MONTEAGLE HOLDINGS SOCIETE ANONYME - ShareData · Chairman’s Review 8-9 Report of the Directors 10-12 Corporate Governance, Internal Financial Control and Directors’ Responsibilities

Directors and Directors of Group Subsidiaries 1-3

Shareholder Information 4

Results in Brief 5

Notice of Annual General Meeting 6-7

Chairman’s Review 8-9

Report of the Directors 10-12

Corporate Governance, Internal Financial Control and Directors’ Responsibilities 13

Consolidated Profit and Loss Account and Consolidated Statement of Recognised Gains and Losses 14

Consolidated Balance Sheet 15

Consolidated Cash Flow Statement 16

Notes to the Financial Statements 17-31

Financial Statements of the Parent Company 32

Notes to the Financial Statements of the Parent Company 33-35

Report of the Auditors 36

Report of the Commissaire 37

Financial Summary 38

Proxy Form enclosed

MONTEAGLE HOLDINGS SOCIETE ANONYME

CONTENTS

Directors of the Company

J.M. ROBOTHAM, OBE, FCA, MSI, Non-executive Chairman, age 68

Mr Robotham has been a Director of Monteagle since 1982 and is a member of theaudit and remuneration committees. He was appointed Non-executive Chairman in1996 and resides in the United Kingdom. He is a chartered accountant, a memberof the Securities Institute and associated with J.M. Finn & Co., a firm of Londonstockbrokers. He is a non-executive director of Falcon Investment Holdings S.A.and a number of listed English companies including London Finance & InvestmentGroup P.L.C., Marylebone Warwick Balfour Group Plc, and Western SelectionP.L.C.

A.R.C. BARCLAY, FCA, Non-executive, age 62

Mr Barclay was appointed a Director of the Company in 2000. He is a Fellow ofthe Institute of Chartered Accountants in England and Wales and was ChiefExecutive of City Group P.L.C., Monteagle’s Secretaries, from 1980 until hisretirement in October 1999. Over the last twenty years, he has had extensiveexperience of the management, administration and development of listedcompanies in Zimbabwe, South Africa, Luxembourg and the United Kingdom. Heis a non-executive director of Falcon Investment Holdings S.A.. He is also a non-executive director of Megalomedia plc and Western Selection P.L.C.

R.C. KERR, Non-executive, age 52

Mr. Kerr has been a Director of Monteagle since 1982 and is a member of the auditcommittee. He resides in Dublin and is qualified as a South African attorney,notary and conveyancer, as well as an English solicitor. He is a partner of WebberWentzel Bowens and a principal of the Maitland group. He is also a non-executivedirector of the Madeira Development Company (Sociedade de Desenvolvimentoda Madeira, S.A.), and of a number of investment funds. In recent years, he hasalso become a trustee of an Employee Share Incentive Plan of a public companyand a trustee of selected family trusts.

D.C. MARSHALL, Chief executive, age 57

Mr. Marshall has been a Director of Monteagle since 1982 and was appointedChief Executive in 1996. He resides in South Africa, where he has extensiveinterests in listed trading, financial and property companies. In recent years, he hastaken a leading role in the re-organisation and development of medium sized listedcompanies in the U.K. and overseas. He is the chairman of the board of FalconInvestment Holdings S.A and a non-executive director of Conafex Holdings S.A.He is also chairman of a number of listed English and South African companies,including Creston plc, London Finance & Investment Group P.L.C., MaryleboneWarwick Balfour Group Plc and Western Selection P.L.C. He is a non-executivedirector of Megalomedia plc and The Sanctuary Group PLC.

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MONTEAGLE HOLDINGS SOCIETE ANONYME(Incorporated in Luxembourg)

R.C. Luxembourg No. B 19600

Directors of Group subsidiaries

W.H. MARSHALL, age 32Mr Marshall was educated in South Africa and trained in the United Kingdom. Heis a director of a number of listed and non-listed operating and investmentcompanies in South Africa and the United Kingdom. He joined the Group in 1993and has extensive experience in international trade marketing, shipping and tradefinance related operations. In the Monteagle Group he is responsible for the furtherdevelopment and growth of regional and international business.

P.N. LONSDALE, age 69

Mr Lonsdale was born and educated in the United Kingdom and he joined theGroup in 1989. He is a Fellow of the Institute of Chartered Secretaries andAdministrators and is an executive director of the Group’s subsidiary companies,with investments in commercial properties situated both in California and SouthAfrica. He also serves as a non-executive director of the Group’s South Africanimport and financing subsidiaries.

E.J. BEALE, age 41

Mr Beale is the chief executive of City Group P.L.C., Monteagle’s secretaries, andjoined the Group in 1998. He is a chartered accountant and is a director of mostof the Group’s European subsidiaries and associated companies.

L.H. MARSHALL, age 30

Mr Marshall, who was educated in South Africa and trained in the UnitedKingdom, is a director of City Group P.L.C., Monteagle’s secretaries. He isresponsible for investment portfolio administration within the Group and is adirector of various Group subsidiary companies, including trade and financeservices in Europe and the United Kingdom.

D.A. GREER, age 44

Mr Greer has been a director of Group subsidiaries since 1995 having joined theGroup in 1989. He is responsible for the South African group secretariat, financialreporting and co-ordination of information technology and accounting.

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Notice of Meeting


O.H. MARSHALL, age 27

Mr Marshall was educated in South Africa and trained in the United Kingdom. Hejoined the group in 1998 and is responsible for the Group’s coffee export andmarketing operations.

C.P JOUSSE, age 53

Mr Jousse has been a Group director since 1980. He is the chief executive ofConafex Holdings S.A. and was largely responsible for the reorganisation of thatgroup’s agricultural interests. He resides in Zimbabwe and is a non-executivedirector of Falcon Investment Holdings S.A. and Ariston Holdings Limited and ofseveral companies outside the Group, which are listed on the Zimbabwe StockExchange.

A.D. BEATTIE, age 58

Mr. Beattie has been Managing Director of the Group’s gold mining division since1992. He resides in Zimbabwe and has had over 35 years’ experience with themining industry, including seven years as General Manager for the Lonrho WestMining Division. He also acts as a consulting engineer to a number of mines,including all those operated by Falcon and Olympus.

G.K. VACY-LYLE, age 40

Mr G.K. Vacy-Lyle joined the Group in 1985 and is managing director of L&GTool and Machinery Distributors. The company is an importer and wholesaledistributor of motor accessories, hand tools, hardware and air compressorsthroughout South Africa and neighbouring territories. He has extensive productknowledge and visits many countries in Europe and the Far East on a regular basisto source merchandise from international suppliers.

A.C. VACY-LYLE, age 44

Mr A.C. Vacy-Lyle joined and was appointed a director of the Group’s Australiansubsidiary in 1988. He is responsible for the development of the Group’s tool andmachinery importing division in Queensland.

T.R. MAARSCHALK, age 35

Mr Maarschalk joined the Group in 1990. He has established and is responsible fordeveloping the Group’s joint venture in South Africa with Abac Aria, Italy’s largestmanufacturer of air compressors.

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Notice of Meeting


Financial Calendar

Financial year end 30th September 2001Preliminary announcement of results 27th December 2001Annual General Meeting 26th March 2002 at 4.00 p.m.

6 rue Adolphe Fischer, L-1520, LuxembourgDividend for 2001 Payable on 3rd May 2002 to holders registered on

28th March 2002.Half year 31st March 2002Half-year results announced June 2002

Share Information

The Company has 6,536,543 shares in issue, of which 236,543 are currently held in treasury leaving 6,300,000 sharesin shareholders’ hands. The shares are listed on the following stock exchanges and the respective share prices as at22nd February 2002, the latest practical date, are shown.Luxembourg US$1.39London £1.10Johannesburg R16.10

Group OfficesLuxembourg (Registered Office) South Africa6 rue Adolphe Fischer, 11 Sunbury Park, La Lucia Ridge, La Lucia,L-1520, Luxembourg 4051, South Africa(PO Box 1361, L-1013, Luxembourg) (PO Box 4126, Durban, 4320)Tel: +352 40 25 05 1 Tel: +27 (0)31 566 7600

Zimbabwe United Kingdom215 Fife Avenue,/10th Street, 25 City Road,Harare (P.O. Box 2733, Harare) London, EC1Y 1BQTel: +263 4 704949 Tel: +44 (0)20 7448 8950

Registrars Listing and Paying AgentsMaitland Management Services S.A. Dexia-Banque Internationale à Luxembourg6 rue Adolphe Fischer, 69 route d’Esch,L-1520, Luxembourg, L-1470, Luxembourg(P.O. Box 1361, L-1013, Luxembourg)

Transfer AgentsEurope South AfricaC.I. Registrars Limited Mercantile Registrars LimitedCresta House, Alma Street, 11 Diagonal StreetLuton, Bedfordshire, Johannesburg 2001LU1 2PU, U.K. (P.O. Box 1053, Johannesburg, 2000)

Bankers Credit Suisse (Luxembourg) S.A. Ansbacher (Channel Islands) Limited56 Grand Rue, P.O. Box 393, 7-11 Britannia Place,L-1660, Luxembourg Bath Street, St. Helier,

Jersey, Channel Islands

Auditors and CommissaireFirst National Bank Deloitte & Touche S.ASmith/Field Street, Registered AuditorsDurban, 3 Route d’Arlon,South Africa L-8009, Strassen, Luxembourg4

Shareholder Information


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Results in BriefGroup

2001 2000US$000 US$000

Group revenue including share of associated companies 41,799 37,917

Share of revenue of associated companies (15,861) (12,866)––––––––– –––––––––

Group revenue 25,938 25,051––––––––– –––––––––

Profit on ordinary activities before tax and minority interests 9,402 3,290

Profit on ordinary activities after tax and minority interests 7,584 1,845

Earnings per share – US cents 120.4c 29.3c

Proposed dividend – US cents 8.5c 8.5c

Net assets per share attributable to shareholders US$5.37 US$5.20(including listed investments at market value)

Analysis of Assets, net of current liabilities, including listed investments at Market Valuebefore long term finance and minority interests

2001 – US$46.9 million 2000 – US$44.5 million

2001 2000Financed by US$000 US$000

Shareholders’ equity 33,817 32,741Minorities 9,640 7,895Long term finance 3,485 3,876

––––––––– –––––––––46,942 44,512

––––––––– –––––––––

TotalAnalysis of Shareholders Number % Shareholding %

1 – 499 508 71.45 84,858 1.35500 – 999 52 7.31 34,511 0.55

1,000 – 9,999 93 13.08 293,264 4.6510,000 – 49,999 42 5.91 824,702 13.0950,000 – 99,999 6 0.84 423,018 6.71

100,000 – 249,999 7 0.98 1,125,783 17.87250,000 – 999,999 2 0.28 1,477,101 23.45

Over 1,000,000 1 0.14 2,036,763 32.33–––––––––– –––––––––– –––––––––– ––––––––––

711 100.0 6,300,000 100.0–––––––––– –––––––––– –––––––––– ––––––––––

Results in Brief, Analysis of Net Assets and Analysis of Shareholders


South Africa US$4.8 million

ZimbabweUS$19.9 million

U.S.A., Europe andAustralia

US$22.2 millionSouth Africa

US$10.8 million

ZimbabweUS$16.7 million

U.S.A., Europe andAustralia

US$17.0 million

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NOTICE is hereby given that the twentieth ANNUAL GENERAL MEETING of Monteagle Holdings SociétéAnonyme will be held at the offices of Maitland & Co. S.àr.l., 6 rue Adolphe Fischer, L-1520, Luxembourg onTuesday 26th March 2002 at 4.00 p.m. for the following purposes:

1. To receive and adopt the reports of the Directors, Auditors and Commissaire for the year ended30th September 2001.

2. To receive and adopt the balance sheet of the Company at 30th September 2001 and the profit and loss accountfor the year ended on that date.

