| Mon 16 May 2011, 7:05 | | VOD - Vodacom Group Limited - Preliminary results for the year ended 31 March |
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VOD
VOD
VOD - Vodacom Group Limited - Preliminary results for the year ended 31 March
2011
Vodacom Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1993/005461/06
(ISIN: ZAE000132577 Share Code: VOD) (`Vodacom`)
Preliminary results for the year ended 31 March 2011
Salient features
Strong performance culminates in solid HEPS growth
- Group revenue up 6.4%(*) (4.5% reported)
- Group free cash flow up 22.4% to R8 829 million
- Impairment losses of R1 508 million mainly in respect of Gateway
- Headline earnings per share up 28.6% to 656 cents per share
- 60.0% increase in final dividend per share to 280 cents
Customer focus underpins commercial success
- Group customers increased 9.0% to 43.5 million
- New offers delivering more value to customers
- Group voice traffic up 19.0%
- Number one Net Promoter Score (`NPS`) in South Africa
Demand for data services remains high
- Group data revenue increased 35.5% to R6 433 million
- Expanded portfolio of low cost internet devices
- Investment in 1 086 more 3G base stations across the Group
- 34.6% growth in South Africa data customers to 9.0 million
Refocus, reorganise and refresh
- Sustainability objectives integrated into strategic and reporting processes
- Steps taken to simplify the organisation, empower employees, speed up decision
making
- Brand refresh kicks off initiatives covering network, service and value
Operating review
South Africa
South Africa delivered a robust performance with service revenue growing 4.7% to
R46 392 million. This was achieved despite a 16.3% decline in interconnect
revenue following the cuts in mobile termination rates (`MTRs`). Service revenue
growth was supported by a higher contribution from data revenue and increased
voice usage stemming from value offerings.
Data revenue increased 33.9% to R6 180 million due to increased penetration of
mobile PC connectivity and mobile internet usage, with active data bundle users
increasing 76.2% to 2.6 million and overall active data customers increasing
34.6% to 9.0 million. Active smartphones on the network increased 84.2% to 3.6
million and PC connectivity devices increased 47.8% to 1.1 million. During the
year greater value was added to data bundles and we were successful in signing
up more smartphone customers with data bundles.
Customers increased 1.0% to 26.5 million with gross connections of 11.6 million
reaching our pre Regulation of Interception of Communications and Provision of
Communication-Related Information Act (`RICA`) levels. Excluding the impact of
the change in the disconnection rule in April 2010, 3.5 million customers were
added, of which 2.9 million were prepaid customers, bringing the total reported
prepaid customers to 21.4 million for the year. Contract customer growth
remained strong, up 14.0% to 5.1 million, adding 629 000 customers despite the
change in the disconnection rule. Vodacom has registered 84.9% of the customer
base for RICA at 31 March 2011.
Total ARPU is reported as 18.9% higher year on year to R157 largely due to the
disconnection of 3.3 million SIM cards, the increase in average minutes of use
of 27.5% to 102 minutes, offset by a reduction in the average effective price
per minute of 11.3% and lower interconnect revenue.
The South Africa EBITDA increased 7.0%(*) (5.8% reported growth) and the EBITDA
margin increased 0.4(*) percentage points (reported EBITDA margin stable at
36.8%) due to the improved contribution margin which resulted from a lower net
contribution from interconnect and a reduction in customer and distribution
costs.
We continued to make substantial investments in the network, particularly to
enhance quality and support the 48.9% growth in data traffic. Capital
expenditure of R5 100 million, 9.6% of revenue, was largely allocated to
building a wider and faster data network with 948 new 3G sites bringing the
total to 4 290 sites. We enhanced the network with the latest technologies, 3
217 base stations have been upgraded to the next generation Long-term Evolution
(`LTE`) ready equipment and more than one thousand dual-carrier sites are now
live. The long-distance national fibre build and our own project to self provide
fibre to our base stations has been slower than planned due to delays in
obtaining right of way approvals and the build freeze during the World Cup.
