título do capítulo PT · 2021. 4. 20. · título do capítulo PT Summary of Activity Angola...

título do capítulo PT


ANNUAL REPORT 2019


Summary of Activity Angola CablesP. 06

Analysis of ActivityP. 20

Financial StatementsP. 38

P. 12

Financial AnalysisP. 32

Glossary and AbbreviationsP. 86

Table of Contents

P. 03Angola Cables - Annual Report 2019

P. 04 Angola Cables - Annual Report 2019

Message from the CEO

Dear Shareholders,

For the first time in the company’s lifetime, we have

had a complete billing cycle, with all infrastructures in

operation. However, in 2019, the financing agreement

repayments and interest for the SACS also came into

full effect, as did the depreciation of all the cables.

Despite the vicissitudes related to the heavy impact

of the national economy and the sudden devaluation

of the currency, the company’s income grew by 53%

compared to 2018.

New heights were reached in terms of the

company’s credibility as it became a reference in the

Angolan internet market. It has been an extremely

rigorous test of our maturity and ability and we are

proud of the results achieved.

As for the objective of boosting our business in

the international market, the company now has more

international customers than domestic customers,

while the volume of traffic processed is also larger

outside Angola. However, these markets are extremely

competitive and revenue is lower than that generated

in the domestic market, in addition to the fact that

international customers are also more demanding.

These tough lessons equip the Angola Cables team to

deal with less demanding markets more effectively.

The focus is on continuing to grow in the foreign

market, with Africa and Brazil being the most important

for business outside Angola. The maturity and

complexity of the Brazilian make it a perfect training

ground for the company in a business sense, while

Africa provides fertile ground for value development.

However, there have been significant difficulties,

not only due to competition in the more developed

markets, but also because of the lack of financial

resources we have experienced during 2019.

The company has always faced great challenges,

yet it has always been able to overcome them and

achieve positive results. In the midst of an economic

crisis, we increased our sales by 47% compared to 2018.

The company’s capital structure places enormous

pressure on liquidity and this could be catastrophic in

2020 due to debt service obligations. The support of

the shareholders in overcoming this obstacle is key to

the company’s survival.

I thank the entire Angola Cables team for another

year of strong results. This team has enormous powers of

resilience that make it possible to turn dreams into reality.

I thank the shareholders for their continued

confidence in the Executive Committee.

Together we will go far.

António NunesCEO

Summary of Activity


Summary of Activity: Main indicators

+39%Compared with 2018160

Million Akz / HR

Sales / No. HRProductivity


17.588Million Akz

Proveitos 2019


Gbps

CircuitsCapacity sold


5.759Million Akz

EBITDA 2019

+1 P.P.Compared with 201833%

EBITDA Margin 2019


294Gbps

IP Transit


103At the end of 2019

Human Talent

9.476Thousand Million Akz

Investment 2019


Summary of Activity: Results

RESULTS

Income EBITDA

243,5

2014 2015 2016 2017 2018 2019

1.311981

2.079

3.768

5.759

Net Income

- 196,49 551 122 741

-4.634

- 36.877

2014 2015 2016 2017 2018 2019

Investment

1.37315.728 9.4761.414

40.993

14.555

2014 2015 2016 2017 2018 2019

Equity

2014 2015 2016 2017 2018 2019

11.063,09 11.624 11.750 12.4918.104

-28.772

Assets

2014 2015 2016 2017 2018 2019

16.635,07 17.169

30.911

52.454

98.278

110.713

2014 2015 2016 2017 2018 2019

2.622,614.329

5.5687.354

11.952

17.588


Summary of Activity: Forecast for 2020

FORECASTS FOR 2020BUSINESS GROWTH

GAIN MARKET SHAREBesides the domestic market, in 2019 the

company had a presence and consolidated the growth

of its customer base in the Brazilian, South African

and European markets. In addition, though having

no permanent presence, the company continued to

seek and gain opportunities in other African markets,

especially the West African countries.

Growth in the foreign markets will continue to be

the focus of commercial activity in 2020. However,

Angola Cables continues to seek out new markets and

will diversify its sales channels, allowing it to increase

its revenue, both in Africa, bearing in mind that there

is increasing awareness of the Angola Cables brand

and business among African stakeholders, as well as in

South and North America and Europe. The contribution

of foreign markets is expected to grow by more than

50% in 2020 compared to 2019.

A better knowledge of the market, greater brand

awareness, improvement of the quality of our offer and

the increase of by-products created for the services

offer will allow us to gain new market shares, alleviating

the pressure on sales prices.

As scale is a determining factor for competitiveness

in this business, the initiation of commercial activity

in Brazil has already contributed to a significant


Summary of Activity: Forecast for 2020

improvement in the company’s competitive position

in Africa, since it has allowed us to position ourselves

as a true international Tier I operator due to our

simultaneous presence in these very different markets.

Meanwhile, in Brazil our position is also improving

with respect to the major competitors, since we have

exclusive offers for these American markets.

IMPROVE STRATEGIC POSITIONING IN BRAZILBrazil is a very mature market, with strong

competition, where large national and international

operators operate, in particular those from North

America. This market is also an extremely complex one

for a company to operate in, from tax and duty issues to

labour aspects, which represent significant challenges

that must be overcome by Angola Cables in order for

the company to be managed efficiently. However, this

market has great potential and the growth forecast for

2020 is high.

The company must continue to look for

differentiating factors and demand segments that

allow it to grow rapidly with good profitability. We

now have unique products, which are being exploited

effectively.

The entry into service of the data centre in Fortaleza

is an important milestone in differentiating Angola

Cables’s offer in the market. By leveraging the digital

ecosystem around the AngoNAP in Fortaleza new

business opportunities will arise, both for the use of IP

Transit marketed by the company and for international

connectivity. In addition to these factors, the company

is already looking to develop new services, which will

be active in 2020.

As Brazil is a large country, Angola Cables’s points

of presence are increasingly diversified, meaning

we can find customers who are growing and looking

for the products we offer. This situation presents us

with a second set of challenges, as we don’t have

infrastructure in every state of Brazil. Therefore, the

company will need to continue searching for creative

solutions in order to develop its network, maximising

its investment in this area, with infrastructure sharing

solutions or the establishment of efficient strategic

development partnerships to develop the necessary

infrastructure for growing Angola Cables in Brazil.

RISKSAt the close of 2019, the company faces the

following risks that could have a significant impact on

results in 2020:

• Macroeconomic risk: uncertainties in the evolution

of the Angolan and Brazilian economies as regards

Gross Domestic Product growth, the foreign

exchange ratio for billing currencies, payments in

hard currency and inflation in the markets where

we operate.

• Market risk: the company operates in very

competitive markets such as Brazil, South Africa

and Nigeria. However, the Angolan market

is changing and there may also be surprise

competition in the future.

• Risk of debt service default: the company does

not yet generate sufficient revenue to meet

its operational and debt servicing obligations

simultaneously. This may destabilise the company

as regards its cash flow management in 2020.

ANGOLA CABLES DIFFERENTIATING FACTORSThe SACS, together with the rest of the network

on the Atlantic coasts and its AngoNAP in Fortaleza

and Luanda.

Angola Cables

título do capítulo PTA Angola Cables: Brand

BRANDIn 2019, Angola Cables started to implement a

new brand concept, Deep Connection, which refers to

connectivity, innovation and bringing people, businesses

and continents together. However, this concept also

BRAND PILLARS

DEEPCONNECTION

Our Mission

• Research;• Market intelligence;

• Business intelligence;• Benchmarketing;

• Account based marketing;• Análise de concorrência;

• Comunicação digital;

DEEPEXPERTISE

Business

BusinessIntelligenceMarket research,lead generation,

conversionopportunities

DEEPCOMMITMENT

People

• Corporate culture (MKT + BR);• Team building & formation;

• Angola Cables Team;• Partners, agents, distributors;

• Customer driven;• Brand experience;

Sponsorship& SutainabilityMussulo & Naval Sail,

Kitabanga & Tata,IPOM & Sangano

TalentTraining, internalcommunication,

connectors,endomarketing

• Pre-sales;• Events;

• Service delivery;• Product development;• Technical know-how;• Customer experience;

• Sales management experience;

Media &Institutional

PR, news, media, content, interviews,

meetings

DigitalSocial media,

website, email MKT,Google Ads,

EventsIndustry, relational,

institutional,commercials


alludes to the submarine cables in the ocean depths.

It is a concept that is strong, global, open, and easy

to remember.

DEEPUNDERSTANDING

Market


SHAREHOLDER STRUCTUREThe Angola Cables shareholder structure is made

up of the five main domestic telecommunications

operators. The shareholders have the following holdings:

Angola Telecom with 51%, Unitel with 31%, MSTelcom

with 9%, Movicel with 6% and Startel with 3%.

CORPORATE BODIES

GENERAL MEETINGThe Angola Cables General Meeting represents

the shareholders and deliberates on matters provided

for in the Articles of Association, as well as on all other

issues that are not the responsibility of other company

bodies. The General Meeting Board conducts the

Meeting and comprises a Chairman, a Vice-Chairman,

and a Secretary.

SUPERVISORY BOARDThe Supervisory Board monitors the fiduciary

responsibilities of the administrative bodies and in

2019 was formed of two members and two alternative

members.

Composition of the General Meeting Board

Diogo da Silva Manuel

Osvaldo Mancoca

Tidiane dos Santos

President

Vice-President

Secretary

Composition of the Remuneration Committee

João Dias

Fernando Sebastião

Hebell Gomes Afonso

President

Member

Member

Composition of the Supervisory Board

Fernando Sebastião

Rosângela Ferreira da Silva

President

Member

REMUNERATION COMMITTEEThe Remuneration Committee is an advisory body

to the General Meeting that is composed of three

members and which was appointed for the first time on

30 October 2018.

BOARD OF DIRECTORSThe Board of Directors is composed of directors

appointed by the company’s shareholders, with some

being independent and others employees. Their function

is to define the company’s strategy and management

within the scope of the powers defined in the Articles

of Association and the Companies Act, as regulated by

the internal regulations approved under the Articles of

Association.

On 30 October 2018, the General Meeting

appointed the new corporate bodies for the 2018-2021

period and revoked this mandate on 9 February 2019.

Angola Cables: Corporate Governance

GeneralMeeting

AuditCommittee

Remuneration Committee

Board ofDirectors

ExecutiveCommittee

EXECUTIVE COMMITTEEThe Executive Committee is responsible for

the day-to-day management of the company, in

accordance with the Articles of Association and the

powers delegated by the Board of Directors, exercising

those powers in accordance with the respective

internal regulations and regularly informing the Board

of Directors about business developments and the

company’s activities.

The Executive Committee also submits proposals

to the Board of Directors that create value for the

company.

Composition of the Board of Directorsfrom 09 February 2019

Augusto Mota de Carvalho

N´Silu Ferreira

Solange Nunes

Adalberto Fernando Nhinguica

António José T. A. Nabais Nunes

Laura Ferreira Carneiro

Ângelo Pereira da Gama

President

Vice-President

Member

Member

CEC

EC

EC

The President of the Board role has now passed from

Mr. Eduardo Domingos Sebastião to Mr. Agostinho Mota

de Carvalho.

ANGOLA CABLES EXECUTIVE COMMITTEE

Director responsible for the Technical

Directorate, Technological Innovation Management

and Procurement. Graduated in Electrical and

Robotic Engineering from the Lisbon Higher

Technical Institute in 1999.

Director responsible for the Commercial

and Marketing Directorate, the Human Talent

and Administrative Services Directorate, the

Planning and Reporting Department, and the

Legal Department. Graduated in Electrotechnical

Engineering from the Dresden University of

Technology in Germany in 1992.

António NunesChairman of the Executive Committee

Director responsible for the Financial

Directorate and Executive Secretariat. Graduated

in Financial Management from the Catholic

University of Angola in 2007.

Laura CarneiroDirector

Ângelo GamaDirector


Angola Cables: Business

BUSINESSSERVICE OFFER

Angola Cables’s business consists of: the sale of

international transmission capacity, the sale of IP transit

(internet), VLANs/VPNs and IP/MPLS circuits, services

that allow the establishment of dedicated point-to-point

and point-to-multipoint IP circuits. Services related to the

data centres. Remote peering services, providing remote

connection to AngoNIX and large European, Brazilian,

and American IXPs. We operate the largest Angolan IXP,

where we sell connectivity ports.

Angola Cables markets its products based on the

international network, which it owns mainly through

its submarine cable assets, but also sells circuits in

submarine cables and terrestrial fibre optic networks

that do not belong to its cables.

Its operational submarine cables are:

• The WACS (West Africa Cable System), which

connects 11 African and 3 European countries and

stretches from South Africa to the United Kingdom,

with connections at various points along the West

Coast of Africa;

• The Monet, which links São Paulo, Fortaleza and

Miami between Brazil and the United States;

• The SACS (South Atlantic Cable System), which

links Luanda to Fortaleza between Angola and

Brazil.

The IP Transit services are based on a strong PoP

infrastructure and connections around the world where

the company buys and sells internet.

AngoNIX (Angolan Internet Exchange Point) is

the main peering hub for domestic Internet traffic

exchange between national ISP networks. The

company is promoting AngoNIX internationally so that

it comes to play a significant peering role for regional

(SADC) ISPs, making the regional distribution of digital

content from Angola more attractive.

The data centre services offer consists in colocation

services, cross-connect services, customer equipment

operation and maintenance services, cloud services,

and a computing and data storage infrastructure

service.

This offer is aimed mainly at telecommunications

operators, domestic and foreign producers/distributors

of digital content, distributors of cloud computing

applications, and companies with a digital business

model.

