| for the year ended 31 March |
| |
Nature of business |
Vodacom Group Limited ('the Company') is an investment holding company. Its principal subsidiaries are engaged in the
provision of a wide-range of communications products and services including but not limited to voice, messaging, converged
services, broadband and data connectivity.
There have been no material changes to the nature of the Group's business from the prior year. |
| |
Financial results |
Earnings attributable to equity holders of the Group for the year ended 31 March 2011 were R8 245 million (2010: R4 196 million;
2009: R6 089 million) representing basic earnings per share of 561.5 cents (2010: 282.3 cents; 2009: 409.2 cents).
The Group has recognised impairment losses of R1 506 million relating to its International reportable segment. In the prior year
a goodwill impairment loss of R3 039 million was recognised in respect of the combined Gateway cash-generating unit. Full
details of the impairment losses are included in Note 2.
Full details on the financial position and results of the Group are set out in these consolidated annual financial statements. |
| |
Dividends |
Dividend distribution |
| An ordinary dividend of R5 282 million (2010: R1 637 million; 2009: R5 200 million) was declared for the year (Note 8). Details of
the final dividend are included under 'Events after the reporting period' in this directors' report. |
| |
| Rm |
2011 |
|
2010 |
|
2009 |
| |
|
|
|
|
|
| Declared 11 September 2008 and paid 6 October 2008 |
– |
|
– |
|
3 000 |
| Declared 30 January 2009 and paid 8 April 2009 |
– |
|
– |
|
2 200 |
| Declared 5 November 2009 and paid 7 December 2009 |
– |
|
1 637 |
|
– |
| Declared 14 May 2010 and paid 5 July 2010 |
2 604 |
|
– |
|
– |
| Declared 5 November 2010 and paid 6 December 2010 |
2 678 |
|
– |
|
– |
| |
5 282 |
|
1 637 |
|
5 200 |
|
| |
Dividend policy |
The Company intends to pay as much of its after tax profits as will be available after retaining such sums and repaying such
borrowings owing to third parties as shall be necessary to meet the requirements reflected in the budget and business plan,
taking into account monies required for investment opportunities. However, there is no assurance that a dividend will be paid
in respect of any financial period and any future dividends will be dependent upon the operating results, financial condition,
investment strategy, capital requirements and other factors. It is envisaged that interim dividends will be paid in December and
final dividends in July of each year. There is no fixed date on which entitlement to dividends arises and the date of payment will
be determined by the Board or shareholders at the time of declaration, subject to the JSE Listings Requirements.
On 11 May 2011, the Board approved a change in the dividend target from a pay out of approximately 60% of headline earnings
per share to at least 70% of headline earnings per share. The Company declared dividends of 460 cents (2010: 285 cents)
per share during the year ended 31 March 2011, representing 70% (2010: 60%) of headline earnings for the year ended
31 March 2011. |
| |
Net current liability position |
The Group is in a net current liability position, however, management believes that based on its operating cash flows, the
Group will be able to meet its obligations as they fall due and that it is in compliance with all covenants contained in material
borrowing agreements.
Depending on market conditions, the Group will continue to seek longer-term funding opportunities which will reduce the net
current liability position. |
| |
Share capital |
| The authorised and issued share capital are as follows: |
| |
Stated capital |
| • |
Authorised - 4 000 000 000 ordinary shares of no par value; and |
| • |
Issued - 1 487 954 000 ordinary shares of no par value amounting to R100. |
|
| |
| Full details of the authorised and issued share capital of the Company are contained in Note 15. |
| |
Repurchase of shares |
Shareholders approved a special resolution granting a general authority for the repurchase of ordinary shares by the Group,
to a maximum of 20.0% (2010: 20.0%) of shares in issue, at the annual general meeting held on Friday 30 July 2010, subject to
the JSE Listings Requirements and the provisions of the Companies Act of 1973, as amended. In terms of this general authority,
15 880 043 (2010: 120 456) ordinary shares were repurchased during the year at an average price of R60.14 (2010: R57.92)
per share. These shares are held as treasury shares by a wholly-owned subsidiary, Wheatfields Investments 276 (Pty) Limited
('Wheatfields'). Approval to renew this general authority will be sought at the forthcoming annual general meeting on
Thursday 4 August 2011.
