Telekom Malawi : TNM PLC H1 2023 FINANCIALS

Summarised unaudited consolidated and separate financial

Statements for the six months ended 30 June 2023

Performance

The Board is pleased to announce the unaudited interim financial results for the group for the six months period ended 30 June 2023.

The group has taken a positive trajectory from the dismal performance experienced over the last 18 months. All key performance metrics are showing signs of recovery and are moving towards the right direction.

The group registered a 17% increase in revenue to MK51.27 billion (2022: MK43.78 billion) due to growth in data revenue by

22% to MK20.47 billion (2022: MK16.77 billion) and Mpamba revenue by 35% to MK8.36 billion (2022: MK6.18 billion).

KEY FINANCIAL HIGHLIGHTS

17%	MK 51.27
growth in total revenue to	billion
35%	MK 8.36

SUMMARY STATEMENTS OF COMPREHENSIVE INCOME

In billions of Malawi Kwacha

	Group	Group	Company	Company	Group	Company
	unaudited	unaudited	unaudited	unaudited	audited	audited
	six months	six months	six months	six months	year ended	year ended
	ended	ended	ended	ended	31-Dec-22	31-Dec-22
	30-Jun-23	30-Jun-2230-Jun-2330-Jun-22
Service revenue	51.27	43.78	43.65	38.23	96.35	83.38
Cost of sales	(35.36)	(32.03)	(31.43)	(28.95)	(65.47)	(58.11)
Gross profit	15.91	11.75	12.22	9.28	30.88	25.27

SUMMARY STATEMENTS OF CHANGES IN EQUITY

In billions of Malawi Kwacha

Group-unaudited

Balance as at 1 January 2023

Comprehensive income for the period

Balance at 30 June 2023

Group-unaudited

Share	Share	Retained	TOTAL
Capital	Premium	earnings
0.40	2.35	43.81	46.56
-	-	0.78	0.78
0.40	2.35	44.59	47.34

EBITDA margin increased to 36% (June 2022: 28%) due to cost containment initiatives that the company continues to implement and monitor. Net profit after taxation increased by 158% to a profit of MK0.78 billion (June 2022 loss of MK1.34 billion).

The group invested MK7.00 billion in capital expenditure during the period (June 2022: MK9.31 billion) notably in distribution systems, network and systems catering for expansion, improvement, and future use as data needs grow.

Outlook

The macro-economic environment is expected to remain challenging putting pressure on the group's profitability. The volatile exchange rates, foreign currency scarcity and pressure on inflation will continue to adversely impact the cost of operations.

The group will continue developing and implementing initiatives to drive customer growth, grow revenues, deliver efficiencies in costs and improve overall group financial performance.

Dividends

Due to the need to prioritize on recovery from the recent past subdued performance of the company, the Directors have declared a nil (2022: nil) first interim dividend for the financial year ending 31 December 2023.

Ted Sauti-Phiri	Lekani Katandula
Chairman	Chairman, Board Audit Committee
5 Septenber 2023

tnm.co.mw |

growth in mobile money revenue to	billion
22%	MK 20.47
growth in data revenue to	billion
47%	MK 18.24
growth in EBITDA to	billion
158%	MK 0.78
growth in net profit after taxation to	billion
Infrastructure	MK 7.00
investment of	billion
Earnings per share	MK 0.08
	billion
Subscriber base at	MK 4.6
	million

Other income	3.18	2.33	3.38	3.14	4.93	5.93
Administrative expenses	(11.10)	(10.01)	(10.29)	(9.33)	(25.50)	(22.10)
Impairment of trade receivables	(0.33)	(1.11)	(0.31)	(1.11)	(2.45)	(2.45)
Operating profit	7.66	2.96	5.00	1.98	7.86	6.65
Finance income	0.07	0.06	0.04	0.04	0.12	0.07
Finance expense	(6.86)	(5.07)	(7.20)	(5.07)	(9.77)	(9.77)
Net finance expenses	(6.79)	(5.01)	(7.16)	(5.03)	(9.65)	(9.70)
Profit before income tax	0.87	(2.05)	(2.16)	(3.05)	(1.79)	(3.05)
Income tax expense	(0.09)	0.71	1.01	1.25	0.03	0.86
Profit/(loss) for the year	0.78	(1.34)	(1.15)	(1.80)	(1.76)	(2.19)
Total comprehensive income/(loss) for the year	0.78	(1.34)	(1.15)	(1.80)	(1.76)	(2.19)
Earnings per share (MK)	0.08	(0.13)	(0.11)	(0.18)	(0.18)	(0.22)
Number of ordinary shares in issue (billion)	10.04	10.04	10.04	10.04	10.04	10.04

