Financial Statements

Pakistan Telecommunication Company Limited

For the year ended June 30, 2009

Auditors’ Report to the Members
We have audited the annexed balance sheet of Pakistan Telecommunication Company Limited as at June 30, 2009 and the related profit and loss account, cash flow statement 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) (b) In our opinion, proper books of account have been kept by the company as required by the Companies Ordinance, 1984; In our opinion: (i) the balance sheet and profit and loss account 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; the expenditure incurred during the year was for the purpose of the company’s business; and the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the company;

(ii) (iii)

(c)

in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, cash flow statement 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, 2009 and of the profit, its cash flows and changes in equity for the year then ended; and in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance.

(d)

A. F. Ferguson & Co. Chartered Accountants Lahore. Name of engagement partner: Muhammad Masood Dated September 29, 2009

Ford Rhodes Sidat Hyder & Co. Chartered Accountants Islamabad. Name of engagement partner: Sajjad Hussain Gill

Annual Report 2009

35

Balance Sheet
as at June 30, 2009
Note 2009 2008
(Rupees in thousand)

Equity and liabilities Share capital and reserves Authorized capital 11,100,000,000 “A” class ordinary shares of Rs 10 each 3,900,000,000 “B” class ordinary shares of Rs 10 each 111,000,000 39,000,000 150,000,000 Issued, subscribed and paid up capital Revenue reserves – Insurance reserve – General reserve – Unappropriated profit 6 1,683,074 30,500,000 16,206,485 99,389,559 Non current liabilities Payable to PTA against WLL license fee Long term security deposits from customers – non interest bearing Deferred taxation Employees’ retirement benefits Deferred government grants 7 8 9 10 11 – 990,055 2,379,000 14,142,099 1,061,044 18,572,198 Current liabilities Trade and other payables Current portion of payable to PTA against WLL license fee Taxation Dividend payable 12 7 26,114,171 1,953,971 368,180 7,650,000 36,086,322 Contingencies and commitments 13 154,048,079 The annexed notes from 1 to 47 form an integral part of these financial statements. 137,447,852 21,731,667 – 182,292 – 21,913,959 1,768,839 951,618 590,000 14,240,062 95,000 17,645,519 1,683,074 30,500,000 14,705,300 97,888,374 5 51,000,000 111,000,000 39,000,000 150,000,000 51,000,000

Chairman

36

Pakistan Telecommunication Company Limited

270 2.383.790 11.817 1.366.827.943 97.766 1.603.059.607.800.730.892.844.017.617 2. plant and equipment Capital work–in–progress Intangible assets Long term investments Long term loans 14 15 16 17 18 77.439 394.836.588 3.344.164.823 3.178 7.164.447.991 10.448 54.220.760.149.048.670 5.378 99.079 137.641.061 821.608 698.852 President & CEO Annual Report 2009 37 .072 10.063 3.974 590.072 21.954.545.Note 2009 2008 (Rupees in thousand) Assets Non current assets Property.320.145 39.216 888.406 82.379 4.763 9.027 1.439 3.838 Current assets Stores and spares Trade debts Loans and advances Accrued interest Recoverable from tax authorities Other receivables Receivable from Government of Pakistan Short term investments Cash and bank balances 19 20 21 22 23 24 25 26 27 5.332.906.201.607.309 315.085 13.446 154.241 4.

637.524) 14.917 35 (4.824.336.173 (10.001 (37.823.346.118) 4.071) 10.890) (Rupees) 30 31 (8.672 (23.042 (37.261) (1.Profit and Loss Account for the year ended June 30.817.462.732) 9.726 (2.172 (908.239.854) 3.754.185 Earnings / (loss) per share – basic and diluted 41 1.989.935.946) 16.539 (847.151.555) (1.506.869.799.869) 28.957.55) The annexed notes from 1 to 47 form an integral part of these financial statements.020.79 (0.282) 21.267.616) 1.365.719 66.732. Chairman President & CEO Pakistan Telecommunication Company Limited 38 .937.973) (4.387 32 33 34 (92. 2009 Note 2009 2008 (Rupees in thousand) Revenue Cost of services Gross profit Administrative and general expenses Selling and marketing expenses Operating profit Voluntary separation scheme Other operating income Finance cost Profit / (loss) before tax Taxation Profit / (loss) after tax 28 29 59.

812.702.052) 15.470.000) 62.195.485) (16.216) (109.125) 38 34. 2009 Note 2009 2008 (Rupees in thousand) Cash flows from operating activities Cash generated from operations Long term security deposits Employees’ retirement benefits paid Payment of other VSS components Received from Government of Pakistan Finance cost paid Income tax paid Net cash inflow from operating activities Cash flows from investing activities Capital expenditure Intangible assets Proceeds from disposal of property.712 14.889.337.860.444.524 31.904.000) 2.833.719 95.091. plant and equipment Short term investments other than cash equivalents Advance to the wholly owned subsidiary against issue of ordinary shares Long term loans–net Loan to the wholly owned subsidiary Return on bank placements / loan to subsidiary Government grants received Dividend income Net cash outflow from investing activities Cash flows from financing activities Repayment of suppliers’ credit Dividend paid Net cash outflow from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 39 – (2.100.565 (3.352 (172.437 (1.961) (10.886) (2.214.927) – (265.824 966.000.335) (840.980.524 (9.373.459) 1.088.044 – (12.270) 19.039 (1.455.188) 31.742) (2.411.264.751.889.524) (10.651 – – 1.248.000.Cash Flow Statement for the year ended June 30.232) (2.368.844) 28. Chairman President & CEO Annual Report 2009 39 .422 26 The annexed notes from 1 to 47 form an integral part of these financial statements.000 (6.391 38.137.742) 16.979) 206.249 (244.000 350.221.928 (360.166) (17.991 – 2.920) (11.894.828 14.407) (2.527) (397.490 28.671) (21.

074 30.260.500. 2007 Net loss for the year Transfer from insurance reserve Final dividend for the year ended June 30.300 9.973 (10.559 The annexed notes from 1 to 47 form an integral part of these financial statements.389.824.000) 16.740.206. 1. 2009 37.000) 97.200.705. 2007 – Rs.000 1.000) 99.264 (2.260.000 – – – 30.973) – 1.500.151.664.740.890) 65.683.000 – – – 37.000) 14.650.485 110.185 (7.5 per share Balance as at June 30.913. subscribed and paid–up capital Class “A” Class “B” Insurance reserve Revenue reserves General reserve Unappropriated profit Total (Rupees in thousand) Balance as at July 01.000 – – – 13.650.888.000 13. 2008 Net profit for the year Interim dividend for the year ended June 30.000 – – 37.000 – – 13.200. Chairman President & CEO Pakistan Telecommunication Company Limited 40 .151. 2009 Issued.185 (7.374 9. 2009 – Rs.217 (2.000 – – 30.824.890) – (10.000 27.047 – (65.749.740. 2 per share Balance as at June 30.260.074 – – 1.Statement of Changes in Equity for the year ended June 30.500.683.

2009. G–8/4. 2009). The business was transferred to the Company on January 1. assets. 1. IFRIC 13 “Customer Loyalty Programmes” and IFRIC 14 “IAS 19 – The Limit on Defined Benefit Asset. they will be required to present a restated financial position (balance sheet) as at beginning of comparative period in addition to the current requirement to present the balance sheet as at the end of the current and the comparative period. the provisions or directives of the Companies Ordinance. 1996 under the Pakistan Telecommunication (Reorganization) Act. these interpretations do not affect the Company’s financial statements. The Company was established to undertake the telecommunication business formerly carried on by Pakistan Telecommunication Corporation (PTC). In case requirements differ. namely IFRIC 12 “Service Concession Arrangements”. 1984. rights. 2.Notes to and forming part of the Financial Statements for the year ended June 30. IFRS 7 has superseded IAS 30 and disclosure requirements of IAS 32. 1. When the entity applies an accounting policy retrospectively or makes retrospective statement or reclassifies items in the financial statements. The Company is listed on Karachi.2 Standards.3 Amendments and Interpretations to publish standards applicable to the Company not yet effective The following amendments and interpretations to existing standards have been published and are mandatory for the Company’s accounting periods beginning on or after their respective effective dates: IAS 1 (Revised). 2. The registered office of the Company is situated at PTCL Headquarters. The revised standard requires an entity to present. Minimum Funding Requirements and their Interaction” also become effective during the year. was issued in September 2007. Pakistan Telecommunication Authority (PTA) and Pakistan Telecommunication Employees Trust (PTET). interpretations of accounting standards. all owner changes in equity. 2. The amendment also permits an entity to transfer from the available–for–sale category to the loans and receivables category. comprehensive income) will be required to be presented separately from owner changes in equity. Annual Report 2009 Legal status and nature of business 41 . a financial asset that would have met the definition of loans and receivables (if the financial asset had not been designated as available–for–sale). However. 1995 and commenced business on January 1. Frequency Allocation Board (FAB). It owns and operates telecommunication facilities and provides domestic and international telephone services and other communication facilities throughout Pakistan. The adoption of this standard will only impact the presentation of the financial statements. 2. Islamabad. 1984.2 Activities The Company provides telecommunication services in Pakistan.e. 2009 1. 1984 shall prevail. All non–owner changes in equity (i. Adoption of this standard has only resulted in additional disclosures which have been set out in note 42 to these financial statements. IFRS 7 ‘Financial Instruments: Disclosures’ became effective. in a statement of changes in equity. obligations and liabilities of PTC except those transferred to National Telecommunication Corporation (NTC). interpretations and amendments to published approved accounting standards that are effective in current year During the year ended June 30. provisions of and directives issued under the Companies Ordinance. 1996 at which date the Company took over all the properties. 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. if the entity has the intention and ability to hold that financial asset for the foreseeable future. Further. IAS 39 (Amendment). Lahore and Islamabad stock exchanges. 2009). The management is in the process of assessing the impact of its adoption on the Company’s financial statements.1 Constitution and ownership Pakistan Telecommunication Company Limited (“the Company”) was incorporated in Pakistan on December 31. ‘Presentation of financial statements’ (effective for annual periods beginning on or after July 1. ‘Financial Instruments: Recognition and Measurement’ – Reclassification of Financial Assets (effective from July 1.1 Basis of preparation Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. This amendment to the Standard permits an entity to reclassify non–derivative financial assets (other than those designated at fair value through profit or loss by the entity upon initial recognition) out of the fair value through profit or loss category in particular circumstances. 1996. either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). The Company has also been licensed to provide such services to territories in Azad Jammu and Kashmir and Northern Areas.

