annual report of the company and its subsidiaries for …

The following reports and financial statements for the company and the group are presented:

PAGE PAGE

Administration 29 Financial Highlights 8

Auditors’ Report 1 Income Statements 14

Balance Sheets 13 Notes to the Cash Flow Statements 16

Cash Flow Statements 15 Notes to the Financial Statements 18 - 28

Chief Executive’s Report 2 - 3 Notice to Shareholders 30

Directors’ Report 11 Statement of changes in equity 17

The above financial statements and group financial statements were approved by the board of directors on 30 July 2003 and are

signed on its behalf.

B.G. VAN ROOYEN R.C.I. SEROBE

CHIEF EXECUTIVE OFFICER DIRECTOR

AUDITORS’ REPORT

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF LABAT AFRICA LIMITED

We have audited the annual financial statements and group annual financial statements of Labat Africa Limited set out on pages

11 to 28. The 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.

Scope

We conducted our audit in accordance with statements of South African Auditing Standards. 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 Opinion

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

group at 28 February 2003 and the results of their operations and cash flow for the year then ended in accordance with South

African statements of Generally Accepted Accounting Practice and in the manner required by the South African Companies Act.

Nkonki Pierce

Registered Accountants and Auditors

Chartered Accountants (S.A.); Johannesburg

30 July 2003

1

ANNUAL REPORT OF THE COMPANY AND ITS SUBSIDIARIESFOR THE YEAR ENDED 28 FEBRUARY 2003

LABAT AFRICA LIMITEDIncorporated in the Republic of South Africa

Registration No. 1986/001616/06 AFRICA LIMITED

SUMMARYThe year 2003 proved to be another successful chapter in the development of the company. Despite difficult trading conditionsin most of the areas in which we operate the group managed to achieve an attributable profit of R31,5 million and headlineearnings per share of 17,7 cents.

The main challenges facing the group during the year were caused by the strengthening rand which adversely affected our exportbusiness and the high interest rate climate currently prevalent in South Africa. The adverse effects of the Rand strength will becounter-balanced by the expansion of our overseas markets to attract increased volumes to our low cost manufacturing capability.This is a short term solution and we see further difficulties ahead for our export business if the rand maintains its current strength.Already this year interest rates have been reduced and further reductions have been projected for later in the year. This bodes wellfor our retail business. We have a host of new opportunities to explore in the year ahead which looks exciting but not withoutdifficulties.

FINANCIALThe financial performance was satisfactory in the circumstances.

2003 2002 2001

Turnover (R’ 000) 244 930 224 204 175 735

Operating Profit (R’ 000) 38 990 52 812 27 260

Headline earnings (R’ 000) 32 750 38 002 16 739

Headline earnings per share (cents) 17,7 20,6 9,1

LABAT TRAFFIC SOLUTIONSOur Traffic business performed well during the past year and we have won several new contracts which are expected to generatesubstantial revenue in the years ahead. One of the main challenges for the business is the collection rate of outstanding fines.Our revenue depends on the success of the collection rate. In most of our contracts we are not responsible for fine collectionsand therefore have had little influence over the success of this aspect of the business. During the past year we acquired a controllingstake in Total Computer Services (Pty) Ltd (TCS) which supplies back office software to some 150 Municipalities. TCS alsoprovides a total back office solution to a number of municipalities. We are now in a position to offer a complete outsource solutionto our customers and consequently we expect collection levels to increase substantially in the years ahead.

SOUTH AFRICAN MICRO-ELECTRONIC SYSTEMS (SAMES)SAMES was affected adversely by the strong rand and by delays in orders from the Indian market. To counter this shortfall inthe future we have accelerated our marketing roll-out into other markets both geographically and with a range of exciting newproducts. We are currently engaged in discussions with various parties with a view to participating in the many off-set programmescurrently in place. SAMES is strongly positioned to take advantage of these programmes. We are however expecting that profitswill be substantially reduced in the year ahead, returning to current levels only in the 2005 year and thereafter.

LABAT MANAGEMENT CONSULTINGOur consulting business has done well. We are now mainly engaged in various kinds of I.T. consulting and are currently expandingour I.T. resources and representations. We have recently signed a master re-seller agreement with S.S.A. Global TechnologiesInc. (S.S.A.) for the whole of Africa. S.S.A. is one of the major international software houses and their range of products includeBPCS, Masterpiece, Max and Infinium and they have just acquired the BAAN business. We are using the current customer baseand our in-house and partner expertise to further develop a fully fledged, operationally empowered I.T. business with substantialconsulting, developmental and implementation capacity. There are substantial opportunities in the I.T. outsourcing area specificallyin our current client and product base and we are in discussions with several substantial partners to take this forward. The publicsector, particularly the municipalities, present great opportunities for such an outsourced solution.

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AFRICA LIMITED

CHIEF EXECUTIVE’S REPORT AND REVIEW OF OPERATIONS

LABAT RETAILOur retail business has done well despite difficult trading conditions. Our strategy has been to consolidate and improve the qualityof the debtors book and to restructure the business appropriately to suit the changing market. We have closed some stores andconsolidated their trade and their debtors book into neighbouring stores. We are now well positioned to take advantage of anyupswing in the retail sector.

We have expanded the range and upped the quality of our services and products through ventures with up-market furnituresuppliers Montani and with fitted unit manufacturer William Tell and are expecting to see the benefits of this in the year ahead.As reported last year we are exploring various options to separate the retail business from the rest of our businesses which aremainly technology based. This should go a long way towards giving us the higher market rating which is more appropriate.

PROSPECTSThe prospects for our existing businesses are good and we expect each of the main businesses to perform satisfactorily in the yearahead. We intend to consolidate our position and win market share and will grow these businesses substantially in the year ahead.

As a real operational empowerment company we are constantly being offered opportunities in a variety of businesses. Our businessis currently grouped as follows;- SAMES- Labat Traffic Solutions- Labat Management Consulting / I.T.- Labat Retailand we are pursuing new opportunities which fit logically into these four groupings.

These opportunities include initiatives in the I.D and smart card industries in conjunction with major international partners, inpayment solutions with major local partners, in the airtime business with various partners and in the consulting and I.T. industrieswith local and international partners. This year we will also be expanding our operations into selected African countries inconjunction with international partners.

RESTRUCTURINGTo house these new opportunities it is necessary to create a new business grouping which will be titled Labat Business Solutionswhich will house SAMES and these new ventures. To facilitate the growth of these ventures it may be necessary to enter into arelationship with a partner with the necessary capacity to enable the business to grow rapidly. To this end we are in on-goingdiscussions with various potential partners.

FIXED ASSETSDuring the year a substantial investment was made in fixed assets. A total of R36,4 million was invested, R28,6 million of thiswas for SAMES in order to maintain the plant in its now pristine condition. The replacement value of this plant is currently inthe order of R800 million. R6,5 million was spent by Labat Traffic Solutions for the equipment roll out for new contracts, thebenefits of which will accrue in the years ahead. All of this equipment is linked to 5 year revenue contracts with the capex beingfinanced over three years.

ACQUISITIONSDuring the year we acquired, through Labat Traffic Solutions a 51% shareholding in Total Computer Services (Pty) Ltd (TCS)for a purchase consideration of R4 million. The business has performed very well since acquisition and will add substantial valueto our overall traffic business.

