| Pakistan Telecommunication Ltd (A) - 2009 |
|
Balance Sheet as at June 30, 2009
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Note 2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Equity and liabilities
Share capital and reserves
Authorized capital
11,100,000,000 "A" class ordinary shares of Rs 10 each 111,000,000 111000,000
3,900,000,000 "B" class ordinary shares of Rs 10 each 39,000,000 39,000,000
150,000,000 150,000,000
Issued, subscribed and paid up capital 5 51,000,000 51,000,000
Revenue reserves
Insurance reserve 6 1,683,074 1,683,074
General reserve 30,500,000 30,500,000
Unappropriated profit 16,206,485 14,705,300
99,389,559 97,888,374
Non current liabilities
Payable to PTA against WLL license fee 7 - 1,768,839
Long term security deposits from
customers - non interest bearing 8 990,055 951,618
Deferred taxation 9 2,379,000 590,000
Employees' retirement benefits 10 14,142,099 14,240,062
Deferred government grants 11 1,061,044 95,000
18,572,198 17,645,519
Current liabilities
Trade and other payables 12 26,114,171 21,731,667
Current portion of payable to PTA against
WLL license fee 7 1,953,971 -
Taxation 368,180 182,292
Dividend payable 7,650,000 -
36,086,322 21,913,959
Contingencies and commitments 13
Assets
Non current assets
Property, plant and equipment 14 77,730,763 82,800,178
Capital work-in-progress 15 9,836,588 7,892,823
Intangible assets 16 3,320,670 3,149,063
Long term investments 17 5,607,439 3,607,439
Long term loans 18 3,332,378 394,943
99,827,838 97,844,446
Current assets
Stores and spares 19 5,201,991 4,954,085
Trade debts 20 10,760,974 13,366,216
Loans and advances 21 590,061 888,309
Accrued interest 22 821,027 315,817
Recoverable from tax authorities 23 1,059,608 1,383,766
Other receivables 24 698,270 1,641,617
Receivable from
Government of Pakistan 25 2,164,072 2,164,072
Short term investments 26 21,017,790 10,344,379
Cash and bank balances 27 11,906,448 4,545,145
54,220,241 39,603,406
154,048,079 137,447,852
==========================================================================================Profit and Loss Account for the year ended June 30, 2009==========================================================================================
Note 2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Revenue 28 59,239,001 66,336,042
Cost of services 29 (37,732,282) (37,346,869)
Gross profit 21,506,719 28,989,173
Administrative and general expenses 30 (8,935,261) (10,823,555)
Selling and marketing expenses 31 (1,817,071) (1,799,946)
Operating profit 10,754,387 16,365,672
Voluntary separation scheme 32 (92,118) (23,937,854)
Other operating income 33 4,267,172 3,957,539
Finance cost 34 (908,524) (847,973)
Profit / (loss) before tax 14,020,917 (4,462,616)
Taxation 35 (4,869,732) 1,637,726
Profit / (loss) after tax 9,151,185 (2,824,890)
(Rupees)
Earnings/ (loss) per share - basic and dilute 41 1.79 (0.55)
==========================================================================================Cash Flow Statement for the year ended June 30, 2009==========================================================================================
Note 2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Cash flows from operating activities
Cash generated from operations 38 34,337,391 28,091,249
Long term security deposits 38,437 (244,166)
Employees' retirement benefits paid (1,470,335) (17,373,671)
Payment of other VSS components (840,927) (21,444,052)
Received from Government of Pakistan - 15,264,928
Finance cost paid (265,232) (360,407)
Income tax paid (2,894,844) (2,833,459)
Net cash inflow from operating activities 28,904,490 1,100,422
Cash flows from investing activities
Capital expenditure (9,455,527) (11,411,216)
Intangible assets (397,979) (109,270)
Proceeds from disposal of property, plant and equipment 206,039 19,651
Short term investments other than cash equivalents 26 (1,221,886) -
Advance to the wholly owned subsidiary
against issue of ordinary shares (2,000,000) -
Long term loans-net 62,565 1,214,991
Loan to the wholly owned subsidiary (3,000,000) -
Return on bank placements / loan to subsidiary 2,751,824 2,860,719
Government grants received 966,044 95,000
Dividend income - 350,000
Net cash outflow from investing activities (12,088,920) (6,980,125)
Cash flows from financing activities
Repayment of suppliers' credit - (172,961)
Dividend paid (2,742) (10,195,524)
Net cash outflow from financing activities (2,742) (10,368,485)
Net increase /(decrease) in cash and cash equivalents 16,812,828 (16,248,188)
Cash and cash equivalents at beginning of the year 14,889,524 31,137,712
Cash and cash equivalents at end of the year 39 31,702,352 - 14,889,524
==========================================================================================Statement of Changes in Equity for the year ended June 30, 2009=================================================================================================================
Issued,
subscribed and Revenue reserves
paid-up capital
Class "A" Class "B' Insurance General Unappropriated Total
reserve reserve profit
=================================================================================================================
(Rupees in thousand)
=================================================================================================================
Balance as at July01, 2007 37,740,000 13,260,000 1,749,047 30,500,000 27,664,217 110,913,264
Net loss for the year - - - - (2,824,890) (2,824,890)
Transfer from insurance reserve - - (65,973) - 65,973 -
Final dividend for the year ended
June 30, 2007 - Rs. 2 per share - - (10,200,000) (10,200,000)
Balance as at June 30, 2008 37,740,000 13,260,000 1,683,074 30,500,000 14,705,300 97,888,374
Net profit for the year - - - - 9,151,185 9,151,185
Interim dividend for the year ended
June 30, 2009 - Rs. 1.5 per share - - - - (7,650,000) (7,650,000)
Balance as at June 30, 2009 37,740,000 13,260,000 1,683,074 30,500,000 16,206,485 99,389,559
=================================================================================================================Notes to and forming part of the Financial Statements for the year ended June 30, 20091. Legal status and nature of business. 1.1. Constitution and ownership Pakistan Telecommunication Company Limited ("the Company) was incorporated in Pakistan on December 31, 1995 and commenced business on January 1, 1996. The Company is listed on Karachi, Lahore and Islamabad stock exchanges. The Company was established to undertake the telecommunication business formerly carried on by Pakistan Telecommunication Corporation (PTC). The business was transferred to the Company on January 1, 1996 under the Pakistan Telecommunication (Reorganization) Act, 1996 at which date the Company took over All the properties, rights, assets, obligations and liabilities of PTC except those transferred to National Telecommunication Corporation (NTC), Frequency Allocation Board (FAB), Pakistan Telecommunication Authority (PTA) and Pakistan Telecommunication Employees Trust (PTET). The registered office of the Company is situated at PTCL Headquarters, G-8/4, Islamabad. 1.2. Activities The Company provides telecommunication services in Pakistan. It owns and operates telecommunication facilities and provides domestic and international telephone services and other communication facilities throughout Pakistan. The Company has also been licensed to provide such services to territories in Azad Jammu and Kashmir and Northern Areas. 2. Basis of preparation 2.1. Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1 984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shAll prevail. 2.2. Standards, interpretations and amendments to published approved accounting standards that are effective in current year During the year ended June 30, 2009 IFRS 7 'Financial Instruments: Disclosures' became effective. IFRS 7 has superseded IAS 30 and disclosure requirements of IAS 32. Adoption of this standard has only resulted in additional disclosures which have been set out in note 42 to these financial statements. Further, interpretations of accounting standards, namely IFRIC 12 "Service Concession Arrangements' IFRIC 13 "Customer Loyalty Programmes" and IFRIC 14 "IAS 19 -The Limit on Defined Benefit Asset, Minimum Funding Requirements and their Interaction" also become effective during the year. However, these interpretations do not affect the Company's financial statements. 2.3. Amendments and Interpretations to publish standards applicable to the Company not yet effective The following amendments and interpretations to existing standards have been published and are mandatory for the Company's accounting periods beginning on or after their respective effective dates: IAS 1 (Revised), 'Presentation of financial statements' (effective for annual periods beginning on or after July 1, 2009), was issued in September 2007. The revised standard requires an entity to present, in a statement of changes in equity, all owner changes in equity. All non-owner changes in equity (i.e. comprehensive income) will be required to be presented separately from owner changes in equity, either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). When the entity applies an accounting policy retrospectively or makes retrospective statement or reclassifies items in the financial statements, they will be required to present a restated financial position (balance sheet) as at beginning of comparative period in addition to the current requirement to present the balance sheet as at the end of the current and the comparative period. The adoption of this standard will only impact the presentation of the financial statements. IAS 39 (Amendment), 'Financial Instruments: Recognition and Measurement' - Reclassification of Financial Assets (effective from July 1, 2009). This amendment to the Standard permits an entity to reclassify non-derivative financial assets (other than those designated at fair value through profit or loss by the entity upon initial recognition) out of the fair value through profit or loss category in particular circumstances. The amendment also permits an entity to transfer from the available-for-sale category to the loans and receivables category, a financial asset that would have met the definition of loans and receivables (if the financial asset had not been designated as available-for-sale), if the entity has the intention and ability to hold that financial asset for the foreseeable future. The management is in the process of assessing the impact of its adoption on the Company's financial statements. IFRS 7 (Amendment), 'financial Instruments: Disclosure.' There are a number of minor amendments to IFRS 7 in respect of enhanced disclosures about liquidity risk and fair value measurements. These amendments are unlikely to have an impact on the Company's financial statements and have therefore not been analyzed in detail. IAS 38 (Amendment), 'Intangible Assets' (effective from July 1, 2009). The amended standard states that a prepayment may only be recognized in the event that payment has been made in advance of obtaining right of access of goods or receipt of services. This amendment is not expected to have a significant effect on the Company's financial statements. 2.4. Standards and interpretations to existing standards that are not applicable to the Company and not yet effective ==============================================================================================
Standards or Interpretation Effective date
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(accounting periods beginning on or after)
==============================================================================================
IFRS 4 Insurance Contracts January 01, 2009
IFRS 8 Operating Segments January 01, 2009
IFRIC 15 Accounting for Agreements for the Construction of Real Estate January 01, 2009
IFRIC 16 Hedge of Net Investment in a Foreign Operation July 01, 2009
IFRIC 17 Distribution of Non-cash Assets to Owners July 01, 2009
IAS 23 Borrowing Costs (Revised) January 01, 2009
IAS 27 Consolidated and Separate Financial Statements January 01, 2009
IAS 32 Financial Instruments: Presentation - Amendments
regarding puttable Financial Instruments January 01, 2009
IFRS 2 Share Based Payments - Amendments Regarding Vesting
Conditions and Cancellation January 01, 2009
IFRS 3 Business Combinations - (Revised) July 01, 2009
IFIC 18 Transfer of Assets of Customers July 01, 2009
IFAS 2 IJARAH January 01, 2009
==============================================================================================3. Basis of measurementThese financial statements have been prepared under the historical cost convention, except for revaluation of certain financial instruments at fair value and recognition of certain employee retirement benefits and license fee payable at present value. The Company's significant accounting policies are stated in note 4. Not all of these significant policies require the management to make difficult, subjective or complex judgments or estimates. The following is intended to provide an understanding of the policies the management considers critical because of their complexity, judgment of estimation involved in their application and their impact on these financial statements. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to be reasonable under the circumstances. These judgments involve assumptions or estimates in respect of future events and the actual results may differ from these estimates. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are as follows: a).Employees' retirement benefits The Company uses the valuation performed by an independent actuary as a present value of its retirement benefits obligations. The valuation is based on assumptions as mentioned in note 4.4. b).Provision for taxation The Company takes into account the current income tax law and the decisions taken by appellate authorities. Instances where the Company's view differs from the view taken by the Income Tax department at the assessment stage and where the Company considers that its view on items of material nature is in accordance with law, the amounts are shown as contingent liabilities. c).Useful life and residual values of property, plant and equipment The Company reviews the useful lives of property, plant and equipment on regular basis. Any change in estimates in future years might affect the carrying amounts of the respective items of property, plant and equipment with the corresponding effect on the depreciation charge and impairment. d).Provision for doubtful receivables Provision against overdue receivable balances is recognized after considering the receipt pattern and the future outlook of the concerned receivable party. It is reviewed by the management on a regular basis. 4. Significant accounting policies The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented unless otherwise stated. 4.1. Insurance reserve The assets of the Company are self insured. The Company has created an insurance reserve. Appropriation out of profits are made on discretion of the Board of Directors. The reserve is to be utilized to meet any loss resulting from theft, fire or natural disasters. 4.2. Borrowings Borrowings are initially recorded at the proceeds received. Finance cost is accounted for on an accrual basis and is either added to the carrying amount of the instrument or disclosed as interest and mark-up accrued to the extent of amount remaining unpaid. 4.3. Taxation Current Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made in previous years arising from assessments framed during the year for such years. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except in the case of items credited or charged to equity in which case it is included in equity. 4.4. Employees' retirement benefits and other obligations (a).Pension obligations The Company operates an approved funded pension scheme through a separate trust called the Pakistan Telecommunication Employees Trust"(PTET) for its employees recruited prior to January 1, 1996 when the Company took over the business from PTC. The Company also operates an unfunded pension scheme for employees recruited on regular basis after December 31, 1995. Provisions are made annually to cover the obligations under the schemes on the basis of actuarial valuations and are charged to profit. The most recent valuation was carried out as at June 30, 2009 using the "Projected unit credit method". The amount recognized in the balance sheet represents the present value of the defined benefit obligations as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost and as reduced by the fair value of the plan assets. Cumulative net unrecognized actuarial gains and losses at the end of the previous year which exceed 10% of the greater of the present value of the Company's pension obligations and the fair value of plan assets are amortized over the expected average working lives of the participating employees. The principal actuarial assumptions used in the valuation as at June 30, 2009 were as follows: ==============================================================================
