SELECTIVE FINANCIAL GROUP CAUTIONARY ANNOUNCEMENT

SELECTIVE FINANCIAL GROUP LIMITED
(REGISTRATION NUMBER 86/00334/06)
CAUTIONARY ANNOUNCEMENT

NEWLY LISTED SELECTIVE FINANCIAL GROUP IS AT PRESENT UNDERGOING RESTRUCTURING.
THIS RESTRUCTURING WILL RESULT IN SHARP FOCUS ON THOSE DIVISIONS WITH THE
GREATEST POTENTIAL FOR GROWTH AND HIGH INCOME. FOCUS WILL BE ON OUTSOURCING AND
CORPORATE CELL-CAPTIVE INSURANCE.

SELECTIVE INVESTMENTS, HEADED UP BY ERNST COETZEE, AND FUTURE BROKERS HEADED UP
BY WIMPIE ACKERMAN WILL BE REVERSED OUT OF THE GROUP.

THE INTENTION OF THE VENDORS, EQUISEC AND FUTURE BROKERS WILL BE TO "TAKE BACK"
THEIR RESPECTIVE BUSINESSES AND TO LIST TOGETHER WITH RADCO.
(PRESENT GROUP STRUCTURE APPEARS HERE)

PINNACLE MICRO AND INFOLINE WILL ALSO BE LISTED EARLY SECOND QUARTER 1999. SFG
WILL RETAIN A SIGNIFICANT STAKE IN PINNACLE.

THE REMOVAL OF RADCO, SELECTIVE INVESTMENTS AND FUTURE BROKERS WITH

RESTRUCTURING WILL RESULT IN A SIGNIFICANT REDUCTION IN SHARE CAPITAL, FROM 246
MILLION SHARES IN ISSUE DOWN TO APPROXIMATELY 100 MILLION SHARES. IT IS
ANTICIPATED THAT SELECTIVE FINANCIAL GROUP WILL RETAIN NO INTEREST IN SELECTIVE
INVESTMENTS, RADCO, EQUISEC OR FUTURE, BUT WILL MAKE A PROFIT FROM THE SEPARATE
LISTING.

THE NET EFFECT OF THE ABOVE TRANSACTIONS IS THAT SFG WILL FOCUS ONLY ON
OUTSOURCING OF EMPLOYEE BENEFITS, HEALTHCARE, LABOUR BROKING, INDUSTRIAL PLANT
MAINTENANCE AND TURNAROUND, TOGETHER WITH CORPORATE CELL-CAPTIVE INSURANCE.
THE RESTRUCTURED GROUP WILL HAVE THE FOLLOWING STRUCTURE:
(NEW GROUP STRUCTURE APPEARS HERE)
FINANCIALLY         BEFORE                 AFTER

NUMBER OF SHARE     248 MILLION            APPROXIMATELY 100 MILLION

NAV                 34 CENTS PER SHARE     INCREASED

EPS                 23 CENTS               28 - 33 CENTS

THE QUALITY OF EARNINGS WILL ALSO IMPROVE WITH RELATIVELY GREATER ANNUITY
INCOME. IT IS PLANNED THAT SFG GROWTH WILL OCCUR IN PEO, WHICH CONCEPT IS
RELATIVELY NEW IN SOUTH AFRICA. TRADITIONALLY, THE SOUTH AFRICAN MARKET IS
CHARACTERISED BY RIGID BENEFIT PACKAGES. PEO IS ABLE TO STRUCTURE A FLEXIBLE,
TAILOR-MADE PACKAGE FOR EACH EMPLOYEE IN THE ORGANISATION TO SUIT LIFESTYLE,
RETIREMENT ASPIRATIONS AND MAXIMISING TAX EFFICIENCY. FURTHER, PEO IS ABLE TO
PUT ITS CLIENT BASE INTO A POSITION TO MEET THE DEPARTMENT OF INLAND REVENUE'S
NEW ELECTRONIC TAX AND FINANCIAL REPORTING CRITERIA. THE TAX, FINANCIAL AND
LABOUR CONSULTANTS OF PEO WORK CLOSELY WITH THE RECEIVER OF REVENUE AND ARE
CONTINUALLY STREAMLINING SYSTEMS WITH CHANGES IN TAX LEGISLATION AND REPORTING.
THE PEO SYSTEMS ARE ABLE TO DO DEDUCTIONS FROM PAYROLL BEFORE THE FINANCIAL
INSTITUTIONS ARE ABLE TO ACCESS PAYROLL. THIS WILL HAVE FAR REACHING

IMPLICATIONS FOR THE FUTURE OF THE MICROLOAN INDUSTRY - PEO WILL BE ABLE TO
INTERNALISE MICROLOANS FOR FIRMS TO THE ADVANTAGE OF THE FIRM.

