REMBRANDT GROUP LIMITED (REGISTRATION NUMBER 1948/031037/06) CONTENTS Salient features – Financial results 1 Group structure 2 Directorate 3 General review 4 Community service 12 Corporate governance 14 Administrasie 46 Seven year consolidated financial review 16 aandeelhouers vir belang van 46 Datums Report of the independent auditors 17 aandeelhouers aan Kennisgewing 46 Certificate by the company secretary 17 aandeelhouers van Ontleding 45 Report of the Board of Directors 18 kontantvloeistate die by 44 Aantekeninge Accounting policies 24 Kontantvloeistate 43 Balance sheets 26 C Bylaag – 42 maatskappye geassosieerde Beduidende Income statements 27 B Bylaag – beleggings 41 Belangrikste Statements of changes in equity 28 A Bylaag – 40 filiaalmaatskappye Belangrikste Notes to the annual financial statements 29 jaarstate finansiële die by 29 Aantekeninge Principal subsidiary companies – Annexure A 40 ekwiteit in veranderinge van 28 State Principal investments – Annexure B 41 Inkomstestate 27 Significant associated companies – Annexure C 42 Balansstate 26 Cash flow statements 43 beleid Rekeningkundige 24 Notes to the cash flow statements 44 direkteure van raad die van 18 Verslag Analysis of shareholders 45 maatskappysekretaris die 17 deur Verklaring Notice to shareholders 46 ouditeure onafhanklike die 17 van Verslag Dates of importance to shareholders 46 oorsig finansiële 16 Sewejaar-gekonsolideerde Administration 46 bestuur Korporatiewe 14 Gemeenskapsdiens 12 Algemene oorsig Algemene 4 Direksie 3 Direksie Groepstruktuur 2 Groepstruktuur Hooftrekke – Finansiële resultate resultate Finansiële – Hooftrekke 1 INHOUD (REGISTRASIENOMMER 1948/031037/06) (REGISTRASIENOMMER REMBRANDT GROEP BEPERK GROEP REMBRANDT REMBRANDT GROUP LIMITED SALIENT FEATURES – FINANCIAL RESULTS 2000 1999 HEADLINE EARNINGS R3 080 mio R2 809 mio ATTRIBUTABLE NET INCOME R2 725 mio R2 793 mio Issued shares of 1 cent each 522 mio 522 mio HEADLINE EARNINGS PER SHARE 590.0c 538.1c EARNINGS PER SHARE 522.0c 535.1c DIVIDENDS PER SHARE ordinary 120.00c 104.35c special 30.00c 100.00c The comparative figures for the year ended 31 March 1999 have been restated. Please refer to the paragraph headed “Prior year adjustments” in the Report of the Board of Directors. Headline earnings Ordinary dividends per shaRe per shaRe ADJUSTED FOR INFLATION* ADJUSTED FOR INFLATION* Cents Cents 450 85 80 400 75 350 70 300 65 60 250 55 200 50 150 45 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 * Headline earnings and ordinary dividends per share as reflected in the graphs above are shown after elimination of the effects of inflation as represented by the general consumer price index (CPI). (CPI basis 1995 = 100) 1 REMBRANDT GROUP LIMITED GROUP STRUCTURE AT 31 MARCH 2000 TIB TECHNICAL AND INDUSTRIAL INVESTMENTS LIMITED 60.4% TEGKOR 9.6% TECHNICAL INVESTMENT CORPORATION LIMITED 40.6% RBB REMBRANDT CONTROLLING INVESTMENTS LIMITED 51.1% REMGRO REMBRANDT GROUP LIMITED TRADE MARK INTERESTS INDUSTRIAL INTERESTS BRITISH AMERICAN TOBACCO 12% ROBERTSONS HOLDINGS 73% STELLENBOSCH FARMERS’ WINERY 30% TRANSVAAL SUGAR 73% DISTILLERS CORPORATION 30% RAINBOW CHICKEN 56% RICHEMONT 2% WISPECO 100% SA INVESTMENTS (SAIL) 9% DORBYL 41% AIR PRODUCTS 50% TOTAL SA 34% HENKEL SA 50% MALBAK 48% LENCO HOLDINGS 33% MINING INTERESTS BILLITON 9% GENCOR 11% GOLD FIELDS 11% FINANCIAL SERVICES GFSA 15% TRANS HEX GROUP 43% ABSA GROUP 9% SAGE GROUP 17% CORPORATE OTHER INTERESTS REMBRANDT FINANCE CORPORATION 100% MEDI-CLINIC CORPORATION 51% RGH HOLDINGS 100% VODACOM 13% RUPERT INTERNATIONAL 100% TRACKER 43% VENFIN 82% Percentages represent the Group’s effective interests and have been rounded. Annexures A and B provide further information of subsidiary companies and investments. 2 REMBRANDT GROUP LIMITED DIRECTORATE EXECUTIVE DIRECTORS NON-EXECUTIVE DIRECTORS Johann Rupert (50) * G D de Jager (49) Chairman Chief Executive Officer: Malbak Limited Appointed to the Board in 1986. Appointed to the Board in 1993. Years of service with the Group: 14 E de la H Hertzog (50) * P J Erasmus (68) # Deputy Chairman Former Executive Director Appointed to the Board in 1986. Reappointed to the Board in 1997. Years of service with the Group: 17 Years of service with the Group: 36 M H Visser (46) * E Molobi (55) Managing Director/Deputy Chairman Chairman: Kagiso Trust Investment Appointed to the Board in 1990. Company (Pty) Limited Years of service with the Group: 20 Appointed to the Board in 1997. P E Beyers (50) * P G Steyn (66) # Marketing Strategy Former Executive Director Appointed to the Board in 1997. Appointed to the Board in 1988. Years of service with the Group: 3 Years of service with the Group: 34 W E Bührmann (45) * Investments Appointed to the Board in 1998. Years of service with the Group: 13 J W Dreyer (49) * Investments Appointed to the Board in 2000. D M Falck (54) * # Group Finance Appointed to the Board in 1990. Years of service with the Group: 28 J Malherbe (44) * # Investments Director Appointed to the Board in 1993. Years of