Expected rate of return per annum on plan assets 13% (2008: 10%)
Discount rate 12% (2008: 12%)
Indexation of pension 8% (2008: 8%)
Expected increase in salary 9% for first five years
and then 11% (2008:11%)
Average expected remaining working lives
of participating employees - funded 13 years (2008: 13 years)
Average expected remaining working lives
of participating employees - unfunded 17 years (2008: 1 7 years)
Expected mortality rate EFU 61 - 66 Mortality Table
adjusted for Company's
experience
Expected withdrawal rate Based on experience
==============================================================================The expected rate of return is based on complex mathematical model which takes into account the maturity of high yielding DSC's and other investments present at the beginning of the financial year. It considers the expected returns on the reinvestments of maturity proceedings in similar instruments up to the life of related obligations.The expected rate of return also considers the changes of plan assets during the year on account of contributions and benefit payments. The model results in expected rate of return of 13% (2008: 10%). The rounded expected rate of return used for the Fund Assets is 13% during 2008-09 (2007-08: 10%) (b).Medical benefits The Company provides post retirement medical benefits to pensionable employees and their families. Under the unfunded scheme all such employees, their spouses, children up to the age of 21 and parents residing with and dependent on the employee are entitled to the benefit. Unmarried daughters are not subject to 21 years age limit. The pensioner and the family are entitled to the facility up to the life of the pensioner and spouse. There are no annual limits to the cost of drugs, hospital in patient treatment and consultation fees. Provisions are made annually to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit. The most recent valuation was carried out as at June 30, 2009 using the "Projected unit credit method". The amount recognized in the balance sheet represents the present value of the defined benefit obligations as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost. Cumulative net unrecognized actuarial gains and losses at the end of the previous year which exceed 10% of the present value of the Company's obligations are amortized over a period of fourteen years. The principal assumptions used in the valuation as at June 30, 2009 were as follows: ============================================================== Discount rate 12% (2008: 12%) Expected rate of increase in medical costs 11% (2008: 11%) Company's experience Expected mortality rate EFU 61 - 66 Mortality Table adjusted for ==============================================================(c).Accumulating compensated absences The Company provides a facility to its employees for accumulating their annual earned leave. Under the unfunded scheme, regular employees are entitled to four days of earned leave per month. Unutilized leave can be accumulated without limit and can be used at any time subject to the Company's approval up to 120 days in a year without medical certificate, 180 days with medical certificate and 365 days during the entire service of the employee. Up to 180 days of accumulated leave can be encashed on retirement provided the employee has a minimum leave balance of 365 days. Leaves are encashed at emoluments applicable for monthly pension. New Terms and Conditions (NTC) / contractual employees are entitled to 3 days earned leave per month. Unutilized leave can be accumulated without limit. Up to 180 days of accumulated leaves can be encashed on departure at gross pay. New Compensation Pay Grade (NCPG) employees are entitled to 20 leaves after completion of one year of service. Leaves can be accumulated after completion of second year of service, to a maximum of 28 days. Current year was the first year in which, PTCL calculated the obligation for accumulated compensated absences for NTC/contractual and NCPG employees. Provisions are made annually to cover the obligation for accumulating compensated absences based on actuarial valuation and are charged to profit. The most recent valuation was carried out as at June 30, 2009 using the "Projected unit credit method" The amount recognized in the balance sheet represents the present value of the defined benefit obligations. Actuarial gains and losses are charged to profit immediately in the period when these occur. The principal assumptions used in the valuation as at June 30, 2009 were as follows: ================================================================================
Expected increase in salary 9% in first five years and then 11% (2008: 11%)
Discount rate 12% (2008: 12%)
Expected mortality rate EFU 61 -66 Mortality Table adjusted for Company's
experience
================================================================================ (d).Provident fundThe Company operates approved funded provident fund covering permanent employees. For the purposes of the scheme a separate trust titled as "PTCL Employees GPF Trust" has been established. Monthly contributions are deducted from the salaries of employees and are to be paid to the Trust by the Company. Interest is paid at the rate announced by the Federal Government. Such rate for the year was 15% (2008: 12.5%) per annum, The Company contributes to the fund the differential, if any, of the interest charge for the year and the income earned on the investments made by the Trust. The contributions deducted from the employees during the year and interest payable by the Company for the year, if any, appear as other liabilities. (e).Gratuity The Company operates an unfunded gratuity scheme for its NTC / contractual employees. Provisions are made annually to cover the obligation under the scheme on the basis of actuarial valuations and are charged to profit. The most recent valuation was carried out as at June 30, 2009 using the Projected unit credit method". The amount recognized in balance sheet represents the present value of the defined benefit obligation as on June 30, 2009 as adjusted for unrecognized actuarial gains and losses. Cumulative net unrecognized actuarial gains and losses at the end of the previous year which exceed 10% of the present value of the Company's obligations are amortized over the expected average working lives of the participating employees. The principal assumptions used in the valuation as at June 30, 2009 were as follows: ==================================================================================== Discount rate 1 2% (2008: 12%) Expected increase in salaries 9% for first five years and then 11% (2008: 11%) Average expected remaining working lifetime of NTC / 6 years (2008: 5 years) contractual employees ====================================================================================Retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. 4.5. Trade and other payables Liabilities for creditors and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for the goods and / or services received, whether or not billed to the Company. Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 4.6. Property, plant and equipment Property, plant and equipment, except freehold land are stated at cost less accumulated depreciation and any identified impairment loss. Freehold land is stated at cost less any identified impairment loss. Cost includes direct cost, related overheads, mark up and interest referred to in note 4.19. Depreciation on all property, plant and equipment is charged to profit on the straight line method so as to write off the depreciable amount of an asset over its estimated useful life at the annual rates mentioned in note 14 after taking into account their residual values. Depreciation on additions to property, plant and equipment is charged from the month in which an asset is acquired or capitalized while no depreciation is charged for the month in which the asset is disposed off. Impairment loss or its reversal, if any, is also charged to profit. Where an impairment loss is recognized, the depreciation charge is adjusted in future periods to allocate the assets' revised carrying amount over their estimated useful life. The assets' residual values and useful lives are reviewed at each financial year end, and adjusted if impact on depreciation is significant. The Company assesses at each balance sheet date whether there is any indication that property, plant and equipment may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognized in income currently. The recoverable amount is the higher of an assets fair value less costs to sell and value in use. Where an impairment loss is recognized, the depreciation charge is adjusted in the future periods to allocate the assets' revised carrying amount over its estimated useful life. Subsequent costs are included in the assets carrying amount or recognized 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 of the item can be measured reliably. All other repairs and maintenance costs are charged to income during the period in which they are incurred. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as an income or expense. 4.7. Intangible assets These are stated at cost less accumulated amortization and any identified impairment loss. Intangible assets are amortize using the straight line method over the period of the license or useful life of the software. Amortization on additions to intangible assets is charged from the month in which an asset is acquired or capitalized while no amortization is charged for the month in which the asset is disposed off. The Company assesses at each balance sheet date whether there is any indication that intangible asset may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying values exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognized in income currently. The recoverable amount is the higher of assets fair value less costs to sell and value in use. Where an impairment loss is recognized, the amortization is adjusted in the future periods to allocate the assets' revised carrying amount over its estimated useful life. 4.8. Capital work-in-progress Capital work-in-progress is stated at cost less any identified impairment loss, 4.9. Investments Investments intended to be held for less than twelve months from the balance sheet date or to be sold to raise operating capital, are included in current assets, all other investments are classified as non-current. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. 4.9.1. Investments in equity instruments of subsidiaries and associated companies Investments in subsidiaries and associates where the Company has significant influence are measured at cost in the Company's financial statements. Cost in relation to investments made in foreign currency is determined by translating the consideration paid in foreign currency into rupees at exchange rates prevailing on the date of transactions. The Company is required to issue consolidated financial statements along with its separate financial statements, in accordance with the requirements of IAS 27 'Consolidated and Separate Financial Statements.' Investments in associated undertakings, in the consolidated financial statements, are being accounted for using the equity method. 4.9.2. Other investments The other investments made by the Company are classified for the purpose of measurement into the following category: 4.9.2.1. Available for sale The financial assets including investments in associated undertakings where the Company does not have significant influence that are intended to be held for an indefinite period of time or may be sold in response to the need for liquidity are classified as available for sale. Investments classified as available for sale are initially measured at cost, being the fair value of consideration given. At subsequent reporting dates, these investments are remeasured at fair value (quoted market price), unless fair value cannot be reliably measured. The investment for which a quoted market price is not available, are measured at cost as it is not possible to apply any other valuation methodology. Unrealized gains and losses arising from the changes in the fair value are included in fair value reserves in the period in which they arise. All purchases and sales of investments are recognized on the trade date which is the date that the Company commits to purchase or sell the investment. Cost of purchase includes transaction cost. At each balance sheet date, the Company reviews the carrying amounts of the investments to assess whether there is any indication that such investments have suffered an impairment loss. If any such indication exists, the recoverable amount is estimated in order to determine the extent of the impairment loss, if any. Impairment losses are recognized as expense. In respect of 'available for sale' financial assets, cumulative impairment loss less any impairment loss on that financial asset previously recognized in profit and loss account, is removed from equity and recognized in the profit and loss account. Impairment losses recognized in the profit and loss account on equity instruments are not reversed through the profit and loss account. 