3. To receive and adopt the consolidated balance sheet of the Group at 30th September 2001 and the consolidatedprofit and loss account for the year ended on that date .

4. To consider and approve the transfer to legal reserve and appropriation of profits.

5. To accept with effect from 13th September 2001, the resignation of Pim Goldby S.C. as Auditors andCommissaire; to grant discharge to the Directors and Commissaire in respect of the execution of theirmandates to 30th September 2001 and 13th September 2001 respectively; to ratify the appointment with effectfrom 9th October 2001 of Deloitte & Touche SA, as Auditors and Commissaire, and to approve and accepttheir report for the year ended 30th September 2001.

6. To receive and act on the statutory nomination of the Directors, Auditors and Commissaire for a new term ofone year.

Special Business

7. To give, in terms of the Law of 10 August 1915 on commercial companies, as amended, and the ListingsRequirements of the Johannesburg Stock Exchange (“JSE”), the Board of Directors of the Company generalauthority to issue ordinary shares of US$1.50 each for cash as and when suitable situations arise, subject to thefollowing limitations:

– that this authority shall not extend beyond 15 (fifteen) months from the date of this annual general meetingand is renewable at the next annual general meeting;

– that issues in the aggregate in any one year may not exceed 10% of the number of shares of that class ofthe Company’s issued share capital, including instruments which are compulsorily convertible into sharesof that class, provided further that such issues shall not in aggregate in any three-year period exceed 15%of the Company’s issued share capital of that class, including instruments which are compulsorilyconvertible into shares of that class; and

– that in determining the price at which an issue of shares will be made in terms of this authority, themaximum discount permitted will be 10% of the weighted average traded price of the shares in question,as determined over the 30 days prior to the date that the price of the issue is determined or agreed by theDirectors.

By order of the Board,

CITY GROUP P.L.C.

Group Secretaries

6 rue Adolphe Fischer,

Luxembourg.

25th February 2002

Notice of Annual General Meeting

MONTEAGLE HOLDINGS SOCIETE ANONYMER.C. Luxembourg No. B19600

Notes:

(i) A proxy form is enclosed with this document. You are requested to complete and return the form whether ornot you intend to attend the Annual General Meeting.

(ii) In terms of Article 24.4 of the Company’s Articles of Incorporation a shareholder may appoint a proxy whoneed not be a shareholder of the Company. Any company being a shareholder of the Company may execute aform of proxy under the hand of a duly authorised officer.

(iii) To be effective, the form of proxy, duly completed, must arrive at the registered office of the Company not lessthan forty-eight hours before the time fixed for the meeting. Proxies sent to the office of a transfer agent forforwarding to the Company at shareholders’ risk must be received by the transfer agent not less than seven daysbefore the meeting.

CHANGE OF ADDRESSShareholders are requested to advise the European transfer agents, C.I. Registrars Limited, or the South Africantransfer agents, Mercantile Registrars Limited of any change of address. The addresses of the Transfer Agents canbe found on page 4.

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INTRODUCTION

Monteagle’s objective is to achieve capital growth over the long term. A number of exceptional and unrepeatablecircumstances have come together over the last 12 months to generate an extraordinarily pleasing set of results.

RESULTS

Group profit before exceptional items and tax was US$2,952,000 compared to US$1,342,000 in 2000, primarily dueto the increase in profits of our agriculture interests in Zimbabwe. Understandably, due to circumstances inZimbabwe, those results may not be repeatable in future years. Exceptional profits have increased to US$6,450,000(2000 - US$1,948,000) due to the sale of our portfolios of listed investments. The Group profit attributable toshareholders was US$7,584,000, which equates to earnings per share of 120.4 US cents (2000 - 29.3 US cents).

INVESTMENT PORTFOLIOS AND PROPERTY

The key to the exceptional level of earnings this year was the decision taken to sell all of our investments in shareslisted on the US and South African stock exchanges. This realised, as exceptional profits, the increase in the valueof investments over cost which had been built up over a number of years. The timing of our decision proved to becorrect and most investments were sold at satisfactory prices prior to the major decline in world stock markets. Sofar we have reinvested approximately one half of our cash balances in blue chip European, U.K. and U.S.A. stockswhich are currently showing a gain. We continue to monitor the above stock markets and will reinvest the balanceas opportunities occur.

The Group structure was changed during the year to enhance its value in hard currency, and to increase assetsavailable as security to the European banks that finance our international trading operations. We expect this tofacilitate future growth in our import and export businesses.

We strive to achieve real growth in net assets per share in dollars and are pleased to report that net assets, includinginvestments at market value and after deducting minority interests, have grown to US$33,817,000 (2000 –US$32,741,000). Of these US$17,940,000, US$2.85per share, (2000 – US$12,083,000, US$1.92 per share) areoutside Africa following the reorganisation of our Group structure.

The returns from the Group’s investment properties in California have continued to grow. Lower returns, however,were seen from our properties in South Africa where we had a reduction in occupancy rates.

DISTRIBUTION

The importing, exporting and distribution businesses showed mixed results. The turnover of our businesses tradingnon-perishable private label food products on an international basis has increased by over 90% with volumeincreases in both existing and new product lines. The higher contribution from these businesses more than offset adecline in the contribution from our South African tool and machinery import and distribution business whichexperienced a reduction in margins because of the devaluation of the Rand. Our smaller Australian tool andmachinery import and distribution business continues to grow both volumes and profits.

Chairman’s ReviewOF THE YEAR ENDED 30th SEPTEMBER 2001


ZIMBABWE

The commercial agriculture & horticulture interests held through Conafex and its associated company, AristonHoldings Limited, had a very successful year, despite the political and economic situation in Zimbabwe. Their profitcontribution before interest, exceptional items and tax more than doubled due to the principal export crops oftobacco, tea and flowers all performing well.

Conafex has continued to diversify out of Zimbabwe with the acquisition of minority stakes in a rooibos andhoneybush herbal tea producer in South Africa and a speciality tea packing business in the UK.

Our share of the losses incurred by our Zimbabwean gold mining interests, including our associate Falcon, wasUS$56,000 (2000 - US$118,000) as a result of the deteriorating operating environment, inflation of over 100% andthe continuing low gold price.

I would like to repeat the words (other than those in parenthesis) I used last year in respect of our Zimbabweanassets: “Your board has carefully considered the carrying value of our Zimbabwe assets and has decided to continueto incorporate them in the Group accounts at depreciated historic cost, translated at year end exchange rates [withthe exception of the valuation of freehold properties which have been held for many years]. It is, of course, notpossible, in present circumstances, to estimate a realistic realisable value of our Zimbabwean assets. However, mostof the products produced by our interests in Zimbabwe have selling prices denominated in hard currency and, to acertain extent, this improves their cashflows in local currency terms in the current uncertain political and economicclimate.” The carrying value of these net assets at 30th September 2001 after deducting minority interests hasincreased to US$13,471,000, US$2.14 per share, (2000 - US$12,132,000, US$1.93 per share) reflecting theundistributed profits of our farming interests.

DESMOND VACY-LYLE

I am very sad to report the death of Des Vacy-Lyle in October, after the end of our financial year. Des wasmanaging director of our subsidiary company, L & G Tool and Machinery Distributors Limited in Durban. Hiscompany was a continuous contributor to our profits and I would like to record the large contribution he made toour group and his many years of loyal and devoted service to the Group. L & G is now run by his son, Grant, whowill continue to drive the company forward. Our condolences go to Des’s wife and his family.

DIVIDEND

We regard the hard currency cash flow from our investments to Luxembourg as a crucial issue, particularly whenconsidering the level of dividend to recommend to shareholders. The dividend is being maintained at 8.5 US centsper share for 2001 because of the exceptional results for the year, despite limited cash flows received from oursubsidiaries. The uncertainty over the level of future remittances from our interests in southern Africa due tocurrency weaknesses and the political situation means that we cannot expect to be able to maintain the dividend atthe current level in 2002. Our budgets indicate that shareholders should expect approximately 5.0 US cents as nextyear’s dividend.

We are confident that we can capitalise on our strong balance sheet in future years now that we have increased ournet assets outside Africa. All of our divisions, subsidiaries and associates, with the exception of gold mining, haveexperienced a good first quarter and we are, therefore, optimistic for the year as a whole.

J.M. ROBOTHAM25th February 2001 Chairman

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The Directors submit their report and the audited financial statements for the year ended 30th September 2001.

PRINCIPAL ACTIVITIES

The Company is incorporated as a société anonyme in the Grand Duchy of Luxembourg with financial holdingcompany status. Its activities in Luxembourg comprise the central supervision and control of the Group’sinvestments in its operating subsidiaries and the administration of a general investment portfolio. The Company’sshares are listed on the Luxembourg, London and Johannesburg Stock Exchanges.

The Group owns commercial properties in the United States of America, and in Australia it operates as a specialistimporter and distributor of hand tools and machinery.

In South Africa the Group owns and manages multi-tenanted rent producing properties and operates tradingbusinesses involved in the importation and distribution of hand tools, machinery and non-perishable foodproducts.

Our listed subsidiary, Conafex Holdings S.A. (“Conafex”), holds the Group’s agricultural interests through ZimcorLimited and their associated company, Ariston Holdings Limited, which is a large scale tea, coffee, flower andmacadamia nut producer. Conafex also has interests in tea marketing and distribution.

The Group has interests in gold mining directly through its subsidiary, Olympus Gold Mines Limited (“Olympus”)and in Falcon Gold Zimbabwe Limited through its listed associated company, Falcon Investment Holdings S.A.(“Falcon”).

