1 Wateen HY Report Dec 2010

8/10/2019 1 Wateen HY Report Dec 2010

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WATEEN TELECOM LIMITED HALF YEARLY REPORT DEC ‘1001

CONTENTS

02 Corporate Information03 Director’s Report

Condensed Financial Information

05 Auditors’ Review Report to the Members06 Condensed Interim Balance Sheet08 Condensed Interim Profit and Loss Account09 Condensed Interim Statement of Comprehensive Income10 Condensed Interim Cash Flow Statement12 Condensed Interim Statement of Changes in Equity13 Selected Notes to and Forming Part of the Condensed Interim Financial Information

Condensed Consolidated Financial Information

28 Condensed Consolidated Interim Balance Sheet30 Condensed Consolidated Interim Profit and Loss Account31 Condensed Consolidated Interim Statement of Comprehensive Income32 Condensed Consolidated Interim Cash Flow Statement34 Condensed Consolidated Interim Statement of Changes in Equity35 Selected Notes to and Forming Part of the Condensed Consolidated Interim Financial Information




CORPORATE INFORMATION

Management TeamNaeem ZamindarChief Executive Officer

Sajjeed AslamChief Financial Officer

Sajid Farooq HashmiCompany Secretary & Head of Legal

Syed Jibran AliChief Commercial Officer

Faisal SattarChief Technology Officer

Asad RezzviChief Transformation Officer

Zafar Iqbal Ch.GM HR, Admin & Infrastructure

Zeeshan HasanGM Customer Care

Ali KhanGM Enterprise & Carrier Sales

Adnan KareemHead of Product Development

Brig (R) Mazhar Qayyum ButtGM Corporate Affairs

Saleem AkhtarHead of Project Management Office

Naila BhattiGM Media

Auditors A.F. Ferguson & Co.Chartered Accountants

PIA Building, 3rd Floor,49 - Blue Area, P.O. Box 3021,Islamabad.

Registered Office

4th Floor, New Auriga Complex,Main Boulevard, Gulberg IILahore.

Share Registrar

THK Associates (Pvt.) LimitedGround Floor,State Life Building No.3,Dr. Zia-ud-Din Ahmed Road,Karachi.

Bankers

Standard Chartered Bank (Pakistan) Limited

Bank Al Habib LimitedHabib Bank LimitedBank Alfalah LimitedNational Bank of Pakistan LimitedPak Libya Holding Company (Pvt.) LimitedSummit Bank Limited (Formerly Arif Habib Bank Limited)

Askari Bank LimitedSoneri Bank LimitedPak Brunei Investment Company Limited

The Bank Of KhyberHSBC Bank Middle East Limited

Allied Bank Limited

United Bank LimitedDubai Islamic Bank Limited




The Directors of Wateen Telecom Limited are

pleased to present the financial statements for the

second quarter and six months ended December31, 2010. These financial statements have been

reviewed by the statutory auditors.

Wateen reassessed its overall strategy given the

current socio-economic situation of Pakistan,

evolving consumer needs and the current trends in

the telecom sector worldwide. New management

and governance structures were introduced

during FY’2011 with the major changes in the

Board of Directors, establishment of an ExecutiveManagement Committee, reconstitution of the

Board Audit Committee and appointments of

a new Chief Executive Officer, Chief Financial

Officer and Company Secretary along with other

key positions. These changes were necessary to

reinforce compliance with rigorous requirements of

corporate governance and enhancing transparency

in the overall operations.

The new Board of Directors appreciate and

recognize the significance of sound corporate

governance practices are hence, giving high priorityto regularize matters to ensure compliance with the

legal and regulatory requirements.

The company has posted consolidated revenues

of Rs 1,478 million for the second quarter ended

December 31, 2010 and cumulative revenues

of Rs 3,409 million for the six months ended

December 31, 2010. A 30% decline in the revenue

is attributable to the change in market dynamics of

long distance international business which remainedunder severe pressure of grey traffic. Gross profit

has been improved to 25% compared to 18% in

same period last year. Sponsors’ has injected Rs

2,063 million directly and Rs 600 million through

an associated company to improve the liquidity

situation of the company compared to Nil for the

same period last year.

DIRECTORS’ REPORT




New Management has evaluated the current market

dynamics and recommended a focused approach

to consolidate the position of the Company and

make significant progress in areas with high growth

opportunities and discontinue certain operations

to ensure best possible return on investments.

This has resulted in provisions and write offs of Rs

1,542 million compared to Rs 18 million in the same

period last year and brought EBITDA loss to the

tune of Rs 1,649 million. We believe these drastic

measures were inevitable and overdue to build a

profitable business going forward.

Demand for data services in Pakistan and

neighboring countries from carriers, businesses

and consumers with more innovative value added

services like mobile banking and cloud computing

will be the key drivers for growth in the years to

come. Your company is well placed and prepared

to claim a fair share in the growth and profitability

with the capacity to provide services in the region.

The Company recognizes the importance of

its human resources which play a critical role

for a service organization like Wateen Telecom.

Conscious efforts are being made to obtain and

retain best available human resources as well as

to enhance the productivity of the existing ones so

as to create a work force suitable to meet today’s

challenges.

The Board would like to thank our valued customers

for their continued support and the regulatory

authorities for their guidance and patronage.

On behalf of the Board,

Naeem ZamindarChief Executive Officer &

Member Board of Directors




~

pwc

AUDITOR'S REPORT TO THE MEMBERS ON REVIEW OF INTERIM FINANCIAL

INFORMATION

We have reviewed the accompanying condensed interim balance sheet of Wateen Telecom

Limited as at December 31, 2010 and the related condensed interim profit and loss account,

condensed interim statement of comprehensive income, condensed interim cash flow

statement and condensed interim statement of changes in equity and notes to the interim

financial information for the six months period ended (here-in-after referred to as the "interim

financial information"). Management is responsible for the preparation and presentation of this

interim financial information in accordance with approved accounting standards as applicable

in Pakistan. Our responsibility is to express a conclusion on this interim financial information

based on our review. The figures of the condensed interim profit and loss account for quarters

ended December 31, 2010 and 2009 have not been reviewed, as we are required to review

only the cumulative figures for the six months period ended December 31, 2010.

We conducted our review in accordance with International Standard on Review Engagements

2410, "Review of Interim Financial Information Performed by the Independent Auditor of the

Entity". A review of interim financial information consists of making inquiries, primarily of

persons responsible for financial and accounting matters, and applying analytical and other

review procedures. A review is substantially less in scope than an audit conducted in

accordance with International Standards on Auditing and consequently does not enable us to

obtain assurance that we would become aware of all significant matters that might be

identified in an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the

accompanying interim financial information as of and for the six months period ended

December 31, 2010 is not prepared, in all material respects, in accordance with approved

accounting standards as applicable in Pakistan.

H~Chartered AccountantsIslamabad: January 20, 2012

............................................................................................................................................................................................................................................................................

05

............................................................................................................................................................................................................................................................................

:A. F. FERGUSON & CO., Chartered Accountants, a member firm of the PwC network

PIA Building, 3rd FloOr, 49 Blue Area, Fazl-ul-Haq Road, P.O. Box 3021, Islamabad-44000, Pakistan

Tel: +92 (51) 2273457-60/2870045-8; Fax: +92 (51) 2277924; < www.pwc.com/pk>

Karachi: State Life Building No. 1-C, 1.1. Chundrigar Road, P.O. Box 4716, Karachi-74000, Pakistan; Tel: +92 (21) 32426682-5132426711-5; Fax: +92 (21) 32415007

Lahore: 23-C, Aziz Avenue, Canal Bank, Gulberg V, P.O. Box 39, Lahore-54660, Pakistan; Tel: +92 (42) 35715864-71; Fax: +92 (42) 35715872

Kabul: House No. 1916, Street NO.1, Behind Cinema Bariqot, Nahar-e-Darsan, Karte-4, Kabul, Afghanistan; Tel: +93 (779) 315320, +93 (799) 315320




CONDENSED INTERIM BALANCE SHEET (UN-AUDITED) AS AT DECEMBER 31, 2010

December 31, June 30,

2010 2010

Note (Rupees in thousand)

SHARE CAPITAL AND RESERVES

Authorised capital 1,000,000,000(June 30, 2010: 1,000,000,000)ordinary shares of Rs 10 each 10,000,000 10,000,000

Issued, subscribed and paid–up capital 6,174,746 6,174,746617,474,620 (June 30, 2010: 617,474,620)ordinary shares of Rs 10 each

General reserve 134,681 134,681

Accumulated loss (4,900,856) (2,099,760)

1,408,571 4,209,667

NON–CURRENT LIABILITIES

Long term finance – secured 5 – –Medium term finance from an associated company – unsecured 6 – –Long term finance from a shareholder – unsecured 7 2,063,379 –Cross currency and interest rate swap – fair value 5.5 – 139,053Obligations under finance leases 4,638 5,429Long term deposits 64,759 110,455

2,132,776 254,937

DEFERRED LIABILITIES

Employees’ retirement benefits – 43,690Deferred income tax liability 8 – 74,593Deferred USF grant 9 1,046,248 827,159

1,046,248 945,442

CURRENT LIABILITIES

Current portion of long term finance – secured 5 11,858,743 12,411,659Current portion of medium term finance from anassociated company – unsecured 6 600,000 –Payable to supplier to be settled through long term finance – 433,798Cross currency and interest rate swap liability 5.5 517,000 217,397Current portion of obligations under finance leases 2,035 1,556Finance from supplier – unsecured 77,941 77,668Short term borrowings – secured 10 4,092,484 4,604,346

Trade and other payables 11 4,898,324 5,922,431Interest / markup accrued 661,615 631,491

22,708,142 24,300,346

CONTINGENCIES AND COMMITMENTS 12

27,295,737 29,710,392

The annexed notes 1-26 are an integral part of this condensed interim financial information.





