We have regularly in the past drawn attention to the fact that currency movements could have a significant impact on the Group's earnings. In particular, British American Tobacco Plc's (BAT) Sterling profit contribution, translated into South African rands, amounts to almost 50% of Remgro's total headline earnings.

The favourable currency impact on translation of BAT's contribution to headline earnings as set out in the table below, has declined from R427 million during 2002 to R243 million for the year under review.

Basic earnings per share increased by a substantial 151% to 1 682.9 cents. Basic earnings reflects earnings after goodwill amortisation and inclusion of non-recurring exceptional items. During the current year, attributable after-tax exceptional items amounted to R4 293 million. These included large exceptional gains such as:

Attributable cash earnings (which excludes the Group's share of net profits retained by associated companies), before exceptional items and amortisation of goodwill, increased by 41.6% from R1 986 million to R2 813 million or 541.4 cents per share, mainly as a result of an increase in dividends received from associated companies. The latter amounted to R2 203 million compared to R1 508 million in 2001/2002, mainly due to higher dividends from R&R Holdings, FirstRand Limited and RMB Holdings Limited.

The balance sheet reflects cash and cash equivalents of R2 286 million at 31 March 2003. Of this, R647 million is attributable to Rainbow Chicken, Transvaal Sugar and Medi-Clinic Corporation. Cash at the centre amounted to R1 639 million.

Ordinary dividends of 248 cents per share were declared for the year, compared to 206 cents the previous year. This represents an increase of 20.4%. The dividends are covered 3.8 times by headline earnings and 2.2 times by cash earnings, against 4.0 times and 1.8 times respectively the previous year.

In the past we have reported the underlying, or "intrinsic", net asset value of the Group at year-end, which differs from the book value of net assets shown in the balance sheet. Such valuation includes all investments, incorporating subsidiary and associated companies, either at listed market value or, in the case of unlisted investments, at directors' valuation. The net assets of wholly-owned non-investment subsidiary companies, consisting mainly of monetary items, are included at book value.

The table below reflects a comparison of the relative performance of the Remgro intrinsic net asset value per share in relation to certain selected JSE indices.

No account has been taken of dividends declared on the Remgro shares.

Remgro's tobacco interests are represented by a one-third shareholding in R&R Holdings SA, Luxembourg (R&R). The other two-thirds are held by Compagnie Financière Richemont SA (Richemont).

In January 2003, R&R issued secured call warrants exercisable into ordinary shares of BAT in 2004. This transaction effectively locked in the value of the 120.9 million convertible redeemable preference shares which R&R has in BAT and which it was obliged to either sell or tender for redemption in June 2004 at the redemption price of 675 pence per share. Together with the gross warrant premium of 34.29 pence per share received in January 2003, the value locked in amounted to 709.29 pence per share, before costs. R&R also holds 604.3 million BAT ordinary shares.

As a consequence of the warrant issue, the preference shares are now treated as a debt instrument in the consolidated accounts of R&R and are no longer equity accounted. For the nine months ended 31 December 2002, R&R's effective interest in BAT, reflecting the holding of both ordinary and preference shares, was 31.5%. For the three-month period ended 31 March 2003, R&R has accounted for its 27.9% effective interest in BAT ordinary shares under the equity method and, in respect of the preference shares, has recorded the movement in the present value of the shares as investment income. Similarly, this movement in net present value effectively became an investment expense for BAT in accounting terms and therefore, for purposes of equity accounting the interest in the ordinary shares, R&R reduced BAT's attributable profit for the quarter ended 31 March 2003 accordingly.

Linked to the realisation of the value of the preference shares and their reclassification, R&R recorded an exceptional gain during the year under review, Remgro's share of which amounted to R3 204.4 million.

After elimination of exceptional items and goodwill amortisation and the necessary adjustments referred to above, R&R's contribution to Remgro's headline earnings is made up as set out in the table alongside.

BAT had shipments of 777 billion cigarettes in the year to 31 December 2002 representing a global market share of 14.6%. It has a robust position in all regions worldwide which, together with the broad based portfolio of international, regional and local brands, provides the platform for achieving global leadership of the tobacco business. Growth in profit is achieved by a continuous focus on increasing its share in the key growth consumer segments of international and premium priced brands.

For BAT the most encouraging aspect of the results for the year was the impressive growth in their global drive brands. Dunhill, Kent, Lucky Strike and Pall Mall grew by 8% between them. Dunhill in particular performed well with sales exceeding 30 billion cigarettes for the first time. Although Lucky Strike declined in 2002 as a result of the planned reduction in duty-free sales, the brand should return to growth in 2003 whilst Dunhill, Kent and Pall Mall should maintain their progress.

