Annual Report 2009 Casting our shadow in Africa

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(1)Casting our shadow in Africa. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Annual Report 2009.

(2) Vision, mission and strategy. 1. Financial highlights. 2. Segmental analysis. 3. Overview of ACTOWERS. 4. Group activities. 5. Board of Directors. 8. Chairman’s and Chief Executive Officer’s report. 10. Corporate governance. 15. Audit Committee report. 20. Annual Financial Statements. 21. Shareholders’ analysis. 85. Shareholders’ diary. 86. Share price performance. 86. Notice of Annual General Meeting. 87. Form of proxy. 91. Administration. IBC. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. CONTENTS.

(3) VISION, MISSION AND STRATEGY Vision Our vision is to: n expand our telecommunications and shelters business into Africa and other emerging markets by. establishing a presence in strategic regions; n become one of the preferred manufacturers of electric transmission and distribution towers and a. turnkey constructor of power lines in South Africa and neighbouring countries; n continue to improve our service delivery abilities; n ensure that we are the preferred supplier to all major telecommunication and power providers in the. markets in which we operate; and n explore new complementary and synergistic product offerings.. Mission Our mission is to become the largest in-house manufacturer as well as a full turnkey installation and supply company in Africa for both the telecommunication and power line industries.. Our strategy is to: n pursue contracts that ACTOWERS was previously. excluded from participation, using our newly improved Black Economic Empowerment (BEE) status; n increase our own production capabilities, which will. reduce our dependency on outside suppliers; n be self-reliant by bringing certain processes in-house to. ensure more effective cost management; n be an employer of choice by training and motivating. our employees through an incentive scheme that we have in place for them to ensure a loyal workforce; and n be a company that strives to continue to enhance. shareholder value.. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 1. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Strategy.

(4) financial highlights. Revenue up. Headline earnings up. (2008: R326,6 million). (2008: R45,0 million). 54,8% to R505,4 million. 13,6% to R51,1 million. Headline earnings per share up. Net tangible asset value per share up. (2008: 17,7 cents). (2008: 64,6 cents). 10,4% to 19,5 cents. 46,8% to 94,8 cents. Improvement of 35% in debtor days to. 109 days from 167 days. Revenue (Including inter-segmental). operating profit before interest and taxation (Excluding inter-segmental). 600. 90 80. 15,5. 14,2. 70. 74,5. 67,5. R million. 417,5. 400. R million. 60. 58,5 300 285,6 200. 17,3. 50 47,6 40. 42,7. 30 20. 179,3. 10. 100. 0 -2,7 0. 2007. 2008. 2009. Cellular Towers. 2. -10. / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. Equipment Shelters. 2007. 2008. Power Lines. 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. 500.

(5) segmental analysis. revenue analysis per major country 38. 40. 25. 0. 9 2. 7. 8. 7. South Africa. 7. Sudan. 5. 7. 9. Ghana. 8. 9. 10. 15. 16. 15. 15. 20. 11. Percentage. 30. 32. 35. Nigeria. Tanzania. Chad. 2008. DRC. Uganda. Congo. Other. 2009. revenue analysis per major customer 50 47. 45. 30. Globacom. 24. 21. SWAP. Zain. Huawei. 2008. ALPS. Yesodot Barniv. 1. 7. Tigo/ Millicom. 4. 4. 6. 1. 0. 6. 5. 8. 10. 16. 15. 17. 20. 18. 25. Alcatel. Other. 2009. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 3. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. 35. 20. Percentage. 40.

(6) overview of actowers. ACTOWERS was established in 1999 and listed on the Alternative Exchange (AltX) of the JSE Limited ( JSE) on 29 November 2006. The ACTOWERS Group offers full turnkey solutions inclusive. ACTOWERS manufactures structural steel components. of tower design, manufacture and installation as well as. for cellular towers, transmission line towers, distribution. GSM shelter manufacture. Our portfolio of products and. line towers and electrical sub-stations using modern. services supports the telecommunications and power. CNC technology.. lines industries and the Group operates over most of the African continent.. ACTOWERS currently has 13 CNC machines. The Group also has a welding robot, a bending machine, a 250 ton. ACTOWERS operates through the following divisions:. hydraulic press, radial arm drill and a guillotine for. •. Cellular Towers;. processing special fittings for the power line towers.. •. Equipment Shelters (JK Shelters); and. •. Power Lines.. The Group supplied more than 7 000 telecommunication towers into Africa and has started to supply power line. ACTOWERS, after an extensive search period, concluded. towers into the market.. a transaction with TisoGroup (Pty) Limited (TisoGroup), a BEE group, early in 2009. TisoGroup was established in. ACTOWERS is able to manufacture 3-legged lattice towers. 2001 and is one of South Africa’s leading black-controlled. up to 70 meter and 4-legged lattice towers up to. and managed principal investment companies. TisoGroup. 100 meter for both Base Transmittal Station (BTS) and. has a highly experienced senior executive team. It has. Backbone Applications to the client’s specifications.. industrial and financial services sectors. It further has strategic holdings in construction, steel merchanting, coal, industrial minerals, mining services, power and property development companies with significant shareholding in banking, logistics and specialty chemicals companies. Tiso Telecom (Pty) Limited (Tiso Telecom), a subsidiary. The envisaged galvanizing plant is in the process of being designed for construction on the new site approximately 28 kilometers from ACTOWERS’ current premises. The Environmental Impact Assessment process is currently being conducted. This galvanizing plant will be one of the most modern of its kind in the southern hemisphere.. of TisoGroup, became a 25,1% shareholder in ACTOWERS. ACTOWERS provides holistic logistic service solutions to its. after an issue of shares for cash transaction effective. customers and prides itself in going the extra mile by. 16 February 2009.. delivering its products to the most remote regions.. ACTOWERS group structure Cellular Towers • Manufactures and supplies cellular. Equipment Shelters • Manufactures and supplies equipment shelters to house. tower masts to the cellular industry. equipment for cellular towers. in Africa and other emerging markets. • Supply all ACTOWERS cellular. • Installation of these towers. towers as well as to third party. • Installation of fibre optic systems. operators. 4. / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. Power Lines • Manufactures and supplies towers to the electric transmission and distribution industry • The final objective is to be a full turnkey line construction provider. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. primarily investments in the infrastructure, resources,.

(7) GROUP ACTIVITIES. cellular towers. This division delivers full turnkey telecommunication infrastructure installations that include lattice towers, palisade fencing and fibre optic systems. The technical capabilities of this division were. Republic of Congo, Congo (Brazzaville),. strengthened by the addition of highly. Madagascar and Uganda. This division has, since 1999, constructed over. ACTOWERS has a footprint in over 28 African. 3 500 sites across the African continent. Its. countries. The company has subsidiaries in. customers include most of the major cellular,. various African countries such as Democratic. CDMA and Internet operators in Africa. The division has established a warehouse in Ghana where stock is held for distribution into the West African region.. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 5. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. qualified Design Engineers during 2008..