4.9.2.2. Held-to-maturity Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturities that management has the positive intention and ability to hold to maturity. These are recorded at amortized cost using the effective interest rate method, less any amounts written off to reflect impairment. 4.10. Stores and spares Usable stores and spares are valued principally at moving average cost, while items considered obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value plus other charges paid thereon. 4.11. Trade debts Trade debts are carried at original invoice amount less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identified. 4.12. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purpose of cash flow statement cash and cash equivalents comprise cash in hand, demand deposits, other short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value and short term borrowings. 4.13. Government grants Government grants are recognized at their fair value and included in non-current liabilities as deferred income when there is grant. reasonable assurance that the grant will be received and the Company will comply with the conditions associated with the Grants that compensate the Company for expenses incurred are recognized in profit and loss account on a systematic basis in the same period in which the expenses are recognized. Grants that compensate the Company for the cost of an asset are recognized in the profit and loss account on a systematic basis over the expected useful life of the related asset upon capitalization. 4.14. Financial instruments Financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of the instrument and derecognized when the Company loses control of contractual rights that comprise the financial assets and in the case of financial liabilities when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on derecognition of financial assets and financial liabilities is included in the profit and loss account for the year. Financial instruments carried on the balance sheet include long term investments, long term loans, trade debts, loans, advances, deposits and other receivables, cash and bank balances, long term security deposits from customers, trade and other payables and interest. All financial assets and liabilities are initially measured at cost, which is the fair value of consideration given and received respectively. These financial assets and liabilities are subsequently measured at fair value or cost as the case may be. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. 4.15. Offsetting of financial assets and liabilities Financial assets and liabilities are offset and the net amount is reported in the financial statements only when there is a legally enforceable right to set off the recognized amount and the Company intends either to settle on a net basis or to realize the assets and to settle the liabilities simultaneously. 4.16. Derivative financial instruments These are initially recorded at cost value on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. 4.17. Foreign currencies All monetary assets and liabilities in foreign currencies are translated into Rupees at exchange rates prevailing at the balance sheet date. Transactions in foreign currencies are translated into Rupees at the spot rate, All non-monetary items are translated into Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. Exchange differences are included in income currently. Revenue from international calling services and foreign operating cost is translated into local currency at the month end rate. The financial statements are presented in Pak Rupees, which is the Company's functional and presentation currency. 4.18. Revenue recognition Revenue from telecommunication services is recognized when services have been rendered. Return on deposits is accrued on a time proportion basis with reference to the principal outstanding and the applicable rate of return. Dividend income and return from investments are recognized when the Company's right to receive payment has been established. 4.19. Borrowing costs Mark-up and other borrowing costs are capitalized up to the date of commissioning of the respective qualifying asset. All other mark-up, interest and other charges are charged to profit. 4.20. Dividend Dividend distribution to the Company's shareholders is recognized as a liability in the period in which the dividends are approved. 5. Issued, subscribed and paid up capital ====================================================================================================
2009 2008 2009 2008
====================================================================================================
(Numbers in thousand) (Rupees in thousand)
====================================================================================================
note 5.1 3,774,000 3,774,000 A class ordinary shares of Rs 10 each 37,740,000 37,740,000
issued as fully paid for consideration
other than cash
note 5.1 1,326,000 1,326,000 B class ordinary shares of Rs 10 each 13,260,000 13,260,000
issued as fully paid for consideration
other than cash
5,100,000 5,100,000 51,000,000 51,000,000
====================================================================================================5.1. These shares were initially issued to the Government of Pakistan in consideration for the assets and liabilities transferred from Pakistan Telecommunication Corporation (PTC) to Pakistan Telecommunication Company Limited (PTCL) under the Pakistan Telecommunication (Reorganization) Act, 1 996 as referred to in note 1.1.5.2. Except for voting rights the "A" and "B" class ordinary shares rank pari passu in all respects. "A" class ordinary shares carry one vote and "B" class ordinary shares carry four votes save for the purposes of election of directors. "A" class ordinary shares can not be converted into "B" class ordinary shares. However, "B" class ordinary shares may be converted into "A" class ordinary shares at the option exercisable in writing submitted to the Company by the holders of three fourths of the "B" class ordinary shares. In the event of termination of the license issued to the Company under the provisions of Pakistan Telecommunication (Reorganization) Act, 1996 or at any time within three years from April 12, 2006, if there is any change of control of any member holding "B" class ordinary shares without the prior written approval of Government of Pakistan, the "B" class ordinary shares shall be automatically converted into "A" class ordinary shares. 5.3. The Government of Pakistan through an "Offer for Sale" document, dated July 30, 1994 issued to domestic investors a first tranche of vouchers exchangeable for "A" class ordinary shares of the Company and through an Information Memorandum dated September 16, 1994 issued a second tranche of vouchers to the international investors also exchangeable, at the option of voucher holder for "A" class ordinary shares or Global Depository Receipts (GDRs) representing "A" class ordinary shares of the Company. Out of 3,774,000 thousand "A" class ordinary shares, vouchers against 601,084 thousand "A" class ordinary shares were issued to general public. Till June 30, 2009, 599,500 thousand (2008: 599,476 thousand)"A" class ordinary shares had been exchanged for vouchers. 5.4. In pursuance of the privatization of the Company, a bid was held by the Government of Pakistan on June 8, 2005 for sale of "B" class ordinary shares of Rs 10 each along with management control. Emirates Telecommunication Corporation-(Etisalat) was the successful bidder. The shares along with management control were transferred with effect from April 12, 2006 to Etisalat International Pakistan (EIP), UAE which is a subsidiary of Etisalat. 5.5. Ordinary shares of the Company held by the related parties as at year end are as follows: ===================================================================================================
2009 2008
===================================================================================================
(Number of shares)
===================================================================================================
Etisalat International Pakistan (LLC) SE ("B" class ordinary shares) 407,809,524 407,809,524
Etisalat International Pakistan (LLC) ("B" class ordinary shares) 918,190,476 918,190,476
1,326,000,000 1,326,000,000
===================================================================================================6. Insurance reserve==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 1,683,074 1,749,047
Utilized during the year - (65,973)
Balance as at June 30 1,683,074 1,683,074
==========================================================================================7. Payable to PTA against WLL license fee==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Payable to PTA against WLL license fee - note 7.1 2,105,500 2,105,500
Present value adjustment (631,756) (631,756)
Present value of license fee payable 1,473,744 1,473,744
Imputed interest charged to profit and loss account to date 480,227 295,095
1,953,971 1,768,839
Current portion shown undercurrent liabilities (1,953,971) -
- 1,768,839
==========================================================================================7.1. In previous years the Company had paid to PTA Rs 4,278,639 thousand in respect of license to provide Wireless Local Loop (WLL) services. Previously PTA Allowed the Company to adjust Rs 2,105,500 thousand out of Rs. 4,278,639 thousand already paid against the amount payable to Universal Service Fund (USF).The balance amount of Rs 2,105,500 thousand in respect of license fee is payable to PTA in March 2010 and carries no interest. The license fee payable has been discounted to present value of future cash flows using effective interest rate of 10% per annum and the corresponding adjustment was made to the cost of license included in intangible assets. Difference between the amount payable and the present value of cash equivalents being recognized as imputed interest over the remaining credit period. 8. Long term security deposits from customers non interest bearing ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
- note 8.1 990,055 951,618
==========================================================================================8.1. During the current year, the Company adjusted security deposits amounting to Rs Nil (2008: Rs 40,711 thousand) against defaulter receivable balances.9. Deferred taxation ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
The liability for deferred taxation comprises of timing differences relating to:
Accelerated tax depreciationmortization 8,719,515 8,322,099
Provision for doubtful trade debts (6,284,901) (5,730,635)
Provision for doubtful advances and receivables (58,720) (8,439)
Available tax losses - (1,996,138)
Others 3,106 3,113
2,379,000 590,000
The gross movement in deterred tax liability during the year is as follows:
Balance as at July 01 590,000 2,373,223
Charge / (reversal) during the year - note 35 1,789,000 (1,783,223)
Balance as at June 30 2,379,000 590,000
==========================================================================================10. Employees' retirement benefits==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Liabilities for pension obligations
Funded - note 10.1 4,550,208 5,389,026
Unfunded - note 10.1 841,872 630,417
5,392,080 6,019,443
Gratuity - note 10.1 391,609 267,106
Accumulating compensated absences - note 10.1 1,025,164 833,006
Post retirement medical facility - note 10.1 7,333,246 7,120,507
14,142,099 14,240,062
==========================================================================================10.1. Employees' retirement benefits=====================================================================================================================================
Pension Gratuity Accumulating Post Total
compensated retirement 2009
Funded Unfunded absences medical facility
=====================================================================================================================================
(Rupees in thousand)
=====================================================================================================================================
Present value of defined
benefit obligations - note 10.2 53,610,885 932,231 314,871 1,025,164 6,448,686 62,331,837
Fair value of assets - note 10.5 (50,096,598) - - - - (50,096,598)
3,514,287 932,231 314,871 1,025,164 6,448,686 12,235,239
Unrecognized actuarial gains/ (losses) 1,035,921 (90,359) 76,738 - 884,560 1,906,860
Liability as at June 30 4,550,208 841,872 391,609 1,025,164 7,333,246 14,142,099
Liability as at July 01 5,389,026 630,417 267,106 833,006 7,120,507 14,240,062
Charge for the year
Current service cost 445,896 131,893 108,135 33,234 64,052 783,210
Interest cost 6,012,673 85,125 30,147 117,419 623,452 6,868,816
Expected return on plan assets (6,297,387) - - - - (6,297,387)
Actuarial losses/(gains) recognized
during the year - 472 - (27,825) (100,395) (127,748)
Liability for NCPG / contractual employees - - - 145,482 - 145,482
161,182 217,490 138,282 268,310 587,109 1,372,373
Contributions (1,000,000) - - - - (1,000,000)
Benefits paid during the year - (6,035) (13,779) (76,152) (374,370) (470,336)
Liability as at June 30 4,550,208 841,872 391,609 1,025,164 7,333,246 14,142,099
=====================================================================================================================================10.1.1. =====================================================================================================================================
Pension Gratuity Accumulating Post Total
compensated retirement 2009
Funded Unfunded absences medical facility
=====================================================================================================================================
(Rupees in thousand)
=====================================================================================================================================
Charge for the year 2008 was as follows (669,566) 232,604 99,286 186,473 282,072 130,869
=====================================================================================================================================10.2. Changes in the present value of the defined benefit obligations==========================================================================================
(Pension Funded)
==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 50,105,610 36,529,541
Current service cost 445,896 1,035,152
Interest cost 6,012,673 3,232,783
Benefits paid (3,906,371) (14,033,816)
Actuarial losses 953,077 778,679
Curtailment / settlement losses - 22,563,271
Balance as at June 30 53,610,885 50,105,610
==========================================================================================
