Group Structure - ShareData · Group Structure 1 howden africa holdings limited 41,58%...

Group S t r u c t u r e

1howden africa holdings limited

41,58%

Institutional andprivate investors

7,49%

James Howden& Godfrey Overseas

Limited

50,93%

Howden GroupSouth Africa

Limited

HowdenInternationalHoldings BV

Charter plc

Howden AfricaHoldings Limited

F i v e - Yea r F i n anc i a l Summa r yfor the years ended 31 December

SUMMARISED INCOME STATEMENTS 2003 2002 2001 2000 1999

R'000 R'000 R'000 R'000 R'000

Revenue 554 925 522 598 376 466 336 440 370 598

Operating profit 34 124 23 872 6 962 6 384 5 202

Financial revenue/(cost) 5 029 734 (965) 2 403 3 506

Foreign exchange (losses)/gains (6 243) (7 196) 6 677 1 069 341

Exceptional item – loan written off – (112) (4 303) – –

Goodwill amortisation and write down

on acquisition – (979) – – –

Share of results of associate – (1 397) (3 225) – –

Profit before taxation 32 910 14 922 5 146 9 856 9 049

Taxation 11 138 10 286 9 520 3 687 4 889

Profit/(loss) after taxation 21 772 4 636 (4 374) 6 169 4 160

Outside shareholders' interest 3 242 2 393 787 1 253 1 630

Net profit/(loss) for the year 18 530 2 243 (5 161) 4 916 2 530

Earnings per share: (cents) 28,19 3,41 (7,85) 7,60 3,94

Dividends per share:

– interim dividend paid (cents) 3,00 0,00 0,00 5,00 5,00

– final dividend declared (cents) 0,00 0,00 0,00 9,00 9,00

Number of shares ('000)

In issue 65 729 65 729 65 729 65 729 64 215

Weighted average 65 729 65 729 65 729 64 695 64 215

SUMMARISED BALANCE SHEETS 2003 2002 2001 2000 1999

R'000 R'000 R'000 R'000 R'000

ASSETS

Non-current assets 62 174 35 957 43 840 43 181 39 639

Current assets 190 833 209 353 161 484 165 130 179 994

Inventories 48 447 54 663 57 090 52 405 52 653

Receivables and prepayments 67 011 123 133 100 016 82 418 78 097

Cash and cash equivalents 75 375 31 557 4 378 30 307 49 244

Total assets 253 007 245 310 205 324 208 311 219 633

EQUITY AND LIABILITIES

Capital and reserves

Shareholders' funds 119 483 101 215 95 669 103 083 106 245

Outside shareholders’ interest 5 289 6 556 4 227 9 978 9 113

Non-current liabilities – 3 164 5 152 4 856 467

Current liabilities 128 235 134 375 100 276 90 394 103 808

Total equity and liabilities 253 007 245 310 205 324 208 311 219 633


Othe r G r oup Sa l i e n t F ea t u r e sfor the year ended 31 December 2003

2003 2002 2001 2000 1999

Net asset value per share (cents) 181,78 153,99 145,55 156,83 165,45

Depreciation (R'000) 6 370 6 557 5 244 4 459 4 415

Capital expenditure (R'000) 5 192 6 984 4 590 4 153 6 308

Acquisition of new businesses (R'000) – – 9 426 565 931

Capital commitments (R'000)

Authorised and contracted 78 811 556 1 095 –

Authorised not contracted 287 – 626 650 19

Operating profit to turnover 6,15% 4,57% 1,85% 1,90% 1,40%

Number of employees 652 738 629 659 761

Closing share price (cents) 145 82 69 90 105

Total number of shares traded 2 469 931 5 828 525 2 291 033 7 182 888 31 937 289

Average price for the year (cents) 100 75 84 100 96

Total value of shares traded

at average price (R) 2 469 931 4 371 394 1 924 468 7 182 888 30 659 797

Volume of shares traded to total weighted

average number of shares 3,76% 8,.87% 3,49% 11,10% 49,73%


99 00 01 02 030

100000

200000

300 000

400 000

500 000

600 000

TURNOVER (R’m)

370 598

336 440

376 466

522 598

554 925

99 00 01 02 030

5 000

10 000

15 000

20 000

25 000

30 000

35 000

PROFIT BEFORE TAX (R’m)

9 0499 856

5 146

32 910

EARNINGS PER SHARE (CENTS)

7,60

99 00 01 02 03-10

-5

0

5

10

15

20

25

30

3,94

(7,85)

3,41

28,19

14 922

D i r e c t o r s , o f f i c e r s and aud i t o r s

EXECUTIVE DIRECTORS

J FEEK (63)

Executive Chairman (Acting)

John Feek was appointed to the board during April 2002 and became Chairman of the board on 27 June 2002 and Executive

Chairman on 1 May 2003. He was previously Group Managing Director of Rental Transport Systems Limited, the Haggie Group and

Abercom. He holds non-executive directorships in several unlisted companies.

S MEYER (49)

Group Financial Director and Chief Operating Officer (Acting)

Shane Meyer joined the Group in 1977. In 1991, he was promoted to Group Financial Director of Howden Group South Africa

Limited. He was appointed Financial Director of Howden Africa Holdings Limited upon its incorporation. He was appointed Chief

Operating Officer (acting) on 1 May 2003.


From left to right: Seated: Bob Cleland, Dr Renosi Mokate, Arthur Mashiatshidi. Standing: John Feek, Mike Lake, Shane Meyer

NON-EXECUTIVE DIRECTORS

A B MASHIATSHIDI (43)

Independent Non-Executive Director

Arthur B Mashiatshidi is Chief Executive of Decorum Capital

Partners (Pty) Limited, a company that manages the New Africa

Mining Fund. He serves as non-executive director on the boards

of various companies and institutions including: Thebe

Investment Corporation (Pty) Limited, Thebe Risk Solution (Pty)

Limited, Financial Markets Advisory Board and University of

Cape Town (Graduate School of Business Advisory Board).

DR R MOKATE (45)


Renosi Mokate is Chief Executive Officer of Mandisis Consulting

cc. She was previously the CEO of the Central Energy Fund (Pty)

Limited, (CEF) which has as its subsidiaries PetroSA, the

Strategic Fuel Fund and Enerkom, I-Gas and the Petroleum

Agency of South Africa. Previously she was Executive Director,

Group: Economic and Social Analysis at the Human Sciences

Research Council (HSRC). She has served as a Senior Policy

Analyst and Programme Manager at the Development Bank of

Southern Africa, as Director: Centre for Reconstruction and

Development at the University of Pretoria, and Associate

Professor at Lincoln University, Pennsylvania, United States of

America. She is a member of the Financial and Fiscal

Commission, the Presidential National Commission on

Information, Society and Development, and Chairperson of

Masirelo Properties (Pty) Limited.

R J CLELAND (56)

Non-Executive Director (British)

Bob Cleland was appointed Chief Executive of Howden in 1999.

He was previously Group Operations Director on the Board of

Triplex Lloyd plc and prior to that was an Executive of British

Steel Stainless, now AvestaPolarit. He was appointed Non-

Executive Director of the Howden Africa Holdings Limited board

on 2 March 2000.


SECRETARY

Michael John Millard Lake

REGISTERED OFFICE

1a Booysens Road, Booysens

Johannesburg

2091

REGISTERED AUDITORS

PricewaterhouseCoopers

Chartered Accountants (SA)

REGISTRARS

Computershare Limited

70 Marshall Street

Johannesburg

2001

Share Code: HWN

ISIN Code: ZAE 000010583

ATTORNEYS

Cliffe Dekker Inc

Cha i rman ’s S t a t emen t

It is indeed gratifying to again express my appreciation to our

respective stakeholders for this years improved results. Our

employees, customers and suppliers have combined to facilitate

these improvements and to the raising of our performance

standards and expectations.

GENERAL REVIEW

The excellent level of orders booked in 2002 was not repeated

during 2003. This concern was expressed in the interim report

and any hope for an improvement towards the year-end did not

materialise. Orders booked in the period were R495 million,

which is a decline of 17% against 2002. This slow down in

order intake was evident from April through to year-end and no

significant change occurred during the last quarter. The Rand

continued to strengthen through the year and many projects

relating to resources and their conversion were either withdrawn

or postponed.

Divisional management has demonstrated a level of focus in

maintaining sales for 2003 at the improved levels achieved

during 2002. This was also evidenced in the management of

both distribution costs and administrative expenses with a

positive effect on operating profit.

The individual Divisions are covered more specifically in the

Directors’ report.

STRUCTURAL CHANGES TO GROUP ACTIVITIES

The Group has reaffirmed its strategy in fulfilling the fluid

handling needs of its customers, with special focus on existing

technologies.

As a consequence the electric motors business of Hertz

Technologies was disposed of during May 2003. This business

did not fit the Group profile. The acquirer was an empowered

group, namely Mandlikazi Engineering Holdings.

The continued Rand strength altered both the competitive

position of our products and expected margins in overseas

markets. We have taken the view that the remaining offshore

activities should be positioned as follows:

• Negotiations are in progress with management at Engart Inc.

(USA) to acquire this business inclusive of a distribution

agreement for the territory.

• 3T’s International is to become a division of Howden Energy

Systems and will continue to service Europe, Central Europe

and the Middle East. The business will no longer operate as

a separate entity and the expense profile will be reduced in

line with this change.

The objective is to reduce the foreign exchange variable that

these activities introduced to the Group.

Shareholders voted unanimously in support of the merger of

Orbit Pump and Howden Pumps during December 2003.

Merging these two activities will take time, considerable

management effort and dedication. Opportunities for the merged

entity are tangible and management will be encouraged to attain

their goals.


"Howden offer engineeringsolutions to the fluid handlingmarket"

• Consistent sales performance matches inflation.

• Margins sustained and operating expenses well controlled.

• Taxation enters normal range and taxed profits improve.

BEE AND AFFIRMATIVE ACTION INITIATIVES

The employment equity act initiatives continue to be followed

and the Group is active in promoting these objectives. Operating

companies support the sourcing of goods and services from

small, medium and micro enterprisers at an ever-increasing

commercial level.

The introduction of various charters serves to emphasise the

importance of bringing previously disadvantaged people into the

mainstream of the South African economy. The Group continues

to review the many approaches that have been received in order

to determine the appropriate partners or combination to bring

into the Holding Company. Howden Group is continuously

apprised of these approaches and has indicated its support to

find the correct solution.

HIV/AIDS

The Group's HIV/Aids policy continues to be developed in

consultation with third parties. The programme of voluntary

testing continues and all Group companies practice a

compassionate approach towards their personnel. At a national

level debate continues and positive outcomes are evident.

OUTLOOK

Rand strength and US Dollar weakness are seemingly

inextricably linked and the implications for the forward plans of

our major customers are significant. To this extent our future

order book should be considered vulnerable.

With the significant reduction in the domestic inflation rate

coupled with reduced interest rates, it would seem reasonable

that projected investment returns will track downwards over

time. The impact for the Group will be that margins on future

projects will come under pressure as enquiries convert to orders.

An unpredictable trading environment indicates that a difficult

year lies ahead.

BOARD OF DIRECTORS

During June 2003 Mr Colin Ferreira resigned as an executive

director. It was resolved not to replace his position immediately

and Mr Shane Meyer continues to operate as Group Financial

Director and in the interim as Acting Chief Operating Officer.

During July 2003 Mr Arthur Mashiatshidi was appointed as an

independent non-executive director and his appointment was

more fully covered in our interim report to shareholders. Since

Mr Mashiatshidi’s appointment he has also assumed the

Chairmanship of the Group Audit Committee.

DIVIDENDS

In the light of the earnings achieved during 2003 and in

conjunction with the positive cash management, dividends were

resumed at the interim stage.

Consideration has been given to the declaration of a final

dividend based on the second half year results, which includes

a cover of not less than three times.

In Summary: Interim Dividend 3 cents paid Monday,

13 October 2003

Final Dividend 5 cents to be paid Monday,

8 March 2004

Total 8 cents for the year

The board has considered the net cash position as reported and

the current cash position and has resolved to declare a special

dividend of 47 cents per share, also to be paid on 8 March

2004. This represents a return of cash to shareholders, which is

considered appropriate, as the Group will continue to focus on

generic fluid handling applications as presently and in the

future.

Effectively the final and special dividends will absorb roughly half

the reported net cash balances inclusive of the Standard Tax on

Companies (STC) charge.

J S FEEK

Executive Chairman, Acting


Co rpo r a t e Go ve r nance

The board and management of Howden Africa Holdings Limited

are committed to the principles of openness, integrity and

accountability as advocated in the King Report on Corporate

Governance (Code of Corporate Practices and Conduct).

