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Contents

Group Trading Structure 1

Directorate & Administration 2

Historical Financial Review 3

Chairman’s Review 4

Property Analysis 5

Accounting Policies 6

Directors’ Report 8

Consolidated Balance Sheet 12

Consolidated Income Statement 13

Consolidated Statement of Changes in Equity 14

Balance Sheet 15

Income Statement 16

Statement of Changes in Equity 16

Notes to the Financial Statements 17

Consolidated Cash Flow Statement 32

Notes to the Consolidated Cash Flow Statement 33

Cash Flow Statement 34

Report of the Independent Auditors 35

Notice of Meeting 36

Form of Proxy inserted

T3IB00019 Marshalls AR – 17 May 2006 – Sharrell – – PROOF 4

Marshalls Limited

MARSHALLS LIMITED ANNUAL REPORT 20051

Group Trading Structure

T3IB00019 Marshalls AR – 17 May 2006 – Sharrell – Page 1 – PROOF 4

MARSHALLS LIMITED

Listed on the JSE Limited

MARSHALLS INTERNAL LIMITED

Investment Holding Company

MARSHALLS GROUP LIMITED

Main Operating SubsidiaryOwner of commercial and lightindustrial properties in Durbanand Cape Town. It also operatesas a confirming house

MARSHALLS PARKING (PTY) LIMITED

Trades as Nicol Square Parking Garage

MARSHALL METALLIC HOLDINGSLIMITED

Holds investments in a permanentportfolio of foreign listed shares

MARSHALLS CONFIRMING(JERSEY) LIMITED

Trades as a Confirming House

Directorate and Administration

POSTAL ADDRESSPO Box 4112, The Square, 4021

TRANSFER SECRETARIESComputershare Investor Services 2004 (Pty) Limited

70 Marshall Street

Johannesburg

2001

AUDITORSPKF David Strachan & Tayler

Chartered Accountants (SA)

19th Floor, 320 West Street

Durban, 4001

SPONSORImara Corporate Finance South Africa (Pty) Limited

Ground Floor, West Wing

25 Wellington Road

Parktown, 2193

GROUP BANKERSFirst National Bank

8 Rydall Vale Park

Douglas Saunders Drive

La Lucia, 4320

ATTORNEYSShepstone and Wylie

35 Aliwal Street

Durban, 4001

2 MARSHALLS LIMITED


MARSHALLS LIMITED(Registration No. 1987/002656/06)

DIRECTORATEDavid C Marshall (Chairman) (61 years)

Peter N Lonsdale, FCIS* # (73 years)

Mark E Stewart, BCompt (Hons) CA(SA)* # (43 years)

Brian A Hose, FRICS, FIV(SA)* (68 years)

OPERATING SUBSIDIARY

MARSHALLS GROUP LIMITED(Registration No. 1955/003199/06)

DIRECTORATEDavid C Marshall (Chairman)

Peter N Lonsdale, FCIS*

Lloyd H Marshall* (34 years)

Oliver H Marshall* (31 years)

Warwick H Marshall (36 years)

Mark E Stewart, BCompt (Hons) CA(SA)*

Brian A Hose, FRICS, FIV(SA) *

Eric Prange, CA(SA) # (Managing) (30 years)

* Non-executive# Group Audit and Risk Committee

SECRETARYAbdool M Ahmed, MIAC

BUSINESS AND REGISTERED ADDRESS11 Sunbury Park, La Lucia Ridge Office Estate

La Lucia, 4319

David C Marshall Peter N Lonsdale Mark E Stewart Brian A Hose


Historical Financial Review

Restated* Restated#

2000 2001 2002 2003 2004 2005

R000’s R000’s R000’s R000’s R000’s R000’s

Results

Revenue 18 235 18 177 18 769 18 105 18 686 17 874

Profit before taxation and interest paid 4 068 45 9 600 5 191 12 579 16 115

Interest paid 1 872 3 347 3 824 3 113 2 534 3 111

Earnings attributable to ordinary

shareholders 1 143 (3 042) 4 303 818 8 361 10 521

Headline earnings attributable to

ordinary shareholders 4 385 4 065 1 144 925 2 217 1 571

Ordinary shareholders’ interest 69 896 72 004 63 059 65 846 71 095 82 684

Investment property 73 015 64 101 60 177 60 138 65 727 71 667

Restated Restated

2000 2001 2002 2003 2004 2005

cents cents cents cents cents cents

Per share data

Earnings per share 6,6 (17,5) 24,8 4,7 48,1 60,6

Headline earnings per share 25,2 23,4 6,6 5,3 12,8 9,0

Dividends per share 19,0 17,0 12,0 10,0 10,0 12,0

Dividend cover (times) 0,3 (1,0) 2,1 0,5 4,8 5,1

Net asset value per share 402 414 363 379 409 476

Restated Restated

2000 2001 2002 2003 2004 2005

Other data

Investment properties to total assets (%) 70.5 59.2 64.5 67.4 72.4 65.5

Interest bearing debt to ordinary

shareholders’ interest (%) 31.3 29.7 27.3 26.0 22.8 23.5

Interest cover (times) 2.2 – 2.5 1.7 5.0 5.2

Profit before taxation and interest paid

to revenue (%) 22.3 0.2 51.1 28.7 67.3 90.2

DEFINITIONSInterest coverThis is the ratio which operating profit, before interest paid and taxation, bears to interest paid.

Earnings per shareEarnings per share are calculated on the weighted average number of ordinary shares in issue during the year and are based

on earnings attributable to ordinary shareholders.

Headline earnings per shareHeadline earnings per share are calculated on the weighted average number of ordinary shares in issue during the year and

are based on earnings attributable to ordinary shareholders, after excluding all items of a non-trading nature, net of taxation.

Details of the adjustments to earnings attributable to ordinary shareholders, for items of a non-trading nature, are provided

in note 20 of the notes to the financial statements.

# Refer to note 17.

* Refer to note 18.


Chairman’s Review for the year ended 31 December 2005

Review of operating resultsOperating profit before interest

amounted to R5 512 406 (2004:

R5 738 357 restated). The fall

is attributable to the group

operating from a lower asset

base due to the disposal of

two investment properties and

the difficulty experienced in

re-investing in the short term.

Interest paid increased to R3 110 693 (2004: R2 533 803)

due to an increase in borrowings and the recognition of

interest rate swap derivative liabilities which have fixed the

rate of interest for the years ahead.

Headline earnings per share decreased by 29.7% to

9,0 cents per share (2004: 12,8 cents per share restated).

Despite this, the group has been able to show an increase

in dividends declared to 12 cents per share (2004:

10 cents per share) and with the most recently declared

dividend (15 March 2006) being 6,5 cents per share.

Total assets under management at the reporting date

totalled R109 443 506 (2004: R90 786 694 restated) with

82% of this figure represented by investment properties

and the group’s share portfolio.

Property divisionMarket sentiment for the future remains positive due to the

buoyant economy and continued demand for leased light

industrial premises. At present the vacancy level, based on

fully let value, is less than 2%.

At year end the group’s portfolio of investment properties

was valued at R69 215 000 (2004: R67 120 000). Property

held at both year ends was valued at R63 315 000 (2004:

R54 810 000).

During the year two investment properties were disposed

of at a cumulative surplus of R1 617 019. Cash available

from these disposals after disposal costs amounted to

R13 858 436.

Efforts to reinvest in the group’s operational areas of

Durban and Cape Town have been frustrated by the lack

of suitable stock and falling yields. Two additional

investment properties have been acquired, one during

2005 and another in the first quarter of 2006.

The group has geared up in order to purchase additional

investment properties and has approximately R17 500 000

to invest.

