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M-CELL LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 94/09584/06)
("M-CELL")
PRELIMINARY REPORT
GROUP AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 1998 WERE AS FOLLOWS:
INCOME STATEMENT
1998 1997
R'M R'M
REVENUES 843,5 579,6
COST OF SALES AND PROVISION
OF SERVICES 305,2 287,4
GROSS PROFIT 538,3 292,2
OPERATING COSTS 414,7 242,2
OPERATING PROFIT 123,6 50,0
FINANCE (COSTS)/INCOME (11,6) 6,1
PROFIT BEFORE TAXATION 112,0 56,1
TAXATION 41,9 14,8
PROFIT ATTRIBUTABLE TO
SHAREHOLDERS 70,1 41,3
DIVIDEND 14,8 9,9
RETAINED PROFIT 55,3 31,4
EARNINGS PER SHARE (CENTS) 14,2 8,4
DIVIDEND PER SHARE (CENTS) 3,0 2,0
ABRIDGED BALANCE SHEET
1998 1997
R'M R'M
SHAREHOLDERS' INTEREST 542,2 496,2
NET INTEREST-BEARING DEBT 146,0 49,6
LONG-TERM LIABILITIES 271,2 156,0
NET BANK BALANCES AND
OTHER SHORT-TERM LOANS (125,2) (106,4)
DEFERRED TAXATION 34,6 6,6
CAPITAL EMPLOYED 722,8 552,4
FIXED ASSETS 652,5 496,9
NON-CURRENT ASSETS 98,8 106,3
INVESTMENTS AND LOANS 17,5 6,5
CURRENT ASSETS 157,3 94,2
CURRENT LIABILITIES (203,3) (151,5)
EMPLOYMENT OF CAPITAL 722,8 552,4
ABRIDGED CASH FLOW STATEMENT
1998 1997
R'M R'M
CASH GENERATED FROM
OPERATIONS 235,0 128,1
FINANCE (COSTS)/INCOME (11,6) 6,1
TAXATION PAID (12,3) (3,2)
DIVIDEND PAID - (9,9)
INCREASE IN WORKING CAPITAL (27,7) (3,0)
CASH FLOW FROM OPERATIONS 183,4 118,1
FIXED AND OTHER NON-CURRENT
ASSETS (268,9) (272,3)
INVESTING ACTIVITIES (10,9) (5,6)
NET CASH FLOW (96,4) (159,8)
NET INTEREST-BEARING DEBT
AT BEGINNING OF PERIOD (49,6) 110,2
NET INTEREST-BEARING DEBT
AT END OF PERIOD (146,0) (49,6)
SUPPLEMENTARY INFORMATION
1998 1997
R'M R'M
INCLUDED IN OPERATING PROFIT
DEPRECIATION AND AMORTISATION (111,1) (78,1)
OPERATING LEASE CHARGES (13,6) (8,7)
FINANCE (COSTS)/INCOME (11,6) 6,1
INTEREST RECEIVED 19,9 18,3
INTEREST PAID (31,5) (12,2)
INVESTMENTS AND LOANS 17,5 6,5
UNLISTED SHARES AT COST 0,4 0,4
LOANS TO EMPLOYEE SHARE
INCENTIVE SCHEMES 17,1 6,1
DIRECTORS' VALUATION OF UNLISTED
INVESTMENTS 0,4 0,4
CAPITAL EXPENDITURE FOR
THE YEAR 232,5 219,9
COMMITMENTS 246,1 195,2
CAPITAL EXPENDITURE COMMITTED
OR AUTHORISED 207,6 150,3
OPERATING LEASES 38,5 44,9
GUARANTEES 4,5 -
NUMBER OF ORDINARY SHARES IN
ISSUE (MILLION) 494,1 494,1
NET ASSET VALUE PER SHARE (CENTS) 109,7 100,4
INTRODUCTION
M-CELL'S PRIMARY INVESTMENT IS A 29,5% INTEREST IN MTN HOLDINGS (PROPRIETARY)
LIMITED (MTN). THE REPORTED RESULTS INCLUDE THE PROPORTIONATELY CONSOLIDATED
RESULTS OF THIS INVESTMENT.
RESULTS
MTN ENJOYED STRONG GROWTH IN THE YEAR UNDER REVIEW, WITH THE ACTIVE SUBSCRIBER
BASE NOW APPROACHING 700 000. M-CELL'S REVENUES OF R843,5 MILLION FOR THE YEAR
COMPRISE MAINLY SUBSCRIPTION FEES, AIRTIME AND ROAMING REVENUES AND REFLECT
GROWTH OF 46%. AN OPERATING PROFIT OF R123,6 MILLION WAS EARNED - AN INCREASE
OF 147% ON THE PREVIOUS YEAR. THE CONSOLIDATED NET PROFIT AFTER TAX WAS R70,1
MILLION, EQUIVALENT TO EARNINGS PER SHARE OF 14,2 CENTS, REFLECTING AN INCREASE
OF 69% ON THE PREVIOUS YEAR.
