Wrap Text
Condensed Consilidated reviewed interim results
MTN Group Limited
Condensed Consilidated reviewed interim results
Registration number: 1994/009584/06
ISIN code: ZAE 000042164
Share code: MTN
Highlights
Group subscribers up 6.9% to 175,997 million
Revenue up 17,5% to R66, 426 million
EBITDA margin up 0.3 percentage points to 44.9%**
Adjusted HEPS up 14.3% to 537.4 cents
Dividend per share 321 cents, 72% payout ratio
Share buyback of R2, 088 million completed
Overview
MTN Group delivered a satisfactory set of results to June 2012,
increasing its subscriber numbers by 6.9% to 175,997 million from
31 December 2011. Market conditions continued to be impacted by
increasing levels of competition, regulatory requirements,
political unrest in certain countries and the global economic
slowdown. Despite these challenges, revenue showed solid growth of
17.5% (12.5%*) year on year, driven mainly by strong operational
performance and competitive value propositions in South Africa,
Iran and Ghana. The weaker rand exchange rate versus the USD and
the relatively muted decline in the value of the naira to the USD,
had a positive impact on rand reported results. Growth in Nigeria
was lower than anticipated as a result of intense competition. The
Group EBITDA margin expanded marginally to 44.9%** mainly due to
greater efficiencies and tighter cost controls across most
operations.
*constant currency
**2012 EBITDA includes the realisation of R19 million in respect
of the previously deferred Ghana Tower Company profit to the
income statement and R547 million profit from the sale of the
Uganda tower portfolio. 2011 EBITDA includes R455 million profit
from the sale of 400 of the Ghana towers.
The Group continued to deliver on its strategy to improve
shareholder returns, develop existing and new revenue streams,
optimise costs and enable an excellent customer experience through
various key initiatives:
• During the six month period, MTN Holdings Proprietary Limited
acquired 15.6 million MTN shares at a total cost of R2,088
million. In total, the Group has repurchased 1.2% of issued
shares at the cost of R3,018 million since the buy-back
initiative was implemented in late 2011.
• MTN remains focused on maintaining and enhancing its leadership
position by offering competitive segmented voice offerings and
loyalty programmes to its customers as competition increases.
The Group also continues to increase its distribution footprint
to ensure greater accessibility.
• Data usage continues to improve through an aggressive 3G
rollout, a comprehensive device strategy and appealing local
content across operations. Mobile Money, which has been launched
in 13 countries, recorded 7,3 million users. Data, excluding
SMS, contributed 10.0% to Group revenue, increasing 69.6% to
R6,666 million. MTN’s data strategy will be further supported by
the West African Cable System (WACS), which became operational
in May 2012, with landing stations in eight countries.
• MTN’s ICT strategy remains a focus. ICT will now be streamlined
under a newly established Enterprise Business function, which
will coordinate, standardise and measure ICT implementation
throughout the Group.
• The centralised procurement project continues to show steady
progress with 40-45% of the Group’s procurement now centralised.
Its priority is to establish an integrated supply chain
organisation across the Group. The IT shared services project
has expanded to include Uganda, Zambia and Swaziland. Rwanda is
expected to be integrated later in the year. Some of the
operational efficiencies include the standardisation of
intelligent network platforms, billing systems and application
transformation.
• Rationalisation of back office operations with a focus on
transactional activities in human resources, finance and supply
chain management is underway.
• Infrastructure investments for enhanced quality, capacity and to
support 3G remains a priority for the Group, with R10,144
million of capital expenditure (capex) incurred in the first
half of the year. More importantly, a total of 69% of the total
approved capex has been committed by operations through orders
placed with vendors. Although capex increased when compared to
the corresponding period for 2011, the rate of capex is expected
to accelerate in the second half of the year.
On 28 March 2012, Turkcell Iletisim AS and EAC (Turkcell) filed a
legal action against MTN Group and MTN International (Mauritius)
Limited (MTNI) in the United States district court in Washington,
DC. Turkcell alleges principally that MTN violated the US Alien
Tort Statute by engaging in the bribery of an Iranian and a South
African government official in connection with MTN’s participation
in the Irancell consortium, that MTN encouraged the South African
government to take a favourable position toward Iran`s civil
nuclear power development programme at a meeting of the
International Atomic Energy Agency in November 2005, and that MTN
enlisted South African government support for the provision of
military equipment to Iran. Turkcell seeks damages in the amount
of $4.2 billion. On 2 July 2012, MTN moved to dismiss the case on
the basis that it lacks legal merit. On 30 July 2012, the
Turkcell plaintiffs filed an opposition to the motion. MTN’s
replying brief is due on 15 August 2012, at which point the motion
will be fully briefed. MTN expects that the court will decide the
motion in late 2012 or early 2013.
On 1 February 2012, the board of directors appointed a special
committee to investigate the allegations made by Turkcell. The
committee is chaired by an independent jurist, Lord Leonard
Hoffmann, and has been directed to conduct an investigation and
report its findings and recommendations to the board. The
committee’s investigation is continuing.
