Unconsolidated Statement of Financial Position Disclaimer note: This Unconsolidated Statement of Financial Position for the Company is intended solely for the use of Company Management and its Shareholders and shall not be distributed to any other party than the Company management, Board of directors and Shareholders.
UNCONSOLIDATED STATEMENT OF FINANCIAL POSITION NOK thousands Note 30 Sep 2018 Assets Investments in group companies 2 846,061 Long-term receivables 6 104,728 Total non-current assets 950,789 Short-term receivables from group companies 3 114,198 Accrued interest receivable 1,726 Total current receivables 115,924 Cash and cash equivalents 26 Total current assets 115,950 Total assets 1,066,739 Equity and liabilities Share capital 4, 5 138,952 Other contributed capital 4 822,682 Retained earnings -1,255 Total equity 960,380 Subscription rights liability 6 102,285 Total long-term liabilities 102,285 Accrued interest payable 2,039 Other current liabilities 73 Trade payables 1,962 Total current liabilities 4,074 Total liabilities 41,016 Total equity and liabilities 1,066,739 The Board of Oslo, 26 November 2018 Jean Daniel Fouchard Hans-Holger Albrecht Trygve Lauvdal Jan Sebor Chairman Board member Board member Board member Page 1 (6)
NOTES TO THE 30 SEPTEMBER 2018 BALANCE SHEET Net1 International, previously Ice Group International AS, ( Net1 or the Company ) is the result of the de-merger of Ice Group AS non-scandinavian operations. The de-merger was made effective on 4 September 2018, where the Company was the overtaking party. Access Industries, the controlling party in the de-merger, is also the majority shareholder in the Company post de-merger. The Company is a holdings company, currently with investments in telecommunications operations in Indonesia and the Philippines. Net1 s strategy is to provide mobile data and building complementary networks, operating on low frequency bands, to largely provide internet access to customers in suburban and rural areas where existing internet access is poor or non-existent. The Company s investments in Indonesia and the Philippines, holds the only nationwide 4G licenses for the 450 MHz bands, as well as 3.5 GHz (20 MHz) spectrum in the Philippines. The markets in these countries are both heavily populated with low fixed line internet penetration in rural areas and have topographies where low frequency bands can be particularly effective. The broad coverage of 450 MHz further provides a strong opportunity within the growing M2M/IoT space The Company has office premises in Oslo, Norway. Note 1 Basis of preparation The audited Unconsolidated Statement of Financial Position is prepared for the first time as of and has been prepared solely for the purpose to carry out acquisition of own shares. The Unconsolidated Statement of Financial Position for the Company is intended solely for the use of Company Management and its Shareholders and shall not be distributed to any other party than the Company management, Board of directors and Shareholders. was formally incorporated as of 8 March 2018, originally named Ice Group International AS, in July 2018 renamed to and then listed on Oslo OTC on 11 October 2018, under the ticker symbol NET1. A full set of annual IFRS compliant financial statements will be prepared for the period 8 March 2018 through 31 December 2018. This unconsolidated statement of financial position has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ( IFRS ). The principal accounting policies applied in these financial statements are set out below. Functional and presentation currency The functional currency of the Company is NOK as this is the currency of the primary economic environment in which the Company operates. All amounts in this report are presented in Thousand Norwegian Kroner (NOK thousands), unless otherwise stated. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held on call with banks. Financial instruments Financial instruments are included in many balance sheet items as described below. Classification The Company classifies its financial assets and liabilities in the following categories: financial assets at fair value through profit or loss, amortized cost or fair value over other comprehensive income. Page 2 (6)
Borrowings, trade payables and the part of current liabilities related to financial instruments are classified as financial liabilities at amortized cost. The subscription rights liability is a financial liability that is classified as debt, not equity, as the exercise of the subscription rights is not fixed-for-fixed but a variable payment amount. The rights are measured at fair value based on a Black & Scholes valuation model that is a level 2 valuation. See also note 6 for additional information Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the contractual obligations have been completed or otherwise terminated. Loans and receivables and other financial liabilities are subsequently measured at amortized cost using the effective interest method. Offsetting financial instruments Financial assets and liabilities are off-set and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Impairment of financial assets Assets carried at amortised cost are impaired using the expected loss model as required by IFRS 9. Share capital All shares are classified as equity. Trade payables Trade payables are financial instruments and represents obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Page 3 (6)
