annual report 2004 - sharedatanet tangible asset value per share (cents) (note 2) 388,6 355,7 295,3...
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A N N U A L R E P O R T 2 0 0 4
C R E A T I N G S O U T H A F R I C A ’ S P R E - E M I N E N T B E E G R O U P
2
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Ten year history
1995 – 1996 Rebhold was founded
in 1995 and was listed on the JSE Securities
Exchange South Africa on 16 October 1996 in
the “Industrial – Beverages, Hotels and
Leisure” sector of the JSE lists. The group held
investments in businesses which covered a
diversified range of distribution activities
extending country-wide primarily in the food,
liquor and freight forwarding industries.
South Africa, offering a comprehensive range
of facilities management and professional
services, mining and technical services, food
services and support services to the
corporate, industrial and mining sectors. In
March 2001 the group disposed of its
wholesale and distribution businesses in order
to focus on its services operations, thus
creating one of the leading services groups in
South Africa.
1997 – 1998 Rebhold grew both
organically and by acquiring businesses in
its key areas of expertise, to create one of
the leading wholesale and distribution
groups in South Africa. Rebhold’s market
capitalisation peaked at over R4 billion in
August 1998, before the market crash of
October 1998.
2004 In May 2004 Rebserve announced
that it had reached agreement on the terms
and conditions for the merger of Rebserve
and the businesses and assets of
Mvelaphanda Holdings. The Merger became
unconditional in November 2004 and presents
a unique opportunity in the context of the
transformation of the South African economy
to merge the country’s pre-eminent BEE group
with one of South Africa’s leading services
groups. The Merger will establish a
platform for the rapid growth and expansion
of MVG into a major broad-based, black-
controlled, owned and managed diversified
group.
1999 – 2003 In January 1999
Rebhold identified the services sector as one
which offered good growth prospects, while
generating strong cash flows, and developed
a strategy to create South Africa’s leading
services group. By January 2001 Rebserve
had become the leading services group in
Our values – a recognition of the inter-dependence and importance of:
� Shareholder Value: balancing growth, risk and returns to strategies that sustain shareholder confidence and meet investor expectations.
� Customer Value: meeting or exceeding customer expectations at a price no higher than their perception of the service’s value.
� People Value: satisfying human needs in the workplace to maximise the commitment of staff to corporate goals.
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
1 Group profile
2 Ten year history
3 Financial highlights
4 Segmental information
6 Board of directors
8 Chairman’s review
12 Chief Executive’s review
22 Financial review
24 Transformation and social responsibility
28 Corporate governance
31 Value added statement
32 Report of the independent auditors
33 Directors’ report
37 Directors’ approval
37 Statement of compliance by the company secretary
38 Accounting policies
42 Income statements
43 Balance sheets
44 Cash flow statements
45 Statements of changes in equity
46 Notes to the financial statements
64 Principal subsidiaries
65 Analysis of shareholders
66 Notice to members
70 Administration
Proxy form
Contents
1
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Group profile
THE CREATION OF SOUTH AFRICA’S PRE-EMINENT BEE GROUP
Rebserve has always recognised BEE as a strategic imperative, having
initially concluded a significant BEE transaction in 1997.
Since 2003, it has been the expressed intention of Rebserve to materially
increase its BEE shareholding, and Rebserve has actively pursued
opportunities and initiatives in this regard.
The merger of Rebserve and the businesses and assets of Mvelaphanda
Holdings (Proprietary) Limited is the result of these initiatives and presents
a unique opportunity in the context of the transformation of the South
African economy to merge the country’s pre-eminent BEE group with one of
South Africa’s leading services groups.
The merger has resulted in a real, effective and active BEE shareholding
of more than 50% of Mvelaphanda Group Limited at inception, and has
established a platform for the rapid growth and expansion of Mvelaphanda
Group Limited into a major broad-based, black-controlled, owned and
managed diversified group.
Change of name
In terms of a special resolution passed on 3 September 2004, and subject to the implementation
of the merger between Rebserve and the businesses and assets of Mvelaphanda Holdings
(Proprietary) Limited (“Mvelaphanda Holdings”) (“the Merger”), the company’s name will be changed
to Mvelaphanda Group Limited (“MVG”) to reflect the new controlling shareholder of Rebserve.
Throughout this annual report, references to “Rebhold”, “Rebserve”, “MVG” and “the company”
refer to the same entity and are used interchangeably having regard to the date when the
relevant section of this report was prepared and the context in which the reference is made.
Contents
3
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Financial highlights
years ended 30 June
▲
2004 2003 2002 2001 2000
Revenue (R’000) 3 487 126 3 189 576 2 911 107 5 559 588 4 496 959
Profit from operations (R’000) 270 523 276 394 255 232 352 221 307 241
Cash generated from operations (R’000) 356 538 288 363 269 088 303 761 240 118
Net profit after taxation (R’000) 203 980 218 889 218 184 353 113 274 268
Headline net profit after taxation (R’000) 221 209 233 913 232 136 299 802 274 268
Headline attributable net profit (R’000) 198 118 208 724 208 589 260 740 247 467
Diluted headline earnings per share (cents) 111,5 114,0 109,6 134,6 133,0
Headline earnings per share (cents) 111,8 116,2 110,6 134,6 137,0
Distribution/dividend per share (cents) (note 1) 175,0 35,0 30,0 20,5 20,0
Net tangible asset value per
share (cents) (note 2) 388,6 355,7 295,3 256,7 197,4
Number of employees 31 822 35 810 33 327 30 764 30 521
Number of shares in issue (’000) 193 730 193 730 193 730 193 730 180 630
Annual compound growth rate in headline earnings per share since 1995 34% 41% 46% 61% 77%
Operating margin 7,8% 8,7% 8,8% 6,3% 6,8%
Notes:
1. Includes capitalisation share award.
2. Net tangible asset value per share is calculated on the basis that amounts due to vendors will be settled in cash or by the issue of Rebserve shares in terms of existing acquisition agreements.
3. Results for the financial years ended on and after 30 June 2000 are based on the new accounting policies then adopted for revenue, intangible assets and deferred taxation.
4. Results up to 30 June 2001 include the wholesale and services operations. By 30 June 2001 the wholesale and non-core businesses had been disposed of or closed. Results for the financial years ending on or after 30 June 2002 comprise only the continuing services operations and are reflected in blue in the adjacent graphs.
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4
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Segmental information
FACILITIES MANAGEMENT AND PROFESSIONAL SERVICES
Centred around TFMC, the group provides services including real
estate management, facilities development, maintenance and
repairs to infrastructure and power systems, and the management
of a variety of support services. Allied to this is the provision of
professional consulting services in the areas of engineering,
maintenance, project management and other specialist technical
areas.
▲
MINING AND TECHNICAL SERVICES
The mining and technical services division provides a wide range
of non-core services to the underground and opencast mining
sectors, including general mine management, geological and
engineering consulting, sweeping, vamping, stoping, mesh and
lacing, night-shift cleaning, shot-creting, mine construction, blasting,
bulk earth-moving and rehabilitation on behalf of mine owners.
▲
FOOD SERVICES
Contract catering services include the operation and management
of corporate dining facilities, staff canteens, hospital kitchens, mine
hostels, remote site catering and facilities management, and
industrial catering. Food distribution services include the national
distribution of a broad range of branded and unbranded packaging
and dry goods to the retail, fast food, industrial and bakery
markets.▲
SUPPORT SERVICES
Support services comprises security services (including guarding,
transportation and storage of cash, bullion and other valuable
cargoes, installation of security systems, domestic and industrial
monitoring and armed response, investigations and surveillance);
cleaning services to the industrial, corporate, retail, commercial,
healthcare and hospitality industries; and freight forwarding and
clearing services to importers and exporters for air-freight and sea-
freight shipments.
▲
GRAPH TO
COME
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5
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Segmental information
REVENUE
R1 269m (+11,5%)(2003: R1 138m)
PROFIT FROM OPERATIONS
R140m (+40,0%)(2003: R100m)
REVENUE
R659m (–5,5%)(2003: R697m)
PROFIT FROM OPERATIONS
R36m (–55,5%)(2003: R81m)
REVENUE
R788m (+6,8%)(2003: R738m)
PROFIT FROM OPERATIONS
R36m (–25,0%)(2003: R48m)
REVENUE
R771m (+25,1%)(2003: R616m)
PROFIT FROM OPERATIONS
R58m (+23,4%)(2003: R47m)
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NUMBER OF EMPLOYEES
31 822 in total
EMPLOYEE INFORMATION FOR THE GROUP
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DEMOGRAPHIC PROFILE
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HDSA MANAGEMENT PROFILE
HDSA = Historically Disadvantaged South Africans and Africans
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R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Board of directors
Executive directors
▲
Stephen Levenberg (47)*
(BA, LLB, HDip Co Law (Wits))
Chairman
Prior to founding Rebserve,
Stephen Levenberg was a
senior partner and head of
corporate law at Werksmans
Attorneys, having gained
extensive experience in
corporate finance, mergers
and acquisitions, and other
transactions. He has served as
a director of various companies,
both listed and unlisted.
Will Paskins (55)#
(BSc Eng, FICE, FRSA)
Chief Executive
Will Paskins was formerly a
member of the management
board of WS Atkins Facilities
Management Limited and, prior
to that, a partner in a leading
UK company of professional
engineering consultants. He has
extensive global management
consultancy experience. He
joined the group, first as CEO of
TFMC, and was appointed Chief
Executive of Rebserve in 2001.
Brett Till (35)
(BCom, BAcc (Wits), CA(SA))
Financial Director
After qualifying as a chartered
accountant in 1993 Brett Till
spent 18 months working in
London and became a partner
of Fisher Hoffman in 1996.
He joined Rebserve in 1998
and was appointed Financial
Director in 1999.
The New Board of Directors
▲
Tokyo Sexwale (51)
(Cert Bus Studies: University of
Botswana, Lesotho, Swaziland)
Executive Chairman
Mikki Xayiya (43)
(BA, University of South
Africa; Cert of Defence
Management, Wits; Emerging
Market Leadership Programme,
University of Pennsylvania)
Executive Deputy Chairman
Mark Willcox (34)
(BA, LLB, Post Grad Dip (Tax)
(UCT))
Chief Investment Officer
Yolanda Cuba (27)
(CA(SA), BCom (Statistics) (UCT),
BCom Hons (Accounting)
(University of Natal (Durban)))
Deputy Chief Executive
Officer
Jackie Mphafudi (48)
(MB ChB)
Chief Operating Officer
Pursuant to the Merger, Stephen Levenberg will step down as Chairman of Rebserve, in favour of Tokyo Sexwale, and will be appointed as Chief Executive Officer of MVG.
Will Paskins will resign as a director of Rebserve Holdings Limited, but will remain Chief Executive of Rebserve Limited, the major operating subsidiary of
MVG. The board of directors will be reconstituted by the appointment of the following new executive directors:
7
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Non-executive directors
Board of directors
Mackie Brodie (78)*#
Independent non-executive
director
Mackie Brodie has held
various directorships of
both listed and unlisted
companies, including
South African Freight
Corporation (SAFCOR),
Primedia and Bid
Corporation. He was non-
executive Chairman of
Rebserve at the time when
Rebserve was listed in
1996.
Kuseni Dlamini (36)
(MPhil (Oxford))
Independent non-executive
director
Kuseni Dlamini has held
senior appointments at
De Beers in South Africa
and in the United Kingdom,
including having previously
been head of public affairs
at De Beers. He currently
holds a senior position in
respect of human resources
at Anglogold.
Louisa Mojela (48)
(BCom (Lesotho))
Independent non-executive
director
Louisa Mojela is currently
Chief Executive Officer of
Woman Investment Portfolio
Holdings. She is a non-
executive director of the
Financial Services Board,
and currently serves on
various boards including
Ericsson South Africa,
New Africa Investments
and ABB Powertech
Transformers.
Ramesh Patel (59)
Independent non-executive
director
Ramesh Patel is the
Chairman and Chief
Executive Officer of the MLP
group of companies which
has interests in a range of
businesses in the financial
services, tobacco, paint and
plastics industries. He has
also been instrumental in
the formation of several BEE
groups.
▲
The New Board of Directors
▲
Bryan Hopkins (57)
(BCom (Hons), CA(SA))
Independent non-executive director
Oyama Mabandla (41)
(BA (University of California), Juris Doctor
(University of Columbia))
Independent non-executive director
David Moshapalo (48)
Independent non-executive director
Mpumi Nxumalo (48)
(BA (University of Coventry), Post-Graduate
Degree Town Planning (University of
Coventry))
Independent non-executive director
Pursuant to the merger, Mackie Brodie and Kuseni Dlamini will resign as directors of Rebserve Holdings Limited. The board of directors will be reconstituted by the
appointment of the following new independent non-executive directors:
Carl Stein (49)*#
(BCom, LLB, HDip Tax Law (Wits))
Non-executive director
Carl Stein has been a partner
in Werksmans Attorneys
since 1984, and was
appointed as Chairman of
Werksmans in 2001. He is
a non-executive director of
several listed companies and
is regarded as one of South
Africa’s leading corporate
lawyers, specialising in
mergers and acquisitions,
stock exchange and
commercial transactions.
Committee Memberships
#Member of the audit committee
*Member of the remuneration committee
8
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Chairman’s review
Merger with Mvelaphanda Holdings
On 10 May 2004 Rebserve announced the terms of the proposed merger of Rebserve with the businesses and assets of
Mvelaphanda Holdings. The Merger was approved by approximately 99% of Rebserve shareholders on 3 September 2004, and
by the Competition Tribunal on 27 October 2004. The closing in terms of the Merger will take place on 13 December 2004 when
the special cash dividend of R1,10 per Rebserve share will be paid to existing Rebserve shareholders, and the capitalisation
share award of 7,14286 new Rebserve shares for every 100 existing Rebserve shares held (equivalent in value to a further
50 cents per Rebserve share based on a price of R7,00 per Rebserve share) will be implemented.
The Merger comprises the most significant event in the history of the group since its listing in October 1996, and will
transform Rebserve, which is to be renamed Mvelaphanda Group Limited (“MVG”), into South Africa’s leading broad-based
black-controlled, owned and managed diversified group, and the only large services player in South Africa with such BEE
credentials.
MVG will combine the stature and reputation of the Mvelaphanda Holdings brand and team and the prospect of substantial BEE
deal flow at the most active stage of the transformation of the South African economy, with the solid cash generative base,
track record and proven operational and transactional skills of Rebserve and its management. The Merger has established a
platform for the transformation, rapid growth and expansion of Rebserve into a major black-controlled, owned and managed
diversified group.
Pursuant to the Merger, MVG anticipates a major boost in business opportunities and the awarding of new contracts for most
companies in the group, as well as preventing any potential loss of existing contracts, particularly where a significant BEE
shareholding is a prerequisite. Selected businesses of Mvela Holdings will be integrated into the Rebserve operating structures
to increase the growth and development of these businesses.
The increase in, and diversification of, the range of services offered by MVG as a result of the Merger is expected to entrench
Rebserve’s position as the leading services group in South Africa, and make it the outsourcing partner of choice to the public
and private sectors. MVG is expected to benefit from the increasing number of public-private partnerships and government’s
stated objective of revitalising and further developing South Africa’s infrastructure.
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R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Chairman’s review (continued)
Historic returns to Rebserve shareholders
As we close the chapter of the group’s history represented by the eight year period commencing with the listing of Rebhold
in October 1996, and embark on an exciting new phase as the group reinvents itself in the form of MVG, it is appropriate to
reflect on the historical financial performance of Rebserve.
