CULLINAN - A DISPOSAL AND ACQUISITIONS

CULLINAN HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1901/001808/06)
("CULLINAN")
ANNOUNCEMENT REGARDING:
- A DISPOSAL AND ACQUISITIONS; AND

- THE HONDA AGENCY OPERATED BY MIDMACOR (PROPRIETARY) LIMITED
1. INTRODUCTION

FURTHER TO THE CAUTIONARY ANNOUNCEMENT DATED 25 JULY 2000, THE BOARD OF
DIRECTORS OF CULLINAN WISHES TO ANNOUNCE THAT CULLINAN HAS CONCLUDED AGREEMENTS
IN TERMS OF WHICH:

1.1 IT WILL DISPOSE OF CULLINAN PRECISION ENGINEERING ("CPE"), A DIVISION OF
CULLINAN ("THE DISPOSAL");

1.2 IT WILL ACQUIRE THE BUSINESS OF KRUSHAW (PROPRIETARY) LIMITED, TRADING AS
GATEWAY AFRICA ("GATEWAY"); AND

1.3 IT WILL EFFECTIVELY ACQUIRE A 70 PER CENT INTEREST IN THOMPSONS GATEWAY PTE
LIMITED ("THOMPSONS PTE") FROM MR CHOY KIM FOO, WHO WILL RETAIN THE BALANCE OF
30 PER CENT ("THE ACQUISITIONS").
2. NATURE OF THE BUSINESSES

CPE IS A SPECIALIST TOOL-ROOM, WHICH MANUFACTURES VARIOUS TOOLS, JIGS, FIXTURES
AND GAUGES FOR BOTH LOCAL AND FOREIGN CUSTOMERS.

GATEWAY OPERATES AS AN INBOUND TOUR OPERATOR THAT SERVICES TWO MAIN

GEOGRAPHICAL AREAS: THE USA AND SOUTH-EAST ASIA. GATEWAY PROVIDES GROUND
HANDLING AND DESTINATION MANAGEMENT FUNCTIONS FOR THESE MARKETS.

THOMPSONS PTE IS AN OUTBOUND TOUR OPERATOR WITH A CLIENT BASE IN SINGAPORE,
MALAYSIA, THAILAND, THE PHILIPPINES AND INDONESIA. THOMPSONS PTE ONLY SENDS
TOURS TO SOUTH AFRICA AND WILL DEAL EXCLUSIVELY WITH THOMPSONS TOURS AND TRAVEL
("THOMPSONS") WHICH WILL PROVIDE THE GROUND HANDLING AND DESTINATION MANAGEMENT
FUNCTIONS IN SOUTH AFRICA.
3. RATIONALE FOR THE DISPOSAL AND THE ACQUISITIONS

THE DISPOSAL AND THE ACQUISITIONS ARE IN LINE WITH CULLINAN'S STATED POLICY OF
CONTINUING TO FOCUS THE GROUP'S ACTIVITIES AROUND "TOURISM AND LEISURE" AND
"OUTDOOR LIFESTYLE".

THE SALE OF CPE, BEING NON-CORE, WAS ANTICIPATED IN THE LATEST ANNUAL REPORT OF
CULLINAN.

THE PURCHASE OF GATEWAY AND 70 PER CENT OF THOMPSONS PTE EXTENDS THE CULLINAN
STRATEGY OF MAKING SELECTED ACQUISITIONS INTO AREAS THAT COMPLEMENT EXISTING
BUSINESSES.

THE OVERRIDING OBJECTIVE OF THE ACQUISITIONS IS TO OBTAIN A CLIENT BASE IN
GEOGRAPHICAL MARKETS NOT PREVIOUSLY COVERED BY THOMPSONS. IN ADDITION, THE
ADDITIONAL REVENUE FROM THE ACQUISITIONS CAN BE MANAGED BY THOMPSONS WITH
LITTLE EFFECT ON OVERHEAD COSTS.

4. CONSIDERATIONS FOR THE DISPOSAL AND THE ACQUISITIONS

CPE WAS SOLD FOR A NET CASH CONSIDERATION OF R4,0 MILLION.

