Directors' Report

FINANCIALS

GENERAL REVIEW

The nature of the company's business is described on the home page. The financial results are reflected in the financial statements (refer to Financials Menu). The net income/(loss) attributable to the various classes of business of the group is as follows:

	18 MONTHS 31/12/01	YEAR 30/06/00

	RM	RM

CONTAINER OPERATIONS
SALES AND FINANCE	104,6	42,7
TEXTAINER	166,6	90,6
EXCHANGE RATE GAINS	1 477,8	242,8
NET LONG-TERM RECEIVABLE ADJUSTMENT	(752,6)	(35,6)
TRAILERS	(27,0)	(4,4)
SUPPLY CHAIN MANAGEMENT	(29,4)	(6,6)
INTEREST AND OTHER	(218,8)	(77,4)
ABNORMAL ITEMS - CONTINUING OPERATIONS	80,2	(26,8)
DISCONTINUING OPERATIONS (INCLUDING
ABNORMAL ITEMS)	3,6	(312,9)

	805,0	(87,6)

DIRECTORS AND SECRETARY

The names of the directors appear on Directors & Committees Page and that of the secretary on the Administration page. Mr A M Brown retired as an executive director on 1 October 2001 and, from that date, his status changed to that of a non-executive director. He acts as a consultant to the group and assumes certain duties as agreed from time to time. Mr G M C Ryan resigned as a director effective 6 March 2002.

In terms of the articles of association Messrs H A Gorvy, C Jowell and H R van der Merwe retire by rotation at the forthcoming annual general meeting but, being eligible, offer themselves for re-election.

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DIRECTORS' INTERESTS

The aggregate of the direct and indirect interests of the directors in the issued share capital of the company were as follows:

	31/12/01	30/06/00
BENEFICIAL %	1,7	1,7
NON-BENEFICIAL %	12,9	12,9

	14,6	14,6

The direct and indirect interests of each director who held in excess of 1% of the issued share capital were as follows:

	31/12/01	30/06/00
BENEFICIAL %
G M C RYAN	1,5	1,5
NON-BENEFICIAL %

C JOWELL	6,4	6,4
N I JOWELL	6,4	6,4

AUDITORS

The board appointed KPMG Inc as auditors to the company and to all South African group entities in the place of Andersen (formerly known as Arthur Andersen & Co) effective 29 June 2001. KPMG Inc were auditors to the majority of the group's overseas subsidiaries and associates, whilst Andersen provided audit services to the Trencor group locally. It became necessary to appoint a single firm as auditors to the group, and both firms submitted bids for the appointment, which was awarded to KPMG Inc.

INCOME TAX QUERIES

As previously reported, during September and October 1999 the South African Revenue Service ('SARS') issued queries to some of the group's export partners relating to the tax treatment of their participation in the container export trade through export partnerships. It is not possible to anticipate when the SARS enquiries will be concluded.

The income tax principles underlying the tax treatment of the participation of our partners in the export trade have been the subject of a number of supportive legal opinions, including from various Senior Counsel, and we remain confident that the legal advice received will prevail should SARS seek to challenge the tax treatment.

A successful challenge by SARS may result in the acceleration of the payment of certain amounts attributable to third parties (ie our export partners) which are carried at their net present values and which would otherwise be paid over periods of up to fourteen years. Details of the total amounts owing to our export partners and the net present value thereof are the amounts reflected as attributable to third parties in note 8.4 to the financial statements.

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BANKING FACILITIES

On 10 December 2001, it was announced that the group had, in effect, concluded a refinancing of existing funding facilities extended by its South African banks, details of which had been published in the annual report in respect of the year ended 30 June 2000.

This was achieved through securing these funding facilities by means of a US dollar denominated Letter of Credit ('LC') in an amount of US$65 835 000 provided by two foreign banks which are bankers to Textainer Group Holdings Ltd ('Textainer'), Trencor's 74% offshore subsidiary. The amount of the local debt and of the LC will reduce to zero over a period of four years. In addition, the US dollar loan taken up by the Trencor group from its South African banks in 1998 to finance the acquisition of an additional shareholding in Textainer, has been repaid from facilities extended by these foreign banks.

