ANNUAL REPORT 2017 - MTC · N$1.1 billion dollar 081Every1 project that will see MTC erect over 524 new towers to ensure close to 100% network connectivity in Namibia. We are proud

ANNUALREPORT

2017

Table of Content

OPERATIONAL OVERVIEW

03 Executive Committee 04 Chairman’s Commentary 05 Chief Executive Officer’s Overview

06 The Technological Environment 07 Commercial Operations 10 Human Capital Environment

12 Corporate Social Investment Initiatives 13 The Regulatory Environment 14 Chief Financial Officer’s Report

18 The Board of Directors

FINANCIAL OVERVIEW

19 Annual Financial Statements 21 Directors’ Responsibilities & Approval 22 Independent Auditors’ Report

24 Directors’ Report 26 and Other Comprehensive Income 27 Statements of Financial Position

28 Statements of Changes in Equity 29 Statement of Cash Flows 30 Accounting Policies

38 Notes to the Financial Statements

Statements of Profit or Loss

3ANNUAL REPORT 2017

Executive Committee

Patience KanaleloHead: Corporate Legal Services

and Company Secretary

Alvin KorkieChief Commercial Officer

Tim EkandjoChief Human Capital and Corporate

Affairs Officer, Human Resources

Licky ErastusChief Technology Officer

Thinus SmitActing CEO

and Chief Finance Officer

4ANNUAL REPORT 2017

If I were to sum up the 2017 MTC year, I would simply say “081Every1”.

This is of course one of the most significant project to date, a strategic

decision we made to achieve 100% network connectivity in Namibia.

Today we have over 640 towers across the country and the 081Every1

project will see the erection of 524 new towers across Namibia. We

place paramount importance on this project because we believe that

internet connectivity has become a basic human right and that nobody

should be left behind when it comes to taking full advantage of the

digital age. This is of course also in line with the country’s Harambee

Prosperity Plan and we are happy to make a contribution of N$1.1

billion towards this plan. Having said this, we are well aware that we

will be making significant investments in areas that take time to bring

return, but we have made a conscious choice to place the needs of

people over profits.

MTC currently covers 95% of Namibia’s population. After the

successful implementation of our 081Every1 project, we expect to

see an increase in our 2G coverage from 95% to 100%, with 3G from

67% to 95% and 4G from its current 34% to 50%. We are certainly

proud of this investment because we know it contributes positively to

Namibia’s development and making the country investor friendly.

The Board remains cognisant of the current difficult economic

conditions facing our country, and believe in our responsibility to

continue to create value by making a positive contribution through

employment creation opportunities.

With a positive revenue growth of 4.1% compared to 2016, we are

excited about the future of the Namibian telecommunications sector

and look forward to making an even better contribution in 2018, by

placing the needs of our customers first at all times.

Chairman’s Commentary

Elvis NashilongoChairman

The company is well on course with its 2018 - 2020 strategic plan

recently adopted with the Executive Management team with the

key emphasis on customer experience, reliable connectivity and

continuous people development. We are committed to making a

success of this strategy, and ensuring that it is delivered superbly by

proud brand ambassadors in the form of our employees.

5ANNUAL REPORT 2017

Chief Executive Officer’s Overview

Thinus SmitActing Chief Executive Officer

Despite an extremely challenging economic environment which have

negatively affected disposable income, MTC has continued to show

positive growth with an increase of 4.1% in revenue compared to 2016,

seeing revenues grow from N$2.3 billion in 2016 to N$2.4 billion in

2017. This growth is largely attributed to an excellent execution of our

data strategy as well as an average 7% increase in subscription fees

introduced for the first time in 12 years.

We have certainly seen some positive spin-offs from strategic

decisions made in 2016, one being the Osmartphona project where

we rolled out highly subsidized handsets to the value of N$399 per

handset to ensure that customers in rural Namibia benefit from the

N$1.1 billion dollar 081Every1 project that will see MTC erect over 524

new towers to ensure close to 100% network connectivity in Namibia.

We are proud to make this massive investment in a country that is

our only home, and making a positive contribution towards closing the

digital gap between people living in urban vs rural areas.

We will continue to place key emphasis on delivering to customers’

expectations through a reliable network and affordable

telecommunications services, with a key and undebatable emphasis

on our people development to deliver on our expectations as outlined

in the MTC strategy.

Our performance as a company remains strong with a strong net

asset value and underlying cash flow, which positions us favourably

to deliver on our strategy. We continue to deliver improved returns

for shareholders, while making progress on key objectives. Our net

assets reported for the financial year end was N$1.5 billion and a

growth on EBITDA of 7% was reported year on year. The commercial

offers resulted in a substantial growth in net profit after tax of N$711.4

million, all thanks to our dedicated employees.

Despite the positive outlook, we remain concerned about Namibia’s

volatile economy, as well as possible regulatory introductions such as

number portability, interception, one international gateway and sim

registration which could most likely impact our future competitive

outlook.

In conclusion, we remain committed to maintaining our number one

position as telecommunications provider in Namibia as well as being

a socially responsible company by spending over N$30 million in

various social community upliftment initiatives ranging from sports,

education, ICT, arts and culture.

524New towers going up

Revenue Up

4.1%

6ANNUAL REPORT 2017

The Technological Environment

MTC has seen a continuation of the data centric demand from its

customer base. The demand for traditional services such as SMS and

Voice-, have remained depressed and is expected to continue on its

downward trajectory for the foreseeable future. This is attributed

to the expanded use and improvements in Over-the-Top service

providers that allow for expanded communications functionalities.

Due to this and the fast pace of expansions in this space, MTC’s

strategy will compensate and provide further mitigations in order

to counter revenue erosion. The technology and commercial

departments will work on innovative product and pricing strategies

to fight this threat and maintain our customer base.

MTC continues to optimise and expand network components to take

advantage of customers’ appetite for data, while remaining aware of

the need for transformation in the products and services space, with a

view to revenue growth. Our continued investments in infrastructure

and improvements to network elements are an indication that we view

this as a long-term challenge.

2017 saw the completion of phase 2 of the “Perfect Network Project”

that has resulted in increased 3G data services in rural areas.

Towards the end of the financial year, MTC announced two new

improvement programs namely 081Every1 and Project 2020.

• Project 081Every1 specifically aims at providing 100% Population

coverage by the end of 2019.

• Project 2020 is part of a continuous effort to bring technology

to all Namibians and by the end of 2018, second generation

network towers will be upgraded and expanded with a new layer

of third generation radio technology.

Highlights for the year

• MTC expanded the national coverage and increased capacity by

erecting a total of 16 new base stations throughout Namibia.

• MTC increased its rural 3G coverage by introducing U900 to 108

sites spread across Namibia’s remote areas.

• MTC completed the implementation of its fully redundant Online

Charging System (OCS) system and successfully launched its first

catalogue changes in time for the Festive Season.

• During the year under review, MTC increased our capacity and

improved our resiliency on our Internet footprint.

• MTC laid the foundation for the implementation of a fully-fledged

Enterprise Data Warehouse, an improvement that will bear fruit in

the next financial year.

7ANNUAL REPORT 2017

Commercial Operations

Overview

Overall another very successful year commercially for MTC, achieving

and exceeding our top line revenue budgets. Some highlights include:

• Postpaid subscriber base increased 1.85%.

• Prepaid subscriber base increased 1.19%.

• Total subscriber base increased 1.23%.

• Postpaid subscriptions increased by 6.24%.

• Prepaid subscriptions as % of prepaid revenues remained at 42%.

MTC witnessed another year of exceptional data growth with data

consumption up by 52% on the previous year. Data as a percentage

of total revenue is now at 43%. (This number is inclusive of SMS and

Data revenues).

The successful implementation of the new OCS (online charging

system) promises to provide a number of improved features that will

allow MTC to launch a variety of innovative new products and services.

Products & Services

As is customary, MTC launched a number of promotions during the

course of this financial year. December 2016 saw a wide variety of

handsets on offer. Later during the year we also launched 2 major

SMS campaigns, the most noticeable being the SMS and Vrooom

campaign where MTC gave away 13 pick-ups and cars worth more than

N$2 million.

MTC continued to provide the latest handsets to the market and also

introduced a few new brands to meet the customer demands.

Events & Roadshows

Continuing to drive data adoption, MTC completed phase 3 of the

OsmartPhona roadshow, which saw the roadshow bring 3G internet

connectivity to an additional 18 rural villages.

MTC continued to support and participate in 31 trade shows across

Namibia and remained the main sponsor of the OATSF. MTC sold around

5000 handsets through these various trade shows and exhibitions.

MTC Retail

MTC launched the Mobile Home on Wheels concept to cover

Nkurenkuru, Eenhana, Ruacana and Opuwo. This concept was launched

because of the size of these communities and the long distances these

customers had to travel to get to the nearest Mobile Home.

MTC launched three brand new Mobile Homes in Swakopmund,

Eenhana and Nkurenkuru during the course of this financial year

and also conducted extensive renovations at Otjiwarongo and Hosea

Kutako International Airport.

The following Mobile Home branches were rebranded to comply

with our new corporate identity: Oshakati, Ongwediwa, Ondangwa,

Okahandja, Rehoboth, Grove Mall, Swakopmund Main, Keetmanshoop

and Mariental.

8ANNUAL REPORT 2017

Distribution

A total of 368 informal outlets and 30 prime locations were painted in

the MTC colours this year as part of the brand building drive. Signage

was replaced at more than 2000 dealer outlets selling MTC’s airtime

and products.

Airtime City, One of MTC’s top distributors-, launched the mobile-to-

mobile recharge solution allowing their agents to sell airtime directly

from their mobile devices.

35 dealer employees also received training on MTC products and

services.

Key Accounts

Our Key Accounts teams held numerous Customer Days during the

year at Rio Tinto Mining Exploration (Rössing), Namibia Breweries,

FNB, Namport, Namibia Dairies, Municipality of Swakopmund, Ministry

of Education, Ministry of Environment and Tunacor.

Branding

Another busy year from the brand team with some highlights including

MTC’s new Corporate Identity completed, Brand Audit Research

Survey, MH Branding, acquired rights for Cinema Advertising and

Annual outdoor advertising agreements successfully signed.

Customer Service

MTC customer service again proved that it was a force to be reckoned

with. Firstly, we looked to our own market in Namibia and received

feedback from our own customer base in the form of a Service Quality

Assessment. This assessment focused on a number of key areas such

as:

• Technology competency (call queue facility and functionality).

• Agent/service competency (response times, introductory

procedures, professional business conduct, adherence to language

preference, attitude, voice clarity, sales skill abilities, product and

service knowledge, personalisation and quest for 1st call resolution.

• Competitor Assessment (to benchmark performance across

businesses using the same criteria as above).

The Assessment of the Call Centre Agents themselves

All Call Centre Agents were assessed on the following: Communication

(verbal and non-verbal communication), Listening & Attentiveness,

Understanding & Consistency, Confidence & Product Knowledge

(based on the FAQ’s) as well as Flexibility & Proactive Problem Solving.

Service Quality Assessments Achievements during 2017

The MTC Call Centre Agents achieved an overall percentage of 90%

for the 2017 financial year. In September 2017, they achieved 91%, in

June 90% and 89% in February 2017.

Customer Satisfaction Survey Report

The aim of the independent Customer Satisfaction Survey is to establish

customer experience and level of satisfaction when interacting with

MTC’s Customer Contact Centre. This is done by contacting a sample

of customers who recently interacted with MTC’s Customer Contact

Centre.

Focus on the following:

• Response Times of the agents

• Overall Customer Satisfaction

• Agent Performance

• Further suggestions to improve service delivery.

CONTINUED


9ANNUAL REPORT 2017

Assessments Achievements during 2017

The following overall results were recorded from the “Customer

satisfaction survey” during the 2016/2017 financial year:

June 2017 (86.61%), February 2017 (89.57%), September 2016 (77.56%),

June 2016 (77.50%), March 2016 (77.50%), February 2016 (78.87%).

Outbound Customer Survey Report

The aim is to evaluate the level of service delivery and customer

satisfaction in terms of MTC’s Customers contacted by the OutBound

Call Centre.

The supplier contacted customers under the OutBound Call Centre

portfolio to evaluate the service delivery based on questions as

provided by MTC on the following:

Overall Customer Satisfaction; Product & Service knowledge;

Friendliness & Helpfulness; Problem Solving; Response Times of

the agents; Agent Performance and further suggestions to improve

service delivery.

Assessments Achievements during 2017

The following overall results were recorded for the 2016/2017

“Outbound Customer Survey” report:

June 2017 (89.87%), September 2017 (93.60%), June 2016 (79.76%),

March 2016 (88.99%).

CONTINUED


10ANNUAL REPORT 2017

Overview

MTC continues to place huge emphasis on people development as a

key strategy to business success. Everything that we do are centered

around our people, and their ability to deliver excellent results. We

believe that by taking good care of our people, they will take good

care of our business and our customers. That is why we call all our

employees MTC Ambassadors, because they represent the aspirations

and values of our brand.

Talent Management

Central to our people development strategy is our Talent Management

program which enables us to develop a suitable pipeline of talented

ambassadors for now and the future. MTC has invested over

N$5 million in this programme that helps us develop skills for the

future, motivate, train, attract and retain key talent. Our retention

strategy is one of the most aggressive in Namibia, as we fend off the

war for talent and skills globally. We continue to invest in Training

and Development of our ambassadors and have spent an amount of

N$3.4 million in 2017 to upskill all our ambassadors.

In 2017, we introduced a tailor made Leadership Development

Programme for all our Managers and Supervisors across the board

to empower them with the latest trends and skills in leadership to the

value of N$2.1 million.