PEO'S SUCCESS IS ATTRIBUTED TO A THOROUGH UNDERSTANDING OF THE DYNAMICS AND
CHANGES OF HUMAN RESOURCES IN SOUTH AFRICA, THE COST EFFECTIVE BENEFITS TO
COMPANIES OUTSOURCING ROUTINE AND SPECIALIST FUNCTIONS AND THE EMPHASIS THEY
HAVE PLACED ON DELIVERING THEIR PROMISE TO THEIR CLIENTS.

PEO IS ONE OF THE FIRST COMPANIES TO BECOME INFLUENTIAL IN THE "PROFESSIONAL
EMPLOYER ORGANISATION" INDUSTRY WITHIN SOUTH AFRICA. THEIR PRODUCTS INCLUDE
MANAGING PAYROLLS AND HANDLING ALL THIRD PARTY STATUTORY PAYMENTS INCLUDING
MEDICAL AID, PROVIDENT FUND, U.I.F., BARGAINING COUNCIL LEVIES AND THE COMPLEX
RETURNS TO THE SARS THROUGH THE NITS SYSTEM (NEW INCOME TAX SYSTEM). THEY
SPECIALISE IN EMPLOYEE SALARY PACKAGE RE-STRUCTURING, MANAGEMENT OF CONTRACT
LABOUR, IMPLEMENTATION AND ADMINISTRATION OF MEDICAL AIDS AND PROVIDENT FUNDS,
AND ALL HUMAN RESOURCE AND INDUSTRIAL RELATION ISSUES.

PEO HANDLE ALL EMPLOYER, EMPLOYEE RELATED ISSUES WITHIN SMALL, MEDIUM AND LARGE
ORGANISATIONS AND ADD VALUE BY IMPROVING COMPANY EFFICIENCIES, LIMITING
POTENTIAL COMPANY AND EMPLOYEE LIABILITIES (TAX AND LRA), REDUCING OPERATING
COSTS AND ALLOWING COMPANIES MORE TIME TO FOCUS ON THEIR CORE BUSINESS.
PEO MANAGE HR ACTIVITIES FOR OVER 350 COMPANIES THROUGHOUT SOUTH AFRICA, AND
HAVE RECENTLY GAINED CONTRACTS IN MOZAMBIQUE AND ZIMBABWE.

WARD ALSO CONFIRMED THAT THE GROUP IS IN EARNEST DISCUSSION WITH A NUMBER OF
UNIONS. SFG NEEDS SERIOUS BLACK EMPOWERMENT, AND FROM A STRATEGIC POINT OF VIEW
WE WILL OPT FOR GENUINE UNIONIST RATHER THAN CAPITALIST BLACK EMPOWERMENT . IT
IS ALSO NO SECRET THAT SFG ARE IN DISCUSSION WITH CASH RICH ZELTIS IN SPITE OF
THE FACT THAT SFG IS CASH NEUTRAL.

ANNOUNCEMENTS REGARDING THE OUTCOME OF THESE DISCUSSIONS WILL BE MADE IN THE
NEXT FEW WEEKS.

WARD IS VERY OPTIMISTIC ABOUT THE SHARE PRICE CONSEQUENT UPON RESTRUCTURING.
THE GROUP WILL NOW BE FOCUSED AND THE MARKET WILL BE ABLE TO RATE IT PROPERLY.
"A CLEAR CUT APPROACH OF CORPORATE HR OUTSOURCING AND CORPORATE CELL-CAPTIVE
INSURANCE WILL TELL THE MARKET EXACTLY WHAT WE ARE DOING".

SFG IS ON TARGET WITH PROJECTED MAIDEN INTERIM PROFITS WHICH WILL BE ANNOUNCED
IN A FORTNIGHT.

"THE FACT THAT WE ARE ON TARGET WITH PROFIT, SIGNED UP OVER 300 BUSINESSES AND
INCREASING QUALITY ANNUITY INCOME WILL HELP WITH RE-RATING. FURTHER, IT IS
ANTICIPATED THAT THERE WILL BE STRONG INSTITUTIONAL DEMAND FOR SFG STOCK IN
FUTURE".
CAPE TOWN
19 FEBRUARY 1999