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MTN Group Limited - Audited results for the financial year ended 31 March 2005
and dividend declaration
MTN Group Limited
Incorporated in the Republic of South Africa
Registration number 1994/009584/06
Share code: MTN
ISIN ZAE000042164
("MTN Group" or "the Group")
Audited results for the financial year ended 31 March 2005 and dividend
declaration
HIGHLIGHTS OF RESULTS
- Subscribers increased by 50% to 14,3 million
- Revenue increased by 21% to R29 billion
- EBITDA increased by 33% to R12 billion
- EBITDA margin increased to 41,5%
- PAT increased by 47% to R7,3 billion
- Adjusted headline earnings per share increased by 45% to 366,6 cents
Operational data
Year ended Year ended
31 March 2005 31 March 2004
South Africa
Subscribers 8 001 000 6 270 000
ARPU (Rand) 184 203
Nigeria
Subscribers 4 392 000 1 966 000
ARPU (USD) 40 51
Cameroon
Subscribers 863 000 581 000
ARPU (USD) 23 24
Uganda
Subscribers 719 000 495 000
ARPU (USD) 19 22
Rwanda
Subscribers 188 000 146 000
ARPU (USD) 19 22
Swaziland
Subscribers 145 000 85 000
ARPU (Rand) 178 223
REVIEW OF RESULTS
MTN Group Limited (MTN Group or the Group) continued its strong growth trend
during the 2005 financial year, achieving an increase of 45% in Adjusted
Headline earnings per share (Adjusted Headline EPS) to 366,6 cents. The Group
lifted consolidated revenues by 21% year-on-year to R29 billion on the strength
of a 50% increase in its total mobile subscriber base to 14,3 million at 31
March 2005. MTN Group also improved profitability levels, recording earnings
before interest, tax, depreciation and amortisation (EBITDA) of R12 billion and
profit after tax (PAT) of R7,3 billion, up 33% and 47%, respectively, compared
to last year.
The reported Adjusted Headline EPS excludes the beneficial financial impact of
the deferred tax asset recognised by MTN Nigeria Communications Limited (MTN
Nigeria). Basic (unadjusted) headline earnings per share are 385 cents compared
to 264,2 cents for the previous financial year.
The contribution by the international operations to overall Group results
increased slightly to 39% of revenue, 50% of EBITDA and 44% of Adjusted Headline
EPS. As a significant proportion of the Group"s revenue and profits is generated
outside South Africa, the fluctuation of the reporting currencies of our
international operations against the rand continues to impact on the Group"s
consolidated results. Of primary importance is the Nigerian naira, against which
the rand strengthened by 17% on average over the 2005 financial year compared
with the average rate for the previous year. Consequently, the strong revenue
and earnings growth achieved by MTN Nigeria was somewhat muted in the Group
financial results when translated into rand. During the year, the rand also
appreciated by between 2% and 17% on average against the reporting currencies of
the Group"s other international operations.
An important change in accounting policies was implemented during the year, with
MTN Group adopting IFRS3 (AC 140) and the revised IAS36 (AC 128), IAS38 (AC 129)
and IAS27 (AC 132) with effect from 17 July 2000. Under the above statements,
minority shareholders are now treated as equity participants and increases or
reductions of the Group"s stake in any of its subsidiaries, which do not result
in a change of control, are accounted for as equity transactions. As a result,
the difference between the purchase price (or disposal proceeds) and book value
of minority interests acquired (or disposed of) arising from transactions with
minorities is now recorded directly in equity and not as goodwill or in the
income statement, as was previously the case. The main transaction impacted by
this retrospective adoption of the above accounting statements was the
restructuring transaction implemented in July 2000 in terms of which MTN Group
acquired the 23% minority stake in MTN Holdings held by Transnet Limited, and
settled the transaction by the issue of shares. Although there was no effective
change in control in terms of the MTN Group"s previous accounting policy, this
resulted in the recognition of R11,6 billion of goodwill on the MTN Group
balance sheet. Such goodwill was previously being amortised over 20 years at an
annual charge of R580 million. Restating the income statement for this change
in accounting policy in respect of the year ended
31 March 2004, resulted in an increase of PAT by R671 million for the 2004
financial year, which is primarily attributable to goodwill no longer being
amortised. On the restated balance sheet as at
31 March 2004, goodwill has been credited by R9,7 billion, reducing reserves and
overall equity by the same amount.
