CONNECTING - sharedata.co.za · connecting a f r i c a annual report 2007 africa cellular towers annual report 2007

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Our vision is to expand into Africa and other

emerging markets by building factories and

supply depots in strategic regions to continue

to improve our service delivery abilities as well

as ensure that we are the preferred supplier to all

major telecommunication providers in the markets

in which we operate.

Our vision

Our strategy is to:

• increase our own production

capabilities, which will reduce our

dependency on outside suppliers;

• be self-reliant by bringing certain

processes in-house to ensure

more effective cost management;

• be an employer of choice by training

and motivating our employees through

an incentive scheme that we have

in place for them to ensure a loyal

workforce; and

• be a company

that will strive

to continue

to enhance

shareholder value.

Our strategy

Our mission is to become the largest

in-house full turnkey manufacturer and

supply company of telecommunication

support systems in Africa and other

emerging markets.

Our mission

ACTOWERS Annual Repor t 2007 1

Connecting Africa

Revenue EBIT and margin

F I N A N C I A L H I G H L I G H T S

ACTOWERS Annual Repor t 20072

Revenue growth 52,4%

EBIT growth 50,3%

EBIT margin 21,6%

Earnings per share (cents) 16,3

Diluted earnings per share (cents) 16,0

Headline earnings per share (cents) 16,1

Diluted headline earnings per share (cents) 15,8

R m

illio

n

250

200

150

100

50

0200620052004 2007

117,2

156,7

129,4

197,3

R m

illio

n

45

40

35

30

25

20

15

10

5

0200620052004 2007

2,4

%45

40

35

30

25

20

15

10

5

0

24,4

28,3

42,7

S E G M E N TA L A N A LY S I S


Revenue per African country

Revenue per client

DRC 22%

Congo 15%

Sudan 14%

Chad 12%

Nigeria 19%

Other 18%

DRC 25%

Congo 0%

Chad 13%

Nigeria 14%

Guinea 9%

Gabon 20%

Other 19%

Celtel 51%

Huawei 10%

Mobitel Sudan 14%

Accat Nigeria 9%

Other 16%

Celtel 77%

Accat Nigeria 12%

Other 11%

Connecting Africa

C O R P O R AT E P R O F I L E


History

ACTOWERS was established in 1999 by Chris Krüger,

an entrepreneur and turnkey specialist in the construction

of cellular towers. Chris Krüger and his team were pioneers

in the construction of cellular towers in Africa, with their first

cellular tower being erected in Gabon in December 1999.

On 27 October 2000, ACTOWERS was incorporated as

a private company and on 26 October 2006 ACTOWERS

was converted to a public company which listed on

29 November 2006 on the Alternative Exchange (ALTx)

of the JSE Limited (JSE).

Nature of the business

ACTOWERS, based in Johannesburg, is an in-house, full

turnkey manufacturing and supply company of tele-

communication support systems in Africa and other emerging

markets.

Manufacturing

ACTOWERS’ main business consists of their manufacturing

operation, located in a 3 200 m2 factory based in Johannesburg,

manufacturing:

• steel communication towers (cellular and transmission masts);

• manufacturing of steel structures and warehouse facilities

(general steel engineering);

• steel palisade fencing for the telecoms site;

• diesel and water tanks for the telecoms site; and

• solar structures, also used at the telecoms site.

ACTOWERS expanded the Johannesburg manufacturing facility

by adding 1 200 m2 to the existing factory, which was completed

by mid July 2007.

ACTOWERS uses 1 200 tons of steel per month and the current

production capacity at ACTOWERS per week is:

• 10 x 100 metre towers; or



• 25 x 30 metre towers

The production capacity is also being expanded by the

acquisition of six new fully automated cut, punch and marking

machines, of which two have already arrived, which will push the

usage of steel up to 2 000 tons of steel per month.

ACTOWERS is also in the process of building its own galvanizing

plant and the kettle required to galvanize the steel was delivered

in June 2007.

Sales and Installations

The Sales and Installations teams are responsible for all

pole-related support systems, which include:

• the management of turnkey telecommunications network

projects including GSM, WLL, fixed wireless and VSAT

technology;

• providing turnkey solutions or tower parts only for tower

construction in Africa and other emerging markets, such

as the Gulf States and India;

• ensuring that the tower parts are properly installed.

All tower components are pre-manufactured in South Africa as a

modular system, to make it easier to rig in remote areas.

The company services mobile telecommunication operators

in a number of African countries. Contracts are quoted in

USD and Euro and are based on the actual cost per kilogram

of steel.


Our global footprint

Major contracts in Africa

Country Number of towers

Nigeria 380

Sudan 350

DRC 300

Ghana 200

Chad 160

Gabon 160

Congo Brazaville 150

Tanzania 150

Zambia 150

South Africa 150

Guinea 124

Burkina Faso 120

Sierra Leone 70

Uganda 70

C O R P O R AT E P R O F I L E C O N T I N U E D


Subsequent year-end events

On 13 February 2007, ACTOWERS announced that they have

entered into Heads of Agreement to purchase JK Shelters

(Pty) Limited (JKS) for an indicative purchase consideration

of R40 million, based on a profit after tax amount of R8 million,

which equates to a 5 x PE ratio. The transaction was effective

1 March 2007. The details of the transaction are to be published

in a circular to be distributed to shareholders.

In April 2007, ACTOWERS met with a delegation of the Ghana

Government where the Ghana Government will allow

ACTOWERS to occupy space in the Free Zone in order to keep

inventory in Ghana. ACTOWERS is seriously considering

establishing manufacturing capacity in Ghana in the future to

supply the whole of the West and North Africa. The rationale is

to find solutions to improving efficiencies as well as the

turnaround time of delivery of components to customers. The

Free Zone also provides ACTOWERS with certain tax benefits

and exports from the Free Zone are exempt of charges. Ghana

is seen as the gateway to the sub-region giving the company

access to the market with a population of about 250 million.

Prospects

ACTOWERS is still in the process of finding a suitable Black

Economic Empowerment (BEE) investor. Whilst this is not a

critical factor for operating in the emerging markets outside of

South Africa, a BEE partner will position the company favourably

when tendering for the large telecoms related contracts in

South Africa.

The drive by management is to further diversify its

customer base that will provide more opportunities to expand

its business.

The goal of ACTOWERS to expand geographically over Africa

into other emerging markets will promote growth and we believe

with the Ghana Free Zone initiative, this will go a long way

towards achieving this goal.

ACTOWERS will diversify and expand the current range

of products and services it offers to more flexible solutions

such as low cost rapid deployment towers and cost

efficient products.

ACTOWERS will also pursue its strategy to earn annuity income

from existing towers erected from, for example, the maintenance

of towers.

ACTOWERS intends to acquire businesses which form part

of its supply chain to enable it to secure higher margins by

reducing its reliance on third party suppliers.


ACTOWERS won The South African Institute of Steel Construction

award in 2003 in the export category for project management and

installation of 120 metre towers in Gabon

I N D U S T R Y O V E R V I E W


General

The cellular phone market in Africa is perceived to be the fastest

growing cellular phone market in the world, having grown on

average by more than 30% per annum between 2002 and 2004.

A large number of African countries have achieved triple-digit

compound annual growth for the period 1998 to 2005. This

phenomenal growth is primarily due to the small number and

high cost of fixed line connections which are mainly located in

major urban areas. It has resulted in the high demand for cellular

phones. The fixed-line telephone sector in Africa is monopolistic,

with each country normally having only one operator. As a result,

the telecommunications sector is in the process of being

restructured in various African countries, creating new

opportunities for growth.

Background

Africa’s and other emerging mobile phone markets, have

expanded rapidly in recent years, with mobile phone penetration

levels now far outstripping those of fixed lines across most of the

continent. Mobile telephony is now firmly entrenched as the

predominant mode of telephony in almost every African country.

The Goldman Sachs Commtech team forecasts that there will be

nearly four billion subscribers globally by 2010, compared to the

current number of two billion.

The major portion of this growth will come from emerging

markets. Mobile subscriber in Africa have increased at such a

rate that they have overtaken the number of fixed lines, making

Africa the first region in the world to achieve this. Since 2000

Africa has provided more telecommunication users than in the

whole of the previous century. Africa is currently the region with

the highest level of mobile communications growth. The vast

majority of mobile users utilise GSM technologies.

African approach

The business and operating climate in the African

telecommunication sector has shifted radically. Firstly, market

liberalisation has helped shape an environment which fosters

competition. Regulatory bodies are being established to oversee

the introduction of services, resolve disputes and support

competition. A glance across Africa’s mobile landscape

illustrates the benefits of competition.


The only countries with less mobile than fixed telephone

subscribers in sub-Saharan Africa were those countries without

mobile networks or without mobile competition. Mobile

competition has benefited even the poorest countries.

The DRC and Ethiopia both have per capita incomes of

approximately US$100 per month yet the DRC has a mobile

penetration of around 2% – some 15 times greater than

Ethiopia’s, which stood at 0,13%. Ethiopia has only one GSM

operator, the DRC has four GSM networks, in addition to

non-GSM cellular networks. Cellular operators insist on having

their own towers due to lack of relationships and the lack of

mutual trust between the operators.

Governmental issues

Mobile telephony in emerging markets has developed into

a significant source of tax revenue for governments, not only

through a number of direct and indirect taxes, but also via the

issue of additional licences. Moreover, increasing numbers of

operators have been encouraged by the relatively straight-

forward return profiles of emerging markets businesses.

The potential growth is evident from the positive approach of

most of the African countries and other emerging markets

regarding the issuing of new cellular licences. This positive

attitude towards cellular operators will ensure that the

requirement for infrastructure development will be immense and

will ensure a sustainable growth for the next couple of years.

Africa’s giants

The emergence over the last three to four years of African-

based, pan-regional mobile operators, is another significant

reason behind mobile’s growth, with the spheres of mobile

influence of these strategic investors now reaching across

the continent. It is these operators, such as Vodacom, Orascom

Telecom, Celtel/MTC, Mobitel, Investcom, Bashier and MTN

who have been able to apply uniquely African approaches

into the markets in which they operate. Operators such as

MTN or Vodacom have the knowledge of operating in different

African markets which they can then apply in other markets

in the region.

Vendors, seeking growth in new markets as they face saturation

elsewhere, are increasingly tailoring their approach in the region,

developing special lower-cost solutions to suit the needs of

the region.

Mobile’s benefits

Levels of mobile penetration vary considerably across the

region, ranging from under 1,0% in Ethiopia to 74,7% in

Réunion, an indication that for much of the region there is still

huge scope for growth. Mobile technology has, however, gone

further than any other communications technology in Africa in

terms of bridging the digital divide. Mobile’s ease of payment

means that services extend to segments of urban and rural

populations who previously would not have been able to

afford them.

Mobile infrastructure also extends way beyond that of fixed-line,

into rural and “universal access” markets, something to which

wireless technology is innately more suited than the traditional

fixed-line. Nevertheless, network coverage remains low with

only an estimated 50% of sub-Saharan Africa covered by

mobile signal, indicating that there is still a large untapped

market provided operators can be encouraged to extend

network coverage.

Industry overview

I N D U S T R Y O V E R V I E W C O N T I N U E D


Tapping into new growth streams data

Applications such as WAP are beginning to surface. One of

the most publicised examples is Senegal’s Manoni, which

launched a service to enable farmers to query databases on

pricing information utilising WAP. The service is used by over

1 000 users.

Meanwhile, SMS usage is showing signs of a fast uptake

in Africa. Whilst the majority of SMS traffic tends to be for

mundane communications, SMS has also been harnessed for a

number of innovative, region-specific applications. In Zambia,

mobile operator Celtel has launched a mobile payment system

whereby users can make payments using SMS, with a code

identifying the payee.

Applications such as mobile banking have the potential to make

major impact in Africa, a region where cash payments are

preferred and where people do not generally carry credit cards.

Migration to 3G and other product services

A lack of fixed-line infrastructure as well as low PC penetration

means that the growth opportunity for mobile Internet is

considerable. 3G services have already been launched in

a number of African countries. Ericsson was awarded Africa’s

first EDGE contract, to provide the technology to Ghana’s

Scancom. Deploying EDGE will provide a migration path toward

3G and enable Scancom to assess demand for enhanced

data services. Recently in Nigeria four 3G licences have

been awarded.

High speed or not, mobiles can still allow users to access the

Internet. Given this, a logical technology to deploy would be

3G/GPRS, which could provide a higher speed access solution.

Yet operators have still to embark on a large-scale rollout of

the technology.

Developing regions and rural areas

The universal service market offers some surprisingly vibrant

growth opportunities. Nervous of extending the reach of mobile

services into rural areas, where service uptake may not be as

rapid as in urban areas, operators have been slow in seizing the

prospects these markets offer. Operators should see these

markets as a growth opportunity, where providing services such

as a community payphone can generate over three times the

monthly revenue of a conventional user.

Whilst services such as community payphones clearly may

provide a boost for handset sales, levels of mobile traffic are kept

high. Mobile initiatives in the universal services area include the

Grameen Phone initiative. This initiative replicates the Grameen

Telecom’s village phone programme running in Bangladesh,

which currently has over 40 000 village phone operators. The

Grameen initiative in Uganda operates in partnership with

MTN Uganda and provides low-cost mobile services into poor

rural areas.

Fixed-line networks

Fixed-line services will also need to be adapted to meet the

needs of the market, paying attention to areas which have

helped mobile grow – in particular the ability to prepay for calls

and introducing CDMA. The suitability of FWA networks means

that they are already being deployed in certain countries in Africa

and other emerging markets. In Nigeria, for example, new fixed

wireless networks accounted for some 30% of all fixed lines.


Wireless – way forward

In the absence of fixed-line networks and in addition to a lack of

PCs, mobile phones are likely to become increasingly used as

means to access the Internet, and in the immediate future it is

mobile technologies such as 3G/GPRS combined with wireless

technologies such as WiFi which are likely to drive the mobile

Internet market. With a number of the region’s mobile networks

ready for 3G/GPRS, it is only a matter of time until operators

keen to address stagnant levels of ARPU begin to push

3G/GPRS as a means of accessing the Internet.

Fixed-line operators must also look to wireless options to

diversify and extend their service range. As well as voice

services, fixed wireless technology will also allow operators to

offer high-speed broadband Internet access, all of which need

infrastructure. Another problem with a fixed line is connectivity;

that it can take months after the implementation of an

application to be able to communicate on a fixed line.

Emerging market risk issue

The World Bank and United Nations view the following concerns

as the major emerging market risks that will influence the

industry growth:

• Political stability – risk of armed conflicts, social unrest,

military coups.

• Regulatory quality – governmental regulation, unfair

competition, unfair trade.

• Rule of law – enforceability of contracts, crime, property

rights and judicial independence.

• Control of corruption – diversion of funds, bribery, relative

frequency of corruption in business and government-related

activity.

• Human resources – approximated through the human

development index which measures life, health, education

and standard of living.

Sources: ITU, International Telecommunications Union, UBS

Investment Research, Citigroup Global Markets, JP Morgan

African Equity Research.

From left to right: RR Richards, CJJ Krüger (Chairman and CEO), J de Villiers, DM van Staden

B O A R D O F D I R E C T O R S



The drive by management to diversify its customer base

will shift reliance away from Celtel as its major customer and

provide more opportunities to expand its business

CHRIS KRÜGER (59)

Chairman and Chief

Executive Officer

Chris has been the sole

shareholder and Chairman

and Chief Executive Officer

of ACTOWERS from 1999.