The fully diluted headline earnings per share of 111,5 cents for the 2004 financial year represents a compound annual growth
rate in fully diluted headline earnings per share of 34% for the nine years since 1995, when Rebhold was constituted.
Taking into account the capital to be returned to shareholders in the form of the special dividend of R1,10 per share payable
on 13 December 2004 and the capitalisation share award of 7,14286 new Rebserve shares for every 100 existing Rebserve
shares held (equivalent in value to a further 50 cents per Rebserve share based on a price of R7,00 per Rebserve share), as
well as all dividends and/or capitalisation issues paid or awarded to shareholders since the listing of the group in October
1996, shareholders will have received a cash return of R3,19 per share on their initial subscription of R2,20 per share at the
time of the group’s listing in October 1996. This total cash return of R3,19 per share plus the value of R7,00 attributed to each
Rebserve share for the purposes of the Merger, equates to an internal rate of return of 23% per annum on the initial subscription
of R2,20 per share at the time of the group’s listing in October 1996.
Performance review
The overall performance of the majority of the Rebserve businesses for the 2004 financial year was in line with expectations,
with steady performances primarily in both the facilities management and professional services, as well as the support
services, divisions, being offset by deteriorating operating conditions primarily in the mining and technical services division.
This took place against the background of a relatively healthy macro-economic environment and a continued decline in
interest rates, although the further strengthening of the rand against the US dollar continued to present challenges to the group,
especially as a result of its exposure to the mining sector.
The positive effect of the receipt by TFMC of the gainshare payment from Telkom was offset mainly by the reduction in
profitability of the mining services division and restructuring costs incurred in this division. Despite the underperformance of
the mining services division, the annuity and/or contractual nature of the major portion of the balance of the group’s revenue
and profits ensured a reasonable overall financial result. The group achieved a significant milestone when TFMC’s success
“The successful conclusion of the merger between Rebserve
and the businesses and assets of Mvelaphanda Holdings will
transform Rebserve into South Africa’s pre-eminent broad-based
black-controlled, owned and managed diversified group.”
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R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Chairman’s review (continued)
was formally recognised by Telkom South Africa with the receipt by TFMC of the gainshare payment in respect of the savings
generated by TFMC for Telkom over the first three years of the Telkom contract.
Fully diluted headline earnings per share at 111,5 cents per share is above the pro forma fully diluted headline earnings
per share for the prior year of 110,5 cents, which pro forma figure is calculated on the assumption that the balance of
the Molope purchase consideration had been paid on 1 July 2002 and at an assumed interest rate of 10% per annum.
Cash generated from operations of R357 million was up 24% on the prior year. The group’s businesses remain highly cash
generative, notwithstanding the difficult trading environment. Free cash flow for the year was R213 million. The group’s net
cash (comprising liquid funds less interest bearing borrowings) increased from R266 million at 30 June 2003 to R298 million at
30 June 2004.
During the year Atkins plc disposed of its 38,25% effective interest in TFMC, with Rebserve having acquired 13,25% of this
effective interest and Mvelaphanda Holdings having acquired the remaining 25% effective interest.
Future capital raising
Pursuant to the Merger, MVG will, within a period of three to six months after implementation of the Merger, contemplate a
capital-raising programme in order to raise capital to fund MVG’s anticipated strong deal flow over the medium term. The exact
nature of the capital raising has yet to be finalised, but will seek to optimise the group’s capital structure having regard to the
market conditions then prevailing. In the context of the capital raising, MVG will consider introducing additional broad-based
HDSA shareholders into MVG in order to ensure that the BEE profile of MVG is retained and enhanced.
Prospects
The relatively flat operating performance of the group over the past two years highlights the fact that significant growth
prospects for the group will be influenced by, and are dependent on, the successful implementation of the Merger.
Mvelaphanda Holdings has already demonstrated a proven ability to structure and implement innovative and value-enhancing
BEE transactions. The introduction of industry charters and the general transformation of the South African economy will
provide further significant investment opportunities to MVG. Thus far, industry charters have been introduced in the mining,
11
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Chairman’s review (continued)
minerals and energy and financial services sectors. A draft charter for the information and communication technology sector
has been released and industry charters in other sectors are expected to be introduced in the medium term.
BEE deal flow is expected to be a major driver of merger and acquisition activity in South Africa in the foreseeable future.
According to Ernst & Young, 2002 saw total BEE deal value of R12,4 billion and this increased by 240% in 2003 to R42,2 billion.
MVG is well-positioned to benefit from this anticipated increase in merger and acquisition activity.
The present difficult trading conditions, particularly in the mining services division, are expected to persist until at least the
second half of the 2005 financial year, whereafter the benefits of the restructuring initiatives in JIC Mining Services are expected
to materialise. A material improvement in the performance of the group’s food services division is not anticipated until the
second half of the 2005 financial year. Growth in the facilities management division remains dependent on the winning of new
facilities management contracts. The other group businesses continue to trade satisfactorily.
Acknowledgements
My thanks and appreciation go to my co-directors, and the executives and staff of all Rebserve group companies for their
continued hard work, dedication and loyalty in a difficult trading environment. We look forward to the challenges which lie
ahead, as well as the opportunities which are expected to arise as a result of MVG being at the forefront of BEE activity in the
South African economy.
Stephen Levenberg
Chairman
“Mvelaphanda Group Limited is well-positioned to benefit from
the anticipated increase in merger and acquisition activity as a
result of strong BEE deal flow.”
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R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Chief Executive’s review
During the financial year under review, good progress was made in the strategic development of Rebserve and the individual
businesses operated within the group. Rebserve’s operating ethos is based on three fundamental principles:
4 autonomy of individual subsidiaries under strong, entrepreneurial and experienced operational management;
4 leadership and support from a small team of Rebserve corporate executives; and
4 strong financial management and operating systems at subsidiary level, with a focus on good corporate governance.
These principles are carried into effect throughout the group, with individual subsidiary directors having full responsibility for
the operational performance and strategic development of their businesses. Intervention from head office is assessed on a
regular basis in terms of a balanced set of performance and development criteria to ensure that sufficient attention is given to
short-, medium- and long-term objectives.
At the heart of the group’s strategic development is the continuing development of our executives and staff. In this regard
several training and development programmes were implemented by the group during the year in order to continually improve
the quality and depth of the management across the group. This goes hand-in-hand with the identification and training of BEE
candidates, which is also regarded as a major strategic imperative.
Divisional performance
The overall performance of the majority of Rebserve’s businesses was in line with expectations.
Facilities Management and Professional Services
Divisional revenue increased by 11% to R1 269 million and profit from operations increased by 39% to R140 million as a result
of the gainshare payment received by TFMC from Telkom and the commencement of new facilities management
contracts.
TFMC’s performance was in line with expectations. The success of the TFMC Telkom contract was confirmed in
May 2004 with Telkom’s agreement that TFMC had exceeded the savings contractually guaranteed by TFMC to
Telkom for the first three years of the Telkom contract, and the receipt by TFMC from Telkom of the resultant gainshare
payment. This amount has been accounted for during the year. The receipt by TFMC of this payment confirms the
success of the outsourcing partnership established between TFMC and Telkom in August 2000.
Notwithstanding that the initial period of the Telkom contract during which TFMC guaranteed a certain level of savings
to Telkom has been successfully concluded, TFMC remains committed to maintaining its level of expenditure in line
13
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R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Facil i t ies management and professional services
“The success of TFMC’s performance in terms of the Telkom
contract is best reflected in the recognition received by TFMC
from Telkom and the receipt by TFMC of the gainshare
payment.”
Chief Executive’s review (continued)
1414
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with Telkom budgets. Future revenue and expenditure for TFMC are expected to be largely in line with the current year, mainly
due to budget constraints imposed by Telkom and TFMC’s ongoing commitment to delivering an efficient and cost-effective
service.
Following the proven success of the Telkom contract, and in order to position itself for winning new facilities management
contracts, TFMC has established three separate strategic business units (SBUs):
Professional services focuses on all aspects of property asset management including disposals, acquisitions, leasing, letting,
rental administration, site sharing and utilities management. In addition architectural, professional engineering and project
management services are provided for projects ranging from plant replacement and refurbishment, to complete rebuilding.
Facilities solutions provides technical and support services including maintenance, cleaning, catering, security, furniture
management, waste management and pest control, and operates a 24 x 7 x 365 call centre. Emphasis is placed on the
management and monitoring of quality (including health and safety and environmental compliance), delivery and costing of all
services, and customer relationship management.
Engineering maintenance provides planned and reactive maintenance services covering the full spectrum of hard facilities
management services. These services include maintenance of mechanical and electrical installations, minor building works,
uninterrupted power supply (UPS) systems, solar, wind and mobile power systems, surveillance, monitoring and control of key
aspects of functioning of critical sites and fast reaction or emergency response services.
The marketing of the services of the SBUs, individually and collectively, has commenced with several positive enquiries having
already been received, particularly from operators in the telecommunications industry.
Prospects for winning further facilities management contracts have been enhanced by the proven success of the Telkom
contract. Several new opportunities are being pursued or developed locally, including the proposed joint venture with Propnet,
and in the Middle East and Asia-Pacific regions. Certain of these opportunities are at an advanced stage of development.
Other contracts in the facilities management division, notably the joint venture relating to the Department of Trade and Industry
campus in Tshwane, contributed positively to the result.
The performance of the facilities management contracts in JIC were negatively impacted by the adverse trading conditions in
the mining sector and the restructuring initiatives undertaken in JIC referred to below.
Mining and Technical Services
Trading conditions in the mining sector were extremely difficult, mainly as a result of the strong rand, and impacted negatively
on the performance of the group’s mining services businesses.
Revenue for the mining and technical services division decreased by 6% to R659 million as a result of the loss of
certain contracts and the scaling back of other contracts. Profit from operations decreased by 55% to R36 million.
The performance of most of the South African mining houses during the period under review showed substantial
decreases in profitability in comparison to the previous year, with an average 65% decrease in profitability of those
mining houses which are clients of JIC. This decrease in performance by these major mining houses has resulted in far-
reaching cost-cutting initiatives across the mining sector, decreased investment in new projects and the development
of existing mining areas, and significant pressure on the prices charged by contractors. Contractors inevitably bear the
brunt of this process of attrition in the mining sector.
Chief Executive’s review (continued)
15
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“The performance of most of the South African mining houses
during this period showed substantial decreases in profitability
in comparison to the previous year.”
Mining and technical services
Chief Executive’s review (continued)
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Steps were taken in the second half of the financial year to restructure the JIC business in order to adapt the business
to the changing environment in which it operates. A new CEO for JIC was appointed in May 2004 and an extensive
restructuring programme was undertaken. The restructuring programme resulted in the retrenchment of employees at
all levels of the organisation, and in increased investment in management systems in order to allow the business to
better manage its labour resources and work flow planning, and to provide weekly profitability reporting by contract.
The combined effect of highly negative trading conditions in the South African mining sector as well as the short-term cost of
these restructuring initiatives, has had a material impact on the performance of JIC in the year under review. The benefits of
these restructuring initiatives and the improved management systems are expected to materialise in the second half of the
ensuing year, but remain partially dependent on an improvement in trading conditions in the mining sector generally.
Trollope Mining Services performed reasonably in the context of an underperforming mining sector.
As a result of the stronger rand and oversupply of second-hand equipment in the market, the replacement cost of plant
and machinery in the industry is decreasing, bringing selling rates down and impacting on the operating margins of service
providers in this industry. Plant efficiency levels achieved by Trollope Mining Services were maintained above industry norms
as a result of the strict adherence to the proven plant and equipment replacement and maintenance policies, thereby ensuring
that the business remained competitive.
Notwithstanding the relatively low level of free cash flow generated by Trollope Mining Services, the gearing levels within the
business are low compared to many of its competitors. This has allowed greater flexibility in the way in which contract prices
and cash flow are managed. Slightly lower operating margins and a decrease in operating profits were partially offset by the
effect of lower interest rates and debt levels, with the overall result being considered satisfactory in the circumstances.
Food Services
Divisional revenue increased by 7% to R789 million. Profit from operations decreased by 25% to R36 million as a result of
increased costs and the loss of certain contracts in Stamford Sales.
Stamford Sales performed below expectations as a result of the loss of its major KFC contract in April 2004. This loss
necessitated the downsizing of certain areas of the business and the retrenchment of employees in all of the branches
operated by the business. Substantial costs were incurred in re-engineering the business processes, operating structures and
methodologies in order to improve operating efficiencies in the context of the loss of the KFC contract, and to better equip the
business for the challenges which it faces in maintaining its historic growth rates and market position. Trading conditions for
the business remain difficult in a competitive trading environment.
Royal Food Services performed well during the year. Growth in turnover was complemented by improved operating
efficiencies and operating margins. Sechaba Afrika Support Services, Royal Food Services’ BEE joint venture, performed
particularly well, securing several new contracts and continuing the development and growth of the Sechaba brand.
In the first half of the financial year Royal Food Services and Sechaba Afrika established a special events division which
specializes in catering for large corporate and similar functions, including government-sponsored and public events.
The division performed well in its first year of operations, mainly as a result of the large number of contracts which
were awarded during the run up to, and after, the general elections held in April 2004, including one contract to provide
Chief Executive’s review (continued)
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Food services
“Growth in turnover in Royal Food Services was complemented
by improved operating efficiencies and operating margins.”
Chief Executive’s review (continued)
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catering services at the Presidential inauguration. A strategy for the special events division has been formulated in
order to develop a sustainable revenue stream for this division and to diversify the client base.
The joint ventures in Mozambique and Namibia continued to trade well. A new joint venture was established in Lesotho
which provides catering services to four government hospitals in Maseru and surrounding areas.
As part of the restructuring of JIC, the business of MRS was merged with Royal Food Services from 1 July 2004 and will
operate as a specialist mining catering division within Royal Food Services. MRS performed in line with expectations
despite the difficult trading conditions in the mining sector.
King Pie performed satisfactorily and maintained its position as one of the leading fast food franchise brands in South
Africa. The growth and development of the group’s franchising expertise is dependent on the origination or acquisition of
new franchise concepts. In July 2004 the group acquired the Black Steer and the Bulldog Pub and Grill franchises. Although
not material to the overall financial performance of the group, these new franchises will benefit from the proven skills of the
King Pie management team.
Support Services
The support services division includes the group’s security, cleaning and freight forwarding interests. Divisional revenue
increased by 25% to R771 million and profit from operations increased by 24% to R58 million, largely as a result of good
performances from the security businesses.
Security services
Coin Security delivered a good performance. Growth in market share and profitability in the existing areas of guarding, assets-
in-transit and armed reaction was supplemented by a positive contribution from a new division which provides a range of
security risk management services.
Substantial progress was made in the replacement of the assets-in-transit vehicle fleet, necessitating capital expenditure of
approximately R50 million. The benefits of the new vehicle fleet have been well received by existing clients and potential
clients, as reflected in the high retention level of existing client contracts and the numerous new contracts signed with
prestigious clients during the year, including a contract to manage the movement of cash for Standard Bank’s ATM network.
The new security risk management services division provides tailored insurance and risk management services to clients of
Coin Security’s assets-in-transit, guarding and armed response divisions. By partnering with clients and advising them on the
proactive management of their security risks through the services offered by Coin, costs to clients are reduced to the mutual
benefit of Coin and the clients concerned. Prospects for this division are good and several new opportunities in this area are
being investigated.
Protea Security performed well with good growth in revenue and profitability. Protea Security’s position as a leading security
services provider to the mining sector was entrenched with the awarding of its first contract in the ferro-chrome industry.
