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Group Finance Director’s report

INTRODUCTION

The MTN Group changed its financial year-end from 31 March to 31 December in line with its operating cycle and international peers. Consequently, the reported results cover a period of nine months and are not directly comparable to the audited results for the full year to 31 March 2005. To facilitate comparison and evaluation of the results for the period ended 31 December 2005, the unaudited operating results for the nine months ended 31 December 2004 are included for revenue, expenses and earnings before interest, tax, depreciation and amortisation (EBITDA), as the transition to IFRS did not have a significant impact on these.

The MTN Group recorded a strong performance for the period under review, driven mainly by mobile subscriber growth and improved customer focus in all the Group’s established operations. Consolidated revenue increased by 26% to R27,2 billion for the nine months ended December 2005 from R21,5 billion for the nine months to December 2004. Adjusted HEPS was 338,2 cents for the current period, which compares favourably with the previous 12-month adjusted HEPS of 366 cents. The Group EBITDA margin was 41,3%, up from 39,8% for the nine months to December 2004, and remained virtually flat compared to 41,4% at 31 March 2005.

The Group’s non-South African operations contributed 43% of revenue (March 2005: 40%), 55% of EBITDA (March 2005: 50%) and 55% of profit after tax (March 2005: 51%) (excluding MTN Nigeria’s deferred tax credit) to Group results, with MTN Nigeria being the most significant of the international operations.

The Group’s total asset base at 31 December 2005 was R44,8 billion, an increase of 51% on the total assets of R29,7 billion as adjusted for IFRS (previously disclosed as R29,3 billion) as at 31 March 2005. During the review period, the MTN Group successfully concluded acquisitions of MTN Côte d’Ivoire (51%), MTN Zambia (100%), Irancell (49%), MTN Congo Brazzaville (100%) and Mascom (44% indirect). These acquisitions have moved the Group’s net debt to equity ratio to 4,5% and reversed the March 2005 position when the Group was holding more cash than debt. While we are pleased with the progress of our expansion strategy we will continue to pursue value-enhancing expansion opportunities supported by the Group’s strong balance sheet.

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MACROECONOMIC ENVIRONMENT

Economic conditions in the markets in which the Group operates were favourable during the period with interest rates remaining relatively low and the functional currencies, except for the rand, remaining stable against the US dollar. The telecommunications sector in most of the countries in which the Group operates has remained competitive, with mobile competition in Nigeria increasing considerably.

Exchange rates

Table 1 sets out movements in the closing and average exchange rates between the rand and the currencies of the Group’s international operations.

Average exchange rates remained fairly stable during the period. While all the functional currencies of the Group’s international operations strengthened slightly against the rand, only the 4% strengthening of the Nigerian naira had a noteworthy positive effect on Group revenues. On a weighted basis, average exchange rate movements between the rand and the functional currencies of the Group’s international operations increased reported revenue by 2% compared to the nine months ended 31 December 2004.

Table 1: Current vs previous periods’ exchange rates

The effects of closing exchange rate movements on the consolidated balance sheet were minimal, as the 31 December 2005 rates were similar to those prevailing at 31 March 2005. The 5% strengthening of the naira increased the Group’s period-end assets by approximately 1,3%.

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SUBSCRIBERS

Table 2 shows double-digit subscriber growth rates across all MTN operations, with the total closing base (including acquisitions) reflecting more than 23 million subscribers. Since June 2005, ARPUs have remained relatively stable, with a marginal decline of USD1 in Nigeria, and South Africa remaining flat on the strength of good prepaid performance. ARPUs recorded for the current nine-month period are not directly comparable to those disclosed for 31 March 2005 as ARPUs for December 2005 are based on a 90-day activity subscriber definition. In the period up to March 2005 all ARPUs except MTN South Africa were based on 30-day activity.

Table 2: Subscriber growth per operation

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INCOME STATEMENT

Group revenue

Revenue by operation

The 26% increase in the Group’s revenue compared to the nine-month period ended 31 December 2004 was primarily attributable to the growth in subscriber bases across all operations.

As indicated in table 3 MTN South Africa and MTN Nigeria remain the most substantial contributors to total Group revenue and account for 94% of revenue growth, excluding new operations.