Staff Employee Forum

MTC’s ambassadors believe that they have the power to ensure and

guarantee a conducive and safe industrial relations environment.

To date we have the Staff Employee Forum that continues to do an

excellent job representing employees, ensuring that a harmonious and

mutually respectable relationship flourish across the organisation.

In 2017, the Forum successfully negotiated the implementation of a

20% across the board subsidy on medical aid for all MTC employees

and will continue to negotiate until 90% subsidy is achieved over the

next 3 years. Our strategy to guarantee a sound industrial relations

environment is based on the premise of respect for one another,

transparency, consistency and continuous open engagement and

communication.

Scholarships

MTC’s scholarship programme continues to respond to Namibia’s dire

need for the intake and experiential learning of graduates. In 2017,

MTC continued its scholarship program and invested an amount of

N$600 000 to provide bursaries to six students studying in various

fields. Of significant importance is that over 95% of our graduates are

guaranteed a permanent position at MTC at the completion of their

studies. To date, several of our graduates have worked themselves up

the ladder with some being Managers and the first being promoted to

a General Manager in 2017.

In addition to that, we also look after our own ambassadors and provide

them with study loans and/or full internal bursaries to allow them to

study towards undergraduate and postgraduate qualifications.

The Human Capital Environment


The Institute of People Management of Namibia

MTC has remained the principal sponsor of the Institute of People

Management Conference for the 7th consecutive year. The 2017

Conference attracted over 300 delegates from across Namibia and

once again led the people management agenda by discussing pertinent

People Management and Leadership issues affecting Namibia. MTC is

proud of this investment, because we contribute and provoke debate

on national issues that will influence people management policies

and practices. We do not believe in championing world class People

Management excellence alone, we believe that if best practices can be

shared with as many companies, it can only be to Namibia’s benefit.

MTC Ambassador Project

One of MTC’s key employee value propositions is that we offer a

flexible, friendly, relaxed and inspiring work environment. We call

each other on first name basis, we have a relatively young workforce,

we celebrate our achievements and we work extremely hard to put

smiles on the faces of our customers. In 2017, we embarked on an

exciting program titled “MTC Ambassadors” where we interviewed

over 25 staff members where they simply talked about themselves,

their families and why they love working for MTC. These video clips

were played on NBC television for an entire month and allowed our

customers to gain an insight into our proud ambassadors. These clips

are still being viewed on social media platforms, and most importantly

showed how proud we are of ourselves and our colleagues.

CONTINUED

The Human Capital Environment

Health and Safety

Spearheaded by our Auxiliary Department and HR Health and Safety,

we take Health & Safety very serious. We are happy to announce that

with a fleet of 79 vehicles and over 130 company vehicle operators,

no serious accidents or fatalities were reported in 2017 which is a

remarkable achievement and testimony to our commitment of safety

on our roads and at the workplace.

MTC Olympic Health Challenge

To ensure that we have fun while staying healthy, MTC’s Wellness

Department introduced the MTC Olympic Health Challenge in 2017.

These Olympics brought together over 200 ambassadors to compete

in various sports codes every Friday morning. Exciting prizes were

on display and it significantly increased employee morale and

commitment to our brand.


Overview

MTC has cemented its status as a leading socially responsible

corporate citizen in Namibia, with a spending of over N$30 million in

sponsorships and corporate social initiatives in the areas of Sports,

ICT, Education, Arts & Culture and Health.

Namibian Chamber of Commerce

MTC is a founding member of the Namibia Chamber of Commerce

and Industry and has been the main sponsor of its Annual General

Meeting and Gala dinner for the past eight years consecutively. Our

involvement with the NCCI ensures that we make a contribution to

SME’s to grow the Namibian economy and offer opportunities to

develop their businesses.

Sport

In 2017, MTC continued its sponsorship to the MTC Nestor Sunshine

Boxing & Fitness Academy to the value of N$3.5 million, the Dr

Hage Geingob Cup to the value of N$1.5 million, the Dr Sam Nujoma

Marathon to the amount of N$180 000 and the MTC Namibia Sports

Commission Awards to the value of N$600 000. Our involvement in

sport is based on the premise that sport unites people and enables

the youth to engage in meaningful social activities, allowing them to

realise their dreams. Of significant importance was that we produced

a unified boxing world champion for the first time through the MTC

Nestor Sunshine Boxing Academy which was a significant achievement

for Namibia, Africa and the world.

Namibian Annual Music Awards

In 2017, MTC once again hosted Africa’s leading national awards ceremony,

the Namibian Annual Music Awards for the first time in Walvis Bay. With

an annual investment of N$7.4 million, the NAMA brand has become a

recognisable African and global brand broadcasting across various global

networks, including TraceTV and SoundCity reaching a global potential

audience of over 50 million viewers. The Namibian Annual Music Awards

continues to grow and is without a doubt the best organised event on

the African continent, giving Namibian artists a platform to shine on the

international music scene and making an immense contribution to arts

and culture in Namibia.

MTC Cares Project

The MTC Cares project, which is an MTC staff driven social initiative

continues to support worthy and needy communities. Beneficiaries

in 2017 included various Old Age Homes, the SPCA, Santa Shoebox,

Welfare organizations and the Children’s SOS Village in Khomasdal.

Through these philanthropic gestures, MTC employees are able to

put a human face to the brand by showing gratitude while making the

connection with a human touch.

Local Trade Fairs & Exhibitions

The success of MTC rests largely on its interactions and appreciation

of the communities and the areas in which we operate, hence why

we continue to empower the various Trade Fairs and Exhibitions

across the country. Our aim is to encourage and stimulate growth

at both Town and Regional level. MTC also sees this as a way to

support entrepreneurship, stimulate growth and innovation. Our total

investment in Trade Fairs and Exhibitions in 2017 amounted to over

N$2.8 million supporting over 90% of all Trade Fairs in Namibia.

MICT-Annual ICT Summit

MTC was the main sponsor of Namibia’s ICT summit organised by

the Ministry of Information, Communications and Technology. This

industry high level summit brings together leaders in the global ICT

industry and has over the years attracted more than 800 industry

players from around the globe for intense business to business

networking.

Corporate Social Investment Initiatives

13

MTC recognises the role of the Communications Regulatory Authority

of Namibia (CRAN) as mandated by the Communications Act no. 8 of

2009.

While appreciating the role of CRAN, it is worth noting that the

regulatory environment impacts the operations of MTC. During this

financial year (1 October 2016 to 30 September 2017) the following

decision of CRAN impacted MTC:

• A Reconsideration Application on 5 August 2016 for spectrum for

1935 – 1940MHz and 2125 – 2130 MHz, which was previously declined,

was finally reconsidered and approved on 1 February 2017. This

allowed MTC to increase/upgrade capacity to the benefit of our

customers.

MTC remains committed and supportive of the mandate of CRAN

and trusts that as the Regulator grows, speed of consideration of

applications will improve.

Number Portability was not concluded in this financial year as

anticipated.

Interception and SIM Registration (being an outflow of interception)

remains outstanding. MTC has in the meantime implemented

voluntary SIM registration of existing customers and mandatory SIM

Registration for SIM cards purchased from an MTC Mobile Home.

This is aimed at ensuring compliance with the eventual law and to curb

fraud in protection of our customers.

The Regulatory Environment

14

Chief Financial Officer’s Report

The global economy recorded real growth of 3.1% in 2016, the lowest

rate since 2009 according to the International Monetary Fund (IMF).

Namibia followed the same trend and showed real growth of only 1.2%

in 2016. Short-term growth is affected greatly by political uncertainty

and the perception of deteriorating governance. Both Fitch Ratings

and Standard and Poor’s downgraded South Africa’s foreign currency

credit rating to sub-investment grade in April 2017, which also

contributed to the downgrade of Namibia by both Moody’s and Fitch

to BBB with a negative outlook. The political uncertainty coupled with

the downgrading of both countries may have negative repercussions

for trade and economic activity in Namibia.

Namibia has been in the grip of a progressing drought over the last

four years. Some favourable rainfall in 2017 brought some needed

relief, but there is still some way to go before the country’s economy

has recovered from the impact of the drought. The impact is still felt

by our customer base in the increased food prices and continued

strain on cash resources, which negatively impacts the disposable

income available in the market to be spent.

The above uncertainties have negatively impacted the exchange rate,

resulting in local currency depreciation coupled with rising inflation.

The company generated a strong cash flow and maintained a healthy

balance sheet for the year ended 30 September 2017, with a net asset

value of N$1 506 million. Our EBITDA margin has grown with 3%

from 56.2% to 57.9%. This margin is maintained through consistent

revenue levels against the background of an economic slowdown.

Despite the decrease in available disposable income in the market, the

company has managed to increase net profit after tax with 22.8%,

from N$579.4 million in 2016 to N$711.4 million in 2017.

Revenues

For the year under review, MTC reported increased revenues by 4.1%

from N$2 323.5 million in 2016 compared to N$2 420.9 million during

2017. The factors that contributed to the increased revenue are: the

introduction of a 7% average increase in the subscription fees of its

products in July 2017, a small growth in the subscriber base, and the

continued growth in data usage and revenues.

Revenue components 2017

34% Post-paid

57% Pre-paid

4% Roaming

3% Handsets

1% Interconnect

2% Other

Revenue components 2016

33% Post-paid

58% Pre-paid

3% Roaming

3% Handsets

1% Interconnect

2% Other

15

ExpenditureContinuous improvement in cost efficiency by following an approach

of being cost conscious and the continuous monitoring of Bad Debts

resulted in low deviation from the previous year’s expenditure.

Personnel cost reported an exceptional inflationary and performance

increase of 10.8% with a slight decrease in operational cost as a result

of the decrease in Sales and Marketing costs, as well as Depreciation

and Amortisation.

There is a strong focus driving innovation of the company, the goal

being affordable excellence.

The procurement of these innovations are negotiated to ensure

the best value for money is attained, whilst empowering Small and

Medium Enterprises (SME’s) and therefore growing the economy.

MTC maintains strong relationships with suppliers and conducts firm

negotiations on Service Level Agreements (SLA’s), which result in

lower than CPI increases for certain cost components. Cost efficiency

was further gained through long-term commitments being negotiated

with lower annual increases.

Cost Breakdown 20178.6% Change in inventories of finished goods

27.3% Direct Cost

4% Sales and Marketing

13.1% General and Admin

18.7% Personnel Cost

28.4% Depreciation and Amortisation

Cost Breakdown 20167.3% Change in inventories of finished goods

27.5% Direct Cost

5.3% Sales and Marketing

11.9% General and Admin

16% Personnel Cost

32% Depreciation and Amortisation

Revenue vs EBITDA

2012 2013 2014 2015 2016 2017

Revenue EBITDA - Accounting

500

1 000

1 500

2 000

2 500

85

9.4

100

7

113

8.2

117

8.3

130

5

140

2.8

1616

.6

183

1.8

20

81.

8

22

50

.5

23

23

.5

24

20

.9

EBITDA%

2012 2013 2014 2015 2016 2017

52%

51%

50%

53%

54%

55%

56%

57%

58%

EBITDA%

53.16%

55% 54.7%

52.4%

56.2%

57.9%

EBIDTA

Whilst capital expenditure for the year under review was maintained

at approximately the same level as 2016, the company maintained

its superior profitability by continually showing an increased “cash-

margin”. Superior customer-experience (especially in the data age)

and reducing operational expenditure remain value drivers for the

company. Operational efficiency through cost efficiency and a cost

conscious culture remain the main contributors to the increased value

and margin for EBITDA.

An EBITDA margin of 57.9% was reported for the financial year ended

30 September 2017.

16

Taxation

The income taxation of N$328.7 million paid increased by 34.7% from

the previous financial year. The effective tax rate decreased from

31.97% to 31.13% as a result of movement in temporary tax differences

from slightly increased capital allowances. The reason for the increase

in income taxation paid relates to the increase in the revenues and the

decrease in deductible expenditure for the period under review.

Net profit

The company executed well on strategy and reported a 22.8% increase

on net profit after tax, from N$579.4 million in 2016 to N$711.4 million

for the year ended 30 September 2017. The company introduced a

7% average increase on subscription fees of its products in July 2017,

together with the growing uptake of data services through the use

of smartphones contributed to increased revenues. The increase in

revenue was complimented by the decrease in operational costs, due

to an increased culture of cost consciousness and a lean strategy for

overall increased efficiency.

Dividends

A dividend of N$197.4 million was declared on 4 December 2017. The

decrease from 2016 relates to a decision made by the shareholders

to only pay dividends of 50% of Net profit after tax, in line with the

dividend policy, which is in place. The reduction in dividends paid

will enable MTC to finance the 081Every1 project to ensure 100%

population coverage is achieved in line with the strategy of the

Harambee Prosperity Plan.

Income Tax paid N$’000 Dividends paid

2012 2013 2014 2015 2016 2017

Dividends paid - per annum

500

0

1 000

1 500

2 000

2 500

4 000

3 500

3 000

4 500

5 000

341

2 241.92 625.9

384 462

3 087.9

522

3 609.9

481 488.5

4 090.94 579.4

Dividends paid - Accumulated

2012 2013 2014 2015 2016

Income Tax paid - per annum

500

0

1 000

1 500

2 000

2 500

3 000

190.8

1 394.9

250.9

1 645.8

249.2

1 895.0

246.5

2 41.5

244.1

2 385.6

Income Tax paid - Accumulated

2017

328.7

2 714.3

17

Capital Investments

MTC is still maintaining high levels of Capital Investment and 2017

was earmarked for radio network infrastructure upgrades on Perfect

Network phase 2. Capacity and quality upgrades in 2G, 3G & 4G

generation wireless mobile telecommunications technology was

rolled out. As commitment to our mission to improve the lives of our

Namibian customers through a quality network and inclusion of all,

MTC has launched the 081Every1 project which is focused on providing

quality network coverage to 100% of Namibia’s population.