Within BAT's regions, America-Pacific's operating profit was in line with the prior year, reflecting the net effect of a good performance from all its regional markets offset by the adverse exchange rate movements. Asia-Pacific, along with the Africa and Middle East regions, suffered from the planned reduction in duty-free sales with profits down £46 million and £50 million respectively. Latin America performed well given the exceptionally difficult economic circumstances and political uncertainty in many countries during the year with profits down £35 million, reflecting lower volumes and a significant weakening of the region's major currencies against Sterling. Europe's operating profit was £42 million higher as a result of solid market performances in Russia, Ukraine, Poland, Hungary, France and Switzerland. This was despite a significant loss of profit from the dissolution of the UK partnership, a price war in Romania and excise tax increases in Germany.

In the year to 31 December 2002, BAT's adjusted earnings per share, arguably the best measure of the company's underlying performance, grew by 8% as a result of lower net interest expense, an improved tax position and lower minority charges. These results were achieved despite a 3% decline in operating profit caused by the impact of weak currencies and the planned decline in duty-free sales, but at comparable rates of exchange operating profits were up by 3%.

Distell Group Limited (Distell) contributed R76 million to Remgro's headline earnings, compared to R79 million in the previous year. This relates to Distell's two consecutive six-month periods ended 31 December 2002.

Distell reported sales volume growth for most of its major brands for the six months ended 31 December 2002. International sales revenue increased by 30.7% and comprised 21.6% of total sales revenue. Distell's trading income increased substantially by 52.3%. This was largely the result of increased sales revenue, a favourable sales mix and improved production efficiencies. The increase in trading income was however negated by the unfavourable effect of the strengthening in the value of the rand towards the end of 2002.

On 18 June 2003 the Competition Tribunal finally approved the merger between Stellenbosch Farmers' Winery Group Limited and Distillers Corporation (SA) Limited, subject to Distell relinquishing control of two of its brands in the South African spirits market, i.e. the Martell and KWV brands.

Both FirstRand Limited (FirstRand) and RMB Holdings Limited (RMBH) have June year-ends and therefore their results for the twelve months to 31 December 2002 were equity accounted by Remgro in the year under review.

Resulting from the rand's strength, FirstRand reported exceptional translation losses amounting to R528 million for the twelve months to 31 December 2002 (2001: R650 million gain). Remgro's portion of these translation losses was R90 million (2002: R110 million gain) – R50 million through its direct interest in FirstRand, and R40 million indirectly through its interest in RMBH.

FirstRand's contribution to Remgro's headline earnings was R424 million (2002: R437 million). This excludes the indirect contribution of FirstRand through Remgro's interest in RMBH.

For the six months ended 31 December 2002 FirstRand's headline earnings decreased by 19.3% to R2 223 million (2001: R2 754 million). FirstRand's core operational headline earnings, before taking into account the exceptional translation loss mentioned above, increased by 26.7% to R2 585 million.

During this period FirstRand's Retail Banking division reflected growth of 26% over the corresponding period. This increase is due to scale benefits achieved as a result of organic growth as well as growth resulting from the acquisition of the mortgage loan books from BoE Limited and Saambou Bank Limited during the first half of 2002.

RMBH's contribution to Remgro's headline earnings was R371 million (2002: R384 million). For the twelve months ended 31 December 2002, 90.7% (2001: 92.3%) of RMBH's headline earnings was derived from FirstRand while 9.3% (2001: 7.7%) was contributed by its other interests.

RMBH's other interests include RMB Structured Insurance Limited, OUTsurance Limited (OUTsurance), Glenrand M.I.B Limited and Global Resorts (SA) (Pty) Limited (GRSA). OUTsurance reported an exceptional six months to December 2002 with record sales volumes and profitability being achieved.

On 22 May 2003 it was announced that the proposed transaction whereby RMBH intended selling its 48.4% interest in GRSA to a consortium backed by Mettalon Corporation Limited, was terminated due to certain conditions precedent not being met within the contracted time periods.

Absa's headline earnings for the year ended 31 March 2003 increased by 82.3% to R3 441 million. This high growth stems from the low earnings base of the previous financial year which resulted from losses suffered by its microlending subsidiary, Unifer Holdings Limited (Unifer). Excluding the impact of Unifer, Absa's headline earnings increased by 19.8%. Commercial banking showed good advances growth of 11.9%. This performance was primarily driven by growth in Bankfin's advances. Wholesale domestic advances increased by 1.7%.

Effective 31 December 2002, Sage Group Limited's (Sage) financial year-end was changed from March to December. For the nine months ended 31 December 2002, Sage reported a GAAP headline loss of R48 million (twelve months ended 31 March 2002: R251 million). Due to the fact that Remgro's portion of Sage's accumulated losses exceeds its carrying value, Remgro did not account for its portion of Sage's results for the nine months ended 31 December 2002. In 2001/2002 Remgro's portion of Sage's headline loss was R42 million.