The circuits enable large volumes of data

to be relayed, at the speed of light, between

two points along the WACS fibre optic system

(submarine cable).

CIRCUITS

The IP Transit services allow national

operators and ISPs to exchange domestic

internet traffic and interconnect with Tier-I/

II ISPs, improving quality and providing more

efficient access to international content.

IP TRANSIT

The data centre services consist in the

hosting of ICT and digital content equipment

(Colocation), the connection of customers

(Cross-Connect), and the provision of associated

operation and maintenance services.

DATA CENTRE

STRATEGYGROWTH

Angola Cables’s business is one of economies of

scale, where the volume of capacity sold is a key factor

in profitability. However, as it is also an international

business, it is subject to exchange rate variations in its

billing currencies.

In 2019, the company’s infrastructure was fully

operational and, for the first time, there was a full fiscal

year of billing based on this infrastructure, which gave

it scale potential in the markets where it operates.

The North – South routes, already quite

consolidated, are those that currently guarantee the

sustainability of the company, while the South – South

route of the SACS still needs to attract demand. Angola

Cables is constantly promoting the development

of this new “SACS market”, i.e. the intercontinental

communications market in the South Atlantic, in order

to exploit the advantages of being the first global

operator to create such a market.

The market is already embracing the SACS route

and we have demand for the cable from the large OTTs.

Angola Cables is the only carrier capable of providing

capacities in the terabytes per second range between

the United States and South Africa, with the lowest

latency. The São Paulo – Lisbon route (with extension

to other European cities) also has good potential due

to the obsolescence of the current submarine cables

between Brazil and Europe.

This presence on both sides of the South

Atlantic also creates great synergies for the IP Transit

business. Such synergies have already translated

into a significant improvement in Angola Cables’s

position in several international rankings and in its


Angola Cables: Strategy

synergies provided by technological and intangible

assets in order to integrate into the industry value chain

(optical transmission via submarine cable, IP, IXP, Data

Centre). Expansion of the customer base, substantially

increasing the relative weighting of international

customers. Geographical diversification to reduce

market risks and serve global customers. The company

creates new services and products in order to capture

value in the different areas of the digital economy and

within its available assets.

Secondly, expansion in Africa.

The African continent has considerable

asymmetries between national markets that can

provide substantial revenue when the barriers to entry

are overcome. Angola Cables will continue to promote

Africa – Americas connectivity and make a prudent

assessment of new development opportunities for

the African Telecommunications Hub in Angola. It has

therefore made a concerted effort to enter several

African markets, such as Nigeria, Ghana and others.

Thirdly, building customer trust.

The company has continuously strived to optimise

processes and ways of dealing with customers, with

their satisfaction always the primary focus. Every time

we lose a client it is a major blow to the company

structure. The company has also worked to minimise

acquisition and transaction costs in order to keep the

business sustainable in the long term.

Fourthly, innovation.

The company has been an innovator in all the

markets in which it operates (supply chain, offer,

quality of service, commercial relationship), as well as

with its workforce. The ability to anticipate change, to

adapt, innovate, and evolve, within an ever-changing

environment, will be essential attributes for Angola

Cables as it continues to grow.

Diversification of revenue streams.

Expansion in Africa.

Building customer trust.

Quality of Service.

Innovation of the commercial offer.

negotiating power for interconnection with larger (Tier

1) network operators. Another important effect is the

development of a portfolio of digital content whose

export and distribution is a differentiating factor and

a source of value creation. The company is currently

looking for partners capable of jointly developing the

potential of the Angola-based regional hub.

One of the great challenges has been making the

domestic market players understand the benefits of

working together so that we can make a difference

in the region. In 2019, the company substantially

strengthened its credibility in the African digital

market and is now reaping the rewards of that strategy,

as shown by the orders we have had from various

entities in the sector in Africa. This intangible and

time-consuming asset (know-how) will be the major

investment for the coming years and the main driver

of growth.

The sustainable growth strategy is based on 4

main pillars.

Firstly, the diversification of revenue streams.

Diversification of the offer, capitalising on the

Analysis of Activity


COMMERCIALCONSOLIDATION OF THE DOMESTIC MARKET AND DEVELOPMENTOF NEW MARKETS

Brazil continued to pose a major commercial

challenge in 2019. Market reaction to our stronger

market entry has significantly increased the level of

competition with an accelerated destruction of market

value due to a sharp drop in the average price of both

circuits and IP Transit. The completion and inauguration

of Angonap Fortaleza in the 2nd quarter of the year

enhanced our image as a fiercely determined player

with credibility in the Brazilian market. This was evident

in the consolidation of the results obtained in the 2nd

half of the year, in which, with a full commercial team

and new leadership, we began to see the results of

the work conducted there. At the end of the year, two

thirds of the capacity sold were related to circuits.

In South Africa, the company has consolidated its

position as a major supplier of international capacity

and gained market share in the IP market. The

strengthening of the team, as well as the establishment

of a local company and the consequent execution of

local receipts in rand had a very positive impact and

brand awareness was enhanced.

The Africa – Latin America route via the SACS

drew attention to the pioneering routes from the South

Atlantic to the US and Brazil.

Dedication to the Brazilian and South African

markets has reduced the attention on the Nigerian

market, where a new model will have to be thought out

for 2020. The company implemented the PoP in Accra

in Ghana, allowing it to gain customers and market

share, although less than would be expected if it had a

permanent local presence like in South Africa.

Analysis of Activity: Commercial

In 2019 the numberof Angola Cables customers

outside the domesticmarket grew 91%.

Turnover continued to grow in the domestic

market, as it did overall in the other African markets.

Commercial activities in African markets have

been one of the company’s major challenges, as each

one has its own distinct characteristics. Markets are still

very closed and building trust is a drawn-out process.

In 2019, sales of IP Transit capacity increased

206%. This growth was essentially sustained by the

Brazilian market, which grew 428%.

Evolution of IP Transit capacity sold 2018 – 2019

(Gbps)

Brazil

Africa

2019

30

264

2018

46

50

Evolution of transmission capacity sold (Circuits)

2018 – 2019 (Gbps)

2019

1159

2018

822

P. 22

Analysis of Activity: Commercial

International transmission capacity (Circuits)

increased by 41%, thanks to a strong growth in capacity

sold in the three submarine cable systems – WACS,

SACS and Monet.

The sale of circuits continues to be the company’s

main business in Africa, but in Brazil the IP Transit

business has almost the same turnover as the circuits

business. The domestic market continued to have the

highest turnover. However, the largest annual growth

was in the South Africa, Rest of Africa and Brazil

markets, the latter having achieved growth of 528%.

Domestic and International Customers 2018 – 2019

National market

Other markets

2019

53

105

2018

29

55

Distribution of 2019 sales by market

Rest of Africa:

5%

Brazil:

5%

South Africa:

4%

Europe:

2%Rest of te World:

2%

Angola:

82%

Distribution of 2019 sales by service in Africa

Circuits:

67%IP Transit:

31%

Data center:

2%

The customer base grew 88% in 2019, with 83%

growth in the domestic market and 91% in foreign

markets.

Distribution of 2019 sales by service in Brazil

Circuits:

51%IP Transit:

48%

Data center:

2% MARKETINGINTERNATIONAL VISIBILITY

In 2019, Angola Cables completed its last major

project with the inauguration of Angonap Fortaleza

in April, a Tier III data centre in Fortaleza, Brazil.

This completed the investment plan in three major

projects: the completion of the Monet cable in early

2018, completion of the SACS cable in September

2018, and completion of the third and final piece of the

strategy, the data centre in Fortaleza. This event was

attended by our shareholders and representatives of

the Angolan government, the government of Ceará,

the city of Fortaleza and major local entities.

Angola Cables - Annual Report 2019


Analysis of Activity: Marketing

In 2019, the PoP was also completed in Accra,

Ghana, while 2 new PoPs were opened in São Paulo

and the interconnection ring between the 3 PoPs in

São Paulo was established.

We also completed the installation of our Latin

American internet exchange point (IXP), operating at

Angonap Fortaleza.

In 2019, Angola Cables continued its partnerships,

enhancing international recognition of the company.

On a commercial level, we renegotiated a new

services marketing relationship with the American

company AP Telecom. The fact that they have strong

relationships in the United States and Asia-Pacific will

boost the company’s sales in those areas, where we are

still finding it difficult to penetrate.

This partnership is also promoting the South –

South connection, empowering Africa in the global

transmission ecosystem.

Angola Cables has also established a partnership

with TM Global of Malaysia by signing a low latency

test partnership agreement that will provide the

market with a shorter route connecting Asia to South

America through the SACS and the South Africa Far

East (SAFE) cable system.


Another partnership established was with

the London Internet Exchange (LINX), the entity

responsible for the Internet Traffic Exchange Point in

London, which resulted in better connectivity between

the peering community in that region and is essential

for Angola Cables’s customers. LINX is one of the

largest internet traffic exchange points in the world,

with 825 members connected from 75 countries.

The partnership with DE-CIX was also

strengthened in 2019, with the aim of expanding

capacities and boosting internet provider businesses

via South - South connections in the SACS. DE-CIX is

a leading global provider of Internet Exchange (IX)

services, providing premium interconnection services,

with over 1700 operators, ISPs and content networks

in more than 100 countries, including all the leading

international players in several European markets, the

Middle East, India and North America.

One of the major market novelties created

by Angola Cables was the “Peering BAR” during

Futurecom 2019. This space was set up in partnership

with DE-CIX and allowed people to connect and

explore the “Peering BAR”, which showed the global

connections of Peering Points (PoPs) best suited to

the needs of their businesses and the ideal routing to

connect their businesses at various points in the world.

Analysis of Activity: Marketing - International Visibility


With NOKIA, we created a partnership that was

presented to the market during AfricaCom 2019, the

largest telecommunications exhibition on the African

continent. A real and direct link between Sangano

in Angola and Boca Raton in Miami (United States)

was created using the fibres from Angola Cables’s

submarine cables and Nokia equipment, with a

capacity of 400G. This test was unprecedented

and it was the first time a capacity of that size had

been transmitted at such a distance. Angola Cables

and Nokia said in a joint statement that the direct

connection between the three continents resulted

in latency success and highly enhanced capacity.

This could bring great future benefits in terms of

expanding the submarine cables, which are beginning

to reach the end of their life.

A partnership has also been established with the

integrated provider VOX Telecom, a South African ICT

and infrastructure company, which will enable remote

fibre optic pair access to the SACS.

The company took part in more than 45 events

throughout the year and had a presence at the largest

international telecommunications conferences,

participating in discussions and lectures that generated

18 press releases and more than 758 news items, with

media returns amounting to roughly USD 1.8 MILLION.

Analysis of Activity: Marketing - International Visibility


Analysis of Activity: Human Talent

HUMAN TALENTINTERNATIONAL VISIBILITY

ANGOLA CABLES EMPLOYEESThe company ended 2019 with a total of 103

employees, 14 more than at the end of 2018.

DISTRIBUTION BY FUNCTIONAL AREAIn 2019, the Angola Cables organisational structure

continued to be divided into three directorates

(Technical; Commercial and Marketing; Administrative

and Financial), 5 departments (Human Talent;

Legal; Business Development; Project Management;

Procurement), and an Executive Secretariat.

The Technical Directorate, made up of 5

units (Engineering, Operations, Service Delivery,

Infrastructure, Information Systems) continues to be

the functional area with the most staff, making up 42%

of the total workforce.

PROFILEAngola Cables is a young, skilled organisation that

is capable of successfully completing its mission.

AGEThe most common age range of employees is

30-35 years, followed by the 35-40 years range.

The average age of staff is 34, which shows huge

development potential.

Number of Angola Cables employees

Distribution of Angola Cables employees

by functional area

2016

94

2017

94

2018

97

2019

103

0% 3%6%

20192018

Exe

cuti

ve S

ecre

tari

at

3 3

Leg

al O

ffice

2 5

Pro

ject

Man

agem

ent

2 2

Pro

cure

men

t

0 2

Ad

min

istr

ativ

e D

irec

tora

te

7 7

Bus

ines

s G

row

th

7 7

Co

mm

erci

al a

nd M

arke

ting

Dir

ecto

rate

1720

Tech

nica

l Dir

ecto

rate

43 41

Hum

an T

alen

t D

irec

tora

tean

d A

dm

inis

trat

ive

Ser

vice

s

16 16


by age range, 2019

20192018

< 25

1 2

> 55

4 3

30 - 35

3744

50 - 55

1 1

35 - 40

1820

25 - 30

25

14

40 - 45

812

45 - 50

3 7


Analysis of Activity: Human Talent

GENDERThe Angola Cables workforce is made up mainly

of men (61%), reflecting the technical nature of most

of the operations. In terms of administrative functions,

there is more balance between men and women.

NATIONALITYAngola Cables relies mainly on highly-qualified

staff native to its regions of activity. In Angola, the

company had only 8 foreign employees within its

structure at the end of 2019.


by gender, 2019


in Angola by nationality, 2019

Male:

61%Female:

39%National:

95Foreigner:

8


Analysis of Activity: Corporate Responsibility

CORPORATE RESPONSIBILITY

Angola Cables conducts its activity while

maintaining close links with the communities in which

it operates, respecting and protecting the ecosystem.

We show constant concern for social responsibility,

providing visibility and support to sustainability

projects, with 3 pillars in particular: Environmental,

Social, and Economic.

We work to achieve excellence in terms of the

quality and efficiency of our services, facilitating

access to communication and especially the Internet,

thereby ensuring the satisfaction of our customers and

shareholders.

