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GIJIMA GROUP LIMITED(formerly “Gijima Ast Group Limited”)
Incorporated in the Republic of South Africa(Registration number 1998/021790/06)
Share code: GIJ ISIN: ZAE000147443(“Gijima” or “the Company”)
Circular to Shareholdersrelating to:
• a Rights Offer in respect of 3 000 000 000 Shares made to Shareholders in the ratio of 309.80298 new Rights Offer Shares for every 100 Shares held at the close of trade on Friday, 31 May 2013 at a price of 5 cents per Rights Offer Share
and including:
• Revised Listing Particulars; and
• a Form of Instruction in respect of a Letter of Allocation for use by Certificated Shareholders only.
The Directors of Gijima, appointed as at the Last Practicable Date, whose names appear on page 9 of this Circular, collectively and individually, accept full responsibility for the accuracy of the information given in this Circular and certify that, to the best of their knowledge and belief, there are no facts the omission of which would make any statement in this Circular false or misleading and that they have made all reasonable enquiries to ascertain such facts and that this Circular contains all information required in law and by the Listings Requirements.
This Rights Offer Circular incorporates revised listing particulars and is issued in compliance with the Listings Requirements of the JSE Limited, for the purpose of providing information with regard to the Company.
The definitions and interpretations commencing on page 6 of this Circular apply to this cover page.
This Circular is available in English only. Copies may be obtained from the registered offices of the Company, the Transfer Secretaries and the Merchant Bank and Sponsor at the addresses set out in the “Corporate information and advisers” section of this Circular from Monday, 3 June 2013 to Friday, 21 June 2013, both days inclusive. Shareholders will be able to inspect the Circular on the Company’s website, www.gijima.co.za from the date of issue of this Circular until Friday, 21 June 2013, both days inclusive.
The Rights Offer opens at 09:00 on Monday, 3 June 2013 and closes at 12:00 on Friday, 21 June 2013.
Date of issue: Monday, 3 June 2013
Legal Advisors
Merchant Bank and Sponsor
Independent Reporting Accountants and Auditors
CORPORATE INFORMATION
Company Secretary
iThemba Governance and Statutory Solutions (Pty) Ltd(Registration number 2008/008745/07)Block 5, Suite 102Monument Office Park79 Steenbok AvenueMonument Park(PO Box 25160, Monument Park, 0105)
Transfer Secretaries
Link Market Services South Africa (Pty) Ltd(Registration number 2000/007239/07)13th Floor, Rennie House19 Ameshoff Street, BraamfonteinJohannesburg2001(PO Box 4844, Johannesburg, 2000)
Merchant Bank and Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited)(Registration number 1929/001225/06)1 Merchant PlaceCorner Fredman Drive and Rivonia RoadSandton2146(PO Box 786273, Sandton, 2146)
Date and place of incorporation: 3 November 1998, South Africa
Gijima Registered Office
(Registration number 1998/021790/06)Jupiter Building, Gijima Office Park47 Landmarks AvenueKosmosdalSamrandCenturion0157(PO Box 10629, Centurion, 0046)
Legal Advisors
Webber Wentzel10 Fricker RoadIllovo BoulevardJohannesburg2196(PO Box 61771, Marshalltown, 2107)
Independent Reporting Accountants and Auditors
KPMG Inc(Registration number 1999/021543/21)KPMG Crescent85 Empire RoadParktown2193(Private Bag X9, Parkview, 2122)
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CONTENTS
Page
Corporate information Insidefrontcover
Action required by Shareholders 2
Salient dates and times 5
Definitions and interpretations 6
Section A: Information relating to the Rights Offer 9
1. Introduction 9
2. Useofproceeds 9
3. InformationontheRightsOffer 10
4. Unauditedproformafinancialinformation 16
5. EstimatedexpensesinrelationtotheRightsOffer 17
Section B: Information regarding Gijima 18
6. BackgroundinformationonGijima 18
7. Financialinformation 19
8. InformationontheDirectorsandseniormanagement 22
9. Additionalinformation 27
10. Directors’responsibilitystatement 30
11. Consents 30
12. Workingcapitalstatement 30
13. Documentsavailableforinspection 30
Annexure 1: Tableofentitlement 32
Annexure 2: InformationontheUnderwriters 34
Annexure 3: Unauditedproformastatementoffinancialpositionandstatementofcomprehensiveincome 36
Annexure 4: Independentreportingaccountants’reasonableassurancereportonthecompilationofproformafinancialinformation 39
Annexure 5: TradinghistoryoftheSharesontheJSE 41
Annexure 6: HistoricalfinancialinformationofGijimafortheyearsended30June2010,30June2011and30June2012 42
Annexure 7: InterimfinancialresultsofGijimaforthesixmonthsended31December2011and31December2012 82
Annexure 8: InformationontheDirectorsandseniormanagementofGijimaanditsmajorsubsidiaries 92
Annexure 9: ExtractsfromtheMOI 99
Annexure 10: Investmentsinsubsidiaries 101
Annexure 11: Corporategovernance 103
Form of Instruction Enclosed
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ACTION REQUIRED BY SHAREHOLDERS
The definitions and interpretations commencing on page 6 of this Circular apply to the “Action required by Shareholders” section of the Circular.
If you are in any doubt as to what action you should take, you should consult your CSDP, Broker, banker, legal adviser, accountant or other professional adviser immediately. If you have disposed of all of your Shares, this Circular should be forwarded to the purchaser to whom, or the CSDP, Broker, banker or agent through whom, you disposed of such Shares except that this Circular should not be forwarded or transmitted by you to any person in any territory other than South Africa unless the Rights Offer can lawfully be made to such person or in such territory.
The Rights that are represented by Letters of Allocation are valuable and may be traded on the JSE. Letters of Allocation can, however, only be traded in Dematerialised form and accordingly, all Letters of Allocation have been issued in Dematerialised form.
The electronic record for holders of Certificated Shares is being maintained by the Transfer Secretaries and this has made it possible for holders of Certificated Shares to enjoy similar rights and opportunities as holders of Dematerialised Shares in respect of trades on the JSE of the Letters of Allocation, to the extent possible. Instructions on how to sell the Rights represented by the Letters of Allocation are set out in paragraph 3.10of this Circular.
Action required by holders of Certificated Shares
AFormofInstructionforcompletionbyQualifyingShareholderswhoholdCertificatedSharesisenclosedwiththisCircularandtherelevantprocedureforparticipationintheRightsOfferissetoutbelow:
• ALetterofAllocationwill be created inelectronic formwith theTransferSecretaries toaffordholdersofCertificatedSharesthesamerightsandopportunitiesasthosewhohavealreadyDematerialisedtheirShares.
• IfyoudonotwishtosubscribeforalloftheRightsallocatedtoyouasreflectedintheFormofInstruction,youmayeitherdisposeoforrenounceallorpartofyourentitlementasfollows:
– ifyouwishtosellallorpartofyourentitlement,youmustcompleteFormAintheenclosedFormofInstructionandreturnittotheTransferSecretariessoastobereceivedbynolaterthan12:00onThursday,13June2013.TheTransferSecretarieswillendeavourtoprocurethesaleofRightsontheJSEonyourbehalfandtoremitthenetproceedsthereofinaccordancewithyourinstructions.Inthisregard,neithertheTransferSecretariesnorGijimawillhaveanyobligationorberesponsibleforanylossordamagewhatsoeverinrelationtoorarisingfromthetimingofsuchsales,thepriceobtained,orthefailuretodisposeofsuchentitlements.PleasenotethatthelastdaytotradeanyLetterofAllocationis Thursday,13June2013;and
– ifyouwishtorenounceyourentitlementinfavourofanynamedrenouncee,youmustcompleteFormB in the enclosed Form of Instruction, and the renouncee must complete Form C in the enclosedFormofInstructionandreturnittotheTransferSecretaries,tobereceivedbynolaterthan12:00onFriday, 21 June2013,togetherwithabank-guaranteedchequeorbankdraftfortheappropriateamount.
IfyouareaQualifyingShareholderholdingCertificatedSharesandwishtosubscribeforallorpartofyourentitlementintermsoftheenclosedFormofInstruction,youmustcompletetheenclosedFormofInstructioninaccordancewiththeinstructionscontainedthereinandlodgeit,togetherwiththeamountdueinRands,withtheTransferSecretariesasfollows:
Hand deliveries to: Postal deliveries to:
Gijima Group Limited – Rights Offer Gijima Group Limited – Rights Offer
C/oLinkMarketServicesSouthAfrica(Pty)Ltd C/oLinkMarketServicesSouthAfrica(Pty)Ltd13thFloor,RennieHouse POBox484419AmeshoffStreet,Braamfontein Johannesburg,2000Johannesburg,2001
soastobereceivedbytheTransferSecretariesbynolaterthan12:00onFriday,21June2013.
TotheextentthatyousubscribefortheRightsallocatedtoyou,youwillreceivetheRightsOfferSharesinCertificatedform.YouwillonlybeabletosellyourRightsOfferSharesontheJSEthroughtheStratesystemoncetheRightsOfferShareshavebeenDematerialised.
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If the required documentation and payment has not been received in accordance with the instructions contained in the enclosed Form of Instruction (either from the Qualifying Shareholders or from any person in whose favour the Rights have been renounced) by 12:00 on Friday, 21 June 2013, then the Rights to those unsubscribed Shares will be deemed to have been declined and the Rights Offer entitlement will lapse.
InstructionsonhowtoapplyforexcessRightsOfferSharesaresetoutinparagraph3.8ofthisCircular.
Action required by holders of Dematerialised Shares
IfyouareaQualifyingShareholderholdingDematerialisedShares,youwillnotreceiveaprintedFormofInstructionandyoushouldreceivenotificationfromyourCSDPorBrokerregardingtheRightstowhichyouareentitledintermsoftheRightsOffer.
YourCSDPorBrokerwillcredityouraccountwiththenumberofRightstowhichyouareentitledandyouarerequiredtonotifyyourCSDPorBroker:
– whetheryouwishtofollowyourRightsintermsoftheRightsOfferand,ifso,inrespectofhowmanyRightsOfferShares;ifyoudonotfollowalloranyofyourRights;
– whetheryouwishtosellyourRightsand,ifso,howmanyRightsyouwishtosell;or
– whetheryouwishtorenounceyourRightsand,ifso,howmanyRightsandinfavourofwhomyouwishto renouncethoseRights.
IfyouareaQualifyingShareholderholdingDematerialisedSharesandwishtofollowyourRightsinrespectoftheRightsOffer,youarerequiredtonotifyyourdulyappointedCSDPorBrokerofyouracceptanceoftheRightsOfferinthemannerandtimestipulatedinthecustodyagreementgoverningtherelationshipbetweenyourselfandyourCSDPorBroker. Ifyouarenotcontacted,youshouldcontactyourCSDPorBrokerandprovide themwithyour instructions. If yourCSDPorBrokerdoesnot obtain instructions fromyou, theyare obligedtoactintermsofthemandategrantedtothembyyou,orifthemandateissilentinthisregard,nottosubscribeforSharesintermsoftheRightsOffer.
GijimadoesnottakeresponsibilityandwillnotbeheldliableforanyfailureonthepartofanyCSDPorBrokertonotifyyouoftheRightsOfferand/ortoobtaininstructionsfromyoutosubscribefortheRightsOfferSharesand/ortoselltheRightsallocated.
CSDPseffectpaymentinrespectofDematerialisedShareholdersonadeliveryversuspaymentbasis.YoumustensurethatyouhavesufficientfundsinyouraccounttosettletheissuepriceinrespectoftheRightsOfferSharesforwhichyouapply.
InstructionsonhowtoapplyforexcessRightsOfferSharesaresetoutinparagraph3.8ofthisCircular.
Jurisdiction
TheRightsOfferSharesandtheRightsOfferdocumentationwillnotberegisteredwithanyauthorityinanyjurisdictionotherthanSouthAfrica.ThedistributionofthisCircular,theRightsOffer,theFormofInstructionandthetransferoftheRightsOfferSharesand/ortherightstosubscribefortheRightsOfferSharestocertainpersonsinterritoriesotherthanSouthAfricamayberestrictedbylawandfailuretocomplywithanyofthoserestrictionsmayconstituteaviolationofthelawsofanysuchterritory.NeitherthisCircular,noranyFormofInstruction,istoberegardedasanofferorinvitationtoanypersoninanyjurisdictionotherthanSouthAfricatotheextentthatanyapplicablelegalrequirementinsuchjurisdictionhasnotbeencompliedoritisforanyreasonillegalorunlawfultomakesuchanofferorinvitationinsuchjurisdictiontosuchperson.Inthosecircumstances,thisCircularissentforinformationpurposesonly.
TheRights, theRightsOfferSharesandtheLettersofAllocationhavenotbeenandwillnotberegisteredundertheUSSecuritiesActof1933,asamended(the“Securities Act”)orunderanysecuritieslawsofanystate or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold,renounced,transferredordelivered,directlyorindirectly,withintheUnitedStatesexceptinaccordancewiththeregistrationrequirementsoftheSecuritiesActoranapplicableexemptiontherefromandincompliancewithanyapplicablesecuritieslawsofanystateorotherjurisdictionoftheUS.Accordingly,subjecttocertainexceptions,GijimaisnotextendingtheRightsOfferintotheUnitedStatesandneitherthisCircularnoranyLetterofAllocationconstitutesorwillconstituteorformspartofanyofferorinvitationtosellorissue,oranysolicitationofanyoffertopurchaseorsubscribefor,anyRights,RightsOfferSharesorLetterofAllocationin theUnitedStates.
ThisCircularandFormofInstructionshouldnotbeforwardedortransmittedbyyoutoanypersoninanyterritory, other than where the Rights Offer made to such person in such territory is compliant with theapplicablelawsofthatterritory.ItistheresponsibilityofanypersonoutsideSouthAfrica(including,withoutlimitation,custodians,nominees,agentsandtrusteesforsuchpersons)receivingthisCircularandwishingtotakeupRightsundertheRightsOffer,tosatisfyitselfastofullobservanceoftheapplicablelawsofanyrelevant territory, including obtaining any requisite governmental or other consents, observing any other
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requisiteformalitiesandpayinganyissue,transferorothertaxesdueinsuchterritories.ShareholdersoutsideofSouthAfricashouldconsulttheirprofessionaladviserstodeterminewhetheranygovernmentalorotherconsents are required or other formalities need to be observed to allow them to takeup theRights Offer,or tradetheirentitlement.
ShareholdersholdingGijimaSharesonbehalfofpersonswhoarenon-QualifyingShareholdersareresponsibleforensuringthattakinguptheRightsOffer,ortradingintheirentitlementsunderthatoffer,donotbreachregulationsintherelevantoverseasjurisdictions,andshouldnotinconnectionwiththeRightsOfferdistributeinorsendtheCircularintoanyjurisdictionortransferRightstoanypersonin,orcitizenorresidentofanysuchjurisdictionwheretodosowouldormightcontravenelocalsecuritieslawsorregulations.AnypersonwhodoesforwardthisCircularoraLetterofAllocationintoanysuchjurisdiction(whetherunderalegalorcontractualobligationorotherwise)shoulddrawtherecipient’sattentiontotheprovisionsofparagraph3.14.AnypersontakinguptheRightsOffer,ortradingintheirentitlementsundertheRightsOffermakestherepresentationsandwarrantiestotheCompanyandtheUnderwritersetoutinparagraph3.15ofthisCircular.
Non-residents
Shareholders who are Non-residents are referred to paragraph 3.13 of the Circular regarding applicableExchangeControlRegulations.
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SALIENT DATES AND TIMES
2013
LastdaytotradeinSharesinordertoparticipateintheRightsOffer(cumentitlement) Friday,24May
Sharescommencetradingex-entitlementat09:00on Monday,27May
ListingofandtradingintheLettersofAllocationontheJSEcommencesat09:00on Monday,27May
RecordDatefortheRightsOfferforpurposesofdeterminingShareholdersentitledtoparticipateintheRightsOfferatthecloseoftradeon Friday,31May
RightsOfferCircularandRevisedListingParticularsaswellasaFormofInstruction,whereapplicable,postedtoShareholders Monday,3June
Rights Offer opens at 09:00 on Monday, 3 June
LettersofAllocationcreditedtoanelectronicaccountheldattheTransferSecretariesinrespectofholdersofCertificatedSharesandCSDPorBrokeraccountscreditedwithentitlementsinrespectofholdersofDematerialisedShares Monday,3June
LastdayfortradingLettersofAllocationontheJSEinordertosettletradesbythecloseoftheRightsOffer Thursday,13June
ListingofRightsOfferSharesandtradingthereinontheJSEcommencesat09:00on Friday,14June
ForCertificatedShareholderswishingtoacceptallorpartoftheirentitlement,paymenttobemadeandFormsofInstructiontobelodgedwiththeTransferSecretariesby12:00on Friday,21June
Rights Offer closes at 12:00 on Friday, 21 June
RecorddatefortheLettersofAllocation Friday,21June
RightsOfferSharesissuedonorabout Monday,24June
CSDPorBrokeraccountsinrespectofholdersofDematerialisedSharesdebitedwiththepaymentdueandupdatedwithRightsOfferSharesandSharecertificatespostedtoCertificatedShareholdersonorabout Monday,24June
ResultsoftheRightsOfferannouncedonSENS Monday,24June
ResultsoftheRightsOfferpublishedinthepress Tuesday,25June
RightsOfferSharesinrespectofsuccessfulexcessapplications(ifapplicable)issuedonorabout Wednesday,26June
Refundpaymentsmadeand/orSharecertificatespostedtoCertificatedShareholdersand/orCSDPaccountscreditedinrespectofexcessapplications(ifapplicable)onorabout Wednesday,26June
Notes:
1. Share certificates in respect of Shares may not be Dematerialised or rematerialised between Monday, 27 May 2013 and Friday,31May2013,bothdaysinclusive.
2. IfyouareaQualifyingDematerialisedShareholderyouarerequiredtonotifyyourdulyappointedCSDPorBrokerofyouracceptanceoftheRightsOfferinthemannerandtimestipulatedintheagreementgoverningtherelationshipbetweenyourselfandyourCSDPor Broker.
3. CSDPseffectpaymentonadeliveryversuspaymentmethodinrespectofQualifyingDematerialisedShareholders.
4. AlltimesareSouthAfricantimes.
5. Share certificates in respect of Rights Offer Shares will be posted at the risk of the Qualifying Certificated Shareholders (or theirrenouncees).
This Circular is only available in English. Additional copies of the Circular will be made available at theregisteredofficesofGijima,theTransferSecretariesandRandMerchantBank,theaddressesofwhichareset outintheCorporateinformationsectionofthisCircular.
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DEFINITIONS AND INTERPRETATION
InthisCircularanditsannexures,unlessotherwisestatedorthecontextotherwiseindicates,thewordsandexpressionsinthefirstcolumnshallhavethemeaningsstatedoppositetheminthesecondcolumnandwordsandexpressionsinthesingularshallincludethepluralandviceversa,wordsimportingnaturalpersonsshallincludecorporationsandassociationsofpersonsandviceversaandanyreferencetoonegendershallincludetheothergenders:
“Act”or“CompaniesAct” theCompaniesAct,No71of2008,asamended;
“AllanGray” Allan Gray (Pty) Ltd, acting for and on behalf of its clients, as dulyauthorisedagentandinvestmentmanager;
“AuthorisedDealer” apersonauthorisedtodealinforeignexchangeascontemplatedintheExchangeControlRegulations;
“Board”or“Directors” the board of directors of Gijima, as at the Last Practicable Date,whose namesaresetoutinpage9ofthisCircular;
“Broker” astockbrokerasdefinedintheSecuritiesServicesAct;
“BusinessDay” any day other than a Saturday, Sunday or official public holidayin South Africa;
“CertificatedShareholders” ShareholderswhoholdCertificatedShares;
“CertificatedShares” Shareswhichare“certificatedsecurities”asdefinedinsection29oftheSecurities Services Act, such Shares being evidenced by a certificateor otherDocumentofTitle;
“Circular” this bound document dated Monday, 3 June 2013 relating to theRightsOffer, incorporating revised listingparticulars and includingthe annexures hereto and the attached Form of Instruction (whereapplicable);
“CommonMonetaryArea” collectively,SouthAfrica,theRepublicofNamibiaandtheKingdomsof LesothoandSwaziland;
“CSDP” a depository institution or central securities depository participantacceptedbyStrateasaparticipantintermsoftheSecuritiesServicesAct;
“Dematerialisation” the process by which certificated securities are converted to or heldinelectronicformasuncertificatedsecuritiesandrecordedassuchina sub-registerofmembersmaintainedbyaCSDP;
“DematerialisedShareholders” ShareholderswhoholdDematerialisedShares;
“DematerialisedShares” ShareswhichhavebeenthroughtheDematerialisationprocess;
“DocumentofTitle” sharecertificates,certifiedtransferdeeds,balancereceiptsoranyotherdocumentsoftitletoShares;
“EPS” earningspershare;
“ExchangeControlRegulations” theExchangeControlRegulations,1961,asamended,promulgatedintermsofsection9oftheSouthAfricanCurrencyandExchangesAct,No 9of1933,asamended;
“ExcludedForeignShareholders” Shareholderswhichareresidentin,orhaveregisteredaddressesin,theUnitedKingdom,EuropeanEconomicArea,Canada,theUnitedStatesofAmerica,Japan,orAustralia;
“FormofInstruction” a printed, personalised Form of Instruction in respect of Letters ofAllocationreflectingtheRightsofQualifyingCertificatedShareholdersandonwhichCertificatedShareholdersareentitledtoindicatewhethertheywishtotakeuptheirRightsorsellorrenouncealloraportionoftheirLetterofAllocation;
“theFunders” the holders of debentures issued by GijimaAst Finance, as at theLast PracticableDate;
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“Futuregrowth” FuturegrowthAssetManagement (Pty)Ltd,acting forandonbehalfof itsclients,asdulyauthorisedagentandinvestmentmanager;
“Gijima”or“theCompany” GijimaGroupLimited,registrationnumber1998/021790/06,alimitedliability public company duly incorporated in accordance with thecompanylawsofSouthAfrica,theSharesofwhichislistedontheJSE;
“GijimaAstFinance” GijimaAST Finance Proprietary Limited, registration number2006/007198/07,alimitedliabilityprivatecompanydulyincorporatedin accordance with the company laws of South Africa, which is anindependently owned special purpose entity with whom the Groupentered into various agreements including, inter alia, the sale ofexistingandfuturetradereceivables;
“GijimaGroup”orthe“Group” collectively,Gijimaanditssubsidiaries(includingtheirsubsidiaries);
“GumaGroup” collectively, Guma Tech (Pty) Ltd, Guma Support (Pty) Ltd, GumaInvestmentHoldings(Pty)LtdandGumaTechGroup(Pty)Ltd,beinga 6.5%shareholderinGijima;
“HeadsofAgreement” theagreementdated2April2013enteredintobetween,amongstothers,GijimaandtheFunders;
“HEPS” headlineearningspershare;
“IFRS” InternationalFinancialReportingStandardsasissuedbytheBoardoftheInternationalAccountingStandardsCommitteefromtimetotime;
“IncomeTaxAct” theIncomeTaxAct,No58of1962,asamended;
“InvestecAM” InvestecAssetManagement (Pty)Ltd,acting forandonbehalfof itsclients,asdulyauthorisedagentandinvestmentmanager;
“JSE” JSE Limited, registration number 2005/022939/06, a limited liabilitypubliccompanydulyincorporatedinaccordancewiththecompanylawsofSouthAfricaand licensed tooperatean exchange in termsof theSecuritiesServicesAct;
“JSEListingsRequirements” theListingsRequirementsoftheJSE,asamended;
“KingReportIIIReport” KingReportandCodeofGovernancePrinciplesforSouthAfrica2009;
“LastPracticableDate” Friday, 10 May 2013, being the last practicable date prior to thefinalisationofthisCircular;
“LetterofAllocation” a renounceable (nil paid) letter of allocation by the Company toQualifyingShareholders inDematerialisedForm,conferringaRightontheholderthereof;
“LetterofUndertaking” the agreement dated 2 April 2013 entered into between Gijima, thePrincipalShareholdersandtheUnderwriters;
“LinkMarketServices”or“Transfer Secretaries”
Link Market Services South Africa (Pty) Ltd, registration number1929/001225/06,alimitedliabilityprivatecompanydulyincorporatedinaccordancewiththecompanylawsofSouthAfrica;
“ListingsRequirements” theJSELimitedListingsRequirements,asamended;
“MOI” theMemorandumofIncorporationofGijima,adoptedbyshareholdersattheAGMheldon23November2012;
“PrincipalShareholders” GumaGroup,AllanGrayandInvestecAM;
“ProspectiveFinancialInformation” the information and financial projections provided to the SeniorDebentureholdersbytheCompanyonorabout28March2013;
“NAV” netassetvalue;
“Non-resident” apersonwhoisnotconsideredtobeordinarilyresidentinSouthAfricaintermsofExchangeControlRegulations;
“QualifyingCertificatedShareholders”
QualifyingShareholderswhoholdCertificatedShares;
“QualifyingDematerialisedShareholders”
QualifyingShareholderswhoholdDematerialisedShares;
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“QualifyingShareholder” a holder of Shares registered as such in the Register on the RecordDate;
“Rand”or“R”or“cents” South African Rand and cents, being the official currency of SouthAfrica;
“RandMerchantBank”or“RMB” Rand Merchant Bank, a division of FirstRand Bank Limited,registrationnumber1929/001225/06,alimitedliabilitypubliccompanydulyincorporatedinaccordancewiththecompanylawsofSouthAfrica;
“RecordDate” the lastday forShareholders toberecorded in theRegister inorderto participate in the Rights Offer, being close of business on Friday,31May2013;
“Register” the register of Certificated Shareholders maintained by the TransferSecretaries and the sub-register of Dematerialised ShareholdersmaintainedbytherelevantCSDPsinaccordancewithsection50oftheCompaniesAct;
“ReportingAccountantsandAuditors”
KPMGInc,registeredaccountantsandauditors,registrationnumber1999/01543/21, a company duly registered and incorporated withlimitedliabilityinaccordancewiththelawsofSouthAfrica;
“RevisedListingParticulars” therevisedlistingparticularsofGijimacontainedinthisCircular;
“Right/s” the right/s to subscribe for Rights Offer Shares at the Rights OfferPrice,pursuanttotheRightsOffer;
“RightsOffer” the fully underwritten renounceable rights offer of 3 000 000 000RightsOfferSharesattheRightsOfferPrice,intheratioof309.80298RightsOfferSharesforevery100SharesheldontheRecordDate;
“RightsOfferPrice” thesubscriptionpricepayableperRightsOfferShare,being5cents;
“RightsOfferShares” thenewShareswhicharebeingofferedpursuanttotheRightsOffer,whichamountto3000000000Sharesintotal;
“SecuritiesServicesAct” theSecuritiesServicesAct,No36of2004,asamended;
“Securitisation” the trade receivables securitisation funding programme establishedbyGijimaandpursuanttowhichdebenturesareissuedbyGijimaAstFinancefromtimetotime;
“SeniorDebentures” theunsubordinated seniordebenturesundera consolidatedamendedtrust deed entered into between Gijima Finance and PT&A Trustees(Pty)Limited,datedonorabout2July2012;
“SENS” theStockExchangeNewsServiceoftheJSE;
“Shareholders” holdersofShares;
“Shares”or“GijimaShares” ordinarysharesissuedbyGijima;
“SouthAfrica” theRepublicofSouthAfrica;
“SouthAfricanExchangeControlRegulations”
theExchangeControlRegulationsintermsofsection9oftheCurrencyandExchangesAct,No9of1933,asamended;
“Strate” StrateLimited,registrationnumber1998/022242/06,alimitedliabilitypubliccompanydulyincorporatedinaccordancewiththecompanylawsofSouthAfrica,andwhichisaregisteredcentralsecuritiesdepositoryresponsiblefortheelectroniccustodyandsettlementsystemoftheJSE;
“TangibleNetAssetValuePershare”or“TangibleNAVPerShare”
netassetvaluepershareexcludingintangibleassetsandgoodwill;
“Underwriters” GumaGroupandFuturegrowth;
“VAT” value-addedtax,payableintermsoftheValue-AddedTaxAct,No89of1991,asamended;and
“YeboGuma” YeboGumaInvestments(Pty)Ltd,registrationnumber1997/01132/07,a limited liability private company duly incorporated in accordancewiththecompanylawsofSouthAfrica.
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GIJIMA GROUP LIMITED(formerly “Gijima Ast Group Limited”)
IncorporatedintheRepublicofSouthAfrica(Registrationnumber1998/021790/06)
Sharecode:GIJ ISIN:ZAE000147443(“Gijima”or“theCompany”)
CIRCULAR TO SHAREHOLDERS
Non-executive Directors
RWGumede(Chairman)AHTrikamjee*JCLvanderWalt*MMacdonald*MHRBussin**Independentnon-executiveDirectors
Executive Directors
EWilton(InterimChiefExecutiveOfficer)CJHFerreira(ChiefFinancialOfficer)
Company Secretary
iThembaGovernanceandStatutorySolutions(Pty)Ltd
SECTION A: INFORMATION RELATING TO THE RIGHTS OFFER
1. INTRODUCTION
ShareholdersarereferredtothecautionaryannouncementpublishedonSENSon28March2013relatingtoaproposedrenounceableRightsOffer.
IntermsoftheSecuritisation,GijimaAstFinancepresentlyhasR255millionsecuredSeniorDebenturesinissue,presentlyheldbytheFunders.
PursuanttotheSecuritisation,GijimaAstFinanceissubjecttoanumberoffinancialcovenants,includingaminimumassetcoverandgearingcovenant.TheCompanyandtheFundershaveenteredintotheHeadsofAgreement, intermsofwhichtheFundershaveconditionallyagreedtoprovidetemporaryleniencyin respect of non-compliance by GijimaAst Finance with such covenants. One of the conditions uponwhichsuchleniencyistobegrantedisthatsufficientequitycapitalmustberaisedbyGijima,andfundsmadeavailablebyGijimatoGijimaAstFinance,toensurethatGijimaAstFinancewillmeettherequiredminimumassetcoverratioandhavesufficientfundingreservestocaterforunforeseenrisks.
ItwasproposedthatR150millionofnewequitywouldberaisedbyGijimabywayoftheRightsOffer.
2. USE OF PROCEEDS
Theproceeds from theRightsOfferwill beused, inter alia, to recapitalise theCompany, toprovide afunding injection to GijimaAst Finance in order to ensure compliance by GijimaAst Finance with itsSecuritisationfundingcovenants,tofundtheworkingcapitalrequirementsoftheCompanygoingforwardandtoredeemaportionoftheSeniorDebentures.
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3. INFORMATION ON THE RIGHTS OFFER
3.1 Terms of the Rights Offer
IntermsoftheRightsOfferGijimawilloffer3000 000000RightsOfferSharesatasubscriptionpriceof5 centsperRightsOfferShare, in the ratioof309.80298RightsOfferShares for every100 SharesheldbyShareholdersatthecloseofbusinessontheRecordDatefortheRightsOffer.
TheRightsOfferShareswill,uponallotmentand issue,rankparipassuwithallotherexistingShares inall respects, including in termsofbothvotingrightsanddividends.TheRightsOfferSharesdonothaveanyconvertibilityorredemptionprovisions.
TheRightsOfferShares,onceissued,willbefullypaidupandfreelytransferable.
TheRightsOfferissupportedbyShareholders,collectivelyholdingormanaging70.0%ofSharesas detailedinparagraph3.5ofthisCircular.
3.2 Entitlement
ThenumberofRightsOfferSharestowhichQualifyingShareholderswillbeentitledbyreferencetothenumberofSharesheldontheRecordDate,issetoutintheTableofEntitlementinAnnexure 1tothisCircular.
TheentitlementofeachQualifyingCertificatedShareholderisreflectedintheappropriateblockintheFormofInstruction,whichisenclosedwiththisCircular.QualifyingCertificatedShareholderswillhavetheirentitlementscreditedtoanaccountwiththeTransferSecretaries.
If you are a Qualifying Dematerialised Shareholder, you will not receive a Form of Instruction.Instead,youshouldreceivenotificationfromyourCSDPorBrokerregardingtheRightstowhichyouareentitledintermsoftheRightsOffer.QualifyingDematerialisedShareholderswillhavetheirCSDPorBrokeraccountsautomaticallycredited.
3.3 Fractional entitlements
RightsOfferSharesrepresentingfractionalentitlementswillnotbeissuedtoQualifyingShareholders.Wherenecessary,entitlementstoRightsOfferSharesof0.5orgreaterwillberoundeduptothenearestwholenumberandentitlementstoRightsOfferSharesoflessthan0.5willberoundeddowntothenearestwholenumber.
3.4 Holdings of odd lots in multiples other than 100 Shares
Qualifying Shareholders holding less than 100 Shares, or not holding a whole multiple of100 Shares, will be entitled, in respect of such holdings, to participate in the Rights Offer inaccordancewiththeTableofEntitlementinAnnexure1tothisCircular.
3.5 Shareholder commitments
IntermsoftheLetterofUndertaking,thePrincipalShareholdershaveundertakentosubscribefor,or(asregardsAllanGrayandInvestecAMandfurthersubjecttocertainexceptions)torecommendtotheirclientsthattheysubscribefor,alloftheRightsOfferSharesofferedtothempursuanttotheRightsOffer,onthefollowingbasis:
ShareholderNumber of Rights Offer
Shares (million)Percentage of
Rights Offer SharesValue of Rights Offer
Shares (R million)
GumaGroup 1094 36.5 54.7AllanGray 706 23.5 35.3InvestecAM 300 10.0 15.0
Total 2 099 70.0 105.0
TheundertakingsbythePrincipalShareholdersareprovidedontheconditionthattheCompanyisnotplacedundersupervisionforbusinessrescueinaccordancewiththeCompaniesActorintoprovisionalorfinalliquidationpriortothecloseoftheRightsOffer.