This project is in collaboration with the Harambee Prosperity Plan of

the Government of Namibia. MTC reinvested 67% of net profit after

tax for the financial year under review.

2012 2013 2014 2015 2016 2017

20%

0%

40%

60%

80%

100%

120%

140%

2012 2013 2014 2015 2016 2017

100

0

200

300

400

500

600

700

800

35

2.6

42

4.4

50

4.9

49

1.4

57

9.4

711

.4

40

6.9

42

7.6

513

.4

38

5.7

48

7.9

47

9

130

.2

20

4.9

33

0.8

26

3.6

30

3.5

27

1.8

Capex vs Net profit after tax N$‘000 000

Net profit after tax Total Capex Intangible assets

115%

101% 102%

78%84%

67%

Capital expenditure per year

Capital investment as a percentage of Net Profit (%)

18

Lorna MbwaleDirector

The Board of Directors

Tulimeke MunyikaDirector

Steve GallowayDirector

Elvis NashilongoChairman

19

GENERAL INFORMATIONDirectors TM Munyika

EE Nashilongo

LP Mbwale

S Galloway

Nature of business and principal activities Provision of a cellular network and related services in Namibia

Company Secretary Patience Kanalelo

Country of incorporation and domicile Namibia

Registered office Corner of Hamutenya Wanehepo Ndadi & Mose Tjitendero Streets

Olympia

Windhoek

Namibia

Auditors Deloitte & Touche

Bankers Bank Windhoek Limited

First National Bank of Namibia Limited

Standard Bank Namibia Limited

Nedbank Namibia Limited

Nampost Savings Bank

Company registration number 94/458

Holding company Namibia Post and Telecommunications Holdings Limited

incorporated in Namibia

Financial StatementsANNUAL

FOR THE YEAR ENDED 30 SEPTEMBER 2017

20

INDEX

21 Directors’ Responsibilities & Approval

22 Independent Auditors’ Report

24 Directors’ Report

26 Statements of Profit or Loss and Other Comprehensive Income

27 Statements of Financial Position

28 Statements of Changes in Equity

29 Statement of Cash Flows

30 Accounting Policies

38 Notes to the Financial Statements

Financial StatementsANNUAL


21

Director’s Responsibilities & ApprovalFOR THE YEAR ENDED 30 SEPTEMBER 2017

The directors are required in terms of the Companies Act, No 28 of

2004 to maintain adequate accounting records and are responsible

for the content and integrity of the annual financial statements

and related financial information included in this report. It is their

responsibility to ensure that the annual financial statements fairly

represent the state of affairs of the group as at the end of the financial

year and the results of its operations and cash flows for the period then

ended, in conformity with International Financial Reporting Standards

and the Companies Act of Namibia. The external auditors are engaged

to express an independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with

International Financial Reporting Standards and the Companies

Act of Namibia and are based upon appropriate accounting policies

consistently applied and supported by reasonable and prudent

judgements and estimates.

The directors acknowledge that they are ultimately responsible for

the system of internal financial control established by the group

and place considerable importance on maintaining a strong control

environment. To enable the directors to meet these responsibilities,

the board of directors sets standards for internal control aimed

at reducing the risk of error or loss in a cost effective manner. The

standards include the proper delegation of responsibilities within

a clearly defined framework, effective accounting procedures and

adequate segregation of duties to ensure an acceptable level of risk.

These controls are monitored throughout the group and all employees

are required to maintain the highest ethical standards in ensuring

the group’s business is conducted in a manner that in all reasonable

circumstances is above reproach. The focus of risk management in

the group is on identifying, assessing, managing and monitoring all

known forms of risk across the group. While operating risk cannot be

fully eliminated, the group endeavours to minimise it by ensuring that

appropriate infrastructure, controls, systems and ethical behaviour

are applied and managed within predetermined procedures and

constraints.

The directors are of the opinion, based on the information and

explanations given by management, that the system of internal control

provides reasonable assurance that the financial records may be relied

on for the preparation of the annual financial statements. However,

any system of internal financial control can provide only reasonable,

and not absolute, assurance against material misstatement or loss.

The directors have reviewed the group’s cash flow forecast for the

year to 30 September 2018 and, in light of this review and the current

financial position, they are satisfied that the group has or had access

to adequate resources to continue in operational existence for the

foreseeable future.

The external auditors are responsible for independently auditing and

reporting on the group’s annual financial statements. The annual

financial statements have been examined by the group’s external

auditors and their report is presented on page 22.

The annual financial statements set out on pages 20 to 73, which have

been prepared on the going concern basis, were approved by the board

of directors on 4 December 2017 and were signed on their behalf by:

Director

TM Munyika

Director

EE Nashilongo

22

Auditors’ ReportINDEPENDENT

Report on the Audit of the Consolidated and Separate Financial

Statements

Opinion

We have audited the consolidated and separate annual financial

statements of Mobile Telecommunications Limited as set out on

pages 20 to 73, which comprise the statements of financial position

as at 30 September 2017, and the statements of profit or loss and

other comprehensive income, the statements of changes in equity

and the statements of cash flows for the year then ended, and a

summary of significant accounting policies and other explanatory

notes and the directors’ report.

In our opinion, the consolidated and separate financial statements

present fairly, in all material respects, the consolidated and

separate financial position of the Group as at 30 June 2017, and its

consolidated and separate financial performance and consolidated

and separate cash flows for the year then ended in accordance

with International Financial Reporting Standards (IFRSs) and the

requirements of the Companies Act of Namibia.

Basis for Opinion

We conducted our audit in accordance with International Standards on

Auditing (ISAs). Our responsibilities under those standards are further

described in the Auditor’s Responsibilities for the audit of the Consolidated

and Separate Financial Statements section of our report. We are

independent of the Group in accordance with the independence

requirements applicable to performing audits of financial statements

in Namibia which is consistent with the International Ethics Standards

Board for Accountants Code of Ethics for Professional Accountants

(Part A and B) (IESBA Code). We have fulfilled our other ethical

responsibilities in accordance with the requirements applicable to

performing audits in Namibia. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

The directors are responsible for the other information. The other information

comprises general information and the directors’ responsibilities

and approval set out on pages 19 and 21 respectively made available

before the date of this report as well as the operational review, which

is expected to be made available to us after the date of this report.

The other information does not include the financial statements and our

auditor’s report thereon. Our opinion on the financial statements does

not cover the other information and we do not express an audit opinion

or any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility

is to read the other information and, in doing so, consider whether

the other information is materially inconsistent with the financial statements

or our knowledge obtained in the audit, or otherwise appears to be

materially misstated.

If, based on the work we have performed, we conclude that there is a

material misstatement of this other information, we are required to

report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the Consolidated and Separate

Financial Statements

The directors are responsible for the preparation and fair presentation

of the consolidated and separate financial statements in accordance

with International Financial Reporting Standards and the requirements

of the Companies Act of Namibia, and for such internal control as the

directors determine is necessary to enable the preparation of consolidated

and separate financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the consolidated and separate financial statements, the

directors are responsible for assessing the Group’s ability to continue

as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless the

directors either intend to liquidate the Group or to cease operations,

or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Consolidated and

Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the

consolidated and separate financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an

auditor’s report that includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in

accordance with ISAs will always detect a material misstatement when it

exists. Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the

basis of these consolidated and separate financial statements.

TO THE MEMBERS OF MOBILE TELECOMMUNICATIONS LIMITED

23

Auditors’ ReportINDEPENDENT

As part of an audit in accordance with ISAs, we exercise professional

judgement and maintain professional scepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the

consolidated and separate financial statements, whether due

to fraud or error, design and perform audit procedures responsive

to those risks, and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher

than for one resulting from error, as fraud may involve collusion,

forgery, intentional omissions, misrepresentations, or the override

of internal control.

• Obtain an understanding of internal control relevant to the audit

in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the

reasonableness of accounting estimates and related disclosures

made by the directors.

• Conclude on the appropriateness of the directors’ use of the going

concern basis of accounting and based on the audit evidence

obtained, whether a material uncertainty exists related to events

or conditions that may cast significant doubt on the Group’s ability

to continue as a going concern. If we conclude that a material

uncertainty exists, we are required to draw attention in our

auditor’s report to the related disclosures in the consolidated

and separate financial statements or, if such disclosures are in

adequate, to modify our opinion. Our conclusions are based on

the audit evidence obtained up to the date of our auditor’s report.

However, future events or conditions may cause the Group to

cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the

consolidated and separate financial statements, including the

disclosures, and whether the consolidated and separate financial

statements represent the underlying transactions and events in

a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the

financial information of the entities or business activities within

the Group to express an opinion on the consolidated and separate

financial statements. We are responsible for the direction, super

vision and performance of the Group audit. We remain solely re

sponsible for our audit opinion.

We communicate with the directors regarding, among other matters,

the planned scope and timing of the audit and significant audit findings,

including any significant deficiencies in internal control that we identify

during our audit.

Deloitte & Touche

Registered Accountants and Auditors

Chartered Accountants (Namibia)

ICAN practice number: 9407

Per J.H. Cronjé

Partner

PO Box 47, Windhoek, Namibia

4 December 2017

Partners: E. Tjipuka (Managing Partner), R.H. Mc Donald, H. de Bruin,

J. Cronjé, A. Akayombokwa , J. Nghikevali, G. Brand*, M. Harrison*

*Director

Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited

CONTINUED

24

Directors’ ReportFOR THE YEAR ENDED 30 SEPTEMBER 2017

The directors herewith submit their report which forms part of the

annual financial statements of the company and the group annual

financial statements for the financial year ended 30 September 2017.

1. Nature of Business

MTC conducts business as a registered telecommunications

provider. The principal nature of the business is to invest in the

telecommunications infrastructure of Namibia for provisioning of

total communication solutions to the customer base. Although MTC

is an autonomous Namibian company, it also provides international

telecommunication solutions through direct liaison with providers of

telecommunication services worldwide.

The nature of the business did not change during the year under

review. The following business activities are conducted through

controlled entities:

• Jurgens Thirty Four (Pty) Ltd

- Letting of property

• Windhoek General Administrators (Pty) Ltd

- Dormant

• MTC Social Responsibility Trust

- Trust established to harness resources for establishing and

maintaining infrastructure with the principal focus on the care,

welfare and support for children or orphans who can not rely

on the support of their parents and are homeless. The trustees

have previously decided to unwind the trust from 30 June 2009

onwards. Before this process was completed the process was

halted pending a change in the mandate of the trust to focus

on larger corporate social responsibility matters. As at 30

September 2017 the trust had no assets or liabilities to report

(2016: Nil).

2. Financial results

The group and company’s results of operations are set out on page 25.

The financial position of the group and company are set out in the

statements of financial position on page 26.

The group recorded a net profit after tax for the year ended 30

September 2017 of N$711 405 000. This represented an increase of

22% from the net profit after tax of the prior year of N$579 368 000.

The company recorded a net profit after tax for the year ended 30

September 2017 of N$707 020 000. This represented an increase of

22% from the net profit after tax of the prior year of N$579 487 000.

Group and company revenue increased by 4% from N$2 323 533 000 in

the prior year to N$2 420 896 000 for the year ended 30 September

2017.

The increase in group and company revenue is as a result of the

growth in subscriber base as well as a 7% average increase applied by

MTC from June and July 2017 for prepaid and postpaid respectively.

Subscriber base (number of active subscribers) 2017 2016

Pre-paid 2 293 210 2 266 344

Post-paid 160 787 157 865

Total 2 453 997 2 424 209

3. Share capital

The authorised and issued share capital remained unchanged during

the year under review. Details of the authorised, issued and unissued

share capital at 30 September 2017 are set out in note 16 to the

financial statements.

Shareholding 2017 2016

Namibia Post and Telecommunications

Holdings Limited 66% 66%

Africatel Holdings B.V. -% 34%

Samba DutchCo B.V. 34% -%

Total 100% 100%

4. Dividends Distributed 2017 2016

N$ ‘000 N$ ‘000

Declared 6 December 2016

paid 30 December 2016 112 200 -


paid 31 December 2016 217 800 -

Declared 30 June 2017

paid 28 July 2017 53 890 -


paid 31 July 2017 104 610 -


paid 23 December 2015 - 153 120


paid 31 December 2015 - 78 880


paid 29 June 2016 - 84 660


paid 30 June 2016 - 164 340

488 500 481 000

25

5. Dividend declared subsequent to year end

On 4 December 2017, a dividend of N$197 400 000 was declared, but

has not yet been paid out to the shareholders at the date of these

financial statements.

6. Insurance and risk management

The group follows a policy of reviewing the risks relating to assets and

possible liabilities arising from business transactions with its insurers

on at least an annual basis. Wherever possible assets are automatically

included. There is also a continuous asset risk control programme,

which is carried out in conjunction with the group’s insurance brokers.

All risks are considered to be adequately covered, except for political

risks, in the case of which as much cover as is reasonably available has

been arranged.

7. Capital expenditure

For the year under review, capital expenditure approved was N$524

million (2016: N$513 million) which included capital expenditure carried

forward from the previous financial year. The capital expenditure

incurred was N$479 million (2016: N$488 million), which was funded

out of internal cash generated from operations, with the main aim to

ensure capacity in the existing network and extensive coverage within

Namibia. The capital expenditure incurred was less than the approved

expenditure due mainly to unforeseen circumstances resulting in certain

delays of capital expenditure.

8. Property, plant and equipment

There was no change in the nature or use of the group’s and company’s

property, plant and equipment.

9. Subsidiaries

Details of material interests in subsidiary companies are presented in

the group annual financial statements in note 12.

