group does not expect to incur loss.

• There are no pending changes in government legislation that may adversely affect thegroup.

22

D i r e c t o r s ’ r e p o r t (continued)

Share capital and share premium

A subsidiary of the company holds 130 565 (2002: 118 800) ordinary shares and 1 066 075(2002: 970 880) “N” ordinary shares in treasury at a combined cost of R2,1 million (2002: R1,9 million). Details of the amounts set-off against the share capital and share premium ofthe group are set out in notes 1.1 and 1.2.

At the annual general meeting held on 23 April 2003 a special resolution was passed as ageneral approval, as contemplated in Sections 85(2) and 85(3) of the Companies Act No 61of 1973, as amended, for the acquisition of ordinary and “N” ordinary shares issued by thecompany.

Investments

Details of the group’s investments are set out on pages 4 and 5.

Directors’ interests

The directors’ beneficial and non-beneficial direct and indirect holdings in the ordinaryshares and the “N” ordinary shares of the company at 31 December 2003 were as follows:

2003Ordinary “N” ordinary Total

shares shares Total 2002000’s 000’s 000’s 000’s

ExecutiveCS Seabrooke 11 544 2 195 13 749 13 529R Pleaner 21 1 003 1 024 1 024

Non-executiveP Coutts-Trotter 5 4 9 209H Habib – – – –NSH Hughes – – – –GE Nel – – – –RS Price 2 600 14 985 17 585 17 585

14 180 18 187 32 367 32 347

Dividends

A dividend of 3 cents per share has been declared subsequent to the year-end.

Directors and secretary

Details of the present board of directors and the secretary appear on page 9. Messrs Habib,Seabrooke and Nel retire at the forthcoming annual general meeting but, being eligible,offer themselves for re-election.

23

Sabvest Limited

Controlling entity

The company has no holding company. A controlling interest in the company is held by The Seabrooke FamilyTrust.

Special resolution of subsidiary

Sabvest Financial Services (Pty) Limited passed a special resolution dated 12 November 2003 to increase itsauthorised share capital from 4 000 ordinary shares of R1,00 each to 20 000 ordinary shares of R1,00 each.

24

C o n s o l i d a t e d b a l a n c e s h e e t

2003 2002Notes R’000 R’000

Ordinary share capital and premium 1 49 668 49 909Reserves 2 81 827 89 128

Ordinary shareholders’ equity 131 495 139 037Interest-bearing debt 3 5 852 10 888Accounts payable 4 1 494 2 635

Total equity and liabilities 138 841 152 560

Fixed assets 5 1 202 934Deferred taxation 724 –Investments 6 122 563 130 016

Listed 18 494 10 664Unlisted 100 405 115 362Goodwill 3 664 3 990

Finance advances and receivables 13 693 20 681Cash balances 7 659 929

Total assets 138 841 152 560

Net asset value per share – cents 292 307Net tangible asset value per share – cents 283 299

25

Sabvest Limited

2003 2002Notes R’000 R’000

Gross income from operations and investments 31 217 31 062

Dividends received 2 048 1 674Interest received 5 720 3 270Fees and other income 2 658 2 722Share of equity accounted retained income 20 791 23 396

Interest paid 2 191 3 528

Net income from operations and investments 29 026 27 534Operating costs 7 402 6 339

Net income before exceptional items 8 21 624 21 195Exceptional losses 9 (5 733) (5 214)

Group (2 656) (112)Net losses arising from former finance operations 7 (6 296)Associates (1 606) 1 331Amortisation of goodwill (1 478) (237)Associates impairment (provision)/recovery – 100

Net income/(loss) before taxation 15 891 15 981Taxation – deferred 10 724 –

Net income/(loss) attributable to ordinary shareholders 16 615 15 981

Headline earnings per share – basic and diluted (cents) 11 49,5 42,5Earnings/(Loss) per share – basic and diluted (cents) 12 36,8 34,5

Dividend proposed per share (cents) 3,0 –

26

C o m p a n y b a l a n c e s h e e t

2003 2002Notes R’000 R’000

Ordinary share capital and premium 1 51 779 51 779Reserves 2 (6 577) (321)

Ordinary shareholders’ equity 45 202 51 458Current liabilities 51 51

Accounts payable 4 51 51


Non-current assets 3 015 19

Investment in subsidiaries 6 3 015 19

Current assets 42 238 51 490

Loans to subsidiaries 42 195 51 484Cash balances 7 43 6

Total assets 45 253 51 509

2003 2002Notes R’000 R’000

Dividends received – 2 204

Net income before exceptional items 8 – 2 204Impairment provisions/recoveries 14 (6 256) (18 257)

Net loss for the year (6 256) (16 053)

27

Sabvest Limited

GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

Cash flows from operating activities (2 712) (5 208) – 2 202

Net income/(loss) after taxation 16 615 15 981 (6 256) (16 053)Adjustments for:

Depreciation 441 393 – –Retained income of associated companies (20 791) (23 396) – –Exceptional items 3 084 (2 693) – –Imputed interest earned (2 701) – – –Deferred taxation (724) – – –Impairments – – 6 256 18 257Loss on sale of investments 2 656 6 807 – –Profit on sale of fixed assets (151) – – –Increase/(Decrease) in accounts payable (1 141) (2 300) – (2)

Cash flows from operations (2 712) (5 208) – 2 202Dividends paid – – – –

Cash flows from investing activities 7 719 26 469 37 (31)

Purchase of fixed assets (763) (80) – –Proceeds from sale of fixed assets 204 35 – –Purchase of investments/repayment of investment loans (730) (11 111) – –Proceeds from sale of investments – 38 127 – 1Increase in investment in subsidiary – – (2 996) –(Increase)/Decrease in loans to subsidiaries – – 3 033 (32)(Increase)/Decrease in finance advances and receivables 9 008 (502) – –

Cash effects of financing activities (241) (2 666) (2 204)

Repurchase and cancellation of shares lessshares held in treasury at beginning of year – (796) – (2 204)Purchase of company shares held in treasury (241) (1 870) – –

Change in cash and cash equivalents 4 766 18 595 37 (33)Cash and cash equivalents at beginning of year* (9 959) (28 554) 6 39

Cash and cash equivalents at end of year* (5 193) (9 959) 43 6

*Calculated on the difference between interest-bearing debt and cash on hand.

