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A N N U A L R EMA

P O R T2004

CONTENTS

PAGE

Group profile 2

Directorate and executive 3

Chairman’s report 4

Corporate governance 5-6

Administration 7

FINANCIAL STATEMENTS

Statement of responsibility and approval by the board of directors 8

Declaration by secretary 8

Report of the independent auditors 9

Directors’ report 10-11

Balance sheets 12

Income statements 13

Statements of changes in equity 14

Cash flow statements 15

Notes to the cash flow statements 16

Notes to the financial statements 17-26

Analysis of shareholding 27

Notice of meeting 28-29

Shareholders’ diary 30

Form of proxy Enclosed

A N N U A L R EMA

P O R T1

GROUP PROFILE

2

(Incorporated in the Republic of South Africa)(Registration number 1926/008797/06)

(JSE Code: AME)(ISIN: ZAE 00014106)

African Media Entertainment Limited ("AME") is a broadcast company listed in the “Media and Entertainment” sector

of the JSE Securities Exchange South Africa.

AME’s three active operations are:

RADIO BROADCASTERS

OFM

Servicing central South Africa – Free State,

Northern Cape and North-West Province

Algoa FM

Servicing the entire Eastern Cape

SPECIALIST RADIO ADVERTISING SALES HOUSE:

United Stations

Servicing the advertising industry across South Africa

DIRECTORATE AND EXECUTIVE

BOARD OF DIRECTORS

ACG ("Connie") Molusi (42)Non-executive ChairmanAppointed 18 March 2004

Connie has been involved with the media industry formany years and holds a number of directorships,including Group Chief Executive of JohnnicCommunications Limited.

Zenwill Lacob (56)Non-executive directorBA LLB (Wits), LLB (Jerusalem)Appointed 5 June 2002

Zenwill is a senior lawyer with extensive commercial,corporate and media experience. Zenwill has practisedlaw in South Africa for twenty-six years.

Martinus J Prinsloo (50)Non-executive directorBCom (Law), CA(SA)Appointed 13 November 2003

Inus has worked for a number of merchant banks. Henow runs his own practice as a corporate financialadvisor.

Wilfred Tshuma (35)Non-executive directorBCom (Hons) (Zimbabwe)Appointed 7 July 2004

Wilfred has held internal audit and financial positionswith a number of banks and is presently a portfoliomanager at ABSA.

Stanley B Katz Executive ManagementRetired 28 May 2004

Joe MakobeResigned 1 April 2004

Carl de KlerkResigned 27 November 2003

EXECUTIVE MANAGEMENT

The group is managed by the senior executives of itsmajor subsidiaries:

Rivak Bunce (43)United Stations

Rivak has a strong background in training, having runhis own training franchise for several years. He joinedRadio 702 in 1987, rising to the position of salesmanager. He subsequently worked for Primedia Groupas group sales director until co-founding UnitedStations with Stan Katz in March 2000. He joined theAME group when that company was acquired inNovember 2002.

Lyndon Johnstone (41)Seyalemoya Communications – OFM

Lyndon started his career in journalism in Cape Townwith Die Burger and SABC, after studying at thePeninsula Technikon in Bellville. Lyndon moved intothe commercial sector of broadcasting when he joinedOFM as news editor in 1999. He was appointedmanaging director in March 2003. He currently serveson the Advisory Board of the CommunicationsDepartment at the Central University of Technology –Free State.

David Tiltmann (40)Umoya Communications – Algoa FM

David obtained his BCom from UPE in 1986. He beganworking for Algoa FM as a freelance announcer in1989 and has held positions as music manager,programme manager and operations manager sincethen. He was appointed managing director of thestation in February 2000.

A N N U A L R EMA

P O R T3

CHAIRMAN’S REPORT

4

REVIEW OF THE YEAR

The results for the past year are gratifying and reflectthe hard work that has been put in by bothmanagement and staff in the group. With an increasein turnover of 18% (2003: 17,6%) and carefulmonitoring of all expenditures to keep them at thesame levels as in 2003, the group has produced aprofit attributable to shareholders of R6 047 000(2003: loss R1 925 000). OFM continued its reliablepath of contributing good profits, whilst Algoa FMbenefited both from improved national advertisingsales as well as excellent local advertising from thedirect team, that has been relocated back at thestation. United Stations, the group’s specialist radioadvertising sales house, is now focusing on nationalsales and tactical, strategic and training support to thedirect teams at the stations. Had it not been for thesubstantial reduction in national radio adspend in Julyand August 2004, this company would have alsocontributed to the group’s profits.

With the return to profitability and the carefulmanagement of the group’s cash flows, it has beenpossible to reduce the group’s liabilities during the yearfrom R41 027 000 to R28 818 000. This in turn hasreduced the group’s finance cost by a further 43,7%(2003: 40%). The historical, legacy debt, thatpreviously caused such a drain on the group’sresources, has been brought well under control andshould be eliminated entirely during the coming year.As a consequence of this much improved situation, theboard has been able to defer the proposed rights issue.Any rights issue the board may consider will only resultfrom the group’s plans to expand, once the anticipatednew ICASA regulations become law during 2005. Inorder to continue to strengthen the group’s financialposition, your board has decided not to recommend adividend.

During the past year management uncovered certainaccounting errors and practices that did not complywith South African Accounting Standards. Thesecomprised the calculation of the minority interest in asubsidiary company and the excessive impairment ofthe company’s interest in its radio station subsidiariesbelow their fair cost. These fundamental errors havebeen corrected in the group and company prior yearfigures, as set out in the Statements of Changes inEquity on page 14 of this report. As a final decision onthe group’s share incentive trust has been deferred

until all options have been considered by theremuneration committee, the group has nowcomplied with the JSE Securities Exchange South AfricaListings Requirements and consolidated all theunallocated shares of the trust. These are also reflectedin the Statements of Changes in Equity, as a deductionfrom share capital and related share premium.

Your directors wished to make the company’s sharesmore tradable and to reduce the number ofshareholders, which was disproportionate to the sizeand capitalisation of the company. In June this wasachieved by consolidation of the authorised and issuedshare capital on a 1-for-100 basis. Certain odd-lotholders sold their shares to other shareholders or tothe company. The net result was to reduce thenumber of shareholders to a more manageable 1 100and the share price has moved from 500 cents at thetime of its consolidation to 1 010 cents shortly beforethis annual report was issued.

The past year has been difficult, with tough decisionshaving been made to ensure the group returned to asound financial status. I would like to thank my fellowdirectors for their sage advice and leadership and ourcreditors and bankers for their patience and supportthroughout the year. My biggest thanks, however, goto the management and staff of the group. Their beliefin our radio business and their determination andenthusiasm for its continuation, has been inspirational.With the strengthening of the economy and theexpected increase in adspend in the coming year, ourstaff, business associates and shareholders can expect acontinuing improvement in the group’s results.

ACG MOLUSI

Chairman

7 February 2005

CORPORATE GOVERNANCE

AME supports the principles set out in the King IIReport on Corporate Governance and, whereappropriate to the group, is committed to theimplementation of these principles.

As a result of the substantial reduction in the size andcomplexity of the group in the last three years and thecash flow difficulties experienced in the previous years,it has not always been either appropriate or financiallyexpedient to set up the expensive structures envisagedby the King Report. However, where the group’sresources have allowed, compliance has been achievedin the following areas:

BOARD OF DIRECTORS

The board presently comprises four non-executivedirectors and is scheduled to meet four times in thecoming year. During the year under review it met atotal of seven times. Of those meetings the followingdirectors were unable to attend – ACG Molusi (2),J Makobe (1) and MJ Prinsloo (1).