2010 2010


NON-CURRENT ASSETS

Property, plant and equipment Operating assets 13 18,712,000 17,045,929 Capital work in progress 14 2,791,644 3,883,565Intangible assets 197,592 204,726

21,701,236 21,134,220

LONG TERM INVESTMENT IN SUBSIDIARY COMPANIES 15 137,661 57,061

DEFERRED INCOME TAX ASSET 8 773,395 –

LONG TERM DEPOSITS AND PREPAYMENTS

Long term deposits 273,886 238,584Long term prepayments 71,328 79,139

345,214 317,723

CURRENT ASSETS

Trade debts 16 1,274,874 3,097,982Contract work in progress 18,805 18,782Stores, spares and loose tools 17 558,096 847,528

Advances, deposits, prepayments and

other receivables 18 1,923,479 2,001,340Income tax refundable 192,412 238,841Cash and bank balances 19 370,565 1,996,915

4,338,231 8,201,388

27,295,737 29,710,392

______________ _____________

Chief Executive Director




CONDENSED INTERIM PROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010

3 months to 6 months to

December 31, December 31, December 31, December 31,

2010 2009 2010 2009


Revenue 20 1,431,663 2,163,409 3,257,190 4,533,435

Cost of sales (excludingdepreciation and amortisation) 21 1,208,553 1,708,023 2,439,071 3,757,814

General and administration expenses 567,792 374,426 854,964 730,756 Advertisement and marketing expenses 44,664 71,605 75,271 166,196Selling and distribution expenses 1,478 6,901 8,830 14,093Provisions and write off 22 1,516,803 – 1,516,803 18,273Other charges – 28,936 – 28,936

Other income 23 128,652 (9,492) (176,790) (33,394)

3,467,942 2,180,399 4,718,149 4,682,674

Loss before interest, taxation,depreciation and amortisation (2,036,279) (16,990) (1,460,959) (149,239)

Depreciation and amortisation 518,211 395,312 987,327 757,205Finance cost 24 799,334 561,266 1,282,557 984,956Finance income (78,349) (52,714) (81,759) (60,405)

Loss before taxation (3,275,475) (920,854) (3,649,084) (1,830,995)Deferred income tax credit 791,649 290,184 847,988 580,369

Loss for the period (2,483,826) (630,670) (2,801,096) (1,250,626)

Loss per share Rs (4.03) Rs (1.51) Rs (4.54) Rs (3.00)


______________ _____________





CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010



2010 2009 2010 2009

(Rupees in thousand)


Other comprehensive income – – – –

Total comprehensive loss for the period (2,483,826) (630,670) (2,801,096) (1,250,626)


______________ _____________





CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010

6 months to

December 31, December 31,

2010 2009


CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation (3,649,084) (1,830,995)

Adjustment of non cash items:

Depreciation/ Amortisation 987,327 757,205(Profit)/loss on sale of operating assets 6,798 (22,953)Finance cost 1,282,557 984,956Deferred grant recognised during the period (25,939) –

Dividend income from subsidiary company (156,060) –Provisions and write off (note 22) 1,516,803 18,273

3,611,486 1,737,481

(37,598) (93,514)

Changes in working capital:

Decrease/ (Increase) in trade debts 1,399,405 (282,265)(Increase) in contract work in progress (23) (3,140)Decrease in stores, spares and loose tools 17,434 223,188(Increase)/Decrease in advances, deposits,prepayments and other receivables (140,297) 205,756Increase in cross currency and interest rate swap liability 160,550 43,813(Decrease)/ Increase in trade and other payables (1,062,810) 708,113

374,259 895,465

Taxes (paid)/refunded 46,429 (20,710)

Cash flows from operating activities 383,090 781,241

CASH FLOW FROM INVESTING ACTIVITIES

Property, plant and equipment additions (including finance cost) (1,920,356) (2,809,011)Intangible assets additions (4,300) –Sale of property, plant and equipment 10,000 163,024Long term deposits receivable – (paid)/received (35,302) 213Long term prepayments 7,811 8,814

Advance against purchase of shares (85,000) –Dividend income received 156,060 –

Cash flows from investing activities (1,871,087) (2,636,960)




6 months to

December 31, December 31,

2010 2009


CASH FLOW FROM FINANCING ACTIVITIES

Long term finance received 579,241 5,691,156Long term finance repaid (1,132,158) (470,929)Long term finance received from associated company 600,000 –Long term finance received from sponsor 2,063,379 –Payable to supplier to be settled through long term finance repaid (433,798) (2,872,226)Long term payable to supplier received/(repaid) 273 (210,212)Employees’ accumulated absences paid (4,987) 4,228Deferred USF grant received – 297,960

Obligations under finance leases repaid (312) (1,683)Long term deposits payable – (repaid)/received (45,696) 13,594Short term borrowings repaid (1,545,415) –Finance cost paid (1,252,433) (769,511)

Cash flows from financing activities (1,171,906) 1,682,377

(DECREASE) IN CASH AND CASH EQUIVALENTS (2,659,903) (173,341)

Cash and cash equivalents at beginning of the period (927,266) (2,324,688)

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD (3,587,169) (2,498,029)

CASH AND CASH EQUIVALENTS COMPRISE:

Cash and bank balances 370,565 337,838Short term running finance (3,957,734) (2,835,867)

(3,587,169) (2,498,029)


______________ _____________





CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010

Share General Accumulated

capital reserve loss Total


Balance at July 1, 2009 2,087,373 392,908 1,829,146 4,309,427

Issue of 208,737,310 bonus shares 2,087,373 (258,227) (1,829,146) –

Total comprehensive loss for the period – – (1,250,626) (1,250,626)

Balance at December 31, 2009 4,174,746 134,681 (1,250,626) 3,058,801

Balance at January 1, 2010 4,174,746 134,681 (1,250,626) 3,058,801

Issue of 200,000,000 shares for cashon April 20, 2010 2,000,000 – – 2,000,000

Shares issue cost (net of tax benefit) – – (79,247) (79,247)

Total comprehensive loss for the period – – (769,887) (769,887)

Balance at June 30, 2010 6,174,746 134,681 (2,099,760) 4,209,667

Balance at July 1, 2010 6,174,746 134,681 (2,099,760) 4,209,667

Total comprehensive loss for the period – – (2,801,096) (2,801,096)

Balance at December 31, 2010 6,174,746 134,681 (4,900,856) 1,408,571


______________ _____________





1. LEGAL STATUS AND OPERATIONS

The Company was incorporated in Pakistan as a Private Limited Company under CompaniesOrdinance, 1984 on March 4, 2005 for providing Long Distance and International public voicetelephone (LDI) services and Wireless Local Loop (WLL) service in Pakistan. The Company commencedits commercial operations from May 1, 2005. The legal status of the Company was changed from“Private Limited” to “Public Limited” with effect from October 19, 2009. The Company is listed onKarachi, Lahore and Islamabad Stock Exchanges. The registered office of the Company is situated atLahore. The Company is a subsidiary of Warid Telecom International LLC, U.A.E.

2. STATEMENT OF COMPLIANCE

This condensed interim financial information of the Company for the six months period endedDecember 31, 2010 has been prepared in accordance with the requirements of the International

Accounting Standard 34 - Interim Financial Reporting and provisions of and directives issued underthe Companies Ordinance, 1984. In case where requirements differ, the provisions of or directivesissued under the Companies Ordinance, 1984 have been followed.

3. ACCOUNTING POLICIES

The accounting policies and methods of computation adopted for the preparation of this condensedinterim financial information are the same as those applied in preparation of the financial statementsfor the year ended June 30, 2010.

4. NET CURRENT LIABILITIES

Net current liabilities as at December 31, 2010 were Rs 18.370 billion of which Rs 10.613 billion

relate to loan installments due for repayment after December 31, 2011 and Rs 4.660 billion relatesto current portion of long term finance and short term finance. A shareholder of the Company hasprovided financial support in the form of long term finance amounting to Rs 2.063 billion to meetthe requirements of the Company and this arrangement is expected to continue. Subsequent tothe period end, the Company has negotiated with the lenders to restructure long term finance andconvert short term finance, except for short term running finance from Bank Alfalah Limited amountingto Rs 1.795 billion, into long term finance facilities. The tenure of the restructured facilities is eightyears w.e.f January 1, 2011 (inclusive of grace period of three years). The principal of restructuredfacilities will be repayable in 10 semiannual installments commencing July 1, 2014. Compliance withfinancial covenants is required after the grace period except for the Long Term Debt to Equity Ratioof 80:20, which should not be breached during the grace period. The Company is in the phase offinalizing addendum agreements to restructure term finance facilities with lenders.

The Company has also negotiated with associated company Taavun (Pvt) Limited to reschedule itsmedium term finance facility. The associated company has agreed to reschedule its facility. Principalwill be repayable in semi-annual equal installments within two years after the expiry of grace period i.e.from January 01, 2011 to December 31, 2019. The rate of markup will be 6 months KIBOR, subjectto the approval of the Board of Directors of Taavun (Pvt) Limited, the Company will finalize addendumagreement to restructure the term finance facility with lender.

SELECTED NOTES TO AND FORMING PART OF THECONDENSED INTERIM FINANCIAL INFORMATION (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010






2010 2010


5. LONG TERM FINANCE - SECURED

Syndicate of banks 5.1 4,766,000 4,766,000 Export Credit Guarantee Department – (ECGD) 5.2 2,199,048 2,450,304 Standard Chartered Bank (SCB) 5.3 40,500 54,000 Dubai Islamic Bank (DIB) 5.4 477,000 477,000 Motorola Credit Corporation (MCC) 5.5 4,122,227 4,963,819 Standard Chartered Bank (SCB) 5.6 508,830 –

Total 12,113,605 12,711,123

Unamortized transaction and other ancillary cost Opening balance 299,464 – Additions during the period/year – 400,862 Amortisation for the period/year (44,602) (101,398)

(254,862) (299,464)

11,858,743 12,411,659

Less: Amount shown as current liability Amount payable within next twelve months (1,845,763) (1,991,174) Amount due after Dec 31, 2011 5.7 (10,012,980) (10,420,485)

(11,858,743) (12,411,659)

– –

5.1 The Company has obtained syndicate term finance facility from a syndicate of banks with StandardChartered Bank Limited (SCB), Habib Bank Limited (HBL), Bank Al-Habib Limited (BAHL) and NationalBank of Pakistan (NBP), being lead arrangers to finance the capital requirements of the Companyamounting to Rs 5.0 billion, of which Rs 4.8 billion has been availed till December 31, 2010. Thetenure of the facility is 5 years commencing from November 4, 2009. The principal is repayable in sixunequal stepped -up- semi annual installments. The first such installment shall be due on June 30,2012 and subsequently every six months thereafter until December 31, 2014. The rate of mark-up is6 months KIBOR+2.75% per annum for 1-2 years and KIBOR + 2.5% per annum for next 3-5 years.

The facility is secured by way of hypothecation over all present and future moveable assets (includingall current assets) and present and future current/fixed assets (excluding assets under specific chargeof CM Pak, CISCO, Motorola, DIB, World call and USF), a mortgage by deposit of title deeds inrespect of immoveable properties of the Company, lien over collection accounts and Debt ServiceReserve Account and a corporate guarantee from Warid Telecom International LLC.

