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FINANCIALS

DIRECTORS' REPORT

Nature of business | General review | Directors and secretary | Directors' interests | Dividends and debenture interest | Strate | Corporate governance | Subsidiaries | Special resolution | Special resolutions of subsidiaries | Interest in Trencor | Analysis of share and debenture holders | Subsequent event: Share capital restructuring | Conversion of convertible debentures

NATURE OF BUSINESS

Mobile is an investment holding company listed on the JSE and is the pyramid company of Trencor Ltd.

The company’s main investment is a holding of 46,04% (2005: 46,88%) of the issued share capital and 47,96% (2005: 47,96%) of the 6% convertible debentures of Trencor Ltd, a holding company listed on the JSE. Trencor’s core business focus worldwide is:

  • owning, leasing and managing marine cargo containers;
  • owning and leasing returnable packaging units together with the related management and technology; and 
  • finance related activities.

Members are directed to the Chairman’s statement and results of Trencor which are fully reported on in the accompanying annual report.

GENERAL REVIEW

The financial results are reflected in the financial statements. The estimated proportion of income after tax attributable to the various classes of business of the group is as follows:

  2006 2005
  % %
UNREALISED GAIN – CONVERTIBLE DEBENTURES 45,6 26,7
(LOSS)/PROFIT ON DILUTION OF INVESTMENT IN ASSOCIATE (4,6) 0,7 
PROFIT OF ASSOCIATE 58,9 73,1
FINANCE AND OTHER INCOME 0,1 (0,5)
  100,0 100,0


DIRECTORS AND SECRETARY

The names of the directors appear here and that of the secretary here. In terms of the articles of association Messrs C Jowell and N I Jowell retire by rotation at the forthcoming annual general meeting but, being eligible, offer themselves for re-election. Brief résumés of the directors are presented here.

DIRECTORS’ INTERESTS

The aggregate of the direct and indirect interests of the directors in the issued securities of the company at 31 December 2006 and 2005 were as follows:

    6% CONVERTIBLE
 ORDINARY‘N’ ORDINARY DEBENTURES
BENEFICIAL %32,926,6 0,2
 

The direct and indirect interests of each director who held in excess of 1% of the issued securities at 31 December 2006 and 2005 were as follows:

    
  ORDINARY ‘N’ ORDINARY
BENEFICIAL %    
C JOWELL 15,8 13,4
N I JOWELL  17,013,2
    

Subsequent to the year-end, as a result of the share capital restructuring referred to below, the ‘N’ ordinary shares were renamed ordinary shares. Accordingly, the aggregate of the direct and indirect interests of the directors in the issued securities of the company with effect from 12 March 2007 was as follows:

    
    6% CONVERTIBLE
  ORDINARY DEBENTURES
BENEFICIAL % 28,8 0,2
    

In addition the direct and indirect interests of each director who held in excess of 1% of the issued securities at 12 March 2007 was as follows:

    
BENEFICIAL %   ORDINARY
C JOWELL   14,2
N I JOWELL   14,5
    

There have been no other changes in these interests between the financial year-end and the date of this report.

DIVIDENDS AND DEBENTURE INTEREST

        AMOUNT  
  PAYMENT RECORD PAYMENT PER SHARE/  
  NUMBER DATE DATE DEBENTURE TOTAL
        CENTS R’000
DIVIDENDS          
2005 – INTERIM 64 30/09/05 03/10/05 0,75 6 734
        – FINAL 65 07/04/06 10/04/06 2,30 20 651
2006 – INTERIM 66 29/09/06 02/10/06 1,55 13 917
        – FINAL 67 05/04/07 10/04/07 3,0 26 936
DEBENTURE INTEREST          
– 6% CONVERTIBLE 29 15/05/06 30/06/06 6,75 3 829
  30 15/12/06 29/12/06 6,75 3 829

STRATE


Holders of securities are reminded that paper certificates are no longer good for delivery and those who have not yet dematerialised their holdings are urged to surrender their paper certificates to a selected Central Securities Depository Participant, bank or qualifying stockbroker for conversion into an electronic record, to render them eligible  or settlement in the Strate system of electronic settlement on the JSE.

CORPORATE GOVERNANCE

The report on corporate governance is presented here.

SUBSIDIARIES


The company holds 100% (2005: 100%) of the 700 000 (2005: 700 000) issued ordinary shares of Mobile Acceptances (Pty) Ltd. Details of this investment are as follows:
 
  2006 2005
  R’000 R’000
SHARES AT COST 2 233 2 233
PROFIT/(LOSS) FOR THE YEAR 1 033 (110)

Mobile Acceptances (Pty) Ltd, in turn, holds 100% (2005: 100%) of the 100 (2005: 100) issued ordinary shares of Transport Acceptances (Pty) Ltd. These subsidiaries are incorporated in the Republic of South Africa and are partners in export partnerships.

