| Fri 23 Mar 2007, 10:00 | | CEL - Celcom Group - Reviewed Interim Results For |
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CEL
CEL
CEL - Celcom Group - Reviewed Interim Results For The Nine Months Ended 31
December 2006
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")
* Successful listing on AltX
* Revenue up 81.4%
* Headline earnings up 30%
* Core earnings for the nine months ended 31 December 2006 3.91 cents
REVIEWED INTERIM RESULTS FOR THE NINE MONTHS ENDED 31 DECEMBER 2006
GROUP INCOME STATEMENT
Pro-forma
Reviewed unaudited
nine months nine months
ended ended
31 December 31 December
2006 2005
R`000 R `000
Revenue 271 008 149 373
Gross profit 29 196 17 845
Operating profit before financing income
and amortisation of intangibles 4 733 4 283
Amortisation of intangibles (1 851) -
Net interest received 583 5
Profit before taxation 3 465 4 288
Taxation (1 549) (1 402)
Profit after taxation 1 916 2 886
Number of shares (000`s)
- Issued 204 609 131 500
- Weighted 151 343 131 500
Headline earnings per share (cents)
- Issued 1.84 2.19
- Weighted 2.49 2.19
Earnings per share (cents)
- Issued 0.94 2.19
- Weighted 1.27 2.19
Calculation of headline earnings
Net profit attributable to shareholders 1 916 2 886
Adjusted for:
Amortisation of intangibles 1 851 -
Headline earnings 3 767 2 886
GROUP CASH FLOW STATEMENT
Pro-forma
Reviewed unaudited
nine months nine months
ended ended
31 December 31 December
2006 2005
R`000 R `000
Net cash flows from operations 17 698 8 007
Net cash flows from investing activities (58 827) (1 570)
Net cash flows from financing activities 54 014 480
Net increase/(decrease) in cash resources 12 885 6 917
Cash resources at beginning of period 10 660 627
Cash resources at end of period 23 545 7 544
GROUP BALANCE SHEET
Pro-forma
Reviewed at unaudited at
31 December 31 December
2006 2005
R`000 R `000
ASSETS
Non-current assets 61 588 5 331
Property, plant and equipment 2 188 1 995
Intangible assets 35 575 1 020
Goodwill 23 454 2 184
Deferred taxation 371 132
Current assets 96 651 46 897
Inventory 29 647 15 935
Trade and other receivables 42 055 19 981
Cash and cash equivalents 23 545 10 695
Prepaid taxation 1 404 286
Total assets 158 239 52 228
EQUITY AND LIABILITIES
Equity
Issued capital 54 217 6 801
Retained earnings 16 874 15 300
Current liabilities 87 148 30 127
Trade and other payables 72 489 23 210
Interest-bearing loans and borrowings 210 844
Bank overdraft 12 982 6 020
Taxation payable 1 468 54
Total equity and liabilities 158 239 52 228
Net asset value per share (cents) 34.74 16.81
Net tangible asset value per share (cents) 5.85 14.37
GROUP STATEMENT OF CHANGES IN EQUITY
For the nine months ended 31 December 2006
Issued Share Accumulat Total
shares premium ed 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 1 51 296 51 297
premium
Cost of listing (3 881) (3
881)
Profit for the nine 1 916 1 916
months ending 31
December 2006
Balance at 31 December 2 54 215 16 875 71 091
2006
COMMENTS
Introduction
Celcom Group successfully listed on the Alternative Exchange ("Altx") of the JSE
Limited on 22 November 2006, and is pleased to report the company`s maiden
interim results for the nine months ended 31 December 2006 ("the period").
Celcom Group has, effective from listing, changed its year-end from 31 March to
30 June and consequently will have a 15 month financial year ending 30 June
2007.
Group profile
Celcom Group operates in the Information, Communication and Technology industry,
focusing on mobile telecommunications and related markets. The group comprises:
Celcom -
a long-established, market-dominant cellular telephone accessories wholesaler in
Southern Africa which has business relationships with all three mobile network
operators. Its supply of accessories extends to all countries in Africa serviced
by these networks.
Virtual Payment Solutions ("VPS") -
owns and exploits intellectual property constituting a broad-use electronic
payment mechanism.
