Mobile Telephone Networks Holdings Limited and its
subsidiaries
(Registration number: 1993/001411/06)
Annual Financial Statements
for the year ended 31 December 2023
Mobile Telephone Networks Holdings Limited
Annual Financial Statements
for the year ended 31 December 2023
Contents
STATUTORY REPORTS
Statement of directors' responsibility | 2 |
Certificate by the Company Secretary | 4 |
Report of the Audit Committee | 5 |
Directors' report | 13 |
Independent auditor's report to the shareholder of Mobile Telephone | 18 |
Networks Holdings Limited |
GROUP FINANCIAL STATEMENTS
Group income statement | 24 |
Group statement of comprehensive income | 25 |
Group statement of financial position | 26 |
Group statement of changes in equity | 27 |
Group statement of cash flows | 28 |
Index to the notes to the Group financial statements | 29 |
Notes to the Group financial statements | 31 |
COMPANY FINANCIAL STATEMENTS
Company income statement | 149 |
Company statement of financial position | 150 |
Company statement of changes in equity | 151 |
Company statement of cash flows | 152 |
Notes to the Company financial statements | 153 |
Financial definitions | 177 |
The Group and Company financial statements were audited in terms of the Companies Act, No 71 of 2008 as amended.
The Group and Company Annual Financial Statements have been prepared by the MTN Finance staff under the guidance of the Group Finance Executive, S Perumal CA(SA) and was supervised by the Group Chief Financial Officer, TBL Molefe CA(SA).
These Annual Financial Statements were authorised on 29 April 2024 by the Board of Directors.
1
Mobile Telephone Networks Holdings Limited
Statement of directors' responsibility
for the year ended 31 December 2023
The directors are responsible for the integrity, preparation and fair presentation of the annual separate and consolidated financial statements of Mobile Telephone Networks Holdings Limited (the Company), its subsidiaries, joint ventures, associates and structured entities (together, the Group) in accordance with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) as issued by the International Accounting Standards Board (IASB) and Interpretations as issued by the IFRS Interpretations Committee (IFRIC), the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee (APC), Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council (FRSC), the Johannesburg Stock Exchange (JSE) Listings Requirements and the requirements of the South African Companies Act, No 71 of 2008 as amended and the Company's memorandum of incorporation (MOI).
The Company also subscribes in all its activities to principles of best practice and corporate governance, as set out in the King IV Report on Corporate Governance for South Africa 2016 (King IV*).
The preparation of financial statements in conformity with IFRS requires management to consistently apply appropriate accounting policies, supported by reasonable judgements and estimates. The directors are of the opinion that the information contained in the Annual Financial Statements fairly present, in all material respects, the financial position at year-end and the financial performance and cash flows of the Group and the Company for the year then ended.
The directors have taken the responsibility for ensuring that accurate and complete accounting records are kept to enable the Group and the Company to satisfy their obligation with respect to the preparation of financial statements. The directors confirm that no facts have been omitted or untrue statements made that would make the financial statements false or misleading.
The directors are also responsible for the oversight of the Group's system of internal controls. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
The Group operates in an established control environment, which is documented and regularly reviewed. The Group Risk Management and Compliance Committee plays an integral role in risk management. Risk management and internal control procedures are designed to provide reasonable assurance that assets are safeguarded and that the risks facing the business are controlled.
Internal financial controls have been put in place to ensure that material information relating to the Company and the Group has been provided to effectively prepare the Annual Financial Statements. The internal financial controls are considered adequate and effective and can be relied upon in compiling the Annual Financial Statements. Where deficiencies in the design and operational effectiveness of internal financial controls have been identified, the Group continues to make improvements to the internal financial controls.
The directors are responsible for the controls over, and the security of, the website and where applicable, for establishing and controlling the process for electronically distributing Annual Financial Statements and other financial information to shareholders and to the Companies and Intellectual Property Commission.
The Group's internal audit function, which operates unimpeded by operational management, and has unrestricted access to the Group's Audit Committee, assesses and, when necessary, recommends improvements in the system of internal control and accounting practices, based on audit plans that take cognisance of the relative degrees of risk of each function or aspect of the business. The Group's internal audit function operates within the Group's combined assurance framework.
