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M-CELL LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1994/009584/06)
("M-CELL")
A JOHNNIC GROUP SUBSIDIARY
REVENUE UP 35%
HEADLINE EARNINGS PER SHARE UP 102%
EBITDA UP 73%
DIVIDEND PER SHARE UP 98%
CONSOLIDATED INCOME STATEMENT
RESTATED
YEAR ENDED YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH CHANGE 31 MARCH
2000 1999 % 1999
RM RM RM
REVENUE 6 007,9 4 453,3 35 1 456,6
EARNINGS BEFORE INTEREST,
TAXATION, DEPRECIATION AND
AMORTISATION ("EBITDA") 2 021,2 1 170,8 73 384,3
DEPRECIATION (522,1) (347,1) (113,6)
AMORTISATION (130,7) (138,4) (44,6)
INCOME FROM OPERATIONS 1 368,4 685,3 100 226,1
FINANCE COSTS (235,0) (213,5) (70,0)
FINANCE INCOME 92,9 60,5 35,1
SHARE OF LOSSES OF ASSOCIATES (0,8) - -
INCOME BEFORE TAXATION 1 225,5 532,3 130 191,2
TAXATION (407,6) (155,9) (57,5)
INCOME AFTER TAXATION 817,9 376,4 117 133,7
MINORITY INTEREST (229,3) (242,7) -
NET INCOME 588,6 133,7 340 133,7
HEADLINE EARNINGS PER
ORDINARY SHARE (CENTS) 50,7 25,1 102 25,1
DIVIDEND PER ORDINARY
SHARE (CENTS)
- INTERIM 2,3 N/A N/A
- FINAL 5,6 4,0 4,0
7,9 4,0 98 4,0
DIVIDEND COVER (TIMES) 6,1 6,3 6,3
NUMBER OF ORDINARY SHARES
IN ISSUE:
- WEIGHTED AVERAGE ('000) 1 160 090 533 121 533 121
- AT YEAR END ('000) 1 249 132 663 930 663 930
SUMMARISED CONSOLIDATED BALANCE SHEET
RESTATED
31 MARCH 31 MARCH 31 MARCH
2000 1999 1999
RM RM RM
ASSETS
NON-CURRENT ASSETS
FIXED ASSETS AND INTANGIBLES 3 923,4 2 856,7 1 171,3
INVESTMENTS AND LOANS - UNLISTED 211,6 200,0 86,1
OTHER NON-CURRENT ASSETS 523,7 154,1 63,2
4 658,7 3 210,8 1 320,6
CURRENT ASSETS 1 703,3 1 371,7 616,2
BANK BALANCES, DEPOSITS AND CASH 332,7 521,6 263,0
OTHER CURRENT ASSETS 1 370,6 850,1 353,2
TOTAL ASSETS 6 362,0 4 582,5 1 936,8
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
ORDINARY SHAREHOLDERS' INTEREST 1 923,4 788,4 788,4
MINORITY INTEREST 580,2 1 075,1 -
TOTAL EQUITY 2 503,6 1,863,5 788,4
NON-CURRENT LIABILITIES 2 013,2 1 679,1 707,9
LONG TERM LIABILITIES
- INTEREST-BEARING 1 505,3 1 476,9 625,0
DEFERRED TAXATION 507,9 202,2 82,9
CURRENT LIABILITIES 1 845,2 1 039,9 440,5
NON-INTEREST BEARING LIABILITIES 1 349,4 986,3 418,6
INTEREST-BEARING LIABILITIES 495,8 53,6 21,9
TOTAL EQUITY AND LIABILITIES 6 362,0 4 582,5 1 936,8
NET ASSET VALUE PER ORDINARY SHARE (RAND)
- BOOK VALUE 1,54 1,19 1,19
- BASED ON DIRECTORS' VALUATION OF
UNDERLYING INVESTMENTS 36,05 4,05 4,05
NOTES:
1. THE TOTAL INTEREST BEARING DEBT OF
THE GROUP AMOUNTS TO 2 001,1 1 530,5 646,9
2. CAPITAL EXPENDITURE INCURRED 1 597,7 983,0 403,0
3. THE GROUP'S CONTINGENT LIABILITIES
AND COMMITMENTS ARE AS FOLLOWS:
GUARANTEES (US$) 108,0 12,0 4,9
OPERATING LEASES 710,2 290,9 119,3
COMMITMENTS FOR CAPITAL EXPENDITURE
