ANNUAL REPORT 2005 CONTENTS INVESTMENT PHILOSOPHY 1 Remgro’s investment philosophy GROUP STRUCTURE 2 Schematic presentation of the Group’s principal investments GROUP PROFILE 3 Summary of the Company’s business and its principal investments FINANCIAL HIGHLIGHTS 6 Headline earnings per share Dividends per share Intrinsic value per share Exchange rates Stock exchange prices Remgro’s relative share performance SHARE STATISTICS 7 Information regarding transactions on the JSE Securities Exchange South Africa CONSOLIDATED FINANCIAL STATISTICS Seven-year consolidated income statements 8 Six-year consolidated balance sheets and cash flow statements 9 DIRECTORATE 10 Executive and non-executive directors’ curricula vitae GENERAL REPORT Financial review 12 Commentary on the Group’s results Investment review 16 Short review of the results of individual investments INTRINSIC NET ASSET VALUE 28 Composition of the intrinsic net asset value CORPORATE GOVERNANCE 29 SUSTAINABILITY REPORT 36 Stakeholder relations Group ethics Safety and environment HIV/Aids policy Employees Employment equity BEE – black economic empowerment Social investment FINANCIAL REPORT 2005 44 Statutory consolidated annual financial statements of the Group with contents COMPANY INFORMATION 93 SHAREHOLDERS’ INFORMATION 94 NOTICE TO SHAREHOLDERS 98 EXPLANATORY NOTES TO THE NOTICE TO SHAREHOLDERS 102 FORM OF PROXY ATTACHED REMGRO LIMITED INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA REGISTRATION NUMBER 1968/006415/06 ISIN ZAE000026480 SHARE CODE REM www.remgro.com INVESTMENT PHILOSOPHY Remgro invests in businesses that can deliver superior earnings and dividend growth over the long term. This involves the acquisition of meaningful interests in companies that have sound management and have the ability to generate strong cash returns and growth. Remgro forges strategic alliances on a partnership basis and endeavours to add value where possible. The purpose is to ensure excellent returns to shareholders by way of dividend and capital growth. remgro 1 limited GROUP STRUCTURE AT 31 MARCH 2005 REMGRO LIMITED associated companies and other subsidiary companies tobacco interests industrial interests British American Tobacco 10% Transvaal Sugar 100% Wispeco 100% financial services Rainbow Chicken 63% Medi-Clinic Corporation 52% FirstRand 10% RMB Holdings 23% Absa Group 9% corporate and other interests Sage Group 22% Remgro Finance Corporation 100% Remgro Finance and Services 100% industrial interests Unilever Bestfoods Robertsons 41% Nampak 14% Total South Africa 25% Dorbyl 43% Air Products SA 50% Distell Group 30% mining interests Gencor 11% Trans Hex Group 34% Implats 5% Percentages represent the direct interests and have been rounded off. Annexures A and B provide further information of subsidiary companies and investments. M&I MANAGEMENT SERVICES &I Management Services (Proprietary) Limited (M&I) renders management and support services to Remgro. Remgro Mdoes not hold any interest in M&I. The shareholders of M&I are employees of M&I who own all the issued ordinary shares. Rembrandt Trust (Proprietary) Limited owns all the A ordinary shares of M&I. The A ordinary shares only have voting rights but have no rights to the income or assets of M&I. remgro 2 limited GROUP PROFILE Remgro Limited is a South African investment holding company established with effect from 1 April 2000, after the restructuring of the former Rembrandt Group Limited. The Group’s interests consist mainly of investments in tobacco products, banking and financial services, printing and packaging, building and motor components, life assurance, medical services, mining, petroleum products, food, wine and spirits and various other trade mark products. The Company’s activities are concentrated mainly on the management of investments and the provision of support rather than on being involved in the day-to-day management of business units of investees. Subsidiaries not wholly owned are mainly listed companies with independent boards of directors on which this Company has non-executive representation. Non-subsidiary investments comprise both listed and unlisted companies not controlled by this Company and which are mostly associated companies due to significant influence and Board representation. remgro 3 limited GROUP PROFILE INFORMATION ON THE COMPANIES IN WHICH INVESTMENTS ARE HELD • Listed on the London Stock Exchange. • Chief Executive Officer: P Adams • Produces high quality tobacco products for a diverse, worldwide market. The company is involved from the planting and growing of tobacco crops to the marketing of the final products. • Interest is represented by a one-third shareholding in the ordinary shares and a 100% shareholding in the Effective interest: 10% participating securities of R&R