28

S t a t e m e n t s o f c h a n g e s i n e q u i t y

GroupNon-

distri- Distri-Share Share butable butable

capital premium reserve reserve TotalR’000 R’000 R’000 R’000 R’000

Balance as at 31/12/01 880 52 160 92 195 (7 057) 138 178Shares held in treasury – written back 6 937 943Shares held in treasury – cancelled (17) (2 187) (2 204)Shares held in treasury (6) (1 864) (1 870)Translation of foreign subsidiary/associates (11 806) (11 806)Variation of interest in subsidiary/associates 465 465Attributable income of associates 7 419 (7 419) –Movement in translation reserves of associates (650) (650)Net profit for the year 15 981 15 981

Balance as at 31/12/02 863 49 046 87 623 1 505 139 037AC133 adjustment – opening balance (9 938) (9 938)Shares held in treasury – written back 6 1 864 1 870Shares held in treasury (7) (2 104) (2 111)Translation of foreign subsidiary/associates (5 978) (5 978)Attributable income of associates 15 184 (15 184) –Movement in translation reserves of associates (8 000) (8 000)Net profit for the year 16 615 16 615

Balance as at 31/12/03 862 48 806 88 829 (7 002) 131 495

CompanyDistri-

Share Share butablecapital premium reserve TotalR’000 R’000 R’000 R’000

Balance as previously stated at 31/12/01 886 53 097 98 983 152 966Adjustment (83 251) (83 251)

Restated balance at 31/12/01 886 53 097 15 732 69 715Ordinary shares repurchased and cancelled (17) (2 187) (2 204)Net loss for the year (16 053) (16 053)

Balance as at 31/12/02 869 50 910 (321) 51 458Net loss for the year (6 256) (6 256)

Balance as at 31/12/03 869 50 910 (6 577) 45 202

29

Sabvest Limited

Accounting policies

The financial statements are prepared on the historical cost basis and incorporate the followingprincipal accounting policies which are consistent with those adopted in prior years other than theintroduction of accounting Standard AC133 from 1 January 2003. The effect of the introductionon AC133 is disclosed in the statements of changes in equity.

Basis of consolidation

The consolidated financial statements include the financial statements of the company and itssubsidiaries. Results of subsidiaries are included from the effective date of acquisition to theeffective date of disposal.

Associated companies

Associate companies are those companies over which the group exercises significant influence andin which it holds long-term equity interests, but which are not subsidiaries.

Associated companies are accounted for using the equity method of accounting.

If an associated company applies accounting policies that are recognised as being materiallyd i f f e rent to those adopted by the group, adjustments are made to the financial statements of theassociated company prior to equity accounting in order to obtain consistency of approach to pro f i tre c o g n i t i o n .

Equity accounted income is transferred to a non-distributable reserve.

In cases where the associated company is listed, the most recent published financial results areused and where the associated company is unlisted, the latest consolidated managementinformation is used.

Investments

Long-term investments are included at carrying value in the consolidated financial statements.Short-term investments are included at cost. On disposal of investments the profit or loss isaccounted for as the difference between the consideration received and the carrying value of theinvestment at the disposal date and is included in exceptional items in the financial statements.

Financial instruments

Financial assets and financial liabilities are recognised on the group’s balance sheet when thegroup has become a party to the contractual provisions of the instrument.

Financial instruments recognised on the balance sheet include cash and cash equivalents,investments, trade receivables, trade creditors and borrowings. The group enters into financialinstruments to reduce exposure to fluctuations in foreign exchange and interest rates.

Derivative financial instruments are initially recorded at cost and are remeasured to fair value atsubsequent reporting dates.

Changes in the fair value of derivative financial instruments that are designated and effective ascash flow hedges are recognised directly in equity. Amounts deferred in equity are recognised inthe income statements in the same period in which the hedged firm commitment or forecasttransaction affects net profit or loss.

Interest-bearing loans and overdrafts are recorded at the proceeds received, net of direct issuecosts. Finance charges, including premiums payable on settlement or redemption, are accountedfor on an accrual basis and are added to the carrying amount of the instrument to the extent thatthey are not settled in the period in which they arise.

30

A c c o u n t i n g p o l i c i e s (continued)

Originated loans and receivables are measured initially at fair value. The loans andreceivables are measured subsequently at amortised cost using the effective interest ratemethod. If the terms of a loan or receivable are not market-related, the payments arediscounted at a market related rate to determine the fair value at initial recognition.

Fixed assets and depreciation

Fixed assets are reflected at cost and depreciation is provided on a straight-line basiscalculated to write off the cost over the effective life of the assets. The principaldepreciation rates are:

Office furniture and equipment 10%Motor vehicles 20%Computers and leasehold improvements 33,3%

Foreign currencies

The assets and liabilities of foreign subsidiaries are translated into South African currencyat rates of exchange ruling at the balance sheet date and profits and losses at the weightedaverage rate of exchange for the year. Translation differences arising are either credited to aforeign currency translation reserve or written off against reserves.

Goodwill

Goodwill arising on the acquisition of an associated company is amortised or written backover the useful life of the associated company or should there be an impairment to thevalue of an associate, it is written down.

Goodwill on acquisition of an associated company in foreign subsidiaries is translated at theexchange rate arising at the date when the goodwill arose.

Amortisation is provided on a straight-line basis at a rate of 5%.

Impairment provisions

Associate companies and investments are considered annually for indications impairments.If, in the opinion of the directors there is an impairment, an impairment provision isdeducted from the carrying value of the associate company or investment. Impairmentprovisions created or reversed during the year are written off/written back through theincome statement. Where there is a reversal of an impairment loss the asset is increased tothe estimated recoverable value which will not be greater than the carrying value had noimpairment loss been recognised in the prior years.

Provisions

Specific impairment provisions or debt write-offs may be deducted from finance advancesor investments where in the opinion of the directors recoverability is doubtful or unlikely.

Revenue recognition

Revenue is recognised only when it is probable that the economic benefits associated withthe transaction will flow to the group and the amount of revenue can be estimated.

Dividends from investments are recognised when the right to receive payment is established.

Interest is recognised on a time proportion basis.

Capitalisation shares elected in lieu of a cash dividend are accounted for in investmentincome at the cash dividend equivalent.

31

Sabvest Limited

GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

1. Share capital1.1 Share capital

Authorised24 000 000 ordinary shares of 5 cents each 1 200 1 200 1 200 1 20080 000 000 “N” ordinary shares of 0,01 cent each 8 8 8 8

Issued17 326 549 (2002: 17 326 549) ordinary shares of 5 cents each 866 866 866 86628 979 854 (2002: 28 979 854) “N” ordinary shares of 0,01 cent each 3 3 3 3

869 869 869 869

Issued, net of shares in treasury 17 195 984 (2002: 17 207 749) ordinary shares 27 913 779 (2002: 28 008 974) “N” ordinary shares.