or areas where assumptions and estimates are significant to the financial statements are as follows: a) Employees’ retirement benefits The Company uses the valuation performed by an independent actuary as a present value of its retirement benefits obligations. IAS 38 (Amendment). Estimates and judgments are continually evaluated and are based on historical experience. 2009 January 01. The amended standard states that a prepayment may only be recognized in the event that payment has been made in advance of obtaining right of access of goods or receipt of services. Insurance Contracts Operating Segments Accounting for Agreements for the Construction of Real Estate Hedge of Net Investment in a Foreign Operation Distribution of Non–cash Assets to Owners Borrowing Costs (Revised) Consolidated and Separate Financial Statements Financial Instruments: Presentation – Amendments regarding puttable Financial Instruments Share Based Payments – Amendments Regarding Vesting Conditions and Cancellation Business Combinations – (Revised) Transfer of Assets of Customers IJARAH Basis of measurement These financial statements have been prepared under the historical cost convention. 2. including expectations of future events that are believed to be reasonable under the circumstances. 2009 January 01. These amendments are unlikely to have an impact on the Company’s financial statements and have therefore not been analyzed in detail.Notes to and forming part of the Financial Statements for the year ended June 30. The areas involving a higher degree of judgment or complexity. ‘ Financial Instruments: Disclosure’. Not all of these significant policies require the management to make difficult. 2009 January 01. c) Useful life and residual values of property. the amounts are shown as contingent liabilities. 2009 IFRS 7 (Amendment). plant and equipment on regular basis. 2009 January 01. The valuation is based on assumptions as mentioned in note 4. 2009 July 01. except for revaluation of certain financial instruments at fair value and recognition of certain employee retirement benefits and license fee payable at present value. judgment of estimation involved in their application and their impact on these financial statements. 2009). plant and equipment with the corresponding effect on the depreciation charge and impairment. There are a number of minor amendments to IFRS 7 in respect of enhanced disclosures about liquidity risk and fair value measurements.4. These judgments involve assumptions or estimates in respect of future events and the actual results may differ from these estimates. 2009 IFRS 4 IFRS 8 IFRIC 15 IFRIC 16 IFRIC 17 IAS 23 IAS 27 IAS 32 IFRS 2 IFRS 3 IFRIC 18 IFAS 2 3. 2009 July 01. 42 Pakistan Telecommunication Company Limited . subjective or complex judgments or estimates. The following is intended to provide an understanding of the policies the management considers critical because of their complexity. 2009 July 01. Instances where the Company’s view differs from the view taken by the Income Tax department at the assessment stage and where the Company considers that its view on items of material nature is in accordance with law. Any change in estimates in future years might affect the carrying amounts of the respective items of property. 2009 January 01. The Company’s significant accounting policies are stated in note 4. 2009 January 01. b) Provision for taxation The Company takes into account the current income tax law and the decisions taken by appellate authorities. ‘Intangible Assets’ (effective from July 1. plant and equipment The Company reviews the useful lives of property. This amendment is not expected to have a significant effect on the Company’s financial statements. 2009 January 01. 2009 July 01.4 Standards and interpretations to existing standards that are not applicable to the Company and not yet effective Standards or Interpretation Effective date (accounting periods beginning on or after) January 01.

The charge for current tax also includes adjustments. 2009 d) Provision for doubtful receivables Provision against overdue receivable balances is recognized after considering the receipt pattern and the future outlook of the concerned receivable party. The Company also operates an unfunded pension scheme for employees recruited on regular basis after December 31. Provisions are made annually to cover the obligations under the schemes on the basis of actuarial valuations and are charged to profit. fire or natural disasters. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year if enacted.3 Taxation Current Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. Finance cost is accounted for on an accrual basis and is either added to the carrying amount of the instrument or disclosed as interest and mark–up accrued to the extent of amount remaining unpaid. The amount recognized in the balance sheet represents the present value of the defined benefit obligations as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost and as reduced by the fair value of the plan assets. The most recent valuation was carried out as at June 30. 1995. 4. Annual Report 2009 43 . Deferred tax is charged or credited in the income statement. 1996 when the Company took over the business from PTC. 4. These policies have been consistently applied to all the years presented unless otherwise stated.Notes to and forming part of the Financial Statements for the year ended June 30.1 Insurance reserve The assets of the Company are self insured. unused tax losses and tax credits can be utilized. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.2 Borrowings Borrowings are initially recorded at the proceeds received. The Company has created an insurance reserve. except in the case of items credited or charged to equity in which case it is included in equity. Significant accounting policies The significant accounting policies adopted in the preparation of these financial statements are set out below.4 (a) Employees’ retirement benefits and other obligations Pension obligations The Company operates an approved funded pension scheme through a separate trust called the “Pakistan Telecommunication Employees’ Trust” (PTET) for its employees recruited prior to January 1. 4. The reserve is to be utilized to meet any loss resulting from theft. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences. It is reviewed by the management on a regular basis. 4. where considered necessary. 2009 using the “Projected unit credit method”. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the balance sheet date. to provision for tax made in previous years arising from assessments framed during the year for such years. 4. Appropriation out of profits are made on discretion of the Board of Directors.

It considers the expected returns on the re– investments of maturity proceedings in similar instruments up to the life of related obligations. 2009 Cumulative net unrecognized actuarial gains and losses at the end of the previous year which exceed 10% of the greater of the present value of the Company’s pension obligations and the fair value of plan assets are amortized over the expected average working lives of the participating employees. The rounded expected rate of return used for the Fund Assets is 13% during 2008–09 (2007–08: 10%) (b) Medical benefits The Company provides post retirement medical benefits to pensionable employees and their families.Notes to and forming part of the Financial Statements for the year ended June 30. There are no annual limits to the cost of drugs. Under the unfunded scheme all such employees. The principal actuarial assumptions used in the valuation as at June 30. 44 Pakistan Telecommunication Company Limited . Under the unfunded scheme. 180 days with medical certificate and 365 days during the entire service of the employee. hospital in patient treatment and consultation fees. Up to 180 days of accumulated leave can be encashed on retirement provided the employee has a minimum leave balance of 365 days. 2009 using the “Projected unit credit method”. The amount recognized in the balance sheet represents the present value of the defined benefit obligations as adjusted for unrecognized actuarial gains and losses and unrecognized past service cost. The principal assumptions used in the valuation as at June 30. The model results in expected rate of return of 13% (2008: 10%). The expected rate of return also considers the changes of plan assets during the year on account of contributions and benefit payments. Leaves are encashed at emoluments applicable for monthly pension. 2009 were as follows: Expected rate of return per annum on plan assets Discount rate Indexation of pension Expected increase in salary Average expected remaining working lives of participating employees – funded Average expected remaining working lives of participating employees – unfunded Expected mortality rate 13% (2008: 10%) 12% (2008: 12%) 8% (2008: 8%) 9% for first five years and then 11% (2008: 11%) 13 years (2008: 13 years) 17 years (2008: 17 years) EFU 61 – 66 Mortality Table adjusted for Company’s experience Based on experience Expected withdrawal rate The expected rate of return is based on complex mathematical model which takes into account the maturity of high yielding DSC’s and other investments present at the beginning of the financial year. Provisions are made annually to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit. Unmarried daughters are not subject to 21 years age limit. their spouses. The most recent valuation was carried out as at June 30. Cumulative net unrecognized actuarial gains and losses at the end of the previous year which exceed 10% of the present value of the Company’s obligations are amortized over a period of fourteen years. The pensioner and the family are entitled to the facility up to the life of the pensioner and spouse. children up to the age of 21 and parents residing with and dependent on the employee are entitled to the benefit. regular employees are entitled to four days of earned leave per month. Unutilized leave can be accumulated without limit and can be used at any time subject to the Company’s approval up to 120 days in a year without medical certificate. 2009 were as follows: Discount rate Expected rate of increase in medical costs Expected mortality rate 12% (2008: 12%) 11% (2008: 11%) EFU 61 – 66 Mortality Table adjusted for Company’s experience (c) Accumulating compensated absences The Company provides a facility to its employees for accumulating their annual earned leave.

The amount recognized in balance sheet represents the present value of the defined benefit obligation as on June 30. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. if any. Leaves can be accumulated after completion of second year of service. New Compensation Pay Grade (NCPG) employees are entitled to 20 leaves after completion of one year of service. Such rate for the year was 15% (2008: 12. Provisions are made annually to cover the obligation for accumulating compensated absences based on actuarial valuation and are charged to profit. The most recent valuation was carried out as at June 30. The contributions deducted from the employees during the year and interest payable by the Company for the year. The Company contributes to the fund the differential. Unutilized leave can be accumulated without limit. 2009 were as follows: Discount rate Expected increase in salaries Average expected remaining working lifetime of NTC / contractual employees 12% (2008: 12%) 9% for first five years and then 11% (2008: 11%) 6 years (2008: 5 years) Retirement benefits are payable to staff on completion of prescribed qualifying period of service under these schemes. whether or not billed to the Company. Actuarial gains and losses are charged to profit immediately in the period when these occur. The principal assumptions used in the valuation as at June 30. The principal assumptions used in the valuation as at June 30. Current year was the first year in which. Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events.Notes to and forming part of the Financial Statements for the year ended June 30. to a maximum of 28 days. 2009 New Terms and Conditions (NTC) / contractual employees are entitled to 3 days earned leave per month.5 Trade and other payables Liabilities for creditors and other amounts payable 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.5%) per annum. 2009 using the “Projected unit credit method”. Cumulative net unrecognized actuarial gains and losses at the end of the previous year which exceed 10% of the present value of the Company’s obligations are amortized over the expected average working lives of the participating employees. 2009 using the “Projected unit credit method”. it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and reliable estimate of the amount can be made. 2009 were as follows: Expected increase in salary Discount rate Expected mortality rate 9% in first five years and then 11% (2008: 11%) 12% (2008: 12%) EFU 61 – 66 Mortality Table adjusted for Company’s experience (d) Provident fund The Company operates approved funded provident fund covering permanent employees. 4. appear as other liabilities. 2009 as adjusted for unrecognized actuarial gains and losses. Provisions are made annually to cover the obligation under the scheme on the basis of actuarial valuations and are charged to profit. Interest is paid at the rate announced by the Federal Government. Up to 180 days of accumulated leaves can be encashed on departure at gross pay. The most recent valuation was carried out as at June 30. Annual Report 2009 45 . if any. The amount recognized in the balance sheet represents the present value of the defined benefit obligations. For the purposes of the scheme a separate trust titled as “PTCL Employees GPF Trust” has been established. Monthly contributions are deducted from the salaries of employees and are to be paid to the Trust by the Company. of the interest charge for the year and the income earned on the investments made by the Trust. (e) Gratuity The Company operates an unfunded gratuity scheme for its NTC / contractual employees. PTCL calculated the obligation for accumulated compensated absences for NTC/contractual and NCPG employees.