10. Directorate

The directors in office at the date of this report are as follows:

Directors Office Designation Nationality Changes

A M Ferreira Geraldes Managing Director Executive Portuguese Resigned 31 January 2017

T M Munyika Director Non-executive Namibian

E E Nashilongo Chairperson Non-executive Namibian Appointed 01 October 2016

L P Mbwale Director Non-executive Namibian Appointed 01 October 2016

S Galloway Director Executive Namibian Appointed 01 October 2016

L H Soares Rosa Director Executive Brazilian Resigned 31 January 2017

Directors’ ReportFOR THE YEAR ENDED 30 SEPTEMBER 2017

11. Subsequent events

The directors are not aware of any material event which occurred

after the reporting date and up to the date of this report.

12. Secretary

The company secretary is Mrs Patience Kanalelo.

Business address: Corner of Hamutenya Ndadi & Mose Tjitendero Street

Olympia

Windhoek Namibia

26

GROUP COMPANY

Notes 2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

Revenue 3 2 420 896 2 323 533 2 420 896 2 323 533

Other income 1 598 1 321 1 920 1 735

Total income 2 422 494 2 324 854 2 422 816 2 325 268

Changes in inventories of finished goods (122 499) (109 479) (122 499) (109 479)

Direct costs (388 181) (413 258) (388 181) (413 258)

Sales and marketing (57 491) (79 072) (57 491) (79 072)

General and administration (185 791) (178 267) (185 635) (178 578)

Personnel costs (265 740) (239 793) (265 740) (239 793)

Depreciation (170 572) (198 302) (170 490) (198 228)

Amortisation (233 349) (282 678) (233 349) (282 678)

Profit from operations 3 998 871 824 005 999 431 824 182

Finance income 4 37 570 27 695 37 567 27 694

Finance costs 5 (24) (27) (24) (27)

Profit before taxation 1 036 417 851 673 1 036 974 851 849

Taxation 7 (325 012) (272 305) (325 155) (272 362)

Profit for the year 711 405 579 368 711 819 579 487

Other comprehensive income - - - -

Total comprehensive income for the year 711 405 579 368 711 819 579 487

Profit attributable to:

Owners of the parent 711 405 579 368 711 819 579 487

Total comprehensive income attributable to:

Owners of the parent 711 405 579 368 711 819 579 487

EARNINGS PER SHARE

Per share information

Basic and diluted earnings per share (Cents) 8 2 845.62 2 317.47 2 847.28 2 317.95

Dividends paid per share information

Interim (Cents) 8 634.00 996.00 634.00 996.00

Final (Cents) 8 1 320.00 928.00 1 320.00 928.00

1 954.00 1 924.00 1 954.00 1 924.00

Profit or Loss and Other Comprehensive IncomeSTATEMENTS OF


27

Financial PositionSTATEMENTS OF

AS AT 30 SEPTEMBER 2017

GROUP COMPANY

Notes 2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

ASSETS

Non-Current Assets

Property, plant and equipment 9 864 985 830 122 862 722 827 818

Intangible assets 11 502 771 466 246 502 771 466 246

Investments in subsidiaries 12 - - 3 688 3 083

Long term deposit 22 63 930 30 974 63 930 30 974

1 431 686 1 327 342 1 433 111 1 328 121

Current Assets

Inventories 13 113 035 63 671 113 035 63 671

Trade and other receivables 14 185 413 132 200 185 392 132 200

Cash and cash equivalents 15 599 861 442 605 599 740 442 553

898 309 38 476 898 167 638 424

Total assets 2 329 995 1 965 818 2 331 278 1 966 545

EQUITY AND LIABILITIES

Equity

Share capital 16 25 000 25 000 25 000 25 000

Retained income 1 481 655 1 258 750 1 482 412 1 259 093

1 506 655 1 283 750 1 507 412 1 284 093

LIABILITIES

Non-Current Liabilities

Deferred taxation 17 255 000 235 268 255 547 235 673

Current Liabilities

Trade and other payables 18 398 929 248 093 398 888 248 052

Deferred revenue 19 157 688 163 603 157 688 163 603

Current tax payable 11 723 35 104 11 743 35 124

568 340 446 800 568 319 446 779

Total liabilities 823 340 682 068 823 866 682 452

Total equity and liabilities 2 329 995 1 965 818 2 331 278 1 966 545

28

Changes in EquitySTATEMENTS OF


Share capital Retained income Total equity

N$’000 N$’000 N$’000

GROUP

Balance at 01 October 2015 25 000 1 160 382 1 185 382

Profit for the year - 579 368 579 368

Other comprehensive income - - -

Total comprehensive income for the year - 579 368 579 368

Dividends - (481 000) (481 000)

Total contributions by and distributions to owners of

company recognised directly in equity - (481 000) (481 000)





Dividends - (488 500) (488 500)



Balance at 30 September 2017 25 000 1 481 655 1 506 655

Note 16

COMPANY





Dividends - (481 000) (481 000)







Dividends - (488 500) (488 500)



Balance at 30 September 2017 25 000 1 482 412 1 507 412

Note 16

29

Cash FlowsSTATEMENT OF


GROUP COMPANY

Notes 2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 2 369 281 2 300 207 2 369 624 2 300 621

Cash paid to suppliers and employees (924 720) (1 021 621) (924 566) (1 021 939)

Cash generated from operations 20 1 444 561 1 278 586 1 445 058 1 278 682

Interest income 37 570 27 695 37 567 27 694

Finance costs (24) (27) (24) (27)

Tax paid 21 (328 662) (244 127) (328 662) (244 127)

Net cash from operating activities 1 153 445 1 062 127 1 153 939 1 062 222

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment 9 (203 722) (184 375) (203 681) (184 375)

Proceeds on disposal of property, plant and equipment 9 735 523 735 523

Purchase of other intangible assets 11 (244 262) (293 457) (244 262) (293 457)

Net movements in loan to subsidiary - - (605) (102)

Construction deposit paid (63 930) (30 974) (63 929) (30 974)

Net cash from investing activities (511 179) (508 283) (511 742) (508 385)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid (488 500) (481 000) (488 500) (481 000)

Total cash movement for the year 153 766 72 844 153 697 72 837

Cash at the beginning of the year 442 605 370 605 442 553 370 560

Net foreign exchange differences 3 490 (844) 3 490 (844)

Total cash at end of the year 15 599 861 442 605 599 740 442 553

30

Accounting PoliciesFOR THE YEAR ENDED 30 SEPTEMBER 2017

1. Significant accounting policies

The principal accounting policies applied in the preparation of these

consolidated and separate annual financial statements are set out

below.

These accounting policies are consistent with the previous period.

1.1 Basis of preparation

The annual financial statements set out on pages 20 to 73 have

been prepared on the going concern basis in accordance with, and

in compliance with, International Financial Reporting Standards

(“IFRS”) and International Financial Reporting Interpretations

Committee (“IFRIC”) interpretations issued and effective at the time

of preparing these annual financial statements and the Companies

Act, No 28 of 2004.

The annual financial statements have been prepared on the historic

cost convention, unless otherwise stated in the accounting policies

which follow and incorporate the principal accounting policies set out

below. They are presented in Namibia Dollars (N$‘000), which is the

group and company’s functional currency.

These accounting policies are consistent with the previous period.

1.2 Statement of compliance

The financial statements of the company and group have been prepared

in accordance with International Financial Reporting Standards (IFRS’s)

as issued by the International Accounting Standards Board (IASB) and

the requirements of the Companies Act of Namibia. References to

“the group“ includes the company, unless stated otherwise.

1.3 Consolidation

Basis of consolidation

The consolidated annual financial statements incorporate the annual

financial statements of the company and all subsidiaries. Subsidiaries are

entities (including structured entities) which are controlled by the group.

The group has control of an entity when it is exposed to or has rights

to variable returns from involvement with the entity and it has the

ability to affect those returns through the use of its power over the

entity.

The results of subsidiaries are included in the consolidated annual

financial statements from the effective date of acquisition to the

effective date of disposal.

Adjustments are made when necessary to the annual financial

statements of subsidiaries to bring their accounting policies in line

with those of the group.

All inter-company transactions, balances, and unrealised gains

on transactions between group companies are eliminated in full

on consolidation. Unrealised losses are also eliminated unless

the transaction provides evidence of an impairment of the asset

transferred.

Non-controlling interests in the net assets of consolidated subsidiaries

are identified and recognised separately from the group’s interest

therein, and are recognised within equity. Losses of subsidiaries

attributable to non-controlling interests are allocated to the non-

controlling interest even if this results in a debit balance being

recognised for non-controlling interest.

Where a subsidiary is disposed of and a non-controlling shareholding

is retained, the remaining investment is measured to fair value with the

adjustment to fair value recognised in profit or loss as part of the gain

or loss on disposal of the controlling interest. The fair value is the initial

carrying amount for the purposes of subsequently accounting for the

retained interest as an associate, joint venture or financial asset. In

addition, any amounts previously recognised in other comprehensive

income in respect of that entity are accounted for as if the group had

directly disposed of the related assets or liabilities. This may mean

that amounts previously recognised in other comprehensive income

are reclassified to profit or loss.

1.4 Significant judgements and sources of estimation uncertainty

The preparation of the group’s consolidated financial statements

in conformity with IFRS requires management, from time to time,

to make judgements, estimates and assumptions that affect the

application of policies and reported amounts of assets, liabilities,

income and expenses. These estimates and associated assumptions

are based on experience and various other factors that are believed

to be reasonable under the circumstances. Actual results may differ

from these estimates. The estimates and underlying assumptions are

reviewed on an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimates are revised and in any

future periods affected.

31


1.4 Significant judgements and sources of estimation uncertainty

(continued)

Certain accounting policies have been identified as involving

particularly complex or subjective judgements or assessments, as

follows:

Key sources of estimation uncertainty

Trade receivables

The group assesses its trade receivables for impairment at the end

of each reporting period. In determining whether an impairment loss

should be recorded in profit or loss, the group makes judgements

as to whether there is observable data indicating a measurable

decrease in the estimated future cash flows from the financial asset.

The impairment (or loss allowance) for trade receivables is calculated

on a portfolio basis, except for individually significant trade

receivables which are assessed separately. The impairment test on

the portfolio is based on historical loss ratios, adjusted for national

and industry-specific economic conditions and other indicators

present at the reporting date that correlate with defaults on the

portfolio.

Impairment testing

The group reviews and tests the carrying value of assets when events

or changes in circumstances suggest that the carrying amount

may not be recoverable. When such indicators exist, management

determine the recoverable amount by performing value in use

and fair value calculations. These calculations require the use of

estimates and assumptions. When it is not possible to determine the

recoverable amount for an individual asset, management assesses

the recoverable amount for the cash generating unit to which the

asset belongs.

Factors taken into consideration in reaching such an decision include

the economic viability of the asset or economic unit of assets.

Useful lives and residual values of property, plant and equipment

Management assess the appropriateness of the useful lives and

residual values of property, plant and equipment at the end of each

reporting period and may vary depending on a number of factors. In

assessing asset lives, factors such as technological innovation and

maintenance programmes are taken into account. Residual value

assessments consider issues such as future market conditions, the

remaining life of the asset and projected disposal values.

When the estimated useful life of an asset differs from previous

estimates, the change is applied prospectively in the determination

of the depreciation charge.

Intangible assets

Intangible assets are amortised over their finite useful lives, The

carrying amount of intangible assets is reviewed annually and

adjusted for impairment if their is any indication that it may be

impaired.

Sources of estimation uncertainty

There are no key assumptions concerning the future and other

key sources of estimation uncertainty at the reporting date that

management have assessed as having a significant risk of causing

material adjustment to the carrying values of the assets and liabilities

within the next financial year, except for the assumptions and key

sources of estimation uncertainty with regard to retention bonuses

as disclosed in note 18.

1.5 Property, plant and equipment

An item of property, plant and equipment is recognised as an asset when

it is probable that future economic benefits associated with the item will

flow to the group, and the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost. Cost

includes all of the expenditure which is directly attributable to the

acquisition or construction of the asset, including the capitalisation

of borrowing costs on qualifying assets and adjustments in respect

of hedge accounting, where appropriate.

Expenditure incurred subsequently for major services, additions

to or replacements of parts of property, plant and equipment are

capitalised if it is probable that future economic benefits associated

with the expenditure will flow to the group and the cost can be

measured reliably. Day to day servicing costs are included in profit or

loss in the year in which they are incurred.

Major spare parts and stand by equipment which are expected to be used

for more than one year are included in property, plant and equipment.

Property, plant and equipment is subsequently stated at cost less

accumulated depreciation and any accumulated impairment losses,

except for land which is stated at cost less any accumulated impairment

losses.

32


1.5 Property, plant and equipment (continued)

Depreciation is calculated so as to write off the cost of property,

plant and equipment on a straight-line basis, over the estimated

useful life of the asset to its residual value. Land is not depreciated.

Capital work-in-progress is not depreciated as these assets are not

yet available for use. Depreciation rates used are:

2017 2016

per annum per annum

Buildings 5% 5%

Computer and

prepaid equipment 2.28 - 100% 8.28 - 100%

Network equipment 4.6 - 60% 4.6 - 60%

Motor vehicles

(excl. Land Cruisers) 16 - 25% 16 - 25%

Motor vehicles 9.6 - 25% 9.6 - 25%

Furniture and fittings 2.26 - 26.09% 5.26 - 26.09%

Leasehold improvements 16.67 - 46.15% 16.67 - 46.15%

Staff handsets 50 - 100% 50 - 100%

Projects 50% 50%

The residual value, useful life and depreciation method of each asset

are reviewed at the end of each reporting year. If the expectations

differ from previous estimates, the change is accounted for

prospectively as a change in accounting estimate. Refer to note 10 for

the effect of this review on the current annual financial statements.

