Chairman's Statement

I have pleasure in submitting my first report to shareholders as chairman of KAP International.

The listing of many of the companies that now comprise this group follows some 14 years of investment in South Africa.

In fact the name KAP came from the German translation of Cape of Good Hope - 'Kap der Guten Hoffnung'. Kap Beteiligungs AG, in English Cape Investments, is now listed on the Frankfurt bourse and initially housed some of the South African investments which have borne fruit and have been integrated into KAP International.

I am very positive about the investment climate and opportunities in South Africa. The government must be given credit for its efforts to build a nation and the current growth rates in Gross Domestic Product have been founded on a firm platform of sound economic planning.

KAP International contains a diverse portfolio of businesses that have been carefully chosen and are well balanced. They are effectively run and positioned to offer acceptable improvements in profitability. An excellent executive team is supported by depth of management and committed employees at all operating entities. KAP International is thus well placed to take advantage of growth opportunities that become available and to deliver strong growth in returns to shareholders.

I thank all employees for their enthusiasm, hard work and loyalty in striving to achieve our goals. I welcome our new colleagues onto the reconstructed KAP board and look forward to working with them in growing our business through fostering an entrepreneurial spirit, in a manner that is both transparent and incorporates sound governance.

C E Daun
Non-executive chairman

Mossop Western Leathers - Cape Town