Corporate Information 2. Notice of Annual General Meeting 3. Results at a Glance 4. Board of Directors 5. Report of the Directors 7

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3 CONTENTS PAGE Corporate Information 2 Notice of Annual General Meeting 3 Results at a Glance 4 Board of Directors 5 Report of the Directors 7 Corporate Governance Report 11 Statement of Directors Responsibilities 14 Report of the Audit Committee 15 Independent Auditors Report 16 Statement of Significant Accounting Policies 18 Consolidated Balance Sheet 21 Consolidated Profit and Loss Account 22 Consolidated Statement of Cash Flows 23 Notes to the Financial Statements 24 Consolidated Statement of Value Added 36 Five-Year Financial summary Company 37 e-dividend Activation Form 39 Proxy Form 41 Notes 43

4 CORPORATE INFORMATION DIRECTORS: Adokpaye Godwin - Chairman Titilayo Olatunde - Group Vice-Chairman Kesavan Madhavaro - Acting Group CEO/Managing Director Ogunlesi Adegbola Soyoye Funso Semenitari James Henry COMPANY SECRETARY: A.K. Nominees Management Services Limited 18, Otunba Adedoyin Ogungbe Crescent Off Omorinre Johnson Street Lekki Phase 1, Lagos CORPORATE ADDRESS Plot 1, Block 128b, New Creation Street Off Remi Olowude Way Lekki Phase 1, Lagos REGISTERED OFFICE: Plot 1, Block 128b, New Creation Street Off Remi Olowude Way Lekki Phase 1, Lagos LEGAL ADVISERS: Adeniji Kazeem & Co. 18, Otunba Adedoyin Ogungbe Crescent Off Omorinre Johnson Street Lekki Phase 1, Lagos FINANCIAL ADVISERS: PAC Capital Plc. 8A, Elsie Femi Pearse Street Victoria Island, Lagos REGISTRAR PAC Registrars Limited 122, Bode Thomas Street Surulere, Lagos AUDITORS: Ernst & Young Yinka Adesanya & Co (Chartered Accountants) (Chartered Accountants) UBA Building NACCIMA Building 10 th & 13 th Floor 8A, Oba Akinjobi Road, GRA 57, Marina, Lagos Ikeja, Lagos BANKERS: African Import Export Bank (Afreximbank) First Bank of Nigeria Plc Fidelity Bank Plc Diamond Bank Plc Unity Bank Plc Page 2

5 NOTICE OF AGM NOTICE is hereby given that the Annual General Meeting of SWAP Technologies & Telecomms Plc (the Company ) will be held on 12th day of June, 2018 at The Peninsula Hotel & Towers, Lekki-Epe Expressway, after Lekki Phase 1 Roundabout, (beside Bras Motors) Lekki, Lagos at 11 am, to transact the following business: ORDINARY BUSINESS 1. To receive the audited financial Statements for the year ended 30th June 2013 and the Chairman s, Directors and auditors report thereon. 2. To receive the audited financial Statements for the year ended 30th June 2014 and the Chairman s, Directors and auditors report thereon. 3. To receive the audited financial Statements for the year ended 30th June 2015 and the Chairman s, Directors and auditors report thereon. 4. To receive the audited financial Statements for the year ended 30th June 2016 and the Chairman s, Directors and auditors report thereon. 5. To elect/re-elect Directors. 6. To fix the remuneration of Directors. 7. To appoint Auditors to the Company 8. To authorize Directors to fix the remuneration of the Auditors. 9. To elect/re-elect members of the Audit Committee. SPECIAL BUSINESS To consider and if thought fit, pass the following resolution as a Special resolution: 1. The change of the Company s name from SWAP Technologies & Telecomms Plc to SWAP Plc Dated this 21st day of May, 2018 AK NOMINEES Registered Office: Company Secretaries Plot 1, Block 128B, New Creation Street 1B, Adedoyin Ogungbe Street Off Remi Olowude Way Off Omorinre Johnson Street Lekki Phase 1, Lagos. Lekki Phase 1, Lagos. NOTES: 1. PROXY: A member of the company entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy in his/her stead. A proxy needs not be a member of the Company. All instruments of proxy should be duly stamped by the commissioner of Stamp Duties and deposited at the Registrar s Office, PAC Registrars Limited - 122, Bode Thomas Street, Surulere, Lagos not later than 48 hours before the time for holding the meeting. A corporate body being a member of the company is required to execute a proxy under seal. 2. CLOSURE OF REGISTER OF MEMBERS AND TRANSFER BOOKS: The Register of Members and Transfer Books of the Company will close on June 2, 2018 to facilitate the preparation of the Register for the AGM by the Registrars. Page 3

6 RESULTS AT A GLANCE FOR THE YEAR ENDED 30 JUNE Group Company Group Company N 000 N 000 N 000 N 000 Turnover 4,738,932 4,340,917 6,703,722 6,028,386 Loss before interest, exchange gain/( loss) and taxation (4,295,073) (4,084,745) (798,456) (828,266) Loss before taxation (6,779,732) (6,557,835) (2,732,197) (2,771,378) Taxation (11,336) (11,336) (745,837) (745,837) Loss after taxation before extra ordinary item (6,791,068) (6,569,171) (3,478,034) (3,517,215) Extra ordinary item (147,600) (147,600) (191,000) (191,000) Loss for the year (6,938,668) (6,716,771) (3,669,034) (3,708,215) Total Assets 22,848,400 22,691,472 22,891,317 22,865,248 Net Liabilities (8,658,037) (8,276,367) (1,686,328) (1,559,596) Shareholders funds (8,658,037) (8,276,367) (1,686,328) (1,559,596) Issued and fully paid share capital 1,352,689 1,352,689 1,352,689 1,352,689 Loss per share (256k) (248k) (136k) (137k) Net Liabilities per share (320k) (305k) (62k) (58k) Page 4

7 Board of Directors

8 BOARD OF DIRECTORS GODWIN T. S. ADOKPAYE - Chairman Mr Adokpaye holds a B.A. Honours degree in Classics from the University of Ibadan. He worked with Mobil Oil Nigeria Plc from 1959 and rose through the ranks before finally retiring from an executive position in December He is on the board of FCMB Bank Plc and is currently the Chairman of the Bank s Audit Committee. He is also the chairman of First Capital Trust Limited. OLATUNDE TITILAYO Group Vice Chairman Mr. Titilayo is a graduate of Electrical and Electronics Engineering (B.Sc. degree) from the Obafemi Awolowo University, Ile Ife. He has over the past 20 years gained wide experience in sectors like engineering, consulting, banking and Telecomms. He also has an MBA degree from IESE Business School, Barcelona. He is on the Board of Nigerian American Chambers of Commerce and a member of Institute of Directors (IOD). HENRY JAMES SEMENITARI Mr. Semenitari was until recently an Executive Director with FCMB Bank Plc where he was responsible for the commercial banking division of the bank. He had over 19 years banking experience in various areas including commercial and retail banking, corporate banking, operations and internal control. He holds a Bachelors Degree in Chemical Engineering from University of Lagos and MBA from University of Navarra (I.E.S.E), Barcelona Spain. ADE OGUNLESI Mr. Ogunlesi is a successful entrepreneur. He manages Sofisticat Limited and Skin Beauty Limited, a successful manufacturing outfit in Lagos. He obtained his first degree from University of Lagos and an MBA from IESE Business School in Barcelona. He has over 20 years of experience in Business Management. EMMANUEL OLUFUNSO SOYOYE Mr. Soyoye holds a Masters (M.Sc.) degree in Finance from the University of Lagos and a Bachelors degree (Upper Honors) in Business Administration from Ogun State University. He is an alumnus of the Lagos Business School (CEP18) and other Management Development Programs at IESE Business School, IMD Laussane and Management Center Europe. He has over 20 years in Corporate Strategy, Finance and Business Development. He is the Managing Director and Chief Executive Officer of Pebnic Ventures Limited. Page 6