He was involved in

production and construction

for many years. Chris is a

successful entrepreneur and

has an in-depth knowledge

of the telecommunications

infrastructure and

manufacturing sectors.

Chris has over 38 years

of experience in the

engineering industry and

16 years of experience

in telecommunication

hardware. Under his

guidance ACTOWERS has

completed more than

900 projects in Africa, which

includes the construction of

more than 3 000 towers in

some of the most rural and

remote areas in Africa.

DAVID VAN STADEN (32)

Operations Director

Diploma in Quantity

Surveying and Project

Management

David has been the Project

Director for ACTOWERS

since 1999. He has an

excellent background in the

projects field and thrives in

his position as Operations

Director. David has over

10 years of experience in

project management and

quantity surveying and is

responsible for the project

management of the

installation of towers

in Africa.

JACQUES DE VILLIERS (37)

Financial Director

BCom (Hons), CA(SA),

MCom (Business

Management)

Jacques qualified as a

Chartered Accountant in

1995 and completed his

MCom (Business

Management) at

Johannesburg University

(previously RAU) in 2002.

He joined De Villiers

Myburgh Inc. in 1996 and

was appointed as a director

of De Villiers Myburgh Inc. in

1999. Jacques consulted in

the telecommunications

industry from 1996 to 1999

for Telkom Limited and acted

as the financial project leader

for the planning, building and

implementation of the ICO

Global Mobile Satellite Hub

for Southern Africa. He has

been involved in the financial

planning and modelling of

the SAT3/SAFE underwater

communication cable that

ranges from Portugal to

Malaysia via South Africa.

Jacques was appointed

as Financial Director

to ACTOWERS on

6 October 2006.

DR RUBEN RICHARDS (47)

Independent

Non-Executive Director

National Technical Certificate

V; BSocSc; Bachelor of

Divinity; Master of Theology;

Doctor of Philosophy

Ruben was born and raised

in Cape Town. He

commenced his working

career as an apprentice and

qualified fitter and turner at

Globe Engineering Works

and later served as engine

room operator on-board

various South African naval

vessels. He left South Africa

in 1989 and studied and lived

abroad (USA and Europe).

Ruben returned to South

Africa in 1994 to assist in the

re-engineering of the South

African criminal justice

environment. He recently

moved back into business

to contribute to the

improvement of skills

and South Africa’s

competitiveness with

respect to the ship repair

and the oil and gas

industries. Ruben has held

high profile positions within

the South African criminal

justice environment including

Executive Secretary of the

Truth and Reconciliation

Commission; Deputy

Director-General of the

Scorpions; Executive

Director of the Police

Practice, Technikon SA

(now incorporated into

Unisa).

C H A I R M A N A N D C H I E F E X E C U T I V E O F F I C E R R E P O R T


CJJ Krüger (Chairman and CEO)


ACTOWERS is entering an exciting era of

economic growth into Africa

Introduction

I am pleased to report ACTOWERS’ annual results for the year

ended 28 February 2007. The business has grown from strength

to strength and this year we managed to increase revenue by

52,4% from R129,4 million in 2006 to R197,3 million, profit after

tax was increased by a satisfactory 48,7% to R31,5 million and

diluted headline earnings per share of 15,8 cents was achieved,

a 33,9% increase on 2006 diluted headline earnings per share

of 11,8 cents.

It was an exciting year for ACTOWERS and after a strong history

of seven years in the construction of cellular towers in Africa,

ACTOWERS listed on 29 November 2006 on ALTx. We started

from humble beginnings and now operate in 25 African

countries out of a potential of 53 countries. We also operate

in some of the Gulf States.

The year was further characterised by five new licences being

awarded in Africa to new network operators, which goes to show

how strong the market is in Africa. We worked very hard in

reducing our exposure to Celtel and as a result, have gained new

cellular operators as clients. We added Madagascar to the list of

countries we service and we have been able to negotiate a

lucrative contract with a reputable client. We were also awarded

large contracts in Nigeria as well as Ghana and Congo

Brazzaville.

In order to consolidate our operations, we built a new head office

on the same premises as our factory, which we occupied in

January 2007.

Our market is competitive and this has the effect of constantly

putting pressure on our gross profit as well as operating

margins. We are, however, confident that with our established

reputation in the African countries we service, we would be in a

strong position to continue to secure new contracts.

Financial results

Revenue increased by 52,4% from R129,4 million in 2006 to

R197,3 million as a result of large contracts awarded in Nigeria,

Ghana and Congo Brazzaville.

Gross profit grew by 28,4% from R47,9 million in 2006 to

R61,6 million, but the gross profit margin declined from 37,0% in

2006 to 31,2% as a result of greater competition and an increase

in the steel price and galvanizing cost that could not immediately

be passed on to our customers.

Earnings before interest, taxation, depreciation and amortisation

(EBITDA) increased by 49,3% from R29,3 million in 2006

to R43,8 million. The EBITDA margin decreased marginally

from 22,7% (2006) to 22,2% (2007). The 2006 year-end was

characterised by more “supply-only” type contracts as opposed

to the 2007 year-end which saw more “supply-and-install”

contracts, which impacted on the group’s EBITDA margin. We

are still very happy with these levels of gross profit and EBITDA

margins which we believe could be maintained or even improved

with the introduction of our galvanizing plant.

As a result of the private placement of R50 million undertaken

prior to the listing, the balance sheet was significantly

C H A I R M A N A N D C H I E F E X E C U T I V E O F F I C E R R E P O R T C O N T I N U E D


strengthened. The capital proceeds raised enabled the

company to increase raw materials substantially from 2006 to

ensure a higher work-in-process in the factory to meet demand.

The reason for the unusually high increase in work-in-process

regarding contracts is that during January and February 2006,

two big projects in Chad and the DRC were completed and

signed off. These projects were invoiced in the 2006 financial

year. We also had further roll-outs of new contracts in Chad and

the DRC which commenced in the 2007 financial year. At the

end of the 2007 financial year, the company had substantial

incompleted contracts.

In the prospectus (dated 16 November 2006), it was disclosed

that Celtel Congo (RDC) S.p.r.l., a debtor of the company,

was indebted to the company in the sum of approximately

R34 million. In order to provide comfort to potential investors, I

personally gave an irrevocable and unconditional undertaking to

ACTOWERS to the effect that, should payment of the aforesaid

amount not be received by ACTOWERS from Celtel before

31 July 2007, I will purchase the claim of ACTOWERS against

Celtel for a consideration equal to the full face value of the claim

then outstanding. It is with pleasure that I can report that

only approximately R7,0 million was still outstanding as at

28 February 2007. I am confident that Celtel will settle the

outstanding balance before 31 July 2007. Trade receivable days

have decreased from 186 days to 95 days and we are very

comfortable with this level. As a result of doing business in

Africa, the debtors’ days will always be more than industry norm,

but I believe by diversifying our client base, we spread our

credit risk.

Trade payables increased by 76,6% as a direct result of

the increase in the purchase of raw materials. Our trade payable

days went up from 84 days (2006) to 85 days (2007).

ACTOWERS experienced strong cash flows from operations, a

69,5% increase from R20,2 million (2006) to R34,3 million (2007).

Prospects

The cellular phone market in Africa is perceived to be the fastest

growing cellular phone market in the world and the high demand

for cellular phones makes this an exciting industry to be

operating in. I believe ACTOWERS is very well positioned to

benefit from this growth, especially with the recently concluded

agreement with the Government of Ghana which will allow us

to import our product into Ghana’s Free Zone and export into

neighbouring African countries exempt of both import and

export duty. I am very excited about the vast possibilities of this

venture into Ghana.

We further believe that we have a strong reputation to expand

our business into other emerging markets and we are constantly

looking for new opportunities.

Black Economic Empowerment

Since the bulk of ACTOWERS’ business has, to date, been

conducted in Africa, there was previously no need for Black

Economic Empowerment. However, we are committed to find a

suitable BEE partner which will position the company favourably

when tendering for large telecoms contracts in South Africa.


Dividends

Initially all earnings generated by the company will be utilised to

fund future growth and development.

Appreciation

I would like to thank my fellow directors for their support

throughout the year and the entire team at ACTOWERS for their

hard work and dedication throughout the year. I would further

like to thank our customers for their loyal support. We have set

stringent targets for the year ahead and we are working hard in

achieving them to ensure superior returns for our shareholders.

Chris Krüger

Chairman and Chief Executive Officer

ACTOWERS is entering an exiting era of economic growth

in Africa. We have grown from strength to strength

and we have managed to increase revenue

C O R P O R AT E G O V E R N A N C E R E P O R T


Introduction

ACTOWERS is listed on the ALTx of the JSE. The board of

directors (the board) is subject to and supports the principles

contained in the Code of Corporate Practices and Conduct

recommended by the 2002 King Report on Corporate

Governance for South Africa (King II), as well as the Listings

Requirements of the JSE.

ACTOWERS is committed to the principles of openness,

integrity and accountability and adheres to King II.

Statement of compliance

The Listings Requirements of the JSE require that listed

companies report on the extent to which they comply with the

principles incorporated in King II.

As the group is committed to the highest ethical standards of

business conduct and to fully complying with all applicable laws

and regulations, the board will be adopting various policies and

procedures during the new financial year.

Chairman and Chief Executive Officer

The Chairman and Chief Executive Officer is Mr Chris Krüger.

Mr Krüger leads the board and is responsible for representing the

board to shareholders. He is further responsible for the running of

the day-to-day business of the group, for the implementation

of policies and strategies adopted by the board and takes

full responsibility for all operations. In terms of the Listings

Requirements of the JSE for ALTx companies, the separation of

the Chairman and the Chief Executive Officer is not required.

Board

The board comprises of four directors of whom one is an

independent non-executive director. The independent director

ensures that no one individual has unfettered powers of

decision-making and authority, so that shareowner interests are

protected. He enjoys no benefits from the company for his

service as a director, other than his fees and potential capital

gains and dividends on his interests in ordinary shares.

The guidelines contained in the Listings Requirements of the

JSE were used to test his independence.

The primary responsibilities of the board include regular review

of the strategic direction of investment decisions and

performance against approved plans, budgets and best practice

standards. The board retains full and effective control of the

group and decisions on material matters are reserved for the

board. The board is also responsible for monitoring the activities

of the executive management.

The board will meet at least quarterly, and more frequently if

circumstances or decisions require. The board met once during

the last financial year. All the members were present at the board

meeting held on 21 February 2007.

One third of the directors are subject, by rotation, to retirement

and re-election at the annual general meeting in terms of the

company’s articles of association. In addition, all directors are

subject to election by shareholders at the first annual general

meeting after their initial appointment. Dr RR Richards and

Mr J de Villiers, being eligible, have offered themselves for

re-election.

The biographical details for each of the directors are set out on

page 13 of the annual financial statements.

Board committees

While the board remains accountable and responsible for the

performance and affairs of the company, it delegates to

Connecting Africa


management and board committees certain functions to assist

it to properly discharge its duties. The board currently only has

two board committees, namely the audit committee and the

executive committee. The chairmen of these committees will

report at each scheduled meeting of the board and minutes of

the committee meetings will be provided to the board. The

chairman of the audit committee is required to attend annual

general meetings to answer questions raised by shareholders.

Audit committee

The audit committee will be chaired by a non-executive director

and the company’s Designated Advisor will be a member of the

committee. The Financial Director will be invited to attend the

meetings. The committee will be formed for the purposes of

monitoring and reviewing:

• the effectiveness of the company’s information systems and

other systems of internal control;

• the effectiveness of the internal audit function;

• the reports of both the external and internal auditors;

• the annual report and specifically the annual financial

statements included therein;

• the accounting policies of the company and any proposed

revisions thereto;

• the external audit findings, reports and fees and the approval

thereof;

• ensuring that non-audit services will not be obtained from

the external auditors where the provisions of such services

could impair audit independence; and

• compliance with applicable legislation and requirements of

regulatory authorities.

No audit committee meetings were held during the financial year

ended 28 February 2007.

Executive committee

The executive committee comprises Chris Krüger (Chairman),

Jacques de Villiers and David van Staden. The committee was

formed to translate group board strategic direction into a group

strategic plan and to address other items considered crucial

for success.

The executive committee met five times during the financial year

ended 28 February 2007. All members were in attendance.

Appointments to the board

Directors are appointed on the basis of skill, acumen, experience

and level of contribution to and impact on the activities of the

group. Directors are invited to assist with the identification and

nomination of potential candidates. The independent members

of the board propose suitable candidates for consideration by

the board.

Company secretary

The appointment and removal of the company secretary is a

matter for the board as a whole. The company secretary advises

the board on the appropriate procedures for the management of

meetings and the implementation of governance procedures,

and is further responsible for providing the board collectively,

and each director individually, with guidance on the discharge of

their responsibilities in terms of the legislation and regulatory

requirements applicable to South Africa.

Interests in contracts

During the year ended 28 February 2007, other than the Krüger

family’s interest in JK Shelters (Pty) Limited (JKS), and

J de Villiers, who is a shareholder and a director in De Villiers

C O R P O R AT E G O V E R N A N C E R E P O R T C O N T I N U E D


Myburgh Inc., the company’s secretaries, and other than as

disclosed in note 30 to the annual financial statements, no other

director had a significant interest in any contract or arrangement

entered into by the company or its subsidiaries.

Directors will be required to inform the board timeously of

conflicts or potential conflicts of interests they may have in

relation to particular items of business and recuse themselves

from discussions or decisions on matters in which they have

a conflicting interest.

Relations with shareholders

The company maintains dialogue with its key financial

audiences, especially institutional shareholders and analysts.

The management team manages the dialogue with these

audiences and presentations take place at the time of publishing

interim and final results.

The company’s website provides the latest and historical

financial and other information, including the financial reports.

The board encourages shareholders to attend its annual general

meeting, notice of which is contained in this annual report,

where shareholders will have the opportunity to put questions to

the board, including the chairman of the audit committee.

Directors’ share dealings

Directors may not deal in the company’s shares without first

advising and obtaining clearance from the Chairman and the

Financial Director. The Chairman and Financial Director may not

deal in the company’s shares without first advising and obtaining

clearance from the board. No director or executive may trade in

ACTOWERS shares during closed periods as defined in the JSE

Listings Requirements. The directors of the company keep the

company secretary advised of all their dealings in securities.

Going concern

The annual financial statements contained in this annual report

have been prepared on the going concern basis.

The directors report that, after making enquiries, they have a

reasonable expectation that the group has adequate resources

to continue in operational existence for the foreseeable future.

For this reason, the group continues to adopt the going concern

basis in preparing the annual financial statements.

Employment equity

An affirmative action programme forms part of the group’s

business plan. ACTOWERS offers equal opportunities to all

employees. It seeks to provide a work environment in which

individuals of ability and commitment are able to develop their

careers regardless of their background, race, religion or gender.

ACTOWERS fully supports the government’s initiative to achieve

greater equity in the workplace and management of all group

companies and is fully committed to complying with the

Employment Equity Act of 1998 (as amended). ACTOWERS

ensures that the company achieves their employment equity

objectives and that policies are properly implemented.