FINANCIAL

The directors acknowledge responsibility for thepreparation of the annual financial statements, which,in their opinion, fairly present the state of affairs of thecompany and the group at the end of the year andtheir operations and cash flows for the twelve monthsended 31 October 2004. The external auditors areresponsible for reporting on the fair presentation ofthese financial statements.

The financial statements set out in this report havebeen prepared by the directors in accordance withSouth African Statements of Generally AcceptedAccounting Practice and are based on appropriateaccounting policies, which have been consistentlyapplied and which are supported by reasonable andprudent judgements and estimates. The directors alsoprepared the other information included in the annualreport and are responsible for both its accuracy and itsconsistency with the financial statements. The financialstatements have been audited by independentauditors, Charles Orbach & Company, who were givenunrestricted access to all financial records and relateddata, including minutes of all meetings of shareholders,the board of directors and committees of the board.The directors believe that all representations made tothe independent auditors during their audit were validand appropriate.

RISK MANAGEMENT

The purpose of management is to identify risk andassess its impact on the group. This is a continuingprocess, commencing at board level and filtered downto all levels of management by reporting and checkingmechanisms.

AUDIT COMMITEE

The committee presently comprises:

• MJ Prinsloo (Chairman)

• W Tshuma (Member)

• PD Terwey (Member)

Members of the group’s financial management andthe independent auditors attend all meetings byinvitation. Of the four meetings held during the yearunder review, W Tshuma was unable to attend onemeeting. The committee meetings focus on financialreporting requirements, both internal and external,and review fees charged by the independent auditors(for audit and consulting assignments) and directorsfor their professional services beyond their roles asdirectors.

REMUNERATION COMMITTEE

The committee presently comprises:

• Z Lacob (Chairman)

• W Tshuma (Member)

• PD Terwey (Member)

The committee comprises two non-executive directorsand the group’s financial consultant who has beenworking on the group’s staff incentive scheme. Takinginto consideration the group’s size, the subsidiarycompany boards agreed to disband their ownsubsidiary remuneration committees and now send arepresentative from their board to attend the group’sremuneration committee meetings. The committeemet six times during the year under review and allmembers and invitees attended those meetings.

The committee makes proposals regardingremuneration paid to non-executive directors. It alsoreviews management’s remuneration policies andmakes recommendations on the remuneration to thegroup’s staff, particularly incentive-basedremuneration.

A N N U A L R EMA

P O R T5

CORPORATE GOVERNANCE (continued)

6

Both board sub-committees are scheduled to meetfour times in the current year, however, they will meetadditionally if considered necessary to perform thefunctions for which they were established.

INTERNAL CONTROLS

The group’s size does not warrant the establishment ofan internal audit function. The system of internalcontrols established by management is consideredsufficient to provide reasonable assurance as to theintegrity and reliability of the financial statements andto adequately safeguard, verify and maintainaccountability of the group’s assets.

EMPLOYMENT EQUITY AND SKILLS DEVELOPMENT

Throughout the group, equitable employment policiesare in use to ensure individuals from all demographicgroupings are given the opportunity to be employedand trained by the group. As a result of the reductionin the operations of the group, it has been necessaryto place an increased emphasis on maintaining andtraining those members of staff who can provideexcellent service in a small team environment. To thisend the staff incentive scheme, approved during thepast financial year, will provide financial rewardsappropriate to the personal performance of individualstaff members.

HIV/AIDS

The board has given consideration to the HIV/AIDSpandemic and its possible impact on the group’shuman resources. Due to the high quality of our staffand their level of education, the board does notbelieve that there is a greater chance of losing stafffrom HIV/AIDS than from any other medical condition.However, it is accepted that the threat of HIV/AIDS tothe country is real and the board will continue toconsider any impact on the group’s staff.

GOING CONCERN

The going concern basis has been adopted inpreparing the financial statements. The steps taken inthe past year and the continued tight control onexpenditures and cash flows, give the directors reasonto believe that the business of the group will continue

to function as a going concern for the foreseeablefuture.

COMPANY SECRETARIAL AND PROFESSIONAL ADVICE

All directors have unlimited access to the advice andservices of the company secretary, who is responsibleto the board for ensuring that board procedures arefollowed. All directors are entitled to seek independentprofessional advice, at the group’s expense,concerning the affairs of the group, after obtaining theapproval of the chairman.

ADMINISTRATION

AFRICAN MEDIA ENTERTAINMENT LIMITED

Incorporated in the Republic of South AfricaRegistration number: 1926/008797/06JSE code: AMEISIN: ZAE000114106

SPONSOR

LPC Manhattan Sponsors (Pty) LimitedRegistration number: 1999/024792/074th Floor, Hyde Park CnrJan Smuts AvenueJohannesburg 2001

PO Box 41906, Craighall 2024

SECRETARY AND REGISTERED OFFICE

KJ Bownass5th Floor, Park Terras33 Princess of Wales TerraceParktown Johannesburg 2001

PO Box 3014, Houghton 2041

AUDITORS

Charles Orbach & CompanyChartered Acccountants (SA)Registered accountants and auditorsAssociated worldwide with Bakker Tilly InternationalGround floor, Orbach Place261 Oxford RoadIllovo 2196

SHARE REGISTRARS

Computershare Investor Services 2004 (Pty) Limited70 Marshall StreetMarshalltownJohannesburg 2001

PO Box 1053, Johannesburg 2107

Telephone: +27 11 370 5000Telefax: +27 111 668 7721

BANKERS

NedbankA division of Nedcor Bank Limited1st floor, Retail Place EastNedcor Sandton135 Rivonia RoadSandton2196

LEGAL ADVISORS

Werkmans Attorneys155 Fifth StreetSandown2196Zenwill Lacob Attorneys32 St John RoadHoughton2198

A N N U A L R EMA

P O R T7

STATEMENT OF RESPONSIBILITY

AND APPROVAL BY THE BOARD OF DIRECTORS

8

The directors are responsible for the preparation and integrity of the financial statements and other informationcontained in the annual report.

The directors’ responsibility for internal controls and the basis of preparation of these financial statements is clearlyset out in the corporate governance section of this annual report. The financial statements set out on pages 10 to26 have been approved by the board of directors and are signed on its behalf by:

ACG MOLUSI

Chairman

7 February 2005

DECLARATION BY COMPANY SECRETARY

In terms of section 268 G(d) of the Companies Act 1973, as amended, I certify that the company has, or willshortly, lodge with the Registrar of Companies, all such returns as are required by the Companies Act.

KJ BOWNASS

Company secretary

7 February 2005

REPORT OF THE INDEPENDENT AUDITORS

To the members of African Media Entertainment Limited

We have audited the financial statements and group financial statements set out on pages 10 to 26 for the yearended 31 October 2004. These financial statements are the responsibility of the company’s directors. Ourresponsibility is to express an opinion on these financial statements based on our audit.

SCOPE

We conducted our audit in accordance with statements of South African Auditing Standards. Those standardsrequire that we plan and perform the audit to obtain reasonable assurance that the financial statements are free ofmaterial misstatement. An audit includes:

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

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

• evaluating the overall financial statement presentation.

