Emirates Telecommunications Corporation - Etisalat · We have reviewed the accompanying condensed...
Transcript of Emirates Telecommunications Corporation - Etisalat · We have reviewed the accompanying condensed...
Emirates Telecommunications CorporationReview report and condensed consolidated interim financial information
for the period ended 30 June 2015
Review report and interim financial information for the period ended 30 June 2015
Contents Pages
Management report 1
Independent auditor's review report to the Board of Directors 2
Condensed consolidated interim statement of profit or loss 3
Condensed consolidated interim statement of comprehensive income 4
Condensed consolidated interim statement of financial position 5
Condensed consolidated interim statement of changes in equity 6
Condensed consolidated interim statement of cash flows 7
Notes to the condensed consolidated interim financial information 8 - 21
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Emirates Telecommunications CorporationManagement report on the condensed consolidated interim financial information for the period ended 30 June 2015
Financial Review
5. International operations
(i) Disposal of Atlantique Telecom ("AT") operations
(ii) Disposal Group held for sale/ Discontinued operations
(iii) Canar Telecommunications Company Limited ("Canar") - Acquisition of additional equity
During the period, the Group concluded the swap of its entire stake in one of the available for sale financial assets with the stake ofone of the minority shareholders in Canar. This has resulted in the increase of Group's stake in Canar from 90.47% to 92.3%.
On 26 January 2015, Emirates Telecommunications Corporation ("Etisalat"), Atlantique Telecom SA ("AT") and Etisalat InternationalBenin Limited ("EIBL") successfully completed the sale of Etisalat's shareholdings in its operations in Benin, the Central African Republic, Gabon, the Ivory Coast, Niger, Togo and Prestige Telecom to Etisalat AI Maghrib ("Maroc Telecom").
The final consideration in return for Etisalat' s equity in and receivables (including shareholder loans) from these seven companiesamounted to Euro 474 million.
On 3 June 2014, the directors approved a plan to dispose of the Group’s interest in Zanzibar Telecom Limited (Zantel), one of theGroup's overseas subsidiary. The disposal is in line with the Group's strategy to optimise its returns on investments in the internationalsegment. Further, on 4 June 2015, Group signed a Share Purchase Agreement with Millicom International Cellular SA ("Millicom'') forthe sale of Group's 85% interest in Zantel. Under the terms of the agreement, Group will receive cash consideration of USD 1 andMillicom will assume total debt obligation of USD 74 million. In addition, Zantel will have up to USD 32 million in net current liabilitiesat closing. The transaction remains subject to the regulatory approval by Tanzanian Communication Regulatory Authority and the FairCompetition Commission of Tanzania.
1. Revenue, profit and earnings per share
2. Corporate net assets
3. Capital expenditure
4. Dividends and Bonus share
The Group's financial performance in the six month period ended 30 June 2015 is summarised in the financial metrics below:
iii) Earnings per share decreased by AED 0.09 when compared to the corresponding period in the prior year.
i) Consolidated revenue amounted to AED 26,213 million, exhibiting an AED 3,899 million (17%) increase over the revenue of thecorresponding period in the prior year.
ii) Profit attributable to the equity holders of the Corporation amounted to AED 3,712 million, exhibiting a decrease of AED 820 millionwhen compared to that of corresponding period in the prior year.
As compared to 31 December 2014, the Group's net assets decreased by AED 1,844 million to AED 58,605 million as at 30 June 2015.
The Group incurred AED 3,451 million on capital expenditure in the six month period ended 30 June 2015 (AED 4,323 million in the sixmonth period ended 30 June 2014).
A final dividend for the year 2014 at the rate of AED 0.35 per share was approved for distribution to the shareholders registered at theclose of business on Sunday, 5 April 2015. The dividend distribution commenced from Monday, 13 April 2015. This brought the totaldividend for the year 2014 to AED 0.70 per share.
On 28 July 2015, the Board of Directors declared the first interim dividend for the year 2015 at the rate of AED 0.40 per share.
On 24 March 2015, the shareholders at the extraordinary general assembly meeting, approved the increase in the authorised sharecapital of the Corporation to AED 10,000 million. On 24 March 2015, the shareholders at the ordinary general assembly meeting,approved the issue of one bonus share for every ten shares held. The Corporation has one class of ordinary shares which do not carryany guaranteed dividend rights. The record date for issuance of bonus shares was 5 April 2015.
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To the Board of Directors of Emirates Telecommunications Corporation
Report on review of condensed consolidated interim financial informationIntroduction
We have reviewed the accompanying condensed consolidated interim statement of financial position of Emirates Telecommunications Corporation (“the Corporation”) and its subsidiaries (together, “the Group”) as of 30 June 2015 and the related condensed consolidated interim statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of cash flows for the six month period then ended. Management is responsible for the preparation and presentation of the condensed consolidated interim financial information in accordance with International Accounting Standard 34 “Interim Financial Reporting”. Our responsibility is to express a conclusion on the condensed consolidated interim financial information based on our review.
Scope of Review
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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34.
Deloitte & Touche (M.E.)Abu Dhabi, United Arab EmiratesRama Padmanabha Acharya(Reg. No. 701)
Xx XX 2015
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Emirates Telecommunications CorporationCondensed consolidated interim statement of profit or loss for the period ended 30 June 2015
2015 2014 2015 2014Notes AED’000 AED’000 AED’000 AED’000
Continuing operations
Revenue 13,307,400 12,492,291 26,213,341 22,313,872
Operating expenses 4 (8,531,109) (8,014,646) (16,622,210) (14,029,612)
Impairment and other losses (12,064) (776,000) (40,167) (776,000)
Share of results of associates and joint ventures 5 (214,489) 347,087 (218,708) 722,291
Operating profit before federal royalty 4,549,738 4,048,732 9,332,256 8,230,551
Federal royalty 4 (1,920,262) (1,778,384) (3,732,335) (3,679,016)
Operating profit 2,629,476 2,270,348 5,599,921 4,551,535
Finance and other income 6 72,047 2,245,008 188,653 2,403,570
Finance and other costs 7 (249,054) (1,096,988) (478,058) (1,172,064)
Profit before tax 2,452,469 3,418,368 5,310,516 5,783,041
Taxation (409,839) (524,059) (738,794) (697,187)
Profit for the period from continuing operations 2,042,630 2,894,309 4,571,722 5,085,854
Loss from discontinued operations 23 (142,593) (36,553) (224,037) (75,580)
Profit for the period 1,900,037 2,857,756 4,347,685 5,010,274
Profit attributable to:
The equity holders of the Corporation 1,534,224 2,507,315 3,711,613 4,531,455
Non-controlling interests 365,813 350,441 636,072 478,819
1,900,037 2,857,756 4,347,685 5,010,274
Earnings per share
Basic and diluted 9 AED 0.18 AED 0.29 AED 0.43 AED 0.52
(Unaudited)
The accompanying notes on pages 8 to 21 form an integral part of the condensed consolidated interim financial information.