Table 3: Analysis of MTN Group revenue by operation

Revenue composition

Table 4 shows that revenue composition for the MTN Group did not vary significantly from March 2005 to December 2005. At 89% wireless communications continued to dominate Group consolidated revenue. Connection fee revenue decreased by 70% mainly due to the substantial reduction in connection fees charged by MTN Nigeria. The increase in telephones and accessory revenue of 41% was due to a 47% increase in handset revenue in South Africa, which is the only operation with significant telephone and accessories revenue. Data revenue increased to 5,2% of Group revenue excluding handsets.

Table 4: MTN Group revenue composition

Group EBITDA

Group EBITDA margin remained virtually unchanged at 41% since 31 March 2005. The EBITDA margin in MTN South Africa decreased by 1,8% to 32,3% compared to 31 March 2005 due to higher handset revenue during the nine-month period. Excluding acquisitions during the period, international operations contributed 49% of EBITDA. Of the acquisitions, MTN Zambia and Irancell reported negative EBITDA: MTN Zambia can be viewed as a startup, while Irancell is still to begin commercial operations. The most significant foreign exchange impact on EBITDA was the 2% strengthening of the naira.

Table 5: MTN Group EBITDA analysis by operation

Depreciation

The Group’s depreciation and amortisation of R2,8 billion for the 12 month ended 31 March is slightly lower than the R3 billion for the 12 months ended 31 March 2005. The implementation of IFRS has led to a decrease of depreciation of R270 million for the nine-month period due to a revision of the useful lives of property plant and equipment by MTN South Africa. Due to the increased network roll out by MTN Nigeria, depreciation in this operation was slightly higher for the nine months than for the previous 12 months.

Amortisation of intangible assets has increased to R256 million for the nine-month period compared to R189 million for the 12 months ended 31 March 2005. IFRS 3: Business Combinations requires that when new businesses are acquired, the fair value of intangibles including subscriber bases and licences are recognised as assets. The amortisation of R54 million of these intangibles has had a limited impact on the current period as MTN Côte d’Ivoire has only been amortised for six months and Mascom for three months. The impact of the other acquisitions has been negligible. In the next financial year, this amortisation will, however, be accounted for on all new acquisitions for the full financial year.

Finance costs

The Group’s EBITDA to net interest cover remains strong at 30 times.

The Group recorded net finance costs of R373 million for the nine months compared to R270 million for the previous 12 months. Net finance costs include non-cash charges of R330 million, mainly comprising fair value movements of minority put options of R124 million and unrealised foreign exchange losses of R181 million.

MTN South Africa continued to record net finance income due to strong cash flows and low average debt levels. Surplus cash decreased due to significant dividend payments to MTN Holdings during the latter part of the period. Net finance costs for MTN Nigeria decreased from the prior year as the operation moved from a net debt to a cash-positive position.

Taxation

The Group’s effective tax rate remains low at 17,4%, which is similar to the effective tax rate of 17% for the previous financial period. The Group’s effective tax rate would have been approximately 33,4% had MTN Nigeria been taxed at the Nigerian statutory tax rate of 30%. The tax charge includes STC of R135 million.

MTN Nigeria remains within its five-year tax holiday which expires on 1 April 2007. From 1 April 2007 onwards capital allowances on capital expenditure incurred during the five-year period may be claimed as deductions against taxable income.

According to IAS 12: Income Taxes, MTN Nigeria has been obliged to recognise a deferred tax asset representing the tax effect of the deductible temporary differences as depreciation has been recognised and capital allowances for tax purposes will only be recognised in the future. To date the Group has recognised a deferred tax asset of R1,1 billion in this regard, with R354 million of this recognised in the current year. The Group has adjusted its headline earnings to exclude this positive effect.

For the financial year ending 31 December 2007, MTN Nigeria will be required to pay tax as its Pioneer Status will have expired. As reflected in the graph below both the tax charge and cash tax payable will be significantly higher than Nigeria’s statutory tax rate of 30% as:

• The commencement provisions of Nigerian tax law results in double taxation which leads to a higher tax charge, and
• A portion of the deferred tax asset is utilised during the period.

Headline earnings per share

Adjusted HEPS of 338,2 cents was recorded for the nine months to 31 December 2005. This compares favourably with the adjusted HEPS of 366 cents for the 12 months to 31 March 2005.

