AG INDUSTRIES LIMITED ( f o rmerly Africa Glass Industries ... · AG INDUSTRIES LIMITED ( f o rmerly Africa Glass Industries Limited) CONTINUED GROWTH ANNUAL REPORT 2002 SHARE CODE:

AG INDUSTRIES LIMITED( f o rmerly Africa Glass Industries Limited)

CONTINUED GROWTH

ANNUAL REPORT 2002ANNUAL REPORT 2002

SHARE CODE: AGI ISIN: ZAE000039467

AGi Annual Report 2002 11/15/02 9:40 AM Page 1

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C O RPO R ATE GOV ERN A NC E

APPLICATION OF GOVERNANCE

As a Group with securities listed on the JSE Securities Exchange SA, AGI subscribes to the principles established in the Code ofCorporate Practices and Conduct set out in the King Report on Corporate Governance in South Africa ("the King Report"). AGI is pro-actively pursuing the principles of the revised King report notwithstanding that they are effective from financial years commencing on orafter 1 March 2002.

AGI is committed to provide its shareholders and other stakeholders with the assurance that the Group is being managed ethically andin compliance with best practices.

GOVERNANCE STRUCTURES

The Board Of Directors Constitution and Responsibilities of the BoardAlthough the board of directors is chaired by the Executive Chairman, the board includes four independent minded executives whoconstitute a strong and free thinking element on the board. These are persons of a calibre and with the experience and skills to reviewand assess the strategy and performance of the Group and the various non-financial issues associated with its good governance. All thenon-executive directors are free of the full time, day to day management of the Group and its business.

The board comprises individuals of varied skills, experience and backgrounds. The executive members of the board are all wellexperienced in the industry in which AGI operates. There are six executive directors and four non-executive directors on the board. Theirnames and credentials appear on pages 12 and 13.

The function of the board is to:- give strategic direction to the Gro u p ;- maintain effective control over the Gro u p ;- monitor management;- implement board plans and strategies;- e n s u re that the Group complies with all relevant laws, regulations and codes of business practice;- consider non-financial aspects of the Gro u p ’s business; and- identify key risk are a s .

The board gives careful consideration to the basis upon which it concludes that the Group will continue as a going concern for theensuing financial year.

Procedures for the appointment of directors to the board are formal and the rotation of directors staggered in accordance with theprovisions of the Company’s articles of association.

Board MeetingsThe board meets regularly, at least twice annually, and on any other occasion circumstances dictate. Committees of the board meetregularly, at least on an annual basis and, likewise, whenever else circumstances dictate. Directors and committee members alike arecomprehensively briefed in advance of such meetings permitting them to consider and pass judgement on all relevant matters in aprofessional and responsible manner. Meetings follow a formal agenda ensuring all necessary matters are fully addressed.

The performance of executive directors is monitored and assessed by the Remuneration Committee.

The Group’s financial director is the appointed secretary and fulfills the necessary statutory duties.

Board CommitteesThe Audit CommitteeAGI’s Audit Committee is mandated by a charter issued by the board. The Group’s Executive Chairman is the only executive memberof the committee which also comprises two non-executive directors. The external auditors have direct access to the Audit Committee.The Audit Committee meets periodically to review:

- the adequacy of financial re c o rd s ;- the appropriateness of accounting re c o rd s ;- the adequacy of the internal control pro c e d u res; and- to confirm that the going concern premise is appro p r i a t e .

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A NNUAL FIN A NCIAL STAT EMEN T S

June 30, 2002

C O N T E N T S

Corporate Governance 21

Directors' Responsibility Statement and Certificate by the Company Secretary 26

Report of the Independent Auditors 27

Directors' Report 28

Income Statements 32

Balance Sheets 33

Statements of Changes in Equity 34

Cash Flow Statements 35

Notes to the Cash Flow Statements 36

Group Segmental Reports 38

Notes to the Annual Financial Statements 40

Schedule A - Schedule of Interests in Subsidiary Companies 52

Shareholding Information 53


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C O RPO R ATE GOV ERN A NC E continued

Di rectors' Remuneration Fees and P e rf o rm - Other

for the year ended e x p e n s e s C a s h a n c e b e n e f i t sJune 30, 2001 as dire c t o r s s a l a ry b o n u s e s (Note 1) To t a l

R ' 0 0 0 R ' 0 0 0 R ' 0 0 0 R ' 0 0 0 R ' 0 0 0

Executive Dire c t o r sA.A. Barrell - 658 - 191 849M.J.E. Geldenhuys - 343 43 197 583J. Martingano - 371 43 164 578J.B. Rosenberg - 343 - 168 511J.C. Saville- 209 55 126 390(Appointed November 22, 2000)T. Y. Wo rt h i n g t o n - 1 3 7 - 1 2 1 2 5 8Non-Executive Dire c t o r sB.E. Danoher - - - - -H.R. Levine - - - - -

Note 1 Other benefits includes provident fund contributions, medical aid contributions, travel allowances, subsistanceallowances and entertainment allowances.

S h a res Issue S h a res S h a re options / entitlements E x p i ry date g r a n t e d p r i c e g r a n t e d Issue price

2002 R 2001 R

A.A. Barrell - - - - -M.J.E. Geldenhuys April 2009 400 000 3,10 - -C.P. Kalil April 2009 400 000 3,10 - -J. Martingano April 2009 600 000 3,10 - -J.B. Rosenberg - - - - -J.C. Saville - - - - -T.Y. Worthington - - - - -B.E. Danoher - - - - -H.R. Levine - - - - -G.F.D. Twigg - - - - -

Insider Tr a d i n gNo AGI employees may, directly or indire c t l y, deal in the Gro u p ’s shares on the basis of unpublished price-sensitive inform a t i o nre g a rding the business or the affairs of the Group. No director of the Group, and no employee of the Group who participates in theS h a re Incentive Scheme, may trade in the Company’s shares during embargo periods determined by the Board. These embarg operiods precede publication of interim and annual financial operating re s u l t s .

RISK MANAGEMENT AND INTERNAL CONTROL

The responsibility for the total risk management process rests with the board as well as the obligation to assess the effectiveness ofthe process. The implementation, monitoring and integration of the process into the Gro u p ’s daily activities are management’sre s p o n s i b i l i t y.

An effective process for the identification, evaluation and management of risk has been implemented by the Group. The process isongoing and is consistently reviewed for its effectiveness in establishing unacceptable exposures and initiating actions to limite x p o s u re to acceptable levels.

The Gro u p ’s stru c t u re re q u i res that operating division administrative staff re p o rt to the Finance Committee on all aspects of thatc o m m i t t e e ’s responsibilities while re p o rting to their divisional chief executives on operational matters. Divisional chief executives, int u rn, re p o rt to the Executive Committee.

AGI has long utilised this dual re p o rting/evaluation system as part of its risk management pro c e d u res to identify internal control lapsesand risk exposures in due time through ongoing monthly review pro c e d u res including:

- the daily re p o rting by functional division of key information including sales, margin, funding balances, inventory levels andearly warning re p o rts on interest rate and foreign exchange exposure ;

- the re p o rting on a monthly basis of variances in perpetual inventory shortly after month end; and - the assessment on a monthly basis of each division’s perf o rmance based on detailed management accounts and

c o m p rehensive supporting working papers in the form of conventional year end working paper files.These pro c e d u res have brought to light no significant lapses in internal contro l .

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C O R P O R ATE GOVERNANCE continued

The Remuneration CommitteeThe Remuneration Committee is subject to the direction and control of the board. The Committee comprises two non-executived i rectors and the Executive Chairman who acted as its chairman for the year under re v i e w. Mr B.E. Danoher, a non-executive dire c t o r,was appointed as chairman of the Remuneration Commitee with effect from September 10, 2002. Mr A.A. Barrell resigned asc h a i rman of the Remuneration Commitee on that date but remains a commitee member. The purpose of the Remuneration Committeeis to ensure that the Gro u p ’s executive directors and senior management are fairly re w a rded for their individual contribution to theG ro u p ’s perf o rmance. The Remuneration Committee also addresses matters of policy relating to terms of employment there b yensuring that the Group is able to suitably motivate and retain the executives re q u i red to manage the Gro u p .

Executive CommitteeThe Executive Committee comprises the Executive Chairman and all the executive members of the board. Its purpose is to discharg ethe obligations of the board on a daily basis.

Finance CommitteeThe Finance Committee comprises the Group Financial Dire c t o r, the Group Commercial Director and the Group Tre a s u ry Dire c t o r.The committee is responsible for the following functions:

- R e p o rting and complianceThese functions include the financial, tax and secretarial administration of the Group as well as responsibility for internal c o n t ro l ;

- M e rgers and AcquisitionsM e rger and acquisition activity, the administrative integration of acquisitions into the Group and other corporate finance activities fall under this re s p o n s i b i l i t y ;

- Tre a s u ry OperationsThese include the placing and raising of funds in the wholesale money market, the securing of appropriate funding facilitiesand the management of interest rate and exchange rate exposure s ;

- I n f o rmation Te c h n o l o g yThe development and operation of the Gro u p ’s internationally networked on-line integrated management system, which is fully Euro currency compliant, and which provides a platform for Group administration and management of the intern a lc o n t rols and international compliance standards, falls under this re s p o n s i b i l i t y ;

- C redit Contro lMaintenance and application of the Gro u p ’s conservative credit control policies including management of debtors books,domestically and intern a t i o n a l l y, as well as management of its credit insurance policies on an active basis, limiting insurance costs by self-insurance, the obtaining of adequate security and pro-active collection of debt, falls under this re s p o n s i b i l i t y ;

- Human Resourc e sThe establishment and implementation of employment policies, negotiation with the employee re p resentatives and the maintenance of good relations with the Gro u p ’s workforce, fall under this re s p o n s i b i l i t y.

D i rectors' Remuneration Fees and P e rf o rm - Other

for the year ended e x p e n s e s C a s h a n c e b e n e f i t sJune 30, 2002 as dire c t o r s s a l a ry b o n u s e s (Note 1) To t a l

R ' 0 0 0 R ' 0 0 0 R ' 0 0 0 R ' 0 0 0 R ' 0 0 0

Executive Dire c t o r sA.A. Barre l l - 1 073 1 5 7 3 1 2 1 542M.J.E. Geldenhuys - 4 8 0 6 3 2 5 3 7 9 6C . P. Kalil - 1 2 7 - 5 1 1 7 8(appointed March 18, 2002)J. Mart i n g a n o - 5 8 4 6 3 1 9 8 8 4 5J.B. Rosenberg - 5 5 9 7 2 2 0 9 8 4 0J.C. Saville - 4 8 2 6 3 2 1 6 7 6 1T. Y. Wo rt h i n g t o n - 3 5 - 4 2 7 7( resigned October 30, 2001)

Non-Executive DirectorsB.E. Danoher - - - - -H.R. Levine 1 0 0 - - - 1 0 0T. Y. Wo rt h i n g t o n 6 9 - - 9 7 8(appointed November 1, 2001)G . F.D. Tw i g g - - - - -(appointed June 4, 2002)


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Recommendations by AGI’s employees which are for the good of the Group and its stakeholders are encouraged. In this re g a rd :- consultative internal committees comprising a cross-section of staff including senior and junior members are established at

each workplace;- to empower these committees key issues are circularised re g a rd i n g ;

- discrimination aware n e s s ;- the content of the Employment Equity Act;- the role of committee members and their duty to communicate with their colleagues;- summaries of the Employment Equities Act; and- the review of the employment policies, practices and pro c e d u res to identify any barriers to employment equity and to

f o rmulate solutions and plans to eliminate any such barr i e r s .

Findings of these reviews and their solutions are communicated annually to the department of labour in re p o rts which address workf o rce profiles in terms of occupational levels and categories by race and gender, work force movement by race and gender in variousoccupational levels, skills development action by occupational category and by race and gender, and include a qualitative assessmentre g a rding workforce awareness of the consultative internal committees and a quantitative assessment re g a rding employment policiesand practices.

The Group continues to encourage previously disadvantaged groups. The pro g ress of past years has continued with 60% (2001:53%) of management positions now occupied by previously disadvantaged groups which also consitute the vast majority of the totals t a ff compliment.

Self development and the promotion of equal opportunity are advanced by AGI in a formal training program in respect of which a skillsdevelopment officer is re g i s t e red with the Chemical Industries Educational and Training Authority. Ongoing implementation of thisp rogram is overseen by in-house consultative committees.

Employee Statics

Total number of employees at the beginning of the year 1 245

A c q u i s i t i o n s :The undertaking of Sheerline Aluminium Systems (Pro p r i e t a ry) Limited 8 5West Cape Safety Glass (Pro p r i e t a ry) Limited 2 7R e c ru i t m e n t s 2 3 6

1 593Less: resignations, re t i rements, etc. 1 4 7

Total number of employees at the end of the year 1 446

Code of EthicsA G I ’s philosophy of striving for and maintaining the highest standards dictates that all its employees must adhere to the highest ethicals t a n d a rds and behave in an honest way and with high integrity in all their dealings both within and without the Group. Suitablep rograms, modified where necessary, ensure an honourable culture .

ACCOUNTING AND AUDIT

E x t e rnal auditors have conducted an independent assessment of internal financial control at certain of the Goup’s more significantoperations and are responsible for re p o rting on whether financial statements are fairly presented and in conformity with GAAP. Thee x t e rnal auditors offer reasonable, but not absolute, assurance on the fair presentation of financial disclosure. Consultation occursbetween the external auditors and the Audit Committee re g a rding the efficiency of the audit process. Responsibility for the adequacyof the accounting re c o rds, the effectiveness of risk management and the Gro u p ’s internal control stru c t u res, the appropriateness ofaccounting policies and the consistency of estimates is acknowledged by the board as is its responsibility for the preparation of theannual financial statements, adherence to applicable accounting standards and the presentation of information that fairly presents thestate of affairs and the results of the Gro u p .

R E L ATIONS WITH SHARE OWNERS

AGI has a constructive dialogue with institutional investors at all times observing statutory, re g u l a t o ry and other directives re g a rd i n gthe dissemination of information by the Group and its’ directors and officers. The board acknowledges its responsibility tocommunicate a balanced and understandable assessment of the Gro u p ’s position to its stakeholders covering both financial and non-financial information and addressing material matters of significant interest and concern to share h o l d e r s .

I M P L E M E N TATION OF GOVERNANCE CODES

The board, its committees, individual directors, officers of the Group and senior management acknowledge their responsibility toe n s u re that the principles set out in the King Code are observ e d .

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The division of responsibility between persons responsible for financial re p o rting and those responsible for operational matters allowsp e rf o rmance measurement, financial control and risk management associated with underlying operations to be accounted forindependently under the responsibility of the Finance Committee while management of business operations rests with operatingexecutives. This internal review system is supplemented by internal audit re v i e w s .

Due diligence investigations in respect of all acquisitions are perf o rmed by a team of senior Group executives under the authority ofthe Finance Committee. The team is, on occasion, supplemented by the external auditors. Comprehensive warranty and indemnityp rovisions are included in all acquisition agreements to limit exposures not uncovered during such due diligence investigations.S h o rtcomings which are discovered during such investigation are, if the acquisition in question proceeds, addressed in terms of theG ro u p ’s internal control and re p o rting standards to which acquisitions and new businesses alike are immediately subjected so thatthey conform with the Gro u p ’s financial re p o rting and risk management stru c t u re s .

The risk assessment stru c t u res employed by AGI apply uniform standards and efficient forms of communications so that re p o rt i n ga c c u r a c y, early identification of shortcomings and containment of exposures are achieved.

Exchange risks are managed with the aid of an integrated system which "marks to market" on a daily basis import creditor and exportdebtor sub-ledgers and optimises the benefit of covering foreign exchange exposures and borrowing at advantageous foreign rates.F o reign currency exposures are monitored daily and adjusted with re f e rence to the consensus forecast of major financial institutions.

The Finance Committee reviews risk management and internal control outcomes on a frequent and ongoing basis taking expedientaction to limit exposures when appro p r i a t e .

The Gro u p ’s risk assessment pro c e d u res address human re s o u rce risk, operational risks, compliance risks and business continuityrisks. Technology and market risks fall to the responsibility of operating directors re p o rting to the Executive Committee.

Weaknesses and failings are addressed at board meetings.

The purpose of the review process is also to positively identify opportunities for the Gro u p .

The risk management review pro c e d u re is supplemented by the ad-hoc evaluation of key management information (including sales,i n v e n t o ry and tre a s u ry details) which is available in successive levels of detail commencing with consolidated companies andextending to line item detail on source documents. The information is available to members of the Executive Committee on thedecision support facility which forms part of the Gro u p ’s internationally networked on-line integrated management system.

INTERNAL AUDIT

I n t e rnal audit pro c e d u res are perf o rmed to supplement the Gro u p ’s dual re p o rting/evaluation system in terms of which administratives t a ff re p o rt to the Finance Committee on all financial matters while perf o rming their operational duties under the responsibility ofoperations executives, who re p o rt to the Executive Committee. The internal audit review pro c e d u res follow standard programs withthe object of improving the Gro u p ’s risk management and control processes. Executives engaged in internal audit have direct accessto the Finance and Audit Committee.

S U S TAINABILITY REPORT I N GSocial ResponsibilitiesA G I ’s social responsibility commitment has two objectives:

- the promotion within AGI of the "family" concept in terms of which financial and general welfare support is off e red in timesof need; and

- e x t e rn a l l y, to the community at large, by the contribution to selected and deserving projects in which the aim of empowering p reviously disadvantaged groups with knowledge transfer is an objective.

C o n c e rning environmental safety and health issues, little threat exists of AGI operations having consequence for the environment givenc a reful consideration by the Group of the handling of its’ waste. Safety standards are strictly adhered to and the health and well-being of AGI’s work force, its’ customers and the ultimate users of its products are a commitment of the Gro u p .

Tr a n s f o rmation ResponsibilitiesAGI acknowledges the importance of its employees and their loyalty and effectiveness to the Gro u p ’s ultimate success. AGIacknowledges the limitations which have prevented previously disadvantaged groups from realising their full potential. Theappointment and promotion of suitably qualified members of these groups is, accord i n g l y, a commitment of the Gro u p .

Worker participation through improved communication with worker re p resentatives, particularly in matters of common concern, isa d d ressed in an active policy which also encourages self-development, the promotion of equal opportunity and the elimination ofdiscrimination.


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REPORT OF THE INDEP ENDENT AUDI TO RS

TO THE MEMBERS OF AG INDUSTRIES LIMITED

We have audited the annual financial statements of the Company and the Group set out on pages 28 to 53 for the year ended June

30, 2002. 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.

S C O P E

We conducted our audit in accordance with statements of South African Auditing Standards. Those standards re q u i re that we plan

and perf o rm the audit to obtain reasonable assurance that the annual financial statements are free of material misstatement. An audit

i n c l u d e s :

– examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;

– assessing the accounting principles used and significant estimates made by management; and

– evaluating the overall financial statement pre s e n t a t i o n .

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

AUDIT OPINION

In our opinion, the financial statements fairly present, in all material respects, the financial position of the Company and the Gro u p ,

at June 30, 2002, and the results of their operations and cash flows for the year then ended in accordance with South African

Statements of Generally Accepted Accounting Practice, and in the manner re q u i red by the Companies Act in South Africa.

DELOITTE & TOUCHE

R e g i s t e red Accountants and Auditors

C h a rt e red Accountants (SA)

Wo o d m e a d

September 16, 2002

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DIRECTO RS’ RESPO NSIBILITY STAT EMEN T

The directors of the Group are responsible for the maintenance of adequate accounting re c o rds and for the preparation of annual

financial statements that fairly present the state of affairs of the Company and the Group. The annual financial statements have been

p re p a red by management in accordance with South African Statements of Generally Accepted Accounting Practice and are based

on appropriate accounting policies which have been consistently applied, except for the adoption of the revised accounting statements

mentioned in note 2 to the annual financial statements. The Group's independent auditors, Deloitte & Touche, have audited the annual

financial statements and their unqualified re p o rt appears on page 27.

