DURBAN - MTN Zakhele Futhi said on Friday that its half-year profits surged by 27.65percent for the six months to the end of June, largely attributable to the dividend income received and, to a smaller extent, to the revaluation of the derivative asset.
The company said its profits after tax rose to R395.7million during the period, up from R310m compared with last year.
MTN Zakhele Futhi’s financial performance is based entirely on the MTN Group’s share price and any dividend declared and received from MTN Group during the year.
MTN Zakhele Futhi was established as a ring-fenced, special-purpose vehicle for the previously disadvantaged members of the public to indirectly invest and hold shares in the MTN Group. MTN Zakhele Futhi holds 77million MTN Group shares, which equal about 4percent of MTN’s issued share capital.
At the end of June, the MTN Group’s share price was down by 49.97percent to R52.83 a share on the JSE, declining by R52.77 from last year’s R105.60.
“The decrease in the MTN Group share price had a direct impact on the revaluation of the derivative financial asset. This has resulted in a profit of R167.5m at the end of the period, compared to a loss of R39.8m being recognised in the statement of profit or loss,” it said.
The company said, in addition to the fair value loss recognised on the derivative financial asset, a fair value loss on the re-measurement of the financial asset of R1.52billion was recognised compared with a gain of R907.2m reported last year in the statement of comprehensive income.
The company’s operating profit increased 10.23percent to R263.32m during the period, up from R238.87m compared with a year earlier. Its basic and diluted earnings per share declined by 34.95percent to 184.88cents a share, down from 284.23c last year.
MTN Zakhele Futhi received R272.8m during the period as a form of a dividend from the MTN Group, compared with R249.7m received in 2019.
“This income was used firstly to pay the company’s permitted operational costs and tax with the remainder of the dividend income being used to pay dividends owing to the preference shareholders and to reduce the capital portion of the debt owing to the preference shareholders,” the company said.
In addition, R212.6m of the dividend income was applied towards the early redemption of the preference shares during the six-month period. “This will ultimately result in a reduction of dividends payable on the preference shares over the life of these instruments,” the group said.
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