vision and mission - sharedata

VISION AND MISSION

Our vision is to develop Sanyati into a highly profitable,

sustainable construction company with shareholding and

management reflecting the demographics of South

Africa, and list it on the main board of the JSE. In

achieving this objective we will:

• ensure customer satisfaction

• increase shareholder value

• communicate regularly with stakeholders

• apply sound, ethical business principles

• invest in people and quality

• invest in, and implement, responsible health and

safety, and environmental programmes

• finance and implement social programmes

CONTENTS

Vision and mission inside front cover

Commentary

Definitions 03

Chief executive officer’s report 04

Financial director’s report 08

Directorate 10

Corporate governance 12

Corporate social responsibility (CSR) and environmental report 17

Financial statements

Report of the independent auditors 19

Directors’ responsibilities and approval 20

Statement of compliance by the company secretaries 21

Report of the directors 22

Balance sheet 34

Income statement 35

Statement of changes in equity 36

Cash flow statement 37

Notes to the annual financial statements 38

Shareholder information

Share analysis 75

Notice of annual general meeting 76

Form of proxy inserted

Adminstration inside back cover

Shareholders’ calendar inside back cover

Diverse

Dynamic

Dependable

Sanyati Holdings Limited Annual Report 2008

DEFINITIONS

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The following abbreviations have been used throughout this report:

“the Act” the Companies Act, Act 61 of 1973, as amended

“AltX” Alternative Exchange of the JSE Limited

“BBBEE” Broad-based Black Economic Empowerment

“CIBD” Construction Industry Development Board

“EPS” Earnings per share

“EBITDA” Earnings before interest, taxation, depreciation and amortisation

‘HEPS” Headline earnings per share

“IAS” International Accounting Standards

“IFRIC” International Financial Reporting Interpretations Committee

“IFRS” International Financial Reporting Standards

“ISO” International Standards Organisation

“JSE” JSE Limited, South Africa’s Securities Exchange

“Pty” Proprietary

“R” South African Rand

“SAFCEC” South African Federation of Civil Engneering Contractors

“SANRAL” South African National Roads Agency Limited

“SENS” Stock Exchange News Services

“VWAP” Volume weighted average price


4

CHIEF EXECUTIVE OFFICER’S REPORT

INTRODUCTION

The landmark year saw Sanyati conclude its 20th year of operation and second as a

company listed on the alternative exchange of the JSE Limited (AltX).. I am very proud

to present the group’s financial results for the year ended 29 February 2008 (“the

year”), which reflect significantly higher profitability.

With the acquisitions during the year of Ruthcon Civil Contractors (“Ruthcon”), GEM

Earthworks (“GEM”), Meyker Construction and Meyker Re-Teng Construction

(collectively “the Meyker Group”), Sanyati extended its geographical footprint into all

provinces in South Africa, as well as into Zambia and Botswana. The acquisition of

the Meyker Group further saw the group enter the niche growth market of

telecommunications infrastructure through a well-established operator. (See

“Acquisitions” below.)

Following the successful integration of the acquisitions, we have undertaken a

significant restructuring and rebranding of operations to facilitate a more cohesive

and streamlined structure. (See “Operational review” below).

GROUP STRUCTURE

The restructuring of the group has incorporated existing and newly-acquired

businesses under a single branded identity. All businesses are now owned by Sanyati’s

wholly-owned subsidiary, Sanyati Civil Engineering and Construction (Pty) Limited

(“Sanyati Construction”) and are Sanyati-branded, entrenching the consolidation of

the group and furthering brand awareness.

The restructuring has further resulted in Sanyati achieving the highest Construction

Industry Development Board (CIDB) rating – 9 CE/GB/SJ/SB/EE – allowing the group

to tender on all size contracts in South Africa and distinguishing it amongst its

competitors. The improved rating will expose the group to a greater scope of

opportunities through the ability to tender for major larger-scale commissions.

BOARD OF DIRECTORS

Post year-end, as announced on 20 March 2008, Sanyati restructured its board of

directors in order to ensure a more streamlined board with majority black

representation. The restructuring is in line with our strategy to become majority black-

owned by 2009. The reduction in board members from thirteen to seven will also

enhance efficiency and accelerate decision-making processes.

K Ramkissoon, M O’Reilly and R Deacon, executive directors of Sanyati, resigned with

effect from 15 March 2008 to take up executive positions on the board of directors of

Sanyati Construction in line with their responsibilities as managing directors of

subsidiaries. In addition non-executive directors T Ahier, M Fleming and C Crowie

resigned from the board with effect from 15 March 2008.

The board of directors now comprises:

RD Jackson (chief executive officer)

MI Krouse (financial director)

MJ Sangweni (human resources director)

AJ Rutherford (operations director)

M Dlamini (independent non-executive director)

N Khambule (independent non-executive director)

R Crowie (non-executive director)

Rick Jackson Chief Executive Officer


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A new Sanyati Construction board has been established

to deal more effectively with operational matters

comprising all the managing directors of the various

subsidiaries and includes:

AJ Rutherford (Managing director)

JPM O’Reilly

RW Deacon

MJ Sangweni

K Ramkissoon

J Gutter

I Ferguson

G van Schalkwyk (as alternate to JPM O’Reilly)

OPERATIONAL REVIEW

All Sanyati’s divisions experienced good organic growth,

which accounted for 74% of the growth in turnover.

Complemented by the acquisitions, this translated to a

significant increase in profitability.

Building

The division posted revenue of R184,5 million and net

profit of R11,1 million. Incorporating Rusinga, Sanprop

and Megapile, Building continues to show sustainable

growth with strong growth prospects. Major building

contracts currently in progress include the Richmond

Shopping Centre (for Sakhisizwe Holdings), the Mtatha

Shopping Centre (for Sanlam Properties), the Hibiscus

Hospital extensions in Port Shepstone and the Zambia

River Lodge (for Orient Hotels). Piling and Geotechnical,

an operation in the Building segment, is currently

involved in major contracts in respect of the Bridge City

development in Durban, as well as the Knysna

Shopping Centre. Recently completed contracts include

the new Liberty Life Building in Umhlanga, as well as

the Sinaba Stadium in Daveyton. Margins in Building

were impacted in the second half of the year by

expansion into the Gauteng market through the Piling

and Geotechnical operation and unusually high rainfall

during November and December 2007, although the

division nonetheless increased its contribution to group

profitability year-on-year.

Civils Coastal

Civils Coastal generated revenue of R420,9 million and

net profit of R26,4 million. The division, which comprises

the integrated operations of Afriscan, Deroma Structures

and GEM, is currently in the process of completing the

Barberton to Bulembu Road (R125 million), the

Greenville Access Road (R104 million) in Eastern Cape

and the eThekwini Water Supply upgrade project

(R150 million). Work is also progressing well on King

Shaka International Airport (R190 million) where the

division is a 10% partner in the Illembe Construction

joint venture. Civils Coastal revved up performance in

the second half of the year especially to post higher

profitability.

Civils inland

This division posted revenue of R221,8 million and net

profit of R19,7 million. Civils Inland, as a joint venture

partner with Wilson Bayley Holmes Ovcon (WBHO), was

recently awarded a contract to the value of R2,3 billion

(of which Sanyati’s 15% share amounts to approximately

R350 million) for the upgrade of the Gauteng road

infrastructure in the SANRAL programme. Further, Phase

II of the Eye Of Africa Golf Course development, as well

as Monaghan Farm outside of Brits is progressing well.

Civils Inland also saw a significant improvement in

performances in the second half of the year, posting

higher profitability.

Roads

The division posted revenue of R173,1 million

generating R9,4 million net profit. Sanyati Roads has

recently secured the surfacing contract for the King

Shaka International Airport to the value of R175 million

over the next two years. Work is currently being

completed on a 55 000 ton asphalting contract in the

Durban Harbour for Portnet, in addition to the

Department of Transport and eThekwini annual supply

contracts currently in progress. Roads’ performance was

a significant improvement on last year’s contribution to

the group’s bottom line.

ACQUISITIONS

Sanyati’s strategy announced at the time of listing was to

expand regionally and maximise exposure to

infrastructure expansion country-wide and in Africa.

Prior to listing the group was in a sound financial

position, which meant that at the same time as we

continued operating in KwaZulu-Natal following the

listing we could pursue acquisitive growth to expand

our national footprint outside of the province. The

acquisitions go some way towards achieving this goal.

As previously announced on 20 March 2007 Sanyati

acquired Ruthcon for R150 million and GEM for

R45 million during the year. The acquisitions have been

fully integrated with both companies contributing

significantly to the group’s strong performance. Both

became unconditional during April 2007 and have been

included in these annual financial results for an

11-month period.


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CHIEF EXECUTIVE OFFICER’S REPORT continued

Ruthcon has been a Gauteng-based supplier for 13 years of roadworks, township

services and bulk earthworks to clients including government and private developers.

The company also has a concrete division specialising in concrete structures and slip-

form construction. Ruthcon is an accredited empowerment contractor for the

Bombela joint venture on the Gautrain and is currently involved with an initial

R30 million project for Rosebank and the Marlboro portal. The concrete division has

recently completed six silos for Impala Platinum and Sasko.

GEM provides road and earthwork services, as well as plant hire. GEM’s plant fleet

and road building equipment further enable Sanyati to deliver specialised solutions to

our clients.

Further to announcements on 4 December 2007,

13 December 2007 and 21 January 2008 Sanyati acquired the entire issued share

capital in the Meyker Group for a maximum purchase consideration of

R220 million. All conditions precedent have been met and the acquisition concluded

effective 17 January 2008, with the Meyker Group included in these annual financial

results for one month effectively.

Established in 1996, the Meyker Group operates in the Free State, Northern Cape,

Northern Province and Botswana. It is a specialist supplier of optical fibre cable

installation for leading network providers MTN and Vodacom, as well as for Transtel

and Neotel. The Meyker Group further offers project management and road and

bridge building for other clients including Eskom and government. Specifically it

offers telecommunication transmission line infrastructure, ground works,

earthmoving, mobile crushing, sealing, road construction and dam building,

specialising in logistically challenging projects in remote areas with tight time

constraints.

The acquisitions have given the group the opportunity to leverage synergies to amass

cost savings and streamline operational efficiency over the medium to long term. In

the immediate term we are benefiting from the companies’ full order books and

healthy pipelines, supported by reputable expertise and track records.

FINANCIAL REVIEW

During the year revenue almost trebled to R1 billion (164%) compared to R379,6

million in the previous year, which was 4,9% ahead of the revised forecasts

(published in May 2007 following conclusion of the Ruthcon and GEM acquisitions).

Organic growth accounted for 74% of the increase in revenue, in large part due to

Megapile being fully consolidated and Rusinga Building’s growth in turnover. Profit

attributable to shareholders more than doubled (145,8%) to

R59,4 million from R24,2 million, 12% ahead of forecasts. Headline earnings per

share increased 89,4% from 11,78 cents to 22,31 cents, 22,4% ahead of forecasts.

More detailed financial results are set out in the annual financial statements and

accompanying notes.


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SKILLS AND TRAINING

Sanyati is cognisant of the skills shortage facing the

industry and has recently opened a training centre in

KwaZulu-Natal aimed at equipping existing employees,

as well as learners, with the necessary skills. Employing

an aggressive training strategy, the group expects this

will help alleviate the skills pressure.

BEE

Following the issue of shares to select BEE investors to

help fund the acquisitions, Sanyati’s black shareholding

currently stands at 43%. In addition the board has been

restructured to further boost black representation, as

well as enhance efficiency and accelerate decision-

making processes. The group is therefore well positioned

to meet its target of majority BEE ownership by the end

of 2009.

Sanyati is currently a “Level 4” contributor in terms of the

Department of Trade and Industry’s BBBEE Codes of

Good Practice.

PROSPECTS

Notwithstanding negative business sentiment, rising

inflation and increasing interest rates the construction

industry in southern Africa continues to demonstrate

robust growth opportunity.

Sanyati is well placed to benefit from government’s

considerable infrastructure spend which is expected to

continue for at least the next six to eight years.

Projections by the South African Federation of Civil

Engineering Contractors (SAFCEC) indicate that current

industry conditions are expected to continue until 2014

and beyond.

Sanyati is presently involved in many of the larger civil

engineering projects either in joint ventures or as the

main contractor. These include the King Shaka

International Airport in KwaZulu-Natal, the 2010 Soccer

World Cup Bloemfontein stadium, an Eskom power

supply contract in Braamhoek, the Gautrain and several

SANRAL roads contracts. Having achieved the highest

CIDB registration, and strongly empowered, the group is

well positioned to take advantage of future

infrastructure spend by government and parastatals.

In addition, through the Meyker Group acquisition

Sanyati will capitalise on escalating spend on

telecommunications infrastructure.

Sanyati is also involved in private and public sector

building and civil engineering projects across Africa

including in Botswana, Zambia and Rwanda where

growth prospects look strong.

The order book currently stands at R2 billion.

R1,4 billion, or 78%, is attributable to the year to

February 2009 indicating that the group is on track to

achieve projected turnover of R1,8 billion, a record for

Sanyati. A number of high-value contracts currently

being negotiated are set to assist in reaching this target.

The R600 million balance in hand will roll over into the

year ending February 2010.

APPRECIATION

We recognise the invaluable contribution of all our

management and employees whose sheer hard work

has been a key driver of the group’s strong

performance, and we thank them. We also extend our

thanks to our business partners, advisers and suppliers

for their support and our fellow directors for their insight

and counsel. Finally, thank you to our stakeholders for

their faith in the group.

Rick Jackson

Chief Executive Officer

19 May 2008


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FINANCIAL DIRECTOR’S REPORT

Income statement

The group achieved a major milestone with turnover for the year exceeding

R1,0 billion, 164,09% ahead of R380 million for the previous year, and 4,87% ahead

of the revised forecasts published on SENS in May 2007 following conclusion of the

acquisitions of Ruthcon and GEM. This generated profit before interest and taxation

(PBIT) of R82,9 million, 238,04% higher than the previous year and 11,77% above

the revised forecasts.

The earnings before interest, taxation, depreciation and amortisation (EBITDA) margin

on revenue decreased slightly to 9,2% from 10,0% at February 2007, due to a

combination of reserves set aside for asset depreciation adjustments, provisions for

anticipated losses on specific contracts and for potential contract disputes as well as

increased bad debt provisions in certain operating segments reliant on private sector

work. Adjusting for these items would have resulted in an EBITDA margin of 10,4% in

line with the previous year and reflecting improved trading conditions in various

sectors of the industry.

Attributable earnings increased 145,81% to R59,4 million from R24,2 million and was

12,04% ahead of the revised forecasts. Headline earnings per share (HEPS) of

22,31 cents reflects growth of 89,36% on 11,78 cents in the previous year and an

increase of 22,35% over the revised forecasts, notwithstanding an increase in the

weighted average number of shares in issue to 278,5 million from 207,3 million.

Diluted earnings per share (EPS) rose from 11,66 cents to 14,86 cents excluding the

effect of consolidation of the acquired companies for the full year. With the

consolidation of the acquired companies for the full year diluted EPS would have

amounted to 22,40 cents, an increase of 90,15% over the previous year, which is in

line with HEPS of 22,31 cents.

Divisional performance

Building contributed R11,1 million to group profitability, which marked growth year-

on-year but represented a lesser percentage contribution than for the interim period

to August 2007. Margins in the second half of the year were impacted by expansion

into the Gauteng market, as well as unusually excessive rainfall during November and

December 2007. Building’s profitability accounted for a 5,92% margin on revenue of

R184,5 million.

Civils Coastal recorded a 5,25% margin on revenue of R420,9 million with a

contribution of R26,4 million to group profitability compared with R10,9 million

(4,07%) at February 2007. At interim stage the division’s contribution to profitability

totalled 3,12% with trade improving substantially during the second half of the year

and the inclusion of the Meyker group for a period of one month being reflected for

that period.

Civils Inland, formed in March 2007 with the acquisitions of Ruthcon, returned a

contribution to group profitability of R19,7 million or 8,90% on revenue of R221,8

million. Conclusion of several fixed price contracts during the second half of the year

boosted margins for the full year above 7,38% achieved at interim stage.

Roads improved its contribution to group profitability year-on-year with R9,4 million,

equating to 5,44% on revenue of R173,1 million, up on the 3,17% for February

2007 and in line with 5,47% returned for the interim reporting period.

Marc Krouse Financial Director


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Property, plant and equipmentThe group invested R122,6 million in capital assets

during the year to further increase its investment in

property, plant and equipment by 252,7% to

R150 million. This is as a result of the assets acquired

following the acquisitions, as well as additional

investment to expand capacity in several of Sanyati’s

operations.

Balance sheetThe strong balance sheet reflects Sanyati’s continued

growth. Total assets increased from R237 million to

R1,1 billion for the year, of which R497 million

constitutes intangible assets in the form of goodwill

arising from the acquisitions of Megapile, Ruthcon, GEM

and the Meyker Group. A full valuation of the intangible

assets was performed using a discounted cash flow

model and no impairment was deemed required other

than an impairment of the goodwill on Deroma

Structures (Pty) Limited by an amount of R2,72 million.

Debtors’ days moved from 51,3 days on average for

2007 to 66,9 days at year-end, significantly reducing

cash on hand to R2,2 million from R18,2 million at the

previous year-end. This was as a result of debtors’ days

from the acquired companies being in excess of the

levels previously maintained by Sanyati, one contractual

dispute totalling approximately R15 million and the Road

division’s book moving from 79 days to 92 days. The

group however has adequate facilities available to meet

its existing and ongoing obligations. Further, an

enhanced credit control policy has been implemented

with the employment of a National Credit Manager and

the benefits of an enhanced cash flow are already

starting to be felt by the group. It is projected that

debtors’ days will improve to 50 days by the end of

August 2008. As a result of this trade and other

receivables increased by 212,3% to R372,5 million.

Interest-bearing borrowings increased from R16,6 million

to R103,2 million largely as a result of the financing of

new plant and equipment and the assumption of the

existing finance facilities of the companies acquired

during the year. The debt equity ratio of 16,4% remains

within acceptable limits as determined by Sanyati’s

directors and well within the industry average of around

25%. Trade and other payables increased by 202,9% to

R175,5 million.

Significant investment was made in the group’s

information technology. A completely new hardware

platform was installed at a cost of approximately

R2,0 million to run a new financial software package

implemented on 1 November 2007. Total investment to

date is approximately R4,5 million we intend to continue

expanding on the platform going forward, as well as roll

out the solution throughout the group. Training of staff is

ongoing and the benefits of this enhanced information

technology platform will be felt in years to come.

Sanyati is on track to achieve projected turnover of

R1,8 billion for the year to February 2009 and the

directors are confident of achieving similar levels of

profitability as achieved during the 2008 financial year.

Full disclosure of future share issues to be made is in the

Directors Report, that forms part of the annual financial

statements.

Marc Krouse

Financial Director

19 May 2008


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DIRECTORATE

The following served as directors during the period under review.

RICHARD DAVID JACKSON Chief executive officerRick qualified in 1979 with a Diploma in Civil Engineering at Natal Technikon whilstemployed at the eThekwini Council. In 1984, studying part time, he completed hisDiploma in Civil Engineering Technology and joined a civil engineering contractingcompany to gain valuable experience in the industry.

In 1988, Rick started Afriscan (Pty) Limited (now Sanyati) as one of the three foundingmembers and successfully grew the company rapidly to become one of the BusinessDay Top 20 Non-listed Company finalists for five years running from 1995 to 1999.

TREVOR BRUCE CABOT AHIER Non-executive directorTrevor has more than fifteen years’ experience in executive and managementpositions and has founded and headed over ten companies in his career. Trevor holdsa Civil Engineering Degree and an LLB degree. He is the chairman and founder ofAdcheck.

CLINTON CRAIG CROWIE Non-executive directorClinton holds a BSc in Construction Management. In June 2000 Clinton foundedCrowie Projects (Pty) Limited and was appointed executive director. In January 2002after the merger with PM Africa he was appointed executive director of Focus ProjectManagement.

ROWAN MARK CROWIE Non-executive directorRowan has a BSc in Construction Management. Rowan is currently the managingdirector of Crowie Holdings (Pty) Limited and from 1998 to 2000 he was the head ofthe Facilities Management Division of the South African Reserve Bank.

RAYMOND WILLIAM DEACON Executive directorRaymond has diplomas in Civil Engineering (NHDip Tech) and ConstructionManagement (CMP). He has been involved in most segments of the constructionindustry throughout his career, serving as contracts manager and director withcompanies working in the civil engineering, structures, building and asphalt sectors.Raymond has a total of 26 years’ experience in the construction industry.

Back from left to right:RM Crowie, HM Dlamini N Khambule, MI Krouse

Front from left to right: AJ Rutherford, RD Jackson MJ Sangweni


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HANS MICHAEL DLAMINIIndependent non-executive directorMichael completed his National Diploma in QuantitySurveying at Mangosuthu Technikon in 1996 and wenton to complete a BSc in Construction Management atthe University of Natal in 1999.

In addition to being a member of the BlackManagement Forum, Michael holds several otherprofessional memberships and affiliates including theAssociation of South African Project Managers and theChartered Institute of Building (UK).

CECIL MICHAEL DOUGLAS FLEMMINGNon-executive directorMike holds a BCom, Bachelor of Law and BProc degree.He also attended the Harvard Business School AdvancedManagement Programme.

Mike joined African Oxygen Limited in 1985 andtransferred to its healthcare division in 1994. Michaelwas appointed managing director of Afrox Healthcare in2001.

NHLANHLA KHAMBULEIndependent non-executive directorNhlanhla completed a National Diploma in Agricultureand after a short stint with the Department ofAgriculture he completed a BTech degree in BusinessManagement. A subsequent Advanced BusinessProgramme in Business Development is being followedby an MBA which is currently 80% completed.

Nhlanhla has extensive project management, consultingand marketing experience. He currently providesfinancial management, local economic development,project management, organisational and individualperformance management and HR development to arange of municipalities nationwide.

MARC IVOR KROUSEFinancial directorAfter graduating from the University of Natal with aBCom (Business Finance) degree in 1989, Marccommenced a career in banking with Boland Bank. Aftera relatively short period in banking, several financialpositions followed in various manufacturing industriesand this culminated with Marc joining Afriscan (Pty)Limited (now Sanyati) in March 1996. Beinginstrumental in the group restructure later the same yearhe was promoted to group financial director during1998, a position he has held since then.

JANVIER PATRICK MICHAEL O’REILLYExecutive directorMike completed and graduated with a National Diplomain Civil Engineering in 1984 and after in-service trainingwith Natal Roads Department, was appointed asresident engineer at the Winterton construction unit fora period of four years.

After several years with Basil Read Construction Mikewas offered a management position with AfriscanConstruction (Pty) Limited (now Sanyati) during 2002and took up an appointment in January 2003,completing various civil engineering projects. Mike wasappointed a director in 2005 and now holds theposition of managing director, responsible for the dailyoperations of Afriscan (now Sanyati), includingmarketing, strategic planning, financial management,procurement and mentorship.

