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M-CELL LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 94/09584/06)
("M-CELL")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
- REVENUE UP 331%
- HEADLINE EARNINGS UP 395%
- EBITDA UP 434%
- HEADLINE EARNINGS PER SHARE UP 118%
CONSOLIDATED INCOME STATEMENT
6 MONTHS
6 MONTHS ENDED
6 MONTHS ENDED 30 SEPT 12 MONTHS
ENDED 30 SEPT 1998 ENDED
30 SEPT 1998 PREVIOUSLY 31 MARCH
1999 PRO FORMA REPORTED 1999
UNAUDITED UNAUDITED CHANGE UNAUDITED AUDITED
RM RM % RM RM
REVENUE 2 736,9 635,6 331 635,6 1 456,6
EBITDA 844,4 158,1 434 145,9 384,3
NET INTEREST
PAID (87,2) (15,2) (15,2) (34,9)
DEPRECIATION (239,3 (49,4) (49,4) (113,6)
AMORTISATION (65,4) (22,2) (20,4) (44,6)
INCOME BEFORE
TAXATION 452,5 71,3 535 60,9 191,2
TAXATION 142,9 26,3 22,7 57,5
INCOME AFTER
TAXATION 309,6 45,0 588 38,2 133,7
INCOME
ATTRIBUTABLE TO
OUTSIDE
SHAREHOLDERS (87,0) - - -
HEADLINE
EARNINGS 222,6 45,0 395 38,2 133,7
HEADLINE
EARNINGS PER
ORDINARY SHARE
(CENTS) 19,4 8,9 118 7,6 25,1
DIVIDEND PER ORDINARY
SHARE (CENTS)
- INTERIM 2,3 N/A N/A N/A
- FINAL N/A N/A N/A 4,0
2,3 N/A N/A 4,0
DIVIDEND COVER
(TIMES) 8,4 N/A N/A 6,3
NUMBER OF ORDINARY
SHARES IN ISSUE:
- WEIGHTED AVERAGE
('000) 1 148 680 504 762 504 762 533 121
- AT PERIOD END
('000) 1 168 705 558 284 558 284 663 930
SUMMARISED CONSOLIDATED BALANCE SHEET
30 SEPT 30 SEPT 31 MARCH
1999 1998 1999
UNAUDITED UNAUDITED AUDITED
RM RM RM
ASSETS
NON-CURRENT ASSETS
FIXED ASSETS AND
INTANGIBLES 3 259,9 822,9 1 171,3
INVESTMENTS AND LOANS 142,7 45,2 86,1
OTHER NON-CURRENT ASSETS 142,6 95,9 63,2
3 545,2 964,0 1 320,6
CURRENT ASSETS 1 005,5 379,8 462,5
BANK BALANCES, DEPOSITS
AND CASH 109,8 106,0 109,3
OTHER CURRENT ASSETS 895,7 273,8 353,2
TOTAL ASSETS 4 550,7 1 343,8 1 783,1
EQUITY AND LIABILITIES
SHARE CAPITAL AND
RESERVES
ORDINARY SHAREHOLDERS'
INTEREST 1 522,8 661,7 788,4
OUTSIDE SHAREHOLDERS'
INTEREST 589,7 - -
TOTAL EQUITY 2 112,5 661,7 788,4
NON-CURRENT LIABILITIES 1 352, 439,3 554,2
LONG TERM LIABILITIES 1 030,0 380,5 471,3
DEFERRED TAXATION 322,0 58,8 82,9
CURRENT LIABILITIES 1 086,2 242,8 440,5
NON-INTEREST BEARING
LIABILITIES 1 070,7 242,8 428,8
INTEREST-BEARING
LIABILITIES 15,5 - 11,7
TOTAL EQUITY AND
LIABILITIES 4 550,7 1 343,8 1 783,1
NET ASSET VALUE PER
ORDINARY SHARE (RAND)
- BOOK VALUE 1,30 1,19 1,19
- BASED ON DIRECTORS'
VALUATION OF UNDERLYING
INVESTMENTS 7,19 2,32 4,05
NOTES:
1. THE TOTAL INTEREST-
BEARING DEBT OF
THE GROUP AMOUNTS TO 1 045,5 380,5 483,0
2. CAPITAL EXPENDITURE