The unissued “N” ordinary shares areunder the control of the directors until the forthcoming annual general meeting.

1.2 Share premiumAt beginning of year 50 910 53 097 50 910 53 097Ordinary shares repurchased and cancelled – (718) – (718)“N” ordinary shares re p u rchased and c a n c e l l e d – (1 469) – (1 469)

At end of year 50 910 50 910 50 910 50 910

S h a re capital and premium before shares held in tre a s u r y 51 779 51 779 51 779 51 779Less: 130 565 (2002: 118 800) ordinary and 1 066 075 (2002: 970 880) “N” ordinary shares held in treasury (2 111) (1 870) – –

Share capital and premium 49 668 49 909 51 779 51 779

32

N o t e s t o t h e f i n a n c i a l s t a t e m e n t s (continued)

GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

2. Reserves2.1 Non-distributable reserves

On translation of foreign subsidiary/associated companies– prior years 10 506 22 312 – –– current year (5 978) (11 806) – –On movement on NDR of associates– prior years 6 072 6 722 – –– current year (8 000) (650) – –Variation of interest in subsidiary/associated companies– prior years 3 329 2 864 – –– current year – 465 – –Attributable incomeof associated companies– prior years 67 154 59 735 – –– current year 15 184 7 419 – –

Capital redemption reserve fund 562 562 – –

88 829 87 623 – –

2.2 Distributable reserveRetained income at beginning of year 1 505 (7 057) (321) 15 732AC133 adjustment – opening balance (9 938) – – –Retained income/(Loss) for the year 1 431 8 562 (6 256) (16 053)

Accumulated loss at end of year (7 002) 1 505 (6 577) (321)

Total reserves 81 827 89 128 (6 577) (321)

3. Interest-bearing debtShort-termSouth African rand borrowing

Bank advances 2 359 – – –Other 3 493 10 888 – –

5 852 10 888 – –

The interest-bearing debt has no fixed terms of repayment.

Interest on South African rand borrowings is paid at variable rates between prime minus 2%and prime plus 2% per annum.

Included within other debt in 2002 is an amount of R9 025 000 relating to a vendor claim onwhich interest accrued and was previously disclosed under accounts payable.

33

Sabvest Limited

GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

4. Accounts payableOther 1 494 2 635 51 51

1 494 2 635 51 51

Office furniture,equipment, computers

Motor and leaseholdvehicles improvements Total

R’000 R’000 R’000

5. Fixed assets2003 GroupBeginning of year

Cost 1 277 1 804 3 081Accumulated depreciation (1 004) (1 143) (2 147)

Net book value 273 661 934

Current year movements Additions 599 164 763Net disposals (7) (47) (54)Depreciation (292) (149) (441)

Total movement 300 (32) 268

Comprising the following: Assets at cost 1 589 1 890 3 479Accumulated depreciation (1 016) (1 261) (2 277)

Net book value 573 629 1 202

2002 GroupBeginning of year

Cost 1 342 1 724 3 066Accumulated depreciation (805) (979) (1 784)

Net book value 537 745 1 282

Current year movements Additions – 80 80Net disposals (35) (35)Depreciation (229) (164) (393)

Total movement (264) (84) (348)

Comprising the following: Assets at cost 1 277 1 804 3 081Accumulated depreciation (1 004) (1 143) (2 147)

Net book value 273 661 934

34


GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

6. Investments6.1 Investment in subsidiaries

Shares at cost less impairments 3 015 19

6.2 InvestmentsListedAt cost 29 446 23 084AC133 adjustment – –

AC133 adjustment – opening balance – –AC133 movement for the year – –

Cost after adjusting for AC133 29 446 23 084Share of post-acquisition reserves 4 810 3 342

Movement on NDR – –Variation of interest/translation offoreign associates – –Retained income 4 810 3 342

Carrying value before impairment 34 256 26 426Impairment provision (15 762) (15 762)

Carrying value per balance sheet – listed 18 494 10 664

Goodwill – 92

Directors’ valuation – listed 18 494 11 479

Market valuation – listed 20 500 10 695

UnlistedAt cost 30 755 41 468AC133 adjustment (7 359) –

AC133 adjustment – opening balance (9 938) –AC133 movement for the year 2 579 –


Movement on NDR (1 928) 6 072Variation of interest/translation of foreign associates 1 409 4 010Retained income 77 528 63 812

Carrying value before impairment 100 405 115 362Impairment provision – –

Carrying value per balance sheet – unlisted 100 405 115 362

Goodwill 3 664 3 990

Directors’ valuation – unlisted 130 026 149 119

35

Sabvest Limited

GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

6. Investments (continued)6.2 Investments (continued)

TotalAt cost 60 201 64 552AC133 adjustment (7 359) –

AC133 adjustment – opening balance (9 938) –AC133 movement for the year 2 579 –


Movement on NDR (1 928) 6 072Variation of interest/translation offoreign associates 1 409 4 010Retained income 82 338 67 154

Carrying value before impairment 134 661 141 788Impairment provision (15 762) (15 762)

Carrying value per balance sheet – total 118 899 126 026

Goodwill 3 664 3 990

Directors’ valuation – total 148 520 160 598

Included in the cost are investment loans after adjusting for AC133, which total R22 720 000 (2002: R37 420 000). These loans are repayable over various terms and bear interest at rates varying between 8% and 17%.

6.3 Total share of post-acquisitionreservesShare of post-acquisition reserves at beginning of year 77 236 75 765Movement on NDR of associates for the year (8 000) (650)Variation of interest/translation of foreign associates (2 601) (5 298)Equity retained income for the year 20 791 23 396Share of associates exceptional profit/(losses) (1 606) 1 331Disposals during the year (4 001) (17 308)

S h a re of post-acquisition reserves at end of year 81 819 77 236

6.4 Impairment provisionImpairment provision at beginning of year (15 762) (36 299)Impairment provision on investments sold – 22 507Impairment provision for the year (1 970)

Impairment provision at end of year (15 762) (15 762)

36


GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

6. Investments (continued)6.5 Goodwill

Goodwill at beginning of year 3 990 4 094Goodwill arising on acquisitions during the year 1 152 133Amortisation of goodwill for the year (234) (237)Write-off of goodwill for the year (1 244) –

Goodwill at end of year 3 664 3 990

6 . 6 Summarised financial informationRefer to Annexure B.