KHISORE RAMKISSOONExecutive directorAfter matriculating in 1970, Khisore attended universityfor two years studying for a BA degree which he partlycompleted before changing to studying EngineeringSurveying while working for a large constructioncompany. Khisore registered with PLATO as anengineering surveyor and worked for some largeconstruction companies as a surveyor between 1973and 1983. Khisore joined Afriscan (Pty) Limited (nowSanyati) in 1992 and was promoted to contracts directortwo years later. Khisore purchased shares in Afriscanshortly thereafter and, together with Rick Jackson, grewthe business rapidly. After serving as managing directorof Afriscan Construction (Pty) Limited (now Sanyati) for anumber of years Khisore handed over to Mike O’Reillyeffective 1 March 2007.

ARCHIBALD JAMES RUTHERFORDExecutive directorArchie has a PrEng, BSc (Civil Engineering) and a HigherDiploma in Arbitration. He has previously worked for LTAEarthworks (Pty) Limited and WJM Projects (Pty) Limited.Archie founded Ruthcon Civil Contractors (Pty) Limited inFebruary 1994.

MOSES JABULANI SANGWENIHuman resources directorMoses has a Diploma in HR Development and Training.He has completed numerous courses relating to skillsdevelopment and industrial relations. He has been inthe construction industry since 1982 when he startedoff as a soils laboratory assistant and ended up beingthe training officer where he was trained in a range ofconstruction skills.

Moses was promoted to HR director in 1997. Moses alsoproject manages the company’s emerging contractordevelopment projects.


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CORPORATE GOVERNANCE

COMPLIANCE WITH KING II

Sanyati is committed to the promotion of good corporate governance and to

compliance with the Code of Corporate Practices and Conduct as set out in the

King Report on Corporate Governance for South Africa – 2002 (King II). Whilst every

effort has been made to institute “best practice” wherever possible, there are areas

where this has not been achieved and these areas have been highlighted in this

report. A summary of the current compliance is provided below.

Sanyati’s board of directors sets the group’s overall policy and provides guidance and

input in areas relating to strategic direction, planning, acquisitions, performance

measurement, resource allocation, key appointments, standards of conduct and

communication with shareholders.

The directors acknowledge the need for an independent non-executive chairman to

be appointed and this will be done once the company has identified a person

suitably qualified for the position. The company intends appointing a senior

independent non-executive director to assist the chairman in the immediate future.

The group’s corporate philosophy is consistent with the principles of King II in that,

inter alia:

• The roles of the chairman and chief executive officer will be separated.

• An independent non-executive director will be elected as chairman.

• Service contracts of executive directors do not exceed four years in duration.

• Remuneration and audit committees are chaired by non-executive directors who

act independently.

The board will, as a minimum, ensure compliance with the following:

1. CODE OF CONDUCT

Having acknowledged the importance of sound corporate governance and the

guidelines set out in the Principles of Corporate Governance and Code of Best

Practice (Combined Code), the directors intend to embrace the Combined Code

in so far as is appropriate having regard to the size and nature of the various

companies making up the group. The board will take such measures as far as is

practicable to comply with the Combined Code.

2. THE BOARD OF DIRECTORS

The company has a unitary board of directors. The company had seven executive

directors and six non-executive directors during the period under review.

Subsequent to the end of the financial year, three executive directors and three

non-executive directors resigned from the board. All of the company’s directors

have attended the AltX Directors’ Induction Programme.

The non-executive directors are fully independent of management and are free to

make their own decisions and independent judgements. They enjoy no benefits

from the company for their services as directors other than their fees and the

potential gains and dividends on their interests in ordinary shares. The non-

executive directors do not receive share options. The non-executive directors are

high-calibre professionals and are sufficient in number for their independent views

to carry significant weight in the board’s deliberations and decisions.


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The board of directors is responsible for the proper

management and ultimate control of the company.

In order to meet this responsibility to the members

and other stakeholders, the board is responsible for

setting the strategic objectives of the company;

determining investment and performance criteria;

and taking ultimate responsibility for the proper

management and ethical behaviour of the business

of the group. There exists a clear division of

responsibilities at board level that ensures a balance

of power and authority, such that no one individual

has unfettered powers of decision-making. The

board is also responsible for monitoring the activities

of the executive management.

At board meets at least quarterly on a formal basis.

Additional meetings are arranged where necessary

to review strategy, planning, operations, financial

performance, risk and capital expenditure, human

resources and environmental management. Four

meetings were held in the period under review and

the directors’ attendance record is set out at the end

of this report. A representative of the company’s

designated adviser attends all board and audit

committee meetings as required in terms of the JSE

Listings Requirements.

At its meeting held during February 2008, the board

resolved to restructure the group such that Sanyati

Civil Engineering and Construction was introduced

as the main operating company with effect from 1

March 2008. As a result, the boards of both Sanyati

Holdings and Sanyati Civil Engineering and

Construction were reconstituted on 15 March 2008

as follows:

Sanyati Holdings Limited

• RD Jackson (CEO)

• MI Krouse (financial director)

• AJ Rutherford (operations director)

• MJ Sangweni (Human Resources director)

• R Crowie (non-executive director)

• HM Dlamini (independent non-executive

director)

• N Khambule (independent non-executive director)

The Board aims to appoint additional independent

non-executive directors in the forthcoming year and

discussions in this regard are being held with

prospective directors.

Sanyati Civil Engineering and Construction (Pty)

Limited

• AJ Rutherford (Managing director)

• JPM O’Reilly

• MJ Sangweni

• K Ramkissoon

• RW Deacon

• J Gutter

• G van Schalkwyk (as alternate to JPM O’Reilly)

• IR Ferguson

Each of the directors listed above is the managing

director of one of the main subsidiary companies

within the group.

RD Jackson and MI Krouse will attend all meetings of

the Sanyati Civil Engineering and Construction

board.

3. BOARD COMMITTEES

At the board meeting held on 31 May 2007 the

three board committees were reconstituted to allow

for the inclusion of the new directors. The

committees were constituted as follows for the

remainder of the period under review:

3.1 Audit committee

The audit committee consisted of the following

members who are all non-executive directors:

• N Khambule (independent chairperson)

• M Flemming (resigned 15 March 2008)

• R Crowie

with the financial director and representatives

from the designated adviser, the auditors and

the company secretaries in attendance.

Subsequent to the Corporate Laws Amendment

Act coming into effect on 14 December 2007,

the committee has recognised the need for it to

be reconstituted to include an additional non-

executive director, who can be seen to be


14

CORPORATE GOVERNANCE continued

independent. M Flemming has resigned as

director of the company effective 15 March

2008 and as such will no longer be a member

of the audit committee. R Crowie will remain as

a member of the committee until an additional

independent non-executive director has been

appointed.

The audit committee meets at least three times a

year to review the draft audited financial

statements and annual report; the preliminary

profit announcement and interim statements;

and to receive reports on audits carried out by

the external and internal auditors. The audit

committee assists the board by performing an

objective and independent review of the

organisation’s finance, accounting and control

mechanisms; and reviews and monitors the

following:

• The effectiveness of the group’s information

systems and other systems of internal

control

• The effectiveness of the internal audit

function

• The reports of both the external and

internal auditors

• The appointment of and monitoring the

independence of the external auditors

• The annual report and specifically the

annual financial statements included therein

• The accounting policies of the group and

any proposed revisions thereto

• The external audit findings, reports and

fees; and the approval thereof

• Compliance with applicable legislation and

requirements of regulatory authorities

The company maintains accounting and

administrative control systems required for the

current level of operations.

Terms of reference have been adopted by the

committee, during the year under review, which

include the principles for recommending the use

of external auditors for non-audit services. The

internal and external auditors have unrestricted

access to the audit committee and its chairman

with a view to ensuring that their independence

is not impaired.

Internal control

The board, assisted by the audit committee, is

responsible for the systems of internal control.

The group has implemented generally

recognised systems of internal control which are

designed to detect and minimise the risk of

fraud, potential liability, loss and material

misstatement.

These systems also provide reasonable but not

absolute assurance regarding compliance with

statutory laws and regulations and the

maintenance of proper accounting records. The

purpose of the systems of internal control is to

maintain a sound system of risk management

and sustain an effective internal control

environment, ensuring that the financial

statements are honest and reliable, as well as to

safeguard the group’s assets. In addition, the

systems of internal control assist the board in

behaving responsibly towards all stakeholders

and ensuring business sustainability under

general as well as adverse operating conditions.

There are inherent limitations to the effectiveness

of any systems of internal control, including the

possibility of human error and the circumvention

or overriding of controls. The systems are

therefore designed to manage rather than

eliminate risk of failure and opportunity risk.

Nothing has come to the attention of the board

to indicate that there has been a material

breakdown in the internal systems of control

during the year.

3.2 Remuneration committee

The remuneration committee was established on

31 May 2007 and comprises the following non-

executive directors:

• M Dlamini (independent chairman)

• T Ahier (resigned effective 15 March 2008)

• C Crowie (resigned effective 15 March

2008)


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The board had recognised the need to

reconstitute the committee, which will be

undertaken in the foreseeable future.

The chief executive officer and financial director

also attend meetings of the committee.

This committee will establish the group’s

remuneration philosophy, and review the terms

and conditions of employment of the executive

directors and other executives and their

incentive schemes.

No meetings were held during the year under

review. Matters needing attention were dealt

with via written resolutions after being circulated

to and discussed by the relevant parties.

Remuneration is one of the largest cost

components of the group and optimising the

remuneration expense remains a core focus

area. The directors’ remuneration for the period

under review amounted to R9 544 000 and

comprises the following:

• Executive directors’ remuneration of

R9 468 000

• Non-executive directors’ remuneration of

R76 000

An analysis of directors’ emoluments is given in

note 33 on page 63 of this report.

3.3 Risk management committee

The directors are responsible for risk

management and ensuring that appropriate risk

management processes are in place. This

encompasses identifying, assessing, managing

and monitoring all types of possible risk facing

the group.

A risk management committee was established

during the year and at year-end comprised the

following persons:

• K Ramkissoon

• MI Krouse

• JPM O’Reilly

• MJ Sangweni

• L Luthuli (legal adviser)

The risk management committee, in consultation

with the board, ensures that an effective and

ongoing risk management process is in place

measuring the potential impact of a risk against

a broad set of assumptions and introducing risk

mitigation procedures to reduce the exposure to

an acceptable level.

The risk management strategy, established

during the year under review, includes the

following key elements:

• An appreciation of the importance of risk

management

• Setting mission and risk management

objectives

• Assessing existing solutions for vulnerabilities

• Establishing risk management infrastructure

and assigning leadership

• Compiling a list of risks and assigning areas

of responsibilities to various persons

• Selecting assessment techniques and

defining risk appetite and tolerances

• Developing internal communication and

reporting structures

• Monitoring the implementation and

execution of risk management

• Integrate risk management into existing

operational systems

The following key areas of risk have been

identified:

• Construction projects

– Tender phase

– Project implementation phase

• Legal and regulatory compliance

• Safety, health and environment

• Human resources

• Economic projects

• Finance and administration

• Communication and information

technology

• Procurement

• Asset management


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CORPORATE GOVERNANCE continued

The committee meets on a quarterly basis and the board

is satisfied that, although the comprehensive strategy is

still being developed and will only be completed in the

next quarter, adequate measures and processes are

currently in place to mitigate identified risks.

The board has recognised the need to reconstitute the

committee, which will be undertaken in the foreseeable

future.

DIRECTORS’ RESPONSIBILITY STATEMENT

The directors are responsible for the preparation,

integrity and objectivity of the annual financial

statements and other information contained in the

annual report in a manner that fairly presents the state

of affairs and results of the operations of the group.

The annual financial statements have been prepared in

accordance with International Standards. They are based

on appropriate accounting policies and are supported

by reasonable and prudent judgements and estimates.

The external auditors are responsible for carrying out

an independent examination of the financial statements

in accordance with International Standards on Auditing

and reporting their findings thereon.

COMPANY SECRETARIES

The company secretaries, Highway Corporate Services

(Pty) Limited, were appointed by the board effective

2 May 2007. The board is of the opinion that the

secretaries are suitably qualified and experienced to

carry out their duties as stipulated under section 268G

of the Companies Act. The company secretaries provide

guidance to the directors on their duties and ensure

awareness of all relevant statutory requirements and

legislation. All directors have access to the advice and

services of the company secretaries. Independent

professional advice will be arranged for the directors by

the company secretaries, at the company’s expense,

where it has been requested by the directors.

CODE OF ETHICS

The group sets the highest level of ethical standards for

all its directors and employees, all of whom are bound

by the group’s Code of Ethics. This ensures that Sanyati

remains committed to conducting business in a manner

that is above reproach in all reasonable circumstances.

In addition, the group strives to provide a work

environment that is non-discriminatory with sound

safety, health and environmental practices.

GOING CONCERN

The directors report that, after making enquiries, they

have a reasonable expectation that the group has

adequate resources and workload to continue in

operational existence for the foreseeable future. For this

reason, the group continues to adopt the going

concern basis in preparing the annual financial

statements.

NON-EXECUTIVE REMUNERATION

Non-executive directors enjoy no benefits from the

company for their services as directors other than their

fees and potential gains and dividends on their interests

in ordinary shares where applicable. Non-executive

directors are also paid for their attendance at audit and

remuneration committee meetings. Non-executive

directors’ fees paid for board and committee meetings

in respect of the period under review amounted to

R76 000.

DIRECTORS’ ATTENDANCE AT BOARD MEETINGS DURING THE PERIOD UNDER REVIEW (FOUR MEETINGS)

DIRECTOR DESIGNATION APPOINTED ATTENDANCE

Richard David Jackson Chief executive office 23.05.1988 4/4

Marc Ivor Krouse Financial director 01.01.1999 4/4

Khisore Ramkissoon resigned 28.02.2006 4/4

Moses Jabulani Sangweni Human resources director 01.04.2006 4/4

Hans Michael Dlamini Independent non-executive director 01.04.2006 2/4

Nhlanhla Khambule Independent non-executive director 01.04.2006 4/4

Janvier Patrick Michael O’Reilly resigned 31.05.2007 4/4

Raymond William Deacon resigned 31.05.2007 4/4

Archibald James Rutherford Operations director 31.05.2007 4/4

Cecil Michael Douglas Flemming Non-executive director 31.05.2007 2/4

Clinton Craig Crowie resigned 31.05.2007 4/4

Trevor Bruce Cabot Ahier resigned 31.05.2007 4/4

Rowan Mark Crowie Non-executive director 31.05.2007 3/4


CORPORATE SOCIAL RESPONSIBILITY (CSR)

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INTRODUCTION

Sanyati recognises that its development and

sustainability depends to a large extent on its

responsiveness to the socio-economic and

environmental challenges within its area of operation,

particularly in South Africa as a whole. Sanyati also

acknowledges that, in addition to public sector

initiatives, corporates have a responsibility through good

corporate governance to develop and implement

policies to address the following social imperatives:

• Health and safety

• Human dignity and human rights

• Equality, non-sexism and non-racism

• Black economic empowerment

• Employment equity

• Environmental conservation and rehabilitation

• Corporate ethics

Sanyati Holdings’ commitment to CSR has the full

support of senior management and board of directors

who, together with the CSR committee, are involved in

the development and implementation of the CSR policy.

POLICIES

1. Health and safety

Sanyati Holdings’ responsibilities and obligations in

regard to health and safety of employees and the

public are identified and documented for each area

of operation. Safety plans are prepared and

measures implemented to ensure compliance.

Regular audits are conducted by consulting health

and safety practitioners who submit regular reports

to the board.

2. Equality, human dignity and human rights

Fundamental to the development and

implementation of all the company’s policies is the

recognition that everyone is equal before the law

and that everyone has inherent dignity, which must

be respected and protected. Non-sexism and

non-racism is promoted and practised both within

the company and externally.

3. Black economic empowerment

It is Sanyati Holdings’ objective to obtain and

maintain a high ranking amongst the top

empowerment companies in South Africa. A

recognised BEE rating consultancy has assessed

Sanyati’s ranking on the BEE scorecard on equity,

management, employment equity, skills

development, preferential procurement, enterprise

development and corporate social investment. The

result of this assessment was an Empowerdex “A”

grade rating of 66,6%.

• 43% of Sanyati’s equity is held by historically

disadvantaged individuals

• 57% of Sanyati’s current directors are historically

disadvantaged individuals

• committment to majority black ownership by

February 2009

FOREIGNMALE FEMALE NATIONALS

Occupational levels A C I W A C I W M F TOTAL

Top management 1 – 1 5 – – – – – – 7

Senior management 1 – 5 24 – – – – – – 30

Professionally qualified and

experienced specialists and

mid-management 9 – 12 47 – – – 1 – – 69

Skilled technical and academically

qualified workers, junior management,

supervisors, foremen,

and superintendents 194 10 21 93 2 – 6 2 – – 328

Semi-skilled and discretionary

decision-making 636 – 6 18 18 1 6 20 – – 705

Unskilled and defined decision-making 361 – 2 11 – – – – – – 374

Total permanent 1 202 10 47 198 20 1 12 23 1 513

Non-permanent employees 1 929 – – – 170 12 – – – – 2 111

Grand total 3 131 10 47 198 190 13 12 23 – – 3 624

Key: A = African C = Coloured I = Indian W = White M = Male F = Female


18

CORPORATE SOCIAL RESPONSIBILITY continued

4. Employment equity

Sanyati Holdings subscribes to a policy of

employment equity, which takes cognisance of the

diversity that exists in South Africa in general and in

its area of operation in particular. The company is

opposed to any form of tokenism, but will ensure

that suitably qualified people from designated

groups have equal opportunity and are equitably

represented at all levels and in all occupational

categories. Provision has been made in the

company’s employment equity policy to identify and

eliminate any unfair discrimination.

The Department of Labour requires listed companies

to publish their employment equity statistics

submitted to the department in its annual report.

The table on page 15 represents Sanyati’s submission

for the period 1 March 2007 to 29 February 2008.

5. Environment

Sanyati Holdings has resolved to focus on

environmental issues, with emphasis on attaining a

high level of environmental conscience and as a

responsible business taking the lead in its field. As

part of its commitment Sanyati Holdings has

appointed an experienced environmental and quality

manager, qualified in environmental management,

to oversee all environmental issues pertaining to the

group and its subsidiary companies. Furthermore the

group recognises that every being has the right to

an environment that is not harmful to their health or

well-being and that the nature of its activities could

impact on the environment. As a result there is a

strong focus on implementing an environmental

management system (EMS) (based on ISO 14001)

that will be incorporated into the already existing

ISO 9001 system. The objective of such an EMS

would be to:

• Identify possible impacts that may emanate from

its activities

• Implement mitigating measures to prevent,

reduce and minimise the impacts

• Create an awareness among all employees

• Incorporate environmental issues into the

company’s business strategy

In addition Sanyati Holdings is committed to:

• Continual improvement of its own environmental

system and procedures through monitoring,

auditing and reviewing of its environmental

performance

• Compliance with environmental management

plans (EMP) of its customers/clients in addition to

all relevant environmental legislation

• Establishment of its own EMP for use on

contracts as a statement of the group’s

commitment

• Endeavouring to influence not only its own

employees but also all subcontractors and suppliers

to strive for environmentally responsible practices

6. Corporate ethics

Sanyati espouses the doctrine of good corporate

governance and conducts its business in a legal and

professional manner. Generally accepted business

and accounting principles and the letter of the law

are applied in every aspect of the business. Anti-

corruption and the prevention of fraud are high on

Sanyati’s list of priorities.

7. Corporate social investment

Sanyati Holdings will contribute a percentage of its

net profit to corporate social investment (CSI)

programmes. The value spent will be in line with

national and international norms. CSI, a

management-driven programme, is implemented by

a strongly motivated committee. The programme is

broadly aimed at the upliftment of previously

disadvantaged communities and citizens with

emphasis on children and youth. The CSI committee

will identify needy projects with the assistance and

involvement of development partners who will

include:

• Non-governmental organisations

• Government departments

• Community forums

• Welfare organisations

• Education trusts

• School governing bodies

• Sporting bodies

• Higher educational institutions

Sanyati endorses innovative, responsible initiatives

aimed at social upliftment and may contribute to

existing programmes on the approval of the CSI

committee.


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REPORT OF THE INDEPENDENT AUDITORS

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To the members of Sanyati Holdings Limited and its subsidiaries

Report on the annual financial statements

We have audited the accompanying annual financial statements of Sanyati Holdings Limited and the group, which

comprise the directors report, the balance sheet as at 29 February 2008, the income statement, statement of changes in

equity and cash flow statement for the year then ended; and a summary of significant accounting policies and other

explanatory notes as set out on pages 22 to 74.

Management’s responsibility for the annual financial statements

Management is responsible for the preparation and fair presentation of these annual financial statements in accordance

with International Financial Reporting Standards and the requirements of the Companies Act in South Africa. This

responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair

presentation of annual financial statements that are free from material misstatement, whether due to fraud or error;

selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the

circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our

audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free

from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual

financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks

of material misstatement of the annual financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the annual

financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating

the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,

as well as evaluating the overall presentation of the annual financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion, the annual financial statements present fairly, in all material respects, the annual financial position of

Sanyati Holdings Limited and the group as at 29 February 2008 and of its financial performance and its cash flows for

the year then ended in accordance with International Financial Reporting Standards and the requirements of the

Companies Act South Africa.

PKF Durban

Registered Auditors

Chartered Accountants (South Africa)

per K Gertenbach RA CA (SA)

DURBAN

20 May 2008


20

DIRECTORS’ RESPONSIBILITIES AND APPROVAL for the year ended 29 February 2008

The directors are required by the South African Companies Act, 1973, to maintain adequate accounting records and are

responsible for the content and integrity of the annual financial statements of Sanyati Holdings Limited and its

subsidiaries and related financial information included in this report. It is their responsibility to ensure that the annual

financial statements fairly present the state of affairs of the company and the group as at the end of the financial year

and the results of its operations and cash flows for the year then ended, in conformity with International Financial

Reporting Standards. The external auditors are engaged to express an independent opinion on the annual financial

statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and are

based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements

and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by

the group and place considerable importance on maintaining a strong control environment. To enable the directors to

meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or

loss in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined

framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk.

These controls are monitored throughout the group and all employees are required to maintain the highest ethical

standards in ensuring the group’s business is conducted in a manner that, in all reasonable circumstances, is above

reproach. The focus of risk management in the group is on identifying, assessing, managing and monitoring all known

forms of risk across the group.

While operating risk cannot be fully eliminated, the group endeavours to minimise it by ensuring that appropriate

infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and

constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of

internal control provides reasonable assurance that the financial records may be relied on for the preparation of the

annual financial statements. However, any system of internal financial control can provide only reasonable, and not

absolute, assurance against material misstatement or loss.

The directors have reviewed the group’s cash flow forecast for the year to 28 February 2009 and, in the light of this

review and the current financial position, they are satisfied that the company and the group have access to adequate

resources to continue in operational existence for the foreseeable future.

The annual financial statements of the group and company set out on pages 22 to 74, which have been prepared on

the going concern basis, were approved by the board of directors on 19 May 2008 and were signed on its behalf by:

RD Jackson MI Krouse

Chief Executive Officer Financial Director

19 May 2008

Durban


21

STATEMENT OF COMPLIANCE BY THE COMPANY SECRETARIES for the year ended 29 February 2008

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We certify that the requirements as stated in section 268G of the Companies Act 61 of 1973, as amended, have been

met and that all returns, as required of a public company in terms of the aforementioned Act, have been submitted to

the Registrar of Companies and that such returns are true, correct and up to date.