Directors’ report ......................................................................................................................... 22

Report of the independent auditors ........................................................................................... 26

Certification by the company secretary ...................................................................................... 26

Directors’ responsibilities and approval ...................................................................................... 27

Balance sheet – Group ............................................................................................................... 28

Income statement – Group ........................................................................................................ 29

Cash flow statement – Group .................................................................................................... 30

Statement of changes in equity – Group .................................................................................... 31

Accounting policies .................................................................................................................... 32

Notes to the annual financial statements ................................................................................... 42

Balance sheet – Company.......................................................................................................... 62

Income statement – Company ................................................................................................... 63

Cash flow statement – Company ............................................................................................... 64

Statement of changes in equity – Company .............................................................................. 65

ContentsT O T H E A N N U A L F I N A N C I A L S TAT E M E N T S

The directors have pleasure in submitting their report together with the company’s annual financial statements for the financial year

ended 28 February 2007.

1. INCORPORATION

The company was incorporated on 27 October 2000 and obtained its certificate to commence business on the same day.

2. MAIN BUSINESS AND OPERATIONS

The company is engaged in the manufacturing and fabrication of steel communication towers and operates principally

in Africa.

The operating results and state of affairs of the company are fully set out in the attached annual financial statements and

do not in our opinion require any further comment.

Net profit of the group was R31,5 million (2006: R21,2 million) (2005: R16,6 million) and the company was R31,7 million

(2006: R21,2 million) (2005: R16,6 million), after taxation of R13,7 million (2006: R8,7 million) (2005: R7,4 million) for both the

group and company.

3. GOING CONCERN

The annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This

basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of

liabilities, contingent obligations and commitments will occur in the ordinary course of business.

4. FINANCIAL STATEMENTS

The company’s results and financial position are contained in the financial statements on pages 28 to 65 of the annual report.

The audited statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and their

interpretation adopted by the International Accounting Standards Board (IASB), the Listings Requirements of the JSE and the

Companies Act, 61 of 1973, as amended, remain consistent with those applied to the 31 August 2006 interim results

published.

5. POST-BALANCE SHEET EVENTS

The directors are not aware of any matter or circumstance arising since the end of the financial year except for the capital

commitments mentioned in note 29.

D I R E C T O R S ’ R E P O R T



6. INTEREST OF DIRECTORS

Directly Share

Ordinary shares % option

2007 2006 2005 2007 2006 2005 2007 (Only)

CJJ Krüger 124 250 000 180 000 000 180 000 000 51,42 100,00 100,00 –

J de Villiers 742 500 – – 0,31 0,00 0,00 1 000 000

DM van Staden – – – 0,00 0,00 0,00 3 000 000

RR Richards – – – 0,00 0,00 0,00 300 000

Notes:

1. No other director holds an indirect beneficial or direct/indirect non-beneficial interest in the company’s shares.

2. The above directors’ interests remained unchanged from 28 February 2007 to 21 May 2007.

3. Share options were awarded to the directors in terms of the share incentive scheme at a price of 80 cents per share.

CJJ Krüger has granted an option to J de Villiers to acquire an additional 3 375 000 ordinary shares from him at a price of

R1,00 per share, which option is to be exercised prior to 29 November 2007.

7. SEGMENT REPORTING

Management views the operations of the company as one segment. This is because the two facets of the business

operations, manufacturing and supply and installation, are so closely related that they cannot be separated in any meaningful

manner. This business is managed on a contract-to-contract basis and each contract may include elements of either aspects

of the business.

The company’s manufacturing operation is situated in South Africa and sales are made across the African continent. The

company has no staff permanently employed outside of South Africa, nor does it have any permanent offices outside South

Africa. The company may have temporary staff and offices for the duration of a contract.

The company thus has no discernible business or geographical segment.

In order to give a better understanding to shareholders, the company discloses the percentage turnover in the following

African countries:

Percentage revenue per African country:

2007 2006 2005

Democratic Republic of Congo 22 25 30

Congo – Brazzaville 15 – 1

Sudan 14 – 2

Chad 12 13 4

Nigeria 19 14 –

Guinea – 9 –

Gabon – 20 20

Other 18 19 43

100 100 100

8. AUTHORISED AND ISSUED SHARE CAPITAL

The 100 issued shares of R1 each were converted into 1 000 000 shares of R0,0001 each.

The authorised shares capital was increased to 500 000 000 shares of R0,0001 each = R50 000.

The following allotments were made during the year:

179 000 000 shares for R0,0001 = R17 900 for cash.

11 650 000 shares for R0,80 = R9 320 000 in terms of a share incentive scheme.

50 000 000 shares for R1,00 = R50 000 000 for cash.

As a result of the above issues, share premium of R56 547 642 was raised after accounting for share issue expenses in the

amount of R2 766 193. The full details are contained in the statement of changes in equity.

9. BORROWING POWERS

In terms of the articles of association of the company, its borrowing powers are unlimited and the company can borrow money

as it considers appropriate.

10. SHARE INCENTIVE SCHEME

In terms of a share-based incentive scheme, 11 650 000 shares were allotted to the ACTOWERS Share Incentive Scheme for

a consideration of R9 320 000 on a loan account basis.

As part of the share incentive scheme a loan of some R9,3 million was advanced to the scheme.

11. DIVIDENDS

In line with the company’s growth strategy, no dividends were declared during the financial year ended 28 February 2007.

12. PROPERTY, PLANT AND EQUIPMENT

As part of the expansion programmes fixed assets in the amount of R6,2 million (2006: R2,2 million) (2005: R3,6 million) were

acquired during the year. The details are contained in note 3 of the annual financial statements.

13. INDEPENDENT AUDITORS

The auditor of the company is Nexia HBLT Chartered Accountants (East Rand) Inc. and they will continue in office in

accordance with section 270(2) of the Companies Act.

14. SIGNIFICANT SHAREHOLDERS

Details of significant shareholders are included on page 66 of this annual report.

15. INTERESTS OF DIRECTORS IN CONTRACTS

Other than the interests disclosed in note 30 of the annual financial statements, no director have any other interest in

any transactions of significance with the company or any of its subsidiaries.

16. LITIGATION

There are no legal or arbitration proceedings, including any such proceedings that are pending or threatened of which

ACTOWERS is aware that may have, or have had during the 12 months preceding the date of the annual report a material

effect on the financial position of the company.

17. SPECIAL RESOLUTIONS

The company was listed on the ALTx on 29 November 2006 after being converted into a public company on 26 October 2006.

A special resolution was taken to increase the authorised share capital to 500 000 000 shares of R0,0001 = R50 000.

18. INTEREST IN SUBSIDIARIES/ SPECIAL PURPOSE ENTITIES

The company does not have any share investments in subsidiaries.

D I R E C T O R S ’ R E P O R T C O N T I N U E D


ACTOWERS controls all the day to day business operations of ACTOWERS Share Incentive Scheme (a share incentive trust)

and Africa Towers Technology S.p.r.l. (a provider of cellular towers in DRC). These entities were therefore consolidated.

The trustees of ACTOWERS Share Incentive Scheme consist of:

– Aad Pieter den Haartog

– Izak Johannes de Villiers

Directors of Africa Towers Technology S.p.r.l. consist of:

– CJJ Krüger

– DM van Staden

The attributable interest of the group in the income and losses of its subsidiaries for the year ended 28 February 2007 are:

R R R

2007 2006 2005

Aggregate amount of income after tax – – –

Aggregate amount of losses after tax 1 113 – –

19. WORK IN PROGRESS

During January 2006 and February 2006, two big projects in Chad and the Democratic Republic of Congo (DRC) were

completed and signed-off. These projects were invoiced in the 2006 financial year. Further roll-outs on new contracts in Chad

and the DRC commenced during the 2007 financial year. Therefore the company did not have any Work in Progress on

contracts at the end of the 2006 financial year. At the end of the 2007 financial year, the company had substantial

uncompleted contracts and therefore discloses Work in Progress on contracts separately.

20. WARRANTY PROVISION

No provision for warranties is made as the company has no exposure to any warranties. The company only gives a warranty

on towers and its installation, if the company performs the continuous maintenance on the towers. Currently, the company

does not perform any continuous maintenance on any towers and therefore no provision for warranties is necessary.

21. DIRECTORS

The directors of the company during the year and to the date of this report are as follows:

Name Change in appointment

CJJ Krüger – CEO and Chairman

DM van Staden – Executive director Appointed 6 October 2006

RR Richards – Non-executive director Appointed 6 October 2006

J de Villiers – Financial director Appointed 6 October 2006

22. SECRETARY

The secretary of the company is De Villiers Myburgh Incorporated of:

Business address First Floor DVM Office Par

16 Kingfisher Crescent

Meyersdal

1447

Postal address PO Box 1363

Alberton

1450


R E P O R T O F T H E I N D E P E N D E N T A U D I T O R S


TO THE SHAREHOLDERS OF AFRICA CELLULAR TOWERS LIMITED

We have audited the annual financial statements and group annual financial statements of AFRICA CELLULAR TOWERS LIMITED

set out on pages 22 to 25, and 28 to 65 for the year ended 28 February 2007. These annual financial statements are the responsibility

of the company’s directors. Our responsibility is to express an opinion on these annual financial statements based on our audit.

Scope

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether the annual financial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the amounts and disclosures in the annual financial statements. An audit also

includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall

financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the annual financial statements and group annual financial statements present fairly, in all material respects, the

financial position of the company at 28 February 2007 and the results of its operations and cash flows for the year then ended in

accordance with International Financial Reporting Standards, in the manner required by the Companies Act.

Nexia HBLT Chartered Accountants (East Rand) Inc Per: Anton Ferreira

Chartered Accountants (SA) Alberton

Registered Auditors 21 May 2007

In terms of section 268(G) of the Companies Act, 61 of 1973 (Act), as amended, I certify that, to the best of my knowledge and belief,

the company has, in respect of the financial year reported upon, lodged with the Registrar of Companies all returns required of

a public company in terms of the Act and that all such returns are true, correct and up to date.

De Villiers Myburgh Inc.

Company Secretary

Alberton

21 May 2007

C E R T I F I C AT I O N B Y T H E C O M PA N Y S E C R E TA R Y

The directors are required by the Companies Act 61 of 1973, as amended, to maintain adequate accounting records and are

responsible for the content and integrity of the annual financial statements and group annual financial statements and related financial

information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of

affairs of the company as at the end of the financial year and the results of its operations and cash flows for the period then ended,

in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion

on the annual financial statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and are based upon

appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company

and place considerable importance on maintaining a strong control environment. To enable the directors to meet these

responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective

manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting

procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the

company and all employees are required to maintain the highest ethical standards in ensuring the company’s business is conducted

in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company is on identifying,

assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the

company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied

and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control

provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements.

However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material

misstatement or loss.

The directors have reviewed the company’s cash flow forecast for the year to 29 February 2008 and, in the light of this review and

the current financial position, they are satisfied that the company has or has access to adequate resources to continue in operational

existence for the foreseeable future.

Although the board of directors are primarily responsible for the financial affairs of the company, they are supported by the company’s

external auditors.

The external auditors are responsible for independently reviewing and reporting on the company’s annual financial statements. The

annual financial statements have been examined by the company’s external auditors and their report is presented on page 26.

The annual financial statements set out on pages 22 to 25 and 28 to 65, which have been prepared on the going concern basis,

were approved by the board of directors on 21 May 2007 and were signed on its behalf by:

CJJ Krüger J de Villiers

Chairman and CEO Financial director

Alberton

21 May 2007

D I R E C T O R S ’ R E S P O N S I B I L I T I E S A N D A P P R O VA L


ASSETS

Non-current assets

Property, plant and equipment 3 10 881 978 6 011 852 4 880 893

Other financial assets 5 952 032 9 220 570 8 781 612

Deferred tax 6 – 272 892 96 114

11 834 010 15 505 314 13 758 619

Current assets

Inventories 7 41 352 969 4 294 565 5 663 371

Other financial assets 5 720 000 – –

Current tax receivable 8 1 708 487 – –

Trade and other receivables 9 51 194 529 65 940 091 52 713 552

Loan receivable 10 – 181 783 –

Cash and cash equivalents 11 60 879 410 1 071 967 237 419

155 855 395 71 488 406 58 614 342

Total assets 167 689 405 86 993 720 72 372 961

EQUITY AND LIABILITIES

Equity

Share capital 12 47 882 075 100 100

Reserves 66 406 13 901 17 435

Retained income 77 947 815 46 483 229 25 320 544

125 896 296 46 497 230 25 338 079

Liabilities

Non-current liabilitiesLong-term liabilities 14 7 051 994 3 201 788 2 939 110

Deferred tax 6 427 037 – –

Other long-term liabilities 15 – 1 107 629 13 210 451

7 479 031 4 309 417 16 149 561

Current liabilitiesLoans from directors 16 192 817 3 694 712 –

Loans payable 10 – – 4 048

Other financial liabilities 17.1 – – 6 692

Current tax payable 8 – 11 942 289 11 813 245

Current portion of long-term liabilities 14 2 426 274 1 390 241 1 020 910

Trade and other payables 17.2 31 694 987 17 951 622 14 867 012

Provisions 18 – – 407 588

Bank overdraft 11 – 1 208 209 2 765 826

34 314 078 36 187 073 30 885 321

Total liabilities 41 793 109 40 496 490 47 034 882

Total equity and liabilities 167 689 405 86 993 720 72 372 961

Ordinary shares in issue (2006 and 2005 restated) 230 000 000 180 000 000 180 000 000

Net asset value per share (cents) 54,7 25,8 14,1

Net tangible asset value per share (cents) 54,7 25,8 14,1

Group

Figures in Rand Notes 2007 2006 2005

B A L A N C E S H E E TAt 28 February


I N C O M E S TAT E M E N TFor the year ended 28 February

Revenue 19.1 197 250 967 129 428 679 156 714 805

Cost of sales 19.2 (135 695 953) (81 478 754) (116 341 559)

Gross profit 61 555 014 47 949 925 40 373 246

Other income 20 11 609 515 5 380 523 12 081 008

Operating expenses 21 (30 488 800) (24 938 209) (28 041 623)

Operating profit 22 42 675 729 28 392 239 24 412 631

Investment revenue 23 5 328 608 3 743 523 2 341 685

Finance costs 24 (2 889 485) (2 303 742) (2 754 259)

Profit before taxation 45 114 852 29 832 020 24 000 057

Taxation 25 (13 650 266) (8 669 339) (7 419 929)

Profit for the period 31 464 586 21 162 681 16 580 128

Earnings per ordinary share (cents) 26.1 16,3 11,8 9,2

Fully diluted earnings per ordinary share (cents) 26.1 16,0 11,8 9,2

Group



C A S H F L O W S TAT E M E N TFor the year ended 28 February

Cash flows from operating activities

Cash receipts from customers 205 704 980 113 310 855 142 314 126

Cash paid to suppliers and employees (170 228 293) (93 082 141) (152 996 098)

Cash generated from operations 27 35 476 687 20 228 714 (10 681 972)

Interest income 23 5 328 608 3 742 453 2 338 834

Dividends received 23 – 1 070 2 851

Finance costs 24 (2 889 485) (2 303 742) (2 754 259)

Tax paid 28 (26 601 113) (8 716 354) 420 624

Net cash from operating activities 11 314 697 12 952 141 (10 673 922)

Cash flows from investing activities

Purchase of property, plant and equipment 3 (6 281 872) (2 152 394) (3 554 895)