The directors are also responsible for the Group's systems of internal control, which are designed to provide reasonable, but not

absolute, assurance as to the integrity and reliability of the annual financial statements and to adequately safeguard, verify and maintain

accountability of its assets, and to prevent and detect material misstatement and loss. Nothing has come to the attention of the

d i rectors to indicate that any material breakdown in the functioning of these controls, pro c e d u res and systems has occurred during

the year under re v i e w.

The annual financial statements have been pre p a red on a going concern basis and nothing has come to the attention of the dire c t o r s

to indicate that the Group will not remain a going concern for the foreseeable future .

The annual financial statements and re p o rts appearing on pages 28 to 53 were approved by the Board of Directors on September

16, 2002 and are signed on its behalf.

A.A. BARRELL J.B. ROSENBERGExecutive Chairm a n G roup Financial Dire c t o r

September 16, 2002

C ER T IF ICATE BY T HE COMPA N Y SEC RE TA RY

I hereby certify that, to the best of my knowledge, for the year ended June 30, 2002 the Company has lodged, with the Registrar ofCompanies, all such re t u rns as are re q u i red of a public company in terms of the Companies Act 1973, as amended, and that allre t u rns are true, correct and up to date.

J.B. ROSENBERGCompany Secre t a ry

September 16, 2002


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DIRECTO RS’ REPO R T continued

SHARE CAPITA LDetails of the authorised and issued ord i n a ry share capital of the Company and the Group appear in note 15 to the annual financialstatements. The following changes have taken place in the Company's share capital during the year:

1. AUTHORISED SHARE CAPITA LThe authorised share capital of the Company comprises 300 000 000 ord i n a ry shares of 0,5 cent each.

2. ISSUED SHARE CAPITA L

E ff e c t i v e We i g h t e ddate for a v e r a g e

w e i g h t e d number ofNo of N o m i n a l S h a re n u m b e r s h a res –

s h a res v a l u e p re m i u m of share s year endedi s s u e d R' 000 R' 000 c a l c u l a t i o n June 30, 2002

Balance at beginning of the year 192 552 974 9 6 3 103 458 July 1, 2001 192 552 974Issued to vendors of a 60% interest 300 000 2 5 9 8 July 1, 2001 300 000in The Aluminium Connection (Pro p r i e t a ry )L i m i t e dIssued to vendors of a 100% interest in: 2 125 000 1 0 5 727 July 1, 2001 2 125 000

- Clearway Sliding Doors( P ro p r i e t a ry) Limited,

- Clearway Aluminium Durban( P ro p r i e t a ry) Limited

- Distinctive Systems( P ro p r i e t a ry) Limited and

- Profal (Pro p r i e t a ry) Limited("the Clearway Gro u p " )

Issued to vendors of a 100% interest in 500 000 3 1 552 July 1, 2001 500 000Vistalam Glass (Pro p r i e t a ry) Limited

Balance at end of the year before 195 477 974 9 7 8 111 335 195 477 974w r i t e - o ff of share issue expenses

3. UNISSUED SHARE CAPITA LSubject to the restrictions imposed by the Companies Act, 1973, the unissued shares of the Company are under the control of thed i rectors until the forthcoming annual general meeting. At the forthcoming annual general meeting shareholders will be re q u e s t e dto again authorise the placing of unissued shares of the Company under the control of the directors. It should be noted that the directors may not issue ord i n a ry shares, in any one financial year, for cash, if the issue exceeds 15%of the Company’s issued ord i n a ry share capital.

4. RENEWAL OF AUTHORITY FOR THE REPURCHASE OF SHARESThe conditions relating to the re p u rchase by the Company of its own shares are governed by the Company’s articles of associationwhich provide, inter alia, that this authority shall not extend beyond the date of the forthcoming annual general meeting, unless suchauthority is renewed by shareholders in general meeting. At the forthcoming annual general meeting shareholders will accord i n g l ybe requested to renew this authority until the next annual general meeting to be held in November 2003.

5. SHARE INCENTIVE SCHEMEThe Africa Glass Industries Share Incentive Trust ("the Trust"), was established for the purpose of the Africa Glass IndustriesLimited Share Incentive Scheme ("the scheme"). The board of trustees is composed of a minimum of two trustees. Messrs A.A.B a rrell and C.H. Boulle were appointed as trustees on the establishment of the Trust. In terms of the scheme, the aggre g a t enumber of ord i n a ry shares which may be made available for purposes of the scheme shall not exceed 7,5% of the company’sissued ord i n a ry share capital.The scheme is a combination scheme in terms of which, at the discretion of the board, duly authorised, ord i n a ry shares may beo ff e red for immediate or deferred sale to specified employees of the Group or scheme options granted to such employees.

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DIRECTO RS’ REPO R T

The directors have pleasure in submitting their re p o rt on the activities of the Company and the Group for the year endedJune 30, 2002.

CHANGE OF NAMEFor reasons mentioned in the Chairman's statement on page 6, the name "Africa Glass" is no longer considered pro p e r l yre p resentative of the Company’s activities and, in recognition of the Company’s development since listing, the board of directors ofAfrica Glass have deemed it appropriate to re-brand the group as "AG Industries Limited". In terms of a special resolution passedon June 19, 2002, the name of the Company was changed to AG Industries Limited, and the shortened version, "AGI", wasa p p ro v e d .

I N C O R P O R ATION AND HISTORYAGI was founded in 1980 and operated successfully as a private company for some nineteen years. The Company listed on the JSESecurites Exchange S.A. (“the JSE”) on July 14, 1999, raising capital in the amount of R50,5 million.

BUSINESS AND OPERAT I O N SThe Group is a fabricator of value added glass and aluminium products. These perf o rmance products, as well as unbeneficiatedglass, are distributed to a worldwide customer base through its operations located throughout South Africa, Namibia, Botswana ,theUnited Kingdom, Germ a n y, Scandinavia and the USA.

FINANCIAL RESULT SThe Group financial results of the Company and of the Group are set out on pages 32 to 53 of this re p o rt. Profit for the yearamounted to R58,0 million (2001: R51,4 million) and translated to headline earnings per ord i n a ry share of 33,3 cents (2001: 28,4cents). The Group financial statements are presented in South African rands, as the rand re p resents the largest single currency inwhich the transactions of the Group are concluded.

Rates C u rrency conversion guideThe approximate rand cost per unit at June 30, 2002 was:

2 0 0 2 2 0 0 1

US Dollar- closing rate 1 0 , 4 3 8 , 0 1- average rate 1 0 , 1 4 7 , 5 7

S t e r l i n g 1 5 , 9 2 1 1 , 2 6

E u ro 1 0 , 3 0 n / a

Deutsche Mark n / a 3 , 4 5

Danish Kro n a 1 , 3 9 n / a

Swiss Franc 7 , 0 4 4 , 4 3

Botswana Pula 1 , 6 0 n / a

D I V I D E N DO r d i n a ryA dividend of R12 706 068 (2001: R10 533 806) was proposed and paid to shareholders of the Company re g i s t e red as such on September 28, 2001.The board intends retaining a policy of paying one ord i n a ry dividend at the end of each financial year while maintaining a dividendcover of approximately four to five times.The board has declared a dividend of 7, 5 cents per ord i n a ry share (2001: 6,5 cents per ord i n a ry share) for the year ended June 30,2002. The last day to trade ("cum" dividend) in AGl shares in order to participate in the dividend will be Friday, October 4, 2002.F rom Monday, October 7, 2002 AGI shares will commence trading "ex" dividend. The re c o rd date will be Friday, October 11, 2002.Dividend payments will be made on Monday, October 14, 2002. Share certificates may not be dematerialised or re m a t e r i a l i s e dbetween Monday, October 7, 2002 and Friday, October 11, 2002, both days inclusive. P r e f e r e n c eNo pre f e rence dividend was declared or paid during the current year (2001: R111 924). The pre f e rence shares on which dividendsw e re paid in the previous year, were fully redeemed on June 30, 2001.


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DIRECTO RS’ REPORT continued

INVESTMENT IN SUBSIDIARY AND ASSOCIATED COMPA N I E S

1 . D I S P O S A L ST h e re were no disposals of subsidiary companies during the financial year under re v i e w. Africa Glass Botswana (Pro p r i e t a ry)Limited and Africa Glass Swaziland (Pro p r i e t a ry) Limited, both dormant companies, were dere g i s t e red during the year under re v i e w.

2 . A C Q U I S I T I O N SThe following acquisitions were made during the financial year under re v i e w :

C o m p a n y H o l d i n g P e rcentage held E ffective cost E ff e c t i v ea c q u i re d a c q u i re d after acquisition of acquisition d a t e

Raider Glass (Pro p r i e t a ry) Limited 5 1 % 1 0 0 % - December 31, 2001Gulfstar Industries Incorporated 2 5 % 1 0 0 % R 6 860 192 June 25, 2002Home Advantage West Incorporated 1 0 0 % 1 0 0 % R11 206 875 June 25, 2002

The undertakings of Sheerline Aluminium Systems (Pro p r i e t a ry) Limited and Sheerline Botswana (Pro p r i e t a ry) Limited, national e x t rusion and hard w a re stockists, were acquired effective September 1, 2001 for an amount of R17 274 351. The details in respect of the Company's interests in its subsidiary companies are set out in schedule A of the annual financial s t a t e m e n t s .The aggregate profits and losses after taxation of the subsidiaries attributable to the Company are as follows:– pro f i t s R63 546 922 (2001: R52 991 353)– losses R 3 916 099 (2001: R 664 806)Details of the associated companies are set out in note 10 to the annual financial statements.

SPECIAL RESOLUTIONSThe following special resolutions were passed during the year under re v i e w :- AG Industries Limited:

- Amendment of articles for use of STRATE and electronic media;- General approval to acquire own shares; and- Change of name and registration of shortened name.

- Other special resolutions passed during the year relate to the change of name and main business object of other subsidiaries, and are not considered material to this re p o rt .

SHARE TRANSACTIONS TOTA L LY ELECTRONIC ("STRAT E " )S T R ATE affects shareholders who hold shares on the register of the Company. STRATE is a new electronic clearing, settlement andcustody system for securities listed on the JSE. It is aimed at achieving a secure electronic settlement environment for transactionson the JSE. Its introduction necessitates the dematerialisation of share certificates and the re p resentation of ownership via ane l e c t ronic re c o rd .

In accordance with this objective the Company’s shares were converted to the STRATE system on March 5, 2001 and trading fore l e c t ronic settlement commenced on March 26, 2001.

POST BALANCE SHEET EVENTSThe directors are not aware of any material events not otherwise dealt with in the annual re p o rt that would affect the operations of theG roup significantly.

BORROWING POWERST h e re are no limitations on the directors' borrowing powers in terms of the articles of association of the Company or its subsidiaries.

COMPOSITION OF GROUP COMMITTEESThe composition of the board and the group audit, remuneration and other sub-committees are reflected in the section dealing withcorporate govern a n c e .

3 0

DIRECTO RS’ REPO R T c o n t i n u e d

The price payable by participants for scheme securities will be the middle market price at which the shares are traded on theJSE on the trading day immediately preceding the date upon which the board resolves to sell ord i n a ry shares in terms of the scheme,or to grant an option in terms of the scheme.Scheme securities acquired by a participant in the scheme will be released to the participant in four annual tranches commencing onthe third anniversary of an offer/acceptance date and will expire after seven years.The directors and staff of the Group have been allocated shares which are based on incentive based perf o rmance criteria. The Gro u phas loaned funds to the Tru s t .

The following movements in shares have taken place during the year under re v i e w :Number of share s Average price

Options outstanding at the beginning of the year 1 297 000 2 , 1 2Options granted 1 400 000 3 , 1 0Options exerc i s e d – –

Options outstanding at the end of the year 2 697 000 2 , 6 3

Options outstanding at June 30, 2002:

E x p i ry date Number of share s Average strike priceR

2 0 0 4 122 500 1 , 7 22 0 0 5 324 250 2 , 1 22 0 0 6 674 250 2 , 6 32 0 0 7 674 250 2 , 6 32 0 0 8 551 750 2 , 8 32 0 0 9 350 000 3 , 1 0

2 697 000 2 , 6 3

6. PREFERENCE SHARE CAPITAL AND PREMIUMThe authorised pre f e rence share capital of the Company comprises 30 authorised cumulative, redeemable pre f e rence shares of R1each and 300 000 cumulative pre f e rence shares of 1 cent each. No shares are currently in issue.

D I R E C T O R ATE AND ADMINISTRAT I O NThe names of the directors appear on pages 12 and 13 and the Company Secre t a ry as well as the business and postal addre s s e sappear on page 54 of this re p o rt .In terms of the Articles of Association of the Company, J.C. Saville, H.R. Levin, T. Y. Wo rthington, B. Danoher, C.P. Kalil and G . F.D. Twigg re t i re at the forthcoming annual general meeting and, being eligible, stand for re - e l e c t i o n .C . P. Kalil was appointed an executive director of the Company on March 18, 2002 and G.F.D. Twigg was appointed as a non-executive director of the company on June 4, 2002.As at June 30, 2002, the direct and indirect, beneficial and non-beneficial interest of the directors in the fully paid issued share capitalof the Company was 32 314 607 s h a res (2001: 34 613 424) held as follows:

B e n e f i c i a l N o n - b e n e f i c i a lD i re c t I n d i re c t D i re c t I n d i re c t

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1

Executive dire c t o r sA.A. Barre l l - - 14 806 07 2 17 060 699 1 299 810 494 000 - -M.J.E. Geldenhuys 752 354 752 354 - - - - - -C.K. Kalil - - 3 718 234 3 818 234 - - -J. Mart i n g a n o 446 900 496 900 - - - - - -J.B. Rosenberg 1 125 504 1 325 504 1 36 611 136 611 - - - -J.C. Saville 7 358 17 5 7 758 175 - - - - - -T. Y. Wo rt h i n g t o n 13 440 113 440 1 855 507 1 855 507 - - - -Non-executive dire c t o r sB.E. Danoher 50 000 50 000 - - - - - -H.R. Levin 752 000 752 000 - - - - - -G . F.D. Tw i g g - - - - - - - -

The transfer secretaries are Computershare Investor Services Limited. Details of their business and postal addresses appear onpage 54 of this re p o rt .


3 3

BA L A NC E SHEE T S

June 30, 2002

C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1

R ’ 0 0 0 R ’ 0 0 0 N o t e s R ’ 0 0 0 R ’ 0 0 0

A SSE T SNon-current assets

- - P ro p e rt y, plant and equipment 8 88 430 47 150- - G o o d w i l l 8 142 277 105 432

10 163 10 828 Other intangible assets 8 11 419 13 052123 54 3 118 556 Investment in subsidiaries 9 - -

3 127 3 148 Investment in associates 1 0 10 084 8 3162 2 6 4 8 2 Other unlisted investments 1 1 2 09 2 2 172

- - L o n g - t e rm re c e i v a b l e 1 2 3 17 1 3 171- - D e f e rred taxation assets 1 3 4 821 2 560

1 37 059 133 014 262 294 181 853

Current assets- - I n v e n t o r i e s 1 4 1 38 952 95 915

64 2 203 Trade and other re c e i v a b l e s 2 0 185 709 139 68612 59 2 3 2 8 Amounts owed by subsidiaries - -

- - Ta x a t i o n 7 2 8 2 7 81 2 0 2 926 Bank balances and cash 2 3 31 44 3 16 752

12 776 5 457 3 56 832 252 631

1 49 835 138 471 Total assets 619 126 434 484

EQ UITY AND LIABIL I T IESShareholders’ equity

1 08 776 108 776 O rd i n a ry share capital and pre m i u m 1 5 1 08 776 108 776- - Non-distributable re s e rv e s 35 49 1 14 931

16 149 15 776 Retained earn i n g s 1 68 140 124 641

124 925 124 552 312 407 248 348

Minority shareholders’ interest- - Outside shareholders’ intere s t 1 284 1 754

- - 1 284 1 754

Non-current liabilities- - Amounts due to vendors after one year 1 6 - 1 1 5- - S h a reholders’ loans 1 7 1 512 6 6 7

1 5 1 5 D e f e rred taxation liabilities 1 3 8 399 4 470- - B o rrowings due after one year 1 8 13 617 3 019- - Obligations under finance lease agreements due 1 9 30 587 8 943

after one year

1 5 1 5 54 115 17 214

Current liabilities378 7 4 2 Trade and other payables 2 1 1 48 74 2 108 643

3 012 1 430 Amounts owed to subsidiaries - -6 3 S h a reholders for dividend 6 3

46 5 11 465 Amounts due to vendors within one year 1 6 6 088 12 846- - B o rrowings due within one year 1 8 9 532 2 889- - Obligations under finance lease agre e m e n t s 1 9 8 64 2 3 867

due within one year1 1 0 2 6 4 Ta x a t i o n 11 88 3 10 589

20 924 - Bank borro w i n g s 2 2 66 427 28 331

24 89 5 13 904 251 320 167 168

1 49 835 138 471 Total equity and liabilities 619 126 434 484

3 2

INC O ME STAT EMEN T S

for the year ended June 30, 2002

C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1

R ’ 0 0 0 R ’ 0 0 0 N o t e s R ’ 0 0 0 R ’ 0 0 0

- - R e v e n u e 829 956 540 716

15 54 3 1 525 Other operating income 30 880 19 269

- - Changes in inventories of finished goods and work 43 037 25 112

in pro g re s s

- - Raw materials and consumables used (552 584 ) (344 880)

- - S t a ff costs ( 1 30 139 ) (86 516)

( 66 5 ) ( 6 8 6 ) D e p reciation and amortisation expense 4 (23 608 ) (15 586)

( 1 0 2 ) ( 1 3 8 ) Other operating expenses ( 1 06 125) (66 018)

14 776 7 0 1 Profit from operations 4 91 417 72 097

1 3 4 7 4 I n t e rest re c e i v e d 5 48 1 4 224

- ( 2 6 5 ) I n t e rest paid 5 (16 926) (6 926)

- - Income from associates 1 0 2 540 3 466

14 789 9 1 0 Profit before taxation 82 512 72 861

(1 710) ( 8 8 5 ) Ta x a t i o n 6 (24 550 ) (20 509)

13 079 2 5 Profit after taxation 57 96 2 52 352

- - Minority intere s t 34 ( 8 5 1 )

- - P re f e rence dividends - ( 1 1 2 )

13 079 2 5 Profit for the year 57 996 51 389

Basic earnings per ordinary share (cents) 7 2 9 ,7 2 6 , 3

Headline earnings per ordinary share (cents) 7 3 3 , 3 2 8 , 4

- as previously stated 3 3 , 3 2 9 , 2

- profit on disposal of pro p e rt y, plant and equipment - ( 0 , 8 )

(adoption of ED 151)

Dividend paid

Dividend per ord i n a ry share (cents) 7 6 , 5 * 5 , 5

Dividend cover (times) 7 4 , 6 4 , 9

* Dividend declared in respect of financial year

Dividend per ord i n a ry share (cents) 7, 5 6 , 5

Dividend cover (times) 4 , 0 4 , 1

*Refer Directors’ re p o rt


3 5

CA SH FLOW STAT EMEN T S


C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 N o t e s R ’ 0 0 0 R ’ 0 0 0