7. Cash balancesCash at bank 659 929 43 6

659 929 43 6

8. Net income beforeexceptional itemsThis is stated after crediting:

Income from subsidiaries – dividends – 2 204Profit on sale of fixed assets 151 –Gain on revaluation of forward exchange 120 –

And after charging:Fees – audit 206 188Fees – other 197 273Consulting fees 76 208Depreciation (refer to note 5) 441 393Rent paid – offices 405 303 Payroll costs 3 604 3 111Retirement benefits 237 218Other 2 236 1 645

9. Exceptional itemsNet loss on sale of associates (2 656) (112) – –Net costs and losses arising from the group’sformer finance operations 7 (6 296) – –

(2 649) (6 408) – –Share of associate companies’ exceptional (losses)/profits (1 606) 1 331 – –Amortisation of goodwill (1 478) (237) – –Associate recovery/(impairment) provisions – 100 – –

Net exceptional losses (5 733) (5 214) – –

37

Sabvest Limited

GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

10. Taxation10.1 Charged for the year

South African normal taxation – – – –

10.2 Taxation rate reconciliation % % % %Standard rate of taxation 30 30 30 30Rate of taxation for the year affectedby non-taxable income (30) (30) (30) (30)

– – – –

10.3 Deferred tax asset (on STC credits) 724 –

Two of the group’s subsidiaries have assessed losses for taxation purposes. As these are not yet earning net income, no deferred tax asset has been raised. The unutilised estimated assessed losses relating to the subsidiaries amounts to R155 million.

Unutilised STC credits amount to R25 million.

11. Headline earnings per shareHeadline earnings per share compriseattributableincome adjusted by certain exceptionalgains/(losses) attributable to ordinaryshareholders divided by the weighted averagenumber of shares in issue as follows:Income/(Loss) attributable to ordinaryshareholders 16 615 15 981Add exceptional losses 5 733 3 714

Headline earnings 22 348 19 695

The weighted average number of shares used in the calculation for the current year is 45 144 306 (2002: 46 320 158).

12. Earnings per shareEarnings per share re p resents the profits in cents attributable to each share and compriseattributable income divided by the weighted average number of shares in issue during the year.The weighted average number of shares used in the calculation for the current year is45 144 306 (2002: 46 320 158). There are no potentially dilutive shares.

38


2003 2002 2003 2002 2003 2002R’000 R’000 R’000 R’000 R’000 R’000

13. Directors’ emolumentsExecutive directors CS Seabrooke R PleanerBasic remuneration 1 090 1 000 665 610 1 755 1 610Retirement andmedical benefits 119 108 113 94 232 202Incentive bonuses 450 300 250 250 700 550Other benefits 153 125 52 52 205 177

Total remuneration 1 812 1 533 1 080 1 006 2 892 2 539Paid by subsidiaries (1 812) (1 533) (1 080) (1 006) (2 892) (2 539)

– – – – – –

Non-executive directorsFees as directors 190 138

Philip Coutts-Trotter 45 29Haroon Habib 40 20Nigel Stuart Hamilton Hughes 40 26Graham Ernest Nel 35 23Philip Pencharz – 20Ronald Sydney Price 30 20

190 138

Some of the directors are shareholders, directors or executives of certain of the gro u p ’ sassociated companies from which they receive remuneration for services, unlinked to servicesperformed for Sabvest. Sabvest itself receives consulting fees directly from these companiesfor services provided to them by executive directors and staff of Sabvest as reflected in theg roup income statement. In addition Mr CS Seabro o ke received directors’ fees from certainof Sabvest’s associates in his capacity as a non-executive director of those companies of R610000 (2002: R640 000). Interest free loans to or on behalf of directors are reflected in note 20.

GROUP COMPANY

2003 2002 2003 2002R’000 R’000 R’000 R’000

14. RevenueRevenue, which is stated for statutory purposes, comprises dividends, interest and sundry income 10 426 7 666 – 2 204

39

Sabvest Limited

15. Prior year adjustment

The company’s equity interest in and loans to Sabvest Finance and Gurantee Corporationwere impaired at 31 December 2001. This had the effect of reducing the closingdistributable reserves of the company at 31 December 2001 by R83 251 000. The companyimpaired its loan further during the 2002 and 2003 financial years.

16. Contingent liabilities and commitments

16.1 The company has guaranteed R4 million (2002: R10 million) of senior loans payableby SA Bias Industries Limited. This reduced to nil on 31 January 2004.

16.2 The company has given put options of R21,5 million (2002: R22 million) to holdersof redeemable preference shares in SA Bias Industries Limited which have due datesin 2004 to 2009.

16.3 The group or its bankers have given no guarantees (2002: R4,1 million) in respect offacilities granted to clients or associates.

16.4 Group companies provide guarantees, letters of comfort or undertakings relative to corporate finance or investment transactions in progress from time to time. At theyear-end these amounted to R4,1 million (2002: R7,2 million).

16.5 The group has rights and obligations in terms of shareholder or purchase and saleagreements relating to certain of its present or former investments.

17. Legal actions

17.1 The group has responded fully to a demand made in 2002 for an accounting anddebatement of account between one of its subsidiaries and a former associatecompany, The New Republic Bank Limited (NRB). Sabvest’s legal advisors do notexpect any liability to arise from this process. It is intended to submit this toarbitration in 2004/5.

17.2 One of the group’s directors, Mr CS Seabrooke, responded in June 2002 to claimsmade in January 2002 by NRB allegedly arising from the purchase by NRB of one ofSabvest’s subsidiaries in 1993. No further communication has been received in thisregard. Sabvest’s legal advisors do not expect any liability to arise from this process.

40


18. Related party transactionsRelated party transactions can exist between subsidiaries and the holding company, fellowsubsidiaries, associated companies and key management personnel. The subsidiaries of thegroup are identified in Annexure A1 and the associated companies on pages 4 and 5.

Transactions between the holding company, its subsidiaries and fellow subsidiaries relate todividends and interest. The income and loans are regarded as intergroup transactions andare eliminated on consolidation.

Transactions between the holding company, its subsidiaries and associated companies relateto fees, dividends and interest and these are reflected as income in the income statement.Approximately 90% of the group’s income is generated from the group’s associates.

Long-term loans to associates are included in investments in the balance sheet and short-term finance advances and receivables.

