SABVEST annual report Results 2005/Annual Report 2005.pdf · Sabvest Annual Report 2005. ... R12 109 29,0% R22 046 11,7% R10 874 5,8% R118 284 62,6% 2005 R11 397 ... receivables Finance

Sabvest Limited

Annual Report 2005www.sabvest.com

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Sabvest Limited

Annual Report 2005www.sabvest.com

Sabvest L

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Mission statement 1

Corporate profile 1

Financial targets 1

Group salient features 2

Graphical presentation of assets and income 3

Profile of investments 4

Five-year review 6

Five-year graphical review 8

Directorate 9

Operating philosophy 10

Statement of corporate governance 11

Annual review 15

Directors’ approval of the annual financial statements 19

Declaration by company secretary 19

Report of the independent auditors 20

Directors’ report 21

Consolidated balance sheet 24

Consolidated income statement 25

Company balance sheet 26

Company income statement 26

Cash flow statements 27

Statements of changes in equity 28

Accounting policies 29

Notes to the financial statements 34

Annexure A1 – Schedule of consolidated subsidiaries 46

Annexure A2 – Company structure 47

Annexure B – Assets, liabilities and income of associates 48

Shares and shareholders 49

Notice to shareholders 50

Form of proxy Attached

Administration ibc

Shareholders’ diary ibc

CONTENTS

Sabvest Annual Report 2005


1

Sabvest aims to enhance income and value for its shareholders

through the growth of its investments in well managed

cash generative businesses.

Sabvest is an investment holding company which was listed in 1988.

Its ordinary and “N” ordinary shares are quoted in the

Financials – Equity Investment Instruments sector of the JSE Limited.

Sabvest has significant interests in seven groups on all of whose boards

it is represented and which are accounted for as associates.

Sabvest also has portfolios of smaller investments which are

accounted for on a fair value basis.

In addition Sabvest maintains finance advances and

debt instrument portfolios and undertakes corporate finance and other

fee and profit earning activities.

Sabvest targets to increase headline earnings and intrinsic value per

share (NAV at directors’ valuation) by at least 15% per annum

with 2002 as the base year.

Sabvest also aims to increase cash dividends

paid to shareholders.

MISSION STATEMENT

CORPORATE PROFILE

FINANCIAL TARGETS

2004 2005 2005 2004

US US RSA RSA

cents cents cents cents

RETURNS TO SHAREHOLDERS

8,7 11,6 Headline earnings per share 74,1 55,4

8,6 11,2 Earnings/(loss) per share 71,4 55,1

0,5 0,9 Dividend proposed (after year-end) 6,0 3,0

58 62 Net asset value per share 391 326

56 60 Net tangible asset value per share 384 318

Net asset value per share with listed investments at

62 70 market value 444 350

Net asset value per share with investments at directors’

79 91 valuation (intrinsic value) 579 447

US$’000 US$’000 R’000 R’000

INCOME STATEMENT

3 975 5 388 Headline attributable income 34 262 25 390

3 953 5 193 Income attributable to equity shareholders 33 026 25 247

BALANCE SHEET

26 809 28 471 Ordinary shareholders’ equity 180 933 151 034

28 482 29 729 Total assets 188 929 160 461

23 585 23 793 Investment holdings 151 204 132 870

1 403 830 Interest-bearing debt 5 279 7 906

Ordinary shareholders’ equity with investments

36 694 42 140 at directors’ valuation 267 801 206 723

Rand/Dollar exchange rate

Income statement: US$1 = 6,3595 (2004: US$1 = 6,3869)

Balance sheet: US$1 = 6,3550 (2004: US$1 = 5,6337)

GROUP SALIENT FEATURES


2

as at 31 December 2005

HUMAN RESOURCES

ASSETS PER CATEGORY EXPRESSED AS A PERCENTAGE

OF TOTAL ASSETS AT 31 DECEMBER (R’000)

INCOME PER CATEGORY EXPRESSED AS A PERCENTAGE

OF TOTAL INCOME FOR THE YEAR ENDED 31 DECEMBER (R’000)

RSA Overseas Non-

executive executive executive Total

directors management Staff directors 2005 2004

2 1 6 6 15 14

2005

R23 54156,3%

R12 10929,0%

R22 04611,7%

R10 8745,8%

R118 28462,6%

2005

R11 3976,0%

R9 3014,9%

Sabvest Industrial

Sabvest Distributionand Services

Long-terminvestments

Other income

2004

R27 50976,1%

R3 2749,1%

R3 5079,6%

R8 0725,0%

R22 21613,8%

R117 39373,3%

2004

R5 3753,3%

R2 5986,2%

R3 5668,5%

R1 8625,2%

R17 0279,0%

R7 4054,6%

Sabvest Industrial

Sabvest Distributionand Services

Long-terminvestments

Medium-termreceivables

Finance advances,receivables andshort-term portfolio

Other

20042005

GRAPHICAL PRESENTATION OFASSETS AND INCOME


3

Number ofDate first Listed/ shares Economic

Company invested Unlisted held interest Nature of business

Associates

SABVEST INDUSTRIAL

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

SA Bias Industries Limited 1988 U 50,0% Global manufacturer of printedand woven labels, narrow fabricproducts and trimmings throughInternational Trimmings andLabels, Narrowtex and Bitrim inRSA, UK, Canada, Europe,China, Hong Kong, Turkey, SriLanka, Morocco and Australia.

Set Point Technology Holdings Limited 2000 L 50 000 000 16,3% Manufacturers, distributors andservice suppliers in the miningtechnology, fluid handling andanalytical services sectors.

SABVEST DISTRIBUTION AND SERVICES

Flowmax Holdings Limited (BV1/UK) 1997 U 40,0% Distributors of fluid handlingequipment systems in the UnitedKingdom through its subsidiariesAlpeco, CTS, Action Sealtite,Torbar, Coulton Instrumentation, IFC andFlowmax Instrumentation.

HDS Tech Holdings (Pty) Limited 2004 U 30,0% Developer of entrepreneurialbusiness applications for software,and operators of the LINUXportal in South Africa.

Korbitec Holdings (Pty) Limited 1999 U 17,0% Specialist software developersand distributors incorporatingKorbinet, Ghostfill andMotornostix.

Midsouth Distributors (Pty) Limited 1997 U 30,0% Distributors of Polaroid andDurst photographic products andimage recognition technologyand software.

INVESTMENTS

Long-term investments

Datatec Limited 2005 L 150 000

Massmart Holdings Limited 2005 L 75 000

Metrofile (Pty) Limited 2005 U 5,0%

SA Bias Industries Limited – redeemable preference shares 1997 U

*1 Directors’ valuation R238 million per note 3.2 to the balance sheet.

PROFILE OF INVESTMENTS


4

as at 31 December 2005

PROFILE OF INVESTMENTScontinued


5

Carryingvalue

includinggoodwill and Share of income of associates

after Dividends Interest Retained Fair value Period forimpairments received received income adjustment Total purposes

2005 2005 2005 2005 2005 2005 of equity BoardR’000 R’000 R’000 R’000 R’000 R’000 accounting representation

140 330 5 399 528 20 212 – 26 139

118 284 4 311 372 18 858 – 23 541

13 668 12 months to31 December 2005 √


17 767 12 months to31 August 2005 √

22 046 1 088 156 1 354 – 2 598


` – √



10 874 – – – 3 566 3 566

3 000 √

3 874 √

2 000 √

2 000 √

151 204 5 399 528 20 212 3 566 29 705

Total per Other income 12 109

balance sheet*1 Total per income statement 41 814


BALANCE SHEETS2004 2005

US$’000 US$’000

24 523 27 045 Non-current assets

374 289 Property, plant and equipment154 749 Deferred tax asset – –410 421 Share trust receivables

– 1 793 Medium-term receivables – – – –

23 585 23 793 Investment holdings

22 270 22 082 Associates1 315 1 711 Long-term

3 959 2 684 Current assets

3 943 2 335 Finance advances and receivables– 344 Short-term investments – – – –

16 5 Cash balances

28 482 29 729 Total assets

26 809 28 471 Ordinary shareholders’ equity

9 8 Non-current liability – – –

9 8 Deferred tax liability – – –

1 664 1 250 Current liabilities

1 403 830 Interest-bearing debt261 420 Accounts payable

28 482 29 729 Total equity and liabilities

INCOME STATEMENTS5 660 6 575 Gross income from operations and investments

548 862 Dividends received772 1 204 Interest received

– 453 Income on financial instruments and shares – – – –372 364 Fees and sundry income

– 514 Fair value adjustment to investments – – – –3 968 3 178 Equity accounted retained income of associates

223 209 Interest paid

5 437 6 366 Net income from operations and investments1 507 1 784 Less: Expenditure

1 251 1 483 Operating costs74 70 Depreciation

182 231 Exceptional items

3 930 4 582 Net income before taxation(23) (612) Taxation – deferred – –

3 953 5 194 Net income attributable to equity shareholders

3 975 5 388 Headline attributable income

RETURNS TO SHAREHOLDERS8,7 11,7 Headline earnings per share – cents8,6 11,2 Earnings/(loss) per share – cents0,5 0,9 Dividends per share – paid or proposed – cents – –58 62 Net asset value per share – cents56 60 Net tangible asset value per share – cents79 91 Net asset value per share at directors’ valuation (intrinsic value) – cents

46 259 46 259 Number of shares in issue – 000’s45 845 46 259 Weighted number of shares in issue – 000’s

FIVE-YEAR REVIEW


6

at 31 December 2005

2001 2002 2003 2004 2005R’000 R’000 R’000 R’000 R’000

154 933 134 395 125 861 138 156 171 868

1 282 934 1 202 2 106 1 835– – 724 868 4 758

3 445 3 445 1 372 2 312 2 674– – – – 11 397

150 206 130 016 122 563 132 870 151 204

139 070 125 677 110 985 125 465 140 33011 136 4 339 11 578 7 405 10 874

17 214 18 165 12 980 22 305 17 061

16 734 17 236 12 321 22 216 14 841– – – – 2 186

480 929 659 89 34

172 147 152 560 138 841 160 461 188 929

138 178 139 037 131 495 151 034 180 933

– – – 49 49

– – – 49 49

33 969 13 523 7 346 9 378 7 947

29 034 10 888 5 852 7 906 5 2794 935 2 635 1 494 1 472 2 668

172 147 152 560 138 841 160 461 188 929

25 758 31 062 31 217 36 152 41 814

3 599 1 674 2 048 3 500 5 4853 397 3 270 5 720 4 932 7 656

– – – – 2 8792 833 2 722 2 658 2 378 2 314

– – – – 3 26815 929 23 396 20 791 25 342 20 212

7 713 3 528 2 191 1 425 1 330

18 045 27 534 29 026 34 727 40 48433 782 11 553 13 135 9 625 11 348

6 017 5 946 6 961 7 991 9 431522 393 441 471 448

27 243 5 214 5 733 1 163 1 469

(15 737) 15 981 15 891 25 102 29 136– – (724) (145) (3 890)

(15 737) 15 981 16 615 25 247 33 026

11 506 19 695 22 348 25 390 34 262

24,3 42,5 49,5 55,4 74,1(33,2) 34,5 36,8 55,1 71,4

– – 3,0 3,0 6,0295 307 292 326 391286 299 283 318 384348 357 348 447 579

46 898 45 217 45 109 46 259 46 25947 374 46 320 45 144 45 845 46 259

FIVE-YEAR REVIEWcontinued


7


8

FIVE-YEAR GRAPHICAL REVIEWat 31 December 2005

2001 2002 2003 2004 2005

Headline earnings per share

2001 2002 2003 2004 20050

25 000

75 000100 000125 000

175 000

Ordinary shareholders’ funds

2001 2002 2003 2004 2005

150

200

Closing price of ordinary and “N” ordinary shares

Sabvest ordinary sharesSabvest “N” ordinary shares

2001 2002 2003 2004 2005050

400

Net asset value per share

2001 2002 2003 2004 20050

5 000

10 000

15 00020 000

25 000

35 000

Headline attributable income

2001 2002 2003 2004 2005

100

2001 2002 2003 2004 20050

Ordinary shareholders’ funds with investmentsat directors’ valuation – intrinsic value

