FINANCIAL HIGHLIGHTS - Morningstar, Inc

FINANCIAL HIGHLIGHTS

MARCH MARCH 2006 2005

Turnover of continuing operations (R million) 986,0 915,6 Export (R million) 197,0 197,3 Operating income from continuing operations before

impairment of assets and provision for benefit funds (R million) 25,3 15,6

Attributable earnings (R million) 594,2 76,9 Headline (loss)/earnings (R million) (59,3) 92,7 Headline earnings before Secondary Tax on

Companies related to special dividends (R million) 51,0 92,7

Earnings per ordinary share (cents) Basic earnings 1 741,6 217,0 Headline (loss)/earnings (176,1) 280,7 Headline earnings before Secondary Tax on Companies (STC) related to special dividends 151,6 280,7

Normal dividends per ordinary share (cents) 75,0 85,0 Special dividends per ordinary share (cents) 2 600,0 -Dividend cover - headline earnings before STC relating

to special dividends/normal dividends (times) 2,0 3,2

Net operating assets (R million) 166,9 475,9 Net asset value per ordinary share (cents) 1 369,0 2 223,0 Market price at end of year (cents) 1 362,0 3 000,0 Net cash (R million) 359,3 317,7 Cash available from operations (R million) 33,1 78,3 Capital expenditure (R million) 51,9 110,2

DORBYL ANNUAL REPORT 2006 1

GROUP EXECUTIVE REVIEW

The most important occurrence of the year

was the disposal of Alpine for a net

consideration of R991 million.

This generated a significant capital

profit and earnings increased from

217 cents to 1 741,6 cents.

The cash generated enabled the

distribution of a special

dividend of R26 per share

which amounted

to R882 million.

wk


The group is now focused on the manufacture of the following automotive components:

• Automotive seats;

• CV joints and driveshafts;

• Steel wheels;

• The forging and machining of components and the manufacture of propshafts; and

• Casting and machining of components, in particular brake drums.

Dorbyl Automotive Technologies (DAT), the remaining operating division of Dorbyl, has experienced a difficult trading environment as a result of the strong Rand, coupled to the increasing competitiveness of the international automotive industry.

While local retail sales of motor vehicles increased significantly during the last year, imports now make up more than 50% of car sales. The effective market for DAT, apart from direct component exports, is therefore the local vehicle manufacturers for local sales as well as export. This is clearly explained by the comparison of the increase in local car sales from 2003 to 2005 being 62,6% while manufacturing volumes including exports only increased by 11,5% over the same period, the balance being made up by the imports. Locally manufactured light commercial vehicles increased over the same period. As a result, the growth in component demand has been muted.

Notwithstanding this, operating profit (excluding non-recurring items) grew by 29%, reflecting the results of the cost reduction and efficiency improvements over the last year.

Local vehicle production is, however, expected to grow at a faster rate in the next two years as expanded export programmes of the vehicle manufacturers are implemented. The NAAMSA projection for this increase is 23% over the next two years. DAT should benefit from these programmes and has already secured good orders to support this growth.

The major investment into the steel wheel facilities has largely been completed, and adequate capacity exists to support these programmes. Increased off-take is expected as localisation for export vehicles is expanded.

Univel (the joint venture with GKN) also carried out a sizeable investment programme successfully to supply the latest driveshaft technology to the local market. New equipment facilitates production of components that are only available from three of GKN's many plants worldwide.


The seat metals operation has been awarded several new contracts which will ensure good growth as new vehicle models go into production. Training programmes have been expanded and motivation and commitment at all levels massively improved through a unique involvement of people at all levels.

The Casting and Machining Division has improved throughput, productivity and quality, thereby increasing profitability. Significant investment into environmental improvement projects has materially impacted on aerial pollution levels. The continuity, and quality, of electrical power is, however, progressively deteriorating, making efficient operation of this continuous process difficult.

The strong Rand has continued to impact the profitability of the Forging and Machining operation, since this division exports a significant percentage of overall output.

The value of the Rand is a key determinant of future profitability, and, notwithstanding the gold and other commodity prices, the growing deficit on the trade account should in due course impact on the Rand value. It is important to notice that the automotive sector forex usage has deteriorated from a nett deficit of some R9 billion in 2003 to an estimated deficit of R28 billion in 2005.

The national concern about the skills shortage is also most relevant to DAT, and extensive programmes have been implemented to grow and upgrade the skills of the current workforce. Innovative ways of improving the workforce commitment and morale are being implemented.

As has been communicated, it is a clear objective to carry out a black economic empowerment transaction to ensure that DAT has the appropriate credentials in this regard.

RESULTS FOR 2005/2006

Group earnings improved by 718%, due to a significant profit on the disposal of the USA operation, AlpineEngineered Products Inc., (Alpine) in July 2005.

Turnover at the continuing DAT operations increased by 8% and operating income before non-recurring itemsincreased by 29%. After taking account of the impairment of group assets of R55 million and an abnormalprovision in respect of the benefit funds of R15 million, an operating loss of R44,7 million was reported.

The provision in respect of the Dorbyl benefit funds is the result of the apportionment of surpluses to membersand former members in terms of the Pension Funds Amendment Act promulgated in December 2001. Thepossibility of further exposures in this regard are more fully detailed in the financial statements.

Net interest received benefited from the proceeds of the sale of Alpine for a limited period only and, despitelower interest rates, increased by 20% compared to the previous year.


The R698 million profit, net of

taxation, on the sale of Alpine,

enabled the group to declare a

special dividend of R26 per share.

However, the STC (Secondary Tax on

Companies) in respect of this dividend of

R110 million adversely affected the headline

earnings per share of the continuing

operations, which declined by 163% from

the previous year. Excluding this STC charge,

headline earnings per share of the continuing

operations would have improved by 27%.

The net cash position at 31 March 2006 was

R359 million (31 March 2005: R332 million).

-

N PHILLIPS (Chairman)

.

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WW COOPER (Chief Executive)


DIRECTORATE AND ADMINISTRATION

DIRECTORATE

N Phillips** (71) (Chairman) (appointed 1993)

WW Cooper* (55) (Group Chief Executive) (appointed 1994)

D Orwin* (58) (Group Financial Director) (appointed 1998)

Buhrmnn WE(51)(5 (appointed 1 995)(

JB Magwaza** (64) (appointed 1995)

T van Wykt (58) (appointed 1991)

* Executive Directors ** Independent Non-executive Directors t Non-executive Directors

AUDIT COMMITTEE

WE Bührmann (Chairman) N Phillips JB Magwaza WW Cooper D Orwin

REMUNERATION COMMITTEE

N Phillips (Chairman) JB Magwaza T van Wyk

EXECUTIVE COMMITTEE

WW Cooper (Chairman) 12 years' service Pr Eng BSc (Chem Eng) MBL MSAI ChE

D Orwin (Group Financial Director) 31 years' service BCom CA(SA)

ADMINISTRATION

Dorbyl Limited Company registration number 1911/001510/06

Company secretary and registered office BD Bhikha 16 Jan Smuts Avenue, Parktown 2193 PO Box 2392, Houghton 2041

Transfer secretaries Computershare Investor Services 2004 (Pty) Limited 70 Marshall Street, Johannesburg 2001 PO Box 61051, Marshalltown 2107

Sponsor PSG Capital Limited Building 8, Woodmead Office Park 1 Woodmead Drive, Woodmead PO Box 987, Parklands 2121

Auditors KPMG Inc KPMG Crescent 85 Empire Road Parktown 2193 Private Bag 9 Parkview 2122


DORBYL GROUP OPERATIONS

The activities of Dorbyl are now concentrated in the

Automotive Sector

0 DORBYL AUTOMOTIVE SYSTEMS/PULLMAFLEX

0 UNIVEL TRANSMISSIONS

GUESTRO FORGING AND MACHINING/GUESTRO STEERING GEARS

GUESTRO WHEELS - ROSSLYN AND PORT ELIZABETH

GUESTRO AUTOMOTIVE CASTING AND MACHINING

MISSION DIRECTED WORK TEAMS


DORBYL AUTOMOTIVE SYSTEMS/PULLMAFLEX (DAS)Executive Director Patrick Lavery General Manager Chris Foster

Dorbyl Automotive Systems is based in Port Elizabeth and manufacturesand assembles automotive components for DaimlerChrysler, Ford, GeneralMotors, Nissan and Volkswagen, with the predominant product line beingseat metal structures. This is made possible by virtue of long-standingtechnical partnerships with European market leaders such as Keiper, Sitechand Kuster and also includes a joint venture with Pullmaflex UK for themanufacture of seat suspension mats.

. The manufacturing site is a modern, totally integrated, production environment with a capable management structure encompassing production, quality, engineering, supply and logistics, finance and human resources.

Continued investment in high quality modern equipment has resulted inthe production facility being capable of producing product to globallyacceptable standards. In addition to metal pressing, tube and wirebending, welding and clinching and various assembly processes, the plantalso has an electrophoretic coating capability.

The product lines include:

• Automotive seat frames, seat slides and seat suspension mats;

• Public transport seating;

• Automotive window regulators; and

• Pressed and profile door hinges.

Forward integration has resulted in seats now being manufactured fornon-automotive markets such as conference centres and sport stadiums.

High volume automated production lines within the facility include seatframes for DaimlerChrysler and Volkswagen, while production lines witha greater manual intervention have also been introduced for lowervolume product. This has resulted in significant flexibility being availablewithin the plant.

Product and process validation is achieved using an engineeringstandards testing laboratory, capable of conducting the necessaryES testing requirements, full weld penetration and pullout testing, as wellas surface finish validation.

Quality assurance certification includes IS09001:2000 and TS16949(Edition 2002). The objective at DAS is to achieve IS014001, theenvironmental management certification, during 2006.


0

UNIVEL TRANSMISSIONS Executive Director Ron Bartlett General Manager Romeo Louw

Univel Transmissions, situated in Neave Township, Port Elizabeth, is a joint venture between GKN Automotive Driveline Division and Dorbyl Limited.

The company supplies constant velocity driveshaft assemblies and wheel hub flanges to local and international original equipment manufacturers. The manufacture of these high technology products is conducted under licence to GKN Automotive.

The company supplies driveshafts or components to the major vehicle manufacturers, including Toyota, BMW, General Motors, Ford and Nissan.

Demand from vehicle automotive assemblers for the introduction of CV joints to the latest technological design levels, incorporating complex track profiles and closer manufacturing tolerances, necessitated the purchase of purpose built machines designed and built by E-mag Germany in collaboration with GKN engineers.

Major projects within these parameters included the introduction of monobloc plunging joints for a new product, for which hard and soft track millers were purchased at a cost of R9,5 million.

An additional investment of R5,5 million for the purchase of a hard turn/ milling machine was made for certain vehicles to ensure that the critical track and spherical dimensions were effectively maintained.

The availability of these machines in South Africa now provides the flexibility required to meet future GKN design introductions and customer requirements. As a consequence Univel will be supplying certain vehicle manufacturers with increasing volumes.

DORBYL ANNUAL REPORT 9

9

0

GUESTRO FORGING AND MACHINING/ GUESTRO STEERING GEARS Executive Director Mornet Villet General Manager Riaan Marais

The Guestro Forging and Machining Division (F&M) is based in Uitenhage and manufactures wheel hubs, propshafts, CV joints and forgings. Guestro Steering Gears, which is on the same site, manufactures steering gears and completes the machining process and sub-assembly of the forged hubs for export.

Forging design technology was recently upgraded by commissioning a software package called MSC Superforge. This new technology enhanced F&M's ability to achieve optimal material yields, ultimate grain flow of materials, and product development assistance to customers, and reduced project leadtime to market by 50%. To ensure that F&M stays abreast of the latest forging technology, design engineers attend international forging conferences and overseas training at recognised institutions.

F&M developed a propeller shaft with one slip joint and three constant velocity joints and successfully commissioned this product in the local market during 2005.

Export at F&M is still receiving high focus and, over the past six years, the customer base for wheel hubs increased from one to six, spread over three continents. Historically, supply was restricted to original equipment markets, but in the second half of 2005 a breakthrough was made in the aftermarket sector. In 2006 the aftermarket is expected to represent 18% of machined products exported.

Internal training and development are aligned with the employment equity plan and numerical goals. A total of 64 trainees are currently involved in categories of supervisory leadership, advanced leadership and management development programmes.


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GUESTRO WHEELS Guestro Wheels Rosslyn Executive Director Dennis Kleynhans Guestro Wheels Rosslyn General Manager Grant Ramsden Guestro Wheels Port Elizabeth Executive Director Mornet Villet Guestro Wheels Port Elizabeth General Manager Chris Bryan

The Guestro Wheels Division consists of two sites, namely Guestro Wheels Rosslyn and Guestro Wheels Port Elizabeth. At both these sites passenger wheels are manufactured, whilst at the Port Elizabeth facility, a separate manufacturing plant also produces commercial wheels.

Over the past few years it was recognised that it was essential to upgrade the manufacturing capability on both sites to meet the future demands of customers for passenger vehicle wheels in particular. An investment programme, which totalled some R45 million, was undertaken to procure state-of-the-art equipment from Fontijne in Holland to enhance the efficiencies and quality outputs in the respective units. In addition to this, Y the disc manufacturing equipment and paint plants were significantly upgraded to balance the outputs of the new lines.

Guestro Wheels now has the ability to compete with global manufacturers both on the economic and quality fronts. In addition the division also has the capability, in conjunction with appointed professional engineering consultants, to utilise finite element analysis technology in the design and manufacture of new products. These capabilities now meet with all customer requirements and conform to international standards.

The abilities of both sites have been recognised by the local Original Equipment Manufacturers (OEMs) and product is supplied to the majority of these customers. In addition to meeting the demands of the local OEMs, the Rosslyn facility is also re-positioning itself to further support the local and export aftermarket wheels business. Aftermarket product is also supplied to various global destinations from both facilities.

Both facilities are accredited to TS16949 as well as having met the in-house quality requirements of all of their customers.

The skills base of the respective sites is continually being upgraded in accordance with the requirements of MERSETA.


GUESTRO AUTOMOTIVE CASTING AND MACHINING Executive Director Dennis Kleynhans Guestro Automotive Casting General Manager Max Morgan Guestro Automotive Machining Acting General Manager Dennis Kleynhans

Both facilities are situated in the industrial sites of Benoni in Gauteng. Guestro Automotive Casting (GAC) is a ferrous foundry and specialises in the manufacture of castings in grey and ductile irons. Induction hardening of the ductile products is also available. The product range is largely targeted at the local Original Equipment Manufacturing companies (OEMs), but product is also supplied to the automotive aftermarket and to general engineering customers. Guestro Automotive Machining (GAM) specialises in the machining and finishing of a large volume of the product produced by GAC. The predominant product line is brake drums which are distributed through a division of Supergroup (HDC) into the local aftermarket. In addition to this, the machining and assembly of steering linkages is also undertaken with product being supplied to the local automotive industry.