International
The reported results of the International operations were negatively impacted by
foreign exchange movements. International service revenue increased by 11.6%(*)
(reported decline of 1.4%) supported by the 24.4% growth in customers to 17.0
million. Despite intense competition and the resulting 38.1% reduction in the
average price per minute, we are encouraged by the elasticity experienced with
voice traffic up 40.9%. Data revenue increased 88.8% to R253 million mainly due
to data promotions and strong growth in M-PESA active users to 1.3 million in
Tanzania.
The International EBITDA declined 20.7%(*) (28.6% reported decline) to R840
million largely as a result of declining margins in Gateway. Various cost
efficiency programmes, such as efforts to reduce site operating and maintenance
costs, have been put in place to adjust business structures in the mobile
operations in order to support lower tariffs.
Vodacom continued to invest in the International operations, supporting the
medium-to-long term growth potential of these businesses with capital
expenditure at R1 208 million (14.7% of revenue). The investment was mainly
focused on increasing capacity to support higher traffic and expanding the
network in Mozambique.
Financial review
The Group has restated certain numbers previously reported to align with
reporting practices of its ultimate parent. Refer to note 7 of the preliminary
condensed annual financial statements.
Service revenue
Group revenue and service revenue for the year ended 31 March 2011 increased by
6.4%(*) and 5.5%(*) respectively, (reported 4.5% and 3.6% respectively)
underpinned by continued growth in Group data and voice revenue offset by a
decline in interconnect revenue from South Africa. The South African rand
strengthened against all other functional currencies, negatively impacting
reported revenue and service revenue of the International operations which
declined by 2.7% and 1.4% respectively. Revenue and service revenue from the
International operations increased 10.5%(*) and 11.6%(*) respectively.
Operating expenses1
Group operating expenses increased by 6.8%(*) to R40 638 million (4.8%
reported). A net foreign exchange gain on the revaluation of foreign denominated
trading items of R11 million (2010: R192 million gain) has been included
in operating expenses. In South Africa, operating expenses increased by 5.3%(*)
(6.0% reported), below revenue growth of 5.8%. International operating expense
growth of 16.2%(*) (1.4% reported) was mainly due to difficult trading
conditions in Gateway.
EBITDA
Group EBITDA increased 5.8%(*) (4.1% reported) to R20 594 million, and the
EBITDA margin remained relatively stable at 33.7% (2010: 33.8%). South Africa
contributed 95.4% (2010: 93.9%) to Group EBITDA for the year. Group EBITDA was
negatively impacted by unfavourable foreign exchange movements and difficult
trading conditions in Gateway. This resulted in a decline of 20.7%(*) (28.6%
reported) in the International EBITDA with margins declining from 14.0% to
10.2%. In aggregate, the International mobile operations expanded their EBITDA
margins.
Operating profit
Operating profit increased by 21.9% to R13 696 million, primarily due to a
reduction in impairment losses, mainly relating to Gateway, from R3 370 million
in the prior year to R1 508 million. Operating profit increased by 5.0%(*),
excluding the impact of impairment losses.
Net finance charges
Net finance charges reduced from R2 272 million in the prior year to R1 058
million for the year ended 31 March 2011, mainly due to lower net finance costs
in the current period and the negative impact of the remeasurement of loans
granted of R375 million in the prior year. The loss on translation of foreign
assets and liabilities increased over the prior year due to the impact that the
stronger rand had on cash held in foreign currency, while the loss on
derivatives mainly from the revaluation of foreign exchange contracts in South
Africa decreased by 58.6%.
Finance costs for the period reduced by R738 million compared to the prior year
as a result of average debt declining to R11 033 million compared to R15
200 million in the prior year coupled with the benefit of lower interest rates.
The average cost of debt reduced from 9.0% to 7.7%.
Taxation
The tax expense of R4 659 million for the period declined by 1.8% compared to
March 2010 due to the non-recurrence of the derecognition of the DRC deferred
tax asset offset by an increase in secondary tax on companies (`STC`) relating
to the timing of the dividend declared.
The effective tax rate declined from 53.0% to 36.9% as a result of the decrease
in impairment losses and the derecognition of the DRC deferred tax asset in the
prior year.
Earnings
Earnings per share for the period increased from 282 cents per share to 561
cents per share, impacted by impairment losses and the derecognition of the DRC
deferred tax asset in the prior year. Headline earnings per share, which
excludes impairment losses, increased 28.6% to 656 cents per share.