MTN is working closely with all the relevant authorities to manage
US sanctions against Iran and Syria. MTN continues to retain
international legal advisors to assist the Group in remaining
compliant with all applicable sanctions.
Financial review
Revenue
Group revenue increased by a healthy 17.5% to R66, 426 million due
to solid growth in South Africa, Iran and Ghana of 9.5%, 29.9% and
19.9% respectively. Nigeria’s reported revenue grew 16.5%. The
average rand: USD exchange rate weakened from R6,80 in the prior
period to R7,89 and this, together with a relatively muted naira :
USD exchange rate, had a positive impact on revenue. On a constant
currency basis, Group revenue grew 12.5%. Local currency revenue
in Iran and Ghana increased 28.3% and 22.4% respectively while
Nigeria’s local currency revenue grew 4.4%. The contribution of
airtime and subscription revenue reduced to 63.2% from 66.0% in
the prior comparative period while data revenue increased its
contribution to 10.0% from 7.0%. This was mainly attributable to
strong data growth in South Africa and Nigeria, which contributed
46.8% and 28.4% respectively to total Group data revenue. SMS
revenue continued to show positive growth and increased its
contribution marginally. This was mainly due to the continued
success of SMS in Iran and South Africa.
Operating costs
Group operating costs increased 17.0% to R37, 194 million. This
was largely driven by higher direct and operating costs related to
network rollout and the cost of handsets and accessories in South
Africa, which increased mainly due to adverse foreign exchange
movements and higher volumes of handset sales. The weaker rand
against the operational currencies had a negative impact on
reported operating costs.
Other income
Other income includes the partial realisation of the previously
deferred Ghana Tower Company profit of R19 million to the income
statement, the profit from the sale of the Uganda tower portfolio
of R547 million and R145 million relating to the amortisation of
the BICS deferred gain.
EBITDA and EBITDA margin
Group EBITDA, which includes the partial reversal of the
previously deferred Ghana Tower Company profit and Uganda tower
profit, increased 18.2% to R29, 798 million. On a constant
currency basis, EBITDA grew 12.0%. The growth in EBITDA was mainly
due to strong organic growth in South Africa and Iran, which grew
local currency EBITDA by 10.5% and 36.4% respectively. Group
EBITDA margin expanded 0.3 percentage points to 44.9%. MTN
Nigeria’s EBITDA margin declined by 2.8 percentage points to 60.5%
following intense pressure on tariffs and higher interconnect
costs from an increase in off-network calls. On a like-for-like
basis, when the impact of the partial reversal of the previously
deferred Ghana Tower Company profit and the profit on the Uganda
towers are excluded from 2012 EBITDA and the impact from the
profit on the sale from the Ghana towers is excluded from 2011
EBITDA, the Group EBITDA margin would have increased 0.2
percentage points to 44.0%. This was due to tight cost controls
and efficiencies in South Africa, Iran, Sudan and Cote d’Ivôire,
which were partly offset by a lower EBITDA margin in Nigeria.
Depreciation and amortisation
The Group’s depreciation increased 12.0% to R7, 045 million while
amortisation decreased by 2.6% to R1, 112 million. This was mainly
due to continued investment in network infrastructure and some of
the intangible assets relating to the Investcom acquisition in
2006 becoming fully amortised during the period under review.
Net finance costs
Net finance costs increased mainly due to foreign exchange losses.
Net functional currency gains of R77 million were recorded,
compared to a gain of R414 million in the prior period. A large
portion of the gain was attributable to the conversion of cash
balances in Mauritius, which is a rand reporting entity. Net
foreign exchange losses were approximately R1, 679 million higher
than the corresponding period in 2011. These losses were largely
due to the impact of the depreciation of the Syrian pound on
dividends payable (R701 million) and the sharp depreciation of the
Sudanese pound, which impacted loans and current accounts (R880
million).
Taxation
The Group’s taxation charge increased by 18.6% to R7, 522 million
from June 2011 and the effective tax rate increased 1.15
percentage points to 38.10%. The higher effective tax rate is
mainly due to the increased Secondary Tax on Companies (STC)
related to the higher dividends paid to shareholders in April 2012
as well as withholding taxes due to dividend and management fees
up-streamed to the Group by its operating companies.
Earnings
Attributable earnings per share (EPS) increased by 12.7% to 574.5
cents. Adjusted HeadlineEPS increased 14.3% to 537.4 cents from
470.1 cents. Adjusted Headline EPS was lower than Attributable EPS
mainly due to the reversal of the profit from the sale of the
Uganda towers. The depreciation of the Sudanese and Syrian pounds
negatively impacted EPS by 58 cents and 36 cents respectively.