5.2 The Company has obtained long term finance facility amounting to USD 42 million from Export CreditGuarantee Department (ECGD) UK, of which US$ 35 million has been availed till December 31, 2010.

Amount outstanding at December 31, 2010 was USD 25.600 million. The loan is repayable in 14semi annual installments of USD 3,025 thousand each starting from October 14, 2009. The rate ofmark-up is LIBOR + 1.5% per annum. Additional mark-up at 2% per annum will be payable on defaultpayment from the due date for payment upto the date of payment. If the finance charge is not paid




then additional interest rate will be payable at 1.5% per annum above CIRR rate applicable to theperiod during which the finance charge remained unpaid or at 5% per annum whichever is higher. Theloan is secured by personal guarantees by three Sponsors of the Company.

5.3 The Company has obtained an aggregate medium term finance facility of USD 3 million from StandardChartered bank. The principal is repayable in 8 equal semi annual installments commencing fromOctober 1, 2007. The rate of interest is six month average KIBOR + 1.25%.The loan is secured byfirst pari passu hypothecation charge over the specific assets of the Company amounting to Rs 275million.

5.4 The Company has obtained Ijarah finance facility of Rs 530 million from Dubai Islamic Bank (DIB). Theprincipal is repayable in 10 semi annual installments of 53 mil lion each commencing from February 1,2010. The rate of mark up is 6 month KIBOR plus 1.5% per annum. Additional interest is payable ondefault payment at KIBOR + 4% per annum from the due date for payment upto the date of payment.

The loan is secured by specific fixed assets (DWDM equipment, eltek cabinets and batteries).

During the period the bank has rescheduled the second installment due on August 01, 2010 toJanuary 31, 2011. Remaining repayments are due on their respective dates.

5.5 The Company has obtained term finance facility of USD 65 million from MCC of which USD 64 million(June 30, 2010: USD 64 million) has been availed till December 31, 2010. Amount outstanding atDecember 31, 2010 was USD 47.989 million. The principal amount of outstanding facility is repayablein 12 unequal semi annual installments commencing from June 30, 2009 until and including thefinal maturity date which is December 31, 2014. The rate of mark-up is six month LIBOR + 1.7%per annum. Additional interest is payable on default payment at six month LIBOR + 2% per annum

from the due date for payment upto the date of payment. The loan is secured through hypothecationcharge over specific assets of the Company supplied under supply & services agreements withMotorola.

Repayment of principal and interest payments thereon (except for margin of 1.7% per annum)amounting to US$ 23.2 mil lion at December 31, 2010 (June 30,2010: US$ 25.5 million) were hedgedthrough cross currency swap contract with SCB. In consideration, the Company paid the differencebetween interest based on LIBOR and KIBOR + 2.2% per annum to the bank. The contract wasterminated by the Company on January 18, 2011 and the cost of termination has been recognised inprofit and loss account.

The interest payments (except for margin of 1.7% per annum) upon principal amounting to US$53.5 million at December 31, 2010 (June 30, 2010: US$ 58.5 million) were hedged through interestrate swap contract with SCB. In consideration, the company paid 3.05% on the notional amount.

The contract was terminated by the Company on January 18, 2011 and the cost of termination hasbeen recognised in profit and loss account.

Subsequent to period end MCC has transferred all of its rights, title benefits and interests in theoriginal facility agreement to the Deutsche Bank AG as lender, effective August 19, 2011.

5.6 During the period, the Company has obtained term finance facility from Standard Chartered Bankamounting to Rs 291 million against letter of credit facilities availed till June 30, 2010. The principalis repayable in five installments commencing from June 30, 2011. The rate of mark-up is six monthsKIBOR + 2.5%. The facility is secured by way of hypothecation over all of its current and fixed assets(excluding cellular license and CM Pak, CISCO & Motorola financed assets) for a sum of Rs 1,000




million, which charge shall no later than thirty days from the execution of this agreement be enhancedto a first pari passu charge inter se, SCB and the existing creditors of the customer.

During the period the Company has obtained term finance facility from Standard Chartered Bankamounting to Rs 217 million. The principal is repayable in five installments commencing from June30, 2011. The rate of mark-up is six months KIBOR + 2.5%. The facility is secured by way ofhypothecation over all of its current and fixed assets (excluding cellular license and CM Pak, CISCO& Motorola financed assets) for a sum of Rs 500 million, which charge shall no later than thirty daysfrom the execution of this agreement be enhanced to a first pari passu charge inter se, SCB and theexisting creditors of the customer.

5.7 The Company is required to make payments of long term loans on due dates and to maintain certainratios as specified in loan agreements. The Company paid ECGD loan installment of USD 3.025 million

on December 24, 2010 which was due on October 14, 2010 and SCB loan installment of Rs 13,500thousand on January 31, 2011 which was due on October 25, 2010. Further, certain ratios specifiedin the loan agreements have not been maintained at December 31, 2010. As a consequence, thelenders shall be entitled to declare all outstanding amount of the loans immediately due and payable.In terms of provisions of International Accounting Standard on Presentation of financial statements(IAS 1), since the Company does not have an unconditional right to defer settlement of liabilities forat least twelve months after the balance sheet date, all liabilities under these loan agreements arerequired to be classified as current liabilities. Based on above, loan installments due as per loanagreements after December 31, 2011 amounting to Rs 10,012,980 thousand have been shown ascurrent liability.

Subsequent to period end, the Company has negotiated with the lenders to restructure its existinglong term finance facilities as explained in note 4.

6. MEDIUM TERM FINANCE FROM AN ASSOCIATED COMPANY - UNSECURED

During the period, the Company has obtained an aggregate medium term finance facility of Rs 600million from an associated company Taavun (Pvt) Limited. This loan is subordinated to all securedfinance facilities availed by the Company. The principal is repayable within 30 days of the expiryof twenty four months from the effective date i.e September 30, 2010. The rate of mark-up is sixmonth KIBOR + 2.5% with 24 months grace period payable quarterly. As explained in note 5.7, loaninstallments due as per loan agreement after December 31, 2011 amounting to Rs 600 million havebeen shown as current liability.

Subsequent to the period end the Company has negotiated with associated Company Taavun (Pvt)Limited to reschedule its finance facility. The associated Company has agreed to restructure its facility

as explained in note 4.

7. LONG TERM FINANCE FROM A SHAREHOLDER - UNSECURED

During the period, the Company has obtained loan from a shareholder amounting to USD 24 million. This loan is subordinated to all secured finance facilities availed by the Company. This loan is repayablewithin 30 days of the expiry of a period of five years from the last date the lender has disbursed theloan, which shall be on or about January 29, 2015. The rate of mark-up is LIBOR + 1.5%. Alternativelythe loan may be converted into equity by way of issuance of the Company’s ordinary shares at theoption of the lender at any time after the repayment date on the best possible terms but subject tofulfillment of all legal requirements at the cost of the Company. The said conversion of loan shall be atthe higher of par value i-e Rs 10/ ordinary share or 10% below prevailing market value, which value





shall be calculated after taking into account the average share price of the last 30 calendar days,counted backwards from the repayment date, provided that such conversion is permissible under theapplicable laws of Pakistan.


2010 2010


8. DEFERRED INCOME TAX ASSET/ (LIABILITY)

Taxable temporary differences between accounting and tax depreciation (3,745,267) (3,423,807) Unused tax losses 8.1 3,973,860 3,268,671 Unused tax benefit related to share issue cost 39,462 34,138

Deductible temporary differences on account of provisions 505,340 46,405 773,395 (74,593)

8.1 Unused tax losses for which no deferred tax asset has been recognised amounts to Rs 478,585thousand representing business losses of Rs 1,367,386 thousand which will expire in tax year 2016.

8.2 The existence of future taxable profits sufficient to absorb these losses is based on a businessplan prepared by management of the Company which involves making judgments regarding keyassumptions underlying the estimation of future taxable profits estimated in the plan. Theseassumptions if not met have a significant risk of causing a material adjustment to the carrying amountof the deferred tax asset. In the management’s view it is probable that the company will be able toachieve the profits projected in the plan.


2010 2010


9. DEFERRED UNIVERSAL SERVICE FUND (USF) GRANT

Balance at beginning of the period/year 827,159 212,428 Amount received/receivable during the period/year 245,028 616,477 Amount recognised as income during the period/year (25,939) (1,746)

Closing balance 1,046,248 827,159

10. SHORT TERM BORROWINGS - SECURED

Short term borrowings 134,750 1,680,165 Short term running finance 3,957,734 2,924,181

4,092,484 4,604,346






2010 2010


11. TRADE AND OTHER PAYABLES

These include payable to related parties as follows:

Wateen Solutions (Pvt) Limited 175,392 165,283 Wateen Satellite Services (Pvt) Limited 146,204 146,204 Warid Telecom (Pvt) Limited 106,366 86,656 Advances from Warid Telecom (Pvt) Limited 34,316 151,004 Bank Alfalah Limited 3,950 – Warid Telecom Uganda Limited – 47,474

Payable to gratuity fund 109,841 104,041 Payable to provident fund 22,637 11,569

598,706 712,231

12. CONTINGENCIES AND COMMITMENTS

(i) Claims against the Company not acknowledged as debt 260,267 264,038

(ii) Performance guarantees issued by banks in favour of the Company 1,412,233 1,476,816

(iii) Outstanding commitments for capital expenditure 1,208,145 1,799,824

(iv) Acquisition of 49% shares in subsidiary Wateen Solutions (Pvt) Limited

49% of the shareholding of Wateen Solutions is held by Mr. Jahangir Ahmed. The Board ofDirectors of the Company in their meetings held on November 15, 2009 and November 19,2009 approved the acquisition of 49% shareholding of Wateen Solutions from Mr. Jahangir

Ahmed for a total sale consideration of Rs 490,000 thousand. On the basis of the approvalof the Board of Directors of the Company, the Company entered into a Share Purchase

Agreement dated April 1, 2010 (SPA) with Mr. Jahangir Ahmed for the acquisition of the 49%shareholding of Wateen Solutions.

However, in light of the dividend payment of Rs 150,000 thousand by Wateen Solutions toMr. Jahangir Ahmed, the Company entered into negotiations with Mr. Jahangir Ahmed for thepurposes of negotiating a downward revision to the purchase price as agreed in the SPA fromRs 490,000 thousand to Rs 340,000 thousand. This reduction in the purchase price and the

resultant change in utilization of the IPO proceeds was approved by the shareholders of theCompany in the Extra Ordinary General Meeting dated August 13, 2010.

