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Constantly bettering the continent of Africa

Annual Report 2011

/Contents

DisclaimerThe annual report may contain certain forward-looking statements concerning ACTOWERS’ operations, business strategy, financial conditions, growth, plans and expectations. These statements include without limitation, those concerning the economic outlook, business climate and changes in the market. Such views involve both known and unknown risks, assumptions, uncertainties and important factors that could materially influence the actual performance of the Group. No assurance can be given that these will prove to be correct and no representation or warranty expressed or implied is given as to the accuracy or completeness of such views or as to any of the other information in the annual report.

Corporate profile 1

Business overview

Groupstructure 2

Four-yearfinancialreview 3

Groupataglance 4

ACTOWERSturningthecorner 6

Board of directors 8

Executive management team 9

Chairman’s statement 10

Chief Executive Officer’s report 14

Operational review

c Power Lines 18

c Cellular Towers 19

c Equipment Shelters 20

Sustainability and governance report

Aboutthisreport 21

Sustainabilityreport 21

Corporategovernancereport 22

Remunerationreport 25

Shareholders’analysis 29

Annual financial statements

CertificateoftheCompanySecretary 30

AuditCommitteereport 31

Independentauditors’report 33

Directors’responsibilitiesandapproval 34

Directors’report 35

Statementoffinancialposition 39

Statementofcomprehensiveincome 40

Statementofchangesinequity 41

Statementofcashflows 42

Notestotheconsolidatedannualfinancialstatements 43

Notice of annual general meeting 81

Corporate data 86

Shareholders’ diary 86

Form of proxy 87

/Corporate profile

Africa Cellular Towers Limited (“ACTOWERS” or “the Group”), incorporated on 27 October 2000, is a broad-based

structural engineering and civil construction company listed on the Alternative Exchange (“AltX”) of the JSE Limited

(“JSE”). The Group is a leading manufacturer, supplier and installer of steel lattice towers to its customers in

the power line and telecommunications industries in South Africa as well as Africa. The Group’s business units

comprise of:

Values“To be reliable”c Caring for our people c Honesty and integrity c Accountability c Transparency c Respect c Teamwork

VisionTo be a leading manufacturer, supplier and full turnkey solution provider of steel lattice towers in Africa for the power lines and telecommunications industries.

c Power Lines c Cellular Towers c Equipment Shelters

MissionTo be the preferred supplier in each of the market segments in which ACTOWERS competes.

Africa Cellular Towers Annual Report 2011 1

/Business overview

c Group structure

Power Lines

Cellular Towers

Manufacturing

Equipment Shelters

Africa Cellular Towers Annual Report 20112

c Four-year fi nancial review

For the year ended 28 February 2011 2010 2009 2008

Income statementRevenue R’000 202 128 227 390 505 408 326 572Gross (loss) / profi t R’000 (11 635) 2 951 99 631 88 198Operating (loss) / profi t R’000 (117 261) (100 417) 65 019 64 265 (Loss) / profi t before taxation R’000 (122 413) (93 332) 72 697 69 421

(Loss) / profi t for the year R’000 (133 100) (92 263) 51 259 45 025

(Loss) / earnings per share (EPS)Basic EPS Cents (37,4) (25,9) 19,6 17,7Headline (loss) / earnings per share (HEPS)Basic HEPS Cents (30,8) (22,9) 19,5 17,3Fully diluted HEPS Cents (30,8) (22,9) 19,1 17,3Weighted number of shares in issue ‘000 356 055 356 055 261 889 254 658

Balance sheetShareholders’ equity and reserves R’000 140 495 276 999 384 321 205 503Non-current liabilities R’000 19 970 24 286 26 204 12 082Current liabilities R’000 40 097 36 926 77 903 67 899

Total equity and liabilities R’000 200 562 338 211 488 428 285 484

Non-current assets R’000 61 144 73 667 87 753 62 876Current assets R’000 139 418 264 544 400 675 222 608

Total assets R’000 200 562 338 211 488 428 285 484

Shares in issue ‘000 370 287 370 287 369 887 266 820Net asset value per share Cents 37,9 74,8 103,9 77,0Net tangible asset value per share Cents 37,9 68,8 94,8 64,6

Cash fl ow statementCash fl ows from operating activities R’000 (14 826) (35 422) (13 298) (40 055)Cash fl ows from investing activities R’000 (19 582) (3 245) (3 904) (25 385)Cash fl ows from fi nancing activities R’000 (7 959) (10 699) 126 990 4 638

(Decrease) / increase in cash R’000 (42 367) (49 366) 109 788 (60 802)


c Group at a glance

2011 2010This business is responsible for the

construction of electric transmission and

distribution lines in South Africa and

neighbouring countries. This division was

established in 2008.

February R’000 R’000

Revenue 81 752 4 555

Operating profit / (loss) 7 115 (3 653)

Net working assets 17 208 1 326

Equi

pmen

t She

lter

sC

ellu

lar

Tow

ers

Pow

er L

ines

2011 2010This unit manufactures cellular lattice

towers as well as palisade fencing

and delivers full turnkey

telecommunication infrastructure

installations throughout Africa.


Revenue 100 932 192 157

Operating loss (65 764) (47 545)


2011 2010

This company, known as JK Shelters,

is a manufacturer of cellular equipment

shelters and outdoor cabinets for

ACTOWERS as well as for other customers.


Revenue 9 429 13 635

Operating loss (8 613) (9 742)


Performance Business description

/Business overview (continued)


Geographic presence Contribution to the group

Southern Africa

Nigeria, Ghana, Chad, Tanzania, Malawi, DRC, Uganda and other Southern African countries

Nigeria, Ghana, Chad, Tanzania, Malawi, DRC, Uganda and other Southern African countries

49,9%

40,4%

4,7%


1. Our legacyACTOWERS was established in 2000 as a cellular tower

construction company. In September 2004, ACTOWERS

commenced with the manufacturing of cellular towers and

currently has a manufacturing capacity of over 3,000 tons of

steel per month. ACTOWERS has completed more than

1,050 projects in Africa, which includes the construction of

more than 4,000 cellular towers in some of the most rural

and remote areas in Africa.

ACTOWERS listed on the Alternative Exchange (AltX) board

of the JSE Limited (JSE) in November 2006. On 1 March

2007, the company acquired JK Shelters, a manufacturer of

equipment shelters used in conjunction with cellular

towers.

ACTOWERS took a decision in September 2007 to diversify

its product range into the electrical transmission and

distribution industry and established the Power Lines

Division. The main reasons behind the strategic shift

towards the manufacture of power line towers and the

construction of power line sites were the predicted decline

of volumes in the cellular industry as well as a significant

increase in demand for expansion in the Southern African

power distribution market.

ACTOWERS successfully concluded a Broad Based Black

Economic Empowerment (BBBEE) transaction in January

2009 and as a result became a Level 6 BBBEE contributor.

This level has improved to a Level 5 BBBEE contributor

status this year. Our goal is to obtain at least a Level 4

BBBEE rating.

2. Our futureACTOWERS has experienced severe declines in profitability,

reported significant losses and saw an erosion of cash

resources over the past two years because of various

economic as well as internal factors. The Board of directors

took a decision in October 2010 to restructure the

management team as well as employ a turnaround

c ACTOWERS turning the corner

specialist to assist with re-designing the business and

facilitating a sustainable turnaround strategy for ACTOWERS

in order to restore shareholder value.

Management is committed to improving ACTOWERS’

performance and profitability going forward by taking

decisive and significant actions.

Significant changes were made to the management

structure:

■■ Chris Krüger retired as Executive Chairman and CEO, but

remains a Non-Executive Director;

■■ Mitesh Patel, previously an Independent Non-Executive

Director was appointed as Independent Chairman of

ACTOWERS;

■■ Jacques de Villiers, previously the Financial Director,

accepted the position as Chief Executive Officer (CEO) of

the Group;

■■ David van Staden, previously Operations, Sales and

Marketing Director, relinquished his responsibilities to

focus on the Sales and Marketing functions only;

■■ Nick van der Mescht was promoted to Operations Director;

and

■■ Pieter Swart was appointed as Financial Director.

For more information on their curricula vitae, please refer

to pages 8 and 9.

ACTOWERS also focused on introducing qualified project

managers and qualified personnel for each project, on

establishing complementary management teams and

transfer of skills.

A dedicated sales team was introduced with intensive

tender and bid proposal controls and procedures being in

place to monitor quality and margins on proposals sent out

to third parties.

The business models and plans for each division were

evaluated for viability and sustainability of each division.

/Business overview (continued)


■■ The Group changed its strategy to become more

customer-focused by addressing customer’s needs.

■■ The decision was taken that the Power Lines Division will

be the core business of the Group. Power line construction

and tower supply is a mature and stable industry, with

stable clients in Southern Africa with a significant backlog

on the rollout of power line projects. The sustainability

and growth opportunities in this market is supported by

well communicated build programmes offering a

continuous and predictable flow of work for at least the

next ten years.

■■ The Cellular Towers Division was transformed into a low

cost and streamlined division to be able to adapt quicker

to changes in its industry and to mobilise more effectively.

In order to avoid the recurrence of losses, management

will be very selective regarding clients, countries and

contracts in the Cellular Towers Division.

■■ The Fibre Optics Division was closed. No new contracts

were taken on; existing contracts in this division were still

being completed.

■■ Extensive cost cutting initiatives were performed

throughout the company.

ACTOWERS therefore took decisive steps and actions since

May 2010 to prevent further losses and to ensure that the

company returns to a profitable position. Although much

has been achieved to date, this is an ongoing process.

Management are however confident that the actions taken

will provide the necessary results and will ensure that the

company returns to profitability.

ACTOWERS has established four main goals, namely:

■■ Creating wealth for shareholder and stakeholders

– Becoming profitable and achieving budgets and targets

from 2012 onwards.

– Restoring confidence with shareholders and investors.

– Ensure that the company is adequately funded – optimal

capital structure.

■■ Become the preferred employer in the power lines and

GSM industries

– Create value for key personnel.

– Retain key skills, personnel and creating strong

complimentary teams.

– Offering growth opportunities for all employees in their

careers.

– Provide a safe, healthy and happy environment where

everyone has an opportunity to share ideas and grow.

■■ Become one of the leading Power Lines companies in

Southern Africa

– Successfully win power line orders to ensure a stable

predictable order book going forward.

– Complete all projects on time, at the required quality

and budgets.

■■ Restore Cellular Towers Division as second core business

– Return to profitability.

– Be very selective on contracts, countries and customers.

– Be a low cost and flexible division.

– Focussing more on South Africa and stable African

countries.


/Board of directors

David M van Staden (36) Sales and Marketing DirectorAppointed on 6 October 2006David has a Diploma in Quantity Surveying and Project Management. He joined ACTOWERS as Group Project Manager in 1999. David was previously the Operations Director of the Cellular Towers Division and has been appointed as Sales and Marketing Director of all the business units, except for JK Shelters, in order for him to dedicate his time on the sales and marketing function, with effect from 1 June 2010.

c

Pieter SN Swart (39)Financial DirectorAppointed on 1 March 2011 Pieter was appointed the Financial Director with effect from 1 March 2011. Pieter is a qualifi ed Chartered Accountant who previously worked at Fima Films SA (Pty) Ltd as Chief Financial Offi cer from July 2001 until September 2009 where he was appointed Joint Chief Executive Offi cer.

c

Nick WJ van der Mescht (50)Operations DirectorAppointed on 1 June 2010 Nick, who headed up the Power Lines business unit, has now been appointed as Operations Director for all the business units, except for the Equipment Shelters operation, within the Group. During his career, he served in various corporate companies such as Eskom Holdings Limited, Howden Group Limited and Babcock in various positions ranging from Quality Assurance Manager, Production Manager, and Project Manager to General Manager. Nick holds a National Technical Certifi cate (5), Production Management Diploma, Export Management Diploma, Advanced Project Management Diploma and a Management Diploma from Wits Business School (MAP). Since November 2006, he has served as Chairman of the Hot Dip Galvanizing Association of South Africa and regularly participates in industry forums such as the South African Institute for Steel Construction and the Institute for Steel Fabricators of South Africa.

c

c Executive Directors

Jacques de Villiers (41)Chief Executive Offi cerAppointed on 6 October 2006 Jacques has a BCom (Hons), qualifi ed 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 in 1999. Jacques consulted in the telecommunications industry from 1996 to 1999 for Telkom Limited and acted as the fi nancial project leader for the planning, building and implementation of the ICO Global Mobile Satellite Hub for Southern Africa. He has been involved in the fi nancial planning and modelling of the SAT3/SAFE underwater communication cable that runs from Portugal to Malaysia via South Africa. Jacques acted as Financial Director of ACTOWERS since October 2006 and took over the position of Chief Executive Offi cer effective 1 October 2010.

c


/Executive management team

Redik du Toit (28)FinancialManagerRedik has a BCom (Hons), qualifi ed as a Chartered Accountant in 2008 and articled at De Villiers Myburgh Inc. He joined ACTOWERS in 2009 and was appointed as Financial Reporting Manager. Redik was appointed Interim Chief Financial Offi cer from 1 October 2010 to 1 March 2011 and then reverted to Financial Manager on the appointment of Pieter Swart.

c

Riaan Jonker (46)ManagingDirector–JKSheltersRiaan has an Executive Management Development Certifi cate obtained from the University of Stellenbosch as well as a Business Management Diploma from the University of Manchester (UK). Since the mid 1980’s, Riaan has been extensively involved in business development within Africa. He was involved in telecommunications, television broadcasting and satellite management. Riaan has in-depth African experiences in working and staying abroad where he managed overall turnkey procurement, manufacturing, services and implementation processes to mobile and fi x line operators. Riaan was the Chief Operating Offi cer of Kratos (Nigeria) where he managed overall processes in terms of which Kratos offered full turnkey procurement of materials and in-country services as well as marketing of existing and new site coordinates to other operator’s in-country.

c

c Non-executive directors

Vuyisa Nkonyeni (41)Non-ExecutiveDirectorAppointed on 19 Feburary 2009 Vuyisa, who represents Tiso Group, is the Chairman of the Remuneration Committee and a member of the Audit Committee and Risk Committee. He has a BSc (Inf. Proc), BSc (Hon), Post Graduate Diploma in Accounting, CA (SA). He is a former associate at Deutsche Bank Corporate Finance where he gained investment banking experience primarily in corporate and project fi nance advisory work. Prior to joining Tiso Group, he was the fi nancial director of Worldwide African Investment Holdings (Pty) Ltd and director at Actis LLP.

c

Mitesh M Patel (37)IndependentNon-ExecutiveChairmanAppointed on 9 September 2008Mitesh Patel was appointed Independent Non-Executive Chairman of the Group on 26 January 2011. He was previously the Chairman of the Audit Committee and the Risk Committee. Mitesh is a Chartered Accountant and has a BCompt Honours in fi nancial accounting, fi nancial management, taxation and auditing. Mitesh is currently a Managing Partner at Nkonki Incorporated and further acts as an Independent Non-Executive Director and Audit Committee Chairman for JSE listed companies, Stratcorp Limited, Wearne Limited and PSV Holdings Limited.

c

Chris JJ Krüger (63)Non-ExecutiveDirectorAppointed on 27 October 2000Chris is a successful entrepreneur and has an in depth knowledge of the telecommunications infrastructure and manufacturing sectors. Chris started ACTOWERS in 1999 and since its listing in 2006, has been the Chief Executive Offi cer until 1 October 2010, as well as fulfi lling the function of Chairman, until resigning from this position effective 26 January 2011. He has over 40 years of experience in the engineering industry and 18 years experience in telecommunication hardware.

c

Seth Radebe (37)IndependentNon-ExecutiveDirectorAppointed on 26 January 2011Seth was appointed an Independent Non-Executive Director of the company and Chairman of the Audit Committee and Risk Committee. Seth is a qualifi ed Chartered Accountant and brings with him a wealth of experience where he is the Managing Director of Rebahale Incorporated, Non-Executive Director of Yebo Yeth (an empowerment vehicle for Vodacom South Africa), member of the City of Johannesburg Metro Group Audit Committee, Non-Executive Chairman of Arthur Els Actuarial Consulting and former Non-Executive Director and Chairperson of SAFCOL Audit Committee.

c


/Chairman’s statement

An overview of the yearI am pleased to deliver my fi rst report to the ACTOWERS shareholders following my appointment

as Independent Non-Executive Chairman on 26 January 2011.

In light of challenging market conditions persisting throughout the 28 February 2011 year end

period and changes experienced in the business of ACTOWERS, the results remained well below

the Board’s expectations. The 2011 second half results, compared to the fi rst half results, showed

a marked improvement, indicating that the Group is beginning to see the benefi ts of a turnaround

strategy implemented earlier in the fi nancial year. As a Board, we are satisfi ed that management

has taken necessary and decisive action to address these problems in a well laid-out strategic

plan. All businesses go through phases of growth and challenges before reaching relative

maturity. Initially they need the raw energy and propensity for risk of the entrepreneur. Sustainable

growth requires a professional approach to leadership and governance to match the spirit of

entrepreneurship and innovation.

The main external and internal factors, inter alia, the strength of the South African currency, low

revenue generation, low volume through-put in the factory, caused by availability of steel imports

from China and India at below local market cost and losses incurred on certain cellular and fi bre

optic installation contracts in Africa, negatively impacted the results. Positive developments in the

second half of 2011 included securing profi table cellular contracts and being awarded meaningful

power line contracts as a result of establishing the required resources and a solid working

relationship with Eskom. Revenue generated for the Group decreased to nearly R202 million, a

decline of 11% from the 2010 revenue of R227 million. Operating loss before interest, taxation,

depreciation and amortisation was a disappointing R117 million. However, on a normalised basis

the operating loss would have been R64,8 million if all the once off adjustments for IFRS and the

impairment of goodwill are excluded. The Power Lines Division delivered a sterling performance

in a highly competitive environment.

Theeconomiccrisishasnotonly

affectedACTOWERSbutalsomostof

our competitors and other industry

playerswhoareexperiencingsimilar

problemsandchallenges.

Mitesh M Patel

IndependentNon-ExecutiveChairman

c


Industry outlookThe short to medium term outlook in our traditional markets, power line and cellular tower

installation industries, is likely to remain competitive. The focus by government on power

infrastructural spend is poised to shift significantly during the next period with government’s well

documented expansion plans. The political imperative for a rapid, efficient and visible improvement

in the delivery of basic services to the majority of South Africans is well understood. We remain

confident that the budgeted power expansion spend program will ultimately bring about this

service delivery. ACTOWERS is committed to playing its part in this vital program and to this end

we have established a solid relationship with Eskom and have proven our abilities on the projects

completed for this parastatal.

The cellular tower market in Africa has changed since ACTOWERS was established. There has

been a marked shift towards tower site sharing amongst the large cellular service providers

globally. Having said this, it is our belief that the cellular tower market is still viable. Network

operators like Helios Africa, American Towers and Eaton Telecom are active parties looking to

expand into Africa, although this might be executed through the acquisition of existing tower

assets. The issuing of new cellular licenses is also an indicator that there is potential growth,

however, for cellular tower constructors, it is not always a guarantee for improved business.

Our new strategy incorporates a re-look of our traditional target markets. The CEO’s report

further describes the ambitions and progress towards further balancing the pipeline of

opportunities.

Corporate governance and sustainabilityCorporate governance remains a priority for the Group and measures were taken during the year

to align business practices with the King III Report. Adherence to corporate governance principles

and policies are set out in detail in the corporate governance report on pages 22 to 25.

We believe that the health and prosperity of South Africa as well as that of ACTOWERS hinges on

the upliftment and transformation of the communities in which we conduct business. We also rely

on our customers’ support to grow our business and produce sustainable profits for our

shareholders. In return, customers expect us to be a reliable service provider and the community

expects us to enhance the quality of their environment.

ACTOWERS’ social investment programme, as set out on pages 21 and 22 continues to concentrate

on the development of staff through training programmes and skills development.

Board of directorsA number of changes to the Board of directors have taken place over the past year. Chris Krüger

(former founding member, CEO and Chairperson) resigned but remains on the Board as Non-

Executive Director. We acknowledge the contribution that Chris has made in the building of

ACTOWERS and wish to thank Chris for his leadership in establishing and growing ACTOWERS,

both as CEO and as Executive Chairman. Martin Potgieter, a Non-Executive Director, resigned

during the period.


/Chairman’s statement (continued)

The role of CEO was given to Jacques de Villiers and his leadership and insight into this new phase

of ACTOWERS growth will stand the company in good stead. Jacques was previously Financial

Director and comes equipped with a keen understanding of the business. Pieter Swart was

appointed as the succeeding Financial Director and his rigor and professionalism will benefit

ACTOWERS. Pieter replaced Redik Du Toit who was appointed as the Acting Chief Financial Officer

on 1 October 2010. Nick van der Mescht was appointed as Operations Director and David van

Staden as Sales and Marketing Director effective 1 June 2010. On 26 January 2011, ACTOWERS

announced the appointment of Seth Radebe as an Independent Non–Executive Director and

Chairman of the Audit Committee, and me as the Independent Non-Executive Chairman.