Confirming divisionThe contribution from this division fell by 51% and was

both anticipated and planned for. The outlook for the future

is expected to mirror that of 2005.

Investment divisionThe market value of the foreign listed shares was

R18 196 983 (2004: R15 170 814). Overall performance of

the portfolio has been extremely pleasing and it has

appreciated in sterling currency by approximately 20%

during the year under review.

Investment income received from the underlying

investments was R448 904 (2004: R378 802). Cost savings

have added to this division’s performance, resulting in a

62% increase in its contribution before tax to R236 520

(2004: R146 330).

International financial reporting standards (IFRS)

The accepted treatment of operating leases in terms of IAS

17 (leases) has caused significant consternation within the

property industry. Once again the group has had to restate

its comparative figures in order to comply with IFRS.

The effect of complying with IAS 17 (leases) has not been

material to the group’s results with the costs of complying

exceeding the benefit.

Capital restructuringPreviously the share capital of the group consisted of par

value ordinary shares and par value “N” Ordinary shares.

During the year the members passed special resolutions

consolidating these shares on a one for one basis to

ordinary shares having no par value.

AppreciationOn behalf of the board of directors and the shareholders,

I wish to extend my sincere appreciation to my executive

and all staff for their commitment and support.

DC MARSHALLChairman

4 MARSHALLS LIMITED



Property Analysis

Dear Sirs,

As instructed, we carried out an Open Market Valuation of the properties owned by Marshalls Limited as at

31 December 2005, details of which are available at the offices of the Group.

We define “Open Market Value” as the price at which the property might reasonably be expected to sell, assuming an arm’s

length transaction between a willing, able and informed seller and a willing, able and informed buyer(s), and further, that

reasonable time is allowed for the disposal of the property.

Generally all these properties are well situated, the tenants are sound and the rentals achieved are market related.

Yours faithfully

CB RICHARD ELLISMA Carrim MIV (SA)

Registered Valuer


2005 2004 2005 2004

% m2 % m2 % R % R

Commercial and Commercial and

Light Industrial 80.8 48 449 43.9 42 378 Light Industrial 76.0 12 736 803 74.4 12 823 131

Offices 2.0 1 221 6.2 6 019 Offices 11.4 1 916 922 12.0 2 075 859

Parking 17.2 10 296 49.9 48 209 Parking 12.6 2 113 060 13.6 2 337 678

100.0 59 966 100.0 96 606 100.0 16 766 785 100.0 17 236 668

2.0%

17.2%

80.8%

11.4%

12.6%

76.0%

LETTABLE AREAS RENTAL AND PARKING FEES

2005 2005

6.2%

49.9%43.9%

12.0%

13.6%

74.4%

2004 2004

COMMERCIAL ANDLIGHT INDUSTRIAL

OFFICES

PARKING

Accounting Policies for the year ended 31 December 2005

The financial statements set out on pages 6 to 34

incorporate the following principal accounting policies

which are consistent with those applied in the previous

year except for the effects of applying the accepted

interpretation of IAS 17 (leases), as more fully detailed in

note 17 to these financial statements. These policies

comply with International Financial Reporting Standards

and in the manner required by the Companies Act in

South Africa.

RevenueRevenue comprises:

Net rentals charged to tenants and parking income

Net confirming fees and interest charged to confirming

clients

Investment income from investments.

Rental income is recognised on a straight line basis in

accordance with the accepted interpretation of IAS 17

(leases).

Basis of consolidationThe consolidated financial statements incorporate the

assets, liabilities and results of all the company’s

subsidiaries. The results of the subsidiaries are included

from the effective dates of acquisition and up to the

effective dates of disposal. All inter-company transactions

and balances have been eliminated.

Foreign currenciesTransactions in foreign currencies are accounted for at the

rates of exchange ruling on the date of transactions. Gains

and losses arising from the settlement of such transactions

are recognised in the income statement.

Monetary assets and liabilities denominated in foreign

currencies are translated at the rates of exchange ruling at

the balance sheet date. Unrealised differences on

monetary assets and liabilities are recognised in the

income statement.

Deferred taxationDeferred taxation is calculated at current rates using the

liability method. Full provision is made for all temporary

differences between the tax base of an asset or liability

and its carrying amount.

A deferred tax asset is not raised on assessed losses or

deductible temporary differences unless it is probable that

future taxable profits will be available against which the

deferred tax asset can be raised in the foreseeable future.

Investment propertyInvestment property is land and buildings held by the

group to earn rentals and/or for capital appreciation.

Investment property is initially recorded at cost including

transaction costs. Subsequent measurement is at open

market value with the adjustment for the period being

included in the determination of the profit/loss for that

period. The properties are valued annually by a suitably

qualified, independent valuator and this value is taken as

the open market value at year end.

Any surpluses or losses on disposal of the properties are

recognised in the income statement.

Depreciation of property, plant and equipmentProperty, plant and equipment are depreciated to their

residual values on a straight line basis over the useful lives

of the assets.

6 MARSHALLS LIMITED



Accounting Policies for the year ended 31 December 2005

Investments in subsidiariesShares in subsidiaries are stated at cost or valuation at

time of acquisition. The company has an investment in a

foreign subsidiary company which is classified as a foreign

entity. The financial statements of this subsidiary are

translated for incorporation into the group financial

statements as follows:

Assets and liabilities at the closing rate.

Income statement items at the average rate for the

period.

Exchange differences are taken directly to non-

distributable reserves.

Investments in listed sharesListed investments are stated at fair value at year end.

Adjustments to the fair value of listed investments are

charged directly to equity.

Retirement benefitsThe defined benefit obligations, the related current service

cost, and where applicable, past service cost, are

determined by using the projected unit credit method.

A portion of actuarial gains and losses is recognised as

income or expense if the net cumulative unrecognised

actuarial gains and losses at the end of the previous

reporting period exceeded the greater of:

* 10% of the present value of the defined benefit obligation

at that date before deducting plan assets; and

* 10% of the fair value of any plan assets at that date.

The portion of actuarial gains and losses to be recognised

is the excess referred to above, divided by the expected

average remaining working lives of the employees

participating in the plan.

Segment reportingSegment assets and liabilities are directly attributable to

the segments.Segment assets include all operating assets

used by a segment, and consist principally of investment

property, property, plant and equipment, as well as current

assets. Segment liabilities include operating liabilities and

consist principally of trade payables.

Segment revenue and expenses are directly attributable to

the segments. Segment revenue, expenses and results

include transfers between business segments. Such

transfers are accounted for at competitive market prices

charged to unaffiliated customers for similar goods. These

transfers are eliminated on consolidation.

Financial instrumentsFinancial instruments carried on the balance sheet include

cash and bank balances, investments, receivables, trade

creditors and borrowings. These instruments are carried at

fair value. The particular recognition methods adopted are

disclosed in the individual policy statements associated

with each item.

LeasesLeases are classified as finance leases whenever the terms

of the lease transfer substantially all the risks and rewards

of ownership to the lessee. All other leases are classified

as operating leases.

ProvisionsProvisions are recognised when the company has a

present legal or constructive obligation as a result of a past

event, and it is probable that an outflow of resources

embodying economic benefits will be required to settle

the obligation, and a reliable estimate of the amount can

be made.


Directors’ Report for the year ended 31 December 2005

Your directors have pleasure in submitting their report for

the financial year ended 31 December 2005.

Nature of businessThe company, as a holding company, receives income in

the form of dividends from its wholly owned subsidiary

Marshalls Internal Limited.