A combination of the abilities of both of these facilities has resulted in export business being secured with Vibracoustic Technologies, a company based in the USA and Caterpillar where business is conducted through the operations in the EU. Significant further opportunities have been identified with both these customers.

Major investment has taken place at GAC, in line with its commitment to become IS014001 compliant. R2 million was spent on an extractor system to eliminate pollutants in the atmosphere and a further R3 million on various smaller projects to improve productivity and working conditions in the foundry. GAM has invested in two new CNC vertical machining centres which have been commissioned to cope with additional business from export customers.

Both companies are approved and accredited to the TS16949 quality management systems and meet the quality requirements of local vehicle manufacturers and export customers.


' MISSION DIRECTED WORK TEAMS

In order to improve the overall capability of the manufacturing unit andenable it to compete against globally sourced products, a decision wastaken to adopt a new work practice governed by the philosophy ofMission Directed Work Teams (MDWT).

The introduction of this programme commenced at Dorbyl AutomotiveSystems (DAS) some two years ago and significant progress has beenmade, with all employees fully embracing the culture incorporated in theprogramme. Success has been measured by virtue of the manufacturingunit improving in all spheres, with the result that a number of new projectshave been secured against global competition.

In brief, the programme effectively empowers employees and thereby creates a sense of ownership and responsibility through ten core modules, which incorporate: • Goal Alignment • Virtual Work Place (5S) • Asset Care • Team Leadership • Work Flow Management • Team Coaching • Quality Assurance • Service Quality • Process Improvement (7W) • Self Development

In addition to these modules, the programme cascades into modules ofSafety and Health, Risk Management and Problem Solving.

Significant benefits have been realised since the introduction of thisprogramme at DAS and similar programmes are currently being introducedin the other manufacturing units of Dorbyl Automotive Manufacturing.

QUALITY CONTROL

Quality and Risk Management structures are now well entrenched in everyoperation. Central support continues to be provided by internal specialistsand external quality auditors. All sites are certified to IS09001:2000 andISO/TS 1 6949 automotive quality systems certification.


Environmental risks continue to be controlled through .

the IS014001 Environ-mental Management System at Univel and Guestro Forging and Machining. The Guestro Wheels plants in Rosslyn and Port Elizabeth are shortly to be certified under the continued guidance of environmental and safety consultants, Safetech.

A significant investment was made in shop floor environmental control at the Guestro Castings Benoni Plant, clearing the way for environmental certification. This is a specific requirement for ongoing business with Toyota, their major customer.

Employment equity and skills development

Employment equity targets were reviewed at the conclusion of the first five year cycle (March 2006) with most sites meeting their targets. All plans have been updated, as required, for the next five years.

Development learnership programmes were successfully completed at all sites, Dorbyl Automotive Systems in particular enjoying strong support from the SETA for their unemployed learnerships.

Training and development programmes have been successfully internalised with stable human resource management teams in the Eastern Cape and Gauteng. There is now limited reliance on skills development facilitation by external consultants.


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DIRECTORS' RESPONSIBILITY STATEMENT

The directors of the Company are responsible for the preparation of financial statements that fairly present the state of affairs of the Company and the Group. The financial statements have been prepared by management in accordance with International Financial Reporting Standards and the South African Companies Act, 1973 (Act 61 of 1973), as amended and are based on appropriate accounting policies which have been consistently applied.

The directors are also responsible for the Group's systems of internal control, which are designed to provide reasonable assurance as to the integrity and reliability of the financial statements and to adequately safeguard, verify and maintain accountability of its assets. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

The directors have a reasonable expectation that the Group has adequate resources to continue to operate as a going concern in the year ahead and the financial statements have been prepared accordingly.

The financial statements appearing on pages 21 to 69 were approved by the Board of Directors on 30 May 2006 and are signed on its behalf by:

WW COOPER (Chief Executive) D ORWIN (Financial Director)

DECLARATION BY THE COMPANY SECRETARY

In terms of section 268G(d) of the Companies Act, No 61 of 1973, as amended, I certify that the Company has lodged with the Registrar of Companies all such returns as are required of a public company, in terms of the Companies Act, and that all such returns are true, correct and up to date.

BD BHIKHA (Company Secretary)


REPORT OF THE INDEPENDENT AUDITORS

TO THE MEMBERS OF DORBYL LIMITED We have audited the annual financial statements and Group annual financial statements of Dorbyl Limited set out on pages 21 to 69 for the year ended 31 March 2006. 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.

We conducted our audit in accordance with International Standards on Auditing. Those 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 in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company and of the Group at 31 March 2006 and the results of their operations and cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act in South Africa.

KPMG Inc. (Registered Accountants and Auditors)Chartered Accountants (SA)

Johannesburg30 May 2006


CORPORATE GOVERNANCE

Dorbyl remains fully committed to effective corporate governance and the need for integrity and high ethical standards in the conduct of its business. Dorbyl essentially complies with the first King Report and progress continues to be made to achieve compliance with the second King Report.

BOARD OF DIRECTORS The Board of Directors, which at present comprises four non-executive directors (of which two are independent non-executives) and two executive directors, meets at least four times per annum and is chaired by an independent non-executive director. The composition of the Board is set out on page 6 and details of attendances at Board and Committee meetings on page 25. It is considered that there is a reasonable balance between executive and non-executive directors. Through its representation on various Committees, its monitoring of executive management's strategies, plans and actions and clearly defined delegated authority to ensure that all material matters are dealt with at Board level, the Board retains full and effective control over the Group. A board charter has been adopted and there is a clear division of responsibilities to ensure a balance of power and authority and no one individual has unfettered powers of decision making.

Executive directors meet regularly with senior management and non-executive directors have access to senior management when they consider it necessary.

Executive directors have entered into service contracts with Dorbyl with the following salient provisions:

• A minimum notice period by Dorbyl of three years for executive directors.

• A restraint period of three years after termination of employment.

• Post-retirement medical aid costs of executive directors will be borne by the Company.

The Board is fully involved in the nomination and appointment of new directors and, in view of the limited number of Board members, it was not deemed necessary to establish a nomination committee as part of the procedures for appointing new directors. In terms of the Articles of Association of Dorbyl Limited, the appointment or replacement of non-executive directors during the year must be ratified at the following Annual General Meeting. Non-executive directors have to retire, by rotation, at the end of every three years, the retirement age being 70 years. In regard to the age limit of 70 years, the Articles were amended to allow shareholders to extend that date, should they deem it desirable.

For their services as directors, the four non-executive directors are paid pre-determined fees, which are not subject to the financial performance of the Group.

AUDIT COMMITTEE The Audit Committee, chaired by a non-executive director, reviews the financial statements and the appropriateness of the Group's accounting and disclosure policies. The Committee also monitors the effectiveness and efficiency of internal controls and risk management practices within the Group as reported by management. The Audit Committee recommends the appointment of external auditors to the Board, reviews the scope of their audit as well as the scope of the internal audit plan. The Committee has also established guidelines as to the extent that the external auditors should be used for non-audit services and their independence is regularly reviewed. The Audit Committee has given greater prominence to the review of risk and the Audit Committee of the operating division (Dorbyl Automotive Manufacturing) has formalised its approach to risk reviews. No significant new risks have been identified and major risks identified in the past continue to receive focus.

The members of the Audit Committee meet at least twice per annum with management. The external and internal auditors have unrestricted access to this Committee and attend the meetings to report on their findings and to discuss accounting, auditing, internal control, financial reporting matters and risk management exposures.


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REMUNERATION COMMITTEE The Remuneration Committee consists of three non-executive directors (two of whom are independent) and is chaired by the Chairman of the Board. The Committee's main responsibility is to monitor the remuneration policies of the Group and to review and approve the remuneration (including performance based bonus structures and targets) and terms of employment of the Executive Directors and senior employees of the Group. The Chief Executive Officer and other Executive Directors attend these meetings on invitation.

COMPANY SECRETARY The Board has access to the advice and services of the Company Secretary and, where necessary may seek professional advice.

DISCIPLINARY HEARINGS During the course of the financial year, it was unfortunately necessary to have conducted independent disciplinary hearings in respect of two executive directors, because of irregularities that emerged regarding their conduct in the course of certain of the Group's business disposals. The outcomes of these hearings were, as previously reported on the Stock Exchange News Service (SENS) in terms of the JSE Limited regulations, that one resigned as a director and employee, while the other was dismissed and removed from the Board.

CODE OF ETHICS All employees of the Dorbyl group are required to maintain the highest ethical standards in their dealings with each other and other stakeholders. In line with the relevant recommendation of the King Report, these values have been formalised in a Code of Ethics which is widely distributed to employees.

RISK MANAGEMENT AND INTERNAL CONTROL The Internal Audit function is outsourced to M&I (an independent appraisal function operating within the Remgro group), which continues to follow a Risk Based Audit Methodology.

The Internal Audit function assists the Audit Committee and executive management in the effective discharge of their responsibilities through a review of the:

• effectiveness and efficiency of internal control systems;

• effectiveness, efficiency and reliability of information systems;

• level of compliance with the Group's Code of Ethics, business plans and relevant legislation; and

• controls ensuring the safeguarding of assets.

Reports issued by the Internal Audit function are reviewed by the external auditors.

M&I have also assisted the Group in undertaking its review of risks.

SPONSOR Dorbyl has appointed PSG Capital Limited as its sponsor to advise the company on the interpretation of, and compliance with, the Listing Requirements of the JSE Limited (JSE) regulations and to review all notices required in terms of the JSE rules and regulations.

DEALING IN SECURITIES Directors, officers and selected employees are made aware of the restricted or "closed" periods for dealing in Dorbyl shares and the provisions of the Insider Trading legislation.


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CREATION OF VALUE for the year ended 31 March

% 2006

R'000 % 2005

R'000

Revenue Suppliers of materials and services

100 20

1 369 711 267 421

100 66

2 061 968 1 350 708

Total value created 80 1 102 290 34 711 260

Distributed as follows: Employees' salaries and wages Providers of capital

32 82

351 802 909 362

73 5

520 214 32 591

Ordinary dividends Outside shareholders

906 905 2 457

28 062 4 529

Providers of finance (1) (13 813) 2 788

Net financial income excluding preference dividends Preference dividends Operating lease charges

(27 573) 212

13 548

(23 095) 212

25 671

Taxation Reinvested in the Group

13 (26)

140 904 (285 965)

8 14

58 191 97 476

Depreciation and amortisation (Deficit)/surplus for the year

35 028 (320 993)

53 910 43 566

100 1 102 290 100 711 260


DIRECTORS REPORT

NATURE OF BUSINESS Dorbyl Limited is a quoted industrial Group. Pursuant to the disposal during the year of Dorbyl Holdings UK Ltd, the remaining operations of the Group comprise the Automotive Manufacturing Division in South Africa. The major activity of the Group is the supply of components to the automotive motor industry (both original equipment and aftermarket) locally and offshore.

FINANCIAL RESULTS Effective 13 July 2005, the Group disposed of its interest in Dorbyl Holdings UK Ltd (the "DUK group" or "Alpine") for a total consideration of US$158 million. The DUK group of companies comprised the operations based in the United Kingdom, Canada and the USA.

Total turnover for the year ended 31 March 2006 amounted to R1 370 million, R692 million below the previous year's level of R2 062 million, due to the disposal of Alpine during the year.

Turnover and operating income contribution by business segment was as follows:

Turnover Operating income/(loss)

Year ended Year ended Year ended Year ended R millions 31 March 2006 % 31 March 2005 % 31 March 2006 31 March 2005

Continuing operations:Automotive Manufacturing 986 72 915 44 (9) 35

Before impairment of assets 46 36 Impairment of assets (55) (1)

Corporate (36) (20)

Before provision for benefit funds (21) (20) Provision for benefit funds (15) —

Discontinued operations: Automotive Manufacturing — — 59 3 — (3) Building Products 384 28 1 088 53 52 122

Total 1 370 100 2 062 100 7 134

Reviewing the operating results of the continuing operations only, turnover increased by 8% and operating income, prior to taking into account an impairment of Group assets of R55 million (see below) and an abnormal R15 million provision for benefit funds, increased by 62%. Taking account of these two items, the operating loss was R45 million.

Whilst net financial income benefited to some extent from the proceeds received from the sale of Alpine, this was for a limited period only as the proceeds were distributed shortly after receipt thereof by way of a special dividend. Nevertheless this non-recurring benefit amounted to some R8 million and, after tax, contributed some 17 cents per share to the earnings line. As a result, net financial income increased by 20% when compared to the prior year despite lower interest rates.

The distribution of the proceeds received on the sale of Alpine resulted in Secondary Tax on Companies (STC) of R110 million, which increased the tax charge attributable to continuing operations significantly to R122,7 million. As a result, the loss after taxation from continuing operations was R139,7 million, reflecting the adverse impact of the STC of R110 million, the impairment of R55 million and provision for benefit funds of R15 million.

The profit after tax from discontinued operations (representing Alpine) amounted to R33,2 million (2005 — R79 million).

The profit on the sale Alpine, net of taxation, amounted to R698 million. This enabled the Group to declare a special dividend of R26 per share. However, the STC payable on that dividend adversely affected headline earnings per share, which declined by 163%. Excluding this STC charge, headline earnings would have declined by 46%, being adversely affected by the disposal of Alpine during the year, as Alpine's profits constituted a major portion of the earnings last year.


DIRECTORS' REPORT (CONTINUED)

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT Certain operations within Automotive Manufacturing were performing poorly and there was some concern that the net asset value of these operations had been impaired. The carrying value of these operations was assessed using a combination of earnings before net financial income, depreciation and amortisation (EBITDA) and discounted cash flow and the price — earnings (PE) methods of valuation. The actual results for 2005 and forecasts for 2006, 2007 and 2008 were considered in the assessment as was a weighted cost of capital of 14% (optimistic) and 18% (conservative). Plant and equipment was impaired by R55 million following this assessment.

RETIREMENT FUNDS The Trustees of both the Dorbyl Pension and Provident Funds have finalised their proposals in regard to the surplus apportionment and these have been submitted to the Financial Services Board (FSB) for consideration. In terms of those submissions, the provision of R15 million reported on in the September 2005 interim profit statement was adequate to meet the only identified exposure, being the shortfall of R7 million that will exist in the Pension Fund after the apportionment of the surplus.

With reference to the Pension Fund, the FSB has raised certain matters which it requires to be satisfactorily explained or resolved before it can approve the scheme. The need for a further provision of a maximum of some R27 million could result. The Fund's professional advisors believe that adequate explanations can be furnished, but it is difficult to predict the final outcome. No further provision has been raised in this regard.

In regard to the Provident Fund, a former member representative has advised the FSB that he believed it was inappropriate to allocate a share of the surplus to Dorbyl as the Group had participated in the surplus in the past via contribution holidays. Should this view prevail, notwithstanding that all the Trustees supported the scheme, the Group could have a maximum liability of some R15 million to the Provident Fund. Conversely, Dorbyl could be awarded a greater share of the surplus. The FSB has, as yet, not expressed a view in this regard, and no provision has been raised.