(8 020) 16 752 CA SH FLOW FROM OPER AT ING ACT I V I T IES : A 32 76 2 19 535

CA SH FLOW FROM IN V ES T ING ACT I V I T IES :(4 987 ) 11 342 ( I n c re a s e ) / d e c rease in investment in subsidiaries - -

- (13 715) Acquisition of subsidiaries D ( 36 667 ) (13 715)- 7 2 0 Dividend received from associate - 7 2 0

2 1 ( 1 0 2 ) D e c re a s e / ( i n c rease) in investment in associates 2 3 -2 56 4 0 D e c re a s e / ( i n c rease) in other unlisted investments 80 ( 1 5 0 )

- - Additions to pro p e rt y, plant, equipment and E (55 433) (18 457)intangible assets

- - P roceeds on disposal of pro p e rt y, plant, equipment and F 3 86 3 6 128intangible assets

(4 710) (1 715) Net cash outflow from investing activities ( 88 134 ) (25 474)

CA SH FLOW FROM FIN A NC ING ACT I V I T ES :- - D e c rease in pre f e rence share capital and pre m i u m - ( 7 0 0 )- (11 000) D e c rease in amounts due to vendors ( 1 1 5 ) (10 885)

after one year- - I n c re a s e / ( d e c rease) in shareholders’ loans 84 5 ( 4 8 2 )- - I n c re a s e / ( d e c rease) in borrowings due after one year 9 874 (12 436)- - I n c rease in obligations under finance lease agre e m e n t s 21 550 1 964

due after one year(11 000) 4 6 5 ( D e c re a s e ) / i n c rease in amounts due to vendors (6 908 ) 1 846

within one year- - I n c rease in borrowings due within one year 5 833 8 6 3- - I n c re a s e / ( d e c rease) in obligations under finance lease 4 70 1 ( 7 2 3 )

a g reements due within one year- - I n c rease in long-term re c e i v a b l e - (3 171)

(11 000) (10 535) Net cash inflow/(outflow) from financing activities 35 780 (23 724)

(23 730 ) 4 502 Net (decrease)/increase in cash and cash equivalents (19 59 2 ) (29 663)

2 926 (1 576) Cash and cash equivalents at beginning of the year (11 579 ) 15 686- - Cash and cash equivalents of purchased subsidiaries (3 064 ) 1 538- - F o reign exchange (profit)/loss on translation ( 749 ) 8 6 0

of foreign subsidiaries

(20 804 ) 2 926 CA SH AND CA SH EQ UI VA L ENTS AT G ( 34 984 ) (11 579)END OF THE YEAR

3 4

S TAT EMENTS OF CHANGES IN EQ UI T Y


Foreign Non-currency distributable Total

translation/ reserves Group share-Share Share redemption relating to retained holders’capital premium reserves associates earnings equityR ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

GRO UP :Balance at June 30, 2000 9 7 5 106 246 3 081 3 463 85 494 199 259

Contingency shares issued 3 1 552 - - - 1 555Net exchange rate adjustments - - 6 682 - - 6 682Income from associates - - - 1 706 (1 706) -Associate converted to subsidiary - - - ( 3 ) - ( 3 )Redemption of pre f e rence share s - - 2 - ( 2 ) -P rofit for the year - - - - 51 389 51 389O rd i n a ry dividend - - - - (10 534) (10 534)

Balance at June 30, 2001 9 7 8 107 798 9 765 5 166 124 641 248 348

Net exchange rate adjustments - - 18 769 - - 18 769Income from associates - - - 1 791 (1 791) -P rofit for the year - - - - 57 996 57 996O rd i n a ry dividend - - - - (12 706) (12 706)

Balance at June 30, 2002 978 1 07 798 28 534 6 957 1 68 140 312 407

C O MPA N Y :Balance at June 30, 2000 9 7 5 106 246 - - 26 285 133 506

Contingency shares issued 3 1 552 - - - 1 555P rofit for the year - - - - 2 5 2 5O rd i n a ry dividend - - - - (10 534) (10 534)

Balance at June 30, 2001 9 7 8 107 798 - - 15 776 124 552

P rofit for the year - - - - 13 079 13 079O rd i n a ry dividend - - - - (12 706) (12 706)

Balance at June 30, 2002 978 1 07 798 - - 16 149 124 925

The movement on the foreign currency translation re s e rve arises from the translation of the re p o rting currencies of non SouthAfrican foreign entities into South African rand upon consolidation.


3 7

NOT ES TO THE CA SH FLOW STAT EMEN T S c o n t i n u e d


C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

D . AC Q UISI T ION AND SUBSIDI A RIES :- 9 032 P ro p e rt y, plant and equipment 1 538 9 032- 20 509 Goodwill and intangible assets 32 078 20 509- 6 996 I n v e n t o r i e s 9 44 2 6 996- 13 847 Trade and other re c e i v a b l e s 12 624 13 847- 1 538 Bank balances and cash - 1 538- ( 6 1 8 ) S h a reholders’ loans - ( 6 1 8 )- ( 4 3 8 ) B o rrowings and obligations under finance lease agre e m e n t s - ( 4 3 8 )- (15 012) B o rrowings due after one year - (15 012)- (17 525) Trade and other payables (15 747 ) (17 525)- - Ta x a t i o n ( 2 04 ) -- - Bank borro w i n g s (3 064 ) -- 1 4 D e f e rred taxation asset - 1 4

- 18 343 Net assets acquire d 36 667 18 343- ( 2 9 7 ) Outside shareholders’ intere s t - ( 2 9 7 )- (2 776) Transfer from investment in associates - (2 776)- (1 555) Payable through issue of ord i n a ry share s - (1 555)

- 13 715 36 667 13 715

E . A DDI T IO NS TO PRO P ER T Y, PLANT, EQ UIP MEN TA ND IN TA NGIBLE ASSE T S :

- - Restraint of trade 2 5 1 5 0- - Plant and machinery 35 052 7 660- - O ffice furn i t u re and equipment 5 912 3 271- - Motor vehicles 7 687 2 989- - Land and buildings 5 504 -- - Leasehold impro v e m e n t s 1 253 4 362- - Know-how payments - 2 5

- - 55 433 18 457

F. P RO C EEDS ON DISPOSAL OF PRO P ER T Y, PLANT, EQ UIP MENT AND IN TA NGIBLE ASSE T S :

- - Net book value of pro p e rt y, plant, equipment andintangible assets disposed of 3 280 3 880

- - Net profit on disposal of pro p e rt y, plant, equipment 58 3 2 248and intangible assets

- - 3 86 3 6 128

G . CA SH AND CA SH EQ UI VA L EN T S :1 2 0 2 926 Bank balances and cash 31 44 3 16 752

(20 924) - Bank borro w i n g s ( 66 427 ) (28 331)

(20 804 ) 2 926 ( 34 984 ) (11 579)

3 6

NOT ES TO THE CA SH FLOW STAT EMEN T S


2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

A . CA SH FLOW FROM OPER AT ING ACT I V I T IES :

14 789 9 1 0 P rofit before taxation 82 512 72 861Adjusted for:

- - Net profit on disposal of pro p e rt y, plant, ( 58 3 ) (2 248)equipment and intangible assets

66 5 6 8 6 D e p reciation and amortisation expense 23 608 15 586( 1 3 ) ( 4 7 4 ) I n t e rest re c e i v e d (5 48 1 ) (4 224)

- 2 6 5 I n t e rest paid 16 926 6 926- - Income from associates (2 540 ) (3 466)

15 44 1 1 387 Operating profit before working capital ch a n g e s 114 44 2 85 435

- - I n c rease in inventories (26 80 5 ) (22 060)2 139 (1 691) ( I n c re a s e ) / d e c rease in trade and other re c e i v a b l e s (24 50 2 ) (13 460)

(10 68 2 ) 32 686 ( I n c re a s e ) / d e c rease in amounts owed to/(by) subsidiaries - -( 364 ) (3 194) I n c re a s e / ( d e c rease) in trade and other payables 15 180 2 243

6 534 29 188 78 315 52 158

1 3 4 7 4 I n t e rest re c e i v e d 5 48 1 4 224- ( 2 6 5 ) I n t e rest paid (16 926) (6 926)

(12 70 3 ) (10 531) Dividend paid (Note B) (12 70 3 ) (10 670)( 366 ) (1 497) Taxation paid (Note C) (19 907 ) (18 620)

(1 498 ) ( 6 1 7 ) S e c o n d a ry taxation on companies (1 498 ) ( 6 3 1 )

(8 020) 16 752 32 76 2 19 535

B . DI V IDEND PA ID :3 - Amount unpaid at beginning of the year 3 2 7

Amount charged to the income statement12 706 10 534 - Ord i n a ry dividend 12 706 10 534

- - - Pre f e rence dividend - 1 1 2( 6 ) ( 3 ) Amount unpaid at the end of the year ( 6 ) ( 3 )

12 70 3 10 531 12 70 3 10 670

C . TA X AT ION PA ID :2 64 1 497 Amount unpaid at beginning of the year 10 311 11 410

- - Amount unpaid at beginning of the year – purchased subsidiaries 2 04 5 92 1 2 2 6 4 Amount charged to the income statement (excluding 20 294 17 462

d e f e rred taxation)- - F o reign currency translation adjustment 2 5 3 -

( 1 1 0 ) ( 2 6 4 ) Amount unpaid at the end of the year (11 155) (10 311)

366 1 497 19 907 18 620

C O MPA N Y GRO UP


The segment information set out below is based on the re q u i rements of AC 115 - Segment Report i n g .For management purposes the group is split into two geographical segments – Southern Africa and International (consisting ofmainly Europe and the USA). These segments re p resent the basis on which all management and perf o rmance measure m e n tdecisions are taken and are the basis on which the Group re p o rts its primary segment inform a t i o n .

G E O G R A P H I C A L2 0 0 2

E l i m i n a t i o n s/ h e a d l i n e

S o u t h e r n Europe and e a r n i n g sAf r i c a the US A a d j u s t m e n t To t a lR ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

R e v e n u eE x t e rnal sales 599 677 2 30 279 - 829 956I n t e r-segment sales 1 80 914 56 840 ( 2 37 754 ) -

Total revenue 780 59 1 2 87 119 ( 2 37 754 ) 829 956R e s u l t :P rofit from operations 75 967 22 39 3 (6 94 3 ) 91 417I n t e rest re c e i v e d - - - 5 48 1I n t e rest paid - - - (16 926)Income from associates - - - 2 540

Profit before taxation - - - 82 512

Other InformationCapital additions 52 281 3 152 - 55 433D e p reciation and amortisation expense 17 398 6 210 - 23 608

G E O G R A P H I C A L2 0 0 1

E l i m i n a t i o n s/ headline

S o u t h e rn E u rope and e a rn i n g sA f r i c a the USA a d j u s t m e n t To t a lR ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

R e v e n u eE x t e rnal sales 426 009 114 707 - 540 716I n t e r-segment sales 115 616 35 520 (151 136) -

Total revenue 541 625 150 227 (151 136) 540 716

R e s u l t :P rofit from operations 57 937 17 485 (3 325) 72 097I n t e rest re c e i v e d - - - 4 224I n t e rest paid - - - (6 926)Income from associates - - - 3 466

Profit before taxation - - - 72 861Other InformationCapital additions 17 961 4 9 6 - 18 457D e p reciation and amortisation expense 14 335 1 251 - 15 586

3 9

GRO UP SEGMEN TAL REPO R T S c o n t i n u e d


BALANCE SHEET

Net assets/ Net assets/

A s s e t s L i a b i l i t i e s ( l i a b i l i t i e s ) A s s e t s L i a b i l i t i e s ( l i a b i l i t i e s )

2 0 0 2 2 0 0 2 2 0 0 2 2 0 0 1 2 0 0 1 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

S o u t h e rn Africa 419 348 (92 896 ) 326 452 291 230 (60 368) 230 862

E u rope and the USA 1 48 167 (55 846 ) 92 321 110 283 (48 275) 62 008

Investment in associates 10 084 - 10 084 8 316 - 8 316

Unallocated corporate assets/(liabilities) 41 527 ( 1 56 69 3 ) (115 166 ) 24 655 (75 739) (51 084)

619 126 ( 305 435) 313 69 1 434 484 (184 382) 250 102

The average number of employees for the year in each of the Gro u p ’s principal divisions was as follows:

2 0 0 2 2 0 0 1

S o u t h e rn Africa 1 367 1 177E u rope and the USA 79 6 8

1 446 1 245

R ’ 0 0 0 R ’ 0 0 0

BUSINESS SEGMEN TR e v e n u eE x t e rnal and inter-segment sales:Unbeneficiated pro d u c t s 477 453 294 960Value added products – Glass 1 48 631 131 930Value added products – Aluminium 441 626 264 962S e rv i c e s - -

1 067 710 691 852I n t e r-segment sales eliminated ( 2 37 754 ) (151 136)

Total revenue 829 956 540 716

Carrying amount of segment assetsUnbeneficiated pro d u c t s 218 596 152 581Value added products – Glass 92 744 73 379Value added products – Aluminium 1 80 625 105 953S e rv i c e s 122 340 100 909Unallocated corporate assets 4 821 1 662

619 126 434 484

Additions to property, plant, equipment, goodwill and other intangible assetsUnbeneficiated pro d u c t s 9 446 1 182Value added products – Glass 22 88 3 5 509Value added products – Aluminium 12 07 5 6 437S e rv i c e s 11 029 5 329

55 433 18 457

3 8

GRO UP SEGMEN TAL REPO R T S



4 1

NOT ES TO THE ANNUAL FIN A NCIAL STAT EMEN T S c o n t i n u e d


3 . 4 I N TANGIBLE ASSETSGoodwill arising on consolidation re p resents the excess of the cost of acquisition over the Gro u p ’s interest in the fair value of theidentifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill is recognised as an asset and amortised ona systematic basis following an assessment of the foreseeable life of the asset, subject to a maximum of 20 years. Goodwill isgenerally amortised over a period of 20 years.

Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate. Goodwill arising onthe acquisition of subsidiaries is presented separately in the balance sheet.

Negative goodwill, which re p resents the excess of the Gro u p ’s interest in the fair value of the identifiable assets and liabilitiesa c q u i red over the cost of acquisition, is eliminated pro p o rtionately against the fair values of the non-monetary assets acquire d .Any amount in excess of the fair values of the non-monetary assets acquired is recognised as income on a straight line basis overa period generally not exceeding 5 years.

On disposal of a subsidiary or associate, the attributable amount of unamortised goodwill or negative goodwill is included in thed e t e rmination of the profit or loss on disposal.

Know-how payments are carried at historical cost less accumulated amortisation. The asset is amortised on a systematic basisfollowing an assessment of the foreseeable life of the asset, subject to a maximum of 20 years.

The restraints of trade are carried at historical cost, less accumulated amortisation. The restraints of trade are amortised over aperiod calculated on the diff e rence between the age of the recipient of the restraint payment and a re t i rement age of 65 years,this being considered the pattern in which the asset’s economic benefits are consumed by the company. These restraints arevalued on an annual basis, and where, in the opinion of the directors, an impairment has arisen, appropriate provision will bem a d e .

3 . 5 DEFERRED TA X AT I O ND e f e rred taxation is accounted for using the balance sheet liability method in respect of temporary diff e rences between thec a rrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation oftaxable income. In principle, deferred tax liabilities are recognised for all taxable temporary diff e rences and deferred tax assetsa re recognised to the extent that it is probable that taxable profit will be available against which deductible temporary diff e re n c e scan be utilised.

3 . 6 LEASED ASSETSAssets leased in terms of agreements which are considered to be finance leases are capitalised at their fair value at the date ofacquisition. The corresponding liability to the lessor, net of finance changes, is included in the balance sheet as a finance leaseobligation. Capitalised leased assets are depreciated on the straight line basis at various annual rates considered appropriate toreduce book values to estimated residual values over the anticipated useful lives of the assets. Lease payments are allocatedbetween finance costs and capital repayments using the effective interest rate method. Lease finance costs are charged tooperating profit as they become due.

All other leases are classified as operating leases. Rentals payable are charged to operating profit on a straight line basis overthe term of the relevant lease.

3 . 7 I N V E N T O R I E SRaw materials, consumables and finished goods are valued at the lower of cost and net realisable value. Cost is determined onthe following bases:

- raw materials and consumables are valued at invoice cost on the first-in, first-out basis,- finished goods are valued at raw material cost and, where appropriate, labour and a pro p o rtion of manufacturing

o v e rhead expenses are included.

3 . 8 FINANCIAL INSTRUMENTSFinancial AssetsThe Gro u p ’s principal financial assets are bank balances and cash, trade receivables, and equity investments.

Trade receivables are stated at their nominal value and reduced by appropriate allowances for estimated irrecoverable amounts.

L o n g - t e rm investments, where the Group is not in a position to exercise significant influence or joint control, are stated at costless impairment losses recognised, where the investment’s carrying amount exceeds its estimated recoverable amount.

4 0

NOT ES TO THE ANNUAL FIN A NCIAL STAT EMEN T S


1 . P R E S E N TATION OF FINANCIAL STAT E M E N T SThe financial statements are presented in rands, since that is the currency in which the majority of the Groups' transactionsa re denominated, and cover the 12 month period ended June 30, 2002.

2 . ADOPTION OF NEW ACCOUNTING STA N D A R D SIn the current year the Group has adopted the following South African Statements of GAAP for the first time:AC135 – Investment Pro p e rt yAC135 relates to the re q u i rement for accounting and disclosures for investment pro p e rties. The statement has been adoptedin the current financial year and no adjustments have been made to comparative amounts as the effects are not material.

3 . S U M M A RY OF SIGNIFICANT ACCOUNTING POLICIESThe annual financial statements are pre p a red on the historical cost convention and have been pre p a red in accordance withSouth African Statements of GAAP. The principal accounting policies adopted are set out below. The accounting policiesremain unchanged from the previous year, except for the adoption of the new accounting standard mentioned in note 2 above.

3 . 1 BASIS OF CONSOLIDAT I O NThe Group annual financial statements incorporate the financial statements of the Company and its subsidiaries. The operatingresults of the subsidiaries are included from the effective dates of acquisition or up to the effective date of disposal asa p p ropriate and, where necessary, adjustments are made to the financial statements of subsidiaries to bring accountingpolicies used in line with those used by other members of the Gro u p .

On acquisition, the assets and liabilities of the relevant subsidiaries are measured at their fair values at the date of acquisition.All significant inter-company transactions and balances are eliminated. On the acquisition of subsidiaries, goodwill or negativegoodwill, is treated in terms of the Group's accounting policy for goodwill or negative goodwill as explained in note 3.4.

3 . 2 A S S O C I ATED COMPA N I E SAssociated companies are those companies in which the Group holds an interest and over which it has the ability to exerc i s esignificant influence and which are neither subsidiaries nor joint venture s .

Associated companies are accounted for by the equity method in the Group annual financial statements from the date they become investees.

Equity accounted income, which is included in the respective carrying values of the investments, re p resents the Gro u p ' sp ro p o rtionate share of the associates' retained earnings after accounting for dividends payable by those associates.The post-acquisition share of retained earnings of associates is included in the consolidated income statement and transferre dto a non-distributable re s e rv e .

P rovision is made when there has been an impairment in the carrying value of an interest in an associate. Where the equitymethod results in the Group's pro p o rtion of an associate's losses being greater than or equal to the carrying value of theassociate, the associate is carried at nil or at a nominal amount. Where associated companies have a year end other than June30, 2002, the latest available management accounts have been used.