Cashflow
Cash generated by operations increased 26.3% while net cash from
operating activities decreased by 13.9%, principally due to a
35.9% increase in dividends and a 182% increase in tax paid. Cash
used in investing activities increased to R13,730 million mainly
due to expenditure on property, plant and equipment (excluding
software) of R8, 688 million, which was 56.0% higher than the same
period last year; intangibles of R1,373 million; Mauritian fixed
deposits of R3, 952 million and pre-payments of R800 million
offset by cash inflows from the proceeds of the Uganda tower sale.
Cash used in financing activities was mainly attributable to MTN
Holdings purchasing shares in line with MTN’s strategy to return
cash to shareholders and dividends paid to minorities.
Capital expenditure
Capex increased 77.7% to R10,144 million when compared to the same
period last year. This was mainly due to an aggressive rollout
programme implemented earlier in the year and the ongoing focus on
critical capex investment programmes across the Group’s
operations. However, capex was lower than anticipated due to long
lead times, equipment delays and slow site approvals by
authorities. Importantly, the capex target of R24,772 million is
on track for the year with a significant portion of full year
authorised capex committed to projects. Rollout is expected to
accelerate in the second half of the year.
Assets and liabilities
Assets and liabilities were positively impacted by the movement in
foreign currency exchange rates. Property, plant and equipment
decreased by 1.2% or R834 million to R70,776 million due to
foreign currency translation and depreciation of R7,045 million,
partly offset by capex additions of R10,144 million. Goodwill and
other intangible assets decreased by 9.2% to R31,359 million,
mainly due to the foreign currency translation impact and the
unwinding of the intangible assets recognised on the Investcom
acquisition in 2006.
Net debt/cash
Net cash decreased by 22.6% to R7, 654 million from R9,885 million
due to the higher dividend paid in April 2012, the share
repurchase and increased capex payments over the six months to
June 2012.
Changes in ownership
MTN increased its shareholding in MTN Cote d’Ivôire by 3% to
67.7%.
Operational review
South Africa
MTN South Africa delivered a good performance for the six months
to 30 June 2012, increasing its subscriber base by 6.8% to 23,5
million. This was mainly due to growth in the prepaid segment,
which increased its subscriber base to 19,3 million largely due to
strong promotional campaigns, MTN Mahala and MTN Zone offerings
and data services. The postpaid segment maintained a positive
trend, growing its subscriber base by 9.4% to 4,2 million.
Competitive data offerings and the continued success of hybrid
packages were the main contributors to post-paid growth. MTN South
Africa recorded market share of 35.5% and value share showed a
positive upward trend, particularly in the prepaid segment.
Total revenue increased by 9.5% mainly due to a 49.0% increase in
data revenue and strong prepaid revenue growth of 15%. Data
revenue now contributes 15.9% to total revenue compared to 11.6%
in the prior comparative period. Airtime and subscription revenue
showed good growth of 5.9%, while handset revenue grew 29.1% due
to the increase in demand for higher value phones. At 30 June
2012, there were 11.9 million data users with 4,4 million
smartphones. Interconnect revenue decreased by 15.3% as a result
of the lower interconnect rate. Postpaid average revenue per user
(ARPU) continued to trend downward to R265 due to the increased
uptake of lower value hybrid packages and telemetry SIM cards.
Prepaid ARPU decreased to R92 largely due to the interconnect rate
cut and lower marginal prepaid subscribers. Reported blended ARPU
was R123.
MTN South Africa recorded a slight increase in EBITDA margin to
35.4% due to tight cost controls. This was partly offset by higher
handset costs due to the impact of the weaker rand and increase in
volumes of handset sales. A lower interconnect margin following
the reduction in the interconnect rate in March this year also had
a negative impact on the EBITDA margin. This was partly mitigated
by promotions increasing on-network traffic to 65% compared to 60%
in the prior comparative period.
Capex for the period amounted to R1,936 million. MTN continued to
modernise its network and focus on 3G coverage and capacity. The
3G population coverage is now 56%. During the period, 146 2G sites
and 446 3G co-located sites were added, bringing the total number
of 2G sites to 6,772 and 3G co-located sites to 3,600. Fibre
rollout remains a priority with 95% of the National Long Distance
(NLD) route from Johannesburg to Durban trenched and over 50% of
the fibre already installed. The Johannesburg to Bloemfontein
route trenching is 91% completed while the Bloemfontein to Cape
Town route trenching is 70% completed. The qualification criteria
for Long Term Evolution (LTE) spectrum is still being finalised by
the Minister of Communications who has embarked on a process to
address the high demand frequency bands in South Africa.
Nigeria
MTN Nigeria experienced a challenging first half mainly due to
aggressive pricing competition during the second quarter, driven
by a multitude of bonuses on recharge, freebies and other
promotional activity. The Nigerian market performance was also
negatively impacted by a slower economy and the removal of fuel
subsidies, which have led to lower consumer spending on
telecommunications. It is estimated that only 25% of the gross
additions in the market were first time subscribers. The other 75%
was mainly attributable to rotational churn and multi SIM cards in
the market. The company grew its subscriber base by 3.7% to 43,184
million. While market share declined slightly to 48%, MTN has
maintained its value share and captured more than 50% of first
time users in the market
Total revenue in naira grew by 4.4 %. This was driven mainly by a
11.5% increase in interconnect revenue and a 130% increase in data
revenue, which benefited from innovative data offerings, improved
3G coverage and an increase in the number of smartphones. At the
end of June 2012, MTN Nigeria had 2,6 million smartphones on its
network and over 479,685 dongles. Airtime and subscription revenue
decreased by 4.4%, a function of lower consumer spending and a
reduction in effective tariffs. SMS revenue declined by 9.3%
largely due to the substitution effect of instant messaging.
