Wateen Annual Report 2016 - Wateen Telecom · PDF fileto the telecom industry, the business...

CONTENTS

Wateen Telecom Ltd. Annual Report 201601

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Corporate InformationDirectors’ ReportAttendance of the Board MembersAuditors' Report to the Members

FINANCIAL STATEMENTS Statement of Financial PositionIncome StatementStatement of Comprehensive IncomeStatement of Cash FlowsStatement of Changes in EquityNotes to and forming part of the Financial Statements

CONSOLIDATED FINANCIAL STATEMENTS Auditors' Report to the MembersConsolidated Statement of Financial PositionConsolidated Income StatementConsolidated Statement of Comprehensive IncomeConsolidated Statement of Cash FlowsConsolidated Statement of Changes in EquityConsolidated Notes to and forming part of the Consolidated Financial Statements

ANNEXURESPattern of ShareholdingCategories of ShareholdingNotice of Annual General MeetingForm of Proxy

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16

18

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71

114

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CORPORATE INFORMATION

Board of Directors

List of Board of Directors as at June 30, 2016H.H. NAHAYAN MABARAK AL NAHAYANADEEL KHALID BAJWARIZWAN ALI TIWANAABID HASANKHWAJA AHMAD HOSAIN

MANAGEMENT TEAMManagement as of June 30, 2016

RIZWAN ALI TIWANACHIEF EXECUTIVE OFFICER

MUHAMMAD AQIB ZULFIQARCHIEF FINANCIAL OFFICER & COMPANY SECRETARY

HASSAN HAYAT QURESHIHEAD OF LEGAL

ZAFAR IQBAL CH.VICE PRESIDENT HR & ADMIN

TAHIR HAMEEDCHIEF COMMERCIAL OFFICER- BROADBAND & MEDIA BUSINESS

ZAFAR MASOODDIRECTOR PROGRAM MANAGEMENT OFFICE

MUHAMMAD BILAL CH.DIRECTOR NETWORK ENGINEERING

JAUHER ALIDIRECTOR FIELD ENGINEERING

JUNAID SHEIKHCHIEF COMMERCIAL OFFICER- CARRIER & ENTERPRISE BUSINESS

AUDITORSA.F. Ferguson & Co.Chartered AccountantsPIA Building, 3rd Floor,49 - Blue Area, P.O. Box 3021,Islamabad

REGISTERED OFFICEMain Walton Road, Opp. Bab-e-Pakistan, Walton Cantt., Lahore.

PRESENT PLACE OF BUSINESSMain Walton Road, Opp. Bab-e-Pakistan, Walton Cantt., Lahore.

SHARE REGISTRARTHK Associates (Pvt.) Limited,2nd Floor, State Life Building No.3,Dr. Zia-ud-Din Ahmed Road, Karachi.

Wateen Telecom Ltd. 03 Annual Report 2016

Wateen Telecom Ltd. 04

BANKERSStandard Chartered Bank PakistanHabib Bank LimitedBank Al Habib LimitedNational Bank of PakistanPak Libya Holding Company LimitedSummit Bank LimitedAskari Bank LimitedSoneri Bank LimitedPak Brunei Investment Company LimitedThe Bank of KhyberBank Alfalah Ltd.Allied Bank of PakistanTameer Micro Finance BankNIB Bank LimitedThe Bank of PunjabDubai Islamic Bank LimitedMeezan BankUnited Bank LimitedWaseela Microfinance Bank Limited

LEGAL ADVISORSIjaz Ahmed & Associates

Suite No. 425, 4th Floor, Siddique Trade Centre,

72 Main Boulevard, Gulberg, Lahore, Pakistan

Annual Report 2016

DIRECTORS' REPORT

The Directors' of Wateen Telecom Ltd (the 'Company') are pleased to present the audited financial statements of the Company for the year ended June 30, 2016.

INDUSTRY OUTLOOK

Tele-density remained at around 70% for the FY16 (Source: PTA), however the increased demand for data saw

subscribers move to the newly launched 3G/4G data services. Almost 15 million broadband customers were

added by the industry (Source: PTA), which required the mobile operators to upgrade their existing infrastructure

and hence enhance their reliance on organizations like Wateen, to fulfill the surge in these demands. With respect

to the telecom industry, the business consolidation between Mobilink and Warid was one of the most significant

developments of FY16, which should help to leverage the scalability of the merged businesses and greatly benefit

the consumers.

With its ever increasing fiber network now covering over 22,000 kms across Pakistan, the Company has been

ideally positioned as a carrier's-carrier to provide quality infrastructure services to the telecom operators. As of

now, the Company has commercial arrangements with all Mobile Network Operators in the market, offering

various services to them to cater to their respective needs. Telenor Pakistan and CMPAK's optic fiber IRU

agreements contributed majorly to the improvement of results for the year's Optic Fibre Cable (OFC) business.

The Company remains a major connectivity partner for the financial sector as it continues to add new VPN

connections, managed capacity and telehousing locations. Demand for more robust services are on the increase

as the banking industry is modernizing its infrastructure to take advantage of the uptake in the Mobile Financial

Services market.

LDI has continued to be major contributor towards the business, through restored operations, after the annulment

of the ICH regime in 2015. New operations for GPON services for residential and SOHO customers were

launched during the year, adding VPN locations and new customers' contributions towards the overall revenue.

FINANCIAL PERFORMANCE

As fully explained in note 2(iii) to the financial statements, FY16 saw Wateen improving its revenues to PKR 6,957

million, as compared to PKR 4,980 million in FY15. This growth can be attributed to the benefits of the 3G/4G

proliferation in the previous year, as well as the need for more robust and reliable networks in the financial sector.

The year, therefore, saw Wateen record its highest EBIDTA post 2009, amounting to PKR 1,581 million in FY16

compared to PKR 853 million in FY15 and a much-improved reliance on cash-flow from operations PKR 1,245

million in FY16 as compared to PKR 406 million in FY15.

A significant growth was witnessed in OFC revenue, which closed at PKR 2,608 million in FY16, compared to PKR 1,223 million in FY15. This was mainly attributable to the delivery of optical dark fibre projects during the financial year to mobile operators to fulfil their 3G/4G requirements. Managed capacity selling grew by Rs 120 million as compared to previous year. Tele housing revenue for the year also showed growth of PKR 55 million as compared to previous year.


FY 16 FY 15

Revenue (PKR million) 6,957 4,980

EBITDA (PKR million) 1,581 853

Cash flow from Operations

(PKR million)

(Loss) per share – PKR (3.18) (9.16)

4061,245

Annual Report 2016


LDI revenues were slightly higher for FY16 at PKR 2,075 million, compared to PKR 1,998 million in FY15. The Company managed to successfully restore its arrangement with International Operators for incoming traffic in the country after the termination of ICH regime during FY 15.

VSAT revenues closed at PKR 458 million as compared to PKR 401 million in FY 15, amounting to a growth of

14%.

SIGNIFICANT DISCLOSURES

DEBT RESTRUCTURING

As fully explained in note 7 to the financial statements, certain condition precedents (CP) to the Second

Amendatory Agreement (SAA) signed during year ended June 30, 2015 are not yet fulfilled; however the

management of the Company is taking necessary steps to fulfill such CPs. Once the CPs of the SAA has been

fulfilled, the banks will formally issue letter to the Company which will complete the restructuring process.

As part of further restructuring with the Company's international lenders, the Deutsche Bank AG facility will be

novated from the Company to Warid Telecom International (WTI) and the facility from ECGD will also be

restructured in the same manner. The management is of view that restructuring will further improve the financial

position of the Company.

EARNINGS PER SHARE

Earnings per share are PKR (3.18) for FY 2016 as compared to PKR (9.16) in FY 2015.

DIVIDENDDue to net loss, the Company has been unable to declare any dividends.

FUTURE OUTLOOK

Pakistan is currently at an inflection point for digital services and the burgeoning demand for 3G/4G services will

continue to rise as operators expand their footprint for these services in new areas. Banks are also experiencing a

new phase of development for its IT infrastructure, as improved and more secure services will be required to meet

the demands of the future.

New services, such as digital set-top boxes, will provide much needed improved entertainment services, helping

reduce churn in the broadband market in the longer run. Fixed broadband market may yet see consolidations and

collaborations in the coming years, as most existing players do not have the required financial muscle on their own

to serve the needs in the suburban and semi-urban areas. With a growing startup culture in the country,

businesses will also demand and expect improved service quality, although their ability to pay for high quality

services remains challenging. Improved regulation from the government and implementation of the telecom

policy will also marginalize the cottage suppliers and put the impetus on the larger players to fill this gap.

BOARD AUDIT COMMITTEE

The Board Audit Committee of the Company has been established with the purpose of assisting the Board of

Directors in fulfilling their oversight responsibilities relating to internal controls, financial and accounting matter,

compliance and risk management practices.

COMPOSITION OF BOARD AUDIT COMMITTEE MEETINGS ATTENDED

ABID HASAN (Independent Director) Chairman 2KHWAJA AHMAD HOSAIN (Independent Director) Member 2

Annual Report 2016

CONSOLIDATED FINANCIAL STATEMENTSConsolidated financial statements of the Company are also included as part of this annual report.

AUDITORSThe present Auditors M/s A.F.Ferguson & Co, Chartered Accountants have completed their assignment for the year ended June 30, 2016 and shall retire on the conclusion of the Annual General Meeting. Audit Committed and the Board of Directors considered and recommended the appointment of M/s EY Ford Rhodes Chartered Accountants as Auditors of the Company for the year ending June 30, 2017.

WEB PRESENCEAnnual financial statements of the Company are also available on the Wateen website www.wateen.com for information of the shareholders and others.

ACKNOWLEDGEMENTSOn behalf of the Board of Directors of the Company, we would like to thank all our customers, suppliers, contractors, service providers, sponsors and shareholders for their continued support. We would like to commend the diligent and dedicated efforts of our employees across the country which has enabled the Company to successfully face the challenges of a highly competitive telecom environment. We would also like to express our special thanks to the Government of Pakistan and the Dhabi Group for their continued support and encouragement.

ATTENDANCE OF THE BOARD MEMBERS


S. No. Name of Directors Board Meetings

Attendance during 2015-16

1. H.H. NAHAYAN MABARAK AL NAHAYAN NIL

2. ADEEL KHALID BAJWA 1

3. RIZWAN ALI TIWANA 1

4. ABID HASAN 1

5. KHWAJA AHMAD HOSAIN 1

Annual Report 2016

Financial Statements



AUDITORS’ REPORT TO THE MEMBERS

We have audited the annexed statement of financial position of Wateen Telecom Limited (the Company) as at June 30, 2016 and the related income statement, statement of comprehensive income, statement of cash flows and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Company's management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

(a) in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984.

(b) in our opinion:

(i) the statement of financial position and income statement together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied;

(ii) the expenditure incurred during the year was for the purpose of the Company's business; and

(iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Company;

(c) in our opinion and to the best of our information and according to explanations given to us, the statement of financial position, income statement, statement of comprehensive income, statement of cash flows and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the Company's affairs as at June 30, 2016 and of the loss, total comprehensive loss, its cash flows and changes in equity for the year then ended; and

(d) in our opinion, no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.

We draw attention to note 2 (iii) to the financial statements related to management's assessment of going concern. Our opinion is not qualified in respect of this matter.

Chartered AccountantsIslamabad: November 29, 2016Engagement Partner: JehanZeb Amin

Annual Report 2016

STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2016


The annexed notes 1- 47 form an integral part of these financial statements.

2016 2015Note

SHARE CAPITAL AND RESERVES

Authorised capital 5 10,000,000 10,000,000

Issued, subscribed and paid-up capital 5 6,174,746 6,174,746

General reserve 6 134,681

134,681

Accumulated loss (35,675,906)

(33,703,119)

(29,366,479)

(27,393,692)NON-CURRENT LIABILITIES

Long term finance - secured 7 -

-

Long term portion of deferred mark up 8 -

-

Long term finance from shareholders - unsecured 9 14,041,457

13,334,608

Medium term finance from an associated company - unsecured 10 600,000

600,000

Long term deposits 11 35,680

35,680

14,677,137 13,970,288

DEFERRED LIABILITIES

Deferred government grants 12 2,567,744

3,233,958

CURRENT LIABILITIES

Current portion of long term finance - secured 7 16,865,384

16,624,016

Current portion of deferred mark up 8 3,924,871

2,946,219

Short term running finance - secured 13 765,512

787,135

Trade and other payables 14 4,807,944

5,786,267

Interest / markup accrued 15 2,425,718

1,766,089

28,789,430

27,909,726

CONTINGENCIES AND COMMITMENTS 16

16,667,832 17,720,280

(Rupees in thousand)

Annual Report 2016

______________ __________

Chief Executive Director

STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2016


2016 2015Note

NON-CURRENT ASSETS

Property, plant and equipment

Operating assets 17 9,167,410

8,519,310

Capital work in progress 18 1,028,815

1,506,592

Intangible assets 19 15,212

22,488

10,211,437

10,048,390

LONG TERM INVESTMENT IN SUBSIDIARY COMPANIES 20 137,661

137,661

DEFERRED INCOME TAX ASSET 21 -

-

LONG TERM LOAN TO SUBSIDIARY COMPANY 22 -

-

LONG TERM DEPOSITS, PREPAYMENTS AND TRADE DEBTS

Long term deposits 23 479,760 468,647

Long term prepayments 24 40,116

56,127

Long term trade debts 25 634,447

523,325

1,154,323

1,048,099

CURRENT ASSETS

Trade debts 25 1,703,037

1,981,463

Contract work in progress 26 61,884

230,725

Stores, spares and loose tools 27 378,537

501,890

Advances, deposits, prepayments and other receivables 28 2,227,143

2,936,128

Income tax refundable 548,309 746,093

Cash and bank balances 29 245,501 89,831

5,164,411

6,486,130

16,667,832 17,720,280


Annual Report 2016

_____________

DirectorChief Executive

INCOME STATEMENTFOR THE YEAR ENDED JUNE 30, 2016


2016 2015 Note

Revenue 30 6,956,578 4,979,589

Cost of sales (excluding depreciation and amortisation) 31 3,957,949

2,810,867

General and administration expenses 32 1,360,070

1,339,148

Advertisement and marketing expenses 21,188

18,350

Selling and distribution expenses 91

11,702

Provisions 33 557,380

545,266

Other income 34 (521,312)

(598,692)

Earnings before interest, taxation, impairment

depreciation and amortisation 1,581,212

852,948

Less: Depreciation and amortisation 699,489 612,628 Finance cost 35 2,428,743 2,170,106 Provision for long term loan to and impairment of

investment in subsidiary company 36 153,243

3,895,065

Finance income 37 (182,022)

(219,117)

Loss before taxation from continuing operations (1,518,242)

(5,605,734)

Taxation 38 442,737

52,590

Loss for the year from continuing operations (1,960,979)

(5,658,324)

Loss for the year from discontinued operations - net 39 -

(22,131)

Loss for the year (1,960,979) (5,680,455)



Annual Report 2016

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED JUNE 30, 2016

_____________Chief Executive Director


Note 2016 2015

Loss for the year (1,960,979)

(5,680,455)

Other comprehensive income/ (loss)

Items that will not be reclassified to income statement:

Remeasurement loss on staff retirementbenefit plan 43.4 (11,808)

(6,862)

Total comprehensive loss for the year (1,972,787)

(5,687,317)

Attributable to:

- Continuing operations (1,972,787)

(5,665,186)- Discontinued operations -

(22,131)

(1,972,787)

(5,687,317)



STATEMENT OF CASH FLOWS



2016 2015

CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation including discontinued operations (1,518,242) (5,627,660)

Adjustment of non cash items:

Depreciation and amortisation 699,489 612,628

Finance cost 2,428,743

2,170,106

Loss / (profit) on sale of operating assets 115,075

(9,297)

Cost associated with IRU of optic fiber cable 273,007

154,090

Deferred USF grant recognised during the year (143,561)

(178,230)

Provisions 557,380

545,266

Provision for long term loan to and impairment of

investment in subsidiary company 153,243

3,895,065

Provision of markup on advances to associated companies 60,388

53,193

Remeasurement loss on staff retirement benefit plan (11,808)

(6,862)

Stores and spares written off 16,599

-

Write back of liability (493,876)

(407,799)

3,654,679

6,828,160

2,136,437

1,200,500

Changes in working capital:

(Increase)/ decrease in trade debts (238,677)

461,161

Decrease/(Increase) in contract work in progress 168,841

(209,267)

Decrease in stores, spares and loose tools 21,523

83,186

Increase in advances, deposits,

prepayments and other receivables (52,428)

(21,360)

Decrease in trade and other payables (545,353)

(868,947)

(646,094) (555,227)

Income taxes paid (244,953) (239,268)

Cash flow from operating activities 1,245,391

406,005

CASH FLOW FROM INVESTING ACTIVITIES

Property, plant and equipment additions (1,280,853)

(1,483,942)

Proceeds from sale of property, plant and equipment 30,236

13,371

Long term loan to subsidiary company (155,243)

(543,035)

Long term deposits receivable paid (11,113)

(219,534)

Long term prepayments received 16,011 9,444

Cash flow from investing activities (1,400,963) (2,223,696)




STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JUNE 30, 2016 2016 2015


Long term finance from shareholders - unsecured received 315,000

2,194,375

Increase in long term finance - secured net -

1,875,753

Long term finance repaid (8,934)

(1,032,125)

Deferred grants received 112,204

222,110

Obligations under finance leases repaid -

(1,090)

Long term deposits repaid -

(21,430)

Finance cost paid-net (85,404)

(529,468)

Cash flow from financing activities 332,866

2,708,125

INCREASE IN CASH AND CASH EQUIVALENTS 177,293

890,434

Cash and cash equivalents at beginning of the year (697,304) (1,587,738)

CASH AND CASH EQUIVALENTS AT END OF THE YEAR (520,011) (697,304)

CASH AND CASH EQUIVALENTS COMPRISE:

Cash and bank balances 245,501 89,831

Short term running finance - secured (765,512) (787,135)

(520,011) (697,304)


CASH FLOW FROM FINANCING ACTIVITIES

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED JUNE 30, 2016

______________Chief Executive


______________Director

Share General Accumulated

capital reserve (loss) Total

Balance at July 1, 2014 6,174,746

134,681

(28,015,802)

(21,706,375)

Total comprehensive loss

for the yearLoss for the year - - (5,680,455) (5,680,455)

Other comprehensive loss -

-

(6,862)

(6,862)-

-

(5,687,317)

(5,687,317)

Balance at June 30, 2015 6,174,746

134,681

(33,703,119)

(27,393,692)

Total comprehensive loss

for the yearLoss for the year -

-

(1,960,979)

(1,960,979)

Other comprehensive loss -

-

(11,808)

(11,808)- - (1,972,787) (1,972,787)

Balance at June 30, 2016 6,174,746 134,681 (35,675,906) (29,366,479)


---------------(Rupees in thousand)-----------

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS



1. Legal status and operations

1.1 Disposal group classified as held for sale and discontinued operations

2. Basis of preparation

(i) Statement of compliance

(ii) Accounting convention

(iii) Management's assessment of going concern

Wateen Telecom Limited (the Company) was incorporated in Pakistan as a private limited company

under Companies Ordinance, 1984 on March 4, 2005 for providing Long Distance and International

public voice telephone (LDI) services and Wireless Local Loop (WLL) service in Pakistan. The

Company commenced its LDI business commercial operations from May 1, 2005. The Company

transferred its WLL license to wholly owned subsidiary Wateen WiMAX(Private) Limited (WWL) during

the year ended June 30, 2015. The legal status of the Company was changed from "Private Limited" to

"Public Limited" with effect from October 19, 2009 and thereafter, the Company was listed on Karachi,

Lahore and Islamabad Stock Exchanges. Subsequently, the Karachi, Lahore and Islamabad Stock

Exchanges accepted the request for delisting of the Company and accordingly the Company stood

delisted from these stock exchanges with effect from February 17, 2014. The registered office of the

Company is situated at Lahore. The Company is a subsidiary of Warid Telecom International LLC, United Arab Emirates (WTI).

These financial statements have been prepared in accordance with the approved accounting standards

as applicable in Pakistan. Approved accounting standards comprise of such International Financial

Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified

under the Companies Ordinance 1984, provisions of and directives issued under the Companies

Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail.

These financial statements have been prepared on the basis of 'historical cost convention' except as

otherwise stated in the respective accounting policies notes.

These financial statements are the separate financial statements of the Company. In addition to these

separate financial statements, the Company also prepares consolidated financial statements.

In assessing the going concern status of the Company, management has carefully assessed a number

of factors covering the operational performance of the business, the ability to implement a significant

debt restructuring of the Company’s existing debts and the appetite of majority shareholder to continue

financial support. Based on the analysis of these, management is comfortable that the Company will be

able to continue as a going concern in the foreseeable future. Set out below are the key areas of

evidence that management has considered.

The Company along its wholly owned subsidiary WWL entered into a Master Transaction Agreement

(MTA) with Augere Holdings (Netherlands) B.V (Augere Holdings) on December 4, 2013 for

consolidationof their respective WiMAX businesses in Pakistan. In furtherance of the terms of MTA, the

shareholders of the Company in their Extra-Ordinary General Meeting held on October 3, 2014 approved

transfer of WiMAXrelated net assets as at July 10, 2014 to WWL for consideration other than cash in

accordance with the terms of share issuance agreement dated September 9, 2014 between the

Company and WWL. During the year ended June 30, 2015, the Company transferred the assets and

liabilities envisaged in the agreement to WWL. As a result, the Company’s operationswere dividedinto

Continuing and Discontinued operations in accordance with the requirements of InternationalFinancial

Reporting Standard (IFRS) 5, ‘Non-current assets held for sale and Discontinued operations’. WiMAX

operations were classified as Discontinued operations. Continued operation included the operations

other than WiMAX.

However, the subsidiary company WWL served a termination notice in prior year under the MTA which

was acknowledged and accepted by Pakistan subsidiary of Augere Holdings without prejudice to any

accrued rights and interests in the matter and also mentioned in note 16.4.


Operational performance

Debt restructuring

Ongoing Shareholder Support

(iv) Critical accounting estimates and judgments

(i)

(ii) Impairment of DSL assets (note 18)

(iii) Impairment of investment in and loan to subsidiary company (note 20 and 22)

(iv) Provision for doubtful debts (note 25)

During the year ended June 30, 2016 Company incurred the net loss after taxation Rs 1,961 million

(June 30, 2015: Rs 5,680 million) and had net current liabilitiesas at June 30, 2016 of Rs 23,625 million

(2015: 21,423 million) of which Rs 12,212 million (2015: Rs 14,064 million) relate to loan installments

and deferred markup of Rs 3,925 million (2015: Rs 2,946 million), due for repayment after June 30, 2017

but classified as current liabilities as mentioned in notes 7 & 8 respectively. Net current liabilities also

include markup of Rs 1,358 million (2015: Rs 923 million) on account of subordinated loan from

shareholders of the Company. It is important to note that during the past five years, the majority

shareholder has provided financial support in the form of long term finance amounting to Rs 14,041

million to meet the capital requirements of the Company (un availed finance facility from shareholder

amounts to USD 75 million at June 30, 2016) and management expects the support to continue.

Company’s operating performance reflected improvement during the year ended June 30, 2016 by

posting the earnings before interest, taxation, depreciation and amortization (EBITDA) of Rs 1,581

million (June 30, 2015: Rs 853 million) as a highest EBITDA after financial year 2008 - 2009. Further,

during the year, the Company has been able to generate positive cashflows from operations for an

amount of Rs 1,245 million (2015: Rs 406 million).

The Company's majority shareholder WTI continues to providemanagement with comfort with regards

to its ongoing support and this is evident from further loan of USD 3 million extended to the Company

during the year ended June 30, 2016 (year ended June 30, 2015: USD 10 million) for the Company.

The preparation of financial statements in conformity with approved accounting standards requires the

use of certain critical accounting estimates. It also requires management to exercise its judgment in the

process of applying the Company’s accounting policies. Estimates and judgments are continually

evaluatedand are based on historic experience, includingexpectationsof future events that are believed

to be reasonable under the circumstances. The areas involving a higher degree of judgment or

complexity, or areas where assumptions and estimates are significant to the financial statements, are

as follows:

As part of further restructuring the Company is negotiating with lenders whereby it is proposed that

Deutsche Bank AG facility will be novated from company to WTI and facility from ECGD will also be

restructured. The management is of the view that above restructuring will further improve the financial


Operating assets - estimated useful life of property, plant and equipment (note 17)

In addition, WTI guarantees the local Syndicate Finance Facility, and certain sponsors guarantees are

also provided to the foreign debt holders. The continued support of WTI including the guarantees and

financial assistance from WTI will enable the Company to continue its operations and fulfill its financial

obligations for a minimum period of twelve months from the year end. Further, the Board and

management is confident that WTI will continue to provide strong support to the Company.

Keeping in view the foregoing and other related operational facts, the management believes that the

Company is able to operate on a going concern basis in the foreseeable future and these financial

statements have been prepared reflecting this assumption.


(v) Provision for obsolete stores (note 27)

(vi) Provision for doubtful advances and other receivables (note 28)

(vii) Provision for current and deferred income tax (note 21)

(viii) Employees' retirement benefits (note 43)

(ix) Deferred government grants (note 12)

3. Adoption of new and revised standards and interpretations

IFRS 5 Non-current Assets Held for Sale and Discontinued

Operations (Amendments) January 1, 2016

IFRS 7 Financial Instruments: Disclosures (Amendments) January 1, 2016

IFRS 11 Joint Arrangements (Amendments) January 1, 2017

IFRS 14 Regulatory Deferral Accounts January 1, 2016

IFRS 15 Revenue from Contracts with Customers January 1, 2018

IFRS 16 Leases January 1, 2019

IAS 1 Presentation of Financial Statements (Amendments) January 1, 2016

IAS 7 Statement of Cash Flows (Amendments) January 1, 2017

IAS 12 Income Taxes (Amendments) January 1, 2017

IAS 16 Property, Plant and Equipment (Amendments) January 1, 2016

IAS 19 Employee Benefits (Amendments) January 1, 2016

IAS 27 Separate Financial Statements (Amendments) January 1, 2016

IAS 28 Investment in Associates and Joint Ventures (Amendments) January 1, 2016

IAS 34 Interim Financial Reporting (Amendments) January 1, 2016

IAS 38 Intangible Assets (Amendments) January 1, 2016

IAS 41 Agriculture (Amendments) January 1, 2016

IFRS 1 First-time adoption of International Financial Reporting Standards

IFRS 9 Financial instruments

IFRIC 4 Determining whether an arrangement contains lease

IFRIC 12 Service concession arrangements

Further, the following new standards and interpretations have been issued by the International

Accounting Standards Board (IASB), which have not been notifiedupto June 30, 2016 by the Securities

and Exchange Commission of Pakistan, for the purpose of their applicability in Pakistan:

Standards, amendments and interpretations to existing standards, that are not yet effective and have

not been early adopted by Company:

The following interpretations issued by the IASB have been waived off by SECP effective January 16,

2012:

The management anticipates that the adoptionof the above standards, amendments and interpretations

in future periods, will have no material impact on the financial statements other than in

presentation/disclosures.

Effective date (annual periods

beginning on or after)


4. Summary of significant accounting policies

4.1 Employees' retirement benefits

(i) Upto February28, 2015, the Company provided gratuity to all permanent employees in accordance with

the rules of the Company. Effective March 1, 2015, the benefit has been discontinuedand amount due

to employees as at February 28, 2015 will be payable at the time of final settlement. Actuarialvaluation

is conducted periodically using "Projected Unit Credit Method" and latest valuation was carried out at

June 30, 2016. The details of actuarial valuation are given in note 43.

(ii)

4.2 Taxation

Current

Deferred

4.3 Government grant

Contributory provident fund for all permanent employees of the Company is in place. Contribution for the

year amounted to Rs 28.421 million (2015: Rs 27.332 million) is charged to income for the year.

Government grants are recognized at their fair values and included in non-current liabilities, as deferred

income, when there is reasonable assurance that the grants will be received and the Company will be

able to comply with the conditions associated with the grants.

The tax expense for the year comprises of current and deferred income tax, and is recognized in

income for the year, except to the extent that it relates to items recognized directly in other

comprehensive income, in which case the related tax is also recognized in other comprehensive income.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the date of the statement of financial position. Management periodically evaluates positions

taken in tax returns, with respect to situations in which applicable tax regulation is subject to

interpretation,and establishes provisions, where appropriate, on the basis of amounts expected to be

paid to the tax authorities.

Deferred income tax liabilities are recognized for all taxable temporary differences and deferred tax

assets are recognized to the extent that it is probable that taxable profits will be availableagainst which

the deductible temporary differences, unused tax losses and tax credits can be utilized.

Deferred income tax is calculated at the rates that are expected to apply to the period when the

differences reverse, and the tax rates that have been enacted, or substantively enacted, at the date of

the statement of financial position.

Deferred income tax is accounted for using the balance sheet liability method in respect of all temporary

differences arising between the carrying amounts of assets and liabilitiesin the financial statements and

the corresponding tax base used in the computation of taxable profit.

Actuarial gains and losses (remeasurement gains / losses) on employees’ retirement benefit plans are

recognised immediately in other comprehensive income and past service cost is recognized in profit

and loss when they occur. Calculation of gratuity requires assumptions to be made of future outcomes

which mainly includes increase in remuneration, expected long-term return on plan assets and the

discount rate used to convert future cash flows to current values. Calculations are sensitive to changes

in the underlying assumptions.

Grants that compensate the Company for expenses incurred, are recognized on a systematic basis in

the income for the year in which the related expenses are recognized. Grants that compensate the

Company for the cost of an asset are recognized in income on a systematic basis over the expected

useful life of the related asset.


4.4 Borrowings and borrowing costs

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are

subsequently stated at amortized cost; any difference between proceeds (net of transaction costs) and

the redemption value is recognised in the income statement over the period of the borrowings using

effective interest method.

Borrowing costs incurred that are directly attributable to the acquisition, construction or production of

qualifyingassets are capitalized as part of the cost of that asset. All other borrowing costs are charged

to income for the year. Qualifying assets are assets that necessarily takes substantial period of time to

get ready for their extended use.

4.5 Trade and other payables

4.6 Provisions

4.7 Contingent liabilities

4.8 Dividend distribution

4.9 Property, plant and equipment

Depreciationon operatingassets is calculated, using the straight line method, to allocate their cost over

their estimated useful lives, at the rates mentioned in note 17.