THANKSI thank all my colleagues on the board and our dedicated management team and staff for their contribution during the year.Thank you!

A special thanks to Mendel Sender who retired this year after many years of dedicated service and who is taking a well deservedbreak on a world tour after some 60 years of service to SA companies. Bon voyage Mendel!

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AFRICA LIMITED

CHIEF EXECUTIVE’S REPORT AND REVIEW OF OPERATIONS(continued)

SAMES is the only commercial semi-conductor manufacturing

facility in Africa. It is an integrated operation undertaking the

design, manufacture and marketing of high performance analogue

and mixed signal integrated circuits. The company is ISO 9001

certified.

SAMES markets its products in every part of the world through

a well-established network of agents and distributors. The

company occupies a dominant position in certain global market

segments.

PRODUCTS

• SAMES offers a range of standard (proprietary) Application

Specific ICs (ASICs) that are used in the energy measurement,

telecommunication and ID & security industries.

• Customer Specific ICs (CSICs) are custom designed and

manufactured to meet the exact specifications desired by

customers. Products that cover a wide range of industries

and customers from all continents have been developed over

the years.

DESIGN

• Motivated and dynamic development engineers are available to assist customers with the transfer of an existing design, with

place-and-route, or test program development or to provide any other assistance that may be necessary to take any design

successfully to the prototype stage.

WAFERFAB

• The SAMES Class 1 waferfab facility is constructed to sub-micron

requirements and specialises in the volume manufacturing of analogue

and mixed signal C-MOS process technologies. The modular processes

allow the easy integration of specialised variants into the base

technologies qualified in 1,0 to 2,0 micron geometries. Specialised

options such as EEPROM, high resistive poly resistors, low and high

voltage devices and zero threshold devices can easily be added upon

request. The flexible waferfab boasts world-class line yields, cycle

times and defect density levels.

4

SUBSIDIARY PROFILESAFRICA LIMITED

SOUTH AFRICAN MICRO ELECTRONIC SYSTEMS (PTY) LTD (SAMES)

Labat Traffic Solutions (Pty) Ltd was started in

December 1999 to provide customised I.T. and

financial solutions and a complete high-tech traffic

management system to municipalities and provincial

governments on a public / private partnership basis.

The unique solution offered by Labat Traffic enables the target customers to obtain a state of the art system together with a

competent team to run the back-room processing with no up-front outlays of scarce capital resources.

Labat Traffic has developed a range of cutting edge licence

plate recognition and image archiving technologies able to

automate the otherwise labour intensive job of manually

processing traffic photographs. The system is able to read

the licence plate of an offending vehicle from a negative. The

system archives

the photo and

m a k e s i t

available on the

i n t e r n e t f o r

viewing and easy

payment of the

traffic fine. Our

image database

technology has been developed to manage terabytes of information and we expect

our archives to rival some of the largest image databases in the world.

LABAT AFRICA MANAGEMENT CONSULTING (PTY) LTD

Labat Africa Management Consulting (Pty) Limited was formed in 1994. It’s initial

client base was in the public service and the services provided related to SMME

(Small Medium and Micro Enterprise) development in South Africa.

Our multi-service consulting management division now specialises in transformation

and performance improvement, providing realistic, effective and proven business

solutions that meet local needs.

Designed to bridge the gap between the public and private sector by bringing the

best of private sector and modern government practices to the public sector, this

division offers a full suite of professional services ranging from project management

to I.T. consulting.

5

AFRICA LIMITED

LABAT TRAFFIC SOLUTIONS (PTY) LTD

SUBSIDIARY PROFILES

LABAT AFRICA MANAGEMENT CONSULTING (PTY) LTD (continued)

Our service range includes amongst others:

• Human Resource Development

• Transformation

• Information Technology

• Skills & Competency audits

• Performance Management

• Business process re-engineering

Some of our clients include:• Rand Water Board• Eskom• City Power• Government of Botswana• Department of Agriculture• Department of Water Affairs & Forestry• Department of Public Works• The City of Johannesburg• The City of Cape Town• The Nelson Mandela Metro

LABAT RETAIL

Labat Retail is a furniture business engaged in general

retailing, selling predominantly to the middle and lower

income groups under two brands ACME and DALES.

Our management team is experienced and extremely

familiar with our target market and our ability to be sensitive

to the needs of our customers is seen to be a great advantage

because it enables us to adapt to our ever changing

environment.

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AFRICA LIMITED

SUBSIDIARY PROFILES

LABAT RETAIL (continued)

We are dedicated to fulfilling the needs of our Clients by providing quality goods at competitive prices, through service excellence,

long term supplier confidence and adding value to products we sell to our customers.

Acme operates out of 22 branches whose code of values is:

1. To be recognised as a premier retail business by exceeding the expectations of our customers.

2. To form partnerships between customers, staff and management.

3. To establish standards of excellence.

4. To treat customers with empathy, respect and dignity.

5. To demonstrate the highest values of ethics, morality, integrity and honesty.

6. To develop initiative, creativity and reward our greatest asset, our staff.

7. To ensure that each purchase made from us will always remain a positive experience for our customers.

8. To be distinctive and unique.

AFRICA LIMITED

SUBSIDIARY PROFILES

7

AFRICA LIMITED

FINANCIAL HIGHLIGHTS

GROUP SUMMARY

2003 2002

R’000 R’000

Key elements

Revenue 244 930 224 204

Operating income before depreciation 38 990 52 812

Net income after taxation 20 296 41 360

Headline earnings 32 750 38 002

Basic earnings 31 475 38 002

Ordinary shareholders’ equity 153 553 122 318

Interest bearing debt/shareholders’ funds 0,55 0,54

Current assets/current liabilities 1,99 1,99

Return on average equity (%) 22,8 36,8

Operating margin before depreciation 15,19 23,6

Share performance

Headline earnings (cents per share) 17,7 20,6

Net intangible asset value (cents per share) 66,8 51,9

Total number of shares in issue (000) 184 415 184 903

Market price (cents per share)

- opening 0,39 0,15

- high 0,85 0,40

- low 0,30 0,15

- closing – end of February 0,47 0,39

Closing market capitalisation (R’000) 86 675 72 112

Volume of shares traded (000) 28 916 16 795

Total value of transactions (R’000) 16 860 4 217

Average price per share (cents) 58,3 25,1

Employee information

Total number of employees 584 561

Previously disadvantaged employees 454 419

8

AFRICA LIMITED

INTEREST IN SUBSIDIARIES

2003 2002 2003 2002 2003 2002 2003 2002 2003 2002

Acme Stores (Pty) Ltd 2 2 100 100 - - 3 869 606 3 869 606 37 169 533 39 500 791

Integrated Circuit DesignCentre (Pty) Ltd 1 000 1 000 100 100 - - 1 000 1 000 - -

Labat Africa ManagementConsulting (Pty) Ltd 1 1 100 100 - - 1 442 523 1 442 523 (376 509) (5 166 731)