The Board continues to report adjusted headline earnings in addition to basic headline earnings. Adjusted headline earnings have been adjusted for:
• The positive impact on earnings that the deferred tax credit had in Nigeria has been reversed. This decreased HEPS during the period by 20 cents.
• The implementation of IFRS requires the Group to account for a written put option held by a minority shareholder of one of the Group’s subsidiaries, which gives the minority the right to require the subsidiary to acquire its shareholding at fair value. Prior to the implementation of IFRS, the shareholding was treated as a minority shareholder in the subsidiary as all risks and rewards associated with these shares, including dividends, accrued to the minority shareholder.

IAS 32 requires that under the circumstances described above, (a) the present value of the future redemption amount be reclassified from equity to financial liabilities and that the financial liability thus 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 and (c) the minority shareholder holding the put option no longer be regarded as a minority shareholder, but rather as a creditor from the date of entering into the put option.

The fair value movement on the financial instrument resulted in an increase in HEPS of 1,1 cents per share. The finance charges reflected as a result of this treatment had a negative impact of 5,8 cents and the Group’s increased share in the results of the subsidiary, as a consequence of the minority shareholder being accounted for as a creditor, was 6,3 cents. This resulted in a net positive impact of 1,6 cents which has been reversed in the adjusted HEPS.

The Board believes that accounting for this put option as required by IAS 32 and IAS 39 does not adequately reflect the economic realities of the transaction in that the minority shareholder currently participates in the equity risks and rewards of the subsidiary. Accounting for changes in the fair value of the financial instrument in the income statement is misleading, because if the put option was excercised at fair value it stands to reason that these shares could be sold for the same price with no impact on profitability or cash flow. Inherently, a transaction at fair market value implies that one party receives an asset at fair value, and the other party pays for it at fair value. To suggest that a profit or loss is made on this transaction is, in the opinion of the directors, inherently misleading.

MTN South Africa

Revenue December 2004 vs 2005
MTN South Africa recorded revenues of R15,5 billion for the period, an increase of 19% driven by the 28% increase in subscribers and the 47% increase in handset revenue.

The 13% increase in airtime and subscription revenue and 16% increase in interconnect revenue was driven by the 19% and 30% respective increases in contract and prepaid subscriber bases. The contribution of prepaid subscribers to overall revenue continues to increase due to rapid growth in that segment.

The growth in interconnect revenue was as a result of increased minutes terminated from other mobile operators due to the growth of the mobile market while fixed-line interconnect revenue remained relatively static.

Handset revenue increased by 47% during the period, driven by high demand for more expensive handsets by both new and existing subscribers. The large increase in handset revenue had a positive impact on revenue growth as growth excluding handset revenue was 14%.

Data revenue amounted to 8,2% of total revenue excluding handsets, with SMS revenue still comprising the bulk of this. Data revenue now includes revenue relating to data and SMS included in bundled products. Previously this revenue was included in subscription revenue. Had this adjustment not been made, data as a percentage of revenue excluding handsets would have been 6,4%.

EBITDA and expenditure December 2004 vs 2005

MTN South Africa’s EBITDA was 21% higher during the period, fuelled by solid revenue growth of 14% (excluding handsets), tight cost controls and efficiency improvements. EBITDA margin excluding handset revenue has increased by 2% to 38%.

Sales, distribution and marketing costs increased due to the additional costs associated with securing new distribution channels, as well as incremental costs associated with higher subscriber acquisition activity.

Handset costs were significantly higher than the previous year due to the increase in the volume and price of handsets sold.

Direct network operating costs increased by only 5,7% due to maintenance as well as rent and utilitiesrelated efficiencies, while the limited increase in other expenses was due to the release of bad debt provisions during the period.

Table 6: MTN South Africa revenue and expense summary

MTN Nigeria

Revenue December 2004 vs 2005

MTN Nigeria’s revenue grew by 30%, mainly driven by the strong increase in subscribers over the nine months despite competitive market conditions. MTN Nigeria’s subscriber base increased by 50% with connection fees dropping below 500 naira by the end of the period.

Revenue growth was lower than subscriber growth due to deeper penetration into the market. Furthermore, competitive pricing and attractive promotions by competitors have encouraged existing subscribers to subscribe to more than one mobile network thereby diminishing their average spend on the MTN network. ARPU of USD23 reported in June 2005 dropped slightly to USD22 for the nine-month period.

Connection fees decreased by 77% despite impressive growth in the subscriber base due to the highly competitive market resulting in much lower connection fees being charged to new subscribers. Connection fees now represent 1% of total revenue compared to 6% in the previous period.