These appointments are in line with the decision taken to apply the principles of King III. We are

confident that the Board reflects a balance of skill-sets and experience, appropriate to good

governance of the Group.

Broad Based Black Economic EmpowermentACTOWERS achieved a Level 5 contributor status and has a strong commitment to the ongoing

transformation of our business.

The Group’s strategy, action plans and measurement is driven by a steering committee made up

of senior managers from each entity within ACTOWERS and chaired by the Group CEO. Progress

has been made during the year in the areas of employment equity, skill-sets, enterprise

development and social economic development.

ProspectsThe turnaround strategy in implementation since May 2010 encompasses inter alia a cost cutting

exercise, major organisational restructuring and evaluating the sustainability and viability of each

division, which resulted in the closure of the Fibre Optics Division. The management team of

ACTOWERS developed comprehensive business plans and models for each division. The

turnaround strategy is still ongoing and the full benefits should materialise over the next 18

months.

ACTOWERS has set itself four specific goals to return the company to profitability. The goals are

to create shareholder and stakeholder wealth, become the preferred employer in the power lines

and GSM industries, become one of the leading power line companies in Southern Africa and

restore the Cellular Towers Division as a second core business.

Post year end, the company was able to secure various debt facilities to the amount of R99 million

from the Industrial Development Corporation (IDC) which have allowed for working capital and

the purchase of necessary assets for the Power Lines Division.

The Power Lines Division, subsequent to the funding being secured, is well placed on several

meaningful tenders. The Cellular Towers Division is experiencing an increase in demand from

new clients and operators and with a focus on growing the business locally and in stable SADC

and African countries; it is expected to return to profitability.


ACTOWERS is considering recapitalising the business to reduce gearing, alleviate short term

pressure on cash flow, provide funding for contracts and to be able to execute larger power line

contracts. The Board of ACTOWERS believes that the Group is turning the corner and is striving to

become reliable in all aspects of its business.

ACTOWERS’ investment propositionOur investment proposition can be summarised as follows:

■■ Focus on core competencies with a clear strategic and structural business plan for each division.

■■ Management depth and expertise throughout the business.

■■ ACTOWERS has a diverse geographical presence, customers as well as product offering.

■■ Growth opportunities are opening up in both the power lines and telecommunications industries.

AcknowledgementsI would like this opportunity to thank our management team for their dedication during an

exceptionally tough period and we believe that you will put your best efforts into returning the

Group to profitability. We would like to assure you that you have the support of the Board. To my

fellow Board members, your commitment is greatly appreciated and I believe that we are on the

road to recovery.

I would also like to express my appreciation to our BBBEE partner and shareholders who have

remained committed to the company, we assure you of our commitment to restore shareholder

value.

Mitesh Patel

Independent Non-Executive Chairman

15 July 2011


/Chief Executive Offi cer’s report

OverviewThe year ended 28 February 2011 proved to be another exceptionally tough year for ACTOWERS.

Much has been achieved in the last 12 months as we took decisive action to return ACTOWERS to

profi tability. With the assistance of a turnaround strategist, issues within ACTOWERS which

contributed to the poor performance of the Group were addressed. The benefi ts of these actions

have already shown light when the fi rst half of 2011 is compared to the second half of 2011, with

a marked improvement visible in the second half.

The year under review was marked by a number of operational challenges which have negatively

affected the overall fi nancial results. We believe that these issues have been fully dealt with and

the business is far better positioned for the future; a future which has caused us to rethink our

strategy and build on the unique strengths of the organisation. We realise that the process will be

challenging and will take time, but the management team is fully committed to the success of

ACTOWERS.

Financial overviewGroup revenue decreased by 11% from R227,4 million (2010) to R202,1 million for the year ended

28 February 2011, mainly as a result of the lack of quality contracts in the Cellular and Equipment

Shelters Divisions and lower volume through-put in the factory in the fi rst six months of 2011,

as well as the strong Rand. A stated objective of the Group was to reduce its exposure in Africa and

ACTOWERS geographic revenue split for 28 February 2011 is 55% South Africa (2010: 14%) and

45% the rest of Africa (2010: 86%), a noteworthy achievement.

The company made a gross loss of R11,6 million in relation to last year’s gross profi t of

R2,9 million. However, a gross profi t of R13 million was achieved the second half of the year

against a gross loss of R21 million in the fi rst half of the year. The gross loss which mainly incurred

in the fi rst half of the year can be attributed to the following factors:

Thebenefitsoftheturnaround

strategyisstartingtomaterialise

andbodeswellforthefuture.

c

Jacques de Villiers

ChiefExecutiveOfficer


■■ The overall low revenue and factory through-put compared to the fixed factory cost structures

in the Cellular Towers and Equipment Shelters Divisions.

■■ The high cost structures of having a presence in the various African countries compared to the

low revenue generated from cellular installation contracts.

■■ The strength of the South African currency. Although foreign exchange losses are reported

separately in the Statement of Comprehensive Income, the strong Rand had an effect on the

gross profit. The effect of the currency fluctuations between the date of quoting and the date of

invoicing is reflected in the gross loss. Furthermore, a big component of the costs incurred for

the cellular installations in Africa are incurred in Rands, whilst the majority of the income is

received in US Dollars.

■■ The Cellular Towers and Fibre Optics Divisions have completed a number of loss making

contracts in South Africa and various African countries. The reason for loss-making contracts

can be attributed to escalating costs, overruns on contracts and sign-off procedures

with clients.

The gross profit achieved in second half of the year can be attributed to the turnaround strategy

implemented and would have been even higher was it not for the completion of loss making

projects from the first half of the year. The turnaround in gross profit is directly aligned with the

company’s turnaround strategy and bodes well for the future.

Despite the factory being relatively quiet during the period ended February 2011, ACTOWERS

managed to become a preferred supplier of substation steel for large corporates both in South

Africa and abroad. ACTOWERS also shipped significant steel tonnages to Brazil. The factory

remains a strategic fit for the business. The South African Government’s ASGISA requirements

and their decision to impose a 15% import duty on the import of steel towers should benefit the

steel tower manufacturing industry.

The operating loss increased by 17% to R117,3 million from R100,4 million for the comparative

year. The largest item affecting the operating loss is the R23,7 million goodwill impairment on JK

Shelters and the “R59” property. The goodwill on JK Shelters has been completely written off.

Margin pressure on projects, as a result of the competitive environment, was experienced in the

first half of 2011.

The company provided for and wrote–off bad debts to the value of R17,6 million during the year,

with only R300 000 written off in the second half of the year. The management of working capital

is a key focus area for ACTOWERS and days in trade debtors improved to 78 days (2011) versus

128 days (2010), days in construction contracts improved to 70 days (2011) versus 104 days (2010)

and days in inventory improved to 64 days (2011) versus 78 days (2010). There was a slight increase

in days in creditors from 46 days (2010) to 53 days (2011). The debtors’ age analysis also showed

a satisfactory improvement with current debtors representing 45% (2010: 25%) of the debtors’

book and more than 120 days 44% of the book (2010: 62%).


/Chief Executive Officer’s report (continued)

Operational overviewA comprehensive overview of the financial performance of each of the business units is set out in

the Operational Review on pages 18 to 20 of this annual report.

The Power Lines Division was the star performer of the Group, returning to profitability through

securing key contracts with Eskom. The prospects for this division are promising and ACTOWERS

has a clear strategy in place to secure sustainable business for this division into the future.

The Cellular Towers Division was impacted in the first half of 2011 as a result of a changed

cellular landscape and ACTOWERS being more selective and risk averse when accepting cellular

installation projects especially in Africa. We are committed to restructuring this division to be our

second core business.

The Equipment Shelters Division continued to be a poor performer and was impacted by similar

market conditions than the Cellular Towers Division.

Outlook and strategic visionFor the 2011 financial year, ACTOWERS was focused and committed to the implementation of a

sound strategy to restore the company’s profitability as well as enhance shareholder value. We

have made good progress in implementing the said strategy and are satisfied that, although it will

be very challenging, we are on the right track to fulfil this goal over the next 18 months.

This strategy will see the Group optimising opportunities in the markets in which we operate. The

core business is defined into two broad capabilities: power line and cellular tower supply. There

are several components to this strategy with four defined goals which are set out on page 7 of this

annual report.

The first component was to establish a new management team and this has been done successfully.

We have a team with the necessary skills and competence to take this business to the next level.

The past years have seen the building of critical mass, an extended geographic footprint and

empowerment credentials that were necessary for ACTOWERS to establish it as a player in the

power line market. The next phase was to evaluate and assess each division and develop a

business plan for each unit to ensure that competitive advantage is derived through stringent

cost-cutting and cash management and to de-risk the business. This strategy is also fully aligned

to the non-negotiable requirement of project execution on time and within budget, making

ACTOWERS reliable in all endeavours.

The power line industry offers good growth opportunities as government is committed to spend

on power supply infrastructure. The importance of maintaining and expanding the country’s rail,

road and power infrastructure and capacity as the backbone for our economy is also well

understood. We will therefore continue to adopt a strategy that optimises our opportunities to

meaningfully participate in this spend program as and when it is rolled out. An increase in Eskom

tenders being released is being seen, however, the tender processes will remain competitive,

placing pressure on margins, and unfortunately long lag periods prior to the tenders being

awarded still impacts our order book.


The cellular and telecommunications market remain challenging, but we have seen an increase

in enquiries. The strong Rand and increased competition from China and India will continue to

negatively affect this industry. ACTOWERS is also more selective in approving tenders and is risk

adverse when assessing contracts in Africa.

The short to medium term outlook is likely to continue to remain competitive and tough. We, as

management, believe that the building blocks of the new strategy are in place. The management

team will continue to regularly revisit its strategic intent to confirm that it is being properly

entrenched across the Group. The strategy must translate into improved efficiencies and customer

services to ensure that ACTOWERS is a reliable company to do business with. ACTOWERS remains

a viable business and a recapitalisation programme of the business is being investigated.

Thank youI am indebted to all our staff and management for their tremendous support and loyalty during a

challenging year. ACTOWERS is the sum of its people and its relationships. A big thank you goes

to our colleagues at all levels, site management, site staff, back office, administration, financial

management, executive colleagues and non-executive Board members. Our staff has adapted to

all the challenges they have faced and changes made to the business, and I would like to thank

you for this.

The unfailing commitment of the Board during these times of change has once again proved

invaluable.

Jacques de Villiers

Chief Executive Officer

15 July 2011


The Power Lines Division’s revenue growth of 1 694,8% to R81,8 million (2010: R4,6 million) is testimony to ACTOWERS having established its credentials with Eskom and being awarded turnkey power line contracts.

This division moved into an operating profi t position of R5,5 million (2010: operating loss of R5,6 million). ACTOWERS has high aspirations for this division and believes that the future growth of the Group will stem from this division.

ProspectsEskom’s roll-out plan for transmission is well documented up to 2020 which will create huge demand in the power lines industry.

ACTOWERS has secured funding to equip this division and fund these contracts. We are confi dent that we are now well placed on several big tenders.

The Power Lines Division has submitted various tenders in excess of R150 million with an optimistic expectation that at least one of these tenders will be successful. The confi rmed order book for this division is R168 million as at 28 February 2011 of which R107 million is still due. The division has a clear strategy in place which is ongoing.

The Power Lines unit is responsible for the turnkey construction of electric transmission and distribution lines in South Africa and neighbouring countries.

This business unit was established in 2007 and has completed successful projects for and on the Eskom power grid on 88kv, 132kv and 400kv lines.

It is currently engaged in several new projects including a 400kv section at Medupi and a 132kv line from Watershed to Mmabatho. Teams are being created and we are acquiring construction equipment as the projects progress, thus continuously building our installed capacity to meet the demand for line construction.

The overall results for Power Lines for the year ended 28 February are:

R’000 % Change 2011 2H2011 1H2011 2010

Revenue 1 694,8 81 752 57 281 24 471 4 555

Trading profi t / (loss) 294,8 7 115 5 503 1 612 (3 653)

Trading margin 8,7% 9,6% 6,6% nm

Operating profi t / (loss) 199,1 5 548 4 635 913 (5 600)

Financial overview

/Operational review

c Power Lines


10

This business was established in 2000 and delivers full turnkey telecommunication infrastructure installations that include lattice towers and palisade fencing. The Cellular Towers business unit has supplied numerous telecommunication towers to sites across the African continent.

This business is able to manufacture 3-legged lattice towers of up to 70 meters in height and 4-legged lattice towers of up to 100 meters high, for both Base Transmittal Station (BTS) and Backbone Applications to client specifications.

The Cellular Towers business unit provides holistic logistic service solutions to its customers and prides itself in “going the extra mile” by delivering its products to the most remote regions. The technical capabilities of this operation are supported by highly qualified Design Engineers.

The Cellular Towers Division reported a significant decline in revenue of 47,5% as a result of a changed cellular landscape and ACTOWERS being more selective and risk averse when accepting cellular installation projects. Regarding the operating loss of R79,1 million (2010: R86,2 million), the division showed an “improved” second half 2011 with an operating loss of R19,8 million opposed to the dire first half 2011 results reflecting a loss of R59,2 million. The second half 2011 demonstrates the benefits of turnaround strategy implemented for this division. The results were severely affected by the completion of loss-making installation contracts, lower sales volumes and the stronger Rand.

ProspectsThe strategy for this division is to focus on opportunities in the South African cellular market and stable African countries, including SADC countries.

ACTOWERS also wants to transform this division into a low cost flexible division. An increase in the demand, from new clients and operators, are being experienced, but ACTOWERS has become very selective and stringent when assessing new contract clients and countries.

The overall results for Cellular Towers for the year ended 28 February are:

R’000 % Change 2011 2H2011 1H2011 2010

Revenue (47,5) 100 932 35 568 65 364 192 157

Trading loss 39,2 (65 646) (7 691) (57 955) (47 245)

Operating loss (8,3) (79 066) (13 340) (65 726) (86 181)

c Cellular Towers

Financial overview


The Equipment Shelters business, better known as JK Shelters, is a manufacturer of cellular equipment shelters and outdoor BTS cabinets for ACTOWERS. Its products are supplied throughout Africa and South Africa.

An equipment shelter or outdoor BTS cabinet is supplied for every tower site erected, either as a roof top or a Greenfi eld’s project.

This division continued to deliver disappointing results. Revenue decreased by 30,8% to R9,4 million

(2010: R13,6 million) and operating loss improved by 5,6% from R11,1 million in 2010 to R10,5 million in

the current fi nancial period. The main reasons for the loss position are low revenue as a result of the

change in product demand and the strong Rand.

ProspectsThe prospects and future for this division are uncertain.

The overall results for Cellular Towers for the year ended 28 February are:

R’000 % Change 2011 2H2011 1H2011 2010

Revenue (30,8) 9 429 6 550 2 879 13 635

Trading loss (2,0) (9 551) (2 113) (7 438) (9 742)

Operating loss (5,6) (10 509) (1 357) (9 152) (11 127)

c Equipment Shelters

/Operational review (continued)

Financial overview


c About this report

ACTOWERS is now reporting far more extensively in terms of its sustainability initiatives. As recommended by the King III Report on governance, the Group endeavours to provide a transparent and accurate integrated sustainability perspective by covering not only the economic performance, but also the Group’s social and environmental initiatives. Due to the size of ACTOWERS it was decided to not follow the Global Reporting Initiative’s (GRI) G3 Index.

c Sustainability report

ACTOWER is conscious of its responsibility to contribute to government’s initiative to enhance wealth creation in South Africa and Africa at large and commits to use sustainable business practices as a foundation for sustainable growth.

ACTOWERS’ Code of Business Ethics, policies and practices are underpinned by good corporate governance and support the following social imperatives:■■ Environmental conservation and preservation;■■ Health and safety;■■ Quality;■■ Broad based black economic empowerment; and■■ Social investment.

1. Environmental conservation and preservationACTOWERS has committed to not only focusing on environmental issues, but to be actively involved in playing our part in attaining a high level of environmental sustainability.

As part of our commitment we have expanded the Environmental department in order to focus on ensuring that all our activities, in all work areas, are analysed and addressed by way of a documented action plan that mitigates or disposes of any negative impact our activities may have on the environment.

ACTOWERS is developing and implementing an environmental management system in line with ISO 14000 that documents our policies and procedures that support the consistent adherence to sustainable and benefi cial environmental management practices.

2. Health and Safety Health and Safety systems are continuously evaluated, modifi ed and remodelled to meet the ever changing demands of both our geographical and functional activities.

Systems include hazard identifi cation processes, ergonomic studies, safe work procedures and policies that are all electronically documented in user-friendly systems with easy access to all users. Continuous audits, both planned and ad hoc, ensure that systems are implemented. Functional managers and supervisors are empowered and held accountable for ensuring that our systems are suitable to prevent any harm to our employees and that the systems are entrenched in our every day execution of our tasks. ACTOWERS has a zero tolerance policy for non conformance to Safety, Health and Environmental (SHE) systems.

Besides complying with legal compliance, ACTOWERS is committed to a ‘no harm’ approach and provides a safe and healthy work environment for all our employees in support of this commitment.

3. Quality Since receiving our ISO 9001 Certifi cation in 2009 we have had several maintenance audits by the South African Bureau of Standards (SABS) with satisfactory reports on all occasions. The systems are becoming well entrenched in the organisation and our next objective is to merge all management systems related to SHE as a fully integrated system. ACTOWERS understands and values the importance of having well qualifi ed people working to well defi ned systems to reach verifi able and measurable objectives. To this end, ACTOWERS is implementing a performance reward system across the entire Group where levels of service, excellence of outputs, teamwork and customer satisfaction would be the minimum performance parameters that will be evaluated.

Employees are encouraged to log all customer complaints and this provides us with an excellent opportunity to correct issues in our organisation that may lead to breakdowns in relationships with our customers and other stakeholders.

Our Quality Control activities have been expanded to ensure that any process defects are identifi ed before it leaves our premises. Where such issues occur, production and engineering evaluates the root causes for the occurrence and corrective and preventive measures are taken.

4. Broad based black economic empowerment (BBBEE)ACTOWERS takes cognisance of the Codes of Good Practice on BBBEE by engaging in practices that support the upliftment of previously disadvantaged individuals in South Africa.

/Sustainability and governance report


/Sustainability and governance report (continued)

During the period under review, the following changes were

made:■■ roles of Chief Executive Officer (“CEO”) and Chairman were

separated;■■ independent director appointed as the Chairman of the Board;■■ an additional independent director was appointed to the Board

and to Chair the Audit Committee;■■ a Financial Director was appointed; and■■ an Internal Risk Committee which meets on a monthly basis,

was established

ACTOWERS currently does not comply with the following

recommendations of King III:■■ The majority of the members of the Board are non-executive

directors.■■ The majority of the non-executive directors are not

independent.■■ The Audit Committee does not comprise non-executive

directors with the majority being independent and does not

comprise three members.■■ Annual Board Evaluation – due to changes on the Board, a

Board and Committee effectiveness evaluation will be

completed at the end of this year.

ACTOWERS will evaluate areas where governance at a corporate

and subsidiary level can be strengthened. The company is in the

process of taking appropriate steps to ensure compliance with

the new Companies Act, No 71 of 2008.

The Board At the date of this annual report, ACTOWERS has eight directors;

four executive directors and four non-executive directors, two of

whom are independent. The guidelines outlined in King III were

used to categorise the directors. Biographical details of the

directors appear on pages 8 and 9 of this annual report.

The changes made to the Board during the year are set out on

page 6 of the annual report.

The Board is governed by a formal Board Charter setting out

composition, processes and responsibilities and includes a

policy which sets out a clear balance of power and authority at

Board level to ensure that no one director has unfettered

powers of decision-making. 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

Tiso Group remains the largest black owned shareholder to

date with 32%.

The Group achieved its goal and received a BBBEE

assessment verification certificate in November 2010

confirming the company to be at a Level 5. We are working

hard to improve better ratings in years to come.

ACTOWERS announced the appointment of Seth Radebe as

an Independent Non–Executive Director and Chairman of

the Audit Committee, and Mitesh Patel as the Independent

Non-Executive Chairman.

5. Social InvestmentThe sustainability of the telecommunications and power

supply industries is dependent on the development of skills

and transfer of knowledge. ACTOWERS provided in-service

as well as external course training to 206 employees in the

fields of, inter alia, machinery, ISO 9001 applications, health

and safety as well as rigging skills, during the year. Many of

the trainees are taken on as permanent employees once

their training is complete.

The Group is pursuing the implementation of customised

mentorship and development programmes that would be

aligned to the individual’s personal goals and career path

while enhancing the talent pool in the Group.

The Group is also working on implementing learnership in

conjunction with SETA’s.

c Corporate governance report

ACTOWERS is listed on the Alternative Exchange (“AltX”) of the

JSE Limited (“JSE”). The Board of directors (“the Board”) is

committed to ensuring that the Group adheres to the highest

standards of corporate governance in the conduct of its business

and is committed to the principles of openness, integrity and

accountability. The Board supports the principles contained in

the King Report on Governance for South Africa 2009 (“King III”)

and is taking steps to ensure that it will be compliant therewith.