Six months ended 30 June Three months ended 30 June
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Emirates Telecommunications CorporationCondensed consolidated interim statement of comprehensive income for the period ended 30 June 2015
2015 2014 2015 2014
Notes AED’000 AED’000 AED’000 AED’000
Profit for the period 1,900,037 2,857,756 4,347,685 5,010,274
Other comprehensive (loss) / income
Items that may be reclassified subsequently to profit or loss:
Exchange differences arising during the period
Exchange differences on translation of foreign operations 622,509 (245,439) (2,441,085) 689,460
(Loss) / gain on hedging instruments designated in hedges of the net assets of foreign operations
20 (295,695) (159,374) 1,005,359 (159,374)
Available-for-sale financial assets
Gain/(Loss) on revaluation of financial assets during the period
(73,917) 105,506 (115,711) (2,760)
Reclassification adjustment relating to available-for-sale financial assets on disposal
(10,646) (227,452) (15,552) (264,326)
Total other comprehensive income / (loss) 242,251 (526,759) (1,566,989) 263,000
Total comprehensive income for the period 2,142,288 2,330,997 2,780,696 5,273,274
Attributable to:
The equity holders of the Corporation 1,598,999 2,022,073 3,092,128 4,352,650
Non-controlling interests 543,289 308,924 (311,432) 920,624
2,142,288 2,330,997 2,780,696 5,273,274
Three months ended 30 June Six months ended 30 June
The accompanying notes on pages 8 to 21 form an integral part of the condensed consolidated interim financial information.
(Unaudited)
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Emirates Telecommunications CorporationCondensed consolidated interim statement of financial position as at 30 June 2015
(Unaudited) (Audited)
30 June 2015
31 December 2014
Notes AED’000 AED’000Non-current assetsGoodwill 10 14,847,304 15,690,382Other intangible assets 11 17,507,930 19,094,776Property, plant and equipment 12 44,545,386 45,972,612Investment property 11 40,546 41,378Investments in associates and joint ventures 14 4,950,970 5,174,201Other investments 15 884,727 983,997Other receivables 13 818,839 803,828Derivative financial instruments 20 602,176 293,584Loans to related party 16 2,390,194 2,390,194Deferred tax assets 8 325,693 317,383
86,913,765 90,762,335Current assetsInventories 17 691,797 624,652Trade and other receivables 13 18,277,906 17,376,549Current income tax assets 8 636,732 637,299Due from associates and joint ventures 16 547,358 459,855Cash and cash equivalents 14 18,277,379 18,542,859
38,431,172 37,641,214
Assets classified as held for sale 23 434,787 532,757
Total assets 125,779,724 128,936,306Non-current liabilitiesOther payables 15 1,160,402 1,075,480Borrowings 19 18,182,593 18,619,459Payables related to investments and licenses 21 786,853 936,699Derivative financial instruments 20 17,232 -Deferred tax liabilities 8 4,236,690 4,707,879Finance lease obligations 24 13,249 17,283Provisions 25 184,301 126,736Provision for end of service benefits 28 1,851,964 2,044,540
26,433,284 27,528,076Current liabilitiesTrade and other payables 15 28,507,627 30,850,818Borrowings 19 5,715,002 3,609,711Payables related to investments and licenses 21 3,160,509 3,133,794Current income tax liabilities 8 253,464 369,379Finance lease obligations 24 6,370 6,983Provisions 25 1,911,108 1,862,566
39,554,080 39,833,251
Liabilities directly associated with the assets classified as held for sale 23 1,187,645 1,126,517
Total liabilities 67,175,009 68,487,844Net assets 58,604,715 60,448,462EquityShare capital 27 8,696,754 7,906,140Reserves 29 26,916,748 27,509,272Retained earnings 7,169,120 7,038,930Equity attributable to the equity holders of the Corporation 42,782,622 42,454,342Non-controlling interests 12 15,822,093 17,994,120Total equity 58,604,715 60,448,462
The accompanying notes on pages 8 to 21 form an integral part of the condensed consolidated interim financial information.
As at
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Emirates Telecommunications CorporationCondensed consolidated interim statement of changes in equity for the period ended 30 June 2015 (Unaudited)
Share capital ReservesRetained earnings
Owners' equity
Non-controlling
interestsTotal
equity
Notes AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
Balance at 1 January 2014 (as previously reported)
7,906,140 28,266,980 4,359,024 40,532,144 9,060,552 49,592,696
Effects of restatement (Note 29) - - (262,481) (262,481) - (262,481)
Balance at 1 January 2014 (as restated)
7,906,140 28,266,980 4,096,543 40,269,663 9,060,552 49,330,215
Total comprehensive income for the period
- (178,805) 4,531,455 4,352,650 920,624 5,273,274
Transfer to reserves - 2,339 (2,339) - - -
Acquisition of a subsidiary 26 - - - - 5,403,023 5,403,023
Transaction with owners: - Equity contribution from non-controlling interests for acquisition of a subsidiary
- - - - 1,813,527 1,813,527
Dividends 8 - - (2,765,952) (2,765,952) (1,251,492) (4,017,444)
Balance at 30 June 2014 7,906,140 28,090,514 5,859,707 41,856,361 15,946,234 57,802,595
Balance at 1 January 2015 (as previously reported)
7,906,140 26,852,704 7,517,339 42,276,183 18,650,688 60,926,871
Effects of restatement (Note 29) - 656,568 (478,409) 178,159 (656,568) (478,409)
Balance at 1 January 2015 (as restated)
7,906,140 27,509,272 7,038,930 42,454,342 17,994,120 60,448,462
Total comprehensive income for the period
- (619,485) 3,711,613 3,092,128 (311,432) 2,780,696
Other movements in equity - - 2,537 2,537 15,881 18,418
Transfer to reserves - 26,961 (26,961) - - -
Transaction with owners:
Acquisition of non-controlling interests
- - (433) (433) (5,664) (6,097)
Repayment of equity contribution from non-controlling interests for acquisition of a subsidiary
- - - - (121,347) (121,347)
Bonus issue of 790.614 million fully paid shares of AED 1
27 790,614 - (790,614) - - -
Dividends 8 - - (2,765,952) (2,765,952) (1,749,465) (4,515,417)
Balance at 30 June 2015 8,696,754 26,916,748 7,169,120 42,782,622 15,822,093 58,604,715
Attributable to equity holders of the Corporation
The accompanying notes on pages 8 to 21 form an integral part of the condensed consolidated interim financial information.
