MTN Nigeria Communications Plc
Audited consolidated and separate financial statements
for the year ended 31 December 2023
Together with Directors' and Auditor's Reports
MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Corporate Information
Registered Company Number | 395010 | ||
Directors | Names | Nationality | Position |
Dr. Ernest Ndukwe, OFR | Nigerian | Chairman | |
Mr. Karl Toriola | Nigerian | Chief Executive Officer | |
Mr. Muhammad K. Ahmad, OON | Nigerian | Independent Non-Executive | |
Director | |||
Mr. Michael Ajukwu | Nigerian | Independent Non-Executive | |
Director | |||
Mr. Andrew Alli | Nigerian | Non-Executive Director | |
Mr. Rhidwaan Gasant | South African | Independent Non-Executive | |
Director | |||
Dr. Omobola Johnson | Nigerian | Non-Executive Director | |
Mr. Modupe Kadri | Nigerian | Executive Director | |
Mr. Abubakar B. Mahmoud, SAN OON | Nigerian | Non-Executive Director | |
Ms. Tsholofelo Molefe | South African | Non-Executive Director | |
Mr Ferdinand Moolman | South African | Non-Executive Director | |
Mr. Mazen Mroue | Lebanese | Non-Executive Director | |
Mr. Ralph Mupita | South African | Non-Executive Director | |
Mrs. Ifueko M. Omoigui Okauru, MFR | Nigerian | Non-Executive Director | |
Mr. Jens Schulte-Bockum | German | Non-Executive Director | |
Registered office | 4 Aromire road, | ||
Off Alfred Rewane | |||
Ikoyi Lagos | |||
Holding company | MTN International (Mauritius) Limited | ||
incorporated in the Republic of Mauritius | |||
Auditor | Ernst & Young Nigeria | ||
10th & 13th floors | |||
UBA House | |||
Marina | |||
Lagos | |||
Company Secretary | Uto Ukpanah | ||
Registrar | Coronation Registrars Limited | ||
9 Amodu Ojikutu Street | |||
Victoria Island, Lagos | |||
Tax Identification Number | 00969009-0001 |
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MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Contents
Page | |
Financial highlights | 3 |
Directors' report | 4 |
Statement of directors' responsibilities to prepare the financial statements | 8 |
Statement of corporate responsibility for financial statements | 9 |
Statutory audit committee report | 10 |
Statement on internal controls over financial reporting | 11 |
Management's annual assessment of, and report on the entity's internal control over financial | 12 |
reporting | |
Independent auditor's attestation report on management's assessment of internal control over | 13 |
financial reporting | |
Independent auditor's report | 19 |
Consolidated and separate statement of profit or loss | 22 |
Consolidated and separate statement of other comprehensive income | 23 |
Consolidated and separate statement of financial position | 24 |
Consolidated and separate statement of changes in equity | 26 |
Consolidated and separate statement of cash flows | 28 |
Notes to the consolidated and separate financial statements | 29 |
Other national disclosures: | |
Value added statements | 116 |
Five-year financial summaries | 118 |
. | 2 |
MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Financial highlights
Notes | 2023 | 2022 | % Change | |
N million | restated* | |||
N million | ||||
Revenue | 10 | 2,468,847 | 2,012,272 | 22.7 |
Operating profit | 773,660 | 734,164 | 5.4 | |
Net foreign exchange losses | 13 | (740,434) | (81,822) | 804.9 |
(Loss)/profit before taxation | (177,886) | 518,823 | (134.3) | |
(Loss)/profit for the year attributable to the owners of the | (133,841) | 351,382 | (138.1) | |
company | ||||
Share capital | 28 | 420 | 407 | 3.2 |
Total equity attributable to the owners of the company | (45,404) | 261,097 | (117.4) | |
Basic and diluted (loss)/earnings per share (N)** | 46.1 | (6.38) | 16.76 | (138.1) |
Net (liabilities)/assets per share (N)** | (2.17) | 12.45 | (117.4) | |
Stock Exchange Information | ||||
Dividend per share (DPS): - Interim (N) | 46.2 | 5.60 | 5.60 | - |
Dividend per share (DPS): - Final (N) (proposed) | 46.2 | - | 10.00 | (100.0) |
Market price per share as at year end (N) | 264.00 | 215.00 | 22.8 | |
Market capitalisation as at year end | 5,542,944 | 4,376,325 | 26.7 | |
Number of shares issued and fully paid as at year end (millions) | 28.1 | 20,996 | 20,355 | 3.1 |
**Restated to reflect the changes in number of shares, see note 28. | ||||
The financial highlights reflect Group numbers only. |
*See note 56
3
MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Directors' report
The directors present their report on the affairs of MTN Nigeria Communications Plc and its subsidiaries (the Group), together with the financial statements and independent auditors' report for the year ended 31 December 2023.
