98/08/30: Annual Report for the Year Ended 30 September 1998

CORPGRO

Dedication

CorpGro is dedicated to achieving optimum growth in shareholder value through the deliberate alliance of exceptional intellectual resources and capital.

Financial Highlights

1998 / 1997* / % Increase
Total revenues (R’000) / 799 980 / 351 878 / 127
income before taxation (R’000) / 115 665 / 44 935 / 157
Headline earnings (R’000) / 69 381 / 32 513 / 113
Headline earnings per share (cents) / 30,1 / 19,0 / 58
Inflation (Consumer Price Index) (%) / 7,6 / 8,7
Dividend per share (cents) / 7,0 / 5,3 / 32
Net asset value per share (cents)
equity / 173,7 / 59,3 / 193
tangible assets / 153,6 / 40,2 / 282
ordinary shareholders' equity (R’000) / 427 015 / 124 494 / 243
Total assets (R’000) / 1 175 971 / 284 198 / 314
Cash and shortterm funds (R’000) / 654 172 / 45 656 / 1 333
Cash generated from operations (R’000) / 109 760 / 38 909 / 182

*Information is presented for the 12 months from 1 September 1996 to 31 August 1997 to facilitate analysis and comparison.

The exceptional growth achieved by CorpGro in the year ended 31 August 1998 and the realisation of defined strategic initiatives, are early and significant indicators of the strength and vitality of the group. The group strategy of acquiring entrepreneurial businesses in high-growth industry sectors, run by motivated management teams in a financially disciplined environment, resulted in headline earnings per share growing by 58% to 30,1 cents from 19 cents in 1997 and headline earnings growing by 113% to R69,4 million from R32,5 million. Total revenues rose by 127% to R800 million from R351,9 million.

Board of Directors

Executive directors

Jeff Liebesman (46)
BComm. BAcc CA(SA) Dip BDP
Chief Executive Officer

Chairman: Corpcom Limited
Director: Corpcapital Limited
Appointed in 1996

Martin Sacks (28)
BComm. BAcc CA(SA)

Director: Corpcom Limited,
Corpcapital Limited,
Servest Holdings Limited

Appointed in 1997

Nonexecutive directors

Nic Frangos+ (56)
BComm

Chairman
Chairman Sasani Limited
Appointed in 1996

Errol Grolman+* (48)
BComm. FCD

Executive Chairman: Corpcaptal Limited
Chairman: The Doll Group Limited
Appointed in 1990

Eric Ellerine (64)
Chairman and Managing Director:

Ellerine Holdings Limited
Appointed in 1996

Benji Liebmann* (45)
BProc

Partner of Attorneys GB Liebmann,
Behrmann Co.

Director: Corpcom Limited.
Corpcapital Limited,
Servest Holdings Limited,
Berzack Illman Investment Corporation Limited
Appointed in 1990

*Audit committee

+Remuneration committee

Corporate History

1997 financial year

CorpGro established through change of control, and subsequent change of name, of South East Rand Gold Holdings Limited cash shell.

Listing transferred to the "Industrial Industrial Holdings" sector of the JSE. CorpBuild, CorpCom and CorpFood established.

Acquisitions

CorpBuild

The businesses of Benoni Builders Supplies CC, Benoni Builders Supplies (Vaal) CC, B&B Hardware Distributors (Pty) Limited, F&F Building Supplies CC.

100% of Lowveld Building Supplies (Pty) Limited 65% of B&B Hardware Distributors (Cape) (Pty) Limited and 100% of B&B Hardware Distributors (Natal) (Pty) Limited.

CorpCom

Interests in the RentaSign group of companies, the InterAfrica group of companies, Sayer and Associates (Pty) Limited and Supersigns Polska Sp.z.o.o. The business of Nameplate Centre (Pty) Limited.

CorpFood

The business of Colcab Manufacturing (Pty) Limited. 100% of Insulated Structures (1989) (Pty) Limited and Matador Refrigeration (Pty) Limited.

1998 financial year

CorpCapital established, and reverse listed into TPN Investments Limited cash shell with effect from 1 July 1998. TPN renamed Corpcapital Limited and reconstituted as an investment banking and niche financial services group. investment banking division enjoys excellent dealflow takes stakes in Servest Holdings Limited, successfully listed in August 1998, and

Securedata Solutions Limited, to be listed on 25 November 1998. 60% of CorpCapital held by CorpGro at year end. CorpCom listed in the "Industrial Media" sector of the JSE on 2 July 1998 by way of a renouncable offer to CorpGro shareholders. 86% of CorpCom held by CorpGro at year end.