Security services are now provided to the gold, platinum, diamond, and ferro-chrome mining sectors.
Further advances were made in the use of technology as an integrated part of Protea Security’s service offering. On-
line vehicle tracking services are operated from the Protea Security national control centre in Centurion, to monitor the
movement of valuable cargoes by Protea or its clients.
Chief Executive’s review (continued)
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Support services
“Rebserve’s security businesses have developed expertise and
technology which can compete strongly with international
security service providers.”
Chief Executive’s review (continued)
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Coin Security established a joint venture in the Middle East and has commenced operations in Abu Dhabi. This is a
positive move forward for the group’s security services businesses and confirms that the group has security expertise
and technology which can compete strongly with international security service providers, and which expertise can be
exported to overseas markets.
Cleaning services
Rebserve Cleaning Services performed in line with expectations.
Berco Cleaning Services, the commercial and industrial cleaning services brand, maintained its dominant market
position in the Western Cape, while achieving reasonable growth in the KwaZulu-Natal and Gauteng markets. The
benefits of the increased sales and marketing initiatives in Gauteng are starting to materialise.
Good growth was achieved in the Mediguard division, which provides specialist cleaning services in hospitals and similar
medical facilities. New contracts were won with all of the major private hospital groups, including three such contracts where
Mediguard combined with Coin Security and/or Royal Food Services in offering clients an integrated services solution to their
respective cleaning, security and catering service requirements.
A new strategic alliance was entered into with Western Province Laundries, a well-established laundry service provider in the
Western Cape, to cross-sell the cleaning and laundry services of each company to their respective client bases. Benefits from
this strategic alliance will only materialise in the 2005 financial year.
In recognition of the success achieved by Rebserve Cleaning Services and the quality of the services provided to its clients,
Rebserve Cleaning Services was awarded a PMR Diamond award for excellence in the cleaning services industry in 2003,
based on independent research conducted with customers in the cleaning services market.
Freight forwarding services
The performance of the freight forwarding business was in line with expectations and was negatively impacted as a result of
the stronger rand, despite volumes being maintained.
Acknowledgements
My thanks and appreciation go to all of the directors, executives and staff across the Rebserve group for their continued efforts
and enthusiasm in making Rebserve the leading services provider in Southern Africa, and the outsourcing partner of choice.
We look forward to the new opportunities which will arise from the merger with Mvelaphanda Holdings.
Will Paskins
Chief Executive
Chief Executive’s review (continued)
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Chief Executive’s review (continued)
“The Merger with Mvelaphanda Holdings is expected to provide
a major boost in business opportunities and new contracts for
all companies in the Rebserve Group.”
▲
Support services
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Financial review
Fully diluted headline earnings per share for the year ended 30 June 2004 at 111,5 cents per share is above the pro forma fully
diluted headline earnings per share for the prior year of 110,5 cents, which pro forma figure is calculated on the assumption
that the balance of the Molope purchase consideration had been paid on 1 July 2002 and at an assumed interest rate of
10% per annum.
Revenue increased by 9% to R3 487 million and profit from operations decreased by 2% to R271 million. The positive effect
of the receipt by TFMC of the gainshare payment from Telkom was offset mainly by the reduction in profitability of the mining
services division and restructuring costs incurred in this division. The overall operating margin decreased from 8,7% for the
year ended 30 June 2003 to 7,8% for the year ended 30 June 2004.
Net investment income, which comprises net interest and dividends received, decreased to R18 million following the decrease
in interest rates, the payment of the balance of the Molope purchase consideration of R188 million on which amount interest
was earned in the prior year, and share buybacks concluded in the previous financial year.
Headline net profit attributable to ordinary shareholders was R198 million. The weighted average number of shares in issue
decreased to 177,3 million as a result of share buybacks concluded during the previous financial year and the consolidation of
the Rebserve Share Incentive Scheme.
Headline earnings per share was 111,8 cents. Fully diluted headline earnings per share of 111,5 cents (which is based on
177,6 million shares after taking into account the number of shares still to be issued pursuant to historic acquisitions) was
2% below the fully diluted headline earnings per share for the prior year of 114,0 cents.
Net profit attributable to outside shareholders decreased compared to the prior year as a result of the acquisition by Rebserve
of a further 13,25% effective interest in TFMC from Atkins plc. This decrease was partially offset by the pro rata portion of the
gainshare payment received by TFMC from Telkom which is attributable to the remaining effective 25% minority interest in
TFMC.
Cash generated from operations of R357 million was up 24% on the prior year. The group’s businesses remain highly cash
generative, notwithstanding the difficult trading environment. Working capital increased by only R17,4 million compared to the
increase in the year ended 30 June 2003 of R76,6 million. This improvement was as a result of strict enforcement of credit
policies across the group, particularly in the mining services division.
Free cash flow for the year was R213 million. R89 million was returned to shareholders during the year by way of the capital
distribution of 35 cents per share in lieu of a dividend paid in October 2003, and the interim dividend of 15 cents per share
paid in March 2004.
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Financial review
The group’s net cash (comprising liquid funds less interest bearing liabilities) increased from R266 million at 30 June 2003
to R298 million at 30 June 2004. Pursuant to the Merger with Mvelaphanda Holdings, approximately R212 million will be paid
to shareholders in cash as a result of the special cash dividend of R1,10 per share payable to existing Rebserve shareholders
on implementation of the Merger.
Exceptional items comprise the amortisation of goodwill and the impairment of a loan account in a joint venture company.
Net capital expenditure amounted to R118 million mainly due to the continued expansion and replacement of vehicles in
Coin Security in line with the growth in the assets-in-transit division of Coin Security, and the fleet replacement programme
followed by Trollope Mining Services.
Goodwill increased mainly as a result of the acquisition by Rebserve of a further 13,25% effective interest in TFMC and other
minor acquisitions concluded in certain of the operating divisions.
Investments and loans decreased following the early repayment of certain of the outstanding loan balances which arose from
the sale of certain of the wholesale businesses in the 2001 financial year.
Amounts due to vendors decreased mainly as a result of the payment of outstanding amounts due in respect of the acquisition
of the Rebserve Cleaning Services and Coin Security businesses.
The return on average shareholders’ funds was 18,6% compared to the group’s weighted average cost of capital of 12,8%.
Economic value added was 5,8% equating to R56 million.
Brett Till
Financial Director
“The group’s excellent cash generation will provide a solid
foundation for the merger with Mvelaphanda Holdings.”
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Transformation and social responsibility
Rebserve, as a group which is owned and located in South Africa, has a responsibility to advance the interests of all of its
stakeholders, including shareholders, employees, customers and the communities in which it operates. It is the group’s policy
to provide opportunities for all of its stakeholders to secure and enhance their quality of life.
The group is committed to social, environmental and ethical upliftment and believes that companies which do so are more
likely to enjoy a competitive advantage in the long term, to achieve sustained growth and financial health, and to contribute
positively towards nation-building.
The group’s transformation and social responsibility programmes are focused in the following areas:
Equity ownership
Rebserve has always recognised BEE as a strategic imperative, having initially concluded a significant BEE transaction in
1997. Since 2003, it has been the expressed intention of Rebserve to materially increase its BEE shareholding, and Rebserve
has actively pursued opportunities and initiatives in this regard. The Merger with Mvelaphanda Holdings is the result of these
initiatives and will result in a real, effective and active BEE shareholding of more than 50% of MVG at inception, which is not
dependent upon future share price performance or upon the ability to raise funds.
Mvelaphanda Holdings will, upon implementation of the Merger, be the controlling shareholder of Rebserve. The strategy of
Mvelaphanda Holdings is to contribute to the meaningful participation of historically disadvantaged persons in South Africa’s
economy, by seeking to add significant value to its investments.
Mvelaphanda Holdings has an inclusive philosophy towards empowerment and believes that community participation is critical
to its future success. Its shareholder profile reflects its commitment to ensuring that grassroots communities benefit from its
assets and investments. The direct and indirect shareholders of Mvelaphanda Holdings reflect a broad base of historically
disadvantaged South Africans.
It is the stated intention of Mvelaphanda Holdings to facilitate further participation in MVG by black people (as defined in
section 1 of the broad-based Black Economic Empowerment Act 53 of 2003), after the implementation of the Merger. In this
regard Mvelaphanda Holdings intends to facilitate the formation and financing of a trust for the benefit of HDSA employees
of MVG, HDSA community groups, HDSA youth groups, people with disabilities and HDSA women’s groups. This initiative is
expected to increase the BEE ownership of MVG to a level of approximately 70%.
Various group companies have continued to operate joint ventures with HDSA joint venture partners. One of the key elements
of these joint ventures is the transfer of skills from group executives to such joint venture partners and their management
25
“Mvelaphanda Holdings has an inclusive philosophy towards
empowerment and believes that community participation is
critical to its future success.”
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
teams, thereby increasing the level of knowledge and skills across the group, and assisting in the fast tracking and
development of management from previously disadvantaged groups.
Employment equity
The group remains committed to the principles and intent of the Employment Equity Act and all group companies have
employment equity plans which include numerical goals and training and development targets. Achievements against these
targets are monitored and reported on regularly.
As part of the employment equity plan of each business, specific attention is paid to the development and fast-tracking of
previously disadvantaged individuals who are identified as having the necessary potential and ability to be managers
and leaders in their respective businesses. The intention of these accelerated development programmes is to ensure that,
over time, the management of the group and its businesses includes a substantial number of previously disadvantaged persons.
The actual level of representation by previously disadvantaged persons (excluding white females) in the top, senior and middle
management positions at 30 June 2004, was 22,6% (2003: 19,1%), 20,3% (2003: 20,1%) and 54,5% (2003: 41,9%) respectively.
Procurement
As a key element of the group’s transformation programme, increased emphasis is being placed on procurement policies and
the level of goods and services which are purchased from suppliers who subscribe to the same transformation ideals and
principles as the group. Systems have been introduced to evaluate, report on and monitor the level of procurement which is
being directed to companies who are empowered. Progress on this initiative will be monitored on an ongoing basis.
Allied to this BEE procurement initiative is the support given by group companies to SMMEs. While it is not always possible
to find SMME suppliers for all goods and services, policies are being adopted by individual businesses to allocate a certain
Transformation and social responsibility (continued)
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percentage of their total procurement budget to be spent with SMME suppliers, thereby ensuring ongoing support for these
emerging businesses.
Management development
Several training and development initiatives were launched in the 2004 financial year to assist in developing the quality and
depth of management across the group, and in particular the development of managers and executives from previously
disadvantaged backgrounds. These programmes include the Executive Development Programme, the Management
Development Programme and the New Manager’s Programme.
The group’s Executive Development Programme was launched in September 2003. The programme is aimed at
executives and senior managers, and teaches a balanced approach to managing, growing and developing businesses.
34 executives and senior managers from all group companies have attended the programme, which runs for 18 months
and covers various disciplines including strategic planning, scenario planning, finance, marketing, human resources
management and organisational behaviour. The programme is run in conjunction with, and has been fully accredited by, the
Wits Business School.
The Management Development Programme aims to give managers a broad exposure to the fundamental nature and process
of management and human behaviour in organisations, and to provide managers with the skills, knowledge and techniques
that will lead to more professional management and better decision making. The Management Development Programme is a
stepping stone to the Executive Development Programme.
The New Manager’s Programme is aimed at newly appointed managers and provides training on the range of competencies
relevant to their new positions, including basic business skills, problem solving, communication and team building.
A total of 96 employees, including 64 employees from previously disadvantaged backgrounds, attended the
Management Development and New Manager’s Programmes during the year. The total cost (direct and indirect) of
all three of these development programmes to the group for the financial year ended 30 June 2004, was approximately
R8 million.
Social responsibility
The group’s social responsibility programme seeks to identify and support groups which make a meaningful contribution
to the upliftment and improvement of the quality of life of all South Africans, mainly in education and other special
programmes.
Transformation and social responsibility (continued)
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At group level, Rebserve supports selected charities and social development programmes. These charitable organisations
include the JB Marks Education Trust Fund which provides financial assistance to NUM workers and their families to secure
access to further education (mainly in the science and engineering disciplines), and Tikkun which is an umbrella body which
links various organisations involved in upliftment and development projects so as to share ideas, resources and services.
Rebserve is a corporate patron of Tikkun.
A number of Rebserve’s subsidiaries have implemented their own corporate social responsibility programmes to assist the
charitable and community organisations in the industries and communities in which they operate. The organisations which are
supported are generally active in the areas of education, training and healthcare, and focus largely on people from previously
disadvantaged communities. Contributions (if financial in nature) made to these organisations are determined based on a
percentage of profits of the relevant subsidiary or by way of free services being provided by the company. In addition to any
contribution by the company, employees are encouraged to contribute their own time and effort in supporting these charitable
and community organisations on a voluntary basis. Suppliers and customers are often also approached, or required in terms
of their supply agreements, to lend their support to these charitable causes.
Transformation and social responsibility (continued)
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The board of directors endorses the Code of Corporate Practices and Conduct recommended in the King II Report. The board
recognises that corporate governance is a developing process. Accordingly, it reviews the degree of compliance with the
Code on an ongoing basis and implements procedures to ensure further compliance where appropriate.
Directorate
The board comprises a chairman, a chief executive, one executive director and five non-executive directors (four of
whom are independent). It meets periodically with senior management to examine the results of the group, to ensure that
delegated responsibilities are duly executed by management, and to consider important issues. There is adequate division of
responsibilities amongst board members to ensure a balance of power and authority.
The appointment of new directors is considered by the board as and when the need arises, and from time to time.
Recommendations for the appointment of new directors are made to, and approved by. the full board of directors. If appropriate,
external consultants are engaged to recommend candidates for appointment to the board. Executive directors are appointed to the
board on the basis of functional expertise, experience and overall contribution to the group. Non-executive directors are selected
on the basis of industry knowledge, professional skills and experience.
Human resources
The group is an equal opportunity employer and there is no discrimination on any grounds. The group supports the principles
and objectives contained in the Employment Equity Act. There has been a continued emphasis across the group on all
matters relating to employment equity and black economic empowerment, including several training and learnership initiatives
to assist employees from previously disadvantaged backgrounds. Plans are also in place to ensure that succession planning
is adequately addressed in all group companies.
The group recognises that the HIV/AIDS epidemic will affect every workplace, with prolonged staff illness, absenteeism, and
death impacting on productivity, employee benefits, occupational health and safety, production costs and workplace morale.
Consistent with the group’s concern for employees’ well-being, the group has adopted a policy with regard to HIV/AIDS and
other life-threatening diseases.
The policy sets out guidelines for group companies in order to ensure that individuals with HIV/AIDS are not unfairly
discriminated against in the workplace. This includes creating a non-discriminatory work environment, dealing with HIV
testing, confidentiality and disclosure, providing equitable employee benefits, dealing with dismissals and managing grievance
procedures.
In terms of this policy, group companies endeavour to support those individuals who are infected or affected by HIV/AIDS,
to enable them to continue to work productively for as long as possible. This is achieved by offering advice on the rights
of afflicted employees and their colleagues, educating employees and management on life-threatening diseases, referral
Corporate governance
29
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of employees to medical and other resources (including counselling services), and consulting employees on conditions of
employment in order to assist employees in managing their illness from an employment perspective.
Progress in terms of this policy will be monitored on an ongoing basis.
Ethics
The board strives to ensure that the group conducts its business with the utmost integrity towards all its stakeholders,
including its shareholders, employees, customers, suppliers, and society at large. The majority of group companies have
documented codes of conduct for staff designed to provide guidance as to the ethical conduct of staff in all areas, appropriate
policies in respect of the safeguarding of assets and information, and the appropriate corrective measures to enforce these
policies. The group provides, monitors and audits a safe system for employees to report any unethical behaviour by fellow
employees, directors or shareholders of the group.