(8) GROUP ACTIVITIES continued. Equipment Shelters SHELTERS. JK Shelters, being the manufacturer of cellular equipment shelters for ACTOWERS, supplies its products throughout Africa and South Africa. An equipment shelter is supplied for every. This division has recently installed a new. tower site erected, either as a roof top or a. polyurethane injection line to enable it to. greenfield project.. supply companies who uses this product,. The company has also been innovative in designing an “outdoor cabinet” suitable for smaller sites or sites requiring retrofitting or. instead of the traditional polystyrene panels. These panels can also be used in the building of houses, offices and large cold rooms.. upgrading where space within the original equipment shelter is limited. The product series was recently launched with much success and enthusiasm. This series has been deployed within the same target market as. 6. / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. that currently enjoyed by Equipment Shelters..

(9) Power Lines. Power Lines is responsible for the turnkey construction of electric transmission and distribution lines in South Africa and neighbouring countries. This division was established in 2008 and. To build this new division, ACTOWERS was able. received its first order for the installation of a. to secure the services of a world class team of. distribution line near Eastgate in Johannesburg. transmission and distribution line specialists. This division has its own stringing equipment that enables it to install quad configuration conductors on up to 400kV conductor transmission lines. One of the purposes of the BEE transaction was to raise capital for the expansion of this division by acquiring the necessary equipment to make it a viable competitor in the power line construction industry.. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 7. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. in the last quarter of 2008..

(10) BOARD OF DIRECTORS. Chris Krüger (61) Chairman and Chief Executive Officer Chris 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 Officer. Chris is also currently the Chairman of the Board. Chris has over 39 years of experience in the engineering industry and 17 years of experience in telecommunication hardware.. David van Staden (34) Operations Director David has a Diploma in Quantity Surveying and Project Management. He was the Project Manager for ACTOWERS since 1999 and was appointed as the Operations Director on 6 October 2006. He has an excellent background in the projects field and thrives in his position as Operations Director. David has over 10 years of experience in project management and quantity surveying. He is responsible for the project management of the installation of towers in Africa and sourcing new contracts for the cellular towers business.. Jacques de Villiers (39) Financial Director Jacques has a BCom (Hons) and qualified as a Chartered Accountant in 1995 and completed his MCom (Business Management) at Johannesburg University (previously RAU) in 2002. He joined De Villiers Myburgh Inc. in 1996 and was appointed as a Director of De Villiers Myburgh Inc. in 1999. Jacques consulted in the telecommunications industry from 1996 to 1999 for Telkom Limited and acted as the financial project leader for the planning, building and implementation. of the SAT3/SAFE underwater communication cable that ranges from Portugal to Malaysia via South Africa. Jacques was appointed as Financial Director to ACTOWERS on 6 October 2006.. Mitesh Patel (35) Independent Non-Executive Director Mitesh Patel was appointed to the ACTOWERS’ Board as an Independent Non-Executive Director and Chairman of the Audit Committee effective from 9 September 2008 and subsequently appointed as the Chairman of the Risk Committee and member of the Remuneration Committee. Mitesh is a Chartered Accountant and has a BCompt Honours in financial accounting, financial management, taxation and auditing. He is an energetic, self-motivated and highly principled individual who received an opportunity to join the fifth largest audit practice in South Africa. Mitesh became the Managing Director of PKF (Pta) Incorporated in 2005 and was instrumental in the company’s growth. He was offered a partnership opportunity at Ernst and Young. Mitesh is currently the Managing Partner at Nkonki Incorporated and further acts as an Independent Non-Executive Director and Audit Committee Chairperson for JSE listed companies, Stratcorp Limited and African Dawn Capital Limited and member of the Audit Committee of PSV Holdings Limited.. 8. / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. of the ICO Global Mobile Satellite Hub for Southern Africa. He has been involved in the financial planning and modelling.

(11) Vuyisa Nkonyeni (39) Non-Executive Director Vuyisa, who represents TisoGroup, was appointed to the ACTOWERS Board on 31 January 2009. Vuyisa is the Chairman of the Remuneration Committee and member of the Risk Committee. Vuyisa has a BSc (Inf. Proc), BSc (Hon), Post Graduate Diploma in Accounting and is a CA(SA). He is a former associate at Deutsche Bank Corporate Finance where he gained investment banking experience primarily in corporate and project finance advisory work. More recently he was the Financial Director of Worldwide African Investment Holdings (Pty) Limited and Director at Actis LLP.. Martin Potgieter (34) Independent Non-Executive Director Martin was appointed as an Independent Non-Executive Director and member of the Audit, Risk and Remuneration Committees of ACTOWERS with effect from 3 March 2009. Martin is a Fellow of the Institute of Actuaries (UK) and a CFA charterholder. He works in the Principal Investments division of RMB. Prior to joining RMB in early 2008 he spent more than five years working for Watson Wyatt Worldwide in London, where he focused on private equity investing and consulting. In 2007 he was a senior member of a team that advised on US$2 billion of global private equity investments. He qualified as an actuary in 2001 while working for Alexander Forbes, which he joined in 1997 after completing his BCom (Hons) Actuarial. Seated in front: Chris Krüger and Martin Potgieter Back row left to right: Jacques de Villiers, Mitesh Patel, Vuyisa Nkonyeni and David van Staden. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 9. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Science at the University of Pretoria..

(12) CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REport. Overview of the year. Lines completed its first construction contract as lead. This has been a year of two halves. The first half of the. contractor in April 2009, beating the deadline by one. year we have enjoyed strong demand for our cellular. month, and has already achieved revenue of R15,5 million. towers and equipment shelters and a steel price that. in its first year of operation.. was conducive to our business. Although we have not. We have always stated that we will pursue opportunities. been as severely affected by the deterioration of the. for the Group that will be complementary to our existing. world economy as certain other sectors, as a consequence. product offering. We have therefore expanded our product. of, inter alia, the sub-prime crisis and credit crunch that. offering into the Optic Fibre market by introducing services. emanated from the United States of America, we have. to install Optic Fibre links in South Africa and also in other. experienced a retraction of certain contracts and a. Sub-Saharan countries. This division, which currently falls. slowdown in certain project roll-outs. The sharp decrease. under the Cellular Towers division, is expected to be a. in the steel price negatively impacted our business in. major income contributor for the 2010 financial year with. the second half of the year. The weakening South African. a confirmed order book amounting to approximately. rand against the US Dollar and the Euro in the second. R35 million.. half of the year, however softened the effect of the. managed to increase its sales from R326,6 million for the 2008 financial year to R505,4 million in the 2009 financial year.. Since listing, long outstanding debtors have always been a concern in terms of repatriating payments out of Africa and trying to resolve disputes on contracts, long distance. The world-wide economic crisis also had an effect on payments from customers. The repatriation of foreign. A large milestone for ACTOWERS this year was the. currency (US$) from certain smaller African countries has. successfully concluded empowerment transaction with. proved to be a challenge. We have decided to take some. Tiso Telecom (Pty) Limited (Tiso Telecom), a subsidiary of. decisive steps and have reviewed credit policies and. TisoGroup (Pty) Limited (TisoGroup), in February 2009, in. procedures in the past year, focusing on tightening the. terms of which Tiso Telecom acquired a 25,1% interest in. terms and conditions of our manufacturing and supply. ACTOWERS for a total consideration of R116 million. Vuyisa. contracts with regard to specifically the acceptance,. Nkonyeni, a Director of Investments at TisoGroup and also. performance and payment terms of the contracts. Some. a Director of Tiso Telecom, joined the Board of ACTOWERS. of the changes that were implemented include only. as a Non-Executive Director and has already made a. shipping products on the receipt of acceptable Letters. valuable contribution to the company.. of Credit, more favourable payment terms staggered on. The Power Lines division has been established and with the introduction of Tiso Telecom, can and is tendering for contracts as a lead, turnkey provider, complying with all the relevant requirements for parastatal contracts. This division has already tendered for large contracts of several. various milestones and no new work for long outstanding and problem accounts. These changes resulted in improved working capital management with regard to new contracts and debtors, as can be seen from the improvement in debtors’ days.. hundred million rand and has been short listed on. On old historic debt (the vast majority of which relate to. substantial tenders. We are proud of the fact that Power. only one customer), decisive steps were taken to improve. 10 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. lower steel price. Despite these factors, the Group.