The primary objective of any system of corporate governance is

to ensure that directors and managers, to whom the running of

large corporations has been entrusted by the shareholders, carry

out their responsibilities faithfully and effectively, placing the

interests of the corporation ahead of their own. This process is

facilitated through the establishment of appropriate reporting

and control structures within the organisation.

DIRECTORATE AND EXECUTIVE MANAGEMENT

The board of Howden Africa Holdings Limited is balanced

between executive and non-executive directors.

The roles of chairman and chief operating officer vest in

different persons. There are presently three non-executive

directors and two executive directors none of whom have

contracts exceeding two years. New appointments to the board

are submitted to the board as a whole for approval prior to

appointment.

The board meets at least quarterly and retains full and executive

control over the Group. The board monitors management ensuring

that material matters are subject to board approval. Members of

executive management attend board meetings by invitation.

All directors have unlimited access to the advice and services of

the company secretary, who is responsible to the board for

ensuring that the board procedures are followed.

All directors are entitled to seek independent professional advice

at the Group’s expense, concerning the affairs of the Group,

after obtaining the approval of the chairman.

Attendance at meetings

There were four meeting held during the year

Date Date

Director appointed resigned Attendance

J S Feek 17 April 2002 4/4

(Chairman)

R J Cleland 2 March 2000 4/4

C J Ferreira 1 November 1998 12 June 2003 2/2

A B Mashiatshidi 31 July 2003 2/2

S Meyer 3 May 1996 4/4

R Mokate 1 November 1996 4/4

AUDIT COMMITTEE

The Audit Committee consists of two non-executive directors

with the company secretary as secretary. Both the internal and

external auditors have unrestricted access to this committee.

The committee meets twice a year and these meetings are

attended by external and internal auditors and appropriate

members of executive management including those involved in

risk management, control and finance. The committee reviews

the effectiveness of internal control in the Company with

reference to the findings of both the internal and external

auditors.

It further reviews the financial statements and accounting

policies ensuring compliance with applicable legislation and

other authorities. Other areas covered include the review of

important accounting issues, accounting policies, reporting and

disclosure, compliance with the Code of Corporate Practices and

Conduct and with the Group’s code of ethics.

Audit Committee meetings

There were two meetings held during the year

Date Date


J S Feek 17 April 2002 1 May 2003 1/1


A B Mashiatshidi 31 July 2003 1/1

(Chairman)

R Mokate 1 November 1996 2/2


REMUNERATION COMMITTEE

The Remuneration Committee consists of the chairman and one

non-executive director. It is authorised by the board to review

remuneration packages of all directors and senior managers.

The financial statements accompanying this report make full

disclosure of the total of executive and non-executive directors’

earnings and other benefits in accordance with the requirements

of the Companies Act, 1973, the King Report and the

Johannesburg Securities Exchange SA requirements.

Remuneration Committee meeting

There was one meeting held during the year

Date Date


J S Feek 17 April 2002 1/1


(Chairman)

INTERNAL CONTROL SYSTEMS

To meet its responsibility with respect to providing reliable

financial information, the Group maintains financial and

operational systems of internal control. These controls are

designed to provide reasonable assurance that transactions are

concluded in accordance with management’s authority, that the

assets are adequately protected against material loss of

unauthorised acquisition, use or disposition, and that

transactions are properly authorised and recorded.

The system includes a documented organisational structure and

division of responsibility, established policies and procedures,

including a code of ethics to foster a strong ethical climate,

which is communicated throughout the Group, and careful

selection, training and development of people.

Internal audit monitors the operation of the internal control

system and reports findings and recommendations to

management and the board of directors. Corrective actions are

taken to address control deficiencies and other opportunities for

improving the system as they are identified. The Group’s

assessment of the effective controls over the financial reporting

and safeguarding of assets was considered to meet all the

necessary criteria for the year ended 31 December 2003.

ETHICAL STANDARDS

Howden Africa Holdings Limited has adopted a code of ethics

policy. This incorporates the Group’s operating, financial and

behavioural policies in a set of integrated values, including the

ethical standards required of employees of the Group in their

interaction with one another and with all stakeholders. Detailed

policies and procedures are in place across the Group covering

the regulation and reporting of transactions in securities of

Group companies by directors and officers. The code is

distributed to all employees of the Company, and its

subsidiaries. The directors regularly review this code to ensure it

reflects best practice in corporate governance.

THE ENVIRONMENT, HEALTH AND SAFETY

The Group strives to conform to environmental, health and

safety laws in its operations and also seeks to add value to the

quality of life of its employees through preventative health

programmes. Although the Group’s major activities do not pose

a major threat to the environment, the Group’s risk management

activities continue to focus on compliance with key features of

existing environmental, health and safety legislation and

international standards.


D i r e c t o r s ’ Re spon s i b i l i t y

The directors are responsible for the integrity of the financial statements and related information included in this annual report.

For the board to discharge its responsibilities management has developed and continues to maintain a system of internal financial

control. The board has ultimate responsibility for this system of internal control and reviews the effectiveness of its operations,

primarily through the Group Audit Committee and other risk-monitoring committees and functions.

The internal financial controls include risk-based systems of accounting and administrative controls designed to provide reasonable,

but not absolute, assurance that assets are safeguarded and that transactions are executed and recorded in accordance with

generally accepted business practices and the Group's written policies and procedures. These controls are implemented by trained,

skilled staff with clearly defined lines of accountability and appropriate segregation of duties. The controls are monitored by

management and include a comprehensive budgeting and reporting system operating within strict deadlines and an appropriate

control framework.

The external auditors are responsible for reporting on the financial statements.

The financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice and

incorporate responsible disclosures in line with the accounting philosophy of the Group. The financial statements are based on

appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The

directors believe that the Group will be a going concern in the year ahead. For this reason they continue to adopt the going concern

basis in preparing the Group annual financial statements.

These financial statements, which appear on pages 12 to 49, have been approved by the Board of Directors and are signed on its

behalf by:

J S FEEK S MEYER

Executive Chairman, Acting Chief Operating Officer,

Acting and Group Financial Director

20 February 2004

Ce r t i f i c a t e o f t h e Company Sec r e t a r y

In my opinion as company secretary, I hereby confirm, in terms of section 268 (d) of the Companies Act, 1973, as amended, that for

the year ended 31 December 2003, the Company has lodged, with the Registrar of Companies, all such returns as are required of a

public company in terms of this Act and that all such returns are true, correct and up to date.

M J M LAKE

Company secretary


Repo r t o f t h e I ndependen t Aud i t o r s

Report of the independent auditors to the members of Howden Africa Holdings Limited for the year ended 31 December 2003

We have audited the annual financial statements and Group annual financial statements for the year ended 31 December 2003 set out

on pages 12 to 49. 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. These standards require that we plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit

includes:

• examining, on a test basis, evidence supporting the amounts and disclosures included in the financial statements,

• assessing the accounting principles used and significant estimates made by management, and

• evaluating the overall financial statements presentation.

We believe that our audit provides a reasonable basis for our opinion.

AUDIT OPINION

In our opinion, these financial statements fairly present, in all material respects, the financial position of the Company and the Group

at 31 December 2003, and the results of their operations and cash flows for the year then ended in conformity with South African

Statements of Generally Accepted Accounting Practice and in the manner required by the South African Companies Act, 1973.

PricewaterhouseCoopers Inc.

Chartered Accountants (SA)

Registered Accountants and Auditors

Johannesburg

20 February 2004


D i r e c t o r s ’ Repo r t

The directors have pleasure in submitting the ninth annual

report of the Company and the Group for the year ended

31 December 2003.

GROUP RESULTS

2003 2002

R’000 R’000

Revenue 554 925 522 598

Orders received 495 042 597 006

Operating profit 34 124 23 872

Assets 253 007 245 310

Liabilities 128 235 137 539

Depreciation 6 370 6 557

Capital expenditure 5 192 6 984

The detailed segmental report is shown under Notes to the

Financial Statements, note 1 on pages 27 – 28.

A strong order book at the beginning of the year, and good order

intake in the first quarter, gave early indications that results for

the full year would be ahead of results reported for 2002.

Although this did materialise it must be viewed against a sharp

decline in both the order book and order intake over the balance

of the year, post the first quarter. The strengthening of the Rand

over the year impacted negatively on the larger resource based

sector of the economy resulting in a rescheduling of capital

expenditure programmes in line with reduced export earnings.

Order intake, having peaked at a rolling average of R57 million

per month in March, fell steadily over the balance of the year to

lows of R33 million in December 2003.

Operating results achieved over the second half of the year

represent a healthy improvement over both the second half of

last year and the first half of 2003. Reorganisation efforts

associated with the offshore operations, together with the sale of

Hertz Technologies (Pty) Limited in May 2003, have resulted in

profit improvements of R3,3 million being reported for the

period, offset by a R3,1 million loss on sale of this subsidiary.


FINANCIAL RESULTS

Group turnover from operations at R554,9 million represents an

improvement of 6,2% compared to the year 2002. A number of

large orders were completed during the year in the key

petrochemical, power and mining markets. Exports as a

percentage of total sales reduced from 22,2% last year to 10,1%

in the year under review, due mainly to a reduction in large

offshore contract work.

Operating profit of R34,1 million (2002:R23,9 million) is

reported, after writing off an amount of R3,1 million (2002:

R2,1 million) for loss on sale of discontinued business and

R0,9 million (2002: Nil) on conversion of subsidiary to associate.

The sale of the properties based in Sebenza and Montague

Gardens yielded a profit of R3,4 million.

The low level of business achieved in the offshore companies, in

turn contributing chiefly to the lower aforementioned export

earnings, resulted in a combined operating loss of R3,1 million

(2002: R3,6 million). Further efforts will be directed towards

reducing our offshore exposure in the 2004 year. The continued

recovery in the Rand over the year gives rise to exchange losses

totalling R6,2 million which compares to the exchange loss of

R7,2 million reported in 2002.

A taxation charge of R11,1 million (2002: R10,3 million) has

been accrued, which at 33,8% of profit before tax represents an

improvement on the 68,9% reported last year. Earnings in the

pump company for the year substantially reduced available

assessed losses which in turn assisted in bringing the overall

effective tax rate to more reasonable levels.

The comparisons below refer to the corresponding twelve-month

period to December 2002:

• Order intake amounted to R495 million compared to

R597 million in the corresponding period

• Turnover was R555 million compared to R523 million

• Operating profit of R34,1 million compared to R23,9 million

• Earnings per share of 28,2 cents compared to 3,4 cents

• At 31 December 2003 the Group had a net positive cash

position of R75,4 million compared to R31,6 million


2002 2003

Power Generation 17%

Agriculture 12%

Environmental 1%

HVAC 6%

Gold Mining 14%

Other Mining 25%

Petrochemical 12%

Industrial 5%

Steel/Cement 7%

Other 1%

Power Generation 26%

Agriculture 15%

Environmental 1%

HVAC 4%

Gold Mining 13%

Other Mining 17%

Petrochemical 10%

Industrial 8%

Steel/Cement 4%

Other 2%

MARKETS SERVED

D i r e c t o r s ’ Repo r t ( c on t i nued )

REVIEW OF OPERATIONS

FANS AND HEAT EXCHANGERS

Order intake for fans and heat exchangers totalled R235 million,

which represents 47% of the total order intake, compared to

R249 million the previous year.

Mixed fortunes were experienced in the standard fan business

with some loss of market share in the HVAC market due to

unsustainable competitor pricing, but holding market share in

other markets served. The Company trades in the HVAC and

light industrial/process markets where competition is extremely

varied and keen. Order intake levels towards year-end showed

encouraging signs for an improvement in trading conditions in

2004 and success in the development of certain niche market

areas should result in a more satisfactory position being

achieved in the 2004 year. The Donkin Fans UK business has

been closed and business in that territory will in future be

channelled through an appointed agent.

The engineered fan business focusing almost exclusively on the

mining sector started the year with a strong order book and

promising prospects for mine expansion programmes, achieving

another good year in orders received. Orders received during the

year included main surface fans at South Deep Gold Mine,

Anglo and Impala Platinum Mines. Although order prospects

slowed during the last quarter of the year, the order book in

place should ensure a respectable result for 2004.

Business in the power generation and industrial boiler markets

levelled off during the year in line with the anticipated decrease

in airheater work post the completion of Eskom’s modification

programme and element replacement cycle. Good progress was,

however, achieved on maintenance and fan enhancement

contracts at Sasol, and fabric filter retrofit installations for other

group companies.

The sale of Hertz Technologies (Pty) Limited and the absorption

of the Engart group of companies into the business focusing on

the mining market results in the fan and heat exchanger division

being strategically focused on a market segment basis. One or

two corporate actions may be taken in the new year to further

strengthen the division which begins the new year with an order

book giving confidence for a repeat performance in 2004.