INCURRED 612,7 98,2 403,0
3. PARTICULARS OF THE
GROUP'S CONTINGENT
LIABILITIES AND CAPITAL
EXPENDITURE COMMITMENTS
ARE AS FOLLOWS:
CONTRACT GUARANTEES - 5,3 -
OPERATING LEASES 481,3 41,6 119,3
CAPITAL EXPENDITURE 765,4 280,0 565,0
4. UNLISTED INVESTMENTS
AT 0DIRECTORS' VALUATION 8 346,1 1 210,8 2 613,2
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
6 MONTHS 6 MONTHS 12 MONTHS
ENDED ENDED ENDED
30 SEPT 30 SEPT 31 MARCH
1999 1998 1999
UNAUDITED UNAUDITED AUDITED
RM RM RM
CASH INFLOWS FROM
OPERATING ACTIVITIES 765,0 33,9 329,1
CASH OUTFLOWS FROM
INVESTING ACTIVITIES (657,1) (709,8) (414,7)
CASH (OUTFLOWS) INFLOWS
FROM FINANCING ACTIVITIES (107,2) 656,7 59,6
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 0,7 (19,2) (26,0)
CASH AND CASH
EQUIVALENTS AT BEGINNING
OF PERIOD 97,6 125,2 125,2
FOREIGN ENTITIES
TRANSLATION ADJUSTMENT (4,0) - (1,6)
CASH AND CASH EQUIVALENTS
AT END OF PERIOD 94,3 106,0 97,6
INTRODUCTION
M-CELL HAS UNDERTAKEN A NUMBER OF TRANSACTIONS SINCE THE BEGINNING OF THE
FINANCIAL YEAR WHICH SAW THE GROUP:
- ACQUIRE 158 823 530 MOBILE TELEPHONE NETWORKS HOLDINGS (PROPRIETARY) LIMITED
("MTN") SHARES (31%) WITH EFFECT FROM 1 APRIL 1999, IN EXCHANGE FOR THE ISSUE
OF 480 829 033 NEW M-CELL SHARES. THIS RESULTED IN M-CELL INCREASING ITS
SHAREHOLDING IN MTN FROM 41% TO 72%.
- ACQUIRE 100% OF ORBICOM (PROPRIETARY) LIMITED ("ORBICOM"), A
TELECOMMUNICATIONS AND MULTIMEDIA COMPANY SPECIALISING IN DIGITAL COMPRESSION,
SATELLITE UPLINK FACILITIES, TERRESTIAL NETWORKS AND MULTIPOINT MICROWAVE
DISTRIBUTION SYSTEM TECHNOLOGIES, WITH EFFECT FROM 1 SEPTEMBER 1999, IN
EXCHANGE FOR THE ISSUE OF 23 952 096 NEW M-CELL SHARES.
AS A RESULT OF THESE TRANSACTIONS, M-CELL NOW FULLY CONSOLIDATES THE RESULTS OF
MTN AND ORBICOM. THE CURRENT YEAR RESULTS ARE THEREFORE NOT FULLY COMPARABLE
WITH THE RESULTS OF THE PREVIOUS YEAR.
PRO FORMA RESULTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER 1998 HAVE BEEN RESTATED
TO REFLECT THE CHANGE IN MTN'S ACCOUNTING POLICY FOR SUBSCRIBER ACQUISITION
COSTS, TO ENABLE COMPARISON WITH THE 6 MONTHS OF THE CURRENT FINANCIAL YEAR.
ALL COMPARISONS TO THE PREVIOUS YEAR RESULTS, WHERE APPLICABLE, REFER TO THE
PRO FORMA RESULTS.
RESULTS
REVENUE ROSE 331% TO R2 736,9 MILLION, AS A RESULT OF STRONG GROWTH IN REVENUES
FROM MTN. THE INCREASE ALSO REFLECTS THE INCREASED SHAREHOLDING IN MTN BY THE
GROUP.
TOTAL EARNINGS BEFORE INTEREST, TAXATION, DEPRECIATION AND AMORTISATION
("EBITDA") ROSE 434% TO R844,4 MILLION OVER THE CORRESPONDING PERIOD LAST YEAR.