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

AUDIT OPINION

In our opinion, the financial statements fairly present, in all material respects, the financial position of the companyand the group at 31 October 2004 and the results of their operations and cash flows for the year then ended inaccordance with South African Statements of Generally Accepted Accounting Practice and in the manner requiredby the Companies Act in South Africa.

CHARLES ORBACH & COMPANY

Chartered Accountants (SA)Registered Accountants and Auditors

7 February 2005

A N N U A L R EMA

P O R T9

DIRECTORS’ REPORTfor the year ended 31 October 2004

10

NATURE OF BUSINESS

The group’s main activities are set out on page 2 of this report.

FINANCIAL RESULTS

The financial results of the group and of the company are set out on page 12 of this report. A review of thegroup’sresults and performance of the business units is given in the Chairman’s report on page 4.

DIVIDENDS

No dividends are recommended in respect of the financial year under review.

SHARE CAPITAL

Authorised share capital

At the annual general meeting of the company held on 24 May 2004, resolutions proposing the consolidation ofthe share capital of the company were approved. The effect of the resolution was to consolidate the share capital ofthe company on the basis of 1-for-100 ordinary shares, from an authorised share capital of 1 500 000 000 ordinaryshares of 1 cent each to 15 000 000 ordinary shares of 100 cents each. The details relating to this are more fullydescribed in the circular issued to shareholders on 31 May 2004.

Issued share capital

The following changes in issued share capital and share premium took place during the year under review:

Number of Nominal Shareshares value premiumissued R’000 R’000

Balance at beginning of year 8 646 870 8 647 32 431 Repurchased during the year (18 562) (19) (75)

Balance at end of year 8 628 308 8 628 32 356

DIRECTORATE AND SECRETARY

Details of the directorate are given on page 3 of this report. Details of their remuneration is set out below:

Basic Severance Allowances TotalR’000 R’000 R’000 R’000

ACG Molusi (non-executive) – – – –Z Lacob (non-executive) – – – –MJ Prinsloo (non-executive) – – – –W Tshuma (non-executive) (Appointed 7 July 2004) – – – –S Katz (Retired 24 May 2004) 669 67 98 834 C de Klerk (Resigned 27 November 2003) 55 110 – 165

Total remuneration 724 177 98 999

Mr KJ Bownass was appointed secretary of the company with effect from 1 March 2004.

In terms of the articles of association of the company, not less than a third of the directors retire at the forthcomingannual general meeting and being eligible, offer themselves for re-election.

As at 31 October 2004, the aggregate direct and indirect, beneficial and non-beneficial interests of the directors inthe fully paid issued share capital of the company, was nil (2003: 192 138 112). There has been no material changein the directors’ interests in the issued share capital between 31 October 2004 and the date of this report.

DISPOSALS

During the financial year under review, the company disposed of the business of Quayle Properties with effect from31 December 2003. The proceeds from this disposal were used to settle a portion of the company’s legacy debt.

POST-BALANCE SHEET EVENTS

There have been no matters between the group’s year-end and the date of this report that require to be brought tothe attention of shareholders.

INVESTMENT IN SUBSIDIARY COMPANIES

On 1 November 2002 the company acquired a 100% interest in United Stations (Pty) Limited. The initial purchaseprice comprised R550 000, which was settled by the issue of 220 000 shares in the company. The final purchaseprice will only be determined after 31 October 2005, when the cumulative profits to that date have beendetermined. The shares to be issued in respect of any additional consideration may not exceed 440 000 shares.

The financial information in respect of the company’s interest in its major subsidiary companies is set out in note 4on page 21 of the financial statements.

The aggregate profits and losses after taxation of the subsidiaries attributable to the company amounted to R10 638 000 (2003: R5 565 000).

GOING CONCERN

The financial statements have been prepared on the basis of accounting policies applicable to a going concern. Thisbasis assumes that funds will be available to finance future operations and that the realisation of assets andsettlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The legacy debt of both the group and company have been significantly reduced as a result of the group’ssubstantially better cash flows. The remaining liabilities are reflected as short-term and the directors are satisfiedthat these remaining debts will be liquidated within the next twelve months. As a result, the group and thecompany are not considered to be trading in a cash flow restrictive environment.

A N N U A L R EMA

P O R T11

BALANCE SHEETSas at 31 October 2004

12

GROUP COMPANY

2004 2003 2004 2003Note R’000 R’000 R’000 R’000

ASSETS

Non-current assets 34 226 37 679 48 373 48 490

Property, plant and equipment 2 3 276 3 071 27 143 Intangible assets 3 26 487 30 244 – – Investment in subsidiaries 4 – – 47 494 47 495 Share incentive trust 5 – – 536 536 Deferred taxation 6 4 463 4 364 316 316

Current assets 19 114 19 853 4 962 4 418

Trade and other receivables 7 14 435 15 453 10 18 Loans receivable 1 073 4 400 – 4 400 Loans to subsidiaries – – 3 845 – Cash and bank balances 3 606 – 1 107 –

Total assets 53 340 57 532 53 335 52 908

EQUITY AND LIABILITIES

Capital and reserves 24 522 16 505 35 490 28 524

Share capital 8 8 539 8 558 8 628 8 647 Share premium 31 909 31 984 32 356 32 431 Accumulated losses (18 783) (24 830) (21 118) (28 178)Non-distributable reserve 9 – – 15 624 15 624

Ordinary shareholders’ interests 21 665 15 712 35 490 28 524 Minorities 2 857 793 – –

Non-current liabilities 315 7 831 – 7 516

Interest-bearing borrowings 10 – 7 516 – 7 516 Non-interest-bearing borrowings 11 315 315 – –

Current liabilities 28 503 33 196 17 845 16 868

Trade and other payables 12 778 20 042 6 386 7 421 Taxation 4 036 7 944 – 873 Loans from subsidiaries – – – 4 288 Current portion of borrowings 10 6 887 2 449 6 657 2 154 Bank overdraft 12 4 802 2 761 4 802 2 132

Total equity and liabilities 53 340 57 532 53 335 52 908

INCOME STATEMENTSfor the year ended 31 October 2004

GROUP COMPANY

2004 2003 2004 2003Note R’000 R’000 R’000 R’000

Continued operationsRevenue 13 92 227 78 163 – – Cost of sales (30 739) (24 967) – –

Gross profit 61 488 53 196 – –Other operating income 14 2 405 1 297 4 620 3 805

63 893 54 493 4 620 3 805 Operating expenses 14 (49 226) (49 615) (5 515) (6 984)

Income/(loss) from continued operations 14 667 4 878 (895) (3 179)

Discontinued operationsRevenue 13 1 300 14 487 – – Cost of sales (600) (5 230) – –

Gross profit 700 9 257 – – Operating expenses 14 (1 100) (13 301) – –

Loss from discontinued operations (400) (4 044) – –

Total income/(loss) from operations 14 267 834 (895) (3 179)Exceptional items 15 1 363 5 779 (1 392) 3 394

Operating income/(loss) 15 630 6 613 (2 287) 215 Investment income 16 479 823 11 665 54 295 Finance costs 16 (1 967) (3 492) (2 318) (4 257)

Income before taxation 14 142 3 944 7 060 50 253 Taxation 17 (5 883) (4 060) – (86)

Income/(loss) after taxation 8 259 (116) 7 060 50 167 Attributable to outside shareholders (2 212) (1 809) – –

