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INS Towers of strength

IHS Towers NG Limited

Consolidated and separate financial statements for the year ended 31 December 2016

IHS TOWERS NG LIMITED CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016

Table of contents

Corporate information

Directors' report

Statement of directors' responsibilities

Report of independent auditors

Statements of profit or loss and other comprehensive income

Statements of financial position

Statements of changes in equity

Statements of cash flows

Notes to the consolidated and separate financial statements

1 General information

1.1 Going concern

2 Summary of significant accounting policies

2.1 Basis of preparation

2.1.1 Changes in accounting policies and disclosures

2.2 Consolidation

2.3 Foreign currency translation

2.4 Revenue recogn ition

2.5 Property, plant and equipment

2.6 Intangible assets

2.7 Impairment of non-financial assets

2.8 Inventories

2. 9 Financial assets

2.9.1 Classification

2.9.2 Recognition and measurement

2.9.3 Impairment of financial assets

2.1 o Financial liabilities

2.10.1 Classification

2.11 Offsetting financial instruments

2.12 Embedded derivatives

2.13 Derecognition of financial instruments

2.14 Taxation

2.15 Borrowing costs

2.16 Employee benefits

2.17 Leases

2.18 Decommissioning and site restoration provision

2.19 Interest income

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3 Introduction and overview of group's risk management

4 Critical accounting estimates and judgements

5 Prior year adjustments

6 Revenue

7 Cost of sales

8 Administrative expenses

9 Staff cost

1 o Other income

11 Finance income

12 Finance costs

13 Fair value through profit or loss

14 Foreign exchange gain

15 Property, plant and equipment

16 Intangible assets

17 Investment in subsidiaries

18 Prepaid land rent

19 Inventories

20 Trade and other receivables

21 Cash and cash equivalents

22 Share capital

23 Share premium

24 Borrowings

25 Decommissioning and site restoration provision

26 Trade and other payables

27 Taxation

28 Derivative financial instrument

29 Related party disclosures

30 Cash generated from operations

31 Other capital reserves

32 Events after reporting date

33 Contingent liabilities

Other national disclosures

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Corporate Information

Company registration number

Registered office

Board of Directors

Auditors

Bankers

Company Secretary

Solicitor

RC 448308

9 Alfred Rewane Road lkoyi Lagos

Adedotun Sulaiman Oluwafemi Tejuoso Femi Akingbe Abhulime Ehiagwina Babatunde Soyoye Kennedy Bungane lnderpal Bajaj Sam Senbanjo Kamar Bakrin Mohamad Darwish David Ordman Jimoh Umoru

PricewaterhouseCoopers Chartered Accountants Landmark Towers

Chairman Director Director Director Director Director Director Director Director Director Director Director

Plot 5B Water Corporation Road Victoria Island, Lagos

First City Monument Bank Pie Standard Chartered Bank Pie Ecobank Nigeria Pie ABN AMRO Bank N.V.

Jimoh Umoru Plot 934 ldejo Street Victoria Island, Lagos

Templars {Barristers & Solicitors) The Octagon (5th Floor) 13A, A. J. Marin ho Drive Victoria Island

1

Resigned effective 10 June 2016 Resigned effective 10 June 2016 Resigned effective 10 June 2016 Resigned effective 10 June 2016 Resigned effective 10 June 2016 Resigned effective 10 June 2016 Resigned effective 10 June 2016 Resigned effective 10 June 2016 Resigned effective 10 June 2016 Appointed effective 10 June 2016 Appointed effective 10 June 2016 Appointed effective 10 June 2016


Directors' Report

The directors present their annual report on the affairs of IHS Towers NG Limited (the "Company") and its subsidiaries, Tower Infrastructure Company Limited and IHS Towers Netherlands Finco NG B.V. (together referred to as the "Group"), with the audited financial statements for the year ended 31 December 2016, to the members of the Company. This report discloses the state of the Company and the Group.

INCORPORATION AND ADDRESS The Company was incorporated as a private limited liability company in 2002. The Company is located at 9 Alfred Rewane Road, lkoyi, Lagos, which is also its registered apdress.

PRINCIPAL ACTIVITIES The principal activity of the Company continues to be the managing and infrastructure sharing and leasing (colocation) of telecommunications infrastructure to telecommunications and other service providers.

RES UL TS AND DIVIDEND The Group and Company's results for the year ended 31 December 2016 are set out on page 9. The summarised results are presented below.

Revenue Operating (loss)/profit Loss for the year

Group

31-Dec-16 N'OOO

19,706,993 (7,014,876)

(41 ,848,785)

Restated* 31-Dec-15

N'OOO 14,676,436 7,520,798

(2,134,743)

Company

31-Dec-16 N'OOO

15,465,605 (4,988,836)

(39,602,037)

Restated* 31-Dec-15

N'OOO 11,732,491

8,172,363 (1 ,458,899)

The directors did not recommend the payment of dividend in the current and prior year.

DIRECTORS' SHAREHOLDING The directors who served during the year and their interest in the shares of the Company for the purposes of sections 275 and 276 of the Companies and Allied Matters Act. were as follows:

31 December 2016

Director Adedotun Sulaiman * Oluwafemi Tejuoso * Femi Akingbe * Abhulime Ehiagwina * Babatunde Soyoye * Kennedy Bungane * lnderpal Bajaj * Sam Senbanjo * Kamar Bakrin * Mohamad Darwish ** David Ordman ** Jimoh Umoru **

* Resigned effective 10 June 2016 ** Appointed effective 10 June 2016

Number of Ordinary shares Role/Representing of 50k each Chairman Nil Helios Investment Partners Nil Ventures and Trusts Ltd. · Nil Chief Financial Officer (CFO) Nil Helios Investment Partners Nil Shanduka Group (Pty) Ltd Nil Chief Executive Officer (CEO) Nil Helios Investment Partners Nil Helios Investment Partners Nil IHS Holding Limited Nil IHS Holding Limited Nil IHS Holding Limited Nil

2


Directors' Report (cont'd)

DIRECTORS' SHAREHOLDING (continued) 31 December 2015

Director Adedotun Sulaiman Oluwafemi Tejuoso Femi Akingbe Abhulime Ehiagwina Babatunde Soyoye Kennedy Bungane *** lnderpal Bajaj Phuti Malabie **** Sam Senbanjo Dave Govender ***** Kamar Bakrin

*** Appointed effective 1 October 2015 **** Resigned effective 1 October 2015 ***** Resigned 30 June 2015

Analysis of Shareholding

Role/Representing Chairman Helios Investment Partners Ventures and Trusts Ltd. Chief Financial Officer (CFO) Helios Investment Partners Shanduka Group (Pty) Ltd Chief Executive Officer (CEO) Shanduka Group (Pty) Ltd Helios Investment Partners Shanduka Group (Pty) Ltd Helios Investment Partners

An analysis of the distribution of the Company's shares is as follows:

31 December 2016

IHS Netherlands NG2 B. V. IHS Nigeria Limited

31 December 2015

HTN Towers Pie Mr Temitope Lawani

Number of Ordinary shares of 50k each

70,772,329 1

70,772,330


70,772,329 1

70,772,330


Amount N

35,386,164 1

35,386,165

Amount N

35,386,164 1

35,386,165

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

%Holding

100.00% 0.00%

100.00%

%Holding

100.00% 0.00%

100.00%

The shareholders of HTN Towers Pie transferred all their rights and obligations in the entire issued share capital of the Company to IHS Holding Limited on 10 March 2016. On 15 September 2016, IHS Holding transferred the shares to a special purpose vehicle, IHS Netherlands NG2 B.V. IHS Holding Limited (ultimate parent) controls the day to day activities and major financial decisions of IHS Towers NG Limited.

With effect from 10 October 2016, the name of the Company was changed from Helios Towers Nigeria Limited to IHS Towers NG Limited.

DIRECTORS' INTERESTS IN CONTRACTS None of the directors has notified the Company for the purpose of section 277 of the Companies and Allied Matters Act of their direct or indirect interest in contracts or proposed contracts with the company during the year.

PROPERTY, PLANT, AND EQUIPMENT Information relating to changes in property, plant & equipment is disclosed in note 15 to these financial statements.

EMPLOYMENT OF PHYSICALLY CHALLENGED PERSONS The Group has a policy of fair consideration of job applications by disabled persons having regard to their abilities and aptitude. The Group's policy prohibits discrimination against disabled persons in the recruitment, training, and career development process.

3

-!HS TOWERS NG LIMITED CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 'FOR THE YEAR ENDE031 DECEMBER 2016' . .

Directors' Report (cont'd)

EMPLOYEE HEAL TH, ·SAFETY 'AND WELFARE Tlie .. safety aricl health of employees is·of pliramo,.mt ifnport~1Jce.at IH.S Tow.er.s_NG Li.mited,. Manflgers. )ei\lm leaders and. employees are lrwolyed In the d.evelopment and·impleme.nta·tion of heaJl!i-and safety prociedUfes .. The.Group c:ornplfed with the health and safety legislaiion an·d. also embarked on a ccirillnuous :campaign for elimination of hazatds in the work place,. . .

The Group's emplliyees ariri.covered by Workmen's Comperisation. Medic;~I costs of empli)yees··are b.ome RY ·the Group as -co'f1s]de~ed ·appr,opriat.e.

F_lre prevention and fire-fig~ting equipme.nt.are iostalled afstrate_gic locaiions .within the Group's· premises,

EMPL0.YEE TRAINING AN.0 INVOLVEMENT ManagE:meni and start' relations, in the ·Group are ve~ -cordial , Regular joint consultative meetings are held Where ·employees are' involved ··1ri discussirig issues that affe'ct them and :also· prov.id~ avsnue for discussing ottier ·1s·sues of mutual.benefits. The intellectual capacity of employees cpn.stitul!!S ·1he most valu.e(/ assets of ·tfie r;;ro.up. -Our non-(/_iscriminalory ·recrul.tment prociess is .siructured to attract -and rel.ain the best talents who, 1hrough pr.aper induction and acculturatfon, embrace the·culture ofbuilding quality into whatever lhey'.do. . . .

P.:s p,art of.our .capability building straiegy, -ail categories of s,taff attended Cclrefully planned training courses and seminars t_o .update the ,special skills arid job. retjuireme·nts. This is. rn:addition .to·the regular Pn"~liie~job ttafhing· across all operational sites·. ·

DONATIONS -AND GIFTS The Group did n9t male a_ny ·ch~ri)able donation durirJQ the-year (201_5; ·nli).

AUDITORS Pric.ew·aterhouseCoopers l'{ere appointed -as independent au1:HtCJrs lo_:t'he· ¢ompany during 1.h!i! year and have ·incifcated their willlngn~ss:fo cont.fnue in office:.as ihe auclitors. o_f the·Company in .accqrdance with section 357(2j cif the 'Companies ·and Allied Matteis.Act of Nigeria. . . . '

BY ORDER OF THE BOARD

.Jlmoh Umoru Compa_ny Secretary

Lagos, Nigeria ·25 April 2011

4


Statement of Directors' Responsibilities

The Companies and Allied Matters Act requires the Directors to prepare 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;

(b) establishes adequate internal controls to safeguard its assets and to prevenl and detect fraud and other irregularities; and

(c) prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgements 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 judgements and estimates, in conformity with International Financial Reporting Standards, and the requirements of the Companies and Allied Matters Act of Nigeria.

The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the company and of its profit or loss. 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.

David Ordman Director 26 April 2017

s

Mohamad Darwish Director 26 April 2017

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Independent auditor's report To the Members of IHS Towers NG Limited

Report on the audit of the consolidated and separate financial statements

Our opinion In our opinion, the consolidated and separate financial statements give a true and fair view of the consolidated and separate financial position of IHS Towers NG Limited ("the Company'') and its subsidiaries (together "the Group") as at 31 December 2016, and of their consolidated and separate financial performance and their consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and the requirements of the Companies and Allied Matters Act.

