ProPakistani.PK CONTENTS. Board of Directors Condensed Interim Financial Statements

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1 PAKISTAN TELECOMMUNICATION COMPANY LTD. CONTENTS Board of Directors Condensed Interim Financial Statements 8-9 Condensed Consolidated Interim Financial Statements

2 PAKISTAN TELECOMMUNICATION COMPANY LTD. Board of Directors Naguibullah Malik Chairman PTCL Board Secretary (IT & Telecom Division) Miniry of Information Technology Government of Pakian Islamabad. Abdulrahim A. Al Nooryani Chairman & Chief Executive Officer Etisalat International Pakian L.L.C Executive Vice President (Contracts & Adminiration) Etisalat, UAE. Mushtaq Ahmad Bhatti Member (Telecom) Miniry of Information Technology Government of Pakian Islamabad. Khurshed Ahmed Junejo Ambassador Embassy of Pakian Abu Dhabi, UAE. Salman Siddique Secretary (Finance) Miniry of Finance Government of Pakian Islamabad. Abdulaziz A. Al Sawaleh Chief Human Resources Officer Etisalat, UAE. Fadhil Al Ansari Executive Vice President (Engineering) Etisalat, UAE. Abdulaziz H. Taryam General Manager (Northern Emirates) Etisalat, UAE. Dr. Ahmed Al Jarwan General Manager/eRE Etisalat, UAE. Farah Qamar Company Secretary 2

3 PAKISTAN TELECOMMUNICATION COMPANY LTD. Corporate Information Management Walid Irshaid President & Chief Executive Officer Muhammad Nehmatullah Toor S.E.V.P (Finance) / CFO Syed Mazhar Hussain S.E.V.P (HR / Admin & Procurement) Sikandar Naqi S.E.V.P (Corporate Development) Naveed Saeed S.E.V.P (Commercial) Muhammad Nasrullah Chief Technical Officer (C.T.O) Tariq Salman S.E.V.P (Business Zone North) Abdulla Yousef S.E.V.P (Business Zone South) Hamid Farooq S.E.V.P (Special Projects) Javed Mushtaq Chief Information Officer (C.I.O) Company Secretary Farah Qamar Legal Affairs Zahida Awan Ghulam Muafa Bankers Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Bank Al Habib Limited The Bank of Punjab Citibank, N.A. Dubai Islamic Bank Faysal Bank Limited Habib Metropolitan Bank Limited MCB Bank Limited Meezan Bank Limited National Bank of Pakian NIB Bank Limited Royal Bank of Scotland Silkbank Limited SME Bank Limited Standard Chartered Bank (Pakian) Limited United Bank Limited Auditors A.F. Ferguson & Co. Chartered Accountants Ern & Young Ford Rhodes Sidat Hyder Chartered Accountants Regiered Office PTCL Headquarters, Sector G-8/4, Islamabad-44000, Pakian. Tel: & 34 Fax: company.secretary@ptcl.net.pk Web: Share Regirar M/s FAMCO Associates (Pvt.) Limited Ground Floor, State Life Building No. 1-A, I.I. Chundrigar Road, Karachi Pakian Tel: , & Fax:

4 PAKISTAN TELECOMMUNICATION COMPANY LTD. Directors' Report The Directors are pleased to present their report together with the unaudited financial atements of the Company for the three months ended. During the period under review, PTCL Group revenue at Rs billion was 4% higher than the same period la year. However, because of catarophic floods in mo part of the country, PTCL revenue at Rs billion declined by 4% during this period as compared to same period la year. The attrition was moly witnessed in revenue from PSTN, International Business and Carrier & Wholesale segments. On the other hand, revenue from Broadband services (wireline and wireless) showed promising increase in this period. The overall operating expenses during the period under review increased by 9% compared to corresponding quarter la year. Main reason for the higher expenses is the effect of increase in employees' compensation. Accordingly, the Co of Services increased by 9% and the Adminirative and General Expenses were higher by 5%. The Selling and Marketing Expenses increased by 21% because of continued focus on enhancing public awareness of various new packages introduced specially to promote the Broadband services. The Other Operating Income at Rs. 1.9 billion increased by 71%; main reason being healthy returns on Company's invements and enhanced availability of funds as is evident from decreased levels of trade debts compared to the respective amount as of September Accordingly, the better management of available funds also decreased the Finance co by 46%. During the quarter under review, your Company earned profit after tax of Rs. 2.1 billion (EPS Rs.0.41). We are also pleased to report that Ufone, the wholly owned subsidiary of your Company, maintained its high performance and growth in the cellular sector and accordingly its revenue and profitability was 16% and 92% higher respectively than the same period la year. Taking cognizance of loss of business and infraructure because of floods, your Company s employees made hectic efforts to reore its services even at times risking their lives and also ensured that the targets to inall new connections and faults removal are achieved to the maximum even in these trying times. As a result of the all out company-wide efforts, your Company was successful in regaining the operational normalcy within the period under review. The Company introduced many new and exciting packages and hiorical mileone was crossed by offering 10MB Broadband connection for the fir time in Pakian. Besides, the speed of other Broadband packages was increased many folds without extra burden to the consumers. To attract new PSTN business, the inallation charges for new connections were subantially reduced; bundled packages for international dialing were introduced and new campaigns like free telephone sets for new connections during Ramadan and gift schemes for usage enhancement etc. were launched. In order to keep your Company fully abrea of the technological advancement in telecom field PTCL further improved its networking and 4