IntermsoftheLetterofUndertaking,theCompanyhasagreedtopayacommitmentfeeof4.33%,3.33%and3.33%ofthevalueoftheRightsOfferSharestoGumaGroup,AllanGrayandInvestecAMrespectively,upontheirsubscriptionforRightsOfferShares.
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3.6 Underwriting
TheUnderwritershavecommittedtounderwritethebalanceoftheRightsOfferSharesnotsubscribedforbythePrincipalShareholdersasdescribedabove,onthefollowingbasis:
ShareholderNumber of Rights Offer
Shares (million)Percentage of
Rights Offer SharesValue of Rights Offer
Shares (R million)
GumaGroup 406 13.5 20.3Futuregrowth 495 16.5 24.7
Total 901 30.0 45.0
IntermsoftheLetterofUndertaking,anunderwritingfeeequalto10.0%oftheamountunderwrittenbytheUnderwriters,ispayablebytheCompanytotheUnderwriters.TheunderwritingfeeisthebestcommercialfeethattheCompanycouldnegotiateunderthecircumstances.Theunderwritingfee isonlypayableupon theUnderwriters fulfilling theircommitments in termsof theLetterofUndertaking.
The Board has made due and careful enquiry to confirm that the Underwriters can meet theirunderwritingcommitmentsintermsoftheLetterofUndertaking.
Details of the Underwriters, as required in terms of the Listings Requirements, are set out inAnnexure2tothisCircular.
3.7 Minimum subscription
The Rights Offer is partially underwritten and is therefore not conditional upon a minimumsubscription.
3.8 Excess applications
ShareholdersareinvitedtoapplyforadditionalRightsOfferSharesoverandabovetheirentitlement.HoldersofCertificatedShareswishingtoapplyforexcessRightsOfferSharesmustcompletetheattached Form of Instruction in accordance with the instructions contained therein and, oncecompleted,lodgesame,togetherwithpaymentoftheRightsOfferPrice,withtheTransferSecretariesattheaddressessetoutinthe“Corporateinformationandadvisers”sectionofthisCircular,soastobereceivedbytheTransferSecretariesbynolaterthan12:00onFriday,21June2013.
HoldersofDematerialisedShareswishingtoapplyforexcessRightsOfferSharesshouldinstructtheirCSDPorBroker,intermsofthecustodyagreemententeredintobetweenthemselvesandtheirCSDPorBroker,astothenumberofexcessRightsOfferSharesforwhichtheywishtoapply.
ShouldtherebeexcessRightsOfferSharesavailable,thepoolofsuchexcessRightsOfferShareswill be allocated equitably, taking cognisanceof thenumberofRightsOfferSharesheldby theShareholderjustpriortosuchallocation(theRecordDate),includingthosetakenupasaresultoftheRightsOffer,andthenumberofexcessRightsOfferSharesappliedforbysuchShareholder.Non-equitableallocationsofexcessRightsOfferShareswillonlybeallowedininstanceswheretheyareusedtoroundholdingsuptothenearestmultipleof100.
AnannouncementwillbereleasedonSENSonMonday,24June2013andpublishedinthepressonTuesday,25June2013,statingtheresultsoftheRightsOfferandtheallocationofanyadditionalRightsOfferSharesforwhichapplicationwasmade.Therefundpaymentsinrespectofunsuccessfulapplications by Certificated Shareholders for additional Rights Offer Shares will be made to therelevantapplicants,attheirrisk,onoraboutWednesday,26June2013.Nointerestwillbepaidonmoniesreceivedinrespectofunsuccessfulapplications.
3.9 Procedures for acceptance of Rights Offers entitlements
3.9.1 Qualifying Certificated Shareholders and/or their renouncees who wish to exercise allorsomeoftheirRightsassetoutintheFormofInstruction,mustcompletetheFormofInstructioninaccordancewiththeinstructionscontainedthereinand,oncecompleted,lodgesame,togetherwithpaymentoftheaggregateRightsOfferPricepayableinrespectoftheRightsOfferShares forwhich they intend to subscribe,with theTransferSecretaries ateitheroftheaddressessetoutinthe“Corporateinformationandadvisors”sectionofthisCircular,soastobereceivedbytheTransferSecretariesbynolaterthan12:00onFriday,21June2013.OncereceivedbytheTransferSecretaries,theexerciseofRightsisirrevocableandmaynotbewithdrawn.
If payment is not received on or before 12:00 on Friday, 21 June 2013, the QualifyingCertificatedShareholderorrenounceeconcernedwillbedeemedtohavedeclineditsRightsandtherelevantnumberofRightsOfferSharesandtheirentitlementswilllapse.
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Qualifying Certificated Shareholders are advised to take into consideration postal delivery times when posting their Forms of Instruction, as no late postal deliveries will be accepted. Qualifying Certificated Shareholders are advised to deliver their completed Forms of Instruction together with payment to the Transfer Secretaries by hand or by courier, where possible.
3.9.2 QualifyingDematerialisedShareholderswillnotreceiveaFormofInstruction.Instead,theyshouldreceivenotificationfromtheirCSDPorBrokerregardingtheRightstowhichtheyareentitledintermsoftheRightsOffer.
QualifyingDematerialisedShareholdersand/ortheirrenounceeswhowishtoexerciseallorsomeoftheirRightsarerequiredtonotifytheirdulyappointedCSDPorBrokeroftheiracceptanceoftheRightsOfferinthemannerandtimestipulatedintheagreementgoverningtherelationshipbetweenthemselvesandtheirCSDPorBroker.
Gijima does not take responsibility and will not be held liable for any failure on the part of any CSDP or Broker to notify Qualifying Dematerialised Shareholders of the Rights Offer and/or to obtain instructions from Qualifying Dematerialised Shareholders to subscribe for the Rights Offer Shares and/or to sell and/or renounce Letters of Allocation.
3.10 Procedures for sale or renunciation of Letters of Allocation
3.10.1 QualifyingCertificatedShareholderswhodonotwishtoexerciseallorsomeoftheRightsallocatedtothemasreflectedintheirFormofInstruction,mayeitherdisposeoforrenounceallorsomeoftheirLettersofAllocationasfollows:
• Qualifying Certificated Shareholders who wish to sell all or some of their Letters ofAllocation, must complete Form A in their Form of Instruction and return it to theTransferSecretariessoastobereceivedbynolaterthan12:00onThursday,13June2013.TheTransferSecretarieswillendeavourtoprocurethesaleofLettersofAllocationon theJSEonbehalf of suchQualifyingCertificatedShareholdersandwill remit thenet proceeds of the sale in accordance with the instructions set out in the Forms ofInstruction,providedthatnetproceedsamountingtolessthanR131.10willaccrueforthebenefitoftheCompany.Inthisregard,neithertheTransferSecretaries,northeBrokerappointedbythemtoeffectthesalenorGijimawillhaveanyobligationorberesponsibleforanylossordamagewhatsoeverinrelationtoorarisingfromthetimingofsuchsales,thepriceobtained,orthefailuretodisposeofsuchLettersofAllocation.
• QualifyingCertificatedShareholderswhowishtorenounceallorsomeoftheirLettersofAllocationinfavourofanynamedrenouncee,mustcompleteFormBintheirFormofInstruction,andtherenounceemustcompleteFormCintheirFormofInstructionandreturnittotheTransferSecretaries,soastobereceivedbynolaterthan12:00onFriday,21 June 2013, together with payment of the aggregate Rights Offer Price payable inrespectoftheRightsOfferSharestobesubscribedfor.
3.10.2 QualifyingDematerialisedShareholderswhowishtosellorrenounceallorsomeoftheirLettersofAllocationshouldmakethenecessaryarrangementswiththeirCSDPorBrokerin themanner and time stipulated in the agreementgoverning the relationshipbetweenthemselvesandtheirCSDPorBroker.
QualifyingShareholderswishingtosellorrenounceallorsomeoftheirLettersofAllocationwillbeliabletopaybrokeragechargesandassociatedexpenses.
3.10.3 AnymemberofGumaGroupmayrenouncesomeorallofitsrightstosubscribeforRightsOfferShares infavourofYeboGuma,providedthat insucheventeachmemberofGumaGroupjointlyandseverallyundertakestoprocurethatYeboGumadulysubscribesandpaysforallRightsOfferShares inrelation towhichrightswererenounced in favourofYeboGuma.
3.11 Payment
TheamountdueonacceptanceoftheRightsOfferispayableinRand.
3.11.1 Qualifying Certificated Shareholders (or their renouncees) must make payment of theaggregateRightsOfferPricepayableinrespectoftheRightsOfferSharestobesubscribedfor,bywayof:
(i) acheque(crossed,marked“nottransferable”andwiththewords“orbearer”deleted)orabankers’draft(drawnonabankregisteredinSouthAfrica)madepayableto“GijimaLimited–RightsOffer”andpostedordeliveredtotheTransferSecretariesasfollows:
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Hand deliveries to: Postal deliveries to:LinkMarketServicesSouthAfrica LinkMarketServicesSouthAfrica(Pty)Ltd (Pty)Ltd13thFloor,RennieHouse POBox484419AmeshoffStreet,Braamfontein Johannesburg,2000Johannesburg,2001
or;
(ii) an electronic funds transfer into the designated bank account (details of which areavailablefromtheCorporateActionsdepartmentofLinkMarketServices,contactableduringordinarybusinesshourson+27(0)117130800)andquotingtheaccountnumber(asprintedonpage1oftheFormofInstruction)aspaymentreference,
soastobereceived,togetherwiththeirproperlycompletedFormofInstruction,bynolaterthan12:00onFriday,21June2013.
PaymentwillconstituteanirrevocablesubscriptionbytheQualifyingCertificatedShareholder(orrenouncee)oftheRightsOfferSharesuponthetermssetoutinthisCircularandintheFormofInstruction.
Deliveryofanybankguaranteedchequeorbanker’sdraftwillbeattheriskoftheQualifyingCertificatedShareholder(orrenouncee)concerned.Allbank-guaranteedchequesorbankers’draftsreceivedbytheTransferSecretarieswillbedepositedimmediatelyforpayment.Intheeventthatanychequeorbankers’draftisdishonoured,Gijimamay,initssolediscretion,treattheacceptanceofRightsOfferSharesandthecompletedFormofInstructionasvoidormaytenderdeliveryoftherelevantRightsOfferSharestowhichsuchchequeorbanker’sdraftrelates,againstpayment.
3.11.2 PaymentbyQualifyingDematerialisedShareholders(ortheirrenouncees)willbeeffectedontheirbehalfbytheirCSDPorBroker.TheCSDPorBrokerwillmakepaymentinrespectofQualifyingDematerialisedShareholders(ortheirrenouncees)onadeliveryversuspaymentbasis.QualifyingDematerialisedShareholdersmustensurethattheyplacetheirCSDPorBrokerinsufficientfundssoastoenablethemtosettletheaggregateRightsOfferSharePricepayableinrespectoftheRightsOfferSharesforwhichtheywishtosubscribe.
3.12 Lapsing of Rights
QualifyingShareholdersthatdonottakeuptheirRightswillcontinuetoownthesamenumberofSharesasheldpriortotheRightsOffer,buttheirpercentageholdinginGijimawillbediluted.
Subject to exceptions applicable to Excluded Foreign Shareholders, Rights not exercised will bedeemed to have been declined and will lapse and the relevant Qualifying Shareholder shall notreceiveanyeconomicbenefitinrespectofsuchlapsedRights.
3.13 Exchange control regulations
The following summary is intended only as a guide and is, therefore, not comprehensive.If Shareholdersareinanydoubtastotheappropriatecourseofactiontheyareadvisedtoconsulttheirprofessionaladvisor.
Non-residents
In termsof theExchangeControlRegulations,Non-residentQualifyingShareholders, excludingformerresidents(emigrants),oftheCommonMonetaryAreawillbeallowedto:
• exerciseRightsallocatedtothemintermsoftheRightsOffer;
• purchaseLettersofAllocationontheJSE;and
• subscribefortheRightsOfferSharesarisinginrespectoftheLetterofAllocationpurchasedontheJSEprovidedthatpaymentisreceivedthroughnormalbankingchannelsinforeigncurrencyorRandfromanon-residentaccount.
All applications by Non-residents for the above purposes must be made through an AuthorisedDealer.ElectronicstatementsissuedintermsofStrateandanySharecertificatesissuedpursuantto suchapplicationswillbeendorsed“Non-resident”.
Emigrants
WhereaRightbecomesduetoaformerresident(emigrant)oftheCommonMonetaryArea,whichRightisbasedonSharesblockedintermsoftheExchangeControlRegulations,thenonlyemigrantblockedfundsmaybeusedto:
• takeuptheRightsallocatedtothemintermsoftheRightsOffer;
• purchaseLettersofAllocationontheJSE;and
• subscribefortheRightsOfferSharesarisinginrespectoftheLettersofAllocationpurchasedon theJSE.
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Allapplicationsbyemigrantsusingblockedfundsfortheabovepurposesmustbemadethroughthe AuthorisedDealercontrollingtheirblockedassets.
New share certificates issued to an emigrant will be endorsed “non-resident” and placed underthecontroloftheAuthorisedDealerthroughwhomthepaymentwasmade.TheproceedsduetoemigrantsfromthesaleoftheLettersofAllocation,ifapplicable,willbereturnedtotheAuthorisedDealerforcreditofsuchemigrants’blockedaccounts.
Wheretheemigrant’sSharesareinDematerialisedformwithaCSDP,anySharesissuedpursuantto the use of emigrant blocked funds will be credited to their blocked share accounts at theCSDP controllingtheirblockedportfolios.Theelectronicstatement issuedintermsofStratewillbedispatchedbytheCSDPorBroker to theaddressof theemigrant in therecordsof theCSDPor Broker.
AnyQualifyingShareholderresidentoutsidetheCommonMonetaryAreawhoreceivesthisCircularand/orFormofInstructionshouldobtainadviceastowhetheranygovernmentaland/orotherlegalconsentisrequiredand/oranyotherformalitymustbeobservedtoenableasubscriptiontobemadeintermsofsuchformofinstruction.
3.14 Non-resident Shareholders
The Rights Offer Shares, the Circular and Form of Instruction will not be registered with anyauthorityinanyjurisdictionotherthanSouthAfrica.ThemakingoftheRightsOffer,thedistributionofthisCircularortheFormofInstructionandthetransferofRightsOfferSharesand/orLettersofAllocation to certainpersons in territories other thanSouthAfricamaybe restricted by law,and failure to comply with any of those restrictions may constitute a contravention of the lawsofanysuchterritory.NeitherthisCircular,noranyFormofInstruction,istoberegardedasanofferorinvitationtoanypersoninanyjurisdictionotherthanSouthAfricatotheextentthatanyapplicablelegalrequirementinsuchjurisdictionhasnotbeencompliedwithoritisforanyreasonillegalorunlawfultomakesuchanofferorinvitationinsuchjurisdictiontosuchperson.Inthosecircumstances,thisCircularand/ortheFormofInstructionissentforinformationpurposesonly.
TheRights, theRightsOfferSharesand theLettersofAllocationhavenotbeenandwillnotberegistered under the US Securities Act of 1933, as amended (the “Securities Act”) or under anysecuritieslawsofanystateorotherjurisdictionoftheUnitedStatesandmaynotbeoffered,sold,takenup,exercised,resold,renounced,transferredordelivered,directlyor indirectly,withintheUnitedStatesexceptinaccordancewiththeregistrationrequirementsoftheSecuritiesActoranapplicableexemptiontherefromandincompliancewithanyapplicablesecuritieslawsofanystateorotherjurisdictionoftheUnitedStates.Accordingly,subjecttocertainexceptions,GijimaisnotofferingtheRightsOfferSharesintotheUnitedStatesandneitherthisCircularnoranyLetterofAllocationnortheFormofInstructionconstitutesorwillconstituteorformspartofanyofferorinvitationtosellorissue,oranysolicitationofanyoffertopurchaseorsubscribefor,anyRights,RightsOfferSharesorLettersofAllocationintheUnitedStates.
ThisCircularand/orFormofInstructionshouldnotbeforwardedortransmittedtoanypersoninanyterritory,otherthanwheretheRightsOffermadetosuchpersoninsuchterritoryiscompliantwiththeapplicablelawsofthatterritory.ItistheresponsibilityofanypersonoutsideofSouthAfrica(including,withoutlimitation,custodians,nominees,agentsandtrusteesforsuchpersons)receivingthisCircularand/oraFormofInstructionandwishingtotakeupRightsOfferSharesundertheRightsOffer,tosatisfyitselfastofullobservanceoftheapplicablelawsoftherelevantterritory,includingobtaininganyrequisitegovernmentalorotherconsents,observinganyotherrequisiteformalitiesandpayinganyissue,transferorothertaxesdueinsuchterritories.ShareholdersoutsideSouthAfricashouldconsulttheirprofessionaladvisorstodeterminewhetheranygovernmentalorotherconsentsarerequiredorotherformalitiesneedtobeobservedtoallowthemtotakeupRightsOfferSharesand/ortradetheirentitlements.
QualifyingShareholdersholdingSharesonbehalfofpersonswhoareresidentorhaveregisteredaddressesinjurisdictionsoutsideofSouthAfricaareresponsibleforensuringthattakingupRightsOffer Shares, or selling and/or renouncing Letters of Allocation under the Rights Offer, do notcontraveneregulationsintherelevantforeignjurisdictions,andshouldnot,inconnectionwiththeRightsOffer,distributeinorsendtheCircularand/ortheFormofInstructionintoanyjurisdictionortransferLettersofAllocationtoanypersonin,orcitizenorresidentofanyjurisdictionwheretodosowouldormightcontravenelocalsecuritieslawsorregulations.AnypersonwhodoesforwardthisCircularand/orFormofInstructionortransfersaLetterofAllocationintoanysuchjurisdiction(whetherunderalegalorcontractualobligationorotherwise)shoulddrawtherecipient’sattentiontotheprovisionsofparagraph3.13ofthisCircular.AnypersontakingupRightsOfferShares,orsellingand/orrenouncingtheirentitlementsundertheRightsOffermakestherepresentationsandwarrantiestotheCompanyandtheUnderwriterssetoutinparagraph3.14ofthisCircular.
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NoLettersofAllocationwillbesenttoanyExcludedForeignShareholders.TheLettersofAllocationattributabletoExcludedForeignShareholderswillinsteadbedeliveredtotheTransferSecretarieswhowillactasnomineefortheExcludedForeignShareholders.TheTransferSecretarieswillsellsuchLettersofAllocationontheJSEonabestendeavoursbasisonbehalfandforthebenefitoftheExcludedForeignShareholdersandwillremittheproceedstothesaidShareholderssubjecttode minimisthresholdofR131.10.ExcludedForeignShareholderswillnotbeentitledtoaccepttheRightsOffer.
3.15 Representations and warranties given by Qualifying Shareholders (or their renouncees)
3.15.1 Qualifying Certificated Shareholders
AnypersonexercisingRightsorrequestingregistrationofRightsOfferSharesrepresentsandwarrantstoGijimaandtheUnderwritersthat,exceptwhereproofhasbeenprovidedtoGijima’ssatisfactionthatsuchperson’sexerciseofRightswillnotresultinthecontraventionofanyapplicablelegalorregulatoryrequirementinanyjurisdiction,suchperson:
(a) isnotexercisingRights,orrequestingregistrationoftherelevantRightsOfferShares,from within any jurisdiction in which it is unlawful to make or accept an offer toacquireRightsOfferSharesortousetheFormofInstructioninanymannerinwhichsuchpersonhasusedorwilluseit;
(b) isnotactingonanon-discretionarybasisforapersonlocatedwithinanyjurisdictionreferredtoin(a)aboveatthetimetheinstructiontoacceptwasgiven;and
(c) is not acquiring Rights Offer Shares with a view to the offer, sale, resale, transfer,deliveryordistribution,directlyorindirectly,ofanysuchRightsOfferSharesintoanyjurisdictionreferredtoin(a)above.
GijimamaytreatasinvalidanyexerciseofRightsandtheacceptanceorpurportedacceptanceoftheallotmentofRightsOfferSharesif:
(a) it appears to Gijima or its agent that the Form of Instruction was executed in ordispatched froma jurisdictionoutsideSouthAfricaorotherwise inamannerwhichmayinvolveacontraventionofthelawsofanyjurisdictionorifitbelievesthesamemayviolateanyapplicablelegalorregulatoryrequirement;
(b) anaddressoutsideSouthAfricaisprovidedfordeliveryofsharecertificatesforRightsOfferSharesintowhichitwouldbeunlawfultodeliversuchsharecertificates;or
(c) itpurportstoexcludetherepresentationsandwarrantiesrequiredbythisparagraph.
3.15.2 Qualifying Dematerialised Shareholders (or their renouncees)
ApersonwhomakesavalidacceptanceinaccordancewiththeproceduressetoutinthisCircularrepresentsandwarrantstoGijimaandtheUnderwritersthat,exceptwhereproofhasbeenprovidedtoGijima’ssatisfactionthatsuchperson’sacceptancewillnotresultinthecontraventionofanyapplicablelegalrequirementsinanyjurisdiction,suchperson:
(a) is not within any jurisdiction in which it is unlawful to make or accept an offer toacquireRightsorRightsOfferShares;
(b) isnotacceptingtheRightsOfferonanon-discretionarybasisforapersonlocatedwithinanyjurisdictionreferredtoin(a)aboveatthetimetheinstructiontoacceptwasgiven;and
(c) isnotacquiringRightsorRightsOfferShareswithaviewtotheoffer,sale,transfer,deliveryordistribution,directlyorindirectly,ofanysuchRightsorRightsOfferSharesintoanyjurisdictionreferredtoin(a)above.
GijimareservestherighttorejectanymarketinstructionsentfromoutsideSouthAfricaortocredittheaccountofanypersonwhoisactingonanon-discretionarybasisfortheaccountorbenefitofapersonlocatedoutsideSouthAfricawithRightsOfferShares,ifGijimabelievesthatitwouldresultinaviolationofanyapplicablelegalorregulatoryrequirementsinanyjurisdiction.
Theinformationsetoutinparagraph3.14andthisparagraph3.15isintendedasaguideonlyandpersonsresidentin,orwhoarecitizensof,countriesotherthanSouthAfricashouldconsulttheirprofessionaladvisorsastowhethertheyrequireanygovernmentalorotherconsentsorneedtoobserveanyother formalities toenable themto takeupRightsOfferSharesand/orselland/orrenouncetheirentitlements.
Theprovisionsofparagraph3.14and thisparagraph3.15andofanyother termsof theRightsOfferrelatingtoShareholdersresidentoutsideSouthAfricamaybewaived,variedormodifiedasregardsspecificQualifyingShareholdersoronageneralbasisbyGijimainitsabsolutediscretion.
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3.16 South African law
All transactions arising from the provisions of this Circular and the accompanying Form ofInstructionwillbegovernedby,andbesubjectto,thelawsofSouthAfrica.
3.17 Tax consequences
Qualifying Shareholders are advised to consult their tax and financial advisors regarding anytaxationimplicationspertainingtothemregardingtheacceptanceoftheirRightsintermsoftheRightsOffer.
3.18 Documents of Title
Newshare certificates to be issued toQualifyingCertificatedShareholders (or their renouncees)in respect of those Rights Offer Shares for which they have validly subscribed, will be postedto Qualifying Certificated Shareholders (or their renouncees), by registered post, at their risk,on or aboutMonday,24June2013.
Qualifying Certificated Shareholders receiving the Rights Offer Shares must note that suchCertificatedSharesmaynotbetradedontheJSEuntiltheyhavebeenDematerialised.
Qualifying Dematerialised Shareholders (or their renouncees) that have validly subscribed forRightsOfferShareswillhavetheiraccountswiththeirCSDPorBrokerupdatedwiththeRightsOfferSharestowhichtheyareentitled,onMonday,24June2013.
3.19 JSE listings
TheIssuerRegulationDivisionoftheJSEhasapprovedthelistingsontheJSEof:
• the Letters of Allocation, JSE code: GIJM and ISIN: ZAE000177440, in respect of all of the3 000 000000RightsOfferShareswitheffect from the commencementof tradeonMonday,27 May 2013tothecloseoftradeonThursday,13June2013,bothdaysinclusive;and
• 3 000 000 000 Rights Offer Shares with effect from the commencement of trade on Friday,14 June2013.
4. UNAUDITED PRO FORMA FINANCIAL INFORMATION
The tablebelowsetsout theunauditedandunreviewedpro formafinancialeffectsof theRightsOfferbasedonthepublishedunauditedinterimresultsforthesixmonthsended31December2012.
The unaudited and unreviewed pro forma financial effects are the responsibility of the Directors andhavebeenpreparedforillustrativepurposesonlytoprovideinformationabouthowtheRightsOffermayhaveaffectedGijima’sstatementofcomprehensiveincomehadtheRightsOfferbeenundertakenatthecommencementofthesixmonthsended31December2012,being1July2012,and,inthecaseofGijima’sstatementoffinancialposition,hadtheRightsOfferbeenundertakenon31December2012.Duetotheirnature,theunauditedproformafinancialeffectsmaynotfairlypresentGijima’sfinancialposition,changesinequity,andresultsofoperationsorcashflowsaftertheimplementationoftheRightsOffer.
The unaudited and unreviewed pro forma financial effects should be read in conjunction with theindependentreportingaccountants’reasonableassurancereport,whichisincludedasAnnexure4tothisCircular.
TheaccountingpoliciesofGijimahavebeenused in thepreparationof theunauditedandunreviewedpro formafinancialeffectsoftheRightsOffer.
TheproformastatementofcomprehensiveincomeandstatementoffinancialpositionofGijimaaresetoutinAnnexure3tothisCircular.
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Theproformafinancialeffectshavebeenpreparedonthefollowingbasis:
Published unaudited
interim for the 6 months ended
31 December 2012
Unaudited pro forma after the
Rights Offer% increase/
(decrease)
BasicEPS(cents) (2.54) (0.66) (74.0)DilutedEPS(cents) (2.54) (0.66) (74.0)BasicHEPSrestatedforRightsOffer(cents) (1.58) (0.66) (58.3)
BasicHEPS(cents) (10.58) (2.61) (75.3)DilutedHEPS(cents) (10.58) (2.61) (75.3)BasicHEPSrestatedforRightsOffer(cents) (6.58) (2.61) (60.3)
NAVpershare(cents) 23.04 9.05 (60.7)TangibleNAVpershare(cents) 0.09 0.06 (38.9)
WeightedaveragenumberofShares(’000) 961 565 3961565 312.0DilutedweightedaveragenumberofShares(’000) 961 565 3961565 312.0
Notes:1. TheunauditedfinancialinformationhasbeenextractedwithoutadjustmentfromthepublishedunauditedinterimresultsofGijima
forthesixmonthsended31December2012.
2. ProformaadjustmentstobasicanddilutedEPSandHEPSarecalculatedontheassumptionthattheRightsOfferproceedswerereceivedon1July2012.
3. ProformaadjustmentstotheNAVandtangibleNAVarecalculatedontheassumptionthattheRightsOfferproceedswerereceivedon31December2012.
4. EstimatedexpensesofR13.07million,relatingtotheRightsOffer,havebeentakenintoaccount indeterminingthefinancialeffects.R12.98millionwasdeductedagainsttheproceedsoftheRightsOfferandthebalancewasexpensed.
5. TheRightsOfferproceeds,netofestimatedexpenses,areassumedtohavebeenusedtorepayaportionoftheSeniorDebenturesinvarioustranches.Theeffectoninterestisasaresultofthespreadchangefrom340and370basispointsto450basispoints,relatingtotheSeniorDebenturesaswellasthepartialrecognitionofthebreakagefeeschargedbytheFunders.
6. Alladjustmentswiththeexceptionoftransactioncostsareexpectedtohaveacontinuingeffect.
7. Astatutorytaxrateof28%hasbeenappliedtotheinterestadjustmenttothestatementofcomprehensiveincome.
8. TheclosingSharepriceasat8April2013wasusedasthe‘marketvalue’indeterminingthefactortobeusedinrestatingthebasicEPSandHEPSfortheRightsOfferintermsofIAS33.
5. ESTIMATED ExPENSES IN RELATION TO THE RIGHTS OFFER
TheestimatedfeesandexpensesthatwillbeincurredbyGijimainrespectoftheRightsOfferaretabledbelow:
Expense Payable to R’000
Underwritingfees Underwriters 4503Commitmentfees PrincipalShareholders 4043Legaladvisorfee WebberWentzelandEdwardNathanSonnenbergs 2260Advisoryandsponsorfee RMB 1500Printing,postagecostsandannouncements
Ince(Pty)Limited 500
Independentreportingaccountants’fee KPMGInc 100JSEdocumentationfees JSE 42JSElistingfees JSE 95TransferSecretaries LinkMarketServices 30
Estimated total excluding VAT 13 073
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SECTION B: INFORMATION REGARDING GIJIMA
6. BACkGROUND INFORMATION ON GIJIMA
6.1 Incorporation and listing
GijimawasincorporatedinSouthAfricaon3November1998.TheCompanyconvertedintoapubliccompanyon2August1999andlistedontheJSEin1999.
6.2 History and nature of the business
GijimaprovidesICTservicesinSouthAfricaandinternationally.Historically,theCompanyoperatedintwosegments:ProfessionalServicesandManagedServices.Inthelast12months,theCompanyunderwentareorganisationoftheoperatingmodel.ThereorganisationoftheCompanyoperatingmodel has resulted in a shift in the primary reporting view from Professional and ManagedServicestothatofSystemsEngineeringandServices.TheSystemsEngineeringdivisionhousesthecompany’svariousprojectenvironments,includingcustomandpackagedsolutions,aswellasinfrastructureprojects.TheServicesdivisionisresponsibleforthevarioussupportenvironments,includingfieldoperations,businessapplications,infrastructuresupportandtheintegratedservicecentre. All other focused businesses are grouped under our Ring-fenced division, including ourtrainingandplacementbusiness,ourvoicebusiness,ourNamibianoperationaswellasMineRPup tothedateofitsdisposal.
TheoriginsofGijima(thenAdvancesSoftwareTechnologies (AST))datebacktothe1980swhenthebusiness,thenprivatelyheld,wasfocusedonthesale,implementationandsupportofsoftwareprojects in the enterprise systems management arena. In 1998, Iscor Limited sold its entireInformationTechnologydivisiontoAST inexchangefor30%ofAST’s issuedsharecapital.ASTthenlistedontheJSE,beingadmittedon9September1998,andbroadeneditsbusinessmodeltoincludeawidespectrumofinformationtechnologyservicesandsolutionsaimedatpositioningitselfasthestrategic informationtechnologypartnerofchoicetoclientswhohave large,complexandoftengeographicallydispersedinformationtechnologyrequirements.
In 1999 AST merged with Abraxas Investment Holdings Limited to become Advances SoftwareTechnologies-AbraxasLimited,withtheenlargedgroup’srelistingbecomingeffectiveon2August1999.TheCompany’snamewaschangedtoASTGroupLimitedon22December2000.
Effective 1 May 2005, AST merged with the information technology businesses of Gijima InfoTechnologies.ThemergerresultedintheformationofGijimaAstGroupLimited,acompanywithexcellentcredentials,alarge,competentandextensivedeliverycapacityandcapabilityengagedbyanextensiveand loyalcustomerbase,anenviableservice trackrecord,a leadingsetof industrysolutions,anunparalleledgeographicalfootprintanda36%directlyownedblackshareholding.
NogovernmentprotectionorinvestorencouragementisapplicabletoGijima.TherearenoroyaltiespayableoritemsofasimilarnatureinrespectofGijimaoranyofitssubsidiaries.
6.3 Gijima Group prospects
Looking forward,GDPgrowth is expected to remain subdued through the endof2013.Weakerdisposableincomegrowthamidsoftemploymentdynamicsandlowerrealwageincreasesshouldkeepconsumerspendingincheck.Furthermore,theweakEUeconomyshouldensureacontinuationoftheconstrainedexportenvironment.Combinedwithglobaluncertainties,domesticconstraintssuggest that the environment is also not conducive to robust growth in private sector fixedinvestment.Asaresult,GDPgrowthisforecasttoremainaroundthe2.5%markin2013(Source:Gartner,IT SpendingForecast,4Q12Update:2013TheYearAhead).
GlobalITspendingisforecasttogrow5.2%in2013,withaslightincreaseinfutureyearsreaching1$ trillion in2016 (Source:Gartner, ITSpendingForecast,4Q12Update:2013TheYearAhead).By 2014,marketconsolidationislikelytodisplaceupto20%ofthetop100ITservicesproviders.
Onthelocalfront,theSouthAfricanITservicesmarketreachedavalueofR39.2billionin2011(Source:BMI-T2012),reflectingayear-on-yeargrowthof14.6%.Themarket isexpectedtogrowat a CAGRof10.5%overthefive-yearforecastperiod,reachingatotalofR64.4billionby2016.
Managedservices,FullOutsourceandtheMaintain,SupportandUpgrademakeupthesubstantialpart of the South African IT services spending. These are traditionally areas where Gijima hasperformedwell.Despitesomechallengesoverthelasttwoyears,Gijimalookstoconsolidateandthenexpanditsshareofthesemarkets,aswellastakingtheleadinachosenfewemergingtechnologies.Theseareinparticularinthemobilityspace.
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Overall theSouthAfricanIT industry isshowingsteadygrowth,andhas tendedtosurpriseontheupside,despite theprevailinggeneraleconomicconditions.Theoutlookfor2013and2014isreasonable,andGijimaislookingtoemergefrom2014havingrecapturedsomelostmarketsharetocompetitors,aswellasbeingestablishedasthemarketleaderinanumberofchosenenvironments,mostnotablymobility,SAPsupportandMicrosoftservices.