Statement of complianceThe directors, to the best of their knowledge and belief, are of

the opinion that throughout the accounting period under review,

the Group has complied with the principles set out in King III and

with the specific requirements relating to corporate governance

set out in the JSE Listings Requirements.


management and Board Committees certain functions to assist

it to properly discharge its duties. The Board had three

Committees during the period under review. The Chairmen of

the Committees report at each scheduled Board meeting and

attend all annual general meetings to answer questions raised

by shareholders.

Audit Committee During the period under review, the members of this committee

were Messrs Mitesh Patel (Chairman) and Martin Potgieter.

The CEO, Financial Director and external auditors attend

the meetings by invitation. Mr Martin Potgieter resigned

31 January 2011 and was replaced by Mr Vuyisa Nkonyeni.

Mt Mitesh Patel also resigned as Audit Committee Chairman

and was replaced by Mr Seth Radebe.

The Audit Committee report setting out the committee’s

responsibilities and duties during the period under review is set

out on page 31.

Risk Committee During the period under review, the members of this committee

were Messrs Mitesh Patel (Chairman), Vuyisa Nkonyeni, Martin

Potgieter, Jacques De Villiers, Nick van der Mescht and David

van Staden. The committee is mandated, in terms of its approved

Terms of Reference, to assist the Board in the discharge of its

duties relating to corporate accountability and the associated

risk in terms of management, assurance and reporting. The

committee will review and assess the integrity of the risk

control systems and ensure that the risk policies and strategies

are effectively managed. Mr Martin Potgieter resigned

31 January 2011 and was replaced by Mr Vuyisa Nkonyeni.

Mr Mitesh Patel also resigned as Risk Committee Chairman and

was replaced by Mr Seth Radebe.

Remuneration CommitteeMessrs Vuyisa Nkonyeni (Chairman), Mitesh Patel and Martin

Potgieter are the members of the Remuneration Committee.

The committee is authorised, in terms of its approved Terms of

Reference, to approve executive remuneration that is fair and

competitive and will also review the executives’ recommendations

for non-executive directors’ fees and committee fee structures

against market data. Martin Potgieter resigned 31 January 2011.

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.

Chairman In line with the recommendations of the King III Report, the roles of the Chairman and the CEO are separate.

Mr Mitesh Patel was appointed as the Independent Chairman of the Board on 26 January 2011. Mitesh leads the Board and is responsible for representing the Board to shareholders. He is further responsible, with the assistance of the other executive directors and management, 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.

The directors are experienced business people and are required to exercise leadership, enterprise, integrity and judgement based on the principles of good governance.

CEOMr Jacques de Villiers was appointed as the CEO of the company on 1 October 2010. The CEO sets the tone in providing ethical leadership and creating an ethical environment. The CEO plays a critical role in the operations and success of the day-to-day business of the Group. Board authority conferred on management is delegated through the CEO, in accordance with approved authority levels.

Retirement and re-election of directorsOne 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 (“articles”). Messrs Chris Krüger, Mitesh Patel and David van Staden being eligible, have offered themselves for re-election. In accordance with the articles, Messrs Pieter Swart and Seth Radebe’s appointment as directors of the Board will be confirmed by shareholders at the forthcoming annual general meeting. A brief CV of each director standing for election and re-election is set out on pages 8 and 9 of the annual report.

Board CommitteesWhile the Board remains accountable and responsible for the performance and affairs of the Group, it delegates to



Board and Committee meeting attendanceDetails of the attendance at meetings are provided in the table

below.

Director Board Audit RiskRemu-

neration

CJJ Krüger 7/7 N/A 2/22 N/A

J de Villiers 7/7 4/42 2/2 5/52

VN Nkonyeni 7/7 4/42 2/2 5/51

MM Patel 7/7 4/41 2/21 5/5

MM Potgieter 7/7 4/4 2/2 4/5

S Radebe4 N/A N/A N/A N/A

PSN Swart5 N/A N/A N/A N/A

DM van Staden 7/7 N/A 2/2 N/A

NWJ van der Mescht3 4/7 N/A 2/2 N/A

1 Chairman 4 Appointed on 26 January 20112 By invitation 5 Appointed on 1 March 20113 Appointed on 1 June 2010

In compliance with the JSE Listings Requirements, a

representative of the company’s Designated Adviser attended all

Board and Audit Committee meetings.

Appointments to the BoardThe Board has adopted a formal and transparent policy on the

procedures for the appointment of directors, which is a matter

for the Board as a whole. Directors will be appointed based on

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

non-executive members of the Board propose suitable

candidates for consideration by the Board.

Closed periodsA closed period is exercised by the directors from the date of the

reporting period until the Group’s results are published on

SENS. Additional closed periods are enforced as required in

terms of any corporate activity or when directors are in

possession of price sensitive information. The Company

Secretary ensures that all directors are aware of the legislation

regulating insider trading.

Directors’ interestsThe direct and indirect beneficial interests of directors in the

company’s securities as at 28 February 2011 are set out on

page 27 of the annual report. A record of directors’ dealings and

clearance provided in terms of the JSE Listings Requirements is

retained by the Company Secretary.

Directors’ share dealingsNone of the directors had any share dealings during the year.

Directors’ interests in contractsThe directors’ interests in contracts as at 28 February 2011 are

set out on page 28 of the annual report.

Independent adviceThe members of the Board and Committees may seek advice

from independent experts whenever it is considered appropriate.

Individual directors may, with the consent of the Chairman,

seek independent professional advice at the expense of the

company, on any matter connected with the discharge of their

responsibilities as directors.

Price-sensitive informationThe Board acknowledges its responsibility for ensuring the

equal treatment of all shareholders. The Board has an approved

Information Disclosure Policy in place which sets out the

necessary guidelines that have to be adhered to at all times in

the external communication of the company’s affairs

Conflicts of interestACTOWERS encourages directors to avoid situations where they

have, or can have, a direct or indirect interest that conflicts with

the company’s interests. Directors are required to inform the

Board timeously of conflicts or potential conflicts of interests

they may have in relation to particular items of business. A

director who has a conflict of interest with respect to a contract

or transaction that will be voted on at a meeting, shall not be

counted in determining the presence of a quorum for purposes

of the vote, may not vote on the contract or transaction, and

shall not be present in the meeting room when the vote is taken.

Company SecretaryThe 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. The Company Secretary

monitors directors’ dealings in securities and ensures adherence

to closed periods for share trading.


CommunicationThe Board ensures that material matters of interest and concern

to shareholders and other stakeholders are addressed in the

company’s public disclosure and communication. In this regard,

the Board ensures that the Group provides adequate

transparency on all pertinent matters. The CEO and Financial

Director meet with shareholders and analysts as well as with

the financial press in order to ensure accurate reporting of

Group matters. All pertinent Group announcements are placed

on the company’s website.

The Board further encourages shareholders to attend its annual

general meeting, notice of which is contained in this annual

report, where shareholders have the opportunity to put questions

to the Board and the Chairman of the Audit and Risk Committee.

The company’s website provides the latest and historical

financial and other information, including the annual financial

statements.

Employment equityAn affirmative action programme forms part of the Group’s

business plan. The Group 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.

The Group fully supports the government’s initiative to achieve

greater equity in the workplace and management of all Group

companies is fully committed to complying with the Employment

Equity Act of 1998 (as amended).

Going concernThe annual financial statements set out in this annual report

have been prepared in accordance with International Financial

Reporting Standards. They are based on appropriate accounting

policies that have been consistently applied.

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.

Accordingly, the Group continues to adopt the going concern

basis in preparing the annual financial statements.

c Remuneration report

The Remuneration Committee (“Remco”) is mandated by the

ACTOWERS Board (“the Board”) to support and advise on the

Group’s remuneration philosophy and policy.

Refer to the corporate governance report on page 24 for details

on the composition, meetings and mandate of Remco. During

the year under review, the Board accepted the recommendations

of Remco under its delegated powers.

The chairman of the Board ensures that Remco has access to

professional advice from outside the Group where necessary.

Policy on directors’ remunerationThe directors are appointed to the Board to bring to the

management and direction of the Group the skills and

experience appropriate to its needs as a diversified leading

South African business. The guaranteed remuneration is based

on the median of the market, with discretion to pay a premium

(typically 5% to 20%) to the median for the attraction and

retention of the directors.

Executive directors’ remunerationThe committee aims to align the directors’ total remuneration

with shareholders’ interest by ensuring that a significant

portion of their package is linked to the achievement of

performance targets.

Executive directors’ salaries comprise a cash salary which

is reviewed annually by the committee. Salaries are compared

to pay levels of other South African companies to ensure

sustainable performance and market competitiveness.

The individual salaries of directors are reviewed annually in

light of their own performance, experience, responsibility and

Group performance. The company makes contributions to

defined contribution plans on behalf of the executive directors

on the basis of a percentage of cash salary. Death and

disability cover reflects best practice amongst comparable

employers in South Africa. Other benefits include car and travel

benefits. These elements comprise the fixed remuneration

component. Executive directors do not receive directors’ fees.

The following tables show a breakdown of the annual

remuneration (excluding equity awards) of directors for the

years ended 28 February 2011 and 28 February 2010.



Year ended

Basic remune-

ration1

Retirement contributions

Other material benefits2

Total excluding

performance bonus

Performance bonus7 Total

28 February 2011 R R R R R R

CJJ Krüger 3 1 580 694 235 889 – 1 816 583 – 1 816 583J de Villiers 4 1 324 742 196 775 84 000 1 605 517 – 1 605 517PSN Swart 5 – – – – – –NWJ van der Mescht 6 691 366 103 705 35 368 830 439 – 830 439DM van Staden 1 111 546 160 392 66 000 1 337 938 – 1 337 938

Total 4 708 348 698 761 185 368 5 590 477 – 5 590 477

1 Remuneration comprises gross salary.2 Other material benefits include entitlement to fuel, cover on the Group’s

medical healthcare and disability scheme, funeral benefits and travel allowances. These benefits are granted on similar terms to other senior executives.

3 CJJ Krüger resigned as Chief Executive Officer on 1 October 2010.4 J de Villiers was appointed as Chief Executive Officer on 1 October 2010.5 PSN Swart was appointed Financial Director on 1 March 2011.6 NWJ van der Mescht was appointed Operations Director on 1 June 2010.7 No bonuses were paid during the year

Year ended

Basic remune-

ration1

Retirement contributions

Other material benefits2

Total excluding

performance bonus

Performance bonus Total

28 February 2010 R R R R R R

CJJ Krüger 2 195 958 – 18 000 2 213 958 – 2 213 958J de Villiers 952 000 – 104 000 1 056 000 – 1 056 000DM van Staden 991 000 – 65 000 1 056 000 – 1 056 000

Total 4 138 958 – 187 000 4 325 958 – 4 325 958

No bonuses were paid during the year

The top three executive management employees are included under the directors’ emoluments

Non-executive directors’ feesNon-executive directors generally receive fixed fees for service on the Board and Board committees. Non-executive directors do not

receive short-term incentives nor do they participate in any long-term incentive schemes. The fees paid to non-executive directors were

approved by the Remco, the ACTOWERS directors and shareholders at the annual general meeting.

Fixed directors’ fees

including allowances

Chairman’s/ Deputy

Chairman’s fees

Meeting Attendance

feesConsulting

fees

Year ended

28 February 2011

Year ended

28 February 2010

R R R R R R

MM Patel1 207 496 – – – 207 496 133 065CJJ Krüger2 – – – – – –V Nkonyeni 231 639 – – – 231 639 126 083S Radebe3 16 667 – – – 16 667 –MM Potgieter4 259 578 – – – 259 578 124 000

1 MM Patel was appointed as Chairman of the Board on 26 January 2011.2 CJJ Krüger became a non-executive director on 1 October 2010.3 S Radebe was appointed as an Independent non-executive director on 26 January 2011.4 MM Potgieter resigned as non-executive director on 31 January 2011.


Directors’ service contractsMr Jacques de Villiers was appointed as CEO of ACTOWERS with

effect from 1 October 2010. The CEO has a written letter of

appointment, which endures indefinitely and is subject to

termination on three month’s notice. Mr Pieter Swart was

appointed as Financial Director with effect from 1 March 2011

and has a written letter of appointment, which endures

indefinitely and is subject to termination on three months’

notice. The contractual relationship between the company and

its executive directors is controlled through Remco, which

comprises non-executive directors only.

These contracts are formulated in a manner which is consistent

with the provisions of the Basic Conditions of Employment Act.

Directors’ share option and incentive schemes grantsDirectors participate in the Group’s share option and incentive

schemes, which are designed to recognise the contributions of

senior staff to the growth in the value of the Group’s equity and

to retain key employees. Within the limits imposed by the

company’s shareholders, options are allocated to the directors

and senior staff in proportion to their contribution to the

business as reflected by their seniority and the company’s

performance. The options, which are allocated at a price

determined by Remco, in terms of a resolution and the

applicable JSE Limited rules, vest after stipulated periods

and are exercisable over a four-year period in terms of the

scheme rules.

Share option allocations are considered annually and are

recommended by Remco and approved by the Board of directors.

The underlying principle of these schemes is to provide direct

linkage between the interests of shareholders and the efforts of

executives or managers.

Analysis of directors’ share options as at 28 February 2011

Entitlements under share option schemes

Opening balance Granted

Closing balance

Executive directors

J de Villiers 1 000 000 – 1 000 000

D van Staden 3 000 000 – 3 000 000

NWJ van der Mescht 750 000 – 750 000

Note: No director exercised any share option during the year. There were no entitlements under share option schemes granted to non-executive directors.

Directors’ interestsThe aggregate direct and indirect beneficial holdings at

28 February 2011, held by the directors of the company and their

associates, are detailed below:

28 February 2011Number of ordinary

shares held

28 February 2010Number of ordinary

shares held

Direct beneficial

Indirect beneficial

Direct beneficial

Indirect beneficial

Executive

J de Villiers 2 058 750 – 2 058 750 –

DM van Staden – 125 000 – 125 000

Non-executive

CJJ Krüger 111 345 000 13 942 905 111 345 000 13 942 905

There were no changes in the directors’ interests in the share

capital of the company between 28 February 2011 and the date

this annual report.



Interest of directors in contractsDuring the year ended 28 February 2011, other than Mr Chris

Krüger’s interest in JK Shelters and Vuyisa Nkonyeni’s interest

in Tiso Telecom disclosed in note 25 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.

With the exception of Messrs Krüger and Nkonyeni, the directors

have certified that they were not materially interested in any

transaction of material significance and which significantly

affected the business of the Group, with the company or any of

its subsidiaries. Accordingly, no conflict of interest with regard

to directors’ interests in contracts exists. There have been no

material changes in the aforegoing since 28 February 2011 and

the date of this annual report.

Directors are 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.

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

advising and obtaining written 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 and a written record is contained thereof.


Number of shareholdings

% of totalshareholdings

Number of shares

% of shares in issue

Size of Holdings1 – 1 000 shares 161 11,33 95 625 0,031 001 – 10 000 shares 614 43,21 3 118 302 0,8410 001 – 100 000 shares 518 36,45 19 214 746 5,19100 001 – 1 000 000 shares 107 7,53 28 334 744 7,651 000 001 shares and over 21 1,48 319 523 866 86,29

Total 1 421 100,00 370 287 283 100,00

Distribution of shareholdersRetail shareholders 1 282 90,22 173 543 512 46,86Private companies 27 1,90 132 676 554 35,83Custodians 12 0,85 42 988 209 11,61Collective investment schemes 1 0,07 685 900 0,18Share schemes 1 0,07 14 201 900 3,84Trusts 61 4,29 3 374 123 0,91Close corporations 18 1,27 1 244 142 0,34Foundations and charitable funds 5 0,35 44 966 0,01Managed funds 7 0,49 1 410 650 0,38Investment partnerships 5 0,35 97 570 0,03Stockbrokers and nominees 2 0,14 19 757 0,01

Total 1 421 100,00 370 287 283 100,00

Shareholder typeNon-public shareholders 6 0,42 259 281 855 70,03

Directors and associates (direct holding) 1 0,07 111 345 000 30,07Directors and associates (indirect holding) 2 0,14 16 001 655 4,32Tiso Group (BEE Empowerment partner) 2 0,14 117 733 300 31,80Share Schemes 1 0,07 14 201 900 3,84

Public shareholders 1 415 99,58 111 005 428 29,97

Total 1 421 100,00 370 287 283 100,00

Beneficial shareholders with a holding greater than 3% of the shares in issueMr CJJ Krüger 1 111 345 000 30,07Tiso Telecoms (Pty) Limited 1 92 733 300 25,05Tiso Group (Pty) Limited 1 25 000 000 6,75Africa Cellular Towers Share Incentive Scheme 1 14 201 900 3,84Mrs CML Krüger 1 13 942 905 3,77Fidelity International 1 11 191 777 3,02

Total 6 268 414 882 72,50

Total number of shareholders 1 421

Total number of shares in issue 370 287 283

Share Price PerformanceOpening price 1 March 2010 R0,52Closing price 28 February 2011 R0,09Closing high for the period R0,76Closing low for the period R0,09

Number of shares in issue 370 287 283Volume traded during period 77 828 918Ratio of volume traded to shares in issue (%) 21,02

c Shareholders’ analysis

At25February2011


/Annual financial statementsConsolidated annual financial statements for the year ended 28 February 2011

1

Certificate of the Company Secretary 30

Audit Committee report 31

Independent auditors’ report 33

Directors’ responsibilities and approval 34

Directors’ report 35

Statement of financial position 39

Statement of comprehensive income 40

Statement of changes in equity 41

Statement of cash flows 42

Notes to the consolidated annual financial statements 43

/Certificate of the Company Secretary

In terms of Section 88 (2) e of the Companies Act 71 of 2008 (“Act”), I certify that, to the best of my knowledge and belief, Africa Cellular Towers Limited has, in respect of the financial year ended 28 February 2011, lodged with Cipro all returns and notices required of a public company in terms of the Act and that all such returns and notices are true, correct and up to date.

Premium Corporate Consulting Services (Pty) LimitedCompany Secretary15 July 2011

/Contents Page

The reports and statements set out below comprise the consolidated annual financial statements presented to the shareholders:



/Audit Committee reportFor the year ended 28 February 2011

The Audit Committee is a committee of the Board of directors and in addition to having specific statutory responsibilities to the shareholders in terms of the Companies Act 71 of 2008 it assists the Board through advising and making submissions on financial reporting, oversight of the risk management process and internal financial controls, external and internal audit functions and statutory and regulatory compliance of the Group.

Terms of referenceThe Audit Committee has adopted formal terms of reference that have been approved by the Board and these terms of reference are regularly reviewed and updated where necessary. The Audit Committee has executed its duties during the past financial year in accordance with these terms of reference.

CompositionAs at 25 January 2011, the Audit Committee comprised of Messrs Mitesh Patel (Chairman) and Martin Potgieter. Mr Seth Radebe was appointed on 26 January 2011 as Chairman of the Committee and Vuyisa Nkonyeni as member of this Committee. Mr Martin Potgieter resigned on 31 January 2011.

MeetingsThe Audit Committee held four meetings during the period. Attendance at these meetings is shown in the table set out on page 24 of the annual report.

Statutory dutiesIn execution of its statutory duties, the Audit Committee:■■ Nominated the re-appointment of, SAB&T Chartered Accountants Inc (“SAB&T”) as auditors and Mr B Adam as the individual designated auditor, after satisfying ourselves through enquiry that SAB&T are independent as defined in terms of the Act;

■■ Determined the fees to be paid to SAB&T as disclosed in note 19 to the annual financial statements on page 69 of the annual report and their terms of engagement.

■■ Approved a Non-Audit Services Policy which determines the nature and extent of any non-audit services which SAB&T may provide to the Group.

■■ Pre-approved any proposed contract with SAB&T for the provision of non-audit services to the Group.■■ Received no complaints relating to the accounting practices of the Group, the content or auditing of its financial statements, the internal financial controls of the Group, and any other related matters.

■■ Reviewed the draft audited financial statements and annual report, the preliminary profit announcement and interim statements.■■ Met with the external auditors to discuss the annual financial statements prior to their approval by the Board.■■ Reviewed the valuation of goodwill before recommending any impairment to the Board for approval. ■■ Made submissions to the Board on matters concerning the Group’s accounting policies, financial control, records and reporting; and■■ Concurred that the adoption of the going concern premise in the preparation of the annual financial statements is appropriate.

Oversight of risk managementThe Audit Committee, through its Risk Committee, has:■■ Received assurance that the process and procedures followed by the Risk Management Committee are adequate to ensure that financial risks are identified and monitored.

■■ Has satisfied itself that the following areas have been appropriately addressed:– Financial reporting risks;– Internal financial controls;– Fraud risks as they relate to financial reporting; and– IT risks as they relate to financial reporting.