5 PAKISTAN TELECOMMUNICATION COMPANY LTD. infraructure capabilities. A new Data Centre has been eablished in Lahore which is similar to the one earlier set up in Karachi. Commensurate with the launch of Rev-B technology for EVO wireless broadband, whereby the internet speed has been tripled to 9.3 Mbps, the respective network in all the major cities was upgraded. Further expansion in exiing capacity of DSL Broadband was carried out. Country-wide availability of bandwidth to support the segment of Broadband (DSL and EVO) and Corporate Services was enhanced by augmenting the Metro Ethernet Network. Major work on phase II of Optical fibre (OFC) network was completed besides increasing the OFC resilience in smaller cities. The Access Network in Greenfield areas was expanded to provide for increased PSTN and Broadband connectivity. To curb the menace of grey traffic, the project of Revenue Assurance and Fraud Management based on late available technological solution is underway. Besides, work on various USF projects to provide telecommunication facilities in rural and under developed areas is being completed in line with the contractual obligations. The management and employees of PTCL are committed to provide quality services at competitive prices through optimal use of resources for achieving enhanced revenue and improved shareholders' value. On behalf of the Board, Naguibullah Malik Walid Irshaid Chairman PTCL Board President & CEO PTCL Islamabad: October 27, 5

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7 Condensed Interim Financial Statements

8 PAKISTAN TELECOMMUNICATION COMPANY LTD. CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION AS AT SEPTEMBER 30, (UN-AUDITED) Note (Un-audited) June30, (Audited) 5 The annexed notes from 1 to 13 form an integral part of these condensed interim financial atements. 8

9 PAKISTAN TELECOMMUNICATION COMPANY LTD. (Un-audited) June30, (Audited) Fixed assets 9

10 PAKISTAN TELECOMMUNICATION COMPANY LTD. CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME

11 PAKISTAN TELECOMMUNICATION COMPANY LTD. CONDENSED INTERIM STATEMENT OF CASH FLOWS Note

12 PAKISTAN TELECOMMUNICATION COMPANY LTD. CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE QUARTER ENDED SEPTEMBER 30, (UN-AUDITED) 12

13 PAKISTAN TELECOMMUNICATION COMPANY LTD. NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, (UN-AUDITED) 1. The Company and its operations Pakian Telecommunication Company Limited ("the Company") was incorporated in Pakian on December 31, 1995 and commenced business on January 01, The Company is lied on Karachi, Lahore and Islamabad ock exchanges. The Company was eablished to undertake the telecommunication business formerly carried on by Pakian Telecommunication Corporation (PTC). The business was transferred to the Company on January 01, 1996 under the Pakian Telecommunication (Reorganization) Act, 1996 at which date the Company took over all the properties, rights, assets, obligations and liabilities of PTC except those transferred to National Telecommunication Corporation (NTC), Frequency Allocation Board (FAB), Pakian Telecommunication Authority (PTA) and Pakian Telecommunication Employees' Tru (PTET). The regiered office of the Company is situated at PTCL Headquarters, G-8/4, Islamabad. The Company provides telecommunication services in Pakian. It owns and operates telecommunication facilities and provides domeic and international telephone services and other communication facilities throughout Pakian. The Company has also been licensed to provide such services to territories of Azad Jammu & Kashmir and Gilgit-Baltian. 2. Basis of preparation These condensed interim financial atements are unaudited and are being submitted to the members in accordance with the requirements of Section 245 of the Companies Ordinance, 1984 and International Accounting Standard (IAS) 34 'Interim Financial Reporting'. These condensed interim financial atements do not include all the information and disclosures required in the annual financial atements and should be read in conjunction with the annual audited financial atements of the Company for the year ended June 30,. 3. Significant accounting policies The accounting policies adopted in the preparation of these condensed interim financial atements are the same as those applied in the preparation of annual audited financial atements of the Company for the year ended June 30,. 4. Accounting judgement and eimates The preparation of financial atements in conformity with approved accounting andards requires the use of certain critical accounting eimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. Eimates and judgements are continually evaluated and are based on hioric experience including expectation of future events that are believed to be reasonable under the prevailing circumances. Eimates and judgements made by the management in preparation of these condensed interim financial atements are the same as those used in the preparation of annual audited financial atements of the Company for the year ended June 30,. 5. Contingencies and commitments 5.1 Contingencies There has been no material change in contingencies since the la annual audited financial atements of the Company. 5.2 Commitments Commitments in respect of contracts for capital expenditure amount to Rs. 15,280,902 thousand (June 30, : Rs. 14,127,643 thousand). 13

