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Trencor performed very well in the year under review largely as a result of another outstanding contribution from Textainer. Trading profit, after net interest, increased by 34% to US$47,3 million from US$35,2 million in 2003. In rand terms, despite the strengthening of the currency, the group achieved an increase of 12% to R305 million compared to R273 million last year. Headline earnings per share were US$0,201 (2003: US$0,056) or 61,8 SA cents (2003: loss of 108,2 SA cents). The board has declared a dividend of 12 SA cents per share. Most of our assets, revenue and expenses are denominated in US dollars and therefore we are for the first time including (on page 54 and page 55) our balance sheet and income statement in US dollars. These are unaudited and have been prepared by management in order to supplement the information presented in the audited annual financial statements. This will largely avoid the huge distortions of the past caused by major fluctuations in the exchange rate of the rand to the dollar. As reported on 22 December 2004, the queries from the South African Revenue Service in relation to the tax treatment of the group's export partners' participation in the export trade of cargo containers have been settled. The salient details of the settlement appear in the directors' report. The uncertainty that resulted from these queries over the past seven years was very damaging, both directly and also in many ways that are difficult to quantify. This settlement now completes the phase of closing our container factories and leaves the group almost completely focused on international business: Textainer in marine freight containers, TrenStar in supply chain and other mobile asset management services, and the collection of the remaining long-term receivable book. We are now able to review our operations and corporate structures on their own merits. Textainer remains the main component of our trading profit. After strong growth in 2003, its earnings for 2004 increased by 57% to US$46,4 million. It purchased a fleet of 79 000 units from Xtra International for US$85,3 million. These containers were already being managed by Textainer but the increase in owned containers under current trading conditions will further enhance its earnings from November 2004. It is appropriate to again pay tribute to the President and CEO, John Maccarone, and the company's outstanding management team whose adherence to core values of transparency and responsible business, while focusing on long-term objectives, bodes well for Textainer's future. As previously noted, Textainer improved the quality of its earnings by reducing much of the volatility that is a feature of container leasing. It achieved this by increasing the proportion of containers on long-term lease and limiting customer flexibility in the selection of end-lease drop-off points. While the former may well place a damper on even higher earnings in strong markets, we believe the net result will be beneficial. Prospects for Textainer are good. Fleet utilisation levels are high and forecasts are for these conditions to continue through 2005. New container prices continue to increase with the likely effect of marginal upward pressure on lease rates. Textainer plans to purchase about 150 000 TEU (twenty-foot equivalent unit) of new containers in 2005, similar to last year, and well above the annual average of 104 000 TEU over the past four years. TrenStar's performance fell short of expectations. Revenue, although 28% up on last year, was below budget and it failed to achieve profitability in 2004. The main reason for this is the very long time it takes to conclude negotiations for the major contracts we seek. In retrospect, we underestimated the difficulty of negotiating 15 year contracts for a new product that entails outsourcing of a strategic activity in our large international customers' businesses. The shortfall was exacerbated by the cost of exiting from non-core activities in TrenStar UK. The beer keg division itself was profitable and we hope to conclude further significant contracts in 2005. TrenStar is conducting pilot contracts in other industries - namely Jettainer, a joint venture with Lufthansa to supply and manage air freight containers, Agility in healthcare and in the US synthetic rubber industry. The performance of TrenStar will depend on the success of concluding further contracts in the beer keg industry and extending the pilot projects to full-scale businesses.
Accordingly, we anticipate an increase in US-dollar earnings in 2005. The translation into rand will, of course, depend on the exchange rate during the year and rand earnings will be further impacted by the translation of long-term receivables into rand at 31 December 2005.
 I express my appreciation to all our personnel for the diligent and meaningful role they play. To my co-directors, I thank them for their independence and valuable advice in directing the affairs of the group.
N I JOWELL 24 MARCH 2005
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