service with the Group: 10 J A Preller (Mrs) (50) * Corporate Affairs Appointed to the Board in 1995. Years of service with the Group: 28 T van Wyk (52) * Investments Appointed to the Board in 1990. # Member of the Group Audit Committee Years of service with the Group: 10 * Member of the Executive Committee 3 REMBRANDT GROUP LIMITED GENERAL REVIEW Headline earnings per share increased by 9.6% from 538.1 cents to 590.0 cents. The compound growth rate over the last five years has been 21.8% per annum. GROUP RESULTS dividend flow from R&R Holdings. In any event, it is BAT’s Headline earnings per share increased by 9.6% from policy to declare annually dividends of at least 50% of its 538.1 cents to 590.0 cents. The compound growth rate long-term sustainable earnings. over the last five years has been 21.8% per annum. This has had no effect on the reported earnings as the The major contributors to the increase in headline equity adjustment in the income statement includes both earnings for the year under review were the mining the dividend portion and the retained earnings portion of interests, 41.4%, industrial interests, 32.0% and Vodacom, the Group’s share of net income of associated companies. 48.9%. Overall growth was, however, limited to 9.6%, Ordinary dividends of 120.00 cents per share were mainly due to less interest earned on cash resources and declared and paid for the year, compared to 104.35 cents a slightly reduced contribution by the tobacco interests. for the previous year. This represents an increase of 15.0%. Net earnings, after exceptional items and amortisation of The ordinary dividends are covered 4.9 times by headline goodwill, decreased by 2.4% mainly due to a significant earnings and 1.7 times by cash earnings, compared to increase in unfavourable exceptional items. The capital 5.2 times and 2.9 times respectively for the previous year. surplus on the disposal by subsidiaries of investments and The interest of own members in shareholders’ funds at businesses was R238 million. However, the attributable book value increased by R1 624 million to R16 787 million share of the unfavourable exceptional items of associated or R32.16 per share. Of this increase, R374 million was due companies amounted to R575 million. This included Gold to exchange rate adjustments. After taking into account the Fields Limited’s provision for impairment of assets and surplus of market values and directors’ valuations over the British American Tobacco Plc’s integration costs. book value of investments, the interest of own members The financial figures in the income statement which amounted to R73.98 (1999: R59.12) per share. represent the net operating income after taxation for 1999/2000, are lower than the comparative figures. This is TRADE MARK INTERESTS as a result of Dorbyl Limited being equity accounted as an Contribution to headline earnings: associated company compared to being consolidated in R1 511 mio (1999: R1 538 mio) the previous year. Certain items in the balance sheet are Decrease 1.8% therefore also not comparable. Percentage of headline earnings: Attributable cash earnings (which exclude the Group’s 49% (1999: 55%) share of net income retained by associated companies), before exceptional items and amortisation of goodwill, Tobacco decreased by 30% from R1 562 million to R1 093 million R&R HOLDINGS: 1 1 as a result of lower dividends received from associated Effective interest 33 /3% (1999: 33 /3%) companies. The latter amounted to R740 million, which is Rembrandt’s tobacco interests are represented by a one- R480 million lower than in the previous year. The dividend third shareholding in R&R Holdings (R&R), previously patterns and payment cycles of British American Tobacco named Rothmans International Holdings (RIH). The other Plc (BAT) differ from those of Rothmans International B.V., two-thirds are held by Compagnie Financière Richemont with the result that there has been a one-off change to the AG. Prior to the merger referred to, R&R held 100% of the 4 equity of Rothmans International B.V. (RIBV). In June 1999 Financial results the merger of RIBV and British American Tobacco Plc The table below illustrates the adjustments made to BAT’s (BAT) was completed, resulting in R&R holding an reported results and the composition of R&R’s headline economic interest of 35% in the enlarged BAT; 25% in BAT earnings for the period to 31 March 2000. ordinary shares and 10% in BAT convertible redeemable £ mio preference shares. Attributable profit as reported by BAT for the year ended 31 December 1999 556 Attributable profit as reported by BAT for Accounting issues the quarter ended 31 March 2000 55 For the period under review Rembrandt has, through its Adjustments: 1 – to eliminate the attributable profit of BAT interest in R&R, equity accounted 33 /3% of RIBV for the for the five months to 31 May 1999 (236) two months to 31 May 1999 and 112/ % of the enlarged 3 – in respect of deferred taxation 112 BAT for the ten months to 31 March 2000.