Sale of property, plant and equipment 671 580 – 135 000

Loans advanced to group companies – – (4 474 077)

Financial assets: Loans collected 7 601 042 (63 198) (151 608)

Loans to group companies repaid – 207 333 74 000

Repayment of loan receivable 181 783 – –

Net cash from investing activities 2 172 533 (2 008 259) (7 971 580)

Cash flows from financing activities

Proceeds on share issue 12 47 251 707 – –

Movement in other liability (589 874) (6 694) 6 694

Movement in Tricom Structures liability (517 755) (12 692 696) 13 210 451

Repayment of shareholders’ loan (3 501 895) 3 515 664 (162 489)

Long-term liabilities repayment:

Instalment sale and finance lease agreements 4 886 239 632 009 2 494 006

Net cash from financing activities 47 528 422 (8 551 717) 15 548 662

Total cash movement for the period 61 015 652 2 392 165 (3 096 840)

Cash at the beginning of the period (136 242) (2 528 407) 568 433

Total cash at end of the period 11 60 879 410 (136 242) (2 528 407)

Group



Share Total

Share Share incentive share Revaluation Retained Total

Figures in Rand capital premium reserve capital reserve income equity

GROUP

Balance at 1 March 2004 100 – – 100 – 8 740 417 8 740 517

Changes in equity

Revaluation of financial assets – – – – 17 435 – 17 435

Net income/(expenses)

recognised directly in equity – – – – 17 435 – 17 435

Profit for the year – – – – – 16 580 128 16 580 128

Total recognised income

and expenses for the period – – – – 17 435 16 580 128 16 597 563

Total changes – – – – 17 435 16 580 128 16 597 563

Balance at 1 March 2005 100 – – 100 17 435 25 320 545 25 338 080

Changes in equity

Revaluation of financial assets – – – – (3 534) – (3 534)


recognised directly in equity – – – – (3 534) – (3 534)



and expenses for the period – – – – (3 534) 21 162 681 21 159 147

Total changes – – – – (3 534) 21 162 681 21 159 147

Balance at 1 March 2006 100 – – 100 13 901 46 483 226 46 497 227

Changes in equity

Revaluation of financial asset – – – – 52 505 – 52 505



Profit for the year – – – – 31 464 586 31 464 586

Total recognised income and

expenses for the period – – – – 52 505 31 464 586 31 517 091

Issue of shares 22 900 47 228 807 – 47 251 707 – – 47 251 707

Employee share options – – 630 268 630 268 – – 630 268

Total changes 22 900 47 228 807 630 268 47 881 975 52 505 31 464 586 79 399 066

Balance at

28 February 2007 23 000 47 228 807 630 268 47 882 075 66 406 77 947 812 125 896 293

Note 12 12 12 12

S TAT E M E N T O F C H A N G E S I N E Q U I T YFor the year ended 28 February


1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS

The annual financial statements have been prepared in accordance with International Financial Reporting Standards its

interpretations adopted by the International Accounting Standards Board (IASB), and the Companies Act. The annual financial

statements have been prepared on the historical cost basis with the exception of certain items noted below, and incorporate

the principal accounting policies set out below.

These accounting policies are consistent with the previous period.

1.1 Significant accounting judgments and estimates

In preparing the financial statements, management is required to make estimates and assumptions that affect reported

income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. Use of available information and the

application of judgment is inherent in the formation of estimates. Actual results in the future could differ from these estimates

which may be material to the financial statements. Significant judgments made relate to the estimate of useful life of tangible

assets (refer to accounting policy no 1.3 and financial statements note 3), allowance for doubtful debts (refer to accounting

policy note 1.5.3 and financial statements note 9) and the evaluation of contract work-in-progress (refer to accounting policy

note 1.9).

1.2 Basis of consolidation

The consolidated financial statements include the financial statements of the company and its subsidiary and special purpose

entity. The accounting policies for the subsidiaries are consistent with the policies adopted by the group, and the financial

statements of the subsidiaries are prepared for the same reporting period as the parent company. Subsidiaries are fully

consolidated from the date of acquisition, being the date on which the group obtains control, and continue to be consolidated

until the date that such control ceases. Subsidiaries are defined as those companies in which the group, either directly or

indirectly, has more than one half of the voting rights, has the right to appoint more than half the board of directors or otherwise

has the power to control the financial and operating activities of the entity. All intra-group balances, transactions, income and

expenses and profits and losses resulting from intra-group transactions are eliminated in full. The company carries its

investments in subsidiaries at cost, less accumulated impairment losses.

1.3 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:

• it is probable that future economic benefits associated with the item will flow to the company; and

• the cost of the item can be measured reliably.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred

subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of

property, plant and equipment, the carrying amount of the replaced part is derecognised.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also

included in the cost of property, plant and equipment.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

Item Average useful life

Plant and machinery 6 years

Furniture and fixtures 6 years

Motor vehicles 4 to 5 years

Office equipment 6 years

IT equipment 3 years

Computer software 2 years

Instruments and tools 6 years

The residual value and the useful life of each asset are reviewed at each financial period end.

A C C O U N T I N G P O L I C I E SFor the year ended 28 February


Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall

be depreciated separately.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of

another asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when

the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is

determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

1.4 Goodwill

Goodwill (or negative goodwill) represents the excess (or shortfall) of the cost of acquisition of interests in subsidiaries and

associates over the fair value of the group’s share of the net identifiable assets, liabilities and contingent liabilities at date(s) of

acquisition. Following initial recognition, goodwill is measured at cost, less any accumulated impairment losses. Goodwill is

not amortised. Goodwill is assessed for impairment annually, or more frequently, if events or changes in circumstances indicate

that the carrying value may be impaired. As at the acquisition date, any goodwill acquired is allocated to each of the cash-

generating units expected to benefit from the acquisition. Impairment is determined by assessing the recoverable amount of

the cash-generating unit, to which the goodwill relates. The recoverable amount of a cash-generating unit is the higher of its

fair value less costs to sell and its value in use. Where the recoverable amount of the cash-generating unit is less than the

carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future

periods. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the

goodwill associated with the operation disposed of, is included in the carrying amount of the operation, when determining the

gain or loss on disposal of that operation. Goodwill disposed of in this circumstance is measured on the basis of the relative

values of the operation disposed of and the portion of the cash-generating unit which is retained. Negative goodwill is

recognised immediately in the income statement.

Although goodwill is not applicable in the 2007 financial year, it is presented in anticipation of the acquisition of all the shares

of JK Shelters (Pty) Limited – refer note 29.

1.5 Financial instruments

1.5.1 Initial recognition

The company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial

liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial assets and financial liabilities are recognised on the company’s balance sheet when the company becomes party

to the contractual provisions of the instrument.

1.5.2 Loans to/(from) shareholders, directors, managers and employees

These financial assets are initially at fair value plus direct transaction costs.

Subsequently these loans are measured at amortised cost using the effective interest rate method, less any impairment loss

recognised to reflect irrecoverable amounts.

On loans receivable an impairment loss is recognised in profit or loss when there is objective evidence that it is impaired. The

impairment is measured as the difference between the investment’s carrying amount and the present value of estimated future

cash flows discounted at the effective interest rate computed at initial recognition.

Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be

related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying


amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been

had the impairment not been recognised.

1.5.3 Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the

effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss

when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between

the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate

computed at initial recognition.

1.5.4 Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective

interest rate method.

1.5.5 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that

are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially

and subsequently recorded at fair value.

1.5.6 Bank overdraft and borrowings

Bank overdrafts and borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using

the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or

redemption of borrowings is recognised over the term of the borrowings in accordance with the company’s accounting policy

for borrowing costs.

1.5.7 Available-for-sale financial assets

Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under

a contract whose terms require delivery of the investment within the timeframe established by the market concerned.

These investments are measured initially and subsequently at fair value. Gains and losses arising from changes in fair value

are recognised directly in equity until the security is disposed of or is determined to be impaired, at which time the cumulative

gain or loss previously recognised in equity is included in the profit or loss for the period.

Impairment losses recognised in profit or loss for equity investments classified as available-for-sale are not subsequently

reversed through profit or loss. Impairment losses recognised in profit or loss for debt instruments classified as available-for-

sale are subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring

after the recognition of the impairment loss.

1.5.8 Held to maturity and loans and receivables

At subsequent reporting dates these are measured at amortised cost using the effective interest rate method, less any

impairment loss recognised to reflect irrecoverable amounts. An impairment loss is recognised in profit or loss when there is

objective evidence that the asset is impaired, and is measured as the difference between the investment’s carrying amount

and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be

related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying

amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been

had the impairment not been recognised.

Financial assets that the company has the positive intention and ability to hold to maturity are classified as held to maturity.

A C C O U N T I N G P O L I C I E S C O N T I N U E D

For the year ended 28 February


1.6 Tax

1.6.1 Current tax assets and liabilitiesCurrent tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect

of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered

from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the balance

sheet date.

1.6.2 Deferred tax assets and liabilitiesA deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability

arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither

accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit

will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when

it arises from the initial recognition of an asset or liability in a transaction at the time of the transaction, affects neither

accounting profit nor taxable profit (tax loss).

A deferred tax asset is recognised for the carry forward of unused tax losses and unused STC credits to the extent that it is

probable that future taxable profit will be available against which the unused tax losses and unused STC credits can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is

realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the

balance sheet date.

1.6.3 Tax expensesCurrent and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to

the extent that the tax arises from:

• a transaction or event which is recognised, in the same or a different period, directly in equity; or

• a business combination.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged,

in the same or a different period, directly to equity.

1.6.4 Value added taxRevenues, expenses and assets are recognised net of the amount of value added tax except:

• where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in

which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item

as applicable; and

• receivables and payables that are stated with the amount of value added tax included.

The net amount of value added tax recoverable from, or payable to, the taxation authority is included as part of receivables

or payables in the balance sheet.

1.7 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is

classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

1.7.1 Finance leases – lesseeFinance leases are recognised as assets and liabilities in the balance sheet at amounts equal to the fair value of the leased

property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in

the balance sheet as a finance lease obligation.


The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge

is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of

the liability.

1.7.2 Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between

the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset. This liability

is not discounted.

Any contingent rents are expensed in the period they are incurred.

1.8 Inventories

Inventories are measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion

and the estimated costs necessary to make the sale.

The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the

inventories to their present location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for

specific projects is assigned using specific identification of the individual costs.

The cost of inventories is assigned using the weighted average cost formula. The same cost formula is used for all inventories

having a similar nature and use to the entity.

When inventories are sold, the carrying amount of those inventories are recognised as an expense in the period in which the

related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories

are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of

inventories, arising from an increase in net realisable value, are recognised as a reduction in the amount of inventories

recognised as an expense in the period in which the reversal occurs.

1.9 Construction contracts and receivables

Where the outcome of a construction contract can be estimated reliably, contract revenue and costs are recognised

by reference to the stage of completion of the contract activity at the balance sheet date, as measured by completion of

a physical proportion of the contract work.

Variations in contract work, claims and incentive payments are included to the extent that they have been agreed with

the customer.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent that

contract costs incurred are recoverable. Contract costs are recognised as an expense in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense

immediately.

1.10 Non-current assets held for sale and disposal groups

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale

transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and




the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the

sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets held for sale or disposal group are measured at the lower of its carrying amount and fair value less costs

to sell.

A non-current asset is not depreciated or amortised while it is classified as held for sale, or while it is part of a disposal group

classified as held for sale.

Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale are recognised in profit

or loss.

1.11 Impairment of assets

The group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such

indication exists, the company estimates the recoverable amount of the asset.

Irrespective of whether there is any indication of impairment, the company also:

• tests intangible assets with an indefinite useful life or intangible assets not yet available for use for impairment annually by

comparing its carrying amount with its recoverable amount. This impairment test is performed during the annual period

and at the same time every period;

If there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not

possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash generating unit to

which the asset belongs is determined.

The recoverable amount of an asset or a cash generating unit is the higher of its fair value less costs to sell and its value

in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its

recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in

profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

An impairment loss is recognised for cash generating units if the recoverable amount of the unit is less than the carrying amount

of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the following order:

• first, to reduce the carrying amount of any goodwill allocated to the cash generating unit; and

• then, to the other assets of the unit, pro rata on the basis of the carrying amount of each asset in the unit.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods

for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable

amounts of those assets are estimated.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill

is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation

increase.

1.12 Share capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of

its liabilities.

If the company reacquires its own equity instruments, those instruments are deducted from equity. No gain or loss is

recognised in profit or loss on the purchase, sale, issue or cancellation of the company’s own equity instruments.

Consideration paid or received shall be recognised directly in equity.


1.13 Employee benefits

1.13.1 Share-based paymentsGoods or services received or acquired in a share-based payment transaction are recognised when the goods or the services

are received. A corresponding increase in equity is recognised if the goods or services were received in an equity settled share-

based payment transaction or a liability if the goods or services were acquired in a cash settled share-based payment

transaction.

When the goods or services received or acquired in a share-based payment transaction do not qualify for recognition as

assets, they are recognised as expenses.

For equity-settled share-based payment transactions, the goods or services received are measured, and the corresponding

increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably.

If the fair value of the goods or services received cannot be estimated reliably, their value and the corresponding increase in

equity, indirectly, are measured by reference to the fair value of the equity instruments granted.

For cash-settled share-based payment transactions, the goods or services acquired and the liability incurred are measured

at the fair value of the liability. Until the liability is settled, the fair value of the liability is remeasured at each reporting date and

at the date of settlement, with any changes in fair value recognised in profit or loss for the period.

If the share-based payments granted do not vest until the counterparty completes a specified period of service, the company

accounts for those services as they are rendered by the counterparty during the vesting period (or on a straight-line basis over

the vesting period).

If the share-based payments vest immediately the services received are recognised in full.

For share-based payment transactions in which the terms of the arrangement provide either the entity or the counterparty with

the choice of whether the entity settles the transaction in cash (or other assets) or by issuing equity instruments, the

components of that transaction are recorded as a cash-settled share-based payment transaction if, and to the extent that,

a liability to settle in cash or other assets has been incurred, or as an equity-settled share-based payment transaction if, and

to the extent that, no such liability has been incurred.

1.13.2 Short-term employee benefitsThe cost of short-term employee benefits (those payable within 12 months after the service is rendered, such as paid vacation

leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the

service is rendered and are not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase

their entitlement or, in the case of non-accumulating absences, when the absence occurs.

The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive

obligation to make such payments as a result of past performance.

1.13.3 Defined contribution plansPayments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry managed (or state plans) retirement benefit schemes are dealt with as defined contribution

plans where the company’s obligation under the schemes is equivalent to those arising in a defined contribution retirement

benefit plan.

1.14 Provisions and contingencies

Provisions are recognised when:

• the company has a present obligation as a result of a past event;

• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

• a reliable estimate can be made of the obligation.




The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the

reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity

settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement

shall not exceed the amount of the provision.

Provisions are not recognised for future operating losses.

If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as

a provision.

A constructive obligation to restructure arises only when an entity:

• has a detailed formal plan for the restructuring, identifying at least:

– the business or part of a business concerned;

– the principal locations affected;

– the location, function, and approximate number of employees who will be compensated for terminating their services;

– the expenditures that will be undertaken; and

– when the plan will be implemented; and

• has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or

announcing its main features to those affected by it.