3 . 3 P R O P E RT Y, PLANT AND EQUIPMENTLand and buildings are stated at cost. Buildings are depreciated on the straight line method to reduce book values toestimated residual values over the useful life of the building.P ro p e rt y, plant and equipment are stated at historical cost to the Group, less accumulated depreciation. Depreciation isp rovided for on the straight line method at various annual rates designed to reduce costs or book values to estimated re s i d u a lvalues over the anticipated useful lives of the assets. Depreciation is provided on the various classes of assets at the followingr a t e s :

%

Land and buildings 2

Leasehold impro v e m e n t s 5

Computer hard w a re and software 33,3 – 100

O ffice furn i t u re and equipment 1 0

Plant and machinery 1 5

Motor vehicles 2 0


4 3



C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

4 . PROFIT FROM OPERAT I O N SP rofit from operations is stated after taking the following into account:

I n c o m e- - P rofit on disposal of pro p e rt y, plant, equipment 6 1 5 2 302

and intangible assets796 8 0 4 Net profit on foreign exchange 5 94 1 1 508

- 7 2 0 Dividend received from associate - 7 2 0

Income from subsidiaries:- 4 0 1 - Intere s t - -

14 747 - - Dividend - -

14 747 4 0 1 - -

E x p e n s e sAuditors’ re m u n e r a t i o n :

- 1 2 - Fees 668 9 1 0- - - Under provision in prior year 1 2 2 5 6- - - Other serv i c e s 27 3 7 9

- 1 2 9 5 3 1 245

- - D e p re c i a t i o n 14 878 8 933- - A m o rtisation of goodwill 7 526 5 570

66 5 6 8 6 A m o rtisation of other intangible assets 1 204 1 083

66 5 6 8 6 23 608 15 586

- - Loss on disposal of pro p e rt y, plant, equipment 3 2 5 4and intangible assets

- - Operating lease payments 21 880 13 016

P rofessional fees:- - - Legal 7 2 5 3 3 1- - - Consultancy 1 099 9 2 5

5 . INTEREST PA I D- 2 6 5 L o n g - t e rm borro w i n g s 2 67 2 1 467- - Bank borro w i n g s 13 896 5 383- - O t h e r 667 9 6

- 2 6 5 Total interest paid 17 235 6 946- - Less amounts capitalised to

p ro p e rt y, plant and equipment ( 309 ) ( 2 0 )

- 2 6 5 Interest paid 16 926 6 926

4 2



Financial LiabilitiesSignificant financial liabilities include finance lease obligations, interest-bearing bank loans and overdrafts and trade andother payables.

The accounting policy adopted for finance lease obligations is outlined above.

I n t e rest-bearing bank loans and overdrafts are re c o rded at the proceeds received, net of direct issue costs. Financec h a rges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are addedto the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade and other payables are stated at their nominal value.

3 . 9 T R A N S L ATION OF FOREIGN CURRENCIES

Transactions in currencies other than rand are initially re c o rded at the rates of exchange ruling on the dates of thetransactions. Assets and liabilities have been translated into South African currency at the spot rate of exchange ruling atJune 30, 2002. All profits and losses on the translation of foreign currencies are dealt with in the income statements in theyear in which they arise. In order to hedge its exposure to foreign exchange risks, the Group enters into forw a rd exchangecontracts. Unrealised gains and losses arising on forw a rd exchange contracts are deferred and matched against gainsand losses arising on the specified transactions.

On consolidation, the assets and liabilities of the Gro u p ’s overseas operations are translated at exchange rates ruling onthe balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchanged i ff e rences arising if any, are classified as equity and transferred to the Gro u p ’s translation re s e rve. Such translationd i ff e rences are recognised as income or as expenses in the period in which the operation is disposed of.

Goodwill arising on the acquisition of a foreign entity is treated as an asset of the foreign entity and translated at the closingspot rate.

3.10 BORROWING COSTSB o rrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assetsthat necessarily take a substantial period of time to get ready for their intended use are added to the cost of those assets,until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are re c o g n i s e dthe income statement in the year in which they are incurre d .

3 . 1 1 RETIREMENT BENEFITSC u rrent contributions to the provident fund and pension funds which are defined contribution plans, are based on curre n ts e rvice and current salary and are recognised in the income statement in the year in which they are incurre d .

3 . 1 2 R E V E N U ERevenue re p resents the net invoiced value of goods delivered in respect of trading operations, excluding value addedtaxation, and is re c o rded at the date goods are delivered to customers and title has passed. Consolidated re v e n u eexcludes sales to Group companies.


4 5

NOTES TO THE ANNUAL FINANCIAL STAT E M E N T S c o n t i n u e d


8. PROPERT Y, PLANT, EQUIPMENT, GOODWILL AND OTHER INTANGIBLE ASSETS

A c c u m u l a t e d Net bookC o s t d e p re c i a t i o n v a l u e

R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

G r o u p

2 0 0 2O ffice furn i t u re and equipment 22 452 9 136 13 316Motor vehicles 26 423 13 668 12 755Land and buildings 5 504 5 2 5 452Leasehold impro v e m e n t s 6 190 1 359 4 831Plant and machinery 75 567 23 491 52 076

Pr o p e r t y, plant and equipment 136 136 47 706 88 430

G o o d w i l l 168 531 26 254 142 277

Restraint of trade 13 835 3 458 10 377Know-how payments 2 229 1 187 1 042

Other intangible assets 16 064 4 645 11 419

Total property, plant, equipment, goodwill and other intangible assets 320 731 78 605 242 126

C o m p a n y

2 0 0 2

Restraint of trade 12 020 1 857 10 163Know-how payments 1 3 0 1 3 0 -

Other intangible assets 12 150 1 987 10 163

As the only movement relates to amortisation for the year, a detailed reconciliation has not been pre p a red for the Company.

Group reconciliation of net book value (R’000)

Net fore i g nNet book A c c u m u l a t e d D e p re c i a t i o n c u rre n c y Net book

v a l u e Additions D i s p o s a l s d e p re c i a t i o n S u b s i d i a r i e s a n d t r a n s l a t i o n v a l u e2 0 0 1 at cost at cost on disposals Tr a n s f e r s a c q u i re d a m o rt i s a t i o n a d j u s t m e n t 2 0 0 2

O ffice furn i t u re 9 290 5 912 ( 9 0 7 ) 7 0 4 - 8 2 6 (3 059) 5 5 0 13 316and equipmentMotor vehicles 9 143 7 687 (3 548) 2 388 - 4 6 2 (4 293) 9 1 6 12 755Land and buildings - 5 504 - - - - ( 5 2 ) - 5 452Leasehold impro v e m e n t s 3 901 1 253 ( 1 9 ) 5 - 7 ( 3 7 1 ) 5 5 4 831Plant and machinery 24 816 35 052 (3 947) 2 118 - 2 4 3 (7 103) 8 9 7 52 076

Pr o p e r t y, plant 47 150 55 408 (8 421) 5 215 - 1 538 (14 878) 2 418 88 430and equipment

G o o d w i l l 105 432 - - - 1 973 31 036 (7 526) 11 362 142 277

Restraint of trade 11 433 2 5 - - - - (1 204) 1 2 3 10 377Know-how payments 1 619 - ( 7 5 ) 1 (1 973) 1 042 - 4 2 8 1 04 2Other intangible 13 052 2 5 ( 7 5 ) 1 (1 973) 1 042 (1 204) 5 5 1 11 419a s s e t s

Total property, 165 634 55 433 (8 496) 5 216 - 33 616 (23 608) 14 331 242 126plant, equipment, goodwill and other intangible assets

C e rtain pro p e rt y, plant and equipment is encumbered as disclosed in note 19.

4 4



C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

6. TA X AT I O NSouth African normal taxation:

2 1 2 2 6 4 - Current year 19 388 16 407- - - Prior year under/(over) pro v i s i o n 8 5 ( 2 )

F o reign taxation:- - - Current year 60 0 1 096- - - Prior year under/(over) pro v i s i o n 2 2 1 ( 3 9 )

D e f e rred taxation:- 4 - Current year 2 990 1 359- - - Prior year (over)/under pro v i s i o n ( 98 1 ) 1 7

1 498 6 1 7 S e c o n d a ry taxation on companies 1 498 6 3 1- - S h a re of taxation attributable to associates 749 1 040

1 710 8 8 5 Total taxation 24 550 20 509

Taxation for jurisdictions other than South Africa is calculated at the rates prevailing in the respective jurisdictions.

Taxation rate reconciliation:1 1 , 6 % 9 7 , 3 % C u rrent and deferred taxation as a percentage of pro f i t

b e f o re taxation 2 9 , 8 % 2 8 , 1 %Reduction in charge due to:

2 9 , 9 % - - Capital pro f i t s 0 , 5 % 3 , 0 %- 2 3 , 7 % - Dividend income - 0 , 1 %- - - Losses for tax purposes brought forw a rd 0 , 3 % 1 , 0 %- - - Income not subject to South African taxation 2 , 9 % 2 , 4 %- - - Prior year over provision of taxation 0 , 6 % 0 , 1 %- - - Deferred taxation assets not raised in prior years 1 , 0 % 1 , 1 %

4 1 , 5 % 1 2 1 , 0 % 3 5 , 1 % 3 5 , 8 %I n c rease in charge due to:

( 1 , 3 % ) ( 2 3 , 2 % ) - Disallowable expenses ( 3 , 3 % ) ( 4 , 9 % )( 1 0 , 2 % ) ( 6 7 , 8 % ) - Secondary taxation on companies ( 1 , 8 % ) ( 0 , 9 % )

30 , 0 % 3 0 , 0 % South African normal taxation rate 30 , 0 % 3 0 , 0 %

GRO UP2 0 0 2 2 0 0 1

R ’ 0 0 0 R ’ 0 0 0

7 . EARNINGS AND DIVIDEND PER ORDINARY SHAREThe calculation of the basic and headline earnings per shareis based on the following data:E a r n i n g sE a rnings for the purpose of basic earnings per ord i n a ry share 57 996 364 51 389 362A d j u s t m e n t s :- P rofit on sale of pro p e rt y, plant, equipment and intangible assets after taxation: ( 407 911) (1 573 655)

P rofit on sale of pro p e rt y, plant, equipment and intangible assets before taxation ( 582 730 ) (2 248 079)Ta x a t i o n 174 819 674 424

- Cost of investment written down - 3 072- Goodwill amort i s e d : 7 576 64 3 5 569 681

In subsidiaries 7 525 813 5 569 681In associates 50 830 -E a rnings for the purpose of headline earnings per ord i n a ry share 65 165 096 55 388 460

Number of sharesWeighted average number of ord i n a ry shares for the purposes of calculating basic and headline earnings per ord i n a ry share 195 477 974 195 061 536D i v i d e n dDividend paid 12 706 068 10 533 806Number of ord i n a ry shares in issue at the year end 195 477 974 192 552 974


4 7



C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

1 3 . DEFERRED TA X AT I O N- - D e f e rred taxation assets 4 821 2 560

( 1 5 ) ( 1 5 ) D e f e rred taxation liabilities (8 399 ) (4 470)

( 1 5 ) ( 1 5 ) Net position (3 578 ) (1 910)

( 1 5 ) ( 1 1 ) Balance at beginning of the year (1 910) ( 5 4 8 )Movements consisting of:

- - S u b s i d i a ry acquire d - 1 4- ( 4 ) Te m p o r a ry diff e re n c e s (2 818) (2 398)- - Tax losses utilised 809 9 3 1- - F o reign currency translation movement 34 1 9 1

( 1 5 ) ( 1 5 ) Balance at end of the year (3 578 ) (1 910)

The deferred taxation assets/(liabilities) arose as follows:- - Plant and machinery (4 729) (2 232)- - Leased assets ( 3 3 5 ) ( 3 2 2 )- - Deemed recoupment on expiry of financial leases 40 3 4 7- - P ro v i s i o n s (3 633) (3 115)

( 1 5 ) ( 1 5 ) P repayments and re t e n t i o n s ( 2 1 5 ) ( 2 0 7 )- - Tax losses 5 294 3 619

( 1 5 ) ( 1 5 ) (3 578 ) (1 910)

1 4 . I N V E N T O R I E SInventories consist of:

- - - Raw materials and consumables 31 264 16 290- - - Work in pro g re s s 4 686 2 774- - - Finished goods 103 002 76 851

- - 1 38 952 95 915

1 5 . O R D I N A RY SHARE CAPITAL AND PREMIUMAuthorised ordinary share capital

1 50 0 1 500 300 000 000 o rd i n a ry shares of 0 , 5 cent each 1 50 0 1 500

Issued ordinary share capital978 9 6 3 195 477 974 (2001 : 192 552 974) ord i n a ry shares of 0 , 5 cent each 978 9 6 3

111 335 103 458 S h a re premium on ord i n a ry shares issued 111 335 103 458(3 537 ) (3 537) S h a re issue expenses written off against share pre m i u m (3 537 ) (3 537)

Contingently issued ordinary share capital- 1 5 Nil (2001: 2 925 000) contingently issued ord i n a ry shares - 1 5

of 0 , 5 cent each- 7 877 S h a re premium on contingently issued share s - 7 877

1 08 776 108 776 1 08 776 108 776

4 6



C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

9 . INVESTMENT IN SUBSIDIARIES63 216 70 525 S h a res at cost - -60 327 48 031 Amounts owed by subsidiaries - -

123 54 3 118 556 - -

( F u rther details of subsidiaries are set out in Schedule A on page 52)

1 0 . INVESTMENT IN ASSOCIAT E S

3 127 3 148 Cost of investment in associates 3 127 3 150- - S h a re of associates retained earnings at end of the year 6 957 5 166

- - S h a re of associates retained earnings at beginning of the year 5 166 3 463- - Associate converted to subsidiary - ( 3 )- - Income from associates 2 540 3 466- - Ta x a t i o n ( 749 ) (1 040)- - Dividend received from associate - ( 7 2 0 )

3 127 3 148 10 084 8 316

3 127 3 148 D i rectors’ valuation 10 084 8 316

P e rcentage I s s u e d Financial N a t u re ofh o l d i n g capital year end b u s i n e s s

Associated companies comprise:N o rt h e rn Hard w a re and Glass 4 0 , 0 % 10 000 F e b ru a ry 28 Flat and auto glass ( P ro p r i e t a ry) Limited fabrication and distributionMatto Investments (Pro p r i e t a ry) Limited 4 9 , 9 % 1 000 June 30 Investment holding companyAll Glass Holdings (Pro p r i e t a ry) Limited 4 5 , 0 % 1 0 0 June 30 Flat and auto glass

installation and distribution

C O MPA N Y GRO UP2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1

R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

1 1 . OTHER UNLISTED INVESTMENTS- 2 5 6 Unitrade 28 (Pro p r i e t a ry) Limited - 2 5 6

2 2 1 2 2 1 Weimershoek No.81 (Pro p r i e t a ry) Limited 2 2 1 2 2 15 5 Plate Glass and Shatterprufe Industries (Pro p r i e t a ry) Limited 5 5- - Old Mutual Frontier Fund 1 866 1 690

2 2 6 4 8 2 2 09 2 2 172

2 2 6 4 8 2 D i rectors’ valuation 2 09 2 2 172

1 2 . LONG-TERM RECEIVA B L E- - Industrial Leases (Pro p r i e t a ry) Limited 3 17 1 3 171

C e rtain leasehold improvements of a subsidiary were sold to Industrial Leases (Pro p r i e t a ry) Limited. The proceeds will be repaid t h rough the forgoing of rentals on pro p e rties occupied by subsidiaries of the Group for the period March 2012 through October 2012.


4 9



19. OBL IG AT IO NS UNDER FIN A NCE LEASE AGREEMEN T S

Amounts payable under instalment sale and finance lease agre e m e n t s :

M i n i m u m Present value

l e a s e of minimum

p a y m e n t s lease payments

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

G r o u p

Within one year 13 474 5 324 8 64 1 3 867In the second to fifth years inclusive 38 30 5 10 354 30 588 8 943

51 779 15 678 39 229 12 810Less: future finance charg e s (12 550 ) (2 868) - -

P resent value of lease obligations 39 229 12 810 39 229 12 810Less: amounts due for settlement within one year (8 64 2 ) (3 867) (8 64 2 ) (3 867)

Amounts due for settlement after one year 30 587 8 943 30 587 8 943

Analysis of borrowings by curre n c y :

2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0

G r o u p

B o rro w i n g s - denominated in Rands 38 087 12 257

- denominated in USD 4 2 5 2 9 8

- denominated in DEM - 2 1 8

- denominated in N$ 2 1 3 7

- denominated in Euro 177 -- denominated in Danish Kro n e 5 1 9 -

39 229 12 810

It is the Gro u p ’s policy to purchase certain of its pro p e rt y, plant and equipment under instalment sale or finance lease agre e m e n t s .

The average agreement term is three to five years. These agreements bear interest at an average effective borrowing rate of 1 3 , 5 %

(2001:12,5%). All agreements are on the fixed repayment basis. The fair value of the Gro u p ’s obligations approximates their carry i n g

a m o u n t .

The Gro u p ’s obligations under these agreements are secured by the lessor’s charge over the assets.

The assets, under instalment sale and finance lease agreements, have the following book values at year end:

2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0

G r o u p

Plant and machinery 27 48 1 10 042

O ffice furn i t u re and equipment 90 2 2 7 9Motor vehicles 8 080 5 045

To t a l 36 46 3 15 366

4 8



C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

1 6 . A MO UNTS DUE TO VENDO RSDue within one year:

46 5 11 465 The Clearway Group vendors 46 5 11 465- - Vistalam Glass (Pro p r i e t a ry) Limited vendors - 1 036- - Anso Aluminium East London (Pro p r i e t a ry) Limited vendors 2 0 2 3 4 5- - Gulfstar Industries Incorporated and

Home Advantage West Incorporated vendors 5 421 -- - P u rchase price 17 931 -- - Less: set off of counterparty obligations (12 510) -

Due thereafter:- - Anso Aluminium East London (Pro p r i e t a ry) Limited vendors - 1 1 5

46 5 11 465 6 088 12 961( 46 5 ) (11 465) Less: amounts due within one year (6 088 ) (12 846)

- - Amounts due for settlement after one year - 1 1 5

The amount due to the vendors of the Clearway Group arose in terms of an agreement to acquire the equity interest in this Gro u pwith effect from July 1, 1999. The amount is interest free, unsecured and will be settled in cash during September 2002. The amountsdue to vendors of Anso arose in terms of an agreement to acquire 51% of the equity interest in this company with effect from April 1, 2001. The amount is interest free, unsecured and will be settled in cash in October 2002.The amounts due to the vendors of Gulfstar and Home Advantage West arose in terms of an agreement to acquire the outstanding25% and 100% respectively in the equity of the companies. The amounts are interest free and unsecured and will be settled in oneinstalment of USD300,000 during September 2002, five equal monthly instalments of USD33 333 commencing in October 2002 anda final instalment of USD53 333 in March 2003.