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Emirates Telecommunications Corporation
2015 2014Notes AED’000 AED’000
Operating profit including discontinued operations 5,395,987 4,501,111
Adjustments for:
Depreciation 10, 11 2,855,709 2,191,016
Amortisation 9 905,720 485,496
Impairment and other losses 40,167 776,000
Share of results of associates and joint ventures 13 218,708 (722,291)
Provisions and allowances 278,172 669,162
Other non-cash movements - (256,444)
Operating profit before changes in working capital 9,694,463 7,644,050
Changes in working capital:
Inventories (83,382) 37,534
Due from associates and joint ventures (96,438) (2,735)
Trade and other receivables 585,243 (871,285)
Trade and other payables (3,135,088) (665,465)
Cash generated from operations 6,964,798 6,142,099
Income taxes paid (1,080,987) (953,225)
Payment of end of service benefits 27 (307,929) (44,179)
Net cash generated from operating activities 5,575,882 5,144,695
Cash flows from investing activities
Net proceeds from (acquisition) / disposal of other investments (37,496) 485,901
Purchase of property, plant and equipment (3,020,269) (2,655,200)
Proceeds from disposal of property, plant and equipment 12,963 63,305
Purchase of other intangible assets (430,673) (1,667,999)
Proceeds from disposal of other intangible assets 995 893
Dividend income received from associates and other investments 4,017 529,001Acquisition of additional equity in subsidiary (98,731) (18,660,985)Finance and other income received 150,112 2,037,780
Net cash used in investing activities (3,419,082) (19,867,304)
Cash flows from financing activities
Proceeds from borrowings and finance lease obligations 5,715,440 34,641,416
Repayments of borrowings and finance lease obligations (2,830,223) (16,568,986)Equity (Repayment)/contribution from non-controlling interests for acquisition of a subsidiary
(121,347) 1,813,527
Dividends paid (4,406,922) (4,017,448)
Finance and other costs paid (526,476) (1,121,569)
Net cash (used in) / generated from financing activities (2,169,528) 14,746,940
Net (decrease) / increase in cash and cash equivalents (12,728) 24,331
Cash and cash equivalents at the beginning of the period 18,551,773 15,450,248
Effect of foreign exchange rate changes (251,480) 72,244
Cash and cash equivalents at the end of the period 14 18,287,565 15,546,823
The accompanying notes on pages 8 to 21 form an integral part of the condensed consolidated interim financial information.
Six months ended 30 June Condensed consolidated interim statement of cash flows for the period ended 30 June 2015 (unaudited)
During the period, the Group concluded the swap of its entire stake in one of the available for sale financial assets with the stake of one of the minority shareholders in Canar and derecognition of spectrum in PTCL, which have been reflected as non-cash transactions in the condensed consolidated interim statement of cash flows for the period ended 30 June 2015.
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Emirates Telecommunications Corporation Notes to the condensed consolidated interim financial information for the period ended 30 June 2015
1. General information
The Emirates Telecommunications Corporation Group (“the Group”) comprises the holding company Emirates
Telecommunications Corporation (“the Corporation”) and its subsidiaries. The Corporation was incorporated in the United
Arab Emirates (“UAE”), with limited liability, in 1976 by UAE Federal Government decree No. 78, which was revised by the
UAE Federal Act No. (1) of 1991 and further amended by Decretal Federal Code No. 3 of 2003 concerning the regulation of
the telecommunications sector in the UAE. In accordance with Federal Law No. 267/10 for 2009, the Federal Government of
the UAE transferred its 60% holding in the Corporation to the Emirates Investment Authority with effect from 1 January
2008, which is ultimately controlled by the UAE Federal Government. During the period, the Federal Government decided to
lift the restriction on Etisalat stock ownership by the local institutions, foreign institutions, expatriate individuals provided
that such ownership does not exceed 20%. This is subject to additional legal and legislative procedures.The address of the
registered office is P.O. Box 3838, Abu Dhabi, United Arab Emirates. The Corporation’s shares are listed on the Abu Dhabi
Securities Exchange.
The principal activities of the Group are to provide telecommunications services, media and related equipment including the
provision of related contracting and consultancy services to international telecommunications companies and consortia.
These activities are carried out through the Corporation (which holds a full service license from the UAE
Telecommunications Regulatory Authority valid until 2025), its subsidiaries, associates and joint ventures.
This condensed consolidated interim financial information was approved by the Board of Directors and authorised for issue
on 28 July 2015.
2. Significant accounting policies
The significant accounting policies adopted in the preparation of this condensed consolidated interim financial information
are set out below.
Basis of preparation
The condensed consolidated interim financial information has been prepared in accordance with IAS 34, Interim Financial
Reporting.
The condensed consolidated interim financial information does not include all the information and disclosures required in
the annual audited consolidated financial statements, and should be read in conjunction with the Group’s latest annual
audited consolidated financial statements.
The condensed consolidated interim financial information is presented in UAE Dirhams (AED) which is the Group’s functional
and presentational currency, rounded to the nearest thousand except where otherwise indicated.
The condensed consolidated interim financial information has been prepared under the historical cost convention, except
for the revaluation of certain financial instruments that have been recorded at fair value.
New and amended standards adopted by the Group
The accounting policies adopted in the preparation of the condensed consolidated interim financial information are
consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year
ended 31 December 2014, except for the adoption of the following new or amended accounting policies and new standards
and interpretations effective as of 1 January 2015.
The following revised IFRSs have been adopted in this consolidated condensed interim financial information. The application
of these revised IFRSs has not had any material impact on the amounts reported for the current and prior periods but may
affect the accounting for future transactions or arrangements.