In view of the security afforded by the LC, the South African banks agreed to revised terms that were more favourable to Trencor than those that applied previously. The undertakings and banking covenants previously agreed to by Trencor have been cancelled and, save in respect of asset-based financing, most of the securities provided in relation to the facilities have been released. Trencor provided the foreign banks with a pledge over the shares held by it in Textainer (previously pledged to the South African banks).

The LC arrangement will expire on the earlier of the date on which all local borrowings are repaid to the South African banks or 20 October 2005. It is anticipated that all South African banking facilities will be repaid by that date.

The Facility Fee, Arrangement Fee and certain other costs incurred in procuring the issue of the LC and repaying the US dollar loan taken up by the group from its South African banks in 1998 amounted to R31 million in aggregate. This has been charged against current income.

In order to provide for the event that the LC does not adequately cover the exposure of the South African banks, and to ensure that the Trencor group will have sufficient working capital facilities in place, the new arrangements include a standby facility of R50 million from the South African banks which will be available in the event that a draw down under the facility occurs. This facility is secured by a pledge of certain assets, as referred to in note 31.

DIVIDENDS

The board of directors has decided not to declare a dividend at this time because a large proportion of earnings (relating to the revaluation of the long-term receivables) is unrealised; the full cash benefit from this source will only be received over a period of some years. Furthermore, in the present difficult times being experienced in the container industry, the board believes it is in the group's interest to conserve cash and reduce borrowings.

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6% CONVERTIBLE DEBENTURE INTEREST PAYMENTS


PAYMENT NUMBER	REGISTRATION/ RECORD DATE	PAYMENT DATE	AMOUNT PER DEBENTURE	TOTAL

			CENTS	R'000

18	08/12/00	31/12/00	27,3	7 815
19	08/06/01	29/06/01	27,3	7 815
20	28/12/01	31/12/01	27,3	7 815

CHANGE IN FINANCIAL YEAR-END

Textainer Group Holdings Ltd, a 74% subsidiary, is required to end its financial year at 31 December. In view of its increasing materiality in relation to Trencor, audited accounts for Textainer at its half-year were required for purposes of consolidation into Trencor at 30 June. It was therefore decided that the year-ends of the groups should be co-terminous. Accordingly, the board of Trencor resolved to change the financial year-end of the company from 30 June to 31 December. The current financial period is therefore for the eighteen months from 1 July 2000 to 31 December 2001.

STRATE

The company transferred to the STRATE (share transactions totally electronic) system of electronic settlement on the JSE Securities Exchange South Africa with effect from 12 November 2001. Trading for electronic settlement commenced on 3 December 2001 and, from that date, paper certificates are no longer good for delivery. Holders of securities who have not yet dematerialised their certificates are urged to submit their certificates to a selected Central Securities Depository Participant or qualifying stockbroker for conversion into an electronic record, to render them eligible for settlement in the STRATE environment.

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CORPORATE GOVERNANCE PRINCIPLES

Trencor endorses the Code of Corporate Practices and Conduct recommended in the King Report on Corporate Governance. Ongoing enhancement of corporate governance principles is a global phenomenon, fully supported by the board, and the board will continue to adopt existing and new principles which advance corporate governance and add value within Trencor's businesses.

The board has satisfied itself that Trencor has adhered to key corporate governance principles during the period under review.

Code of Ethics

The board, management and staff have agreed a code of ethical conduct which seeks to ensure high ethical standards. All directors, managers and employees are expected to strive at all times to adhere to this code, and to enhance the reputation of the group.

Committees of the Board

The audit committee of the board, comprising two non-executive directors, meets formally at least twice a year with the external auditors and members of senior management to evaluate aspects of accounting practices, auditing, control systems and management of risk areas. The external auditors have direct and unrestricted access to the audit committee.

The remuneration committee of the board comprises one non-executive director and the executive chairman. The remuneration committee reviews the compensation of senior management, and reports directly to the board.

