Cellular network Vodacom increased its revenue by 22.5% to R19.78 billion in the year to 31 March and is looking to boost that even further.
<B>Salient figures</B>
Vodacom results for the year to 31 March 2003.
Figures for the previous year in parentheses:
Revenue: R19.78b (R16.15b)
Operating profit: R4.33b (R3.62b)
Profit before tax: R3.53b (R3.59b)
Net profit: 2.22b (R2.37b)
Current assets: R4.69b (R4.15b)
Bank and cash: R1.21b (R719m)
Current liabilities: R7.01b (R7.99b)
Cash flow from operating activities: R3.82b (R4.34b)
The unlisted group, which is 50% owned by JSE-listed network operator Telkom, increased its operating profit by 19.6% from R3.62 billion to R4.33 billion during the year.
However, net income saw a 6.7% decline from R2.37 billion to R2.22 billion.
"The past three years` net income has been significantly distorted by two main factors," the group says. "Firstly, the disposal of non-core businesses and integration costs, principally relating to the consolidation of previously independent service providers, resulted in an abnormal profit of R56 million in 2002 and an abnormal loss of R213 million in 2001."
The adoption of accounting standards relating to the recognition and measurement of financial instruments (IAS 39) also resulted in a pre-tax loss of R486 million in the year under review and profit before tax of R352 million in the previous year.
"Although it is Vodacom`s policy to hedge all foreign denominated commitments from SA, it does not qualify for hedge accounting in terms of IAS 39 and the impact of fluctuations in exchange rates on the market value of the financial instruments are required to be reflected through the income statement."
Despite African expansion, Cell C roaming, GPRS launch and the installation of 1800MHz equipment, capital expenditure (capex) decreased 20.6% to R3.4 billion, or 17.2% of revenue, compared with R4.28 billion or 26.5% of revenue previously.
Capex fell by 24.4% and 7.8% to R2.49 billion (2002: R3.29 billion) and R911 million (R988 million) in SA and other African countries respectively.
Group finance director Leon Crouse says revenue in SA rose from R15.41 billion to R18.54 billion while revenue elsewhere in Africa is also showing growth. Tanzania accounted for R880 million (2002: R657 million) of group revenue, Congo R259 million (R14 million) and Lesotho R96 million (R70 million)
The balance sheet showed an improvement, with total interest and non-interest bearing debt falling 18.5% to R3.5 billion as a result of the 37.2% decrease in SA`s total debt to R2.33 billion.
Total debt in other African countries rose by of 98.6% to R1.17 billion, mainly because of the R336 million utilisation of an extended credit facility for Vodacom Congo, R502 million draw down of a project financing facility in Tanzania and the repayment of R400 million of funding loans in Vodacom Group.
Group CEO Alan Knott-Craig says the group`s short- to medium-term strategy focuses on the delivering on the potential for continued growth in SA, while in the medium- to long-term the aim is to leverage the SA position to capitalise on potential returns from other African operations.
This, he says, is underpinned by, among others, a simple, focused organisational structure, a powerful brand and strict financial discipline.
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