In the 2010 financial year, Wheatfields also acquired 2 426 471 shares at R56.61 per share in terms of an odd-lot offer and a
specific share repurchase.
Treasury shares held by Wheatfields do not carry any voting rights. |
| |
Forfeitable share plan (‘FSP’) |
| During the year the Group allocated 3 242 476 (2010: 4 722 504) shares out of treasury shares to eligible employees under its FSP.
Further details on the FSP may be found in the 'Remuneration report' in the integrated report as well as in Note 16. |
| |
Shareholder analysis |
| The Group's shareholder analysis as at 31 March 2011 was as follows: |
| |
| Shareholder spread |
Number of shareholdings |
% |
Number of shares |
% |
| |
|
|
|
|
| 1 – 100 shares |
10 166 |
24.62 |
425 847 |
0.03 |
| 101 – 1000 shares |
26 015 |
62.99 |
8 294 071 |
0.56 |
| 1 001 – 10 000 shares |
3 986 |
9.65 |
11 834 359 |
0.80 |
| 10 001 – 50 000 shares |
567 |
1.37 |
13 303 186 |
0.89 |
| 50 001 – 100 000 shares |
245 |
0.59 |
17 228 297 |
1.16 |
| 100 001 – 1 000 000 shares |
273 |
0.66 |
78 067 901 |
5.25 |
| 1 000 001 shares and above |
48 |
0.12 |
1 358 800 339 |
91.31 |
| |
41 300 |
100 |
1 487 954 000 |
100 |
|
| Distribution of shareholders |
|
|
|
|
| Close corporations |
128 |
0.31 |
206 209 |
0.01 |
| Collective investment schemes |
350 |
0.85 |
65 903 474 |
4.43 |
| Custodians |
126 |
0.31 |
52 381 381 |
3.52 |
| Foundations & charitable funds |
67 |
0.16 |
676 807 |
0.05 |
| Hedge funds |
6 |
0.01 |
208 109 |
0.01 |
| Holding company |
2 |
0.00 |
967 170 100 |
65.00 |
| Individuals |
37 644 |
91.16 |
24 022 705 |
1.61 |
| Insurance companies |
62 |
0.15 |
6 008 165 |
0.40 |
| Investment partnerships |
232 |
0.56 |
380 466 |
0.03 |
| Medical aid funds |
30 |
0.07 |
1 122 728 |
0.08 |
| Organs of state |
14 |
0.03 |
81 858 030 |
5.50 |
| Other corporations |
100 |
0.24 |
208 238 788 |
13.99 |
| Personal liability companies |
3 |
0.01 |
6 030 |
0.00 |
| Private companies |
221 |
0.54 |
17 085 156 |
1.15 |
| Public companies |
25 |
0.06 |
11 139 778 |
0.75 |
| Public entities |
2 |
0.00 |
100 132 |
0.01 |
| Retirement benefit funds |
369 |
0.89 |
39 584 060 |
2.66 |
| Scrip lending |
23 |
0.06 |
5 373 046 |
0.36 |
| Stockbrokers & nominees |
20 |
0.05 |
834 906 |
0.06 |
| Trusts |
1 864 |
4.51 |
5 650 883 |
0.38 |
| Unclaimed assets |
12 |
0.03 |
3 047 |
0.00 |
| |
41 300 |
100 |
1 487 954 000 |
100 |
|
| |
| Non-public and public shareholders |
Number of shareholdings |
% |
Number of shares |
% |
| |
|
|
|
|
| Non-public shareholders |
19 |
0.05 |
1 190 461 901 |
80.01 |
| Directors and associates |
13 |
0.02 |
842 235 |
0.06 |
| Wholly-owned subsidiaries |
2 |
0.01 |
15 402 046 |
1.04 |
| Strategic holdings (more than 10.0%) |
2 |
0.01 |
207 047 520 |
13.91 |
| Holding company |
2 |
0.01 |
967 170 100 |
65.00 |
| Public shareholders |
41 281 |
99.95 |
297 492 099 |
19.99 |
| |
41 300 |
100 |
1 487 954 000 |
100 |
|
| Geographical holdings by owner |
|
|
|
|
| United Kingdom |
83 |
0.20 |
977 186 066 |
65.67 |
| South Africa |
40 904 |
99.04 |
453 559 992 |
30.48 |
| United States |
93 |
0.23 |
50 515 950 |
3.40 |
| Europe |
66 |
0.16 |
4 659 995 |
0.31 |
| Other |
154 |
0.37 |
2 031 997 |
0.14 |
| |
41 300 |
100 |