30 000

40 000

250

300

350

50 000

150 000

200 000

2001 2002 2003 2004 20050

20

30

7080

Headline earnings per share

2001 2002 2003 2004 2005

Ordinary shareholders’ funds

2001 2002 2003 2004 20050

50

100

150

200

Closing price of ordinary and “N” ordinary shares

Sabvest ordinary sharesSabvest “N” ordinary shares

2001 2002 2003 2004 2005

100150200250300

450

Net asset value per share

2001 2002 2003 2004 20050

5 000

10 000

15 00020 000

25 000

35 000

Headline attributable income

2001 2002 2003 2004 20050

200

300

400

500

600

700

2001 2002 2003 2004 2005

50 000

100 000

150 000

200 000

250 000

300 000

10

4050

60 30 000

40 000

250

300

350

350

Net asset value per share with investmentsat directors’ valuation – intrinsic value

Appointed to the Board in 2005Chairman and CEO of MBM Change Agents (Pty) Limited.Non-executive Director of Massmart Holdings Limited, Nozala Investments (Pty) Limited, Engen Limited, VitalAire Capacity Outsourcing (Pty) Limited. Chairperson of Tsebo Outsourcing Group (Pty) Limited. Former winner South African Businesswoman of the Year Award

DIRECTORATE


9

Joined the group in 1980

Appointed Chief Executive in 1987

Non-executive Chairman of Massmart Holdings Limited, MetrofileHoldings Limited and Set Point Technology Holdings Limited.Non-executive Director of Datatec Limited, Primedia Limited andNet1 UEPS Technologies Inc (Nasdaq)

CHRISTOPHER STEFANSEABROOKE (52)BCom, BAcc, MBA, FCMAChief Executive Joined the group in 1985, appointed company secretary in 1988

and appointed to the board in 1996

RAYMOND PLEANER (51) BCompt(Hons), CA(SA)Financial Director and Company Secretary

Ages

at 3

1 D

ecem

ber 2

005

EXECUTIVE DIRECTORS

NON-EXECUTIVE DIRECTORS

Appointed to the board in 1987

Chief Executive, Mertrade (Pty) Limited

NIGEL STUARTHAMILTON HUGHES (51) BCom, CA(SA), FCMAIndependent Non-executive Director


Executive Chairman, Flowmax Holdings Limited

Non-executive Director, Set Point Technology Holdings Limited

GRAHAM ERNESTNEL (58)

Pr Eng, BSc Eng, MBL,MSAICE

Non-executive Director

Appointed to the board in 1996 and Chairman in 2003

Chairman, Financial Markets & Investments (Pty) Limited

HAROON HABIB (65)Independent Non-executive Chairman


Executive Chairman, SA Bias Industries Limited

Appointed to the Board in 2005Managing Director Metropolitan Bus Services (Pty) Limited.Non-executive Director of Primedia Limited, Highveld Steeland Vanadium Corporation Limited, African Bank Limited,African Bank Investments Limited, Super Group Limited, Air Transport and Navigation Services Limited

DAWN NONCEBAMERLE MOKHOBO (56)BA (Social Science)Independent Non-executive Director

PHILIP COUTTS-TROTTER (59)

BCom, MBA Non-executive Deputy Chairman

BHEKI JAMES THEMBASHONGWE (50)

BA (Econ), MBA, ACIS, FCIBM

Independent Non-executive Director

The philosophies and strategies that guide our approach to our existing holdings and to the growth in our

investment base are as follows:

• We wish to have meaningful interests in a spread of businesses that generate cash and earn above average

returns on capital over a period. The businesses should have distinct competitive or management

advantages in their marketplaces.

• Our interests will usually be large minority holdings with sizeable interests held by management with

whom we interact as partners.

• We may hold equity interests that are small in percentage terms, but where we are able to exert influence

through board representation and shareholder agreements. Conversely we may hold majority or joint

controlling interests but without direct management responsibility. Accordingly, we participate in good

businesses with first-class management without being restricted by a required size of our percentage

holdings.

• Our approach to our interests is similar to that of a diversified holding company. However, each business

in which we are invested is free standing in financial terms, ring-fenced as to risk and separately assessed.

• We do not follow a trading approach to our holdings. We do not acquire or dispose of investments in

accordance with a “private equity” type philosophy, nor are we constrained by any required balance

between listed and unlisted holdings. We hold our investments on a long-term basis subject only to

continual review of the quality of the underlying businesses, and to any constraints or obligations in

shareholder agreements.

• We will, when necessary, make changes to our holdings or within the businesses in which we are invested

notwithstanding any short-term accounting consequences.

• We will be reluctant to issue shares for acquisitions or for the purposes of raising funds unless the value

received meaningfully exceeds the value given.

• We respond proactively to under-performance, either by instituting appropriate measures together with

our partners, or by disposing of our interests in the businesses concerned.

• We also undertake financing, dealing and debt purchase activities within our credit competencies for short-

and medium-term gain.

OPERATING PHILOSOPHY


10

STATEMENT OF CORPORATE GOVERNANCE

The company and its directors are fully committed to group corporate governance and to the principles of

openness, integrity and accountability in dealing with shareholders and all other stakeholders.

All directors endorse the code of corporate practices and conduct recommended in the King Report on

Corporate Governance.

All the recommendations that apply to Sabvest as an investment company, have been implemented, or the

reasons for electing non-compliance are stated in this report.

BOARD OF DIRECTORS

The board consists of eight directors, six of whom are non-executive and four of whom are independent.

The roles of the Chairman and Chief Executive are separate. The Chairman is an independent non-executive

director. The directors consider the mix of technical, entrepreneurial, financial and business skills of the

directors to be balanced, thus ensuring the effectiveness of the board.

The board retains full and effective control over the company and its subsidiaries and monitors the performance

of and decisions of executive management. In addition, the company is represented on the boards of all of its

associates.

All directors have access to management and the Company Secretary and to such information as is needed to

carry out their duties and responsibilities. All directors are entitled to seek independent professional advice

concerning the affairs of Sabvest at the company’s expense.

Directors are subject to election by shareholders at the first opportunity following their appointment. Directors

retire by rotation and stand for re-election by shareholders at least once every three years, in accordance with

the company’s Articles of Association.

The board meets at least three times a year. Additional meetings are held when non-scheduled matters arise. In

addition, the company has an effective communication process to facilitate consultation with all directors on an

ongoing basis.

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

Directors participate at meetings in person or by audio conference. During the year directors’ attendance at the

board meetings held, was as follows:

P Coutts-Trotter 3/3

H Habib 3/3

NSH Hughes 2/3

GE Nel 2/3

R Pleaner 3/3

DNM Mokhobo 1/1

CS Seabrooke 3/3

BJT Shongwe 1/1



11

The profiles of directors are set out on page 9, shareholdings on page 22, remuneration details on

page 41 and share scheme allocations on page 45.

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

• Audit, Governance and Risk Committee; and

• Remuneration and Nominations Committee.

AUDIT, GOVERNANCE AND RISK COMMITTEE

The Committee operates within defined terms of reference and authority granted to it by the board in terms

of a written charter. It meets at least twice a year, and the external auditors and CFO are invited to attend.

The Chief Executive may also attend by invitation from time to time. The external auditors have unrestricted

access to the Committee.

The principle functions of the Committee are to review the interim and annual financial statements and

accounting policies, monitor the effects of internal controls, assess the risks facing the business, discuss the

findings and recommendations of the auditors and review corporate governance procedures. The Audit

Committee also has the responsibility for recommending the appointment of auditors to shareholders and

for ensuring that there is appropriate independence relating to non-audit services provided by the auditors.

These non-audit services are presently taxation, corporate finance, risk and human resources.

The committee comprises the following members:

Attendance:

NSH Hughes (Independent Non-executive Chairman) 2/2

GE Nel (Non-executive) 2/2

BJT Shongwe (Independent Non-executive) n/a

REMUNERATION AND NOMINATIONS COMMITTEE

The Remuneration and Nominations Committee operates within defined terms of reference granted to it by

the board and meets annually.

The Committee determines executive remuneration and incentives, reviews staff costs and recommends

non-executive directors’ fees to shareholders. It conducts appropriate market reviews periodically relative to

these assessments. It also considers the composition and performance of the board and its committees and

makes recommendations on new appointments.

The Committee comprises the following members:

Attendance:

NSH Hughes (Independent Non-executive Chairman) 1/1

P Coutts-Trotter (Non-executive) 1/1

DNM Mokhobo (Independent Non-executive) n/a

REMUNERATION POLICY

The Remuneration and Nominations Committee ensures that the packages approved are competitive in the

South African marketplace.



12

continued

Sabvest’s remuneration policy strives for fixed remuneration in the upper quartiles for comparable positions

with incentives based on qualitative and quantative criteria to a further 50% of total cost to company packages.

The Committee has the discretion to further reward superior individual performance.

The executive directors participate in the share incentive scheme by way of interest-free loans for shares

purchased. No options are presently in issue.

Sabvest has implemented a long-term incentive plan (LTIP) for executives and staff. Participants receive a

notional award of between 10% and 50% of their cost to company package which is “invested” in the group’s

NAV. The growth in this notional investment is measured annually and vests in the participant after five years

(or after three or four years in certain circumstances). An award will expire and not vest if a hurdle growth rate

of 10% per annum in NAV is not achieved. Adjustments are made to eliminate movement in deferred tax and

to account for the notional re-investment of dividends. The awards are cash settled and accounted for in the

income statement annually as the potential value of the awards increases.

Executive directors who take the responsibilities of non-executive appointments on the boards of the group’s

associates are permitted to receive directors’ fees from some of those companies (refer page 41).

In addition all of the group’s associates pay consulting fees directly to Sabvest. Mr Seabrooke holds other non-

executive directorships not directly connected to the group. These enhance the group’s influence and improve

the group’s access to new investments. In addition, these appointments result in additional fee income to the

group from time to time.

Non-executive directors receive fees for their roles as directors and as board committee members.

SHAREHOLDER COMMUNICATION

Sabvest reports formally to shareholders twice a year when its half year and full year results are announced on

SENS, in the press and in printed form to shareholders and other parties.

Shareholders are invited to Sabvest’s annual general meeting and encouraged to interact with management in

that forum.

Sabvest’s website www.sabvest.com provides up-to-date financial and business information about the group and

includes electronic copies of all recent formal announcements, statements and financial results.

SHARE BUY-BACK PROGRAMME

The company has authority from its shareholders to purchase its own shares through the market up to a

maximum of 20% of the issued shares at a price not greater than 10% of that of the preceding five-day

weighted average. These purchases are subject to the Listings Requirements of the JSE Limited.

30 565 ordinary shares and 16 075 “N” ordinary shares remain uncancelled and held as treasury shares at the

year-end.

SHARE DEALINGS

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

STATEMENT OF CORPORATE GOVERNANCEcontinued


13

No director, executive or employee may deal directly or indirectly in Sabvest shares where that person may be

aware of unpublished price sensitive information. In addition, there is a closed period where dealings are not

permitted. This commences at the end of the interim and final reporting periods until the release of the group’s

results or at any time when Sabvest has issued a cautionary announcement.

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

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

associates.

BEE

Sabvest is committed to BEE principles and practices and also encourages BEE practices in all of its associates.

FINANCIAL AND INTERNAL CONTROLS

The group’s internal control and accounting systems are designed to provide reasonable, but not absolute,

assurances as to the integrity and reliability of the financial information and to safeguard, verify and maintain

accountability of its revenue and assets.

The board has considered the group’s major business risks and the control environmenat and an independent

risk review is conducted periodically.

The directors are not aware of any material breakdowns in the systems of internal financial control during the

year.

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

ENVIRONMENT

Sabvest encourages the businesses with which it is associated to operate in a manner that minimises negative

effects to the environment and enhances their surroundings, wherever possible.

ETHICS

Sabvest has subscribed to a written code of ethics. It is committed to the highest standard of integrity and

behaviour in dealing with all its stakeholders and those of its associates, and with society as a whole.

DISCLOSURE

The annual report deals adequately with disclosures pertaining to financial statements, auditor’s responsibility,

accounting records, internal control, risk management, accounting policies, adherence to accounting standards,

going concern issues, codes of corporate governance and the JSE Listings Requirements.

