AIRTEL MALAWI : FY2022 FINANCIALS

Airtel Malawi Plc Financial Results For the Year Ended 31 December 2022

Year after year double-digitgrowth with strong performance on Revenue, EBITDA and Net Profit

Summary Statement of Financial Position

	Year Ended
	31 Dec-22	31 Dec-21
ASSETS	K'000	K'000
Non-current assets
Property, plant and equipment	66,154,743	61,503,714
Right of use asset	38,436,487	21,849,320
Intangible assets	340,848	653,011
Deferred tax asset	3,248,157	1,496,419
Other non-current assets	10,725,495	7,868,598
Investment	81,000	81,000
Total non-current assets	118,986,730	93,452,062
Current assets
Inventories	278,084	292,722

Net cash generated from operations before tax	100,766,461	54,021,570
Income Tax Paid	(18,826,198)	(11,892,985)
Net cash generated from operating activities	81,940,263	42,128,585
Cash Flows from investing activities
Purchase of plant and equipment	(15,831,169)	(8,504,107)
Interest received	3,001,570	1,863,628
Proceeds from sale of property, plant and equipment	532,781	7,859,838
Net cash used in investing activities	(12,296,818)	1,219,359
Cash flows from financing activities

REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL STATEMENTS

To the members of Airtel Malawi Plc

Opinion

The summary financial statements, which comprise the summary statement of financial position as at 31 December 2022, and the summary statement of comprehensive income, summary statement of changes in equity and summary statement of cash flows for the year then ended are derived from the audited financial statements of Airtel Malawi Plc for the year ended 31 December 2022.

In our opinion, the accompanying summary financial statements are a fair summary of the financial statements, and on the basis described on the basis of preparation paragraph.

Revenue	EBITDA
16.5%	18.3%
Revenue increased by	EBITDA increased by 18.3%
16.5% to K 153,464	to K 78,506 million and
million.	EBITDA margin was up by
	76 bps to 51.2%.

EPS

14.3%

EPS increased by 14.3% from K 2.94 in Financial Year 2021 to K 3.36 in Financial Year 2022.

Trade and other receivables	7,712,084	23,006,453
Cash and cash equivalents	59,072,915	38,522,971
Other current assets	10,328,617	5,389,551
Total current assets	77,391,700	67,211,697
Total assets	196,378,430	160,663,759
EQUITY AND LIABILITIES
Equity
Share capital	1,000	1,000
Share premium	398,375	398,375

Repayment of borrowings - Principal	(5,489,519)	(607,306)
Interest paid on borrowing	(1,340,498)	(579,728)
Other finance costs	(3,677,075)	-
Dividends paid	(32,058,690)	(12,491,524)
Repayment of spectrum liability - principal	(166,252)	(133,268)
Interest paid on spectrum liability	(15,549)	(22,159)

Summary Financial Statements

The summary financial statements do not contain all the disclosures required by International Financial Reporting Standards. Reading the summary financial statements and the auditor's report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor's report thereon. The summary financial statements and the audited financial statements do not reflect the effects of events that occurred subsequent to the date of our report on the audited financial statements.

The Audited Financial Statements and Our Report Thereon

Other Key highlights

• Broad-basedrevenue growth across all business segments. Voice revenue increased by 19.03%, data by 11.24%, and other revenue by 21.66%.
• Net debt was K18,101 million in Financial Year 2022 with a leverage ratio of 0.32
• Company continued to support local communities by donating an amount of K 154.5 million to charitable causes and CSR activities.
• Final dividend proposed is K 2.50 per share for Financial Year 2022.