Transactions with directors relate to fees and are disclosed in note 13 and monies lent tothe group by companies controlled by directors are included in interest-bearing liabilitiesin the balance sheet and foreign exchange contracts are included in note 19.

All the above transactions are concluded under terms and conditions that are no lessfavourable than those available from third parties.

19. Financial instrumentsFluctuations in interest rates impact on the value of short-term cash investments andfinancing activities, giving rise to interest rate risk. As part of the process of managing thegroup’s interest rate risk, interest rate characteristics of new borrowings and the refinancingof existing borrowings are positioned according to expected movements in interest rates.Details of interest rates relating to borrowings are shown in note 3.

Credit risk arises from the risk that a counterparty may default or not meet its obligationstimeously. The group minimises credit risk by ensuring that credit risk is spread over anumber of counterparties and by giving due consideration to the counterparties to whichloans are granted.

The company has entered into foreign exchange contracts with banking institutions. Thefair value of these financial instruments amounts to R120 480.

The group has entered into a number of interest swap agreements with banking institutions.

In the opinion of the directors, the fair value of financial instruments approximates theirbook value.

20. Retirement benefit informationAll eligible employees are members of the group’s pension scheme which operates on thedefined contribution basis, where employee benefits are determined according to eachmember’s equitable share of the total assets of the fund. The fund is reviewed actuarially onan annual basis and every three years a statutory valuation is performed and submitted tothe Registrar of Pension Funds. The fund is governed by the Pension Fund Act of 1956.Retirement costs are expensed in the year in which they are incurred. The fund was valuedduring the 2001 financial year and was found to be financially sound by independentconsulting actuaries. The next actuarial valuation will be in 2004.

41

Sabvest Limited

21. Sabvest Limited Share TrustThere were Nil (2002: nil) ordinary shares and 650 (2002: 36 900) “N” ordinary sharesunallocated at the year-end.

Interest-free loans from the share trust were as follows:

2003 2002R’000 R’000

CS Seabrooke (Seabrooke Family Trust) 2 455 2 455R Pleaner 990 990

The loans are repayable in terms of Share Trust Deed.

22. Capital commitmentsThere were no capital commitments at year-end.

23. Subsequent eventsOther than the proposed dividend, there were no events subsequent to 31 December 2003and the date of approval of the financial statements that require adjustments to the annualfinancial statements.

24. Borrowing powersThe borrowing powers of the group are not limited.

25. Comparative figuresComparative figures have been restated where necessary.

42

A n n e x u r e A 1

ProportionAmount held directly Book value of interest

Nature of issued or indirectly Shares Indebtednessof capital 2003 2002 2003 2002 2003 2002business R % % R’000 R’000 R’000 R’000

Sabvest Investment 4 000 100 100 4 4 7 513 17 993Investments holding(Pty) Limited company

Sabvest Financial Corporate 5 000 100 100 3 000 4Services services(Pty) Limited

Sabvest Dormant 10 000 100 100 10 10Securities(Pty) Limited

Sabvest Finance Finance Ord 100 100 1 1 34 682 33 491and Guarantee and 6 000Corporation guaranteesLimited

Sabvest Capital Investment US$2 100 100 Holdings Limited holding(BVI) company

and corporatefinancer

SD Nominees Nominee 1 000 100 100(Pty) Limited company

Investment in subsidiaries 3 015 19Indebtedness included in the company’s assets 42 195 51 484

Aggregate net income/(loss) after taxation, exceptional items and amortisation of goodwill attributable to Sabvest Limited’s interest in its subsidiaries 16 615 15 981

SABVEST LIMITED

Sabvest Finance andGuarantee Corporation

Limited

Sabvest Capital HoldingsLimited (BVI)

Sabvest Financial Services (Pty) Limited

Sabvest Investments(Pty) Limited

Sabvest Securities(Pty) Limited*

SD Nominees(Pty) Limited*

*Dormant

100%

100%

43

Sabvest Limited

44

A s s e t s , l i a b i l i t i e s a n d i n c o m e o f a s s o c i a t e s

2003 2002R’000 R’000

1. Listed1.1 Primeserv Group Limited

Period: 12 months to 30 June 2003

Shareholders’ funds 47 232 79 214Interest-bearing debt 18 210 31 858Non-interest-bearing debt 33 451 34 466


Non-current assets 20 762 45 338Current assets 78 131 100 200

Total assets 98 893 145 538

Revenue 464 046 532 924EBIT 7 172 13 784Headline earnings 3 826 6 522Headline earnings per share – cents 3,0 4,7Dividends proposed 0,5 –

1.2 Set Point Technology Holdings LimitedPeriod: 12 months to 31 August 2003

Shareholders’ equity 58 938 38 322Vendors’ loans 450 450Minority interests 4 978 –

Total shareholders’ funds 64 366 38 772Interest-bearing debt 36 823 26 038Non-interest-bearing debt 46 697 37 880


Non-current assets 56 697 29 006Current assets 91 189 73 684

Total assets 147 886 102 690

Revenue 219 293 189 603EBIT 17 643 19 759Headline earnings 7 499 11 424Headline earnings per share – cents 3,6 6,5Dividends proposed 1,0 –

2. UnlistedAggregated comprising:

Flowmax Holdings Limited, Midsouth Distributors (Pty) Limited,Nutritional Foods (Pty) Limited and SA Bias Industries LimitedPeriod: 12 months to 31 December *

Shareholders’ equity 186 648 190 303Minorities 21 873 44 628Shareholders’ loans 28 470 57 232

Total shareholders’ funds 236 991 292 163Interest-bearing debt 60 948 89 135Non-interest-bearing debt 132 599 150 407


Non-current assets 120 325 126 954Intangible assets 20 457 40 816Current assets 289 756 363 935

Total assets 430 538 531 705

Revenue 716 388 896 217EBIT 73 611 112 842Attributable income 41 536 49 122Headline earnings 42 281 52 922

*Based on management accounts as subsequently adjusted by audited accounts.Note: 2002 figures include Flowmax Investments (Pty) Limited group and are therefore not comparable to 2003.