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

CORPORATE SOCIAL INVESTMENT

The group encourages CSI programmes in all of its associates.

Directly, Sabvest has, in addition to the CSI spends of its associates, elected to invest at least a further 0,5% of

profits annually. Expenditure in 2005 focused on secondary education bursaries for HDI’s and training seminars

for headmasters and teaching staff in KwaZulu-Natal.


14

STATEMENT OF CORPORATE GOVERNANCEcontinued

THE YEAR IN RETROSPECT

Sabvest made significant progress in 2005. All seven of the group’s associates performed in line with

expectations although the results of SA Bias Industries were adversely affected by substantially higher world

yarn prices and restructuring costs in its UK production unit.

Enhanced profitability was achieved by the group’s portfolio and lending books and in particular from Sabvest’s

purchase of Metrofile 2009 loan notes at a discounted face value.

Sabvest acquired a 5% interest in Metrofile (Pty) Limited and made long-term portfolio investments in Datatec

Limited and Massmart Holdings Limited.

Sabvest has also participated with Credit Management Solutions (Pty) Limited (CMS) in the acquisition of

selected distressed consumer debt. A full recovery has already been made on the first book purchased and a

second more substantial purchase has been made but is subject to suspensive conditions.

2005 FINANCIAL RESULTS

Headline earnings per share increased by 34% to 74,1 cents. A portion of the increase arose from an adjustment

to deferred tax. Excluding this adjustment HEPS would have increased by 20% to 66 cents.

The group’s balance sheet remains sound with negligible debt. Shareholders’ funds with investments in

associates at directors’ valuation were R268 million and intrinsic value per share calculated on the same basis

increased to 579 cents per share.

LONG-TERM PERFORMANCE

NAV per share with investments at directors’ valuation (intrinsic value) has increased by 18% per annum over

the four years 2002 – 2005 and by 30% in the 2005 financial year. HEPS have increased by 25% over the

four-year period and by 34% in the current financial year.

These rates of growth exceed the group’s target growth rates of 15% per annum.

Sabvest intends to increase dividends payable to shareholders but is unable to set a target due to the different

stages of maturity in cash generation of its individual investments. However, dividends were increased by 100%

in the current financial year.

ACCOUNTING POLICIES

The financial statements have been prepared in terms of International Financial Reporting Standards (IFRS)

applicable at 31 December 2005. Accounting policy changes and requirements have been implemented to

comply with IFRS and in particular restated 2004 comparative figures based on the transition date of 1 January

2004 and the use of optional exemptions in respect of the designation of financial assets and financial liabilities.

ANNUAL REVIEW


15

STRATEGIC OVERVIEW AND PROSPECTS

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

Long-term investments are funded by Sabvest’s equity, and by long-term borrowings if needed. Short-term

borrowings and surplus equity are utilised for interest-bearing finance advances and receivables, debt

instruments and short-term dealing portfolios. Corporate finance and advisory fees are earned from associates

and clients.

Sabvest is concentrating on assisting its existing investees in the growth of their operations and the

implementation of expansion strategies. We will seek to increase the flow of cash income from investees to

Sabvest except where underlying business opportunities exist to utilise the cash generated.

Sabvest anticipates a slight increase in its economic interest in SA Bias Industries Limited in 2006 to 2008

arising from a buy-back and cancellation of shares by SA Bias.

We continue to develop our expertise in the distressed debt market and are negotiating the establishment of a

Fund with appropriate banking and industry partners.

In the year ahead we intend to dispose of our smaller investments to facilitate improved focus.

Sabvest is also actively considering joint venture possibilities with selected BEE partners.

INVESTMENT OVERVIEW

The details of Sabvest’s holdings and a description of the businesses are set out on pages 4 and 5 and

graphically represented on page 3 of this report.

SABVEST INDUSTRIAL

• Nutritional Foods (Pty) Limited increased the scale of its business operations during the year through the

acquisition of Ovipro (Pty) Limited which is a leading manufacturer of frozen and spray dried egg

products. Nutritional Foods’ results for the year were good and a satisfactory increase in earnings was

recorded.

• SA Bias Industries Limited produced results in accordance with expectations but below the prior year’s

attributable income. This was a result of substantially higher world yarn prices and restructuring costs in

the UK. The business units of International Trimmings & Labels in Hong Kong, China and Sri Lanka

continue to perform very strongly. SA Bias expects to resume growth in earnings in the coming year.

• Set Point Technology Holdings Limited improved its earnings and dividends during the year and

completed the disposal of its remaining loss making and non-core businesses. Set Point implemented a

number of acquisitions in the mining technologies sector funded through deferred earn-outs and share

issues. This has lead to the creation of a third major division for Set Point and enhanced growth prospects

for the period ahead.

ANNUAL REVIEW


16

continued

SABVEST DISTRIBUTION AND SERVICES

• Flowmax Holdings Limited has recorded substantially improved results in most of its divisions and

subsequent to the year-end, has increased its portfolio of businesses through the purchase of 75% of Hytek

Limited in the UK. Further growth is expected in the period ahead.

• HDS Tech Holdings (Pty) Limited continues to have prospects in the IT sector. However, due to the small

size of this investment and the unlikelihood of meaningful growth in the short-term, we have decided to

disinvest after consultation with our partners.

• Korbitec Holdings (Pty) Limited continues to improve its profitability materially in its core divisions and

has now made a strategic decision to dispose of its remaining grassroots and second stage operations which

are not yet profitable. This will materially enhance the group’s prospects in the periods ahead.

• Midsouth Distributors (Pty) Limited had a satisfactory year. Our partners in this business are emigrating

and we have mutually decided to dispose of Midsouth in the 2006 financial year.

SABVEST INVESTMENTS, SHORT-TERM PORTFOLIO ANDMEDIUM-TERM RECEIVABLES

• The group’s long-term portfolio comprises investments in Datatec Limited and Massmart Holdings

Limited – groups which Sabvest believes have significant prospects (and on the boards of which the CEO

of Sabvest is a director).

• Metrofile (Pty) Limited, in which the group has a 5% interest, continues to improve its operating

performance with material increases in EBITDA. Sabvest hopes to increase its holding in Metrofile and/or

Metrofile Holdings if suitable opportunities arise.

• The group’s holding of Metrofile 2009 C loans is expected to generate a material profit for the group

through an early refinancing before the expected redemption/conversion dates.

• Sabvest’s short-term portfolio performed well during 2005 and has been realised in full in the first quarter

of 2006.

FINANCE ADVANCES

The finance advances portfolio is sound and earning satisfactory returns. All advances are made to post, current

or prospective investees, or comprise loans to entities established for distressed debt purchases.

INVESTMENTS SOLD

No investments in associates or in the group’s long-term portfolio were sold during the current year.

DIVIDEND POLICY

Dividend payments are considered annually and may vary or be waived depending on the group’s cash

requirements. The extent of dividends will be influenced by operating cash flows and receipts from the

non-core components of finance advances and investments that are not earmarked for new projects.

ANNUAL REVIEWcontinued


17


18

As increased cash flows are accruing from associates, Sabvest has increased its dividend by 100% from 3 cents

to 6 cents per share.

In 2006 Sabvest anticipates a further increase in dividends and is considering the introduction of an interim

dividend.

LEGAL ACTIONS

Shareholders’ attention is drawn to the legal actions referred to in note 22. Although the group does not

anticipate any losses arising from these, the length of time being taken to bring these matters to conclusion

continues to be prejudicial to Sabvest as the uncertainty precludes a number of corporate opportunities

available to the group. Accordingly Sabvest will institute its own actions and incur the necessary costs to procure

an earlier resolution of these matters.

BOARD OF DIRECTORS

Mr Ronnie Price retired as a non-executive director during the year. His input over the past seven years has

been greatly appreciated. His family continues to be a major shareholder of the group.

It is our great pleasure to welcome Mrs Dawn Mokhobo and Mr Bheki Shongwe to the board. Both are

directors of numerous listed and unlisted companies and we are delighted that they have agreed to bring their

experience to the Sabvest board.

PROSPECTS

The group’s five core associates are all performing well and good returns are expected from the finance and

debt instrument portfolios. Accordingly, subject to volatility arising from the adoption of IFRS and possible

movements in deferred tax balances, Sabvest expects a satisfactory performance in 2006 in terms of earnings,

cash flow and intrinsic value per share.

Haroon Habib Christopher Seabrooke

Chairman Chief Executive

Sandton

31 May 2006

ANNUAL REVIEWcontinued

To the members of Sabvest Limited

The directors of the company are responsible for the preparation and integrity of the annual financial statements

and related financial information included in this report. The financial statements have been prepared in

accordance with International Financial Reporting Standards. It is the responsibility of the independent auditors

to report on the financial statements. Their report to the members of the company is set out on page 20 of the

annual report. The financial statements incorporate full and responsible disclosure in line with the accounting

philosophy of the group. There is no reason to believe that the business will not continue as a going concern for

the foreseeable future. These financial statements have been approved by the board of directors and are signed

on its behalf by:

CS Seabrooke R Pleaner

Chief Executive Chief Financial Officer

Sandton

31 May 2006

The secretary certifies that the company has lodged with the Registrar of Companies all such returns as are

required of a public company, in terms of the Companies Act, No 61 of 1973, as amended, and that all such

returns are true, correct and up to date.

R Pleaner

Secretary

Sandton

31 May 2006

DIRECTORS’ APPROVAL OF THEANNUAL FINANCIAL STATEMENTS

DECLARATION BY COMPANY SECRETARY


19


20

To the members of Sabvest Limited

We have audited the annual financial statements and group annual financial statements of Sabvest Limited set

out on pages 4 and 5 and pages 21 to 49 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.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that

we plan and perform the audit to obtain reasonable assurance that the annual financial statements are free of

material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and

disclosures in the annual financial statements. An audit also includes assessing the accounting principles used

and significant estimates made by management as well as evaluating the overall annual financial statement

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

In our opinion, the annual 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 in South Africa.

Deloitte & ToucheRegistered Auditors

per BL EscottPartner – Audit

31 May 2006

Buildings 1 and 2Deloitte PlaceThe WoodlandsWoodlands DriveWoodmead, Sandton

National Executive: V Naidoo (Chief Executive), RMW Dunne (Chief Operating Officer),

GM Pinnock (Audit), DL Kennedy (Tax), GG Gelink (Consulting), MG Crisp (Financial Advisory),

CR Beukman, TJ Brown, AE Swiegers, NT Mtoba (Chairman of the Board),

J Rhynes (Deputy Chairman of the Board)

Regional leader: GT Waugh

A full list of partners and directors is available on request.

REPORT OF THE INDEPENDENT AUDITORS

NATURE OF BUSINESS

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

RESULTS OF OPERATIONS

The results of operations for the year ended 31 December 2005 are reflected in the attached annual financial

statements.

SUBSIDIARIES

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

this report.

GOING CONCERN

The board has concluded that the business will be a going concern in the year ahead after considering all

relevant variables within its knowledge.

SHARE CAPITAL AND SHARE PREMIUM

A subsidiary of the company holds 30 565 (2004: 30 565) ordinary shares and 16 075 (2004: 16 075) “N”

ordinary shares in treasury at a combined cost of R86 000 (2004: R86 000). Details of the amounts set-off

against the share capital and share premium of the group are set out in notes 6.1 and 6.2.

At the annual general meeting held on 12 April 2005 a special resolution was passed as a general approval, as

contemplated in Sections 85(2) and 85(3) of the Companies Act No 61 of 1973, as amended, for the acquisition

of ordinary and “N” ordinary shares issued by the company.