ENVIRONMENTAL CONTROL

The environmental control division did not have a good year,

achieving orders totalling R128 million, representing 26% of the

total order intake, compared to R232 million in the previous year.

A number of large value, resource based contracts were

postponed during the year but more disappointing was the loss

of high value fabric filtration contracts despite concerted efforts

on the part of the division. The reduced number of prospects

available to the market, essentially driven by the strengthening in

the Rand, witnessed the emergence of a wider range of

competitors keen to establish reference sites at extremely low

margins. It has become clear, however, that the division needs to

establish a larger network of technology supporters and attention

will be given to this in the new financial year.

The successful completion of the fabric filter retrofit project at

Hendrina Power Station, and good progress on the retrofit

programme at Kelvin Power Station, continues to reflect well on

the division. On the orders front the receipt of an order for

R44 million for a continuation of the programme at Kelvin

proved to be the highlight for the year.

Mine refrigeration and process gas business was executed at

record levels during the year, representing an improvement of

70% over the corresponding period. This was mainly thanks to a

strong opening order book, which over the year was reduced by

R35 million to end the year 48% down on the start of the year.

Contracts at Driefontein, Kloof and South Deep mines stretched

available resources and full recognition must be given to staff

associated with these developments.

The business focused on industrial and mining environmental

solutions had a poor year but progress has been made in terms

of supplying environmentally friendly incineration technology into

the medical waste market. Success with this project could

generate opportunities for similar applications throughout the

African continent.

Despite a relatively poor year in order intake, the

environmental control division’s contribution to Group results

was not too far off that generated in 2002. With the real

possibility existing of converting targeted large value contracts

in the first quarter of 2004 this contribution is expected to

remain steady in the new year.

PUMPS

Order intake for pumps totalled R132 million, which represents

27% of total order intake, compared to R116 million last year.

The devastating drought experienced in large parts of the

country through 2003 led to an increase in demand for pumps

in the agricultural sector. A large emphasis was also placed on

improving brand awareness in targeted market segments with

positive results for order intake.

The successful conclusion of negotiations with Orbit Pump,

resulting in the merger with Howden Pumps, proved to be one

of the highlights of the year. An ordinary resolution approving the

merger was unanimously passed by shareholders representing

89,4% of the issued share capital of the Company at a general

meeting held on 12 December 2003. Plans to move the

Germiston based business of Orbit Pump to the existing

Sebenza site of Howden Pumps are in place, the intention being

for the move to be completed by end May 2004.

The merger represents a logical and necessary development to

achieve sustainability and competitiveness. The past decade has

witnessed vigorous consolidation in the international pump

market and South African companies in the pump industry

require critical mass to compete in this changed environment.

Operating under the corporate name, Pump Brands (Pty)

Limited, the merged unit will continue with its drive to reinforce

brand identity in its respective markets.

Exports in the pump division remained in line with the

achievement in 2002 with prospects in the new year improving

in the merged pump business. An improvement in export

prospects positions the business well to consolidate activities

and report sustainable earnings, a commendable outcome in the

first year of the combined businesses.

OUTLOOK

The strong Rand exchange rate has impacted negatively on the

mining and manufacturing sectors of the economy, both of

which are extremely important to the Group. A softening of the

exchange rate, coupled with an improving world economic

outlook, would be necessary for an improvement in trading

conditions. Should a strong Rand scenario persist for much of

2004, pressure would be placed on holding the order book at

present levels, with ultimate negative implications for earnings.


D i r e c t o r s ’ Repo r t ( c on t i nued )

SOCIAL RESPONSIBILITY

The year 2004 heralds a number of milestones in the history of

the Howden Group. Howden Group internationally celebrates

one hundred and fifty years in existence, which includes fifty-two

years in South Africa. This coincides with the end of the first

decade of democracy in the country, making the year even more

auspicious.

The social investment portfolio’s key focus remains education

and skills development. Personnel training is a top priority at

every level in all operations. A third trainee engineer was sent to

the UK to gain exposure and improve his knowledge of the

Group’s products and services. The Group also embarked on a

revitalisation of its apprentice-training programme, which will

start formally in 2004 with five deserving students from

disadvantaged communities.

Support for basic education of employees’ children remains a

critical challenge. The Group, in its efforts to encourage youth to

follow the engineering and accounting fields, sponsors two

tertiary and 176 primary and high school children.

Apart from the above, the Group contributes to selected old age

homes; homes for the HIV infected and affected babies, sports

activities and community projects. The Group is committed to

promoting a non-racial work place, fair employment practices

complying with employment equity legislation and the

Occupational Health and Safety Act. An HIV/Aids programme

was finalised in the year and the rollout will include training

mechanisms that will promote acceptance, openness and family

support groups.

OTHER MATTERS

SHARE CAPITAL

Details of the Company’s share capital, its holding company and

its shareholders are given in note 15 to the financial statements.

DIRECTORATE

Mr Colin Ferreira resigned as an Executive Director on 12 June

2003. Mr Arthur Mashiatshidi was appointed as an independent

non-executive director on 31 July 2003.

In terms of the Company’s articles of association, Mr Arthur

Mashiatshidi, Mr Bob Cleland and Mr John Feek retire from

office by rotation at the annual general meeting and, being

eligible, offer themselves for re-election.

The names of the directors, secretary and auditors are listed on

page 4 and 5 of the report.

DIRECTORS’ INTERESTS

At 31 December 2003, the aggregate direct beneficial interest of

the directors in the issued ordinary shares of the Company was

85 960 shares (Dec 2002: 85 960). In addition, directors of the

Company held in aggregate 100 000 shares (Dec 2002:

200 000) in the Company’s share option scheme.

At 31 December 2003, the directors’ interest and that of their

families did not in aggregate exceed 1% of the issued share

capital of the Company.

At the date of this report there had been no changes to the

above shareholdings.

SUBSIDIARY COMPANIES

A list of the Company’s subsidiaries and its interests therein is

given on pages 48 – 49 of the report.

MANAGEMENT BY THIRD PARTIES

No business of the Company or its subsidiaries was managed by

a third person or company during the financial year, with the

exception that the Company provides managerial services to its

subsidiaries.

DIVIDEND

An interim dividend of 3 cents per share was paid out on

13 October 2003 (2002: nil). Given the improvement in earnings

and the stronger cash position the directors have approved a

final dividend of 5 cents per share to be declared payable to

shareholders. The board has considered the net cash position as

reported and the current cash position and has resolved to

declare a special dividend of 47 cents per share. This

represents a return of cash to shareholders, which is considered

appropriate. For both the final dividend of 5 cents per share and

the special dividend of 47 cents per share the last date to trade

cum dividend is Friday, 27 February 2004. Shares start trading

ex dividend on Monday, 1 March 2004. The record date is

Friday, 5 March 2004. Payment will be Monday, 8 March 2004.

No share certificates are to be dematerialised or rematerialised

between Monday, 1 March 2004 and Friday, 5 March 2004,

both days inclusive.

For and on behalf of the board

S MEYER

Chief Operating Officer, Acting

20 February 2004


FINANCIAL CONTENTS

18 Balance sheets

19 Income statements

20 Statements of changes in equity

21 Cash flow statements

22 Accounting policies

27 Notes to the financial statements

48 Interest in subsidiary companies


GROUP COMPANY

2003 2002 2003 2002

Notes R'000 R'000 R'000 R'000

ASSETS

Non-current assets

Property, plant and equipment 8 23 701 34 601 83 162

Intangible assets 9 581 871

Interest in subsidiaries 10 49 782 104 590

Investment in associate 11 33 865 – 33 865 –

Non-current loans 12 – – – –

Deferred tax 18 4 027 485 – –

62 174 35 957 83 730 104 752

Current assets

Inventories 13 48 447 54 663 – –

Receivables and prepayments 14 67 011 123 133 6 321 37

Current tax asset – 102

Amounts owing by holding company and subsidiaries 3 056 3 050

Cash and cash equivalents 28 75 375 31 557 280 –

190 833 209 353 9 657 3 189

TOTAL ASSETS 253 007 245 310 93 387 107 941

EQUITY AND LIABILITIES

Capital and reserves

Ordinary share capital 15 61 708 61 708 61 708 61 708

Reserves 16 57 775 39 507 18 828 27 026

SHARE CAPITAL AND RESERVES 119 483 101 215 80 536 88 734

Outside shareholders' interest 17 5 289 6 556 – –

Non-current liabilities

Post retirement medical benefit obligations 31 – 3 164

Deferred tax 18 – – 1 923 1 718

– 3 164 1 923 1 718

Current liabilities

Trade and other payables 19 115 157 126 825 4 299 4 078

Current tax liability 13 078 7 550 617 –

Amounts owing to holding company and subsidiaries 6 012 4 380

Bank overdraft 28 – – – 9 031

128 235 134 375 10 928 17 489

Total liabilities 128 235 137 539 12 851 19 207

TOTAL EQUITY AND LIABILITIES 253 007 245 310 93 387 107 941

Ba l ance Shee t sas at 31 December 2003


GROUP COMPANY

2003 2002 2003 2002

Notes R'000 R'000 R'000 R'000

REVENUE 2 554 925 522 598 – –

Cost of sales 401 949 378 693 – –

Gross profit 152 976 143 905 – –

Other operating income 8 052 5 088 13 498 5 227

Distribution costs (52 192) (56 033) (58) (466)

Administrative expenses (70 417) (66 730) (2 469) (1 845)

Other operating expenses (290) (248) – –

Loss on conversion of subsidiary to associate (925) – (4 337) –

Loss on sale of discontinued business (3 080) (2 110) (10 590) –

OPERATING PROFIT/(LOSS) 3A 34 124 23 872 (3 956) 2 916

Foreign exchange (losses)/gains 3B (6 243) (7 196) (10) 68

Amortisation of goodwill on acquisition – (827) – –

Diminution in value of investment in subsidiary – (152) – (152)

Exceptional item – loan written off 3C – (112) – (112)

Share of results of associate – (1 397) – (1 397)

Financial revenue/(cost) 4 5 029 734 (463) (580)

PROFIT/(LOSS) BEFORE TAXATION 32 910 14 922 (4 429) 743

Taxation 5 11 138 10 286 1 797 731

PROFIT/(LOSS) AFTER TAXATION 21 772 4 636 (6 226) 12

Outside shareholders' interest 17 3 242 2 393

NET PROFIT/(LOSS) FOR THE YEAR 18 530 2 243 (6 226) 12

NUMBER OF SHARES IN ISSUE ('000) 7 65 729 65 729

Cents Cents

EARNINGS PER ORDINARY SHARE 7 28,19 3,41

HEADLINE EARNINGS PER ORDINARY SHARE 29,47 7,87

DIVIDENDS PER ORDINARY SHARE 6 3,00 0,00

HEADLINE EARNINGS RECONCILIATION

Net profit for the year 18 530 2 243

Loss on sale of subsidiary 3 080 2 110

(Profit) on sale of property, plant and equipment (3 453) (518)

Amortisation of goodwill 290 248

Loss on conversion of subsidiary to associate 925 –

Exceptional item – loan written off – 112

Amortisation of goodwill on acquisition – 827

Diminution in value of investment in subsidiary – 152

19 372 5 174

I n c ome S t a t emen t sfor the year ended 31 December 2003


Revaluation

Notes Share Share and other Retained

capital premium reserves earnings Total

CONSOLIDATED

Balance at 1 January 2002 657 61 051 7 040 26 921 95 669

Currency translation differences 16 2 393 2 393

Net profit 2 243 2 243

Subsidiary’s reserves disposed of 910 910

Balance at 31 December 2002 657 61 051 7 040 32 467 101 215

Balance at 1 January 2003 657 61 051 7 040 32 467 101 215

Currency translation differences 16 1 710 1 710

Net profit 18 530 18 530

Dividends 6 (1 972) (1 972)

Balance at 31 December 2003 657 61 051 7 040 50 735 119 483

COMPANY

Balance at 1 January 2002 657 61 051 – 22 392 84 100

Net profit 12 12

Reversal of associate company losses on disposal 4 622 4 622

Balance at 31 December 2002 657 61 051 – 27 026 88 734

Balance at 1 January 2003 657 61 051 – 27 026 88 734

Net profit (6 226) (6 226)

Dividends (1 972) (1 972)

Balance at 31 December 2003 657 61 051 – 18 828 80 536

S t a t emen t s o f Change s i n Equ i t yfor the year ended 31 December 2003


GROUP COMPANY

2003 2002 2003 2002

Notes R'000 R'000 R'000 R'000

CASH FLOW FROM OPERATING ACTIVITIES

Cash receipts from customers 600 436 515 933

Cash paid to suppliers and employees (556 782) (477 476)