After their initial recognition contingent liabilities recognised in business combinations that are recognised separately are

subsequently measured at the higher of:

• the amount that would be recognised as a provision; and

• the amount initially recognised less cumulative amortisation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 29.

1.15 Revenue

Revenue from the sale of goods is recognised when all the following conditions have been satisfied:

• the company has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the company retains neither continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the company; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the

transaction is recognised by reference to the stage of completion of the transaction at the balance sheet date. The outcome

of a transaction can be estimated reliably when all the following conditions are satisfied:

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the company;

• the stage of completion of the transaction at the balance sheet date can be measured reliably; and

• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be

recognised only to the extent of the expenses recognised that are recoverable.

Service revenue is recognised by reference to the stage of completion of the transaction at balance sheet date. Stage of

completion is determined by services performed to date as a percentage of total services to be performed.


Contract revenue comprises:

• the initial amount of revenue agreed in the contract; and

• variations in contract work, claims and incentive payments:

– to the extent that it is probable that they will result in revenue; and

– they are capable of being reliably measured.

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable

for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value-

added tax.

Interest is recognised, in profit or loss, using the effective interest rate method.

Service fees included in the price of the product are recognised as revenue over the period during which the service

is performed.

1.16 Turnover

Turnover comprises sales to customers and service rendered to customers. Turnover is stated at the invoice amount and is

exclusive of value-added taxation.

1.17 Cost of sales

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the

related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories

are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of

inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories

recognised as an expense in the period in which the reversal occurs.

The related cost of providing services recognised as revenue in the current period is included in cost of sales.

Contract costs comprise:

• costs that relate directly to the specific contract;

• costs that are attributable to contract activity in general and can be allocated to the contract; and

• such other costs as are specifically chargeable to the customer under the terms of the contract.

1.18 Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

1.19 Translation of foreign currencies

A foreign currency transaction is recorded, on initial recognition in Rands, by applying to the foreign currency amount the spot

exchange rate between the functional currency and the foreign currency at the date of the transaction.

At each balance sheet date:

• foreign currency monetary items are translated using the closing rate;

• non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange

rate at the date of the transaction; and

• non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the

date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those

at which they were translated on initial recognition during the period or in previous annual financial statements are recognised

in profit or loss in the period in which they arise.




When a gain or loss on a non-monetary item is recognised directly in equity, any exchange component of that gain or loss is

recognised directly in equity. When a gain or loss on a non-monetary item is recognised in profit or loss, any exchange

component of that gain or loss is recognised in profit or loss.

Cash flows arising from transactions in a foreign currency are recorded in Rands by applying to the foreign currency amount

the exchange rate between the Rand and the foreign currency at the date of the cash flow.

1.20 IFRS’s and IFRIC Interpretations not yet effective

The group has not applied the following IFRS’s and IFRIC Interpretations that have been issued but are not yet effective:

1.20.1 IAS 1 Amendment – Capital Disclosures

This amendment is required for years commencing on or after 1 January 2007. This amendment required the group to make

new disclosures to enable users of the financial statements to evaluate the group’s objectives, policies and processes for

managing capital, and will not have any quantitative effect on the group.

1.20.2 IFRS 7 Financial Instruments: Disclosures

This standard is required for years commencing on or after 1 January 2007. This Standard primarily deals with disclosure and

will not have any quantitative effect on the group.

1.20.3 IFRS 8 Operating Segments

This standard is required for years commencing on or after 1 January 2009. This standard primarily deals with disclosure of

operating segments and will not have any quantitative effect on the group.

1.20.4 IFRIC 8 Scope of IFRS 2

This interpretation is required for years commencing on or after 1 May 2006. The interpretation applies to BEE and similar

schemes involving ownership where equity instruments are issued at less than market value and currently has no effect on

the group.

1.20.5 IFRIC 9 Reassessment of embedded derivatives

This interpretation is required for years commencing on or after 1 June 2007 but is not expected to be relevant to the current

activities of the group.

1.20.6 IFRIC 10 Interim reporting and impairment

This interpretation is required for years commencing on or after 1 November 2006 and deals with subsequent treatment of

impairments at interim reporting dates. The impact of the interpretation is currently being assessed and currently has no effect

on the group.

1.20.7 IFRIC 11 Group Treasury and Share Transactions

This interpretation is required for years commencing on or after 1 March 2007 but is not expected to be relevant to the current

activities of the group.

1.20.8 IFRIC 12 Service Concession Arrangements

This interpretation is required for years commencing on or after 1 January 2008 but is not expected to be relevant to the

current activities of the group.

1.20.9 AC 503 Accounting for Black Empowerment (BEE) Transactions

This interpretation is required for years commencing on or after 1 May 2006. This interpretation applies to BEE transactions

and the accounting treatment for the acquired BEE credentials, and currently has no effect on the group.

The group expects the adoption of the pronouncements listed above to have no quantitative impact on the financial

statements in the period of initial application.


N O T E S T O T H E A N N U A L F I N A N C I A L S TAT E M E N T SFor the year ended 28 February


2. ACTOWERS PROSPECTUS 2006 (ISSUED ON 16 NOVEMBER 2006): IFRS AND OTHER DISCLOSURE MATTERS

The JSE, on advice received from the GAAP Monitoring Panel (GMP), indicated certain financial disclosure deficiencies in

Annexure 2, relating to the historical financial information in the Prospectus issued by the Company on 16 November 2006.

It was agreed to disclose not only the comparative figures for 2007, i.e. the figures for 2006, but also to disclose the figures

for 2005. These deficiencies relate to disclosure in terms of IFRS and had no material financial effect on the results or the

financial position of the Company as disclosed in the Prospectus.

The following disclosures in respect of the Prospectus were amended in these financial statements, in order to rectify any

deficiencies in disclosure in terms of IFRS and SA GAAP:

Description or items: Nature of issue: Amendment – 2007 report:

1. Accounting Policies:

1.1 Investment Properties Disclosure Removed

1.2 Financial Instruments Disclosure Note 1.5

1.3 Trade and Other Receivables Disclosure Note 1.5.3

1.4 Deferred Tax Disclosure Note 1.6.2

1.5 Leases Disclosure Note 1.7

1.6 Construction Contracts Disclosure Note 1.9

1.7 Revenue Recognition Disclosure Note 1.15

2. Financial Instruments

2.1 Financial Investments Disclosure Note 5

2.2 Other Financial Liabilities Disclosure Note 10

2.3 Loans Payable Disclosure Note 15

2.4 Details of Investment Income Disclosure Note 23

3. Related Party Transactions

3.1 Related parties Disclosure Note 30

3.2 Loans to Directors and Companies Disclosure Note 30

4. Deferred Tax and Income Tax Disclosure Notes 6 and 25

5. Inventories Disclosure Note 7

6. Leases and related assets Disclosure Notes 3 and 14

7. Other Disclosures

7.1 Disclosable items included within the

Operating Profit Disclosure Notes 21, 22 and 23

7.2 Directors’ remuneration Disclosure Note 31

7.3 Other Income and Investment Revenue Disclosure Note 20 and 23

7.4 Undertaking by Director to buy the

Debtor in the instance of default Disclosure Note 9

7.5 Headline Earnings Disclosure Note 26

7.6 Finance Lease payments in Cash Flow Statement Disclosure Cash Flow Statement

8. Segment Reporting Disclosure Directors’ Report (note 7)

2007 2006

Accu- Accu-

mulated mulated

depre- Carrying depre- Carrying

Figures in Rand Cost ciation value Cost ciation value

3. PROPERTY, PLANT

AND EQUIPMENT

Land and buildings – – – 286 623 – 286 623

Plant and machinery 10 534 410 (1 273 923) 9 260 487 4 735 595 (710 339) 4 025 256

Furniture and fixtures 364 691 (81 802) 282 889 78 851 (61 943) 16 908

Motor vehicles 2 595 893 (1 323 290) 1 272 603 2 525 560 (996 773) 1 528 787

Office equipment 80 153 (56 593) 23 560 80 153 (46 683) 33 470

IT equipment 262 915 (244 387) 18 528 253 200 (194 061) 59 139

Computer software 99 243 (83 465) 15 778 99 243 (47 740) 51 503

Instruments and tools 12 200 (4 067) 8 133 12 200 (2 034) 10 166

Total 13 949 505 (3 067 527) 10 881 978 8 071 425 (2 059 573) 6 011 852

2005

Accu-

mulated

depre- Carrying

Cost ciation value

Land and buildings 286 623 – 286 623

Plant and machinery 3 047 765 (228 582) 2 819 183

Furniture and fixtures 78 851 (49 765) 29 086

Motor vehicles 2 282 355 (676 230) 1 606 125

Office equipment 78 864 (34 852) 44 012

IT equipment 220 805 (129 075) 91 730

Computer software 4 134 – 4 134

Instruments and tools – – –

Total 5 999 397 (1 118 504) 4 880 893


3. PROPERTY, PLANT AND

EQUIPMENT (continued)

Reconciliation of property,

plant and equipment – 2007

Land and buildings 286 623 – (286 623) – –Plant and machinery 4 025 256 5 798 814 – (563 583) 9 260 487Furniture and fixtures 16 908 285 840 – (19 859) 282 889Motor vehicles 1 528 787 187 502 (1) (443 685) 1 272 603Office equipment 33 470 – – (9 910) 23 560IT equipment 59 139 9 716 – (50 327) 18 528Computer software 51 503 – – (35 725) 15 778Instruments and tools 10 166 – – (2 033) 8 133

6 011 852 6 281 872 (286 624) (1 125 122) 10 881 978



Land 286 623 – – – 286 623

Plant and machinery 2 819 183 1 687 830 – (481 757) 4 025 256

Furniture and fixtures 29 086 – – (12 178) 16 908

Motor vehicles 1 606 125 348 519 (84 251) (341 606) 1 528 787

Office equipment 44 012 – – (10 542) 33 470

IT equipment 91 730 32 396 – (64 987) 59 139

Computer software 4 134 71 449 – (24 080) 51 503

Instruments and tools – 12 200 – (2 034) 10 166

4 880 893 2 152 394 (84 251) (937 184) 6 011 852



Land 286 623 – – – 286 623

Plant and machinery – 3 047 765 – (228 582) 2 819 183

Furniture and fixtures 42 230 – – (13 144) 29 086

Motor vehicles 1 648 089 458 308 (113 380) (386 892) 1 606 125

Office equipment 30 210 24 361 – (10 559) 44 012

IT equipment 120 156 24 461 – (52 887) 91 730

Computer software 16 531 – – (12 397) 4 134

2 143 839 3 554 895 (113 380) (704 461) 4 880 893

Opening

Figures in Rand balance Additions Disposals Depreciation Total

N O T E S T O T H E A N N U A L F I N A N C I A L S TAT E M E N T S C O N T I N U E D



3. PROPERTY, PLANT AND

EQUIPMENT (continued)

Reconciliation of assets

under finance leases (included

in property, plant and equipment)

– 2007

Plant and machinery 267 832 – – (23 633) 244 199

Reconciliation of assets under

finance leases (included in property,

plant and equipment) – 2006

Plant and machinery 291 465 – – (23 633) 267 832

Reconciliation of assets under

finance leases (included in property,

plant and equipment) – 2005

Plant and machinery – 315 098 – (23 633) 291 465

2007 2006 2005

Details of properties

Erf 646 of the township Alberton in the Gauteng province under title deed number T7521/2000Terms and conditions

– Purchase price – 185 000 185 000

– Capitalised expenditure – 101 623 101 623

– 286 623 286 623

4. ACTOWERS SHARE INCENTIVE SCHEME

– COMPANY ONLY

Special purpose entities

ACTOWERS Share Incentive Scheme 9 529 126 – –

The loan bears interest at 9% per annum repayable in four years before 28 February 2011.

The interest rate fluctuates from time to time.

Opening

Figures in Rand balance Additions Disposals Depreciation Total


5. OTHER FINANCIAL ASSETS

Available for sale

Stanlib Unit Trust 807 692 755 187 702 712

Opening balance 755 187 702 712 626 809

Revaluation and income distributions 52 505 52 475 75 903

Unlisted investment stated at market value through equity on

28 February 2007.

ABSA deposit 144 340 139 661 128 938

952 032 894 848 1 534 362

Loans and receivables

Lezmin 1367 Closed Corporation – 1 845 431 1 713 279

Unsecured, interest free loan with no fixed terms of repayment.

Aracedo Properties Closed Corporation 720 000 – –

The loan is unsecured, bears interest at 9% per annum

and is repayable before 28 February 2008. The closed corporation

is controlled by CJJ Krüger. (See note 30)

JK Shelters (Pty) Limited – 1 797 543 1 008 326


Better Crates and Pallets Closed Corporation – 405 083 –


Villa D’Afrique – 1 446 594 1 384 350


Other loans and receivables – 3 204 995 3 995 919

Unsecured, interest free loans with no fixed terms of repayment.

Implicit interest adjustment – (373 924) (854 625)

720 000 8 325 722 7 247 249

Total other financial assets 1 672 032 9 220 570 8 781 611

Non-current assets

Available for sale 952 032 894 848 1 534 362

Loans and receivables – 8 325 722 7 247 249

952 032 9 220 570 8 781 611

Current assets

Loans and receivables 720 000 – –

1 672 032 9 220 570 8 781 611

Figures in Rand 2007 2006 2005




6. DEFERRED TAX

Deferred tax asset (liability)

Capital allowance (1 426 336) (521 966) (106 355)

Doubtful debt allowances 348 000 353 842 –

Implicit interest adjustments 154 877 441 016 67 669

Contract activities and related 496 423 – –

Other – – 134 800

(427 037) 272 892 96 114

Reconciliation of deferred tax asset (liability)

At the beginning of the year 272 892 96 114 189 941

Finance leases (77 949) – (92 708)

Income invoiced in advance 496 423 – –

Accumulated capital allowances (769 795) (576 235) (49 428)

Provisions (5 842) 353 842 (202 144)

Implicit interest adjustments (342 766) 399 171 250 453

(427 037) 272 892 96 114



7. INVENTORIES

Raw materials 2 281 790 280 000 310 363

Work in progress – factory 2 138 682 620 919 –

Finished goods 8 678 735 3 393 646 3 566 507

Work in progress – contracts 28 253 762 – 1 786 500

41 352 969 4 294 565 5 663 370

This is the first year that the company has significant

work in progress for contracts.

During January 2006 and February 2006, two big projects in

Chad and the Democratic Republic of Congo were completed

and signed-off. These projects were invoiced in the 2006

financial year. Further roll-outs on new contracts in Chad and

the DRC commenced during the 2007 financial year. Therefore the

company did not have any work in progress on contracts at the end

of the 2006 financial year. At the end of the 2007 financial year,

the company had substantial uncompleted contracts and

therefore discloses work in progress on contracts separately.