HEADLINE EARNINGS OF R222,6 MILLION REPRESENTS A 395% INCREASE ON THE PRIOR
PERIOD. HEADLINE EARNINGS PER SHARE GREW 118% TO 19,4 CENTS (1998: 8,9 CENTS).
GOODWILL AMOUNTING TO R4 964,5 MILLION WAS WRITTEN OFF AGAINST RESERVES DURING
THE PERIOD.
MOBILE TELEPHONE NETWORKSHOLDINGS (PROPRIETARY)LIMITED
MTN CONTINUED TO ENJOY STRONG SUBSCRIBER GROWTH IN SOUTH AFRICA, WITH THE
ACTIVE SUBSCRIBER BASE RISING BY 36% DURING THE REVIEW PERIOD.
THE ROBUST SUBSCRIBER GROWTH BOOSTED REVENUES 29% TO R2,7 BILLION. THE EBITDA
MARGIN IMPROVED FROM 26% TO 31% REFLECTING OVERALL IMPROVEMENTS IN
EFFICIENCIES, AND RESULTING IN HEADLINE EARNINGS INCREASING BY 110%.
MTN HAS MADE SIGNIFICANT PROGRESS IN IMPLEMENTING A STRATEGY TO EXPAND ITS
TELECOMMUNICATIONS OPERATIONS OUTSIDE SOUTH AFRICA. IT IS ALREADY INVESTED IN
UGANDA, RWANDA AND SWAZILAND WHERE RESULTS ARE AHEAD OF EXPECTATIONS AND
PLEASING MARKET GROWTH HAS BEEN ACHIEVED.
ORBICOM (PROPRIETARY)LIMITED
ORBICOM IS THE LEADING SATELLITE COMMUNCATIONS COMPANY IN AFRICA. THE COMPANY
IS A DISTRIBUTOR OF DIGITAL SATELLITE SIGNALS FOR THE MIHGROUP AND MANAGES DATA
AND VALUE-ADDED NETWORKS IN BOTSWANA, BURUNDI, EGYPT, GHANA, KENYA, LESOTHO,
NAMIBIA, NIGERIA, TANZANIA, UGANDA AND ZAMBIA.
ORBICOM IS WELL POSITIONED TO DELIVER SERVICES SUCH AS DISTANCE EDUCATION,
TELE-MEDICINE AND OTHER SIMILAR SERVICES THAT BENEFIT COMMUNITIES THROUGHOUT
AFRICA. THE COMPANY AIMS TO BE A LEADER IN THE PROVISION OF VIDEO, INTERNET AND
CORPORATE COMMUNICATION NETWORKS VIA SATELLITE.
THE ACQUISITION OF ORBICOM HAS ENABLED M-CELL TO BROADEN ITS ACTIVITIES FROM
WIRELESS COMMUNICATIONS TO INCLUDE A BROAD RANGE OF SATELLITE TELECOMMUNICATION
SERVICES.
YEAR 2000 COMPLIANCE
M-CELL'S MAJOR OPERATING COMPANIES HAVE IMPLEMENTED MILLENNIUM COMPLIANCE
INITIATIVES WHICH COMPLY WITH THE ISO8601 DATE STANDARD AND EQUIVALENT BSI
STANDARD. BUSINESS CONTINUITY CONTINGENCY PLANS ARE IN PLACE AND HAVE BEEN
TESTED TO ASSURE KEY ASPECTS OF THE BUSINESSES. ON THE STRENGTH OF END-TO-END
SYSTEMS TESTING, THE GROUP IS CONFIDENT THAT THE YEAR 2000 ISSUE WILL NOT POSE
MATERIAL OPERATIONAL DIFFICULTIES FOR ANY PRODUCTS, SERVICES OR BUSINESS
CRITICAL SYSTEMS.
PROSPECTS
THE LOCAL CELLULAR TELEPHONE INDUSTRY CONTINUES TO SHOW SIGNIFICANT GROWTH,
PRIMARILY IN THE PRE-PAID MARKET. THE COMBINATION OF CONTINUED CUSTOMER GROWTH
AND LOWER INTEREST RATES BODES WELL FOR MTN'S EXPANSION PLANS IN SOUTH AFRICA.