OPERATING REVIEW

The Group profit, after tax and minority interests, was US$7,584,000 compared to US$1,845,000 for the previousyear, giving earnings per share of 120.4 US cents per share compared to 29.3 US cents in 2000. A detailed reviewof the Group’s operations is made in the Chairman’s Review. A detailed analysis of the Group’s operations is setout in note 3 on pages 19 and 20.

EXCEPTIONAL ITEMS

Exceptional items include surpluses on the disposal of tangible fixed assets and investments, and provisions againstinvestments. Details are set out in Note 5 on page 21.

DIVIDEND

A dividend of 8.5 US cents per share for the year ended 30th September 2001 (2000 – 8.5 US cents) is recommendedto be paid on 3rd May 2002, to those shareholders registered at the close of business on 28th March 2002.

DIRECTORSA list of the present Directors of the Company is shown on page 1.

In accordance with the Articles of Incorporation, all of the Directors retire at the forthcoming Annual GeneralMeeting and stand for re-election.

Report of the DirectorsFOR THE YEAR ENDED 30th SEPTEMBER 2001


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The share interests of the Directors who held office during the year were as follows:

30th September 2001 30th September 2000Beneficial Non-beneficial Options Beneficial Non-beneficial Options

J.M. Robotham 8,000 726,061* – 8,000 698,852* –D.C. Marshall 1,031,800 2,063,600* 457,559 1,031,800 2,063,600* 457,559R.C. Kerr 5,000 – – 5,000 – –A.R.C. Barclay – – – – – –

*These non-beneficial holdings arise, wholly or partly, because the individuals concerned are also directors ortrustees of entities that hold shares in Monteagle.

As at 30th September 2001, 653,651 (2000 – 653,651) shares were reserved against the exercise of options at theprices shown. Options are exerciseable at any time up to the twelfth anniversary of the date of grant, at which timethey expire. The option holders have agreed that they will exercise their options at the greater of the exercise priceor the nominal value of each share, which is US$1.50.

Date of grant Expiry date No. granted Exercise price21st September 1990 20th September 2002 381,910 US$1.78629th April 1991 28th April 2003 210,051 US$1.507th May 1991 6th May 2003 19,444 US$1.5011th May 1992 10th May 2004 42,246 US$1.50

There are no contracts of service with any of the directors.

The directors do not beneficially own any shares in subsidiary companies, with the exception of Conafex, details ofwhich are given below:

30th September 2001 1st October 2000Beneficial Non-beneficial Beneficial Non-beneficial

J.M. Robotham 5,065 5,333* 6,860 53,333*D.C. Marshall 86,177 172,354* 86,177 172,354*R.C. Kerr 5,000 – 5,000 –A.R.C. Barclay – – – –

*These non-beneficial holdings arise, wholly or partly, because the individuals concerned were also directors ortrustees of entities that hold shares in Conafex.

There were no changes in directors’ interests between 30th September 2001 and the date of this report.

SUBSTANTIAL INTERESTS

At the date of this report, the following holdings represented 5% and over of the issued share capital of theCompany:

Shares %Hambros Bank (Nominees) Limited 2,036,763 31.2Registered Offices Limited 726,061 11.1

These holdings are all included in Mr. D.C. Marshall’s beneficial and non-beneficial interests shown above.

The Company has not been notified as required by Luxembourg law, of any other shareholdings that exceeded orfell below the thresholds of 10%, 20%, 33.33%, 50% or 66.66% in the capital of the Company.

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Report of the Directors (continued)FOR THE YEAR ENDED 30th SEPTEMBER 2001


AUDITORS AND COMMISSAIREDuring the year under review the Company’s auditors changed. Pim Goldby S.C., who had served as Auditors andCommissaire of your Company from incorporation, resigned on 13th September 2001. Subsequently, on9th October 2001, Deloitte & Touche SA, formally took over this role.

This change occurred because during the year Deloitte & Touche S.A. completed the absorption of the clientele ofits affiliated firm, Pim Goldby S.C., and assumed the audit mandate for the Company. For several years, Deloitte& Touche S.A. has had a financial interest in Pim Goldby S.C. and has supervised the quality of audits carried byPim Goldby S.C. As a result, this change is substantially one of form rather than substance.

Luxembourg law requires shareholders to deal formally with the technicality of acceptance of the resignation andthe appointment of the Auditor and Commissaire. This includes an appropriate discharge of the retiring Auditorsand Commissaire, and the appointment of a successor. Accordingly, resolution 5, as set out in the Notice ofMeeting on page 6 will be proposed, to effect these changes:

STRATESTRATE, (Share Transactions Totally Electronic), is a system that has been introduced by the Johannesburg StockExchange (“the JSE”) which allows the dematerialisation of share certificates for JSE purposes. The Company’sshares were transferred to STRATE on 18th December 2001. A letter has been sent to shareholders on the SouthAfrican branch of the Company’s share register, setting out in detail further information relating to STRATE andhow it may affect them. Shareholders on the European and Zimbabwean branches of the Company’s share register,who should not be affected, were not sent this letter.

ANNUAL GENERAL MEETINGAccording to the Company’s Articles of Incorporation (“Articles”), the Annual General Meeting of Shareholder’s(“AGM”) is required to be held on the last Friday in the month of March. The Articles further state that if theAGM cannot take place on that date, it should take place on the first preceding day. Because Friday 29th March2002 is Good Friday, the AGM should take place on Thursday 28th March 2002. However, it was considered thatthis date would be inconvenient to shareholders and it has been decided to bring forward the meeting. Accordinglythe Annual General Meeting will take place on Tuesday 26th March 2002 at 4.00 p.m. at the registered office of theCompany, 6 rue Adolphe Fischer, L-1520, Luxembourg.

SHARE PREMIUM ACCOUNTFollowing shareholder approval at the Annual General Meeting held on 30th March 2001, the balance of the SharePremium account of US$2,411,000 has been transferred to the Profit and Loss Account. This action is inaccordance with Luxembourg law and was made to cover the write down of the Group’s investment in FalconInvestment Holdings S.A.

ARTICLES OF INCORPORATIONYour board proposes that in terms of the Law of 10 August 1915 on commercial companies, as amended, and theListings Requirements of the Johannesburg Stock Exchange (“JSE”), the board of Directors of the Company begiven general authority to issue ordinary shares of US$ 1.50 for cash as and when suitable situations arise, subjectto the limitations as set out in resolution 7 on the Notice of Meeting on page 6.

By Order of the Board

CITY GROUP PLCGroup Secretaries

25th February 2001

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CORPORATE GOVERNANCEThe Directors have reviewed the Company’s compliance with the requirements of the King Report on CorporateGovernance, which applies to all companies listed on the Johannesburg Stock Exchange.

The Directors have adopted procedures within the context of the Monteagle Group and the financial and humanresources currently available to the Group.

The Board comprises Mr J.M. Robotham, the Chairman, Mr R.C. Kerr, Mr A.R.C. Barclay who are all non-executive Directors, and Mr D.C. Marshall, the Chief Executive officer of the Group. The roles of Chairman andChief Executive are separated. The Audit Committee comprises Mr Robotham and Mr Kerr and their report oninternal financial control is set out below. Mr Robotham and Mr Barclay form the Remuneration Committee, whichmeets as required and is responsible for decisions on remuneration for Directors and senior executives of theGroup. Details of the Directors’ interests in the Company are given in the Directors’ Report on pages 10 to 12 anddetails of Directors’ remuneration are set out on page 21 in note 4 to the accounts.

The Board meets regularly and through an executive committee retains full and effective control over the Group.The nomination of Directors is a matter for the entire Board and there is therefore no nomination committee. EachDirector is required to retire every year in accordance with the Articles of Incorporation and Luxembourg law andre-appointment is not automatic.

INTERNAL FINANCIAL CONTROLThe Group’s system of internal financial control is established to provide the safeguarding of the Group’s assets,the maintenance of proper accounting records and the reliability of financial information. Such a system of controlcan provide only reasonable and not absolute assurance against material misstatement or loss. Procedures areestablished which are designed to provide an effective system of internal financial control including the segregationof duties and management authorisation and review. In addition the Company safeguards its interests in the Groupby appointing Directors to the boards of the subsidiary and associated companies.

The Audit Committee meets periodically to review accounting, auditing, internal control and related matters of theGroup. Nothing has come to the attention of the Directors to indicate that any material breakdown in thefunctioning of the controls, procedures and systems has occurred during the year under review.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ACCOUNTSThe Directors of the Company are responsible for the preparation, integrity and objectivity of the financialstatements for each financial period which give a true and fair view of the state of affairs of the Company and ofthe Group at the end of the financial period and of the respective results for that period. The Directors considerthat appropriate accounting policies have been used and applied consistently, reasonable and prudent judgementshave been made and accounting standards applicable to the operations of the Company and of the Group havebeen followed.

The Directors are responsible for maintaining accounting records in accordance with Luxembourg law, asamended, and have general responsibility for taking such steps as are reasonably open to them to safeguard theassets of the Company, and detect and prevent fraud and other irregularities.

Consolidated Profit and Loss AccountFOR THE YEAR ENDED 30th SEPTEMBER


14

Notes 2001 2000US$000 US$000

Group revenue including share of associated companies 41,799 37,917Less share of revenue of associated companies (15,861) (12,866)

––––––––– –––––––––Group revenue 3 25,938 25,051Operating costs (24,155) (23,651)

––––––––– –––––––––Operating profit 3 & 4 1,783 1,400Share of associated companies results 2,052 616Income from investments – dividends 317 435

– interest 294 200Interest paid and similar charges (1,494) (1,309)

––––––––– –––––––––Profit on ordinary activities before exceptional items and tax 2,952 1,342Exceptional items 5 6,450 1,948

––––––––– –––––––––Profit before tax and minority interests 9,402 3,290Taxation 6 (691) (446)

––––––––– –––––––––Profit after tax before minority interests 8,711 2,844Minority interests (1,127) (999)

––––––––– –––––––––Profit attributable to shareholders of the Group 7,584 1,845

––––––––– –––––––––Basic earnings per share US cents 7 120.4c 29.3cFully diluted earnings per share US cents 7 120.4c 28.4cHeadline earnings per share US cents 7 24.0c 6.9c

Consolidated Statement of Recognised Gains and Losses

2001 2000US$000 US$000

Exchange differences on translation of the financial statements offoreign entities (316) (4,030)

Charge in interest in subsidiaries (217) –Group share of surplus on revaluation of properties – 2,630

––––––––– –––––––––Net loss not recognised in the income statement (533) (1,400)Dividend paid for the previous year (536) (536)Net profit for the period 7,584 1,845

––––––––– –––––––––Total recognised profits/(losses) and increase/(decrease) in shareholders’ funds 6,515 (91)

Shareholders’ funds brought forward 25,136 25,227––––––––– –––––––––

Shareholders’ funds carried forward 31,651 25,136––––––––– –––––––––

The notes on pages 17 to 31 form part of these financial statements.