INCOME STATEMENT ANALYSIS
Group consolidated revenue increased to R29 billion, a 21% increase year-on-
year. MTN South Africa recorded an increase in revenue of 17% to R17,8 billion,
while MTN Nigeria"s revenue grew by 34% to R9,3 billion, despite the rand
strengthening against the naira during the period under review.
EBITDA increased by 33% to R12 billion and, pleasingly, the Group"s EBITDA
margin increased from 37,9% to 41,5%. MTN South Africa recorded a healthy
improvement in EBITDA margin to 34%, up from 30% for the year ended 31 March
2004 and 33% for the six months ended 30 September 2004. This positive trend
has been underpinned by tighter control over distribution costs, improved net
interconnect balances and lower handset costs due to rand strength, but has been
offset to some degree by increased postpaid subscriber acquisition costs driven
by the competitive environment. The Group"s international operations all
increased their EBITDA margins year-on-year and achieved margins in the 43% to
52% range.
Depreciation charges increased by 23% from R2,2 billion to R2,7 billion, driven
by the sizeable capital investment linked to the network roll-out in Nigeria.
Net finance costs declined to R266 million from R604 million in the prior year.
MTN Nigeria took on additional borrowings during the year, drawing down further
under its medium-term project finance facility. This was offset by a reduction
in interest expense arising from the US dollar-syndicated facility in MTN
Mauritius being largely repaid during the year, as well as the substantial cash
balances in South Africa generating interest income. A reduction in foreign
exchange losses to R38 million for 2005, compared to R208 million for the
previous year, further contributed to the overall reduction of net finance
costs.
Taxation increased by 36% to R1,5 billion for the year ended 31 March 2005,
which includes R84million of STC payable on the dividend payment made in July
2004. The Group"s effective tax rate decreased to 17%, primarily as a result of
MTN Nigeria still being within its five-year tax holiday granted under pioneer
status in 2002, coupled with the increase in the deferred tax asset of R406
million due to timing differences on capital allowances.
Basic headline earnings per share increased by 46% to 385,0 cents while Adjusted
Headline EPS increased by 45% to 366,6 cents. South African operations
contributed 204 cents or 56% of total Adjusted Headline EPS, representing a 50%
year-on-year increase. Adjusted headline EPS derived from international
operations increased by 38% to 162,6 cents.
BALANCE SHEET AND CASH FLOW
The Group"s total assets have increased by 32% to R29,4 billion compared to the
restated R22,3 billion at 31 March 2004. Long-term borrowings reduced to R3,0
billion (2004: R3,7 billion), while short-term borrowings decreased to R167
million (2004: R334 million) as at 31 March 2005. Both MTN Mauritius and MTN
Cameroon reduced their borrowings, year-on-year while MTN Nigeria had fully
drawn down on its US$345 million medium-term loan facilities, and utilised US$15
million of the additional US$200 million loan facility arranged during the year
to meet its aggressive capital investment plans.
At 31 March 2005, the Group had cash on hand of R6,4 billion, including
securitised cash deposits of R591 million against letters of credit in Nigeria,
with R4,4 billion of the cash on hand residing in South Africa. Overall taking
cash at bank and on hand, securitised cash deposits less interest-bearing short-
and long-term liabilities into account, the Group remains in a net cash positive
position of R3,2 billion at 31 March 2005. This increase from R1,2 billion at
31 March 2004 is largely attributable to the strong operating cash generation in
MTN South Africa.
Operating cash flow (before dividends of R680 million) was R10,2 billion for the
year, with free cash flow (being operating cash inflows less capital
expenditure) of R2 billion being generated notwithstanding the major investment
of R7,6 billion in property plant and equipment. MTN Nigeria invested R5,5
billion, representing 72% of the Group"s total capital expenditure for the year.