9 REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 JUNE 2013 The directors present their report on the state of affairs of Swap Technologies and Telecomms Plc ( the Company ) together with the consolidated audited financial statements for the year ended 30 June PRINCIPAL ACTIVITIES The principal activities of the Company are the provision of infrastructure sharing (co-location) services, turnkey site deployment and cell site management services to the telecoms industry. During the year, the company incorporated a subsidiary, Prime Infrastructure and Engineering Services Limited, to take over its engineering construction and cell site management services. STATE OF AFFAIRS In the opinion of the Directors, the State of the Company s affairs is satisfactory and no events have occurred since the balance sheet date, which would affect the financial statements as presented. LEGAL STATUS The company was incorporated in 2003 as a private Limited Liability Company in Nigeria and became a public limited liability company in RESULTS FOR THE YEAR The company and group s results for the year ended 30 June 2013 are presented below: Group Company Group Company N 000 N 000 N 000 N 000 Turnover 4,738,932 4,340,917 6,703,722 6,028,386 Loss before taxation (6,779,732) (6,557,835) (2,732,197) (2,771,378) Taxation (11,336) (11,336) (745,837) (745,837) Loss after taxation before extra ordinary item 6,791,068) (6,569,171) (3,478,034) (3,517,215) Extra ordinary item (147,600) (147,600) (191,000) (191,000) (6,938,668) (6,716,771) (3,669,034) (3,708,215) DIVIDEND The directors do not recommend the payment of dividend during the year. FUTURE DEVELOPMENTS The company intends to carry on fulfilling its objectives as stated in the Memorandum and articles of Association. Page 7

10 REPORT OF THE DIRECTORS continued FOR THE YEAR ENDED 30 JUNE 2013 DIRECTORS The names of Directors at the date of this report and of those who held office during the year are as follows: Adokpaye Godwin - Chairman Titilayo Olatunde - Group Vice-Chairman (formerly Managing Director/CEO) Kesavan Madhavarao - Acting Group CEO/Managing Director, Appointed 11 January 2013 Ogunlesi Adegbola Soyoye Funso Semenitari James Henry DIRECTORS INTERESTS Shareholding Directors interests in the issued share capital of the company as recorded in the register of shareholders at 30 June 2013 are as follows: Director Direct Indirect Total % Adokpaye Godwin 6,428,571 6,428, Titilayo Olatunde 507,456, ,912,000 1,322,368, Semenitari James Henry 3,428,571 3,428, Ogunlesi Adegbola 5,000,000 5,000, Soyoye Funso 2,500, ,000 2,900, ,813, ,312,000 1,340,125, Contracts None of the Directors has notified the Company for the purpose of section 277 of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004, of any discloseable interest in contracts with which the Company is involved as at 30 June SHAREHOLDING Below is the share range analysis of the company at 30 June 2013: Share Range Number Of Shareholders % of Shareholders Units Held % Shareholding 1-10, , ,001-50, , , , ,895, , , ,048, ,001-1,000, ,834, ,000,001-50,000, ,571, ,000,001-9,999,999, ,014,465, TOTAL ,705,377, Page 8

11 REPORT OF THE DIRECTORS continued FOR THE YEAR ENDED 30 JUNE 2013 SUBSTANTIAL INTEREST IN SHARES No single shareholder other than the under listed held 5% or more of the issued and fully paid share capital of the Company as at 30 June Shareholder No. of Shares Percentage Held SWAP Associate Limited 814,912, Titilayo Olatunde 507,456, Keystone Bank Limited 230,000, PAC Capital Nominees 200,000, PROPERTY, PLANT & EQUIPMENT Information relating to changes in property, plant and equipment during the year is shown in Note 2 on page 18. In the opinion of the Directors, the market value of the Company s properties is not less than the value shown in these financial statements. POST BALANCE SHEET EVENTS There are no material post balance sheet events which could have had a material effect on the state of affairs of the Company as at 30 June CHARITABLE CONTRIBUTIONS In compliance with Section 38(2) of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004, the Company did not make any donations or gifts to any political association or for any political purpose during the period. EMPLOYMENT OF PHYSICALLY CHALLENGED PERSON It is the Company s policy that there is no discrimination in considering applications for employment including those from physically challenged persons. All employees whether or not physically challenged are given equal opportunities to develop their expertise and knowledge and to qualify for promotion in furtherance of their careers. No physically challenged person was in the employment of the Company as at 30 June HEALTH, SAFETY AND WELFARE AT WORK OF EMPLOYEES Health and safety regulations are in force within the premises and sites of the Company. The company provides or subsidise transportation, lunch and medical facilities to all levels of employees. EMPLOYEES INTEREST AND TRAINING The company places a high premium on consultation with employees on matters affecting them. In addition, formal channels of communication are employed in keeping staff abreast of various factors affecting the performance of the Company. The company organizes in-house training for its members of staff, and overseas courses are arranged when necessary. FORMAT OF FINANCIAL STATEMENTS The financial statements have been prepared in accordance with the reporting and presentation requirements of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria The directors consider that the format adopted is the most suitable for the Company. Page 9

12 REPORT OF THE DIRECTORS continued FOR THE YEAR ENDED 30 JUNE 2013 AUDITORS The auditors, Messrs Ernst & Young and Yinka Adesanya & Co, have indicated their willingness to continue in office as auditors in accordance with Section 357 (2) of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria October 2014 Page 10

13 CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED 30 JUNE 2013 SWAP Technologies and Telecomms Plc has continued in its commitment to ensuring that it takes account of and complies with the principles of good corporate governance. SWAP recognizes that good corporate governance is an important but distinct task from management. The Board of SWAP recognizes the place of good corporate governance in ensuring that the pursuit of the Company s purpose is undertaken in a manner that effectively promotes the long term interest of the Company s stakeholders. Corporate Governance is overseen by the Company s Board of Directors while the day to day management is delegated to the Chief Executive Officer. The Securities and Exchange Commission Code of Best Practices on corporate governance, the Nigerian Communications Commission regulations (including the Client Code of Practice), Nigerian Environmental Standards and Regulations Enforcement Agency guidelines, Local Governments, States and Federal Laws and the general principles of corporate social responsibility are some of the basis on which our corporate governance ideals rest. GOVERNANCE STRUCTURE Shareholders The shareholders are the highest decision-making body of SWAP, subject to the Company s Memorandum and Articles of Incorporation, Company and Allied Matters Act and any other applicable legislation. Attendance of the Company s Annual General Meeting (AGM), held once in a year (with a break in the past four years due to financial challenges), is open to shareholders and their proxies; with proceedings monitored by members of the press, representatives of Securities and Exchange Commission and Corporate Affairs Commission. The Board The Board recognizes its separate and unique role as the link in the chain of authority between the shareholders and the Company s Executive Management. The ultimate responsibility for governance rests with the Board of Directors of the Company, whose duty it is to ensure that appropriate controls, systems and practices are in place. The Board during the 2013 financial year comprised of 5 members including the Chairman, the Vice Chairman and 3 Non-executive Directors. The position of the Chairman and the Managing Director are separate and distinct. With 1 executive director on the board, the Company s Code of Corporate Governance provides for more non-executive directors of such calibre as to make constructive contributions and for their views to carry significant weight in the board s deliberations. There is no shadow or alternate director and independent thought is brought to bear on the decisions of the board. The Board ensures that the activities of the company are executed within the applicable regulatory frameworks at all times. The responsibilities of the Board include; Defining the company s business strategy and objectives; Considering and approving annual budgets, monitoring performance and ensuring that the company is a going concern; Formulating risk policies and making decisions on the establishment of foreign subsidiaries; Assume ultimate responsibility for financial, operational and internal systems of control and ensure adequate reporting on these by management To maintain effective control over the company affairs and monitor the executive and management, the board meets quarterly and not less than once in a quarter as may be required by circumstances. The Board met over 4 times during the course of this financial year. One of the features of the manner in which the board operates is the role played by board committees, which facilitate the discharge of board responsibilities. Page 11