Cash generated from operations 20 43 654 38 457 283 1 818

Interest received/(paid) 5 029 734 (463) (580)

Dividends received 6 328 376

Dividends paid 21 (1 972) – (1 972) –

Taxation paid 22 (11 626) (10 170) (873) (521)

Net cash flow from operating activities 35 085 29 021 3 303 1 093

CASH FLOW FROM INVESTING ACTIVITIES

Acquisition of associated company 11 (1 100) (1 850) (1 100) (2 002)

Acquisition of Hertz Technologies (Pty) Limited 23 – 429

Disposal of Howden Pumps (Pty) Limited 24 9 693 – – –

Disposal of Hertz Technologies (Pty) Limited 25 (1 112) – – –

Disposal of Engart Australasia Pty Limited 26 – (378) – –

Exchange differences on conversion of

foreign subsidiaries 1 050 1 813

Replacement of fixed assets (5 192) (6 984) (8) (9)

Proceeds on disposal of fixed assets 27 9 894 1 091 – 5

Net cash inflow/(outflow) from investing activities 13 233 (5 879) (1 108) (2 006)

CASH FLOW FROM FINANCING ACTIVITIES

Dividends paid to minorities (4 500) – – –

Decrease in non-current loans – 4 037 – 4 037

Decrease/(Increase) in long-term loans to subsidiaries – – 7 116 (5 522)

Net cash inflow/(outflow) from financing activities (4 500) 4 037 7 116 (1 485)

Net increase/(decrease) in cash and cash equivalents 43 818 27 179 9 311 (2 398)

Cash and cash equivalents at beginning of period 31 557 4 378 (9 031) (6 633)

Cash and cash equivalents at end of period 28 75 375 31 557 280 (9 031)

Cash F l ow S t a t emen t sfor the year ended 31 December 2003


The principal accounting policies adopted in the preparation of these consolidated annual financial statements are set out below and

are consistent with those of the previous year.

1. BASIS OF PREPARATION

The consolidated financial statements are prepared in accordance with and comply with Statements of Generally Accepted

Accounting Principles. The consolidated financial statements are prepared under the historical cost convention as modified by

the revaluation of certain freehold land and buildings.

2. BASIS OF CONSOLIDATION

The consolidated financial statements include those of the holding company and its subsidiaries. Subsidiaries, which are those

companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has

power to exercise control over the operations, have been consolidated. Subsidiaries are consolidated from the date on which

effective control is transferred to the Group and are no longer consolidated from the date of disposal. All inter-company

transactions, balances and unrealised surpluses and deficits on transactions between Group companies have been eliminated.

Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by

the Group. Separate disclosure is made of outside shareholders’ interest.

A listing of the Group’s principal subsidiaries is set out at the end of the notes to the annual financial statements. The financial

effect of the acquisition and disposal of subsidiaries is shown, in notes 23 to 26 to the annual financial statements.

3. FOREIGN ENTITIES

The financial statements of foreign entities have been consolidated after translating the balance sheets at the exchange rates

ruling at the year-end and the income statements at the weighted average rates of exchange for the year.

Investments in foreign subsidiaries are translated at the original rate ruling at the time of acquiring the investment. Exchange

differences are only recognised in the income statement as a gain or loss on disposal of the foreign entity.

4. FOREIGN CURRENCY TRANSACTIONS

Assets and liabilities in foreign currencies are translated to rand values at rates of exchange ruling at the end of the financial year.

Translation differences relating to the foreign subsidiaries are dealt with through reserves. All other exchange differences are dealt

with in the income statement. Translation gains and losses, both realised and unrealised, are credited or charged to income.

5. GOODWILL

Goodwill on acquisitions occurring on or after 1 January 1999 is reported in the balance sheet as an intangible asset and is

amortised using the straight-line method over its estimated useful life. This period will be a period of between 5 and 15 years.

The carrying amount of goodwill is reviewed annually and written down for permanent impairment where it is considered

necessary. Previously when subsidiaries were acquired, any excess of the consideration paid over the fair value of the net

tangible assets at the date of acquisition was written off against reserves or share premium, where applicable.

6. PROPERTY, PLANT AND EQUIPMENT

Freehold land and buildings are valued on an open market basis by external independent valuers, with existing use, every five

years. Increases in the carrying amount arising on revaluation are credited to revaluation and other reserves in shareholders’

equity. Decreases that offset previous increases of the same asset are charged against the revaluation reserve; all other

decreases are charged to the income statement.

On realisation, net revaluation surpluses are transferred from revaluation reserves to distributable reserves and profits and

losses on disposals, based on carrying values, are credited or charged to income.

Accoun t i n g Po l i c i e sfor the year ended 31 December 2003


Plant, equipment and vehicles are included at historical cost. Depreciation is calculated on the straight-line method to write off

the cost of each asset, or revalued amounts, to their residual values over their estimated useful lives.

Property, plant and equipment are depreciated using mainly the following rates per annum.

Buildings 2% straight line

Plant and equipment 20% straight line

Motor vehicles 25% straight line

Patterns and dies 33% straight line

Computer equipment 33% straight line

Office furniture and equipment 20% straight line

Where a permanent diminution in value or impairment of an asset is identified, the deficit is charged to the income statement.

7. INVENTORIES

Inventory, other than long-term contracts in progress, is stated at the lower of cost and net realisable value. In general, cost is

determined on a first in, first out basis and includes transport and handling costs. In the case of manufactured products, costs

include all direct expenditure and production overheads based on normal levels of activity. Where necessary, provision is made

for obsolete, slow moving and defective inventory.

Long-term contracts in progress are valued at cost, comprising direct expenditure and attributable overheads, together with a

proportion of the estimated total profit earned on the work completed to date, less progress payments received and receivable.

Provision is made for all losses expected to arise on completion of the contracts.

8. DEFERRED INCOME TAXES

Deferred income tax is provided, using the liability method, for all temporary differences arising between the tax bases of assets

and liabilities and their carrying values for financial reporting purposes. Currently enacted tax rates are used to determine

deferred income tax.

Under this method, the Group is required to make provision for deferred income taxes on the revaluation of certain non-current

assets and, in relation to an acquisition, on the differences between the fair values of the net assets acquired and their tax base.

The principal temporary differences arise from depreciation on property, plant and equipment, revaluations of certain non-

current assets, provisions for pensions and other post-retirement benefits, and tax losses carried forward. Deferred tax assets

relating to the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be

available against which the unused tax losses can be utilised.

9. LEASED ASSETS

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of

ownership to the lessee. All other leases are classified as operating leases. Assets acquired in terms of finance lease

agreements are capitalised at their fair value at the date of acquisition. The corresponding liability to the lessor, net of finance

charges, is included in the balance sheet as finance lease obligation. Finance lease assets are depreciated on the same basis

as owned assets (owned non-current assets). Finance charges are charged to the income statement as they become due and

payable. Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of

the relevant lease.



10. REVENUE RECOGNITION

Sales are recorded in the financial statements at the date goods are delivered to customers or services provided.

Profit is taken, where the outcome of the contract can be reasonably determined, using the percentage of completion method.

Where necessary, full provision is made for losses expected on completion.

11. WARRANTIES

Provision is made in full for claims by customers in respect of defects in goods supplied or work performed when such claims

are ascertainable. In addition, certain long-term contract provisions are made for warranties calculated on an appropriate

percentage of the contract prices.

12. PROVISIONS

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable

that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the

amount of the obligation can be made.

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated

liability for annual leave as a result of services rendered by employees up to the balance sheet date.

13. TRADE RECEIVABLES

Trade receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of

all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified.

14. PENSION SCHEME ARRANGEMENTS AND POST RETIREMENT MEDICAL BENEFITS

The Group operates defined benefit and defined contribution plans, the assets of which are generally held in separate trustee-

administered funds. The pension plans are generally funded by payments from employees and by the relevant Group

companies, taking account of the recommendations of independent qualified actuaries.

For defined benefit plans, the pension accounting costs are assessed using the projected unit credit method. Under this

method, the cost of providing pensions is charged to the income statement to spread the regular cost over the service lives of

employees in accordance with the advice of qualified actuaries who carry out a full valuation of the plans every three years. The

pension obligation is measured as the present value of the estimated future cash outflows using interest rates of government

securities that have terms to maturity approximately the terms of the related liability.

All unrealised actuarial gains and losses are spread forward over the average remaining service lives of employees.

The Group's contributions to the defined contribution pension plans are charged to the income statement in the year to which

they relate.

The amount accounted for as a liability for post retirement medical benefits is based on valuations made by independent

qualified actuaries.



15. CASH AND CASH EQUIVALENTS

For purposes of the cash flow statement, cash includes cash on hand, deposits held on call with banks, and investments in

money market instruments.

16. INVESTMENT IN ASSOCIATE

Investments in associate undertakings are accounted for by the equity method of accounting. These are undertakings over

which the Group has between 20% and 50% of the voting rights and over which the Group exercises significant influence, but

which it does not control.

Provisions are recorded for long-term impairment in value.

Equity accounting involves recognising in the income statement the Group's share of the associate's profit or loss for the year.

The Group's interest in the associate is carried in the balance sheet at an amount that reflects its cost of investment and loans

to the associate less its share of the associate's loss as reflected in note 11.

17. IMPAIRMENT

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether

there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount

of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the

recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which

the asset belongs.

If the recoverable amount of an asset or cash-generating unit is estimated to be les than its carrying amount, the carrying

amount of the asset or cash-generating unit is reduced to its recoverable amount. Impairment losses are recognised as an

expense immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the

revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount

that would have been determined had no impairment loss been recognised for the asset or cash generating unit in prior years.

A reversal of an impairment loss is recognised as income immediately.

18. DISCONTINUING OPERATIONS

A discontinuing operation results from the sale or abandonment of an operation that represents a separate major line of

business and of which the assets, net profit or loss and activities can be distinguished physically, operationally and for financial

reporting purposes.



19. FINANCIAL INSTRUMENTS

Measurement

Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial recognition these

instruments are measured as set out below.

Investments

Listed investments are carried at market value, which is calculated by reference to stock exchange quoted selling prices at the

close of business on the balance sheet date. Other investments are measured at fair value.

Trade and other receivables

Trade and other receivables originated by the group are stated at cost less provision for doubtful debts.

Cash and cash equivalents

Cash and cash equivalents are stated at cost which approximate fair value due to the short-term nature of these instruments.

Trade and other payables

Trade and other payables are stated at cost.

Gains and losses on subsequent measurement

Gains and losses arising from a change in the fair value of financial instruments that are not part of a hedging relationship are

included in net profit or loss in the period in which the change arises.

20. COMPARATIVES

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.



1. SEGMENT INFORMATION

For the year ended 31 December 2003 Operating

Revenues profit Assets Liabilities

R'000 R'000 R'000 R'000

Fans and Heat exchangers 232 024 17 733 170 715 105 143

Environmental Control 190 044 10 631 58 983 30 287

Pumps 132 857 5 744 1 439 166

Other – 16 21 870 (7 361)

554 925 34 124 253 007 128 235

Non-cash

Capital income or

expenditure Depreciation expenses

R'000 R'000 R'000

Fans and Heat exchangers 1 816 3 116 4 032

Environmental Control 306 501 –

Pumps 902 1 737 –

Other 2 168 1 016 –

5 192 6 370 4 032

For the year ended 31 December 2002 Operating

Revenues profit Assets Liabilities

R'000 R'000 R'000 R'000

Fans and Heat exchangers 213 694 10 867 101 613 45 320

Environmental Control 194 106 11 768 84 921 56 816

Pumps 114 798 2 158 48 737 18 223

Other – (921) 10 039 17 180

522 598 23 872 245 310 137 539

Non-cash

Capital income or

expenditure Depreciation expenses

R'000 R'000 R'000

Fans and Heat exchangers 3 918 3 029 3 853

Environmental Control 481 606 (210)

Pumps 1 941 1 868 0

Other 644 1 054 (1 694)

6 984 6 557 1 949

No t e s t o t h e F i n anc i a l S t a t emen t sfor the year ended 31 December 2003


2003 2002

R'000 R'000

1. SEGMENT INFORMATION (continued)

Segment results (operating profit) 34 124 23 872

Finance revenue 5 029 734

Foreign exchange losses (6 243) (7 196)

Exceptional item – loan written off – (112)

Goodwill amortisation and write-down on acquisition – (979)

Share of results of associate – (1 397)

Profit before taxation 32 910 14 922

Taxation (11 138) (10 286)

Profit after taxation 21 772 4 636

Outside shareholders' interest (3 242) (2 393)

Net profit for the year 18 530 2 243

GEOGRAPHICAL SEGMENTS

Although the Group's three business segments are managed on a world-wide basis, they operate in four main

geographical areas:

South Africa is the home country of the parent company, and the areas of operation are: fans and heat exchangers,

environmental control and pumps

Revenues Total assets

R'000 R'000

2003 2002 2003 2002

South Africa 531 718 454 849 238 080 208 322

United Kingdom 14 226 40 072 9 308 29 513

North America 8 795 5 983 5 348 5 258

Australia 186 21 694 271 2 217

554 925 522 598 253 007 245 310

Capital expenditure

R'000

2003 2002

South Africa 5 055 6 767

United Kingdom 99 169

North America 38 17

Australia – 31

5 192 6 984



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

2. REVENUE

Sales, which excludes value-added tax and sales

between Group companies, represents the invoiced

value of goods and services supplied and the value

of long-term contract work.