The company is ever closer to the communities

in which it operates, through activities and projects

undertaken with the participation of company employees,

in order to encourage everyone to contribute towards

sustainable development and leave future generations

the legacy of a better world, as well as adopting projects

aimed at educational and cultural development.



CORPORATE RESPONSABILITY SOLIDARITY

In the community of Sangano, where our

submarine cable station is located, we continue to

implement solidarity measures for the local population,

especially in the provision of basic living support and

education to children, involving company employees in

the process.

In 2019, we supplied the water tanks in the

community and primary school, distributed school

supplies to the Sangano schoolchildren, continuing

our “Back to School” project by offering teaching

materials. We also organised the delivery of school

supplies to the children of El-Bethel Orphanage in

Zango on African Children’s Day and held a Christmas

Party with children from the community, in which we

decided along with the shareholders to ask each of

the Sangano schoolchildren to write to Santa Claus

with a Christmas wish list. More than 300 letters were

received and each of the employees sponsored a child,

thereby fulfilling all of their wishes by giving them their

dream Christmas gift, while also providing them all

with refreshments.

Also within the framework of Social Responsibility,

Angola Cables continued to support the Clube Náutico

de Luanda (CNIL) sailing club by participating in CNIL’s

95th Anniversary in February, the Brands Tournament in

April and the Angola Cables Tournament in December.

Our athletes participated in sailing, rowing and canoeing

competitions and we gave participation certificates and

refreshments to all tournament participants.

This support for sailing and other nautical activities

is a reflection of our business’ close connection with

the sea.

In Fortaleza, we support the Instituto Povo do

Mar (IPOM), which provides non-woven bags to use as

promotional gifts to our customers and employees, in

addition to sponsoring the Holiday Camp, IPOM KIDS,

and the Christmas Party.

Análise da actividade: Conservation Of Biodiversity

CORPORATE RESPONSABILITYCONSERVATION OF BIODIVERSITY

We work with the present global impact in mind in

order to ensure a sustainable future.

The future of the company, business, social and

environmental projects, and the communities and

markets where we operate. We are all connected to

the planet and everyone has a duty to care for it.

The sustainability policy adopted by the company

includes the constant search for environmentally

friendly solutions in the physical facilities and the

construction of infrastructures, as well as in the day-

to-day running of the company.

In Angola, we continue to support the Kitanga

Project and conduct awareness-raising activities

among the local communities of Sangano and the

coastal region of the city of Luanda.

Financial Analysis


Financial Analysis: Financial Results

ECONOMIC ANALYSIS

SUMMARY

Operating Revenues

Operating expenses before depreciation

EBITDA

Depreciation

Operating Income

EBITDA Margin

2019

17.587,54

- 11.828,87

5.758,67

- 4.348,64

1.410,03

33%

2018

11.951,73

- 8.183,81

3.767,92

- 1.401,15

2.366,76

32%

2017

7.353,73

- 5.274,42

2.079,31

- 622,26

1.457,05

28%

Million of Kwanzas

47%

45%

53%

210%

- 40%

1 pp.

63%

55%

81%

125%

62%

3 pp.

Million of Kwanzas

Operating revenues

Operating expenses before depreciation

Depreciation

Operating income

Financial income

Non-operating income

Net Income for the Year

2019

17.587,54

- 11.828,87

- 4.348,64

1.410,03

- 37.864,67

- 422,21

- 36.876,84

2018

11.951,73

- 8.183,81

- 1.401,15

2.366,76

- 6.517,12

- 483,39

- 4.633,75

2017

7.353,73

- 5.274,42

622,26

1.457,05

- 155,54

- 70,56

741,01

47%

45%

210%

- 40%

- 481%

13%

- 696%

63%

55%

325%

62%

- 4090%

- 585%

- 725%

Operating revenues totalled Akz 17,587.54 million

in 2019, Angola Cables’s seventh year of commercial

activity.

Income increased 47% on the previous year but

this positive change was essentially due to exchange

rate fluctuation, since in dollars there was actually a

decrease of around USD 2,926 Million.

Operating expenses, excluding depreciation,

increased by 45% in comparison with 2018, mainly due

to the Monet and SACS cables beginning operation

and the expansion of the PoP network.

With revenue growth outstripping operating

expenses, EBITDA increased by 53% to Akz 5,758.67

million.

Operating income was Akz 1,410.03 million, down

40% on the previous year.

The EBITDA margin was 33%, up 1 percentage

point on the previous year. The improvement in

EBITDA Margin, in a year during which fixed costs grew

substantially and revenues from Monet and the SACS

were still in their infancy, is a reflection of gains owing

to the increase in sales from 2018 to 2019.



In 2019, the company posted a net loss of Akz

36,876.84 million, a consequence of the exponential

increase in the financial income during the year.

The Financial Income worsened by a further

Akz 31,347.55 million compared to 2018, due to the

exchange rate differences associated with the monthly

revaluation of the SACS and MONET loans and interest

contracted in foreign currency, as well as the exchange

rate adjustment of other liabilities denominated in

foreign currency.

Non-operating income was Akz 61,183.00 million

lower than that recorded in 2018, standing at Akz

-422,210.33 million in 2019.

The sale of international transmission capacity

(circuits) in the WACS system continued to be the

main source of revenue, corresponding to 59% of the

total. However, 2019 marks the start of transmission

capacity service sales in the MONET system, which

had a significant impact on the company’s sales,

attaining a weighting of 16% of total revenue. The Data

Centre services, in particular Colocation, grew 28 %

but continued to have a minor impact on revenue due

to the limitations on available space in AngoNAP.OPERATING REVENUES

Provision of Services

Domestic market revenues

International market revenues

Landing Service Provider (Sangano)

Operating revenues

2019

15.577,94

1.633,87

375,73

17.587,54

2018

9.980,86

1.309,56

661,32

11.951,73

Million of Kwanzas

56%

25%

- 43%

47%

Domestic market revenues grew 56%, with a

strong growth in international transmission capacity

services (circuits) associated with the SACS and

MONET systems.

International market revenues grew 25% compared

with the previous year, the fruit of the sales focus in

external markets. In 2019, international revenues,

including the LSP services, amounted to 10% of total

revenues.

Distribution of revenues in 2019

OPERATING EXPENSES AND DEPRECIATION

Personnel costs

Depreciation

Other operating expenses and losses

Operating Expenses

2019

- 3.153,18

- 4.348,64

- 8.675,69

- 16.177,50

2018

- 2.333,00

- 1.401,15

- 5.850,82

- 9.584,97

Million of Kwanzas

35%

210%

48%

69%

Circuits:

75%Internet:

22%

Data center:

3%

Others:

0%

Evolution of Revenues 2017-2019

2017

7.354

2018

11.952

2019

17.588

63%47%



In 2019 there was a net loss of Akz 36,877 million.

Despite the strong economic performance, reflected

in the positive operating income, this was insufficient

in view of the impact of national currency devaluation

on the revaluation of liabilities denominated in foreign

currency (mainly bank loans for financing the Monet

and SACS submarine cables).

NET PROFIT

- 4.6342017

741

2016

122 2018 2019

- 36.877

508%

- 78%

- 725%

CAPITAL STRUCTURESAs of 31 December 2019, the company had a

negative equity of -28,772 million. This situation

occurred in 2019 due to the significant net loss recorded

by the company during the year. As mentioned, this is

a reflection of the SACS and MONET submarine cable

financing model, mostly based on bank financing

denominated in foreign currency.

Million of Kwanzas

Equity

Liabilities

Total

2019

- 28.772,41

139.485,54

110.713,13

2018

8.104,43

90.173,78

98.278,21

- 455%

55%

13%

Subcontracts

Supplies and third-party services

Taxes

Other Operating Expenses and Losses

2019

4.247,83

4.134,88

292,98

8.675,69

2018

2.171,53

3.465,44

213,85

5.850,82

Million of Kwanzas

96%

19%

37%

48%

OPERATING INCOMEIn 2019, operating income was Akz 1,410 million,

down 40% on the previous year. This drop is significant

given the sharp increase in depreciation during the year.

Evolution of Operating Income 2016-2019

2017

1.457

2016

427

2018

2.367

2019

1.410

In 2019, operating expenses rose by 69% compared

to the previous year, totalling Akz 16,177.50 million.

Depreciation increased 210% over the previous

year, mainly due to depreciation beginning on the SACS

submarine cable and having a full year of depreciation

on the MONET cable.

Other operating expenses and losses grew

by 48% overall. Supplies and third-party services,

which represent 26% of operating expenses before

depreciation, grew 19%, mainly resulting from a full

year of maintenance costs for the Monet and SACS

submarine cables. Subcontracts, corresponding to

telecommunications infrastructures leased from other

domestic and foreign operators, grew 96%, mainly due

to the SWAP made with Angola Telecom in the amount

of USD 8,100 million for 2019.

LiabilitiesEquity

2016

11.750,00

19.161,00

Total:30.911,00

2017

12.491,00

39.963,00

Total:52.454,00

8.104,00

90.174,00

Total:90.174,00

2018- 28.772,00

139 486,00

Total:110.713,00

2019

Evolution of Capital Structure 2016-2019


COMPOSITION OF LIABILITIESAt the end of the 2019 financial year, Angola

Cables’s liabilities totalled Akz 139,486 million, up Akz

49,112 million on the previous year.

Million of Kwanzas

Medium- and long-term loans

Provisions for other risks and charges

Accounts payable

Current portion of medium-and long-term loans

Other current liabilities

Total Liabilities

2019Liabilities

110.446

2.909

4.443

5.412

16.276

139.486

2018

65.015

2.464

6.119

8.324

8.251

90.174

70%

18%

- 27%

- 35%

97%

55%

The amount of medium- and long-term loans

increased due to the exchange rate adjustment that

had to be made with respect to revaluing financial

liabilities associated with the financing of the SACS

and MONET cables.

Provisions for other risks and charges refer to tax

expenses relating to investment projects, in particular

the new submarine cables, pending the tax exemption

claim submitted to the tax authorities.

Of the accounts payable, 49% relate to intra-group

balances and 33% to debts payable to various suppliers

and providers with whom the company works.

Other current liabilities include interest accrued on

bank loans for the construction of the Monet and SACS

submarine cables, deferred income from the sale of

IRUs, payments to INACOM in accordance with the plan

agreed in 2016, payments due to suppliers for services

provided but not invoiced in 2019, and a provision for

variable pay to staff linked to the individual annual

performance appraisal.



COMPOSITION OF ASSETSAngola Cables’s total assets at the end of the

2019 financial year amounted to Akz 110,713 million, an

increase of 13% compared to 2018. Their composition

was as follows:

Million of Kwanzas

Non-current assets

Tangible assets

Intangible assets

Investments in subsidiariesand associates

Total non-current assets

Current assets

Accounts receivable

Cash and Cash Equivalents

Other current assets

Total Currents Assets

Total Assets

2019Assets

69.509,32

618,48

25.566,34

95.694,14

7.406,90

3.079,98

4.532,10

15.018,99

110.713,13

2018

70.920,08

643,16

14.654,54

86.217,78

4.987,59

5.970,64

1.102,20

12.060,43

98.278,21

- 2%

- 4%

74%

11%

49%

- 48%

311%

25%

13%

Evolution of Assets 2016-2019

Current AssetsNon-current Assets

2016

26.485

4.425

Total:30.911

2017

45.225

7.229

Total:52.454

86.218

12.060

Total:98.278

2018

95.694

15.019

Total:110.713

2019

Investment in subsidiaries and associates

increased 74% on 2018, reflecting the capitalisation of

the Brazilian subsidiary Angola Cables Holding Ltda

that has been conducted to finance installation and

operation projects for the Monet and SACS submarine

cables in Brazil.