1 7 . SHAREHOLDERS’ LOANS- - S h a reholders’ loans which are unsecured, interest free and 1 512 5 7

have no fixed terms of re p a y m e n t- - S h a re h o l d e r ’s loan which is unsecured, bears interest at 12% - 6 1 0

per annum and has no fixed terms of re p a y m e n t

- - 1 512 6 6 7

1 8 . B O R R O W I N G S- - Bank term loans – unsecure d 17 024 5 015- - Other loans – unsecure d 6 125 8 9 3

- - 23 149 5 908

The borrowings are repayable as follows:- - On demand or within one year 9 532 2 889- - In the second year 10 699 1 454- - In the third to fifth years inclusive 2 918 1 565

- - 23 149 5 908- - Less: amounts due for settlement within one year (9 532) (2 889)

- - Amount due for settlement after one year 13 617 3 019

The average interest rates paid were as follows:- - Bank term loans 1 1 , 9 % 8 , 0 %- - Other loans 1 5 , 0 % -

2 0 0 2 2 0 0 1Analysis of borrowings by curre n c y : R ’ 0 0 0 R ’ 0 0 0G r o u pBank term loans - denominated in Rands 9 620 -

- denominated in USD 7 404 5 015Other loans - denominated in Rands 6 125 8 9 3

To t a l 23 149 5 908


5 1



2 6 . PENSION AND PROVIDENT FUNDSThe South African subsidiaries have defined contribution pension and provident funds in terms of which re t i rement benefits ared e t e rmined by re f e rence to contributions to the funds. These funds are governed by the Pension Funds Act of 1956.The employees of the Group's subsidiary in Germany are members of a state-managed re t i rement benefit scheme operated bythe German government. The subsidiary is re q u i red to contribute a specific percentage of its payroll cost to the re t i rement benefitscheme to fund the benefits. The only obligation of the subsidiary with respect to the re t i rement scheme is to make the specifiedc o n t r i b u t i o n s .The employees of the Group's subsidiaries in the UK and USA are not members of a pension or provident fund. Total contributions to the pension and provident funds for the year amounted to R6 301 857 (2001: R3 698 959).

C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

27. COMMITMENTSP ro p e rty operating lease commitments contracted for but not p rovided in the financial statements:

- - Due within one year 23 357 14 115- - Due in the second to fifth year inclusive 87 994 60 560- - Due there a f t e r 70 79 5 66 485

- - 182 146 141 160

Other operating lease commitments contracted for but not p rovided in the financial statements:

- - Due within one year 1 514 1 185- - Due in the second to fifth year inclusive 2 278 1 931- - Due there a f t e r - 5

- - 3 79 2 3 121

Capital expenditure committed or authorised but not p rovided in the financial statements:

- - Capital assets 18 003 15 582- 16 932 Acquisition of the undertaking of Sheerline - 16 932

- 16 932 18 003 32 514

The operating lease commitments will be funded out of cash flows generated from operating activities. Material capital commitments will be funded through instalment sale or finance lease agre e m e n t s .

2 8 . R E L ATED PA RTY TRANSACTIONSTrading transactionsT h e re were no trading transactions between related parties other than transactions between Group companies which have beeneliminated on consolidation. All related party transactions took place at arms length.Non-trading transactionsThe Clearway Sliding Doors (Pro p r i e t a ry) Limited ("Sliding Doors") and Clearway Aluminium Durban (Pro p r i e t a ry) Limited("Aluminium") premises are owned by Middlelea Pro p e rties No. 87 C.C. ("Middlelea"), Betakom Pro p e rties C.C. ("Betakom")and Aero p rop C.C. ("Aero p rop"). Mr Aerts, a director of Sliding Doors and Aluminium, is a member of Middlelea, Betakom andA e ro p rop. Total rentals for these pro p e rties for the year amounted to R835 149 (2001: R685 432).The Africa Glass Namibia (Pro p r i e t a ry) Limited ("Namibia") premises is owned by Focus C.C. ("Focus"). Mrs van Niekerk, a director of Namibia, is a member of Focus. Rentals paid for the pro p e rty for the year amounted to N$216 411 (2001: N$105 493).All pro p e rty rental transactions took place at arms length.An amount of R2 774 496 (2001: R2 774 496) is owed by the Africa Glass Industries Limited Share Incentive Trust to the Gro u p .This loan is unsecured, interest free and has no fixed terms of re p a y m e n t .An amount of R 479 17 2 (2001: R1 456 388) is owed by the Group to Alibar Investments (Pro p r i e t a ry) Limited ("Alibar"). Mr Barrell, the executive chairman of the Group, is a shareholder of Alibar. The loan is unsecured, bears interest at 12% (2001: 12%) per annum and has been fully repaid subsequent to year end.An amount of R 38 784 is owed by Mr McCann, a director of Africa Glass Distribution (Pro p r i e t a ry) Limited, to the Group. Theloan is unsecured, bears interest at 1 6 % per annum and is repayable within the next 12 months.An amount of R 68 60 2 is owed by Mr Schrader, a director of Africa Glass Namibia (Pro p r i e t a ry) Limited, ("AG Namibia"). Theloan is interest free, secured by Mr Schrader's shares in AG Namibia and is repayable in three equal annual instalments of R20 059 commencing in December 2002 and a final instalment of R8 425 in December 2004.



C O MPA N Y GRO UP

2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

2 0 . TRADE AND OTHER RECEIVA B L E S- - Trade receivables 1 60 511 117 106- - Related part i e s 77 9 3

49 4 9 P re p a y m e n t s 1 254 1 9001 5 2 154 Other re c e i v a b l e s 23 867 20 587

64 2 203 185 709 139 686

2 1 . TRADE AND OTHER PAYA B L E S- - Trade payables 1 04 030 83 102- - Related part i e s 2 3 1 1 3- - Employee costs and benefits 4 969 4 157

378 7 4 2 Other payables 39 512 21 371

378 7 4 2 1 48 74 2 108 643

2 2 . BANK BORROWINGSThe banking facilities granted to the Group are unsecured, with the exception of Gulfstar Industries Inc. ("Gulfstar"). There arec ross guarantees between Group companies and the Group has undertaken not to encumber assets without the prior writtenconsent of its various bankers. The bank facility granted to Gulfstar is secured by a notorial lien.

2 3 . OTHER FINANCIAL ASSETSTrade and other receivables comprise amounts receivable for the sale of goods, loan amounts due from employees and others u n d ry receivables. The average credit period taken on sale of goods is 62 days (2001: 80 days), calculated by the period indays over which sales, equivalent to trade receivables currently outstanding, were generated in the prior and preceeding months.An allowance has been made for estimated irrecoverable amounts from the sale of goods.

Bank balances and cash comprise cash and short term deposits held by the Group tre a s u ry division.

Credit risk is primarily attributable to trade receivables. The amounts presented in the balance sheet are net of allowances fordoubtful receivables, estimated by the Gro u p ’s management based on prior experience and the current economic environment. The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties andcustomers. The carrying amount of the above approximates their fair value.

24. OTHER FINANCIAL LIABILITIESTrade and other payables comprise amounts outstanding for trade purchases and ongoing costs. The average credit periodtaken for trade purchases is 47 days (2001: 58 days), calculated by the period in days over which purchases, equivalent to tradepayables currently outstanding, were made in the prior and preceeding months. The carrying amount of the above appro x i m a t e stheir fair value.

25. CONTINGENT LIABILITIESG r o u pS u b s i d i a ry companies have issued bond customs rebate store guarantees in the amount of R155 000 (2001: R152 500). Cert a i ns u b s i d i a ry companies have issued contract and perf o rmance guarantees in the amount of R2 533 223 (2001: R205 146).Outstanding letters of credit amounted to R1 218 407 (2001: R917 535). A subsidiary company has issued a guarantee in favourof Guardian Industries in the amount of USD 1 000 000 (2001: Nil). The amount payable to Guardian at year end, which hasbeen included in current liabilities, is USD 194 551.C o m p a n yThe Company has provided surety for the bank overdrafts of its subsidiaries. The net overdraft position of the subsidiaries atyear end amounts to R6 836 030 (2001: R3 320 895). The Company has issued a guarantee in favour of Billiton AluminiumLimited in the amount of R15 000 000 (2001: R10 000 000). The amount payable to Billiton at year end, which has been includedin current liabilities, is R8 178 775 (2001: R6 945 355).

5 0


5 3

SH A REHO L DING INFO RM AT IO N

5 2

SC HEDULE A - SC HEDULE OF IN T EREST IN SUBSIDI A RY COMPA NIES

June 30, 2002

Details of direct and indirect holdings in subsidiaries are as follows:

I s s u e d Pe r c e n t a g e P e rc e n t a g e I n d e b t e d - I n d e b t e d -c a p i t a l h o l d i n g h o l d i n g S h a r e s S h a re s n e s s n e s s

2 0 0 2 2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1 2 0 0 2 2 0 0 1% % R R R R

Africa Glass (Pty) Ltd 1 1 0 0 100 * * * *Africa Glass (Botswana) (Pty) Ltd - - # 100 * * * *Africa Glass Cape (Pty) Ltd 1 000 1 0 0 100 * * * *Africa Glass Distribution (Pty) Ltd 1 000 1 0 0 100 * * * *Africa Glass Export (Pty) Ltd 2 0 0 1 0 0 100 760 162 760 162 - -Africa Glass Group Services (Pty) Ltd 1 0 0 1 0 0 100 1 0 0 1 0 0 5 000 000 5 000 000Africa Glass International Holdings Inc. US$10 000 1 0 0 1 0 0 33 644 550 33 644 550 - -( B . V.I. 259 888)Africa Glass Manufacturing (Pty) Ltd 1 0 0 1 0 0 100 * * * *Africa Glass Mirrors (Pty) Ltd 20 000 1 0 0 100 9 50 000 8 249 000 - -Africa Glass Namibia (Pty) Ltd 604 70 , 5 70,5 * * * *Africa Glass Pro p e rty Services (Pty) Ltd 1 0 0 1 0 0 1 0 0 1 100 100 1 110 000 1 499 90 0 1 490 000Africa Glass SA Holdings (Pty) Ltd 1 9 1 0 0 100 12 491 96 1 12 491 961 14 358 989 2 690 657Africa Glass Swaziland (Pty) Ltd - - # 100 * * * *Africa Glass Tre a s u ry (Pty) Ltd 1 1 0 0 100 1 1 - -AG International Trading Inc. US $ 2 1 0 0 1 0 0 * * * *(Panama 17563)All Glass Gauteng (Pty) Ltd 1 3 3 1 0 0 1 0 0 1 3 3 1 3 3 884 456 702 056Anso Aluminium (Pty) Ltd 1 0 0 5 1 5 1 * * * *Avbar Investments (Pty) Ltd 30 0 1 0 0 100 300 300 3 813 404 520 Barbet Holding SA US$1 040 980 1 0 0 1 0 0 * * 3 440 250 2 644 125( L u x e m b o u rg 20859)C l e a rway Aluminium Durban (Pty) Ltd 1 0 0 1 0 0 1 0 0 * * * *C l e a rway Holdings (Pty) Ltd 1 0 0 1 0 0 1 0 0 60 100 60 100 34 700 776 34 655 278C l e a rway Sliding Doors (Pty) Ltd 3 2 0 1 0 0 1 0 0 * * * *Dabchick Holdings Ltd US $ 1 0 0 1 0 0 1 0 0 * * * *( B . V.I. 18285)Distinctive Systems (Pty) Ltd 30 0 1 0 0 1 0 0 * * * *Dowse Aluminium (Pty) Ltd 1 0 0 1 0 0 100 13 929 042 13 929 042 4 38 926 438 926 Francolin Pro p e rties (Pty) Ltd 1 1 0 0 1 0 0 * * * *Gulfstar Industries Incorporated US$2 248 1 0 0 7 5 * * * *(USA 65-0505440)H a rrier Limited US $ 2 1 0 0 1 0 0 * * * *( B . V.I. 42169)Home Advantage West Incorporated US $ 1 0 0 1 0 0 - * * * *(USA 65-0634512) IT For Africa (Pty) Ltd 1 1 0 0 1 0 0 2 80 000 280 000 - 4 999KAB Allglass GmbH DM 50 000 1 0 0 1 0 0 * * * *( G e rmany 40972)KAB Allglass Scandanavia A/S DKK 500 000 1 0 0 - * - * -(Denmark 26079241)Kal Projects (Pty) Ltd 1 0 0 1 0 0 1 0 0 * * * *Lanner Limited US $ 2 100 1 0 0 * * * *( B . V.I. 13862)Lawi A.G. C HF 50 000 1 0 0 1 0 0 * * * *(Switzerland CH–1703012382–0)Monoglass Inc. US $ 2 100 1 0 0 * * * *(USA 13/3623532)Oriole Services Inc. US $ 2 1 0 0 1 0 0 * * * *( B . V.I. 17562)Pelican International Inc. US $ 2 1 0 0 100 5 5 - -( B . V.I. 31266)P rofal (Pty) Ltd 1 0 0 1 0 0 1 0 0 * * * *Raider Glass Works (Pty) Ltd 1 0 0 1 0 0 4 9 * * * *Safe Glass (Pty) Ltd 1 0 0 0 1 0 0 100 * * * *Sheerline Aluminium (Botswana) (Pty) Ltd 1 0 0 1 0 0 - * * * *Sheerline Aluminium Systems (Pty) Ltd 2 000 1 0 0 100 * * * *( p reviously Africa Glass Nelspruit (Pty) Ltd)The Aluminium Connection (Pty) Ltd 1 0 0 1 0 0 1 0 0 * * * *Uniglass Limited GBP 475 000 1 0 0 1 0 0 * * * *(United Kingdom 2413276)Vistalam Glass (Pty) Ltd 1 0 0 1 0 0 1 0 0 * * * *West Cape Safety Glass (Pty) Ltd 1 000 6 5 65 * * * *

63 216 454 70 525 354 60 327 110 48 030 561

Notes * Denotes indirectly held subsidiaries # Denotes company dere g i s t e re dIssued share capital is denominated in rands unless otherwise stated

A N A LYSIS OF SH A REHO L DERSAs at June 30, 2002, an analysis of the share register showed the following:

SIZE OF SH A REHO L DINGNumber of P e rcentage of Number of P e rcentage of

s h a re h o l d e r s s h a re h o l d e r s s h a res held s h a res issued0 – 50 000 7 6 8 8 6 , 2 % 6 558 119 3 , 3 %

50 001 100 000 3 8 4 , 3 % 2 901 475 1 , 5 %100 001 500 000 4 2 4 , 7 % 10 861 935 5 , 5 %500 001 1 000 000 1 0 1 , 1 % 6 994 402 3 , 6 %

1 000 001 5 000 000 2 5 2 , 8 % 51 165 818 2 6 , 2 %5 000 001 10 000 000 3 0 , 3 % 18 114 222 9 , 3 %

Over 10 000 000 5 0 , 6 % 98 882 003 5 0 , 6 %8 9 1 1 0 0 , 0 % 195 477 974 1 0 0 , 0 %

CAT EGO RY OF SH A REHO L DINGI n d i v i d u a l s 6 4 0 7 1 , 8 % 33 381 820 1 7 , 1 %C o m p a n i e s 3 9 4 , 4 % 46 562 426 2 3 , 8 %Nominee companies 2 0 , 2 % 410 520 0 , 2 %Investment companies 2 1 0 2 3 , 6 % 115 123 208 5 8 , 9 %

8 9 1 1 0 0 , 0 % 195 477 974 1 0 0 , 0 %

SH A REHO L DER SP RE A DPublic share h o l d e r s 8 1 9 9 1 , 9 % 83 817 759 4 2 , 9 %Non-public share h o l d e r s 7 2 8 , 1 % 111 660 215 5 7 , 1 %– Directors, trustees and associates 7 1 8 , 0 % 72 214 600 3 6 , 9 %– Persons interested, directly or indire c t l y, 1 0 , 1 % 39 445 615 2 0 , 2 %

in 10% or more8 9 1 1 0 0 , 0 % 195 477 974 1 0 0 , 0 %

NOT E : Included in public shareholders are 2 nominee companies which, although counted as single shareholders, are believed tore p resent the interests of several share h o l d e r s .

M A JOR SH A REHO L DERSS h a reholders holding in excess of 5% of theissued share capital of the Company:

D a rter International Incorporated. 39 445 615 2 0 , 2 %Alibar Investments (Pro p r i e t a ry) Limited 18 000 000 9 , 2 %L i v ron Holding SA 15 294 680 7 , 8 %B a rricade Investments (Pro p r i e t a ry) Limited 14 894 195 7 , 6 %S A Mutual Life 11 247 813 5 , 8 %

Volume Traded July 2, 2001 to June 28, 2002 - 34 854 871Volum Traded July 14, 1999 to June 28, 2002 - 97 374 210


5 5

NOT ICE OF ANNUAL GENERAL MEE T ING

Notice is hereby given that the annual general meeting of the shareholders of AG Industries Limited ("the Company") will be held inthe board room, Corner Kruger Street and Mimetes Road, Denver Extension 11, Johannesburg at 10h00 on November 27, 2002 forthe following purposes:

As ord i n a ry re s o l u t i o n s -

1 . To receive and adopt the annual financial statements and Group annual financial statements for the year ended June 30, 2002.

2 . To elect directors in accordance with the provisions of the articles of association of the Company to replace J.C. Saville, H.R. Levin, T. Y. Wo rthington, B.E. Danoher, C.P. Kalil and G.F.D. Twigg, who re t i re and, being eligible, stand for re - e l e c t i o n .

3 . To re-elect the auditors, Deloitte & Touche, for the ensuing year and to authorise the directors to determine the auditors' re m u n e r a t i o n .

4 . To approve the remuneration of the directors for their services as such.

5 . To consider and, if deemed fit, to pass with or without modification the following ord i n a ry re s o l u t i o n s :

5 . 1 "Resolved that, the directors be given a specific authority to issue to participants in the Africa Glass Industries Limited ShareIncentive Scheme shares of 0,5 cent each which, in aggregate, do not exceed 14 660 848 shares being 7,5% of the issueds h a re capital of the Company, provided that the price at which the shares shall be issued shall re p resent a discount not exceeding 10% of the weighted average traded price of the shares over the 30 days prior to the date of determination of theprice of the issue and provided further that the authority and any issue pursuant thereto shall be in terms of the CompaniesAct 1973 (Act 61 of 1973), as amended, and the Listing Requirements of the JSE Securities Exchange SA."

A 75% majority of the votes of all shareholders present or re p resented by proxy at the general meeting excluding contro l l i n gs h a reholders, their associates, any party acting in concert, and, if applicable, any shareholder who is participating in the issueand who is not re g a rded as being public in terms of the Listing Requirements of the JSE Securities Exchange SA must be cast in favour of this resolution for this resolution to become eff e c t i v e .

5 . 2 "Resolved that, the unissued authorised shares (excluding for this purpose the 14 660 848 ord i n a ry shares over which the d i rectors are granted specific authority to meet the re q u i rements of the Africa Glass Industries Limited Share Incentive Scheme in terms of resolution 5.1) in the capital of the Company be and they are hereby placed under the control of the d i rectors of the Company as an unconditional general authority in terms of section 221 (2) of the Companies Act (Act 61 of 1973), as amended ("the Act"), with the power to allot and issue all or any portion of such shares at their discretion, subjectto sections 221(3) and 221(1) of the Act and the Listing Requirements of the JSE Securities Exchange SA."

5 . 3 "Resolved that, subject to the passing of Ord i n a ry Resolution 5.2 and in terms of the re q u i rements of the JSE Securities Exchange SA, the directors be given the general authority to issue ord i n a ry shares of 0,5 cent each for cash as and when theysee fit, subject to the following limitations:

5 . 3 . 1 that this authority shall not extend beyond 15 (fifteen) months from the date of this general meeting;

5 . 3 . 2 that issues in the aggregate in any one financial year will not exceed 15% of the Company’s issued share capital;

5 . 3 . 3 that, in determining the price at which an issue of shares will be made in terms of this authority, the maximum discountat which securities will be issued shall be 10% of the weighted average traded price of the shares over the 30 days prior to the date on which the price of the issue is determined or agreed by the directors; and

5 . 3 . 4 any such issue will only be made to public shareholders as defined in the Listing Requirements of the JSE SecuritiesExchange SA."

In terms of listing re q u i rements of the JSE Securities Exchange SA, the approval of a 75% majority of the votes castby shareholders present or re p resented by proxy at this meeting is re q u i red for Ord i n a ry Resolution 5.3 to become e ff e c t i v e .

