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MTN
MTN
Not for release, publication or distribution in or into the United States of
America, Canada, Australia or Japan
MTN Group Limited - Financial Effects And Withdrawal Of Cautionary Announcement
MTN Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009584/06)
(Share code: MTN)
(ISIN code: ZAE000042164)
("MTN Group" or the "Company")
FINANCIAL EFFECTS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the SENS announcement dated 2 May 2006 regarding MTN Group"s proposed
acquisition of the entire issued share capital of Investcom LLC ("Investcom")
("the Proposed Transaction"), MTN Group announces that the financial effects
arising on the retrospective application of the Proposed Transaction, as
required in terms of the Listings Requirements of the JSE Limited, have been
finalised.
2. FINANCIAL EFFECTS STATEMENT
The table below sets out, for illustrative purposes only, the unaudited pro
forma financial effects of the Proposed Transaction based on the final audited
results of MTN Group for the nine months ended 31 December 2005 and a
corresponding nine-month extract from Investcom"s published financial statements
for the 12 month period ended 31 December 2005. These results were prepared in
accordance with International Financial Reporting Standards.
Due to the nature of these pro forma financial effects, the table below may not
fairly present MTN Group"s financial position, changes in equity, results of
operations or cash flows, nor does this statement in any way constitute a profit
forecast or estimate. Furthermore, it is essential that the table set out below
be read in conjunction with the explanatory notes following immediately
thereafter. The financial effects statement is the responsibility of the
directors of MTN Group.
Audited before Pro forma Change
the acquisition(1) after the (%)
transaction(2)(3)
(4)(5)
Headline earnings per MTN Group 359.8 280.6 (22.0)
ordinary share (cents)
Adjusted headline earnings per 338.2 261.5 (22.7)
MTN Group ordinary share (cents)
Attributable earnings per MTN 352.7 274.9 (22.1)
Group ordinary share (cents)
Diluted headline earnings per 356.5 278.6 (21.9)
MTN Group ordinary share (cents)
Diluted adjusted headline earnings 335.9 259.5 (22.7)
per MTN Group ordinary share (cents)
Diluted attributable earnings per 349.7 272.8 (22.0)
MTN Group ordinary share (cents)
Net asset value per MTN Group 1 183.9 1 693.5 43.0
ordinary share (cents)
Net tangible asset value per MTN 818.8 (329.0) (140.2)
Group ordinary share (cents)
Weighted average number of MTN 1 663.2 1 867.5 12.3
Group ordinary shares (millions)
Diluted weighted average number of 1 677.4 1 881.7 12.2
MTN Group ordinary shares (millions)
Number of MTN Group ordinary shares 1 665.3 1 869.6 12.3
in issue as at 31 December 2005
(millions)
Notes:
(1) The "before the acquisition" financial information reflects amounts
extracted from the MTN Group audited financial results for the nine-month period
ended 31 December 2005 and the audited financial position as reported on that
date.
(2) The "after the transaction" financial information reflects MTN Group"s pro
forma financial results after accounting for a 100% acquisition of Investcom.
The following assumptions have been applied in calculating these effects:
- all Investcom shareholders accepted the offer and opted for the cash and
share alternative of US$2.0809 in cash and 0.1807 new MTN Group shares for each
Investcom share;
- up to a maximum of 204.3 million new MTN Group shares were issued to
Investcom shareholders and the balance of the consideration was settled in cash;
the Proposed Transaction was effective throughout the nine-month period ended
31 December 2005 for attributable earnings, headline earnings and adjusted
headline earnings per share;
- the Proposed Transaction was effective as at 31 December 2005 for net asset
and net tangible asset value per share; and
- 204.3 million new MTN Group shares were issued to Investcom shareholders on
1 April 2005 for weighted average, diluted weighted average and total number of
ordinary shares.
(3) Because of the retrospective nature of the unaudited pro forma financial
effects, these financial effects do not appropriately reflect MTN Group"s
financial position after the Proposed Transaction and do not give an indication
of MTN Group"s future earnings. A simple consolidation of the historical
financial effects of MTN Group and Investcom does not appropriately reflect the
future prospects of the combined businesses that MTN Group is offering to
purchase due to:
- the high annual growth (in excess of 40%) experienced by Investcom over the
past two years;
- certain Investcom companies having only commenced operations last year and
not contributing to profitability for the pro forma period reported on;
- Investcom having increased its effective shareholdings in Yemen and in
Sudan since the end of the reported period (31 December 2005); and
- the exceptional growth currently being experienced in the cellular industry
in emerging markets.
Consequently historical performance is not an appropriate reflection of future
prospects.
(4) A full Purchase Price Allocation review in terms of IFRS3 Business
Combinations has not been completed as a consequence of the extent of this
exercise, and as a result none of the financial effects resulting from such an
allocation have been taken into account in the above financial effects,
including no amortisation and deferred tax impacts in respect of intangible
assets which may arise on the acquisition.
(5) The change in tangible net asset value per ordinary share "after the
transaction" arises from the deduction of goodwill relating to the Proposed
Transaction. The net asset value of Investcom as at 31 December 2005 was R4,814
million.
3. PRE-CONDITIONS
The Proposed Transaction remains subject to the pre-conditions as set out in the
announcement dated 2 May 2006 (and, if and when the offer to acquire the entire
issued share capital of Investcom is made, it will be subject to the conditions
stated therein). A further announcement will be released on SENS and published
in the South African press and a circular setting out full details of the
Proposed Transaction will be posted to MTN Group shareholders following the
fulfilment or waiver of the pre-conditions and certain of the conditions.
4. WITHDRAWAL OF CAUTIONARY
Shareholders of MTN Group are no longer required to exercise caution in their
dealings in MTN Group shares, with respect to the Proposed Transaction.
Johannesburg
15 May 2006
Joint financial adviser and transaction sponsor
Deutsche Securities (SA) (Proprietary) Limited
Member of the Deutsche Bank Group
Joint financial adviser
First Africa (SA) Pty. Ltd
South African legal adviser
Webber Wentzel Bowens
International legal advisers
Freshfields Bruckhaus Deringer
Joint independent reporting accountants and auditors
PricewaterhouseCoopers Inc.
Joint independent reporting accountants and auditors
SizweNtsaluba VSP Inc.
Sponsor
Merrill Lynch South Africa (Pty) Ltd
Date: 15/05/2006 12:02:16 PM Produced by the JSE SENS Department
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