Marshalls Internal Limited, in turn, has a wholly owned

subsidiary, being Marshalls Group Limited. Marshalls

Group Limited is the owner of commercial and light

industrial properties, situated in Durban and Cape Town. It

also operates a confirming and indent financing division

trading in South Africa. Marshalls Group Limited holds a

100% interest in the following companies:

Marshalls Confirming (Jersey) Limited is incorporated in

Jersey, Channel Islands, and operates as a confirming

house.

Marshalls Parking (Pty) Limited owns a parking garage in

Durban.

Marshall Metallic Holdings Limited holds, as a permanent

investment, a portfolio of listed shares in the United

Kingdom, the United States of America and Western

Europe.

Borrowing powersAt 31 December 2005 the Group’s borrowings were

R19 398 482 (2004: R16 179 567). In terms of the Articles

of Association the borrowing powers of the company are

unlimited.

Subsidiary companiesThe interest of the company in its subsidiaries is set out in

note 3 to these financial statements.

Restated

2005 2004

R R

The aggregate net operating

income after tax of the

subsidiaries attributable to the

company was 10 524 957 8 365 204

DividendsPaid 12 cents per share

(2004: 10 cents) 2 084 676 1 737 230

A final dividend of 6,5 cents per share in respect of the

year ended 31 December 2005 has been declared.

CORPORATE GOVERNANCE

Code of Corporate Practices and ConductThe directors endorse and, during the period under review,

have applied the Code of Corporate Practices and

Conduct as set out in the King Report. By supporting the

Code, the directors have recognised the need to conduct

the enterprise with integrity and in accordance with

generally accepted corporate practices.

Directors’ responsibilities in relation to financial statementsThe Board supports the principles of openness, integrity

and accountability. Fundamental to the fulfilment of

corporate responsibilities and the achievement of financial

objectives is an effective system of corporate governance.

Following the publication of the King Report on Corporate

Governance, the Board continually reviews the group’s

policies to determine that they meet current requirements.

These policies relate, inter alia, to the duties of the Board

and to the delegation of powers to the various committees,

and specify responsibilities and levels of authority.

Accountability and controlThe directors are required by the Companies Act to

prepare financial statements which fairly present, in all

material respects, the financial position of the company

and group as at the end of the financial year and the

results of their operations and cash flows for that period,

in accordance with International Financial Reporting

Standards and in the manner required by the Companies

Act in South Africa. It is the auditors’ responsibility to

report on them.

Your directors report that the group’s internal controls and

systems are designed to provide reasonable assurance as

to the integrity and reliability of financial statements and to

adequately safeguard, verify and maintain accountability

of its assets. Such controls are based on established

trained and skilled personnel with an appropriate

segregation of duties.

These are monitored through the group and all employees

are required to maintain the highest ethical standards in

ensuring the group’s business practices are to be

conducted in a manner which in all reasonable

circumstances is above reproach. Nothing has come to

the attention of your directors to indicate that any material

breakdown in the functioning of these controls,

procedures and systems has occurred during the year

under review.

8 MARSHALLS LIMITED




In preparing the financial statements, the group has used appropriate accounting policies consistently, supported by

reasonable prudent judgements and estimates, and has complied with all applicable accounting standards. The directors

are of the opinion that the financial statements fairly present, in all material respects, the financial position of the company

and the group at 31 December 2005, and the results of their operations and cash flow information for the year then ended.

After making enquiries the directors have reasonable expectation that the company has adequate resources to continue in

operational existence for the year ahead. For this reason, they continue to adopt the going concern basis in preparing the

annual financial statements.

The external auditors concur with the above statements by the directors.

Board of directors and committee structuresDetails of the directors are given on page 2 of this report. The Board comprises both executive and non-executive directors.

Your directors consider that it is in the group’s best interest that Mr DC Marshall, an executive director, be Chairman of the

Board. The Group Audit and Risk Committee comprises non-executive directors with executive directors attending by

invitation. It is responsible for monitoring the adequacy of the group’s financial controls, accounting policies and financial

reporting.

The Board of Directors met nine times during the 2005 financial year and attendance was as follows:

DC Marshall 7 times

PN Lonsdale 8 times

ME Stewart 8 times

BA Hose 9 times

The Group Audit and Risk Committee met twice during the 2005 financial year and attendance was as follows:

PN Lonsdale 2 times

ME Stewart 2 times

E Prange 2 times

External auditors 2 times (by invitation)

Directors’ shareholdingsInterests of the directors of the company as at 31 December 2005 were as follows:

2005 2004*

Shares held Shares held

DC Marshall

Indirect beneficial holding 2 912 529 2 910 863

Indirect non-beneficial holding 6 877 000 6 878 666

9 789 529 9 789 529

PN Lonsdale

Indirect beneficial holding 266 100 266 100

* = The “N” Ordinary shareholdings of directors in respect of 2004 are reflected as ordinary shares for comparison purposes.

No directors hold either a direct beneficial or direct non-beneficial interest in the shares of the company.

There have been no changes in the above holdings since the reporting date.



2005 %

Shares held Shares held

Analysis of shareholding

Major shareholders holding more than 5%

Marshall Holdings (Pty) Limited 7 928 489 45.6

Monteagle Merchant Group Limited 1 051 940 6.1

8 980 429 51.7

Shareholders holding less than 5% each 8 391 871 48.3

Total 17 372 300 100.0

Number of Shares

shareholders held %

Analysis of public and non-public shareholders

Public 340 7 316 671 42.1

Non-public – directors and associates 4 10 055 629 57.9

Total 344 17 372 300 100.0

Number of Total

members % holding %

Shareholder analysis

1 – 999 56 16.3 19 163 0.1

1 000 – 9 999 132 38.2 540 131 3.1

10 000 – 49 999 112 32.6 2 272 275 13.1

50 000 – 99 999 24 7.0 1 552 156 8.9

100 000 – 499 999 16 4.7 2 550 046 14.7

500 000 – 999 999 2 0.6 1 458 100 8.4

1 000 000 and above 2 0.6 8 980 429 51.7

344 100.0 17 372 300 100.0

Share capitalOn 9 May 2005, special resolutions were passed consolidating the company’s two classes of ordinary shares of par value

into one class of ordinary share with no par value.

Stated Share Share

capital capital premium Total

R R R R

Balance at beginning of year – 11 504 501 15 304 525 26 809 026

Consolidation of issued ordinary and

“N” ordinary shares 11 504 501 (11 504 501) – –

Consolidation of share premium 15 304 575 – (15 304 525) –

Balance at end of year 26 809 026 – – 26 809 026

10 MARSHALLS LIMITED




Special resolutionsThe following special resolutions were passed by the shareholders:

1. The entire share capital consisting of ordinary par value shares and “N” ordinary par value shares be converted to no

par value shares.

2. The Articles of Association were amended to abolish the distinction between “N” ordinary shareholders and ordinary

shareholders in respect of each such shareholder’s voting rights.

3. The Articles of Association were amended to convey equal voting rights on each shareholder whether such voting rights

are exercised by way of a show of hands or on a poll.

4. The Articles of Association were amended to delete all references to shares of differing par value for the purposes of

payments and dividends to shareholders.

Annual Financial StatementsThe annual financial statements set out from page 6 to 34 were approved by the Board of Directors and are signed on its

behalf.

DC MARSHALL PN LONSDALEChairman

Durban,

6 April 2006

Declaration by Company SecretaryIn my capacity as Company Secretary, to the best of my knowledge, I hereby confirm, in terms of the Companies Act, 1973,

that for the year ended 31 December 2005, the company has lodged with the Registrar of Companies all such returns as

are required of a public company in terms of this Act and that all such returns are true, correct and up to date.