VPS technology allows for the monitoring and implementation of any prepaid
ticket sale and its platform can be expanded from the current delivery of
prepaid airtime to loyalty and rewards programmes, Eskom prepaid electricity,
money transfers and bus, concert, soccer games and movie tickets. VPS acts as an
intermediary between the network operators and the retailers and earns switching
and/or transaction fees. The business is highly cash generative.
Go Mobile -
services small to medium sized enterprises, which have been traditionally
neglected by the larger mobile communications service providers, with mobile
phone upgrades, call time package selection and data delivery enhancements.
It also provides community telephone services to historically disadvantaged
communities.
Machine Logistics -
competes in the technology-oriented field of machine-to-machine communication.
It has been appointed as agent for two of the leading global machine-to-machine
module manufacturers, gaining further access to cutting-edge technology.
V Cellular Stores -
operates a chain of 13 Vodashop and Vodacom 4 U franchise outlets in Gauteng`s
premier shopping nodes including Menlyn Park Shopping Centre, Centurion Mall,
Westgate Shopping Centre, Cresta Mall and Clearwater Mall.
BEE
As a "Proudly South African" company, Celcom Group is approximately 20% owned by
an empowerment consortium, including a black women`s investment company that is
linked to a number of social projects and charities.
In line with the undertaking set out in the prospectus, executive management is
in the process of placing certain of its shares with a BEE entity as well as
establishing a BEE Staff Trust to increase BEE equity participation to 25,1%.
Impact of the V Cellular acquisition
The businesses housed in V Cellular were acquired with effect from 1 July 2006,
subject to certain conditions precedent (the "V Cellular acquisition"). The
final condition was met early in October 2006.
International Financial Reporting Standards ("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 interim
results for the period include only 3 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 6 months of V Cellular earnings at the interim stage.
In addition, IFRS 3 requires the franchise agreements acquired to be accounted
for at fair value. The intangible asset representing the franchise agreement is
then amortised over 5 years commencing 1 October 2006. Goodwill represents the
value in excess of the tangible assets and franchise agreements acquired.
Financial results
The group`s revenue for the nine month period was 81.4% higher than the
comparative period. This is largely attributable to the three months of revenue
from the V Cellular acquisition which accounted for 51% of the increase.
Significant growth in VPS sales was also experienced. However, the group
experienced slower than expected growth in local and export cellphone accessory
and hardware revenues as a result of cyclical network operator demand and longer
than anticipated hardware testing times.
The group`s gross profit grew 63.6% from the comparative period, with the sale
of low margin electronic prepaid vouchers slightly diluting group margins from
12% to 11%.
The V Cellular acquisition accounted for 79% of the growth in operating
expenses, including amortisation of intangibles. Increased costs resulting from
the listing of the group accounted for an 8% increase in operating costs.
Headline earnings increased 30.5% from the comparative period and core earnings
amounted to 3.91 cents per share.
Net cash from operating activities grew by 121% 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. Trade and other receivables include V
Cellular vendor loans, which have subsequently been settled.
Issues of shares raised R19.1 million net of expenses on the listing of the
group, which together with additional gearing was utilised to pay for the cash
portion of the V Cellular acquisition.
Prospects
The V Cellular acquisition has been integrated into the group and synergies and
cost savings are expected to be realised in the second six months of the
financial year.
The robust performance of VPS is expected to be further enhanced by ongoing
buoyant customer demand as well as the implementation of a retail banking joint
venture.
Management are actively pursuing market opportunities in particular in areas of
mobile number portability, the renewed demand for equipment, value added
products by network operators and new products linked to the increased usage in
data services.
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 IFRS. The accounting
policies are consistent with those adopted in the annual financial statements
for the year ended 31 March 2006.
In compiling the pro forma financial results for the nine months ended 31
December 2005, certain year-end adjustments from the audited financial results
for the year ended 31 March 2006 have been pro rated for the nine months. The
number of issued shares shown as at 31 December 2005 has been calculated in
accordance with the requirements of IFRS.
These 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);
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: 23/03/2007 10:00:01 Produced by the JSE SENS Department.
