Wateen HY Report Dec 2010.pdf

SELECTED NOTES TO AND FORMING PART OF THE
CONDENSED 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 of
the cost of acquisition over the fair value of the parent share of the identifiable net assets acquired
is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the
subsidiary acquired, the difference is recognised directly in the income statement.
All significant intercompany transactions and balances between group entities are eliminated on
consolidation.
The group applies a policy of treating transactions with non-controlling interests as transactions with
parties external to the group. Disposals to non-controlling interests result in gain and losses for the
company and are recorded in the income statement if the parent losses control of the subsidiary and
in the statement of changes in equity if the change in ownership of subsidiary does not result in loss
of control. Purchases from minority interests results in goodwill, being the difference between any
consideration 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 Company
for the six months period ended December 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 under the Companies Ordinance, 1984. In case where requirements differ, the
provisions 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 condensed
consolidated 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 billion
relate to loan installments due for repayment after December 31, 2011 and Rs 4.660 billion relates
to current portion of long term finance and short term finance. A shareholder of the Company has
provided financial support in the form of long term finance amounting to Rs 2.063 billion to meet
the requirements of the Company and this arrangement is expected to continue. Subsequent to the
period end, the Company has negotiated with the lenders to restructure long term finance and convert
short term finance, except for short term running finance from Bank Alfalah Limited amounting to
Rs 1.795 billion, into long term finance facilities. The tenure of the restructured facilities is eight years
w.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 with
financial covenants is required after the grace period except for the Long Term Debt to Equity Ratio
of 80:20, which should not be breached during the grace period. The Company is in the phase of
finalizing addendum agreements to restructure term finance facilities with lenders.
The Company has also negotiated with associated company Taavun (Pvt) Limited to reschedule its
medium term finance facility. The associated company has agreed to reschedule its facility. Principal
will 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, subject
to the approval of the Board of Directors of Taavun (Pvt) Limited, the Company will finalize addendum
agreement to restructure the term finance facility with lender.
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WATEEN TELECOM LIMITED half yearly report dec ‘10