Holdings SA (R&R). The other two-thirds shareholding in R&R are held by Compagnie Financière Richemont SA. • Market capitalisation at 31 March 2005: £19 935 million • Website: www.bat.com • Listed on the JSE Securities Exchange South Africa. • Chief Executive Officer: J J Scannell • Distell produces and markets fine wines, spirits and flavoured alcoholic beverages, with an increasing international profile, in South Africa. Effective interest: 30% • Interest is represented by a 50% shareholding in Remgro-KWV Investments Limited which held a 60% share in Distell at 31 March 2005. • Market capitalisation at 31 March 2005: R4 726 million • Website: www.distell.co.za • Listed on the JSE Securities Exchange South Africa. • Chief Executive Officer: L L Dippenaar • The FirstRand group of companies is involved in financial service activities, including retail, corporate, investment and merchant banking, short-term insurance, life insurance, employee benefits, health insurance Effective interest: 10% and asset management. (excluding indirect interest held • The banking and insurance activities are represented by the wholly-owned subsidiaries FirstRand Bank through RMB Holdings) Holdings Limited and Momentum Group Limited respectively and the health activities in the 66%-owned Discovery Holdings Limited. • Market capitalisation at 31 March 2005: R72 999 million • Website: www.firstrand.co.za • Listed on the JSE Securities Exchange South Africa. • Chief Executive Officer: P Cooper • RMBH’s interests are: – FirstRand Limited (32%) – RMB Structured Insurance Limited (100%) Effective interest: 23% – OUTsurance Limited (66%) – Glenrand M.I.B Limited (17%) • Market capitalisation at 31 March 2005: R25 455 million • Website: www.rmbh.co.za • Listed on the JSE Securities Exchange South Africa. • Chief Executive Officer: S F Booysen • Absa is the investment holding company of a number of banks and insurance companies. The company gives Effective interest: 9% direction to the planning, controlling and co-ordination of the activities of its group companies. • Market capitalisation at 31 March 2005: R49 391 million • Website: www.absa.co.za • Listed on the JSE Securities Exchange South Africa. • Chief Executive Officer: G Griffin (resigned on 31 May 2005) • Sage is a South African life assurance, investment and financial services organisation. • Market capitalisation at 31 March 2005: R679 million Effective interest: 22% • Website: www.sage.co.za • Listed on the JSE Securities Exchange South Africa. • Chief Executive Officer: L Delport • Exploration for, and mining and marketing of, land and marine diamonds. • Market capitalisation at 31 March 2005: R1 559 million Effective interest: 34% • Website: www.transhex.co.za • Unlisted • Chief Executive Officers: K T Kruythoff (South Africa); M Keren (Israel) • The UBR venture covers the territories of Southern Africa and Israel, and manufactures and markets an extensive range of food products, while enjoying market leadership in most of its major categories. Effective interest: 41% Well-known international and local brands include Robertsons herbs and spices, Knorr soups, Aromat seasonings, Rama and Flora margarine, Lipton and Joko tea, and Mrs Ball’s culinary products. • Website: www.unilever.co.za remgro 4 limited GROUP PROFILE • Listed on the JSE Securities Exchange South Africa. • Chief Executive Officer: G E Bortolan • Nampak is Africa’s largest and most diversified packaging manufacturer, with operations in the United Kingdom and Europe. It produces a wide variety of packaging products, from metals, paper and plastic to glass, is the largest Effective interest: 14% manufacturer and distributor of tissue paper products, and holds a substantial share of the paper merchanting market. • Market capitalisation at 31 March 2005: R10 193 million • Website: www.nampak.com • Unlisted • Chief Executive Officer: P W Jordan • Subsidiary of Total (France). Total South Africa’s business is the refining and marketing of petroleum and petroleum products in South Africa and it has a market share of 15%. It distributes to neighbouring NBLS countries. It has a 36% interest in National Petroleum Refiners of S.A. (Pty) Limited (Natref ). Effective interest: 25% • Website: www.total.co.za • Listed on the JSE Securities Exchange South Africa. • Chief Executive Officer: W W Cooper • Dorbyl is an industrial group in the engineering industry, with investments in South Africa and the USA. Major industries served by Dorbyl include automotive and roofing. Effective interest: 43% • Market capitalisation at 31 March 2005: R995 million • Website: www.dorbyl.co.za • Unlisted • Chief Executive Officer: A G Cooper • Air Products produces oxygen, hydrogen and nitrogen for sale in gaseous form by pipeline under long-term Effective