Acquisitions

CorpBuild The businesses of Hazyview Hardware and Building Supplies CC, General Builders Centre (Clayville) (Pty) Limited and JJJ Roof Sheeting CC with effect from November 1997. The Bildware and Builders Market businesses from Boumat Limited with effect from 1 March 1998.

CorpCapital

100% of Izwelethu Finance (Pty) Limited with effect from 18 March 1998. 49% of Fulcrum Science and Technology Bank Controlling Company Limited (the holding company of Fulcrum Science and Technology Bank Limited) with effect from 1 July 1998. Acquisition of a further 25%, and an offer to minorities, subject to the approval of the Minister of Finance.

CorpCom

The business of Reliance Trading (Pty) Limited with effect from 1 September 1997. The business of Tricor Marketing (Pty) Limited, 100% of Tricor Marketing (Botswana) (Pty) Limited and 95% of Tricor Marketing (Zimbabwe) (Pty) Limited with effect from 1 September 1997.

The businesses of DayNight Outdoor (Pry) Limited and Site Acquisitions CC with effect from 1 November 1997. Gemini Advertising (Pty) Limited and Maverick Advertising (Pty) Limited with effect from 1 March 1998.

Chairman's Statement

The group strategy of acquiring entrepreneurial businesses in highgrowth industry sectors, run by motivated management teams in a financially disciplined environment, resulted in headline earnings per share growing by 58% to 30,1 cents from 19 cents in 1997 and headline earnings growing by 11 3% to R69,4 million from R32,5 million. Total revenues rose by 127% to R800 million from R35 1.9 million

The group substantially enhanced shareholder value. Tangible net asset value per share rose by 282%, to 153.6 cents from 40,2 cents Operations generated R109,8 million cash and cash value per share rose by 3 48% to 97,3 cents 21.7 cents shareholders equity rose substantially by 2 43% to R 427 million from R 12 4,5m, establishing a solid base for strong sustainable growth.

This excellent performance is the flowering of a vision just over two years ago, in 1996 The vision for CorpGro started with a small core of people Jeff Liebesman, Mc Frangos, Benji Liebmann, Eric Ellerine, Errol Grolman and Martin Sacks They recognised the significant changes that were occurring in The business environment the transformation of South Africa. Globalisation, deconsolidation of the economy In this environment there are many outstanding independent companies that can benefit by being part of a larger group and move to levels beyond their present capability, To build dynamic groups made up of such companies became the central aim of the core founders

The realisation of that vision has implied process of identifying opportunities that meet defined criteria CorpGro, from the outset developed the skill to seek out companies of good potential in growth markets It was also able to negotiate winwin transactions and to move quickly often in fiercely competitive situations CorpGro has been a leader in enhancing employee empowerment and encouraging a culture of hard work and a universal focus on building shareholder value benefits are shared fairly by all stakeholders.

By defragmenting markets and exploiting synergies through sound understanding of its operations backed and driven by a mindset that all things are possible, Corpgro has added significant value to its investments

CorpGro established itself from the beginning with activities that extend beyond traditional merchant banking and private equity transations The differentiators are the intense involvement with investments to create value,

and a longer term view. The formation of CorpCapital and the acquisition of Fulcrum have further positioned CorpGro nearer to the evolving epicenter of the financial services industry. The core competencies of the corporate management team complement this positioning. Further moves in this direction are under active consideration.

The original core teams have embraced the new structures and in their different ways, each has played an invaluable role in building the business. Jeff Liebesman is the driving force who took the founders' vision and made it a reality. He is a talented businessman with remarkable energy. Most importantly, Jeff has established a great rapport with the managing teams of the group companies. in a very short time, he has effected a paradigm shift. Group management are confident, full of ideas, and are value driven.

Jeff if assisted by Martin Sacks, a young man who has made a difference in a short period, and at corporate level there is a growing number of young people of high intellectual capacity. These young people are excited about the potential of the business and are already making major contributions.

The financial services market is undergoing a tremendous metamorphosis worldwide, with new niches constantly emerging. In many respects members of the younger generation understand this market better, just as they do the IT industry. They see things more quickly and thrive in an environment of rapid change. CorpCapital's people are young and enthusiastic and will make a real contribution to the business in association with Errol Grolman and Benji Liebmann

At board level, every founding director has a material stake in CorpGro. They operate well as a complementary team. The board is strongly participative and thrives on lively debate. The blend is entrepreneurial and disciplined. I wish to thank my fellow directors, not only for the constructive and committed way they have participated at board meetings but also for having made themselves available day and night whenever the circumstances required.