• Annual Improvements 2010-2012 Cycle, IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16 and 38 and IAS 24
• Amendments to IAS 19 Defined Benefit Plans relating to employee contributions
• Annual Improvements 2011-2013 Cycle, IFRS 1, IFRS 3, IFRS 13 and IAS 40
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Emirates Telecommunications Corporation Notes to the condensed consolidated interim financial information for the period ended 30 June 2015
2. Significant accounting policies (continued)
New and amended standards adopted by the Group (Continued)
New and amended standards in issue but not yet effective
At the date of the consolidated financial statements, the following Standards, Amendments and Interpretations have not
been effective but have not been early adopted:
Effective date
IFRS 9 Financial Instruments (as amended in 2014) IFRS 9 (2014) supersedes IFRS 9 (2009),
IFRS 9 (2010) and IFRS 9 (2013),
1 January 2018
Amendment to IFRS 7 Financial Instruments: Disclosures relating to transition to IFRS 9 (or
otherwise when IFRS 9 is first applied)
When IFRS 9 is
first applied
IFRS 14 Regulatory deferral accounts 1 January 2016
Amendments to IAS 39 Financial instruments – Continuation of hedge accounting When IFRS 9 is
first applied
Amendments to IFRS 11 - Accounting for acquisitions of Interests in Joint operations 1 January 2016
Amendments to IAS 16 and IAS 38 - Clarification of acceptable methods of depreciation and
amortisation
1 January 2016
Amendments to IAS 16 and IAS 41 - Agriculture: Bearer plants 1 January 2016
IFRS 15 – Revenue from contracts with customers 1 January 2017
Amendment to IAS 27 Separate Financial Statements (as amended in 2011) relating to
reinstating the equity method as an accounting option for investments in in subsidiaries, joint
ventures and associates in an entity's separate financial statements
1 January 2016
Amendments resulting from September 2014 Annual Improvements to IFRS 5 Non-current
Assets Held for Sale and Discontinued Operations, IFRS 7 Financial Instruments: Disclosures,
IAS 19 Employee Benefits and IAS 34 Interim Financial Reporting
1 January 2016
Amendments to IFRS 10 and IAS 28 clarify that the recognition of the gain or loss on the sale
or contribution of assets between an investor and its associate or joint venture depends on
whether the assets sold or contributed constitute a business
1 January 2016
Amendments to IFRS 10, IFRS 12 and IAS 28 regarding the application of the consolidation
exception
1 January 2016
IAS 1 Presentation of Financial Statements: Amendments resulting from the disclosure initiative 1 January 2016
Management anticipates that the application of the above Standards and Interpretations in future periods will have no
material impact on the consolidated financial statements of the Group in the period of initial application with the exception
of IFRS 15 revenue from contracts with customers and IFRS 9 financial Instruments which management is currently
assessing. However, it is not practicable to provide a reasonable estimate of effects of the application of these standards
until the Group performs a detailed review.
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Emirates Telecommunications Corporation Notes to the condensed consolidated interim financial information for the period ended 30 June 2015
2. Significant accounting policies (continued)
Associates and joint ventures
A joint venture is a joint arrangement whereby the Group has joint control of the arrangement and has corresponding rights
to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
Associates are those companies over which Group exercises significant influence but it does not control or have joint
control over those companies. Investments in associates and joint ventures are accounted for using the equity method of
accounting except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for
in accordance with IFRS 5. Investments in associates and joint ventures are carried in the consolidated statement of
financial position at cost as adjusted by post-acquisition changes in the Group’s share of the net assets of the associates
and joint ventures less any impairment in the value of individual investments. Losses of the associates and joint ventures in
excess of the Group’s interest are not recognised unless the Group has incurred legal or constructive obligations.
The carrying values of investments in associates and joint ventures are reviewed on a regular basis and if impairment in
the value has occurred, it is written off in the period in which those circumstances are identified.
Any excess of the cost of acquisition over the Group’s share of the fair values of the identifiable net assets of the
associates at the date of acquisition is recognised as goodwill and included as part of the cost of investment. Any
deficiency of the cost of acquisition below the Group’s share of the fair values of the identifiable net assets of the
associates at the date of acquisition is credited to the consolidated statement of profit or loss in the year of acquisition.
The Group’s share of associates’ and joint ventures’ results is based on the most recent financial statements or interim
financial statements drawn up to the Group’s reporting date. Accounting policies of associates and joint ventures have been
adjusted, where necessary, to ensure consistency with the policies adopted by the Group.
Profits and losses resulting from upstream and downstream transactions between the Groups (including its consolidated
subsidiaries) and its associate or joint ventures are recognised in the Group’s financial statements only to the extent of
unrelated group’s interests in the associates or joint ventures. Losses may provide evidence of an impairment of the asset
transferred, in which case appropriate provision is made for impairment.
Dilution gains and losses arising on deemed disposal of investments in associates and joint ventures are recognised in the
consolidated statement of profit or loss.
Investment property
Investment property, which is property held to earn rentals and/or for capital appreciation, is carried at cost less
accumulated depreciation and impairment loss.
Investment properties are depreciated on a straight-line basis over the lesser of 20 years and the period of the lease.
Financial assets
i) Held-to-maturity investments
Bonds and Sukuk bonds with fixed or determinable payments and fixed maturity dates that the Group has the positive
intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are
recorded at amortised cost using the effective interest method less any impairment, with revenue recognised on an
effective yield basis. The Group considers the credit risk of counterparties in its assessment of whether such financial
instruments are impaired.
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Emirates Telecommunications Corporation Notes to the condensed consolidated interim financial information for the period ended 30 June 2015
2. Significant accounting policies (continued)
Financial assets (continued)
ii) Available-for-sale financial assets (“AFS”)
Listed securities held by the Group that are quoted in an active market are classified as being AFS and are stated at fair
value at the end of each reporting period. Gains and losses arising from changes in fair value are recognised directly in
equity in the investment revaluation reserve with the exception of impairment losses, interest calculated using the
effective interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in profit
or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously
recognised in the investments revaluation reserve is included in the consolidated statement of profit or loss.
Dividends on AFS equity instruments are recognised in the consolidated statement of profit or loss when the Group’s right
to receive the dividends is established.
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and
translated at the exchange rate prevailing at the end of each reporting period. The foreign exchange gains/losses that are
recognised in the consolidated statement of profit or loss are determined based on the amortised cost of the monetary
asset. Other foreign exchange gains/losses are recognised in other comprehensive income.
The Group assesses at the end of each reporting period whether there is objective evidence that AFS assets are impaired.
In the case of equity securities, a significant or prolonged decline in the fair value of the security below its cost is
considered as an indicator that the securities are impaired. Impairment losses recognised in the consolidated statement of
profit or loss on equity instruments are not reversed through the consolidated statement of profit or loss.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably
measured are measured at cost less any identified impairment losses at the end of each reporting period.
iii) Financial asset at fair value through profit or loss
A financial asset at fair value through profit or loss is a financial asset that meets either of the following conditions:
a) It is classified as held for trading, i.e. it is:
(i) acquired or incurred principally for the purpose of selling or repurchasing it in the near term;
(ii) part of a portfolio of identified financial instruments that are managed together and for which there is
evidence of a recent actual pattern of short-term profit taking; or
(iii) a derivative (except for a derivative that is a designated and effective hedging instrument)
b) Upon initial recognition it is designated by the entity as “at fair value through profit or loss” (FVTPL). An entity
may use this designation only when doing so results in more relevant information (i.e. it eliminates or significantly
reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or
liabilities and their gains and losses on different basis; or a group of financial assets and/or financial liabilities is
both managed and its performance is evaluated on a fair value basis; or if the instrument contains one or more
embedded derivatives)
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Emirates Telecommunications Corporation Notes to the condensed consolidated interim financial information for the period ended 30 June 2015
3. Segmental information
Information regarding the Group’s operating segments is set out below in accordance with IFRS 8 Operating Segments. IFRS
8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Group’s
chief operating decision maker and used to allocate resources to the segments and to assess their performance.
a) Products and services from which reportable segments derive their revenues
The Group is engaged in a single line of business, being the supply of telecommunications services and related products.