INVESTMENTS

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

DIRECTORS’ REPORTfor the year ended 31 December 2005


21

DIRECTORS’ INTERESTS

The directors’ beneficial and non-beneficial direct and indirect holdings in the ordinary shares and the “N”

ordinary shares of the company at 31 December 2005 were as follows:

2005

ordinary “N” ordinary Total

shares shares Total 2004

000’s 000’s 000’s 000’s

Executive

CS Seabrooke 11 685 3 348 15 033 15 000

R Pleaner 21 1 073 1 094 1 094

Non-executive

P Coutts-Trotter 5 4 9 9

H Habib – – – –

NSH Hughes – – – –

DNM Mokhobo – – – –

GE Nel – – – –

BJT Shongwe – – – –

11 711 4 425 16 136 16 103

Since the end of the financial year to the date of this report the interest of the directors remained unchanged

other than those of Mr CS Seabrooke whose interest in ordinary and “N” ordinary shares decreased by 6 977

shares and increased by 10 000 shares respectively.

DIVIDENDS

A dividend of 6 cents per share (2004: 3 cents) has been declared subsequent to the year-end.

CHANGES IN INVESTMENT HOLDINGS

During the year a subsidiary of the Company acquired 5% of Metrofile (Pty) Limited, 150 000 ordinary shares

in Datatec Limited and 75 000 shares in Massmart Holdings Limited.

DIRECTORS AND SECRETARY

Details of the present board of directors and the secretary appear on page 9. Messrs H Habib and

BJT Shongwe and Mrs DNM Mokhobo retire at the forthcoming annual general meeting but, being eligible,

offer themselves for re-election.

On 22 May 2005 Mr RS Price resigned as a director of the company.

On 26 October 2005 Mrs DNM Mokhobo and Mr BJT Shongwe were appointed as directors of

the company.

DIRECTORS’ REPORT


22

for the year ended 31 December 2005

continued

CONTROLLING ENTITY

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

Trust. Details of shareholders are set out on page 49.

SUBSEQUENT EVENTS

A subsidiary of the company has bought a further 50 000 ordinary shares in Datatec Limited and disposed of

its remaining preference shares in SA Bias Industries Limited and its investments in Midsouth Distributors (Pty)

Limited and HDS Tech Holdings (Pty) Limited.

DIRECTORS’ REPORTfor the year ended 31 December 2005

continued


23

2004

2005 Restated

Notes R’000 R’000

Non-current assets 171 868 138 156

Property, plant and equipment 1 1 835 2 106

Deferred tax asset 12.4 4 758 868

Share trust receivables 2 674 2 312

Medium-term receivables 2 11 397 –

Investment holdings 3 151 204 132 870

Associates 140 330 125 465

Long-term 10 874 7 405

Current assets 17 061 22 305

Finance advances and receivables 14 841 22 216

Short-term investments 4 2 186 –

Cash balances 5 34 89

Total assets 188 929 160 461

Ordinary shareholders’ equity 180 933 151 034

Share capital and premium 6 51 693 51 693

Non-distributable reserves 7 126 980 105 227

Accumulated profit/(loss) 7 2 260 (5 886)

Non-current liability 49 49

Deferred tax liability 12.4 49 49

Current liabilities 7 947 9 378

Interest-bearing debt 8 5 279 7 906

Accounts payable 9 2 668 1 472

Total equity and liabilities 188 929 160 461

CONSOLIDATED BALANCE SHEET


24

at 31 December 2005

CONSOLIDATED INCOME STATEMENTfor the year ended 31 December 2005


25

2004

2005 Restated


Gross income from operations and investments 41 814 36 152

Dividends received 5 485 3 500

Interest received 7 656 4 932

Income on financial instruments and shares 2 879 –

Fees and sundry income 2 314 2 378

Fair value adjustment to investments 3 268 –

Equity accounted retained income of associates 20 212 25 342

Interest paid 1 330 1 425

Net income from operations and investments 40 484 34 727

Less: Expenditure 11 348 9 625

Operating costs 9 431 7 991

Exceptional items 10 1 469 1 163

Depreciation 448 471

Net income before taxation 11 29 136 25 102

Taxation – deferred 12 (3 890) (145)

Net income for the year attributable to

equity shareholders 33 026 25 247

Earnings per share – cents 13 71,4 55,1

Dividend per share (proposed after year-end) – cents 6,0 3,0

Weighted average number of shares in issue – 000’s 46 259 45 845

2004

2005 Restated


Non-current asset 3 015 3 015

Investment in subsidiaries 3 3 015 3 015

Current assets 42 663 36 519

Loans to subsidiaries 42 649 36 455

Cash balances 5 14 64

Total assets 45 678 39 534

Ordinary share capital and premium 6 51 779 51 779

Accumulated loss 7 (6 165) (12 305)

Ordinary shareholders’ equity 45 614 39 474

Current liability 64 60

Accounts payable 9 64 60


2004

2005 Restated


Dividends received 16 2 500 1 500

Interest received 16 1 –

Gross income 2 501 1 500

Impairment recovery/(provision) 5 684 (5 875)

Expenditure (657) –

Net income/(loss) for the year 7 528 (4 375)

COMPANY BALANCE SHEET


26

at 31 December 2005

COMPANY INCOME STATEMENTfor the year ended 31 December 2005

GROUP COMPANY

2004 2004

2005 Restated 2005 Restated

R’000 R’000 R’000 R’000

Cash flows from operating activities 2 149 (3 334) 460 156

Net income/(loss) for the year 33 026 25 247 7 528 (4 375)

Adjustments for:

Depreciation 448 471 – –

Fair value adjustments to investments (3 268) – – –

Equity accounted retained income

of associates (20 212) (25 342) – –

Exceptional items 310 1 314 – –

Imputed interest earned (AC133) (2 427) (2 759) – –

Deferred taxation (3 890) (145) – –

Gain on sale of short-term investments (482) – – –

Impairment provision – – (5 684) 5 875

Gain on sale of investments and associates (427) (761) – –

(Profit)/loss on sale of property, plant and

equipment (233) 47 – –

Increase/(decrease) in accounts payable 692 (53) 4 9

Cash flows from operations 3 537 (1 981) 1 848 1 509

Dividends paid (1 388) (1 353) (1 388) (1 353)

Cash flows from investing activities 423 (1 351) (510) (135)

Purchase of property, plant and equipment (210) (1 259) – –

Purchase of short-term investments (4 328) – – –

Purchase of investments and repayment of

investment loans (3 701) 255 – –

Proceeds from sale of property, plant and equipment 266 3 – –

Proceeds from sale of short-term portfolio 2 829 – – –

Proceeds from sale of investments 6 377 3 985 – –

Increase in loans to subsidiaries – – (510) (135)

Increase in medium-term receivables (11 397) – – –

(Increase)/decrease in finance advances and receivables 10 587 (4 335) – –

Cash effects of financing activities – 2 061 – –

Sale of company shares held in treasury – 2 061 – –

Change in cash and cash equivalents 2 572 (2 624) (50) 21

Cash and cash equivalents at beginning

of year (7 817) (5 193) 64 43

Cash and cash equivalents at end of year (5 245) (7 817) 14 64

CASH FLOW STATEMENTSfor the year ended 31 December 2005


27

GROUP

COMPANY Accumu-

Share Share lated

capital premium loss Total

R’000 R’000 R’000 R’000

Balance as at 31 December 2003 869 50 910 (6 577) 45 202

Net loss for the year – – (4 375) (4 375)

Dividend paid – – (1 353) (1 353)


Net income for the year – – 7 528 7 528

Dividend paid – – (1 388) (1 388)


STATEMENTS OF CHANGES IN EQUITY


28


Non-distri- Accumu-

Share Share butable lated

capital premium reserve profit/(loss) Total

Notes R’000 R’000 R’000 R’000 R’000

Balance as at 1 January 2004 –

as previously reported 862 48 806 88 829 (7 002) 131 495

IFRS adjustments – property, plant

and equipment/deferred taxation

liability 18 – – – 116 116

IFRS adjustments – associates 18 – – 1 665 – 1 665

Restatements 19 – – (5) (524) (529)

Balance as at 1 January 2004 –

restated 862 48 806 90 489 (7 410) 132 747

Net income for the year – – – 25 247 25 247

As previously reported – – – 22 736 22 736

IFRS adjustments 18 – – – 2 999 2 999

Restatements 19 – – – (488) (488)

Translation of foreign

subsidiary/associates – – (967) – (967)

Attributable income of associates – – 22 406 (22 406) –

As previously reported – – 19 787 (19 787) –

IFRS adjustments 18 – – 2 968 (2 968) –

Restatements 19 – – (349) 349 –

Movement in translation and

other reserves of associates – – (6 701) – (6 701)

Shares held in treasury –

written back 7 2 104 – – 2 111

Shares held in treasury (2) (84) – 36 (50)

Dividends paid – – – (1 353) (1 353)

Balance as at

31 December 2004 867 50 826 105 227 (5 886) 151 034

Net income for the year – – – 33 026 33 026

Translation of foreign

subsidiary/associates – – 211 – 211

Attributable income of associates – – 19 902 (19 902) –

Movement in translation and other

reserves of associates – – 1 640 (3 590) (1 950)

Dividends paid – – – (1 388) (1 388)

Balance as at 31 December 2005 867 50 826 126 980 2 260 180 933

Accounting policies

The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS)

for the first time. The financial statements for the year ended 31 December 2004 were prepared in accordance

with South African Statements of Generally Accepted Accounting Practice (SA GAAP). SA GAAP differs in

some areas from IFRS. Accordingly certain accounting policy changes and requirements were implemented to

comply with IFRS. Comparative figures in respect of 2004 have been restated to reflect these adjustments.

Sabvest’s transition date is 1 January 2004. The group’s opening IFRS balance sheet at that date has been

restated to reflect all existing IFRS statements applicable at 31 December 2005. The group has elected to take

optional exemption from full retrospective application as allowed by IFRS1 in respect of the designation of

financial assets and financial liabilities. The group reclassified various available for sale investments as financial

assets at fair value through profit and loss.

The disclosure required by IFRS concerning the transition from SA GAAP to IFRS is given in note 18.

The following new accounting policies were applied for IFRS reporting:

• Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses;

• Assets that had an indefinite useful life are not subject to amortisation and are tested annually for

impairment;

• There are currently no share options in issue. However, should these be granted in the future, their fair

value will be recognised as an employee benefit expense with a corresponding increase to share-based

payments reserved in equity over the vesting period. The expense will be adjusted at the end of each

reporting period to reflect actual and expected levels of vesting. The proceeds received net of any directly

attributable transaction costs will be credited to share capital and share premium when the options are

exercised;

• The group has elected to measure certain individual items of property at fair value at the date of transition

to IFRS, the fair value is deemed to be cost at that date.

The financial statements are prepared on the historical cost basis modified by the revaluation of financial

instruments.

The principal accounting policies adopted are set out below.

Basis of consolidation

The consolidated financial statements include the financial statements of the company and entities controlled

by the company (its subsidiaries) made up to 31 December each year. Control is achieved where the company

has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from

its activities.

On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair value

at the date of acquisition. Any excess of the cost at acquisition over the fair values of the identifiable net assets

acquired is recognised as goodwill. Any deficiency of the cost over the fair values of the identifiable net asset

acquired (ie discount on acquisition) is credited to the income statement in the period of acquisition.

All inter-company transactions and balances between entities are eliminated on consolidation.

Associate companies

Associate companies are those companies over which the group exercises significant influence and in which it

holds long-term equity interests, but which are not subsidiaries. Significant influence is the power to participate

in the financial and operating policy decisions of the investee but is not control over those policies.

The results of the associate companies are incorporated in these financial statements by using the equity

method of accounting. The equity accounted income is transferred to a non-distributable reserve.

ACCOUNTING POLICIES


29


Investments in associates are carried in the balance sheet at cost as adjusted by post-acquisition changes in the

group’s share of the net assets of the associate, less any impairment in the value of individual investments.

Any excess of the cost of acquisition over the group’s share of the fair value of the identifiable net assets of the

associate at the date of acquisition is recognised as goodwill. Any deficiency of the cost of acquisition below the

group’s share of the fair value of the identifiable net assets of the associate at the date of acquisition,

(ie discount on acquisition) is credited in the income statement in the period of acquisition.

In cases where the associate company is listed, the most recent published financial results are used and where

the associate company is unlisted, the latest consolidated management information is used.

Investments

Long-term investments are included at fair value in the consolidated financial statements. Gains and losses

arising from changes in the fair value are included in the income statement for the period. On disposal of the

investments the profit or loss is accounted for as the difference between the consideration received and the fair

value of the investment at the disposal date and is included in exceptional items in the financial statements.