1 487 954 000 |
100 |
|
| |
| Beneficial shareholders holding 5% or more of the issued capital |
Total shareholding |
% of shares in issue |
| |
|
|
| Vodafone Group |
967 170 100 |
65.00 |
| South African Government |
207 047 520 |
13.91 |
| Government employees’ pension fund |
79 821 738 |
5.36 |
| |
1 254 039 358 |
84.27 |
|
| |
| Share price performance |
2011 |
|
2010 |
| |
|
|
|
| Opening price 1 April 2010/18 May 2009 |
R55.60 |
|
R59.50 |
| Closing price 31 March |
R79.38 |
|
R55.60 |
| Closing high for the year/period |
R79.95 |
|
R59.00 |
| Closing low for the year/period |
R53.39 |
|
R51.55 |
| Number of shares in issue |
1 487 954 000 |
|
1 487 954 000 |
| Volume traded during year/period |
365 746 139 |
|
581 075 914 |
| Ratio of volume traded to shares issued (%) |
24.58 |
|
39.05 |
|
| |
Subsidiaries, associate company and other investments |
| Particulars of the Group's principal subsidiaries are provided in Addendum A, while particulars of the associate company and
other investments are provided in Note 11. The attributable interest in the net profit or losses of subsidiaries before eliminations
for the year ended 31 March 2011 is as follows: |
| |
| Rm |
2011 |
|
2010 |
|
2009 |
| |
|
|
|
|
|
| Aggregate amount of profit after tax |
12 798 |
|
11 429 |
|
8 007 |
| Aggregate amount of losses after tax |
(1 625) |
|
(9 425) |
|
(696) |
| |
11 173 |
|
2 004 |
|
7 311 |
|
| |
Borrowings |
The Standard Bank of South Africa Limited/Rand Merchant Bank |
| The loan with a nominal value of R2 500 million was partially repaid in April 2010 using short-term borrowings amounting to
R1 159 million. |
| |
Citibank syndicated loans |
| The Group increased its Citibank syndicated loans by TZS40 350 million and US$20 million during the year. The loans will be
utilised for capital expenditure and general corporate requirements in Tanzania, and are repayable in six bi-annual instalments
commencing on 16 June 2011. |
| |
Asset Backed Arbitraged Securities (Pty) Limited |
| The promissory notes with a nominal value of R1 000 million were repaid in December 2010 using short-term borrowings. |
| |
Capital expenditure and commitments |
| Details of the Group's capital expenditure are set out in Notes 9 and 10, and commitments are set out in Note 24. |
| |
Special resolutions |
| No special resolutions relating to capital structure, borrowing powers or any other material matter that affects the
understanding of the Group were passed by subsidiary companies during the year under review. |
| |
Directorate and secretary |
| Movements in the directorate during the year under review: |
| |
Appointments |
|
| 13 September 2010 |
NJ Read^ |
|
|
| |
|
Resignations |
|
| 13 September 2010 |
RC Snow^ |
| 4 November 2010 |
P Malabie |
| 31 March 2011 |
MS Aziz Joosub |
|
|
| |
|
Withdrawn |
|
| 31 January 2011 |
HM Mahmoud (alternate)# |
|
| |
| Movements in the directorate after 31 March 2011: |
| |
Appointments |
|
| 12 May 2011 |
A Kekana |
|
|
|
| |
In terms of the Company's articles of association, Mr NJ Read^ and Ms A Kekana, having been appointed since the last annual
general meeting of the Company, retire at the forthcoming annual general meeting to be held on Thursday 4 August 2011.
