THE NETWORK LIMITED

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

CONTENTS PAGE

Company information 1

Report of the directors 2 -5

Statement of directors responsibilities 6

Declaration of head of finance of State Aviation 7

Report of the independent auditors 8-10

Financial statements:

Statement of financial position 11

Statement of comprehensive income 12

Statement of changes in equity 13

Statement of cash flows 14

Significant accounting policies 15-21

Notes to the financial statements 23-29

The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

COMPANY INFORMATION : Private Company Limited by Shares

BOARD OF DIRECTORS : Joseph MlebyaKusaga

: Brian Waluchio
: Mustapha SelemaniBatenga

REGISTERED OFFICE : Plot No. 381/382, Old Bagamoyo Road

: Mickocheni
: P.O. Box 31513
: Dar Es Salaam
: Tanzania

PRINCIPAL BANKERS : NCBA BANK

: Masaki Branch
: P.O. BOX 268
: Dar es Salaam
: Tanzania

INDEPENDENT AUDITORS : Fincare & Company

: Rita Towers
: 9th floor
: P.O. BOX 4504
: Dar es Salaam, Tanzania

1
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

REPORT OF THE DIRECTORS

The directors submit their report and the audited financial statements for the financial year ended 31
December 2022 which disclose the state of affairs of the company.

INCORPORATION

The company was incorporated on 27th October 2016 under the Tanzania Companies Act, 2002 as a private
company limited by shares.

PRINCIPAL ACTIVITIES

The principal activities of the company are lottery based games, instant win games ,online casino, sports
book,number games and virtual sports games.

DIRECTORS

The directors who held office during the year and at the date of this report are as shown below.

Name of Directors Name of Directors Name of Directors

Joseph MlebyaKusaga Mustapha SelemaniBatenga Brian Waluchio

In accordance with the company's Articles of Association, no director is due for retirement by rotation.

DIRECTORS' INTEREST

The directors hold a direct interest in the issued and paid up share capital of the company, as shown in the
below note.

2
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

REPORT OF THE DIRECTORS ( Continued)

RELATED PARTY
All related party transactions and balances are disclosed in Note 13 of these financial statements.

CORPORATE GOVERNANCE

The Board of Directors consists of 3 Directors. The Board takes overall responsibility for the Company,
including responsibility for identifying key risk areas, considering and monitoring significant investment
decisions, considering significant financial matters, and reviewing the performance of management business
plans and budgets. The Board is also responsible for ensuring that a comprehensive system of internal control
policies and procedures is operative, and for compliance with sound corporate governance principles.

The Board is required to meet at least four times a year. During the financial year ended 31 December 2018,
the board met four times. The Board delegates the day to day management of the business to General Manager
assisted by senior management. Senior Management is invited to attend board meetings and facilitate the
effective control of all the Company’s operational activities, acting as a medium of communication and
coordination between all the various business units.

The company is committed to the principles of effective corporate governance. The directors also recognize
the importance of integrity, transparency and accountability.

RISK MANAGEMENT AND INTERNAL CONTROL

The Board accepts final responsibility for the risk management and internal control systems of the Company. It
is the task of management to ensure that adequate internal financial and operational control systems are
developed and maintained on an ongoing basis in order to provide reasonable assurance regarding:
• The effectiveness and efficiency of operations;
• The safeguarding of the Company’s assets;
• Compliance with applicable laws and regulations;
• The reliability of accounting records;
• Business sustainability under normal as well as adverse conditions; and
• Responsible behavior towards all stakeholders.
The efficiency of any internal control system is dependent on the strict observance of prescribed measures.
There is always a risk of non-compliance of such measures by staff. Whilst no system, of internal control can
provide absolute assurance against misstatement or losses, the company system is designed to provide the
Board with reasonable assurance that the procedures in place are operating effectively.

The Board assessed the internal control systems throughout the financial year ended 31st December 2018 and
is of the opinion that they met accepted criteria.