Cost includes direct cost.19. If such indication exists. 4. all other investments are classified as non–current. 4. Amortization on additions to intangible assets is charged from the month in which an asset is acquired or capitalized while no amortization is charged for the month in which the asset is disposed off. only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.8 Capital work–in–progress Capital work–in–progress is stated at cost less any identified impairment loss. the amortization is adjusted in the future periods to allocate the assets’ revised carrying amount over its estimated useful life. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. if any. is also charged to profit. and adjusted if impact on depreciation is significant. the depreciation charge is adjusted in future periods to allocate the assets’ revised carrying amount over their estimated useful life. plant and equipment Property. The recoverable amount is the higher of assets’ fair value less costs to sell and value in use. are included in current assets. assets are written down to their recoverable amounts and the resulting impairment loss is recognized in income currently. Where an impairment loss is recognized. except freehold land are stated at cost less accumulated depreciation and any identified impairment loss. plant and equipment is charged from the month in which an asset is acquired or capitalized while no depreciation is charged for the month in which the asset is disposed off. The assets’ residual values and useful lives are reviewed at each financial year end. Depreciation on additions to property. 2009 4. plant and equipment is charged to profit on the straight line method so as to write off the depreciable amount of an asset over its estimated useful life at the annual rates mentioned in note 14 after taking into account their residual values. If such indication exists. 4. Intangible assets are amortized using the straight line method over the period of the license or useful life of the software. Freehold land is stated at cost less any identified impairment loss. Where carrying values exceed the respective recoverable amount. the depreciation charge is adjusted in the future periods to allocate the assets’ revised carrying amount over its estimated useful life.9 Investments Investments intended to be held for less than twelve months from the balance sheet date or to be sold to raise operating capital. The recoverable amount is the higher of an assets’ fair value less costs to sell and value in use. mark up and interest referred to in note 4. Subsequent costs are included in the assets carrying amount or recognized as a separate asset. 46 Pakistan Telecommunication Company Limited . Depreciation on all property. The Company assesses at each balance sheet date whether there is any indication that intangible asset may be impaired. Management determines the appropriate classification of its investments at the time of the purchase and re–evaluates such designation on a regular basis. plant and equipment.7 Intangible assets These are stated at cost less accumulated amortization and any identified impairment loss.6 Property. related overheads. as appropriate. The Company assesses at each balance sheet date whether there is any indication that property. Where an impairment loss is recognized. Where an impairment loss is recognized.Notes to and forming part of the Financial Statements for the year ended June 30. plant and equipment may be impaired. Impairment loss or its reversal. assets are written down to their recoverable amounts and the resulting impairment loss is recognized in income currently. the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as an income or expense. All other repairs and maintenance costs are charged to income during the period in which they are incurred. Where carrying values exceed the respective recoverable amount.

4.12 Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost.9. other short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value and short term borrowings. At each balance sheet date.2 Other investments The other investments made by the Company are classified for the purpose of measurement into the following category: 4.Notes to and forming part of the Financial Statements for the year ended June 30.1 Investments in equity instruments of subsidiaries and associated companies Investments in subsidiaries and associates where the Company has significant influence are measured at cost in the Company’s financial statements. 4. Items in transit are valued at cost comprising invoice value plus other charges paid thereon. these investments are remeasured at fair value (quoted market price). Annual Report 2009 47 . demand deposits.11 Trade debts Trade debts are carried at original invoice amount less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Impairment losses recognized in the profit and loss account on equity instruments are not reversed through the profit and loss account. in the consolidated financial statements. 4. 4. are measured at cost as it is not possible to apply any other valuation methodology. Cost in relation to investments made in foreign currency is determined by translating the consideration paid in foreign currency into rupees at exchange rates prevailing on the date of transactions. For the purpose of cash flow statement cash and cash equivalents comprise cash in hand.1 Available for sale The financial assets including investments in associated undertakings where the Company does not have significant influence that are intended to be held for an indefinite period of time or may be sold in response to the need for liquidity are classified as available for sale. while items considered obsolete are carried at nil value. Cost of purchase includes transaction cost. unless fair value cannot be reliably measured. the Company reviews the carrying amounts of the investments to assess whether there is any indication that such investments have suffered an impairment loss. In respect of ‘available for sale’ financial assets. 4. in accordance with the requirements of IAS 27 ‘Consolidated and Separate Financial Statements’. 4.13 Government grants Government grants are recognized at their fair value and included in non–current liabilities as deferred income when there is reasonable assurance that the grant will be received and the Company will comply with the conditions associated with the grant. are being accounted for using the equity method.2. The investments for which a quoted market price is not available. 2009 4. being the fair value of consideration given. All purchases and sales of investments are recognized on the trade date which is the date that the Company commits to purchase or sell the investment. At subsequent reporting dates. if any.10 Stores and spares Usable stores and spares are valued principally at moving average cost. The Company is required to issue consolidated financial statements along with its separate financial statements.2 Held–to–maturity Held–to–maturity investments are financial assets with fixed or determinable payments and fixed maturities that management has the positive intention and ability to hold to maturity. cumulative impairment loss less any impairment loss on that financial asset previously recognized in profit and loss account. These are recorded at amortized cost using the effective interest rate method.9. less any amounts written off to reflect impairment. Unrealized gains and losses arising from the changes in the fair value are included in fair value reserves in the period in which they arise. the recoverable amount is estimated in order to determine the extent of the impairment loss. Investments classified as available for sale are initially measured at cost. Bad debts are written off when identified. Investments in associated undertakings.9.2. If any such indication exists. is removed from equity and recognized in the profit and loss account.9. Impairment losses are recognized as expense.

20 Dividend Dividend distribution to the Company’s shareholders is recognized as a liability in the period in which the dividends are approved.19 Borrowing costs Mark–up and other borrowing costs are capitalized up to the date of commissioning of the respective qualifying asset. deposits and other receivables. 4. loans. 4.17 Foreign currencies All monetary assets and liabilities in foreign currencies are translated into Rupees at exchange rates prevailing at the balance sheet date.16 Derivative financial instruments These are initially recorded at cost value on the date a derivative contract is entered into and are remeasured to fair value at subsequent reporting dates. 48 Pakistan Telecommunication Company Limited . Any gain or loss on derecognition of financial assets and financial liabilities is included in the profit and loss account for the year. long term loans. Dividend income and return from investments are recognized when the Company’s right to receive payment has been established. Transactions in foreign currencies are translated into Rupees at the spot rate. which is the Company’s functional and presentation currency. All other mark–up.Notes to and forming part of the Financial Statements for the year ended June 30. cancelled or expired.18 Revenue recognition Revenue from telecommunication services is recognized when services have been rendered. 4. 4.14 Financial instruments Financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of the instrument and derecognized when the Company loses control of contractual rights that comprise the financial assets and in the case of financial liabilities when the obligation specified in the contract is discharged. 2009 Grants that compensate the Company for expenses incurred are recognized in profit and loss account on a systematic basis in the same period in which the expenses are recognized. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. 4. All non–monetary items are translated into Rupees at exchange rates prevailing on the date of transaction or on the date when fair values are determined. Return on deposits is accrued on a time proportion basis with reference to the principal outstanding and the applicable rate of return. trade and other payables and interest . 4. Revenue from international calling services and foreign operating cost is translated into local currency at the month end rate. interest and other charges are charged to profit. Grants that compensate the Company for the cost of an asset are recognized in the profit and loss account on a systematic basis over the expected useful life of the related asset upon capitalization. long term security deposits from customers. All financial assets and liabilities are initially measured at cost. The financial statements are presented in Pak Rupees. advances. 4. cash and bank balances. These financial assets and liabilities are subsequently measured at fair value or cost as the case may be. Exchange differences are included in income currently. Financial instruments carried on the balance sheet include long term investments.15 Offsetting of financial assets and liabilities Financial assets and liabilities are offset and the net amount is reported in the financial statements only when there is a legally enforceable right to set off the recognized amount and the Company intends either to settle on a net basis or to realize the assets and to settle the liabilities simultaneously. trade debts. which is the fair value of consideration given and received respectively.

000 thousand “A” class ordinary shares. dated July 30.000 51.326. UAE which is a subsidiary of Etisalat.000 1. 2009 5.3 5.740.100.476 thousand) “A” class ordinary shares had been exchanged for vouchers.774.774. In pursuance of the privatization of the Company.000.000.084 thousand “A” class ordinary shares were issued to general public. “A” class ordinary shares carry one vote and “B” class ordinary shares carry four votes save for the purposes of election of directors. 2009. 1996 as referred to in note 1. 2006. subscribed and paid up capital 2008 3. In the event of termination of the license issued to the Company under the provisions of Pakistan Telecommunication (Reorganization) Act.326. vouchers against 601.500 thousand (2008: 599. 1994 issued a second tranche of vouchers to the international investors also exchangeable. 2006 to Etisalat International Pakistan (EIP).000 5.5 Ordinary shares of the Company held by the related parties as at year end are as follows: Etisalat International Pakistan (LLC) SE Etisalat International Pakistan (LLC) (“B” class ordinary shares) (“B” class ordinary shares) 407. 2009 – note 5. the “B” class ordinary shares shall be automatically converted into “A” class ordinary shares.1 1.000 13. if there is any change of control of any member holding “B” class ordinary shares without the prior written approval of Government of Pakistan.774.000 (Numbers in thousand) (Rupees in thousand) – note 5. Out of 3.000 51.000 A class ordinary shares of Rs 10 each issued as fully paid for consideration other than cash B class ordinary shares of Rs 10 each issued as fully paid for consideration other than cash 2009 37. Except for voting rights the “A” and “B” class ordinary shares rank pari passu in all respects.190.100. a bid was held by the Government of Pakistan on June 8. Emirates Telecommunication Corporation–(Etisalat) was the successful bidder.Notes to and forming part of the Financial Statements for the year ended June 30.260.476 1.1 3.000 13. The Government of Pakistan through an “Offer for Sale” document.000 2008 37.326.000 Annual Report 2009 49 . “A” class ordinary shares can not be converted into “B” class ordinary shares. 599.190.000.809.476 1.809. 2005 for sale of “B” class ordinary shares of Rs 10 each along with management control.740.260.524 918.1.000 5.000 407.326. “B” class ordinary shares may be converted into “A” class ordinary shares at the option exercisable in writing submitted to the Company by the holders of three fourths of the “B” class ordinary shares.2 5. Till June 30. 1994 issued to domestic investors a first tranche of vouchers exchangeable for “A” class ordinary shares of the Company and through an Information Memorandum dated September 16.000. 2009 (Number of shares) 5. However.4 2008 5.1 These shares were initially issued to the Government of Pakistan in consideration for the assets and liabilities transferred from Pakistan Telecommunication Corporation (PTC) to Pakistan Telecommunication Company Limited (PTCL) under the Pakistan Telecommunication (Reorganization) Act. at the option of voucher holder for “A” class ordinary shares or Global Depository Receipts ( GDRs ) representing “A” class ordinary shares of the Company.000 Issued. The shares along with management control were transferred with effect from April 12.000 5. 1996 or at any time within three years from April 12.524 918.