==========================================================================================
(Pension Unfunded)
==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 709,378 1,180,770
Current service cost 131,893 127,477
Interest cost 85,125 102,687
Benefits paid (6,035) -
Actuarial losses 11,870 1,764
Curtailment / settlement (gains) - (703,320)
Balance as at June 30 932,231 709,378
==========================================================================================
==========================================================================================
(Gratuity)
==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 251,226 111,444
Current service cost 108,135 97,290
Interest cost 30,147 11,164
Benefits paid (13,779) (9,798)
Actuarial (gains) / losses (60,858) 41,126
Balance as at June 30 314,871 251,226
==========================================================================================
==========================================================================================
(Accumulating Compensated Absences)
==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 833,006 1,871,553
Current service cost 33,234 13,125
Interest cost 117,419 160,358
Benefits paid (76,152) (1,382,160)
Actuarial (gains) / losses (27,825) 12,990
Curtailment / settlement losses - 157,140
Recognition of NCPG/ contractual liabilities 145,482 -
Balance as at June 30 1,025,164 833,006
==========================================================================================
==========================================================================================
(Post Retirement Medical Facility)
==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 5,195,430 4,798,947
Current service cost 64,052 126,931
Interest cost 623,452 423,508
Benefits paid (374,369) (2,664,434)
Actuarial losses / (gains) 940,121 (51,761)
Curtailment / Settlement losses - 2,562,239
Balance as at June 30 - -
6,448,686 5,195,430
==========================================================================================10.3. Historical Information=========================================================================================================
2009 2008 2007 2006 2005
=========================================================================================================
(Rupees in thousand)
=========================================================================================================
Defined benefit pension plan funded
Present value of defined benefit
obligations at year end 53,610,885 50,105,610 36,529,541 31,413,488 28,134,077
Fair value of plan assets at year end (50,096,598) (48,441,436) (45,158,318) (39,243,528) (34,241,407)
Deficit / (Surplus) in the Plan 3,514,287 1,664,174 (8,628,777) (7,830,040) (6,107,330)
Experience adjustment on
plan liabilities losses 953,077 778,679 2,581,597 603,337 2,538,991
Experience adjustment on
plan assets gains/(Losses) (1,735,854) (522,664) 3,776,675 2,611,253 2,339,398
Defined benefit pension
plan - unfunded
Present value of defined benefit
obligations at year end 932,231 709,378 1,180,770 1,050,561 805,823
Experience adjustment
on pension liabilities (gains) / losses 83,101 1,764 (96,454) 47,981 156,338
Defined benefit gratuity plan
Present value of defined benefit
obligations at year end 314,871 251,226 111,444 136,265 38,128
Experience adjustment on
gratuity liability (gains) / losses (51,220) 41,126 (77,172) 10,089 909
Accumulating compensated absences
Present value of defined benefit
obligations at year end 1, 025 164 - 833,006 1,871,553 2,.972,819
Experience adjustment on
accumulating compensated
absences liability (gains) / losses 39,239 12,990 21,748 (235,937) (91,581)
Defined benefit post
retirement medical facility
Present value of defined benefit
obligations at year end 6,448,686 5,195,430 4,798,947 4,58,3853 4,723,962
Experience adjustment on post retirement
medical liability (gains) / losses 940,121 (51,761) (274,176) (673,407) (890)
=========================================================================================================10.4. Major categories of plan assets of defined benefit pension plan-funded as percentage of total plan assets are as follows:==========================================================================================
2009 2008
==========================================================================================
(Percentage)
==========================================================================================
Defence saving certificates 43 71
Term finance and other certificates 47 14
Pakistan investment bonds 6 7
Fixed & other assets 4 8
100 100
==========================================================================================10.5. Changes in the fair value of plan assets==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 48,441,436 45,158,318
Expected return on plan assets 6,297,387 4,515,832
Contributions made by the Company during the year 1,000,000 1,569,879
Contributions made by the employees - deputationists - 6,487
Benefits paid (3,906,371) (2,286,416)
Actuarial (losses) on plan assets (1,735,854) (522,664)
Balance as at June 30 50,096,598 48,441,436
Actual return on plan assets 4,561,533 3,993,168
==========================================================================================10.6. Effect of increase / decrease in medical cost trend rateEffect of 1 % increase in medical cost trend rate in current service cost and interest cost is Rs 18,181 thousand (2008: Rs 44,426 thousand) and effect of 1% decrease is Rs 15,063 thousand (2008: Rs 36,810 thousand). Effect of 1% increase in medical cost trend rate in present value of defined benefit obligations for medical cost is Rs 1,892,189 thousand (2008: Rs 1,792,423 thousand) and effect of 1% decrease is Rs 1,563,113 thousand (2008: Rs 1,480,697 thousand). 10.7. In the next financial year expected contribution to be paid to the funded pension plan by the Company is Rs 463,242 thousand (2008: Rs 740,975 thousand). 11. Deferred government grants ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 95,000 -
Received during the year - note 11.1 966,044 95,000
Balance as at June 30 1,061,044 95,000
==========================================================================================11.1. These represent grants received from Universal Service Fund (a government formed agency) mainly relating to property, plant and equipment received as assistance towards development of the telecommunication infrastructure in rural areas and include telecom infrastructure project for (i) basic telecom access in Pishin, Mansehra, Dadu and Larkana; (ii) Optical fibre extension - Baluchistan Package - 2; (iii) Broadband projects in Faisalabad, Sargodha Civil Division, Multan, Bahawalpur, Dera Ghazi Khan Civil Division and Hyderabad Civil Division.12. Trade and other payables ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Trade creditors - note 12.1 5,414,955 5,964,893
Accrued liabilities - note 12.2 1,315,240 1,875,019
Receipts against third party works 499,556 617,706
Taxes payable
Income tax collected from subscribers 366,426 498,389
Income tax deducted at source 13,017 24,466
379,443 522,855
Sales tax payable 1,061,915 731,611
Advances from customers 1,856,153 973,204
Technical services fee payable
to related party note 30.2 503,467 563,187
Retention money payable to
contractors / suppliers 5,914,707 6,540,698
Payable to:
Research and Development Fund - note 30.4 2,397,144 1,980,131
Universal Service Fund - related party - note 12.3 6,122,799 719,263
Pakistan Telecommunication Authority 34,542 20,216
Due to satellite companies - 51,703
Unclaimed dividend 120,342 123,084
VSS benefits payable 61,057 729,563
Other liabilities 432,851 318,534
26,114,171 21,731,667
==========================================================================================12.1. Included in trade creditors are amounts due to the following related parties:==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Telecom Foundation Pipes Limited 2,232 2,344
Etisalat - UAE - 170,990
Etisalat-Afghanistan - 81
Thuraya 8,929 28,021
11,161 201,436
==========================================================================================These relate to the normal business of the Company and are interest free.12.2. This includes Rs. 573,155 thousand (2008: Rs 519,851 thousand) representing provision against EOBI contribution payable under EOBI Act 1976, for employees hired subsequent to PTCL's incorporation. The Company has withheld the payment of EOBI pending the settlement of court case as discussed in note 13.7. The amount of provision made during the year is Rs. 53,304 thousand (2008: Rs 59,830 thousand). 12.3. This includes an amount of Rs 3,458,866 thousand (2008: Nil) payable to Universal Service Fund for the period from May 01, 2008 to December 31, 2008. As per agreement between the Company and the Pakistan Telecommunication Authority, this amount is payable in 15 equal monthly installments starting from May 2009. 13. Contingencies and commitments Commitments 13.1. Commitments in respect of contracts for capital expenditure amounting to Rs 12,352,378 thousand (2008: Rs 11,026,561 thousand). Contingencies 13.2. 1,850 cases (2008: 1,666 cases) have been filed against the Company primarily by subscribers and employees. Because of the number of cases involved and their uncertain nature, it is not possible to quantify their financial effect at present. However, the management and the Company's legal advisor are of the view that the outcome of these cases is expected to be favorable and a liability, if any, arising on the settlement of these cases is not likely to be material. 13.3. In previous years the Income Tax Authorities served show cause notices under section 52 and section 86 of the repealed Income Tax Ordinance 1979 for the assessment years 1996-97 to 1998-99 on failure to withhold/deduct tax under section 50(3) while making payments to non resident satellite companies. The Company filed a writ petition before Honourable Lahore High Court against the said notices which was dismissed. An appeal was filed against the dismissal before Honourable Supreme Court of Pakistan which was also dismissed and the Company was advised by the Honourable Court to file an appeal before the Income Tax Appellate Authorities. Subsequently, the Company filed an appeal with the Commissioner Income Tax (CIT) Appeals who has annulled the order of the Taxation Officer. The department has filed an appeal with the Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals). Pending final outcome of the appeal, no provision has been made in these financial statements for the demands aggregating Rs 1,599,557 thousand (2008: Rs 1,599,557 thousand) The management and the Company's tax advisor are of the view that the outcome of the appeal is expected to be favourable. 13.4. In 1995 the Government of Pakistan, in the interest of public safety, passed an order to close transmission of all messages, inter alia, through card phone services and mobile telephone services within and outside the city of Karachi. Telecard Limited, a pay card service provider, served a legal notice to the Government of Pakistan seeking restoration of its services and claimed damages from the Government amounting to Rs 2,261,924 thousand. The Government of Pakistan ordered for immediate restoration of Pay Card services including rebate relief and discount to all pay phone service providers. In view of relief and discount offered by the Government, Telecard Limited withheld payments on account of their monthly bills to the Company and obtained a stay order from the Honourable Sindh High Court for an amount of Rs 110,033 thousand against the Company. On the instructions of Honourable Court, external consultants calculated the rebate and discount amounting to Rs 349,953 thousand payable by the Company to Telecard Limited for the period from January 1997 to August 2001. In the suit, final arguments of the parties are to be reheard. The Company has also filed a claim against Telecard Limited for an amount of Rs 324,683 thousand receivable up to December 31, 2001 and Rs 9,416 thousand rebate refund claim. In another case, identical to the above matter M/s Telefon has claimed Rs 97,337 thousand from the Company. In the last hearing held on May 9, 2006 issues have been framed and evidence will be recorded in the next hearing. The management and the Company's tax advisor are of the view that the outcome of the appeal is expected to be favourable. 13.5. M/s Televoice has filed a suit with Honourable Sindh High Court for arbitration claiming Rs 409,125 thousand for breach of interconnect agreement by the Company. A counter claim for Rs 120,000 thousand has been lodged by the Company in the same court. The arbitrator announced an award of Rs.115,000 thousand on April 25, 2006 in favour of PTCL for which execution has been filed by the Company with the court. However, pending the outcome of the execution application, no adjustment has been made in these financial statements for the above amounts. 13.6. Consequent to an audit of central excise duty collected by the Company from subscribers for the years 1998-99 and 1999-2000 the Rawalpindi Collectorate of Central Excise Department raised a demand for excise duty along with additional duties and penalties amounting to Rs 2,043,268 thousand. The matter was taken up by the Company with the Federal Board of Revenue (FBR), Government of Pakistan for resolution. A committee was formed comprising representatives from the Company and FBR. As a result of the negotiations, the Company deposited an amount of Rs 466,176 thousand on account of central excise duty. It was agreed that the Company would retain the right to contest the additional duties and penalties at All appellate forums and in the event of favourable decision the amount would be refunded to the Company by Collectorate of Central Excise. The Company has filed an appeal to contest the additional duties and penalties levied by the Collectorate. During the year ended June 30,2008 appeals amounting to Rs 1,468,806 thousand had been decided by Custom, Central Excise and Sales Tax Appellate Tribunal in favour of PTCL subject to submission of proof. Pending the final outcome, no provision has been made in these financial statements for the above demand, since the management and the Company's lawyer are of the view that the outcome of the appeal is expected to be favourable. 13.7. The Employees' Old-Age Benefits Institute (EOBI) served a demand notice on the Company under section 12(3) of Employees' Old Age Benefits (EOBI) Act, 1976 for payment of Company's and employees contribution amounting to Rs 1,496,829 thousand for the period January 1, 1996 to May31, 2005. The management has filed a writ petition against the demand before Honourable High Court which is pending for hearing. However, the management and legal advisor are of the view that case would be decided in the favour of the Company. 13.8. In respect of tax years 2006 and 2007, Additional Commissioner of Income Tax (ACIT) inter alia amended the assessment on the grounds that Company's claim of concessional rate of tax at 1% of revenues received from international customers, provided for through Clause 3 of Part II of Second Schedule to the Income Tax Ordinance, 2001 is not in accordance with such legal provisions, as underlying telecommunication services have not been rendered outside Pakistan. The overall impact of this amendment is approximately Rs 2,250,000 thousand. The Commissioner of Income Tax (CIT Appeals) and Income Tax Appellate Tribunal (ITAT) have endorsed the departmental view and presently Company's reference against the judgment of ITAT, in this respect, is pending before the Rawalpindi Bench of the Honourable Lahore High Court. Provision in connection with above amendment of assessment has not been incorporated in these financial statements owing to the fact that management and the Company's tax advisor consider that underlying legal and factual position favours the Company's stance and that the litigation would eventually settle in company's favour. 13.9. Bank guarantees and bid bonds issued in favour of: ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Universal Service Fund (USF) against Government grants 2,030,337 190,000
