MTN NIGERIA COMMUNICATIONS : QUARTER 5 - FINANCIAL STATEMENT FOR 2023

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

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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

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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:

1. Officers who signed the audited consolidated and separate financial statements have reviewed them, and based on the officers' knowledge the:

1. 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
2. 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;

1. Officers who signed the audited consolidated and separate financial statements:

1. 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;
2. 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;
3. certifies that the group's and company's internal controls are effective as of that date.

1. Officers who signed the audited consolidated and separate financial statements disclosed to the company's auditors and audit committee:

1. 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
2. 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.

1. 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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