What we have audited IHS Towers NG Limited's consolidated and separate financial statements comprise:

• the consolidated and separate statements of financial position as at 31 December 2016;

• the consolidated and separate statements of profit or loss and other comprehensive income for the year then ended;

• the consolidated and separate statements of changes in equity for the year ended;

• the consolidated and separate statements of cash flows for the year then ended; and

• the notes to the consolidated and separate financial statements, which include a summary of significant accounting policies.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) . Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated and separate.financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.

Other information The directors are responsible for the other information. The other information comprises the Directors Report, Statement of Directors' Responsibilities, and Statement of Value Added and Five Year Financial Summary (but does not include the consolidated and separate financial statements and our auditor's report thereon).

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

, ..... ........ , ........................ ..... ... ............................................................. .......................... .. ... ... .... .. .... ...... ............ ....... ..... ............... .. ... .................... ... ............. .. .

IPricewaterhouseCoopers Chartered Accountants, Landmark Towers, 5B Water Corporation Road, Victoria Island, Lagos, Nigeria

pwc

Responsibilities of the directors and those charged with governance for the consolidated and separate financial statements The directors are responsible for the preparation of the consolidated and separate financial statements that give a true and fair view in accordance with IFRSs and the requirements of the Companies and Allied Matters Act, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the C([)nsolidated and separate financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are 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 Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated and separate financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

pwc

We communicate with those charged with governance 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.

Report on other legal and regulatory requirements

The Companies and Allied Matters Act requires that in carrying out our audit we consider and report to you on the following matters. 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 purposes of our audit;

ii) the Company has kept proper books of account, so far as appears from our examination of those books and returns adequate for our audit have been received from branches not visited by us;

iii) the Company's statement of financial position and profit or loss and other comprehensive income are in agreement with the books of account.

For: PricewaterhouseCoopers Chartered Accountants Lagos, Nigeria

Engagement Partner: Edafe Erhie FRC/2013/ICAN/00000001143

26 April 2017


Statements of Profit or Loss and Other Comprehensive Income

Group Restated*

31-Dec-16 31-Dec-15 Note N'OOO N'OOO

Revenue 6 19,706,993 14,676,436

Cost of sales 7 (12,004,270) (9,280,144) Gross profit 7,702,723 5,396,292

Administrative expenses 8 (14,726,627) (1,514,438) Other income 10 9,028 3,638,944 Operating (loss)/profit (7,014,876) 7,520,798

Finance income 11 152,169 108,376 Finance costs 12 (39,135,111) (8,118,425) Fair value through profit or loss 13 3,379,640 (1,548,420) Foreign exchange gain 14 47,886 Loss before taxation (42,570,292) (2,037,671)

Taxation 27 721,507 (97,072)

Loss for the year (41,848,785) (2,134,743)

Attributable to: Owners of the ea rent (41,848,785) (2,134,743)

(41,848,785) (2,134,743)

Other comprehensive income:

Items that may be reclassified to profit or loss:

Exchange differences on translation of foreign operations 31 286,171 Other comprehensive income for the year net of taxes 286,171

Attributable to: Owners of the ea rent 286,171

286,171

Total comprehensive loss for the year (41,562,614) (2,134,743)

Attributable to: Owners of the earent (41,562,614) (2,134,743)

(41,562,614) (2,134,743)

*Impact of prior year restatements (note 5)

The notes on pages 13 to 45 are an integral part of these financial statements.

9

Company Restated*

31-Dec-16 31-Dec-15 N'OOO N'OOO

15,465,605 11,732,491 (9,132,169) (6,294,285)

6,333,436 5,438,206

(11 ,331,300) (904,787) 9,028 3,638,944

(4,988,836) 8,172,363

152,169 108,376 (39,207,908) (8,191 ,218)

3,379,640 (1 ,548,420) 47,886

(40,617,049) (1,458,899)

1,015,012

(39,602,037) (1 ,458,899)

(39,602,037) (1,458,899) (39,602,037) (1 ,458,899)

(39,602,037) (1,458,899)

(39,602,037) (1,458,899) (39,602,037) (1,458,899)


Statements of Financial Position

Groue I Company I Restated' Restated" Restated" Restated'

31-Dec-16 31 -Dec-15 1-Jan-15 31-Dec-16 31-Dec-15 1-Jan-15 Note 14'000 14'000 111'000 111'000 14'000 1:1'000

Assets Non-current assets Property, plant and equipment 15 18.903,830 24,545,150 26,321,839 15,677,075 17,950,702 20,517.647 Intangible assets 16 6,138 6,484 16,761 6,138 6,484 16.761 Investments in subsidiaries 17 467,125 467,125 467,125 Prepaid land rent 18 783.649 754,998 1,183,332 783,649 754,998 1.183,332 Derivative financial instrument 28 238,986 238,986 Trade and other receivables 20 5,865.462 4,503,785 5,911 ,857 4,503.785 Total non-current assets 19.932.603 31 .172,094 32,025,717 17. 172.973 25,091 .166 26,688,650

Current assets Prepaid land rent 18 525.642 696,525 696,396 525,642 696,525 696,396 Inventories 19 539,677 314.002 221,144 539,677 314,002 221 ,144 Trade and other receivables 20 9,007,758 6,297,363 2,041 ,240 9,007,238 6,296,363 2,040,240 Amounts due from related parties 29 72,514 142,130 6,142,423 8,390,093 6,842,674 Cash and cash eguivalents 21 2,931.183 4. 105,371 3,359,599 2,915,885 4.1 05.371 3.359.599 Total current assets 13.076,774 11 ,555,391 6.318.379 19,130,865 19,802.354 13.160.053

Total assets 33,009,377 42,727,485 38,344,096 36,303 ,838 44,893,520 39,848,703

Liabilities Current liabilities Trade and other payables 26 3,432.885 3,239,374 2.245,055 3,241 ,774 3,775.484 2,711 ,180 Amounts due to related parties 29 3,959,988 4, t19 ,461 1,875,519 1.684,065 Borrowings 24 1,393,859 1,875,519 1,684,065 Current tax liabilities 27 409,347 t76,712 126,035 126,035 126,035 126,035 Decommissioning and site res toration erovision 25 1,058.138 285.469 Total current liabilities 10.254,217 5.291 ,605 4,055.155 7,772.739 5.777.038 4.521 .280

Non-current liabilities Amounts due to related parties 29 72.181,909 77:'37,066 47.371 ,243 43,701.903 Borrowings 24 2.687.672 47,371,243 43.701 ,903 Decommissioning and sile restoration provision 25 256,961 80,840 16,918 190.512 47,116 16,91 8 Derivative financial inslrumenl 28 2.949,465 1,401 .045 2.949,465 1,401.045 Total non-current liabilities 75.126.542 50,401.548 45.119.866 77,227. 578 50,367.824 45.119,866

Total liabtlitles 85,380,759 55,693,153 49,175,021 85,000,317 56,144,862 49,641,146

Equity Share cap,tal 22 35,386 35,386 35,386 35,386 35,386 35,386 Share premium 23 17,274,663 17,274,663 17,274 ,663 17,274 ,663 17,274,663 17,274,663 Retained losses (72.124,502) (30,684,511) (28,549,768). (68 ,163.428) (28,970,185) (27,511 .286) Olher cae,tal reserves 31 2.443,071 408.794 408,794 2.156,900 408.794 408.794 Total equity !52,371,382) p 2,965,668) (10,830,925) (48,696,479) (11,251 ,342) !9,792,443)

Total cgui)X and llablllties 33,009,377 42,727,485 38,344,096 36,303,838 44,893,520 39,848,703

The financial statemenls on pages 9 to 47 were approved and authorised for issue by the board of directors on 26 April 2017 and were signed on ils behalf by

David Ordman Director

'Impact of prior year restatements (nole 5)

The notes on pages 13 to 45 are an integral part of these financial slatements.

10

+i t Mohama!l q,rwish Director

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11


Statements of Cash Flows

Note Cash flows from operating activities Cash generated from operations 30 Income tax paid 27 Net cash flows generated from operating activities

Cash flows from investing activities Acquisition of property plant and equipment 15 Proceeds from disposal of property plant and equipment 15 Acquisition of intangible assets 16 Payment for land lease 18 Finance income received 11 Net cash used in investing activities

Cash flows from financing activities Loan receipts - related party 29 Transaction costs paid 29 Principal paid - related party 29 Interest paid - related party 29 Principal paid - external borrowing 24 Interest paid - external borrowing 24 Finance costs paid 12 Loan premium on early redemption 12 Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents, beginning of the year Effect of movements in exchange rates on cash Cash and cash equivalents, end of the year 21


Group

31-Dec-16 N'OOO

8,846,691 (60,870}

8,785,821

(1 ,784,323) 18,220

(20,424) (509,983)

152,169 (2, 144,341)

77,587,202 (2,003,114)

(72,265,175) (7,531,984)

(3,608,023} (7,821,094)

(1,179,614) 4,105,371

5,426 2,931,183

The notes on pages 13 to 45 are an integral part of these financial statements.

12

Company Restated* Restated* 31-Dec-15 31-Dec-16 31 -Dec-15

N'OOO N'OOO N'OOO

6,540,713 7,942,946 6,539,920

6,540,713 7,942,946 6,539,920

(1,594,893) (1,784,323) (1,594,100) 81,116 18,220 81 ,116

(525) (20,424) (525) (227,666) (509,983) (227,666)

103,992 152,169 103,992 {1,637,976) (2,144,341) {1 ,637,183}

77,587,202 (2,003,114)

(72,265.175) (6,704,407) (4,104,471)

(4,104,471) (57,545) (57,545)

(3,608,023} ( 4, 162,016) {6,993,517) (4,162,016)

740,721 (1,194,912) 740,721 3,359,599 4,105,371 3,359,599

5,051 5,426 5,051 4,105,371 2,915,885 4,105,371


Notes to the Financial Statements

1 General information These financial statements are the financial statements of IHS Towers NG Limited (the "Company"} (formerly Helios Towers Nigeria Limited} and its subsidiaries, Tower Infrastructure Company Limited and IHS Towers Netherlands FinCo NG B.V. (formerly Helios Towers Finance Netherlands B.V.} (together referred to as the "Group").

With effect from 10 October 2016, the name of the Company was changed from Helios Towers Nigeria Limited to IHS Towers NG Limited.

IHS Towers NG Limited (the "Company"} was incorporated in Nigeria under the Companies and Allied Matters Act in 2002 but did not commence operations until November 2005. The registered address of the Company is 9 Alfred Rewane Road, lkoyi, Lagos.

The principal activities of the group continues to be the managing and infrastructure sharing and leasing (colocation} of telecommunications infrastructure to telecommunications and other service providers.

IHS Towers NG Limited is a subsidiary of IHS Netherlands NG2 B.V. and controlled by IHS Holding Limited (ultimate parent}. IHS Holding Limited has the right to appoint board members, controls the day to day activities and major financial decisions of IHS Towers NG Limited.

1.1 Going concern The directors have reasonable expectations that the Group has adequate resources to continue in operational existence for the foreseeable future. The results of management review of the Company's market, operations and financial performance in the· past twelve months and a forecast for the next few years provides a sound basis for the appropriateness of using the going concern assumption in the preparation of the Company's financial statements for the period ended 31 December 2016. The following further form the basis of management's use of going concern:

- The market is growing and the business is growing its share of ihe overall market.

- The business has grown its revenues and operational cash flows month on month in the last 12 months and is on track to sustain the growth.

- The business has a very strong investor base that has the ability and willingness to inject additional funding where necessary.

2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to the periods presented, unless otherwise stated.

2.1 Basis of preparation The consolidated and seperate financial statements of IHS Towers NG Limited have been prepared in accordance with International Financial Reporting Standards (IFRS} and interpretations issued by the IFRS Interpretations Committee (IFRS IC} applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB}.

The consolidated and separate financial statements are presented in the functional currency, Nigerian Naira (N}, rounded to the nearest thousand, and prepared under the historical cost convention, except where otherwise stated.