JH Acutt

Professional Accountant (SA)

on behalf of

Highway Corporate Services (Pty) Limited

Company Secretaries

19 May 2008


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REPORT OF THE DIRECTORS for the year ended 29 February 2008

1. NATURE OF BUSINESS

Sanyati Holdings Limited (“Sanyati”) is one of the larger black empowered civil engineering and construction

companies in South Africa. The company executes projects for a number of private clients, parastatals and

government departments. Large infrastructure projects are tendered for and undertaken by Sanyati as main

contractor and/or in partnership with larger private or listed construction companies.

The Sanyati Group includes the following major subsidiaries:

1.1 SANYATI CIVILS COASTAL (PTY) LIMITED (Formerly Afriscan Construction (Pty) Limited)

Established in 1988, Afriscan Construction has evolved into an organisation recognised for producing cost-

effective construction of high quality. It has earned its placed in the industry as a viable, reputable, ethical and

financially sound contracting company.

Afriscan Construction includes as stakeholders and clients both private and public enterprises, and aims to be

the contractor of preference to undertake civil engineering projects that are delivered within time and budgets

without compromising quality, safety or the environment.

Very high emphasis is placed on the quality of service based on the Company’s ISO 9001: 2000 Quality

Management System accreditation. To this end they also employ, train and retain only people of the highest

calibre.

Their team comprises experienced and skilled engineers with emphasis on training and keeping abreast with

technological innovations. They are in a position to undertake all types of civil engineering infrastructure

projects.

1.2 BRISK ASPHALT AND SURFACING (PTY) LIMITED

Established in 1987, Bentham Asphalt was incorporated into the Sanyati Holdings group in 2003 and

rebranded as Brisk Asphalt and Surfacing (Pty) Limited.

Following the company’s Strategic Acquisition Policy, Brisk Asphalt acquired Nyanga Roads in 2006, allowing

them access to the specialised chip and spray surfacing, slurry sealing and bitumen emulsion manufacturing

markets. Hibiscus Asphalt was added to the group in 2007, which has opened up the national Asphalt Paving

and Milling Market, with contracts in the Eastern Cape and Mpumalanga regions.

Brisk Asphalt and Surfacing now has the full range of road construction resources to offer its private, municipal

and government sector clients, fully backed by their ISO 9001: 2000 Quality Control certification, highly

trained and motivated staff.

1.3 DEROMA STRUCTURES (PTY) LIMITED

Established in 1987, Deroma Structures is a well-established, technically proficient company with an impressive

client base in the KwaZulu-Natal region. In March 2003 Deroma Structures (Pty) Limited was purchased as a

wholly-owned subsidiary of Sanyati Holdings Limited.

Deroma specialises in the construction of bridges, water retaining structures and concrete roads for private

clients, municipalities and government departments.

Deroma, an ISO 9001: 2000 Quality Management System accredited company, continuously strives to remain

a market leader by offering its clients and stakeholders cost-effective steel and reinforced concrete structures of

the highest quality.

1.4 SANPROP (PTY) LIMITED

Sanprop (Pty) Limited is a wholly-owned subsidiary of the Sanyati group, focusing on development of smaller

residential developments, medium-sized commercial offices and a range of industrial properties. The company’s

aim is to provide their clients with a turnkey solution ranging from customised design criteria to personalised

finishes.

Sanprop’s uncompromising commitment to a quality workmanship, personalised customer service and

attention to the smallest detail is what sets the company apart from its competitors. Sanprop has grown from

small beginnings two years ago to an operation that will turn over approximately R50 million during the

current financial year.


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1.5 SANYATI BUILDING (PTY) LIMITED (Formerly Rusinga Building (Pty) Limited)

Founded in 1974, C&R Construction provided building services in the Richards Bay area. In 2004 after a name

change to Rusinga Building (Pty) Limited, this company was acquired by Sanyati to maximise the growing

building construction market throughout KwaZulu-Natal.

Rusinga Building has restructured its senior management, employed additional qualified and experienced

operations personnel, and built up a competent and reliable team of specialist subcontractors and other

support stakeholders. This, together with disciplined administrative and financial controls, has enabled the

company to undertake a wide range of construction projects.

1.6 SANYATI PILING AND GEOTECHNICAL (PTY) LIMITED (Formerly Megapile (Pty) Limited)

Megapile is a specialist geotechnical and civil engineering contractor, with offices in Gauteng and KwaZulu-

Natal, incorporating KZN Piling.

Established in 1996, Megapile can proudly list some high-profile contracts which include the Walter Sisulu

Square of Dedication in Johannesburg, the Durban International Airport terminal revamp, Garlicke and

Bousefield Head Office and the Palmgate Residential Development at Gateway amongst others. In

December 2005 a joint venture between Megapile and KZN Piling was awarded the multi-million rand

contract for piling the foundations for the Durban International Airport multi-storey car park.

Megapile offers a wide range of services including: piling, pipe jacking, lateral support, and other related

services, both on design and construct, or construct only bases.

Megapile was acquired effective 1 December 2006. The company has met and exceeded the profit forecasts

as warranted in the purchase and sale agreement that has successfully been concluded on 29 February 2008

with payment due to the vendors by the end of May 2008.

1.7 SANYATI CIVILS INLAND (PTY) LIMITED (Formerly Ruthcon Civil Contractors (Pty) Limited)

Ruthcon is a dynamic, all-encompassing civil engineering contracting company that has the expertise and

experience to tackle any construction project.

Established in 1994, Ruthcon was at the forefront of Black Economic Empowerment with majority black

ownership bringing to market a civil contractor with a commitment to transformation and a new level of

service excellence. The company is the first of a new breed of South African civil contractors to combine a

wealth of experience with the professional, theoretical and technical background required to get the job

done, within budget, on time and at the right quality.

In 2005, Ruthcon won the national sustainable growth awards in the five-year private company category.

These awards recognise companies that show exceptional expansion and that makes a significant contribution

to the South African economy by demonstrating profitable and sustainable growth. Ruthcon became the first

construction company to win this award.

A young, dynamic and perhaps most importantly, flexible management team equipped with plant and

information technology resources, provides theoretical and practical engineering solutions to a range of civil

contracting challenges.

Complete customer satisfaction and strong industry and client relationships are at the core of the company’s

day-to-day activities.

Ruthcon was acquired by Sanyati effective 1 April 2007. Ruthcon has achieved excellent profitability during the

audited 14-month period ended 29 February, 2008 (consolidated for 11 months). The full warranted profit

that achieved the maximum purchase consideration of R150 million has been achieved in the

12 months to 31 December 2007. The company is currently changing its customer base to focus more on

public sector work with the slow down that has been seen in the private sector residential market that

previously formed its core customer base. We are confident that the company will continue to prosper going

forward.


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1.8 GEM EARTHWORKS (PTY) LIMITED

GEM Earthworks was established in 1997 and incorporated into Sanyati Holdings ten years later, in 2007.

The company comprises a team of dynamic, motivated and qualified personnel, including professional

engineers and project managers able to perform a wide range of civil engineering operations, including

bridges, concrete structures, roads and major earthworks projects in Mpumalanga, the Eastern Cape and

other parts of South Africa.

GEM Earthworks is active in the promotion of emerging contractors by incorporating them into joint venture

agreements at tender or post-tender stage. By adopting this approach, the company has learned and

developed a social responsibility that recognises the needs of local communities and seeks, where possible, to

reduce unemployment.

GEM Earthworks was acquired by Sanyati effective 1 April 2007 (consolidated for 11 months). GEM Earthworks

has achieved profit levels that were warranted to achieve the maximum purchase consideration of R60 million.

The company will be incorporated into Sanyati Civils Coastal (Pty) Limited effective 1 March 2008.

1.9 SANYATI ENGINEERING CENTRAL (PTY) LIMITED (Formerly Meyker Re-Teng Construction (Pty) Limited)

Meyker Construction (Pty) Limited was established in 1996 by founding shareholder Jannie Gutter. Subsequent

to a BEE transaction with Re-Teng Business Enterprises in 2006, the company Meyker Re-Teng Construction

(Pty) Limited was formed. Both companies were purchased by Sanyati in a deal concluded in December 2007

with the final suspensive condition being concluded on 17 January 2008.

Under the competent leadership of Jannie Gutter, the staff comprising professional engineers, national

diploma engineers, surveyors and support staff provide an array of civil engineering services and disciplines to

the South African and broader regional market. Contracts have over the years successfully been undertaken in

Botswana, Namibia, Zambia and as far afield as Sudan. The company prides itself on being able to undertake

unique and diversified construction projects with tight time constraints and very often in remote areas.

The company’s niche market sectors include telecommunications infrastructure, fibre optics, overhead

electrification, railroad infrastructure and large road building projects. The directors are confident that this

company will continue to deliver the high levels of profitability that have been achieved in the past due to its

niche market focus.

Subsequent to year-end and effective 1 March 2008, the company was restructured to reflect the following

structure:

Sanyati CivilsInland

• Ruthcon

Sanyati CivilsCoastal

• Afriscan• GEM• Deroma

Sanyati Building

• Rusinga• Sanprop

Sanyati Roads

• Brisk

Sanyati Piling &Geotechnical

• Megapile

SanyatiEngineeringCentral

• MeykerRe-teng

Sanyati Construction

Sanyati Holdings

100%

100%


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The business of the subsidiaries of Sanyati Holdings Limited listed above have been acquired by Sanyati Civil

Engineering and Construction (Pty) Limited t/a Sanyati Construction with effect from March 2008. These

subsidiaries will be transferred as going concerns to Sanyati Construction and therefore all employees and

assets of the subsidiaries transferred to Sanyati Construction with effect from March 2008.

Sanyati Construction becomes the main trading entity with an Agency Agreement in place with each of the

operating divisions to execute work procured by Sanyati Construction. An operational board for Sanyati

Construction has been elected with the managing directors of each operating division represented.

A new corporate identity has been agreed upon by management and we have adopted the blue and yellow

corporate identity of Sanyati Construction on all of our plant and equipment. All sites will display a Sanyati

Construction sign according to our Corporate Identity manual logo.

2. STATE OF AFFAIRS

During the financial year under review the company achieved the following notable achievements:

• acquisition of both Ruthcon Civil Contractors (Pty) Limited and GEM Earthworks (Pty) Limited.

• undertook a share placement to BEE vendors in an amount of 48 000 000 ordinary shares which achieved a

BEE shareholding of 42,39%.

• achieved Civil Industry Development Board (“CIDB”) rating of 9 CE/GB/SJ/SB to qualify to tender on any size

contract in future.

• acquisition of Meyker Re-Teng Construction (Pty) Limited and Meyker Construction (Pty) Limited effective on

17 January 2008.

3. REVIEW OF BUSINESS

The group has achieved full year profitability of R59,415 million, 145,81% improvement over February 2007 and

12,04% ahead of the revised projections published during May 2007. A major milestone was the turnover of the

group exceeding R1,0 billion (2007: R380 million) for the year under review. The EBITDA margin decreased slightly

to 9,2% (2007: 10,0%).

Headline earnings of 22,31 cents per share reflects an increase of 88,39% on the 11,78 cents achieved to

February 2007 and an increase of 22,35% over the revised projections for the year. This is despite the weighted

average number of shares in issue increasing to 278,5 million from the 207,3 million in February 2007.

The group remains on target to achieve the projected turnover of R1,8 billion to February 2009.

A full review of the financial and overall company performances can be found in the Chief Executive Officer’s and

Financial Director’s Reports in the annual report.

4. STATEMENT OF RESPONSIBILITY

The directors’ statement of responsibility is addressed on the approval page of these financial statements.

5. FINANCIAL RESULTS

The results of the group are set out in the attached financial statements and do not, in our opinion, require further

comment.

6. DIVIDENDS

The company’s policy is to pay dividends at the discretion of the directors. It is the intention of the company to pay

an annual dividend once the company has achieved mature growth, and periodically thereafter in light of

prevailing circumstances and future cash flow requirements. Initially all earnings generated by the company will be

utilised to fund future growth and development.

No dividends were declared during the current financial year (2007: nil).


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7. SHARE CAPITAL

7.1 AUTHORISED

During the year under review no changes were made to the authorised share capital of R10 000 divided into

1 000 000 000 ordinary shares of 0,001 cent each.

7.2 ISSUED

The issued share capital was increased during the period under review:

• from R2 270,48 divided into 227 048 193 ordinary shares of 0,001 cent each to R2 437,15 divided into

243 714 860 ordinary shares by the issue of 16 666 667 ordinary shares to the vendors of Ruthcon at an

issue price of 180 cents per share. These shares were issued upon Ruthcon’s achievement of the initial

profit warranty in the period to 31 December 2006 as set out in the purchase and sale agreement

• from R2 437,15 divided into 243 714 860 ordinary shares of 0,001 cent each by the issue of the

following shares:

– 48 000 000 ordinary shares to various BEE vendors at an issue price of 210 cents per share

– 1 200 000 ordinary shares to exchange sponsors in lieu of fees earned at an issue price of 256 cents

per share

– 10 000 000 ordinary shares to the 2007 Sanyati Acquisitions Trust at an issue price of 210 cents per

share

– to R3 029,15 divided into 302 914 860 ordinary shares of 0,001 cent each

• from R3 029,15 divided into 302 914 860 ordinary shares of 0,001 cent each to R3 058,44 divided into

305 844 077 ordinary shares of 0,001 cent each by the issue of 2 929 217 ordinary shares to the

vendors of Megapile at an issue price of 166 cents per share. The shares were issued subsequent to

Megapile achieving the initial profit warranties for the year ended 28 February 2007 as set out in the

purchase and sale agreement

7.3 FUTURE ISSUES

The following commitments for share issues are known by the directors and these shares will be issued on the

approximate date set out below:

NATURE OF ISSUE APPROXIMATE DATE OF ISSUE NUMBER OF SHARES

Sanyati Executive Share Scheme June 2008 3 000 000

Sanyati Broad-based Share Scheme June 2008 2 000 000

Megapile Vendors Number 2 Placement1 June 2008 12 028 680

Ruthcon Vendors Number 2 Placement2 June 2008 29 166 667

GEM Vendors Number 1 Placement June 2008 21 428 571

Meyker Vendors Number 1 Placement June 2008 26 656 347

Meyker Vendors Number 2 Placement May 2009 17 461 301

Total for new issue 111 741 566

Current shares in issue 305 844 077

Total projected number of shares in issue 417 585 643

1 Subject to certain conditions being met by 31 October 2008, in terms of a proposed amendment to the

purchase and sale agreement, the vendors of Megapile may earn an additional payment that may result

in an additional 3 116 607 shares being issued.

2 In terms of the purchase and sale agreement, the vendors may elect 50% of their payment due in cash.

For purposes of this calculation, it has been assumed that half the vendors will elect cash and the other

half equity. Should all vendors elect a full equity allocation, it will result in an additional 9 722 222 shares

being issued.


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8. SPECIAL RESOLUTIONS

There were no special resolutions that were passed for Sanyati Holdings during the year under review.

The following special resolutions were passed by the subsidiary companies:

COMPANY DATE PASSED CONTENT

Sanyati Civil Engineering and

Construction (Pty) Limited 03.09.2007 Change of name from Ntuthuko Development (Pty) Limited and

main business change to construction and related activities

Sanyati Civils Coastal (Pty) Limited 25.02.2008 Change of name from Afriscan Construction (Pty) Limited

Sanyati Civils Inland (Pty) Limited 25.02.2008 Change of name from Ruthcon Civil Contractors (Pty) Limited

Sanyati Piling and

Geotechnical (Pty) Limited 25.02.2008 Change of name from Megapile (Pty) Limited

Sanyati Roads (Pty) Limited 25.02.2008 Change of name from Nyanga Roads (Pty) Limited and main

business to road construction and related activities

Sanyati Building (Pty) Limited 25.02.2008 Change of name from Rusinga Building (Pty) Limited

9. CONTROLLING AND MAJOR SHAREHOLDERS

There are 2 284 shareholders (2007: 1 997). The controlling and major shareholders exceeding 3% are listed below:

PERCENTAGE OF

NUMBER OF SHARES HELD ISSUED SHARE CAPITAL

Richard Jackson Family Trust; RD Jackson; TL Jackson 46 211 000 15,11

Sanlam 28 001 467 9,16

Saib, I 14 252 000 4,66

Sangweni, MJ 12 281 000 4,02

Ramkissoon, K 11 605 000 3,79

Crowie Holdings (Pty) Limited 10 033 333 3,28

Sanyati 2007 Acquisitions Share Incentive Scheme 10 000 000 3,27

Public Investment Corporation 9 556 490 3,12

141 940 290 46,41

10. BORROWINGS

On behalf of the group, the directors have established credit facilities with various financial institutions for use by

the various subsidiary companies. The directors did not exceed any authorised levels of borrowings during the year

under review.


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11. DIRECTORSHIPDATE DATE

DIRECTORS DESIGNATION APPOINTED ATTENDANCE RESIGNED

Richard David Jackson Chief Executive Officer 23 May 1988 4/4

Marc Ivor Krouse Financial Director 1 January 1999 4/4

Khisore Ramkissoon Executive Director 28 February 2006 4/4 15 March 2008

Moses Jabulani Sangweni Human Resources Director 1 April 2006 4/4

Hans Michael Dlamini Independent Non-executive Director 1 April 2006 2/4

Nhlanhla Khambule Independent Non-executive Director 1 April 2006 4/4

Janvier Patrick Michael O’Reilly Executive Director 31 May 2007 4/4 15 March 2008

Raymond William Deacon Executive Director 31 May 2007 4/4 15 March 2008

Archibald James Rutherford Executive Director 31 May 2007 4/4

Cecil Michael Douglas Flemming Non-executive Director 31 May 2007 2/4 15 March 2008

Clinton Craig Crowie Non-executive Director 31 May 2007 4/4 15 March 2008

Rowan Mark Crowie Non-executive Director 31 May 2007 3/4

Trevor Bruce Cabot Ahier Non-executive Director 31 May 2007 4/4 15 March 2008

As mentioned in point one above, the election of the Sanyati Construction board effective March 2008 effectively

moved operational control of the construction division to this level. In order to give effect to this restructure, several

Sanyati board members resigned effective March 2008 to take up Sanyati Construction directorship. These

members’ resignations are indicated above. The resignations at non-executive director level were as a result of the

group’s BEE initiatives and ongoing commitments to improve the levels of corporate governance and achieve

greater independence of the non-executive directorship.

12. DIRECTORS’ INTEREST IN SHARE CAPITAL

On the last practicable date, the directors of Sanyati Holdings Limited had the following direct and indirect

beneficial and non-beneficial interests in the issued capital of Sanyati Holdings Limited:

DIRECT INDIRECTDIRECT NON- INDIRECT NON- TOTAL

BENEFICIAL BENEFICIAL BENEFICIAL BENEFICIAL SHARES %

RD Jackson 5 258 000 – 40 741 000 1 212 000 2 46 211 000 15,11

MJ Sangweni 12 281 000 – – – 12 281 000 4,02

MI Krouse 195 000 – 5 938 000 3 436 500 4 6 569 500 2,15

HM Dlamini – – – – – –

N Khambule – – – – – –

AJ Rutherford 4 166 667 – – – 4 166 667 1,36

RM Crowie – – 6 689 223 5 – 6 689 223 2,19

21 900 667 – 53 368 223 648 500 75 917 390 24,83

1 Held by the Richard Jackson Family Trust

2 Held by Tracy Lynn Jackson

3 Held by the Krouse Family Trust

4 Held by Helen Mary Hayes

5 Held by Crowie Holdings (Pty) Limited


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The following directors who resigned subsequent to the financial year ended on 29 February 2008 held the

following direct and indirect beneficial and non-beneficial interests in the issued share capital of Sanyati on

29 February 2008:

DIRECT INDIRECTDIRECT NON- INDIRECT NON- TOTAL

BENEFICIAL BENEFICIAL BENEFICIAL BENEFICIAL SHARES %

K Ramkissoon 11 605 000 – – – 11 605 000 3,79

TBC Ahier 4 166 667 – – – 4 166 667 1,36

RW Deacon 4 376 171 – – – 4 376 171 1,43

CC Crowie – – 3 344 110 1 – 3 344 110 1,09

JPM O’Reilly 6 709 000 – – – 6 709 000 2,20

26 856 838 – 3 344 110 – 30 200 948 9,87

1 Held by Crowie Holdings (Pty) Limited

12.1 SHARE OPTIONS

2007 Acquisitions Share Incentive Scheme

OPTIONS OPTIONS DATE STRIKE VESTINGGRANTED ACCEPTED GRANTED PRICE DATE

RD Jackson 883 427 883 427 31/10/2007 210 cents 31/10/2010

MJ Sangweni 529 938 529 938 31/10/2007 210 cents 31/10/2010

MI Krouse 395 910 395 910 31/10/2007 210 cents 31/10/2010

AJ Rutherford 347 607 347 607 31/10/2007 210 cents 31/10/2010

Executive Share Incentive SchemeOPTIONS OPTIONS DATE STRIKE VESTING

GRANTED ACCEPTED GRANTED PRICE DATE

RD Jackson 253 326 253 326 31/10/2007 100 cents 31/10/2010

MJ Sangweni 132 494 132 494 31/10/2007 100 cents 31/10/2010

MI Krouse 151 091 151 091 31/10/2007 100 cents 31/10/2010

13. SECRETARIES

The company secretaries, Highway Corporate Services (Pty) Limited, were appointed by the board effective

2 May 2007. The board is of the opinion that the secretaries are suitably qualified and experienced to carry out

their duties as stipulated under section 268G of the Companies Act. The company secretaries provide guidance to

the directors on their duties and ensure awareness of all relevant statutory requirements and legislation. All directors

have access to the advice and services of the company secretaries, at the company’s expense, where it has been

requested by the directors.

The transfer secretaries are Computershare Investor Services (Pty) Limited of 70 Marshall Street, Johannesburg,

2001; PO Box 61051, Marshalltown, 2107.

14. AUDITORS

PKF Durban will continue in office in accordance with section 270(2) of the Companies Act.

15. MANAGEMENT BY THIRD PARTIES

Neither the business of the company nor its subsidiaries, nor any part thereof, has been managed by a third person

or a company in which a director had an interest during the year under review.


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16. CORPORATE GOVERNANCE

The directors acknowledge and subscribe to the values of good corporate governance as set out in the King II

Report on Corporate Governance for the Republic of South Africa. By supporting this Code of Corporate Practices

and Conduct, the directors have recognised the need to conduct the business of the group with integrity and in

accordance with generally accepted best corporate governance practices. Refer to the corporate governance report

in the annual report for specific disclosure requirements.

