NOTES TO THE ANNUAL FINANCIAL STATEMENTS  
for the year ended 31 December 2005

              GROUP   COMPANY  
            Year ended     Year ended     Year ended     Year ended  
          31 Dec 2005   31 Dec 2004   31 Dec 2005   31 Dec 2004  
              Restated       Restated  
          Rm   Rm   Rm   Rm  

 34.

CASH FLOW STATEMENT

                    
 

34.1

Cash generated from/(utilised by) operations

                    
    Operating profit/(loss) before taxation and impairment of subsidiaries     248,7   265,9   16,2   (15,2)  
    Adjusted for:                    
    Depreciation     42,2   23,3   0,3   –  
    Impairment of investment property     0,8   –   –   –  
    Release of negative goodwill     –   (134,7)   –   –  
    (Profit)/loss on disposal of property, plant and equipment     (15,0)   (2,2)   –   0,2  
    Profit on disposal of subsidiaries     –   (3,1)   –   –  
    Decrease in retirement benefit obligation     (20,8)   (1,9)   –   (0,4)  
    Increase in fair value of biological assets     (6,1)   (3,8)   –   –  
    Unrealised gain on listed investment     (0,5)   –   –   –  
    Foreign exchange differences     –   0,1   –   –  
    Reversal of negative provision for impairment of investment in subsidiaries on sale     –   –   –   9,6  
    Net finance cost/(income)     19,4   10,6   (6,2)   (7,7)  
    Dividends received     –   –   (20,9)   –  
    Income from joint ventures     (0,7)   (1,2)   –   –  
    Pension fund surplus recognised     (50,6)   –   –   –  
    Share-based payment reserve movement     1,1   11,8   1,1   11,8  
    Operating profit/(loss) before changes in working capital     218,5   164,8   (9,5)   (1,7)  
    Movements in working capital:                    
    Increase in inventory and biological assets     (79,9)   (36,7)   –   –  
    (Increase)/decrease in accounts receivable     (29,5)   12,0   (0,8)   0,1  
    Increase (decrease) in accounts payable and provisions     23,9   (19,7)   1,8   (1,5)  
    Cash generated from/(utilised by) operations     133,0   120,4   (8,5)   (3,1)  
 

34.2

Taxation paid is reconciled as follows:

                    
    Amounts unpaid at the beginning of the year     (1,6)   (5,3)   (4,4)   (4,5)  
    Subsidiaries acquired     –   (6,9)   –   –  
    Disposal of subsidiaries     –   0,1   –   –  
    (Charged)/credited to the income statement     (6,8)   (3,0)   2,9   (1,8)  
    Amounts unpaid at the end of the year     5,3   1,6   1,3   4,4  
    Taxation paid     (3,1)   (13,5)   (0,2)   (1,9)  
 
          GROUP  
          Year ended   Year ended  
          31 Dec 2005   31 Dec 2004  
          Rm   Rm  
      

 34.3

Acquisition of subsidiaries

            
    Particulars of net assets acquired at date of acquisition:            
    Property, plant and equipment     1,0   278,6  
    Investment property     –   5,8  
    Investments in joint ventures     –   10,8  
    Receivables and loans     –   26,8  
    Inventory     3,0   259,0  
    Accounts receivable     2,5   387,2  
    Deferred taxation assets     –   147,2  
    Short-term loans receivable     –   3,4  
    SARS – income tax receivable     –   0,2  
    Cash and cash equivalents     –   30,1  
    Minorities     –   (7,1)  
    Interest–bearing borrowings     (1,3)   (134,5)  
    Interest–free borrowings     –   (6,1)  
    Deferred taxation liabilities     –   (0,2)  
    Retirement benefit obligations     –   (32,7)  
    Accounts payable     (5,2)   (307,8)  
    Provisions     –   (23,3)  
    SARS – income tax payable     –   (7,2)  
    Short-term borrowings     –   (21,2)  
    Bank overdraft     –   (95,8)  
    Net assets acquired     –   513,2  
    Negative goodwill     –   (134,7)  
    Purchase consideration     –   378,5  
    Bank overdrafts acquired     –   65,7  
    Subsidiaries acquired, net of bank overdrafts acquired     –   444,2  
On 1 January 2005 the group acquired the entire share capital of Inyathi UK Limited , a company in the footwear industry, for a purchase consideration of R1. The acquisition was accounted for by the purchase method of accounting.
The subsidiaries acquired on 1 July 2004 were as follows (all 100% unless otherwise indicated):
     Calan Limited, Calan Retread Services (Proprietary) Limited, Carlo de Firenze (Proprietary) Limited, Casa Rosada Investments (Proprietary) Limited, Centeon Pharma (Proprietary) Limited, Chemical Leasing (Proprietary) Limited, Chemical Plant Finance (Proprietary) Limited, Conshu Holdings Limited, Conshu Limited, Conshu Trading (Proprietary) Limited, Dano Textile Industries (Proprietary) Limited, Danoduv Investments (Proprietary) Limited, Durban Fibres (Proprietary) Limited, Feltex Fehrer (Proprietary) Limited (74%), Feltex Limited, Hosaf Fibres (Proprietary) Limited, Jordan Footwear Namibia (Proprietary) Limited, Lanatex Weaving Manufacturers (Proprietary) Limited, Marker Investments (Proprietary) Limited, Persaltum (Proprietary) Limited and Textowel Weavers (Proprietary) Limited. All the above acquisitions were accounted for by the purchase method of accounting.
 
          GROUP  
          Year ended   Year ended  
          31 Dec 2005   31 Dec 2004  
          Rm   Rm  
    The purchase consideration comprises the following:            
    Cost of acquisition (issuance of shares)     –   375,9  
    Costs directly relating to acquisition     –   2,6  
    Purchase consideration     –   378,5  
 
          GROUP  
          Year ended   Year ended  
          31 Dec 2005   31 Dec 2004  
          Rm   Rm  
 

 34.4

  Disposal of subsidiaries

            
    Particulars of net assets sold at date of sale:            
    Property, plant and equipment     –   0,5  
    Investments and loans     –   –  
    Inventory     –   1,4  
    Accounts receivable     –   0,5  
    Cash and cash equivalents     –   –  
    Bank overdraft     –   (0,2)  
    Long-term liabilities     –   –  
    Accounts payable     –   (3,1)  
    SARS – income tax payable     –   (0,1)  
    Net liabilities sold     –   (1,0)  
    Profit on disposal     –   3,1  
    Sale consideration     –   2,1  
    Cash sold     –   0,2  
    Proceeds on disposal of subsidiaries     –   2,3  
The subsidiaries sold on 1 January 2004 were are as follows (all 100%):
Exotan (Proprietary) Limited, Matsapa Hides & Stores (Proprietary) Limited, Border Export (Proprietary) Limited, Bregin & Co (Cape) (Proprietary) Limited, Cape Produce Export Co (Proprietary) Limited, South West Wool Sorters (Proprietary) Limited, OSB Exports (Proprietary) Limited, Kaftan NV, Manzini Hide Collectors (Proprietary) Limited, S M Lurie and Company (Botswana) (Proprietary) Limited, GH Hackmann (Proprietary) Limited, Hideskin Namibia (Proprietary) Limited, African Hide Trading Namibia (Proprietary) Limited, Oudtshoorn Ostrich Processors (Proprietary) Limited, Kolosus Leathers Africa, Barvan Pvt and Velskin Product (Proprietary) Limited.