Financial Statements


Financial Statements: Balance Sheet

BALANCE SHEET AS OF 31 DECEMBER 2019 AND 31 DECEMBER 2018(AMOUNTS EXPRESSED IN KWANZAS)

Assets

Non-current assets

Tangible assets

Intangible assets

Investments in subsidiaries and associates

Current assets

Accounts receivable

Cash and Cash Equivalents

Other current assets

Total Current Assets

Total Assets

Equity And Liabilities

Equity

Capital

Reserves

Carryforwards

Net income for the year

Non-current liabilities


Provisions for other risks and charges

Current liabilities

Accounts payable

Current portion of medium- and long-term loans

Other current liabilities

Total Equity And Liabilities

NotesName

4

9

12

5

10

13

15

19

21

6

11

14

18

15

69.509.319,235

7.406.904,400

13.392.606,741

618.482,094

3.079.984,991

78.000,000

110.445.914,256

- 36.876.842,175

- 28.772.412,877

4.443.083,258

16.275.748,742

25.566.341,852

95.694.143,181

4.532.096,838

15.018.986,229

110.713.129,411

- 5.366.177,442

2.909.189,585

113.355.103,841

5.411.606,446

26.130.438,447

110.713.129,411

70.920.078,577

4.987.593,703

13.392.606,741

643.155,980

5.970.639,575

78.000,000

65.014.722,610

- 4.633.747,339

8.104.429,298

6,119,289,481

8.251.329,613

14.654.541,590

86.217.776,146

1.102.199,966

12.060.433,244

98.278.209,391

- 732.430,104

2.464.342,239

67.479.064,849

8.324.096,150

22.694.715,244

98.278.209,391

2019 2018

Year


Financial Statements: Income Statement By Nature

INCOME STATEMENT BY NATURE ON 31 DECEMBER 2019 AND 31 DECEMBER 2018(AMOUNTS EXPRESSED IN KWANZAS)

NotesName 2019 2018

Year

23

24

17.211.808,702

375.730,030

17.587.538,732

11.290.413,640

661.315,974

11.951.729,614

Service Provision

Other operating revenues

28

29

30

- 3.153.179,493

- 4.348.636,838

- 8.675.687,527

- 16.177.503,858

1.410.034,874

- 2.332.998,032

- 1.401.151,359

- 5.850.816,009

- 9.584.965,400

2.366.764,214

Personnel costs

Depreciation

Other operating expenses and losses

Operating Income

31 - 37.864.666,723 - 6.517.118,219Financial income

35 - -Income Tax

33 - 422.210,326 - 483.393,334Non-operating income

- 36.876.842,175 - 4.633.747,339Income Before Taxes

- 36.876.842,175 - 4.633.747,339Net Income For The Year


Financial Statements: Cash Flow Statement

AS OF 31 DECEMBER 2019 AND 31 DECEMBER 2018(AMOUNTS EXPRESSED IN KWANZAS)

NotesName 2019 2018

43,47

43,47

43,47

15.832.352,402

- 1.953.244,289

7.829.524,728

904.272,425

- 2.890.654,584

5.970.639,575

3.079.984,991

- 8.002.827,674

-

- 430.441,179

-

- 5.817.831,184

- 93.466,668

15.650,128

- 1.492.054,266

- 1.853.064,279

5.876.280,439

- 2.376.972,126

- 7.294.235,322

12.519.001,838

- 1.345.581,215

3.211.882,860

2.821.242,365

2.795.163,614

3.175.475,961

5.970.639,575

- 9.307.118,978

353.600,524

- 457.770,678

5.768.500,000

- 774.633,904

- 188.475,086

117,565.782

- 472.642,226

- 6.238.524,808

2.219.902,169

- 6.884.770,572

4.638.789,652

Cash flow from operating activities

Trade receivables

Tax on profits

Cash generated by operations

Foreign exchange rate effect

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

Payments to suppliers and employees

Other receipts/payments

Cash flow from investment activities

Cash flow from financing activities

Payments relating to:

Receipts from:

Payments relating to:

Tangible assets

Bank loans

Bank loans

Intangible assets

Interest and similar income received

Interest and similar expenditures paid

Financial investments

Net cash from operating activities

Net cash used in investment activities

Net cash used in financing activities

Year


Financial Statements: Notes to the Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

FOREWORD1. Activity

2. Accounting policies adopted in the preparation of the financial statements

3. Changes to accounting policies

NOTES TO THE BALANCE SHEET4. Tangible assets

5. Intangible assets

6. Investments in subsidiaries and associates

9. Other non-current assets and accounts receivable

10. Cash and cash equivalents

11. Other current assets

12. Share capital

13. Reserves

14. Carryforwards

15. Medium- and long-term loans

18. Provisions for other risks and charges

19. Accounts payable

21. Other current liabilities

NOTES TO THE INCOME STATEMENT23. Provision of services

24. Other operating revenues and gains

28. Staff expenses

29. Depreciation

30. Other operating expenses and losses

31. Financial income

33. Non-operating income

35. Income tax

OTHER NOTES RELATING TO THE FINANCIAL POSITION AND OPERATING INCOME38. Events after the balance sheet date

40. Balances and transactions with related entities



FOREWORD1. Activity1.1 Brief description of the company

Angola Cables SA (hereinafter “Angola Cables” or “Company”) is a public limited company incorporated by

a public deed dated 4 June 2009, in Luanda, at the Notary Office of the GUE (Guiché Único da Empresa). The

following stakes are held in the company: 51% by Angola Telecom, 31% by Unitel, 9% by MS Telecom, 6% by Movicel,

and 3% by Mundo Startel, as set out in note 12.

The company’s corporate object consists in the sale of international transmission capacity to telecommunications

operators to carry the voice and data traffic generated or received within their networks. The West African Cable

System (WACS) is a 14,500 km submarine cable between South Africa (Yzerfontein) and the United Kingdom

(London), connecting 14 countries along the West African coast. It entered into service in May 2012 and is a

consortium, Angola Cables being one of the four largest WACS investors and currently holding 11.2% of the system’s

economic rights. MONET is a fibre optic submarine cable system between the United States and Brazil, constructed

by Angola Cables in collaboration with Google (USA), Algar Telecom (Brazil) and Antel (Uruguay), Angola Cables

owning two fibre optic pairs with a capacity of 24 Tbps, which were completed in February 2018. The South

Atlantic Cable System (SACS) is the name of the 6,165 km submarine cable exclusively owned by Angola Cables,

which links Angola (Sangano) and Brazil (Fortaleza) with 4 fibre optic pairs and a capacity of 40 Tbps. It is the first

intercontinental submarine cable in the South Atlantic, completed on 01.01.2019.

2. Accounting policies adopted in the preparation of the financial statements2.1 Basis for presenting the financial statements

The financial statements were prepared in accordance with the General Accounting Plan (GAP), approved by

Decree Law no. 82/01 of 16 November, which applies to commercial companies and public companies that operate

in Angola or other countries and have their headquarters in Angola.

The financial statements, which include the balance sheet, income statements by nature, the cash flow

statement and the notes to the accounts, were drawn up in accordance with the principles of continuity and

accrual in which items are recognised as assets, liabilities, equity, earnings and expenses when they meet the

definitions and recognition criteria for these elements in the GAP, in accordance with the qualitative features of

relevance, reliability, faithful representation, economic substance, neutrality, prudence, and completeness in all

material aspects.

The financial statements were also prepared in accordance with the accounting principles of consistency,

materiality, no-netting, and comparability.

No derogations were made from the GAP directives. The International Financial Reporting Standards (IFRS)



are also used in matters not covered by the GAP or when the former provides more reliable financial information.

The notes in the financial statements were numbered in accordance with the official plan, although they may

not run in sequence. When they were not applicable they were omitted, since they were not relevant to the reading

of the financial statements.

2.2 Valuation bases used in preparing the financial statements

The financial statements as at 31 December 2019 show a negative equity of AOA 28,772,412,877 and current

liabilities of AOA 26,130,438,447 in excess of current assets in the amount of AOA 15,018,986,229. Considering that

a significant portion of the short-term liabilities relate to debt service and interest payments, the company is in

negotiation with the BDA (Development Bank of Angola) regarding an extension of the repayment term for loans

relating to the construction of the MONET and SACS cables, the immediate objective being to meet short-term cash

requirements. Additionally, the shareholders are currently discussing ways to recapitalise the Company, including a

capital increase, which also aims to restore at least 2/3 of the share capital under Article 37 of the Companies Act.

The financial statements have been prepared on a going concern basis, which depends on the success of the

recapitalisation measures under discussion, the future success of the company’s operations, the success of the bank

debt renegotiation and the ability to raise the funds necessary to ensure the normal functioning of the Company.

Preparation of financial statements in accordance with the GAP requires Management to make judgements,

estimations and assumptions that influence the application of the accounting policies and reported amounts of

assets, liabilities, revenues and expenses. Estimates and associated assumptions are based on experience and

other factors considered reasonable in context and that form the basis for judgements on the values of assets and

liabilities that are not readily apparent from other sources. Actual results may differ from the estimates. The issues

that require a greater level of judgement or complexity or where assumptions and estimates are considered to be

significant are presented in note 2.2.2 – Relevant accounting estimates and judgements.

2.2.1 Recognition criteria and specific valuation bases

Tangible assets Tangible assets comprise fixed and movable physical assets used by the Company during its operations, which

are not destined to be sold or transformed and have a period of use greater than one year.

The tangible assets acquired are recorded at their acquisition price, which includes their purchase price,

including import rights and non-reimbursable purchase taxes (which include liabilities/provisions estimated by

management with respect to possible industrial tax withholdings), after deducting discounts and reductions, and

any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable

of operating in the intended manner, deducting accumulated depreciation and extraordinary amortisations. On



the specific issue of investments made in the WACS submarine cable, the values recorded under tangible assets

correspond to the Company’s share in the overall investments made by the consortium.

Subsequent costs are included in the carrying value of the asset or recognised as separate assets, as

appropriate, only when future financial benefits are likely to fall on the company and their respective cost can be

reliably measured.

The main spares and reserve equipment are classified as fixed assets when the Company expects to use them

during more than one period.

• Improvements are only recognised as assets when the expenditure improves the condition of the asset beyond its

originally evaluated level of performance, including:

• Modification of an element of an installation in order to prolong its useful life, including an increase in capacity;

• Replacement of machine parts to achieve a significant improvement in the quality of production;

• Adoption of new production processes that allow a significant reduction in the previously evaluated operating costs

Maintenance and repair costs are recognised as an expense in the financial statements if they have been made

to restore or maintain the future economic benefits of the asset. Maintenance and repair costs aimed at restoring

the future economic benefits of the asset, the losses on which had already been considered at the initial record

date, are capitalised provided that the recorded amount:

• Does not exceed the recoverable amount of the asset;

• Can be recovered from the future use of the asset.

Replacement costs are recognised as an expense in the financial statements because they are aimed at

maintaining the future economic benefits of the asset.

The company analyses the impairment of tangible assets whenever events and circumstances may indicate

that the book value of an asset exceeds its recoverable amount, any impairment being recognised in the income

statement, except when the asset has been previously revalued. In this case, the impairment identified is covered

by the revaluation reserve in the first instance.

Tangible assets in progress reflect fixed assets that are still under construction and are recorded at acquisition

cost. They become tangible assets and begin depreciating at the moment the investment projects are available for

use.



Financial charges relating to loans obtained to fund ongoing investment, as well as unfavourable exchange rate

balances calculated in relation to monetary liabilities directly related to ongoing investments, are capitalised in full

until their availability for use.

The useful life of a fixed asset is the period during which a depreciating asset is expected to be used by the

company. Land does not depreciate since it has an unlimited useful life.

The amounts shown under the Land item that correspond to the acquisition of surface rights are being

depreciated for the duration of the respective associated contracts.

Depreciation in tangible assets are calculated according to the straight-line method, in accordance with the

following periods of useful life expected of the assets, according to the law in force in each financial period:

Losses resulting from the retirement of a tangible fixed asset are determined by the value for which it is recorded

(gross value deducted from the corresponding depreciation) and are recognised in the financial statements.

Gains or losses arising from the disposal of a tangible fixed asset are determined by the difference between the

estimated net income from the disposal and the amount for which the asset is recorded, being recognised as gains

or losses in the financial statements, as appropriate.

Intangible assetsThe company’s intangible assets are recorded at acquisition price minus the respective accumulated

amortisations and extraordinary amortisations.

The Foundation assesses for impairment whenever events or circumstances indicate that the book value of an

asset exceeds its recoverable value. If this difference is found to exist, it is recognised in the income statement. The

recoverable amount is determined as the greater of the net selling price or its value in use, calculated on the basis

of the current value of the estimated future cash flows obtained from the continued use of the asset and its sale at

the end of its useful life.

Intangible assets are amortised on a straight-line basis for their duration period, which is 6 years on average,

with the exception of the license to operate telecommunications services, which has a duration of 14 years, in

Buildings and other constructions

Basic equipment

Loading and transportation equipment

Administrative equipment

Other tangible assets

Class Useful life

20 - 25

4 - 10

4

3 - 10

3 - 10

Depreciation Rate

4% - 5%

10% - 25%

25%

10% - 33,33%

10% - 33,33%



accordance with regulations.

Investments in subsidiaries and associatesInvestments in subsidiaries over which the company has direct or indirect control are recorded at acquisition

cost, minus any possible contingent losses. Control is presumed to exist when the company holds more than

half the voting rights or when it has the power to govern the financial and operating policies of a company or an

economic activity in order to obtain benefits from it, even if it holds less than a 50% stake.

Financial investments in associates are recorded at their acquisition cost. Associates are entities over which

the company has significant influence without having control over financial and operating policies. The company

is deemed to have significant influence when it has the power to exercise more than 20% of the associate’s voting

rights. When the company holds less than 20% of the voting rights, it is deemed not to have a significant influence,

except when this influence can be clearly demonstrated.

Significant influence is usually demonstrated in one or more of the following ways:

• Representation on the board of directors or equivalent governing body;

• Involvement in defining policies, including involvement in decisions on dividends and other distributions;

• The existence of material Transactions between the company and the associate;

• Interchange of managerial personnel;

• Provision of essential technical information.

Accounts receivableReceivables include sums due from customers and other debtors, as well as state credits relating to retentions

and interim payments.

In the first instance, receivables are recognised as the lower amount between their nominal value and their net

realisable value and are included on the balance sheet, deducted from any associated provisions for doubtful debts.

Provisions for identified doubtful debts are charged against income when there is objective evidence that the

total amount owed, with respect to the original conditions of the receivables, will not be received. The charge is

subsequently reversed if there is a reduction in the estimated losses in a subsequent period.

In the case of receivables relating to shareholder customers, the company does not consider aged balances to be

an effective credit risk, which is why there are no doubtful debt provisions for these sums.



Cash and Cash EquivalentsCash and cash equivalents include cash on hand, bank deposits, and other short-term, highly liquid investments

with a maturity up to three months that are readily convertible to known amounts of cash and which are subject to an

insignificant risk of changes in value.