AM AHMEDCompany Secretary


Restated

Notes 2005 2004

R R

ASSETS

Non-current assets 93 564 745 82 239 361

Investment property 1 71 667 305 65 726 707

Property, plant and equipment 2 3 241 782 930 671

Listed investments 4 18 202 599 15 173 622

Amortised lease receivables 453 059 408 361

Current assets 15 878 761 8 547 333

Trade receivables and loans 2 267 108 1 052 995

Bills receivable 3 634 760 3 992 328

Available for sale assets 5 6 729 000 –

Bank and cash balances 3 247 893 3 502 010

TOTAL ASSETS 109 443 506 90 786 694

EQUITY AND LIABILITIES

Equity and reserves 82 684 343 71 095 349

Stated capital 6 26 809 026 –

Share capital 6 – 11 504 501

Share premium 7 – 15 304 525

Non-distributable reserves 8 36 783 058 28 872 391

Distributable reserves 19 092 259 15 413 932

Non-current liabilities 20 003 600 15 750 241

Interest bearing borrowings 9 18 588 737 15 588 597

Deferred taxation 10 1 414 863 161 644

Current liabilities 6 755 563 3 941 104

Trade payables 1 486 551 1 655 705

Current portion – interest bearing borrowings 9 809 745 590 970

Bank overdrafts 3 744 487 1 069 105

Taxation payable 339 895 56 523

Provisions 11 374 885 568 801

TOTAL EQUITY AND LIABILITIES 109 443 506 90 786 694

Consolidated Balance Sheet as at 31 December 2005



Consolidated Income Statement for the year ended 31 December 2005


Restated

Notes 2005 2004

R R

Revenue 12 17 873 597 18 686 381

Other income 94 925 192 539

Expenses (12 456 116) (13 140 563)

Administration 2 141 289 1 966 502

Personnel 4 928 399 5 314 875

Property and operations 5 386 428 5 859 186

Operating profit before interest 13 5 512 406 5 738 357

Interest received 289 195 28 230

Interest paid (3 110 693) (2 533 803)

Operating profit after interest 2 690 908 3 232 784

Non-operating profit/(loss) items 15 10 313 713 6 812 176

Profit before taxation 13 004 621 10 044 960

Taxation 16 2 483 591 1 683 732

Profit for the year 10 521 030 8 361 228

Earnings per share 20 60,6 cents 48,1 cents

Headline earnings per share 20 9,0 cents 12,8 cents

Dividends per share 12,0 cents 10,0 cents

Dividend cover 5,1 times 4,8 times


Restated

Notes 2005 2004

R R


Balance at beginning of year – –

Consolidation of issued ordinary shares 11 504 501 –

Consolidation of share premium 15 304 525 –


Balance at beginning of year 11 504 501 11 504 501

Transfer to stated capital (11 504 501) –




Non-distributable reserves 36 783 058 28 872 391


As previously reported 29 336 348 21 324 322

Lease smoothing effect 17 (463 957) (518 173)

Effect of prior year adjustment 18 – 5 385 879

Transfer from distributable reserves 7 333 232 3 507 925

Currency translation movement 577 435 (827 562)



As previously reported 15 072 731 12 206 910

Lease smoothing effect 17 341 201 403 067

Effect of prior year adjustment 18 – 119 915


Dividends paid (2 084 676) (1 737 230)

Transfer of surplus on property revaluations to

non-distributable reserves (5 984 360) (3 507 925)

Unrealised surplus on revaluation of listed investments 2 575 205 (244 802)

Transfer of net surplus on disposal of investment properties to

non-distributable reserves (1 348 872) –

Net deficit on disposal of listed investments – (187 231)

Equity and reserves at end of year 82 684 343 71 095 349

Consolidated Statement of Changes in Equity for the year ended 31 December 2005



Balance Sheet as at 31 December 2005


Notes 2005 2004

R R

ASSETS

Non-current assets

Investment in subsidiary 3 22 568 647 22 568 647

Loan to subsidiary 6 325 902 6 331 345

Current assets

Cash 68 298 2 400

TOTAL ASSETS 28 962 847 28 902 392

EQUITY AND LIABILITIES

Equity and reserves 28 864 476 28 868 403





Current liabilities

Trade payables 98 371 33 989

TOTAL EQUITY AND LIABILITIES 28 962 847 28 902 392


Notes 2005 2004

R R

Revenue

Unclaimed dividends written back 73 115

Dividends received from subsidiary 2 084 676 1 737 230

2 084 749 1 737 345

Profit for the year 13 2 080 749 1 733 345

Statement of Changes in Equity for the year ended 31 December 2005

Notes 2005 2004

R R


Balance at beginning of year – –

Consolidation of issued ordinary shares 11 504 501 –

Consolidation of share premium 15 304 525 –










Dividends paid (2 084 676) (1 737 230)

Equity and reserves at end of year 28 864 476 28 868 403

Income Statement for the year ended 31 December 2005



Notes to the Financial Statements for the year ended 31 December 2005


Group Company

Restated

2005 2004 2005 2004

R R R R

1. INVESTMENT PROPERTY

Freehold property – at valuation 72 412 904 66 573 228 – –

Lease smoothing effect (745 599) (846 521) – –

71 667 305 65 726 707 – –

Reconciliation of the carrying value of investment property

Opening carrying value 65 726 707 59 344 276 – –

Disposals (12 241 417) – – –

Additions 9 310 317 – – –

Improvements 36 193 63 153 – –

Revaluation surplus 8 835 505 6 319 278 – –

Closing carrying value 71 667 305 65 726 707 – –

A register is maintained that is open for inspection by

members or their duly authorised agents at the registered

office of the company giving the information required

in terms of Schedule 4, paragraph 22(3) of the

Companies Act.

On 31 December 2005 the group’s freehold properties

were valued by MA Carrim, MIV (SA) registered valuer, at

open market value of R69 215 000 (2004: R67 120 000).

Open market value is defined as the price at which the

property might reasonably be expected to sell, assuming

an arm’s length transaction between a willing, able and

informed seller and buyer and further, that reasonable time

is allowed for the disposal of the property. The valuation

includes certain items of plant and equipment which have

been deducted from the carrying value of the properties

stated above. Also deducted from this carrying value is the

amortised lease receivables recognised on the balance

sheet in terms of IAS 17 (leases).

Certain freehold properties owned by subsidiary

companies valued at R46 700 000 (2004: R31 880 000) are

held as security for interest bearing borrowings totalling

R24 157 207 (2004: R16 179 567) as detailed in Note 9.

Subsequent to year end, the group took legal title of an

investment property situated in Westmead, Durban.


Group Company

Restated

2005 2004 2005 2004

R R R R

2. PROPERTY, PLANT AND EQUIPMENT

Property – at cost November 2005 2 253 719 – – –

Air conditioners 229 768 337 899 – –

At cost 729 415 1 190 045 – –

Accumulated depreciation (499 647) (852 146) – –

Motor vehicles 172 799 137 370 – –

At cost 909 456 795 007 – –

Accumulated depreciation (736 657) (657 637) – –

Office equipment and plant 585 496 455 402 – –

At cost 1 991 229 1 550 921 – –

Accumulated depreciation (1 405 733) (1 095 519) – –

3 241 782 930 671 – –

Property is described as Sections No. 3 and 5, Marshalls

House, situated at 11 Sunbury Park, La Lucia Ridge Office

Estate in extent 244 square metres.

No depreciation has been provided for on the property as

the residual value of the property exceeds its cost at the

balance sheet date.

Reconciliation of the carrying value of property,

plant and equipment.