Key financial information

Description	UoM		Year ended
	Dec-22	Dec-21	Change %
P&L Summary
Revenue	K Mn	153,464	131,769	16.46%
Voice revenue	K Mn	86,858	72,971	19.03%
Data revenue	K Mn	52,609	47,294	11.24%
Other revenue	K Mn	13,996	11,504	21.66%
Expenses	K Mn	(74,958)	(65,389)	14.63%
EBITDA	K Mn	78,506	66,380	18.27%
EBITDA Margin	%	51.16%	50.40%	76 bps
Depreciation & amortization	K Mn	(14,412)	(15,253)	-5.51%
Other income	K Mn	2,989	3,305	-9.56%
Operating profit	K Mn	67,083	54,432	23.24%
Net finance costs	K Mn	(19,662)	(8,215)	139.34%
Non-operating exceptional items	K Mn	5,344	-	100%
Profit before tax	K Mn	52,765	46,217	14.17%
Tax	K Mn	(15,840)	(13,882)	14.11%
Profit after tax	K Mn	36,925	32,335	14.19%
Basic EPS	K	3.36	2.94	14.29%
Weighted average no of shares	in Mn	11000	11,000	0.00%
Capex	K Mn	15,831	8,504	86.16%
Net debts	K Mn	18,010	25,393
Operating KPIs
ARPU	K	2,131	1,930	10.41%
Total customer base (30 days active)	000	6,541	6,245	4.74%
Data customer base	000	2,401	2,244	7.00%

Financial review for the year ended 31 December 2022

Revenue

The company recorded revenue of K 153,463 million in Financial Year 2022 as compared to K 131,769 million in Financial Year 2021. Revenue growth of 16.5% was largely driven by the growth of our customer base of 5% and growth of Average Revenue Per User (ARPU) of 10%. Revenue growth was broad based across all key segments: voice up 19.03%, data up 11.24% and other revenue up 21.66%.

EBITDA

EBITDA of K 78,506 million, up by 18.3% was supported by strong revenue growth and broadly a contained operating expenditure environment. EBITDA margin has slightly increased from 50.4% to 51.2% as compared with the previous period.

Profit after tax

Profit after tax of K 36,925 million went up from K 32,335 million mainly due to increase in operating profit. During the year, the company sustained forex loss of K 12,790 million on the back of Kwacha weakening against major foreign currencies. In Financial Year 2021, the impact of forex loss was K 5,626 million.

*Outlook

Our focus remains to support the economy and keep communities and businesses in Malawi connected. Our view on the medium-term opportunity

for growth in Malawi remains attractive, as the telecommunication sector will continue to benefit from population growth and need for increased connectivity. We expect to continue to execute our strategy focused on increasing mobile penetration in Malawi through investment in rural unserved markets as well as digitise the economy by increasing penetration of data usage.

However, the economy and company is exposed to continued impact of Kwacha depreciation and scarcity of foreign currency. We continue to focus on investing and growing customers and revenue followed by containing cost and diversifying currency sourcing to mitigate the exposures.

*Unaudited.

Other significant updates

Dividend

The company plans to continue its investment in network infrastructure and in new technologies which are capital intensive in nature. The future capital intensity is accentuated by the exposure to depreciation of the Kwacha over major foreign currencies. The Board thus recommended final dividend of K2.50 per ordinary share. The dividend will be paid after approval at the AGM in July 2023 at a date to be determined.

External Borrowings

During the period the company extended the maturity of $33million external borrowings, which was due in September 2023, by 24 months.

Expansion of network coverage

During the year, the company expanded its network with roll out of additional 51 sites.

SUMMARY FINANCIAL STATEMENTS

Summary Statement of Comprehensive Income

	Year Ended
	31 Dec-22	31 Dec-21
	K'000	K'000
Income
Revenue	153,463,598	131,769,046
Other income	2,988,885	3,305,312
	156,452,483	135,074,358
Expenses
Network operations and maintenance	(23,400,619)	(21,003,756)
Sales and marketing expenses	(13,828,774)	(12,080,165)
Employee benefits expenses	(6,179,925)	(5,193,733)
Access charges	(3,543,958)	(3,148,706)
Other expenses	(17,566,737)	(14,256,350)
License fee & spectrum usage charges	(11,178,259)	(10,310,154)
Impairment loss recovered on financial assets	740,734	603,139
Depreciation and amortization	(14,412,325)	(15,252,684)
	(89,369,863)	(80,642,409)
Profit before financing costs and exchange losses	67,082,620	54,431,949
Finance cost	(6,872,071)	(2,588,699)
Other non-operating income	5,344,970	-
Foreign exchange loss	(12,790,039)	(5,625,822)
Profit before tax	52,765,480	46,217,428
Income tax expense	(15,840,174)	(13,882,494)
Profit and total comprehensive income for the year	36,925,306	32,334,934
Basic and diluted earnings per share (K)	3.36	2.94