Note 2 Participations in Group companies The Parent Company holds the following investments in subsidiaries and associated companies: Corporate identity no Registered office Ownership Number of shares Equity per 30 Sep 2018 Direct holdings Net1 International Holdings BV Amsterdam, 62871102 The Netherlands 100% 253,128,122 670,698 Indirect holdings Mobile Internet Holdings BV Amsterdam, 62866788 The Netherlands 56% 9,710,002 - Net1 Philippines Holdings BV Amsterdam, 62870912 The Netherlands 100% 11,000 - Net1 LATAM Holdings BV Amsterdam, 62871102 The Netherlands 100% 1 Ice Group Holdings Ltda 15.271.183 Sao Paulo, /0001-57 Brazil 100% 248,540 - Ice Group Telecomunicações Ltda 15.321.957 Sao Paulo, /0001-07 Brazil 100% 95,000 - PT Sampoerna Telekomunikasi Indonesia 09.03.1.61. Jakarta, 22069. Indonesia 65% 28,923,463,981 - Broadband Everywhere Corp. Manila, 88589 The Philippines 40% 6,666,664 Textron Holdings Corp. Manila, A200012904 The Philippines 20% 1,493,332 - Total 670,698 Note 3 Short-term receivables from group companies The NOK 114 million loan to Ice Group International Holdings BV is a convertible loan. The loan bears a 8% p.a. interest, and has a maturity date of 22 July 2019. Note 4 Share capital and other contributed capital NOK thousands No of shares Share capital Other contributed capital Total As per 8 March 2018 (incorporation) 30,000 30-30 Share capital decrease, 19 July 2018-30,000-30 - -30 New share issue, 19 July 2018 4,010,025 3,609 28,391 32,000 New share issues, de-merger with Ice Group AS* 126,416,347 113,775 732,286 846,061 New share issue (registration pending) 23,964,723 21,568 62,005 83,573 As per 154,391,095 138,952 822,682 961,634 * All new shares issued related to the de-merger transaction with Ice Group AS are non-cash and have been paid in kind with shares in Net1 International Holdings BV. Page 4 (6)
Note 5 Shareholder information The Company s shares are traded at Oslo OTC under the ticker NET1. As per the share holdings were distributed as follows (direct and indirect holdings): Shareholders Shares Ownership % Access Industries 80,744,293 52,3 Rasmussengruppen 36,694,404 23,8 Jörg Mohaupt 8,679,886 5,6 Other investors (less than 5% holdings each) 28,272,512 18,3 Total shares 154,391,095 100,0 Note 6 Subscription rights On 22 August 2018, the Company issued 52,699,940 subscription rights to Rasmussengruppen. The initial fair value of the subscription rights was set to SEK 113.7 million (NOK 104.5 million). Of the 52,699,940 subscription rights, 42,566,822 can be exercised upon successful de-merger (completed at 4 September 2018) but no later than 31 December 2021. 10,113,118 of the 52,699,940 can only be exercised if Ice Group AS becomes listed on a regulated marketplace and does not pay its accrued interest on their outstanding loan to Rasmussengruppen. The cost of the subscription rights (call option) is valued at fair value. At initial valuation the subscription rights value was assessed to NOK 104.5 million, recognized as a subscription right liability. Subsequent changes in the fair value is recognized over profit and loss until the warrants are exercised, or the lapse of the subscription rights at 31 December 2021. As per, the subscription rights fair value was NOK 102.3 million, recognizing the decrease of the value of NOK 2.4 million over the profit and loss as a financial income. The consideration for the subscription rights, SEK 113.7 million is to be paid by Ice Group AS. Note 7 - Risks and factors of uncertainty The Company s investments operate in the highly competitive and regulated mobile telecommunications industry in South East Asia and is exposed to certain risks that could have impact on earnings or its financial position. Net1 has defined risk as anything that could have a material adverse effect on the achievement its goals or activities for its investments. Risks can be threats, uncertainties or lost opportunities relating to their current or future operations. Net1 divides the risks into related to the Industry in which it operates, risk related to the Operations and risks related to Financing of the business. The most significant risks and uncertainties that are expected to remain for the next three months are described below. As significant Industry risks Net1 identifies the risk that the earnings and financial condition in its investments could be affected by the general conditions within the telecommunications industry, the regulatory environment being a significant component as well as the continuing rapid technological development, both which could increase competition, and thereby potentially limit their ability to increase or maintain their market share