The consolidated and separate financial statements comprise the statements of profit or loss and other comprehensive income, the statements of financial position, the statements of changes in equity, the statements of cash flows, and the notes, comprising of a summary of significant accounting policies and other explanatory notes.

The preparation of consolidated and separate financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the directors to exercise judgement in the process of applying the Group's accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. The directors believe that the underlying assumptions are appropriate and that the Group's financial statements therefore present the financial position and results fairly. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 4.

The consolidated financial statements were authorised for issue by the Board of Directors on 24 April 2017.

13


Notes to the Financial Statements (cont'd)

2.1.1 Changes in accounting policies and disclosures (a) New standards, amendments and interpretations adopted by the Group. A number of new or amended standards became effective in the current year. Those that are applicable to the Group are as follows:

(i) Disclosure initiative: Amendments to IAS 1.

(ii) Clarification of acceptable methods of depreciation and amortisation: Amendments to IAS 16 and IAS 38.

The Group did not have to change its accounting policies and disclosures, or make retrospective adjustments as there were no transactions that would be affected by these new amendments.

(b) New standards and interpretations not yet adopted by the Group Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2016 reporting periods and have not been early adopted by the Group. None of these standards are expected to have a significant effect on the consolidated and separate financial statements, except the following set out below:

IFRS 9, 'Financial instruments,' addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments.

IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through OCI and fair value through profit or loss. The standard is effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted. The Group is yet to assess IFRS 9's full impact.

IFRS 15, 'Revenue from contracts with customers' deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11 'Construction contracts' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Group is assessing the impact of IFRS 15.

IFRS 16 "Leases" was issued on 13 January 2016 and is effective from January 2019. It specifies the recognition, measurement, presentation and disclosure of leases. The standard provides a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to clarify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. The Group is assessing the impact of IFRS 16.

There are no other IFRSs or IFRS IC interpretations that are not yet effective that would be expected to have a material impact on the Group's financial statements.

2.2 Consolidation (a) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Subsidiaries are accounted for at cost in the separate financial statements of the Company.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in statement of profit or loss and other comprehensive income.

14



2.2 Consolidation (continued) (a) Subsidiaries (continued) Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 in the statement of comprehensive income.

Inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated. Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.3 Foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The Group's financial statements are presented in Nigerian Naira which is also the Group's functional currency.

(b) Transactions and balances Foreign currency transactions are translated into Naira using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss and comprehensive income. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the statement of comprehensive income within 'finance income or cost'. Other foreign exchange gains or losses are presented as a seperate line within 'foreign exchange gains or losses' in the statement of profit or loss and other comprehensive income.

(c) Group companies The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(i) assets and liabilities for each statement of financial position presented are translated at the closing rate at the reporting date;

(ii) income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii) all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings, are taken to other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.4 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, rebates and sales related taxes but including interest receivable on sales on extended credit and income from the provision of technical services and agreements. Revenue is recognised when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.

(a) Infrastructure sharing on owned towers ('Owned') The Group sells space and services on our owned towers to our customers, mobile service providers. Customers lease space on existing towers alongside current tenants, known as colocation, or they commission IHS to build new towers for construction to the customer's specifications, known as BTS. Revenue from such services is recognised in the accounting period in which the rental income is earned and services are rendered.

(b) Managed services The Group also provides managed services in limited situations for certain towers owned by third parties. Managed services include maintenance, operations and marketing and leasing services tailored to customers' specific needs. Revenue from managed services is recognised in the accounting period in which the services are rendered by reference to the stage of completion based on the terms of each contract.

15



2.5 Property, plant and equipment These are mainly leasehold land, base stations, office complex, office equipment and other equipment that are used by the Group in its towers managed and colocation services, or for administrative purposes. The assets are carried at historical cost less accumulated depreciation and accumulated impairment losses. All other property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Property plant and equipment under construction are disclosed as capital work-in-progress.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost can be measured reliably. The carrying amount of the replaced cost is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Capital work-in-progress and freehold land is not depreciated. The attributable cost of each asset is transferred to the relevant asset category immediately the asset is ready for use and depreciated accordingly. Leasehold land is depreciated over the unexpired tenor of the lease. Depreciation on all other assets is calculated using the straight line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Base station towers (including civil costs and overheads) Base station equipment (other equipment) Base station equipment (alarms & batteries) Base station equipment (generators) Office buildings Furniture, fittings & office equipment Motor vehicles

Years 20 20 5 3

40 3 4

Assets residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting date. Where an indication of impairment exists, an asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss for the period.

2.6 Intangible assets (a) Licenses Separately acquired licenses are shown at historical cost. Licenses acquired in a business combination are recognised at fair value at the acquisition date. Licenses have a finite useful life determined primarily by reference to the term of the license and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over their estimated useful lives of fifteen years.

(b) Computer software Costs associated with maintaining computer software programmes are recognised as expenses as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

- it is technically feasible to complete the software product so that it will be available for use;

- management intends to complete the software product and use or sell it;

- there is an ability to use or sell the software product;

- adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

- the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as asset in a subsequent period. Amortisation is calculated using the straight-line method over their estimated useful lives of three to five years.

16



2.7 Impairment of non-financial assets Assets that have an indefinite useful life, for example, goodwill or intangible assets not ready for use are not subject to amortisation but are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.

2.8 Inventories Inventories are stated at the lower of cost and estimated net realisable value. Cost comprises direct materials costs and where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated -using the first-in, first-out method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. If the carrying value exceeds net realisable amount, a write down is recognised. The write-down may be reversed in a subsequent period if the circumstances which caused it no longer exist.

In other instances where the net realisable value of an inventory item is not readily determinable, management assesses the age and the risk of obsolescence of such items in determining net realisable value of such item using an appropriate age/obsolescence factor model.

2.9 Financial assets (Non derivative) 2.9.1 Classification

The Group classifies financial assets based on the purpose for which the financial assets were acquired . Management determines the classification of its financial assets at initial recognition.

(a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

The Group's loans and receivables comprise 'trade and other receivables', 'amounts due from related parties' and 'cash and cash equivalents' in the statement of financial position.

(i) Trade and other receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

The Group reviews trade receivables at least annually and when there is any indication that the receivables might be impaired. The Group has estimated the recoverable amount using models that require assumptions about future cash flows, cash flow dates and discount rates.

(ii) Amounts due from related parties These are amounts due from related parties for services performed in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets; if not, they are presented as non-current assets.

(iii) Cash and cash equivalents Cash and cash equivalents includes cash at bank and in hand plus short-term deposits. Short-term deposits have a maturity of less than three months from the date of acquisition.

2.9.2 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. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

17



2.9 Financial assets (continued) 2.9.3 Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a 'loss event') and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

The Group first assesses whether objective evidence of impairment exists. The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:

- significant financial difficulty of the issuer or obliger; - the Group, for economic or legal reasons relating to the borrower's financial difficulty, granting to the borrower a

concession that the lender would not otherwise consider; - it becomes probable that the customer will enter bankruptcy or other financial reorganisation; - the disappearance of an active market for that financial asset because of financial difficulties; or - observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio

of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:

(i) adverse changes in the payment status of borrowers in the portfolio; and (ii) national or local economic conditions that correlate with defaults on the assets in the portfolio.

For loans and receivables, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of comprehensive income. If a loan or receivable has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument's fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor's credit rating) , the reversal of the previously recognised impairment loss is recognised in the statement of comprehensive income.

2.10 Financial liabilities (Non derivative) 2.10.1 Classification

The Group's financial liabilities are classified as financial liabilities at amortised cost. Financial liabilities are recognised initially at fair value and inclusive of directly attributable transaction costs. The Group's financial liabilities are borrowings, trade and other payables and amounts due to related parties.

(a) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis through the statement of comprehensive income using the effective interest method and are added to the carrying amount of the instrument to the extent they are not settled in the period in which they arise.

Day one gain or loss on non-market borrowings is included in equity.

(b) Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payables 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.

18



2.10 Financial liabilities (continued) 2.10.1 Classification ( continued)

(c) Amounts due to related parties These are amounts due to related parties for services received in the ordinary course of business. If payment is expected to transfer in one year or less (or in the normal operating cycle of the business if longer), they are classified as current liabilities; if not, they are presented as non-current liabilities.

2.11 Offsetting financial instruments Financial assets and liabilities are offset 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. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Group or the counterparty.

2.12 Embedded derivatives An embedded derivative is a component of a hybrid (combined) instrument that also includes a non-derivative host contract. An embedded derivative causes some or all of the cashflows that otherwise would be required by the contract to be modified according to a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates or other variable (provided in the case of a non-financial variable that the variable is not specific to a party to the contract) .

An embedded derivative is only separated and reported at fair value with gains and losses being recognised in the profit or loss component of the statement of comprehensive income when the following requirements are met:

• where the economic characteristics and risks of the embedded derivative are not clearly and closely related to those of the host contract;

• the terms of the embedded derivative are the same as those of a stand-alone derivative; and • the combined contract is not held for trading or designated at fair value through profit or loss.

2.13 Derecognition of financial instruments All financial instruments are initially measured at fair value. Financial assets and liabilities are derecognised when the rights to receive cash flows from the investments or settle obligations have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

2.14 Taxation (a) Deferred tax

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

(b) Current tax Tax is recognised in the profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

19



2.14 Taxation (continued) (b) Current tax (continued)

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the countries where the Group operates and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Income tax expenses/credits is the aggregate of the charges or credits recognized in the profit or loss account in respect of current income tax, education tax and deferred income tax.

2.15 Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss. No qualifying borrowing costs have been capitalised in the year ended 31 December 2016.

2.16 Employee benefits (a) Defined Contribution scheme

The Group operates a defined contribution plan in line with the provisions of the Pension Reform Act 2014. The Group and its employees contribute a minimum of 10% and 8% of the employees qualifying emoluments respectively. The amount contributed by the Group is recognised as employee benefit expenses and charged to the statement of comprehensive income while employee contributions are funded through payroll deductions. The Group has no further payment obligation once the contributions have been paid. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available.

(b) Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

2.17 Leases Operating leases Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

2.18 Decommissioning and site restoration provision The Group makes provision for the future cost of decommissioning of its telecommunication towers on the leasehold land. These costs are expected to be incurred within 5 to 15 years depending on the term of the leasehold. The Group estimates this provision using existing technology at current prices as quoted by decommissioning experts, escalated at the relevant inflation factor. The inflated decommissioning provision is subsequently discounted to present value using the Group's current borrowing rates. The timing of each decommissioning will depend on whether or not the lessor intends to renew the rent.

A corresponding amount is recognised as part of the cost of leasehold land in property, plant and equipment This is subsequently amortised as part of the leasehold land. Other than the unwinding discount on the provision, any change in the present value of the estimated expenditure is reflected as an adjustment to the provision and the corresponding item of property, plant and equipment.

20



2.19 Interest income Interest income is recognised using the effective income method as set out in IAS 39.

3 Introduction and overview of group's financial risk management The Group's activities expose it to a variety of financial risks including market risk, credit risk and liquidity risk. The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Board has established the Strategic and Finance Planning Committee, who is responsible for developing and monitoring the Group's risk management policies. The committee reports regularly to the Board of Directors on its activities.

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly by the executive management to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board oversees how management monitors compl iance with the Group's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Board is supported by various management functions that checks and undertakes both regular and ad hoc reviews of compliance with established controls and procedures.

(a) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Group manages market risks by keeping costs low through various cost optimization programs. Moreover, market developments are monitored and discussed regularly, and mitigating actions are taken where necessary.

The Group is not exposed to interest rate risks on any financial instruments. Interest on all borrowings and related party loans are fixed. The Group also does not carry any of these borrowings at fair value.