Foreign currency balances and transactionsAssets and liabilities in foreign currencies are converted into kwanzas (AOA) at the exchange rate on the balance

sheet date. The exchange rates used for converting receivables or payables in foreign currency on the balance sheet

date were as follows:

United States of America Dollars

European Union Euro

United Kingdom Pound Sterling

Brazilian Real

South African Rand (ZAR)

Currency 2019

504

565

665

121

36

2018

316

362

400

82

22

Exchange rate differences, whether favourable or unfavourable, that arise from fluctuations in the rate between

the transaction dates and the collection, payment, and balance sheet dates, are recorded as profits and/or losses in

the income statements for the accounting period under the foreign exchange gains/losses item.

As for non-monetary items, when a gain or loss is recognised in the results, any exchange rate variations

included in this gain or loss are recognised in the results. When a gain or loss is recognised directly in equity, the

related foreign exchange rate variations are also recognised in equity.

Other current assetsOther current assets include amounts relating to sums to allocate to future periods. This account records sums

that are to be recognised in future periods, in accordance with the accrual method.

Provisions for other risks and chargesProvisions are recorded when the company has a present obligation (legal or implicit) resulting from a past

event and it is likely that resources will be used to settle the obligation, the amount of which can be reasonably

estimated. The amount of provisions recorded is a best estimate, made by management on the date of reporting,

of the resources necessary for settling the obligation. This estimate is determined by taking into account the risks

and uncertainties associated with each obligation and are based on the assumptions considered most appropriate

by management. Provisions for other risks and charges are subject to revision on a biannual basis, depending on the

forecast for the respective future responsibilities. Provisions for future operating losses are not recognised.



Financing Obtained / Interest and similar expensesFinancing is recognised under liabilities for the nominal amount received, the financial cost of obtained financing

relating to the purchase, construction, and production of tangible fixed assets being capitalised and forming part of

the cost of the asset. The capitalisation of these costs begins after the start of preparations for building activities

or development of the asset and is interrupted by the end of the production or construction of the asset or when

the ongoing project is suspended.

Accounts payableAccounts payable include sums owed to suppliers and the state and are valued at the historical cost of the

transactions. Sums owed in foreign currency are recorded by their value in kwanzas, using the exchange rate in

effect on 31 December. Foreign currency transactions are recorded by their value in kwanzas, using the exchange

rate in effect on the transaction date.

Other current liabilitiesOther current liabilities include payable sums on the expense account whose binding document had not yet

been received at the balance sheet date; they are valued at historical cost. This item also includes income from

service provision agreements which, in some cases, span different financial periods. In these cases, in accordance

with the accrual method, the company defers the income that does not relate to the year in question.

NotesRevenue associated with service provision is recognised in the financial statements according to the stage of

completion of the service provision on the balance sheet date when the outcome of a transaction can be reliably

estimated. The outcome of a transaction can be reliably estimated when all the following conditions are met:

• The amount of revenue can be reliably measured;

• It is likely that the economic benefits associated with the Transactions will flow into the Company;

• The stage of completion of the Transactions on the date of the balance can be reliably measured;

• The costs incurred with the transaction and the costs to conclude the transaction can be reliably measured.

Received interest is recognised in accordance with the accrual method, taking into account the sum owed and

the effective rate for the period up to maturity.

The differences between the amounts received and paid and the corresponding income and expenses generated in

accordance with the accrual method are registered under the “Other current assets” and “Other current liabilities” items.

They are not recognised if there are doubts surrounding the collectability of the product or provision of services.


Employee benefits (short term)Short-term employee benefits include salaries, social security contributions, food allowance, authorised and

paid absences, holiday and Christmas pay, and any other retributions occasionally decided by Management.

The obligations arising from short-term benefits are recognised as a cost in the time period the employee

provided the service, on an undiscounted basis against a liability that is extinguished with the respective payment.

In accordance with the applicable labour laws, holiday and holiday pay entitlement for the year, this coinciding

with the calendar year, expires on 31 December every year and is only paid during the following year, meaning the

corresponding costs are recognised as short-term benefits and treated as mentioned previously.

Benefits arising from the termination of employment, whether due to a unilateral decision by the company or

by mutual agreement, are recognised as costs in the year in which they occur.

Fundamental ErrorsFundamental errors are those which have such a significant effect on the financial statements for one or more

previous years that those financial statements cannot be considered to have been reliable at the date of issue. In

this evaluation of errors we took into consideration the nature and magnitude of such errors. No fundamental errors

relating to the financial statements of previous years were identified.

TaxesThe company is subject to the following taxes:

• Social security: this contribution corresponds to 11% of staff remuneration, 3% of which is the responsibility of

the employee;

• Labour income tax (IRT): this tax is retained by the company when processing employees’ wages and is

calculated based on salary. Under Law no. 18/14, of 22 October, 13 variable bands were established, with the

maximum rate being 17%.

• Stamp Duty: this tax is paid monthly and corresponds to 1% of sales and service provision revenue. The tax

payable is calculated based on receipts. However, with the entry into force of Value Added Tax under Law

7/2019 of 1 October 2019, the company only settles Stamp Duty on invoices issued up to 30th September 2019,

upon actual receipt.

• Industrial Tax: Law 19/14, of 22 October, establishes the tax regime for the settlement and interim payment of

Industrial Tax on service agreements (6.5%), using the withholding tax system;

• Industrial Tax: this tax corresponds to 30% of taxable income, based on financial results, adjusted in accordance



with current Angolan tax legislation. The company is required to submit a Declaration of Income from

Collections for the Financial Year (Model 1 – Group A), which is subject to review and correction by the Angolan

tax authorities for a period of five years.

• Excise Duty: the telecommunications services provided by the company are subject to excise duty at a rate of

5% under Executive Decree no. 41/99, of 10 December, revised by Presidential Legislative Decree no. 7/11, of

30 December; However, with the entry into force of Value Added Tax under Law 7/2019 of 1 October 2019, the

company only settles excise duty on invoices issued up to 30 September 2019, upon actual receipt.

• Value Added Tax: as from 1 October 2019, telecommunications services provided by the company within

national territory and to national entities are subject to VAT at a rate of 14%, under Law 7/19 of 24 April 2019

and its amendment, Law 17/2019 of 13 August. The company applies the general VAT rate.

• Property Tax: this tax corresponds to 15% of property leases and rentals agreed by the company, in accordance

with Law no. 18/11, of 21 April;

• Special Contribution on Exchange Transactions for Current Invisibles: this 10% tax approved under Presidential

Legislative Decree no. 2/15 of 29 June, is levied on transfers made in relation to service contracts for technical

support or foreign management

• There are various Transactions and calculations for which determination of the final amount of tax payable

is uncertain during the normal business cycle. Other interpretations and estimates could lead to a different

amount for the tax payable on current profits that is recorded for the year. In Angola, the tax authorities are

entitled to review the company’s determination of its taxable earnings for a period of five years. As a result, it

is possible that additional taxes may be assessed as a result of differences in the interpretation of tax laws. The

company recognises liabilities for additional tax assessments that may arise from reviews by the tax authorities.

When the final result of these estimates is different from the values initially recorded, the differences will have

an impact on income tax for the period in which the discrepancies are identified.

The Board of Directors is convinced that there are no relevant fiscal responsibilities, real or contingent, that

have not been carried and that the tax authorities will make no corrections to the taxable amount of any material

bearing on the company accounts.

Subsequent eventsEvents after the balance sheet date that provide additional information about conditions that existed at the

balance sheet date are reflected in the financial statements If there are materially relevant events after the balance

sheet date, they are disclosed in the annex to the financial statements.



2.2.2 Relevant accounting estimates and judgements

In preparing the financial statements, the Board of Directors is required to make judgements and estimates

when making decisions regarding certain accounting processes which impact on the total reported values of the

assets, liabilities, equity, earnings, expenses, and disclosures at the balance sheet date. Results and actual effects

at the closing date of transactions may differ from any estimates and judgements made, particularly regarding the

effect of actual expenditure and earnings.

Estimates are determined by management judgements and are based on:

• The best information and knowledge of current events available at the time, in some cases supported by

reports from independent experts;

• The actions that the Company believes it is able to carry out in the future with respect to the situations that

are subject to estimation.

The main accounting estimates and judgements used in applying the accounting policies are discussed in this note

in order to improve the understanding of how their application affects the reported results and disclosures. A more

detailed description of the main accounting policies employed by the Company is given in note 2.2.1 of this Annex.

If one considers that in some situations there are alternatives to the accounting policies adopted by the

Company, the reported results might have been different if a different policy had been chosen. The Board of

Directors believes that the choices made are appropriate and that the financial statements provide an adequate

picture of the Company’s financial position and results in all materially relevant respects. The results of the following

alternatives analysed are presented only in order to help the reader understand the financial statements and do not

intend to suggest that other alternatives may be more appropriate.

Impairment of non-current assetsTangible assets are revised for impairment whenever there are facts or circumstances that indicate that their

net value may not be recoverable. The Board of Directors is of the understanding that, as at 31 December 2019,

there are no events or circumstances that could lead to the existence of any impairment indicators.




NOTES TO THE BALANCE SHEET4. Tangible assets4.1 Composition

As at 31 December 2019 and 31 December 2018, the composition of the “Tangible assets” item was as follows:

Net Value Gross value

354.269,262

73.098.527,465

2.759.958,850

430.476,031

53.787,872

70.813,762

407.835,551

77.175.668,792

Accumulated depreciation

22.017,234

6.300.516,546

861.775,716

352.455,134

-

52.341,773

77.243,155

7.666.349,558

332.252,028

66.798.010,919

1.898.183,133

78.020,897

53.787,872

18.471,989

330.592,396

69.509.319,235

Items

Period ended 31.12.2019

Land and natural resources


Basic equipment


Construction in progress

Transport equipment


Total

347.168,029

32.819.326,870

774.034,634

461.764,403

39.483.222,067

89.863,640

419.984,665

74.395.364,309

18.347,695

2.722.969,279

317.749,437

310.799,965

-

60.663,291

44.756,066

3.475.285,732

328.820,334

30.096.357,592

456.285,197

150.964,439

39.483.222,067

29.200,349

375.228,599

70.920.078,577




Basic equipment





Total

4.2 Composition by valuation criteria adopted

TotalHistorical cost

354.269,262

73.098.527,465

2.759.958,850

430.476,031

53.787,872

70.813,762

407.835,551

77.175.668,792

354.269,262

73.098.527,465

2.759.958,850

430.476,031

53.787,872

70.813,762

407.835,551

77.175.668,792

Revaluation value

-

-

-

-

-

-

-

-

Items




Basic equipment





Total


During the period ended 31 December 2019, the changes in the gross value of tangible assets were as follows:

4.3 Changes in gross value during the year




Basic equipment



Transport Equipment


Total

Rubricas

347.168,029

32.819.327,870

774.034,633

461.764,403

39.483.222,067

89.863,640

419.984,665

74.395.364,309

Openingbalance

354.269,261

73.098.527,464

2.759.958,850

430.476,031

53.787,872

70.813,762

407.835,551

77.175.668,792

Closingbalance

-

-

- 46.023,422

- 15.133,894

-

- 21.836,050

-

- 82.993,567

Disposals

-

-

46.023,422

- 21.300,535

-

-

- 24.723,087

-

Regulariz.

-

36.592.756,171

912.388,059

-

- 39.505.144,230

-

-

-

Transfers

7.101,232

1.686.444,423

1.073.536,158

5.146,057

75.710,035

2.786,172

12.573,973

2.863.298,050

Increases

-

-

-

-

-

-

-

-

Revaluations

The “Land and natural resources” item includes investment through the purchase of land and surface rights.

The amount recorded relates to surface rights for the land at the Sangano station and the Angonap station in

Talatona. The increase in the acquisition value refers to expenditure on the land legalisation process.

The “Buildings and other constructions” item includes the investment in the WACS (West Africa Cable System)

submarine fibre optic cable, Angonap, and the Sangano station. The increase/transfers recorded refer mainly to

the SACS (South Atlantic Submarine Cable System) investment and improvements at the Sangano station relating

to the Rainwater project.

The “Basic equipment” item includes investment in transmission equipment for the construction of POPs (Points

of Presence) aimed at improving the Company’s IP network. The increase recorded refers to routers associated with

the investment in the SACS submarine cable.

The “Administrative equipment” item consists mainly in computers, cabinets, printers, and other furniture and

hardware, devoted to the company’s normal operations.

The “Other tangible assets” item essentially relates to the purchase of marine signalling material for the beach

in Sangano, where the WACS and SACS cable stations are situated.

At 31 December 2019, “Construction in Progress” consisted of the investment in the Sangano roof waterproofing

project.




The depreciation recorded under “Land and natural resources” corresponds to the number of years granted

under the respective surface rights.

The “Buildings and other constructions” item includes the investments in the WACS (West Africa Cable System)

submarine fibre optic cable and the SACS (South Atlantic Submarine Cable System), Angonap, and the Sangano

station. The significant change in depreciation is related to the beginning of depreciation on the SACS submarine

cable investments (1 January 2019).

The adjustments recorded under “Basic equipment” refer to movements from the allocation and disaggregation

of assets from one item to another in order to dispose of the assets in question – including the sale of POP to Tel

Cables (Pty) LTD.

4.4 Changes in accumulated depreciation during the year

Items Closingbalance

22.017,234

6.300.516,546

861.775,716

352.455,134

52.341,773

77.243,155


Buildings and other structures

Basic equipment

Office equipment

Transport Equipment


Total

Initial balance

18.347,695

2.722.969,279

317.749,436

310.799,965

60.663,291

44.756,066

3.475.285,732 7.666.349,558

Write-offs/ Transf.