Communication
The group supports a policy of open communication with all stakeholders on matters of both a financial and non-financial
nature. Regular communication sessions are held internally with management and senior executives, and externally with
institutional shareholders and investment analysts.
Going concern
The group has sufficient resources to continue in operational existence for the year ahead. Accordingly, the directors have
adopted the going concern basis in preparing the annual financial statements.
Audit committee
The group has an independent audit committee comprising two non-executive directors (one of whom serves as its chairman),
and an executive director. It has terms of reference which clearly set out its scope and objectives. The external auditors have
unrestricted access to this committee.
The audit committee meets three times per annum to review the effectiveness of internal controls in the group with reference
to the findings of the internal and external auditors, to review important accounting issues and specific disclosures in the
financial statements (including areas of management judgement and estimates), to review major audit recommendations, and
to review risk management procedures across the group.
Remuneration committee
The remuneration committee comprises two non-executive directors (one of whom serves as its chairman) and the Chairman
of Rebserve. The committee is responsible for determining the conditions of employment, incentivisation and remuneration
Corporate governance (continued)
30
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packages, including the allocation of shares and options in terms of the Rebserve Share Incentive Scheme, primarily to
executive directors and senior executives.
Management reporting
There are comprehensive management reporting disciplines in place which include the preparation of annual budgets by all
operating divisions. Individual operational budgets are approved by the boards of directors of the relevant companies. The
group budget is reviewed by the Rebserve board of directors. Monthly results are reported against budgets. Budgets and
profit projections are reviewed and updated regularly during the financial year. Working capital and cash flow management are
monitored on an ongoing basis.
Internal audit
The group has established internal audit departments for the group and within certain divisions. These functions are performed
by appropriately qualified and experienced personnel. In divisions where no internal audit department exists, internal audit
functions are performed by the group internal audit department or have been outsourced to specialists who are engaged to
review and report on systems of internal controls.
Risk management
The board of directors is ultimately responsible for the management of risk. The audit committee is responsible for overseeing
the risk management procedures within the group. The committee has established the minimum standards required of each
business in identifying, analysing and monitoring the risks which each business faces. The results of these procedures are
communicated to the audit committee regularly or as circumstances change.
Social responsibility
As an integral part of South African society, the group strives to be a trusted and good corporate citizen, fulfilling its
responsibilities to its stakeholders and the communities in which it operates. The group’s social responsibility programme
seeks to identify and support groups which make a contribution to the upliftment and improvements of the quality of life of
South Africans, mainly in education and other special programmes.
Corporate governance (continued)
31
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Value added statement
Group
Revenue 3 487 126 3 189 576
Cost of materials, services and other expenses (1 525 303) (1 375 473)
Value added 1 961 823 1 814 103
Investment income 53 424 81 950
Exceptional items (17 229) (15 024)
Total value added 1 998 018 1 881 029
Applied as follows:
Employees
Salaries, wages, bonuses, pension, medical aid and other benefits 1 127 234 1 056 020
Providers of capital 124 382 112 914
Lenders 35 659 57 833
Distribution/dividend to ordinary shareholders 88 723 55 081
Government
Taxation 438 364 405 348
Reinvested in the group 308 038 306 747
Depreciation and amortisation 104 058 87 858
Outside shareholders 23 091 25 189
Net attributable income 180 889 193 700
1 998 018 1 881 029
Money exchanges with the Government
Taxation on profit 67 079 66 598
PAYE 129 411 128 047
VAT 192 322 162 047
RSC levies 6 923 8 464
Rates and licences 1 550 894
Skills development levy 10 615 9 775
UIF and WCA 30 464 29 523
438 364 405 348
2004 2003
R’000 R’000
year ended 30 June 2004
32
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
To the members of Rebserve Holdings Limited
We have audited the annual financial statements and group annual financial statements set out on pages 33 to 65.
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.
Scope
We conducted our audit in accordance with statements of South African Auditing Standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An
audit includes:
� examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;
� assessing the accounting principles used and significant estimates made by management; and
� evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
Audit opinion
In our opinion, the financial statements fairly present, in all material respects, the financial position of the company and
group at 30 June 2004 and the results of their operations and cash flows for the financial year then ended in accordance with
South African Statements of Generally Accepted Accounting Practice, and in the manner required by the Companies Act in
South Africa.
Fisher Hoffman PKF (Jhb) Inc.
Chartered Accountants (SA)
Registered Accountants and Auditors
Registration number 1994/001166/21
Johannesburg
23 August 2004
Report of the independent auditors
33
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
The directors have pleasure in submitting the financial statements of the company and the group for the year ended
30 June 2004.
Nature of business
Rebserve Holdings Limited is a holding company whose businesses provide a range of integrated services, including facilities
management, technical, professional, and support services, extending countrywide.
Proposed merger with Mvelaphanda Holdings (Proprietary) Limited
It was announced on SENS on 10 May 2004 and in the press on 11 May 2004 that the boards of directors of Rebserve and
Mvelaphanda Holdings (Proprietary) Limited (“Mvelaphanda Holdings”) had reached agreement in principle on, and had signed
a memorandum of understanding containing the salient terms and conditions of, a proposed merger between the businesses
and assets of Mvelaphanda Holdings and Rebserve, utilising Rebserve as the vehicle for the Merger. The Merger Agreement
containing all the terms and conditions of the Merger, was signed on 20 July 2004. On implementation of the Merger, control of
Rebserve will pass to Mvelaphanda Holdings. The Merger therefore entails a reverse takeover of Rebserve by Mvelaphanda
Holdings, resulting in the creation of a truly empowered, black-controlled, owned and managed diversified South African group.
It is proposed that Rebserve changes its name to Mvelaphanda Group Limited (“MVG”) following implementation of the
Merger.
A circular to inform Rebserve shareholders of the salient details of the Merger and to convene a general meeting of Rebserve
shareholders on 3 September 2004, at which ordinary and special resolutions will be proposed, inter alia, to approve the
Merger, was posted to Rebserve shareholders on 30 July 2004.
Financial results
The results of the company and the group are set out in the financial statements.
The consolidated net profit after taxation attributable to ordinary shareholders amounted to R180 889 000
(2003: R193 700 000).
The headline consolidated net profit after taxation attributable to ordinary shareholders amounted to R198 118 000
(2003: R208 724 000).
Directors’ report
34
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Share capital
Number of shares in issue at 30 June 2004 193 729 661
On 30 June 2004 a subsidiary of Rebserve Holdings Limited held 15 945 282 (2003: 17 520 210) Rebserve Holdings Limited shares
which had been acquired in the open market at a cost of R107 998 000 (2003: R124 867 000) in terms of share buybacks.
Rebserve Share Incentive Scheme
On 30 June 2004 the scheme held 534 611 (2003: 736 403) Rebserve Holdings Limited shares. No new options were granted
to directors and employees during the year.
Reconciliation of share options/scheme shares granted to directors and employees:
2004 2003
Number Strike price Number Strike price
(cents) (cents)
Number of options/scheme shares outstanding
at the beginning of the year 12 969 855 479 – 975 6 544 855 560 – 975
New options granted during the year — — 6 925 000 479 – 585
Options cancelled/lapsed during the year (1 704 625) 479 – 975 (500 000) 670
Number of options/scheme shares outstanding
at the end of the year 11 265 230 479 – 975 12 969 855 479 – 975
Events subsequent to the balance sheet date
There have been no events subsequent to 30 June 2004 which necessitate adjustment to the income statement or balance
sheet at that date.
Directorate and secretary
The name and address of the company secretary appears on page 70 and the names of the directors appear on pages 6 and 7.
In terms of clause 53.2 of the articles of association, Messrs Brodie, Paskins and Till retire at the forthcoming annual general
meeting, but being eligible, offer themselves for re-election.
Pursuant to the Merger, it is proposed that the Rebserve board of directors be reconstituted to reflect the new controlling shareholder
of Rebserve, inter alia, by the appointment of Tokyo Sexwale, Mikki Xayiya, Mark Willcox, Yolanda Cuba and Jackie Mphafudi as
executive directors of MVG. In the context of the Merger, Mackie Brodie, Will Paskins and Kuseni Dlamini will resign as directors of
Rebserve.
Directors’ report (continued)
35
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Directors’ interests
On 30 June 2004 the directors of Rebserve held, in aggregate, 4 704 160 (2003: 4 704 160) Rebserve shares, representing 2,4%
(2003: 2,4%) of the issued share capital of Rebserve. The following direct and indirect interests in Rebserve shares and options/
scheme shares were held by the directors of Rebserve at 30 June 2004:
Rebserve shares Rebserve options/scheme shares
% of % of
issued Strike issued
Direct Indirect share Date price share
Name beneficial beneficial Total capital granted (cents) Number capital
M H Brodie 52 302 — 52 302 — — — — —
K D Dlamini — — — — — — — —
S M Levenberg 105 4 392 416 4 392 521 2,3 10/04/2002 560 250 000 0,1
02/09/2002 479 4 725 000 2,4
L Mojela — — — — — — — —
W J Paskins — — — — 04/04/2001 650 208 650 0,1
02/09/2002 479 800 000 0,4
R M Patel — 43 871 43 871 — — — — —
C D Stein 10 000 — 10 000 — — — — —
B C Till — 205 466 205 466 0,1 01/10/1997 800 200 000 0,1
04/04/2001 650 150 000 0,1
02/09/2002 479 500 000 0,3
Total 62 407 4 641 753 4 704 160 2,4 6 833 650 3,5
There have been no changes in the above shareholdings or options/scheme shares between 30 June 2003 and the date of
this report.
Subsidiaries
Details of the company’s principal subsidiaries and changes therein are set out on page 64.
The aggregate headline profit after taxation of subsidiaries attributable to the company amounted to R174 882 000
(2003: R174 998 000).
Directors’ report (continued)
3636
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Dividends and capitalisation issue
Given the strongly cash generative nature of the group’s businesses, the directors resolved to revert to a policy of declaring an
interim dividend as well as a final dividend.
Interim dividend
An interim cash dividend of 15 cents per Rebserve share was declared and paid to shareholders on 29 March 2004.
Final dividend
As disclosed in the circular to Rebserve shareholders dated 30 July 2004 relating to the Merger:
� Rebserve intends, subject to the Merger becoming unconditional, to pay a special cash dividend of R1,10 per Rebserve share
to all existing Rebserve shareholders, and to also make a capitalisation issue out of its existing capital and/or reserves to all
existing shareholders, on the basis of 7,14286 new Rebserve shares at R7,00 per Rebserve share, credited as fully paid, for
every 100 Rebserve shares held (equivalent in value to a further 50 cents per Rebserve share). Subject to the requisite
shareholder approvals being obtained, the salient dates for payment of the special cash dividend and the capitalisation issue
will be announced on SENS and in the press upon the fulfilment of all conditions precedent to the Merger;
� save as set out above, there will be no further dividend payable by Rebserve to its shareholders in respect of the financial
year ended 30 June 2004.
Borrowing limitation
In terms of the articles of association, the directors may exercise all powers of the company to borrow money as they consider
appropriate. The borrowing powers of the directors are unlimited.
Special resolutions
On 16 January 2004 the directors of Rebserve were authorised to facilitate, inter alia, the acquisition by Rebserve or a subsidiary
of Rebserve, from time to time, of the issued shares of Rebserve upon such terms and conditions and in such numbers as the
directors of Rebserve may from time to time decide, but subject to the provisions of the Companies Act, No 61 of 1973, as
amended, and the Listings Requirements of the JSE Securities Exchange South Africa.
Change in accounting policy
During the year the group consolidated the Rebserve Share Incentive Scheme in line with the guidelines issued by the JSE
Securities Exchange South Africa. This constituted a change in accounting policy. Prior year results have not been restated as
the effect of the change in accounting policy is not material to the group’s results. Full details of the change in accounting
policy are contained in note 27 to the financial statements.
Directors’ report (continued)
3737
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
The directors of the company are responsible for the maintenance of adequate records and the preparation and integrity of the
financial statements, group financial statements and related financial information included in this report.
The annual financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting
Practice and incorporate full and responsible disclosure in line with the accounting philosophy of the group.
The directors are also responsible for the group’s systems of internal controls and believe that these controls provide
reasonable, but not absolute, assurance as to the reliability of the financial statements, adequately safeguard, verify and
maintain accountability of assets, and prevent and detect material misstatements and loss.
These financial statements have been prepared on the going concern basis, were approved by the board of directors on
23 August 2004, and are signed on its behalf by:
S M Levenberg Chairman B C Till Financial director
Directors’ approval
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, and all such returns are true, correct and up to date.
For: Rebhold Management Services (Proprietary) Limited
Statement of compliance by the company secretary
38
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
The financial statements have been prepared in accordance with South African Statements of Generally Accepted Accounting
Practice, on the historical cost basis, except as modified by the application of AC133, and incorporate the following principal
accounting policies, which have been consistently applied in all material respects, except where noted below.
Basis of consolidation
The group’s annual financial statements incorporate the financial position of the company and its subsidiaries from the effective
date of acquisition to the effective date of disposal. Fixed properties owned by subsidiaries are stated at the value attributed to them
on acquisition by the group. The excess of the cost of shares in other subsidiary companies over the tangible net asset value at
the date of acquisition is attributed to trademarks and goodwill. Material inter-group transactions are eliminated on consolidation.
The Rebserve Share Incentive Scheme is included in the consolidated financial statements for the first time in the current
financial year as if it were a subsidiary. Comparative amounts have not been restated.
Revenue
Revenue, which excludes value added tax, comprises the net amounts invoiced to customers, before discounts for goods
supplied and services rendered.
Under certain service contracts the group manages customer expenditure and is obliged to purchase goods and services from
third party contractors and recharge them to the customer at cost. These “flow through” amounts charged by contractors and
recharged to customers at cost are excluded from turnover and cost of sales. Debtor and creditor balances relating to these
transactions are recorded in the balance sheet.
Revenue recognition
Revenue from service-based activities is recognised when the service is completed. Revenue from the sale of merchandise
and finished goods is brought to account when the risk in the goods passes to the customer. Interest earned is accrued on a
time apportion basis. Dividends are recognised when the right to receive payment is established.
Intangible assets
Intangible assets, which comprise trademarks and goodwill, arising after 30 June 2000, are carried at cost and are amortised
over their estimated useful lives. Intangible assets which arose prior to 30 June 2000 were written off in the year the asset arose,
firstly against share premium and, secondly, directly to distributable reserves.
Property, plant and equipment
Furniture, fittings, computer equipment, plant and equipment, improvements to leasehold premises, office equipment and
motor vehicles are stated at cost less depreciation calculated on a straight-line basis at rates considered appropriate to write
off the cost to the estimated residual value over the estimated useful lives of the assets. The depreciation rates used are:
Accounting policies
39
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Plant and equipment 15% – 20%
Office equipment 15%
Computer equipment 33%
Furniture and fittings 15%
Motor vehicles – passenger 20%
Motor vehicles – commercial 25%
Improvements to leasehold premises period of lease
Land and buildings, which are regarded as investment properties, are stated at fair value.
Development costs
Development costs comprise start-up and development costs in relation to new contracts. These costs are capitalised and
written off over the period of the contract from the year that the contract commences operation.
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined on a first-in, first-out basis. The cost of
finished goods includes direct expenditure and production overheads.