SUBSIDIARIES Subsidiaries of the Group are set out in Annexure 1 on page 67.

DISPOSAL OF ALPINE ENGINEERED PRODUCTS (the DUK group) Dorbyl disposed of its 100% interest in the DUK group for a consideration of US$158 million. The disposal was implemented in accordance with section 228 of the Companies Act.

DIVIDENDS Normal dividends totalling 75 cents per share (2005 — 85 cents) comprising a final of 65 cents for 2005 (2004 — 50 cents), an interim of 10 cents (2005 — 35 cents) and a special dividend of 2 600 cents per share, were declared and paid to ordinary shareholders as follows:

Cents per share Declared Paid

Final — 2005 65 27/05/05 27/06/05 Special 2 600 04/08/05 29/08/05 Interim — 2006 10 22/11/05 16/01/06

A final dividend of 10 cents per share, amounting to R3,4 million, has been declared for the year ended 31 March 2006, payable on 3 July 2006. Secondary Tax on Companies amounting to R0,4 million will be payable on this dividend.


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The following half-yearly dividends were declared and paid to preference shareholders during the year ended 31 March 2006:

Cents per Amount Amount share 2006 2005

5% preference shares 6 months to 30 June 2005 5,0 R37 000 R37 000 6 months to 31 December 2005 5,0 R37 000 R37 000 5,5% preference shares 6 months to 30 June 2005 5,5 R68 750 R68 750 6 months to 31 December 2005 5,5 R68 750 R68 750

SHARE CAPITAL Details of the authorised and issued share capital at 31 March 2006 are set out in note 16 to the financial statements. There was no change in the authorised ordinary share capital, nor the authorised and issued preference share capital during the year.

As a result of the exercise of share options granted in terms of the employee share option scheme, the ordinary share capital of Dorbyl Limited increased by 910 300 shares from 33 159 756 to 34 070 056 shares. Stated capital increased accordingly by R11,5 million to R13,7 million.

EMPLOYEE SHARE SCHEME Details of the share option scheme are as follows:

Options allocated after 8 December 1998

2006 2005

Shares made available 4 972 613 4 972 613 Less: options allocated (2 511 000) (2 511 000)

Balance available for allocation until 7 December 2008 2 461 613 2 461 613

Options allocated as above 2 511 000 2 511 000 Less: options exercised (950 800) (40 500) Less: options lapsed (1 560 200) (1 560 200)

Options available to be exercised — 910 300

In terms of the current rules, the maximum number of unissued shares available to the Scheme within each ten-year period shall be 15% of the Company's issued share capital. Each ten-year period commences from the date of the first allocation to participants of the Scheme.

There were no unexercised share options at 31 March 2006.

DIRECTORATE The names of the directors and the company secretary in office at the date of this report, and the Company's business and postal addresses appear on page 6. There were no appointments during the year under review.

Effective 2 March 2006, EJ Vorster was dismissed as employee of Dorbyl Limited and removed as director of Dorbyl Limited in terms of article 15.15 of the Company's Articles of Association. Further, effective 17 March 2006, RC Duff resigned both as employee and director of Dorbyl Limited.

In terms of the Company's Articles of Association (clauses 15.16 and 17.1), the following directors retire at the forthcoming Annual General Meeting and, being eligible, are available for re-election:

N Phillips, aged 71 (appointed 1993), BCom (Rhodes University), PMD (Harvard Business School), was previous Managing Director of Volkswagen South Africa, President and Chief Executive Officer of Volkswagen America and President and Chief Executive Officer of Autolatina (the Volkswagen and Ford operations in Brazil and Argentina).


DIRECTORS' REPORT (CONTINUED)

r 1 11

T van Wyk, aged 58 (appointed 1991), LLM, H Dip Tax, former professor of Mercantile Law at UNISA and the University of Stellenbosch, was Registrar of Financial Institutions from 1987 to 1990 and is an Executive Director of Remgro Limited. He also serves as a non-executive director of Business Partners Limited and TSB Sugar RSA Limited.

DIRECTORS' INTEREST IN THE SHARE CAPITAL OF THE COMPANY The interest of the current directors in the ordinary share capital of the Company as at 31 March 2006 was as follows:

Non-beneficially held Beneficially held Total Director Directly Indirectly Directly Indirectly shares Percentage

WW Cooper 10 10 D Orwin — 54 000 54 000 0,16

Details of the directors' share options movement were as follows:

Share options at Share options at 31 March 2005 Exercised 31 March 2006

Name Number Price (cents) Number Date Gain (R) Number

WW Cooper 6 000 1 046 6 000 20/07/05 172 440 — 66 600 1 046 66 600 21/07/05 1 900 098 23 700 1 046 23 700 22/07/05 676 398 —

353 700 1 046 353 700 26/07/05 10 094 598 —

D Orwin 5 900 1 046 5 900 20/07/05 169 566 — 66 600 1 046 66 600 21/07/05 1 900 098 23 600 1 046 23 600 22/07/05 673 544 — 13 900 1 046 13 900 10/08/05 417 556 — 40 000 2 271 40 000 10/08/05 711 600

EJ Vorster 6 000 1 046 6 000 20/07/05 172 440 — 66 800 1 046 66 800 21/07/05 1 905 804 — 23 700 1 046 23 700 22/07/05 676 398 23 500 1 046 23 500 26/07/05 670 690 — 40 000 2 271 40 000 26/07/05 651 600 —

RC Duff 13 400 1 046 13 400 20/07/05 385 11626 700 2 271 26 700 20/07/05 440 283

Total 800 100 800 100 21 618 229

There were no changes to the beneficial shareholdings of directors between 31 March 2006 and the date of this report.


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DIRECTORS' REMUNERATION The directors' remuneration in respect of the financial year ended 31 March 2006 was as follows:

Basic Retire- Gains on Directors' remune- Other ment/ Cash share

fees ration benefits medical incentives options Total R'000 R'000 R'000 R'000 R'000 R'000 R'000

Executive 6 678 507 1 170 12 785 21 618 42 758

WW Cooper 2 350 169 359 10 958 12 844 26 680 RC Duff 1 431 133 278 207 825 2 874 D Orwin 1 542 74 280 900 3 872 6 668 EJ Vorster 1 355 131 253 720 4 077 6 536

Non-executive 501 301 802

N Phillips 159 301 460 JB Magwaza 113 113 WE Bührmann* 128 128 T van Wyk* 101 — — — 101

31 March 2006 501 6 678 808 1 170 12 785 21 618 43 560

31 March 2005 282 5 657 1 937 901 3 888 12 665

* Paid to the company that these directors represent.

Included in directors' remuneration are payments by subsidiaries of the Company to executive directors amounting to R1,3 million for the year ended 31 March 2006 (2005 — R2,7 million).

In terms of the Management Participation Scheme established to reward executive directors for unlocking value within the Group, an amount of R50 million was set aside as a result of the significant value unlocked during the sale of Alpine. Of this amount R9,5 million has been paid. Certain suspensive conditions have prevented the payment of further bonuses in this regard, but it is expected that bonuses will be paid in due course. Bonuses paid out in this regard in 2002 and 2003 were disclosed as directors' emoluments at that time. Further details in regard to directors' contracts are reflected in the Corporate Governance Report on page 18.

MEETING ATTENDANCE The details of the Board and Committee meeting attendances by the directors are set out below. The number in brackets reflects the number of meetings attended, whilst the director was in office.

Special Board Audit Remuneration Director Board and Committee Committee Committee

N Phillips (4) 4 (11) 11 (2) 2 (3) 3 WW Cooper (4) 4 (12) 12 (2) 2 D Orwin (4) 4 (12) 12 (2) 2 WE Bührmann (4) 4 (11) 11 (2) 2 (2) 2 RC Duff (3) 3 (6) 7 JB Magwaza (2) 4 (10) 12 (2) 2 (1) 1 EJ Vorster (2) 3 (6) 6 T van Wyk (4) 4 (11) 12 (1) 1


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INCOME STATEMENTS for the year ended 31 March

Group Company 2006 2005 2006 2005

Note R'000 R'000 R'000 R'000

CONTINUING OPERATIONS: Revenue 1 986 016 915 604 525 450 536 187 Cost of sales (800 466) (739 700) (425 449) (436 886)

Gross profit Other operating income

185 550 8 762

175 904 27 794

100 001 102 613

99 301 50 672

Dividends from subsidiaries 85 084 31 092 Other 8 762 27 794 17 529 19 580

Administrative expenses Sales and distribution expenses

(179 524) (4 454)

(184 085) (3 996)

(132 396) (4 706)

(106 814) (3 592)

Other operating expenses Impairment of assets 2 (55 029) (741) (134 077) (56 205)

Operating (loss)/income Net financial income 3

(44 695) 27 361

14 876 22 883

(68 565) 34 080

(16 638) 25 950

Financial income 3 32 842 25 820 39 515 36 191 Financial costs 3 (5 481) (2 937) (5 435) (10 241)

Share of profit of associate 11 340 415 194 226

(Loss)/profit before taxation Income tax expense 4

(16 994) (122 729)

38 174 (17 398)

(34 291) (89 688)

9 538 (5 930)

(Loss)/profit after taxation from continuing operations

Profit after taxation from discontinued operations 6 (139 723)

33 237 20 776 78 899

(123 979) —

3 608 739

Profit/(loss) on sale of discontinued operations, net of taxation 5 700 643 (22 799) 835 402 5 239

Profit for the year 2 594 157 76 876 711 423 9 586

Attributable to: Equity holders of the parent 585 912 71 628 Minority interest 8 245 5 248

Profit for the year 594 157 76 876

Basic earnings/(loss) per share 7 1 741,6 217,0

Continuing operations (439,8) 47,0 Discontinued operations 2 181,4 170,0

Diluted earnings/(loss) per share 7 1 741,6 213,9

Continuing operations Discontinued operations

(439,8) 2 181,4

46,4 167,5

Dividends paid per ordinary share (cents) 2 675 85

Final — year ended 31 March 2005 (2004) 65 50 Special — 29 August 2005 2 600 Interim — period ended 30 September 2005 (2004) 10 35

26 DORBYL ANNUAL REPORT 2006

r BALANCE SHEETS as at 31 March

Note 2006

R'000

Group 2005

R'000

Company 2006 2005

R'000 R'000

ASSETS Non-current assets Property, plant and equipment Intangible assets Deferred tax assets Investment in associate Other advances Interests in subsidiaries

9 10

8 11

12

212 113 —

4 523 1 200

—

256 824

16 729 1 191

16

124 967 —

6 050 258

— 199 602

128 975

7 313 282

16 182 856

217 836 274 760 330 877 319 442

Current assets Inventories Trade and other receivables Assets classified as held for sale Cash and cash equivalents

13 14 6

15

94 188 122 826

— 359 319

105 752 108 029 340 925 319 904

38 902 65 010

— 300 509

40 260 56 167

158 111 359 431

576 333 874 610 404 421 613 969

Total assets 794 169 1 149 370 735 298 933 411

EQUITY AND LIABILITIES Capital and reserves Share capital Treasury shares

16 16

13 725 (2 477)

2 257 (2 477)

13 725 2 257

Non-distributable reserves Retained earnings

17 11 248 4 311

449 010

(220) (35 076) 769 094

13 725 29 174

448 301

2 257 228 437 447 992

Total equity attributable to equity holders of the parent

Minority interest 464 569

47 536 733 798 41 876

491 200 678 686

Total equity 512 105 775 674 491 200 678 686

Non-current liabilities Deferred tax liabilities Preference share capital Provisions Advances from subsidiaries

8 16 20 12

10 287 3 980

26 201

9 402 3 980

26 963

— 3 980

26 201 42 233

3 980 26 963 94 232

40 468 40 345 72 414 125 175

Current liabilities Trade and other payables Provisions Taxation payable Liabilities classified as held for sale

19 20

6

213 181 24 048 4 367

—

184 371 15 500 13 020

120 460

146 907 24 048

729 —

108 667 10 500 10 383

241 596 333 351 171 684 129 550

Total equity and liabilities 794 169 1 149 370 735 298 933 411


CASH FLOW STATEMENTS for the year ended 31 March

Note

Cash generated/(utilised) by operations 21 Financial income 3 Financial costs 3 Income taxes 22

Cash available from operationsDividends paid

Cash (utilised by)/retained from operations

Cash flows from investing activities

Proceeds on disposal of property, plant and equipment Acquisition of property, plant and equipment — expansion — replacement Proceeds on disposal of businesses and subsidiaries 23 Increase in advances to subsidiaries Decrease in investments

Cash flows from financing activities

Decrease in minority interest Repayment of borrowings 24 Proceeds from issue of share capital

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year Effect of exchange rate fluctuations on cash held

Cash and cash equivalents at end of year 15

2006 R`000

123 353 32 843 (5 481)

(117 633)

33 082 (906 905)

(873 823)

895 807

6 017

(29 438) (22 487) 941 675

40

8 479

(2 457) (532)

11 468

30 463 331 638

(2 782)

359 319

Group 2005

R'000

101 849 27 244 (3 817)

(46 971)

78 305 (28 062)

50 243

(40 283)

63 568

(49 147) (61 095)

3 858

2 533

(35 705)

(7 332) (28 373)

(25 745) 357 444

(61)

331 638

Company 2006 2005

R'000 R'000

125 227 53 132 39 515 36 191 (5 435) (10 241)

(97 649) (3 580)

61 658 75 502 (910 809) (28 186)

(849 151) 47 316

778 761 18 293

3 798 61 398

(9 786) (9 749) (4 672) (6 780)

990 721 5 500 (201 340) (32076) —4

11 468

—— 11 468

(58 922) 65 609 359 431 293 822

300 509 359 431


RECONCILIATION OF MOVEMENT IN CAPITAL AND RESERVESfor the year ended 31 March

Non- Equity distri- holders

Share butable Retained of the Minority Total capital reserves earnings parent interest equity

Note R'000 R'000 R'000 R'000 R'000 R'000

GROUPBalance 31 March 2004 — as previously stated (220) (38 601) 718 502 679 681 43 048 722 729Prior year adjustments 33 7 215 7 215 3 704 10 919Balance 31 March 2004 — as restated (220) (38 601) 725 717 686 896 46 752 733 648Net movement not recognised in the income statement 17 (913) (189) (1 102) — (1 102)

Direct movements in reserves (1 102) (1 102) (1 102)Transfers to retained earnings 189 (189) — —

Transfers affecting retained earnings 4 438 4 438 4 438Profit for the year — restated 71 628 71 628 5 248 76 876

Profit for the year — as previously reported 69 933 69 933 5 181 75 114 Prior year adjustments 33 1 695 1 695 67 1 762

Change in holding in and disposal of minorities (5 595) (5 595)Dividends to shareholders (28 062) (28 062) (4 529) (32 591)Balance 31 March 2005 — as restated (220) (35 076) 769 094 733 798 41 876 775 674Net movement not recognised in the income statement 17 14 291 909 15 200 (128) 15 072

Direct movements in reserves 15 200 15 200 (128) 15 072 Transfers to retained earnings (909) 909 — —

Transfers affecting retained earnings 25 096 25 096 25 096Profit for the year 585 912 585 912 8 245 594 157Issue of share capital 11 468 11 468 11 468Dividends to shareholders (906 905) (906 905) (2 457) (909 362)Balance 31 March 2006 11 248 4 311 449 010 464 569 47 536 512 105 COMPANYBalance 31 March 2004 — as previously stated 2 257 220 842 469 794 692 893 692 893Prior year adjustments 33 4 155 4 155 4 155Balance 31 March 2004 — as restated 2 257 220 842 473 949 697 048 697 048 Net movement not recognised in the income statement 17 7 595 (7 357) 238 238

Direct movements in reserves 238 238 238 Transfers to retained earnings 7 357 (7 357) — —

Profit for the year — restated 9 586 9 586 9 586Profit for the year — as previously reported 7 106 7 106 7 106 Prior year adjustments 33 2 480 2 480 2 480

Dividends to shareholders (28 186) (28 186) (28 186)

Balance 31 March 2005 — as restated 2 257 228 437 447 992 678 686 678 686 Net movement not recognised in the income statement 17 (199 263) 199 695 432 432

Direct movements in reserves 432 432 432 Transfers to retained earnings (199 695) 199 695 — —

Profit for the year 711 423 711 423 711 423Issue of share capital 11 468 11 468 11 468Dividends to shareholders (910 809) (910 809) (910 809)

Balance 31 March 2006 13 725 29 174 448 301 491 200 491 200

Details of non-distributable reserves are set out in note 17.