3
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

REPORT OF THE DIRECTORS ( Continued)

The Board carries risk and internal control assessment through the Senior Management.

DIVIDEND
The directors do not recommend the declaration of a dividend for the year.

SOLVENCY
The Directors confirm that applicable accounting standards have been followed and that the financial
statements have been prepared on the basis of accounting policies applicable to a going concern. This basis
presumes that funds will be available to finance future operations and that the realisation of assets and
settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of

EVENTS AFTER THE REPORTING PERIOD

The directors are not aware of any matter or circumstance arising since the end of the financial year.

Management and Employees' Relationship

There were continued good relation between employees and management during the year ended 31 December
2023. There were no unresolved complaints received by Management from the employees during the year.

The company is an equal opportunity employer. It gives equal access to employment opportunities and ensures
that the best available person is appointed to any given position free from discrimination of any kind and
without regard to factors like gender, marital status, tribes, religion and disability which does not impair

The Directors are required in terms of the Companies Act, 2002 to maintain adequate accounting records and
are responsible for the content and integrity of the financial statements and related financial information
included in this report. It is their responsibility to ensure that the financial statements fairly present the state of
affairs of the company as at the end of the financial year and the results of its operations and cash flows for the
year then ended, in conformity with International Financial Reporting Standards and the requirements of the
Companies Act, 2002. The external auditors are engaged to express an independent opinion on the financial

The financial statements are prepared in accordance with International Financial Reporting Standards and the
requirements of the Companies Act, 2002, and are based upon appropriate accounting policies consistently
applied and supported by reasonable and prudent judgments and estimates.
INDEPENDENT AUDITORS
The company's auditors is Fincare have expressed their willingness to continue in office in accordance with
Section 170 of the Companies Act, 2002.

BY ORDER OF THE BOARD

Brian Waluchio
Director

13th December 2024

Date

4
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors acknowledge that they are ultimately responsible for the system of internal financial control
established by the company and place considerable importance on maintaining a strong control
environment. To enable the directors to meet these responsibilities, the board sets standards for internal
control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the
proper delegation of responsibilities within a clearly defined framework, effective accounting procedures
and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored
throughout the company and all employees are required to maintain the highest ethical standards in
ensuring the company’s business is conducted in a manner that in all reasonable circumstances is above
reproach. The focus of risk management in the company is on identifying, assessing, managing and
monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the
company endeavours to minimize it by ensuring that appropriate infrastructure, controls, systems and
ethical behaviour are applied and managed within predetermined procedures and constraints.

The Directors acknowledge that they are responsibility for establishing appropriate policies and procedures
to prevent non-compliance with laws and regulations (NOCLAR), including whistleblowing procedures as a
necessary part of good internal governance.

The Directors are of the opinion, based on the information and explanations given by management, that the
system of internal control provides reasonable assurance that the financial records may be relied on for the
preparation of the financial statements. However, any system of internal financial control can provide only
reasonable, and not absolute, assurance against material misstatement or loss.

The Directors have reviewed the company’s cash flow forecast for the year to 31 December 2023 and, in the
light of this review and the current financial position, they are satisfied that the company has access to
adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently reviewing and reporting on the company's financial
statements. The financial statements have been examined by the company's external auditors and their
report is presented on pages 7
The financial statements set out on pages 10 to 28, which have been prepared on the going concern basis,
were authorised and approved by the board on ………………….. 2024 and signed on its behalf by:

Brian Waluchio
Director

6
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

DECLARATION OF THE HEAD OF FINANCE OF THE NETWORK LIMITED

The National Board of Accountants and Auditors (NBAA) according to the power conferred under the
Auditors and Accountants (Registration) Act. No. 33 of 1972, as amended by Act No. 2 of 1995, requires
financial statements to be accompanied with a declaration issued by the Head of Finance/Accounting
responsible for the preparation of financial statements of the entity concerned.