(i) Foreign exchange risk The Group is exposed to foreign exchange (FX) risk arising from currency exposures other than the Nigerian Naira. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

The Group is exposed to risks resulting from fluctuations in foreign currency exchange rates. A material change in the value of any such foreign currency could result in a material adverse effect on the Group's cash flow and future profits. The Group is exposed to exchange rate risk to the extent that balances and transactions denominated in a currency other than the Nigerian Naira. The Group holds the majority of its cash and cash equivalents in Naira. However, the Group does maintain deposits in other currencies in order to fund ongoing commercial activity and other expenditure incurred in these currencies.

In managing foreign exchange risk, the Group aims to reduce the impact of short-term fluctuations on earnings. The Group has no export sales but it has customers that are either contracted using fees quoted in US dollars (USO) or in Naira but with foreign exchange indexation. The Group's significant exposure to currency risk relates to its loan facilities that are mainly in USO. Although the Group has various measures to mitigate exposure to foreign exchange rate movement over the longer term, the gains/losses on foreign exchange balances impact on the profit or loss. The Group monitors the movement in the currency rates on an on-going basis.

Currency exposure arising from assets and liabilities denominated in foreign currencies is managed primarily by setting limits on the percentage of net assets that may be invested in such deposits.

21


Notes to the Financial Statements (cont'd) 3 Introduction and overview of group's risk management (continued)

(a) Market risk (continued) (i) Foreign exchange risk (continued)

The summary of quantitative data about the Group and Company's exposure to foreign exchange risk is as follows:

Cash and cash equivalents Trade and other receivables Trade and other payables Borrowings Loans from related parties Net exposure

Sensitivity analysis

Group 31-Dec-16

N'OOO 105,899

2,022,225 (20,215)

31-Dec-15 N'OOO

79,503 603,855

(4,134,435) (49,246,762) (75,380,856) (77,407,382) (48,563,404)

Company 31-Dec-16 31-Dec-15

N'OOO N'OOO 90,602

2,022,225 (20,215)

(80,448,391) (78,355,779)

79,503 603,855

(49,246,762) (48,563,404)

The table below shows the impact on the Group and Company's profit and equity if the exchange rate between the Naira and the USO had increased or decreased by 55%, with all other variables held constant.

USO (30% percent strengthening) USO (30% percent weakening)

(b) Credit risk

(Decrease)/ increase in profit

Group 31-Dec-16

N'OOO (23,222,215)

23,222,215

31 -Dec-15 N'OOO

(14,604,761) 14,604,761

(Decrease)/increase in profit

Company I · 31 -Dec-16 31-Dec-15

N'OOO N'OOO (23,506,734) (14,604,761)

23,506,734 14,604,761

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from clients and related parties.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Group I Company Note 31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15

N'OOO N'OOO N'OOO N'OOO Trade receivables 20 8,807,717 6,226,627 8,807,717 6,225,627 Other receivables 20 110,844 693,147 110,844 693,147 Amounts due from related parties 29 72,514 142,130 6,142,423 8,390,093 Cash and cash equivalents 21 2,931 ,183 4,105,371 2,915,885 4,105,371

11 ,922,258 11,167,275 17,976,869 19,414,238

The financial assets are further broken down into:

Trade Other Amounts due Cash and Total Group 2016 receivables receivables from related cash

parties equivalents

N'OOO N'OOO N'OOO N'OOO N'OOO Neither past due nor impaired 792,937 81 ,090 72,514 2,931 ,183 3,877,724 Past due but not impaired 7,338,204 13,500 7,351,704 Impaired 676,576 16,254 692,830

8,807,717 110,844 72,514 2,931 ,183 11 ,922,258

Group 2015 Neither past due nor impaired 3,900,401 45,073 142,130 4,105,371 8,192,975 Past due but not impaired 2,209,259 52,121 2,261 ,380 Impaired 116,967 595,953 712,920

6,226,627 693,147 142,130 4,105,371 11,167,275

22



3 Introduction and overview of group's risk management (continued) (b) Credit risk (continued)

Trade Other

Company 2016 receivables receivables

N'OOO N'OOO Neither past due nor impaired 792,937 81 ,090 Past due but not impaired 7,338,204 13,500 Impaired 676,576 16,254

8,807,717 110,844

Company 2015 Neither past due nor impaired 3,900,401 45,073 Past due but not impaired 2,208,259 52,121 Impaired 116,967 595,953

6,225,627 693,147

(i) Concentration of credit risk

Amounts due Cash and Total from related cash

parties equivalents

N'OOO N'OOO N'OOO 6,142,423 2,915,885 9,932,335

7,351 ,704 692,830

6,142,423 2,915,885 17,976,869

8,390,093 4,105,371 16,440,938 2,260,380

712,920 8,390,093 4,105,371 19,414,238

The Group utilises data analysis and market knowledge to determine the concentration of its risks by reference to independent and internal ratings of customers. The assessment of the concentration risk are consistent with the overall risk appetite as established by the Group. The Group's credit concentration is based on internal ratings from the finance department. The finance department classifies customers as mega or non-mega based on sales revenue from each customer during the period. Below is the credit concentration for trade receivables at the reporting date:

Group Trade receivables 31-Dec-16 31-Dec-15

N'OOO N'OOO Mega customers 7,751 ,918 2,282,426 Non-mega customers 1,055,799 3,944,201

8,807,717 6,226,627

Mega customers - Customers that individually account for over 10% of revenue Non-mega customers - Customers that individually account for less than 10% of revenue

(ii) Credit quality of financial assets

I Company 31-Dec-16 31-Dec-15

N'OOO N'OOO 7,751 ,918 2,282,426 1,055,799 3,943,201 8,807,717 6,225,627

The credit quality of the portfolio of trade and other receivables that are neither past due nor impaired can be referenced to historical information about counterparty default rates and the credit policy of the Group. An analysis of the credit quality of financial assets that are neither past due nor impaired is presented as follows:

Cash and cash equivalents Group Company

31-Dec-16 31-Dec-15 31 -Dec-16 31-Dec-15 N'OOO N'OOO N'OOO N'OOO

A+ 130,769 942,907 115,471 942,907 B+ 2,341 53,147 2,341 53,147 B 4 15,488 4 15,488 8- 2,795,231 2,795,231 BBB+ 3,093,829 3,093,829 Not rated (cash at hand) 2,838 2,838

2,931 ,183 4,105,371 2,915,885 4,105,371

Definition of bank ratings A: High credit quality - 'A' ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.

B: Highly speculative " 'B' ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.

23

I

I



. 3 Introduction and overview of group's risk management (continued) (b) Credit risk (continued) (ii) Credit quality of financial assets (continued)

Definition of bank ratings (continued) BBB: Good credit quality - 'BBB' ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.

The modifier"+" or "-" is appended to a rating to denote relative status within major rating categories.

Bank ratings are based on Fitch rating as at year end dates.

Trade receivables As at 31 December 2016 trade receivables of N792.94 million for the Group and Company (2015:N3.90 billion) were neither past due nor impaired. The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to internal rating provided by the credit department. The credit ratings of these trade receivables is as follows:

Group 1 Group 2

Group 31-Dec-16

N'OOO 652,381 140,556 792,937

Group 1 - Mega customers with less than or equal to 3 months credit days Group 2 - Non-mega customers with less than or equal to 3 months credit days

Other receivables

Not rated

Other receivables not rated comprises of short tenn advances.

Group 31-Dec-16

N'OOO 81,090

31-Dec-15 N'OOO

118,674 3,781,727 3,900,401

31-Dec-15 N'OOO

45,073


N'OOO N'OOO 652,381 118,674 140,556 3,781 ,727 792,937 3,900,401

Company 31 -Dec-16 31-Dec-15

N'OOO 81 ,090

N'OO,O 45,073

(iii) Maturity analysis of financial assets that are past due but not impaired is presented as follows: As at 31 December 2016, trade receivables of N?.33 billion for the Group and Company (2015: N2.21 billion) were past due but not impaired. This relates to a number of independent customers from whom there is no recent history of default. The aging analysis of these trade receivables is as follows:

Group I Company 31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15

N'OOO N'OOO N'OOO N'OOO 1 - 2 months 266,298 333,226 266,298 333,226 2 - 6 months 5,220,925 1,807,517 5,220,925 1,807,517 Over 6 months 1,850,981 68,516 1,850,981 67,516

7,338,204 2,209,259 7,338,204 2,208,259

24

I



3 Introduction and overview of group's risk management (continued) (b) Credit risk (continued) (iv) Financial assets that are impaired

During the year, trade receivables of N562.99 million were impaired. The Group does not secure any collateral for trade and other receivables. The movement in the allowance for impairment in respect of trade and other receivables during the year was as follows:

Group I Company I 31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15

N'OOO N'OOO N'OOO N'OOO Balance, as at 1 January 712,920 1,110,386 712,920 1,110,386

Impairment losses written-off (579,699) (285,760) (579,699) (285,760) Impairment reversals (3,388) (111 ,706) (3,388) (111 ,706) Impairment charge 562,997 562,997 Balance, as at 31 December 692,830 712,920 692,830 712,920

'The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures.

(c) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions , without incurring unacceptable losses or risking damage to the Group's reputation.

Typically the credit terms with clients are more favourable compared to payment terms to its vendors in order to help provide sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. The table below analyses the Group's financial liabilities including estimated interest payments and excluding the impact of netting agreements into relevant maturity groupings based on the remaining period from the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Group Carrying Contractual Within 1 - 2 years Over 31 December 2016 amount cash flows 1 year 2 years

N'OOO N'OOO N'OOO N'OOO N'OOO Trade and other payables 2,826,329 2,826,329 2,826,329 Amounts due to related parties 76,141 ,897 114,412,887 9,684,428 6,962,157 97,766,302 Borrowings 4,081 ,531 4,991 ,722 337,810 337,810 4,316,102

83,049,757 122,230,938 12,848,567 7,299,967 102,082,404

31 December 2015 Trade and other payables 2,532,587 2,532,587 2,532,587 Borrowings 49,246,762 54,013,590 1,875,519 52,138,071 Derivative financial liability 2,949,465 2,949,465 2,949,465

54,728,814 59,495,642 4,408,106 55,087,536

Company Carrying Contractual Within 1 - 2 years Over 31 December 2016 amount cash flows 1 year 2years

N'OOO N'OOO N'OOO N'OOO N'OOO Trade and other payables 2,635,218 2,635,218 2,635,218 Amounts due to related parties 81 ,156,527 120,345,628 10,028,853 7,306,582 103,010,193

83,791,745 122,980,846 12,664,071 7,306,582 103,010,193

31 December 2015 Trade and other payables 3,068,697 3,068,697 3,068,697 Amounts due to related parties 49,246,762 54,013,590 1,875,519 52,138,071 Derivative financial liability 2,949,465 2,949,465 2,949,465

55,264,924 60,031 ,752 4,944,216 55,087,536

25



3 Introduction and overview of group's risk management (continued) ( d) Capital risk management

The Group's objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including 'current and non-current borrowings' as shown in the statement of financial position), plus loans from related parties, less cash and cash equivalents. Total capital is calculated as 'equity' as shown in the statement of financial position plus net debt.

The Group and Company's gearing ratios are shown in the table below:

Group I Company I Note 31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15

N'OOO N'OOO N'OOO N'OOO Borrowings 24 4,081 ,531 49,246,762 49,246,762

Loans from related parties 29 73,419,626 78,434,256 Less: Cash and cash equivalents 21 (2,931 ,183) (4,105,371) (2,915,885) (4,105,371)

Net debt 74,569,974 45,141,391 75,518,371 45,141 ,391

Total equity (52,371,382) (12,965,668) (48,696,479) (11,251 ,342) Total capital employed 22,198,592 32,175,723 26,821 ,892 33,890,049

Gearing ratio 336% 140% 282% 133%

Fair value hierarchy Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

As at the reporting date, the Group had no financial instruments measured at fair value.

Fair value estimation With the exception of borrowings and loans from related parties (measured at amortised cost) , the carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables approximate their fair values.