Share capital is reflected net of treasury shares. Details of share capital and treasury shares are set out in note 16.


GROUP ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES Dorbyl Limited is a company domiciled in South Africa. The consolidated financial statements of the Company for the year ended 31 March 2006 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in associates.

1. STATEMENT OF COMPLIANCE The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB). These are the Group's first consolidated financial statements prepared in accordance with IFRS and IFRS 1 has been applied. The Group has adopted the following exemption in accordance with IFRS 1.

Business combinations The Group has decided to apply IFRS 3 Business Combinations to all business combinations occurring on or after 1 April 2004 (the date of transition to IFRS).

An explanation of how the transition to IFRS has affected the reported financial position and financial performance of the Group is provided in note 33.

2. BASIS OF PREPARATION The financial statements are presented in South African Rand rounded to the nearest thousand. They are prepared on the historical cost basis except that the following assets and liabilities where applicable are stated at their fair value: derivative financial instruments, financial instruments held for trading, and financial instruments classified as available-for-sale.

Non-current assets and disposal groups held for sale are stated at the lower of carrying amount and fair value less costs to sell.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and in preparing an opening IFRS balance sheet at 1 April 2004 for the purposes of the transition to IFRS.

The accounting policies have been applied consistently by Group entities.

3. BASIS OF CONSOLIDATION Subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group's share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an associate, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.


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Transactions eliminated on consolidation Intragroup balances and any unrealised gains and losses or income and expenses arising from intragroup transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of the Group's interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

4. FOREIGN CURRENCY Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to Rand at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement.

Financial statements of foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Rand at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Rand at rates approximating to the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity.

Net investment in foreign operations Exchange differences arising from the translation of the net investment in foreign operations, are taken to translation reserve. They are released into the income statement upon disposal.

5. PROPERTY, PLANT AND EQUIPMENT Owned assets Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Leased assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Plant and equipment acquired by way of finance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and accumulated impairment losses.

Subsequent costs The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

Depreciation Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.

The estimated useful lives are as follows:

• buildings 50 — 100 years • plant and equipment 10 — 20 years • fixtures and fittings 5 years • vehicles 4 years

The useful lives, depreciation methods and the residual value, if not insignificant, is reassessed annually.


1

GROUP ACCOUNTING POLICIES (CONTINUED)

Derecognition The carrying amount of an item of property, plant and equipment is derecognised at the earlier of:

• disposal; or • when no future economic benefits are expected from its use or disposal.

6. INTANGIBLE ASSETS Goodwill All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on acquisition of subsidiaries, associates and joint ventures. Since 1 January 2003, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.

In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous Generally Accepted Accounting Practice (GAAP). (Goodwill was written off directly against distributable reserves.)

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment. In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate.

Negative goodwill arising on an acquisition is recognised directly in profit or loss.

Research and development expenditure Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the Group has sufficient resources to complete development. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and accumulated impairment losses.

Other intangible assets Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses.

Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as incurred.

Subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

Amortisation Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows:

• patents and trademarks 10 — 20 years • capitalised development costs 5 — 7 years

7. INVENTORIES Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The cost of inventories is based at standard cost which approximates actual cost and is determined using the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity.


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8. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprises cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

9. IMPAIRMENT The carrying amounts of the Group's assets, other than inventories and deferred tax assets, which are dealt with in terms of their specific policies, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.

For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units and then to reduce the carrying amount of other assets.

Calculation of recoverable amount The recoverable amount of the Group's receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate. Receivables with a short duration are not discounted.

The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Reversals of impairment An impairment loss in respect of receivables carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.

An impairment loss in respect of goodwill is not reversed.

In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

10. SHARE CAPITAL Preference share capital Preference share capital is classified as equity if it is non-redeemable and any dividends are discretionary, or is redeemable but only at the Company's option. Dividends on preference share capital classified as equity are recognised as distributions within equity.

Preference share capital is classified as a liability if it is redeemable on a specific date or at the option of the shareholders or if dividend payments are not discretionary. Dividends thereon are recognised in the income statement as interest expense.

Repurchase of share capital When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are classified as treasury shares and presented as a deduction from total equity.

Dividends Dividends on redeemable preference shares are recognised as a liability and expensed on an accrual basis. Other dividends are recognised as a liability in the period in which they are declared.



11. EMPLOYEE BENEFITS Defined contribution plan Obligations for contributions to the defined contribution plan are recognised as an expense in the income statement as incurred.

Defined benefit plan The Group's net obligation in respect of the defined benefit pension plan is calculated by estimating the amount of future benefits that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on risk free bonds that have maturity dates approximating to the terms of the Group's obligations. The calculation is performed by a qualified actuary using the projected unit credit method.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately the expense is recognised immediately in the income statement.

All actuarial gains and losses as at 1 April 2004, the date of transition to IFRS, were recognised. Actuarial gains and losses that arise subsequent to 1 April 2004 are recognised immediately in the income statement.

Where the calculation results in a benefit to the Group, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.

Long-term service benefits The Group's net obligation in respect of long-term service benefits, other than pension plans, is the amount of future benefits that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method, is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at the balance sheet date on risk free bonds that have maturity dates approximating to the terms of the Group's obligations.

Share-based payment transactions The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a binomial lattice model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

12. PROVISIONS A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Onerous contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

13. REVENUE Goods sold and services rendered Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.


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14.

15.

16.

17.

Rental income Rental income derived from sub-leases is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

Dividend Income Dividend income is recognised when the right to receive payment is established.

EXPENSES Operating lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.

Finance lease payments Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Net financing costs Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, dividends on redeemable preference shares, interest receivable on funds invested, foreign exchange gains and losses, and gains and losses on hedging instruments that are recognised in the income statement.

Interest income is recognised in the income statement as it accrues, using the effective interest rate method. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method.

INCOME TAX Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend.

SEGMENT REPORTING A segment is a distinguishable component of the Group that is engaged either in providing products (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS Non-current assets held for sale Immediately before classification as held for sale, the measurement of the assets (and all assets and liabilities in a disposal group) is brought up-to-date in accordance with applicable IFRSs. Then, on initial classification as held for sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less costs to sell.



r

Impairment losses on initial classification as held for sale are included in profit or loss, even when there is a revaluation. The same applies to gains and losses on subsequent remeasurement.

Discontinued operations A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify.

18. FINANCIAL INSTRUMENTS Trading in financial instruments is accounted for on the transaction date and is initially measured at fair value, which includes transaction costs. The subsequent measurement of these instruments is dealt with as follows:

Unlisted investments Unlisted investments are classified as 'available for sale financial assets' and are carried at fair value. Fair value of unlisted investments is determined using appropriate valuation models.

Trade and other receivables Trade and other receivables originated by the Group are stated at amortised cost less impairment.

Cash and cash equivalents Cash and cash equivalents are measured at fair value, based on the relevant exchange rates at balance sheet date.

Trade and other payables Trade and other payables are stated at amortised cost.

Other financial liabilities Financial liabilities other than derivatives are recognised at their original debt value less principal payments and amortisations.

Interest-bearing borrowings Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

Derivative financial instruments The Group uses derivative financial instruments to hedge its exposure to foreign exchange arising from operational activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged.

Cash flow hedges Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. When the forecasted transaction subsequently results in the recognition of a non-financial asset or non-financial liability, the associated cumulative gain or loss is removed from equity and included in the initial cost or other carrying amount of the non-financial asset or liability. If a hedge of a forecasted transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss (ie, when the expense is recognised). For cash flow hedges, other than those covered by the preceding two policy statements, the associated cumulative gain or loss is removed from equity and recognised in the income statement in the same period or periods during which the hedged forecast transaction affects profit or loss. The ineffective part of any gain or loss is recognised immediately in the income statement.


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When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in the income statement.

Derecognition Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:

• the rights to receive cash flows from the asset have expired; • the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full

without material delay to a third party under a 'pass-through' arrangement; or • the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all

the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Gains and losses 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.

Offset Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when the Company has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Trading in financial instruments It is the policy of the Group not to trade in derivative financial instruments for speculative purposes.

19. RELATED PARTIES Related parties in the case of the Group include any shareholder who is able to exert a significant influence on the operating policies of the Group. Directors, their close family members and any employee who is able to exert a significant influence on the operating policies of the Group are also considered to be related parties. In the case of the Company, related parties would also include subsidiaries, associates and joint ventures.


r NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 March

2006 R'000

Group 2005

R'000 2006

R'000

Company 2005

R'000

1. REVENUE Included in turnover are direct and indirect exports and offshore sales amounting to 580 666 1 284 992 15 812 27 822


196 971 383 695

197 268 1 087 724

15 812 —

27 822 —

2. PROFIT FOR THE YEAR Included in profit for the year which includes continuing operations, discontinued operations and profit on sale of discontinued operations are the items detailed below (before taxation):

Revenue items Dividends from associate — unlisted Dividends — other Income from subsidiaries

194 —

226 819

194 —

101 862

226 819

45 970

Dividends Net interest received/(paid) Fees Rental

85 084 2 755 7 861 6 162

31 092 (1 419) 9 631 6 666

Operating lease rentals received 2 097 2 148 1 879 1 276

Expense items Auditors' remuneration 4 689 3 624 3 025 890

Audit fees Other services

2 450 2 239

2 582 1 042

1 058 1 967

552 338

Depreciation and amortisation 35 028 53 910 14 856 14 224

Owned assets Intangible assets

31 325 3 703

42 407 11 503

14 856 —

14 224

Impairment of assets 55 029 741 134 077 56 205

Impairment of property, plant and equipment Impairment of investments in and advances to subsidiaries and associate

54 916

113

741 1 482

132 595 56 205


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for the year ended 31 March

2. PROFIT FOR THE YEAR (continued)Expense items (continued)increase in provisionsProfit on disposal of plant, vehiclesand equipmentRetirement funds

Contributions to pension and provident funds Contributions to post-retirement medical benefits Actuarial gains included in movement

in provisions Provision for liabilities to benefit funds due to surplus apportionment

Employee costs JSE Limited Managerial, technical and administrative fees Operating lease charges

Premises Premises sub-leases (net of straight-line lease adjustments)

Machinery and equipment Vehicles Office equipment

Professional fees Research and development costs

3. NET FINANCIAL INCOMEContinuing operationsFinancial income

Interest received Foreign exchange gains

Financial costs Interest paid Foreign exchange losses Preference dividends

Discontinued operations Financial income

Interest received Financial costs

Interest paid

Group Company2006 2005 2006 2005

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

15 000 9 859 15 000 4 859

(3 517) (2 546) (1 669) (804) 31 247 18 951 25 401 9 201

15 190 18 117 9 694 8 706 1 057 975 707 636

(141) (141)

15 000 15 000

351 802 520 214 155 946 148 276 147 139 147 139 938 3 521 938 3 521

13 548 25 671 6 240 2 546

8 579 20 263 3 549 3 761

561 (3 689) 561 (3 689) 2 353 3 589 1 728 2 158

980 3 229 — 1 075 2 279 402 316

9 534 9 579 5 845 484 3 002 6 421 414 398

29 853 24 339 37 859 35 936 2 989 1 481 1 656 255

32 842 25 820 39 515 36 191

(2 554) (765) (4 276) (9 463) (2 715) (1 960) (947) (566)

(212) (212) (212) (212)

(5 481) (2 937) (5 435) (10 241)

27 361 22 883 34 080 25 950

1 1 424 —

— (880) — —

1 544 — —


NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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3. NET FINANCIAL INCOME (continued) Total Financial income

Interest received Foreign exchange gains

Financial costs Interest paid Foreign exchange losses Preference dividends

4. INCOME TAX EXPENSE South African

Current year Normal Deferred Deferred — reduction in tax rate

Prior yearNormalDeferred

Foreign

Current yearNormalDeferred

Secondary Tax on Companies Capital Gains Tax

Total income tax expense

Allocated as follows: Continuing operations Discontinued operations Sale of discontinued operations

Group2006 2005

R'000 R'000

29 854 25 763 2 989 1 481

32 843 27 244

(2 554) (1 645) (2 715) (1 960)

(212) (212)

(5 481) (3 817)

27 362 23 427

11 189 14 365

11 192 8 979 4 312 4 509

— 41

(13 470) (5 682) 9 155 6 518

18 457 40 519

25 335 33 843 (6 878) 6 676

29 646 54 884 111 110 3 206

148 101

140 904 58 191

122 729 17 398 18 457 40 713

(282) 80

140 904 58 191

Company2006 2005

R'000 R'000

37 859 35 936 1 656 255

39 515 36 191

(4 276) (9 463) (947) (566) (212) (212)

(5 435) (10 241)

34 080 25 950

(7 101) 4 085

5 102 7 294 929 2 280

— 257

(13 466) (5 682) 334 (64)

—

— — —

(7 101) 4 085 96 359 2 066

— 96

89 258 6 247

89 688 5 930 — 317

(430)

89 258 6 247


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2006 Group

2005 Company

2006 2005 R'000 R'000 R'000 R'000

4. INCOME TAX EXPENSE (continued) Income tax rate reconciliation

Income tax expense at standard rate 29% (2005 — 30%)

Reductions/(increases) due to the following: 213 168 (72 264)

40 520 17 671

232 197 (142 939)

4 750 1 497

Dividends and share of associate retained income (Income not taxable)/expenses not allowed Deferred tax not raised

(99) (2 202) 20 938

(372) 398

11 378

(24 730) 130

—

(9 642) 1 750

Higher foreign taxes (Over)/under provision in respect of prior years Deferred tax rate change Deferred tax on Secondary Tax on

Companies credits Capital profit on disposal of businesses Impairment of investments in and loans to subsidiaries

4 189 (4 315)

—

2 077 (203 387)

6 299 836

41

(2 553) —

— (13 132)

—

2 553 (242 572)

38 453

(5 746) 257

(2 553) (1 592)

16 861 Capital allowances relating to foreign subsidiaries Capital Gains Tax Secondary Tax on Companies

(723) 148

111 110

(1 663) 101

3 206 —

96 359 96

2 066

Total tax change 140 904 58 191 89 258 6 247

Capital Gains Tax (CGT) on the disposal of Dorbyl Holdings UK Limited ("Alpine")

Professional advice received indicates that Dorbyl does not have a CGT liability in respect of the profit derived on the disposal of Alpine as it is exempt in terms of paragraph 64B of the Eighth schedule of the Income Tax Act (Act 58 of 1962, as amended).