It is the duty of a Professional Accountant to assist the Board of Directors/Management to discharge the
responsibility of preparing financial statements of an entity showing true and fair view of the entity
position and performance in accordance with applicable International Accounting Standards and statutory
financial reporting requirements. Full legal responsibility for the preparation of financial statements rests
with the Board of Directors/Governing Body as under Directors Responsibility statement on an earlier page.

I _____________________________________ being the Head of Finance of TThe Network Limited hereby

acknowledge my responsibility of ensuring that financial statements for the year ended 31 December 2019
have been prepared in compliance with applicable accounting standards and statutory requirements.

I thus confirm that the financial statements give a true and fair view position on The Netwok Limited as on
that date and that they have been prepared based on properly maintained financial records.

Signed by: ……………………………………

Position: Accountant

NBAA Membership No: …………………….

Date: …...……………………..

7
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

Balance Sheet Notes 2022 2021

TZS 000 TZS 000

NON CURRENT ASSETS

PPE 1 ########## 6,845,224
Intangibles 240,103 252,474

########## 7,097,698

Current Assets

Trade & Other Receivables 2 6,334,110 2,879,141

Cash and Bank 3 389,873 165,352

Total Current Assets 6,723,983 3,044,493

Total Assets ########## ##########

Equity and Liabilites

Share Capital 10,400 10,400

share holder's funds 1,221,000 1,221,000
Retained Earnings ########## 6,075,129

Total ########## 7,306,529

CURRENT LIABILITES
Trade and Other Payables 4 2,963,735 2,068,229
Tax payables 753,431 767,433

Total Equity and Liabilites ########## ##########

11
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

Profit and Loss Account Notes 2022 2021

TZS 000 TZS 000

Revenue ########## #########

5
Less:
Payout ########## #########
Direct Cost 6 3,083,958 678,898
Taxes 4,433,482 639,605
Total Cost of Sales ########## #########

Gross Profit ########## #########

Operating Expenses 7 873,201 - 682,927

Profit After Tax 9,343,288 0 556,989

12
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

STATEMENT OF CHANGES IN EQUITY

Share capital Shareholders Retained Total
Funds Earnings
TZS 000 TZS 000 TZS 000 TZS 000

As at 1 January 2022 10,400 1,221,000 6,075,130 7,306,530

Contributions -
Profit for the year 9,343,287 9,343,287
Dividend -
As at 31 December 2022 10,400 1,221,000 15,418,417 16,649,817

As at 1 January 2021 10,400 1,221,000 5,518,140 6,749,540

Contributions -
Profit for the year 556,990 556,990
Dividend -
As at 31 December 2021 10,400 1,221,000 6,075,130 7,306,530

The significant accounting policies on pages 14-21 and the notes on pages 22 to 28 form an intergral of these financial stateme

Report to independent auditors- pages 7-9

13
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

1.0 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS), and the requirements of the Tanzanian Companies Act, 2002. The financial
statements have been prepared on the historical cost basis except where otherwise stated, and
incorporate the principal accounting policies set out below. The historical cost convention is
generally based on the fair value of the consideration given in exchange of assets.
1.1 Going concern
The financial performance of the company is set out in the Director's report and in the statement of
comprehensive income. The financial position of the company is set out in the statement of financial
position. Disclosures in respect of risk management are set out in Note 12.
Based on the financial performance and position of the company and its risk management policies, the
directors are of the opinion that the company is well placed to continue in business for the forseeable
future and as a result the financial statements are prepared on a going concern basis.
These financial statements comply with the requirements of the Tanzanian Companies Act, 2002. The
statement of comprehensive income represents the profit and loss account referred to in the Act. The
statement of financial position represents the balance sheet referred to in the Act.
1.2 New and amended standards adopted by the company
The accounting policies adopted in the preparation of these financial statements are consistent with
those of the previous year except for the adoption of new standards and interpretations which were
effective for annual periods beginning on or after 1 January 2018. The Company has not early adopted
any standard, interpretation or amendment that has been issued but is not yet effective.