The majority of the Group’s revenues, profits and assets relate to its operations in the UAE. Outside of the UAE, the Group
operates through its subsidiaries and associates in nineteen countries which are divided in to the following operating
segments:
Pakistan
Egypt
Morocco
International - others
Revenue is attributed to an operating segment based on the location of the Group Company reporting the revenue. Inter-
segment sales are charged at arms’ length prices.
b) Segment revenues and results
Segment results represent operating profit earned by each segment without allocation of finance income, finance costs and
federal royalty. This is the measure reported to the Group’s Board of Directors (“Board of Directors”) for the purposes of
resource allocation and assessment of segment performance.
The Group’s share of results from associates and joint ventures has been allocated to the segments based on the
geographical location of the operations of the associate and joint venture investments. The allocation is in line with how
results from investments in associates and joint ventures are reported to the Board of Directors.
c) Segment assets
For the purposes of monitoring segment performance and allocating resources between segments, the Board of Directors
monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable
segments. Goodwill is allocated to reportable segments. Assets used jointly by reportable segments are allocated on the
basis of the revenues earned by individual reportable segments.
The segment information has been provided on the following page.
13
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
3. Segmental information (continued)
UAE Morocco Egypt Pakistan Others Eliminations ConsolidatedAED’000 AED’000 AED’000 AED’000 AED’000 AED’000 AED’000
Six months ended 30 June 2015
Revenue
External sales 14,982,404 4,003,435 2,146,564 2,160,077 2,920,861 - 26,213,341
Inter-segment sales 173,325 32,594 12,977 44,921 122,874 (386,691) -
Total revenue 15,155,729 4,036,029 2,159,541 2,204,998 3,043,735 (386,691) 26,213,341
Segment result 7,647,147 1,507,352 291,246 110,635 (224,124) - 9,332,256
Federal royalty (3,732,335)
Finance and other income 188,653
Finance and other costs (478,058)
Profit before tax 5,310,516
Taxation (738,794)Profit for the period from continuing operations 4,571,722
Total assets at 30 June 2015 54,422,170 34,581,302 13,055,975 20,368,253 14,092,452 (10,740,428) 125,779,724
Six months ended 30 June 2014RevenueExternal sales 13,712,515 1,612,245 2,335,974 2,308,309 2,344,829 - 22,313,872Inter-segment sales 211,339 5,418 18,358 181,857 84,652 (501,624) -Total revenue 13,923,854 1,617,663 2,354,332 2,490,166 2,429,481 (501,624) 22,313,872Segment result 5,896,820 619,655 406,824 360,620 946,632 8,230,551Federal royalty (3,679,016)Finance and other income 2,403,570Finance and other costs (1,172,064)Profit before tax 5,783,041Taxation (697,187)Profit for the period from continuing operations 5,085,854Total assets at 31 December 2014 54,041,272 34,685,813 13,907,277 20,868,347 16,374,037 (10,940,440) 128,936,306
In May 2014, the Group acquired 53% stake in Maroc Telecom. Maroc Telecom is accordingly consolidated in the Group consolidated financial statements from the date of acquisition. Accordingly, the comparatives for the period ended 30 June 2014 include the results of operations relating to Maroc Telecom with effect from the date of acquisition.
International
14
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
4. Operating expenses and federal royalty
a) Operating expenses (before federal royalty) 2015 2014 2015 2014AED’000 AED’000 AED’000 AED’000
Direct cost of sales 3,057,755 2,718,455 5,834,865 4,859,114
Staff costs 1,377,465 1,431,334 2,889,993 2,704,053
Depreciation 1,411,468 1,270,786 2,828,557 2,163,918
Network and other related costs 697,329 719,227 1,398,849 1,257,792
Amortisation 447,740 289,147 898,620 481,228
Marketing expenses 262,552 242,364 497,927 400,173
Regulatory expenses 203,513 393,028 398,055 563,030
Operating lease rentals 32,978 27,106 64,473 60,446
Foreign exchange losses / (gains) 207,357 (171,784) 93,702 (125,059)
Other operating expenses 832,952 1,094,984 1,717,169 1,664,917
Operating expenses (before federal royalty) 8,531,109 8,014,647 16,622,210 14,029,612
b) Federal Royalty
5. Share of results of associates and joint ventures
6. Finance and other income
The Group follows the criteria of IAS 39 to determine whether its financial assets are impaired and accordingly, the Group has assessed thatits loan and interest receivable due from one of its related parties may be impaired. Accordingly, finance and other income is reported net ofimpairment for the period amounting to AED 392 million (2014: AED 345 million) in relation to the loan and interest receivable.
Six months ended 30 June
In accordance with the Cabinet decision No. 558/1 for the year 1991, the Corporation was required to pay a federal royalty, equivalent to 40%
of its annual net profit before such federal royalty, to the UAE Government for use of federal facilities. With effect from 1 June 1998, Cabinet
decision No. 325/28M for 1998 increased the federal royalty payable to 50%.On 9 December 2012, the Cabinet of Ministers of UAE issued decision no. 320/15/23 of 2012 in respect of a new royalty mechanism
applicable to Etisalat. Under this mechanism a distinction was made between revenue earned from services regulated by Telecommunications
Regulatory Authority (“TRA”) and non-regulated services as well as between foreign and local profits. Etisalat was required to pay 15 %
royalty fee on the UAE regulated revenues and 35 % of net profit after deduction of the 15 % royalty fee on the UAE regulated revenues. In
respect of foreign profit, the 35 % royalty was reduced by the amount that the foreign profit has already been subject to foreign taxes.
Three months ended 30 June
The mechanism for computation of federal royalty for the year ended 31 December 2014 was consistent with the mechanism followed for the
computation of the federal royalty for the year ended 31 December 2013.During 2014, certain clarifications have been received from the Ministry of Finance ("MOF") on the mechanism of computation of federal royalty for the prior years. These clarifications have been considered for the computation of federal royalty for the year ended 31 December 2014. On 25 February 2015, MOF issued revised guidelines (which was received by the Company on 1 March 2015) for the computation of federal royalty for the financial years ending 31 December 2014, 2015 and 2016 (“Guidelines”). Etisalat responded to the MOF with a letter dated 23 March 2015 and is currently engaged in discussions with the MOF seeking clarifications regarding the Guidelines. Etisalat assumes the Guidelines would not apply for the Financial Year ending 31 December 2014, which was already closed at the time the Guidelines were issued. The mechanism for computation of federal royalty for the period ended 30 June 2015 is in accordance with the Guidelines, which are subject to clarifications from the MOF. The Group has made certain judgements for the computation of federal royalty in the absence of clarifications from MOF.