A contingent liability is disclosed when the Company has a possible obligation as a result of past events,

the existence of which will be confirmed only by the occurrence or non-occurrence, of one or more

uncertain future events, not wholly within the control of the Company; or when the Company has a

present legal or constructive obligation, that arises from past events, but it is not probable that an

outflow of resources embodying economic benefits will be required to settle the obligation, or the

amount of the obligation cannot be measured with sufficient reliability.

The distribution of the final dividend, to the Company’s shareholders, is recognized as a liability in the

financial statements in the period in which the dividend is approvedby the Company’s shareholders; the

distribution of the interim dividend is recognized in the period in which it is declared by the Board of

Directors.

Property, plant and equipment, except freehold land and capital work-in-progress, is stated at cost less

accumulated depreciation and any identified impairment losses; freehold land is stated at cost less

identified impairment losses, if any. Cost includes expenditure, related overheads, mark-up and

borrowing costs (note 4.4) that are directly attributable to the acquisition of the asset.

Subsequentcosts, if reliablymeasurable, are included in the asset’s carrying amount, or recognized as

a separate asset as appropriate,only when it is probable that future economic benefits associated with

the cost will flow to the Company. The carrying amount of any replaced parts as well as other repair and

maintenance costs, are charged to income during the period in which they are incurred.

Liabilities for creditors and other amounts payable including payable to related parties are carried at

cost, which is the fair value of the consideration to be paid in the future for the goods and / or services

received, whether or not billed to the Company.

Provisions are recognized when the Company has a present legal or constructive obligationas a result

of past events, it is probablethat an outflow of resources embodyingeconomic benefits will be required

to settle the obligationand a reliable estimate of the amount can be made. Provisions are reviewed at

each statement of financial position date and are adjusted to reflect the current best estimate.


The gain or loss on disposal of an asset, calculated as the difference between the sale proceeds and

the carrying amount of the asset, is recognized in profit or loss for the year.

Depreciation on additions to property, plant and equipment, is charged from the month in which the

relevant asset is acquired or capitalized, while no depreciation is charged for the month in which the

asset is disposed off. Impairment loss, if any, or its reversal, is also charged to income for the year.

Where an impairment loss is recognized, the depreciation charge is adjusted in future periods to

allocate the asset’s revised carrying amount, less its residual value, over its estimated useful life.

4.10 Intangible assets

(i) Licenses

(ii) Computer software

4.11 Impairment of non-financial assets

4.12 Non current assets/disposal group held for sale

The amortization on licenses acquired during the year, is charged from the month in which a license is

acquired / capitalized, while no amortization is charged in the month of expiry / disposal of the license.

The amortization on computer software acquired during the year is charged from the month in which the

software is acquired or capitalized,while no amortization is charged for the month in which the software

is disposed off.

These are carried at cost less accumulated amortization and any identified impairment losses.

Amortization is calculated using the straight line method from the date of commencement of

commercial operations, to allocate the cost of the license over its estimated useful life specified in note

19, and is charged to income for the year.

Assets that have an indefiniteuseful life, for example freehold land, are not subject to depreciationand

are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed

for impairment on the date of the statement of financial position, or whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is

recognized, equal to the amount by which the asset’s carrying amount exceeds its recoverableamount.

An asset’s recoverable amount is the higher of its fair value less costs to sell and value in use. For the

purposes of assessing impairment, assets are grouped at the lowest levels for which there are

separately identifiable cash flows. Non financial assets that suffered an impairment, are reviewed for

possible reversal of the impairment at each statement of financial position date. Reversals of the

impairment loss are restricted to the extent that asset’s carrying amount does not exceed the carrying

amount that would have been determined, net of depreciationor amortization, if no impairment loss has

been recognized. An impairment loss, or the reversal of an impairment loss, are both recognized in the

income statement.

Non-currentassets are classified as assets held-for-salewhen their carrying amount is to be recovered

principally through a sale transaction and sale is considered highly probable. They are stated at the

lower of carrying amount and fair value less cost to sell.

These are carried at cost less accumulated amortisation and any identified impairment losses.

Amortisation is calculated using the straight line method, to allocate the cost of the software over its

estimated useful life, and is charged in income statement. Costs associated with maintainingcomputer

software, are recognised as an expense as and when incurred.


4.13 Investment in subsidiaries

4.14 Right of way charges

Right of way charges paid to local governments, concerned authorities and land owners for access of

land are carried at cost less amortisation. Amortisation is provided to write off the cost on straight line

basis over the period of right of way.

Investments in subsidiaries, where the Company has control or significant influence, are measured at

cost in the Company’s financial statements. The profits and losses of subsidiaries are carried in the

financial statements of the respective subsidiaries, and are not dealt within the financial statements of

the Company, except to the extent of dividends declared by these subsidiaries.

4.15 Trade debts and other receivables

4.16 Stores, spares and loose tools

4.17 Cash and cash equivalents

4.18 Revenue recognition

4.19 Functional and presentation currency

Stores, spares and loose tools are carried at cost less allowance for obsolescence. Cost is determined

on weighted average cost formula basis. Items in transit are valued at cost, comprising invoice values

and other related charges incurred up to the date of the statement of financial position.

Revenue from prepaid cards is recognised as credit is used, unutilised credit is carried in statement of

financial position as unearned revenue in trade and other payables.

Revenue is recognised as related services are rendered.

Cash and cash equivalents are carried at cost. For the purpose of the statement of cash flows, cash

and cash equivalents comprise cash in hand and bank and short term highly liquid investments with

original maturities of three months or less, and that are readily convertible to known amounts of cash,

and subject to an insignificant risk of changes in value.

Revenue from granting of Indefeasible Right of Use (IRU) of dark fiber upto 20 years or more is

recognised at the time of delivery and acceptance by the customer.

Interest income is recognised using the effective yield method.

Dividend income is recognised when the right to receive payment is established.

Items included in the financial statements of the Company are measured using the currency of the

primary economic environment in which the entity operates (the functional currency). These financial

statements are presented in Pakistan Rupees (Rs), which is the Company’s functional currency.

Trade debts and other receivables are carried at their original invoice amounts, less any estimates

made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are

written off when identified.

Revenue from sale of equipment is recognised when the significant risks and rewards of ownership are

transferred to the buyer.


4.20 Foreign currency transactions and translations

4.21 Financial instruments

Financial assets and liabilities are recognized when the Company becomes a party to the contractual

provisions of the instrument and derecognized when the Company loses control of the contractual

rights that comprise the financial assets and in case of financial liabilities when the obligationspecified

in the contract is discharged, cancelled or expires. All financial assets and liabilities are initially

recognized at fair value plus transaction costs other than financial assets and liabilities carried at fair

value through profit or loss. Financial assets and liabilities carried at fair value through profit or loss are

initially recognized at fair value, and transaction costs are charged to income for the year. These are

subsequently measured at fair value, amortized cost or cost, as the case may be. Any gain or loss on

derecognition of financial assets and financial liabilities is included in profit or loss for the year.

Foreign currency transactions are translated into the functional currency, using the exchange rates

prevailing on the date of the transaction. Monetary assets and liabilities, denominated in foreign

currencies, are translated into the functional currency using the exchange rate prevailingon the date of

the statement of financial position. Foreign exchange gains and losses resulting from the settlement of

such transactions, and from the translation of monetary items at year end exchangerates, are charged

to income for the year.

(a) Financial assets

Classification and subsequent measurement

(i) Fair value through profit and loss

(ii) Held to maturity

(iii) Loans and receivables

Financial assets at fair value through profit or loss are carried in the statement of financialposition

at their fair value, with changes therein recognized in the income for the year. Assets in this

category are classified as current assets.

Financial assets at fair value through profit or loss, include financial assets held for trading and

financial assets, designated upon initial recognition, at fair value through profit or loss.

Loans and receivables are non derivative financial assets with fixed or determinable payments, that

are not quoted in an active market. After initial measurement, these financialassets are measured

at amortized cost, using the effective interest rate method, less impairment, if any.

Non derivative financial assets with fixed or determinable payments and fixed maturities are

classified as held-to-maturity when the Company has the positive intentionand ability to hold these

assets to maturity. After initial measurement, held-to-maturity investments are measured at

amortized cost using the effective interest method, less impairment, if any.

The Company’s loans and receivables comprise 'Long term deposits', ‘Trade debts’, 'Contract

work in progress', ‘Advances, deposits and other receivables,' ‘Income tax refundable’and ‘Bank

balances’.

The Company classifies its financial assets in the following categories: fair value through profit or loss,

held-to-maturity investments, loans and receivables and available-for-sale financial assets. The

classification depends on the purpose for which the financial assets were acquired. Management

determines the classification of its financialassets at initial recognition. Regular purchases and sales of

financial assets are recognized on the trade date - the date on which the Company commits to

purchase or sell the asset.


(iv) Available for sale

Impairment

The Company assesses at the end of each reporting period whether there is an objective evidence that

a financialasset or group of financialassets is impaired as a result of one or more events that occurred

after the initial recognition of the asset (a ‘loss event’), and that loss event (or events) has an impact on

the estimated future cash flows of the financial asset or group of financial assets that can be reliably

estimated.

After initial measurement, available-for-sale financial assets are measured at fair value, with

unrealized gains or losses recognized as other comprehensive income, until the investment is

derecognized, at which time the cumulative gain or loss is recognized in income for the year.

Available-for-sale financial assets are non-derivatives, that are either designatedin this category, or

not classified in any of the other categories. These are included in non current assets, unless

management intends to dispose them off within twelve months of the date of the statement of

financial position.

(b) Financial liabilities

Initial recognition and measurement

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

(i)

(ii)

(c) Offsetting of financial assets and liabilities

4.22 Derivative financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial

position, when there is a legally enforceable right to set off the recognised amounts and there is an

intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Legally

enforceable right must not be contingenton future events and must be enforceable in normal course of

business and in the event of default, insolvency or bankruptcy of the Company or the counter party.

After initial recognition, other financial liabilities which are interest bearing are subsequently

measured at amortized cost, using the effective interest rate method.

Other financial liabilities

Derivates are initially recognised at fair value on the date a derivative contract is entered into and are

subsequently remeasured at fair value. Changes in fair value of derivates that are designated and qualify

as fair value hedges are recorded in income statement togetherwith any changes in the fair value of the

hedged asset or liability that are attributable to the hedged risk.

Financial liabilities at fair value through profit or loss, include financial liabilities held-for-trading and

financial liabilities designated upon initial recognition as being at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are carried in the statement of financial

position at their fair value, with changes therein recognized in the income for the year.

The Company classifies its financial liabilities in the followingcategories: fair value through profit or loss

and other financial liabilities.The Company determines the classification of its financial liabilities at initial

recognition. All financial liabilities are recognized initiallyat fair value and, in the case of other financial

liabilities, also include directly attributable transaction costs.

Fair value through profit or loss


Number of Rs Number of Rs

5. Share capital Shares ( '000) Shares ( '000)

Authorised share capital:

Ordinary shares of Rs 10 each 1,000,000,000 10,000,000 1,000,000,000 10,000,000

Issued, subscribed and paid up

share capital:

Shares issued for cash

Ordinary shares of Rs 10 each 408,737,310

4,087,373

408,737,310

4,087,373

Shares issued as fully paid

bonus shares of Rs 10 each 208,737,310

2,087,373

208,737,310

2,087,373

617,474,620

6,174,746

617,474,620

6,174,746

5.1

6. General reserve

Note

2016 2015

7. Long term finance - secured

Syndicate of banks 7.1 7,789,921

7,796,452

Export Credit Guarantee Department (ECGD) 7.2 2,680,329

2,603,529

Dubai Islamic Bank (DIB) 7.3 335,224

335,627

Deutsche Bank AG 7.4 5,024,298

4,880,335

Loan guaranteed on behalf of WWL 7.5 1,109,000

1,111,000

Total 16,938,772

16,726,943

Unamortised transaction and other ancillary cost

Opening balance 102,927

105,435

Additions during the year -

50,200

Amortisation for the year (29,540) (52,708)

(73,387) (102,927)

16,865,384 16,624,016

Less: Amount shown as current liability

Amount payable within next twelve months (4,653,075) (2,560,463)

Amount due after June 30, 2017 (12,212,309) (14,063,553)

7.6 (16,865,384) (16,624,016)

The Company is to place at least 10% of the profits in the general reserve account till it reaches 50% of the

issued, subscribed and paid up capital of the company.

June 30, 2016 June 30, 2015

The parent company, Warid Telecom International LLC, U.A.Eheld 595,393,361 (2015: 588,577,066) ordinary

shares at year end.


- -


7.1

7.2

7.3

The Company obtained long term finance facility amounting to USD 42 million (2015: USD 42 million) from

ECGD UK, of which USD 35 million (2015: USD 35 million) was availed till June 30, 2016. During the year

ended June 30, 2012, the Company and ECGD UK signed an agreement to restructure the terms of loan

agreement including repayment schedule. Amount outstanding at June 30, 2016 was USD 25.60 million

(2015: 25.60 million). The principal is repayable in ten semi annual installments. The first such installment

was due on July 1, 2014 and subsequentlyevery six months until January 1, 2019. The rate of mark-up is six

month LIBOR + 1.5% (interest rate) per annum till June 30, 2011 and six month LIBOR + 1.9% (interest rate)

for the remaining period. If the amount of installment payable and/or interest payable is not paid on the due

date, the Company shall pay interest on such amount the interest rate + 2% per annum.

The Company obtained Ijarah finance facility of Rs 530 million (2015: Rs 530 million) from DIB. During the

year ended June 30, 2015, the Company and DIB signed an agreement to restructure the terms of the Ijarah

finance facility. The principal is now repayable in twenty unequal six-monthly instalments. The first such

instalment was due on April 1, 2015 and subsequently every six months until October 1, 2024. The rate of

mark-up is 12% per annum from commencement date which shall stand deferred till payment of the final

installment of principal portion (deferred payment) as referred to in note 8.2. Earlier, principal was repayable

in ten unequalsemi annual installments with first such installment due on July 1, 2014 and it carried a markup

of 6 months KIBOR per annum till December 31, 2013 and 6 months KIBOR + 2.5% per annum for remaining

period.

The facility is secured by way of hypothecation over all present and future moveable assets (including all

current assets) and present and future current/ fixed assets (excluding assets under specific charge of CM

Pak and assets which are subject to lien in favour of USF), a mortgage by deposit of title deeds in respect of

immoveable properties of the Company, lien over collection accounts and Debt Service Reserve Account and

personal guarantees by three Sponsors of the Company.

As explained in note 2(iii), the Company is in negotiation with the lenders to restructure the above finance

facility.

The Company obtained syndicate term finance facility from a syndicate of banks with Standard Chartered

Bank Limited (SCB), Habib Bank Limited (HBL), Bank AI-Habib Limited (BAHL)and National Bank of Pakistan

(NBP), being lead arrangers to finance the capital requirements of the Company. During the year ended June

30, 2015, the Company and the Syndicate of Banks signed second amendatory agreement to restructure

Syndicate term finance facility and the short term running finance from Bank Alfalah Limited (BAF) running

finance facility-I. All the finance facilities have been fully availed by the Company till June 30, 2016. The

principal is now repayable in twenty unequal six monthly instalments. The first such instalment was due on

April 1, 2015 and subsequently every six months until October 1, 2024. The Company is required to

mandatorily prepay the outstanding amount out of net cash proceeds from sale of WWL or any excess cash

generated by the Company after taking into account a minimum cash balance, capital expenditure and

working capital requirements in each financial year. The rate of mark-up is 12% per annum from July 1, 2013

which shall stand deferred till payment of the final installment of principal portion (deferred payment) as

referred to in note 8.1. Earlier, principal was repayable in ten unequal semi annual installments with first

installment due on July 1, 2014 and it carried a mark up of 6 months KIBOR per annum till December 31, 2013and 6 months KIBOR +2.5% per annum for remaining period.


current assets) and present and future current/ fixed assets, a mortgage by deposit of title deeds in respect of

immoveable properties of the Company, pledge over fully paid ordinary shares (entire present and future)

owned by the Company in WWL and owned by WTI in the capital of the Company, a guarantee from WTI for

amounts payable under second amendatory agreement and undertaking from shareholders from WTI for

retaining the shareholding and control of WTI. Syndicate is entitledto designateone nominee to be appointed

as director in the Board of directors of the Company.

Certain conditions precedent to the second amendatory agreement are not yet fulfilled, management of the

Company is takingsteps to fulfill those conditions. Once conditions precedent to restructured agreements are

fulfilled, a formal letter shall be issued to the Company by the Syndicate of aforesaid Banks, which shall

complete the restructuring process.


7.4

7.5

7.6


current assets) and present and future current/ fixed assets (movable and immoveable), pledge over fully paid

ordinary shares (entire present and future) owned by the Company in WWL and owned by WTI in the capital

of the Company, a corporate guarantee from WTI and undertakingfrom shareholders from WTI for retaining

the shareholding and control of WTI.

The loan is secured through personal guarantee by one Sponsor of the Company and is ranked pari passu

with unsecured and unsubordinated creditors.

Certain conditions precedent to the restructured agreement are not yet fulfilled, management of the Company

is taking steps to fulfill those conditions. Once conditions precedent to restructured agreement are fulfilled,

bank will formally issue letter to the Company which will complete the restructuring process.

The Company obtained term finance facility of USD 65 million (2015: USD 65 million) from MotorolaCredit

Corporation (MCC) of which USD 64 million (2015: USD 64 million) has been availed till June 30, 2016. On

August 19, 2011, MCC has transferred all of its rights, title benefits and interests in the original facility

agreement to Deutsche Bank AG as lender, effective August 19, 2011. During the year ended June 30, 2012,

the Company and Deutsche Bank AG signed an agreement to restructure the terms of loan agreement.

Amount outstanding at June 30, 2016 is USD 48 million (2015: USD 48 million). The principal is repayablein

ten semi annual installments commencing from July 1, 2014 until and including the final maturity date which is

December 31, 2019. The rate of mark-up is six month LIBOR + 1% per annum provided that rate shall be

capped at 2.5% per annum. If the Company fails to pay any amount payable on its due date, interest shall

accrue on the unpaid sum from the due date up to the date of actual payment at a rate which is 2% higher

than the rate of interest in effect thereon at the time of such default until the end of the then current interest

period. Thereafter, for each successive interest period, 2% above the six-month LIBOR plus margin provided

the Company is in breach of its payment obligations hereof.

The Company is required to make payments of loan installments and markup of long term finance on due

dates. The Company has not paid loan installments of ECGD amounting to USD 8.713 million and loan

installments of Deutsche Bank AG amounting to USD 16.334 million due till June 30, 2016. Further, the

Company was not able to make payments of markup to ECGD and Deutsche Bank AG of Rs 59.160 million

and Rs 91.81 million on due dates. Furthermore, certain applicable ratios specified in the above loan

agreements have not been maintained at June 30, 2016 and latest restructured loan agreements have also

not yet become effective as certain conditions precedent to the restructured agreements are not yet fulfilled

and the Company is obliged to prepay the outstanding amounts in certain events mentioned therein.

Accordingly, the lenders 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 for at least

twelve months after the statement of financial position date, all liabilities under these loan agreements are

required to be classified as current liabilities. Based on above, loan installments for an amount of Rs 12,212

million due after June 30, 2017 have been shown as current liability.

As explained in note 2(iii), the Company is in negotiation with the lenders to restructure the above finance

facility.

As explained in note 7.1, the Company transferred a portion of outstanding principal amount under Syndicate

Term Finance Agreement to its wholly owned subsidiary WWL. Under the terms of agreement, the Company

guaranteed the amount on behalf of WWL and the amount guaranteed has been recognized by the Company

due to curtailed scale of operations of WWL, negative value in use of WWL, loss of the year, termination of

MTA and existence of no realistic basis of preparation of financial statements of WWL on a going concern

basis.

8.1

i)

ii)

iii)

iv)

8.2

i)

ii)

8.3

9. Long term finance from shareholders - unsecured

Note

2016 2015

Facility 1 9.1 2,515,418 2,443,343

Facility 2 9.2 11,526,040 10,891,265

14,041,457 13,334,608

Deferred payment of Rs 1,023 million pertainingto the period of January 1, 2011 till June 30, 2013

shall be paid in seven unequal six-monthly installments starting from April 1, 2025 and ending on

April 1, 2028;

Deferred payment at 8% per annum for the period from July 1, 2013 till March 31, 2014 shall be

paid in four unequal six-monthly installments starting from April 1, 2028 and endingon October 1,

2029;

Deferred payment at 5% per annum for the period from April 1, 2014 upto final due date under

second amendatory agreement shall be paid in two unequal installments due on October 1, 2029

and April 1, 2030; and

After payments of all amounts above, the deferred payment at 4% per annum for the period of July

1, 2013 till March 31, 2014 and at 7% per annum for the period from April 1, 2014 upto final date

under second amendatory agreement shall be payable as a bullet payment in the year 2030

subject to availability of the excess cash generated by the Company.

Markup calculated at 5%per annum for theperiod from commencement date till October 1, 2024

shall be paid in eleven six-monthly installments starting from April 1, 2025 and ending on April 1,

2030; and Markupat 7% per annum shall be paid as a bullet payment in the year 2030 subject to availability

of the excess cash generated by the Company.


As explained in note 7.1, the markup (deferred payments) has been restructured under the second

amendatory agreement. The deferred payments are payable in following order of priority and

sequence:

As explained in note 7.3, the markup (deferred payments) has been restructured. The markup is

payable in the following sequence:

As explained in note 7.6, the entire amount has been shown as current liability.

8. Long term portion of deferred mark up

Note 2016 2015

Syndicate of banks 8.1 3,831,455 2,893,165

Dubai Islamic Bank (DIB) 8.2 93,416 53,054

Total 3,924,871 2,946,219


Amount payable within next twelve months - -

Amount due after June 30, 2017 (3,924,871)

(2,946,219)

8.3 (3,924,871)

(2,946,219)

-

-




9.1 The Company obtained long term finance from a shareholder amounting to USD 24 million (2015:

USD 24 million). This loan is subordinated to all secured finance facilities availed by the Company.

This loan is repayable within 30 days of the expiry of a period of five years from the last date the lender

has disbursed the loans, which shall be on or about January 29, 2015. The rate of mark-up is 6

months LIBOR + 1.5% with 24 months payment grace period payable half yearly. Alternatively loans

may be converted into equity by way of issuance of the Company's ordinary shares at the option of

the lender at any time prior to, at or after the repayment date on the best possible terms but subject to

fulfillment of all legal requirements at the cost of the Company. The said conversion of loan shall be

affected at such price per ordinary share of the Company as shall be calculated after taking into

account the average share price of the last 30 calendar days, counted backwards from the

conversion request date, provided that such conversion is permissible under the applicable laws of

Pakistan.

9.2 The Company obtained long term finance facility from a shareholder amounting to USD 185 million

(2015: USD 185 million) of which USD 110 million (2015: USD 107 million) has been availed at June

30, 2016. The rate of mark-up is 6 months LIBOR + 1.5% payable half yearly. The Company shall

repay the loan in full in five equal annual installments from June 30, 2014 with final maturity date of

June 30, 2018. Alternatively the lender shall also have the option to instruct the Company any time

during the term of this agreement to convert the remaining unpaidamount of the loan and the interest

in part or in its entirety into equity by way of issuance of ordinaryshares of the Company in favour of

the lender in compliance with all applicable laws of Pakistan.

Upon the request of the Company for conversion of the loan and the interest into equity, the lender and

the Company shall, with mutual consent, appoint an independent auditor to determine the fair market

value per share of the borrower prevailingat the time of such request. lf the lender agrees to the price

per share as determined by the independent auditor then the loan and the interest shall be converted

into equity at the rate per share decided by the independent auditor. In case the lender, in its sole

discretion, disagrees with the price per share as determined by the independent auditor then the

request for conversion shall stand revoked and the loan shall subsist.

This loan together with accrued interest will have at all times priority over all unsecured debts of the

Company except as providedunder Law. In the event the Company defaults on its financial loans or in

case Warid Telecom International LLC, Abu Dhabi, UAE, no longer remains the holding company of

the Company and sells its 100% shares to any other person or party or relinquishes the control of its

management then, unless otherwise agreed in writing by the lender, the entire loan together with the

accrued interest will become due and payable for with and shall be paid within 15 working days of the

event of default or decision of the Board of Directors of the Company accepting such a change in the

shareholding as the case may be, and until repaid in full, the loan shall immediately become part of

financial loans, rankingpari passu therewith subject to the consent of the Company's existing financial

loan providers. As the loan is subordinated to all secured finance facilities availed by the Company,

the entire amount of loan has been classified as non current liability.

The loan together with the interest shall have priority over all other unsecured debts of the Company.

Further, after the execution of this agreement, the Company shall not avail any other loan or funding

facility from any other source without prior written consent of the lender. The Company undertakes

that it shall not declare dividends,make any distributions or pay any other amount to its shareholders

unless the repayment of the loan and the interest in full to the lender. The rights of the lender in

respect of the loan are subordinated to any indebtedness of the Company to any secured lendingby

any financial institution in any way, both present and future notwithstanding whether such

indebtedness is recoverable by process of law or is conditional or unconditional.Furthermore, in the

event that insolvency proceedings are initiated against the Company or that it is unable to pay its

Financial Loans as they fall due or if the Company has proposed any composition, assignment or

arrangement with respect to its Financial Loans, the obligationto repay the outstanding amount of the

loan shall be subordinated to the Financial Loans but will have priorityover all other unsecured debts

of the Company. As the loan is subordinatedto all secured finance facilities availedby the Company,



10. Medium term finance from an associated company - unsecured

The Company obtained an aggregate medium term finance facility of Rs 600 million from an

associated company Taavun (Pvt) Limited. As per the terms of loan agreement, this loan is

subordinated to all secured finance facilities availed by the Company. The principal was repayable

within 30 days of the expiry of twenty four months from the effective date i.e. September 30, 2010,

which was further extendableto twelve months. The rate of mark-up is six month KIBOR + 2.5% with

24 months grace period payablequarterly. As the loan is subordinated to all secured finance facilities

availed by the Company, the entire amount of loan has been classified as non current liability.

11. Long term deposits

12. Deferred grants

Movement during the year is as follows:Note 2016 2015

Balance at beginning of the year-

excluding amount receivable 2,599,101

2,555,221

Amount received during the year - net 112,204

222,110

Amount receivable at year end -

634,857

Amount recognised as income during the year 34 (143,561)

(178,230)Balance at end of the year 2,567,744

3,233,958

13. Short term running finance - secured

Balance as at June 30 13.1 765,512

787,135

13.1

This represents amount received and receivable from Universal Service Fund (USF) as subsidy to

assist in meeting the cost of deployment of USF Fiber Optic Network for providing USF Fiber Optic

Communication Services in Sindh, Baluchistan, Punjab and broad band services in Faisalabad

Telecom Region, Hazara Telecom Region and Gujranwala Telecom Region. USF Fiber Optic

Network and broad band network will be owned and operated by the Company. Total amount of USF

contracts is Rs 3,740 million (2015: Rs 4,022 million) payableby USF in five installments in contracts

with project implementation milestones.


These represent security deposits received from customers. These are interest free and refundable

on termination of relationship with the Company.

The Company has a cash finance facility of Rs 790 million (2015: Rs 790 million) of which Rs 24.488

million (2015: Rs 2.865 million) was unutilised as at June 30, 2016. The facility is available till

December 31, 2016. Markup on the facility is to be serviced on quarterly basis. The rate of mark-up is

3 months KIBOR + 1% per annum.

This facility is secured by lien marked on an amount of USD 8.44 million held under the name "Dhabi

One Investment Services LLC" maintained at Bank Alfalah.


2016 2015Note

14. Trade and other payables

Creditors 14.1 491,437

406,615Due to related parties 14.2 188,959

187,327Due to international carriers 403,082 1,088,924Payable to Pakistan Telecommunication Authority 591,475 562,283Accrued liabilities 2,611,020 2,454,419Payable to provident fund 72,094 73,373

Sales tax payable 98,045 -Advance from customers 14.3 156,280 884,323Income tax deducted at source 195,552 129,003

4,807,944 5,786,267


14.1 Trade creditors include following amounts due to related parties:

Wateen Solutions (Pvt) Limited

14.2 Due to associated companies

Wateen Satellite Services (Pvt) LimitedBank Alfalah Limited

Warid International LLC, UAE - Parent companyWarid Telecom (Pvt) Limited

14.3 Advance from customers

2016 2015Note

15. Interest / markup accrued

Long term finance from shareholders

Long term finance - secured

Medium term finance - unsecured 15.1

Short term running finance - secured 15.2

15.1

15.2

2016 2015

16. Contingencies and Commitments

16.1 Claims against the Company not acknowledged as debt 438,875 319,561

16.2 Performance guarantees issued by banks on behalf

of the Company 1,410,309 1,175,447

This includes advance of Rs Nil (2015: Rs 48.983 million) received from associated companies.


This represents markup payable to an associated company Taavun (Private) Limited.

This includes markup payable to an associated company Bank Alfalah Limited amounting to Rs

13.197 million (2015: 17.032 million).


221,457 218,309

146,232 145,94516,932 17,52124,563 23,861

1,232

-188,959

187,327

1,357,967 922,616

585,390

420,600

448,577

391,928

33,784

30,945

2,425,718

1,766,089


16.3

16.4

Under the Access Promotion Regulations, 2005, the Company is liable to make payments of Access

Promotion Charges (APC) for Universal Service Fund (USF) within 90 days of close of the month to

which such payment relates. The Company has disputed the APC Regulations,2005 and the case is

currently pending with High Court. The Company has not recorded the penalty on delayed payment of

APC for USF amounting to Rs 1,469 million as required by the Access Promotion Regulations,2005

as the management and legal advisor of the Company are of the view, that the Company has a strong

case and chances of success are very high.

WWL under the terms of the MTA served the termination notice to Augere Holdings and claimed

certain expenditures as reimbursable to WWL on account of business consolidation not successful

as per MTA. In response to Company’s termination notice, Augere Pakistan (Pvt) Limited served

notice to the Company as acknowledgement of termination of MTA and claimed certain charges.

WWL and the Company, being a party to MTA, is in process of initiating related proceedings for

settlement of its charges incurred under MTA. The management believes that no amount shall be

payable by the Company upon completion of related proceedings and accordingly, no provision is

carried in these financial statements in this respect.

likely to be decided in the favor of Company.

16.5

16.6

16.7

16.8

The Deputy Commissioner Inland Revenue(DCIR), Enforcement Unit IV, Large Taxpayers Unit (LTU),

Islamabad issued Order-in-Original based on the observations of Director General Intelligence and

Investigation and raised a demand of Rs 31.830 million to be paid along with penalty and default

surcharge and also issued recovery notice. The Commissioner Inland Revenue - Appeals [CIR (A)]

and Appellate Tribunal Inland Revenue (ATIR) upheld the order of the DCIR. The Company filed

reference before the Honorable High Court whereby the case has been remanded to ATIR. The

appeal is pending for adjudication with ATIR.