Revenue

– Sale of goods 501 065 490 890 – –

– Contract revenue 53 860 31 708 – –

554 925 522 598 – –

3A. OPERATING PROFIT IS STATED AFTER CHARGING

Additional inventory obsolescence provision – 2 500

Amortisation of intangible assets (note 9)

– Goodwill (included in Other operating expenses) 290 248 – –

Auditors' remuneration

– Audit fees 1 095 1 188 135 124

– Secretarial and other services 137 253 25 232

– Expenses 43 43 10 10

1 275 1 484 170 366

Depreciation

– Buildings 313 325 – –

– Plant, equipment and vehicles 6 057 6 232 87 87

6 370 6 557 87 87

Directors' emoluments (refer note 35)

Executive directors 2 380 2 069

Non-executive directors 136 97

2 516 2 166

Foreign exchange profits/(losses) (2) 128

Provision for warranties 179 565

Remuneration other than to employees for

technical services 567 1 253

Rentals under operating leases

– Land and buildings 843 843 – –

– Equipment and vehicles 5 649 5 630 93 67

6 492 6 473 93 67

Retrenchment costs – 139

Staff costs 114 908 114 154 4 186 3 797



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

3A. OPERATING PROFIT IS STATED AFTER CHARGING (continued)

OPERATING PROFIT IS STATED AFTER CREDITING

Income from subsidiaries

– Dividends 6 328 376

– Management fees 4 998 3 492

– Royalties 5 584 5 075

16 910 8 943

Profit on disposals of property, plant and equipment 3 453 518 – –

3B. FOREIGN EXCHANGE (LOSSES)/GAINS

Exchange losses on foreign currency

denominated inter-company loans (6 243) (7 196) 10 (68)

3C. EXCEPTIONAL ITEM – LOAN WRITTEN OFF

Write off of non-current loans – (112) – (112)

As stated in note 12, the loans to the Howden Africa

Holdings Limited Employees Share Trust have been

written off due to the impairment in their value.

3D. DISCONTINUED OPERATIONS

Hertz Technologies (Pty) Limited an electric motor

business, which did not fit the Group's profile, being

fluid handling needs, was disposed of during

May 2003.

Sales 2 699 12 610

Operating costs 3 809 16 588

Operating loss (1 110) (3 978)

Financial costs 6 (1)

Loss before taxation (1 104) (3 979)

Taxation – –

Loss after taxation (1 104) (3 979)

Property, plant and equipment 764 930

Current assets 3 153 4 335

Total assets 3 917 5 265

Total liabilities (837) (5 093)

Net assets 3 080 172

Proceeds on sale of operations –

Loss on disposal 3 080

Proceeds on sale –

Less cash and cash equivalent of subsidiary sold (1 112)

Net cash outflow on sale (1 112)



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

4. FINANCIAL REVENUE/(COST)

Net interest paid

– Short-term borrowings (subsidiaries) – (712)

– Bank overdrafts (49 236) (35 427) (1 807) (1 719)

– Other (12) (196) – (1)

(49 248) (35 623) (1 807) (2 432)

Interest received

– Bank balances 54 060 35 899 465 781

– Short-term borrowings (subsidiaries) 879 869

– Other 217 458 – 202

5 029 734 (463) (580)

5. TAXATION

South African normal tax

Current tax

– current year 15 825 12 754 1 592 482

– prior year (937) 2 – –

Deferred tax

– current year (2 237) (2 459) 205 249

– prior year (2 638) (11) – –

Secondary tax on companies

– current year 1 125 –

– prior year – –

11 138 10 286 1 797 731

Reconciliation of rate of taxation % % % %

South African normal tax rate 30,0 30,0 30,0 30,0

Adjusted for:

Disallowable expenditure 6,6 16,2 (113,4) 86,0

Exempt income (3,0) (5,9) 42,9 (17,6)

Investment and other allowances – – – –

Assessed losses carried forward 7,7 50,5 – –

Deferred tax assets not raised (0,1) (21,9) – –

Secondary tax on companies 3,4 – – –

Prior year adjustments (10,8) (0,1) – –

Net increase/(reduction) 3,8 38,8 (70,5) 68,4

Effective rate 33,8 68,8 (40,5) 98,4

Gross calculated tax losses of R18 360 380

(2002: R22 616 630) of certain subsidiaries at the end

of the financial year are available for utilisation against

future taxable income of those companies. This is

dependent on sufficient taxable income being earned in

future by the subsidiaries concerned.



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

6. ORDINARY DIVIDENDS

Interim of 3 cents paid (2002: 0 cents) 1 972 0 1 972 0

Final of 0 cents recommended (2002: 0 cents ) 0 0 0 0

1 972 0 1 972 0

DIVIDENDS

The board of directors approved a final dividend of 5 cents per share and a special dividend of 47 cents per share. This

dividend was declared payable to all shareholders recorded on 27 February 2004 and paid on 8 March 2004.

Total value of dividend payable R34,179 million. Taxation (STC) payable R4,272 million. Total value of dividend payment

R38,451 million.

It should be noted that as at 31 December 2003 there remained 1 340 800 share options available to employees in

respect of the share incentive scheme.

As the special dividend of 47 cents per share constitutes a net asset reduction , the Howden Africa Holdings Limited

Employees Share Trust requires that this amount be held in a Dividend reserve for the benefit of the Trust option holders.

An amount of R630 000 will be provided for in the 2004 financial year in respect of outstanding options granted.

7. EARNINGS PER ORDINARY SHARE

The calculation of earnings per share is based on the consolidated net profit attributable to ordinary shareholders of

R18 530 000 (2002: R2 243 000) and 65 729 109 (2002: 65 729 109) ordinary shares in issue during the year.



8. PROPERTY, PLANT AND EQUIPMENT

Freehold land Plant,

and equipment,

buildings vehicles

purchased purchased Total

R'000 R'000 R'000

DECEMBER 2003 – CONSOLIDATED

COST AT 31 DECEMBER 2002 21 769 59 922 81 691

Exchange differences – (175) (175)

Additions 1 823 3 360 5 183

Business acquisitions – – –

Disposals (6 767) (26) (6 793)

Disposal of subsidiary – (17 457) (17 457)

COST AT 31 DECEMBER 2003 16 825 45 624 62 449

DEPRECIATION

Depreciation at 31 December 2002 1 572 45 518 47 090


Charge for the year 313 6 056 6 369

Business acquisitions – – –

Depreciation on disposals (341) (11) (352)

Disposal of subsidiary – (14 260) (14 260)

DEPRECIATION AT 31 DECEMBER 2003 1 544 37 204 38 748

NET BOOK VALUE AT 31 DECEMBER 2003 15 281 8 420 23 701

DECEMBER 2002 – CONSOLIDATED

COST AT 31 DECEMBER 2001 21 989 51 872 73 861


Additions 45 6 939 6 984

Business acquisitions – 3 305 3 305

Disposals (265) (844) (1 109)

Disposal of subsidiary – (864) (864)

COST AT 31 DECEMBER 2002 21 769 59 922 81 691

DEPRECIATION

Depreciation at 31 December 2001 1 251 38 769 40 020


Charge for the year 325 6 232 6 557

Business acquisitions – 2 014 2 014

Depreciation on disposals (4) (532) (536)

Disposal of subsidiary – (743) (743)

DEPRECIATION AT 31 DECEMBER 2002 1 572 45 518 47 090

NET BOOK VALUE AT 31 DECEMBER 2002 20 197 14 404 34 601



8. PROPERTY, PLANT AND EQUIPMENT (continued)

Freehold land Plant,

and equipment,

buildings vehicles

purchased purchased Total

R'000 R'000 R'000

DECEMBER 2003 – COMPANY

COST AT 31 DECEMBER 2002 – 723 723

Additions – 8 8


DEPRECIATION

Depreciation at 31 December 2002 – 561 561

Charge for the year – 87 87

DEPRECIATION AT 31 DECEMBER 2003 – 648 648

NET BOOK VALUE AT 31 DECEMBER 2003 – 83 83

DECEMBER 2002 – COMPANY


Additions – 9 9

Disposals – (18) (18)


DEPRECIATION

Depreciation at 31 December 2001 – 487 487

Charge for the year – 87 87

Depreciation on disposals – (13) (13)

DEPRECIATION AT 31 DECEMBER 2002 – 561 561

NET BOOK VALUE AT 31 DECEMBER 2002 – 162 162

Details in respect of immovable property are set out in a register which may be inspected at the Company's registered office

during normal business hours.

In terms of the Group’s accounting policy, freehold immovable properties were valued during the financial year 2000 by an

independent registered valuer – JHI Real Estate Limited .These values were conservatively adjusted by the directors.



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

9. INTANGIBLE ASSET

Opening balance 871 1 329

Less: Goodwill previously provided was reversed – (210)

Amortisation charge (note 3A) (290) (248)

581 871

The goodwill arose from the purchase of the business of

Mining Refrigeration Equipment.

10. INTERESTS IN SUBSIDIARIES

Shares at cost less provisions and amounts written off 32 905 32 906

Loans to subsidiaries 49 717 96 189

82 622 129 095

Less: Loans from subsidiaries 32 840 24 505

49 782 104 590

Loans to/from subsidiaries are unsecured and not

subject to any fixed terms of repayment. Except as

detailed hereunder, no interest is charged at present but

these arrangements are subject to revision from time to

time.Included in loans to subsidiaries is a long-term loan

to a subsidiary which bears interest at the current

prime bank overdraft rate. 4 500 4 500

11. INVESTMENT IN ASSOCIATE

Unlisted

Cost of acquisition 25 533 – 25 533 –

Opening carrying amount – 4 521 – 4 521

Loans granted to associate 8 332 1 850 8 332 1 850

33 865 6 371 33 865 6 371

Post acquisition results of the company – (1 397) – (1 397)

33 865 4 974 33 865 4 974

Transfer of losses of associate on it becoming a subsidiary – 4 622 – 4 622

Transfer of loans of associate on it becoming a subsidiary – (9 596) – (9 596)

Closing carrying amount 33 865 – 33 865 –

Directors' valuation 33 865 – 33 865 –

The associate is the unlisted Pump Brands (Proprietary)

Limited which became an associate company on

31 December 2003.



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

12. NON-CURRENT LOANS

Opening balance – 4 149 – 4 149

Less: Write off – (112) – (112)

Repaid – (4 037) – (4 037)

Closing balance – – – –

Long-term loans granted by subsidiaries to Howden Africa

Holdings Limited Employees Share Trust for the employee

share incentive scheme.

13. INVENTORIES

The amounts attributable to the different categories

are as follows :

– Raw materials, components and consumables 8 002 6 264 – –

– Work in progress 31 894 9 704 – –

– Finished goods 8 551 38 695 – –

48 447 54 663 – –

Long-term contracts included in work in progress – – – –

Less: Progress payments – – – –

– – – –

14. RECEIVABLES AND PREPAYMENTS

Trade receivables 57 618 103 130 – –

Prepayments and other receivables 9 393 20 003 6 321 37

67 011 123 133 6 321 37

15. ORDINARY SHARE CAPITAL

Authorised

150 000 000 ordinary shares of 1 cent each 1 500 1 500 1 500 1 500

Issued

65 729 109 ordinary shares of 1 cent each 657 657 657 657

Share premium

– Opening balance and closing balance 61 051 61 051 61 051 61 051

61 708 61 708 61 708 61 708

Share capital

3 130 448 ordinary shares were reserved for the Company's employee share incentive scheme. In the first allotment 1 301 500

shares were issued at R4,50 per share,in the second allotment 304 250 shares were issued at R4,00 per share and in the third

allotment 1 514 400 shares were issued at R0,90 per share to the Howden Africa Holdings Limited Employees Share Trust for

employees who accepted and exercised their options with deferred delivery. These shares were listed on 17 April 1997, 2 July

1998 and 7 September 2000 respectively.