SUMMARY STATEMENTS OF FINANCIAL POSITION

In billions of Malawi Kwacha

				Group	Group	Company	Company	Group	Company
				unaudited	unaudited	unaudited	unaudited	audited	audited
				as at	as at	as at	as at	as at	as at
				30-Jun-23	30-Jun-22	30-Jun-23	30-Jun-22	31-Dec-22	31-Dec-22
			Notes
		Assets
		Non-current assets		-	-	1.26	-	-	1.26
		Investmeny in subsidiary
		Equity investments		0.16	0.16	0.16	1.42	0.16	0.16
		Property, plant and equipment		77.58	80.98	74.84	79.49	77.70	75.57
		Intangible assets		12.24	11.27	12.32	10.62	14.19	14.11
		Right of use assets		13.18	13.34	13.18	13.34	13.94	13.94
		Contract assets		0.94	1.29	0.94	1.29	0.81	0.81
		Deferred tax assets		1.00	-	0.98	-	-	-
		Total non-current assets		105.10	107.04	103.68	106.16	106.80	105.85
		Current assets		1.29	1.93	1.29	1.93	1.27	1.27
		Inventories
		Contract assets		1.10	1.35	1.10	1.35	1.44	1.44
		Trade and other receivables		17.83	17.14	16.68	9.74	15.97	14.82
		Amounts due from related companies		0.21	-	0.21	0.49	0.64	1.69
		Current tax recoverable		-	0.39	0.33	0.95	0.39	0.25
		Bank and cash balances		20.18	11.62	1.09	0.87	22.68	1.58
		Total current assets		40.61	32.43	20.70	15.33	42.39	21.05
		Total assets		145.71	139.47	124.38	121.49	149.19	126.90
		Equity and liabilities
		Shareholder's equity		0.40	0.40	0.40	0.40	0.40	0.40
		Share capital
		Share premium		2.35	2.35	2.35	2.35	2.35	2.35
		Retained earnings		44.59	45.23	38.52	41.06	43.81	39.67
		Total equity		47.34	47.98	41.27	43.81	46.56	42.42
		Non-current liabilities		-	0.38	-	0.37	0.11	0.05
		Deferred tax liabilities
		Long-term portion of interest bearing loans	3	28.83	21.70	28.83	21.70	26.44	26.44
		Long-term portion of lease liabilities	4	0.42	1.07	0.42	1.07	0.53	0.53
		Total non-current liabilities		29.25	23.15	29.25	23.14	27.08	27.02
		Current liabilities		0.10	-	0.10	-	0.21	0.21
		Amounts due to related parties
		Bank overdraft		10.77	8.07	10.77	8.07	10.99	10.99
		Current-term portion of interest bearing loans	3	11.79	18.40	11.79	18.40	13.78	13.78
		Trade and other payables		31.44	30.66	30.49	27.23	33.00	31.07
		Amounts payable to owners of e-money		13.71	10.37	-	-	16.16	-
		Current portion of lease liabilities	4	0.71	0.84	0.71	0.84	1.41	1.41
		Current tax payable		0.60	-	-	-	-	-
		Total current liabilities		69.12	68.34	53.86	54.54	75.55	57.46
		Total liabilities		98.37	91.53	83.11	77.68	102.63	84.48
		Total equity and liabilities		145.71	139.47	124.38	121.49	149.19	126.90

Balance at 1 January 2022	0.40	2.35	46.57	49.32
Comprehensive loss for the period	-	-	(1.34)	(1.34)
Balance at 30 June 2022	0.40	2.35	45.23	47.98
Company-unaudited
Balance at 1 January 2023	0.40	2.35	39.67	Total
42.42
Comprehensive loss for the period	-	-	(1.15)	(1.15)
Balance at 30 June 2023	0.40	2.35	38.52	41.27
Company-unaudited
Balance as at 1 January 2022	0.40	2.35	42.86	45.61
Comprehensive loss for the period	-	-	(1.80)	(1.80)
Balance at 30 June 2022	0.40	2.35	41.06	43.81
Group-audited
Balance at 1 January 2022	0.40	2.35	46.57	49.32
Comprehensive loss for the period	-	-	(1.76)	(1.76)
Dividend declared (MK0.43 per share)	-	-	(1.00)	(1.00)
Balance at 31 December 2022	0.40	2.35	43.81	46.56
Company-audited
Balance at 1 January 2022	0.40	2.35	42.86	45.61
Comprehensive loss for the year	-	-	(2.19)	(2.19)
Dividend declared (MK0.43 per share)	-	-	(1.00)	(1.00)
Balance at 31 December 2022	0.40	2.35	39.67	42.42