■■ Reviewed tax and technology risks, in particular how they are managed.

/Audit Committee report (continued)

For the year ended 28 February 2011

1

Internal financial controls■■ Reviewed the effectiveness of the Group’s system of internal financial controls including receiving assurance from management and external audit.

■■ Reviewed significant issues raised by the external auditors in their reports.■■ Reviewed policies and procedures for preventing and detecting fraud.

Based on the processes and assurances obtained, we believe that the significant internal financial controls are effective.

Regulatory complianceThe Audit Committee has complied with all applicable legal and regulatory responsibilities.

External auditBased on processes followed and assurances received, we have no concerns regarding the external auditor’s independence.

Description of fees Rand % of Total

Audit services 1 160 999 100Non-audit services – –

Total audit fees 1 160 999 100

Based on our satisfaction with the results of the activities outlined above, we have recommended the reappointment of SAB&T Chartered Accountants Inc. to the Board and the shareholders.

Internal auditThere is no separate internal audit team within the Group.

Financial DirectorWe have satisfied ourselves that Pieter Swart has the appropriate expertise and experience to meet the responsibilities of his appointed position as Financial Director as required by the JSE.

We are satisfied with the:■■ expertise and experience of the Group Financial Manager, and■■ as part of the turnaround strategy, the resources within the finance function are being strengthened to provide the necessary support to the Financial Director.

In making these assessments, we have obtained feedback from the external auditors.

Based on the processes and assurances obtained, we believe that the accounting practices are effective.

Annual reportWe have evaluated the annual financial statements of Africa Cellular Towers Limited and the Group for the year ended 28 February 2011 and based on the information provided to the Audit Committee, consider that the Group complies in all material respects, with the requirements of the Act and International Financial Reporting Standards and we recommended the annual report to the Board for approval.

On behalf of the Audit Committee

Mr Seth RadebeAudit Committee Chairman

17 May 2011



/Independent auditors’ report

TO THE MEMBERS OF AFRICA CELLuLAR TOWERS LIMITED AND ITS SuBSIDIARIES

Report on annual financial statementsWe have audited the Group annual financial statements and annual financial statements of Africa Cellular Towers Limited, which comprise the consolidated and separate statements of financial position as at 28 February 2011, and the consolidated and separate statements of comprehensive income, the consolidated and separate statements of changes in equity and consolidated and separate statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the directors’ report as set out on pages 35 to 79.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of Africa Cellular Towers Limited as at 28 February 2011, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.

SAB&T Chartered Accountants IncorporatedRegistered Auditors

Per: Bashier Adam

17 May 2011

119 Witch-Hazel AvenueHighveld TechnoparkCenturion, 0046

/Directors’ responsibilities and approvalFor the year ended 28 February 2011

The Board of directors (“the directors”) are required by the Companies Act 71 of 2008 to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements of Africa Cellular Towers Limited and its subsidiaries (“the Group”) and related financial information included in this annual report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the company and the Group as at the end of the financial year and the results of its operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards (“IFRS”). The external auditors are engaged to express an independent opinion on the annual financial statements.

The financial statements have been audited by the independent accounting firm, SAB&T Chartered Accountants Inc., who was given unrestricted access to all financial records and related data, including minutes of all meetings of the shareholders, the directors and its committees. The directors believe that all representations made to the independent auditors during the audit were valid and appropriate.

The annual financial statements are prepared in accordance with IFRS and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the 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 Group and all employees are required to maintain the highest ethical standards in ensuring the Group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group.

While operating risk cannot be fully eliminated, the Group 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 Group’s cash flow forecast for the year ending 28 February 2012 and in the light of this review and the current financial position, they are satisfied that the company and Group have or have access to adequate resources to continue in operational existence for the foreseeable future.

The annual financial statements of the Group and company, set out on pages 39 to 79 which have been prepared on the going concern basis, were approved by the board on 17 May 2011 and were signed on its behalf by:

Mr J de Villiers Mr PSN SwartChief Executive Officer Financial Director

Tulisa Park17 May 2011



/Directors’ reportFor the year ended 28 February 2011

The directors submit their report for the year ended 28 February 2011.

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

2. Review of activitiesMain business and operationsThe Group is engaged in manufacturing and fabrication of steel communication towers, towers for the power industries and supplies other ancillary products and services in South Africa and the rest of Africa.

The operating results and state of affairs of the company are fully set out in the attached consolidated annual financial statements and do not in our opinion require any further comment.

3. Going concernThe consolidated 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.

The Group has restructured and the directors believe that the Group is solvent. Additional funding was secured to perform on current and future contracts.

The turnaround strategy, implemented since May 2010, encompassed inter alia a cost cutting exercise, major organisational restructuring and evaluating the sustainability and viability of each division. ACTOWERS developed comprehensive business plans and models for each division. The turnaround strategy is ongoing.

4. Post-balance sheet eventsThe Group is pleased to announce that an agreement has been entered into with the Industrial Development Corporation (“IDC”), in respect of a R99 million funding facility, staggered over the next six years at market-related rates, to assist with capital expenditure and working capital requirements of the Group.

The directors are not aware of any other matter or circumstance arising since the end of the financial year which may materially effect the financial statements under review.

5. Directors’ and associates’ interests

Director Direct Indirect * Total % holding

2011CJJ Krüger 1 111 345 000 13 942 905 125 287 905 33,84J de Villiers 2 058 750 – 2 058 750 0,56DM van Staden 2 – 125 000 125 000 0,03

2010CJJ Krüger 1 111 345 000 13 942 905 125 287 905 33,84J de Villiers 2 058 750 – 2 058 750 0,56DM van Staden 2 – 125 000 125 000 0,03

*Associates

Notes:1. Indirect interest held by MLC Krüger (wife of CJJ Krüger)2. Indirect interest held by N van Staden (wife of DM van Staden)

/Directors’ report (continued)


6. Financial statementsThe consolidated annual results and financial position are contained in the consolidated annual financial statements on pages 39 to 79 of the annual report.

The audited statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and their interpretations adopted by the International Accounting Standards Board (IASB), the Listings Requirements of the JSE Limited (“JSE”) and the Companies Act, 61 of 1973, as amended (“Companies Act”) remain consistent with those applied in the prior year.

7. Authorised and issued share capitalThere were no changes in the authorised share capital of the Group during the year under review.

8. Borrowing limitationsIn terms of the articles of association of the company, the directors may exercise all the powers of the company to borrow money, as they consider appropriate.

9. Share incentive schemeRefer to note 22 for details about share-based payments during the current year.

In terms of the share-based incentive scheme, 0 (zero) (2010: 930 000) shares were allotted to the ACTOWERS Share Incentive Scheme for a consideration of R0 (2010: R812 800) on a loan account basis.

10. Non-current assetsThere were no major changes in the nature of the non-current assets of the Group during the year.

11. DividendsNo dividends were declared or paid to shareholders during the year.

12. Interest of directors in contractsOther than the interests disclosed in note 5 of the directors’ report and related party note 25 of the annual financial statements, no directors have any other interest in any transactions of significance with the company or any of its subsidiaries.

13. DirectorsThe directors of the company during the year and to the date of this report are as follows:

Name Nationality Changes

CJJ Krüger – Non-Executive Director South AfricanJ de Villiers – CEO South AfricanNWJ Van Der Mescht – Executive Director South African Appointed 1 June 2010MM Patel – Chairman South AfricanV Nkonyeni – Non-Executive Director South AfricanMM Potgieter – Independent Non-Executive Director South African Resigned 31 January 2011S Radebe – Independent Director South African Appointed 26 January 2011Pieter Swart – Financial Director South African Appointed 1 March 2011DM van Staden – Executive Director South African



14. SecretaryThe secretary of the company is Premium Corporate Consulting Services (Proprietary) Limited of:

Business address Waterford Business Parker unit 28, First Floor Corner Waterford and Witkoppen Drive Fourways 2188

Postal address PO Box 1078 Jukskei Park 2153

15. LitigationThe directors of the company are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past (being at least the previous 12 months from the date of the consolidated annual financial statements) a material effect on the Group’s financial position.

16. Interest in subsidiaries/special purpose entities

Name of subsidiary Country of incorporation if not the RSA

Net income (loss) after tax

R

2011JK Shelters (Proprietary) Limited (10 651 509)Africa Cellular Madagascar SARL Madagascar (6 927)Brazzaville Tower Services SARL Congo (Brazzaville) –Africa Tower Technologies SPRL Democratic Republic of Congo (1 011 916)Granada Trading (Proprietary) Limited (5 306 570)Africa Cellular Towers uganda Limited uganda (2 199 983)ACTOWERS Share Incentive Scheme (1 100 233)Africa Cellular Towers Tanzania Ltd Tanzania (1 182 850)ACTOWERS Ghana LTD Ghana (1 199 392)

2010JK Shelters (Proprietary) Limited (9 263 876)Africa Cellular Madagascar SARL Madagascar 4 800 513Brazzaville Tower Services SARL Congo (Brazzaville) 4 900 509Africa Tower Technologies SPRL Democratic Republic of Congo (1 731 570)Granada Trading (Proprietary) Limited (3 581 416)Africa Cellular Towers uganda Limited uganda (4 259 496)ACTOWERS Share Incentive Scheme (129 446)Africa Cellular Towers Tanzania Ltd Tanzania (3 804 549)ACTOWERS Ghana Ltd Ghana (101 067)

Details of the company’s investment in subsidiaries are set out in note 6 of the annual financial statements.

ACTOWERS controls all the day-to-day business operations of ACTOWERS Share Incentive Scheme (a share incentive trust). The entity was therefore consolidated.

The trustees of ACTOWERS Share Incentive Scheme consist of:■■ Aad Pieter den Haartog■■ Izak Johannes de Villiers

/Directors’ report (continued)


17. AuditorsSAB&T Chartered Accountants Inc. will continue in office in accordance with section 270(2) of the Companies Act.

18. Warranty provisionThe 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. The company warrants the workmanship and design on towers for a year. Based on past history and experience of actual events, no provision for warranties is necessary.

19. Segment reportThe majority of revenue and expenditure for the Group derives from cellular towers, shelters and power lines, therefore management uses this as the primary segment.

SegmentsFigures in Rand

Cellular Towers

Equipment Shelters

PowerLines

Fibre Optics Consolidated

RevenueExternal sales 100 931 945 9 428 876 81 752 211 10 015 178 202 128 210 Inter-segment sales – – – –

Total revenue 100 931 945 9 428 876 81 752 211 10 015 178 202 128 210

ResultOperating profit (65 646 002) (8 611 862) 7 115 029 (18 874 827) (86 017 661)Impairment of investment – (22 032 347) – – (22 032 347)Interest expense (2 863 181) (58 899) (2 164 596) (265 177) (5 351 853)Interest income 2 979 870 1 380 288 3 229 883 395 682 7 985 723 Depreciation, amortisation and impairments (7 369 684) (447 999) (1 566 895) (113 200) (9 497 778)Profit and loss on foreign exchange (6 050 552) (1 449 312) – – (7 499 864)Taxation (11 022 146) (519 713) 855 354 – (10 686 505)

(Loss)/profit for the year (89 971 695) (31 739 844) 7 468 776 (18 857 522) (133 100 285)

Other informationSegment assets 141 316 586 17 646 866 36 696 666 4 902 385 200 562 503 Segment liabilities 37 560 856 1 500 016 19 488 458 1 517 585 60 066 915 Capital expenditure 8 138 153 271 188 5 088 696 114 912 13 612 949

The Group’s manufacturing operations are situated in South Africa and sales are made across the African continent.

The Group has no staff permanently employed outside of South Africa, nor does it have any permanent offices outside South Africa. The Group may have temporary staff and offices for the duration of a contract.

The Group thus has no discernible geographical segment.

20. Special resolutionsNo special resolutions were passed by the company’s subsidiaries since the date of the previous directors’ report.

21. Material changesOther 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 company or the Group since the signature date of this annual report and the posting date thereof.



/Statement of financial positionAt 28 February 2011

Group Company

Figures in Rand Note(s) 2011 2010 2011 2010

AssetsNon‑current assetsProperty, plant and equipment 3 54 724 255 50 691 934 52 540 492 48 367 650Goodwill 4 – 22 032 347 – –Intangible assets 5 47 559 69 190 32 688 51 044Investments in subsidiaries 6 – – 14 032 841 39 704 704Loans to Group companies 7.1 – – 17 776 681 16 613 720Other financial assets 7.2 6 296 844 – 6 296 844 –Deferred tax 8 75 618 873 118 – 277 787

61 144 276 73 666 589 90 679 546 105 014 905

Current assetsInventories 9 37 212 093 47 849 416 35 322 984 45 835 466Loans to Group companies 7.1 – – 13 427 418 30 440 863Other financial assets 7.2 – 165 352 – 165 352Current tax receivable 94 412 4 218 313 – 4 218 313Construction contracts and receivables 10 37 545 355 63 671 248 30 253 184 41 865 791Trade and other receivables 7.3 46 434 388 88 141 149 36 980 670 57 829 205Cash and cash equivalents 7.4 18 131 979 60 499 030 6 452 876 43 378 018

139 418 227 264 544 508 122 437 132 223 733 008

Total assets 200 562 503 338 211 097 213 116 678 328 747 913

Equity and liabilitiesEquityShare capital 11 218 652 996 219 152 503 231 302 791 231 802 298Reserves (27 026 585) (24 122 942) (26 807 500) (22 681 686)Accumulated loss (51 130 823) 81 969 462 (45 634 352) 74 754 529

140 495 588 276 999 023 158 860 939 283 875 141

LiabilitiesNon‑current liabilitiesInstalment sale obligation 12.1 12 414 637 17 688 608 12 233 157 17 326 640Deferred tax 8 957 085 – 957 085 –Mortgage bonds 12.2 6 598 032 6 597 440 6 598 032 6 597 440

19 969 754 24 286 048 19 788 274 23 924 080

Current liabilitiesCurrent tax payable 1 710 271 2 761 206 565 816 –Instalment sale obligation 12.1 5 816 890 6 110 781 5 637 180 5 612 541Trade and other payables 12.3 32 565 340 28 049 728 28 259 809 15 331 840Mortgage bonds 12.2 4 660 4 311 4 660 4 311

40 097 161 36 926 026 34 467 465 20 948 692

Total liabilities 60 066 915 61 212 074 54 255 739 44 872 772

Total equity and liabilities 200 562 503 338 211 097 213 116 678 328 747 913

Ordinary shares in issue 370 287 283 370 287 283Net asset value per share (cents) 37,9 74,8Net tangible asset value per share (cents) 37,9 68,8

Group Company


Revenue 13 202 128 210 227 389 855 176 877 562 210 955 388Cost of sales 14 (213 763 521) (224 438 552) (181 064 506) (194 424 585)

Gross (loss)/profit (11 635 311) 2 951 303 (4 186 944) 16 530 803Other income 31 2 433 579 7 710 591 3 541 342 6 959 013Operating expenses 32 (108 346 054) (91 905 540) (110 485 238) (86 217 954)Profit and loss on exchange differences (7 499 864) (25 490 599) (3 588 731) (20 981 719)

Operating (loss)/profit 15 (125 047 650) (106 734 245) (114 719 571) (83 709 857)Investment revenue 16 7 985 723 21 181 041 11 908 431 20 367 820Income from available-for-sale investment – 278 447 – 278 447Finance costs 17 (5 351 853) (8 057 798) (7 489 018) (9 099 384)

(Loss)/profit before taxation (122 413 780) (93 332 555) (110 300 158) (72 162 974)Taxation 18 (10 686 505) 1 069 447 (10 088 723) 506 959

(Loss)/profit for the year (133 100 285) (92 263 108) (120 388 881) (71 656 015)

Other comprehensive income(Loss)/profit for the year (133 100 285) (92 263 108) (120 388 881) (71 656 015)Exchange differences on translating foreign operations (2 903 643) (16 333 418) (4 125 814) (18 107 338)Gains/(losses) on available-for-sale investment – (244 526) – (244 526)

Other comprehensive income for the year net of taxation 20 (2 903 643) (16 577 944) (4 125 814) (18 351 864)

Total comprehensive (loss)/income (136 003 928) (108 841 052) (124 514 695) (90 007 879)

Total comprehensive (loss)/income attributable to:Owners of the parent (136 003 928) (108 841 052) (124 514 695) (90 007 879)

/Statement of comprehensive incomeFor the year ended 28 February 2011



Figures in Rand Share capital

Share premium

Share incentive

reserve

Total share

capital

Foreign currency

translation reserve

Revaluation reserve

Total reserves

Retained income

Total equity

Group

Balance at 1 March 2009 35 605 212 594 996 5 002 418 217 633 019 (7 789 524) 244 526 (7 544 998) 174 232 570 384 320 591

Changes in equity

Total comprehensive income for the year – – – – (16 333 418) (244 526) (16 577 944) (92 263 108) (108 841 052)

Issue of shares 40 351 960 – 352 000 – – – – 352 000

Employees share option – – 1 519 484 1 519 484 – – – – 1 519 484

Purchase of own/treasury shares (40) (351 960) – (352 000) – – – – (352 000)

Total changes – – 1 519 484 1 519 484 (16 333 418) (244 526) (16 577 944) (92 263 108) (107 321 568)

Balance at 1 March 2010 35 605 212 594 996 6 521 902 219 152 503 (24 122 942) – (24 122 942) 81 969 462 276 999 023

Changes in equity

Total comprehensive income for the year – – – – (2 903 643) – (2 903 643) (133 100 285) (136 003 928)

Employees share option – – (499 507) (499 507) – – – – (499 507)

Total changes – – (499 507) (499 507) (2 903 643) – (2 903 643) (133 100 285) (136 503 435)

Balance at 28 February 2011 35 605 212 594 996 6 022 395 218 652 996 (27 026 585) – (27 026 585) (51 130 823) 140 495 588

Note(s) 11 11 11

Company

Balance at 1 March 2009 36 989 224 891 408 5 002 418 229 930 815 (4 574 348) 244 526 (4 329 822) 146 410 544 372 011 537

Changes in equity

Total comprehensive income for the year – – – – (18 107 338) (244 526) (18 351 864) (71 656 015) (90 007 879)

Issue of shares 40 351 960 – 352 000 – – – – 352 000

Employees share option – – 1 519 483 1 519 483 – – – – 1 519 483

Total changes 40 351 960 1 519 483 1 871 483 (18 107 338) (244 526) (18 351 864) (71 656 015) (88 136 396)

Balance at 1 March 2010 37 029 225 243 368 6 521 901 231 802 298 (22 681 686) – (22 681 686) 74 754 529 283 875 141

Changes in equity

Total comprehensive income for the year – – – – (4 125 814) – (4 125 814) (120 388 881) (124 514 695)

Employees share option – – (499 507) (499 507) – – – – (499 507)

Total changes – – (499 507) (499 507) (4 125 814) – (4 125 814) (120 388 881) (125 014 202)

Balance at 28 February 2011 37 029 225 243 368 6 022 394 231 302 791 (26 807 500) – (26 807 500) (45 634 352) 158 860 939

Note(s) 11 11 11 11

/Statement of changes in equityFor the year ended 28 February 2011

Group Company


Cash flows from operating activitiesCash receipts from customers 243 834 971 297 757 875 197 726 097 263 229 463Cash paid to suppliers and employees (263 697 837) (336 753 890) (232 420 724) (313 521 386)

Cash generated from (used in) operations 21 (19 862 866) (38 996 015) (34 694 627) (50 291 923)Interest income 7 985 723 21 181 041 11 908 431 20 367 820Finance costs (2 959 229) (4 659 886) (5 128 133) (5 838 460)Tax received (paid) 23 10 589 (12 947 037) 1 799 821 (3 802 407)

Net cash from operating activities (14 825 783) (35 421 897) (26 114 508) (39 564 970)

Cash flows from investing activitiesPurchase of property, plant and equipment 3 (13 612 949) (4 871 151) (13 115 530) (3 731 725)Sale of property, plant and equipment 3 206 982 220 010 45 623 220 009Purchase of intangible assets 5 (44 264) – (30 931) –Loans advanced to Group companies – – (1 594 747) (22 189 352)Proceeds from loans from Group companies – – 17 445 231 23 649 270Financial assets: Loans collected (6 131 492) 1 406 078 (6 131 492) 1 406 078

Net cash from investing activities (19 581 723) (3 245 063) (3 381 846) (645 720)

Cash flows from financing activitiesProceeds on share issue 11 – – – 352 000Movement in mortgage bonds 941 35 258 941 35 258Movement in instalment sale agreements (7 960 486) (10 734 457) (7 429 729) (10 438 307)

Net cash from financing activities (7 959 545) (10 699 199) (7 428 788) (10 051 049)

Total cash movement for the year (42 367 051) (49 366 159) (36 925 142) (50 261 739)Cash at the beginning of the year 60 499 030 109 865 189 43 378 018 93 639 757

Total cash at the end of the year 7.4 18 131 979 60 499 030 6 452 876 43 378 018

/Statement of cash flowsFor the year ended 28 February 2011



/Notes to the consolidated annual financial statementsFor the year ended 28 February 2011

Accounting Policies1. Presentation of consolidated annual financial statements

The consolidated annual financial statements have been prepared in accordance with International Financial Reporting Standards, and the Companies Act of South Africa, 1973. The consolidated annual financial statements have been prepared on the historical cost basis except for certain financial instruments which are measured at fair value. The principal accounting policies are set out below.