Borrowings

Carrying amount

Fair value

Loans from related parties

Carrying amount

Fair value

Note

24

29

Group 31-Dec-16

N'OOO 4,081,531

4,064,537

73,419,626

74,184,993

I Company 31-Dec-15 31-Dec-16 31-Dec-15

N'OOO N'OOO N'OOO 49,246,762

47,708,718

78,434,256 49,246,762

79,188,414 47,708,718

The fair values are based on cash flows discounted using a rate based on borrowing rates of 9.5%. Loans and borrowings are within level 2 of the fair value hierarchy.

26

I



3 Introduction and overview of group's risk management (continued) Financial instruments by category The Group's financial instruments are categorised as follows:

Group 2016 Fair value through Loans and Total profit or loss receivables

N'OOO N'OOO N'OOO

Financial assets Trade and other receivables 20 9,007,758 9,007,758

Amounts due from related parties 29 72,514 72,514

Cash and cash equivalents 21 2,931 ,183 2,931,183

Derivative financial asset 28 238,986 238,986 238,986 12,011,455 12,250,441

Fair value through Amortised Total profit or loss Cost

Financial liabilities N'OOO N'OOO N'OOO Borrowings 24 4,081,531 4,081,531

Amounts due to related parties 29 76,141 ,897 76,141,897

Trade and other payables 26 2,826,329 2,826,329 83,049,757 83,049,757

Group 2015 Fair value through Loans and Total profit or loss receivables

N'OOO N'OOO N'OOO Financial assets Trade and other receivables 20 12,162,825 12,162,825

Amounts due from related parties 29 142,130 142,130

Cash and cash equivalents 21 4, 105,371 4,105,371 16,410,326 16,410,326


Financial liabilities N'OOO N'OOO N'OOO Borrowings 24 49,246,762 49,246,762

Trade and other payables 26 3,239,374 3,239,374

Derivative financial liability 28 2,949,465 2,949,465 2,949,465 52,486,136 55,435,601

Company 2016 Fair value through Loans and Total profit or loss receivables

N'OOO N'OOO N'OOO Financial assets Trade and other receivables 20 9,007,238 9,007,238 Amounts due from related parties 29 6,142,423 6,142,423 Cash and cash equivalents 21 2,915,885 2,915,885 Derivative financial asset 28 238,986 238,986

238,986 18,065,546 18,304,532


Financial liabilities N'OOO N'OOO N'OOO Amounts due to related parties 29 81 ,156,527 81,156,527 Trade and other payables 26 2,635,218 2,635,218

83,791,745 83,791 ,745

27



Company 2015

Financial assets Trade and other receivables 20 Amounts due from related parties 29 Cash and cash equivalents 21

Financial liabilities Amounts due to related parties 29 Trade and other payables 26 Derivative financial liability 28

4 Critical accounting estimates and judgements

Fair value through profit or loss

N'OOO

Fair value through profit or loss

N'OOO

2,949,465 2,949,465

Loans and Total receivables

N'OOO N'OOO

12,208,220 12,208,220 8,390,093 8,390,093 4,105,371 4,105,371

24,703,684 24,703,684

Amortised Total Cost

N'OOO N'OOO 49,246,762 49,246,762

3,775,484 3,775,484 2,949,465

53,022,246 55,971,711

The preparation of financial statements requires management to make certain judgements, accounting estimates and assumptions that affect the amounts reported to the assets and liabilities as at the reporting date and the amounts reported for revenues and expenses during the year. The nature of the estimation means that actual outcomes could differ from those estimates. The key source of estimation uncertainty that have a risk of causing adjustments to the carrying amounts of assets and liabilities are discussed below.

(a) Decommissioning and site restoration provision Provisions are made for decommissioning and site restoration costs for the telecommunication towers constructed on the group's leased land. These estimates are based on current construction requirements, technology, price levels and expected plans for remediation. Actual costs and cash outflows can differ from estimates because of changes in government legislation, prices when the obligation crystallises. The following critical judgments have been made:

(i) Probability factor of 2% (2015: 5%) which represents a percentage of the estimated number of sites expected to be decommissioned to the total number of sites on leased land.

(ii) Inflation rate of 12% (2015: 8.7%).

(iii) Discount rate of 17% (2015: 11 %) reflecting the pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the decommissioning liability. The cashflows used to arrive at the present value of the decommissioning liability were unadjusted.

The impact on finance costs as a result of the revision of the above rates is an increase of N136.19 million and N107.20 million in the Group and Company respectively.

Based on the simulation performed, the impact on post tax loss of a 5% shift in discount rate is given below:

Effect of 5% increase on profit or loss Effect of 5% decrease on profit or loss

(Decrease)/increase in profit

Group 31-Dec-16

N'OOO (42,694)

42,694

31-Dec-15 N'OOO

(21,7.98) 21,798

(b) Recoverability of carrying amount of property, plant and equipment

(Decrease) I increase in profit

Company I 31-Dec-16 31-Dec-15

N'OOO N'OOO (33,069) (48,791)

33,069 48,791

The Group assesses its property, plant and equipment for possible impairment if there are events or changes in circumstances that indicate that carrying values of the assets may not be recoverable, or at least at the end of every reporting period. Such indicators include changes in the Group's business plans, changes in diesel prices, evidence of physical damage and technological changes and impacts of obsolescence. If there are rapid changes in technology of the existing telecommunication infrastructure, the Group may need to recognise significant impairment charges. The assessment for impairment entails comparing the carrying value of the asset with its recoverable amount, that is, the higher of the value in use and fair value less costs to sell. Value in use is usually determined on the basis of discounted estimated future net cash flows.

28



4 Critical accounting estimates and judgements (continued) (b) Recoverability of carrying amount of property, plant and equipment (continued)

Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters such as future prices of telecommunication towers equipment, the effects of inflation on operating expenses, discount rates, etc.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will , by definition, seldom equal the related actual results. Such estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Impairment loss of H3.67 billion and H1 .32 billion has been recognised by the Group and Company respectively to write down the carrying amount of the assets to its recoverable amount.

(c) Impairment of trade receivables The Group reviews trade receivables at least annually and when there is any indication of impairment.

(d) Estimation of asset useful lives of property, plant and equipment The Group's management determines the estimated useful lives and related depreciation charge for its property, plant and equipment on an annual basis. In 2016, the estimated useful lives of the following assets was revised to reflect more current industry information.

Asset Base station towers (including civil costs and overheads) Furniture fittings and office equipment Motor vehicles Office complex

Previous useful life 15

5 3

50

Current useful life 20

3 4

40

The impact on depreciation expense as a result of the changes is Group: H577.44 million and Company: H422.35 million.

(e) Estimation of asset useful lives of intangible assets The Group's management determines the estimated useful lives and related amortisation charge for its intangible assets with finite lives based on the period of the contractual or other legal rights. Useful lives do not exceed the period of those rights, but may be shorter depending on the period over which the asset is expected to be in use.

In 2016, the estimated useful life of licenses was revised from 10 to 15 years. There is no material impact on amortization expense as a result of the change.

(f) Deferred taxation A certain level of judgement is required for recognition of the deferred tax assets. Management is required to assess the ability of the Company to generate future taxable economic earnings that will utilise the deferred tax assets. Assumptions over the generation of future taxable profits depends on management's estimates of future cashflows and applicability of withholding taxes on earned and collected revenue. The estimates are based on the future cashflow from operations taking into consideration the rental income for colocation, growth in tenancy rates, maintenance income and likely diesel variations. Deferred tax assets amounting to amounting to H31 .21 billion and H29.67 billion have not been recognised by the Group and Company respectively due to uncertainties relating to the timing and amount of future taxable profits.

(g) Valuation of options embedded in listed bonds The Group has analysed the listed bond issued by IHS Netherlands Holdco B.V. in October 2016 (which the Group is a guarantor to) and notes issued by IHS Netherlands Finco NG B.V. (formerly Helios Towers Finance Netherlands B.V.) in July 2014 in accordance with IAS 39 and has identified free standing call and put options embedded that required separate valuation.

The Group employed valuation techniques commonly used by market participants to evaluate bonds with embedded options, including discounted cashflow and option pricing models, and make maximum reference to market inputs. The techniques adopted include the major factors that market participants would consider in setting a price and are consistent with accepted economic methodologies for pricing financial instruments. The options are priced using interest-rate option pricing models such as the Hull-White model.

29


Notes to the Financial Statements (con_t'd)

4 Critical accounting estimates and judgements (continued) (h) Impairment of withholding tax assets

The Group's management has determined that the utilisation of withholding taxes against future tax liabilities may be in doubt due to uncertainties of immediate future taxable profit position of the entity. Impairment loss of N6.63 billion has been recognised by the Group and Company during the year.

5 Prior year adjustments The Group's $250 million 8.375% Guaranteed Senior Notes due 2019 issued in July 2014 by IHS Towers Netherlands Finco NG B.V. (formerly Helios Towers Finance Netherlands B.V.) included embedded free standing call and put options. In accordance with IAS 39 Financial Instruments: Recognition and measurement, these options require seperation from the host contract and to be accounted for as a derivative recognised at fair value through profit or loss. The restatement of prior balances has resulted in a net increase of N280.21 million in finance costs, N1 .54 billion in net fair value loss and N1 .96 billion in total liability for the Group and Company as at 31 December 2015. The impact on the opening balances as at 1 January 2015 is an increase of N130.51 mill ion in total liability and corresponding decrease in retained earnings.

Impact on Statement of financial position

Group 31-Dec-15 Previously

reported Restatement Restated N'OOO N'OOO N'OOO

Derivative financial instrument 2,949,465 2,949,465 Borrowings 50,237,090 (990,328) 49,246,762 Total liability 50,237,090 1,959,137 52,196,227

Retained losses (28,725,374) (1,959,137) (30,684,511) Total equity (28,725,374) (1 ,959.137) (30,684,511)

Company 31-Dec-15 Previously

reported Restatement Restated N'OOO N'OOO N'OOO

Derivative financial instrument 2,949,465 2,949,465 Amounts due to related parties 50,237,090 (990,328) 49,246,762 Total liability 50,237,090 1,959,137 52,196,227

Retained losses (27,011 ,048) (1,959.137) (28,970,185) Total equity (27,011 ,048) (1,959.137) (28,970,185)

Impact on Statement of profit or loss and other comprehensive income

Group

Finance costs Fair value through profit or loss Impact on loss for the year

Company

Finance costs Fair value through profit or loss Impact on loss for the year

30

Previously reported

N'OOO

46,656,505 46,656,505

(28,419,260) (28,419,260)

Previously reported

N'OOO

46,656,505 46,656,505

(27,380,778) (27,380,778)

Previously reported

N'OOO 7,838,216

7,838,216

Previously reported

N'OOO 7,911 ,009

7,911,009

1-Jan-15

Restatement N'OOO

1,401,045 (1,270,537)

130,508

(130,508) (130,508)

1-Jan-15

Restatement N'OOO

1,401,045 (1,270,537)

130,508

(130,508) (130,508)

31-Dec-15

Restatement N'OOO

280,209 1,548,420 1,828,629

31-Dec-15

Restatement N'OOO

280,209 1,548,420 1,828,629

Restated N'OOO

1,401,045 45,385,968 46,787,013

(28,549,768) (28,549,768)

Restated N'OOO

1,401,045 45,385,968 46,787,013

(27,511 ,286) (27,511,286)

Restated N'OOO

8,118,425 1,548,420

· 8,118,425

Restated N'OOO

8,191 ,218 1,548,420 8,191,218



6 Revenue

Owned Managed services

7 Cost of sales

Fuel and diesel Depreciation (see note 15) Staff costs (see note 9) Rent Security Repairs and maintenance Professional fees Regulatory permits and fees Other expenses Public power Insurance