Changes resulting from the following new or revised standards and interpretations, amendments to
existing standards and interpretations and improvements to IFRS that were effective for the current
reporting period did not have any impact on the accounting policies, financial position or
performance of the Company.
The new standards or amendments are listed below:
a) Annual Improvements 2014-2016 Cycle
• IFRS 1 - First-time Adoption of International Financial Reporting Standards
• IAS 28 - Investments in Associates and Joint Ventures
b) IFRS 15 Revenue from Contracts with Customers
c) IFRS 9 (2014) Financial Instruments
d) IAS 40 Transfers of Investment Property
e) Amendments to IFRS 4 - Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
f) Amendments to IFRS 2 - IFRS 2 Classification and Measurement of Share-based Payment
Transactions

15
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.3 Critical accounting estimates, judgements and assumptions (Continued)

(iii) Revenue recognition

In making their judgement, the directors considered the detailed criteria for the recognition of revenue
from the provision of goods and services set out in IFRS 15.

(iv) Taxes

The Company is subjected to several taxes and levies by various government and quasi- government
regulatory bodies. As a rule of thumb, the Company recognizes liabilities for the anticipated tax/levies
payable with utmost care and diligence. However, significant judgment is usually required in the
interpretation and applicability of those taxes/levies. Should it come to the attention of management, in
one way or the other, that the initially recorded liability was erroneous, such differences will impact on
the income and liabilities in the period in which such differences are determined.

1.4 Equipments
All equipments are initially recorded at cost and thereafter stated at historical cost less accumulated
depreciation. Historical cost comprises expenditure initially incurred to bring the asset to its location
and condition ready for its intended use.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the company and the cost can be reliably measured. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to the statement of comprehensive income
during the financial year in which they are incurred.
Depreciation is calculated on a reducing balance basis to write down the cost of each asset, to its residual
value over its estimated useful life using the following annual rates:
Item Rate %
Furniture and fittings 12.5
Office equipments 12.5
Leasehold Improvements 12.5
Motor Vehicles 25.0
The assets residual values and useful lives are reviewed and adjusted if appropriate, at each statement of
financial position date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposal of plant and equipment are determined by comparing the proceeds with the
carrying amount and are taken into account in determining operating profit.

17
The NetworkLimited
Annual Report and Financial Statements
For the year ended 31 December 2022

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.5 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and/or
performance of services, in the ordinary course of business and is stated net of VAT, rebates and
discounts.
The company recognizes revenue when the amount of revenue can be reliably measured, it is probable
that future economic benefits will flow to the entity and when the specific criteria have been met for the
company's activity as described below. The company bases its estimates on historical results, taking into
consideration the type of customer, type of transaction and specifics of each arrangement. The amount
of revenue is not considered to be reliably measured until all contingencies relating to the sale have been
resolved.

1.6 Financial instruments

Classification
The company classifies financial assets and financial liabilities into the following categories:
- Loans and receivables
- Financial liabilities measured at amortised cost

Classification depends on the purpose for which the financial instruments were obtained/incurred and

Financial assets
The company's financial assets which include trade and other receivables and cash and cash equivalents
and tax recoverable fall in the following category:

Loans and receivables: financial assets with fixed or determinable payments that are not quoted in an
active market. Such assets are classified as current assets where maturities are within 12 months of the
statement of financial position date. All assets with maturities greater than 12 months after the
statement of financial position date are classified as non-current assets. Changes in the carrying amount
are recognised in the statement of comprehensive income.

1.6 Financial instruments (continued)

Management classify the fair values of financial assets based on the qualitative characteristics of the fair
valuation as at the financial year end. The three hierarchy levels used by management are:
- Level 1: where fair values are based on non-adjusted quoted prices in active markets for identical
financial assets.
Level 2: where fair values are based on adjusted quoted prices and observable prices of similar
financial assets.
Level 3: where fair values are not based on observable market data.