Under the terms of the SPA, the Company has paid an advance of Rs 85,000 thousand aspartial payment of the purchase price and the balance of Rs 255,000 thousand is payableby the Company to Mr. Jahangir Ahmed. In light of the current business dynamics of WateenSolutions and the resultant devaluation of its share price, the new management entered intonegotiations as a result of which Mr. Jahangir Ahmad has agreed to transfer the shares ofWateen Solutions to the Company without requiring payment of the balance of Rs 255,000thousand, however the finalization of renegotiated agreement is in process.

Same have been approved by shareholders in Extra Ordinary General Meeting dated December31, 2011.




Six months to Year ended

December 31, 2010 June 30, 2010

%age (Rupees in %age (Rupees in

Holding thousand) Holding thousand)

15. LONG TERM INVESTMENT IN

SUBSIDIARY COMPANIES

Unquoted

Wateen Solutions (Pvt) Limited 413,212 fully paid ordinary shares of Rs 100 each 51 52,656 51 52,656

Advance against purchase of shares 85,000 -

137,656 52,656

Wateen Satellite Services (Pvt) Limited 500 fully paid ordinary shares of Rs 10 each 100 5 100 5

Netsonline Services (Pvt) Limited 4,000 fully paid ordinary shares of Rs 100 each 100 4,400 100 4,400

142,061 57,061

Provision for impairment of investment in Netsonline Services (Pvt) Limited (4,400) -

137,661 57,061

All the companies are incorporated in Pakistan.


December 31, June 30, 2010 2010


13. OPERATING ASSETS

Opening net book value 17,045,929 14,050,553 Additions – owned 2,658,762 4,803,102 – leased – 9,293 Disposals at net book value (16,798) (191,184) Depreciation charge (975,893) (1,625,835)

18,712,000 17,045,929

14. CAPITAL WORK IN PROGRESS

Leasehold improvements 21,219 23,334 Line and wire 1,240,781 1,319,762 Network equipment 14.1 1,529,644 2,540,469

2,791,644 3,883,565

14.1 Network equipment is net of provision for impairment of Rs 354 million (June 30, 2010: Nil).

14.2 Finance cost of Rs 234 million was capitalised during the six months period ended December 31,2010 (Year ended June 30, 2010: Rs 550 million).






2010 2010


16. TRADE DEBTS

Trade debts – related parties 16.1 224,956 1,807,657 – other parties 1,399,981 1,422,911

1,624,937 3,230,568 Less: Provision for doubtful debts – other parties 16.2 (350,063) (132,586)

1,274,874 3,097,982

16.1 Trade debts include due from related parties as follows:

Warid Telecom (Pvt) Limited 124,864 457,957 Warid International LLC, UAE – Parent company 85,700 85,400 Bank Alfalah Limited 14,392 12,125 Warid Telecom Congo S.A – 1,060,716 Warid Telecom Uganda Limited – 85,816 Wateen Telecom UK Limited – 105,643

224,956 1,807,657

These balances are net of trade debts written off during the period related to following associatedcompanies, which have been approved by the shareholders in Extra Ordinary General Meeting heldon December 31, 2011.

December 31, June 30, 2010 2010


Warid Telecom (Private) Limited 76,834 – Warid Telecom Congo Limited 125,127 – Warid Telecom Uganda Limited 4,266 – Bank Alfalah Limited – 8,451

206,227 8,451

16.2 Provision for doubtful debts – other parties

Opening balance 132,586 85,131

Provision during the period 217,477 47,455

Closing balance 350,063 132,586

Provision during the period includes Rs 197,213 thousand based on age analysis of debts as follows:

Balances 181 - 360 days past due - 50 % Balances over 360 days past due - 100 %





2010 2010


17. STORES, SPARES AND LOOSE TOOLS

Cost 830,094 847,528 Less: Provision for obsolete stores 271,998 –

558,096 847,528

18. ADVANCES, DEPOSITS, PREPAYMENTS

AND OTHER RECEIVABLES

18.1 These include receivable from related parties as follows:

Wateen Solutions (Pvt) Limited 370,376 488,943 Wateen Telecom UK Limited 18.2 293,367 108,720 Wateen Multimedia (Pvt) Limited 149,106 137,160 Advance for construction of Warid Tower 68,916 65,716 Warid International LLC, UAE – Parent company 38,956 35,855 Amoon Media Group (Pvt) Limited 27,960 27,960 Raseen Technology (Pvt) Limited 16,329 – Warid Telecom Georgia Limited 15,403 15,403 Netsonline Services (Pvt) Limited 7,728 6,847 Warid Telecom International – Bangladesh 5,587 5,587 Bank Alfalah Limited – 12,379 Warid Telecom Congo S.A – 5,384

993,728 909,954 Less: Provision for doubtful receivables from related parties 18.3 447,587 –

546,141 909,954

18.2 This includes investment in 51 % shares of Wateen Telecom UK Limited of par value GBP 5,099 (2010:51 % shares of par value of GBP 5,099). Subsequent to December 31, 2010 the Company acquiredremaining 49 % shares of Wateen Telecom UK Limited of par value GBP 4,901. This company wasincorporated in UK in 2008 for wholesale and retail voice business. Approval from State Bank ofPakistan for investment in foreign equity abroad is in process and shares of Wateen Telecom UKLimited will be issued to Wateen Telecom Limited after receipt of such approval. In absence of thisspecific approval, holding company cannot control the financial and operating policies of Wateen

Telecom UK Limited to obtain the benefit in terms of dividend, repatriation of investment, advance orreceive any loan or interest thereon. Hence despite the 51% ownership Wateen Telecom UK Limitedis not treated as subsidiary of the Company.






2010 2010


18.3 Provision for doubtful receivables from related parties

Wateen Telecom UK Limited 266,708 – Advance for construction of Warid Tower 68,916 – Warid International LLC, UAE 38,956 – Amoon Media Group (Pvt) Limited 27,960 – Raseen Technology (Pvt) Limited 16,329 – Warid Telecom Georgia Limited 15,403 – Netsonline Services (Pvt) Limited 7,728 – Warid Telecom International – Bangladesh 5,587 –

447,587 -

Provision for doubtful receivables other than Netsonline Services (Pvt) Limited have been approved byshareholders of the Company in Extraordinary General Meeting held on December 31, 2011.

18.4 Provision for doubtful advances and other receivables from other parties is Rs 15,598 thousand (June30, 2010: Rs Nil).

19. CASH AND BANK BALANCES

Bank balances amounting to Rs 31 million were under lien with banks (June 30, 2010: Rs 31 million).



2010 2009 2010 2009


20. REVENUE

Long Distance and International (LDI) 675,810 1,085,157 1,237,677 2,495,301 Optic Fiber Cable (OFC) Indefeasible Right of Use (IRU) (232,045) – – – Operation and Maintenance 155,147 169,317 298,690 295,709 Managed capacity 21,991 23,669 34,734 52,582 Broadband and voice 455,723 354,198 903,267 644,357

Hybrid Fiber Cable Services (HFC) 8,535 8,081 17,395 14,378 Very Small Aperture Terminal services (VSAT) 218,387 467,346 470,895 861,073 ADM sites rentals 43,174 – 74,172 – Others 84,941 55,641 220,360 170,035

1,431,663 2,163,409 3,257,190 4,533,435






2010 2009 2010 2009


21. COST OF SALES

LDI Interconnect cost 616,022 735,525 1,069,463 1,531,653 Leased circuit charges 84,230 80,330 181,471 163,327 Contribution to PTA Funds 49,006 234,296 123,384 627,848 PTA regulatory and spectrum fee 5,926 9,008 13,138 12,260 Operational cost 247,880 329,407 588,260 732,966 Bandwidth cost of VSAT services 196,248 297,816 398,726 624,642 Others 9,241 21,641 64,629 65,118

1,208,553 1,708,023 2,439,071 3,757,814

22. PROVISIONS AND WRITE OFF

Trade debts written off – related parties 206,227 – 206,227 8,451 Provision for doubtful trade debts – other parties 217,477 – 217,477 9,822 Provision for doubtful advances

and other receivables – related parties 447,587 – 447,587 – – other parties 15,599 – 15,599 – Provision for impairment of capital work in progress 353,515 – 353,515 – Provision for impairment of long term investment in subsidiary company 4,400 – 4,400 –

Provision for obsolete stores and spares 271,998 – 271,998 – 1,516,803 – 1,516,803 18,273

23. OTHER INCOME/ (LOSS)

Dividend income from subsidiary company – – 156,060 – USF grant recognised as income (121,608) – 25,939 – Profit/ (loss) on sale of fixed assets (6,709) – (6,798) 22,953 Rental income – 3,892 – 3,892 Other income/ (loss) (335) 5,600 1,589 6,549

(128,652) 9,492 176,790 33,394

24. FINANCE COST

Interest/markup 500,971 163,886 1,012,486 676,875

Cross currency and interest rate swap contracts cost 377,947 171,155 377,947 171,155 Amortization of ancillary cost of long term finance 22,301 – 44,602 – Finance cost of leased assets 596 190 852 595 Bank charges, commission and fees 26,615 43,682 39,638 95,916 Exchange (gain)/ loss (11,900) 328,542 41,424 332,792

916,530 707,455 1,516,949 1,277,333

Interest/mark up capitalised under property, plant and equipment (117,196) (146,189) (234,392) (292,377)

799,334 561,266 1,282,557 984,956







2010 2009 2010 2009


25. RELATED PARTY TRANSACTIONS

Aggregate transactions with related parties

during the period were as follows:

Parent Company

Warid Telecom International LLC, UAE (WTI)

Markup charged to WTI 1,549 – 3,045 –

Provision for doubtful advances 35,911 – 35,911 –

Payments made by the Company on behalf of WTI – – 56 –

Shareholder

Long term finance received from shareholder 856,579 – 2,063,379 –

Markup on long term finance from shareholder 8,693 – 8,693 –

Subsidiary Companies

Wateen Solutions (Private) Limited (WSPL)

Cost and expenses charged by WSPL 30,191 – 30,630 –

Markup charged to WSPL 25,951 57,225 –

Purchase of intangible assets 4,300 – 4,300 –

Dividend income – – 156,060 –

Payments made by WSPL on behalf of the Company 65,357 – 176,952 35,588

Payments made on behalf of WSPL – 21,797 – 21,797

Netsonline Services (Pvt) Limited


Provision for impairment in investment 4,400 – 4,400 –

Associated Companies

Warid Telecom (Private) Limited (WTL)