The Group utilised R7,6 billion of the authorised R9,5 billion capital
expenditure during the year, while capital expenditure of R10,4 billion has been
approved for the next twelve months.
OPERATIONAL REVIEW
MTN SOUTH AFRICA continues to achieve healthy subscriber growth and recorded a
total of 8001000 capable subscribers at 31 March 2005. The prepaid component of
its base increased by 30% to 6 610 000 subscribers. The postpaid base increased
by 19% to 1391000 subscribers. Estimated market share remains between 38% and
39%.
Blended average revenue per user per month (ARPU) of R184 was achieved for the
year. Both postpaid and prepaid subscriber ARPU decreased, to R576 (2004: R597)
and R97 (2004: R104) respectively. This decrease in both prepaid and postpaid
ARPU is the result of strong subscriber growth in the lower-end segments of the
mobile market in South Africa. The decrease in blended ARPU is driven by changes
in mix, with prepaid subscribers now constituting 83% of the total base.
Included in total postpaid subscribers are 215 000 My Choice Top-up subscribers,
who generate significantly lower ARPU than the average for the postpaid base,
and as such impacted on the postpaid ARPU decrease year-on-year.
Data contributed 6% towards total revenue excluding handset revenue.
The national roll-out of 3G coverage and services has commenced and full
commercial service launch of broadband services is planned mid-year, with EDGE
coverage of approximately 20% of our South African network and 3G covering the
key metropolitan centres. This will enable customers to access advanced MTN
data offerings as well as video-based services.
During the year, MTN disposed of its 30% investment in New Bucks Holdings, the
loyalty programme jointly established with FirstRand Bank Limited, to eBucks.com
Holdings Limited.
MTN NIGERIA increased its active subscriber base to 4 392 000, a 123% growth
year-on-year, despite a slow start. This strong increase, particularly in the
third financial quarter, was partially assisted by a substantial decrease in
connection fees to 980 naira, which coincided with additional network and
switching capacity being made available. As a natural consequence of rapidly-
increasing penetration into the addressable market for GSM subscribers, blended
ARPU (excluding connection fees) has decreased significantly from US$51 for the
2004 financial year to US$40 for the 2005 financial year. The ARPU of
subscribers most recently joining the network have decreased to US$27 at the end
of March 2005. This downward trend in blended ARPU is expected to continue.
MTN Nigeria continued its accelerated network roll-out, commissioning 823 base
stations and 14 switches during the year to meet customer demand in the rapidly-
expanding Nigerian market. Total capital expenditure for the year was R5,5
billion, a record for any operation in the MTN Group. To date, all profits
generated by MTN Nigeria have been reinvested into the business. Additional
funding of US$200 million has been raised from local and international financial
institutions to supplement internally-generated cash flows to fund the extensive
capital expenditure programme of R7 billion approved for the twelve month period
to March 2006.
During the year under review, correspondence was received from certain Nigerian
authorities that could have created uncertainty as to whether or not MTN Nigeria
has "pioneer status". Discussions have been ongoing with the relevant
authorities in this regard. Subsequent to year end, additional positive
correspondence clarifying the position around pioneer status has been received.
In the light of these factors, the board of directors of MTN Group remains
confident that the grant of pioneer status to MTN Nigeria is and will remain in
effect for the full five-year period.
MTN CAMEROON maintained market leadership in a highly-competitive trading
environment. Its subscriber base increased to 863 000, representing a 49%
increase from 31 March 2004. This was, boosted by being first to market with a
variety of innovative offerings, including Me2U which enables transfer of
prepaid virtual airtime between subscribers. ARPU declined marginally to US$23
for the year ended 31 March 2005.
MTN UGANDA increased its total GSM subscriber base by 45% year-on-year to 719
000, fuelled by the introduction of packages providing network access and
airtime in a single card, as well as simple, flat-rate tariffs which have proven
extremely popular. Following strong subscriber growth, MTN Uganda"s ARPU
decreased to US$19 from US$22 for the year to March 2005, assisted by a 10%
strengthening of the Ugandan shilling against the US dollar.
