Botswana Telecommunications : ABRIDGED UNAUDITED FINANCIAL RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2022

Botswana Telecommunications Corporation Limited

ABRIDGED UNAUDITED FINANCIAL RESULTS FOR THE HALF YEAR ENDED 30 SEPTEMBER 2022

The Board and Management of Botswana Telecommunications Corporation Limited ('BTC') are pleased to present to shareholders the abridged unaudited financial results of the Company for the half year ended 30 September 2022.

Revenue	Profit for the Period	Earnings per share
P691 million	P22 million	2.11 thebe

STATEMENT OF CASH FLOWS

For the six months ended 30 September 2022	Unaudited	Unaudited	Audited
	6 Months	6 Months	12 Months
	to 30.09.2022	to 30.09.2021	to 31.03.2022
	P '000	P '000	P '000

Dividend

Given the current circumstances, the Board decided not to declare a dividend for this period.

Total Assets	EDITDA Margin
P3.02 billion	21%

CASH FLOWS FROM OPERATING ACTIVITIES Operating cash flow before working capital changes Working capital adjustments:

Increase in inventories

Decrease/(Increase) in trade and other receivables, contract assets and prepayments

215,260	227,204	439,539
(13,177)	(7,244)	(8,197)
15,291	(1,585)	5,001

For and on behalf of the Board of Directors

COMMENTARY

Our Business

Botswana Telecommunications Corporation is a converged telecommunications operator offering fixed (voice and data), mobile (voice and data) and broadband services to consumers, enterprise and other licensed service providers.

Half year performance in numbers

• Revenue P691 million
• EBITDA margin 21%
• Profit after tax P22 million
• Earnings per share 2.11 thebe
• Cash Conversion at 67%

Review of Results

The interim Financial Statements of the company for the six months' period ended 30 September 2022 were authorised for issue by the Board of Directors on 14 December 2022.

Performance Overview

For the six months under review, the Company performance was subdued due to difficult macro-economic conditions. Performance was further depressed by the once off provision for restructuring costs and an escalation in replacement costs for stolen copper from our network.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

	Unaudited	Unaudited	Audited
For the six months ended 30 September 2022	6 Months	6 Months	12 Months
	to 30.09.2022	to 30.09.2021	to 31.03.2022
	P '000	P '000	P '000
Revenue from contracts with customers	691,206	698,363	1,392,257
Cost of services and goods sold*	(290,516)	(294,995)	(604,751)
Gross profit
400,690	403,368	787,506
Interest income	23,685	9,334	18,796
Interest expense	(9,899)	(11,901)	(22,767)
Other income	2,581	24,986	39,918
Selling and distribution costs	(11,764)	(9,586)	(18,242)
Administrative expenses**	(260,766)	(198,615)	(403,573)
Impairment losses and gains on financial	(2,353)	(10,390)	3,191
assets and contract assets	(116,848)	(107,485)	(222,436)
Other expenses
Profit before tax
25,326	99,711	182,393
Income tax expense	(3,135)	(13,766)	(41,608)
Profit for the period
22,191	85,945	140,785
Other comprehensive income for the period	-	-	(6,054)

Increase in trade and other payables and contract liabilities Cash generated from operations

Ordinary dividend paid to shareholders Income tax paid

Net cash from operating activities

CASH FLOWS USED IN INVESTING ACTIVITIES:

Investment to expand operations:

Purchase of property, plant and equipment Purchase of intangible assets

Proceeds from disposal of property, plant and equipment Interest income received

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Grants received

Interest paid on lease liabilities and IRU liability Principal payment of lease liabilities Principal payment of IRU liability

Net cash from financing activities

Increase in cash and cash equivalents

Net foreign exchange difference on cash and cash equivalents Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the period