A board of directors which operates on such intimate terms can only do so if the Chief Executive is completely open and shares his knowledge at every level. Jeff Liebesman does that, and the result is a strong, contributive team.

We realise that we operate in a highly competitive environment and things are changing quickly. The successes of last year have faded and the new year has started with a brandnew set of challenges. We are committed to stay ahead of the game. The market will demand performance and we intend providing it. Jeff Liebesman's leadership, supported by that of the other founders and the leaders of the group companies, promise an outstanding future for CorpGro. Its story is only just beginning, and I am confident that it will unfold internationally as well as in South Africa.

Nic Frangos
Chairman

23 November 1998

Chief Executive Officer’s Report

Results

The CorpGro group was established in July 1996 with the object of investing, through entrepreneurial and lateral initiative, in opportunities that offer shareholders above-average long-term sustainable growth in value. Extremely challenging targets were set, including earnings per share growth of 15% above inflation. This was to be achieved through entrepreneurial activity within strict financial parameters.

I am therefore happy to report that the group has again surpassed its financial targets by achieving headline earnings per share of 30,1 cents, an increase of 58% on 1997, and a 113% increase in headline earnings to R69,4 million compared with R32,5 million. Total revenues rose by 127% to R800 million from R351, 9 million. At the same time shareholder value was substantially enhanced, with tangible asset value per share growing to 153,6 cents from 40,2 cents. Operations generated R109,8 million cash and equivalent cash value per share rose to 97,3 cents from 21,7 cents. Ordinary shareholders equity rose to R427 million from R124,5 million.

Dedication

CorpGro is dedicated to achieving optimum growth in shareholder value through the deliberate alliance of exceptional intellectual resources and capital.

We will continue to identify and develop all forms of intellectual capacity and human resource, particularly lateral initiative. Operational skills, passion and commitment. These strengths will, in partnership with the Group’s executive teams, be guided by our strategic vision and nurtured within sound corporate governance that embraces moral and social integrity, the analysis and management of risk, the setting of demanding but realistic financial targets and the implementation of effective financial controls.

Since the group’s inception, this dedication has become the golden thread evident in each of its activities.

Focus

The successful alliance of intellect and capital has enormous potential and is not limited to any particular industry or market sector. The process of identifying value opportunities, developing them and unlocking them for the benefit of shareholders is attainable across the full spectrum of economic activity. The opportunities evolving in the South African and international business arena are vast and are continuously being evaluated by the CorpGro team.

CorpGro unlocks shareholder value by ensuring that each of its strategic investments is clearly focused in its area of expertise and that it delivers exceptional organic and acquisitive growth. To these ends CorpGro, in partnership with its management teams, provides the strategic, financial and operational guidance to best exploit the activities of its investments.

In the current year CorpGro has demonstrated its ability to unlock shareholder value through the practical implementation of this philosophy.

Strategic developments

CorpCom

The reengineering and subsequent listing of CorpCom, the focused media group, on the Johannesburg Stock Exchange, was an important milestone in realising CorpGro's philosophy of unlocking shareholder value. The listing, effected through a renounceable offer, gave CorpGro shareholders the opportunity to invest directly in CorpCom at the advantageous price of 125 cents per share. CorpCom shares were trading at 215 cents per share at the date of this report.

CorpCapital

CorpCapital was established late last year with the objective of providing financial services, initially leveraging off CorpGro's existing client and product base, and exploiting investment banking opportunities which do not fit the CorpGro strategic investment profile. Effective 1 July 1998, CorpCapital was reversed into the TPN Investments Limited cash shell which was renamed CorpCapital. Subsequently CorpCapital acquired a 49% controlling stake in the newly listed Fulcrum Science and Technology Bank Controlling Company Limited. The acquisition of a further 25% of Fulcrum, and an offer to Fulcrum minority shareholders, is subject to the approval of the Minister of Finance. The transactions extracted substantial real value for CorpCapital. In addition, CorpCapital has attracted and continues to attract excellent deal flow and exciting intellectual capital, which positions it to make a significant impact on the financial services industry and substantial, sustainable, high quality contributions to group earnings.