Acoupleofcontractlossesnotwithstanding,Gijimahasaloyalcustomerbase,whichisevidencedbysomesignificantmulti-yearrenewalsoverthelastyear,supportingthegenerallyacceptedviewthatGijima’sservicesarehighlyregarded.This,coupledwithahealthypipeline,atmorethantwiceannual revenuecover,provides theorganisationwitha solid foundation fromwhich to establishdominanceintheareasselected.Thecostbaseisbeingadjusted,asamatterofcourse,giventherevenueachievementtodate,andthishelpsprovidetheorganisationwithaleanerdeliveryengine,andlessdragonperformance.
Ourlinesofofferingsarewellpositionedtoachieveourobjectives,particularlyconsideringthatourMicrosoftteamisregardedasoneofthetopteamsinthecountry,andwehaveoneofthelargestSAPsupporthubsonthecontinent.Twoglobaltechnologyresearchcompanieshaverecentlyvettedourmobilityoffering,andsignificantmomentumhasbeenobtainedinthisarea,andGijimaislookingto capitaliseon this.Thiswhite spaceenvironment isahighgrowtharea,and themarginsareextremelygood.ThisdrivewithinthemobilityspacehastheabilitytoreenergisetheInfrastructureandManagedServicesbusiness,aswellaseliminatethecommodityattributesthathavecreatedlowmarginsoverthelastfewyears.
Gijimahas5%ofthesystemsintegrationmarketshareinSouthAfrica,andthisisalsoanareathatGijimaislookingtocapitaliseon,offthebackofsomelargepublicsectorprojects,whichGijimawillbeconcludingoverthenextsixmonths.
Overall,givenwheretheorganisationfindsitselftoday,theoutlookispositive,andtheorganisationispositioningitselfwelltoliveuptothepromise.
6.4 Trading history of Gijima Shares on the JSE
AtablesettingoutthepricehistoryoftheSharesontheJSEhasbeenincludedinAnnexure5totheCircular.
7. FINANCIAL INFORMATION
7.1 Historical financial information
The annual historical financial information of Gijima for the three financial periods ended30 June 2010,30June2011and30June2012isincludedinAnnexure6tothisCircular.
Theinterimfinancialresultsforthesixmonthsended31December2011and31December2012havebeenincludedinAnnexure7tothisCircular.
Theannualhistoricalfinancialinformationispreparedbasedontheoldstructure(i.e.beforethereorganisation of the operating model) and the interim financial results are based on the newstructure.
The Directors are responsible for the accuracy of the relevant information extracted from theinterimandyear-endstatements.
7.2 Material liabilities, commitments and loan receivables
Gijimahadthefollowinglong-terminterest-bearingliabilitiesasat31December2012:
2012R’000
2011R’000
Long-termloans 255 000 150000Totalliability 255 000 150000
Securitisation1 255 000 150000
Liabilitiesundercapitalisedfinanceleaseagreements2 1 501 2291
Totalliability 2 490 3696Less:Currentportionmovedtotradeandotherpayables (989) (1405)
Total 256 501 152291
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Notes:
Trade receivables securitisation
On21June2010GijimaAstFinancefundedthepurchasepriceofthesecuritiseddebtorspaidtoGijimaHoldings(Pty)Ltd(“GijimaHoldings”)byissuing150ofClassA1,60-monthsecurednon-amortising debentures and by issuing 150 of Class A2, 24-month secured non-amortising rateddebenturesofR1millioneachtotheFunders.Thetradereceivableshavebeenpledgedassecurity.
R38 million Class A1 debentures and R7 million Class A1 debentures were redeemed on31 December 2012.
R66millionofClassA1debenturesbear interestatafixedrateof11.199%nominalannualratecompoundedquarterly.InApril2013,thesedebentureswereconvertedtofloatingrateinstruments,withabaserateofthree-monthJIBARplus450basispoints.
TheremainingR39millionofClassA1debenturesandR150millionoftheClassA2debenturesbearinterestatvariablerates.InApril2013,thespreadontheR39millionofClassA1debentureswasincreasedto450basispoints.
TheR150millionClassA2debenturesmaturedon30June2012.Fundingof theA2debentureswasrolledforwardforafurtherfiveyearsmaturingon30June2017.TherolledA2debenturesare60-monthsecurednon-amortisingrateddebenturesofR1 millioneach.
ClassA1andA2debentureshavebeenawardedazaAAcreditratingbyGlobalCreditRating,andhavebeenissuedtoinvestorsinthecapitalmarkets.
Liabilities under capitalised finance lease agreements
OthercapitalisedfinanceleaseliabilitieswhichamounttoR2.4million(2011:R3.7million)havebeenenteredintoandarerepayablemonthly.Theloantermsarefiveyears,withthematuritydatesbeingbetween2015and2017.
Interestonthesefinanceleasesislinkedtotheprimeoverdraftrate,whichat31December2012was8.5%.Theleasesaresecuredbyacessionoftheassetstowhichtheyrelate.
Thepresentvalueofotherfutureminimumleasepaymentsundernon-cancellablefinanceleasesareasfollows:
2012R’000
2011R’000
Lessthan1years 989 1405Between1yearsand5years 1 501 2291Laterthan5years – –
2 490 3696Lesscurrentportion (989) (1405)
Total 1 501 2291
Theloanspayablewithintwelve(12)monthswillbefinancedbyacombinationofinternallygeneratedcashflowsandtheproceedsfromtheRightsOffer.
The fair value of thefinance lease liabilities andother liabilities is approximately equal to theircarryingamounts.
There are no conversion rights attached to these loans. There are no debentures that have beenissuedbywayofconversionorreplacementofdebenturespreviouslyissued.
Bridge loan facility
InApril2013,theCompany,asborrower,concludedabridgeloanfinancingagreementwithYeboGuma,aslender(Lender),pursuanttowhichtheCompanyhasaccesstoabridgeloanfacilityforitsworkingcapitalpurposesandinordertoensurecompliancebyGijimaAstFinancewithcertainofitsSecuritisationfundingcovenantspriortocompletionoftheRightsOfferintheaggregateamountofR50000000(theFacility).Intermsofthebridgeloanagreement,theFacilityisavailablefordrawdownduringtheperiodfrom3 April2013untiltheClosingDateoftheRightsOfferdeterminedinaccordancewith theListingsRequirements,beingthedateuponwhich theShareholderswillberequiredtopaythesubscriptionpriceoftheRightsOfferSharesinrespectofwhichtheyhavefollowedtheirRights(theClosingDate).
Intermsofthebridgeloanfinancingagreement,theFacilityisnotrepayableattheinstanceoftheLender(otherthanpursuanttoaneventofdefault)inwholeorinpartpriortotheClosingDate.EachentityintheGumaGroupwillrenounce,infavouroftheLender(oritsnominee),certainofits
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rightspursuanttotheRightsOffer,whichnumberofrightswill,inaggregate,beequaltotherightsrequiredtoensurethattheaggregatesubscriptionpriceforsuchRightsOfferSharesisequaltothecapitalamountoutstandingundertheFacility.UpontheClosingDate,theLender(oritsnominee)willexercisetheserightsandwillberequiredtopaytheaggregatesubscriptionpriceinrespectofthoseRightsOfferShares.OntheClosingDate,theCompanywillberequiredtorepaythecapitalamountoutstandingundertheFacilityinfull.OntheClosingDate,theaggregatesubscriptionpriceowedbytheLendertotheCompanywillbeautomaticallyset-offagainsttheamountowedbytheCompanytotheLenderunderthebridgeloanagreement.TheFacilitybearsinterestattheprimelendingrateplusamarginof5%.
TheFacilityisguaranteedbyGijimaHoldings.
SecurityprovidedontheFacilityisintheformof:
• eachof theCompanyandGijimaHoldingsenteringintoasecuritycessionintermsofwhichtheycedeinsecuritytotheLender,alloftheirright,titleandinterestinandtotheirintellectualproperty rights and certainmaterial contacts, and in the case of theCompany, a pledge andcessionofitssharesinGijimaHoldings.Inaddition,GijimaHoldingshassignedatrademarkdeedofsecuritypursuanttowhichitgrantstotheLenderahypothecoverallitstrademarks;and
• GijimaHoldingsregisteringageneralnotarialbondoverallofitsmoveableassetsinfavouroftheLender.
CertainindemnitieshavealsobeenprovidedbyGijimaandGijimaHoldingsinfavouroftheLenderintermsofthebridgeloanagreementasregardscosts,lossesorliabilities(asapplicable)whichtheLendermayincurasaresultof:
• theoccurrenceofanyeventofdefault;
• anybreachoffunding,paymentorrepaymentobligations;
• theinvestigationofanyeventwhichtheLenderreasonablybelievestobeadefault;
• theLenderactingorrelyingonanynotice,requestorinstructionwhichtheLenderreasonablybelievestobegenuine,correctandappropriatelyauthorised;or
• anytaxrelatedliabilitieswhichtheLender(actingreasonably)determineshasbeensufferedinrelationtoapaymentreceivedorreceivable(oranypaymentdeemedtobereceivedorreceivable).
AsattheLastPracticableDate,anamountofR35000000hasbeendrawndown.
Loan receivables
TheCompanydoesnothaveanymaterialloansreceivablemadebyitselforbyanyofitssubsidiaries.
7.3 Dividends and dividend policy
TheBoardhaselectedtosuspendthepaymentofdividendsfor thetimebeing,butwillcontinuetoreviewthefinancialpositionoftheCompanyandiscommittedtothecontinuationofdividendpaymentsassoonasconditionsallow.
Anydividendwhichisunclaimed,mayberetainedbytheCompanyandmaybeinvestedorusedastheDirectorsmaydeemfitforthebenefitoftheCompanyuntilclaimedprovidedthatanymoniesduetotheShareholdersmustbeheldintrustbytheCompanyindefinitely,butsubjecttothelawsofprescription,whichprovideforaperiodof3(three)yearsfromthedateonwhichsuchmoniesbecamedue,furthersubjecttotherelevantprovisionsofthePrescriptionAct,1969andshallnotbearinterestagainsttheCompany.
DespiteGijima’srighttodeclaredividendsasforfeitedafteraperiodofthreeyears,ithasneverdonethisandcurrentlyhasnointentionofdoingsoinfuture.
7.4 Material change
Other than as set out in this Circular, there have been no material changes in the financial ortradingpositionoftheGijimaGroupthathaveoccurredsincetheendofthelastfinancialperiodforwhichthefinancialresultswerepublishedforthesixmonthsended31December2012.
TherehavebeennochangesinthetradingobjectsoftheCompanyanditssubsidiariesduringthepreviousfiveyears.
In2010,theCompanychangeditsnamefromGijimaAstGroupLimitedtoGijimaGroupLimited.There is currentlynocontrollingShareholderof theCompanyand therehasbeennochange incontrollingShareholderinthepastfiveyears.
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8. INFORMATION ON THE DIRECTORS AND SENIOR MANAGEMENT
8.1 Details and experience of Directors and senior management
Thefullnames,positions,datesofappointment,ages,nationalities,businessaddresses,qualifications,experienceandotherdirectorshipsoftheDirectorsandseniormanagementofGijimaanditsmajorsubsidiariesaresetoutinAnnexure8tothisCircular.
8.2 Directors’ and senior managements’ declarations
NoneoftheDirectorsandseniormanagersofGijimahave:
• everbeenconvictedofanoffenceresultingfromdishonesty,fraudorembezzlement;
• everbeendeclaredbankrupt,insolventorsequestratedinanyjurisdiction;
• atanytimebeenapartytoaschemeofarrangementormadeanyotherformofcompromisewiththeircreditors;
• everbeenfoundguiltyindisciplinaryproceedingsbyanemployerorregulatorybody,duetodishonestactivities;
• ever been involved in any receiverships, compulsory liquidations or creditors’ voluntaryliquidations;
• everreceivedpubliccriticismsfromstatutoryorregulatoryauthorities,includingprofessionalbodies,andhaveeverbeendisqualifiedbyacourtfromactingasadirectorofacompanyorfromactinginthemanagementorconductoftheaffairsofanycompany;
• everbeenbarredfromentryintoaprofessionoroccupation;
• everbeenconvictedinanyjurisdictionofanycriminaloffence;
• everbeenremovedfromanofficeoftrust,onthegroundsofmisconductandinvolvinghonesty;
• ever been involved in compulsory liquidations, administrations or partnership voluntaryagreementsofanypartnershipswheretheywerepartnersatthetimeof,orwithinthe12monthspreceding,anysuchevent;
• everreceivedacourtorderdeclaringtheDirectoradelinquentorplacingtheDirectorunderprobationintermsofsection162oftheCompaniesActorprohibitinghimtoactasadirector;or
• everbeeninvolved,asadirectororinanexecutivefunctioninanybusinessrescueplansand/orresolutionproposedbyanyentitytocommencebusinessrescueproceedings,applicationhavingbeenmadeforanyentitytobeginbusinessrescueproceedings,noticeshavingbeendeliveredintermsofsection129(7)oftheCompaniesAct,receiverships,compulsoryliquidations,creditors’voluntaryliquidations,administrations,companyvoluntaryarrangementsoranycompromiseorarrangementwithcreditorsgenerallyoranyclassofcreditorsofanycompanywithinthelast12months.
AlloftheDirectorshavecompleteddirectors’declarationsintermsofSchedule21oftheListingsRequirementsupontheirappointmentandnothing,relativetotheabove,haschangedsincetheirappointment.
8.3 Qualification, remuneration, borrowing powers and appointment of Directors
8.3.1 Extracts from the MOI relating to the Directors
TherelevantprovisionsoftheMOIconcerningthequalification,remuneration,borrowingpowersandappointmentoftheDirectorsaresetoutinAnnexure9tothisCircular.
8.3.2 Borrowing powers
TheMOIdoesnotimposeanylimitationontheborrowingpowersofDirectorsandthereforetherehavebeennocircumstancesinwhichtheborrowingpowershavebeenexceededduringthepreviousthreeyears.
TheMOIdoesnotimposeanylimitationsontheDirectorsinrelationtoexchangecontrol.
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8.3.3 Directors’ emoluments
RemunerationpaidbytheGrouptotheDirectorsforthe12monthsended30June2012wasasfollows:
Directors’ fees
R’000
Basic salaryR’000
IncentivesR’000
Share-based expenses
R’000
Total 2012
R’000
Non-executiveRGumede 1740 – – – 1740AMthembu* 500 – – – 500JMiller** 273 – – – 273VNFakude*** 269 – – – 269MMacdonald 501 – – – 501AHTrikamjee 260 – – – 260DrMHRBussin**** 135 – – – 135JvanderWalt 391 – – – 391
Total 4 069 – – – 4 069
*AMthemburesignedinMay2013
**JMillerresignedinFebruary2013.
***VNFakuderesignedinMarch2013.
****DrMHRBussinwasappointedon2March2012.
Thenon-executiveDirectorshavenotreceivedothermaterialbenefitsincludingcommission,gainsorprofit-sharingbenefits.Therehavebeennocontributionspaidunderanypensionforanyofthenon-executiveDirectors.
Directors’ fees
R’000
Basic salaryR’000
BenefitsR’000
Share-based expenses
R’000
Total 2012
R’000
ExecutiveJBogoshi1 – 3176 111 209 3496CFerreira – 2923 65 155 3143DMZwane-Chikura2 – 2262 68 – 2330
Total – 8 361 244 364 8 969
1JBogoshiresignedinDecember2012.
2DMZwane-Chikuraresignedon2March2012.
AllDirectors’ remunerationwaspaidbysubsidiariesofGijima.Therearenocontractualsecretarial,managementortechnicalfeespayable.
TherehavebeennofeespaidoraccruedaspayabletoathirdpartyinlieuofDirectors’fees.Otherthandisclosedabove,nobonusesandadditionalmaterialbenefitshavebeenreceivedbyDirectorsduringtheyearsended30June2011and30June2012.NocommissionsorgainswerereceivedbyDirectorsandnoprofit-sharingarrangementswereinplacerelatingto Directors for the periods ended 30 June 2011 and 30 June 2012. There have been nocontributionspaidunderanypensionforanyoftheexecutiveDirectors.
TheremunerationreceivablebyanyoftheDirectorswillnotbevariedinconsequenceoftheRightsOfferoranyrelatedtransaction.
8.3.4 Directors’ service contracts
TheappointmentofexecutiveDirectorsisreviewedeverythreeyears.
None of the service contracts of the executive or non-executive Directors contains noticeperiodsinexcessofoneyear,orprovidesforpredeterminedcompensationonterminationexceedingoneyear’ssalaryandbenefitsinkind.
TheAuditCommitteeofGijimaissatisfiedwiththeexpertiseandexperienceoftheChiefFinancialOfficer.
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8.4 Interests of Directors
8.4.1 Directors’ interests in Shares
Before the Rights Offer
Thedirectand indirectbeneficial interests inSharesheldbyall theDirectors (includingDirectorswhohaveresignedinthelast18months)asat30June2012,areshownbelow.There have been no changes in Directors’ interests between 30 June 2012 and the LastPracticableDate:
Direct beneficial
Indirect beneficial Total % held
CJHFerreira 1061802 21 526352 22588154 2.33RWGumede 1800447 332610064 334410511 34.53MMacdonald – 995488 995488 0.10JEMiller 3042122 – 3042122 0.31JCLvanderWalt 72059 1935384 2007443 0.21
Total 5 976 430 357 067 288 363 043 718 37.49
Duringtheyearended30June2012,theinterestofDirectorsremainedunchanged.
After the Rights Offer
For thepurposesof the tablebelow, ithasbeenassumed thatall theDirectorsasat theLastPracticableDatewill followtheirRights in termsof theRightsOffer,and theywillaccordinglyholdthefollowingnumberofSharesaftertheRightsOffer:
Direct beneficial
Indirect beneficial Total % held
CJHFerreira 4351296 88215632 92566928 2.33RWGumede 7378285 1363045948 1370424234 34.53MMacdonald – 4079539 4079539 0.10JEMiller 12466707 – 12466707 0.31JCLvanderWalt 295300 7931261 8226561 0.21
Total 24 491 588 1 463 272 380 1 487 763 969 37.49
8.4.2 Share options held by Directors
Asat31December2012,therewerenoshareoptionsheldbytheexecutiveDirectors.
8.4.3 Director’s interests in transactions
During theyear ended30June2012 the followingcontractswere entered into inwhichDirectorshadaninterestandwhichsignificantlyaffectedthebusinessoftheGroup:
• GijimaHoldingshadcontractedSeekersTravelas its travelagencyas from1August2008.ThecontractwithSeekersTravelwasterminatedduringthe2012financialyear.SeekersTravel isultimately ownedbyTourvestHoldings (Pty)Ltd, a companywhereMessrs RW Gumede,AFBMthembuandCJHFerreiraareminorityshareholdersdirectlyorthroughvariousintermediaryholdingcompaniesandfamilytrusts;
• GijimaHoldingshadcontractedGenTechnologies (Pty)Ltdonaminorportionof theWho-am-I-onlineproject.GenTechnologies(Pty)LtdisasubsidiarycompanyofGumaInvestmentHoldings(Pty)Ltd.MessrsRWGumedeandCJHFerreirahaveaninterestandarealsodirectorsofGumaInvestmentHoldings(Pty)Ltd;and
• GijimaHoldingshadcontracted21stCenturyPaySolutionsGroup(Pty)LtdonaHumanResources related matters. Dr MHR Bussin has an interest and is also a director of21stCenturyPaySolutionsGroup(Pty)Ltd.
InApril2013,theCompany,asborrower,concludedabridgeloanfinancingagreementwithYeboGuma,aslender,pursuanttowhichtheCompanyhasaccesstoabridgeloanfacilityforitsworkingcapitalpurposesandinordertoensurecompliancebyGijimaAstFinancewithcertainofitsSecuritisationfundingcovenantspriortocompletionoftheRightsOfferintheaggregateamountofR50000000.MessrsRWGumedeholds100%ofYeboGumathroughhistrustandisalsoadirectorofYeboGuma.
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Alltransactionswereconcludedonanarm’slengthbasiswiththeapprovaloftheBoardandweretotheadvantageoftheGroup.Otherthanasdisclosedabove,noneoftheDirectorshaveanyinterestinanytransactioneffectedbyGijimaduringthecurrentorimmediatelypreceding financial year or during any earlier financial year and which remain, in anyrespect,outstandingorunperformed.
NothirdpersonorcompanyinwhichaDirectorhadaninterestmanagedanyofthebusinessoftheGijimaGroupduringthereportingperiod.
CertainDirectors(MessrsRWGumedeandCJHFerreira)haveinterestsintheUnderwriters.RefertoAnnexure2forthisdetail.
8.4.4 Directors’ interests in promotion and property of Gijima
NoneoftheDirectorshadanyinterest,directorindirect,inthepromotionofGijimaorinanypropertyacquiredorproposedtobeacquiredoutoftheproceedsoftheRightsOfferduringtheprecedingthreeyearsandnoneoftheDirectorshaveanysuchinterestcurrently.
Nopaymentsweremadeto,orhavebeenagreedtobepaidto,anyDirectororanycompanyinwhichheisbeneficiallyinterested,directlyorindirectly,orofwhichheisadirectorortoanypartnership,syndicateorotherassociation(the“associatecompany”)ofwhichheisamembereithertoinducehimtobecome,ortoqualifyhimasadirectororotherwisefortheservicesrenderedbyhimorbytheassociatecompanyintheconnectionorformationofGijimawithintheprecedingthreeyears.
8.5 Information on the Shares of the Company
8.5.1 Authorised and issued Shares
None of the issued Shares have preferential conversion and/or exchange rights, votingrights,rightstodividends,profitsorcapital.NoissuedShareshavepreferentialrightsonliquidationordistributionofcapitalassets.TheissuedSharesrankparipassuwithrespecttovotingrights,andnoothersecuritiesareissuedbyGijimawhichhavevotingrights.Uponliquidation,theissuedSharesrankparipassuwithrespecttoanyliquidationdividends.Noarrangementisinplaceunderwhichfuturedividendsarewaivedoragreedtobewaived.
TheCompanydoesnothaveanycontractorarrangementorproposedcontractorproposedarrangement,wherebyanyoptionorpreferentialrightofanykindtobegiventoanypersontosubscribeforanysecuritiesoftheCompanyoranysecuritiesofthesubsidiaries.
TheMOI requiresa special resolution tobepassedbyShareholders inorder tovary therightsattachingtoShares.
ThenumberofauthorisedandissuedShares,asattheLastPracticableDateandtheindicativeeffectoftheRightsOffer,aresetoutbelow:
Before the Rights OfferNumberofauthorisedShares5000000000ordinarysharesofnoparvalue1
NumberofissuedShares968357379ordinarysharesofnoparvalue
NumberoftreasuryShares6792070ordinarysharesofnoparvalue
After the Rights Offer2
NumberofauthorisedShares5000000000ordinarysharesofnoparvalue
NumberofissuedShares3968357379ordinarysharesofnoparvalue
NumberoftreasuryShares27834105ordinarysharesofnoparvalue
Notes:
1 Increasedfrom1300000000authorisedSharesasat31December2012asaresultoftheresolutionspassed at a general meeting held on Thursday, 9 May 2013. During that meeting, the ShareholdersapprovedtheresolutiontoconvertitssharecapitalfromShareswithparvaluetoShareswithnoparvalue
2 Sharesof0.5orgreaterwillberoundeduptothenearestwholenumberandSharesoflessthan0.5willberoundeddowntothenearestwholenumber.
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TherearenootherclassesofsecuritieslistedandnosecuritiesoftheCompanyarelistedonanystockexchangesotherthantheJSE.Inexcessof20%ofGijima’sSharesareheldbythepublic.Refertoparagraph8.5.5ofthisCircularfordetailsofmajorbeneficialShareholders.
8.5.2 Alterations to the number of issued Shares
ThechangestoGijima’sissuedShares,netoftreasuryShares,duringthethreefinancialperiodsended30June2010,30June2011and30June2012aresummarisedbelow:
Changes to issued Shares
Number of Shares issued
and allotted
2012IssuedSharesatbeginningofyear 968357379IssuedSharesatendofyear 968357379
2011IssuedSharesatbeginningofyear 981459166Sharesrepurchased (13101787)IssuedSharesatendofyear 968357379
2010IssuedSharesatbeginningofyear 981459166IssuedSharesatendofyear 981459166
In2010,Gijimarepurchased13101787oftheSharesresultinginareductionintheordinarysharecapitalandthesharepremiumofR10.99million.TheShareswererepurchasedatapricenogreaterthan10%abovetheweightedaverageofthemarketvalueofSharesforthefivedaysimmediatelyprecedingthedateofrepurchase.
Otherthantheabove,therehavebeennoSharerepurchases,consolidationsorsubdivisionsby Gijima and its subsidiaries during the preceding three years. There were no sharesallottedandissuedinthecapitalofGijimatoexecutiveDirectorsandmanagementpursuanttothetermsandconditionsoftheshareoptionschemeduringtheyearunderreview.
NoShareshavebeenissuedbyGijimasubsidiariesintheprecedingthreeyears.NoShareswereissuedbyGijimaduringtheprecedingthreeyearsasaresultoftheexerciseofoptionsbyGijimaemployees.
Nocommissions,discountsorbrokerageswereincurredinconnectionwiththeissueoftheSharesasaresultoftheexerciseofoptions.
TherehavebeennootheroffersorissuesofanysecuritiesbyGijimaoranyofitssubsidiariesduringtheprecedingthreeyears.
NoissuesofSharesaretooccursimultaneouslywiththeRightsOffer.
8.5.3 Commissions
OtherthanthecommitmentfeepayabletothePrincipalShareholdersandtheunderwritingfee payable to the Underwriters, as disclosed in paragraphs 3.5 and 3.6 of this Circularrespectively,nocommissionswerepaidtoanypersonswithintheprecedingthreeyearsinrelationtotheRightsOfferorinrelationtotheissueofanyGijimasecurities.
Therehavebeennoother commissionspaidoraccruedaspayable,within theprecedingthreeyears.
8.5.4 Rights attaching to Shares and power to issue Shares
AlltheauthorisedandissuedSharesareofthesameclassandrankparipassuineveryrespect.AnyvariationofrightsattachingtosuchShareswillrequireaspecialresolutionofShareholdersingeneralmeetinginaccordancewiththeMOI.InaccordancewiththeMOI,atanygeneralmeeting,everyShareholderpresentinpersonorbyproxy(orifabodycorporate,dulyrepresentedbyanauthorisedrepresentative)shallhaveonevoteonashowofhandsandonapollshallbeentitledtoexerciseonevoteforeveryShareheld.
AlltheauthorisedbutunissuedSharesareunderthecontroloftheDirectors.
8.5.5 Major Shareholders
InsofarasisknowntotheDirectors,thefollowingShareholders(excludingDirectorsandmanagement)beneficiallyheld,directlyorindirectly,aninterestof5%ormoreoftheissuedSharesofGijimaasattheLastPracticableDate:
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Name of Shareholder Number held % held
AllanGray(Pty)Ltd 227800911 23.5GumaTech(Pty)Ltd1 169817449 17.5GumaSupport(Pty)Ltd2 123503600 12.8InvestecAssetManagement(Pty)Ltd 96704832 10.0GumaInvestmentHoldings(Pty)Ltd3 44409958 4.6GumaTechGroup(Pty)Ltd4 15437950 1.6
Total 677 674 700 70.0
After the Rights Offer
AssumingthatalltheShareholdersfollowtheirRights,majorbeneficialshareholdingsposttheRightsOfferwillbeasfollows:
Name of Shareholder Number held % held
AllanGray(Pty)Ltd 933534922 23.5GumaTech(Pty)Ltd1 695916964 17.5GumaSupport(Pty)Ltd2 506121431 12.8InvestecAssetManagement(Pty)Ltd 396299282 10.0GumaInvestmentHoldings(Pty)Ltd3 181993331 4.6GumaTechGroup(Pty)Ltd4 63265179 1.6
Total 2 777 131 115 70.0
Notes:
1 MessrsRWGumedeandCJHFerreirahaveaninterestandarealsodirectorsofGumaTech(Pty)Ltd.
2 MessrsRWGumedeandCJHFerreirahaveaninterestandarealsodirectorsofGumaSupport(Pty)Ltd.
3 MessrsRWGumedeandCJHFerreirahaveaninterestandarealsodirectorsofGumaInvestmentHoldings(Pty)Ltd.
4 Messrs RW Gumede and CJH Ferreira have an interest and are also directors of Guma Tech Group(Pty) Ltd.
ThereiscurrentlynocontrollingShareholderoftheCompanyandtherewillbenochangeincontrollingShareholderasaresultoftheRightsOffer.
8.5.6 Advisors’ interests
As at the Last Practicable Date, none of the advisors to the Company had any materialinterestintheissuedShares.
9. ADDITIONAL INFORMATION
9.1 Subsidiary companies
DetailsofGijima’sprincipalsubsidiarycompaniesaresetoutinAnnexure10tothisCircular.
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9.2 Principal immovable property
DetailsoftheprincipalimmovablepropertiesleasedbyGijimaanditssubsidiariesaresetoutbelow:
Address of premises Area (m2)Commencementof lease
Termination of lease
Monthly rental (R)
Escalation (%)
Gijima Office Park47LandmarksAvenue,KosmosdalSamrand 12064 01/04/2011 31/03/2018 1193 940.00 10
AST TerracesGolfPark,RapenbergRoadMombaryCapeTown 2494.16 01/07/2008 30/06/2013 220270.00 9
Rust Building1FrikkieMeyerStreet,PretoriaWest 5169.96 01/09/2007 Monthly 204689.00 CPIX
Crown MinesErf173,CnrDoradoandStellarAvenueCrownext4(warehouse)Martindale 2076.32 01/10/2010 30/09/2013 65000.00 8
Gijima Office Park47LandmarksAvenue,KosmosdalSamrand 9562 01/11/2008 30/11/2018 1626 376.00 8
Nothlands Business ParkHooglandExt47,NorthRidingRandburgStand359 710 01/03/2011 28/02/2014 52560.00 9
Glass House office ParkBuildingno3309UmhlangaRocksDriveLaLuciaRidge 2357.1 01/01/2009 31/12/2013 303449.50 9.75
91 Western AvenueVincent,EastLondon–Atros 410 01/08/2011 31/07/2014 61922.65 10
13 Tswelopele (kilo) Street,UnitA6;MiddelburgIndustrialMiddelburg,1050 417 01/12/2009 30/11/2014 33400.00 10
Campsdrift Park3BarnsleyRoadPietermaritzburgUnit14 2400 01/03/2011 28/02/2014 52560.00 9
Ex Oakley Building,HumerailBusinessPark,HumerailRoad/OakworthDrive,HumewayPortElizabeth 1322 01/12/2010 31/01/2016 100000.00 8
TheCompanydoesnotownanyimmovableproperties.
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9.3 Material acquisitions and disposals
9.3.1 Material acquisitions
TherehasbeennomaterialpropertyacquiredduringtheprecedingthreeyearsbyGijimaoranyofitssubsidiaries.
9.3.2 Material disposals
In November 2012, Gijima disposed of, to a consortium led by RMB Corvest (Pty) Ltd, asubsidiaryofRMBPrivateEquity(Pty)Ltd,itsminingtechnologyandconsultingbusinesses(MineRPBusinesses)foratransactionvalueofR175million.
9.4 Promoters
Noamountswerepaid,oraccruedaspayable,withintheprecedingthreeyears,orwereproposedtobepaidtoanypromoter,ortoanypartnership,syndicateorotherassociationofwhichhe/she/itisorwasamember,andtheconsiderationforsuchpayment,andanyotherbenefitgiventosuchpromoter,partnership,syndicateorotherassociationwithinthesaidperiodorproposedtobegiven,andtheconsiderationforthegivingofsuchbenefit.
Nopromoterhadanymaterialbeneficialinterest,directorindirect,inthepromotionofGijimaandinanypropertyacquiredbyGijimaoutoftheproceedsoftheRightsOfferorduringthethreeyearsprecedingthedateofthisCircular.
9.5 Material contracts
InNovember2012,Gijimahasconcludedthetermsofagreementsrelatingtothedisposalof theMineRPBusinessestoaconsortiumledbyRMBCorvest(Pty)Ltd.OtherthanthedisposaloftheMineRPBusinesses,theCompanyhasnotenteredintoatanycontract,otherthanintheordinarycourseofbusiness,inthetwoyearspriortotheLastPracticableDate,oratanytimeandcontaininganobligationorsettlementthatismaterialtotheCompany.
9.6 Corporate governance
The Board accepts full responsibility for corporate governance and is committed to ensuringa high standard of discipline, independence, ethics, responsibility, equity, social responsibility,accountability,cooperationandtransparency.TheBoardbelievesthattheGrouphascompliedinallmaterialrespectswiththeprinciplesoftheKingIIIReportandhasmettheListingsRequirements.
Annexure11tothisCircularcontainsfurtherinformationonGijima’scorporategovernanceanddisclosureofareasofnon-compliance.
9.7 Litigation statement
ThearbitrationproceedingsinitiatedinOctober2012byoneofGijima’ssoftwareprovidersandinrespectofwhichaprovisionwasmadeinthefinancialstatementsofendJune2012continueandarenotexpectedtobefinalisedinthe12monthsfollowingthedateofissueofthisCircular.TheBoard,onadvicefromseniorcounselanditscommercialadvisers,remainsoftheviewthattheclaimisgrossly overstated andbaseduponassumptionswhichare either incorrect or open to seriouschallenge.Gijimahasinstitutedacounterclaimagainstthethirdparty.
9.8 Third party management under contract or arrangement
ThebusinessofGijimaanditssubsidiarieswillnotbemanagedbyathirdpartyunderacontractorarrangement.