Principal activities of the Group
MTN Nigeria Communications Plc (MTN Nigeria or the Company) was incorporated on November 8, 2000 as a private limited liability company. It was granted a licence by the Nigerian Communications Commission on 09 February 2001 to undertake the business of building and operating GSM Cellular Network Systems and other related services nation-wide in Nigeria. The Company commenced operations on 08 August 2001 (commercial launch date). Currently, the Company holds a Unified Access Service License (UASL).
The Company re-registered as a public limited company, MTN Nigeria Communications Plc on 18 April 2019 and listed by introduction on the Premium Board of the Nigerian Stock Exchange on 16 May 2019.
The registered office address of the Company is 4, Aromire Road, Off Alfred Rewane, Ikoyi Lagos. The principal place of business is MTN Plaza, Falomo, Ikoyi, Lagos.
The Group's subsidiaries are XS Broadband Limited, Visafone Communications Limited, Yello Digital Financial Services Limited and MoMo Payment Service Bank Limited. The subsidiaries principal activities are the provision of broadband fixed wireless access service, high quality telecommunication services and mobile financial services in Nigeria.
The Nigerian Communication Commission (NCC) on 5 April 2019, granted Visafone Communications Limited (Visafone) the approval to transfer its 800mHz license and spectrum to MTN Nigeria Communications Plc. On 24 July 2019, the Board of Visafone approved the voluntary winding down of Visafone Communication Limited. The final general meeting of the Company was held on 5 October 2020 whereby the account of the winding up of the Company was approved. The process for the transfer and liquidation is currently on-going.
Business review
The Group recorded revenue of N2.47 trillion (2022: N2.01 trillion) and a loss after tax of N137.02 billion (2022: profit N348.73 billion) for the year.
Operating results and dividends | |||
The following is a summary of the Group's operating results: | |||
2023 | 2022 | ||
restated* | |||
Note(s) | N million | N million | |
Revenue | 2,468,847 | 2,012,272 | |
Operating profit | 773,660 | 734,164 | |
(Loss)/profit before taxation | (177,886) | 518,823 | |
Income tax credit/(expense) | 17 | 40,865 | (170,096) |
(Loss)/profit for the year | (137,021) | 348,727 | |
(Loss)/profit attributable to the owners of the company | (133,841) | 351,382 | |
(Loss)/profit before taxation has been arrived at after charging: | |||
Depreciation of property and equipment | 18 | 231,540 | 180,853 |
Depreciation of right of use assets | 19 | 118,296 | 101,394 |
Amortisation of intangible assets | 20 | 79,033 | 53,955 |
Employee costs | 14 | 65,002 | 45,080 |
Other operating expenses | 15 | 139,884 | 104,626 |
Finance costs | 12 | 236,927 | 147,287 |
Net foreign exchange loss* | 13 | 740,434 | 81,822 |
Net foreign exchange loss*
The Group generated a loss before tax of N177.9 billion during the year ended 31 December 2023 (year ended 31 December 2022: profit before tax of N518.8 billion). This was significantly due to operational changes to the Nigerian Foreign exchange market, including the abolishment of the segmented/parallel structure announced by CBN in June 2023. Prior to the abolishment, the Nigerian Autonomous Foreign Exchange Market (NAFEM) rate as at 30 May 2023 was N464.67/$1, however, subsequent to the devaluation, the NAFEM rate as at 30 June 2023 was N769.25/$1. After this the Naira further depreciated to N907.11/$1 as at 31 December 2023.