(13) the as yet unresolved issues. To this extent, we collected. revenues by 2012 will be around US$10 billion. The. R42,9 million of the long outstanding debtors during the. Angolan ICT market is in its infancy, but annual subscriber. 2009 financial year. Senior management has had a series. growth rates of 10% are expected.. of meetings with senior management of the customer in question, including meetings at their Head Office and the various relevant African countries. Management is still vigorously working on resolving this matter as soon as possible, and is confident of collecting the long outstanding debt.. Industry overview The global reality is that at the end of 2008, most countries were in an official or unofficial recession. Africa. There is a growing demand for electricity in the SubSaharan Africa region. The biggest draw backs or issues on the African continent pertaining to electricity are insufficient generation capacities, years of underinvestment in generation capabilities and failed planning and maintenance programmes. Only 23% of the African continent had access to electricity in 2007. South Africa in turn only generates approximately 1,8% of the world’s total electricity supply. Demand for electricity is mainly driven by fast growing economies, such as Nigeria.. has managed to “buck” the decline into recession to a large extent and a majority of African markets managed to record some form of growth. The IMF predicts a growth of only 3,2% in Sub-Saharan Africa in 2009. The industries in Africa that are most affected by the global economic crisis are mining and automotive. South Africa experienced a 1,8% contraction of its economy in January 2009. Angola and Nigeria are seen as key growth markets on the. market with Frost & Sullivan predicting that mobile. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 11. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. African continent. Nigeria represents a rapidly developing.

(14) CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REport continued. Financial results. customer, a few substantial contracts were cancelled by. Revenue increased by a more than satisfactory 54,8%. certain customers after the company had already. to R505,4 million (2008: R326,6 million). The growth in. manufactured the towers. These towers had to be sold. revenue was mainly as a result of the continued demand. to other customers at lower prices as a consequence of. for cellular towers and equipment shelters in Africa in the. the decrease in the steel price; •. African operations – the company incurred losses in. price that led to higher selling prices. The company has. some of the African installation operations in the latter. seen, in the latter part of the year, a decline in the number. part of the financial year due mainly to escalating costs. of orders from their main customers throughout Africa as. in the African countries and delays experienced in the. projects have been either delayed or cancelled.. sign-off on projects by the customers as a result of political instabilities. This relates mainly to Chad at the. Gross profit increased to R99,6 million (2008:. beginning of the financial year and Madagascar at the. R88,2 million), with gross profit margins decreasing from. end of the 2009 financial year. The profits derived from. 27,0% to 19,7% in 2009. The decrease in gross profit. the African installation operations were consequently. margins can mainly be attributed to a number of factors, the most important being: •. The decrease in the steel price – the price of steel (which contributes approximately 70% to 85% of the total input costs of the lattice towers), peaked in the third quarter of 2008 and has since then decreased. •. Manufacturing expenses – increased costs were incurred to establish capacity, know-how and the staff complement for the manufacturing and installation of power line components.. significantly to current levels. The impact of this. EBITDA decreased by 2,2% to R65,0 million. fluctuation in the steel price had a negative impact on. (2008: R66,5 million) for the 2009 year end. EBITDA. the gross profit margin of the company, because it has. margins decreased to 12,86% (2008: 20,4%) mainly. not been able to pass the higher price of steel on hand. as a result of bad debt written-off to the amount of. to its customers in the latter part of the 2009 financial. R10 million, and an increase in the provision for doubtful. year, when the steel price declined significantly.. debts to R31,3 million (2008: R15,6 million).. Normally, the company only acquires steel on confirmed orders. However, with the material increase in the steel price in the first half of the financial year, the company increased its stock pile of steel in an. •. lower than anticipated; and. Other income mainly relates to foreign exchange gains of R35,5 million (2008: R13,5 million) of which R21,0 million is unrealised foreign exchange profits at year end.. effort to reduce the impact of increasing steel price on. During the reporting period the Group acquired three. contracts. The company has reduced its stock pile of. adjacent stands in the Midvaal Municipality area, close to. steel at the higher prices and gross profit margin. the R59 highway, for a consideration of approximately. should return to more acceptable levels in the. R7 million. These stands are being developed and. forthcoming financial year;. earmarked to house the galvanizing plant as soon as the. Credit Policy – As a result of the company’s policy not. environmental approval process is completed. These. to ship towers without a Letter of Credit from the. stands will also be utilised as a packing and dispatching. 12 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. first half of the year as well as the increase in the steel.

(15) area for towers after they have been galvanized. Stringing. passed the high standards and criteria set out in the. equipment for the Power Lines division was acquired. ISO9001 guidelines. We are, effective 15 July 2009,. during the year and this will ensure that ACTOWERS can. ISO9001 accredited.. now provide the full turnkey solution for manufacturing, construction and stringing of power lines. Trade debtors have remained largely unchanged at R150,9 million at 28 February 2009 (2008: R149,3 million) included in trade and other receivables, but the debtors have reduced significantly from 167 days in 2008 to 109 days in 2009. This amount allows for a doubtful debt provision of R31,3 million (2008: R15,6 million).. Prospects The global economic slow-down has and will affect ACTOWERS, though the prospects for the telecoms industry in Africa are still positive in the long-term. The steel price has stabilised since March 2009, but the lower steel price together with the stronger South African currency, may result in lower revenue. A strong South African rand is also not conducive for exports and could result in foreign. Construction contracts were reclassified from inventory. exchange losses. We have recently seen an increase in. and disclosed separately to improve disclosure.. enquiries, some of which have resulted in supply-only. Construction contracts increased to R87,8 million. orders, but not at the same levels as in the 2009 financial. (2008: R2,8 million), as a result of large contracts. year. However, the market has become more competitive. entered into during the year nearing completion at. and margins have reduced. We have taken pro-active steps. year end. Subsequent to year end, material progress. and are offering operators lower-cost, rapid deployment. was made on the completion and sign-off of the. sites and have also designed new technology for saving. construction contracts.. operating costs per site. The new products have been well. Achievements. turnover in future years. The company has a strong order. We have received a Level 6 BEE contributor status,. book for the supply and installation of lattice towers. qualifying us to tender for parastatal work.. extending into the second half of the current financial year. An important milestone for ACTOWERS was the awarding of SANS (SABS) 9001-2008 certification. The SANS criteria. and has tendered on several large contracts, on which we consider to have a reasonable chance of success.. includes the design, manufacturing and construction. The expansion of the company’s business into the. by a company. It gives us credibility as a leading steel. installation of optic fibre links in South Africa and Sub-. fabricating company, worldwide. This is truly a prestigious. Saharan Africa has been well received and is expected to. certificate to have and our clients understand that all. be a solid contributor to Group revenue and profits for the. manufacturing is done under strict regulations and. 2010 financial year. We have also installed a new. specifications.. polyurethane injection line for JK Shelters to enable them. ACTOWERS has recently been through a rigorous audit by. to supply more sophisticated markets and operators.. the ISO9001 accreditation committee and it is with great. The Power Lines division has established itself and has. pride and pleasure that we can announce that we have. been successful in receiving a number of small orders for. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 13. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. received by operators and should have a positive effect on.