* Copyright and trademarks are owned by the Institute of Directors Southern Africa NPC and all of its rights are reserved.
2
Mobile Telephone Networks Holdings Limited
Statement of directors' responsibility (continued)
for the year ended 31 December 2023
The directors have reviewed the Group and the Company budgets and cash flow forecasts for the year to 31 December 2024. In light of this review, the current financial position and existing borrowing facilities, the going concern basis has been adopted in preparing the Group and the Company Annual Financial Statements. The directors have no reason to believe that the Company or its subsidiaries will not be going concerns in the year ahead. These financial statements support the viability of the Group and the Company.
The Group's external auditor, Ernst & Young Inc (EY) audited the Group and the Company Annual Financial Statements and their unqualified audit report is presented on pages 18 to 23.
The external auditor was given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the Board of Directors and committees of the Board. The directors believe that all representations made to the independent auditor during their audit are valid and appropriate.
The Group and the Company Annual Financial Statements which appear on pages 1 to 178 were approved for issue by the Board of Directors on 29 April 2024 and are signed on its behalf by:
RT Mupita
Group President and Chief Executive Officer (CEO)
Fairland
TBL Molefe
Group Chief Finance Officer (GCFO)
Fairland
3
Mobile Telephone Networks Holdings Limited
Certificate by the Company Secretary
for the year ended 31 December 2023
I certify that, to the best of my knowledge and belief, Mobile Telephone Networks Holdings Limited has filed all its returns and notices with the Registrar of Companies and Intellectual Property Commission for the year ended 31 December 2023, as required of a public company in terms of section 88(2)(e) of the Companies Act, No 71 of 2008 as amended and that such returns and notices are true, correct and up to date.
PT Sishuba-Bonoyi
Group Secretary
Fairland
29 April 2024
4
Mobile Telephone Networks Holdings Limited
Report of the Audit Committee (continued)
for the year ended 31 December 2023
This report is provided by the MTN Group Audit Committee ("the committee"), in respect of the 2023 financial year, in compliance with section 94 of the Companies Act, King IV, the JSE Listings Requirements and other applicable regulatory requirements, and describes how the committee has discharged its statutory duties in terms of the Companies Act and its additional duties assigned to it by the Board in respect of the financial year ended 31 December 2023.
COMPOSITION AND GOVERNANCE
Members of the committee are all independent non-executive directors, all of whom satisfy the requirements of section 94(4) of the Companies Act and King IV. The committee is adequately skilled, and all members possess the appropriate financial and related qualifications, skills, expertise and experience required to discharge their responsibilities.
The composition of the committee and the attendance at the meetings by its members during the 2023 financial year are set out below.
Members | 2 | 6 | 19 | 23 | 28 | 7 | 3 | 27 | 24 |
February | March | April | May | July | August | October | October | November | |
2023* | 2023 | 2023* | 2023 | 2023* | 2023 | 2023* | 2023 | ||
2023* | |||||||||
SN Mabaso- | √ | √ | √ | √ | √ | √ | √ | √ | √ |
Koyana | |||||||||
NP Gosa | √ | √ | √ | √ | √ | √ | √ | √ | √ |
CWN | X | √ | √ | √ | √ | √ | √ | √ | √ |
Molope | |||||||||
T | √ | √ | √ | √ | √ | √ | √ | √ | √ |
Pennington | |||||||||
VM Rague | X | √ | √ | √ | √ | √ | √ | X | √ |
* Special meeting held.
X An apology was tendered for non-attendance. √ Attended the meeting.
Four formal committee meetings were held in line with the Group's financial reporting and regulatory cycle in the financial year under review. There were five ad hoc meetings held to consider and approve various head office subsidiary annual financial statements, MTN Group trading statements and JSE regulatory engagements. Members' fees are included in the table of directors' emoluments and related payments in note 10.
The Group President and CEO, the Group Chief Financial Officer, the Group Chief Risk Officer, the Group Chief Legal Counsel, the Group Executive: Internal Audit, the Group Executive: Finance, and representatives of the external auditor attend committee meetings by invitation. Other members of management are invited to attend certain meetings to provide the committee with assurance and greater insight into specific issues or areas in the Group.