Sale of services to WTL 500,478 546,934 891,537 1,097,493

Cost and expenses charged by WTL 86,601 69,049 231,804 145,775

Trade debts written off 76,834 – 76,834 –

Wateen Multimedia (Pvt) Limited (WMM)

Cost and expenses charged by WMM 13,674 – 22,791 – Payments made by the Company on behalf of WMM 3,683 4,078 11,945 17,833

Wateen Telecom Limited - UK (Wateen UK)

Sale of services 33,635 – 67,313 –

Markup charged to Wateen UK 7,480 – 11,820 –

Cost and expenses charged by Wateen UK 153,561 – 218,766 –


Payments made by the Company on behalf of

Wateen UK – – 173,458 –






2010 2009 2010 2009


Bank Alfalah Limited (BAL)

Sale of services to BAL 1,652 – 35,312 33,818

Markup charged by BAL on short term borrowings 68,399 67,666 132,571 135,581

Trade debts written off – 8,451 – 8,451

Taavun (Pvt) Limited

Long term finance received 50,000 – 600,000 –

Markup on long term finance 23,789 – 23,789 –

Warid Congo S.A (Warid Congo) Cost and expenses charged by Warid Congo – – – 3,675


Payments made on behalf of Warid Congo – – 5,384 –

Warid Telecom Uganda Limited (Warid Uganda)


Warid Uganda – 26,537 47,474 39,933


Warid Telecom Georgia Limited


Warid Telecom International – Bangladesh


Raseen Technology (Pvt) Limited (Raseen)

Markup charged to Raseen – – 1,159 –


Amoon Media Group (Private) Limited


Advance for construction of Warid Tower

Advance paid during the period – – 3,200 –


Gratuity Fund

Employer contribution to fund 8,905 17,963 27,686 32,963

Provident Fund Trust

Employer contribution to trust 4,649 8,267 14,052 14,865

Surcharge payable to trust on late payments 1,142 – 1,142 –

Other related parties

Remuneration of chief executive and

key management personnel including

benefits and perquisites 110,926 97,664 228,600 190,483



26


26. DATE OF AUTHORISATION FOR ISSUE

This condensed interim financial information has been authorised for circulation to the shareholdersby the Board Of Directors of the Company on January 20, 2012.

______________ _____________





2727

CONDENSEDCONSOLIDATEDFINANCIALINFORMATION




CONDENSED CONSOLIDATED INTERIM BALANCE SHEET (UN-AUDITED) AS AT DECEMBER 31, 2010


2010 2010


SHARE CAPITAL AND RESERVES

Authorised capital 1,000,000,000(June 30, 2010: 1,000,000,000)ordinary shares of Rs 10 each 10,000,000 10,000,000

Issued, subscribed and paid–up capital 6,174,746 6,174,746617,474,620 (June 30, 2010: 617,474,620)ordinary shares of Rs 10 each

General reserve 134,681 134,681

Accumulated loss (4,799,761) (1,794,123)

1,509,666 4,515,304

Non controlling interest in equity of Subsidiary CompanyWateen Solutions (Pvt) Ltd 5,007 206,999

1,514,673 4,722,303

NON–CURRENT LIABILITIES

Long term finance – secured 5 – –Medium term finance from an associated company – unsecured 6 – –Long term finance from a shareholder – unsecured 7 2,063,379 –Cross currency and interest rate swap – fair value 5.5 – 139,053Obligations under finance leases 4,638 5,429Long term deposits 64,759 110,455

2,132,776 254,937

DEFERRED LIABILITIES

Employees’ retirement benefits 18,748 60,059Deferred income tax liability 8 – 76,807Deferred USF grant 9 1,046,248 827,159

1,064,996 964,025

CURRENT LIABILITIES

Current portion of long term finance – secured 5 11,858,743 12,411,659Current portion of medium term finance from anassociated company – unsecured 6 600,000 –Payable to supplier to be settled through long term finance – 433,798Cross currency and interest rate swap liability 5.5 517,000 217,397

Current portion of obligations under finance leases 2,035 1,556Finance from supplier – unsecured 77,941 77,668Short term borrowings – secured 10 4,092,484 4,604,346

Trade and other payables 11 4,909,744 6,030,371Interest / markup accrued 661,615 631,491

22,719,562 24,408,286CONTINGENCIES AND COMMITMENTS 12

27,432,007 30,349,551

The annexed notes 1-27 are an integral part of this condensed consolidated interim financial information.





2010 2010


NON-CURRENT ASSETS

Property, plant and equipment Operating assets 13 18,718,039 17,053,114

Capital work in progress 14 2,791,644 3,883,565Intangible assets 295,943 310,843

21,805,627 21,247,522

ADVANCE AGAINST PURCHASE OF SHARES 15 85,000 –

DEFERRED INCOME TAX ASSET 8 772,299 –

LONG TERM DEPOSITS AND PREPAYMENTS

Long term deposits 273,886 239,474Long term prepayments 71,328 79,139

345,214 318,613

CURRENT ASSETS

Trade debts 16 1,602,279 4,060,687Contract work in progress 39,390 47,394Stores, spares and loose tools 17 564,418 855,619

Advances, deposits, prepayments and

other receivables 18 1,634,177 1,558,692Income tax refundable 202,168 246,298Cash and bank balances 19 381,435 2,014,726

4,423,867 8,783,416

27,432,007 30,349,551

______________ _____________





CONDENSED CONSOLIDATED INTERIMPROFIT AND LOSS ACCOUNT (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010



2010 2009 2010 2009


Revenue 20 1,478,374 2,417,220 3,409,340 4,915,648

Cost of sales (excludingdepreciation and amortisation) 21 1,231,428 1,901,223 2,563,887 4,049,688

General and administration expenses 595,323 379,899 891,505 762,691Provisions and write off 22 1,542,537 – 1,542,537 18,273

Advertisement and marketing expenses 44,664 71,605 75,271 166,196Selling and distribution expenses 1,478 6,901 8,830 14,093Other charges – 28,936 – 28,936

Other income 23 95,135 (10,163) (23,388) (34,695)

3,510,565 2,378,401 5,058,642 5,005,182

Loss before interest, taxation,depreciation and amortisation (2,032,191) 38,819 (1,649,302) (89,534)

Depreciation and amortisation 519,782 400,533 990,472 762,748Finance cost 24 808,172 556,208 1,284,594 963,734Finance income (20,503) (52,460) (23,917) (60,405)

Loss before taxation (3,339,642) (865,462) (3,900,450) (1,755,611)Deferred Income tax credit 25 785,965 287,635 842,760 575,268Loss for the period (2,553,676) (577,827) (3,057,690) (1,180,343)

Non controlling interest in (profit)/loss of consolidated subsidiary company 34,506 (17,455) 52,052 (34,956)


Loss per share Rs (4.08) Rs (1.47) Rs (4.87) Rs (2.91)


______________ _____________





CONDENSED CONSOLIDATED INTERIMSTATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010



2010 2009 2010 2009



Other comprehensive income – – – –

Total comprehensive loss for the period (2,519,170) (595,282) (3,005,638) (1,215,299)


______________ _____________





CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010

6 months to


2010 2009


CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation (3,900,450) (1,755,611)

Adjustment of non cash items:

Depreciation and amortisation 990,472 762,748Finance cost 1,284,594 963,734(Profit)/loss on sale of operating assets 6,798 (23,328)Deferred grant recognised during the period (25,939) –

Provisions and write off (note 22) 1,542,537 18,273Provision for employees’ retirement benefits 4,052 6,655

3,801,858 1,728,082

(98,593) (27,529)

Changes in working capital:

Decrease/(Increase) in trade debts 2,002,607 (384,933)Decrease/(Increase) in contract work in progress 8,004 (9,527)Decrease in stores, spares and loose tools 19,203 336,191(Increase)/Decrease in advances, deposits,prepayments and other receivables (285,259) 561,588Increase in cross currency and interest rate swap liability 160,550 43,813(Decrease)/Increase in trade and other payables (1,159,330) 235,153

745,776 782,285

Employees’ retirement benefits paid (6,661) – Taxes refund/(paid) 37,786 (28,958)

Cash flows from operating activities 678,308 725,798

CASH FLOW FROM INVESTING ACTIVITIES

Property, plant and equipment additions (including finance cost) (1,920,356) (2,809,024)Intangible assets additions (4,300) –Sale of property, plant and equipment 10,000 163,656Long term deposits receivable – (paid)/received (34,412) 213Long term prepayments 7,811 8,815

Advance against purchase of shares (85,000) –

Cash flows from investing activities (2,026,257) (2,636,340)




6 months to


2010 2009


CASH FLOW FROM FINANCING ACTIVITIES

Long term finance received 579,241 5,691,156Long term finance repaid (1,132,158) (470,929)Long term finance received from associated company 600,000 –Long term finance received from a shareholder 2,063,379 –Payable to supplier to be settled through long term finance repaid (433,798) (2,872,226)Long term payable to supplier 273 (210,212)Deferred USF grant received – 297,960Obligations under finance leases repaid (311) (1,683)

Long term deposits payable – (repaid)/received (45,696) 13,594Dividend paid to non controlling shareholders (149,940) –Short term borrowings repaid (1,545,415) –Finance cost paid (1,254,470) (748,289)

Cash flows from financing activities (1,318,895) 1,699,371

(DECREASE) IN CASH AND CASH EQUIVALENTS (2,666,844) (211,171)

Cash and cash equivalents at beginning of the period (909,455) (2,261,349)

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD (3,576,299) (2,472,520)

CASH AND CASH EQUIVALENTS COMPRISE:

Cash and bank balances 381,435 363,347Short term running finance (3,957,734) (2,835,867)

(3,576,299) (2,472,520)


______________ _____________





CONDENSED CONSOLIDATED INTERIMSTATEMENT OF CHANGES IN EQUITY (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010

Non controlling

Share General Accumulated interest in equitycapital reserve loss Total of subsidiary Total


Balance at July 1, 2009 2,087,373 392,908 2,107,630 4,587,911 179,500 4,767,411

Issue of 208,737,310 bonus shares 2,087,373 (258,227) (1,829,146) – – –

Total comprehensive loss for the period – – (1,215,298) (1,215,298) 34,956 (1,180,342)

Balance at December 31, 2009 4,174,746 134,681 (936,814) 3,372,613 214,456 3,587,069

Balance at January 1, 2010 4,174,746 134,681 (936,814) 3,372,613 214,456 3,587,069

Issue of 200,000,000 shares for cash 2,000,000 – – 2,000,000 – 2,000,000on April 20, 2010

Shares issue cost (net of tax benefit) – – (79,247) (79,247) – (79,247)

Total comprehensive loss for the period – – (778,062) (778,062) (7,457) (785,519)

Balance at June 30, 2010 6,174,746 134,681 (1,794,123) 4,515,304 206,999 4,722,303

Balance at July 1, 2010 6,174,746 134,681 (1,794,123) 4,515,304 206,999 4,722,303

Dividend paid to non–controlling shareholders – – – – (149,940) (149,940)

Total comprehensive loss for the period – – (3,005,638) (3,005,638) (52,052) (3,057,690)

Balance at December 31, 2010 6,174,746 134,681 (4,799,761) 1,509,666 5,007 1,514,673


______________ _____________





1. LEGAL STATUS AND OPERATIONS

The condensed consolidated interim financial information includes the financial information of Wateen Telecom Limited and its subsidiary companies Wateen Solutions (Pvt) Limited (51% owned), WateenSatellite Services (Pvt) Limited (100% owned) and Netsonline Services (Pvt) Limited (100% owned).For the purpose of this financial information, Wateen and consolidated subsidiaries are referred to asthe Company.