18
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.6 Financial instruments (continued)

Financial liabilities
The company's financial liabilities which include trade and other payables and borrowings fall into the
following category:
Financial liabilities measured at amortised cost: These include trade and other payables and
borrowings. These are initially measured at fair value and subsequently measured at amortised cost,
using the effective interest rate method.
Borrowings are initially recognised at fair value, net of transaction costs incurred and are subsequently
stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in the statement of comprehensive income.
Fees associated with the acquisition of borrowing facilities are recognised as transaction costs of the
borrowing to the extent that it is probable that some or all of the facilities will be acquired.
All financial liabilities are classified as current liabilities unless the company has an unconditional right
to defer settlement of the liability for at least 12 months after the statement of financial position date.
Initial recognition and measurement
Financial instruments are recognised initially when the company becomes a party to the contractual
provisions of the instruments.
The company classifies financial instruments, or their component parts, on initial recognition as a
financial asset, a financial liability or an equity instrument in accordance with the substance of the
contractual arrangement.
Financial instruments are measured initially at fair value, except for equity investments for which a fair
value is not determinable, which are measured at cost and are classified as available-for-sale financial
assets.
For financial instruments which are not at fair value through profit or loss, transaction costs are
recognised in profit or loss.
Subsequent measurement
Loans and receivables are subsequently measured at amortised cost, using the effective interest method,
less accumulated impairment losses.
Gains and losses arising from changes in fair value are recognised in other comprehensive income and
accumulated in equity until the asset is disposed of or determined to be impaired.
Financial liabilities at amortised cost are subsequently measured at amortised cost, using the effective
interest method.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when there is a legally enforceable right to offset the amounts and there is an intention to settle
on a net basis, or realise the asset and settle the liability simultaneously.

19
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.6 Financial instruments (continued)

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the investments
have expired or have been transferred and the company has transferred substantially all risks and
rewards of ownership.

Financial liabilities are derecognised when, and only when, the company's obligations are
discharged, cancelled or expired.

Impairment of financial assets

At each reporting date the company assesses all financial assets, other than those at fair value
through profit or loss, to determine whether there is objective evidence that a financial asset or
group of financial assets has been impaired.

For amounts due to the company, significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy and default of payments are all considered indicators of
impairment.

Impairment losses are recognised in the statement of comprehensive income.

Impairment losses are reversed when an increase in the financial asset's recoverable amount can
be related objectively to an event occurring after the impairment was recognised, subject to the
restriction that the carrying amount of the financial asset at the date that the impairment is
reversed shall not exceed what the carrying amount would have been had the impairment not
been recognised.

Reversals of impairment losses are recognised in the statement of comprehensive income except
for equity investments classified as available for-sale.

Where financial assets are impaired through use of an allowance account, the amount of the loss
is recognised in the statement of comprehensive income within operating expenses. When such
assets are written off, the write off is made against the relevant allowance account. Subsequent
recoveries of amounts previously written off are credited against operating expenses.

20
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.7 Trade and other receivables

Trade and other receivables are measured at initial recognition at fair value, and are subsequently
measured at amortised cost using the effective interest rate method. Appropriate allowances for
estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that
the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered
indicators that the trade receivable is impaired. The allowance recognised is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows discounted at
the effective interest rate computed at initial recognition.
The carrying amount of the asset is reduced through the use of an allowance account, and the amount of
the loss is recognised in profit or loss within operating expenses. When a trade receivable is
uncollectable, it is written off against the allowance account for trade receivables. Subsequent
recoveries of amounts previously written off are credited against operating expenses in profit or loss.

Trade and other receivables are classified as loans and receivables.

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost,
using the effective interest rate method.