Foreign currency transactions
Foreign currency transactions are recorded at the exchange rate ruling on the transaction dates. Assets and liabilities designated
in foreign currencies are translated at rates of exchange ruling at the balance sheet date. Exchange differences are taken to
income in the year in which they arise.
Deferred taxation
Deferred taxation is provided for on the liability method using the comprehensive basis in respect of income tax payable in
future periods in respect of taxable temporary differences. Deferred tax assets are recognised in respect of tax losses to the
extent that it is probable that future tax benefits will be available against which the losses can be utilised. Deferred tax assets
are also recognised in respect of income taxes recoverable in future periods in respect of deductible temporary differences.
Accounting policies (continued)
40
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Liquid funds
The bank balances are stated in accordance with the bank statement balances.
Leased assets
Assets acquired under financial leases are capitalised at their cash cost equivalent and are depreciated as indicated above.
Finance costs are expensed using the effective interest rate method. All other leases are treated as operating leases and are
charged against income as incurred.
Associated companies
Associates are those companies in which the group has a long term interest and over which it exercises significant influence,
but not control. The group’s share of post-acquisition results of associates is included in the consolidated financial statements
using the equity method where material.
Financial instruments
Classification
Originating loans
Originating loans are assets not held for trading purposes. These include various long-term loans advanced by the group.
Trade and other receivables
Financial assets that are balances from trade and other receivables are classified as originating loans and advances.
Trade and other payables
Financial liabilities that are not held for trading are balances due to trade and other creditors.
Liquid funds
Liquid funds comprise cash balances on hand, cash deposited with financial institutions and liquid investments.
Derivative instruments
Derivative instruments are classified as either trading or hedging instruments in accordance with management’s intentions.
Recognition
The group recognises financial assets and liabilities on the date it commits to purchase or sell such instruments. From this date
any gains or losses in fair value of the assets or liabilities are recorded.
Accounting policies (continued)
41
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Measurement
Financial instruments are measured initially at cost, including transaction costs. For financial assets acquired, cost is the fair
value of the consideration given. For financial liabilities, cost is the fair value of the consideration received. Transaction costs
included in the initial measurement are those incremental costs arising on the initial purchase of the investment or incurring of
a liability.
Originating loans are carried at amortised cost, being original sums advanced less principal payments and amortisations.
Trade and other receivables originated by the group are stated at amortised cost less a provision for doubtful debts.
Liquid funds are carried at fair value.
Financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisations.
Derivative instruments are recognised at fair value and the corresponding adjustments reflected in the income statement.
Impairment
Financial instruments that are stated at cost or amortised cost, are reviewed at each balance sheet date to determine whether
there is objective evidence of impairment. If any such indication exists, an impairment loss is recognised based on the
instrument’s estimated recoverable amount.
If in a subsequent period the amount of an impairment loss has decreased and the decrease can be linked objectively to an
event occurring after the write down, the write down is reversed through the income statement.
Provisions
A provision is recognised when, and only when, the group has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and
adjusted to reflect current best estimate. Where the effect of the time value of money is material, the amount of a provision is
the present value of the expenditure expected to be required to settle the obligation.
Retirement benefits
The group provides for retirement benefits for the majority of employees by payments to independently administered pension
and provident funds. Current contributions are charged against income as incurred. The cost of providing for any deficit is
charged against income when determined.
The present value of any post-retirement medical aid liability is actuarially determined. Any deficit or surplus is recognised
immediately and charged against income.
Accounting policies (continued)
42
▲
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Income statements
year ended 30 June 2004
Revenue 1 3 487 126 3 189 576 — —
Cost of sales and direct expenses (2 796 726) (2 521 215) — —
Gross profit 690 400 668 361 — —
Other operating profit 100 164 51 173 11 838 4 000
Operating expenses (520 041) (443 140) (601) (25)
Profit from operations 2 270 523 276 394 11 237 3 975
Net interest received 3 13 087 6 765 11 192 19 422
Dividends received 3 895 17 222 39 888 38 833
Income from associates 783 130 — —
Exceptional items 4 (17 229) (15 024) — —
Net profit before taxation 271 059 285 487 62 317 62 230
Income tax expense 5 (67 079) (66 598) (3 871) (7 023)
Net profit after taxation 203 980 218 889 58 446 55 207
Net profit attributable to outside shareholders (23 091) (25 189) — —
Net profit attributable to ordinary shareholders 180 889 193 700 58 446 55 207
Earnings per share (cents) 6 102,1 107,8
Headline earnings per share (cents) 6 111,8 116,2
Fully diluted headline earnings per share (cents) 6 111,5 114,0
Dividend/distribution per share (cents) 175,0 35,0
– interim 15,0 —
– final 110,0 35,0
– capitalisation share issue 50,0 —
2004 2003 2004 2003
Notes R’000 R’000 R’000 R’000
Group Company
43
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R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Balance sheets
at 30 June 2004
ASSETS
Non-current assets 701 102 691 596 796 963 882 600
Property, plant and equipment 7 345 663 328 675 — —Development costs and long-term receivables 8 6 687 13 327 — —Goodwill 9 275 065 248 114 — —Investments in subsidiaries 10.1 — — 790 712 860 945 Investments in associates 10.2 22 333 18 978 122 122Other investments 10.3 2 800 — — —Financial assets 10.4 4 377 36 707 6 129 21 533Deferred taxation 19 44 177 45 795 — —
Current assets 1 100 957 1 121 579 168 950 160 283
Inventories 11 52 165 62 690 — —Trade and other receivables 30 608 003 566 977 3 306 5 282Liquid funds 12 440 789 491 912 165 644 155 001
Total assets 1 802 059 1 813 175 965 913 1 042 883
EQUITY AND LIABILITIES
Capital and reserves 1 003 458 938 236 963 697 1 036 114
Share capital 13 177 176 194 194 Share premium 23 146 90 951 53 826 121 631 Non-distributable reserves 14 49 045 49 045 — —Distributable reserves 15 899 185 735 597 877 772 851 822 Amounts due to vendors 16 31 905 62 467 31 905 62 467
Outside shareholders’ interest 614 31 242 — —Non-current liabilities 85 297 168 454 — —
Interest-bearing borrowings 17 69 332 160 211 — —Non-interest-bearing borrowings 18 3 395 — — —Deferred taxation 19 12 570 8 243 — —
Current liabilities 712 690 675 243 2 216 6 769
Trade and other payables 598 855 580 538 2 216 5 469 Short-term borrowings — 3 648 — —Current portion of interest-bearing borrowings 73 490 65 872 — —Current portion of non-interest-bearing borrowings 970 — — —Provisions 20 18 789 22 650 — —Bank overdrafts — 114 — —Taxation liabilities 20 586 2 421 — 1 300
Total equity and liabilities 1 802 059 1 813 175 965 913 1 042 883
2004 2003 2004 2003
Notes R’000 R’000 R’000 R’000
Group Company
44
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R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Group Company
Cash flow statements
year ended 30 June 2004
Cash flows from operating activities 304 211 173 100 26 810 (15 334)
Cash received from customers 21 3 447 239 3 125 351 — —
Cash paid to suppliers and employees 22 (3 090 701) (2 836 988) — —
Cash generated/(utilised) from/(in) operations 23 356 538 288 363 9 960 (121)
Net interest received 3 13 087 6 765 11 192 19 422
Investment income 3 895 17 222 39 888 38 833
Taxation paid 25 (42 641) (84 169) (5 171) (15 350)
Dividends paid (26 668) (55 081) (29 059) (58 118)
Cash flows from investing activities (145 785) (90 700) 71 081 (335 777)
Acquisition/(disposal) of subsidiaries and
businesses as going concerns 26 (45 360) (7 247) — —
Additions to property, plant and equipment,
development costs and long-term receivables (189 290) (183 616) — —
Proceeds from disposal of property, plant and
equipment and long-term receivables realised 71 461 92 060 — —
(Increase)/decrease in investments (5 610) (7 887) 59 114 (335 777)
Decrease in financial assets 23 014 15 990 11 967 —
Cash flows from financing activities (209 549) (331 917) (87 248) (8 141)
Decrease in long-term borrowings (92 904) (53 288) — —
Decrease in short-term borrowings 4 826 (201 692) — —
Decrease in minority interests (39 973) (13 537) — —
Decrease in amounts due to vendors (19 443) (8 141) (19 443) (8 141)
Distribution to shareholders (62 055) — (67 805) —
Share buy-backs — (55 259) — —
Net (decrease)/increase in liquid funds (51 123) (249 517) 10 643 (359 252)
Liquid funds at the beginning of the year 491 912 741 429 155 001 514 253
Liquid funds at the end of the year 440 789 491 912 165 644 155 001
2004 2003 2004 2003
Notes R’000 R’000 R’000 R’000
45
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R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Statements of changes in equity
Non- Amounts Share Share distributable Distributable due to capital premium reserves reserves vendors Total R’000 R’000 R’000 R’000 R’000 R’000
Group
Balance at 30 June 2002 185 90 951 49 045 652 228 70 608 863 017
Share buybacks (9) — — (55 250) — (55 259)
Cash amounts paid to vendors — — — — (8 141) (8 141)
Net profit attributable to ordinary shareholders — — — 193 700 — 193 700
Dividends — — — (55 081) — (55 081)
Balance at 30 June 2003 176 90 951 49 045 735 597 62 467 938 236
Treasury shares transferred to vendors 2 — — 11 117 (11 119) —
Share incentive scheme – impairment of loan account — — — (3 437) — (3 437)
Share incentive scheme – Rebserve shares held (1) — — (4 063) — (4 064)
Cash amounts paid to vendors — — — — (19 443) (19 443)
Net profit attributable to ordinary shareholders — — — 180 889 — 180 889
Dividends — — — (26 668) — (26 668)
Distribution to shareholders — (67 805) — 5 750 — (62 055)
Balance at 30 June 2004 177 23 146 49 045 899 185 31 905 1 003 458
Company
Balance at 30 June 2002 194 121 631 — 854 733 70 608 1 047 166
Cash amounts paid to vendors — — — — (8 141) (8 141)
Net profit attributable to ordinary shareholders — — — 55 207 — 55 207
Dividends — — — (58 118) — (58 118)
Balance at 30 June 2003 194 121 631 — 851 822 62 467 1 036 114
Treasury shares transferred to vendors — — — — (11 119) (11 119)
Share incentive scheme – impairment of loan account — — — (3 437) — (3 437)
Cash amounts paid to vendors — — — — (19 443) (19 443)
Net profit attributable to ordinary shareholders — — — 58 446 — 58 446
Dividends — — — (29 059) — (29 059)
Distribution to shareholders — (67 805) — — — (67 805)
Balance at 30 June 2004 194 53 826 — 877 772 31 905 963 697
year ended 30 June 2004
46
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Group Company
1. Revenue
Facilities management and professional services 1 269 351 1 138 491 — —
Mining and technical services 658 509 696 970 — —
Food services 788 502 738 087 — —
Support services 770 764 616 028 — —
3 487 126 3 189 576 — —
2. Profit from operations
Facilities management and professional services 139 610 100 124 — —
Mining and technical services 36 336 81 400 — —
Food services 36 206 47 965 — —
Support services 58 371 46 905 — —
270 523 276 394 — —
Profit from operations is stated after charging:
Auditors’ remuneration
Audit fees 2 359 4 239 35 25
Current year 3 115 4 069 35 25
(Over)/underprovision prior years (756) 170 — —
Other services 113 189 — —
2 472 4 428 35 25
Depreciation and amortisation
Plant and equipment 48 213 41 036 — —
Office equipment 1 824 962 — —
Computer equipment 21 345 21 826 — —
Furniture and fittings 5 731 4 958 — —
Motor vehicles 25 442 18 170 — —
Improvements to leasehold premises 1 061 906 — —
Development costs 442 — — —
104 058 87 858 — —
Employee costs
Salaries and bonuses 1 170 627 1 088 993 — —
Fringe benefits 44 559 69 599 — —
Pension/provident fund contributions 59 419 43 521 — —
1 274 605 1 202 113 — —
Notes to the financial statements
2004 2003 2004 2003
R’000 R’000 R’000 R’000
47
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
2. Profit from operations (continued)
Remuneration other than to employees for Managerial services 242 672 — — Technical services 3 607 1 412 — —
3 849 2 084 — —
Rentals under operating leases Land and buildings 21 410 16 725 — — Equipment 11 491 10 563 — — Motor vehicles 5 609 6 891 — — Other — 195 — —
38 510 34 374 — —
Foreign currency losses 96 474 — — Losses on disposal of property,
plant and equipment 1 776 4 877 — —
Directors’ emoluments paid by subsidiaries
Salaries, Medical aid directors’ fees, and allowances retirement and fringe benefit Total benefits Bonus contributions Total 2003 R’000 R’000 R’000 R’000 R’000
2004
Executive directors F Cohen 1 325 — 26 1 351 1 650 S M Levenberg 2 990 1 750 135 4 875 3 711 W J Paskins 1 784 1 250 16 3 050 2 678 M C Ramaphosa — — — — 962 B C Till 1 334 950 316 2 600 2 025
Non-executive directors M H Brodie 426 — — 426 387 K D Dlamini 44 — — 44 — L M Mojela 44 — — 44 — R M Patel 44 — — 44 — C D Stein 70 — — 70 64
8 061 3 950 493 12 504 11 477
2003 7 746 2 453 1 278 11 477
The remuneration of the executive directors is structured on the basis of a market-related guaranteed cost to company remuneration package (including current medical aid and retirement benefit contributions), plus a discretionary bonus based on performance of the executive and merit. The allocation of the guaranteed cost to company package as between salary, allowances and fringe benefits is not considered relevant.
At 30 June 2004 none of the directors of Rebserve had fixed-term service contracts, nor are there any service agreements with any of the directors of Rebserve which impose any abnormal notice periods on Rebserve.
2004 2003 2004 2003
R’000 R’000 R’000 R’000
Group Company
Notes to the financial statements (continued)
48
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Group Company
2. Profit from operations (continued)
And after crediting:
Administration fees received 316 — 7 500 4 000
Foreign currency gains 1 702 1 704 — —
Profit on disposal of property,
plant and equipment 2 412 4 140 — —
3. Net interest received
Interest received 48 746 64 598 11 192 19 436
Interest paid (23 484) (46 139) — (14)
Finance charges (12 175) (11 694) — —
13 087 6 765 11 192 19 422
4. Exceptional items
Goodwill amortised 16 991 14 347 — —
Impairment of a loan account 238 677 — —
17 229 15 024 — —
2004 2003 2004 2003
R’000 R’000 R’000 R’000
Notes to the financial statements (continued)
49
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Group Company
2004 2003 2004 2003
R’000 R’000 R’000 R’000
5. Income tax expense
South African normal tax 54 511 59 735 3 871 7 023
– Current 57 908 58 150 3 871 7 023
– (Over)/underprovision prior years (3 397) 1 585 — —
Deferred tax 5 945 2 227 — —
Capital gains tax 46 3 — —
Secondary tax on companies 6 577 4 413 — —
Foreign tax — 220 — —
67 079 66 598 3 871 7 023
Reconciliation of taxation amount
South African normal tax amount 81 318 85 646 18 695 18 669
Adjusted for: (20 862) (23 684) (14 824) (11 646)
Disallowable expenditure 2 447 380 — 4
Income from associates (234) (47) — —
Exempt income and exceptional items (19 045) (21 838) (11 966) (11 650)
Investment and other special allowances (2 582) (901) — —
Assessed losses utilised/carried forward (1 448) (1 031) — —
Other — (247) (2 858) —
Capital gains tax 46 3 — —
Secondary tax on companies 6 577 4 413 — —
Foreign tax — 220 — —
Effective amount 67 079 66 598 3 871 7 023
Gross estimated tax losses available for
utilisation against future taxable income 59 543 69 709 — —
Tax relief at current tax rates 17 863 20 913 — —
Credits in respect of secondary tax on companies, available for set-off by the company against future dividends amounted
to R1 555 000 (2003: R2 329 000).