-

-

-

- 33.583,761

- 21.836,050

- 5.838,798

- 61.258,609

Adjustments

-

21.694,667

-

-

-

-

21.694,667

Supplement

3.669,539

3.555.852,600

544.026,280

75.238,930

13.514,532

38.325,887

4.230.627,767

-

-

-

-

-

-

Revaluations

-

5. Intangible assets5.1 Composition

As at 31 December 2019 and 31 December 2018, the composition of the “Intangible assets” item was as follows:

Net ValueGross value

1.307.216,748

1.213.881,563

-

-

1.307.216,748

1.213.881,563

Accumulated depreciation

688.734,654

570.725,583

-

-

688.734,654

570.725,583

618.482,094

643.155,980

-

-

618.482,094

643.155,980

Items



Other intangible assets




Total

Total


Initial balance

1.21.881,563

-

1.21.881,563

Increases

93.335,185

-

93.335,185

Decrease

-

-

-

Final balance

1.307.216,748

-

1.307.216,748

Items




Total

1.003.672,586

15.491,337

1.019.163,923

193.860,731

16.348,245

210.208,976

- 16.348,246

31.839,582

15.491,337

1.213.881,563

-

1.213.881,563

Período findo em 31.12.2018



Total

5.2 Changes in gross value during the year

Changes up to 31 December 2019:

Initial balance Increases Decrease Final balanceItems

5.3 Changes in accumulated depreciation during the year

During the year ended 31 December 2019, the changes in accumulated depreciation were as follows:

570.725,583

118.009,071

-

688.734,654



570.725,583 118.009,071 - 688.734,654TOTAL

389.304,094

181.421,489

-

570.725,583



389.304,094 181.421,489 - 570 725 583 Total


6. Investments in subsidiaries and associates6.1 Composition

As at 31 December 2019 “Investments in subsidiaries and associates” item had the following breakdown:

Gross value

628.775,600

14.025.765,990

14.654.541,590

Increase

-

10.911.800,262

10.911.800,262

Decrease

-

-

-

Net Value

628.775,600

24.937.566,252

25.566.341,852

Items


Subsidiaries:

Equity holdings

Loans

Total



The “Equity holdings” item refers to the company’s holding (99.99%) in Angola Cables Holdings LTDA (“ACH”),

which was incorporated at the end of 2014, within the scope of the investment projects in the Monet and SACS

submarine cables, and the holding (100%, equivalent to AOA 933,600 (50,000 SEK)) in Tele Cables Sweden AB,

incorporated on 13 March 2017, within the context of internationalisation and tax efficiency. The amount of loans

granted as of 31 December 2019 is as follows.

31/12/2019

2.207.726,751

22.719.350,115

10.489,386

24.937.566,252

31/12/2018

1.385.389,635

12.633.794,071

6.582,284

14.025.765,990

Related Party

Angola Cables Brazil

Angola Cables Holding

TeleCables Sweden AB

Total

“Loans” relates to (paid) financing for ongoing projects by both ACH and ACB (Angola Cables Brasil), the latter

being 99.99% owned by ACH (see Note 40).

Angola Cables Holdings LTDA is a limited liability company with headquarters at Avenida Presidente António

Carlos, no. 615, Rooms 904 and 905, Rio de Janeiro, CEP: 20020-010 (Brazil).

Tele Cables Sweden AB is a limited liability company with headquarters at Advokatfirman Glimstedt, Box 2259,

403 14 Gothenburg (Sweden), and 100% owned by Angola Cables S.A.


9. Other non-current assets and accounts receivable9.1 Composition

As at 31 December 2019, the “Accounts receivable” item had the following breakdown:

The values under the “Other debtors – Group entities” item relate to income from the wholesale agreement

made with Mundo Startel shareholders, which was in force between 2012-2014.

Current

5.320.944,532

2.664.345,754

-

9.240,512

- 905.494,151

264.909,086

35.364,841

17.593,826

7.406.904,400

Maturity up to 5 years

-

-

-

-

-

-

-

-

-

Maturity more than 5 years

-

-

-

-

-

-

-

-

-

Total

-

-

-

-

-

-

-

-

-

Items


Gross value:

Customers – Current:

Related parties (Note 40)

Suppliers – Debit Balance

Other debtors

Provisions For Doubtful Debts

External Customers

Group entities (Note 40)

Personnel

Total

3.344.175,179

8.886,906

4.519,380

- 136.621,492

1.679.427,479

48.121,279

39.084,973

4.987.593,703

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Non-current



Gross value:

Customers – Current:

Related parties (Note 40)

Suppliers – Debit Balance

Other debtors


External Customers


Personnel

Total



9.2 Changes in the provisions during the year

Initial balance

136.621,492

136.621,492

Increase

768.872,659

768.872,659

Decrease

-

-

Closing balance

905,494,151

905,494,151

Items

Customers – Current


Total

10. Cash and cash equivalents10.1 Composition

The “Cash and cash equivalents” item essentially involves demand deposits held by the company in banking

institutions on 31 December 2019, and which have the following breakdown:

31/12/2019

-

3.079.853,439

131,552

3.079.984,991

31/12/2018

1.549.269,410

4.421.214,384

155,782

5.970.639,575

Items

Term deposits

Demand deposits

Cash

Total

11. Other current assets11.1 Composition

As at 31 December 2019, the “Other current assets” item comprised the following:

31/12/2019 31/12/2018Items

1.001.660,646

3.059.126,094

4.060.786,740

-

934.827,531

934.827,531

Unbilled revenue:

Provision of Services

Interest (Note 40)

650,000

403.409,696

67.250,401

471.310,097

4.532.096,838

-

167.372,435

-

167.372,435

1.102.199,966

Deferred costs:

Rent

Supplies and External Services

Insurance

Total

The “Unbilled revenue” item refers to accrued income from services rendered under the contract with Tele Cables

Sweden AB, with the amount of AKZ 949 606 543 representing 95% of the item (see Note 40), and WIOCC.


12. Share capital12.1 Composition of share capital

As at 31 December 2019, the company’s share capital, amounting to AOA 390,000,000 or USD 5,000,000,

was fully subscribed and paid up. The Company’s capital is broken down as follows:

12.2 Supplementary capital contributions

As at 31 December 2019, the “Supplementary capital contributions” item comprised the following:

The share capital is divided into 1,000,000 shares, each with a value of AOA 390, which are held as follows:

Entities

Capital:

Angola Telecom - E.P.

Mercury - Serviços de telecomunicações, S.A.

Mundo Startel, S.A.

Unitel, S.A.

Movicel - Telecomunicações, Lda.

Total

51%

9%

3%

31%

6%

100%

% held

510.000

90.000

30.000

310.000

60.000

1.000.000

Number of Shares

198.900.000

35.100.000

11.700.000

120.900.000

23.400.000

390.000.000

Value Kwanzas

Entities

Supplementary capital contributions:



Mundo Startel, S.A.

Unitel, S.A.


Total

6.691.200,000

1.180.800,000

276.206,741

4.067.200,000

787.200,000

13.002.606,741

6.691.200,000

1.180.800,000

276.206,741

4.067.200,000

787.200,000

13.002.606,741

31.12.2019 31.12.2018

Items

Capital

Supplementary capital contributions

Total

13.002.606,741

390.000,000

13.392.606,741

Initial balance

-

-

-

Increases

-

-

-

Decreases

13.002.606,741

390.000,000

13.392.606,741

Final balance

The “Deferred costs” item relates to deferrals for property rents, insurance, and others, the amounts of which will

be recognised in future financial years.




13. Reserves13.1 Composition

Supplementary capital contributions are in cash, free of charge and they do not accrue interest. The provisions of

the supplementary capital contribution scheme provided for in Articles 231 to 235 of the Companies Act will apply

to repayment.

12.4 Changes during the year

During the year ended 31 December 2019, movements under the “Supplementary Capital Contributions” item

were as follows:

The overall amount of “Supplementary capital contributions” relates to the commitment towards funding the

WACS submarine cable, up to a limit in kwanzas equivalent to 90,000,000 US dollars, and the SACS and MONET

submarine cables, up to a limit in kwanzas equivalent to 40,000,000 US dollars.

At 31 December 2019, a further 121,393,259 kwanzas of supplementary capital contributions were still to be paid by

the shareholder Mundo Startel as part of a commitment to participate in the financing of the WACS submarine cable.

There were no changes to the reserves during the period.

Reserve created under current legislation to cover possible losses.

Entities Final balance



Mundo Startel, S.A.

Unitel, S.A.


Total

Initial balance

6.691.200,000

1.180.800,000

276.206,741

4.067.200,000

787.200,000

13.002.606,741

6.691.200,000

1.180.800,000

276.206,741

4.067.200,000

787.200,000

13.002.606,741

Increases

-

-

-

-

-

-

Decreases

-

-

-

-

-

-

Items Final balance

Legal reserve

Total

Initial balance

78.000,000

78.000,000

78.000,000

78.000,000

Increases

-

-

Decreases

-

-


14. Carryforwards

As at 31 December 2019, the “Carryforwards” item comprised the following:

15. Medium- and long-term loans15.1 Composition

As at 31 December 2019, the “Medium/long-term loans” item comprised the following:

Items

Initial balance:

Transfer of results from the previous financial year

Other movements

Total

- 732.430,104

-

- 732.430,104

Initial balance

-

-

-

Increases

4.633.747,339

-

4.633.747,339

Decreases

- 5.366.177,442

-

- 5.366.177,442

Final balance

Current Maturity up to 5 years TotalItems

5.411.606,446

-

5.411.606,446

44.442.791,207

-

44.442.791,207


62.683.293,041

4.319.830,007

67.003.123,049

106.126.084,241

4.319.830,007

110.445.914,256

Bank loans

Other loans

Total

Non- current

The “Bank loans” item corresponds to loans from a credit line established between BDA (Development Bank

of Angola) and Japanese financial institutions (JBIC and SMBC) for financing the development of the SACS cable,

to a total amount of USD 109,795,000, and a bank loan from BDA in the total amount of USD 130,000,000 for

financing the MONET cable.

The values under the “Other loans (Shareholders)” item relate to sums paid by shareholders in excess of their

share of the maximum supplementary capital limit of 9,000,000,000 kwanzas (WACS), which are recognised as

“Shareholder Loans”.




The division between capital and interest, per shareholder, on 31 December 2019 was as follows:

These loans have a maturity of over 5 years and incur annual interest corresponding to the 6-month LIBOR

rate, plus 3%, as provided for in the company’s shareholder agreement.

Description 31.12.201931.12.2018

Capital

Unitel, S.A.



Mercury - Serviços de Telecomunicações, S.A.

1.408.779,690

621.476,047

708.663,403

581.453,327

3.320.372,467

1.408.779,690

621.476,047

708.663,403

581.453,327

3.320.372,467

Increases

-

-

-

-

-

Decreases

-

-

-

-

-

Total

Interest

Unitel, S.A.



Mercury - Serviços de Telecomunicações, S.A.

370.007,544

131.923,761

189.456,459

124.107,528

815.495,292

4.135.867,759

448.059,715

166.356,082

228.719,317

156.322,427

999.457,540

4.319.830,007

78.052,171

34.432,321

39.262,858

32.214,898

183.962,248

183.962,248

-

-

-

-

-

-

15.2 Changes during the year

As at 31 December 2019, changes under this heading were as follows:

Items

Bank loans

Bank loans

Other loans

MONET

Total

SACS

Total

4.135.867,396

69.202.951,001

73.338.818,397

31.12.2018

41.126.930,000

28.076.021,001

69.202.951,001

183.962,611

9.560.194,589

9.744.157,200

Increases

-

9.560.194,589

9.560.194,589

-

5.817.831,184

5.817.831,184

Decreases

-

5.817.831,184

5.817.831,184

-

38.592.376,289

38.592.376,289

Exchange rate adjustment

24.412.195,900

14.180.270,389

38.592.376,289

4.319.830.007

111.537.690.695

115.857.520.702

31.12.2019

65.539.035,900

45.998.654,795

111.537.690,695


15.3 Financing conditions

The financing has the following conditions:

I) The amount of 9,560,194,589 kwanzas recorded under “Increases” in bank loans refers to capital disbursements

BM7, BM8 and BM9, which were made in 2019 in relation to ongoing financing (SACS);

II) The amount of 5,817,831,184 kwanzas recorded under “Decreases” in bank loans refers to capital repayments and

relates to 3 instalments: 14 October 2018, 4 April 2019 and 14 October 2019;

III) The amount of 38,592,376,289 kwanzas recorded under “Exchange Rate Adjustment” of bank loans refers to

exchange losses due to the revaluation of monetary liabilities;

Bank loans

MONET

SACS

Other loans

Total

Items

24 months

24 months

RepaymentTerm

65.539.035,900

55.352.757,181

4.319.830,007

125.211.623,089

Maximum limit (AKZ)

65.539.035,900

45.998.654,795

4.319.830,007

115.857.520,702

Amount used (AKZ)

130.000,000

109.795,000

12.384,053

252.179,052

Maximum limit (USD)

Libor 6M + 6%

4,87% / 3,40%

Libor 6M + 3%

Interest Rate

18. Provisions for other risks and charges18.1 Changes in these provisions during the year

As at 31 December 2019, the “Provisions for other risks and charges” item was as detailed in the table below:

Items Initial balance Increases Decreases Final balance

2.464.342,239

2.464.342,239

444.847,347

444.847,347

-

-

2.909.189,585

2.909.189,585


Provisions for other risks/charges (Note 33)

Total

1.706.018,021

6.634.702,498

758.324,218

1.648.018,911

-

-

2.464.342,239

8.282.721,409


Provisions for other risks/charges (Note 33)

Total

These provisions relate to the company recognising full responsibility for withholdings with respect to industrial

tax on the acquisition of services abroad, relating fundamentally to the construction of cables.