Property – addition 2 253 719 – – –


Opening carrying value 337 899 357 045 – –

Additions 108 674 52 127 – –

Disposals (150 648) – – –

Depreciation – current (66 157) (71 273) – –

Motor vehicles 172 799 137 370 – –


Addition 131 762 – – –

Disposals (3 046) – – –




Additions 275 297 53 706 – –

Disposals (23 300) – – –


Carrying value at end of year 3 241 782 930 671 – –






Group Company

Restated

2005 2004 2005 2004

R R R R

3. INVESTMENTS IN SUBSIDIARIES

3.1 100% held by Marshalls Limited

Marshalls Internal Limited

8 500 000 shares of no par value – at cost 22 568 647 22 568 647

3.2 Trading subsidiaries

100% held by Marshalls Internal Limited

Marshalls Group Limited

100 ordinary shares of R2 each at cost 200 200

Loan 23 421 525 23 425 525

The loan is unsecured, interest free, with

no fixed date of repayment.

3.3 100% held by Marshalls Group Limited

Marshalls Confirming (Jersey) Limited

(incorporated in Jersey, Channel Islands)

9 shares of R2,78 each – at cost 25 25

Marshall Metallic Holdings Limited

550 000 shares of 1,0 cent each 5 500 5 500

Loan 16 853 000 15 652 300

The loan is unsecured, interest free and with


Marshalls Parking (Pty) Limited

100 shares of R1 each 100 100

Loan 3 722 628 4 089 181

The loan is unsecured, interest free and with


44 002 978 43 172 831 22 568 647 22 568 647


GroupRestated Restated

2005 2005 2004 2004Number of Fair Number of Fair

Shares value Shares valueR R

4. LISTED INVESTMENTSUnited Kingdom 9 029 469 7 633 425

Associated British Foods plc 5 300 485 572 5 300 451 918Aviva plc (formerly CGNU plc) 4 500 346 431 4 500 308 729BAA plc 9 000 616 205 9 000 574 196BP Amoco plc 8 000 540 749 8 000 443 975British American Tobacco plc 4 750 674 299 4 750 465 726Cadbury Schweppes plc 11 000 660 049 11 000 582 827Diageo plc 8 000 735 996 8 000 649 358GlaxoSmithKline 3 750 601 551 3 750 500 619HSBC Holdings plc 5 000 509 410 5 000 480 136Imperial Tobacco plc 3 000 569 032 3 000 467 682Informa plc 7 500 497 332 7 500 309 308Pearson plc 4 400 330 325 4 400 302 109Prudential plc 5 833 350 330 5 833 288 660Reckitt Benckiser plc 2 750 576 566 2 750 472 870Reuters Group plc 4 000 188 039 4 000 164 961Royal Dutch Shell (formerly Shell Transport & Trading Co plc) 2 298 466 244 8 000 388 041Unilever plc 14 000 881 339 14 000 782 310

United States of America 2 561 408 2 354 948

American Express Co. 1 200 392 775 1 200 384 906Citigroup Inc 1 300 401 282 1 300 356 404Johnson & Johnson 1 600 611 630 1 600 577 397Merck & Co Inc 900 182 099 900 164 590Pfizer Inc 1 600 237 320 1 600 244 820Proctor & Gamble & Co 2 000 736 302 2 000 626 831

Western Europe 6 606 106 5 182 441

Baloise Holdings AG 590 218 538 590 154 998Bayer AG 1 600 427 609 1 600 308 128Credit Suisse Group AG 1 400 452 703 1 400 334 861Deutsche Bank AG 800 491 774 800 404 035Fortis ‘B’ 2 400 489 252 2 400 378 111ING Groep NV 2 000 445 682 2 000 344 332L’Oreal 1 050 499 079 1 050 453 556Nestle SA 360 682 816 360 535 917Novartis AG 2 000 666 502 2 000 573 454Roche Holdings AG 700 666 546 700 458 516Schweiz-Ruckversicherungs-G AG 720 334 288 720 292 189UBS AG 1 500 905 645 1 500 715 692Zurich Financial Services AG 241 325 672 241 228 652

South AfricaMercantile Bank Holdings Limited(formerly Mercantile Lisbon Bank Holdings Limited) 15 600 5 616 15 600 2 808

18 202 599 15 173 622

These investments, with the exception of the South African holding, are held as security in favour of Investec BankLimited as detailed in note 9.






Group Company

Restated

2005 2004 2005 2004

R R R R

5. AVAILABLE FOR SALE ASSETS

Property 6 729 000 – – –

The group acquired a commercial office building and

simultaneously initiated the creation of a sectional title

register. Agreements of sale have been signed to dispose

of sections 1, 2 and 4. Transfer of ownership took place in

March 2006.

6. STATED CAPITAL AND SHARE CAPITAL

Authorised

34 000 000 ordinary shares of no par value – – – –

14 000 000 ordinary shares of R1,00 each – 14 000 000 – 14 000 000

20 000 000 “N” ordinary shares of 1,0 cent each – 200 000 – 200 000

– 14 200 000 – 14 200 000

Issued

17 372 300 ordinary shares of no par value 26 809 026 – 26 809 026 –

11 445 230 ordinary shares of R1,00 each – 11 445 230 – 11 445 230

5 927 070 “N” ordinary shares of 1,0 cent each – 59 271 – 59 271

26 809 026 11 504 501 26 809 026 11 504 501

Unissued ordinary shares are under the control of the

directors in terms of a resolution passed at the annual

general meeting held on 28 June 2005. This authority

expires at the forthcoming annual general meeting.

Effective from 9 May 2005, the company’s two classes of

ordinary par value shares were consolidated into one class

of ordinary shares of no par value.

7. SHARE PREMIUM

Arising on the issue of ordinary and “N” ordinary shares in

exchange for shares in Marshalls Internal Limited. – 15 304 525 – 15 304 525

Effective from 9 May 2005, the share premium account

was transferred to the stated capital account.

8. NON-DISTRIBUTABLE RESERVES

Surplus on revaluation, sale of investment properties and

investments and on acquisition of shares in subsidiary 35 278 354 27 945 122 – –

Foreign currency translation reserve 1 504 704 927 269 – –

36 783 058 28 872 391 – –


Group Company

Restated

2005 2004 2005 2004

R R R R

9. INTEREST BEARING BORROWINGS

Secured loans

9.1 Nedbank Limited 4 679 139 5 067 708 – –

The loan bears interest, payable monthly at a fixed

rate per annum, the year end rate being 11.45%

(2004: 10%). The loan is repayable in monthly

instalments of R76 421 (2004: R72 865) and is

repayable in full by 31 March 2013. This loan is

secured over freehold property valued at R9 100 000

(2004: R12 250 000), as detailed in note 1.

This loan is repayable in full or part thereof at any

time at the option of the borrower.

9.2 FirstRand Bank Limited 1 091 155 1 314 882 – –

This loan bears interest at variable rates per annum,

the year end rate being 9.5% (2004: 10%). The loan

is repayable in monthly instalments of R28 834

(2004: R28 683) and is repayable in full by 1 October

2009. This loan is secured over freehold property

valued at R5 300 000 (2004: R4 230 000), as detailed

in note 1.

This loan is repayable in full, or part thereof, subject

to three months written notice, at the option of the

borrower.

9.3 FirstRand Bank Limited 3 021 254 – – –

This loan bears interest, payable monthly at variable

rates per annum, the year end rate being 9.7%

(2004: nil). The loan is repayable in monthly

instalments of R39 817 (2004: nil) and repayable in

full by 30 October 2015. This loan is secured over

freehold property valued at R5 900 000 (2004: nil), as

detailed in note 1.