17. HOLDING COMPANY AND SUBSIDIARY DETAILS

The holding company is an investment holding and management company and all profits reflected in the income

statement are those of the subsidiary companies, details of which are set out below:

COMPANY COUNTRY % DIRECT % INDIRECTREGISTRATION OF INTEREST INTEREST

NAME OF COMPANY NUMBER INCORPORATION HELD HELD

Brisk Asphalt and Surfacing (Pty) Limited 2000/018043/07 South Africa 100

Deroma Structures (Pty) Limited 2001/023079/07 South Africa 100

Emberton Investments (Pty) Limited 2004/026812/07 South Africa (Rusinga) 100

GEM Earthworks (Pty) Limited 1997/019330/07 South Africa 100

Meyker Construction (Pty) Limited 2003/016339/07 South Africa 100

Meyker Re-Teng Construction (Pty) Limited 2004/030758/07 South Africa 32 (Meyker) 168

Purple Plum Properties 125 (Pty) Limited 2005/004104/07 South Africa (Sanprop) 100

Sancroft Trading (Pty) Limited 2006/008508/07 South Africa (Brisk) 100

Sanprop (Pty) Limited 2003/029018/07 South Africa 100

Sanyati Building (Pty) Limited 1995/006764/07 South Africa 100

Sanyati Civil Engineering and

Construction (Pty) Limited 1984/006483/07 South Africa 100

Sanyati Civils Coastal (Pty) Limited 1991/060155/07 South Africa 100

Sanyati Civils Inland (Pty) Limited 1997/015348/07 South Africa 100

Sanyati Piling and Geotechnical (Pty) Limited 2006/008566/07 South Africa 100

Sanyati Properties Five (Pty) Limited 2004/029295/07 South Africa (Sanprop) 100

Sanyati Properties Four (Pty) Limited 2004/027338/07 South Africa (Sanprop) 100

Sanyati Properties Nine (Pty) Limited 2004/031953/07 South Africa (Sanprop) 100

Sanyati Properties One (Pty) Limited 2004/027134/07 South Africa (Sanprop) 100

Sanyati Properties Ten (Pty) Limited 2004/032404/07 South Africa (Sanprop) 100

Sanyati Properties Three (Pty) Limited 2003/027584/07 South Africa (Sanprop) 100

Sanyati Properties Two (Pty) Limited 2004/015000/07 South Africa (Sanprop) 100

Sanyati Roads (Pty) Limited 2005/044452/07 South Africa (Brisk) 100

18. SHARE INCENTIVE SCHEMES

The company adopted, prior to listing, two employee share trusts:

• Sanyati Executive Share Incentive Scheme

• Sanyati Broad-based Share Incentive Scheme

The share schemes were introduced for the purpose of providing an opportunity to the employees of Sanyati and

its subsidiary companies to acquire shares in the capital of the company. This can be done directly or through the

granting of options, so as to give employees the incentive to advance the interests of the company for the ultimate

benefit of all stakeholders in the company.

During the year under review an additional scheme, the Sanyati 2007 Acquisitions Trust, was proposed and

approved by the shareholders of the company. This trust enabled employees of Sanyati and its subsidiary

companies to acquire, via the granting of share options, shares in the capital of the company. On 7 June 2007

10 000 000 shares were issued to the trust and the options were granted to the various employees on

30 October 2007.


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During the year under review the two schemes mentioned above were activated by the company directors placing

under control of the trustees the following number of shares:

SANYATI EXECUTIVE SHARE INCENTIVE SCHEME (3 000 000 shares)

The salient features of the scheme are as follows:

OPTION-BASED SCHEME An option is the right, but not the obligation, to purchase shares. Options do not

have to be taken up when they become available.

BENEFICIARIES The offerees are management and employees of the Sanyati Group and may not be

transferred to any third party.

PRICE The scheme offers options to purchase shares at the 30-day VWAP on the date of

approval by the company directors.

TIMING The options may be exercised at the following times:

• 33% of options – one year after acceptance of the offer

• up to 50% of the remaining options – two years after acceptance of the offer

• the balance – three years after acceptance of the offer.

Options do not have to be taken up immediately at the times they become

available.

PAYMENT The shares have to be paid for at the time the options are exercised.

LAPSE The option will lapse if employment by the group ceases – other than for reasons of

death or physical disability. In the case of death, the estate will be entitled to

exercise the options.

SANYATI BROAD-BASED SHARE INCENTIVE SCHEME (2 000 000 shares)

The Sanyati Broad-based Employee Share Plan

The scheme has been introduced to provide an opportunity for employees of Sanyati Holdings Limited and its

subsidiaries to acquire shares in the company and thereby share in the growth of the Sanyati Group.

• Shares are offered at 0,001 cent per share.

• Only employees who are currently employed on a permanent basis and who have worked continuously for a

Sanyati Group company for a period of at least one year may participate in the scheme.

• The offer of shares is specific and may not be transferred to any third party.

• Acceptance must be in writing on the prescribed form and if the acceptance form is not received by the

specified date, the offer will lapse.

• The shares have to be paid for on acceptance of the offer.

• The directors of Sanyati will make the decision when the shares will become available for sale, which must be

within five years from the acceptance date. The shares will be held in name of a trust until entitlement to sell.

• The individual will be required to pledge the shares back to the trust as security for the due performance of

obligations in terms of the plan.

To date these 5 000 000 shares have not been issued and this will be done during the 2009 financial year.

19. PROSPECTS

Sanyati’s focus on civil engineering and road building capabilities focus on governmental and non-residential

construction projects. New projects and ongoing project roll-outs have indicated that government is well under

way with its R500 billion expenditure programme, with the most prominent being construction projects at the

country’s airports, the ongoing construction of the Gautrain project, the building of the 2010 soccer stadia, the

Dube Tradeport in KwaZulu-Natal and national roads projects in most of the provinces. Future expenditure in the

power industry will also have a positive impact on industry spending for the next few years.


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Private sector investment in non-residential projects has initiated the investment spent in infrastructure. All project

activity has increased over the past three years, and is anticipated to continue in the next three to five years, albeit

at a slower growth rate.

Sanyati's principal clients include the state departments such as the Department of Transport, parastatals, local

government and large corporates involved in the development of non-residential infrastructure, such as office

blocks, shopping centres and retail parks. The company is presently involved in a number of projects with Tongaat

Hulett Properties, Umgeni Water, road rehabilitation projects for local city councils and the Mpumalanga road

upgrade among others. Its subsidiary, Sanyati Piling and Geotechnical, was recently involved with the parkade

project at Durban International Airport, and was involved with the construction of the Soccer Stadium in Durban.

20. THE MEYKER ACQUISITION

20.1 INTRODUCTION

Sanyati has, subject to the conditions precedent set out below, purchased all the issued shares in and claims

on loan account against Meyker Construction (Pty) Limited and Meyker Re-Teng Construction (Pty) Limited

(“the Meyker Group”) from African Spirit Trading 78 (Pty) Limited, J Gutter Trust, De Bruin Konstruksie Trust,

D & L Trust, Bosch Trust and Meyker Konstruksie Trust (“the vendors”) (“the acquisition”).

20.2 RATIONALE FOR ACQUISITION

Sanyati is a black empowered civil engineering and construction company operating mainly in KwaZulu-Natal

and the Northern Provinces. The company executes projects for a number of private clients, parastatals and

government departments. Large infrastructure projects are tendered for and undertaken by Sanyati as main

contractor and/or in partnership with larger private or listed construction companies. The Meyker Group is a

civil engineering company that serves the civil engineering and construction market in the Free State,

Northern Cape and Northern Provinces.

The acquisition will achieve Sanyati's long-term objective of regional expansion outside its traditional areas of

operation. The Meyker Group’s customer base of corporate clients and local government will enhance

Sanyati's customer profile. The Meyker Group’s long-term relationship with telecommunication companies has

resulted in ongoing projects to expand the fibre-optic networks.

20.3 DESCRIPTION OF MEYKER’S BUSINESS

The Meyker Group is a civil engineering company specialising in the provision of ground works, earth moving,

mobile crushing, sealing, road construction, the building of dams and laying of optical fibre cables for Transtel,

MTN and Vodacom. The Meyker Group distinguishes itself from other competitors through its expertise and

specialised equipment in the supply and maintenance of masts and stay foundations in South Africa for the

telecommunications industry.

The Meyker Group’s clients include the Free State and Northern Cape provincial government, Transtel, Eskom,

Vodacom, MTN and Neotel.

20.4 TERMS AND CONDITIONS OF THE ACQUISITION

20.4.1 On 3 December 2007 Sanyati entered into an agreement, subject to the fulfilment of the conditions

precedent in 20.5 below, to purchase, with effect from 1 October 2007, all the issued share capital

in and claims on loan account against the Meyker Group. The purchase consideration is a maximum

of R250 million and is subject to adjustment should certain profits not be achieved.

20.4.2 The purchase price is payable as presented in 20.5 below:

20.5 PAYMENT STRUCTURE

20.5.1 INITIAL PAYMENT

An amount equal to the lesser of the net tangible asset value of the Meyker Group as at

1 October 2007 or R30 million on the acquisition becoming unconditional, payable in cash.


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20.5.2 SECOND ADDITIONAL PAYMENT

The second payment will be determined as 40% of the actual net profit after tax of the

Meyker Group for the year ending 29 February 2008 multiplied by a PE ratio of 7 and deducting

from this amount the initial payment per 20.5.1.

The second payment will be paid as follows:

• 75% by the issue of Sanyati ordinary shares at an issue price of 323 cents per share

• 25% in cash

20.5.3 THIRD ADDITIONAL PAYMENT

The third payment will be determined as 30% of the actual net profit after tax of the Meyker Group

for the year ending 28 February 2009 multiplied by a PE ratio of 6.

The third payment will be paid as follows:


• 25% in cash

20.5.4 FOURTH ADDITIONAL PAYMENT

The fourth payment will be determined as 30% of the actual net profit after tax of the Meyker Group

for the year ending 28 February 2010 multiplied by a PE ratio of 5.

The fourth payment will be paid as follows:


• 25% in cash

20.5.5 FINAL ADDITIONAL PAYMENT

The final payment will be determined in an amount equal to the actual net profit after tax of the

Meyker Group for the year ending 28 February, 2010, less R50 million, multiplying the result by a PE

ratio of 5 and dividing the resultant amount by one half, of which final payment is payable in cash.

20.5.6 J Gutter, D Lourens, L de Bruin, L Potgieter, and A Ross, the management of the Meyker Group have

signed service and restraint agreements with the Meyker Group. All the vendors, MOP Molema and

MM Khomo have signed restraint undertakings in favour of the Meyker Group and Sanyati.

20.5.7 The liability for the final payment cannot at this point be reliably and accurately measured.

21. PROPERTY, PLANT AND EQUIPMENT

The group acquired property, plant and equipment to the amount of R122,571 million (2007: R38,44 million).

22. INVESTMENTS

The group disposed of unit trusts during the year (2007: nil) and acquired other investments with First National

Bank Limited and ABSA Bank Limited.

23. BEE TRANSACTION

During the year under review the directors made a strategic decision to increase the BEE shareholding of the

company. To coincide with payments due to the vendors of Ruthcon and GEM and to raise working capital for

future acquisitions 48 000 000 shares were placed with selected BEE shareholders to raise a total of R100 800 000.

A road show was done in Johannesburg, Durban and Cape Town to attract BEE investors. The shares were

subsequently placed and issued on 7 June 2007.

The significant terms of the transactions were as follows:

• The shares were locked up for a period of 12 months from the date of issue.

• The shares were fully paid for in cash by all the vendors.

• No financial assistance was given by the company to any BEE vendor to acquire these shares.


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BALANCE SHEET at 29 February 2008

GROUP COMPANY2008 2007 2008 2007

Notes R’000 R’000 R’000 R’000

ASSETS

Non-current assets 650 733 79 500 711 622 85 544

Property, plant and equipment 3 149 885 42 744 4 172 482

Loan account 8 – – 21 000 –

Investment property 4 885 – – –

Goodwill 5 497 721 36 436 – –

Investments in subsidiaries 6 – – 487 343 56 397

Investments 7 2 242 320 – –

Loans to subsidiary companies 8 – – 198 051 28 351

Deferred taxation 9 – – 1 056 314

Current assets 447 278 157 717 10 564 20 958

Inventory 10 44 263 14 014 – –

Trade and other receivables 11 372 528 119 300 10 400 2 796

Gross amount due from customers 12 12 802 4 702 – –

Cash resources 17 685 19 701 164 18 162

Total assets 1 098 011 237 217 722 186 106 502

EQUITY AND LIABILITIES

Equity and reserves 638 830 99 928 593 732 52 876

Share capital 13 3 2 3 2

Shares to be issued 315 760 – 315 760 –

Share premium 214 116 52 743 235 116 52 743

Share-based payment reserve 2 353 – 2 353 –

Fair value reserve 3 111 3 111 – –

Accumulated profits 103 487 44 072 40 500 131

Non-current liabilities 112 374 18 760 51 524 21 031

Loans from subsidiary companies 8 – – 29 567 21 031

Vendor liabilities 16 21 957 – 21 957 –

Interest-bearing borrowings 14 68 125 10 601 – –

Deferred taxation 9 22 292 8 159 – –

Current liabilities 346 807 118 529 76 930 32 595

Trade and other payables 15 175 484 58 287 2 385 2 147

Gross amount due to customers 12 41 505 12 158 – –

Current portion of interest-bearing borrowings 14 24 959 4 577 – –

Current portion of vendor liabilities 16 58 887 29 200 58 887 29 200

Provisions 17 12 472 3 664 1 454 1 216

Taxation 18 047 9 162 – 32

Bank overdraft 15 453 1 481 14 204 –

Total equity and liabilities 1 098 011 237 217 722 186 106 502


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INCOME STATEMENT for the year ended 29 February 2008

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GROUP COMPANY2008 2007 2008 2007

Notes R’000 R’000 R’000 R’000

Revenue 2.1 and 19 1 002 458 379 596 19 735 13 327

Contracting costs (789 269) (323 663) – –

Gross profit 213 189 55 933 19 735 13 327

Other income 3 789 6 150 – –

Administrative and operating expenses (134 075) (27 256) (27 355) (14 185)

Profit before interest and taxation 82 903 34 827 (7 620) (858)

Investment income 20 7 821 1 020 50 595 1 693

Finance costs 21 (5 231) (1 474) (3 348) (727)

Profit before taxation 22 85 493 34 373 39 627 108

Taxation 24 (26 078) (10 202) 742 (161)

Profit for the year attributable to

equity holders of the company 59 415 24 171 40 369 (53)

Earnings per share

Basic earnings per share (cents) 25.1 21,33 11,66 14,49 (0,03)

Diluted earnings per share (cents) 25.2 14,84 11,66 10,09 (0,03)

Headline earnings per share (cents) 25.3 22,31 11,78 14,49 (0,03)

Fully diluted headline earnings per share (cents) 23.3 15,52 11,66 10,09 (0,03)


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STATEMENT OF CHANGES IN EQUITY for the year ended 29 February 2008

SHARE-SHARES FAIR ACCU- BASED

SHARE SHARE TREASURY TO BE VALUE MULATED PAYMENTCAPITAL PREMIUM SHARES ISSUED RESERVE PROFITS RESERVE TOTAL

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

GROUP

Balance at 1 March 2006 1 – – – 3 186 19 826 – 23 013

Realisation of non-distributable reserve – – – – (75) 75 – –

Share issue 1 52 743 – – – – – 52 744

Profit for the year – – – – – 24 171 – 24 171

Balance at 1 March 2007 2 52 743 – – 3 111 44 072 – 99 928

Share adjustments – – – 315 760 – – 2 353 318 113

Share issue 1 161 373 – – – – – 161 374

Treasury share consolidation – 21 000 (21 000) – – – – –


Balance at 29 February 2008 3 235 116 (21 000) 315 760 3 111 103 487 2 353 638 830

COMPANY

Balance at 1 March 2006 1 – – – – 184 – 185

Share issue 1 52 743 – – – – – 52 744

Loss for the year – – – – – (53) – (53)

Balance at 1 March 2007 2 52 743 – – – 131 – 52 876

Share adjustments – – – 315 760 – – 2 353 318 113

Share issue 1 161 373 – – – – – 161 374

Treasury share consolidation – 21 000 – – – – – 21 000


Balance at 29 February 2008 3 235 116 – 315 760 – 40 500 2 353 593 732


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CASH FLOW STATEMENT for the year ended 29 February 2008

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GROUP COMPANY2008 2007 2008 2007

Notes R’000 R’000 R’000 R’000

Cash flows from operating activities (44 433) 5 417 35 364 (2 964)

Cash (utilised in)/generated by operating activities 26.1 (41 324) 9 866 (11 723) (2 998)

Interest received 7 821 1 020 5 489 1 693

Interest paid (5 231) (1 474) (3 348) (727)

Dividends received – – 45 106 –

Taxation paid 26.2 (5 699) (3 995) (160) (932)

Cash flows from investing activities (207 094) (68 583) (222 293) (49 141)

Purchase of investment property (885) – – –

Purchase of property, plant and equipment

– to expand operations (70 169) (38 440) (4 235) (459)

– from acquisitions (52 402) – – –

Proceeds from sale of property, plant and equipment 5 605 1 559 – –

Additions of goodwill at net amount (89 961) (31 713) – –

Less: deferred tax purchased 2 640 – – –

Purchase of investments (1 922) 11 (81 765) (48 682)

Loans increased – – (136 293) –

Cash flows from financing activities 235 539 79 297 154 727 70 136

Issue of ordinary share capital net of expenses 103 083 52 744 103 083 52 744

Increase in interest-bearing borrowings 80 812 4 663 – –

Decrease in shareholders’ loans – (7 310) – (7 310)

Increase in vendor liabilities 51 644 – 51 644 –

Increase in short-term liabilities – 29 200 – 3 467

Long-term loans received – – – 22 574

Decrease in loans to subsidiary company – – – (1 339)

(Decrease)/Increase in cash resources (15 988) 16 131 (32 202) 18 031

Cash resources at beginning of year 26.3 18 220 2 089 18 162 131

Cash resources at end of year 26.3 2 232 18 220 (14 040) 18 162


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NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 29 February 2008

The annual financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) andthe Companies Act of South Africa, 1973. These policies have been applied consistently to all years presented, unlessotherwise stated.

1. BASIS OF PREPARATIONThe annual financial statements are prepared on the historical cost basis and incorporate the principal accountingpolicies listed below, except for the following assets and liabilities which are stated at fair value: derivative financialinstruments and financial instruments classified as available-for-sale. Non-current and disposal groups held for saleare stated at the lower of carrying amount and fair value less cost to sell.

The preparation of financial statements in conformity with IFRS requires management to make judgements,estimates and assumptions that may affect the application of policies and reported amounts of assets, liabilities,income and expenses. The estimates and associated assumptions are based on historical experience and variousother factors that are believed to be reasonable under the circumstances, the results of which form the basis ofmaking the judgements about carrying values of assets and liabilities that are not readily apparent from othersources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised if the revision only affects that period, or inthe period of the revision and future periods if the revision affects both current and future periods. The areasinvolving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant tothe consolidated financial statements, are disclosed in note 38.

1.1 Adoption of standards and interpretations effective in 2008The following standards have been applied by the group from 1 March 2007:

• IFRS 7 – Financial Instruments: Disclosure

• IAS 1 (Amendment) – Capital Disclosures

• IFRIC 11 (IFRS 2) – Group and Treasury Share Transactions

The application of IFRS 7 and IAS 1 (Amendment) in the year ended 29 February 2008 have not affected theamounts recognised in the balance sheet or income statement as the standards are concerned with disclosureonly. Certain comparative information has, however, been restated in order to achieve compliance with thedisclosure requirements set out in these standards.

IFRIC 11 addresses share-based payment transactions involving an entity’s own equity instruments and share-based payment transactions involving equity instruments of a parent company. Application of theinterpretation is unlikely to have any effect on the group:

1.2 Standards and interpretations effective in 2008 but not relevantThe following amendments were mandatory for accounting periods beginning on or after 1 March 2007 butis not relevant to the operations of the group.

• IFRIC 12 – Service Concession Arrangements

• IFRIC 13 – Customer Loyalty Programmes

• IFRIC 14: (IAS 19) – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and theirInteraction

1.3 IFRS issued but not yet appliedThe following IFRS was available for early application but has not yet been applied by the group in thesefinancial statements:

• IFRS 8 – Operating Segments for Years Commencing on or after 1 January 2009.

• IAS 23 – Borrowing Costs for Years Commencing on or after 1 January 2009.

The application of IFRS 8 in the year ended 29 February 2008 would not have affected the balance sheet orincome statement as the standard is concerned only with disclosure.

The application of IAS 23 will not affect the balance sheet and income statement as the group alreadycapitalises borrowing costs directly attributable to the construction and acquisition of the qualifying assets.


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2. ACCOUNTING POLICIES

2.1 Revenue

Revenue is recognised only when it is probable that the economic benefits associated with a transaction will

flow to the group and the amount of revenue can be measured reliably.

Contract revenue comprises the initial amount of revenue agreed in the contract, as well as variations in

contract work, claims and incentive payments, to the extent that it is probable they will result in revenue and

can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable

and represents the state of completion at balance sheet date. State of completion is measured with reference

to the percentage work performed to date of total work to be performed.

Sale of goods and services are recognised on the dates the goods are delivered or services rendered.

Property sales are recognised when the risks and rewards of ownership have been transferred.

Interest income is recognised in the income statement using the effective interest rate method.

2.2 Cost of sales

Contract costs comprise:

• costs that relate directly to the specific contract

• costs that are attributable to contract activity in general and can be allocated to the contract

• such other costs as are specifically chargeable to the customers under the terms of the contract

2.3 Inventory

Inventory is stated at the lower of cost or net realisable value. Cost comprises all costs of purchase, costs of

conversion and other costs which are incurred in bringing the inventory to its present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of

completion and the estimated costs necessary to make the sale.

Raw materials are valued on the first-in, first-out basis and property under construction is valued at cost.

2.4 Taxation

Current tax

The charge for current tax is based on the results for the year adjusted for items which are tax exempt or are

not tax deductible. Tax is calculated using rates that have been enacted or substantively enacted by the

balance sheet date.

Deferred tax

Deferred tax is provided on the balance sheet liability method computed as the difference between the tax

base and carrying amounts of assets and liabilities. Deferred tax liabilities are recognised for all taxable

temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent

that it is probable that taxable profits will be available against which the deductible temporary difference can

be utilised. The carrying amount of the deferred tax assets are reviewed at each balance sheet date and

reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or

part of the asset to be recovered.

The group does not recognise deferred tax liabilities, or deferred tax assets, on temporary differences

associated with investments in subsidiaries, joint ventures and associates as it is not considered probable that

the temporary differences will reverse in the foreseeable future. It is the group’s policy to reinvest undistributed

profits arising in group companies.

Deferred tax assets and liabilities are not recognised if they arise in the following situations: the initial

recognition of goodwill; or the initial recognition of assets and liabilities that affect neither accounting nor

taxable profit.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when

the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or

substantively enacted by the balance sheet date.


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2. ACCOUNTING POLICIES continued2.5 Operating leases

Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified asoperating leases. Payments made under operating leases are charged against income on a straight-line basisover the period of the lease.

2.6 GoodwillThe purchase method is used when an entity is acquired. On acquisition date, fair values are attributed to theidentifiable assets, liabilities and contingent liabilities.

Fair values of the identifiable assets and liabilities are deemed by return to market value of those or similaritems, where available, or by discounting expected future cash flows to achieve present values.

The cost of acquisition is the fair value of the group’s contribution in the form of assets transferred, sharesissued and liabilities assumed at the acquisition date plus costs attributable to the acquisition.

At acquisition date, goodwill is recognised when the costs of the acquisition exceeds the fair value of thegroup’s interest in the net identifiable assets of the entity acquired. Goodwill is not amortised and subject to anannual impairment test, and any impairment is recognised in the income statement immediately and will notbe subsequently reversed.

The profit or loss realised on disposal of an entity is calculated after taking into account the carrying value ofany related goodwill.

To the extent that the fair value of the net identifiable assets of the entity acquired exceeds the cost ofacquisition, the excess is recognised in the income statement on acquisition date.