Retained earnings			37,404,064	32,928,758
Total equity			37,803,439	33,328,133
Non-current liabilities
Borrowings			33,872,355	32,582,000
Lease liabilities			39,933,211	26,991,750
Deferred spectrum liabilities			-	136,654
Total non-current liabilities			73,805,566	59,710,404
Current liabilities
Borrowings			109,284	32,688
Lease liabilities			3,169,923	4,309,420
Deferred Spectrum liabilities			201,028	176,275
Provisions			2,514,042	1,454,097
Trade and other payables			46,709,702	30,570,222
Contract liabilities			9,975,227	8,130,675
Current tax payable			5,784,950	7,019,235
Other current liabilities			16,305,269	15,932,610
Total current liabilities			84,769,425	67,625,222
Total liabilities			158,574,991	127,335,626
Total equity & liabilities			196,378,430	160,663,759
Summary Statement of Changes in Equity
	Share	Share	Retained	Total
	capital	premium	earnings
	K'000	K'000	K'000	K'000
Year ended 31 December 2021
Balance at 1 January 2021	1,000	398,375	23,693,824	24,093,199
Dividend declared for 2020 profit	-	-	(23,100,000)	(23,100,000)
Total comprehensive income for	-	-	32,334,934	32,334,934
the year
At end of the year	1,000	398,375	32,928,758	33,328,133
Year ended 31 December 2022
Balance at 1 January 2022	1,000	398,375	32,928,758	33,328,133
Dividend declared for 2021 profit	-	-	(32,450,000)	(32,450,000)
Total comprehensive income for	-	-	36,925,306	36,925,306
the year
At end of the year	1,000	398,375	37,404,064	37,803,439
Summary Statement of Cash Flows
			Year Ended
			31 Dec-22	31 Dec-21
Cash flows from operating activities		K'000	K'000
Profit Before Taxation			52,765,480	46,217,428
Adjustments for:
Depreciation & amortization			14,412,325	15,252,684
Interest income			(3,001,570)	(1,863,628)
Unrealised exchange losses			8,678,839	2,927,824
Miscellaneous Income			-	(12,846)
Other non -operating income			(5,344,970)	-
Movement in Provisions			1,059,946	56,268
Loss / (profit) on disposal of plant and equipment		12,180	(1,428,838)
Finance cost			6,705,805	2,564,432
Operating cash before working capital changes	75,288,035	63,713,324
Changes in working capital:
(Increase)/Decrease in trade and other receivables	15,294,369	(3,402,538)
(Increase)/Decrease in inventory			14,638	(31,097)
(Increase)/Decrease in other assets			(7,795,963)	(857,257)
Increase/(Decrease) in trade and other payables		16,139,481	(6,749,081)
Increase/(Decrease) in other liabilities			1,825,902	1,348,219

Lease write back	(2,127)	-
Repayment of lease liability - principal	(4,671,107)	(6,531,506)
Interest paid on lease liability	(1,672,684)	(1,877,247)
Net cash used in financing activities	(49,093,501)	(22,242,738)
Net increase in Cash and Cash equivalents	20,549,944	21,105,206
Cash and Cash equivalents at the beginning of the year	38,522,971	17,417,765
Cash and Cash equivalents at the end of the year	59,072,915	38,522,971

Notes to the Summary Financial Statements

		Year Ended
		31 Dec-22	31 Dec-21
		K'000	K'000
Borrowings
Non-Current portion of the loan		33,872,355	32,582,000
Current portion of the loan		109,284	32,688
Total borrowings		33,981,639	32,614,688
The borrowings are due to the following
	Bharti Airtel Malawi	Bank of	Total
	Holdings BV	America
	Holding Company	Hong Kong
	Branch
	K'000	K'000	K'000
At 1 January 2021	535,506	30,950,290	31,485,796
Interest charges capitalized	4,122	575,606	579,728
Repayments in the year	(589,544)	(597,490)	(1,187,034)
Exchange losses	49,916	1,686,282	1,736,198
At 31 December 2021	-	32,614,688	32,614,688
At 1 January 2022	-	32,614,688	32,614,688
Interest charges capitalized	-	1,340,498	1,340,498
Repayments in the year	-	(6,830,017)	(6,830,017)
Exchange losses	-	6,856,471	6,856,471
At 31 December 2022	-	33,981,639	33,981,639