14 PAKISTAN TELECOMMUNICATION COMPANY LTD. 6. Property, plant and equipment (Un-audited) June 30, (Audited) 7 7. Operating assets Long term loans 9. This includes unsecured loans of Rs. 11,000,000 thousand (June 30, : Rs. 7,000,000 thousand) to Pak Telecom Mobile Limited, a wholly owned subsidiary of the Company, under subordinated debt agreements. These loans are recoverable in eight equal quarterly inalments commencing after a grace period of 3 to 4 years by 2015 and carry mark-up at the rate of three months KIBOR plus 82 to 180 basis points. Transactions with related parties (Un-audited) 2009 (Un-audited) 9.1 (Un-audited) June 30, (Audited) 14

15 PAKISTAN TELECOMMUNICATION COMPANY LTD. 9.1 This represents PTCL's share of fee payable to Emirates Telecommunication Corporation (Etisalat) under an agreement for technical services effective October 01, 2006 at the rate of 3.5% of PTCL group's consolidated annual revenue. 10. Cash generated from operations (Un-audited) 2009 (Un-audited) Effect on cash flows due to working capital changes: 11. Cash and cash equivalents 12. Date of authorisation for issue of financial atements These condensed interim financial atements were authorised for issue on October 27, by the Board of Directors of the Company. 13. General Figures presented in these condensed interim financial atements have been rounded off to the neare thousand rupees. 15

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17 Condensed Consolidated Interim Financial Statements

18 PAKISTAN TELECOMMUNICATION GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AS AT SEPTEMBER 30, (UN-AUDITED) (Un-audited) June 30, (Audited) 5 The annexed notes from 1 to 10 form an integral part of these condensed consolidated interim financial atements. 18

19 PAKISTAN TELECOMMUNICATION GROUP Note (Un-audited) June 30, (Audited) Fixed assets 19

20 PAKISTAN TELECOMMUNICATION GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE QUARTER ENDED SEPTEMBER 30, (UN-AUDITED) 2009 The annexed notes from 1 to 10 form an integral part of these condensed consolidated interim financial atements. 20

21 PAKISTAN TELECOMMUNICATION GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS FOR THE QUARTER ENDED SEPTEMBER 30, (UN-AUDITED) Note The annexed notes from 1 to 10 form an integral part of these condensed consolidated interim financial atements. 21

22 PAKISTAN TELECOMMUNICATION GROUP CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY The annexed notes from 1 to 10 form an integral part of these condensed consolidated interim financial atements. 22

23 PAKISTAN TELECOMMUNICATION GROUP NOTES TO AND FORMING PART OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, (UN-AUDITED) 1. Conitution and ownership The consolidated financial atements of the Pakian Telecommunication Group ("the Group") comprise of the financial atements of: Pakian Telecommunication Company Limited (PTCL) PTCL owns and operates telecommunication facilities and provides domeic and international telephone services and other communication facilities throughout Pakian. PTCL has also been licensed to provide such services to territories of Azad Jammu & Kashmir and Gilgit-Baltian. Pak Telecom Mobile Limited (PTML) PTML provides cellular mobile telephony services throughout Pakian under the brand name of Ufone. Maskatiya Communications (Private) Limited (MAXCOM) MAXCOM provides broadband services in the cities of Karachi & Hyderabad. 2. Basis of preparation These condensed interim financial atements are unaudited and are being submitted to the members in accordance with the requirements of Section 245 of the Companies Ordinance, 1984 and International Accounting Standard (IAS) 34 'Interim Financial Reporting'. These condensed interim financial atements do not include all the information and disclosures required in the annual financial atements and should be read in conjunction with the annual audited financial atements of the Group for the year ended June 30,. 3. Significant accounting policies The accounting policies adopted in the preparation of these condensed interim financial atements are the same as those applied in the preparation of annual audited financial atements of the Group for the year ended June 30,. 4. Accounting judgement and eimates The preparation of financial atements in conformity with approved accounting andards requires the use of certain critical accounting eimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Eimates and judgements are continually evaluated and are based on hioric experience including expectation of future events that are believed to be reasonable under the circumances. Eimates and judgements made by the management in preparation of these condensed interim financial atements are the same as those used in the preparation of annual audited financial atements of the Group for the year ended June 30,. 5. Contingencies and commitments 5.1 Contingencies There has been no material change in contingencies since la audited financial atements of the Group. 5.2 Commitments Commitments in respect of contracts for capital expenditure amount to Rs.26,584,279 thousand (June : Rs. 18,967,439 thousand). 23

24 PAKISTAN TELECOMMUNICATION GROUP 2009 non-cash charges & other items: Effect on cash flows due to working capital changes: 8. Segment Information For Management purposes, the group is organized into business units based on their services and has two reportable operating segments. Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties. 8.1 Revenue information regarding the Group's operating segments for the quarter ended and 2009 is tabulated below: Inter segment revenues are eliminated on consolidation. 24

25 PAKISTAN TELECOMMUNICATION GROUP 8.2 Assets & liabilities of the Group's operating segments as at and June 30, are tabulated below. 9. Date of authorisation for issue of financial atements These condensed interim financial atements were authorised for issue on October 27, by the Board of Directors of the Group. 10. General Figures presented in these condensed interim financial atements have been rounded off to the neare thousand rupees. 25

26 Notes