9.9 Material inter-company transactions
In the financial period ended 31 December 2012, the Company and its subsidiaries entered intovarioustransactionsrelatingtointer-companyloanswitheachotheranddetailedbelow:
• MineRP Africa (Pty) Ltd settled its loan account with MineRP Canada Limited and MineRPAustralia(Pty)LtdforanamountofR6.5millionandR12.1millionrespectively;
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• MineRPCanadaLimitedsettleditsloanwithASTInternational(Mauritius),MineRPAfrica(Pty)LtdandMatsemaInternationalBV(Netherlands)foranamountofR1.4million,R0.3millionandR54799respectively;
• AST(WesternAustralia)(Pty)LtdsettleditsloanaccountwithGijimaHoldings(Pty)LtdforanamountofR742531;and
• AST Holdings Australia (Pty) Ltd settled its loan account with Matsema International BV(Netherlands)AUD16.5million.Anadditional loanwascreatedbetweenGijimaHoldings(Pty)LtdandMatsemaInternationalBV(Netherlands)AUD16.5millionasaresultofthecashbeingpaidstraighttoGijimaHoldings(Pty)Ltd.
10. DIRECTORS’ RESPONSIBILITY STATEMENT
TheDirectors,whosenamesaregivenonpage9ofthisCircular,collectivelyandindividually,acceptfullresponsibilityfortheaccuracyoftheinformationinrelationtoGijimagiveninthisCircularandcertifythat,tothebestoftheirknowledgeandbelieftherearenofactsinrelationtoGijimathathavebeenomittedwhichwouldmakeanystatementfalseormisleading,andthatallreasonableenquiriestoascertainsuchfactshavebeenmadeandthatthisCircularcontainsallinformationinrelationtoGijimarequiredbytheJSEListingsRequirements.
11. CONSENTS
RandMerchantBank,WebberWentzel,KPMGInc,andLinkMarketServiceshaveallprovidedtheirwrittenconsentstoactinthecapacitystatedandtotheirnamesbeingusedinthisCircularandhavenotwithdrawntheirconsentspriortothepublicationofthisCircular.TheindependentreportingaccountantshaveconsentedtotheinclusionoftheirreportinthisCircular.
12. WORkING CAPITAL STATEMENT
TheDirectorsareoftheopinionthatpursuanttotheimplementationoftheRightsOffertheworkingcapitalavailabletotheGijimaGroupisadequatetoremainagoingconcernforatleast12monthsfollowingtheLastPracticableDate.
Theworkingcapitalprojectionshavebeenpreparedusingassumptionsofrevenueandoperatingprofitthatwillbegeneratedoverthisperiodwhich,intheopinionoftheDirectors,areachievable.The Directors’ opinion is based on the current economic, financial, market and other conditionsprevailingasatthedateofthisCircular.
13. DOCUMENTS AVAILABLE FOR INSPECTION
CopiesofthefollowingdocumentswillbeavailableforinspectionattheregisteredofficeofGijimaandattheregisteredofficesofRandMerchantBank,whosedetailscanbefoundinthe“Corporateinformation”sectionontheinsidefrontcoverofthisCircular,duringnormalbusinesshoursonaBusinessDayfromthedateofissueofthisCircularuptoandincludingFriday,21June2013:
• theMOIofGijimaanditsmajorsubsidiaries;
• theauditedannualfinancialstatementsofGijimaforthethreefinancialperiodsended30June2010,30June2011and30June2012;
• theunauditedinterimfinancialresultsofGijimaforthesixmonthsended31December2011and31December2012;
• theLetterofUndertaking;
• HeadsofAgreement;
• Bridgeloanfinancingagreement;
• Directors’serviceagreements;
• thesignedindependentreportingaccountants’reportontheproformafinancialinformationofGijima;
• thewrittenconsentsreferredtoinparagraph11above;
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• a signed copy of the circular, dated 10 October 2012, relating to the disposal of MineRPBusinesses;
• copiesofthematerialcontractsrelatingtothedisposalofMineRPBusinesses;and
• asignedcopyofthisCircular.
ForandonbehalfoftheBoard
Gijima Group Limited
EA WiltonInterimChiefExecutiveOfficer
Samrand
3June2013
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ANNExURE 1
TABLE OF ENTITLEMENT
ThenumberofRightsOfferSharestowhichQualifyingShareholderswillbeentitledissetoutbelow,onthebasisthatQualifyingShareholderswillbeentitledto309.80298RightsOfferSharesforevery100SharesheldontheRecordDate.Shareholders’entitlementswillberoundedupordown,asappropriateinaccordancewiththestandardroundingconventionwithfractionsof0.5andabovebeingroundedupandfractionsoflessthan0.5beingroundeddown,andonlywholenumbersofRightsOfferShareswillbeissued,inaccordancewiththeListingsRequirements.
Shares held Entitlement Shares held Entitlement
1 3 41 1272 6 42 1303 9 43 1334 12 44 1365 15 45 1396 19 46 1437 22 47 1468 25 48 1499 28 49 152
10 31 50 15511 34 51 15812 37 52 16113 40 53 16414 43 54 16715 46 55 17016 50 56 17317 53 57 17718 56 58 18019 59 59 18320 62 60 18621 65 61 18922 68 62 19223 71 63 19524 74 64 19825 77 65 20126 81 66 20427 84 67 20828 87 68 21129 90 69 21430 93 70 21731 96 71 22032 99 72 22333 102 73 22634 105 74 22935 108 75 23236 112 76 23537 115 77 23938 118 78 24239 121 79 24540 124 80 24881 251 2100 650682 254 2200 681683 257 2300 712584 260 2400 743585 263 2500 774586 266 2600 805587 270 2700 8365
33
Shares held Entitlement Shares held Entitlement
88 273 2800 867489 276 2900 898490 279 3000 929491 282 3100 960492 285 3200 991493 288 3300 1022394 291 3400 1053395 294 3500 1084396 297 3600 1115397 301 3700 1146398 304 3800 1177399 307 3900 12082
100 310 4000 12392200 620 4100 12702300 929 4200 13012400 1239 4300 13322500 1549 4400 13631600 1859 4500 13941700 2169 4600 14251800 2478 4700 14561900 2788 4800 14871
1000 3098 4900 151801100 3408 5000 154901200 3718 10000 309801300 4027 100000 3098031400 4337 1000000 30980301500 4647 10000000 30 9802981600 49571700 52671800 55761900 58862000 6196
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ANNExURE 2
INFORMATION ON THE UNDERWRITERS
Underwriter 1: Guma Group
TheRightsOfferisunderwrittenbytheGumaGroup,throughthevariouscompaniesthathaveaninterestinGijima.DetailspertainingtotheUnderwriterasrequiredbytheListingsRequirementsaresetoutbelow:
Full legal entity name: GUMA INVESTMENT HOLDINGS (PTY) LTDDirectors: RobertWellingtonGumede
CarlosJorgeHenriquesFerreiraCompany secretary: SQNFinancialServices(BradJames)Date and place of incorporation: 13February1996,SouthAfricaRegistration number: 1996/002438/07Registered office: 7GolfStreet,Linksfield,Johannesburg,2192Auditors: HaigRandallCharteredAccountants(SA)Bankers: StandardBankofSAAuthorised share capital: 400 000ordinarysharesIssued share capital: 18 295ordinaryshares
Full legal entity name: GUMA SUPPORT (PTY) LTDDirectors: RobertWellingtonGumede
CarlosJorgeHenriquesFerreiraCompany secretary: SQNFinancialServices(BradJames)Date and place of incorporation: 1February2002,SouthAfricaRegistration number: 2002/002176/07Registered office: 7GolfStreet,Linksfield,Johannesburg,2192Auditors: HaigRandallCharteredAccountants(SA)Bankers: StandardBankofSAAuthorised share capital: 200ordinarysharesIssued share capital: 200ordinaryshares
Full legal entity name: GUMA TECH (PTY) LTDDirectors: RobertWellingtonGumede
CarlosJorgeHenriquesFerreiraCompany secretary: SQNFinancialServices(BradJames)Date and place of incorporation: 8May1961,SouthAfricaRegistration number: 1961/001624/07Registered office: 7GolfStreet,Linksfield,Johannesburg,2192Auditors: HaigRandallCharteredAccountants(SA)Bankers: StandardBankofSAAuthorised share capital: 200ordinarysharesIssued share capital: 200ordinaryshares
Full legal entity name: GUMA TECH GROUP (PTY) LTDDirectors: RobertWellingtonGumede
CarlosJorgeHenriquesFerreiraCompany secretary: SQNFinancialServices(BradJames)Date and place of incorporation: 20November2000,SouthAfricaRegistration number: 2000/029084/07Registered office: 7GolfStreet,Linksfield,Johannesburg,2192Auditors: HaigRandallCharteredAccountants(SA)Bankers: StandardBankofSAAuthorised share capital: 1000ordinarysharesIssued share capital: 120ordinaryshares
35
Gijima Directors’ interests in the Guma Group
ThefollowingDirectorshaveinterestsinGumaGroup:
• CJHFerreirahasanindirectbeneficialinterestinGumaInvestmentHoldings(Pty)Ltdof1065ordinaryshares,being5.8%(rounded)oftheissuedsharecapitalofGumaGumaInvestmentHoldings(Pty)LtdandanindirectbeneficialinterestinGumaSupport(Pty)Ltd,GumaTech(Pty)LtdandGumaTechGroup(Pty)Ltd,whollyownedsubsidiarycompaniesofGumaInvestmentHoldings(Pty)Ltd,being5.8%(rounded)oftheissuedsharecapitalofGumaSupport(Pty)Ltd,GumaTech(Pty)LtdandGumaTechGroup(Pty)Ltd;and
• RWGumedehasanindirectbeneficialinterestinGumaInvestmentHoldings(Pty)Ltdof17 230ordinaryshares,being94.2%(rounded)oftheissuedsharecapitalofGumaGroupandanindirectbeneficialinterestinGumaSupport(Pty)Ltd,GumaTech(Pty)LtdandGumaTechGroup(Pty)Ltd,whollyownedsubsidiarycompaniesofGumaInvestmentHoldings(Pty)Ltd,being94.2%(rounded)oftheissuedsharecapitalofGumaSupport(Pty)Ltd,GumaTech(Pty)LtdandGumaTechGroup(Pty)Ltd.
Underwriter 2: Futuregrowth
TheRightsOfferisunderwrittenbyFuturegrowth.DetailspertainingtotheUnderwriterasrequiredbytheListingsRequirementsaresetoutbelow:
Full legal entity name: FUTUREGROWTH ASSET MANAGEMENT (PTY) LTDDirectors: PaulRackstraw
AndrewCanterDianeRadleyHenkBeetsKerrinLandMabathoSeeisoMobasheetPatel
Company secretary: OldMutualLifeAssuranceCompanySouthAfrica(OMLACSA)Date and place of incorporation: 23December1996,PretoriaRegistration number: 1996/018222/07Registered office: OMLACSA,MutualPark,JanSmutsDrive,Pinelands,CapeTownAuditors: KPMGBankers: NedbankAuthorised share capital: 1millionordinarysharesofR0.001and9millionAclasssharesof
R0.0001Issued share capital: 1875210Aclassordinarysharesand56490ordinaryshares
NoneoftheDirectorshaveaninterestinFuturegrowthoranyofitssubsidiaries.
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ANNExURE 3
UNAUDITED AND UNREVIEWED PRO FORMA STATEMEMENT OF FINANCIAL POSITION AND STATEMENT OF COMPREHENSIVE INCOME
TheunauditedandunreviewedproformafinancialeffectsaretheresponsibilityoftheDirectorsandhavebeenpreparedforillustrativepurposesonlytoprovideinformationabouthowtheRightsOffermayhaveaffectedGijima’sstatementofcomprehensiveincomehadtheRightsOfferbeenundertakenatthecommencementofthesixmonthsended31December2012,being1July2012,and,inthecaseofGijima’sstatementoffinancialposition,had theRightsOffer beenundertakenon31December2012.Due to theirnature, theunauditedpro formafinancialeffectsmaynotfairlypresentGijima’sfinancialposition,changesinequity,andresultsofoperationsorcashflowsaftertheimplementationoftheRightsOffer.
TheaccountingpoliciesofGijimahavebeenusedinthepreparationoftheunauditedandunreviewedpro formafinancialeffectsoftheRightsOffer.
TheDirectorsareresponsible for thepreparationof theunauditedandunreviewedpro formastatementoffinancialpositionandstatementofcomprehensiveincome.
37
UNADITED PRO FORMA STATEMENT OF COMPREHENSIVE INCOME OF GIJIMA
Unaudited6 months
ended31 Dec 2012
R’000Adjustments
R’000Pro forma
R’000
Continuingoperations –Revenue 911 207 – 911 207Otheroperatingincome 400 – 400
Income 911 607 – 911 607
EBITDA (100 260) (95) (100 355)Depreciationandamortisationcharge (23100) – (23100)
Operating profit/(loss) (123 360) (95) (123 455)Netfinancial(expense)/income (18466) (2265) (20731)
Profit/(Loss) before tax (141826) (2361) (144187)Incometax 35621 661 36282
(Loss)/Earnings for the period from continuing operations (106 205) (1 700) (107 905)
Discontinued operationsProfit from discontinued operation, net of tax 82 471 – 82 471
Netlossbeforereclassificationofcurrencytranslationofnetinvestmentsandprofitondisposalofbusiness (9529) – (9529)Profitondisposalofbusiness 63479 – 63479Reclassificationofcurrencytranslationofnetinvestmentsduetodisposalofbusiness 41332 – 41332Taxeffectonadjustments (12811) – (12811)
(Loss)/Profit for the period (23 734) (1 700) (25 434)
Attributableto:Ownersoftheparent (24411) (1700) (26111)Non-controllinginterest 677 – 677Adjustedfor:Lossattributabletoownersoftheparent (24411) (1700) (26111)Profitondisposalofbusiness (63479) – (63479)Reclassificationofcurrencytranslationonnetinvestments (38836) – (38836)Taxeffectofreclassificationonnetinvestments 24819 – 24819Lossonsaleofproperty,plantandequipment 199 – 199
Taxeffect (56) – (56)
Headline earnings/(loss) (101 764) (1 700) (103 464)
Shares in issue:WeightedaveragenumberofShares(’000) 961565 3000000 3961565DilutedweightedaveragenumberofShares(’000) 961565 3000000 3961565
cents cents centsBasicEPS (2.54) 1.88 (0.66)DilutedEPS (2.54) 1.88 (0.66)BasicEPSrestatedforRightsOffer (1.58) 0.92 (0.66)DilutedEPSrestatedforRightsOffer (1.58) 0.92 (0.66)BasicHEPS (10.58) 7.97 (2.61)DilutedHEPS (10.58) 7.97 (2.61)BasicHEPSrestatedforRightsOffer (6.58) 3.97 (2.61)DilutedHEPSrestatedforRightsOffer (6.58) 3.97 (2.61)
38
UNADITED PRO FORMA STATEMENT OF FINANCIAL POSITION OF GIJIMA
Unaudited 6 months
ended 31 Dec 2012
R’000Adjustments
R’000Pro forma
R’000
ASSETSNon-current assets 401 538 – 401 538
Property,plantandequipment 77013 – 77013Intangibles 131245 – 131245Deferredtaxassets 193280 – 193280
Current assets 550 690 136 953 687 643
Inventories 39195 – 39195Tradeandotherreceivables 421988 – 421988Currenttaxassets 436 – 436Cashandcashequivalents 89071 136953 226024
Total assets 952 228 136 953 1 089 181
EQUITY AND LIABILITIESTotal shareholders’ equity 219 219 136 953 356 172
Equityattributabletoparentshareholders 221552 136953 358505Non-controllinginterest (2333) – (2333)
Non-current liabilities 336 677 – 336 677
Interest-bearingborrowings 256501 – 256501Operatingleaseliability 18697 – 18697Deferredtaxliabilities 61479 – 61479
Current liabilities 396 332 – 396 332
Tradeandotherpayables 365378 – 365378Operatingleaseliability 2066 – 2066Provisions 28888 – 28888
Total equity and liabilities 952 228 136 953 1 089 181
Shares in issueSharesinissueasat31December2012(’000) 961565 3000000 3961565
cents Cents centsNAVpershare(cents) 23.04 (14.0) 9.05TangibleNAVpershare(cents) 0.09 (0.0) 0.06
Notes:
1. The unaudited financial information has been extracted without adjustment from the published unaudited interimresultsofGijimaforthesixmonthsended31December2012.
2. ProformaadjustmentstothestatementofcomprehensiveincomearecalculatedontheassumptionthattheRightsOfferproceedswerereceivedon1July2012.
3. ProformaadjustmentstothestatementoffinancialpositionarecalculatedontheassumptionthattheRightsOfferproceedswerereceivedon31December2012.
4. EstimatedexpensesofR13.07million,relatingtotheRightsOffer,havebeentakenintoaccountindeterminingthefinancialeffects.R12.98millionwasdeductedagainsttheproceedsoftheRightsOfferandthebalancewasexpensed.
5. TheRightsOffersproceeds,netofestimatedexpenses,areassumedtohavebeenusedtorepayaportionoftheSeniorDebenturesinvarioustranches.Theeffectoninterestisasaresultofthespreadchangefrom340and370basispointsto450basispoints,relatingtotheSeniorDebenturesaswellasthepartialrecognitionofthebreakagefeeschargedbytheFunders.
6. Alladjustmentswiththeexceptionoftransactioncostsareexpectedtohaveacontinuingeffect.
7. Astatutorytaxrateof28%hasbeenappliedtotheinterestadjustmenttothestatementofcomprehensiveincome.
8. TheclosingSharepriceasat8April2013wasusedas the “marketvalue” indetermining the factor tobeused inrestatingthebasicEPSandHEPSfortheRightsOfferintermsofIAS33.
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ANNExURE 4
INDEPENDENT REPORTING ACCOUNTANTS’ REASONABLE ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA
FINANCIAL INFORMATION
TheDirectors
GijimaGroupLimited
JupiterBuilding
GijimaOfficePark
47LandsmarksAvenue
Samrand
Centurion
0157
15May2013
Report on the Compilation of pro forma financial information
Wehavecompletedourassuranceengagementtoreport(“Report”)onthecompilationoftheunauditedandunreviewed pro forma earnings and diluted earnings, headline and diluted headline earnings, net assetvalueandnettangibleassetvaluepershareofGijimaGroupLimited(“Gijima”or“theCompany”),proformastatement of financial position of Gijima, the pro forma statement of comprehensive income of Gijima andtherelatednotes, includingareconciliationshowingallof theproformaadjustmentsto thesharecapital,reservesandotherequityitemsrelatingtoGijima, (collectively,“theproformafinancial information”).Thepro formafinancialinformationissetoutintheSalientFeatures,paragraph4andAppendix3oftheCirculartoshareholderstobeissuedbytheCompanyonorabout3June2013(“Circular”):
TheproformafinancialinformationhasbeencompiledbytheDirectorsofGijimatoillustratetheimpactoftheRightsOffermadetoshareholdersintheratioof309.80298newRightsOfferSharesforevery100sharesheld(“Transaction”)asdetailedintheCircularontheCompany’sfinancialpositionasat31December2012andtheCompany’sfinancialperformancefortheperiodended31December2012.
Aspartofthisprocess, theCompany’searnings,dilutedearnings,headlineearningsanddilutedheadlineearningspershare,statementofcomprehensiveincomeandstatementoffinancialpositionhavebeenextractedbytheDirectorsfromtheCompany’spublishedinterimfinancialstatementsfortheperiodended31December2012 (“Published Financial Information”), on which no review report has been published. In addition, theDirectorshavecalculatedthenetassetvalueandnettangibleassetvaluepershareasat31December2012basedonfinancialinformationextractedfromthePublishedFinancialInformation.
Directors’ responsibility for the pro forma financial information
TheDirectorsofGijimaareresponsibleforcompilingtheproformafinancialinformationonthebasisoftheapplicable criteriaasdetailed inparagraphs8.15 to8.33of theListingsRequirementsof theJSELimitedandtheSAICAGuideonProFormaFinancialInformation,revisedandissuedinSeptember2012(“ApplicableCriteria”).
Reporting Accountants’ responsibility
Ourresponsibilityistoexpressanopinionaboutwhethertheproformafinancialinformationhasbeencompiled,in all material respects, by the Directors on the basis of the Applicable Criteria, based on our proceduresperformed.
WeconductedourengagementinaccordancewithInternationalStandardonAssuranceEngagements(ISAE)3420,AssuranceEngagementstoReportontheCompilationofProFormaFinancialInformationIncludedinaProspectus,issuedbytheInternationalAuditingandAssuranceStandardsBoard.Thisstandardrequiresthatthereportingaccountants’complywithethicalrequirementsandplanandperformprocedurestoobtainreasonable assurance about whether the Directors have compiled, in all material respects, the pro formafinancialinformationonthebasisoftheApplicableCriteria.
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Forpurposesofthisengagement,wearenotresponsibleforupdatingorreissuinganyreportsoropinionsonanyPublishedFinancialInformationusedincompilingtheproformafinancialinformation,norhavewe,inthecourseofthisengagement,performedanauditorreviewofthePublishedFinancialInformationusedincompilingtheproformafinancialinformation.
ThepurposeofproformafinancialinformationincludedintheCircularissolelytoillustratetheimpactoftheTransactionontheunadjustedPublishedFinancialInformationasiftheTransactionhadbeenundertakenon1July2012forpurposesoftheproformaearnings,dilutedearnings,headlineanddilutedheadlineearningspershareandtheproformastatementofcomprehensiveincome,andon31December2012forpurposesofthenetassetvalueandnettangibleassetvaluepershareandstatementoffinancialposition.Accordingly,wedonotprovideanyassurancethattheactualoutcomeoftheTransaction,subsequenttoitsimplementation,willbeaspresentedintheproformafinancialinformation.
Areasonableassuranceengagementtoreportonwhethertheproformafinancialinformationhasbeenproperlycompiled,inallmaterialrespects,onthebasisoftheApplicableCriteriainvolvesperformingprocedurestoassesswhether theApplicableCriteriausedby theDirectors in the compilationof thepro formafinancialinformation provide a reasonable basis for presenting the significant effects directly attributable to theTransactionandtoobtainsufficientappropriateevidenceaboutwhether:
• therelatedproformaadjustmentsgiveappropriateeffecttotheApplicableCriteria;and
• theproformafinancialinformationreflectstheproperapplicationofthoseproformaadjustmentstotheunadjustedPublishedFinancialInformation.
The procedures selected depend on the reporting accountants’ judgment, having regard to the reportingaccountants’understandingofthenatureoftheCompany,theTransactioninrespectofwhichtheproformafinancialInformationhasbeencompiledandotherrelevantengagementcircumstances.
Theengagementalsoinvolvesevaluatingtheoverallpresentationoftheproformafinancialinformation.
Webelievethattheevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.
Opinion
Inouropinion,theproformafinancialinformationhasbeencompiled,inallmaterialrespects,onthebasisoftheApplicableCriteria.
Yoursfaithfully
kPMG Inc.
Per Willem PretoriusCharteredAccountants(SA)Director
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ANNExURE 5
TRADING HISTORY OF THE SHARES ON THE JSE
ThetradinghistoryofSharesontheJSE,foreachmonthoverthe12monthspriortotheLastPracticableDate,eachquarteroverthetwoyearspriortosuch12-monthperiodandforeachdayoverthe30daysprecedingtheLastPracticableDate,issetoutbelow:
High (cents)
Low (cents)
Volume traded (Shares)
Value traded(Rand)
Day ended2013/04/10 10 7 2658371 2044032013/04/11 10 8 732447 657102013/04/12 10 10 636554 636552013/04/15 10 9 839972 781242013/04/16 10 9 522854 478402013/04/17 9 8 617041 554432013/04/18 11 8 453996 410322013/04/19 11 9 2869453 2692452013/04/22 10 9 536614 499472013/04/23 10 9 176164 175192013/04/24 10 10 459435 459432013/04/25 10 9 358360 358192013/04/26 10 9 265869 264822013/04/29 10 9 310399 305742013/04/30 10 8 1348387 1260142013/05/02 10 9 657792 597272013/05/03 9 7 4162392 3253502013/05/06 8 7 1255658 941772013/05/07 8 6 969841 696192013/05/08 8 6 1811071 1350552013/05/09 8 7 304487 228002013/05/10 8 7 1434354 103119
Month ended2012/05/31 48 35 8320956 36065552012/06/30 47 35 7850270 31734962012/07/31 48 40 1540797 6429992012/08/31 47 40 13500077 57641622012/09/30 46 40 3592769 15450792012/10/31 45 38 5134953 21139912012/11/30 40 22 11064292 33280102012/12/31 27 22 12330332 30198102013/01/31 36 25 2269030 6745642013/02/28 30 18 5749142 13322792013/03/31 22 15 4518338 8522662013/04/30 14 7 26078578 2524466
Quarter ended2011/09/30 65 47 105700454 183574982011/12/31 73 60 46436310 595900512012/03/31 67 48 59846625 316266432012/06/30 53 35 46243017 362073442012/09/30 48 40 18633643 19673232012/12/31 45 22 28529577 79522402013/03/31 36 15 12536510 84618112013/06/30 14 6 57011502 2859109
Note:TheaboveinformationwassourcedfromI-NetBridge
42
ANNExURE 6
HISTORICAL FINANCIAL INFORMATION OF GIJIMA FOR THE YEARS ENDED 30 JUNE 2010, 30 JUNE 2011 AND 30 JUNE 2012
TheconsolidatedfinancialinformationofGijimaforthethreeperiodsended30June2010,30June2011and30June2012issetoutbelow.TheannualfinancialstatementsofGijimaforthelastthreefinancialperiodshavebeenauditedbyKPMGInc.Anunqualifiedauditopinionwasissuedinallthreeperiods.Theauditedfinancialstatementsforthethreeperiodsended30June2010,30June2011and30June2012willbeavailableforinspectionasdescribedinparagraph13ofthisCircular.
ThisreportonhistoricalfinancialinformationistheresponsibilityoftheDirectorsofGijima.Nomaterialfactorcircumstancehasoccurredbetweenthelatestfinancialyear-endofGijimaandtheLastPracticableDate.
No adjustments concerning the correction of fundamental errors or application of changes in accountingpolicieshavebeenmadeinpreparingthereportofhistoricalfinancialinformation.Non-materialadjustmentshavebeenmadeforcomparativepurposesonly.Therehavebeennosubsidiaries,foreignsubsidiariesincluded,whosefinancialreportswerenotcompletedaccordingtoIFRS.
COMMENTARY ON FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012
Highlights
• New business gained kept revenue flat despite certain key contract terminations• Client centric business model established• Internal optimisation programme completed• Debtors securitisation funding programme extended• Non-core business disposed
GijimaisoneofSouthAfrica’sleadingInformation,CommunicationandTechnology(ICT)ServicesgroupsandhasaLevel2AAAempowermentrating.ItoffersendtoendManagedInfrastructureandProfessionalServicesfromits80pointsofpresencewithinSouthernAfricaanditsoperationsinAustralia,Asia,NorthandSouthAmerica.
The Company’s results for the 12 months ended 30 June 2012 were significantly impacted by the cost ofestablishingitsclientcentricbusinessmodel,thelossoftwosignificantcontractsaswellasthecostofaninternaloptimisationprogramme.
TheCompanyhascompletedtheimplementationofitsnewstructureanditsbusinessmodelhasbeenalteredtoreflectanorganisationwhereclientcentricityistheprimaryfocus.Thispositioningwillallowforimprovedindustryandclientunderstandingtobettertranslatesolutionsthatdifferentiateitfromitspeers.Aspartofthereorganisation,Gijimahasappointedseveralsenior leadingITindustryexecutivestodrivethevariousclientcentricinitiatives.ThecostofestablishingtheclientcentricmodelamountedtoR22.3million,ofwhichR5.4 millionrelatedtoretrenchmentcosts.
A significant contract was lost and a material portion of another key contract was insourced during the12 monthsended30June2012,significantlyimpactingontheCompany’srevenueandprofit.
Gijimahadbeenrenderinghardwarebreak-fixservicestotheSouthAfricanPoliceServices(“SAPS”)since2002.Followingtheexpiryofthelatestthree-yeartermoftheSITA433Contractin2009,GijimaandSITAenteredintoseveralshort-termextensionsthereof,culminatinginamonth-to-monthagreementfortheprovisionoftheservicesfromNovember2011.Theseshort-termarrangementswereinplacewhilstSITAconductedthetenderprocessfortheawardofasubsequentthree-yearcontractforthebreak-fixservicestoSAPS.On25January2012,GijimareceivednotificationfromSITAthatanewserviceproviderwouldtakeoverthemonth-to-monthprovisionof services from1February2012.Gijimahas beenworkingwith theSAPS formanyyears andhasdeliveredinaccordancewiththecontractinquestion.AnewtenderforRemoteInfrastructureManagedSupport isexpectedtobe issuedforSAPSinthenearfuturethatwillreplacethecurrentmonth-to-monthagreement.Gijimawillrespondtothistender.
GijimahasrenderedseveraloutsourceservicestoAbsaoverthepast10yearsandhasdeliveredinaccordancewiththesecontracts.AportionofthedesktopservicescontractwithAbsahasbeeninsourcedbacktoAbsafrom1April2012inaccordancewiththeglobalpolicyofitsmajorshareholder.Gijimawillcontinuetodeliverontheremainderofthiscontract.Almost180employees,specificallydedicatedtoworkingontheinsourcedpartofthecontract,havebeentransitionedbacktoAbsaaspermanentemployeesofthebank.GijimacontinuestoworkwithAbsainotherareasandhasalreadybeeninvitedtotenderfornewbusiness.
43
Thecostsofrationalisingthebusinessinlinewiththesecontractterminationswereborneintheyearended30June2012.
GijimalaunchedaninternaloptimisationprogrammeinFebruary2012,aimedatimprovingtheCompany’sefficiencyandreducingitscostbase.Peopleinitiativeswereprioritisedtofirstlyaddressthecontractorbaseof the Company, and subsequently on reducing the number of its permanent employees. The Company’sheadcount,oncetheprogrammehasbeencompleted,isexpectedtoreducebysome700employeesfromthe3902employeesatthestartofthefinancialyear.Ofthisreduction,approximately200employeesreducedwere throughretrenchment,with thebalanceof the reduction coming from theAbsa insource, contractorterminationsandnatural attrition.The cost of thepeople optimisationofR38.3million is reflected in theresultsfortheyearended30June2012.Theoptimisationprogrammealsofocusedonnon-peoplecostsavinginitiatives,addressingexpendituresarounditsinternalInformationManagementandSupplyChaindisciplines,aswellasotheroperatingexpenses.
Despitethesignificantcontractterminationsduringthefinancialyear,theGroup’srevenueendedthe12 monthsto30June2012largelyinlinewiththerevenuereportedinthepreviousfinancialyearended30June2011.Therevenuelosthasbeenmadeupbygainsinotherareas.Earningsbeforeinterest,tax,depreciationandamortisationendedtheyearatalossofR517k.
TheProfessionalServicesDivisionperformedwellandrecordedrevenuegrowthof11.5%onthepreviousyear.AprofitofR25.2millionwasachieved,comparedtolastyear’sreportedlossofR6.9million,apositiveturn-aroundofR32.1million.TheSystemsIntegrationunithasdeliveredamuchimprovedperformancefromlastyearandissuccessfullydeployingsomesubstantialprojects.TheperformanceoftheERPbusinesswasinlinewiththatofthepreviousfinancialyearandthepipelineforthislineofbusinessremainshealthy.Theminingtechnicalsolutionsbusinessproducedverystrongresults,withamarkedimprovementinthetopandbottomline.ItsindustryleadingMineRPsetofproductscontinuestogainglobalmarketshare.Gijima’strainingandplacementbusinessalsoproducedconsiderablerevenueandprofitgrowth.
RevenuefortheManagedServicesDivisionwassignificantlydownfortheperiodwithprofitdown92.6%.Thisdivisionwasthemostsignificantlyimpactedbythetwocontractlosses.TheUnifiedCommunications,DataCentreandSecuritybusinesseshadarelativelymutedperformanceduetolowsalesvolumes.TheinvestmentcostofourexpansionintothedatacentreEnterpriseSystemManagementsoftwaremarketfurtherreducedprofitability for the division. Revenue and profit of the Distributed Computing business were significantlyimpacted by the contracted losses. Gijima continues to expand its mobility offerings and although thecontribution fromthisarea is still smallatpresent,weanticipate that thiswillbeanareaof considerablegrowthgoingforward.
TheGroupincurredanon-cashforeignexchangeratetranslationlossofR11.6millionduringtheperiodwhichispredominantlyduetotheaccountingconsolidationofitsforeignoperations.Depreciationandamortisationwas marginally higher than the prior year as capital expenditure remained largely unchanged. The netfinancialexpenseendedtheperiodat6.5%lessduetolowerborrowingcosts.
Gijima’seffectivetaxrateof29.0%isinlinewiththestatutorynorm.ThedeferredtaxassetofR158.4millionincludesacalculatedtaxlossofR88.3million.
TheGroup’snetcashbalancesincreasedfromthepreviousfinancialyeartoR117.0million.Despitesignificantcostsincurredtoestablishthenewbusinessmodelandtooptimisethebusiness,GijimageneratedR83.9millionincashfromoperationsfortheyear,ofwhichR47.7millionarosefrompositiveworkingcapitalmanagement.TheGrouphasinadditionsecuredtheextensionofitslong-termdebtorssecuritisationfundingprogramme.InvestorsinR150millionClassA2secureddebenturesthatmaturedon30June2012havesubscribedforanewissueofR150millionclassAdebentureswithadurationoffiveyearsandamaturitydateof30June2017.TheR150millionclassA1debentures,whicharescheduledtomatureon31June2015,remaininissueandareunaffectedbytheextensionoftheprogrammeforafurtherfiveyearperiod.
