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CEL
CEL
CEL - Celcom Group - Reviewed Interim Results For The Six Months Ended
31 December 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 SIX MONTHS ENDED 31 DECEMBER 2007
- Revenue up 87%
- Earnings up 115%
- EBITDA up 57%
GROUP INCOME STATEMENT
Reviewed Reviewed Proforma
6 months 9 months 6 months
ended ended ended
31 31 31
December December December
2007 2006 2006
R`000 R`000 R`000
Revenue 506 141 271 008 180 672
Gross profit 50 339 29 196 19 464
EBITDA 8 960 5 692 3 795
Amortisation of intangibles (1 916) (1 851) (1 234)
Depreciation (686) (959) (639)
Net interest received 107 583 389
Profit before taxation 6 465 3 465 2 310
Taxation (2 345) (1 549) (1 033)
Profit after taxation 4 120 1 916 1 277
Number of shares (000`s)
Issued 206 459 204 609 204 609
Weighted 206 399 151 343 161 157
Headline earnings per share
(cents)
Issued 1.43c 0.94c 0.62c
Weighted 1.43c 1.27c 0.79c
Earnings per share (cents)
Issued 2.00c 0.94c 0.62c
Weighted 2.00c 1.27c 0.79c
Calculation of headline earnings
Net profit attributable to 4 120 1 916 1 277
shareholders
Adjusted for:
Profit on sale of businesses (1 174) 0 0
Headline earnings 2 946 1 916 1 277
GROUP CASH FLOW STATEMENT
Reviewed Reviewed
6 months 9 months
ended ended
31 31
December December
2007 2006
R`000 R`000
Operating income before working 7 701 5 447
capital changes
Increase in inventories (9 904) (13 712)
Decrease/(increase) in trade and 1 965 (22 152)
other receivables
(Decrease)/increase in trade (3 527) 48 989
payables
Cash generated from operations (3 765) 18 572
Finance income 629 848
Finance expenses (522) (265)
Income tax payments (5 539) (1 457)
Net cash flows from operating (9 197) 17 698
activities
Net cash flows from investing (10 307) (58 827)
activities
Net cash flows from financing 6 728 47 024
activities
Net (decrease)/increase in cash (12 776) 5 895
resources
Cash resources at beginning of 20 518 4 668
period
Cash resources at end of period 7 742 10 563
GROUP BALANCE SHEET
Reviewed Reviewed
at at
31 31
December December
2007 2006
R`000 R`000
ASSETS
Non-current assets 70 649 61 588
Property, plant and equipment 6 500 2 188
Goodwill 28 529 23 454
Intangible assets 33 475 35 575
Deferred taxation 2 145 371
Current assets 83 929 96 651
Inventories 40 227 29 647
Trade and other receivables 34 455 42 055
Cash and cash equivalents 7 742 23 545
Prepaid taxation 1 505 1 404
Total assets 154 578 158 239
EQUITY AND LIABILITIES
Equity
Issued capital 56 030 54 216
Share compensation reserve 166 0
Retained earnings 21 462 16 874
Non-current liabilities 3 813 0
Long term loans 3 813 0
Current liabilities 73 107 87 148
Trade and other payables 68 895 72 489
Interest-bearing loans and 1 386 210
borrowings
Bank overdraft 0 12 982
Taxation payable 2 826 1 468
Total equity and liabilities 154 578 158 239
Net asset value per share (cents) 37.61c 34.74c
Net tangible asset value per 7.58c 5.89c
share (cents)
GROUP STATEMENT OF
CHANGES IN EQUITY
For the six months ended
31 December 2007
Issued Share Share-based Accumulated
shares premium compensation profit
reserve
R`000 R`000 R`000 R`000
Balance at 31 March 2006 1 6 800 - 14 958
Issue of shares at a 1 51 296 - -
premium
Cost of listing - (3 914) - -
Profit for the 15 months - - - 2 384
ended 30 June 2007
Share-based payments - - 53 -
Balance at 30 June 2007 2 54 182 53 17 342
Issue of shares at a 0 1 850 - -
premium
Cost of share issue - (4) - -
Profit for the six months - - - 4 120
ended 31 December 2007
Share-based payments - - 113 -
Balance at 31 December 2 56 028 166 21 462
2007
COMMENTARY
The reviewed interim financial statements set out in this announcement pertain
to the six month period ended 31 December 2007. The previous corresponding
period for which results were published was the nine month interim period ended
31 December 2006 (the "previous period"). The proforma unaudited results for the
six months ended 31 December 2006 have been extrapolated from the reviewed
results for the previous period as previously released.