The carrying values of property, plant and equipment are reviewed

for impairment when events or changes in circumstances indicate the

carrying value may not be recoverable. If any such indication exists

and where the carrying values exceed the estimated recoverable

amount, the assets or cash-generating units are written down to

their recoverable amount. The recoverable amount of property,

plant and equipment is the greater of net selling price and value in

use. In assessing value in use, the estimated future cash flows are

discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money and

the risks specific to the asset. Each significant component included in

an item of property, plant and equipment is separately recorded and

depreciated. The depreciation rates corresponds to the estimated

average useful lives of the respective assets. For an asset that does

not generate largely independent cash inflows, the recoverable

amount is determined for the cash-generating unit to which the asset

belongs. Impairment losses are recognised in the statement of profit

or loss and other comprehensive income.

An item of property, plant and equipment is derecognised upon

disposal or when no future economic benefits are expected to

arise from the continued use of the asset. Any gain or loss arising

on derecognition of the asset is included in the statement of profit

or loss and other comprehensive income in the year the item is

derecognised.

General and special purpose buildings are generally classified as

owner occupied. They are held at cost and depreciated as property,

plant and equipment and not regarded as investment properties.

1.6 Intangible assets

Intangible assets acquired separately are measured on initial

recognition at cost. Following initial recognition, intangible assets

are carried at cost less any accumulated amortisation and any

accumulated impairment losses. Intangible assets are recognised if

any future economic benefits are expected and those benefits could

be reliably measured. Intangible assets consist of software licences.

The amortisation rate used is:

2017 2016

per annum per annum

Computer software 8 - 70.59% 8 - 70.59%

Network software 7 - 33.33% 7 - 33.33%

Customer bases 7.69 - 66.67% 8 - 66.67%

Licenses 20% 20%

The useful lives of intangible assets are assessed as either finite

or indefinite. Intangibles with finite lives are amortised over the

useful economic life and assessed for impairment whenever there

is an indication that the intangible asset may be impaired. The

amortisation expense is recognised in profit or loss in the statement

of profit or loss and other comprehensive income.

The amortisation period and the amortisation method is reviewed

at each financial year end. Changes in the expected useful life of the

assets are accounted for by changing the amortisation period, as

appropriate, and treated as changes in accounting estimates. Refer

to note 10 for the effect of this review on the current annual financial

statements.

33


1.7 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction

or production of qualifying assets are capitalised as part of the cost

of such asset. All other borrowing costs are recognised as an expense

when incurred. Borrowing costs consist of interest and other costs

that an entity incurs in connection with the borrowing of funds.

1.8 Investments and other financial assets

Financial assets within the scope of “IAS 39: Financial Instruments

recognition and measurement” are classified as financial assets at fair

value through profit or loss, loans and receivables, held to maturity

investments and available for sale financial assets, as appropriate.

When financial assets are recognised initially, they are measured at

fair value plus, in the case of investments not at fair value through

profit or loss, directly attributable transaction costs.

The group determines the classification of its financial assets on

initial recognition and, where allowed and appropriate, re-evaluates

this designation at each financial year end. At year end the group’s

financial assets consist of loans and receivables and financial

instruments at fair value through profit or loss.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed

or determinable payments that are not quoted in an active market.

After initial measurement loans and receivables are subsequently

carried at amortised cost using the effective interest method less

any allowance for impairment. Amortised cost is calculated taking

into account any discount or premium on acquisition and includes

fees that are an integral part of the effective interest rate and

transaction costs. Gains and losses are recognised in profit or loss

in the statement of profit or loss and other comprehensive income

when the loans and receivables are derecognised or impaired, as well

as through the amortisation process.

Fair value

The fair value of investments that are actively traded in organised

financial markets is determined by reference to quoted market bid

prices at the close of business on the reporting date. For investments

where there is no active market, fair value is determined using

valuation techniques. Such techniques include using recent arm’s

length market transactions; reference to the current market value of

another instrument, which is substantially the same; discounted cash

flow analysis or other valuation models.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss includes financial

assets held for trading and financial assets designated upon initial

recognition at fair value through profit or loss.

Financial assets are classified as held for trading if they are

acquired for the purpose of selling or repurchasing in the near term

Derivatives, including separated embedded derivatives are also

classified as held for trading unless they are designated as effective

hedging instruments as defined by IAS 39. Financial assets at fair

value through profit and loss are carried in the statement of financial

position at fair value with net changes in fair value recognised as

finance costs in profit and loss. Financial assets designated upon

initial recognition at fair value through profit and loss are designated

at their initial recognition date and only if the criteria under IAS 39

are satisfied.

1.9 Impairment of financial assets

The group assesses at each reporting date whether a financial asset

or group of financial assets is impaired.

Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans

and receivables carried at amortised cost has been incurred, the

amount of the loss is measured as the difference between the asset’s

carrying amount and the present value of estimated future cash

flows (excluding future credit losses that have not been incurred)

discounted at the financial asset’s original effective interest rate

(i.e. the effective interest rate computed at initial recognition). The

carrying amount of the asset shall be reduced either directly or

through use of an allowance account. The amount of the loss shall

be recognised in profit or loss in the statement of profit or loss and

other comprehensive income.

The group first assesses whether objective evidence of impairment

exists individually for financial assets that are significant, and

individually or collectively for financial assets that are not significant.

If it is determined that no objective evidence of impairment exists for

an individually assessed financial asset, whether significant or not,

the asset is included in a group of financial assets with similar credit

risk characteristics and that group of financial assets is collectively

assessed for impairment.

34


1.9 Impairment of financial assets (continued)

Assets carried at amortised cost (continued)

Assets that are individually assessed for impairment and for which

an impairment loss is or continues to be recognised are not included

in a collective assessment of impairment.

If, in a subsequent period, the amount of the impairment loss

decreases and the decrease can be related objectively to an event

occurring after the impairment was recognised, the previously

recognised impairment loss is reversed. Any subsequent reversal of

an impairment loss is recognised in profit or loss in the statement of

profit or loss and other comprehensive income, to the extent that the

carrying value of the asset does not exceed its amortised cost at the

reversal date.

In relation to trade receivables a provision for impairment is

made when there is objective evidence (such as the probability of

insolvency or significant financial difficulties of the debtor) that the

group will not be able to collect all of the amounts due under the

original terms of the invoice. The carrying amount of the receivable

is reduced through the use of an allowance account. Impaired debts

are derecognised when they are assessed as uncollectible.

1.10 Financial liabilities

All financial liabilities are recognised initially at fair value plus, in the

case of loans and borrowings, directly attributable cost. Financial

liabilities are measured at amortised cost where a maturity date

exists, or cost if no maturity date exists.

Subsequently amortised cost is calculated on the effective interest

rate method. Gains and losses on subsequent measurement are

taken to profit or loss in the statement of profit or loss and other

comprehensive income.

1.11 Derecognition of financial assets and liabilities

Financial assets

The Group has transferred its rights to receive cash flows from the

asset or has assumed an obligation to pay the received cash flows

in full without material delay to a third party under a ‘pass-through’

arrangement; and either

- the Group has transferred substantially all the risks and

rewards of the asset, or

Financial assets (continued)

- the Group has neither transferred nor retained substantially

all the risks and rewards of the asset, but has transferred

control of the asset.

Financial liabilities

A financial liability is derecognised when the obligation under the

liability is discharged or cancelled or expires.

1.12 Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount

reported in the consolidated statement of financial position if, and

only if: There is a currently enforceable legal right to offset the

recognised amounts and there is an intention to settle on a net basis,

or to realise the assets and settle the liabilities simultaneously.

1.13 Cash and cash equivalents

Cash and short-term deposits in the statement of financial position

comprise cash at banks and at hand and short term deposits with an

original maturity of three months or less. Cash and cash equivalents

are classified as loans and receivables and are subsequently

recognised at amortised cost.

For the purpose of the consolidated statement of cash flows, cash

and cash equivalents consist of cash and cash equivalents as defined

above, net of outstanding bank overdrafts.

1.14 Inventories

Inventories are valued at the lower of cost and net realisable value.

Cost is incurred in bringing each product to its present location and

condition are accounted for by using the weighted average cost per

item purchased during the financial year. Net realisable value is

the estimated selling price in the ordinary course of business, less

estimated costs of completion and the estimated costs necessary to

make the sale.

35


1.15 Provisions

Provisions are recognised when the group has a present obligation

(legal or constructive) as a result of a past event, it is probable that an

outflow of resources embodying economic benefits will be required

to settle the obligation and a reliable estimate can be made of the

amount of the obligation. Where the group expects some or all of a

provision to be reimbursed, for example under an insurance contract,

the reimbursement is recognised as a separate asset but only when

the reimbursement is virtually certain. The expense relating to any

provision is presented in the statement of profit or loss and other

comprehensive income net of any reimbursement. If the effect of

the time value of money is material, provisions are discounted using

a current pre tax rate that reflects, where appropriate, the risks

specific to the liability. Where discounting is used, the increase in the

provision due to the passage of time is recognised as a finance cost.

Defined contribution plans

Contributions in respect of defined contribution plans are recognised

as an expense in the year to which they relate.

1.16 Leases

Leases are classified as finance leases whenever the terms of the

lease transfer substantially all the risks and rewards of ownership to

the lessee. All other leases are classified as operating leases.

Group as lessor

Amounts due from lessees under finance leases are recorded as

receivables at the amount of the group’s net investment in the

leases. Finance lease income is allocated to the accounting periods

so as to reflect a constant periodic rate of return on the group’s net

investment outstanding in respect of the leases.

Rental income from operating leases is recognised on a straight-line

basis over the term of the relevant lease. Initial direct costs incurred

in negotiating and arranging an operating lease are added to the

carrying amount of the lease payments and recognised on a straight-

line basis over the lease term.

Group as lessee

Assets held under finance leases are initially recognised as the

assets of the group at their fair value at the inception of the lease

or, if lower, at the present value of the minimum lease payments. The

corresponding liability to the lessor is included in the statement of

financial position as a finance lease obligation.

Group as lessee (continued)

Lease payments are apportioned between finance charges and

reduction of the lease obligation so as to achieve a constant rate of

interest on the remaining balance of the liability. Finance charges are

charged directly to profit or loss, unless they are directly attributable

to qualifying assets, in which case they are capitalised in accordance

with the group’s general policy on borrowing costs. Contingent

rentals are recognised as expenses in the periods in which they

incurred.

Operating lease payments are recognised as an expense on a straight-

line basis over the lease term, except where another systematic

basis is more representative of the time pattern in which economic

benefits from the leased asset are consumed. Contingent rentals

arising under operating leases are recognised as an expense in the

period in which they are incurred.

In the event that lease incentives are received to enter into operating

leases, such incentives are recognised as a liability. The aggregate

benefit of incentives is recognised as a reduction of rental expense

on a straight-line basis, except where another systematic basis is

more representative of the time pattern in which economic benefits

from the leased asset are consumed.

1.17 Revenue recognition

Revenue is recognised to the extent that it is probable that the

economic benefits will flow to the group and the revenue can

be reliably measured. Revenue is measured at the fair value of

the consideration receivable, excluding discounts, rebates, and

other sales taxes or duty. The group invoices independent service

providers for the revenue billed by them on behalf of the group, when

the deliverables are used.

The following specific recognition criteria must also be met before

revenue is recognised:

Post-paid products

Post-paid products may include deliverables such as a SIM-card, a

handset and a fixed period service and are defined as arrangements

with multiple deliverables. The arrangement consideration is allocated

to each deliverable based on the fair value of each deliverable on a

standalone basis as a percentage of the aggregated fair value of the

individual deliverables.

36


1.17 Revenue recognition (continued)

Post-paid products (continued)

Based on usage commencing on activation date. Unused airtime

is deferred in full and recognised in the month of usage or on

termination of the contract by the subscriber.

Revenue allocated to the identified deliverables in each revenue

arrangement and the cost applicable to these identified deliverables

are recognised based on the same recognition criteria of the

individual deliverable at the time the product or service is delivered.

- Revenue from connect packages, which includes activation,

SIM-cards and phone, is recognised over the period of the

contract.

- Revenue from SIM-cards, representing activation fees, is

recognised upon activation of the SIM-card by the postpaid

customer.

- Revenue from handsets is recognised when the product is

delivered.

- Monthly service revenue received from the customer is

recognised in the period in which the service is rendered.

- Airtime revenue is recognised on the usage basis.

Pre-paid products

Pre-paid products may include deliverables such as a SIM-card, a

handset and airtime and are defined as arrangements with multiple

deliverables. The arrangement consideration is allocated to each

deliverable based on the fair value of each deliverable on a standalone

basis as a percentage of the aggregated fair value of the individual

deliverables.

Revenue allocated to the identified deliverables in each revenue

arrangement and the cost applicable to these identified deliverables

are recognised based on the same recognition criteria of the

individual deliverable at the time the product or service is delivered.

- Revenue from SIM-cards, representing activation fees, is

recognised upon activation of the SIM-card by the prepaid

customer.

- Airtime revenue is recognised on the usage basis. The unused

airtime is deferred in full.

- Deferred revenue related to unused airtime is recognised

when utilised by the customer.

Upon termination of the customer contract, all deferred revenue for

unused airtime is recognised in revenue.

Pre-paid products (continued)

Deferred revenue and costs related to unactivated starter packs,

which do not contain any expiry date, are recognised in the period

when the probability of these starter packs being activated becomes

remote.

