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CEL
CEL
CEL - Celcom Group Limited - Trading statement
CELCOM GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/021219/06)
JSE code: CEL & ISIN: ZAE000087490
("Celcom Group" or "the company")
TRADING STATEMENT
The Celcom Group prospectus issued on 13 November 2006 contains profit
forecasts for both the 15 month period and the year ending 30 June 2007.
Shareholders are advised that, for reasons described below, Celcom Group`s
performance since the issue of the prospectus is such that it is expected
that:
* earnings will be between 20 and 40% less than forecast;
* headline earnings will be between 20 and 35% less than forecast;
* earnings per share will be between 15 and 30% less than forecast; and
* headline earnings per share will be between 10 and 25% less than
forecast.
The Celcom Group`s cellphone accessories and enhancement business
("Celcom") has faced changes in trading conditions in the final months of
2006 and early part of 2007. These include:
* Historically, the preferred model for new contracts was a bundling of
select cellphone accessories with the handset. Retailers have recently
experimented with bundling lifestyle items such as gaming consoles,
DVD players and vacation vouchers with handsets. Celcom is
appropriately adapting to this change.
* Parallel/grey imports and the supply of counterfeit cellphone
accessories have been particularly prevalent in the accessories
market. As a distributor of original accessories Celcom does not
engage in the distribution of parallel or counterfeit products and,
together with the network providers, is taking the necessary steps to
limit the impact of the sale of such products going forward. In
addition, the Department of Trade and Industry has embarked on a
campaign to clamp down on illegal imports.
* The expansion of Celcom`s cellular accessories and enhancement
business into additional African markets beyond the Southern African
region was a material assumption underlying its forecast performance.
Although management has been actively pursuing this expansion, its
implementation is taking longer than was anticipated.
The remainder of Celcom Group`s key businesses, specifically V Cellular
Stores and VPS, continue to significantly outperform their forecast
performance. Much time has been spent integrating the V Cellular Stores
businesses into the group and synergies and cost savings are beginning to
be realised.
Management remains confident that the Celcom Group is well positioned to
benefit from growth and new opportunities in its markets.
The financial information on which this trading statement is based has not
been audited or reviewed by the company`s auditors.
Shareholders are reminded that, in light of on-going negotiations, they
should continue to exercise caution in dealings in the company`s
securities.
Rosebank
11 June 2007
Designated Advisor
Java Capital (Proprietary) Limited
Date: 11/06/2007 08:57:55 Produced by the JSE SENS Department.
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