REVIEW OF RESULTS
The Group recorded revenue growth of 87% to R506 million. This is largely due to
increased sales in prepaid virtual vouchers, which accounted for 46% of the
growth, together with the effect of the acquisition of the retail stores in V
Cellular in the last three months of the previous period. (The results of the
previous period did not include the results of the Kolonnade Vodashop
acquisition, which was concluded in July 2007.)
The Group`s gross profit increased to R50 million, 72% above the previous
period, with the growth in prepaid voucher sales, which yield lower margins,
slightly diluting gross margins from 10.8% to 9.9%.
The Group`s earnings before interest, tax, depreciation and amortisation
("EBITDA") increased by 57% to R9 million when compared to the previous period.
This translates into an annualised growth of 136% in EBITDA.
In line with International Financial Reporting Standards ("IFRS"), the board has
reviewed the useful life of the intangibles relating to the Vodashop and Vodacom
4U franchise agreements and has changed the useful life from 5 years to 10
years. This change is the result of the recently concluded franchise agreements
with an initial 5 year term together with the franchisee having the option to
extend by a further 5 years.
Profit after taxation ("PAT") increased by 115% to R4.1 million compared to the
previous period.
Earnings per share ("EPS") increased to 2.00 cents for the period, 58% above the
1.27 cents for the previous period. This is an annualised growth of 137%.
Headline earnings per share ("HEPS") increased by 13% for the period to 1.43
cents compared to the revised HEPS of 1.27 cents in the previous period. The
annualised growth in HEPS is 69%. The restatement of HEPS in the previous period
relates to the Group aligning with Circular 08/07 (the "Circular") issued by the
South African Institute of Chartered Accountants in November 2007. The effect of
the Circular is that amortisation of intangibles is not excluded from HEPS.
Amortisation of intangibles accounted for 0.93 cents per share in the period,
compared to 1.22 cents per share in the previous period.
Reconciliation of restated headline earnings
R`000
Headline earnings as previously 3 767
reported
Adjusted for:
Amortisation of intangible assets (1 851)
Restated headline earnings 1 916
HEPS as previously reported (cents) 2.49
Amortisation of intangible assets (1.22)
(cents)
Restated HEPS (cents) 1.27
BALANCE SHEET ANALYSIS
Property, plant and equipment increased by R4.4 million from 31 December 2006.
This increase primarily relates to the Group consolidating to a leased warehouse
and office premises in Midrand during December 2007.
Goodwill has increased by R3.4 million and intangible assets have increased by
R1.6 million during the period as a result of the Kolonnade Vodashop
acquisition, offset by amortisation of R1.9 million.
Inventories increased by 33% to R40 million during the six months to 31 December
2007. This is largely seasonal as inventories are increased for the late
December and early January trade.
Share capital and premium have increased by R1.9 million as a result of the
issue of shares to the vendor of Kolonnade Vodashop in early July 2007. The
increase in long-term loans also relates to the funding of the Kolonnade
Vodashop.
CASH FLOW ANALYSIS
Cash flow from operations before working capital changes has increased by 41% to
R7.7 million from the previous period. Working capital has increased due to the
seasonal increase in inventories, resulting in a cash outflow from operations.
Net cash flow from investing activities and from financing activities relate to
the acquisition of the Kolonnade Vodashop, together with the increase in assets
from the Group`s relocation to new consolidated premises.
PROSPECTS
The second half of the year should translate the benefits of the acquisition of
Nilecom Limited in Uganda, announced on 29 January 2008. The business is
complementary to the Group`s business in South Africa and the acquisition
presents Celcom Group with the opportunity to secure a significant distribution
footprint in Uganda. The acquisition in Uganda serves as the Group`s springboard
to further African expansion.
Operational improvements, together with the recent consolidation into one
premises, are expected to continue throughout the second half of the year.
Management remain confident that the Group is well positioned to benefit from
growth and opportunities in its markets.
BASIS OF PREPARATION
The interim results have been compiled in accordance with International
Financial Reporting Standards ("IFRS") and International Accounting Standard
(IAS 34) - Interim Financial Reporting. The accounting policies are consistent
with those adopted in the annual financial statements for the 15 months ended 30
June 2007, save as set out above.
The 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
Directors:
M Golding (Chairman)*; S Brachini (CEO); C Brown (CFO); G Aliferis (COO);
L Brachini (MD); S Mukaddam*; D Rose*; 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
19 February 2008
Designated Advisor
Java Capital (Proprietary) Limited
Date: 19/02/2008 11:08:01 Produced by the JSE SENS Department.
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