Financial instruments

Financial assets and financial liabilities are recognised on the group’s balance sheet when the group has become

a party to the contractual provisions of the instrument.

Financial instruments recognised on the balance sheet include cash and cash equivalents, investments, trade

receivables, trade creditors and borrowings.

Equity instruments issued are recorded as the proceeds received out of direct issue costs.

Derivative financial instruments are initially recorded at cost and are remeasured to fair value at subsequent

reporting dates.

Trade creditors are initially measured at fair value and are subsequently measured at amortised cost, using the

effective interest rate method.

Changes in the fair value of derivative financial instruments that are designated and effective as cash flow

hedges are recognised directly in equity. Amounts deferred in equity are recognised in the income statements in

the same period in which the hedged firm commitment or forecast transaction affects net profit or loss.

Interest-bearing loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance

charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and

are added to the carrying amount of the instrument to the extent that they are not settled in the period in which

they arise.

Originated loans and receivables are measured initially at cost. The loans and receivables are measured

subsequently at amortised cost using the effective interest rate method. If the terms of a loan or receivable are

not market-related, the payments are discounted at a market-related rate to determine the fair value at initial

recognition.

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid

investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of

changes in value.

Short-term investments are measured at fair value. They are recognised as being held for trading purposes and

gains or losses in fair value are included in the income statement for the period.

ACCOUNTING POLICIES


30


continued

continued


31

ACCOUNTING POLICIES

Property, plant and equipment

Property, plant and equipment is reflected at cost less accumulated depreciation and any recognised impairment

loss on the following basis:

Fixtures, equipment and motor vehicles 10 – 33%.

Depreciation is charged so as to write-off the cost or valuation of assets over their estimated useful lives, using

the straight-line basis.

The gain or loss arising on disposal of the asset is determined as to the difference between the sale proceeds

and the carrying amount of the asset and is recognised in income.

Foreign currencies

The individual financial statements of each group entity are presented in the currency of the primary economic

environment in which the entity operates (its functional currency). For the purpose of the consolidated financial

statements, the results and financial position of each entity are expressed in Rands, which is the functional

currency of the company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s

functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the

transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at

the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated

in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined.

Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items,

are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary

items carried at fair value are included in profit or loss for the period except for differences arising on the

retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For

such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the group’s foreign

operations (including comparatives) are expressed in Rands using exchange rates prevailing on the balance sheet

date. Income and expense items (including comparatives) are translated at the average exchange rates for the

period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the

dates of the transactions are used. Exchange differences arising, if any, are classified as equity and transferred

to the group’s translation reserve. Such translation differences are recognised in profit or loss in the period in

which the foreign operation is disposed of.

Goodwill

Goodwill arising on consolidation represents the excess of the group’s interest in the fair value of the identifiable

assets and liabilities of a subsidiary or associate at the date of acquisition.

Goodwill is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised

immediately in the income statement and is not subsequently reversed.

On disposal of a subsidiary or associate the amount of goodwill is included in the determination of the gain or

loss on disposal.

Goodwill arising on the acquisition before the date of transition to IFRS has been retained at the previous

South African Statements of Generally Accepted Accounting Practice amounts subject to being tested for

impairment at that date.


ACCOUNTING POLICIES



continued

For the purpose of impairment testing, goodwill is allocated to each of the group’s cash-generating units

expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been

allocated are tested for impairment annually, or more frequently when there is an indication that the unit may

be impaired. If the recoverable amount of the cash-generaging unit is less than the carrying amount of the unit,

the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and

then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An

impairment loss recognised for goodwill is not reversed in a subsequent period.

Impairment provisions

Associate companies and investments are considered annually for impairments in value. If, in the opinion of the

directors there is an impairment, an impairment provision is deducted from the carrying value of the associate

company or investment. Impairment provisions created or reversed during the year are written off/written back

through the income statement. Where there is a reversal of an impairment loss the asset is increased to the

estimated recoverable value which will not be greater than the carrying value had no impairment loss been

recognised in the prior years.

At each balance sheet date, the group reviews the carrying amounts of its other tangible assets to determine

whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,

the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the

recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects

current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,

the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment

loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which

case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is

increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not

exceed the carrying amount that would have been determined had no impairment loss been recognised for the

asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit

or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment

loss is treated as a revaluation increase.

Provisions

Specific impairment provisions or debt write-offs may be deducted from finance advances or investments where

in the opinion of the directors recoverability is doubtful or unlikely.

Revenue recognition

Revenue is recognised only when it is probable that the economic benefits associated with the transaction will

flow to the group and the amount of revenue can be reliably estimated.

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

Interest is recognised on a time proportion basis.

Capitalisation shares elected in lieu of a cash dividend are accounted for in investment income at the cash

dividend equivalent.

32

continued


33

ACCOUNTING POLICIES

Lease agreements

Rentals payable under lease agreement entered into for premises occupied by the group are expensed on a

straight-line basis over the term of the relevant lease.

Retirement benefits

Payments to defined contribution retirement benefit plans are charged and expensed as they fall due.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported

in the income statement because it excludes items of income or expense that are taxable or deductible in other

years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is

calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial

statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for

using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable

temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits

will be available against which deductible temporary differences can be utilised. Such assets and liabilities are

not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a

business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor

the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries

and associates, and interests in joint ventures, except where the group is able to control the reversal of the

temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent

that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be

recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or

the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged

or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets

against current tax liabilities and when they relate to income taxes levied by the same taxation authority and

the group intends to settle its current tax assets and liabilities on a net basis.

Critical judgements in applying entities’ accounting policies

In the process of applying the entities’ accounting policies no critical judgements were made that would have a

significant effect on the amounts recognised in the financial statements.



34

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 December 2005

Office furniture,

equipment,

computers

Motor and leasehold

vehicles improvements Total

R’000 R’000 R’000

1. PROPERTY, PLANT AND EQUIPMENT2005 Group

Beginning of year

Cost 1 589 2 771 4 360

Accumulated depreciation (1 199) (1 055) (2 254)

Net book value 390 1 716 2 106

Current year movements

Additions – 210 210

Net disposals – (33) (33)

Depreciation (120) (328) (448)

Total movement (120) (151) (271)

Comprising the following at end of year:

Cost 874 2 907 3 781

Accumulated depreciation (604) (1 342) (1 946)


2004 Group

Beginning of year

Cost 1 589 1 890 3 479


Net book value 573 794 1 367

Current year movements

Additions – 1 259 1 259

Net disposals – (49) (49)

Depreciation (183) (288) (471)

Total movement (183) 922 739

Comprising the following at end of year:

Cost 1 589 2 771 4 360



Following the revisions to IAS16 – Property, Plant and Equipment that are effective for the current

accounting period, the group has reviewed the residual values used for the purposes of depreciation

calculations in the light of the amended definition of residual value in the revised Standard. The review

did not highlight any requirement for an adjustment to the residual values used in the current or prior

periods. In line with the new requirements, these residual values will be reviewed and updated annually in

the future.


continued


35

GROUP COMPANY

2005 2004 2005 2004R’000 R’000 R’000 R’000

2. MEDIUM-TERM RECEIVABLES

A group company acquired subordinated redeemable convertible C loan debt in Metrofile(Pty) Limited. The C loan debt bears interest at prime plus 2% per annum compounded quarterly. The C loan debt is redeemable by Metrofile before 4 March 2009 failing which it will becompulsorily convertible into shares in Metrofile.The gross face value of the C loan debt togetherwith accrued interest at 31 December 2005 wasR28,6 million. Sabvest’s carrying value per thebalance sheet was R11,4 million.

3. INVESTMENT HOLDINGS3.1 Investment in subsidiaries

Shares at cost less impairments 3 015 3 015

3.2 Investment holdingAssociatesAt cost 18 157 25 882IAS39 adjustment (1 983) (3 031)

IAS39 adjustment – opening balance (3 031) (4 461)IAS39 movement for the year 1 048 1 430

Cost after adjusting for IAS39 16 174 22 851Share of post-acquisition reserves 120 726 99 184

Movement on non-distributable reserves (5 982) (7 578)Variation of interest/translation of

foreign associates 402 358Retained income 126 306 106 404

Carrying value 136 900 122 035Goodwill 3 430 3 430

Investment per balance sheet 140 330 125 465

Directors’ valuation 227 198 181 154

Long-termAt cost 7 308 12 161IAS39 adjustment – (4 756)

IAS39 adjustment – opening balance (4 756) (6 085)IAS39 movement for the year 4 756 1 329

Cost after adjusting for IAS39 7 308 7 405Fair value adjustment for the year 3 566 –

Investment per balance sheet 10 874 7 405

Directors’ valuation 10 874 7 405

Total investment holdings perbalance sheet 151 204 132 870

Directors’ valuation – total 238 072 188 559

GROUP COMPANY

2005 2004 2005 2004

R’000 R’000 R’000 R’000

3. INVESTMENT HOLDINGS(continued)

3.2 Investment holding (continued)Included in the cost are investment loans after adjusting for IAS39, which total R4 427 181 (2004: R16 762 819). These loans are repayable over various termsand bear interest at rates varying between 0% and 17%.

3.3 Total share of post-acquisitionreservesShare of post-acquisition reserves at

beginning of year 99 184 83 479Movement on non-distributable reserves

of associates for the year 1 596 (5 650)Translation of foreign associates 44 (1 051)Equity accounted retained income

for the year 20 212 25 342Share of associates’ exceptional losses (310) (1 049)Disposals during the year – (1 887)

Share of post-acquisition reserves at end of year 120 726 99 184

3.4 Impairment of goodwill andinvestmentsThe group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. Determining whether goodwillwas impaired requires an estimation ofthe value of the long-term investment towhich goodwill has been allocated. Theinvestment is valued by applying a relativeprice earnings valuation to its sustainable earnings corroborated by the net asset valuation methodology.Impairment provision at beginning

of year – (15 762)Reversal of impairment provision

on investments sold – 15 762

Impairment provision at end of year – –

3.5 GoodwillGoodwill at beginning of year 3 430 3 664Amortisation of goodwill for the year – (234)

Goodwill at end of year 3 430 3 430

3.6 Summarised financial informationRefer to Annexure B.


36


continued


continued


37

GROUP COMPANY

2005 2004 2005 2004

R’000 R’000 R’000 R’000

4. SHORT-TERM INVESTMENTSFair value 2 186 – – –

The short-term investments represent

investments in listed equity securities. The fair

value of these securities are the quoted market

prices.

5. CASH BALANCESCash at bank 34 89 14 64

6. SHARE CAPITAL AND PREMIUM6.1 Share capital

Authorised

24 000 000 ordinary shares of

5 cents each 1 200 1 200 1 200 1 200

80 000 000 “N” ordinary shares of

0,01 cent each 8 8 8 8

Issued

17 326 549 (2004: 17 326 549)

ordinary shares of 5 cents each 866 866 866 866

28 979 854 (2004: 28 979 854)

“N” ordinary shares of 0,01 cent each 3 3 3 3

869 869 869 869

Issued, net of shares in treasury

17 295 984 (2004: 17 295 984)

ordinary shares

28 963 779 (2004: 28 963 779)

“N” ordinary shares.

The unissued “N” ordinary shares are

under the control of the directors until

the forthcoming annual general

meeting.