MTN RWANDA experienced a slowdown in subscriber growth, increasing its active
subscriber base to 188 000. ARPU of US$19 was recorded, compared to US$22 at 31
March 2004.
MTN SWAZILAND achieved strong subscriber growth of 71%, driven by the decision
to combine network access and airtime in a single card. Deeper penetration into
the market resulted in a decrease in ARPU to R178 from R223.
Traditionally, the Group reported on its international subscriber base as being
subscribers who have been active (made or received a revenue-generating call)
over a 30-day period, compared to a 90-day period in South Africa. To align all
Group companies to a common standard comparable with other operators, all
reported subscriber numbers will with effect from April 2005 be based on 90-day
activity levels. Under the new definition, the subscriber base as at 31 March
2005 would be 15,6 million subscribers.
STRATEGIC INVESTMENTS
MTN Group, through its strategic investments division, identifies and evaluates
value-enhancing expansion opportunities in developing markets as well as
opportunities to expand the Group"s business offerings beyond the core mobile
telecommunications arena. While several potential acquisitions as well as new
licence bids have been pursued during the year, none of these transactions have
yet come to fruition.
Reference is made to the announcement dated 9 June 2005 in respect of legal
proceedings in the English High Court against Celtel International B.V. and Dr
Mohammed Ibrahim, whereby MTN Group obtained disclosure of certain information
and documents. The board of directors has resolved that it is in the Group"s
long-term best interest not to pursue further legal proceedings at this stage.
PROSPECTS
The Group"s vision is to be the leader in telecommunications in developing
markets. To further consolidate its position on the continent and to diversify
its investment portfolio, the Group will continue to explore value-enhancing
international expansion opportunities. Business opportunities complementary to
the core mobile telephony business will also be pursued.
Assuming that current market conditions prevail, the board is confident that the
Group will continue to show good subscriber growth and maintain a strong market
position in all its operations despite intensifying competition. While a
meaningful capital expansion programme in Nigeria and South Africa is planned
for the current financial year, this will be fully funded by the operations and
is expected to support further subscriber and revenue growth.
The Group continues to review alternative mechanisms to broaden the Nigerian
shareholding in MTN Nigeria. A further announcement will be made in this regard
once a firm decision has been reached.
CHANGE IN YEAR-END
The MTN Group board has decided to align its reporting cycle with its
international peers and has approved a change in year end to 31 December.
Transitionally, interim results for the six-month period to 30 September 2005
will be reported on, followed by financial results for the nine-month period to
31 December 2005. The Group"s reporting cycle will then change, with interim
results being published for the six months to 30 June and full-year financial
results to 31 December.
DIVIDEND
In light of the Group"s strong free cash flow generation, especially by the
South African operation coupled with its strong financial position, the board
recommended a dividend cover of 5 to 6 times on Adjusted Headline EPS.
Accordingly, as detailed below, a dividend of 65 cents per share for the year
has been declared.
This dividend policy for MTN Group will still enable the Group to pursue growth
opportunities while returning cash to shareholders and optimising its capital
structure.
For and on behalf of the board
M C Ramaphosa P F Nhleko
(Chairman) (Group Chief Executive Officer)
Johannesburg
9 June 2005
DIVIDEND DECLARATION
Notice is hereby given that a dividend (number 6) of 65 cents per ordinary share
has been declared and is payable to shareholders recorded in the register of MTN
Group at the close of business on Friday, 1 July 2005.
In compliance with the requirements of STRATE, the electronic settlement and
custody system used by the JSE Securities Exchange South Africa, MTN Group has
determined the following salient dates for the payment of the dividend:
Last day to trade cum-dividend Friday, 24 June 2005
Shares commence trading ex-dividend Monday, 27 June 2005
Record date Friday, 1 July 2005
Payment date of dividend Monday, 4 July 2005
Share certificates may not be dematerialised/rematerialised between Monday, 27
June 2005 and Friday, 1 July 2005, both days inclusive.