The committee chairman has regular contact with the Group senior management team to discuss relevant matters directly during the year. The internal auditors and the external auditor have direct access to the committee, including closed sessions without management, during the year on any matter they regard as relevant to the fulfilment of the committee responsibilities. Further, the committee meeting agenda allows for the internal auditors, external auditor and senior management to meet separately with the members.
The committee chairman reports to the Group Board on committee activities and the matters discussed at each meeting, highlighting any key issues that the committee believes warrant action by the Board, and providing recommendations to resolve the said issues.
5
Mobile Telephone Networks Holdings Limited
Report of the Audit Committee (continued)
for the year ended 31 December 2023
COMPOSITION AND GOVERNANCE (continued)
The Group's Company Secretariat annually assesses the effectiveness of the committee. An external facilitated assessment is conducted every two years. Both processes are endorsed by the committee.
TERMS OF REFERENCE
The committee assists the Board in discharging its duties by independently monitoring the strength of the operational, financial and control processes. These include internal financial controls and ensuring that assurance services and functions enable an effective control environment and that these support the integrity of information produced in compliance with applicable legal and regulatory requirements.
FEEDBACK ON KEY FOCUS AREAS FOR THE YEAR UNDER REVIEW
Key focus areas | Developments in key focus areas | |||||
Monitor the progress on the | Progress on activities to coordinate and oversee the | |||||
implementation and standardisation of | standardisation of key controls across key processes includes: | |||||
key controls | to further | enhance | the | • | Understanding the current maturity levels of the Finance | |
overall control environment. | ||||||
Operating Model with an intention to identify opportunities for | ||||||
control improvement. | ||||||
• Developing an Internal Control Framework (ICF) in | ||||||
consultation with the organisation-wide assurance partner. | ||||||
• Launching a strategic initiative aimed at optimising control | ||||||
processes in six operating companies. | ||||||
• | Fast tracking of the cloud Enterprise Resource Planning | |||||
implementation to all operating companies and monitoring | ||||||
maturity after implementation. | ||||||
Strengthening | the effectiveness | of | The Group conducted proactive assessments to identify areas of | |||
internal controls and internal financial | improvement to analyse the people, processes and systems with | |||||
controls. | specific focus on the internal financial control environment. | |||||
The internal audit plan for the financial reporting period | ||||||
encompassed coverage of financial and non-financial factors to | ||||||
provide independent assurance on the adequacy and effectiveness | ||||||
of critical internal financial controls across the Group's operating | ||||||
and holding companies. | ||||||
Insights obtained from these targeted deep dives have led to | ||||||
control environment improvement efforts designed to address the | ||||||
specific areas of control improvement and beyond, specially where | ||||||
control design changes were necessary and warranted. | ||||||
Annual | Financial | Statements | The committee considered management's assessment of | |||
restatements identified during 2023. | accounting matters identified and evaluated the appropriate | |||||
accounting treatment thereof, after considering the relevant legal | ||||||
and accounting opinions and views of the Group's auditor. The | ||||||
committee evaluated and reviewed the disclosure of the | ||||||
restatements and related stakeholder engagements. | ||||||
The committee reviewed management's assessment of the root | ||||||
cause analysis as well as the corrective actions to internal financial | ||||||
controls to mitigate risks in future. | ||||||
6
Mobile Telephone Networks Holdings Limited
Report of the Audit Committee (continued)
for the year ended 31 December 2023
FEEDBACK ON KEY FOCUS AREAS FOR THE YEAR UNDER REVIEW (continued)
Key focus areas | Developments in key focus areas | |
Oversight of the salient matters | The Group's operating companies including it's platform | |
reported by the audit committees of the | businesses, Fintech and Bayobab, submit quarterly reports to the | |
Group's operating companies. | Group Audit Committee. The committee reviews these reports and | |
identifies key themes or material items that require further | ||
management attention. | ||
Review the progress on the | The committee reviews the execution of the enterprise cloud | |
implementation of the enterprise cloud | solution against the Group's strategic implementation roadmap. | |
solution across the Group's footprint. | During 2023, Scancom PLC Ghana (MTN Ghana) implemented the | |
enterprise cloud solution in February 2023. Fintech Holdings | ||