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MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Directors' report
Dividend
During the year ended 31 December 2023, N320.86 billion (31 December 2022: N288.19 billion) dividend was approved and paid as follows:
∙ | 31 | December 2022 final dividend: | N203.38 billion |
∙ | 30 | June 2023 interim dividend: | N117.48 billion |
On 27 July 2023, the Board of Directors approved interim dividends of N117.48 billion for the year ended 31 December 2023 (Interim 2022: N113.99 billion). The interim dividend were paid out of interim profit made during the same period and represents N5.60 kobo per ordinary share on the issued share capital of 21 billion ordinary shares of 2 kobo each for the period ended 30 June 2023.
Given the significant currency devaluation and its impact on the retained earnings, the Directors will not be recommending a final dividend payment, in view of the resulting loss for the year ended 31 December 2023.
Unclaimed dividends
In line with SEC guidelines, Coronation Registrars Limited returned to the Group the sum of N381.5 million unclaimed dividend during the year ended 31 December 2023 (31 December 2022: N632 million). Replenishment notices from registrars amounting to N657.5 million were received and honoured during the period (2022: N193 million). The total amount of unclaimed dividends outstanding as at 31 December 2023 is N1.38 billion (31 December 2022: N1.13 billion).
Scrip issue
At the Annual General Meeting held on 18 April 2023, the shareholders approved a final dividend of N10.00k per share for the year ended 31 December 2022 and a Scrip Dividend Plan. A scrip dividend is an alternative form of shareholder return to a cash dividend. The option allowed shareholders who submitted scrip dividend election forms by the deadline of 11 April 2023, to receive new ordinary shares of the company instead of cash dividend.
Upon the conclusion of the election period, shareholders elected to receive a total number of 641,047,053 scrip dividend shares. The Corporate Affairs Commission (CAC) authorised the increase of the Company share capital to accommodate the 641,047,053 scrip dividend shares. Those shares were subsequently approved and registered by the Securities and Exchange Commission (SEC).
Value Added Tax (VAT) assessment and recent Tax Appeal Tribunal (TAT) decision
In 2018, the Attorney General of the Federation and Minister of Justice (AGF) demanded approximately US$2 billion in tax arrears from MTN Nigeria. This is to be in respect of Value Added Tax (VAT) assessment for the periods covering 2007 and 2010 - 2017. In 2020, the AGF withdrew from the case and transferred the Form A-related transactions valued at US$1.3 billion to the Federal Inland Revenue Service (FIRS) and the balance to the Nigerian Customs Service (NCS) to resolve the contentious issues. After a series of engagements, the FIRS issued a revised total assessment of US$135.7 million, representing a principal tax liability of US$47.8 million and interest and penalty of US$87.9 million.
To clarify the interpretation of the VAT Act's provisions concerning the tax treatment of the transactions that led to the aforementioned assessments, MTN Nigeria filed an appeal at the Tax Appeal Tribunal (TAT). The transactions in question primarily involve the alleged VAT payable on offshore training services provided to employees of MTN Nigeria, transponder services provided by a non-resident company, and software licensing and upgrades.
On 20 October 2023, the Tax Appeal Tribunal upheld the principal liability of US$47.8 million and set aside the interest and penalty charges of US$87.9 million. Having reviewed this outcome, MTN Nigeria has appealed the decision of the Tribunal while FIRS also appealed the decision of the Tribunal on the interest and penalty charges on the assessment.