5 . 4 To consider and, if deemed fit, to pass with or without modification the following ord i n a ry resolution:

"Resolved that the directors of the Company be and are hereby authorised and empowered to reduce the share premium account of the Company, which presently amounts to R107 798 459, by writing off against the Company’s interest in subsidiaries, as and when and in such amount as the directors in their discretion deem fit, subject to the restrictions that suchauthority shall be valid until the Company’s next annual general meeting and that the amount determined by the directors to be written off against the share premium account shall not exceed R142 277 226."

The reason for and effect of this ord i n a ry resolution are to reduce the share premium account by the amount considered by the directors as the prudent reduction in the value of the Company’s interests in its subsidaries. The directors do not pro p o s eto act under the authority if granted but believe it prudent to provide for a general authority until the next annual general meetingof the Company.

5 4

GENERAL INFO RM AT IO N

SHAREHOLDERS’ DIARY

Financial year- e n d June 30Last date to trade for dividend of 7,5 cents per share October 4, 2002Dividend payment October 14, 2002Annual general meeting November 27, 2002

R e p o rts and profit statements– Interim re p o rt for 6 months ended December 31, 2002 Published March 2003– Annual re p o rt for year ended June 30, 2003 Published October 2003

A D M I N I S T R AT I O N

AG Industries Limited

( F o rmerly Africa Glass

Industries Limited)

Incorporated in the Republic of

South Africa

Registration number 1980/004051/06

S h a re code: AGI

ISIN: ZAE 000039467

Company Secre t a ry

J.B. Rosenberg

R e g i s t e red Off i c e

C o rner Kruger Street and

Mimetes Road

Denver Extension 11

J o h a n n e s b u rg, 2094

Telephone (011) 607-4500

Fax (011) 615-7050

Postal Addre s s

PO Box 40443

Cleveland, 2022

South Africa

I n t e rnet Addre s s

w w w. a g - i n d u s t r i e s . c o m

Investor Relations

i n v e s t o r s @ a g - i n d u s t r i e s . c o m

Transfer Secre t a r i e sC o m p u t e r s h a re Investor S e rvices Limited70 Marshall Stre e tJ o h a n n e s b u rg, 2001PO Box 1053J o h a n n e s b u rg, 2000Telephone (011) 370-5000Fax (011) 370-5487

S p o n s o rHSBC Investment Serv i c e s(Africa) (Pro p r i e t a ry) Limited6-9 Riviera RoadHougton, 2198Telephone (011) 481-4200Fax (011) 646-8483

A u d i t o r sDeloitte & To u c h e20 Woodlands DriveWo o d m e a dSandton, 2146Telephone (011) 806-5000

Principal BankersThe Standard Bank of SouthAfrica LimitedS t a n d a rd Corporate andM e rchant Bank 3 Simmonds Stre e tJ o h a n n e s b u rg ,2 0 0 0


5 7

NOT ICE OF ANNUAL GENERAL MEE T ING c o n t i n u e d

" 5 4 DIVIDENDS AND OTHER PAYMENTS TO MEMBERS

5 4 . 1 Subject to the relevant provisions of the relevant statutes, the company may make payments to its members (or any of its members) from time to time. For the purpose of this Article and without detracting from the definition of "payment" ascribed to the word in the Act, payment will include any writing off or reduction in the c o m p a n y ’s issued share capital or share premium account in any manner authorised.

5 4 . 2 The company in general meeting (subject to obtaining the declaration of the directors re f e rred to in Article 54.6) or the directors may from time to time declare a dividend to be paid or make any other payment to the members and to the holders of share warrants (if any) in pro p o rtion to the number of shares held by them in each class. Dividends shall be declared payable to members re g i s t e red as such on a date subsequent to the date of the declaration of the dividend.

5 4 . 3 No larger dividend or other payment to members shall be declared by the company in general meeting than is recommended by the directors, but the company in general meeting may declare a smaller dividend.

5 4 . 4 Any dividend so declared or other payments approved may be paid and satisfied, either wholly or in part, by the distribution of specific assets, and in particular of paid up shares or debentures of any other company, or in cash or in any one or more of such ways as the company in general meeting or directors may at the time of declaring the dividend or approving the payment determine and dire c t .

5 4 . 5 Unless otherwise determined by the board of directors in respect of any particular dividend to be declared by the company, dividends shall not carry interest as against the company. Dividends may be declared either f ree of or subject to the deduction of income tax and any other tax or duty in respect of which the company may be chargeable. All unclaimed dividends or other payments to members contemplated in this Article may be invested or otherwise made use of by the directors for the benefit of the company until claimed, provided that dividends or other payments to members contemplated in this Article unclaimed for a period of not less than 3 (three) years from the date on which such dividends or other payments to members contemplated in this Article became payable and not previously forfeited may be forfeited by the directors for the benefit of the company.

5 4 . 6 The declaration of the directors as to whether -

5 4 . 6 . 1 the company is, or would be after the payment able to pay its debts as they become due in the o rd i n a ry course of business;

5 4 . 6 . 2 the consolidated assets of the company, fairly valued would, after the dividend or other payment not be less than the consolidated liabilities of the company,

shall be conclusive.

5 4 . 7 In the case where several persons are re g i s t e red as joint holders of any share any one of such persons may give effectual receipts for all dividends and payments in respect of such share .

5 4 . 8 Each dividend, interest or other moneys payable to the re g i s t e red holder of shares may be paid by cheque, w a rrant, coupon or otherwise as the directors may from time to time determine, and may, if paid otherwise than by coupon, be sent by post to the last re g i s t e red address of the member entitled thereto, or any other a d d ress requested by him, or in the case of joint holders to that one of them first named in the register in respect of such joint holdings, and the payment of such cheque or warrant if purporting to be duly endorsed, or the surrender of any coupon, shall be a good discharge to the company in respect there o f .

5 4 . 9 Dividends or other payments shall be declared in the currency of the Republic.

5 4 . 1 0 The company shall be entitled at any time to delegate its obligations to any member in respect of unclaimed dividends or other payments, to any one of the company’s bankers from time to time."

5 6


6 . To consider and, if deemed fit, to pass with or without modification the following special re s o l u t i o n s :

6 . 1 "Resolved that the directors of the Company be and are hereby authorised, by way of a general authority, to acquire share sissued by the Company in terms of section 85(2) and 85(3) of the Companies Act, 1973 (Act 61 of 1973), as amended and in terms of the Rules, Regulations and Requirements of the JSE Securities Exchange SA, such that:-

6 . 1 . 1 any such acquisition of shares shall be implemented on the JSE Securities Exchange SA;

6 . 1 . 2 this general authority is in the form of a renewable mandate and is valid until the Company’s next annualgeneral meeting, but it shall not extend beyond 15 months from the date of this general meeting;

6 . 1 . 3 a paid press announcement, containing full details of the shares concerned, will be published as soon as the Company has acquired shares constituting, on a cumulative basis, 3% of the number of shares in issue prior to theacquisition pursuant to which the 3% threshold is re a c h e d ;

6 . 1 . 4 acquisitions in the aggregate in any one financial year may not exceed 20% of the Company’s issued share capitalat the date of the passing of this special re s o l u t i o n .

6 . 1 . 5 in determining the price at which shares issued by the Company are acquired by it in terms of this authority the maximum premium permitted will be 10% of the weighted average closing price as determined over the five daysimmediately preceding the date of acquisition of those shares by the Company; and

6 . 1 . 6 s h a res may not be acquired if, as a result of any such acquisition, the Company will or may be unable to pay its debts as they become due in the ord i n a ry course of business, or the value of the consolidated assets of the Company fairly valued will or may be less than the consolidated liabilities of the Company. "

The reasons for and the effects of this special resolution are to grant the Company a general approval in terms ofthe Companies Act, 1973 (Act 61 of 1973), as amended, for the acquisition by the Company of its own share s ,which general approval shall be valid until the earlier of the next annual general meeting of the Company or thevariation or revocation of such general authority by special resolution by any subsequent general meeting of theCompany provided that the general authority shall not extend beyond 15 months from the date of this generalmeeting. The directors do not propose to act under the authority if granted but believe it prudent to provide for ageneral authority until the next annual general meeting of the Company. Any acquisition will be made by means ofan acquisition through the Company’s sponsor, as agent for and on behalf of the Company through the JSESecurities Exchange Trading System (SETS). The directors are of the view that, if the acquisition by the Companyof the maximum number of shares permitted to be acquired in terms of this special resolution is implemented:

a) the ability of the Company to pay its debts as they become due in the ord i n a ry course of business will not bea ff e c t e d ;

b) the consolidated assets of the Company, fairly valued, will exceed the consolidated liabilities of the C o m p a n y ;

c) the capital of the Company will be adequate for its ongoing business; and

d) the Company will have sufficient working capital for its ongoing business re q u i re m e n t s .

6 . 2 "Resolved that, the articles of association of the Company be and they are hereby amended by -

6 . 2 . 1 the insertion of a new definition of "Statutes" as Article 1.1.10 bis to read as follows -

"1.1.10 bis"Statutes" means the Act and any other statute or ordinance from time to time concerning companies and affecting the company. "

6 . 2 . 2 the deletion of Article 54 and the insertion of the following replacement article 54 to read as follows -


5 9

FO RM OF PROXY

For use by ord i n a ry shareholders ("ord i n a ry shareholders") of AG Industries Limited ("the Company") for the annual generalmeeting of the Company to be held on November 27, 2002 at 10h00 ("the annual general meeting").

I / We

(Name/s in block letters)

being the re g i s t e red holder/s of ord i n a ry shares in the Company, appoint (see note 1):

1. or failing him

2. or failing him

3 . the chairman of the annual general meeting

as my/our proxy to act for me/us and on my/our behalf at the annual general meeting and at any adjournment thereof which will beheld for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed t h e re a tand to vote for and/or against the resolutions and/or abstain from voting in respect of the ord i n a ry shares re g i s t e red in my/our name/s,in accordance with the following instru c t i o n s :

Agenda Item * Vote for * Vote Ag a i n s t *Ab s t a i n

Ordinary Resolutions

1 Adoption of annual financial statements

2 . 1 Election of directors en bloc

2 . 2 Re-election of dire c t o r s :

J.C. Saville

H.R. Levin

T. Y. Wo rt h i n g t o n

B.E. Danoher

C . P. Kalil

G . F.D. Tw i g g

3 Re-election and remuneration of auditors

4 Remuneration of dire c t o r s

5 . 1 Authority to directors to issue shares to participants in the Africa Glass Industries Limited Share Incentive Scheme

5 . 2 Unconditional general authority to directors until the next annual general meeting to allot and issue share s

5 . 3 Authority to directors to allot and issue shares for cash

5 . 4 Authority to directors until the next annual general meeting to reduce the share premium account

Special Resolutions

6 . 1 I n s e rtion of a new definition of "Statutes" and Article 54 re g a rding dividends and other payments to memebers

6 . 2 General authority to acquire share s

Signed at on 2 0 0 2

S i g n a t u re

Assisted by me ( w h e re applicable)

*See note 2 on the reverse side of this form .

A member who is entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies to attend, speakand vote in his/her stead. The person so appointed need not be a member of the Company.

Note: For instructions on the completion of this form, please see the notes on the reverse side of this form .

5 8


6 . 2 . 3 the deletion of Article 55 in its entire t y.

6 . 2 . 4 the deletion of Article 56 in its entire t y.

6 . 2 . 5 the deletion of Article 58 in its entirety

The reasons for and the effect of this special resolution are to amend the articles of association of the Company to enable the

Company to, and set the manner by which the Company may:

a ) reduce its share capital, share premium, re s e rves, including statutory non-distributable re s e rves, stated

capital and/or any capital redemption re s e rve fund; and

b ) make payments to its share h o l d e r s .

7 . To attend to such other business as may be raised at the meeting.

A member who is entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies to attend,

speak and vote in his/her stead. The person so appointed need not be a member of the Company. A proxy form is enclosed for

use at this annual general meeting. Proxy forms are only to be completed by those shareholders who hold shares in cert i f i c a t e d

f o rm or who are re c o rded in the sub-register in electronic form in own name. All other beneficial shareholders who have

dematerialised their shares through a Central Securities Depository Participant ("CSDP") or broker must provide the re l e v a n t

CSDP or broker with their voting instruction in terms of the custody agreement entered into between themselves as the

beneficial owner and the relevant CSDP or broker as the case may be. Proxy forms should be forw a rded to reach AG Industries

Limited's re g i s t e red office not later than 24 hours before the time fixed for the meeting. The last date to trade in AGI shares in

o rder to qualify to vote will be November 15, 2002. The re c o rd date on which shareholders entitled to vote directly or by pro x y

t h rough a CSDP or broker are determined shall be November 22, 2002 and the last date to lodge proxy forms will be

November 26, 2002.

By order of the board

J.B. Rosenberg

Company Secre t a ry

September 16, 2002


6 1

DEF INI T IO NS

“the Company” AG Industries Limited

"the Gro u p " the Company, its subsidiary and associated companies

" A n s o " Anso Aluminium East London (Pro p r i e t a ry) Limited

" G u l f s t a r " Gulfstar Industries Inc. based in the state of Florida USA

“Home Advantage We s t ” Home Advantage West Incorport e d

"Sheerline" the undertaking of Sheerline Aluminium Systems (Pro p r i e t a ry) Limited,

Sheerline Aluminium Botswana (Pro p r i e t a ry) Limited and Inex Trading (Pro p r i e t a ry) Limited

“ G A A P ” Generally Accepted Accounting Practice

AWA RDS

1999 Special Presidential Aw a rd for contribution to The Reconstruction and Development Pro g r a m m e

1993 Best South African Non-Listed Company Aw a rd

1993 State President's Export Achievement Aw a rd

1989 Best South African Non-Listed Company Aw a rd - Runner- u p

1989 State President's Export Achievement Aw a rd

6 0

NOT ES TO FO RM OF PROXY

1. A member who is entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies to attend,

speak and vote in his/her stead. The person so appointed need not be a member of the Company. Proxy forms are only to be

completed by those shareholders who hold shares in certificated form or who are re c o rded in the sub-register in electronic form

in own name. All other beneficial shareholders who have dematerialised their shares through a Central Securities Depository

P a rticipant ("CSDP") or broker must provide the relevant CSDP or broker with their voting instruction in terms of the custody

a g reement entered into between the beneficial owner and the CSDP or broker as the case may be. Proxy forms should be

f o rw a rded to reach AG Industries Limited's re g i s t e red office not later than 24 hours before the time fixed for the meeting. The

last date to lodge proxy forms will be November 26, 2002.

2. The person whose name stands first in the form of proxy and who is present at the annual general meeting will be entitled to

act as proxy to the exclusion of those whose names follow.

3. A proxy may vote on a show of hands and on a poll. An ord i n a ry share h o l d e r ’s instructions to the proxy must be indicated by

the insertion of the relevant number of votes exercisable by that ord i n a ry shareholder in the appropriate box/es provided. Failure

to comply with the above will be deemed to authorise the chairman of the annual general meeting, if he is the authorised pro x y,

to vote in favour of the resolutions at the annual general meeting, or any other proxy to vote or to abstain from voting at the

annual general meeting as he deems fit in respect of the share h o l d e r ’s votes exercisable thereat. Any alteration made to this

f o rm of proxy must be initialled.

4. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general

meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof should such

s h a reholder wish to do so.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a re p resentative capacity must be

attached to this form .

6. This form of proxy must be signed by all joint share h o l d e r s .

7. Proxy forms must be lodged at the re g i s t e red office of the Company or posted to Mr J.B. Rosenberg, Company Secre t a ry, AG

Industries Limited, PO Box 40443, Cleveland, 2022, to be received not later than 24 hours before the time fixed for the annual

general meeting.


0 1

C O N T EN T S

Financial Highlights 2

Value Added Statement 3

Six Year Financial Review 4

Segmental Review and Ratios 5

C h a i rman's Statement 6

Strategic Focus 1 0

B o a rd of Dire c t o r s 1 2

O u t l e t s 1 4

Operational Review 1 5

Annual Financial Statements 2 0

General Inform a t i o n 5 4

Notice of Annual General Meeting 5 5

F o rm of Pro x y A t t a c h e d

Definitions, Aw a rds and Brands Inside Back Cover

C O RE STRAT EGY

Through its service to an international customer base, AGI has

developed two world class skill sets:

- It is a low cost producer in hard currency terms, and

- It has world class design, technical and production

c a p a c i t y.

The global value added aluminium and glass fabrication market is

characterised by a fragmented supplier base serving localised

needs including climate and design style.

An opportunity exists to harness an understanding of these needs

on a global basis and to supply the appropriate solutions from a

low cost producer base.

This is our goal.

AGi Annual Report Doc 2 2002 11/15/02 1:10 PM Page 1

0 3

VA L UE ADDED STAT EMEN T

June 30 2 0 0 2 2 0 0 1R ’ 0 0 0 % R ’ 0 0 0 %

Wealth cre a t e dR e v e n u e 829 956 540 716Cost of goods and services net of other income 582 252 363 051

Value added 2 47 704 177 665I n t e rest re c e i v e d 5 48 1 4 224

253 185 1 0 0 181 889 1 0 0

Wealth distributedTo employees as salaries, wages and other benefits 1 30 139 86 516To providers of capital as intere s t 16 926 6 926To shareholders as dividends 12 706 10 646To outside share h o l d e r s ( 34 ) 8 5 1To government as taxation 24 550 20 509

1 84 287 7 3 125 448 6 9

Retained to develop future gro w t hD e p reciation and amortisation expense 23 608 15 586Retained earnings after dividend distribution 45 290 40 855

68 898 27 56 441 3 1

253 185 1 0 0 181 889 1 0 0

Note: The above amounts exclude the effects of value added taxation.