SUMMARY STATEMENTS OF CASH FLOWS

In billions of Malawi Kwacha

		Group	Group	Company	Company	Company	Company
		unaudited	unaudited	unaudited	unaudited	audited	audited
		Six months	Six months	Six months	Six months year ended year ended
		ended	ended	ended	ended 31-Dec-2231-Dec-22
		30-Jun-23	30-Jun-22	30-Jun-23	30-Jun-22
Cash flows from operating activities	Notes
Cash generated from operations		10.77	11.47	11.89	14.61	36.73	27.82
Interest received		0.07	0.06	0.04	0.04	0.12	0.07
Interest paid		(5.10)	(3.05)	(5.10)	(3.05)	(7.60)	(7.60)
Current tax paid		(0.08)	(1.52)	(0.08)	(1.16)	(2.49)	(1.16)
Net cash generated from operations		5.66	6.96	6.75	10.44	26.76	19.13
Investing activities
Purchase of property, plant and equipment	5	(5.39)	(8.83)	(4.47)	(8.83)	(15.14)	(14.46)
Purchase of intangible assets	5	(1.61)	(0.48)	(1.61)	(0.48)	(3.14)	(3.06)
Proceeds from sale of property, plant and equipment	-	-	-	-	0.07	0.07
Net cash used in investing activities		(7.00)	(9.31)	(6.08)	(9.31)	(18.21)	(17.45)
Financing activities
Divinded paid to owners of the company		-	(1.51)	-	(1.51)	(2.51)	(2.51)
Proceeds from loans	3	8.97	7.86	8.97	7.86	18.89	18.89
Repayment of loans	3	(8.57)	(5.50)	(8.57)	(5.50)	(17.03)	(17.03)
Lease liability payments	4	(1.34)	(3.54)	(1.34)	(3.54)	(4.80)	(4.80)
Net cash used in financing activities		(0.94)	(2.69)	(0.94)	(2.69)	(5.45)	(5.45)
Net (decrease)/increase in cash and cash equivalents	(2.28)	(5.04)	(0.27)	(1.56)	3.10	(3.77)
Cash and cash equivalents at the beginning of the period	11.69	8.59	(9.41)	(5.64)	8.59	(5.64)
Cash and cash equivalents at the end of the year	9.41	3.55	(9.68)	(7.20)	11.69	(9.41)

Summarised unaudited consolidated and separate financial

Statements for the six months ended 30 June 2023

NOTES TO THE SUMMARY FINANCIAL STATEMENTS

NOTES TO THE SUMMARY FINANCIAL STATEMENTS (continued)

In billions of Malawi Kwacha

In billions of Malawi Kwacha

Standard Bank plc revolving credit facility

Group

Group

Company

Conpany

Group

Company

unaudited

unaudited

unaudited

unaudited

audited

audited

TNM entered into a revolving credit facility with Standard Bank plc of up to MWK 24 billion or the Malawi Kwacha equivalent

as at

as at

aas at

as at

as at

as at

30-Jun-2330-Jun-22

30-Jun-23

30-Jun-22

31-Dec-22

31-Dec-22

thereof. The purpose of the facility is to finance or refinance capital expenditure. The facility has a tenor of 60 months and

1. Capital commitments

5.20

11.98

5.20

11.98

12.32

12.32

attracts interest at a rate of Standard Bank Malawi plc reference rate plus 1.9% effectively 22.9%. TNM has covenanted to

Authorised and contracted for

maintain a USD denominated account with Standard Bank plc for the lifetime of the facility and to channel all its USD

Authorised and not contracted for

7.40

20.19

7.40

20.19

14.65

14.65

receivables to the said account.

The capital expenditure will be financed from internally generated resources and existing facilities

4.Lease liabilities

Group

Group

Company

Company

Group

Company

2. Contingent liabilities

unaudited

unaudited

unaudited

unaudited

audited

audited

as at

as at

as at

as at

as at

as at

Legal claims

3.50

0.35

3.30

0.35

0.86

0.86

30-Jun-23

30-Jun-22

30-Jun-23

30-Jun-22

31-Dec-2231-Dec-22

Lease liabilities

1.13

1.91

1.13

1.91

1.94

1.94

3. Loans and borrowings

		Old Mutual	Standard	Total
Group and Company-unaudited	Investment	Bank
Group Limited	revolving
		Commercial Paper	credit facility
Opening balance - 1 January 2023	17.00	23.22	40.22
Additions	-	8.97	8.97
Interest charge	1.78	1.67	3.45
Capital repayments	-	(8.57)	(8.57)
Interest paid	(1.78)	(1.67)	(3.45)
	Balance as at 30 June 2023	17.00	23.62	40.62
Long term portion of loans	17.00	11.83	28.83
Current portion of loans	-	11.79	11.79
		17.00	23.62	40.62