Reported ARPU declined by 4% to USD 9.3 while local currency ARPU
declined 2% due to economic challenges.
MTN Nigeria EBITDA margin decreased 2.9 percentage points to
60.5%. This was as a result of lower revenue due to lower tariffs,
a lower interconnect margin due to an increase in off-network
calls and increased transmission costs related to higher data
volumes, the introduction of WACS and the provision in data
capacity. Power costs continue to reduce, albeit off a high base,
due to base stations being powered by more fuel efficient hybrid
systems.
Capex for the period amounted to R4,432 million. MTN Nigeria
continued to enhance the quality and capacity of the network as
well as expand 3G coverage. At the end of June, 554 2G sites and
562 3G co-located sites were added bringing the total number of
2G sites to 7,611 and 3G co-located sites to 2,636. 3G population
coverage improved to 35% from 28% in the previous comparative
period. Capex in the first half was substantially in line with
target and is expected to accelerate in the second half of the
year. The regulator recently imposed fines on the four GSM
operators for poor quality of service. These fines have been paid
and more realistic KPI’s have been negotiated. MTN Nigeria is
confident that it will be able to achieve the new KPI’s.
There remains no clarity on the deadline for SIM registration
although the regulator continues with the harmonisation process to
form a central database for registration. The percentage of
subscribers registered by MTN was 80% at the end of June 2012.
Iran
MTN Irancell delivered a strong performance increasing its
subscriber base by 10.4% to 38,3 million in a highly penetrated
market. This growth was largely due to the company’s attractive
value proposition and improved network quality. Despite
competition and an increasingly challenging economy, MTN Irancell
increased its market share to 47%
Total rial revenue grew by 28.3% for the six months to 30 June
2012. This was mainly due to a 24.7% increase in airtime and
subscription revenue and a 36.1% increase in SMS revenue, which
benefited from promotions. Wimax performance continues to improve
and the company will stand to benefit from its 3G offering when
the third mobile operator‘s exclusivity on 3G comes to an end in
May 2013. Reported ARPU decreased by 6% while local currency ARPU
increased by 6% due to a better quality network, assisting
increased minutes of use.
MTN Irancell recorded an increase in EBITDA margin to 44.7%. This
was due to efficiencies and good cost control, which largely
countered the impact of a high inflationary environment,
particularly on fuel, electricity and imported goods.
MTN Irancell continued to invest in its network, with MTN’s 49%
share of capex for the six months at R418 million. MTN Irancell
improved the quality and capacity of its network, adding 249 sites
and bringing the total number of 2G sites to 7 889. The rollout of
some projects has been slower than anticipated because of delayed
equipment delivery and the impact of sanctions on certain
equipment. Population and geographic coverage increased to 81% and
24% respectively. At the end of June 2012, the company had 231 000
Wimax customers.
Ghana
MTN Ghana delivered a strong performance with subscribers
increasing by 5.9% to 10,76 million despite aggressive
competition. This performance was largely due to attractive
segmented promotions across the product portfolio and a well-
managed pricing strategy. A stronger economy also assisted growth.
As expected, market share declined to 51% as a result of the entry
of a new mobile player into the market.
Total cedi revenue increased by 22.4%. This was mainly driven by
an 18.8% increase in airtime and subscription revenue, which
benefited from promotions driving usage and spend. Data revenue
grew by 193%, albeit off a low base, due to handset and data
promotions. The 3G market is becoming increasingly competitive
with the five mobile operators all investing considerable
resources to upgrade or expand their 3G networks. This is partly
driven by the rising demand for broadband services and the
increasing usage of smartphones.
MTN Ghana’s EBITDA margin dipped slightly from 38.7% at 30 June
2011 to 37.7% due to increased rent and utilities from the leasing
of the 400 towers previously sold. The 2011 EBITDA margin excluded
the profit from the sale of the towers. Reported ARPU decreased
10% although local currency ARPU increased 4%.
MTN Ghana continued to improve the quality and capacity of the
network as well as increase its 3G coverage and capacity. During
the six months it rolled out 62 2G sites and 21 3G co-located
sites bringing total 2G sites to 2,318 and co-located 3G sites to
749. Capex for the period amounted to R273 million, which was
below target due to project delivery issues. Corrective actions
have been put in place and MTN Ghana is confident that it will
meet its capital expenditure targets by the end of the year.