In terms of the articles of association, Messrs MP Moyo, RAW Schellekens. and Ms TM Mokgosi-Mwantembe retire by rotation.
All retiring directors are eligible and available for re-election. Their profiles appear in the 'Notice of annual general meeting'.
As at the date of this report, the directors of the Company were as follows: |
| |
Independent non-executive |
| MP Moyo (Chairman), TA Boardman, A Kekana, TM Mokgosi-Mwantembe, PJ Moleketi |
| |
Non-executive |
| M Lundal~, P Bertoluzzo@, M Joseph*, RAW Schellekens., NJ Read^, TJ Harrabin (alternate)^ |
| |
Executive |
PJ Uys (Chief Executive Officer), RA Shuter (Chief Financial Officer)
The Company Secretary is SF Linford and her business and postal address appear on the 'Corporate information' sheet. |
| |
| |
Interests of directors |
| As at 31 March 2011, the directors of the Company held direct and indirect beneficial interests in 842 235 (2010: 494 335) of its
issued ordinary shares as set out below: |
| |
|
2011 |
2011 |
|
2010 |
2010 |
| Shares |
Direct |
Indirect |
|
Direct |
Indirect |
| Executive |
|
|
|
|
|
| PJ Uys |
338 723 |
– |
|
199 901 |
– |
| RA Shuter |
230 524 |
– |
|
122 954 |
– |
| MS Aziz Joosub |
269 200 |
– |
|
167 692 |
– |
| Independent non-executive |
|
|
|
|
|
| MP Moyo |
250 |
2 415 |
|
250 |
2 415 |
| PJ Moleketi |
643 |
480 |
|
643 |
480 |
| |
839 340 |
2 895 |
|
491 440 |
2 895 |
|
| |
| There have been no changes in beneficial interests that occurred between the end of the reporting period and the date of this report. |
| |
Holding company and ultimate holding company |
| The Group is ultimately controlled by Vodafone Group Plc which owns 65.0% of the issued shares through: |
| • |
Vodafone Holdings SA (Pty) Limited; and |
| • |
Vodafone Investments SA (Pty) Limited. |
|
| |
| Vodafone Group Plc is incorporated and domiciled in the United Kingdom. |
| |
Audit, Risk and Compliance Committee (‘ARC Committee’) |
In terms of Section 270A(f) of the Companies Act of 1973, as amended ('the Act'), the ARC Committee discharged all of those
functions delegated to it in terms of its mandate, the Act and the JSE Listings Requirements. Further details on the role and
function of the ARC Committee.
The auditors' business and postal address appear on the 'Corporate information' can be found in this report.. |
| |
Regulatory matters |
Electronic Communications Act (‘EC Act’) |
Universal service obligations (‘USOs’) |
| The Independent Communications Authority of South Africa ('ICASA') and the Universal Service and Access Agency of
South Africa are in the process of reviewing the licensing terms relating to USOs. It is anticipated that this review process,
which will result in the promulgation of the new USO policy framework, will be finalised during the next financial year.
The Group is participating in the consultative process. |
| |
Facility leasing |
| The EC Act now requires that facility leasing agreements be filed with ICASA in line with the new electronic communications
facilities regulations. In compliance with the new regulations, the Group has filed the required agreements with ICASA. |
| |
Customer registration |
| The Group's operations in South Africa, Mozambique, Tanzania and the Democratic Republic of Congo are subject to mobile
customer registration legislation in their respective countries of operation. Significant progress has been made to register
customers and to minimise disruptions to customer acquisitions as a result of registration. |
| |
Interconnect rates |
| On 29 October 2010 ICASA published the call termination regulations, in terms of which the peak interconnect rate has further
been reduced from R0.89 to R0.73 and the off-peak rate from R0.77 to R0.65 in March 2011. The regulations stipulate further
reductions in the peak and off-peak rates to R0.56 and R0.52 respectively in March 2012, and a flat rate of R0.40 for both in
July 2013. In terms of the regulations, asymmetrical interconnect rates may also be payable to licensees who meet specific
criteria on the basis of spectrum or market share. The Group continues to actively engage with ICASA in the implementation
of the regulations. |
| |
Consumer Protection Act (‘CP Act’) |
| The Group's South African operation is subjected to the CP Act which came into effect on 31 March 2011. The CP Act seeks
to, inter alia, prohibit certain unfair marketing and business practices, as well as promoting responsible consumer behaviour.