Wateen Telecom Limited was incorporated in Pakistan as a Private Limited Company underCompanies Ordinance, 1984 on March 4, 2005 for providing Long Distance and International publicvoice telephone (LDI) services and Wireless Local Loop (WLL) service in Pakistan. The Companycommenced its commercial operations from May 1, 2005. The legal status of the Company waschanged from “Private Limited” to “Public Limited” with effect from October 19, 2009. The Companywas listed on Karachi, Lahore and Islamabad Stock Exchanges with effect from May 27, 2010. The

registered office of the Company is situated at Lahore. The Company is a subsidiary of Warid TelecomInternational LLC, U.A.E.

The subsidiary company Wateen Solutions (Pvt) Limited , is incorporated under Companies Ordinance,1984 as a private Limited company on May 17, 2004. The principal activities of the company are tosell and deploy telecom equipment and provide related services. The registered office of the companyis situated at Lahore. Wateen acquired 100 % interest in Wateen Solutions (Pvt) Limited on August2, 2006. Wateen sold 49% shares (397,027 fully paid ordinary shares of Rs 100 each) of WateenSolutions (Pvt) Limited on July 1, 2008.

The subsidiary company Wateen Satellite Services (Pvt) Limited (WSS) ,is incorporated as a privatelimited company under the Companies Ordinance, 1984 and is engaged in providing back hauland satellite data connectivity services in Pakistan. On March 1, 2009, the Company transferred all

contracts for providing back haul and satellite data connectivity services to Wateen Telecom Limited.Wateen acquired 100% shares of Wateen Satellite Services (Pvt) Limited on July 1, 2008.

WSS has transferred all of its assets to parent company on March 31, 2009. Further, subsequent toyear end the Board of Directors of the parent company in their meeting held on November 22, 2011has decided to voluntary winding up the Company. Accordingly, the financial statements of the WSShas not been prepared on a going concern basis.

The subsidiary company Netsonline Services (Pvt) Limited, is incorporated as a private limitedcompany under the Companies Ordinance, 1984 and is engaged in providing internet and othertechnology related services in Pakistan. Wateen acquired 100% shares of Netsonline Services (Pvt)Limited on July 1, 2008.

Further, subsequent to year end the Board of Directors of the parent company in their meeting held

on November 22, 2011 has decided to voluntary winding up the Company. Accordingly, the financialstatements of the NetsOnline Services (Pvt) Limited has not been prepared on a going concern basis.

Subsidiaries are all entities over which the parent has the power to govern the financial and operatingpolicies generally accompanying a shareholding of more than one half of the voting rights. The existenceand effect of potential voting rights that are currently exercisable or convertible are considered whenassessing whether the group controls another entity. Subsidiaries are fully consolidated from the dateon which control is transferred to the group. They are de-consolidated from the date control ceases.

The purchase method of accounting is used to account for the acquisition of subsidiaries by thegroup. The cost of an acquisition is measured as the fair value of the assets given, equity instrumentsissued and liabilities incurred or assumed at the date of exchange, plus costs directly attributableto the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a

SELECTED NOTES TO AND FORMING PART OF THECONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (UN-AUDITED)FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010




business combination are measured initially at their fair values at the acquisition date. The excess ofthe cost of acquisition over the fair value of the parent share of the identifiable net assets acquiredis recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of thesubsidiary acquired, the difference is recognised directly in the income statement.

All significant intercompany transactions and balances between group entities are eliminated onconsolidation.

The group applies a policy of treating transactions with non-controlling interests as transactions withparties external to the group. Disposals to non-controlling interests result in gain and losses for thecompany and are recorded in the income statement if the parent losses control of the subsidiary andin the statement of changes in equity if the change in ownership of subsidiary does not result in lossof control. Purchases from minority interests results in goodwill, being the difference between anyconsideration paid and the relevant share acquired of the carrying value of the assets of the subsidiary.

2. STATEMENT OF COMPLIANCE

The presentation of this condensed consolidated interim financial information of the Companyfor the six months period ended December 31, 2010 has been prepared in accordance with therequirements of the International Accounting Standard 34 - Interim Financial Reporting and provisionsof and directives issued under the Companies Ordinance, 1984. In case where requirements differ, theprovisions of or directives issued under the Companies Ordinance, 1984 have been followed.

3. ACCOUNTING POLICIES

The accounting policies and methods of computation adopted for the preparation of this condensedconsolidated interim financial information are the same as those applied in preparation of the published

financial statements for the year ended June 30, 2010.

4. NET CURRENT LIABILITIES

Net current liabilities as at December 31, 2010 were Rs 18.272 billion of which Rs 10.613 billionrelate to loan installments due for repayment after December 31, 2011 and Rs 4.660 billion relatesto current portion of long term finance and short term finance. A shareholder of the Company hasprovided financial support in the form of long term finance amounting to Rs 2.063 billion to meetthe requirements of the Company and this arrangement is expected to continue. Subsequent to theperiod end, the Company has negotiated with the lenders to restructure long term finance and convertshort term finance, except for short term running finance from Bank Alfalah Limited amounting toRs 1.795 billion, into long term finance facilities. The tenure of the restructured facilities is eight yearsw.e.f January 1, 2011 (inclusive of grace period of three years). The principal amount of restructured

facilities will be repayable in 10 semiannual installments commencing July 1, 2014. Compliance withfinancial covenants is required after the grace period except for the Long Term Debt to Equity Ratioof 80:20, which should not be breached during the grace period. The Company is in the phase offinalizing addendum agreements to restructure term finance facilities with lenders.

The Company has also negotiated with associated company Taavun (Pvt) Limited to reschedule itsmedium term finance facility. The associated company has agreed to reschedule its facility. Principalwill be repayable in semi-annual equal installments within two years after the expiry of grace period(from January 01, 2011 to December 31, 2019). The rate of markup will be 6 months KIBOR, subjectto the approval of the Board of Directors of Taavun (Pvt) Limited, the Company will finalize addendumagreement to restructure the term finance facility with lender.






2010 2010


5. LONG TERM FINANCE - SECURED

Syndicate of banks 5.1 4,766,000 4,766,000 Export Credit Guarantee Department – (ECGD) 5.2 2,199,048 2,450,304 Standard Chartered Bank (SCB) 5.3 40,500 54,000 Dubai Islamic Bank (DIB) 5.4 477,000 477,000 Motorola Credit Corporation (MCC) 5.5 4,122,227 4,963,819 Standard Chartered Bank (SCB) 5.6 508,830 –

Total 12,113,605 12,711,123

Unamortized transaction and other ancillary cost Opening balance 299,464 – Additions during the period/year – 400,862 Amortisation for the period/year (44,602) (101,398)

(254,862) (299,464)

11,858,743 12,411,659

Less: Amount shown as current liability Amount payable within next twelve months (1,845,763) (1,991,174) Amount due after Dec 31, 2011 5.7 (10,012,980) (10,420,485)

(11,858,743) (12,411,659)

– –

5.1 The Company has obtained syndicate term finance facility from a syndicate of banks with StandardChartered Bank Limited (SCB), Habib Bank Limited (HBL), Bank Al-Habib Limited (BAHL) and NationalBank of Pakistan (NBP), being lead arrangers to finance the capital requirements of the Companyamounting to Rs 5.0 billion, of which Rs 4.8 billion has been availed till December 31, 2010. Thetenure of the facility is 5 years commencing from November 4, 2009. The principal is repayable in sixunequal stepped -up- semi annual instalments. The first such instalment shall be due on June 30,2012 and subsequently every six months thereafter until December 31, 2014. The rate of mark-up is6 months KIBOR+2.75% per annum for 1-2 years and KIBOR + 2.5% per annum for next 3-5 years.

The facility is secured by way of hypothecation over all present and future moveable assets (includingall current assets) and present and future current/fixed assets (excluding assets under specific chargeof CM Pak, CISCO, Motorola, DIB, World call and USF), a mortgage by deposit of title deeds inrespect of immoveable properties of the Company, lien over collection accounts and Debt ServiceReserve Account and a corporate guarantee from Warid Telecom International LLC.

5.2 The Company has obtained long term finance facility amounting to USD 42 million from Export CreditGuarantee Department (ECGD) UK, of which US$ 35 million has been availed till December 31, 2010.

Amount outstanding at December 31, 2010 was USD 25.600 million. The loan is repayable in 14semi annual installments of USD 3,025 thousand each starting from October 14, 2009. The rate ofmark-up is LIBOR + 1.5% per annum. Additional mark-up at 2% per annum will be payable on defaultpayment from the due date for payment upto the date of payment. If the finance charge is not paid




then additional interest rate will be payable at 1.5% per annum above CIRR rate applicable to theperiod during which the finance charge remained unpaid or at 5% per annum whichever is higher. Theloan is secured by personal guarantees by three Sponsors of the Company.

5.3 The Company has obtained an aggregate medium term finance facility of USD 3 million from StandardChartered bank. The principal is repayable in 8 equal semi annual installments commencing fromOctober 1, 2007. The rate of interest is six month average KIBOR + 1.25%.The loan is secured byfirst pari passu hypothecation charge over the specific assets of the Company amounting to Rs 275million.

5.4 The Company has obtained Ijarah finance facility of Rs 530 million from Dubai Islamic Bank (DIB). Theprincipal is repayable in 10 semi annual installments of 53 million each commencing from February 1,2010. The rate of mark up is 6 month KIBOR plus 1.5% per annum. Additional interest is payable ondefault payment at KIBOR + 4% per annum from the due date for payment upto the date of payment.

