|
 |
|
|
| You are here: Directors' report / Next: Independent auditors' report |
| Directors' report for the year ended 31 December 2013 NATURE OF BUSINESS MTN Group Limited (the Company) incorporated in the Republic of South Africa on 23 November 1994 carries on the business of investing in the telecommunications industry through its subsidiary companies, joint ventures and associated companies. The Group is listed on the JSE Limited. The Company’s registered address is 216 14th Avenue, Fairland, Roodepoort, Gauteng, 2195. ACCOUNTING PRACTICES The Group and Company annual financial statements were prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB) and comply with the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the JSE Listings Requirements and the requirements of the Companies Act. FINANCIAL RESULTS The Group recorded a profit after tax for the year ended 31 December 2013 of R30 400 million (2012: R24 068 million). Full details of the financial results of the Group and Company are set out on pages 10 to 135 of these annual financial statements and accompanying notes for the year ended 31 December 2013. CAPITAL EXPENDITURE Capital expenditure for the year ended 31 December 2013 totalled R30 164 million (2012: R28 827 million*) which comprised the following:
RELATED PARTY TRANSACTIONS Details of related party transactions are set out on pages 83 and 84 of these annual financial statements. YEAR UNDER REVIEW The detailed reviews of performance and the activities of the Group are contained in the reports of the Group president and chief executive officer, and the Group chief financial officer as set out on pages 50 to 53 and 64 to 65 of the integrated report. BORROWING POWERS In terms of the memorandum of incorporation (MOI), the borrowing powers of the Company are unlimited. However, all borrowings by the Group are subject to limitations set out in the treasury policy of the Group. The details of borrowings are disclosed in note 26. GOING CONCERN The directors have reviewed the Group’s budget and cash flow forecast for the year to 31 December 2014. On the basis of this review, and in light of the current financial position and existing borrowing facilities, the directors are satisfied that the Group and Company have access to adequate resources to continue in operational existence for the foreseeable future and are going concerns and have continued to adopt the going concern basis in preparing the annual financial statements. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES Details of subsidiaries in which the Group has a direct or indirect interest are set out in note 47 of the annual financial statements on pages 120 to 122. All Group entities have a year-end consistent with that of the Company with the exception of Irancell Telecommunication Company Services (PJSC) (MTN Irancell), a joint venture of the Group that has a year end of 21 December, in line with statutory requirements in Iran. DISTRIBUTION TO SHAREHOLDERS Notice is hereby given that a gross final dividend of 665 cents per share for the period to 31 December 2013 has been declared payable to shareholders. The number of ordinary shares in issue at the date of this declaration is 1 872 213 682 (including 22 337 752 treasury shares). The dividend will be subject to a maximum local dividend tax rate of 15% which will result in a net dividend of 565,25 cents per share to those shareholders who bear the maximum rate of dividend withholding tax of 99,75 cents per share. The Company’s tax reference number is 9692/942/71/8. In compliance with the requirements of STRATE, the electronic settlement and custody system used by the JSE, the salient dates relating to the payment of the dividend are as follows:
No share certificates may be dematerialised or rematerialised between Monday, 24 March 2014 and Friday, 28 March 2014, both days inclusive. On Monday, 31 March 2014, the dividend will be transferred electronically to the bank accounts of certificated shareholders who make use of this facility. In respect of those who do not use this facility, cheques dated Monday, 31 March 2014 will be posted on or about that date. Shareholders who hold dematerialised shares will have their accounts held by the Central Securities Depository Participant or broker credited on Monday, 31 March 2014. The board confirms that the Company will satisfy the solvency and liquidity test immediately after completion of the dividend distribution. Interim dividend A gross interim dividend of 370 cents per share (2012: 321 cents per share) amounting to R6 848 million (2012: R5 979 million) in respect of the half-year period ended 30 June 2013 was declared on 13 August 2013 and paid to shareholders on 9 September 2013. Before declaring the interim dividend, the board:
The payments of future dividends will depend on the board’s ongoing assessment of the Group’s earnings, financial position, cash needs, future earnings prospects and other factors. Shareholders on the South African register who dematerialised their ordinary shares receive payment of their dividends electronically, as provided for by STRATE. For those shareholders who have not yet dematerialised their shareholding in the Company in certificated form, the Company operates an electronic funds transmission service, whereby dividends may be electronically transferred to shareholders’ bank accounts. These shareholders are encouraged to mandate this method of payment for all future dividends, by approaching the Company’s share registrar, Computershare Investor Services Proprietary Limited, whose contact details are set out on page 98 of the integrated report. SHARE CAPITAL There was no change in the authorised share capital of the Company during the year under review. The authorised ordinary share capital of the Company is 2,5 billion shares of 0,01 cent each. Issued share capital The issued share capital of the Company is R187 328 (2012: R188 348) comprising 1 873 278 848 (2012: 1 883 484 324) ordinary shares of 0,01 cent each. MTN Zakhele Scheme Details of the MTN Zakhele Scheme are set out in note 24. Details of participation in the MTN Zakhele Scheme by directors of the Company, the Group secretary, directors and the company secretary of major subsidiaries are set out on page 120 of the annual financial statements. SHARE PRICE PERFORMANCE Details of the share price performance of the Company are set out on page 104 of the integrated report. CONTROL OF UNISSUED SHARE CAPITAL The unissued ordinary shares are the subject of a general authority granted to the directors in terms of section 38 of