Syria
MTN Syria increased subscribers by 3.3% to 5,91million despite a
very challenging socio-political environment impacting the economy
and the ability to operate. Market share decreased slightly to
45.5% from 46%.
Total Syrian pound revenue increased by 12.0% driven by airtime
and subscription revenue, which grew by 8.8%. The MTN proposition,
which includes promotions, multiple communication channels and
reliable systems and processes, has underpinned MTN Syria’s
performance. Data revenue increased by 39% and SMS revenue
increased by 37%, largely due to smartphone and bundle promotions.
The tough economic environment impacted consumer spending and
resulted in a decline in local currency ARPU of 3%. Reported ARPU
declined by 27% following the depreciation of the Syrian pound
against the USD.
Despite rising electricity and fuel prices, MTN Syria showed only
a slight decrease in its EBITDA margin to 23% due to tight cost
controls.
MTN Syria continued to operate the network under the basis of the
“Build Operate and Transfer arrangement”. The timing of the
conversion of the BOT into a free hold licence has been impacted
by the current political situation in the country. Capex for the
period amounted to R241 million.
Prospects
MTN remains optimistic notwithstanding challenging market
conditions. The Group is committed to creating value for
stakeholders through improved shareholder returns and enhancing
its business model to better position itself as markets mature and
competition intensifies. MTN’s key priorities over the next six
months are to maintain its leadership position with an increased
focus on customer experience and countering competition through
innovative and relevant products and services. This strategy will
be supported by continued investments in infrastructure to ensure
quality and capacity, the rollout of efficiency initiatives and
value accretive M&A opportunities.
In view of the change in taxation on dividends, the board has
decided to increase the full year dividend payout ratio to 72%
from 70%. The impact on MTN’s cash outflow remains neutral. The
interim dividend of 321 cents is calculated at 30% of the prior
full year’s adjusted HEPS.
Subscriber net additions revised guidance for 2012:
Old Revised
‘000 ‘000
South Africa 2,900 3,000
Nigeria 4,000 4,000
Ghana 950 950
Iran 5,000 5,500
Syria 450 400
Rest 8,000 7,400
Total 21,300 21,250
Declaration of interim ordinary dividend
Notice is hereby given that a gross interim dividend No3 of 321
cents per share for the six months ended 30 June 2012 has been
declared payable to shareholders of MTN’s shares. The dividend has
been declared out of income reserves. The number of ordinary
shares in issue at the date of this declaration is 1 884 968 549
(including 22 337 752 treasury shares). The dividend will be
subject to a maximum local dividend tax rate of 15% which will
result in a net dividend to those shareholders that bear the
maximum rate of dividend withholding tax of 276.61346 cents per
share after dividend withholding tax of 44.38654 cents per share
and STC credits amounting to 25.08974 cents per share will be
utilised. The net dividend per share for the respective categories
of shareholders for the different dividend tax rates are as
follows:
0% 321 Per share
5% 306.20449 Per share
7.50% 298.80673 Per share
10% 291.40897 Per share
12.50% 284.01122 Per share
15% 276.61346 Per share
The different dividends tax rates above result from the
application of the tax rates in various double taxation agreements
as well as exemptions from dividend tax.
MTN Group Limited’s tax reference number is 9692/942/71/8.
In compliance with the requirements of STRATE, the electronic
settlement and custody system used by the JSE Limited, the salient
dates relating to the payment of the dividend are as follows:
Last day to trade cum dividend on the JSE Friday, 24 August 2012
First trading day ex dividend on the JSE Monday, 27 August 2012
Record date Friday, 31 August 2012
Payment date Monday, 3 September 2012
No share certificates may be dematerialised or re-materialised
between Monday, 27 August 2012 and Friday, 31 August 2012, both
days inclusive.
Dividends in respect of certificated shareholders will be
transferred electronically to shareholders` bank accounts on
Monday, 3 September 2012. In the absence of specific mandates,
dividend cheques will be posted to shareholders on or about
Monday, 3 September 2012. Shareholders who hold dematerialised
shares will have their accounts at their Central Securities
Depository Participant ("CSDP") or broker credited on Monday, 3
September 2012.
The Group’s Board confirms that the Group will satisfy the
solvency and liquidity test immediately after completion of the
dividend distribution.
For and behalf of the board
MC Ramaphosa
Chairman
RS Dabengwa
Group President and CEO
Fairland
7 August 2012
For further information on the MTN Interim results please refer to
the Group’s website www.mtn.com
Condensed consolidated reviewed interim results
The Group’s condensed consolidated reviewed interim results for
the six months ended 30 June 2012 have been independently reviewed
by the Group’s external auditors. The preparation of the Group’s
condensed consolidated reviewed interim results was supervised by
the Group Chief Financial Officer, Nazir Patel, BCom, BCompt
(Hons), CA(SA).
These results were made available on 8 August 2012.