Notes to the financial statements (continued)
50
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
6. Earnings per share
Earnings per share is based on the consolidated net profit attributable to ordinary shareholders of R180 889 000
(2003: R193 700 000) and is calculated using the weighted average number of 177 249 768 (2003: 179 604 219) shares
in issue during the year.
Headline earnings per share is based on the consolidated headline net profit attributable to ordinary shareholders
of R198 118 000 (2003: R208 724 000) and is calculated using the weighted average number of 177 249 768
(2003: 179 604 219) shares in issue during the year.
Fully diluted headline earnings per share is based on the consolidated headline net profit attributable to ordinary
shareholders of R198 118 000 (2003: R208 724 000) and is calculated using the weighted average number of 177 604 834
(2003: 183 095 164) shares, being the weighted average number of shares in issue during the year plus such further
shares as are likely to be issued to vendors in terms of acquisition agreements and on achievement of future profit
warranties.
The dilutionary effect of options granted to directors and employees to subscribe for shares via the Rebserve Share
Incentive Scheme is not material.
Group
2004 2003 R’000 R’000
Reconciliation between earnings and headline earnings
Net profit attributable to ordinary shareholders 180 889 193 700
Exceptional items attributable to ordinary shareholders 17 229 15 024
Goodwill amortised 16 991 14 347
Impairment of a loan account 238 677
Headline net profit attributable to
ordinary shareholders 198 118 208 724
Reconciliation of the weighted average number of shares in issue during the year and the fully diluted weighted average number of shares
Number of shares
2004 2003
Number of shares in issue 193 729 661 193 729 661
Weighted average number of shares held by a
subsidiary during the year (15 945 282) (14 125 442)
Shares held by the Rebserve Share Incentive Scheme (534 611) —
Weighted average number of shares in issue during the year 177 249 768 179 604 219
Shares likely to be issued pursuant to
historic acquisitions 355 066 3 490 945
Fully diluted weighted average number of shares 177 604 834 183 095 164
Notes to the financial statements (continued)
51
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
Cost Accumulated Net book Net book
depreciation value value
2004 2004 2004 2003 R’000 R’000 R’000 R’000
7. Property, plant and equipment
Group
Land and buildings 1 585 — 1 585 5 923
Plant and equipment 292 157 91 443 200 714 197 890
Office equipment 12 845 4 296 8 549 2 706
Computer equipment 95 759 66 362 29 397 33 494
Furniture and fittings 38 409 15 830 22 579 24 755
Motor vehicles 126 547 47 570 78 977 60 066
Improvements to leasehold premises 6 662 2 800 3 862 3 841
573 964 228 301 345 663 328 675
Reconciliation of carrying value
Net book Net book value value 30 June Depreci- 30 June 2003 Additions Disposals ation 2004
R’000 R’000 R’000 R’000 R’000
Land and buildings 5 923 24 (4 362) — 1 585
Plant and equipment 197 890 105 920 (54 883) (48 213) 200 714
Office equipment 2 706 7 808 (141) (1 824) 8 549
Computer equipment 33 494 17 963 (715) (21 345) 29 397
Furniture and fittings 24 755 5 923 (2 368) (5 731) 22 579
Motor vehicles 60 066 49 877 (5 524) (25 442) 78 977
Improvements to leasehold premises 3 841 1 431 (349) (1 061) 3 862
328 675 188 946 (68 342) (103 616) 345 663
Analysis of additions
Replacement of assets 147 786
Expansion of businesses 41 160
188 946
Details of land and buildings are available for inspection by members or their nominees at the company’s registered
office.
Land and buildings are regarded as investment properties and are carried at fair value.
Certain of the group’s assets are encumbered by instalment sale agreements and capitalised finance leases as described
in note 17.
Notes to the financial statements (continued)
52
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Group Company
8. Development costs and long-term receivables
Net book value 6 687 13 327 — —
Reconciliation of net book value
Balance at the beginning of the year 13 327 8 627 — —
Additions 344 10 401 — —
Amortisation (442) — — —
Amounts realised (6 542) (5 701) — —
Balance at the end of the year 6 687 13 327 — —
The net book value includes an amount of
R5 333 000 (2003: R9 333 000) which is classified
as an originating loan in terms of AC133, is carried
at amortised cost and will be realised over
28-months.
9. Goodwill
Cost 330 880 286 938 — —
Accumulated amortisation (55 815) (38 824) — —
Net book value 275 065 248 114 — —
Reconciliation of net book value
Balance at the beginning of the year 248 114 254 540 — —
Acquisition of businesses and subsidiaries 43 942 7 921 — —
Amortisation (16 991) (14 347) — —
Balance at the end of the year 275 065 248 114 — —
10. Investments
10.1 Investments in subsidiaries
Shares at cost — — 100 179 96 064
Loans receivable — — 778 671 1 037 508
Loans payable — — (3 959) (188 448)
Goodwill and trademarks previously
written off — — (84 179) (84 179)
— — 790 712 860 945
Details of principal subsidiary companies are set out on page 64.
2004 2003 2004 2003
R’000 R’000 R’000 R’000
Notes to the financial statements (continued)
53
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Group Company
10. Investments (continued)
10.2 Investments in associates
(i) 32% shareholding in Fridge Foods Group (Proprietary) Limited
(ii) 49% shareholding in Telesafe (Proprietary) Limited
(iii) 49% shareholding in Cudah SARL (incorporated in Mozambique)
(iv) 48% shareholding in Experience Delivery Company (Proprietary) Limited
Shares at cost 123 123 122 122
Group’s share of post-acquisition reserves 3 531 3 409 — —
Loans 18 679 15 446 — —
22 333 18 978 122 122
Directors’ valuation of shares 3 654 3 532 — —
Fridge Foods Group carries on business as a multi-temperature distributor of food products.
Telesafe provides security services to Telkom SA Limited.
Cudah SARL provides contract catering services in Mozambique.
Experience Delivery Company provides facilities management services for the DTI campus in Tshwane/Pretoria.
Summarised financial information of associates
Property, plant and equipment 3 847 5 444
Deferred taxation 675 —
Current assets 45 998 40 974
Total assets 50 520 46 418
Shareholders’ funds 24 447 26 807
Non-current liabilities 2 261 3 213
Current liabilities 23 812 16 398
Total equity and liabilities 50 520 46 418
Revenue 199 074 153 458
Net profit before taxation 2 864 1 149
Income tax expense (1 037) (344)
Net profit attributable to ordinary shareholders 1 827 805
2004 2003 2004 2003
R’000 R’000 R’000 R’000
Notes to the financial statements (continued)
54
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Group Company
10. Investments (continued)
10.3 Other investments
20% shareholding in Rainprop (Proprietary) Limited at cost 2 800 — — —
Directors’ valuation 2 800 — — —
10.4 Financial assets
Originating loans
(i) Secured loans 4 377 27 258 250 13 452
The loans bear interest at varying rates linked to the prime overdraft rate and are repayable in equal monthly or annual instalments over periods ranging from 1 to 3 years. The loans are secured by notarial bonds over assets, negative pledges of assets, cessions of debtors and personal suretyships by the directors and shareholders, of the debtor companies.
(ii) Unsecured loans — 9 449 5 879 8 081
Unsecured loans bearing interest at rates linked to the prime overdraft rate.
4 377 36 707 6 129 21 533
Total investments at cost 29 510 55 685 796 963 882 600
11. Inventories
Raw materials 6 386 6 769 — —
Work in progress 7 933 8 915 — —
Consumables 14 701 18 290 — —
Merchandise and finished goods 23 145 28 716 — —
52 165 62 690 — —
12. Liquid funds
Bank balances 233 918 407 393 115 644 105 001
Term deposits 156 871 34 169 — —
Liquid investments 50 000 50 350 50 000 50 000
440 789 491 912 165 644 155 001
2004 2003 2004 2003
R’000 R’000 R’000 R’000
Notes to the financial statements (continued)
55
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Group Company
2004 2003 2004 2003
R’000 R’000 R’000 R’000
13. Share capital
Authorised
300 000 000 (2003: 300 000 000) ordinary shares of 0,1 cent each 300 300 300 300
Issued
193 729 661 (2003: 193 729 661) ordinary shares of 0,1 cent each 194 194 194 194
Less: 15 945 282 (2003: 17 520 210) ordinary shares of 0,1 cent each held by a subsidiary company (16) (18) — —
534 611 ordinary shares held by the Rebserve Share Incentive Scheme (1) — — —
177 176 194 194
There were no changes in the issued share capital during the year. The unissued shares are under the control of the directors until the next annual general meeting.
14. Non-distributable reserves
Comprising
Deferred tax assets 49 045 49 045 — —
15. Distributable reserves
Balance at the beginning of the year 735 597 652 228 851 822 854 733
Net profit attributable to ordinary shareholders 180 889 193 700 58 446 55 207
Dividends (26 668) (55 081) (29 059) (58 118)
Distribution to shareholders 5 750 — — —
Share incentive scheme – impairment of loan account (3 437) — (3 437) —
Share incentive scheme – shares held (4 063) — — —
Treasury shares transferred to vendors 11 117 — — —
Share buybacks — (55 250) — —
Balance at the end of the year 899 185 735 597 877 772 851 822
Comprising
Accumulated profits 899 185 735 597 877 772 851 822
16. Amounts due to vendors
Amounts due to vendors in terms of existing acquisition agreements 31 905 62 467 31 905 62 467
The amounts are expected to be settled in cash or to be converted into fully paid ordinary shares of 0,1 cent each at varying prices, as specified in the relevant historic acquisition agreements.
Notes to the financial statements (continued)
56
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2004 2003 2004 2003
R’000 R’000 R’000 R’000
Group Company
17. Interest-bearing borrowings
Secured
Capitalised finance leases and instalment sale creditors 30 162 37 814 — —
Total amount owing 95 873 99 468 — —
Current portion included in current liabilities (65 711) (61 654) — —
Secured by property, plant and equipment with a net book value of R181 821 000 (2003: R168 483 000). The liabilities bear interest at rates linked to the prime overdraft rate, ranging between 9,5% per annum and 15,0% per annum at 30 June 2004, and are repayable in monthly instalments of R6 802 000 (2003: R4 573 000).
Unsecured
Bank loans — 69 934 — —
Total amount owing 108 125 171 125 — —
Collateralised deposits (107 526) (100 000) — —
Current portion included in current liabilities (599) (1 191) — —
The loans bear interest at variable rates linked to the JIBAR rate. The actual interest rate on 30 June 2004 was 10,01% per annum. Interest is payable quarterly. Capital is repayable on or before 15 December 2005.
Bank loan 39 162 52 456 — —
Total amount owing 42 002 55 483 — —
Current portion included in current liabilities (2 840) (3 027) — —
The loan bears interest at variable rates linked to the JIBAR rate. The actual interest rate on 30 June 2004 was 10,36% per annum. Interest is payable quarterly. Capital is repayable on or before 1 May 2007.
Other loans 8 7 — —
The loans are unsecured, bear interest at varying rates and have no fixed repayment terms.
Non-current interest-bearing borrowings 69 332 160 211 — —
Notes to the financial statements (continued)
57
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Group Company
2004 2003 2004 2003
R’000 R’000 R’000 R’000
17. Interest-bearing borrowings (continued)
Reconciliation of total interest-bearing borrowings:
Non-current interest-bearing borrowings 69 332 160 211 — — Current portion of interest-bearing borrowings 69 150 65 872 — — Other short-term interest-bearing borrowings 4 340 — — — Bank overdrafts — 114 — —
Total interest-bearing borrowings 142 822 226 197 — —
18. Non-interest-bearing borrowings
Vendor loan 3 395 — — —
Total amount owing 4 365 — — — Current portion included in current liabilities (970) — — —
The loan is unsecured, interest-free and is repayable in quarterly instalments of R242 000 each.
19. Deferred taxation
Balance at the beginning of the year (37 552) (39 779) — —
Wear and tear 12 413 7 118 — — Doubtful debts (1 210) 88 — — Prepayments 768 545 — — Special taxation allowances (20 437) (23 420) — — Other (29 086) (24 110) — —
Charged to income 5 945 2 227 — —
Wear and tear 3 384 5 295 — — Doubtful debts (81) (1 298) — — Prepayments 3 698 223 — — Special taxation allowances 4 272 2 983 — — Other (5 328) (4 976) — —
Balance at the end of the year (31 607) (37 552) —
Wear and tear 15 797 12 413 — — Doubtful debts (1 291) (1 210) — — Prepayments 4 466 768 — — Special taxation allowances (16 165) (20 437) — — Other (34 414) (29 086) — —
Comprising Deferred taxation assets (44 177) (45 795) — — Deferred taxation liabilities 12 570 8 243 — —
(31 607) (37 552) — —
Deferred taxation assets and liabilities are calculated at the rates of taxation at the balance sheet date.
Notes to the financial statements (continued)
58
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Group Company
20. Provisions
Balance at the beginning of the year 22 650 39 780 — —
Amounts utilised during the year (4 871) (19 912) — —
New provisions raised during the year 1 010 2 782 — —
Balance at the end of the year 18 789 22 650 — —
Comprising Closure costs – wholesale operations 5 513 8 940 — —
Post-retirement medical aid benefits 13 276 13 710 — —
18 789 22 650 — —
Closure costs – wholesale operations
During the year ended June 2001 it was resolved to close down or sell the remaining Browns and Weirs stores, head office and regional offices. Full provision was made for the anticipated closure costs. The amount of the provision is based on the directors’ original estimate of the anticipated actual costs to be incurred during the closure period in terms of existing contracts to which the group is party, including the retrenchment of employees and termination of lease obligations, less amounts actually paid out to date. The closure of the stores and winding down of the head office are already complete. Certain assets are still in the process of being realised, as are certain liabilities still to be settled.
Post-retirement medical aid benefits
Contributions are made to the medical aid of retired employees for a small number of former employees of Browns Cash and Carry (Proprietary) Limited. The present value of the potential post-retirement medical aid liability in respect of former employees has been estimated at R13 276 000 at 30 June 2004 (R13 710 000 at 30 June 2003).
