Constant currency, hyperinflation and tower profit
Certain financial information presented in these results constitutes pro forma financial information. The pro forma financial information is the responsibility of the Group’s board of directors and is presented for illustrative purposes.
Because of its nature, the pro forma financial information may not fairly present MTN’s financial position, changes in
equity, results of operations or cash flows. An assurance report has been prepared and issued by our joint auditors
PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc. in respect of the pro forma financial information; which
has been included in this appendix to the integrated report.
| 1. |
The financial information presented in these results has been prepared excluding the impact of hyperinflation and
relating goodwill impairment, tower profits, and the Nigerian regulatory fine and constitutes pro forma financial
information to the extent not extracted from the segment disclosure included in the audited financial statements for
the year ended 31 December 2015. This pro forma financial information has been presented to eliminate the
impact of hyperinflation and relating goodwill impairment, tower profits, and the Nigerian regulatory fine from the
financial results in order to achieve a comparable analysis year-on-year. Hyperinflation adjustments and relating
goodwill impairment, tower profits and the Nigerian regulatory fine have been calculated in terms of the Group’s
accounting policies disclosed in the consolidated financial statements. |
| 2. |
Constant currency (“organic”) information has been presented to illustrate the impact of changes in currency rates
on the Group’s results. In determining the change in constant currency terms, the current financial reporting year’s
results have been adjusted to the prior year’s average exchange rates determined as the average of the monthly
exchange rates which can be found on www.mtn.com/investors  . The measurement has been performed for
each of the Group’s currencies, materially being that of the US dollar and Nigerian naira. The organic growth
percentage has been calculated by utilising the constant currency results compared to the prior year results. In
addition, in respect of MTN Irancell, MTN Sudan and MTN Syria, the constant currency information has been
prepared excluding the impact of hyperinflation. During the year the Iranian economy was assessed to no longer
be hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015. |
Pro forma financial information for the year ended 31 December
| ZAR (million) |
Actual
2015 |
(1)
Hyper-
inflation |
(2)
Tower
profit |
Nigeria
regula-
tory
fine |
Actual
2015
adjusted |
|
|
Actual
2014 |
(1)
Hyper-
inflation |
(2)
Tower
profit |
Actual
2014
adjusted |
|
| Revenue |
147 063 |
710 |
– |
– |
146 353 |
|
|
146 930 |
776 |
– |
146 154 |
|
| Other income |
8 409 |
1 |
8 263 |
– |
145 |
|
|
7 928 |
– |
7 430 |
498 |
|
| EBITDA |
59 125 |
231 |
8 263 |
(9 287) |
59 918 |
|
|
73 191 |
241 |
7 430 |
65 520 |
|
| Depreciation, amortisation and impairment of goodwill |
23 797 |
473 |
– |
– |
23 324 |
|
|
23 546 |
2 191 |
– |
21 355 |
|
| Profit from operations |
35 328 |
(242) |
8 263 |
(9 287) |
36 594 |
|
|
49 645 |
(1 950) |
7 430 |
44 165 |
|
| Net finance cost |
3 010 |
5 |
– |
– |
3 005 |
|
|
3 668 |
62 |
– |
3 606 |
|
| Share of results of joint ventures and associates after tax |
1 226 |
(1 768) |
– |
– |
2 994 |
|
|
4 208 |
529 |
– |
3 679 |
|
| Monetary gain |
1 348 |
1 348 |
– |
– |
– |
|
|
878 |
878 |
– |
– |
|
| Profit before tax |
34 892 |
(667) |
8 263 |
(9 287) |
36 583 |
|
|
51 063 |
(605) |
7 430 |
44 238 |
|
| Income tax expense |
11 322 |
91 |
(707) |
– |
11 938 |
|
|
13 361 |
7 |
(426) |
13 780 |
|
| Profit after tax |
23 570 |
(758) |
8 970 |
(9 287) |
24 645 |
|
|
37 702 |
(612) |
7 856 |
30 458 |
|
| Non-controlling interests |
3 366 |
231 |
1 854 |
(1 966) |
3 247 |
|
|
5 623 |
161 |
1 586 |
3 876 |
|
| Attributable profit |
20 204 |
(989) |
7 116 |
(7 321) |
21 398 |
|
|
32 079 |
(773) |
6 270 |
26 582 |
|
| EBITDA margin |
40,2% |
|
|
|
40,9% |
|
|
49,8% |
|
|
44,8% |
|
| Effective tax rate |
32,4% |
|
|
|
32,6% |
|
|
26,2% |
|
|
31,1% |
|
Notes on treatment of constant currency, hyperinflation and tower profit
| 1. |
Represents the exclusion of the impact of hyperinflation and relating goodwill impairment of certain of the Group’s subsidiaries (MTN Sudan and MTN Syria) and the
Group’s joint venture in Iran, being accounted for on a hyperinflationary basis in accordance with IFRS on the respective financial statement line items affected. During
2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting was discontinued effective 1 July 2015. |
| 2. |
Represents the exclusion of the financial impact relating to the sale of tower assets during the financial year on the respective financial line items impacted,
which include:
Nigeria R8 233 million (including R19 million loss on contingent consideration receivable and R12 million loss on exchange right) and Ghana release of deferred gain
of R30 million (2014: Nigeria R7 329 million, Zambia R48 million, Rwanda R2 million, Ghana R20 million and release of deferred gain of R31 million). |
As the Group will continue in its strategy to monetise its passive infrastructure, similar tower sale transactions may continue going forward. In addition, the impact of hyperinflation on the Group’s results will continue for as long as Syria and Sudan are considered to be hyperinflationary economies.