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MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Directors' report
Directors and their interests | |||||
2023 | 2022 | ||||
The directors who served during the year and their direct/ indirect interests in the | Direct | Indirect | Direct | Indirect | |
Group's equity were as follows: | % | % | % | % | |
Dr. Ernest Ndukwe, OFR | 0.0008 | Nil | 0.0008 | Nil | |
Mr. Karl Toriola | 0.0195 | Nil | 0.0104 | Nil | |
Mr. Muhammad K. Ahmad, OON | Nil | Nil | Nil | Nil | |
Mr. Michael Ajukwu | Nil | Nil | Nil | Nil | |
Mr. Andrew Alli | 0.0004 | Nil | 0.0005 | Nil | |
Mr. Rhidwaan Gasant | Nil | Nil | Nil | Nil | |
Dr. Omobola Johnson | 0.0011 | Nil | 0.0011 | Nil | |
Mr. Modupe Kadri | 0.0055 | Nil | 0.0004 | Nil | |
Mr. Abubakar B. Mahmoud, SAN OON | Nil | Nil | 0.0014 | Nil | |
Ms. Tsholofelo Molefe | Nil | Nil | Nil | Nil | |
Mr. Ferdinand Moolman | Nil | Nil | Nil | Nil | |
Mr. Mazen Mroue | Nil | Nil | Nil | Nil | |
Mr. Ralph Mupita | Nil | Nil | Nil | Nil | |
Mrs. Ifueko M. Omoigui Okauru, MFR | Nil | Nil | Nil | Nil | |
Mr. Jens Schulte-Bockum | Nil | Nil | Nil | Nil |
Directors' interest in contracts
None of the directors have notified the Group for the purpose of Section 303 of the Companies and Allied Matters Act of Nigeria (CAMA) 2020, of any declarable interest in contracts in which the Group is involved.
Shareholders and their interest as at 31 December 2023 | ||||
Share range | Number of | % of | Number of | % of |
shareholders | shareholders | holdings | shareholdings | |
1 - 10,000 | 132,530 | 94.7035 | 83,606,415 | 0.40 |
10,001 - 50,000 | 5,024 | 3.5901 | 98,414,791 | 0.47 |
50,001 - 100,000 | 883 | 0.6310 | 59,651,643 | 0.28 |
100,001 - 500,000 | 1,035 | 0.7396 | 217,519,618 | 1.04 |
500,001 - 1,000,000 | 168 | 0.1200 | 118,625,486 | 0.57 |
1,000,001 - 5,000,000 | 191 | 0.1365 | 421,645,596 | 2.01 |
5,000,001 - 10,000,000 | 48 | 0.0343 | 334,272,018 | 1.59 |
10,000,001 - 50,000,000 | 47 | 0.0336 | 905,309,860 | 4.31 |
50,000,001 - 100,000,000 | 5 | 0.0036 | 328,710,342 | 1.57 |
100,000,001 - 500,000,000 | 8 | 0.0057 | 1,630,061,458 | 7.76 |
500,000,001 - 1,000,000,000 | 2 | 0.0014 | 1,388,256,875 | 6.61 |
1,000,000,001 - above | 1 | 0.0007 | 15,409,486,001 | 73.39 |
139,942 | 100 | 20,995,560,103 | 100 | |
Substantial interest in shares
As at 31 December 2023, MTN International (Mauritius) Limited with total interest of 73.39% (2022: 72.83%) held more than 5% of the issued share capital of the Company.
The net increase in MTN International (Mauritius) Limited shares was due to the scrip share option elected and received in lieu of cash dividend payable as at December 2022 (see note 28.3) and the transfer of ordinary shares being incentive given during the offer for sale of MTN International (Mauritius) Limited shares. The incentive was in the form of 1 bonus ordinary share for every 20 ordinary shares purchased (581,194,533 shares), allotted and held (unsold) as at 31 December 2022 up to a maximum of 250 bonus ordinary shares per investor. A total of 3,977,418 ordinary shares were transferred to various investors after approval by the Securities & Exchange Commission (SEC) on 31 January 2023.
