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M-CELL LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 94/09584/06)
("M-CELL")
INTERIM REPORT
THE UNAUDITED RESULTS OF M-CELL FOR THE SIX MONTHS TO 30 SEPTEMBER 1998 ARE AS
FOLLOWS:
INCOME STATEMENT
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
30 SEPTEMBER 30 SEPTEMBER 31 MARCH
1998 1997 1998
(UNAUDITED) (UNAUDITED) (AUDITED)
R'M R'M R'M
REVENUES 635,6 379,0 843,5
COST OF SALES AND PROVISION
OF SERVICES 276,9 195,5 305,2
GROSS PROFIT 358,7 183,5 538,3
OPERATING COSTS 282,6 143,6 414,7
OPERATING PROFIT 76,1 39,9 123,6
FINANCE COSTS 15,2 2,4 11,6
PROFIT BEFORE TAXATION 60,9 37,5 112,0
TAXATION 22,7 13,4 41,9
PROFIT ATTRIBUTABLE TO
SHAREHOLDERS 38,2 24,1 70,1
DIVIDEND - - 14,8
RETAINED PROFIT 38,2 24,1 55,3
EARNINGS PER SHARE (CENTS) 7,6 4,9 14,2
DIVIDEND PER SHARE (CENTS) - - 3,0
SHARES IN ISSUE ('000) 558 284 494 057 494 057
- WEIGHTED AVERAGE FOR THE
PERIOD 504 762 494 057 494 057
ABRIDGED CASH FLOW STATEMENT
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
30 SEPTEMBER 30 SEPTEMBER 31 MARCH
1998 1997 1998
(UNAUDITED) (UNAUDITED) (AUDITED)
R'M R'M R'M
CASH GENERATED FROM
OPERATIONS 149,2 93,3 235,0
FINANCE COSTS (15,2) (2,4) (11,6)
TAXATION PAID (10,9) (7,6) (12,3)
DIVIDEND PAID (14,8) - -
INCREASE IN WORKING CAPITAL (74,3) (50,7) (27,7)
CASH FLOW FROM OPERATIONS 34,0 32,6 183,4
FIXED AND OTHER NON-CURRENT
ASSETS (98,2) (102,7) (268,9)
PROCEEDS OF RIGHTS ISSUE 589,6 - -
INVESTING ACTIVITIES (611,6) (0,1) (10,9)
NET CASH FLOW (86,2) (70,2) (96,4)
NET BORROWINGS ARISING ON
ACQUISITION OF ADDITIONAL
INTEREST (42,3) - -
NET INTEREST-BEARING DEBT
AT BEGINNING OF PERIOD (146,0) (49,6) (49,6)
NET INTEREST-BEARING DEBT
AT END OF PERIOD (274,5) (119,8) (146,0)
ABRIDGED BALANCE SHEET
SIX MONTHS SIX MONTHS YEAR
ENDED ENDED ENDED
30 SEPTEMBER 30 SEPTEMBER 31 MARCH
1998 1997 1998
(UNAUDITED) (UNAUDITED) (AUDITED)
R'M R'M R'M
SHAREHOLDER'S INTEREST 661,7 520,3 542,2
NET INTEREST-BEARING DEBT 274,5 119,8 146,0
LONG-TERM LIABILITIES 380,5 230,8 271,2
NET BANK BALANCES AND OTHER
SHORT-TERM LOANS (106,0) (111,0) (125,2)
DEFERRED TAX 58,8 17,7 34,6
CAPITAL EMPLOYED 995,0 657,8 722,8
FIXED ASSETS 822,9 549,7 652,5
NON-CURRENT ASSETS 95,9 99,2 98,8
INVESTMENT AND LOANS 45,2 6,6 17,5
CURRENT ASSETS 273,8 146,8 157,3
CURRENT LIABILITIES (242,8) (144,5) (203,3)
EMPLOYMENT OF CAPITAL 995,0 657,8 722,8
SUPPLEMENTARY INFORMATION
30 SEPTEMBER 30 SEPTEMBER 31 MARCH
1998 1997 1998
(UNAUDITED) (UNAUDITED) (AUDITED)
R'M R'M R'M
INCLUDED IN OPERATING PROFIT:
DEPRECIATION AND AMORTISATION 69,8 53,4 111,1
OPERATING LEASE CHARGES 9,3 4,1 13,6
FINANCE COSTS :
INTEREST RECEIVED 12,8 8,6 19,9
INTEREST PAID 28,0 11,0 31,5
INVESTMENTS AND LOANS:
UNLISTED SHARES AT COST 24,4 0,4 0,4
LOANS TO EMPLOYEE SHARE
INCENTIVE SCHEMES 20,8 6,2 17,1
DIRECTOR'S VALUATION OF
UNLISTED INVESTMENT 24,4 0,4 0,4
CAPITAL EXPENDITURE FOR THE
PERIOD 98,2 102,7 232,5
COMMITMENTS: 326,9 185,4 250,6
CAPITAL EXPENDITURE
COMMITTED OR AUTHORISED 280,0 142,7 207,6
GUARANTEES 5,3 - 4,5
OPERATING LEASES 41,6 42,7 38,5
NUMBER OF ORDINARY SHARES IN
ISSUE (MILLION) 558,3 494,1 494,1
NET ASSET VALUE PER SHARE
(CENTS) 118,5 105,3 109,7
COMMENTS
M-CELL'S INVESTMENT IN MTN HOLDINGS (PROPRIETARY) LIMITED (MTN) INCREASED TO
34,7% ON 31 AUGUST 1998. THE REPORTED RESULTS INCLUDE THE PROPORTIONATELY
CONSOLIDATED RESULTS OF THIS INVESTMENT.