Others 5,000 -
2,035,337 190,000
==========================================================================================14. Property, plant and equipment=================================================================================================================================================
2009
=================================================================================================================================================
Cost as at Additions Cost as at Accumulated Depreciation Accumulated Net book Annual
July 1, (deletions) June 30, depreciation for the year depreciation value as at rate of
2008 2009 as at July 1, Ion disposals) as at June 30, June 30, depreciation
2008 2009 2009 %
=================================================================================================================================================
(Rupees in thousand)
=================================================================================================================================================
Land - Freehold 1,643,226 555 1,643,781 - - - 1,643,781
Leasehold 74,151 3,267 77,418 21,821 1,178 22,999 54,419 1 -3.3
Buildings on - Freehold land 9,838,254 210,065 10,048,319 2,701,091 247,328 2,948,419 7,099,900 2.5
Leasehold land 1,009,184 - 1,009,184 351,389 25,230 376,619 632,565 2.5
Lines and wires 102,895,985 1,677,423 104,573,408 71,323,741 4,630,990 75,954,731 28,618,677 7
Apparatus, plant and equipment 118,024,486 5,240,150 123,264,636 80,785,132 6,995,979 87,781,111 35,483,525 10
Office equipment 1,008,318 183,575 1,189,925 518,677 103,480 620,971 568,954 10
(1,968) (1,186)
Furniture and fittings 444,310 15,801 455,345 296,127 24,642 316,003 139,342 10
(4,766) (4,766)
Vehicles 1,566,821 180,926 1,359,277 1,335,671 114,854 1,076,706 282,571 20
(388,470) (373,819)
Submarine cables 5,715,407 - 5,715,407 2,086,315 422,063 2,508,378 3,207,029 6.67-8.33
Total 242,220,142 7,511,762 249,336,700 159,419,964 12,565,744 171,605,937 77,730,763
(395,204) (379,771)
=================================================================================================================================================
2008
=================================================================================================================================================
Cost as at Additions Cost as at Accumulated Depreciation Accumulated Net book Annual
July 1, (deletions) June 30, depreciation for the year depreciation value as at rate of
2008 2009 as at July 1, Con disposals) as at June 30, June 30, depreciation
2008 2009 2009 %
=================================================================================================================================================
(Rupees in thousand)
=================================================================================================================================================
Land -Freehold 1,641,805 1,421 1,643,226 - - - 1,643,226 -
Leasehold 74,114 37 74,151 20,868 953 21,821 52,330 1-3.3
Buildings on- - Freehold land 9,568,729 286,079 9,838,254 2,463,469 242,575 2,701,091 7,137,163 2.5
(16,554) (4,953)
Leasehold land 1,009,184 - 1,009,184 326,159 25,230 351,389 657,795 2.5
Lines and wires 98,704,981 4,191,004 102,895,985 66,291,133 5,032,608 71,323,741 31,572,244 7
Apparatus, plant and equipment 108,244,220 10,188,181 118,024,486 74,849,887 6,294,774 80,785,132 37,239,354 10
(407,915) (359,529)
Office equipment 883,871 130,410 1,008,318 430,402 91,553 518,677 489,641 10
(5,963) (3,278)
Furniture and fittings 394,832 52,965 444,310 273,243 26,009 296,127 148,183 10
(3,487) (3,125)
Vehicles 1,590,906 21,270 1,566,821 1,265,600 108,241 1,335,671 231,150 20
(45,355) (38,170)
Submarine cables 5,464,910 250,497 5,715,407 1,664,252 422,063 2,086,315 3,629,092 6.67 -8.33
Total 227,577,552 15,121,864 242,220,142 14,758,5013 12,244,006 159,419,964 82,800,178
(479,274) (409,055)
=================================================================================================================================================14.1. The depreciation charge for the year has been allocated as follows:==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Cost of services - note 29 12,314,429 11,999,126
Administrative and general expenses - note 30 188,486 183,660
Selling and marketing expenses - note 31 62,829 61,220
12,565,744 12,244,006
==========================================================================================14.2. As explained in note 1.1 the property and tights in the above assets at January 1, 1996 were transferred to the Company from Pakistan Telecommunication Corporation under the Pakistan Telecommunication (Reorganization) Act, 1 996. However, the title to such freehold land was not formally transferred in the name of the Company in the land revenue records. The Company initiated the process of transfer of title of land in its name in previous year which is still ongoing and shall be completed in due course of time.14.3. Disposal of property, plant and equipment ======================================================================================================================
2009
======================================================================================================================
Particulars Sold to Cost Accumulated Book Sale Mode of
of assets depreciation value proceeds disposal
======================================================================================================================
(Rupees in thousand)
======================================================================================================================
Office Equipment
TV Miscellaneous parties 12 54 66 260 Auction
Computer Accessories Miscellaneous parties 151 63 88 38 Auction
Printers, CPUs Miscellaneous parties 847 581 266 275 Auction
AC's Miscellaneous parties 178 51 127 88 Auction
Photocopiers Miscellaneous parties 648 428 220 115 Auction
Miscellaneous items Miscellaneous parties 24 9 15 97 Auction
1,968 1,186 782 873
Furniture & fittings 4,766 4,766 - 477 Auction
Motor Vehicles
GuI Muhammad 567 453 114 283 Company Policy
M. Iqbal Waseem 887 710 177 169 Company Policy
Syed Abid Hussain 1,314 1,226 88 250 Company Policy
Zubair Assad ullah Tunio 880 704 176 167 Company Policy
Nafees Ahmed Siddique 849 679 170 161 Company Policy
Bashir Hussain 759 455 304 304 Company Policy
Nawazish Ali Anjum 866 693 173 173 Company Policy
Rizwan Ahmadd Bhutto 323 158 165 152 Company Policy
Hussain Ahmad 585 468 117 293 Company Policy
M.Amjad ALI 772 617 155 154 Company Policy
M. Iqbal Siyal 568 454 114 284 Company Policy
Atiq Nawaz 583 466 117 291 Company Policy
Mazhar Amin 570 456 114 285 Company Policy
Ehsan Ul Haq 563 305 258 338 Company Policy
Rao Abdul Raqeeb Khan 563 225 338 321 Company Policy
M. Roshan Awan 563 225 338 338 Company Policy
Sana Ullah Shaikh 563 225 338 321 Company Policy
Dr. Tahir Saeed 563 225 338 338 Company Policy
Zakir Hussain Satti 563 225 338 338 Company Policy
Anwer Jamil 834 333 500 500 Company Policy
Mian Muhammad Bilal 568 454 114 270 Company Policy
Fuad Enver 563 300 263 338 Company Policy
Imran Ul Haq 834 333 500 500 Company Policy
Mubashir Naseer Ch 582 466 116 291 Company Policy
Iftikhar Ahmed Cheema 582 466 116 291 Company Policy
Kanwar Ghulam Mustafa Khan 867 693 174 403 Company Policy
Shakeel Ahmed 585 468 117 293 Company Policy
Aftab Ahmad Chishti 866 693 173 411 Company Policy
Col (Retd) Zamir Hussain Bha 567 453 114 283 Company Policy
Zomma Mohiuddin 1,141 913 228 542 Company Policy
Sajjad Ahmad 759 384 375 455 Company Policy
Shahid Ahmad 773 618 155 309 Company Policy
Gohar Malik 563 305 258 338 Company Policy
S. M. Imran Ali 866 693 173 433 Company Policy
M.Amir Hussain 755 604 151 378 Company Policy
Brig (R) Waqar Ahmed Malik 773 618 155 386 Company Policy
Syed ALIl QadirJillani 955 764 191 454 Company Policy
Noor Ahmed Noor 563 225 338 338 Company Policy
Javed Iqbal 757 606 151 144 Company Policy
Tariq Qamar 759 405 354 432 Company Policy
Sohail Anwar 585 469 116 293 Company Policy
Zia Ud Din Barki 367 220 147 220 Company Policy
Badar UI Zaman 367 232 135 220 Company Policy
Behram Shahrokh Aslam 404 222 182 283 Company Policy
Shaukat Ali 759 304 455 329 Company Policy
Muhammad Siddique Afridi 562 450 112 281 Company Policy
Faheem Ul Hassan 323 173 150 153 Company Policy
Abrar Ahmed 775 620 155 147 Company Policy
Fazle Mabood 834 413 420 317 Company Policy
Ghulam Shabbir 416 242 173 188 Company Policy
Mehbool Iqbal Qadir 568 454 114 284 Company Policy
Mudassar Hafeez Dar 563 225 338 321 Company Policy
M.Aamir 563 305 258 321 Company Policy
M. Afzal Kharal 563 305 258 338 Company Policy
Muhammad Umar 569 454 115 270 Company Policy
Wajeeh Anwar 563 305 258 321 Company Policy
Muhammad Saleem Akhtar 746 599 147 142 Company Policy
Mushtaq Ahmed Afridi 610 486 124 305 Company Policy
Sardar Ali 640 512 127 304 Company Policy
S. Mazhar Hussain 886 709 177 443 Company Policy
Syed Shafqat Mehdi 597 478 119 298 Company Policy
Zulfiqar Ali Shah 563 225 338 338 Company Policy
Sher Bahader Khan 367 202 165 244 Company Policy
Saleem 367 202 165 209 Company Policy
Mudassar Hafeez Dar 563 390 173 338 Company Policy
Muhammad Azam 759 417 342 455 Company Policy
MujeebUr Rehman 404 222 182 283 Company Policy
Israr Ahmed Abro 626 502 124 250 Company Policy
Muhammad Anwar 568 454 114 284 Company Policy
Tariq Mehmood 604 484 120 229 Company Policy
M. Hatam Shad 344 201 143 202 Auction
Others 342,634 342,577 57 183,330 Company Policy
388,470 373,819 14,651 204,689
Total 395,204 379,771 15,433 206,039
======================================================================================================================Others represent vehicles disposed off during the year having a book value of less than Rs 50,000.======================================================================================================================
2008
======================================================================================================================
Particulars Sold to Cost Accumulated Book Sale Mode of
of assets depreciation value proceeds disposal
======================================================================================================================
(Rupees in thousand)
======================================================================================================================
Apparatus, plant and
equipment
Exchanges 394,740 354,248 40,492 Write Off
DRS Links 8,708 3,562 5,146 - Write Off
BTS 4,466 1,720 2,746 - Write Off
407,914 359,530 48,384 -
Buildings
Civil Work/ Electrification - 16,554 4,953 11,601 Write Off
Furniture and fittings
Office furniture & fixture 3,487 3,125 362 Write Off
Office equipment 5,963 3,278 2,685 Write Off
Motor Vehicles 5,950 5,663 287 Write Off
Sher Bahadur Khan 866 520 346 347 Company Policy
Javaid Akhtar 755 466 289 290 Company Policy
Gul Ahmed 759 293 466 472 Company Policy
Pervaiz Akhtar 866 520 346 347 Company Policy
Naveed Iqbal 755 466 289 289 Company Policy
S Ubaid Hussain Shah 894 551 343 343 Company Policy
Naeem- UI Haq 753 464 289 289 Company Policy
Pervaz Ahmed Mehtab 1,168 720 448 448 Company Policy
RehmatUllah 1,185 711 474 474 Company Policy
Nawab Khan Afridi 759 291 468 468 Company Policy
M Hanif Khan 787 590 197 197 Company Policy
Muhammad Iqbal Bangish 815 611 204 204 Company Policy
5,714 3,062 2,652 - Theft
22,026 14,928 7,098 4,168
Others 23,330 23,241 89 15,483
Total 479,274 409,055 70,219 19,651
======================================================================================================================Others represent property, plant and equipment disposed off during the year having a book value of less than Rs 50,000.The amounts written off during the year represent the book value of assets that were partially or completely destroyed under the country wide riots that took place in December 2007. 15. Capital work-in-progress ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Buildings 118,413 127,435
Lines and wires 1,589,605 2,245,182
Apparatus, plant and equipment 3,613,242 4,329,873
Intangibles 38,632 68,517
Advances to suppliers - note 15.1 4,476,696 1,121,816
- note 15.2 9,836,588 7,892,823
==========================================================================================15.1. Advances to suppliers include an amount of Rs 1,685,532 thousand (2008: Rs 449,000 thousand) given to Emirates Telecommunication Corporation, a related party, in respect of a project called India Middle East Western Europe (I-ME-WE).15.2. Capital work in progress includes an amount of Rs 443,426 thousand (2008: Rs 704,271 thousand) in respect of overheads relating to the development regions capitalized during the year. 16. Intangible assets ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Cost
Licenses 4,015,397 4,015,397
Softwares 397,979 -
-note 16.1 4,413,376 4,015,397
Accumulated amortization
Licenses (1,062,749) (866,334)
Softwares (29,957) -
- note 16.2 (1,092,706) (866,334)
3,320,670 3,149,063
==========================================================================================16.1. Cost==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 4,015,397 3,906,127
Additions during the year
Bill printing software 8,201 -
Billing and automation of broadband 46,065 -
Enterprise Resource Planning (ERP) SAP system note 16.6 343,713 -
WLL and LDI License note 16.5 - 109,270
397,979 109,270
Balance as at June 30 4,413,376 4,015,397
==========================================================================================16.2. Accumulated amortization==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 866,334 675,385
Amortization for the year
Licenses 196,415 190,949
Softwares 29,957 -
- note 29 226,372 190,949
Balance as at June 30 1,092,706 866,334