In terms of JSE Securities Exchange requirement section 20.9 these shares were sold to Howden Group SA Limited.



15. ORDINARY SHARE CAPITAL (continued)

Holding company

The holding company of Howden Africa Holdings Limited is Howden Group South Africa Limited, incorporated in South Africa

and its ultimate holding company is Charter plc. incorporated in England and Wales.

Shareholders' analysis

at 31 December 2003

Number of Number of

HOLDINGS shareholders % shares %

1 – 1 000 shares 271 56,93 66 339 0,10

1 001 – 10 000 shares 109 22,90 542 144 0,83

10 001 – 100 000 shares 67 14,08 2 598 280 3,95

100 001 – 1 000 000 shares 22 4,62 7 988 657 12,15

Over 1 000 000 shares 7 1,47 54 533 689 82,97

476 100,00 65 729 109 100,00

CATEGORY OF ORDINARY SHAREHOLDERS

Holding companies 2 0,42 38 401 336 58,42

Individuals 414 86,98 4 298 692 6,54

Banks, nominees and trust companies 31 6,51 1 813 271 2,76

Insurance companies 2 0,42 5 913 650 9,00

Pension funds and investment companies 3 0,63 6 479 500 9,86

Endowment and mutual funds 6 1,26 6 750 361 10,27

Other corporations and close corporations 7 1,47 60 217 0,09

Other Limited and Private companies 11 2,31 2 012 082 3,06

476 100,00 65 729 109 100,00

MAJOR SHAREHOLDERS BENEFICIALLY INTERESTED IN

5% OR MORE OF THE COMPANY'S LISTED SECURITIES

Howden Group South Africa Limited 33 477 574 50,93

Old Mutual Group 5 913 650 9,00

James Howden & Godfrey Overseas Limited 4 923 762 7,49

SABC Pension Fund 4 696 900 7,15

Allan Gray 4 257 900 6,48



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

16. RESERVES

Balance at the end of the year 57 775 39 507 18 828 27 026

Comprising:

Company 18 828 27 036 18 828 27 026

Consolidated subsidiaries 38 947 12 471

Distributable reserves

Balance at the beginning of the year 32 467 26 921 27 026 22 392

Movement for year 18 268 5 546 (8 198) 4 634

Retained profit/(accumulated loss) for the year 18 530 2 243 (6 226) 4 634

Dividend (1 972) – (1 972)

Exchange difference on translation of foreign subsidiaries 1 710 2 393

Reserves of subsidiary sold – 910

Balance at the end of the year 50 735 32 467 18 828 27 026

Revaluation reserve

Balance at the beginning and end of the year 7 040 7 040 – –

17. OUTSIDE SHAREHOLDERS' INTEREST

Balance at beginning of year 6 556 4 227

Disposal – (61)

Share of net profits of subsidiaries 3 242 2 393

Dividend paid by subsidiary (4 500) –

Exchange difference on conversion of foreign subsidiaries (9) (3)

Balance at the end of the year 5 289 6 556

18. DEFERRED TAX

Balance at beginning of year (485) 1 988 1 718 1 469

Exchange adjustment (2) – – –

Charge for the year (4 875) (2 473) 205 249

Disposal of subsidiary 1 335 – – –

(4 027) (485) 1 923 1 718

The balance comprises:

Provisions (3 630) (3 973) (110) (50)

Working capital allowances (857) 1 193 2 033 1 768

Assessed losses (2 504) (669) – –

Revaluation 2 964 2 964 – –

(4 027) (485) 1 923 1 718



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

19. TRADE AND OTHER PAYABLES

Trade payables 13 912 37 500 – –

Other payables 101 245 89 325 4 299 4 078

115 157 126 825 4 299 4 078

20. CASH GENERATED FROM OPERATIONS

Net profit before taxation 32 910 14 922 (4 429) 743

Adjustments for:

Depreciation 6 370 6 557 87 87

Dividends received – – (6 328) (376)

Write down of non-current loans – 112 – 112

Investment in subsidiary written off – 152 – 152

Amortisation of goodwill on acquiring subsidiary – 827 – –

Share of results before tax of associate company – 1 397 – 1 397

Loss on disposal of discontinuing business 3 080 2 110 10 590 –

Loss on conversion of subsidiary to associate 925 – 4 337 –

Profit on disposal of fixed assets (3 453) (518) – –

Financial (revenue)/cost (5 029) (734) 463 580

Operating profit before working capital changes 34 803 24 825 4 720 2 695

Working capital changes 8 851 13 632 (4 437) (877)

(Increase)/decrease in inventories (23 636) 4 603

Decrease/(increase)in accounts receivable 34 139 (19 340) (6 284) 39

Increase in amounts owing by subsidiaries – – (6) (2 544)

Increase/(decrease) in accounts payable (1 652) 28 369 221 791

Increase/(decrease) in amounts owing to subsidiaries 1 632 837

43 654 38 457 283 1 818

21. RECONCILIATION OF DIVIDENDS PAID DURING THE YEAR

Dividends provided at the beginning of the year – – – –

Ordinary dividends recommended (1 972) – (1 972) –

Dividends provided at the end of the year – – – –

(1 972) – (1 972) –

22. RECONCILIATION OF TAXATION PAID DURING THE YEAR

Amount owing at beginning of year (7 550) (5 050) 102 63

Exchange adjustment 33 86 – –

Charge in income statement (11 138) (10 286) (1 797) (731)

Adjustment for disposal of subsidiary (1 174) –

Adjustment for deferred taxation (4 875) (2 470) 205 249

Amount owing at end of year 13 078 7 550 617 (102)

(11 626) (10 170) (873) (521)



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

23. ACQUISITION OF HERTZ TECHNOLOGIES (PTY) LIMITED

During the prior year the Group acquired the company

Hertz Technologies (Pty) Limited. The fair value of

acquisition was as follows:

Property, plant and equipment acquired – 1 291 – –

Inventory acquired – 3 320 – –

Receivables and prepayments acquired – 3 869 – –

Cash acquired – 574 – –

Intercompany accounts – (2 506) – –

Trade and other payables disposed – (2 395) – –

Net asset value – 4 153 – –

Accumulated loss accounted for since acquired as an associate – 4 622 – –

Goodwill on acquisition – 827 – –

– 9 602 – –

Purchase price on loan and cash – (9 747) – –

Net cash outflow – (145) – –

Add: cash acquired – 574 – –

Net cash inflow – 429 – –

24. DISPOSAL OF HOWDEN PUMPS (PTY) LIMITED

During the year the Group disposed of the company

Howden Pumps (Pty) Limited. The fair value of

disposal was as follows:

Property, plant and equipment disposed (2 433) – – –

Inventory disposed (29 125) – – –

Receivables and prepayments disposed (20 658) – – –

Intercompany accounts (11) – – –

Trade and other payables disposed 11 353 – – –

Taxation disposed (1 174) – – –

Bank overdraft disposed 9 693 – – –

Deferred taxation disposed (1 335) – – –

Net asset value (33 690) – – –

Less: Intercompany balance written off 37 101 – – –

Net cash outflow 3 411 – – –

Less: Reserves disposed (3 411) – – –

– – – –

Overdraft released 9 693 – – –

Net cash inflow 9 693 – – –



GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

25. DISPOSAL OF HERTZ TECHNOLOGIES (PTY) LIMITED

During the year the Group disposed of the company

Hertz Technologies (Pty) Limited. The fair value

of disposal was as follows:

Property, plant and equipment disposed (764) – – –

Inventory disposed (727) – – –

Receivables and prepayments disposed (1 314) – – –

Intercompany accounts – – – –

Trade and other payables disposed 837 – – –

Cash disposed (1 112) – – –

Net asset value (3 080) – – –

Less: Intercompany balance written off – – – –

Net cash outflow (3 080) – – –

Less: Loss on sale 3 080 – – –

– – – –

Cash released (1 112) – – –

Net cash outflow (1 112) – – –

26. DISPOSAL OF ENGART AUSTRALASIA PTY LIMITED

During the prior year the Group disposed of the company

Engart Australasia Pty Limited. The fair value of

disposal was as follows:

Property, plant and equipment disposed – (121) – –

Inventory disposed – (1 144) – –

Receivables and prepayments disposed – (92) – –

Intercompany accounts – 1 178 – –

Trade and other payables disposed – 493 – –

Cash disposed – (396) – –

Net asset value – (82) – –

Less: Outside shareholders’ interest – 61 – –


Less: Reserves disposed – 2 149 – –

Total value of investment in subsidiary disposed – 2 128 – –

Less: Intercompany balances written off – (1 178) – –

Investment in subsidiary – (932) – –

– 18 – –

Cash released – (396) – –




GROUP COMPANY

2003 2002 2003 2002

R'000 R'000 R'000 R'000

27. PROCEEDS ON DISPOSAL OF FIXED ASSETSBook value 6 441 573 – 5 Profit on disposal 3 453 518 – –

Proceeds 9 894 1 091 – 5

28. CASH AND CASH EQUIVALENTSCash and cash equivalents included in the cash flow statementcomprises the following balance sheet amounts:Bank and cash balances 75 375 31 557 280 – Bank overdraft – – – (9 031)

75 375 31 557 280 (9 031)

29. COMMITMENTSCapital expenditureAuthorised and contracted 78 811 Authorised not contracted 287 – Operating leasesFuture leasing charges for premises, equipment and motor vehicles.Payable within 1 year 1 506 1 847 69 55Payable within 2 to 5 years 5 874 7 562 109 27

7 380 9 409 178 82

30. GUARANTEESThe Company has guaranteed facilities granted to subsidiary companies amounting to R54 400 000 (2002 – R54 400 000).

The Company has given a limited guarantee amounting to R3 000 000 (2002 – R3 000 000) to a raw material supplier of asubsidiary company.

The Company's bankers have furnished performance and shipping guarantees on behalf of subsidiaries amounting toR34 734 000 (2002: R32 545 000).

No losses are expected to arise out of the above arrangements.

LITIGATIONThere are no legal matters, which in the opinion of the Group and in consultation with legal counsel, would have any materialeffect on the Group’s consolidated financial position, results of operations or cash flow.

31. RETIREMENT FUNDS AND POST RETIREMENT BENEFITSDefined benefit fundThe Company operates a post retirement pension scheme that covers all employees employed before 1 January 2001. Thepension fund is a final salary defined benefit plan and is fully funded. The assets of the fund are held in an independent trusteeadministered fund, which is administered in terms of the Pension Funds Act of 1956, as amended. The fund is valued everythree years using the projected unit credit method. The latest full actuarial valuation was performed on 31 December 2002.

Defined contribution fundThe Company operates a defined contribution pension fund for all employees who joined after 1 January 2001.

This fund is administered by Lekana Employee Benefit Solutions. Both the Group and the employees are required to contributeto the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefitscheme is to make the specified contributions. The total cost charged to the income statement of R1,5 million (2002: R0,9 million) represents contributions paid to the scheme.

Employees who are not members of either of the Group's pension funds are covered by the relevant industry fund or throughforeign territory statutory funds.

All the funds are managed independently of the Group.



31. RETIREMENT FUNDS AND POST RETIREMENT BENEFITS (continued)

Amounts recognised in the balance sheet are as follows:

GROUP

2003 2002

R'000 R'000

Balance at end of the year – –

Present value of funded obligations 97 390 91 186

Fair value of plan assets (93 834) (89 315)

3 556 1 871

Unrecognised actuarial gains and losses (165) (13 004)

(Deficit)/surplus not recognised (3 391) 11 133

Liability at balance sheet date – –

No assets are recognised in respect of the surplus as the apportionment of the surplus

still needs to be calculated and approved by the Registrar of Pension Funds in terms of

the Pension Fund Second Amendment Act, 39 0f 2001.

Movement in the liability recognised in the balance sheet

Opening balance as previously stated 1 871 (9 367)

(Deficit)/surplus not recognised (1 871) 9 367

Balance at the beginning of the year – –

Movement during the year

Contributions paid (2 684) (2 605)

Other expenses included in staff costs 2 684 2 605

Current service costs 4 061 2 828

Interest costs 9 630 9 159

Expected return on plan assets (9 486) (11 148)

Movement in surplus not recognised (1 521) 1 766

Balance at end of the year – –

The principal actuarial assumptions used for accounting purposes were:

Discount rate 9,25% 11,00%

Pension increases 6,00% 6,00%

Return on assets 10,25% 10,75%

Salary increases 6,00% 8,00%

Post retirement benefitsThe Group only had certain employees that it provided for as regards post-employment medical benefits. These employeesall originate from the Pump division. An amount of R3 164 000 was included as a liability on the Balance Sheet as

determined by an actuarial valuation in respect of post-retirement healthcare cost of pensioners valued as at 1 January2003. This amount has been transferred with the Pump division when it became an associate.