This loan is repayable in full, or part thereof, at any

time after the first thirty-six months of the term of the

loan having elapsed.






Group Company

Restated

2005 2004 2005 2004

R R R R

9. INTEREST BEARING BORROWINGS (continued)

9.4 FirstRand Bank Limited 68 635 – – –

This loan bears interest, payable monthly at

variable rates per annum, the year end rate being

9.7% (2004: nil). The registered loan amount is

R5 500 000, which has not been drawn down. The

loan is currently repayable in monthly instalments of

R895 (2004: nil) and is repayable in full by

1 December 2015. This loan is secured over freehold

property valued at R8 800 000 (2004: nil), as detailed

in note 1.

This loan is repayable in full, or part thereof, at any

time after the first thirty-six months of the term of the

loan having elapsed.

9.5 FirstRand Bank Limited 741 275 – – –

Interest rate swap derivative agreements entered

into are at fixed rates of 11.45%, 11.45% and

11.40% per annum until 30 October 2015,

1 February 2016 and 4 December 2020 respectively.

These agreements have been fair valued and

marked to market at the reporting date.

9.6 Investec Bank Limited 9 797 024 9 796 977 – –

The loan bears interest at a fixed rate of 16.35%

(2004: 16.35%) per annum and interest is repayable

in bi-annual instalments of R828 688 (2004:

R828 688). The capital is repayable in full on

1 November 2010. This loan is secured over freehold

property valued at R17 600 000 (2004: R15 400 000),

as detailed in note 1.

The company has ceded all rentals under lease

agreements concluded in respect of the mortgaged

property to Investec Bank Limited. As detailed in

note 4, the group’s listed investments have been

pledged in favour of Investec Bank Limited.

19 398 482 16 179 567 – –

Amounts repayable within the next twelve months

included in current liabilities (809 745) (590 970) – –

18 588 737 15 588 597 – –


Group Company

Restated

2005 2004 2005 2004

R R R R

10. DEFERRED TAXATION

Unrealised surplus on revaluation of investment properties 1 276 193 205 689 – –

Amortised lease receivables 216 221 245 491 – –

Provisions (121 889) (207 160) – –

Unrealised net capital losses on revaluation of listed

investments (45 070) (420 127) – –

Interest rate swap derivative agreements (214 970) – – –

Other sundry temporary differences 304 378 337 751 – –

1 414 863 161 644 – –

Balance at beginning of year 161 644 (648 142) – –

– As previously reported 38 906 4 742 555 – –

– Lease smoothing effect 122 738 115 097 – –

– Effect of change in accounting policy – (5 505 794) – –

Movement relating to unrealised surplus on revaluation

of investment property 1 070 504 559 020 – –

Movement relating to provisions 85 271 90 518 – –

Movement relating to other sundry temporary differences (33 373) 52 151 – –

Movement relating to amortised lease receivables (29 270) 15 300 – –

Movement relating to interest rate swap derivative

agreements (214 970) – – –

Assessed loss utilised – 29 859 – –

Movement relating to unrealised net capital losses on

revaluation of listed investments 375 057 62 938 – –

Balance at end of year 1 414 863 161 644 – –

11. PROVISIONS

Leave pay provision 374 885 568 801 – –

Reconciliation


Additional provisions provided for 123 264 66 601 – –

Amounts utilised and transferred (317 180) (490 060) – –

Closing carrying value 374 885 568 801 – –

12. REVENUE

Rental and parking fees 16 766 785 17 236 668 – –

Confirming fees and interest 657 908 1 070 911 – –

Investment income 448 904 378 802 – –

17 873 597 18 686 381 – –

Projected future rental income in terms of non-cancellable

operating leases in place

Within 1 year 10 197 803 14 632 310 – –

In 1 to 5 years 10 609 403 18 517 394 – –







Group Company

Restated

2005 2004 2005 2004

R R R R

13. OPERATING PROFIT BEFORE INTEREST

is stated after:

Income

Income from subsidiary – – 2 084 676 1 737 230

Dividends received 448 471 378 299 – –

Surplus on disposal of property, plant and equipment 37 454 – – –

Expenses

Auditors’ remuneration 260 380 224 556 – –

Audit fee – current year 260 380 178 056 – –

Fees for other services – 46 500 – –

Depreciation of property, plant and equipment 281 347 241 111 – –


Motor vehicles 93 287 77 419 – –


Loss on foreign exchange 26 840 36 458 – –

Loss on disposal of property, plant and equipment 174 027 – – –

Fees relating to valuation of properties 51 068 42 242 – –

Operating leases – offices and warehousing 351 529 380 844 – –

14. DIRECTORS’ EMOLUMENTS

Paid or credited by the holding company and its

subsidiaries during the year under review for:

Services as directors 123 000 114 000 – –

Managerial and other services 353 019 849 332 – –

476 019 963 332 – –

Directors’ emoluments were earned as follows:

Consulting Services as

Total Salaries Bonuses Benefits services directors

R R R R R R

DC Marshall – Executive 311 770 245 856 20 488 21 426 – 24 000

PN Lonsdale – Non-executive 35 400 2 400 – – – 33 000

BA Hose – Non-executive 95 849 – – – 62 849 33 000

ME Stewart – Non-executive 33 000 – – – – 33 000

476 019 248 256 20 488 21 426 62 849 123 000

Mr BA Hose performed certain advisory services relating to property acquisitions at an agreed market related

fee structure.

Group Company

Restated

2005 2004 2005 2004

R R R R

15. NON-OPERATING PROFIT/(LOSS) ITEMS

Unrealised surplus on revaluation of investment properties 8 835 505 6 319 278 – –

Realised net surplus on disposal of investment properties 1 617 019 – – –

Cost of capital restructure (234 408) – – –

Realised net surplus on disposal of listed investments 95 597 180 498 – –

Realised surplus on disposal of unlisted investments – 312 400 – –

10 313 713 6 812 176 – –

16. TAXATION

SA Normal tax 1 330 851 844 906 – –

– current 1 048 650 798 170 – –

– tax on capital gains 282 642 46 736 – –

– overprovision – prior year (441) – – –

Deferred tax 892 156 711 920 – –

– other temporary differences (187 993) 157 970 – –

– tax loss utilised – 29 859 – –

– listed investments – (34 934) – –

– revaluation of properties 1 081 446 559 025 – –

– effect of rate change (1 297) – – –

Secondary tax on companies 260 584 126 906 – –

– current 260 584 217 154 – –

– prior year overprovision – (90 248) – –

2 483 591 1 683 732 – –

Reconciliation of tax charge % % % %

Effective rate 19.1 16.8 – –

Standard rate 29.0 30.0 29.0 30.0

Adjusted for tax effects of:

Revaluation of investment property (19.7) (18.8) – –

Dividends received – – (29.0) (30.0)

Deferred tax on revaluation of properties above cost 8.3 5.4 – –

Secondary tax on companies 2.0 2.2 – –

Sundry reconciling items increasing the effective rate 3.6 0.7 – –

Sundry reconciling items decreasing the effective rate (4.1) (2.7) – –

19.1 16.8 – –

During the year the taxation rate applicable to the group/company decreased by 1% to 29%.






Group Company

Restated

2005 2004 2005 2004

R R R R

17. LEASE SMOOTHING EFFECT

This arose due to the application of the accepted

interpretation of IAS 17 (leases). This resulted in the

recognition of rental income on a straight line basis,

whereas it was previously recognised in terms of the cash

flows inherent in lease agreements. A corresponding lease

receivable has been recognised on the balance sheet

appropriately disclosed between non-current and current

assets.