Labat Projects (Pty) Ltd 200 200 70 70 - - 140 140 - -

Labat Traffic Solutions(Eastern Cape)(Pty) Ltd 100 100 51 51 - - 51 51 - -

Labat Traffic Solutions(Pty) Ltd 100 100 51 51 - - 51 51 - 1 804 070

Sames Properties (Pty) Ltd 200 200 - - 100 100 - - - -

South African Micro-Electronic Systems(Pty) Ltd 8 366 872 8 366 872 100 100 - - 201 070 201 070 64 106 237 72 311 367

Total Computer Services(Pty) Ltd 450 - - - 51 - - - - -

5 514 441 5 514 441 100 899 261 108 449 497

Less: Reserve - - 65 641 014 65 641 014

5 514 441 5 514 441 35 258 247 42 808 483

Interest in Company

Direct Indirect Shares Indebtedness

(Rands) % (Rands)

NAME OF COMPANY Issued Share Capital Interest in Capital

9

Issued Share Capital : 184,903,149 shares

SHAREHOLDER SPREAD No. of % No. of Shares %

shareholders

1 - 5,000 shares 309 54.12 430,241 0.23

5,001 - 10,000 shares 52 9.11 428,600 0.23

10,001 - 50,000 shares 99 17.34 2,504,017 1.35

50,001 - 100,000 shares 36 6.30 2,992,228 1.62

100,001 - 1,000,000 shares 60 10.51 23,620,164 12.77

1,000,001 and over shares 15 2.63 154,927,899 83.79

571 100.00 184,903,149 100.00

DISTRIBUTION OF SHAREHOLDERS No. of % No. of Shares %

shareholders

Banks 7 1.23 760,100 0.41

Close Corporations 18 3.15 2,506,387 1.36

Individuals 440 77.06 22,194,239 12.00

Investment Companies 14 2.45 15,557,976 8.41

Limited Companies 7 1.23 1,242,133 0.67

Mutual Funds 2 0.35 1,706,883 0.92

Nominees and Trusts 50 8.76 21,157,838 11.44

Pty Companies 32 5.60 115,148,970 62.28

Share Incentive Scheme 1 0.18 4,628,623 2.50

571 100.00 184,903,149 100.00

PUBLIC / NON - PUBLIC SHAREHOLDERS No. of % No. of Linked %

shareholders Units

Directors of the Company 1 0.18 3,333,333 1.80

Labat Anderson SA (Pty) Limited 1 0.18 97,538,790 52.75

Labat Consortium 1 0.18 890,923 0.48

Share Incentive Scheme 1 0.18 4,628,623 2.50

Non - Public Shareholders 4 0.70 106,391,669 57.54

Public Shareholders 567 99.30 78,511,480 42.46

571 100.00 184,903,149 100.00

BENEFICIAL SHAREHOLDERS WITH No. of Linked %

AN INTEREST OF 4% OR MORE IN SHARES Units

Labat Anderson SA (Pty) Limited 97,538,790 52.75

Industrial Development Corporation 10,909,091 5.90

Comint Investment Limited (Non/Res) 9,750,547 5.27

IMR Investments (Pty) Limited 9,300,000 5.03

Mr Tony Lee Herbert (Non/Res) 7,800,000 4.22

135,298,428 73.17

DIRECTORS' SHAREHOLDINGS Beneficial % Beneficial %

Direct Direct

Shabangu, JM 3,333,333 1.80 0 0

3,333,333 1.80 0 0

AFRICA LIMITED

ANALYSIS OF SHAREHOLDERS

10

AFRICA LIMITED

Your directors have pleasure in submitting their report of the company and its subsidiaries for the year under review.

Nature of businessThe company is an investment operating company which through its subsidiaries is engaged in management consulting, trafficcontrol technology, manufacture of electronic chips and retailing and these businesses are divisionally grouped into three mainfocus areas, namely Technology, Professional Services and Retail Services.

General reviewThe group continues to operate as a going concern. The activities of the group are comprehensively dealt with in the reports of theChief Executive Officer who is temporarily also acting as Chairman of the company following the death of the former chairman.

Financial resultsThe accompanying income statements show that the income of the group attributable to the shareholders of the company amounts toR31,5 million (2002 – R38,0 million). Comprehensive details of the group’s performance are covered elsewhere in this annual report.

DividendsNo dividends were declared during the year but when deemed appropriate, a dividend will be declared.

Share capitalDuring the year 488 600 shares were purchased by the company from employees in terms of a share incentive scheme.

Directors and secretaryThe names of the current directors and secretary are set out under Administration of this annual report.The only change in directorate that occurred during the year was the appointment of Mr. S. L. Majombozi.

Directors’ interest in issued share capitalThe directors’ holdings of shares in the company are detailed in the schedule headed Analysis of Shareholders.

Subsidiary companiesDetails of subsidiary companies are listed in the schedule headed Interest in Subsidiaries. On 1 July 2002 the group acquired51% of the share capital of Total Computer Services (Pty) Ltd through it’s subsidiary Labat Traffic Solutions (Pty) Ltd.

Allied Technologies Limited (Altech)A proposed deal to sell certain of the company’s subsidiaries to Altech Data was not concluded as the parties couldnot agree on the price and funding for the Altech Data businesses and it was mutually agreed to terminatediscussions regarding the sale.

Statement of responsibilityThe directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financialstatements and related information. The auditors are responsible to report on the fair presentation of the financial statements. Thefinancial statements have been prepared in accordance with South African generally accepted accounting practice and in the mannerrequired by the South African Companies Act. The directors are also responsible for the company’s system of internal financialcontrol. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the financial statements, andto adequately safeguard, verify and maintain accountability of assets, and detect misstatement and loss. Nothing has come to theattention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems hasoccurred during the year under review. The financial statements have been prepared on the going concern basis, since the directorshave every reason to believe that the company has adequate resources in place to continue in operation for the foreseeable future.

In terms of Section 268G(d) of the Companies Act, 1973 (as amended), I certify that the company has lodged with the Registrarof Companies all such returns as are required and that such returns are true, correct and up to date.

ALLISON BRITTOSECRETARY30 July 2003

SECRETARY’S REPORT

DIRECTORS’ REPORT

11

AFRICA LIMITED

CORPORATE GOVERNANCE

The group subscribes to the values of good corporate governance at all levels and is committed to conduct business with discipline,

integrity and social responsibility.

Board of directors

We regret to report that our chairman, Mr J. J. Modise passed away in December 2001. Pending the appointment of a new chairman,

our CEO Mr B G van Rooyen is acting as chairman. There are five non-executive members on the board of directors. Meetings

of executive directors are held at regular intervals with regard to the running of day to day operations in addition to regular

meetings of the full board. One third of the directors are subject to retirement annually, on a rotation basis.

Code of ethics

All employees of the group are required to maintain the highest standards in ensuring that business practices are conducted in a

manner, which, in all reasonable circumstances, is above reproach.

Management reporting

Management has extensive reporting facilities which are utilised within the group and monthly management reports are reviewed

against budgets and against past performances.

Internal control

The group has implemented internal control systems designed to provide reasonable assurance as to the integrity and reliability

of the financial statements and to adequately safeguard the accountability of its assets. Divisions are required to report their

performance against monthly budgets which have been set.