(16) CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REport continued. the manufacturing and installation of electrical pylons.. Appreciation. It has tendered for various contracts as main contractor,. The Group’s performance has been underpinned by a. but Eskom has unfortunately delayed the roll-out of. strong management team, our staff, loyal customers and. transmission line projects and is only expected to continue. long serving suppliers. Your hard work, dedication and. with its roll-out plan towards the end of 2009. There are. contribution in the face of difficult trading conditions are. however opportunities in neighbouring countries such as. highly appreciated. To my colleagues on the Board, thank. Namibia, Botswana and Zimbabwe for the construction. you for your invaluable guidance during this year, your. and supply of transmission lines, and ACTOWERS has been. input is appreciated.. invited to tender on these opportunities. We continue to believe that the Group is well positioned for the upgrade, maintenance and expansion of the power grid in SADC. To our shareholders, we will continue to strive to ensure that we enhance value for you.. that will eventually happen. ACTOWERS is continuously considering various acquisition opportunities to expand its business into related industries.. Changes to the Board of Directors Mitesh Patel was appointed by the Board on 9 September 2008 as an Independent Non-Executive Director, Chairman. Chris Krüger Chairman and Chief Executive Officer 31 July 2009. of both the Audit Committee and Risk Committee and is. On 31 January 2009 Vuyisa Nkonyeni was appointed by the Board as a Non-Executive Director following the investment by Tiso Telecom in ACTOWERS. Vuyisa is the Chairman of the Remuneration Committee and a member of the Risk Committee. Martin Potgieter was appointed by the Board as an Independent Non-Executive Director on 3 March 2009. He is a member of the Remuneration Committee, the Audit Committee and the Risk Committee. Ruben Richards retired from the Board as a Non-Executive Director and Chairman of the Audit Committee on 28 August 2008.. 14 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. a member of the Remuneration Committee..

(17) CORPORATE GOVERNANCE. Introduction. Statement of compliance. ACTOWERS is listed on the Alternative Exchange (AltX) of. The Listings Requirements of the JSE require that. the JSE Limited (JSE). The Board of Directors (the Board). listed companies report on the extent to which they. is committed to ensuring that the Group adheres to the. comply with the principles incorporated in King II.. highest standards of corporate governance in the conduct. The Directors, to the best of their knowledge and belief,. of its business and is committed to the principles of. are of the opinion that throughout the accounting period. openness, integrity and accountability. The Board supports. under review, the company has substantially applied. the principles contained in the Code of Corporate Practices. the principles of King II in terms of the Board’s. and Conduct recommended by the 2002 King Report on. governance framework, other than King II’s. Corporate Governance for South Africa (King II) as well as. recommendation that the roles of the Chairman and the. the Listings Requirements of the JSE.. Chief Executive Officer be separated, although this separation is not required in terms of the Listings. Improvements made during the past year and plans for the year ahead. Requirements of the JSE for AltX companies.. The Board’s governance policies and procedures are. of the Listings Requirements of the JSE and is satisfied. continually updated to ensure ongoing adherence to the. that it complied in all material respects with these. Listings Requirements of the JSE, King II and current. regulations.. ACTOWERS has further reviewed the rules and regulations. legislation. During the period under review, the following. framework: •. the Audit Committee charter was aligned with the requirements of the promulgated Corporate Laws. •. •. The Board of Directors ACTOWERS has a unitary Board structure with six Directors, including three Executive Directors and three NonExecutive Directors. Two of the three Non-Executive. Amendment Act 24 of 2006 (CLAA);. Directors are independent in terms of the guidelines. a Risk Committee was constituted by the Board on. outlined in the JSE Listings Requirements and the. 19 February 2009 to monitor risks;. CLAA. Biographical details of the Directors appear on. a Remuneration Committee was constituted by the. pages 8 and 9.. Board on 19 February 2009; •. an Acquisition Committee was constituted by the Board on 11 March 2009 to evaluate future acquisitions;. •. •. The changes made to the Board during the year are set out on page 14 of the Annual Report.. a non-audit services policy was formalised by the Audit. The Board is governed by a formal Board Charter. Committee and approved by the Board; and. setting out composition, processes and responsibilities.. the Board appointed an additional Independent. The primary responsibilities of the Board include regular. Director and member of the Audit and Risk. review of the strategic direction of investment decisions. Committees to ensure that the company is fully. and performance against approved plans, budgets. compliant with the CLAA.. and best practice standards. The Board retains full. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 15. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. enhancements were made to the Board’s governance.

(18) CORPORATE GOVERNANCE continued. and effective control of the Group and decisions on. the Remuneration Committee and the Acquisition. material matters are reserved for the Board. The Board. Committee. The Chairman of the Audit Committee reports. is also responsible for monitoring the activities of the. at each scheduled meeting to the Board and members. executive management.. attend all Annual General Meetings to answer questions raised by shareholders.. Chairman and Chief Executive Officer The Chairman and Chief Executive Officer is Chris Krüger.. Audit Committee. Chris leads the Board and is responsible for representing. The Audit Committee was chaired by Dr Ruben Richards. the Board to shareholders. He is further responsible,. until his retirement on 28 August 2008. Mitesh Patel was. with the assistance of the other Executive Directors and. appointed as the Chairman of the Audit Committee with. management, for the running of the day-to-day business. effect from 9 September 2008. A Risk Committee was. of the Group, for the implementation of policies and. subsequently formed by the Board. The Audit Committee. strategies adopted by the Board and takes full. was attended by the Financial Director, the Independent. responsibility for all operations.. Auditors and the Designated Adviser, who attended by. are required to exercise leadership, enterprise, integrity and judgement based on the principles of good. invitation. The Audit Committee was formed for the purposes of monitoring and reviewing: •. and other systems of internal control;. governance.. Retirement and re-election of directors One third of the Directors are subject, by rotation, to retirement and re-election at the Annual General Meeting in terms of the company’s Articles of Association, David van Staden and Jacques de Villiers, being eligible, have. •. the effectiveness of the internal audit function;. •. the reports of both the external and internal auditors;. •. the Annual Report and specifically the Annual Financial Statements included therein;. •. the accounting policies of the Group and any proposed revisions thereto;. •. the external audit findings, reports and fees and the approval thereof;. offered themselves for re-election. The biographical details for each of the Directors are set out on page 8 of the. the effectiveness of the Group’s information systems. •. ensuring that non-audit services will not be obtained from the external auditors where the provisions of such. Annual Report.. services could impair audit independence; and. Board Committees While the Board remains accountable and responsible for. •. compliance with applicable legislation and requirements of regulatory authorities.. the performance and affairs of the company, it delegates. The Audit Committee has set the principles for. to management and Board Committees certain functions. recommending the firm of external auditors for non-audit. to assist it to properly discharge its duties. The Board had. services. A separate disclosure is made in note 19 of the. one Committee during the period under review and. Annual Financial Statements of the amounts paid for. recently formed two additional Board Committees, namely. audit services. The Audit Committee has satisfied its. 16 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. The Directors are experienced business people and.