Condensed consolidated income statement
Financial
Six months Six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
Reviewed Reviewed Audited
Note Rm Rm Rm
Revenue 66 426 56 542 121 884
Other income 711 445 1 458
Direct network operating
costs (10 389) (8 755) (18 782)
Cost of handsets and other
accessories (4 687) (3 657) (8 160)
Interconnect and roaming (7 043) (6 206) (13 395)
Employee benefits (3 617) (2 975) (6 754)
Selling, distribution and
marketing expenses (7 803) (6 615) (14 805)
Other operating expenses (3 800) (3 577) (6 696)
Depreciation of property,
plant and equipment (7 045) (6 293) (13 296)
Amortisation of intangible
assets (1 112) (1 142) (2 163)
Impairment of goodwill – – (31)
Operating profit 21 641 17 767 39 260
Net finance costs (1 805) (587) (1 582)
Share of results of
associates (93) (14) (38)
Profit before tax 19 743 17 166 37 640
Income tax expense (7 522) (6 343) (13 853)
Profit after tax 12 221 10 823 23 787
Attributable to: 12 221 10 823 23 787
Equity holders of the
Company 10 594 9 450 20 754
Non-controlling interests 1 627 1 373 3 033
Basic earnings per share
(cents) 7 574.5 509.6 1 119.5
Diluted earnings per share
(cents) 7 570.4 497.3 1 110.8
Condensed consolidated statement of comprehensive income
Financial
Six months Six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
Reviewed Reviewed Audited
Rm Rm Rm
Profit after tax 12 221 10 823 23 787
Other comprehensive income:
Exchange differences on
translating foreign operations (4 908) 1 277 10 796
Equity holders of the Company (4 728) 1 157 10 415
Non-controlling interests (180) 120 381
Total comprehensive income for
the period 7 313 12 100 34 583
Attributable to:
Equity holders of the Company 5 866 10 607 31 169
Non-controlling interests 1 447 1 493 3 414
7 313 12 100 34 583
Condensed consolidated statement of finanial position
30 June 30 June 31 December
2012 2011 2011
Reviewed Reviewed Audited
Note Rm Rm Rm
Non-current assets 110 716 99 505 113 787
70 776 63 224 71 610
Property, plant and
equipment
Intangible assets 31 359 30 002 34 540
Investment in associates 1 841 1 916 2 681
Deferred tax and other non-
current assets 6 740 4 363 4 956
Current assets 62 476 57 938 66 801
Other current assets 32 773 24 525 30 449
Restricted cash 1 725 653 546
Cash and cash equivalents 27 978 32 760 35 806
Non-current assets held
for sale 13 – 738 820
ASSETS 173 192 158 181 181 408
Total equity 87 165 78 140 92 699
Attributable to equity
holders of the Company 83 545 75 786 88 897
Non-controlling interests 3 620 2 354 3 802
Non-current liabilities 35 021 34 710 33 392
Interest-bearing liabilities 11 25 621 26 016 23 554
Deferred tax and other non-
current liabilities 9 400 8 694 9 838
Current liabilities 51 006 45 331 55 317
Interest-bearing liabilities 11 9 837 4 776 10 462
Non-interest bearing
liabilities 41 169 40 555 44 855
EQUITY AND LIABILITIES 173 192 158 181 181 408
Condensed consolidated statement of cash flows
Financial
Six months Six months year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
Reviewed Reviewed Audited
Rm Rm Rm
Net cash from operating
activities 10 957 12 720 27 874
Net cash used in investing
activities (13 730) (12 280) (20 616)
Net cash used in financing
activities (3 676) (4 750) (12 033)
Net decrease in cash and cash
equivalents (6 449) (4 310) (4 775)
Cash and cash equivalents at
beginning of period 35 213 35 907 35 907
Exchange (losses)/gains on cash
and cash equivalents (1 298) 744 4 081
Cash and cash equivalents at end
of period 27 466 32 341 35 213
Condensed consolidated statement of changes in equity
Financial
Six months Six months year
ended ended ended
31
30 June 30 June December
2012 2011 2011
Reviewed Reviewed Audited
Rm Rm Rm
Opening balance 88 897 71 855 71 855
Share buy-back (2 088) – (930)
Shares issued during the period 2 2 6
Settlement of the put option – – (1 662)
Transactions with non-
controlling interests (122) – (30)
Share-based payment reserve 23 39 74
Total comprehensive income 5 866 10 607 31 169
Dividends paid (8 940) (6 577) (11 722)
Other movements (93) (140) 137
Attributable to the equity
holders of the Company 83 545 75 786 88 897
Non-controlling interests 3 620 2 354 3 802
Closing balance 87 165 78 140 92 699
Dividends per share (cents) 476 349 622
Notes to the condensed consolidated interim results
1. INDEPENDENT REVIEW BY THE AUDITORS
These condensed consolidated interim results have been reviewed
by the Group’s joint auditors PricewaterhouseCoopers Inc. and
SizweNtsalubaGobodo Inc. who have performed their review in
accordance with the International Standard on Review
Engagements 2410. A copy of their unqualified review conclusion
is available for inspection at the registered office of the
Group.