6.2 Share premium at beginning and

end of year 50 910 50 910 50 910 50 910

Share capital and premium before

shares held in treasury 51 779 51 779 51 779 51 779

Less: 30 565 (2004: 30 565)

ordinary and 16 075 (2004: 16 075)

“N” ordinary shares held in treasury (86) (86) – –

Share capital and premium 51 693 51 693 51 779 51 779


38


continued

GROUP COMPANY

2005 2004 2005 2004

R’000 R’000 R’000 R’000

7. RESERVES7.1 Non-distributable reserves

On translation of foreign subsidiary/associated companies– prior years 2 510 4 528 – –– current year 255 (2 018) – –On movement on non-distributable reserves of associated companies– prior years (7 578) (1 928) – –– current year 1 596 (5 650) – –Variation of interest in subsidiary/associated companies 3 329 3 329 – –Attributable income of associated companies– prior years 106 404 83 998 – –– current year 19 902 22 406 – –

Capital redemption reserve fund 562 562 – –

126 980 105 227 – –

7.2 Accumulated profit/(loss)Accumulated loss at beginning of year (5 886) (7 410) (12 305) (6 577)

Accumulated profit/(loss) for the year 8 146 1 524 6 140 (5 728)

Accumulated profit/(loss) at end of year 2 260 (5 886) (6 165) (12 305)

Total reserves 129 240 99 341 (6 165) (12 305)

8. INTEREST-BEARING DEBTShort-termSouth African rand borrowings

Bank advances 962 859 – –Other 2 651 6 872 – –

3 613 7 731 – –Foreign borrowings 1 666 175 – –

5 279 7 906 – –

The interest-bearing debt has no fixed termsof repayment.

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

Interest on foreign borrowings is paid at baseplus 2% per annum.

9. ACCOUNTS PAYABLEDeferred income 683 – – –

Other 1 985 1 472 64 60

2 668 1 472 64 60

GROUP COMPANY

2005 2004 2005 2004

R’000 R’000 R’000 R’000

10. EXCEPTIONAL ITEMSGain on sale of investments 427 – – –Gain on sale of associates – 761 – –(Costs/losses) arising from the group’s

former finance operations (1 586) (641) – –

(1 159) 120 – –Share of associate companies’ exceptional

losses (310) (1 049) – –Amortisation of goodwill – (234) – –

Net exceptional losses (1 469) (1 163) – –

11. NET INCOME BEFORE TAXATIONThis is stated after taking into account:

Income from subsidiaries – dividends – – 2 500 1 500(Gain) on sale of short-term investments (482) – – –(Profit)/loss on sale of property, plant and

equipment (233) 47 – –Auditors’ remuneration 691 334

Fees – audit 457 230 – –Fees – other 234 104 – –

Consulting fees 86 143 – –Depreciation (refer to note 1) 448 471 – –Rent paid – offices 669 556 – –Payroll costs 4 800 3 935 – –Retirement benefits 253 265 – –Other 3 165 2 711 657 –

12. TAXATION12.1 Charged for the year

South African normal taxation – – – –

12.2 Taxation rate reconciliation % % % %Standard rate of taxation 29 30 29 30Rate of taxation for the year affected

by non-taxable income (42) (31) (29) (30)

(13) (1) – –

12.3 Movement on deferred tax asset

Deferred tax asset– STC credits 173 145 – –– Tax loss 3 717 – – –

3 890 145 – –

Two of the group’s subsidiaries have assessed losses for taxation purposes. The unutilised estimatedlosses relating to the subsidiaries amount to R152 million (2004: R155 million).

Unutilised STC credits amount to R30 million (2004: R26 million).


continued


39


40


continued

GROUP COMPANY

2005 2004 2005 2004R’000 R’000 R’000 R’000

12. TAXATION (continued)

12.4 Deferred tax asset (liability)– STC credits 1 041 868 – –– Tax loss 3 717 – – –

4 758 868 – –

Leases (49) (49) – –

12.5 Capital gains tax

In the event that the group’s investmentswere sold at directors’ valuation, the estimated capital gains tax liability wouldbe R13 million (2004: R8 million).

13. EARNINGS PER SHAREEarnings per share represents the profits in centsattributable to each share and comprises netincome for the year attributable to ordinaryshareholders divided by the weightedaverage number of shares in issue during the year.

Earnings per share 71,4 55,1The weighted average number of shares used inthe calculation for the current year is 46 259 763 (2004: 45 845 009). There are nopotentially dilutive shares.

14. HEADLINE EARNINGS PER SHARE

Headline earnings per share comprise attributable income adjusted by certain exceptional gains/(losses) attributable to ordinary shareholders divided by the weightedaverage number of shares in issue as follows:

Net income for the year attributable to equity shareholders 33 026 25 247

Gains on disposal of investments (427) (761)

Exceptional losses – associates 310 29

Losses/costs arising from former financeoperations 1 586 641

Amortisation of goodwill – 234

Profit on sale of property, plant and equipment (233) –

Headline earnings for the year 34 262 25 390

Headline earnings per share (cents) 74,1 55,4

The weighted average number of shares used in the calculation for the current year is 46 259 763 (2004: 45 845 009).

2005 2004 2005 2004 2005 2004R’000 R’000 R’000 R’000 R’000 R’000

15. DIRECTORS’ EMOLUMENTSExecutive directors

Salaries 1 200 1 140 750 705 1 950 1 845Retirement and medical 156 146 137 133 293 279Other benefits 420 176 72 52 492 228

Basic remuneration 1 776 1 462 959 890 2 735 2 352Incentive bonuses 700 450 325 275 1 025 725Share trust loan benefits 376 334 82 88 458 422

Total remuneration 2 852 2 246 1 366 1 253 4 218 3 499

Non-executive directorsFees as directors 362 200

P Coutts-Trotter 80 45H Habib 80 50NSH Hughes 70 40DNM Mokhobo 30 –GE Nel 60 35RS Price 12 30BJT Shongwe 30 –

4 580 3 699

Some of the directors are executives of certain of the group’s associated companies from which theyreceive remuneration, unlinked to services performed for Sabvest. Sabvest itself receives consulting feesdirectly from its associates for services provided to them by executive directors and staff of Sabvest. Inaddition Mr CS Seabrooke receives directors’ fees from some of Sabvest’s associates in his capacity asa director of those companies of R795 000 (2004: R700 000).

GROUP COMPANY

2005 2004 2005 2004R’000 R’000 R’000 R’000

16. REVENUERevenue, which is stated for statutory purposes, comprises dividends, interest, feesand sundry income and other income on financial services and shares 18 334 10 810 2 501 1 500

17. NET ASSET VALUESPER SHARENet asset value per share – cents 391 326Net tangible asset value per share – cents 384 318Net asset value per share with investments

in associates at market value – cents 444 350Net asset value per share with investments in

associates at directors’ valuation(intrinsic value) – cents 579 447

Number of shares in issue less held in treasury – 000’s 46 259 46 259

CS Seabrooke R Pleaner Total


continued


41


42


continued

18. EFFECTS OF TRANSITION TO IFRSThis is the first year the company has presented its financial statements under IFRS. The last financial

statements under South African Standards of Generally Accepted Accounting Practice (SA GAAP) were

for the year ended 31 December 2004 and the date of transition to IFRS was therefore

1 January 2004.

SA GAAP differs in some areas from IFRS. Comparative figures in respect of 2004 have been restated

to reflect these adjustments. The group’s opening IFRS balance sheet at that date has been restated to

reflect all existing IFRS statements applicable at 31 December 2005. Sabvest has elected to take optional

exemption from full retrospective application as allowed by IFRS1 in respect of the designation of

financial assets and financial liabilities.

At the date of approval of these financial statements the following standards and interpretations were in

issue, but not yet effective:

• IFRS7 – Financial Instruments: Disclosure

The effects of the transition to IFRS are as follows :

31 December

2004

R’000

18.1 ASSETS AND EQUITY

18.1.1 Non-distributable reserve

As previously reported 100 948

IFRS adjustments to opening reserves – associates 1 665

IFRS adjustments for the year – associates 2 968

Restated for IFRS adjustments 105 581

18.1.2 Distributable reserve

As previously reported (5 370)

IFRS adjustments to opening reserves 116

IFRS adjustments for the year 31

Restated for IFRS adjustments (5 223)

18.1.3 Property, plant and equipment


IFRS adjustments to opening reserves 165

IFRS adjustments for the year 31


18.1.4 Investment holdings


IFRS adjustments to opening reserves – associates 1 665



18.2 NET INCOME FOR THE YEAR


IFRS adjustments – depreciation 31



Effect on earnings per share (increase) – cents 6,5

19. RESTATEMENTS

19.1 Operating leases

Leases are recognised as an expense on a straight-line basis over the term of the lease as a result

of Circular 7/2005 issued by SAICA. Previously, lease expenses were recognised on a basis which

reflected the cash flows during that period. Comparative figures have been restated.

19.2 Loan write-off

Correction to understatement of a loss on disposal of an associate in a prior year. Comparative

figures have been restated.

The aggregate effect of the above restatement is as follows :

2005 2004

R’000 R’000

Opening accumulated loss

Gross restatement (1 061) (549)

Tax effect 49 25

Net restatement (1 012) (524)

Net income for the year

Gross restatement (398) (512)

Tax effect 5 24

Net restatement (393) (488)

Effect on earnings per share (decrease) – cents (0,8) (1,1)

20. CONTINGENT LIABILITIES AND COMMITMENTS20.1 The company has given put options of R18 million (2004: R19,5 million) to holders of

redeemable preference shares in SA Bias Industries Limited which have due dates from 2006

to 2009.

20.2 The group has given put options of R9,2 million (2004: Rnil) to holders of SA Bias Industries

Limited junior loans which have due dates from 2007 to 2010.

20.3 Group companies provide guarantees, or undertakings relative to facilities, corporate finance or

investment transactions from time to time. At the year-end these were utilised in an amount of

R2 million (2004: R4,1 million).

20.4 The group has rights and obligations in terms of shareholder or purchase and sale agreements

relating to its present or former investments.

20.5 A group company has given call options and has been given put options with regard to the group’s

shareholding in Metrofile (Pty) Limited, which are exercisable by either party under certain

circumstances until 2009.

20.6 A group company has entered into lease agreements for the premises that it occupies. Amounts

due are as follows:

R’000

Years 1 – 2 1 096

Years 3 – 4 715


continued


43


44


continued

21. HYPOTHECATIONS21.1 Facilities made available offshore to Sabvest Capital Holdings Limited (BVI) are not guaranteed

by any of the South African companies but are secured by a pledge of shares and loan accountsin Flowmax Holdings Limited (BVI).

21.2 Sabvest Finance and Guarantee Corporation Limited has ceded its present and future receivablesto its bankers as security for facilities granted. A reversionary cession has been given to securefacilities from other lenders.

22. LEGAL ACTIONS22.1 The group has responded fully to a demand made in 2002 for an accounting and debatement of

account between one of its subsidiaries and a former associate company, The New Republic BankLimited (NRB). Sabvest’s legal advisors do not expect any liability to arise from this process.

22.2 The group’s chief executive responded in 2002 to claims made that year by NRB allegedly arisingfrom the purchase by NRB of one of Sabvest’s subsidiaries in 1993. Sabvest’s legal advisors donot expect any liability to arise from this process.

23. RELATED PARTY TRANSACTIONSRelated party transactions can exist between subsidiaries and the holding company, fellow subsidiaries,associated companies and key management personnel. The subsidiaries of the group are identified inAnnexure A1 and the associated companies on pages 4 and 5.

Transactions between the holding company, its subsidiaries and fellow subsidiaries relate to dividendsand interest. The income and loans are regarded as intergroup transactions and are eliminated onconsolidation.

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

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

Transactions with directors relate to fees and are disclosed in note 15 and monies lent to the group bycompanies controlled by directors are included in interest-bearing liabilities in the balance sheet andforeign exchange contracts.

All the above transactions are concluded under terms and conditions that are no less favourable thanthose available from third parties.

Trading transactions

During the year the group entities entered into the following trading transactions with related parties thatare not members of the group:

Amount Amountsowed by owed to

related relatedparties parties

Fees Dividends Interest Interest 31 Dec 31 Decreceived received received paid 2005 2005

R’000 R’000 R’000 R’000 R’000 R’000

NSH Hughes and familyCompany – – – 70 – 18

R Pleaner and familyIndividual – – – 14 – 163

CS Seabrooke and familyIndividual – – – 41 – 222Company 21 – – 684 – 2 258

Associates 1 495 5 399 528 – 14 653 –


45


continued

24. FINANCIAL INSTRUMENTSFluctuations in interest rates impact on the value of short-term cash investments and financing activities,

giving rise to interest rate risk. As part of the process of managing the group’s interest rate risk, interest

rate characteristics of new borrowings and the refinancing of existing borrowings are positioned

according to expected movements in interest rates. Details of interest rates relating to borrowings are

shown in note 8.