(19) responsibilities during the year in accordance with its formal Terms of Reference.. Board and Committee meeting attendance The Board and Audit Committee meets at least four times. Risk Committee. a year. Additional meetings were convened to consider. Mitesh Patel (Chairman), Vuyisa Nkonyeni, Martin Potgieter. specific business issues which arose between scheduled. and Jacques de Villiers are the members of the. meetings. Representatives of the appointed Designated. Risk Committee. The Committee was constituted on. Adviser attend all Board and Audit Committee meetings.. 19 February 2009 and as a result, no meeting was held. The Company Secretary acts as secretary to the Board and. during the period under review. The Committee is. its Committees and attends all meetings.. mandated to assist the Board in the discharge of its duties. in terms of management, assurance and reporting. The. Details of the attendance at meetings are provided in the table below.. Committee will review and assess the integrity of the risk control systems and ensure that the risk policies and strategies are effectively managed.. Remuneration Committee Vuyisa Nkonyeni (Chairman), Mitesh Patel and Martin. Status. Board. CJJ Krüger. Executive. 7/7#. J de Villiers. Executive. 7/7. DM van Staden. Executive. 7/7. RR Richards. Non-Executive. 4/7*. 3/6*. MM Patel. Independent Non-Executive. 3/7**. 3/6**. V Nkonyeni. Independent Non-Executive. 1/7~. 0/6~. MM Potgieter. Independent Non-Executive. 1/7+. 0/6++. Potgieter are the members of the Remuneration Committee. The Committee was constituted on 19 February 2009 and as a result, no meeting was held during the period under review. The Committee is authorised to approve Executive Directors’ remuneration that is fair and competitive and will also review the Executive Directors’ recommendations for Non-Executive Directors’ fees and Committee fee structures against. Audit Committee. Director. 6/6+. # Chairman * Retired from the Board with effect from 28 August 2008 ** Appointed to the Board on 9 September 2008 ~ Appointed to the Board on 31 January 2009 + Attended by invitation ++ Appointed to the Board on 3 March 2009. market data.. Appointments to the Board Acquisition Committee. The Board has adopted a policy on the procedures for. Jacques de Villiers and David van Staden are the members. the appointment of Directors. Directors will be appointed. of the Acquisition Committee. The Designated Adviser. on the basis of skill, acumen, experience and level of. will attend meetings by invitation. The Committee was. contribution to and impact on the activities of the Group.. constituted on 11 March 2009 and as a result, no meeting. Directors are invited to assist with the identification and. was held during the period under review. The Committee. nomination of potential candidates. The Non-Executive. will discuss any possible acquisitions that would enhance. Directors of the Board propose suitable candidates for. growth in the Group.. consideration by the Board.. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 17. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. relating to corporate accountability and the associated risk.

(20) CORPORATE GOVERNANCE continued. Closed periods. note 25 to the Annual Financial Statements, no other. A closed period is exercised by the Directors from the. Director had a significant interest in any contract. date of the reporting period until the Group’s results are. or arrangement entered into by the company or. published on SENS. Additional closed periods are enforced. its subsidiaries.. as required in terms of any corporate activity or when. Directors are required to inform the Board timeously of. Directors are in possession of price sensitive information.. conflicts or potential conflicts of interests they may have. The Company Secretary ensures that all Directors are. in relation to particular items of business and recuse. aware of the legislation regulating insider trading.. themselves from discussions or decisions on matters in which they have a conflicting interest.. Interests of directors The direct and indirect beneficial interests of Directors in the company’s securities as at 28 February 2009 are set. The register of interests of Directors in contracts in terms of Section 234 of the Companies Act 61 of 1973, as amended, is updated at every Board meeting.. out in note 5 on page 25 of the Annual Report. There were. of the company between 28 February 2009 and the date of the Notice of Annual General Meeting contained in this Annual Report. A record of Directors’ dealings and clearance provided in terms of the Listings Requirements of the JSE is retained by the Company Secretary.. Directors’ share dealings. Company secretary The appointment and removal of the Company Secretary is a matter for the Board as a whole. The Company Secretary advises the Board on the appropriate procedures for the management of meetings and the implementation of governance procedures, and is further responsible for providing the Board collectively, and each Director individually, with guidance on the discharge of their. Directors may not deal in the company’s shares without. responsibilities in terms of the legislation and regulatory. first advising and obtaining written clearance from the. requirements applicable to South Africa. The Company. Chairman and the Financial Director. The Chairman and. Secretary monitors Directors’ dealings in securities and. Financial Director may not deal in the company’s shares. ensures adherence to closed periods for share trading.. without first advising and obtaining clearance from the Board. No Director or executive may trade in ACTOWERS. Communication. shares during closed periods as defined in the JSE Listings. The Board ensures that material matters of interest and. Requirements. The Directors of the company keep the. concern to shareholders and other stakeholders are. Company Secretary advised of all their dealings in. addressed in the company’s public disclosure and. securities and a written record is contained thereof.. communication. In this regard the Board ensures that the Group provides adequate transparency on all pertinent. Interests in contracts. matters. The Chief Executive Officer and Financial Director. During the year ended 28 February 2009, other than. meet with shareholders and analysts as well as with the. Mr Chris Krüger’s interest in JK Shelters disclosed in. financial press in order to ensure accurate reporting of. 18 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. no changes in the Directors’ interests in the share capital.

(21) company matters. All pertinent company announcements. The Group fully supports the government’s initiative. are placed on the company website.. to achieve greater equity in the workplace and. The Board further encourages shareholders to attend its Annual General Meeting, notice of which is contained in this Annual Report, where shareholders have the. management of all Group companies is fully committed to complying with the Employment Equity Act of 1998 (as amended).. opportunity to put questions to the Board and the. The company’s website provides the latest and historical financial and other information, including the Annual Reports.. Employment equity. Going concern The 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.. An affirmative action programme forms part of. The Directors report that, after making enquiries,. the Group’s business plan. The Group offers equal. they have a reasonable expectation that the Group has. opportunities to all employees. It seeks to provide. adequate resources to continue in operational existence. a work environment in which individuals of ability and. for the foreseeable future. Accordingly, the Group. commitment are able to develop their careers regardless. continues to adopt the going concern basis in preparing. of their background, race, religion or gender.. the Annual Financial Statements.. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 19. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Chairman of the Audit Committee..