Excluding the impact of several non-recurring charges in the prior year,
adjusted headline earnings per share increased 15.1% from 568 cents to 654 cents
per share mainly due to the growth in EBITDA and the reduction in net finance
charges.
Cash flow
Operating free cash flow increased by 10.0% to R14 837 million for the period.
The cash generated from operations grew by R1 674 million and was mainly
due to increased EBITDA, coupled with an improvement in working capital. Net
cash additions to property, plant and equipment and intangible assets increased
from R6 222 million to R6 548 million. Group free cash flow increased 22.4% to
R8 829 million.
Net cash flows utilised in financing activities increased from R8 548 million
to R10 119 million. This resulted from an increase in debt repayments compared
to the prior year, R984 million cash outflow (2010: R385 million) relating to
the share repurchase programme, an increase of R1 375 million in dividends paid
and reduced interest payments due to lower interest rates and average debt.
Capital expenditure
The Group`s capital expenditure for the period was R6 311 million, 4.9% less
than a year ago. Capital expenditure of R1 208 million (14.7% of revenue) in the
International operations was 29.5%(*) lower (reported 41.6% lower) mainly due to
a reduction in capital expenditure in the DRC and Tanzania following last year`s
significant network investment in Tanzania. South Africa`s capital expenditure
increased by 11.5% (9.6% of revenue compared to 9.1% a year ago) due to the
investment in higher speed data technology and fibre.
Statement of financial position
Property, plant and equipment and intangible assets were negatively impacted by
foreign currency translation adjustments of R738 million and R166 million,
respectively due to the rand strengthening against functional reporting
currencies of the International operations since 31 March 2010.
Net debt decreased to R9 458 million, compared to R12 161 million a year ago.
The Group`s financial gearing reduced slightly, with the net debt to EBITDA
ratio at 0.5 times at 31 March 2011 (2010: 0.6 times). 86.7% (2010: 89.6%) of
the debt2 is denominated in rand. R3 114 million (2010: R3 349 million) of the
debt2 matures in the next 12 months and 66.2% (2010: 96.3%) of interest bearing
debt (including bank overdrafts) is at floating rates.
Declaration of final dividend No. 4
Notice is hereby given that final dividend number 4 of 280 cents per ordinary
share in respect of the financial year ended 31 March 2011 has been declared
payable on Monday 4 July 2011 to shareholders recorded in the register at the
close of business on Friday 1 July 2011:
Last day to trade shares cum dividend Friday 24 June 2011
Shares commence trading ex dividend Monday 27 June 2011
Record date Friday 1 July 2011
Payment date Monday 4 July 2011
Share certificates may not be dematerialised or rematerialised between Monday 27
June 2011 and Friday 1 July 2011, both days inclusive.
On Monday 4 July 2011, the final dividend will be electronically transferred
into the bank accounts of all certificated shareholders where this facility is
available. Where electronic funds transfer is not available, cheques will be
dated and posted on or about Monday 4 July 2011.
Shareholders who hold dematerialised shares will have their accounts at their
CSDP or broker credited on Monday 4 July 2011.
Annual general meeting
The annual general meeting of Vodacom Group Limited will be held at Talk 200,
Vodacom World, Midrand on Thursday 4 August 2011 at 11:00.
Outlook
This has been a positive year in which good progress was made on the Group`s
strategic objectives, particularly driving growth in data, and the results were
in-line with our medium-term guidance. The changes instituted in the latter half
of the year, culminating in the brand refresh, have placed Vodacom in a unique
position to capitalise on the changing mobile communications landscape.
By integrating sustainability issues and encompassing the concerns of all
stakeholders into our strategic process, we have identified five clear focus
areas for the year ahead:
1. Grow passionate promoters through dramatically improving
customer experience.
2. Actively create an environment for our employees to excel and
grow.
3. Put the power of the internet into people`s hands.
4. Together drive operational excellence.
5. Proactively partner with our stakeholders.
Looking to next year, we expect competition to remain intense and customer spend
to be under pressure from rising food and fuel prices, however, our medium-term
guidance remains unchanged. The approved capital expenditure budget for fiscal
period 2012 is R7.7 billion3. Our capital expenditure programme will focus on
accelerating the rollout of mobile broadband coverage and self-provisioning of
transmission to improve the quality of our service. This will support continued
growth in demand for data services.