NETWORK INFRASTRUCTURE INVESTMENT IS EXPECTED TO EXCEED R1,5 BILLION IN THE
CURRENT FINANCIAL YEAR.
IT IS ENVISAGED THAT THE THIRD CELLULAR LICENCE WILL BE AWARDED WITHIN THE NEXT
SIX MONTHS. THE AWARD IS NOT EXPECTED TO HAVE A MATERIAL EFFECT ON EARNINGS IN
THE CURRENT FINANCIAL YEAR.
FURTHER EXPANSION OPPORTUNITIES, WHICH WILL ADD LONG-TERM VALUE, HAVE BEEN
IDENTIFIED IN AFRICA AND ARE UNDER EVALUATION. THE DEVELOPMENT COSTS OF THESE
OPPORTUNITIES MAY DEPRESS SHORT-TERM EARNINGS.
IT IS M-CELL'S INTENTION TO FURTHER BROADEN THE RANGE OF TELECOMMUNCATION
SERVICES OFFERED BEYOND WIRELESS SATELLITE TELECOMMUNICATIONS AND FURTHER
ACQUISITIONS ARE BEING CONSIDERED IN THIS REGARD.
DIVIDEND
AN INTERIM DIVIDEND NO. 4 OF 2,3 CENTS PER SHARE HAS BEEN DECLARED PAYABLE ON 7
JANUARY 2000 TO SHAREHOLDERS REGISTERED AT THE CLOSE OF BUSINESS ON 10 DECEMBER
1999.
CHANGE IN SECTOR, AMENDMENTS TO ARTICLES AND CAPITAL REDUCTIONS
SHAREHOLDERS ARE REFERRED TO AN ANNOUNCEMENT APPEARING ELSEWHERE IN THE PRESS
RELATING TO THE PROPOSAL BY THE BOARD TO;
- TRANSFER THE LISTING OF M-CELL FROM THE INDUSTRIAL-DEVELOPMENT SECTOR TO THE
INDUSTRIAL-TELECOMMUNICATIONS SECTOR OF THE JOHANNESBURG STOCK EXCHANGE,
- AMEND THE ARTICLES OF ASSOCIATION OF M-CELL TO ENABLE THE COMPANY TO ACQUIRE
ITS OWN SHARES OR SHARES IN ITS HOLDING COMPANY, AND EFFECT PAYMENT TO
SHAREHOLDERS, PARTICULARLY PAYMENTS ENVISAGED IN TERMS OF SECTION 90 OF THE
COMPANIES ACT, AND
- WRITE OFF GOODWILL AMOUNTING TO R4 539,7 MILLION AGAINST SHARE PREMIUM.
CAUTIONARY ANNOUNCEMENT
NEGOTIATIONS ARE UNDER WAY TO ACQUIRE THE REMAINING 28% INTEREST IN MTN NOT
OWNED BY M-CELL IN EXCHANGE FOR THE ISSUE OF NEW M-CELL ORDINARY SHARES.
SHAREHOLDERS ARE THEREFORE ADVISED TO CONTINUE TO EXERCISE CAUTION IN THEIR
DEALINGS IN THE SHARES OF THE COMPANY.
FOR AND ON BEHALF OF THE BOARD
I CHARNLEY
CHAIRPERSON
J R D MODISE
DIRECTOR
24 NOVEMBER 1999
DIRECTORS
I CHARNLEY (CHAIRPERSON), J P BEKKER, Z N A CINDI, J S CRAIB, P EDWARDS*, A S
MABOGOANE, J R D MODISE, S J Z PACAK *BRITISH
COMPANY SECRETARY
M R D BOYNS*
TRANSFER SECRETARIES
MERCANTILE REGISTRARS LIMITED
11 DIAGONAL STREET
JOHANNESBURG, 2001
(POBOX 1053, JOHANNESBURG, 2000)
REGISTERED OFFICE
28 HARRISON STREET
JOHANNESBURG
2001
(POBOX 231, JOHANNESBURG, 2000)
THESE RESULTS CAN VIEWED ON THE WEBSITE AT HTTP://WWW.M-CELL.CO.ZA
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