(22) audit committee report. The Corporate Laws Amendment Act 24 of 2006 (CLAA) came into effect on 14 December 2007. In compliance with the CLAA, an Audit Committee was appointed by the Board of Directors. This Committee comprises of Mr Mitesh Patel and Mr Martin Potgieter. During the financial year ended 28 February 2009, in addition to the duties set out in the Audit Committee’s Terms of Reference (a summary is provided on page 16 of the Corporate Governance report), the Audit Committee. •. pre-approved any proposed contract with SAB&T for the provision of non-audit services to the Group.. The Audit Committee has satisfied itself through enquiry that SAB&T and Mr Bashier Adam, the Designated Auditor, are independent of the Group. The Audit Committee recommended that the Annual Financial Statements for the year ended 28 February 2009 be approved by the Board.. carried out its functions as follows:. In compliance with the Listings Requirements of the. •. nominated and approved the appointment of SAB&T. JSE Limited, the Audit Committee further executed their. Chartered Accountants Incorporated (SAB&T) on. responsibility in considering and has satisfied themselves. 16 March 2009 as the registered Independent Auditor. as to the appropriateness of the expertise and experience. after satisfying itself through enquiry that SAB&T is. of the Financial Director.. independent as defined in terms of the CLAA; •. determined the fees to be paid to SAB&T and their terms of engagement;. •. ensured that the appointment of SAB&T complied with the CLAA and any other legislation relating to the. •. 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; and. 20 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. Mitesh Patel Audit Committee Chairman 31 July 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. appointment of auditors;.

(23) ANNUAL FINANCIAL STATEMENTS For the year ended 28 February 2009. Report of the Independent Auditors. 22. Directors’ responsibilities and approval. 23. Certification by the Company Secretary. 24. Report of the Directors. 25. Income statement. 30. Balance sheet. 31. Statement of changes in equity. 32. Cash flow statement. 34. Accounting policies. 35. Notes to the Annual Financial Statements. 46. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 21. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. CONTENTS.

(24) report of the independent auditors. To the members of Africa Cellular Towers Limited and its subsidiaries Report on Annual Financial Statements We have audited the group annual financial statements and annual financial statements of Africa Cellular Towers Limited, which comprise the consolidated and separate balance sheets as at 28 February 2009, and the consolidated and separate income statements, the consolidated and separate statements of changes in equity and consolidated and separate cash flow statements 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 25 to 84. Directors’ Responsibility for the Financial Statements The 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 Responsibility Our 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.. Opinion In 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 2009, 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 Incorporated Registered Auditors Per: Bashier Adam 21 May 2009 119 Witch-Hazel Avenue Highveld Technopark Centurion, 0046. 22 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion..

(25) directors’ responsibilities and approval. The Directors are required by the Companies Act 61 of 1973, as amended, to maintain adequate accounting records and are responsible for the content and integrity of the Annual Financial Statements and 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 Group as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the Annual Financial Statements. The Annual Financial Statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent 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 Board 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 external auditors are responsible for independently reviewing and reporting on the Group’s Annual Financial Statements. The Annual Financial Statements have been examined by the Group’s external auditors and their report is presented on page 22. The Group Annual Financial Statements set out on pages 25 to 84, which have been prepared on the going concern basis, were approved by the Board on 21 May 2009 and were signed on its behalf by:. CJJ Krüger Chairman and Chief Executive Officer. J de Villiers Financial Director. Tulisa Park 21 May 2009. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 23. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. The Directors have reviewed the Group’s cash flow forecast for the year to 28 February 2010 and, in the light of this review and the current financial position, they are satisfied that the Group has or has access to adequate resources to continue in operational existence for the foreseeable future..

(26) certification by the company secretary. In terms of Section 268 (G) of the Companies Act 61 of 1973 (Act), as amended, I certify that, to the best of my knowledge and belief, the company has, in respect of the financial year reported upon, lodged with CIPRO all returns required of a public company in terms of the Act and that all such returns are true, correct and up to date.. Premium Corporate Consulting Services (Pty) Ltd Company Secretary. 24 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. 31 July 2009.

(27) report of the directors. The Directors submit their report for the year ended 28 February 2009. 1. Incorporation The company was incorporated on 27 October 2000 and obtained its certificate to commence business on the same day. 2. Review of activities Main business and operations The Group manufactures and constructs steel towers for the cellular and 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 Annual Financial Statements and do not in our opinion require any further comment. Net profit of the Group was R51 259 239 (2008: profit R45 025 412), after taxation of R21 437 515 (2008: R24 395 667). 3. Going concern The Annual Financial Statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business. 4. Post balance sheet events Appointment of Martin Potgieter as Independent Non-Executive Director and member of the Audit and Risk Committees on 3 March 2009. Director 2009 CJJ Krüger J de Villiers DM van Staden V Nkonyeni MM Patel MM Potgieter RR Richards 2008 CJJ Krüger J de Villiers DM van Staden RR Richards. Note. Direct. Indirect*. Total. % holding. 1. 110 750 000 2 058 750 – – – – –. 13 942 905 – 125 000 – – – –. 124 692 905 2 058 750 125 000 – – – –. 33,71 0,56 0,03 0,00 0,00 0,00 0,00. 110 750 000 2 058 750 – –. 15 848 055 – 125 000 –. 126 598 055 2 058 750 125 000 –. 47,45 0,77 0,05 0,00. 2 3 4 5 6 1 2. * 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) 3. Represents Tiso Telecom (Pty) Limited which holds 92 733 300 ordinary shares (25%). Appointed on 19 February 2009 4. Appointed on 9 September 2009 5. Appointed on 3 March 2009 6. Retired on 28 August 2008 No change in the above interests occurred between 28 February 2009 and the date of the Notice of the Annual General Meeting.. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 25. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. 5. Directors’ and associates’ interests.

(28) report of the directors continued. 6. Financial statements The Group’s and company’s results and financial position are contained in the Annual Financial Statements on pages 30 to 84 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 capital There were no changes in the authorised share capital of the Group during the year under review. The following allotments were made during the year: 92 733 300 shares of R1,25 = R115 916 625 for cash to Tiso Telecom (Pty) Limited 350 000 shares of 1,30 = R455 000 in terms of Share Incentive Scheme 431 900 shares of R0,84 = R362 796 in terms of Share Incentive Scheme 9 550 000 shares of R2,10 = R20 055 000 for cash. 8. Borrowing limitations In 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 scheme Refer to note 21 on page 68 for detail about share based payments during the current year.. In terms of Share Incentive Scheme, 1 260 000 (2008: 1 400 000) shares were allotted to the ACTOWERS Share Incentive Scheme for a consideration of R1 512 400 (2008: R2 184 000) on a loan account basis. Non-current assets There were no major changes in the nature of the non-current assets of the Group during the year.. 11. Dividends In line with the company’s growth strategy, no dividends were declared during the financial year ended 28 February 2009. 12. Interest of directors in contracts Other 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.. 26 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. 10..

(29) 13. Directors The Directors of the company during the year and to the date of this report are as follows: Name. Changes. CJJ Krüger – Chairman and CEO J de Villiers – Financial Director DM van Staden – Executive Director MM Patel – Independent Non-Executive Director. Appointed 9 September 2008. V Nkonyeni – Non-Executive Director. Appointed 19 February 2009. MM Potgieter – Independent Non-Executive Director. Appointed 3 March 2009. RR Richards – Non-Executive Director. Retired 28 August 2008. 14. company secretary The Company Secretary of the company is Premium Corporate Consulting Services (Pty) Limited of: Business address. Waterford Business Park. . Unit 28, First Floor, Corner Waterford and Witkoppen Drive, Fourways, 2188. . Telephone: +27 11 658 0474. . [email protected]. Postal address 15.. PO Box 1078, Jukskei Park, 2153. Litigation. The 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 Annual Report) a material effect on the Group’s financial position. Interest in subsidiaries/Special purpose entities. Name of subsidiary. Country of incorporation if not the RSA. Net income/(loss) after tax. 2009 JK Shelters (Pty) Limited. 13 766 655. Africa Cellular Madagascar SARL. Madagascar. Brazzaville Tower Services SARL. Congo (Brazzaville). (4 523 791). Africa Tower Technologies SPRL. Democratic Republic of Congo. 3 566 542. Granada Trading (Pty) Limited Africa Cellular Towers Uganda Limited. (10 940 988). 6 566 508 Uganda. ACTOWERS Share Incentive Scheme. 2 030 018 (401 813). Africa Cellular Towers Tanzania Limited. Tanzania. ACTOWERS Ghana Limited. Ghana. 1 482 407 (627 389). AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 27. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. 16..