Disclosure of contracts still in progress at year-end

Total value of contracts entered into 45 457 871 – 5 762 903

Contract revenue recognised as revenue in this period

Invoiced 3 790 875 – 547 476

Retentions not invoiced yet 12 028 881 – –

Funds in advance (5 706 013) – –

Contract costs

Actual 26 032 241 – 2 333 976

Accrual for expenses 8 352 612 – –

Invoiced in advance (5 706 013) – –

Advances received

Work in progress 16 224 880 – 1 786 500

Gross amount due from customers for contract work 28 253 761 – –

Accrual for expenses (8 352 612) – –

8. TAX

Amount owing/(prepaid) at 1 March 11 942 289 11 813 245 3,683,561

Amount paid in respect of current and prior years (26 601 113) (8 716 354) 420 624

Changes per income statement 12 950 337 8 845 398 7 709 060

Amount owing/(prepaid) at 28 February (1 708 487) 11 942 289 11 813 245





9. TRADE AND OTHER RECEIVABLES

Trade receivables 50 960 303 69 002 316 39 636 140

Angola 1 043 010 – –

Burkina Fasso 4 083 010 4 539 955 4 582 197

Chad* 259 325 8 616 672 2 011 621

Congo (Brazzaville)* (2 749 547) 1 095 042 1 415 972

DRC* 26 676 496 33 289 140 16 918 910

Dubai 91 478 – –

Gabon* 67 406 8 399 319 6 459 960

Guinea (8 427) 65 –

Madagascar – 1 821 492 –

Niger* 515 751 438 460 2 742 547

Nigeria 10 533 490 1 609 831 –

Sierra Leone* 341 374 734 147 313 036

South Africa 2 211 742 41 331 119 728

Sudan 5 059 891 708 889 –

Tanzania – 3 429 472 941 382

Uganda* 628 235 533 495 501 232

Zambia* 2 207 007 3 745 005 3 629 555

Implicit interest adjustments (887 118) (1 733 957) (381 138)

Deposits 963 228 292 548 300 367

VAT 1 747 340 – 12 917 792

Staff loans 10 772 10 700 240 391

Provision for bad debts (1 600 000) (1 631 517) –

51 194 525 65 940 090 52 713 552

*Celtel a customer of ACTOWERS is operating in all these countries. Celtel is the only customer in Congo (Brazzaville). Even though this balance is in credit, Celtel

owes a balance of R24,194,107 at year end.

Trade and other receivables pledged as security

Trade and other receivables were pledged as security for overdraft facilities of the company. At year-end the overdraft

amounted to R Nil (2006: R1 208 209) (2005: R2 765 826).

Celtel Congo (RDC) S.p.r.l

In the prospectus of ACTOWERS, issued on 16 November 2006, it was disclosed that Celtel Congo (RDC) S.p.r.l, a debtor

of the company, was indebted to the company in the sum of R33 972 755 (before adjustment from historical cost to NPV). In

order to provide comfort to potential, Chris Krüger gave an irrevocable and unconditional undertaking to ACTOWERS to the

effect that, should payment of the aforesaid amount of R33 972 755 not be received by ACTOWERS from Celtel before

31 July 2007, he will, in his personal capacity, purchase the claim of ACTOWERS against Celtel for a consideration equal to

the full face value of the claim then outstanding and will effect payment to ACTOWERS of such consideration.

Of the outstanding amount of R33 972 755 (before adjustment from historical cost to NPV) only R7 011 955 (before

adjustment from historical cost to NPV) is still outstanding as at 28 February 2007. The company is still satisfied and confident

that the outstanding amount of the secured claim will be paid by Celtel. The irrevocable and unconditional undertaking by

Chris Krüger is, however, still in place.




10. LOAN RECEIVABLE/(PAYABLE)

The loan to R Bester is unsecured, interest-free with no

fixed terms of repayment – 190 183 (4 497)

Implicit interest adjustment – (8 400) 449

– 181 783 (4 048)

11. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of:

Cash on hand 5 937 5 986 –

Bank balances 60 873 473 1 071 967 237 419

ABSA 19 045 931 1 071 967 237 419

Ecobank – Chad 874 592 – –

Investec 2 – –

Nedbank 40 744 134 – –

FNB 208 814 – –

Bank overdraft – (1 208 209) (2 765 826)

ABSA – (1 208 209) (2 765 826)

60 879 410 (130 256) (2 528 407)

Current assets 60 879 410 1 071 967 237 419

Current liabilities – (1 208 209) (2 765 826)

60 879 410 (136 242) (2 528 407)

Guarantees were given by Nedbank in the amount of R2,335,688 in favour of Huawei Technologies Limited.




12. SHARE CAPITAL

Authorised

500 000 000 ordinary shares of 0,01 cent each 50 000 – –

1 000 ordinary shares of R1 each – 1 000 1 000

50 000 1 000 1 000

The unissued ordinary shares are under the control of the directors

in terms of a resolution of members passed at the last annual

general meeting. This authority remains in force until the next

annual general meeting.

Issued

230 million ordinary shares of 0,01 cent each 23 000 – –

100 ordinary shares of R1 each – 100 100

Share premium 49 995 000 – –

Share issue costs written off against share premium (2 766 193) – –

47 251 807 100 100

Employee share options 630 268 – –

Group total 47 882 075 100 100

Issued – Company

241,65 million ordinary shares of 0,01 cent each 24 165 – –

100 ordinary shares of R1 each – 100 100

Share premium 59 313 835 – –

Share issue costs written off against share premium (2 766 193) – –

56 571 807 100 100

Employee share options 630 268 – –

Company total 57 202 075 100 100



13. SHARE-BASED PAYMENTS

Employees’ share options

Outstanding at the beginning of the period 11 650 000 80c 9 320 000

Weighted average share price at exercise date of options was R1. The weighted average exercise price per option was R0,80.

Outstanding options Exercise Exercise Exercise

date date date

within from two after

one year to five years five years Total

Options with exercise price R0,80 1 864 000 7 456 000 – 9 320 000

Information on options granted during the year

Weighted fair value of options granted during the year was 48c per option.

The company could not measure the fair value of the services received. The company used the fair value of the equity

instruments granted to disclose the share based payment transaction.

Fair value was determined by the Trinomial model. The following inputs were used:

• Weighted average share price, R1,00.

• Exercise price, R0,80.

• Expected volatility, 54%

• Option life, 4 years.

• Expected dividends, 0%.

• The risk-free interest rate, 9%.

• Employee exit rate, 2,5% per annum.

On 29 November 2006, 11 650 000 ordinary shares were issued at a price of R0,80 a share to the ACTOWERS Share

Incentive Scheme.

Total expenses of R630,268 (2006: R Nil) (2005: Nil) related to equity-settled share-based payments transactions were

recognised in 2007.

Terms of the Scheme

The participant will be entitled to the release of his Scheme Shares from the operation of this Scheme after payments for

purchase of the shares have been received and the expiry of a period of:

• one year after acceptance date, in respect of 20% of the scheme shares, or part thereof;

• two years after the acceptance date, in respect of a further 25% of the scheme shares, or part thereof;

• three years after the acceptance date, in respect of a further 25% of the scheme shares, or part thereof;

• four years after the acceptance date, in respect of a further 30% of the scheme shares, or the balance of the scheme

shares.

Weighted

exercise

Figures in Rand Number price Total value




14. LONG-TERM LIABILITIES

14.1 Instalment sale agreements

Minimum payments due on instalment sale agreements

– within one year 3 251 303 1 651 109 1 191 308

– in second to fifth year inclusive 7 735 282 3 635 818 2 982 394

10 986 585 5 286 927 4 173 702

Less: Future finance charges (1 541 778) (854 492) (486 571)

Present value of minimum payments 9 444 807 4 432 435 3 687 131

Present value of minimum payments due

– within one year 2 392 813 1 263 985 861 035

– in second to fifth year inclusive 7 051 994 3 168 450 2 826 096

9 444 807 4 432 435 3 687 131

Non-current liabilities 7 051 994 3 168 450 2 826 096

Current liabilities 2 392 813 1 263 985 861 035

9 444 807 4 432 435 3 687 131

The average instalment sale agreement term was five years and the average effective borrowing rate was 13% (2006: 12,5%)

(2005: 12%).



14.2 Finance lease agreements

Minimum payments due on instalment sale agreements

– within one year 37 644 140 144 177 461

– in second to fifth year inclusive – 37 005 125 446

37 644 177 149 302 907

Less: Future finance charges (4 183) (17 555) (30 018)

Present value of minimum payments 33 461 159 594 272 889

Present value of minimum payments due

– within one year 33 461 126 256 159 875

– in second to fifth year inclusive – 33 338 113 014

33 461 159 594 272 889

Non-current liabilities – 33 338 113 014

Current liabilities 33 461 126 256 159 875

33 461 159 594 272 889

The average lease term was five years and the average effective

borrowing rate was 11% (2006: 10%) (2005: 11,5%).

Interest rates are linked to prime at the contract date. All leases have

fixed repayments and no arrangements have been entered into for

contingent rent.

Total long-term liabilities

Non-current liabilities 7 051 994 3 201 788 2 939 110

Current liabilities 2 426 274 1 390 241 1 020 910

9 478 268 4 592 029 3 960 020

The company’s obligations under finance leases are secured by the

lessor’s charge over the leased assets.

These obligations are secured by property, plant and equipment with

a carrying value of R7 983 937 (2006: R4 232 670) (2005: R3 710 917)

for assets and instalment sale agreements.

Repayable in monthly instalments of R286 308 (2006: R149 463)

(2005: R132 129) for instalment sale agreements and R28,833

(2006: R29,540) (2005: R31,250) for leases.

15. OTHER LONG-TERM LIABILITIES

Tricom Structures – 517 755 13 210 451

The loan bears interest at 11% per annum, is repayable in monthly

instalments of R1 110 000 and is secured by CJJ Krüger.

Villa D’Assante – 617 149 –

Unsecured, interest-free loan with no fixed terms of repayment – 1 134 904 13 210 451

Implicit interest adjustment – (27 275) –

– 1 107 629 13 210 451





16. LOANS FROM DIRECTORS

CJJ Krüger (192 817) (3 865 551) –

Implicit interest adjustment – 170 839 –

(192 817) (3 694 712) –

The loan is unsecured, bears interest at 9% (2006: 0%) and is

repayable before 28 February 2008.

The interest rate fluctuates from time to time.

17. TRADE AND OTHER PAYABLES

17.1 Other financial liabilities

Sundry creditors – – 6 692

17.2 Trade payables 17 529 909 17 507 191 14 408 356

Trade payables are paid within 30 to 60 days from the statement date.

Amounts received in advance 5 706 017 – –

Implicit interest adjustment (99 390) (213 392) (155 575)

Accruals 1 408 727 657 823 614 231

Contract accruals 7 149 724 – –

31 694 987 17 951 622 14 867 012

18. PROVISIONS

Reconciliation of provisions – 2007

No provision for warranties is made as the company has no exposure to any warranties. The company only gives a warranty

on towers and its installation if the company performs the continuous maintenance on the towers. Currently the company does

not perform any continuous maintenance on any towers and therefore no provision for warranties is necessary.

Reversed

Opening during

balance the year Total


Warranty provision (407 588) 407 588 –

Opening Closing

balance Additions balance


Warranty provision – (407 588) (407 588)



19. IMPLICIT INTEREST ADJUSTMENTS

19.1 Sale of goods

Actual sale of goods 194 347 319 133 768 767 159 337 394

Contract revenue not invoiced yet 6 322 869 – –

Implicit interest adjustment (3 459 221) (4 340 088) (2 622 589)

Sale of goods after interest adjustment 197 250 967 129 428 679 156 714 805

19.2 Cost of sales

Cost of goods sold 137 388 553 83 031 185 117 883 745

Implicit finance cost adjustment (1 692 600) (1 552 431) (1 542 186)

Cost of sales after interest adjustment 135 695 953 81 478 754 116 341 559

20. OTHER INCOME

Sundry income 58 200 169 751 244 744

Profit/(loss) on foreign exchange – USD 10 159 928 3 049 367 –

Profit/(loss) on foreign exchange – Euro 611 026 – –

Bad debt recoveries – – 8 092 987

Rental income 395 406 722 567 223 273

Profit on disposal of motor vehicles 40 000 – 21 620

Profit and loss on disposal of property 344 956 – –

Steel rebates – 782 767 3 231 592

Discount received – 656 071 266 791

11 609 516 5 380 523 12 081 007

21. OPERATING EXPENSES

Administration 3 902 267 7 419 359 4 026 623

Accommodation and facilities 1 187 838 1 013 831 593 534

Depreciation 1 125 123 937 183 704 461

Employee costs and related 14 465 306 10 600 090 8 105 453

Loss on foreign exchange – Euro – – 5 117 415

Production and contract overheads 9 808 266 4 967 744 9 494 137

30 488 800 24 938 207 28 041 623





22. OPERATING PROFIT

Operating profit for the year is stated after accounting for the following:

Operating lease charges

Premises

• Contractual amounts 840 000 24 352 –

Hire of equipment

• Contractual amounts 404 687 256 269 295 737

1 244 687 280 621 295 737

Profit/(loss) on sale of property, plant and equipment 384 956 (84 251) 21 620

Audit fees – for audit 109 303 89 175 55 655

Depreciation on property, plant and equipment 1 125 123 937 183 704 461

Employee costs 13 097 076 9 974 903 7 408 124

Profit on exchange differences 10 770 953 3 049 367 5 117 415

Labour hire 1 299 240 563 406 –

Consulting and professional expenses 329 167 239 933 498 852

23. INVESTMENT REVENUE

Interest revenue

Bank and financial assets 1 022 548 1 148 557 580 848

Implicit interest adjustment 4 306 060 2 593 896 1 757 986

Total interest received 5 328 608 3 742 453 2 338 834

Dividends received – 1 070 2 851

5 328 608 3 743 523 2 341 685

24. FINANCE COSTS

Interest paid 1 072 265 982 374 1 295 865

Interest on finance lease 10 618 24 868 72 232

Implicit interest adjustment 1 806 602 1 296 500 1 386 162

2 889 485 2 303 742 2 754 259

25. TAXATION

Major components of the tax expense (income)

CurrentLocal income tax – current period 12 950 337 8 845 398 7 709 060

DeferredChange in tax rate from 30% to 29% – – (3 203)

Temporary differences – current period 699 929 (176 059) (285 928)

13 650 266 8 669 339 7 419 929

Reconciliation of the tax expense

Reconciliation between applicable tax rate

and average effective tax rate

Applicable tax rate (%) 29,0 29,0 30,0

Permanent differences (%) 1,3 0,1 0,1

30,3 29,1 30,1




26. EARNINGS PER SHARE AND RELATED – GROUP ONLY

26.1 Earnings per share

The calculation of earnings per share is based on profits of

R31 464 586 (2006: R21 162 681) and 193 424 658

(2006: 180 000 000) weighted average ordinary shares

in issue during the year.

Earnings from continuing operations attributable

to the ordinary equity holders

Profit for the year 31 464 586 21 162 681 16 580 128

Reconciliation of the weighted average number

of ordinary shares

Balance at the beginning of the year 100 100 100

Share split – 10 October 2006 180 000 000 180 000 000 180 000 000

Share issue – 22 November 2006 13 424 658 – –

193 424 658 180 000 000 180 000 000

Earnings per ordinary share (cents) 16,3 11,8 9,2

Fully diluted earnings per ordinary share (cents) 16,0 11,8 9,2

26.2 Headline earnings per share

The calculation of earnings per share is based on profits of

R31 079 630 (2006: R21 246 935) and 193 424 658

(2006: 180 000 000) weighted average ordinary shares

in issue during the year.

Reconciliation between earnings and headline earnings

Profit for the year 31 464 586 21 162 684 16 580 128

Plus/(minus) profit and loss on disposal of non-current assets (384 956) – (21 620)

31 079 630 21 162 684 16 558 508

26.3 Diluted earnings per share

The calculation of fully diluted earnings per share is based on:

A weighted average number of ordinary shares outstanding during

the period, adjusted for the effect of all possible dilution of

196 329 178 (2006: 180 000 000).