Consolidated Balance SheetAT 30th SEPTEMBER


15

Notes 2001 2000US$000 US$000

AssetsNon current assetsProperty, plant and equipment 9 20,233 21,633Investments 10 14,645 17,391

––––––––– –––––––––34,878 39,024

––––––––– –––––––––Current assetsInventories 11 7,066 5,176Accounts receivable 12 4,944 4,118Cash and bank balances 8,083 1,493

––––––––– –––––––––20,093 10,787

Current liabilitiesAccounts payable (falling due within one year) 13(a) (8,618) (10,250)

––––––––– –––––––––Net current assets 11,475 537

––––––––– –––––––––Total assets less current liabilities 46,353 39,561

––––––––– –––––––––

Non current liabilitiesAccounts payable (falling due after more than one year) 13(b) (3,485) (3,876)Deferred taxation 14 (2,636) (2,654)

––––––––– –––––––––(6,121) (6,530)

––––––––– –––––––––40,232 33,031

––––––––– –––––––––Capital and reservesCalled up share capital (note (d) page 34) 9,450 9,450Share premium account – 2,411Other reserves 15 6,133 6,754Retained earnings 16 16,068 6,521

––––––––– –––––––––Shareholders’ funds 31,651 25,136

Minority interests 8,581 7,895––––––––– –––––––––

40,232 33,031––––––––– –––––––––

Approved by the Board on 25th February 2001

J.M. ROBOTHAMChairman

DirectorsD.C. MARSHALLChief Executive

The notes on pages 17 to 31 and note (d) on page 34 form part of these financial statements.

Consolidated Cash Flow StatementFOR THE YEAR ENDED 30th SEPTEMBER


16

Notes 2001 2000US$000 US$000

Operating activitiesCash generated from operations 17(a) 1,802 51Interest paid (890) (1,309)Taxation paid (604) (520)

––––––––– –––––––––Net cash inflow/(outflow) from operating activities 308 (1,778)

––––––––– –––––––––

Investment activitiesPurchase of tangible fixed assets (458) (1,025)Purchase of investments (3,405) (3,005)Disposal of tangible fixed assets 19 1,430Disposal of investments 13,946 4,259Interest received and other investment income 611 635Dividends received from associates 297 227

––––––––– –––––––––Net cash inflow from investment activities 11,010 2,521

––––––––– –––––––––Net cash inflow before financing 11,318 743

––––––––– –––––––––

Financing activitiesNet (decrease)/increase in long term debt 17(e) (245) 235Foreign exchange cost of subsidiary’s dividend (610) –Dividend paid – group (536) (536)

– minority shareholders (170) (76)––––––––– –––––––––

Net cash outflow from financing activities (1,561) (377)––––––––– –––––––––

Net decrease in debt 9,757 366Net debt at 1st October (2,750) (3,487)Effect of foreign exchange rate changes 381 371

––––––––– –––––––––Net funds/(debt) at 30th September 17(c) 7,388 (2,750)

––––––––– –––––––––

The notes on pages 17 to 31 form part of these financial statements.

Notes to the Financial StatementsFOR THE YEAR ENDED 30th SEPTEMBER 2001


17

1. GENERAL

The Company is incorporated as a société anonyme, with financial holding company status under the Law of31st July 1929, as amended, in the Grand Duchy of Luxembourg. In view of the international nature of the Group’soperations, and as permitted by Luxembourg law, the amounts shown in these financial statements are presented inUnited States dollars.

2. ACCOUNTING POLICIES

The principal accounting policies of the Group, which are set out below have been applied consistently and complywith International Accounting Standards in all respects, except as set out in note 22, and with Luxembourg legalrequirements, except for the revaluation of certain fixed assets as set out in note 9.

(a) Basis of preparationThe consolidated financial statements are prepared under the historical cost convention adjusted for therevaluation of certain fixed tangible assets and on the going concern basis.

(b) Basis of ConsolidationThe consolidated accounts incorporate audited accounts of the Company and its subsidiary undertakings (allof which are companies), being those companies in which the Group, directly or indirectly, has an interest ofmore than one half of the voting rights and is able to exercise control over the operations. Separate disclosureis made of minority interests. All significant intercompany transactions and balances between group companiesare eliminated on consolidation.The results of subsidiaries acquired during the year are included from the date of acquisition and for thosesubsidiaries disposed of during the year up to the date of disposal. On acquisition, the purchase considerationis allocated over the fair values of net tangible assets. Where a group company transacts with an associate of theGroup, unrealised profits and losses are eliminated to the extent of the Group’s interest in the relevant associate,except where unrealised losses provide evidence of an impairment of the asset transferred.

(c) Associated CompaniesAn associated company is one in which the Group’s interest is considered to be long term, is substantial andwhich the Group does not control but over which it is able to exercise a significant influence, having due regardto the disposition of the other shareholdings.The consolidated profit and loss account includes the Group’s share of the results of associates (equityaccounting). The results of associates acquired during the year are included from the date of acquisition. Theresults of associates disposed of during the year are included up to the date of disposal. The carrying value ofassociates in the consolidated balance sheet comprises the fair value on acquisition plus the Group’s share ofpost acquisition undistributed reserves and revaluations of fixed assets of associates. Provision is made againstcost, when in the opinion of the Directors, there has been a permanent decline in value.

(d) RevenueRevenue comprises the value receivable for the sale of goods, farm produce, livestock, gold bullion, services andproperty. Revenue is stated after eliminating sales within the Group.

(e) Depreciation and RevaluationDepreciation has been calculated to write off the cost, less any expected residual value, of fixed assets over theiruseful lives. The rates of depreciation are shown in note 9. Depreciation is not provided on freehold land andbuildings held as investment properties as the Directors are of the opinion that market values are moresignificant than depreciation. All investment property maintenance and running costs are charged againstrevenue in the year that they occur. These properties are revalued on a rolling basis at not more than five yearintervals. Any surplus on revaluation in excess of any deficit previously written off in respect of that property istaken to revaluation reserve, any excess of deficits arising over existing related revaluation reserves are expensed.On disposal of revalued assets, amounts in revaluation and other reserves relating to that asset are transferredto retained earnings.

(f) InvestmentsListed investments are stated at the lower of cost less amounts written off, and market value. Unlistedinvestments are stated at cost less amounts written off, where in the opinion of the Directors, a permanentdecline in value has arisen.Gains and losses on disposal of investments are included as exceptional items in the profit and loss account.

18

ACCOUNTING POLICIES (continued)

(g) InventoriesInventories are stated at the lower of cost and net realisable value. Cost is determined on a first in first outmethod or the average cost for raw materials, which includes stores, tillages and merchandise. Net realisablevalue is the estimated selling price in the ordinary course of business, less completion and selling costs. Estatebred livestock is carried at standard value, which is substantially below estimated realisable value and purchasedlivestock is carried at cost.

(h) TaxationTax payable on distributions to the Company from the retained earnings of subsidiaries is provided for wherethere is a current intention to remit such earnings.Deferred taxation is provided at current rates using the balance sheet liability method. Full provision is madefor all temporary differences between the taxation base of assets and the liabilities and their balance sheetcarrying values. Assets are not raised in respect of deferred taxation on assessed losses unless it is probable thatfuture taxable income will be available against which the deferred tax asset can be realised in the foreseeablefuture.

(i) LeasesWhere the substance of a lease is a financing arrangement, the asset and related obligation are respectivelyaccounted for as a fixed asset and as a current or long term liability. The asset is depreciated in accordance withthe group policy, over the lease period, and finance costs are charged to income in relation to the outstandingliability throughout the lease period.The costs of leasing other assets are charged to income as they occur.

(j) Pension ObligationsContributions to Group pension schemes are determined by independent qualified actuaries on the projectedunit credit method and are charged to profit and loss account so as to spread the cost over employees’ workinglives with the Group. Contributions to pensions provided for other employees, through various GovernmentSchemes and other money purchase schemes to which the group has no responsibility for unfunded liabilities.All contributions are charged to profit and loss account in the year to which they relate.

(k) Foreign CurrenciesAll exchange gains and losses on settlement of foreign currency transactions or the translation of monetaryassets and liabilities at year end exchange rates are included in the profit and loss account of the relevant Groupcompany.On consolidation, profit and loss accounts of companies expressed in a currency other than United Statesdollars are translated at average rates of exchange and balance sheets are translated at the rates of exchange atthe end of the year.Differences on translation arising in changes in the United States dollar value of overseas net assets held at thebeginning of the accounting period to that at the end of the period are shown as a movement on reserves. Theexchange loss or profit arising from the difference in rates used for profit and loss and balance sheet purposesare also taken to reserves.The rates used are: US$1 =

Profit & Loss Account Balance Sheet2001 2000 2001 2000

Australia – Aus$ 1.934 1.667 2.026 1.847South Africa – Rand 8.015 6.563 9.008 7.221United Kingdom – £ 0.694 0.642 0.680 0.676Zimbabwe – Z$ 55.000 40.210 55.000 53.000

The official exchange rate for the Zimbabwe dollar has been used. The unofficial or parallel exchange rate hasvaried considerably from the official rate, but there are significant distortions in the unofficial foreign exchangemarket and we believe that use of the unofficial exchange rate would not enhance the value of these accountsfor shareholders and other users. This may result in certain assets and liabilities not being realised or settled atthe official rate of exchange.

Notes to the Financial Statements (continued)FOR THE YEAR ENDED 30th SEPTEMBER 2001


ACCOUNTING POLICIES (continued)

(l) FundsFor the purposes of the cash flow statement, funds comprise cash in hand, deposits held at call with banks, andinvestments in money market instruments net of bank overdrafts. In the balance sheet, bank overdrafts areincluded in accounts payable.

(m) Financial instrumentsFinancial AssetsThe principal financial assets are the investments in associates, cash and bank balances and the accountsreceivable. The latter two are stated in their nominal value. Investments in associates are stated in accordancewith accounting policy note 2(c).Financial LiabilitiesFinancial Liabilities are classified according to the substance of the contractual agreements entered into. Theprincipal financial liabilities are accounts payable.

3. SEGMENTAL REPORTING

Primary reporting format – business segmentsThe Group is organised on a worldwide basis into four main business segments:

Import and distribution tool import and distribution businesses in South Africa and Australia, and a non-perishable food import business in South Africa.