The loan is secured by specific fixed assets (DWDM equipment, eltek cabinets and batteries).

During the period the bank has rescheduled the second installment due on August 01, 2010 toJanuary 31, 2011. Remaining repayments are due on their respective dates.

5.5 The Company has obtained term finance facility of USD 65 million from MCC of which USD 64 million(June 30, 2010: USD 64 million) has been availed till December 31, 2010. Amount outstanding atDecember 31, 2010 was USD 47.989 million. The principal amount of outstanding facility is repayablein 12 unequal semi annual installments commencing from June 30, 2009 until and including the finalmaturity date which is December 31, 2014. The rate of mark-up is six month LIBOR + 1.7% perannum. Additional interest is payable on default payment at six month LIBOR + 2% per annum from

the due date for payment upto the date of payment. The loan is secured through hypothecationcharge over specific assets of the Company supplied under supply & services agreements withMotorola.

Repayment of principal and interest payments thereon (except for margin of 1.7% per annum)amounting to US$ 23.2 million at December 31, 2010 (June 30,2010: US$ 25.5 million) were hedgedthrough cross currency swap contract with SCB. In consideration, the Company paid the differencebetween interest based on LIBOR and KIBOR + 2.2% per annum to the bank. The contract wasterminated by the Company on January 18, 2011 and the cost of termination has been recognised inprofit and loss account.

The interest payments (except for margin of 1.7% per annum) upon principal amounting to US$53.5 million at December 31, 2010 (June 30, 2010: US$ 58.5 million) were hedged through interestrate swap contract with SCB. In consideration, the company paid 3.05% on the notional amount.

The contract was terminated by the Company on January 18, 2011 and the cost of termination hasbeen recognised in profit and loss account.

Subsequent to period end MCC has transferred all of its rights, title benefits and interests in theoriginal facility agreement to the Deutsche Bank AG as lender, effective August 19, 2011.

5.6 During the period, the Company has obtained term finance facility from Standard Chartered bankamounting to Rs 291 million against letter of credit facilities availed till June 30, 2010. The principalis repayable in five installments commencing from June 30, 2011. The rate of mark-up is six monthsKIBOR + 2.5%. The facility is secured by way of hypothecation over all of its current and fixed assets(excluding cellular license and CM Pak, CISCO & Motorola financed assets) for a sum of Rs 1,000





million, which charge shall no later than thirty days from the execution of this agreement be enhancedto a first pari passu charge inter se, SCB and the existing creditors of the customer.

During the period the Company has obtained term finance facility from Standard Chartered bankamounting to Rs 217 million. The principal is repayable in five installments commencing from June30, 2011. The rate of mark-up is six months KIBOR + 2.5%. The facility is secured by way ofhypothecation over all of its current and fixed assets (excluding cellular license and CM Pak, CISCO& Motorola financed assets) for a sum of Rs 500 million, which charge shall no later than thirty daysfrom the execution of this agreement be enhanced to a first pari passu charge inter se, SCB and theexisting creditors of the customer.

5.7 The Company is required to make payments of long term loans on due dates and to maintain certainratios as specified in loan agreements. The Company paid ECGD loan installment of USD 3.025 million

on December 24, 2010 which was due on October 14, 2010 and SCB loan installment of Rs 13,500thousand on January 31, 2011 which was due on October 25, 2010. Further, certain ratios specifiedin the loan agreements have not been maintained at December 31, 2010. As a consequence, thelenders shall be entitled to declare all outstanding amount of the loans immediately due and payable.In terms of provisions of International Accounting Standard on Presentation of financial statements(IAS 1), since the Company does not have an unconditional right to defer settlement of liabilities forat least twelve months after the balance sheet date, all liabilities under these loan agreements arerequired to be classified as current liabilities. Based on above, loan installments due as per loanagreements after December 31, 2011 amounting to Rs 10,012,980 thousand have been shown ascurrent liability.

Subsequent to period end, the Company has negotiated with the lenders to restructure its existinglong term finance facilities as explained in note 4.

6. MEDIUM TERM FINANCE FROM AN ASSOCIATED COMPANY - UNSECURED

During the period, the Company has obtained an aggregate medium term finance facility of Rs 600million from an associated company Taavun (Pvt) Limited. This loan is subordinated to all securedfinance facilities availed by the Company. The principal is repayable within 30 days of the expiryof twenty four months from the effective date i.e September 30, 2010. The rate of mark-up is sixmonth KIBOR + 2.5% with 24 months grace period payable quarterly. As explained in note 5.7, loaninstallments due as per loan agreement after December 31, 2011 amounting to Rs 600 million havebeen shown as current liability.

Subsequent to the period end the Company has negotiated with associated Company Taavun (Pvt)Limited to reschedule its finance facility. The associated Company has agreed to restructure its facility

as explained in note 4.

7. LONG TERM FINANCE FROM A SHAREHOLDER - UNSECURED

During the period, the Company has obtained loan from a shareholder amounting to USD 24 million. This loan is subordinated to all secured finance facilities availed by the Company. This loan is repayablewithin 30 days of the expiry of a period of five years from the last date the lender has disbursed theloan, which shall be on or about January 29, 2015. The rate of mark-up is LIBOR + 1.5%. Alternativelythe loan may be converted into equity by way of issuance of the Company’s ordinary shares at theoption of the lender at any time after the repayment date on the best possible terms but subject tofulfillment of all legal requirements at the cost of the Company. The said conversion of loan shall be atthe higher of par value i-e Rs 10/ ordinary share or 10% below prevailing market value, which value





shall be calculated after taking into account the average share price of the last 30 calendar days,counted backwards from the repayment date, provided that such conversion is permissible under theapplicable laws of Pakistan.


2010 2010


8. DEFERRED INCOME TAX ASSET/ (LIABILITY)

Temporary differences between accountingand tax depreciation (3,745,161) 3,423,722Unused tax losses 8.1 3,973,860 (3,268,671)

Unused tax benefit related to share issue cost 39,462 (34,138) Deductible temporary differences on account of provisions 506,037 (47,102) Deferred cost 36 (72) Trade debts - exchange gain (1,935) 3,068

772,299 76,807

8.1 Potential tax benefit of Rs 478,585 thousand has not been recognised representing business lossesof Rs 1,367,386 thousand which will expire in tax year 2016.

8.2 The existence of future taxable profits sufficient to absorb these losses is based on a businessplan prepared by management of the Company which involves making judgments regarding key

assumptions underlying the estimation of future taxable profits estimated in the plan. Theseassumptions if not met have a significant risk of causing a material adjustment to the carrying amountof the deferred tax asset. In the management’s view it is probable that the company will be able toachieve the profits projected in the plan.


2010 2010


9. DEFERRED UNIVERSAL SERVICE FUND (USF) GRANT

Balance at beginning of the period/year 827,159 212,428 Amount received/receivable during the period/year 245,028 616,477 Amount recognised as income during the period/year (25,939) (1,746)

Closing balance 1,046,248 827,159

10. SHORT TERM BORROWINGS - SECURED

Short term borrowings 134,750 1,680,165 Short term running finance 3,957,734 2,924,181

4,092,484 4,604,346





2010 2010


11. TRADE AND OTHER PAYABLES

These include payable to related parties as follows:

Warid Telecom (Pvt) Limited 140,682 86,656 Advances from Warid Telecom (Pvt) Limited 34,316 151,004Bank Alfalah Limited 3,950 –Warid Telecom Uganda Limited – 47,474Payable to gratuity fund 109,841 104,041Payable to provident fund 22,637 11,569

311,426 400,744

12. CONTINGENCIES AND COMMITMENTS

(i) Claims against the Company not acknowledged as debt 260,267 264,038

(ii) Performance guarantees issued by banks in favour of the Company 1,412,233 1,476,816

(iii) Outstanding commitments for capital expenditure 1,208,145 1,799,824

(iv) Acquisition of 49% shares in subsidiary Wateen Solutions (Pvt) Limited

49% of the shareholding of Wateen Solutions is held by Mr. Jahangir Ahmed. The Board of

Directors of the Company in their meetings held on November 15, 2009 and November 19,2009 approved the acquisition of 49% shareholding of Wateen Solutions from Mr. Jahangir Ahmed for a total sale consideration of Rs 490,000 thousand. On the basis of the approvalof the Board of Directors of the Company, the Company entered into a Share Purchase

Agreement dated April 1, 2010 (SPA) with Mr. Jahangir Ahmed for the acquisition of the 49%shareholding of Wateen Solutions.

However, in light of the dividend payment of Rs 150,000 thousand by Wateen Solutions toMr. Jahangir Ahmed, the Company entered into negotiations with Mr. Jahangir Ahmed for thepurposes of negotiating a downward revision to the purchase price as agreed in the SPA fromRs 490,000 thousand to Rs 340,000 thousand. This reduction in the purchase price and theresultant change in utilization of the IPO proceeds was approved by the shareholders of theCompany in the Extra Ordinary General Meeting dated August 13, 2010.

Under the terms of the SPA, the Company has paid an advance of Rs 85,000 thousand aspartial payment of the purchase price and the balance of Rs 255,000 thousand is payableby the Company to Mr. Jahangir Ahmed. In l ight of the current business dynamics of WateenSolutions and the resultant devaluation of its share price, the new management entered intonegotiations as a result of which Mr. Jahangir Ahmad has agreed to transfer the shares ofWateen Solutions to the Company without requiring payment of the balance of Rs 255,000thousand, however the finalization of renegotiated agreement is in process.

Same have been approved by shareholders in EOGM dated December 31, 2011.






December 31, June 30, 2010 2010


13. OPERATING ASSETS

Opening net book value 17,053,114 14,062,017 Additions – owned 2,658,762 4,804,160

– leased – 9,293 Disposals at net book value (16,798) (191,532) Depreciation charge (977,039) (1,630,824)

Closing net book value 18,718,039 17,053,114

14. CAPITAL WORK IN PROGRESS

Leasehold improvements 21,219 23,334Line and wire 1,240,781 1,319,762Network equipment 14.1 1,529,644 2,540,469

2,791,644 3,883,565

14.1 Network equipment is net of provision for impairment of Rs 354 million (June 30, 2010: Nil).

14.2 Finance cost of Rs 234 million was capitalised during the six months period ended December 31,2010 (Year ended June 30, 2010: Rs 550 million).