11,557	9,959	22,023
228,931	228,334	458,366
(51,906)	(54,903)	(92,676)
(1,034)	1,265	(169)
175,991	174,696	365,521
(73,431)	(24,058)	(113,050)
(13,977)	(17,185)	(20,903)
27,099	184	387
23,685	5,954	18,796
(36,624)	(35,105)	(114,770)
4,740	-	3,465
(10,123)	(12,151)	(23,130)
(8,405)	(8,251)	(17,125)
(29,323)	(27,465)	(55,946)
(43,111)	(47,867)	(92,736)
96,256	91,724	158,015
(743)	9,642	(846)
520,442	363,273	363,273
615,955	464,639	520,442

Lorato Boakgomo-Ntakhwana		Anthony Masunga
Chairperson		Managing Director

Board of Directors

Lorato Boakgomo-Ntakhwana (Chairperson), Anthony Masunga (Managing Director), Maclean Letshwiti, Andrew Johnson*, Ranjith Priyalal De Silva**, Thari Pheko, Bafana Molomo and Thato Kewakae.

*South African **Sri Lankan

Company Secretary

Sidney Mganga

Company Number

BW00000748937

Transfer Secretaries

Central Securities Depository Company of Botswana

Plot 70667, Fairscape Precinct. 4th Floor, Fairgrounds, Gaborone Private Bag 00417, Gaborone

Contact Details: 3674400/ 09/11/12

Contact Person: Nonofo Phalatse or Ambrosia Khupe

The Company recorded revenue of P691 million during the period under review. Data services and mobile financial services revenue growth momentum continued but was partially offset by the decline in performance of voice services. The cost of sales reduced by only 2% (normalised basis 11%) thus leading to gross profit being level with the prior year. The total impact of copper cable theft amounted to P29 million. The Company has since intensified efforts and increased its capital budget towards building alternative technologies to replace the copper network investments. The once off provision of P67 million for the organisational restructuring drove the increase in the operating expenditure. The primary objectives of the organisational restructuring include the creation of a more fit-for-purpose organisation that supports the strategic repositioning of the business into the future. Furthermore, the exercise ensures that the Company has the right human capital in the right jobs that will contribute towards

Total comprehensive income for the period	22,191	85,945	134,731
Basic and diluted earnings per share (thebe):	2.11	8.19	13.41
*Cost of sales include P29 million related to copper cable theft
**Administrative expenses include cost of resource optimization of P67 million
STATEMENT OF FINANCIAL POSITION
	Unaudited	Unaudited	Audited
As at 30 September 2022	Sep 2022	Sep 2021	Mar 2022
	P '000	P '000	P '000

STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2022	Stated	Revaluation	Accumulated	Total
	Capital	Reserve	Profits
	P '000	P '000	P '000	P '000
Balance at 1 April 2021 (Restated)	478,892	382,363	1,379,999	2,241,254
Profit for the six months period	-	-	85,945	85,945
Total Comprehensive Income
-	-	85,945	85,945

Auditor

Deloitte & Touche

Plot 64518 Fairgrounds

P O Box 778 Gaborone, Botswana

Megaleng House

Plot 50350, Khama Crescent

P.O. Box 700 Gaborone, Botswana

the future viability and long-term financial sustainability of the Company.

The pressure on costs as highlighted above led to EBITDA declining by 13% to P144 million.

The Company delivered healthy cash and cash equivalents that resulted in an increase of P96 million reflecting a 67% cash conversion.

Domestic Economy

The domestic economy is forecasted to grow by about 4% in 2022, with the increase in economic activity following the relaxation of COVID-19 protocols, a successful vaccination rollout programme and the implementation of the Government's Economic Recovery and Transformation Plan (ERTP) and the national Reset Agenda.

Inflation is expected to continue to be above the central bank target of 3-6% due to rising prices of goods and services especially food and fuel prices. This in turn is expected to negatively impact spending power of Government, enterprises and households.