Going concern

The directors believe that the company will continue as a going concern in the year to the next balance sheet date. For this reason

the annual financial statements are prepared on the going concern basis.

Review

The group’s adherence to the principles contained in the Code of Corporate Practices and Conduct as set out in the King Report

is constantly reviewed and believes that the code is substantially being applied.

12

AFRICA LIMITED

Group Company

2003 2002 2003 2002

Note R’000 R’000 R’000 R’000

Assets

Fixed assets 4 54 128 25 514 - -

Intangible assets 5 30 324 26 357 - -

Interest in subsidiaries 6 - - 40 888 48 323

Loan to share incentive trust 18 600 1 872 600 1 872

Other investments 7 7029 217 6 584 -

Deferred taxation 3 15 251 703 - -

Non-current assets 107 332 54 663 48 072 50 195

Inventory 8 35 417 34 443 - -

Instalment sale debtors 9 94 221 82 891 - -

Trade and other receivables 21 947 27 639 66 4 167

Cash resources 22 555 39 612 537 590

Current assets 174 140 184 585 603 4 757

Total assets 281 472 239 248 48 675 54 952

Equity and liabilities

Share capital 11 1 844 1 849 1 844 1 849

Share premium 12 48 855 49 090 48 855 49 090

Distributable reserves 102 854 71 379 (10 632) (1 871)

Capital and reserves 153 553 122 318 40 067 49 068

Minority interest 6 263 4 043 - -

Long term liabilities 10 22 874 9 755 - -

Deferred taxation 3 11 670 10 576 - -

Non-current liabilities 34 544 20 331 - -

Trade and other payables 24 888 35 280 5 406 758

Bank overdraft-instalment sale finance 10 35 411 26 759 - -

Other Bank overdrafts 10 14 827 14 196 2 027 1 229

Other short term debt 10 10 593 15 766 1 175 3 897

Taxation 3 1 393 555 - -

Current liabilities 87 112 92 556 8 608 5 884

Total equity and liabilities 281 472 239 248 48 675 54 952

13

BALANCE SHEETAT 28 FEBRUARY 2003

14

AFRICA LIMITED

Group Company

2003 2002 2003 2002

Note R’000 R’000 R’000 R’000

Revenue 1 244 930 224 204 4 042 1 460

Operating income / (loss) before depreciation 38 990 52 812 (8 167) (6 982)

Depreciation (8 028) (4 504) - (492)

Finance income 1 291 760 289 113

Finance charges (11 957) (7 708) (883) (38)

Net income / (loss) before taxation 2 20 296 41 360 (8 761) (7 399)

Taxation 3 12 994 (607) - (107)

Attributable net income / (loss) 33 290 40 753 (8 761) (7 506)

Profit attributable to minority shareholders (1 815) (2 751) - -

Income / (loss) attributable to Labat shareholders 31 475 38 002 (8 761) (7 506)

Earnings per share 17

Basic Earnings (R’000) 31 475 38 002 - -

Headline earnings (R’000) 32 750 38 002 - -

Number of shares in issue throughout the year (‘000) 184 903 184 903 - -

Basic earnings per share (cents) 17,0 20,6 - -

Headline earnings per share (cents) 17,7 20,6 - -

INCOME STATEMENTFOR THE YEAR ENDED 28 FEBRUARY 2003

Group Company

2003 2002 2003 2002

Note R’000 R’000 R’000 R’000

CASH FLOW FROM OPERATING ACTIVITIES

Cash received from customers 1 234 647 220 307 2 756 2 876

Cash paid to suppliers and employees (217 897) (181 216) (11 670) (10 763)

Cash generated/(utilised) by operations 2 16 750 39 091 (8 914) (7 887)

Net finance (costs) / revenue (10 666) (5 859) (594) 74

Taxation refunded / (paid) 3 715 (1 022) - (107)

Net cash generated/(utilised) by operations 6 799 32 210 (9 508) (7 920)

CASH FLOW FROM INVESTING ACTIVITIES

Additions and replacements of fixed assets (36 422) (7 596) - -

Proceeds on disposal of fixed assets - 2 117 - 329

(Increase) / decrease in investments (4 739) (22) 8 656 8 010

Net cash (utilized)/ generated by investing activities (41 161) (5 501) 8 656 8 339

CASH FLOW FROM FINANCING ACTIVITIES

Increase in long-term borrowings 13 118 213 - -

Increase / (decrease) in bank overdrafts 9 283 3 408 798 (3 241)

(Decrease) / increase in short-term borrowings (5 096) 4 019 - 3 166

Net cash generated / (utilised) by financing activities 17 305 7 640 798 (75)

CASH AND CASH EQUIVALENTS

Net (decrease) / increase in cash and cash equivalents (17 057) 34 349 (54) 344

Cash and cash equivalents at beginning of year 39 612 5 263 590 246

CASH AND CASH EQUIVALENTS AT END OF YEAR 22 555 39 612 536 590

15

AFRICA LIMITED

CASH FLOW STATEMENTSFOR THE YEAR ENDED 28 FEBRUARY 2003

Group Company

2003 2002 2003 2002

R’000 R’000 R’000 R’000

1. CASH RECEIVED FROM CUSTOMERS

Trading revenue per income statements 244 930 224 204 4 042 1 460

Add: Accounts receivable previous year 110 530 106 633 4 167 5 583

355 490 330 837 8 209 7 043

Less : Accounts receivable this year (120 813) (110 530) (5 453) (4 167)

Cash received from customers 234 647 220 307 2 756 2 876

2. CASH GENERATED/(UTILISED) BY OPERATIONS

Net profit / (loss) before finance and taxation costs 30 962 48 308 (8 167) (7 474)

Depreciation, amortisation and non-cash items 10 164 3 799 3 256 492

41 126 52 107 (4 911) (6 982)

Movements in working capital

(Increase) /decrease in accounts receivable (10 315) (3 898) 329 1 416

(Increase) /decrease in inventory (974) (16 630) - -

(Decrease)/ increase in accounts payable (13 087) 7 512 (4 332) (2 321)

Cash generated / (utilised) by operations 16 750 39 091 (8 914) (7 887)

3. RECONCILIATION OF TAX REFUNDED / PAID

Unpaid at end of last year (555) (915) - -

Prior year - 663 - (107)

Normal tax payable (123) (1 325) - -

Unpaid at end of this year 1 393 555 - -

Tax refunded / (paid) 715 (1 022) - (107)

16

AFRICA LIMITED

NOTES TO THE CASH FLOW STATEMENTSFOR THE YEAR ENDED 28 FEBRUARY 2003

Group Company

2003 2002 2003 2002

R’000 R’000 R’000 R’000

SHARE CAPITAL

Balance at beginning of year 1 849 1 849 1 849 1 849

Share buy-back (5) - (5) -

Balance at end of year 1 844 1 849 1 844 1 849

SHARE PREMIUM

Balance at beginning of year 49 090 49 090 49 090 49 090

Share buyback (235) - (235) -

Balance at end of year 48 855 49 090 48 855 49 090

DISTRIBUTABLE RESERVES

Balance at beginning of year 71 379 33 012 (1 871) 5 635

Attributable income/(loss) for the year 31 475 38 002 (8 761) (7 506)

Prior year adjustment - 365 - -

Balance at end of year 102 854 71 379 (10 632) (1 871)

TOTAL CAPITAL AND RESERVES 153 553 122 318 40 067 49 068

17

AFRICA LIMITED

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 28 FEBRUARY 2003

18

AFRICA LIMITED

1. Accounting PoliciesThe financial statements have been prepared on the historical cost basis except as modified by revaluation of freehold land andbuildings, and incorporate the following principal accounting policies which have been consistently applied in all material respectswith those of the previous year. These policies comply with South African statements of Generally Accepted Accounting Practice.