December 31, June 30, 2010 2010


15. ADVANCE AGAINST PURCHASE OF SHARES

Advance paid against purchase of sharesWateen Solutions (Pvt) Limited 12 (iv) 85,000 –

16. TRADE DEBTS

Trade debts – related parties 16.1 328,258 1,807,657 – other parties 1,680,630 1,422,911

Less: Provision for doubtful debts – other parties 16.2 (406,609) (157,035) 1,602,279 4,060,687





2010 2010


16.1 Trade debts include due from related parties as follows:

Warid Telecom (Pvt) Limited 145,927 560,627Warid International LLC, UAE - Parent company 85,700 85,400Bank Alfalah Limited 96,631 22,095Warid Telecom Congo S.A – 1,191,305Warid Telecom Uganda Limited – 201,540Wateen Telecom UK Limited – 105,643

328,258 2,166,610

These balances are net of trade debts written off during the period related to following associatedcompanies, which have been approved by the shareholders in Extra Ordinary General Meeting heldon December 31, 2011.


2010 2010


Warid Telecom (Private) Limited 76,834 – Warid Telecom Congo Limited 125,127 – Warid Telecom Uganda Limited 4,266 – Bank Alfalah Limited – 8,451

206,227 8,451

16.2 Provision for doubtful debts – other parties

Opening balance 157,035 110,875Provision during the period 249,574 47,203Recovery during the year – (1,043)

Closing balance 406,609 157,035

Provision during the period includes Rs 197,213 thousand based on age analysis of debts as follows:

Balances 181 - 360 days past due - 50 % Balances over 360 days past due - 100 %

December 31, June 30, 2010 2010


17. STORES, SPARES AND LOOSE TOOLS

Cost 836,416 855,619Less: Provision for obsolete stores 271,998 –

564,418 855,619






2010 2010


18. ADVANCES, DEPOSITS, PREPAYMENTS

AND OTHER RECEIVABLES

18.1 These include receivable from related parties as follows:

Wateen Telecom UK Limited 293,998 108,720Wateen Multimedia (Pvt) Limited 149,106 137,160

Advance for construction of Warid Tower 68,916 65,716Warid International LLC, UAE – Parent company 38,956 35,855

Amoon Media Group (Pvt) Limited 27,960 27,960

Raseen Technology (Pvt) Limited 16,329 –Warid Telecom Georgia Limited 15,403 15,403Warid Telecom International – Bangladesh 5,587 5,587Bank Alfalah Limited – 12,379Warid Telecom Congo S.A – 5,384

616,255 414,164Less: Provision for doubtful receivables from

related parties 18.2 439,859 –

176,396 414,164

18.2 Provision for doubtful receivables from related parties

Wateen Telecom UK Limited 18.3 266,708 – Advance for construction of Warid Tower 68,916 –Warid International LLC, UAE 38,956 –

Amoon Media Group (Pvt) Limited 27,960 –Raseen Technology (Pvt) Limited 16,329 –Warid Telecom Georgia Limited 15,403 –Warid Telecom International – Bangladesh 5,587 –

439,859 –

Provision for doubtful receivables have been approved by shareholders of the Company in ExtraordinaryGeneral Meeting held on December 31, 2011.

18.3 This includes investment in 51% shares of Wateen Telecom UK Limited of par value GBP 5,099 (June30, 2010: 51% shares of par value of GBP 5,099). Subsequent to December 31, 2010 the Companyacquired remaining 49% shares of Wateen Telecom UK Limited of par value GBP 4,901. This companywas incorporated in UK in 2008 for wholesale and retail voice business. Approval from State BankOf Pakistan as per investment in foreign equity abroad is in process and shares of Wateen TelecomUK Limited will be issued to Wateen Telecom Limited after receipt of such approval. In absence ofthis specific approval holding company cannot control the financial and operating policies of Wateen

Telecom UK Limited to obtain the benefit in term of dividend, repatriation of investment, advanceor receive any loan or interest thereon. Hence despite of the 100% ownership Wateen Telecom UKLimited is not treated as subsidiary of the Company.




18.4 Provision for doubtful advances and other receivables from other parties is Rs 15,598 thousand (June30, 2010: Rs Nil).

19. CASH AND BANK BALANCES

Bank balances amounting to Rs 34 million were under lien with banks (June 30, 2010: Rs 42.2million).



2010 2009 2010 2009


20. REVENUE

Long Distance and International (LDI) 675,810 1,085,157 1,237,677 2,495,301Optic Fiber Cable (OFC)

Indefeasible Right of Use (IRU) (232,045) – – –Operation and Maintenance 155,147 169,317 298,690 295,709Managed capacity 21,991 23,669 34,734 52,582

Broadband and voice 455,723 354,198 903,267 777,854Hybrid Fiber Cable Services (HFC) 8,535 8,081 17,395 14,378 Very Small Aperture Terminal services (VSAT) 218,387 467,346 470,895 861,073 ADM sites rentals 43,174 – 74,172 –Sale of product and services 33,282 105,634 149,090 377,576Margin/commission 13,429 148,177 3,060 4,637Others 84,941 55,641 220,360 36,538

1,478,374 2,417,220 3,409,340 4,915,648

21. COST OF SALES

LDI Interconnect cost 616,022 735,525 1,069,463 1,531,653Leased circuit charges 84,230 80,330 181,471 163,327Contribution to PTA Funds 49,006 234,296 123,384 627,848PTA regulatory and spectrum fee 5,926 9,008 13,138 12,260Cost associated with IRU of Optic FiberCable – – – –Operational cost 247,880 443,369 630,116 849,017Bandwidth cost of VSAT services 196,248 297,816 398,726 624,642Equipment and material consumed 22,875 79,238 82,960 159,320Others 9,241 21,641 64,629 81,621

1,231,428 1,901,223 2,563,887 4,049,688







2010 2009 2010 2009


22. PROVISIONS AND WRITE OFF

Trade debts written off - related parties 206,227 – 206,227 8,451Provision for doubtful trade debts – other parties 249,574 – 249,574 9,822Provision for doubtful advances

and other receivables– related parties 439,859 – 439,859 –– other parties 15,599 – 15,599 –

Provision for impairment of capital work in progress 353,515 – 353,515 –

Provision for impairment of goodwill onacquisition of subsidiary company 5,765 – 5,765 –Provision for obsolete stores and spares 271,998 – 271,998 –

1,542,537 – 1,542,537 18,273

23. OTHER INCOME/ (LOSS)

Profit/(loss) on sale of fixed assets (6,709) – (6,798) 23,326Rental income – 3,892 – 3,892USF grant recognised as income (84,816) – 25,939 –Other income/ (loss) (3,610) 6,271 4,247 7,477

(95,135) 10,163 23,388 34,695

24. FINANCE COST Interest/markup 507,699 163,886 1,012,486 669,926

Cross currency and interest rate swap contracts cost 377,947 171,155 377,947 171,155 Amortization of ancillary cost of long term finance 22,301 – 44,602 –Finance cost of leased assets 596 190 852 595Bank charges, commission and fees 28,762 44,006 41,849 103,785Exchange loss/(gain) (11,937) 323,160 41,250 310,650

925,368 702,397 1,518,986 1,256,111Mark up on long term finance capitalised underproperty, plant and equipment (117,196) (146,189) (234,392) (292,377)

808,172 556,208 1,284,594 963,734

25. INCOME TAX CHARGE/(CREDIT)

Current (12,894) 4,310 3,747 8,621Prior Period – – 2,601 –Deferred (773,071) (291,944) (849,108) (583,889)

(785,965) (287,634) (842,760) (575,268)






2010 2009 2010 2009


26. RELATED PARTY TRANSACTIONS

Aggregate transactions with related parties

during the period were as follows:

Parent Company

Warid Telecom International LLC, UAE (WTI)

Markup charged to WTI 3,045 – 6,090 –

Payments made by the Company on behalf of WTI – – 56 –


Shareholder

Long term finance received from shareholder 856,579 – 2,063,379 –

Markup on long term finance from shareholder 8,693 – 8,693 –

Associated Companies

Warid Telecom (Private) Limited (WTL)

Sale of services 500,478 546,934 891,537 1,097,493

Cost and expenses charged by company 86,601 69,049 423,818 145,775


Unearned revenue reversed 147,315 – 147,315 –

Wateen Multimedia (Pvt) Limited (WMM)Cost and expenses charged by (WMM) 13,674 – 22,791 –

Payments made by the Company on behalf of WMM 3,683 4,078 11,945 17,833

Bank Alfalah Limited (BAL)

Sale of services 1,652 – 35,312 33,818

Markup charged by company on

running finance facility 68,399 67,666 132,571 135,581

Trade debts written off – 8,451 – –

Taavun (Pvt) Limited

Long term finance received 50,000 – 600,000 –

Markup charged by company on long term finance 23,789 – 23,789 –

Wateen Telecom Limited – UK (Wateen UK)

Sale of services 33,635 – 67,313 –

Markup charged to Wateen UK 7,480 – 11,820 –

Cost and expenses charged by Wateen UK 153,561 – 218,766 –

Provision for advance against purchase of shares 266,708 – 266,708 –


Wateen UK 86,729 – 173,458 –







2010 2009 2010 2009


Warid Congo S.A (Warid Congo)

Cost and expenses charged by Warid Congo – – – 3,675

Trade Debts written off 125,127 – 125,127 –

Payments made on behalf of Warid Congo – – 5,384 –

Warid Telecom Uganda Limited (Warid Uganda)


Warid Uganda – 26,537 47,474 39,933

Trade Debts written off 4,266 – 4,266 –

Warid Telecom Georgia LimitedProvision for doubtful advances 15,402 – 15,402 –

Warid Telecom International – Bangladesh


Raseen Technology (Pvt) Limited (Raseen)

Markup charged to Raseen – – 1,159 –


Amoon Media Group (Private) Limited


Advance for construction of Warid Tower

Advance paid during the period – – 3,200 –


Gratuity Fund

Employer contribution to fund 8,905 17,963 27,686 32,963

Provident Fund Trust

Employer contribution to trust 4,649 8,267 14,052 14,865

Surcharge charged by trust on late payments 1,142 – 1,142 –

Other related parties

Remuneration of chief executive and

key management personnel including

benefits and perquisites 110,926 97,664 228,600 190,483

27. DATE OF AUTHORISATION FOR ISSUE This condensed interim financial information has been authorised for circulation to the shareholders

by the Board Of Directors of the Company on January 20, 2012.

______________ _____________


1 Wateen HY Report Dec 2010

Documents

Transcript of 1 Wateen HY Report Dec 2010