On Monday, 4 July 2005, the dividend will be electronically transferred to the
bank accounts of certificated shareholders who make use of this facility. In
respect of those who do not use this facility, cheques dated 4 July 2005 will be
posted on or about that date. Shareholders who have dematerialised their shares
will have accounts held by their Central Securities Depositary Participant or
broker credited on Monday, 4 July 2005.
Certain statements in this announcement that are neither reported financial
results nor other historical information are forward-looking statements,
relating to matters such as future earnings, savings, synergies, events, trends,
plans or objectives.
Undue reliance should not be placed on such statements because they are
inherently subject to known and unknown risks and uncertainties and can be
affected by other factors, that could cause actual results and company plans and
objectives to differ materially from those expressed or implied in the forward-
looking statements (or from past results).
Unfortunately MTN Group cannot undertake to publicly update or revise any of
these forward-looking statements, whether to reflect new information of future
events or circumstances or otherwise.
Directorate: M C Ramaphosa (Chairman), P F Nhleko* (CEO), D D B Band, S L
Botha*, I Charnley*, Z N A Cindi, R S Dabengwa*, P L Heinamann,
M A Moses, R D Nisbet*, J H N Strydom, A F van Biljon *Executive
Acting Company Secretary: L C Jooste
216 - 14th Avenue, Fairland, 2195
Private Bag 9955, Sandton, 2146
Registered office: 216 - 14th Avenue, Fairland, 2195
American Depository Receipt (ADR) programme: Cusip No. 62474M108 ADR to ordinary
share 1:1 Depository: The Bank of New York, 101 Barclay Street New York NY
10286, USA
Office of the South African Registrars: Computershare Investor Services 2004
(Proprietary) Limited
(Registration number: 2004/003647/07)
70 Marshall Street, Johannesburg, 2001
PO Box 61051,Marshalltown, 2107
Joint auditors: PricewaterhouseCoopers Inc., 2 Eglin Road, Sunninghill, 2157
Private Bag X36, Sunninghill, 2157 and SizweNtsaluba VSP Inc., 1 Woodmead Drive,
Woodmead Estate, PO Box 2939, Saxonwold, 2132
E-mail: investor_relations@mtn.co.za
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
31 March 31 March
2005 2004
Audited Audited* %
Rm Rm change
Revenue 28 994 23 871 21
Cost of sales (10 848) (9 659) 12
Gross profit 18 146 14 212 28
Operating expenses - net of
other operating income (9 082) (7 533) 21
Profit from operations 9 064 6 679 36
Finance income 305 144 112
Finance costs (571) (748) (24)
Share of profits of
associates 18 9 100
Profit before taxation 8 816 6 084 45
Income tax expense (1 502) (1 101) 36
Profit after taxation (PAT) 7 314 4 983 47
Minority interest (907) (612) 48
Net profit 6 407 4 371 47
Calculation of headline
earnings
Net profit 6 407 4 371 47
(Profit)/loss on disposal of
property, plant and equipment (3) 8
Impairment reversed against
loan arising on disposal of
MTN Cameroon (11) (9)
Profit on sale of associate (4) -
Basic headline earnings 6 389 4 370 46
Adjustment:
Reversal of deferred tax asset
(see note 14) (305) (174)
Adjusted headline earnings 6 084 4 196 45
Reconciliation of headline
earnings per ordinary share
(cents)
Attributable earnings per
share (cents) 386,0 264,2 46
(Profit)/loss on disposal of
property, plant and equipment (0,2) 0,5
Impairment reversed against
loan arising on disposal of
MTN Cameroon (0,6) (0,5)
Profit on sale of associate (0,2) -
Basic headline earnings per
share (cents) 385,0 264,2 46
Effect of reversal of deferred
tax asset (see note 14) (18,4) (10,6) 73