MONEY EXCHANGES WITH GOVERNMENTTa x a t i o nPaid to governments (direct taxes on income) 24 550 20 509Collected on behalf of, and paid over to governments :- Employees’ taxation 20 66 5 12 869- Regional services council levies 1 519 1 019- Unemployment fund, workmen’s compensation and 4 969 3 882

skills development levy- Withholding taxes 2 3 3 2 0 5- Net value added taxation (VAT ) 17 312 10 886

69 248 49 370

0 2

F IN A NCIAL HIGHL IGH T S


0 5

SEGMEN TAL RE V IEW AND RAT IO S

June 30 2 0 0 2 2 0 0 1 2 0 0 0 1 9 9 9

R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

G E O G R A P H I C A LR e v e n u e :- S o u t h e rn Africa 599 677 426 009 345 634 214 489- E u rope and the USA 2 30 279 114 707 96 154 78 230

829 956 540 716 441 788 292 719

Profit from operations:- S o u t h e rn Africa 71 99 1 54 617 40 734 15 716- E u rope and the USA 19 426 17 480 12 290 7 921

91 417 72 097 53 024 23 637

Number of employees:- S o u t h e rn Africa 1 367 1 177 1 012 7 9 0- E u rope and the USA 79 6 8 6 3 5 8

1 446 1 245 1 075 8 4 8

BUSINESS SEGMENTSR e v e n u e :E x t e rnal and inter-segment sales:Unbeneficiated pro d u c t s 477 453 294 960 226 645 213 460Value added products – Glass 1 48 631 131 930 102 714 88 838Value added products – Aluminium 441 626 264 962 156 779 50 453S e rv i c e s - - 19 800 -

G ross re v e n u e 1 067 710 691 852 505 938 352 751I n t e r-segment sales eliminated ( 2 37 754 ) (151 136) (64 150) (60 032)

829 956 540 716 441 788 292 719

S TATISTICS AND RAT I O S2 0 0 2 2 0 0 1 2 0 0 0 1 9 9 9 1 9 9 8 1 9 9 7

Share statisticsS h a res in issue ('000) 195 478 192 553 191 490 145 161 101 435# 101 435#Weighted average number of ord i n a ry 195 478 195 062 193 628 151 600 101 435 101 435s h a res in issue ('000)Basic earnings per ord i n a ry share (cents) 2 9 ,7 2 6 , 3 2 1 , 0 8 , 5 8 , 2 8 , 0Headline earnings per ord i n a ry share (cents) 3 3 , 3 2 8 , 4 2 1 , 1 1 2 , 3 8 , 2 8 , 0Dividend paid per ord i n a ry share (cents) 6 , 5 * 5 , 5 * 2 , 4 1 , 7 1 , 0 0 , 7Net asset value per ord i n a ry share (cents) 1 60 1 2 9 1 0 4 6 1 4 4 3 7Number of employees 1 446 1 245 1 075 8 4 8 5 8 9 5 7 6

Selected ratiosI n t e rest bearing borrowings to shareholders’ equity 30 , 8 % 1 1 , 8 % - 5 5 , 1 % 8 9 , 7 % 1 0 3 , 3 %R e t u rn on shareholders’ equity 1 8 , 6 % 2 0 , 7 % 2 0 , 4 % 1 4 , 6 % 1 8 , 6 % 2 1 , 5 %R e t u rn on shareholders’ equity 36 , 5 % 3 9 , 6 % 3 9 , 8 % 4 6 , 3 % 2 1 , 8 % 2 5 , 9 %(excluding intangibles)Headline earnings re t u rn on shareholders’ equity 2 0 , 9 % 2 2 , 3 % 2 0 , 5 % 2 1 , 0 % 1 8 , 6 % 2 1 , 5 %R e t u rn on total assets 9 , 4 % 1 1 , 8 % 1 1 , 9 % 6 , 1 % 6 , 3 % 6 , 2 %Revenue per employee (R’000) 574 4 3 4 4 1 1 3 4 5 2 9 1 2 8 2Total assets per employee (R’000) 4 2 8 3 4 9 3 1 9 2 5 0 2 2 2 2 2 8Operating marg i n 1 1 , 0 % 1 3 , 3 % 1 2 , 0 % 8 , 1 % 8 , 4 % 9 , 1 %C u rrent ratio (times) 1 , 4 1 , 5 1 , 6 1 , 1 1 , 3 1 , 3Quick ratio (times) 0 , 9 0 , 9 1 , 1 0 , 7 1 , 0 0 , 9

*Dividend declared in respect of year ended June 30, 2002 – 7, 5 (2001 : 6,5) cps (Refer Directors’ Report on page 28)

#After taking into account an 8:1 split of 12 679 425 ord i n a ry shares which were then in issue

0 4

SIX YEAR FIN A NCIAL RE V IE W

June 30 2002 2001 2000 1999 1998 1997

R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0 R ’ 0 0 0

ABRIDGED INCOME STAT E M E N T

R e v e n u e 829 956 540 716 441 788 292 719 171 518 162 655

Profit from operations 91 417 72 097 53 024 23 637 14 384 14 805

Net finance costs (11 44 5 ) (2 702) (2 165) (9 379) (5 872) (6 110)

Income from associates 2 540 3 466 2 276 1 723 2 509 5 9 4

Ta x a t i o n (24 550 ) (20 509) (12 082) (2 767) (1 904) ( 7 4 5 )

Minority interest and pre f e rence dividends 34 ( 9 6 3 ) ( 3 7 9 ) ( 3 0 0 ) ( 8 4 5 ) ( 4 8 4 )

Profit for the year 57 996 51 389 40 674 12 914 8 272 8 060

Headline operating profit 98 360 75 422 53 264 29 330 14 384 14 805

Headline earnings for the year 65 165 55 388 40 914 18 607 8 272 8 060

ABRIDGED BALANCE SHEET

N o n - c u rrent assets 262 294 181 853 146 028 91 916 35 693 27 804

C u rrent assets 3 56 832 252 631 196 819 120 085 94 822 103 356

Total assets 619 126 434 484 342 847 212 001 130 515 131 160

S h a reholders’ equity 312 407 248 348 199 259 88 446 44 579 37 430

Minority and pre f e rence shareholders’ intere s t 1 284 1 754 1 268 1 001 5 397 4 933

N o n - c u rrent liabilities 54 115 17 214 22 438 11 414 7 351 11 062

C u rrent liabilities 251 320 167 168 119 882 111 140 73 188 77 735

Total equity and liabilities 619 126 434 484 342 847 212 001 130 515 131 160

ABRIDGED CASH FLOW

Changes in working capital ( 36 127 ) (33 277) (22 654) (6 456) 1 795 (8 309)

Cash flow fro m 32 76 2 19 535 28 995 12 206 11 410 (5 522)

operating activities

Cash flow fro m ( 88 134 ) (25 474) (37 538) (58 847) (8 698) (2 524)

investing activities

Cash flow fro m 35 780 (23 724) 59 208 42 178 (3 844) ( 2 7 0 )

financing activities

Net (decrease)/increase in cash (19 59 2 ) (29 663) 50 665 (4 463) (1 132) (8 316)

and cash equivalents


0 7

C H A IRMAN’S STAT EMEN T c o n t i n u e d

In line with these objectives and the Group's export campaign, the focus for the year fell on:

- securing the foreign distribution infrastru c t u re and route to market for the Group's finished pro d u c t ;- developing a comprehensive range of products specifically for the international market; and- laying in the capacity necessary to satisfy the demand for the Group's product both domestically and from the

G roup's export campaign.

I n t e r n a t i o n a l

The attention of the international division during the year under review fell mainly on the "bedding down" of the Gulfstar acquisitionmade during the previous financial year when AGI increased its shareholding to a 75% interest. The acquisition secured a niche inthe enormous USA market with an initial focus on Florida where Gulfstar has a state-wide distribution infrastru c t u re. The motivationfor the acquisition was to adapt Gulfstar from a distributor of low margin commodity-type glass products to a highly successfuldistributor of value added high margin finished products. During the year, the focus at Gulfstar was the development and intro d u c t i o nof value added products in the form of tub enclosures, patio doors, value added glass products (including patio furn i t u re table tops)and aluminium profiles, and the improving of efficiencies. The importance of Gulfstar as AGI's "route to market" for aluminium andglass value added products in the USA dictated the acquisition, at the close of the year, of the outstanding 25% of Gulfstar which isnow a wholly-owned subsidiary and the acquisition of the holder of certain distribution rights for finished products to a customer baseamongst which are substantial USA home improvement re t a i l e r s .

The Group's finished product export campaign pro g ressed well during the year with most products on schedule. Patio/hurr i c a n edoor development was, however, hampered by the development of new legislative standards in the state of Florida, USA, in re s p e c tof which there was a lack of clarity. This delayed finalisation of product development which then coincided with the re s t ru c t u re of theG roup's re s e a rch and development division following the acquisition of Sheerline during the first half of the year. Sheerline is aleading edge aluminium door and window design house and component distributor. Sheerline has enhanced the Group's ability tore s e a rch, design and develop new products which meet the clearly identified needs of demanding new markets including the USA.

Given the significance of the Gro u p ’s USA expansion, focus remained there and on the introduction of finished product to the UK sothat further European development, including the establishment of a manufacturing operation in the Czech Republic was deferre d .

The net result of international operations for the year was significant revenue expansion arising from the Gulfstar acquisition whichalso contributed to a dilution of margins. This dilution will reverse as increased weightings of value added products impact uponGulfstar and European operations. Expansion in the USA and Scandinavia also contributed to abnormal overhead absorption whichwill abate as the volume in new branches incre a s e s .

D o m e s t i c

During the year under review two further glass toughening furnaces were installed to meet the internal demand of the Group bothdomestically and internationally in respect of the export campaign. This re p resents a trebling of capacity with benefits for overh e a dabsorption in the form of reduced unit costs as increased throughput "ramps up" with rising domestic demand and the draw of thee x p o rt campaign. Current tempering capacity utilisation is 100% on single shift allowing for a doubling of throughput and significantp e rcentage margin improvement. Further expansions of productive capacity undertaken during the year include an improvement tothe Gro u p ’s mirror manufacturing facility and the re-installation of the autoclave vinyl laminating facility acquired at the close of thep revious financial year. These developments contributed to manufacturing efficiency and improved quality.

In the distribution market, the installation of "high-tech" customised processing equipment improved both efficiency and quality.H o w e v e r, perf o rmance was constrained by poor demand for commodity-type product in the building sector, pre s s u re from import sand an inability to pass on certain supplier price increases all of which contributed to compressed margins in the Gro u p ’s domesticglass distribution business. Although distribution margins opened briefly during the early months of the second half, the significants t rengthening of the rand exchange rate during the period led to more competitive imports, once again compressing margins. Pro j e c twork was, however, vibrant with supplies to major projects including Didata, Johannesburg International Airport, Vodacom, MTN andNashua to name a few, leading to a buoyant perf o rm a n c e .

0 6

C H A IRMAN’S STAT EMEN T

I am pleased to re p o rt the continuation of our unbroken profit history and a further year of re c o rd earnings. The year under re v i e wwas characterised by infrastructural development in support of the Gro u p ’s sustainable growth strategy. This development re s u l t e din exceptional overhead absorption. It is there f o re creditable that, during the year under re v i e w, headline operating profit grew bym o re than 30% from R75,4 million to R98,4 million.

The year under review was not only a year of significant infrastructural development but also one of exceptional growth withconsolidated revenue increasing by more than 53% from R541 million to R830 million which re p resents an almost doubling inrevenue over the past two years and an almost threefold increase in revenue over the past three years.

In line with objectives, hard currency revenues almost doubled, in part owing to the Gulfstar acquisition in the second half of thep revious financial year. Also, the pro p o rtion of hard currency revenue to total revenue rose to 27% (2001: 22%).

The infrastructural development undertaken during the year brought with it a significant increase in interest bearing debt and theassociated finance costs which contained headline earnings per share growth at 17% with an increase from 28,4 cents to 33,3cents per share .

I m p o rtantly though, a headline earnings re t u rn on equity of 21% (2001: 22%) was achieved.

Both the infrastructural development and the growth achieved during the year under review flow from the Gro u p ’s sustainableg rowth strategy which has seen the Group expand from a manufacturer and distributor of glass products to a manufacturer andi n t e rnational distributor of aluminium and glass doors and windows and the associated components. This development led to achange in the Gro u p ’s name so as to better reflect two important drivers of the business, namely:

- an increase in hard currency business; and- an improvement in margins by focussing on value added pro d u c t s .

The name "Africa Glass" was no longer considered re p resentative of the Gro u p ’s activities so that the Group was rebranded "AGIndustries", a name which denotes neither a business confined geographically to African activities nor one limited in scope to glasso p e r a t i o n s .

S U S TAINABLE GROWTH STRAT E G Y

The ultimate goal of the strategy is sustained global growth. The strategy seeks to:- i m p rove volumes by capturing market share domestically and internationally; and- raise margins by focussing on value added and hard currency business and integrating vertically to exploit both

manufacturing and distribution margins, wherever possible, taking advantage of the Gro u p ’s "low-cost m a n u f a c t u rer" status.

In following this strategy, a guiding philosophy is that market share should first be captured before manufacture for that markets h a re is integrated.

The tactic followed in achieving this strategy has two clear focuses:- i n c reasing hard currency and value added business for improved revenues and margins as

p roductive efficiencies rise with manufacturing economies of scale; and- a policy of "manufacture in rands and sell in hard curre n c y " .

Both the sustainable growth strategy and the tactic employed to achieve that strategy are promoted by AGI’s strategic advantagein the unique combination of the following opport u n i t i e s :

- the enormous and highly fragmented international value added market which lends AGI a virtually unrestricted g rowth opport u n i t y ;

- A G I ’s unusual combination of glass and aluminium fabrication;- A G I ’s low manufacturing cost base in international term s ;- A G I ’s ownership of it’s own foreign distribution channels and the resulting foreign distribution margins; and- i n t e rnational growth in the use of glass and aluminium in architectural and other applications.

REVIEW OF 2002 GOALS

In terms of the Group's sustainable growth strategy, the following broad objectives were laid down for the year under re v i e w :- leverage group synergies to free "trapped" manufacturing and distribution marg i n s ;- i m p rove efficiencies; and- continue to globalise.


0 9


I n t e rn a t i o n a l l y, plans to achieve this include:- expansion of AGI’s finished product and component ranges distributed through owned foreign outlets;- g rowth in the volume of aluminium doors sold in international markets including shower doors already supplied to the

USA and UK markets, shower doors to be supplied to the European market and patio doors to be supplied to the USAmarket; and

- the establishment of additional international outlets in select economies where positive growth is anticipated and wheregood markets exist for AGI’s finished products and components alike, including Mauritius where an initiative is c u rrently under way.

D o m e s t i c a l l y, margin and volume growth is expected fro m :- a repetition of the good perf o rmance of AGI’s double glazed manufacturing;- the benefit of increased throughput as toughened glass production ramps up with increased demand;- a pro g ressing export campaign which will generate improved manufacturing pro f i t a b i l i t y ;- the introduction of new pro d u c t s ;- the increase in the volume of perf o rmance based products to West African, Mozambican and Mauritian markets;- additional customised order processing equipment to be commissioned during the first half of the forthcoming year

which will improve efficiency and quality and aims to achieve improved market share; and- a significant project order book already on hand for the forthcoming year.

The system of applying woodgrain and other decorative finishes to aluminium profiles pioneered by AGI’s aluminium division in SouthAfrica is to be expanded following the success of these coated products both in South Africa and in international markets. An upratedplant, which delivers improved product perf o rmance and significant production eff i c i e n c y, is to be commissioned later this year.F u rther growth should result from raised aluminium volumes with Sheerline being accounted for for the whole of the 2003 financialy e a r, from the export campaign and the improved prospects of the international project division.

Aside from the uprated Kal-Kote plant to be commissioned in the new year, no significant capital expenditure is forecast, the re q u i re dexpansion of productive capacity being largely complete.

With additional productive capacity on hand, we are now well positioned to capitalise on the strategic advantage the Group enjoysand there f o re further growth is expected.

C O R P O R ATE GOVERNANCE

AGI has remained committed to the principles set out in the King Report Code of Corporate Practice to which it subscribes and inb road compliance with which it continues to operate. AGI strives for continued pro g ress in the implementation of the Revised Code’sprinciples in existing businesses and in businesses recently acquired or established.

A P P R E C I AT I O N

AGI and its success rests on the foundation of its people and the environment in which they operate. Pre s e rving the commitment ofits people is crucial to AGI’s success and is provided for by an evaluation and re w a rd system for all members of staff. During the yearunder review 1 400 000 shares were made available to 3 employees under the share incentive scheme.

Two new board appointments were made during the course of the year, Clive Kalil, head of our Aluminium division, whose knowledgeand experience of this important part of AGI’s business is most valued and Garnet Twigg who recently accepted an appointment asa non-executive dire c t o r. Garnet is an experienced international management consultant and is trusted for his wisdom and soundc o u n s e l .

The year under review was particularly challenging for AGI, being one in which an extraord i n a ry contribution was asked of its staff toachieve the infrastructural development and expansion demanded by our sustainable growth strategy. To our staff and associates, oursenior executives and the board of directors, I express my sincere thanks for an exceptional eff o rt. To our customers, suppliers andinvestors, I extend my appreciation for the support they have given over the past year.

0 8


The acquisition of the undertaking of Sheerline by AGI’s aluminium division also contributed to improved project design capability.R e g a rding the aluminium division, healthy market share growth, generally, and a bouyant home improvement sector led to anexceptional perf o rmance. Also, the aluminium export factory commissioned in Natal during the first half of the year began tocontribute. Benefits from the standardisation of products and the rationalisation of glass inputs led to production efficiencies andi m p roved marg i n s .

During the year the Group Services IT Division again contributed usefully.

In Summary

Our goals to integrate vert i c a l l y, free "trapped" manufacturing and distribution margins and continue to globalise were achieved by:- the acquisition of the outstanding shares in Gulfstar;- the acquisition of Sheerline;- the foundations laid for the gro u p ’s export campaign; and- e fficiencies which will result from raised throughput and rationalisation of product ranges.

The year, however, has been one of infrastructural development in the form of new plant, the bedding down of acquisitions and newf o reign outlets and product development. All are necessary to achieve continued growth. The lower margins sustained during thec u rrent year, and arising in part from the expansion initiatives, should there f o re be viewed as an investment for the future which willgenerate higher margins as throughput rises and utilisation of the increased capacity occurs.

Given that the year under review was one of significant infrastructural development, the Gro u p ’s perf o rmance is considere dc re d i t a b l e .

FINANCIAL PERFORMANCE

The 53% increase in revenue achieved during the year is attributable primarily to an exceptional perf o rmance by the aluminiumdivision and the benefits of the Sheerline acquisition as well as a 91% increase in hard currency revenues to which Gulfstarc o n t r i b u t e d .

Headline operating margins fell, however, from 14% to 12% mainly as a result of trading margin pre s s u re in the domestic glassmarket, abnormal overhead absorption associated with infrastructural development and the dilutionary effect on trading margins ofthe Gulfstar acquisition.

Key attention was paid during the year to working capital management which resulted in working capital (trade receivables plusinventories less trade payables) falling significantly from 23% to 21% of revenue as both inventory and receivables turn o v e ri m p roved. Accord i n g l y, the significantly increased finance cost incurred during the year is attributable primarily to infrastru c t u r a ld e v e l o p m e n t .

The effect of the higher finance charge rate, an increased effective tax rate (owing to a greater STC impact) and a lower operatingm a rgin were, however, abated by significantly increased revenue, improved asset turnover and increased leverage to achieve aheadline re t u rn on equity of 21% (2001: 22%).

P R O S P E C T S

A G I ’s strategic advantage which flows from a virtually unrestricted growth opportunity in a market enjoying natural growth, theunusual combination of glass and aluminium fabrication, a low manufacturing cost base and ownership of foreign distributionchannels re p resents an exciting opport u n i t y. An adept implementation of AGI’s sustainable growth strategy will capatilise on thiso p p o rt u n i t y. This implementation re q u i res the ongoing expansion of AGI’s value added and hard currency business.


1 11 0

S T R AT EGIC FO C US


1 2 1 3

BOA RD OF DIRECTO RSBOA RD OF DIRECTO RS

Years in the industry 2 6Years with AGI 2 2Member of Audit Co m m i t t e eMember of Remuneration Co m m i t t e e

Alex Barrell's entire business career has been in the glass industry. Alexhas led the Group from modest beginnings in 1980 at 80 square metrep remises in Johannesburg to its current global form. Alex is widelytravelled and has countless associations throughout the international glassand aluminium industries. He is an incisive strategic thinker and employsan entre p reneurial management style.

Alex Anthony Barrell (51)EXECUTIVE CHAIRMAN

Jonathan Burrel Rosenberg (47)EXECUTIVE DIRECTORGROUP FINANCIAL DIRECTOR

B.Acc, M.Comm, CA (SA)Years in the industry 1 2Years with AGI 1 2

After qualifying as a Chart e red Accountant in1980 Jonathan Rosenberg became a member ofthe Johannesburg Stock Exchange where heremained a broking member for most of the1980's gaining extensive investment andcorporate financial experience. Since 1990 hehe has been the Group's Financial Dire c t o r. He isresponsible for the Group's corporate financeand corporate development functions.