953.379.099 (5. Insurance reserve Balance as at July 01 Utilized during the year Balance as at June 30 7. Payable to PTA against WLL license fee Payable to PTA against WLL license fee Present value adjustment Present value of license fee payable Imputed interest charged to profit and loss account to date Current portion shown under current liabilities – note 7.138) 3.996. The license fee payable has been discounted to present value of future cash flows using effective interest rate of 10% per annum and the corresponding adjustment was made to the cost of license included in intangible assets. Previously PTA allowed the Company to adjust Rs 2.473.744 295. 2009 2008 (Rupees in thousand) 9.095 1. Difference between the amount payable and the present value of cash equivalents being recognized as imputed interest over the remaining credit period. 2009 2008 (Rupees in thousand) 8.500 thousand out of Rs.473.618 8.105.1 2.749.1 990.789.379.500 (631.639 thousand already paid against the amount payable to Universal Service Fund (USF).055 951.1 During the current year.768.074 2008 (Rupees in thousand) In previous years the Company had paid to PTA Rs 4.500 (631.683. Long term security deposits from customers – non interest bearing – note 8.768.074 1.074 – 1.278.000 8.783.000 50 Pakistan Telecommunication Company Limited .047 (65.756) 1.439) (1.901) (58.515 (6.223) 590.106 2.971 (1.683.756) 1.973) 1.373.322.683.284. the Company adjusted security deposits amounting to Rs Nil (2008: Rs 40.105.113 590.227 1.000 The gross movement in deferred tax liability during the year is as follows: Balance as at July 01 Charge / (reversal) during the year Balance as at June 30 – note 35 590.953.635) (8.839 1.105. The balance amount of Rs 2. 4.730. Deferred taxation The liability for deferred taxation comprises of timing differences relating to: Accelerated tax depreciation / amortization Provision for doubtful trade debts Provision for doubtful advances and receivables Available tax losses Others 8.223 (1.000 2.Notes to and forming part of the Financial Statements for the year ended June 30.971) – 7.000 1.719.639 thousand in respect of license to provide Wireless Local Loop (WLL) services.720) – 3.278.744 480.711 thousand) against defaulter receivable balances.000 2.500 thousand in respect of license fee is payable to PTA in March 2010 and carries no interest. 2009 2009 6.105.839 – 1.1 2.

333.072 62.025.738 391.370) 7.816 (6.164 186.389.062 783.389.006 7.550.164 7.359) 841.448.872 232.871 76.673 (6.609 1.234 117.748) 145.208 5.240.026 630.1 Charge for the year 2008 was as follows Annual Report 2009 51 .443 267.872 630.482 1.000.507 14.099 10.906.000) – 4.514.142.125 – 472 – 217.231 – 932.550.604 314.096.235.893 85.610.837 (50.025.598) 12.860 14.868.566) 932.099 130.120.921 4.686 884.164 833.287 1.164 – 1.387) (127.019.333.417 131.282 – (13.210 6. Employees’ retirement benefits Liabilities for pension obligations Funded Unfunded Gratuity Accumulating compensated absences Post retirement medical facility – note 10.779) 391.208 841.609 267.099 14.1.482 268.395) – 587.182 (1.1 – note 10.310 – (76.333.373 (1.871 – 314.000.473 6.1 – note 10.109 – (374.096.120.152) 1.560 7.142.609 99.000) (470.869 – Current service cost – Interest cost – Expected return on plan assets – Actuarial losses / (gains) recognized during the year – Liability for NCPG / contractual employees Contributions Benefits paid during the year Liability as at June 30 10.240.026 445.012.286 1.135 30.062 Present value of defined benefit obligations Fair value of assets Unrecognized actuarial gains / (losses) Liability as at June 30 Liability as at July 01 Charge for the year – note 10.392.2 53.Notes to and forming part of the Financial Statements for the year ended June 30.896 6.297.1 – note 10.507 64.419 – (27.387) – – 161.825) 145.052 623.417 6.448.239 1.035.452 – (100.550.1 Employees’ retirement benefits Pension Funded Unfunded Gratuity Accumulating compensated absences (Rupees in thousand) Post retirement medical facility Total 2009 2008 (Rupees in thousand) 5.025.872 5.142.246 14.164 – 1.686 – 6.1 – note 10.331.372.5 (50.490 – (6.035) 841. 2009 2009 10.080 391.1 4.025.231 (90.885 – note 10.208 (669.598) 3.106 833.025.246 7.336) 14.106 108.147 – – – 138.006 33.297.246 282.

226 (Rupees in thousand) 2008 1.226 108.140 – 833.816) 778.231 (Gratuity) 2009 Balance as at July 01 Current service cost Interest cost Benefits paid Actuarial (gains) / losses Balance as at June 30 251.164 (9.541 1.152 3.893 85.125 (6.006 (Rupees in thousand) 52 Pakistan Telecommunication Company Limited .553 13.563.610 445.234 117.035.378 (Rupees in thousand) (Accumulating Compensated Absences) 2009 Balance as at July 01 Current service cost Interest cost Benefits paid Actuarial (gains) / losses Curtailment / settlement losses Recognition of NCPG / contractual liabilities Balance as at June 30 833.105.147 (13.610 (Rupees in thousand) (Pension Unfunded) 2009 Balance as at July 01 Current service cost Interest cost Benefits paid Actuarial losses Curtailment / settlement (gains) Balance as at June 30 709.783 (14.035) 11.320) 709.290 11.770 127.610.105.764 (703.896 6.180.232.358 (1.673 (3.779) (60.160) 12.990 157.477 102.012.2 Changes in the present value of the defined benefit obligations (Pension Funded) 2009 Balance as at July 01 Current service cost Interest cost Benefits paid Actuarial losses Curtailment / settlement losses Balance as at June 30 50.152) (27.825) – 145.871.126 251.858) 314.885 2008 36.033.419 (76.906.025.798) 41.687 – 1.164 2008 1.482 1.378 131.871 2008 111.870 – 932. 2009 10.444 97.382.529.135 30.271 50.Notes to and forming part of the Financial Statements for the year ended June 30.125 160.006 33.371) 953.679 22.077 – 53.

853 (673.413.448.947 126.538.798.735.339.947 (274.287 953.265 10.679 (522.819 314.434) (51.598) 3.931 423.686 940.508 (2.158.096.121 – 6.611.723.664.990 21.231 83.830.748 (235.121 5.628.3 Historical Information 2009 Defined benefit pension plan – funded Present value of defined benefit obligations at year end Fair value of plan assets at year end Deficit / (Surplus) in the Plan Experience adjustment on plan liabilities losses Experience adjustment on plan assets gains / (losses) Defined benefit pension plan – unfunded Present value of defined benefit obligations at year end Experience adjustment on pension liabilities (gains) / losses Defined benefit gratuity plan Present value of defined benefit obligations at year end Experience adjustment on gratuity liability (gains) / losses Accumulating compensated absences Present value of defined benefit obligations at year end Experience adjustment on accumulating compensated absences liability (gains) / losses Defined benefit post retirement medical facility Present value of defined benefit obligations at year end Experience adjustment on post retirement medical liability (gains) / losses 6.581.407) 4.981 805.089 38.195.Notes to and forming part of the Financial Statements for the year ended June 30.448.378 1.430 64.195.176) 4.854) 50.025.541 (45.040) 603.164 833.330) 2.134.077 (34.180.454) 1.174 778.597 3.338 53.052 623. 2009 (Post Retirement Medical Facility) 2009 Balance as at July 01 Current service cost Interest cost Benefits paid Actuarial losses / (gains) Curtailment / Settlement losses Balance as at June 30 10.764 1.761) 4.452 (374.253 28.101 709.407) (6.777) 2.430 (Rupees in thousand) 5.107.610 (48.220) 251.885 (50.686 2006 2005 39.962 (890) 1.735.798.318) (8.972.398 2008 2007 (Rupees in thousand) 2008 4.430 (51.337 2.105.436) 1.770 (96.369) 940.561 47.553 1.128 909 932.610.562.664) 36.675 31.937) (91.581) Annual Report 2009 53 .444 (77.488 (39.241.050.195.239 12.441.243.761) 2.583.226 41.776.006 1.238 2.126 111.823 156.529.664.239 5.077 (1.991 2.871.514.172) 136.871 (51.528) (7.

044 – 95.810 thousand).436 6.854) 50.158. Mansehra.000 95.480. Sargodha Civil Division.975 thousand). 10.044 1.297.318 4. Bahawalpur.7 In the next financial year expected contribution to be paid to the funded pension plan by the Company is Rs 463. Dera Ghazi Khan Civil Division and Hyderabad Civil Division.533 45.993.561. Dadu and Larkana.Notes to and forming part of the Financial Statements for the year ended June 30.5 Changes in the fair value of plan assets Balance as at July 01 Expected return on plan assets Contributions made by the Company during the year Contributions made by the employees – deputationists Benefits paid Actuarial (losses) on plan assets Balance as at June 30 Actual return on plan assets 48.664) 48.371) (1.892. Deferred government grants Balance as at July 01 Received during the year Balance as at June 30 – note 11.515.832 1.000 966.441.6 Effect of increase / decrease in medical cost trend rate Effect of 1 % increase in medical cost trend rate in current service cost and interest cost is Rs 18.792.906.1 95. 2009 2008 (Rupees in thousand) 11.697 thousand).426 thousand) and effect of 1% decrease is Rs 15.000.598 4.096.113 thousand (2008: Rs 1.387 1. 54 Pakistan Telecommunication Company Limited . Multan.286.879 6.000 – (3. (ii) Optical fibre extension – Baluchistan Package – 2.487 (2.063 thousand (2008: Rs 36.1 These represent grants received from Universal Service Fund ( a government formed agency ) mainly relating to property. 2009 10.436 3.569.441.4 Major categories of plan assets of defined benefit pension plan–funded as percentage of total plan assets are as follows: 2009 (Percentage) 2008 71 14 7 8 100 2008 Defence saving certificates Term finance and other certificates Pakistan investment bonds Fixed & other assets 43 47 6 4 100 2009 (Rupees in thousand) 10. plant and equipment received as assistance towards development of the telecommunication infrastructure in rural areas and include telecom infrastructure project for (i) basic telecom access in Pishin.168 10.416) (522.000 11.735.423 thousand) and effect of 1% decrease is Rs 1.181 thousand (2008: Rs 44. Effect of 1 % increase in medical cost trend rate in present value of defined benefit obligations for medical cost is Rs 1.242 thousand (2008: Rs 740.189 thousand (2008: Rs 1. (iii) Broadband projects in Faisalabad.061.563.