==========================================================================================16.3. The Pakistan Telecommunication Authority (PTA) has issued a license to the Company to provide telecommunication services in Pakistan for a period of 25 years commencing January 1, 1996 for an agreed license fee of Rs 249,344 thousand. In the year ended June 30, 2005, PTA modified the previously issued license to provide telecommunication services to include spectrum license at an agreed license fee of Rs 4,278,639 thousand.This license allowed the Company to provide the Wireless Local Loop services in Pakistan over a period of 20 years commencing October 2004. The cost of the license is being amortized on straight line basis over the period of the license. 16.4. PTCL acquired the IPTV license from PEMRA on October 1,2006 for the agreed price of Rs. 9,900 thousand. The cost of license is being amortized on straight line basis over the period of 5 years. 16.5. The Pakistan Telecommunication Authority (PTA) has issued a license under section 5 of the Azad Jammu and Kashmir Council Adaptation of Pakistan Telecommunication (Re-organization) Act, 1996, Northern Areas Telecommunication (Reorganization) Act, 2005 and Northern Areas Telecommunication (Re-organization) (Adaptation and Enforcement) Order, 2006 to the Company to establish, maintain and operate a telecommunication system in Azad Jammu and Kashmir and Northern Areas for a period of 20 years commencing May 28, 2008 for an agreed license fee of Rs. 109,270 thousand. The cost of the license is being amortized on straight line basis over the period of the license. 16.6. This represents Enterprise Resource Planning (ERP) - SAP system with a useful life of 10 years. 17. Long term investments - at cost ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Subsidiaries - unquoted
Pak Telecom Mobile Limited
350,000,000 (2008: 350,000,000) ordinary shares of Rs 10 each
Ordinary shares held 100% (2008: 100%) 3,500,000 3,500,000
Paknet Limited
Nil (2008: 20,000,000) ordinary shares of Rs 10 each
Ordinary shares held Nil (2008: 100%) - 200,000
Provision for impairment - note 17.1 - (200,000)
Associate - unquoted
Telecom Foundation Pipes Limited
1,658,520 (2008: 1,658,520) ordinary shares of Rs 10 each
Ordinary shares held 40% (2008: 40%)
(MD: Gul Bahadur Yousafzai) 23,539 23,539
3,523,539 3,523,539
Other investments
Available for sale - Unquoted
New ICO Global Communications (Holdings) Limited
218,207 (2008:218,207) ordinary shares of US $ 0.01 per share
(Acting Chief Executive
: Mr. Michael P. Corkery) - note 17.2
Alcatel - Lucent Pakistan Limited
2,000,000 (2008: 2,000,000)
ordinary shares of Rs 10 each 20,000 20,000
(Chief Executive: Mr. Ben Verwaayen)
Thuraya Satellite Company
3,670,000 (2008: 3,670,000)
ordinary shares of 1 Dirham each 63,900 63,900
(Chief Executive: Mr. Yousuf Al Syed)
World Tel Assembly of Governors
Participation Fund investment of US $ 100,000
(2008: US $100,000) 6,390 6,390
Provision for impairment (6,390) (6,390)
Advance against purchase of shares - note 17.3 2,000,000 -
5,607,439 3,607,439
==========================================================================================17.1. The investment has been written off during the year upon dissolution of Paknet Limited.17.2. New ICO Global Communications (Holdings) Limited acquired the assets of ICO Global Communications (Holdings) Limited, established in January 1995 to provide global mobile personal communication services by satellite. ICO Global Communications (Holdings) Limited was suspended from trading when the Company filed for Chapter 11 protection on August 27, 1999. The business was renamed New ICO Global Communications (Holdings) Limited following its emergence from Chapter 11 protection on May 16, 2000. According to the reorganization plan, the shareholders of CO Global Communications (Holdings) Limited received one class A ordinary shares of US $ 0.01 in New ICO Global Communications (Holdings) Limited for every 103.8 shares and an option to exchange one warrant of US $ 90 for exchange with 13.84 shares at any time on or after May 16, 2000 (the effective date) on which the reorganization plan becomes effective until 5 p.m. New York City time, on May 17, 2006, which was extended by the Company up to August 3, 2006. The Company did not exercise the option before expiry. 17.3. This represents an advance given to Pakistan Telecom Mobile Limited, the wholly owned subsidiary, for issuance of ordinary shares. 18. Long term loans - considered good ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Loan to subsidiary: PTML - unsecured - note 18.1 3,000,000 -
Loans to employees - secured - note 18.2 455,599 524,556
Current portion shown under current assets - note 21 (123,421) (129,613)
332,178 394,943
Others 200 -
3,332,378 394,943
==========================================================================================18.1. This represents an unsecured loan given during the year to Pak Telecom Mobile Limited, a wholly owned subsidiary of the Company, under a subordinated debt agreement. The loan is recoverable in eight equal quarterly installments commencing after a grace period of four years and carries markup at the rate of three months KIBOR plus 82 basis points.18.2. These loans and advances are for house building and purchase of motor cars, motor cycles and cycles. Loans to gazetted employees of the Company carry interest at the rate of 12.5% per annum (2008: 12.5% per annum), whereas, loans to other employees are interest free. The loans are recoverable in monthly installments spread over a period of 5 to 10 years. These loans are secured against future pension payments of employees. This also includes Rs. 35,670 thousand (2008: Nil) receivables from employees against sale of vehicles, recoverable in monthly installments spread over a period of 1 to 2 years. 19. Stores and spares ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Stores and spares 5,851,582 5,505,540
Provision for obsolescence - note 19.2 (649,591) (551,455)
5,201,991 4,954,085
==========================================================================================19.1. Stores and spares include items which may result in property, plant and equipment but are not distinguishable.19.2. Provision for obsolescence ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 551,455 414,403
Provision during the year - note 30 172,276 252,489
723,731 666,892
Write off against provision (74,140) (115,437)
Balance as at June 30 649,591 551,455
==========================================================================================20. Trade debts==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Domestic
Considered good-unsecured - note 20.1 7,566,398 10,551,791
Considered doubtful 18,110,656 16,887,734
25,677,054 27,439,525
International
Considered good-unsecured - note 20.2 3,194,576 2,814,425
Considered doubtful 885,740 318,335
4,080,316 3,132,760
29,757,370 30,572,285
Provision for doubtful debts - note 20.3 (18,996,396) (17,206,069)
10,760,974 13,366,216
==========================================================================================20.1. Included in trade debts - domestic are amounts due from Pak Telecom Mobile Limited and National Telecommunication Corporation (NTC), related parties of the Company, amounting to Rs 412,309 thousand (2008: Rs 1,442,670 thousand) and Rs 354,744 thousand (2008: Rs 695,070 thousand) respectively. These amounts are interest free and accrued in the normal course of business.20.2. Included in trade debts - international are amounts due from the following related parties: ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Etisalat - Afghanistan 100,502 -
Etisalat - UAE 657,771 -
Mobily - Saudi Arabia 528,119 655,645
1,286,392 655,645
==========================================================================================These amounts are interest free and accrued in the normal course of business.20.3. Provision for doubtful debts ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 17,206,069 13,652,636
Provision for the year - note 30 2,907,395 4,993,257
20,113,464 18,645,893
Trade debts written off against provision (1,117,068) (1,439,824)
Balance as at June 30 18,996,396 17,206,069
==========================================================================================21. Loans and advances==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Current portion of loans to
employees - considered good - note 18 123,421 129,613
Advances to suppliers and contractors - considered good 466,640 758,696
590,061 888,309
==========================================================================================22. Accrued interest==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Accrued profit on bank placements 766,674 315,817
Interest receivable on loan to the
subsidiary - considered good - note 22.1 54,353 -
821,027 315,817
==========================================================================================22.1. This represents markup on loan to Pakistan Telecom Mobile Limited, the wholly owned subsidiary, as indicated in the note 18.123. Recoverable from tax authorities ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Central excise 466,176 466,176
Sales tax 593,432 917,590
1,059,608 1,383,766
==========================================================================================24. Other receivables==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Due from Pakistan Telecommunication Employees Trust
(PTET) - related party 69,009 38,978
Due from PTCL employees GPF Trust - related patty 147,767 906,746
Due from Special Communication Organization (SCO) 220,000 221,013
Other receivables:
considered good 261,494 474,880
considered doubtful 185,239 26,559
446,733 501,439
883,509 1,668,176
Provision for doubtful receivables - note 24.1 (185,239) (26,559)
698,270 1,641,617
==========================================================================================24.1. Provision for doubtful receivables==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Balance as at July 01 26,559 34,310
Provision for the year - note 30 158,680 -
185,239 34,310
Trade debts written off against provision - (7,751)
Balance as at June 30 185,239 26,559
==========================================================================================25. Receivable from Government of Pakistan==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
- note 25.1 2,164,072 2,164,072
==========================================================================================25.1. This represents the amount receivable from Government of Pakistan (GOP) on account of its share in the Voluntary Separation Scheme (VSS) offered to the Company's employees during last year.26. Short term investments ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Maturity period upto three months 19,795,904 10,344,379
Maturity period three to six months 1,221,886 -
- note 26.1 21,017,790 10,344,379
==========================================================================================26.1. These represent Term Deposit Placements with different banks having maturity periods of three to six months. The effective interest rate ranges between 13% to 17% (2008: 10% to 14.25%) per annum.27. Cash and bank balances ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
At banks in:
Deposit accounts - note 27.1 10,304,147 3,816,168
Current accounts including US $ 10,751 thousand
(2008: US $ 1,222 thousand) 1,602,273 717,415
11,906,420 4,533,583
In hand 28 11,562
11,906,448 4,545,145
==========================================================================================27.1. The balances in deposit accounts bear mark up which ranges from 5 % to 19.5% per annum (2008: 1.5 % to 14.25% per annum).28. Revenue ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Domestic - note 28.1 53,039,455 60,704,017
International - note 28.2 6,199,546 5,632,025
59,239,001 66,336,042
==========================================================================================28.1. Revenue is exclusive of excise duty amounting to Rs 8,611,191 thousand (2008: Rs 7,631,695 thousand).28.2. International revenue represents revenue from foreign network operators for calls that originate outside Pakistan and it has been shown net of interconnect cost relating to the other operators and Access Promotion Charges aggregating to Rs. 10,886,794 thousand (2008: Rs 7,758,176 thousand). 29. Cost of services ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Salaries, allowances and other benefits - note 29.1 7,995,033 9,789,118
Call centre charges 187,165 109,984
Interconnect cost 4,103,667 5,250,432
Foreign operators cost and satellite charges 6,053,657 3,541,961
Fuel and power 3,109,948 2,474,085
Communication 7,421 3,303
Stores and spares consumed 1,160,754 1,739,081
Rent, rates and taxes note 29.2 502,709 247,531
Repairs and maintenance 1,475,724 1,414,604
Printing and stationery 255,198 190,478
Travelling and conveyance 16,308 16,574
Depreciation of property, plant and equipment note 14.1 12,314,429 11,999,126
Amortization of intangible assets - note 16.2 226,372 190,949
Annual license fee to PTA 323,897 379,643
37,732,282 37,346,869
==========================================================================================29.1. This includes Rs 1,097,079 thousand (2008: Rs 104,694 thousand) in respect of employees' retirement benefits other than VSS.29.2. This includes co-location charges of Rs 78,305 thousand (2008: Rs 86,923 thousand) payable to National Telecommunication Corporation for the current year. 30. Administrative and general expenses ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Salaries, allowances and other benefits - note 30.1 814,614 886,147
Call centre charges 28,075 16,498
Fuel and power 234,074 165,167
Rent, rates and taxes 322,651 160,681
Repairs and maintenance 8,634 30,618
Printing and stationery 3,940 4,252
Travelling and conveyance 130,467 132,588
Technical services fee note 30.2 1,886,885 2,186,398
Legal and professional services - note 30.3 486,434 75,796
Depreciation of property, plant and equipment note 14.1 188,486 183,660
Research and development - note 30.4 471,239 648,898
Provision for:
Impairment of investment - 3,679
Obsolete stores - note 19.2 172,276 252,489
Doubtful debts - note 20.3 2,907,395 4,934,064
Doubtful receivables - note 24.1 158,680 -
Donations - note 30.6 37,069 2,509
Receivables written off 142,195 -
Loss on settlement of Paknet Limited balances - 1,652
Other expenses 942,147 1,138,459
8,935,261 10,823,555
==========================================================================================30.1. This includes Rs 164,562 thousand (2008: Rs 15,705 thousand) in respect of employees' retirement benefits other than VSS.30.2. This represents amount payable to Emirates Telecommunication Corporation (Etisalat), a related party, under a technical service agreement between the Company and Etisalat for a period of five years commencing October 1, 2006 at the rate of 3.5% of PTCL group's consolidated annual revenue. 30.3. Auditors remuneration The charges for legal and professional services include the following in respect of auditors' services for: ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
A F Ferguson & Co.