For and on behalf of the Board
Peter Moyo Pieter Uys Rob Shuter
Non-executive Chief Executive Chief Financial
Chairman Officer Officer
13 May 2011
Midrand
(*) All amounts marked with an `(*)` represent normalised growth
excluding trading foreign exchange and at a constant currency.
1. Excluding depreciation, amortisation, BBBEE charge and
impairment losses.
2. Debt inclubdes interest bearing debt, non-interest bearing
debt and bank overdrafts.
3. Excluding the non-cash accounting for RAN swaps.
Condensed consolidated income statement
for the year ended 31 March
2011 2010 2009
Rm Note Reviewe Audited Audited
s d
Revenue 3 61 197 58 535 55 442
Direct expenses 7 (27 (26 (25
600) 764) 913)
Staff expenses 7 (4 024) (3 878) (3 268)
Publicity expenses 7 (2 086) (1 848) (1 875)
Broad-based black economic - - (1 315)
empowerment charge
Other operating expenses 7 (6 928) (6 280) (6 271)
Depreciation and amortisation (5 355) (5 157) (4 683)
Impairment losses 4 (1 508) (3 370) (112)
Operating profit 13 696 11 238 12 005
Finance income 109 124 108
Finance costs (864) (1 602) (1 459)
Net loss on remeasurement and (303) (794) (398)
disposal of financial instruments
Loss from associate - (21) (19)
Profit before tax 12 638 8 945 10 237
Taxation (4 659) (4 745) (4 045)
Net profit 7 979 4 200 6 192
Attributable to:
Equity shareholders 8 245 4 196 6 089
Non-controlling interests (266) 4 103
7 979 4 200 6 192
2011 2010 2009
Cents Note Reviewe Audited Audited
s d
Basic earnings per share 5 561.5 282.3 409.2
Diluted earnings per share 5 560.4 282.0 409.2
Condensed consolidated statement of comprehensive income
for the year ended 31 March
2011 2010 2009
Rm Reviewe Audited Audited
d
Net profit 7 979 4 200 6 192
Other comprehensive income (449) (2 665) 379
Foreign currency translation (502) (2 665) 405
differences, net of tax
Fair value adjustments on available- - - (17)
for-sale financial assets, net of tax
Gain on hedging instruments in cash 53 - -
flow hedges, net of tax
Other, net of tax - - (9)
Total comprehensive income 7 530 1 535 6 571
Attributable to:
Equity shareholders 7 739 1 645 6 437
Non-controlling interests (209) (110) 134
7 530 1 535 6 571
Condensed consolidated statement of financial position
as at 31 March
2011 2010 2009
Rm Notes Reviewed Audited Audited
Assets
Non-current assets 27 982 29 131 35 224
Property, plant and equipment 21 577 21 383 21 844
Intangible assets 5 215 6 673 11 794
Financial assets 189 181 303
Trade and other receivables 264 231 241
Finance lease receivables 307 408 259
Deferred tax 430 255 783
Current assets 13 453 12 560 12 135
Financial assets 273 153 203
Inventory 799 707 653
Trade and other receivables 10 773 10 024 9 843
Finance lease receivables 462 262 268
Tax receivable 276 353 64
Cash and cash equivalents 870 1 061 1 104
Total assets 41 435 41 691 47 359
Equity and liabilities
Fully paid share capital * * *
Treasury shares (1 384) (422) -
Retained earnings 17 864 14 832 12 265
Other reserves (858) (672) 1 752
Equity attributable to owners 15 622 13 738 14 017
of the parent
Non-controlling interests 558 898 1 081
Total equity 16 180 14 636 15 098
Non-current liabilities 8 743 11 590 10 430
Borrowings 11 7 280 9 786 8 316
Trade and other payables 258 317 388
Provisions 510 436 365
Deferred tax 695 1 051 1 361
Current liabilities 16 512 15 465 21 831
Borrowings 11 2 783 3 239 7 875
Trade and other payables 13 005 11 714 10 938
Provisions 298 193 238
Tax payable 87 203 549
Dividends payable 8 6 2 211
Bank overdrafts 331 110 20
Total equity and liabilities 41 435 41 691 47 359
* Fully paid share capital of R100.