153 503.851 26.342 61.084 729.155 thousand (2008: Rs 519.964.534 21. 2008. 12.315.990 81 28.7.161 These relate to the normal business of the Company and are interest free. 573.698 1.144 6.122.Notes to and forming part of the Financial Statements for the year ended June 30. This includes an amount of Rs 3. 2008 to December 31. for employees hired subsequent to PTCL’s incorporation.1 – note 12.061.021 201.467 5.707 2.667 2008 (Rupees in thousand) – note 30.114.929 11.893 1.187 6.344 170. 2.131 719. The amount of provision made during the year is Rs.540.458.4 – note 12.856. As per agreement between the Company and the Pakistan Telecommunication Authority.2 5.914.706 498.397.426 13.851 thousand) representing provision against EOBI contribution payable under EOBI Act 1976.204 563.216 51.389 24.1 Included in trade creditors are amounts due to the following related parties : Telecom Foundation Pipes Limited Etisalat – UAE Etisalat – Afghanistan Thuraya 2.057 432.563 318.443 1.980.855 731.436 5.017 379.955 1.866 thousand (2008: Nil) payable to Universal Service Fund for the period from May 01.703 123.019 617.875.799 34.915 1.556 366. 53.232 – – 8.171 12. Trade and other payables Trade creditors Accrued liabilities Receipts against third party works Taxes payable Income tax collected from subscribers Income tax deducted at source Sales tax payable Advances from customers Technical services fee payable to related party Retention money payable to contractors / suppliers Payable to: Research and Development Fund Universal Service Fund – related party Pakistan Telecommunication Authority Due to satellite companies Unclaimed dividend VSS benefits payable Other liabilities – note 12.3 12.731. 2009 2009 12.3 Annual Report 2009 55 .263 20.304 thousand (2008: Rs 59. this amount is payable in 15 equal monthly installments starting from May 2009.2 This includes Rs.466 522.2 – note 30.414. The Company has withheld the payment of EOBI pending the settlement of court case as discussed in note 13.542 – 120.611 973.830 thousand).240 499.

The matter was taken up by the Company with the Federal Board of Revenue (FBR).924 thousand. external consultants calculated the rebate and discount amounting to Rs 349. Subsequently.125 thousand for breach of interconnect agreement by the Company. Because of the number of cases involved and their uncertain nature. it is not possible to quantify their financial effect at present. Contingencies and commitments 13. arising on the settlement of these cases is not likely to be material. final arguments of the parties are to be reheard. 13. Telecard Limited. 2001 and Rs 9. Pending final outcome of the appeal. no adjustment has been made in these financial statements for the above amounts. 2006 issues have been framed and evidence will be recorded in the next hearing. A counter claim for Rs 120. However.557 thousand) . identical to the above matter M/s Telefon has claimed Rs 97. if any.557 thousand (2008: Rs 1. In the suit. The Government of Pakistan ordered for immediate restoration of Pay Card services including rebate relief and discount to all pay phone service providers. A committee was formed comprising representatives from the Company and FBR.5 M/s Televoice has filed a suit with Honourable Sindh High Court for arbitration claiming Rs 409.6 56 Pakistan Telecommunication Company Limited . Contingencies 13. In previous years the Income Tax Authorities served show cause notices under section 52 and section 86 of the repealed Income Tax Ordinance 1979 for the assessment years 1996–97 to 1998–99 on failure to withhold/deduct tax under section 50(3) while making payments to non resident satellite companies.1 Commitments Commitments in respect of contracts for capital expenditure amounting to Rs 12.599. through card phone services and mobile telephone services within and outside the city of Karachi.4 In 1995 the Government of Pakistan.378 thousand (2008: Rs 11. In view of relief and discount offered by the Government.268 thousand.850 cases (2008: 1. pending the outcome of the execution application.261. The management and the Company’s tax advisor are of the view that the outcome of the appeal is expected to be favourable. the Company filed an appeal with the Commissioner Income Tax (CIT) Appeals who has annulled the order of the Taxation Officer. 2009 13.416 thousand rebate refund claim. 2006 in favour of PTCL for which execution has been filed by the Company with the court. The Company has also filed a claim against Telecard Limited for an amount of Rs 324. The department has filed an appeal with the Income Tax Appellate Tribunal (ITAT) against the order of CIT (Appeals).176 thousand on account of central excise duty. As a result of the negotiations.000 thousand has been lodged by the Company in the same court.352.026. In the last hearing held on May 9.561 thousand).599. in the interest of public safety. Consequent to an audit of central excise duty collected by the Company from subscribers for the years 1998–99 and 1999–2000 the Rawalpindi Collectorate of Central Excise Department raised a demand for excise duty along with additional duties and penalties amounting to Rs 2. the management and the Company’s legal advisor are of the view that the outcome of these cases is expected to be favorable and a liability.953 thousand payable by the Company to Telecard Limited for the period from January 1997 to August 2001.666 cases) have been filed against the Company primarily by subscribers and employees. On the instructions of Honourable Court. 13.3 13. However. 13. served a legal notice to the Government of Pakistan seeking restoration of its services and claimed damages from the Government amounting to Rs 2. passed an order to close transmission of all messages. inter alia.337 thousand from the Company. The arbitrator announced an award of Rs.033 thousand against the Company. In another case. a pay card service provider. Telecard Limited withheld payments on account of their monthly bills to the Company and obtained a stay order from the Honourable Sindh High Court for an amount of Rs 110. The management and the Company’s tax advisor are of the view that the outcome of the appeal is expected to be favourable. the Company deposited an amount of Rs 466.2 1. Government of Pakistan for resolution. The Company filed a writ petition before Honourable Lahore High Court against the said notices which was dismissed.000 thousand on April 25.683 thousand receivable up to December 31.043. no provision has been made in these financial statements for the demands aggregating Rs 1.Notes to and forming part of the Financial Statements for the year ended June 30.115. An appeal was filed against the dismissal before Honourable Supreme Court of Pakistan which was also dismissed and the Company was advised by the Honourable Court to file an appeal before the Income Tax Appellate Authorities.

since the management and the Company’s lawyer are of the view that the outcome of the appeal is expected to be favourable.Notes to and forming part of the Financial Statements for the year ended June 30.496. During the year ended June 30.829 thousand for the period January 1. The management has filed a writ petition against the demand before Honourable High Court which is pending for hearing. 1996 to May 31. Pending the final outcome. 2009 13. 13. The Commissioner of Income Tax (CIT Appeals) and Income Tax Appellate Tribunal (ITAT) have endorsed the departmental view and presently Company’s reference against the judgment of ITAT. Provision in connection with above amendment of assessment has not been incorporated in these financial statements owing to the fact that management and the Company’s tax advisor consider that underlying legal and factual position favours the Company’s stance and that the litigation would eventually settle in company’s favour.337 190.000 2. Central Excise and Sales Tax Appellate Tribunal in favour of PTCL subject to submission of proof.000 thousand.000 – 190. Additional Commissioner of Income Tax (ACIT) inter alia amended the assessment on the grounds that Company’s claim of concessional rate of tax at 1% of revenues received from international customers.8 (Rupees in thousand) Annual Report 2009 57 . 2005.468. the management and legal advisor are of the view that case would be decided in the favour of the Company. 2001 is not in accordance with such legal provisions. However.806 thousand had been decided by Custom. provided for through Clause 3 of Part II of Second Schedule to the Income Tax Ordinance. The overall impact of this amendment is approximately Rs 2.250. is pending before the Rawalpindi Bench of the Honourable Lahore High Court.337 5. 2009 It was agreed that the Company would retain the right to contest the additional duties and penalties at all appellate forums and in the event of favourable decision the amount would be refunded to the Company by Collectorate of Central Excise.000 2008 13.9 Bank guarantees and bid bonds issued in favour of: Universal Service Fund (USF) against Government grants Others 2.035. 1976 for payment of Company’s and employees contribution amounting to Rs 1. no provision has been made in these financial statements for the above demand. 2008 appeals amounting to Rs 1. as underlying telecommunication services have not been rendered outside Pakistan. In respect of tax years 2006 and 2007. The Company has filed an appeal to contest the additional duties and penalties levied by the Collectorate. in this respect.7 The Employees’ Old–Age Benefits Institute (EOBI) served a demand notice on the Company under section 12(3) of Employees’ Old Age Benefits (EOBI) Act.030.

421 1.184 98.389 71.700 159.554) – 1.771) 1.671 (38.244 37.744 171.590.781 54.565.178 – 1 – 3.968) 15.838. 2009 Accumulated Depreciation depreciation for the year/ as at July 1.009.701.378 – 12. 2009 Accumulated Depreciation depreciation for the year/ as at July 1.925 (1.063 2.336.091 (4.Notes to and forming part of the Financial Statements for the year ended June 30.009 296.188.142 555 1.731 – 6.470) – 5. plant and equipment Office equipment Furniture and fittings Vehicles Submarine cables Total 1.979 87.766) 114.821 2.577.265.111 – 103.133 74.318 (5.805 74.345 (4.121.264.244.150 3. 2009 14.092 82.243 1.849.511.183 231.065 10.801 455.762 249.244.151 – 286.67 – 8.766) 180.629.323.191.618.895.150 123.965 444.419.910 227.701.278) 26.239.178 22.310 (3.971 (1.132 (359.643.67 – 8.132 518.159 66. 2009 Net book value as at June 30.315 12.643.419 – 25.024.795 31.184 102.630.763 – 1 – 3.008.335.486 1.418 – 210.270 1.310 1.241 1.819) 422.419.781.3 2.318 444.785.832 1.137.641 148.636 – 183.706 (373.009.838.781 – 3.906 5.937 (379.5 7 10 10 10 20 6.671 2.887 430.677 296.127 (3.359.186) 24.677.525 568.355) 250. 2009 Annual rate of depreciation % (Rupees in thousand) Land – Freehold – Leasehold Buildings on – Freehold land – Leasehold land Lines and wires Apparatus.408 – 5.342 282. 2008 Additions/ (deletions) Cost as at June 30.600 1.006 159.730.619 4.335. 2009 Annual rate of depreciation % (Rupees in thousand) Land – Freehold – Leasehold Buildings on – Freehold land – Leasehold land Lines and wires Apparatus.076.643.220 883.254 (16.741 80.5 2.5 7 10 10 10 20 6.566.487) 21.125) 108.315 – – – 1.642 316. (on disposals) 2008 Accumulated depreciation as at June 30.964 (395.009.127 1.821 (45.220.230 351.114 9.497 5.573.605.184 – 4.003 (4.480 620.529) 91.226 74.226 52.985 118.008.643.954 139. 2009 Net book value as at June 30.641.407 – – 21.895.464.926 1.220.294.821 5.33 7.900 632.252 – – – 953 21.091 351.423 104. plant and equipment 2009 Cost as at July 1.715.585.999 – 247.048.463.854 1.575 2.486 (407.086.142 147.871 394.568.079 9.677 35.985 – 10.508.565 28. (on disposals) 2008 Accumulated depreciation as at June 30.063 2.226 – 37 74.170) 422.571 3.715.274) 58 Pakistan Telecommunication Company Limited .572.741 – 6.954. Property.785.33 15.5 2.963) 52.643.181 118.419 7.163 657.291.821 – 242.469 326.402 273.099.029 77.575 1.354 489.277 (388.704.608 71.330 7.3 2.407 242.664.389 – 5.323.013 (479.953) 25.995.009.483.151 9. plant and equipment Office equipment Furniture and fittings Vehicles Submarine cables Total 1.566.981 108.024.004 102. 2008 Additions/ (deletions) Cost as at June 30.729 1.204) 2008 Cost as at July 1.715.552 1.207.328 2.774 80.864 242.800.410 1.868 2.230 376.964 (409.032.677 (3.267 77.915) 130.948.055) 1.184 1.240.189.254 1.990 75.086.407 – 20.553 518.319 – – 1.