RESULTS
MTN CONTINUED TO EXPERIENCE ROBUST SUBSCRIBER GROWTH AND THE ACTIVE SUBSCRIBER
BASE NOW EXCEEDS 850 000. REVENUES ROSE TO R635,6 MILLION FOR THE PERIOD,
REFLECTING COMPARABLE GROWTH OF 68%. THIS COMPRISES MAINLY SUBSCRIPTION FEES,
AIRTIME AND ROAMING REVENUES.
AN OPERATING PROFIT OF R76,1 MILLION WAS EARNED, WHILST ATTRIBUTABLE PROFITS
INCREASED FROM R24,1 MILLION TO R38,2 MILLION. THE RESULTANT EARNINGS PER
SHARE OF 7,6 CENTS REFLECTS GROWTH OF 55% COMPARED WITH LAST YEAR.
PROSPECTS AND DEVELOPMENTS
MTN CONTINUED TO INVEST EXTENSIVELY IN EXPANDING ITS NETWORK CAPACITY AND
COVERAGE TO CATER FOR A RAPIDLY GROWING SUBSCRIBER BASE. IT IS EXPECTED THAT
IN EXCESS OF R1,0 BILLION WILL BE INVESTED IN THE NETWORK THIS YEAR, FUNDED
FROM INTERNAL RESOURCES.
THE SOUTH AFRICAN CELLULAR TELEPHONY INDUSTRY REMAINS HIGHLY COMPETITIVE, AND
NOW EXCEEDS TWO MILLION SUBSCRIBERS. DESPITE THIS RAPID GROWTH, IT HAS YET TO
SHOW SIGNS OF HAVING REACHED MATURITY IT IS ANTICIPATED THAT FURTHER LICENCES
WILL BE ISSUED IN SOUTH AFRICA DURING THE COURSE OF 1999.
THE COMPANY CONTINUES TO PURSUE INVESTMENT OPPORTUNITIES BOTH IN SOUTH AFRICA
AND ELSEWHERE ON THE AFRICAN CONTINENT. MTN HAS RECENTLY LAUNCHED
TELECOMMUNICATION SERVICES IN UGANDA, RWANDA AND SWAZILAND.
FURTHER OPPORTUNITIES ARE BEING EVALUATED. THESE INVESTMENTS WILL RESULT IN
DEVELOPMENT COSTS BEING INCURRED WHICH WILL REDUCE THE RATE OF EARNINGS GROWTH
OVER THE SHORT TERM, BUT SHOULD CREATE FURTHER VALUE FOR MTN AND M-CELL.
YEAR 2000
M-CELL AND MTN ARE CONDUCTING COMPREHENSIVE REVIEWS OF THEIR OPERATIONS TO
ENSURE THAT THEIR PRODUCTS, SERVICES AND BUSINESS CRITICAL SYSTEMS WILL ACHIEVE
ACCEPTABLE LEVELS OF YEAR 2000 COMPLIANCE BY 30 JUNE 1999. BASED ON THEIR
ASSESSMENT TO DATE, AND WITH THEIR PLANNED MODIFICATIONS. M-CELL AND MTN DO
NOT EXPECT TO ENCOUNTER MATERIAL OPERATIONAL DIFFICULTIES ARISING FROM THE
ADVENT OF THE YEAR 2000.
M-CELL AND MTN HAVE INCURRED, AND WILL CONTINUE TO INCUR, GENERAL STAFF COSTS,
CONSULTANCY FEES AND OTHER EXPENSES, WHICH WILL BE ABSORBED IN THE NORMAL
OPERATING BUDGETS.
ON BEHALF OF THE BOARD
I CHARNLEY
CHAIRPERSON
16 NOVEMBER 1998
DIRECTORS
I CHARNLEY (CHAIRPERSON), JP BEKKER, VG BRAY, JM BUITENDAG, JS CRAIB, AS
MABOGOANE, TR MOKOENA, SJZ PACAK (CHIEF EXECUTIVE), KB SIBIYA, JDT STOFBERG, T
VOSLOO
ALTERNATE DIRECTORS
ZNA CINDI, PG GREYLING, CJ SIDEGO
TRANSFER SECRETARIES REGISTERED OFFICE
MERCANTILE REGISTRARS LIMITED 251 OAK AVENUE
11 DIAGONAL 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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