Condensed consolidated statement of changes in equity
for the year ended 31 March
Rm Equity Non- Total
attri- Con- equity
butable trolling
to
owners interests
of the
parent
1 April 2008 11 402 404 11 806
Total comprehensive income 6 437 134 6 571
Dividends (5 200) (13) (5 213)
Business combinations and other
non-controlling interests (4) 34 30
acquisitions
Share-based payment expense 1 382 522 1 904
31 March 2009 - Audited 14 017 1 081 15 098
Total comprehensive income 1 645 (110) 1 535
Dividends (1 631) (73) (1 704)
Repurchase of shares (422) - (422)
Share-based payment expense 129 - 129
31 March 2010 - Audited 13 738 898 14 636
Total comprehensive income 7 739 (209) 7 530
Dividends (5 212) (71) (5 283)
Partial disposal of interests 156 (60) 96
in subsidiaries
Repurchase of shares (962) - (962)
Share-based payment expense 163 - 163
31 March 2011 - Reviewed 15 622 558 16 180
Condensed consolidated statement of cash flows
for the year ended 31 March
2011 2010 2009
Rm Reviewed Audited Audited
Cash flows from operating activities
Cash generated from operations 21 385 19 711 15 905
Tax paid (4 982) (4 764) (4 123)
Net cash flows from operating 16 403 14 947 11 782
activities
Cash flows from investing activities
Net additions to property, plant and (6 548) (6 222) (7 211)
equipment and intangible assets
Business combinations, net of cash (24) - (5 348)
acquired
Other investing activities (9) (107) (87)
Net cash flows utilised in investing (6 581) (6 329) (12 646)
activities
Cash flows from financing activities
Movement in borrowings, including (3 949) (4 255) 6 853
finance costs paid
Dividends paid (5 283) (3 908) (6 204)
Repurchase of shares (984) (385) -
Partial disposal of interests in 98 - -
subsidiaries, net of cash disposed
Non-controlling interests (1) - 522
Net cash flows (utilised in)/from (10 119) (8 548) 1 171
financing activities
Net (decrease)/increase in cash and (297) 70 307
cash equivalents
Cash and cash equivalents at the 951 1 084 837
beginning of the year
Effect of foreign exchange rate (115) (203) (60)
changes
Cash and cash equivalents at the end 539 951 1 084
of the year
Notes to the preliminary condensed consolidated annual financialstatements
1. Basis of preparation
These preliminary condensed consolidated annual financial
statements have been prepared in accordance with the
recognition and measurement criteria of International
Financial Reporting Standards (`IFRS`) and the information
required by International Accounting Standard 34: Interim
Financial Reporting as issued by the International Accounting
Standards Board (`IASB`), the AC 500 standards as issued by
the Accounting Practices Board, the JSE Listings Requirements
and the Companies Act of 1973, as amended. They have been
prepared on the historical cost basis, except for certain
financial instruments which are measured at fair value or at
amortised cost, and are presented in South African rand, which
is the parent Company`s functional and presentation currency.
The significant accounting policies and methods of computation
are consistent in all material respects with those applied in
the previous period, except as disclosed in Note 2. The
significant accounting policies are available for inspection
at the Group`s registered office.
There have been no material changes in judgements or estimates
of amounts reported in prior reporting periods.
Certain items have been reclassified as disclosed in Note 7.
The financial information has been reviewed by Deloitte &
Touche whose unmodified review report is available for
inspection at the Group`s registered office.
2. Changes in accounting policies
The Group adopted all the new, revised or amended accounting
pronouncements as issued by the IASB, which were effective for
the Group from 1 April 2010. The adopted accounting
pronouncements, which had an impact on the Group or were
reviewed for possible impact, are as follows:
- IFRS 3: Business Combinations (Revised) (`IFRS 3`); and
- IAS 27: Consolidated and Separate Financial Statements
(Amended) (`IAS 27`).
The revisions to IFRS 3 impact the amount of goodwill
recognised as well as the reported results. The change in
accounting policy did not have a significant impact on the
Group`s financial results for the year.