Basis of ConsolidationThe consolidated financial statements include those of the company and its subsidiaries. Material inter-company transactionsand balances have been eliminated. Goodwill and other intangible assets are amortised usually commencing in the year afterorigination at rates varying from 5% to 33 1 /3%. The results of subsidiaries and associated companies are included from theeffective dates of acquisition to the effective dates of disposal. Separate disclosure is made of minority interests.

InvestmentsInvestments are stated at cost except where in the opinion of the directors there is a permanent diminution in value, in whichcase they are written down to market value or directors’ valuation.

Deferred TaxationDeferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases ofassets and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determinedeferred income tax. A deferred tax asset is only raised if there is convincing evidence of the probability that taxable profitswill arise in the foreseeable future against which the deferred tax asset can be realised.

Earnings per ShareThe calculation of earnings per share is based on net profit attributable to ordinary shareholders and the actual number of ordinaryshares in issue throughout the year or where there has been a change during the year in the number of issued shares, the weightedaverage number of shares. Headline earnings per share is calculated in accordance with generally accepted accounting practice.

Leased AssetsLeases of property, plant and equipment where the group assumes substantially all the benefits and risks of ownership areclassified as finance leases. Finance leases are capitalized at the estimated present value of the underlying lease payments.Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the financebalance outstanding. The corresponding rental obligations, net of finance charges is included in other long term payables.The interest element is charged to the income statement over the lease period. The property, plant and equipment acquiredunder finance leasing contracts is depreciated over the useful life of the asset.

Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified asoperating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over theperiod of the lease.

Associate companiesAn associate company is one over which the group has the ability to exercise significant influence, but not control, and whichit intends to hold as a long-term investment. The group’s share of post acquisition results of associate companies are incorporatedin the financial statements, using the equity method of accounting, from the effective dates of their acquisition until theeffective dates of their disposal.

Financial instrumentsFinancial instruments carried on the balance sheet include cash and bank balances, investments, receivables, trade creditorsand borrowings. These instruments are generally carried at their anticipated realisable values.

Fixed Assets and DepreciationLand and buildings are carried at valuation less depreciation on the cost of the building with the basis of the valuation beingthe income capitalisation method with an income capitalisation rate of 15%.

Property, plant, equipment, fixtures, etc. are stated at cost and are depreciated at rates considered appropriate to reduce book

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 28 FEBRUARY 2003

AFRICA LIMITED

value to estimated residual value over the expected useful lives of the assets. Depreciation is provided on the various classesat the following rates:

Freehold land with no building thereon NoneBuildings on freehold land 50 yearsLeasehold improvements over the lease periodPlant, machinery and equipment 3-5 yearsFurniture, fittings and office equipment 3-6 yearsComputer software 1-3 yearsComputer hardware 3 yearsMotor vehicles 5 years

Foreign CurrencyForeign currency transactions are translated at the spot rate ruling on the transaction dates, or at hedged forward rates. Assetsand liabilities designated in foreign currencies are translated at rates of exchange ruling at balance sheet date, except wherethe liabilities are covered by forward cover contracts. Exchange differences occurring on the settlement of monetary itemsor on the reporting of outstanding monetary items are brought into account in the income statement. Unrealised differenceson monetary assets and liabilities are recognised in the income statement in the period in which they occur.

Research and Development CostsResearch and development costs are recognised as an expense in the period they are incurred, unless the product or processis clearly defined and the costs attributable to the product or process can be separately identified and measured reliably. Theextent of capitalisation is limited to the amount, which when taken together with further related costs, is likely to be recoveredfrom future economic benefits over a maximum period of five years.

InventoryInventory comprising merchandise for resale is valued at the lower of cost determined on a unit cost basis and net realisablevalue. Where necessary provision is made for obsolete and defective stock. Raw materials, consumables, work in progressand finished goods are valued at the lower of cost or net realisable value on a first-in-first-out basis. Work-in-progress andfinished goods include an allocation of fixed direct overheads based on normal levels of capacity. Maintenance spares arecapitalised and repairs accounted for on a first-in-first-out basis as they occur.

Employee Benefit fundsThe defined contributions by the company’s subsidiaries to various benefit funds are charged against income as incurred.

RevenueRevenue from sale of merchandise is recognised when the significant risks and rewards of ownership are transferred to thepurchaser. Revenue from the sale of design or development services is recognised when targets agreed with customers havebeen met. Revenue from instalment sale contracts comprises the invoiced value of sales to customers, and excludes theunearned portion of finance charges calculated in proportion to the period of the contract. Revenue from consulting servicesis based on the stage of completion determined by reference to the physical amount of work performed in relation to the totalproject. Revenue arising from technology provided to municipalities in levying and collecting traffic fines is recognised onan accrual basis in accordance with the substance of relevant agreements.

Cash FlowsFor the purposes of the cash flow statement, cash includes cash on hand.

GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the company’s share of the net assets ofthe acquired business undertaking at the date of acquisition. Goodwill on acquisition is reported in the balance sheet as anintangible asset and is amortised using the straight-line method over its estimated useful life of 20 years.

ProvisionsProvisions are recognised when the group has a present legal or constructive obligation as a result of past events, it is probablethat an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate ofthe amount of the obligation can be made.

Comparative FiguresWhere necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

19

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTSAFRICA LIMITED

20

Group Company

2003 2002 2003 2002

R’000 R’000 R’000 R’000

2. Net income / (loss) before taxation

Income / (loss) before taxation is stated after taking

into account the following:

Income

Use of company’s leased assets - - 660 500

Royalty for use of Labat Africa trademark - - 960 960

Expenses

Amortisation 2 420 3 185 - -

Auditors’ remuneration

- Fees 400 74 89 -

- Prior year under / (over) provision 30 (59) - -

- Other services 160 18 135 3

Depreciation 8 028 4 504 - 492

Employer contributions

- Defined benefit fund - 23 - -

- Defined contribution funds 6 373 3 285 - -

Investments written off 2 365 - 2 365 -

Adjustment to goodwill 133 957 - -

Leasing expenses

Operating leases

- Premises 6 920 7 329 136 -

- Fixtures, equipment and vehicles 433 3 773 - -

Finance leases

- Fixtures, equipment & vehicles 10 693 1 697 - 1 158

Management, technical, administrative, secretarial

and sub-contractors’ fees 6 011 6 262 - 3 620


21

AFRICA LIMITED

Group Company

2003 2002 2003 2002

R’000 R’000 R’000 R’000

3. Taxation

South African taxation

Normal - Current year (460) (1 325) - -

- Prior years - 663 - (107)

Deferred - Current year (1 094) (250) - -

- Deferred tax asset reversed (6 606) - - -

- Deferred tax asset raised 21 154 305 - -

12 994 (607) - (107)

South African Normal Tax 1 393 555 - -

S.A. normal tax payable to the Receiver of

Revenue. Assessed and/or estimated tax losses in

the group amount to approximately R120 million

(2002- R144 million)

1 393 555 - -

Deferred taxation liability reconciliation

Balance at beginning of year 10 576 10 326 - -

Movements during the year

Current year’s liability 1 094 250 - -

Balance at end of year 11 670 10 576 - -

Deferred tax asset reconciliation

Balance at beginning of the year 703 513 - -

Movements during the year 14 548 190 - -

Balance at end of year 15 251 703 - -

Included in the taxation charge is a non-recurring

benefit of R13,9 million based upon the amount of

the usable assessed loss brought forward.