45

Sabvest Limited

Shareholder analysis at 31 December 2003*

Ordinary shares “N” ordinary sharesNumber of % of total Number of Number of % of total Number of

Category shareholders shareholders shares held shareholders shareholders shares held

Banks and nominee companies 6 5,7 46 036 14 4,0 626 565Investment and trust companies 9 8,5 12 152 435 13 3,7 8 241 505Other corporate bodies 12 11,3 4 389 902 23 6,5 15 731 145Individuals 79 74,5 607 611 301 85,8 3 314 564

106 100,0 17 195 984 351 100,0 27 913 779

Principal shareholders*1

Shareholders whose holdings of ordinary and “N” ordinary shares in the company total more than 2 000 000shares:

Ordinary shares “N” ordinary shares OverallNumber % of Number % of % of

of shares issued of shares issued votingName held shares held shares rights

Seabrooke Family Trust* 11 554 000 67,2 2 195 000 7,9 67,0

Utas Investments (Pty) Limited 2 600 000 15,1 10 685 378 38,3 15,2

Ellerine Brothers (Pty) Limited 500 150 2,9 1 581 187 5,7 2,9

Gingko Trading CC 274 000 1,6 1 874 760 6,7 1,6

14 928 150 86,8 16 336 325 58,6 86,7

*Including Comfin Capital (Pty) Limited.

Shareholder spread*

% ordinary % “N” ordinary % overallshares in issue shares in issue shares in issue

Non-public shareholders

Directors 82,5 65,2 71,8

Public shareholders 17,5 34,8 28,2

100,0 100,0 100,0

Note: Directors holdings are set out on page 22.

Stock Exchange Performance

JSE Securities Exchange Ordinary “N” ordinarySouth Africa 2003 2002 2003 2002

Closing price (cents) 200 200 180 171

Highest price (cents) 300 220 285 200

Lowest price (cents) 180 121 171 120

Total number of shares traded (’000) 47 352 356 1 510

Total value of shares traded (R’000) 100 561 705 2 359

Total number of transactions recorded 15 26 32 77

Total volume of shares traded as a percentage of total issued shares (%) 0,3 2,1 1,3 5,4

*1Calculations are based upon actual number of shares in issue less shares held in treasury.

46

N o t i c e t o s h a r e h o l d e r s

Sabvest LimitedRegistration number 1987/003753/06

ISIN: ZAE000006417 – ordinary sharesShare code: SBV – ordinary shares

ISIN: ZAE000012043 – “N” ordinary sharesShare code: SVN – “N” ordinary shares

Notice is hereby given that the annual general meeting of shareholders will be held in the boardroom at Ground Floor, Commerce Square, Building 4, 39 Rivonia Road,Sandhurst, Sandton at 12h00 on Thursday, 3 June 2004 for the purpose of consideringand, if deemed fit, passing, with or without modification, the following resolutions andtransacting the following business:

1. Ordinary resolution number one

“RESOLVED that the audited annual financial statements of the company and itssubsidiaries incorporating the auditors’ and directors’ reports for the financial yearended 31 December 2003 be and are hereby approved and confirmed.”

2. Ordinary resolution number two

“ R E S O LVED that the re-appointment of Mr H Habib in terms of article 13 of the Articlesof Association of the company, as director of the company for a further term of office beand it is hereby authorised and confirmed.”

3. Ordinary resolution number three

“RESOLVED that the re-appointment of Mr CS Seabrooke in terms of article 13 of theArticles of Association of the company, as director of the company for a further term ofoffice be and it is hereby authorised and confirmed.”

4. Ordinary resolution number four

“RESOLVED that the re-appointment of Mr GE Nel in terms of article 13 of theArticles of Association of the company, as director of the company for a further term ofoffice be and it is hereby authorised and confirmed.”

A profile of the aforesaid directors can be found on page 9 of the annual report.

5. Ordinary resolution number five

“RESOLVED that Messrs Deloitte be re-appointed as auditors of the company.”

6. Ordinary resolution number six

“ R E S O LVED that, subject to not less than 75% (seventy-five per cent) of thoses h a reholders of the company, present in person or by proxy and entitled to vote at theannual general meeting at which this ordinary resolution number six is to be considere d ,voting in favour thereof, the directors of the company be and they are hereby authorisedby way of a general authority to issue all or any of the “N” ordinary shares and up to1 million of the ordinary shares for cash as they in their discretion deem fit, subject tothe following limitations:

47

Sabvest Limited

– the authority shall be valid until the date of the next annual general meeting of the company, provided itshall not extend beyond 15 (fifteen) months from the date of this annual general meeting;

– a paid press announcement giving full details, including the impact on net asset value and earnings pers h a re, will be published after any issue re p resenting, on an accumulative basis within 1 (one) financial year,3% (three per cent) or more of the aggregate in number of the ordinary and “N” ordinary shares in issue,prior to such issue;

– issues in terms of this authority will not exceed 15% (fifteen per cent) in the aggregate of the number ofordinary and/or “N” ordinary shares in the company’s issued share capital in any 1 (one) financial year;

– in determining the price at which the issue of ordinary or “N” ordinary shares will be made in terms ofthis authority, the maximum discount permitted will be 10% (ten per cent) of the weighted average tradeprice of such ordinary and “N” ordinary shares, as determined over a 30 (thirty) day period prior to thedate that the price of issue is determined or agreed by the directors;

– the equity securities which are the subject of the issue for cash will be of a class already in issue, or wherethis is not the case, will be limited to such securities or rights that are convertible into a class already inissue; and

– any such issue will only be made to public shareholders as defined in paragraph 4.26–4.27 of the ListingsRequirements of the JSE Securities Exchange South Africa (“JSE”).”

7. O rd i n a ry resolution number seven

“RESOLVED that 1 million of the ordinary and all of the “N” ordinary shares in the authorised but unissuedshare capital of the company be and are hereby placed under the control of the directors of the company asa general authority in terms of section 221(2) of the Companies Act 61 of 1973, as amended (“the Act”),subject to the provisions of the Act and the Listings Requirements of the JSE until the next annual generalmeeting of the company, for allotment to such persons and on such conditions as the directors deem fit.”

8. Ordinary resolution number eight

“RESOLVED that the remuneration payable to the non-executive directors of the company for the 2004financial year be as follows:

Chairman R50 000Deputy chairman R40 000Directors R30 000Committee members R5 000.”