The most significant amendment to IAS 27 is that total
comprehensive income is now attributed to non-controlling
interests even if this results in the non-controlling
interests having a deficit balance. The change in accounting
policy had a favourable impact on the Group`s headline
earnings per share for the current year.
Full details on changes in accounting policies will be
disclosed in the Group`s integrated report for the year ended
31 March 2011.
2011 2010 2009
Rm Reviewed Audited Audited
3. Segment analysis
External customers segment revenue 61 197 58 535 55 442
South Africa 53 193 50 290 47 592
International 1 7 984 8 226 7 835
Corporate 20 19 15
EBITDA 20 594 19 782 18 196
South Africa 19 653 18 578 16 222
International 1 840 1 176 1 935
Corporate and eliminations 101 28 39
2011 2010 2009
Rm Reviewed Audited Audited
3. Segment analysis continued
Reconciliation of segment results
EBITDA 20 594 19 782 18 196
Depreciation, amortisation and (6 863) (8 527) (4 795)
impairment losses
Broad-based black economic - - (1 315)
empowerment charge
Other (35) (17) (81)
Operating profit 13 696 11 238 12 005
Net finance charges (1 058) (2 272) (1 749)
Finance income 109 124 108
Finance costs (864) (1 602) (1 459)
Net loss on remeasurement and (303) (794) (398)
disposal of financial instruments
Loss from associate - (21) (19)
Profit before tax 12 638 8 945 10 237
Taxation (4 659) (4 745) (4 045)
Net profit 7 979 4 200 6 192
Total assets 41 435 41 691 47 359
South Africa 31 076 28 464 26 692
International 1 9 743 11 958 19 196
Corporate and eliminations 616 1 269 1 471
1 In order to align with the change in operational structure
within the Group, the Gateway reportable segment has been
divided into the Vodacom Business Africa and Gateway Carrier
Services cash-generating units, which have been incorporated
into the International reportable segment in the current year.
Details on the restatement of comparative amounts will be
disclosed in the Group`s integrated report for the year ended
31 March 2011.
2011 2010 2009
Rm Reviewed Audited Audited
4. Impairment losses
Impairment losses recognised are
as follows:
Intangible assets (1 500) (3 285) (1)
Property, plant and equipment (8) (34) (105)
Available-for-sale financial - (8) (6)
assets carried at cost
Investment in associate - (43) -
(1 508) (3 370) (112)
The intangible assets impairment losses of R1 500 million
relate to the International reportable segment, of which
further information will be provided in the Group`s integrated
report for the year ended 31 March 2011. In the prior year a
goodwill impairment loss of R3 039 million was recognised in
respect of the combined Gateway cash-generating unit. The
impairment losses are the result of increased price competition
and poorer trading conditions.
2011 2010 2009
Cents Reviewed Audited Audited
5. Per share calculations
5. Earnings, dividends and net asset
1 value per share
Basic earnings per share 561.5 282.3 409.2
Diluted earnings per share 560.4 282.0 409.2
Headline earnings per share 655.5 509.9 417.4
Diluted headline earnings per share 654.3 509.4 417.4
Dividends per share 355.0 110.0 349.5
Net asset value per share 1 098.8 985.3 1 014.7
2011 2010 2009
Million Reviewed Audited Audited
5. Weighted average number of ordinary
2 shares outstanding for the purpose
of calculating:
Basic and headline earnings per 1 468 1 486 1 488
share
Diluted earnings and diluted 1 471 1 488 1 488
headline earnings per share
5. Ordinary shares for the purpose of
3 calculating:
Dividends per share 1 488 1 488 1 488
Net asset value per share 1 473 1 485 1 488
Wheatfields Investments 276 (Pty) Limited (`Wheatfields`), a
wholly-owned subsidiary of the Group, acquired 15 880 043
(2010: 120 456) shares in the market during the year at an
average price of R60.14 (2010: R57.92) per share. In the 2010
financial year, Wheatfields also acquired 2 426 471 shares at
R56.61 per share in terms of an odd-lot offer and a specific
share repurchase.