Statutory audit including half yearly review 4,500 4,250
Others 250 200
Ford Rhodes Sidat Hyder & Co.
Statutory audit including half yearly review 4,500 -
Others 250 -
KPMG Taseer Hadi & Co.
Statutory audit including half yearly review - 4,250
Others - 200
9,500 9,900
==========================================================================================30.4. This represents Company's contribution to Information Communication Technology (ICT) Research and Development Fund at the rate of 1% of its gross revenue less inter operator payments and payments toward research and development activities in Pakistan in accordance with the terms and conditions of its license to provide telecommunication services.30.5. Provision against doubtful debts is net of security deposits written back amounting to Rs Nil (2008: Rs 40,711 thousand) against defaulter receivable balances. 30.6. There were no donations during the year in which the directors or their spouses had interest. 31. Selling and marketing expenses ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Salaries, Allowances and other benefits - note 31.1 799,503 978,912
Call centre charges 18,717 10,998
Sales & Distribution Charges 357,486 -
Fuel and power 69,110 54,980
Printing and stationery 2,631 2,126
Travelling and conveyance 16,308 16,574
Advertisement and publicity 490,487 675,136
Depreciation of property, plant and equipment note 14.1 62,829 61,220
1,817,071 1,799,946
==========================================================================================31.1. This includes Rs 109,708 thousand (2008: Rs 10,469 thousand) in respect of employees' retirement benefits other than VSS.32. Voluntary separation scheme (VSS) Last year the Company offered a uniform non-discriminatory Voluntary Separation Scheme (the Scheme) to its employees hired on government terms and conditions. The benefits offered over and above the accumulated post retirement benefit obligation as at March 31, 2008 have been treated as VSS cost. Out of 29,954 employees who opted for the scheme, 25,324 belong to funded pension scheme and 4,630 to unfunded pension scheme. 18,167 of these employees have become pensioners last year. The amount of actuarial gain/loss on curtailment / settlement and proportionate share of unrecognized actuarial gains/losses as at March 31, 2008 for employees who have opted for VSS have also been adjusted/charged against the VSS expense. The break up of these expense is as follows: =====================================================================================================================
2009
=====================================================================================================================
Pension Gratuity Accumulating Post Total
compensated retirement
Funded Unfunded absences medical facility
=====================================================================================================================
(Rupees in thousand)
=====================================================================================================================
Commutation under VSS 10,351 - - - - 10,351
Pension paid - - - - - -
Pension payable - long term - - - - - -
Accumulating compensated absences - - - - - -
Post retirement medical facilities - - - -
Lumpsum medical compensation - - - - 7,383 7,383
Cost of VSS retirement benefits 10,351 - - - 7,383 17,734
Provision for retirement benefits - - - - -
Unrecognized actuarial gains / (losses)
recognized on curtailment / settlement - - - - - -
VSS expense relating to retirement benefi 10,351 - - - 7,383 17,734
Other VSS expense 74,384
VSS consultancy/implementation cost -
Total VSS cost 92,118
Contribution from Government of Pakistan -
Net Cost of VSS 92,118
=====================================================================================================================
2008
=====================================================================================================================
Pension Gratuity Accumulating Post Total
compensated retirement
Funded Unfunded absences medical facility
=====================================================================================================================
(Rupees in thousand)
=====================================================================================================================
Commutation under VSS 11,747,400 - - - - 11,747,400
Pension paid 490,381 - - - - 490,381
Pension payable - long term 28,956,214 - - - - 28,956,214
Accumulating compensated absences - - - 1,317,919 - 1,317,919
Post retirement medical facilities - - - - 2,482,417 2,482,417
Lump sum medical compensation - - - - 2,580,600 2,580,600
Cost of VSS retirement benefits 41,193,995 - - 1,317,919 5,063,017 47,574,931
Provision for retirement benefits 18,630,724 703,320 - 1,160,779 2,500,778 22,995,601
Unrecognized actuarial gains / (losses)
recognized on curtailment/settlement 3,641,471 (82,360) - - 1,826,981 -
620,960 - - 1,160,779 4,327,759 28,381,693
VSS expense relating to retirement benefi 18,921,800 (620,960) - 157,140 735,258 19,193,238
Other VSS expense 22,040,029
VSS consultancy/implementation cost 133,587
Total VSS cost 41,366,854
Contribution from Government of Pakistan (17,429,000)
Net Cost of VSS 23,937,854
=====================================================================================================================33. Other operating income Income from financial assets:==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Mark up on loans and advances - note 33.1 270,436 35,794
Dividend - note 33.2 - 350,000
Return on bank placements 2,986,598 2,599,908
Late payment surcharge from subscribers on over due bills 213,268 585,221
Income / (expense) from non-financial assets:
Gain / (loss) on disposal of property, plant and equipment 190,606 (50,568)
Others 606,264 437,184
4,267,172 3,957,539
==========================================================================================33.1. Included in markup on loans and advances is an amount of Rs 263,333 thousand (2008: Rs 24,966 thousand) accrued on the loan given to Pak Telecom Mobile Limited, the wholly owned subsidiary, as shown in the note 18.1.33.2. This includes dividend from Pak Telecom Mobile Limited, the wholly owned subsidiary, amounting to Rs Nil (2008: Rs 350,000 thousand. 34. Finance cost ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Interest and other charges on Suppliers' credit - 1,644
Bank and other charges 265,232 358,764
Net exchange loss 458,160 319,948
Imputed interest on payment
to PTA against WLL license fee - note 7 185,132 167,617
908,524 847,973
==========================================================================================35. Taxation==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Current 3,080,732 145,497
Deferred - note 9 1,789,000 (1,783,223)
4,869,732 (1,637,726)
==========================================================================================35.1. Tax charge reconciliationNumerical reconciliation between the average effective tax rate and the applicable tax rate: ==========================================================================================
2009 2008
==========================================================================================
(%)
==========================================================================================
Applicable tax rate 35.00 35.00
Chargeable to tax at lower rates/effect
of change in prior year's tax (0.76) 2.13
Tax effect of amounts that are not
deductible for tax purposes and others 0.49 (0.43)
(0.27) 1.70
Average effective tax rate charged to profit and loss account 34.73 36.70
==========================================================================================36. Remuneration of Directors and Executives36.1. The aggregate amount charged in the financial statements for remuneration, including all benefits, to the Chairman, Chief Executive and Executives of the Company is as follows: =====================================================================================
Chairman Chief Executive Executives
=====================================================================================
2009 2008 2009 2008 2009 2008
=====================================================================================
(Rupees in thousand)
=====================================================================================
Managerial remuneration - - 56,763 45,590 548,632 423,605
Honorarium 300 325 - - - -
Bonus - - - - 7,113 1,615
Retirement benefits - - - - 45,700 35,300
Housing - - 1,774 1,517 181,272 154,183
Utilities - - 591 455 40,189 35,220
300 325 59,128 47,562 822,906 649,923
Number of persons 1 1 1 1 430 471
=====================================================================================The Company also provides free medical and limited residential telephone facility to all its Executives and the Chief Executive. The Chairman is entitled for free transport and limited residential telephone facility whereas the Directors are provided with limited telephone facility. Certain executives are also provided with Company maintained cars.Aggregate amount charged in the financial statements for the year as fee to 9 directors (2008: 9 directors) is Rs 3,736 thousand (2008: Rs 4,684 thousand), for attending Board of Directors and Sub-committee meetings. 37. Rates of exchange Assets in foreign currencies have been translated into Rupees at USD 1.2331 (2008: USD 1.4706) equal to Rs 100. while liabilities-. in foreign currencies have been translated into Rupees at USD 1.2300 (2008: USD 1.4663) equal to Rs 100. 38. Cash generated from operations ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Profit / (Loss) before tax 14,020,917 (4,462,615)
Adjustments for non-cash charges and other items:
Depreciation and amortization 12,792,116 12,434,955
Provision for impairment of investment - 3,679
Provision for doubtful trade debts 2,907,390 4,934,064
VSS expense 92,118 23,937,854
Provision for doubtful receivables 158,680 -
Employees' retirement benefits 1,372,372 130,869
Receivables written off 142,195 -
Imputed interest on payment to PTA against WLL license fee 185,132 167,617
Mark-up on long term loans (270,436) (35,794)
(Gain) / loss on disposal of property, plant and equipment (190,606) 50,568
Dividend - (350,000)
Return on bank placements (2,986,598) (2,599,908)
Provision for obsolete stores 172,276 252,489
Finance cost 723,392 680,355
29,118,948 35,144,133
Effect on cash flow due to working capital changes:
(Increase) / decrease in current assets:
Stores and spares (420,182) (1,327,368)
Trade debts (302,153) (6,888,868)
Loans and advances 292,056 45,497
Recoverable from tax authorities 324,158 138,284
Other receivables 784,667 (558,656)
678,546 (8,591,111)
Increase / (decrease) in current liabilities:
Trade and other payables 4,539,897 1,538,227
34,337,391 28,091,249
==========================================================================================39. Cash and cash equivalents==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Short term investments with maturity
upto three months - note 26 19,795,904 10,344,379
Cash and bank balances - note 27 11,906,448 4,545,145
31,702,352 14,889,524
==========================================================================================40. Capacity=======================================================================
Access lines installed Access lines in service
=======================================================================
(ALI) (ALIS)
=======================================================================
2009 2008 2009 2008
=======================================================================
(Number)
=======================================================================
Number of lines 9,240,431 9,225,720 4,796,299 5,315,668
=======================================================================ALI represents switching lines. ALI include 225,195 (2008: 214,784) and ALI.5 include 115,575 (2008: 134,845) Primary Rate Interface (PRI) and Basic Rate Interface (BRI) respectively. ALI and ALIS also include 2,656,000 (2008: 2,599,500) and 1,305,675 (2008: 1,188,416) WLL connections respectively. The difference between ALI and ALIS is due to pending and potential future demand. 41. Earnings / (loss) per share - basic and diluted ==========================================================================================
2009 2008
==========================================================================================
Profit / (loss) for the year Rupees in thousands 9,151,185 (2,824,889)
Weighted average number
of ordinary shares Numbers in thousands 5,100,000 5,100,000
Earnings / (loss) per share Rupees 1.79 (0.55)
==========================================================================================42. Financial risk management42.1. Financial risk factors The Company's activities expose it to a variety of financial risks: market risk (including currency risk, other price risk 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 minimize potential adverse effects on the financial performance. Risk management is carried out by the Board of Directors (the Board). The Board has provided 'Risk Management Policy' covering specific areas such as foreign exchange risk, interest rate risk, credit risk and investment of excess liquidity. All treasury related transactions are carried out within the parameters of this policy. (a).Market risk (i).Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies. The Company is exposed to currency risk arising from various currency exposures,' primarily with respect to the United States Dollar (USD), Australian Dollar (AUD) and Swiss Franc (CHF). Currently, the Company's foreign exchange risk exposure is restricted to the amounts receivable from / payable to the foreign entities. The Company's exposure to currency risk is as follows: ==========================================================================================
2009 2008
==========================================================================================
Trade and other payables - USD 85,490,571 80,217,829
Trade Debts - USD 49,143,314 46,069,999
Cash and bank- USD 10,751,921 1,222,000
Net exposure - USD 25,595,336 32,925,830
Trade and other payables - CHF 71,550 -
Loans and advances - AUD 25,352 -