The federal royalty has been treated as an operating expense in the consolidated statement of profit or loss on the basis that the expenses the Corporation would otherwise have had to incur for the use of the federal facilities would have been classified as operating expenses.
The Group has reassessed its accounting treatment for share of results of one of its associates. Consequently, the Group has discontinued therecognition of the share of the results of that associate with effect from 1 January 2013. The net unrecognised share of losses in the associatefor the period ended 30 June 2015 amounts to AED 623 million (2014 : AED 358 million). The cumulative net unrecognised share of losses asat 30 June 2015 amounts to AED 2,889 million (2014: AED 2,266 million). Effective 1 January 2015, the Group has elected to recognize theshare of results of one of its associates, Mobily, with a lag of one quarter. The share of profit from Mobily for the three month period ended31 March 2015 amounted to AED 2 million and the same is recognised in these condensed consolidated interim financial information. Inaddition, share of loss from Mobily amounting to AED 215 million for the charge towards an impairment of receivables of ZainTelecommunication has been recognised in these condensed consolidated interim financial information. Mobily is a listed company and itsfinancial information for the period ended 30 June 2015 is not available at the time of issuance of these condensed consolidated interimfinancial information and accordingly the share of results from Mobily for the three month period ended 30 June 2015 have not beenrecognised.
15
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
7. Finance and other costs
8. Dividends
Amounts recognised as distribution to equity holders: AED’000
Six months ended 30 June 2014Final dividend for the year ended 31 December 2013 of AED 0.35 per share 2,765,952
Six months ended 30 June 2015Final dividend for the year ended 31 December 2014 of AED 0.35 per share 2,765,952
Interim dividend for the year ended 31 December 2014 of AED 0.35 per share -
2,765,952
9. Earnings per share
2015 2014 2015 2014
Earnings (AED'000)
1,534,224 2,507,315 3,711,613 4,531,455
Number of shares ('000)
8,696,754 8,696,754 8,696,754 8,696,754
Earnings per share AED 0.18 AED 0.29 AED 0.43 AED 0.52
10. Goodwill
The movement in the Goodwill is provided below: 2015Note AED’000
15,690,382Goodwill on acquisition of a subsidiary 47,497Exchange difference (890,575)
As at 30 June 14,847,304
11. Other intangible assets 2015
AED’000
19,094,776
Additions 430,673Disposals (76,782)
Amortisation (905,720)
Reclassified as held for sale 23 (67,592)
Exchange difference (967,425)
As at 30 June 17,507,930
12. Property, plant and equipment
2015AED’000
45,972,612
Additions 3,020,269Disposals (12,963)Depreciation (2,855,709)Reclassified as held for sale 23 (201,638)Exchange difference (1,377,185)
As at 30 June 44,545,386
The movement in the other intangible assets is provided below:
During the period, the Group acquired items of property, plant and equipment amounting to AED 3,020 million (2014: AED 2,655 million ) anddisposed items of property, plant and equipment with a carrying value of AED 13 million (2014: AED 63 million).The movement in the property, plant and equipment is provided below:
The weighted average number of shares for the current and prior periods were calculated by taking into consideration the bonus sharesdeclared through retained earnings at the ordinary general assembly meeting held on 24 March 2015. The process of registering the increasein capital with the concerned authorities was completed on 5 April 2015.
As at 1 January
PTCL, a subsidiary of the Group, has acquired 100% shareholding of DVCOM Data (Private) Limited, which owns Wireless Local Loop (WLL) License of 1900 MHz spectrum in nine telecom regions of Pakistan.
In 2014, finance and other costs included an amount of AED 620.9 million representing share registration fees paid for the acquisition ofshares in Maroc Telecom.
As at 1 January
Earnings for the purposes of basic earnings per share being the profit attributable to the equity holders of the Corporation
Six months ended 30 June
On 28 July 2015, the Board of Directors declared the first interim dividend for the year 2015 at the rate of AED 0.40 per share.
Weighted average number of ordinary shares for the purposes of basic earnings per share
Three months ended 30 June
The Group does not have potentially dilutive shares and accordingly, diluted earnings per share equals to basic earnings per share.
As at 1 January
16
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
13. Trade and other receivables
14. Cash and cash equivalents
30 June 2015 31 December 2014
AED’000 AED’000of which maintained locally 14,291,528 15,924,323
of which maintained overseas, unrestricted in use 3,676,392 2,335,947
of which maintained overseas, restricted in use 319,645 291,504
Cash and cash equivalents 18,287,565 18,551,774
Reclassified as held for sale (Note 23) (10,186) (8,915)
Cash and cash equivalents from continuing operations 18,277,379 18,542,859
15. Trade and other payables
16. Contingent liabilities
Foreign exchange regulations
b) Other contingent liabilities
i) The Group is disputing certain charges from the governmental and telecom regulatory agencies and telecom operators in the UAE and certain other jurisdictions but does not expect any material adverse effect on the Group's financial position and results from resolution of these.
ii) With regard to the appeals filed by the PTCL, a subsidiary of the Group, before the Honorable Supreme Court of Pakistan against the orders passed by various High Courts, the Honorable Supreme Court of Pakistan dismissed such appeals through announcement of the earlier-reserved order on 12th June, 2015. Based on the directives contained in the said order and the pertinent legal provisions, the Group is evaluating the extent of its responsibility vis-à-vis such order. PTCL, the Pakistan Telecommunication Employees Trust ("PTET") and the Federal Government of Pakistan have filed Review Petitions before the Apex Court in this regard. Under the circumstances, the Group is of the view, it is not possible at this stage to ascertain the financial obligations, if any, flowing from the Honorable Supreme Court decision which could be disclosed in these financial information. In the meanwhile, PTET has issued notices to prospective beneficiaries for the determination of their entitlements.
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less. These aredenominated primarily in UAE Dirham, with financial institutions and banks. Interest is earned on these deposits at prevailing market rates.The carrying amount of these assets approximates to their fair value.
As at
As at period end, trade and other receivables include a net amount of AED 7,697 million (2014: AED 7,736 million) receivable for servicesrendered and an amount of AED 5,380 million (2014: AED 5,310 million) due from other telecommunication operators/carriers.
On 23 July 2011, Etisalat DB Telecom Pvt Limited (the Company) received a show cause notice from the Directorate of Enforcement (the ED) ofIndia alleging certain breaches of the Foreign Exchange Management Act 1999 (FEMA), by the Company and its Directors (at the time of thealleged breach). The Company and its Directors have filed their response(s) to the notice and the cases of each of the notices have been partheard by the ED. Should there be an adverse finding by the ED, the penalty for a breach of FEMA carries a theoretical exposure in excess ofUS$ 1.0 billion; however, there is no clarity on how such a fine would be apportioned between the respondents. The proceedings of the caseare ongoing as at the consolidated statement of financial position date.