2. NATURE OF BUSINESS
MTN Group Limited (the Company) carries on the business of
investing in the telecommunications industry through its
subsidiary companies, joint ventures and associate companies.
3. BASIS OF PREPARATION
These condensed consolidated interim results have been prepared
in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRS) as issued by
the International Accounting Standards Board (IASB), the
preparation and disclosure requirements of IAS 34 Interim
Financial Reporting, the AC500 Standards as issued by the
Accounting Practices Board or its successor, the Listings
Requirements of the JSE Limited and in the manner required by
the South African Companies Act No.71, 2008.
4. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies and methods of computation
applied are consistent in all material respects with those
applied in the previous period and are available for inspection
at the Group’s registered office. The Group has adopted all the
new, revised or amended accounting pronouncements as issued by
the IASB which were effective for the Group from 1 January
2012. None of the adopted pronouncements had a material impact
on the Group’s results.
5. SEASONALITY OF OPERATIONS
The diverse geography of the Group’s operations reduces the
impact of seasonality on the results, however,
telecommunication services volumes tend to increase in the
second half of the year during the summer period and festive
season in the southern hemisphere.
6. SEGMENT ANALYSIS
The Group changed the composition and presentation of its
segment analysis following the announcement of a change in its
operating structure and reporting responsibilities in March
2012. In terms of the implemented changes, the Group replaced
the previous segments (SEA, WECA and MENA) with the segments as
reflected in the table below. In addition, the Group redefined
the composition of its executive committee and its executive
organisational structure which is deemed to be the Chief
Operating Decision Maker (“CODM”) of the Group. The comparative
numbers have been presented accordingly.
Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2012 2011 2011
Reviewed Reviewed Audited
Rm Rm Rm
SEGMENT PERFORMANCE
Revenue
South Africa 19 783 18 075 38 457
Nigeria 19 221 16 514 34 814
Large OpCo cluster 19 111 15 572 34 387
Iran 6 506 5 010 11 050
Ghana 3 238 2 696 5 923
Syria 2 839 2 984 6 481
Others in large OpCo
cluster 6 528 4 882 10 933
Small OpCo cluster 8 219 6 240 14 036
Head office companies
and eliminations 92 141 190
66 426 56 542 121 884
EBITDA
South Africa 7 026 6 360 13 591
Nigeria 11 645 10 465 21 527
Large OpCo cluster 8 026 6 356 14 734
Iran 2 908 2 103 4 697
Ghana 1 225 1 491 4 242
Syria 655 764 1 744
Others in large OpCo
cluster 3 238 1 998 4 051
Small OpCo cluster 2 834 1 685 4 460
Head office companies
and eliminations 267 336 438
29 798 25 202 54 750
EBITDA 29 798 25 202 54 750
Depreciation,
amortisation and
impairment of assets (8 157) (7 435) (15 490)
Net finance costs (1 805) (587) (1 582)
Share of results of
associates (93) (14) (38)
Profit before tax 19 743 17 166 37 640
Six months Six months Financial
ended ended year ended
30 June 30 June 31 December
2012 2011 2011
Reviewed Reviewed Audited
EARNINGS PER ORDINARY
7. SHARE
Number of shares in
issue
At period end
(excluding MTN
Zakhele) 1 854 973 597 1 854 614 925 1 854 816 617
Weighted number of
shares
Balance at beginning
of period (excluding
MTN Zakhele) 1 854 816 617 1 854 534 365 1 854 515 165
Share options
excercised 59 113 22 434 111 781
In issue at end of
period 1 854 875 730 1 854 556 799 1 854 626 946
Less treasury shares (10 809 049) – (704 965)
Shares for earnings
per share 1 844 066 681 1 854 556 799 1 853 921 981
Add dilutive shares
MTN Zakhele shares
issued 11 621 957 17 129 274 12 327 694
Share schemes 1 465 326 7 963 233 2 073 167
1 857 153 964 1 879 649 306 1 868 322 842
Shares for diluted
earnings per share
Reconciliation between
profit attributable to
the equity holders of
the Company and
headline earnings Rm
Net Net Net
Rm Rm Rm
Profit after tax 10 594 9 450 20 754
Net profit on disposal
of non-current assets (695) (637) (900)
Reversal of impairment
of property, plant and
equipment and non-
current assets (11) (25) (43)
Basic headline
earnings* 9 888 8 788 19 811
Recognition/(reversal)
of put option in
respect of
subsidiaries 23 (70) 25
Adjusted headline
earnings 9 911 8 718 19 836
Earnings per share
(cents)
– Basic 574.5 509.6 1 119.5
– Basic headline 536.2 473.9 1 068.6
– Adjusted headline 537.4 470.1 1 070.0
Diluted earnings per
share (cents)
– Basic 570.4 497.3 1 110.8
– Basic headline 532.4 462.1 1 060.4
– Adjusted headline 533.6 458.3 1 061.7
* Amounts are presented after taking into account non-
controlling interests and tax
* Headline earnings is calculated in accordance with circular
3/2012 Headline Earnings as issued by the South African
Institute of Chartered Accountants at the request of the JSE
Limited.