Clive Paul Kalil (47)EXECUTIVE DIRECTORMANAGING DIRECTOR - ALUMINIUM DIVISION

Years in the industry 2 7Years associated with AGI 1 7

Clive Kalil, who heads the Gro u p ’s AluminiumDivision, served as the Managing Director of the Gro u p ’s wholly owned subsidiary DowseAluminium (Pty) Limited (trading as KALAluminium) since its inception in 1983. He bringsto the board a wealth of experience of thealuminium market, an increasingly import a n tfocus of the Gro u p .

Timothy Yorke Wo rthington (73)NON-EXECUTIVE DIRECTORC O N S U LTANT - GLASS INDUSTRY

Years in the industry 4 3Years with AGI 1 6

Timothy Wo rthington's entire business care e rhas been in the South African glass industry ofwhich he is re g a rded as a doyen. Havingmanaged the Group's Natal operations for manyyears, he now contributes his vast operationalexperience and his expert i s e .

Jackie Martingano (35)EXECUTIVE DIRECTORGROUP COMMERCIAL DIRECTOR

B. Compt. (Hons)Years in the industry 1 3Years with AGI 13

Jackie Martingano joined the Group in 1989after four years in commerce. She qualified whileemployed by the Group where she has heldsuccessive management positions in which shehas gained an intimate knowledge of all Gro u poperations. She is responsible for the Gro u p ' sfinance, information technology and intern a lc o n t ro l .

J e ff rey Charles Saville (55)EXECUTIVE DIRECTORMANAGING DIRECTOR - GLASS DIVISION

Years in the industry 3 3Years with AGI 1 7

J e ff rey Saville's entire business career has beenin the South African glass industry where he hass e rved as a managing director for more than 20years both prior to and during his time with theG roup. His associations within and experienceof the South African glass market make him aleading figure in the industry.

Michael John Edward Geldenhuys (41)EXECUTIVE DIRECTOR GROUP TREASURY DIRECTOR

B.Comm. (Hons)Years in the industry 5Years with AGI 5

Michael Geldenhuys' business career until hejoined the Group in 1997 was in banking wherehe achieved a senior management position andobtained commercial experience and specialisedknowledge of tre a s u ry and risk management. Heis responsible for the Group's tre a s u ry andhuman re s o u rces management.

Hymie Reuvin Levin (57)NON-EXECUTIVE DIRECTORATTORNEY AND DIRECTOR

B. Comm., LLB., LLM.,H . D i p . C o . L a w, H.Dip.Ta xYears associated with AGI 2 0Chairman of Audit Co m m i t t e eMember of Remuneration Co m m i t t e e

Hymie Levin, the Group's counsel, is ac o m m e rcial and tax attorney and a director ofseveral listed companies. His immense expert i s eand wide experience have contributed significantlyto the Group's pro g ress in the 20 years duringwhich he has been associated with it.

B ryan Eric Danoher (73)NON-EXECUTIVE DIRECTOR C O N S U LTANT - GLASS INDUSTRY

Years in the industry 4 7Years associated with AGI 1 7Member of Audit Co m m i t t e eChairman of Remuneration Co m m i t t e e

B ryan Danoher's entire working career has beenin the international glass industry, for many yearsas the managing director of a glassmanufacturing organisation. His knowledge andexperience of the industry is extensive and hiscontribution highly valued.

G a rnet Francis Despard Twigg (48)NON-EXECUTIVE DIRECTORMANAGEMENT CONSULTA N T

BA, LLBYears associated with AGI 1

G a rnet Twigg, who trained as an attorney inSouth Africa, has for the past 18 years beenengaged in corporate consulting in the UKfocussing on the optimisation of managemente ffectiveness, first with Coopers & Lybrand, and, more re c e n t l y, with Statumen. He brings to the board a wealth of experience and expert i s ewhich will be much valued in the company'si n t e rnational growth campaign.


1 5

O P ER AT IONAL RE V IE W

AGI’s operational structure reflects the emphasis on development of its’ international market with products

m a n u factured in South Africa. AGI’s primary segmental division is geographical. This is based on the divergent

economic drivers which guide the hard currency economies where AGI’s international development is focussed and

the South African economy where its value added finished products and components are manufa c t u r e d .

Ac c o r d i n g l y, the results of operations generating SA Rands are reported under "South African Operations" while

those generating hard currencies are reflected under "International Operations".

SOUTH AFRICAN OPERAT I O N S

During the year under review South African Operations contributed 73% of Group revenue (2001:78%) and 77% of operating pro f i t

(2001:77%). The fall in the pro p o rtion which South African operations contributed to total revenue is a reflection of the exceptional

g rowth in hard currency revenues rather than pedestrian South African growth, South African revenue having grown by 44% for the

year under review (2001:42%). The similarity in the contribution of South African operations to Group operating profit between the

year under review and the comparative period in the face of hard currency revenue growth is due, primarily, to a dilution in the

operating margin of International Operations.

Coinciding with the secondary segmental division which divides the AGI Group (that is including South African operations and

I n t e rnational Operations), into business generated from value added product and business generated from unbeneficiated product or

distribution-type operations, South African operations are re p o rted under "value added product" and "unbeneficiated product". "Va l u e

added product" includes all value added manufacture and the fabrication of both glass and aluminium products. "Unbeneficiated

p roduct" includes all South African wholesale distribution operations.

A G I ’s specialist project marketing team, which focusses on the specification of Group value added glass and aluminium products in

p roject developments, also forms part of South African operations, acting as a marketing division for both value added product and

unbeneficiated product. This team works in close association with the Gro u p ’s re s e a rch and development division which was

re s t ru c t u red following the acquisition of Sheerline during the first half of the year. Sheerline added aluminium design development

e x p e rtise to the team’s glass technical skills to form a unified glass and aluminium technical team which offers architects, quantity

s u rveyors, engineers and other contractors support on the technical specifications and advantages of AGI’s glass and aluminium

p roducts. The object is to secure specification of AGI’s product in contracts handled by those professionals. The success of this

team has been responsible for the execution of most major projects under development in South Africa during the past year including

Didata, Johannesburg International airport, Vodacom, MTN and Unilever in Durban to name a few. Import a n t l y, the team expanded its

horizons during the year securing international contracts among which was the LAPF Millenium Tower in Tanzania. The eff e c t i v e n e s s

of the team is further bourne out by the several substantial contracts, both South African and international, which have already been

s e c u red for the forthcoming year.

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O U T L E T S


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O P ER AT IONAL RE V IE W c o n t i n u e d

Vinyl LaminatesSimilar to liquid laminates except bonded by a poly-vinyl butryl ("PVB") interlayer by one of two pro c e s s e s :

- autoclave – an autoclave pre s s u re vessel is used to effect the bonding; or- non autoclave – a vacuum ring process is used to effect the bonding.

PVB Laminates have similar applications to liquid laminates with the advantage of improved utility where high perf o rm a n c ea rchitectural glass is laminated.

O p e r a t i o n sIn line with AGI’s strategy of expanding value added and hard currency businesses to achieve market share growth and impro v em a rgins, which strategy generated the "finished product export campaign", during the year productive capacity was substantiallye x p a n d e d .

Toughened safety glass manufacturing capacity was trebled by the commissioning of two new furnaces, one in Johannesburgalongside the Gro u p ’s existing furnace and a second new furnace in the We s t e rn Cape. This development has greatly enhanced theG ro u p ’s capacity to service both local and export markets timeously with a quality product. Overheads absorbed during thecommissioning process and the early months of manufacture, before utilisation of the additional capacity increased to more eff i c i e n tlevels, impacted negatively on operating margins, particularly during the second half when both plants were commissioned. All thre eplants are now operating at 100% of single shift capacity so that current throughput could be more than doubled thereby pro v i d i n gfor the increased demand expected domestically and from the Gro u p ’s export campaign. Increased throughput would markedly raisep roductive efficiency and, with it, operating marg i n s .

The SIG unit manufacturing facility, which manufactures only for customised orders and not for stocking purposes, was fully utilisedduring the year under review manufacturing products for a host of projects secured by AGI’s technical team.

During the year, the mirror manufacturing facility was uprated with the addition of a leading edge European silvering system whichi m p roves the efficiency of production and the quality of pro d u c t .

The autoclave laminating facility, acquired at the close of the previous financial year, was re-installed with enhancements to the linemaking way for more cost effective manufacture of higher volume quality pro d u c t s .

In a concerted marketing drive, new markets were developed with West Africa, Mozambique, Mauritius and Europe now acquiringvalue added products not previously in the range of products sold in those re g i o n s .

Pe r f o r m a n c eA 38% (2001:61%) increase in revenue, partly as a result of increased capacities, led to a 27% (2001:103%) increase in operatingp rofits reflecting the abnormal overhead absorption during a period of substantial infrastructural development.

Pr o s p e c t sAn improved perf o rmance is anticipated from toughened glass manufacture as the "finished product export campaign" gathersmomentum. The increased volumes will not only add to revenue but will abate the unit cost of manufacture as capacity utilisation risesso that improved margins are anticipated in the forthcoming and following years.

The sealed insulated glass unit manufacturing facility has a full order book of profitable products for projects generated by the glassand aluminium technical team. The benefits of an uprated silvering plant are expected to add to the contribution by the mirro rmanufacturing facility during the forthcoming year. A similar improvement is anticipated from the enhanced PVB autoclavemanufacturing facility for which the 2003 financial year will be its first full year of operation.

The added business of newly developed African, Indian Ocean and European markets is also expected to contribute positively to thef o rthcoming year.

In all, the benefits of improved utilisation of the expanded and uprated productive capacity installed during the year under re v i e w, newmarket opportunities established at the close of the financial year and the benefits of increased business flowing from a pro g re s s i n g"finished product export campaign" are expected to contribute to a sound perf o rmance for the forthcoming year.

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U N B E N E F I C I ATED GLASS

S t r u c t u r eThe division operates through comprehensively equipped distribution hubs which handle volume distribution and customised ord e r sincluding cutting, edge working (polishing and bevelling) and drilling through hubs located in Gauteng, We s t e rn Cape and Kwa-Zulu Natal and a national network of branch outlets.

O p e r a t i o n sDistribution operations experienced successive supplier price increases for commodity-type products and was affected by thevolatility of the rand exchange rate. Not all supplier price increases sustained during the early part of the year could be passed onwith the result of compressed margins. A brief respite at the beginning of the second half soon ebbed as a strengthening randexchange rate led to more competitive imports, once again compressing margins. The effects of subdued glass distributionbusiness in low margin commodity-type products which resulted from a softer building sector as reflected in the lower level ofdevelopment activity was, to some extent, countered by the division’s contribution in the distribution of product destined for pro j e c t swon by the Group together with a widening of the division’s product range.

During the period high-tech processing equipment was installed to improve the volume, efficiency and service of customised ord e r swhich business is diff e rentiated from general distribution by its more favourable margin. Further processing equipment is due forcommissioning during the first half of the forthcoming financial year.

Pe r f o r m a n c eDuring the year revenue increased by 13% (2001:23%) but increased market pre s s u re constrained margins and volumes leadingto a fall in the division’s pro f i t a b i l i t y. Given the circumstances prevailing in the market during the year, it is considered cre d i t a b l ethat the division remained pro f i t a b l e .

Pr o s p e c t sAlthough the wholesale distribution segment of the glass market is expected to remain competitive for the forthcoming year, somei m p rovement is anticipated from the processing equipment already installed and the further equipment to be installed whichp romises to weight the business flowing through the division more in favour of higher margin processed product. An improved, ifstill subdued, perf o rmance is, there f o re, anticipated from the division for the 2003 financial year.

VALUE ADDED GLASS

S t r u c t u r eThe main value added manufacturing facility is located in Denver, Johannesburg where toughened safety glass, mirrors, sealedinsulated glass units and vinyl lamination using the autoclave process occurs. Satellite glass manufacturing operations are locatedin the We s t e rn Cape at a dedicated toughened safety glass manufacturing facility and at AGI’s South African distribution hubs inGauteng, the We s t e rn Cape and Kwa-Zulu Natal where liquid resin laminate glass is manufacture d .

Value added glass products include:

Toughened Safety GlassM a n u f a c t u red in a tempering furnace, the product is some five times stronger than conventional glass and, if fracture d ,b reaks into small particles to prevent injury from shards. Main applications are architectural, in the automotive, white goodsand furn i t u re industries, and as the staple glass input for aluminium doors and windows.

M i r r o rA modern double curtain coat paint system manufactures mirror products to international standards for the furn i t u re andbuilding industries.

Sealed Insulated Glass Units (S.I.G. Units)Units comprising two pieces of glass with a dividing air gap fixed into a sealed insulated unit, these products perf o rme ffective sound and temperature insulation mainly in refrigeration and architectural applications.

Liquid LaminatesA resin interlayer bonds two sheets of glass for strength and security.


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O P ER AT IONAL RE V IEW c o n t i n u e d

F u rther development was, there f o re, confined to the establishment of a new Gulfstar branch in Miami and the acquisition, at the closeof the year under re v i e w, of the outstanding 25% shareholding in Gulfstar to constitute Gulfstar, by the year end, as a wholly-owneds u b s i d i a ry and the simultaneous acquisition of the holder of certain distribution rights.

USA OperationsC o n t rol of Gulfstar was acquired to secure a niche in the USA market, Gulfstar offering a statewide distribution infrastru c t u re inFlorida, one of the highest growth areas in the USA economy and one suited in many respects to product manufactured by AGI’sSouth African operations. The objective was to develop Gulfstar into a distributor of value added aluminium and glass finishedp roducts and components thereby raising margins, Gulfstar having been a distributor of low margin unbeneficiated products at thetime it fell under AGI control. The accounting for the full financial year of the Gulfstar operation which was acquired during the secondhalf of the previous financial year led to a dilution in operating margins. Gulfstar is in the process of transformation into a distributorof value added finished aluminium doors and windows and associated components. The focus for the year was, there f o re, thei n t roduction at Gulfstar of value added product, primarily aluminium and glass doors and their associated components and valueadded glass products including patio furn i t u re table-tops. Gulfstar’s value to AGI as it’s route to the USA market for its’ aluminiumand glass finished product as well as the increased value of Gulfstar expected to result from a pro g ressing "finished product exportcampaign" led to the acquisition of the outstanding shareholding at the close of the financial year and the acquisition of the holder ofc e rtain distribution rights for finished products to a customer base amongst which are substantial USA home improvement re t a i l e r s .

UK OperationsSome rationalisation in the business and a pro g ression towards value added product led to a satisfactory perf o rmance from the UKoperation. Little focus was placed on expanding this business until aluminium and glass finished product has been firmly establishedin this market.

European OperationsWith the emphasis on the Gro u p ’s USA expansion, the introduction of finished product to the UK market and a dull Euro p e a ne c o n o m y, development, among which the establishment of a manufacturing operation in Eastern Europe and further distribution outletsin southern Germany were possibilities, has been deferred. In the European division, where margin pre s s u re was experienced inG e rm a n y, emphasis was there f o re placed on the consolidation of the Scandinavian operation, established during the early part of theperiod under re v i e w, which is now approaching break-even volumes..

Agency OperationsAgain, these continued little changed for the year under review with satisfactory trade leading to a sound perf o rm a n c e .

Pe r f o r m a n c eDespite the events of September 11, 2001, a dull European economy and the abnormal cost absorption associated with theestablishment of new operations in Miami and Scandinavia, the division re t u rned a creditable perf o rmance with revenues incre a s i n g91% (2001:21%), in part, as a result of the Gulfstar acquisition. Operating profits also increased by a satisfactory 28% (2001:47%)despite limited benefit from the "finished product export campaign" which is expected to contribute significantly only from thef o rthcoming year.

Finished Product Export CampaignPatio and hurricane door development was hampered by new USA legislative standards introduced during the year under re v i e w. Thedevelopment and redesign of flexible door products suited to a wider range of applications in terms of the USA standards is nowcompleted. Other products, including tub enclosures and shower doors, are now on schedule.

Pr o s p e c t sThe enormous and fragmented international door and window market, which enjoys natural growth, offers AGI and its’ Intern a t i o n a lOperations in particular an almost boundless growth opport u n i t y. AGI’s low manufacturing cost base in international terms andownership of its’ own foreign distribution channels together with the unusual combination of glass and aluminium fabrication aff o rd ita strategic advantage for international development.

The laying in of productive capacity in terms of the staple value added glass input for aluminium and glass finished products, theexpansion of the aluminium division’s productive capacity concluded during the current financial year and the development of ane ffective export product range has positioned International Operations to take full advantage of this opportunity during the fort h c o m i n gy e a r. Accordingly a year of continued growth is anticipated.

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VALUE ADDED ALUMINIUM

S t r u c t u r eThe aluminium division is predominantly a fabricator of aluminium and glass doors and windows.

It is, however, supported by:- an aluminium extrusion operation;- a unique facility which applies woodgrain and other decorative finishes to aluminium profiles; and- since the acquisition of Sheerline, a leading edge aluminium door and window design house and component

d i s t r i b u t o r.

The division operates from seven outlets in Gauteng, three in the We s t e rn Cape, three in the Eastern Cape, three in Kwa-ZuluNatal, two in Mpumalanga, one in the Free State and one in Botswana. Both the domestic and commercial sectors of the buildingi n d u s t ry are serviced by the division which has special skills in flush glazing and curtain walling. The aluminium extrusion installationsupplies the Group and third party fabricators.

O p e r a t i o n sDuring the year market share growth, in which the window sector was notable, was achieved as expansion undertaken in thep revious financial year began to contribute positively.

Two key initiatives during the year were :- the development of new product for both domestic and export applications; and- the rationalisation of product and glass sizes, (a legacy from the two businesses which were combined to form the

division), the benefit of which is increased productivity and efficiencies including inventory containment.

New products developed during the year include tub enclosures for the North American market, shower doors now on sale in theUnited Kingdom, a high perf o rmance patio door with domestic and international applications including hurricane resistance and a face-lift of the domestic product range.

Keen demand, both domestically and intern a t i o n a l l y, for product finished with the unique "Kal-Kote", a decorative finish inwoodgrain and other alternatives, kept the facility operating at capacity for the year under review and sponsored the uprating ofthe facility to raise productive capacity, productive efficiency and product perf o rmance. The improved facility is to be commissionedduring November 2002.

Pe r f o r m a n c eThe focus on "bedding down" expansions in the previous financial year, together with the Sheerline acquisition, contributed to a67% (2001:69%) increase in aluminium division revenues for the period under re v i e w. Improved efficiencies and robust marg i n sled to a 79% (2001:103%) increase in operating profit for the year. In all, the perf o rmance is considered highly satisfactoryp a rticularly since the benefits of the Gro u p ’s "finished product export campaign" have yet to contribute meaningfully to thed i v i s i o n ’s perf o rm a n c e .

Pr o s p e c t sThe laying in of toughened safety glass capacity together with the development of competitive international products, includingp a t i o / h u rricane resistant doors, tub enclosures and shower doors, during the year under review establishes the foundation re q u i re dto propel the Gro u p ’s "finished product export campaign". As the campaign gathers further momentum so the volume of aluminiumfinished product will rise to develop continued growth for the division. Expansion in the division’s productive capacity, with theestablishment of export manufacturing facilities in Kwa-Zulu Natal and the We s t e rn Cape, equip the division to meet incre a s e ddemand from within and without the Group. Increased "Kal-Kote" capacity will allow the supply of significantly higher volumes thanp reviously possible both in finished product and component form. In all, continued growth is expected from the division for thef o rthcoming year.

I N T E R N ATIONAL OPERAT I O N S

"International Operations" accounts for all business generating hard currency earnings and includes both SouthAfrican export earnings and the earnings of businesses located outside of Southern Africa.

S t r u c t u r eThe focus of International Operations during the year under review was to "bed down" the acquisition made during the second halfof the previous financial year which led to Gulfstar being a 75% controlled subsidiary.


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