(30) report of the directors continued. 16.. Interest in subsidiaries/Special purpose entities continued. Name of subsidiary. Country of incorporation if not the RSA. Net income/(loss) after tax. 2008 JK Shelters (Pty) Limited. 10 904 174. Africa Cellular Madagascar SARL. Madagascar. Brazzaville Tower Services SARL. Congo (Brazzaville). (995 124). Africa Tower Technologies SPRL. Democratic Republic of Congo. 280 195. Granada Trading (Pty) Limited Africa Cellular Towers Uganda Limited. 6 047 679. 2 316 601 Uganda. ACTOWERS Share Incentive Scheme. 540 592 (8 790). 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 17.. Auditors. On 16 March 2009 SAB&T Chartered Accountants Incorporated was appointed as the Auditors of the company and will continue in office in accordance with Section 270(2) of the Companies Act. 18. Warranty provision The company only gives a warranty on towers and its installation, if the company performs the continuous 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.. 28 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. maintenance on the towers. Currently, the company does not perform any continuous maintenance on any towers..

(31) 19.. Segment report. The majority of revenue and expenditure for the Group derives from cellular towers, shelters and power lines, therefore management use this as the primary segment. Audited 12 months February 2009 R’000. Audited 12 months February 2008 R’000. 417 545. 285 575. Gross revenue Cellular Towers Power Lines. 15 516. –. Equipment Shelters. 74 464. 58 471. (2 117). (17 474). 505 408. 326 572. 47 599. 67 534. Inter segment eliminations Profit before interest and taxation Cellular Towers Power Lines Equipment Shelters Inter segment eliminations. (2 667). –. 17 270. 14 205. (2 117). (17 474). 60 085. 64 265. (4 630). (2 002). (58). –. Depreciation Cellular Towers Power Lines Equipment Shelters. (246). (214). (4 934). (2 216). 20. Special Resolutions No special resolutions were passed by the company’s subsidiaries since the date of the previous Directors’ Report.. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 29. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. For the detailed segmental report, refer to note 33 of the Annual Financial Statements..

(32) income statement For the year ended 28 February 2009 Company. Note(s). 2009. 2008. 2009. 2008. Revenue. 13. 505 408 408. 326 572 282. 383 551 249. 231 418 570. Cost of sales. 14. (405 777 431). (238 374 619). (310 782 243). (178 183 348). 99 630 977. 88 197 663. 72 769 006. 53 235 222. Figures in Rand. Gross profit Other income. 30. 37 105 319. 14 868 235. 26 993 501. 9 166 023. Operating expenses. 31. (76 651 080). (38 800 501). (62 097 143). (26 300 301). Operating profit. 15. 60 085 216. 64 265 397. 37 665 364. 36 100 944. Investment revenue. 16. 25 432 818. 13 351 100. 28 515 128. 11 731 402. Finance costs. 17. (12 821 280). (8 195 418). (12 773 402). (7 894 859). 72 696 754. 69 421 079. 53 407 090. 39 937 487. (21 437 515). (24 395 667). (11 995 989). (13 094 992). 51 259 239. 45 025 412. 41 411 101. 26 842 495. Profit before taxation Taxation. 18. Profit for the year Earnings per share (cents). 29. 19,6. 17,7. Diluted earnings per share (cents). 29. 19,2. 17,3. 30 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Group.

(33) BALANCE SHEET At 28 February 2009 Group. Company. Note(s). 2009. 2008. 2009. 2008. Property, plant and equipment. 3. 48 035 001. 27 876 665. 46 255 032. 26 312 644. Goodwill. 4. 33 226 714. 33 226 714. –. –. Intangible assets. 5. 366 169. 55 130. 335 399. 4 388. Investments in subsidiaries. 6. –. –. 44 619 519. 44 474 184. Loans to Group companies. 7.1. –. –. 14 889 945. 18 779 568. 8. 6 125 074. 1 717 152. 2 605 952. 1 538 928. 87 752 958. 62 875 661. 108 705 847. 91 109 712. Figures in Rand Assets Non-current assets. Deferred tax Current assets. 9. 43 019 086. 33 784 754. 36 858 504. 27 878 218. Loans to Group companies. 7.1. –. –. 37 299 940. 5 608 767. Other financial assets. 7.2. 1 571 430. 1 022 892. 1 571 430. 1 022 892. Inventories. Construction contracts and receivables. 10. 87 881 152. 27 753 227. 68 870 595. 27 253 990. Trade and other receivables. 7.3. 158 338 226. 154 786 438. 110 103 281. 110 084 906. Cash and cash equivalents. 7.4. 109 865 189. 5 260 682. 93 639 757. 74 034. 400 675 083. 222 607 993. 348 343 507. 171 922 807. 488 428 041. 285 483 654. 457 049 354. 263 032 519. 217 633 019. 82 466 640. 229 930 815. 93 946 639. (7 544 998). 63 000. (4 329 822). 130 469. 174 232 569. 122 973 330. 146 410 540. 104 999 439. 384 320 590. 205 502 970. 372 011 533. 199 076 547. 11 213 726. Total assets Equity and liabilities Equity Share capital. 11. Reserves Retained income. Non-current liabilities Instalment sale obligation. 12.1. 19 648 653. 12 081 945. 19 574 996. Mortgage bonds. 12.2. 6 554 656. –. 6 554 656. –. 26 203 309. 12 081 945. 26 129 652. 11 213 726. Current liabilities Loans from Group companies. 7.1. Current tax payable. –. –. 3 675 384. –. 15 481 216. 19 702 155. 2 419 218. 9 209 251. Instalment sale obligation. 12.1. 7 447 213. 3 182 141. 6 501 490. 2 733 691. Trade and other payables. 12.3. 54 963 876. 39 831 062. 46 300 240. 35 615 923. Mortgage bonds. 12.2. 11 837. –. 11 837. –. 7.4. –. 5 183 381. –. 5 183 381 52 742 246. Bank overdraft. 77 904 142. 67 898 739. 58 908 169. Total liabilities. 104 107 451. 79 980 684. 85 037 821. 63 955 972. Total equity and liabilities. 488 428 041. 285 483 654. 457 049 354. 263 032 519. Ordinary shares in issue. 369 887 000. 266 820 000. 103,9. 77,0. 94,8. 64,6. Net asset value per share (cents) Net tangible asset value per share (cents). AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 31. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Liabilities.