The Assistant Commissioner Inland Revenue (ACIR), Enforcement Unit IV, LTU, Islamabad, issued

show cause notices based on the observation that Company has not furnished sales tax and federal

excise returns for the periods from August 2009 to March 2010, November 2010 and December 2010.

In this respect, ACIR issued Order-in-Original and assessed demand of Rs 249.471 million

(calculated on the basis of allegedminimum liability)payable along with penaltyand default surcharge

and also issued recovery notice. The Company depositedprincipal amount of Rs 138.709 million and

default surcharge of Rs 26.231 million based on actual liabilityas per own working of the Company.

The ATIR, Islamabad remanded the case to the assessing officer with certain directions. The

Company submitted information in response to the related proceedings initiated by ACIR,

Enforcement-IV, LTU, Islamabad and proceedings are not yet concluded by the ACIR. As of now no

tax demand is in field and company foresees a favorable decision in reassessment proceedings.

The ACIR issued notice to the Company for the period of July 2010 to June 2011 and confronted to

charge sales tax on the difference of sales reported in auditedaccounts and sales reported in monthly

sales tax returns and passed ex-parte order with demand of Rs. 1,048 million by the Company. The

Company filed appeal before CIR (A) and same was rejected. An appeal has been filed by the

Company with the ATIR which is pending for adjudicationand management believes that the case is

The AdditionalCommissioner Inland Revenue, Audit - II, Large Taxpayers Unit, Islamabad (Add. CIR)

issued show cause notice dated June 6, 2014 whereby Add. CIR alleged the Company is claiming

inadmissible input tax, suppression of sale, non-paymentof sales tax on fixed asset, non-compliance

of sales tax special procedure withholding rules, penalty on late filing of sales tax and federal excise

returns and non-withholding of federal excise duty on advertisement services. The Company could not

furnish the requisite information to the Add. CIR because of fire effected records further; the

assessment was barred by time. The Add. CIR passed ex-parteorders and raised the demand of Rs

518 million along with penalty and default surcharge. The Company filed appeal before CIR (A) and

same was rejected. Being aggrieved with the order,appeal was filed before ATIR and ATIR confirmed

the order passed by CIR (A). Resultantly, the Company filed reference application before High Court

which is pending and management believes the same is likely to be decided in the favor of Company.


16.9 The ACIR alleged that Company has not withheld tax from payments made to foreign telecom

operators during the tax years 2008, 2009, 2010 and 2011. Further the ACIR ordered the Company to

pay allegeddemand of Rs 477.767million representingprincipal amount and default surcharge for the

aforesaid tax years. The CIR (A) upheld the contentions of the assessing officer and directed the

assessing officer to recalculate the withholding tax by applying the rates as given in the Division II of

Part III of the First Schedule to the Income Tax Ordinance, 2001. The Company filed appeal before

ATIR, and same was rejected. The Company filed reference before the High Court and case was

remanded back for fresh proceedings. The proceedings were finalized by the assessing officer and a

demand of Rs 1,911 million was created. The Company preferred an appealbefore CIR (A) and CIR

(A) remanded the case to DCIR. The DCIR raised demand of Rs 1,131 million against which the

Company preferred appeal before CIR (A) who upheld the orders of DCIR. The Company preferred

appeal against the aforesaid appellate order in the ATIR, whereby ATIR up-held the decision of CIR (A)

regarding tax withholding on payments and has remanded the case to the officer for levy of

withholding tax on lower of treaty rates or the Ordinance rates. The Company is in process of filling

references before High Court on the premise that the payments made to foreign operators falls under

the ambit of business income and is exempt from withholding tax. Based on this company foresees a

favorable decision from higher appellate forums.

16.10

16.11

16.12

16.13

16.14

DCIR raised tax demand for Rs 55 million for tax year 2013 on account of allegednon deduction of tax

under section 152 of the Ordinance while making payments to foreign telecom operators. The

Company has filed an appeal before CIR (A). The CIR (A) and ATIR both upheld the action of DCIR.

The Company also filed Misc. Application in the ATIR against the Orders of the ATIR. The Company is

in process of filling references before High Court on the premise that the payments made to foreign

operators falls under the ambit of business income and is exempt from withholding tax. Based on this

the Company foresees a favorable decision at higher appellate forums.

DCIR raised tax demand for Rs 133 million in respect of tax year 2014 for allegednon deduction of tax


Company preferred appeal before the CIR (A) against the orders of the DCIR. The CIR (A) remanded

the case to the DCIR with the direction to charge the withholding on the actual payment and not on the

amount of expense but has confirmed the levy of withholding tax. No appeal effect notice has been

issued as yet. The Company also preferred appeal against the order of the CIR (A) in ATIR and the

same is pending. The payments made to foreign operators falls under the ambit of business income

and is exempt from withholding tax. Based on this company foresees a favorable decision at higher

appellate forums.

The Assistant Commissioner - I, Sindh RevenueBoard, disallowed input tax claim of the Company for

the months of March 2014 to June 2014 and raised a demand of Rs 66 million. The Company filed

appealbefore Commissioner Appealshowever, no appellate order is received to-date. Certain related

evidence has been provided by the company in support of its contention and company foresees a

favorable decision at appellate forums.

The OIR also levied minimum tax under section 113 of the Income Ordinance, 2001 for tax years

2010, 2011, 2012 & 2013 by rejecting the stance of Company of gross loss. The Company preferred

appeals against the aforesaid orders before CIR (A) and same were rejected by the CIR (A) for tax

year 2010 and 2012. The Company preferred appeal before the ATIR and same was also rejected.

As per Income Tax Ordinance 2001 the above mentioned section is not applicable in case of gross

loss of that particular year by the company. Company has filed reference applications before High

Court and is likely to be decided in the favor of Company.

The Officer Inland Revenue, Audit - V, Large Taxpayers Unit, Islamabad (OIR) issued orders and

raised income tax demand of Rs 163 million relating to tax years 2008, 2009, 2011, 2012 and 2013 by

holding that the taxes paid under section 148 (7) on imports of the Company are not adjustable

against the income tax liability as the Company is not covered under the definition of industrial

undertaking. The Company preferred appeal before CIR (A) who upheld the order of OIR,

consequently Company has filed appeal before ATIR. The ATIR has rejected Company's appeal for

tax year 2009 and 2013. The Company is in process of filling of references before High Court.

16.15

2016 2015

16.16 Outstanding commitments for capital expenditure 635,844 668,447

No provision on account of contingencies disclosed in note 16.3 - 16.15 above has been made in

these financial statements as the management and its advisors are of the view, that these matters will

eventually be settled in favor of the Company.

DCIR issued notice to the Company and required to provide the details of tax deduction while making

payment of finance cost for the year ended June 30, 2012. Subsequently, the DCIR raised a demand

of Rs 253 million on gross amount of finance cost paid. The Company contended that DCIR did not

consider the impact of exchange loss and bank charges. Appeal was filed before CIR (A) and

rectification application before DCIR. The CIR (A) remanded the case to DCIR for fresh proceedings.

As of now no tax demand is in field and likely to be concluded in favor of Company.




17.

Op

erat

ing

ass

ets

owne

dle

ased

At J

une

30, 2

014

Cos

t64

,829

934,

138

118,

240

4,29

9,91

84,

445,

043

129,

005

122,

000

783,

054

200,

021

119,

834

13,4

0811

,229

,490

Acc

umul

ated

dep

reci

atio

n-

(155

,617

)(4

5,94

7)(6

66,2

71)

(1,5

18,9

34)

(112

,369

)(5

6,88

1)(7

33,7

00)

(95,

774)

(106

,674

)(1

0,25

6)(3

,502

,423

)

Net

boo

k am

ount

64,8

2977

8,52

172

,293

3,63

3,64

72,

926,

109

16,6

3665

,119

49,3

5410

4,24

713

,160

3,15

27,

727,

067

Year

end

ed J

une

30, 2

015

Ope

ning

net

boo

k am

ount

64,8

2977

8,52

172

,293

3,63

3,64

72,

926,

109

16,6

3665

,119

49,3

5410

4,24

713

,160

3,15

27,

727,

067

Add

ition

s5,

714

-47

,202

1,11

2,13

026

5,70

123

,915

37,9

4716

,684

37,9

655,

515

-1,

552,

773

Dis

posa

ls/ t

rans

fer

- C

ost

--

-

(154

,090

)

(1,1

46)

-

(6,2

83)

(283

)

-(2

6,01

5)-

(187

,817

)

- Acc

umul

ated

dep

reci

atio

n-

--

-

603

-

4,94

8

99

-24

,003

-29

,653

- N

et b

ook

valu

e-

--

(154

,090

)

(543

)

-

(1,3

35)

(184

)

-(2

,012

)-

(158

,164

)

Dep

reci

atio

n ch

arge

-(2

3,35

3)(1

2,18

1)

(175

,208

)

(307

,853

)

(10,

618)

(11,

666)

(3

6,38

8)

(20,

116)

(4,9

67)

(16)

(602

,366

)

Clo

sing

net

boo

k am

ount

70,5

4375

5,16

810

7,31

4

4,41

6,47

9

2,88

3,41

4

29,9

33

90,0

65

29,4

66

122,

096

11,6

963,

136

8,51

9,31

0

At J

une

30, 2

015

Cos

t70

,543

934,

138

165,

442

5,25

7,95

8

4,70

9,59

8

152,

920

153,

664

799,

455

237,

986

99,3

3413

,408

12,5

94,4

46

Acc

umul

ated

dep

reci

atio

n-

(178

,970

)(5

8,12

8)

(841

,479

)

(1,8

26,1

84)

(122

,987

)

(63,

599)

(7

69,9

89)

(115

,890

)(8

7,63

8)(1

0,27

2)(4

,075

,136

)

Net

boo

k am

ount

70,5

4375

5,16

810

7,31

4

4,41

6,47

9

2,88

3,41

4

29,9

33

90,0

65

29,4

66

122,

096

11,6

963,

136

8,51

9,31

0

Year

end

ed J

une

30, 2

016

Ope

ning

net

boo

k am

ount

70,5

4375

5,16

810

7,31

4

4,

416,

479

2,88

3,41

4

29,9

33

90,0

65

29,4

66

122,

096

11,6

963,

136

8,51

9,31

0

Add

ition

s-

3,08

047

,889

1,

343,

363

255,

931

32,0

50

11,5

12

23,2

58

7,54

134

,006

-1,

758,

630

Dis

posa

ls/ t

rans

fer

- C

ost

--

-

(278

,200

)

(352

,431

)

-

(2,2

74) (4

2,10

2)

--

(13,

408)

(688

,415

)

- Acc

umul

ated

dep

reci

atio

n-

--

5,19

321

1,16

2-

1,36

842

,102

--

10,2

7227

0,09

7

- N

et b

ook

valu

e-

--

(273

,007

)(1

41,2

69)

-(9

06)

--

-(3

,136

)(4

18,3

18)

Dep

reci

atio

n ch

arge

-(2

3,33

9)(1

9,44

9)(2

31,3

59)

(329

,874

)(1

9,98

3)(1

5,42

2)(2

0,31

1)(2

3,88

3)(8

,592

)-

(692

,213

)

Clo

sing

net

boo

k am

ount

70,5

4373

4,90

913

5,75

45,

255,

476

2,66

8,20

242

,000

85,2

4932

,413

105,

754

37,1

10-

9,16

7,41

0

At J

une

30, 2

016

Cos

t70

,543

937,

218

213,

331

6,32

3,12

14,

613,

098

184,

970

162,

902

780,

611

245,

527

133,

340

-13

,664

,662

Acc

umul

ated

dep

reci

atio

n-

(202

,309

)(7

7,57

7)(1

,067

,645

)(1

,944

,896

)(1

42,9

70)

(77,

653)

(748

,198

)(1

39,7

73)

(96,

230)

-(4

,497

,251

)

Net

boo

k am

ount

70,5

4373

4,90

913

5,75

45,

255,

476

2,66

8,20

242

,000

85,2

4932

,413

105,

754

37,1

10-

9,16

7,41

0

Ann

ual r

ate

of d

epre

ciat

ion

%-

2.5

104

6.67

-20

33.3

310

33.3

310

2020

Mot

or V

ehic

les

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

--(R

upee

s in

thou

sand

) --

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

--

Fre

ehol

d

Land

Bui

ldin

gs

free

hold

Leas

e ho

ld

impr

ovem

ent

Line

and

wire

Net

wor

k

equi

pmen

t

Too

ls a

nd

gear

s

Offi

ce

equi

pmen

t

Com

pute

rs

and

Fur

nitu

re

and

fixtu

re

Tot

al

Ass

esso

ries


17.1

Note 2016 2015

18. Capital work in progress

Lease hold improvements 9,826

7,328

Line and wire 923,844

1,374,472

Network equipment (net of impairment of DSL assets

Rs 353.515 million) 95,145

124,792

1,028,815

1,506,592

18.1 Movement during the year

Balance as at July 1 1,506,592

1,548,633

Additions during the year 925,361

1,349,254

Capitalised during the year (1,403,138)

(1,391,295)

Balance as at June 30 1,028,815

1,506,592

19. Intangible assets

LDI license fee 19.1

Cost 28,934 28,934

Amortisation


14,348

Amortisation for the year 1,447

1,447

(17,242)

(15,795)

Net book value 11,692

13,139

Software license

Cost 84,417 84,417

Amortisation

Opening balance 75,068 66,253

Amortisation for the year 5,829 8,815

80,897 75,068


9,349

Total net book value 15,212 22,488

19.1

19.2


The cost of fully depreciated assets which are still in use as at June 30, 2016 is Rs 955

million (2015: Rs. 955 million).

Pakistan Telecommunication Authority (PTA) granted Long Distance International (LDI)

license for a period of 20 years from July 26, 2004.

Software license is amortised over a period of 5 years.


20.

%age Rs %age Rs

Unquoted Holding (000) Holding (000)

Wateen Solutions (Pvt) Limited

810,239 (2015: 413,212) fully paid ordinary shares of Rs 100 each 137,656 51 52,656

Nil (2015: 397,027) fully paid ordinary shares purchased (note 20.2) - - 49 85,000

100 137,656 51 137,656

Wateen Satellite Services (Pvt) Limited 100 5 100 5

500 fully paid ordinary shares of Rs 10 each

Netsonline Services (Pvt) Limited 100 4,400

100 4,400

4,000 fully paid ordinary shares of Rs 100 each

Wateen Telecom UK Limited

10,000 fully paid ordinary shares of GBP 1 each 100 1,390

100 1,390

(note 20.3)

Wateen WiMAX (Pvt) Limited (WWL)

212,916,590 (2015: 1,000) fully paid ordinary shares of Rs 10 each 100 2,129,250 100 10

Nil (2015: 212,916,590) shares acquired (note 20.4) -

2,129,240

2,272,701 2,272,701

Provision for impairment of investment in

Netsonline Services (Pvt) Limited (4,400) (4,400)

Wateen Telecom UK Limited (1,390) (1,390)

Wateen WiMAX (Pvt) Limited (note 20.5) (2,129,250) (2,129,250)

(2,135,040) (2,135,040)

137,661

137,661

20.1

20.2

20.3

20.4

20.5

-

-

-

-

All the companies are incorporated in Pakistan except for Wateen Telecom UK Limited which is incorporated in

United Kingdom (UK).

The Company acquired 49% shares (397,027 fully paid ordinary shares of Rs 100 each) of Wateen Solutions (Pvt)

Limited effective November 18, 2014 for Rs 85 million.

Approvalof State Bank of Pakistan for investing in equity abroad is in process and shares of Wateen Telecom UK

Limited will be issued to the Company after receipt of such approval.

As per the terms of share issuance agreement dated September 9, 2014 between the Company and WWL, WWL

issued 100% (212,916,590 fully paid ordinary shares of Rs 10 each) shares to the Company at par value for

consideration against transfer of assets and liabilities pertaining to the WiMAX operations.

Pursuant to the termination notice served by WWL upon Pakistan subsidiary of AugereHoldings under the MTA, as

referred to in note 1.1, the management reviewed the business performance of subsidiary company WWL,

considering it a cash generating unit. An assessment was made in respect of triggering events as specified by IAS

36 applicable to the impairment of investment in subsidiary relating to WiMAX business. Based on the following

indicators applicable to WiMAX business, an impairment test was carried out by management to determine the

impairment of WiMAX business:

Significant change in the technological and economic conditions;

Decrease in the economic performance of WiMAX business; and

Indications suggested that WiMAX business is likely to become idle and management plans to materially curtail

WiMAX business.

For the purpose of determining the value in use, the WiMAX subsidiary was considered as separate Cash

Generating Unit (CGU). The value in use was determined using discounted cash flow method. The financial

projections of the CGU for three years have been derived from a latest business plan approved by the Board of

Directors (BOD) of the Company based on curtailment strategy as discussed above. The value in use of WiMAX

CGU determined by a management is negative Rs 1,795 million (2015: negative Rs 1,595 million) using discount

rate of 12% (2015: 12%). The fair value is scrap value of the assets in the subsidiary,which is not determinable till the assets are sold to third

party as these assets have no active market. Keeping in view above, the management recognized an impairment

loss of Rs 2,129 million based on negative value in use, any consequential difference between scrap value and

carrying amount as recongnized above will be dealt in the financial statements of ensuing periods in which the

disposal or sale of these assets takes place.

Long term investment in subsidiary companies - at cost

Decline in the market value of WiMAX assets;

June 30, 2016 June 30, 2015

100


2016 2015

21. Deferred income tax asset

Taxable temporary differences between accounting

and tax depreciation (5,317,854) (5,022,735)

5,317,854 5,022,735

- -

Tax losses Tax Year Rs in million

2018 1,739

2019 508

2020 1,031

2021 808

2022 655

Tax Credit 2020 53

2021 271

Note 2016 2015

22. Long term loan to subsidiary company (fully provided)

Loan guaranteed on behalf of WWL 1,109,000 1,111,000

Long term loan to subsidiary company 810,058 654,815

1,919,058 1,765,815

Less: provision for long term loan 22.1 (1,919,058) (1,765,815)

- -

22.1


24. Long term prepayments

2016 2015Note

25. Trade debts - unsecured

Considered good 25.1 2,337,484 2,504,788

Considered doubtful 1,431,754 1,025,773

3,769,238 3,530,561

Provision for doubtful debts 25.4 (1,431,754) (1,025,773)

2,337,484 2,504,788

Less: long term trade debts 25.2 (634,447) (523,325)

1,703,037 1,981,463

These includes long term portion of right of way charges paid to local governments and various land owners

for access of land.

The aggregate tax losses available to the Company for set off against future taxable profits at June 30, 2016

amounted to Rs 16,732 million. Of these, losses aggregating Rs 5,318 million have been recognized in the

financial statements against taxable temporary differences at June 30, 2016.

These mainly represent the security deposits paid to domestic interconnect operators and government

authorities on account of utilities and suppliers on account of rent, DPLC and satellite bandwidth.



This represents loan given to subsidiary company, WWL and is interest free. The amount has been provided

for during the year due to curtailed scale of operationsof WWL, negative value in use of WWL, substantial loss

of the year, termination of MTA and existence of no realistic basis of preparation of financial statements of

WWL on a going concern basis.

Unused tax losses - recognised to extent of taxable temporary differences


Deferred tax asset, the potential tax benefit of which amounts to Rs 5,597 million has not been recognized on

balance representing business losses aggregating to Rs 4,741 million, tax depreciationlosses aggregatingRs

6,664 million, tax credits aggregating to Rs 324 million and deductible temporary differences on account of

provisions and share issue cost aggregating Rs 6,173 million as at June 30, 2016. Business losses / tax

credits expire as follows:


2016 2015

25.1 Trade debts include following balances due from related parties, past due but not impaired:

Warid Telecom (Pvt) Limited 289,903 128,892

Warid International LLC, UAE - Parent company - 101,500

Wateen Telecom UK Limited 391 21,412

Alfalah Insurance Company 13,292 10,289

Bank Alfalah Limited 121,821

27,904

425,407

289,997

25.2

2016Total future Unearned Present value

payments interest

income

Current portion

Not later than one year 135,815

100,164

35,650

Long term portion

Between one and five years 543,260

333,743

209,517

Later than five years 823,639

398,710

424,929

1,366,899 732,453 634,447

1,502,714 832,617 670,097

2015

Not later than one year 121,180 91,095 30,085


307,909 176,809


318,770 346,516

1,150,004

626,679

523,325

1,271,184 717,774 553,410

25.3 Age analysis of trade debts from associated companies, past due but not impaired is as follows:

2016 2015

0 to 6 months 85,780 179,554

6 to 12 months 145,839 1,122

Above 12 months 193,789 109,321

425,407 289,997


Trade debts include receivable under finance lease of optic fiber cable and telecom equipment as follows:




Note 2016 2015

25.4 Provision for doubtful debts

Related parties

Opening balance - -

Provision made during the year - related parties 101,500 -

Closing balance 101,500 -

Other parties

Opening balance 1,025,773

922,062

Provision made during the year - other parties 304,481

103,711

Closing balance 25.4.1 1,330,254

1,025,773

1,431,754

1,025,773

25.4.1

26. Contract work in progress

Balance as at July 1 230,725

21,458


312,767

Adjustments during the year (223,802) (103,500)

Balance as at June 30 26.1 61,884 230,725

26.1

27. Stores, spares and loose tools

571,126 592,649 Less:

Provision for obsolete stores 27.1 (175,990) (90,759)Store and spares written off 33 (16,599) -

378,537 501,890

27.1 Provision for obsolete stores


Provision for the year 85,231 -

Transfer to subsidiary company WWL - (121,507)

Closing balance 175,990 90,759

This includes balance amounting to Rs Nil (2015: Rs 227 million) pertaining to associated company.

- Balances 181 - 360 days past due - 50 %

These include Rs 1,281 million (2015: Rs 977 million) based on age analysis of the debts as follows:

- Balances over 360 days past due - 100 %

Cost



Note 2016 2015

28. Advances, deposits, prepayments and other receivables

Advances to suppliers and contractors - considered good 686,310 587,725

Advances to employees - considered good 10,295 40,520

Security deposits and earnest money 128,950 119,170

Margin held by bank against letters of guarantee 170,571 321,996

Prepayments 28.1 88,614

85,820

Sales tax refundable -

155,496

Due from associated companies 28.2 2,191,196

1,945,449

Receivable from gratuity fund 43 10,086

5,582

Accrued interest 9,768

9,673

Government grant receivable -

634,857

Others 152,276

124,206

3,448,065

4,030,494

Less:

28.3


468,854

Provision for the year - charged against finance income 60,388

53,193

Closing balance 582,435

522,047


Provision for the year 66,168 441,555


572,319

1,220,922

1,094,366

2,227,143

2,936,128

28.1

2016 2015

28.2 Due from associated companies

Wateen Solutions (Pvt) Limited 1,139,486

1,106,770

Wateen Telecom UK Limited 428,490

385,310

Wateen Telecom Inc. Malaysia 666

-

Wateen Multi Media (Pvt) Limited 228,263

207,555

Advance for construction of Warid Tower 68,916 68,916

Warid International LLC, UAE - Parent company 83,019 70,012

Raseen Technologies (Pvt) Limited 27,844 25,877

Warid Telecom Georgia Limited 23,459 21,820

Netsonline services (Pvt) Limited 8,351 8,351

Warid Telecom International - Bangladesh 8,504 7,909

Innov8 Limited 174,198 42,929

2,191,196 1,945,449



Provision for doubtful receivables - other parties

Provision for doubtful receivables - related parties

These include current portion of right of way charges of Rs 17.773 million (2015: Rs 17.036 million).


28.3

2016 2015

362,382 319,202


Warid International LLC, UAE - Parent company 83,019 70,012

27,844 25,877

23,459 21,820

8,311

8,311

8,504

7,909

582,435 522,047

2016 2015

29. Cash and bank balances

Balance with banks on

- current accounts 185,422

39,669

- collection accounts 27,728

17,378

- deposit accounts 31,997

32,534

Cash in hand 354

250

245,501

89,831

29.1

29.2

29.3

Note 2016 2015

30. Revenue

Gross revenue 30.1 7,384,877

5,386,301

Less: Sales tax / Federal excise duty 428,299

406,712

6,956,578

4,979,589

30.1


Warid Telecom Georgia Limited

Wateen Telecom UK Limited

Provision for doubtful receivables includes provision for doubtful receivables from following related parties:

Raseen Technologies (Pvt) Limited


Warid Telecom International Bangladesh

Netsonline Services (Pvt) Limited

This includes an amount of Rs. Nil million (2015: Rs. 560 million) representing the Company's share of gross

revenue from the incoming internationalvoice traffic, generated under the International Clearing House (ICH)

arrangement. In accordance with PTA's directive of August 23, 2012, an agreement was signed on August 30,

2012 amongst Long Distance International (LDI) operators operating in Pakistan to establish the ICH for

International incoming voice traffic terminating in Pakistan. Under the terms of the agreement, one operator

was selected as the international operator. The agreement was approved by the Ministry of Informationand

Technology (MoIT) and became operational with effect from October 1, 2012. Under the agreement, the

Company had a net share equal to its allocated percentage in total gross revenue of ICH, along with related

costs. On February 24, 2015, the Honorable Supreme Court of Pakistan ordered to cancel the ICH

arrangement. Accordingly, the operations of ICH were terminated with immediate effect by the Company.

Bank balances on deposit accounts carried interest at an average rate of 5% - 8 % per annum (2015: 5%-8%

per annum).

Provision for doubtful receivables other than NetsonlineServices (Pvt) Limited was approved by shareholders

of the Company in Extra Ordinary General Meetings held on December 31, 2011 and October 3, 2014.

Cash and bank balances include foreign currency balances aggregatingUSD 1.728 million (2015: USD 0.082

million).

Bank balances amounting to Rs 29.651 million were under lien with banks (2015: Rs 29.651 million).



Note 2016 2015

31. Cost of sales

LDI Interconnect cost 1,679,240 992,446

Leased circuit charges 146,007 106,668

Contribution to PTA Funds 89,529 65,881

PTA regulatory and spectrum fee 22,382 16,470

Cost associated with IRU of Optic Fibre Cable 273,007 154,090

Operational cost 741,589

679,514

Repair and maintenance 361,311

181,632

Bandwidth cost of VSAT services 221,187

268,759

LTE equipment 169,480

206,306

Others 254,217

139,101

3,957,949

2,810,867

32. General and administration expenses

Salaries, wages and benefits 32.1 1,046,623

929,984

Rent 81,894

92,101

Repairs and maintenance 5,750

8,745

Vehicle repairs and maintenance 6,087

11,012

Travel and conveyance 14,524

35,522

Postage and stationery 7,450

9,952

Auditor's remuneration 32.2 6,471

10,059

Legal and professional charges 44,169

48,577

Communication expenses 17,096 17,078

Employee training 3,276

3,361

Customer services charges 37,395

75,981

Fees and subscription 4,012

3,303

Insurance 30,563

37,908

Entertainment 10,098

12,947

General office expenses 44,662

42,618

1,360,070

1,339,148

32.1

Note 2016 2015

32.2 Auditor's remuneration

Annual audit 2,420

2,200

Audit of consolidated accounts and certification 330

300

Tax services 3,648 7,464

Out of pocket expenses 73 95

6,471 10,059

33. Provisions

Provision for doubtful trade debts 25.4 405,981 103,711

Provision for doubtful advances and other receivables 28 66,168 441,555

Provision for obsolete stores 27.1 85,231 -

557,380 545,266


These include charges against employee's retirement benefits as referred to in note 43.


38. Taxation

Current - for the year 38.1 442,737 52,590

Note 2016 2015

34. Other income

Income from non-financial assets:

(Loss) / Gain on sale of operating assets (115,075) 9,297

Government grant recognised 12 143,561 178,230

Write back of liability 493,876 407,799

Store and spares written off 27 (16,599) -

Others 15,549 3,366

521,312

598,692

35. Finance cost

Markup on long term and medium term finance 35.1 1,596,500

1,301,193

Amortization of ancillary cost of long term finance 29,540

52,708

Mark up on short term running finance 35.2 55,127

88,471

Finance cost of leased assets -

25

Bank charges, commission, fees and other charges 32,964

46,643

Late payment charges on other payables 70,937

1,967

Exchange (gain)/loss 643,676

574,209

Others 35.3 -

104,890

2,428,743

2,170,106

35.1

35.2

35.3

Note 2016 2015

36. Provision for long term loan to and impairment of

investment in subsidiary company

Impairment of investment in subsidiary company 20 -

2,129,250

Reversal of provision for loan guaranteed on behalf of WWL 7.5 (2,000)

1,111,000

Provision for long term loan to subsidiary company 22 155,243

654,815

153,243

3,895,065

37. Finance income

Finance income on lease 103,063 95,244

Markup on advance to associated companies 137,425 162,261

Provision of markup on advances to associated companies (60,388) (53,193)

77,037 109,068

Income on bank deposit accounts 1,922 14,805

182,022 219,117

This includes markup related to long term finance from shareholders of Rs. 303.257 million (2015: Rs

238.687 million), medium term finance from an associated company of Rs 56.649 million (2015: Rs

74.279 million) and markup related to associated company of Rs 163.274 million (2015: Rs 157.643

million).

This includes markup related to an associated company of Rs. 55.127 million (2015: Rs. 75.993

million).



These represented charges paid in relation to termination of USF CTR Project.



2016 2015


38.1 Reconciliation of tax charge % %

Applicable tax rate 32 33

Tax effect of (income)/expense that are

not allowed for tax purpose (31) (1)

Deferred tax asset on unused tax losses not recognised (30) (33)

Average effective tax rate (29) (1)

39. Discontinued operations

39.1 Discontinued Operations

Revenue -

20,468

Operating expenses -

(42,394)

Loss before interest, taxation, impairment -

(21,926)

depreciation and amortisation

Less: -

-

- -

Loss before taxation and impairment -

(21,926)

Reversal of impairment of WiMAX assets -

-

Loss before taxation for the year from discontinued operations -

(21,926)

Taxation -

205

Loss for the year from discontinued operations -

(22,131)

Loss for the year -

(22,131)

Cash flows from discontinued operations

Cash flows from operating activities - (21,926)

Cash flows from investing activities - -

Cash flows from financing activities - -

Total cash flows - (21,926)

As more fully explained in note 1.1 to these financial statements, assets along with liabilities of WiMAX

operations were transferred to wholly owned subsidiary Company WWL effective July 10, 2014. The

disposal group comprised of the WiMAX operations. The assets and liabilities of disposal group are

separately classified as held for sale and the income statement for these operations had also been

separately presented as a discontinued operation.