14 CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED 30 JUNE 2013 The Standing Committees The Board presently carries out its oversight functions through 2 standing committees namely: the Audit Committee and the Finance and General Purpose Committee. Each of these committees has a charter that clearly defines its purpose, composition, and structure, frequency of meeting, duties, tenure and reporting lines to the board. The composition and structure of these committees are shown below. Board Finance and General Purpose Committee The Committee acts on behalf of the Board on all matters relating to management and reports to the Board for approval and ratification. The members are as follows: Funso Soyoye J. Henry Semenitari Olatunde Titilayo Chairman Member Member Responsibilities The Committee is responsible for review and recommendation to the Board for approval of projects, long term investments, contracts and purchases that entail major financial commitments on the part of the Company. To review, consider and make appropriate recommendations to the board on the general economic conditions as it could affect the fortunes of the company Review and make recommendations to the Board on the financing aspects of major capital commitments. Board Audit Committee Estabilshed in compliance with section 359 (6) of the Companies and Allied Matters Act, 1990, the committee whose membership is stated below is, as specified by the Code of Corporate Governance, chaired by a Shareholder. Kayode Abayomi Funso Soyoye J. Henry Semenitari Igbasanmi John (Died April 15, 2015) Chairman Member Member Member The Company s Chief Financial Officer and Head of Internal Audit have access and make quarterly presentations to the Committee. The Committee met 2 times during the 2013 financial year. Responsibilities Review the scope and results of the audit and the cost effectiveness, independence and objectivity of the internal and external auditors Review all issues relating to accounting and financial control practices of the Company All such matters as are reserved to the Audit Committee by the Companies and Allied Matters Act. The Board is presently considering creation of a Risk Management Committee towards enhancing the management standards of the Company s level of exposure. Page 12

15 CORPORATE GOVERNANCE REPORT FOR THE YEAR ENDED 30 JUNE 2013 Directors Attendance The table below shows the frequency of meetings of the Board of Directors, board committees, and members attendance at these meetings, during the year under review DIRECTORS Full Board Meeting Fin & G.P Comm Audit Committee Number of Meetings Godwin Adokpaye 4 N/A N/A Olatunde Titilayo 4 4 N/A Ade Ogunlesi 3 N/A N/A Funso Soyoye Henry Semenitari Page 13

16 STATEMENT OF DIRECTORS RESPONSIBILITIES FOR THE YEAR ENDED 30 JUNE 2013 The Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004, requires the directors to prepare consolidated financial statements for each financial year that give a true and fair view of the state of financial affairs of the Company at the end of the year and of its profit or loss. The responsibilities include ensuring that the company: a) keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Company and comply with the requirements of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004; b) establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and c) prepares its consolidated financial statements using suitable accounting policies supported by reasonable and prudent judgments and estimates, and are consistently applied. The directors accept responsibility for the annual financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with Statements of Accounting Standards issued by the Financial Reporting Council of Nigeria Act No 6, 2011 and the requirements of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria The directors are of the opinion that the consolidated financial statements give a true and fair view of the state of the financial affairs of the Company and of its loss for the year ended 30 June The directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control. Nothing has come to the attention of the directors to indicate that the company will not remain a going concern for at least twelve months from the date of this statement. Titilayo Olatunde Soyoye Funso Director Director FRC/2013/10DN/2684 FRC/2013/10DN/ October October 2014 Page 14

17 REPORT OF THE AUDIT COMMITTEE TO THE MEMBERS OF SWAP TECHNOLOGIES & TELECOMMS PLC In accordance with the provision of Section 359(6) of the Companies & Allied Matters Act CAP C20 Laws of the Federation of Nigeria 2004, we members of the Audit Committee hereby report as follows: That the scope and planning of the audit were adequate in our opinion; That the accounting and reporting policies of the Company conformed with statutory requirements and ethical practices; That the internal control was being constantly and efficiently monitored; That the Joint External Auditors management report received satisfactory response from Management Dated October 24, 2014 KAYODE ABAYOMI Chairman, Audit Committee Members of the Committee Kayode Abayomi - Chairman Mr. John Olatomide Igbasanmi (Died April 15, 2015) - Shareholder Mr Olufunso Soyoye - Non Executive Director Mr Henry James Semenitari - Non Executive Director Page 15

18 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SWAP TECHNOLOGIES AND TELECOMMS PLC Ernst & Young UBA Building 10th & 13th Floor 57, Marina Lagos, Nigeria. Tel: +234 (01) / 80 Fax: +234 (01) ey.com NACCIMA HOUSE 8A, Oba Akinjobi Road, GRA, Ikeja. P. O. Box 9131, Ikeja, Lagos. Tel: , info@yinkaadesanya.com stmattewng@yahoo.com yinkaadesanyang@gmail.com Website: Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Swap Technologies and Telecomms Plc and its subsidiaries, which comprise the consolidated balance sheet as at 30 June 2013, the consolidated profit and loss account, consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes. Directors responsibility for the financial statements The Company s directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the relevant standards issued by the Financial Reporting Council of Nigeria Act No. 6, 2011 and the provisions of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004 and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity s preparation and fair presentation of the consolidated financial statements 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 entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of Swap Technologies and Telecomms Plc and its subsidiaries as at 30 June 2013 and of its financial performance and cash flows for the year then ended in accordance with the relevant standards issued by the Financial Reporting Council of Nigeria Act No. 6, 2011 and provisions of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria Page 16

19 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SWAP TECHNOLOGIES AND TELECOMMS PLC Ernst & Young UBA Building 10th & 13th Floor 57, Marina Lagos, Nigeria. Tel: +234 (01) / 80 Fax: +234 (01) ey.com NACCIMA HOUSE 8A, Oba Akinjobi Road, GRA, Ikeja. P. O. Box 9131, Ikeja, Lagos. Tel: , info@yinkaadesanya.com stmattewng@yahoo.com yinkaadesanyang@gmail.com Website: Emphasis of Matter Without qualifying our opinion, we draw attention to note 37 to the financial statements which indicates that the Group made a net loss of N6.9 billion (2012: N3.7 billion) and at balance sheet date, the current liabilities exceeded its current assets by N6.9 billion (2012: N2.6 billion) and a deficit in shareholders funds of N8.7 billion (2012: N1.7 billion). These conditions, along with other matters as set forth in note 37, indicate the existence of material uncertainties which may cast significant doubt on the company s ability to continue as a going concern. Report on Other Legal and Regulatory Requirements In accordance with the requirement of Schedule 6 of the Companies and Allied Matters Act, CAP C20, Laws of the Federation of Nigeria 2004, we confirm that: i) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; ii) iii) in our opinion, proper books of account have been kept by the Company, so far as appears from our examination of those books, and proper returns adequate for the purposes of our audit have been received from subsidiaries not visited by us; the Company s consolidated balance sheet and profit and loss account are in agreement with the books of account; Funmi Ogunlowo, Yinka Adesanya FCA, FRC/2013/ICAN/ FCA, FRC/2013/ICAN/ For: Ernst & Young Chartered Accountants For: Yinka Adesanya & Co. Lagos, Nigeria Lagos, Nigeria 24 October October 2014 Page 17