5. PROFIT/(LOSS) ON SALE OF DISCONTINUED OPERATIONS/SUBSIDIARIES

Profit on sale of shares in and loans to subsidiaries 832 610 1 500 Profit/(loss) arising on the sale or discontinuance of identifiable parts of the business 698 245 (4 803) — (793)

Other 2 116 (17 916) 2 362 4 532

700 361 (22 719) 834 972 5 239 Tax relief/(charge) 282 (80) 430

700 643 (22 799) 835 402 5 239



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Group Company 2006 2005 2006 2005

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

6. DISCONTINUED OPERATIONS AND ASSETS ANDLIABILITIES CLASSIFIED AS HELD FOR SALERevenue 383 695 1 146 364 — Cost of sales (223 507) (704 970) —

Gross profit 160 188 441 394 — Other operating income — 3 340 — 1 056 Administrative expenses (108 495) (325 666) —

Operating profit 51 693 119 068 — 1 056 Financial income 1 1 424 — Financial costs — ( 880) —

Profit before taxation 51 694 119 612 — 1 056 Income tax expense (18 457) (40 713) — (317)

Profit for the year 33 237 78 899 — 739

Attributable to:Equity holders of the parent 33 237 79 228Minority interest — (329)

33 237 78 899

Cash flows from discontinued operationsto date of disposal

Cash flows from operating activities 52 655 61 617Cash flows from investing activities (12 053) (43 825)Cash flows from financing activities (532) (28 373)

Discontinued operations comprise mainly of those of Dorbyl Holdings UK Limited, which were disposed of mid-July 2005. The assets and liabilities of these operations were classified as held for sale in the prior year as the disposal was being negotiated prior to the year end and the agreement of sale was signed before the financial statements were approved. Details of the assets and liabilities disposed of, consideration received and profit on the disposal are included in note 23.


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6. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (continued) Assets classified as held for sale Property, plant and equipment Intangible assets Interest in subsidiary Inventories Trade and other receivables Cash and cash equivalents

Total assets classified as held for sale

Liabilities classified as held for sale Deferred tax liabilities Interest bearing loans and borrowings Trade and other payables Taxation payable Short-term borrowings

Total liabilities classified as held for sale

7. EARNINGS PER SHARE Basic earnings per share (cents)Headline (loss)/earnings per share (cents)


Headline earnings per share before Secondary Tax on Companies (STC) on special dividends (cents)


The calculation of basic earnings per share is based on the weighted average number of ordinary shares in issue during the year and profit for the year attributable to the equity shareholders of the parent.

Weighted average number of shares net of treasury shares (000)

Group Company 2006 2005 2006 2005

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

— 89 120 — — 52 830 —

— 158 111 — 86 341 — — 100 900 — — 11 734 —

— 340 925 — 158 111

— 6 740 — — 9 196 — — 98 251 — — 1 534 — — 4 739 —

— 120 460 — —

1 741,6 217,0 (176,1) 280,7

(274,9) 41,798,8 239,0

151,6 280,7

52,8 41,798,8 239,0

33 643 33 014




7. EARNINGS PER SHARE (continued) Headline earnings per share were arrived at after the following adjustments:

Profit for the year Adjusted for: Loss/(profit) on disposal of plant, vehicles and equipment

(Profit)/loss on sale or discontinuance of identifiable parts of the business (refer note 5)

Impairment of assets Income tax expense attributable to adjustments Adjustments attributable to minority shareholders

Headline earnings STC relating to special dividends

Headline earnings before STC on special dividends

Diluted earnings per share (cents)Diluted headline earnings per share (cents)

The calculation of diluted earnings per share is based on income attributable to shareholders and the adjusted weighted average number of shares in issue. The weighted average number of shares has been adjusted for the potential future issue of shares in terms of the Group's Share Option Scheme at below fair value as detailed below.

The following adjustments to the weighted average number of shares in issue were taken into account in the calculation of diluted earnings per share:

Weighted average number of shares Number of outstanding share options Number of share options deemed to be issued at fair value

Adjusted weighted number of shares in issue

2006 R'000

Group 2005

R'000 2006

R'000

Company 2005

R'000

585 912 71 628

620

(700 361) 55 029

(462) —

(59 262) 110 253

50 991

1 741,6 (176,1)

(2 546)

22 719

684 188

92 673

92 673

213,9 276,8

33 643 —

—

33 643

33 014 910

(445)

33 479


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8. DEFERRED TAX ASSETS AND LIABILITIES Deferred tax assetsDeferred tax liabilities

Reflected as deferred tax liability Included in liabilities classified as held for sale

Net deferred tax (liability)/asset

Deferred tax assets comprise: Accelerated capital allowances Disallowed provisions Secondary Tax on Companies — credits Other timing differences

Set off of tax losses

Deferred tax liabilities comprise: Accelerated capital allowances Disallowed provisions Other timing differences

Set off of tax losses

Movement: Carrying amount at beginning of year

as previously stated Prior year adjustments (refer note 33)

Balance at beginning of year — restated Per income statement Disposal of business Translation adjustment

Balance at end of year

Group Company 2006 2005 2006 2005

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

4 523 16 729 6 050 7 313 (10 287) (16 142) —

(10 287) (9 402) — — (6 740) — —

(5 764) 587 6 050 7 313

(15 401) (10 767) (15 401) (13 412) 19 421 18 658 19 421 18 172

476 2 553 — 2 553 27 (1 828) 2 030

4523 8 616 6 050 7 313 — 8 113 —

4 523 16 729 6 050 7 313

(10 666) (28 644) — 10 629

299 (2 649)

(10 367) (20 664) 80 4 522

(10 287) (16 142)

6 764 23 580 10 031 11 566 (6 177) (5 118) (2 718) (1 780)

587 18 462 7 313 9 786 (6 589) (17 744) (1 263) (2 473)

64 (52) — 174 (79) —

(5 764) 587 6 050 7 313



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8. DEFERRED TAX ASSETS AND LIABILITIES (continued) Unrecognised deferred tax assets Deferred tax assets have not been recognised in

respect of the following items: Capital allowances Disallowed provisions Other timing differences

Tax losses

Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group can utilise the benefits therefrom. Computed tax losses carried forward (South African)

Used in computation of deferred tax Not used in computation of deferred tax

9. PROPERTY PLANT AND EQUIPMENT Group

Accumulated depreciation

and Cost impairment

R'000 R'000

Owned assets 31 March 2006 Property 49 412 (9 909) Leasehold improvements 1 560 (569) Plant and equipment 426 047 (258 018) Vehicles 1 454 (1195) Office equipment 29 277 (25 946)

507 750 (295 637)

31 March 2005 Property 74 237 (13 420) Leasehold improvements 12 495 (6 601) Plant and equipment 473 884 (209 319) Vehicles 1 358 (806) Office equipment 82 837 (68 721)

644 811 (298 867) Classified as assets held

for sale (169 800) 80 680

475 011 (218 187)


Group 2006

R'000

2 6741 355

(2 407)

1 62256 876

58 498

196 400

277 196 123

Carrying amount

R'000

39 503 991

168 029 259

3 331

212 113

60 817 5 894

264 565 552

14 116

345 944

(89 120)

256 824

2005 R'000

(6 715) 2 648

59

(4 008) 41 568

37 560

186 907

43 569 143 338

Cost R'000

49 888 1 203

182 977 1 036

24 489

259 593

50 618 1 096

171 963 1 058

24 789

249 524

—

249 524

Company 2006 2005

R'000 R'000

— — —

— —

—

—

— — —

Company Accumulated depreciation

and Carrying impairment amount

R'000 R'000

(10 402) 39 486 (571) 632

(100 541) 82 436 (794) 242

(22 318) 2 171

(134 626) 124 967

(9 763) 40 855 (505) 591

(89 332) 82 631 (705) 353

(20 244) 4 545

(120 549) 128 975

(120 549) 128 975

46

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Plant and Office 2006 2005 Property equipment Vehicles equipment

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

9. PROPERTY PLANTAND EQUIPMENT (continued)Movement — Group

Carrying amount at beginning of year — as previously stated 66 104 235 586 552 14 116 316 358 330 413

Prior year adjustments and transition to IFRS (refer note 33) 607 28 979 29 586 29 761

Carrying amount at beginning of year — as restated 66 711 264 565 552 14 116 345 944 360 174

Acquisitions 947 40 864 230 6 018 48 059 98 577 Disposals (1 134) (1 292) (74) (2 500) (60 806) Impairment — (52 974) (328) (1 614) (54 916) (741) Depreciation (1 194) (26 173) (195) (3 763) (31 325) (42 407) Disposal of businesses (26 215) (60 047) — (11 799) (98 061) (8 569) Effect of movement in foreign exchange 1 379 3 086 447 4 912 (284)

Carrying amount at end of year 40 494 168 029 259 3 331 212 113 345 944

Movement — Company

Carrying amount at beginning of year — as previously stated 40 839 66 824 353 4 545 112 561 174 152

Prior year adjustments (refer note 33) 607 15 807 16 414 16 130

Carrying amount at beginning of year — as restated 41 446 82 631 353 4 545 128 975 190 282

Acquisitions 511 12 796 1 152 14 459 16 529 Disposals (1 134) (921) (74) (2 129) (60 319) Impairment — (1 482) (1 482) Depreciation (705) (12 070) (111) (1 970) (14 856) (14 224) Disposal of businesses — (3 293)

Carrying amount at end of year 40 118 82 436 242 2 171 124 967 128 975

Details of land and buildings are available for inspection at the registered office of the Company.

Group Company Accumulated Carrying Accumulated Carrying

Cost depreciation amount Cost depreciation amount R'000 R'000 R'000 R'000 R'000 R'000

Capitalised leased assets

31 March 2006 Plant and equipment 12 714 (12 714) — 12 714 (12 714)

31 March 2005 Plant and equipment 12 714 (12 714) — 12 714 (12 714) -



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Cost R'000

Group Accumulated amortisation

R'000

Carrying amount

R'000 Cost

R'000

Company Accumulated amortisation

R'000

Carrying amount

R'000

10. INTANGIBLE ASSETS 31 March 2006

Trademarks Patents Software

— — —

— —

— —

31 March 2005 Trademarks Patents Software

3 117 26 941 60 543

(237) (2 438)

(35 096)

2 880 24 503 25 447

Assets classified as held for sale

90 601

(90 601)

(37 771)

37 771

52 830

(52 830) —

— —

Patents R'000

Trademarks R'000

Software R'000

2006 R'000

2005 R'000

Movement — Group Carrying amount at beginning of year — as previously stated

Transition to IFRS (refer note 33) 24 503 3 117

(237) 25 447 53 067

(237) 53 112

(81)

Carrying amount at beginning of year — as restated

Acquisitions Amortisation Disposal of businesses Effect of movement in foreign exchange

24 503 152

(573) (25 507)

1 425

2 880

(3 068) 188

25 447 3 715

(3 130) (27 479)

1 447

52 830 3 867

(3 703) (56 054)

3 060

53 031 11 665

(11 503)

(363)

Carrying amount at end of year — 52 830


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2006 2005 % Holding % Holding

11. INVESTMENT INASSOCIATEUnlisted First Afrijoint Assemblers (Pty) Ltd

Carrying value excluding advances 43 43

Movement in carrying value Carrying value of associate at

beginning of the year Attributable retained income during the year

Profit for the year Dividends paid during the year

Carrying value of associate at end of the year Impairment

Advances — associate

Investment and advances — associate

Directors' valuation of associate (including advances)

Share of post-acquisition reserves of associate Retained surplus

Summarised financial information of associate Income statement Revenue

Operating income Net financial income

Profit before taxation Income tax expense

Profit for the year

Balance sheet Non-current assetsCurrent assetsNet cash

Total assets

Shareholders' fundsDeferred tax liabilityCurrent liabilities

Total equity and liabilities

Group Company 2006 2005 2006 2005

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

942 909 — -

909 720 — -146 189 — -

340 415 194 226 (194) (226) (194) (226)

1 055 909 — -(113) — -

942 909 - -258 282 258 282

1 200 1 191 258 282

1 200 1 500 1 200 1 500

1 055 909

7 841 7 023

1 031 1 343161 141

1 192 1 484(402) (510)

790 974

280 374 187 174

2 577 2 247

3 044 2 795

2 432 2 093 43 43

569 659

3 044 2 795



r


Group 2006 2005

R'000 R'000

12. INTERESTS IN SUBSIDIARIES Shares at cost less amounts written off Classified as assets held for sale

Advances to subsidiaries

Interest bearing Interest free

Impairment

Advances from subsidiaries

Interest bearing Interest free

Interest bearing advances to/(from) subsidiaries bear interest at rates linked to prime overdraft rates less 1,5% and there are no fixed terms of repayment. Details of interests in subsidiaries appear in Annexure 1.