Adjusted headline earnings
per share (cents) 366,6 253,6 45
Contribution to adjusted
headline earnings per
ordinary share (cents)
South Africa 204,0 136,1 50
Rest of Africa 162,6 117,5 38
Adjusted headline earnings
per share (cents) 366,6 253,6 45
Number of ordinary shares
in issue:
- Weighted average (000) 1 659 671 1 654 380
- At period end (000) 1 662 497 1 657 724
SEGMENTAL ANALYSIS
Year ended Year ended
31 March 31 March
2005 2004
Audited Audited*
Rm Rm
REVENUE
South Africa 17 753 15 184
Rest of Africa 11 241 8 687
28 994 23 871
EBITDA
South Africa 6 016 4 522
Rest of Africa 6 003 4 533
12 019 9 055
PAT
South Africa 3 393 2 244
Rest of Africa 3 921 2 739
7 314 4 983
Summarised consolidated balance sheet
Year ended Year ended
31 March 31 March
2005 2004
Audited Audited*
Rm Rm
ASSETS
Non-current assets 18 727 13 637
Property, plant and equipment 15 623 10 904
Goodwill 33 33
Intangible assets 1 686 1 784
Investments and loans 604 560
Deferred tax assets 781 356
Current assets 10 637 8 643
Cash at bank and on hand 5 838 3 648
Securitised cash deposits** 591 1 688
Other current assets 4 208 3 307
Total assets 29 364 22 280
EQUITY AND LIABILITIES
Shareholders" equity
Share capital and reserves 15 933 10 128
Minority interests 2 324 1 418
18 257 11 546
Non-current liabilities 3 618 4 376
Borrowings 3 011 3 710
Deferred tax liabilities 607 666
Current liabilities 7 489 6 358
Non-interest bearing liabilities 7 272 5 919
Interest-bearing liabilities 217 439
Total equity and liabilities 29 364 22 280
Net asset value per ordinary
share (rand) 9,58 6,11
Net cash (debt)/equity % 18 10
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
31 March 31 March
2005 2004
Audited Audited
Rm Rm
Cash inflows from operating activities 9 501 8 597
Cash outflows from investing activities (7 551) (4 898)
Cash (out)/inflows from financing
activities (859) 233
Net movement in cash and cash equivalents 1 091 3 932
Cash and cash equivalents at beginning
of period 5 231 1 931
Foreign entities translation adjustment 57 (632)
Cash and cash equivalents at end of period 6 379 5 231
SUMMARISED GROUP STATEMENT OF CHANGES IN SHAREHOLDERS" EQUITY
Year ended Year ended
31 March 31 March
2005 2004
Audited Audited*
Rm Rm
Opening balance at 1 April 10 128 17 056
Effect of adoption of IAS 39 (AC 133) - (15)
Effect of adoption of IFRS 3 (AC 140) - (10 281)
Restated opening balance at 1 April 10 128 6 760
Net profit 6 407 4 371
Dividends paid (680) -
Issue of share capital 55 95
Transactions with minorities (12) (110)
Treasury shares sold 6 -
Currency translation differences 29 (988)
15 933 10 128
*Restated for the adoption of IFRS 3 (AC 140), IAS 36 (AC 128) (revised), IAS 38
(AC 129) (revised) and
IAS 27 (AC 132) (revised).
**These monies are placed on deposit with banks in Nigeria to secure letters of
credit.
NOTES
1. Basis of accounting
These condensed consolidated results have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice (GAAP). The
accounting policies are consistent with those used in the annual financial
statements for the year ended 31 March 2004, except for the adoption of South
African Statements of Generally Accepted Accounting Practice
IFRS 3 (AC 140) - Business Combinations, IAS 36 (AC 128) - Impairment of Assets
(revised), IAS 38 (AC 129) - Intangible assets (revised) and IAS 27 (AC 132) -
Consolidated and separate financial statements (revised) with effect from 17
July 2000.
2. Comparatives
Where necessary, comparative figures have been adjusted to conform with changes
in presentation and accounting policies during the year.