20 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2013 The following are the significant accounting policies used by the Company. (a) (b) (c) (d) (e) Basis of preparation of financial statements The financial statements are prepared under the historical cost convention as modified by the revaluation of certain investment securities and property, and in compliance with Nigerian Statements of Accounting Standards issued by the Financial Reporting Council of Nigeria Act No. 6, Consolidation The consolidated financial statements comprise the financial statements of Swap Technologies and Telecomm Plc and its subsidiaries as at 30 June The consolidated subsidiaries are Swap Technologies and Telecomms, Ghana and Swap Technologies and Telecomms, Cote d Ivoire and Prime Infrastructure and Engineering Services. All intra-group balances resulting from intra-group transactions are eliminated in full. Turnover Turnover represents the invoiced value of sales to third parties of the goods and services falling due within the company s ordinary activities after deduction of trade discounts and all other sales taxes. Fixed Assets Fixed assets are stated at cost or valuation less accumulated depreciation. Depreciation of Fixed Assets Fixed assets are depreciated over their estimated expected useful lives by the straight-line method at the following annual rates: % Buildings 2 Plant & Machinery 25 Motor Vehicles 25 Furniture and Fittings 20 Office/Site Equipment 20 Towers 6.67 Generators and Cooling Systems 33 Back Up Power 50 Fence and Transformers 10 Full depreciation is provided on the cost of new assets in the month they are first put to use while no depreciation is charged on assets disposed of in the month of their disposal. No depreciation is charged on capital works-in-progress until such assets are completed and available for use. (f) (g) Operating lease Lease rental expenses are charged to the profit and loss account on a systematic basis in line with the time pattern of the benefit derived by the Company. Investment Investment in properties is stated at current market values with corresponding gains/losses passed to Capital Reserve. Other investments are stated at cost with provisions made for diminution in value. Page 18

21 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2013 (h) (i) (j) (k) (l) Interest and rental Income Interest and rental income are recognized in the profit and loss account on accrual basis. Income from investments Income from investments is credited gross on the basis of the amounts actually received in the year. Inventories Inventories which include site equipment and accessories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis and includes expenditure incurred in acquiring inventories and bringing them to their existing location and condition. Net realisable value represents the estimated selling price in the ordinary course of business less all costs to be incurred in selling and distribution. Where appropriate, allowance is made for slow moving, obsolete and defective stock. Receivables Receivables are stated after making specific provision for debt considered doubtful of recovery. An estimate for doubtful debts is made when collection of the full amount is no longer probable. The uncollectible amount or the amount in respect of which recovery has ceased to be probable is recognized as an expense in the profit and loss account. Repairs and Maintenance Cost of normal repairs and maintenance are charged to profit and loss account in the period they are incurred. (m) Finance Lease The capital element of assets under finance lease is capitalized and depreciated at the rates for assets of that category. The interest element of the finance cost is charged to profit and loss account over the lease period. The obligation to lessor is shown as part of creditors, and creditors amounts falling due after more than one year appropriately classified as to maturity. (n) (o) (p) (q) Taxation Income tax expenses are recognized in the profit and loss account. Current income tax is the provision made in respect of expected tax payable on taxable incomes, using applicable statutory tax rates. Deferred Taxation Deferred taxation, which arises from differences in the timing of recognition of items in the accounts by the tax authorities, is calculated using the liability method. It is provided on all timing differences at the rate of tax likely to be in force at the time of reversal. Deferred Income Major items of revenue received in advance in respect of partially completed projects are dealt with as deferred income. Term loans Term loans are recorded at face value less amounts repaid. Interest costs are recognized in the profit and loss account over the duration of the facility. Page 19

22 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2013 (r) Employees retirement benefit scheme The company operates a defined contributory staff pension scheme for its staff in accordance with the provisions of the Pension Reform Act The company and each employee contribute 7.5% respectively. Staff contribution to the scheme is funded through the payroll deductions while the Company s contributions are charged to the profit and loss account. In addition, the Company operates a terminal gratuity scheme, which is based on the number of years of services of the retiring personnel and is accounted for on accrual basis. The related costs are charged to the profit and loss account. (s) (t) (u) (v) (w) (x) Provision A provision is recognised when the Company has a present legal or constructive obligation that can be estimated reliably as a result of a past event and it is probable that an outflow of economic resources will be required to settle the obligation in accordance with the Statement of Accounting Standards (SAS) 23. Assets retirement obligations The company s estimated asset dismantling and restoration costs are based on the present value of the assets retirement obligations. Upon initial recognition, the associated asset retirement costs are capitalized as part of the carrying amount of the fixed asset and a corresponding asset retirement and restoration liability is recognized. The asset is depreciated in line with the depreciation policy of the relevant asset. Foreign Currency Translation Transactions denominated in foreign currencies are recorded at the official rates of exchange at the transaction date. Assets and Liabilities denominated in foreign currencies are translated at the applicable official rates of exchange. Exchange gains or losses are included in the profit and loss account of the year in which they arise. Segment Reporting The company carries out its operations in three geographical locations namely Nigeria, Ghana and Cote d-ivoire. Its primary format for segment reporting is based on business segments. The company s operations comprised two business segments namely collocation/infrastructure sharing and engineering construction and managed services. Cash and cash equivalent Cash and cash equivalent include cash on hand, cash balances with banks and other shortterm funds held with banks which are-available to the Company for use either generally or specifically. Borrowing costs Financing costs directly associated with the acquisition or construction of assets that require more than three months to complete and place in service are capitalised at weighted average interest rates relating to the loans. Other borrowing costs such as arrangement, exposure and other upfront fees are deferred and amortised over the tenor of the loan on a straight line basis. Page 20

23 CONSOLIDATED BALANCE SHEET AS AT 30 JUNE Group Company Group Company Notes N 000 N 000 N 000 N 000 FIXED ASSETS Property, plant and equipment 2 13,353,745 13,269,861 13,983,902 13,927,964 Investments 3 685,651 1,170, , ,614 Due from related parties , ,376-62,418 Other long term assets 4 1,414,945 1,414, , ,958 Deferred taxation 14 3,288,873 3,257,871 2,724,575 2,724,575 19,089,172 19,521,411 17,922,686 18,022,529 CURRENT ASSETS Stocks 5 382, , , ,860 Debtors and prepayments 6 2,452,051 2,082,263 4,100,016 3,867,963 Due from related parties 31 43,535 92,863 43, ,035 Cash and Bank 7 880, ,759 76,340 18,861 3,759,228 3,170,061 4,968,631 4,842,719 CREDITORS DUE WITHIN ONE YEAR Creditors and accruals 8 3,611,196 3,333,181 4,117,208 3,964,407 Finance lease 9 10,970 8,537 15,429 15,429 Bank overdrafts , ,794 Short-term loans 11 7,025,872 6,746,609 2,926,798 2,926,798 Due to related parties 31-52, Taxation 13 11,256 11,256 16,650 16,650 NET CURRENT LIABILITIES (6,900,066) (6,981,637) (2,634,248) (2,607,359) TOTAL ASSETS LESS CURRENT LIABILITIES 12,189,106 12,539,774 15,288,438 15,415,170 CREDITORS DUE MORE THAN ONE YEAR Finance lease ,777 7,777 Long term loans 12 17,437,492 17,437,492 14,166,988 14,166,988 Deferred taxation 14 3,288,873 3,257,871 2,724,575 2,724,575 Provision for asset retirement 15 68,939 68,939 37,745 37,745 Gratuity 16 51,839 51,839 37,681 37,681 (8,658,037) (8,276,367) (1,686,328) (1,559,596) CAPITAL AND RESERVES Share capital 17 1,352,689 1,352,689 1,352,689 1,352,689 Share premium 18 2,953,228 2,953,228 2,953,228 2,953,228 Capital reserve , , , ,820 Translation reserve 20 10,573-43,614 - Revenue reserve 21 (13,135,347) (12,743,104) (6,196,679) (6,026,333) (8,658,037) (8,276,367) (1,686,328) (1,559,596) Chief Executive Officer Director Chief Financial Officer FRC/2014/IODN/9522 FRC/2013/IODN/2684 FRC/2013/ICAN/2641 See notes to the financial statements. Page 21