Income/(loss) attributable to shareholders 6 047 (1 925) 7 060 50 167

Earnings/(loss) per share (cents) 18 70,8 (22,5)Headline earnings per share (cents)– continued operations 18 103,8 10,4 Total headline earnings/(loss) per share (cents) 99,2 (45,8)

A N N U A L R EMA

P O R T13

STATEMENTS OF CHANGES IN EQUITYfor the year ended 31 October 2004

14

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

Share capital 8 539 8 558 8 628 8 647

Balance at beginning of year 8 647 8 427 8 647 8 427 Consolidation of share trust (89) (89) – –

Restated balance at beginning of the year 8 558 8 338 8 647 8 427 (Repurchased)/issued during the year (19) 220 (19) 220

Share premium 31 909 31 984 32 356 32 431

Balance at beginning of year 32 431 32 101 32 431 32 101 Consolidation of share trust (447) (447) – –

Restated balance at beginning of the year 31 984 31 654 32 431 32 101 (Repurchased)/issued during the year (75) 330 (75) 330

Accumulated losses (18 783) (24 830) (21 118) (28 178)

Balance at beginning of year (24 830) (26 118) (28 178) (102 978)Prior year adjustments (see notes below) – 3 213 – 24 633

Restated balance at beginning of the year (24 830) (22 905) (28 178) (78 345)Profit/(loss) for the year 6 047 (1 925) 7 060 50 167

Non-distributable reserve – – 15 624 15 624

Restated balance at beginning of the year – – 15 624 –Prior year adjustment (see notes below) – – – 15 624

Total ordinary shareholders’ interests 21 665 15 712 35 490 28 524

Notes

Restatement of minority interests – group

The method of calculating the minority interest in respect of subsidiary companies was previously incorrect. The 2002year-end minority interest was accordingly decreased by R3,2 million. There was no material impact on 2003 earnings.

Restatement of investment in subsidiaries – company

In prior years the company had provided for the impairment of the investment in its subsidiaries. This impairment wasdetermined to be excessive and a fundamental error, and therefore the portion that was previously written off to theincome statement has been taken to accumulated losses.

A portion of the goodwill arising in respect of the original acquisition of the radio station subsidiaries had been previouslywritten off against the company’s share premium in terms of accounting practices prevailing at the time. Again, excessivewrite-down was recorded in the company’s records, and this fundamental error is considered to be of a capital nature andtaken directly to a non-distributable reserve. These adjustments had no effect on the company’s 2003 earnings and haveno taxation effect.

GROUP COMPANY

2004 2003 2004 2003Note R’000 R’000 R’000 R’000

Cash flows generated by operating activities 3 286 2 571 9 684 53 144

Income before taxation 14 142 3 944 7 060 50 253 Adjustments 5 171 3 991 1 946 (5 571)

– net interest paid/(received) 1 488 2 669 1 823 (3 684)– depreciation 1 262 2 319 26 166 – non-cash flow exceptional items (1 363) (4 778) 97 (2 053)– amortisation of goodwill 3 784 3 781 – –

Operating income/(loss) before workingcapital changes 19 313 7 935 9 006 44 682

(5 331) (376) 3 374 4 778

– (increase)/decrease in trade and other receivables (506) 10 777 4 409 1 125

– (decrease)/increase in trade and other payables (4 825) (11 153) (1 035) 3 653

Cash generated by operations 13 982 7 559 12 380 49 460 Net interest (paid)/received (1 488) (2 669) (1 823) 3 684 Taxation paid A (9 208) (2 319) (873) –

Cash flows from/(utilised in) investing activities 1 503 19 970 (8 140) (39 358)

Decrease/(increase) in investments and loans 3 326 17 841 (8 133) (39 199)Purchase of property, plant and equipment (1 823) (1 146) (7) (159)Acquisition of subsidiary B – – – –Proceeds on disposal of businesses/investments C – 3 275 – –

Cash flows from financing activities 4 292 (16 342) 4 409 (5 301)

Increase/(decrease) in current borrowings 4 292 (15 832) 4 503 (11 803)Repurchase of share capital – – (94) –(Decrease)/increase in non-current borrowings – (510) – 6 502

Net increase in cash and cash equivalents 9 081 6 199 5 953 8 485 Cash and cash equivalents from acquisitions and disposals – (706) – –Non-current liability transferred to bank overdraft (7 516) – (7 516) –Cash and cash equivalents at beginning of year (2 761) (8 254) (2 132) (10 617)

Cash and cash equivalents at end of year (1 196) (2 761) (3 695) (2 132)

CASH FLOW STATEMENTSfor the year ended 31 October 2004

A N N U A L R EMA

P O R T15

NOTES TO THE CASH FLOW STATEMENTSfor the year ended 31 October 2004

16

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

A. TAXATION PAID

Amount unpaid at beginning of year (7 944) (6 499) (873) (873)Amount on disposal of subsidiaries 682 605 – –Amount charged to income statement (5 982) (4 369) – – Amount unpaid at end of year 4 036 7 944 – 873

(9 208) (2 319) (873) –

B. ACQUISITION OF SUBSIDIARY

Property, plant and equipment – (814) – –Intangible assets – (3 132) – –Deferred tax asset – (3 182) – –Current assets – (7 978) – – Current liabilities – 9 631 – –Non-current borrowings – 4 925 – –Investment in subsidiary – – – (550)

Net assets acquired – (550) – (550)Paid for by issue of share capital – 550 – 550

Paid for in cash – – – –

C. PROCEEDS ON DISPOSAL OF BUSINESSES/INVESTMENTS

Tangible and intangible assets 356 3 028 – – Current assets 999 – – – Current liabilities 833 – – – Profit on disposal (net of non-cash write offs) (2 188) 247 – –

– 3 275 – –

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 October 2004

1. ACCOUNTING POLICIES

1.1 Basis of preparationThe financial statements are prepared in accordance with South African Statements of GenerallyAccepted Accounting Practice. The financial statements are prepared under the historical costconvention.

The following are the principal accounting policies used by the company which are consistent with theprevious year, with the exception of the consolidation of the AME Share Incentive Trust. The share trusthas been consolidated in terms of the directive issued by the JSE Securities Exchange South Africa, andthe requirements of AC132 (Consolidated Financial Statements). The comparative figures have beenrestated accordingly.

1.2 Basis of consolidationThe consolidated financial statements include those of the holding company and its subsidiaries. Theresults of the subsidiaries are included from the dates effective control was acquired and up to the dateseffective control ceased. Intra-group transactions are eliminated fully on consolidation.

1.3 GoodwillThe difference between the fair value of the consideration paid and the fair value of net tangible assetsof subsidiaries at the date of acquisition is charged or credited to goodwill arising on consolidation.Goodwill is amortised on the straight-line method over its expected useful life to a nil residual. In theevent of a permanent impairment in the value of a subsidiary, the relevant unamortised balance iswritten off.

1.4 Property, plant and equipmentProperty, plant and equipment is initially recorded at cost.

Impairment losses and reversal of impairment losses are recognised in the income statement.

Depreciation is calculated on the straight-line method to write off the cost of each asset to their residualvalues over their estimated useful lives. The depreciation rates applicable to each category of property,plant and equipment are as follows:

• electronic equipment 20 – 33,3%

• motor vehicles 20%

• office equipment 10 – 16,7%

• leasehold improvements period of the lease

The carrying values of property, plant and equipment are reviewed for impairment when events orchanges in circumstances indicate the carrying value may not be recoverable. If any such indicationexists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

Gains and losses on disposal of property, plant and equipment are determined by reference to theircarrying amount and are taken into account in determining operating profit.