or product prices, or require the Company to make substantial additional capital investments. As significant Operational risks, Net1 sees the risk that it may not be able to successfully carry out its strategy or realize any or all of its anticipated gains in market share, higher ARPU and cost scalability in its investments. The strategy to build out the networks in Indonesia and the Philippines faces the risks of being dependent on suppliers and vendors in order to continue its investments in maintaining, upgrading and expanding its technical network. Amongst Financing risks, Net1 sees the risk of not being able to raise equity capital, which might restrict the Company from making strategic acquisitions or exploiting business opportunities or the ability to successfully implement its business strategy. Also, the Liquidity risk that Net1 or its investments may not have sufficient Page 5 (6)
liquid financial resources to meet its obligations when they fall due or would have to incur excessive costs to do so, has been identified. Net1 assesses, monitors and manages its liquidity needs on an ongoing basis. Note 8 Subsequent events The final 147,714 new shares related to the de-merger were issued on 13 November 2018. Page 6 (6)
pwc To the General Meeting of Netl International Holdings AS Auditor's Report to the Unconsolidated Statement of Financial Position Opinion We have audited the unconsolidated statement of financial position of Netl International Holdings AS as at showing an equity of NOK 960 380 thousands. The unconsolidated statement of :financial position as at comprise the unconsolidated statement of :financial position, notes to the unconsolidated statement of :financial position, including a summary of significant accounting policies. In our opinion, the accompanying unconsolidated statement of financial position in all material respects, express the financial position of the company in accordance with the accounting policies as set out in note 1. Basis for Opinion We conducted our audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company as required by laws and regulations, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter-Basis of accounting and Restriction on Distribution We draw attention to note 1 in the unconsolidated statement of financial position, which describes the basis of preparation. The unconsolidated statement of financial position is prepared solely for the purpose to carry out acquisition of own shares (asl 9-3). As a result, the unconsolidated statement of financial position may not be suitable for another purpose. Our report is intended solely for the Nell International Holdings AS and should not be distributed to parties other than Netl International Holdings AS. Our opinion is not modified in respect of this matter. Responsibilities of the Board of Directors for the Unconsolidated Statement of Financial Position The Board of Directors (management) are responsible for the preparation in accordance with the accounting policies as set out in note 1, and for such internal control as management determines is necessary to enable the preparation of the unconsolidated statement of financial position that are free from material misstatement, whether due to fraud or error. PricewaterhouseCoopers AS, Postboks 748 Sentrum, NO-0106 Oslo T: 02316, org.no.: 987009 713 VAT, www.pwc.no State authorised public accountants, members of The Norwegian Institute of Public Accountants, and authorised accounting firm
pwc Independent Auditor's Report - In preparing the unconsolidated statement of financial position, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern. The unconsolidated statement of financial position use the going concern basis of accounting insofar as it is not likely that the enterprise will cease operations. Auditor's Responsibilities for the Audit of the Unconsolidated Statement of Financial Position Our objectives are to obtain reasonable assurance about whether the unconsolidated statement of financial position as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the unconsolidated statement of financial position. As part of an audit in accordance with laws, regulations, and auditing standards and practices generally accepted in Norway, including International Standards on Auditing (ISAs), we exercise professionaljudgment and maintain professional scepticism throughout the audit. We also: identify and assess the risks of material misstatement of the unconsolidated statement of financial position, whether due to fraud or error. We design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the unconsolidated statement of financial position or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the unconsolidated statement of financial position represent the underlying transactions and events in a manner that achieves fair presentation. (2)
Independent Auditor's Report- pwc We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. -,,,,,/ B/. Oslo, 28 November 2018 PriceWaterhouseCo~s..,,,,..,--~-- / --~...-,e Herman Skibrek State Authorised Public Accountant (3)