Property and equipment
Information relating to changes in property and equipment is given in Note 18 to the audited consolidated and separate financial statements.
Taxation
Company Income Tax, Education Tax and National Information Technology Development Fund Levy due in the prior years have been duly settled in line with the provisions of relevant tax laws.
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MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Directors' report
An aggregate tax credit of N40.87 billion (December 2022: expense of N170.10 billion) has been recognised in the consolidated statement of profit or loss covering the period January to December 2023.
Charitable gifts
No provision was made in the year for donation to MTN Foundation Limited by Guarantee (December 2022: N3.80 billion) as the Group made a loss after taxation. The Foundation, a duly registered charitable entity separate and distinct from the Group has two major portfolios namely National Priority and Youth development that covers: Education, Economic Empowerment and Health.
The Group made no donations to other charitable organisations during the year (December 2022: Nil). In compliance with S.43(2) of Companies and Allied Matters Act of Nigeria 2020, the Group did not make any donations to any political party, political association or for any political purpose.
Employment of differently abled persons
The Group has a policy of fair consideration of job applications by differently abled persons having regard to their abilities and aptitude. The Group's policy prohibits discrimination against differently abled persons in the recruitment, training and career development of its employees. As at the end of the reporting period, the Group had thirty four (34) differently abled persons in employment (31 December 2022: twenty-three (33)).
Employee consultation and training
The Group has a vibrant platform called "Employee Council" through which it engages with its employees on a regular basis and also leverages all communication channels to keep employees informed on business performance.
MTN Nigeria is committed to employee development as a key value proposition through its investment in learning and development opportunities to drive personal development and achievement of business targets. This is achieved by identifying skills gaps and sourcing learning interventions to address them. There are also opportunities for professional development and the pursuit of postgraduate studies for eligible employees.
Health, safety and welfare at work
The Group places a high premium on the health, safety and welfare of its employees in their place of work. To this end, the Group has various forms of insurance policies, including employee compensation scheme (NSITF), employer's liability and group life insurance policies, to adequately secure and protect its employees. The Group also has Safety, Health and Environment (SHE) policies that employees are required to adhere to.
Statutory audit committee
In accordance with the provisions of Section 404(3) of the Companies and Allied Matters Act (CAMA) 2020, the Company's Statutory Audit Committee consist of five (5) members comprising of three (3) shareholders and two (2) non-executive directors as follows:
a) Mr. Nornah Awoh | Shareholders' Representative | Chairman |
b) Col. Ayegbeni Peters (rtd) | Shareholders' Representative | Member |
c) Mrs. Josephine Ewitat | Shareholders' Representative | Member |
d) Mr. Rhidwaan Gasant | Independent Non-Executive Director | Member |
e) Mrs. Ifueko M Omoigui Okauru, MFR | Non-Executive Director | Member |
All members of the Statutory Audit Committee are financially literate.
Auditor
Messrs Ernst & Young (EY) acted as the Company's independent auditor during the financial year ended 31 December 2023. The independent auditor's report was signed by Funmi Ogunlowo, a partner in the firm, with Financial Reporting Council (FRC) membership number FRC/2013/PRO/ICAN/004/00000000681.
Messrs Ernst & Young (EY) has indicated its willingness to continue in office as auditor in accordance with S.401(2) of the Companies and Allied Matters Act 2020, Laws of the Federation of Nigeria.