9. Special resolution number one

To consider and, if deemed fit, to pass with or without modification the following special resolution in themanner re q u i red by the Act and subject to the Listings Re q u i rements of the JSE:

“ R E S O LVED that in terms of the authority granted in the Articles of Association of the company and/orsubsidiary of the company, the company and/or any of its subsidiaries be and is hereby authorised, by way of ageneral approval, to acquire the company’s own shares comprising ordinary and “N” ordinary shares, upon suchterms and conditions and in such amounts as the directors of the company (and, in the case of an acquisition bya subsidiary/(ies), the directors of the subsidiary) may from time to time decide but subject to the provisions ofthe Act and the Listings Re q u i rements of the JSE and any other stock exchange upon which the shares of thecompany may be quoted or listed, subject to the following conditions:

– that this authority shall be valid until the next annual general meeting of the company or for fifteen monthsf rom the date of the passing of this resolution, whichever period is shorter;

48

N o t i c e t o s h a r e h o l d e r s (continued)

– that any acquisition of shares in terms of this authority be effected through the ord e rbook operated by the JSE trading system and done without any prior understandingor arrangement between the company and the counterparty;

– that the acquisitions by the company of its own shares in any one financial year shallbe limited to 20% (twenty per cent) of the issued share capital of the relevant class inexistence at the date of this annual general meeting and that the acquisition by anysubsidiary of the company’s own shares does not result in the subsidiary, togetherwith all other subsidiaries of the company, holding more than 10% (ten per cent) inthe aggregate of the relevant class of securities in the company;

– that any acquisition of ordinary shares and/or “N” ordinary shares in terms of thisauthority may not be made at a price greater than 10% (ten per cent) above theweighted average traded price of the relevant class of securities over the 5 (five)business days immediately preceding the date on which the transaction is effected;

– that after any acquisition of ordinary shares and/or “N” ordinary shares, thecompany complies with the shareholder spread requirements set out in the JSEListings Requirements;

– that an announcement containing full details of such acquisitions of shares will bepublished as soon as the company and/or its subsidiaries has/have acquired sharesconstituting, on a cumulative basis, 3% (three per cent) of the number of shares ofthe relevant class in issue at the date of the general meeting at which this specialresolution is considered and, if approved, passed for each 3% (three per cent) inaggregate of the initial number acquired thereafter;

– that any such acquisition is not affected during a prohibited period as defined inthe JSE Listings Requirements; and

– that the company only appoints one agent to effect any repurchase(s) on its behalf.”

10. To transact such other business as may be transacted ata general meeting

Reasons for and effects of the Special Resolution

The reason for, and effect of, this special resolution is to grant the directors a generalauthority in terms of the Act and, subject to the Listings Requirements of the JSE andany other stock exchange upon which the shares of the company may be quoted orlisted, of the acquisition by the company or one of its wholly-owned subsidiaries of thecompany’s own shares on the terms set out above.

The directors of the company have no specific intention to acquire any of thecompany’s shares, a position which will be continually re-examined having regard toprevailing circumstances and, after considering the effects of a maximum repurchase,the directors are of the opinion that:

– the company and the group will be able to pay their debts as they become due inthe ordinary course of business for a period of 12 (twelve) months after the date ofnotice of this annual general meeting;

– the assets of the company and group, fairly valued in accordance with generallyaccepted accounting practice, will be in excess of the company’s and the

49

Sabvest Limited

group’s consolidated liabilities for a period of 12 (twelve) months after the date of notice of this annualgeneral meeting;

– the company’s and the group’s share capital and reserves and working capital will be adequate for aperiod of 12 (twelve) months after the date of notice of the annual general meeting to meet thecompany’s and group’s current and foreseeable future re q u i rements; and

– upon entering into the market to proceed with the repurchase the company’s sponsor has confirmedthe adequacy of Sabvest’s working capital for the purpose of undertaking a repurchase of shares inwriting to the JSE.

The company is not currently acquiring shares as it does not meet the spread requirements of the JSE.

Other disclosure in terms of the JSE Listings Requirements Section 11.26.

The JSE Listings Requirements require the following disclosure, some which are elsewhere in the annual reportof which this notice forms part as set out below:

Directors and management – page 9Major shareholders of Sabvest – page 45Directors’ interests in securities – page 22Share capital of the company – page 31

Litigation statement

In terms of Section 11.26 of the Listings Requirements of the JSE, the directors, whose names are given on page9 of the annual 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 atleast the previous 12 months, a material effect on the group’s financial position.

Each member who, being a natural person, is present in person, by proxy or agent, or being a company, ispresent by representative proxy or agent at the annual general meeting, is entitled to vote on a show of hands.On a poll, each member entitled to vote, whether present in person or by proxy, or by representation, is entitledto vote for each ordinary and/or “N” ordinary share held.

Voting and proxies

Members who have not dematerialised their shares or who have dematerialised their shares with “own name”registration are entitled to attend and vote at the meeting and are entitled to appoint a proxy or proxies toattend, speak and vote in their stead. The person so appointed need not be a member. Proxy forms should beforwarded to reach the registered office of the company/company’s transfer secretaries by not later than12h00on Tuesday, 1 June 2004.

Members who have dematerialised their shares, other than those members who have dematerialised their share swith “own name” registration, should contact their CSDP or bro ker in the manner and time stipulated in theira g re e m e n t :

• To furnish them with their voting instructions; and

• In the event that they wish to attend the meeting, to obtain the necessary authority to do so.

Proxy forms

• Only for use by members who have not dematerialised their shares or members who have dematerialisedtheir shares with own name registration.

• All other dematerialised shareholders must contact their CSDP or broker to make the relevant arrangementsconcerning voting and/or attendance at the meeting.

50

N o t i c e t o s h a r e h o l d e r s (continued)

Directors’ responsibility statement

The directors, whose names are given on page 9 of the annual report, collectively andindividually accept full responsibility for the accuracy of the information pertaining to thisresolution and certify that to the best of their knowledge and belief there are no facts thathave been omitted which would make any statement false or misleading, and that allreasonable enquiries to ascertain such facts have been made and that this resolutioncontains all information.

Material change

Other than the facts and developments reported on in the annual report, there have beenno material changes in the affairs or financial position of Sabvest and its subsidiaries sincethe date of signature of the audit report and the date of this notice.

The reason and effect for special resolution 1 is to authorise the company and/or itssubsidiary company by way of a general authority to acquire its own issued shares on suchterms, conditions and such amounts determined from time to time by the directors of thecompany subject to the limitations set out above.

The directors of the company have no specific intention to effect the provisions of specialresolution number 1, but will, however, continually review the company’s position, havingregard to prevailing circumstances and market conditions, in considering whether to effectthe provisions of special resolution number 1.