N o t e s t o t h e F i n anc i a l S t a t emen t sfor the year ended 31 December 2003


32. EQUITY COMPENSATION BENEFITS

The Howden Africa Holdings Limited Employees Share Trust

It is noted that under the rules of the Trust the scheme is intended as an incentive to employees to remain in the employment

of the Group and to promote its continued growth by giving them an opportunity to acquire shares in the Company.

The Company shall reserve sufficient of its authorised share capital to enable it to make available to the Trust a maximum

number of shares being equal to 5% of the Company's issued shares. This number and percentage shall not be subject to

change other than by resolution of the Company in general meeting or as a result of a capitalisation or rights issue.

The Company shall allot shares from time to time at the written request of the trustees at a price equal to their market value on

their date of allotment.

Under the rules of the Trust, employees shall be eligible to and shall participate in the scheme only if and to the extent that

offers are made to and are accepted by them or that options are granted to them. Every offer shall be in writing and specify:

the name of the offeree; the number of unreserved shares offered; the offer or option date; the price at which shares are to be

offered and terms of payment.

The number of scheme shares for which any one employee shall be entitled is limited to a maximum of 100 000. The offer

price shall be made at a purchase price equal to the market value of the shares at the time the offer is made or the option

granted.

Subject to the provisions of the Trust deed, the purchase price of the scheme shares purchased by the employee shall be

payable in a manner and at such time and times as may be stipulated in the offer of the shares. However, the total purchase

price shall be paid not later than 10 years after the offer date; but payment of the purchase price of any shares purchased as a

result of an acceptance of an offer may not be effected before the lapse of the following respective periods (calculated from the

offer date):

• three years, in respect of not more than one-third of the total number of shares rounded down to the nearest 100 shares;

• four years, in respect of not more than two-thirds of the total number of shares rounded down to the nearest 100 shares;

• five years, in respect of the balance of the shares.

The option shall lapse to the extent that it is not exercised by the date specified as its expiry date by the trustees when granting

the option, which is 10 years from the date of granting the option.

As noted in note 15 of the notes to the financial statements, 3 130 448 ordinary shares were reserved for the Company's

employee share incentive scheme: 3 120 150 share options were exercised with deferred delivery and issued at R4,50;

R4,00 and 90 cents in 1997,1998 and 2000 respectively.

In terms of the JSE Securities Exchange requirement section 20.9, these shares totalling 3 120 150 which had been listed

previously were sold to Howden Group SA Limited.




32. EQUITY COMPENSATION BENEFITS (continued)

Summary of share options that have been granted and accepted with deferred delivery in respect of employees who are

currently employed as at 31 December 2003.

Share price Number of

of options share options

Share options at 31 January 1997 4,50 1 301 500

Share options at 1 May 1998 4,00 304 250

Share Options at 17 July 2000 0,90 1 514 400

3 120 150

Lapsed, returned or forfeited 1 779 350

Total options on hand 31 December 2003 1 340 800

Summary of options

Number of share Lapsed, forfeited, Total on hand

options granted returned 31 Dec 2003

R4,50 – 31 January 1997 1 301 500 (1 090 600) 210 900

R4,00 – 1 May 1998 304 250 (262 150) 42 100

R0,90 – 17 July 2000 1 514 400 (426 600) 1 087 800

3 120 150 (1 779 350) 1 340 800

Included in the above are 100 000 options under 90 cents which have been granted to an executive director which are more

fully described under note 35: directors’ emoluments.

33. FINANCIAL INSTRUMENTS

(i) Credit risk management

Potential concentrations of credit risk consist principally of cash investments and trade debtors. The Group only deposits

cash surpluses with major banks of high quality and with financial institutions located in South Africa and the United

Kingdom. Trade debtors consist of a large number of customers, spread across diverse industries and geographical areas.

Credit evaluation is performed on the financial condition of the customers before granting credit. The ongoing

creditworthiness of the debtors is assessed from time to time.

(ii) Liquidity risk management

The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing

facilities are maintained.

(iii) Financial risk management

The Group uses financial instruments to raise finance for its operations and to manage the risks arising from these

operations. All transactions are undertaken to manage the risks arising from underlying business activities. The main

financial risk faced by the Group is interest rate risk.

(iv) Fair value of financial instruments

At 31 December 2003 the carrying amounts of cash and bank balances, receivables, trade creditors and short term

borrowings approximate their fair values due to the short-term maturities of these assets and liabilities.

34. RELATED PARTY TRANSACTION

All transactions with related parties took place at arms' length and at market related terms.

For details of subsidiary companies and the Group's interest therein refer to pages 48 and 49.

Refer to page 4 for details of the directors and note 35 to the financial statements for details of emoluments paid to directors.

Refer to note 30 to the financial statements for details of guarantees provided on behalf of the subsidiary companies.


35. DIRECTORS’ EMOLUMENTS

for the year ended 31 December 2003

Bonuses or Sums paid Any other Contribution Commission

Fees for performance by way of material to gain or

services as Basic related expense benefit pension profit -sharing

a director salary payments allowance received scheme arrangement

Executive Directors

C J Ferreira 891 156 31 50 72 –

S Meyer 822 236 1 56 65 –

Non-executive Directors

A B Mashiatshidi 22

R Mokate 54

J S Feek 60

136 1 713 392 32 106 137 –

2 516

Share options Period when

Number of Strike Date of Period of allowed to Other

share options price option option take up information

Executive Directors

S Meyer 100 000 90 cents 17-Jul-00 10 years 3 years The options granted to the

executive director are on

the same terms and

conditions as those offered

to all the employees of the

Company.

100 000



35. DIRECTORS’ EMOLUMENTS (continued)

for the year ended 31 December 2002

Bonuses or Sums paid Any other Contribution Commission

Fees for performance by way of material to gain or

services as Basic related expense benefit pension profit-sharing

a director salary payments allowance received scheme arrangement

Executive Directors

C J Ferreira 1 069 – 24 39 80 –

S Meyer 761 – 4 39 53 –

Non-executive Directors

T V Maphai 11

R Mokate 46

J S Feek 40

97 1 830 – 28 78 133 –

2 166

Share options Period when

Number of Strike Date of Period of allowed to

share options price option option take up Other information

Executive Directors

C J Ferreira 100 000 90 cents 17-Jul-00 10 years 3 years The options granted to the

two executive directors are

on the same terms

and conditions as those

offered to all the employees

S Meyer 100 000 90 cents 17-Jul-00 10 years 3 years of the Company.

200 000



I n t e r e s t i n Subs i d i a r y Compan i e sfor the year ended 31 December 2003

Details of holding company's interest

Issued Shares at cost

ordinary or valuation

share Proportion less amounts

capital held written off Indebtedness

DEC 2003 DEC 2003 DEC 2002 DEC 2003 DEC 2002

R % R'000 R'000 R'000 R'000

SUBSIDIARIES OF HOWDEN AFRICA

HOLDINGS LIMITED

Incorporated in South Africa

James Howden Holdings Limited 1 406 488 100,00 10 708 10 708 11 616 9 252

Davidson Africa (Pty) Limited 4 000 100,00 1 555 1 555 3 567 3 567

Howden Pumps (Pty) Limited 1 000 100,00 – 1 – 37 102

Howden Attack (Pty) Limited 400 000 100,00 – – – –

Bateman Howden South Africa (Pty) Limited 1 000 49,99* 2 745 2 745 56 412

Howden Process Compressors (Pty) Limited 1 000 100,00 491 491 2 927 2 240

Howden Weir (Pty) Limited 100 50,00* – – – –

Howden Safanco (Pty) Limited 4 000 100,00 4 4 (70) 390

Hamton Properties (Pty) Limited 1 000 100,00 148 148 31 (2)

Howden Airpreheaters (Pty) Limited 30 000 100,00 – – (54) (54)

Howden Compressors South Africa (Pty) Limited 30 000 100,00 – – (130) (130)

Gertrude Holdings Limited 200 100,00 6 287 6 287 (9 619) (1 063)

Howden Holdings (Pty) Limited 100 100,00 10 967 10 967 (3 909) (3 909)

Howden Machinery and Materials (Pty) Limited 108 100,00 – – – –

Hertz Technologies (Pty) Limited 8 000 100,00 – – – 10 675

Incorporated in Scotland

Donkin Fans Limited 23 100,00 – – – –

32 905 32 906 4 415 58 480

SUBSIDIARIES OF JAMES HOWDEN HOLDINGS LIMITED


Engart Africa (Pty) Limited 2 100,00 – – 63 62

Howden Projects (Pty) Limited 200 50,00 1 1 – –

Howden Power (Pty) Limited 15 000 90,00 15 15 2 715 5 499

Incorporated in Australia

3T’s Australia Pty Limited 650 90,00 – – – –

Incorporated in United States of America

Engart America Incorporated 7 591 90,00 8 8 – –

Engart Incorporated 6 680 100,00 8 – – –

Incorporated in Scotland

Howden 3T’s International Limited 23 100,00 – – 563 319

32 24 3 341 5 880


I n t e r e s t i n Subs i d i a r y Compan i e sfor the year ended 31 December 2003

Details of holding company's interest

Issued Shares at cost

ordinary or valuation

share Proportion less amounts

capital held written off Indebtedness

DEC 2003 DEC 2003 DEC 2002 DEC 2003 DEC 2002

R % R'000 R'000 R'000 R'000

SUBSIDIARIES OF GERTRUDE HOLDINGS LIMITED


Brumerose Properties (Pty) Limited 200 100,00 31 31 (730) (618)

SUBSIDIARIES OF HOWDEN HOLDINGS (PTY) LIMITED


Howden Donkin (Pty) Limited 10 000 100,00 8 295 8 295 14 905 12 044

Ventline Manufacturing (Pty) Limited 50 000 100,00 50 50 – –

Luft Industries (Pty) Limited 300 100,00 – – – –

Rumilross Properties (Pty) Limited 300 100,00 501 501 (3 300) (799)

Donkin Manufacturing Company (Pty) Limited 16 380 100,00 4 000 4 000 (4 895) (4 633)

Howden Pumpmaker (Pty) Limited 100 100,00 – – – –

12 846 12 846 6 710 6 612

Total indebtedness 13 736 70 354

Reconciliation of total indebtedness

Loans to subsidiaries (note 10) 49 717 96 189

Loans from subsidiaries (note 10) (32 840) (24 505)

Amounts owing by holding company and

subsidiaries (Balance Sheet) 3 056 3 050

Less: Amounts owing to holding company

(included in R(6 012) (2002: R4 380) (185) 0

Amounts owing to subsidiaries

(Balance Sheet) (6 012) (4 380)

13 736 70 354

* Howden Africa Holdings Limited has management control in respect of these companies.

HOWDEN AFRICA HOLDINGS LIMITED

(Incorporated in the Republic of South Africa)

(Registration number 1996/002982/06) (‘the Company")

JSE Code: HWN; ISIN Code: ZAE 000010583

Notice is hereby given that the ninth annual general meeting of the shareholders of the Company will be held at the Registered

Office, 1a Booysens Road, Booysens, Johannesburg at 12h00 on Thursday, 27 May 2004 for the following purposes:

1. To receive and consider the annual financial statements for the year ended 31 December 2003;

2. To re-elect Mr A B Mashiatshidi who retires from the board of directors in terms of the Company’s Articles of Association; (Please

see note 1)

3. To re-elect Messrs J S Feek and R J Cleland who retire by rotation from the board of directors, in terms of the Company’s Articles

of Association; (Please see note 2)

4. To approve the remuneration of directors;

5. To appoint Messrs PricewaterhouseCoopers Inc. as auditors of the Company;

6. To place the unissued share capital of the Company under the control of the directors in terms of section 221 of the

Companies Act 61 of 1973 as amended (“the Act”), and to renew the authority of the directors to allot and issue any of the

unissued shares of the Company on such terms and conditions as they may deem fit, subject to the provisions of the Act, and

the requirements of the JSE Securities Exchange of South Africa (“JSE”)① ;

7. To consider, and, if deemed fit to pass, with or without modification, the following resolution as an ordinary resolution① ;

Resolved that, subject to meeting the requirements of the JSE, the directors are hereby authorised to issue ordinary shares for

cash as and when suitable opportunities arise, subject to the following conditions:

• that this authority shall not extend beyond the next annual general meeting or 15 months from the date of this annual general

meeting, whichever date is the earlier;

• that there will be no restrictions in regard to the persons to whom the shares may be issued, provided that such shares are to

be issued to public shareholders and not to related parties;

• that a 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 representing, on a cumulative basis within one financial year, 5% or more of the number of

shares in issue prior to the issue/s;

• that issues in the aggregate in any one financial year shall not exceed 15% of the Company’s issued ordinary share capital;

and

• that in determining the price at which an issue of shares will be made in terms of this authority, the maximum discount

permitted will be 10% of the weighted average traded price of the shares in question, as determined over the 30 business

days prior to the date that the price of the issue is determined or agreed by the directors.