The Group is proactively assessing the impact which the CP Act will have on its South African operation. |
| |
Spectrum fees regulations |
On 27 August 2010 ICASA published spectrum fees regulations in terms of which all licensees will now pay the same fees.
The regulations, which will be implemented from
1 April 2012, are expected to result in an overall reduction in the spectrum
fees incurred by the Group. |
| |
Radio frequency spectrum regulation |
| On 31 March 2011 ICASA published the radio frequency spectrum regulation which consolidates and replaces several
regulations such as the Radio Regulations of 1979, High Demand spectrum regulations and the Licence Exempt spectrum
regulations. The minimum criterion for participation in the licensing process for high demand spectrum is that applicants must
have at least 30.0% ownership by historically disadvantaged individuals ('HDIs'). The Group's current low ownership by HDIs
precludes it from participating in the licensing process for high demand spectrum such as the 2.6 GHz and 800 MHz digital
dividend bands. |
| |
Companies Act of 2008 |
On 20 April 2011 the Companies Amendment Act was signed by the president of South Africa, putting into legal force the
Companies Act of 2008 ('the new Act') with effect from
1 May 2011. The new Act ushers in a new dispensation for corporate
South Africa and is expected to improve the environment for business operation. The Group is adequately resourced to ensure
that its South African operations fully comply with the new Act. |
| |
Other significant matters |
Vodacom Congo (RDC) s.p.r.l. (‘Vodacom Congo’) |
The Group continues to participate in the International Chamber of Commerce arbitration with Congolese Wireless Network
s.p.r.l. ('CWN'), the other shareholder in Vodacom Congo. The arbitration relates to various funding and operational agreements
and co-operation in the manner in which the Vodacom Congo business is run. Notwithstanding the arbitration, the Group
continues to pursue an amicable and constructive resolution with CWN. A possible resolution may include an exit from this
investment and NM Rothschild was appointed in December 2010 to explore commercial options, including a sale, on behalf
of both shareholders of Vodacom Congo.
Namemco, an entity which provided certain services to the Group in 2007, including assistance in negotiating with CWN,
brought a claim of approximately US$41 million against the Group for alleged consulting fees due. The claim was initially
brought in South African courts, and then subsequently in the Congolese commercial court, in which a unilateral order was
granted for the attachment of the Group's shares in Vodacom Congo to satisfy the claim. The Group has, in addition to filing
a robust defence in the action of the merits before the Congolese commercial court, brought an ancillary action for the
annulment of the ex parte order on grounds that Namemco's claim was wholly unsubstantiated. |
| |
Events after the reporting period |
Final dividend |
| A final dividend of R4 166 million (280 cents per ordinary share) was declared for the year ended 31 March 2011, payable on
Monday 4 July 2011 to shareholders recorded in the register at the close of business on Friday 1 July 2011. |
| |
Other matters |
| The Board is not aware of any matter or circumstance arising since the end of the reporting period, not otherwise dealt
with in the consolidated annual financial statements, which significantly affects the financial position of the Group as at
31 March 2011 or the results of its operations or cash flows for the year then ended, other than those disclosed in Note 27. |
| |
Auditors |
| Deloitte & Touche continued in office as the Group's auditors. At the annual general meeting of Thursday 4 August 2011,
shareholders will be requested to appoint Deloitte & Touche as the Group's auditors for the 2012 financial year and it will
be noted that PJ Smit will be the individual registered auditor who will undertake the audit. |