Put option in respect of subsidiary
IFRS requires the Group to account for a written put option
held by a non-controlling shareholder of one of the Group’s
subsidiaries, which provides the non-controlling shareholder
with the right to require the subsidiary to acquire its
shareholdings at fair value.
IAS 32 requires that in the circumstances described in the
previous paragraph:
(a) the present value of the future redemption amount be
reclassified from equity to financial liabilities and that the
financial liability so reclassified subsequently be measured in
accordance with IAS 39;
(b) in accordance with IAS 39, all subsequent changes in the
fair value of the liability together with the related interest
charges arising from present valuing the future liability be
recognised in the income statement;
(c) the non-controlling shareholder holding the put option no
longer be regarded as a non-controlling shareholder but rather
as a creditor from the date of receiving the put option.
Although the Group has complied with the requirements of IAS 32
and IAS 39 as outlined above, the board of directors has
reservations about the appropriateness of this treatment in
view of the fact that:
(a) the recording of a liability for the present value of the
future strike price of the written put option results in the
recording of a liability that is inconsistent with the
framework, as there is no present obligation for the future
strike price;
(b) the shares considered to be subject to the contract that is
outstanding, have the same rights as any other shares and
should therefore be accounted for as a derivative rather than
creating an exception to the accounting required under IAS 39.
30 June 30 June 31 December
2012 2011 2011
Reviewed Reviewed Audited
Rm Rm Rm
8. CAPITAL EXPENDITURE INCURRED 10 144 5 708 17 717
9. CONTINGENT LIABILITIES
Contingent liabilities – 917 936 838
upgrade incentives
10. AUTHORISED CAPITAL 24 445 16 457 24 400
EXPENDITURE FOR PROPERTY,
PLANT AND EQUIPMENT AND
INTANGIBLE ASSETS*
*Includes contracted and not yet contracted for
11. INTEREST-BEARING LIABILITIES
Bank overdrafts 512 419 593
Short-term borrowings 9 325 4 357 9 869
Current liabilities 9 837 4 776 10 462
Long-term liabilities 25 621 26 016 23 554
35 458 30 792 34 016
12. ISSUE AND REPAYMENT OF DEBT AND EQUITY SECURITIES
During the period under review MTN Holdings Proprietary
Limited, a wholly owned subsidiary of the Group, acquired 15
573 340 shares (December 2011: 6 764 412 shares) in the
ordinary share capital of the Company for an amount of R2,1
billion, with the cumulative amount of R3 billion spent in
respect of the share buy-back at period end (inclusive of
transaction costs). The shares so acquired are fully paid up
and are held as treasury shares at period end.
In accordance with the Domestic Medium Term Note Programme
previously estabished by MTN Holdings Proprietary Limited, the
Group issued R3,1 billion (December 2011: R750 million) of
Senior Unsecured Zero Coupon Notes during the period of which
R1,6 billion is due in September 2012. In addition, the Group
repaid R2,2 billion of Senior Unsecured Zero Coupon Notes that
fell due in June 2012.
13. NON-CURRENT ASSETS HELD FOR SALE
During the period under review, MTN Uganda Limited concluded
the envisaged transaction with American Tower Company (ATC)
which resulted in the sale of MTN Uganda’s existing BTS sites
to TowerCo Uganda for an amount of R1 378 million.
14. EVENTS AFTER REPORTING PERIOD
Subsequent to period end it has been intimated by the Governor
of the Central Bank of Iran that a change to the government’s
“reference rate” of the Iranian rial to the US dollar, which
has been used for in-country translation and consolidation
purposes, will be announced in due course.
As no formal announcement has been made as yet, quantification
of the impact on the condensed consolidated interim results was
not deemed predictable.
Directorate: MC Ramaphosa (Chairman), RS Dabengwa* (Group
President and CEO), NI Patel* KP Kalyan, AT Mikati1, MJN Njeke,
JHN Strydom, AF van Biljon, J van Rooyen, MLD Marole, NP Mageza, A
Harper2, F Titi (Appointed 28 June 2012)
*Executive 1Lebanese 2British
Group secretary: SB Mtshali, 216 – 14th Avenue, Fairland, 2195 ~
Private Bag X9955, Cresta, 2118
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 Proprietary Limited (Registration number: 2004/003647/07)
~ 70 Marshall Street, Marshalltown, Johannesburg, 2001 ~ PO Box
61051, Marshalltown, 2107
Joint auditors: PricewaterhouseCoopers Inc., 2 Eglin Road,
Sunninghill, 2157 ~ Private Bag X36, Sunninghill, 2157 and
SizweNtsalubaGobodo Inc., 20 Morris Street East, Woodmead, 2191 ~
PO Box 2939, Saxonwold, 2132
Sponsor: Deutsche Securities (SA) Proprietary Limited
E-mail: investor_relations@mtn.co.za
Date: 08/08/2012 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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