The consolidated annual financial statements have been prepared on a going concern basis. 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.

The consolidated annual financial statements are presented in South African Rand, which is also the functional currency for Africa Cellular Towers Limited.

These accounting policies are consistent with the previous period.

1.1 Significant judgements and estimatesIn preparing the consolidated annual financial statements, directors are required to make estimates and assumptions that affect the amounts represented in the consolidated annual financial statements and related disclosures. use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the consolidated annual financial statements. Significant judgements include:

Options grantedDirectors used the trinomial model to determine the value of the options at issue date. Additional details regarding the estimates are included in note 22 of the annual financial statements – Share-based payments.

Fair value estimationThe fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

Basis of consolidationThe consolidated financial statements include the financial statements of the company and its subsidiaries and special purpose entities. 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, in its separate financial statements.

1.2 Property, plant and equipmentThe 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.

Property, plant and equipment are initially measured at cost.

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.

Property, plant and equipment are depreciated on the straight-line basis over their expected useful lives to their estimated residual value.

Land are not depreciated and have indefinite useful lives.

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

The useful lives of items of property, plant and equipment have been assessed as follows:

Item Average useful life

Land IndefinitePlant and machinery Ten yearsFurniture and fixtures Six yearsMotor vehicles Four to five yearsOffice equipment Six yearsIT equipment Three yearsInstrument and tools Six yearsLeasehold improvements Ten years

Property, plant and equipment with a cost of less than R7 000 are written off as minor assets.

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

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

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 is depreciated separately.

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.

1.3 GoodwillGoodwill represents the excess of the cost of acquisition of interests in subsidiaries 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 cost 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 these circumstances 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. Any excess on acquisition is recognised immediately in the income statement.

/Notes to the consolidated annual financial statements (continued)




1.4 Intangible assetsAn intangible asset is recognised when:■■ it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and■■ the cost of the asset can be measured reliably.

Intangible assets are initially recognised at cost.

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

The amortisation period and the amortisation method for intangible assets are reviewed every period-end.

Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows:

Item Useful life

Computer software Two to five years

1.5 Investments in subsidiariesCompany consolidated annual financial statementsIn the company’s separate consolidated annual financial statements, investments in subsidiaries are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of:■■ the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the company; plus

■■ any costs directly attributable to the purchase of the subsidiary.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.

1.6 Financial instrumentsFinancial instruments are recognised when the entity becomes a party to the contractual provisions of the instrument. Financial assets and liabilities as a result of firm commitments are only recognised when one of the parties has performed under the contract.

A financial asset is an asset that is cash, an equity instrument of another entity, a contractual right to receive cash or another financial asset from another entity, or to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity.

A financial liability is a liability that is a contractual obligation to deliver cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity.

ClassificationThe Group classifies financial assets and financial liabilities into the following categories:■■ Financial assets at fair value through profit or loss – held-for-trading■■ Financial assets at fair value through profit or loss – designated■■ Held-to-maturity investment■■ Loans and receivables■■ Available-for-sale financial assets■■ Financial liabilities measured at amortised cost

Classification depends on the purpose for which the financial instruments were obtained/incurred and takes place at initial recognition. Classification is reassessed on an annual basis, except for derivatives and financial assets designated as at fair value through profit or loss, which shall not be classified out of the fair value through profit or loss category.

Initial recognition and measurementFinancial instruments are recognised initially when the Group becomes a party to the contractual provisions of the instruments. Financial assets and liabilities as a result of firm commitments are only recognised when one of the parties has performed under the contract.

The Group 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 instruments are measured initially at fair value, except for equity investments for which a fair value is not determinable, which are measured at cost and are classified as available-for-sale financial assets.

For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument.

Transaction costs on financial instruments at fair value through profit or loss are recognised in profit or loss.

Subsequent measurementFinancial instruments at fair value through profit or loss are subsequently measured at fair value, with gains and losses arising from changes in fair value being included in profit or loss for the period.

Net gains or losses on the financial instruments at fair value through profit or loss exclude dividends and interest.

Dividend income is recognised in profit or loss as part of other income when the Group’s right to receive payment is established.

Loans and receivables are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.

Held-to-maturity investments are subsequently measured at amortised cost, using the effective interest method, less accumulated impairment losses.

Available for sale financial assets are subsequently measured at fair value. This excludes equity investments for which a fair value is not determinable, which are measured at cost less accumulated impairment losses.

Gains and losses arising from changes in fair value of available-for-sale financial assets are recognised directly in equity until the asset is disposed of or determined to be impaired. Interest on available-for-sale financial assets calculated using the effective interest method is recognised in profit or loss as part of other income.

Changes in fair value of available-for-sale financial assets denominated in a foreign currency are analysed between translation differences resulting from changes in amortised cost and other changes in the carrying amount. Translation differences on monetary items are recognised in profit or loss, while translation differences on non-monetary items are recognised in equity.

Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective interest method.

Fair value determinationThe fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs.





Impairment of financial assetsAt each statement of financial position date the Group assesses all financial assets, other than those at fair value through profit or loss, to determine whether there is objective evidence that a financial asset or group of financial assets has been impaired.

In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator of impairment. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in profit or loss.

Impairment losses are recognised in profit or loss.

Impairment losses are reversed when an increase in the financial asset’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 financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss except for equity investments classified as available-for-sale.

Impairment losses are also not subsequently reversed for available-for-sale equity investments which are held at cost because fair value was not determinable.

Where financial assets are impaired through use of an allowance account, the amount of the loss is recognised in profit or loss within operating expenses. When such assets are written off, the write-off is made against the relevant allowance account. Subsequent recoveries of amounts previously written off are credited against operating expenses.

Loans to (from) Group companiesThese include loans to and from holding companies, fellow subsidiaries, subsidiaries, joint ventures and associates and are recognised initially at fair value plus direct transaction costs.

Loans to Group companies are classified as loans and receivables.

Loans from Group companies are classified as financial liabilities measured at amortised cost.

Trade and other receivablesTrade 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.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in the income statement.

Trade and other payablesTrade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

Cash and cash equivalentsCash 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 recorded at fair value and subsequently at amortised cost.

Bank overdraft and borrowingsBank 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 Group’s accounting policy for borrowing costs.

1.7 TaxCurrent 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.

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 end of the reporting period.

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, to other comprehensive income; 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 in equity.

1.8 LeasesA 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.

Instalment sale obligations – lesseeInstalment sale obligations 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.

Interest rates are linked to prime at the contract date. All instalments have fixed repayments. The fair value is equal to the carrying value as the interest rates are variable.





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.

Operating leases – lesseeOperating 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.

1.9 InventoriesInventories 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 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.

1.10 Construction contracts and receivablesWhere 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 reporting date.

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.

1.11 Impairment of assetsThe Group assesses at each end of the reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset.

Irrespective of whether there is any indication of impairment, the Group 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; and

■■ tests goodwill acquired in a business combination for impairment annually.

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.

Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination.

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.

The Group 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.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

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.

1.12 Share capital and equityAn equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

If the Group 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 Group’s own equity instruments. Consideration paid or received shall be recognised directly in equity.

1.13 Employee benefitsShort-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.

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, group 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.

1.14 Provisions and contingenciesProvisions are recognised when:■■ the Group 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 the Group 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.

1.15 RevenueRevenue from the sale of goods is recognised when all the following conditions have been satisfied:■■ the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;■■ the Group 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 Group; 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 end of the reporting period. 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 Group;■■ the stage of completion of the transaction at the end of the reporting period 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 the end of the reporting period. 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.

Royalties are recognised on the accrual basis in accordance with the substance of the relevant agreements.

Dividends are recognised, in profit or loss, when the company’s right to receive payment has been established.

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

1.16 Cost of salesWhen 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.

1.17 Borrowing costsBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset until such time as the asset is ready for its intended use. The amount of borrowing costs eligible for capitalisation is determined as follows:■■ Actual borrowing costs on funds specifically borrowed for the purpose of obtaining a qualifying asset less any temporary investment of those borrowings.

■■ Weighted average of the borrowing costs applicable to the entity on funds generally borrowed for the purpose of obtaining a qualifying asset. The borrowing costs capitalised do not exceed the total borrowing costs incurred.

The capitalisation of borrowing costs commences when:■■ expenditures for the asset have occurred;■■ borrowing costs have been incurred, and■■ activities that are necessary to prepare the asset for its intended use or sale are in progress.

Capitalisation is suspended during extended periods in which active development is interrupted.

Capitalisation ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

1.18 Translation of foreign currenciesForeign currency transactionsA foreign currency transaction is recorded, on initial recognition, in Rand, 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 the end of the reporting period:■■ 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 consolidated 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 to other comprehensive income and accumulated in equity, any exchange component of that gain or loss is recognised to other comprehensive income and accumulated 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 Rand by applying to the foreign currency amount the exchange rate between the Rand and the foreign currency at the date of the cash flow.

Investments in subsidiaries, joint ventures and associatesThe results and financial position of a foreign operation are translated into the functional currency using the following procedures:■■ assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;

■■ income and expenses for each item of profit or loss are translated at exchange rates at the dates of the transactions; and■■ all resulting exchange differences are recognised to other comprehensive income and accumulated as a separate component of equity.

Exchange differences arising on a monetary item that forms part of a net investment in a foreign operation are recognised initially to other comprehensive income and accumulated in the translation reserve. They are recognised in profit or loss as a reclassification adjustment through to other comprehensive income on disposal of net investment.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation are treated as assets and liabilities of the foreign operation.

The cash flows of a foreign subsidiary are translated at the exchange rates between the functional currency and the foreign currency at the dates of the cash flows.

1.19 Cash flow statementThe cash flow statement is prepared on the direct method, whereby the major classes of gross cash receipts and gross cash payments are disclosed.

For purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and deposits held on call with banks net of bank overdrafts, all of which are available for use by the company unless otherwise stated.

2. New standards and interpretations2.1 Standards and interpretations not yet effective

The Group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Group’s accounting periods beginning on or after 1 March 2011 or later periods:

IFRS 3 (Revised) Business CombinationsFirst-time adopters of IFRS may measure exploration and evaluation assets and assets in the development or production phase (for oil and gas properties) at the amount determined in accordance with their previous GAAP at date of transition. However, these assets should be tested for impairment in accordance with IAS 36 (AC 128) Impairment of Assets at the date of transition to IFRS and, if necessary, reduced. If the exemption for oil and gas assets is applied, then any decommissioning, restoration and similar liabilities at the date of transition shall be determined in accordance with IAS 37 (AC 130) Provisions, Contingent Liabilities and Contingent Assets. The difference between that amount and the amount recognised under previous GAAP shall be recognised directly in retained earnings.

Another exemption provides for first-time adopters who made the same determination of whether an arrangement contains a lease in accordance with previous GAAP as required by IFRIC 4 (AC 437) Determining Whether an Arrangement Contains a Lease, but at a date other than that required by IFRIC 4, the First-time adopter does not need to reassess that determination when it adopts IFRS.

The effective date of the amendment is for years beginning on or after 01 January 2010.

The Group has adopted the amendment for the First-time in the 2011 consolidated annual financial statements.

The impact of the amendment is set out in note Changes in Accounting Policy.





IAS 24 Related Party Disclosures (Revised)The revisions to IAS 24 include a clarification of the definition of a related party as well as providing a partial exemption for related party disclosures between government-related entities.

In terms of the definition, the revision clarifies that joint ventures or associates of the same third party are related parties of each other. To this end, an associate includes its subsidiaries and a joint venture includes its subsidiaries.

The partial exemption applies to related party transactions and outstanding balances with a government which controls, jointly controls or significantly influences the reporting entity as well as to transactions or outstanding balances with another entity which is controlled, jointly controlled or significantly influenced by the same government. In such circumstances, the entity is exempt from the disclosure requirements of paragraph 18 of IAS 24 and is required only to disclose:■■ The name of the government and nature of the relationship■■ Information about the nature and amount of each individually significant transaction and a quantitative or qualitative indication of the extent of collectively significant transactions. Such information is required in sufficient detail to allow users to understand the effect.


The Group expects to adopt the amendment for the First-time in the 2012 consolidated annual financial statements.

It is unlikely that the amendment will have a material impact on the company’s consolidated annual financial statements.

2010 Annual Improvements Project: Amendments to IFRS 7 Financial Instruments: Disclosures

Additional clarification is provided on the requirements for risk disclosures




2010 Annual Improvements Project: Amendments to IAS 1 Presentation of Financial StatementsThe amendment now requires that an entity must present, either in the statement of changes in equity or in the notes, an analysis of by item.




2010 Annual Improvements Project: Amendments to IAS 34 Interim Financial ReportingThe amendment provides additional examples of events and transactions which would be considered significant and therefore required to be disclosed in the interim financial report. In addition, the amendment removes references to only reporting certain items when they are material. Therefore, the list of items to be presented in addition to significant transactions and events are required irrespective of whether they are material.






3. Property, plant and equipment

2011 2010

Figures in Rand CostAccumulated depreciation

Carrying value Cost

Accumulated depreciation

Carrying value

GROUPLand 6 900 000 – 6 900 000 8 611 216 – 8 611 216Plant and machinery 47 449 368 (14 346 987) 33 102 381 44 301 655 (9 632 527) 34 669 128Furniture and fixtures 859 844 (322 620) 537 224 511 235 (181 381) 329 854Motor vehicles 15 327 186 (4 753 010) 10 574 176 6 290 868 (2 800 870) 3 489 998Office equipment 229 390 (80 083) 149 307 108 614 (43 828) 64 786IT equipment 756 275 (400 443) 355 832 583 877 (267 858) 316 019Leasehold improvements 2 944 012 (868 216) 2 075 796 2 956 143 (574 843) 2 381 300Instruments and tools 1 368 879 (339 340) 1 029 539 981 272 (151 639) 829 633

Total 75 834 954 (21 110 699) 54 724 255 64 344 880 (13 652 946) 50 691 934

COMPANyLand 6 900 000 – 6 900 000 8 611 216 – 8 611 216Plant and machinery 45 024 754 (13 513 531) 31 511 223 41 980 125 (9 074 559) 32 905 566Furniture and fixtures 752 695 (287 413) 465 282 451 609 (169 206) 282 403Motor vehicles 14 255 578 (4 046 296) 10 209 282 5 388 099 (2 314 828) 3 073 271Office equipment 113 382 (73 530) 39 852 64 743 (37 821) 26 922IT equipment 692 421 (382 903) 309 518 541 799 (241 691) 300 108Leasehold improvements 2 944 012 (868 216) 2 075 796 2 956 143 (574 843) 2 381 300Instruments and tools 1 368 879 (339 340) 1 029 539 938 503 (151 639) 786 864

Total 72 051 721 (19 511 229) 52 540 492 60 932 237 (12 564 587) 48 367 650

Reconciliation of property, plant and equipment – Group – 2011

Figures in RandOpening

balance Additions Disposals Transfers

Foreign

exchange

movements

Minor

assets

written off

Depre‑

ciation

Impairment

loss

Closing

balance

Land 8 611 216 – – – – – – (1 711 216) 6 900 000

Plant and machinery 34 669 128 3 189 129 – – (11 659) – (4 744 217) – 33 102 381

Furniture and fixtures 329 854 436 233 (45 623) – (6 505) – (176 735) – 537 224

Motor vehicles 3 489 998 9 149 791 – – (53 926) (814) (2 010 873) – 10 574 176

Office equipment 64 786 101 262 – – 17 763 – (34 504) – 149 307

IT equipment 316 019 306 158 – (49 578) 8 555 (3 069) (222 253) – 355 832

Leasehold

improvements 2 381 300 – – – – (10 698) (294 806) – 2 075 796

Instruments and tools 829 633 430 376 (42 769) – – – (187 701) – 1 029 539

50 691 934 13 612 949 (88 392) (49 578) (45 772) (14 581) (7 671 089) (1 711 216) 54 724 255



3. Property, plant and equipment (continued)Reconciliation of property, plant and equipment – Company – 2011

Figures in RandOpening balance Additions Disposals Transfers

Foreign exchange

movements

Minor assets

written offDepre‑ciation

Impairment loss

Closing balance

Land 8 611 216 – – – – – – (1 711 216) 6 900 000

Plant and machinery 32 905 566 3 049 129 – – – (12 125) (4 431 347) – 31 511 223

Furniture and fixtures 282 403 386 724 (45 623) – (9 951) – (148 271) – 465 282

Motor vehicles 3 073 271 8 921 917 – – (30 505) (814) (1 754 587) – 10 209 282

Office equipment 26 922 62 239 – – (20 196) – (29 113) – 39 852

IT equipment 300 108 265 145 – (49 578) 12 171 (3 069) (215 259) – 309 518

Leasehold improvements 2 381 300 – – – – (10 698) (294 806) – 2 075 796

Instrument and tools 786 864 430 376 – – – – (187 701) – 1 029 539

48 367 650 13 115 530 (45 623) (49 578) (48 481) (26 706) (7 061 084) (1 711 216) 52 540 492

Assets under instalment sale obligation

Group CompanyFigures in Rand 2011 2010 2011 2010

Plant and machinery 21 414 527 33 079 987 21 402 819 31 650 682Motor vehicles 1 627 545 1 987 870 1 610 234 1 901 313

Details of propertiesHolding 98 ValleyAgricultural holding no 3, Registration Division IR the Province of Gauteng, measuring approximately 2 2258 hectares, held under deed of transfer T 51638/1999 as a vacant stand. This property is pledged as security for First Covering Mortgage Bond over Holding 98, Valley Settlement by Africa Cellular Towers Ltd reflected as mortgagor, and Nedbank reflected as mortgagee, in the amount of R2 200 000 (two million and two hundred thousand rand).

– Opening balance 3 120 006 – 3 120 006 –– Purchase price: 28 May 2008 – 2 500 000 – 2 500 000– Impairment loss (620 006) – (620 006) –– Capitalised expenditure – 620 006 – 620 006

2 500 000 3 120 006 2 500 000 3 120 006

3. Property, plant and equipment (continued)Assets under instalment sale obligation (continued)


Holding 99 ValleyAgricultural holding no 3, Registration Division I.R, measuring approximately 2,2258 hectares, held under Title Deed TI 03118/2005, as a vacant stand. This property is pledged as security for First Covering Mortgage Bond over Holding 99, Valley Settlement by Africa Cellular Towers Ltd reflected as mortgagor, and Nedbank reflected as mortgagee, in the amount of R2 150 000 (TWO MILLION AND ONE HuNDRED AND FIFTY THOuSAND RAND).

– Opening balance 2 683 205 – 2 683 205 –– Purchase price: 3 June 2008 – 2 150 000 – 2 150 000– Impairment loss (533 205) – (533 205) –– Capitalised expenditure – 533 205 – 533 205

2 150 000 2 683 205 2 150 000 2 683 205

Holding 102 WitkoppieRegistration Division IR 373, measuring approximately 2,3535 hectares, held under Title Deed T83547/2007, as a vacant stand. This property is pledged as security for First Covering Mortgage Bond over Holding 102, Witkoppie IR 373 by Africa Cellular Towers Ltd reflected as mortgagor, and Nedbank reflected as mortgagee, in the amount of R2 350 000 (two million and three hundred and fifty thousand rand).

Opening balance 2 808 005 – 2 808 005 –Purchase price: 3 June 2008 – 2 250 000 – 2 250 000Impairment loss (558 005) – (558 005) –Capitalised expenditure – 558 005 – 558 005

2 250 000 2 808 005 2 250 000 2 808 005

A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available for inspection at the registered office of the company.