Group Company
2004 2003 2004 2003
R’000 R’000 R’000 R’000
21. Cash received from customers
Revenue 3 487 126 3 189 576 — —
Movement in trade and other receivables (39 887) (64 225) — —
3 447 239 3 125 351 — —
22. Cash paid to suppliers and employees
Revenue 3 487 126 3 189 576 — —
Profit from operations (270 523) (276 394) — —
3 216 603 2 913 182 — —
Depreciation and amortisation (104 058) (87 858) — —
Net profit/(loss) on disposal of property, plant and equipment 636 (737) — —
Movement in inventories (10 525) 10 519 — —
Movement in trade and other payables (11 955) 1 882 — —
3 090 701 2 836 988 — —
2004 2003 2004 2003
R’000 R’000 R’000 R’000
Notes to the financial statements (continued)
59
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Group Company
2004 2003 2004 2003
R’000 R’000 R’000 R’000
23. Cash generated/(utilised) from/(in) operations
Profit from operations 270 523 276 394 11 237 3 975 Depreciation and amortisation 104 058 87 858 — — Net (profit)/loss on disposal of property, plant
and equipment (636) 737 — — Working capital changes (17 407) (76 626) (1 277) (4 096)
356 538 288 363 9 960 (121)
24. Working capital changes
Inventories 10 525 (10 519) — — Trade and other receivables (39 887) (64 225) 1 976 (5 282) Trade and other payables 11 955 (1 882) (3 253) 1 186
(17 407) (76 626) (1 277) (4 096)
25. Taxation paid
Unpaid at the beginning of the year and on acquisition of subsidiaries and businesses 2 093 22 219 1 300 9 627
Charged in the income statement 61 134 64 371 3 871 7 023 Unpaid at the end of the year (20 586) (2 421) — (1 300)
42 641 84 169 5 171 15 350
26. Acquisition/(disposal) of subsidiaries and businesses as going concerns
Property, plant and equipment (4 059) 5 350 — — Financial assets (9 316) — — — Trade and other receivables 1 139 — — — Current liabilities (2 501) — — — Net cash and short-term funds (486) — — — Non-cash portion of working capital — 38 — — Taxation 328 (1) — —
Net assets (disposed)/acquired (14 895) 5 387 — — Distributable reserves/share capital 7 501 — — — Minority interest 13 746 — — — Goodwill 43 942 7 921 — —
Net purchase consideration 50 294 13 308 — —
Satisfied by: Cash 44 874 7 247 — — Non-interest bearing borrowings 5 420 6 061 — —
50 294 13 308 — —
Businesses acquired during the year relate mainly to the acquisition of businesses and contracts in the security services businesses, the acquisition of a further 13,25% effective interest in Total Facilities Management Company (Proprietary) Limited and the consolidation of the Rebserve Share Incentive Scheme. Subsidiaries disposed of include certain property owning subsidiaries of Browns Cash and Carry (Proprietary) Limited.
Notes to the financial statements (continued)
60
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27. Change in accounting policy
As a result of a recent ruling by the JSE Securities Exchange South Africa, the group has consolidated the Rebserve Share
Incentive Scheme as if it were a subsidiary. The loan to the Scheme has been eliminated on consolidation and the shares
held by the Scheme have been shown as treasury shares at 30 June 2004.
Comparative amounts have not been restated as the effect on the prior year results is not material.
The following adjustments have been made in the statement of changes in equity in the current financial year.
R’000
Share Incentive Scheme loan impaired (3 437)
Rebserve shares held by the Scheme at 30 June 2004 shown as treasury shares (4 064)
Total amount charged against distributable reserves/share capital (7 501)
28. Related party transactions
Related party relationships exist with the associated companies recorded in note 10. All purchase and sales transactions
are concluded at arm’s lengh. The value of transactions concluded during the year is not material to the group.
Various property leases have been entered into with related parties. The leases were transacted on an arm’s length basis
at market related rates at the time of the transactions.
Mr Stein, a non-executive director of Rebserve Holdings Limited, is the chairman of Werksmans Inc. who are Rebserve’s
attorneys. All fees paid to Werksmans are determined on an arm’s length basis. The total of all fees paid to Werksmans
Inc. during the year ended 30 June 2004 amounted to R1 079 000 (2003: R1 767 000).
Group Company
2004 2003 2004 2003
R’000 R’000 R’000 R’000
29. Capital commitments
Capital expenditure
Commitments in respect of capital
expenditure approved by the directors
Contracted for 5 018 8 846 — —
Not contracted for 5 000 9 919 — —
10 018 18 765 — —
The above commitments are to be financed from
liquid funds.
Operating leases
The minimum commitments are:
Land and buildings 59 250 48 992 — —
Equipment 13 541 19 303 — —
Motor vehicles 17 513 23 329 — —
90 304 91 624 — —
Notes to the financial statements (continued)
61
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Group Company
2004 2003 2004 2003
R’000 R’000 R’000 R’000
29. Capital commitments (continued)
Operating leases (continued)
Due in year one 27 739 26 073 — —
Due in year two 26 255 21 351 — —
Due in year three 20 411 16 208 — —
Due in year four 11 023 14 805 — —
Thereafter 4 876 13 187 — —
90 304 91 624 — —
Material lease commitments relate mainly to immovable property, vehicles and equipment. Specific details and terms of the leases vary between different contracts. Renewal options, where these exist, are for between 1 and 5 years.
Rentals on certain leases escalate annually. The majority of rentals under property lease renewal options are determined with reference to market rentals at the time of renewal. There are no contingent rental payments.
30. Contingent liabilities
Bank facilities
Bank facilities of certain subsidiaries are secured by a negative pledge over certain assets and a cession of book debts of R87 539 000 (2003: R116 782 000).
Bank facilities of certain subsidiary companies and interest-bearing liabilities of R190 127 000 (2003: R266 608 000) incurred by certain subsidiary companies have been guaranteed by Rebserve Holdings Limited.
Group Company
2004 2003 2004 2003
R’000 R’000 R’000 R’000
Other guarantees
Bank guarantees to clients 12 355 8 374 — —
Bank guarantees to suppliers 15 000 6 093 — —
Secondary tax on companies
In the event that the company were to declare a dividend equal to its distributable reserves, it would be liable for secondary tax on companies amounting to R95 975 000 (2003: R94 646 000).
Outstanding litigation
Coin Security Group (Proprietary) Limited is currently involved in a dispute over whether the terms and conditions of employment for its employees in its assets-in-transit division should be based on the terms and conditions of employment for employees in the transportation sector or employees in the security sector. The case has been heard in the CCMA and it was ruled that the employees fall within the transportation sector and should be paid in accordance with the minimum rates applicable in this sector. A review application has been lodged in this regard with the Labour Court.
Protea Aviation (Proprietary) Limited has been named as second defendant with KLM Royal Dutch Airlines (as first defendant) in a claim relating to the alleged theft of approximately US$9,65 million in foreign currency and valuable cargo during an alleged robbery which took place at Johannesburg International Airport in December 2001. Investigations carried out to date indicate that the group is not likely to incur any liability in respect of this case. Legal opinion obtained by the group confirms the above.
Notes to the financial statements (continued)
62
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Group Company
2004 2003 2004 2003
31. Uncovered foreign liabilities
Foreign currency amounts (’000)
US dollars 107 95 — —
Sterling 15 19 — —
Euros — 63 — —
Japenese Yen — 505 — —
Other (Rand equivalent) (R’000) 434 17 — —
32. Financial instruments
Business and credit concentration
Financial instruments which potentially subject the group to concentrations of credit risk are primarily cash, liquid investments,
financial assets, long-term investments and trade receivables. As regards cash and liquid investments the group deals with
major financial institutions in South Africa. Other long-term investments are secured where considered appropriate or necessary.
The group’s customers are concentrated almost entirely in South Africa. The group establishes an allowance for doubtful
accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
Foreign currency risk
The group conducts certain transactions in various foreign currencies. As a result, it is subject to the transactional exposure
that arises from foreign exchange rate movements between the dates that foreign currency transactions are recorded
(foreign sales and purchases) and the dates upon which they are consummated (cash receipts and cash disbursements in
foreign currencies). Where considered appropriate, the group hedges its foreign currency exposure for either purchase or
sale transactions using forward exchange contracts or other similar products. In other instances the risk arising from foreign
exchange rate movements is priced into the cost of goods or services and recovered directly from customers.
Interest rate risk
The group is exposed to interest rate risk through its cash, liquid investments, financial assets, long-term investments and
interest-bearing borrowings. Interest rate exposure is monitored and managed by corporate treasury. In certain
circumstances the group hedges its current interest exposure using interest rate swaps.
Notes to the financial statements (continued)
63
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
32. Financial instruments (continued)
The exposure to interest rate risk at the balance sheet date is:
Floating Non- interest interest rate bearing R’000 R’000
Assets
Bank balances 233 918 —
Term deposits 156 871 —
Collateralised deposits 107 526 —
Liquid investments 50 000 —
Other investments 4 377 —
552 692 —
Liabilities
Capitalised finance leases and instalment sale creditors 95 873 —
Bank loans 150 127 —
Other loans 4 348 4 365
250 348 4 365
33. Retirement benefits
Approximately 90% (2003: 75%) of the group’s employees are members of various pension and provident funds.
These funds include the Rebserve Provident Fund, a defined contribution fund which is governed by the Pension Funds
Act No. 24 of 1956, various independently administered defined contribution funds of the operating companies, and
defined contribution funds for the industries in which group employees work.
The group’s contributions to all retirement funds are charged against income when incurred. The group contributed
R59 419 000 (2003: R43 521 000) to defined contribution plans during the year.
Notes to the financial statements (continued)
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Nature of Issued Shares Details of principal subsidiary companies business capital at cost Loans at 30 June 2004 (Refer note) R’000 R’000 R’000
Services DivisionDirectly heldRebserve Limited 1 # 100 179 481 462
Indirectly heldAtreb (Proprietary) Limited 9 # — —Coin Security Group (Proprietary) Limited 6 # — —Contract Forwarding (Proprietary) Limited 3 61 — —JIC Mining Services (2000) (Proprietary) Limited 9 # — —King Pie Holdings (Proprietary) Limited 5 # — 1 500Protea Security Services (2000) (Proprietary) Limited 6 # — —Rebhold Distribution Services (Proprietary) Limited 7 # — 30 976Rebhold Freight Services (2000) (Proprietary) Limited 3 # — (1 381)Rebserve Facilities Management (Proprietary) Limited 9 # — —Rebserve Management Services (Proprietary) Limited 10 # — —Rebserve Cleaning Services (Proprietary) Limited 8 # — —Royal Food Services (Proprietary) Limited 4 1 — —Total Facilities Management Company (Proprietary) Limited 9 # — —Trans Global Freight (Proprietary) Limited 3 # — —Trollope Mining Services (2000) (Proprietary) Limited 9 # — — Wholesale DivisionDirectly heldBrowns Cash and Carry (Proprietary) Limited 2 # — (2 578) OtherDirectly heldJenbrooke Investments (Proprietary) Limited 11 # — 1 808Lexshell 172 Property Holdings (Proprietary) Limited 11 # — —Lexshell 175 Property Holdings (Proprietary) Limited 11 # — 1 095Rebhold Management Services (Proprietary) Limited 10 # — 261 830
100 179 774 712
The above details are given in respect of interests in subsidiaries, where material. A full list of subsidiaries is available to shareholders, on request, at the registered office of the company. All principal subsidiaries are incorporated in South Africa and wholly-owned, except for Atreb (Proprietary) Limited in which the group has an effective 70,6% interest, Total Facilities Management Company (Proprietary) Limited in which the group has an effective 75% interest, and Browns Cash and Carry (Proprietary) Limited in which the group has an effective 70% interest.
Note:
1 Intermediate holding company 2 Wholesaling and distribution of consumer goods 3 Freight forwarding services 4 Contract catering services 5 Franchising 6 Security services 7 Distribution services 8 Cleaning services 9 Facilities management, professional and technical services10 Management services11 Property investment # Less than R1 000
Principal subsidiaries
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Analysis of shareholders
at 30 June 2004
Number of % of Number of % of Size of holdings shareholders total shares total
1 – 1 000 884 48,8 246 669 0,1
1 001 – 10 000 588 32,5 2 058 818 1,1
10 001 – 100 000 185 10,2 7 332 606 3,8
100 001 – 1 000 000 114 6,3 40 712 801 21,0
Over 1 000 000 shares 40 2,2 143 378 767 74,0
1 811 100,0 193 729 661 100,0
Analysis of holdings
Insurance companies, pension funds,
corporate bodies and nominee companies 552 30,5 182 006 359 93,9
Individuals 1 259 69,5 11 723 302 6,1
1 811 100,0 193 729 661 100,0
Beneficial shareholders holding more Number % of issued than 5% of share capital of shares share capital
Coolbay Investments (Proprietary) Limited 28 331 646 14,6
Old Mutual Life Assurance Company 16 987 765 8,8
Rebhold Management Services (Proprietary) Limited 15 945 282 8,2
Number of Number % of issued Public and non-public shareholders shareholders of shares share capital
Public shareholders 1 742 141 674 942 73,1
Non-public shareholders
Directors 5 4 704 160 2,4
Rebserve Share Incentive Scheme 1 534 611 0,3
Employees 61 2 539 020 1,3
Other 2 44 276 928 22,9
1 811 193 729 661 100,0
▲
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Notice to members
Notice is hereby given that the ninth annual general meeting of members of Rebserve Holdings Limited (“Rebserve” or
“the company”) will be held in the boardroom, Rebserve House, Hunts End, 36 Wierda Road West, Wierda Valley, Sandton at
11:00 on Friday, 21 January 2005 to conduct the following business:
1. To receive and consider the annual financial statements for the year ended 30 June 2004.
2. To approve the remuneration of the directors for the year ended 30 June 2004.
3. Re-election of directors who retire in accordance with the provisions of the company’s articles of association.
In terms of clause 53.2 of the articles of association, Mr Till retires at the forthcoming annual general meeting, but, being
eligible, offers himself for re-election.
� Brett Till (BCom, BAcc (Wits), CA(SA))
After qualifying as a chartered accountant in 1993 he spent 18 months working in London and became a partner of
Fisher Hoffman PKF in 1996. He joined Rebserve in 1998 and was appointed Financial Director in 1999.
4. Subject to the merger with Mvelaphanda Holdings (Proprietary) Limited being implemented prior to the date of the annual
general meeting, Messrs Hopkins, Mabandla, Moshapalo, Mphafudi, Sexwale, Willcox, Xayiya, Ms Cuba and Ms Nxumalo
will be appointed directors of the company. In terms of clause 53.3 of the articles of association, these directors retire at
the forthcoming annual general meeting, but being eligible, offer themselves for re-election:
� Bryan Hopkins (BCom (Hons), CA(SA))
He is currently a director of Abvest Associates (Proprietary) Limited. He was previously Chief Investment Officer and
an executive director of Old Mutual Asset Management and prior to that, a professor of accounting at the University of
Cape Town.
� Yolanda Cuba (CA(SA), BCom (Statistics) (UCT), BCom Hons (Accounting) (University of Natal (Durban)))
She is currently Deputy Chief Executive Officer of Mvelaphanda Holdings having joined Mvelaphanda Holdings’
corporate finance division in January 2003 to facilitate the sourcing, valuation and execution of transactions within the
Mvelaphanda Holdings Group. She has worked in a wide range of companies and firms including Robertsons Foods,
Fisher Hoffman PKF and Metropolitan Life, and has also been involved in a number of development companies where
she gives assistance and advice on financial modelling and strategic investment.
� Oyama Mabandla (BA (University of California), Juris Doctor (University of Columbia))
He previously held a number of senior positions with South African Airways including Executive Vice-President:
strategy, revenue and network planning, and general counsel. Prior to joining South African Airways, he held various
positions within the legal and investment banking professions.
� David Moshapalo
He is currently Chairman of Gobodo Inc. and a board member of the Black Business Council. His previous positions
include having been a member of Nedlac Council, an executive member of Business South Africa, President of the
South Africa Entrepreneurship and Small Business Association, Vice Chairperson of the Gauteng Tender Board and an
alternate director of MTN Group Limited.
� Jackie Mphafudi (MB, ChB)
Prior to joining Mvelaphanda Holdings he held a number of senior positions in the private sector. He is Chairman of
Mvelaphanda Strategic Investments, and a director of certain investments of Mvelaphanda Holdings.
� Mpumi Nxumalo (BA (University of Coventry), Post-Graduate Degree Town Planning (University of Coventry))
She has been Director General in the Department of Housing since 1997. She has also held a number of other senior
positions including having been a member of the Gauteng Development Tribunal, a board member of the National
Housing Finance Corporation and a board member of the South African Housing Trust.