During September 2001 it was announced that Robertsons Holdings (Proprietary) Limited (Robertsons) and Unilever Plc (Unilever) had agreed in principle to restructure the interests they held in the existing joint venture between Robertsons and Bestfoods Europe. This was a direct result of Unilever's acquisition of Bestfoods' global interests.

The new Unilever Bestfoods Robertsons (UBR) venture, in which Robertsons holds 41%, was established with effect from 1 April 2002. From that date the interest in UBR has been equity accounted. In the past the interest in the former Bestfoods Robertsons joint venture was consolidated proportionately.

In South Africa, well-known international and local brands include Robertsons herbs and spices, Knorr soups, Aromat seasonings, Skippy, Bovril and Marmite spreads, Rama and Flora margarine, Melrose cheese, Lipton and Joko tea, and Mrs Ball's culinary products.

Notwithstanding difficult economies in several of the territories included in the venture, good progress has been made during the first year of operation. In Israel, trading conditions have become progressively more difficult due to the escalation of political unrest in the country and a gradual slowdown of the economy. The Israeli operation has to some extent managed to offset these difficulties by achieving good growth in retail sales.

UBR's contribution to Remgro's headline earnings was R54 million. The contribution from the former Bestfoods Robertsons joint venture in 2001/2002 was R91 million. These results are however not directly comparable due to the fact that UBR incurred exceptional restructuring expenses against its headline earnings during the year under review. Excluding the impact of these exceptional items, UBR's contribution to Remgro's headline earnings would have been R106 million.

Transvaal Sugar Limited (TSB) is primarily involved in cane growing and the production, transport and marketing of refined and brown sugar and animal feed. Citrus and tea are also grown on the company's estates.

The primary area of operation is the Nkomazi region in the Mpumalanga Lowveld. Sugar production operations are situated near Malelane and Komatipoort, while citrus is grown on TSB's estates in the same region.

The citrus operations benefited from an aggressive marketing effort, the return of export prices to normal levels and the normalisation of export markets. A total of 36.2 thousand tons of oranges and grapefruit were exported versus 28.5 thousand tons the previous year.

TSB achieved record results for its 2003 year with headline earnings of R105.7 million (2002: R72.4 million).

Operating profit has shown an improvement of R25.6 million or 15.6%. This marked improvement was mainly contributed to by focused management attention to productivity enhancements and cost containment, as well as excellent climatic conditions which resulted in a record sugar production.

Despite increased competition in the national market, TSB was able to maintain its market share. TSB's contribution to Remgro's headline earnings was R94 million (2002: R55 million).

Rainbow Chicken Limited's (Rainbow) contribution to Remgro's headline earnings increased from R86 million in the previous year to R152 million in the period under review.

Its headline earnings grew by 77.9% from R154.7 million to R275.2 million on revenue which, including the impact of volume and mix improvements in feedmilling, breeding and boiler operations, increased by 23.8%, from R3.0 billion to R3.8 billion. The significant increase in revenue was predominantly attributable to the recovery of higher feed raw material input costs in sales prices.

Rainbow reported that its optimisation strategy, although in its early stages, is progressing as planned and benefits are already beginning to be realised in terms of both cost efficiencies and better realisations as a result of an enhanced product mix.

Air Products South Africa (Proprietary) Limited's (Air Products) contribution to Remgro's headline earnings was R44 million compared to R42 million in the previous year.

In the year under review Air Products continued to experience strong growth in all the segments in which it operates following the commissioning of major capital projects the previous year.

Dorbyl Limited's (Dorbyl) contribution to Remgro's headline earnings was R41 million (2002: R47 million). This contribution excludes special dividends amounting to R141 million declared by Dorbyl as a result of its disposal programme set out hereunder.

During the past year the core focus of Dorbyl has been considerably narrowed and to this end a significant number of disposals have been made. Dorbyl's interest in parts distributor Midas Limited was sold to a management consortium with effect from 1 June 2002. In addition, Dorbyl Engineering was sold to a management consortium with a black empowerment partner effective August/September 2002.

Due to the significant disposals referred to above, Dorbyl's turnover for the year ended 31 March 2003 declined by 34% to R2.9 billion, while operating income decreased by 15% to R143.8 million. The continuing operations, however, reflected significantly higher operating profits for the year when compared to those of the previous year.

Subsequent to 31 March 2003, Dorbyl disposed of its local Global Roofing Solutions division.

Total South Africa (Proprietary) Limited's financial position has remained sound during its 2002 financial year and its retail market share continued to grow. Its contribution to Remgro's headline earnings was R95 million (2002: R92 million).