continued deployment across its entities with a combination of | ||
enterprise resource planning solutions. The cloud payroll system | ||
was deployed in a number of South African-based entities. | ||
Considered the | enterprise resource | The enterprise resource planning system has been set up and |
planning set-up and readiness for the | implementation considerations are in the process of being finalised. | |
implementation | of United Arab | |
Emirates (UAE) corporate tax. | ||
Review of internal audit and forensic | The committee reviewed the appropriate governance structures | |
services governance structures. | and effectiveness of the functions. The committee approved the | |
separation of the internal audit and forensic services functions. | ||
Following the separation, the forensic services function formed part | ||
of the Group's Risk Management and Compliance function. | ||
Ensure fair and balanced financial | The committee considered the appropriateness of the Group's | |
reporting. | financial reporting to ensure fair and balanced reporting is | |
achieved. The committee reviewed submissions and presentations | ||
by management on the financial results, significant transactions, | ||
critical accounting judgements and assumptions as well as views | ||
by the Group's auditor on key audit matters and internal auditors on | ||
internal financial controls. | ||
The committee has recommended that the Board approve the | ||
Annual Financial Statements. | ||
EXECUTION FUNCTIONS OF THE AUDIT COMMITTEE
The committee is satisfied that, in respect of the period under review, it has conducted its affairs and discharged its duties and responsibilities in accordance with its terms of reference and the Companies Act and paragraph 3.84(g) of the JSE Listings Requirements.
The committee discharged the following responsibilities during the year under review:
EXTERNAL AUDITOR
The committee is responsible for the appointment, compensation and oversight of the external auditor for the Group, namely Ernst & Young Inc (EY) in 2023. EY is a global auditing firm and is a level 1 broad-based black economic empowerment (B-BBEE) contributor.
During the period under review the committee:
- Considered and satisfied itself with the independence and objectivity of the external auditor and designated registered auditor and ensured that the scope of non-audit services rendered did not impair their independence.
7
Mobile Telephone Networks Holdings Limited
Report of the Audit Committee (continued)
for the year ended 31 December 2023
EXTERNAL AUDITOR (continued)
- Approved the non-audit related services performed by the external auditor during the year in accordance with the policy established and approved by the Board.
The fees paid for non-audit services are disclosed in note 2.3 of these Annual Financial Statements and represents 10% of audit fees, which is within the Group's policy of 25% of audit fees. These comprised:
2023 | 2022 | |
% | % | |
Assurance related | 57 | 35 |
Consulting | 3 | 31 |
Tax | 40 | 33 |
Other services | - | 1 |
100 | 100 | |
Services assigned to the Group audit firms were pre-approved following an evaluation of the impact on auditor independence based on the Group's approved policy.
Services for larger assignments are individually evaluated by the committee and approved if the committee is satisfied that the independence of the audit firms will not be compromised. These appointments relate to work that will further complement the audit engagement or where the audit firm will be in a position to provide a higher quality or more cost-effective service. Other than for the fees for approved services, no other benefits were provided to the auditor. Larger projects during 2023 included limited assurance reviews on revenue assurance maturity and control self-assessment, agreed upon procedures on remuneration and tax administration and consultation services.
The committee performed the following oversight role of the external audit function:
- Determined the external auditor terms of engagement and fees for 2023. Fees paid to auditor for the year under review are disclosed in note 2.3 of these Annual Financial Statements.
- Satisfied itself with the performance of the external auditor and designated registered auditor.
- Satisfied itself that the designated registered auditor is within his tenure and rotation requirements.
- EY has been auditing the Group for three years. Mr EAL Botha has been the engagement partner since 2021.
- Assessed the audit firm as well as the engagement partner's suitability for appointment, taking into account the quality of the audit work and related reporting to the committee, industry expertise of the firm and its designated partner,findings by the Independent Regulatory Board for Auditors (IRBA) and statements relating to independence as well as the representations made by the external auditor to the committee including those under ISQC 1 International Standard on Quality Control 1.
- The committee recommends the re-appointment of EY at the Company's 29th Annual General Meeting (AGM).