Gijima’sdebttoequityratioendedtheyearat133%.Theratioisexpectedtoimprovetowellbelow100%afterconclusionofthedisposaloftheMineRPbusiness.Thecurrentratiomeasuresat1.4times.
Dividends
Nodividendhasbeendeclaredfortheperiod.TheresumptionofpaymentofdividendswillbereviewedbytheBoardinfuture,basedontheGroup’stradingatthetime.
Disposalofnon-corebusinesspost-balancesheetdate
Gijimahas concluded the termsof agreements relating to thepotentialdisposal of theCompany’sminingtechnologyandconsultingbusinesses(MineRP),toaconsortiumledbyRMBCorvest(Pty)Ltd,asubsidiaryofRMBPrivateEquity(Pty)Ltd.MineRPwouldbehousedinanewlyincorporatedentity,OakleafInvestmentHoldings89(Pty)Ltd.Theagreementswillbesubjecttoconditionsprecedent,includingtheapprovaloftheCompetitionAuthorities.
44
TheBoardhasidentifiedMineRPasnon-coreand,asMineRPrequiresconsiderableinvestmenttomaintainitscompetitiveposition,hasresolvedtodisposethereofinordertopreserveMineRP’svalueandrealisemaximumvalueforGijimashareholders
Prospects
GijimahasinvestedtopositiontheGroupforstability,consolidationandgrowth.Newgenerationservicesintheareasofmobilityandcloudarestartingtobearfruit.Gijima’smobilityframework,whichincludesMobileDeviceManagement,applicationdevelopmentalongwiththeabilitytointegrateintoexistinglegacyplatformsiscomplete,andthemarkethasbeguntoshowgood interest in thesolutions.Gijima’send-to-endsecurityofferingsarebeingpositioned to target thesignificantpain-pointsbeing feltby largeorganisations today,particularlyinthefinancialservicesindustry.Thesenewgenerationserviceswillalsoprovideusefulimpetusto Gijima’s traditional strength in the infrastructure space. Despite the challenges in the 2012 financialyear,managementareconfidentthattheremedialactionstakenhavepositionedtheCompanyforasolidandprofitableperformanceinthe2013financialyear.
GIJIMA GROUP LIMITEDStatement of comprehensive income for the year ended 30 June 2012
Notes2012
R’0002011
R’0002010
R’000
Revenue 2.1 2 530 068 2566582 2943417Otheroperatingincome 9 708 3553 3913
Income 2 539 776 2570135 2947330Employeebenefitsexpense 2.12 (1 469 155) (1401330) (1436864)Operatingcosts (1 037 609) (989795) (1210115)Foreigncurrency(losses)/gains 2.6 (12 230) 3343 (1409)Reversalofimpairment – – –Otherexpenses (21 299) (394160) (13268)
(Loss)/Earnings before interest, tax, depreciation and amortisation charges (EBITDA) (517) (211807) 285674
Normal(loss)/earningsbeforeinterest,tax,depreciationandamortisation(EBITDA) (517) 162140 285674Settlementexpense 2.13 – (373947) –
Depreciationandamortisationcharges (48 576) (46358) (44686)
Operating (loss)/profit before financing costs 2 (49 093) (258165) 240988
Financialincome 3.1 7 233 8363 22609Financialexpenses 3.2 (29 423) (32099) (34375)
Netfinancial(expense)/income 3 (22 190) (23736) (11766)
(Loss)/Profit before tax (71 283) (281901) 229222Incometax 4 20 693 73153 (75059)
(Loss)/Profit for the year (50 590) (208748) 154163
Attributableto:Ownersoftheparent (50 785) (209990) 158610Non-controllinginterest 14 195 1242 (4447)
(50 590) (208748) 154163
Lossperordinaryshare(cents)–Basic 5 (5.28) (21.84) 16.37–Diluted 5 (5.28) (21.76) 16.31
Refertonote5forheadlinelosspershare.
45
GIJIMA GROUP LIMITEDStatement of comprehensive income for the year ended 30 June 2012
Notes2012
R’0002011
R’0002010
R’000
(Loss)/Profit for the year (50 590) (208748) 154163Othercomprehensiveincome/(loss)
Currencytranslationdifferencesforforeignoperations 2.6 2 844 (29194) 9812Currencytranslationonthenetinvestmentsforforeignoperations 2.6 11 496 24638 (11169)Revaluationoflandandbuildings 6 3 839 – –Taxeffectonothercomprehensiveincome/(loss) 4 (34) (41) (55)
Othercomprehensiveincome/(loss)fortheyear,netofincometax 18 145 (4597) (1412)
Total comprehensive (loss)/income for the year (32 445) (213345) 152751
Attributableto:
Ownersoftheparent (32 640) (214587) 157198Non-controllinginterest 195 1242 (4447)
Total comprehensive (loss)/income for the year (32 445) (213345) 152751
46
GIJIMA GROUP LIMITEDStatement of financial position at 30 June 2012
Notes2012
R’0002011
R’0002010
R’000
AssetsNon-current assets 408 276 387227 300776
Property,plantandequipment 6 89 828 81621 91334Investmentinsubsidiaries 7 – – –Intangibles 9 141 799 154163 138285Tradeandotherreceivables 12 18 213 17301 –Deferredtaxassets 10 158 436 134142 71157
Current assets 696 535 825210 1313751
Inventories 11 34 459 26506 42554Tradeandotherreceivables 12 539 887 693666 927944Currenttaxassets 919 16211 184Cashandcashequivalents 13 121 270 88827 343069
Total assets 1 104 811 1212437 1614527
Equity and liabilities
Total shareholders’ equity 229 892 262337 497173
Equityattributabletoparentshareholders 232 902 265542 501620Non-controllinginterest 14 (3 010) (3205) (4447)
Non-current liabilities 371 887 237403 416222
Interest-bearingborrowings 15 301 980 152729 300706Operatingleaseliability 19 336 23778 27821Amountsduetovendors 16 – 2463 6065Deferredtaxliabilities 10 50 571 58433 81630
Current liabilities 503 032 712697 701132
Tradeandotherpayables 17 464 359 552194 687095Short-termborrowings 18 – 150000 –Operatingleaseliability 4 451 3607 –Provisions 19 28 020 2931 6119Bankoverdrafts 13 4 235 2352 3152Amountsduetovendors 16 1 967 1613 2039Currenttaxliabilities – – 2727
Total equity and liabilities 1 104 811 1212437 1614527
cents cents cents
NAVpershare(cents) 24.22 27.62 52.17TangibleNAVpershare(cents) 9.47 11.58 37.79
47
GIJIMA GROUP LIMITEDStatement of cash flows for the year ended 30 June 2012
Notes2012
R’0002011
R’0002010
R’000
Cash flows from operating activitiesCashgeneratedfrom/(usedin)operations 26.1 83 605 (121268) 84224Interestreceived 26.2 7 214 9316 22161Interestpaid 26.3 (20 904) (34943) (37746)Dividendpaid – (24039) (73105)Dividendreceived – – –Taxrefund/(paid) 26.4 3 829 (35400) (28697)
Netcashgeneratedfrom/(usedin)operatingactivities 73 744 (206334) (33163)
Cash flows from investing activities
Purchaseofintangibleassets (7 577) (15242) (7114)Purchaseofproperty,plantandequipment (33 514) (21853) (29436)Repurchaseofshares 7 – – –Businessacquired 8 – (10000) (4900)Paymentofamountsduetovendors (1 686) (2090) –Proceedsfromthesaleofintangiblesandproperty,plantandequipment 342 54 54
Netcashusedininvestingactivities (42 435) (49131) (41396)
Cash flows from financing activities
Repaymentsofshort-termborrowings (150 749) (1676) (201003)Repurchaseofshares – – –Sharepremium – – –Increaseinfinanceliability – 3699 –Increaseininterest-bearingborrowings 150 000 – 100000Repaymentofinterest-bearingborrowings – – (256000)Ownsharesacquired – – (12912)Proceedsfrominterest-bearingborrowings – – 300000
Netcash(usedin)/generatedfromfinancingactivities (749) 2023 (69915)
Net increase/(decrease) in cash and cash equivalents 30 560 (253442) (144474)Cash and cash equivalents at the beginning of the year 86 475 339917 484391
Cash and cash equivalents at the end of the year 13 117 035 86475 339917
48
GIJ
IMA
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50
Segment information
Group
Gijima has a diversified and comprehensive range of ICT consulting and delivering capabilities. Togetherwithourin-depthknowledgeofsystemsintegration,theGrouphasasolidfoundationfromwhichtodeliververticallyintegrated,industryfocusedsolutionsforourclientsacrossabroadspectrumofindustries.Thesecomprehensive and integrated industry solutions are delivered by the Group’s two reportable segments,ProfessionalServicesandManagedServices,whicharetheGroup’sstrategicbusinessunits.
Foreachofthestrategicbusinessunits,theGroup’sCEO(thechiefoperatingdecision-makeroftheGroup)reviewsinternalmanagementreportsonamonthlybasis.
ProfessionalServicesfocusesonprofessionalconsultingandprojectservicesasfollows:
– applicationconsultingandcustomisation;
– customapplicationsdevelopment;
– applicationsmanagementoutsourcing;
– systemintegration;
– informationsystemconsulting;
– ITtrainingandeducation;and
– industry-specifictechnicalsolutions.
ManagedServicesfocusesoninfrastructureservicesandsolutionsinthefollowingdisciplines:
– remotemanagedservicesencompassingtheICTassetsintheentireenterprise;
– secure,peer-to-peer,unifiedcommunicationservices;
– advancedenterprisecomputingservicesincludingprocessing,storagemanagementandhostingservices;
– Applicationshostingandsupport;and
– distributedfieldservices,incorporatingdesktop,outputmanagement,mobileservices,specialisedequipmentlikeATMsphysicalsecuritymaintenanceandlogisticalservices.
Performanceismeasuredbasedonsegmentprofitbeforeincometax,asincludedintheinternalmanagementreportsthatarereviewedbytheGroup’sCEO.Segmentprofitisusedtomeasureperformanceasmanagementbelievesthatsuchinformationisthemostrelevantinevaluatingtheresultsofcertainsegmentsrelativetootherentitiesthatoperatewithintheseindustries.
Informationregardingtheresultsofeachreportablesegmentisincludedbelow:
2012 2011
RevenueR’000
Segment results
R’000Revenue
R’000
SegmentresultsR’000
ProfessionalServices 1 059 048 25 209 949810 (6911)
ManagedServices 1 498 102 10 692 1648085 144964
2 557 150 35 901 2597895 138053
Internalrevenueadjustment (27 082) (31313)
2 530 068 2566582
Unallocated items:
Othercorporateexpenses (52 725) (24199)Lossonsaleofproperty,plantandequipmentandintangibleassets (168) (1415)Settlementexpense – (373947)Retrenchmentcost (43 678) –
Exchangeratelossesontransactions 11 577 3343
Operatingloss (49 093) (258165)Financialincome 7 233 8363
Financialexpenses (29 423) (32099)
Lossbeforetax (71 283) (281901)
Incometax 20 693 73153
Lossfortheyear (50 590) (208748)
51
Thereportablesegmentsoperateinthefollowingindustries:
2012Revenue
R’000
2011Revenue
R’000
Mining 571 207 561265Manufacturing 390 327 380962Telecommunications 24 150 70194Financialservices 500 199 503192Retailandhospitality 51 224 65520Publicsector 893 426 914251Other 99 535 71198
2 530 068 2566582
Inpresentinginformationonthebasisofgeographicalsegments,segmentrevenueisbasedonthegeographicallocationofouroffices.
Geographical information
2012 2011
RevenueR’000
Operating profitR’000
RevenueR’000
OperatingprofitR’000
SouthernAfrica 2 415 505 (35 665) 2462803 (298275)Foreign 114 563 (13 428) 103779 40110
2 530 068 (49 093) 2566582 (258165)
Major customers
RevenuesfromtwocustomersthatrepresentsapproximatelyR545million(2011:R673million)oftheGroup’stotalrevenuesofwhichR295million(2011:R338million)relatestothepublicsectorandR249million(2011:R325million)tothefinancialservicessector.
Operating loss before financing costs
Operatingprofitbeforefinancingcostsisarrivedataftertakingintoaccount:
Group2012
R’0002011
R’000
2.1 Revenue from
–Saleofgoods 464 714 409741–Renderingofservices 2 065 354 2156841
2 530 068 2566582
Revenuefrom(%)
–Saleofgoods 18 16–Renderingofservices 82 84
100 100
2.2 Auditors’ remuneration
–Auditfees 5 035 7132–Otherservices 682 96
5 717 7228
52
Group2012
R’0002011
R’000
2.3 Depreciation: property, plant and equipment (refer note 6)
–Buildings-owned 106 183–Computerequipment–owned 21 834 25130–Furnitureandfittings–owned 4 647 4047–Officeequipment–owned 1 717 1792–Motorvehicles–owned 331 214
28 635 31366
2.4 Amortisation: intangible assets (refer note 9)
–Amortisationoftradename 2 336 2337–Amortisationofsoftware 15 022 12009–Amortisationofclientcontract 2 583 646
19 941 14992
2.5 Loss on disposal of intangibles and property, plant and equipment 168 1415
2.6 Foreign exchange losses
Lossonforeignexchangecontracts 653 121Loss/(Gain)onforeignexchangetransactions 11 577 (3464)
Total foreign exchange losses/(gains) 12 230 (3343)
Theforeignexchangelosses/(gains)resultedmainlyfromtherevaluationofforeigntradereceivableandpayablebalancesandintra-grouploanaccountsdenominatedinAustraliandollars,Canadiandollars,USdollars,Chileanpeso,TurkishliraandEuro’stospotrate(refernote27).
Foreign exchange gains/(losses) recognised in other comprehensive income
Currencytranslationdifferencesforforeignoperations 2 844 (29194)Currencytranslationonnetinvestmentsforforeignoperations 11 496 24638Incometaxexpenseoncurrencytranslationsrecognisedinothercomprehensive(loss)/income (34) (41)
14 306 (4597)
ThecurrentaccountingpolicyincorporatestheeffectsofIAS21.15(theeffectsofchangesinforeignexchangerates).TheeffectisthattheGroup’sprofitsarenolongerimpactedbyexchangerategainsandlossesontranslationoninter-grouploanaccountsdenominatedinforeigncurrencies.Thesetranslationdifferencesare,from1July2009,recordedintheCompany’sstatementofcomprehensiveincome.Thistreatmentfollowsmanagement’sassessmentandclassificationoftheunderlyinginter-grouploanaccountsaspartofGijima’snetinvestmentintherelevantnon-tradingforeignoperations.
Attributableto:
Ownersoftheparent 14 306 (4597)Non-controllinginterest – –
Foreign exchange gains/(losses) recognised in other comprehensive income, net of income tax 14 306 (4597)
53
Group Company2012
R’0002011
R’0002012
R’0002011
R’000
2.7 Impairment of non-current assets and interest in subsidiary company
Chargesfortheyear
–Impairmentofloansreceivable(note7) – – 78 515 248039
– – 78 515 248039
2.8 Impairment of current assets
Chargesfortheyear–Increase/(Decrease)inprovisionforimpairmentoftrade
receivables(refernote12) 142 (15641)–Decreaseinprovisionforimpairmentofinventory(refernote11) (2 401) (216)
(2 259) (15857)
2.9 Fees for services
–Secretarial 180 180–Professional 15 234 11390
15 414 11570
2.10 Rentals in respect of operating leases
–Landandbuildings 65 692 62284–Equipment 28 080 27779–Officeequipment 870 1018–Computerequipmentandsoftware 5 928 5438–Vehicles 6 355 4788
106 925 101307
54
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56
Prescribed officer’s
Theaboveprescribedofficersareresponsibleforexercisinggeneralexecutivecontroloverandmanagementofthewhole,orsignificantportionofthebusiness.
Thetopthreeearnersare: R’000
TKopolo 3132JBogoshi 3287CJHFereirra 2988
Directors’ service contracts
Noneoftheservicecontractsoftheexecutiveornon-executiveDirectorscontainsnoticeperiodsinexcessofoneyear,orprovideforpredeterminedcompensationonterminationexceedingoneyear’ssalaryandbenefitsinkind.
Directors’ and prescribed officers’ interest in Share Linked Bonus Scheme
Ofthe19720000notionalsharesatyear-end,directorsandprescribedofficerswereawarded4500000notionalsharesasat30June2012.Allofthenotionalshareshavevestedatyear-end.
Group2012
R’0002011
R’000
2.12 Employeebenefitsexpense
Salariesandwages 1 365 534 1303540
–Permanent 1 079 187 1028019–Contractors 286 347 275521
Pensioncosts(refernote23) 103 621 97790
1 469 155 1401330
Theshare-basedpaymentexpenseisincludedinsalariesandwagesofpermanentemployees(refernote14).
Number of employees employed by reportable segment at 30 June
ProfessionalServices 1 233 1514ManagedServices 1 328 1995Corporateandother 594 393
3 155 3902
2.13 Dispute settlement
ThefollowingmaterialitemsrelatetocostsincurredbyGijimaaspartofasettlementagreementbetweenGijimaHoldings(Pty)Ltd,awhollyownedsubsidiaryofGijimaGroupLtdandtheDepartmentofHomeAffairs(DHA)regardingtheWhoAmIOnline(WAIO)contract.Theimpactofthedirectandrelatedsettlementexpenseshavebeenincludedintheoperatinglossfortheyearended30June2011.
Settlementexpenses – (357740)Settlement-relatedexpenses – (16207)
Grosssettlementcost – (373947)Deferredtax – 104705
Netoftax – (269242)
57
Group2012
R’0002011
R’000
3. NET FINANCIAL ExPENSE
3.1 Financial income
Interestincomeonbankdeposits 6 811 8274–Fairvalueadjustment 422 –
7 233 8363
3.2 Financial expenses
–Interestexpenseondebtorssecuritisationmeasuredatamortisedcost (28 055) (28767)
–Fairvalueadjustment – 8338–Interestexpenseonlong-termloansmeasuredatamortisedcost (1 099) (738)–Interestexpenseonoverdraft (269) (673)–Other – (10259)
(29 423) (32099)
4. INCOME TAx
South African tax (21 595) (80190)
Currenttax 8 302 8078
–currentyear 8 302 3479–prioryears – (168)–abnormaltax – 4767
Deferredtax(refernote10) (29 897) (88333)
–currentyear (29 909) (89375)–prioryears 12 959–changeintaxrate – 83
Withholdingtax – 65
–writtenoff – 65
Foreign tax 822 4577
Currenttax 3 114 6003
–currentyear 3 114 6003
Deferredtax(refernote10) (2 292) (1426)
–currentyear (2 292) (1426)
Secondary Tax on Companies 80 2460
(20 693) (73153)
58
Income tax recognised in other comprehensive income
Group
Before income tax
R’000
2012 Income tax
expenseR’000
Net of income tax
R’000
Before income tax
R’000
2011 Income tax
expenseR’000
Net of income tax
R’000
Currencytranslationdifferencesforforeignoperations 2 844 (34) 2 810 (29194) (41) (29235)Currencytranslationonnetinvestmentsforforeignoperations 11 496 – 11 496 24638 – 24638
14 340 (34) 14 306 (4556) (41) (4597)
Reconciliation of the tax rateLossbeforetax (71 283) (281901)
SouthAfricanstatutorytaxrate(%) 28.00 28.00Disallowableexpenditure(%) (3.58) (3.86)SecondaryTaxonCompanies(%) (0.11) (0.89)Incomenotsubjecttotax(%) 4.35 4.29Deferredtaxassetderecognised(currentyearmovement)(%) 0.39 –Deferredtaxassetrecognised(%) – 0.41Abnormaltax(%) – (1.69)Prioryearunderprovision(%) (0.02) (0.28)Withholdingtaxeswrittenoff(%) – (0.02)
Effectivetaxrate(%) 29.03 25.96
ThesubsidiaryGijimaInformationTechnologyServices(Pty)LtdoperatesinataxjurisdictioninNamibiawithhighertaxrates.
Group
2012 2011
5. LOSS PER SHARE
Basiclosspershareiscalculatedbydividingtheearningsattributabletoequityholdersoftheparentbytheweightedaveragenumberofordinarysharesinissueduringtheyear.BasiclosspershareLossattributabletoownersoftheparent(R’000) (50 785) (209990)
Weightedaveragenumberofordinarysharesinissue(thousands) 961 565 961565Basiclosspershare(cents) (5.28) (21.84)DilutedlosspershareLossattributabletoownersoftheparentascalculatedabove(R’000) (50 785) (209990)
Weightedaveragenumberofordinarysharesfordilutedearningspershare(thousands) 961 565 965167
Dilutedlosspershare(cents) (5.28) (21.76)
Theweightedaveragenumberofshareswascalculatedafteradjustmentsfortheeffectsofallpotentiallydilutiveordinarysharesofnil(2011:3602).
59
Group
2012 2011
Weightedaveragenumberofordinaryshares(basic) 961 565 961565Effectoffifthnotionalshareissues(refernote14) – 3602
Weightedaveragenumberofordinaryshares(diluted) 961 565 965167
In2012therewerenodilutiveshares.Headline loss per shareReconciliationbetweenearningsandheadlineearnings:For the year ended 30 JuneNetlossattributabletoownersoftheparent (50 785) (209990)AdjustmentsLossonsaleofproperty,plantandequipment(netoftaxeffect) 121 1019
Headlineloss (50 664) (208971)
Headlinelossperordinaryshare(cents) (5.27) (21.73)Dilutedheadlinelossperordinaryshare(cents) (5.27) (21.65)
6. PROPERTY, PLANT AND EQUIPMENT
Group
TotalR’000
Land and buildings
R’000
Computer equipment
R’000
Furniture and fittings
R’000
Office equipment
R’000Vehicles
R’000
Year ended 30 June 2012–Carryingamountat
1July2011 81 621 8 769 45 794 21 258 4 952 848–Additions 33 514 – 28 288 2 220 2 676 330–Revaluationofasset 3 839 3 839 – – – ––Disposalsand
adjustments (511) – (513) (5) 13 (6)–Depreciationcharge (28 635) (107) (21 833) (4 647) (1 717) (331)
–Carryingamountat30June2012 89 828 12 501 51 736 18 826 5 924 841
At30June2012–Cost 324 280 3 457 236 671 57 683 23 468 3 001–Revaluation 9 509 9 509 – – – ––Accumulated
depreciationandaccumulatedimpairmentlosses (243 961) (465) (184 935) (38 857) (17 544) (2 160)
–Closingcarryingamount 89 828 12 501 51 736 18 826 5 924 841
Leasedassetsincludedabovecomprise:Cost 10 080 – 9 973 – – 107Accumulateddepreciationandaccumulatedimpairmentlosses (4 503) – (4 399) – – (104)
Carryingamount 5 577 – 5 574 – – 3
Landandbuildingsconsistof:
Office Block situated on stand 7565, 2 Bismark Street, Windhoek, Namibia. The land and buildings,acquiredinJanuary2003,atapurchasepriceofR3.8million(includingimprovements)wererevaluedby anindependentqualifiedPropertyValuer.
A revaluation was carried out for the year ended 30 June 2012. Land and buildings were revaluedto N$12.5 million(R12.5million).
Therevaluationwasperformedusingthediscountedcashflowmethodusedwasbasedonthefuturenetrentalincomewhichcanbegeneratedbytheproperty,whichiscapitalisedatapresentmarketrelatedrate.
60
Theoffice blockwas valuedbasedonmarket related rental per squaremetre taking into account theareaofofficespace,storagespaceandparking,resulting inamarketrelatedrentalafterexpensesofR0.77 million.Thiswascapitalisedat9%.
ThecarryingamountthatwouldhavebeenrecognisedhadtheassetsbeenmeasuredunderthecostmodelwouldhavebeenR2.9million(2011:R3.1million).
Erf7565,BismarkStreet,WindhoekispledgedassecurityforanamountofN$5million(R5million).
TotalR’000
Land and buildings
R’000
Computer equipment
R’000
Furniture and
fittingsR’000
Office equipment
R’000Vehicles
R’000
Year ended 30 June 2011–Carryingamountat
1July2010 91334 8952 57229 18262 5950 941–Additions 21853 – 13923 7067 744 119–Businessacquired 106 – 106 – – ––Disposalsand
adjustments (306) – (334) (24) 50 2–Depreciationcharge (31366) (183) (25130) (4047) (1792) (214)
–Carryingamountat30June2011 81621 8769 45794 21258 4952 848
At30June2011–Cost 293975 3457 208896 57474 21322 2826–Revaluation 5670 5670 – – – ––Accumulateddepreciation
andaccumulatedimpairmentlosses (218024) (358) (163102) (36216) (16370) (1978)
–Closingcarryingamount 81621 8769 45794 21258 4952 848
Leasedassetsincludedabovecomprise:Cost 10890 – 10107 – – 783Accumulateddepreciationandaccumulatedimpairmentlosses (3998) – (3272) – – (726)
Carryingamount 6892 – 6835 – – 57
Company
2012R’000
2011R’000
7. INVESTMENT IN SUBSIDIARY COMPANY
Unlisted
Sharesatcostlessimpairmentlosses – –LoansowingbyGijimaHoldings(Pty)Ltd 787 166 663944
787 166 663944Impairmentofloansreceivable (708 600) (630085)
Netinterestinsubsidiarycompany 78 566 33859Sharebuyback – (11005)
78 566 22854
Gijimahassubordinatedallitsrights,titleandinterestinclaimsduetoitbyGijimaHoldings,untilsuchtimeas the subsidiary’s assets, fairlyvalued exceed its liabilities.Asa result of theseagreements therecoverabilityoftheloanreflectedhasbeenimpaireduntilsuchtimeasitisreasonablycertainthattheoutstandingbalancecanberecovered.TheloantoGijimaHoldingsisinterest-free,unsecuredandwithnorepaymentterms.
AdetailedlistofsubsidiarycompaniesisavailableforinspectionattheregisteredofficeoftheCompany.
61
8. BUSINESS ESTABLISHMENT
Year ended 30 June 2012The MineRP division in Canada expanded its operations to Turkey and Chile. Two new subsidiaries,MineRPEurasiaandMineRPLatinAmericawasestablished.Thesubsidiariesoperationswillinvolveprovidingminingconsultingservicesandsoftware.EstablishmentoftheoperationswillenabletheGrouptoexpanditsinternationaloperationsandmarketshareminingconsultingservicesandsoftwareinEurope/AsiaandLatinAmerica.
2012
Group
MineRP Eurasia
MineRP Latin
America
Dateofestablishment31August
201130May
2012Groupshareholdingacquired 99.99% 99%RevenuecontributiontoGroupsresults R8.6million R0.750millionTheinvestmentintherespectiveentitieswasfinancedbyMineRPCanadaInc.Theinvestmentcomprisedofthefollowingcapitalcontributions:Sharecapital 25Turkishlira 10000pesoSharepremium 7975Turkish
lira990000peso
9. INTANGIBLE ASSETS
Group
Total Goodwill Trade name SoftwareClient
contractR’000 R’000 R’000 R’000 R’000
Year ended 30 June 2012Balance at 1 July 2011 154 163 71 354 37 381 33 157 12 271Additions 7 577 – – 7 577 –Amortisation charge (19 941) – (2 336) (15 022) (2 583)
Balance at 30 June 2012 141 799 71 354 35 045 25 712 9 688At 30 June 2012Cost 262 683 108 096 46 727 94 943 12 917Accumulated amortisation and impairment (120 884) (36 742) (11 682) (69 231) (3 229)Carrying amount 141 799 71 354 35 045 25 712 9 688Year ended 30 June 2011Balanceat1July2010 138285 67481 39717 31087 –Additions 15242 – – 15242 –Businessacquired 16790 3873 – – 12917Disposals (1162) – – (1162) –Amortisationcharge (14992) – (2336) (12010) (646)Balanceat30June2011 154163 71354 37381 33157 12271At30June2011Cost 255106 108096 46727 87366 12917Accumulatedamortisationandimpairment (100943) (36742) (9346) (54209) (646)Carryingamount 154163 71354 37381 33157 12271
ThegoodwillandtradenamethatarosefromthemergerwiththeinformationtechnologybusinessesofGijimainMay2005wassubjecttoanimpairmenttestatyear-endbasedonthecashgeneratingcapabilityofGijimaHoldings(Pty)Ltd,theprincipalacquirer.Therecoverableamountoftheunitwasdeterminedtobehigherthanitscarryingamountandthereforenoimpairmentchargeemanated.
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GoodwillofR49.3millionarosefromtheacquisitionoftheinformationtechnologybusinessesofGijima.TheR49.3millionrepresentsthecostoftheacquisitionoverthefairvalueofthenetassetsacquired,afterdeductingthevalueofclientcontracts,adjustedfortheimpactofthedeferredtaximplicationsofIAS12andthevalueofthetradename.
ThecashgeneratingcapabilityofGijimaHoldings(Pty)Ltdwasdeterminedbydiscountingthefuturecashflowsgeneratedfromcontinuingoperations.
Thecashflowprojectionswerebasedonthe2012/2013budgetandthefouryearbusinessplanthereafter.A weighted average cost of capital rate of 11.70% per annum was used in discounting the projectedcash flows.
Thevalueofthetradenamehasbeenseparatelydisclosedandwasvaluedusingtherelief-from-royaltymethodology. This approach recognises that intangible assets have value insofar as the use of theseintangibleassetsgiverisetoanincomestream.Thevalueofthesefutureincomestreamsisbasedontheincomeproducingcapabilityoftheintangibleasset,withtheaftertaxnetpresentvalueoftheseincomestreamsaggregatedtodeterminethecurrenteconomicworthoftheintangibleasset.
FactorsspecifictotheGijimatradenamewereconsideredindeterminingareasonableroyaltyrateintheindicativetradenamevaluation.Aroyaltyrateof2.0%wasdeemedappropriatefortheindicativeGijimatradenamevaluation.Theusefullifeofthetradenameisestimatedtobe20yearsandisamortisedoverthisperiod.Theusefullifeofthetradenameisassessedonanannualbasisbasedonthemostcurrentinformationavailable.
10. DEFERRED TAx
Group
2012R’000
2011R’000
Balanceat1July 75 709 (10473)Currentyear 32 201 90801Underprovisionprioryears (11) (1043)Deferredtaxraisedagainstgoodwill – (3617)Currencytranslationdifferences(recogniseddirectlyinothercomprehensiveincome) (34) 41
Balanceat30June 107 865 75709
63
AssetsR’000
2012Liabilities
R’000TotalR’000
AssetsR’000
2011Liabilities
R’000TotalR’000
Thedeferredtaxbalances,allcalculatedat28%,comprisethefollowing:Capitalallowances – (4 673) (4 673) – (4338) (4338)Provisionsandotherallowances 55 402 – 55 402 48574 – 48574Unrealisedforeignexchangeitem 731 (234) 497 – (2318) (2318)Incomereceivedinadvance 4 781 – 4 781 7700 – 7700Liabilityarisingfromthestraight-liningofoperatingleases 6 658 – 6 658 7667 – 7667Deferredtaxininternationalstructure 2 612 (64) 2 548 2610 (2354) 256Calculatedtaxloss 88 252 – 88 252 67373 – 67373Prepayments – (2 112) (2 112) – (2947) (2947)Section24Callowances – (23 046) (23 046) – (28922) (28922)Share-basedpayment – – – 218 – 218Deferredtaxonintangibleassets – (2 713) (2 713) – (3436) (3436)Workinprogress – (7 495) (7 495) – (4470) (4470)Retentiondebtors – (10 200) (10 200) – (9689) (9689)Deferredtaxrecogniseddirectlyinthestatementofcomprehensiveincome – (34) (34) – 41 41
158 436 (50 571) 107 865 134142 (58433) 75709
11. INVENTORIES
Group
2012R’000
2011R’000
Finishedgoods 7 727 12977Writedownoffinishedgoods (35) (2436)
7 692 10541Workinprogress 26 767 15965
34 459 26506
Inventorycarriedatnetrealisablevalue 5 809 8495
12. TRADE AND OTHER RECEIVABLES
Group
2012R’000
2011R’000
Tradereceivables 570 237 696328Less:non-current (18 213) (17301)
Currenttradereceivables 552 024 679027Provisionforimpairmentoftradereceivables (30 223) (30081)
521 801 648946Prepayments 12 763 18335Otherreceivables 5 323 26385
539 887 693666
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At 30 June 2012 trade receivables include retention trade receivables of R36 427 million (2011:R34.602 million)relatingtocontractsinprogress.
Trade receivables securitisation
GijimaHoldingsanditssubsidiariescollectivelyenteredintoatradereceivablessecuritisationfundingprogramme(“Programme”),whichhasthefollowingfundingandearningsenhancementobjectives:
– tocreateaflexibleenvironmentwherebytheGroupcanraiseexternalfundingusingitstradereceivablesassecurity;
– toraisefundingatanefficientcost;
– tofacilitatetherecurringfundingoftheGroup’sgrowingoperations;and
– toenhanceprofitabilityandearningspersharebyreducingtheGroup’sfundingrate.
Mechanics of the structure
An independently owned special purpose entity, GijimaAst Finance (“SPE”) was incorporated and theGroupenteredintothesaleofexistingandfuturetradereceivables,andotheragreementswiththeSPE.
TheGroupmaintainstherighttomanageandadministerthecollectionsprocess.
IntermsoftheProgramme,theGroupraisedR256millionon31July2006fromvariousinvestorsintheCapitalMarketsatafixedrateforaperiodoffiveyears.TheSPEfundedthepurchasepricepaidtotheGroupbyissuing256millionClassA,securednon-amortisingzaAArateddebentures;and64millionClassB, subordinated,unsecured,non-amortisingandunrateddebentures in the2007financialyear.AnadditionalR9millionClassB,subordinated,unsecured,non-amortisingandunrateddebentureswasissuedinDecember2008withtheadjustmenttothesubordinatedfundingratioto22%(previously20%).