4. Fixed assets

At cost or valuation

Land at cost 843 843 - -

Land and buildings at valuation 4 750 4 750 - -

Plant, machinery, furniture, fittings, equipment,

motor vehicles and computer software and

hardware, at cost 195 192 158 837 - -

200 785 164 430 - -


22

AFRICA LIMITED

Group Company

2003 2002 2003 2002

R’000 R’000 R’000 R’000

4. Fixed assets (Continued)

Accumulated depreciation

Land and buildings 275 209 - -



hardware 146 382 138 707 - -

146 657 138 916 - -

Net book value at end of year

Land and buildings 5 318 5 384 - -



hardware 48 810 20 130 - -

54 128 25 514 - -

Movement for the year

Net book value at beginning of year 25 514 20 099 - 820

Additions during the year 36 647 10 355 - -

Disposals during the year (5) (436) - (328)

Depreciation for the year (8 028) (4 504) - (492)

Net book value at end of year 54 128 25 514 - -

Categorised as follows:

Owned 13 956 16 431 - -

Leased 40 172 9 083 - -

54 128 25 514 - -

Land and buildings comprise:

A factory and office block situated on Portion 1 of Erf 113, Koedoespoort Industrial Area, acquired on 19 October 1990 at

a cost including transfer fees of R2,1 million. This property was subsequently revalued up to R4,8 million and accumulated

depreciation since revaluation amounts to R275K thus resulting in a net book value of R4,5 million. An independent sworn

appraiser in November 1999, determined the carrying value of the property to be R8,5 million. The property has been pledged

to Imperial Bank as security for a loan of R3,3 million to Sames Properties (Pty) Ltd.

Vacant land being the remaining extent of Erf 36, Koedoespoort Industrial Area, acquired on 12 February 1991 at a cost

including transfer fees of R0,8 million. There have been no additions and no depreciation has been charged to reduce the book

value.

Certain plant, machinery and equipment has been leased, the value thereof has been capitalised and depreciation charged.

The amounts owing to the leaseholders in respect of such leases are R32,2 million by the group. The cost values of the assets

that have been secured total R52,8 million.


23

AFRICA LIMITED

Group Company

2003 2002 2003 2002

R’000 R’000 R’000 R’000

5. Intangible assets

Research and development

Opening value, at cost less amortisation 2 444 6 352 - -

Disposals - (723) - -

Expenditure during the year 2 387 - - -

Amortisation (2 419) (3 185) - -

Closing value, at cost less amortisation 2 412 2 444 - -

Goodwill 27 912 23 913 - -

30 324 26 357 - -

6. Interest in Subsidiaries

Loan to Subsidiaries

Shareholders’ loans by the holding company to

Acme Stores (Pty) Ltd and SAMES net of reserves.

The loans are ceded to the B.o.E. Bank as security

for banking facilities. - - 40 888 48 323

- - 40 888 48 323

7. Other Investments

Unlisted Investments at directors’ valuation

A one third interest in Trisource (Pty) Ltd. 339 86 - -

Investment in various share block companies

The group’s ownership in these companies as a

percentage of their equity, is negligible. 106 131 - -

Leading Edge Solutions (Pty) Ltd

A wholly owned subsidiary formed as a result of

steps taken to recover the investment in Armada

referred to in note 21. 6 584 - 6 584 -

7 029 217 6 584 -

8. Inventory

Consumables 948 796 - -

Finished goods 7 161 3 410 - -

Maintenance spares 6 840 3 753 - -

Merchandise for resale 5 512 5 402 - -

Raw materials 7 754 10 138 - -

Work in progress 7 202 10 944 - -

35 417 34 443 - -


24

AFRICA LIMITED

Group Company

2003 2002 2003 2002

R’000 R’000 R’000 R’000

9. Instalment Sale DebtorsAccounts receivable net of finance charges andprovisions relating to the sale of merchandise oninstalment sale plans averaging 24 months. Thedebtors book is ceded to B.o.E. bank. Includingfinance charges, R67,8 million is due within a yearand R36,4 million thereafter. 94 221 82 891 - -

10. Interest bearing debt

Current borrowings

Bank overdraft – instalment sale finance 35 411 26 759 - -

Other bank overdrafts 14 827 14 196 2 027 1 229

Other short term debt 10 593 15 766 1 175 3 897

60 831 56 721 3 202 5 126

The bank overdrafts are secured by general unlimitedinterlinking suretyships entered into between LabatAfrica Ltd and its subsidiaries except Labat TrafficSolutions (Pty) Ltd, the cessions of loan account claimsof Labat Africa Ltd against Acme Stores and SAMES,a general and specific notorial bond over movableassets stock and equipment and the cession ofinstalment sale and other debtors.

Long term borrowings

Finance lease agreements 19 532 6 197 - -

Bond over property – Per Note 4 3 342 3 558 - -

22 874 9 755 - -

The finance leases are in respect of furniture, fittings,equipment, motor vehicles, and bear interest at ratesvarying from prime overdraft to prime less 2%The monthly instalments payable amount toR988K. The rate of interest on the bond over theproperty is the prime overdraft rate less 1%.

Total interest bearing debt 83 705 66 476 3 202 5 126

11. Share capital

Authorised

300 000 000 ordinary shares of 1 cent each 3 000 3 000 3 000 3 000

Issued

184 903 149 ordinary shares of 1 cent each 1 849 1 849 1 849 1 849

Less share buy-back of 488 600 shares (5) - (5) -

Balance at 28 February 2003 1 844 1 849 1 844 1 849


25

AFRICA LIMITED

Group Company

2003 2002 2003 2002

R’000 R’000 R’000 R’000

12. Share premium

Balance brought forward 49 090 49 090 49 090 49 090

Less share buy-back of 488 600 shares (235) - (235) -

Balance at 28 February 2003 48 855 49 090 48 855 49 090

In terms of the Labat Africa Share Incentive Scheme 488 600 shares were purchased by the company from employees at

the ruling market price of 49 cents per share.

13. Capital expenditure

Capital expenditure incurred

Fixed assets 36 422 7 596 - -

Intangible assets 4 000 - - -

40 422 7 596 - -

There are capital expenditure commitments of approximately R 6,2 million (2002 – R7,3million).