(34) statement of changes in equity For the year ended 28 February 2009. Figures in Rand. Share capital. Share premium. Share incentive reserve. 23 000. 47 228 807. 630 268. Total share capital. Foreign currency translation reserve. Revaluation reserve. Total reserves. Retained income. Total equity. 47 882 075. –. 66 406. 66 406. 77 947 918. 125 896 399. –. –. 64 063. 64 063. –. 64 063. –. (67 469). –. (67 469). –. (67 469). Group Balance at 1 March 2007 Changes in equity Revaluation reserve for available-for-sale financial assets. –. Currency translation difference. –. Net income (expenses) recognised directly in equity. –. –. –. (67 469). 64 063. (3 406). –. (3 406). Profit for the year. –. –. –. –. –. –. 45 025 412. 45 025 412. Total recognised income and expenses for the year Issue of shares. –. – 2 377. – 32 113 936. –. (67 469). 64 063. (3 406). 45 025 412. 45 022 006. 32 116 313. –. –. –. –. 32 116 313 2 468 252. Employees share option. –. –. 2 468 252. 2 468 252. –. –. –. –. Shares delivered. –. 14 121. (14 121). –. –. –. –. –. –. 2 377. 32 128 057. 2 454 131. 34 584 565. (67 469). 64 063. (3 406). 45 025 412. 79 606 571. 25 377. 79 356 864. 3 084 399. 82 466 640. (67 469). 130 469. 63 000. 122 973 330. 205 502 970. –. –. –. –. 114 057. 114 057. –. 114 057. –. –. (7 722 055). –. (7 722 055). –. (7 722 055). (7 722 055). 114 057. (7 607 998). –. –. –. –. 51 259 239. 51 259 239. –. –. (7 722 055). 114 057. (7 607 998). 51 259 239. 43 651 241. 1 918 019. 1 918 019. –. –. –. –. 1 918 019 134 066 157. Total changes Balance at 1 March 2008 Changes in equity. Currency translation differences. –. Net income (expenses) recognised directly in equity Profit for the year. –. Total recognised income and expenses for the year. –. Employees share option. –. –. 10 307. 134 055 850. 134 066 157. –. –. –. –. (79). (817 718). (817 797). –. –. –. –. (817 797). Total changes. 10 228. 133 238 132. 1 918 019. 135 166 379. (7 722 055). 114 057. (7 607 998). 51 259 239. 178 817 620. Balance at 28 February 2009. 35 605. 212 594 996. 5 002 418. 217 633 019. (7 789 524). 244 526. (7 544 998). 174 232 569. 384 320 590. 11. 11. Issue of shares Purchase of own/treasury shares. Note(s). –. (7 607 998). 32 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. 11. 11. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Revaluation reserve for available-for-sale financial assets.

(35) Figures in Rand Company Balance at 1 March 2007. Share capital. Share premium. Share incentive reserve. Total share capital. Foreign currency translation reserve. Revaluation reserve. Total reserves. Retained income. Total equity. 56 547 642. 630 268. 57 202 075. –. 66 406. 66 406. 78 156 944. 135 425 425. –. 64 063. – 24 165. Revaluation reserve for available-for-sale financial assets. –. –. –. –. 64 063. 64 063. Net income (expenses) recognised directly in equity. –. –. –. –. 64 063. 64 063. –. 64 063. Profit for the year. –. –. –. –. –. –. 26 842 495. 26 842 495. Total recognised income and expenses for the year Issue of shares Employees share option Total changes Balance at 1 March 2008. – 2 517. – 34 287 916. –. –. 64 063. 64 063. 26 842 495. 26 906 558. 34 290 433. –. –. –. –. 34 290 433. –. –. 2 454 131. 2 454 131. –. –. –. 2 454 131. 2 517. 34 287 916. 2 454 131. 36 744 564. –. 64 063. 64 063. 26 842 495. 63 651 122. 26 682. 90 835 558. 3 084 399. 93 946 639. –. 130 469. 130 469. 104 999 439. 199 076 547. Changes in equity. –. Currency translation differences. –. –. –. (4 574 348). –. (4 574 348). –. (4 574 348). Net income (expenses) recognised directly in equity. –. –. –. (4 574 348). –. (4 574 348). –. (4 574 348). Profit for the year. –. –. –. –. –. –. 41 411 101. 41 411 101. Total recognised income and expenses for the year. –. –. –. (4 574 348). –. (4 574 348). 41 411 101. 36 836 753. 134 066 157. –. –. –. –. 134 066 157. –. –. –. 114 057. 114 057. –. 114 057. 1 918 019. 1 918 019. –. –. –. –. 1 918 019. Issue of shares. 10 307. Revaluation reserve for available-for-sale financial assets. –. Employees share option. –. 134 055 850. –. Total changes. 10 307. 134 055 850. 1 918 019. 135 984 176. (4 574 348). 114 057. (4 460 291). 41 411 101. 172 934 986. Balance at 28 February 2009. 36 989. 224 891 408. 5 002 418. 229 930 815. (4 574 348). 244 526. (4 329 822). 146 410 540. 372 011 533. 11. 11. 11. 11. Note(s). 11. AFRICA CELLULAR TOWERS ANNUAL REPORT 2009 /. 33. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Changes in equity.

(36) cash flow statement For the year ended 28 February 2009 Group. Company. 2009. 2008. 2009. 2008. 391 063 172. 214 471 774. 345 659 752. 150 309 660. (391 989 572). (256 869 087). (345 925 320). (192 807 131). (926 400). (42 397 313). (265 568). (42 497 471). Interest income. 25 432 818. 13 351 100. 28 515 128. 11 731 402. Finance costs. (10 068 031). (8 195 418). (10 198 212). (7 894 859). (27 736 258). (2 813 426). (19 853 046). (4 143 219). (13 297 871). (40 055 057). (1 801 698). (42 804 147). (2 935 431). (19 258 242). (2 492 626). (16 838 800). Figures in Rand. Note(s). Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash used in operations. Tax paid. 20. 22. Net cash from operating activities Cash flows from investing activities Purchase of property, plant and equipment Sale of property, plant and equipment Purchase of other intangible assets. 144 819. 136 385. –. 136 385. 5. (565 328). (67 381). (565 328). (5 377). 23. –. (6 845 128). –. –. Loans advanced to Group companies. –. –. (27 801 550). –. Proceeds from loans from Group companies. –. –. 3 675 384. –. Acquisition of businesses. Repayment of loans from third parties Financial assets: Loans collected Net cash from investing activities. –. 649 140. –. –. (548 538). –. (548 538). (11 138 868). (3 904 478). (25 385 226). (27 732 658). (27 846 660). 133 248 282. –. 134 066 157. –. (33 507). –. (33 507). –. –. 115 918. –. 115 918 4 546 132. Proceeds on share issue Movement in mortgage bonds Repayment of other loans Movement in instalment sale agreements. (6 224 538). 4 522 256. (5 749 190). Net cash from financing activities. 126 990 237. 4 638 174. 128 283 460. 4 662 050. Total cash movement for the year. 109 787 888. (60 802 109). 98 749 104. (65 988 757). 77 301. 60 879 410. (5 109 347). 60 879 410. 109 865 189. 77 301. 93 639 757. (5 109 347). Cash at the beginning of the year Total cash at end of the year. 34 / AFRICA CELLULAR TOWERS ANNUAL REPORT 2009. 7.4. WorldReginfo - c81f159d-ab63-4713-8aef-bd9998bf3580. Cash flows from financing activities.