2.7 Property, plant and equipmentProperty, plant and equipment are stated at cost less any accumulated depreciation and any accumulated impairment losses. Depreciation is computed by allocating the depreciable amount of an asset on a systematicbasis over its useful life and is applied separately to each identifiable component. Residual values and usefullives are assessed at the end of every financial year and the year’s depreciation determined.

The carrying amounts of property, plant and equipment are reviewed annually for an indication whether ornot the relevant asset is impaired. If any such indication exists and where the carrying amounts exceed theestimated recoverable amount, the assets or cash-generated units are written down to their recoverableamounts. Impairment losses and reversals are recognised directly in the income statement under the line item“other expenses”, unless such reversals relate to previously recognised revaluation reserves in equity.

Property, plant and equipment is depreciated at the following estimated useful lives as follows:

Plant and equipment 5 years

Motor vehicles 5 years

Office furniture, equipment and computers 3 to 6 years

2.8 ImpairmentThe carrying amounts of the assets are reviewed at each balance sheet date to determine whether there isany indication of impairment. If any such indication exists, or when annual impairment testing for an asset isrequired, the recoverable amount is estimated as the higher of the net selling price and value in use.

In assessing value in use, the expected future cash flows are discounted to future value using pre-tax discountrates that reflects current market assessments of the time value of money and the risk specific to the asset. An impairment loss is recognised whenever the carrying amount exceeds the recoverable amount. Impairmentlosses and reversals of impairment losses are separately disclosed in the income statement, above the incomebefore tax subtotal.

For an asset that does not generate cash inflows largely independent of those from other assets, therecoverable amount is determined for the cash-generating unit to which the asset belongs. An impairmentloss is recognised whenever the carrying amount of the cash-generating unit exceeds its recoverable amount.

A previous recognised impairment loss is reversed if there has been a change in the estimate used todetermine the recoverable amount, however not to an amount higher than the carrying amount that wouldhave been determined (net of depreciation) had no impairment loss been recognised in prior years.


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2. ACCOUNTING POLICIES continued

2.9 Provisions, contingent liabilities and contingent assets

Provisions are recognised when the company has a present legal or constructive obligation as a result of past

events for which it is probable that an outflow of economic benefits will occur, and when a reliable estimate

can be made of the amount of the obligation. Where the effect of discontinuing is material, provisions are

discounted. The discount rate used is a pre-tax rate.

2.10 Basis of consolidation

Subsidiaries

Subsidiaries which are those entities (including the share incentive trusts) in which the group has an interest of

more than one half of the voting rights or otherwise has power to govern the financial and operating policies,

are consolidated. The existence and effect of potential voting rights that are currently exercisable or convertible

are considered when assessing whether the group controls another entity.

Subsidiaries are consolidated from the date on which the control is transferred to the group and are no longer

consolidated from the date that control ceases. The purchase method of accounting is used to account for the

acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up,

shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition.

The excess of the cost of acquisition over the fair value of the net assets of the subsidiaries acquired is

recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary

acquired, the difference is recognised directly in the income statement. Inter-company transactions, balances

and unrealised gains on transactions between group companies are eliminated.

Joint ventures

A joint venture is an entity over which the group has joint control. Joint control is the contractually agreed

sharing of control over an entity, and exists only when strategic financial and operating decisions relating to

the activity require the unanimous consent of the parties sharing control. The joint ventures are accounted for

using the equity accounting method.

The investment in a joint venture is initially recognised at cost and adjusted for the group’s share of the

changes in the net assets of the joint venture after the date of acquisition, and for any impairment in value.

If the group’s share of losses of a joint venture exceeds its interest in the joint venture, the group discontinues

recognising its share of further losses. Inter-company transactions, balances and unrealised gains on

transactions between the group and its joint venture are eliminated on consolidation.

2.11 Employee benefits

Short-term employee benefits

The cost of all short-term benefits is recognised during the period in which the employee renders the related

service.

The provisions for employee entitlements to wages, salaries and annual leave represent the amount which the

company has a present obligation to pay as a result of employees’ services provided to the balance sheet date.

The provisions have been calculated at undiscounted amounts based on current wage and salary rates.

Retirement benefits

The company and its subsidiaries contribute to defined contribution funds. Contributions to defined

contribution funds are charged against income as incurred.

2.12 Borrowings

Borrowings are recognised initially at the proceeds received, net of transaction costs incurred. Borrowings are

subsequently stated at amortised cost, using the effective interest rate method. Any difference between

proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the

period of the borrowings as interest.


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2.13 Segmental reporting

A segment is a distinguishable component of the group that is engaged in providing products or services

which are subject to risks and rewards that are different from those of other segments. The primary basis for

reporting segment information is business segments as there is no secondary basis geographical segment. The

basis of segment reporting is representative of the internal structure used for management reporting. Segment

results include revenue and expenses directly attributable to a segment whether from external transactions or

from transactions with other group segments. Segment assets and liabilities comprise those operating assets

and liabilities that are directly attributable to the segment or can be allocated to the segment on a reasonable

basis.

2.14 Financial instruments

The group classifies financial instruments on initial recognition as a financial asset, a financial liability or an

equity instrument in accordance with the substance of the contractual arrangement.

Financial instruments are recognised on the balance sheet at fair value when the group becomes a party to

the contractual provisions of the instrument. Transaction costs are included in the initial carrying value of the

financial instrument except in the case of financial instruments classified at fair value through profit and loss, in

which case the transaction costs are expensed as they are incurred.

The group has divided its financial instruments into the classes based on the manner in which the financial

instruments are managed and reported on for internal management purposes.

Long-term investments

These include available-for-sale financial instruments and financial instruments held to maturity. The purpose of

such investment is to earn a return on surplus cash flows in excess of the investor’s required rate of return.

Trading investments

These include financial instruments held for trading and certain derivative financial instruments. The purpose

of such investments is to earn returns based on short-term profit taking and taking advantage of speculative

opportunities.

Working capital balances

These include loan and trade receivables and loan and trade payables which arise in the normal course of the

group’s business.

Long-term obligations

Long-term obligations include shareholders’ loans and inter-group loans payable. These obligations are

categorised as trade and loans payable.

Subsequent to initial measurement, the constituents of the above classes of financial instruments are measured

as follows:

Available-for-sale assets

Subsequent to initial recognition movements in the fair value of available-for-sale financial assets are taken

directly to equity.

Designated at fair value through profit and loss

The group has designated certain loans payable at fair value, as the loan portfolio is managed and its

performance evaluated together with its portfolio of equity and derivative investments according to a

documented risk management and investment strategy.

Fair values are based on prices quoted in an active market if such a market is available. If an active market is

not available, the group establishes the financial instrument’s fair value by using a valuation technique, mainly

discounted cash flow analysis. Other valuation techniques used included: recent arm’s length market

transactions between knowledgeable, willing parties; reference to the current fair value of another instrument

that is substantially the same; and option pricing models.


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2.14 Financial instruments continued

Trade and other receivables

Trade and loans receivable are subsequently measured at amortised cost using the effective interest rate

method and reduced by appropriate allowances for estimated irrecoverable amounts.

The group makes an assessment at each reporting date whether there is any objective evidence that trade

and other receivables are impaired. Where objective evidence exists as a result of the occurrence of one or

more events that occurred subsequent to the initial recognition of the receivable, the amount of the

impairment is determined by estimating the impact of these loss events on the future cash flows expected to

be generated from the receivable.

Trade and other payables

Trade and loans payable are subsequently measured at their amortised cost using the effective interest rate

method.

2.15 Set-off of financial assets and liabilities

If a legally enforceable right exists to set-off recognised amounts of financial assets and liabilities and the

company intends to settle on a net basis or to realise the asset and liability simultaneously, all related financial

effects are netted.

2.16 Dividends

Dividend distribution to the company’s shareholders is recognised as a liability in the company’s financial

statements in the period in which the dividends are approved by the company’s shareholders.

2.17 Construction contracts, receivables and revenue

Where the outcome of a construction contract can be estimated reliably, contract revenue and cost are

recognised by reference to the stage of completion of the contract activity at the balance sheet date, as

measured by surveys of work done.

Variations in contract work, claims and incentive payments are included to the extent that they have been

agreed with the customer.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to

the extent that contract costs incurred are recoverable. Contract costs are recognised as an expense in the

period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised

as an expense immediately. The group also presents as contracts in progress the gross amount due from

customers for contracts in progress for which costs incurred plus recognised profits (less recognised losses)

exceed progress billings. Progress billings not yet paid by customers and retentions are included in trade and

other receivables.

The group represents as a liability (excess billings over work done) the gross amount due to customers for

contract work for all contracts in progress for which progress billings exceed costs incurred plus recognised

profits (less recognised losses).

2.18 Investments

The company classifies its investments as available-for-sale. Investments are disclosed as non-current assets

unless management has the intention to sell them in the next twelve months from the balance sheet date, in

which case they are included in current assets. Purchase of investments is initially recorded at cost on the trade

date that the company commits to the purchase. Investments are subsequently carried at fair value. Realised

and unrealised gains and losses arising from changes in the fair value of these investments are included in

capital. The fair value of listed investments is based on quoted listed prices.


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2.19 Share-based payments

Options are measured at fair value at grant date using the Black Scholes Pricing Market Model. The fair value is

expensed on a straight-line basis over the vesting period, based on an estimate of the number of options that

will eventually vest.

Equity settled share-based payments are not adjusted for subsequent changes in the fair value of theinstruments granted but rather the number of equity instruments that are granted are adjusted based on thefulfilment of the attached non-market-related vesting conditions. Options exercised are equity settled through afresh issue of shares or through repurchase and reissue of shares by the group.

Cash settled share-based payment transactions result in the recognition of a liability at its current fair value. The liability is remeasured to fair value at each reporting date with the resulting fair value gain or loss beingrecognised in profit and loss.

2.20 Investment propertyInvestment property comprises non-owner-occupied property held to earn rentals and for capital appreciation.Investment property is carried at fair value.

2.21 Capitalisation of borrowing costsBorrowing costs, incurred in respect of inventory that require a substantial period to prepare assets for theirintended use, are capitalised up to the date that the development of the asset is ready for its intended use.Other borrowing costs are recognised directly to the income statement when incurred.

2.22 Share capitalOrdinary shares are classified as equity. Issued share capital is stated in the statement of changes in equity atthe amount of the proceeds received less directly attributable issue costs. Cost of share options issued havebeen charged to share capital and share premium as described in note 2.19 above.

2.23 Earnings per sharea) Earnings per share is based on attributable profit for the year divided by the weighted average number

of ordinary shares in issue during the year. Fully diluted earnings per share is presented when theinclusion of potential ordinary shares has a dilutive effect on earnings per share.

b) Earnings per share from continuing operations is based on attributable profit for the year from continuingoperations divided by the weighted average number of ordinary shares in issue during the year. Fully diluted earnings per share is presented when the inclusion of potential ordinary shares has a dilutiveeffect on earnings per share.

2.24 Headline earnings per shareHeadline earnings per share is based on the same calculation as in 2.23 above except that attributable profitspecifically excludes items as set out in Circular 8/2007 “Interpretation of Statement of Investment Practice No. 1: Headline Earnings” issued by the South African Institute of Chartered Accountants. Fully dilutedearnings per share is presented when the inclusion of potential ordinary shares has a dilutive effect onheadline earnings per share.

2.25 Related party transactionsAll subsidiaries, joint ventures and associated companies of the group are related parties. A list of the majorsubsidiaries, joint ventures and associated companies are included in note 37 of this annual report. Alltransactions entered into with subsidiaries and associated companies were under terms no more favourablethan those with third parties and have been eliminated in the consolidated group accounts. Directors’ andsenior management’s emoluments, as well as transactions with other related parties, are set out in note 33.There were no other material contracts with related parties.

2.26 Contingencies and commitmentsTransactions are classified as contingent liabilities where the group’s obligations depend on uncertain eventsand principally consist of contract-specific third-party obligations underwritten by banking institutions. Items areclassified as commitments where the group commits itself to future transactions, particularly in the acquisitionof property, plant and equipment.


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3. PROPERTY, PLANT AND EQUIPMENTFURNITURE, LEASEHOLD

PLANT AND FITTINGS AND IMPROVE-EQUIPMENT VEHICLES COMPUTERS MENTS TOTAL

GROUP R’000 R’000 R’000 R’000 R’000

2008

Net carrying amount at beginning of year 31 315 10 335 1 094 – 42 744

Gross carrying amount 34 810 12 172 1 847 – 48 829

Accumulated depreciation and impairments (3 495) (1 837) (753) – (6 085)

Additions at cost 99 006 16 552 6 006 1 007 122 571

– from acquisitions 59 899 3 994 5 269 1 007 70 169

– from business combinations 39 107 12 558 737 – 52 402

Disposals at carrying amount (3 188) (2 623) (44) – (5 855)

Depreciation (6 743) (1 610) (1 222) – (9 575)

Net carrying amount at end of year 120 390 22 654 5 834 1 007 149 885

Gross carrying amount 130 027 25 250 7 778 1 007 164 062

Accumulated depreciation and impairments (9 637) (2 596) (1 944) – (14 177)

2007

Net carrying amount at beginning of year 6 653 1 795 599 – 9 047


Accumulated depreciation and impairments (2 343) (741) (639) – (3 723)

Additions at cost 26 939 10 857 644 – 38 440

– from acquisitions 13 325 9 587 517 – 23 429

– from business combinations 13 614 1 270 127 – 15 011

Disposals at carrying amount (527) (927) (18) – (1 472)

Depreciation (1 750) (1 390) (131) – (3 271)

Net carrying amount at end of year 31 315 10 335 1 094 – 42 744


Accumulated depreciation and impairments (3 495) (1 837) (753) – (6 085)

FURNITURE,FITTINGS AND

COMPUTERS TOTALCOMPANY R’000 R’000

2008

Net carrying amount at beginning of year 482 482

Gross carrying amount 980 980

Accumulated depreciation and impairments (498) (498)

Additions at cost

– from acquisitions 4 235 4 235

Depreciation (537) (537)

Disposals at carrying amount (8) (8)

Net carrying amount at end of year 4 172 4 172

Gross carrying amount 5 192 5 192

Accumulated depreciation and impairments (1 020) (1 020)


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3. PROPERTY, PLANT AND EQUIPMENT continued

FURNITURE,

FITTINGS AND

COMPUTERS TOTAL

COMPANY R’000 R’000

2007

Net carrying amount at beginning of year 114 114



Additions at cost

– from acquisitions 459 459

Depreciation (91) (91)

Net carrying amount at end of year 482 482



Certain assets are encumbered as security for liabilities of the group (refer to note 14).

GROUP COMPANY

2008 2007 2008 2007

R’000 R’000 R’000 R’000

Assets subject to instalment sale agreements

(net carrying amount) :

Plant and equipment 57 846 4 317 – –

Motor vehicles 23 983 5 321 – –

81 829 9 638 – –

Assets held under notarial bond with First National

Bank Limited

Plant and equipment 3 602 – – –

Motor vehicles 1 855 – – –

Tools and equipment 467 – – –

5 924 – – –


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GROUP COMPANY2008 2007 2008 2007R’000 R’000 R’000 R’000

4. INVESTMENT PROPERTY

Held at fair value – additions through business

combinations 885 – – –

The fair value of the investment property has been

determined by the directors. In determining this value

reference has been made to current market conditions

in recent sales transactions of similar properties in

similar geographic locations.

5. GOODWILL

Carrying amount at beginning of year

Gross carrying amount 36 436 4 723 – –

Impairment loss (2 723) – – –

Recognised on acquisition of subsidiaries at net amount 464 008 31 713 – –

Recognised on acquisition of significant subsidiaries

(note 27) 429 456 – – –

Additional goodwill on acquisition of Sanyati Piling and

Geotechnical (Pty) Limited 25 612 31 713 – –

Recognised in subsidiary 2 544 – – –

Recognised on acquisition of Hibiscus Asphalt (Pty) Limited 6 396 – – –

Carrying amount at end of year – gross carrying amount 497 721 36 436 – –

Goodwill is allocated to cash generating units (CGU), such allocation being done on the basis of the group’s

primary reporting segments (see note 35). Goodwill is tested for impairment on a fair value basis using projected

profitability of each CGU.

The calculations are discounted at 9%. The discount factor is determined from a consideration of the current

industry conditions, government spend projections with regard to national infrastructure, world-wide steel

shortages, exchange rates which affect cement prices, and skills shortages facing the industry.

6. INVESTMENTS IN SUBSIDIARIESThe following is a list of subsidiaries and their subsidiaries:

2008 2007INVEST- SUBSID- INVEST- SUBSID-

MENT IARIES’ MENT IARIES’% TYPE OF AT INVEST- AT INVEST-

INTEREST INVEST- COST MENTS COST MENTSNAME OF COMPANY HELD MENT R’000 R’000 R’000 R’000

v African Olive Trading 69 (Pty) Limited 100% Subsidiary – – * –^ Sanyati Civils Coastal (Pty) Limited 100% Subsidiary 4 – 4 –# Brisk Asphalt Surfacing (Pty) Limited 100% Subsidiary 1 025 – 1 025 –^ Deroma Structures (Pty) Limited 100% Subsidiary * – * –# GEM Earthworks (Pty) Limited 100% Subsidiary 63 007 – – –v Hibiscus Asphalt (Pty) Limited 100% Subsidiary – * – –v KZN Piling (Pty) Limited 100% Subsidiary – – * –w Sanyati Piling and Geotechnical (Pty) Limited 100% Subsidiary * – 40 515 –^ Metallon Trading (Pty) Limited 100% Subsidiary – 200 – 201^ Sanyati Engineering Central (Pty) Limited 100% Subsidiary 222 011 – – –^ Sanyati Construction (Pty) Limited 100% Subsidiary – * – *# Sanyati Roads (Pty) Limited 100% Subsidiary – * – *+ Purple Plum (Pty) Limited 100% Subsidiary – 1 600 – –v Rickrock Investments (Pty) Limited 100% Subsidiary – – * –^ Sanyati Building (Pty) Limited 100% Subsidiary * – * –^ Sanyati Civils Inland (Pty) Limited 100% Subsidiary 201 296 – – –+ Sanprop (Pty) Limited 100% Subsidiary * – * –+ Sanyati Properties Five (Pty) Limited 100% Subsidiary – * – *+ Sanyati Properties Four (Pty) Limited 100% Subsidiary – * – *+ Sanyati Properties Nine (Pty) Limited 100% Subsidiary – * – *+ Sanyati Properties One (Pty) Limited 100% Subsidiary – * – *+ Sanyati Properties Ten (Pty) Limited 100% Subsidiary – * – *+ Sanyati Properties Three (Pty) Limited 100% Subsidiary – * – *+ Sanyati Properties Two (Pty) Limited 100% Subsidiary – * – –v Triponza Trading 257 (Pty) Limited 100% Subsidiary – – * –

487 343 1 800 41 544 201

*All investments at cost are less than R1 000.

All subsidiaries are incorporated in South Africa and are wholly owned.

The group maintains a register of all subsidiaries available for inspection at the registered office of Sanyati Holdings Limited.

No part of the business of any subsidiary has been managed during the financial period by any third party.

Nature of business^ Construction activities+ Property developmentw Piling# Road buildingv Dormant entities

Amounts owing by subsidiaries: – – 14 853 7 337

Sanyati Civils Coastal (Pty) Limited – – 3 617 –Brisk Asphalt Surfacing (Pty) Limited – – 2 550 –Sanyati Piling and Geotechnical (Pty) Limited – – 8 686 –Sanyati Roads (Pty) Limited – – – 7 337

487 343 1 800 56 397 7 538


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6. INVESTMENTS IN SUBSIDIARIES continued

Sanyati Civils Inland (Pty) Limited, GEM Earthworks (Pty) Limited, Sanyati Engineering Central (Pty) Limited, Purple

Plum (Pty) Limited and Hibiscus Asphalt (Pty) Limited were acquired during the year. Refer to note 27 for further

details.

The holding company’s interest in the aggregate net profits earned by the subsidiaries amounted to R64 153 194

(2007: R24 224 000) after tax.GROUP COMPANY

2008 2007 2008 2007R’000 R’000 R’000 R’000

7. INVESTMENTS

Non-current assets

The following financial assets are carried at amortised cost:

Fixed deposit: First National Bank Limited 2 185 – – –

Fixed deposit: ABSA Bank Limited 57 – – –

Unit trusts: Allan Gray Limited – 320 – –

2 242 320 – –

8. LOANS TO/FROM SUBSIDIARY COMPANIES

Loans to subsidiary companies

Purple Plum (Pty) Limited – – 4 102 –

Sanyati Civils Coastal (Pty) Limited – – 8 169 –

Deroma Structures (Pty) Limited – – 13 950 630

Sanyati Building (Pty) Limited – – 9 984 65

Brisk Asphalt Surfacing (Pty) Limited – – 49 659 17 584

Sanyati Roads (Pty) Limited – – 2 485 –

GEM Earthworks (Pty) Limited – – 15 000 –

Sanprop (Pty) Limited – – 3 808 10 022

Sanyati Piling and Geotechnical (Pty) Limited – – 80 004 50

Sanyati Properties Five (Pty) Limited – – 7 –

Metallon (Pty) Limited – – 345 –

Sanyati Properties One (Pty) Limited – – 5 915 –

Sanyati Properties Two (Pty) Limited – – 3 174 –

Sanyati Properties Three (Pty) Limited – – 732 –

Sanyati Properties Four (Pty) Limited – – 10 –

Sanyati Properties Nine (Pty) Limited – – 7 –

Sanyati Properties Ten (Pty) Limited – – 700 –

– – 198 051 28 351

Loans from subsidiary companies

Sanyati Civils Coastal (Pty) Limited – – 16 546 21 031

Sanyati Roads (Pty) Limited – – 163 –

Sanyati Construction (Pty) Limited – – 2 817 –

Sanyati Civils Inland (Pty) Limited – – 10 000 –

Sanyati Civils Building (Pty) Limited – – 41 –

– – 29 567 21 031

Loan to Sanyati 2007 Acquisitions Trust – – 21 000 –

The above loans are interest-free and have no fixed terms of repayment. They will not be repaid within the next twelve

months.