By order of the board

R PleanerSecretary


Announcement of 2003 results 11 March 2004

Publication of 2003 annual report May 2004

Annual general meeting 3 June 2004

Financial year-end 31 December

I/We

of

being a holder of ordinary shares and/or

“N” ordinary shares in Sabvest Limited, hereby appoint

of

or failing him, of

or failing him the chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the annualgeneral meeting of the company to be held at 12h00 on Thursday, 3 June 2004 and at every adjournment ofthat meeting.

Signed this day of 2004

Signature

Please indicate with an “X” in the appropriate space below how you wish your votes to be cast. If you returnthis form duly signed, without any specific directions, the proxy shall be entitled to vote as he/she thinks fit.

In favour of Against Abstain fromresolution resolution voting

1. Ordinary resolution number one

2. Ordinary resolution number two

3. Ordinary resolution number three

4. Ordinary resolution number four

5. Ordinary resolution number five

6. Ordinary resolution number six

7. Ordinary resolution number seven

8. Ordinary resolution number eight

9. Special resolution number one

A member entitled to attend and vote at the meeting is entitled to appoint a proxy, or proxies, to attend and

speak and on a poll to vote thereat in his stead. A proxy need not also be a member of the company. All proxyforms must be lodged with the company’s transfer secretaries not later than 48 hours before the time set forthe commencement of the meeting or every adjournment thereof.

Shareholders are advised to read the notes on the next page.

S A B V E S TL I M I T E D

(Registration number 1987/003753/06)(“the company”)

ISIN number: ZAE000006417 • Share code: SBV – ordinary sharesISIN number: ZAE000012043 • Share code: SVN – “N” ordinary shares

Sabvest Limited

F o r m o f p r o x y (continued)

1024

Notes

1. A form of proxy is only to be completed by those ordinary shareholders who are:

– holding ordinary shares and “N” ordinary shares in certificated form; or

– recorded on sub-register electronic form in “own name”.

2. If you have already dematerialised your ordinary shares through a Central Securities DepositoryParticipant (“CSDP”) or broker and wish to attend the annual general meeting, you must requestyour CSDP or broker to provide you with a letter of representation or you must instruct yourCSDP or broker to vote by proxy on your behalf in terms of the agreement entered into betweenyourself and the CSDP or broker.

3. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend,speak and vote in his/her stead. A proxy need not be a member of the company.

4. Every person present and entitled to vote at the meeting as a member or as a proxy or as arepresentative of a body corporate shall, on a show of hands, have one vote only, irrespective ofthe number of ordinary shares such person holds ore represents but, in the event of a poll, amember shall be entitled to that proportion of the total votes in the company which theaggregate amount of the nominal value of the ordinary shares held by him/her bears to theaggregate of the nominal value of all the ordinary shares issued by the company.

5. Please insert the relevant number of ordinary and “N” ordinary shares and indicate with an X inthe appropriate spaces on the face hereof, how you wish your votes to be cast. If you return thisform duly signed without any specific directions, the proxy will vote or abstain from voting athis/her discretion.

6. A deletion of any printed details and the completion of any blank space/s need not be signed orinitialled. Any alteration must be initialled.

7. The Chairman of the annual general meeting shall be entitled to decline to accept the authorityof the signatory under a power of attorney, or on behalf of a company, unless the original powerof attorney or authority or a notarially certified copy thereof is produced or has been registered.

8. The signatory may insert the name of any person/s whom the signatory wishes to appoint athis/her proxy, in the blank space/s provided or that purpose.

9. When there are joint holders of ordinary and “N” ordinary shares and if more than one such jointholder be present or represented, then the person whose name stands first in the register inrespect of such ordinary and “N” ordinary shares or his/her proxy, as the case may be, shall alonebe entitled to vote in respect thereof.

10. A minor should be assisted by his parent or legal guardian unless the relevant documentsestablished his legal capacity are produced or have been registered.

11. The completion and lodging of this proxy form will not prejudice the signatory from attendingthe annual general meeting and speaking and voting in person thereat to the exclusion of anyproxy appointed in terms hereof should such signatory wish to do so.

12. If the shareholding is not indicated on the proxy form, the proxy will be deemed to be authorisedto vote the total ordinary and “N” ordinary shareholding.

13. The Chairman of the annual general meeting may reject or accept any proxy form which iscompleted other than in accordance with these instructions, provided that he is satisfied as to themanner in which a shareholder wishes to vote.

14. Forms of proxy will not be accepted unless they have been returned by the shareholdersconcerned to the transfer secretaries at Computershare Limited, PO Box 61051, Marshalltown2107 or fax no +27 11 370 5390, so as to be received by not later than 12h00 on Tuesday, 1 June2004.

ibc

Sabvest Limited

1024

Sabvest LimitedRegistration number: 1987/003753/06ISIN number: ZAE000006417 – ordinary sharesShare code: SBV – ordinary sharesISIN number: ZAE000012043– “N” ordinary sharesShare code: SVN – “N” ordinary shares

DirectorateH Habib* 2 (Chairman) P Coutts-Trotter* 1 (Deputy chairman)CS Seabrooke (Chief Executive) NSH Hughes* 2

GE Nel* 1

R PleanerRS Price* 2

* 1 Non-executive* 2 Independent non-executive

SecretaryR Pleaner

Communications46A Wierda Road WestWierda Valley, Sandton 2196Republic of South Africa

PO Box 78677, Sandton 2146Republic of South Africa

Telephone +27 11 784 7932Telefax +27 11 784 7941e-mail: [email protected] site: www.sabvest.com

New address as from 1 June 2004:Ground Floor, Commerce SquareBuilding 439 Rivonia RoadSandhurst

Registered office46A Wierda Road West Wierda Valley, Sandton 2196Republic of South Africa

SponsorRand Merchant Bank(A division of FirstRand Bank Limited)No 1 Merchant PlaceCnr Rivonia Road and Fredman DriveSandton 2196

Telephone +27 11 282 8000Telefax +27 11 282 8008

Transfer secretariesComputershare Limited70 Marshall StreetJohannesburg 2001

Telephone +27 11 370 5000Telefax +27 11 370 5271

Merchant bankersRand Merchant Bank (A division of FirstRand Bank Limited)

Corporate advisorsDeloitte Corporate Finance

Commercial bankersABSA Bank LimitedFirst Rand Bank LimitedThe Standard Bank of South AfricaLimited

Corporate Law AdvisorsEdward Nathan & Friedland (Pty) Limited

AttorneysKnowles Husain Inc, SandtonShepstone & Wylie, DurbanPenningtons, London

AuditorsMessrs Deloitte & Touche

www.sabvest.co.za

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