InDecember2008,theGroupraisedanadditionalR100millionfrominvestors intheCapitalMarketsatavariablerate.FundingforthefirstyearofthefiveyeartermwassecuredfromfundsexpiringinDecember2009andextendedto21June2010,thenewrepaymentdate.
TheSPEfundedthepurchasepricepaidtotheGroupbyissuinganadditional100millionClassA,securednon-amortisingzaAArateddebentures;andanadditional28millionClassB,subordinated,unsecured,non-amortisingandunrateddebenturesissuedinthe2009financialyear.
InFebruary2010,bymutualagreementwithaparticipatinginvestor,theGroupelectedtoundertakeanearlysettlementof125millionoftheoriginal256millionClassA,securednon-amortisingzaAArateddebentures;andresultedinareductionof35millionClassB,subordinated,unsecured,non-amortisingandunrateddebentures,resultinginabalanceof231millionoutstandingClassAand38millionClassBdebentures.
AnadditionalR11millionClassB,subordinated,unsecured,non-amortisingandunrateddebentureswasissuedinMay2010withtheadjustmenttothesubordinatedfundingratioto25%(previously22%),ofwhichR6millionrelatedtotheR231millionClassAdebenturesandR5milliontotheR100millionClassAshort-termdebentures.
On21June2010,theGroupelectedtoredeemtheremainingR131millionfiveyeardebenturesandtheR100 million short-term debentures and replaced the debentures by issuing new debentures totallingR300million.IntermsofthenewProgramme,theGroupraisedR300millionon21July2010fromthevariousinvestorsinthecapitalmarkets.
The SPE funded the purchase price paid to the Group by issuing 150 million Class A1, secured non-amortising zaAA rated debentures at a fixed and floating rate maturing 30 June 2015; 150 millionClassA2,securednon-amortisingzaAArateddebenturesatafloatingratematuring30June2012;and100 millionClassB,subordinated,unsecured,non-amortisingandunrateddebentures.
UponmaturityofthezaAAClassA2debentures,theywererolledforwardasClassA3debenturesforafurther5yearsmaturingonJune2017.Thedebentureswererolledatafixedratebasedonafiveyearswapcurveplus370basispoints.
ThezaAAClassAdebentureswereratedbyGlobalCreditRatingCo(refernote15and18).
TheGroupandtheFundersinvestedinthedebenturesissuedbytheSPE.AssecuritytotheClassA1andA2(2009:ClassA)debentureholders,acessioninsecuritatemdebitiwasenteredintobetweentheSPEandanestablishedsecuritytrust,wherebyallrightsarecededtothesecuritytrust.ThetrusteesofthesecuritytrustsubsequentlyissuedaguaranteetotheClassA1andA2(2011:ClassA1andA2)debentureholders.
Furthermore,theGrouphasenteredintoanoptionagreementwiththetrusteesoftheownershiptrusttoacquirealltheoptionequityintheSPE,within90daysaftertheterminationdateoftheProgramme.
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TheSPEisconsolidatedintermsofSIC12Consolidation–SpecialPurposeEntities.
TheGroup’stradereceivablesincludeR427.9million(2011:R565.3million)oftheSPEisSouthAfricantradereceivables.Theinterest-bearingborrowingsoftheGroupincludetheR300million(2011:R300 million)externalborrowingsbytheSPE(seenote15and18).
Thefinancialassets(ClassBdebentureinvestments)andthefinancialliabilities(subordinatedloansoftheSPE)areeliminatedonconsolidation.Sincethestatementsoffinancialpositionitemsareeliminated,itisappropriatetoeliminatethecorrespondingincomeandexpenseitems,beingtheinterestreceivedfromthedebenturesandtheinterestpaidonthesubordinatedloans.
Theaggregatevalueat30June2012and30June2011oftheSouthAfricantradereceivableswhichweresoldtotheSPEconsistofthefollowingamounts:
– Gijima Holdings, a wholly owned subsidiary of Gijima, amounting to R401.5 million (2011:R533.4million);
– MineRP Africa (Pty) Ltd, a wholly owned subsidiary of Gijima, amounting to R25.2 million (2011:R29.8million);
– GijimaElectronicandSecuritySystems(Pty)Ltd,awhollyownedsubsidiaryofGijima,amountingtoR1.2million(2011:R2.1million).
12.1 Exposure to credit risk
Thecarryingamountoftradeandotherreceivablesrepresentsthemaximumcreditexposure.
The maximum exposure to credit risk for trade receivables at the reporting date by geographicregionwas:
Group
2012R’000
2011R’000
Domestic 533 846 661540Namibia 14 300 12951Australasiancountries 13 801 14769Canada 8 290 7068
570 237 696328
Themaximumexposuretocreditriskfortradereceivablesatthereportingdatebytypeofcustomerwas:
Publicsector 296 402 396246Mining 88 975 94569Financialservices 42 374 67582Manufacturing 52 762 58501Retailandhospitality 8 925 12541Telecoms 58 609 53356Other 22 190 13533
570 237 696328
TwooftheGroup’smostsignificantcustomers’accountsfor20%ofthetradereceivable’scarryingamountat30June2012(2011:25%).
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12.1.1 Analysis of aging of trade receivables
Gross Impairment Gross Impairment2012 2011
R’000 R’000 R’000 R’000
Notpastdue 379 667 36 545149 74Pastdue1–30days 27 919 46 24005 2Pastdue31–90days 32 231 243 69816 251Pastdue91–120days 33 964 3 449 7519 14Morethan120days 96 456 26 449 49839 29740
Total 570 237 30 223 696328 30081
Theremainingtradereceivablesprofileisconsideredrecoverable.
12.1.2 Analysis of allowance for impairment
Themovementintheallowanceforimpairmentinrespectoftradereceivablesduringtheyearwasasfollows:
2012R’000
2011R’000
Balanceat1July 30 081 45722Impairmentlossraised/(reversed) 142 (15641)
Balanceat30June 30 223 30081
The allowance for impairment is based on past experience and the prevailing tradingconditions relating to specific reportable segments and individual debtors, where risk ofnon-paymentisperceivedtobehighandwhereoutstandingbalancesaredated.
TheallowanceaccountsinrespectoftradereceivablesareusedtorecordimpairmentlossesunlesstheGroupissatisfiedthatnorecoveryoftheamountowingispossible;atthatpointtheamountconsideredirrecoverableisdirectlywrittenoffagainstthefinancialasset.
13. CASH AND CASH EQUIVALENTS
2012R’000
2011R’000
Cashatbankandinhand 121 270 88827Less:Overdraft (4 235) (2352)
117 035 86475
The weighted average effective interest rate on short-term bank deposits was 6.07% (2011:5.24%). Thecarryingamountofcashandcashequivalentsrepresentsthemaximumcreditexposure.
14. ORDINARY SHARE CAPITAL
Group Company
2012R’000
2011R’000
2012R’000
2011R’000
Authorised1300000000ordinarysharesof0.10centeach 1 300 1300 1 300 1300
Issued968357379ordinarysharesof0.10centeach(2011:968357379ordinaryshares) 961 961 968 968
Balanceat1July 961 961 968 981Ownsharesacquired – – – (13)
Balanceat30June 961 961 968 968
6792070(2011:6792070)sharesisheldbyGijimaHoldings,awhollyownedsubsidiaryofGijima.
67
Share Linked Bonus Scheme
TheGrouphasabonusawardschemewithitsemployees.Thebonusawardschemeisanincentiveschemebasedonaconditionalrighttoreceiveacashamountequaltotheincreaseinvalueofacertainnumberofnotionalsharesortheequivalentvalueofshares.ThefairvalueoftheinstrumentsgrantedismeasuredusingtheBlackScholesvaluationmethodology,takingintoaccountthetermsandconditionsuponwhichinstrumentsaregranted.
This cash amount shall be applied wholly and exclusively towards the obligatory subscription and/orpurchaseofsharesintheCompany.
The company’s Remuneration Committee will determine if the settlement is to be applied towards thesubscriptionofnewsharesorthepurchaseofexistingSharesoranycombinationofsuchsubscriptionorpurchase.Historicallyonlyshareshavebeenissuedonvestingofsharelinkedbonusscheme.
ThesesharesaretreatedasequitysettledonaGrouplevel.
TheaggregatenumberofShares issuedunder this schemeat1July2009was16792628, issued inrespectoftrancheone,ofwhich6717051sharesareheldastreasurysharesat30June2012.Noshareswereissuedduringthecurrentfinancialyear.Thesharesissuedundertheschemerepresent0.78%oftheauthorisedsharecapitaland1.05%oftheissuedsharecapitalasat30June2012,excludingtreasuryshares.
Fifth notional share issue
ThefifthnotionalsharesundertheGijimaShareLinkedBonusSchemeweregrantedon18January2010.
Thedetailsofthegrantsareasfollows:
2012 2011
Sharepriceatgrantdate(cents) 100 100Exerciseprice(cents) 49 49Expectedvolatility(%) 53 53Expecteddividendyield(%) 4.73 4.73Risk-freeinterestrate(%) 7.78 7.78
Theexpectedvolatilityof53%isbasedonGijimaGroupLimited’sshareatgrantdateuntiltheexpectedtimetoexpiry.
ThefairvalueofthenotionalsharesatgrantdateisdeterminedbasedontheBlackScholesformula,usingtheaboveinputs.
2012R’000
2011R’000
Employeeexpenses(Income)/ExpensearisingfromnotionalSharesgrantedinprioryears – 2548
Total(income)/expenserecognisedasemployeecosts – 2548
The share-based payment expense is included in the salaries and wages of the permanent employees(Refer note2.12).
ThenumberandweightedaverageexercisepricesofnotionalSharesareasfollows:
Weighted average exercise
price
Number of notional
Shares
Weightedaverageexercise
price
Numberofnotional
Shares2012 2011
(cents) ’000 (cents) ’000
Outstandingat1July 49 24 540 78 60055Grantedduringtheyear – – 49 810Forfeitedduringtheyear 49 (4 820) 78 (12405)Expiredduringtheyear 49 (19 720) 107 (23920)
Exercisableat30June – – – –
68
ThenumberofnotionalsharesheldbyDirectorsareasfollows:
2012PJ Bogoshi
’000CJH Ferreira
’000
Outstandingat1July2011 1 200 1 900
–Atexercisepriceof49cents 1 200 1 000
Grantedduringtheyear – –
–Atexercisepriceof49cents – –
Forfeitedduringtheyear – –Expiringduringtheyear–atexercisepriceof49cents (1 200) (1 000)Outstandingat30June2012 – –
–Atexercisepriceof49cents 1 200 1 000
Exercisableat30June2012 – –
NonewshareswereallotedtoDirectorssubsequenttothe2012financialyearenduntilsuchtimeanewschemeisapprovedbytheshareholders.
2011PJBogoshi
’000CJHFerreira
’000
Outstandingat1July2010 2700 2400
–Atexercisepriceof107cents 1200 900–Atexercisepriceof49cents 1200 1000
Grantedduringtheyear – –
–Atexercisepriceof49cents – –
Forfeitedduringtheyear – –Vestedduringtheyear – –Expiringduringtheyear–atexercisepriceof107cents (1200) (900)Outstandingat30June2011 1200 1000
–Atexercisepriceof49cents 1200 1000
Exercisableat30June2011 – –
Non-controlling interests
Group2012 2011
R’000 R’000
Balanceat1July (3 205) (4447)Shareofnetprofitinsubsidiaries 195 1242
Balanceat30June (3 010) (3205)
30 June 2012
Inthecurrentfinancialyear,a70%ownedsubsidiaryoftheGijimaGroupLimitedincurredanetprofitofR0.646million.30%ofthenetprofitistransferredtonon-controllinginterest(refertoStatementofchangesinequity).
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15. INTEREST-BEARING BORROWINGS
2012R’000
2011R’000
Long-termloans 300 000 150000Totalliability 300 000 150000
–Securitisation 300 000 150000
Liabilitiesundercapitalisedfinanceleaseagreements 1 980 2729
–Totalliability 2 984 4278
–Less:Currentportionmovedtotradeandotherpayables (1 004) (1549)
301 980 152729
Securitisation
DuringMay2010thesubordinatedfundingratiowasadjustedto25%(previously22%).
On21June2010GijimaAstFinancefundedthepurchasepricepaidtoGijimaHoldingsbyissuing150 ofClass A1, 60-month secured non-amortising and by issuing 150 of Class A2, 24-month secured non-amortisingrateddebenturesofR1millioneach,and50ofClassB,subordinatedunsecured60-monthnon-amortisingunrateddebenturesand50ofClassB,subordinatedunsecured24-monthnon-amortisingunrateddebenturesofR1millioneach.
R104 million of Class A1 debentures bear interest at a fixed rate of 11.199% nacq. The remainingR46 millionofClassA1debenturesandR150millionoftheClassA2debenturesbearinterestatvariableratesatJIBARplus3.4and2.6,respectively.TheClassBdebenturesbearinterestatvariablerates.
TheR150millionClassA2debenturesmaturedonthe30June2012.FundingoftheA2debentureswasrolledforwardforafurtherfiveyearsmaturingonthe30June2017(refertonote12).TheA2debenturesare60-monthsecurednon-amortisingrateddebenturesofR1millioneach,and50ofClassBdebenturessubordinated,unsecured60-monthnon-amortisingunrateddebenturesofR1millioneach.
ClassA1andA2debentureshavebeenawardedazaAAcreditratingbyGlobalCreditRating,andhavebeen issuedto investors in theCapitalMarkets.TheClassBdebentureshavebeensubscribedforbyasubsidiaryentityofGijima.
Other liabilities
Othercapitalisedfinance lease liabilitieswhichamount toR3.0million (2011:R4.2million)havebeenenteredintoandarerepayablemonthly.Theloantermisfiveyears,thematuritydateis2015.
Interestonthefinanceleaseislinkedtotheprimeoverdraftrate,at30June2012theinterestratewas9%.Theleasesaresecuredbycessionovertheassetstowhichtheyrelate(refernote6)
Thepresentvalueofotherfutureminimumleasepaymentsundernon-cancellablefinanceleasesareasfollows:
2012R’000
2011R’000
Notlaterthan1year 1 004 1549Laterthan1yearandnotlaterthan5years 1 980 2729Laterthan5years – –
2 984 4278Less:Currentportion (1 004) (1549)
1 980 2729
Reconofminimumleasepayments:Futureleasepayments 1 260 1260Financecost 1 724 3018
PresentvalueendofJune 2 984 4278
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16. AMOUNTS DUE TO VENDORS
TheoutstandingamountonacquisitionofCubicoSolutionsCC:
2012R’000
2011R’000
SellersofCubicoSolutionsCC. 1 967 4076Less:Currentportion (1 967) (1613)
Non-currentportion – 2463
As at 30 June 2012
Not later than
1 yearR’000
Later than 1 year and
not later than
2 yearsR’000
Later than 2 years and
not later than
3 yearsR’000
TotalR’000
SellersofCubicoSolutionsCC 1 967 – – 1 967
1 967 – – 1 967
17. TRADE AND OTHER PAYABLES
Group
2012R’000
2011R’000
Tradepayablesandaccruals 304 206 360786Incomereceivedinadvance 27 657 40462Leavepayaccrual 65 912 66739Currentportionofinterest-bearingborrowings 1 004 1549Onerouscontract 452 1848Payrollandotherpayables 65 128 80810
464 359 552194
Tradepayablesaresubjecttonormalindustrysettlementterms.
18. SHORT-TERM BORROWINGS
Group
2012R’000
2011R’000
Securitisationshort-termborrowings – 150000
– 150000
R150millionwasraisedontheGroup’sdebtorssecuritisationprogrammeon21June2010.FundingofthisR150millionforthefirstyearoftheoriginallyanticipatedtwoyeartermwassourcedfromfundsthatexpiredon21June2012.Thefundingwasrolledforwardforafurtherfiveyearsexpiringon30June2017.
ThisrepresentstheclassA2debentureswhichbearinterestatavariableinterestrate.
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19. PROVISIONS
TotalR’000
Payroll related
provisionsR’000
Onerous contract
R’000
Balance as at 30 June 2012Balance at the beginning of the year 2 931 2 931 –New provisions raised during the year 25 382 2 556 22 826Provisions utilised (293) (293) –
Balance at the end of the year 28 020 5 194 22 826
Balance as at 30 June 2011Balanceatthebeginningoftheyear 6119 6119 –Newprovisionsraisedduringtheyear 10334 10334 –Provisionsutilised (13522) (13522) –
Balanceattheendoftheyear 2931 2931 –
20. COMMITMENTS
2012R’000
2011R’000
Capital commitments
Futurecapitalcommitments 27 645
Future operating lease commitments
TotalR’000
Not later than 1 year
R’000
Later than 1 year and
not later than 5 years
R’000
Later than 5 years
R’000
Landandbuildings 256841 74014 143089 39738
ThematerialportionofleasecommitmentsrelatestofixedpropertyrentalwithCBSPropertyGroup.
21. FOREIGN ExCHANGE POSITION
Thefollowingforwardexchangecontractswereenteredinto.
2012 2011
Foreign currency
’000
Rand amount
R’000
Fair valueR’000
FEC AssetR’000
Foreigncurrency
‘000
Randamount
R’000
FairvalueR’000
FECLiability
R’000
USDollar 805 6761 6628 133 65 451 444 7
Euro 410 4330 4303 26 405 3972 3997 (25)
11090 10931 160 4423 4441 (18)
Theforwardexchangecontracts(“FEC”)relatetospecificforeigntradepayableexposuresonthestatementoffinancialpositionandwereenteredintotocovertheseforeigncommitmentsnotyetdue.
Theforwardexchangecontractswillbeutilisedforthepurposesoftradeduringthefollowingyear.Theforeignexchangecontractshavematuritydatesrangingfrom9July2012to11September2012.
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22. CONTINGENT LIABILITIES
Bank and other guarantees2012
R’0002011
R’000
At30JunetheGrouphadcontingentliabilitiesinrespectofregisteredperformancebonds,bankleaseandotherguaranteessplitbetweencurrenciesassetoutbelow.GijimaASTInformationTechnologyServices(Pty)Ltd–Namibiandollar 19997 –GijimaHoldings(Pty)Ltd-SouthAfricanrand 8784 5271
FirstNationalBankofNamibiaLimited 19997 –StandardBankofSouthAfricaLimited 8784 5271
28781 5271
AdetailedlistofguaranteesandperformancebondscanbeviewedattheGroup’sregisteredoffice.
23. RETIREMENT BENEFITS
TheGrouphascontributedtowardspensionandprovidentschemescovering95%ofqualifyingpermanentemployees.TheGijimaRetirementSchemewasestablishedon1September1999.Thefundisadefinedcontribution fund and is governed by the Pension Fund Act of 1956. The assets of the fund are heldindependently of the Group’s assets in separate trustee administered funds. The total employer andemployeecontributionsarerecognisedasanexpense.
Theamountschargedtotheincomestatementareasfollows:
Group2012
R’0002011
R’000
Pensioncosts 103 621 97909
Totalincludedinemployeebenefitsexpense(refernote2.12) 103 621 97909
24. RELATED PARTY TRANSACTIONS
DuringtheyeartheGroup,intheordinarycourseofbusiness,enteredintovarioussaleandpurchasetransactionswithrelatedparties.Thesetransactionsoccurredundertermsthatarenolessfavourablethanthoseagreedwiththirdparties.Servicesareusuallynegotiatedwithrelatedpartiesonacost-plusbasisallowingamarginrangingfrom10%to25%.Goodsareprocuredonthebasisofthepricelistinforcewithnon-relatedparties.
TwoshareholdersandMembersof theBoardofDirectorshadsignificant influenceon theoperationalandeconomicaldecisionmakingoftheGroupthroughmeansofsignificantshareholdingintheGroup(refer note2.11.)
24.1 Subsidiaries
Details of interests in subsidiaries are disclosed in the annual report. Transactions betweensubsidiariesareconductedintheordinarycourseofbusinessandatarm’slength.
All intercompany transactions, balances and unrealised surpluses within the operations areeliminatedonconsolidation.
24.2 Directors
DetailsrelatingtoDirectors’emolumentsandshareholdingsintheCompanyaredisclosedinnote2.11.
GijimaHoldings(awhollyownedsubsidiaryoftheCompany)contractedSeekersTravelasthetravelagencyofthecompanyasfrom1August2008.
Thistransactionwasdoneonanarm’slengthbasiswiththeapprovaloftheBoardandistotheadvantageoftheGroup.
SeekersTravelisultimatelyownedbyTourvestHoldings(Pty)Ltd,acompanywherethefollowingDirectorshaveanon-controllinginterest,eitherdirectlyorthroughvariousintermediaryholdingcompaniesandfamilytrusts:
–RWGumede
73
–AFBMthembu
–CJHFerreira
GijimaHoldings(awhollyownedsubsidiaryoftheCompany)contractedGenTechnologiesasfromSeptember2009.
Thistransactionwasdoneonanarm’slengthbasiswiththeapprovaloftheBoardandistotheadvantageoftheGroup.GenTechnologies(Pty)LtdisasubsidiaryofGumaTech(Pty)Ltd,amajorshareholderofGijima.
21stCenturyPaySolutionsGroup(Pty)Ltdisarewardsconsultancyentity,inwhichDrMHR Bussinserves as a Director on both Gijima and 21st Century Pay Solutions Group (Pty) Ltd’s board ofdirectors.
Group
2012R’000
2011R’000
ThetotalexpensesincurredbyGijimaGroupwithregardstoSeekersTravel: 9 679 2347821stCenturyPaySolutionsGroup(Pty)Limited 571 –ThetotalexpensesincurredbyGijimaGroupwithregardstoGenTechnologies: 802 1725
11 052 25203
24.3 Share in joint ventures
TheGroup’sinvestmentinjointventuresisreflectedbelow:
Percentage shareholding
2012 2011
SiriusConsulting(Pty)Ltd 50 50
SiriusConsulting(Pty)Ltdisajointventurethatprovidessoftwaresolutionsintheminingindustry.
ThefollowingamountsrepresenttheGroup’sshareoftheassetsandliabilitiesandrevenue,expensesand cash flows of the joint ventures and are included in the consolidated statement of financialposition,incomestatement,statementofcomprehensiveincomeandstatementofcashflows:
2012R’000
2011R’000
Currentassets 1 028 523
Totalassets 1 028 523
Currentliabilities 2 24
Totalliabilities 2 24
Netassets 1 026 499
Revenue 2 713 1722
Profitbeforetaxation 1 899 923Taxation (621) (318)
Profitaftertaxation 1 278 605
Proportionateinterestinjointventures’cashflowsCashgeneratedfrom/(usedin)operatingactivities 1 213 (114)Cashusedininvestingactivities – –Cashusedinfinancingactivities (800) –
Netcashin/(out)flow 413 (114)
74
25. SUBSEQUENT EVENTS
The Board has identified MineRP as non-core and, as MineRP requires considerable investment tomaintainitscompetitiveposition,hasresolvedtodisposethereofinordertopreserveMineRP’svalueandrealisemaximumvalueforGijimashareholders.GijimahasconcludedthetermsofagreementsrelatingtothedisposaloftheCompany’sminingtechnologyandconsultingbusinesses(MineRPBusinesses),toaconsortiumledbyRMBCorvest(Pty)Ltd,asubsidiaryofRMBPrivateEquity(Pty)Ltd.MineRPwillbehousedinanewlyincorporatedentity,OakleafInvestmentHoldings89(Pty)Ltd.
TherewerenoothersubsequenteventsthattheGroupwasawareofatdateofapprovaloftheconsolidatedfinancialstatements.
26. CASH FLOW INFORMATION
26.1 Reconciliation of loss before tax to cash generated from operations
Group
2012R’000
2011R’000
(Loss)/Profitbeforetax (71 283) (281901)Adjustmentsfor:Amortisation 19 941 14992Depreciation 28 635 31366Lossonsaleofintangiblesandproperty,plantandequipment 168 1415Increase/(Decrease)inprovisions 25 089 (3813)Non-cashflowmovementasaresultofoperatinglease (3 598) (436)Impairmentofintergrouploans – –Movementonimpairmentexpense 142 (15641)Disputesettlementandrelatedexpenses(refernote2.13) – 215706Financialincome (7 233) (8363)Financialexpenses 29 423 32099Share-basedpayments – 2548Currencytranslationdifferencesinforeignoperations 2 810 (29235)Currencytranslationonnetinvestmentsinforeignoperations 11 497 24638
Cashgeneratedfrom/(usedin)operationsbeforeworkingcapitalchanges 35 591 (16625)Workingcapitalchanges(Increase)/Decreaseininventories (7 953) 16048Decrease/(Increase)intradeandotherreceivables 152 725 (232401)(Decease)/Increaseintradeandotherpayables (96 758) 111710
Cashgeneratedfrom/(usedin)operations 83 605 (121268)
26.2 Reconciliation of interest received
Interestreceivableatbeginningoftheyear 83 1036Financialincomefortheyear 7 233 8363Interestreceivableatyear-end (102) (83)
Interestreceivedfortheyear 7 214 9316
26.3 Reconciliation of interest paid
Interestpayableatbeginningoftheyear 1 861 (983)Financialexpensesfortheyear (29 423) (32099)Interestpayableatyear-end 6 658 (1861)
Interestpaidfortheyear (20 904) (34943)
75
26.4 Reconciliation of tax paid
Group
2012R’000
2011R’000
Nettaxreceivable/(payable)atbeginningoftheyear 16 276 (2543)Currenttax (11 414) (14080)Withholdingtaxwrittenoff – (65)SecondaryTaxonCompanies (80) (2460)Currencytranslationtaxnotthroughprofitandloss (34) (41)Currencytranslationtaxnotthroughequity – –Nettaxpayableatyear-end (919) (16211)
Taxpaidfortheyear 3 829 (35400)
27. FINANCIAL RISk MANAGEMENT
Overview
TheGrouphasexposureto:
–Creditrisk
–Liquidityrisk
–Marketrisk
ThisnotepresentsinformationabouttheGroup’sexposuretoeachoftheaboverisks,theGroup’sobjectives,policiesandprocessesformeasuringandmanagingrisk,andtheGroup’smanagementofcapital.Furtherquantitativedisclosuresareincludedthroughouttheseconsolidatedfinancialstatements.
TheBoardofDirectorshasoverallresponsibilityfortheestablishmentandoversightoftheGroup’sriskmanagementframework.TheGroup’sTreasuryandCreditfunctionsareresponsiblefordevelopingandmonitoringtheGroup’sriskmanagementpolicies.GroupTreasuryandCreditfunctionsreportregularlytotheBoardofDirectorsontheiractivities.
The Group’s risk management policies are established to identify and analyse the risks faced by theGroup, tosetappropriaterisk limitsandcontrols,and tomonitorrisksandadherence to limits.RiskmanagementpoliciesandsystemsarereviewedregularlytoreflectchangesinmarketconditionsandtheGroup’sactivities.TheGroup,throughitstrainingandmanagementstandardsandprocedures,aimstodevelopadisciplinedandconstructivecontrolenvironmentinwhichallemployeesunderstandtheirrolesandobligations.
The Group Audit Committee oversees how management monitors compliance with the Group’s riskmanagementpoliciesandproceduresandreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfacedbytheGroup.TheGroupAuditCommitteeisassistedinitsoversightrolebyInternalAudit.InternalAuditundertakesbothregularandadhocreviewsofriskmanagementcontrolsandprocedures,theresultsofwhicharereportedtotheAuditCommittee.
Credit risk
CreditriskistheriskoffinanciallosstotheGroupifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligations,andarisesprincipallyfromtheGroup’sreceivablesfromcustomersandinvestmentsecurities.
Trade and other receivables
TheGroup’sexposuretocreditriskisinfluencedmainlybytheindividualcharacteristicsofeachcustomer.ThedemographicsoftheGroup’scustomerbase,includingthedefaultriskoftheindustryandcountryinwhichcustomersoperate,haslessofaninfluenceoncreditrisk.Approximately12%oftheGroup’srevenueisattributabletosalestransactionswithasinglecustomer.
TheGroup’sCreditfunctionhasestablishedacreditpolicyunderwhicheachnewcustomerisanalysedindividuallyforcreditworthinessbeforetheGroup’sstandardpaymentanddeliverytermsandconditionsare offered. The Group’s review includes external ratings, where available, and in some cases bankreferences.CustomersthatfailtomeettheGroup’sbenchmarkcreditworthinessmaytransactwiththeGrouponlyonaprepaymentbasis.
More than80%of theGroup’scustomershavebeen transactingwith theGroupsinceJune2005,andlosseshaveoccurredinfrequently.Inmonitoringcustomercreditrisk,customersaregroupedaccordingto their credit characteristics, including whether they are an individual or legal entity, whether they
76
areawholesale,retailorend-usercustomer,geographiclocation,industry,agingprofile,maturityandexistenceofpreviousfinancialdifficulties.TradeandotherreceivablesrelatemainlytocustomerswhoreceiveservicesfromtheGroup.
Goodsaresoldsubjecttoretentionoftitleclauses,sothatintheeventofnon-paymenttheGroupmayhaveasecuredclaim.TheGroupgenerallydoesnotrequirecollateralinrespectoftradeandother receivables.
The Group establishes an allowance for impairment that represents its estimate of incurred losses inrespectoftradeandotherreceivablesandinvestments.Themaincomponentofthisallowanceisaspecificlosscomponentthatrelatestoindividuallysignificantexposures.
Investments
Guarantees
The Group’s policy is to provide guarantees only to subsidiaries controlled by the Group. At 30 June2012theGrouphadcontingentliabilitiesinrespectofregisteredperformancebonds,bankleaseorotherguaranteestothevalueofR28.8million(June2011:R5.2million).
Liquidity risk
Liquidity risk is the risk that theGroupwillnot be able tomeet itsfinancial obligationsas they falldue.TheGroup’sapproachtomanagingliquidityistoensure,asfaraspossible,thatitwillalwayshavesufficientliquiditytomeetitsliabilitieswhendue,underbothnormalandstressedconditions,withoutincurringunacceptablelossesorriskingdamagetotheGroup’sreputation.
TheGroupusesinternallydevelopedcostingmodelstocostitsproductsandservices,whichassistitinmonitoringcashflowrequirementsandoptimisingitscashreturnoninvestments.TypicallytheGroupensuresthatithassufficientcashondemandtomeetexpectedoperationalexpensesintheshortterm,includingtheservicingoffinancialobligations;thisexcludesthepotentialimpactofextremecircumstancesthat cannot reasonably be predicted, such as natural disasters. In addition, the Group maintains thefollowingsecuredloans:
SouthAfrica
June 2012
– R104millionsecuritisationloan.Thetermoftheloanisfiveyearsendingon30June2015.Interestisfixedandpayablequarterlyat11.199%NACQ.
– R46millionsecuritisationloan.Thetermoftheloanisfiveyearsendingon30June2015.Interestisvariableandpayablequarterlyat3monthJIBARplus260basispoints.
– R150millionsecuritisationloan.Thetermoftheloanhasbeenextendedforafurtherfiveyearsandmatureson30June2017.Interestwillbefixedandpayablequarterlybasedonafive-yearswapcurveplus370basispoints.
June 2011
– R104millionsecuritisationloan.Thetermoftheloanisfiveyearsendingon30June2015.Interestisfixedandpayablequarterlyat11.199%NACQ.
– R46millionsecuritisationloan.Thetermoftheloanisfiveyearsendingon30June2015.Interestisvariableandpayablequarterlyat3monthJIBARplus340basispoints.
– R150millionsecuritisationloan.Thetermoftheloanistwoyearsendingon30June2012.Interestisvariableandpayablequarterlyatthree-monthJIBARplus260basispoints.
TheloansaresecuredbytheGroup’sSouthAfricantradereceivables(refertonote12).
TheGroupmaintainsthefollowinglinesofcredit:
Namibia
– NAD4.5millionoverdraft facility, that issecuredbyGijimaHoldings.Theoverdraft facilitycanbedrawndowntomeetshort-termfinancingneeds.Thefacilityhasanannualmaturitythatisrenewedannually.InterestwouldbepayableattheNamibianprimeinterestrate.
Market risk
Marketriskistheriskthatchangesinmarketprices,suchasforeignexchangerates,interestratesandequitypriceswill affect theGroup’s incomeor thevalueof itsholdingsoffinancial instruments.Theobjectiveofmarketriskmanagementistomanageandcontrolmarketriskexposureswithinacceptableparameters,whileoptimisingthereturnonrisk.
TheGroupbuysandsellsderivativesintheordinarycourseofbusiness,andalsoincursfinancialliabilities,inordertomanagemarketrisks.AllsuchtransactionsarecarriedoutwithintheguidelinessetbyGroupTreasury.TheGroupmarkstomarketallderivatives.
77
Currency risk
TheGroupisexposedtocurrencyriskonsalesandpurchasesthataredenominatedinacurrencyotherthantherespectivefunctionalcurrenciesofGroupentities,primarilytheeuro(EUR)andUSdollars(USD).TheGroup,asfaraspossible,seektoachieveaneconomichedge.
TheGrouphedgestradereceivablesandtradepayablesdenominatedinaforeigncurrencyoramountsinexcessofEUR10000andUSD10000.TheGrouphedgesspecifictransactionsandhasaminimumbaselinecoverageforcontinuousforeignoperations.TheGroupgenerallytakesthepositionofpassingthecurrencyriskovertothecustomerandthereforeinvoicingthecustomerusingtheforwardexchangerateperthespecificcontract.TheGroupusesforwardexchangecontractstohedgeitscurrencyrisk,allwithamaturityoflessthanoneyearfromthereportingdate.Whennecessary,forwardexchangecontractsarerolledoveratmaturity.