8 Administrative expenses

Impairment of withholding tax receivable • Impairment loss on property, plant and equipment (see note 15) Staff costs (see note 9) One-off decommissioning provision (see note 25) •• Professional fees Impairment loss on trade receivables (see note 20) Other expenses Rent Impairment loss on prepaid land lease (see note 18) Travel expenses Depreciation (see note 15) Audit fees Bank charges Amortisation (see note 16) Repairs and maintenance

Group 31-Dec-16 31-Dec-15

N'OOO N'OOO 16,960,461 14,098,225 2,746,532 578,211

19,706,993 14,676,436


111'000 N'OOO 4,870,510 2,688,837 3,714,743 3,946,074

825,075 540,429 837,505 654,989 656,395 516,026 571 ,274 723,327 210,981 139,462 174,647 56,473 53,215 33,452

12,004,270

Group

19,853 31 ,619 19,528

9,280,144

31-Dec-16 31-Dec-15 111'000 N'OOO

6,630,476 3,669,046 1,228,121 1,058,138

625,069 562,997 543,891 117,163 68,923 68,493 54,880 31 ,775 28,894 20,770 17,991

14,726,627

689,789

105,562

212,591 87,125

192,823 129,453 33,900 47,685 10,802 4,708

1,514,438


111'000 N'OOO 12,719,073 11,154,280 2,746,532 578,211

15,465,605 11 ,732,491


N'OOO N'OOO 3,772,236 1,983,769 2,697,663 2,573,557

825,075 540,429 577,545 366,444 452,652 294,455 442,358 421 ,763 145,493 75,446 120,437 38,944 36,697 23,069

9,132,169

11,409 13,655 13,358

6,294,285


111'000 N'OOO 6,630,476 1,318,433 1,228,121 406,976

285,469 567,630 47,046 562,997 402,187 31,106

78,342 51,404 68,923 50,941 149,280 54,880 129,453 28,000 28,400 20,751 47,685 20,770 10,802 13,380 2,635

11 ,331,300 904,787

• This relates to withholding tax credit notes which in management's opinion, cannot be utilised against income tax liabilities in the nearest future.

** This represents a one-off provision for restoring leased sites which have been earmarked for decommissioning by management.

31



9 Staff cost (a) Staff cost comprises:

Salaries, wages and allowances Pension costs Redundancy costs Other benefits

(b) Staff cost was classified as:

Cost of sales Administrative expenses Property plant and equipment


N'OOO N'OOO 1,271,559 1,396,050

43,754 44,457 472,040 265,843

2,053,196 1,440,507


N'OOO N'OOO 825,075 540,429

1,228,121 689,789 210,289

2,053,196 1,440,507


N'OOO N'OOO 1,271,559 1,113,237

43,754 44,457 472,040 265,843

2,053,196 1,157,694


N'OOO N'OOO 825,075 540,429

1,228,121 406,976 210,289

2,053,196 1,157,694

(c) Employees of the Company, whose duties were wholly or mainly discharged in Nigeria received remuneration (excluding pension contributions and certain benefits) during the period in the following ranges:

NS00,001 - N1 ,000,000 N1 ,000,001 - N2,000,000 N2,000,001 - N3,000,000 N3,000,001 - N4,000,000 N4,000,001 - N5,000,000 N5,000,001 - N6,000,000 N6,000,001 - N7,000,000 N7,000,000 and above

10 Other income

Exit fee* Insurance claims Gain on disposal of property, plant, and equipment (see note 15) Reversal of impairment loss on trade receivables (see note 20)


Number Number 2 8

78 81 33 37 31 38 20 12 5 11 4 10

22 26 195 223


N'OOO N'OOO 3,482,635

5,357 283 44,603

3,388 111,706 9,028 3,638,944


Number Number 2 8

78 81 33 37 31 38 20 12

5 11 4 10

22 26 195 223


N'OOO N'OOO 3,482,635

5,357 283 44,603

3,388 111,706 9,028 3,638,944

* This relates to contract exit fee paid by Visafone Communications Limited following its takeover by MTN Nigeria.

11 Finance income Group Company

31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15 N'OOO N'OOO N'OOO N'OOO

Interest income on bank deposits 152,169 108,376 152,169 108,376

32

I



12 Finance costs

Interest expense - borrowings (see note 24) Interest expense - loans from related parties (see note 29) Interest expense - decommissioning liability (see note 25) Loan facility fee Other finance costs •• Net foreign exchange losses - unrealised ***


Group Restated*


6,681 ,914 4,906,751 1,323,722

145,158 21 ,502 57,545

3,608,023 74,1 13 27,376,294 3,058,514 39,135,111 8,118,425

Company Restated*

31 -Dec-16 31-Dec-15 N'OOO N'OOO

8,1 09,760 4,906,751 112,433 2,518

57,545 3,608,023 165,890

27,377,692 3,058,514 39,207,908 8,191 ,218

** N3.61 billion was paid during the year as early redemption premium to certain noteholders of the $250 million 8.375% Guaranteed Senior Notes due 2019 issued by IHS Towers Netherlands FinCo NG B.V. (formerly Helios Towers Finance Netherlands B.V.).

*** This relates to unrealised loss from significant fluctuations in exchange rates on borrowings and related party loans denominated in foreign currency, which were revalued at the end of the year in accordance with IAS 21 The effect of changes in foreign exchange rates .

13 Fair value through profit or loss

Fair value adjustment to derivative financial instruments


Group Restated*


3,379,640 (1 ,548,420)

Company

31-Dec-16 N'OOO

3,379,640

Restated* 31-Dec-15

N'OOO (1 ,548,420)

In accordance with IAS 39 Financial Instruments Recognition and Measurement, embedded derivative assets and liabilities have been measured at fair value through profit or loss. As such, changes in fair value are shown as a separate line item in the statement of profit or loss and other comprehensive income.

14 Foreign exchange gain Group Company

31-Dec-16 31-Dec-15 31-Dec-16 31-Dec-15 N'OOO N'OOO N'OOO N'OOO

Foreign exchange gain* 47,886 47,886

* This relates to net realised gains and losses recognised on settlement of transactions.

33

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Notes to the Financial Statements (cont'd) 15 Property, plant and equipment (continued)

Work-in-progress comprises mainly of tower equipment still under construction and not yet available for use. The Company transfers such assets to the appropriate asset class once they are available for use.

During the year, a total of 278 sites were earmarked for decommissioning by management and the assets relating to these sites were tested for impairment. Impairment loss of N3.66 billion and N1 .32 billion has been recognised by the Group and Company respectively to write down the carrying amount of the assets to its recoverable amount. These sites are not live and therefore have no value in use. The recoverable amounts of the assets have been determined with reference to their fair value less cost to sell. Fair values of the assets were based on prices offered by third party vendors of other related party entities. Since this is an unobservable input, the fair value of the assets are classified as level 3 fair value. The impairment loss is included in administrative expenses in the statement of profit or loss (see note 8).

(c) Analysis of additions to property, plant, and equipment

Additions through cash Additions through increase in decommissioning estimates Other additions *

Group 31-Dec-16

111'000 1,784,323

30,963

1,815,286

31-Dec-15 111'000

1,594,893 42,420

698,038 2,335,351


111'000 111'000 1,784,323 1,594,100

30,963 27,680 698,038

1,815,286 2,319,818

* As at 31 December 2015, N698million of acquired property, plant and equipment had not been paid for.

(d) Depreciation was classified as:

Cost of sales (note 7) Administrative expenses (note 8)

Group 31-Dec-16

111'000 3,714,743

54,880 3,769,623

31-Dec-15 111'000

3,946,074 129,453

4,075,527

(e) The Group and Company had no capital commitments as at the reporting date (2015: nil).

(f) There were no qualifying borrowing costs to be capitalised.

(g) Proceeds from sale of property, plant and equipment

Cost of the asset Accumulated depreciation Gain on disposal of property, plant, and equipment Net proceeds from sale of assets

36

Group 31-Dec-16

111'000 90,926

(72,989) 283

18,220

31-Dec-15 111'000

262,331 (225,818)

44,603 81,116


111'000 111'000 2,697,663 2,573,557

54,880 129,453 2,752,543 2,703,010


111'000 111'000 90,926 262,331

(72,989) (225,818) 283 44,603

18,220 81,116


Notes to the Financial Statements (cont'd) 16 Intangible assets

Group and Company

Cost Balance at 1 January 2015 Additions during the year Balance at 31 December 2015

Balance at 1 January 2016 Additions during the year Balance at 31 December 2016

Accumulated amortization Balance at 1 January 2015 Charge for the year Balance at 31 December 2015

Balance at 1 January 2016 Charge for the year Balance at 31 December 2016

Carrying amount at 31 December 2016

Carrying amount at 31 December 2015

Amortisation charge is included in administrative expense.

17 Investment in subsidiaries Company

IHS Towers Netherlands Finco NG B.V. Tower Infrastructure Company Limited

Software N'OOO

107,718 525

108,243

108,243 20,064

128,307

91,388 10,573

101 ,961

101,961 20,540

122,501

5,806

6,282

Type of Country of Investment Incorporation

Direct Netherlands Direct Nigeria

Licenses Total N'OOO N'OOO 1,941 109,659

525 1,941 110,184

1,941 110,184 360 20,424

2,301 130,608

1,510 92,898 229 10,802

1,739 103,700

1,739 103,700 230 20,770

1,969 124,470

332 6,138

202 6,484

% Holding N'OOO

100.00 466,125 100.00 ___ 1'--",0=-=0:..::..0

467,125

IHS Towers Netherlands FinCo NG B.V. is a special purpose vehicle registered in the Netherlands for the issuance of the Company's bonds.

The principal activity of Tower Infrastructure Company Limited is the acquisition and leasing of telecommunications infrastructure to telecommunications and other service providers.

18 Prepaid land rent

Balance, as at 1 January Additions Amortisation Impairment Balance, as at 31 December

Due with in 12 months Due after 12 months

19 Inventories

Stock of materials

Group 31-Dec-16

N'OOO 1,451,523

509,983 (583,292)

(68,923) 1,309,291

525,642 783,649

1,309,291

Group 31-Dec-16

N'OOO 539,677

Company 31-Dec-15 31 -Dec-16 31-Dec-15

N'OOO N'OOO N'OOO 1,879,857 1,451 ,523 1,879,857

227,666 509,983 227,666 (656,000) (583,292) (656,000)

(68,923) 1,451 ,523 1,309,291 1,451,523

696,525 525,642 696,525 754,998 783,649 754,998

1,451,523 1,309,291 1,451 ,523

Company 31-Dec-15 31-Dec-16 31-Dec-15

N'OOO N'OOO N'OOO 314,002 539,677 314,002

The cost of inventories recognised as cost of sales for the Group and Company during the year was N4.87 billion and N3.77 billion respectively (2015: Group N2.68 billion, Company N1 .98 billion)

37


Notes to the Financial Statements (cont'd) 20 Trade and other receivables

Trade receivables Other receivables Less: impairment allowance Net trade and other receivables Withholding tax receivable Other prepaid expenses

Due within 12 months Due after 12 months

Group 31-Dec-16

N'OOO 8,807,717

110,844 (692 ,830) 8,225,731

690,727 91,300

9,007,758

9,007,758

9,007,758


N'OOO N'OOO N'OOO 6,226,627 8,807,717 6,225,627

693,147 110,844 693,147 (712,920) (692,830) (712,920) 6,206,854 8,225,731 6,205,854 5,865,462 700,000 5,911,857

90,509 81 ,507 90,509 12,162,825 9,007,238 12,208,220

6,297,363 9,007,238 6,296,363 5,865,462 5,911,857

12,162,825 9,007,238 12,208,220

The movement in the allowance for impairment in respect of trade and other receivables during the year is as follows:

Balance, as at 1 January Impairment charges recognised (note 8) Impairment losses written-off Impairment reversals (note 10) Balance, as at 31 December

21 Cash and cash equivalents

Short-term deposits Bank and cash balances

22 Share capital

Authorised: 112,000,000 ordinary shares of 50k each

Issued and fully paid: 70,772,330 ordinary shares of 50k each

23 Share premium

Balance beginning and end of year

Group 31 -Dec-16

N'OOO 712,920 562,997

(579,699) (3,388)

692,830

Group 31 -Dec-16

N'OOO

2,931,183 2,931,183

Group 31-Dec-16

N'OOO 56,000

Group 31-Dec-16

N'OOO 35,386

Group 31-Dec-16

N'OOO 17,274,663

31-Dec-15 N'OOO

1,110,386

(285,760) (111,706)

712,920

31-Dec-15 N'OOO

3,713,498 391 ,873

4,105,371

31-Dec-15 N'OOO

56,000

31-Dec-15 N'OOO

35,386

31-Dec-15 N'OOO

17,274,663


N'OOO N'OOO 712,920 1,110,386 562,997

(579,699) (285,760) (3,388) (111 ,706)

692,830 712,920


N'OOO N'OOO 3,713,498

2,915,885 391 ,873 2,915,885 4,105,371


N'OOO N'OOO 56,000 56,000


N'OOO N'OOO 35,386 35,386

Company 31-Dec-16 31 -Dec-15

N'OOO N'OOO 17,274,663 17,274,663

Share premium is a non-distributable reserve for recording additional paid in capital in excess of the nominal value.