Farming commercial agriculture and horticulture interests in Zimbabwe held through Conafexand our associated company, Ariston.

Gold Mining four gold mines in Zimbabwe. One is owned 33.33% by the Group and 66.67% by ourassociated company, Falcon, and three are owned by Falcon.

Property investment properties in California and South Africa.

Other operations of the Group mainly comprise transactions relating to the share portfolios, profits on disposals oftangible and intangible fixed assets and local head office costs.

There are no sales or other transactions between business segments. Segment assets consist of property, plant andequipment, inventories and receivables and exclude cash balances. Segment liabilities are operating liabilities andexclude items such as taxation and borrowings. Capital expenditure comprises additions to property, plant andequipment.

Unallocated assets and liabilities are cash balances, taxation and borrowings.

2001 2000Segmental analysis of results US$000 US$000

Revenue Result Revenue Result

Import and distribution 16,874 1,064 15,704 851Farming 5,100 309 5,188 401Gold mining 2,215 432 2,042 346Other 250* 7,061 643* 1,796Property 1,499 (22) 1,474 534

––––––– ––––––– ––––––– –––––––25,938 8,844 25,051 3,928

Share of revenue and results of associatesFarming 10,027 2,482 7,861 899Gold mining 5,834 (430) 5,005 (228)

––––––– –––––––41,799 37,917

––––––– –––––––Interest paid and other charges (1,494) (1,309)

––––––– –––––––Profit before tax 9,402 3,290

––––––– –––––––

* Other revenue excludes dividend income and the proceeds of sales of investments, the profits of which are included inthe result of this segment.

19

3. SEGMENTAL REPORTING (continued)

Segmental analysis of net assets30th September 2001 Assets Liabilities Net assets/ Capital Depreciation

(liabilities) Expenditure chargeUS$000 US$000 US$000 US$000 US$000

Import and distribution 8,168 4,809 3,359 29 59Property 11,645 266 11,379 215 –Farming – Group 12,180 1,793 10,387 124 137

– Associates 10,989 – 10,989 – –Gold mining – Group 316 366 (50) 37 73

– Associates 296 – 296 – –Other 3,327 658 2,669 53 28Unallocated* 8,050 6,847 1,203 – –

––––––– ––––––– ––––––– ––––––– –––––––Consolidated total 54,971 14,739 40,232 458 297

––––––– ––––––– ––––––– ––––––– –––––––

Segmental analysis of net assets30th September 2000 Import/distribution 7,726 3,953 3,773 29 93Property 11,820 193 11,627 646 –Farming – Group 11,408 971 10,437 96 143

– Associates 9,705 – 9,705 – –Gold mining – Group 399 276 123 254 98

– Associates 562 – 562 – –Other 6,698 292 6,406 – 6Unallocated* 1,493 11,095 (9,602) – –

––––––– ––––––– ––––––– ––––––– –––––––Consolidated total 49,811 16,780 33,031 1,025 340

––––––– ––––––– ––––––– ––––––– –––––––*Unallocated assets and liabilities are cash balances, taxation and borrowings.

Secondary reporting format – geographical segmentsThe Group operates in seven countries.Luxembourg home of the parent company and no trading activities take place there.South Africa location of the bulk of the Group’s import and distribution business and part of the investment and

property portfolio.Zimbabwe all of the Group’s farming and gold mining interests are located there.Australia location for part of the Group’s import and distribution business.Chile development of an iodine deposit.United States part of the Group’s property portfolio is located there.Jersey part of the Group's investment portfolio is held there.

2001 2000US$000 US$000

Group Total Capital Group Total CapitalRevenue Net assets Expenditure Revenue Net assets ExpenditureUS$000 US$000 US$000 US$000 US$000 US$000

South Africa 15,689 3,908 159 14,461 6,784 414Zimbabwe 7,315 18,177 161 7,227 17,055 327Australia 1,660 623 29 1,538 633 26United States 1,274 7,428 56 1,190 7,631 258Jersey – 5,545 – – – –Chile – 936 – – 1,024 –Luxembourg – 3,615 53 635 (96) –

––––––– ––––––– ––––––– ––––––– ––––––– –––––––25,938 40,232 458 25,051 33,031 1,025

––––––– ––––––– ––––––– ––––––– ––––––– –––––––

20



3. SEGMENTAL REPORTING (continued)

Sales revenue is based on the country in which the order is received. It would not be materially different if based onthe country in which the customer is located. Total assets and capital expenditure are shown by the geographical areain which the assets are located.

4. OPERATING PROFIT AND EMPLOYEES

2001 2000US$000 US$000

Operating profit is stated after:Cost of sales 13,070 11,664Depreciation 297 340Exchange losses/gains 513 (22)Directors emoluments – fees 12 14

– other 185 186––––––– –––––––

197 200Staff costs:

Salaries and wages 2,522 2,644Social security costs 120 122Pension costs 226 226

––––––– –––––––2,868 2,992

Related party feesMonteagle Group 114 162Conafex Group 97 110

––––––– –––––––211 272

Related party fees concluded on an arm’s length basis arise from the provision of consultancy and administrationservices to Group companies by European companies, which, through board representation and/or shareholdings,are classified as related parties.

The average number of employees of the Group during the year were:Group Associates

2001 2000 2001 2000

Production, farming and manual 1,454 1,430 5,331 5,890Administration 9 11 284 280Management, including directors 35 37 65 72

––––––– ––––––– ––––––– –––––––1,498 1,478 5,680 6,242

––––––– ––––––– ––––––– –––––––

5. EXCEPTIONAL ITEMS

2001 2000US$000 US$000

IncomeSurplus on disposal of investments 7,036 992Surplus on disposal of tangible fixed assets 3 901

––––––– –––––––7,039 1,893

Share of associated company’s surplus on disposal of fixed assets – 55––––––– –––––––

Total income 7,039 1,948

ChargeProperty devaluation (589) -

––––––– –––––––Exceptional items – net income 6,450 1,948

––––––– –––––––

21



6. TAXATION

2001 2000US$000 US$000

Capital tax 50 63Corporate tax – current year 348 367

– prior years (1) –Withholding tax 173 62Deferred taxation (44) 93

––––––– –––––––526 585

Share of associated companies 165 (139)––––––– –––––––

691 446––––––– –––––––

Reconciliation of the expected tax charge of Group companies to the actual tax charge is as follows:

Expected tax charge at statutory rates 1,103 909Withholding taxes 173 62Capital taxes 50 63Non-taxable income (65) –Exchange differences on deferred liabilities – (66)Losses utilised (248) (144)Permanent differences (487) (239)

––––––– –––––––526 585

Share of associated companies 165 (139)––––––– –––––––

691 446––––––– –––––––

The taxation charge of the Group companies includes not only taxes of general application but also taxes at specialrates levied on particular forms of income.

7. EARNINGS PER SHARE

2001 2000Based on the result attributable to shareholders of the Company and on the average of6,300,000 shares in issue, allowing for shares held in treasury (2000 – 6,300,000). 120.4c 29.3c.

Fully diluted earnings per share, taking account of the 653,651 share optionsoutstanding (2000 – 653,651) 120.4c 28.4c.

Headline earnings per share, based on the result attributable to shareholders, ofUS$8,711,000 (2000 – US$1,854,000), excluding exceptional items US$6,450,000 (2000 – US$1,948,000), net of minority interest and tax US$375,000 (2000 – US$537,000),and the average number of shares in issue. There is no dilution. 24.0c 6.9c.

8. RECOMMENDED DIVIDEND

8.5 US cents per share (2000 – 8.5) 536 536

The recommended dividend is subject to approval at the Annual General meeting on 26th March 2002.

22

9. PROPERTY, PLANT AND EQUIPMENT

Plant andequipment,

mining assets FreeholdInvestment vehicles and land and 2001 2000properties furniture buildings Total Total

US$000 US$000 US$000 US$000 US$000

At cost or valuationBrought forward at 1st October:

At cost 431 1,653 112 2,196 10,472At valuation 11,164 – 9,260 20,424 10,696Translation adjustment (542) (129) (364) (1,035) (3.313)

––––––– ––––––– ––––––– ––––––– –––––––11,053 1,524 9,008 21,585 17,855

Revaluation (589) – – (589) 4,514Additions 92 244 122 458 1,025Disposals – (239) (10) (249) (774)

––––––– ––––––– ––––––– ––––––– –––––––Balances carried forward at 30th September

At cost 267 1,529 131 1,927 2,196At valuation 10,289 – 8,989 19,278 20,424

––––––– ––––––– ––––––– ––––––– –––––––10,556 1,529 9,120 21,205 22,620

––––––– ––––––– ––––––– ––––––– –––––––DepreciationBrought forward at 1st October – 895 92 987 1,257Translation adjustment – (75) (4) (79) (302)

––––––– ––––––– ––––––– ––––––– –––––––– 820 88 908 955

Charge for the year – 196 101 297 340Translation difference – – – – (63)Adjustment on revaluation – – – – (76)Disposals – (225) (8) (233) (169)

––––––– ––––––– ––––––– ––––––– –––––––Balances carried forward at 30th September – 791 181 972 987

––––––– ––––––– ––––––– ––––––– –––––––Net book value at 30th September 2001 10,556 738 8,939 20,233

––––––– ––––––– ––––––– –––––––Net book value at 30th September 2000 11,595 758 9,280 21,633

––––––– ––––––– ––––––– –––––––

Analysis of net book value:United States 8,856 8,800South Africa 1,883 2,946Zimbabwe 9,091 9,506Australia & other 403 381

––––––– –––––––20,233 21,633

––––––– –––––––

At 30th September 2001 all of the tangible fixed assets situated in Zimbabwe are included in the Balance Sheet attheir net book value translated at the official exchange rate ruling at that date. Freehold land and buildings includeproperty that has been revalued at US$3,960,000 above historical cost.

Investment properties are valued at current market values, on an open market basis. The latest valuations for theUnited States properties, of US$8,800,000, were determined as at 30th September 2000 by Business Real Estate. Inc.Certain South African properties were valued at US$1,422,000. Of this amount US$450,000 was determined on30th September 1997 and US$96,000 on 30th September 2001 by JHI Group; US$143,000 by Wall Smith PropertyConsultants on 30th September 2001 and US$733,000 by Richard Ellis on 30th September 2001. South Africanproperties carried at cost were US$267,000. The cost of the revalued United States investment properties wasUS$8,429,000 and that of the South African investment properties US$824,000.

23



9. PROPERTY, PLANT AND EQUIPMENT (continued)

The book value of assets acquired under finance leases amounting to US$66,000 (2000 – $35,000) is included aboveand they have been depreciated in accordance with group accounting policies.