		Old Mutual	NICO Asset	Standard Total
Group and Company-unaudited	Investment	Managers	Bank
Group Limited	Commercial Paper	revolving
		Commercial Paper		credit facility
Opening balance - 1 January 2022	17.68	5.19	14.84	37.71
Additions	-	-	7.86	7.86
Interest charge	1.38	0.37	1.25	3.00
Capital repayments	-	-	(5.50)	(5.50)
Interest paid	(1.35)	(0.37)	(1.25)	(2.97)
Balance as at 30 June 2022	17.71	5.19	17.20	40.10
Long term portion of loans	17.00	-	4.70	21.70
Current portion of loans	0.71	5.19	12.50	18.40
		17.71	5.19	17.20	40.10

Long-term portion of lease liability	0.42	1.07	0.42	1.07	0.53	0.53
Short-term portion of lease liability	0.71	0.84	0.71	0.84	1.41	1.41
		1.13	1.91	1.13	1.91	1.94	1.94
5.Capital expenditure
		Group	Group	Company	Company	Group	Company
		unaudited	unaudited	unaudited	unaudited	audited	audited
		as at	as at	as at	as at	as at	as at
		30-Jun-23	30-Jun-22	30-Jun-23	30-Jun-22	31-Dec-22	31-Dec-22
	Acquisition of property, plant and equipment	5.39	8.83	4.47	8.83	15.14	14.46
	Acquisition of intangible assets	1.61	0.48	1.61	0.48	3.14	3.06
		7.00	9.31	6.08	9.31	18.28	17.52
6. Depreciation and amortisation
		Group	Group	Company	Company	Group	Company
		unaudited	unaudited	unaudited	unaudited	audited	audited
		Six months	Six months	Six months	Six months	year ended	year ended
		ended	ended	ended	ended	31-Dec-22	31-Dec-22
	Depreciation and amortisation	30-Jun-23	30-Jun-22	30-Jun-23	30-Jun-22
	10.22	7.65	9.09	7.47	16.33	15.90

		Old Mutual	NICO Asset	Standard	Total
Group and Company-audited	Investment	Managers	Bank
Group Limited	Commercial Paper	revolving
		Commercial Paper	credit facility
Opening balance - 1 January 2022	17.68	5.19	14.84	37.71
Additions	-	-	18.89	18.89
Interest charge	3.01	0.43	3.09	6.53
Capital repayments	(0.68)	(5.19)	(11.16) (17.03)
Interest paid	(3.01)	(0.43)	(2.44)	(5.88)
Balance as at 31 December 2022	17.00	-	23.22	40.22
Long term portion of loans	17.00	-	9.44	26.44
Current portion of loans	-	-	13.78	13.78
		17.00	-	23.22	40.22

Old Mutual Investment Group Limited (OMIGL)

On 26 February 2015, the company secured commercial debt paper of MK5.0 billion. The arranger and administrator was Old Mutual Investment Group Limited (OMIGL). The commercial paper was for a period of 5 years with an option of early repayment in tranches of MK1.0 billion after the third year. The coupon rate was 364 Treasury bill rate plus 200 basis points. The loan was secured with a debenture ranking behind National Bank of Malawi Plc overdraft facility and First Capital Bank Plc overdraft facility debentures and ranking pari pasu with the NICO Asset Managers Limited commercial paper debenture. On 25 February 2020 the loan was rolled over for another 5 year period on the same terms.

In 2020, the company secured commercial debt paper of MK10.0 billion. The arranger and administrator is Old Mutual Investment Group Limited (OMIGL). The commercial paper is for a period of 5 years with an option of early repayment in tranches of MK1.0 billion after the third year. The coupon rate is 364 Treasury bill rate plus 175 basis points. The loan is secured with a debenture ranking behind National Bank of Malawi Plc overdraft facility and First Capital Bank Plc overdraft facility debentures and ranking pari pasu with the Old Mutual Investment Group commercial paper and NICO Asset Managers Limited commercial paper debentures.

In 2021, the company secured additional commercial paper of MK2.0 billion from Old Mutual Investment Group Limited for a period of 5 years with the same terms as the other existing Old Mutual Investment Group Limited commercial papers.

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