999. Iqbal Siyal Atiq Nawaz Mazhar Amin Ehsan Ul Haq Rao Abdul Raqeeb Khan M.006 2008 (Rupees in thousand) As explained in note 1.486 62.244. the title to such freehold land was not formally transferred in the name of the Company in the land revenue records.126 183. The Company initiated the process of transfer of title of land in its name in previous year which is still ongoing and shall be completed in due course of time.226 704 679 455 693 158 468 617 454 466 456 305 225 225 225 225 225 333 454 300 114 177 88 176 170 304 173 165 117 155 114 117 114 258 338 338 338 338 338 500 114 263 283 169 250 167 161 304 173 152 293 154 284 291 285 338 321 338 321 338 338 500 270 338 Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy 4.186 4.766 66 88 266 127 220 15 782 – 260 38 275 88 115 97 873 477 Auction Auction Auction Auction Auction Auction Auction Annual Report 2009 59 . plant and equipment 2009 Particulars of assets Sold to Cost Accumulated depreciation Book value Sale proceeds Mode of disposal (Rupees in thousand) Office Equipment TV Computer Accessories Printers. Roshan Awan Sana Ullah Shaikh Dr.429 188.829 12.220 12. 1996.766 54 63 581 51 428 9 1.565.744 14. 1996 were transferred to the Company from Pakistan Telecommunication Corporation under the Pakistan Telecommunication (Reorganization) Act.1 the property and rights in the above assets at January 1. Amjad Ali M. CPUs AC’s Photocopiers Miscellaneous items Miscellaneous parties Miscellaneous parties Miscellaneous parties Miscellaneous parties Miscellaneous parties Miscellaneous parties 120 151 847 178 648 24 1.2 11.314.314 880 849 759 866 323 585 772 568 583 570 563 563 563 563 563 563 834 568 563 453 710 1. Iqbal Waseem Syed Abid Hussain Zubair Assadullah Tunio Nafees Ahmed Siddique Bashir Hussain Nawazish Ali Anjum Rizwan Ahamd Bhutto Hussain Ahmad M.1 The depreciation charge for the year has been allocated as follows: Cost of services Administrative and general expenses Selling and marketing expenses – note 29 – note 30 – note 31 12.660 61.Notes to and forming part of the Financial Statements for the year ended June 30. Tahir Saeed Zakir Hussain Satti Anwer Jamil Mian Muhammad Bilal Fuad Enver 567 887 1.3 Disposal of property.968 Furniture & fittings Motor Vehicles Gul Muhammad M. 2009 2009 14. However. 14.

Aamir M.330 204.433 500 291 291 403 293 411 283 542 455 309 338 433 378 386 454 338 144 432 293 220 220 283 329 281 153 147 317 188 284 321 321 338 270 321 142 305 304 443 298 338 244 209 338 455 283 250 284 229 202 183.141 759 773 563 866 755 773 955 563 757 759 585 367 367 404 759 562 323 775 834 416 568 563 563 563 569 563 746 610 640 886 597 563 367 367 563 759 404 626 568 604 344 342.819 379. Iftikhar Ahmed Cheema Kanwar Ghulam Mustafa Khan Shakeel Ahmed Aftab Ahmad Chishti Col (Retd) Zamir Hussain Bhatti Zomma Mohiuddin Sajjad Ahmad Shahid Ahmad Gohar Malik S.577 373. Amir Hussain Brig (R) Waqar Ahmed Malik Syed Ali Qadir Jillani Noor Ahmed Noor Javed Iqbal Tariq Qamar Sohail Anwar Zia Ud Din Barki Badar Ul Zaman Behram Shahrokh Aslam Shaukat Ali Muhammad Siddique Afridi Faheem Ul Hassan Abrar Ahmed Fazle Mabood Ghulam Shabbir Mehboob Iqbal Qadir Mudassar Hafeez Dar M.771 500 116 116 174 117 173 114 228 375 155 258 173 151 155 191 338 151 354 116 147 135 182 455 112 150 155 420 173 114 338 258 258 115 258 147 124 127 177 119 338 165 165 173 342 182 124 114 120 143 57 14. 60 Pakistan Telecommunication Company Limited . 2009 Particulars of assets 2009 Sold to Cost Accumulated depreciation Book value Sale proceeds Mode of disposal (Rupees in thousand) Imran Ul Haq Mubashir Naseer Ch.634 388. Mazhar Hussain Syed Shafqat Mehdi Zulfiqar Ali Shah Sher Bahader Khan Saleem Mudassar Hafeez Dar Muhammad Azam Mujeeb Ur Rehman Israr Ahmed Abro Muhammad Anwar Tariq Mehmood M.204 333 466 466 693 468 693 453 913 384 618 305 693 604 618 764 225 606 405 469 220 232 222 304 450 173 620 413 242 454 225 305 305 454 305 599 486 512 709 478 225 202 202 390 417 222 502 454 484 201 342.689 206.470 395. Imran Ali M.000. Hatam Shad Others Total 834 582 582 867 585 866 567 1.Notes to and forming part of the Financial Statements for the year ended June 30. Afzal Kharal Muhammad Umar Wajeeh Anwar Muhammad Saleem Akhtar Mushtaq Ahmed Afridi Sardar Ali S. M.039 Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Auction Company Policy Others represent vehicles disposed off during the year having a book value of less than Rs 50.651 15.

248 3. Annual Report 2009 61 .720 359.125 3. plant and equipment Exchanges DRS Links BTS Buildings Civil Work / Electrification Furniture and fittings Office furniture & fixture Office equipment Motor Vehicles – – – Sher Bahadur Khan Javaid Akhtar Gul Ahmed Pervaiz Akhtar Naveed Iqbal S Ubaid Hussain Shah Naeem– Ul Haq Pervaz Ahmed Mehtab Rehmat Ullah Nawab Khan Afridi M Hanif Khan Muhammad Iqbal Bangish – 3.651 Write Off Write Off Write Off Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Company Policy Theft – 16. 2009 Particulars of assets 2008 Sold to Cost Accumulated depreciation Book value Sale proceeds Mode of disposal (Rupees in thousand) Apparatus. The amounts written off during the year represent the book value of assets that were partially or completely destroyed under the country wide riots that took place in December 2007.487 5.953 11.168 15.714 22.483 19.278 5.492 5.652 7.384 – – – – Write Off Write Off Write Off – – Others Total Others represent property.928 23.330 479.062 14.146 2.685 287 346 289 466 346 289 343 289 448 474 468 197 204 2.950 866 755 759 866 755 894 753 1.055 362 2.554 4.708 4.026 23.168 1.963 5.746 48.740 8.274 3.562 1.914 354.466 407.Notes to and forming part of the Financial Statements for the year ended June 30. plant and equipment disposed off during the year having a book value of less than Rs 50.219 – – – 347 290 472 347 289 343 289 448 474 468 197 204 – 4.098 89 70.663 520 466 293 520 466 551 464 720 711 291 590 611 3.185 759 787 815 5.530 40.000.241 409.601 – Write Off – – – 394.

397 (866.476.5 16.270 109.413.2 (Rupees in thousand) 16.245.092.605 3.588 127.271 thousand) in respect of overheads relating to the development regions capitalized during the year.376 3.149.6 – note 16.632 4.397 8.957) (1.706 675.639 thousand. Intangible assets Cost – Licenses – Softwares – note 16.1 – note 15.242 38.749) (29. Capital work in progress includes an amount of Rs 443.397 397.334) – (866.182 4.949 866.1 Accumulated amortization – Licenses – Softwares – note 16.2 Accumulated amortization Balance as at July 01 Amortization for the year – Licenses – Softwares – note 29 Balance as at June 30 866.015.015.1 Advances to suppliers include an amount of Rs 1.2 15.949 – 190.670 4. 2009 2008 15.127 – – – 109.334 196.376 (1.065 343. Pakistan Telecommunication Company Limited 62 .685.015.062.092. plant and equipment Intangibles Advances to suppliers 118.957 226.015.000 thousand) given to Emirates Telecommunication Corporation.696 9.613.532 thousand (2008: Rs 449.892. 2009 2009 15. 1996 for an agreed license fee of Rs 249.278.906.Notes to and forming part of the Financial Statements for the year ended June 30.329. The cost of the license is being amortized on straight line basis over the period of the license.344 thousand. This license allowed the Company to provide the Wireless Local Loop services in Pakistan over a period of 20 years commencing October 2004.1 Cost Balance as at July 01 Additions during the year – Bill printing software – Billing and automation of broadband – Enterprise Resource Planning (ERP)SAP system – WLL and LDI License Balance as at June 30 4.121.426 thousand (2008: Rs 704.334 16.589.435 2.413 1. in respect of a project called India Middle East Western Europe (I–ME–WE).397 – note 16. a related party.713 – 397.334) 3.415 29.015.3 The Pakistan Telecommunication Authority (PTA) has issued a license to the Company to provide telecommunication services in Pakistan for a period of 25 years commencing January 1. PTA modified the previously issued license to provide telecommunication services to include spectrum license at an agreed license fee of Rs 4.397 – 4.873 68.413.063 16. Capital work–in–progress Buildings Lines and wires Apparatus. 2005.517 1.270 4.823 2008 (Rupees in thousand) – note 15.201 46.836.320.2 4. In the year ended June 30.979 4.816 7.385 190.372 1.706) 3.979 4.

000.539 23.4 PTCL acquired the IPTV license from PEMRA on October 1. This represents Enterprise Resource Planning (ERP) – SAP system with a useful life of 10 years.2 – – – – – 200.658.000 (2008: 2.000 (200.000 5.607.207) ordinary shares of US $ 0.000.000) ordinary shares of 1 Dirham each (Chief Executive: Mr.390) – – 3.000.01 per share (Acting Chief Executive: Mr.390) – 2. Long term investments – at cost Subsidiaries – unquoted Pak Telecom Mobile Limited 350.Notes to and forming part of the Financial Statements for the year ended June 30. 109.500.000. The cost of license is being amortized on straight line basis over the period of 5 years.523. maintain and operate a telecommunication system in Azad Jammu and Kashmir and Northern Areas for a period of 20 years commencing May 28.390 (6.000) ordinary shares of Rs 10 each Ordinary shares held Nil (2008: 100% ) Provision for impairment Associate – unquoted Telecom Foundation Pipes Limited 1.000 ) ordinary shares of Rs 10 each Ordinary shares held 100% (2008: 100% ) Paknet Limited Nil (2008: 20.000 – note 17.607. The cost of the license is being amortized on straight line basis over the period of the license.000 3.000) Provision for impairment Advance against purchase of shares – note 17.439 6.000 20. 2009 17.6 (Rupees in thousand) – note 17.539 Annual Report 2009 63 . 2006 to the Company to establish. 9.207 (2008: 218.439 63. Yousuf Al Syed) World Tel Assembly of Governors Participation Fund investment of US $ 100.1 23.000) ordinary shares of Rs 10 each (Chief Executive: Mr.000. 1996.670.670.3 6.520) ordinary shares of Rs 10 each Ordinary shares held 40% (2008: 40% ) (MD: Gul Bahadur Yousafzai) Other investments Available for sale – Unquoted New ICO Global Communications (Holdings) Limited 218.000) – 3.539 3.539 3.900 20. 2008 for an agreed license fee of Rs.000 (2008: 350.000 2008 16.270 thousand.000 (2008: 3.000 (2008: US $ 100. The Pakistan Telecommunication Authority (PTA) has issued a license under section 5 of the Azad Jammu and Kashmir Council Adaptation of Pakistan Telecommunication (Re–organization) Act. Corkery) Alcatel – Lucent Pakistan Limited 2.500.5 16.000. Michael P. Northern Areas Telecommunication (Re– organization) Act.523.900 thousand. 2009 16.390 (6.658.520 (2008: 1. 2006 for the agreed price of Rs.900 63. 2005 and Northern Areas Telecommunication (Re–organization) (Adaptation and Enforcement) Order. Ben Verwaayen) Thuraya Satellite Company 3.

