The directors have pleasure in presenting the annual financial statements of the company and the group for the year ended 31 December 2005.
At the date of this report, the company has no majority shareholder. The largest minority shareholders are Daun & Cie AG (42,8%) and Steinhoff Africa Holdings (Pty) Limited (21,0%). Steinhoff holds a pre-emptive right to acquire Daun & Cie's entire interest in the company, except for 15 million shares which it could dispose of free of this restriction.
The group comprises an industrial and a consumer segment. The activities of these segments include automotive leather, trim and components; footwear and related leather processing; fresh and processed meat; PET bottle resin and polyester fibre and textiles. Their activities are dealt with separately in the annual report.
Commentary on the financial results is included in the chairman/chief executive officer's report accompanying the annual financial statements.
Subject to the required shareholder approvals, the board has resolved to declare a distribution of 12 cents per share (2004: 5 cents). The distribution cover is 3,8 times (2004: 6,8 times). The policy of the group is to have a payout ratio of approximately 25% of headline earnings and to declare distributions annually after the year-end results have been finalised. After an initial period of consolidation by the group during 2004, an improved payout ratio was considered appropriate for 2005.
The authorised share capital of the company remained unchanged at 1 200 000 000 ordinary shares of R0,20 each.
4 535 067 new ordinary shares of R0,20 each were issued as consideration shares for a capitalisation dividend paid in respect of 2004.
The unissued shares are under the control of the directors. This resolution is subject to renewal by ordinary resolution at the following annual general meeting.
The directors of the company for the year ended 31 December 2005 are set out below:
| Name | Position | Date |
| C E Daun | Chairman | – |
| P C T Schouten | Chief executive officer | – |
| J P Haveman | Chief financial officer | Appointed |
| 25 November 2005 | ||
| M J Jooste | Non-executive director | – |
| D M van der Merwe | Non-executive director | Appointed |
| 25 November 2005 | ||
| F Möller | Non-executive director | – |
| J B Magwaza | Independent, | |
| non-executive director | – | |
| I N Mkhari | Independent, | |
| non-executive director | – | |
| S H Nomvete | Independent, | |
| non-executive director | – | |
| R D Radford | Executive director | Resigned |
| 22 September 2005 |
Directors appointed by the board and retiring at the annual general meeting in accordance with the articles of association are Messrs J P Haveman and D M van der Merwe. Messrs C E Daun and M J Jooste retire by rotation.
These directors are all eligible and offer themselves for re-election. Details of each of the retiring directors are set out under Directors and Officers.
The company secretary's business and postal address is set out under corporate information of this annual report.
At 31 December 2005, the present directors of the company held direct and indirect interests in 228 061 576 (2004: 332 522 060) or 54,00% (2004: 79,41%) of the company's issued ordinary shares. Further details are set out under Shareholder Profile and in note 35.
The directors are committed to increasing the free float of the company, which at 23,8% is now above the minimum requirement of the JSE Limited (JSE).
No contracts were entered into during the year, other than already disclosed in this annual report, in which directors and officers of the company had an interest and which significantly affected the affairs and business of the company or any of its subsidiaries.
The group complies in all material respects with the JSE Limited Listing Requirements and the Code of Corporate Practice and Conduct published in the King II Report on Corporate Governance. For more information, please refer to the Corporate Governance Report.
During the year the group adopted International Financial Reporting Standards (IFRS). The effects of this change in accounting basis are reflected in the notes to the annual financial statements.
The principal subsidiaries and joint ventures of the group are reflected in notes 4 and 5. The aggregate net profits of consolidated subsidiaries amount to R234,0 million (2004: R108,4 million). The aggregate net losses amount to R2,6 million (2004: R2,6 million).
The group’s borrowing facilities and usage thereof are set out in note 15. In terms of the articles of association of the company and its subsidiaries, there is no limitation of borrowing powers.
No special resolutions were passed during the year. No material special resolutions were passed in subsidiaries during the year.
A special resolution is proposed to amend the articles of association to allow for a reduction of share premium by the directors or in general meeting, which will be used to pay distributions to shareholders in future.
No material change has taken place in the affairs of the group between the end of the financial year and the date of this report.
The directors are responsible for the preparation and integrity of the annual financial statements of the company and group, as well as the other information included in this report. The external auditors, Deloitte & Touche, are responsible for independently auditing and reporting on the financial statements.
The directors, supported by the audit committee, are of the opinion, based on the information and explanations given by management and on comment by the independent auditors on the results of their statutory audit, that the group’s internal accounting controls are adequate, and the financial records may be relied upon for preparing the financial statements and maintaining accountability for assets and liabilities.
The internal controls are designed to provide an acceptable, but not absolute, level of assurance that assets are safeguarded and that transactions are executed and recorded in accordance with generally accepted business practices and the group’s policies and procedures. These controls are implemented by trained and skilled personnel with appropriate segregation of duties, and are monitored by management. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the period under review.
The financial statements set out in this report have been prepared by management in accordance with IFRS and incorporate responsible disclosure based on appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.
The directors have a reasonable expectation that the group has adequate resources to continue in operation for the foreseeable future and the annual financial statements have therefore been prepared on a going concern basis.
The 
annual financial statements for the year ended 31 December 2005, were approved by the board of directors and are signed on its behalf by
![C E Daun [signature]](../i/sign_ce_daun.gif) C E Daun
|
![P C T Schouten [signature]](../i/sign_pct_schouten.gif) P C T Schouten
|
10 March 2006