the Companies Act. As this general authority remains valid only until the next AGM, shareholders will be asked at that meeting to consider an ordinary resolution placing the said unissued ordinary shares, up to a maximum of 10% of the Company’s issued share capital, under the control of the directors until the next AGM. ACQUISITION OF THE COMPANY’S OWN SHARES At the last AGM held on 28 May 2013, shareholders gave the Company or any of its subsidiaries a general approval in terms of section 48 of the Companies Act, by way of special resolution, for the acquisition of its own shares. As this general approval remains valid only until the next AGM to be held on 27 May 2014, shareholders will be asked at that meeting to consider a special resolution to renew this general authority until the next AGM, subject to a maximum extension of 15 months. During the year under review, no shares of the Company were acquired by the Company or any of its subsidiaries. In 2012, a subsidiary of the Group acquired 15 573 340 shares in the Company at an average share price of R134,07, including costs. The issued share capital of the Company was decreased during the year by the cancellation of 11 443 802 (2012: 1 521 025) shares issued to MTN Zakhele. Further details of the authorised and issued shares are set out in note 24. SHAREHOLDERS’ INTEREST Details of shareholders’ interest and a shareholder spread analysis are disclosed in Annexure 1 of the annual financial statements. DIRECTORATE The composition and profiles of the board of directors of the Company are set out on pages 22 and 23 of the integrated report and the information on the board and board committees, its activities, meetings, attendance and any other information are set out in the corporate governance statement on pages 28 to 35 of the integrated report. Details of directors’remuneration and shareholding are set out in note 46 on pages 112 to 120 of the annual financial statements. RETIREMENT BY ROTATION OF DIRECTORS In accordance with the Company’s memorandum of incorporation, KP Kalyan, MJN Njeke and J van Rooyen retire by rotation at the forthcoming AGM. The retiring directors, being eligible, offer themselves for re‑election. In accordance with the policy adopted by the board and the MOI of the Company, directors who have been in office for an aggregate period in excess of nine years, are required to retire at the next AGM and at each AGM thereafter. Accordingly, AF van Biljon and JHN Strydom (non-executive directors), who have served on the board for an aggregate period in excess of nine years, retire at the forthcoming AGM and are eligible and offer themselves for re-election following an evaluation of their independence. The profiles of the directors retiring by rotation and seeking re-election are set out on page 91 of the integrated report. RESIGNATIONS AND APPOINTMENTS During the year under review, PF Nhleko and BD Goschen were appointed to the board as a non-executive and executive director, with effect from 28 May 2013 and 22 July 2013 respectively. Both appointments are subject to shareholder approval at the next AGM to be held on 27 May 2014. MC Ramaphosa retired as the Group chairman and independent non-executive director on 28 May 2013. NI Patel resigned as the Group chief financial officer and executive director on 21 July 2013. There were no resignations other than those mentioned above. INTERESTS OF DIRECTORS AND PRESCRIBED OFFICERS Details of the interests of directors and prescribed officers are provided in note 46. DIRECTORS AND PRESCRIBED OFFICERS’ SHAREHOLDINGS AND DEALINGS Details of the directors and prescribed officers’ shareholdings and dealings are provided in note 46. EMPLOYEE SHARE SCHEMES Details of the Group’s share schemes are provided on pages 43 and 44 of the integrated report and in note 44. MATERIAL RESOLUTIONS There were no material resolutions passed by the Company or its subsidiaries during the year under review. MERGERS AND ACQUISITIONS Details of the Group’s acquisitions and disposals are disclosed in note 42. EVENTS AFTER THE REPORTING PERIOD Details of events after the reporting period are set out in note 40 of these annual financial statements. LITIGATION
AMERICAN DEPOSITARY RECEIPT (ADR) A sponsored American depositary receipt facility has been established. The board has approved the extension of the existing Depositary Receipts (DR) programme by 100 million DRs. This facility is sponsored by the Bank of New York and details of the administrators are reflected on page 106 of the integrated report. ANNUAL GENERAL MEETING The AGM will be held at 14:30 on 27 May 2014. Refer to page 90 of the integrated report for further details of the ordinary and special business for consideration at the meeting. INTERNAL FINANCIAL CONTROLS During the year under review, the board, through the audit committee, assessed the results of the formal documented review of the Group’s system of internal controls and risk management, including the design, implementation and effectiveness of the internal financial controls conducted by internal audit and considered information and explanations given by management and discussions with the external auditors on the results of the audit. Although the audit identified certain weaknesses in financial controls, whether in design, implementation or execution, the board does not consider these control weaknesses (individually or in combination with other weaknesses) to have resulted in actual material financial loss, fraud or material errors. Based on the above results, nothing has come to the attention of the board that caused it to believe that the Company’s system of internal controls and risk management is not effective and that the internal financial controls do not form a sound basis for the preparation of reliable financial statements. The board’s opinion is supported by the audit committee. AUDIT COMMITTEE The report of the audit committee is set out on pages 2 and 3 of the annual financial statements. AUDITORS PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc. will continue in office as joint auditors in accordance with section 90 of the Companies Act. Suren Sooklal will retire and Johan van Huyssteen will be the registered audit partner who will be undertaking the audit for PricewaterhouseCoopers Inc. Suleman Lockhat will continue as the registered audit partner undertaking the audit for SizweNtsalubaGobodo Inc. The audit committee reviewed the independence of the auditors during the period under review and satisfied itself that the auditors were independent of the Group. |