3 (Rupees in thousand) This represents an unsecured loan given during the year to Pak Telecom Mobile Limited. the wholly owned subsidiary.378 18. recoverable in monthly installments spread over a period of 1 to 2 years. which was extended by the Company up to August 3.1 17.8 shares and an option to exchange one warrant of US $ 90 for exchange with 13.1 Stores and spares include items which may result in property.178 200 3.000.1 – 524. under a subordinated debt agreement. a wholly owned subsidiary of the Company.455) 4. the shareholders of ICO Global Communications (Holdings) Limited received one class A ordinary shares of US $ 0.505. 1999. The business was renamed New ICO Global Communications (Holdings) Limited following its emergence from Chapter 11 protection on May 16.000 455.84 shares at any time on or after May 16. 2009 17.670 thousand (2008: Nil) receivables from employees against sale of vehicles.591) 5. New York City time. These loans are secured against future pension payments of employees. established in January 1995 to provide global mobile personal communication services by satellite. The Company did not exercise the option before expiry.582 (649. 35. on May 17.613) 394.943 – 394.540 (551. 2000 (the effective date) on which the reorganization plan becomes effective until 5 p. motor cycles and cycles.599 (123.2 The investment has been written off during the year upon dissolution of Paknet Limited. 2000.2 – note 21 3. 2009 18.421) 332. The loans are recoverable in monthly installments spread over a period of 5 to 10 years. This also includes Rs. Long term loans – considered good Loan to subsidiary: PTML – unsecured Loans to employees – secured Current portion shown under current assets Others – note 18.m.2 5. 64 Pakistan Telecommunication Company Limited .332.2 (Rupees in thousand) 19. The loan is recoverable in eight equal quarterly installments commencing after a grace period of four years and carries markup at the rate of three months KIBOR plus 82 basis points.01 in New ICO Global Communications (Holdings) Limited for every 103.085 19.556 (129.5% per annum (2008: 12.943 2008 17.Notes to and forming part of the Financial Statements for the year ended June 30. 2006. Stores and spares Stores and spares Provision for obsolescence – note 19. 2006. for issuance of ordinary shares. New ICO Global Communications (Holdings) Limited acquired the assets of ICO Global Communications (Holdings) Limited.991 5.5% per annum). whereas. This represents an advance given to Pakistan Telecom Mobile Limited. Loans to gazetted employees of the Company carry interest at the rate of 12. According to the reorganization plan. plant and equipment but are not distinguishable.1 – note 18. 2009 2008 18.201. These loans and advances are for house building and purchase of motor cars. ICO Global Communications (Holdings) Limited was suspended from trading when the Company filed for Chapter 11 protection on August 27.851.954. loans to other employees are interest free.

140) 649.403 252.3 29.502 657.652.640 590.316 Provision for doubtful debts – note 20.395 20.591 414.760.656 25.893 (1. 2009 2009 19.887.069 21.206.576 885.117.740 4.677.525 2.993.974 20.206.551.645. Loans and advances Current portion of loans to employees – considered good Advances to suppliers and contractors – considered good – note 18 123.2 Included in trade debts – international are amounts due from the following related parties: Etisalat – Afghanistan Etisalat – UAE Mobily – Saudi Arabia 100.744 thousand (2008: Rs 695.455 2008 (Rupees in thousand) Included in trade debts – domestic are amounts due from Pak Telecom Mobile Limited and National Telecommunication Corporation (NTC).3 Provision for doubtful debts Balance as at July 01 Provision for the year Trade debts written off against provision Balance as at June 30 – note 30 17.760 30.396) 10.366.757. amounting to Rs 412.907.206.069 2.566.216 – note 30 551.080.734 27.370 (18.636 4.396 13.670 thousand) and Rs 354.309 thousand (2008: Rs 1.814.437) 551.1 10.132.455 172.068) 18.572.054 – note 20.257 18.439.892 (115.791 16.194.439.824) 17.119 1.996.110.425 318. These amounts are interest free and accrued in the normal course of business.613 758. Trade debts Domestic Considered good–unsecured Considered doubtful International Considered good–unsecured Considered doubtful – note 20.061 129.069) 13.996.335 3.489 666.464 (1.645 655.070 thousand) respectively.421 466.2 Provision for obsolescence Balance as at July 01 Provision during the year Write off against provision Balance as at June 30 20.285 (17.2 3. related parties of the Company.309 Annual Report 2009 65 .645 20.Notes to and forming part of the Financial Statements for the year ended June 30.286.696 888.442.731 (74.1 7.398 18.771 528. 2009 2008 (Rupees in thousand) 20.113. – – 655.276 723.392 These amounts are interest free and accrued in the normal course of business.

Recoverable from tax authorities Central excise Sales tax 466.1 26.176 593.494 185.1 2009 2008 (Rupees in thousand) 23.904 1.608 466.344.164. as indicated in the note 18.221.Notes to and forming part of the Financial Statements for the year ended June 30.017.751) 26.176 (26.239) 698.1 2.674 54.559 2. Receivable from Government of Pakistan 25.880 26.383.509 (185.559 158.353 821.1 This represents the amount receivable from Government of Pakistan (GOP) on account of its share in the Voluntary Separation Scheme (VSS) offered to the Company’s employees during last year. Short term investments Maturity period upto three months Maturity period three to six months – note 26.239 446.767 220. 2009 26.379 – 10.766 24.668.009 147.733 Provision for doubtful receivables – note 24.1 883.344.310 – 34.641. the wholly owned subsidiary. 2009 2009 22. The effective interest rate ranges between 13% to 17% (2008: 10% to 14.310 (7.590 1.164.25%) per annum.239 – note 25.1 315. 66 Pakistan Telecommunication Company Limited .072 25.795.439 1.239 – 185.680 185.013 474. Other receivables Due from Pakistan Telecommunication Employees Trust (PTET) – related party Due from PTCL employees’ GPF Trust – related party Due from Special Communication Organization (SCO) Other receivables: – considered good – considered doubtful 69.379 2008 (Rupees in thousand) These represent Term Deposit Placements with different banks having maturity periods of three to six months.1 19.270 38. Accrued interest Accrued profit on bank placements Interest receivable on loan to the subsidiary – considered good – note 22.617 24.059.559 501.072 34.978 906.817 – 315.886 21.1 Provision for doubtful receivables Balance as at July 01 Provision for the year Trade debts written off against provision Balance as at June 30 – note 30 26.432 1.176 917.790 10.1 766.559) 1.027 22.746 221.000 261.817 2008 (Rupees in thousand) This represents markup on loan to Pakistan Telecom Mobile Limited.

081 247.704.039.897 37.432 3.562 4.657 3.1 – note 16.303 1.546 59.574 11. Cost of services Salaries.Notes to and forming part of the Financial Statements for the year ended June 30.611.923 thousand) payable to National Telecommunication Corporation for the current year.643 37.336. 2009 2008 (Rupees in thousand) 29.632.5 % per annum (2008: 1.533.109.250.2 This includes Rs 1.602.145 2008 (Rupees in thousand) The balances in deposit accounts bear mark up which ranges from 5 % to 19. 2009 2009 27.346.165 4.273 11.239.541.1 7.168 717.2 – note 14.478 16.042 28.995. Annual Report 2009 67 .754 502.308 12.949 379.079 thousand (2008: Rs 104.474.198 16.103.694 thousand) in respect of employees’ retirement benefits other than VSS.314.118 109.191 thousand (2008: Rs 7.001 60. Cash and bank balances At banks in: – Deposit accounts – Current accounts including US $ 10.372 323.709 1. allowances and other benefits Call centre charges Interconnect cost Foreign operators cost and satellite charges Fuel and power Communication Stores and spares consumed Rent. rates and taxes Repairs and maintenance Printing and stationery Travelling and conveyance Depreciation of property.758.097. Revenue Domestic International – note 28.304. plant and equipment Amortization of intangible assets Annual license fee to PTA – note 29.147 1.448 27.948 7.2 Revenue is exclusive of excise duty amounting to Rs 8.475.739.421 1.1 10.531 1.1 3.429 226.695 thousand).869 – note 29.025 66.199. 2009 2008 (Rupees in thousand) 28.906.033 187.1 28.724 255.017 5.984 5. This includes co–location charges of Rs 78.906.415 4.789.420 28 11.2 29.583 11.604 190.5 % to 14.732. 10.816.222 thousand) In hand – note 27.25 % per annum).667 6. International revenue represents revenue from foreign network operators for calls that originate outside Pakistan and it has been shown net of interconnect cost relating to the other operators and Access Promotion Charges aggregating to Rs.794 thousand (2008: Rs 7.305 thousand (2008: Rs 86.961 2.085 3.126 190.886.2 53.053.414.1 29.160.999.545.455 6.1 – note 28.751 thousand (2008: US $ 1.631.282 9.176 thousand).