Handset and accessories revenue decreased by 64% as MTN Nigeria exited the handset market and a similar decrease was experienced in related costs.

EBITDA and expenditure December 2004 vs 2005

MTN Nigeria’s EBITDA margin of 52% increased from 51%, while EBITDA has increased by 33% to R4,7 billion.

Direct network operating costs rose to R739 million as a result of significant increases in rent, utilities and maintenance, related to the increasing network roll out; the rent and utility increase was compounded by increasing fuel costs following higher oil prices.

Handset, accessories, SIM and scratch card costs did not show a similar decline to handset revenue as the reduction in handset costs was offset by increased SIM and scratch card cost.

The increase in interconnect and roaming costs was due to the larger subscriber bases of our competitors and booster card offerings increasing outgoing traffic to other networks.

Sales, distribution and marketing expenses, as well as employee and consulting costs, increased by 34% and 33% respectively due to the expansion of operations.

The increase in other expenses was low following decreased provisions for bad debts, as Private Telephone Operators paid outstanding Interconnect balances previously provided for.

Table 7: MTN Nigeria revenue and expense summmary

Rest of the operations

Revenue and EBITDA December 2004 vs 2005
MTN Cameroon’s revenue increased by 16%, driven by strong growth in the subscriber base.

EBITDA margin increased by 4% to 48% due to tight cost control and efficiency gains.

MTN Uganda maintained its EBITDA margin above 50%, while revenue and EBITDA increased by 17% and 16% respectively.

MTN Rwanda and MTN Swaziland recorded strong revenue growth of 34% and 33% respectively, based on similar increases in subscriber bases. This has translated into an improved EBITDA margin of 53% for MTN Rwanda, while Swaziland recorded an exceptional EBITDA margin of 55%. The new operations being MTN Côte d’Ivoire, MTN Zambia, Mascom (Botswana), MTN Congo Brazzaville and Irancell contributed a combined R954 million to Group revenue and R406 million to Group EBITDA, representing 3,5% and 3,6% of the Group’s revenue and EBITDA respectively.

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BALANCE SHEET

The total assets for the Group increased by R15 billion to R44,8 billion at 31 December 2005 from a balance of R29,7 billion at 31 March 2005, as adjusted for the implementation of IFRS. This increase is mainly due to acquisitions concluded during the nine-month period, explained below. The closing balance sheet has also been affected by the South Africa rand weakening by 5% against the Nigerian naira; the value of the assets and liabilities of MTN Nigeria reflected in South African rand weakening would have therefore increased by 5% during the period.

The MTN Group balance sheet has changed significantly during the period due to the acquisition of operations in Côte d’Ivoire, Zambia, Botswana, Iran and the Republic of Congo. These acquisitions have had a significant impact on the balance sheet of the Group, resulting in a cash outflow of R6,2 billion, significant increases in intangible assets and increases in long-term borrowings.

Irancell has acquired the second GSM licence in Iran of EUR 300 million. The licence has been capitalised by Irancell and is amortised over the initial expected licence period of 15 years. In addition, the licence conditions specify that certain minimum fees, based on revenues, are guaranteed and will be paid annually. We believe these future fees do not meet the definition of a liability as they are not at present nonexecutory unconditional obligations. They become an obligation in the year in which they are due, as specified in the licence agreement.

Accordingly, Irancell has not raised a liability in this regard, nor included these fees as part of intangible assets. The gross value of these fees guaranteed by Irancell over 15 years is R39,2 billion at an exchange rate of 1 436 Iranian rials per rand, of which R0,5 billion will be due in the first year of operation, R1,4 billon in the second year of operation, R5,2 billion from the third to the fifth years of operation and R32,1 billion in the following years. The discounted obligation is R8,3 billion.

The Irancell agreements specify that 21% of the equity in Irancell should be listed during 2008/09. It should be assumed that the Group’s shareholding will dilute proportionately to 38,7% when the listing occurs. Terms and conditions are still to be determined.

The conditions of the licence issued to MTN Zambia specify that 10% of the equity of MTN Zambia should be transferred to local shareholders. This is expected to be completed during the 2006 financial year.