Investment properties in South Africa, with a total value of US$1,461,000, and one of the properties in the UnitedStates, with a value of US$6,000,000, were mortgaged at 30th September 2001 to secure long term finance. (see note13 (b)).

Rates of depreciationStraight line method:Plant and equipment and furniture 10% – 25%Mining assets 2.5%Vehicles 10% – 25%Freehold buildings 0% – 12%

10. INVESTMENTS

General Associatedportfolio companies 2001 2000

Listed Unlisted Listed Unlisted Total TotalUS$000 US$000 US$000 US$000 US$000 US$000

CostBalance brought forward at 1st October 7,381 31 12,660 91 20,163 21,563Translation adjustment (824) (2) (82) – (908) (1,558)

––––––– ––––––– ––––––– ––––––– ––––––– –––––––6,557 29 12,578 91 19,255 20,005

Additions 2,914 13 – 478 3,405 3,005Disposals (6,636) (21) (533) (91) (7,281) (3,304)Change in interest – – 77 – 77 –Share of retained result for the year – – 1,861 26 1,887 812Dividends – – (297) – (297) (227)Translation difference – – – – – (128)

––––––– ––––––– ––––––– ––––––– ––––––– –––––––Balance carried forward at 30th September 2,835 21 13,686 504 17,046 20,163

––––––– ––––––– ––––––– ––––––– ––––––– –––––––

ProvisionsBalance brought forward 371 – 2,401 – 2,772 2,810Provision released during year (371) – – – (371) (38)

––––––– ––––––– ––––––– ––––––– ––––––– –––––––Balance carried forward at 30th September – – 2,401 – 2,401 2,772

––––––– ––––––– ––––––– ––––––– ––––––– –––––––Net book value at 30th September 2001 2,835 21 11,285 504 14,645

––––––– ––––––– ––––––– ––––––– –––––––Net book value at 30th September 2000 7,010 31 10,259 91 17,391

––––––– ––––––– ––––––– ––––––– –––––––

Market value of listed investments at30th September – 2001 3,481 13,876 17,357

– 2000 14,947 9,769 24,716

Directors’ valuation of unlisted investments at30th September – 2001 21 504 525

– 2000 31 91 122

24

10. INVESTMENTS (continued)

Geographical analysis: Book value Market value/Directors’Valuation

2001 2000 2001 2000US$000 US$000 US$000 US$000

United States – general portfolio – 2,329 – 7,472South Africa – general portfolio – 4,681 – 7,475Zimbabwe – Falcon – associated company 296 623 455 543Zimbabwe – Ariston – associated company 10,989 9,636 13,421 9,226Europe and others 3,360 122 4,006 122

––––––– ––––––– ––––––– –––––––14,645 17,391 17,882 24,838

––––––– ––––––– ––––––– –––––––

The following investments, which represent more than twenty per cent of the issued equity capital of the companyconcerned, are included in the above Group figures.

Equity accounted: Percentage of equity heldListed 2001 2000

Held by Monteagle Falcon Investment Holdings S.A.Incorporated in Luxembourg and operating internationally 49.95% 49.95%Activity – Holding company – gold miningLoss for the year ended 30th September 2001 US$399,000 (2000 – US$213,000)Reserves: 30th September 2001 US$428,000 (2000 – negative US$2,398,000)

Held by ConafexAriston Holdings LimitedIncorporated and operating in Zimbabwe 33.92% 38.6%Activity – Holding company – farmingProfit for the year ended: 30th September 2001–Z$349,457,000(2000 – Z$97,248,000)Reserves: 30th September 2001 – Z$1,253,914,000 (2000 – Z$1,167,000,000)

Unlisted

Held by ConafexCape Natural Tea Products (Pty) LimitedIncorporated and operating in South Africa 40% –Acquired – 25th March 2001Activity – Tea processing and marketingProfit for the six months to 30th September 2001 – R534,000Reserves: 30th September 2001 – R2,244,000

Accord Services Limited 40% –Incorporated and operating in EnglandAcquired – 29th September 2001Activity – Tea packing

11. INVENTORIES

2001 2000US$000 US$000

Raw materials 2,374 763Work in progress 315 462Finished goods 3,882 3,516Livestock 495 435

––––––– –––––––7,066 5,176

––––––– –––––––

Inventories amounting to US$3,850,000 are pledged to secure short term borrowings.

25



12. ACCOUNTS RECEIVABLE

2001 2000US$000 US$000

Trade debtors 4,325 3,405Taxation recoverable 10 -Other debtors 432 584Associated company 129 67

––––––– –––––––4,896 4,056

Prepayments 48 62––––––– –––––––

4,944 4,118––––––– –––––––

13. ACCOUNTS PAYABLE

a) Amounts falling due within one year:Bank loans and overdrafts 695 4,243Creditors – Trade, including bills payable and acceptance credits 6,947 4,633

– Other creditors and short term portions of secured loans 454 584– Short term portion of capitalised lease obligations 12 –

Taxation 145 322Associates 7 124Accruals 358 344

––––––– –––––––8,618 10,250

––––––– –––––––

A Rand bank overdraft equivalent to US$350,000 is secured by charges over the property, accounts receivableand inventories of the relevant South African subsidiary.

A Zimbabwe bank overdraft equivalent to US$237,000 (2000 – US$412,000) is secured by a negative pledge overthe fixed assets of Zimcor Limited.

Trade creditors equivalent to US$547,000 (2000 – US$493,000) are secured over the trade debtors of theAustralian subsidiary, US$378,000 (2000 – US$295,000) and by a bank guarantee provided by that subsidiary’sbankers.

The Directors have recommended an ordinary dividend of 8.5 US cents per share, which is subject to approvalby shareholders at the Annual General Meeting. In accordance with IAS 10, this liability is not recognised atthe Balance Sheet date.

b) Amounts falling due after more than one year:Secured loans – South Africa – banks (Rand) 699 909

– United States – mortgage corporations (US dollar) 2,381 2,579– Australia – banks (Australian dollar) 9 14– Capitalised lease obligations – (Australian dollar) – 9

– (Rand) 12 1––––––– –––––––

Finance from financial institutions 3,101 3,512––––––– –––––––

Deferred consideration for acquisitions – Europe 100 –Unsecured, local currency, trade creditor loans – South Africa 214 281

– Australia 70 83––––––– –––––––

384 364––––––– –––––––

3,485 3,876––––––– –––––––

Long term finance in the United States and South Africa is secured by mortgages on certain local investmentproperties (see note 9).

The principal rates of interest on loans are commercial rates – United States 7.88% – 8.75%, South Africa prime(average rate for the year was 14.2%) plus 0.623% – 1.00%.

26

13. ACCOUNTS PAYABLE (continued)

The deferred consideration represents the estimate of the consideration payable for the purchase of the Group’s40% interest in Cape Natural Tea (Pty.) Limited, which is dependent upon results over the three year period toMarch 2004.

Loans are repayable over the following periods:-Secured Unsecured

2001 2000 2001 2000US$000 US$000 US$000 US$000

Between one and two years 89 2,222 – –Between two and five years 273 331 100 –Over five years – by instalments 2,739 959 – –No fixed repayment date – – 284 364

––––––– ––––––– ––––––– –––––––3,101 3,512 384 364

––––––– ––––––– ––––––– –––––––

14. DEFERRED TAXATION

2001 2000US$000 US$000

The provision for deferred tax comprises the following effects of temporarytiming differences:

Deferred tax liabilitiesTangible fixed assets 2,518 2,502Inventories 153 142Other 10 10

––––––– –––––––2,681 2,654

Deferred tax assetsOther (45) –

––––––– –––––––Total net deferred tax liabilities 2,636 2,654

––––––– –––––––

The following are the major deferred tax liabilities recognised by the Group and the movements thereon during theperiod:

Revaluations Accelerated tax Total Totaldepreciation 2001 2000

Liabilities US$000 US$000 US$000 US$000

Balances brought forward at 1st October 2,371 283 2,654 2,340 Exchange differences (86) (6) (92) (683) Charge to income during year – 1 1 93 Adjustment on release from capital gains tax liability 118 – 118 –Revaluation movement – – – 904

––––––– ––––––– ––––––– –––––––Balances carried forward at 30th September 2,403 278 2,681 2,654

––––––– ––––––– ––––––– –––––––

Assets

Credit to income during the year – (45) (45) – ––––––– ––––––– ––––––– –––––––

Balances carried forward at 30th September – (45) (45) – ––––––– ––––––– ––––––– –––––––

27



15. OTHER RESERVES

2001 2000US$000 US$000

(a) Legal reserveBalance brought forward at 1st October 589 555Transfer from retained earnings in respect of the prior year 6 34

––––––– –––––––Balance carried forward at 30th September 595 589

––––––– –––––––

Luxembourg law requires that an appropriation of at least 5% of the Company’s own annual distributable profitbe made to legal reserve until such time as the reserve attains 10% of the issued share capital. Consequently theDirectors propose to transfer US$386,000 from retained earnings to legal reserve. A resolution to approve thetransfer will be proposed at the Annual General Meeting. Distribution of this reserve is restricted.

(b) Revaluation reserveBalance brought forward at 1st October 9,595 7,349Change in interest in subsidiaries (58) 18Adjustments on disposals – (384)Transfer to exchange reserve (3,518) –Transfer to retained earnings (173) –Group share of revaluation in year – 2,612

––––––– –––––––Balance carried forward at 30th September 5,846 9,595

––––––– –––––––

(c) Exchange reserveBrought forward at 1st October (7,441) (4,968)Transfer from revaluation reserve 3,518 –Arising during the year (283) (2,473)

––––––– –––––––Balance carried forward at 30th September (4,206) (7,441)

––––––– –––––––

(d) Other reservesBalance brought forward at 1st October 4,011 5,258Effects of exchange movement in year (15) (1,174)Change in interest in subsidiaries (98) (73)


––––––– –––––––TOTAL – OTHER RESERVES 6,133 6,754

––––––– –––––––

16. RETAINED EARNINGS

Balance brought forward at 1st October 6,521 5,172Transfer to legal reserve in respect of the prior year (6) (34)Dividend for prior year (536) (536)Change in interest in subsidiaries (61) –Transfer from share premium account (note(e), page 34) 2,411 –Profit for the year 7,584 1,845Revaluation surplus realised on disposal 173 384Effect of exchange rate changes (18) (310)


––––––– –––––––

28

17. NOTES TO CASH FLOW STATEMENT

2001 2000US$000 US$000

(a) Reconciliation of profit before taxation to net inflow from operating activitiesProfit before taxation 9,402 3,290