- CONTRACTED 167,3 543,7 222,9
- APPROVED BUT NOT CONTRACTED 1 815,4 834,5 342,1
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
RESTATED
YEAR ENDED YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH 31 MARCH
2000 1999 1999
RM RM RM
CASH INFLOWS FROM OPERATING
ACTIVITIES 1 567,0 1 094,0 366,2
CASH OUTFLOWS FROM INVESTING
ACTIVITIES (1 788,4) (1 255,2) (414,8)
CASH INFLOWS FROM FINANCING
ACTIVITIES 359,1 533,2 176,1
NET INCREASE IN CASH AND CASH
EQUIVALENTS 137,7 372,0 127,5
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 251,2 125,2 125,2
FOREIGN ENTITIES TRANSLATION
ADJUSTMENT (8,5) (4,4) (1,5)
CASH AND CASH EQUIVALENTS AT
END OF YEAR 380,4 492,8 251,2
SUMMARISED GROUP STATEMENT OF CHANGES IN EQUITY
31 MARCH 2000 31 MARCH 1999
RM RM
BALANCE AT 1 APRIL 1999 788,4 509,6
NET INCOME ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 588,6 133,7
DIVIDENDS (96,9) (22,3)
NET GOODWILL ARISING ON ACQUISITION OF
SUBSIDIARIES WRITTEN BACK (OFF) 1 274,5 (1 300,7)
SHARE CAPITAL ISSUED AT A PREMIUM LESS
SHARE ISSUE EXPENSES 6 429,5 1 463,6
GOODWILL WRITTEN OFF AGAINST
SHARE PREMIUM ACCOUNT (7 054,1) -
OTHER ADJUSTMENTS (6,6) 4,5
ORDINARY SHAREHOLDERS' INTEREST AT
31 MARCH 2000 1 923,4 788,4
INTRODUCTION
M-CELL HAS CONCLUDED YET ANOTHER SUCCESSFUL YEAR, DURING WHICH THE COMPANY:
INCREASED ITS SHAREHOLDING IN MOBILE TELEPHONE NETWORKS HOLDINGS (PROPRIETARY)
LIMITED ("MTN") FROM 41% TO 77%, ACQUIRED 100% OF ORBICOM (PROPRIETARY)LIMITED
("ORBICOM"), AFRICA'S LEADING SATELLITE TELECOMMUNICATIONS COMPANY, WITH EFFECT
FROM 1 SEPTEMBER 1999, AND
TRANSFERRED ITS LISTING FROM THE INDUSTRIAL - DEVELOPMENT SECTOR TO THE
INDUSTRIAL - TELECOMMUNICATIONS SECTOR OF THE JOHANNESBURG STOCK EXCHANGE.
THE MTN AND ORBICOM TRANSACTIONS ABOVE HAVE RESULTED IN M-CELL NOW FULLY
CONSOLIDATING THE RESULTS OF MTN AND ORBICOM.
THE RESULTS FOR THE CURRENT FINANCIAL YEAR ARE THEREFORE NOT DIRECTLY
COMPARABLE WITH THE RESULTS OF THE PREVIOUS FINANCIAL YEAR. TO ENABLE MORE
ACCURATE COMPARISON WITH THE PREVIOUS YEAR REPORTED RESULTS, THE 1999 RESULTS
HAVE BEEN RESTATED TO REFLECT THE FULL CONSOLIDATION OF MTN INTO M-CELL.
THEREFORE, ALL COMPARISONS TO THE PREVIOUS YEAR RESULTS IN THE COMMENTARY AND
THE REPORT WHERE APPLICABLE, REFER TO THE RESTATED RESULTS.
RESULTS
TOTAL HEADLINE EARNINGS PER SHARE DOUBLED TO 50,7 CENTS FROM 25,1 CENTS LAST
YEAR ON THE BACK OF STRONG GROWTH IN REVENUES AND MARGINS. THE RAPID INCREASE
IN THE MTN SUBSCRIBER BASE FUELLED A 35% GROWTH IN REVENUES TO R6007,9 MILLION,
WHILST THE CONTINUING IMPROVEMENTS IN OPERATING EFFICIENCIES INCREASED THE
EBITDA MARGINS TO 34% FROM 26% IN THE PREVIOUS YEAR. EBITDA AND OPERATING
INCOME INCREASED 73% AND 100% TO R2021,2 MILLION AND R1368,4 MILLION
RESPECTIVELY.