� Tokyo Sexwale (Cert Bus Studies (University of Botswana, Lesotho, Swaziland))
He has held various senior positions in the African National Congress and was elected as the First Premier of Gauteng
Province in 1994. He left public political office in 1998 for the corporate sector and established Mvelaphanda Holdings
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Notice to members (continued)
in late 1998, where he serves as Executive Chairman. He also serves on the boards of, inter alia, GFI-SA Mining South
Africa, Gold Fields Limited, Absa Bank Limited and Allied Electronics Corporation Limited. He is also chairman of Trans
Hex, Northam Platinum and Mvelaphanda Resources.
� Mark Willcox (BA, LLB, Post Grad Dip (Tax) (UCT))
Upon completing his studies he worked for an investment bank based in the USA. During this period he was exposed to
various significant mining and property transactions in the United States of America, the Far East and Africa. He was one of
the founding members of Mvelaphanda Holdings. He has served as Chief Executive Officer of Mvelaphanda Holdings since
its inception and currently serves on the boards of, inter alia, Trans Hex, Northam Platinum and Mvelaphanda Resources.
� Mikki Xayiya (BA (University of South Africa), Cert of Defence Management (Wits), Emerging Market Leadership
Programme (University of Pennsylvania))
He has served in various capacities in the African National Congress since 1977. In 1995, he was appointed as a Policy
Adviser – Office of the Premier, Gauteng Provincial Government. He left public office and joined Mawenzi Asset Managers
as the Managing Director. In 1988, he co-founded Mvelaphanda Holdings and is currently the Executive Deputy Chairman
of Mvelaphanda Holdings. He also serves on a number of boards within the Mvelaphanda Holdings Group.
5. To consider and, if deemed fit, to pass, with or without modification, the following ordinary resolution:
Ordinary resolution number 1
“Resolved that, the authorised but unissued shares in the share capital of the Company be placed under the control of the
directors of the company in terms of sections 221 and 222 of the Companies Act, 1873 (Act no 61 of 1973) (“Companies
Act”), until the next annual general meeting, to enable them to allot and issue such shares at their discretion, subject to
the provisions of the Companies Act, and the Listings Requirements of the JSE Securities Exchange South Africa (“JSE
Listings Requirements”), provided that the maximum number of shares which can be issued in terms of this authority in
the aggregate in any one year shall not exceed 10% of the issued share capital of the company, from time to time.”
6. To consider and, if deemed fit, to pass, with or without modification, the following ordinary resolution:
Ordinary resolution number 2
“Resolved that, 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 shares in the capital of the company for cash, as and when they in their discretion
deem fit, subject to the JSE Listings Requirements, which currently provide, inter alia that:
– this authority shall be valid until the next annual general meeting of the company, provided it shall not extend beyond
15 months from the date that this authority is given;
– a paid press announcement giving full details, including the impact on net asset value and earnings per share, will be
published at the time of any issue of shares representing, on a cumulative basis within one year, 5% or more of the
number of the company’s shares in issue prior to any such issue;
– issues in the aggregate in any one year shall not exceed 15% of the number of shares in the company’s issued share
capital from time to time;
– in determining the price at which an issue of shares may be made in terms of this authority, the maximum discount
permitted will be 10% of the weighted average traded price determined over the 30 business days prior to the date that
the price of the issue is determined or agreed by the directors; and
– any such issue will only be made to the public shareholders as defined by the JSE Securities Exchange South Africa;
provided that the maximum number of shares which can be issued in terms of this authority in the aggregate in any one
year shall not exceed 10% of the issued share capital of the company, from time to time.”
The approval of a 75% majority of the votes cast by shareholders present or represented by proxy at this annual general
meeting is required for the authority in 6 above to become effective.
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Notice to members (continued)
7. To consider and, if deemed fit, to pass, with or without modification, the following special resolution:
Special resolution number 1
“Resolved that, the directors of Rebserve be and are hereby authorised, by way of a general approval pursuant, inter alia, to
articles 13A and 13B of Rebserve’s articles of association to facilitate, inter alia, the acquisition by Rebserve, or a subsidiary
of Rebserve (collectively “the group”), from time to time of the issued shares of Rebserve upon such terms and conditions and
in such numbers as the directors of Rebserve may from time to time decide, but subject to the provisions of the Companies
Act, No 61 of 1973 (“the Companies Act”), as amended, and the Listings Requirements of the JSE Securities Exchange South
Africa (“Listings Requirements”) from time to time, which general approval shall endure until the next annual general meeting of
Rebserve; provided that it shall not extend beyond 15 months from the date of the annual general meeting at which this special
resolution is passed, it being recorded that the Listings Requirements currently require, inter alia, in relation to a general approval
of shareholders that:
1. acquisitions of securities be implemented through the order book operated by the JSE Securities Exchange South Africa
trading system and done without any prior understanding or arrangement between Rebserve and the counterparty;
2. acquisitions in any one financial year are limited to a maximum of 20% of Rebserve’s issued share capital of the
relevant class; provided that acquisitions by subsidiaries of Rebserve are limited to a maximum of 10% of Rebserve’s
issued share capital of the relevant class;
3. an acquisition may not be made at a price more than 10% above the weighted average of the market value for the
shares in question for the five business days immediately preceding the date on which the acquisition is agreed;
4. a paid press announcement containing details of such acquisitions must be published as soon as Rebserve and/or
any of its subsidiaries has/have acquired shares constituting, on a cumulative basis, 3% of the number of shares of
the relevant class in issue at the date of the annual general meeting at which this special resolution is passed (“initial
number”) and for each 3% in aggregate of the initial number acquired thereafter;
5. at any point in time, the company may only appoint one agent to effect any repurchases;
6. such repurchases may only be effected if, thereafter, the company still complies with the spread requirements of the
JSE Securities Exchange South Africa; and
7. no repurchase may take place during prohibited periods stipulated by the Listings Requirements.”
The reason for this special resolution is to obtain, and the effect thereof is to grant the company, a general approval in terms of
the Companies Act for the acquisition by the company, or a subsidiary of the company, of shares in the capital of the company,
which general approval shall be valid until the next annual general meeting of the company; provided that the general authority
shall not extend beyond 15 months from the date of the annual general meeting at which this special resolution is passed.
The board of directors (“board”) of Rebserve, as at the date of this notice, has stated its intention to purchase Rebserve
shares in terms of the general authority granted at the annual general meeting held on 16 January 2004. It is, however,
proposed, and the board believes it to be in the best interests of Rebserve, that shareholders pass a special resolution
granting Rebserve and its subsidiaries a further general authority to acquire Rebserve shares. Such general authority will
provide Rebserve and its subsidiaries with the flexibility, subject to the requirements of the Companies Act and the JSE
Securities Exchange South Africa, to purchase shares should it be in the interests of Rebserve and/or its subsidiaries at
any time while the general authority subsists.
After considering the effect of a purchase of the maximum number of shares which may be purchased, and subject to any
significant changes in market conditions, the board is satisfied that for a period of 12 months from the date of this notice:
� the company and the group will be able, in the ordinary course of business, to pay their debts as they become due;
� the assets of the company and the group, measured in accordance with the accounting policies used in the latest
audited annual financial statements, will be in excess of its consolidated liabilities;
� the issued share capital and reserves of the company and the group are adequate for their ordinary business purposes; and
� the working capital of the company and the group will be adequate for current and foreseeable future business requirements.
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For the purposes of considering special resolution number 1 and in compliance with Rule 11.26(b) of the Listings
Requirements, the information listed below has been included in the annual report, in which this notice of general meeting
is included, at the pages indicated:
� Directors and management (pages 6 – 7)
� Major shareholders (page 65)
� Material changes (page 34)
� Directors’ interests in securities (page 35)
� Share capital of the company (page 55) and
� Litigation statement (page 61)
No acquisitions shall be effected in terms of special resolution number 1 unless the sponsor of Rebserve provides a letter to
the JSE Securities Exchange South Africa on the adequacy of Rebserve’s working capital in terms of the Listings Requirements.
The directors whose names appear on pages 6 and 7 of the annual report, collectively and individually accept full
responsibility for the accuracy of the information contained in this special resolution and clarify that, to the best of their
knowledge and belief, there are no facts that have been omitted which will make any statement false or misleading, and
that all reasonable enquiries to ascertain such facts have been made and that the information referred to in this special
resolution number 1 contains all the information required by law and the JSE Listings Requirements.
8. To consider and, if deemed fit, to pass, with or without modification, the following ordinary resolution:
Ordinary resolution number 3
“Resolved that any director of Rebserve be and is hereby authorised to do all such things, sign all such documents
and take all such actions as are necessary to give effect to the special and ordinary resolutions proposed at the annual
general meeting at which this ordinary resolution is proposed, if it/they is/are passed (in the case of ordinary and special
resolutions) and registered by the Registrar of Companies (in the case of special resolutions).”
9. To transact such other business as may be transacted at an annual general meeting of members.
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 may, in terms of section 189 of the Companies Act of 1973, as amended,
appoint a proxy or proxies, to attend the meeting, speak, and on a polll, vote in their stead.
A proxy need not be a member of the company. A proxy form is enclosed but is also obtainable from the company secretarial
services department, Rebhold Management Services (Proprietary) Limited, at the address set out on the following page.
Proxies must be received by Computershare Investor Services 2004 (Pty) Limited by no later than 11:00 on 20 January 2005.
Members who have dematerialised their shares, other than those members who have dematerialised their shares with ‘own
name’ registration, should contact their Central Securities Depository Participant (CSDP) or broker in the manner and time
stipulated in the relevent agreement:
– to furnish them with voting instructions; and
– in the event that they wish to attend the meeting, to obtain the necessary authority to do so.
By order of the board
Rebhold Management Services (Proprietary) Limited
Secretary
10 December 2004
Notice to members (continued)
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Administration
Registered office
Rebserve House
Hunts End, 36 Wierda Road West
Wierda Valley
Sandton 2196
PO Box 1639, Rivonia 2128
Company registration number
1995/004153/06
Share code
RBV
ISIN code
ZAE 000034484
Website
www.rebserve.co.za
Company secretary
Rebhold Management Services (Proprietary) Limited
Hunts End, 36 Wierda Road West
Wierda Valley
Sandton 2196
PO Box 1639, Rivonia 2128
Auditors
Fisher Hoffman PKF (Jhb) Inc
Attorneys
Werksmans Inc
Transfer secretaries
Computershare Investor Services 2004
(Proprietary) Limited
70 Marshall Street
Johannesburg 2001
PO Box 61051, Marshalltown 2107
Sponsor
Deutsche Securities SA (Proprietary) Limited
3 Exchange Square
87 Maude Street
Sandton 2196
Private Bag X9933, Sandton 2146
Bankers
� The Standard Bank of South Africa Limited
� Nedbank, a division of Nedcor Bank Limited
� First National Bank, a division of First Rand
Bank Limited
Shareholders’ diary
� Annual general meeting 21 January 2005
� Interim results announcement February 2005
� Audited final results and dividend
announcement August 2005
� Annual dividend paid October 2005
BASTION GRAPHICS
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
FORM OF PROXYfor the 9th annual general meeting
I/We
(NAME(S) IN BLOCK LETTERS)
of (address)
being a member/members of Rebserve and entitled to votes
do hereby appoint or failing him/her
or failing him/her
the chairman of the annual general meeting as my/our proxy to act for me/us at the annual general meeting of the company to be held at 11:00 on Friday, 21 January 2005, and at any adjournment thereof, in the boardroom at Rebserve House, Hunts End, 36 Wierda Road West, Wierda Valley, Sandton and to vote for me/us on my/our behalf in respect of the undermentioned resolutions in accordance with the following instructions (see note 2).
Number of votes (one vote per share)
For Against Abstain
1. Adoption of annual financial statements
2. Approval of directors’ remuneration
3. Election of directors B C Till
4. Election of directors Y Z Cuba
B Hopkins
O Mabandla
D Moshapalo
J Mphafudi
M Nxumalo
T G Sexwale
M J Willcox
M Xayiya
5. Place unissued shares under directors’ control
6. Authorise directors to issue shares for cash
7. Authorise Rebserve and its subsidiaries to acquire shares
8. Authorise directors to give effect to resolutions
Signed at on 2004/2005
Signature Assisted by me
(where applicable – see note 7)
Please read the notes overleaf
For use by certificated shareholders and own name dematerialised shareholders
(Incorporated in the Republic of South Africa)(Registration number 1995/004153/06)
JSE Code: RBVISIN Number: ZAE000034484(“Rebserve” or “the company”)
R E B S E R V E H O L D I N G S L I M I T E D A N N U A L R E P O R T 2 0 0 4
NOTES
Shareholders holding certificated shares or dematerialised shares registered in their own name
1. Only shareholders who hold certificated shares and members who have dematerialised their shares with “own name”
registrations may use this form of proxy.
2. Each shareholder is entitled to appoint one or more proxies (none of whom need be a member of the company) to attend,
speak and, on a poll, vote in place of that member at this general meeting, by inserting the name of the proxy or the names
of two alternate proxies of the member’s choice in the space provided, with or without deleting “the Chairman of the general
meeting”. The person whose name stands first on the form of proxy and who is present at this meeting will be entitled to
act as the proxy to the exclusion of those whose names follow.
3. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by
that shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the
Chairman of the meeting, if he is the authorised proxy, to vote in favour of the resolutions at this general meeting, or any
other proxy to vote or to abstain from voting at this general meeting, as he deems fit, in respect of all the shareholder’s
votes exercisable thereat.
4. A shareholder or his proxy is not obliged to vote in respect of all the shares held or represented by him, but the total
number of votes for or against the resolutions in respect of which any abstention is recorded may not exceed the total
number of votes to which the shareholder or his proxy is entitled.
5. Forms of proxy must be lodged and/or posted to the company’s transfer secretaries (Computershare Investor Services
2004 (Proprietary) Limited) at 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107) to be received
by the transfer secretaries by no later than 11:00 on 20 January 2005.
6. The completion and return of this form of proxy in accordance with 5 above will not preclude the relevant member from
attending this general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms
hereof, should such shareholder wish to do so.
7. A minor must be assisted by the minor’s parent or guardian, unless the relevant documents establishing the minor’s
capacity are produced or have been registered by the company.
8. Any alterations or corrections to this form of proxy must be initialled by the signatory(ies).
9. This form of proxy must be signed by all joint shareholders. If more than one of those shareholders is present
at this general meeting either in person or by proxy, the person whose name stands first in the register shall alone be
entitled to vote.
10. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must
be attached to this form of proxy unless previously recorded by the company’s transfer office or waived by the Chairman
of this general meeting.
11. The Chairman of this general meeting may reject or accept any form of proxy which is completed and/or received
other than in accordance with these instructions, provided that he is satisfied as to the manner in which a member
wishes to vote.
Shareholders holding dematerialised shares
1. Shareholders who have dematerialised their shares through a Central Securities Depository Participant (CSDP) or broker
(except those members who have elected to dematerialise their shares in “own name” registrations) and all beneficial
members holding their shares (dematerialised or certificated) through a nominee should provide such CSDP, broker or
nominee with their voting instructions in sufficient time to allow them to advise the transfer secretaries of the company of
their voting instructions before the closing time referred to in paragraph 5 above.
2. All such shareholders wishing to attend the meeting in person may do so only by requesting their CSDP, broker or nominee
to issue the shareholder with a letter of representation in terms of the custody agreement. Such letter of representation
must be lodged with the transfer secretaries before the closing time referred to in paragraph 5 above.