2011 2010 2009
Rm Reviewe Audited Audited
d
5.4 Headline earnings reconciliation
Earnings attributable to equity 8 245 4 196 6 089
shareholders for basic and diluted
earnings per share
Adjusted for:
Net loss on disposal of property, 35 17 13
plant and equipment and intangible
assets
Impairment losses (Note 4) 1 508 3 370 112
Other - 1 -
9 788 7 584 6 214
Tax impact of adjustments (165) (5) (4)
Non-controlling interests in 3 - -
adjustments
Headline earnings for headline and 9 626 7 579 6 210
diluted headline earnings per
share
6. Forfeitable share plan (`FSP`)
During the year the Group allocated 3 242 476 (2010:
4 722 504) shares out of treasury shares to eligible
employees under its FSP, an equity-settled share-based
payment scheme in terms of IFRS 2: Share-based Payment.
7. Reclassifications
Certain items in the preliminary condensed consolidated
annual financial statements were reclassified so as to align
with practices of the Group`s ultimate parent, Vodafone Group
Plc. The reclassifications are summarised below.
7.1 Income statement
The Vodafone Global alliance fee has been reclassified from
direct expenses to other operating expenses. Franchise fees
have been reclassified from other operating expenses to
publicity expenses. Expenses not relating to payroll have
been reclassified from staff expenses to other operating
expenses and certain operating lease expenses have been
reclassified from other operating expenses to direct
expenses.
Full details on reclassifications will be disclosed in the
Group`s integrated report for the year ended 31 March 2011.
8. Related parties
The Group`s related parties are its parent, joint venture,
associate and key management including directors. In prior
years Telkom SA Limited and its subsidiaries were included in
related parties since Telkom SA Limited had joint control
over the Group.
2011 2010 2009
Rm Reviewed Audited Audited
8.1 Balances with related parties
Accounts receivable 278 197 949
Accounts payable (264) (154) (325)
8.2 Transactions with related
parties
Revenue 167 994 3 248
Expenses (472) (587) (2 465)
Dividends declared (3 433) (1 064) (5 200)
8.3 Directors` and key management
personnel remuneration
Compensation paid to the Group`s
Board and key management
personnel will be disclosed in
the Group`s integrated report
for the year ended 31 March
2011.
9. Capital expenditure incurred
Capital expenditure additions 6 311 6 636 6 906
including software
10. Capital commitments
Capital expenditure contracted 2 547 2 213 2 214
for but not yet incurred
Capital expenditure approved but 8 471 6 364 9 712
not yet contracted for
11. Borrowings
11.1 The Standard Bank of South Africa Limited/Rand Merchant Bank
The loan with a nominal value of R2 500 million was
partially repaid in April 2010 using short-term borrowings
amounting to R1 159 million.
11.2 Citibank syndicated loans
The Group increased its Citibank syndicated loans by
TZS40 350 million and US$20 million during the year. The
loans will be utilised for capital expenditure and general
corporate requirements in Tanzania, and are repayable in six
bi-annual instalments commencing on 16 June 2011.
11.3 Asset Backed Arbitraged Securities (Pty) Limited
The loan with a nominal value of R1 000 million was repaid
in December 2010 using short-term borrowings.
12. Contingent liabilities
12.1 Guarantees
The Group issued various guarantees relating to financial
obligations of its subsidiaries, which amounted to
R53 million (2010: R48 million; 2009: R1 810 million). As at
31 March 2009, the related outstanding borrowings on the
statement of financial position were R1 735 million.
Vodacom (Pty) Limited provides an unlimited guarantee for
borrowings entered into by Vodacom Group Limited. The
related outstanding borrowings on the statement of financial
position are R1 655 million as at 31 March 2011 (2010:
R3 593 million; 2009: R4 878 million).
13. Regulatory matters
13.1 Interconnect rates
On 29 October 2010 the Independent Communications Authority
of South Africa (`ICASA`) published the Call Termination
Regulations, in terms of which the peak interconnect rate
has further been reduced from R0.89 to R0.73 and the off-
peak rate from R0.77 to R0.65 in March 2011. The regulations
stipulate further reductions in the peak and off-peak rates
to R0.56 and R0.52 respectively in March 2012, and a flat
rate of R0.40 for both in July 2013. In terms of the
regulations, asymmetrical interconnect rates may also be
payable to licensees who meet specific criteria on the basis
of spectrum or market share. The Group continues to actively
engage with ICASA in the implementation of the regulations.