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9. DEFERRED TAXATIONTemporary differences arose from:Warranty and maintenance provisions 1 165 – – –Section 24C allowances (6 104) – – –Work in progress 4 676Uncertified revenue (14 022) – – –Debtors/(creditors) present value adjustments 339 – – –Property, plant and equipment capital allowances (10 025) (2 698) 11 (19)Contract allowances 8 851 (2 473) – –Doubtful debt provision 1 632 291 16 –Debtors’ retentions (18 010) (5 603) (36) –Prepaid expenses (128) (26) (8) (1)Leave pay and bonus provisions 728 524 366 334Subcontractors’ retentions 3 981 851 – –Computed tax loss 4 625 975 706 –

(22 292) (8 159) 1 055 314

Deferred tax asset/(liability) at beginning of year (8 159) (4 754) 314 140Deferred tax asset/(liability) purchased through acquisitions (2 639) – – –Rate change 775 – (38) –Current year timing differences (12 269) (3 405) 780 174

Deferred tax asset/(liability) at end of year (22 292) (8 159) 1 056 314

10. INVENTORYInventory comprises the following categories:Raw materials 17 001 1 794 – –Property under construction 27 262 12 220 – –

44 263 14 014 – –

Raw materials have been valued as stated in note 2.3.Property under construction can be described as follows:

2008 2007DEVELOP- DEVELOP-

Group COST MENT TOTAL C0ST MENT TOTALName and description of property R’000 R’000 R’000 R’000 R’000 R’000

Sanprop (Pty) LimitedPortion 10 and remainder both of Erf 619 Howick in extent 7 370 m2, the Paddocks 1 783 4 489 6 272 1 783 1 539 3 322

Sanyati Properties Three (Pty) LimitedErf 97 Glenholm in extent 4 269 m2, 7 Abrey Road** 3 150 520 3 670 3 150 215 3 365

Sanyati Properties Ten (Pty) LimitedRemainder of Sub 1 of the Farm Upper End of Langefontein number 980 in extent 4,1632 hectares, 9 Fischer Road, Hillcrest* 4 500 4 703 9 203 4 500 1 013 5 513

VariousOther development costs capitalised – 509 509 – 20 20

Sanyati Properties Two (Pty) LimitedErf 96 Glenholm, more fully described as 5 Abrey Road, Kloof, in extent 4 277 m2** 7 100 508 7 608 – – –

Total 16 533 10 729 27 262 9 433 2 787 12 220

* Properties secured against a mortgage bond with Nedbank Limited raised during the current financial year (note 14).

** Properties secured against a mortgage bond with Investec Bank Limited raised during the current financial year (note 14).


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11. TRADE AND OTHER RECEIVABLES

Trade receivables due from associates – – 7 052 –

Receivables due from related parties (refer note 37) 3 – – 1 590

Trade and other receivables 370 261 118 062 1 206 143

Prepayments 2 264 1 151 2 142 1 063

Taxation receivable – 87 – –

372 528 119 300 10 400 2 796

The carrying value of the trade and other receivables

approximated their fair value due to the short-term

nature of these instruments.

Allowance for impairment:

Opening balance 1 339 1 086

Impairments recognised in profit and loss 5 300 1 303 80 –

Reversals of impairments recognised in profit and loss (1 244) (1 050) – –

Closing balance 5 395 1 339 80 –

Trade receivables past due but not impaired

Amounts in 30 to 60 days 11 645 4 451 208 3

Amounts in 60 to 90 days 12 220 3 386 155 –

Amounts in 90 days + 34 999 7 303 2 802 6

58 864 15 140 3 165 9

12. GROSS AMOUNTS DUE FROM/(TO) CUSTOMERS

Gross amounts due from customers 12 802 4 702 – –

Gross amounts due to customers (41 505) (12 158) – –

(28 703) (7 456) – –

13. SHARE CAPITAL

Authorised

1 000 000 000 ordinary shares of 0,001 cent each 10 10 10 10

Issued

305 844 077 ordinary shares of 0,001 cent each 3 2 3 2


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13. SHARE CAPITAL continuedReconciliation of outstanding shares at beginning and end of year(The number of shares rounded to the nearest thousand)

GROUP COMPANYORDINARY ORDINARY ORDINARY ORDINARY

NUMBER OF SHARES SHARES SHARES SHARESORDINARY 2008 2007 2008 2007

SHARES R’000 R’000 R’000 R’000

Balance at beginning of year 227 048 2,27 1,00 2,27 1,00Shares issued during the year: 1,27 1,272 May 2007 16 667 0,16 – 0,16 –7 June 2007 48 000 0,48 – 0,48 –7 June 2007 1 200 0,01 – 0,01 –7 June 2007 10 000 0,10 – 0,10 –16 July 2007 2 929 0,03 – 0,03 –

Balance at end of year 305 844 3,05 2,27 3,05 2,27

Directors' interests in share capital are disclosed in the Directors’ Report.

The directors are authorised by resolution of the shareholders until the forthcoming annual general meeting, toissue and allot any of the unissued shares for any purpose and upon such terms and conditions as they deem fit.There have been no share issues subsequent to balance sheet date.


14. INTEREST-BEARING BORROWINGS14.1 Instalment sales 70 250 15 080 – –

ABSA Bank Limited 5 529 6 135 – –Nedbank Limited 9 – – –Standard Bank of South Africa Limited 34 329 2 274 – –Bell Equipment Finance Company (Pty) Limited 1 004 – – –GMSA 270 – – –Wesbank Limited 29 109 6 576 – –BMW Financial Services (Pty) Limited – 95 – –

14.2 Mortgage bonds 17 626 98 – –

Nedbank Limited 9 816 98 – –Investec Bank Limited 7 482 – – –Standard Bank of South Africa Limited 328 – – –

14.3 Fixed term loanFirst National Bank Limited 5 208 – – –

93 084 15 178 – –Current portion transferred to current liabilities (24 959) (4 577) – –

68 125 10 601 – –

Property, plant and equipment held as security under instalment sale agreements is disclosed in note 3.Interest charged on these agreements is charged at rates linked to prime. See below for details of repaymentterms.

Mortgage bond repayments amount to R162 632 per month. The abovementioned bonds will be fully settledwhen the related properties are sold. The expected settlement is between 12 to 18 months.

Interest charged on the above balances are charged at a rate linked to prime. The amounts payable toInvestec Bank Limited and Nedbank Limited are secured by mortgage bonds over properties at a cost of R11 278 and R9 203 respectively (see note 10).

Interest on the fixed term loan is charged at a rate linked to prime. Monthly instalments amount to R243 772over a five-year period.


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14. INTEREST-BEARING BORROWINGS continued

Reconciliation of total minimum instalment sale agreements payable at year-end and their present values

UP TO TWO TO MORE THAN TOTALONE YEAR FIVE YEARS FIVE YEARS AMOUNT

GROUP 2008 R’000 R’000 R’000 R’000

Present value of minimum instalments payable 24 830 45 420 – 70 250

Minimum instalment payments 32 796 59 787 – 92 583

Deferred finance charges (7 966) (14 367) – (22 333)

Analysed as follows:

Non-current instalment sale agreements payable

(due after 12 months) 45 420

Current instalment sale agreements payable

(due within 12 months) 24 830

70 250

GROUP 2007

Present value of minimum instalments payable 4 577 10 601 – 15 178

Minimum instalment payments 5 867 12 594 – 18 461

Deferred finance charges (1 290) (1 993) – (3 283)

Analysed as follows:

Non-current instalment sale agreements payable

(due after 12 months) 10 601

Current instalment sale agreements payable

(due within 12 months) 4 577

15 178


15. TRADE AND OTHER PAYABLES

Trade and other payables to external parties 175 484 58 287 2 385 2 147

The carrying value of the trade and other payables

approximated their fair value due to the short-term

nature of these instruments.

16. VENDOR LIABILITIES

Balance due to vendors 80 844 29 200 80 844 29 200

Less: Current portion 58 887 29 200 58 887 29 200

21 957 – 21 957 –

The loans are unsecured, interest-free and arose due to the purchase of Sanyati Engineering Central (Pty) Limited,

Sanyati Civils Inland (Pty) Limited and Sanyati Piling and Geotechnical (Pty) Limited. These loans relate to the

balance of the purchase price outstanding in cash which are carried at amortised cost.


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17. PROVISIONSPROVISION PROVISION PROVISION CONTRACTFOR LEGAL FOR LEAVE FOR AND OTHER

CLAIM PAY BONUS PROVISIONS TOTALR’000 R’000 R’000 R’000 R’000

GROUP 2008Opening carrying amount 200 1 715 86 1 663 3 664Additional provisions – 3 125 7 890 14 408 25 423Amounts utilised (200) (3 242) (7 843) (5 330) (16 615)

Closing carrying amount – 1 598 133 10 741 12 472

GROUP 2007Opening carrying amount – 1 674 1 017 229 2 920Additional provisions 200 2 565 3 153 1 663 7 581Amounts utilised – (2 524) (4 084) (229) (6 837)

Closing carrying amount 200 1 715 86 1 663 3 664

COMPANY 2008 Opening carrying amount – 1 151 – 65 1 216Additional provisions – 496 2 003 109 2 608Amounts utilised – (341) (2 003) (26) (2 370)

Closing carrying amount – 1 306 – 148 1 454

COMPANY 2007Opening carrying amount – 1 070 549 138 1 757Additional provisions – 386 1 281 65 1 732Amounts utilised – (305) (1 830) (138) (2 273)

Closing carrying amount – 1 151 – 65 1 216

Provision for legal claimThe provision was recognised in respect of legal proceedings instituted against Richmond Municipality for non-payment of the moneys outstanding for contract work done and certified. The matter has been resolved and theprovision reversed.

Provision for leave payProvision is made for the unpaid portion of accumulating leave pay accruing to employees as a result of servicesrendered during the period. The amount is to be settled as and when employees take leave.

Provision for bonusProvision is made for bonuses payable to wage employees in December as per the agreement with trade unions.

Contract and other provisionsIncluded in contract and other provisions are audit fee provisions of R546 600 and a warranty provision of R3 823 459 relating to possible warranty costs for Sanyati Civils Inland (Pty) Limited. The balance relates to contractprovisions.

The carrying value of provisions approximates their fair value due to the short-term nature of these instruments. Theprovisions have been determined based on assessments and estimates by management. Actual results could differfrom estimates and there is no certainty as to the timing of the cash flows relating to these provisions.

18. CONTINGENCIESLitigation is in process against Sanyati Engineering Central (Pty) Limited relating to a dispute with a contractor whoalleges that it was the company’s fault that the dam they worked on was washed away and is seeking damages ofR3 166 300. The company’s lawyers and management consider the likelihood of the action against the companybeing successful as unlikely, and the case should be resolved within the next year.

Should the action be successful, the company has insurance cover in place for litigation costs and claims. The totalcover extended by the current policy amounts to R13 600 000.


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19. REVENUEThe group’s revenue comprises:Construction and development 999 612 330 268 – –Sale of property 739 49 328 – –Services rendered 2 107 – 19 735 13 327

1 002 458 379 596 19 735 13 327

20. INVESTMENT INCOMEInterest received on short-term deposits 5 092 1 020 3 733 1 693Interest received on trade receivables 2 729 – 1 756 –Dividends received from subsidiaries – – 45 106 –

7 821 1 020 50 595 1 693

21. FINANCE COSTSInterest on bank overdraft 384 727 384 727Interest on trade payable 1 275 – – –Interest on interest-bearing borrowing 3 572 747 2 964 –

5 231 1 474 3 348 727

Borrowing costs capitalised to qualifying assets 515 762 – –

22. PROFIT BEFORE TAX Profit before tax is shown after the following entries:Auditors’ remuneration– Audit fee 852 454 178 141– Other 410 – 410 –Bad debts written off 70 2 – –Depreciation 9 575 3 271 537 91Directors’ emoluments 16 558 9 554 9 544 4 198Operating lease expenses 11 121 1 724 823 964

– Other 1 266 459 67 465– Rental 9 855 1 265 756 499

Profit/(loss) on sale of property, plant and equipment (250) 89 (8) –Secretarial fees 101 107 101 28Other staff costs 151 412 62 837 19 534 11 401

– Employment costs 132 987 50 584 14 462 8 152– Other costs 18 425 12 253 5 072 3 249

Impairment losses on goodwill 2 723 – – –

23. EMPLOYEE BENEFITSStaff costsWages and salaries 110 303 49 928 10 279 8 585Provident cost-defined contribution plans 4 527 1 632 1 496 956Other staff costs 34 229 11 277 5 406 1 860Share-based payments – equity settled 2 353 – 2 353 –

151 412 62 837 19 534 11 401

Average number of persons employed by the group during the year: NUMBER NUMBER NUMBER NUMBER

– Full time 1 943 524 63 40– Part time 1 298 395 – –


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24. TAXATION

SA normal taxation consists of:

Current tax 14 584 6 797 – 334

– current year 14 584 6,677 – 205

– underprovision for prior year – 120 – 129

Deferred tax

– current year 11 494 3 405 (742) (173)

Taxation expense 26 078 10 202 (742) 161

Tax rate reconciliation % % % %

Applicable tax rate 29,00 29,00 29,00 29,00

Reconciling items:

Exempt differences

– Disallowed expenditure 2,40 0,68 (27,04) 0,03

– Rate adjustment (0,90) – (0,09) –

Under provision of deferred tax for prior year – – – 120,04

Average effective tax rate 30,50 29,68 1,87 149,07

25. BASIC, DILUTED AND HEADLINE EARNINGS PER SHARE

25.1 Basic earnings per share

Diluted earnings from continuing operations

Basic earnings from continued operations (R’000) 59 415 24 171 40 369 (53)

Weighted average number of shares (number ‘000) 278 515 207 307 278 515 207 307

Earnings per share from continuing operations (cents) 21,33 11,66 14,49 (0,03)

25.2 Diluted earnings per share NUMBER NUMBER NUMBER NUMBER

Reconciliation of basic weighted average number

of ordinary shares to diluted weighted average

number of ordinary shares

Basic weighted average number of ordinary shares 278 515 207 307 278 515 207 307

Dilutive effect of share options 15 000 – 15 000 –

Dilutive effect of contingently issuable shares 106 742 2 120 106 742 –

Diluted weighted average number of ordinary shares 400 257 209 427 400 257 207 307

Fully diluted earnings per share (cents) 14,84 11,66 10,09 (0,03)

25.3 Headline earnings per share

Reconciliation of basic earnings to headline earnings

Basic earnings as disclosed above 59 415 24 171 40 369 (53)

Impairment of goodwill 2 723 – – –

Headline earnings 62 138 24 171 40 369 (53)

Headline earnings per share (cents) 22,31 11,78 14,49 (0,03)

Fully diluted headline earnings per share (cents) 15,52 11,66 10,09 (0,03)


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26. NOTES TO THE CASH FLOW STATEMENT

26.1 Net cash generated by/(utilised in)

operating activities

Profit before taxation 85 493 34 373 39 626 108

Adjustments for: 23 708 5 089 (41 970) 730

– Depreciation and amortisation 12 297 3 271 537 91

– Profit/(loss) on sale of non-current asset 250 (89) 8 –

– Share-based payments 2 353 – 2 353 –

– Movement in provision 8 808 1 907 238 639

– Dividends received – – (45 106) –

Adjustment for items disclosed separately on

cash flow statement (2 590) 454 (2 141) (966)

– Interest paid 5 231 1 474 3 348 727

– Interest income (7 821) (1 020) (5 489) (1 693)

Operating profit/(loss) before working

capital changes 106 611 39 916 (4 485) (128)

Changes in working capital: (147 935) (30 050) (7 238) (2 870)

– Increase in inventory (30 249) (8 012) – –

– Increase in gross amount due from customers (8 100) (4 702) – (2 436)

– Increase in trade and other receivables (253 228) (44 792) (7 476) –

– Increase in gross amount due to customers 29 347 4 568 – –

– Increase/(decrease) in trade and other payables 114 295 22 888 238 (434)

Cash (utilised in)/generated by operations (41 324) 9 866 (11 723) (2 998)

26.2 Taxation paid

Outstanding at beginning of year 9 162 6 360 32 630

Expense for the year 14 584 6 797 – 334

Outstanding at end of year (18 047) (9 162) 128 (32)

Taxation paid 5 699 3 995 160 932

26.3 Cash resources

Cash resources consist of cash on hand and

balances with banks. Cash resources included in

the cash flow statement comprise the following

balance sheet amounts:

Cash and bank balances 17 685 19 701 164 18 162

Bank borrowings (15 453) (1 481) (14 204) –

2 232 18 220 (14 040) 18 162


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27. SIGNIFICANT BUSINESS COMBINATIONS EFFECTED DURING THE YEAR

27.1 Sanyati Civils Inland (Pty) Limited (formerly Ruthcon Civil Contractors (Pty) Limited)

The group acquired 100% of Sanyati Civils Inland (Pty) Limited and effectively gained control on 1 April 2007.

The business acquired contributed revenue of R221 769 955 and profit after tax of R19 553 422 to the group

from the date of effective control to 29 February 2008.

If the acquisition had occurred on 1 March 2007, the contribution to group revenue would have been

R236 104 991 and the contribution to profit after tax would have been R20 035 851.

The following assets and liabilities were acquired:CARRYING VALUE FAIR VALUE

BEFORE DETERMINED ONACQUISITION ACQUISITION

R’000 R’000

Overdraft (1 349) (1 349)

Trade receivables 30 556 30 556

Property, plant and equipment 4 619 4 619

Trade payables (19 061) (19 061)

Deferred tax (567) (567)

Long-term debt (85) (85)

Total net assets 14 113 14 113

Goodwill 187 183 187 183

Total fair value of consideration paid 201 296 201 296

Total purchase price consideration

Settled in: 201 296 201 296

– Cash 67 500 67 500

– Fair value of shares issued/to be issued 133 796 133 796

Cash paid 50 000 50 000

The fair value of the shares was determined by reference to the closing price of the shares on 1 April 2007 on

the JSE Limited.

The goodwill on acquisition arose as a result of expected synergies due to expansion within the Republic of

South Africa together with economies of scale. The skills shortage is particulary endemic to this industry and

this entity has a highly skilled level of management.


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27. SIGNIFICANT BUSINESS COMBINATIONS EFFECTED DURING THE YEAR continued

27.2 GEM Earthworks (Pty) Limited

The group acquired 100% of GEM Earthworks (Pty) Limited and effectively gained control on 1 April 2007.

The business acquired contributed revenue of R103 044 525 and profit after tax of R8 015 212 to the group

from the date of effective control to 29 February 2008.



The following assets and liabilities were acquired:CARRYING VALUE FAIR VALUE

BEFORE DETERMINED ONACQUISITION ACQUISITION

R’000 R’000

Overdraft (2 716) (2 716)

Inventory 330 330


Property, plant and equipment 746 746


Deferred tax (1 046) (1 046)

Long-term debt (544) (544)

Total net assets 338 338

Goodwill 62 669 62 669

Total fair value of consideration paid 63 007 63 007


Settled in: 63 007 63 007

– Cash – –

– Fair value of shares issued/to be issued 63 007 63 007

Cash paid – –

The fair value of the shares was determined by reference to the closing price of the shares on 1 April 2007 on

the JSE Limited.





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27.SIGNIFICANT BUSINESS COMBINATIONS EFFECTED DURING THE YEAR continued

27.3Sanyati Engineering Central (Pty) Limited (formerly Meyker Re-Teng Construction (Pty) Limited)

The group acquired 100% of Meyker and effectively gained control on 17 January 2008. The business

acquired contributed revenue of R60 055 795 and profit after tax of R23 600 009 to the group from the date

of effective control to 29 February 2008.



The following assets and liabilities were acquired:

CARRYING VALUE FAIR VALUEBEFORE DETERMINED ON

ACQUISITION ACQUISITIONR’000 R’000

Overdraft (1 254) (1 254)

Investments 2 162 2 162

Inventory 3 714 3 714


Property, plant and equipment 44 934 47 037

Investment property 885 885


Deferred tax (1 027) (1 027)

Long-term debt (31 746) (31 746)

Total net assets 41 542 43 645

Goodwill 179 604

Acquisition costs capitalised (1 238)

Total fair value of consideration paid 222 011


Settled in: 222 011

– Cash 74 660

– Fair value of shares issued/to be issued 147 351

Cash paid 30 000

The fair value of the shares was determined by reference to the closing price of the shares on 1 January 2008

on the JSE Limited.

Refer to note 20.5 of the Directors’ Report in respect of payment terms for this acquisition.




27.4 Other acquisitions

The group also acquired 100% of Purple Plum (Pty) Limited and Hibiscus Asphalt (Pty) Limited. In addition, an

amount in cash (in respect of the second instalment) was also paid to the vendors of Sanyati Piling and

Geotechnical (Pty) Limited. The total additional amount paid in cash amounted to R9,961 million.


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28. POST-EMPLOYMENT BENEFITS

Defined contribution funds

The company participates on behalf of its employees in the following funds:

• Afriscan Provident Fund

• Sanyati Provident Fund No. 2

• Orion Money Purchase Provident Fund SA

• Liberty Life Provident Fund

• Construction Industry Retirement Benefit Fund

All funds are defined contribution plans operating under umbrella funds governed by the Pension Funds Act of

1956.

It is compulsory for all employees who are eligible through qualifying service to become members of a provident

fund.

29. FINANCIAL INSTRUMENTS

29.1 Class of financial instrument

The group’s exposure to various financial risks for

2008 are set out below:

FAIR VALUETOTAL WHERE

LIQUIDITY INTEREST CARRYING MATERIALLYRISK RATE RISK VALUE DIFFERENT

R’000 R’000 R’000 R’000


Available-for-sale – 2 242 2 242 2 242


Trade and loans receivable 47 219 – 47 219 43 633

Trade and loans payable – 14 279 14 279 12 749

47 219 14 279 61 498 56 382

Net exposure 47 219 16 521 63 740 58 624

Class of financial instrument

The group’s exposure to various financial risks for

2007 are set out below:

Class of financial instrument:

Sensitivity to changes in underlying financial variables:


Available-for-sale 320 – 320 –


Trade and loans receivable 1 417 – 1 417 1 417

Trade and loans payable – 6 512 6 512 6 512

1 417 6 512 7 929 7 929

Net exposure 1 737 6 512 8 249 7 929


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29. FINANCIAL INSTRUMENTS continued

29.2 Financial risk management

29.2.1 Interest rate risk

The group is exposed to interest rate risk through its commitments in interest-bearing borrowings, cash

resources and instalment sale agreements. The group manages this risk by keeping the accounts

payable days within a reasonable period and by keeping positive balances in the bank, serving as a

natural hedge. The group’s policy is to manage interest rate risk so that fluctuations in variable rates do

not have a material impact on profit/(loss).

29.2.2 Credit risk

Credit risk comprises mainly trade receivables, cash deposits and cash receivables. Trade receivables

comprise a widespread customer base. Management evaluate credit risk relating to customers on an

ongoing basis. The group limits its counterparty exposure by dealing only with well-established

financial institutions of high credit standing and limits its exposure to one counterparty.

29.3 Financial liabilities

29.3.1 Maturity analysis 2008PAYABLE IN PAYABLE IN PAYABLE IN PAYABLE IN PAYABLE TOTAL

1 TO 6 7 TO 12 1 TO 2 2 TO 5 AFTER 5 CARRYINGMONTHS MONTHS YEARS YEARS YEARS VALUE

R’000 R’000 R’000 R’000 R’000 R’000

Contractual undisclosed

liabilities


Trade and loan payables 175 484 – – – – 175 484

Long-term loans

Instalment sale obligation 12 415 12 415 – 45 420 – 70 250

Fixed term loan 1 451 1 451 – 2 306 – 5 208

Vendor liabilities 41 387 17 500 – 21 957 – 80 844

Mortgage bonds 62 63 – 17 501 – 17 626

55 315 31 429 – 87 184 – 173 928

Total liabilities due 230 799 31 429 – 87 184 – 349 412

29.3.2 Liquidity risk exposure

The group manages liquidity risk by monitoring forecasted cash flows and ensuring that adequate

unutilised borrowing facilities are available. In addition, the group maintains a strong business

relationship with its bankers.

29.3.3 Long-term liabilities and shareholders’ loans

The directors consider the carrying amounts of the long-term liabilities to approximate their values.

29.3.4 Capital management

The group’s objectives when managing capital are to safeguard the entity’s ability to continue as a

going concern, so that it can continue to provide returns for shareholders and benefits for other

stakeholders, and to provide an adequate return to shareholders by pricing products and services

commensurately with the level of risk.

