COMMENTARY

CHAIRMAN'S STATEMENT

The results for the year to December 2006 are satisfactory following the substantial increase in the previous year and, are again, a reflection of another outstanding performance by Textainer, our container leasing operation which has its administrative headquarters in San Francisco.

The group’s trading profit after net finance costs at R493 million is virtually the same as last year’s record as was also the case in US dollar terms at US$74 million. Adjusted headline earnings per share were 253,5 cents (2005: 274,5 cents) which, consistent with prior years, includes net gains and losses arising on the disposal of containers from Textainer’s leasing fleet. In US dollar terms, these were 30,8 US cents per share (2005: 35,1 US cents per share).

The good operating performance and ongoing collection of long-term receivables generated a strong cash flow and the board declared a final dividend of 37 cents per share to make the total for the year 57 cents (40 cents last year). This is in line with our policy guidelines that annual dividends should be covered about three times by sustainable headline earnings, excluding the effect of unrealised foreign exchange gains and losses. This dividend exceeds the threshold of 54,6 cents for the debentures to automatically convert into ordinary shares, which will now occur on 25 May 2007. Following this dividend, Mobile declared a final dividend which will similarly trigger the conversion of its debentures.

The current dividend policy guidelines and consequent elimination of the debentures follows the appointment of an investment bank to review the structure of the Trencor/Mobile group as well as consider opportunities to enhance value for shareholders.

The Mobile board, as part of the above process, decided to simplify its capital structure by effectively consolidating its two classes of shares into one. Resolutions to give effect to this proposal were passed at general meetings of Mobile and took effect on 12 March 2007. The result of these structural changes will be a simplification of the group’s structure and a reduction in the investor entry points into Trencor from five to two.

Investigations into value enhancement initiatives at the operational level indicate that an appropriate opportunity may be the listing of Textainer on an international stock exchange. This is being explored further and shareholders will be advised of developments.

We have again published a summary of our results as well as an unaudited income statement and balance sheet in US dollars. The purpose is to facilitate interpretation of the results and more easily assess the impact of changes in the R/US$ exchange rate.

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TRADING

TEXTAINER

Trading conditions in the container leasing industry for the year as a whole were very good despite a weak first quarter, during which fleet utilisation declined to 88,6% from 90,3% in December 2005 and the price of new twenty-foot containers declined to US$1 400. From mid-March however, the market strengthened and average utilisation was 91,1% for the year as a whole compared to 91,9% for 2005 and largely compensated for the slow first quarter.

We purchased the management contracts for the 317 000 TEU (twenty-foot equivalent unit) Gateway fleet effective 1 July 2006. This increased our total fleet under management to 1 528 000 TEU – Textainer now manages by far the largest lessor fleet in the industry.

Textainer’s owned fleet is 528 000 TEU and 67,3% (last year 70,1%) are currently on long-term lease. This has a meaningful reduction in the volatility of the company’s financial performance.

The strong and efficient operations of Textainer were again manifest in the Gateway acquisition. The total fleet was taken over and integrated within a matter of weeks without adding additional employees – a compliment to the dedication and work ethic of our people.

The very good return on equity despite reduced gearing is a further reflection on our business model and excellent management.

TRENSTAR

During the year under review, results for the TrenStar companies were mixed. TrenStar SA, operating in South Africa and 100% owned by Trencor, performed well and increased its contribution to group profits from R3,5 million in 2005 to R9,8 million.

In TrenStar Inc, the US-based entity in which Trencor holds 58%, certain businesses in the US continue to show promise and Jettainer, our joint venture business with Lufthansa in which TrenStar has a one-third interest, did well.

However, TrenStar Inc’s UK beer keg businesses disappointed, with higher beer keg losses due to increased nationwide theft, disputes with two of its larger UK customers regarding responsibility for the resultant keg replacements and declining draught beer sales by these two brewers making the contracts with them uneconomic. When these customers indicated after the year-end that they were not prepared to sufficiently improve the terms of the contracts to overcome the negative impact of the above factors, the special purpose TrenStar subsidiary that contracted with one of these customers was placed into administration to ensure an orderly exit, and the contract thereafter terminated. Discussions with the second customer are ongoing, but it is possible that this contract will also end. With these contracts falling away, TrenStar’s goal of pooling kegs for multiple brewers in the UK and Europe cannot be achieved, and it is possible that it will exit the beer keg business in these countries in the current year. We are optimistic that this will be achieved on such a basis that the price paid by the brewers for the repurchase of their keg fleets will largely cover the outstanding debt against those fleets.

The above developments made it impossible for TrenStar Inc to raise meaningful new capital, which it requires to de-gear its balance sheet, improve profitability and fund growth in its US businesses. Once a firm basis for withdrawing from the UK/European beer keg activities is established, strategic alternatives for TrenStar will be pursued.

FUNDING

Group borrowings remain mostly asset based – US$541 million (R3,8 billion) in Textainer and US$391 million (R2,7 billion) in TrenStar Inc. Against this, 98% of the group’s assets are in foreign currency (mainly US dollars and UK pounds). The liabilities of Textainer and TrenStar are restricted to those operations.

The good trading conditions also improved cash collection from our long-term receivables and resulted in a reduction of R60 million in the net provision against these receivables.

PROSPECTS

The strong market conditions in the container leasing industry of the last two quarters of 2006 have continued and current indications are that the group should deliver a satisfactory increase in earnings in 2007.

I express my appreciation to our committed and dedicated employees, both locally and internationally, for their outstanding work. I also thank my colleagues on the board for their guidance and judgement.

N I JOWELL 30 MARCH 2007