13. INVENTORIES Merchandise 1 762 2 139 Finished goods 18 200 75 630 Manufacturing work in progress 13 449 20 815 Raw materials 50 697 84 712 Consumable stores 10 080 8 797

94 188 192 093 Classified as assets held for sale — (86 341)

94 188 105 752

Inventory stated at fair value less costs to sell 6 320 4 656

14. TRADE AND OTHER RECEIVABLES Trade receivables 101 491 185 819 Non-trade receivables 21 335 26 574 Accounting for straight-lining of leases — 1 586

122 826 213 979 Impairment — (5 050)

122 826 208 929 Classified as assets held for sale — (100 900)

122 826 108 029

Other disclosable balances included in trade and other receivables Aggregate indebtedness of subsidiaries


Company 2006 2005

R'000 R'000

159 119 351 869 — (158 111)

159 119 193 758 229 283 45 303

92 075 2 305 137 208 42 998

388 402 239 061 (188 800) (56 205)

199 602 182 856 (42 233) (94 232)

— (18 695) (42 233) (75 537)

157 369 88 624

— 6 847 5 202 4 591 8 062

24 484 23 812 2 980 3 184

38 902 40 260 —

38 902 40 260

378 602

51 439 45 776 13 571 8 805

— 1 586

65 010 56 167 —

65 010 56 167 —

65 010 56 167

9 968 8 299

50

r


Group Company2006 2005 2006 2005

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

15. CASH AND CASH EQUIVALENTS Cash at bank and on call 359 319 272 432 300 509 300 225 Interest bearing advances — 59 150 — 59 150 Cash on hand — 56 — 56

Per cash flow statement 359 319 331 638 300 509 359 431 Classified as assets held for sale — (11 734) —

359 319 319 904 300 509 359 431

16. SHARE CAPITALOrdinary share capitalAuthorised 40 000 000 ordinary shares of no par value

Issued 34 070 056 (2005 — 33 159 756) ordinary shares

of no par value 13 725 2 257 13 725 2 257 145 961 (2005 — 145 961) held by subsidiary (2 477) (2 477)

11 248 (220) 13 725 2 257

At the Annual General Meeting held on24 August 2005,

— the directors were authorised to allot andissue the unissued shares at theirdiscretion but not for cash. This authorityis valid for a period not exceeding15 months; and

— the directors were granted a generalauthority to buy back up to 20% of theissued share capital of the Company untilthe next Annual General Meeting.

Preference share capital Authorised 750 000 5% cumulative preference shares of R2 each 1 500 1 500 1 500 1 500 1 250 000 5,5% cumulative preference shares of R2 each 2 500 2 500 2 500 2 500

2 000 000 5,75% redeemable cumulative preference shares of R2 each 4 000 4 000 4 000 4 000

Issued 740 025 5% cumulative preference shares of R2 each 1 480 1 480 1 480 1 480 1 250 000 5,5% cumulative preference shares of R2 each 2 500 2 500 2 500 2 500

3 980 3 980 3 980 3 980



r


Group Company 2006 2005 2006 2005

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

17. NON-DISTRIBUTABLE RESERVES Transfers affecting attributable earnings

Realisation of translation reserves on sale/ deregistration of foreign subsidiary 25 096 4 438

Transfers not affecting attributable earnings (909) 189 (199 695) 7 357

Share of retained income of associate (909) 189Transfer (from)/to general capital reserve (199 695) 7 830Realisation of surplus on restatement of fixed

property transferred within the Group togroup cost — (473)

Total transfers from/(to) retained surplus 24 187 4 627 (199 695) 7 357 Direct movements in reserves 15 200 (1 102) 432 238

Translation reserve 13 659 (657)Hedging reserve 1 541 (445) 432 238

Movement for the year 39 387 3 525 (199 263) 7 595 Balance at beginning of the year (35 076) (38 601) 228 437 220 842

Balance at end of the year 4 311 (35 076) 29 174 228 437

Comprising: Surplus on restatement of fixed property

transferred within the Group to Group cost 5 409 5 409 Capital redemption reserve fund 4 000 4 000 4 000 4 000 General capital reserve — — 19 686 219 381 Translation reserve — (38 755) Hedging reserve 311 (1 230) 79 (353) Share of retained surplus of associate — 909

4 311 (35 076) 29 174 228 437

Surplus on restatement of fixed property transferred within the Group to Group cost This reserve relates to the revaluation of fixed properties transferred from subsidiaries to the holding company to original Group cost.

Capital redemption reserve fund The capital redemption reserve is a statutory reserve created on the redemption of share capital.

General capital reserve The general capital reserve was created in the Company to allow for the write off of goodwill in the Group directly against reserves in prior years.

Translation reserve The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations.

Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred.

Share of retained surplus of associate This reserve comprised the Group's share of retained income of the associate not distributed.


r


18. INTEREST BEARING LOANS AND BORROWINGS Long-term loans Short-term loan

Total borrowings Less: short-term borrowings included above

Long-term borrowings Borrowings classified as liabilities held for sale

Amount outstanding

2006 R'000

Details of long-term borrowings for the year ended 31 March

Loan to subsidiary from others (as above) —

19. TRADE AND OTHER PAYABLES Trade payables Non-trade payables Accounting for straight-lining of leases

Classified as liabilities held for sale

Other disclosable balances included in trade and other payables

Aggregate indebtedness to subsidiaries

Group Company2006 2005 2006 2005

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

— 12 875 — — — 1 060 — —

— 13 935 — — — (4 739) — —

— 9 196 — — (9 196)

——

Amount Interest outstanding rate

2005 as at Repayment detailsR'000 31/3/2005 Frequency Financial year

12 875 Libor plus 2% Quarterly 2005 — 2009

Group Company2006 2005 2006 2005

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

102 728 143 130 59 305 57 778 102 827 130 845 79 976 42 242

7 626 8 647 7 626 8 647

213 181 282 622 146 907 108 667 — (98 251) — —

213 181 184 371 146 907 108 667

892 762



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Group Company 2006 2005 2006 2005

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

20. PROVISIONS Post-retirement medical aid obligations 26 201 26 963 26 201 26 963 Onerous contracts 4 048 5 500 4 048 5 500 Benefit funds 15 000 15 000 -Other 5 000 10 000 5 000 5 000

50 249 42 463 50 249 37 463 Included in current liabilities (24 048) (15 500) (24 048) (10 500)

Non-current portion 26 201 26 963 26 201 26 963

Movement:

Balance at beginning of the year 42 463 57 642 37 463 34 614

Post-retirement medical aid obligations 26 963 27 614 26 963 27 614 Onerous contracts 5 500 25 028 5 500 7 000 Benefit funds — — -Other 10 000 5 000 5 000 -

Raised/(reversed) during the year 15 000 9 859 15 000 4 859

Post-retirement medical aid obligations — (141) — (141) Onerous contracts — — -Benefit funds 15 000 15 000 -Other — 10 000 — 5 000

Utilised during the year (7 214) (25 038) (2 214) (2 010)

Post-retirement medical aid obligations (762) (510) (762) (510) Onerous contracts (1 452) (19 528) (1 452) (1 500) Benefit funds — — -Other (5 000) (5 000) —

Balance at end of the year 50 249 42 463 50 249 37 463

Post-retirement medical aid obligations 26 201 26 963 26 201 26 963 Onerous contracts 4 048 5 500 4 048 5 500 Benefit funds 15 000 15 000 -Other 5 000 10 000 5 000 5 000

Post-retirement medical aid obligations — The Group has an obligation to contribute to the past retirement costs of certain current and past employees (refer note 31).

Onerous contracts — The Group has commitments in terms of a property lease where the Group is no longer the tenant and is unable to recover the full rentals. The estimated outstanding value of such under-recoveries has been provided for in full.

Benefit funds — The most current actuarial valuation of the Dorbyl Pension Fund indicates that the Group would be required to fund a deficit (refer note 30).

Other —The provision relates mainly to legal costs in respect of various litigations either in progress or to be instituted.The underlying disputes relate mainly to labour related issues and past business disposals.


r


Group Company 2006 2005 2006 2005

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

21. CASH GENERATED/(UTILISED) BY OPERATIONS Operating (loss)/income — continuing operations Operating income — discontinued operations Dividends — associate

(44 695) 51 693

194

14 876 119 068

226

(68 565) —

194

(16 638) 1 056

226 Profit/(loss) on the sale or discontinuance of identifiable parts of the business

Items not involving the movement of funds 2 116

101 540 (17 916) 61 964

2 362 162 264

4 532 74 484

Depreciation and amortisation Impairment of assets

35 028 55 029

53 910 741

14 856 134 077

14 224 56 205

Decrease in provision for post-retirement medical aid obligations

Increase in other provisions —

15 000 (141)

10 000 —

15 000 (141)

5 000 Net profit on disposal of property, plant

and equipment (3 517) (2 546) (1 669) (804)

Working capital changes 12 505 (76 368) 28 972 (10 528)

Decrease/(increase) in inventories (Increase)/decrease in trade and other receivables Increase/(decrease) in trade and other payables

4 587 (21 860) 29 778

(36 122) 6 177

(46 423)

1 358 (8 398) 36 012

(4 260) 16 848

(23 116)

123 353 101 849 125 227 53 132

22. INCOME TAX PAID Amounts outstanding at beginning of the year Per the income statements (excluding deferred tax) Subsidiary tax balance disposed of Effect of movement in foreign exchange Amounts outstanding at end of the year

14 554 134 315 (27 630)

761 (4 367)

21 532 40 447

376 (830)

(14 554)

10 383 87 995

— (729)

10 189 3 774

(10 383)

117 633 46 971 97 649 3 580

23. DISPOSAL OF BUSINESSES Property, plant and equipment 98 061 8 569 — 3 293 Intangible assets Inventories

56 054 98 932 2 656

— —

Trade and other receivables 115 820 6 093 — Trade and other payables Tax balances Net cash resources

(110 155) (27 630) 49 046

(5 576) 376

4 522

—

— Borrowings Outside shareholders

(12 684) — (3 560)

— —

Translation reserve 25 096 — Other Investment in subsidiary

(64) 103 — 158 111 1 500

Net identifiable assets and liabilities 292 476 13 183 158 111 4 793 Profit/(loss) on disposal 698 245 (4 803) 832 610 707

Total proceeds Cash disposed

990 721 (49 046)

8 380 (4 522)

990 721 —

5 500

Net proceeds 941 675 3 858 990 721 5 500

DORBYL ANNUAL REPORT 2006 . 55


r


Group Company 2006 2005 2006 2005

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

24. BORROWING ACTIVITIES Decrease in total borrowings for the year (13 935) (28 446) — Borrowings disposed 12 684 — Effect of movement in foreign exchange 719 73 —

Repayment of borrowings (532) (28 373) — —

25. CONTINGENT LIABILITIES Guarantees given for bank overdrafts, loans and

contractual obligations of subsidiary companies — 67 189 Other guarantees 200 200 200 200

Repurchase undertakings — total amount guaranteed R0,5 million

(2005 — R4 million), less estimated value of assets/securities — — —

Debtors discounted with recourse — 1 908 —

200 2 108 200 67 389

STC of 12,5% is payable on dividends declared. No provision has been made for taxes that might become payable if retained surplus is distributed by way of dividend.

Benefit funds Recent developments with regard to the surplus apportionment in terms of the Pension Funds Amendment Act may result in further liabilities. In this regard refer to note 30.

Outstanding legal matters Guarantees have been issued in favour of the liquidator of certain companies against which the Group has claims in order for the liquidator to pursue further claims against former directors and shareholders of those companies. Costs incurred to date in this regard have been accounted for as and when incurred. The directors and shareholders of these companies have indicated, from time to time during the proceedings, their intention to lodge claims against the liquidator and, through the guarantees, Dorbyl Limited. The directors of Dorbyl Limited and their legal advisors believe these claims to be spurious and without substance.

There are other legal claims in progress relating to labour disputes.

Claims by former director Claims have been submitted by a former director following his dismissal. These are not expected to have any material effect on the financial statements and counter-claims have been made.

Group Company 2006 2005 2006 2005

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

26. CAPITAL EXPENDITURE COMMITMENTS Authorised and contracted for 5 737 18 986 1 206 1 346 Authorised but not contracted for — 165 — 165

5 737 19 151 1 206 1 511

The above expenditure will be financed out of internal resources.



Group Company 2006 2005 2006 2005R'000 R'000 R'000 R'000

27. OPERATING LEASE COMMITMENTS/RECEIVABLES Leases excluding sub-lease commitments

Property 22 191 55 630 22 191 7 535

Payable within one year 6 282 18 516 6 282 3 571 Payable in following five years 15 909 35 562 15 909 3 964 Payable thereafter — 1 552 —

Plant, vehicles and equipment 3 267 9 794 2 632 1 928

Payable within one year 1 704 4 222 1 349 991 Payable in following five years 1 563 5 572 1 283 937

25 458 65 424 24 823 9 463

Property leases subject to back to back sub-leases Payable/receivable within one year — 2 091 — 2 091 Payable/receivable in five years — 14 879 — 14 879 Payable/receivable thereafter — 3 372 — 3 372

— 20 342 — 20 342

Total commitments 25 458 85 766 24 823 29 805

Provisions raised in respect of above property leases 11 674 14 147 11 674 14 147

Onerous lease contract 4 048 5 500 4 048 5 500 Straight-lining of lease provision 7 626 8 647 7 626 8 647

Property lease receivables(excluding sub-lease receivables)

Receivable within one year 1 128 1 313 7 512 7 362 Receivable in five years — 454 — 180

1 128 1 767 7 512 7 542

Assets raised in respect of the above sub-leases — 1 586 — 1 586

Property leases and sub-leases include commercial terms and conditions and escalation clauses.

28. BORROWING CAPACITY In terms of the Company's Articles of Association, the Group is entitled to borrow up to the total amount of ordinary and preference shareholders' funds, excluding any reserves arising out of the revaluation of assets.



r


Dorbyl Holdings UK Limited Group

2006 2005 R'000 R'000 R'000

29. DISCONTINUED OPERATIONS AND BUSINESS DISPOSALS Amounts relating to discontinuations and business disposalsduring the year included in the income statements and theireffect on balance sheets for 2006 and 2005 are as follows:

Income statement Revenue 383 695 383 695 1 146 364

Operating income 51 693 51 693 119 068 Net financial income 1 1 544

Profit before taxation 51 694 51 694 119 612 Income tax expense (18 457) (18 457) (40 713) Minority interest — — 329

Attributable profit 33 237 33 237 79 228

Balance sheet Non-current assets 154 115 154 115 151 317 Non-current liabilities (64) (64) (6 741) Current assets 214 752 214 752 201 467 Net cash 36 362 36 362 5 337 Current liabilities (137 785) (137 785) (107 173) Translation reserve 25 096 25 096

Shareholders' funds 292 476 292 476 244 207

Further details are disclosed in the Directors' Report and in notes 6 and 23.

30. PENSION AND PROVIDENT FUNDS The Group operates a defined benefit pension plan and a defined contribution provident plan. The funds are registered in terms of the Pension Funds Act, 1956 and are administered independently of the Group. Employees who are not members of the above funds are members of the appropriate industry pension and provident funds.

The Trustees of both the Pension and Provident Funds have finalised their proposals in regard to the surplus apportionment and these have been submitted to the Financial Services Board (FSB) for consideration. In terms of those submissions, the provision of R15 million raised in the first half of the year is adequate to meet the only identified exposure, being the shortfall of R7 million that will exist in the Pension Fund after the apportionment of the surplus. With reference to the Pension Fund, the FSB has raised certain matters which it requires to be satisfactorily explained or resolved before it can approve the scheme. The need for a further provision of a maximum of some R27 million could result. The Fund's professional advisors believe that adequate explanations can be furnished, but it is difficult to predict the final outcome. No further provision has been raised.