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INTEREST IN MATERIAL SUBSIDIARIES

	ISSUED CAPITAL	EFFECTIVE HOLDING		SHARES AT COST OR VALUATION		AMOUNT OWING (BY)/ TO COMPANY

		2001	2000	2001	2000	2001	2000

	'000	%	%	R'000	R'000	R'000	R'000
INDIRECT: TEXTAINER GROUP HOLDINGS LTD (Incorporated in Bermuda) Owning, management and leasing out of containers	US$187	74	74	-	-	-	-

TRENSTAR INC (Incorporated in Delaware, USA) Owning and leasing-out of returnable packaging units, tracking and logistics management services	US$108,9	61	-	-	-	-	-

DIRECT: HENRED-FRUEHAUF (PTY) LTD (Incorporated in the Republic of South Africa) Manufacturing	R4 200	100	100	50 717	50 717	(426)	-

TRENCOR SERVICES (PTY) LTD (Incorporated in the Republic of South Africa) Exporting and financing of containers and management services	R2 222,5	100	100	810 814	414 159	105 947	(49 817)

TRENCOR SOLUTIONS (PTY) LTD (Incorporated in the Republic of South Africa) Manufacturing and rental of mini-containers and tracking and logistics management services	R2,7	100	100	9 001	9 001	-	-

Aggregate of other subsidiaries				870 532 1 328	473 877 1 328	105 521 -	(49 817) -

				871 860	475 205	105 521	(49 817)

A complete list of subsidiary companies is available on request. The interest of the company in their aggregate profits and losses after taxation is as follows:



	18 MONTHS 31/12/01	YEAR 30/06/00

	R'000	R'000

PROFITS	846 722	83 467
LOSSES	(130 372)	(171 041)

	716 350	(87 574)

SPECIAL RESOLUTIONS OF SUBSIDIARIES

Effective 14 December 2001, Trencor Services (Pty) Ltd, a wholly-owned subsidiary, passed a special resolution to, inter alia, increase its authorised share capital from R50 000 to R650 000 by the creation of two further classes of shares. No other special resolutions of material interest or of substantive nature were passed by other subsidiaries.

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ACQUISITIONS AND DISPOSALS

In line with the group's increasing focus on providing and integrating the use of equipment, management and other services, knowledge and information related to the global transportation industry, the following transactions were concluded:

Effective 30 June 2000, the 50% interest in Budget-Tainer Services (Pty) Ltd was disposed of for a consideration of R1,45 million.
Effective 7 July 2000, the interest in Dynanet Solutions (Pty) Ltd was increased from 51% to 100% for a consideration of R5,5 million.
Effective 9 July 2000, the interest in Centricity Inc was increased from 12% to 40% for a consideration of US$3,5 million. In July 2001, the 40% interest in Centricity Inc was exchanged for a 1% holding in the Descartes Systems Group Inc.
On 11 July 2000, shareholders in general meeting ratified the disposal by Trencor of its entire direct and indirect interests in Waco International Ltd to a consortium led by Ethos Private Equity Ltd. After settlement of certain costs and obligations, Trencor realised a net cash amount of R170 million on 31 July 2000, which has been utilised in the normal course of operations.
In August 2001, TrenStar Inc was established with the merger of Trencor
Solutions Inc (a subsidiary of Trencor Solutions (Pty) Ltd) and MicroStar Logistics Inc, 66% of which was held by Trencor Solutions (Pty) Ltd and the balance of 34% by the previous shareholders of MicroStar.
Effective 1 December 2001, TrenStar Inc acquired, against the issue of shares, 100% of KTP Ltd, a supplier of barcoding and transponder technology and services, operating in the United Kingdom. As a result the interest of Trencor Solutions (Pty) Ltd in TrenStar was diluted to 61%.
Effective 1 October 2001, the interest in Warehouse Works (Pty) Ltd was increased from 70% to 100% for a consideration of R3,6 million.
Effective 1 December 2001, management of the tank container fleet was transferred from TPI Equipment Management Ltd to Exsif Worldwide Inc.
Effective 1 December 2001, the Trailer Division of Henred-Fruehauf Trailers (Pty) Ltd was merged with the businesses of ADF Holdings (Pty) Ltd and its subsidiaries (commonly known as SA Truck Bodies Group) into a single new entity, Madikor Drie (Pty) Ltd, in exchange for a 40% interest in the holding company, Marlio Beleggings Sewe (Pty) Ltd.

ANALYSIS OF SHAREHOLDERS

An analysis of shareholders and of holders who held 5% or more of the issued securities at 31 December 2001 can be viewed.

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