Table 8: Balance sheet analysis

Property, plant and equipment

Property, plant and equipment has increased by R4,9 billion during the nine months ended 31 December 2005. The acquisitions of MTN Côte d’Ivoire, MTN Zambia, Mascom and MTN Congo Brazzaville have resulted in property, plant and equipment at a fair value of R1 billion being added to the Group’s balance sheet. Capital expenditure for the nine months ended 31 December 2005 amounted to R6,7 billion compared to R7,6 billion for the period ended 31 March 2005, with 57% of the expenditure relating to continued network roll out in Nigeria. Capital expenditure in South Africa was R2,3 billion during the period with 3G roll out contributing to capital expenditure incurred.

Intangible assets

Intangible assets have increased by R4,8 billion due to the acquisition of operations.

IFRS 3: Business Combinations requires that all intangible assets be fair valued on acquisition. This has resulted in the recognition of subscriber bases of R351 million which are amortised over their estimated useful lives of three to five years. In addition, licences to the value of R1,6 billion have been recognised, including R1,1 billion representing 49% of the Irancell licence.

Goodwill of R2,7 billion, representing the difference between the purchase consideration and the fair value of the assets and liabilities of the operations acquired, has been recognised. R1,3 billion represents goodwill on the acquisition of the 51% interest in MTN Côte d’Ivoire while the investments in MTN Zambia, Mascom and MTN Congo Brazzaville comprise the balance. In accordance with IAS 38 Intangible Assets, goodwill is not amortised but tested annually for impairment and no impairment provision was considered necessary for the current financial period in respect of any of the Group’s cash generating units. Loans and other non-current receivables have increased by R1,7 billion due to loans to Irancell, shareholders in Irancell and Mascom. Deferred income tax assets have increased by R0,6 billion largely due to the further recognition of the deferred tax asset by MTN Nigeria.

Current assets

The majority of the increase in current assets is due to higher trade receivables in MTN South Africa of R1,3 billion from higher trading activity. The new acquisitions have had a limited impact of R0,2 billion on the increase in current assets.

Despite the cash outflow of R6,2 billion for the acquisition of new operations and capital expenditure of R6,7 billion the Group’s cash balance has increased by R1,1 billion to R7,6 billion. These balances include securitised cash deposits in MTN Nigeria of R0,3 billion.

Cash balances in MTN South Africa decreased by R1,8 billion to R2,4 billion due to cash outflows for dividends. This was offset by the strong cash generation of the operation. Cash in MTN Nigeria increased by R1,8 billion while our portion of the cash balance in Irancell is R0,5 billion.

Table 10: Analysis of capital expenditure (including software)

Interest-bearing liabilities

Interest-bearing debt in the Group increased by R5,4 billion with MTN South Africa’s debt increasing by R3,5 billion. MTN Nigeria’s interest-bearing borrowings increased by R0,8 billion to fund network expansion during the period.

Net cash of R3,2 billion at 31 March 2005 reversed to net debt of R1 billion at 31 December 2005 due to the impact of acquisitions, comprising long-term borrowings of R7,5 billion, short-term borrowings of R1 billion, cash and cash equivalents of R7,2 billion and securitised letters of credit of R0,3 billion.

Other liabilities

Other liabilities consist of trade payables, accruals, taxation, provisions and revenue received in advance. These liabilities have increased by R4,4 billion and include the discounted fair value of put options held by minority shareholders of certain subsidiaries of R1,4 billion. MTN South Africa’s tax liabilities have increased by R0,8 billion as R1billion of tax was only paid in January 2006. Trade creditors increased by R1,1 billion following heightened activity during the festive season in South Africa. Other current liabilities increased due to the inclusion of the new operations.

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CASH FLOW

Cash flow from operating activities

The MTN Group generated cash from operations of R11,4 billion for the nine months, a strong performance compared to R12,3 billion for the previous financial year. Payments of income tax decreased from R1,9 billion to R1,1 billion, the majority of which can be attributed to the South African operation where tax paid decreased by R0,9billion as the payment was only made in January 2006.

Free cash flow

All the Group’s established operations reported positive free cash flows. As Irancell is not yet operational, negative free cash flows, mainly representing the licence payment were reported. Merger and acquisition activity has resulted in cash outflows of R6,2 billion.

Financing activities

Cash of R5,4 billion was generated by financing activities. South Africa raised R2,4 billion.

Table 11: MTN Group cash flow

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CAPITAL COMMITMENTS

The Group is expected to spend significant amounts on capital expenditure in the next financial year. MTN Nigeria has approved commitments of R5,3 billion, MTN South Africa has approved commitments of R3,6 billion while our share of the commitments for Irancell’s network roll out is R2,8 billion. It is expected that MTN Nigeria and Irancell will only use between 80% and 85% of their respective commitments due to anticipated price reductions and project prioritisation. These commitments will be financed through cash flows from operations and raising debt facilities in greenfield operations where cash flows are not expected to be sufficient.