2016 2015



40. Financial instruments by category

40.1 Financial assets and liabilities

2016Financial assetsMaturity up to one year

Trade debts-net of provision 1,703,037 1,703,037Contract work in progress 61,884 61,884Advances, deposits and other receivables 2,090,706 2,090,706Bank balances 245,147 245,147

4,100,774

4,100,774

Maturity after one yearLong term deposits 479,760

479,760Long term trade debts 634,447

634,4471,114,207

1,114,207

Financial liabilitiesMaturity up to one yearLong term finance - secured 4,653,075

4,653,075Short term running finance - secured 765,512

765,512Trade and other payables 4,651,663

4,651,663Interest/mark-up accrued 2,425,718

2,425,71812,495,968

12,495,968

Maturity after one yearLong term finance - secured 12,212,309

12,212,309

Long term portion of deferred mark up 3,924,871 3,924,871Long term finance from shareholders-unsecured 14,041,457

14,041,457

Medium term finance from an associated - company - unsecured 600,000

600,000Long term deposits 35,680

35,680

30,814,318

30,814,318

2015Financial assetsMaturity up to one yearTrade debts-net of provision 1,981,463

1,981,463Contract work in progress 230,725

230,725Advances, deposits and other receivables 2,262,583

2,262,583Bank balances 89,581

89,5814,564,352

4,564,352

Maturity after one yearLong term deposits 523,325

523,325Trade debts 468,647 468,647

991,972 991,972

Financial liabilitiesMaturity up to one yearLong term finance - secured 2,560,463 2,560,463Short term running finance - secured 787,135 787,135Trade and other payables 4,901,944 4,901,944Interest/mark-up accrued 1,766,089 1,766,089

10,015,631 10,015,631



Total

Other financial

liabilitiesTotal


Loans and

receivablesTotal

Other financial

liabilitiesTotal


Loans and

receivables


Maturity after one year

Long term finance - secured 14,063,553 14,063,553

Long term portion of deferred mark up 2,946,219 2,946,219

Long term finance from shareholders-unsecured 13,334,608 13,334,608

Medium term finance from an associated

company - unsecured 600,000 600,000

Long term deposits 35,680 35,680

30,980,060

30,980,060

40.2 Credit quality of financial assets

2016 2015

Rating Trade debts

A1+ 154,098

122,508

Counterparties with external credit rating A1 109

10,248

A2 290

-

A-1 3,320 4,052

A-1+ 13,330 73,771

A-2 247

1,339

P-2 140

26

Counterparties without external credit rating

425,407

289,997

1,740,543

2,002,8472,337,484

2,504,788

Advances, deposits and other receivables

Counterparties with external credit rating A1+ 41,565

1,740

A-1+ 2,551

4,577

A1 125,000

1,000


1,608,761

1,423,402

312,829

831,8642,090,706 2,262,583

Long term deposits479,760 468,647

Bank balances

A1+ 202,841 62,976

A-1+ 28,770 13,056

A-1 13,536 13,549

P-1 1 -245,147 89,581


Other financial

liabilitiesTotal

Others

Due from related parties


Others

Others

The credit quality of Company's financial assets assessed by reference to external credit ratings of counterparties

determined by The Pakistan Credit Rating Agency Limited (PACRA), JCR - VIS Credit Rating Company Limited (JCR-

VIS), Standard and Poor's and Moody's and other international credit rating agencies are as follows:


41. Financial risk management

- Credit risk;

- Liquidity risk; and

- Market risk

The Company has exposure to the following risks from its use of financial instruments:

This note presents information about the Company's exposure to each of the above risks, the Company's objectives,

policies and processes for measuring and managing risk, and the Company's management of capital. Further,

quantitative disclosures are included throughout these financial statements.


41.1 Credit risk

2016 2015

Trade debts-net of provision 2,337,484

2,504,788Contract work in progress 61,884

230,725Advances, deposits and other receivables 2,090,706

2,262,583Bank balances 245,147

89,581


Impairment losses

Gross Impairment Gross Impairment

Up to 3 months 1,018,152 - 487,892 - 3 to 6 months 330,687 - 252,737 - 6 to 9 months 390,654 99,977 257,489 153,494 Above 9 months 2,029,745 1,331,777 2,532,443 872,279

3,769,238 1,431,754 3,530,561 1,025,773

20152016


The aging of these trade debts at the reporting date is as follows:

Company's exposure to credit risk is influenced mainly by the individual characteristics of each operator including the

default risk of the industry and country in which the operator works. Significant portion of the Company’s receivables is

attributable to operators. Company regularly monitors the status of receivables.


The Board of Directors has overall responsibility for the establishment and oversight of the Company risk management

framework. The Board is also responsible for developing and monitoring the Company's risk management policies.

Credit risk is the risk of financial loss to the Company if a counter party to financial instruments fails to meet its

contractual obligations, and arises principally from the Company's receivable from customers, deposits, contract work

in progress, advances, deposits and other receivables and bank balances. The Company assesses the credit qualityof

counterpartiesas satisfactory. The Company does not hold any collateral as security against any of its financialassets.

The Company limits its exposure to credit risk by investing only in liquid securities.

The Board of directors oversees how management monitors compliance with the Company's policies and procedures,

and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The

directors are assisted in their oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews

of risk management controls and procedures, the results of which are reported to the Board of Directors.

The Company's policies are established to identify and analyse the risks faced by the Company, to set appropriaterisk

limits and controls, and to monitor risks. Management's policies and systems are reviewed regularlyto reflect changes

in market conditions and the Company's activities. The Company, through its training and management standards and

procedures, aims to developa disciplined and constructive control environment in which all employees understand their

roles and obligations.

41.2 Liquidity risk

The Company has recorded an allowance for impairment in respect of advances, deposits and other receivables of Rs

1,221 million (2015: Rs 1,094 million).

Company ensures that it has sufficient cash on demand to meet expected cash outflows during its operating cycle.

This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural

disasters. The Company's treasury aims at maintaining flexibility in funding by keeping committed credit lines. Further

shareholders of the Company has provided financial support in the form of long term finance to meet capital

requirements of the Company. Management believes the same support will continue in future. Further, the Company

has restructured the long term finance facilities and short term borrowings which will facilitate the Company to greater

extent to meet its obligations/ covenants under loan agreements.

Liquidity risk is the risk that Company will not be able to meet its financial obligations as they fall due. Company's

approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its

liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking

damage to Company’s reputation.


2016

Long term finance - secured 16,865,384 16,938,772 4,653,075 4,664,398 7,547,912

Long term portion of deferred mark up 3,924,871

3,924,871

-

-

3,924,871

Long term finance from shareholders-unsecured 14,041,457

21,884,998

-

-

14,041,457


company - unsecured 600,000

600,000

-

-

600,000

Short term running finance - secured 765,512

790,000

765,512

-

-

Trade and other payables 4,651,663

4,651,663

4,651,663

-

-

Long term deposits 35,680

35,680

-

35,680

-

Interest/mark-up accrued 2,425,718

2,425,718

2,425,718

-

-

43,310,286

51,251,702

12,495,968

4,700,078

26,114,240

2015

Long term finance - secured 16,624,016

16,726,943

2,560,463

6,957,669

7,105,884

Long term portion of deferred mark up 2,946,219

2,946,219

-

-

2,946,219

Long term finance from shareholders-unsecured 13,334,608

21,255,300

-

-

13,334,608


company - unsecured 600,000 600,000 - - 600,000

Short term running finance - secured 787,135 790,000 787,135 - -

Trade and other payables 4,901,944 4,901,944 4,901,944 - -

Long term deposits 35,680 35,680 - 35,680 -

Interest/mark-up accrued 1,766,089 1,766,089 1,766,089 - -

40,995,691 49,022,175 10,015,631 6,993,349 23,986,711

41.3 Market risk

Above 5

years

Less than 1

Year

Between 1 to

5 years

Market risk is the risk of changes in market prices, such as foreign exchangerates and interest rates. The objectiveof

market risk management is to manage and control market risk exposures within acceptable parameters, while

optimizing the return.


The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining

period at the statement of financialposition date to the maturity date. The amounts disclosed in the table are contractual

undiscounted cash flows except for employee's retirement benefit obligations.

Contractual

Cash flows

Carrying

amount

As June 30, 2016, the Company has financial assets of Rs 5,215 million (2015: Rs 5,556 million) and Rs 7,981 million

(2015: Rs 7,893 million) unavailed borrowing facilities from financial institution.

Carrying Amount

a) Interest rate risk

b) Currency Risk

At June 30, 2016, if the currency had weakened/strengthenedby 10% against US dollar with all other variables held

constant, net loss for the year would have been Rs 2,093 million (2015: Rs 1,906 million) higher/lower.

The Company is exposed to currency risk on long term finance, bank balance and receivables/payables which are

denominated in currency other than the functional currency of the Company. Financial assets include Rs 1,222 million

(2015: Rs 2,849 million) and financial liabilities include Rs 22,150 million (2015: Rs 21,908 million) in foreign currency

which were exposed to exchange risk.

At June 30, 2016, had interest rates been 1% higher/lowerwith all other variablesheld constant, loss for the year would

have been Rs 312 million (2015: Rs 305 million) higher/lower.

As the significant financial assets and liabilities carry variable interest rates, Company's operating cash flows are

dependent on changes in the market interest rates. Financial assets of Rs 1,129 million (2015: Rs 987 million) and

financial liabilities of Rs 32,346 million (2015: Rs 31,449 million) were subject to interest rate risk.


c) Fair value of financial instruments.

2016 2015

Financial assets - Loans and

Trade debts 2,337,484

2,504,788

Contract work in progress 61,884 230,725

Advances, deposits and other receivables 2,090,706

2,262,583

Bank balances 245,147

89,581

Long term deposits 479,760

468,647

5,214,981 5,556,324

Financial liabilities - Other financial liabilities



Long term finance from shareholders - unsecured 14,041,457 13,334,608

Medium term finance from an associated company - unsecured 600,000 600,000

Short term borrowings - secured 765,512 787,135

Trade and other payables 4,651,663 4,901,944


Interest / markup accrued 2,425,718 1,766,089

43,310,286 40,995,691

d) Capital risk management

The Company manages the capital structure in the context of economic conditions and the risk characteristics of the

underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend to

shareholders, issue new shares or sell assets to reduce debts. The Company is required to maintain debt equity ratio

as specified in loan agreements and continuation of support from majority shareholder is vital for the Company's

operations.Under the terms of loan agreements, the Company can not declare dividends,make any distributions or pay

any other amount to its shareholders until the repayment of loan and the interest in full to the lenders. Further, the

Syndicate shall be entitled to designate one nominee to be appointed as director in the Board of directors of the

Company as referred in note 7.1.

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern

and to maintain a capital base to support the sustained development of its businesses.


The carrying value of all financial assets and liabilities reflected in the financial statements approximate their fair values.

42. Offsetting of financial assets and financial liabilities

42.1 Financial assets subject to offsetting

As at June 30, 2016

Trade debts

Due from international carriers 1,113,738

781,294

332,444

1,113,738

781,294

332,444

As at June 30, 2015

Trade debts


518,947

2,646,725

Pakistan Telecommunication Authority 654,068

654,068

-

Other trade receivables 503,773

503,773

-

4,323,513 1,676,788 2,646,725

42.2 Financial liabilities subject to offsetting

As at June 30, 2016

Trade and other payables

Due to international carriers 1,184,376 781,294 403,082

Creditors 624,863

133,426

491,437

1,809,239 914,720 894,519

As at June 30, 2015


Due to international carriers 1,607,871 518,947 1,088,924

Pakistan Telecommunication Authority 654,068 654,068 -

Creditors 1,108,825 1,108,825 -

3,370,764 2,281,840 1,088,924

Gross

amounts of

recognized

financial

assets

Gross amounts of

recognized financial

liabilities set off in

the statement of

financial position

Net amounts of

financial assets

presented in the

statement of

financial position

----------------------Rupees in thousand----------------------


Gross

amounts of

recognized

financial

liabilities

Gross amounts of

recognized financial

assets set off in the

statement of

financial position

Net amounts of

financial liabilities

presented in the

statement of

financial position



2016 2015

43. Employees' retirement benefits

43.1 Liability/(asset) for funded staff gratuity (10,086) (5,582)

The amounts recognised in the statement of financial position:

Present value of defined benefit obligation 101,724 108,187

Benefits due but not paid 4,835 4,616

Fair value of plan assets (116,645) (118,385)

Net liability / (asset) (10,086) (5,582)

43.2 The amounts recognised in the statement of financial position are as follows:

Opening liability / (asset) (5,582) 64,861

Expense recognised in income statement (1,544) (50,543)

Contributions made during the year (14,768) (26,762)

Remeasurement loss/(gain) recognised in statement of

comprehensive income 11,808 6,862

Closing liability / (asset) (10,086) (5,582)

43.3 The amounts recognised in income statement are as follows:

Current service cost - 27,764

Past service cost/(credit) - (84,516)

Interest cost 9,489 22,246

Expected return on plan assets (11,033) (16,037)

(1,544) (50,543)

43.4

Remeasurement loss/(gain) on obligations:

Experience loss / (gain) (5,727)

5,741

Actuarial loss / (gain) from changes in financial assumptions 11,722

-

5,995

5,741

Loss/(gain) due to remeasurement of investment return 5,813

1,121

11,808

6,862

43.5 Changes in the present value of defined benefit obligation are as follows:

Opening defined benefit obligation 108,187

198,837




Remeasurement loss 5,995 5,741

Benefits due but not paid (219) -

Benefits paid (21,728) (61,884)

Closing defined benefit obligation 101,724 108,187


Remeasurements recognised in other comprehensive income (OCI) are as follows:


2016 2015

43.6 Changes in fair value of plan assets:

Opening fair value of plan assets 118,385 138,592

Remeasurement gain / (loss) (5,813) (1,121)

Contributions by employer 14,768

26,761

Benefits paid (21,728)

(61,884)

Expected return on plan assets 11,033

16,037

Closing fair value of plan assets 116,645

118,385

43.7 Break-up of category of assets in respect of staff gratuity:

Rupees %age Rupees %age

('000) ('000)

Cash and bank 14,670

13% 32,073

27%

Investments 101,975

87% 86,312

73%

116,645

100% 118,385

100%

43.8 Significant actuarial assumptions:

2016 2015

Valuation discount rate-p.a 7.25% 9.75%

Expected rate of return on plan assets-p.a 19% 19%

Average expected remaining working

life time of employees 6 years 8 years

43.9 Sensitivity Analysis

Increase (Decrease)

Discount rate (5,118) 5,812

43.10

The Projected Unit Credit Method using the following significant assumptions was used for the

valuation:

2016 2015

Effect of 1%



Actual return on plan assets for the year is Rs 22.246 million.

The calculation of the defined benefit obligation is sensitive to assumptions set out above. The

following table summarizes how the definedbenefit obligationat the end of reporting period would

have increased/ (decreased) as a result of change in respective assumptions by one percent.

Defined benefit obligation

During the next financial year, the expected refund to be paid to the gratuity fund by the Company

is Rs 23 million (2015: Rs 2.30 million).

The weighted average number of years of defined benefit obligation is 6 years as at June 30,

2016.


43.11

2016 2015

Provident fund 28,421

27,332

Gratuity fund (1,544)

(50,543)26,877

(23,211)

44. Defined contribution plan

Details of provident funds are as follows:

Staff provident fund 2016 2015

Net assets 207,375 203,954

Cost of investments made 96,654

96,580

Fair value of investments made 106,007

118,593

%age of investments made 51% 58%

Breakup of investment - at cost Rs '000 %age Rs '000 %age

Shares 23,756

25% 25,656

27%

Mutual Funds 40,000

41% 60,546

63%

Bank deposits 32,898

34% 10,378

10%

96,654 100% 96,580 100%

44.1 Investments out of provident funds have been made in accordance with the provisions of section

227 of the Companies Ordinance, 1984 and the rules formulated for the purpose.

20152016


include amounts in respect of the following:

The Company contributes to gratuity fund on the advice of fund’s actuary. The contribution is

equal to current service cost with the adjustment for any deficit.


Salaries, wages and benefits as appearing in note 32

45. General

45.1 Related party transactions

Aggregate transactions with related parties during the year were as follows:

2016 2015

Parent Company

Warid Telecom International LLC, UAE (WTI)

Markup charged to WTI 13,007

17,295

Shareholders

Long term finance received from shareholders 315,000

2,194,375

Markup on long term finance from shareholders 303,257

238,687

The Company's related parties comprise its subsidiaries, associated undertakings,employees'

retirement benefit plans and key management personnel. Amounts due from / (to) related

parties, are shown under receivables and payables. Remuneration of key management

personnel is disclosed in note 45.2.


Subsidiary companies

Wateen Solutions (Pvt) Limited (WSPL)

Receipt of services 3,353 3,021 Markup charged to WSPL 63,471 88,187 Payments made by WSPL on behalf of Company 50,447

8,976

General and administrative expenses reimbursable

on behalf of WSPL 19,317

32,627

Wateen Satellite Services Private Limited

Payment made on behalf of Wateen Satellite 65 55

Payment made by Wateen Satellite on behalf of the Company 287 -

Wateen Telecom UK Limited (Wateen UK)

Sale of services 135,222 141

Markup charged to Wateen UK 43,180 30,313

Netsonline Services (Private) Limited (NOSPL)

Payments made by the Company on behalf of NOSPL 46

40

Wateen WiMAX (Pvt) Limited (WWL)

Transfer of assets - 3,524,764

Transfer of liabilities - 1,266,818

Payments made by the Company on behalf of WWL 155,243 524,013

Subscriptions for new ordinary shares by WTL against

consideration other than cash - 2,129,240

Impairment of investment in WWL - 2,129,250

Reversal / provision for loan guaranteed on behalf of WWL 2,000 1,111,000

Provision for long term loan to WWL 155,243 654,815


2016 2015

Associated companies:

Warid Telecom (Private) Limited (WTL)

Sale of services 1,259,444 1,289,650

Cost and expenses charged by WTL 398,042 316,539

Wateen Multimedia (Private) Limited (WMM) Markup charged to WMM 6,116

20,891

Payments made by the Company on behalf of WMM 39,008

-

Warid Telecom Georgia Limited

Markup charged on advances 1,639

2,180

Innov8 Limited

Sale of services 52,585

39,108

Cost and expenses charged by WTL 103,108

38,387

Receipt / (payment) by WTL on behalf of Company 24,424

4,541



Raseen Technology (Pvt) Limited

Markup charged on advances 1,967 2,616

Warid Telecom International - Bangladesh

Markup charged on advances 595

791

Wateen Malaysia Inc. (WM)

Payments made by the Company on behalf of WM 666

-

Bank Alfalah Limited (BAL) Sale of services 122,696

110,804

Markup charged by BAL on short term running finance 55,127 88,471

Markup charged by BAL on Long Term Loan 163,274 145,165

Markup charged on bank deposits with BAF 465 141

Taavun (Pvt) Limited

Markup on long term finance 56,649

74,279

Provident Fund Trust

Employer contribution to trust 28,421 27,332

Gratuity Fund

Employer contribution to fund 14,768 26,761

2016 2015


45.2 Remuneration of Chief Executive, Directors and other Key Management Personnel

2016 2015 2016 2015 2016 2015 2016 2015

Managerial remuneration 15,755

15,484

17,434

6,476

287,868

309,650 321,057 331,610

Housing and utilities 8,665

8,516

-

-

158,328

170,308 166,993 178,824

Company's contribution to provident and gratuity funds 1,312

1,304

-

-

23,999

26,290 25,311 27,594

Leave fair assistance 1,313 1,304 - - 23,969 26,277 25,282 27,581

27,045 26,608 17,434 6,476 494,163 532,525 538,643 565,609

Number of persons 1 1 3 2 285 331 288 334

--------------------------------------------------(Rupees in thousand)------------------------------------------------------

Directors Key Management Personnel

The aggregate amount charged in the financial statements for remuneration, including all benefits, to Chief Executives,Directors and Key Management Personnel of the Company is as follows:

Chief Executive Total


45.3 Capacity

45.4 Number of employees 2016 2015

Total number of employees at end of the year 445 536

Average number of employees for the year 453 590

46. Corresponding figures

Trade debts Long term trade debts

47. Date of authorisation for issue

Considering the nature of the Company's business, information regarding capacity has norelevance.

These financial statements have been authorised for issue by the Board of Directors of theCompany on .November 29, 2016

Previous years figures have been reclassified to conform to current year's presentation asfollows:

Rupees in thousandsReclassified from Reclassified to

523,325

_________________ ______________


Consolidated Financial Statements


AUDITORS’ REPORT TO THE MEMBERS

We have audited the annexed consolidated financial statements comprising consolidated statement of financial position of Wateen Telecom Limited (Wateen) and its subsidiary companies, Wateen Solutions (Pvt) Limited, Wateen Satellite Services (Pvt) Limited, Wateen Telecom UK Limited, Netsonline Services (Pvt) Limited and Wateen WiMAX (Private) Limited as at June 30, 2016 and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated statement of changes in equity together with the notes forming part thereof, for the year then ended. We have also expressed separate opinions on the financial statements of Wateen Telecom Limited, subsidiary companies Wateen Satellite Services (Pvt) Limited and Wateen WiMAX (Private) Limited. Financial statements of subsidiary companies, Wateen Solutions (Pvt) Limited, Netsonline Services (Pvt) Limited and Wateen Telecom UK Limited have been audited by other firms of Chartered Accountants and whose reports have been furnished to us. Our opinion in so far as it relates to the amounts included in respect of these subsidiary companies, is based solely on the reports of such other auditors. These financial statements are the responsibility of Wateen's management. Our responsibility is to express an opinion on these financial statements based on our audit.

Our audit was conducted in accordance with the International Standards on Auditing as applicable in Pakistan and accordingly included such tests of accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the consolidated financial statements present fairly the financial position of Wateen Telecom Limited and its subsidiary companies as at June 30, 2016 and the result of their operations for the year then ended in accordance with the approved accounting standards as applicable in Pakistan.

We draw attention to note 2 (iii) to the consolidated financial statements related to management's assessment of going concern. Our opinion is not qualified in respect of this matter.

Chartered AccountantsIslamabad: November 29, 2016

Engagement Partner: JehanZeb Amin


CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2016


2016 2015Note

SHARE CAPITAL AND RESERVES

Authorised capital 5 10,000,000 10,000,000

Issued, subscribed and paid-up capital 5 6,174,746

6,174,746

General reserve 6 134,681

134,681

Accumulated loss (36,821,046)

(34,750,251)

Currency translation differences 37,807

(7,997)

(30,473,812)

(28,448,821)

NON CURRENT LIABILITIES

Long term finance - secured 7 -

-

Term finance from associated company - unsecured 8 - -

Long term portion of deferred mark up 9 -

-

Long term finance from shareholders - unsecured 10 14,041,457

13,334,608

Medium term finance from an associated company - unsecured 11 600,000

600,000


35,680

14,677,137

13,970,288

DEFERRED LIABILITIES

Deferred government grants 13 2,567,744

3,233,958

CURRENT LIABILITIES

Current portion of long term finance - secured 7 16,865,384

16,624,016

Term finance from associated company - unsecured 8 314,100

305,100

Current portion of deferred mark up 9 4,069,768

3,017,066

Short term running finance - secured 14 765,512

787,135

Trade and other payables 15 5,169,120

6,179,124

Interest / markup accrued 16 2,425,718

1,766,089

29,609,602

28,678,530

CONTINGENCIES AND COMMITMENTS 17

16,380,671 17,433,955




CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2016


2016 2015Note

NON-CURRENT ASSETS

Property, plant and equipment

Operating assets 18 9,171,008

8,523,654

Capital work in progress 19 1,028,815

1,506,592

Intangible assets 20 109,563 116,839

10,309,386

10,147,085

DEFERRED INCOME TAX ASSET 21 22,947

8,254

LONG TERM DEPOSITS AND PREPAYMENTS


468,647

Long term prepayments 23 40,116

56,127

Long term trade debts 24 634,447

523,325

1,154,323

1,048,099

CURRENT ASSETS

Trade debts 24 2,138,761

2,384,001

Contract work in progress 175,934

339,764

Stores, spares and loose tools 25 378,537

501,890

Stocks 26 8,713

11,631

Advances, deposits, prepayments and

other receivables 27 1,219,231 2,022,748

Income tax refundable 588,262 763,149

Cash and bank balances 28 384,577 207,334

4,894,016 6,230,517

16,380,671 17,433,955


CONSOLIDATED INCOME STATEMENT


_______________

Chief Executive

____________

Director


2016 2015Note

Revenue 29 7,567,818

6,109,147

Cost of sales (excluding depreciation and amortisation) 30 4,580,533

4,019,239

General and administration expenses 31 1,437,151

1,764,573

Advertisement and marketing expenses 23,052

30,644

Selling and distribution expenses 1,701

12,275

Provisions 32 503,559

810,230

Other income 33 (574,119)

(604,312)

Earnings before interest, taxation, impairment

depreciation and amortisation 1,595,941

76,498

Less: Depreciation and amortisation 700,240 996,739 Finance cost 34 2,523,774 2,253,857 Impairment/(reversal) of WiMAX assets 100,075

3,354,846

Finance income 35 (118,317)

(130,969)

Loss before taxation (1,609,831)

(6,397,975)

Income tax expense 36 (449,156)

(74,932)


(6,472,907)

Loss attributable to:

-owners of Wateen Telecom Limited (2,058,987)

(6,458,578)

-non-controlling interest - (14,329)

(2,058,987) (6,472,907)



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


_______________ ___________



Note 2016 2015


(6,472,907)

Other comprehensive income/ (loss)

Currency translation differences 45,804

22,894

Remeasurement loss on staff retirement

benefit plan 41.4 (11,808) (6,862) 33,996 16,032

Total comprehensive loss for the year (2,024,991)

(6,456,875)

Total comprehensive loss attributable to:

-owners of Wateen Telecom Limited (2,024,991)

(6,442,546)

-non-controlling interest -

(14,329)

(2,024,991)

(6,456,875)



CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2016


Cash flow from investing activities (1,333,266) (2,061,540)

2016 2015

CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation (1,609,831) (6,397,975)

Adjustment of non cash items:

Depreciation and amortisation 700,240 996,739

Finance cost 2,523,774 2,253,857

(Profit)/loss on sale of operating assets 101,662 (10,934)

Impairment/(reversal) of WiMAX assets 100,075

3,354,846

Cost associated with IRU of optic fiber cable 273,007

154,090

Deferred USF grant recognised during the year (143,561)

(178,230)

Provisions 503,559

810,230

Provision of markup on advances to associated companies 17,208

22,880

Remeasurement loss on staff retirement benefit plan (11,808)

(6,862)

Stores and spares written off 16,599

-

Write back of liability (516,690)

(407,799)

3,564,065

6,988,817

1,954,234

590,842

Changes in working capital:

(Increase)/decrease in trade debts (327,027)

416,058

(Increase)/ decrease in contract work in progress 163,830

(291,839)

Decrease/ (Increase)in stores, spares and loose tools 121,598

(91,982)

(Increase)/ decrease in stocks (1,807)

3,848

Decrease in advances, deposits, prepayments and other receivables 74,892

28,559

Decrease in trade and other payables (484,302)

(333,027)

(452,816)

(268,383)

Income taxes paid (288,962)

(280,698)

Cash flow from operating activities 1,212,456

41,761

CASH FLOW FROM INVESTING ACTIVITIES

Property, plant and equipment additions (1,381,813)

(1,781,233)

Intangible assets additions -

(85,225)

Proceeds from sale of property, plant and equipment 43,649

15,008

Long term deposits receivable (paid) / received (11,113) (219,534)

Long term prepayments 16,011 9,444




CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2016

2016 2015 (Rupees in thousand)

CASH FLOW FROM FINANCING ACTIVITIES

Term finance from associated company - unsecured 315,000

2,194,375

Increase in long term finance - secured -

1,926,953

Long term finance repaid (8,935)

(1,033,125)

Deferred grants received 112,204

222,110

Obligations under finance leases repaid -

(1,090)

Long term deposits (repaid) -

(21,430)

Finance cost paid (96,810) (585,431)

Cash flow from financing activities 321,459

2,702,362

INCREASE IN CASH AND CASH EQUIVALENTS 200,648

682,583

Effects of exchange rates on cash and cash equivalents (1,782) (726)

Cash and cash equivalents at beginning of the year (579,801) (1,261,658)

CASH AND CASH EQUIVALENTS AT END OF THE YEAR (380,935) (579,801)

CASH AND CASH EQUIVALENTS COMPRISE:

Cash and bank balances 384,577 207,334

Short term running finance - secured (765,512) (787,135)

(380,935) (579,801)


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CONSOLIDATED NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS



1. Legal status and operations

The consolidated financial statements include the financial statements of Wateen Telecom Limited (the

Company) and its subsidiary companies Wateen Solutions (Pvt) Limited (100% owned) , Wateen

SatelliteServices (Pvt) Limited (100% owned), Wateen Telecom UK Limited (100% owned), Netsonline

Services (Pvt) Limited (100% owned) and Wateen WiMAX (Pvt) Limited (100% owned). For the

purpose of these financial statements, Wateen and consolidated subsidiaries are referred to as the

Company.

The subsidiary company, Wateen Satellite Services (Pvt) Limited (WSS), is incorporated as a Private

Limited Company under the Companies Ordinance, 1984 and is engaged in providing back haul and

satellite data connectivity services in Pakistan. On March 1, 2009, WSS transferred all contracts for

providing back haul and satellite data connectivity services to the Company. Wateen acquired 100%

shares of WSS on July 1, 2008.

The subsidiary company, Netsonline Services (Private) Limited, is incorporated as a Private Limited

Company under the Companies Ordinance, 1984 and is engaged in providing internet and other

technology related services in Pakistan. Wateen acquired 100% shares of Netsonline Services

(Private) Limited on July 1, 2008.

The subsidiary company, Wateen Solutions (Pvt) Limited (WSPL), is incorporated under Companies

Ordinance, 1984 as a Private Limited Company on May 17, 2004. The principal activities of the

Company are to sell and deploy telecom equipmentand providerelated services. The registered office

of the Company is situated at Lahore. Wateen acquired 100 % interest in Wateen Solutions (Pvt)

Limited on August 2, 2006. Wateen sold 49% shares (397,027 fully paid ordinary shares of Rs 100

each) of Wateen Solutions (Pvt) Limited on July 1, 2008, and acquired back 49% shares (397,027fully

paid ordinary shares of Rs 100 each) on November 18, 2014 for Rs 85 million.