In regard to the Provident Fund, a former member representative has advised the FSB that he believed it was inappropriate to allocate a share of the surplus to Dorbyl as the Group had participated in the surplus in the past via contribution holidays. Should this view prevail, notwithstanding that all the Trustees supported the scheme, the Group could have a maximum liabililty of some R15 million to the Provident Fund. Conversely, Dorbyl could be awarded a greater share of the surplus. The FSB has, as yet, not expressed a view in this regard, and no provision has been raised.



Dorbyl Dorbyl Pension Provident

Fund Fund

30. PENSION AND PROVIDENT FUNDS (continued) Number of members 31 March 2006 58 560 Number of members 31 March 2005 141 1 066 Employers' contribution (%) 20 11 Employees' contribution (%) 7 7 Financing vehicle Self administered fund invests Self administered fund invests

own assets own assets Nature of scheme Defined benefit Defined contribution Valuation method Projected unit credit method Fair market value Assumptions used for valuation: — Investment return (%) 7,5 — Inflation rate (%) 4,5 — Future salary increases (%) 5,5 — Future pension increases (%) 1,4 — Discount factor (%) 7,5 — Dividend growth rate None specificFair value of plan assets R102,6 million R330 millionActuarial present value of accrued liabilities R109,9 million

Deficit (R7,3 million)

Provision raised in respect of deficit andother uncertainties R15,0 million

Amount recognised as expense during year(including surplus provision) R16,2 million R7,8 million

2006 2005 R'000 R'000

Net liability for defined benefit obligations at beginning of year — —

Contributions received (1 221) (1 400)Expense recognised in the incomestatement excluding surplus provision 8 500 1 400

Net liability for defined benefit obligationsat end of year 7 279 —

Expense recognised in the income statementexcluding surplus provision

Change in unrecognised assets (30 947) — Actuarial (gains)/losses (2 406) 2 672 Current service costs 1 388 2 969 Past service costs 40 850 — Interest on obligation 5 686 8 098 Expected return on assets (9 583) (12 339) Settlement loss 3 512 —

8 500 1 400




31. POST-RETIREMENT MEDICAL AID OBLIGATIONS The Group provides post-retirement medical subsidies to certain retired employees and is responsible for provision of post-retirement medical benefits to eligible current and past employees. The value of unfunded liabilities is recognised in full in the financial statements.

2006 2005 R million R million

Actuarially determined present value of total obligation at 31 March 45,0 44,3Fair value of fund assets at 31 March 21,0 17,3

Present value of unfunded obligations 24,0 27,0

Net liability for unfunded obligations at beginning of the year 27,0 27,6Contributions received (1,1) (1,2)(Benefit)/loss not taken to income statement (1,9) 0,6

Net liability for unfunded obligations at end of the year 24,0 27,0

Provision raised in respect of this liability 26,2 27,0

Benefit/(loss) available to be taken to the income statementActuarial gains 4,5 (0,7)Return on funding assets 1,6 3,8Settlement loss (0,1) 1,3

Interest cost (3,6) (4,5)Current service cost (0,5) (0,5)

1,9 (0,6)

Key actuarial assumptions Discount rate (%) 7,5 8 5 Health care inflation rate (%) 6,5 6,5 CPI inflation (%) 4,5 4,0 Expected retirement age 63 63 Membership of medical aid discontinued on retirement (%) nil nil

The majority of the active employees are currently contributing to their own endowment policies to provide for post-retirement medical aid costs and the Group has no obligations in this regard. However, in regard to a specific category of employees, where the Group still has an obligation, these policies will be available as a set off. The approximate value of these policies at 31 March 2006, was R4 million which has not been accounted for in the determination of this liability.

32. FINANCIAL INSTRUMENTS Exposure to currency, interest rate and credit risk arises in the normal course of the Group's business.

Currency risk The Group incurs currency risk as a result of purchases and sales which are denominated in a currency other than the Group's functional currency. Group entities hedge all trade receivables and trade payables denominated in a foreign currency. At any point in time they also take out economic hedges over their estimated foreign currency exposure resulting from sales and purchases.


r


Group Company Foreign Foreign

currency currency 000 R'000 000 R'000

32. FINANCIAL INSTRUMENTS (continued) The following forward cover contracts were in place

at 31 March 2006:

Import contracts Covering foreign liabilities US Dollars 144 896 — Euro currency 2 844 21 413 1 194 8 990 Pound Sterling 89 963 14 151 Japanese Yen 11 587 612 —

23 884 9 141

Cover in excess of foreign liabilities required inrespect of purchase orders placed on suppliers

US Dollars 468 2 943 114 711 Euro currency 2 882 20 374 45 290 Pound Sterling 27 307 — Japanese Yen 9 413 1 894 5 313 283

25 518 1 284

Export contracts Covering foreign assets US Dollars 1 129 6 819 221 1 368 Euro currency 141 1 056 — Other 26 291 8 98

8 166 1 466

Cover in excess of foreign assets requiredin respect of orders received from customers

US Dollars 2 027 13 657 394 2 669 Pound Sterling 318 2 416 —

16 073 2 669

Interest rate risk The Group generally adopts a policy of ensuring that its borrowings are at market related rates to address its interest rate risk.

Credit risk Management has a credit control policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. Reputable financial institutions are used for investing and cash handling purposes. At balance sheet date there were no significant concentrations of credit risk. Credit insurance is taken out where deemed necessary.

Fair values The fair values of all financial instruments are substantially identical to carrying values reflected in the balance sheet.




33. PRIOR YEAR ADJUSTMENT AND EXPLANATION OF TRANSITION TO IFRSPrior year adjustmentsProperty, plant and equipment The useful lives and residual values of items of property, plant and equipment were revised with the adoption of IAS 16. However, after considering the previous accounting standard (South African GAAP) in this regard, it was concluded that such revisions were required in terms of this policy. The adjustments to depreciation and deferred taxation in this regard were consequently treated as a prior year adjustment.

Operating lease charges The treatment of operating lease charges was changed to the straight-line basis due to a change in the South African interpretation of IAS 17. In prior years operating lease charges had been accounted for as incurred, which it was concluded was not in accordance with the accounting policy in this regard. The adjustment to operating lease charges and deferred taxation in this regard were consequently treated as a prior year adjustment.

Transition to IFRS Intangible assets Intangible assets which were not amortised under South African GAAP were amortised following the adoption of IAS 38.

Property, plant and equipment The cost of dismantling and removing items of plant and equipment and restoring the site which were not accounted for under South African GAAP in the cost of property, plant and equipment have been accounted for on the adoption of IAS 16.

Group Company R'000 R'000

Retained income Years prior to 31 March 2004 (date of transition) As previously reported 718 502 469 794 Prior year adjustments to fixed assets and leases 7 923 4 155

Overstatement of depreciation 27 310 16 130 Understatement of operating lease charges (10 195) (10 195) Understatement of deferred taxation (5 488) (1 780) Understatement of minority interest (3 704)

As restated prior to transition to IFRS 726 425 473 949 Transition to IFRS (708) —

Understatement of fixed assets 2 451 — Understatement of dismantling and restoration provision (3 448) — Amortisation of trademarks (81) — Overstatement of deferred taxation 370 —

As restated 725 717 473 949


,


33. PRIOR YEAR ADJUSTMENT AND EXPLANATION OF TRANSITION TO IFRS (continued) Profit for the year ended 31 March 2005 As previously reported Prior year adjustments to fixed assets and leases

Overstatement of depreciation Overstatement of operating lease charges Understatement of deferred taxation Understatement of minority interest

As restated prior to transition to IFRS Transition to IFRS

Understatement of depreciation Overstatement of dismantling and restoration provision Amortisation of trademarks Overstatement of deferred taxation

As restated

Balance sheet as at 31 March 2005

Property, plant and equipment

As previously reported Prior year adjustments to fixed assets

Overstatement of accumulated depreciation


Dismantling and restoration provision accounted for

As restated

Intangible assets As previously reported Transition to IFRS

Amortisation of trademarks

As restated

Trade and other receivables As previously reported Prior year adjustments to leases

Understatement of rental received accrual

As restated

Deferred tax asset As previously reported Prior year adjustments to fixed assets and leases

As restated

Group R'000

69 933 2 449

830 3 134

(1 448) (67)

72 382 (754)

(1 005) 19

(156) 388

71 628

316 358

28 140

344 498

1 446

345 944

53 067

(237)

52 830

207 343

1 586

208 929

19 445 (2 716)

16 729

DORBYL ANNUAL REPORT

Company R'000

7 1062 480

2843 134

(938)

9 586

—

9 586

112 561

16 414

128 975

128 975

54 581

1 586

56 167

10 031(2 718)

7 313

2006 63


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33. PRIOR YEAR ADJUSTMENT AND EXPLANATIONOF TRANSITION TO IFRS (continued)Balance sheet as at 31 March 2005 (continued)

Deferred tax liability As previously reported Prior year adjustments to fixed assets and leases

As restated prior to transition to IFRSTransition to IFRS

As restated

Trade and other payables As previously reportedPrior year adjustments to leases

Understatement of rental payable


Dismantling and restoration provision accounted for

As restated

Retained earnings As previously reported Prior year adjustments to fixed assets and leases

Overstatement of depreciation Understatement of operating lease charges Understatement of deferred taxation Understatement of minority interest

As restated prior to transition to IFRSTransition to IFRS

Understatement of depreciation Understatement of dismantling and restoration provision Amortisation of trademarks Overstatement of deferred taxation

As restated

Minority interest As previously reportedPrior year adjustments to fixed assets

As restated

Group R'000

12 681 4 219

16 900 (758)

16 142

270 545

8 647

279 192

3 429

282 621

760 184 10 372

28 140 (7 062) (6 935) (3 771)

770 556 (1 462)

1 446 (3 429)

(237) 758

769 094

38 105 3 771

41 876

Company R'000

100 020

8 647

108 667

108 667

441 357 6 635

16 414 (7 061) (2 718)

447 992

—

—

447 992



34. RELATED PARTIES Group The Company is an associate of Remgro Limited. Any subsidiaries or associates of this group are considered to be related parties. The Group also utilises the internal audit services provided by Remgro Limited. The cost in this regard amounted to R1,4 million (2005 — R1 million). Remgro Limited was further paid R0,3 million (2005 — R0,3 million) in respect of directors' fees and re-imbursement of travel expenses.

Company The subsidiaries of the Group are identified in Annexure 1 and the associate in note 11. All of these entities are related parties of the Company. Dorbyl Limited has made loans and advances to (certain of which have been impaired) and has received loans and advances from certain subsidiaries and the associate. These are set out in Annexure 1 and notes 11 and 12. Details of interest received on these loans together with dividends, fees and rentals received from these related parties are included in note 2.

Directors Information with respect to the directors of the Company is included on page 6, and their remuneration on page 25 in the Directors' Report.

Subsequent to the year end, Dorbyl Limited disposed of its guesthouse facility referred to as Mabula Lodge, by way of a public auction for a total consideration of R4,5 million. The successful bidder comprised a consortium of which WW Cooper is a member.

With regard to the disposal of Alpine, it was initially reported that WW Cooper, by virtue of his participation in the acquiring consortium, would be entitled to approximately 0,7% of any profits made by the consortium, should it subsequently dispose of Alpine. In addition, he would only be working for the Dorbyl group for one third of his normal working hours, the balance with Alpine in the USA. Subsequently, due to a reduction in the number of management participants in the consortium, his aforementioned percentage increased to 0,8%. However, WW Cooper recommenced full-time employment with Dorbyl, effective 1 September, 2005. As a result of the achievement of certain targets by the consortium, post the disposal of Alpine by Dorbyl, the percentage relating to WW Cooper's participation of the profit realised on the subsequent disposal of Alpine, amounted to 2,5%.

It was agreed that R5 million would be refunded to the Company by a former director, in instalments, relating to an undeclared benefit received by him, whilst he was a director. R3 million of the amount is outstanding.

35. INTERNATIONAL FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS ISSUED BUT NOTYET EFFECTIVEAt the date of approval of the annual financial statements, the following standards, and amendments to standards and interpretations that apply to the Group were in issue but not effective:

IFRS 4, IFRS 6, IFRS 7, IFRIC 4, IFRIC 5, IFRIC 7, and IFRIC 8 and amendments to IAS 19, IAS 21 and IAS 39.

IFRS 7 The disclosures in respect of financial instruments in the financial statements for the year ending 31 March 2007 as well as comparative information will be compliant with IFRS 7. The disclosure requirements of IFRS 7 require additional disclosures compared to that required by existing IFRSs in respect of credit risk, liquidity risk, market risk and the capital objectives and policies of the Group.The adoption of IFRS 7 will not have any impact on the accounting policies adopted for financial instruments.

IAS 19 The revisions to IAS 19 will be adopted by the Group for the first time for its financial reporting period ending 31 March 2007. This will not have any impact on the accounting policies adopted for employee benefits. The adoption of IAS 19 will, however, result in additional disclosure of the Group's deferred benefit plans including:

— a sensitivity analysis reflecting the impact of changes in medical cost trend rates on the post-employment medical aid obligations and the current service and interest cost;

— a summary of defined benefit obligations, fair value of plan assets and actuarial gains or losses for the current reporting period and the previous financial periods; and

— an estimate of contributions payable in the following reporting period.

The other standards and interpretations will have no effect on the financial statements.



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36. SEGMENTAL REPORTING The principal segments of the Group have been identified on a primary basis, by the nature of the business and a secondary basis by geographical segment. The basis is representative of the internal structure for management purposes.

Segmental operating income includes revenue and expenditure directly relating to a business segment and excludes net financial costs/income and taxation.

Segmental assets and liabilities include assets and liabilities directly relating to a business segment but exclude taxation related and interest bearing assets and liabilities.

The primary segments during the year were:Automotive ManufacturingBuilding ProductsCorporate

In terms of the geographical segment, Automotive Manufacturing and Corporate are considered to be South African operations, while those of Building Products, mainly the United States.

Building Products was disposed of during the year.

Segmental information is included in Annexure 2.

37. ACCOUNTING ESTIMATES AND JUDGEMENTS Group management has discussed with the Audit Committee the development, selection and disclosure of the Group's current accounting policies and estimates and the application of these policies.

Key sources of uncertainty

Key sources of uncertainty relate to:

Benefit funds At this stage there is uncertainty with regard to the liability to the benefit funds with regard to the surplus apportionment in terms of the Pension Funds Amendment Act. This is dealt with in note 30.

Outstanding legal matters Guarantees have been issued in favour of the liquidator of certain companies against which the Group has a claim. The directors of these companies have from time to time indicated their intention to lodge claims against the liquidator. In addition, claims have been submitted by a former director following his dismissal. There is uncertainty at this stage with regard to the liability, if any, which may result from these claims. (Refer note 25.)

There are other legal claims in process relating to labour disputes.

Critical accounting judgements in applying the Group accounting policies

Property, plant and equipment The Group has reassessed the useful lives and residual values of its property, plant and equipment during the year. The assessment required significant judgement as many items of property, plant and equipment have been operated by the Group for a significant period of time.