38

I

I

I


Notes to the Financial Statements (cont'd) 24 Borrowings

Group

Balance, as at 1 January Interest expense (see note 12) Repayments - principal Repayments - interest Effect of changes in exchange rate Balance, as at 31 December



31-Dec-16 N'OOO

49,246,762 6,681 ,914

(72,265,175) (7,531,984) 27,950,014

4,081 ,531

1,393,859 2,687,672 4,081,531

Restated* 31-Dec-15

N'OOO 45,385,968

4,906,751

(4,104,471) 3,058,514

49,246,762

1,875,519 47,371 ,243 49,246,762

On 27 October 2016, the Group redeemed US$236.935 million of the existing $250 million 8.375% Guaranteed Senior Notes due 2019 issued through IHS Towers Netherlands FinCo NG B.V. (formerly Helios Towers Finance Netherlands B.V.) pursuant to a tender offer made to the noteholders. The outstanding $13.065 million notes attract interest at an annual interest rate of 8.375% payable semi-annually. Principal is repayable at the maturity date (15 July 2019).

25 Decommissioning and site restoration provision This relates to the probable obligation that the company may incur on the land in which its Towers equipment are constructed. The amount recognised initially is the present value of the estimate of the amount that will be required to decommission and restore the leased sites to the original states, discounted using the effective borrowing rate of the company. The amount provided for each site has been discounted based on the respective lease terms attached to each site.

The provisions have been created based on the decommissioning experts, estimates and management's experience of the specific situations. Assumptions based on the current economic environment have been made, and management believes they are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual decommissioning costs will ultimately depend on future market prices for the necessary decommissioning works required that will reflect market conditions at the relevant time. Furthermore, the timing of decommissioning is likely to depend on when the lease term is terminated without renewal. This, in turn , will depend on technological changes in local and international telecommunication industry which are inherently uncertain.

The discount rate used in the calculation of the provision is 17% (2015: 11 %). Sensitivity analysis has been performed in note 4.

The movement in the account during the year is as follows:

Provision for decommissioning

Balance, as at 1 January Unwinding of interest (note 12) Additions and other changes in estimates One-off provision (note 8) Balance, as at 31 December


39

Group 31-Dec-16

N'OOO 80,840

145,158 30,963

1,058,138 1,315,099

1,058,138 256,961

1,315,099


N'OOO N'OOO N'OOO 16,918 47,116 16,918 21 ,502 112,433 2,518 42,420 30,963 27,680

285,469 80,840 475,981 47,116

285,469 80,840 190,512 47,116 80,840 475,981 47,116


Notes to the Financial Statements (cont'd) 26 Trade and other payables

Trade creditors and accruals Other creditors Withholding tax Value added tax

27 Taxation (a) The movement in the current income tax liability is as follows:

Group 31-Dec-16

N'OOO 2,198,553

627,776 155,557 450,999

3,432,885

31-Dec-15 N'OOO

1,662,700 869,887 159,675 547,112

3,239,374


N'OOO N'OOO 2,007,442 2,198,809

627,776 869,888 155,557 159,675 450,999 547,112

3,241,774 3,775,484

.-----------"""T""-----------, Company

Balance, as at 1 January Charge for the year (see (b) below) Payments made during the year Withholding tax offsets Balance, as at 31 December

(b) Tax charge for the year comprises:

Company income tax Tertiary education tax Total current taxes on income Deferred taxes (see note 31) * Total current tax on income statement

Group 31-Dec-16

N'OOO 176,712 293,505 (60,870)

409,347

Group 31-Dec-16

N'OOO 248,814

44,691 293,505

(1,015,012) (721,507)

31-Dec-15 31-Dec-16 31-Dec-15 N'OOO N'OOO N'OOO

165,250 126,035 165,250 97,072

(85,610) (39,215) 176,712 126,035 126,035


N'OOO N'OOO N'OOO 82,597 14,475 97,072

(1,015,012) 97,072 (1,015,012)

* This relates to the deferred tax liability arising from day one gains recognised on related party loans received at below market rates.

(c) Reconciliation of effective tax rate: Group Company

31-Dec-16 31-Dec-15 31 -Dec-16 31-Dec-15 N'OOO N'OOO N'OOO N'OOO

Restated* Restated* Loss before tax (42,570,292) (2,037,671) (40,617,049) (1,458,899) Tax charge @ 32% (13,622,493) (652,055) (12,997,456) (466,848) Tax effects of: Non deductible expenses 2,799,678 449,385 2,242,105 482,020 Deferred tax assets not recognised and other items 10,101,308 314,217 9,740,339 (15,172)

(721,507) 111,547 (1,015,012)

The Company has applied a tax rate of 32% in 2016 (2015: 32%) to reflect the Company's effective tax rate as a result of using the applicable tax rates to compute its various tax liabilities.

(d) Deferred tax assets: The Group and Company have unrecognised net deferred tax assets amounting to N31.21 billion and N29.67 billion respectively (2015: Group N8.84 billion and Company N8.19 billion) arising from unutilised tax losses, unutilised capital allowances and unrealised exchange differences. No deferred tax asset has been recognised due to uncertainties relating to the timing and amount of future taxable profits.

40



28 Derivative financial instrument

Asset

Liability


Group

31-Dec-16 N'OOO

238,986

Restated* 31-Dec-15

N'OOO

(2,949,465)

Company

31-Dec-16 N'OOO

238,986

Restated* 31-Dec-15

N'OOO

(2,949,465)

The derivatives at 31 December 2016 represent the fair value of the put and call options embedded within the terms of the IHS Netherlands Holdco B.V. listed bond. The call options give the Group the right to redeem the bond instruments at a date prior to the maturity date (27 October 2021), under certain conditions and at a premium over the initial notional amount. The put option provides the holders with the right (and the group with an obligation) to settle the bonds before their redemption date in the event of a change in control or major asset sale, and at a premium over the initial notional

The embedded derivatives in 2015 represent the fair value of the put and call options embedded within the terms of the IHS Netherlands FinCo B.V. notes. The call options give the Group the right to redeem the bond instruments, and the put options give the bondholders the right to request early settlement, at a date prior to the maturity date (15 July 2019), in certain circumstances and at a premium over the initial notional amount.

The options are fair valued using an option pricing model that is commonly used by market participants to value such options and makes maximum use of market inputs, relying as little as possible on the entity's specific inputs and making reference to the fair value of similar instruments in the market. Thus, it is considered a level 2 financial instrument in the fair valuation hierarchy of IFRS 13.

The key assumptions in determining the fair value are, the initial fair value of the bond (assumed to be priced at 100% on issue date), the credit spread (derived using Bloomberg analytics at issuance and based on credit market data thereafter), the yield curve and the probabilities of a change in control (20% assumed) and a major asset sale, as defined in the terms of the Holdco Notes, (0% assumed). The probabilities relating to change of control and major asset sale represent a reasonable expectation of those events occurring that would be held by a market participant.

29 Related party disclosures On 10 March 2016, the shareholders of HTN Towers Pie transferred all their rights and obligations in the entire issued share capital of the Company to IHS Holding Limited. IHS Holding Limited is the ultimate parent of the Company. It holds 100% of the ordinary shares in issue as at 31 December 2016 through a special purpose vehicle entity IHS Netherlands NG2 B.V. It has the right to appoint the board members and controls the day to day activities and major financial decisions.

IHS Towers Netherlands FinCo NG B.V. (formerly Helios Towers Finance Netherland B.V.) (100%) and Tower Infrastructure Company Limited (100%) are subsidiaries of IHS Towers NG Limited.

IHS Nigeria Limited and INT Towers Limited are subsidiaries of IHS Holding Limited.

HTN Towers Pie (former parent entity) and Helios Investors Genpar (former sister company) are related parties as of December 2015.

The following transactions were carried out with related parties:

(a) Sale of goods and services There were no sales of goods and services to related parties for the year. However, year end balances arise from expenses incurred on behalf of Tower Infrastructure Company Limited, and IHS Holding Limited for expenses incurred but not yet reimbursed by year-end.

(b) Purchase of goods and services There were no purchases of goods and services from related parties for the year. However, year end balances arise from expenses incurred on behalf of the company by IHS Nigeria Limited, and INT Towers Limited, for expenses incurred but not yet reimbursed by year-end.

41



29 Related party disclosures (continued)

Amount due from: Tower Infrastructure Company Limited Helios Investors Genpar Helios Towers Pie IHS Holding Limited

Group 31-Dec-16

N'OOO

72,514 72,514

31-Dec-15 N'OOO

14,442 127,688

142,130


N'OOO N'OOO 6,069,909 8,247,963

72,514 6,142,423

14,442 127,688

8,390,093

Amounts due from related parties are repayable on demand and have been classified as current assets.

Amount due to: IHS Nigeria Limited INT Towers Limited

Group 31-Dec-16

N'OOO 2,271,208

451,063 2,722,271

31-Dec-15 N'OOO


N'OOO N'OOO 2,271,208

451,063 2,722,271

Amounts due to related parties are repayable on demand and have been classified as current liabilities.

(c) Loans from related parties (i) IHS Netherlands Holdco B.V.

Advanced during the year Transaction costs Fair value of embedded derivative Amortised interest Effects of changes in exchange rate Balance, as at 31 December

Group 31-Dec-16

N'OOO 72,265,175 (2,003,114)

(191,189) 1,286,876 (118,944)

71 ,238,804

31-Dec-15 N'OOO


N'OOO N'OOO 72,265,175 (2,003,114)

(191,189) 1,286,876 (118,944)

71,238,804

On 27 October 2016, the Company received $236.94 million from the $800million 9.5% Senior Notes due 2021 issued by IHS Netherlands Holdco B.V. The facility attracts interest at an annual interest rate of 9.5% plus a margin of 0.15% payable semi-annually. The principal is repayable at maturity date (27 October 2021 ). The proceeds were used to, among other things, settle principal amounts due to holders that tendered outstanding $250 million 8.37!i% Guaranteed Senior Notes due 2019 issued by IHS Towers Netherlands FinCo NG B.V. (formerly known as Helios Towers Finance Netherlands B.V.). $236.94 million in principal amount of the $250m bond was repaid on 27 October 2016.

(ii) IHS Holding Limited

Advanced during the year Fair value adjustments Amortised interest Effects of changes in exchange rate Balance, as at 31 December

Group 31-Dec-16

N'OOO 5,322,027

(3,171,912) 36,846 (6,139)

2,180,822

31-Dec-15 N'OOO


N'OOO N'OOO 5,322,027

(3,171 ,912) 36,846 (6,139)

2,180,822

On 27 October 2016, the Company received $17.45 million from IHS Holding Limited. The facility has a tenor of 8 years from issue date and principal is repayable in full at the maturity date (26 October 2026). The proceeds were used to, amongst other things, settle interest and premiums due to holders that tendered outstanding $250 million 8.375% Guaranteed Senior Notes due 2019 issued by IHS Towers Netherlands FinCo NG B.V. (formerly known as Helios Towers Finance Netherlands B.V.).