STRONG CASH FLOWS ENABLED THE GROUP TO INCREASE ITS INTEREST INCOME FOR MOST
PART OF THE YEAR, HOWEVER ADDITIONAL BORROWINGS WERE PUT IN PLACE TOWARDS THE
END OF THE FINANCIAL YEAR TO FUND THE MTN CAMEROON ACQUISITION.
THE GROUP HAS UTILISED MOST OF ITS ASSESSED LOSSES FROM PREVIOUS YEARS. THIS,
COUPLED WITH THE INCREASE IN PROFITS, RESULTED IN THE INCREASE IN THE TAX
CHARGE IN THE CURRENT FINANCIAL YEAR.
GOODWILL ARISING FROM THE ADDITIONAL STAKE IN MTN AND THE ACQUISITION OF
ORBICOM AMOUNTING TO R7054,1 MILLION HAS BEEN WRITTEN OFF AGAINST SHARE PREMIUM
MOBILE TELEPHONE NETWORKS HOLDINGS (PROPRIETARY)LIMITED ("MTN")
MTN CONTINUED ITS STRONG GROWTH WITH REVENUE INCREASING BY 33% DRIVEN BY A 106%
INCREASE IN THE SUBSCRIBER BASE. A LARGE PORTION OF THE GROWTH IN THE
SUBSCRIBER BASE IS ATTRIBUTABLE TO A SUBSTANTIAL INCREASE IN THE PRE-PAID
CUSTOMERS. GROWTH IN THE CONTRACT CUSTOMERS CONTINUED AS EXPECTED.
IMPROVEMENT IN EFFICIENCIES HAS LED TO EBITDA INCREASING BY 72% TO R2 013,8
MILLION WITH THE EBITDA MARGIN RISING FROM 26% LAST YEAR TO THE CURRENT 34%.
THIS IN TURN LED TO A 124% INCREASE IN PROFIT AFTER TAX.
THE COMPANY ALSO ENTRENCHED ITSELF ON THE INTERNET THIS YEAR, REGISTERING A
WORLDWIDE SUBSCRIBER BASE OF 2,1 MILLION SHORT MESSAGE SYSTEM ("SMS") USERS.
THE PERFORMANCE OF MTN'S INVESTMENT IN OPERATIONS IN RWANDA, UGANDA AND
SWAZILAND HAS EXCEEDED EXPECTATIONS AND HAS CONTRIBUTED POSITIVELY TO MTN'S
RESULTS DURING THEIR FIRST FULL 12 MONTHS OF OPERATIONS. MTN WAS SUCCESSFUL IN
BIDDING FOR, AND ACQUIRING, 100% OF CAMEROON TELECOMMUNICATIONS MOBILE WHICH
NOW TRADES AS MTN CAMEROON. THE ACQUISITION WAS MADE ON 15 FEBRUARY 2000 AND
FURTHER CONSOLIDATED MTN'S POSITION AS A LEADING COMMUNICATIONS PROVIDER IN
AFRICA.
ORBICOM (PROPRIETARY)LIMITED ("ORBICOM")
AS THE LARGEST PROVIDER OF SATELLITE SERVICES IN AFRICA, ORBICOM DISTRIBUTES
DIGITAL SIGNALS AND MANAGES VALUE-ADDED NETWORKS IN BOTSWANA, BURUNDI, EGYPT,
GHANA, KENYA, LESOTHO, NAMIBIA, NIGERIA, TANZANIA, UGANDA AND ZAMBIA.
ORBICOM WAS ACQUIRED BY M-CELL ON 1 SEPTEMBER 1999 AND WAS MERGED INTO THE
GROUP WITHOUT DISRUPTION TO SERVICES, STANDARDS OR STAFF MORALE. THE COMPANY
SECURED A LICENCE TO OPERATE ON PAS 7 AND SUCCESSFULLY MIGRATED ITS KU-BAND
SERVICES FROM THE AILING PAS 4 SATELLITE TO THE PAS 7 SATELLITE. ORBICOM
IMPLEMENTED THE NEW DIVICAST TECHNOLOGY AND LAID THE FOUNDATION OF ITS OWN
FUTURE SATELLITE NETWORK.