The approval of a 75% majority of the votes cast by shareholders present or represented by proxy at the general meeting is

required for this resolution to become effective.

① No issue of shares is contemplated at the present time, other than shares to be issued in terms of the Howden African Holdings

Limited Employees Share Trust.

No issue will be made which could effectively transfer the content of Howden Africa Holdings Limited without prior approval of

shareholders in general meeting.


No t i c e o f Annua l Gene r a l Mee t i n gfor the year ended 31 December 2003



8. Special resolution number 1:

General approval to permit the Company to acquire shares of the Company.

“Resolved that, by way of a general approval, Howden Africa Holdings Limited (“the Company”) is authorised in terms of the

articles of association of the Company to acquire Howden Africa shares in terms of sections 85 and 89 of the Act and of the

Listings Requirements of the JSE from time to time, which Listings Requirements currently provide inter alia that:

• any such acquisition of Howden Africa shares shall be effected through the order book operated by the JSE trading system;

• this general authority shall only be valid until the Company’s next annual general meeting; provided that it shall not extend

beyond fifteen months from the date of passing of this special resolution number 1;

• at any point in time the Company may only appoint one agent to effect any repurchase/s on its behalf;

• the Company may only undertake a repurchase of Howden Africa shares if, after such repurchase, it still complies with

paragraphs 3.37 to 3.41 of the JSE Listings Requirements concerning shareholder spread requirements;

• the Company may not repurchase Howden Africa shares during a prohibited period as defined in paragraph 3.67 of the JSE

Listings Requirements;

• an announcement will be published as soon as the Company has acquired Howden Africa shares constituting, on a

cumulative basis, 3% of the number of Howden Africa shares in issue at the time the authority is granted and for each

subsequent 3% purchased thereafter, containing full details of such acquisition;

• acquisitions in the aggregate in any one financial year by the Company may not exceed 20% of the number of Howden Africa

shares in issue at the commencement of such financial year;

• in determining the price at which Howden Africa shares are acquired by the Company in terms of this general authority, the

maximum premium at which such shares may be purchased will be 10% of the weighted average of the market value of

Howden Africa shares for the five business days immediately preceding the date of the relevant transactions.”

The reason for the special resolution is to grant to the Company and to obtain a general approval in terms of the Act for the

acquisition by the Company of Howden Africa shares. This general approval shall be valid until the earlier of the next annual

general meeting or its variation or revocation by special resolution by any subsequent general meeting; provided that the

general authority shall not extend beyond fifteen months from the date of passing of special resolution number 1.

It is the intention of the Company to act under the general authority referred to in special resolution number 1 if prevailing

circumstances (including market conditions) warrant it.

The Howden Africa board having considered the impact which a purchase of 20% of the Howden Africa shares (being the

maximum number of Howden Africa shares which may be purchased in terms of special resolution number 1) would have on

the Company and the Howden Africa Group, is of the opinion that:

• the Company and the Howden Africa Group will be able in the ordinary course of business to pay its debts;

• the assets of the Company and the Howden Africa Group will be in excess of the liabilities of the Company and the Howden

Africa Group;

• the working capital, ordinary capital and reserves of the Company and the Howden Africa Group will be adequate, for a

period of twelve months after the date of this annual report.


Section 11.26(b) of the JSE Listings Requirements requires the following disclosure, part of which is included in the annual

report of which this notice forms part:

• directors and management (pages 4-5);

• major shareholders of the Company (page 37);

• material changes in the financial or trading position of the Company and its subsidiaries since the date of the Company’s

financial year-end and the date of this notice;

• directors’ interests in Howden Africa shares (page 16);

• share capital of the Company (pages 36-37);

• directors’ responsibility statement – the directors, whose names appear on pages 4 to 5 of this annual report of which this

notice forms part, collectively and individually accept full responsibility for or information pertaining to special resolution

number 1 and certify that to the best of their knowledge and belief there are no facts that have been omitted which would

make any statement false or misleading, and that all reasonable enquiries to ascertain such fact have been made and that

special resolution number 1 contains all such information (page 10);

• litigation statement (page 42).

Note 1

Confirmation of appointment of director who was appointed since the last annual general meeting.

A B MASHIATSHIDI (43)


Arthur B Mashiatshidi is Chief Executive of Decorum Capital Partners (Pty) Limited, a company that manages the New Africa Mining

Fund. He serves as non-executive director on the boards of various companies and institutions including: Thebe Investment

Corporation (Pty) Limited, Thebe Risk Solution (Pty) Limited, Financial Markets Advisory Board and University of Cape Town

(Graduate School of Business Advisory Board).

Note 2

Directors who are retiring by rotation and seeking re-election.

J S FEEK (63)

Executive Chairman (Acting)

John Feek was appointed to the board during April 2002 and became Chairman of the board on 27 June 2002 and Executive

Chairman on 1 May 2003. He was previously Group Managing Director of Rental Transport Systems Limited, the Haggie Group and

Abercom. He holds non-executive directorships in several unlisted companies.

R J CLELAND (56)

Non-Executive Director (British)

Bob Cleland was appointed Chief Executive of Howden in 1999. He was previously Group Operations Director on the Board of

Triplex Lloyd plc and prior to that was an Executive of British Steel Stainless, now AvestaPolarit. He was appointed Non-Executive

Director of the Howden Africa Holdings Limited board on 2 March 2000.



VOTING AND PROXIES

All shareholders will be entitled to attend, speak and vote at the annual general meeting.

Each shareholder is entitled to appoint one or more proxies (who need not be shareholders of the Company), to attend and speak

and vote in place of that shareholder at the annual general meeting.

A form of proxy is attached for any shareholder who is unable to attend the annual general meeting. It should be completed and

lodged with or sent to the Company Transfer Secretaries, Computershare Limited, 70 Marshall Street, Johannesburg, 2001, Republic

of South Africa (PO Box 61051, Marshalltown, 2107), to be received by them not later than 12h00 on Tuesday, 25 May 2004. Any

shareholder who completes and lodges the form of proxy will nevertheless be entitled to attend and vote in person should such

shareholder afterwards decide to do so.

• If you have not yet dematerialised your shares in the Company and therefore hold a share certificate, you should complete the

attached form of proxy in accordance with the instructions therein and lodge it with the transfer secretaries of the Company

namely, Computershare Limited, 70 Marshall Street, Johannesburg, 2001, Republic of South Africa (PO Box 61051,

Marshalltown, 2107) to be received by not later than 12:00 on Tuesday, 25 May 2004;

• If you have already dematerialised your shares in the Company, but the shares are in your own name, you should complete the

attached form of proxy in accordance with the instructions therein and lodge it with the transfer secretaries of the Company

namely, Computershare Limited, 70 Marshall Street, Johannesburg, 2001, Republic of South Africa (PO Box 61051,

Johannesburg, 2107) to be received by not later than 12:00 on Tuesday, 25 May 2004; or

• If you have already dematerialised your shares in the Company through a CSDP or broker, but the shares are not in your own

name, you should notify your duly appointed Central Securities Depository Participant ("CSDP") or broker, as the case may be, in

the manner stipulated in the agreement governing your relationship with your CSDP or broker of your instructions as regards

voting your shares at the general meeting.

By order of the board

Michael John Millard Lake

Company Secretary

10 March 2004



No t e s

Fo rm o f P r o x y

HOWDEN AFRICA HOLDINGS LIMITED(Incorporated in the Republic of South Africa) (Registration number 1996/002982/06)

JSE Code: HWN; ISIN Code: ZAE 000010583

("the Company")

FORM OF PROXY: NINTH ANNUAL GENERAL MEETING OF THE COMPANY TO BE HELD AT 12h00 ON 27 MAY 2004 AT 1a BOOYSENS ROAD, BOOYSENS

for use by shareholders who:– hold shares in certificated form; or– have dematerialised their shares (ie, have replaced the paper share certificates representing the shares with electronic records of ownership under the

JSE’s electronic settlement system (STRATE Limited) and are recorded in the sub-register in “own name” dematerialised form) (ie, shareholders whohave specifically instructed their Central Securities Depository Participant (“CSDP”) to hold their shares in their own name).

If you are unable to attend the ninth annual general meeting of the members convened for 12h00 on Thursday, 27 May 2004 and wish to be representedthereat, you must complete and return this form of proxy as soon as possible, but in any event to be received by not later than 12h00 on Tuesday, 25 May 2004, to Computershare Limited, 70 Marshall Street, Johannesburg, 2001 Republic of South Africa, PO Box 61051,Marshalltown, 2107.

Shareholders who have dematerialised their shares and are not registered as own name dematerialised shareholders and who wish to attend the annualgeneral meeting, must instruct their CSDP or broker to provide them with the relevant letter of representation to enable them to attend such meetings, or,alternatively, should they wish to vote but not to attend the annual general meeting they must provide their CSDP or broker with their voting instructions interms of the relevant custody agreement entered into betweeen them and the CSDP or broker in the manner and cut-off time stipulated therein.

Such shareholders must not complete this form of proxy.

I/We

(Name in block letters)

of

being a member(s) of the Company

and being the holder(s) of ordinary shares in the Company,do hereby appoint:

1. of or failing him/her



the Chairman of the annual general meeting, as my/our proxy to act for me/us at the ninth annual general meeting of the Company to be held onThursday, 27 May 2004 at 12h00 and at any adjournment thereof, at the Company's Registered Office, 1a Booysens Road, Booysens, Johannesburg and tovote for me/us on my/our behalf in respect of the undermentioned resolutions in accordance with the following instructions:

NUMBER OF ORDINARY SHARES

FOR AGAINST ABSTAIN

1. Annual Financial Statements

2. Re-election of J S Feek

3. Re-election of A B Mashiatshidi

4. Re-election of R J Cleland

5. Remuneration of directors

6. Appointment of auditors

7. Placing of unissued shares under control of directors

8. Ordinary resolution

9. Special Resolution Number 1General approval to permit Company to acquire shares of the Company

Signed at: on 2004

Signature Assisted by me

(where applicable)

Each shareholder is entitled to appoint one or more proxies (who need not be shareholders of the Company) to attend, speak and, on apoll, vote in place of that shareholder at the annual general meeting.

PLEASE READ THE NOTES ON THE REVERSE HEREOF

The form of proxy must only be used by certificated shareholders or shareholders who hold dematerialised shares in their “own

name”. Other shareholders are reminded that the onus is on them to communicate with their CSDP or broker.

Instructions on signing and lodging the annual general meeting proxy form:

1 A deletion of any printed matter and the completion of any blank spaces need not be signed or initialled. Any alteration must

be signed, not initialled.

2. The Chairman shall be entitled to decline to accept the authority of the signatory:

(a) under a power of attorney; or

(b) on behalf of a company,

if the power of attorney or authority has not been deposited at the office of the Company’s transfer secretaries, Computershare

Limited, 70 Marshall Street, Johannesburg, 2001, Republic of South Africa, (PO Box 61051, Marshalltown, 2107), by not later

than 12h00 on Tuesday, 25 May 2004.

3. The signatory may insert the name(s) of any person(s) whom the signatory wishes to appoint as his/her proxy in the blank

spaces provided for that purpose.

4. When there are joint holders of shares and if more than one of such joint holders be present or represented, the person whose

name stands first in the register in respect of such shares of his/her proxy, as the case may be, shall alone be entitled to vote in

respect thereof.

5. The completion and lodging of this form of proxy will not preclude the signatory from attending the meeting and speaking and

voting in person thereat to the exclusion of any proxy appointed in terms hereof should such signatory wish to do so.

6. Forms of proxy may be deposited at the office of the Company’s transfer secretaries, Computershare Limited, 70 Marshall

Street, Johannesburg 2001, Republic of South Africa (PO Box 61051, Marshalltown, 2107), by not later than 12h00 on

Tuesday, 25 May 2004.

7. If the signatory does not indicate in the appropriate place on the face hereof how he/she wishes to vote in respect of a

particular resolution, his/her proxy shall be entitled to vote as he/she deems fit in respect of that resolution.

8. The Chairman of the annual general meeting may reject any proxy form which is completed other than in accordance with

these instructions, provided that he may accept such proxy forms where he is satisfied as to the manner in which a member

wishes to vote.

No t e s t o t h e p r o x y

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