24 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE Group Company Group Company Notes N 000 N 000 N 000 N 000 TURNOVER 22 4,738,932 4,340,917 6,703,722 6,028,386 Cost of Sales (3,394,669) (3,158,809) (4,568,725) (4,080,639) Gross Profit 1,344,263 1,182,108 2,134,997 1,947,747 Operating expenses (885,499) (554,254) (811,086) (673,157) Exceptional impairment of receivables 23 (2,879,201) (2,855,455) (195,520) (192,569) OPERATING (LOSS)/PROFIT (2,420,437) (2,227,601) 1,128,391 1,082,021 Other income 24 23,645 16,267 10,922 10,195 (LOSS)/PROFIT BEFORE INTEREST, TAXATION AND DEPRECIATION (2,396,792) (2,211,324) 1,139,313 1,092,216 Depreciation (1,898,281) (1,873,421) (1,937,769) (1,920,482) LOSS BEFORE INTEREST & TAXATION (4,295,073) (4,084,745) (798,456) (828,266) Interest and similar charges 25 (2,549,035) (2,537,664) (1,533,668) (1,532,134) Foreign exchange gain/ (loss) 26 64,376 64,574 (400,073) (410,978) LOSS BEFORE TAXATION 27 (6,779,732) (6,557,835) (2,732,197) (2,771,378) Taxation 13 (11,336) (11,336) (745,837) (745,837) LOSS AFTER TAXATION BEFORE EXTRA ORDINARY ITEM (6,791,068) (6,569,171) (3,478,034) (3,517,215) Extra ordinary item 34 (147,600) (147,600) (191,000) (191,000) Loss for year (6,938,668) (6,716,771) (3,669,034) (3,708,215) Loss per share (Basic) 39 (256k) (248k) (136k) (137k) See notes to the financial statements. Page 22

25 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE Group Company Group Company Notes N 000 N 000 N 000 N 000 CASHFLOWS FROM OPERATING ACTIVITIES Cash receipts from customers 2,693,924 2,501,155 5,200,733 4,548,026 Payment to suppliers and employees (3,682,950) (3,075,755) (4,149,606) (3,510,039) VAT paid (30,217) (30,217) (18,991) (18,991) Tax paid (16,730) (16,730) (88,527) (88,527) NET CASH (UTILIZED)/PROVIDED BY OPERATING ACTIVITIES 28 (1,035,973) (621,547) 943, ,469 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets 30 (658,289) (635,574) (710,042) (706,781) Proceeds from sale of fixed assets 11,624 10,490 25,961 25,961 Increase in investments - (243,744) - - Interest received 14,023 9,067 2,813 2,086 NET CASH UTILISED BY INVESTING ACTIVITIES (632,642) (859,751) (681,268) (678,734) CASH FLOWS FROM FINANCING ACTIVITIES Interest & similar charges on loans (3,100,870) (3,097,551) (428,718) (427,184) Loan received 6,455,473 6,176, , ,449 Loan repayment (320,129) (340,000) (889,722) (889,722) Finance lease payment (14,669) (14,669) (19,860) (9,714) NET CASH PROVIDED/ (UTILIZED) BY FINANCING ACTIVITIES 3,710,475 2,723,990 (419,851) (408,171) Net increase/(decrease) in cash and cash equivalents 1,331,319 1,242,692 (157,510) (156,436) Cash and cash equivalents at the beginning of the year (450,454) (507,933) (292,944) (351,497) Cash and cash equivalents at the end of the year , ,759 (450,454) (507,933) See notes to the financial statements. Page 23

26 NOTES TO THE FINANCIAL STATEMENTS 1. CORPORATE STRUCTURE AND BUSINESS The company was incorporated in 2003 as a private Limited Liability Company in Nigeria and became a Public Limited Company in Its objectives are to carry on the business of infrastructure sharing (co-location) services, turnkey site deployment, cell site management services, sales and distribution of Telecommunication and Information Technologies equipment and accessories. 2. PROPERTY PLANT & EQUIPMENT THE COMPANY Assets under construction Land & Buildings Plant & Machinery Office/Site Equipment Motor Vehicles Furniture & Fittings Generators and Cooling Systems Towers Back Up Power Fence and Transformers Total COST N 000 N 000 N 000 N 000 N 000 N 000 N 000 N 000 N 000 N 000 N 000 At 1 July , ,276 11,954 1,662, ,644 16,015 1,818,153 12,349, , ,244 17,247,532 Additions(Note 30) - 5,920 1,208 70, , ,555 1,056,881 1,710 25,174 1,345,168 Disposals - (2,500) - - (165) - (49,880) (19,200) - - (71,745) Transfers (69,813) - (490) (9,653) (89,167) (1,743) (170,866) At 30 June , ,696 12,672 1,723,360 51,572 15,350 1,950,828 13,387, , ,418 18,350,079 DEPRECIATION At 1 July ,793 9, ,800 81,731 10, ,044 1,773, ,566 49,046 3,319,568 Charge for the year - 3, ,265 16,313 2, , ,149 65,855 31,797 1,873,421 Disposal (134) - (38,725) (3,840) - - (42,699) Transfers - - (451) (5,763) (62,743) (1,105) (70,062) At 30 June ,563 10, ,302 35,167 12,367 1,254,117 2,629, ,421 80,843 5,080,228 NET BOOK VALUE: At 30 June , ,133 2, ,058 16,405 2, ,711 10,757,804 58, ,575 13,269,861 At 30 June , ,483 2,129 1,227,829 58,913 5,226 1,084,109 8,979, , ,198 13,927,964 Page 24

27 NOTES TO THE FINANCIAL STATEMENTS 2. PROPERTY PLANT & EQUIPMENT THE GROUP Assets under construction Land & Buildings Plant & Machinery Office/Site Equipment Motor Vehicles Furniture & Fittings Generators and Cooling Systems Towers Back Up Power Fence and Transformers Total COST N 000 N 000 N 000 N 000 N 000 N 000 N 000 N 000 N 000 N 000 N 000 At 1 July , ,382 11,954 1,696, ,611 26,958 1,818,153 12,365, , ,244 17,358,270 Additions (Note 30) - 5,920 3,862 78,465 7,085 6, ,555 1,056,865 1,710 25,174 1,367,883 Disposals - (2,500) - (9,821) (3,493) (900) (49,880) (19,200) - - (85,794) Reclassification (69,813) (69,813) At 30 June , ,802 15,816 1,765, ,203 32,299 1,950,828 13,403, , ,418 18,570,546 DEPRECIATION At 1 July ,797 9, , ,013 16, ,044 2,349, ,566 49,046 3,374,368 Charge for the year - 3,781 1, ,813 30,472 4, , ,206 65,855 31,797 1,898,281 Disposal (9,821) (3,462) - (38,725) (3,840) - - (55,848) At 30 June ,578 11, , ,023 20,433 1,254,117 2,,642, ,421 80,843 5,216,801 NET BOOK VALUE: At 30 June , ,224 4, ,810 60,180 11, ,711 10,760,954 58, ,575 13,353,745 At 30 June , ,585 2,129 1,246,158 83,598 10,831 1,084,109 8,979, , ,198 13,983,902 Page 25

28 NOTES TO THE FINANCIAL STATEMENTS Group Company Group Company N 000 N 000 N 000 N INVESTMENTS Quoted (3a) Unquoted companies (3b) 223, , , ,900 Subsidiaries (3c) - 484,707-93,363 Real Estate 461, , , , ,651 1,170, , ,614 3a. Quoted investments: Starcomms Plc 9,796 9,796 9,796 9,796 Provision for diminution in value (9,296) (9,296) (9,196) (9,196) b. Unquoted investments: Reltel Telecommunications Limited 294, , , ,000 Seed Capital Microfinance Bank Limited 10,000 10,000 10,000 10,000 First Capital Trust Limited 401, , , ,500 PAC Capital Plc 200, , , ,000 IMFB Limited 20,000 20,000 20,000 20,000 PrimeWaterview Limited 13,650 13,650 13,650 13, , , , ,150 Provision for diminution in value (715,750) (715,750) (568,250) (568,250) 223, , , ,900 3c. Investment in Subsidiaries SWAP Technologies & Telecomms (Ghana) - 185,961-43,506 SWAP Technologies & Telecomms ( CI) - 49,857-49,857 Prime Infrastr. & Engr. Services Ltd (3d) - 248, ,707-93,363 3d. Investment in Prime Infrastructure & Engineering Services Limited In November 2012, the company incorporated a subsidiary to take over its engineering construction services. The subsidiary is 99.9% owned by Swap Technologies and Telecomms Plc. It was capitalized through cash funds and transfers of some fixed assets and inventories. 4. OTHER LONG TERM ASSETS These are long term portion of prepaid cell site rents, deferred charges on loans and other long term receivables from staff members. 5. STOCKS Materials 392, , , ,837 Goods-in-transit , , , , ,837 Inventory provision (9,845) (9,845) (20,977) (20,977) 382, , , ,860 Page 26