1.5 Investments in subsidiariesInvestments in subsidiaries are stated at cost. Provisions are made for any permanent diminution in thevalue of these investments.

1.6 Leased assetsLeases of property, plant and equipment where the company assumes substantially all the benefits andrisks of ownership are classified as finance leases. Finance leases are capitalised at the estimated presentvalue of the underlying lease payments. Each lease payment is allocated between the liability andfinance charges to achieve a constant rate on the finance balance outstanding. The correspondingrental obligations, net of finance charges are included in other long-term payables. The interest elementof the finance charge is charged to the income statement over the lease period. The property, plant

A N N U A L R EMA

P O R T17

NOTES TO THE FINANCIAL STATEMENTS (continued)

for the year ended 31 October 2004

18

and equipment acquired under finance leasing contracts are depreciated over the useful life of theassets.

1.7 TaxationDeferred taxation is provided using a balance sheet liability method on all temporary differencesbetween the carrying amount for financial reporting purposes and the amounts used for taxationpurposes, except for differences relating to goodwill which are not deductible for taxation purposes andthe initial recognition of assets or liabilities which affect neither accounting nor taxable profit or loss.

A deferred tax asset is recognised to the extent that it is possible that future taxable profits will beavailable against which the associated unused tax losses and deductible temporary differences can beutilised.

Secondary Taxation on Companies is provided in respect of dividend payments net of dividendsreceived or receivable and is recognised as a taxation charge for the year.

1.8 Financial instrumentsInitial recognition and measurementAll financial instruments are recognised on the balance sheet. Financial instruments are initiallyrecognised when the company becomes party to the contractual terms of the instruments and aremeasured at cost, which is the fair value of the consideration given (financial asset) or received(financial liability or equity instrument) for it. Financial liabilities and equity instruments are classifiedaccording to the substance of the contractual arrangement on initial recognition. Transaction costs areincluded in the initial measurement of the financial instrument. Subsequent to initial recognition theseinstruments are measured as set out below.

Financial assetsThe group’s principal financial assets are accounts receivable, bank and cash balances and loansreceivable:

Accounts receivableAccounts receivable originated by the company are stated at their nominal value less provision fordoubtful debts. An estimate of doubtful debts is made based on a review of all outstanding amounts atthe balance sheet date. Bad debts are written off during the period in which they are identified.

Bank and cash balancesThe accounting policy for bank and cash is dealt with under cash and cash equivalents set out below.

Loans receivableLoans receivable originated by the company are stated at the amount at which the financial asset wasmeasured at initial recognition less any principal payments received.

Financial liabilities and equity instrumentsThe group’s principal financial liabilities are interest-bearing debt, non-interest-bearing debt, accountspayable, bank overdrafts and other short-term borrowings:

Interest-bearing debtInterest-bearing debt is recognised at its amortised value, namely original cost less principal paymentsand amortisation.

Non-interest-bearing debtNon-interest-bearing debt is recognised at its original cost less principal payments made.

Accounts payableAccounts payable are stated at their nominal value.

Bank overdrafts and other short-term borrowingsThe accounting policy for bank overdraft and other short-term borrowings is dealt with under cash andcash equivalents set out below.

The group’s principal equity instrument is ordinary share capital. Ordinary share capital is recorded atoriginal cost.

DerecognitionFinancial assets (or a portion thereof) are derecognised when the company realises the rights to thebenefits specified in the contract, the rights expire or the company surrenders or otherwise loses controlof the contractual rights that comprise the financial asset. On derecognition, the difference between thecarrying amount of the financial asset and proceeds receivable are included in the income statement.

Financial liabilities (or a portion thereof) are derecognised when the obligation specified in the contractis discharged, cancelled or expires. On derecognition, the difference between the carrying amount ofthe financial liability, including related unamortised costs, and the amount paid for it are included in theincome statement.

Fair value methods and assumptionsThe carrying amounts of financial assets and liabilities with a maturity of less than one year are assumedto approximate their nominal amounts.

Cash and cash equivalentsCash and cash equivalents are measured at their fair value. For the purpose of the cash flow statement,cash and cash equivalents comprise cash on hand, deposits held on call and investments in moneymarket instruments, net of bank overdrafts, all of which are available for use by the company unlessotherwise stated.

Set-offWhere a legally enforceable right to set-off exists for recognised financial assets and financial liabilities,and there is an intention to settle the liability and realise the asset simultaneously, or to settle on a netbasis, all related financial effects are set-off.

1.9 Employee benefitsDefined contribution plansContributions to defined contribution plans in respect of service in a particular period are recognised asan expense in that period.

1.10 Translation of foreign currenciesForeign currency transactions are recorded, on initial recognition in Rand, by applying to the foreign currency amount the exchange rate between the Rand and the foreign currency at the date of thetransaction.

At each balance sheet date:

• foreign currency monetary items are reported using the closing rate;

• non-monetary items, which are carried in terms of historical cost denominated in a foreign currency,are reported using the exchange rate at the date of transaction; and

• non-monetary items, which are carried at fair value denominated in a foreign currency are reportedusing the exchange rates that existed when the values were determined.

Exchange differences arising on the settlement of monetary items on reporting an enterprise’s monetaryitems at rates different from those at which they were initially recorded during the period, or reported inprevious financial statements, are recognised as income or expenses in the period in which they arise.

1.11 RevenueRevenue comprises the invoiced value for the sale of services, net of value added tax and discounts andafter eliminating sales within the group. Revenue from the sale of airtime is recognised uponbroadcasting of the advertising material.

A N N U A L R EMA

P O R T19



20

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

2. PROPERTY, PLANT AND EQUIPMENT

CostElectronic equipment 6 535 7 324 141 426 Office equipment 1 598 2 655 114 784 Motor vehicles 858 746 – –Leasehold improvements 1 116 2 515 – –

10 107 13 240 255 1 210

Accumulated depreciationElectronic equipment 4 445 5 787 132 413 Office equipment 1 107 1 786 96 654 Motor vehicles 292 263 – – Leasehold improvements 987 2 333 – –

6 831 10 169 228 1 067

Net book value at end of yearElectronic equipment 2 090 1 537 9 13 Office equipment 491 869 18 130 Motor vehicles 566 483 – – Leasehold improvements 129 182 – –

3 276 3 071 27 143

Movement for the yearNet book value at beginning of year 3 071 6 458 143 167 Additions– operations acquired – 814 – – – other purchases 1 823 1 146 7 159 Depreciation (1 262) (2 319) (26) (166)Disposals/transfers (356) (3 028) (97) (17)

Net book value at end of year 3 276 3 071 27 143

3. INTANGIBLE ASSETS

GoodwillCarrying value 42 334 42 307 – – Accumulated amortisation (15 847) (12 063) – –

Net carrying value at end of year 26 487 30 244 – –

Movement for the yearNet book value at beginning of year 30 244 35 734 – –Arising from business combinations and other acquisitions/(disposals) 27 (1 709) – –Amortisation – current year (3 784) (3 781) – –

26 487 30 244 – –

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

4. INVESTMENT IN SUBSIDIARIES

Shares at cost less provision for write-down 47 494 47 495

AME Broadcasting (Pty) Limited – 100 shares representing a 100% holding – –

United Stations (Pty) Limited – 1 000 shares representing a 100% holding – –

Seyalemoya Communications (Pty) Limited – 7 720 shares representing a 69,18% holding 28 811 28 811

Umoya Communications (Pty) Limited – 950 shares representing a 95% holding 18 683 18 683

Other – 1

5. SHARE INCENTIVE TRUST

Loan – – 6 865 6 865 Provision for diminution in value – – (6 329) (6 329)

– – 536 536

The loan is interest free and there are no fixed terms of repayment. At the date of this report, none of the 89 275 shares contained in the Share Incentive Trust have been alloted and no options in respect of these shares have been granted.