Reconciliation of the weighted average number of

ordinary shares for diluted earnings per share

Balance at the beginning of the year 100 100 100

Share split – 10 October 2006 180 000 000 180 000 000 180 000 000

Share issue – 22 November 2006 13 424 658 – –

Share issue to share incentive trust – 29 November 2006 2 904 521 – –

Weighted average number of ordinary shares for

diluted earnings per share 196 329 179 180 000 000 180 000 000

Headline earnings per share (cents) 16,1 11,8 9,2

Fully diluted headline earnings per ordinary share (cents) 15,8 11,8 9,2




27. CASH GENERATED FROM OPERATIONS


Adjustments for:

Depreciation and amortisation 1 125 123 937 184 704 461

(Profit)/loss on sale of assets (384 956) 84 251 (21 620)

Dividends received – (1 070) (2 851)

Profit on foreign exchange (10 770 953) (3 049 367) 5 117 415

Interest received (5 537 734) (3 742 453) (2 338 834)

Finance costs 2 878 867 2 278 874 2 682 027

Movements in provisions – (407 588) 407 588

Unrealised foreign exchange difference 7 686 457 1 524 433 (5 117 415)

Non-cash movement share base payments 630 268 – –

Finance lease payments interest 10 618 24 868 72 232

Other – (4 253) 20 513

Changes in working capital:

Inventories (37 058 404) 1 368 806 (5 663 371)

Trade and other receivables 17 830 062 (11 701 604) (14 364 879)

Trade and other payables 13 743 361 3 084 613 (16 177 295)

35 476 687 20 228 714 (10 681 972)

28. TAX (PAID) REFUNDED

Balance at the beginning of the period (11 942 289) (11 813 245) (3 683 561)

Current tax for the period recognised in income statement (12 950 337) (8 845 398) (7 709 060)

Balance at the end of the period (1 708 487) 11 942 289 11 813 245

26 601 113 (8 716 354) 420 624

29. COMMITMENTS

Authorised capital expenditure

Already contracted for but not provided for

– Machinery 7 041 600 – –

– Galvanizing plant and bath 2 937 900 – –

Authorised but not contracted for

– Galvanizing plant and bath 6 000 000 – –

This committed expenditure relates to plant and equipment and will be financed by existing cash resources.

The group indicated to open a distribution warehouse in Ghana to extend its operations. No capital commitments have been

entered into at year-end.

JK Shelters (Pty) Limited

ACTOWERS is in negotiations to acquire JK Shelters (Pty) Limited. ACTOWERS will with effect from 1 March 2007 acquire

JK Shelters (Pty) Limited for an indicative purchase consideration of R40 million. The purchases consideration is based on

JK Shelters (Pty) Limited achieving an after tax profit of R8 million for the year ending 28 February 2007. The purchase

consideration is payable 30% in cash with the balance being settled by the issue of ACTOWERS share at 135 cents per share.



30. RELATED PARTIESRelationships NameShareholders and directors in common JK Shelters (Pty) LimitedMr CJJ Krüger’s wife is a member of: Africa Cellular Towers (Alberton) Closed CorporationShareholders and directors in common Africa Cellular Shipping (Pty) LimitedShareholders and directors in common GSM Tronix (Pty) LimitedShareholders and directors in common Africa Cellular Manufacturing (Pty) LimitedDirector and member in common Better Crates and Pallets Closed CorporationShareholders and directors in common Lezmin 1764 (Pty) LimitedDirector and member in common Aracedo Properties Closed CorporationAfrica Cellular Towers Limited is a trustee of the trust Africa Cellular Share Incentive SchemeShareholders and directors in common Africa Towers Technology S.p.r.l.Directors in common De Villiers Myburgh Inc.Mr CJJ Krüger’s daughter is a member of Assertive Solutions Closed CorporationMrs R Bester is the daughter of Mr CJJ Krüger


Related party balancesTransactions with related parties are conducted on an arm’s length basis under normal business principles.

Loan accounts – owing (to)/by related partiesJK Shelters (Pty) Limited 22 863 1 797 543 1 008 326Lezmin 1764 (Pty) Limited 48 847 1 845 431 542 131Aracedo Properties Closed Corporation 720 000 – –R Bester – 181 783 (4 060)

JK Shelters (Pty) Limited and Lezmin 1764 (Pty) Limited is included in trade receivables while Aracedo Properties CC and R Bester is included in loans receivables.

Amounts included in trade receivable/(trade payable) regarding related partiesJK Shelters (Pty) Limited (937 933) (1 156 014) –GSM Tronix (Pty) Limited (260 825) 29 174 –Better Crates and Pallets Closed Corporation 20 540 (340 879) 73 298

For the year ended 28 February 2007, the group has not made any provision for doubtful debts related to amounts owed by related parties (2006: nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

Related party transactionsPurchases from/(sales to) related partiesJK Shelters (Pty) Limited 2 129 246 1 156 014 2 317 039GSM Tronix (Pty) Limited 5 077 804 29 174 –Better Crates and Pallets Closed Corporation 248 773 320 284 603 162

Rent paid to/(received from) related partiesAfrica Cellular Towers (Alberton) Closed Corporation 395 406 722 567 –

Labour hireAssertive Solutions Closed Corporation 1 557 559 561 830 –

Sale of property at market valueAracedo Properties Closed Corporation 720 000 – –

Professional servicesDe Villiers Myburgh Inc. 265 677 – –




Travel Figures in Rand Salary allowance Bonus Other bonus Total

31. DIRECTORS’ EMOLUMENTS2007CJJ Krüger 1 120 000 – 120 000 96 000 1 336 000DM van Staden 335 800 102 000 45 100 31 500 514 400J de Villiers 233 050 – – – 233 050

1 688 850 102 000 165 100 127 500 2 083 450

2006CJJ Krüger 780 000 780 000

2005CJJ Krüger 680 000 680 000

Non-executiveNo emoluments were paid to any of the non-executive directors for the year.

Key management comprises of directors only.

32. RISK MANAGEMENTCredit riskCredit risk consists mainly of cash deposits, cash equivalents and trade debtors. The company only deposits cash with majorbanks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables comprise a widespread customer base. Management evaluated credit risk relating to customers on anongoing basis. Credit guarantee insurance is purchased when deemed appropriate. No credit guarantee insurance waspurchased during the year under review.

Foreign exchange riskForeign currency exposure at balance sheet dateThe company does not hedge foreign exchange fluctuations. The following items are uncovered:


Current assetsTrade debtors, USD7 777 325 (2006: USD10 488 804) (2005: USD6 205 744) 56 307 840 64 558 591 36 816 884Trade debtors, Euro 461 557 (2006: Euro 601 584) (2005: Euro 343 454) 4 407 873 4 402 395 2 699 546Trade creditors, USD584 063,40 (2006: USD688 226,16)(2005: USD947 628) 4 228 619 4 236 032 5 581 527Trade creditors, (2005: Euro 473) – – 3 721Cash and cash equivalents, USD1 792 315,81 (2006: USD173 188,74)(2005: USD22 572) 12 976 366 1 065 976 132 951Cash and cash equivalents, Euro 22 689,54 (2006: Euro 0) (2005: Euro 1 001) 216 685 – 7 866

Exchange rates used for conversion of foreign items were:US Dollars 7,24 6,15 5,89Euro 9,55 7,32 7,86

Interest rate and liquidity riskFluctuations in interest rates impact on the value of short-term investment and financing activities, give rise to interest rate risk.

In the ordinary course of business, the group receives cash proceeds from its operations and is required to fund working capitaland capital expenditure requirements. The cash is safeguarded to the maximum extent possible by investing only with topfinancial institutions.

Uncommitted borrowing facilities are maintained with several banking counterparties to meet the group’s normal andcontingency funding requirements.


C O M PA N Y B A L A N C E S H E E TAs at 28 February

ASSETS

Non-current assets

Property, plant and equipment 3 10 881 978 6 011 852 4 880 893

Africa Cellular Towers Share Incentive Trust 4 9 529 126 – –

Other financial assets 5 952 032 9 220 570 8 781 612

Deferred tax 6 – 272 892 96 114

21 218 796 12 489 722 13 758 619

Current assets

Inventories 7 41 352 969 4 294 565 5 663 371

Other financial assets 5 720 000 – –

Current tax receivable 8 1 708 487 – –

Trade and other receivables 9 51 194 529 65 940 091 52 713 552

Loan receivable 10 – 181 783 –

Cash and cash equivalents 11 60 879 410 1 071 967 237 419

155 999 731 73 914 124 58 614 342

Total assets 177 218 527 86 403 846 72 372 961

EQUITY AND LIABILITIES

Equity

Share capital 12 57 202 075 100 100

Reserves 66 406 13 901 17 435

Retained earnings 78 156 941 46 483 229 25 320 544

135 425 422 46 497 230 25 338 079

Liabilities

Non-current liabilities

Long-term liabilities 14 7 051 994 3 201 788 2 939 110

Deferred tax 6 427 037 – –

Other long-term liabilities 15 – 1 107 629 13 210 451

7 479 031 3 719 543 16 149 561

Current liabilities

Loans from directors 16 192 817 3 694 712 –

Loans payable 10 – – 4 048

Other financial liabilities 17.1 – – 6 692

Current tax payable 8 – 11 942 289 11 813 245

Current portion of long-term liability 14 2 426 274 1 390 241 1 020 910

Trade and other payables 17.2 31 694 987 17 951 622 14 867 012

Provisions 18 – – 407 588

Bank overdraft 11 – 1 208 209 2 765 826

34 314 074 36 187 073 30 885 321

Total liabilities 41 793 105 39 906 616 47 034 882

Total equity and liabilities 177 218 527 86 403 846 72 372 961



C O M PA N Y I N C O M E S TAT E M E N TFor the year ended 28 February



Revenue 19.1 197 250 967 129 428 679 156 714 805

Cost of sales 19.2 (135 695 953) (81 478 754) (116 341 559)

Gross profit 61 555 014 47 949 925 40 373 246

Other income 20 11 609 515 5 380 523 12 081 008

Operating expenses 21 (30 488 800) (24 938 209) (28 041 623)

Operating profit 22 42 675 729 28 392 239 24 412 631

Investment revenue 23 5 328 608 3 743 523 2 341 685

Finance costs 24 (2 889 485) (2 303 742) (2 754 259)


Taxation 25 (13 650 266) (8 669 339) (7 419 929)

Profit for the period 31 464 586 21 162 681 16 580 128

Cash flows from operating activities

Cash receipts from customers 205 704 980 113 310 855 142 314 126

Cash paid to suppliers and employees (170 228 293) (93 082 141) (152 996 098)

Cash generated from operations 27 35 476 687 20 228 714 (10 681 972)

Interest income 23 5 537 734 3 742 453 2 338 834

Dividends received – 1 070 2 851

Finance costs 24 (2 889 485) (2 303 742) (2 754 259)

Tax paid 28 (26 601 113) (8 716 354) 420 624

Net cash from operating activities 10 967 520 12 952 141 (10 673 922)

Cash flows from investing activities

Purchase of property, plant and equipment

Expansion 3 (6 281 872) (2 152 394) (3 554 895)

Sale of property, plant and equipment 671 580 – 135 000

Loans to share incentive trust (9 529 126) – (4 474 077)

Financial assets: Loans collected 7 601 042 (63 198) (151 608)

Loan – movement – 207 333 74 000

Repayment of loan receivable 181 783 – –

Net cash from investing activities (7 356 593) (2 008 259) (7 971 580)

Cash flows from financing activities

Proceeds on share issue 12 56 571 707 – –

Movement in other liability (589 874) (6 694) 6 694

Loan payable (517 755) (12 692 696) 13 210 451

Repayment of shareholders loan (3 501 895) 3 515 664 (162 489)

Long-term liabilities repayment:

Installment sale and finance lease agreements.

Finance lease payments 4 886 239 632 009 2 494 006

Net cash from financing activities 57 404 725 (8 551 717) 15 548 662

Total cash movement for the period 61 015 652 2 392 165 (3 096 840)

Cash at the beginning of the period (136 242) (2 528 407) 568 433

Total cash at end of the period 11 60 879 410 (136 242) (2 528 407)


C O M PA N Y C A S H F L O W S TAT E M E N TFor the year ended 28 February


C O M PA N Y S TAT E M E N T O F C H A N G E S I N E Q U I T YFor the year ended 28 February


Share Total

Share Share incentive share Revaluation Retained Total

Figures in Rand capital premium reserve capital reserve income equity

COMPANY

Balance at 1 March 2004 100 – – 100 – 8 740 417 8 740 517

Changes in equity

Revaluation of financial assets – – – – 17 435 – 17 435



Profit for the year 16 580 128 16 580 128


and expenses for the period – – – – 17 435 16 580 128 16 597 563

Total changes – – – – 17 435 16 580 128 16 597 563

Balance at 1 March 2005 100 – – 100 13 901 25 320 545 25 334 546

Changes in equity

Profit for the year – – – – 21 162 681 21 162 681

Total changes – – – – – 21 162 681 21 162 681

Balance at 1 March 2006 100 100 13 901 46 483 226 46 497 227

Changes in equity

Revaluation of financial asset – – – – 52 505 – 52 505

Net income\(expenses)



Total recognised income and

expenses for the period 52 505 31 673 712 31 726 217

Issue of shares 24 065 56 547 642 – 56 571 707 – – 56 571 707

Employee share options – – 630 268 630 268 – – 630 268

Total changes 24 065 56 547 642 630 268 57 201 975 52 505 31 673 712 88 928 192

Balance at 28 February 2007 24 165 56 547 642 630 268 57 202 075 66 406 78 156 938 135 425 419

Note 12 12 12 12

A N A LY S I S O F S H A R E H O L D E R SFor the year ended 28 February


Number Number

of shareholdings % of shares %

SHAREHOLDER SPREAD

1 – 1 000 shares 98 7,87 63 031 0,03

1 001 – 10 000 shares 749 60,16 3 804 237 1,57

10 001 – 100 000 shares 312 25,06 11 040 202 4,57

100 001 – 1 000 000 shares 59 4,74 22 102 895 9,15

1 000 001 shares and over 27 2,17 204 639 635 84,68

1 245 100,00 241 650 000 100,00

DISTRIBUTION OF SHAREHOLDERS

Banks 13 1,04 6 329 399 2,62

Close corporations 32 2,57 1 298 247 0,54

Endowment funds 4 0,32 4 025 754 1,67

Holding company 1 0,08 383 810 0,16

Individuals 1 033 82,97 139 858 355 57,88

Insurance companies 2 0,16 1 228 004 0,51

Investment companies 1 0,08 2 042 900 0,85

Mutual funds 25 2,01 48 040 067 19,88

Nominees and trusts 70 5,62 7 999 759 3,31

Other corporations 18 1,45 498 397 0,21

Pension funds 3 0,24 3 500 100 1,45

Private companies 40 3,21 14 755 348 6,11

Public companies 2 0,16 39 860 0,02

Share trust 1 0,08 11 650 000 4,82

1 245 100,00 241 650 000 100,00

PUBLIC/NON-PUBLIC SHAREHOLDERS

Non-public shareholders 3 0,24 136 642 500 56,55

Directors and associates of the company holdings 2 0,16 124 992 500 51,72

Share trust 1 0,08 11 650 000 4,82

Public shareholders 1 242 99,76 105 007 500 43,45

1 245 100,00 241 650 000 100,00

BENEFICIAL SHAREHOLDERS HOLDING 3% OR MORE

Krüger, CJJ 124 250 000 51,42

Sanlam Investment Management 17 659 199 7,31

ACTOWERS Share Incentive Scheme 11 650 000 4,82

Oasis Asset Management 9 500 000 3,93

Oryx Investment Management 8 562 586 3,54

J S E S H A R E I N F O R M AT I O NAt 28 February


2007

Closing price (cents) 161

High for the period (cents) 175

Low for the period (cents) 100

Volume of shares traded during the period 30 916 191

Value of shares traded during the period R40 377 643

Note:

The JSE share information is for the period since listing, 29 November 2006 to 28 February 2007.