The group sets the amount of capital in proportion to risk. The group manages the capital structure

and makes adjustments to it in the light of changes in economic conditions and the risk characteristics

of the underlying assets. In order to maintain or adjust the capital structure, the group may adjust the

amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell

assets to reduce debt.


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29. FINANCIAL INSTRUMENTS continued

29.3 Financial liabilities continued

29.3.1 Maturity analysis 2007PAYABLE IN PAYABLE IN PAYABLE IN PAYABLE IN PAYABLE TOTAL

1 TO 6 7 TO 12 1 TO 2 2 TO 5 AFTER 5 CARRYINGMONTHS MONTHS YEARS YEARS YEARS VALUE

R’000 R’000 R’000 R’000 R’000 R’000

Contractual liabilities


Trade and loan payables 58 287 – – – – 58 287

Long-term loans

Finance lease obligation 2 289 2 288 – 10 601 – 15 178

Vendor liabilities – 29 200 – – – 29 200

2 289 31 488 – 10 601 – 44 378

Total liabilities due 60 576 31 488 – 10 601 – 102 665

29.3.2 Liquidity risk exposureThe group manages liquidity risk by monitoring forecasted cash flows and ensuring that adequateunutilised borrowing facilities are available. In addition, the group maintains a strong businessrelationship with its bankers.

29.3.3 Long-term liabilities and shareholders’ loansThe directors consider the carrying amounts of the long-term liabilities to approximate their values.

29.3.4 Capital managementThe group’s objectives when managing capital are to safeguard the entity’s ability to continue as agoing concern, so that it can continue to provide returns for shareholders and benefits for otherstakeholders, and to provide an adequate return to shareholders by pricing products and servicescommensurately with the level of risk.

The group sets the amount of capital in proportion to risk. The group manages the capital structureand makes adjustments to it in the light of changes in economic conditions and the risk characteristicsof the underlying assets. In order to maintain or adjust the capital structure, the group may adjust theamount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sellassets to reduce debt.

The group monitors capital on the basis of the debt-to-adjusted capital ratio. This ratio is calculated asnet debt divided by capital. Net debt is calculated as total debt (as shown in the balance sheet) lesscash and cash equivalents. Capital comprises all components of equity (i.e. ordinary shares, sharepremium, minority interest, retained earnings and other reserves).

The debt-to-adjusted capital ratios at 29 February 2008 and at 28 February 2007, were as follows:

2008 2007R’000 R’000

Total debt 459 181 137 289Less: Cash and cash equivalents (2 232) (19 701)

Net debt 456 949 117 588

Total equity 638 830 99 928

Debt-to-capital ratio 0,72:1 1,17:1

The increase in the debt-to-capital ratio during 2008 resulted primarily from the increase in equityattributable to the acquisition of Ruthcon Civil Contractors (Pty) Limited, GEM Earthworks (Pty) Limitedand Meyker Re-Teng Construction (Pty) Limited during the year.


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GROUP COMPANYFACILITY FACILITY FACILITY FACILITY

AVAILABLE AVAILABLE AVAILABLE AVAILABLE2008 2007 2008 2007R’000 R’000 R’000 R’000

30. GUARANTEESGuarantee facilities are held with the following institutions:First National Bank Limited 5 500 5 500 5 500 5 500Lombard Insurance Company Limited 150 000 90 000 150 000 40 000Renasa Insurance Company Limited 4 000 6 000 4 000 6 000Performance & Customer Bond Services 20 000 20 000 20 000 20 000The Hollard Insurance Company Limited 5 200 5 200 5 200 5 200Standard Bank of South Africa Limited 180 180 180 180

184 880 126 880 184 880 76 880

It is the opinion of the directors that possibility of any loss is improbable and it is not anticipated that any materialliabilities will arise.

Contract performance guarantees are often provided as security in the form of a performance guarantee from abank or insurance consultant. The issuer of guarantees, in turn, normally receives an indemnity from thecontracting company or other group company. In compliance with industry custom, such indemnities related tothe group and contracting companies are not reported as contingent liabilities since they do not involve anyincrease of liability compared to the contracting commitment.

31. BANKING FACILITIES

The group’s bankers, First National Bank Limited, have made the following facility available:

Overdraft facility: R27 million (2007: R5 million)

32. CAPITAL COMMITMENTS

Subsequent to year-end, Sanyati Holdings Limited purchased the share capital of Sanyati Properties Seven (Pty)

Limited from Secprop 230 Investments (Pty) Limited, a related party, at net asset value. The major assets of Sanyati

Properties Seven (Pty) Limited consisted of Erf 1061, Kloof, Registration Division FT, Province of KwaZulu-Natal, in

extent 3 057 square metres, situated at 20A Village Road, Kloof. The book value of the property of R4,3 million was

considered a fair valuation of the asset. The property will be financed by mortgage bond through Investec Bank

Limited.


32.1 Commitments for capital expenditure

Plant and machinery – – – –

32.2 Future tax consequences on distribution of reserves

If the group were to distribute its equity reserves

to its shareholders, the tax consequences would

be as follows:

Retained earnings 103 487 44 072 40 500 131

Non-distributable reserves 3 111 3 111 – –


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33. DIRECTORS’ EMOLUMENTS

The remuneration in respect of group directors:

2008 Group entity

Sanyati Holdings LimitedSHARES OPTIONS TOTAL

ISSUED AT ISSUED AT EMPLOY- MEETING ANNUALMARKET MARKET MENT ATTEND- REMUN-

SALARIES BONUSES VALUE VALUE BENEFITS ANCE OTHER ERATIONDIRECTORS NAMES R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Executive directors

R Jackson 1 058 360 – 158 267 – – 1 843

M Krouse 756 220 – 83 178 – – 1 237

M Sangweni 553 135 – 87 155 – – 930

K Ramkissoon 870 150 – 134 191 – – 1 345

M O'Reilly 742 220 – 74 208 – – 1 244

RW Deacon 775 185 – 93 199 – – 1 252

A Rutherford 941 500 – 27 149 – – 1 617

5 695 1 770 – 656 1 347 – – 9 468

Non-executive directors

HM Dlamini – – – – – 8 – 8

N Khambule – – – – – 16 – 16

R Crowie – – – – – 12 – 12

C Flemming – – – – – 8 – 8

C Crowie – – – – – 16 – 16

T Ahier – – – – – 16 – 16

– – – – – 76 – 76

The remuneration in respect of group directors:

2007 Group entity

Sanyati Holdings LimitedSHARES OPTIONS TOTAL

ISSUED AT ISSUED AT EMPLOY- MEETING ANNUALMARKET MARKET MENT ATTEN- REMUN-

SALARIES BONUSES VALUE VALUE BENEFITS DANCE OTHER ERATIONDIRECTORS NAMES R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Executive directors

R Jackson 720 275 – – 341 – – 1 336

M Krouse 487 192 – – 277 – – 956

M Sangweni 333 109 – – 246 – – 688

K Ramkissoon 639 249 – – 306 – – 1 194

2 179 825 – – 1 170 – – 4 174

Non-executive directors

HM Dlamini – – – – – 12 – 12

N Khambule – – – – – 12 – 12

– – – – – 24 – 24


Key management personnel compensation

Short-term employee benefits 7 704 4 046 – –


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34. SHARE OPTIONS AND OTHER SHARE-BASED PAYMENTS

34.1 2007 Acquisitions share incentive scheme

With effect from 11 May 2007, the Sanyati Group initiated a share-based option plan. The objective of the

scheme was primarily to incentivise management and staff through ownership in the contracting business

(Scheme 1).

In accordance with IFRS 2 Share-based Payment, an amount of R773 519 (2007: nil) was expensed to the

income statement.

The share issues, referred to above, fall within the scope of IFRS 2 and in terms of IFRS 2 this transaction is

considered to be an equity-settled share-based payment.

As such, the shares are to be fair valued using a recognised pricing model and the difference between the fair

value and the consideration is to be expensed with a corresponding credit to equity.

The Black Scholes Pricing Market Model has been used for the purpose of this exercise.

The above transactions are considered to have an element of an option for the following reasons:

• The risks and rewards are considered to only effectively pass to the new shareholders once the

shareholders’ loans are repaid, or on injection by the new shareholders of their pro rata share of the

shareholders’ loans.

• As such, the risk in regard to the volatility of the cash flows within the Sanyati Group remain with

Sanyati up until 31 October 2010.

Fair value

The group accounts for share option expenses in accordance with IFRS 2 Share-based Payment, which

requires the fair value of share options granted to employees to be valued at the grant date and expensed

through the income statement over the vesting period of the share options. The fair value of each option

granted has been estimated on the grant date using the Black Scholes Pricing Market Model. The assumptions

used in determining the fair value of the options granted in 2008 are summarised below:

Risk free rate 5,75%

Vesting date 31 October 2010

3 years from issue of the “options”

Dividend yield Nil

Volatility 30%

Share price R2,38

Strike price R2,10

Option type Call

Number of options granted 10 000 000

The risk free rate of 5,75% has been assumed, based on the prevailing return on the R153 long-term

government bond as at 14 May 2007.

The volatility of companies in the same industry was used as a proxy.

The expected dividend yield was assumed to be nil as no dividends are to be paid on the shares until the date

the debt is repaid.


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34. SHARE OPTIONS AND OTHER SHARE-BASED PAYMENTS continued34.1 2007 Acquisitions share incentive scheme continued

GROUP COMPANY2008 2007 2008 2007

Share-based payments recognised in retained earnings R’000 R’000 R’000 R’000

The movement in share-based payments is as follows:Share options expensed during the year 774 – 774 –

OPTIONSGRANTED AT

Share options granted to new shareholders 29 FEBRUARY 2008 EXPIRY DATE

Management 10 000 000 31 October 2010

Total 10 000 000

34.2 Broad-based Incentive SchemeWith effect from 31 October 2007, the Sanyati Group initiated a share-based option plan. The objective of thescheme was primarily to incentivise management and staff through ownership in the contracting business(Scheme 2).

In accordance with IFRS 2 Share-based Payment, an amount of R530 126 (2007: nil) was expensed to theincome statement.

The share issues, referred to above, fall within the scope of IFRS 2 and in terms of IFRS 2 this transaction isconsidered to be an equity-settled share-based payment.

As such, the shares are to be fair valued using a recognised pricing model and the difference between the fairvalue and the consideration is to be expensed with a corresponding credit to equity.



• The risks and rewards are considered to only effectively pass to the new shareholders once theshareholders’ loans are repaid, or on injection by the new shareholders of their pro rata share of theshareholders’ loans.

• As such, the risk in regard to the volatility of the cash flows within the Sanyati Group remain with Sanyatiup until the issue of the shares, at which time the full risks and rewards of ownership will pass to thenew shareholders.

Fair valueThe group accounts for share option expenses in accordance with IFRS 2 Share-based Payment, whichrequires the fair value of share options granted to employees to be valued at the grant date and expensedthrough the income statement over the vesting period of the share options. The fair value of each optiongranted has been estimated on the grant date using the Black Scholes Pricing Market Model. The assumptionsused in determining the fair value of the options granted on 31 October 2007 are summarised below:

Risk free rate 9,33%Vesting date 30 June 2010

3 years from issue of the “options”Dividend yield NilVolatility 29,15%Share price R3,30Strike price 0,001 centOption type CallNumber of options granted 2 000 000

The risk free rate of 9,33% has been assumed, based on the prevailing return on the R153 long-termgovernment bond as at 31 October 2007.


The expected dividend yield was assumed to be nil as no dividends are to be paid on the shares until the datethe debt is repaid.


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34. SHARE OPTIONS AND OTHER SHARE-BASED PAYMENTS continued34.2 Broad-based Incentive Scheme continued

GROUP COMPANY2008 2007 2008 2007


The movement in share-based payments is as follows:Share options expensed during the year 530 – 530 –

OPTIONSGRANTED AT


Sanyati Group Staff 2 000 000 30 June 2010

Total 2 000 000

34.3 Executive Share Incentive SchemeWith effect from 31 October 2007, the Sanyati Group initiated a share-based option plan. The objective of thescheme was primarily to incentivise management and staff through ownership in the contracting business(Scheme 1).

In accordance with IFRS 2 Share-based Payment, an amount of R1 049 583 (2007: nil) was expensed to theincome statement.

The share issues, referred to above, fall within the scope of IFRS 2 and in terms of IFRS 2 this transaction isconsidered to be an equity-settled share-based payment.

As such, the shares are to be fair valued using a recognised pricing model and the difference between the fairvalue and the consideration is to be expensed with a corresponding credit to equity.



• The risks and rewards are considered to only effectively pass to the new shareholders once theshareholders’ loans are repaid, or on injection by the new shareholders of their pro rata share of theshareholders’ loans.

• As such, the risk in regard to the volatility of the cash flows within the Sanyati Group remain with Sanyatiup until 31 October 2010.

Fair valueThe group accounts for share option expenses in accordance with IFRS 2 Share-based Payment, whichrequires the fair value of share options granted to employees to be valued at the grant date and expensedthrough the income statement over the vesting period of the share options. The fair value of each optiongranted has been estimated on the grant date using the Black Scholes Pricing Market Model. The assumptionsused in determining the fair value of the options granted on 31 October 2007 are summarised below:

Risk free rate 9,33%Vesting date 31 October 2010

3 years from issue of the "options"Dividend yield NilVolatility 29,15%Share price R3,18Strike price R1,00Option type CallNumber of options granted 3 000 000

The risk free rate of 9,33% has been assumed, based on the prevailing return on the R153 long-termgovernment bond as at 31 October 2007.


The expected dividend yield was assumed to be nil as no dividends are to be paid on the shares until the datethe debt is repaid.


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34. SHARE OPTIONS AND SHARE BASED PAYMENTS continued

34.3 Executive Share Incentive Scheme continued

GROUP COMPANY2008 2007 2008 2007


The movement in share-based payments is as follows:Share options expensed during the year 1 050 – 1 050 –

OPTIONSGRANTED AT


Management 3 000 000 31 October 2010

Total 3 000 000

35. SEGMENT REPORT

Business segments

Based on management’s monthly significant reporting segments, the segment report has been prepared by

operating segment. As a result, the primary reporting format is by business segments with no secondary reporting

format.

The following table presents revenue and profit information and certain asset and liability information regarding the

group’s business segments for the year ended 29 February 2008:

INTER-COMPANYELIMINATION

CIVILS CIVILS HOLDING ANDBUILDING COASTAL INLAND ROADS COMPANY OTHER TOTAL

R’000 R’000 R’000 R’000 R’000 R’000 R’000

Revenue

Segment revenue 187 028 503 256 221 770 176 201 2 107 (87 904) 1 002 458

Inter-segment sales (2 501) (82 265) – (3 138) – 87 904 –

Sales to external

customers 184 527 420 991 221 770 173 063 2 107 – 1 002 458

Results

Gross profit 54 958 74 141 43 235 41 135 2 107 (2 387) 213 189

Profit before interest

and taxation 15 137 37 231 27 707 12 885 (7 634) (2 423) 82 903

Net finance costs (344) 204 – (283) (2 167) – (2 590)

Profit before taxation 15 481 37 027 27 707 13 168 (5 467) (2 423) 85 493

Taxation (4 406) (10 591) (7 974) (3 742) 635 – (26 078)

Profit for the year 11 075 26 436 19 733 9 426 (4 832) (2 423) 59 415

Depreciation 4 584 2 846 932 589 624 – 9 575

Capital expenditure 20 658 71 072 11 071 16 308 4 306 – 123 415

Segment assets 196 459 312 664 97 812 103 238 659 472 (271 634) 1 098 011

Segment liabilities (180 579) (210 336) (55 678) (100 055) (87 469) 174 936 (459 181)


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36. INTEREST IN JOINT VENTURES

The total percentage holding by the group in the equity of each significant jointly controlled entity is as follows:

PROPORTION OF JOINT VENTURE NATURE OF BUSINESS ISSUED SHARES HELD %

Afriscan Construction (Pty) Limited/TBA Construction CC/

Amanngcobo Construction CC Construction 60

Mbusi Gem JV (Pty) Limited Construction 100

Driefontein Joint Venture (Pty) Limited Construction 40

Sakhisizwe Joint Venture (Pty) Limited Construction 70

The group maintains a register of all its joint ventures for inspection at the registered office of Sanyati Holdings

Limited.

All joint ventures are incorporated in South Africa.GROUP COMPANY

2008 2007 2008 2007R’000 R’000 R’000 R’000

Aggregate financial information

BALANCE SHEET

Group’s proportionate share of assets and liabilities

Assets

Non-current assets 1 427 – – –

Current assets 19 535 – – –

20 962 – – –

Equity and liabilities

Shareholders’ equity 2 440 – – –

Non-current liabilities 2 193 – – –

Current liabilities 16 329 – – –

20 962 – – –

For the year ended 29 February 2008

INCOME STATEMENT

Group’s proportionate share of income and expenditure

Revenue 85 694 – – –

Profit before taxation 2 646 – – –

Taxation (767) – – –

Profit after taxation 1 879 – – –

SUMMARISED CASH FLOW STATEMENT

Cash flow from operating activities (195) – – –

Cash flow from investing activities 91 – – –

Cash flow from financing activities 164 – – –

Net increase/(decrease) in cash and cash equivalents 60 – – –


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37. RELATED PARTY TRANSACTIONSThe group has a related party relationship with its subsidiaries (see note 6) and joint venture (see note 36).

Transactions between the group and its subsidiaries, which are related parties of the group, have been eliminatedon consolidation and are not disclosed in this note. These transactions are not considered to be significant to thegroup. Detailed transactions between the group and other related parties are disclosed below.

All related party transactions were at arm’s length and are carried out on commercial terms and conditions atmarket-related prices. These transactions are under terms that are no less favourable than those arranged with thirdparties.

The remuneration and benefits received by directors are disclosed in note 33.

TRANSACTION TRANSACTIONAMOUNT AMOUNT

2008 2007Trading transactions R’000 R’000

Transactions with other companies outside the groupManagement fee charged by Sanyati Holdings LimitedSecprop 230 Investments (Pty) Limited 288 –Administration fee charged by Sanyati Holdings LimitedDeroma Projects CC – 37Rental paid to Exec PropertiesDeroma Structures (Pty) Limited – 165Rental paid to FromSanyati Holdings Limited Secprop 230 Investments (Pty) Limited – 51Sanyati Roads (Pty) Limited Secprop 230 Investments (Pty) Limited – –Secprop 230 Investments (Pty) Limited Sanyati Holdings Limited – –Secprop 230 Investments (Pty) Limited Sanyati Roads (Pty) Limited 188 222Secprop 230 IInvestments (Pty) Limited Sanyati Civil Coastal (Pty) Limited 243 –Secprop 230 Investments (Pty) Limited Sanyati Buildings (Pty) Limited 123 –Secprop 230 Investments (Pty) Limited Deroma Structures (Pty) Limited 107 –Secprop 230 Investments (Pty) Limited Sanyati Properties (Pty) Limited 62 –Sanyati Properties (Pty) Limited Secprop 230 Investments (Pty) Limited 7 –Contract revenue by ForSanyati Buildings (Pty) Limited Sanprop Six (Pty) Limited – 302Sanyati Buildings (Pty) Limited Secprop 230 Investments (Pty) Limited – 112Loan repayments charged by ToSanyati Holdings Limited Sanyati Properties 8 (Pty) Limited 199 –Asset purchased by FromSanyati Properties Six (Pty) Limited Deroma Structures (Pty) Limited 60 –GEM Earthworks (Pty) Limited Derrin Investments (Pty) Limited 15 000 –Rental paid to the Afriscan Property Trust Nature of related partySanyati Holdings Limited Related entity – 15Sanyati Civils Coastal (Pty) Limited Related entity – 153Ntuthuko Development (Pty) Limited Related entity – 5Zambezi Electrical (Pty) Limited Related entity – 52Sanyati Building (Pty) Limited Related entity – 32Interest charged by Sanyati Holdings LimitedSecprop 230 Investments (Pty) Limited Related entity – 94Interest charged by Sanyati Civils Inland (Pty) LimitedRuthcon Trust Related entity 3 –True North Developments (Pty) Limited 177 –AJ Rutherford 48 –Rental paid by Sanyati Civils Inland (Pty) LimitedRuthcon Trust Related entity 466 –


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37. RELATED PARTY TRANSACTIONS continuedTRANSACTION TRANSACTION

AMOUNT AMOUNT2008 2007

Trading transactions R’000 R’000

Rental paid by Sanyati Piling & Geotechnical (Pty) Limited

Whirlaway 194 CC 540 –

Notefull 1086 CC 368 –

Coral Lagoon Investments 202 –

Plant hire charge to Sanyati Engineering Central (Pty) Limited

Boschlogistics 203 –

De Bruin Family Trust 30 –

LMP en Dienste 30 –

Plant hire by GEM Earthworks (Pty) Limited

Derrin Investments (Pty) Limited 2 947 –

Creditor balance in GEM Earthworks (Pty) Limited

Derrin Investments (Pty) Limited 538 –

Thu Development CC 40 –

Umtwalo Trading CC 40 –

SECPROP SURLINK DEROMAAPPLE DESIGNS AP 230 (PTY) PROJECTS

(PTY) LIMITED TRUST INVESTMENTS LIMITED CC2007 Sales and purchases R’000 R’000 R’000 R’000 R’000

Sales from

Sanyati Civils Coastal (Pty) Limited 1 – – 103 –

Deroma Structures (Pty) Limited – – – – 2 257

Emberton Investments (Pty) Limited – 25 – – –

Sanyati Building (Pty) Limited – – 2 262 – –

1 25 2 262 103 2 257

PROBUILD ZAMBEZISURLINK DEROMA HARDWARE ELECTRICAL

APPLE DESIGNS (PTY) PROJECTS (PTY) (PTY)(PTY) LIMITED LIMITED CC LIMITED LIMITED

R’000 R’000 R’000 R’000 R’000

Sales to

Sanyati Civils Coastal (Pty) Limited 4 1 341 310 267 21

Sanyati Holdings Limited 64 – – – –

Sanyati Building (Pty) Limited 56 44 – 66 858

Sanyati Properties (Pty) Limited 114 30 – 2 –

Deroma Structures (Pty) Limited – 76 – 109 –

Brisk Asphalt (Pty) Limited – 22 – 7 –

238 1 513 310 451 879

TRANSACTION TRANSACTIONAMOUNT AMOUNT

NATURE 2008 2007OF RELATED PARTY R’000 R’000

HR Fees charged by Ntuthuko Development (Pty) Limited

Surlink (Pty) Limited Related entity – 21

National Marine Imports Related entity – 21

Entities are considered related party if there is common directorship or ownership by a Sanyati group director.


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38. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors,

including expectations of future events that are believed to be reasonable under the circumstances.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by

definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of

causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are

discussed below.

Provision for impairment of contract debtors

A provision for impairment of contract debtors is established when there is objective evidence that the group will

not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties

of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or

delinquency in payments are considered indicators that the contract debtor is impaired. The amount of the

provision is the difference between the contract debtor's carrying amount and the present value of estimated future

cash flows, discounted at the effective interest rate.

Accounting for construction contracts

The group makes estimates and assumptions concerning the future, particularly as regards construction contract

profit taking, provisions, arbitrations and claims. The resulting accounting estimates can, by definition, only

approximate the actual results. Estimates and judgements are continually evaluated and are based on historical

experience and other factors, including expectations of future events that are believed to be reasonable under the

circumstances.