6. DEFERRED TAXATION

Balance at beginning of year 4 364 341 316 –Movements during the year attributable to:– Temporary differences (402) 547 (41) 44 – Computed tax losses 501 3 476 41 272

Balance at end of year 4 463 4 364 316 316

The balance comprises:Provision for leave pay 193 276 – 51 Income received in advance 114 459 – –Prepaid expenditure (48) (74) – (7)Computed tax losses 4 204 3 703 316 272

4 463 4 364 316 316

7. TRADE AND OTHER RECEIVABLES

Certain of the group’s trade and other receivables have been ceded as security for banking facilities granted.

A N N U A L R EMA

P O R T21



22

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

8. SHARE CAPITALAuthorised15 000 000 ordinary shares of 100 cents each 15 000 15 000 15 000 15 000 (2003: 1 500 000 000 ordinary shares of 1 cent each)

Issued8 628 308 ordinary shares of 100 cents each 8 628 8 647 8 628 8 647 (2003: 864 686 953 ordinary shares of 1 cent each)Held by the AME Share Incentive Trust (89) ( 89) – –

8 539 8 558 8 628 8 647

Unissued sharesThe 6 371 692 (2003: 635 313 047) unissued shares are under the control of the directors in terms of a resolution of members passed at the annual general meeting of shareholders on 24 May 2004. The authority is valid until the next annual general meeting.

9. NON-DISTRIBUTABLE RESERVERestatement of investment in subsidiaries – – 15 624 15 624

10. INTEREST-BEARING BORROWINGS

UnsecuredNedbank – – – –

Total owing – 295 – –Less: current portion included in current liabilities – 295 – –

Interest was charged at 0,25% above the prime bank overdraft rate, and the loan was repaid during the year.

SecuredCTP Limited – – – –

Total owing 6 657 – 6 657 – Less: current portion included in current liabilities 6 657 – 6 657 –

The loan bears interest at the prime bank overdraft rate and has no fixed terms of repayment. The loan is secured by a pledge ofthe company’s shareholding in its subsidiary Seyalemoya Communications (Pty) Limited.

Sastco (Pty) Limited – 7 516 – 7 516

Total owing – 9 116 – 9 116 Less: current portion included in current liabilities – 1 600 – 1 600

Interest was charged at the rate of 16,4% per annum and the loan was repayable in semi-annual instalments of approximately R3,1 million. The loan was converted at the end of September 2004 to a bank overdraft. Refer note 12 regarding the security arrangements.

– 7 516 – 7 516

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

11. NON-INTEREST-BEARING BORROWINGSUnsecured 315 315 – –

Vendor of a subsidiary company 315 315 – –Other vendors – 554 – 554 Volkswagen trade exchange 230 – – –

545 869 – 554 Less: current portion included in current liabilities 230 554 – 554

The loan from a vendor of a subsidiary company is both unsecured and interest free. In terms of the sale agreement, the loan is to be converted to preference share capital when the negotiations with the vendor are finalised. In terms of a trade exchange contract entered into between a subsidiary company and Volkswagen SA, a vehicle was exchanged for advertising. Advertising to the value of R230 000 (2003: RNil ) was still owing toVolkswagen SA, as at 31 October 2004.

12. BANK OVERDRAFTThe banking facilities of the group are secured by unlimited cross deeds of suretyship incorporatingcessions of loan funds from certain subsidiary companies and cessions of trade debtors.

13. REVENUEContinuing operations– commercial advertising 92 227 78 163 – –

Discontinued operations– staging of events 1 300 10 264 – –– production of films – 3 617 – –– other – 606 – –

1 300 14 487 – –

14. OPERATING INCOME AND EXPENSESare stated after taking the following into account:IncomeAdministration and management fees received – – 4 620 3 805 Profit on disposal of property, plant and equipment – – – 26

ExpensesAuditors’ remuneration– fees paid in current year 476 462 300 300 – other services 119 74 22 2 Amortisation of goodwill 3 784 3 781 – – Depreciation 1 262 2 319 26 166 Directors’ remuneration– for services as a director – – – 61 – for other services – – 999 2 309 Operating lease charges 2 110 6 148 – – Staff costs 15 404 18 478 1 047 1 016 Defined contribution plans 1 644 1 500 – –Average number of employees 85 127 4 7

A N N U A L R EMA

P O R T23



24

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

15. EXCEPTIONAL ITEMS

Profit/(loss) on disposal of businesses/investments 1 363 (1 619) (1 392) – Write-up of loan to share incentive trust – 800 – 800 Write-up of investments and intercompany loans – 6 598 – 2 594

1 363 5 779 (1 392) 3 394

16. INVESTMENT INCOME AND FINANCE COSTS

Investment income– interest received 479 823 14 2 153 – subsidiaries – – 481 5 788 – dividends received from subsidiary companies – – 11 170 46 354

479 823 11 665 54 295

Finance costsInterest paid– borrowings (1 085) (2 405) (1 071) (2 235)– bank (552) (1 087) (483) (924)– other (330) – (764) (1 098)

(1 967) (3 492) (2 318) (4 257)

17. TAXATION

SA normal taxation– current (5 886) (4 369) – –– overprovision prior years 1 905 – – –– deferred 98 309 – (86)Secondary Tax on Companies (2 000) – – –

(5 883) (4 060) – (86)

Tax rate reconciliation: % % % %Statutory tax rate 30,0 30,0 30,0 30,0 Amortisation of goodwill 8,0 28,8 – – Computed tax losses created/(utilised) 4,0 75,8 (12,8) (0,6)Non-deductible expenditure 2,5 12,3 24,4 0,5 Exempt income – – (47,5) (27,7)Exceptional items (2,9) (44,0) 5,9 (2,0)Overprovision prior years (14,1) – – – Secondary Tax on Companies 14,1 – – –

Effective tax rate 41,6 102,9 – 0,2

The company has an estimated tax loss of R14 238 872 (2003: R17 256 490) and the group has an estimated tax loss of R26 869 473 (2003: R29 682 127) available for set-off against future taxable income. Theseamounts have not yet been assessed and their recoverability is dependent on the company and the groupearning future taxable income.

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

18. EARNINGS PER SHARE

The earnings per share information is based on the following figures:Income/(loss) for the year 6 047 (1 925) – – Adjustments:Loss on discontinued operations (after taxation) 400 4 812 – – Exceptional items (1 363) (5 779) – – Amortisation of goodwill 3 784 3 781 – –

Headline earnings – continued operations 8 868 889 – –

Total headline earnings/(loss) 8 468 (3 923) – –

Weighted average number of shares in issue (000’s) 8 539 8 558 – –

19. BORROWING POWERS

In terms of the company’s articles of association, the borrowing powers of the company are unlimited.