FINANCIAL STATEMENTS, ACCOUNTING PRACTICES AND OTHER FINANCIAL MATTERS
-
Reviewed and approved the accounting policies and the Annual Financial Statements of the Group and the Company for the year ended 31 December 2023, and based on the information provided to it, the committee considered that, in all material respects, they are appropriate and comply with the provisions of the Companies Act, IFRS, the SAICA Financial Reporting Guides as issued by the APC, Financial Reporting Pronouncements as issued by the FRSC, and the JSE Listings Requirements as well as content from the
JSE's annual proactive monitoring report and references to prior year reports highlighted therein. - Reviewed the processes in place for the reporting of concerns and complaints relating to financial reporting and accounting practices, internal audit, contents of the Group's and the Company's financial statements, internal financial controls and any related matters. The committee can confirm that there were no such complaints of substance during the year under review.
- Reviewed Group tax exposures and assessed the appropriateness of the Group's tax policies.
8
Mobile Telephone Networks Holdings Limited
Report of the Audit Committee (continued)
for the year ended 31 December 2023
FINANCIAL STATEMENTS, ACCOUNTING PRACTICES AND OTHER FINANCIAL MATTERS (continued)
- Reviewed the Group Treasury Policy, compliance thereof and management's counter-party risk assessments.
- Considered the effectiveness of T Shomang as the Debt Officer in line with requirements of paragraph 7.3(g) of the JSE Debt Listings Requirements.
- Reviewed progress on litigation and legal exposures and the related accounting applied and disclosure included in these Annual Financial Statements.
- Received regular updates from management on the repatriation of funds from Group's operating entities.
- Considered the appropriateness of management judgements, estimates made and the accounting treatment of significant transactions.
- Considered if the established financial reporting procedures are appropriate and that the procedures are operating effectively, which includes a consideration of all entities included in the consolidated Group Annual Financial Statements. The committee considered if the Group had access to all the financial information of MTN Holdings Group Limited and its subsidiaries, associates and joint ventures to allow the Group to effectively prepare and report on the financial statements.
Significant matters that the Group Audit Committee has considered in relation to the Annual Financial Statements were:
Significant matters considered | Actions and conclusions | ||||
Significant transactions for 2023 included: | The committee considered the accounting treatments and the | ||||
disclosures of the transactions proposed by management. | |||||
• The Group disposed 160 million shares in | The committee was satisfied that these transactions were | ||||
MTN Ghana to pension funds as part of | |||||
localisation for | net proceeds of | appropriately accounted for and disclosed by management. | |||
R215 | million, decreasing | the | Group's | ||
effective shareholding by 1.3% to 82.8% | |||||
(note 9.4.1.3). | |||||
• The | Group | received | an | offer | |
for Spacetel Guinea-Bissau S.A | (MTN | ||||
Guinea-Bissau) and Areeba Guinea SA | |||||
(MTN Guinea-Conakry). | |||||
The two operations have been classified | |||||
as held for sale as at 31 December 2023 | |||||
(note 9.4.2.2). | |||||
Judgement relating to uncertain tax | The committee reviewed risk and compliance, legal and tax | ||||
exposure, legal and regulatory matters | reports from management and requested opinions from | ||||
independent specialists where it considered appropriate. The | |||||
The Group operates in a number of complex | committee considered management's assessment of | ||||
and uncertain regulatory and tax jurisdictions | possible, probable and remote exposures and the related | ||||
where judgement is required in assessing the | provisions and contingent liability disclosure on tax, | ||||
regulatory and tax exposures (note 1.5.7; | regulatory and legal matters, in light of the latest | ||||
note 3 and note 6.6). | correspondence on these matters by the respective | ||||
authorities. The committee also considered the assessment | |||||
by the Group's external auditor of the appropriate recognition, | |||||
measurement and disclosure of uncertain tax, legal and | |||||
regulatory matters. | |||||
The committee was satisfied that the recognition, | |||||
measurement and disclosure of uncertain tax, legal and | |||||
regulatory matters by management was appropriate. |
9
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MTN Group Ltd. published this content on 30 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2024 14:51:06 UTC.