The Company was incorporated in Pakistan as a Private Limited Company under the Companies

Ordinance, 1984 on March 4, 2005 forproviding Long Distance and International public voice telephone

(LDI) services and Wireless Local Loop (WLL) service in Pakistan. The Company commenced its LDI

business commercial operations from May 1, 2005. The legal status of the Company was changed

from "PrivateLimited" to "Public Limited" with effect from October 19, 2009 and thereafter, it was listed

on Karachi, Lahore and Islamabad Stock Exchanges. Subsequently, the Karachi, Lahore and

Islamabad Stock Exchanges accepted the request for delisting of the Company and accordingly it

stood delisted from these stock exchanges with effect from February 17, 2014. The registered office of

the Company is situated at Lahore. The Company is a subsidiary of Warid Telecom International LLC, United Arab Emirates (WTI).

The subsidiary company, Wateen Telecom UK Limited, is incorporatedas a Private Limited Company

under the UK Companies Act, 2006 and is engaged in providing internet and other technology related

services in United Kingdom. Wateen held 51% shares in Wateen Telecom UK Limited since its

incorporation. Wateen acquired remaining shares of Wateen Telecom UK Limited on March 31, 2011.

The subsidiary company, Wateen WiMAX (Private) Limited (WWL), is incorporated as a Private Limited

Company under the Companies Ordinance, 1984 on December 6, 2012 to carry on business of WiMAX

telecommunications services. The shareholders of Wateen in their Extra Ordinary General Meeting

held during the year consented for the approval of transfer of WiMAXrelated net assets as at July 10,

2014 to the WWL for consideration other than cash in terms of the share issuance agreement dated

September 9, 2014 between WWL and the Company.

Subsidiaries are all entities over which the Company has the power to govern the financial and

operating policies generally accompanying a shareholding of more than one half of the voting rights.

The existence and effect of potential voting rights that are currently exercisable or convertible are

considered when assessing whether the Company controls another entity. The Company also

assesses existence of control where it does not have more than 50% of the votingpower but is able to


govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in

circumstances where the size of the Company’s voting rights relative to the size and dispersion of

holdings of other shareholders give the Company the power to govern the financial and operating

policies, etc.

2. Basis of preparation

(i) Statement of compliance

When the Company ceases to have control any retained interest in the entity is re-measured to its fair

value at the date when control is lost, with the change in carrying amount recognized in profit or loss.

The fair value is the initialcarrying amount for the purposes of subsequently accounting for the retained

interest as an associate, joint ventureor financialasset. In addition, any amounts previouslyrecognized

in other comprehensive income in respect of that entity are accounted for as if the group had directly

disposed of the related assets or liabilities.This may mean that amounts previouslyrecognized in other

comprehensive income are reclassified to profit or loss.

Transactions with non-controlling interests that do not result in loss of control are accounted for as

equity transactions – that is, as transactions with the owners in their capacity as owners. The

difference between fair value of any consideration paid and the relevant share acquired of the carrying

value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-

controlling interests are also recorded in equity.

All significant inter-company transactions, balances, income and expenses on transactions between

group companies are eliminated.Profits and losses resulting from inter-company transactions that are

recognized in assets are also eliminated. Accounting policies of subsidiaries have been changed where

necessary to ensure consistency with the policies adopted by the Company.

The Company applies the acquisition method to account for business combinations. The consideration

transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities

incurred to the former owners of the acquiree and the equity interests issued by the Company. The

consideration transferred includes the fair value of any asset or liability resulting from a contingent

considerationarrangement. Identifiable assets acquired and liabilitiesand contingent liabilitiesassumed

in a business combination are measured initially at their fair values at the acquisition date. The

Company recognizes any non-controlling interest in the acquiree on an acquisition- by-acquisition

basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized

amounts of acquiree’s identifiable net assets.

These financial statements have been prepared in accordance with the approved accounting standards

as applicable in Pakistan. Approved accounting standards comprise of such International Financial

Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified

Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They

are deconsolidated from the date that control ceases.

Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages,

the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is

remeasured to fair value at the acquisition date through income statement.

Any contingent consideration to be transferred by the Company is recognised at fair value at the

acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to

be an asset or liabilityis recognized in accordance with IAS39 either in profit or loss or as a change to

other comprehensive income. Contingent consideration that is classified as equity is not remeasured,

and its subsequent settlement is accounted for within equity.

Goodwill is initiallymeasured as the excess of the aggregate of the consideration transferred and the

fair value of non-controlling interest over the net identifiableassets acquired and liabilities assumed. If

this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference

is recognized in income statement.


(ii) Accounting convention

These financial statements have been prepared on the basis of 'historical cost convention' except as

otherwise stated in the respective accounting policies notes.

under the Companies Ordinance 1984, provisions of and directives issued under the Companies

Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance,

1984 shall prevail.

(iii) Management's assessment of going concern

Operational Performance

Debt restructuring

Ongoing Shareholder Support

Keeping in view the foregoing and other related operational facts, the management believes that the

Company is able to operate on a going concern basis in the foreseeable future and these financial

statements have been prepared reflecting this assumption.

The Company's majority shareholderWTI continues to providemanagement with comfort with regards

to its ongoing support and this is evident from further loan of USD 3 million extended to the Company

during the year ended June 30, 2016 (year ended June 30, 2015: USD 10 million) for operations the

Company.

In addition, WTI guarantees the local Syndicate Finance Facility, and certain sponsors guaranteesare

also provided to the foreign debt holders. The continued support of WTI including the guarantees and

financial assistance from WTI will enable the Company to continue its operations and fulfill its financial

obligations for a minimum period of twelve months from the year end. Further, the Board and

management is confident that WTI will continue to provide strong support to the Company.

In assessing the going concern status of the Company, management has carefully assessed a number

of factors covering the operational performance of the business, the ability to implement a significant

debt restructuring of the Company’s existing debts and the appetiteof majority shareholder to continue

financial support. Based on the analysis of these, management is comfortable that the Company will be

able to continue as a going concern in the foreseeable future. Set out below are the key areas of

evidence that management has considered.

Company’s operating performance reflected remarkable improvement during the year ended June 30,

2016 by posting the earnings before interest, taxation, depreciation and amortization (EBITDA) of Rs

1,596 million (June 30, 2015: Rs 77 million) as a highest EBITDA after financial year 2008-2009.

Further, during the year, the Company has been able to generate positive cashflows from operations

for an amount of Rs 1,212 million (2015: Rs 42 million).

During the year ended June 30, 2016 Company incurred the net loss after taxation Rs 2,059 million

(June 30, 2015: Rs 6,473 million) and had net current liabilitiesas at June 30, 2016 of Rs 24,716 million

(2015: 22,448 million) of which Rs 12,212 million (2015: Rs 14,064 million) relate to loan installments

and deferred markup of Rs 4,070 million (2015: Rs 3,017 million), due for repayment after June 30,

2017 but classified as current liabilities as mentioned in notes 7 & 8 respectively. Net current liabilities

also include markup of Rs 1,358 million (2015: Rs 923 million) on account of subordinated loan from

shareholders of the Company. It is important to note that during the past five years, the majority

shareholder has provided financial support in the form of long term finance amounting to Rs 14,041

million to meet the capital requirements of the Company (un availed finance facility from shareholder

amounts to USD 75 million at June 30, 2016) and management expects the support to continue.

As part of further restructuring the Company is negotiating with lenders whereby it is proposed that

Deutsche Bank AG facility will be novated from company to WTI and facility from ECGD will also be

restructured. The management is of the view that above restructuring will further improve the financial



The management anticipates that the adoption of the above standards, amendments andinterpretations in future periods, will have no material impact on the financial statements otherthan in presentation/disclosures.

Further, the following new standards and interpretations have been issued by the InternationalAccounting Standards Board (IASB), which have not been notified upto June 30, 2016 by theSecurities and Exchange Commission of Pakistan, for the purpose of their applicability inPakistan:

(iv) Critical accounting estimates and judgments

(i) Operating assets - estimated useful life of property, plant and equipment (note 18)

(ii) Impairment of DSL assets (note 19)

(iii) Impairment of intangible assets (note 20)

(iv) Provision for doubtful debts (note 24)

(v) Provision for obsolete stores (note 25)

(vi) Provision for obsolete stocks (note 26)

(vii) Provision for doubtful advances and other receivables (note 27)

(viii) Provision for current and deferred income tax (note 21)

(ix) Employees' retirement benefits (note 41)

(x) Deferred government grants (note 13)

3. Adoption of new and revised standards and interpretations

IFRS 5 Non-current Assets Held for Sale and Discontinued

Operations (Amendments) January 1, 2016

IFRS 7 Financial Instruments: Disclosures (Amendments) January 1, 2016

IFRS 11 Joint Arrangements (Amendments) January 1, 2017

IFRS 14 Regulatory Deferral Accounts January 1, 2016

IFRS 15 Revenue from Contracts with Customers January 1, 2018

IFRS 16 Leases January 1, 2019

IAS 1 Presentation of Financial Statements (Amendments) January 1, 2016

IAS 7 Statement of Cash Flows (Amendments) January 1, 2017

IAS 12 Income Taxes (Amendments) January 1, 2017

IAS 16 Property, Plant and Equipment (Amendments) January 1, 2016

IAS 19 Employee Benefits (Amendments) January 1, 2016

IAS 27 Separate Financial Statements (Amendments) January 1, 2016

IAS 28 Investment in Associates and Joint Ventures (Amendments) January 1, 2016

IAS 34 Interim Financial Reporting (Amendments) January 1, 2016

IAS 38 Intangible Assets (Amendments) January 1, 2016

IAS 41 Agriculture (Amendments) January 1, 2016

Effective date (annual periods beginning

on or after)

The preparation of financial statements in conformity with approved accounting standards requires the

use of certain critical accounting estimates. It also requires management to exercise its judgment in the

process of applying the Company’s accounting policies. Estimates and judgments are continually

evaluated and are based on historic experience, including expectations of future events that are

believed to be reasonableunder the circumstances. The areas involvinga higher degree of judgment or

complexity, or areas where assumptions and estimates are significant to the financial statements, are

as follows:

Standards, amendments and interpretations to existing standards, that are not yet effective and have

not been early adopted by Company:


IFRS 1 First-time adoption of International Financial Reporting StandardsIFRS 9 Financial instruments

IFRIC 4 Determining whether an arrangement contains lease

IFRIC 12 Service concession arrangements

The following interpretations issued by the IASB have been waived off by SECP effective January 16,

2012:

4. Summary of significant accounting policies

4.1 Employees' retirement benefits

(i)

(ii)

4.2 Taxation

Current

Deferred

Deferred income tax is calculated at the rates that are expected to apply to the period when the

differences reverse, and the tax rates that have been enacted, or substantively enacted, at the date of


Deferred income tax is accounted for using the balance sheet liability method in respect of all

temporary differences arising between the carrying amounts of assets and liabilities in the financial

statements and the corresponding tax base used in the computation of taxable profit.

Upto February28, 2015, the Company provided gratuity to all permanent employees in accordance with

the rules of the Company. Effective March 1, 2015, the benefit has been discontinuedand amount due

to employees as at February28, 2015 will be payable at the time of final settlement. Actuarialvaluation

is conducted periodically using "Projected Unit Credit Method"and latest valuation was carried out at

June 30, 2016. The details of actuarial valuation are given in note 41.

Actuarialgains and losses (remeasurement gains / losses) on employees’ retirement benefit plans are

recognised immediately in other comprehensive income and past service cost is recognized in profit

and loss when they occur. Calculation of gratuity requires assumptions to be made of future outcomes

which mainly includes increase in remuneration, expected long-term return on plan assets and the

discount rate used to convert future cash flows to current values. Calculations are sensitive to changes

in the underlying assumptions.

Contributory provident fund for all permanent employees of the Company is in place. Contribution for

the year amounted to Rs 29.567 million (2015: Rs 28.730 million) is charged to income for the year.

Deferred income tax liabilities are recognized for all taxable temporary differences and deferred tax

assets are recognized to the extent that it is probable that taxable profits will be availableagainst which

the deductible temporary differences, unused tax losses and tax credits can be utilized.

The tax expense for the year comprises of current and deferred income tax, and is recognized in

income for the year, except to the extent that it relates to items recognized directly in other

comprehensive income, in which case the related tax is also recognized in other comprehensive

income.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively

enacted at the date of the statement of financial position. Management periodicallyevaluatespositions

taken in tax returns, with respect to situations in which applicable tax regulation is subject to

interpretation,and establishes provisions, where appropriate,on the basis of amounts expected to be

paid to the tax authorities.


4.3 Government grant

Governmentgrants are recognized at their fair values and included in non-current liabilities, as deferred

income, when there is reasonable assurance that the grants will be received and the Company will be

able to comply with the conditions associated with the grants.

Grants that compensate the Company for expenses incurred, are recognized on a systematic basis in

the income for the year in which the related expenses are recognized. Grants that compensate the

Company for the cost of an asset are recognized in income on a systematic basis over the expected

useful life of the related asset.

4.4 Borrowings and borrowing costs

4.5 Trade and other payables

4.6 Provisions

4.7 Contingent liabilities

4.8 Property plant and equipment

Property, plant and equipment,except freehold land and capital work-in-progress, is stated at cost less

accumulated depreciation and any identified impairment losses; freehold land is stated at cost less

identified impairment losses, if any. Cost includes expenditure, related overheads, mark-up and

borrowing costs (note 4.4) that are directly attributable to the acquisition of the asset.

Subsequentcosts, if reliablymeasurable, are included in the asset’s carrying amount, or recognized as

a separate asset as appropriate,only when it is probable that future economic benefits associated with

the cost will flow to the Company. The carrying amount of any replaced parts as well as other repair

and maintenance costs, are charged to income during the period in which they are incurred.

Depreciation on operating assets is calculated, using the straight line method, to allocate their cost over

their estimated useful lives, at the rates mentioned in note 18.

Liabilities for creditors and other amounts payable including payable to related parties are carried at

cost, which is the fair value of the consideration to be paid in the future for the goods and / or services

received, whether or not billed to the Company.

Provisions are recognized when the Company has a present legal or constructive obligationas a result

of past events, it is probablethat an outflow of resources embodyingeconomic benefits will be required

to settle the obligationand a reliable estimate of the amount can be made. Provisions are reviewedat

each statement of financial position date and are adjusted to reflect the current best estimate.

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are

subsequentlystated at amortized cost; any difference between proceeds (net of transaction costs) and

the redemption value is recognised in the income statement over the period of the borrowings using

effective interest method.

Borrowing costs incurred that are directly attributable to the acquisition, construction or production of

qualifyingassets are capitalized as part of the cost of that asset. All other borrowing costs are charged

to income for the year. Qualifyingassets are assets that necessarily takes substantial period of time to

get ready for their extended use.

A contingent liability is disclosed when the Company has a possible obligation as a result of past

events, the existence of which will be confirmed only by the occurrence or non-occurrence, of one or

more uncertain future events, not wholly within the control of the Company; or when the Company has

a present legal or constructive obligation, that arises from past events, but it is not probable that an

outflow of resources embodying economic benefits will be required to settle the obligation, or the

amount of the obligation cannot be measured with sufficient reliability.


The gain or loss on disposal of an asset, calculated as the difference between the sale proceeds and

the carrying amount of the asset, is recognized in profit or loss for the year.

Depreciation on additions to property, plant and equipment, is charged from the month in which the

relevant asset is acquired or capitalized, while no depreciation is charged for the month in which the

asset is disposed off. Impairment loss, if any, or its reversal, is also charged to income for the year.

Where an impairment loss is recognized, the depreciation charge is adjusted in future periods to

allocate the asset’s revised carrying amount, less its residual value, over its estimated useful life.

4.9 Intangible assets

(i) Licenses

(ii) Computer software

(iii)

(iv)

4.10 Impairment of non-financial assets

Assets that have an indefiniteuseful life, for example freehold land, are not subject to depreciationand

are tested annuallyfor impairment. Assets that are subject to depreciation or amortisation are reviewed

for impairment on the date of the statement of financial position, or whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is

recognized, equal to the amount by which the asset’s carrying amount exceeds its recoverable

amount. An asset’s recoverableamount is the higher of its fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are

separately identifiable cash flows. Non financial assets that suffered an impairment, are reviewed for

possible reversal of the impairment at each statement of financial position date. Reversals of the

impairment loss are restricted to the extent that asset’s carrying amount does not exceed the carrying

amount that would have been determined,net of depreciationor amortization, if no impairment loss has

been recognized. An impairment loss, or the reversal of an impairment loss, are both recognized in the

income statement.

The amortization on computer software acquired during the year is charged from the month in which

the software is acquired or capitalized, while no amortization is charged for the month in which the

software is disposed off.

Non compete fee is stated at cost less accumulated amortization. Amortization is calculated using the

straight-line method to allocate the cost over its estimated useful life.

On acquisition of an entity, difference between the purchase consideration and the fair value of the

identifiableassets and liabilitiesacquired, is initially recognised as goodwill.Following initial recognition,

goodwill is measured at cost less accumulated impairment , if any.


Amortization is calculated using the straight line method from the date of commencement of

commercial operations, to allocate the cost of the license over its estimated useful life specified in note

20, and is charged to income for the year.

The amortization on licenses acquired during the year, is charged from the month in which a license is

acquired / capitalized, while no amortization is charged in the month of expiry / disposal of the license.


Amortization is calculated using the straight line method, to allocate the cost of the software over its

estimated useful life, and is charged in income statement. Costs associated with maintainingcomputer

software, are recognised as an expense as and when incurred.


4.11 Right of way charges

4.12 Trade debts and other receivables

Trade debts and other receivables are carried at their original invoice amounts, less any estimates

made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are

written off when identified.

Right of way charges paid to local governments, concerned authorities and land owners for access of

land are carried at cost less amortisation. Amortisation is provided to write off the cost on straight line

basis over the period of right of way.

4.13 Stores, spares and loose tools

4.14

4.15

4.16 Revenue recognition

4.17 Foreign currency translation

a) Functional and presentation currency

b) Foreign currency transactions and translations

Interest income is recognised using the effective yield method.

Stocks are valued at lower of cost and net realizable value. Cost is determined on weighted average

cost formula basis.

Cash and cash equivalents are carried at cost. For the purpose of the statement of cash flows, cash

and cash equivalents comprise cash in hand and bank and short term highly liquid investments with

original maturities of three months or less, and that are readily convertible to known amounts of cash,

and subject to an insignificant risk of changes in value.

Cash and cash equivalents

Dividend income is recognised when the right to receive payment is established.

Revenue from sale of goods is recognised upon dispatch of goods to customers.

Foreign currency transactions are translated into the functional currency, using the exchange rates

prevailing on the date of the transaction. Monetary assets and liabilities, denominated in foreign

currencies, are translated into the functional currency using the exchange rate prevailingon the date of

the statement of financialposition. Foreign exchange gains and losses resulting from the settlement of

such transactions, and from the translationof monetary items at year end exchangerates, are charged

to income for the year.

Items included in the financial statements of the Company are measured using the currency of the

primary economic environment in which the entity operates (the functional currency). These financial

statements are presented in Pakistan Rupees (Rs), which is the Company’s functional currency.

Revenue is recognised as related services are rendered.

Revenue from granting of Indefeasible Right of Use (IRU) of dark fiber upto 25 years or more is

recognised at the time of delivery and acceptance by the customer.

Revenue from prepaidcards is recognised as credit is used, unutilized credit is carried in Statement of

Financial Position balance sheet as unearned revenue in trade and other payables.

Revenue from sale of equipment is recognised when the significant risks and rewards of ownership are

transferred to the buyer.

Stocks

Stores, spares and loose tools are carried at cost less allowance for obsolescence. Cost is determined

on weighted average cost formula basis. Items in transit are valuedat cost, comprising invoice values

and other related charges incurred up to the date of the statement of financial position.


c) Foreign operations

(i)

(ii)

(iii)

income and expenses for each statement of comprehensive income are translated at

average exchange rates (unless this average is not a reasonable approximation of the

cumulative effect of the rates prevailingon the transaction dates, in which case income and

expenses are translated at the rate on the dates of the transactions), and

all resulting currency translation differences are recognised in the statement of

comprehensive income.

The results and financial position of all the Company that have a functional currency different from the

presentation currency are translated into the presentation currency as follows:

assets and liabilities for each statement of financial position presented are translated at the

closing rate at the date of that financial position;

4.18 Financial instruments

(a) Financial assets

Classification and subsequent measurement

(i) Fair value through profit and loss

On the disposal of a foreign operation (that is, a disposal of the Company’s entire interest in a foreign

operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation)all

of the exchange differences accumulated in equity in respect of that operation attributableto the equity

holders of the Company are reclassified to profit or loss.

The Company classifies its financialassets in the followingcategories: fair value through profit or loss,

held-to-maturity investments, loans and receivables and available-for-sale financial assets. The

classification depends on the purpose for which the financial assets were acquired. Management

determines the classification of its financial assets at initial recognition. Regular purchases and sales of

financial assets are recognized on the trade date - the date on which the Company commits to

purchase or sell the asset.

In the case of a partial disposal that does not result in the Company losing control over a subsidiary that

includes a foreign operation, the proportionate share of accumulated exchange differences are re-

attributed to non-controlling interests and are not recognised in profit or loss.

Financial assets at fair value through profit or loss, include financial assets held for trading

and financial assets, designated upon initial recognition, at fair value through profit or loss.

Financial assets at fair value through profit or loss are carried in the statement of financial

position at their fair value,with changes therein recognized in the income for the year. Assets

in this category are classified as current assets.

Financial assets and liabilities are recognized when the Company becomes a party to the contractual

provisions of the instrument and derecognized when the Company loses control of the contractual

rights that comprise the financialassets and in case of financial liabilities when the obligationspecified

in the contract is discharged, cancelled or expires. All financial assets and liabilities are initially

recognized at fair value plus transaction costs other than financial assets and liabilities carried at fair

value through profit or loss. Financial assets and liabilitiescarried at fair value through profit or loss are

initially recognized at fair value, and transaction costs are charged to income for the year. These are

subsequently measured at fair value, amortized cost or cost, as the case may be. Any gain or loss on

derecognition of financial assets and financial liabilities is included in profit or loss for the year.

(ii) Held to maturity

Non derivative financial assets with fixed or determinable payments and fixed maturities are

classified as held-to-maturitywhen the Company has the positive intention and ability to hold

these assets to maturity. After initial measurement, held-to-maturity investments are

measured at amortized cost using the effective interest method, less impairment, if any.


(iii) Loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable

payments, that are not quoted in an active market. After initial measurement, these financial

assets are measured at amortized cost, using the effective interest rate method, less

impairment, if any.

The Company’s loans and receivables comprise 'long term deposits', ‘trade debts’, 'contract

work in progress', ‘advances, deposits and other receivables,' ‘income tax refundable’and

‘bank balances’.

(iv) Available for sale

Impairment

(b) Financial liabilities

Initial recognition and measurement

Subsequent measurement

The measurement of financial liabilities depends on their classification as follows:

(i)

(ii)

(c) Offsetting of financial assets and liabilities

Available-for-sale financial assets are non-derivatives, that are either designated in this

category, or not classified in any of the other categories. These are included in non current

assets, unless management intends to dispose them off within twelve months of the date of


Financial assets and liabilities are offset and the net amount reported in the statement of financial

position, when there is a legally enforceable right to set off the recognised amounts and there is an

intention to settle on a net basis, or realise the asset and settle the liability simultaneously. Legally

enforceableright must not be contingenton future events and must be enforceable in normal course of

business and in the event of default, insolvency or bankruptcy of the Company or the counter party.

The Company classifies its financial liabilitiesin the followingcategories: fair value through profit or loss

and other financial liabilities. The Company determines the classification of its financial liabilities at initial

recognition. All financial liabilities are recognized initiallyat fair value and, in the case of other financial

liabilities, also include directly attributable transaction costs.

Fair value through profit or loss

Financial liabilities at fair value through profit or loss, include financial liabilities held-for-trading

and financial liabilities designated upon initial recognition as being at fair value through profit

or loss. Financial liabilities at fair value through profit or loss are carried in the statement of

financial position at their fair value, with changes therein recognized in the income for the

year.

Other financial liabilities

After initial measurement, available-for-salefinancial assets are measured at fair value, with

unrealized gains or losses recognized as other comprehensive income, until the investment

is derecognized, at which time the cumulative gain or loss is recognized in income for the

year.

After initial recognition, other financial liabilities which are interest bearing are subsequently

measured at amortized cost, using the effective interest rate method.

The Company assesses at the end of each reportingperiod whether there is an objective evidence that

a financial asset or group of financial assets is impaired as a result of one or more events that occurred

after the initial recognitionof the asset (a ‘loss event’), and that loss event (or events) has an impact on

the estimated future cash flows of the financial asset or group of financial assets that can be reliably

estimated.


4.19 Derivative financial instruments

Derivates are initially recognised at fair value on the date a derivative contract is entered into and are

subsequently remeasured at fair value. Changes in fair value of derivates that are designated and

qualify as fair value hedges are recorded in income statement together with any changes in the fair

value of the hedged asset or liability that are attributable to the hedged risk.

Number of Rs Number of Rs

Shares '000 Shares '000

5. Share capital

Authorised share capital:

Ordinary shares of Rs 10 each 1,000,000,000 10,000,000 1,000,000,000 10,000,000

Issued, subscribed and paid up

share capital:

Shares issued for cash

Ordinary shares of Rs 10 each 408,737,310

4,087,373

408,737,310

4,087,373

Shares issued as fully paid

bonus shares of Rs 10 each 208,737,310

2,087,373

208,737,310

2,087,373

617,474,620

6,174,746

617,474,620

6,174,746

5.1

6. General reserve

2016 2015

7. Long term finance - secured

Note


8,861,625

Export Credit Guarantee Department - (ECGD) 7.2 2,680,329

2,603,529

Dubai Islamic Bank (DIB) 7.3 380,969 381,454

Deutsche Bank AG 7.4 5,024,298 4,880,335

Total 16,938,771

16,726,943

Unamortized transaction and other ancillary cost


105,435

Addition during the year -

50,200

Amortisation for the year (29,540)

(52,708)

(73,387)

(102,927)

16,865,384

16,624,016


Amount payable within next twelve months (4,653,075)

(2,560,463)

Amount due after June 30, 2017 (12,212,309)

(14,063,553)

7.5 (16,865,384)

(16,624,016)

- -

7.1 7.1.1 7,789,921 7,796,452

7.1.2 1,063,255 1,065,173

8,853,175 8,861,625

June 30, 2015June 30, 2016

The Company is to place atleast 10% of the profits in the general reserve account till it reaches 50%

of the issued, subscribed and paid up capital of the company.

The parent company, Warid Telecom InternationalLLC, U.A.E held 595,393,361(2015: 588,577,066)

ordinary shares at year end.


Facility 1

Facility 2


7.1.1 The Company obtained syndicate term finance facility from a syndicate of banks with Standard

Chartered Bank Limited (SCB), Habib Bank Limited (HBL), Bank AI-Habib Limited (BAHL) and

National Bank of Pakistan (NBP), being lead arrangers to finance the capital requirements of the

Company. During the year ended June 30, 2015, the Company and the Syndicate of Banks signed

second amendatory agreement to restructure Syndicate term finance facility and the short term

running finance from Bank Alfalah Limited (BAF) running finance facility-I.All the finance facilities fully

availed by the Company till June 30, 2016. The principal is now repayable in twenty unequal six

monthly instalments. The first such instalment being due on April 1, 2015 and subsequently every six

months until October 1, 2024.

7.1.2

7.2 The Company obtainedlong term finance facility amounting to USD 42 million (2015: USD 42 million)

from ECGD UK, of which USD 35 million (2015: USD 35 million) was availed till June 30, 2016.

During the year ended June 30, 2012, the Company and ECGD UK signed an agreement to

restructure the terms of loan agreement including repayment schedule. Amount outstanding at June

30, 2016 was USD 25.60 million (2015: 25.60 million). The principal is repayable in ten semi annual

installments. The first such installment was due on July 1, 2014 and subsequentlyevery six months

until January 1, 2019. The rate of mark-up is six month LIBOR + 1.5% (interest rate) per annum till

Certain conditions precedent to the second amendatory agreement are not yet fulfilled,management

of the Company is taking steps to fulfill those conditions. Once conditions precedent to restructured

agreements are fulfilled, a formal letter shall be issue to the Company by the Syndicate of aforesaid

Banks, which shall complete the restructuring process.

The facility is secured by way of hypothecationover all present and future moveable assets (including

all current assets) and present and future current/ fixed assets, a mortgage by deposit of title deeds

in respect of immoveable properties of the Company, pledge over fully paid ordinary shares (entire

present and future) owned by the Company in Wateen WiMAX(Private) Limited and owned by WTI in

the capital of the Company, a guarantee from WTI for amounts payable under second amendatory

agreement and undertakingfrom shareholders from WTI for retainingthe shareholdingand control of

WTI. Syndicate is entitled to designate one nominee to be appointed as director in the Board of

directors of the Company.

During the year ended June 30, 2015, the Company transferred a portion of principal amount

outstanding under Syndicate Term Finance Agreement (STFA) to WWL. Accordingly, WWL entered

into an agreement with Syndicate of banks for transfer of loan amounting to Rs 1,066 million with

Standard Chartered Bank Limited (SCB), Bank Alfalah Limited (BAFL), Bank Al-HabibLimited (BAHL)

and Habib Bank Limited (HBL) being lead arrangers. Under the terms of the agreement between

WWL and Syndicate of banks, the principal is repayable by the Company in eight unequal semi-

annual installments. The first such installment was due on April 1, 2015 and subsequently every six

months until October 1, 2018. The rate of mark-up is 6% per annum. Entire markup shall be paid by

the Company on a date falling six months from the date of payment of last installment of principal

amount.

The Company is required to mandatorily prepay the outstanding amount out of net cash proceeds

from sale of WWL or any excess cash generated by the Company after taking into account a

minimum cash balance, capital expenditureand working capital requirements in each financialyear.

The rate of mark-up is 12% per annum from July 1, 2013 which shall stand deferred till payment of

the final installment of principal portion (deferred payment) as referred to in note 9.1. Earlier, pricipal

was repayablein ten unequalsemi annual installments with first installment due on July 1, 2014 and it

carried a mark up of 6 months KIBOR per annum till December 31, 2013 and 6 months KIBOR +

2.5% per annum for remaining period.