As at period end, trade and other payables include an amount of AED 3,595 million (2014: AED 5,524 million) payable towards federal royalty.
17
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
17. Capital Commitments
18. Related party transactions
a) Federal Government and state controlled entities
b) Joint ventures and associates
2015 2014 2015 2014AED million AED million AED million AED million
Telecommunication services – sales 40.9 52.9 - -
Telecommunication services – purchases 42.7 55.9 - -
Management and other services 75.5 147.1 1.0 3.0 Net amount due from related parties as at 30 June 2015 / 31 December 2014
548.6 451.5 (1.2) 8.4
Loans to related party
Loans due from related party as at 30 June 2015 / 31 December 2014
2,390.2 2,390.2 - -
The Group has approved capital projects and investments commitments to the extent of AED 6,209 million (2014: AED 10,068 million).
Transactions between the Corporation and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions between the Group and its associates are disclosed below.
Trading transactions for the six months ended 30 June
As stated in Note 1, in accordance with Federal Law No. 267/10 for 2009, the Federal Government of the UAE transferred its 60% holding in
the Corporation to the Emirates Investment Authority with effect from 1 January 2008, which is ultimately controlled by the UAE Federal
Government. The Group provides telecommunication services to the Federal Government (including Ministries and local bodies). These
transactions are at normal commercial terms. The credit period allowed to Government customers ranges from 90 to 120 days. Trade
receivables include an amount of AED 1,057 million (2014: AED 1,073 million), which are net of allowance for doubtful debts of AED 78 million
(2014: AED 101 million), receivable from Federal Ministries and local bodies. See Note 4 for disclosure of the royalty payable to the Federal
Government of the UAE.
In accordance with IAS 24 (revised 2009) Related Party Disclosures the Group has elected not to disclose transactions with the UAE Federal Government and other entities over which the Federal Government exerts control, joint control or significant influence. The nature of the transactions that the Group has with such related parties is the provision of telecommunication services.
Associates Joint Ventures
Sales to related parties comprise management fees and the provision of telecommunication products and services (primarily voice traffic and leased circuits) by the Group. Purchases relate exclusively to the provision of telecommunication products and services by associates to the Group. The loans due from related party is subordinated to external borrowings.
18
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
19. Borrowings
The carrying values of the Group’s bank and other borrowings are as follows:
2014 2013 2015 2014AED’000 AED’000 AED’000 AED’000
Bank overdrafts - 105,895 4,454,924 2,416,452
Bank loans - 4,579,854 3,934,221 4,909,289
Other borrowings
Bonds 14,814,754 14,164,803
Loans from non-controlling interest - 60,382 10,712 56,562
Vendor financing - 541,676 361,992 366,057
Others - 8,420 10,398 8,671 - 5,296,227 23,587,001 21,921,834
Advances from non-controlling interest 564,400 570,715
24,151,401 22,492,549
Reclassified as held for sale (Note 23) (253,806) (263,379)
23,897,595 22,229,170
of which due within 12 months 5,715,002 3,609,711
of which due after 12 months 18,182,593 18,619,459
Nominal ValueFair
ValueCarrying
Value2015 2015 2015
AED’000 AED’000 AED’000
2.375% US dollar 900 million notes due 2019 3,306,600 3,319,496 3,306,580
3.500% US dollar 500 million notes due 2024 1,837,000 1,865,106 1,814,761
1.750% Euro 1,200 million notes due 2021 4,921,920 4,962,280 4,865,266
2.750% Euro 1,200 million notes due 2026 4,921,920 5,125,195 4,828,147
At 30 June 2015 14,987,440 15,272,077 14,814,754
of which due after 12 months 14,814,754
The Group has listed a USD 7 billion (AED 25.7 billion) medium-term note programme which will be used to meet medium to long-term fundingrequirements. In 2014, the Group issued the inaugural bonds under the GMTN programme in USD and Euro tranches amounting to USD 1billion and Euro 2.4 billion in total respectively. Further, in May 2015, the Group issued bonds amounting to USD 400 million under theexisting USD tranches. As at 30 June 2015, the total amounts in issue under this programme split by currency are USD 1.4 billion (AED 5.14billion) and Euro 2.4 billion (AED 9.84 billion) as follows:
Bank borrowings
The carrying values of the Group's bank and other borrowings, excluding bonds, approximate their fair values. Fair values of bonds arecalculated using quoted market prices.
Fair Values Carrying Amounts
Total Borrowings as at 30 June 2015/ 31 December 2014
Borrowings from continuing operations as at 30 June 2015/ 31 December 2014
Bonds
Bonds in net investment hedge relationship
Advances from non-controlling interests represent advances paid by the minority shareholder of Etisalat International Pakistan LLC (EIP)towards the Group's acquisition of its 26% stake in PTCL, net of repayments. The amount is interest free and is not repayable within 12months of the condensed consolidated interim statement of financial position date and accordingly the full amount is carried in non-currentliabilities. The fair value of advances is not equivalent to its carrying value as it is interest-free. However, as the repayment dates are variable,a fair value cannot be reasonably determined.
19
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
20. Net investment hedge relationships
2015 2014AED’000 AED’000
Effective part directly recognised in other comprehensive income 1,005,359 (159,374)
2015 2014AED’000 AED’000
Fair value of swaps designated as net investment hedge 584,944 293,584
21. Payables related to investments and licenses
22. Significant events
As at period end, payables related to investments and licenses include an amount of AED 1 billion (2014: AED 1.1 billion) payable towardsacquisition of 3G licence and renewal of 2G licence in Pakistan.
The fair value of bonds designated as hedge is disclosed in note 19.
The Group has in place cross currency USD-EUR swaps which are designated as hedges of net investment. The fair value of the cross currency swaps are calculated by discounting the future cash flows to net present value using appropriate market interest and prevailing foreigncurrency rates. The fair value of swaps is as follows:
On 26 January 2015, Emirates Telecommunications Corporation ("Etisalat"), Atlantique Telecom SA ("AT") and Etisalat International BeninLimited ("EIBL") successfully completed the sale of Etisalat's shareholdings in its operations in Benin, the Central African Republic, Gabon, theIvory Coast, Niger , Togo and Prestige Telecom to Etisalat AI Maghrib ("Maroc Telecom").
The final consideration in return for Etisalat' s equity in and receivables (including shareholder loans) from these seven companies amountedto Euro 474 million. This transaction has been accounted for as a common control transaction.