3. Change in accounting policies
The adoption of IFRS 3 (AC 140) requires simultaneous adoption of IAS 36 (AC
128) (revised) and IAS 38 (AC 129) (revised). The adoption of these statements
as well as IAS 27 (AC 132) (revised) resulted in a change in accounting policies
applied previously to goodwill and to the acquisition and sale of minorities.
The effects of adopting the above statements and the resultant change in
accounting policies are as follows:
- When minority interests are purchased/sold after 17 July 2000, the difference
between the purchase price/consideration received and the book value of the
minority interest is recorded directly in equity, rather than as additional
goodwill or in the income statement;
- Amortisation of previously recognised goodwill ceased with effect from 17 July
2000; and
- From the year ended 31 March 2001 onwards, goodwill is tested annually for
impairment, as well as when there are indications of impairment.
4. Headline earnings per ordinary share
The calculations of basic and adjusted headline earnings per ordinary share are
based on basic headline earnings of R6389 million (2004: R4370 million) and
adjusted headline earnings of R6084 million (2004: R4196 million) respectively,
and a weighted average of 1659670617 (2004: 1654380353) ordinary shares in
issue. No fully diluted earnings per ordinary share, in respect of debentures
and options convertible into ordinary shares, have been disclosed as the
potential dilution is not considered to be material.
5. Independent audit by the auditors
These condensed consolidated preliminary results have been audited by our joint
auditors PricewaterhouseCoopers Inc. and SizweNtsaluba vsp Inc., who have
performed their audit in accordance with Statements of South African Auditing
Standards.
A copy of their unqualified audit report is available for inspection at the
registered office of the Company.
6. Listing requirements
This interim announcement has been prepared in compliance with the Listings
Requirements of the JSE Securities Exchange South Africa.
Year ended Year ended
31 March 31 March
2005 2004
Audited Audited
Rm Rm
7. Capital expenditure incurred 7 576 5 048
8. Contingent liabilities and commitments
Contingent liabilities 1 372 788
Operating leases 679 610
Finance leases 308 314
9. Commitments for capital expenditure
- Contracted for 3 144 3 516
Authorised but not contracted
For (next twelve months) 7 247 5 986
10. Cash and cash equivalents
Bank balances, deposits and cash 5 838 3 648
Securitised cash deposits 591 1 688
Call borrowings (50) (105)
6 379 5 231
11. Interest bearing liabilities
Call borrowings 50 105
Short-term borrowings 167 334
Current liabilities 217 439
Long-term liabilities 3 011 3 710
3 228 4 149
12. Depreciation and amortisation
Depreciation 2 708 2 204
Amortisation 247 172
13. Reconciliation of profit from operations to EBITDA
2005 2004
Profit from operations 9064 6679
Add:
Depreciation 2708 2204
Amortisation 247 172
EBITDA 12019 9055
14. Recognition of deferred tax asset
The Group"s subsidiary in Nigeria has been granted a five-year tax holiday under
"pioneer status" legislation. Capital allowances arising during this period may
be carried forward and claimed as deductions against taxable income from the
sixth year of operations onwards. A deferred tax credit relating to these
deductible temporary differences has been recognised in the results to 31March
2005 in terms of the requirements of South African Statement of Generally
Accepted Accounting Practice AC 102 - Income Taxes, which requires a deferred
tax asset to be recognised for all deductible temporary differences to the
extent that it is probable that taxable profit will be available against which
the deductible temporary differences can be utilised.
As previously disclosed, although the Group has complied with the requirements
of AC 102 in this regard, the Board of Directors has reservations about the
appropriateness of this treatment in view of the fact that no cognizance may be
taken in determining the value of such deferred tax assets for uncertainties
arising out of the effects of the time value of money or future foreign exchange
movements.
The Board therefore resolved to report adjusted headline earnings (negating the
effect of the deferred tax credit of R305 million) in addition to basic headline
earnings, to more fully reflect the Group"s results for the period.
These results can be viewed on our website at www.mtn.co.za
Date: 09/06/2005 05:33:25 PM Supplied by www.sharenet.co.za
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