THE COMPANY ACHIEVED REVENUES OF R79,9 MILLION AND HEADLINE EARNINGS OF R3,7
MILLION.
YEAR 2000 COMPLIANCE
THE M-CELL GROUP IMPLEMENTED COMPREHENSIVE MEASURES AND DEVELOPED CONTINGENCY
PLANS TO ENSURE THAT YEAR 2000 ISSUES WOULD NOT IMPACT ANY OF ITS OPERATIONS.
THE GROUP IS PLEASED TO REPORT THAT NO INCIDENTS OF YEAR 2000-RELATED
DIFFICULTIES WERE REPORTED IN ANY OF ITS PRODUCTS, SERVICES OR
BUSINESS-CRITICAL SYSTEMS.
PROSPECTS
MTN CONTINUES TO PURSUE ITS GROWTH STRATEGY THROUGHOUT AFRICA AND IS CONFIDENT
OF ACQUIRING ADDITIONAL LICENCES. THE GROUP HAS VARIOUS INITIATIVES UNDERWAY TO
EXPLOIT THESE OPPORTUNITIES.
THE DELAYS THAT CONTINUE TO BE EXPERIENCED IN FINALISING THE ISSUE OF THE THIRD
MOBILE CELLULAR LICENCE IN SOUTH AFRICA WILL POSTPONE THE IMPACT THEREOF ON THE
MARKET.
M-CELL IS NOW WELL POSITIONED TO TAKE ADVANTAGE OF THE OPPORTUNITIES BEING
AFFORDED BY THE CONVERGENCE OF TELECOMMUNICATIONS, MEDIA AND INFORMATION AND
NEW DEVELOPMENTS SUCH AS WIRELESS INTERNET ACCESS AND HIGHSPEED DATA SERVICES
FACILITATED BY THE INTRODUCTION OF GENERAL POCKET RADIO SERVICES ("GPRS").
MOST EXCITING OF ALL IS THE PROSPECTIVE DEREGULATION OF THE SOUTH AFRICAN
TELECOMMUNICATIONS INDUSTRY IN THE NEAR FUTURE. M-CELL, AS A LEADING PRIVATE
SECTOR, BLACK-OWNED, TELECOMMUNICATIONS OPERATOR IS WELL POISED TO PARTICIPATE
IN THE OPPORTUNITIES WHICH DEREGULATION WILL BRING. THESE INCLUDE THE
POSSIBILITY OF STRATEGIC ACQUISITIONS AND EXPANSION OF M-CELL'S BUSINESS WITH
THE OBJECTIVE OF BECOMING A FULL SPECTRUM TELECOMMUNICATIONS SERVICE PROVIDER.
FINALLY, ACQUIRING ORBICOM HAS GIVEN THE GROUP THE CAPACITY TO BROADEN M-CELL'S
RANGE OF PRODUCTS FROM MERELY MOBILE TELEPHONY TO A FULL RANGE OF WIRELESS AND
SATELLITE DIGITAL COMMUNICATION SERVICES.
DIVIDEND
M-CELL'S CORE BUSINESSES OPERATE IN HIGH GROWTH SECTORS. THE GROUP HAS ADOPTED
A DIVIDEND POLICY WHICH WILL ALLOW THE BUSINESSES TO RETAIN AND REINVEST THE
BULK OF THE CASH IT GENERATES TO FUND FUTURE GROWTH. A TARGET DIVIDEND COVER
RATIO OF 5 TO 6 TIMES HEADLINE EARNINGS WILL BE FOLLOWED.
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2000 A FINAL DIVIDEND NO 5 OF 5,6 CENTS
PER SHARE HAS BEEN DECLARED, PAYABLE ON 21 JULY 2000 TO SHAREHOLDERS REGISTERED
AT THE CLOSE OF BUSINESS ON 23 JUNE 2000.
FOR AND ON BEHALF OF THE BOARD
I CHARNLEY J R D MODISE
CHAIRPERSON DIRECTOR
7 JUNE 2000
JOHANNESBURG
DIRECTORS: I CHARNLEY (CHAIRPERSON), Z N A CINDI, J S CRAIB, P EDWARDS*, A S
MABOGOANE, J R D MODISE
*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 BE VIEWED ON THE WEBSITE AT HTTP://WWW.M-CELL.CO.ZA
MTN
THE BETTER CONNECTION
ORBICOM
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