20. RETIREMENT BENEFITS

Certain subsidiary companies presently contribute to defined contribution retirement benefit plans, beingeither provident funds or pension funds governed by the Pension Funds Act, 1956, which, due to the natureof the funds, do not require actuarial valuations.

It is compulsory for the employees of the subsidiary companies to be a member of a fund. The subsidiariesand members of the funds contribute to the funds in equal proportions.

The group has no obligations to fund post-retirement medical benefits.

21. RELATED PARTIES

Identity of related partiesThe material subsidiaries of the group are identified in note 4 on page 21.

DirectorsThe directors are listed in the directors’ report. Details of the directors’ remuneration are listed in thedirectors’ report.

Related party transactionsTrading transactions occur between subsidiaries and divisions within the group companies and are reversedon consolidation of the accounts.

22. FINANCIAL INSTRUMENTS

Credit riskFinancial assets, which potentially subject the group to concentrations of credit risk, consist principally of cash,short-term deposits and trade receivables. The group’s cash equivalents and short-term deposits are placedwith high credit quality financial institutions. Trade receivables are presented net of the allowance for doubtfulreceivables. Credit risk with respect to trade receivables is limited due to the large number of customerscomprising the group’s customer base and their dispersion across different industries and geographical areas.Accordingly, the group has no significant concentration of credit risk.

The carrying amounts of financial assets included in the consolidated balance sheet represent the group’sexposure to credit risk in relation to these assets.

A N N U A L R EMA

P O R T25



26

GROUP COMPANY

2004 2003 2004 2003R’000 R’000 R’000 R’000

22. FINANCIAL INSTRUMENTS (continued)

Fair valuesAt 31 October 2004 and 2003 the carrying amounts of cash and short-term deposits, receivables, payables and accrued expenses and short-term borrowings approximated their fair values due to the short-term maturities of these assets and liabilities.

Interest rate riskThe group’s and company’s exposure to interest rate risk and the effective interest rates on financial instruments at balance sheet date were:Floating interest rate instruments (8 083) (13 041) (10 352) (11 802)

Cash and cash equivalents (1 196) (2 761) (3 695) (2 132)Interest-bearing borrowings (6 887) (9 411) (6 657) (9 116)Vendor liabilities – ( 869) – (554)

Non-interest-bearing instruments 2 185 (189) (4 541) (3 003)

Trade receivables 14 435 15 453 11 18 Loans receivable 1 073 4 400 – 4 400 Trade payables and liabilities (13 323) (20 042) (4 552) (7 421)

Net financial liabilities (5 898) (13 230) (14 893) (14 805)

Weighted average effective interest rate (%) 11,1 16,6 11,5 16,9

23. COMMITMENTS

Future operating lease charges for premises and office equipment:Payable within one year 216 1 197 – –

Premises 155 1 139 – –Office equipment 61 58 – –

Payable thereafter 182 508 – –

Premises – 177 – –Office equipment 182 331 – –

398 1 705 – –

24. CONTINGENT LIABILITIES

The company and certain of its subsidiary companies have signed cross suretyships for the overdraft facilitiesgranted to the group. The suretyships will remain in force for an indefinite period.

ANALYSIS OF SHAREHOLDINGfor the year ended 31 October 2004

Numberof shares Percentage Number

held of shares of Shareholder’000 held shareholders percentage

SIZE OF SHAREHOLDING

1 – 1 000 208 2,4 806 72,2 1 001 – 10 000 930 10,8 253 22,6

10 001 – 100 000 1 726 20,0 45 4,0 100 001+ 5 764 66,8 13 1,2

Total 8 628 100,0 1 117 100,0

CATEGORY

Private individuals 2 866 33,2 933 83,5 Nominee companies or trusts 931 10,8 68 6,1 Investment companies 44 0,5 1 0,1 Limited companies 552 6,4 12 1,1 Other corporate bodies 4 235 49,1 103 9,2

Total 8 628 100,0 1 117 100,0

SHAREHOLDER SPREAD

Total non-public shareholders 2 822 32,7 7 0,6 Public shareholders 5 806 67,3 1 110 99,4

Total 8 628 100,0 1 117 100,0

DIRECTORS’ INTERESTS

There are no directors holding, directly or indirectly, in excess of 1% of the issued shares of the company on 31 October 2004.

SHAREHOLDERS’ INTERESTS

The interests of shareholders, holding in excess of 5% of the issued shares of the company on 31 October 2004,are set out below:

Ordinaryshares Total

held percentageShareholders 000’s held

Moolman and Coburn Partnership 1 355 15,7 Frances Elizabeth Coburn 1 130 13,1 Caxton & CTP Publishers & Printers 665 7,7 Bashlume Investments (Pty) Limited 500 5,8 MGM Family Trust 497 5,8

Total 4 147 48,1

A N N U A L R EMA

P O R T27

NOTICE OF MEETING

28

Notice is hereby given that the seventh annual generalmeeting of the shareholders of African MediaEntertainment Limited will be held in the boardroom,5th floor, Park Terras, 33 Princess of Wales Terrace,Parktown, Johannesburg, at 11:30, on Tuesday, 8 March 2005 for the following purposes:

1. To receive and adopt the annual financialstatements for the financial year ended 31 October 2004.

2. To re-appoint Charles Orbach & Company asauditors to the company for the ensuing year,and to authorise the directors to fix the auditors’remuneration for the past year.

3. To give the directors of the company a generalauthority to issue ordinary shares in the capital ofthe company for cash in accordance with therequirements set out in the Listings Requirementsof the JSE Securities Exchange South Africa ("theJSE").

4. To place the unissued shares of the companyunder the control of the directors.

5. To re-appoint the director who was appointed bythe board during the year.

6. To consider and, if deemed fit, pass the followingresolutions with or without modification:

6.1 Ordinary Resolution Number 1

Resolved that the annual financialstatements for the year ended 31 October2004 be hereby adopted.


Resolved that Charles Orbach & Company,be re-appointed as auditors to thecompany for the ensuing periodterminating on the conclusion of the nextannual general meeting of the companyand to authorise the directors to fix theauditors’ remuneration for the past year.


Resolved that subject to the ListingsRequirements of the JSE relating to ageneral authority of directors to issueshares for cash, the directors of thecompany be and are hereby authorised toissue ordinary shares in the capital of thecompany for cash in accordance with therequirements set out in the ListingsRequirements of the JSE as follows:

• the relevant securities to be issuedunder such authority must be of a classalready in issue;

• the securities must be issued to publicshareholders as defined by the JSE’sListings Requirements and not to relatedparties;

• issues for cash may not exceed 15% ofthe issued number of securities in anyone financial year;

• the maximum discount at which suchsecurities may be issued may not exceed10% of the weighted average tradedprice of those securities during thethirty-day period preceding the date onwhich the price of the issue isdetermined by the directors;

• a 75% majority of the votes of allshareholders present or represented byproxy at the annual general meetingmust be cast in favour of the resolutionto issue the shares; and

• if this resolution has been approved bythe shareholders, the duration of theauthority of the directors will beeffective until the next annual generalmeeting of shareholders, which will notbe longer than fifteen months from thedate of approval.