Adjustments for items not involving cashflowShare of associated companies results (2,052) (671)Income from investments and loans (611) (635)Interest paid and similar charges 1,494 1,309Depreciation 297 309Profit on disposal of fixed assets and devaluation of properties (6,450) (1,893)Exchange difference – (540)

––––––– –––––––Cash generated before working capital changes 2,080 1,169Net increase in working capital (note 17b) (278) (1,118)

––––––– –––––––Cash generated from operations 1,802 51

––––––– –––––––

(b) Net decrease in working capitalIncrease in inventories (2,051) (1,197)(Increase)/Decrease in debtors (992) 106Increase/(Decrease) in creditors 2,765 (27)

––––––– –––––––(278) (1,118)

––––––– –––––––

(c) Analysis of net funds/(debt)2001 2000 Exchange Cash Flow

Movements MovementUS$000 US$000 US$000 US$000

Cash at bank and in hand 8,083 1,493 (48) 6,638Bank overdrafts (note 13a) (695) (4,243) 429 3,119

––––––– ––––––– ––––––– –––––––7,388 (2,750) 381 9,757

––––––– ––––––– ––––––– –––––––

(d) Analysis of funds by currencyUnited States dollars 6,188 (758) – 6,946Zimbabwe dollars (107) (327) 12 208Australian dollars 101 185 (16) (68)South African rands (347) (1,910) 385 1,178Euros 750 – – 750Swiss francs 775 – – 775Pounds sterling 28 60 – (32)

––––––– ––––––– ––––––– –––––––7,388 (2,750) 381 9,757

––––––– ––––––– ––––––– –––––––

(e) Analysis of changes in financingShare capital & Creditors due aftershare premium more than one year

US$000 US$000

Balance at 1st October 2000 11,861 3,876Effect of foreign exchange rate changes – (146)Transfer to Retained earnings (2,411) –Net cash outflow from financing – (245)

––––––– –––––––Balance at 30th September 2001 9,450 3,485

––––––– –––––––

29

18. CREDIT RISK

Concentrations of credit risk consist principally of indirect investments in associated companies in Zimbabwe and inthe leading companies in the U.K., Europe and South Africa and in temporary cash investments. Associates areaccounted for in accordance with accounting policy note 2(c). All of the portfolio investments are in highly liquidstocks and there is no concentration of investment in any one company. Cash and cash equivalents include all cashbalances and highly liquid deposits with a maturity of three months or less and are maintained with recognisedfinancial institutions. Surplus cash balances are placed on deposit at market rates. An analysis by currency is set outin note 17 (d).

19. GROUP COMMITMENTS AND CONTINGENT LIABILITIES

The Group had no material commitments under non-cancellable operating leases, nor for authorised capitalexpenditure contracted. (2000 – US$75,000).

Full provision has been made for potential liabilities at the balance sheet date under forward exchange contracts.

20. CONTINGENCIES

The Government of Zimbabwe has de-listed the compulsory acquisition of land order under a land resettlementprogramme, in respect of Highbury Estate, a farm owned by a Zimbabwean subsidiary.

However, Kent Estate, a farm owned by a separate subsidiary company, is subject to a compulsory acquisition order.Objections have been lodged with the relevant authority and, in addition, diplomatic representations have been madeby Conafex through the embassies of Belgium and the Netherlands in Zimbabwe, who represent Luxembourginterests. Given the precedent of the de-listing of Highbury Estate, the Directors consider that there is a reasonableprospect for the de-listing of Kent Estate. Otherwise, land with a carrying value of US$947 000 will be affected if thecompulsory acquisition proceeds without compensation.

The Group acquired a 40% interest in Cape Natural Tea Product (Pty) Limited during the year. Under the terms ofthe acquisition agreement a potential liability for further consideration arises if profits are recorded in excess of thelevels used to determine the acquisition value.

21. PENSIONS

Pensions are provided for certain employees of Group companies by separate pension funds to which the relevantcompany contributes. These pensions are defined benefit plans under which retirement benefits are determined byreference to the employees’ pensionable remuneration and years of service.

The Zimbabwe fund of a subsidiary of Conafex is being converted to a defined contribution scheme with effect from31st December 2001, when a final valuation will be made. The conversion is not expected to give rise to additionalliabilities to the Group. The result of the October 2000 valuation has not been made available to the company.However a letter received from the fund’s administrators indicates that a preliminary exercise determined that thefund was in a sound position. The fund was in surplus by Z$765,000 on the 1997 valuation.

Pensions are provided for other employees through various Government Schemes and other money purchase schemesto which the contribution of the Group is defined and to which the Group has no responsibility for unfundedliabilities.

All contributions are charged to profit and loss account in the year to which they relate. The following tablesummarises the components of the net benefit expense recognised in the consolidated profit and loss account.

2001 2000US$000 US$000

Net benefit expenseCurrent service costs – defined benefits 68 78Current service costs – defined contributions 158 148

––––––– –––––––226 226

––––––– –––––––

30



31

22. HYPERINFLATION

Our Zimbabwe subsidiaries and associates have not complied with IAS 29, Financial Reporting in HyperinflationaryEconomies. All expenditure in Zimbabwe is subjected to a stringent cost/benefit analysis and the additional costsarising from the preparation and audit of restated accounts incorporating hyperinflation adjustments can not bejustified.

In normal circumstances the exchange rates of countries suffering high levels of inflation depreciate to reflectinflation levels. However, the Government of Zimbabwe has ensured that the official Zimbabwe dollar exchange ratehas remained relatively unchanged over the year.

Consequently, we are unable to determine the full impact of any changes to the financial statements that would berequired to adjust for the effects of hyperinflation. It is estimated that the only significant impact on the Groupbalance sheet would be to reverse prior year translation differences, which have reduced Zimbabwe fixed assets at thebalance sheet dates, and to reduce unrealised exchange losses by a corresponding amount. No significant adjustmentto the profit and loss account would be required.

23. FINANCIAL RISK MANAGEMENT

Credit risk managementConcentration of credit risk consists principally of indirect investments in associated companies in Zimbabwe andaccounts receivable and cash at bank. At the year end the Directors do not consider there to be any significantconcentration of credit risk which has not been adequately provided for.

Interest rate riskExposure to interest rate risk arises in the normal course of the Group’s business and applies mainly to cash depositsand financing. The Group’s objective is to achieve the best rates available, adopting a policy of ensuring that itsexposure to changes in interest rates on surplus funds are short term. The principal average rates on short termborrowings for the year were 14.25% in South Africa and 55% to 65% in Zimbabwe.

The Group secures longer term finance at fixed rates on the best commercial terms, as set out in note 13(b).

Fair value of financial instrumentsThe carrying amounts of the accounts receivable and liabilities reported in the balance sheet approximate their fairvalues at the year end.

32

Financial Statements of the Parent Company


PROFIT AND LOSS ACCOUNTFor the year ended 30th September

2001 2000US$000 US$000

INCOMEIncome from non current assets 7,401 884Income from current assets 83 4

––––––––– –––––––––7,484 888

––––––––– –––––––––EXPENSES

Interest and similar charges 77 193Administration and other charges 464 538Exceptional provision against investments 698 _

Profit for the year 6,245 157––––––––– –––––––––

7,484 888––––––––– –––––––––

BALANCE SHEETAt 30th September

NotesNON CURRENT ASSETS

Investments (c) 16,126 15,418

Current assetsAmounts due from group companies 107 132Accounts receivable 156 83Cash and bank balances 3,688 221

––––––––– –––––––––20,777 15,854

––––––––– –––––––––

LIABILITIESCapital and Reserves

Called up share capital (d) 9,450 9,450Share premium account (e) – 2,411Other reserves (f) 1,970 1,964Retained earnings/(deficit) (g) 1,521 (505)

Accounts payable (falling due within one year) (h) 891 2,377

Profit for the year 6,245 157––––––––– –––––––––

20,077 15,854––––––––– –––––––––

(a) GENERALThe Company is incorporated as a société anonyme, with financial holding company status under the Law of31st July 1929, as amended, in the Grand Duchy of Luxembourg. As permitted by Luxembourg law, the amountsshown in these financial statements are presented in United States dollars.

(b) ACCOUNTING POLICIESThe principal accounting policies of the Company, which are set out below, comply with Luxembourg law,regulations and generally accepted accounting practices and have been consistently followed.

(i) InvestmentsListed and unlisted investments are stated at cost less amounts written off, where, in the opinion of theDirectors, a permanent decline in value has arisen.

(ii) DividendsDividends are accounted for when received, other than dividends from subsidiaries, which are accounted for inthe same year as that for which they are declared. Dividends from certain subsidiaries are subject to exchangecontrol.

(iii) Associated companiesThose companies in which the Company holds an interest of between 20% and 50% are included in theCompany’s balance sheet at cost, less provisions for any permanent decline in value as determined by theDirectors.

(iv) Foreign currenciesForeign exchange losses and realised gains on settlement of foreign currency transactions or on the translationof monetary assets and liabilities at year-end exchange rates are accounted for through the profit and lossaccount.

(c) INVESTMENTSMovements in fixed asset investments

Subsidiaries Investments 2001 2000see note (i) Listed Unlisted Associated Total Total

US$000 US$000 US$000 US$000 US$000 US$000CostBalance brought forward at 1st October 16,476 2,778 5 3,699 22,958 23,762Additions 13,943 1,502 – – 15,445 1,231Disposals and exchange (15,565) (2,778) (1) – (18,344) (2,035)

––––––– ––––––– ––––––– ––––––– ––––––– –––––––Balance carried forward at 30th September 14,854 1,502 4 3,699 20,059 22,958

––––––– ––––––– ––––––– ––––––– ––––––– –––––––

ProvisionsBalance brought forward at 1st October 4,332 371 – 2,837 7,540 7,578Released (3,934) (371) – – (4,305) –Increased 39 475 – 184 698 (38)

––––––– ––––––– ––––––– ––––––– ––––––– –––––––Balance carried forward at 30th September 437 475 – 3,021 3,933 7,540

––––––– ––––––– ––––––– ––––––– ––––––– –––––––Net book value at 30th September 2001 14,417 1,027 4 678 16,126

––––––– ––––––– ––––––– ––––––– –––––––Net book value at 30th September 2000 12,144 2,407 5 862 15,418

––––––– ––––––– ––––––– ––––––– –––––––

Market values of listed investments 1,030 681 1,711 8,013––––––– ––––––– ––––––– –––––––

Directors’ valuation of unlisted investments 4 – 4 5––––––– ––––––– ––––––– –––––––

The company re-organised its interests in its South African and Luxembourg subsidiaries during the year, creating anew wholly owned intermediate investment holding company. The new structure is shown in note (i).