42



29 Related party disclosures (continued) (c) Loans from related parties (continued) (iii) IHS Towers Netherlands FinCo NG B.V.

Balance, as at 1 January Amortised interest Repayments - principal Repayments - interest Effects of changes in exchange rate Balance, as at 31 December


Company

31-Dec-16 N'OOO

49,246,762 6,786,038

(72,265,175) (6,704,407) 27,951,412

5,014,630

Restated* 31-Dec-15

N'OOO 45,385,968

4,906,751

(4,104,471) 3,058,514

49,246,762

This represents the $250 million 8.375% Guaranteed Senior Notes due 2019 issued by the Group through IHS Towers Netherlands FinCo NG B.V. (former Helios Towers Finance Netherlands B.V.) (see note 24 Borrowings) . The outstanding $13.065 million notes attract interest at an annual interest rate of 8.375% plus a margin of 0.164% payable semi-annually. Principal is repayable at the maturity date (15 July 2019).

All loans are interest bearing and are recognised at amortised costs. No loans were advanced to key management staff during the year.

Summary of current loans from related parties

IHS Netherlands Holdco B.V. IHS Towers Netherlands Finco NG B.V.

Summary of non-current loans from related parties

IHS Netherlands Holdco B.V. IHS Holding Limited IHS Towers Netherlands FinCo NG B.V.

(d) Key Management Compensation

Group 31-Dec-16

N'OOO 1,237,717

1,237,717

Group 31-Dec-16

N'OOO 70,001 ,087

2,180,822

72,181,909

31-Dec-15 N'OOO

31-Dec-15 N'OOO


N'OOO N'OOO 1,237,717

159,473 1,397,190

1,875,519 1,875,519


N'OOO N'OOO 70,001,087

2,180,822 4,855,157

77,037,066 47,371,243 47,371 ,243

Key management includes directors (executive and non-executive), members of the Executive Committee and the Company Secretary. The compensation paid or payable to key management for employee services is shown below:

Salaries and other short term benefits

(e) Directors' remuneration

Group 31-Dec-16

N'OOO 167,374

(i) Remuneration paid to directors (excluding pensions) was as follows:

Fees and remuneration Other emoluments

43

Group 31-Dec-16

N'OOO 140,241 27,133

167,374

31-Dec-15 N'OOO

325,693

31-Dec-15 N'OOO

200,055 37,895

237,950


N'OOO N'OOO 167,374 325,693


N'OOO N'OOO 140,241 200,055 27,133 37,895

167,374 237,950



29 Related party disclosures {continued) {e) Directors' remuneration {continued) (ii) Directors remuneration disclosed includes:

Chairman Highest paid director

(iii) The remuneration of all other directors fell in the ranges below:

N500,001 - N2,000,000 N2,000,001 - N10,000,000 N10,000,000 and above

30 Cash generated from operations

Note Reconciliation:

Group 31-Dec-16

N'OOO 2,550

82,927 85,477

Group 31-Dec-16

N'OOO 5 1 2 8

Group

31-Dec-15 N'OOO 5,489

107,160 112,649

31-Dec-15 111'000

8 1 1

10

Restated* 31-Dec-16 31-Dec-15

N'OOO 111'000


N'OOO N'OOO 2,550 5,489

82,927 107,160 85,477 112,649


N'OOO N'OOO 5 8 1 1 2 1 8 10

Company Restated*


Loss before taxation Adjustments:

{42,570,292) (2,037,671) {40,617,049) {1,458,899)

Depreciation on property, plant and equipment 15 Amortisation of intangible assets 16 Amortisation of prepaid land rent 18 Net impairment charge on trade receivables 20 Write-off of withholding tax assets 8 Impairment loss on property, plant and equipment 8 Impairment loss on prepaid land lease 18 One-off decommissioning provision 8 Gain on disposal of property, plant and equipment 15 Finance income 11

Finance costs 12 Fair value through profit or loss 13 Exchange translation differences from foreign subsidiary operations 31

Changes in working capital: Increase in inventories Increase in trade and other receivables net of impairment charges Decrease/{increase) in due from related parties Increase in due to related parties lncrease/(decrease) in trade and other payables Decrease/{increase) in working capital Cash generated from operations

3,769,623 20,770

583,292 559,609

6,630,476 3,669,046

68,923 1,058,138

(283) (152,169)

39,135,111 (3,379,640)

286,171 9,678,775

(225,675)

(3,550,265) 69,616

2,722,271 151,969

44

(832,084) 8,846,691

4,075,527 10,802

656,000 111,706

(44,603) (108,376)

8,118,425 1,548,420

12,330,230

{92,858)

(5,776,697) (142,130)

222,168 (5,789,517)

6,540,713

2,752,543 20,770

583,292 559,609

6,630,476 1,318,433

68,923 285,469

(283) (152,169)

39,207,908 (3,379,640)

7,278,282

(225,675)

(3,504,350) 2,247,670 2,722,271 (575,252)

664,664 7,942,946

2,703,010 10,802

656,000 111,706

(44,603) (108,376) 8,191,218 1,548,420

11,609,278

(92,858)

(2,202,146) (2,974,730)

200,376 (5,069,358)

6,539,920



31 Other capital reserves

Group

Balance, as at 1 January 2015 Other comprehensive income for the year Related party fair value adjustment Balance, as at 31 December 2015

Balance, as at 1 January 2016 Other comprehensive income for the year Related party loan fair value adjustment Deferred tax (see note 27) Reclassification to retained earnings Balance, as at 31 December 2016

Company

Balance, as at 1 January 2015 Other comprehensive income for the year Related party fair value adjustment Balance, as at 31 December 2015

Balance, as at 1 January 2016 Other comprehensive income for the year Related party loan fair value adjustment Deferred tax (see note 27) Reclassification to retained earnings Balance, as at 31 December 2016

Related party loans fair value gain

Related party Foreign loans fair exchange

value translation adjustment reserve

fll'OOO fll'OOO

286,171 3,171,912

(1,015,012)

2,156,900 286,171

Related party loans fair value

adjustment fll'OOO

3,171,912 (1,015,012)

2,156,900

Share based payment

reserve Total fll'OOO fll'OOO

408,794 408,794

408,794 408,794

408,794 408,794 286,171

3,171,912

(408,794) (408,794) 3,458,083

Share based payment

reserve Total fll'OOO fll'OOO

408,794 408,794

408,794 408,794

408,794 408,794

3,171,912

(408,794) (408,794) 3,171,912

It is a non-distributable reserve which relates to the difference between the fair value and actual proceed of related party loans.

Foreign exchange translation reserve It is a non-distributable reserve that harbours the exchange movement in the translation of IHS Towers Netherlands FinCo NG B.V. which is a foreign subsidiary.

Share based payment reserve It is a non-distributable reserve which relates to the share option plan for former key management staff of the company. Awards of shares of Helios Towers Mauritius Holdings Limited are granted under the plan in the form of conditional rights to receive shares on fulfilment of performance obligations set. No payment is made for awards.

The obligation was retained by the former shareholders (Helios Towers Pie) and the reserve written back to retained earnings.

32 Events after reporting date There are no events after the reporting date that need to be disclosed in accordance with IAS 1 O Events after the reporting period.

33 Contingent liabilities There are law suits pending against the Company in various courts of law. The law suits are being handled by external counsel. The contingent liabilities in respect of litigations and claims amounted to N459.42 million (2015: N170 million). Based on legal advice received, the directors are of the view that the Company's liability is not likely to crystallise, thus no provisions have been made in these financial statements.

45


Other National Disclosures

Statement of Value Added

Group 2016 2015

111'000 % 111'000 %

Revenue 19,706,993 14,676,436 Other income 9,028 3,638,944 Finance income 152,169 108,376

19,868,190 18,423,756 Bought-in materials and services (all local) (22,536,685) (7,179,615) Value added (2,668,495) 11 ,244,141

Distribution:

Employees Salaries and benefits 2,053,196 (77) 1,230,218 11

Provider of funds Interest 34,058,208 (1,276) 7,965,265 71

Government Taxation (721 ,507) 27 97,072

Retained in the business Replacement of PPE 3,769,623 (141) 4,075,527 36 Replacement of intangible asset 20,770 (1) 10,802 0 Reserves (41 ,848,785) 1,568 (2,134,743) (19)

(2,668,495) 100 11 ,244,141 100

Company 2016 2015

111'000 % 111'000 % Revenue 15,465,605 11,732,491 Other income 9,028 3,638,944 Finance income 152,169 108,376

15,626,802 15,479,811 Bought-in materials and services (all local) (13,899,866) (5,312,228) Value added 1,726,936 10,167,583

Distribution:

Employees Salaries and benefits 2,053,196 119 947,405 9

Provider of funds Interest 35,487,452 2,055 7,965,265 78

Government Taxation 1,015,012 59

Retained in the business Replacement of PPE 2,752,543 159 2,703,010 27 Replacement of intangible asset 20,770 1 10,802 Reserves (39,602,037) (2,293) (1,458,899) (14)

1,726,936 100 10,167,583 100

46


Other National Disclosures

Financial Summary

Group

Revenue

Results from operating activities Net finance expense (Loss)/profit on ordinary activities before taxation Taxation (Loss)/profit for the year

. Assets employed: Non-current assets Current assets Total assets

Financed by: Equity Non-current liabilities Current liabilities Total equity and liabilities

Company 2016

111'000 Revenue 15,465,605

Results from operating activities (1,561,310) Net finance expense (39,055,739) (Loss)/profit on ordinary activities (40,617,049) before taxation Taxation 1,015,012 (Loss)/profit for the year (39,602,037)

Assets employed: Non-current assets 17,172,973 Current assets 19,130,865 Total assets 36,303,838

Financed by: Equity (48,696,479) Non-current liabilities 77,227,578 Current liabilities 7,772,739 Total equity and liabilities 36,303,838

2016 111'000

19,706,993

(3,587,350) (38,982,942) (42,570,292)

721,507 (41,848,785)

19,932,603 13,076,774 33,009,377

(52,371 ,382) 75,126,542 10,254,217 33,009,377

2015 111'000

11 ,732,491

6,623,943 (8,082,842) (1 ,458,899)

(1,458,899)

25,091,166 19,802,354 44,893,520

(11 ,251,342) 50,367,824

5,777,038 44,893,520

47

2015 2014 2013 111'000 111'000 111'000

14,676,436 11,462,974 15,359,541

5,972,378 695,076 7,634,050 (8,010,049) (14,339,202) (4,864,322) (2,037,671) (13,644,126) 2,769,728

(97,072) (523,300) (195,058) (2,134,743) (14.167,426) 2,574,670

31 ,172,094 32,025,717 33,256,861 11,555,391 6,318,379 5,837,463 42,727,485 38,344,096 39,094,324

(12,965,668) (10,830,925) 3,336,501 50,401 ,548 45,119,866 23,195,174

5,291 ,605 4,055,155 12,562,649 42,727,485 38,344,096 39,094,324

2014 2013 2012 111'000 111'000 111'000

9,350,884 14,743,129 7,591,877

1,403,207 7,964,401 (3,584,843) (14,208,694) (4,864,322) (3,948,451) (12,805,487) 3,100,079 (7,533,294)

(523,300) (195,058) (23,350) (13,328,787) 2,905,021 (7,556,644)

26,688,650 26,901,874 22,502,280 13,160,053 12,522,801 6,488,875 39,848,703 39,424,675 28,991 ,155

(9,792,443) 3,666,852 (7,524,605) 45,119,866 23,195,174 25,440,478

4,521,280 12,562,649 11,075,282 39,848,703 39,424,675 28,991 ,155

consolidated and separate financial statements ihs … · ihs towers ng limited consolidated and...

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