On 30 April 2003 a new economic empowerment grouping, Tosaco (Pty) Limited (Tosaco), effectively acquired a 25% shareholding of Total South Africa. This partnership was finalised after negotiations lasting more than a year. It was structured to ensure a sustainable transaction, compliant with the Petroleum and Liquid Fuels Charter on empowering historically disadvantaged South Africans, with specific emphasis on enhancing the Total South Africa value chain and empowering Tosaco in all aspects thereof with a strong operational involvement in the South African oil industry.

The three shareholders of Total South Africa prior to the transaction, which consisted of the French-based oil giant Total, Remgro and Old Mutual, also played a key role in facilitating this empowerment transaction. Total France reduced its equity stake to 50.1%, Remgro agreed to dilute its shareholding from 34.4% to 24.9%, and Old Mutual agreed to sell its 8% participation back to Total South Africa, thus making it possible for Tosaco to acquire 25% of Total South Africa's share capital.

The merger between Malbak Limited (Malbak) and Nampak Limited (Nampak) was successfully concluded during August 2002. Since then Remgro's interest in Nampak has been 13.5%.

Malbak's results were equity accounted for the four months to 31 July 2002 and that of the enlarged Nampak for the eight months to 31 March 2003.

Nampak's contribution to Remgro's headline earnings was R88 million. Together with Malbak's earnings for the first four months, the packaging interests contributed R131 million for the year under review (2002: R101 million).

For the six months ended 31 March 2003 Nampak reported an increase in headline earnings of 56% to R468.9 million (2002: R301.3 million). During this period Nampak's divisions achieved overall real volume growth of approximately 2%. In South Africa the continuation of exports by its local businesses was a major contributor to this growth.

On 7 May 2003 it was announced that Nampak had sold its 51% interest in NamITech to Allied Technologies Limited for R522.5 million. This transaction is subject to a number of conditions, including approval of the competition authorities.

Wispeco Holdings Limited's (Wispeco) contribution to Remgro's headline earnings was R28 million (2002: R27 million). It should however be noted that headline earnings for Wispeco's previous financial year included the creation of a deferred tax asset of R7.5 million (with a corresponding credit in its income statement), while that of the current year included a deferred tax expense amounting to R11.4 million.

Wispeco's profit before tax grew by 87.3% from R20.8 million to R39.0 million. Overall production efficiencies at Wispeco improved steadily, contributing towards satisfactory financial results.

Gencor Limited's (Gencor) contribution to Remgro's headline earnings was R223 million (2002: R231 million). These figures relate to Gencor's twelve months to 31 December 2002.

Gencor reported attributable profits of R927 million for the six months ended 31 December 2002 which was 9.5% lower than the R1 024 million achieved in the corresponding previous six months. This decrease was mainly due to the lower income from Impala Platinum Holdings Limited (Impala).

The unbundling of Gencor's interest in Impala by way of a dividend in specie was approved by Gencor's shareholders on 25 April 2003. Gencor shareholders received their Impala shares on 18 June 2003. In terms of the Listings Requirements of the JSE Securities Exchange South Africa, Gencor's listing will be suspended six months after the proposed unbundling. Remgro's interest in Impala will be approximately 5.0% and it will no longer be equity accounted.

Trans Hex Group Limited's (Trans Hex) contribution to Remgro's headline earnings was R96 million (2002: R75 million).

The central treasury division's contribution to Remgro's headline earnings increased from R143 million to R152 million. This was mainly the result of higher interest rates than the previous year, as well as higher cash balances during the first half of the financial year.

Medi-Clinic's turnover, which consists entirely of hospital fees levied, increased by 20% to R2 924 million (2002: R2 438 million), while headline earnings increased by 18% to R366 million (2002: R309 million) during the year under review.

On 1 December 2002 Medi-Clinic, in conjunction with Nozala Investments (Proprietary) Limited, Mvelaphanda Capital (Proprietary) Limited and Utlwanang Holdings (Proprietary) Limited (a consortium of black medical professionals), acquired the Curamed Group (Curamed). Curamed is a group of six Pretoria-based specialist hospitals comprising approximately 700 beds of which about 150 were commissioned in early June 2003. Medi-Clinic financed its black economic empowerment partners in this transaction on commercial terms to the amount of R49 million, pending external finance being granted.

To all of those who contributed to the performance of the Group over the past year, we extend our sincere thanks: to the shareholders for their continued confidence; the managing directors and all colleagues in the various Group companies for their co-operation and support; all other directors, officials and employees for their dedication; and all parties concerned for services rendered.

In particular, we express our gratitude to Mr P J Erasmus who retired from the Board on 28 August 2002, for his valuable contribution over more than 45 years.