Increase in revenue – 52 761 – –

Increase in taxation – (7 650) – –

Decrease in unrealised surplus on revaluation of investment

properties – (52 761) – –

Decrease in profit for the year – (7 650) – –

Decrease in equity at the beginning of 2004 – (115 106) – –

Total decrease in equity for 2004 – (122 756) – –

18. CHANGE IN ACCOUNTING POLICY

The company changed its policy for the deferred taxation

rate applicable to the revaluation of investment properties

during 2004. The effect of this change is that deferred

taxation that arises from the revaluation of investment

properties is measured based on the taxation

consequences that would follow from the disposal of the

investment property.

Effect on deferred taxation for the year resulting in decrease

in profit for the year – (582 751)

Effect on deferred taxation:

Increase in non-distributable reserves at beginning of year – 5 385 879

Increase in distributable reserves at beginning of year – 119 915

– 5 505 794

19. ORDINARY DIVIDENDS

Paid 2 084 676 1 737 230 2 084 676 1 737 230


Group Company

Restated

2005 2004 2005 2004

R R R R

20. EARNINGS PER SHARE

The calculation of earnings per share is based on profit for

the year of R10 521 030 (2004: R8 361 228 restated) and

on the weighted average number of ordinary shares in

issue during the year of 17 372 300 (2004: 17 372 300). The

headline earnings per share are based on headline

earnings of R1 571 406 (2004: R2 217 223 restated) and on

the weighted average number of ordinary shares in issue

during the year of 17 372 300 (2004: 17 372 300).

Reconciliation between basic and headline earnings:

Basic earnings per income statement 10 521 030 8 361 228

Adjusted for:

Unrealised surplus on revaluation of investment property

after taxation (7 754 058) (5 697 842)

Realised surplus on disposal of unlisted investment after

taxation – (303 945)

Realised net surplus on disposal of listed investments

after taxation (81 102) (142 218)

Realised net surplus on disposal of investment properties

after taxation (1 348 872) –

Cost of capital restructure after taxation 234 408 –

Headline earnings for the year 1 571 406 2 217 223

21. COMMITMENTS AND CONTINGENCIES

A creditor of a former confirming client of the group, which

has been liquidated, has made an application to the High

Court to set aside the liquidation and distribution account

of the client. The effect of this will be to reflect the group as

a concurrent creditor and not as a secured creditor. The

directors are confident that this application will not

succeed. The matter was heard in the High Court during

February 2006. The Court’s decision is still pending.

Letters of credit and guarantees have been issued by the

group’s bankers to the extent of nil (2004: R1 932 971). The

company has stood surety for a subsidiary’s indebtedness

to Nedbank Limited to the extent of R4 679 139 (2004:

R5 067 708) and to Investec Bank Ltd. to the extent of

R10 000 000 (2004: R10 000 000)

Commitments in terms of non-cancellable operating leases

in place:

Payable within 1 year 304 210 992 303

Payable in 1 to 5 years 346 524 5 731 781






22. RETIREMENT BENEFIT INFORMATION

Certain subsidiary companies contribute to The Marshalls Group Pension Fund, a defined benefit plan. This fund is

registered under and governed by the Pensions Fund Act of 1956. Membership of the fund is compulsory and at

31 December 2005, 18 (2004: 24) employees with pensionable salaries totalling R1 737 096 (2004: R2 244 532) for the

year were members of the fund. Six members with pensionable salaries totalling R183 240 ceased being members

effective 1 October 2005. An amount of R604 153 was paid in respect of contributions to the defined benefit plan during

the period. The fund’s assets are held in investment portfolios of financial institutions. Full actuarial valuations are

performed every three years. A valuation was conducted on 1 January 2006. In arriving at its findings the actuary took

into account the attained age method of valuation, which allows for salary increases until retirement. The actuary’s

report indicated that the fund’s assets exceeded its liabilities. The trustees of the fund approved in principle during the

financial year the decision to convert the fund to a defined contribution fund. Any surplus will be distributed to the

members upon conversion. Application to the Financial Services Board for conversion of the fund will be made.

23. SEGMENT REPORT

Primary segment information: Business segments

Properties Division Confirming Division Investment Division Consolidated

Restated Restated Restated Restated

2005 2004 2005 2004 2005 2004 2005 2004

R R R R R R R R

Segment revenue 16 766 785 17 236 668 657 908 1 070 911 448 904 378 802 17 873 597 18 686 381

Segment result 8 967 418 8 869 329 439 003 902 613 236 520 146 330 9 642 941 9 918 272

Non-segment

expenses (4 130 535) (4 179 915)

Interest paid (3 110 693) (2 533 803)


Non-operating

items 10 313 713 6 812 176

Profit before

taxation 13 004 621 10 044 960

Taxation 2 483 591 1 683 732


Other

information

Segment assets 73 337 091 67 342 040 6 705 855 7 776 183 18 795 161 15 253 523 98 838 107 90 371 746

Non-segment

assets 10 605 399 414 948

Total assets 109 443 506 90 786 694

Segment liabilities (26 028 232) (27 165 674) (44 349) (15 842) (72 783) 8 007 007 (26 145 364) (19 174 509)

Non-segment

liabilities (273 904) (460 313)

Income tax

liabilities (339 895) (56 523)

Total liabilities (26 759 163) (19 691 345)

Capital expenditure 9 859 839 161 883 – – – – 9 859 839 161 883

Depreciation 183 005 140 064 2 938 3 162 – – 185 943 143 226


23. SEGMENT REPORT (continued)

Secondary segment information: Geographic segments by location of assets

South Africa Europe

Restated Restated

2005 2004 2005 2004

R R R R

Segment revenue 16 869 160 17 886 085 1 004 437 800 296

Segment assets 74 010 565 70 234 294 24 827 542 20 137 452

Capital expenditure 9 859 839 161 883 – –

For management purposes, the group is organised into three major operating divisions – property, confirming and

investment. The divisions are the basis on which the group reports its primary segment information. The property

segment owns substantial rental income producing commercial and light industrial properties and a parking garage in

Durban and Cape Town. The confirming segment operates a confirming and indent financing operation, trading as

Marshalls Confirming. The investment segment owns shares in listed companies from which it receives investment

income.

Segment assets and liabilities: segment assets include all operating assets used by a segment and consist principally

of operating cash, trade receivables and property, plant and equipment. Segment liabilities include all operating

liabilities.

24. ACCOUNTING POLICIES

The accounting policies of the group are set out on page 6 of this report.

25. FINANCIAL RISK MANAGEMENT

Financial instruments carried on the balance sheet include cash and bank balances, investments, trade receivables and

payables and borrowings. These instruments are generally carried at their estimated fair value.

Credit risk

Financial assets, which potentially subject the group to concentrations of credit risk, consist principally of cash, short-

term deposits and receivables.

The group’s cash and short-term deposits are placed with high credit quality financial institutions. Receivables are

presented net of the allowance for doubtful receivables. Credit risk with respect to receivables is concentrated due to

the small number of customers comprising the group’s confirming division customer base.

The carrying amounts of financial assets included in the balance sheet represent the group’s exposure to credit risk in

relation to these assets.

Certain of the listed investments, see note 4, are encumbered by a pledge in favour of Investec Bank Limited.

All other financial assets are unencumbered. The group does not have any significant exposure to any individual

customer.

Interest rate risk

Interest-bearing borrowings of the group bear interest at rates detailed in Note 9. Interest rate risks are not hedged,

other than as disclosed in note 9.

Foreign currency risk

The effect of fluctuations in foreign exchange rates on the valuation of the share portfolio have not been hedged.