InterestonborrowingsisdenominatedincurrenciesthatmatchthecashflowsgeneratedbytheunderlyingoperationsoftheGroup,primarilyZARandNAD.Thisprovidesaneconomichedgeandnoderivativesareenteredinto.
Inrespectofothermonetaryassetsandliabilitiesdenominatedinforeigncurrencies,theGroupensuresthatitsnetexposureiskepttoanacceptablelevelbybuyingorsellingforeigncurrenciesatspotrateswhennecessarytoaddressshort-termimbalances.
TheGroup’sinvestmentsinothersubsidiariesarenothedgedasthosecurrencypositionsareconsideredtobelongterminnature.
Interest rate risk
TheGroupadoptsapolicyofensuringthatallofitssignificantexposuretochangesininterestratesonlong-termborrowingsismainlyonafixedratebasis.Thisisachievedbyenteringintofixedinterestratecontracts.
Other market price risk
TheGroupcurrentlydoesnotholdanydebtandequitysecuritiesinitsinvestmentportfolio.AllbuyandselldecisionsareapprovedbytheExecutiveCommittee.
TheGroupdoesnotenterintocommoditycontracts.
Capital management
TheBoard’spolicyistomaintainastrongcapitalbasesoastomaintaininvestor,creditorandmarketconfidenceandtosustainfuturedevelopmentofthebusiness.Capitalconsistsofsharecapital,retainedearningsandnon-controllinginterestoftheGroup.TheBoardofDirectorsmonitorsboththedemographicspreadofshareholders,aswellasthereturnoncapital,whichtheGroupdefinesastotalshareholders’equity,excludingnon-redeemablepreferencesharesandminorityinterestsandthelevelofdividendstoordinaryshareholders.
TheGroupisauthorisedtopurchaseitsownsharesonthemarket;thetimingofthesepurchasesdependsonmarketprices.PrimarilythesharesareintendedtobeusedforissuingsharesundertheGroup’sShareLinkedBonusScheme.BuyandselldecisionsaremadeonaspecifictransactionbasisbytheBoardofDirectors.
78
Financial assets and financial liabilities
Thefairvaluesoffinancialassetsandfinancialliabilities,togetherwiththecarryingamountsshowninthestatementoffinancialposition,areasfollows:
30 June 2012TotalR’000
Fair value through
profit and loss (held
for trading)R’000
Loans andreceivables
R’000
Other liabilities
at amortised cost
R’000Fair value
R’000
Financial assetsTradeandotherreceivables 558 100 – 558 100 – 558 100Cashandcashequivalents 121 270 – 121 270 – 121 270
679 370 – 679 370 – 679 370
Financial liabilitiesFinanceleaseliabilities 2 984 – – 2 984 2 984Securedsecuritisationloan 300 000 – – 300 000 293 804Tradeandotherpayables 463 195 – – 463 195 463 195FECLiability 160 160 – – 160Bankoverdrafts 4 235 – – 4 235 4 235
770 574 160 – 770 414 764 378
Unrecognisedgain 6 196
30 June 2011Total
R’000
Fairvaluethrough
profitandloss(held
fortrading)R’000
Loansandreceivables
R’000
Otherliabilities
atamortisedcost
R’000Fairvalue
R’000
Financial assetsTradeandotherreceivables 710967 – 710967 – 710967Cashandcashequivalents 88827 – 88827 – 88827
799794 – 799794 – 799794
Financial liabilitiesFinanceleaseliabilities 4278 – – 4278 4292Securedsecuritisationloan 300000 – – 300000 296078Tradeandotherpayables 550627 – – 550627 550627FECLiability 18 18 – – 18Bankoverdrafts 2352 – – 2352 2352
857275 18 – 857257 853367
Unrecognisedgain 3908
Interest rates used for determining fair value
Theinterestratesusedtodiscountestimatedcashflows,whenapplicable,arebasedonthegovernmentyieldcurveatthereportingdateplusanadequatecreditspread,andwereasfollows:
2012 2011
Financeleaseliabilities 8.00% – 11.70% 8.00%–11.58%Securedsecuritisationloan 8.19 – 11.70% 8.15–11.20%
79
Fair value hierarchy
Thetablebelowanalysesfinancialinstrumentscarriedatfairvalue,byvaluationmethod.Thedifferentlevelshavebeendefinedasfollows:
Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset orliability,eitherdirectly(ie,asprices)orindirectly(ie,derivedfromprices)
Level3:inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).
30 June 2012 Level 1 Level 2 Level 3 Total
Financial liabilities
FECLiability(R’000) – 160 – 160
– 160 – 160
30June2011 Level1 Level2 Level3 Total
Financial liabilities
FECLiability(R’000) – 18 – 18
– 18 – 18
Credit risk
Exposure to credit risk
Refertotradeandotherreceivables(note12)andcashandcashequivalents(note13).
Liquidity risk
The following are the contractual maturities of financial liabilities, including interest payments andexcludingtheimpactofnettingagreements:
Carrying amount
R’000
Contractual cash flows
R’000
6 months or lessR’000
6 – 12 months
R’000
1 – 2yearsR’000
2 – 5yearsR’000
5 yearsR’000
30 June 2012Non-derivative financial liabilitiesSecuredsecuritisationloan 300 000 (423 254) (15 482) (15 482) (30 965) (196 145) (165 180)Financeleaseliabilities 2 984 (3 225) (596) (596) (2 001) (32) –Tradeandotherpayables 464 359 (464 359) (464 359) – – – –Securedbankoverdraft 4 235 (4 235) (4 235) – – – –
771 578 (895 073) (484 672) (16 078) (32 966) (196 177) (165 180)
30June2011
Non-derivative financial liabilitiesSecuredsecuritisationloan 300000 (375364) (14019) (164019) (15775) (181551) –
Financeleaseliabilities 4278 (4892) (1292) (540) (2160) (900) –
Tradeandotherpayables 552194 (552194) (552194) – – – –
Securedbankoverdraft 2352 (2352) (2352) – – – –
858824 (934802) (569857) (164559) (17935) (182451) –
Currency risk
30 June 2012 30June2011EURO USD GBP EURO USD GBP
Tradereceivables – 578 – 73 641 0Tradepayables (773) (7 485) – (304) (10335) (2)
Grossstatementoffinancialpositionexposure (773) (6 907) – (231) (9694) (2)Forwardexchangecontracts 410 805 – 405 65 –
Netexposure (363) (6 102) – 174 (9629) (2)
80
Thefollowingsignificantexchangeratesappliedduringtheyear:
Average rate Reporting date mid-spot rate2012 2011 2012 2011
USD1 7.768 6.953 8.189 6.779EUR1 10.383 9.555 10.386 9.822AUD1 8.055 6.940 8.392 7.258CAD1 7.740 6.959 8.039 7.027GBP1 12.323 11.074 12.862 10.873
Sensitivity analysis
A10%strengtheningof theZARagainst the followingcurrenciesat30Junewouldhave (increased)/decreasedequityandprofitor(loss)bytheamountsshownbelow.Thisanalysisassumesthatallothervariables,inparticularinterestrates,remainconstant.Theanalysisisperformedonthesamebasisfor2011.
R’000 Equity Profit or loss
30 June 2012USD (4 997) 4 997EUR (377) 377
30June2011USD (6528) 6528EUR 171 (171)
A10%weakeningof theZARagainst the above currencies at 30 Junewouldhavehad the equal butoppositeeffectontheabovecurrenciestotheamountsshownabove,onthebasisthatallothervariablesremainconstant.
A10%strengtheningof theZARagainst the followingcurrenciesat30Junewouldhave (increased)/decreasedequityandprofitor(loss)bytheamountsshownbelow.Thisanalysisassumesthatallothervariables,inparticularinterestrates,remainconstant.Theanalysisisperformedonthesamebasisfor2011.(Includesforeigngainsorlossesexposureoninter-groupforeigncurrencyloans).
R’000 Equity Profit or loss
30 June 2012USD (12 176) 5 131AUD 12 652 306EUR 10 312 382CAD (122) 122TRY 140 (140)PESO 53 (53)
30June2011USD (10655) 6603AUD 7996 170EUR 10086 (171)CAD 94 (94)TRY – –PESO – –
81
A10%weakeningof theZARagainst the above currencies at 30 Junewouldhavehad the equal butoppositeeffectontheabovecurrenciestotheamountsshownabove,onthebasisthatallothervariablesremainconstant.
Interest rate risk
Profile
Carrying amount
2012 2011
Fixed rate instrumentsFinancialliabilities (254 000) (104691)
(254 000) (104691)
Variable rate instrumentsFinancialassets 121 270 88827Financialliabilities (53 219) (201939)
68 051 (113112)
Fair value sensitivity analysis for fixed rate instruments
TheGroupdoesnotaccountforanyfixedratefinancialassetsandfinancialliabilitiesatfairvaluethroughprofitorloss,andtheGroupdoesnotdesignatederivatives(interestrateswaps)ashedginginstrumentsundera fairvaluehedgeaccountingmodel.Thereforeachange in interestratesat thereportingdatewouldnotaffectprofitorloss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased)equityandprofitorlossbytheamountsshownbelow.Thisanalysisassumesthatallothervariables,inparticularforeigncurrencyrates,remainconstant.Theanalysisisperformedonthesamebasisfor2011.
Loss or profit Equity
100 bpincrease
100 bpdecrease
100 bpincrease
100 bpdecrease
30 June 2012
Variable rate instruments 681 (681) – –Cash flow sensitivity (net) 681 (681) – –
30June2011
Variablerateinstruments (1131) 1131 – –Cashflowsensitivity(net) (1131) 1131 – –
82
ANNExURE 7
INTERIM FINANCIAL RESULTS OF GIJIMA FOR THE SIx MONTHS ENDED 31 DECEMBER 2011 AND 31 DECEMBER 2012
The consolidated interim financial results of Gijima for the six months ended 31 December 2011 and31 December2012issetoutbelow.TheannualfinancialstatementsofGijimaforthelastthreefinancialperiodshavebeenauditedbyKPMGInc.Anunqualifiedauditopinionwasissuedinallthreeperiods.TheunauditedfinancialstatementsfortheinterimfinancialresultsofGijimaforthesixmonthsended31December2011and31 December2012willbeavailableforinspectionasdescribedinparagraph13ofthisCircular.
ThisreportoninterimfinancialresultsistheresponsibilityoftheDirectorsofGijima.NomaterialfactorcircumstancehasoccurredbetweenthelatestinterimfinancialresultsofGijimaandtheLastPracticableDate.
No adjustments concerning the correction of fundamental errors or application of changes in accountingpolicieshavebeenmadeinpreparingthereportofhistoricalfinancialinformation.Non-materialadjustmentshavebeenmadeforcomparativepurposesonly.Therehavebeennosubsidiaries,foreignsubsidiariesincluded,whosefinancialreportswerenotcompletedaccordingtoIFRS.
83
GIJIMA GROUP LIMITEDCondensed consolidated income statement for the period ended 31 December 2012
Unaudited31 December
2012(6 months)
R’000
Restated31December
2011(6months)
R’000
Restated30June
2012(12months)
R’000
Continuing operationsRevenue 911 207 1186508 2219239Otheroperatingincome 400 2636 8621
Income 911 607 1189144 2227860
(Loss)/Earnings before interest, tax, depreciation and amortisation charges (EBITDA) (100 260) 56742 (26319)
EBITDAbeforereclassificationofnetinvestment (97 764) 56742 (26319)Reclassificationofcurrencytranslationonnetinvestments (2 496) – –
Depreciationandamortisationcharges (23 100) (23356) (45777)
Operating (loss)/profit (123 360) 33386 (72096)
Financialincome 1 010 3670 6353Financialexpenses (19 476) (15730) (29314)
Net financial expense (18 466) (12060) (22961)
(Loss)/Profit before tax (141 826) 21326 (95057)Incometax 35 621 (8387) 25444
(Loss)/Profit for the period from continuing operations (106 205) 12939 (69613)
Discontinued operationsProfit from discontinued operation, net of tax 82 471 15628 19023
Netlossbeforereclassificationofcurrencytranslationofnetinvestmentsandprofitondisposalofbusiness 9 529) 15628 19023Profitondisposalofbusiness 63 479 – –Reclassificationofcurrencytranslationofnetinvestmentsduetodisposalofbusiness 41 332 – –Taxeffectonadjustments (12 811) – –
(Loss)/Profit for the period (23 734) 28567 (50590)
Total (loss)/profit attributable to:Ownersoftheparent (24 411) 29800 (50785)Non-controllinginterest 677 (1233) 195
(23 734) 28567 (50590)
Weighted average number of shares (000’s) 961 565 961565 961565Diluted number of shares (000’s) 961 565 961565 961565Number of shares in issue (000’s) 961 565 961565 961565Earnings per shareBasic earnings/(loss) per ordinary share (cents) (2.54) 3.10 (5.28)Diluted earnings/(loss) per ordinary share (cents) (2.54) 3.10 (5.28)Headline earnings/(loss) per ordinary share (cents) (10.58) 3.11 (5.27)Diluted headline earnings/(loss) per ordinary share (cents) (10.58) 3.11 (5.27)
84
Unaudited31 December
2012(6 months)
R’000
Restated31December
2011(6months)
R’000
Restated30June
2012(12months)
R’000
Calculation of headline earnings/(loss)Profit/(Loss)attributabletoownersoftheparent (24 411) 29800 (50785)Profitondisposalofbusiness (63 479) – –Reclassificationofcurrencytranslationonnetinvestments (38 836) – –Taxeffectofreclassificationonnetinvestments 24 819 – –Lossonsaleofproperty,plantandequipment 199 175 168Taxeffect (56) (49) (47)
Headline earnings/(loss) (101 764) 29926 (50664)
Earnings per share – continuing operations(Loss)/Profit attributable to:Ownersoftheparent (106 882) 14172 (69808)Non-controllinginterest 677 (1233) 195
(106 205) 12939 (69613)
Basic (loss)/earnings per ordinary share (cents) (11.12) 1.47 (7.26)Diluted (loss)/earnings per ordinary share (cents) (11.12) 1.47 (7.26)Headline (loss)/earnings per ordinary share (cents) (9.59) 1.49 (7.25)Diluted headline (loss)/earnings per ordinary share (cents) (9.59) 1.49 (7.25)
Calculation of headline (loss)/earnings(Loss)/profitattributabletoownersoftheparent (106 882) 14172 (69808)Reclassificationofcurrencytranslationonnetinvestments 2 496 – –Taxeffectonreclassificationonnetinvestments 12 009 – –Lossonsaleofproperty,plantandequipment 188 152 98Taxeffect (53) (43) (27)
Headline (loss)/earnings (92 242) 14281 (69737)
85
GIJIMA GROUP LIMITEDCondensed consolidated statement of comprehensive income for the period ended 31 December 2012
Unaudited31 December
2012R’000
Unaudited31December
2011R’000
Audited30June
2012R’000
(Loss)/Profit for the period (23 734) 28567 (50590)OthercomprehensiveincomeCurrencytranslationdifferencesforforeignoperations 39 361 2849 2844Currencytranslationonthenetinvestmentsforforeignoperations 13 342 10861 11496Reclassificationsofcurrencytranslationoninvestmentsforforeignoperations (39 190) – –Revaluationofproperty,plantandequipment – – 3839Incometaxonothercomprehensiveincome (452) (4925) (34)
Total comprehensive (loss)/income for the period (10 673) 37352 (32445)
Total comprehensive (loss)/income attributable to(Loss)/Profitattributabletoownersoftheparent (11 350) 38585 (32640)Profit/(Loss)attributabletonon-controllinginterest 677 (1233) 195
(10 673) 37352 (32445)
Notes to the condensed consolidated financial statements
1. Statement of compliance
ThecondensedGroupinterimfinancialstatementsarepreparedandpresentedinaccordancewiththeJSELimitedListingsRequirements;theCompaniesAct(Act71of2008);andtherecognitionandmeasurementrequirements of International Financial Reporting Standards and the presentation and disclosurerequirementsofInternationalAccountingStandard34andtheFinancialReportingGuideasissuedbytheAccountingPracticesCommitteeofSAICA,oftheGroup’sunauditedfinancialstatements.
Thesecondensedconsolidatedfinancialstatementsdonotincludealloftheinformationrequiredforfullannualfinancialstatements,andshouldbereadinconjunctionwiththeconsolidatedfinancialstatementsoftheGroupasatandfortheyearended30June2012.
ThecondensedconsolidatedfinancialstatementshavebeenpreparedbyPierreJoubertCA(SA),theGroupManager,FinancialAccounting.
ThesecondensedconsolidatedannualfinancialstatementswereapprovedbytheBoardofDirectorson20 February2013.
2. Significant accounting policies
TheaccountingpoliciesappliedbytheGroupinthesecondensedconsolidatedinterimfinancialstatementsarethesameasthoseappliedbytheGroupinitsconsolidatedfinancialstatementsasatandfortheyearended30June2012.
86
3. Operating profit/(loss)
Thefollowingmaterialitemshavebeenincludedinthecalculationofoperatingprofit
Unaudited31 December
2012R’000
Unaudited31December
2011R’000
Audited30June
2012R’000
Continuing operationsExchangerategains/(losses)ontranslationofforeigncurrency 532 (8503) (8972)Exchangeratelossesonreclassificationofcurrencytranslationonnetinvestments (2 496) – –Reversalofanaccrual – 35970 35970Lossonsaleofproperty,plantandequipment (188) (152) (98)
Discontinued operationsExchangeratelossesontranslationofforeigncurrency (1 063) (1006) (2605)Exchangerategainsonreclassificationofcurrencytranslationonnetinvestments 41 332 – –Profitondisposalofbusiness 63 479 – –Lossonsaleofproperty,plantandequipment (11) (23) (70)
101 585 26286 24225
4. Disposal of subsidiaries
InNovember2012theGijimasolditsminingtechnologyandconsultingbusinesses(MineRPBusinesses).The MineRP Businesses was not classified as held for sale or as a discontinued operation at 30 June2012, and the comparative condensed consolidated income statement has been restated to show the discontinued operation separately from the continuing operations.TheBoardandExecutiveCommitteecommittedtoaplantoselltheMineRPbusinessesearlyinthe2013financialyearandwassubjecttokeyapprovalsforthesaletobevalidsuchastheCompetitionCommissionandJSEapproval.Allapprovalswerecompleted9November2012.
Effect of discontinued operation on the condensed consolidated
Income statement:
Revenue 86 017 150117 310829Expenses (102 568) (129945) (287826)
Results from operating activities (16 551) 20172 23003Netfinancialincome 107 502 771
Results from operating activities, after financial expenses (16 444) 20674 23774Taxation 6 915 (5046) (4751)
Results from operating activities, net of tax (9 529) 15628 19023Gainonsaleofbusiness 63 479 – –Reclassificationofcurrencytranslationonnetinvestments 41 332 – –Taxationonreclassificationofnetinvestments (12 811) – –
Profit for the year 82 471 15628 19023
Basic earnings/(loss) per ordinary share (cents) 8.58 1.63 1.98Diluted earnings/(loss) per ordinary share (cents) 8.58 1.63 1.98Headline (loss)/earnings per ordinary share (cents) (0.99) 1.63 1.98Diluted headline (loss)/earnings per ordinary share (cents) (0.99) 1.63 1.98Cash flows from discontinued operations:Netcashgeneratedfromoperatingactivities 15 559 31460 8315Netcashgeneratedfrom/(usedin)investingactivities 151 134 (3275) (5803)
Effect on cash flows 166 693 28185 2512
87
Effect of discontinued operation on the condensed consolidated
Statement of financial position:
Audited30 June
2012R’000
Property,plantandequipment (7121)Intangibleassets (1387)Deferredtaxassets (5169)Inventories (757)Tradeandotherreceivables (48257)Currenttaxassets (7071)Cashandcashequivalents (22679)Deferredtaxliabilities 70Tradeandotherpayables 31618Currencytranslationdifferences (50768)
Net assets and liabilities (111521)
Considerationreceived,satisfiedincash 175000Cashandcashequivalentsdisposedof (22679)
Netcashinflow 152321
Considerationreceived 175000Netassetsandliabilities (111521)
Profitondisposalofbusiness 63479
Recyclingofnetinvestmentondisposalofbusiness 41332Profitbeforetaxondisposalofbusiness 104811Taxonrecyclingofnetinvestmentondisposalofbusiness (12811)
Profit on disposal of business 92000
5. Contingent liabilities
At31December2012 theGrouphadcontingent liabilities inrespectofregisteredperformancebonds,bankleaseandotherguaranteestothevalueofR17.5million(June2012:R28.8million).
6. Segment analysis
From 1 July 2012 Gijima formally changed to a new reporting structure which comprises of mainlySystemEngineeringandServiceswhichisachangefrompreviouslyreportedProfessionalandManagedServices.Asaresultthesegmentalanalysishavebeenrestated.
88
GIJIMA GROUP LIMITEDCondensed consolidated segmental analysis for the period ended 31 December 2012
Unaudited31 December
2012R’000
Restated31December
2011R’000
Restated30June
2012R’000
RevenueSystemsEngineering 109 280 278269 431593Services 569 012 738480 1433171DiscreteSolutions 240 789 183529 381557MineRPBusinesses 86 017 150117 310829
1 005 098 1350395 2557150Eliminationofdiscontinuedoperations (86 017) (150117) (310829)Internalrevenueadjustment (7 874) (13770) (27082)
Consolidated revenue 911 207 1186508 2219239
Segment resultsSystemsEngineering (132 853) (574) (60061)Services 8 591 54352 21156DiscreteSolutions 21 753 11891 29407MineRPBusinesses 82 335 11422 901
MineRPBusinessessegmentresults (22 476) 11422 901Reclassificationofcurrencytranslationonnetinvestmentsaspartofdisposalofbusiness 41 332 – –Profitondisposalofbusiness 63 479 – –
Consolidatedsegmentresults (20 174) 77091 (8597)Discontinuedoperations (89 323) (21178) (25608)
Eliminationofdiscontinuedoperations 15 488 (21178) (25608)Eliminationofreclassificationofcurrencytranslationonnetinvestmentsaspartofdisposalofbusiness (41 332) – –Eliminationofprofitondisposalofbusiness (63 479) – –
(109 497) 55913 (34205)Unallocatedexpenses (32 329) (34587) (60852)
Othercorporateexpenses (11 899) (14024) (28919)Reclassificationofcurrencytranslationofnetinvestments (2 496) – –Exchangerategains/(losses)ontranslation 532 (8503) (8972)Netfinancialexpense (18 466) (12060) (22961)
Consolidated (loss)/profit before tax of continuing operations (141 826) 21326 (95057)
89
GIJIMA GROUP LIMITED
Condensed consolidated statement of financial position as at 31 December 2012
Unaudited31 December
2012R’000
Unaudited31December
2011R’000
Audited30June
2012R’000
ASSETS
Non-current assets 401 538 354450 408276
Property,plantandequipment 77 013 84657 89828Intangibleassets 131 245 147965 141799Tradeandotherreceivables – – 18213Deferredtaxassets 193 280 121828 158436
Current assets 550 690 820538 696535
Inventories 39 195 27602 34459Tradeandotherreceivables 421 988 591857 539887Currenttaxassets 436 187 919Cashandcashequivalents 89 071 200892 121270
Total assets 952 228 1174988 1104811
EQUITY AND LIABILITIES
Equity attributable to owners of the parent 221 552 304370 232902
Non-controlling interest (2 333) (4438) (3010)
Non-current liabilities 336 677 225499 371887
Interest-bearingliabilities 256 501 152291 301980Operatingleaseliability 18 697 20761 19336Amountsduetovendors – 1019 –Deferredtaxliabilities 61 479 51428 50571
Current liabilities 396 332 649557 503032
Tradeandotherpayables 365 378 480809 464359Short-termborrowings – 150000 –Operatingleaseliability 2 066 5294 4451Provisions 28 888 2158 28020Bankoverdrafts – 1792 4235Amountsduetovendors – 1613 1967Currenttaxliabilities – 7891 –
Total equity and liabilities 952 228 1174988 1104811
90
GIJIMA GROUP LIMITED
Condensed consolidated statement of cash flows for the period ended 31 December 2012
Unaudited31 December
2012R’000
Unaudited31December
2011R’000
Audited30June
2012R’000
Cash flows from operating activities
Cashgenerated(usedin)/fromoperationsbeforeworkingcapitalchanges (114 101) 94293 36120Workingcapitalchanges 21 866 42521 48014Netfinancialexpense (25 051) (11276) (13690)
Interestreceived 1 169 4522 7214Interestpaid (26 220) (15798) (20904)
Dividendpaid – – –Taxpaid (5 898) 10866 3300
Netcash(usedin)/generatedfromoperatingactivities (123 184) 136404 73744
Cash flows from investing activitiesPurchaseofintangibleassets (1 097) (3433) (7577)Purchaseofproperty,plantandequipment (8 610) (18222) (33172)Decreaseinamountsduetovendors (1 915) (1686) (1686)Proceedsfromthedisposalofbusiness 175 000 – –Cashandcashequivalentsfromdisposalofbusiness (22 679) – –
Netcashgeneratedfrom/(usedin)investingactivities 140 699 (23341) (42435)
Cash flows from financing activitiesRepaymentofshort-termborrowings (479) (438) (150749)Repaymentofinterest-bearingborrowings (45 000) – –Increaseinshort-termloans – – 150000Increaseinfinanceliability – – –
Netcash(usedin)/generatedfromfinancingactivities (45 479) (438) (749)
Net increase/(decrease)in cash and cash equivalents (27 964) 112625 30560Cash and cash equivalents at the beginning of the year 117 035 86475 86475
Cash and cash equivalents at the end of the period 89 071 199100 117035
91
GIJ
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92
ANNExURE 8
INFORMATION ON THE DIRECTORS AND SENIOR MANAGEMENT OF GIJIMA AND ITS MAJOR SUBSIDIARIES
NON-ExECUTIVE DIRECTORS OF GIJIMA
Robert Wellington GumedePosition Non-executiveChairmanAppointed May2005Age 49Nationality SouthAfricanBusiness address GumaHouse,54PeterPlaceRoad,PeterPlaceOfficePark,Bryanston,2191Qualification BJurisExperience In 1992, Robert moved to Johannesburg where he assumed several key
positions: Business Development Director for Africa at Sukhulu Holdings(Proprietary)Ltd (1992-1994),BusinessDevelopmentExecutiveatLTALtdandDirectorofLTABuilding(Proprietary)LtdandLTAHousing(Proprietary)Ltd (1994-1996). The business industry and its leadership acknowledgedRobert’s remarkable ability as a strategist, salesman and entrepreneur bynominatingandvotinghimastheSouthAfricanChapterrunner-upcandidatefortheWorldEntrepreneuroftheYear2005.
Other directorships in the past five years
AmitrixInvestments;BlackInvestorGroup;Conymanzi;Conytrix;Conyvision;Conywiz; Duozone Investments; Four Rivers Trading 21; Gamele Trading;Gentechnologies; Gijima Group; Gijima Holdings; Gradocel; Grazipoint;GumaAfrikaConsulting;GumaCapital;GumaGroup;GumaIncentiveTrust;GumaInvestmentHoldings;GumaPrepaidServices;GumaPropertyHoldings;Guma Resources; Guma Smart Card Technologies; Guma Support; GumaTech; Guma Tech Group; Keni Afrika Properties; Kismet Investments 57;Magnolia Ridge Properties 29; Melody Street Trading 63; Mentor TradingAnd Investment 103; Mezotype; Moxirex; Nicha Beleggings; PrimetimeTrading 6; Prostart Properties 74; Ramistax; Rotifield (Rf); SheshisaInvestmentHoldings;Tarowiz;UnityFireTrading11;Volubiz;Volubyte;YeboGumaInvestments;andYesGroup.
Ashwin Hirjee TrikamjeePosition IndependentNon-executiveDirectorAppointed August2010Age 68Nationality SouthAfricanBusiness address 7TorsvaleCrescent,LaLuciaRidgeOfficeEstate,Durban,4319Qualification BJurisExperience Ashwinhasservedasanon-executivedirectorofSAPostOfficeLtdaswellas
theSABC.Hehasbeenapractisingattorneysince1974andhasactedasahighcourtjudgeonmanyoccasionsintheHighCourtofSouthAfrica.
Other directorships in the past five years
SouthAfricanBroadcastingCommissionSOCLtd;KZNGaming&Betting;OldMutualLifeAssuranceCompany(SA)Ltd;OldMutualHoldings(SA)Ltd;GijimaGroupLimited;GijimaHoldings(Pty)Ltd;andG10Investments(Pty)Ltd.
93
Jacobus Carolus Lodewiekus van der WaltPosition IndependentNon-executiveDirectorAppointed April1999Age 71Nationality SouthAfricanBusiness address 61RiverlaneRoad,101JohanRissikDrive,170Waterkloofrif,0181Qualifications BScEngineering(Industrial)Experience Jac’scareerof35yearsinthesteelandminingindustrystartedinIndustrial
Engineering and he was later part of the initial team responsible for theplanning and building of the Newcastle Steel Plant of Iscor Ltd. He thenmovedtothePretoriaSteelWorksheadingtheManagementServicesDivisionresponsible for long-term business planning, organisation development,productivityimprovement,materialsprocurementandlogistics,productionscheduling and industrial engineering. His last 10 years at Iscor he wasGeneralManager,InformationManagement,fortheGroup,responsiblefortheITservicesoftheGroup,includingtheroleofChiefInformationOfficer.HewasresponsibleforcommercialisingtheITDivisionwhichwaslaterlistedasASTLtd.HewasalsoamemberoftheIscorGroupExecutiveCommittee.
Other directorships in the past five years
MukhanyoTheologicalCollege.None
Andrew Fana Bambaphansi MthembuPosition IndependentNon-executiveDirectorAppointed June2005Resigned May2013Age 57Nationality SouthAfricanBusiness address 75GraystonDrive,SandtonQualifications BSc (Chemistry, Biology), BSc (Civil Engineering), MSc (Construction
Management),AdvancedManagementProgramme(AMP)andtheExecutiveManagementProgramme(EMP)
Experience AndrewhasheldthepositionofManagingDirectorofVodacom(Pty)LtdandVodacom International (Pty) Ltd for three years. He has also worked as aspecialICTAdvisortotheMinisterofPublicEnterprisesadvisingtheMinisterontherationalisationofICTinthestateownedenterprises.Andrewhasalsoheld a number of senior management positions in various companies,including,Tolcon,Otis,DevelopmentBankofSouthAfrica(DBSA)andtheMinistryofWorksandCommunication(Swaziland).
Other directorships in the past five years
Gijima Group Limited; Egoliwood Studios (Pty) Ltd; Johannesburg ExpoCentre (Pty) Ltd; Friedshelf 1049 (Pty) Ltd; Garmap (Pty) Ltd; GarminDistributionAfrica(Pty)Ltd;BRASAAdvisoryServices(Pty)Ltd;LinkafricaGroup(Pty)Ltd;H2ONetworksSouthAfrica;Linkafrica(Pty)Ltd;ImphandzeMarine(Pty)Ltd;ImphandzeMarineLogistics(Pty)Ltd;ImphandzeShipping(Pty)Ltd;ImphandzeSubtelServices(Pty)Ltd.
94
Malcolm MacdonaldPosition IndependentNon-executiveDirectorAppointed April1999Age 71Nationality SouthAfricanBusiness address 37DawsAvenue,Bedfordview,2008Qualifications BCom,CA(SA),ACIMAExperience MalcolmhasbeenaDirectorofAstralfoodsandGijimasincebefore2008and
adirectorofArcelorMittalSouthAfricasinceFebruary2010.Hewasalsoadirector of Coris Capital (a pension fund administrator and now part ofSanlam)untilFebruary2012.
Other directorships in the past five years
ArcelorMittal South Africa; Astral Foods; Coris Capital; Gijima Holdings;CorisCapitalHoldings.
Mark BussinPosition Independentnon-executiveDirectorAppointed March2012Age 50Nationality SouthAfricanBusiness address 12BoltonRoad,CornerSussex,Rosebank,2196Qualifications BSc,HDPM,MM,MCom,DComExperience Over 20 years’ remuneration and HR experience in executive positions in
multinational companies and in consulting organisations; immediate pastchairpersonofSMSRemunerationpanelfortheDepartmentofPublicServiceAdministration. Fellow of Institute of People Management (IPM), MasterPractitioner of SABPP (SA Board of People Practices), Global RewardPractitionerandTutorforWorldatWorkacrosstheglobe.
Other directorships in the past five years
Gijima Holdings; 21st Century Pay Solutions; 21 Century Pay SolutionsGroup; Blair Business Solutions; Cell-Bet Marketing Concepts; Servimark121;VIPHospitalitySolutions;WhiteCollarRenovations;andRegnum.
Victoria Nolitha FakudePosition FormerIndependentnon-executiveDirectorAppointed November2010Resigned March2013Age 49Nationality SouthAfricanBusiness address 1SturdeeAvenue,Rosebank,2196Qualifications BA(Hons)inPsychologyExperience Nolitha is an Executive Director of Sasol Limited and is responsible for
sustainability and business transformation. Her portfolio includes groupstrategyandpublicpolicyandregulatoryaffairs,grouphumanresources,Sasolsharedservicesandgroupstakeholderrelations.BeforejoiningSasolshe was a member of the group executive committee at Nedbank GroupLimited.ShewasalsodirectorofHarmonyGoldMiningCompanyLimited,BMFInvestmentLimitedandWoolworthsHoldingsLimited.SheisaformerNationalPresidentoftheBlackManagementForum(BMF).