14. Lease commitments

The future minimum commitments in terms of

finance and operating leases are:

Premises:

- within one year 6 170 5 679 - -

- thereafter 19 262 21 746 - -

Fixtures and equipment:

- within one year 11 864 6 427 - -

- thereafter 20 348 6 703 - -

57 644 40 555 - -

15. Prior year adjustments

In prior years, leases, which met the criteria for classification as finance leases, were treated as operating leases in the

financial statements. The related rentals were expensed to the income statement. In the current year the leased assets and

liabilities have been recognized and the lease payments allocated between the liability and finance charges to achieve a

constant rate on the balance outstanding. Comparative figures have been restated.

The effect on comparative consolidated results is as follows:

Attributable Fixed Total Deferred

Income Assets Liabilities Tax Asset

As previously stated 37 367 16 828 108 541 -

Adjustment 635 8 686 8 389 703

As restated 38 002 25 514 116 930 703


26

AFRICA LIMITED

16. Acquisition of subsidiary

On 1 July 2002 the group acquired 51% of the share capital of Total Computer Services (Pty) Ltd through its subsidiary

Labat Traffic Solutions (Pty) Ltd.

Details of the net assets acquired and goodwill are as follows:

R’000

Purchase consideration 4 000

Fair value of net assets acquired (0)

Goodwill 4 000

The assets and liabilities arising from acquisition are as follows:

Cash and cash equivalents 279

Property, plant and equipment 219

Trade and other receivables 2 288

Shareholders’ loans (324)

Deferred tax liability (3)

Current tax liabilities (126)

Trade and other payables (2 333)

Goodwill 4 000

Minority interest (0)

Cash outflow on acquisition 4 000

17. Earnings per share

The earnings per share information is based on the income attributable to Labat shareholders and the number of shares in

issue throughout the year.

Basic earnings 31 475

Write-off of share premium 1 142

Goodwill 133

32 750

Basic earnings per share (cents) 17,0

Headline earnings per share (cents) 17,7

Number of shares in issue 184 903 149

18. Share Incentive TrustAll 4 866 667 shares allocated to the Trust were allotted on 14 February 2001 to employees at the middle market price onthe day preceding the offer as stipulated in the trust deed. The capital amount which will eventually be recovered fromemployees is R730 000,05 based on the middle market price of 15 cents per share, but the loan to the trust stands in thebooks of the company at R1 871 656,98 and it is therefore necessary to write off the shortfall of R1 141 656,93. It wasproposed to write this amount off against Share Premium as both the Share Premium and the Share Incentive Trust weresanctioned and created at the same time by resolutions passed at the general meeting which authorised the reverse take-overof Acrem Holdings Ltd by the existing controlling shareholders of Labat Africa Ltd. The accounting treatment was reconsidered


27

AFRICA LIMITED

18. Share Incentive Trust (Continued)and it was deemed more prudent to effect the write-down to the income statement in the current year. The effect of the changeis disclosed in note 19. During the year 869 333 shares were issued at 15 cents per share leaving a balance of R599 600 tobe recovered by the trust.

19. Write down of loan to Share Incentive SchemeThe original accounting treatment to effect the write-down of the loan to the Share Incentive Scheme referred to in note 18was reviewed and found to be incorrect. The write-down should have been effected through the income statement as opposedto being written-off against the Share Premium account.The effect of the correction in accounting treatment is as follows:

As As previously As As previously

Restated Stated* Restated Stated*

28-Feb-03 28-Feb-03 31-Aug-02 31-Aug-02

Net income before taxation 20 296 21 438 16 662 17 803

Taxation 12 994 12 994 9 228 9 228

Net income after taxation 33 290 34 432 25 890 27 031

Attributable to outside shareholders (1 815) (1 815) (39) (39)

Income attributable to ordinary shareholders 31 475 32 617 25 851 26 992

Basic earnings per share (cents) 17,0 17,7 14,0 14,6

Headline earnings per share (cents) 17,7 17,7 9,3 9,3

*As published on 27 May 2003 and on 21 November 2002.

Share Premium

Opening balance-28 February 2002 49 090 49 090 49 090 49 090

Share write-down - (1 142) - (1 142)

Share buy-back (235) (235) - -

Closing balance-28 February 2003 48 855 47 713 49 090 47 948

20. Guarantees on behalf of subsidiariesThe company and its subsidiaries have bound themselves with interlinking suretyships and guarantees in respect of presentand future indebtedness as security for banking facilities and asset based finance amounting to R63m. These facilities aresecured by the cession of loan account claims of Labat Africa Limited against Acme Stores and SAMES, a general andspecific notarial bond over movable assets, stock and equipment and the cession of instalment sale and other debtors. Noconsideration is receivable by the subsidiaries nor the holding company for the suretyship and guarantees.

21. Guarantee on behalf of a third partyA guarantee was given to IBM South Africa (Pty) Ltd on behalf of Armada Resource Management & Deployment (Pty) Ltd(“Armada”) to facilitate the conclusion of the sale of Armada. The balance owing as at 28 February 2002, was R7 756 000(2001 – R8 881 000) and remains unchanged except for repayments of R233K made from 1 st April 2002 which paymentswere terminated in October 2002. The company is in negotiations with IBM to settle this matter. Steps have been taken onthe strength of a back to back surety to recover the investment in Armada.

22. Related party transactionsDuring the year, in the ordinary course of business, certain companies within the group entered into arm’s length transactions.These intra-group transactions have been eliminated on consolidation.


28

AFRICA LIMITED

23. Pension and provident fundsWith the exception of 8 employees contributing to the Engineering Industrial Pension Fund, which is a defined benefit fund,all the various pension and provident funds catering for the employees in the subsidiary companies in the group are definedcontribution funds and the companies have no commitment to meet any unfunded benefits. The most recent actuarial valuationof the engineering fund was done on the 31 December 2001 and showed assets of R18,2 million and a surplus of R7,0 million.In August 2002 the contributors to the engineering fund were transferred to a provident fund.

24. Financial InstrumentsCredit riskFinancial assets which potentially subject the group to concentrations of credit risk, consist principally of cash resourcesand receivables.

The group’s cash resources and forward exchange contracts are placed with major South African financial institutions ofhigh credit standing and approved by the executive committee comprising senior executives.

Receivables are reflected net of doubtful debt provisions which are considered adequate. A major part of receivables consistsof instalment debtors but rather than chasing growth, management has pursued a conservative strategy aimed at preservingthe quality of the book. Proceeds of sales to foreign customers, are from time to time held in foreign currency withinprescribed statutory limits of time.

Cash flow and funding riskThis risk is managed using cash flow forecasts and the maintenance of adequate borrowing facilities. In terms of the articlesof association, the company’s borrowing powers are unlimited but are of course subject to the economic health of the companyas assessed by the leading institutions.

Fair valuesAt 28 February 2003 and 2002, the carrying amounts of cash and short term deposits, accounts receivable, accounts payable,accrued expenses and short term borrowings approximated their fair values due to the short term maturities of these assets andliabilities. The fair values of long term investments and long term borrowings are not materially different from the carrying amounts.

Investment in associated companyThe group owns one third of the equity in Trisource (Pty) Ltd. This is a green fields project and the expenditure of R339K(2002: R86K) is accounted for as an investment.