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ACCOUNTING POLICIES AND INTERNATIONAL FINANCIAL REPORTING STANDARDS

IFRS compliance

In terms of the JSE Listings Requirements, compliance with IFRS is required for the financial years beginning on or after 1 January 2005.

Accordingly, Group financial statements for the nine months ended 31 December 2005, are our first IFRS compliant financial statements.

However, MTN had in the previous years already complied with the following SA GAAP standards which have identical requirements to corresponding IFRS standards with effect from 17 July 2000:
• IFRS 3 (AC 140) (issued 2004) – Business Combinations
• IAS 36 (AC 128) (revised 2004) – Impairment of Assets
• IAS 38 (AC 129) (revised 2004) – Intangible Assets
• IAS 27 (AC 132) (revised 2004) – Consolidation and Separate Financial Statements

Effects of transition from SA GAAP to IFRS

The effect of the transition to IFRS has not been significant. The impact on disclosed profit before tax for the 12 months ended 31 March 2005 was a reduction of R70 million. This comprised:

• A reduction of R78 million for depreciation of property, plant and equipment due to the componentisation, review of residual values and useful lives, implementation of decommissioning provisions and correction of depreciation commencement dates.
• An increase of R26 million due to the change of the functional currency of MTN Mauritius and the resulting exchange gains and losses on the revaluation of its dollar-denominated assets and liabilities being accounted for in the income statement.
• A reduction of R17 million due to the adoption of IFRS 2 (Share-based payments).
• A reduction of R1 million for other differences, the most significant being adjustments to operating leases as these are now accounted for on the straight line basis.

The most significant adjustment to the balance sheet at 31 March 2005 was the reclassification of the foreign currency translation reserve (FCTR) from other reserves to retained earnings as the company elected to set the FCTR to zero as part of the transitional elections.

Early Adoption of IAS 21

The Group has elected to early adopt IAS 21 (revised). This has been changed to allow exchange gains and losses on shareholder loans which are considered part of the net investment in a foreign operation and are denominated in a third-party currency to be reflected directly in equity rather than the income statement.

This treatment is similar to the treatment of these loans when the functional currency of Mauritius was USD prior to the implementation of IFRS. As a result of this early adoption, a translation gain of R79 million, which was reflected in the first six months, was no longer recognised.

New accounting standards and IFRIC interpretations

The accounting standards and IFRIC interpretations below have been published and are mandatory for periods beginning on or after 1 January 2006. These standards are not expected to have an impact on Group’s results:

• IFRS 6: Exploration for and Evaluation of Mineral Resources
• IFRIC 5: Rights to interest arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
• IFRIC 6: Liabilities from participating in a Specific Market – Waste Electrical and Electronic Equipment
• IFRIC 7: Applying the restatement approach under the IAS 29: Financial Reporting in Hyperinflationery Economics
• Circular 2/2006, clarification of certain sections of the Financial Intelligence Centre Act

IFRIC 4: Determining whether an asset contains a lease, will be applicable. The Group will apply IFRIC 4 in the 2006 financial year and this is not expected to change the accounting of any of the Group’s current arrangements.

IFRS 7: Financial Instruments: Disclosure will be applied from January 2006. This is expected to result in additional disclosure regarding market risk as well as capital disclosures.

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DIVIDENDS

A dividend of 65 cents per share, in line with the dividend declared in June 2005, has been declared. The conservative dividend cover policy of five to six times has not been altered as the Group continues to explore expansion opportunities.

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CONCLUSION

The Group’s performance over the nine months was positive relative to the comparable period in the previous financial year. The results were, however, impacted by the tariff pressure experienced in Nigeria while the weakening of the rand against certain functional currencies of the operations had a positive impact on results.

Despite significant cash outflows due to acquisitions during the period the Group’s net debt only increased by R4,2 billion. The net debt/equity ratio of 5% and net debt/EBITDA ratio annualised of 7% indicate that the Group still has significant capacity for further expansion. The acquisitions have positioned the Group well for additional growth in future.

IFRS impacted and will continue to impact the reported financial performance of the Group.



Rob Nisbet
Group Finance Director
22 March 2006


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