Impairment of property, plant and equipment Certain of the operations within Automotive Manufacturing were performing poorly and there was some concern that the net asset value of these operations had been impaired. The carrying value of these operations was assessed using a combination of earnings before net financing income, depreciation and amortisation (EBITDA) and the discounted cash flow and the Price Earnings (PE) methods. The actual results for 2005, and forecast for 2006, 2007 and 2008 were considered in the assessment as was a weighted average cost of capital of 14% (optimistic basis) and 18% (conservative basis.) Plant and equipment was impaired by R55 million following this process. The basis used and the discount rate required critical accounting judgements.


r ANNEXURE 1 - SUBSIDIARIES for the year ended 31 March

Issued share Effective Carrying value of interest capital interest Shares Advances to/(from)

2006 2005 2006 2005 2006 2005 2006 2005 R'000 R'000 % % R'000 R'000 R'000 R'000

Operating subsidiaries Local

Dorbyl Precision Tools (Pty) Ltd 2 2 100 100 — — 41 943 (13 189) Guestro Steering Gears (Pty) Ltd 1 1 100 100 — — 49 884 25 561 Guestro Wheels (Pty) Ltd 1 1 100 100 — 60 000 52 623 (2 945) Pullmaflex Southern Africa (Pty) Ltd 20 20 51 51 19 19 753 702 Univel Transmissions (Pty) Ltd* 60 60 50 50 30 30 3 626 1 603

Foreign Dorbyl Holdings UK Ltd United Kingdom** — 147 237 — 100 — 158 111 —

Investment Dorbyl Properties (Pty) Ltd 14 940 14 940 100 100 39 552 72 267 (37 345) (54 267)

Dormant companies Automotive Steering Wheels (Pty) Ltd — 51 51 — 13 (112) (112) Other*** — — 100 100 1 364 5 224 5 032 (6 282)

40 965 295 664 116 404 (48 929) Less: classified as assets held for sale — (158 111) — —

Per note 12 40 965 137 553 116 404 (48 929)

* Companies where the Group has a 50% interest, but has management control have been treated as subsidiaries. ** Wholly owned operating subsidiaries:

Alpine Engineered Products, Inc. (USA);Alpine Automation Ltd (UK); andAlpine Systems Corporation (Canada).

*** Details available on request at the registered office of the Company.

The Company's interests in subsidiaries are shown at the lower of cost and cost less accumulated impairment losses determined on an individual basis.

2006 2005 Income earned by subsidiaries attributable to the Company: R'000 R'000

Aggregate profits after taxation 41 779 92 386 Aggregate losses (after taxation where applicable) (86 657) (55 646)

Aggregate losses of trading subsidiaries (73 964) (55 646) Aggregate losses attributable to Secondary Tax on Companies on dividends declared by

dormant companies (12 693) —

(44 878) 36 740


ANNEXURE 2 - INFORMATION ABOUT BUSINESS SEGMENTSfor the year ended 31 March

Revenue and income

2006 Business segment Continuing operations Automotive Manufacturing

Automotive Manufacturing before impairment of assets Impairment of assets

Corporate and consolidation

Corporate and consolidation before provision for benefit funds Provision for benefit funds

Discontinued operations Building Products

Total

Geographical location South African operations (including exports) International operations

Total

2005 Business segment Continuing operations Automotive Manufacturing

Automotive Manufacturing before impairment of assets Impairment of assets

Corporate and consolidation Discontinued operations

Automotive Manufacturing Building Products

Total

Geographical locationSouth African operations (including exports) International operations

Total

Operating income/ Income

Revenue (loss) associate R'000 R'000 R'000

986 016 (8 981) 340

986 016 46 048 340 (55 029)

(35 714)

(20 714) (15 000)

383 695 51 693

1 369 711 6 998 340

986 016 (44 695) 340 383 695 51 693

1 369 711 6 998 340

915 604 35 040 415

915 604 35 781 415 (741)

(20 164) 1 146 364 119 068

58 640 (2 768) 1 087 724 121 836

2 061 968 133 944 415

974 244 12 108 415 1 087 724 121 836

2 061 968 133 944 415


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Other information

Segment assets R'000

Equity accounted associate

R'000

Total segment

assets R'000

Segment liabilities

R'000

Capital expenditure

R'000

Depreciation and

amortisation R'000

2006

Business segment Automotive Manufacturing Building Products Corporate

414 064

15 063

1 200 415 264 —

15 063

154 736 —

108 694

39 451 12 420

54

26 586 7 857

585

Total 429 127 1 200 430 327 263 430 51 925 35 028

Geographical location South African operations Foreign operations

429 127 1 200 430 327 —

263 430 —

39 505 12 420

27 171 7 857

Total 429 127 1 200 430 327 263 430 51 925 35 028

2005 Business segment Automotive Manufacturing Building Products Corporate

460 107 329 211

10 494

1 191 461 298 329 211

10 494

146 926 97 912 80 246

66 176 43 850

216

26 959 25 985

966

Total 799 812 1 191 801 003 325 084 110 242 53 910

Geographical location South African operations Foreign operations

470 601 329 211

1 191 471 792 329 211

227 172 97 912

66 392 43 850

27 925 25 985

Total 799 812 1 191 801 003 325 084 110 242 53 910


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SHAREHOLDERS for the year ended 31 March

Size of holdings

1 — 5 000 5 001 — 10 000

10 001 — 50 000 50 001 and over

Number of % of total Number of % of total shareholders shareholders shares issued shares

1 007 82,1 1 166 452 3,4 77 6,3 639 829 1,9 88 7,2 2 084 091 6,1 55 4,4 30 179 684 88,6

1 227 100,0 34 070 056 100,0

According to information available to the directors, shareholders holding in excess of 5% of the issued share capital at 31 March 2006 were:

Metkor Group Limited Titan Nominees Pledge Account Investec Value Fund

Shareholder spread

Dorbyl Limited — Ordinary shares Public Non-public

DirectorsMetkor Group Limited Wholly owned subsidiary

Total

Dorbyl Limited — 5% Cumulative preference shares Public Non-public

Old Sillery (Pty) Limited

Total

Dorbyl Limited — 5,5% Cumulative preference shares Public Non-public

Metkor Group Limited

Total

Number of % of shares issued shares

14 058 346 41,3 2 000 000 5,9 1 796 881 5,3

Number of Number of % of shareholders shares issued shares

1 223 19 811 739 58,2 4 14 258 317 41,8

2 54 010 0,1 1 14 058 346 41,3 1 145 961 0,4

1 227 34 070 056 100,0

175 528 848 71,5

1 211 177 28,5

176 740 025 100,0

29 67 152 5,4

1 1 182 848 94,6

30 1 250 000 100,0


NOTICE TO SHAREHOLDERS

DORBYL LIMITED Incorporated in the Republic of South Africa Registration number 1911/001510/06 "Dorbyl" or "the Company"

NOTICE TO SHAREHOLDERS Notice is hereby given that the ninety sixth Annual General Meeting of members of Dorbyl Limited will be held at Dorbyl Ridge,16 Jan Smuts Avenue, Parktown, Johannesburg at 09:00 on Monday, 21 August 2006, to, if approved, pass the followingresolutions with or without modification:

1. APPROVAL OF ANNUAL FINANCIAL STATEMENTS Ordinary Resolution Number 1 Resolved that the audited annual financial statements of the Company and the Group for the year ended 31 March 2006 be accepted and approved.

2. APPROVAL OF DIRECTORS' FEES Ordinary Resolution Number 2 Resolved that the directors' fees amounting to R500 600 paid for the year ended 31 March 2006 in terms of article 21 of the Company's Articles of Association be approved.

3. RE-APPOINTMENT OF AUDITORS Ordinary Resolution Number 3 Resolved that the auditors be re-appointed as auditors of the Company.

4. ELECTION OF DIRECTOR Ordinary Resolution Number 4 Resolved that Mr T van Wyk, who retires in terms of article 17.1 of the Company's Articles of Association and who has offered himself for re-election, be hereby re-elected as director of the Company.

5. ELECTION OF DIRECTOR Ordinary Resolution Number 5 Resolved that, Mr N Phillips, who retires in terms of article 15.16 of the Company's Articles of Association and who has offered himself for re-election, be hereby re-elected as director of the Company.

6. AUTHORITY TO PLACE SHARES UNDER CONTROL OF THE DIRECTORS Ordinary Resolution Number 6 Resolved that subject to the provisions of the Companies Act, 1973 (Act 61 of 1973), as amended ("the Act") and the Listings Requirements of the JSE Limited ("the Listings Requirements"), the directors are hereby authorised to allot and issue at their discretion all the remaining authorised but unissued share capital of the Company for such purposes as they may determine after setting aside so many shares as may be required to be allotted and issued by the Company pursuant to the Share Option Scheme.

7. AUTHORITY TO REPURCHASE SHARESSpecial Resolution Number 1Resolved that the Board of Directors of the Company be hereby authorised, by way of a renewable general authority, to approve the purchase of its own ordinary shares by the Company or to approve the purchase of ordinary shares in the Company by any subsidiary of the Company, provided that:

a) any acquisition of shares shall be implemented through the order book operated by the JSE Limited trading system and done without any prior understanding or arrangement between the Company and/or its relevant subsidiaries and the counter-party;

b) this authority shall be valid only until the next Annual General Meeting provided that it shall not extend beyond 15 (fifteen) months from the date of this resolution;


NOTICE TO SHAREHOLDERS (CONTINUED)

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c) the general repurchase(s) shall in any one financial year be limited to a maximum of 20 per cent of the Company's issued share capital of that class at the time the authority is granted;

d) the acquisition of shares by a subsidiary of the Company may not exceed 10 per cent in the aggregate of the number of issued shares of the Company;

e) repurchases must not be made at a price more than 10 per cent above the weighted average of the market value for the securities for the five business days immediately preceding the date of repurchase;

f) a paid press announcement (complying with paragraph 11.27 of the Listings Requirements) will be published as soon as the Company and/or its subsidiaries have acquired shares constituting, on a cumulative basis, 3 per cent of the initial number of ordinary shares in issue at the time of the granting of this authority, giving full details of such acquisitions and for each 3 per cent in aggregate of the initial number of ordinary shares acquired thereafter by the Company and/or its subsidiaries;

g) the Company will, at any point in time, appoint only one agent to effect any repurchase(s) on the Company's behalf;

h) the Company will only undertake a general repurchase of securities if, after such repurchase, at least 500 public shareholders, as defined in the Listings Requirements, continue to hold at least 20% of the Company's issued ordinary shares;

i) the Company will not repurchase its shares during any prohibited period as defined in paragraph 3.67 of the Listings Requirements ;and

j) such repurchase shall be subject to the Act, the Company's Articles of Association and the Listings Requirements.

DIRECTOR'S STATEMENT RE: UTILISATION OF THE AUTHORITY SOUGHT A repurchase of Dorbyl shares is not contemplated at the date of this notice. However, the Board believes it to be in the interest of Dorbyl that shareholders grant a general authority to provide the Board with optimum flexibility to repurchase Dorbyl shares as and when an opportunity that is in the best interest of the Company arises.

Further, the Board is of the opinion that, even if the maximum amount of 20 per cent of the current issued share capital of the Company is repurchased using the mechanism of the general authority at the maximum price at which repurchases may take place (a 10 per cent premium above the weighted average of the market value for the securities for the five business days immediately preceding the date of the repurchase), based on the current ruling market price of Dorbyl shares on the JSE at the last practical date prior to the date of this notice:

— the issued share capital and reserves of the Company and the Group will be adequate for the purposes of the business of the Company and the Group for a period of 12 months after the date of the notice of the Annual General Meeting;

— the working capital available to the Company and the Group will be sufficient for the Group's requirements for a period of 12 months after the date of the notice of the Annual General Meeting;

— the assets of the Company and the Group, fairly valued in accordance with International Financial Reporting Standards, will exceed the liabilities of the Company and the Group for a period of 12 months after the date of the notice of the Annual General Meeting; and

— the Company and the Group will be able to pay its debts as they become due in the ordinary course of business for a period of 12 months after the date of the notice of the Annual General Meeting.

Reasons for and effect of Special Resolution Number 1 The reason for and effect of the above Special Resolution Number 1 is to grant the Company and/or any of its subsidiary companies a general authority in terms of the Act for the acquisition of its own shares.

For the purposes of considering Special Resolution Number 1 and in compliance with paragraph 11.26 of the Listings Requirements, the information listed below has been included in the Annual Report, in which this notice of Annual General Meeting is included, at the places indicated:


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• Directors and management (page 6);

• Major shareholders (page 70);

• Directors interests in securities (page 24);

• Share capital of the Company (page 51); and

• Responsibility statement (page 16).

Should a share repurchase in terms of the general authority sought be contemplated by the directors, the written assurance of the Company's sponsor in respect of the Company's working capital shall be furnished by the Company's sponsor, by way of a letter to the Issuer Services Department of the JSE Limited prior to the Company entering the market to commence any share repurchases.

8. TO TRANSACT SUCH OTHER BUSINESS AS MAY BE TRANSACTED AT AN ANNUAL GENERAL MEETING

Certificated shareholders and dematerialised shareholders with own name registration entitled to attend and vote at the Annual General Meeting may appoint one or more proxies to attend, speak and vote thereat in their stead. A proxy need not be a member of the Company. A form of proxy, in which are set out the relevant instructions for its completion, is attached for the use of a shareholder who wishes to be represented at the Annual General Meeting. Completion of a form of proxy will not preclude such shareholder from attending and voting (in preference to that shareholder's proxy) at the Annual General Meeting.

Dematerialised shareholders (other than own name registered dematerialised shareholders) who wish to attend the Annual General Meeting or to vote by way of proxy, must contact their Central Securities Depository Participant (CSDP) or broker who will furnish them with the necessary authority to attend the Annual General Meeting or to be represented thereat by proxy. This must be done in terms of the agreement between the member and his/her CSDP or broker.

The instrument appointing a proxy and the authority (if any) under which it is signed must reach the transfer secretaries of the Company at the address given below by not later than 09:00 on Friday, 18 August 2006.

On a poll, ordinary shareholders will have one vote in respect of each share held.

By order of the Board

BD Bhikha Company Secretary

TRANSFER SECRETARIES Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107)

REGISTERED OFFICE 16 Jan Smuts Avenue Parktown 2193

28 July 2006


SHAREHOLDERS' DIARY

Annual General Meeting 21 August 2006

Reports — Interim statement 22 November 2006 — Preliminary announcement of results 18 May 2007

Last date to trade Dividends cum dividend Payment

Ordinary share final dividend (declared 26/05/2006) 23/06/2006 06/07/2006

Ordinary share interim dividend (to be declared 22/11/2006) 05/01/2007 15/01/2007

All preference share dividends: (declared 19/05/2006) 15/06/2006 26/06/2006

(to be declared 10/11/2006) 15/12/2006 29/12/2006

NOTE: The above dates are given as an indication to shareholders. The Company accepts no responsibility should alterations to dates become necessary.


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FINANCIAL HIGHLIGHTS - Morningstar, Inc