4. Goodwill

2011 2010

Figures in Rand Cost

Accu‑

mulated

impairment

Carrying

value Cost

Accu-

mulated

impairment

Carrying

value

GROUPJK Shelters (Proprietary) Limited 33 226 714 (33 226 714) – 33 226 714 (11 194 367) 22 032 347

Reconciliation of goodwill – Group – 2011

Figures in Rand

Opening

balance

Impairment

loss Total

JK Shelters (Proprietary) Limited 22 032 347 (22 032 347) –





5. Intangible assets

2011 2010

Figures in Rand Cost

Accu‑

mulated

amortisation

Carrying

value Cost

Accu-

mulated

amortisation

Carrying

value

GROUP

Computer software 705 011 (657 452) 47 559 630 352 (561 162) 69 190

COMPANy

Computer software 626 654 (593 966) 32 688 565 328 (514 284) 51 044

Figures in Rand

Opening

balance Additions Transfers Amortisation

Closing

balance

Reconciliation of intangible assets – Group – 2011Computer software 69 190 44 264 49 578 (115 473) 47 559

Reconciliation of intangible assets – Company – 2011Computer software 51 044 30 931 49 578 (98 865) 32 688

6. Investments in subsidiaries

Name of company Held by% holding

2011% holding

2010

Carrying amount

2011

Carrying amount

2010

JK Shelters (Pty) Ltd* Africa Cellular Towers Limited 100 100 14 000 000 39 671 863Africa Tower Technologies SPRL Africa Cellular Towers Limited 100 100 139 139Africa Cellular Madagascar SARL Africa Cellular Towers Limited 100 100 10 431 10 431Brazzaville Tower Services SARL Africa Cellular Towers Limited 100 100 19 819 19 819Africa Cellular Towers uganda Ltd Africa Cellular Towers Limited 100 100 1 251 1 251Granada Trading (Pty) Ltd Africa Cellular Towers Limited 100 100 100 100Chad Tower Technology SARL Africa Cellular Towers Limited 100 100 100 100Africa Cellular Towers Tanzania Ltd Africa Cellular Towers Limited 100 100 991 991ACTOWERS Ghana Ltd Africa Cellular Towers Limited 100 100 10 10

14 032 841 39 704 704

The carrying amounts of subsidiaries are shown net of impairment losses.

* Portion relating to the movement in investments relates to the impairment of R25 671 863 relating to the net asset value in the holding company’s separate financial statements.

7. Financial assets by categoryThe accounting policies for financial instruments have been applied to the line items below:

Figures in RandLoans and

receivables

Fair value through

profit or loss – held‑for‑

trading

Held‑to‑maturity

investments Total

GROUP – 2011Other financial assets – – 6 296 844 6 296 844Trade and other receivables 43 981 192 – – 43 981 192Cash and cash equivalents 18 131 979 – – 18 131 979

62 113 171 – 6 296 844 68 410 015


receivables

Fair value through

profit or loss – held for

tradingAvailable-

for-sale Total

GROUP – 2010Other financial assets – 165 352 – 165 352Trade and other receivables 83 215 306 – – 83 215 306Cash and cash equivalents 60 499 031 – – 60 499 031

143 714 337 165 352 – 143 879 689


receivables

Fair value through

profit or loss – held‑for‑

tradingAvailable‑

for‑sale

Held to maturity

investments

COMPANy – 2011Loans to Group companies 31 204 099 – – 31 204 099Other financial assets – – 6 296 844 6 296 844Trade and other receivables 35 925 388 – – 35 925 388Cash and cash equivalents 6 452 876 – – 6 452 876

73 582 363 – 6 296 844 79 879 207


receivables

Fair value through

profit or loss – held-for-

tradingAvailable-

for-sale Total

COMPANy – 2010Loans to Group companies 74 177 173 – – 74 177 173Other financial assets – 165 352 – 165 352Trade and other receivables 54 707 354 – – 54 707 354Cash and cash equivalents 43 378 018 – – 43 378 018

172 262 545 165 352 – 172 427 897





7. Financial assets by category (continued)Group Company

Figures in Rand 2011 2010 2011 2010

7.1 Loans to (from) Group companiesSubsidiariesACTOWERS Share Incentive SchemeThe loan bears interest at 7% (2010: 9%) per annum repayable in four years before 28 February 2011. – – 17 776 681 16 613 720

Granada Trading (Proprietary) LimitedThe loan is unsecured, bears interest at 7% (2010: 9%) per annum with no fixed term of repayment. – – – 3 481 388

Africa Cellular Towers Tanzania LtdThe loan is unsecured, bears interest at 7% (2010: 9%) per annum with no fixed term of repayment. – – 707 270 3 348 313

ACTOWERS Ghana LtdThe loan is unsecured, bears interest at 7% (2010: 9%) per annum with no fixed term of repayment. – – 2 129 515 1 697 729

Africa Tower Technologies SPRLThe loan is unsecured, bears interest at 7% (2010: 9%) per annum with no fixed term of repayment. – – 10 590 633 17 206 642

Africa Cellular Towers Uganda LimitedThe loan is unsecured, bears interest at 7% (2010: 9%) per annum with no fixed term of repayment. – – – 4 706 791

– – 31 204 099 47 054 583

Non-current assets – – 17 776 681 16 613 720Current assets – – 13 427 418 30 440 863

– – 31 204 099 47 054 583

7.2 Other financial assetsAt fair value through profit or loss – held-for-tradingABSA – deposit – 165 352 – 165 352

Held-to-maturityMomentum policy 6 296 844 – 6 296 844 –

Total other financial assets 6 296 844 165 352 6 296 844 165 352Non-current assetsHeld-to-maturity 6 296 844 – 6 296 844 –

Current assetsAt fair value through profit or loss – held-for-trading – 165 352 – 165 352

6 296 844 165 352 6 296 844 165 352

The fair values of the financial assets were determined as follows:■■ The fair values of listed or quoted investments are based on the quoted market price.

■■ The fair values on investments not listed or quoted are estimated using the discounted cash flow analysis.

Fair values are determined annually at balance sheet date.

For debt securities classified as at fair value through profit or loss, the maximum exposure to credit risk at the reporting date is the carrying amount.

7. Financial assets by category (continued)


7.3 Trade and other receivablesTrade receivables 101 001 147 122 611 663 71 126 836 85 379 012Creditors with debit balances – 2 870 592 – 2 870 592Deposits 425 382 234 372 425 382 234 372VAT 2 453 196 4 925 843 1 055 282 3 121 851Staff loans (15 684) 33 474 12 607 23 474Provision for bad debts (58 042 331) (43 147 473) (36 252 115) (34 412 774)Other receivables 612 678 612 678 612 678 612 678

46 434 388 88 141 149 36 980 670 57 829 205

Trade and other receivables pledged as securityTrade and other receivables were pledged as security for overdraft facilities of R24 100 000 (2010: R20 000 000) of the Group. At year-end the overdraft amounted to R23 405 600 (2010: R24 984 981).

Fair value of trade and other receivablesTrade and other receivables 89 210 094 117 751 479 62 391 962 84 577 122

Fair values have been estimated based on the present values of future cash flows. The discount rate used was 5.05% (2010: 6.55%) which is the call account rate at year-end.

The maximum exposure to credit risk is the carrying amount less impairment provisions.

Management assesses the recoverability for each receivable on an individual basis and impairment is provided for the receivables in line with the Group’s credit risk policy.

Trade and other receivables past due but not impairedAt 28 February 2011, R96 412 418 (2010: R52 732 531) were past due but not impaired.

The ageing of amounts past due but not impaired is as follows:One month past due 3 024 212 7 067 237 2 982 251 7 140 216Two months past due 93 388 205 45 665 294 64 138 297 29 642 411

Trade and other receivables impairedThe amount of the provision was R58 042 331 (2010: R43 147 473 ).

The ageing of these receivables is as follows:Three to six months 58 042 331 43 147 473 36 252 115 34 412 774

The carrying amount of trade and other receivables are denominated in the following currencies:uS Dollar 7,07 7,78 7,07 7,78Euro 9,65 10,74 9,65 10,74





7. Financial assets by category (continued)


7.3 Trade and other receivables (continued)Reconciliation of provision for impairment of trade and other receivablesOpening balance (43 147 473) (31 311 252) (34 412 775) (25 674 892)Raised during the year (14 948 244) (15 609 691) (1 891 994) (12 511 353)Reversed during the year 53 386 3 773 470 52 654 3 773 470

(58 042 331) (43 147 473) (36 252 115) (34 412 775)

The creation and release of provision for impaired receivables have been included in operating expenses in the income statement (note 32).

The Group does not hold any collateral as security.

7.4 Cash and cash equivalentsCash and cash equivalents consist of:Cash on hand 7 569 349 881 7 569 234 658Bank balances 18 124 410 60 149 149 6 445 307 43 143 360

18 131 979 60 499 030 6 452 876 43 378 018

FacilitiesOverdraft facility in the sum of R24 100 000 (twenty four million one hundred thousand rand).

Letters of guarantee facility in the sum of R1 102 000 (one million one hundred and two thousand rand).

Nedfleet facility of R120 000 (one hundred and twenty thousand rand).

Nedbond loan agreement in the sum of R6 601 302 (six million six hundred and one thousand three hundred and two rand).

Special projects for vehicle and asset finance (“VAF”) in the sum of R9 091 161 (nine million and ninety one thousand one hundred and sixty one rand), includes existing special project VAF loan agreements currently running down.

Securities for facilitiesunlimited suretyships (incorporating cession of claims), in favour of Nedbank, by:JK Shelters (Pty) LtdGrenada Trading (Pty) Ltd

A cession of all present and future debtors

Lien Over Call funds investment number 7881033665.

A First General Notarial Mortgage bond over unencumbered assets acceptable to Nedbank, reflecting Africa Cellular Towers Ltd as mortgagor and Nedbank as mortgagee, in the amount of R15 000 000 (Fifteen Million Rand).

Security cession of any insurance policy required in terms of the general notarial bond.

Security cessions, in favour of Nedbank, of:Momentum debt redemption policy number 01005170835Momentum debt redemption policy number 01004415168Momentum debt redemption policy number 010044106105Momentum debt redemption policy number 01004415176

8. Deferred tax


Deferred tax asset/(liability)Capital allowance (7 739 788) (9 891 052) (6 999 391) (7 240 477)Doubtful debt allowance 8 289 429 6 118 821 7 226 681 5 391 727Implicit interest adjustment (387 523) 2 293 958 (140 790) 1 634 481Deferred tax – (470 783) – –Construction contracts (1 043 585) – (1 043 585) –Other – 2 822 174 – 492 056

(881 467) 873 118 (957 085) 277 787

Reconciliation of deferred tax asset/(liability)At the beginning of the year 873 118 6 125 074 277 787 2 605 952Accumulated capital allowance (1 180 029) (875 321) (1 667 761) (852 207)Doubtful debt allowance (823 135) 2 170 607 386 262 1 834 956Implicit interest adjustment 291 983 (2 681 479) 90 031 (1 775 271)Construction contracts (43 404) (1 043 587) (43 404) (1 043 587)Other – (2 822 176) – (492 056)

(881 467) 873 118 (957 085) 277 787

Recognition of deferred tax assetA deferred tax asset has not been recognised for the current year’s loss, as it is not certain that future taxable profits will be available in the near future, in order to utilise the deferred tax asset.

9. InventoriesRaw materials 31 989 408 43 737 318 31 289 418 42 715 145Work in progress – factory 4 347 459 3 368 964 3 158 340 2 449 517Finished goods 875 226 743 134 875 226 670 804

37 212 093 47 849 416 35 322 984 45 835 466

10. Construction contracts and receivablesContracts in progress at balance sheet dateConstruction contracts and receivables 37 545 355 63 671 248 30 253 184 41 865 791

Construction contracts and receivables consist of:Work in progress – construction contracts inventory 9 352 467 6 815 438 8 951 131 6 373 344Income accrual – construction contracts 38 706 333 59 048 699 28 947 088 35 162 173Accrual for contract cost (6 272 145) (5 805 551) (5 491 289) (3 044 543)Income received in advance (9 642 194) – (5 666 236) –Advanced payments made to contractors 42 436 138 688 42 436 138 688Construction contracts retention debtors 5 358 458 3 473 974 3 470 054 3 236 129

37 545 355 63 671 248 30 253 184 41 865 791

Work in progress stage of completion was calculated using the work done to date as compared to the budgeted costs for the completion of the contract. The method of revenue recognition was also taken into account to determine the progress of completion.





10. Construction contracts and receivables (continued)


Disclosure of contract detailsTotal contract revenue recognised 150 603 399 226 189 731 126 565 526 179 161 751Total contractual costs 1 395 976 90 038 959 11 914 639 69 767 351Total debtors receivables from customers 7 331 275 65 063 645 7 498 615 40 615 462Total payables to suppliers due to contract work 10 727 902 (6 887 954) 888 247 (3 044 541)

170 058 552 374 404 381 146 867 027 286 500 023

11. Share capitalAuthorised500 000 000 ordinary shares of 0,01 cents each 50 000 50 000 50 000 50 000

Issued370 290 000 ordinary shares of 0,01 cents each 37 029 37 029 37 029 37 029Employee share options 6 022 394 6 521 901 6 022 394 6 521 901Share premium 212 594 996 212 594 996 225 243 368 225 243 368Treasury shares/held by share incentive trust (1 423) (1 423) – –

218 652 996 219 152 503 231 302 791 231 802 298

12. Financial liabilities by categoryThe accounting policies for financial instruments have been applied to the line items below:

Figures in Rand

Financial liabilities at

amortised cost Total

GROUP – 2011Trade and other payables 30 655 220 30 655 220Instalment sale agreement 18 231 526 18 231 526Mortgage bond 6 602 692 6 602 692

55 489 438 55 489 438

GROUP – 2010Trade and other payables 28 049 726 28 049 726Instalment sale agreement 23 799 389 23 799 389Mortgage bond 6 601 751 6 601 751

58 450 866 58 450 866

12. Financial liabilities by category (continued)

Figures in Rand

Financial liabilities at

amortised cost Total

COMPANy – 2011Loans from Group companies 31 204 099 31 204 099Trade and other payables 27 633 875 27 633 875Instalment sale agreement 17 870 337 17 870 337Mortgage bond 6 602 692 6 602 692

83 311 003 83 311 003

COMPANy – 2010Loans from Group companies 27 122 590 27 122 590Trade and other payables 15 331 841 15 331 841Instalment sale agreement 22 939 181 22 939 181Mortgage bond 6 601 751 6 601 751

71 995 363 71 995 363


12.1 Instalment sale obligationMinimum lease payments due– within one year 7 077 867 7 898 913 6 866 904 7 370 909– in second to fifth year inclusive 13 160 790 20 249 119 12 927 913 19 880 274

20 238 657 28 148 032 19 794 817 27 251 183Less: Future finance charges (2 007 130) (4 348 643) (1 924 480) (4 312 002)

Present value of minimum lease payments 18 231 527 23 799 389 17 870 337 22 939 181

Present value of minimum lease payments due– within one year 5 777 517 5 908 066 5 602 936 5 388 746– in second to fifth year inclusive 12 454 009 17 891 323 12 267 401 17 550 435

18 231 526 23 799 389 17 870 337 22 939 181

Non-current liabilities 12 414 637 17 688 608 12 233 157 17 326 640Current liabilities 5 816 890 6 110 781 5 637 180 5 612 541

18 231 527 23 799 389 17 870 337 22 939 181

The average instalment sale agreement term was three years and the average effective borrowing rate was 7,28% (2010: 9,12%), repayable in monthly instalments of R720 069 (2010: R739 101).






12. Financial liabilities by category (continued)


12.2 Mortgage bondsMinimum lease payments due– within one year 499 643 598 412 499 643 598 412– in second to fifth year inclusive 2 832 082 3 590 469 2 832 082 3 590 469– later than five years 7 266 190 7 397 712 7 266 190 7 397 712

10 597 915 11 586 593 10 597 915 11 586 593Less: Future finance charges (3 995 223) (4 984 842) (3 995 223) (4 984 842)

Present value of minimum lease payments 6 602 692 6 601 751 6 602 692 6 601 751

Present value of minimum lease payments due– within one year (4 659) 4 311 (4 659) 4 311– in second to fifth year inclusive (32 877) 35 819 (32 877) 35 819– later than five years 6 640 228 6 561 621 6 640 228 6 561 621

6 602 692 6 601 751 6 602 692 6 601 751

Non-current liabilities 6 598 032 6 597 440 6 598 032 6 597 440Current liabilities 4 660 4 311 4 660 4 311

6 602 692 6 601 751 6 602 692 6 601 751

The average repayment term was 10 years and the average effective borrowing rate was 7,5% (2010: 9%), repayable in monthly instalments of R41 637 (2010: R49 868).


12.3 Trade and other payablesTrade payables 25 708 869 24 188 296 24 142 765 12 071 090VAT 1 284 186 – – –Accruals 3 454 537 2 941 896 2 178 291 2 521 399Accrued audit fees 680 950 – 580 950 –Other payables 1 436 798 919 536 1 357 803 739 351

32 565 340 28 049 728 28 259 809 15 331 840

Fair value of trade and other payablesTrade payables 22 681 470 22 337 881 21 307 688 10 316 024

Fair values have been estimated based on the present values of future cash flows. The discount rate used was 9% (2010: 6,55%) which is the prime rate at year-end.

13. Revenue


Sale of goods 51 253 313 192 789 217 51 253 313 192 789 217Rendering of services 117 528 445 31 113 652 103 168 326 14 917 030Income accrual and retentions 33 346 452 3 486 986 22 455 923 3 249 141

202 128 210 227 389 855 176 877 562 210 955 388

14. Cost of salesManufacturing – employee costs 150 003 9 292 101 150 003 9 292 101Manufacturing – raw materials consumed 128 499 – – –Manufacturing expenses 122 432 716 203 052 467 111 530 407 165 586 616Construction contracts 91 052 303 12 093 984 69 384 096 19 545 868

213 763 521 224 438 552 181 064 506 194 424 585

15. Operating (loss)/profitOperating profit for the year is stated after accounting for the following:

Operating lease chargesPremises■■ Contractual amounts (5 696 528) (4 794 839) (3 435 622) (3 360 552)

Profit on sale of property, plant and equipment 118 590 173 567 – 173 567Impairment of property, plant and equipment (1 711 216) – (1 711 216) –Impairment on businesses (or subsidiaries, joint ventures and associates) (18 726 714) (11 194 367) (25 618 119) (5 000 000)Amortisation of intangible assets (115 473) (297 358) (98 865) (284 353)Depreciation of property, plant and equipment (7 671 090) (5 740 076) (7 061 085) (5 200 886)Employee costs (40 284 337) (43 566 211) (35 004 843) (40 211 272)

16. Investment revenueInterest revenueBank 2 796 765 6 120 786 8 385 583 11 394 008Implicit interest adjustment* 5 188 958 15 060 255 3 522 848 8 973 812

7 985 723 21 181 041 11 908 431 20 367 820

*The discount rate used was 5,05% (2010: 6,55%) which is the call account rate at year-end.

17. Finance costsInstalment sale agreements 2 392 624 3 398 101 2 360 885 3 260 924Late payment of tax – 619 066 – 516 405Interest paid 2 512 391 2 524 412 4 702 521 4 643 435Implicit interest adjustment * 446 838 1 516 219 425 612 678 620

5 351 853 8 057 798 7 489 018 9 099 384

* The discount rate used was 9% (2010: 6,55%) which is the prime rate at year-end.





18. TaxationGroup Company

Figures in Rand 2011 2010 2011 2010

Major components of the tax expense/(income)CurrentLocal income tax – current period 3 062 377 (6 391 286) 2 984 308 (5 235 124)Foreign income tax or withholding tax – recognised in current tax for prior periods – 2 400 000 – 2 400 000

3 062 377 (3 991 286) 2 984 308 (2 835 124)

DeferredOriginating and reversing temporary differences 7 624 128 2 921 839 7 104 415 2 328 165

10 686 505 (1 069 447) 10 088 723 (506 959)

Reconciliation of the tax expenseReconciliation between applicable tax rate and average effective tax rate:Applicable tax rate 28,00 28,00 28,00 28,00Non-deductible items (%) (1,04) (0,66) (1,20) (0,72)Non-taxable items (%) – 3,09 – –Effect of foreign tax rate (%) (0,92) (3,13) – –

Effective tax rate 26,04 27,30 26,80 27,28

19. Auditors’ remunerationFees 1 160 999 568 011 991 536 353 011

20. Other comprehensive income

Figures in Rand Gross Tax Net

Components of other comprehensive income – Group – 2011Exchange differences on translating foreign operations Exchange differences arising during the year (2 903 643) – (2 903 643)

Components of other comprehensive income – Group – 2010Exchange differences on translating foreign operations Exchange differences arising during the year (16 333 418) – (16 333 418)

Movements on revaluation Gains/(losses) on available-for-sale investment (244 526) – (244 526)

Total (16 577 944) – (16 577 944)

Components of other comprehensive income – Company – 2011Exchange differences on translating foreign operations Exchange differences arising during the year (4 125 814) – (4 125 814)

Components of other comprehensive income – Company – 2010Exchange differences on translating foreign operations Exchange differences arising during the year (18 107 338) – (18 107 338)

Movements on revaluation Gains/(losses) on available-for-sale investment (244 526) – (244 526)

Total (18 351 864) – (18 351 864)

21. Cash (used in) generated from operations


(Loss)/profit before taxation (122 413 780) (93 332 555) (110 300 158) (72 162 974)Adjustments for:Depreciation and amortisation 7 786 563 6 037 539 7 159 950 5 485 239Profit on sale of assets (118 590) (173 567) – (173 567)Profit on foreign exchange (6 051 365) (13 502 097) (9 666 800) (17 576 373)Income from available-for-sale investment – (278 447) – (278 447)Interest received (7 985 723) (21 181 041) (11 908 431) (20 367 820)Finance costs 5 351 853 8 057 798 7 489 018 9 099 384Impairment loss 23 743 563 11 194 367 27 329 335 5 000 000Other non-cash items – – – (85 185)Share-based payments (499 507) 1 519 483 (499 507) 1 434 298

Changes in working capital:Inventories 10 637 323 (4 830 330) 10 512 482 (8 976 962)Trade and other receivables 41 706 740 70 197 077 20 848 535 52 274 076Construction contracts and receivables 26 125 893 24 209 904 11 612 607 27 004 804Trade and other payables 1 854 164 (26 914 146) 12 728 342 (30 968 396)

(19 862 866) (38 996 015) (34 694 627) (50 291 923)

22. Share-based payments

Share Option Group Number

Weighted exercise

priceTotal value

2011Outstanding at the beginning of the year 13 922 750 0,88 12 207 720Exercised during the year (985 000) 0,91 (899 240)

12 937 750 – 11 308 480

Weighted average share price at date of issue of options during the year was R0,32 (2010: R0,65). The weighted average exercise price per options outstanding at the end of the year was R0,87 (2010: R0,87).

