Wateen HY Report Dec 2010.pdf

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SELECTED NOTES TO AND FORMING PART OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (UN-AUDITED) FOR THE SIX MONTHS PERIOD ENDED DECEMBER 31, 2010 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 the applicable laws of Pakistan. Note December 31, June 30, 2010 2010 (Rupees in thousand) 8. Deferred income tax asset/ (liability) Temporary differences between accounting and tax depreciation (3,745,161) 3,423,722 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 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 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 business plan prepared by management of the Company which involves making judgments regarding key assumptions underlying the estimation of future taxable profits estimated in the plan. These assumptions if not met have a significant risk of causing a material adjustment to the carrying amount of the deferred tax asset. In the management’s view it is probable that the company will be able to achieve the profits projected in the plan. December 31, June 30, 2010 2010 (Rupees in thousand) 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 40 WATEEN TELECOM LIMITED half yearly report dec ‘10
11. Trade and other payables These include payable to related parties as follows: December 31, June 30, 2010 2010 (Rupees in thousand) Warid Telecom (Pvt) Limited 140,682 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 11,569 311,426 400,744 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 approval of 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 to Mr. Jahangir Ahmed, the Company entered into negotiations with Mr. Jahangir Ahmed for the purposes of negotiating a downward revision to the purchase price as agreed in the SPA from Rs 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 the Company 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 as partial payment of the purchase price and the balance of Rs 255,000 thousand is payable by the Company to Mr. Jahangir Ahmed. In light of the current business dynamics of Wateen Solutions and the resultant devaluation of its share price, the new management entered into negotiations as a result of which Mr. Jahangir Ahmad has agreed to transfer the shares of Wateen Solutions to the Company without requiring payment of the balance of Rs 255,000 thousand, however the finalization of renegotiated agreement is in process. Same have been approved by shareholders in EOGM dated December 31, 2011. WATEEN TELECOM LIMITED half yearly report dec ‘10 41
Page 3 and 4: contents 02 Corporate Information 0
Page 5 and 6: DIrectors’ report The Directors o
Page 7 and 8: ~ pwc ~ pwc AUDITOR'S REPORT TO THE
Page 9 and 10: Note December 31, June 30, 2010 201
Page 11 and 12: CONDENSED INTERIM STATEMENT OF COMP
Page 13 and 14: 6 months to December 31, December 3
Page 15 and 16: SELECTED NOTES TO AND FORMING PART
Page 17 and 18: then additional interest rate will
Page 19 and 20: shall be calculated after taking in
Page 21 and 22: Note Six months to Year ended Decem
Page 25 and 26: 21. Cost of sales 3 months to 6 mon
Page 27 and 28: 3 months to 6 months to December 31
Page 29 and 30: CONDENSED CONSOLIDATED FINANCIAL IN
Page 33 and 34: CONDENSED CONSOLIDATED INTERIM STAT
Page 35 and 36: 6 months to December 31, June 30, 2
Page 37 and 38: SELECTED NOTES TO AND FORMING PART
Page 41: million, which charge shall no late
Page 45 and 46: 16.1 Trade debts include due from r
Page 47 and 48: 18.4 Provision for doubtful advance
Page 49 and 50: 3 months to 6 months to December 31

Wateen HY Report Dec 2010.pdf

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