13.2 Other
Other developments in the Group`s regulatory environment
will be disclosed in the Group`s integrated report for the
year ended 31 March 2011.
14. Acquisitions and disposals of businesses
Details on acquisitions and disposals of businesses, none of
which were material, will be disclosed in the Group`s
integrated report for the year ended 31 March 2011.
15. Events after the reporting period
The Board is not aware of any matter or circumstance arising
since the end of the reporting period, not otherwise dealt
with herein, which significantly affects the financial
position of the Group or the results of its operations or
cash flows for the period, other than the following:
15.1 Dividend declared after the reporting date and not
recognised as a liability
A final dividend of R4 166 million (280 cents per ordinary
share) for the year ended 31 March 2011, was declared on
Friday 13 May 2011, payable on Monday 4 July 2011 to
shareholders recorded in the register at the close of
business on Friday 1 July 2011. The secondary tax on
companies payable on this dividend amounts to R417 million.
Corporate information
Directors
MP Moyo (Chairman), PJ Uys (CEO), P Bertoluzzo1, TA Boardman, M Joseph2, A
Kekana, M Lundal3, T Mokgosi-Mwantembe, PJ Moleketi, NJ Read4, RAW Schellekens5,
RA Shuter
Alternate directors
TJ Harrabin4
1. Italian 2. American 3. Norwegian 4. British 5. Dutch
Registered office
Vodacom Corporate Park, 082 Vodacom Boulevard, Midrand 1685
(Private Bag X9904, Sandton 2146)
Transfer secretary
Computershare Investor Services (Pty) Limited
(Registration number: 2004/003647/07)
70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
Company secretary
SF Linford
Non-GAAP information
The announcement contains certain non-GAAP financial information. The Group`s
management believes these measures provide valuable additional information in
understanding the performance of the Group or the Group`s businesses because
they provide measures used by the Group to assess performance. However, this
additional information presented is not uniformly defined by all companies,
including those in the Group`s industry. Accordingly, it may not be comparable
with similarly titled measures and disclosures by other companies. Additionally,
although these measures are important in the management of the business, they
should not be viewed in isolation or as replacements for or alternatives to, but
rather as complementary to, the comparable GAAP measures.
Trademarks
Vodacom, the Vodacom logo, Vodafone, the Vodafone logo and M-PESA are trademarks
of the Vodafone Group. The RIM(R) and BlackBerry(R) families of trademarks,
images and symbols are the exclusive properties and trademarks of Research in
Motion Limited (`RIM`), used by permission. RIM and BlackBerry are registered
with the US Patent and Trademark Office and may be pending or registered in
other countries. Other product and company names mentioned herein may be the
trademarks of their respective owners.
Forward-looking statements
This announcement which sets out the annual results for Vodacom Group Limited
for the year ended 31 March 2011 contains unaudited `forward-looking statements`
with respect to the Group`s financial condition, results of operations and
businesses and certain of the Group`s plans and objectives. In particular, such
forward-looking statements include statements relating to: the Group`s future
performance; future capital expenditures, acquisitions, divestitures, expenses,
revenues, financial conditions, dividend policy, and future prospects; business
and management strategies relating to the expansion and growth of the Group; the
effects of regulation of the Group`s businesses by governments in the countries
in which it operates; the Group`s expectations as to the launch and roll out
dates for products, services or technologies; expectations regarding the
operating environment and market conditions; growth in customers and usage; and
the rate of dividend growth by the Group.
Forward-looking statements are sometimes, but not always, identified by their
use of a date in the future or such words as `will`, `anticipates`, `aims`,
`could`, `may`, `should`, `expects`, `believes`, `intends`, `plans` or
`targets`. By their nature, forward-looking statements are inherently
predictive, speculative and involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in the future, involve known
and unknown risks, uncertainties and other facts or factors which may cause the
actual results, performance or achievements of the Group, or its industry to be
materially different from any results, performance or achievement expressed or
implied by such forward-looking statements. Forward-looking statements are not
guarantees of future performance and are based on assumptions regarding the
Group`s present and future business strategies and the environments in which it
operates now and in the future.
vodacom.com
16 May 2011
Sponsor: UBS South Africa (Pty) Ltd
Date: 16/05/2011 07:05:28 Produced by the JSE SENS Department.
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