Data service revenue

Revenue net of discounts, from data services is recognised when

the company has performed the related service and depending on

the nature of the service, is recognised either at the gross amount

billed to the customer or the amount receivable by the company as

commission for facilitating the service.

Sale of equipment

Revenue from equipment sales are recognised when the product is

delivered and acceptance has taken place.

Revenue from equipment sales to third party service providers is

recognised when delivery is accepted. No rights of return exist on

sale to third party service providers.

Interconnect and international revenue

Interconnect and international revenue is recognised on the usage

basis.

Interest

Revenue is recognised as interest accrues (using the effective interest

method that is the rate that exactly discounts estimated future cash

receipts through the expected life of the financial instrument to the

net carrying amount of the financial asset).

Rental income

Rental income arising from operating leases of the base stations and

other equipment are recognised on a straightline basis over the lease

terms.

37


1.18 Tax

Current tax

Current tax assets and liabilities for the current and prior periods are

measured at the amount expected to be recovered from or paid to

the taxation authorities. The tax rates and tax laws used to compute

the amount are those that are enacted or substantively enacted by

the reporting date.

Deferred tax

Deferred tax is provided, using the liability method, on all temporary

differences at the reporting date between the tax bases of assets

and liabilities and their carrying amounts for financial reporting

purposes.

Deferred tax liabilities are recognised for all taxable temporary

differences.

Deferred tax assets are recognised for all deductible temporary

differences, carry-forward of unused tax assets and unused tax

losses, to the extent that it is probable that taxable profit will be

available against which the deductible temporary differences, carry-

forward of unused tax assets and unused tax losses can be utilised.

In respect of deductible temporary differences associated with

investments in subsidiaries, deferred tax assets are only recognised

to the extent that it is probable that the temporary differences will

reverse in the foreseeable future and taxable profit will be available

against which the temporary difference can be utilised.

The carrying amount of deferred tax assets is reviewed at each

reporting date and reduced to the extent that it is no longer probable

that sufficient taxable profit will be available to allow all or part of the

deferred tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each

reporting date and are recognised to the extent that it has become

probable that future taxable profit will allow the deferred tax asset

to be recovered.

Deferred income tax assets and liabilities are measured at the tax

rates that are expected to apply to the period when the asset is

realised or the liability is settled, based on tax rates (and tax laws)

that have been enacted or substantively enacted at the reporting

date.

Deferred tax (continued)

Current and deferred tax relating to items recognised directly in

equity is recognised in equity and not in the statement of profit or

loss and other comprehensive income.

Value added tax

Revenues, expenses and assets are recognised net of the amount of

value added tax except:

- where the value added tax incurred on a purchase of assets or

services is not recoverable from the taxation authority, in

which case the value added tax is recognised as part of the

cost of acquisition of the asset or as part of the expense item

as applicable; and

- receivables and payables that are stated with the amount of

value added tax included.

The net amount of value added tax recoverable from, or payable to,

the taxation authority is included as part of receivables or payables

in the statement of financial position.

1.19 Translation of foreign currencies

Transactions in foreign currencies are initially recorded at the

functional currency spot rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are

re-translated at the functional currency spot rate of exchange ruling

at the reporting date. All differences are taken to profit or loss.

Non-monetary items that are measured in terms of historical cost

in a foreign currency are translated using the exchange rates as at

the dates of the initial transactions. Non-monetary items measured

at fair value in a foreign currency are translated using the exchange

rates at the date when the fair value is determined. The gain or loss

arising on retranslation of non-monetary items is treated in line with

the recognition of gain or loss on change in fair value of the item.

The functional currency of the group is Namibia Dollar.

38

Notes to the Annual Financial StatementsFOR THE YEAR ENDED 30 SEPTEMBER 2017

2. New Standards and Interpretations

2.1 Standards and interpretations effective and adopted in the current year

In the current year, the group has adopted the following standards and interpretations that are effective for the current financial year and that

are relevant to its operations:

2.2 Standards and interpretations not yet effective

The group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the

group’s accounting periods beginning on or after 1 October 2017 or later periods:

Standard/ Interpretation: Effective date:

Years beginning on or after

Expected impact:

Amendments to IAS 16 and IAS 38: Clarification of

Acceptable Methods of Depreciation and Amortisation.01 January 2016. The impact of the standard is not material.

Amendments to IFRS 10, 12 and IAS 28: Investment

Entities. Applying the consolidation exemption.01 January 2016. The impact of the amendment is not material.

Amendment to IFRS 7: Financial Instruments:

Disclosures: Annual Improvements project.01 January 2016. The impact of the amendment is not material.

Amendment to IAS 19: Employee Benefits: Annual

Improvements project.01 January 2016. The impact of the amendment is not material.

Disclosure Initiative: Amendment to IAS 1: Presentation of

Financial Statements.01 January 2016. The impact of the amendment is not material.

Standard/ Interpretation: Effective date:

Years beginning on or after

Expected impact:

Amendments to IFRS 10 and IAS 28: Sale or Contribution of

Assets between an Investor and its Associate or Joint Venture.01 January 2099. Unlikely there will be a material impact

Insurance Contracts. 01 January 2021. Unlikely there will be a material impact.

Uncertainty over Income Tax Treatments. 01 January 2019. Unlikely there will be a material impact.

IFRS 16 Leases. 01 January 2019. Impact is currently being assessed.

IFRS 9 Financial Instruments. 01 January 2018. Impact is currently being assessed.

IFRS 15 Revenue from Contracts with Customers. 01 January 2018. Impact is currently being assessed.

Amendments to IFRS 15: Clarifications to IFRS 15 Revenue

from Contracts with Customers.01 January 2018. Impact is currently being assessed.

Amendments to IFRS 2: Classification and Measurement of

Share-based Payment Transactions.01 January 2018. Unlikely there will be a material impact.

Amendments to IFRS 12: Annual Improvements to IFRS

2014 - 2016 cycle.01 January 2017. Unlikely there will be a material impact.

Amendments to IAS 7: Disclosure initiative. 01 January 2017. Unlikely there will be a material impact.

Amendments to IAS 12: Recognition of Deferred Tax Assets

for Unrealised Losses.01 January 2017. Unlikely there will be a material impact.

39


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

3. Profit from operations

Profit from operations for the year

is stated after accounting for the following:

REVENUE 2 420 896 2 323 533 2 420 896 2 323 533

Contract 832 363 771 290 832 363 771 290

Connection fees 2 926 3 548 2 926 3 548

Call charges 197 553 167 038 197 553 167 038

Monthly subscription fees 557 213 524 464 557 213 524 464

Other income 74 671 76 240 74 671 76 240

Pre-paid 1 373 170 1 349 114 1 373 170 1 349 114

Starter packs 8 778 8 639 8 778 8 639

Call charges 1 357 198 1 333 503 1 357 198 1 333 503

Other income 7 194 6 972 7 194 6 972

Roaming income 86 155 62 007 86 155 62 007

Contract 10 096 8 571 10 096 8 571

Visitors 76 059 53 436 76 059 53 436

Handset and accessories sales 70 050 73 478 70 050 73 478

Interconnect income 18 227 31 092 18 227 31 092

Bulk sms revenue 32 786 28 920 32 786 28 920

Site rental 8 145 7 632 8 145 7 632

Income from subsidiaries

- Management fees - Jurgens 34 (Pty) Ltd - - 456 414

40


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

3. Profit from operations (continued)

EXPENSES

Auditors’ remuneration 1 859 1 565 1 825 1 531

- audit fees 1 859 1 565 1 825 1 531

Bad debts written off 29 293 24 333 29 293 24 333

Bad debts recovered (12 980) (12 584) (12 980) (12 584)

(Profit) / loss on exchange differences (1 350) 3 822 (1 350) 3 822

Depreciation on property, plant and equipment 170 572 198 302 170 490 198 228

(Loss) on disposal of plant and equipment (2 895) (519) (2 895) (519)

Amortisation - intangible asset 233 349 282 678 233 349 282 678

Operating lease charges

Premises

- subsidiary - Jurgens 34 (Pty) Ltd - - 100 550

- shareholder - NPTH Limited 18 565 18 480 18 565 18 480

- unrelated parties 9 470 9 219 9 470 9 219

- other 784 1 068 784 1 068

Radio sites and other 29 759 28 551 29 759 28 551

58 578 57 318 58 678 57 868

Fees for services - consulting fees 951 2 172 951 2 172

Personnel costs 265 740 239 793 265 740 239 793

- salaries and wages 230 399 209 132 230 399 209 132

- pension fund contributions 13 325 11 952 13 325 11 952

- medical aid contributions 9 969 9 191 9 969 9 191

- staff training 5 691 3 391 5 691 3 391

- other staff cost 6 356 6 127 6 356 6 127

Number of employees at year end 577 564 577 564

41


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

4. Investment income

Interest income

From investments in financial assets:

Loans and receivables 37 570 27 695 37 567 27 695

5. Finance costs

Trade and other payables 24 27 24 27

6. Directors’ emoluments and

key management remuneration

Executive director:

- emoluments as executives 3 674 5 959 3 674 5 959

3 674 5 959 3 674 5 959

Non - executive directors:

- Fees as directors 804 703 804 703

Total directors’ emoluments 4 478 6 662 4 478 6 662

Key management (excluding directors):

Short term employee benefits 21 727 19 981 21 727 19 981

Long-term employee benefits 1 086 999 1 086 999

22 813 20 980 22 813 20 980

42


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

7. Taxation

MAJOR COMPONENTS OF THE TAX EXPENSE

Current

Namibian income tax - current period 305 281 273 009 305 281 273 009

Deferred

Originating and reversing temporary differences 19 731 (704) 19 874 (647)

325 012 272 305 325 155 272 362

RECONCILIATION OF THE TAX EXPENSE

Reconciliation between applicable tax rate and

average effective tax rate.

Applicable tax rate 32.00% 32.00% 32.00% 32.00%

Permanent differences (0.87)% (0.03)% (0.87)% (0.03)%

31.13% 31.97% 31.13% 31.97%

8. Earnings per share

Basic earnings per share

From continuing operations (c per share) 2 845.62 2 317.47 2 847.28 2 317.95

Basic and diluted earnings per share of the group was based on earnings of N$ 711 405 000 (2016: N$ 579 368 000) and a weighted average

number of ordinary shares of 25 000 000 (2016: 25 000 000).

Basic and diluted earnings per share of the company was based on earnings of N$ 711 819 000 (2016: N$ 579 487 000) and a weighted

average number of ordinary shares of 25 000 000 (2016: 25 000 000).

Reconciliation of profit or loss for the year

to basic earnings

Profit or loss for the year attributable to equity

holders of the parent 711 405 579 368 711 819 579 487

Diluted earnings per share is equal to earnings per share because there are no dilutive potential ordinary shares in issue.

43


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

8. Earnings per share (continued)

Headline earnings and diluted headline earnings

per share

Headline earnings per share (Cents) 2 857.20 2 319.55 2 858.86 2 320.02

Reconciliation between earnings (loss) and

headline earnings (loss)

Basic earnings 711 405 579 368 711 819 579 487

Adjusted for:

Loss on disposal of plant and equipment 2 895 519 2 895 519

714 300 579 887 714 714 580 006

Reconciliation between diluted earnings (loss)

and diluted headline earnings (loss)

Diluted earnings 711 405 579 368 711 819 579 487

Adjusted for:

Loss on disposal of plant and equipment 2 895 519 2 895 519

714 300 579 887 714 714 580 006

Dividends per share

Interim (Cents) 634.00 996.00 634.00 996.00

Final (Cents) 1 320.00 928.00 1 320.00 928.00

44


9. Property, plant and equipment

GROUP 2017 2016

Cost or Accumulated Carrying Cost or Accumulated Carrying

revaluation depreciation value revaluation depreciation value

N$’000 N$’000 N$’000 N$’000 N$’000 N$’000

Buildings 3 329 (1 099) 2 230 3 329 (1 025) 2 304

Leasehold improvements 39 560 (36 359) 3 201 41 194 (36 879) 4 315

Computer and prepaid equipment 115 295 (86 085) 29 210 114 127 (76 795) 37 332

Vehicles, furniture and fittings 66 141 (41 576) 24 565 57 890 (36 246) 21 644

Network equipment 1 684 121 (903 955) 780 166 1 528 854 (786 142) 742 712

Capital - Work-in-progress 25 613 - 25 613 21 815 - 21 815

Total 1 934 059 (1 069 074) 864 985 1 767 209 (937 087) 830 122

COMPANY

Leasehold improvements 39 560 (36 359) 3 201 41 194 (36 879) 4 315

Computer and prepaid equipment 115 295 (86 085) 29 210 114 127 (76 795) 37 332

Vehicles, furniture and fittings 66 100 (41 568) 24 532 57 890 (36 246) 21 644

Network equipment 1 684 121 (903 955) 780 166 1 528 854 (786 142) 742 712

Capital - Work-in-progress 25 613 - 25 613 21 815 - 21 815

Total 1 930 689 (1 067 967) 862 722 1 763 880 (936 062) 827 818

45

9.

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per

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nt

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qu

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(con

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)

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t

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tes

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tem

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FOR

TH

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30

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PT

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46

9.

Pro

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ty, pla

nt

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(con

tin

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)

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cilia

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of

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, pla

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men

t -

Com

pany

- 2

017

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ture

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liati

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f pr

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ty, p

lant

and

equip

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t -

Com

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00

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of U

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TH

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SE

PT

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BE

R 2

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47


10. Change in accounting estimate

In the current year the residual values and estimated useful lives of all categories of property, plant and equipment as well as Intangible

assets were reassessed in accordance with IAS 16 Property, plant and equipment and IAS 38 Intangible assets. This resulted in a change in the

estimated remaining useful life of property plant and equipment and intangible assets.