The facility is secured with a margin of 25% over the principal amount outstanding, by way of

hypothecation over all WiMAX assets, corporate guarantee from WTL and pledge over fully paid

ordinary shares (entire present and future shareholding) owned by the WTL in the capital of WWL.


June 30, 2011 and six month LIBOR + 1.9% (interest rate) for the remaining period. If the amount of

installment payable and/or interest payable is not paid on the due date, the Company shall pay

interest on such amount the interest rate + 2% per annum.


all current assets) and present and future current/ fixed assets (excluding assets under specific

charge of CM Pak and assets which are subject to lien in favour of USF), a mortgage by deposit of

title deeds in respect of immoveable properties of the Company, lien over collection accounts and

Debt Service Reserve Account and personal guarantees by three Sponsors of the Company.

As explained in note 2(iii), the Company is in negotiation with the lenders to restructure the above

finance facility.

the capital of the Company.

2016 2015

7.3 7.3.1 335,224 335,627

7.3.2 45,745 45,827

380,969 381,454

7.3.1

7.3.2

Facility 1

Facility 2

During the year ended June 30, 2016, WTL transferred a portion of principal amount outstanding

under Ijara Finance Facility to WWL. Accordingly, WWL entered into an agreement with DIB for

transfer of loan amounting to Rs 45.9 million. Under the terms of agreement between DIB and the

Company, the principal is repayable by the Company in eight unequalsemi-annual installments. The

first such installment was due on April 1, 2015 and subsequently every six months until October 1,

2018. The rate of mark-up is 6% per annum. Payment of markup shall be deferred until the date of

payment of last installment of principal amount and aggregate of all such deferred amounts shall be

paid by the Company on April 1, 2019.

The facility is secured with a margin of 25% over the principal amount outstanding, by way of

hypothecation over all WiMAX assets, corporate guarantee from parent company and pledge over

fully paid ordinary shares (entire present and future shareholding) owned by the parent company in

The Company obtained Ijarah finance facility of Rs 530 million (2015: Rs 530 million) from DIB.

During the year ended June 30, 2016, the Company and DIB signed an agreement to restructure the

terms of the Ijarah finance facility. The principal is now repayable in twenty unequal six-monthly

instalments. The first such instalment was due on April 1, 2015 and subsequently every six months

until October 1, 2024. The rate of mark-up is 12% per annum from commencement date which shall

stand deferred till payment of the final installment of principal portion (deferred payment) as referred

to in note 9.2. Earlier, principal was repayablein ten unequal semi annual installments with first such

installment due on July 1, 2014 and it carried a markup of 6 months KIBOR per annum till December

31, 2013 and 6 months KIBOR + 2.5% per annum for remaining period.

Certain conditions precedent to the restructured agreement are not yet fulfilled, management of the

Company is taking steps to fulfill those conditions. Once conditions precedent to restructured

agreement are fulfilled, bank will formally issue letter to the Company which will complete the

restructuring process.


all current assets) and present and future current/ fixed assets (movable and immoveable), pledge

over fully paid ordinary shares (entire present and future) owned by the Company in Wateen WiMAX

(Private) Limited and owned by WTI in the capital of the Company, a corporate guarantee from Warid

Telecom International LLC and undertaking from shareholders from WTI for retaining the

shareholding and control of WTI.


Note


7.4 The Company obtained term finance facility of USD 65 million (2015: USD 65 million) from Motorola

Credit Corporation (MCC) of which USD 64 million (2015: USD 64 million) has been availed till June

30, 2016. On August 19, 2011, MCC has transferred all of its rights, title benefits and interests in the

original facility agreement to Deutsche Bank AG as lender, effective August 19, 2011. During the year

ended June 30, 2012, the Company and Deutsche Bank AG signed an agreement to restructure the

terms of loan agreement. Amount outstanding at June 30, 2016 is USD 48 million (2015: USD 48

million). The principal is repayable in ten semi annual installments commencing from July 1, 2014

until and including the final maturity date which is December 31, 2019. The rate of mark-up is six

month LIBOR + 1% per annum provided that rate shall be capped at 2.5% per annum. If the

Company fails to pay any amount payable on its due date, interest shall accrue on the unpaid sum

from the due date up to the date of actual payment at a rate which is 2% higher than the rate of

interest in effect thereon at the time of such default until the end of the then current interest period.

Thereafter, for each successive interest period, 2% above the six-month LIBOR plus margin provided

the Company is in breach of its payment obligations hereof.

7.5

8.

The loan is secured through personal guarantee by one Sponsor of the Company and is ranked pari

passu with unsecured and unsubordinated creditors.

As explained in note 2(iii), the Company is in negotiation with the lenders to restructure the above

finance facility.

This represents long term finance provided by Dhabi One Investment Services LLC to fulfil

requirements of MTA and is a subordinatedloan to be repaid in twelve equal semi annual installments

commencing from March 1, 2018. The rate of mark-up is 6 months LIBOR + 1% payable on six

monthly basis. The interest shall be payablein arrears and no interest shall be payableuntil March 1,

2018, and till that date, interest shall be accumulated and thereafter be payable in cash accordingly.

Although the loan is subordinated to all secured finance facilities availed by WWL, yet the entire

amount has been classified as current liability as the financial statements of WWL are being

prepared on the management estimate that entity is a non- going concern.

The Company is required to make payments of loan installments and markup of long term finance on

due dates. The Company has not paid loan installments of ECGD amounting to USD 8.713 million

and loan installments of Deutsche Bank AG amounting to USD 16.334 million due till June 30, 2016.

Further, the Company was not able to make payments of markup to ECGD and Deutsche Bank AG

of Rs 59.160 million and Rs 91.81 million on due dates. Furthermore, certain applicable ratios

specified in the above loan agreements have not been maintained at June 30, 2016 and latest

restructured loan agreements have also not yet become effective as certain conditions precedent to

the restructured agreements are not yet fulfilled and the Company is obliged to prepay the

outstandingamounts in certain events mentioned therein.Accordingly, the lenders shall be entitledto

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 for at least twelve

months after the statement of financial position date, all liabilities under these loan agreements are

required to be classified as current liabilities. Based on above, loan installments for an amount of Rs

12,212 million due after June 30, 2017 have been shown as current liability.

Term finance from associated company - unsecured


Note 2016 2015

9. Long term portion of deferred mark up


2,955,551

Dubai Islamic Bank (DIB) 9.2 98,854

55,738

Dhabi One Investment Services LLC (DOIS) 9.3 13,045

5,777

Total 4,069,768 3,017,066


Amount payable within next twelve months - -

Amount due after June 30, 2017 (4,069,768) (3,017,066)

9.4 (4,069,768) (3,017,066)

- -


9.1

i)

ii)

iii)

iv)

9.2

i)

ii)

9.3

As explained in note 7.1, the markup (deferred payments) has been restructured under the second

amendatory agreement. The deferred payments are payable in following order of priority and sequence:

Deferred payment of Rs 1,023 million pertaining to the period of January 1, 2011 till June 30,

2013 shall be paid in seven unequal six-monthly installments starting from April 1, 2025 and

ending on April 1, 2028;

Deferred payment at 8% per annum for the period from July 1, 2013 till March 31, 2014 shall be

paid in four unequalsix-monthly installments starting from April 1, 2028 and ending on October

1, 2029;

Deferred payment at 5% per annum for the period from April 1, 2014 upto final due date under

second amendatory agreement shall be paid in two unequal installments due on October 1,

2029 and April 1, 2030; and

After payments of all amounts above, the deferred payment at 4% per annum for the period of

July 1, 2013 till March 31, 2014 and at 7% per annum for the period from April 1, 2014 upto final

date under second amendatory agreement shall be payable as a bullet payment in the year

2030 subject to availability of the excess cash generated by the Company.

Markup calculated at 5% per annum for the period from commencement date till October 1,

2024 shall be paid in eleven six-monthly installments starting from April 1, 2025 and endingon

April 1, 2030; and

As explained in note 7.3, the markup (deferred payments) has been restructured. The markup is

payable in the following sequence:

Markup at 7% per annum shall be paid as a bullet payment in the year 2030 subject to

availability of the excess cash generated by the Company.

This amount is payable in six-monthly installments commencing from March 1, 2018. As the loan

associated with markup is classified as current liabilityas referred to in note 8, the entire amount has

been classified as current liability.

9.4 As explained in note 7.5, the entire amount has been shown as current liability.


10. Long term finance from shareholders - unsecured

Note 2016 2015

Facility 1 10.1 2,515,418 2,443,343

Facility 2 10.2 11,526,039 10,891,265

14,041,457 13,334,608

10.1

10.2

The Company obtained long term finance from a shareholder amounting to USD 24 million (2015:

USD 24 million). This loan is subordinated to all secured finance facilities availed by the Company.

This loan is repayablewithin 30 days of the expiryof a period of five years from the last date the lender

has disbursed the loans, which shall be on or about January 29, 2015. The rate of mark-up is 6

months LIBOR + 1.5% with 24 months payment grace period payable half yearly. Alternatively loans

may be converted into equity by way of issuance of the Company's ordinary shares at the option of the

lender at any time prior to, at or after the repayment date on the best possible terms but subject to

fulfillment of all legal requirements at the cost of the Company. The said conversion of loan shall be

affected at such price per ordinary share of the Company as shall be calculated after taking into

account the average share price of the last 30 calendar days, counted backwards from the conversion

request date, provided that such conversion is permissible under the applicable laws of Pakistan.

This loan together with accrued interest will have at all times priority over all unsecured debts of the

Company except as providedunder Law. In the event the Company defaults on its financial loans or in

case Warid Telecom International LLC, Abu Dhabi, UAE, no longer remains the holding company of

the Company and sells its 100% shares to any other person or party or relinquishes the control of its

management then, unless otherwise agreed in writing by the lender, the entire loan together with the

accrued interest will become due and payable for with and shall be paid within 15 working days of the

event of default or decision of the Board of Directors of the Company accepting such a change in the

shareholding as the case may be, and until repaid in full, the loan shall immediately become part of

financial loans, rankingpari passu there with subject to the consent of the Company's existing financial

loan providers. As the loan is subordinated to all secured finance facilities availed by the Company,


The Company has obtained long term finance facility from a shareholder amounting to USD 185

million (2015: USD 185 million) of which USD 110 million (2015: USD 107 million) has been availedat

June 30, 2016. The rate of mark-up is 6 months LIBOR + 1.5% payable half yearly. The Company

shall repay the loan in full in five equal annual installments from June 30, 2014 with final maturity date

of June 30, 2018. Alternatively the lender shall also have the option to instruct the Company any time

during the term of this agreement to convert the remaining unpaidamount of the loan and the interest

in part or in its entirety into equity by way of issuance of ordinary shares of the Company in favour of

the lender in compliance with all applicable laws of Pakistan.


Upon the request of the Company for conversion of the loan and the interest into equity, the lender and

the Company shall, with mutual consent, appoint an independent auditor to determine the fair market

value per share of the borrower prevailingat the time of such request. lf the lender agrees to the price

per share as determined bythe independent auditor then the loan and the interest shall be converted

into equity at the rate per share decided by the independent auditor. In case the lender, in its sole

discretion, disagrees with the price per share as determined by the independent auditor then the

request for conversion shall stand revoked and the loan shall subsist.

The loan together with the interest shall have priority over all other unsecured debts of the Company.

Further, after the execution of this agreement, the Company shall not avail any other loan or funding

facility from any other source without prior written consent of the lender. The Company undertakes

that it shall not declare dividends,make any distributions or pay any other amount to its shareholders

unless the repayment of the loan and the interest in full to the lender. The rights of the lender in

respect of the loan are subordinated to any indebtedness of the Company to any secured lending by

any financial institution in any way, both present and future notwithstanding whether such

11. Medium term finance from an associated company - unsecured


13. Deferred grants

Movement during the year is as follows:

Note 2016 2015

Balance at beginning of the year -

excluding amount receivable 2,599,101 2,555,221

Amount received during the year 112,204 222,110

Amount receivable at year end - net - 634,857

Amount recognised as income during the year 33 (143,561) (178,230)

Balance at end of the year 2,567,744 3,233,958


This represents amount received and receivable from Universal Service Fund (USF) as subsidy to

assist in meeting the cost of deployment of USF Fiber Optic Network for providing USF Fiber Optic

Communication Services in Sindh, Baluchistan, Punjab and broad band services in Faisalabad

Telecom Region, Hazara Telecom Region and Gujranwala Telecom Region. USF Fiber Optic Network

and broad band network will be owned and operated by the Company. Total amount of USF contracts

is Rs 3,740 million (2015: Rs 4,022 million) payable by USF in five installments in contracts with

project implementation milestones.

The Company has obtained an aggregate medium term finance facility of Rs 600 million from an

associated company Taavun (Pvt) Limited. As per the terms of loan agreement, this loan is

subordinated to all secured finance facilities availed by the Company. The principal was repayable

within 30 days of the expiry of twenty four months from the effective date i.e. September 30, 2010,

which was further extendableto twelve months. The rate of mark-up is six month KIBOR + 2.5% with

24 months grace period payablequarterly. As the loan is subordinatedto all secured finance facilities

availed by the Company, the entire amount of loan has been classified as non current liability.

These represent security deposits received from customers. These are interest free and refundable

on termination of relationship with the Company.

indebtedness is recoverable by process of law or is conditional or unconditional.Furthermore, in the

event that insolvency proceedings are initiated against the Company or that it is unable to pay its

Financial Loans as they fall due or if the Company has proposed any composition, assignment or

arrangementwith respect to its Financial Loans, the obligationto repay the outstandingamount of the

loan shall be subordinated to the Financial Loans but will have priority over all other unsecured debts

of the Company. As the loan is subordinatedto all secured finance facilities availedby the Company,



2016 2015

14. Short term running finance - secured

Facility - II 14.1 765,512 787,135

765,512 787,135

14.1 The Company has a cash finance facility of Rs 790 million (2015: Rs 790 million) of which Rs 24.488

million (2015: Rs 2.865 million) was unutilised as at June 30, 2016. The facility is available till

December 31, 2016. Markupon the facility is to be serviced on quarterly basis. The rate of mark-up is

3 months KIBOR + 1% per annum.



2016 2015Note

15. Trade and other payables

Creditors 647,185 617,038

Due to associated companies 15.1 42,727

41,382

Due to international carriers 403,082

1,088,924

Payable to Pakistan Telecommunication Authority 619,265

584,535

Accrued liabilities 2,827,055

2,661,259

Payable to provident fund 76,272

75,343

Unearned revenue 35,435

39,207

Advance from customers 15.2 194,099

907,087

Workers' Welfare Fund 569

794

Security deposits 14,676 20,786

Sales tax payable 98,045 -

Income tax deducted at source 210,712 138,306

Others -

4,463

5,169,120 6,179,124

15.1 Due to associated companies


17,521

Warid Telecom International LLC, UAE - Parent Company 24,563

23,861

Warid Telecom 1,232

-

42,727

41,382

15.2 Advance from customers

2016 2015Note

16. Interest / markup accrued

Long term finance from shareholders/ sponsors 1,357,967 922,616

Long term finance - secured 585,390 420,600

Long term finance - unsecured 8 - -

Medium term finance - unsecured 16.1 448,577 391,928

Short term running finance - secured 16.2 33,784 30,945

2,425,718 1,766,089

16.1

16.2


This includes markup payable to an associated company Bank Alfalah Limited amounting to Rs

13.197 million (2015: Rs 17.032 million).

This represents markup payable to an associated company Taavun (Private) Limited.

This includes advance of Rs Nil (2015: Rs 48.983 million) received from associated companies.


This facility is secured by lien marked on an amount of USD 8.44 million held under the name "Dhabi

One Investment Services LLC" maintained at Bank Alfalah.

17. Contingencies and Commitments

2016 2015

17.1 Claims against the Company not acknowledged as debt 478,665 355,157

17.2 Performance guarantees issued by banks on behalf

of the Company 1,410,309

1,261,677



17.3

17.4

17.5

Under the Access Promotion Regulations, 2005, the Company is liable to make payments of Access

Promotion Charges (APC) for Universal Service Fund (USF) within 90 days of close of the month to

which such payment relates. The Company has disputed the APC Regulations,2005 and the case is

currently pending with High Court. The Company has not recorded the penalty on delayed payment of

APC for USF amounting to Rs 1,469 million as required by the Access Promotion Regulations,2005

as the management and legal advisor of the Company are of the view, that the Company has a strong

case and chances of success are very high.

WWL under the terms of the MTA served the termination notice to Augere Holdings and claimed

certain expenditures as reimbursable to WWL on account of business consolidation not successful

as per MTA. In response to Company’s termination notice, Augere Pakistan (Pvt) Limited served

notice to WTL as acknowledgement of termination of MTA and claimed certain charges. WWL and

WTL, being a party to MTA, is in process of initiating arbitration proceedings for settlement of its

charges incurred under MTA.

Wateen along its wholly owned subsidiary Wateen WiMAX (Private) Limited (WWL) entered into a

Master Transaction Agreement (MTA) with Augere Holdings (Netherlands) B.V (Augere Holdings) on

December 4, 2013 for consolidationof their respective WiMAXbuisnesses in Pakistan. In furtherance

of the terms of MTA, the shareholders of Wateen in their Extra-Ordinary General Meeting held on

October 3, 2014 approved transfer of WiMAX related net assets as at July 10, 2014 to WWL for

consideration other than cash in accordance with the terms of share issuance agreement dated

September 9, 2014 between Wateen and WWL. During the year ended June 30, 2015, Wateen

transferred the assets and liabilities envisaged in the agreement to WWL.

However, during the year ended June 30, 2015, the subsidiary company WWL served a termination

notice under the MTA which has been acknowledged and accepted by a Pakistan subsidiary of Augere

Holdings without prejudice to any accrued rights and interests in the matter.

The management believes that no amount shall be payable by the Company upon completion of

related proceedings and accordingly, no provision is carried in these financial statements in this

respect.

The Deputy Commissioner InlandRevenue(DCIR), Enforcement Unit IV, Large Taxpayers Unit (LTU),

Islamabad issued Order-in-Original based on the observations of Director General Intelligence and

Investigation and raised a demand of Rs 31.830 million to be paid along with penalty and default

surcharge and also issued recovery notice. The Commissioner Inland Revenue - Appeals [CIR (A)]

and Appellate Tribunal Inland Revenue (ATIR) upheld the order of the DCIR. The Company filed

reference before the Honorable High Court whereby the case has been remanded to ATIR. The appeal

is pending for adjudication before the ATIR.

17.6 The Assistant Commissioner Inland Revenue (ACIR), Enforcement Unit IV, LTU, Islamabad, issued

show cause notices based on the observation that Company has not furnished sales tax and federal

excise returns for the periods from August 2009 to March 2010, November 2010 and December 2010.

In this respect, ACIR issued Order-in-Original and assessed demand of Rs 249.471 million

(calculated on the basis of allegedminimum liability)payable along with penaltyand default surcharge

and also issued recovery notice. The Company depositedprincipal amount of Rs 138.709 million and

default surcharge of Rs 26.231 million based on actual liabilityas per own working of the Company.

The ATIR, Islamabad remanded the case to the assessing officer with certain directions. The

Company submitted information in response to the related proceedings initiated by ACIR,

Enforcement-IV, LTU, Islamabad and proceedings are not yet concluded by the ACIR. As of now no

tax demand is in field and company foresees a favorable decision in reassessment proceedings.

17.7 The AdditionalCommissioner Inland Revenue, Audit - II, Large Taxpayers Unit, Islamabad (Add. CIR)

issued show cause notice dated June 6, 2014 whereby Add. CIR alleged the Company is claiming

inadmissible input tax, suppression of sale, non-paymentof sales tax on fixed asset, non-compliance

of sales tax special procedure withholding rules, penalty on late filing of sales tax and federal excise


17.8

17.9

17.10 DCIR raised tax demand for Rs 55 million for tax year 2013 on account of alleged non deduction of tax


Company has filed an appeal before CIR (A). The CIR (A) and ATIR both upheld the action of DCIR.

The Company also filed Misc. Applicationin the ATIR against the Orders of the ATIR. The Company is

in process of filling references before High Court on the premise that the payments made to foreign

operators falls under the ambit of business income and is exempt from withholding tax. Based on this

the Company foresees a favorable decision at higher appellate forums.

The ACIR issued notice to the Company for the period of July 2010 to June 2011 and confronted to

charge sales tax on the difference of sales reported in audited accounts and sales reported in monthly

sales tax returns and passed ex-parte order with demand of Rs. 1,048 million by the Company. The

Company filed appeal before CIR (A) and same was rejected. An appeal has been filed by the

Company with the ATIR which is pending for adjudicationand management believes that the case is

likely to be decided in the favor of Company.

The ACIR alleged that Company has not withheld tax from payments made to foreign telecom

operators during the tax years 2008, 2009, 2010 and 2011. Further the ACIR ordered the Company to

pay allegeddemand of Rs 477.767million representing principal amount and default surcharge for the

aforesaid tax years. The CIR (A) upheld the contentions of the assessing officer and directed the

assessing officer to recalculate the withholding tax by applying the rates as given in the Division II of

Part III of the First Schedule to the Income Tax Ordinance, 2001. The Company filed appeal before

ATIR, and same was rejected. The Company filed reference before the High Court and case was

remanded back for fresh proceedings. The proceedings were finalized by the assessing officer and a

demand of Rs 1,911 million was created. The Company preferred an appeal before CIR (A) and CIR

(A) remanded the case to DCIR. The DCIR raised demand of Rs 1,131 million against which the

Company preferred appeal before CIR (A) who upheld the orders of DCIR. The Company preferred

appealagainst the aforesaid appellateorder in the ATIR, whereby ATIR up-held the decision of CIR (A)

regarding tax withholding on payments and has remanded the case to the officer for levy of

withholding tax on lower of treaty rates or the Ordinance rates. The Company is in process of filling

references before High Court on the premise that the payments made to foreign operators falls under

the ambit of business income and is exempt from withholdingtax. Based on this company foresees a

favorable decision from higher appellate forums.

returns and non-withholdingof federal excise duty on advertisementservices. The Company could not

furnish the requisite information to the Add. CIR because of fire affected records further; the

assessment was barred by time. The Add. CIR passed ex-parteorders and raised the demand of Rs

518 million along with penalty and default surcharge. The Company filed appeal before CIR (A) and

same was rejected. Being aggrieved with the order, appealwas filed before ATIR and ATIR confirmed

the order passed by CIR (A). Resultantly, the Company filed reference application before High Court

which is pending and management believes the same is likely to be decided in the favor of Company.

17.11

17.12 The Assistant Commissioner - I, Sindh RevenueBoard, disallowed input tax claim of the Company for

the months of March 2014 to June 2014 and raised a demand of Rs 66 million. The Company filed

appeal before Commissioner Appeals however, no appellate order is received to-date. Certain related

evidence has been provided by the company in support of its contention and company foresees a

favorable decision at appellate forums.

DCIR raised tax demand for Rs 133 million in respect of tax year 2014 for alleged non deduction of tax


Company preferred appeal before the CIR (A) against the orders of the DCIR. The CIR (A) remanded

the case to the DCIR with the direction to charge the withholding on the actual payment and not on the

amount of expense but has confirmed the levy of withholding tax. No appeal effect notice has been

issued as yet. The Company also preferred appeal against the order of the CIR (A) in ATIR and the

same is pending. The payments made to foreign operators falls under the ambit of business income

and is exempt from withholding tax. Based on this company foresees a favorable decision at higher

appellate forums.

17.13

17.14

17.15

17.16

17.17

The OIR also levied minimum tax under section 113 of the Income Ordinance, 2001 for tax years

2010, 2011, 2012 & 2013 by rejecting the stance of Company of gross loss. The Company preferred

appeals against the aforesaid orders before CIR (A) and same were rejected by the CIR (A) for tax

year 2010 and 2012. The Company preferred appeal before the ATIR and same was also rejected. As

per Income Tax Ordinance 2001 the above mentioned section is not applicablein case of gross loss

of that particular year by the company. Company has filed reference applications before High Court

and is likely to be decided in the favor of Company.

DCIR issued notice to the Company and required to provide the details of tax deduction while making

payment of finance cost for the year ended June 30, 2012. Subsequently, the DCIR raised a demand

of Rs 253 million on gross amount of finance cost paid. The Company contended that DCIR did not

consider the impact of exchange loss and bank charges. Appeal was filed before CIR (A) and

rectification application before DCIR. The CIR (A) remanded the case to DCIR for fresh proceedings.

As of now no tax demand is in field and likely to be concluded in favor of Company.

In relation to financial years 2008 and 2009 of WSPL, FBR contended to levy sales tax and federal

excise duty of Rs. 113.30 million. WSPL paid Rs. 10.98 million under amnesty scheme against such

order. An appeal was filed before Commissioner Inland Revenue Appeals which upheld the demand

raised by the Department. WSPL preferred appeal before Appellate Tribunal Inland Revenue (ATIR)

and the ATIR vide its order vacated the demand and remanded back the issue to the assessing officer

with certain directions and the related proceedings are yet to be finalized.

In relation to financial year 2008 the Additional Commissioner Inland Revenue raised demand of Rs.

173.8 million by contending that exports of WSPL shall be taxed at the rate of 35% and also

disallowed certain provisions amounting Rs. 21.35 million. WSPL filed its reply and took the plea that

the notice dated 19, June 2014 is barred by time and also furnished the related information. WSPL

obtained stay from the High Court against the aforesaid demand and preferred an appeal before

Commissioner Inland Revenue Appeals. The appeal has been decided in the favor of WSPL and

Commissioner Inland Revenue has ordered OIR for calculation of time limitation in accordance with

the provision of section 122(2) from the date of filing of return.

The Officer Inland Revenue, Audit - V, Large Taxpayers Unit, Islamabad (OIR) issued orders and

raised income tax demand of Rs 163 million relating to tax years 2008, 2009, 2011, 2012 and 2013 by

holding that the taxes paid under section 148 (7) on imports of the Company are not adjustable

against the income tax liability as the Company is not covered under the definition of industrial

undertaking. The Company preferred appeal before CIR (A) who upheld the order of OIR,

consequently Company has filed appeal before ATIR. The ATIR has rejected Company's appeal for

tax year 2009 and 2013. The Company is in process of filling of references before High Court.


17.18

17.19 The Deputy Commissioner Inland Revenue (DCIR) issued show cause notice under section 161/205

of the income tax ordinance 2001 (the Ordinance) on account of short withholding tax for the tax year

2014 and raised demand of Rs 23.7 million. WSPL furnished the requisite information along with the

copies of CPR's as required in show cause notice. The DCIR did not pass any order in this respect

so far.

The Officer Inland Revenue,Audit - V, Large Taxpayers Unit, Islamabad issued show cause under the

provisions of section 122 (5) of the Ordinance for the amendment of assessment for tax year 2009 of

WSPL on account of non-withholding of taxes on salaries, services purchased and incorrect

apportionment of expenses. WSPL furnished the related information/details in response to show

cause notice. The OIR did not acceded to WSPL's submissions and raised the income tax demand of

Rs 43.322 million. WSPL preferred appeal before the CIR Appeals. WSPL also filed rectification

application under section 221 of the Ordinance on account of incorrect apportionment and restriction

of credit of taxes paid. The Commissioner Inland Revenue remanded the case to the OIR for denovo

consideration. No further proceedings were initiated by the OIR as yet.


17.20

17.21

2016 2015


17.22 Outstanding commitments for capital expenditure 735,344 754,677

No provision on account of contingencies disclosed in note 17.3 - 17.21 above has been made in

these financial statements as the management and advisors of the Company are of the view, that

these matters will eventually be settled in favour of the Company.

WSS's case for tax year 2013 was selected for tax audit under section 214C of the Income Tax

Ordinance, 2001 through random computer ballot. The DCIR requested the Company to furnish

information and the Company providednecessary information/details.The DCIR after considering the

Company's submissions passed orders on December 31, 2014 and raised the income tax demand of

Rs 6,627,494.The Company filed the rectification application against the aforesaid orders by

contending that the adjustment of current tax year and prior period's tax losses were not allowed and

the DCIR has not allowed the credit of prior period tax refund. The DCIR while disposing off the

rectification application restricted the income tax demand to Rs 3,536,000 and adjusted the current

and prior period tax losses from the taxable income.The Company has preferred an appeal before the

CIR (Appeals) which is pending for adjudication.

The Deputy Commissioner Inland Revenue (DCIR), Large Taxpayers Unit (LTU), Lahore issued notice

under section 161/205 of the Income Tax Ordinance, 2001 (the Ordinance) and required WSS to

provide the related proof of withholding taxes. WSS contended that the jurisdiction of WSS rests with

Regional Tax Office, Islamabad and not with the LTU Lahore. The DCIR proceeded ex-parte and

levied the tax of Rs 57 million. WSS preferred appealbefore the CIR (Appeals)and after due hearings,

the CIR (Appeals), remanded the case back to the DCIR. The DCIR initiated the proceeding under

section 124 of the Ordinance on June 12, 2015 and fixed the compliance for June 19, 2015. WSS filed

request for extension in time for 15 days. The DCIR did not concur to WSS's request and proceeded

to pass an exparte order and again levied the demand of Rs 57 million. WSS has preferred appeal

before the Commissioner Appeals which is pending for adjudication.


18

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18.1

18.2

2016 201519. Capital work in progress

Note

Lease hold improvements 2,509

7,882

Line and wire 917,838

1,405,211

Network equipment (net of impairment of DSL assets

Rs 384.908 million) 108,468

93,499

1,028,815

1,506,592

19.1 Movement during the year

Balance as at July 1 1,506,592

1,548,633


1,353,857

Reclassified from / (transferred) to disposal group

classified as held for sale -

26,790

Capitalised during the year (1,403,138)

(1,391,295)

1,028,815

1,537,985

Provision for impairment of capital work in progress 19.2 -

(31,393)Balance as at June 30 1,028,815

1,506,592

19.2 Provision for impairment of capital work in progress


Provision made during the year - 31,393Closing balance 384,908 384,908


The cost of fully depreciated assets which are still in use as at June 30, 2016 is Rs 6,246 million

(2015: Rs. 6,246 million).

This includes assets amounting to Rs 284 million (2015: Rs. 284 million) which are under the use

of third party.