29 NOTES TO THE FINANCIAL STATEMENTS Group Company Group Company N 000 N 000 N 000 N DEBTORS AND PREPAYMENTS Trade debtors (6a) 780, ,655 2,372,808 2,223,650 Construction works recoverable 92,375 16, , ,991 Prepayments and others (6b) 743, , , ,965 Withholding taxes 835, , , ,357 2,452,051 2,082,263 4,100,016 3,867,963 6a. Trade debtors 3,914,548 3,684,163 2,626,801 2,477,643 Provision for bad debt (3,134,502) (3,109,508) (253,993) (253,993) 780, ,655 2,372,808 2,223,650 6b. Prepaid site lease & rentals 623, , , ,931 Staff loans and advances 128,803 77, , ,802 VAT recoverable 91,705 87,472 83,138 65,884 Deferred charges on loan syndication 1,279,568 1,279, , ,956 Other receivable 35,000 35,000 28,421 28,350 2,158,712 2,076,433 1,201,593 1,166,923 Less long term portion (Note 4) (1,414,945) (1,414,945) (380,958) (380,958) 743, , , , CASH AND BANK Fixed deposit 608, ,000 8,000 8,000 Cash and bank balances 272, ,759 68,340 10, , ,759 76,340 18, CREDITORS AND ACCRUALS Trade Creditors 994, ,587 1,666,549 1,560,835 Interest payable 615, ,725 1,334,713 1,334,713 VAT & WHT Payable 813, , , ,314 Accruals and other payable 1,187,614 1,066, , ,545 3,611,196 3,333,181 4,117,208 3,964, FINANCE LEASE At 1 July 23,206 23,206 23,014 12,868 Additions 2,433-20,052 20,052 Repayments (14,669) (14,669) (19,860) (9,714) Balance at 30 June 10,970 8,537 23,206 23,206 Due within 1 yr (10,970) (8,537) (15,429) (15,429) Due after 1 yr - - 7,777 7, The overdraft facilities have a tenor of 365 days with an option of renewal. The applicable interest rates on the facilities range between 16.5% and 18%. The facilities are secured by a legal mortgage over the investment property located at Plot F113 F114 Road 36 VGC; and against the stock of the company, tripartite warehousing agreement and the personal guarantee of the Managing Director. Page 27

30 NOTES TO THE FINANCIAL STATEMENTS Group Company Group Company N 000 N 000 N 000 N SHORT-TERM LOANS Commercial Papers (a) 2,320,000 2,320,000 1,920,000 1,920,000 Current portion of long term loans (Note 12) 4,354,298 4,354, , ,349 Truebond ,000 80,000 Fidelity (b) 72,311 72, , ,449 Enterprise bank(c) 149, Unity bank (d) 129, ,025,872 6,746,609 2,926,798 2,926,798 a) The commercial papers are for 180 days period at interest rate of 19% per annum. b) The facility is to finance equipment purchases for site build contracts. Facility amount is N523.2 million at interest rate of 15% per annum with a maturity period of 365 days. Amount outstanding at the balance sheet date was N72.3 million. c) The facility is to finance construction of 16 cell sites for Huawei Technology Limited. Interest rate is 23% per annum with a maturity period of 365 days. The loan is secured by irrevocable domiciliation of entire proceeds from Huawei Technologies Limited to Enterprise Bank Limited d) The facility is to finance site built contracts. Interest rate on the facility is 20% per annum with a maturity period of 365 days. The loan is secured by lien on the proceeds of the invoice to be discounted by the bank and confirmed domiciliation of payment Group Company Group Company N 000 N 000 N 000 N LONG TERM LOANS Syndicated loan (a) 21,791,790 21,791,790 12,901,520 12,901,520 First Bank USD loan (b) - - 1,444,331 1,444,331 First Bank Naira loan (c) , ,486 21,791,790 21,791,790 14,875,337 14,875,337 Current portion of the loans (Note 11) (4,354,298) (4,354,298) (708,349) (708,349) 17,437,492 17,437,492 14,166,988 14,166,988 a) In July 2012, the Company completed its syndicated loan led by Afreximbank. Other banks that participated in the syndication are Nigerian local banks comprising First Bank Plc, Diamond Bank Plc, Unity Bank Plc and Eco International Bank. Outstanding interest payable on the loan at 30 June 2012 was capitalized while additional $35 million was drawn therefore bringing the principal outstanding to $140 million at 30 June The terms of the facility was restructured to a tenor of six years with one year moratorium for principal repayment. The interest rate on the facility is LIBOR + a margin of 6.4% and 6.9% to Afrexim-bank and local Nigerian banks, respectively. While interest accrued on annual basis, the repayment of the principal sum is through quarterly installment effective 31 August The loan is secured by registered composite security deed over the company s assets in favour of first trustee. Page 28

31 NOTES TO THE FINANCIAL STATEMENTS b) The foreign currency denominated facility with First Bank of Nigeria was for the refinancing of existing short term debts initially utilized to finance the importation of towers and accessories for sale. The towers are now utilized for the construction of base stations for telecoms operators. The amount outstanding has been crystallized into the syndication. c) The naira term loan was utilized for the construction of sites for telecoms operators. The facility ceiling amounts to N780.5m. The loan has now been converted to dollar loan as part of the Afreximbank led syndication Group Company Group Company N 000 N 000 N 000 N TAXATION i) Per profit and loss account: Income tax 11,336 11,336 16,650 16,650 11,336 11,336 16,650 16,650 Deferred taxation (Note 14) , ,187 Profit and loss account 11,336 11, , ,837 Per balance sheet At beginning, 16,650 16,650 88,527 88,527 Current period charge 11,336 11,336 16,650 16,650 Paid during the year (16,730) (16,730) (88,527) (88,527) At 30 June 11,256 11,256 16,650 16,650 Income tax provision is in accordance with the provisions of Companies Income Tax Act, CAP C21, laws of the federation of Nigeria 2004 as amended. Current year s tax provision was based on minimum tax payable. No education tax as the Company was in assessable loss position Group Company Group Company N 000 N 000 N 000 N DEFERRED TAXATION Deferred tax asset b/f (2,724,575) (2,724,575) (3,143,989) (3,143,989) Charge for the year (564,298) (533,296) 419, ,414 Deferred tax asset at end (3,288,873) (3,257,871) (2,724,575) (2,724,575) Deferred tax liability b/f 2,724,575 2,724,575 2,414,802 2,414,802 Charge for the year 564, , , ,773 Deferred tax liability at end 3,288,873 3,257,871 2,724,575 2,724,575 Net charge to profit , ,187 Deferred tax asset at the balance sheet date amounted to N6.84 billion. However, due to continued loss making, deferred tax asset has been recognized to the extent of deferred tax liability. Page 29