GATEWAY WAS PURCHASED FOR R4,6 MILLION AND THE INTEREST IN THOMPSONS PTE WAS
PURCHASED FOR 0,805 MILLION SINGAPORE DOLLARS (APPROXIMATELY R3,4 MILLION),
BOTH SETTLED IN CASH OUT OF EXISTING RESOURCES.

5. FINANCIAL EFFECTS OF THE DISPOSAL AND THE ACQUISITIONS

THE TABLE BELOW SETS OUT THE PRO FORMA FINANCIAL EFFECTS OF THE DISPOSAL AND
ACQUISITIONS ON THE LOSS PER SHARE ("EPS") AND NET ASSET VALUE PER SHARE
("NAV") OF CULLINAN ON THE BASES THAT:

- THE "BEFORE THE DISPOSAL AND ACQUISITIONS" EPS IS THE EPS REFLECTED IN THE
PUBLISHED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2000;

- THE "AFTER THE DISPOSAL AND ACQUISITIONS" EPS ASSUMES THAT THE DISPOSAL AND
ACQUISITIONS WERE EFFECTIVE ON 1 OCTOBER 1999 AND NAV ASSUMES THAT THE DISPOSAL
AND ACQUISITIONS WERE EFFECTIVE ON 31 MARCH 2000.
                        BEFORE THE     AFTER THE

                        DISPOSAL AND   DISPOSAL AND   CHANGE

                        ACQUISITIONS   ACQUISITIONS   (CENTS)   CHANGE
EPS (CENTS)             (0,5)          (0,3)          0,2       40%

HEADLINE EPS (CENTS)    (0,3)          (0,1)          0,2       66%

INTANGIBLE NAV (CENTS)  -              1,1            1,1       -

NAV (CENTS)             5,4            7,0            1,6       30%

6. THE HONDA AGENCY OPERATED BY MIDMACOR (PROPRIETARY) LIMITED ("MIDMACOR")
THE HONDA MOTOR CO. LTD. OF JAPAN ("HMC") HAS FOR SOME TIME INTENDED TO
ESTABLISH A NEW COMPANY IN SOUTH AFRICA TO DISTRIBUTE HONDA MOTOR VEHICLES.
RECENTLY HMC HAS INITIATED DISCUSSIONS WITH MIDMACOR INDICATING THAT IT WISHES
TO DISTRIBUTE HONDA BRANDED POWER PRODUCTS AND MOTORCYCLES THROUGH THIS NEW
COMPANY.

MIDMACOR AND HMC HAVE MUTUALLY AGREED THAT, WITH EFFECT FROM 1 JANUARY 2001,
MIDMACOR WILL NO LONGER DISTRIBUTE HONDA BRANDED PRODUCTS. MIDMACOR WILL
CONTINUE TO TRADE IN

NON-HONDA BRANDED PRODUCTS, SUCH AS MOTORCYCLE ACCESSORIES AND SPARES, AND
MIDMACOR MANUFACTURED GENERATORS, LAWNMOWERS AND FIRE FIGHTERS.

DISCUSSIONS ARE CURRENTLY UNDERWAY WITH HMC TO FINALISE THE TERMINATION
ARRANGEMENTS SO AS NOT TO DISRUPT THE SUPPLY OF HONDA PRODUCTS INTO THE SOUTH
AFRICAN MARKET.

THE EFFECT OF THIS DEVELOPMENT WILL BE A SUBSTANTIAL REDUCTION IN CULLINAN
GEARING RESULTING FROM THE CASH INFLOW INTO THE CULLINAN GROUP AS THE WORKING
CAPITAL IN MIDMACOR IS RELEASED. EARNINGS WILL BE NEGATIVELY AFFECTED BY A
REDUCTION IN THE MIDMACOR OPERATING PROFIT, BUT THIS WILL BE OFFSET BY THE
INTEREST EXPENSE SAVINGS AND INTEREST INCOME RESULTING FROM THE REDUCED WORKING
CAPITAL REQUIREMENTS IN MIDMACOR.
SANDTON
30 AUGUST 2000