Outlook

Despite the uncertainty of the economy, BTC will intensify the efforts to improve its financial and operational performance by seizing the available opportunities in the market. Going forward, the company will continue to drive data and value offers in the market as we accommodate the shifts in demand and usage patterns (i.e., from voice to data driven services). We will continue to migrate customers off legacy technologies so that they can experience faster and more reliable fixed and mobile data. We are determined to improve localities and communities through our network and services that we offer. The infrastructure that BTC has invested on from mobile, fixed, VSAT to data centre is a great foundation for driving digital services, cloud services and fintech services. The company will continue to pursue its digital transformation program and create more value for our customers through our services and innovative solutions. BTC is focusing on driving its customers to use more of our digital platforms for convenience and the ability to get our services and offers anywhere and anytime.

The company will further drive its efficiency improvement program as way of optimising our cost structure and responding to changing market dynamics.

Efforts to build a digital culture and strengthen our human capital will continue to position our company to be more responsive to the fast-changing market landscape.

ASSETS

Non-current assets

Property, plant and equipment

Right of use assets

Intangible assets

IRU asset

Current assets

Inventories

Trade and other receivables

Contract assets

Income tax receivable

Cash and cash equivalents

Assets held for sale

TOTAL ASSETS

EQUITY AND LIABILITIES

Capital and Reserves

Stated capital

Revaluation reserve

Accumulated profits

Non - Current Liabilities

Development grants

Lease liabilities

IRU liability

Deferred tax liability

Employee related provisions

Current Liabilities

Trade and other payables Contract liabilities Deferred tax liability Lease liabilities

Current portion of development grants Current portion of employee related provisions

TOTAL EQUITY AND LIABILITIES

1,436,431	1,453,748	1,449,452
178,566	200,435	183,946
112,998	120,580	115,337
401,200	439,409	420,305
2,129,195	2,214,172	2,169,040
66,596	52,466	53,419
146,859	143,710	161,122
49,204	45,154	53,539
1,844	-	810
615,955	464,639	520,442
880,458	705,969	789,332
7,503	39,983	32,222
887,961	745,952	821,554
3,017,156	2,960,124	2,990,594
478,892	478,892	478,892
352,951	373,939	361,375
1,419,123	1,418,613	1,441,428
2,250,966	2,271,444	2,281,695
12,507	6,281	8,543
113,172	119,597	115,753
97,711	151,099	120,590
58,775	29,505	55,640
8,731	9,736	7,994
290,896	316,218	308,520
290,825	248,290	279,765
12,198	16,348	13,522
18,755	16,383	16,718
53,388	58,113	60,022
860	5,735	860
99,268	27,593	29,492
475,294	372,462	400,379
3,017,156	2,960,124	2,990,594

Ordinary dividend declared	-	-	(55,755)	(55,755)
Depreciation transfer for land and buildings	-	(8,424)	8,424	-
Balance at 30 September 2021 (Unaudited)
478,892	373,939	1,418,613	2,271,444
Profit for the rest of the year	-	-	54,840	54,840
Other comprehensive income	-	(6,054)	-	(6,054)
Total Comprehensive Income
-	(6,054)	54,840	48,786
Ordinary dividend declared	-	-	(38,535)	(38,535)
Depreciation transfer for land and buildings	-	(6,510)	6,510	-
Balance at 31 March 2022 (Audited)
478,892	361,375	1,441,428	2,281,695
Profit for the six months period	-	-	22,191	22,191
Total Comprehensive Income
-	-	22,191	22,191
Ordinary dividend declared	-	-	(52,920)	(52,920)
Depreciation transfer for land and buildings	-	(8,424)	8,424	-
Balance at 30 September 2022 (Unaudited)	478,892	352,951	1,419,123	2,250,966

Presentation of Unaudited Interim Financial Statements

The interim Financial Statements are presented in Botswana Pula which is the Company's functional currency.

Basis of Preparation and Accounting Policies

The interim financial statements have been prepared on a historical cost basis, except as modified by the revaluation of certain fixed assets and on the going concern basis.

The accounting policies adopted for the period comply in all material respects with International Financial Reporting Standards (''IFRS'') issued by the International Accounting Standards Board (''IASB''), interpretations issued by the International Financial Reporting Standards Interpretations Committee and in the manner required by the Companies Act of Botswana (CAP 42:01). These policies are consistent with those applied for the year ended 31 March 2022.