SPECIAL RESOLUTION

At the annual general meeting held on 17 May 2006, shareholders passed a special resolution, which was registered on 25 May 2006, to grant the company a general authority for the acquisition by the company or any of its subsidiaries of shares issued by the company, which authority is valid until the earlier of the next annual general meeting or the variation or revocation of such general authority by special resolution by any subsequent general meeting of the company, provided that it shall not extend beyond fifteen months from the date of passing of the resolution.

SPECIAL RESOLUTIONS OF SUBSIDIARIES

No special resolutions were passed by the company’s subsidiaries during the year under review.

INTEREST IN TRENCOR

During the year under review, the number of shares in issue in Trencor increased by 2 784 518 shares as a result of the exercise of options by certain of its directors and employees in terms of The Trencor Share Option Plan. At 31 December 2006 the company had a 46,06% interest (2005: 46,88%) in the issued share capital of Trencor.

Subsequent to the year-end, the number of shares in issue in Trencor increased by 62 475 following the exercise of options and, as a result, the company’s interest in the issued share capital of Trencor decreased from 46,06% to 46,04%.

ANALYSIS OF SHARE AND DEBENTURE HOLDERS

An analysis of share and debenture holders and of holders who held 5% or more of the issued securities at 31 December 2006 is presented here.

SUBSEQUENT EVENT: SHARE CAPITAL RESTRUCTURING

As previously announced, the board proposed to simplify the company’s capital structure as detailed in the circular to security holders dated 19 January 2007. Current stock market practice is to avoid the creation of shares with different voting rights. Furthermore, the different classes of shares in issue provided multiple investment entry points into Mobile. Accordingly, the board proposed resolutions to align shareholders’ voting interests with their economic interests and reduce the number of investment entry points into Mobile.

Given that historically the ‘N’ ordinary shares traded at a share price closely approximating the share price of the ordinary shares, it was proposed that the par value of the ordinary shares be decreased to that of the ‘N’ ordinary shares and that the ‘N’ ordinary shares be renamed to ordinary shares. As a consequence, the terms of the convertible debentures had to be amended to provide for their conversion into three ordinary shares, instead of into one ordinary share and two ‘N’ ordinary shares.

Subsequent to the year-end, on 19 February 2007, holders of securities in general meetings approved the relevant special and ordinary resolutions to give effect to the proposed share capital restructuring and the amendment to the conversion terms of the convertible debentures. The special resolutions were registered by the Registrar of Companies on 23 February 2007.

The share capital restructuring has been implemented as follows:

  • The par value of the issued ordinary shares was reduced from 0,5 cent per share to 0,005 cent per share and an amount of 0,495 cent per share was paid on 12 March 2007 in cash as a return of capital, in terms of section 90 of the Companies Act in South Africa, to the holders of ordinary shares.
  • The authorised but unissued ordinary shares were sub-divided on a hundred-for-one basis into shares of 0,005 cent per share each.
  • All the ‘N’ ordinary shares, issued and unissued, were renamed to ordinary shares and the memorandum and articles of association of the company were amended by removing the references to the ‘N’ ordinary shares.
  • The terms of the debenture trust deed were amended to adjust the conversion terms from the previous one ordinary share and two ‘N’ ordinary shares to be three ordinary shares instead.
  • On 5 March 2007 the listing of the ‘N’ ordinary shares was suspended on the JSE and trading in the new ordinary shares with a par value of 0,005 cent each under the new ISIN ZAE000091435 commenced.

The share capital restructuring has no effect on earnings and headline earnings per share, nor on net asset value and net tangible asset value per share.

Following the share capital restructuring, the company’s authorised and issued share capital effective 12 March 2007 is as follows:

AUTHORISED 10 633 160 542 ORDINARY SHARES  
  OF 0,005 CENT EACH R531 658,03
ISSUED 897 861 076 ORDINARY SHARES  
  OF 0,005 CENT EACH R44 893,05

Holders of certificated ordinary and/or ‘N’ ordinary shares issued prior to 5 March 2007 are reminded to submit the form/s of surrender, contained in the circular to security holders dated 19 January 2007, together with their documents of title, to the company’s transfer secretaries in order to receive a replacement new ordinary share certificate.

CONVERSION OF CONVERTIBLE DEBENTURES

In terms of the trust deed governing the convertible debentures, as amended in general meeting on 19 February 2007, each debenture will automatically convert into three ordinary shares. Such conversion will take place on the last Friday of the fifth month of the financial year following the financial year in respect of which the total dividend declared is equal to or exceeds 4,5 cents per share.

In view of the fact that the total dividend declared in respect of the year ended 31 December 2006 amounted to 4,55 cents per share, each debenture will be converted into three ordinary shares on 25 May 2007. A circular containing details with regard to the conversion will be issued to debenture holders in due course.

 After conversion of the 56 726 200 debentures, the issued share capital will amount to R53 402 comprising 1 068 042 676 ordinary shares of 0,005 cent each.

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