(JSE Code: AME)(ISIN Number: ZAE 00014106)

(“AME” or “the company”)


Resolved that all the unissued shares in thecapital of the company be placed underthe control of the directors as a generalauthority in terms of section 221(2) of theCompanies Act, 1973 (Act 61 of 1973), asamended ("the Act"), who are herebyauthorised to allow and issue shares in thecapital of the company to those persons,upon such terms and conditions, as thedirectors in their sole discretion deem fit,subject to the provisions of the Act andthe requirements of the JSE.


Resolved that the following persons, whoare recommended by the board forappointment as directors, be re-appointedas directors, having been appointed assuch by the board during the year andwhose appointment automaticallyterminates on the day of the annualgeneral meeting in terms of article 12.2 ofthe articles of association of the company.

6.5.1 Wilfred Tshuma

7. Voting and Proxies

Each shareholder who, being a natural person, ispresent in person, by proxy or agent, or, being acompany, is present by representative proxy oragent at the general meeting is entitled to onevote on a show of hands. On a poll, eachshareholder, whether present in person or byproxy, or by representation, is entitled to onevote for each share held.

A form of proxy is attached for use by certi-ficated or own name shareholders who areunable to attend the general meeting but wishto be represented thereat. They are required tocomplete and return the form of proxy so as tobe received by the transfer secretaries of thecompany, Computershare Investor Services 2004(Proprietary) Limited (70 Marshall Street,Johannesburg 2001 or PO Box 61051,Marshalltown 2107) not later than 48 hoursbefore the date and time set for the generalmeeting.

In terms of the custody agreements entered into bydematerialised shareholders and their Central SecuritiesDepository Participants (“CSDP’s”) or brokers:

• dematerialised shareholders other than ownname shareholders who wish to attend thegeneral meeting must instruct their CSDP orbroker to issue them with the necessaryauthority to attend the general meeting;

• dematerialised shareholders other than ownname shareholders who wish to berepresented at the general meeting by way ofproxy must provide their CSDP or broker withtheir voting instructions by the cut-off time ordate advised by their CSDP or broker fortransactions of this nature.

Each certificated or own name dematerialisedshareholder entitled to attend and vote at thegeneral meeting may appoint one or moreproxies (none of whom need be an AMEshareholder) to attend, speak and vote in his/herstead. The completion and lodging of a form ofproxy will not preclude a shareholder fromattending the meeting and speaking and votingthereat to the exclusion of the proxy soappointed.

By order of the board

KJ BOWNASS

Company secretary5th Floor, Park Terras,33 Princess of Wales TerraceParktownJohannesburgPO Box 3014, Houghton 2041

7 February 2005

TRANSFER SECRETARIES

Computershare Investor Services 2004 (Pty) Limited70 Marshall StreetMarshalltownJohannesburg 2001

PO Box 1053, Johannesburg 2107

Telephone: +27 11 370 5000Telefax: +27 111 668 7721

A N N U A L R EMA

P O R T29

SHAREHOLDER’S DIARY

30

Financial year-end 31 October

Annual general meeting 8 March 2005

REPORTS AND PROFIT STATEMENTS

Half-year interim report Published June

Announcement of annual results Published December

NOTES

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For use by certificated shareholders and dematerialised shareholders with “own name” registration at the seventhannual general meeting of the holders of ordinary shares in the company (“AME shareholders”) to be held in theboardroom, 5th floor, Park Terras 33 Princess of Wales Terrace, Parktown, Johannesburg at 11:30, on Tuesday, 8 March 2005 (“the annual general meeting”).

I/We

being the registered holder/s of ordinary shares in the capital of the company of (address):

hereby appoint ( see note 1)

1. or failing him/her

2. or failing him/her

3. the chairman of the annual general meeting as my/our proxy to act for me/us at the annual general meetingfor the purposes of considering and, if deemed fit, passing, with or without modification, the resolutions to beproposed thereat, and at each adjournment thereof, and to vote for or against the resolutions or abstain fromvoting in respect of the ordinary shares registered in my/our name/s in accordance with the followinginstructions (see note 2).

For Against Abstain

1. Approve annual financial statements for the year ended 31 October 2004

2. To re-appoint Charles Orbach & Company as auditors

3. Issue of shares for cash

4. Place unissued ordinary shares under directors’ control

5. Re-appointment of director – Wilfred Tshuma

Signed at on 2005

Signature Assisted by (where applicable)

(state capacity and full name)

Each AME shareholder is entitled to appoint one or more proxy(ies) (who need not be a shareholder(s) of thecompany) to attend, speak and vote in his/her stead at the annual general meeting.

Please read the notes on the reverse side hereof.

FORM OF PROXY

A N N U A L R EMA

P O R T


(JSE Code: AME)(ISIN Number: ZAE 00014106)

(“AME” or “the company”)

FORM OF PROXY (continued)

1. An AME shareholder may insert the name of aproxy or the names of two alternative proxies ofhis/her choice in the space(s) provided, with orwithout deleting "the chairman of the annualgeneral meeting", but any such deletion must beinitialled by the AME shareholder concerned. Theperson whose name appears first on the form ofproxy and has not been deleted, will be entitledto act as proxy to the exclusion of those namesthat follow.

2. An AME shareholder’s instruction to the proxymust be shown by indicating in the appropriateboxes provided the manner in which that AMEshareholder wishes to vote by inserting an "X" inthe relevant box unless a shareholder wishes tosplit his/her votes. In this case the relevantnumber of shares to be so voted must beindicated in the proxy to vote, or abstain fromvoting, at the annual general meeting as he/shedeems fit in respect of all the AME shareholder’svotes exercisable thereat. An AME shareholder orhis/her proxy is not obliged to use all the votesexercisable by the member or to cast all thesevotes exercised in the same way, but the total ofthe votes cast, and in respect whereof abstentionis recorded, may not exceed the total of thevotes exercisable by the member. Failure tocomply with the above will be deemed to beauthority to the chairman of the annual generalmeeting, if he is the authorised proxy, to vote infavour of the resolutions proposed at the annualgeneral meeting as any other proxy to vote orabstain from voting, at the annual generalmeeting as he deems fit, in respect of the sharesconcerned.

3. Forms of proxy and any power of attorney byvirtue of which such proxy is signed (or anotarially certified copy of such power ofattorney) must be lodged at or posted to thecompany’s share registrar, to be received by notlater than 48 (forty-eight) hours before the timefixed for the annual general meeting.

4. Any alteration or correction made to this form ofproxy must be initialled by the signatory/ies.

5. Documentary evidence establishing the authorityof a person signing this form of proxy in arepresentative capacity must be attached to thisform of proxy unless previously recorded by thecompany’s secretary or waived by the chairmanof the annual general meeting.

6. If you are a dematerialised shareholder, otherthan own name registration, you must informyour appointed Central Securities DepositoryParticipant ("CSDP") or broker of the manner inwhich you wish to vote in order for them tonotify the secretary by not later than 11:30 onWednesday, 2 March 2005. Only registeredcertificated shareholders recorded in the mainregister of members of the company or underown names in the dematerialised register, maycomplete a proxy form or alternatively attend theannual general meeting. Those dematerialisedshareholders who are not registered under theirown names who wish to attend the annualgeneral meeting or vote by proxy must contacttheir CSDP or broker who will provide them withthe necessary authority to do so. This must bedone in terms of the agreement between theshareholder and his/her CSDP as applicable.

7. The chairman of the annual general meetingmay reject or accept any proxy form which iscompleted and/or received, other than incompliance with the articles of association of thecompany or these notes.

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