The financial impact of the change in the estimated remaining useful lives was a decrease of the current year depreciation and amortisation

charges, resulting in an increase in current year profit before taxation of N$6.221 million (2016: profit before taxation decreased by N$65.591

million).

The decrease in the current year charges for depreciation and amortisation due to the change in the estimated useful lives will result in

effectively increasing the charges in future periods and therefore effectively decrease profit before taxation for those future periods.

The financial impact of this change in the accounting estimate for the future periods are not disclosed per future financial period since this

is considered to be impracticable.

11. Intangible assets

GROUP 2017 2016

Cost Accumulated Carrying Cost Accumulated Carrying

amortisation value amortisation value

N$’000 N$’000 N$’000 N$’000 N$’000 N$’000

Licenses 9 270 (924) 8 346 1 159 (692) 467

Computer software 215 495 (107 625) 107 870 348 247 (199 753) 148 494

Network software 437 636 (198 974) 238 662 351 948 (170 642) 181 306

Customer bases 285 946 (138 053) 147 893 275 541 (139 562) 135 979

Total 948 347 (445 576) 502 771 976 895 (510 649) 466 246

COMPANY

Licenses 9 270 (924) 8 346 1 159 (692) 467

Computer software 215 495 (107 625) 107 870 348 247 (199 753) 148 494

Network software 437 636 (198 974) 238 662 351 948 (170 642) 181 306

Customer bases 285 946 (138 053) 147 893 275 541 (139 562) 135 979

Total 948 347 (445 576) 502 771 976 895 (510 649) 466 246

48

11.

In

tan

gib

le a

sset

s (c

on

tin

ued

)

Rec

on

ciliati

on

of

inta

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le a

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s

GR

OU

P -

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ing

Addit

ion

s D

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an

sfer

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m

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sfer

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on

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sin

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ty,

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00

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6

No

tes

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al F

inan

cial

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tem

ents

FOR

TH

E Y

EA

R E

ND

ED

30

SE

PT

EM

BE

R 2

017

49

11.

In

tan

gib

le a

sset

s (c

on

tin

ued

)

Rec

on

ciliati

on

of

inta

ngib

le a

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s

CO

MP

AN

Y -

20

17

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ing

Addit

ion

s D

ispos

als

Tr

an

sfer

fro

m

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sfer

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m

Am

ort

isati

on

Clo

sin

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nce

pro

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ty,

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ctio

n

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nce

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nt

an

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men

t

N$

’00

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N$

’00

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0

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0

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ense

s

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7 8

93

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71

Rec

on

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7 7

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1 14

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148

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Net

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oftw

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5

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(915

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00

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rom

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he

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al F

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cial

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tem

ents

FOR

TH

E Y

EA

R E

ND

ED

30

SE

PT

EM

BE

R 2

017

50


12. Investment in subsidiaries

The following table lists the entities which are directly controlled by the group.

COMPANY

Name of company % % Carrying Carrying

holding holding amount 2017 amount 2016

2017 2016

Jurgens Thirty Four (Pty) Ltd 100 % 100 % 3 688 3 083

Windhoek General Administrators (Pty) Ltd 100 % 100 % - -

3 688 3 083

The intercompany loan, has no fixed repayment terms and does not bear interest.

Attributable to Mobile Telecommunications Limited

Jurgens Thirty Four (Pty) Ltd - Aggregate profit/(loss) after tax - - 1 127 (69)

GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

13. Inventories

Network consumables 79 511 6 010 79 511 6 010

Subscriber identity modules 10 069 14 230 10 069 14 230

Handset and accessories 23 455 43 431 23 455 43 431

113 035 63 671 113 035 63 671

Inventory carried at net realisable value 16 673 8 559 16 673 8 559

The amount of write-down of inventories recognised as an expense is N$4 631 643 (2016: N$4 392 899).

51


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

14. Trade and other receivables

Prepayments and deposits 32 552 29 991 32 552 29 991

Interconnect debtors 24 41 24 41

Customers to the mobile network after provisions 144 585 91 583 144 585 91 583

Other receivables 8 252 10 585 8 231 10 585

185 413 132 200 185 392 132 200

The carrying amount of trade and other

receivables approximates their fair value.

Reconciliation of provision for impairment

of trade and other receivables

Opening balance (15 485) (15 484) (15 485) (15 484)

Additional impairment provision (27 001) (25 016) (27 001) (25 016)

Amounts utilised during the period 29 316 25 015 29 316 25 015

(13 170) (15 485) (13 170) (15 485)

Trade receivables are generally on 30 - 60 days terms.

15. Cash and cash equivalents

Cash and cash equivalents consist of:

Bank balances 95 638 246 407 95 517 246 355

Short-term deposits 504 223 196 198 504 223 196 198

599 861 442 605 599 740 442 553

Cash at bank earns interest at floating rates based on daily bank deposit rates. Cash and cash equivalents comprise cash held by

the group and short-term bank deposits with an original maturity of three months or less. The carrying amount of these assets

approximate their fair value.

52


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

16. Share capital

Authorised

25 000 000 ordinary shares of N$1.00 each 25 000 25 000 25 000 25 000

Issued

25 000 000 ordinary shares of N$1.00 each 25 000 25 000 25 000 25 000

17. Deferred taxation

The movement on the deferred taxation

account is as follows:

Balance at beginning of year (235 268) (235 972) (235 673) (236 320)

Taxation recognised in profit or loss (19 732) 704 (19 874) 647

At end of year (255 000) (235 268) (255 547) (235 673)

Comprising:

Deferred income tax assets

Income received in advance 54 744 56 845 54 744 56 845

Provisions 5 301 4 680 5 301 4 680

Straightlining of leases 7 846 6 038 7 846 6 038

Unrealised forex profit 667 953 667 953

Deferred taxation balance from temporary

differences other than unused tax losses 68 558 68 516 68 558 68 516

Total deferred taxation asset 68 558 68 516 68 558 68 516

53


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

17. Deferred taxation (continued)

Deferred income tax liabilities

Capital allowances (311 077) (293 175) (311 624) (293 581)

Inventories (2 993) (1 923) (2 993) (1 923)

Prepayments (9 488) (8 686) (9 488) (8 685)

Total deferred taxation liability (323 558) (303 784) (324 105) (304 189)

Deferred taxation liability (323 558) (303 784) (324 105) (304 189)

Deferred taxation asset 68 558 68 516 68 558 68 516

Total net deferred taxation liability (255 000) (235 268) (255 547) (235 673)

18. Trade and other payables

Trade payables 153 634 66 507 153 614 66 507

VAT 17 068 25 868 17 117 25 870

Accruals 225 940 154 005 225 870 153 962

Other payables 2 287 1 713 2 287 1 713

398 929 248 093 398 888 248 052

Payables are non-interest bearing and are normally settled on 30-day terms.

The company accumulates 13% of a staff member’s average cost to company package over five years of service and pays 70% and 30% of

the accumulated value out to that employee after the fifth and seventh year of service respectively, provided the employee reached a

performance score of 70% or higher in each of the five years. As this expense is dependent upon an uncertain future occurrence, the

provision made reflects only an estimate.

The retention bonus cycle repeats itself from year six.

The carrying amount of trade and other payables approximates their fair value.

54


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

18. Trade and other payables (continued)

The reconciliation between the opening balance and

closing balance of the retention bonus included

in accruals is as follows:

Opening balance at beginning of the year 1 555 1 712 1 555 1 712

Paid during the year (1 567) (1 748) (1 567) (1 748)

Accrued for current year 4 865 1 591 4 865 1 591

Closing balance at end of the year 4 853 1 555 4 853 1 555

19. Deferred revenue

At the beginning of the year 163 603 173 401 163 603 173 401 Airtime sold during the year 1 533 051 1 518 919 1 533 051 1 518 919 Airtime utilised during the year (1 538 966) (1 528 717) (1 538 966) (1 528 717)

At the end of the year 157 688 163 603 157 688 163 603

Current liabilities 157 688 163 603 157 688 163 603

Total 157 688 163 603 157 688 163 603

55


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

20. Cash generated from operations

Profit before taxation 1 036 417 851 673 1 036 974 851 849 Adjustments for: Depreciation and amortisation 403 921 480 980 403 839 480 906 Net loss on disposal of property, plant and equipment 2 895 519 2 895 519 (Profit) / loss on foreign exchange (3 490) 844 (3 490) 844 Interest received - investment (37 570) (27 695) (37 567) (27 694) Finance costs 24 27 24 27 Operating expenditure transferred from work in progress 18 1 18 1 Changes in working capital: Inventories (49 364) 5 712 (49 364) 5 712 Trade and other receivables (53 211) (24 647) (53 192) (24 647) Trade and other payables 150 836 970 150 836 963 Deferred revenue (5 915) (9 798) (5 915) (9 798)

1 444 561 1 278 586 1 445 058 1 278 682

21. Tax paid

Balance at beginning of the year (35 104) (6 222) (35 124) (6 242)

Current tax for the year recognised in profit or loss (305 281) (273 009) (305 281) (273 009)

Balance at end of the year 11 723 35 104 11 743 35 124

(328 662) (244 127) (328 662) (244 127)

56


GROUP COMPANY

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

22. Commitments and contingencies

Capital commitments

Commitments at year end in respect of capital expenditure:

Approved and contracted for

Network expansions 564 761 258 313 564 761 258 313

Retail stock 7 291 24 369 7 291 24 369

572 052 282 682 572 052 282 682

Approved and not contracted for

Network expansions 158 214 103 754 158 214 103 754

Retail stock 152 709 125 232 152 709 125 232

Other - property, plant and equipment 187 460 12 746 187 460 12 746

498 383 241 732 498 383 241 732

This expenditure will be financed from cash generated from normal business operations.

Operating leases – as lessee (expense)

Future minimum rentals payable under non-cancellable

operating leases are as follows as of 30 September:

Premises

GROUP AND COMPANY Radio sites Offices/Shops Total

2017 N$ ‘000 N$ ‘000

Within one year 29 203 8 019 37 222

After one year but not more than five years 129 443 11 397 140 840

More than five years 570 201 - 570 201

728 847 19 416 748 263

Premises

GROUP AND COMPANY Radio sites Offices/Shops Total

2016 N$ ‘000 N$ ‘000

Within one year 28 275 9 953 38 228

After one year but not more than five years 120 754 15 886 136 640

More than five years 555 082 - 555 082

704 111 25 839 729 950

57


22. Commitments and contingencies (continued)

Other commitments

Construction deposits

At 30 September 2017 the group had entered into commitments relating to a network expansion project and 081Every1 project.

Deposits paid before 30 September 2017 relating to work-in-progress on these projects amounted to N$63.930 million. The final payments

of U$9.63 million for phase 2 of the project will be made upon completion of the specific phases of the capital projects, during the 2018 and

2019 financial years.

The construction deposit balance at 30 September 2016 of N$30.974 million related to payments for the network expansion project. The

phase of the projects to which these payments related were completed in the 2017 financial year and the full deposits were transferred to

the relevant capital account before 30 September 2017.

23. Retirement benefit information

The company operates a defined contribution scheme, the MTC Pension Fund (registration number 25/7/7/390), providing benefits based on

the contributions of an employee and is administered by Alexander Forbes. This fund is registered under and governed by the Namibian

Pension Funds Act, 1956 as amended. The fund will be valued every two years. The members of the fund can elect to contribute 7% or the

maximum of 14 %, which will be matched by the employer by the % elected of the members’ pensionable salaries. All contributions of the

company are charged to profit and loss in the statement of comprehensive income as incurred. Employer contributions for the year are

disclosed in note 3. The fair value of the fund’s investments as at the funds’ year end at 31 March 2017 were N$175 778 251

(2016: N$159 364 520).

In addition to the pension fund, the company also operates a group life scheme covering 100% of the total number of employees in cases of

death and/ or permanent disability.

The group does not currently bear and is in no way contractually liable for the cost of funding post-retirement medical aid benefits. The

contribution to the Medical Aid Fund should an employee choose to continue membership of the scheme on retirement, is payable by the

retiree.

A statutory actuarial valuation was performed on 28 February 2015 and the valuation reported that the fund was in a sound financial

position. The next statutory actuarial valuation will be performed on 31 March 2018.

58


24. Bank overdraft

The company has unsecured overdraft facilities at First National Bank Namibia totaling N$1 million (2016: N$1 million). The facility has

expired at year end, but is currently under review. The EFT (same day service) at Standard Bank Namibia is N$ 5 million (2016: N$5 million),

whilst the Debit and Credit Run facility is N$30 million (2016: N$30 million) from Standard Bank Namibia.

The group has a pre-settlement FEC facility at First National Bank Namibia of N$20 million (2016: N$20 million) and a FEC Trading facility

at Standard Bank Namibia of N$40 million (2016: N$40 million).

25. Financial risk management objectives and policies

The group’s principal financial liabilities, other than derivatives, comprise shareholder’s loans and trade payables. The group has no interest

bearing borrowings. The main purpose of these financial liabilities is to raise finance for the group’s operations. The group has various

financial assets such as trade receivables and cash and short-term deposits, which arise directly from its operations. The main risks arising

from the group’s financial instruments are foreign currency risk, credit risk and liquidity risk.

There has been no significant change during the financial year, or since the end of the financial year, to the types of financial risks faced by

the group, the approach to measurement of these financial risks or the objectives, policies and processes for managing these financial risks.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarised below.

Foreign currency risk management

Foreign currency risk refers to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in

foreign exchange rates.

The group incurs currency risk as a result of the following transactions which are denominated in a currency other than Namibia Dollar or

South African Rand: purchases of equipment, consulting fees and borrowings. The currencies which primarily give rise to currency risk are

the US Dollar (USD); Euro (EU); Swiss Francs (CHF) and British Pound (GBP). At 30 September 2017, the group has not hedged any

(2016: none) of its foreign currency creditors for which firm commitments existed at the reporting date.