33

Notes to the Financial Statements of the Parent CompanyFOR THE YEAR ENDED 30th SEPTEMBER 2001


(d) SHARE CAPITAL2001 2000

Number US$000 US$000AuthorisedShares of US$1.50 each 7,500,000 11,250 11,250

–––––––––– ––––––– –––––––Issued and fully paidIn issue 6,536,543 9,805 9,805Held in treasury (236,543) (355) (355)

–––––––––– ––––––– –––––––Held by shareholders 6,300,000 9,450 9,450

–––––––––– ––––––– –––––––

The Directors are authorised, until 30th March 2005, to issue the balance of the unissued authorised share capital of963,457 shares.

(e) SHARE PREMIUMBalance brought forward at 1st October 2,411 2,411Transfer to retained earnings (2,411) –

––––––– –––––––Balance carried forward at 30th September – 2,411

––––––– –––––––

The balance of the Share premium account has been transferred to Retained Earnings following approval byshareholders at the Annual General Meeting held on 30th March 2001.

(f) OTHER RESERVESLegal ReserveBalance brought forward at 1st October 589 555Transfer from retained earnings 6 34

––––––– –––––––Balance carried forward at 30th September 595 589

––––––– –––––––Other reservesBalance brought forward and carried forward 1,375 1,375

––––––– –––––––Total other reserves 1,970 1,964

––––––– –––––––

Luxembourg law requires that an appropriation of at least 5% of the Company’s own annual distributable profit bemade to legal reserve until such time as the reserve attains 10% of the issued share capital. Consequently theDirectors propose to transfer US$386,000 from retained earnings to legal reserve. A resolution to approve thetransfer will be proposed at the Annual General Meeting. Distribution of this reserve is restricted.

(g) RETAINED EARNINGSBalance brought forward at 1st October (505) (615)Transfer from share premium account 2,411 –Profit of the preceding year 157 680Transfer to legal reserve in respect of the preceding year (6) (34)Dividend paid in respect of the preceding year (536) (536)

––––––– –––––––Balance carried forward at 30th September 1,521 (505)

––––––– –––––––

(h) ACCOUNTS PAYABLEGroup companies 513 395Bank overdraft (secured) – 1,744Other creditors 378 238

––––––– –––––––891 2,377

––––––– –––––––

34

Notes to the Financial Statements of the Parent Company(continued)FOR THE YEAR ENDED 30th SEPTEMBER 2001


(i) SUBSIDIARIESThe following companies are the principal active subsidiaries of Monteagle Holdings Société Anonyme, have beenincluded in the consolidated financial statements of the Group and have year ends co-terminous with that of theCompany.

(a) Wholly-owned Principal Activities(i) Incorporated and operating in England:

Monteagle Consumer Group (UK) Limited ImportersMonteagle Properties (UK) Limited Investment holding

The following company is a subsidiary of Monteagle Properties (UK) Limited

Incorporated and operating in San Diego, United States of America:Monteagle Inc Property

(ii) Incorporated in British Virgin Islands and operating internationally:Monteagle International Finance Limited Consultancy, management and

investment holding

(iii) Incorporated in Jersey, Channel Islands and operating internationally:Monteagle Merchant Group (Jersey) Limited Investment holding

The following companies are active subsidiaries of Monteagle MerchantGroup (Jersey) Limited:

Wholly-Owned:Incorporated in Jersey, Channel Islands and operating internationallyMonteagle Consumer Group (Jersey) Limited Importers

Incorporated in South Africa and operating internationallyGlobal Coffee Exports Limited Import and exportMonteagle Consumer Group Limited ImportersMonteagle Property Holdings Limited Property holdingMonteagle Investments (Proprietary) Limited Investment holdingMonteagle Merchant Group Southern Holdings Limited Investment holding

Owned 50.1%L & G Tool and Machinery Distributors Limited Importer and distributor of

hand tools and machinery

Owned 60.42%Incorporated in Luxembourg and operating internationally:Conafex Holdings Société Anonyme

The following company is a wholly owned subsidiary of Conafex :Incorporated and operating in Zimbabwe:Zimcor Limited Farming, property and

investment holdingThe following companies are 90% owned active subsidiaries of Zimcor Limited:-Highbury Estate Limited Farming propertyTrelawney Estate (Private) Limited Farming propertyKent Estate (Private) Limited Farming property

(b) Other subsidiaries of Monteagle Holdings Société Anonyme(i) Incorporated and operating in Zimbabwe

Olympus Gold Mines Limited Gold mining(owned directly 33.33% and 66.67% by an associate)

(ii) Incorporated and operating in AustraliaQueensland Tool and Machinery Distributors Pty Ltd (owned 50.1%) Importers and distributors of

hand tools and machineryRedway Trading Company Pty Ltd (owned 50.1%) Property

35

Following our appointment by the directors on 9th October 2001, on a provisional basis until the Annual GeneralMeeting of shareholders we have audited the consolidated financial statements of Monteagle Holdings Société Anonymefor the year ended 30th September 2001 as set out on pages 14 to 31 and have read the Report of the Directors on pages10 to 12. These consolidated financial statements and the Report of the Directors are the responsibility of the Board ofDirectors. Our responsibility is to express an opinion on these financial statements based on our audit and to confirm theconsistency of the Report of the Directors with the consolidated financial statements.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we planand perform the audit to obtain reasonable assurance that the consolidated financial statements are free from materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in theconsolidated financial statements, the assessment of the accounting principles used and significant estimates made bymanagement and the evaluation of the overall consolidated financial statements’ presentation. We consider that our auditprovides a reasonable basis to express for our opinion presented below.

Basis of opinionThe Zimbabwean economy is recognised as being hyperinflationary for purposes of financial reporting. Theseconsolidated statements have not been prepared in conformity with International Accounting Standards in that therequirements of IAS 29 (Financial Reporting in Hyperinflationary Economies) have not been complied with. Thestandard requires that the financial statement that report in the currency of a hyperinflationary economy should be statedin terms of the measuring unit current at the balance sheet date.

The financial effect of non-compliance with IAS 29 has not been formally established for the reasons given in note 22 tothe consolidated financial statements. The requirements of all other International Accounting Standards have beencomplied with under the historical cost convention.

In addition, the revaluation of certain assets in subsidiary companies, as disclosed in note 9, while allowed underInternational Accounting Standards and local Zimbabwe law under which those subsidiaries operate does not complywith the legal requirements in Luxembourg.

Disclaimer of opinionIn view of the pervasiveness of non-compliance with hyperinflationary reporting referred to above, and the effectivelimitation of scope imposed on our work, and in the absence of the information from the group records necessary toassess the materiality of the non-compliance, we are unable to express an opinion on the consolidated financial statementsas regards conformity with International Accounting Standards.

Opinion on the historical cost consolidated financial statementsThe attached financial statements have been prepared under the historical cost convention (modified by the revaluationof certain assets) and would form the basis for the restatement in terms of IAS 29. The historical cost consolidatedfinancial statements, except for the revaluation of certain assets, give, in conformity with the legal regulatory requirementsin Luxembourg, a true and fair view of assets, liabilities and financial position of Monteagle Holdings S.A. at30th September 2001 and the results for the year then ended.

Without further qualifying our audit opinion above, we draw your attention to;

● the uncertainty surrounding the compulsory acquisition of certain Group assets, as disclosed in note 20, and thecontinued political and economic instability currently experienced in Zimbabwe, where approximately 40% of theshareholders’ assets are situated.

● as disclosed in notes 2(k) the Zimbabwe operations have been translated at the official exchange rate which differssignificantly with the unofficial exchange rate.

The Report of the Directors is in agreement with these consolidated financial statements.

3 Route d’Arlon, DELOITTE & TOUCHE S.A.L-8009, Luxembourg Réviseur d’entreprises

E. SchmitPartner

25th February 2002

36

Report of the Auditors

TO THE MEMBERS OF MONTEAGLE HOLDINGS SOCIETE ANONYME

Following our appointment by the directors on 9th October 2001, on a provisional basis until the next Annual GeneralMeeting of shareholders, we have audited the financial statements of Monteagle Holdings Société Anonyme for the yearended 30th September 2001 as set out on pages 32 to 35. These financial statements are the responsibility of the Board ofDirectors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we planand perform the audit to obtain a reasonable assurance that the financial statements are free from material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,the assessment of the accounting principles used and significant estimates made by management and the evaluation ofthe overall financial statements’ presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion the financial statements give, in conformity with legal and regulatory requirements in Luxembourg, a trueand fair view of the assets and financial position of the Company at 30th September 2001 and the results of its operationsfor the year then ended.

3 Route d’Arlon, DELOITTE & TOUCHE S.A.L-8009, Luxembourg Réviseur d’entreprises

E. SchmitPartner

25th February 2002

37

Report of the Commissaire

TO THE MEMBERS OF MONTEAGLE HOLDINGS SOCIETE ANONYME

38

Financial Summary


2001 2000 1999 1998Notes

US$000 US$000 US$000 US$000

Revenue 25,938 25,051 23,061 24,568

Operating profit 1,783 1,400 1,368 1,166Share of associates 2,052 616 1,234 (70)Dividend income and interest 611 635 591 583Interest payable (1,494) (1,309) (1,390) (1,906)Exceptional items 6,450 1,948 2,619 1,627

Profit on ordinary activities before taxation 9,402 3,290 4,422 1,400Tax on ordinary activities (691) (446) (962) (962)Minority interests (1,127) (999) (721) (415)

Profit attributable to shareholders 7,584 1,845 2,739 23Recommended Dividends 1 (536) (536) (536) (523)

Employment of group capitalFixed assets 34,878 39,024 38,664 35,678Net current assets/(liabilities) 1 11,475 537 (639) (62)

Total assets less current liabilities 46,353 39,561 38,025 35,616

Loans falling due after more than one year (3,485) (3,876) (3,859) (4,225)Deferred tax (2,636) (2,654) (2,340) (2,322)Minority interests (8,581) (7,895) (6,599) (6,716)

Shareholders’ funds 31,651 25,136 25,227 22,353

Shareholders’ funds, including listedinvestments at market value 33,817 32,741 32,162 24,584

StatisticsNet assets per share – outside Africa US$2.85 US$1.92 US$2.35 US$1.23

– inside Africa US$2.52 US$3.28 US$2.76 U$2.53Total net assets per share 2 US$5.37 US$5.20 US$5.11 US$3.76Earnings per share 120.4c 29.30c 42.60c 0.35cDividends per share 8.5c 8.5c 8.5c 8.0c

Note:(1) The figures for prior years have been restated to eliminate the provision for the recommended dividend in accordance

with IAS 10.(2) Net assets per share, being total assets (including listed investments at market value), attributable to members of the

Company.

Printed by Perivan Financial Print 33143

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