DIVIDEND
A DIVIDEND OF 3 CENTS PER SHARE WAS DECLARED TO SHAREHOLDERS REGISTERED AS SUCH
ON 27 MARCH AND PAID ON 2 APRIL 1998.
PROSPECTS AND DEVELOPMENTS
MTN HAS INVESTED IN EXCESS OF R3 BILLION TO EXPAND BOTH THE CAPACITY AND
COVERAGE OF THE NETWORK. THE NETWORK, ONE OF THE LARGEST OF ITS KIND IN THE
WORLD, NOW COVERS SOME 600 000 SQUARE KILOMETRES, EMBRACING 43% OF SOUTH
AFRICA'S GEOGRAPHIC AREA AND GIVING 73% OF THE POPULATION ACCESS TO GSM
TELECOMMUNICATION FACILITIES. IN ADDITION, IN EXCESS OF 6 500 COMMUNITY
PAYPHONES HAVE BEEN INSTALLED IN UNDERSERVICED AREAS AND HAVE PLAYED A
SIGNIFICANT ROLE IN SOCIAL UPLIFTMENT AND ECONOMIC EMPOWERMENT.
THESE INVESTMENTS ARE NOT ONLY AN INDICATION OF MTN'S ABILITY TO RESPOND TO
CUSTOMER NEEDS, BUT ALSO OF ITS COMMITMENT TO THE SOCIO-ECONOMIC DEVELOPMENT OF
SOUTH AFRICA.
HAVING ESTABLISHED ITSELF IN SOUTH AFRICA, MTN PLANS TO EXPAND ITS
TELECOMMUNICATIONS OPERATIONS, BOTH IN FIXED-LINE AND CELLULAR SERVICES. THE
FIRST STEP IN THIS REGARD WAS EFFECTED WHEN AN MTN-LED CONSORTIUM WON THE BID
TO BE THE SECOND LICENSED TELECOMMUNICATIONS NETWORK IN UGANDA. OPERATIONS
SHOULD COMMENCE LATER IN 1998 AND WILL COMPRISE BOTH FIXED-LINE AND CELLULAR
SERVICES.
MTN IS ALSO PART OF A CONSORTIUM THAT WAS AWARDED A GSM CELLULAR LICENCE IN
RWANDA AND IS THE PREFERRED SUPPLIER OF A GSM NETWORK TO SWAZILAND. SIMILAR
OPPORTUNITIES ARE BEING EXPLORED ON THE AFRICAN CONTINENT AND ELSEWHERE.
WHILST THE PURSUIT OF THESE OPPORTUNITIES SHOULD HAVE A POSITIVE LONG-TERM
IMPACT ON MTN'S FINANCIAL PERFORMANCE, IN THE SHORT TERM THEY WILL REQUIRE
FUNDING AND WILL NEGATIVELY IMPACT EARNINGS.
INDICATIONS ARE THAT THE DEMAND FOR CELLULAR SERVICES IN SOUTH AFRICA WILL
CONTINUE TO GROW OVER THE NEXT FEW YEARS. THE POSITIVE EFFECT THIS WILL HAVE ON
MTN'S GROWTH RATE WILL BE TEMPERED BY THE COMMERCIAL LAUNCH OF A THRID LICENSED
CELLULAR OPERATOR IN SOUTH AFRICA WHICH IS EXPECTED DURING 1999.
ON BEHALF OF THE BOARD
TON VOSLOO
CHAIRMAN
15 JUNE 1998
DIRECTORS
T VOSLOO (CHAIRMAN), JP BEKKER, VG BRAY, JM BUITENDAG, JS CRAIB, AS MABOGOANE,
TR MOKOENA, AS NKONYENI, SJZ PACAK (CHIEF EXECUTIVE), KB SIBIYA, JDT STOFBERG.
ALTERNATE DIRECTORS
I CHARNLEY, ZNA CINDI, PG GREYLING, CJ SIDEGO.
TRANSFER SECRETARIES REGISTERED OFFICE
MERCANTILE REGISTRARS LIMITED 251 OAK AVENUE
94 PRESIDENT STREET RANDBURG
JOHANNESBURG, 2001 2194
(PO BOX 1053, JOHANNESBURG 2000) (PO BOX 1502, RANDBURG 2125)
HTTP://WWW.M-CELL.CO.ZA
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