The group and the company normally pay all foreign amounts due close to order / delivery date.

GROUP COMPANY

Foreign exchange losses / (gains) recognised 2017 2016 2017 2016

in the statements of comprehensive income: N$’000 N$’000 N$’000 N$’000

Realised (gain) / loss (3 490) 844 (3 490) 844

Unrealised loss 2 140 2 978 2 140 2 978

59


25. Financial risk management objectives and policies (continued)

Foreign currency risk management (continued)

The following table details the group’s sensitivity to the below-mentioned percentage strengthening and weakening in the functional

currency against the relevant foreign currencies. This percentage is the sensitivity rate used when reporting foreign currency risk internally

to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates.

The sensitivity analysis includes only outstanding foreign-denominated monetary items and adjusts their translations at the period end for

the specified percentage change in foreign currency rates. For the same percentage weakening of the functional currency against the

relevant currency, there would be an equal and opposite impact on the profit before taxation.

There were no changes in the methods and assumptions used in preparing the foreign currency sensitivity analysis.

GROUP COMPANY

Effect on profit before tax of amounts included 2017 2016 2017 2016

in trade payables at year end: N$’000 N$’000 N$’000 N$’000

USD

Effect on profit before tax

Increase of 5% in USD exchange rate (4 405) (836) (4 405) (836)

Decrease of 5% in USD exchange rate 4 405 836 4 405 836

Euro


Increase of 5% in Euro exchange rate (772) (786) (772) (786)

Decrease of 5% in Euro exchange rate 772 786 772 786

Swiss Francs


Increase of 5% in Swiss Francs exchange rate (94) (95) (94) (95)

Decrease of 5% in Swiss Francs exchange rate 94 95 94 95

GBP


Increase of 5% in GBP exchange rate - - - -

Decrease of 5% in GBP exchange rate - - - -

60



Foreign currency risk management (continued)

GROUP AND COMPANY

At year end the following foreign currency

denominated amounts were included in trade 2017 Conversion rate at 2016 Conversion rate at

payables, for which no forward cover was taken: N$’000 30 September 2017 N$’000 30 September 2016

United States Dollars 88 097 13.51 16 729 13.73

Euro 15 435 15.96 15 710 15.43

Swiss Francs 1 883 13.95 1 910 14.16

British Pounds 9 18.11 3 17.86

At year end the following foreign currency

denominated amounts were included in roaming

debtors, for which no forward cover was taken:

United States Dollars 1 318 13.51 1 092 13.73

Credit risk management

Credit risk is related to the risk of a third party failing with its contractual obligations resulting in a financial loss to the group.

The group trades only with recognised, creditworthy third parties. It is the group’s policy that all customers who wish to trade on credit

terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that

the group’s exposure to bad debts is not significant. In addition to this reputable financial institutions are used for investing and cash

handling purposes. The maximum credit exposure is the carrying amount as disclosed in Note 14. There are no significant concentrations of

credit risk within the group.

With respect to credit risk arising from the other financial assets of the company, which comprise cash and cash equivalents and short term

deposits with well known reputable Namibian banks, the company’s exposure to credit risk arises from default of the counterparty, with a

maximum exposure equal to the carrying amount of these balances.

There has been no significant change during the financial year, or since the end of the financial year, to the group’s exposure to credit risk,

the approach to the measurement or the objectives, policies and processes for managing this risk.

61



Credit risk management (continued)

Financial assets exposed to credit risk at year end were as follows:

Financial instrument

Group - 2017 Group - 2016 Company - 2017 Company - 2016

N$’000 N$’000 N$’000 N$’000

Cash and cash equivalents 599 861 442 605 599 740 442 553

Trade and other receivables - Namibia 135 047 87 214 135 026 87 214

Trade and other receivables - non-Namibian 17 814 14 995 17 814 14 995

Investment in subsidiary - - 3 688 3 083

No terms of financial assets were renegotiated.

With respect to trade and other receivables that are neither past due nor impaired, there are no indications as of the reporting date

that the debtors will not meet their payment obligations.

Neither past due nor impaired 131 496 99 390 131 475 99 390

Past due but not impaired:

between 30 and 60 days 18 367 2 468 18 367 2 468

between 60 and 90 days 2 599 347 2 599 347

more than 90 days 399 4 399 4

Net carrying amount 152 861 102 209 152 840 102 209

62



Liquidity risk management

These risks may occur if the sources of funding, including operating cash flows, credit lines and cash flows obtained from financing

operations, do not match with the group’s financing needs, such as operating and financing outflows, investments, shareholder remuneration

and debt repayments.

The group has minimised its risk of illiquidity by ensuring that it has adequate banking facilities and reserve borrowing capacity.

The group monitors its risk to a shortage of funds using monthly management accounts and general cash flow projections.

The table below summarises the maturity profile of the group’s financial liabilities at 30 September based on contractual undiscounted

payments.

On demand Less than 3 3 to 12 1 to 5 > 5

GROUP months months years years

2017 N$’000 N$’000 N$’000 N$’000 N$’000

Trade and other payables - 355 904 - - -

GROUP

2016


COMPANY

2017


COMPANY

2016


63



Capital management

The primary objective of the company’s capital management is to ensure that it maintains a strong credit rating in order to support its

business and maximise shareholder value.

The capital structure of the group consists of debt, cash and cash equivalents and equity.

The company manages its capital structure and makes adjustments to it, in light of changes in economic conditions.

To maintain or adjust the capital structure, the company may issue new shares or obtain additional funding from its shareholders.

No changes were made in the objectives, policies and processes during the years ended 30 September 2017 and 30 September 2016.

The group is not subject to externally imposed capital requirements.

26. Categories of financial instruments

Note(s) Financial Debt Financial Equity and

assets at fair instruments liabilities at non financial

value through at amortised amortised assets and

profit or loss cost cost liabilities Total

N$’000 N$’000 N$’000 N$’000 N$’000

Categories of financial instruments

GROUP - 2017

ASSETS

Non-Current Assets

Property, plant and equipment 9 - - - 864 985 864 985

Intangible assets 11 - - - 502 771 502 771

Long term deposit - - - 63 930 63 930

- - - 1 431 686 1 431 686

Current Assets

Inventories 13 - - - 113 035 113 035

Trade and other receivables 14 - 152 861 - 32 552 185 413

Cash and cash equivalents 15 - 599 861 - - 599 861

- 752 722 - 145 587 898 309

Total Assets - 752 722 - 1 577 273 2 329 995

64


26. Categories of financial instruments (continued)





N$’000 N$’000 N$’000 N$’000 N$’000


GROUP - 2017


Equity

Equity Attributable to Equity Holders of Parent:

Share capital 16 - - - 25 000 25 000

Retained income 16 - - - 1 481 655 1 481 655

- - - 1 506 655 1 506 655

Total Equity - - - 1 506 655 1 506 655

LIABILITIES


Deferred taxation 17 - - - 255 000 255 000

Current Liabilities

Trade and other payables 18 - - 355 904 43 025 398 929

Deferred revenue 19 - - - 157 688 157 688

Current tax payable - - - 11 723 11 723

- - 355 904 212 436 568 340

Total Liabilities - - 355 904 467 436 823 340

Total Equity and Liabilities - - 355 904 1 974 091 2 329 995

65







N$’000 N$’000 N$’000 N$’000 N$’000


GROUP - 2016

ASSETS

Non-Current Assets




- - - 1 327 342 1 327 342

Current Assets

Inventories 13 - - - 63 671 63 671



- 544 814 - 93 662 638 476

Total Assets - 544 814 - 1 421 004 1 965 818

66






N$’000 N$’000 N$’000 N$’000 N$’000


GROUP - 2016


Equity


Share capital 16 - - - 25 000 25 000

Retained income 16 - - - 1 258 750 1 258 750

- - - 1 283 750 1 283 750

Total Equity - - - 1 283 750 1 283 750

LIABILITIES



Current Liabilities




- - 196 268 250 532 446 800




67






N$’000 N$’000 N$’000 N$’000 N$’000


COMPANY - 2017

ASSETS

Non-Current Assets



Investments in subsidiaries 12 - 3 688 - - 3 688


- 3 688 - 1 429 423 1 433 111

Current Assets

Inventories 13 - - - 113 035 113 035



- 752 580 - 145 587 898 167

Total Assets - 756 268 - 1 575 010 2 331 278


68







N$’000 N$’000 N$’000 N$’000 N$’000


COMPANY - 2017


Equity


Share capital 16 - - - 25 000 25 000

Retained income 16 - - - 1 482 412 1 482 412

- - - 1 507 412 1 507 412

Total Equity - - - 1 507 412 1 507 412

LIABILITIES



Current Liabilities




- - 355 814 212 505 568 319



69







N$’000 N$’000 N$’000 N$’000 N$’000


COMPANY - 2016

ASSETS

Non-Current Assets



Investments in subsidiaries 12 - 3 083 - - 3 083


- 3 083 - 1 325 038 1 328 121

Current Assets

Inventories 13 - - - 63 671 63 671



- 544 762 - 93 662 638 424

Total Assets - 544 845 - 1 418 700 1 966 545

70







N$’000 N$’000 N$’000 N$’000 N$’000


COMPANY - 2016


Equity


Share capital 16 - - - 25 000 25 000

Retained income 16 - - - 1 259 093 1 259 093

- - - 1 284 093 1 284 093

Total Equity - - - 1 284 093 1 284 093

LIABILITIES



Current Liabilities




- - 196 225 250 554 446 779



71


27. Fair value information

The fair values of all financial instruments are substantially the same as the carrying values reflected in the statements of financial

positions, for both the group and the company.

Fair value hierarchy

The group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets of liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded value are observable, either directly or

indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market

data.

Valuation techniques:

Forward contracts are valued by marking to market the forward contract with the exchange rate prevalent on each day in an active market.

Trade and other receivables are valued at amortised cost using the effective interest rate method, which substantially equals their fair value.

Trade and other payables are valued at amortised cost using the effective interest rate method, which substantially equals their fair value.

The long term liability is discounted at the effective discount rate applicable to the risks associated with this financial instrument.

As at 30 September 2017, the group did not hold any financial instruments measured at fair value (2016: Nil).

72


28. Related parties

Related party relationships exist between the company and its subsidiaries, fellow subsidiary, shareholders and key management.

All transactions with related parties occurred under terms no less favourable than those arranged with third parties.

Subsidiaries

Details of income and expenditure relating to subsidiaries and investments in subsidiaries are disclosed in notes 3 and 12 respectively.

No interest is charged on loans to subsidiaries.

Key management

The key management personnel of the company comprise the directors and the general managers. Amounts paid to key management are

disclosed under directors’ emoluments and key management remuneration in note 6.

Shareholders

The shareholders of the company are noted in the directors’ report. The only significant transactions related to the shareholders are rentals

paid, management fees paid and interconnect fees paid to the shareholders.

Fellow subsidiary

The company has an interconnect agreement with fellow subsidiaries regarding call traffic between the two companies and rent fibre optic

lines for its operations from a fellow subsidiary.

Relationships

Holding company Namibia Post and Telecommunications Holdings Limited

Subsidiaries Refer to note 12

GROUP COMPANY

Related party balances

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

Loan accounts - Owing by related parties

Jurgens Thirty Four (Pty) Ltd - - 3 230 2 526

Balance receivable from fellow subsidiaries:

Telecom Namibia 197 337 197 337

Nampost Courier 52 50 52 50

Balance receivable from shareholder

Namibia Post and Telecommunications Holdings 8 6 8 6

Balance payable to fellow subsidiaries:

Nampost Courier (2 586) (11 148) (2 586) (11 148)

Telecom Namibia (1 513) (3 192) (1 513) (3 192)

73


28. Related parties (continued)

GROUP COMPANY

Related party transactions

2017 2016 2017 2016

N$’000 N$’000 N$’000 N$’000

Property, plant and equipment purchased from fellow subsidiaries:

Telecom Namibia 1 800 900 18 000 900

Management fees paid:

PT Investomentos Internacionais - Consultoria

Internacional SA - 2 204 - 2 204

OI Investomentos Internacionais 259 - 259 -

Rent paid to related parties:

Namibia Post and Telecommunications Limited 28 925 26 609 28 925 26 609

Jurgens Thirty Four (Pty) Ltd - - 100 550

Lease line paid to (received from) fellow subsidiaries:

Telecom Namibia 35 490 36 779 35 490 36 779

Postage and courier charges paid to fellow subsidiaries:

Nampost Namibia 7 927 7 979 7 927 7 979

Telephone and fax paid to fellow subsidiaries:

Telecom Namibia 329 376 329 376

Dealer commissions paid to fellow subsidiaries:

Nampost Namibia 52 130 30 747 52 130 30 747

Net site rentals paid to (received from) fellow subsidiaries:

Telecom Namibia (8 188) (3 899) (8 188) (3 899)

TN Mobile - 8 924 - 8 924

Net interconnect fees paid to (received from) fellow subsidiaries:

Telecom Namibia 1 798 7 972 1 798 7 972

TN Mobile - (3 282) - (3 282)

Other Transactions:

WACS Payment - Telecom Namibia 4 027 4 613 4 027 4 613

Prepaid sales - Nampost Namibia 328 029 357 939 328 029 357 939

29. Approval of annual financial statements

These annual financial statements have been approved by the Board of Directors on 4 December 2017.

Documents

ANNUAL REPORT 2017 - MTC · N$1.1 billion dollar 081Every1 project that will see MTC erect over 524 new towers to ensure close to 100% network connectivity in Namibia. We are proud