The following significant exchange rates were applied during the year:
Rupees per USD
Average rate 79.92 bL33
Reporting date rate 81.30 68.20
Rupees per CHF
Average rate 64.98 56.67
Reporting date rate 75.26 66.91
Rupees per AUD
Average rate 53.97 56.20
Reporting date rate 65.98 65.60
==========================================================================================If the functional currency, at reporting date, had fluctuated by 5% against the U.5D, GSP and Euro with all other variables held constant, the impact on profit after taxation for the year would have been Rs 67,750 thousand (2008: Rs 72,980 thousand) respectively lower / higher, mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis.(ii).Other price risk Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting ALI similar financial instruments traded in the market. The Company is not exposed to equity price risk since the investments held by the Company are unquoted and are not subject to fluctuations in market prices. (iii) Interest rate risk Interest rate risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. At the balance sheet date, the interest rate profile of the Company's interest bearing financial instruments is: ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Financial assets
Fixed rate instruments
Staff loans 455,599 524,556
Short term investments 21,017,790 10,344,379
Floating rate instruments
Long term loans - loan to subsidiary 3,000,000 -
Bank balances - deposit accounts 10,304,147 3,816,168
34,777,536 14,685,103
========================================================================================== Fair value sensitivity analysis for fixed rate instrumentsThe Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rate at the balance sheet date would not affect profit or loss of the Company. Cash flow sensitivity analysis for variable rate instruments If interest rates on long term loans to subsidiaries and deposit bank balances, at the year end date, fluctuate by 1% higher / lower with ALI other variables held-constant, profit after taxation for the year would have been Rs 11.250 million (2008: Nil) higher / lower, mainly as a result of higher / lower markup income on floating rate loans / investments. (b).Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Company's credit risk is primarily attributable to its trade debts and its balances at banks. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date is as follows: ==========================================================================================
2009 2008
==========================================================================================
(Rupees in thousand)
==========================================================================================
Long term loans 3,332,178 394,943
Trade debts 10,760,974 13,366,216
Loans and advances 590,061 888,309
Accrued interest 821,027 315,817
Other receivables 698,270 1,641,617
Receivable from GoP for VSS 2,164,072 2,164,072
Short term investments 21,017,790 10,344,379
Cash and bank balances 11,906,420 4,533,583
51,290,792 33,648,936
==========================================================================================The credit risk on liquid funds is limited because the counter parties are banks with reasonably high credit ratings. The company believes that it is not exposed to major concentration of credit risk as its exposure is spread over a large number of counter parties and subscribers in the case of trade debts.The credit quality of cash and bank balances that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rate: ====================================================================================
Rating
====================================================================================
Short term Long term Agency 2009 2008
====================================================================================
(Rupees in thousand)
====================================================================================
National Bank of Pakistan A-1+ AAA JCR 15,636,639 6,285,082
Bank Al Falah Limited A1+ AA PACRA 4,000,593 4,500,000
MCB Bank A1+ AA+ PACRA 11,281 5,567
Soneri Bank Limited A1+ AA- PACRA - 1,500,000
Habib Metropolitan Bank A1+ AA+ PACRA 1,000,000 1,500,000
Bank of Punjab A1+ AA- PACRA 3,937,071 2,846,434
NIB Bank A1+ AA- PACRA 1,500,192 1,314
Faysal Bank Limited A-1 + AA PACRA 1,476 -
Habib Bank Limited A-1+ AA+ JCR - 7
Royal Bank of Scotland * A1+ AA PACRA 1,754,080 -
Askari Bank Limited Al + AA PACRA 2,000,000 77
Alllied Bank Limited Al + AA PACRA 2,558,243 -
United Bank Limited A-1 + AA+ JCR 26 -
- 32,399,601 16,638,481
====================================================================================Due to the Company's long standing business relationships with these counterparties and after giving due consideration to their strong financial standing, management does not expect non-performance by these counter patties on their obligations to the Company. Accordingly, the credit risk is minimal.Royal Bank of Scotland has been placed on watchlist by the State Bank of Pakistan and the most recent rating was carried out in September 2008. (c).Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company follows an effective cash management and planning policy to ensure availability of funds and to take appropriate measures for new requirements. The following are the contractual maturities of financial liabilities as at June 30, 2009: ======================================================================================
Carrying Less than One to More than
amount one year five years five years
======================================================================================
(Rupees in thousand)
======================================================================================
Payable to PTA against WLL license fee 1,953,971 1,953,971 - -
Long term security deposits
from customers 990,055 - 990,055 -
Trade and other payables 23,758,462 23,758,462 - -
Dividend payable 7,650,000 7,650,000 - -
34,352,488 33,362,433 990,055 -
====================================================================================== The following are the contractual maturities of financial liabilities as at June 30, 2008:=======================================================================================
Carrying Less than One to More than
amount one year five years five years
=======================================================================================
(Rupees in thousand)
=======================================================================================
Payable to PTA against WLL license fee 1,768,839 - 1,768,839 -
Long term security deposits
from customers 951,618 - 951,618 -
Trade and other payables 18,573,893 18,573,893 - -
21,294,350 18,573,893 2,720,457 -
=======================================================================================42.2. Fair values of financial assets and liabilitiesThe carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values. Fair value is determined on the basis of objective evidence at each reporting date. 42.3. Financial instruments by categories Financial assets as per balance sheet ===================================================================================================================
Available for sale Loans and receivables Total
===================================================================================================================
2009 2008 2009 2008 2009 2008
===================================================================================================================
(Rupees in thousand)
===================================================================================================================
Long term investments 83,900 83,900 - - 83,900 83,900
Long term loans - - 3,332,378 394,943 3,332,378 394,943
Trade debts - - 10,760,974 13,366,216 10,760,974 13,366,216
Loans and advances - - 590,061 888,309 590,061 888,309
Accrued interest - - 821,027 315,817 821,027 315,817
Other receivables - - 883,509 1,582,403 883,509 1,582,403
Receivable from GoP for VSS - - 2,164,072 2,164,072 2,164,072 2,164,072
Short term investments - - 21,017,790 10,344,379 21,017,790 10,344,379
Cash and bank balances - - 11,906,448 4,545,145 11,906,448 4,545,145
83,900 83,900 51,476,259 33,601,284 51,560,159 33,685,184
===================================================================================================================
Liabilities at fair value Other financial Total
===================================================================================================================
through profit and loss liabilities
===================================================================================================================
2009 2008 2009 2008 2009 2008
===================================================================================================================
(Rupees in thousand)
===================================================================================================================
Financial liabilities as per balance sheet
Payable to PTA against WLL license fee - - 1,953,971 1,768,839 1,953,971 1,768,839
Long term security deposits from customers - - 990,055 951,618 990,055 951,618
Trade and other payables - - 23,758,462 18,573,893 23,758,462 18,573,893
Dividend payable - - 7,650,000 - 7,650,000 -
- - 34,352,488 21,294,350 34,352,488 21,294,350
===================================================================================================================42.4. Capital risk managementThe Board's policy is to maintain an efficient capital base so as to maintain investor, creditor and market confidence and to sustain the future development of its business. The Board of Directors monitors the return on capital employed, which the Company defines as operating income divided by total capital employed. The Board of Directors also monitors the level of dividends to ordinary shareholders. The Company's objectives when managing capital are: (i).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, and (ii).to provide an adequate return to shareholders. The Company manages the capital structure in the context of economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may, for example, adjust the amount of dividends paid to shareholders, issue new shares, or sell assets to reduce debt. For working capital requirements and capital expenditure, the Company primarily relies on internal cash generation and does not have any significant borrowings. 43. Transactions with related parties The related parties comprise associated undertakings, subsidiary, employee retirement benefit plans and key management personnel. Amounts due from / (to) related parties are shown under receivables and payables. Remuneration of key management personnel is disclosed in note 36. Enterprises where control exists Subsidiary Pak Telecom Mobile Limited Other related parties with whom the Company had transactions Associates Telecom Foundation Telecom Foundation Pipes Limited Etisalat International Pakistan (EIP) Etisalat - UAE Etisalat - Afghanistan Emirates Telecommunication Corporation Mobily - Saudi Arabia Thuraya Satellite Company Universal Service Fund - (USF) National Telecommunication Corporation - (NTC) Employee benefit plans Pakistan Telecommunication Employee Trust - (PTET) General Provident Fund Trust Disclosure of transactions between the Company and related parties other than those which have been disclosed elsewhere in these financial statements: ===========================================================================
2009 2008
===========================================================================
(Rupees in thousand)
===========================================================================
Subsidiary Purchase of goods and services - 5,133,854
Sale of goods and services 5,196,808 2,312,152
Mark-up on long term loans 263,333 24,966
Advance against purchase of shares 2,000,000 -
Disbursement of loan 3,000,000 -
Associates Purchase of goods and services 2,365,226 1,193,166
Sale of goods and services 8,358,427 2,545,243
Government grant received 966,044 95,000
Advances against capital expenditure 1,685,532 449,000
===========================================================================44. Proposed dividendsThe Board of Directors of the Company has proposed a final dividend for the year ended June 30, 2009 of Rs Nil (2008: Nil) at their meeting held on September 29, 2009. 45. Corresponding figures Corresponding figures have been rearranged and reclassified, wherever necessary, for better presentation and disclosure: ============================================================================================================
Reclassification
from component Reclassification to component (Rupees in thousand)
============================================================================================================
(i) Revenue Cost of services 5,250,432
(ii) Operating cost Cost of services 32,096,437
(iii) Operating cost Administrative expenses 10,823,555
(iv) Operating cost Selling and marketing expenses 1,799,946
(v) Long term investments Property, plant and equipment 3,629,092
(vi) Loans, advances, deposits, prepayments and
other receivables Capital work-in-progress 351,991
(vii) Loans, advances, deposits, prepayments and
other receivables Loans and advances 888,309
(viii) Loans, advances, deposits, prepayments and
other receivables Accrued interest 315,817
(ix) Loans, advances, deposits, prepayments and
other receivables Recoverable from tax authorities 1,383,766
(x) Loans, advances, deposits, prepayments and
other receivables Other receivables 1,641,617
(xi) Short term borrowings Cash and bank 2,536,710
(xii) Cash and bank Short term investments 10,344,379
(xiii) Accrued and other liabilities Accrued liabilities 1,371,760
(xiv) Accrued and other liabilities Other liabilities 401,452
(xv) Trade creditors Accrued liabilities 519,851
============================================================================================================46. Date of authorization for issueThese financial statements were authorized for issue on September 29, 2009 by the Board of Directors of the Company. 47. General Figures have been rounded off to the nearest thousand rupees unless otherwise specified. |