Trade and other payables are classified as financial liabilities at amortised costs.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the investments have
expired or have been transferred and the company has transferred substantially all risks and rewards of
ownership.

Financial liabilities are derecognised when, and only when, the company's obligations are discharged,
cancelled or expired.

Impairment of financial assets

At each reporting date the company assesses all financial assets, other than those at fair value through
profit or loss, to determine whether there is objective evidence that a financial asset or group of
financial assets has been impaired. For amounts due to the company, significant financial difficulties of
the debtor, probability that the debtor will enter bankruptcy and default of payments are all considered
indicators of impairment.

21
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS

1 Property, Plant and Equipment

Computers Furniture & Office Consumer Total
Fittings equipment Platform
TZS '000 TZS '000 TZS '000 TZS '000 TZS '000

Cost 31,295 62,454 16,500 6,790,470 6,900,719

Accumulated Depreciation (24,582) (29,911) (8,965) (63,458)
Addtions / Disposals 6,565,637 6,565,637
Depreciation for the year (1,678) (4,068) (942) (6,688)
NBV at the End of the year 2022 6,713 32,543 7,535 13,356,107 13,402,897

Cost 31,295 62,454 16,500 6,194,806 6,305,055

Accumulated Depreciation (22,344) (25,262) (7,889) (55,495)
Addtions / Disposals 595,664 595,664
Depreciation for the year (2,238) (4,649) (1,076) (7,963)
NBV at the End of the year 2021 8,951 37,192 8,611 6,790,470 6,845,224

Intangible Assets - 2022 Cost Accumulated Additions Carrying

Depreciation Value
Gaming Platform 561,750 (321,647) 240,103
Total 561,750 (321,647) 0 240,103

22
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS

2022 2021
TZS '000 TZS '000

2 Trade & Other Receivables

Trade & Other Receivables 6,334,110 2,879,141

Prepayments 6,879
Total Trade & Other Receivables 6,334,110 2,886,020

3 Cash and Bank

Cash wallet 275,427 116,814
Cash at bank 114,446 48,538
Total Cash and Bank 389,873 165,352

4 Tax Payables
Gaming tax 341,585 347,933
Tax on winnings 411,846 419,500
Total Tax Payables 753,431 767,433

5 Trade and Other Payables

Trade payables 2,963,735 2,068,229
Accruals
2,963,735 2,068,229

6 Cost of Sales
Production Costs 153,012 63,716
Game Engine Support & Platfrom 120,355 131,296
SMS Cost 240,545 22,750
Telecom Charges 275,568 32,458
Presenters Commision 871,478 89,357
Contigency 440,232 69,380
Technical Cost 808,768 95,941
Platform Cost 174,000 174,000

Total Cost of Sales 3,083,958 678,898

22
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS 2022 2021

TZS '000 TZS '000

7 Operating Expenses

Accounting/Audit cost - -
Commissions - Clouds 10% 27,015 1,833
Depreciation 112,719 122,966
General Administrative expenses 204,902 106,364
Internet costs 12,832 14,969
Licence Renewal 84,289 91,951
Medical Insurance - -
Professional Fees & Legal Expences 2,200 1,500
Promotional Allowances & Giveaways 1,550 2,160
Rent 38,896 6,659
Staff Costs 374,438 322,431
Studio Costs - 1,660
Travel and accomodation costs 5,500 6,000
Web Cost 8,860 4,433

873,201 682,927

23
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

9 Risk management objectives and policies (continued)

(a) Market risk (continued)

- Interest rate risk

As the company has no significant interest-bearing assets, the company's income and operating
cash flows are substantially independent of changes in market interest rates.

The companies exposure to interest rate risk arises from borrowings. Financial assets and
liabilities obtained at different rates expose the company to interest rate risk. Financial assets
and liabilities obtained at fixed rates expose the company to fair value interest rate risk, except
where the instruments are carried at amortised costs. The company maintains adequate ratios of
borrowings when compared to total borrowings in fixed interest rates.

