CHAIRMAN'S REPORT

The 1999 financial year has been another eventful period for the Rebhold group which firmly established itself as one of the leading companies in the Service sector of the Johannesburg Stock Exchange.

The group strengthened its base with one major acquisition and merger. Attention was paid to organic growth and a selective acquisition policy.

This attention and focus are reflected in the highly satisfactory results achieved despite an operating period dominated by volatile business conditions, high interest rates and dwindling consumer and corporate spending. Rebhold's spread of activities and common interests between group companies enabled it to weather the economic vicissitudes prevalent during the period.

The first half of the financial year was a particularly turbulent period for the country. The crisis in emerging markets impacted on South Africa as currency speculators drove down the value of the Rand and interest rates rose rapidly to punitive levels. This trend was exacerbated by international companies losing faith in the country and seeking investment opportunities elsewhere. The flight of foreign capital led to a downturn in local financial markets from which no sector emerged unscathed.

At the same time, local investors were reserving their positions as they waited for a new government to be elected and assessed what future policies could be introduced.

After these events and the normalisation of international markets, conditions in South Africa have improved. Inflation, one of the Reserve Bank's major focuses, has continued to decline. Interest rates have fallen and consumer spending is on the increase. The decision by foreign governments not to dispose of their gold holdings led to a resurgence in the gold price and the Rand has remained relatively stable against major currencies. These factors augur well for the ensuing financial year.

The hallmark of Rebhold has always been management's ability to proactively identify, acquire and administer companies that have common interests. Improving operating efficiencies and working capital management have contributed to consistently strong organic growth at operational level. This is well evidenced by the results for the current year.

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