Other directorships in the past five years
SasolGasLtd;SasolGroupServices(Pty)Ltd;SasolMining(Pty)Ltd;SasolMiningHoldings(Pty)Ltd;SasolNewEnergyHoldings(Pty)Ltd;SasolOil(Pty) Ltd; Sasol Chemical Industries Limited; Sasol Synfuels (Pty) Ltd;Free FallTrading178(Pty)Ltd;LosikaTrading(Pty)LtdandHuntrex192(Pty) Ltd.
95
John MillerPosition FormerIndependentnon-executiveDirectorAppointed October2000Resigned February2013Age 72Nationality SouthAfricanBusiness address RetiredQualification AEPExperience John joinedwhat became the IT industry in1961.Hehas extensive sales,
marketingandgeneralmanagementexperienceintheICTindustry.Hehelda position as Managing Director of Unisys Africa, Executive Director ofUnidata, Managing Director of Compusons and National Sales Director ofICL.HewasappointedatASTasMarketingDirectorin2001andthenlaterasChiefExecutiveOfficer(CEO)ofASTinDecember2002.HeretiredasCEOon1July2007andjoinedtheBoardofDirectorsasaNon-executiveDirectoruntilFebruary2013.
Other directorships in the past five years
A-finCapital;AfrodizzyLeisure;ASTAbraxasITSolutions;ASTDistributedTechnology Services; AST Enterprise Hosting; AST Enterprise SolutionsManagement; Bentley West Strategic Consulting; Business and DesignSoftware;CMSProcessPerformanceImprovementSolutions;CortechSales;GijimaHoldings;ModjadjiLodge;andUnisysAfricaLimited.
ExECUTIVE DIRECTORS OF GIJIMA
Eileen WiltonPosition InterimChiefExecutiveOfficerAppointed June2012Age 53Nationality SouthAfricanBusiness address 47LandmarksAvenue,Kosmosdal,Samrand,0057Qualifications BCom(Hons),TTHDEHigherDiplomainEducationExperience EileenheldtwoCIO(ChiefInformationOfficer)positionsatlargeinternational
companies,namelyAngloAmericanandOldMutualSouthAfrica.Atthesecompanies she was responsible for developing and implementing their ITstrategies and all aspects of ICT service delivery. In addition she wasresponsibleforglobalICTsourcingarrangementsandsignedin2007whatwas then South Africa’s largest ICT service outsource deal between OldMutual, Mutual & Federal and T-Systems. She also worked as principalconsultantforvariousconsultingcompaniesdevelopingICTstrategiesandGovernance models, as well implementing SAP programmes. Her currentresponsibilities at Gijima involve developing and delivering industrialisedservicedeliverycapabilities.In2009,shewasawardedtheWoman’sLeadershipaward.
Other directorships in the past five years
GlobalEdgeTechnologies(Pty)Ltd,awhollyownedsoftwarecompanyofOldMutual.Deliversthefundsupermarketplatform,forOldMutual’snon-SouthAfricancompanies.In2009,Eileenwasawardedaccoladesforbeingthebestfundsupermarketplatform.
96
Carlos Jorge Henriques FerreiraPosition ChiefFinancialOfficerAppointed May2005Age 42Nationality SouthAfricanBusiness address 47LandmarksAvenue,Kosmosdal,Samrand,0057Qualification BCom(Hons),MBAExperience CarlosholdsaBComm(Hons)degreeandanMBAfromManchesterBusiness
School and has worked in the corporate and merchant banking arena for12 yearsforinstitutionsincludingAbsa,StandardBankGroupLimitedandTA Bank Limited. He is experienced in not only traditional financialaccounting, but also in corporate banking, corporate finance and privateequity.Carlos was appointed at Guma to head up group finance and to assist incorporatefinanceactivities,includingtheassessmentofpotentialmergerandacquisitionopportunities.HewasappointedtheFinancialDirectorofGijimain2005afterthesuccessfulmergerofGijimaandAST,hewasinstrumentalinthefinancialturnaroundoftheCompany.Carlos is also responsible for the merger, acquisitions and finances of theGijimaGroup.Carlos has played a major role in the development and growth of Gijimabringingprudenceandfinancialdiscipline.
Other directorships in the past five years
Cast Arena Trade and Invest 112; Duozone Investments; Gradocel; GumaSupply Chain Management; Kismet Investments 57; Moxirex; PrimetimeTrading6;Ramistax;Rotifield;TourvestGroup;TourvestHoldings;Volubiz;Volubyte;MainStreet700;Baziphase;YeboGuma;GumaTech;GumaSupport;GumaInvestmentHoldingsandGumaTechGroup.
Jonas BogoshiPosition FormerChiefExecutiveOfficerAppointed July2007Resigned December2012Age 47Nationality SouthAfricanBusiness address 47LandmarksAvenue,Kosmosdal,Samrand,0057Qualification BScComputerScienceExperience JonasBogoshiwastheChiefExecutiveOfficerofGijimaGroupLimitedsince
2007,heresignedeffective31December2012.Hehasspent20yearsworkingforsomeofSouthAfrica’sleadingprivateandpublicsectorinformationandcommunicationtechnologyplayers.HehasworkedforbluechipcompaniessuchasIBMandCiscoSystems.
Other directorships in the past five years
DigitalPartnersSouthAfrica;BengBaMmeMining;EnsaladaInvestments504;GamoimaInvestmentHoldings;andGijimaHoldings.
SENIOR MANAGEMENT OF GIJIMA
Thandisizwe kopoloPosition ChiefClientOfficer:PublicServicesAppointed August2011Age 37Nationality SouthAfricanBusiness address 47LandmarksAvenue,Kosmosdal,Samrand,0057Qualification DiplomainSoftwareDevelopmentExperience Thandisizwehas15years’experienceinIT.Hehasextensiveexperiencein
thepublicsectorandstate-ownedenterprisespaceasaseniorconsultantinITnetworksandITsecurity,projectmanagement.HehasworkedfortheStateInformation Technology Agency, consulting and advising the criminal,justice and security cluster onall IT security relatedmatters.His currentresponsibilities involve managing a team of key account executives indevelopingandexecutingnewbusinessdevelopmentstrategieswithinvariousGijimakeyGovernmentaccounts.
Other directorships in the past five years
None
97
Michael FerreiraPosition ManagingExecutive,HumanResourcesAppointed May1999Age 49Nationality SouthAfricanBusiness address 47LandmarksAvenue,Kosmosdal,Samrand,0057Qualifications BCom(Hons)IndustrialPsychology,DiplomaLabourRelationsExperience Michael successfully held three Human Capital Director positions at top
SouthAfricancompanies,namelyDenel,EDSandGijima.Theseinvolvedthedevelopment,definition,andimplementationoftheHumanCapitalstrategy,as well as major people related projects such as SAP implementations,establishing Internal Communications and Learning Centers and theachievementoftransformationobjectivestobethemostempoweredcompanyintheICTsector.Inaddition,heimplementedvariousBusinessImprovementProgramsnecessarytoachievechangeonalargescale.Healsoestablishedemployeebenefit,supportandincentiveprogramsforvariousorganisations.
Other directorships in the past five years
None
Shane CooperPosition StrategyExecutionOfficerAppointed July2010Age 36Nationality SouthAfricaBusiness address 47LandmarksAvenue,Kosmosdal,Samrand,0057Qualifications Bcompt(Hons),PalladiumGraduateExperience 12 years in ICT, with extensive experience in the financial aspects of ICT
service delivery. Significant experience in business turnaround activities,alongwithstrategyformulation,planninganddevelopment.FouryearswithKPMG
Other directorships in the past five years
None
Ulli ReynekePosition ChiefClientOfficer:FinancialServicesAppointed June2012Age 55Nationality SouthAfricanBusiness address 47LandmarksAvenue,Kosmosdal,Samrand,0057Qualifications BScComputerScience,IBMInternationalCertifiedClientExecutiveExperience 31yearsofICTexperienceOther directorships in the past 5 years
Cornastone Consulting Group (Pty) Ltd; Cornastone Consulting (Pty) Ltd;Cornastone Software Solutions (Pty) Ltd; Cornastone Mobile Solutions(Pty) Ltd;CornastoneServices(Pty)Ltd.
98
Tony de SousaPosition ProductsExecutiveAppointed October2011Age 53Nationality SouthAfricanBusiness address 47LandmarksAvenue,Kosmosdal,Samrand,0057Qualification ACIS–InstituteofCharteredSecretariesandAdministratorsExperience Tonyhasover20years’experiencebuildingandleadinghighperformance
teams selling into the enterprise market, and developing new marketopportunities in Europe and North America, with focus on applicationdevelopment, cloud computing, mobility and convergence of emergingtechnologies.After18yearsabroad,TonyrelocatedbacktoSouthAfricainOctober2011andjoinedGijimaasExecutiveresponsibleforProductsanddevelopmentofMobility business. Tony is currently responsible for Gijima’s go-to-marketofferingsandstrategy.PriortoGijima,TonyheldanumberofseniorpositionsincludingEVPSalesatOutSystems,VPEMEAatSelectica,VPSalesatMotive,VPSalesNorthAmericaatSterlingSoftware,andErnest&Young.
Other directorships in the past five years
None
99
ANNExURE 9
ExTRACTS FROM THE MOI
13.1 Composition of the Board
TheBoardshallcomprisenot less than theminimumnumberofDirectorsrequired in termsof theCompaniesActbutalwayssubjecttotheminimumnumberofDirectorsrequiredintermsoftheListingsRequirements,being4(four)DirectorsasatthedateoftheadoptionofthisMOI.
13.2 Appointment of Directors
13.2.1 Election by Shareholders
Subjecttoarticle13.2.4,alloftheDirectorsmustbeelectedbyShareholdersentitledtoexercisevotingrightsatanygeneralmeetingorannualgeneralmeeting(providedthatsuchmeetingmaynotbeconductedintermsofsection 60oftheCompaniesAct),ascontemplatedintheListingsRequirements, andShareholders shallhave the right tonominateanyperson for electionasaforesaid.
13.2.2 Eligibility or qualification criteria for Directors
Inadditiontosatisfyingthequalificationandeligibilityrequirementssetoutinsection 69oftheCompaniesAct,withoutlimitingtherightsofShareholdersandDirectorstoremoveaDirectorundercertaincircumstancesundertheCompaniesAct,aDirectororPrescribedOfficershallnotbeentitledtoremainservingasaDirectororaPrescribedOfficeroftheCompanyifheorsheisemployedwiththeCompanyintermsofanycontractofemployment,andsuchemploymentcontractisterminated.
13.2.3 Employment of Directors in other capacities
ADirectormaybeemployedinanyothercapacityintheCompanyorasaDirectororemployeeofacompanycontrolledby,oritselfasubsidiaryoftheCompany,inwhicheventtheappointmentand remuneration of such Director in respect of such other office must be determined by adisinterestedquorumofDirectors.
13.2.4 Board’s authority to fill a casual vacancy
13.2.4.1 The Board has the authority to appoint a person to fill a casual vacancy or as anaddition to the Board, subject to confirmation by Shareholders at the next annualgeneralmeetingoftheCompany,failingwhichtheappointedpersonmustvacatehisorheroffice.
13.2.4.2 TheCompanyingeneralmeetingmayfillthevacatedofficesbyelectingalikenumberofpersonstobeDirectors,andmayfillothervacancies.
13.2.5 Appointment of additional Directors to constitute prescribed minimum
ShouldthenumberofDirectorsfallbelowtheminimumnumberprovidedforinarticle0,theremainingDirectorsmustassoonaspossibleandinanyeventnotlaterthan3(three)monthsfrom thedate onwhich thenumberofDirectors fall below theprescribedminimum,fill thevacanciesorcallageneralmeetingforthepurposeoffillingthevacancies.ThefailurebytheCompanytohavetheminimumnumberofDirectorsprovidedforinarticle0ofthisMOIduringthe 3 (three) month period does not limit or negate the authority of the Board or invalidateanythingdonebytheBoardortheCompanyduringsuchperiod.Aftertheexpiryofthe3(three)monthperiod,theremainingDirectorsshallonlybepermittedtoactforthepurposeoffillingvacanciesorcallinggeneralmeetingsoftheCompany.
13.3 No life Directorships or Directorships for indefinite periods
LifeDirectorshipandDirectorshipsforanindefiniteperiodshallnotbeallowedintheCompany.
13.4 Rotation of non-executive Directors
13.4.1 Attheannualgeneralmeeting(providedthatsuchmeetingisnotconductedintermsofsection 60oftheCompaniesAct)heldineachyear1/3(one-third)ofthenon-executiveDirectors,oriftheirnumberisnotamultipleof3(three),thenthenumbernearestto,butnotlessthan1/3(one-third)ofthenon-executiveDirectors,shallretirefromoffice.
13.4.2 Thenon-executiveDirectorstoretireintermsof article0shallbethosewhohavebeenlongestinofficesincetheirlastelectionprovidedthat:
100
13.4.2.1 ifmorethanoneofthemwereelectednon-executiveDirectorsonthesameday,thosetoretireshallbedeterminedby lotunless thoseDirectorsagreeotherwisebetweenthemselves;
13.4.2.2 ifatanyannualgeneralmeetinganynon-executiveDirectorwillhaveheldofficefor3 (three) years sincehis orher election,he or she shall also retire at suchannualgeneralmeeting;
13.4.2.3 the length of time a non-executive Director has been in office shall, subject to theprovisionsofarticle 13.4.2.2,bereckonedfromthedateofhisorherlastappointmentasanon-executiveDirector;
13.4.2.4 ifanon-executiveDirectorisrequiredtoretireatanygeneralmeetingthenheorsheshall continue to be a non-executive Director until the election of Directors at thatmeetingisconcluded; and
13.4.2.5 a retiring non-executive Director may be re-elected, provided that they are eligibleforre-election,andtheBoard,throughthenominationcommittee,shouldrecommendeligibility,takingintoaccountpastperformanceandcontributionmade,providedthatthere-electionofanysuchnon-executiveDirectormaynotbeconductedintermsofsection 60oftheCompaniesAct.
13.8 Directors’ remuneration
Theauthority of theCompany topay remuneration to theCompany’sDirectors for their services asDirectorsoftheCompany,inaccordancewithaspecialresolutionapprovedbytheCompany’sShareholderswithintheprevioustwoyears,assetoutintheCompaniesActisnotamended.
13.9 Directors’ expenses
TheDirectorsmaybepaidalltheirtravellingandotherexpensesproperlyandnecessarilyincurredbytheminandaboutthebusinessoftheCompanyandinattendingmeetingsoftheBoardorcommitteesthereof,andifanyDirectorisrequiredbytheCompanytoperformanyservicesinadditiontohisorherservicesasaDirector,ortoresideabroad,orshallbespecificallyoccupiedabouttheCompany’sbusiness,suchDirectormaybeentitledtoreceivesuchremunerationasisdeterminedbyadisinterestedquorumofDirectorsintheirsolediscretion,whichremunerationmaybeinadditiontoorinsubstitutionforanyotherremunerationpayable,itbeingrecordedthattheCompanyisnotobligedtomakeanypaymentcontemplatedinthisarticle…
13.11 Borrowing powers
13.11.1FromtimetotimetheDirectorsmayborroworraiseforthepurposesoftheCompanysuchsumsastheydeemfit.
13.11.2TheDirectorsmayraiseorsecurethepaymentorrepaymentofsuchmoneysinsuchmanneranduponsuchtermsandconditionsinallrespectsastheythinkfit,andinparticularbymortgagebond.
13.11.3Thegrantingofspecialprivilegestoholdersofdebtinstruments,asdefinedinsection43(1)oftheCompaniesAct,suchasattendingandvotingatgeneralmeetingsandtheappointmentofDirectors,isprohibited.
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103
ANNExURE 11
CORPORATE GOVERNANCE
CORPORATE PRACTICE AND CONDUCT
We affirm our commitment to the principles of openness, integrity and accountability and to providingtimeous,relevantandmeaningfulreportingtoallstakeholdersassetoutintheKingReportonGovernanceforSouthAfrica,2009 (“King III”).During thepreviousfinancialyear, theaudit committee evaluated theGroup’sgovernanceprocessesandpracticesagainsttherecommendationsofKingIIIonbehalfoftheBoardinordertoidentifygapsandtoimplementappropriatemeasuresinordertoaddressthesegapswhereitbelievesthistobeinthebestinterestoftheCompany.
Theinformationbelowisbasedonthecurrentgovernancepracticesandprocesses.
STATEMENT OF COMPLIANCE
JSELimited
TheCompanyissubjectto,andremainscompliantwith,theListingsRequirementsoftheJSELimited.
KingReportonGovernanceforSouthAfrica,2009
Aspartofitscommitmenttogoodcorporategovernance,theCompanycontinuestoapplytherecommendationsascontainedinKingIIIandtoidentifyareaswheresuchapplicationcanbyenhancedinthebestinterestoftheCompany.
BOARD OF DIRECTORS
GijimahasaunitaryBoardstructurecomprisingofNon-executiveandExecutiveDirectors.ThemajorityofNon-executiveDirectorsareindependent.Assuch,thereexistsacleardivisionofresponsibilitiesatBoardleveltoensureabalanceofpowerandauthority,andnooneindividualhasunfetteredpowersofdecision-making.
TheBoard isresponsible fordirectingandcontrollingstrategyandactivitiesandforproviding leadershipand guidance to executive management in terms of an approved charter which delegates authority to theChiefExecutiveOfficer.TheBoardhasaformalcharterwhichsetsoutitsroleandresponsibilitiesinareassuchasethicalleadership,strategy,financialmanagement,riskmanagement,compliance,sustainabilityandgovernanceingeneral.ThecharteraddressesthespecificdutiesofindividualDirectorsbothintermsofthecommonlawaswellastheprovisionsoftheCompaniesActof2008.ImportantelementsofgoodgovernancethatarealsocoveredinthecharterincludetheroleoftheChairmanandtheChiefExecutiveOfficer,thefocusonstakeholderrelationships,theimplementationofaproperdelegationofauthorityandthecompositionandevaluationoftheBoardanditsvariouscommittees.TheBoardissatisfiedthat,fortheyearunderreview,ithascompliedwith thetermsofitscharter.
At30 June 2012,theBoardcomprisedtwoExecutiveDirectors(MessrsBogoshiandFerreira)andeightNon-executiveDirectors(MessrsGumede,Macdonald,Miller,Mthembu,VanderWaltTrikamjee,DrBussinandMsFakude).InviewofthefactthatthechairmanoftheBoard,MrRWGumede,isnotanindependentnon-executiveDirector,MrMthembahasbeenappointedtofulfiltheroleofLeadIndependentDirectorasrecommendedinKingIII.
AsfaraschangestotheBoardareconcernedduringtheperiodunderreview,MsZwane-Chikuraresignedwitheffectfrom2March2012.DrBussinwasappointedtotheBoardasanewIndependentnon-executiveDirectoronthesamedate.
TheNon-executiveDirectorsandIndependentnon-executiveDirectorscontributeanobjectiveandindependentviewpointonallmajordecisionprocessesandstandardsofconduct.TheCompanyprovidesaformalinductionprocessfornewlyappointedDirectors.TheofficesofChairmanandChiefExecutiveOfficerareseparated.TheRemunerationandNominationCommitteeassessestheperformanceoftheChairman,ChiefExecutiveOfficerandExecutiveDirectors.ThetermofofficeofExecutiveDirectorsis36months.
TheBoardmeetsquarterlywhenpracticallypossible,withadditionalmeetingswhennecessary,andalthoughspecificauthorityhasbeendelegatedtoBoardcommitteesandmanagementasappropriate,theBoardretainsfullandeffectivecontrolovertheCompanyandmonitorsmanagement’simplementationoftheBoard’sapprovedplansandstrategy.
AsaresultofthehighlevelofactivityduringtheperiodunderreviewanumberofspecialBoardmeetingshadtobecalledatshortnoticeresultinginnotallDirectorsbeingabletoattendeverymeeting.ThefollowingBoardmeetingswereheldduringtheperiod1July2012to3April2013:
104
03/08/2012
21/08/2012
24/08/2012
20/09/2012
01/10/2012
25/10/2012
23/11/2012
18/02/2013
20/02/2013
28/02/2013
13/03/2013
22/03/2013
18/04/2013
S v
Tel
econ
S B
oard
S v
Tel
econ
S B
oard
S v
Tel
econ
S v
Tel
econ
S v
Tel
econ
Str
at
Ses
s
S B
oard
MemberGumedeRW P A P P P P P P P A P A P
BogoshiPJ P P P P R R R R R R R R R
VanderWaltJCL P P P P P P P P P P P P P
FerreiraCJH P P P P A P P P P P P P P
MacDonaldM P P P P P P P P P P P P P
MillerJE P P P P P P R R R R R R R
MthembuAFB P P P A P P P P P P P P P
TrikamjeeAH P P P P P P P P P P A P P
FakudeNV A P A P P A P# A A P P R R
MBussin A P P P A P P P P A P P A
WiltonEA N/A N/A N/A N/A N/A P P P P P P P P
key:
P------------------- Present
A------------------- Apology
R------------------- Resigned
N/A---------------- Notapplicable
P#------------------- Viatelephone
*--------------------- Partofthemeeting
SvTelecon------ SpecialMeetingviaTelecon
SBoard----------- SpecialBoardMeeting
StratSess------- StrategicSession
AllDirectorshaveaccesstotheservicesandadviceoftheCompanySecretaryandareentitledtoseekindependentprofessionaladviceattheCompany’sexpense.TheBoardhasunrestrictedaccesstoallinformation,documentsandproperty.AllDirectorsareprovidedwithappropriateandtimelyinformation,includingdetailedBoardpackspriortoallBoardandBoardcommitteemeetings.
TheperformanceoftheBoardanditscommitteesisevaluatedonanannualbasis.Aftermakinguseoftheservicesofanexternalpartyduringthepreviousfinancialyear,theBoardconductedaself-assessmentprocessduringtheperiodunderreview.
IntermsofthememorandumofincorporationonethirdofDirectorsretireeveryyear,butifeligibletheymaybere-electedbyshareholdersattheannualgeneralmeeting.Atthelastannualgeneralmeeting(December2011),MessrsGumede,MacdonaldandMsFakudewerere-electedasDirectorstotheBoard.ItisproposedthatMessrsMiller,VanderWaltandMthemburetirebyrotationattheforthcomingannualgeneralmeeting.TheBoard,withtheassistanceoftheRemunerationandNominationsCommittee,hasassessedtheindependenceofallIndependentnon-executiveDirectorswithaparticularfocusonthoseDirectorswhohaveservedformorethan9years.TheBoardhassatisfieditselfthatallIndependentnon-executiveDirectors,notwithstandingtheirtermofoffice,havedisplayedtherequiredlevelofindependence.TheBoardfurthermorerecommendsthere-electionofDirectorsretiringbyrotationandconfirmsthatitissatisfiedwiththeperformance,contributionandobjectivityoftheDirectorsstandingforre-election.
BOARD COMMITTEES
Various Board committees have been established and operate within charters approved by the Board. TheBoardcommitteesarefreetotakeindependentoutsideprofessionaladvicewhenrequiredandattheexpenseoftheCompany.
At30June2012,theseBoardcommitteescomprised:
• AuditandRiskcommittee;
• Social,EthicsandTransformationcommittee;and
• RemunerationandNominationcommittee.
AUDIT AND RISk COMMITTEE
TheAuditandRiskCommitteecompriseofIndependentnon-executiveDirectorsonly.IntermsoftheAct,allmembersofthecommitteearerequiredtobeNon-executiveDirectorswhoactindependently.Thecommitteeisresponsibleformonitoringtheadequacyoffinancialcontrolsandreporting.Itischargedwith,interalia,reviewingtheauditplansoftheexternalandinternalauditors,ascertainingtheextenttowhichthescopeof
105
theauditscanbereliedupontodetectweaknessesininternalcontrolsandensuringthatinterimandyear-endfinancialreportsmeetacceptedaccountingstandards.TheAuditandRiskCommitteealsosetstheprinciplesforrecommendingtheuseof theexternalauditors fornon-auditservices.RegularmeetingsarescheduledandattendedbytheChiefExecutiveOfficer,ChiefFinancialOfficerandrepresentativesfromtheexternalandinternalauditors.ExternalandinternalauditorshavedirectaccesstotheChairmanoftheAuditandRiskCommittee.
Thefollowingpersonsweremembersasat30June2012:
MrMMacdonald ChairmanandIndependentnon-executiveDirector
MrJCLvanderWalt Independentnon-executiveDirector
MrAMthembu Independentnon-executiveDirector
All risk matters are addressed by the Audit and Risk Committee. In line with King III recommendationstheinternalauditfunctionreportsdirectlytotheAuditandRiskCommitteeandtheinternalauditcharterisauthorisedandapprovedbytheBoard.InternalaudithasaccesstothechairmanoftheAuditandRiskCommittee and the Board. The internal audit function reviews internal controls and makes appropriaterecommendationsviatheAuditandRiskCommitteetotheBoard.TheAuditandRiskCommitteerecommendstheriskreviewandriskevaluationtotheBoard.
During theperiod1July2012 to3April2013,meetingsof theAuditandRiskCommitteewereheldandattendedasfollows:
Member2012/09/19
2012/10/12S Meeting 2013/03/20
MMacDonald P P P
JCLVanderWalt P P P
AFBMthembu A A A
key:
P--------- Present
A--------- Apology
AsrequiredbytheJSEListingsRequirements,andrecommendedbyKingIII,thecommitteehassatisfieditselfwiththeappropriatenessandexpertiseoftheFinancialDirector,MrFerreira,andthefinancefunction.
RISk MANAGEMENT
TheBoardhasoverallresponsibilitytoprovideleadership,directionandoversightoverthedesign,developmentandoperationofriskmanagementstructures,processesandactivities.TheBoardalsodeterminesthelevelofriskitiswillingtomanageinthepursuitofgrowthandinmaximisingopportunities.TheAuditandRiskcommitteeassiststheBoardintheexecutionofitsfiduciarydutiesregardingriskmanagement,thescopeofwhichincludes:
• riskmanagementpolicyandframework;
• riskmanagementimplementationplanandprogressagainstit;
• riskmanagementinfrastructure,processesandculture;
• riskprofiling,mitigationandreporting;
• combinedassuranceactivities;
• stakeholderdisclosures;and
• riskmanagementeffectiveness.
Executivemanagement isresponsiblefordesigning, implementingandmonitoringthesystemandprocessof riskmanagement and its integration into theday-to-day activities of the company.Management is alsoaccountabletotheBoardforprovidingassurancethatithasfulfilleditsmandateandthemannerinwhichthishasbeendone.Executivemanagementconsidersbusinessriskswhensettingstrategicobjectives,approvingbudgets,contractingbalancedscorecardsandmonitoringprogressagainstbalancedscorecardsandbudgets.
Acorporateriskmanagementfunctionisresponsibletoassistwiththeidentification,assessing,mitigationandreportingofmaterialrisks.AnindependentHotlineserviceisalsoinplaceprovidingemployeeswithaconfidential,yeteffectivemeanstovoiceanyconcerns.
106
SOCIAL, ETHICS AND TRANSFORMATION COMMITTEE
Aspreviouslyreported,theNomination,TransformationandEthicscommitteewasreplacedbyaSocial,EthicsandTransformationcommitteeinAugust2011incompliancewiththestatutoryrequirementsascontainedintheCompaniesActof2008andtheCompaniesRegulations2011.ThisisaformalcommitteeoftheBoardwhichhasspecificpowersdelegatedtoitbytheBoard.
TheSocial,EthicsandTransformationcommitteehasadualrole:
• actingasa socialandethics committee for theGijimagroupof companiesas required in termsof theCompaniesActof2008;and
• monitoringtheGroup’sperformanceandprogressinrespectof itstransformationstrategies,plansandprocesses.
Regulation 43(5) to the Companies Act of 2008 spells out the functions of a social and ethics committee.A distinctionismadeforpurposesofthecharterofthecommitteebetweenthosefunctionswherethecommitteehasadirectlineofsightandthosewhichhavebeenallocatedtoothercommitteesoftheboardandwherethecommitteewillonly fulfilanoversightrole.Asrequired in termsof theAct, theCommitteeshallmonitortheactivitiesoftheCompanyandrelevantsubsidiaries,havingregardtoanyrelevantlegislation,otherlegalrequirementsorprevailingcodesofbestpractice, intheareasasprescribedbylaw.Theannualworkplanof thecommitteehasbeenupdated to include themonitoringof thoseaspects thatwerenotalreadybeingmonitoredbythecommitteepriortoitsreconstitution.
ThemembersoftheSocial,EthicsandTransformationcommitteeasat30 June 2012were:
MsNFakude ChairpersonandIndependentnon-executiveDirector
MrMMacdonald ChairmanandIndependentnon-executiveDirector
MrRWGumede Non-executiveDirector
MrJEMiller Non-executiveDirector
TheCommitteealsoassiststheBoardinimplementingandmonitoringtheblackeconomicempowermentandemploymentequityprogrammesandpolicies,directingaffirmativeprocurement initiatives,monitoringtheskillsdevelopmentpolicyandthedevelopmentofasocialresponsibilityprogramme.TheCommitteemandatedtheEmploymentEquityForum.TheForum,underthegovernanceoftheCommittee,focusesonallemploymentequity issues in compliancewith theEmploymentEquityAct (Act 55 of 1998).TheForum (comprisingofmembersrepresentingfemaleemployeesthroughoutalllevelsoftheorganisation)aimsatassistingGijimatoachieveitsstrategicbusinessobjectives.
Duringtheperiod1July2012to3April2013,meetingsoftheCommitteewereheldandattendedasfollows:
Member 18/09/2012
VNFakude PRWGumede AJEMiller PMMMacdonald P
key:P--------- Present
A--------- Apology
REMUNERATION AND NOMINATIONS COMMITTEE
TheRemunerationandNominationscommitteeisprimarilyresponsiblefor:
• formulatingremunerationstrategyandpoliciesandthetermsandconditionsofemploymentofexecutivedirectorsandseniorexecutives;and
• makingrecommendationstotheBoardontheappointmentofnewExecutiveandNon-executiveDirectors,includingrecommendationsonthecompositionoftheBoardgenerallyandthebalancebetweenexecutiveandNon-executiveDirectors.
ThenominationprocessitselfisformalandtransparentandamatterofconsiderationfortheBoardasawhole.ThecommitteeisalsoresponsibleforidentifyingandnominatingcandidatestofillBoardvacanciesandtoputsuccessionplansinplace
ThefollowingpersonsweremembersoftheRemunerationandNominationscommitteeasat30June2012:
MrAMthembu Independentnon-executiveDirector
MrJCLvanderWalt Independentnon-executiveDirector
MrRWGumede Non-executiveDirector
DrMHRBussin IndependentNon-executiveDirector
MrAHTrikamjee Independentnon-executivedirector
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MeetingsoftheRemunerationandNominationscommitteetookplaceonthefollowingdates:
Member 11/09/2012 13/02/2013
AFBMthembu P PJCLvanderWalt P PMHRBussin P PRWGumede A AAHTrikamjee P P
key:
P--------- Present
A--------- Apology
ExECUTIVE COMMITTEE
Theday-to-dayrunningoftheCompanyisconductedbytheExecutiveCommittee,whichmeetsonamonthlybasisandconsistsofExecutiveDirectorsandseniormanagingexecutivesofdivisions. It isresponsibleforsettingthestrategicdirectionoftheCompany,forthestrategicmanagementofthecompanyandformonitoringtheimplementationthereofaccordingtotheBoard’sdirectives.
COMPANY SECRETARY
iThembaGovernanceandStatutorySolutions (Pty)Ltd,representedbyMsAnnamarievanderMerweactsasCompanySecretary.Theappointmentandremovalof theCompanySecretary isamatter for theBoard.All DirectorshaveaccesstotheadviceandservicesoftheCompanySecretary,whoisresponsibletotheBoardforensuringcompliancewithproceduresandregulationsofastatutorynature.FurthermoreallDirectorsareentitledtoseekindependentprofessionaladviceconcerningtheaffairsoftheCompanyandtheGroupattheCompany’sexpense.
The Company Secretary attends all Board and committee meetings, and has full access to employees,informationandresources.
TheBoardofDirectorshasnotedtherequirementtoannuallysatisfyitselfonthecompetence,qualificationsandexperienceoftheCompanySecretary,whichrequirementiseffectiveforannualreportandcircularsissuedafter1December2012.Suchannualassessmentwill formpartof the formalyear-endassessmentprocesswitheffectfromtheendofthecurrentfinancialyear.IntheinterimandforpurposesofthisCircular,theBoardwishestoconfirmthatitissatisfiedwiththecompetence,qualificationsandexperienceoftheCompanySecretary.iThembaGovernanceandStatutorySolutions(Pty)Limited,theappointedCompanySecretary,isrepresentedbyMsAnnamarievanderMerwe(BIuris,LLB,LLM)whohas23years’experienceasacorporatelawyerandcompanysecretaryinthelistedenvironment.SheisamemberoftheKingCommitteeaswellastheJSEAdvisoryCommittee.MsvanderMerweplaysanactiveandpivotalroleinprovidingguidancetotheBoardonmattersofcompliancetotheCompaniesActandallcorporategovernancematters.
SHARE DEALINGS
ThereareprocessesinplacetoensurethatnoDirectorsandofficersoftheCompanymaytradeintheCompany’ssharesduringaclosedperioddeterminedbytheBoard,intermsofaformalpolicy.
NoDirectororemployeemaydeal,whetherdirectlyorindirectly,inSharesonthebasisofunpublishedprice-sensitiveinformation.DirectorsandemployeesaresubjecttoanembargoontradinginSharesduringclosedperiodswhentheCompanyisoperatingunderacautionaryannouncementandintheperiodbetweenthecloseofannualandhalf-yearlyreportingperiodsandthepublishingofresults.
108 PRINTEDBYINCE(PTY)LTD REF.W2CF16117