Financial Literacy Workshop
March 2012
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Contents
• Key role players
• Shareholders
• Benefits and risks of being a shareholder
• Hlumisa and Eyomhlaba trading price
• Rights as a shareholder
• Directors
• Auditors
• Statement of comprehensive income (Income statement)
• Component parts
• Operating expenses
• Eyomhlaba & Hlumisa cash flow waterfall
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Key role players
Shareholders
• Invest in the company through the purchase of shares
• Each share equal proportionate ownership of the Company
Benefits and risks of being a shareholder
• Shareholders invest in a Company to achieve a return = dividends + capital
growth:
• Dividends
• May declare a dividend if allowed by law and if directors so decide;
• Capital growth
• Shareholder makes a profit if shares are worth (or sold for) more than
what shareholder paid for the shares.
• Shareholder makes a loss if shares are worth (or sold for) less than what
shareholder paid for the shares.
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Hlumisa and Eyomhlaba trading price
Net Asset Value
(Value based on ABIL share price)
Trading price
(Average for February 2012)
Discount (approximately 50%)
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Eyomhlaba
Hlumisa
R30
R20
R14
____
R16
____
R10
____
R10
____
Hlumisa and Eyomhlaba trading price
Discount is due to the following:
1. Restriction on shareholding exclusive to Black South Africans
2. Shares cannot be used as security
3. After end of lock in period (2011), supply exceeding demand
At end of empowerment, the 3 reasons fall away and the discount to the NAV
should decrease.
NB: Selling of shares is not compulsory.
If dispose of shares a shareholder gives up the discount and future possible gains
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Key role players
Rights as a shareholder
Attend shareholder The meetings that you as a shareholder in Eyomhlaba/Hlumisa may attend are:
meetings
• The annual general meeting (AGM)
• Any general meeting of shareholders
Vote
Appoint a proxy
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Furthermore, you are entitled to attend the above ABIL meetings.
Special and ordinary resolutions as set out in the notice of shareholders’
meeting.
The number of votes you have is dependent on the number of shares you hold.
The more shares you hold, the more votes you have.
If you cannot attend a shareholder meeting, you can arrange for someone to
go to the meeting on you behalf (appoint a proxy). When you receive the
notice of a meeting you will also receive a proxy form with instructions of how
to appoint a proxy.
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
(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
Memorandum of Incorporation of the Company;
• The directors approve the annual financial statements presented to the
shareholders;
• Eyomhlaba’s and Hlumisa’s MOI provide for annual rotation of
one-third of directors.
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Key role players
Auditors
• Present an audit opinion on 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
• Shareholders approve the reappointment of auditors annually at the AGM
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Statement of comprehensive income
The component parts of Eyomhlaba/Hlumisa’s comprehensive income are:
Nature
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Dividends received
Dividends received on the ABIL ordinary shares held
during the year. The dividends received are used to
purchase ABIL shares, after providing for expenses (and
preference dividends)
Interest received
Interest on funds invested in the various bank accounts
Administration fees – Trading
Fees paid by buyers and sellers of shares
Operating expenses
Analysed below
Finance costs
Preference dividend (interest) on preference shares
(loan) and interest payable on bridge loan
Current taxation charge
Income tax calculated based on interest income plus
trading administration fees less trading platform
operating costs
Net gains and losses arising on
revaluation of available-for-sale
assets
Increases or decreases in the value of ABIL shares held
Statement of comprehensive income
Operating expenses comprise the following items:
Expense type
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Nature of expense
Administration fees
Fees paid for transfer secretary and administration services.
Audit fees
Fees paid to Nkonki Inc. for audit services. The fee is paid in arrears
(i.e. the amount paid in 2011 is for the 2010 financial year audit)
Courier, postage and
stationery
Costs of mailing correspondence, annual and interim reports to
shareholders.
Directors’ fees
Paid to directors that are not employed by ABIL
Legal fees
Legal fees incurred on various matters.
Meeting costs
Costs of AGM and roadshows
Printing and designing
costs
Costs of designing and printing interim report, annual reports,
prospectus, share certificates, statements, etc.
Other costs
Miscellaneous costs such as branding and travel costs
OTC trading platform
administration fees
Fees paid to the share trading desk administrator
Eyomhlaba & Hlumisa cash flow waterfall
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Thank you
Disclaimer
African Bank Investments Limited, Hlumisa Investment Holdings and Eyomhlaba Investment Holdings Limited are not
investment or legal advisors. If you require advice on your investment in Hlumisa Investment Holdings Limited
Eyomhlaba Investment Holdings Limited, you should consult an investment and/or legal advisor.
This presentation does not replace the Hlumisa and Eyomhlaba prospectuses and Hlumisa and Eyomhlaba
Memorandums of Incorporation. If anything in this presentation is different to what is stated in the Hlumisa and
Eyomhlaba prospectuses and/or Memorandums of Incorporation, the Hlumisa and Eyomhlaba prospectus and
Memorandums of Incorporation take precedence.
Furthermore, African Bank Investments Limited, Hlumisa Investment Holdings Limited and Eyomhlaba Investment
Holdings Limited will not be responsible in any way if anything has been omitted from this presentation or if
anything stated in the presentation is incorrect.