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CEL
CEL
CEL - Celcom Group - Reviewed Interim Results: 12 Months Ended 31 March 2007
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" or "the group")
REVIEWED INTERIM RESULTS FOR THE 12 MONTHS ENDED 31 MARCH 2007
GROUP INCOME STATEMENT
Reviewed Audited
12 Months Year
ended ended
31 March 31 March
2007 2006
R`000 R`000
Revenue 463,463 205,867
Gross profit 49,057 28,016
Operating profit before financing income 11,634 9,399
and amortisation of intangibles
Amortisation of intangibles -3,684 0
Net interest received 555 88
Profit before tax 8,505 9,487
Income tax expense -3,605 -2,564
Profit after taxation 4,900 6,923
Number of shares (000`s)
- Issued 204,609 131,500
- Weighted 164,477 131,500
Earnings per share (cents) 2.98 5.26
Headline earnings per share (cents) 5.22 5.26
Calculation of headline earnings
Net profit attributable to shareholders 4,900 6,923
Adjusted for:
Amortisation of intangibles 3,684 0
Headline Earnings 8,584 6,923
GROUP CASH FLOW
Reviewed Audited
12 Months Year
ended ended
31 March 31 March
2007 2006
R`000 R`000
Net cash flows from operations 20,955 11,034
Net cash flows from investing activities -59,704 -1,536
Net cash flows from financing activities 46,863 -5,495
Net increase in cash resources 8,114 4,003
Cash resources at beginning of period 4,668 664
Cash resources at end of period 12,782 4,668
GROUP BALANCE SHEET
Reviewed Audited
at 31 at 31
March March
2007 2006
R`000 R`000
ASSETS
Non-current assets 60,623 5,361
Property, plant and equipment 1,945 1,995
Intangible assets 33,742 1,020
Goodwill 24,196 2,184
Deferred taxation 740 162
Current assets 85,945 46,762
Inventory 26,566 15,935
Trade and other receivables 34,212 19,903
Cash and cash equivalents 23,763 10,688
Prepaid taxation 1,404 236
Total assets 146,568 52,123
EQUITY AND LIABILITIES
Equity
Issued capital 54,184 6,801
Retained earnings 19,858 14,958
Current liabilties 72,526 30,364
Trade and other payables 57,156 23,500
Interest-bearing loans and borrowings 324 844
Bank overdraft 10,982 6,020
Taxation payable 4,064 0
Total equity and liabilities 146,568 52,123
Net asset value per share (cents) 36.19 16.55
Net tangible asset value per share (cents) 7.87 14.11
GROUP STATEMENT OF CHANGES IN
EQUITY
For the 12 months ended 31 March
2007
Issued Share Accumulated Total
shares premium profit
R`000 R`000 R`000 R`000
Balance at 31 March 2005 1 6,800 8,036 14,836
Net profit for the year - - 6,923 6,923
Balance at 31 March 2006 1 6,800 14,958 21,759
Issue of shares at a premium 1 51,296 - 51,297
Cost of listing - -3,914 - -3,914
Profit for the 12 months ending 31 - - 4,900 4,900
March 2007
Balance at 31 March 2007 2 54,182 19,858 74,042
COMMENTS
INTRODUCTION
As required by the JSE Limited ("JSE") Listings
Requirements, Celcom Group is reporting its second set of
interim results ("second interim results") for the 12
months ended 31 March 2007 ("the period"). On 23 March 2007
the company released its first interim results for the nine
month period ended 31 December 2006 ("first interim
results").
Celcom Group has changed its year-end from 31 March to 30
June and consequently will have a 15 month financial year
ending 30 June 2007.
FINANCIAL RESULTS
The group`s revenue for the period was 125.1% higher than
the comparative period. This is largely attributable to the
six months of revenue from the V Cellular (Pty) Limited ("V
Cellular") acquisition which accounted for 73% of the
increase. Significant growth in Virtual Payment Solutions
(Pty) Limited ("VPS") sales was also experienced. However,
as detailed in the trading update published on 11 June 2007
("the trading update"), the group faced changes in trading
conditions that resulted in a decline in local and export
cellphone accessory and hardware business`s ("Celcom")
revenues.
The group`s gross profit grew 75% from the comparative
period, with the sale of low margin electronic prepaid
vouchers diluting group margins from 14% to 11%. The gross
profit margins were further negatively impacted by the
tough trading conditions referred to above.
Whilst operating expenses increased by 117% over the
comparative period, the V Cellular acquisition accounted
for 101% of this increase. Costs when compared to the
comparative period have remained within inflation, with the
additional costs being attributable to the listing and the
building of capacity with human resources and operating
infrastructure.
Headline earnings increased 24% from the comparative period
and core earnings amounted to 6.93 cents per share.
Earnings per share decreased over the comparative period as
a result of the amortisation of goodwill relating to the
acquisition of V Cellular. The trading update provides the
anticipated comparisons of earnings and headline earnings
per share to the published forecast to 30 June 2007.
Net cash from operating activities grew by 86% and strong
cash generation was experienced in VPS as a result of its
robust performance. Current assets and liabilities
increased significantly as a result of the V Cellular
acquisition and increased trading activity in VPS.
PROSPECTS
The requisite action with regard to the issues faced by
Celcom is currently being implemented. Operational
improvements in the last quarter of the 2007 financial year
will place Celcom in an improved trading position for the
2008 financial year.
The robust performance of V Cellular and VPS is expected to
continue as a result of buoyant customer demand, with the
significant out-performance against forecast predicted
until year end.
Management remains confident that the Celcom Group is well
positioned to benefit from growth and new opportunities in
its markets.
DIVIDEND
In line with group policy no dividend has been declared for
the period.
BASIS OF PREPARATION
The interim results have been compiled in accordance with
International Financial Reporting Standards ("IFRS"). The
accounting policies are consistent with those adopted in
the annual financial statements for the year ended 31 March
2006. The number of issued shares shown as at 31 March 2006
has been calculated in accordance with the requirements of
IFRS.
As explained in the first interim results, the retail
businesses housed in V Cellular were acquired with effect
from 1 July 2006, subject to certain conditions precedent
which were met in October 2006.
IFRS 3 requires the profit earned prior to all the
conditions being met ("pre-acquisition profits") to be set
off against the cost of the acquisition on the balance
sheet. The second interim results for the period include 6
months of V Cellular profits. In order to provide
comparability with future periods, and as additional
disclosure, core earnings have been calculated whereby the
pre-acquisition profits are added back so as to include 9
months of V Cellular earnings at the period end.
The second interim results have been reviewed by Tuffias
Sandberg KSi. Their unqualified review report is available
for inspection at the company`s registered office.
By order of the board
Stefano Brachini Colin Brown
CEO CFO
15 June 2007
Directors:
M Golding (Chairman)*; S Brachini (CEO); C Brown (CFO);
L Brachini (MD); D Rose*; F Sonn*; P Vallet* (*non-
executive)
Registered office: 4 Fifth Avenue
Edenburg
Sandton
2196
(PO Box 2506, Rivonia, 2128)
Transfer secretaries: Computershare Investor Services 2004
(Pty) Limited
70 Marshall Street
Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107)
Company secretary: Probity Business Services (Pty) Limited
Date: 15/06/2007 16:20:33 Produced by the JSE SENS Department.
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