By Order of the Board
Uto Ukpanah
Company Secretary
FRC/2014/NBA/00000005748
28 February 2024
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MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Statement of directors' responsibilities to prepare the financial statements
The Directors of MTN Nigeria Communications Plc are responsible for the preparation of the consolidated and separate financial statements that present fairly the financial position of the Group and company as at 31 December 2023, and the results of its operations, cash flows and changes in equity for the year then ended, in compliance with International Financial Reporting Standards ("IFRS") and in the manner required by the Companies and Allied Matters Act of Nigeria (CAMA) 2020 and the Financial Reporting Council of Nigeria Act, No 6, 2011.
In preparing the consolidated and separate financial statements, the Directors are responsible for:
- Properly selecting and applying accounting policies;
- Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
- Providing additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance; and
- Making an assessment of the group and company's ability to continue as a going concern.
The Directors are responsible for:
- Designing, implementing and maintaining an effective and sound system of internal controls of the group and company;
- Maintaining adequate accounting records that are sufficient to show and explain the group and company's transactions and disclose with reasonable accuracy at any time the financial position of the group and company, and which enable them to ensure that the consolidated and separate financial statements of the Company comply with IFRS;
- Maintaining statutory accounting records in compliance with the legislation of Nigeria and IFRS;
- Taking such steps as are reasonably available to them to safeguard the assets of the Company; and
- Preventing and detecting fraud and other irregularities.
The Directors have made an assessment of the Company's ability to continue as a going concern and have no reason to believe the Company will not remain a going concern for at least twelve months from the date of this statement.
The consolidated and separate financial statements of the Group and Company for the year ended 31 December 2023 were approved by the directors on 28 February 2024.
Signed on behalf of the Directors of the Group
Dr. Ernest Ndukwe, OFR | Mr. Karl Toriola |
Chairman of the Board of Directors | Chief Executive Officer |
FRC/2020/003/00000020337 | FRC/2021/002/00000022839 |
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MTN Nigeria Communications Plc
Audited consolidated and separate financial statements for the year ended 31 December 2023
Statement of corporate responsibility for financial statements
Section 405 of the Companies and Allied Matters Act (CAMA) 2020 requires the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of a company other than a small company or persons performing similar functions to take direct responsibility for the financial reports and shall certify in the audited consolidated and separate financial statement accordingly.
In pursuant of this Section, the CEO and CFO (hereinafter called "officers") certify that the:
- Officers who signed the audited consolidated and separate financial statements have reviewed them, and based on the officers' knowledge the:
- audited consolidated and separate financial statements do not contain any untrue statement of a material fact or omit to state a material fact which would make the statements misleading, in light of the circumstances under which such statements were made; and
- audited consolidated and separate financial statements and all other financial information included in the statements fairly present, in all material respects, the financial condition and results of operations of the group and company as of, and for, the periods covered by the audited consolidated and separate financial statements;
- Officers who signed the audited consolidated and separate financial statements:
- are responsible for establishing and maintaining internal controls; and have designed such internal controls to ensure that material information relating to the company, and its subsidiaries, is made known to the officers by other officers of the company, particularly during the period in which the audited consolidated and separate financial statements report is being prepared;
- have evaluated the effectiveness of the group and company's internal controls within 90 days prior to the date of the audited consolidated and separate financial statements;
- certifies that the group's and company's internal controls are effective as of that date.
- Officers who signed the audited consolidated and separate financial statements disclosed to the company's auditors and audit committee:
- all significant deficiencies and material weaknesses in the design or operation of the internal control system which could adversely affect the group's and company's ability to record, process, summarize and report financial data; and has identified for the company's auditors any material weaknesses in internal controls, and
- whether or not material, there is any fraud that involves management or other employees who have a significant role in the company's internal control system.
- Officers who signed the report, has indicated in the report, whether or not, there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Signed on 28 February 2024
Karl Toriola
Chief Executive Officer
FRC/2021/002/00000022839
Modupe Kadri
Chief Financial Officer
FRC/2020/001/00000020737
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MTN Nigeria Communications Limited published this content on 01 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2024 00:53:56 UTC.