25. Directors remunerationDirectors Emoluments For Services As Directors Other Services

R’000 R’000

Executive Directors

B.G. van Rooyen 1 779 600

Non-Executive Directors

S.L. Majombozi - 18

C.P. Rosholt - 253

R.C.I. Serobe - 931

M.J. Shabangu - 830

Sub-Total 1 779 2 632

Less paid by subsidiaries - (1 449)

TOTAL 1 779 1 183

Mr. R.C.I. Serobe was granted an option on 500 000 shares at a price of 15 cents per share of which 100 000 have been exercised.

DIRECTORS

B.G. van Rooyen (Chief Executive Officer), V.J. Labat (USA)

C.P. Rosholt, R.C.I. Serobe, M.J. Shabangu, S.L. Majombozi

SECRETARY AND REGISTERED OFFICE

Allison Britto

Island House, Constantia Park Centre,

Cnr 14 th Avenue & Hendrik Potgieter Road,

Weltevreden Park, 1709

Private Bag X09-248, Weltevreden Park, 1715

BUSINESS OFFICE

Island House, Constantia Park Centre,

Cnr 14 th Avenue & Hendrik Potgieter Road,

Weltevreden Park, 1709

Private Bag X09-248, Weltevreden Park, 1715

Telephone: (011) 670-2500

Telefax: (011) 675-1022

E-mail: [email protected]

Website: www.labat.co.za

TRANSFER SECRETARIES

Computershare Limited

70 Marshall Street, Johannesburg, 2001 South Africa

P.O. Box 62053, Marshalltown 2107, South Africa

Telephone: 27 11 370 5000 / 086 110 0933

Telefax: 27 11 688 7732 / 086 110 0932

Website: www.computershare.com

AUDITORS

Nkonki Pierce

3 rd Floor, Anderson Axis

30 Melrose Boulevard

Melrose Arch

Melrose North 2196

Telephone: (011) 684-0400

Telefax: (011) 684-0439

ATTORNEYS

Evan Scop

Block F, Ground Floor

Pin Hill Farm

164 Katherine Street

Sandton 2196

PRINCIPAL BANKERS

B.o.E Bank

AFRICA LIMITED

ADMINISTRATION

29

Notice is hereby given that the sixteenth annual general meeting of the company will be held in the boardroom, Ground Floor,

Island House, Constantia Park Centre, Corner 14 th Avenue and Hendrik Potgieter Road, Weltevreden Park, 1709 at 15h00 on

Friday, 29 August 2003.

The following business will be attended to

1. Ordinary Resolution No.1

To consider and approve the annual financial statements of the group and the company for the year ended 28 February 2003,

together with the reports of the directors and auditors.


To elect the following directors who retire in terms of the company’s articles of association but being eligible, offer themselves

for re-election:

B.G. van Rooyen, V.J. Labat and C.P Rosholt

Executive directors B.G. van Rooyen has a service contract with the company for a period of 3 years commencing on

10 June 1999 and continuing thereafter indefinitely, subject to 3 months notice from either side.


To place the existing unissued share capital under the control of the directors for allotment and issue at their discretion until

the next annual general meeting, subject to section 221(2) of the Companies Act, 1973, and the rules and regulations of the

JSE Securities Exchange.


To renew the authority granted to the directors to exercise at their discretion until the next annual general meeting of the

company, the power of the company to purchase in terms of Section 85 of the Companies Act and the Articles of Association

of the Company, shares which have been issued by the company subject to such authority being liable to variation or cancellation

at any general meeting of the company prior to the next annual general meeting.

5. Other Business

To transact such other business as may be transacted at an annual general meeting.

A member entitled to attend and vote at the meeting may appoint a proxy (or proxies) to attend, speak and vote in his stead. A

proxy need not be a member of the company. Proxy forms must reach the offices of the company’s transfer secretaries, not later

than 15h00 on Wednesday, 27 August 2003.

By order of the Board

ALLISON BRITTOSECRETARY

30 July 2003

AFRICA LIMITED

NOTICE TO SHAREHOLDERS

30

AFRICA LIMITED

PROXY FORM

31

For use by ordinary shareholders at the annual general meeting to be held in the boardroom, Ground Floor, Island House,

Constantia Park Centre, Corner 14 th Avenue and Hendrik Potgieter Road, Weltevreden Park at 15h00 on Friday, 29 August 2003.

I/We

being the holders of ordinary shares and entitled to one vote for each share, hereby appoint

(see notes on the reverse hereof):

1. or failing him/her,

2. or failing him/her,

3. the chairman of the meeting,

as my/our proxy to act on my/our behalf at the annual general meeting which will be held for the purpose of considering and, if

deemed fit, passing, with or without modification the resolutions as detailed in the notice of the meeting and to vote for or against

the resolutions or to abstain from voting in respect of the shares in the issued capital of the company registered in my/our name/s:

Ordinary resolution number 1




Signed at on 2003

Signature

Assisted by me (where applicable)

Each shareholder is entitled to appoint one or more proxies (none of whom need be a member of the company ) to attend, speak

and vote in his/her stead at the general meeting.

Proxy forms must reach the office of the company’s transfer secretaries, not later than 15h00 on Wednesday, 27 August 2003. If

you are registered under the name of a nominee shareholder or a CSDP if your shares have been dematerialised, the proxy form

must be completed and signed by the nominee shareholder or your CSDP for the number of beneficial shares owned by you.

Please read the notes on the reverse side hereof.

Number of votes (one vote per ordinary share)

For Against Abstain

1. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space(s)

provided, with or without deleting “the chairman of the general meeting”. The person whose name stands first on the form

of proxy and who is present at the general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of ordinary shares to be

voted on behalf of that member in the appropriate box provided. Failure to comply with the above will be deemed to authorise

the chairman of the general meeting, if the chairman of the general meeting is the authorised proxy, to vote or to abstain from

voting at the general meeting as the chairman of the general meeting deems fit, in respect of all the ordinary shares concerned.

A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder or his/her proxy, but the total

of the votes cast and in respect whereof absention is recorded may not exceed the total of the votes exercisable by the ordinary

shareholder or by his/her proxy. If the total of votes entered exceeds the number exercisable, the chairman will reduce the

numbers entered in each of the three columns pro rata in order to reduce the total to the number exercisable as reflected in

the company’s share register as at the closing time for the acceptance of proxies.

3. Proxy forms must be lodged at, or posted to the company’s transfer secretaries, Computershare Investor Services Limited,

70 Marshall Street, Johannesburg 2001; (PO Box 62053, Marshalltown 2107, South Africa) to reach them by not later than

15h00 on Wednesday, 27 August 2003.

4. The completion and lodging of this proxy form will not preclude the relevant shareholder from attending the general meeting

and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be

attached to this proxy form unless previously recorded by the transfer secretaries of the company or waived by the chairman

of the general meeting.

6. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

7. A minor must be assisted by his/her parents or guardian unless the relevant documents establishing his/her legal capacity are

produced or have been registered by the transfer secretaries of the company.

8. The chairman of the general meeting may reject or accept a proxy form which is completed and/or received other than in

accordance with these notes if the chairman of the general meeting is satisfied as to the manner in which a shareholder wishes

to vote.

AFRICA LIMITED

NOTES

32

annual report of the company and its subsidiaries for …

Documents