Basis of preparation

The Directors have prepared the summary financial statements to meet the listing requirements of the Malawi Stock Exchange Listings. The Directors have considered the listing requirements of the Malawi Stock Exchange and believe that the summary statement of financial position, summary statement of comprehensive income, summary statement of cash flows and summary statement of changes in equity are sufficient to meet the requirements of the users of the summary financial statements.

The summary financial statements have been derived from the Annual Financial Statements that are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and were approved by the Board of Directors on 1st June 2023. The audited Financial Statements for the period ended 31st December 2022 can be accessed on Airtel's website (www.airtel.mw).

Alex Chitsime	Charles Kamoto
Chairman of the Board	Managing Director

We expressed an unmodified audit opinion on the audited financial statements in our report dated 7th June 2023. That report also includes the communication of key audit matters. Key audit matters are those matters that in our professional judgment, were of most significance in our audit of the financial statements of the current year.

Directors' Responsibility for the Summary Financial Statements

The directors are responsible for the preparation of the summary financial statements in accordance with the basis described on the basis of preparation paragraph.

Auditor's Responsibility

Our responsibility is to express an opinion on whether the summary financial statements are a fair summary of the audited financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing 810 (Revised) Engagements to Report on Summary Financial Statements.

Chartered Accountants

Christopher Kapenda

Partner

7th June 2023

Glossary

Technical and Industry Terms

ARPU	Average revenue per user per month, which is derived by dividing total
	revenue during the relevant period by the average number of customers
	and dividing the result by the number of months in the relevant period.
Average	Average customers are derived by computing the average of the monthly
customers	average customers for the relevant period.
Capital	It is not a GAAP measure and is defined as investment in capital work in
expenditure	progress (CWIP) gross fixed assets (tangible and intangible excluding
	spectrum/licence) and excluding provision on capital work in progress
	(CWIP).
Customer	A customer is defined as a unique subscriber with a unique mobile
	telephone number who used any of Airtel's services in the last 30 days.
Customer base	Total number of subscribers that used any of our services (voice calls, SMS,
	data usage or Other revenues) in the last 30 days.
Data customer	Total subscribers who consumed at least 1MB on the Group's GPRS, 3G or
base	4G network in the last 30 days.
Underlying	It is not a GAAP measure and is defined as operating profit before
EBITDA	depreciation, amortisation, CSR cost and exceptional items.
Underlying	It is not a GAAP measure and is computed by dividing Underlying EBITDA
EBITDA margin	for the relevant period by total revenue for the relevant period.
Earnings per	EPS is computed by dividing the profit for the period attributable to the
share (EPS)	owners of the company by the weighted average number of ordinary
	shares outstanding during the period.
Free cash flow	Free cash flow defined as Operating free cash flow less cash interest, cash
	tax and change in operating working capital.
Minutes of usage	Duration in minutes for which a customer uses the Group's network. It
	is typically expressed over a period of one month. It includes incoming,
	outgoing and in-roaming minutes.
Net debt	It is not a GAAP measure and is defined as the long-term borrowings, short
	term borrowings and leased liability less cash and cash equivalents.
Operating profit	It is a GAAP measure and is computed as revenue less operating expenditure
	including depreciation & amortisation and operating exceptional items.
Weighted	The weighted average number of shares is calculated by taking the number
average number	of outstanding shares and multiplying the portion of the reporting period
of shares	those shares covered, doing this for each portion and, finally, summing the
	total.

Abbreviations

2G	Second-generation technology
3G	Third-generation technology
4G	Fourth-generation technology
ARPU	Average revenue per user
bps	Basis points
EBITDA	Earnings before interest, tax, depreciation and amortisation
EPS	Earnings per share
IFRS	International Financial Reporting Standards
IPO	Initial Public Offering
KPIs	Key performance indicators

1. Million

MB	Megabyte
UoM	Unit of measure