Outstanding options

Exercise date within

one year

Exercise date from two to five

years Total

Options with exercise price of R 0,80 8 367 320 10 880 8 378 200Options with exercise price of R0,88 518 463 88 737 607 200Options with exercise price of R1,56 819 000 – 819 000Options with exercise price of R1,32 871 225 26 375 897 600Options with exercise price of R1,06 562 489 43 991 606 480

11 138 497 169 983 11 308 480





22. Share-based payments (continued)

Information on options granted during the yearFair value was determined by the trinomial model. The following inputs were used:

Grant date21 July

200816 February

200911 August

200928 February

201028 February

2011

Number of options 680 000 580 000 860 000 930 000,00 – Share price 1,65 1,33 1,06 0,52 0,09Exercise price 1,32 1,06 0,88 0,8 n/aExpected volatility 56% 66% 66% 66% 88%Option life 4 years 4 years 4 years 4 years n/aExpected dividends 0% 0% 0% 0% n/aThe risk free rate 9,75% 10% 9% 8,20% 7,7%Employee exit rate 2,5%

per annum 2,5%

per annum 2,5%

per annum 2,5%

per annum 2,5%

per annum

On 21 August 2009, 860 000 ordinary shares were issued at a price of R0,88 a share and on 30 November 2009, 70 000 ordinary shares were issued at a price of R0,80 to the ACTOWERS Share Incentive Scheme, and total expenses of R1 519 483 (2009: R1 918 019) relating to equity-settled share-based payments transactions were recognised for options outstanding at the end of the year at an average price of R0,88 (2008: R0,91).

Share Option Group Number

Weighted exercise

priceTotal value

2010Outstanding at the beginning of the year 13 801 900 0,91 12 612 240Granted during the year 930 000 0,87 812 800Exercised during the year (809 150) 1,50 (1 217 320)

13 922 750 – 12 207 720

Weighted average share price at exercise date of issue of options during the year was R0,65 (2009: R1,50). The weighted average exercise price per options outstanding at the end of the year was R0,87 (2009: R1,20).

Outstanding options

Exercise date within

one year

Exercise date from

two to five years

Exercisedate afterfive years Total

Options with exercise price of R0,80 8 902 004 20 196 – 8 922 200Options with exercise price of R0,88 483 868 272 932 – 756 800Options with exercise price of R1,56 965 661 48 339 – 1 014 000Options with exercise price of R1,32 774 600 123 000 – 897 600Options with exercise price of R1,06 476 338 140 782 – 617 120

11 602 471 605 249 – 12 207 720

22. Share-based payments (continued)Information on options granted during the yearFair value was determined by the trinomial model. The following inputs were used:

Grant date21 July

2008 16 February

2009 11 August

200928 February

2010

Number of options 680 000 580 000 860 000 930 000Share price 1,65 1,33 1,06 0,52Exercise price 1,32 1,06 0,88 0,80Expected volatility 56% 66% 66% 66%Option life 4 years 4 years 4 years 4 yearsRisk-free interest rate 9,75% 10% 9% 8,20%Expected dividends 0% 0% 0% 0%Employee exit rate 2,5%

per annum 2,5%

per annum2,5%

per annum2,5%

per annum

On 21 August 2009, 860 000 ordinary shares were issued at a price of R0,88 a share and on 30 November 2009, 70 000 ordinary shares were issued at a price of R0,80 to the ACTOWERS Share Incentive Scheme

Total expenses of R1 519 483 (2009: R1 918 019) related to equity-settled share-based payments transactions were recognised for options outstanding at the end of the year at an average price of R0,88 (2009: R0,91).

Terms of the schemeThe participant will be entitled to the release of his/her scheme shares from the operation of this scheme after payments for the purchase of the shares have been received and the expiry of a period of:■■ one year after acceptance date, in respect of a further 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.

23. Tax refunded/(paid)


Balance at the beginning of the year 1 457 107 (15 481 216) 4 218 313 (2 419 218)Current tax for the year recognised in profit or loss (3 062 377) 3 991 286 (2 984 308) 2 835 124Balance at the end of the year 1 615 859 (1 457 107) 565 816 (4 218 313)

10 589 (12 947 037) 1 799 821 (3 802 407)

24. CommitmentsOperating leases – as lessee/(expense)Minimum lease payments due– within one year 4 488 096 3 780 084 3 379 546 2 772 312

Operating lease payments represent rentals payable by the Group for certain of its factory and office properties. Leases are fixed on a yearly basis. No contingent rent is payable.





25. Related parties

Relationships Name of related party

CJJ KrügerShareholders and directors in common JK Shelters (Proprietary) Limited

GSM Tronix (Proprietary) LimitedGranada Trading (Proprietary) LimitedLezmin 1367 (Proprietary) LimitedAfrica Tower Technologies SPRLAfrica Cellular Madagascar SARLChad Tower Technology SA

Member in common Better Crates & Pallets Close CorporationSpouse as a member of Africa Cellular Towers (Alberton) Close CorporationDaughter is a member of Assertive Solutions Close Corporation

J de VilliersShareholders and directors in common De Villiers Myburgh Inc.

Subsidiaries Refer to note 6 of the annual financial statementsEmployee share scheme ACTOWERS Share Incentive Scheme

Members of key management CJJ KrügerJ de VilliersDM van StadenCJ JonkerNWJ van der Mescht


Related party balancesLoan accounts – owing/(to) by related partiesAfrica Cellular Towers uganda Limited – – – 4 706 791Africa Cellular Towers Tanzania Limited – – 707 270 3 348 313ACTOWERS Ghana Limited – – 2 129 515 1 697 729Africa Tower Technologies SPRL – – 10 590 633 17 206 642Granada Trading (Proprietary) Limited – – – 3 481 388

Amounts included in trade receivable/(trade payable) regarding related partiesJK Shelters (Proprietary) Limited – – (35 001) –JK Shelters (Proprietary) Limited – – 18 157 618GSM Tronix (Proprietary) Limited – (554 097) – (554 097)Granada Trading (Proprietary) Limited – – – 2 799 717GSM Tronix (Proprietary) Limited 5 618 159 102 466 5 618 159 102 466Better Crates and Pallets Close Corporation (4 594) – (4 594) –Africa Cellular Towers (Alberton) Close Corporation (330 950) (164 289) (330 950) (164 289)Africa Cellular Towers (Alberton) Close Corporation – 73 – 73Assertive Solutions Close Corporation (185 026) (421 359) (185 026) (421 359)

25. Related parties (continued)


Related party transactionsInterest paid to/(received from) related partiesAfrica Cellular Towers uganda Limited – – (311 990) (388 637)Africa Cellular Towers Tanzania Limited – – (214 911) (276 466)ACTOWERS Ghana Limited – – (160 074) (140 183)Africa Tower Technologies SPRL – – (1 287 875) (1 420 732)Granada Trading (Proprietary) Limited – – (330 606) (287 454)Chad Tower Technology SARL – – (2 271 565) (2 239 480)

Purchases from/(sales to) related partiesJK Shelters (Proprietary) Limited – – 1 772 876 1 643JK Shelters (Proprietary) Limited – – (2 751 360) (170 679)GSM Tronix (Proprietary) Limited (18 244 283) 16 531 182 (18 244 283) 16 531 182GSM Tronix (Proprietary) Limited 2 261 927 (594 780) 2 261 927 (594 780)Better Crates and Pallets Close Corporation 333 401 – 333 401 –Africa Cellular Towers (Alberton) Close Corporation (18 908) – (18 908) –Africa Cellular Towers (Alberton) Close Corporation 3 695 092 (2 174) 3 695 092 (2 174)de Villiers Myburgh Incorporated 35 281 (219 259) 35 281 219 259

Rent paid to/(received from) related partiesAfrica Cellular Towers (Alberton) Close Corporation 3 437 748 3 100 076 3 437 748 3 100 076

Labour hire paid to (received from) related partiesAssertive Solutions Close Corporation 4 723 089 6 612 674 4 723 089 6 612 674

Transactions conducted with these related parties’ customers and suppliers were on an arm’s length basis.

26. Directors’ emoluments

Figures in Rand EmolumentsTravel

allowanceProvident

fund Total

Executive2011CJJ Krüger 1 580 694 – 235 889 1 816 583J de Villiers 1 324 742 84 000 196 775 1 605 517DM van Staden 1 111 546 66 000 160 392 1 337 938NWJ van der Mescht 691 366 35 368 103 705 830 439

4 708 348 185 368 696 761 5 590 477





26. Directors’ emoluments (continued)

Figures in Rand EmolumentsTravel

allowance Total

Executive (continued)2010CJJ Krüger 2 195 958 18 000 2 213 958DM van Staden 991 000 65 000 1 056 000J de Villiers 952 000 104 000 1 056 000

4 138 958 187 000 4 325 958

Figures in Rand Fees Total

Non‑executive2011MM Patel 207 496 207 496M Potgieter 259 578 259 578V Nkonyeni 231 639 231 639S Radebe 16 667 16 667

715 380 715 380

2010MM Patel 133 065 133 065MM Potgieter 124 000 124 000V Nkonyeni 126 083 126 083

383 148 383 148

Figures in Rand Emoluments Bonus Total

Key management2011J De Santa Clara (Managing Director of JK Shelters) 288 589 – 288 589CJ Jonker (Managing Director of JK Shelters) 989 853 – 989 853

1 278 442 – 1 278 442

2010J De Santa Clara (Managing Director of JK Shelters) 1 057 440 25 000 1 082 440NWJ van der Mescht (General Manager of Africa Power Lines Division) 1 068 728 45 000 1 113 728

2 126 168 70 000 2 196 168

27. Risk managementThe Risk Committee was established to address the risks set out below.

Capital risk managementThe primary object of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy ratios in order to support its business and maximise shareholder value.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made to the objectives, policies or process during the year ended 28 February 2011.

Financial risk managementThe company’s financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable and payable, loans to and from subsidiaries and installment sale agreements.

The company is exposed to the following risks from financial instruments:

Liquidity riskThe Group’s risk to liquidity is a result of the funds available to cover future commitments. The Group manages liquidity risk through an ongoing review of future commitments and credit facilities.

uncommitted borrowing facilities are maintained with a financial institution to meet the Group’s normal and contingency funding requirements. This unused facility amounts to 2011: R744 504 (2010: R0).

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Figures in RandLess than

one yearBetween one

and five yearsOver

five years

GROUPAt 28 February 2011Trade and other payables 30 655 220 – –Instalment sale obligation 7 077 867 13 160 790 –Mortgage bond 499 643 2 832 082 7 266 190

Figures in RandLess than

one yearBetween one

and five yearsOver

five years

At 28 February 2010Trade and other payables 28 049 728 – –Instalment sale obligation 7 898 913 20 249 119 –Mortgage bond 598 412 3 590 469 7 397 712

COMPANyAt 28 February 2011Trade and other payables 27 157 065 – –Instalment sale obligation 6 866 904 12 927 913 –Mortgage bond 499 643 2 832 082 7 266 190

At 28 February 2010Trade and other payables 15 331 841 – –Instalment sale obligation 7 370 909 19 880 274 –Mortgage bond 598 412 3 590 469 7 397 712





27. Risk management (continued)Interest rate riskFluctuations in interest rates impact on the value of short-term investment and financing activities, giving rise to interest risk.

In the ordinary course of business, the Group received cash proceeds from its operations and is required to fund working capital and capital expenditure requirements. The cash is safeguarded to the maximum extent possible by investing only with top financial institutions and negotiating of preferential interest rate on an ongoing basis.

A significant amount of the Group’s interest rate risk arises from instalment sale obligations and mortgage bonds.

At 28 February 2011, if interest rates on Rand-denominated borrowings had been 1% higher/lower with all other variables held constant, pre-tax profit/(loss) for the year would have been R 47 904 (2010: R 57 116) lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings.

Credit riskCredit risk is the risk of financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

Credit risk consists mainly of cash deposits, cash equivalents, derivative financial instruments and trade debtors. The company only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade receivables comprise a widespread customer base. Management evaluates credit risk relating to customers on an ongoing basis. Credit guarantee insurance is purchased when deemed appropriate.

The Group has increased credit policies and procedures to reduce credit risk. Some of these policies and procedures include the insistence on letters of credit on supply-only contracts; not supplying customers with long outstanding accounts; insuring South African trade debtors and performing credit references on new customers.

Foreign exchange riskThe Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the uS Dollar and the Euro. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group does not hedge foreign exchange fluctuations.

To mitigate the company’s exposure to foreign currency risk, non-Rand cash flows are monitored by project and in accordance with our risk management policies.


Foreign currency exposure at reporting dateCurrent assetsTrade debtors, uSD8 227 363 (2010 : uSD9 734 088) 71 582 109 75 694 219 66 524 309 75 087 925Trade debtors, Euro 0 (2010: Euro 1 634 564) – 17 554 892 – –Cash and cash equivalents, uSD882 583 (2010: uSD1 517 608) 6 239 863 12 069 727 202 944 750 271Cash and cash equivalents, Euro 3 198 (2010: Euro 31 576) 30 864 33 486 – –

Current liabilitiesTrade creditors, uSD122 447 (2010: uSD530 635) 865 698 4 126 327 – 819 414Exchange rates used for conversion of foreign items were:uSD 7,07 7.78 7,07 7,78Euro 9,65 10.74 9,65 10,74

Exposures to currency exchange rates arise from overseas sales and services, which are primarily denominated in uS Dollar and Euro’s. The company also holds foreign bank accounts in uS-Dollars and Euro’s.

The Group reviews its foreign currency exposure, including commitments on an ongoing basis.

27. Risk management (continued)Sensitivity analysisA 10 % change of the Rand against the foreign currencies at balance sheet date would have increased/(decreased) equity and profit and loss shown below, assuming that all other variables are held constant:

2011 2010

EquityIncome

statement EquityIncome

statement

uS Dollar 21 908 865 769 1 016 214 1 335 916

28. Going concernThe consolidated annual financial statements have been prepared on a going concern basis. 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.

The ability of the company to continue as a going concern is dependent on a number of factors. The most significant of these is that the directors continue to procure funding for the ongoing operations.

29. Post-balance sheet eventsThe Group is pleased to announce that an agreement has been entered into with the Industrial Development Corporation (“IDC”), in respect of R99 million funding facility, staggered over the next six years at market-related rates, to assist with capital expenditure and working capital requirements of the Group.

The directors are not aware of any other matter or circumstance arising since the end of the financial year which may materially affect the financial statements under review.

30. Earnings per share


Earnings per share (cents) (37,4) (25,9)The calculation of earnings per share is based on profits/ (loss) of (R133 100 286) (2010: R92 263 106) and 356 055 383 (2010: 356 055 383) weighted average ordinary shares in issue during the year.

Earnings from continuing operations attributable to the ordinary equity holdersProfit for the year (133 100 286) (92 263 106) – –

Reconciliation of the weighted average number of ordinary sharesBalance at the beginning of the year 356 055 383 261 889 159 – –Shares in issue during the year based on prior shares weighted for the current year – 94 166 224 – –

356 055 383 356 055 383 – –

Earnings per share (cents) (37,4) (25,9)





30. Earnings per share (continued)


Headline earnings per shareThe calculation of earnings per share is based on profits/(loss) of (R109 475 313) (2010: R81 520 753) and 356 055 383 (2010: 356 055 383) weighted average ordinary shares in issue during the year.

Reconciliation between earnings and headline earnings Profit for the year (133 100 286) (92 263 106) – –Plus/(minus) profit and loss on disposal of non current assets (118 590) (173 567) – –Impairment of investment in JK Shelters (Pty) Ltd 22 032 347 5 000 000 – –Impairment of goodwill – 6 194 367 – –Impairment of land 1 711 216 – – –

(109 475 313) (81 242 306) – –

Headline earnings per share (cents) (30,7) (22,9)

Diluted earnings and headline earnings per shareThe 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 356 055 383 (2010: 356 055 383).

Reconciliation of the weighted average number of ordinary shares for diluted earnings per shareBalance at the beginning of the year 356 055 383 261 889 159 – –Shares in issue during the year based on prior shares weighted for the current year – 94 166 224 – –

356 055 383 356 055 383 – –

Fully diluted earnings per share (cents) (37,4) (25,9) Fully diluted headline earnings per share (cents) (30,7) (25,9)

31. Other incomeProfit and loss on disposal of non-current assets 118 590 173 567 – 173 567Bad debts reversed 53 386 3 773 470 52 654 –Sundry income 1 931 729 2 899 952 1 874 063 2 899 952Recoveries 329 874 863 602 1 614 625 112 024

2 433 579 7 710 591 3 541 342 3 185 543

32. Operating expense


Administration 15 713 283 25 659 935 39 998 923 21 228 844Accommodation and facilities 1 402 877 3 084 434 1 193 636 2 776 193Accounts written off in branches and subsidiaries 625 934 4 796 894 21 972 953 17 793 962Bad debts (906 433) 3 897 496 (290 451) 2 926 389Bad debts provision 18 530 895 3 098 338 3 396 453 –Depreciation and amortisation 7 786 563 6 037 539 7 159 950 5 485 239Employee and related costs 40 062 397 31 458 941 34 583 357 28 880 874Production and contract overheads 3 098 191 2 677 596 2 470 417 2 126 453Impairment of investment and goodwill 22 032 347 11 194 367 – 5 000 000

108 346 054 91 905 540 110 485 238 86 217 954

33. Segment reportThe majority of revenue and expenditure for the Group derives from cellular towers, shelters and power lines, therefore management uses this as the primary segment.

Segments Figures in Rand

Cellular towers

Equipment shelters

Power lines

Fibre optics Consolidated

RevenueExternal sales 100 931 945 9 428 876 81 752 211 10 015 178 202 128 210 Inter-segment sales – – – –

Total revenue 100 931 945 9 428 876 81 752 211 10 015 178 202 128 210

ResultOperating profit (65 646 002) (8 611 862) 7 115 029 (18 874 827) (86 017 661)Impairment of investment – (22 032 347) – – (22 032 347)Interest expense (2 863 181) (58 899) (2 164 596) (265 177) (5 351 853)Interest income 2 979 870 1 380 288 3 229 883 395 682 7 985 723 Depreciation, amortisation and impairments (7 369 684) (447 999) (1 566 895) (113 200) (9 497 778)Profit and loss on foreign exchange (6 050 552) (1 449 312) – – (7 499 864)Taxation (11 022 146) (519 713) 855 354 – (10 686 505)

(Loss)/profit for the year (89 971 695) (31 739 844) 7 468 776 (18 857 522) (133 100 285)

Other informationSegment assets 141 316 586 17 646 866 36 696 666 4 902 385 200 562 503 Segment liabilities 37 560 856 1 500 016 19 488 458 1 517 585 60 066 915 Capital expenditure 8 138 153 271 188 5 088 696 114 912 13 612 949

The Group’s manufacturing operations are situated in South Africa and sales are made across the African continent. The Group has no staff permanently employed outside of South Africa, nor does it have any permanent offices outside South Africa.

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

The Group thus has no discernible geographical segment.





AFRICA CELLULAR TOWERS LIMITED(Incorporated in the Republic of South Africa)(Registration number 2000/027374/06)JSE code: ATR ISIN: ZAE000088084(“ACTOWERS” or “the Group” or “the company”)

NOTICE IS HEREBY GIVEN that the annual general meeting of members of ACTOWERS will be held in the boardroom, Africa Cellular Corporate Park, 10 Tennyson Drive, Tulisa Park, Johannesburg on Wednesday, 17 August 2011 at 10:00.

Shareholders or their proxies may participate in the meeting by way of a teleconference call and, if they wish to do so:■■ must contact the Company Secretary (by email at the address [email protected]) by no later than 10:00 on Monday, 15 August 2011 in order to obtain a pin number and dial-in details for that conference call;

■■ will be required to provide reasonably satisfactory identification; and■■ will be billed separately by their own telephone service providers for their telephone call to participate in the meeting.

This notice of meeting includes the attached proxy form.

A. Attendance and votingThe date on which an individual must be registered as a shareholder in the company’s register for purposes of being entitled to attend and vote at the meeting is the date of the meeting (“record date”).