Deferred taxation

A deferred tax asset is recognised with the carry-forward of unused tax losses to the extent that it is probable that

future taxable profit will be available against which the unused tax losses can be utilised.

The group considered the following criteria in assessing the probability that taxable profit will be available against

which the unused tax losses can be utilised:

• whether the entity has sufficient taxable temporary differences relating to the same taxation authority and the

same taxable entity, which will result in taxable amounts against which the unused tax losses can be utilised;

• whether it is probable that the entity will have taxable profits before the unused tax losses expire; and

• whether the unused tax losses result from identifiable causes which are unlikely to recur.

To the extent that it is not probable that taxable profit will be available against which the unused tax losses or un-

used tax credits can be utilised, the deferred tax asset is not recognised. To determine the probability that taxable

profit will be available against which the unused tax losses can be utilised, the company has reviewed its forecasts

of secured work for the foreseeable future and compared that to its total tax losses.

Goodwill

Goodwill is tested for impairment at each balance sheet date. The recoverable amount of cash-generating units

have been estimated based on value in use calculations. Value in use calculations have been based on a subjective

pre-tax discount rate of 12,5%.

Trade receivables and trade payables

Normal trade credit terms in South Africa have been judged to be equal to 60 days. Where trade receivables and

payables are settled beyond the normal trade credit terms, the transaction is deemed to include a financing

arrangement. The resulting trade receivables or trade payables are discounted from the date of settlement to day

60 using an appropriate discount rate. The group discounts its trade receivables using a discount rate equivalent to

that which it could earn on funds placed on call for a similar term. Trade payables are discounted using the group’s

incremental borrowing rate which it could obtain from its commercial bank for borrowing funds on similar terms.


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38. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS continued

Residual values and useful lives of items of property, plant and equipment

Plant and machinery

Due to the specialised nature of the group’s plant and machinery the residual value attached to these assets has

been estimated to be nil. The group estimates that the useful life of the plant and machinery, being the period of

time for which the assets can be utilised without significant modifications, replacements or improvements, is

10 years based on current levels of production and repairs and maintenance costs incurred.

Motor vehicles

The entity has a policy of utilising all motor vehicles for a period of three years. It is estimated that passenger

vehicles have a residual value approximating 30% of its initial purchase price. Heavy duty trucks are estimated to

have a residual value at the end of three years equivalent to 40% of their initial carrying values.


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SHARE ANALYSIS

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Register date: 29 February 2008Issued share capital 305 844 077 shares

NUMBER OF NUMBER OF

SHAREHOLDINGS PER CENT SHARES PER CENT

SHAREHOLDER SPREAD

1 – 1 000 shares 315 13,79 178 841 0,06

1 001 – 10 000 shares 1 120 49,04 5 569 360 1,82

10 001 – 100 000 shares 681 29,82 21 656 543 7,08

100 001 – 1 000 000 shares 117 5,12 32 937 146 10,77

1 000 001 shares and over 51 2,23 245 502 187 80,27

2 284 100,00 305 844 077 100,00

DISTRIBUTION OF SHAREHOLDERS

Bank 3 0,13 663 933 0,22

Close corporations 34 1,49 1 387 392 0,45

Endowment funds 10 0,44 214 561 0,07

Individuals 1 890 82,75 126 506 295 41,36

Insurance companies 4 0,18 9 162 953 3,00

Investment companies 13 0,57 8 967 482 2,93

Mutual funds 25 1,09 38 009 379 12,43

Nominees and trusts 191 8,36 61 731 712 20,18

Other corporations 30 1,31 960 400 0,31

Private companies 69 3,02 32 621 812 10,67

Public companies 3 0,13 271 400 0,09

Retirement funds 11 0,48 15 346 758 5,02

Share Trust 1 0,04 10 000 000 3,27

2 284 100,00 305 844 077 100,00

PUBLIC/NON-PUBLIC SHAREHOLDERS

Non-public shareholders 21 0,92 109 409 338 35,77

Directors and associates of the company 20 0,88 99 409 338 32,50

Share Trust 1 0,04 10 000 000 3,27

Public shareholders 2 263 99,16 196 434 739 64,23

2 284 100,00 305 844 077 100,00

BENEFICIAL SHAREHOLDERS HOLDING 3% OR MORE

Richard Jackson Family Trust; RD Jackson; TL Jackson 46 211 000 15,11

Sanlam 28 001 467 9,16

Saib I 14 252 000 4,66

Sangweni MJ 12 281 000 4,02

Ramkissoon K 11 605 000 3,79

Crowie Holdings (Pty) Limited 10 033 333 3,28

Sanyati 2007 Acquisitions Share Incentive Scheme 10 000 000 3,27

Public Investment Corporation Limited 9 556 490 3,12


76

This document is important and requires your immediate attention. If you are in any doubt as to the action you

should take, please consult your stockbroker, accountant, attorney, banker or other independent professional

adviser immediately.

Notice is hereby given that the annual general meeting of members of Sanyati Holdings Limited will be held in the

boardroom, Hibiscus, Sanyati Park, 3 Abrey Road, Kloof, Durban on Monday, 14 July 2008 at 11:00 for the following

purposes:

1. To receive, consider and adopt the annual financial statements of the group and company for the twelve months

ended 29 February 2008, including the Directors’ Report and the report of the auditors thereon.

2. To re-elect a director in accordance with the company’s articles of association.

2.1. In terms of articles 80 and 96 of the company’s articles of association the following non-executive director retires

by rotation, but being eligible offers himself for re-election:

• Hans Michael Dlamini

(The curriculum vitae of this director is set out in the Directorate Report of this document on page 11.)

3. Remuneration

3.1. To approve the remuneration of the directors for the year ended 29 February 2008.

3.2. To approve the remuneration payable to the non-executive directors for attendance at meetings at R5 000 per

meeting for the year ending 28 February 2009.

4. To authorise the directors to fix the remuneration of the auditors for the past year.

5. To reappoint PKF Durban, Chartered Accountants as auditors until the conclusion of the next annual general meeting.

6. To consider, and if deemed fit, to pass the following resolutions as ordinary resolutions:

6.1 Ordinary Resolution Number 1 – Unissued shares to be placed under the control of the directors

THAT the authorised but unissued ordinary shares in the capital of the company be and are hereby placed

under the control and authority of the directors of the company and that the directors be and are hereby

authorised and empowered to allot and issue all or any of such ordinary shares to such person or persons on

such terms and conditions and at such times as the directors may from time to time in their discretion deem fit,

subject to the provisions of the Companies Act, 1973 (Act 61 of 1973), as amended and the Listings

Requirements of JSE Limited (JSE).

6.2 Ordinary Resolution Number 2 – General authority to issue shares, and to sell treasury shares, for cash

THAT the directors of the company and/or any of its subsidiaries from time to time be and they are hereby

authorised, by way of a general authority, to:

• allot and issue shares or options in respect of, all or any of the authorised but unissued ordinary shares in

the capital of the company; and/or

• sell or otherwise dispose of or transfer, or issue any options in respect of, ordinary shares in the capital of

the company purchased by subsidiaries of the company;

for cash, to such person/s on such terms and conditions and at such times as the directors in their discretion

deem fit, subject to the Companies Act, 1973 (Act 61 of 1973), as amended, the articles of association of the

company, the Listings Requirements of JSE and the following limitations:

• the securities which are the subject of the issue for cash must be of a class already in issue, or where this is

not the case, must be limited to such securities or rights that are convertible into a class already in issue;

• any such issue may only be made to public shareholders as defined by the Listings Requirements of JSE and

not to related parties;

NOTICE OF ANNUAL GENERAL MEETING


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• the number of ordinary shares issued for cash shall not in any one financial year in the aggregate exceed

50% (fifty per cent) of the number of issued ordinary shares;

• this general authority is valid until the earlier of the company’s next annual general meeting or expiry of a

period of 15 (fifteen) months from the date that this authority is given;

• a published announcement giving full details, including the impact on the net asset value per share, net

tangible asset value per share, earnings per share and headline earnings per share, will be published when

the company has issued ordinary shares representing, on a cumulative basis within 1(one) financial year,

5% (five per cent) or more of the number of ordinary shares in issue prior to the issue;

• in determining the price at which an issue of ordinary shares may be made in terms of this authority, the

maximum discount permitted will be 10% (ten per cent) of the weighted average traded price on the JSE

of the ordinary shares over the 30 (thirty) business days prior to the date that the price of the issue is

determined or agreed by the directors of the company; and

• whenever the company wishes to use ordinary shares, held as treasury stock by a subsidiary of the

company, such use must comply with the JSE Listings Requirements as if such use was a fresh issue of

ordinary shares.

In terms of the Listings Requirements of the JSE a 75% (seventy-five per cent) majority of the votes cast by

shareholders present or represented by proxy at the general meeting must be cast in favour of ordinary

resolution number 2 for it to be approved.

7. To consider and, if deemed fit, pass the following resolution as a Special Resolution:

Special Resolution Number 1 – Acquisition of own securities

THAT the mandate be given to the company (or any of its wholly-owned subsidiaries) providing authorisation, by

way of a general approval, to acquire the company’s own securities, upon such terms and conditions and in such

amounts as the directors may from time to time decide, but subject to the company’s articles of association, the

provisions of the Companies Act, 1973 (Act 61 of 1973), as amended, (“the Act”) and the Listings Requirements of

JSE Limited (“JSE”) (“the Listings Requirements”) provided that:

• any repurchase of securities must be effected through the order book operated by the JSE trading system and

done without any prior understanding or arrangement between the company and the counterparty;

• at any point in time, the company may only appoint one agent to effect any repurchase on the company’s

behalf;

• this general authority be valid until the company’s next annual general meeting, provided that it shall not

extend beyond 15 (fifteen) months from the date of passing of this special resolution (whichever period is

shorter);

• an announcement be published as soon as the company has cumulatively repurchased 3% (three percent) of

the initial number (the number of that class of share in issue at the time that the general authority is granted) of

the relevant class of securities and for each 3% (three percent) in aggregate of the initial number of that class

acquired thereafter, containing full details of such repurchases;

• repurchases by the company, and/or its subsidiaries, in aggregate in any one financial year may not exceed

20% (twenty per cent) of the company’s issued share capital as at the date of passing this special resolution or

10% (ten per cent) of the company’s issued share capital in the case of an acquisition of shares in the company

by a subsidiary of the company;

• repurchases may not be made at a price greater than 10% (ten per cent) above the weighted average of the

market value of the securities for the 5 (five) business days immediately preceding the date on which the

transaction was effected; and

• repurchases may not be undertaken by the company or one of its wholly-owned subsidiaries during a

prohibited period and may also not be undertaken if they will impact negatively on shareholder spread as

required by the JSE.


78

NOTICE OF ANNUAL GENERAL MEETING continued

The reason for the passing of the above special resolution is to grant the company a general authority in terms of

the Act for the acquisition by the company or any of its subsidiaries of securities issued by the company, which

authority shall be valid until the earlier of the next annual general meeting, or the variation or revocation of such

general authority by special resolution by any subsequent general meeting of the company; provided that the

general authority shall not extend beyond 15 (fifteen) months from the date of this general meeting. The passing

and registration of this special resolution will have the effect of authorising the company or any of its subsidiaries to

acquire securities issued by the Company.

The following information, which is required by the JSE Listings Requirements with regard to the resolution granting

a general authority to the company to repurchase securities, appears on the pages of the financial statements to

which this notice of general meeting is annexed, is indicated below:

Directors of the company pages 10 and 11

Major shareholders page 27

Directors’ interests in securities page 28

Share capital of the company pages 26 and 51

Responsibility statement page 20

Material changes page 25

There are no legal or arbitration proceedings, either pending or threatened against the company or its subsidiaries,

of which the company is aware, which may have, or have had in the last twelve months, a material effect on the

financial position of the company or its subsidiaries.

Statement by the board of directors of the company pursuant to and in terms of the JSE Listings Requirements:

The directors of the company hereby state that:

a) the intention of the directors of the company is to utilise the authority if, at some future date, the cash resources

of the company are in excess of its requirements. In this regard the directors will take account of, inter alia, an

appropriate capitalisation structure for the company, the long-term cash needs of the company and will ensure

that any such utilisation is in the interests of the shareholders; and

b) the method by which the company intends to repurchase its securities and the date on which such repurchase

will take place, has not yet been determined.

At the time that the contemplated repurchase is to take place, the directors of the company will ensure that:

• the company and its subsidiaries will be able to pay their debts as they become due in the ordinary course of

business for a period of twelve months after the date of the annual general meeting;

• the consolidated assets of the company and its subsidiaries, fairly valued in accordance with International

Financial Reporting Standards, will be in excess of the consolidated liabilities of the company and its subsidiaries

for a period of twelve months after the date of the annual general meeting;

• the issued share capital and reserves of the company and its subsidiaries will be adequate for the purpose of the

business of the company and its subsidiaries for a period of twelve months after the date of the annual general

meeting;

• the working capital available to the company and its subsidiaries will be sufficient for the group’s requirements for

a period of twelve months after the date of the annual general meeting; and

• the company will provide its designated adviser and the JSE with all documentation as required in Schedule 25

of the JSE Listings Requirements, and will not commence any repurchase programme until the designated adviser

has signed off on the adequacy of its working capital, advised the JSE accordingly and the JSE has approved this

documentation


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8. Ordinary Resolution Number 3 – Authority to execute requisite documentation

That any director of the company, or the company secretary where appropriate, be and is hereby authorised to do

all such things and to sign all such documents issued by the company and required to give effect to ordinary

resolution numbers 1 and 2 and special resolution number 1.

9. To transact such other business that may be transacted at an annual general meeting.

VOTING AND PROXIES

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

attend and vote in his/her stead, subject to the general instructions attached to this notice. Any proxy so appointed

need not be a member of the company. Proxy forms must be received at the offices of Computershare Investor Services

(Pty) Limited not less than 48 hours before the date of the meeting.

For the convenience of registered members of the company, a form of proxy is enclosed herewith. The attached form of

proxy is only to be completed by those ordinary shareholders who:

• hold ordinary shares in certificated form; or

• are recorded on the sub-register in “own-name” dematerialised form.

Ordinary shareholders who have dematerialised their ordinary shares through a CSDP or broker without “own-name”

registration and wish to attend the annual general meeting, must instruct their CSDP or broker to provide them with the

relevant letter of representation to attend the meeting in person or by proxy and vote. If they do not wish to attend in

person or by proxy, they must provide the CSDP or broker with their voting instructions in terms of the relevant custody

agreement entered into between them and the CSDP or broker.

Proxy forms must be received at the offices of Computershare Investor Services (Pty) Limited at least 48 hours, excluding

Saturdays, Sundays and public holidays, before the time of holding of the annual general meeting.

By order of the board


Company Secretaries

per JH Acutt

3 June 2008

Registered office

Bridelia, Sanyati Park

3 Abrey Road

Kloof

3610

Postal address

PO Box 1055, Kloof, 3640


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NOTICE OF ANNUAL GENERAL MEETING continued

Designed by

Printed by I

GENERAL INSTRUCTIONS

All shareholders are encouraged to attend the annual general meeting of the company.

1. All registered shareholders of ordinary shares (shares) in the company are entitled to attend, speak and vote at the

annual general meeting.

2. Please note that the company utilises the JSE Limited’s electronic settlement system Shares Traded Totally Electronic

(STRATE). If you are a dematerialised shareholder (i.e. you have replaced your paper share certificates with electronic

records of ownership under STRATE) and are not an own-name dematerialised shareholder, then:

2.1. If you wish to attend the annual general meeting you should contact your Central Securities Depository

Participant (CSDP) or broker, as the case may be, and obtain the relevant letter of representation from them.

The letter of representation must be obtained within the time period required by your CSDP or broker, as the

case may be, and allow them sufficient time to provide such letter to the company secretary prior to the

annual general meeting;

or, alternatively,

If you are unable to attend the annual general meeting, you must contact the CSDP or broker, as the case

may be, and furnish them with your voting instructions in respect of the annual general meeting in

accordance with the mandate between yourself and the CSDP or broker, as the case may be. You should not

complete the attached form of proxy. If your CSDP or broker does not obtain voting instructions from you in

respect of the annual general meeting, it will be obliged to act in terms of your mandate. The instructions

must be provided within the time period required by your CSDP or broker, as the case may be.

2.2. If you hold certificated shares (i.e. you have not dematerialised your shares in the company) or are an own-

name dematerialised shareholder, then:

You may attend and vote at the annual general meeting;

or, alternatively

You may appoint a proxy to represent you at the annual general meeting by completing the attached form of

proxy and returning it to the offices of Computershare Investor Services (Pty) Limited by no later than 48

hours prior to the commencement of the meeting.


FORM OF PROXY

SANYATI HOLDINGS LIMITED

Incorporated in the Republic of South Africa

(Registration Number 1998/002538/06)

JSE Code: SAN ISIN: ZAE000081055

For the sole use by the following holders of ordinary shares in the company at the annual general meeting of the company

to be held in the Boardroom, Hibiscus, Sanyati Park, 3 Abrey Road, Kloof, Durban on Monday, 14 July 2008 at 11:00 and

at any adjournment thereof:

• Certificated shareholders; and

• CSDP nominee companies, brokers’ nominee companies and dematerialised shareholders who have elected “own-

name” registrations.

Forms of proxy must be completed and delivered to the offices of Computershare Investor Services (Pty) Limited,

70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) to be received by no later than 11:00 on

Thursday, 10 July 2008.

I/We (BLOCK LETTERS please)

of (address)

Telephone work Telephone home

being the holder/custodian of ordinary shares in the company, hereby appoint

1. or, failing him/her

2. or, failing him/her

3. the Chairman of the meeting

as my/our proxy to attend and speak out and, on a poll, vote for me/us on my/our behalf at the annual general meeting

of the company to be held for the purpose of considering and, if deemed fit, passing the resolutions to be proposed thereat

and at each adjournment or postponement thereof, and to vote for and/or against and/or abstain from voting in respect

of the ordinary shares in the issued share capital of the company registered in my/our name/s in accordance with the

following instructions:

FOR AGAINST ABSTAIN

Adoption of the annual financial statements

Re-election of director retiring by rotation

To approve the remuneration payable to non-executive directors

for the year ending 28 February 2009

To authorise the directors to fix the remuneration of the auditors

To approve the appointment of PKF Durban as auditors

Ordinary Resolution Number 1 – Unissued shares placed in directors’ control

Ordinary Resolution Number 2 – General authority to issue shares for cash

Special Resolution Number 1 – Acquisition of own securities

Ordinary Resolution Number 3 – Authority to execute requisite documentation

(Indicate instruction to proxy by way of a cross in the space provided above)

Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.

Signed this day of 2008

Signature

Please read the notes on the reverse side hereof.


NOTES

1. A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the

spaces provided, with or without deleting “the Chairman of the meeting”, but any such deletion must be initialled by

the member. The person whose name stands first on the form of proxy and who is present at the meeting will be

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

2. Please insert an “X” in the relevant spaces according to how you wish your votes to be cast. However, if you wish to

cast your votes in respect of a lesser number of shares than the total number of shares that you own in the

company, insert the number of ordinary shares held in respect of which you desire to vote. Failure to comply with

the above will be deemed to authorise the proxy to vote or to abstain from voting at the annual general meeting as

he/she deems fit in respect of all the member’s votes exercisable thereat. A member or his/her proxy is not obliged to

use all the votes exercisable by the member or by his/her proxy, but the total of the votes cast and in respect

whereof abstention is recorded may not exceed the total of the votes exercisable by the member or by his/her proxy.

3. Holders of dematerialised shares must inform their CSDP or broker of whether or not they intend to attend the

annual general meeting and obtain the necessary authorisation from their CSDP or broker to attend the annual

general meeting or provide their CSDP or broker with their voting instructions should they not be able to attend the

annual general meeting in person.

4. Forms of proxy must be received at the offices of Computershare Investor Services (Pty) Limited, 70 Marshall Street,

Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by not later than 11:00 on Thursday, 10 July 2008.

5. The completion and lodging of this form of proxy will not preclude the relevant member from attending the general

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

6. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity

must be attached to this form of proxy unless previously recorded by the company’s transfer secretaries or waived by

the chairman of the general meeting.

7. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

8. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal

capacity are produced or have been registered by the transfer secretaries of the company.

9. The chairman of the annual general meeting may reject or accept a form of proxy which is completed and/or

received, other than in accordance with these notes, if the chairman is satisfied as to the manner in which the

member wishes to vote.

CERTIFICATED AND OWN-NAME REGISTERED DEMATERIALISED SHAREHOLDERS

If you are unable to attend the annual general meeting of Sanyati Holdings Limited to be held at 11:00 on Monday,

14 July 2008 at Hibiscus, Sanyati Park, 3 Abrey Road, Kloof, Durban, 3610 and wish to be represented thereat, you must

complete and return this form of proxy in accordance with the instructions contained herein and lodge it with, or post it

to, the offices of Computershare Investor Services (Pty) Limited detailed in Note 4 above, to be received by them by no

later than 11:00 on Thursday, 10 July 2008.

DEMATERIALISED SHAREHOLDERS

If you hold dematerialised shares in Sanyati through a CSDP or broker and do not have an “own-name” registered

dematerialised registration, you must timeously advise your CSDP or broker of your intention to attend and vote at the

annual general meeting or be represented by proxy thereat in order for your CSDP or broker to provide you with the

necessary authorisation to do so, or should you not wish to attend the annual general meeting in person, you must

timeously provide your CSDP or broker with your voting instructions in order for the CSDP or broker to vote in

accordance with your instructions at the annual general meeting.


ADMINISTRATION

Country of incorporation

Republic of South Africa

Registration number

1988/002538/06

Nature of business

To hold shares in other companies with all types of

businesses

Directors

RD Jackson (CEO)

TBC Ahier* (resigned effective 15.03.2008)

CC Crowie* (resigned effective 15.03.2008)

RM Crowie*

RW Deacon (resigned effective 15.03.2008)

HM Dlamini**

CMD Flemming* (resigned effective 15.03.2008)

N Khambule**

MI Krouse (Financial director)

JPM O’Reilly (resigned effective 15.03.2008)

K Ramkissoon (resigned effective 15.03.2008)

AJ Rutherford

MJ Sangweni

*Non-executive

**Independent non-executive

Head office and registered office

Bridelia, Sanyati Park, 3 Abrey Road, Kloof, 3610

Postal address

PO Box 1055, Kloof, 3640

Auditors

PKF Durban Chartered Accountants (SA)

Registered Auditors

(Practice number 906352E)

PO Box 1858, Durban 4000

Company secretaries


PO Box 1319, Hillcrest, 3650

Transfer secretaries

Computershare Investor Services (Pty) Limited

PO Box 61051, Marshalltown, 2107

Designated advisers

Exchange Sponsors (Pty) Limited

(Registration number 1999/024433/07)

PO Box 411216, Craighall, 2024

SHAREHOLDERS’ CALENDAR

2008

Financial year-end 29 February 2008

Release of results 20 May 2008

Despatch of annual report 6 June 2008

Annual general meeting 14 July 2008

Release of interim statement October 2008

2009

Financial year-end 28 February 2009

Release of results May 2009

Despatch of annual report May 2009

Annual general meeting June 2009

Release of interim statement October 2009

vision and mission - sharedata

Documents