MTN Ghana (MTN.gh) 2018 Annual Report

We have extracted below the Chairman’s Statement from the 2018 annual report of MTN Ghana (MTN.gh), listed on the Ghana Stock Exchange:

Distinguished shareholders, ladies and gentlemen It is my pleasure to welcome you to the first annual general meeting (AGM) of Scancom Plc (MTN Ghana) and to present to you, your company’s annual report and financial statements for the year ended 31 December 2018. As this is the first AGM after our initial public offer (IPO), I wish to thank you for the great interest you have shown in the company and for making us a great success story in Ghana and beyond.

Ghana’s political and economic performance

Ghana sustained its democratic credentials and remained politically stable and vibrant. Nonetheless, as the country gets closer to its next presidential and parliamentary elections in 2020, it will be necessary for the government to work with parliament to give sustained assurance to long- term investors in the country.

2018 began with great economic optimism and up to May the economy seemed to be gaining traction. However, from May the volatilities of the economy resurfaced, and economic performance began to weaken. The cedi came under considerable pressure while inflationary pressures also became elevated. The rapid depreciation of the cedi  has been contained and a cautionary stability has been restored but risks still remain.

With Ghana graduating from the extended credit facility programme with the IMF, which has been an important anchor to policy credibility, and Ghana’s history of elevated pre-election spending together with the spending pressures relating to the financial sector, risks to the currency remain high and 2019 will continue to be a difficult year. Consequently, it is unlikely that any further monetary easing can be expected from the Bank of Ghana. The government has, however, established an Independent Fiscal Responsibility Council and a Financial Stability Council and has pledged corrective fiscal actions on a quarterly basis. These should provide anchors to fiscal prudence and if pursued with rigour we could see macroeconomic stability for the rest of 2019.

Business performance

In 2018, our company implemented strategies aimed at making it more efficient and resilient to external shocks, while tightening risk and control measures. Our priorities, at the beginning of the year, were to focus on our customers, putting them at the centre of our operations, ensuring robust governance of the business and maintaining high ethical standards. These are critical to achieving sustainable profitable growth and improving long-term shareholder value.

The Board started 2018 with cautious optimism while focusing on growth opportunities as market conditions improved. We made significant progress in 2018 posting strong financial performance, a testament to the disciplined execution of the company’s strategy of maintaining a strong balance sheet, improving profitability and driving operational efficiencies. Underlying profit before tax increased by 16.5% to GH¢1.6 billion while earnings per share was GH¢0.067 and we are confident on building upon these achievements in 2019.

The management team has taken the needed steps to improve customer experience, drive business growth and deliver value to our shareholders, employees, communities and all other stakeholders.

Successful IPO, capitalisation and dividend

The National Communications Authority directed Scancom Plc to offer 35% of the company shares to indigenous Ghanaians through listing on the Ghana Stock Exchange as part of the conditions for acquiring a 4G licence. Your company complied, leading to a successful initial public offer which commenced on 29 May 2018 and completed on 5 September 2018. At the close of 2018, Scancom Plc (MTN Ghana) had a market capitalisation of GH¢9.7 billion making it the third largest listed company on the Ghana Stock Exchange. The board declared an interim dividend of 2 pesewas per share after reviewing the 3rd quarter performance of the company. After reviewing the full year performance of the company in 2018, the board shall be recommending a final dividend of 3 pesewas on ordinary shares bringing the total dividend for the year 2018 to 5 pesewas per share or 81.2% of profit after tax.

Share price performance

MTN Ghana share price recorded a 5.33% price gain for the year ended 31 December 2018, with a 52-week high and low of GH¢0.93 and GH¢0.75 respectively. The share price at the end of 2018 was GH¢0.79.

Corporate governance

The company remains resolute in upholding high standards of corporate governance to drive sustainable growth. We continue to embed a culture of no tolerance for corruption through our robust conduct management framework. MTN Ghana’s board of directors and its audit and risk committee are made up of experienced professionals providing appropriate oversight over governance structures.

Our scale and reach as a leading mobile network operator in this industry and our contribution to the socio-economic development of this country imposes upon us a greater burden of responsibility. While we are honoured to play this role, the company understands that its leadership comes with higher expectations, bigger obligations and some challenges. With the increasing savviness of our market, changing customer expectations and the heightened complexities of our regulatory environment, the company has put in place the right governance structures that will sustain the profitability and long-term viability of the business.

Scancom Plc (MTN Ghana) is committed to proactive and effective governance management, risk and compliance management practices and hence applies a combined assurance methodology to the management of governance, risk and compliance. The company has in this regard invested extensively in the relevant tools needed to provide an integrated approach to the management of governance, risk and compliance across the business.

Sustainability and social impact

As Ghana’s leading telecommunications provider, your company is equally committed to the socio-economic growth of Ghana. We seek to promote sustainable economic and social development in our communities working through the MTN Foundation. Since the launch of the foundation 11 years ago, we have invested a total of US$13.5 million in education, health and economic empowerment projects. The work of the foundation has impacted over four million people directly and indirectly and has enabled MTN to build a strong corporate citizenship identity in this country and our CSI model has become a benchmark for many organisations. In all, more than 145 projects have been executed across the country with 82 of them focusing on education, 52 on health and 11 on economic empowerment projects.

The foundation is also championing green initiatives in the company and ensuring we are able to conserve energy while managing waste efficiently.

Board changes

Ralph Mupita and Sugentharen Perumal were appointed as directors effective 1 June 2018. Also, Selorm Adadevoh, chief executive officer of MTN Ghana was appointed to the board on 8 August 2018.

Summary

The forecast for the Ghanaian economy in the medium term is one of cautious optimism. The board is confident of the company’s ability to efficiently target areas within the telecom industry for growth while effectively responding to the challenges that may potentially undermine the company’s performance.

On behalf of the board, I would like to welcome all of you, our new shareholders, once again and thank you, our customers, employees, vendors/suppliers, stakeholders and shareholders for the continued support. I am grateful to our staff and management for their dedication and hard work for a smooth execution of the company’s strategies in 2018.

Ishmael Yamson
Chairman
April 2019