32 NOTES TO THE FINANCIAL STATEMENTS 15. PROVISION FOR ASSET RETIREMENT This represents provision made for asset retirement and restoration costs. The provision is based on management s best estimate of the cost of decommissioning and restoration of a cell site. Key assumptions are discount rate of 16.1%, average probability of 5% and inflation factor of 11.6%. Movement on this account during the year was as follows: Group Company Group Company N 000 N 000 N 000 N 000 At beginning 37,745 37,745 23,750 23,750 Provisions during the year 31,194 31,194 13,995 13,995 At 30 June 68,939 68,939 37,745 37, GRATUITY At beginning 37,681 37,681 19,013 19,013 Provisions during the year 14,158 14,158 18,668 18,668 At 30 June 51,839 51,839 37,681 37, SHARE CAPITAL Authorised: 3,000,000,000 ordinary shares of 50k each 1,500,000 1,500,000 1,500,000 1,500,000 Issued and fully paid: 2,705,377,141 ordinary shares of 50k each 1,352,689 1,352,689 1,352,689 1,352, SHARE PREMIUM 2,953,228 2,953,228 2,953,228 2,953, CAPITAL RESERVE This represents the surplus on the market value of investments in properties over the cost. 20. TRANSLATION RESERVE This arose from the translation of monetary and non monetary assets and liabilities of the foreign operations at year end. 21. REVENUE RESERVE At beginning (6,196,679) (6,026,333) (2,527,645) (2,318,118) Loss for the year (6,938,668) (6,716,771) (3,669,034) (3,708,215) At 30 June (13,135,347) (12,743,104) (6,196,679) (6,026,333) 22. TURNOVER Turnover represents the invoiced value of sales to third parties of the goods and services falling due within the company s ordinary activities after deduction of trade discounts and all other sales taxes. Page 30

33 NOTES TO THE FINANCIAL STATEMENTS The principal activities of the company covered the provision of infrastructure sharing and cell site management services to the telecoms industry. The analysis of turnover by activity is as follow: Group Company Group Company N 000 N 000 N 000 N 000 Site construction & Managed services 166,470-1,729,793 1,059,232 Co-location sales 4,572,462 4,340,917 4,974,265 4,969,154 4,738,932 4,340,917 6,703,722 6,028, EXCEPTIONAL IMPAIRMENT OF RECEIVABLES This represents substantially the provisions for trade debts receivable for Starcomms Plc due to economic circumstance of the debtor. Starcomms has ceased servicing its obligation to SWAP Group Company Group Company N 000 N 000 N 000 N OTHER INCOME Interest income 14,023 9,067 2,813 2,086 Rent on property 4,684 4,684 6,547 6,547 Profit on asset disposed 1, Others 3,804 2,516 1,562 1,562 23,645 16,267 10,922 10, INTEREST CHARGES On bank term loans and commercial papers 970, , , ,349 On syndicated loan 1,578,507 1,578, , ,785 2,549,035 2,537,664 1,533,668 1,532, FOREIGN EXCHANGE GAIN The exchange gain is attributed majorly to the effect of devaluation of naira against dollar on the dollar denominated loans. 27. LOSS BEFORE TAXATION The operating result was arrived at after deducting: Group Company Group Company N 000 N 000 N 000 N 000 Directors remunerations 17,559 17,559 24,600 24,600 Auditors Remuneration 22,557 16,500 20,907 16,500 Depreciation of fixed assets 1,898,281 1,873,421 1,937,769 1,920,482 Interest on loans and overdrafts 2,549,035 2,537,664 1,533,668 1,532,134 Staff costs 313, , , ,472 Page 31

34 NOTES TO THE FINANCIAL STATEMENTS 28. RECONCILIATION OF NET LOSS TO NET CASH (UTILIZED)/PROVIDED BY OPERATING ACTIVITIES Group Company Group Company N 000 N 000 N 000 N 000 Loss after taxation (6,938,668) (6,716,771) (3,669,034) (3,708,215) Adjustment to reconcile net loss to net cash provided: Depreciation of fixed assets 1,898,281 1,873,421 1,937,769 1,920,482 Loss on sale of fixed assets 18,322 18,556 81,208 61,477 Interest received (14,023) (9,067) (2,813) (2,086) Provision for loss in investments 147, , , ,000 Provision for doubtful debts 2,879,201 2,855, , ,569 Inventory write off/provision 1,408 1,408 19,225 19,225 Unrealized exchange difference (64,376) (64,574) 400, ,978 Interest charges 2,549,035 2,537,664 1,533,668 1,532,134 Changes in Assets and Liabilities: Decrease/ (increase) in inventories 377, ,816 43,699 (68,088) Increase in debtors and prepayments (1,529,986) (1,766,025) (1,370,319) (1,222,817) Decrease in due from related parties - 145,172-61,394 (Decrease)/increase in creditors and accruals (368,626) (69,881) 846, ,832 Increase in due to related parties - (52,115) - - (Decrease)/increase in taxation (5,394) (5,394) 657, ,310 Increase in gratuity 14,158 14,158 18,668 18,668 5,902,695 6,095,224 4,612,643 4,638,684 Net cash (utilized)/provided by operating activities (1,035,973) (621,547) 943, , RECONCILIATION OF CASH AND CASH EQUIVALENTS Cash and bank 880, ,759 76,340 18,861 Bank overdrafts - - (526,794) (526,794) Cash and cash equivalents 880, ,759 (450,454) (507,933) 30. ADDITIONS TO FIXED ASSETS Financed as follows: Cash financed 658, , , ,781 Asset-Debt swap with Zoom (30a) 678, , Capitalization of inventory in store , ,980 Acquisition through finance lease ,052 20,052 Capitalized decommissioning cost provision 31,194 31,194 13,995 13,995 Total additions (Note 2) 1,367,883 1,345,168 1,051,069 1,047,808 Page 32

35 NOTES TO THE FINANCIAL STATEMENTS 30a. Asset-debt swap with Zoom For part fulfillment of its debt obligation to SWAP Plc, Zoom mobile entered into a sale and leaseback arrangement on 35 additional sites for a consideration of N678.4 million. The agreed consideration was applied as a set off against amount owed by Zoom Mobile. 31. RELATED PARTY TRANSACTIONS In the opinion of the directors, transactions with related parties were carried out at arm s length except for the interest free loan to Swap Technologies and Telecomms, Cote d Ivoire Group Company Group Company N 000 N 000 N 000 N 000 Amount due from related parties: SWAP Ghana Current account ,559 SWAP Associates Limited 43,535 43,535 43,535 43,535 SWAP Cote d Ivoire - 49,095-48,941 43,535 92,863 43, ,035 Long term interest free loan to Cote d Ivoire - 62,418-62,418 Other share loan to Swap Engineering 345, , , ,239 43, ,453 Amount due to related parties: Prime Infrastructure Engineering Services - 52, CHAIRMAN & DIRECTORS EMOLUMENTS Fee & Allowance: Chairman Other Directors Emoluments as Executive Directors 16,909 16,909 23,400 23,400 17,559 17,559 24,600 24,600 Highest paid Director 16,909 16,909 23,400 23, EMPLOYEES (a) STAFF NUMBERS The average number of persons employed by the Company during the period including Directors was as follows: Group Company Group Company N 000 N 000 N 000 N 000 Activity Engineering and Projects Sales and Marketing Finance and Administration Network Sharing & Managed Services Page 33

36 NOTES TO THE FINANCIAL STATEMENTS (b) HIGHER PAID EMPLOYEE Employees of the Company, other than Directors, whose duties were wholly or mainly discharged in Nigeria, received remuneration (including pension contributions) in the following ranges Group Company Group Company N 000 N 000 N 000 N , , , , ,001-1,000, ,100,001-2,000, ,000,001 - Above (c) STAFF COSTS 313, , , , EXTRA ORDINARY ITEM This is attributed to diminution in value of investment in equities of quoted and unquoted Companies. 35. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS Contingent Liabilities: There are legal actions against the Company estimated at N=9,350,075 (2012: N9,350,075). The Company s solicitors and the directors are of the opinion that the liabilities arising, if any are not likely to be significant. No provision has been made for these contingencies in the financial statements. Capital commitments: Capital commitments in respect of outstanding purchase orders being executed at the balance sheet date amounted to N402 million. 36. SEGMENT REPORTING Geographical segment: The company carries out its operations in Nigeria, Ghana and Cote-d Ivoire. Nigerian operations constitute 92% of the total results. Business Segment: As at 30 June 2013, the Company s operations comprised two businesses segments namely collocation and Engineering construction. Collocation segment engages in ownership of passive telecommunication equipment which is leased to operators in the telecommunication industry for rental income. Engineering construction segment specializes in cell site construction and managed services. Results of operations for the business segments are as shown below: Page 34

