Basic Financial Literacy Education MARCH 2010

1. Basic Financial Literacy Education MARCH 2010

2. Contents • Key role players • Shareholders • Directors • Secretary • Company • Auditors • Annual Financial Statements • Statement of comprehensive income (Income statement) • Revenue • Operating expenses • Statement of financial position (Balance sheet) • Assets • Liabilities • Shareholders equity / Net Asset Value • Statement of cash flows (Cash flow statement)

3. Shareholders Invest in the company through the purchase of shares; Each share represents a proportionate ownership of the Company in relation to the total number of shares issued by the Company; In a company with 100 000 issued shares a shareholding of 10 000 shares represents a 10% ownership of that company. Key role players 3

4. Benefits and risks of being a shareholder Shareholders invest in a Company with a view of achieving a return through dividends and capital growth: Dividends A company may declare a dividend if it is allowed to by law and if the directors so decide; There is no guarantee that dividends will be paid annually; Ordinary shareholders have no right to a dividend until declared by the Company. Capital growth A shareholder makes a profit if shares are worth more (or sold for) more than what the shareholder paid for the shares. But a shareholder can make a loss if shares are worth (or sold for) less than what the shareholder paid for the shares. Key role players 4

5. Key role playersReturns of a shareholder Example of returns for an Eyomhlaba shareholder

6. Key role players Rights as a shareholder

7. Key role players Directors • Appointed by shareholders to run the affairs of the Company in a manner that enhances shareholders’ wealth; • Directors have a fiduciary duty towards the Company in terms of law (Companies Act of 1973) (i.e. entrusted to act in the interest of the Company at all times); • Conduct of the directors governed by the Companies Act and the Articles of Association of the Company; • The directors approve the annual financial statements presented to the shareholders; • Directors present a report to shareholders annually in a format prescribed by the Companies Act; • Eyomhlaba’s and Hlumisa’s Articles provide for annual rotation of one-third of directors.

8. Key role players Secretary • Appointed by the directors; • Ensures notices of meetings are in accordance with the Companies Act; • Ensures meetings of directors and shareholders proceed in terms of the Companies Act; • Maintains minutes of shareholders’ and directors’ meetings; and • Ensures all Company returns are lodged with the Registrar of Companies;

9. Key role players Auditors • Present an audit opinion on the Company’s directors’ report, statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows and the notes to the annual financial statements as presented in the annual report; • An unqualified (“clean”) audit opinion signifies that shareholders can rely on the financial statements as prepared by the directors as being fairly presented; • A qualified audit report may indicate an issue in the annual financial statements and needs to be read carefully; and • Shareholders approve the reappointment of auditors annually at the AGM.

10. Key role players Company • Limited liability i.e. shareholders are not liable for the debts of the company and stand the risk of losing only to the extent of the amounts each shareholder has invested in the Company; • Governed by the Articles and Memorandum of Association. They prescribe the powers of the company and they regulate the relationships between the Company, its shareholders and directors; • Eyomhlaba’s and Hlumisa’s Articles defines the Companies’ main object is that of acquiring and holding ABIL ordinary shares; and • Any changes to the Articles must be approved by shareholders in a general meeting by special resolution (i.e. 75% of shareholders present at the meeting to approve the change).

11. Statement of comprehensive income(Income statement) The income statement records the profit (or loss)realised(or incurred) during the previous 12 months ending 31 December. Profit (or loss) = Revenue / Income LESS Expenses LESS Taxes Comprehensive income (loss) = profit (or loss) plus gain/loss on revaluation of ABIL shares Retained profits will increase the Company’s Net Asset Value (“NAV”) thereby increasing the value of each shareholder’s investment in the Company. Losses will have an opposite effect.

12. Statement of comprehensive income The component parts of Eyomhlaba/Hlumisa’s comprehensive income for the year are:

13. Statement of comprehensive income Operating expenses Operating expenses comprise the following items: 13

14. Statement of financial position (Balance Sheet) • Reports the assets owned by the Company, liabilities owed by the Company to its lenders / creditors and the shareholders equity (i.e. the difference between assets and liabilities) at year-end. • The above can be presented as the following formula: Shareholders equity = Assets LESS Liabilities • An asset is an item owned by the Company with an intention of realising benefits from it. • A liability is what the Company owes to its creditors (supplier of goods and services) and/or lenders.

15. Statement of financial position

16. Statement of financial position • Deferred taxation • The deferred tax liability at 31 December 2009 is determined as follows:

17. Statement of financial position Shareholders’ equity SHAREHOLDERS’ EQUITY = ASSETS LESS LIABILITIES

18. Statement of financial position For Eyomhlaba and Hlumisa, the following factors impact the shareholders’ equity of the company:

19. Statement of cash flows This statements reports what cash the company has utilised, and in what activities, and what cash the company has raised and how. The result is the cash held by the company at the end of the year.

20. Thank you