Financial year-end 28 February

Announcement of audited financial results 22 May 2007

Annual report 27 July 2007

Annual general meeting 30 August 2007

Interim report To be published in November 2007

S H A R E H O L D E R S ’ D I A R Y

N O T I C E O F A N N U A L G E N E R A L M E E T I N G


AFRICA CELLULAR TOWERS LIMITED

(Incorporated in the Republic of South Africa)

(Registration number 2000/027374/06)

JSE share code: ATR ISIN: ZAE000088084

(“the company”)

Notice is hereby given that the annual general meeting of the company’s shareholders will be held in the boardroom, Africa Cellular

Corporate Park, 10 Tennyson Drive, Tulisa Park, Johannesburg on Thursday, 30 August 2007 at 11:00 to conduct the following business:

1. To receive and adopt the annual financial statements of the group and the company for the financial year ended 28 February

2007, including the directors’ report and the report of the auditors thereon.

2. To re-elect the following directors:

2.1 Dr RR Richards

2.2 J de Villiers

who, in terms of the company’s articles of association retire by rotation at the annual general meeting, but, being eligible, offer

themselves for re-election.

An abbreviated curriculum vitae in respect of each director offering themselves for re-election is set out on page 13 of this

annual report.

3. To re-appoint Nexia HBLT Chartered Accountants (East Rand) Inc as independent auditors of the company for the ensuing

period terminating on the conclusion of the next annual general meeting of the company and to authorise the directors to fix

the auditors’ remuneration for the past year.

4. To approve the remuneration of the directors for the financial year ended 28 February 2007 as reflected in note 31 to the

annual financial statements;

5. During the year no non-executive fees were paid to the non-executive directors for services rendered.

As special business to consider and, if deemed fit, to pass with or without modification, the following resolutions:

6. To renew the authority that all the unissued shares in the capital of the company be placed under the control of the directors

at their discretion until the next annual general meeting of the company as a general authority in terms of section 221(2) of

the Companies Act, 61 of 1973, as amended (the Act), subject to the provisions of the Act and the Listings Requirements

of the JSE Limited (JSE).

7. To renew the authority that pursuant to the articles of association of the company and subject to the Act and the Listings

Requirements of the JSE, the directors of the company be and are hereby authorised, by way of a general authority, to allot

and issue ordinary shares for cash on the following basis:

7.1 that the shares must be of a class already in issue;

7.2 the shares may only be issued or sold, as the case may be, to public shareholders as defined in the Listings Requirements of

the JSE, and not to related parties;

7.3 that the shares may not in any one financial year in the aggregate exceed 50% of the company’s issued shares, the number

that may be issued or sold, as the case may be, being determined in accordance with sub-paragraph 5.52(c) of the Listings

Requirements of the JSE;

7.4 that the maximum discount at which such shares may be issued or sold, as the case may be, is 10% of the weighted average

traded price of such shares on the JSE over the 30 business days preceding the date of determination of the issue or selling

price, as the case may be;

7.5 that such authorisation being valid only until the next annual general meeting or for 15 months from the date of this resolution,

whichever is the earlier date;

7.6 that an announcement giving full details; including the impact on net asset value and earnings per share, be published at the

time of any issue representing, on a cumulative basis within a financial year, 5% or more of the number of securities in issue

prior to the issue.


In terms of the Listings Requirements of the JSE, the approval of 75% majority of the votes cast in favour of this resolution by

all shareholders present or represented by proxy (excluding the Designated Advisor and the controlling shareholders together

with their associates) is required to approve this resolution.

Special resolution

8. That the company hereby approves, as a general approval contemplated in the Companies Act, 61 of 1973 (the Act), the

repurchase of shares from time to time, either by the company itself or by its subsidiaries, of the company’s issued shares,

upon such terms and conditions and in such amounts as the directors of the company may from time to time decide, subject

however to the provisions of the Act and the Listings Requirements of the JSE Limited (JSE), it being recorded that in

terms of the Listings Requirements of the JSE, general repurchases of the company’s shares can only be made subject to

the following:

8.1 that the company and its subsidiaries are enabled by their articles of association to repurchase such shares;

8.2 that the repurchase of shares be effected through the order book operated by the JSE trading system and be done without

any prior understanding or arrangement between the company and the counterparty;

8.3 that the company and its subsidiaries are authorised by its members in terms of a special resolution taken at general meetings,

to make such general repurchases, such authorisation being valid only until the next annual general meetings or for 15 months

from the date of this special resolution, whichever is the earlier date;

8.4 that an announcement be made giving such details as may be required in terms of the Listings Requirements of the JSE when

the company has cumulatively repurchased 3% of the initial number (the number of that class of share in issue at the time that

the general authority is granted) of the relevant class of shares and for each 3% in aggregate of the initial number of that class

acquired thereafter;

8.5 at any one time the company may only appoint one agent to effect any repurchase on the company’s behalf;

8.6 the repurchase of shares will not take place during a prohibited period and will not affect compliance with the shareholders’

spread requirements as laid down by the JSE;

8.7 the repurchase of shares shall not, in the aggregate, in any one financial year, exceed 20% of the company’s issued share

capital and a maximum of 10% in aggregate of the company’s issued share capital that may be repurchased in terms of the

Act, by the subsidiaries of the company, at the time this authority is given;

8.8 the repurchase of shares may not be made at a price greater than 10% above the weighted average traded price of the market

value of the shares as determined over the five business days immediately preceding the date on which the transaction

is effected.

The reason for this special resolution is to grant the company and its subsidiaries a general authority to repurchase the company’s

shares by way of open market transactions on the JSE, subject to the Act and the Listings Requirements of the JSE.

The effect of this special resolution would be that the company and its subsidiaries will have been authorised generally to repurchase

the company’s shares on the open market, subject to the Act and the Listings Requirements of the JSE.

At the present time the directors have no specific intention with regard to the utilisation of this authority, which will only be used if the

circumstances are appropriate.

DISCLOSURES REQUIRED IN TERMS OF THE LISTINGS REQUIREMENTS OF THE JSE

In terms of the Listings Requirements of the JSE, the following disclosures are required with reference to the repurchase of the

company’s shares as set out in the special resolution above:

Working capital statement

The directors are of the opinion that, after considering the effect of the maximum repurchase permitted and the maximum general

payments to shareholders, for a period of 12 months after the date of this notice of annual general meeting:

• the company and the group will be able, in the ordinary course of business, to pay its debts;

• the assets of the company and the group will be in excess of the liabilities of the company and the group, recognised and

measured in accordance with the accounting policies used in the latest annual financial statements;

• the share capital and reserves of the company and the group will be adequate for ordinary business purposes; and

• the working capital resources of the company and the group will be adequate for ordinary business purposes.

N O T I C E O F A N N U A L G E N E R A L M E E T I N G C O N T I N U E D


Litigation statement

Other than disclosed or accounted for in this annual report, the directors of the company, whose names are given on page 13 of

this annual report, are not aware of any legal or arbitration proceedings, pending or threatened against the group, which may have

or have had, in the 12 months preceding the date of this notice of annual general meeting, a material effect on the group’s

financial position.

Directors’ responsibility statement

The directors, whose names are given on page 13 of this annual report, collectively and individually, accept full responsibility for the

accuracy of the information pertaining to the above special resolution and certify that to the best of their knowledge and belief there

are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to

ascertain such facts have been made and that the above special resolution contains all information required.

Material changes

Other than the facts and developments reported on in this annual report, there have been no material changes in the affairs, financial

or trading position of the group since the signature date of this annual report and the posting date thereof.

The following further disclosures required in terms of the Listings Requirements of the JSE are set out in accordance with the

reference pages in the annual report of which this notice forms part:

Directors (refer to page 13)

Major shareholders of the company (refer to page 66)

Directors’ interests in the company’s shares (refer to page 66)

Share capital (refer to note 12 on page 51)

VOTING AND ATTENDANCE

Certificated shareholders

Shareholders wishing to attend the annual general meeting have to ensure beforehand with the transfer secretaries of the company

that their shares are in fact registered in their name. Should this not be the case and the shares are registered in another name, or in

the name of a nominee company, it is incumbent on shareholders attending the meeting to make the necessary arrangements with

that party to be able to attend and vote in their capacity.

A shareholder entitled to attend and vote at the annual general meeting is entitled to appoint a proxy or proxies to attend, speak and,

on a poll, vote in his/her stead. A proxy need not to be a shareholder of the company.

For the convenience of registered shareholders of the company, a form of proxy is enclosed herewith, containing detailed instructions

in this regard.

Dematerialised shareholders

Beneficial owners of dematerialised shares who wish to attend the annual general meeting have to request their Central Securities

Depository Participant (CSDP) or broker to provide them with a letter of representation, or they must provide the CSDP or broker with

their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker.

Proxies

The instrument appointing a proxy and the authority (if any) under which it is signed must reach the transfer secretaries of the

company at the address given below, by no later than 11:00 on Tuesday, 28 August 2007. On a poll, ordinary shareholders will have

one vote in respect of each share held.

By order of the board

De Villiers Myburgh Inc.

Company Secretary

27 July 2007

F O R M O F P R O X Y

AFRICA CELLULAR TOWERS LIMITED

(Incorporated in the Republic of South Africa)

(Registration number 2000/027374/06)

JSE share code: ATR ISIN: ZAE000088084

(“ACTOWERS” or “the company”)

FOR USE BY SHAREHOLDERS HOLDING SHARE CERTIFICATES AND SHAREHOLDERS WHO HAVE DEMATERIALISED THEIR

SHARE CERTIFICATES AND HAVE ELECTED “OWN NAME” REGISTRATION THROUGH A CENTRAL SECURITIES DEPOSITORY

PARTICIPANT (“CSDP”) OR BROKER, AT THE ANNUAL GENERAL MEETING OF THE COMPANY TO BE HELD AT 11:00 ON

THURSDAY, 30 AUGUST 2007.

If you are a shareholder entitled to attend and vote at the abovementioned annual general meeting you can appoint a proxy to attend,

vote and speak in your stead. A proxy need not be a shareholder of the company.

If you are a shareholder and have dematerialised your share certificate through a CSDP or broker, and have not selected own name

registration in the sub-register maintained by a CSDP, you must not complete this form of proxy but must instruct your CSDP or

broker to issue you with the necessary authority to attend the annual general meeting, or if you do not wish to attend, you may provide

your CSDP or broker with your voting instructions in terms of the custody agreement entered into with your CSDP or broker.

I/We

(Name in block letters)

of

(Address in block letters)

being a member/members of Africa Cellular Towers Limited and entitled to ____________________________________________________________________________________________________________________________________ vote hereby appoint

1. or failing him/her

2. or failing him/her

the chairman of the meeting

as my/our proxy to act for me/us at the annual general meeting, to be held at Africa Cellular Corporate Park, 10 Tennyson Drive, Tulisa

Park, Johannesburg on Thursday, 30 August 2007 at 11:00 and at any adjournment thereof, as follows:

Number of ACTOWERS shares

In favour Against Abstain

1. Adoption of annual financial statements

2. Re-election of directors

2.1 Dr RR Richards

2.2 J de Villiers

3. Re-appointment of independent auditors

4. Approval of the remuneration of the directors

5. Renewal of the authority to place the unissued share capital

under the control of the directors

6. Renewal of the authority to issue shares for cash

7. Special resolution: Renewal of the authority to repurchase shares

Signed at on 2007

Member

Please read the instructions on the reverse side of this form of proxy.


1. On a poll a shareholder is entitled to one vote for each share held.

2. Forms of proxy must be lodged at, posted to or faxed to Computershare Investor Services 2004 (Pty) Limited, 70 Marshall

Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107, Fax +27 11 688 5238), to reach the company by no later

than 11:00 on Tuesday, 28 August 2007.

3. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholders’ choice in the

space/s provided, with or without deleting the words “the chairman of the annual general meeting”. Any such deletion must

be individually initialled by the shareholder, failing which it will not have been validly effected. The person present at the annual

general meeting whose name appears first on the form of proxy and has not been deleted shall be entitled to act as proxy to

the exclusion of the persons whose names follow.

4. Any alterations or corrections to this form of proxy have to be initialled by the relevant signatory(ies).

5. Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder(s) of the company) to attend,

speak and vote (either on a poll or by show of hands) in place of that shareholder at the annual general meeting.

6. Voting instructions for each of the resolutions must be completed by filling the number of votes (one per ordinary share) under

the “In favour”, “Against” or “Abstain” headings on the form of proxy. If no instructions are filled in on the form of proxy, the

chairman of the annual general meeting, if the chairman is the authorised proxy, or any other proxy shall be authorised to vote

in favour of, against or abstain from voting as he/she deems fit.

7. A shareholder or his/her proxy is entitled but not obliged to vote in respect of all the ordinary shares held by the shareholder.

The total number of votes for or against the ordinary and special resolutions and in respect of which any abstention is recorded

may not exceed the total number of shares held by the shareholder.

8. Documentary evidence establishing the authority of a person signing this form must be attached to this form of proxy unless

previously recorded by the transfer secretaries of the company or waived by the chairman of the annual general meeting.

9. This form of proxy is to be completed only by those shareholders who either still hold shares in a certificated form, or whose

shares are recorded in their “own name” in electronic form in the sub-register.

10. Shareholders whose dematerialised shares are held in the name of a nominee and wish to attend the annual general meeting

must contact their Central Securities Depository Participant (“CSDP”) or broker who will furnish them with the necessary letter

of authority to attend the annual general meeting. Alternatively, they have to instruct their CSDP or broker as to how they wish

to vote. This has to be done in terms of the agreement between the shareholder and the CSDP or the broker.

11. Shareholders who wish to attend and vote at the meeting must ensure that their letters of authority from their CSDP or broker

reach the transfer secretaries not later than 11:00 on Tuesday, 28 August 2007.

12. The completion and lodging of this form of proxy does not preclude the relevant shareholder from attending the annual general

meeting and speaking and voting in person to the exclusion of any proxy appointed by the shareholder.

13. The chairman of the annual general meeting may accept or reject any form of proxy which is completed and/or received other

than in accordance with these instructions, provided that he shall not accept a proxy unless he is satisfied as to the manner

in which a shareholder wishes to vote.

Transfer secretaries’ office

Computershare Investor Services 2004 (Pty) Limited

70 Marshall Street, Johannesburg, 2001

(PO Box 61051, Marshalltown, 2107)

F O R M O F P R O X Y – I N S T R U C T I O N S


Documents

CONNECTING - sharedata.co.za · connecting a f r i c a annual report 2007 africa cellular towers annual report 2007