(b) Credit risk

Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits
with banks and financial institutions, as well as credit exposures to customers, including
outstanding receivables.

Management assesses the credit quality of the customer, taking into account their financial
position, past experience and other factors.

Individual limits are set based on internal or external information in accordance with limits set
by the management. The utilisation of credit limits is regularly monitored.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities, the availability of funding through an adequate amount of committed credit facilities
and the ability to close out market positions. Due to the dynamic nature of the underlying
businesses, the company's management maintains flexibility in funding by maintaining
availability under committed credit lines.

The company’s risk to liquidity is a result of the funds available to cover future commitments.
The company manages liquidity risk through an ongoing review of future commitments and
credit facilities.

Cash flow forecasts are prepared and adequate utilised borrowing facilities are monitored.

23
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

10 Capital management

The company's objectives when managing capital are:

to provide an adequate return to shareholders by pricing products and services

-
commensurate with the level of risk;
to safeguard the entity’s ability to continue as a going concern, so that it can continue to
-
provide returns for shareholders and benefits for other stakeholders;
- to maintain a strong asset base to support the development of business; and
- to maintain an optimal capital structure to reduce the cost of capital.

The company sets the amount of capital in proportion to risk. The company manages the capital
structure and makes adjustments to it in the light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the
company may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, or sell assets to reduce debt.
11 Contingency

The directors are of the opinion that there are no other contingent liabilities as at the year end.

12. Risk management objectives and policies

Financial risk management

The company’s activities expose it to a variety of financial risks: market risk (including
foreign exchange and interest rate risk), credit risk and liquidity risk.

The company’s overall risk management programme focuses on the unpredictability of

financial markets and seeks to minimise potential adverse effects on the company’s
financial performance.

Risk management is carried out by the management under policies approved by the
board of directors.

(a) Market risk

- Foreign exchange risk

The company is exposed to foreign exchange risk arising from various currency
exposures primarily with respect to the US Dollar. The risk arises from future
transactions, assets and liabilities in the statement of financial position date.

24
The Network Limited
Annual Report and Financial Statements
For the year ended 31 December 2022

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

1.1 Standards issued but not yet effective

Standards issued but not yet effective up to the date of issuance of the company's financial statements
are listed below. This listing is of standards and interpretations issued, which the Company reasonably
expects to be applicable at a future date. The Company intends to adopt those standards when
applicable as they become effective.

The Company expects that adoption of these standards, amendments and interpretations in most cases
not to have any significant impact on the Company’s financial position or performance in the period of
initial application. In cases where it will have an impact, the Company is still assessing the possible
impact.

1.2 Standards issued but not yet effective (continued)

Standard issued but not effective Effective date

on or before
IFRS 16 Leases 01-Jan-19
Amendments to IFRS 9 - IFRS 9 Prepayment Features with Negative Compensation 01-Jan-19
Amendments to IAS 28 - IAS 28 Long-term Interests in Associates and Joint Ventures 01-Jan-19
IFRS 17 Insurance Contracts 01-Jan-21

1.3 Critical accounting estimates, judgements and assumptions

In the application of the accounting policies, the directors are required to make judgements, estimates
and assumptions about the carrying amount of assets and liabilities that are not readily apparent from
other sources. The estimates and associated assumptions are based on historical experience and other
relevant factors. Such estimates and assumptions are reviewed on an ongoing basis. Revisions to
estimates are recognised prospectively.
The directors have made the following assumptions that have a significant risk of resulting in a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
(i) Equipments
Critical estimates are made by the directors in determining depreciation rates for equipments. The
rates used are set out in the accounting policy under equipments.
(ii) Useful life of equipments
Management reviews the useful lives and residual values of the items of equipments on a regular basis.
During the financial year, the directors determined no significant changes in the useful lives and
residual values.

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