Group finance director's report continued - MTN Group

More documents

Recommendations

Info

Headline earnings per share Adjusted headline earnings per share (HEPS) decreased by 16,6% to 754,3 cents compared with 904,4 cents in 2008. The core contributor to this decrease was the functional currency loss of R3,2 billion in 2009, compared to a functional currency gain of R2,4 billion in 2008. Adjusted HEPS, excluding the functional currency impact, increased by 8,5% to 878,9 cents compared to 2008. IFRS requires the Group to account for a written put option held by a non-controlling shareholder of one of the Group subsidiaries, which provides the non-controlling shareholder with the right to require the subsidiary to acquire its shareholdings at fair value. Prior to the implementation of IFRS the shareholding was treated as a non-controlling shareholder in the subsidiary as all risks and rewards associated with these shares, including dividends, accrue to the non-controlling shareholder. IAS 32 requires that in the circumstances described in the previous paragraph: (a) the present value of the future redemption amount be reclassified from equity to financial liabilities and the financial liability so reclassified subsequently be measured in accordance with IAS 39; (b) in accordance with IAS 39, all subsequent changes in the fair value of the liability together with the related interest charges arising from present valuing the future liability be recognised in the income statement; (c) the non-controlling shareholder holding the put option no longer be regarded as a noncontrolling shareholder but rather as a creditor from the date of receiving the put option. Although the Group has complied with the requirements of IAS 32 and IAS 39 as outlined above, the board of directors has reservations about the appropriateness of this treatment in view of the fact that: (a) the recording of a liability for the present value of the future strike price of the written put option results in the recording of a liability that is inconsistent with the framework, as there is no present obligation for the future strike price; (b) the shares considered to be subject to the contracts are issued and fully paid up, have the same rights as any other issued and fully paid up shares and should be treated as such; (c) the written put option meets the definition of a derivative and should therefore be accounted for as a derivative in which case the liability and the related fair value adjustments recorded through the income statement would not be required. 11 MTN Integrated Business Report ⁄ 31 December 2009 ⁄ Performance overview Performance overview Glossary Financial statements Shareholder information
Group finance director’s report continued The full balance sheet and cash flow statement appear on pages 48 and 50, respectively. Balance sheet and cash flow statement Capex MTN’s extensive network expansion and investment strategy resulted in capex for the year of R31,2 billion, a 10,6% increase on 2008. This was lower than the R42 billion approved capex budget for the year due to a R7,2 billion expenditure rollover into 2010 and a R3,5 billion saving due to rand strength. We expect 2009 to have been our peak year for capital expenditure. The approved budget for 2010 is R23,6 billion (including rollover capex), 44% lower than the 2009 budgeted amount. Assets and liabilities Assets and liabilities were also impacted by foreign currency translation adjustments. Property, plant and equipment was adversely affected by foreign currency translation adjustments approximately R13 billion. Goodwill and other intangible assets decreased by 21% or R9,7 billion to R36,1 billion, mainly due to foreign currency translation adjustments and the unwinding of the intangible assets recognised on the Investcom acquisition in 2006. Other non-current liabilities include a deferred gain of R1,3 billion recognised on the sale or swap of the specific MTN International Carrier Services, Uniglobe and MTN Dubai assets to BICS. This will be released over a five-year period until 2014. Net debt The net debt to EBITDA of 0,26 times has allowed the board to relax the dividend policy of the Company, and a dividend of 192 cents has accordingly been paid. MTN has continued financing its underlying subsidiary companies on a non-recourse basis. During the year, approximately USD462 million was raised in the various operations, including Côte d’Ivoire, Uganda, Rwanda, Benin, Liberia and Afghanistan. Most of this, other than Afghanistan, had been drawndown at year end. MTN’s South African holding company raised a R6 billion term loan facility in December 2009 as part of refinancing maturing debt and creating headroom facilities. The repayment profile shows significant debt repayments in 2010. These are made up of a R5 billion repayment on the MTN01 bond, approximately R6 billion due in Nigeria in October 2010 as well as approximately R3 billion on the continued amortisation of MTN’s jumbo syndication facility. MTN is well advanced in refinancing these liabilities which will result in an improved profile not only for the 2010 debt but also the significant debt due in 2012, principally for MTN Nigeria. 12 MTN Integrated Business Report ⁄ 31 December 2009 ⁄ Performance overview 19,0% 9 778 2006 Actual spend 21,0% 15 348 2007 Capex spend 27,6% 28 263 27,9% 31 248 2008 2009 Capex as % of revenue Capex spend to budget in 2009 Budget 42 031 Underspend ZAR 7,2 billion (3 560) FX (3 382) Nigeria (1 607) Ghana (154) Iran (2 080) Other 31 248 Actual
Page 1 and 2: Group finance director’s report R
Page 3 and 4: Group finance director’s report c
Page 9: Group finance director’s report c

Group finance director's report continued - MTN Group

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?