If you are a registered shareholder as at the record date, you may attend the meeting in person. Alternatively, you may appoint a proxy (who need not be a shareholder of the company) to represent you at the meeting. Any appointment of a proxy may be affected by using the attached proxy form and, in order for the proxy to be effective and valid, must be completed and delivered in accordance with the instructions contained in the attached proxy form.

If you are a beneficial shareholder and not a registered shareholder as at the record date:■■ and wish to attend the meeting, you must obtain the necessary letter of authority to represent the registered shareholder of your shares from your CSDP or broker;

■■ and do not wish to attend the meeting but would like your vote to be recorded at the meeting, you should contact the registered shareholder of your shares through your CSDP or broker and furnish them with your voting instructions; and

■■ you must not complete the attached proxy form.

All participants at the meeting will be required to provide identification reasonably satisfactory to the chairman of the meeting.

B. Purpose of the meetingThe purpose of this meeting is to:■■ present the directors’ report and the audited annual financial statements of the Group for the year ended 28 February 2011;■■ present the Audit Committee report;■■ consider any matters raised by shareholders; and■■ consider and if deemed fit, to pass, with or without modification, the resolutions set out below:

Ordinary Resolution Number 1 – Adoption of the annual financial statements“RESOLVED THAT the annual financial statements for the company and the Group for the year ended 28 February 2011, including the Directors’ Report and the Auditors’ Report therein, be and are hereby received and confirmed.”

Ordinary Resolution Number 2 – Re‑election of directors“RESOLVED THAT the following directors, who retire in accordance with the articles of association, and being eligible, offer themselves for re-election, be and are hereby re-elected as directors of the company:

2.1 CJJ Krüger

2.2 MM Patel

2.3 D van Staden

“Brief curricula vitae for these directors are set out on pages 8 and 9 of this annual report.”

/Notice of annual general meeting

Ordinary Resolution Number 3 – Appointment of directors“RESOLVED THAT the following directors, who were appointed by the Board of directors during the year, be and are hereby appointed.

2.1 S Radebe

2.2 PSN Swart


Ordinary Resolution Number 4 – Re‑appointment of auditors“RESOLVED THAT SAB&T Chartered Accountants Inc. (“SAB&T”) be re-appointed as auditors of the Group and Mr B Adam, being a member of SAB&T, as the individual designated auditor who will undertake the audit of the Group for the ensuring year.”

Ordinary Resolution Number 5 – Appointment of Audit Committee“RESOLVED THAT the following non-executive directors be elected as members of the Audit Committee:

5.1 S Radebe

5.2 V Nkonyeni


Ordinary Resolution Number 6 – Unissued shares to be placed under the control of the directors “RESOLVED THAT all the unissued ordinary shares of the company be placed under the control of the directors who are hereby authorised, subject to the provisions of the Companies Act and the JSE Listings Requirements to allot and issue such shares in their discretion when, and on such terms and conditions as, they deem it fit to do so. “

Ordinary Resolution Number 7– General authority to issue shares, and to sell treasury shares, for cash“RESOLVED THAT the directors of the company and/or any of its subsidiaries from time to time be and they are hereby authorised, by way of a general authority, to:

■■ allot and issue shares or options in respect of, all or any of the authorised but unissued ordinary shares in the capital of the company; and/or

■■ sell or otherwise dispose of or transfer, or issue any options in respect of, ordinary shares in the capital of the company purchased by subsidiaries of the company;

■■ issue shares for cash, to such person/s on such terms and conditions and at such times as the directors in their discretion deem fit, subject to the Companies Act, 71 of 2008, as amended, the Articles of Association of the company, the Listings Requirements of JSE Limited and the following limitations:– the securities which are the subject of the issue for cash must be of a class already in issue, or where this is not the case, must

be limited to such securities or rights that are convertible into a class already in issue;– any such issue may only be made to public shareholders as defined by the Listings Requirements of JSE and not to related

parties;– the number of ordinary shares issued for cash shall not in any one financial year in the aggregate exceed 30% (thirty percent)

of the number of issued ordinary shares;– this general authority is valid until the earlier of the company’s next annual general meeting or expiry of a period of 15 (fifteen)

months from the date that this authority is given;– an announcement giving full details, including the impact on the net asset value per share, net tangible asset value per share,

earnings per share and headline earnings per share, and, if applicable, diluted earnings per share and diluted headline earnings per share, will be released when the company has issued ordinary shares representing, on a cumulative basis within 1(one) financial year, 5% (five percent) or more of the number of ordinary shares in issue prior to the issue;

– in determining the price at which an issue of ordinary shares may be made in terms of this authority, the maximum discount permitted will be 10% (ten percent) of the weighted average traded price on the JSE of the ordinary shares over the 30 (thirty) business days prior to the date that the price of the issue is agreed between the company and the party subscribing for the shares; and

– whenever the company wishes to use ordinary shares, held as treasury stock by a subsidiary of the company, such use must comply with the JSE Listings Requirements as if such use was a fresh issue of ordinary shares.”

/Notice of annual general meeting (continued)



In terms of the Listings Requirements of the JSE, a 75% (seventy five percent) majority of the votes cast by shareholders present or represented by proxy at the general meeting must be cast in favour of ordinary resolution number 7 for it to be approved, excluding the Designated Adviser and the controlling shareholders together with their associates.

Ordinary Resolution Number 8 – Remuneration policyRESOLVED THAT, by way of a non-binding advisory vote, the company’s remuneration policy as set out in the Annual Report, be endorsed as follows:

Remuneration of directors – page 25”

To consider and, if deemed fit, pass the following resolutions as Special Resolutions:

Special Resolution Number 1 – Approval of non‑executive directors’ fees“RESOLVED THAT the following non-executive directors’ fees payable for the financial year ending February 2012 until the next annual general meeting, be and are hereby approved:

Amount Director Description

R400 000 MM Patel Chairman of the BoardR200 000 CJJ Krüger Non-Executive DirectorR200 000 V Nkonyeni Chairman of the Remuneration Committee, member of the Audit Committee and

Risk Committee R200 000 S Radebe Chairman of the Audit Committee and Risk Committee. Member of the

Remuneration Committee, Risk Committee and permanent invitee to the Audit Committee”

Special Resolution Number 2 – Financial assistance to related or inter‑related company“RESOLVED THAT the directors be and is hereby authorised in terms of and subject to the provision of Section 45 of the Companies Act 71 of 2008 to cause the company to provide any financial assistance to any company or corporation which is related or inter-related to the company.”

Special Resolution Number 3 – Acquisition of own securities“RESOLVED THAT the mandate given to the company (or any of its wholly owned subsidiaries) providing authorisation, by way of a general approval, to acquire the company’s own securities, upon such terms and conditions and in such amounts as the directors may from time to time decide, but subject to the company’s Articles of Association, the provisions of the Companies Act 71 of 2008 (“the Act”) and the Listings Requirements of JSE Limited (“JSE”) (“the Listings Requirements”) be extended, provided that:

■■ Any repurchase of securities must be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the company and the counter-party;

■■ At any point in time, the company may only appoint one agent to effect any repurchase on the company’s behalf;■■ This general authority be valid until the company’s next annual general meeting, provided that it shall not extend beyond 15 (fifteen) months from the date of passing of this special resolution (whichever period is shorter);

■■ An announcement be published as soon as the company has cumulatively repurchased 3% (three percent) 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 securities and for each 3% (three percent) in aggregate of the initial number of that class acquired thereafter, containing full details of such repurchases;

■■ Repurchases by the company, and/or its subsidiaries, in aggregate in any one financial year may not exceed 20% (twenty percent) of the company’s issued share capital as at the date of passing this special resolution or 10% (ten percent) of the company’s issued share capital in the case of an acquisition of shares in the company by a subsidiary of the company;

■■ Repurchases may not be made at a price greater than 10% (ten percent) above the weighted average of the market value of the securities for the 5 (five) business days immediately preceding the date on which the transaction was effected;

■■ Repurchases may not be made by the company and/or its subsidiaries during a prohibited period as defined by the Listings Requirements of the JSE unless a repurchase programme is in place where the dates and quantities of securities to be traded during the relevant period are fixed and full details of the programme have been disclosed in an announcement over SENS prior to the commencement of the prohibited period; and

■■ The company may not enter the market to proceed with the repurchase of its ordinary shares until the company’s Designated Adviser has confirmed the adequacy of the company’s working capital for the purpose of undertaking a repurchase of securities in writing to the JSE.”

The directors, after considering the effect of the maximum repurchase permitted, must be of the opinion that if such repurchase is implemented: – The company and the Group will be able, in the ordinary course of business, to pay their debts for a period of 12 months after the

date of this notice;– The assets of the company and the Group will be in excess of the liabilities of the company and the Group, the assets and liabilities

being recognised and measured in accordance with the accounting policies used in the latest audited annual Group financial statements for a period of 12 months after the date of this notice;

– The share capital and reserves will be adequate for the ordinary business purposes of the company and the Group for a period of 12 months after the date of this notice;

– The working capital of the company and the Group will be adequate for ordinary business purposes for a period of 12 months after the date of this notice.

The reason for the passing of the above special resolution is to grant the company a general authority in terms of the Act for the acquisition by the company or any of its subsidiaries of securities issued by the company, which authority shall be valid until the earlier of the next annual general meeting, or the variation or revocation of such General Authority by Special Resolution by any subsequent general meeting of the company; provided that the general authority shall not extend beyond 15 (fifteen) months from the date of this general meeting. The passing and registration of this special resolution will have the effect of authorising the company or any of its subsidiaries to acquire securities issued by the company.

The following information, which is required by the JSE Listing Requirements with regard to the resolution granting a general authority to the company to repurchase its securities, appears on the pages of the financial statements to which this notice of general meeting is annexed, is indicated below:Directors and management pages 8 and 9Major shareholders page 29Directors’ interests in securities page 27Share capital page 65Material changes page 38Litigation page 37

Directors’ responsibility statementThe directors, whose names are given on pages 8 and 9 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.

Solvency and liquidity statementThe Board of directors of the company confirms that the company will not enter into a transaction to distribute capital and reserves in terms of ordinary resolution number 3 or to repurchase shares in terms of special resolution number 3 unless:

i. the company and its subsidiaries (“collectively the Group”) will be able to pay its debts as they become due in the ordinary course of business for a period of 12 months after the date of that distribution or repurchase;

/Notice of annual general meeting (continued)



ii. The assets of the company and the Group, valued in accordance with the accounting policies used in the latest audited Group annual financial statements will exceed the liabilities of the company and the Group for a period of 12 months after the date of that distribution or repurchase;

iii. the share capital and reserves of the company and the Group will be adequate for ordinary business purposes for a period of 12 months after the date of that distribution or repurchase; and

iv. the working capital available to the company and the Group will be adequate for the ordinary business purposes for a period of 12 months after the date of that distribution or repurchase.

The directors of the company hereby state that:

a) the intention of the directors of the company is to utilise the authority if, at some future date, the cash resources of the company are in excess of its requirements. In this regard the directors will take account of, inter alia, an appropriate capitalisation structure for the company, the long-term cash needs of the company and will ensure that any such utilisation is in the interests of the shareholders; and

b) the method by which the company intends to re-purchase its securities and the date on which such re-purchase will take place, has not yet been determined.

JSE Limited Listings RequirementsIn terms of the JSE Listings Requirements, any shares currently held by the ACTOWERS Share Incentive Scheme will not have their votes at the annual general meeting taken into account in determining the results of voting on special resolution number 3 and ordinary resolution number 7.

By order of the Board

Premium Corporate Consulting Services (Pty) LimitedCompany Secretaryper S Wilke

15 July 2011

/Corporate data

Financial year‑end 28 FebruaryRelease of results 20 MayPosting of annual report 15 JulyAnnual general meeting 17 August Release of interim statement November

/Shareholders’ diary 2011

Country of incorporationRepublic of South Africa

Registration number2000/027374/06

JSE share codeATR

JSE ISDN codeZAE000088084

Head office address10 Tennyson Drive, Tulisa Park, Gauteng, 2001

Postal addressPO Box 1078, Jukskei Park, 2153

Telephone number011 907 7364

Facsimile011 907 2772

Email [email protected]

Company secretary and registered officePremium Corporate Consulting Services (Pty) Limited(Registration number 2003/09512/07)Waterford Office Park, unit 28, First FloorCorner Witkoppen Road and Waterford DriveFourways, 2188PO Box 1078, Jukskei Park, 2153Telephone number: 011 658 0473/4Facsimile: 086 512 8872Email address: [email protected]

AuditorsSAB&T Chartered Accountants Incorporated(Registration number 1997/018869/21)119 Witch-Hazel Avenue, Highveld Technopark Centurion, 0046PO Box 10512, Centurion, 0045Telephone number: 012 682 8800Facsimile: 086 505 9796

Transfer secretariesComputershare Investor Services (Pty) Limited(Registration number 2004/003647/07)Ground Floor70 Marshall StreetJohannesburg, 2001PO Box 61051, Marshalltown, 2008

Designated adviserVunani Corporate FinanceTrading as a division of Vunani Capital (Pty) Limited(Registration number 1998/001469/07)Vunani House, Athol Ridge Office Park151 Katherine Street, Sandown, Sandton, 2196PO Box 413972, Craighall, 2024Telephone number: 011 263 9500Facsimile: 011 784 1989

Investor relationsKeyter Rech Investor Solutions CC(Registration number 2008/156985/23)Fountain Grove, 5 2nd Street, Hyde Park, 2195PO Box 653078, Benmore, 2010Telephone number: 011 447-5204Facsimile: 011 447-9391

Websitewww.africacellular.co.za



AFRICA CELLULAR TOWERS LIMITED(Incorporated in the Republic of South Africa)(Registration number 2000/027374/06)JSE code: ATR ISIN: ZAE000088084(“ACTOWERS” or “the Group” or “the company”)

To be completed by registered certificated shareholders and dematerialised shareholders with own‑name registration only

This proxy form relates to the annual general meeting to be held at Africa Cellular Corporate Park, 10 Tennyson Drive, Tulisa Park, Johannesburg on Wednesday, 17 August 2011 at 10:00 (“meeting”) (see note 1) and is for use by registered shareholders whose shares are registered in their own names on the date of the meeting (“record date”) (see note 2).

Terms used in this proxy form have the meanings given to them in the notice of meeting to which this proxy form is attached.

Please print clearly when completing this form and see the instructions and notes at the end of this form for an explanation of the use of this proxy form and the rights of the shareholder and the proxy.

I/We (BLOCK LETTERS please)

of (address)

Telephone (work) (home)

being a shareholder of the company and being the registered owner/s of ordinary shares in the company (note 3)

hereby appoint

or, failing him/her the chairman of the meeting (see note 4)

to attend and participate in the meeting and to speak and to vote or abstain from voting for me/us and on my/our behalf in respect of all matters arising (including any poll and all resolutions put to the meeting) at the meeting, even if the meeting is postponed, and at any resumption thereof after any adjournment (see note 5)

My/Our proxy shall vote as follows:

Please indicate with an “X” in the appropriate spaces how you wish your votes to be cast. If you do not do so, the proxy may vote or abstain at his discretion (see note 6)

FOR AGAINST ABSTAIN

1. Ordinary resolution number 1 – Adoption of the annual financial statements

2. Ordinary resolution number 2 – Re-election of directors

2.1 Mr CJJ Krüger

2.2 Mr MM Patel

2.3 Mr D van Staden

3. Ordinary resolution number 3 – Appointment of directors

3.1 Mr S Radebe

3.2 Mr PSN Swart

4. Ordinary resolution number 4 – Re-appointment of auditors

5. Ordinary resolution number 5 – Appointment of Audit Committee

5.1 Mr S Radebe

5.2 Mr V Nkonyeni

6. Ordinary resolution number 6 – To place the unissued shares under the control of the directors

7. Ordinary resolution number 7 – General authority to issue shares for cash and to sell treasury shares

8. Ordinary Resolution Number 8 – Remuneration policy

9. Special Resolution Number 1 – Approval of non-executive directors’ fees

9.1 Mr MM Patel

9.2 Mr V Nkonyeni

9.3 Mr S Radebe

10. Special Resolution Number 2 – Financial assistance to related or inter-related company

11. Special Resolution Number 3 – Acquisition of own securities

(Indicate instruction to proxy by way of a cross in the space provided above)

unless otherwise instructed, my/our proxy may vote as he/she thinks fit.

Signed this day of 2011

Signature

Please read the notes on the reverse side hereof.

Dated this day of 2011

Signature (see note 1)

/Form of proxy

1. This proxy form will not be effective at the meeting unless received at the company’s transfer office, Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street, Johannesburg, by no later than 10:00 on Monday, 15 August 2011. If a shareholder does not wish to deliver this proxy form to that address, it may also be posted, at the risk of the shareholder, to Computershare Investor Services 2004 (Pty) Ltd, PO Box 61051, Marshalltown, 2107.

2. This form is for use by registered shareholders who wish to appoint another person (a proxy) to represent them at the meeting. If duly authorised, companies and other corporate bodies who are registered shareholders may appoint a proxy using this form, or may appoint a representative in accordance with paragraph 12 below.

Other shareholders should not use this form. All beneficial shareholders who have dematerialised their shares through a CSDP or broker must provide the CSDP or broker with their voting instruction. Alternatively, if they wish to attend the meeting in person, they should request the CSDP or broker to provide them with a letter of representation in terms of the custody agreement entered into between the beneficial shareholder and the CSDP or broker.

3. This proxy shall apply to all ordinary shares registered in the name of the shareholder who signs this proxy form at the record date unless a lesser number of shares is inserted.

4. A shareholder may appoint one person of his own choice as his proxy by inserting the name of such proxy in the space provided. Any such proxy need not be a shareholder of the company. If the name of the proxy is not inserted, the chairman of the meeting will be appointed as proxy. If more than one name is inserted, then the person whose name appears first on the proxy form and who is present at the meeting will be entitled to act as proxy to the exclusion of any persons whose names follow. The proxy appointed in this proxy form may delegate the authority given to him in this proxy form by delivering to the company, in the manner required by these instructions, a further proxy form which has been completed in a manner consistent with the authority given to the proxy in this proxy form.

5. unless revoked, the appointment of a proxy in terms of this proxy form remains valid until the end of the meeting, even if the meeting or part thereof is postponed or adjourned.

6. If:

6.1 a shareholder does not indicate on this instrument that the proxy is to vote in favour of or against or to abstain from voting for any resolution; or

6.2 the shareholder gives contradictory instructions in relation to any matter; or

6.3 any additional resolution/s which are properly put before the meeting; or

6.4 any resolution listed in the proxy form is modified or amended,

then the proxy shall be entitled to vote or abstain from voting, as he thinks fit, in relation to that resolution or matter. If however, the shareholder has provided further written instructions which accompany this form and which indicate how the proxy should vote or abstain from voting in any of the circumstances referred to in 6.1 to 6.4, then the proxy shall comply with those instructions.

7. If this proxy is signed by a person (signatory) on behalf of the shareholder, whether in terms of a power of attorney or otherwise, then this proxy form will not be effective unless –

7.1 it is accompanied by a certified copy of the authority given by the shareholder to the signatory; or

7.2 the company has already received a certified copy of that authority.

8. The chairman of the meeting may, in his discretion, accept or reject any proxy form or other written appointment of a proxy which is received by the chairman prior to the time when the meeting deals with a resolution or matter to which the appointment of the proxy relates, even if that appointment of a proxy has not been completed and/or received in accordance with these instructions. However, the chairman shall not accept any such appointment of a proxy unless the chairman is satisfied that it reflects the intention of the shareholder appointing the proxy.

9. Any alternations made in this proxy form must be initialled by the authorised signatory/ies.

10. This proxy form is revoked if the shareholder who granted the proxy:

10.1 gives written notice of such revocation to the company, so that it is received by the company by not later than 10:00 on Monday, 15 August 2011; or

10.2 subsequently appoints another proxy for the meeting; or

10.3 attends the meeting himself in person.

11. All notices which a shareholder is entitled to receive in relation to the company shall continue to be sent to that shareholder and shall not be sent to the proxy.

12. If duly authorised, companies and other corporate bodies who are shareholders of the company having shares registered in their own names may, instead of completing this proxy form, appoint a representative to represent them and exercise all of their rights at the meeting by giving written notice of the appointment of that representative. That notice will not be effective at the meeting unless it is accompanied by a duly certified copy of the resolution/s or other authorities in terms of which that representative is appointed and is received at the company’s transfer office, Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, by not later than 10:00 on Monday, 15 August 2011. If a shareholder does not wish to deliver that notice to that address, it may also be posted, at the risk of the shareholder to Computershare Investor Services (Pty) Ltd, PO Box 61061, Marshalltown, 2107.

13. 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.

14. 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.

/Instructions and notes to the proxy form


Africa Cellular Park10 Tennyson DriveTulisa ParkGauteng, 2001

PO Box 1078Jukskei Park2153

Tel: +27 11 907 7364Fax: +27 11 907 2772

www.africacellular.co.za

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