Should the group have any exchange rate exposures, it would utilise foreign currency forward

contracts to manage the risk.

Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously. The

group minimises credit risk by ensuring that credit risk is spread over a number of counterparties and

by giving due consideration to the counterparties to which loans are granted.

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

25. RETIREMENT BENEFIT INFORMATIONAll eight employees are members of the group’s pension scheme which operates on the defined

contribution basis, where employee benefits are determined according to each member’s equitable share

of the total assets of the fund. Employees contribute 7,5% and the company contributes 9,5% of

pensionable salary. The fund is reviewed actuarially on an annual basis and every three years a statutory

valuation is performed and submitted to the Registrar of Pension Funds. The fund is governed by the

Pension Fund Act of 1956. Retirement costs are expensed in the year in which they are incurred.

The fund was valued during the 2004 financial year.

26. SABVEST LIMITED SHARE TRUSTThere were 650 (2004: 650) “N” ordinary shares unallocated at the year-end.

Interest-free loans made by the share trust were as follows:

2005 2004

R’000 R’000

The Seabrooke Family Trust 4 509 4 509

R Pleaner 990 990

The loans are repayable in terms of the Share Trust Deed.

Refer to note 15 for deemed benefits received by directors.

27. CAPITAL COMMITMENTSThere were no capital commitments at year-end.

28. SUBSEQUENT EVENTSRefer to directors’ report.

29. BORROWING POWERSThe borrowing powers of the group are not limited.


46

SCHEDULE OF CONSOLIDATED SUBSIDIARIESANNEXURE A1

Proportionamount Held directly Book value of interest

Nature of issued or indirectly Shares Indebtednessof capital 2005 2004 2005 2004 2005 2004business R % % R’000 R’000 R’000 R’000

Sabvest Investment 4 000 100 100 4 4 – 2 159Investments holding(Pty) Limited company

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

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

Sabvest Finance Finance Ord 100 100 1 1 42 649 34 296and Guarantee and 6 000Corporation guarantees 145 606 142 937Limited Gross

impairment (102 957) (108 641)

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

and corporatefinancer

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

Investment in subsidiaries 3 015 3 015Indebtedness included in the company’s assets 42 649 36 455

Aggregate net income after taxation, exceptional items and amortisation of goodwill attributable to Sabvest Limited’s interest in its subsidiaries 32 369 25 247


47

COMPANY STRUCTURE

Sabvest Finance andGuarantee Corporation

Limited

SabvestCapital

HoldingsLimited (BVI)

30% HDS Tech Holdings (Pty) Limited 17% Korbitec Holdings (Pty) Limited5% Metrofile (Pty) Limited30% Midsouth Distributors (Pty) Limited40% Nutritional Foods (Pty) Limited50% SA Bias Industries Limited16% Set Point Technology Holdings Limited150 000 shares in Datatec Limited75 000 shares in Massmart Holdings Limited

Sabvest Financial Services (Pty) Limited

Sabvest Investments(Pty) Limited

Sabvest Securities(Pty) Limited (Dormant)

SD Nominees(Pty) Limited (Dormant)

100%

100%

40%

Finance advances,medium-term

receivables, debtinstruments andshort-term share

portfolio

Flowmax HoldingsLimited (BVI)

SABVEST LIMITED

ANNEXURE A2


48

ASSETS, LIABILITIES & INCOME OF ASSOCIATESANNEXURE B

2005 2004R’000 R’000

1. LISTEDSet Point Technology Holdings LimitedPeriod: 12 months to 31 August 2005

Non-current assets 136 367 58 708Current assets 98 698 83 804

Total assets 235 065 142 512

Shareholders’ equity 86 949 64 388Minority interests 724 5 349

Total shareholders’ funds 87 673 69 737Interest-bearing debt 20 648 25 254Non-interest-bearing debt 126 744 47 521


Revenue 240 172 247 650EBIT 34 754 20 601Headline earnings 16 326 12 569Headline earnings per share – cents 6,7 5,2Dividends proposed 1,0 1,5

2. UNLISTEDAggregated comprising:

Flowmax Holdings Limited, Korbitec (Pty) Limited, HDS Tech Holdings (Pty) Limited, Midsouth Distributors (Pty) Limited, Nutritional Foods (Pty) Limited and SA Bias Industries LimitedPeriod: 12 months to 31 December *1

2005 2004R’000 R’000

Non-current assets 129 132 100 095Deferred taxation 22 340 25 147Intangible assets 33 409 27 485Current assets 365 012 369 999

Total assets 549 893 522 726

Shareholders’ equity 244 300 196 849Minorities 29 066 27 823Shareholders’ loans 61 229 71 148

Total shareholders’ funds 334 595 295 820Interest-bearing debt 60 107 81 524Non-interest-bearing debt 155 191 145 382


Revenue 872 007 827 297EBIT 95 204 92 648Attributable income 48 485 53 477Headline earnings 47 455 51 423

*1 Based on management accounts as subsequently adjusted by audited accounts.

SHARES AND SHAREHOLDERS


49

SHAREHOLDER ANALYSIS AT 31 DECEMBER 2005*1

Ordinary shares “N” ordinary shares

Number of % of total Number of Number of % of total Number ofCategory shareholders shareholders shares held shareholders shareholders shares held

Banks and nominee companies 3 3,5 45 734 12 3,7 507 553

Investment and trust companies 7 8,2 12 249 035 8 2,4 8 885 075Other corporate bodies 11 12,9 4 385 452 23 7,0 16 374 379

Individuals 64 75,4 615 763 284 86,9 3 196 772

85 100 17 295 984 327 100 28 963 779

PRINCIPAL SHAREHOLDERS*1

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

Ordinary shares “N” ordinary shares Overall

Number % of Number % of % ofof shares issued of shares issued voting

Name held shares held shares rights

Seabrooke Family Trust* 11 684 835 67,6 3 348 565 11,6 67,4

Utas Investments (Pty) Limited 2 615 000 15,1 11 183 913 38,6 15,2

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

Gingko Investments (Pty) Limited 269 000 1,6 1 894 270 6,5 1,6

15 068 985 87,2 18 007 935 62,2 87,1

*Including Comfin Capital (Pty) Limited.

SHAREHOLDER SPREAD*1

Ordinary shares “N” ordinary shares Overall shares

Number % Number % Number %

ordinary ordinary “N” ordinary “N” ordinary overall overall

shares in shares in shares in shares in shares in shares inCategory issue issue issue issue issue issue

Non-public shareholders

Directors 11 710 835 67,7 4 425 865 15,3 16 136 700 34,9

Other 2 615 000 15,1 15 483 913 53,4 18 098 913 39,1

Total non-public shareholders 14 325 835 82,8 19 909 778 68,7 34 235 613 74,0

Public shareholders 2 970 149 17,2 9 054 001 31,3 12 024 150 26,0

17 295 984 100,0 28 963 779 100,0 46 259 763 100,0

Note: Directors’ holdings are set out on page 22.

STOCK EXCHANGE PERFORMANCE

JSE Limited Ordinary “N” ordinary

2005 2004 2005 2004

Closing price (cents) 310 220 325 225

Highest price (cents) 375 275 350 270

Lowest price (cents) 220 150 220 175

Total number of shares traded (’000) 49 120 772 1 214

Total value of shares traded (R’000) 146 260 2 211 2 633

Total number of transactions recorded 18 41 69 89

Total volume of shares traded as a percentage oftotal issued shares (%) 0,3 0,7 2,7 4,2

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


50

NOTICE TO SHAREHOLDERS

Sabvest Limited

Registration number 1987/003753/06

Notice is hereby given that the annual general meeting of shareholders will be held in the boardroom at Ground

Floor, Commerce Square, Building 4, 39 Rivonia Road, Sandhurst, Sandton at 10:00 on Wednesday,

28 June 2006 for the purpose of considering and, if deemed fit, passing, with or without modification, the

following resolutions and transacting the following business:

1. ORDINARY RESOLUTION NUMBER ONE

“RESOLVED that the audited annual financial statements of the company and its subsidiaries

incorporating the auditors’ and directors’ reports for the financial year ended 31 December 2005 be

and are hereby approved and confirmed.”

2. ORDINARY RESOLUTION NUMBER TWO

“RESOLVED that the re-appointment of H Habib in terms of article 13 of the Articles of Association

of the company, as director of the company for a further term of office be and it is hereby authorised and

confirmed.”

3. ORDINARY RESOLUTION NUMBER THREE

“RESOLVED that the re-appointment of DNM Mokhobo in terms of article 13 of the Articles of

Association of the company, as director of the company for a further term of office be and it is hereby

authorised and confirmed.”

4. ORDINARY RESOLUTION NUMBER FOUR

“RESOLVED that the re-appointment of BJT Shongwe in terms of article 13 of the Articles of

Association of the company, as director of the company for a further term of office be and it is hereby

authorised and confirmed.”

5. ORDINARY RESOLUTION NUMBER FIVE

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

6. ORDINARY RESOLUTION NUMBER SIX

“RESOLVED that, subject to not less than 75% (seventy-five per cent) of those shareholders of the

company, present in person or by proxy and entitled to vote at the annual general meeting at which this

ordinary resolution number six is to be considered, voting in favour thereof, the directors of the company

be and they are hereby authorised by way of a general authority to issue all or any of the authorised but

unissued “N” ordinary shares and up to 1 million of the ordinary shares for cash as they in their discretion

deem fit, subject to the following limitations:

• the authority shall be valid until the date of the next annual general meeting of the company, provided

it shall not extend beyond 15 (fifteen) months from the date of this annual general meeting;

NOTICE TO SHAREHOLDERScontinued


51

• a paid press announcement giving full details, including the impact on net asset value and earnings

per share, will be published after any issue representing, on a cumulative basis within 1 (one) financial

year, 5% (five per cent) or more of the aggregate in number of the “N” ordinary shares in issue, prior

to such issue;

• issues in terms of this authority will not exceed 15% (fifteen per cent) in the aggregate of the number

of “N” ordinary shares in the company’s issued share capital in any 1 (one) financial year;

• in determining the price at which the issue of “N” ordinary shares will be made in terms of this

authority, the maximum discount permitted will be 10% (ten per cent) of the weighted average trade

price of such “N” ordinary shares, as determined over a 30 (thirty) day period prior to the date that

the price of issue is determined or agreed by the directors;

• the equity securities which are the subject of the issue for cash will be of a class already in issue, or

where this is not the case, will be limited to such securities or rights that are convertible into a class

already in issue;

• any such issue will only be made to public shareholders as defined in paragraph 4.26 – 4.27 of the

Listings Requirements of the JSE Limited (“JSE”) and not to related parties; and

• subject to the Companies Act, 61 of 1973, as amended (“the Act”), the Articles of Association of the

company and the JSE Listings Requirements, when applicable.

7. ORDINARY RESOLUTION NUMBER SEVEN

“RESOLVED that 1 million of the ordinary and all of the “N” ordinary shares in the authorised but

unissued share capital of the company be and are hereby placed under the control of the directors of the

company as a general authority in terms of section 221(2) of the Act, subject to the provisions of the Act,

the Articles of Association of the company and the Listings Requirements of the JSE until the next annual

general meeting of the company, for allotment to such persons and on such conditions as the directors

deem fit.”