Current Suppliers

Group (Note 40)

External Suppliers

Invoices received and pending approval

Customers – Credit Balances

Other credit balances


State (a)

Personnel

Total

Items

2.181.293,418

1.487.478,651

-

84.380,397

9.418,449

93.190,624

500.244,619

87.077,100

4.443.083,258

Current 2018TotalNon-Current

-

-

-

-

-

-

-

-

-

1.417,678

6.119.289,481

231.647,837

4.830.547,366

-

8.483,061

303.161,773

-

744.031,767

19. Accounts payable19.1 Composition

As at 31 December 2019 and 31 December 2018, the “Accounts payable” item related to current balances and

had the following breakdown:


-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Maturity upto 5 years

Non- current

The “Non-group Suppliers” item comprises payables, as detailed below:

Supplier

Current External Suppliers

MONET CBP

Inacom – Instituto Angolano das Comunicações

José Pereira Caldas

Anglobal

DE-CIX

Others

Alcatel Submarine Networks

WIOCC Africa’s Carriers’ Carrier

ORACLE SYSTEMS LIMITED, P.O.

CIVEP CONTRAVEN ANGOLA, SA

Total

403.753,755

242.476,876

31.257,709

36.889,389

26.650,840

294.696,479

354.207,555

37.297,565

31.212,860

25.585,317

1.484.027,714

Amount

27%

16%

2%

2%

2%

20%

24%

3%

2%

2%

100%

%


At 31 December 2019 and 31 December 2018, the “State and other public entities” heading comprised the

following:

Items

Income tax (Note 35)

Withholding tax (Law 19/14)

Labour income tax

Value added tax

Stamp duty

Total

Excise Duty

Social security contributions

IO – Special contribution

11.641,158

-

54.761,265

95.289,657

2.060,606

500.244,619

333.389,673

11.892,342

- 8.790,080

31.12.2019

393.229,029

146.981,627

41.001,112

-

33.882,942

744.031,767

140.489,844

4.652,574

- 16.205,361

31.12.2018

The “Supplier expenses” item relates to additional sums relating to costs incurred in the year ended 31

December 2019 and whose invoices had not been received or were in the process of being discussed/approved by

the company after the balance sheet date.

21. Other current liabilities21.1 Composition

At 31 December 2019 and 31 December 2018, the “Other current liabilities” item comprised the following:

Items

Accrued expenses:

Remuneration

Supplier expenses

Deferred income:

Total

Interest (Note 15)

Multi-annual Contracts

762.415,759

1.723.182,992

2.334.704,858

16.275.748,742

11.455.445,132

13.941.043,884

2.334.704,858

31.12.2019

342.657,241

732.988,388

2.279.488,886

8.251.329,613

4.896.195,097

5.971.840,727

2.279.488,886

31.12.2018




The “Supplier expenses” item relates to additional sums relating to costs incurred in the year ended 31

December 2019 and whose invoices had not been received or were in the process of being discussed/approved by

the company after the balance sheet date.

The estimates essentially relate to sums due to INACOM for concession fees and universal service contributions,

as well as subcontracts with Angola Telecom, and costs relating to maintenance, repairs, and various other services,

as detailed in the table below:

Items

Supplier expenses:

INACOM - INSTITUTO ANGOLA

Anglobal

VCS Limited

Alcatel Submarine Networks

ORACLE SYSTEMS LIMITED

Angola Telecom

BROSETA, ROQUETTE MORAIS E GUERRA

MSTelcom

UNITEL, SARL

Others

Total

621.135,619

125.638,332

80.982,651

67.810,631

78.141,638

10.781,907

1.723.182,992

140.901,597

79.975,628

67.010,886

450.804,103

Amount

36%

7%

5%

4%

5%

1%

100%

8%

5%

4%

27%

%

23. Provision of services23.1 Provision of services by market

The amounts under the “Provision of Services” item for the periods ended 31 December 2019 and 31 December

2018 are as follows:

Items

Domestic market 15.577.940,018

31.12.2019

9.980.858,637

External market

Total

1.633.868,684

17.211.808,702

1.309.555,004

11.290.413,640

31.12.2018


The “WACS landing provider (Sangano)” item relates to operating revenue from the transfer of the Sangano

terminal station to the WACS consortium for the landing of the fibre optic submarine cable. The sums correspond

to contributions towards the operating costs of the station, which are approved annually by the consortium.

Items

Circuit - Wacs

Internet

Circuit - Sacs

Backhaul

Last-mile

Total

Circuit - Monet

Co-location

Others

10.186.401,821

59.053,059

3.707.389,663

87.115,213

39.468,749

17.211.808,702

2.728.146,093

331.845,008

72.389,095

31.12.2019

6.871.051,839

486.771,078

3.325.670,226

94.283,439

97.813,457

11.290.413,640

-

259.535,966

155.287,636

31.12.2018

23.2 Provision of services by activity

For the years ended 31 December 2019 and 31 December 2018, this heading comprised the following:

24. Other operating revenues and gains

As at 31 December 2019 and 30 December 2018, the “Other operating revenues and gains” item had the

following breakdown:

Items

WACS landing provider (Sangano) 375.730,030

31.12.2019

661.315,974

Total 375.730,030 661.315,974

31.12.2018




28. Staff expenses

As at 31 December 2019, the “Staff expenses” item comprised the following:

Items

Remuneration for statutory boards

Health Insurance

Charges on remuneration

Other staff expenses

Subsistence Allowances

Total

Number of Employees

Remuneration - staff

Training

Occupational Accident Insurance

711.508,712

130.686,769

157.326,540

32.257,423

110.144,685

3.153.179,493

111

1.978.863,201

19.166,472

13.225,691

31.12.2019

270.449,550

66.154,090

96.684,086

46.135,522

107.383,184

2.332.998,032

105

1.633.087,440

105.441,385

7.662,775

31.12.2018

The “Other staff expenses” item comprises the following:

Items

Other staff expenses:

House Rental Subs.

Social Protection

Christmas Cards

Funeral Subs.

Medical Assistance

Recruitment

Food

Total

13.081,952

4.725,000

2.678,294

300,000

969,174

8.008,455

2.494,548

32.257,423

Amount

41%

15%

8%

1%

3%

25%

8%

100%

%

Recruitment


29. Depreciation

As at 31 December 2018 and 31 December 2018, depreciation was as follows:

The “Buildings and other constructions” item includes the investments in the WACS (West Africa Cable System)

submarine fibre optic cable and the SACS (South Atlantic Submarine Cable System), Angonap, and the Sangano

station. The significant change in depreciation relates to the beginning of depreciation on the SACS submarine

cable investments as of 1 January 2019.

The “Subcontracts” item relates to connectivity services, which encompass costs incurred with the lease of

third-party transmission circuits, which are necessary to ensure service provision to customers, in particular the

lease of dark fibre between Sangano and Angonap and the lease of local access circuits (Last Mile) in the domestic

market and abroad.

Intangible Assets (Note 5):


Total

118.009,071

4.348.636,838

118.009,071

181.421,489

1.401.151,359

181.421,489

Tangible Assets (Note 4):



Basic equipment




3.669,539

544.026,280

13.514,532

4.230.627,767

38.325,887

3.555.852,600

75.238,930

18.347,695

73.902,900

8.609,053

1.219.729,870

33.847,246

991.118,578

93.904,398

Items 31.12.2019 31.12.2018

30. Other operating expenses and losses30.1 Composition

As at 31 December 2019 and 31 December 2018, the “Other operating expenses and losses” item comprised

the following:

Subcontracts 4.247.825,808 2.171.530,685

Supplies and Third-party Services

Taxes

Total

4.134.877,695

292.984,024

8.675.687,527

3.465.436,826

213.848,498

5.850.816,009


Items 31.12.2019 31.12.2018



30.2 Supplies and third-party services

As at 31 December 2019 and 31 December 2018, the “Supplies and third-party services” item comprised the

following:

Items

Supplies and Third-party Services

Total

Water

Maintenance and repair materials

Monitoring and security services

Fees

Books and technical documentation

Insurance

Fuel and other fluids

Maintenance and repair services

Technical support

Office materials

Leases and rentals

Fast-wearing tools and appliances

Advertising and publicity

Other Services

Communication

Representation expenses

Commission fees

Electricity

Protection, security, and comfort materials

Cleaning, hygiene and comfort

Licenses (INACOM)

Other supplies

Travelling and subsistence allowances

Legal services

15.524,093

61.828,753

1.612.341,361

98.339,319

2.560,274

205.480,491

196.202,340

42.879,196

681.327,886

1.498,418

9.688,537

50,525

181.995,704

3.386 513

46.249,979

8.313,191

22.510,217

1.319,587

620,932

24.686,189

334.368,109

5.110,300

368.829,345

3.022,290

31.12.2019

10.104,067

86.397,758

1.243.792,906

273.169,201

17.276,197

230.980,561

-

37.721 205

581.550,632

3.039,095

15.232,778

4.134.877,695 3.557.236,861

831,070

264.941,796

102.735,909

44.949,747

6.506,747

1.207,066

-

4.535,746

17.316,996

231.201,331

11.808,815

278.681,806

1.762,509

31.12.2018

The “Travelling and subsistence allowances” item relates to company employees’ travel and accommodation

costs during business trips.

The “Advertising and publicity” item relates to the cost of promoting the company’s services and image,

including participation in international telecommunications fairs.


Items

Maintenance and repair:

Total

Wacs / Data Center

Buildings

Monet

Materials

Vehicles

Sacs

Others

678.599,606

448.879,421

2.491,829

15.221,521

1.808.543,701

1.703,903

659.630,238

2.017,183

31.12.2019

745.141,661

133.813,172

16.376,397

105,585,680

1.243.792,906

30,200,843

154.636,867

58,038,286

31.12.2018

Items

Specialised work:

Total

Financial Audit

Marketing Consultancy

Technical Consultancy

Specialised Consultancy

Financial Consultancy

Legal Consultancy

68.654,312

57.638,049

681.327,886

-

328.185,359

41.328,262

185.521,904

31.12.2019

36.565,722

71.290,204

581.550,632

23.835,142

243,807,875

64.009,117

142.042,573

31.12.2018

The “Fees” item relates to expenses arising from various types of consultancy services, including commercial,

legal, technical and specialised, and financial auditing, these being necessary to develop the company’s activity and

internal structure. The breakdown is as follows:


The “Maintenance and repair” item referring to materials and services relates to costs arising from maintaining

the technical facilities, namely the Sangano station and Angonap, as well as the maintenance and repair of the

WACS fibre optic submarine cable. The breakdown is as follows:



Items

Specialised Consultancy:

Total

VCS Limited

Liliana Andersson

Prasad Krishnan

R E Consultoria em gestão empresarial

Dialeto Assertivo - Lda

Jacqueline Sigried Kitching

Jonadab

Estella de Quintal

Avassah Consultoria

Hendrik Stephanus Pretorius

Data Centers Dynamics

Others

125.638,332

36.134,701

14.657,827

28.393,734

12.690,919

3.681,093

18.786,825

5.218,471

328.185,359

48.761,593

21.757,596

6.412,170

6.052,099

31.12.2019

38%

11%

4%

9%

4%

1%

6%

2%

100%

15%

7%

2%

2%

31.12.2018

Specialised consultancy mainly includes the services provided by VCS Limited relating to strategic business

consultancy, those provided by Avassah for business and financial consultancy, and costs arising from specialised

consultancy from freelancers and other miscellaneous services, as detailed below:


31. Financial income

At 31 December 2019, the “Financial Income” item comprised the following:

Items 31.12.2019

Financial Income:

1.314.252,331

35.321.345,766

40,639

37.523.187,190

-

15.650,128

871.898,325

567.220,060

15.334.496,262

-

18.672.014,647

103.487,307

116.263,811

2.550.547,206

183.962,248

5.845.814,116

173.920,944

2.224.420,836

31.12.2018

Interest

Financial investments (Note 40)

Realised

Favourable Exchange Rate Balances

Interest on financial investments

Others

Unrealised

Prompt Payment Discounts

Financial Costs

Interest

Interest on shareholder loans (Note 40)

Interest on financing

Realised

Unfavourable Exchange Rate Balances

Unrealised

Bank charges

64.963.759,163

33.539,145

75.387.853,913

- 37.864.666,723Total

4.360.779,241

21.511.308,738

18.935,241

25.189.132,866

- 6.517.118,219

1.260.547,107

The “Banking services” heading relates to commission costs for international payments, as well as transfer and

administration fees, which are charged by banks.

The “Unfavourable exchange rate balances” and “Favourable exchange rate balances” items refer to gains or

losses, respectively, from exchange rate fluctuations on assets and liabilities denominated in foreign currencies

(mainly EUR and USD), the exchange rate adjustment of loans financing the submarine cables being highly

significant in determining the financial income.

The “Financial Investments” item relates to income from capital investments in the subsidiary Angola Cables

Holdings (“ACH”) – see note 6.




The “Interest on shareholder loans” item relates to interest due on shareholder loans in the form of advances

(see Note 15).

33. Non-operating income

As at 31 December 2019, the “Non-operating income” item comprised the following:

The corrections relating to previous years essentially relate to the costs of services provided to the company

by suppliers and services provided by the company to customers in previous years, which were not duly recorded.