37 NOTES TO THE FINANCIAL STATEMENTS 2013 Group Company N 000 N 000 Turnover: Engineering construction 393,045 1,729,793 Co-location sales 4,345,887 4,974,929 4,738,932 6,703,722 All associated costs, depreciation, selling and general administrative expenses are unallocated. 37. GOING CONCERN During the year ended 30 June 2013, the Company made a net loss of N6.9 billion (2012: N3.7 billion) and at balance sheet date, the current liabilities exceeded its current assets by N6.9 billion (2012: N2.6 billion) and a deficit in shareholders funds of N8.7 billion (2012: N1.7 billion). The company continues to make losses. These conditions give rise to a material uncertainty which may cast significant doubt about the company s ability to continue as a going concern and, therefore may be unable to realise its assets and discharge its liabilities in the normal course of business. Management is making effort at introducing equity capital to pay off existing short and medium bank borrowings. In addition, efforts are being made to sustain the growth in collocation sales with focus on business with GSM operators who dominate the market. The financial statements are prepared on the basis of accounting policies applicable to a going concern. This basis presumes that the Company will inject fresh equity fund in the immediate future and liquidate interest bearing funds and aggressively grow its co-location business as stated above, and that the realisation of assets and settlement of liabilities will occur in the ordinary course of business 38. POST BALANCE SHEET EVENTS At the date of this report, there have been no significant post balance sheet events, which would have a material effect on the financial statements. 39. LOSS PER SHARE (BASIC) Loss per share is based on loss after taxation and on the number of issued and fully paid ordinary shares at the end of the year. 40. COMPARATIVE FIGURES Certain balances in prior period have been reclassified in order to conform to current year s presentation. Page 35

38 STATEMENT OF VALUE ADDED FOR THE YEAR ENDED 30 JUNE Group Company Group Company N 000 N 000 N 000 N 000 Turnover 4,738,932 4,340,917 6,703,722 6,028,386 Bought in materials and services - Local (4,151,163) (4,120,320) (3,097,279) (2,776,924) - Foreign (2,760,181) (2,389,532) (2,805,530) (2,590,347) (2,172,412) (2,168,935) 800, ,115 Other income 23,645 16,267 10,922 10,195 Value (lost)/added (2,148,767) (2,152,688) 811, ,310 Applied as follows: % % % % To employees as salaries, wages and other related costs 331,249 (15) 141,682 (7) 263, , To external providers of capital: as bank interest and charges 2,549,035 (119) 2,537,664 (118) 1,533, ,532, To Government: as Company taxes 11,336 (1) 11,336 (1) 16, ,650 2 Retained for the Company s future: -Depreciation 1,898,281 (88) 1,873,421 (87) 1,937, ,920, Deferred tax , , Retained in the business (6,938,668) 320 (6,716,771) 312 (3,669,034) (452) (3,708,215) (552) (2,148,767) 100 (2,152,668) , , Value (lost)/added represents the wealth which the Company has been able to utilize/create by its own and its employee s efforts. This statement shows the allocation of that wealth among employees, capital providers, government and that retained for future creation of wealth. Page 36

39 FIVE-YEAR FINANCIAL SUMMARY THE COMPANY JUNE DECEMBER N= 000 N= 000 N= 000 N= 000 N= 000 CAPITAL EMPLOYED Share capital 1,352,689 1,352,689 1,352,689 1,352,689 1,352,689 Share premium 2,953,228 2,953,228 2,953,228 2,953,228 2,953,228 Capital reserve 160, , , , ,820 Revenue reserve (12,743,104) (6,026,333) (2,318,118) (192,960) 103,339 (8,276,367) (1,559,596) 2,148,619 4,273,777 4,570,076 ASSETS AND LIABILITIES Fixed assets 13,269,861 13,927,964 14,888,076 1,832, ,980 Investments 1,170, ,614 1,117,614 1,416,713 1,226,811 Due from related parties 408,376 62,418 62, Other assets 1,414, , Deferred taxation 3,257,871 2,724,575 3,143,989 88,986 58,647 Net current (liabilities)/ assets (6,981,637) (2,607,359) (314,355) 943,716 3,022,757 12,539,774 15,415,170 18,897,742 4,281,471 4,573,195 Finance lease - (7,777) Long term loans (17,437,492) (14,166,988) (14,291,558) - - Deferred tax (3,257,871) (2,724,575) (2,414,802) - - Provision for asset retirement (68,939) (37,745) (23,750) - - Gratuity (51,839) (37,681) (19,013) (7,694) (3,119) (8,276,367) (1,559,596) 2,148,619 4,273,777 4,570,076 Turnover 4,340,917 6,028,386 3,650,766 1,801,126 5,250,964 (Loss)/profit before taxation (6,557,835) (2,771,378) (2,374,932) (224,159) 627,017 Taxation (11,336) (745,837) 551,674 6,656 (120,226) (Loss)/Profit after taxation (6,569,171) (3,517,215) (1,823,258) (217,503) 506,791 Extra ordinary item (147,600) (191,000) (301,900) (78,796) - Dividend (405,807) (Loss)/profit for the year (6,716,771) (3,708,215) (2,125,158) (296,299) 100,984 Basic (Loss)/Earnings per share (248k) (137k) (79k) (11k) 19k (Loss)/Earnings per share is based on (loss)/profit after taxation and on the number of issued and fully paid capital at the end of the year. Page 37

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43 PROXY FORM Annual General Meeting of SWAP Technologies & Telecomms Plc (the Company ) to be held on 12th day of June, 2018 at The Peninsula Hotel & Towers, Lekki-Epe Expressway, after Lekki Phase 1 Roundabout, (beside Bras Motors) Lekki, Lagos at 11 am, prompt. I/We being a member/members of Swap Technologies & Telecomms Plc. hereby appoint or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on Tuesday the 12th of June, 2018 and at every adjournment thereof. Dated this day of, Signature: ORDINARY BUSINESS 1. To receive the audited financial Statements for the year ended 30th June 2013 and the Chairman s, Directors and auditors report thereon. 2. To receive the audited financial Statements for the year ended 30th June 2014 and the Chairman s, Directors and auditors report thereon. 3. To receive the audited financial Statements for the year ended 30th June 2015 and the Chairman s, Directors and auditors report thereon. 4. To receive the audited financial Statements for the year ended 30th June 2016 and the Chairman s, Directors and auditors report thereon. 5. To elect/re-elect Directors. 6. To fix the remuneration of Directors. 7. To appoint Auditors to the Company RESOLUTION FOR AGAINST 8. To authorize Directors to fix the remuneration of the Auditors. 9. To elect/re-elect members of the Audit Committee. SPECIAL BUSINESS To consider and if thought fit, pass the following resolution as a Special resolution: 1. The change of the Company s name from SWAP Technologies & Telecomms Plc to SWAP Plc A member (shareholder) who is unable to attend an Annual General Meeting is allowed by law to vote by proxy. The above proxy form has been prepared to enable you exercise your right to vote, in case you cannot personally attend the meeting. Please sign this proxy form and forward it, so as to reach the office of the Company Secretary A.K. Nominees Management Services Limited, 1B, Otunba Adedoyin Ogunugbe Street, off Omorinre Johnson Street, Lekki Phase I, Lagos not later than Wednesday the 6th day of June, If executed by a coporation, the proxy form should be sealed with the common seal. The proxy must produce the admission card sent with the Report and Accounts to obtain entrance to the meeting. Please indicate with an X in the appropriate box how you want your vote to be cast on the resolutions set out above. Unless otherwise instructed, the proxy will vote or abstain from voting at his/her discretion. Admission Slip Please admit the Shareholder named on this slip or his duly appointed proxy to the Annual General Meeting of SWAP Technologies & Telecomms Plc to be held on 12th day of June, 2018 at the Peninsula Hotel & Towers, Lekki-Epe Expressway. NAME: ADDRESS:

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