8. ORDINARY RESOLUTION NUMBER EIGHT

“RESOLVED that the remuneration payable to the non-executive directors of the company for the 2006

financial year be as follows:

Chairman R120 000

Deputy Chairman R110 000

Directors R100 000

Committee members R20 000”


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9. SPECIAL RESOLUTION NUMBER ONE

General authority to repurchase shares

To consider and, if deemed fit, to pass with or without modification the following special resolution in the

manner required by the Act and subject to the Listings Requirements of the JSE:

“RESOLVED that in terms of the authority granted in the Articles of Association of the company, the

company and/or any of its subsidiaries be and is hereby authorised, by way of a general approval, to

acquire the company’s own shares comprising ordinary and “N” ordinary shares, upon such terms and

conditions and in such amounts as the directors of the company (and, in the case of an acquisition by a

subsidiary/(ies), the directors of the subsidiary) may from time to time decide but subject to the provisions

of the Act and the Listings Requirements of the JSE and any other stock exchange upon which the shares

of the company may be quoted or listed, subject to the following conditions:

• that the authority shall be valid until the next annual general meeting of the company or for fifteen

months from the date of the passing of this resolution, whichever period is shorter;

• that any acquisition of shares in terms of this authority be effected through the order book operated

by the JSE trading system and done without any prior understanding or arrangement between the

company and the counterparty;

• that the acquisition by the company of its own shares in any one financial year shall be limited to

20% (twenty per cent) of the issued share capital of the relevant class in existence at the beginning

of the financial year and that the acquisition by any subsidiary of the company’s own shares does not

result in the subsidiary, together with all other subsidiaries of the company, holding more than 10%

(ten per cent) in the aggregate of the relevant class of securities in the company;

• that any acquisition of ordinary shares and/or “N” ordinary shares in terms of this authority may

not be made at a price greater than 10% (ten per cent) above the weighted average traded price of

the relevant class of securities over the 5 (five) business days immediately preceding the date on which

the transaction is effected;

• that after any acquisition of ordinary shares and/or “N” ordinary shares, the company complies with

the shareholder spread requirements set out in the JSE Listings Requirements;

• that an announcement containing full details of such acquisitions of shares will be published as soon

as the company and/or its subsidiaries has/have acquired shares constituting, on a cumulative basis,

3% (three per cent) of the number of shares of the relevant class in issue at the date of the general

meeting at which this special resolution is considered and, if approved, passed and for each 3% (three

per cent) in aggregate of the initial number acquired thereafter;

• that any such acquisition is not effected during a prohibited period as defined in the JSE Listings

Requirements; and

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


53

REASONS FOR AND EFFECTS OF THE SPECIAL RESOLUTION

The reason for, and effect of, this special resolution is to grant the directors a general authority in terms of

the Act and, subject to the Listings Requirements of the JSE and any other stock exchange upon which

the shares of the company may be quoted or listed, of the acquisition by the company or one of its

wholly-owned subsidiaries of the company’s own shares on the terms set out above. The company is not

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

The directors of the company have no specific intention to acquire any of the company’s shares, a position

which will be continually re-examined having regard to prevailing circumstances and, after considering the

effects of a maximum repurchase, the directors are of the opinion that:

• the company and the group will be able to pay their debts as they become due in the ordinary course

of business for a period of 12 (twelve) months after the date of notice of this annual general meeting;

• the assets of the company and group, fairly valued in accordance with International Financial

Reporting Standards, will be in excess of the company’s and the group’s consolidated liabilities for a

period of 12 (twelve) months after the date of notice of this annual general meeting;

• the company’s and the group’s share capital and reserves and working capital will be adequate for a

period of 12 (twelve) months after the date of notice of the annual general meeting to meet the

company’s and the group’s current and foreseeable future requirements; and

• upon entering into the market to proceed with the repurchase, the company’s sponsor has confirmed

the adequacy of Sabvest’s working capital for the purpose of undertaking a repurchase of shares in

writing to the JSE.

The JSE Listings Requirements require the following disclosure, some of which appear elsewhere in the

annual report of which this notice forms part, as set out below:

Directors and management – page 9

Major shareholders of Sabvest – page 49

Directors’ interests in securities – page 22

Share capital of the company – page 37

Litigation statement

The directors, whose names are given on page 9 of the annual report, are not aware of any legal or

arbitration proceedings, including proceedings that are pending or threatened, that may have or have had

in the recent past, being at least the previous twelve months, a material effect on the group’s financial

position.

DIRECTORS’ RESPONSIBILITY STATEMENT

The directors, whose names are given on page 9 of the annual report, collectively and individually accept

full responsibility for the accuracy of the information pertaining to this resolution and certify that to the

best of their knowledge and belief there are no facts that have been omitted which would make any

statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and

that this resolution contains all information required by law and the JSE Listings Requirements.


Material change

Other than the facts and developments reported on in the annual report, there have been no material

changes in the affairs or financial position of Sabvest and its subsidiaries since the date of signature of the

audit report and the date of this notice which may affect the financial position of the group.

10. TO TRANSACT SUCH OTHER BUSINESS AS MAY BE TRANSACTEDAT AN ANNUAL GENERAL MEETING.

Voting and proxies

All shareholders are encouraged to attend, speak and vote at the annual general meeting.

Members who have not dematerialised their shares or who have dematerialised their shares with “own name”

registration are entitled to attend and vote at the meeting and are entitled to appoint a proxy or proxies to

attend, speak and vote in their stead. The person so appointed need not be a member. Proxy forms must be

forwarded to reach the registered office of the company/company’s transfer secretaries, Computershare

Investor Services 2004 (Pty) Limited, 70 Marshall Street, Marshalltown, Johannesburg, 2001 or be posted to

the transfer secretaries at PO Box 61051, Marshalltown, 2107 to be received by them not later than 48 hours

before the time appointed for the holding of the meeting (excluding Saturdays, Sundays and public holidays).

Proxy forms must only be completed by members who have not dematerialised their shares or who have

dematerialised their shares with “own name” registration.

Members who have dematerialised their shares, other than those members who have dematerialised their shares

with “own name” registration, should contact their CSDP or broker in the manner and time stipulated in their

agreement:

• to furnish them with their voting instructions; and

• in the event that they wish to attend the annual general meeting, to obtain the necessary authority

to do so.

Each member who, being a natural person, is present in person, by proxy or agent, or being a company, is

present by representative proxy or agent at the annual general meeting, is entitled to vote on a show of hand.

On a poll, each member entitled to vote, whether present in person or by proxy, or by representation, is entitled

to vote for each ordinary and/or “N” ordinary share held.

By order of the board

R Pleaner

Company Secretary

31 May 2006

Sandton


54


I/We

of

being a holder of ordinary shares and/or

“N” ordinary shares in Sabvest Limited, hereby appoint

of

or failing him, of

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

behalf at the annual general meeting of the company to be held at 10:00 on Wednesday, 28 June 2006, and

at every adjournment of that meeting.

Signed this day of 2006

Signature

Please indicate with an “X” in the appropriate space below how you wish your votes to be cast. If you return

this form duly signed, without any specific directions, the proxy shall be entitled to vote as he/she thinks fit.

In favour of Against Abstain from

resolution resolution voting

1. Ordinary resolution number oneApproval of annual financial statements

2. Ordinary resolution number twoRe-appointment of H Habib

3. Ordinary resolution number threeRe-appointment of DNM Mokhobo

4. Ordinary resolution number fourRe-appointment of BJT Shongwe

5. Ordinary resolution number fiveRe-appointment of auditors

6. Ordinary resolution number sixGeneral authority to issue shares for cash

7. Ordinary resolution number sevenShares placed under control of directors

8. Ordinary resolution number eightRemuneration of non-executive directors

9. Special resolution number oneGeneral authority to repurchase shares

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

to attend and speak and on a poll to vote thereat in his stead. A proxy need not also be a member of the

company. All proxy forms must be lodged with the company’s transfer secretaries not later than 48 hours before

the time set for the commencement of the meeting or every adjournment thereof (excluding Saturdays,

Sundays and public holidays).

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

Only for use by members who have not dematerialised their shares or members who havedematerialised their shares with “own name” registration.

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


FORM OF PROXY

S a b v e s t L i m i t e dRegistration number: 1987/003753/06

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

NOTES

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

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

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

2. If you have already dematerialised your ordinary shares through a Central Securities Depository

Participant (“CSDP”) or broker and wish to attend the annual general meeting, you must request your

CSDP or broker to provide you with a letter of representation or you must instruct your CSDP or broker

to vote by proxy on your behalf in terms of the agreement entered into between yourself and the CSDP

or broker.

3. A member entitled to attend and vote at the annual general meeting is entitled to appoint a proxy to

attend, speak and vote in his/her stead. A proxy need not be a member of the company.

4. Every person present and entitled to vote at the annual general meeting as a member or as a proxy or as

a representative of a body corporate shall, on a show of hands, have one vote only, irrespective of the

number of ordinary shares such person holds or represents but, in the event of a poll, a member shall be

entitled to that proportion of the total votes in the company which the aggregate amount of the nominal

value of the ordinary shares held by him/her bears to the aggregate of the nominal value of all the

ordinary shares issued by the company.

5. Please insert the relevant number of ordinary and “N” ordinary shares and indicate with an X in the

appropriate spaces on the face hereof, how you wish your votes to be cast. If you return this form duly

signed without any specific directions, the proxy will vote or abstain from voting at his/her discretion.

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

Any alteration must be initialled.

7. The Chairman of the annual general meeting shall be entitled to decline to accept the authority of the

signatory under a power of attorney, or on behalf of a company, unless the original power of attorney or

authority or a notarially certified copy thereof is produced or has been registered.

8. The signatory may insert the name of any person/s whom the signatory wishes to appoint at his/her

proxy, in the blank space/s provided for that purpose.

9. When there are joint holders of ordinary and “N” ordinary shares and if more than one such joint holder

be present or represented, then the person whose name stands first in the register in respect of such

ordinary and “N” ordinary shares or his/her proxy, as the case may be, shall alone be entitled to vote in

respect thereof.

10. A minor should be assisted by his parent or legal guardian unless the relevant documents establishing his

legal capacity are produced or have been registered.

11. The completion and lodging of this proxy form will not prejudice the signatory from attending the annual

general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in

terms hereof should such signatory wish to do so.

12. If the shareholding is not indicated on the proxy form, the proxy will be deemed to be authorised to vote

the total ordinary and “N” ordinary shareholding.

13. The Chairman of the annual general meeting may reject or accept any proxy form which is completed

other than in accordance with these instructions, provided that he is satisfied as to the manner in which

a shareholder wishes to vote.

14. Forms of proxy will not be accepted unless they have been returned by the shareholders concerned to the

transfer secretaries at Computershare Investor Services 2004 (Pty) Limited, PO Box 61051, Marshalltown,

2107 or fax no +27 11 370 5390, so as to be received by not later than 10:00 on Monday, 26 June 2006.

NOTES TO PROXY FORM



SABVEST LIMITEDRegistration number: 1987/003753/06

ISIN number: ZAE000006417

– ordinary shares

Share code: SBV – ordinary shares

ISIN number: ZAE000012043

– “N” ordinary shares

Share code: SVN – “N” ordinary shares

DIRECTORATEH Habib (Chairman)

P Coutts-Trotter (Deputy chairman)

CS Seabrooke (Chief Executive)

NSH Hughes

DNM Mokhobo

GE Nel

R Pleaner

BJT Shongwe

SECRETARYR Pleaner

COMMUNICATIONSGround Floor, Commerce Square

Building 4

39 Rivonia Road

Sandhurst

PO Box 78677, Sandton 2146

Republic of South Africa

Telephone +27 11 268 2400

Telefax +27 11 268 2422

e-mail: [email protected]

Web site: www.sabvest.com

JSE SPONSORRand Merchant Bank

(A division of FirstRand Bank Limited)

Telephone +27 11 282 8000

Telefax +27 11 282 8008

TRANSFER SECRETARIESComputershare Investor Services 2004 (Pty) Limited

Telephone +27 11 370 5000

Telefax +27 11 370 5271

COMMERCIAL BANKERSABSA Bank Limited

First Rand Bank Limited

Standard Bank Limited

MERCHANT BANKERSRand Merchant Bank

(A division of FirstRand Bank Limited)

CORPORATE ADVISORSDeloitte Corporate Finance

ATTORNEYS AND LEGALADVISORSEdward Nathan (Pty) Limited, Sandton

Knowles Husain Inc, Sandton

Penningtons, London

Shepstone & Wylie, Durban

AUDITORSDeloitte & Touche

Announcement of 2005 results 30 March 2006

Publication of 2005 annual report 31 May 2006

Annual general meeting 28 June 2006

Financial year-end 31 December

SHAREHOLDERS’ DIARY

ADMINISTRATION

GRA

PHIC

ULT

URE

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Documents

SABVEST annual report Results 2005/Annual Report 2005.pdf · Sabvest Annual Report 2005. ... R12 109 29,0% R22 046 11,7% R10 874 5,8% R118 284 62,6% 2005 R11 397 ... receivables Finance