2016 2015Note

20. Intangible assets

LDI license fee 20.1

Cost 28,934 28,934

Amortisation


14,348

Amortisation for the year 1,447

1,447

(17,242)

(15,795)


13,139

WLL license fee 20.2

Cost

Opening Balance 193,366 176,366

Additions during the year -

17,000

Closing Balance 193,366

193,366

Amortisation


64,586

Amortisation for the year -

18,709

(83,295)

(83,295)


110,071

Less: Provision for impairment of WLL License (110,071) (110,071)

-

-

Software license 20.3

Cost

Opening Balance 151,671 84,417

Additions during the year - 67,254

Closing Balance 151,671 151,671

Amortisation


Amortisation for the year 5,829 16,661

(88,743) (82,914)

NBV - Software license 62,928

234,585

Less: Provision for impairment (59,408) (59,408)


175,177

Goodwill

Goodwill arising on acquisition of

Netsonline Services (Pvt) Limited 20.4 5,766

5,766

Less: Provision for impairment of goodwill (5,766)

(5,766)

-

-

Goodwill arising on acquisition of

Wateen Solutions (Pvt) Limited 20.5 11,333 11,333

Goodwill arising on business acquisition

by the subsidiary company 20.6 83,018 83,018

94,351 94,351

Total net book value 109,563 392,738




20.1

20.2 (i)

(ii)

(iii)

20.3

20.4

20.5

20.6 Goodwill

20.6.1

20.6.2

Revenue growth

Pakistan Telecommunication Authority (PTA) granted Long Distance International(LDI) license for

a period of 20 years from July 26, 2004.

PTA granted Wireless Local Loop (WLL) License for a period of 20 years from December 1,

2004 covering twelve telecom regions. This includes license granted by PTA for WLL for a

period of 20 years for Azad Jammu and Kashmir (AJK) region. Commercial operations of

AJK region have not yet commenced.

PTA granted WLL license for a period of 20 years to WSPL, from November 4, 2004. On

August 31, 2006 the license was transferred by WSPL to the Company covering four telecom

regions.

During the year ended June 30, 2015, Wireless Local Loop (WLL) License has been

transferred to wholly owned subsidiary WWL.

Impairment testing of goodwill

The goodwill resulting from acquisition of National Engineers (AOP) by WSPL as on January 1,

2007. The amount represents the excess of cost of acquisition over the fair value of identifiable

assets and liabilities of National Engineers (AOP) as at the date of acquisition.

Software license is amortised over a period of 5 years.

The goodwill resulting from acquisition of WSS by the Company effective August 2, 2006. The

amount represents the excess of cost of acquisition over the fair value of identifiable assets and

liabilities of WSPL as at the date of acquisition.

The Company acquired 49% shares (397,027 fully paid ordinaryshares of Rs 100 each) of WSPL

for Rs 85 million, effective November 14, 2014.

The goodwill resulting from acquisition of Netsonline Services (Pvt) Limited by Wateen Telecom

Limited effective July 1, 2008. The amount represents the excess of cost of acquisition over the

fair value of identifiableassets and liabilities of Netsonline services (Pvt) Limited as at the date of

acquisition, which was impaired in 2011.

Goodwillacquired through business combination has been tested for impairment. The recoverable

amount has been determinedbased on a value in use calculation using cash flow projections from

the financial budgets approved by the Board covering a five-yearperiod. The discount rate applied

to cash flow projections is 12% (2015: 13%) per annum, which is the expected rate of return

required by the Company.

Key assumptions used in value-in-use calculations

The calculation of value-in-use is most sensitive to the following assumptions:

Growth in revenues have been projected after taking into account order backlogs and follow on

orders and best estimates. The management believes that these assumptions are reasonable

considering the current market dynamics and their expectation of market conditions going forward.


21. Deferred income tax asset 2016 2015

Deductable temporary differences on account of provisions 22,947

8,254

Tax Year (Rupees in million)

2017 2

2018 1,739

2019 516

2020 1,037

2021 816

2022 789

Tax Credits

2020 53

2021 272


Key business assumptions

Discount rates

These assumptions are important, as well as using industry data for growth rates, management

assesses how the position might change over the projected period and ready to trade off amongst

various revenue options to meet the desired results.

Managementbelieves that reasonable possible changes in other assumptions used to determine

the recoverable amounts will not result in an impairment of goodwill.

Sensitivity to changes in assumptions

The discount rate reflects management estimates of the rate of return required by the parent company.

These mainly represent the security deposits paid to domestic interconnect operators and

government authorities on account of utilities and suppliers on account of rent, DPLC and satellite

bandwidth.

The aggregatetax losses availableto the Company for set off against future taxableprofits at June

30, 2016 amounted to Rs 30,938 million. Of these, losses aggregating Rs 5,314 million have been

recognized in the financial statements against taxable temporary differences at June 30, 2016.


Deferred tax asset, the potential tax benefit of which amounts to Rs 11,751 million has not been

recognized on balance representing business losses aggregating to Rs 4,899 million, tax

depreciation losses aggregating Rs 20,712 million, tax credit aggregating to Rs 325 million,

decelerated tax depreciation and amortisation on operating and intangible assets of Rs 2,813

million and deductible temporary differences on account of provisions and share issue cost

aggregating Rs 9,664 million as at June 30, 2016. Business losses expire as follows:


23. Long term prepayments

2016 2015Note

24. Trade debts - unsecured

Considered good 24.1 2,773,208 2,907,326

Considered doubtful 1,578,874 1,193,272

4,352,082

4,100,598

Provision for doubtful debts 24.4 (1,578,874)

(1,193,272)

Long term trade debts (634,447)

(523,325)

2,138,761

2,384,001

24.1 Trade debts include following balances due from associated companies:

Warid Telecom (Pvt) Limited 374,468

224,297

Warid International LLC, UAE - Parent company -

101,500


44,063

Alfalah Insurance Company 17,795

11,578

INOV8 Limited 5,231

2,131

522,524

383,569

24.2

2016

Total future Present value

payments

Current portion

Not later than one year 135,815 100,164 35,650

Long term portion

543,260

333,743

209,517


398,710

424,929

1,366,899

732,453

634,447

1,502,714 832,617 670,097

2015

Current portion

Not later than one year 121,180

91,095

30,085

Long term portion


307,909

176,809


318,770

346,516

1,150,004

626,679

523,325

1,271,184

717,774

553,410

24.3 Age analysis of trade debts from associated companies, past due but not impaired is as follows.

2016 2015

0 to 6 months 88,313 219,1176 to 12 months 198,382 18,082Above 12 months 235,829 146,370

522,524 383,569

Between one and five years


Unearned

Interest


These mainly represent long term portion of right of way charges paid to local governments and

various land owners for access of land.


Trade debts include receivable under finance lease of optic fiber cable and telecom equipment as


2016 2015

24.4 Provision for doubtful debts

Related parties

Opening balance - -

Provision made during the year - related parties 101,500 -


-

Other parties

Opening balance 1,193,272

1,046,692

Provision made during the year - other parties 335,618

Reversal of provision made during the year - other parties (51,516)

146,580

Closing balance 24.4.1 1,477,374

1,193,272

1,578,874

1,193,272

24.4.1

2016 2015

25. Stores, spares and loose tools Note

736,978 858,576

Less: Provision for obsolete stores 25.1 (341,842) (356,686)

Store & spares written off (16,599)

378,537 501,890

25.1 Provision for obsolete stores


Provision made during the year 85,231 144,420

(Reversal)/Provision for the year (100,075) - Closing balance 341,842 356,686

26. Stocks

23,208

25,144 Less: Provision for obsolete stocks 26.1 (14,495) (13,513)

8,713 11,631

26.1 Provision for obsolete stocks


Provision made during the year 4,725 1,397

Write-off during the year (3,743) -Closing balance 14,495 13,513


- Balances over 360 days past due - 100 %

Cost

Cost

These include Rs 1,569 million (2015: Rs 1,285 million) based on age analysis of the debts as

follows:

- Balances 181 - 360 days past due - 50 %


-


2016 2015Note

27. Advances, deposits, prepayments and other receivables

Advances to suppliers and contractors - considered good 823,393 761,791Advances to employees - considered good 10,745 40,855Security deposits and earnest money 198,160 173,212

194,424 344,500Prepayments 27.1 88,910

88,562Sales tax refundable 71,765

254,635Due from associated companies 27.2 614,869

445,018Accrued interest 11,107

10,760Government grant receivable -

634,857Receivable from gratuity fund 10,086

5,582Others 152,303

125,7402,175,763

2,885,512Less: Provision for doubtful receivables - related parties 27.3Opening balance 194,534

171,654Provision for the year - charged against finance income 17,208

22,880Closing balance 211,742

194,534


150,397

Provision for the year 76,560

517,833Closing balance 744,790

668,230

956,532 862,764

1,219,231

2,022,748

27.1

2016 2015

27.2 Due from associated companies

Wateen Multi Media (Pvt) Limited 228,263

207,555Warid International LLC, UAE - Parent company 83,019

70,012Raseen Technologies (Pvt) Limited 27,844

25,877Warid Telecom Georgia Limited 23,459

21,820Warid Telecom International - Bangladesh 8,504

7,909Advance for construction of Warid Tower 68,916

68,916 INOV8 Limited 174,198

42,929 Wateen Malaysia 666

-

614,869

445,018

27.3


Warid International LLC, UAE - Parent company 83,019 70,01227,844 25,877

23,459 21,8208,504 7,909

211,742 194,534

Provision for doubtful receivables includes provision for doubtful

receivables from following related parties:


Margin held by bank against letters of guarantee

Less: Provision for doubtful receivables - other parties

These include current portion of right of way charges of Rs 17.773 million (2015: Rs 17.036 million).


Warid Telecom - International

Provision for doubtful receivables was approved by shareholders of Wateen in Extra Ordinary

General Meetings held on December 31, 2011 and October 3, 2014.

Raseen Technologies (Pvt) LimitedWarid Telecom - Georgia Limited


2016 2015Note

28. Cash and bank balances

Balance with banks on

- current accounts 242,742 84,404

- collection accounts 27,728 17,378

- deposit accounts 113,753 105,299

Cash in hand 354 253384,577

207,334

28.1

28.2

28.3

2016 2015

Represented

29. Revenue

Gross revenue 29.1 8,065,448

6,611,040

Less: Sales tax / Federal excise duty 497,630

501,893

7,567,818

6,109,147

29.1

2016 2015

30. Cost of sales

LDI Interconnect cost 1,888,883

1,017,078

Leased circuit charges 146,007

142,159

Contribution to PTA Funds 91,256 65,887

PTA regulatory and spectrum fee 46,930 32,189

Cost associated with IRU of Optic Fibre Cable 273,007 154,090

Operational cost 1,242,735 1,558,540

Repair and maintenance 361,311 181,632

Bandwidth cost of VSAT services 221,187 268,759

LTE Equipment - 206,306

Others 309,217 392,5994,580,533 4,019,239


This includes an amount of Rs. Nil million (2015: Rs. 560 million) representing the Company's share of

gross revenue from the incoming internationalvoice traffic, generated under the InternationalClearing

House (ICH) arrangement. In accordance with PTA's directive of August 23, 2012, an agreement was

signed on August 30, 2012 amongst Long Distance International(LDI) operators operating in Pakistan

to establish the ICH for Internationalincoming voice traffic terminating in Pakistan. Under the terms of

the agreement, one operator was selected as the internationaloperator. The agreement was approved

by the Ministry of Informationand Technology (MoIT)and became operationalwith effect from October

1, 2012. Under the agreement, the Company had a net share equal to its allocatedpercentage in total

gross revenueof ICH,along with related costs. On February24, 2015, the HonorableSupreme Court of

Pakistan ordered to cancel the ICH arrangement. Accordingly, the operations of ICH were terminated

with immediate effect by the Company.


Cash and bank balances include foreign currency balances aggregatingUSD 2.376 million and GBP

0.091 million (2015: USD 0.082 million and GBP 0.088 million).

Bank balances on deposit accounts maintainedin Rupees carried interest at an averagerate of 5%-8%

per annum (2015: 5%-8% per annum).

Bank balances amounting to Rs 32.624 million were under lien with banks (2015: Rs 30.620million).


Note


2016 2015Note

31. General and administration expenses

Salaries, wages and benefits 31.1 1,104,553 1,189,236

Rent 82,845 97,610

Repairs and maintenance 6,481 9,456

Vehicle repairs and maintenance 6,087

20,007

Travel and conveyance 15,011

39,385

Postage and stationery 7,963

11,917

Auditor's remuneration 31.2 7,366

10,966

Legal and professional charges 49,466

59,596

Communication expenses 18,127

18,583

Employee training 3,276

3,399

Customer services charges 37,399

79,938

Fees and subscription 4,012

10,538

Insurance 36,898

40,206

Entertainment 10,264

13,710

Utilities -

48,966

General office expenses 44,793

104,042

Others 2,610

7,018

1,437,151

1,764,573

31.1

2016 2015

31.2 Auditor's remuneration

Note

Annual audit 3,373

2,560

Audit of consolidated accounts and review of half

yearly accounts 300

Tax services 3,898

7,994

Out of pocket expenses 95

112

7,366

10,966

32. Provisions

Provision for doubtful trade debts 24.4 437,118

146,580

Provision for doubtful advances and other receivables 27 76,560

517,833

(Reversal) / Provision for obsolete stores 25.1 (14,844)

144,420

Provision for obsolete stocks 26.1 4,725

1,397

503,559

810,230

33. Other income / (expenses)

Government grant recognised 13 143,561 178,230

(Loss)/Gain on sale of operating assets (101,662) 10,934

Write back of liability 516,690 407,799

Other income 34,516 8,143

Workers' Welfare Fund charge for the prior year (569) (794)

Other Expenses (1,818) -

Stores and spares write off (16,599) -574,119 604,312

These include charges against employee's retirement benefits as referred to in note 41.



-


2016 2015Note

34. Finance cost

Markup on long term and medium term finance 34.1 1,670,032 1,372,007

Amortization of ancillary cost of long term finance 29,540 52,708

Mark up on short term borrowings 34.2 55,127 88,471

Finance cost of leased assets -

25

Bank charges, commission, fees and other charges 38,019

49,527

Late payment charges on other payables 70,937

1,967

Exchange loss 660,119

584,262

Others 34.3 -

104,8902,523,774

2,253,857

34.1

34.2

34.3 These represent charges paid in relation to termination of USF CTR Project.

2016 2015Note

35. Finance income

Finance income on lease 103,063

95,244

Markup on advance to associated companies 30,540

43,800

Provision of markup on advances to associated companies 27 (17,208)

(22,880)

13,332

20,920

Income on bank deposit accounts 1,922

14,805118,317

130,969

36. Income tax expense

Current

- prior year (4,394)

(622)

- for the year 468,244

83,808

Deferred tax

- prior year credit (14,694)

(8,254)449,156 74,932

37. Reconciliation of tax charge % %

Applicable tax rate 32 33

Tax effect of (income)/expense that are

not allowed for tax purpose (30) (1)

Deferred tax asset on unused tax loss not recognised (30) (33)Average effective tax rate (28) (1)

This includes markup related to an associated company of Rs 55.127 million (2015: Rs 75.993 million).



This includes markup related to long term finance from shareholders of Rs. 303.257million (2015: Rs.

238.687 million), medium term finance from an associated company of Rs 56.649 million (2015: Rs

74.279 million) and markup related to associated company of Rs 163.274 million (2015: Rs 157.643).


38. Financial instruments by category

38.1 Financial assets and liabilities

Total

2016

Financial assets

Maturity up to one year

Trade debts-net of provision 2,138,761 2,138,761


Advances, deposits and other receivables 1,051,718 1,051,718

Bank balances 384,223 384,223

3,750,636 3,750,636



Long term trade debts 634,447 634,447

1,114,207 1,114,207

Total

Financial liabilities



Short term running finance - secured 765,512 765,512


Interest/mark-up accrued 2,425,718 2,425,718

12,783,891 12,783,891



Term finance from associated company - unsecured 314,100 314,100


Long term finance from shareholders-unsecured 14,041,457 14,041,457




31,273,314 31,273,314

Total

2015

Financial assets






4,103,241 4,103,241



Long term trade debts 523,325 523,325

991,972 991,972

Total

Financial liabilities



Short term running finance - secured 787,135 787,135


Interest/mark-up accrued 1,766,089 1,766,089

10,346,517 10,346,517



Term finance from associated company - unsecured 305,100 305,100


Long term finance from shareholders - unsecured 13,334,608 13,334,608




31,356,007 31,356,007





Loans and

receivables

Other

financial

liabilities

Loans and

receivables

Other

financial

liabilities


38.2 Credit quality of financial assets

2016 2015

Rating

Trade debts

A1+ 154,098 122,508

A1 109 10,248

A2 290 -

A-1 3,320 4,052

A-1+ 13,330 73,771

A-2 247 1,339

P-2 140 26

522,524 383,569

2,079,150 2,311,813

2,773,208 2,907,326

Advances, deposits and other receivables

Counterparties with external credit rating

A1+ 41,565 1,740

A-1+ 2,551 4,577

A1 125,000 1,000

A3 - -


420,335 273,364

462,267 891,237

1,051,718 1,171,918

Long term deposits

479,760 468,647

Bank balances

A1+ 330,744 151,985

A-1+ 36,975 14,659

A-1 16,530 26,396

P-1 1 14,041

384,249 207,081

39. Financial risk management

- Credit risk;

- Liquidity risk; and

- Market risk

Others

The Board of directors oversees how management monitors compliance with the Company's policies and procedures, and reviews the

adequacy of the risk management framework in relation to the risks faced by the Company. The directors are assisted in their oversight

role by InternalAudit. InternalAudit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results

of which are reported to the Board of Directors.


This note presents information about the Company's exposure to each of the above risks, the Company's objectives, policies and

processes for measuring and managing risk, and the Company's management of capital. Further, quantitativedisclosures are included

throughout these financial statements.

The credit quality of Company's financial assets assessed by reference to external credit ratings of counterparties determined by The

Pakistan Credit Rating AgencyLimited (PACRA), JCR - VIS Credit Rating Company Limited (JCR-VIS),Standard and Poor's and Moody's

and other international credit rating agencies are as follows:

The Company's policies are established to identifyand analyse the risks faced by the Company, to set appropriate risk limits and controls,

and to monitor risks. Management's policies and systems are reviewed regularly to reflect changes in market conditions and the

Company's activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and

constructive control environment in which all employees understand their roles and obligations.

The Board of Directors has overall responsibility for the establishment and oversight of the Company risk management framework. The

Board is also responsible for developing and monitoring the Company's risk management policies.



Others


The Company has exposure to the following risks from its use of financial instruments:

Others

Counterparties with external credit rating

39.1 Credit risk

2016 2015






Impairment losses

2016 2015

Gross Impairment Gross Impairment

Up to 3 months 1,050,395

-

572,612 -

3 to 6 months 385,560

-

282,522 -

6 to 9 months 859,826

235,927

552,729 128,745

Above 9 months 2,056,300

1,342,946

2,692,735 1,064,527

4,352,081

1,578,873

4,100,598 1,193,272

39.2 Liquidity risk

2016

Long term finance - secured 16,865,384 16,938,771 4,653,075 4,664,398 7,547,911

Term Finance from associated company - unsecured 314,100 314,100 - 314,100 -

Long term portion of deferred mark up 4,069,768 4,069,768 - - 4,069,768

Long term finance from shareholders - unsecured 14,041,457 21,884,998 - - 14,041,457


company - unsecured 600,000 600,000 - - 600,000

Long term deposits 35,680 35,680 - 35,680 -

Short term running finance - secured 765,512 765,512 765,512 - -

Trade and other payables 4,939,586 4,939,586 4,939,586 - -

Interest/mark-up accrued 2,425,718 2,425,718 2,425,718 - -

44,057,205 51,974,134 12,783,891 5,014,178

Company's exposure to credit risk is influenced mainly by the individualcharacteristics of each operator including the default risk of the

industry and country in which the operator works. Significant portion of the Company’s receivables is attributable to operators. Company

regularly monitors the status of receivables.

Credit risk is the risk of financial loss to the Company if a counter party to financial instruments fails to meet its contractual obligations,and

arises principally from the Company's receivable from customers, deposits, contract work in progress, advances, deposits and other

receivables and bank balances. The Company assesses the credit qualityof counterpartiesas satisfactory. The Company does not hold

any collateral as security against any of its financial assets. The Company limits its exposure to credit risk by investing only in liquid

securities.



The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the

statement of financial position date to the maturity date. The amounts disclosed in the table are contractual undiscounted cash flows

except for employee's retirement benefit obligations.

As June 30, 2016, the Company has financial assets of Rs 4,865 million (2015: Rs 5,095 million) and Rs 7,981 million (2015: Rs 7,893

million) unavailed borrowing facilities from financial institution.

Company ensures that it has sufficient cash on demand to meet expected cash outflows during its operating cycle. This excludes the

potential impact of extreme circumstances that cannot reasonablybe predicted, such as natural disasters. The Company's treasury aims

at maintaining flexibilityin funding by keeping committed credit lines. Further shareholders of the Company has provided financial support

in the form of long term finance to meet capital requirements of the Company. Managementbelieves the same support will continue in

future. Further, the Company has restructured the long term finance facilities and short term borrowings which will facilitate the Company

to greater extent to meet its obligations/ covenants under loan agreements.

Liquidity risk is the risk that Company will not be able to meet its financialobligations as they fall due. Company's approach to managing

liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and

stressed conditions, without incurring unacceptable losses or risking damage to Company’s reputation.

The Company has recorded an allowance for impairment in respect of advances, deposits and other receivables of Rs 957 million (2015:

Rs 863 million).

Above 5

years


Carrying

amount

Contractual

Cashflows

Carrying Amount

Less than 1

Year

Between 1

to 5 years

The aging of these trade debts at the reporting date is as follows:


26,259,136


2015

Long term finance - secured 16,624,016 16,726,943 2,560,463 6,957,669 7,105,884Term Finance from associated company - unsecured 305,100 305,100 - 305,100Long term portion of deferred mark up 3,017,066 3,017,066 - - 3,017,066Long term finance from shareholders - unsecured 13,334,608 21,255,300 - - 13,334,608Medium term finance from an associated -company - unsecured 600,000 600,000 - - 600,000Long term deposits 35,680 35,680 35,680 -Short term running finance - secured 787,135 790,000 787,135 - -Trade and other payables 5,232,830 5,232,830 5,232,830 - -Interest/mark-up accrued 1,766,089 1,766,089 1,766,089 - -

41,702,524 49,729,008 10,346,517 7,298,449 24,057,558

39.3 Market risk

a) Interest rate risk

b) Currency Risk

c) Fair value of financial instruments.

2016 2015

Trade debts - net of provision 2,773,208 2,907,326 Contract work in progress 175,934 339,764 Advances, deposits and other receivables 306,928 1,172,395 Bank balances 384,223 207,081 Long term deposits 479,760 468,647

4,120,053 5,095,213

Financial liabilities - Other financial liabilities

Long term finance - secured 16,865,384 16,624,016Term finance from associated company - unsecured 314,100 305,100

Long term portion of deffered mark up 4,069,768 3,017,066

Finance from supplier - unsecured 14,041,457 13,334,608Medium term finance from an associated company - unsecured 600,000 600,000Long term deposits 35,680 35,680Short term running finance - secured 765,512 787,135Trade and other payables 4,939,586 5,232,830 Interest / markup accrued 2,425,718 1,766,089

44,057,205 41,702,524

d) Capital risk management

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern and to maintain a

capital base to support the sustained development of its businesses.

Financial assets - Loans and receivable

The Company is exposed to currency risk on long term finance, bank balance and receivables / payables which are denominated in

currency other than the functional currency of the Company. Financial assets include Rs 1,618 million (2015: Rs 3,182 million) and

financial liabilities include Rs 22,847 million (2015: Rs 22,214 million) in foreign currency which were exposed to exchange risk.

At June 30, 2016, if the currency had weakened/strengthenedby 10% against US dollar with all other variablesheld constant, net loss for

the year would have been Rs 2,140 million (2015: Rs 1,903 million) higher/lower.

The carrying value of all financial assets and liabilities reflected in the financial statements approximate their fair values.

As the significant financialassets and liabilitiescarry variableinterest rates, Company's operatingcash flows are dependentof changes in

the market interest rates. Financial assets of Rs 326 million (2015: Rs 318 million) and financial liabilities of Rs 32,660 million (2015: Rs

31,754 million) were subject to interest rate risk.

At June 30, 2016, had interest rates been 1% higher/lowerwith all other variablesheld constant, net loss for the year would have been Rs

323 million (2015: Rs 314 million) higher/lower.

Above 5 years


The Company manages the capital structure in the context of economic conditions and the risk characteristics of the underlyingassets. In

order to maintain or adjust the capital structure, the Company may adjust the amount of dividendto shareholders, issue new shares or sell

assets to reduce debts. The Company is required to maintain debt equity ratio as specified in loan agreements and continuation of support

from majority shareholder is vital for the Company's operations. Under the terms of loan agreements, the Company can not declare

dividends, make any distributions or pay any other amount to its shareholders until the repayment of loan and the interest in full to the

lenders. Further, the Syndicate shall be entitled to designate one nominee to be appointed as director in the Board of directors of the

Company as referred in note 7.1.


Market risk is the risk of changes in market prices, such as foreign exchange rates and interest rates. The objective of market risk

management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

Carrying amount Contractual

CashflowsLess than 1 Year

Between 1 to

5 years

Carrying Amount


40. Offsetting of financial assets and financial liabilities

40.1 Financial assets subject to offsetting

As at June 30, 2016

Trade debts

Due from international carriers 1,113,738 781,294 332,444

1,113,738 781,294 332,444

As at June 30, 2015

Trade debts


518,947

2,646,725

Pakistan Telecommunication Authority 654,068 654,068 - Other trade receivables 503,773 503,773 -

4,323,513 1,676,788 2,646,725

40.2 Financial liabilities subject to offsetting

As at June 30, 2016


Due to international carriers 1,184,376 781,294 403,082

Creditors 780,611 133,426

647,185

1,964,987 914,720 1,050,267

As at June 30, 2015


Due to international carriers 1,607,871 518,947 1,088,924

Pakistan Telecommunication Authority 654,068 654,068 -

Creditors 1,108,825 1,108,825 -

3,370,764 2,281,840 1,088,924

Net amounts of


presented in the

statement of

financial position

Gross

amounts of

recognized

financial

assets

Gross amounts of

recognized


set off in the

statement of

financial position

Net amounts of

financial assets

presented in the

statement of

financial position


Gross amounts of

recognized

financial assets

set off in the

statement of

financial position

Gross

amounts of

recognized

financial

liabilities


41. Employees' retirement benefits

2016 2015

41.1 Liability for funded staff gratuity (10,086) (5,582)

The amounts recognised in the statement of financial position are as follows:

Present value of defined benefit obligation 101,724 108,187

Benefits due but not paid 4,835 4,616

Fair value of plan assets (116,645) (118,385)

Net liability / (asset) (10,086) (5,582)

41.2 The amounts recognised in the statement of financial position are as follows:

Opening liability / (asset) (5,582) 64,861

Expense recognised in income statement (1,544) (50,543)

Contributions made during the year (14,768) (26,762)

Remeasurement loss/(gain) recognised in statement of

comprehensive income 11,808 6,862

Closing liability / (asset) (10,086) (5,582)

41.3 The amounts recognised in income statement are as follows:


- (84,516)


Expected return on plan assets (11,033) (16,037)

(1,544)

(50,543)

41.4

Remeasurement loss/(gain) on obligations:

Experience loss (5,727)

5,741

Actuarial loss / (gain) from changes in financial assumptions 11,722

-

5,995

5,741

Loss/(gain) due to remeasurement of investment return 5,813

1,121

11,808

6,862

41.5 Changes in the present value of defined benefit obligation are as follows:

Opening defined benefit obligation 108,187

198,837

Current service cost -

27,763



Remeasurement loss 5,995 5,741

Benefits due but not paid (219) -

Benefits paid (21,728) (61,884)

Closing defined benefit obligation 101,724 108,187


Remeasurements recognised in other comprehensive income (OCI) are as follows:

Past service cost/(credit)


2016 2015

41.6 Changes in fair value of plan assets:

Opening fair value of plan assets 118,385 138,592

Remeasurement gain / (loss) (5,813) (1,121)

Contributions by employer 14,768

26,761

Benefits paid (21,728)

(61,884)

Expected return on plan assets 11,033

16,037

Closing fair value of plan assets 116,645

118,385

41.7 Break-up of category of assets in respect of staff gratuity:

Rupees %age Rupees %age

('000) ('000)

Cash and bank 14,670

13% 32,073

46%

Investments 101,975

87% 86,312

54%

116,645

100% 118,385

100%

41.8 Significant actuarial assumptions:

2016 2015

Valuation discount rate-p.a 7.25% 9.75%

Expected rate of return on plan assets-p.a 19% 19%

Average expected remaining working

life time of employees 6 years 8 years

41.9 Sensitivity Analysis

Increase (Decrease)

Discount rate (5,118) 5,812

41.10

The calculation of the defined benefit obligation is sensitive to assumptions set out above.The

following table summarizes how the defined benefit obligation at the end of reporting period

would have increased/ (decreased) as a result of change in respective assumptions by one

percent.

Defined benefit obligation

Effect of 1%


The weighted average number of years of defined benefit obligation is 6 years as at June 30,

2016.

A refund of Rs 23 million (2015: Rs 2.30 million), is expected to arise to the Company from

gratuity fund in the next financial year.

The Projected Unit Credit Methodusing the following significant assumptions was used for the

valuation:

Actual return on plan assets for the year is Rs 22.246 million.

2016 2015



41.11

2016 2015

Provident fund 28,421

27,332

Gratuity fund (1,544)

(50,543)

26,877

(23,211)

42. Defined contribution plan

Details of provident funds are as follows:

Staff provident fund 2016 2015

Net assets 207,375

203,954

Cost of investments made 96,654

96,580

Fair value of investments made 106,007

118,593

%age of investments made 51% 58%

Breakup of investment - at cost Rs '000 %age Rs '000 %age

Shares 23,756

25% 25,656

21%

Mutual Funds 40,000

41% 60,546

38%

Bank deposits 32,898

34% 10,378

41%

96,654 100% 96,580 100%

42.1 Investments out of provident funds have been made in accordance with the provisions of

section 227 of the Companies Ordinance, 1984 and the rules formulated for the purpose.

include amounts in respect of the following:


2016 2015

Salaries, wages and benefits as appearing in note 33

The Company contributes to gratuity fund on the advice of fund’s actuary. The contribution is

equal to current service cost with the adjustment for any deficit.