Items 2019

Non-operating Revenues and Gains:

Corrections Relating to Previous Financial Years

Debt Recovery

Provisions

Corrections Relating to Previous Financial Years

Contractual Fines and Penalties

Other Non-operating Costs

Non-operating Costs:

Gains from Fixed Assets

Other Non-operating Revenues and Gains

Bad debts

Other Risks and Charges (Note 18)

728.780,342

4.896,977

916.765,143

768.872,659

57.233,479

1.338.975,469

- 422,210.326Total

63.028,258

120.059,566

511.578,790

1.290,542

-

657.624,119

-

895.861,273

136.621,492

598.658,853

1.379.254,607

- 483.393,334

-

238.237,154

642.146,413

1.349,349

478,500

2018


35. Income tax

In the period ended 31 December 2019, the company shows a tax loss of 36,658,368,956 kwanzas.

For the period ended 31 December 2018, a tax loss of 3,868,021,466 kwanzas was recorded.

Items 2019

Accounting Result

Corrections for tax purposes:

Positive asset variations

Interest on Financing (Note 33)

Income subject to Cap. Inv. Tax (Article 47) ITC

Taxa Nominal de Imposto

Excessive depreciation (Article 29 and 31) ITC

Unforeseen Provisions (Art. 36) ITC

Industrial Tax (Art. 40) ITC

Capital Investment Tax (Art. 40) ITC

Tax on Profits (a)

Tax Payable

Tax borne by the company (Art. 18) ITC

Customer retention

Effective tax rate

Fiscal Penalties (Art. 40) ITC

Other additions

Other risks and charges

Bad Debts (Note 33)

To be added:

Non-taxable income

To be deducted:

Taxable Income (Tax Loss)

Expenses and losses not accepted for tax purposes

Interest on shareholder loans (Note 31)

Corrections from previous years (Note 33)

- 36.876.842,175

-

1.329.902,459

30%

1.548.375,678

1.329.902,459

- 36.658.368,956

-

-

-

0%

- 4.633.747,339

-

786.971,178

30%

Total

1.552.697,051

-

786.971,178

- 3.868.021,466

-

-

-

0%

511.578,790

57.233,479

152.046,599

-

-

1.307,775

4.482,818

1.290,542

51.563,016

768.872,659

-

642.146,413

-

-

173.920,944

598.658,853

-

-

1.349,349

-

136.621,492

-

2018




OTHER NOTES RELATING TO THE FINANCIAL POSITION AND OPERATING RESULTS

36. Off-balance-sheet liabilities

There are no off-balance-sheet liabilities as of 31 December 2019.

38. Events after the balance sheet date

The company is in negotiations to restructure the MONET and SACS financing, meaning the instalments of March

and April 2020 have not been settled, and as a precautionary measure the company has also adhered to the temporary

moratorium of 60 (sixty) days on the payment of loan instalments, in accordance with Presidential Decree no. 82/20

and Instruction no. 04/2020 from the National Bank of Angola (BNA), as part of the government’s economic support

in the face of the COVID-19 pandemic.

The company believes that during the second half of 2020 it will be able to renegotiate the debt in question

and complete the capital increase by its shareholders, thereby being able to honour its banking commitments to the

Development Bank of Angola ( BDA).

With respect to the impact of the COVID-19 pandemic mentioned above, although the company has been forced

to accelerate the process of changing its way of working, having adhered to the practice of working remotely from

home, it has not noticed significant negative impacts on its business, and the forecast is that in the short term sales may

increase, since we also notice a trend towards increased consumption by our customers, leveraged by the way they

have started working. This will require companies to have greater capacity to store data and will lead to an increase in

both voice and data traffic so the company should be able to monitor this situation and transform its customers’ needs

into concrete business opportunities.

39. Aid from the Government and Other Entities

As of 31 December 2019, the company’s financial statements do not show any transactions resulting from aid

provided by the government or other entities.


40. Balances and transactions with related entities

As at 31 December 2019, the Company held significant balances with group companies and related entities.

The details of these balances at those dates were as follows:

Entity

Angola Telecom - E.P

Unitel, S.A.

Mercury - Serviços de

telecomunicações, S.A.

Movicel - Telecom., Lda.

Mundo Startel, S.A.

Tel Cables (Pty) LTD

Tele Cables Sweden AB

Angola Cables Brasil

Total


-

Other debtors (Note 9)

-

-

-

35.364,841

-

-

-

35.364,841

228.719,317

Interest accruals (Note 15)

156.322,427

448.059,715

166.356,082

-

-

-

-

999.457,540

10.781,907

Other Current Liabilities (Note 21)

79.975,628

67.010,886

-

-

-

-

-

157.768,422

2.436.517,892

Totalliabilities

942.313,060

2.068.715,960

787.832,129

728,317

-

-

515.975,113

6.752.082,471

708.663,403


(Note 15)

581.453,327

1.408.779,690

621.476,047

-

-

-

-

3.320.372,467

1.984.212,252

Customers, current

accounts (Note 9)

51.522,118

1.071.021,080

1.070.383,967

422.983,124

112.471,893

243.948,694

364.401,403

5.320.944,532

1.984.212,252

Assetbalances

51.522,118

1.071.021,080

1.070.383,967

458.347,966

112.471,893

243.948,694

364.401,403

5.356.309,373

1.488.353,265

Accounts Payable

(Note 19)

124.561,678

144.865,669

-

728,317

-

-

515.975,113

2.274.484,042

Assets Liabilities


Unitel, S.A.




Mundo Startel, S.A.



Total


-

-

-

-

48.121,279

-

-

48.121,279

189.456,459

124.107,528

370.007,544

131.923,761

-

-

-

815.495,292

-

-

-

-

-

-

-

-

898.119,862

705.560,85

1.838.676,320

753.399,808

-

-

171.758,751

4.367.515,597

708.663,403

581.453,327

1.408.779,690

621.476,047

-

-

-

3.320.372,467

394.763,748

848.848,842

643.154,857

979.665,371

315.107,498

162.634,863

-

3.344.175,179

394.763,748

848.848,842

643.154,857

979.665,371

363.228,777

162.634,863

-

3.229.661,595

-

-

59.889,086

-

-

-

171.758,751

231.647,837




As at 31 December 2019, the Company has the following share capital and supplementary capital contributions:

The details of transactions during the years ended 31 December 2019 and 31 December 2018 are below:


Unitel, S.A.




Mundo Startel, S.A.

Total

31 December 2019 | Equity

Entities

198.900,000

120.900,000

35.100,000

23.400,000

11.700,000

390.000,000

Share Capital (Note 12.1)

6.691.200,000

4.067.200,000

1.180.800,000

787.200,000

276.206,741

13.002.606,741

Supplementary Capital Contributions (Note 12.2)

6.890.100,000

4.188.100,000

1.215.900,000

810.600,000

287.906,741

13.392.606,741

Total


Unitel, S.A.




Mundo Startel, S.A.

Total

1.573.760,108

1.399.259,603

381.699,732

12.790,242

18.186,652

3.385.696,337

1.573.369,990

98.455,688

120.973,015

-

5.564,255

1.798.362,949

-

27.651,817

243,481

-

-

27.895,298

3.681,368

51.605,433

- 12.252,219

39.414,053

-

82.448,636



Unitel, S.A.




Mundo Startel, S.A.

Total

3.153.100,378

7.870.219,093

381.543,081

410.316,932

119.896,007

11.935.075,491

2.932.067,828

109.721,384

204.537,306

-

7.177,146

3.253.503,665

-

36.076,709

-

-

-

36.076,709

39.262,858

78.052,171

32.214,898

34.432,321

-

183.962,248


Entities Provision of services (Note 23)

Interest on loans (Note 31)

Supplies and services (Note 30)

Subcontracts (Note 30)


In addition, balances and transactions with subsidiaries in the periods ended 31 December 2019 and 2018 are

as follows:

Angola Cables Holding, Ltd.



Total


Entity

627.842,000

-

933,600

628.775,600

Investments in Subsidiaries and Associates

(Note 6)

22.719.350,115

2.207.726,751

10.489,386

24.937.566,252

Loans(Note 6)

2.753.575,396

305.550,698

949.606,543

4.008.732,637

Other Current Assets

(Note 11)

26.100.767,511

2.513.277,450

11.422,986

28.625.467,946

Total assets

-

37.857,003

-

37.857,003

Costs(Subcontracts/ Supplies and

Services (Note 30)

Angola Cables Holding, Ltd.



Total


627.842,000

-

933,600

628.775,600

12.633.794,071

1.385.389,635

6.582,284

14.025.765,990

567.220,060

172.015,909

739.235,969

13.828.856,131

1.557.405,544

7.515,884

15.393.777,559

1.210.131.392,00

104.120,939

-

1.314.252,331

Intereston Loans(Note 31)

-

-

-

-

-

-

949.606,543

949.606,543

Otherrevenues(Note 11.1)

-

-

162.634,863

162.634,863

81.123,153

-

-

81.123,153

Balance Transactions

43. Policies adopted

In calculating the Cash and cash equivalents components in the year ended 31 December 2019, the direct

method was adopted, identifying the liquidity items in all cash transactions. This made it possible to reflect the main

components of receivables and payables, allowing an understanding of how the company generated and used its

funds.

47. Cash and cash equivalents

Items

Cash

Cash

Term deposits

Balances held in Banks, immediately available (Demand Dep.)

Cash and cash equivalents (excluding exchange differences)

Cash and cash equivalents exchange differences

Cash and cash equivalents (exchange differences updated)

Cash and cash equivalents in the Balance Sheet

31.12.2019

131,552

-

3.079.853,439

2.175.712,566

904.272,425

3.079.984,991

3.079.984,991

155,782

1.549.269,410

4.421.214,384

3.149.397,211

2.821.242,365

5.970.639,576

5.970.639,576

31.12.2018




CERTIFICATION OF ACCOUNTS 2019



AUDITOR’S REPORT

Glossary and Abbreviations


Glossary and abbreviations

ACE: Africa Coast to Europe submarine cable that

connects France to South Africa

Backhaul: fibre optic transmission system between the

connection point to the main network (backbone) and

the customer access point (for example, between the

Sangano station and AngoNAP).

Backbone: central element of a telecommunications

network, with a large transmission capacity, through

which other segments of the network interconnect.

Colocation: category of services provided in a data

centre to host equipment and content.

CDN (Content Delivery Network): Digital content

distribution network.

CLS (Cables Landing Station): Submarine cable

station

Data Center: infrastructure for housing ICT equipment,

ensuring high levels of capacity, connectivity,

availability, and security.

Download: transfer of data from a remote server to a

local computer.

DWDM (Dense Wavelength-Division Multiplexing):

technology for increasing the volume of communications

(bandwidth) of an optical transmission medium.

EASSY (Eastern Africa Submarine Cable System):

fibre optic submarine cable that connects South Africa

to Sudan.

EBITDA (Earnings Before Interest, Taxes,

Depreciation and Amortization)

Developed Economies: countries with an above-

average level of economic and social development,

according to generally accepted criteria (e.g. per capita

GDP, level of industrial development, and the human

development index).

ERP (Enterprise Resource Planning): accounting,

financial, and human resources information system.

Ethernet: technology for local computer networks.

Exabyte: unit equal to 1,000 Petabytes (Petabyte –

unit equal to 1,000 Terabytes; Terabyte – unit equal

to 1,000 Gigabytes); byte is the unit of 8 bits used in

digital communications.

IP (Internet Protocol): communications technology

used by the Internet.

ISP (Internet Service Provider): provider of access to

the Internet.

Tier I ISP: the highest level of interconnection (peering)

between ISPs.

Tier II ISP: ISP that practises peering, normally with

others of the same level, but also purchases transit

from other ISPs, normally of a higher level.

IXP (Internet Exchange Point): infrastructure that

allows the exchange of traffic between ISPs.

Main One: submarine cable between Portugal and

South Africa.

Mbps: Megabits per second, unit of speed (or

bandwidth) for digital communications.


Glossary and abbreviations

MPLS (Multi Protocol Label Switching): technology

that increases the efficiency of a digital communications

network, combining various communications

standards (protocols) and allowing the differentiated

management of service quality.

NOC (Networking Operations Centre): management

and operations centre for a telecommunications

network.

OECD (Organisation for Economic Co-operation and

Development): with headquarters in Paris.

Peering: connection of two networks for exchanging

traffic, usually free.

GDP: Gross Domestic Product

POP (Point of Presence): Infrastructure through which

customers and other operators access an operator’s

telecommunications network.

p.p.: percentage points.

PTC: Pacific Telecommunications Council.

RFS (Ready For Service): date on which a new

telecommunications system is declared ready to enter

into service.

Root Server: server that translates website names into

IP addresses.

SACS (South Atlantic Cable System): fibre optic

submarine cable between Sangano (Angola) and

Fortaleza (Brazil), belonging to Angola Cables.

SADC (Southern African Development Community):

economic community of southern African countries.

SAP: market leader in the corporate software and

applications market, including ERPs.

SAT-3 (South Atlantic 3/West Africa Submarine

Cable): submarine cable that connects Europe to Asia

via South Africa.

Tbs: Terabytes per second, unit of speed (or bandwidth)

for digital communications (equal to 1 million Mbps).

ICT: Information and Communication Technologies.

WACS (Western Africa Submarine Cable): submarine

cable that connects South Africa to Portugal, extended

to the United Kingdom.

Head Office

Lote Cellwave

Via AL5, Zona XR6B -

Talatona

Luanda - Angola

CLS SanganoPraia de Sangano,

Município da Kissama,

Luanda – Angola

Fortaleza CLSPraia do Futuro

Ceará, Brasil

AngoNAP LuandaAvenida Pedro Castro

Van Dúnem Loy

Talatona

Luanda – Angola

ContactsTel.: +244 227 360 006

[email protected]

[email protected]

www.angolacables.co.ao

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