In February 2012, the Supreme Court of India cancelled all of Etisalat DB Telecom Private Limited's (the Company) licenses, removing theCompany's ability to operate its mobile telecommunications business. Following the cancellation, the Board of the Company resolved to shutdown its telecommunications network in India and gave the appropriate notices to the Indian authorities. Furthermore, the resignation of thedirectors of the Company appointed by the majority shareholders without replacement adversely affected the ability of the Company's Boardof Directors to take decisions. Subsequently, Etisalat Mauritius Limited (which is wholly owned by Etisalat) filed a petition in March 2012 forthe just and equitable winding up of the Company (the Company Petition). The Company Petition was finally admitted by the Bombay HighCourt after multiple appeals, on 22 February 2015. The Official Liquidator has been appointed by the Bombay High Court and initial reports ofthe Official Liquidator have been heard.
The Group has Euro bonds (refer to note 19) and cross currency swaps which are designated as net investment hedges.
20
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
23.Disposal Group held for sale/ Discontinued operations
2015 2014 2015 2014
AED’000 AED’000 AED’000 AED’000
Revenue 46,118 89,309 102,388 169,657
Operating expenses (181,579) (113,139) (306,322) (220,081)
Operating loss before tax (135,461) (23,830) (203,934) (50,424)
Finance and other income 6,522 (58) 6,502 (129)
Finance costs (13,654) (12,665) (26,605) (25,027)
Loss before tax (142,593) (36,553) (224,037) (75,580)
Taxation - - - -Loss for the period from discontinued operations
(142,593) (36,553) (224,037) (75,580)
2015 2014Assets classified as held for sale AED’000 AED’000
Goodwill 44,896 44,896
Other intangible assets 67,592 74,075
Property, plant and equipment 201,638 255,245
Other investments 3,230 3,570
Inventories 9,608 11,374
Trade and other receivables 97,637 134,682
Cash and cash equivalents 10,186 8,915
Assets classified as held for sale 434,787 532,757
2015 2014
Liabilities classified as held for sale AED’000 AED’000
Trade and other payables 931,805 860,862
Borrowings 253,806 263,379
Provision for end of service benefits 2,034 2,276
Liabilities associated with assets classified as held for sale 1,187,645 1,126,517
Net liabilities classified as held for sale 752,858 593,760
2015Cash flows from discontinued operations AED’000
Net cash inflows from operating activities 10,713
Net cash inflows from investing activities 2,478
Net cash outflows from financing activities (26,617)
Net cash outflows (13,426)
Cumulative income or expense recognised in other comprehensive income
The results of operations included in the profit for the period from discontinued operations are set out below.
At 30 June 2015 the disposal group comprised the following assets and liabilities :
There are no cumulative income or expenses recognised in other comprehensive income relating to the disposal group.
Three months ended 30 June Six months ended 30 June
21
Emirates Telecommunications CorporationNotes to the condensed consolidated interim financial information for the period ended 30 June 2015
24. Seasonality and cyclicality of interim operations
25. Fair value disclosures
26. Acquisition of Maroc Telecom
27. Share capital
28.Provision for end of service benefits 2015
AED’000
2,044,540
Additions 140,131
Payments (307,929)
Exchange difference (27,942)
Other movement 3,164
As at 30 June 1,851,964
29. Comparatives
On 27 June 2015, Mobily (an associate of Etisalat Group) made an announcement on Saudi Stock Exchange (“Tadawul”) regarding the
restatement of its financial results for 2014, prior years and for the period ended 31 March 2015. This restatement has resulted due to the
change in accounting policies for the recognition of revenue from certain contracts and the change in the practice of capitalisation of property,
plant and equipment and corresponding depreciation.
The effect of the above changes in accounting policy and practice on the 2014 financial statements of Mobily was to increase the loss for the
year ended 31 December 2014 by approximately AED 813 million (SAR 830 million) to AED 1,709 million (SAR 1,745 million) and reduce
shareholders equity as of that date by approximately AED 2,360 million (SAR 2,400 million) to AED 16,744 million (SAR 17,022 million). The
effect of the above changes on the financial statements of Mobily for the period ended 31 March 2015 was to decrease the loss for the
quarter then ended by approximately AED 203 million (SAR 207 million) to a net profit of AED 8 million (SAR 8 million). The revised 2014
financial statements and Q1 2015 financial statements of Mobily are expected to be reissued before the issuance of Mobily Q2 2015 financial
statements .
The Group’s share of loss from Mobily on account of Mobily’s restatement of its 2013, and prior year results, net of Royalty amounting to
AED 262 million has been recognised in the retained earnings of the Group as at 1 January 2014. The Group’s share of loss from Mobily on
account of Mobily’s restatement of its 2014 results, net of Royalty amounting to AED 216 million has been recognised in the retained
earnings of the Group as at 31 December 2014. Effective 1 January 2015, the Group has elected to recognize the share of results of Mobily,
with a lag of one quarter. Hence, the impact of the restated results of Mobily for the period ended 31 March 2015 has been recognised in
these condensed consolidated interim financial information for the three month period ended 30 June 2015. The share of results of associates
also included a charge of AED 215 million towards an impairment of receivable from Zain Telecommunication. The above restatements will be
reassessed by the group based on Mobily’s revised financial statements of 2014 and its Q1 2015 financial statements. Also, translation impact
relating to 2014 amounting to AED 657 million has been reclassified from reserves attributable to the Corporation to non-controlling interests.
At the extraordinary general meeting held on 24 March 2015, the shareholders approved the increase of the authorised share capital of theCorporation to AED 10 billion. The Corporation is in the process of amending its articles of association to reflect this increase. At the ordinarygeneral assembly meeting held on 24 March 2015, the shareholders approved the issue of one bonus share for every ten shares held.
The process of registering the increase in capital with the concerned authorities was completed on 5 April 2015.
In May 2014, the Group acquired 53% stake in Maroc Telecom. Maroc Telecom is accordingly consolidated in the Group consolidated financialstatements from the date of acquisition. Accordingly, the comparatives for the period ended 30 June 2014 include the results of operationsand cash flows relating to Maroc Telecom with effect from the date of acquisition.
The Group has Euro bonds and cross currency swaps which are designated as net investment hedges. The Group has in place cross currencyUSD-EUR swaps which are designated as hedges of net investment. The fair value of the cross currency swaps are calculated by discountingthe future cash flows to the net present value using appropriate market interest and prevailing foreign currency rates. The fair value of crosscurrency swaps represent Level 2 fair values. The Group has quoted equity investments in listed equity securities. The fair values of theseequity securities are derived from quoted prices in active markets for identical assets, which in accordance with the fair value hierarchy withIFRS 7 Financial Instruments : Disclosure, represent Level 1 fair values. There were no transfers between Level 1 and Level 2 of the fair valuehierarchy during the period.
As at 1 January
The movement in the provision for end of service benefits is provided below:
There are no items of seasonal or cyclical nature in the interim operations during the period ended 30 June 2015.