43. General

43.1 Related party transactions

Aggregate transactions with related parties during the year were as follows:

2016 2015

Parent Company

Warid Telecom International LLC, UAE (WTI) Markup charged to WTI 13,007

17,295

Shareholders/ Sponsors

Long term finance received from shareholders 315,000

2,194,375Markup on long term finance from shareholders 303,257

238,687

Associated companies:

Warid Telecom (Pvt) Limited (WTL)

Sale of services 1,296,218

1,299,825 Sale of goods 7,073

90,576 Cost and expenses charged by WTL 398,042

316,539

Dhabi One Investment Services LLCMark up on long term finance - unsecured 6,719 5,744

Wateen Multimedia (Pvt) Limited (WMM) Markup charged to WMM 6,116

20,891

Payments made by the Company on behalf of WMM 39,008

-

Warid Telecom Georgia Limited Markup charged on advance 1,639

2,180

Raseen Technology (Pvt) Limited

Markup charged on advance 1,967 2,616

Warid Telecom International - Bangladesh

Markup charged on advance

595 791Wateen Malaysia Inc. (WM)

Payments made by the Company on behalf of WM

666 -

Innov8 Limited

Sale of services 57,816

39,108

Cost and expenses charged by WTL 103,108

38,387

Payments made by WTL on behalf of Company 24,424

4,541

Bank Alfalah Limited (BAL) Sale of services 137,996

122,204

Sale of goods 64,717 51,254

Markup charged 163,616 244,518 Markup charged on bank deposits with BAL 465 141

Alfalah Insurance Limited

Sale of Goods 2,762 -

Rendering of services 452 510

Taavun (Pvt) Limited Markup on long term finance 56,649 74,279

Provident Fund TrustEmployer contribution to trust 28,421 28,370

Gratuity FundEmployer contribution to fund 14,768 26,761

The Company's related parties comprise its subsidiaries, associated undertakings, employees'

retirement benefit plans and key management personnel. Amounts due from / (to) related parties, are

shown under receivables and payables. Remuneration of key management personnel is disclosed in

note 43.2.



43.2 Remuneration of Chief Executive, Directors and Key Management Personnel

2016 2015 2016 2015 2016 2015 2016 2015

Managerial remuneration 15,755

15,484

17,434

6,476

287,868

309,650 321,057 331,610

Housing and utilities 8,665 8,516 - - 158,328 170,308 166,993 178,824

Company's contribution to provident andgratuity funds

1,312

1,304

-

-

23,999

26,290 25,311 27,594

Leave fair assistance 1,313 1,304 - - 23,969 26,277 25,282 27,581

27,045 26,608 17,434 6,476 494,163 532,524 538,643 565,608

Number of persons 1 1 3 2 285 331 288 334

--------------------------------------------------(Rupees in thousand)------------------------------------------------------

The aggregate amount charged in the financial statements for remuneration, including all benefits, to Chief Executives,Directors and Key Management Personnel of the Company is as follows:

Chief Executive Directors TotalKey Management Personnel

43.3 Capacity

43.4 Number of employees 2016 2015

Total number of employees at end of the year 474 576

Average number of employees for the year 487 673

44. Corresponding figures

Trade debts Long term trade debts

45. Date of authorisation for issue

These financial statements have been authorised for issue by the Board of Directors of the

Company on .November 29, 2016

Considering the nature of the Company's business, information regarding capacity has no

relevance.

Previous years figures have been reclassified to conform to current year's presentation as

follows:

Reclassified from Reclassified to Rupees in thousands

523,325

_________________ ______________Chief Executive Director

Annual Report 2016

2016

<---------HAVING SHARES

NO. OF SHAREHOLDERS From To Balance Held Percentage

154 1 100 3996 0.0006

2508 101 500 1245741 0.2017

1615 501 1000 1612676 0.2612

1164 1001 5000 4608320 0.7463

421 5001 10000 4114898 0.6665

41 10001 15000 587388 0.0951

104 15001 20000 2076352 0.3363

14 20001 25000 346301 0.0561

25 25001 30000 746300 0.1209

5 30001 35000 170804 0.0277

5 35001 40000 200000 0.0324

1 40001 45000 45000 0.0073

53 45001 50000 2647300 0.4287

1 50001 55000 50196 0.0081

3 55001 60000 175055 0.0284

1 60001 65000 65000 0.0105

1 70001 75000 75000 0.0121

1 80001 85000 80932 0.0131

18 95001 100000 1800000 0.2915

1 100001 105000 102000 0.0165

1 145001 150000 150000 0.0243

3 195001 200000 600000 0.0972

1 675001 680000 680000 0.1101

1 96285001 96290000 96289940 15.5942

1 165705001 165710000 165705121 26.8359

1 333295001 333300000 333296300 53.9773

6144 Company Total 617474620 100.0000

<---------

114

Annual Report 2016

2016

Particulars No. of

Folio Balance

Share Percentage

DIRECTORS, CEO &

CHILDREN 5 1400 0.0002

ASSOCIATED COMPANIES 4 595393361 96.4239

GENERAL PUBLIC (LOCAL) 61 18 210 59319 3. 4106

GENERAL PUBLIC (FOREIGN) 3 682000 0. 1104

OTHERS 14 338540 0.0549

Company Total 6144 617474620 100.0000

115


NOTICE OF ANNUAL GENERAL MEETING

thNotice is hereby given that 7 Annual General Meeting of WATEEN TELECOM LIMITED (the “Company”) shall be held at the registered office of the Company, situated at Main Walton Road, Opp. Bab-e-Pakistan, Walton Cantt, Lahore, Pakistan, on Monday, January 23, 2017 at 10:00 am, to transact the following business:

Ordinary Business

th1. To confirm the Minutes of the 6 Annual General Meeting held on November 30, 2015.

2. To receive, consider and adopt the Audited Financial Statements of the Company for the year

ended June 30, 2016 together with the Board of Directors’ Report and Auditors’ Report thereon.

3. To appoint EY Ford Rhodes, Chartered Accountants, as the Statutory Auditors of the Company

for the financial year 2016-2017 and to fix their remuneration.

Special Business

4. To consider and approve the transactions having been entered into by the Company with its

associated companies, detailed below, and for this purpose to consider and if deemed fit to

pass, with or without modification, addition, or deletion, the following resolution as special

resolution:

A) WATEEN MULTIMEDIA (PRIVATE) LIMITED (“WMM”)

“RESOLVED THAT, the finance facility up to a limit of PKR 320,688,597/- ('WMM Finance

Facility'), made available by the Company to WMM, for the period between October 04, 2015 till

October 03, 2016, on the terms and conditions (including markup) set forth in the Statement of

Material Facts under Section 160(1)(b) of the Companies Ordinance, 1984 (hereinafter the

“Section 160(1)(b) Statement”), be and are hereby ratified / approved for regularization under

Section 208 of the Companies Ordinance, 1984.”

“FURTHER RESOLVED THAT, the WMM Finance Facility, made available by the Company to

WMM, for the period between October 04, 2016 till January 23, 2017, on the terms and

conditions (including markup) set forth in the Section 160(1)(b) Statement, be and are hereby

ratified / approved for regularization under Section 208 of the Companies Ordinance, 1984.”

“FURTHER RESOLVED THAT, the renewal of term of the WMM Finance Facility, for a further

twelve months period, effective from the date of shareholders' approval, be and is hereby

approved, at the rate of 1% above the Company's borrowing cost and on the terms and

conditions set forth in the Section 160(1)(b) Statement, pursuant to Section 208 of the

Companies Ordinance, 1984.”

“FURTHER RESOLVED THAT, further finance facility up to PKR 50,000,000/- to be extended

by the Company to WMM, for a twelve months period effective from the date of shareholders'

approval, be and is hereby approved, at the rate of 1% above the Company's borrowing cost

and on the terms and conditions set forth in the Section 160(1)(b) Statement, pursuant to


B) WATEEN SOLUTIONS (PVT) LTD (“WSPL”)

“RESOLVED THAT, with effect from July 01, 2016, the revocation of mark-up on loans extended by the Company to WSPL and detailed in Section 160(1)(b) Statement, be and is hereby approved, pursuant to Section 208 of the Companies Ordinance, 1984.”

C) WARID TELECOM INTERNATIONAL LLC (“WTI”)

“RESOLVED THAT, the write-off of (i) an amount of PKR 42,018,461/- (including mark-up of

PKR 6,107,605/- up till December 31, 2011) representing the expenses incurred by the

Company on behalf of WTI, and (ii) the mark-up amount of PKR 13,739,134/-, accrued thereon

from January 01, 2012 to October 03, 2014, which were provisioned in the Company's EOGMs

held on December 31, 2011 and October 03, 2014 respectively, be and is hereby approved

under Section 208 of the Companies Ordinance, 1984.”

“FURTHER RESOLVED THAT, the write-off of (i) trade debts of WTI amounting to US$

1,000,000/- and mark-up thereon amounting to PKR 18,465,248/- (up till December 31, 2011)

and (ii) the markup accrued on the trade debt amounting to PKR 37,748,337/- (for the period

between January 01, 2012 to October 03, 2014), which was regularized in the Company's

EOGM held on October 03, 2014, be and is hereby approved under Section 208 of the

Companies Ordinance, 1984.”

“FURTHER RESOLVED THAT, the write-off of the mark-up amount of PKR 36,184,497/-

(accrued from October 04, 2014 till January 23, 2017) (i) over the expenses incurred by the

Company on behalf of WTI and (ii) in respect to the trade debt of WTI, be and is hereby

approved under Section 208 of the Companies Ordinance, 1984.”

D) WARID TELECOM GEORGIA LIMITED (“WGL”)

“RESOLVED THAT, the write-off of an amount of PKR 18,032,421/- (including mark-up of PKR

2,629,862/- up till December 31, 2011) representing the expenses incurred by the Company on

behalf of WGL, and the mark-up amount of PKR 6,282,138/-, accrued thereon from January 01,

2012 to January 23, 2017, be and is hereby approved under Section 208 of the Companies

Ordinance, 1984.”

E) RASEEN TECHNOLOGIES (PRIVATE) LIMITED (“Raseen”)


2,153,509/- up till December 31, 2011) representing the expenses incurred by the Company on

behalf of Raseen, and the mark-up amount of PKR 6,247,542/-, accrued thereon from January

01, 2012 till October 03, 2014, which were provisioned in the Company's EOGMs held on

December 31, 2011 and October 03, 2014 respectively, be and is hereby approved under


“FURTHER RESOLVED THAT, the write-off of the mark-up amount of PKR 4,020,969/- accrued

from October 04, 2014 till January 23, 2017, over the expenses incurred by the Company on

behalf of Raseen, be and is hereby approved under Section 208 of the Companies Ordinance, 1984.”


F) AGREEMENT WITH SASH CONSTRUCTIONS FOR LEASE – WARID TOWER PROJECT (“Sash Construction”)

“RESOLVED THAT, the write-off of an amount of PKR 80,863,161/-, representing the advance

rent paid to Sash Constructions, and which amount is considered irrecoverable by the

Company and was provisioned in the Company's EOGM held on December 31, 2011, be and is

hereby approved under Section 208 of the Companies Ordinance 1984 .”

G) AIRTEL BANGLADESH LIMITED (FORMERLY KNOWN AS WARID TELECOM INTERNATIONAL LIMITED, BANGLADESH) (“WBIL”)


953,894/- up till December 31, 2011) representing the expenses incurred by the Company on

behalf of WBIL, which amount was provisioned in the Company's EOGM held on December 31,

2011, be and is hereby approved under Section 208 of the Companies Ordinance, 1984.”

“FURTHER RESOLVED THAT, the write-off of the mark-up amount of PKR 2,273,672/- accrued

from October 04, 2014 till January 23, 2017, be and is hereby approved under Section 208 of

the Companies Ordinance, 1984.”

SIGNING AUTHORITY

“FURTHER RESOLVED THAT each of the Chief Executive Officer and the Chief Financial Officer of the Company, acting singly, be and is hereby authorized to act on behalf of the Company in signing all documents, and doing and performing all acts, matters, things and deeds, to implement and / or give effect to the foregoing resolutions.”

STATEMENT OF MATERIAL FACTS UNDER SECTION 160(1)(B) OF THE COMPANIES ORDINANCE, 1984, RELATING TO THE AFORESAID SPECIAL BUSINESS TO BE TRANSACTED AT THE ANNUAL GENERAL MEETING HAS BEEN DISPATCHED TO THE SHAREHOLDERS OF THE COMPANY ALONG WITH THE RELEVANT EXHIBITS IN RESPECT THERETO.

5. Other Business

To consider any other business that may be placed before the meeting with the permission of the Chair.

By the Order of the Board

Muhammad Aqib Zulfiqar(Company Secretary)

Lahore: January 02, 2017


NOTES:

A. PARTICIPATION IN ANNUAL GENERAL MEETINGA member entitled to attend and vote at this meeting may appoint another person as his / her proxy to attend and vote for him / her.

Duly completed instrument of Proxy, and other authority under which it is signed, thereof, must be lodged with the Company Secretary at the registered office of the Company Wateen Telecom Limited, Main Walton Road, Opp. Bab-e-Pakistan, Walton Cantt, Lahore at least 48 hours before the time of the meeting.

B. CDC ACCOUNTS HOLDERSFor attending the meetingIn case of individuals, the account holder or the sub-account holder and / or the person whose securities are in group account and their registration details are uploaded as per CDC regulations, shall authenticate their identity by showing their original Computerized National Identity Cards (CNICs) or original passports at the time of attending the meeting.

In the case of corporate entities, the Board of Directors' resolution / power of attorney with specimen signature of the nominee shall be produced (unless it has been provided earlier) at the time of the meeting.

For appointing proxies

(i) In case of individuals, the account holder or the sub-account holder and / or the person

whose securities are in group account and their registration details are uploaded as per

CDC regulations, shall submit the proxy form as per the above requirement.

(ii) The proxy form shall be witnessed by two persons whose names, addresses and CNIC

numbers shall be mentioned on the form.

(iii) Attested copies for CNICs or the passports of the beneficial owners and of the proxy shall be

furnished with the proxy form.

(iv) The proxies shall produce their original CNICs or original passports at the time of the

meeting.

(v) In case of corporate entities, the Board of Directors' resolution / power of attorney with the

specimen signature of the person nominated to represent and vote on behalf of the

corporate entity shall be submitted (unless it has been provided earlier) along with proxy

form to the Company.

C. CLOSURE OF SHARE TRANSFER BOOKSThe share transfer books of the Company will remain closed, and no transaction with respect to the sale / purchase of the Company's shares shall be accepted, from January 17, 2017 to January 23, 2017 (both days inclusive).

D. CHANGE IN ADDRESSMembers are requested to promptly notify any change in their address to the share registrar of the

ndCompany, THK Associates (Private) Limited, 2 Floor, State Life Building-3, Dr. Zia Uddin Ahmed Road, Karachi.

E. PROVISION OF COPY OF COMPUTERIZED NATIONAL IDENTITY CARD (CNIC)In order to comply with the requirement of SECP SRO 381(I)/2012 dated July 05, 2012 those shareholders who have not yet submitted attested copy of their valid CNICs are once again reminded to provide the same with their folio numbers to the Company's share registrar, THK Associates (Private) Limited.


STATEMENT UNDER SECTION 160(1)(B) OF THE COMPANIES ORDINANCE, 1984

This statement is annexed to the Notice of the Annual General Meeting of Wateen Telecom Limited to be held on (the “Company”) Monday, January 23, 2017 at 10:00 am at registered office of the Company, located at Main Walton Road, Opp. Bab-e-Pakistan, Walton Cantt, Lahore, Pakistan, at which certain special business is to be transacted, and the purpose of this statement is to set out all material facts concerning such special business.

APPROVAL OF TRANSACTIONS WITH ASSOCIATED COMPANIES

A. WATEEN MULTIMEDIA (PRIVATE) LIMITED (“WMM”)

WMM is an associated concern of the Company on account of common directorship since Rizwan Ali Tiwana is a director for both the Company and WMM.

The Company made available a finance facility upto a limit of PKR 200,000,000/- (“Facility 1”), to WMM for the purposes of meeting its working capital and CAPEX requirements, which facility was duly approved by the members in the Extraordinary General Meeting (“EOGM”) dated December 31, 2011. Additionally, in the EOGM dated October 03, 2014, the members approved / ratified (A) the regularization of the Facility 1 and (B) a further finance facility of PKR 120,688,597/- ('Facility 2'), (The aggregation of the aforementioned finance facilities amounting to PRK 320,688,597/-, to be referred as 'WMM Finance Facility').

By facilitating WMM with its funding requirements, the Company has enabled WMM to sustain a positive EBITDA during the preceding years. Though, WMM has exhibited auspicious financial results, WMM's aggressive strategy to secure further growth in the business, necessitates additional funding to cater to its working capital and CAPEX requirements, which WMM is presently not in a position to entirely finance. On account of auspicious financial performance of WMM, the strategic benefit WMM continues to provide the Company for the purpose of providing triple play services to the Company's customers and to cater to its additional working capital and CAPEX requirements, the management of the Company deems (i) the term of the WMM Finance Facility be renewed for an additional period of twelve months (ii) a further facility upto PKR 50,000,000/- at the mark up and on the terms and conditions set out in Exhibit “B” be extended to the WMM.

Accordingly, for the purpose of Section 208 of the Companies Ordinance, 1984, approval / ratification of members is required to:

i) regularize the WMM Finance Facility, with respect to the period between October 04, 2015 to October 03, 2016, along with mark up at the rate of 3 months KIBOR+4% and on the terms and conditions set out as Exhibit “A” hereto.

ii) regularize the WMM Finance Facility, with respect to the period between October 04, 2016 to January 23, 2017, along with mark up at the rate of 3 months KIBOR+4% and on the terms and conditions set out as Exhibit “A” hereto.

iii) renew the term of the WMM Finance Facility, extended by the Company to WMM, for an additional twelve months period (i.e. for the period between January 24, 2017 to January 23, 2018), along with mark up at the rate of 1% above the Company's borrowing cost and on the terms and conditions set out in Exhibit “A” hereto.

iv) extend a further finance facility up to PKR 50,000,000/- along with mark up to be charged thereon to WMM, on the terms and conditions set out in Exhibit “B” hereto.


B. WATEEN SOLUTIONS (PVT) LIMITED (“WSPL”)

In the EOGM dated October 03, 2014, members of the Company approved / ratified, pursuant to Section 208 of the Companies Ordinance, 1984, (A) the regularization of loans / advances amounting to PKR 850,000,000/-, extended by the Company to WSPL from 2006 to 2011 and (B) a further loan of PKR 362,290,398/- for a period of five (5) years from the date of shareholders' approval.

Till October, 2014 the Company owned 51% of WSPL's entire share capital.

With effect from November 18, 2014, the Company acquired the entire outstanding shareholding of WSPL, through the execution of Addendum No. 1 to the Share Purchase Agreement dated November 18, 2014 between the Company and Mr. Jahangir Ahmed.

As WSPL is now a wholly owned subsidiary of the Company, the provisions of Section 208 of the Companies Ordinance, 1984 are no longer applicable, however, since the members approved the regularization / extension of loans for a term of 5 years, the approval of the shareholders is required to revoke the application of mark-up , with effect from July 01, 2016 on the loans / finance facilities extended by the Company to WSPL.

C. WARID TELECOM INTERNATIONAL, LLC (“WTI”)

The Company and WTI are related parties by virtue of the Company being a subsidiary of WTI and on account of common directorship since H. H. Sheikh Nahayan Mabarak Al Nahayan is a director for both the Company and WTI.

In the Company's EOGM dated December 31, 2011, the shareholders approved (a) the regularization and provisioning of expenses amounting to PKR 42,018,461/- (“WTI Expenses”), (including mark-up of PKR 6,107,605/- up till December 31, 2011), incurred on behalf of WTI, and regularization of trade debts of WTI amounting to US$ 1,000,000/- along with mark-up thereon, and (b) in the Company's EOGM dated October 03, 2014, the shareholders approved the provisioning of the mark-up amount of PKR 13,739,134/- (accrued over the WTI Expenses), from January 01, 2012 to October 03, 2014.

The Company has been diligently pursuing the recovery of the provisioned amounts (and the mark-up thereon) by engaging into discussions and negotiations with WTI however despite the Company's best efforts to secure the recovery of the provisioned amounts, the Company has not managed to effect the recovery, and harbors no expectations for recovering the same in the future.

Pursuant to framework of international financial reporting standards, an outstanding amount is to be written off from an entity's books of accounts once the management deems that such an amount is not recoverable.

Accordingly, approval of the shareholders is required to write-off (i) PKR 55,757,595/- (representing the WTI Expenses and the mark-up thereon up till October 03, 2014) (ii) US$ 1,000,000/- (representing the trade debts) and the mark-up thereon up till October 03, 2014 and (iii) the mark-up amount of PKR 36,184,497/- accrued over the WTI Expenses and trade debts, for the period between October 04, 2014 to January 23, 2017 under Section 208 of the Companies Ordinance, 1984.

D. WARID TELECOM GEORGIA LIMITED (“WGL”)

WGL and the Company are related parties by virtue of common majority shareholding. The Company incurred certain operational expenses on behalf of WGL for the provision of GSM services in Georgia.


In the Company's EOGM dated December 31, 2011, the shareholders approved the regularization and provisioning of expenses, amounting to PKR 18,032,421/- (including mark-up of PKR 2,629,862/- up till December 31, 2011) incurred by the Company on behalf of WGL and, in the Company's EOGM dated October 03, 2014, the shareholders approved the provisioning of the mark-up amount accrued over the expenses incurred on behalf of WGL, for the period between January 01, 2012 to October 03, 2014.

The Company has been diligently pursuing the recovery of the provisioned amounts (and the mark-up thereon) by engaging into discussions and negotiations with Warid Telecom International LLC (the majority shareholder of WGL, as WGL is no longer operational) however despite the Company's best efforts to secure the recovery of the provisioned amounts, the Company has not managed to effect the recovery, and harbors no expectations for recovering the same in the future.


Accordingly, approval of the shareholders is required to write-off the expenses incurred on behalf of WGL (including mark-up up till January 23, 2017) of PKR 24,314,559/-, under Section 208 of the Companies Ordinance, 1984.

E. RASEEN TECHNOLOGIES (PRIVATE) LIMITED (“Raseen”)

Raseen and the Company are related parties by virtue of common majority shareholding.

In the Company's EOGM dated December 31, 2011, the shareholders approved the regularization and provisioning of expenses, amounting to PKR 18,482,509/-, (including mark-up of PKR 2,153,509/- up till December 31, 2011) incurred by the Company on behalf of Raseen, and in the Company's EOGM dated October 03, 2014, the shareholders approved the provisioning of the mark-up amount of PKR 6,247,542/- (accrued over the expenses incurred on behalf of Raseen) for the period between January 01, 2012 to October 03, 2014.

The Company has been diligently pursuing the recovery of the provisioned amounts (and the mark-up thereon) by engaging into discussions and negotiations with Raseen / WTI however despite the Company's best efforts to secure the recovery of the provisioned amounts, the Company has not managed to effect the recovery, and harbors no expectations for recovering the same in the future.


Accordingly, approval of the shareholders is required to write-off (i) the provisioned amount (including mark-up up till October 03, 2014) of PKR 24,730,051/- and (ii) the mark-up amount of PKR 4,020,969/- accrued over the provisioned amount, for the period between October 04, 2014 to January 23, 2017 under Section 208 of the Companies Ordinance, 1984.

F. AGREEMENT WITH SASH CONSTRUCTIONS / EX-DIRECTORS FOR LEASE – WARID TOWER PROJECT (“Sash Construction”)

Warid Telecom (Pvt.) Ltd ('Warid') and the Company entered into a Lease Agreement dated May 11, 2007 (“Lease Agreement”) with family members of a certain previous management (“Lessors”) for leasing office space in a building proposed to be constructed by Warid and the Company (“Warid Tower Project”). In terms of the Lease Agreement, the Company made payment of PKR 68,916,266/- ('WTP Outstanding Amount') as advance rent to Sash Construction and Warid.


Subsequently the Warid Tower Project was suspended and the Company was embroiled in a dispute with the Lessors and Sash Construction, therefore recovery of the WTP Outstanding Amount was deemed doubtful by the Company. In EOGM dated December 31, 2011, the Company submitted before the shareholders, the motion to approve the provisioning of the WTP Outstanding Amount along with imputed markup amounting to PKR 11,766,895/-, which was duly granted by the shareholders in pursuance of requirements of Section 208 of the Companies Ordinance, 1984.

To date, the Company has been unable to secure the recovery of the provisioned amount, and has no expectations of recovering the same.

Pursuant to framework of international financial reporting standards, an outstanding amount is to be written off from an entity's books of accounts once the management deems that such an amount is not recoverable. Accordingly, the Company's management, following extensive efforts, has now determined that there is no possibility of recovering the WTP Outstanding Amount.

Accordingly, approval of the shareholders is required to write-off the provisioned amount up till June 30, 2016) of PKR 80,683,161/- (including imputed markup), under Section 208 of the Companies Ordinance, 1984.

G. AIRTEL BANGLADESH LIMITED (FORMERLY KNOWN AS WARID TELECOM INTERNATIONAL LIMITED, BANGLADESH) (“WBIL”)

WBIL and the Company were related parties by virtue of common shareholding up till 2013. The Company primarily incurred operational expenses on behalf of WBIL for meeting working capital requirements.

In the Company's EOGM dated December 31, 2011, the shareholders approved the regularization and provisioning of expenses, amounting to PKR 6,540,653/-, (“WTI Expenses”), (including mark-up of PKR 953,894/- up till December 31, 2011) incurred by the Company on behalf of WBIL.

The Company has been diligently pursuing the recovery of the provisioned amounts (and the mark-up thereon) by engaging into discussions and negotiations with WBIL, however despite the Company's best efforts to secure the recovery of the provisioned amounts, the Company has not managed to effect the recovery, and harbors no expectations for recovering the same in the future.


Accordingly, approval of the shareholders is required to write-off (i) the provisioned amount (including mark-up) of PKR 6,540,653/- and (ii) the mark-up amount of PKR 2,273,672/- accrued over the provisioned amount, for the period between October 04, 2014 to January 23, 2016, under Section 208 of the Companies Ordinance, 1984.

INTEREST OF DIRECTORS

In respect of the resolutions pertaining to the transactions entered into by the Company with its associated companies or undertakings, the following Directors are concerned or interested by virtue of them also being Directors and / or shareholders in the following companies:


WARID TELECOM INTERNATIONAL LLC

WATEEN SOLUTIONS (PRIVATE) LIMITED

WATEEN MULTIMEDIA (PRIVATE) LIMITED

The abovementioned directors adequately disclosed their interests in accordance with Section 214 and Section 216 of the Companies Ordinance, 1984, and abstained from voting in any matter pertaining to the approval or regularization of the transactions with the above-mentioned associated companies.

Except for the above-mentioned interested directors, the Directors of the Company have no interest, whether directly or indirectly, in the transactions being approved in this AGM except to the extent of shareholding held by them in the Company. The shares and percentage of personal shareholdings by the Directors of the Company in proportion to the paid up capital of the Company are as under:

S. N O. N AME OF D IRECTOR AND SHAREHOLDER

1. H. H . Sheikh Nahayan Mabarak Al Nahayan

S. N O. N AME OF D IRECTOR

1. Rizwan Ali Tiwana

S. N O. N AME OF D IRECTOR

1. Rizwan Ali Tiwana

S. NO. NAME OF DIRECTORS NO. OF

SHARES

HELD

(%)

SHAREHOLDING

1. H. H. Sheikh Nahayan Mabarak Al Nahayan 1,000 0.000162

2. Adeel Khalid Bajwa 100 0.000002

3. Rizwan Ali Tiwana 100 0.000002

4. Abid Hasan 100 0.000002

5. Khwaja Ahmad Hosain 100 0.000002


(EXHIBIT – A)Wateen Multimedia (Pvt) LimitedTerms and Conditions of Advances

1. Name of the Investee CompanyWateen Multimedia (Pvt) Limited

2. Purpose of advancesTo meet the working capital & capital expenditure requirements.

3. Details of advances already provided or written offNot Applicable

4. Limit approvedPKR 321 million

5. Outstanding balancePKR 209 million (Inclusive of markup) as at November 30, 2016

6. Rate of mark up3 Months KIBOR + 4% for the period from October 04, 2014 to January 23, 20171% above the borrowing cost of Wateen Telecom Limited from January 24, 2017

7. Details of collateral securityCorporate guarantee by the investee Company

8. Latest approval obtained from shareholdersIn an Extraordinary General Meeting of the Company held on October 03, 2014

9. TenorRenewal for the period of twelve months from January 24, 2017 to January 23, 2018, to comply with requirements of The Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012.

10. Financial Position of Investee Company – (YE June 30, 2015) Audited

PKR'm

Fixed Assets 2.3

Current Assets 62

Current Liabilities** 305

Revenue 150

EBITDA 34

Profit for the year 10

** This includes payable to associated Company Wateen Telecom Limited PKR 208 million


Exhibit B – Loans to Associated CompanyADVANCES TO ASSOCIATED COMPANY (NEW)

REF NAME OF INVESTEE

COMPANY

AMOUNT OF THE LOAN/ADVANCES RATE OF MARK-UP TENOR PURPOSE OF

LOAN/ADVANCE/TRADE

DEBTS

DETAILS OF LOAN/ADVANCE ALREADY PROVIDED

FOR OR WRITTEN OFF TO THE SAID INVESTEE

COMPANY

(a) Wateen Multimedia (Pvt) Limited

PKR 50,000,000 1% above the borrowing cost

12 months from the date of Shareholder’s approval

To meet working capital/ Capex requirements

Not applicable


FORM OF PROXYth ANNUAL GENERAL MEETING

TKH Associates (Pvt) Limited

(Acting as Share Registrar’s Office for Wateen Telecom Limited)nd

2 Floor, State Life Building No. 3, Dr. Ziauddin Ahmed Road, Karachi,Pakistan.

I/We ___________________________ of ___________________________ being member(s) of Wateen

Telecom Limited holding ___________________________ ordinary shares hereby appoint

___________________________ of ____________________________(the “Appointee”) and in case of failure

of the Appointee to act as my/our proxy, I/we hereby appoint ___________________________ of

___________________________ who is/are also member(s) of Wateen Telecom Limited as my/our proxy in

my/our absence to attend and vote for me/ us and on my/our behalf at the Annual General Meeting of the

Company to be held on Monday, January 23, 2017, at registered office of the Company, located at Main Walton Road, Opp. Bab-e-Pakistan, Walton Cantt, Lahore, Pakistan at 10:00 AM, and / or any

adjournment thereof.

As witness my/our hand/seal this ________ day of ______________________, 2017.

Witnesses

1.______________________

2.______________________

Signature on Five Rupees Revenue Stamp.

The signature should match with the

specimen registered with the Company


7

Shareholder Folio No.

Or

CDC Participant I.D. No.

&

Sub Account No.

Wateen Annual Report 2016 - Wateen Telecom · PDF fileto the telecom industry, the business...

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