26. RELATED PARTIES

Marshalls Limited is a related party to the following companies:

Marshalls Internal Limited subsidiary

Marshalls Group Limited subsidiary

Marshall Metallic Holdings Limited subsidiary

Marshalls Confirming (Jersey) Limited subsidiary

Marshalls Parking (Proprietary) Limited subsidiary

Monteagle Property Holdings Limited

Monteagle Consumer Group Limited

Monteagle Africa Limited

Certain of the directors of Marshalls Limited are also directors of some of the abovementioned related parties.

The group rents a storage facility from Monteagle Property Holdings Limited. Total rent billed for the year amounted to

R36 334 (2004: R32 577).

Certain sectional title units (namely 1 and 4) were disposed of to related parties (refer to note 5):

– Monteagle Consumer Group Limited R2 464 000

– Monteagle Africa Limited R2 085 000


Restated

Notes 2005 2004

R R

Net cash outflow from operating activities (229 601) 2 595 539

Cash received from customers 1 17 074 075 21 538 032

Cash paid to suppliers and employees 2 (11 830 714) (13 685 995)

Cash generated by operating activities 3 5 243 361 7 852 037


Interest paid (2 369 418) (2 533 803)

Dividends paid (2 084 676) (1 737 230)

Taxation paid (1 308 063) (1 013 695)

Net cash outflow from investing activities (4 943 148) 486 196

Replacement of property, plant and equipment (515 733) (105 833)

Net proceeds from disposal of investment properties 13 858 436 –

Acquisition of property (8 982 719) –

Acquisition of investment properties (9 310 317) –

Improvements to investment properties (36 193) (63 153)

Proceeds from disposal of investments 95 597 2 037 164

Proceeds from disposal of property, plant and equipment 40 500 –

Acquisition of investments (92 719) (1 381 982)

Net cash inflow from financing activities 2 243 232 (946 098)

Increase in interest bearing borrowings 2 477 640 (946 098)

Cost of capital restructure (234 408) –

Net decrease in cash (2 929 517) 2 135 637

Net cash balances at beginning of year 2 432 923 297 286

Net cash borrowings at end of year 4 (496 594) 2 432 923

Consolidated Cash Flow Statement for the year ended 31 December 2005



Notes to the Consolidated Cash Flow Statement for the year ended 31 December 2005


Restated

2005 2004

R R

1. Cash received from customers

Revenue 17 873 597 18 686 381

Lease smoothing effect 100 923 (52 761)

Movement in trade receivables (900 445) 2 904 412

17 074 075 21 538 032

2. Cash paid to suppliers and employees

Revenue 17 873 597 18 686 381

Operating profit before interest (5 512 406) (5 738 357)

12 361 191 12 948 024

Provision for doubtful debts 101 752 (162 310)

Loss on disposal of property, plant and equipment (174 027) –

Surplus on disposal of property, plant and equipment 37 454 –

Depreciation (281 347) (241 111)

Movement in foreign currency translation reserve (577 435) 827 562

Movement in trade payables 363 126 313 830

11 830 714 13 685 995

3. Cash generated by operating activities

Operating profit before interest 5 512 406 5 738 357

Adjusted for:

Provision for doubtful debts (101 752) 162 310

Loss on disposal of property, plant and equipment 174 027 –

Surplus on disposal of property, plant and equipment (37 454) –

Lease smoothing effect 100 923 (52 761)

Depreciation 281 347 241 111

Movement in foreign currency translation reserve 577 435 (827 562)

Working capital changes (1 263 571) 2 590 582

Increase in trade receivables (900 445) 2 904 412

Decrease in trade payables (363 126) (313 830)

5 243 361 7 852 037

4. Net cash borrowings

Bank and cash balances 3 247 893 3 502 010

Bank overdrafts (3 744 487) (1 069 087)

(496 594) 2 432 923


2005 2004

R R

Net cash inflow from operating activities 60 455 (1 605)

Cash generated by operating activities 60 382 (1 720)

Dividends received 2 084 749 1 737 345

Dividends paid (2 084 676) (1 737 230)

Net cash Inflow from investing activities

Decrease in loan receivable from subsidiary 5 443 4 005

Net increase in cash 65 898 2 400

Cash at beginning of year 2 400 –

Cash at end of year 68 298 2 400

Cash Flow Statement for the year ended 31 December 2005



Report of the Independent Auditors to the Members of Marshalls Limited


We have audited the annual financial statements and group annual financial statements of Marshalls Limited, set out on

pages 6 to 34, for the year ended 31 December 2005. These financial statements are the responsibility of the company’s

directors. Our responsibility is to express an opinion on these financial statements based on our audit.

ScopeWe conducted our audit in accordance with International Standards of Auditing. Those standards require that we plan and

perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit

includes:

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

* assessing the accounting principles used and significant estimates made by management, and

* evaluating the overall financial statement presentation.

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

Audit opinionIn our opinion, the financial statements fairly present, in all material respects, the financial position of the company and the

group at 31 December 2005 and the results of their operations and cash flows for the year then ended in accordance with

International Financial Reporting Standards, and in the manner required by the Companies Act.

Registered Accountants and Auditors

19th Floor, 320 West Street, Durban 4001

South Africa

Durban

7 April 2006


Marshalls Limited(Reg No. 1987/002656/06)

NOTICE IS HEREBY GIVEN that the Nineteenth Annual General Meeting will be held in the Boardroom, 11 Sunbury Park,

La Lucia Ridge Office Estate, La Lucia, Durban, 4319 at 09:00 on 20 June 2006 for the transaction of the following business:

1. To receive and adopt the annual financial statements at 31 December 2005.

2. To appoint the following directors who retire by rotation in terms of the company’s articles of association and who, being

eligible, offer themselves for re-election:

2.1 PN Lonsdale (73)

Non-executive director

Date of appointment: 17 June 1987

Professional qualifications: FCIS

2.2 BA Hose (68)

Non-executive director

Date of appointment: 1 December 2001

Professional qualifications: FRICS, FIV (SA)

3. To fix the remuneration of the auditors for the past audit.

4. To place the unissued ordinary shares of the company under the control of the directors.

A member entitled to attend and vote at a meeting of the company is entitled to appoint a proxy 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.

In order to be effective, the form of proxy must be deposited at 11 Sunbury Park, La Lucia Ridge Office Estate, La Lucia,

Durban, 4319 not less than FORTY-EIGHT (48) HOURS before the time appointed for the holding of the meeting.

By order of the board

AM AHMEDSecretary

La Lucia, Durban

6 April 2006

Notice of Meeting



Designed by

PRINTED BY INCE (PTY) LTD

Form of Proxy


Marshalls Limited(Reg No. 1987/002656/06)

I/We

of

being a member/members of Marshalls Limited hereby appoint

of

or, failing him, the chairman of the meeting as my/our proxy to vote for me/us and on my/our behalf at the annual general

meeting of the company to be held on 20 June 2006 and at every adjournment thereof.

Signed this day of 2006

Signature

Please indicate by an “X” in the appropriate spaces below how you wish your votes to be cast in respect of the resolutions

to be proposed at the meeting. Unless otherwise instructed, my/our proxy is authorised to vote as he thinks fit.

Resolution (1) For Against Abstain




Notes:

(1) Any member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, speak and, on a poll,

vote in his stead, and a person so appointed need not be a member of the company.

(2) If this proxy is signed under power of attorney or on behalf of a company, such power of attorney, unless previously

registered with the company, must accompany it, failing which, the proxy cannot be used at the meeting.

(3) In order to be effective, the form of proxy must be deposited at 11 Sunbury Park, La Lucia Ridge Office Estate, La Lucia,

4319 not less than 48 hours before the time appointed for the holding of the meeting.


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