261 30.467 1.395 158.250 200 68 Pakistan Telecommunication Company Limited .500 250 4.147 8.796 183. allowances and other benefits Call centre charges Fuel and power Rent.509 – 1.3 – note 24.1 – note 30.498 165.705 thousand) in respect of employees’ retirement benefits other than VSS.6 This includes Rs 164. under a technical service agreement between the Company and Etisalat for a period of five years commencing October 1.489 4. 3 Auditors remuneration The charges for legal and professional services include the following in respect of auditors’ services for: A F Ferguson & Co.069 142.3 – note 14.1 814.562 thousand (2008: Rs 15.634 3.588 2.074 322.940 130.898 3. Statutory audit including half yearly review Others KPMG Taseer Hadi & Co.2 – note 30.660 648.652 1.167 160.935.934.500 250 – – 4.500 4. This represents amount payable to Emirates Telecommunication Corporation (Etisalat).195 – 942.555 2008 (Rupees in thousand) – note 30.4 – note 19.147 16.651 8.886.681 30. 2009 2008 (Rupees in thousand) 30. plant and equipment Research and development Provision for: – Impairment of investment – Obsolete stores – Doubtful debts – Doubtful receivables Donations Receivables written off Loss on settlement of Paknet Limited balances Other expenses – note 30. 2009 2009 30.Notes to and forming part of the Financial Statements for the year ended June 30.614 28. Administrative and general expenses Salaries.252 132.885 486. Statutory audit including half yearly review Others – – 9. 2006 at the rate of 3.900 4.250 200 8. a related party.064 – 2.5% of PTCL group’s consolidated annual revenue.186.618 4.823.138.679 252.680 37.1 – note 30.459 10. rates and taxes Repairs and maintenance Printing and stationery Travelling and conveyance Technical services fee Legal and professional services Depreciation of property.276 2. Statutory audit including half yearly review Others Ford Rhodes Sidat Hyder & Co.1 30.486 471.2 – note 20.2 886.075 234.434 188.239 – 172.907.398 75.

110 2.071 31.998 – 54.469 thousand) in respect of employees’ retirement benefits other than VSS. plant and equipment – note 31. Provision against doubtful debts is net of security deposits written back amounting to Rs Nil (2008: Rs 40.308 490. allowances and other benefits Call centre charges Sales & Distribution Charges Fuel and power Printing and stationery Travelling and conveyance Advertisement and publicity Depreciation of property.5 30. Selling and marketing expenses Salaries. 18. Out of 29.574 675. The amount of actuarial gain/loss on curtailment / settlement and proportionate share of unrecognized actuarial gains/losses as at March 31.799. 2009 30. 2008 for employees who have opted for VSS have also been adjusted/charged against the VSS expense.167 of these employees have become pensioners last year.126 16. 2008 have been treated as VSS cost. 25.6 (Rupees in thousand) – note 14.1 This includes Rs 109. The benefits offered over and above the accumulated post retirement benefit obligation as at March 31.220 1.829 1.954 employees who opted for the scheme.631 16. Voluntary separation scheme (VSS) Last year the Company offered a uniform non–discriminatory Voluntary Separation Scheme (the Scheme) to its employees hired on government terms and conditions.946 2008 30.980 2.487 62.4 This represents Company’s contribution to Information Communication Technology (ICT) Research and Development Fund at the rate of 1% of its gross revenue less inter operator payments and payments toward research and development activities in Pakistan in accordance with the terms and conditions of its license to provide telecommunication services.1 32.817.324 belong to funded pension scheme and 4.912 10. The break up of the VSS expense is as follows: Annual Report 2009 69 . 2009 31.630 to unfunded pension scheme.711 thousand) against defaulter receivable balances.503 18.486 69. There were no donations during the year in which the directors or their spouses had interest.1 799. 978.717 357.136 61.708 thousand (2008: Rs 10.Notes to and forming part of the Financial Statements for the year ended June 30.

587 41.800 – – – – – – – 703.641.921.724 3. 2009 2009 Pension Funded Unfunded Gratuity Accumulating compensated absences Post retirement medical facility Total (Rupees in thousand) Commutation under VSS Pension paid Pension payable – long term Accumulating compensated absences Post retirement medical facilities Lump sum medical compensation Cost of VSS retirement benefits – Provision for retirement benefits – Unrecognized actuarial gains / (losses) recognized on curtailment / settlement VSS expense relating to retirement benefits Other VSS expense VSS consultancy / implementation cost Total VSS cost Contribution from Government of Pakistan Net Cost of VSS 10.384 – 92.366.482.351 – – – – 7.383 – – – 7.383 17.383 10.351 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 7.601 5.092 28.386.317.381 28.995 18.317.693 19.160.600 5.919 – – 1.960) – – – – – – – – – – – – – – 1.000) 23.600 47.017 2.381.931 22.919 2.317.956.417 2.118 – 92.214 1.400 490.759 735.351 – – – 10.747.734 – – – 17.919 1.937.272.500.580.826.214 – – – 41.471 22.778 1.956.029 133.140 – – – – 2.580.429.351 – – – – – 10.574.381 28.482.995.Notes to and forming part of the Financial Statements for the year ended June 30.238 22.193.734 74.327.258 11.193.320 (82.063.400 490.417 2.360) 620.779 157.854 (17.630.118 2008 Pension Funded Unfunded Gratuity Accumulating compensated absences Post retirement medical facility Total (Rupees in thousand) Commutation under VSS Pension paid Pension payable – long term Accumulating compensated absences Post retirement medical facilities Lump sum medical compensation Cost of VSS retirement benefits – Provision for retirement benefits – Unrecognized actuarial gains / (losses) recognized on curtailment / settlement VSS expense relating to retirement benefits Other VSS expense VSS consultancy/implementation cost Total VSS cost Contribution from Government of Pakistan Net Cost of VSS 11.383 7.040.747.981 4.779 – 1.854 70 Pakistan Telecommunication Company Limited .960 (620.195 18.160.

2 (Rupees in thousand) 34.764 319. the wholly owned subsidiary.43) 1.617 847.986.00 2.268 35.869.132 908.948 167.637. plant and equipment Others 190.000 thousand).539 – note 33.27) 34.497 (1. as shown in the note 18.1 – note 33.73 35.184 3.172 33.223) (1.2 270.70 Annual Report 2009 71 .794 350.264 4.267.00 (0.598 213.966 thousand) accrued on the loan given to Pak Telecom Mobile Limited. This includes dividend from Pak Telecom Mobile Limited.524 1.908 585.000 2.333 thousand (2008: Rs 24.1 (50.783. Taxation Current Deferred – note 9 3.080.726) 2008 35.76) 0.957. Other operating income Income from financial assets: Mark up on loans and advances Dividend Return on bank placements Late payment surcharge from subscribers on over due bills Income / (expense) from non–financial assets: Gain / (loss) on disposal of property.1 Tax charge reconciliation Numerical reconciliation between the average effective tax rate and the applicable tax rate: Applicable tax rate Chargeable to tax at lower rates / effect of change in prior year’s tax Tax effect of amounts that are not deductible for tax purposes and others Average effective tax rate charged to profit and loss account 35. the wholly owned subsidiary. amounting to Rs Nil (2008: Rs 350. Finance cost Interest and other charges on Suppliers’ credit Bank and other charges Net exchange loss Imputed interest on payment to PTA against WLL license fee – 265.000 4. 2009 2009 33.49 (0.732 1.644 358.Notes to and forming part of the Financial Statements for the year ended June 30.789.221 2008 (Rupees in thousand) Included in markup on loans and advances is an amount of Rs 263. 2009 2008 33.160 185.232 458.606 606.599.973 – note 7 35.1.732 2009 (%) 145.70 36.13 (0.436 – 2.568) 437.

While liabilities in foreign currencies have been translated into Rupees at USD 1. to the Chairman. including all benefits.2300 (2008: USD 1.684 thousand). 72 Pakistan Telecommunication Company Limited .189 822.736 thousand (2008: Rs 4. 37.763 – – – 1.562 1 548. Rates of exchange Assets in foreign currencies have been translated into Rupees at USD 1.1 Remuneration of Directors and Executives The aggregate amount charged in the financial statements for remuneration. Aggregate amount charged in the financial statements for the year as fee to 9 directors (2008: 9 directors) is Rs 3.923 471 Number of persons 1 The Company also provides free medical and limited residential telephone facility to all its Executives and the Chief Executive.272 40.183 35.113 45.590 – – – 1.605 – 1. Certain executives are also provided with Company maintained cars.128 1 45.2331 (2008: USD 1. The Chairman is entitled for free transport and limited residential telephone facility whereas the Directors are provided with limited telephone facility.4663) equal to Rs 100.700 181. for attending Board of Directors and Sub–committee meetings.615 35.Notes to and forming part of the Financial Statements for the year ended June 30.220 649.906 430 423.517 455 47.774 591 59.4706) equal to Rs 100. 2009 36. Chief Executive and Executives of the Company is as follows: Chairman 2009 2008 Chief Executive 2009 2008 (Rupees in thousand) Executives 2009 2008 Managerial remuneration Honorarium Bonus Retirement benefits Housing Utilities – 300 – – – – 300 – 325 – – – – 325 1 56. 36.632 – 7.300 154.

133 14.598) 172.794) 50. ALI include 225.116 – 2. plant and equipment – Dividend – Return on bank placements – Provision for obsolete stores – Finance cost Effect on cash flow due to working capital changes: (Increase) / decrease in current assets: – Stores and spares – Trade debts – Loans and advances – Recoverable from tax authorities – Other receivables Increase / (decrease) in current liabilities: – Trade and other payables 12.431 9.599.897 34.948 12.986.889.372 142. Cash generated from operations Profit / (Loss) before tax Adjustments for non–cash charges and other items: – Depreciation and amortization – Provision for impairment of investment – Provision for doubtful trade debts – VSS expense – Provision for doubtful receivables – Employees’ retirement benefits – Receivables written off – Imputed interest on payment to PTA against WLL license fee – Mark–up on long term loans – (Gain) / loss on disposal of property.379 4.524 40.158 784.497 138.299 5.153) 292.937.462.195 185.868) 45.539.606) – (2.702.545.344.489 680.132 (270.854 – 130.305.795.195 (2008: 214.227 28.908) 252. The difference between ALI and ALIS is due to pending and potential future demand.904 11.906.680 1.064 23.720 4. Cash and cash equivalents Short term investments with maturity upto three months Cash and bank balances – note 26 – note 27 19.390 92.679 4.327.020.276 723.337.391 (1.372. 2009 2009 38.934.091.416) WLL connections respectively.118.144.546 4.118 158.784 ) and ALIS include 115.888.667 678.575 (2008: 134.668 ALI represents switching lines.656) (8.656. Capacity Access lines installed (ALI) 2009 2008 (Number) Access lines in service (ALIS) 2009 2008 Number of lines 9.591.188.955 3.448 31.240. ALI and ALIS also include 2.796.392 29.500) and 1.Notes to and forming part of the Financial Statements for the year ended June 30.675 (2008 : 1.869 – 167.368) (6.249 39.538.355 35.111) 1.182) (302.917 (4.845) Primary Rate Interface (PRI) and Basic Rate Interface (BRI) respectively.145 14.617 (35.284 (558.315.000) (2.056 324.615) 2008 (Rupees in thousand) (420.436) (190.434.352 10.599.568 (350.907.225.792. Annual Report 2009 73 .000 (2008: 2.

91 79. had fluctuated by 5% against the USD.824. other price risk and interest rate risk).222. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis.79 (2.Notes to and forming part of the Financial Statements for the year ended June 30.100.92 81.829 46.000 32.55) 2008 If the functional currency.069.98 75.999 1. Earnings / (loss) per share – basic and diluted Profit / (loss) for the year Weighted average number of ordinary shares Earnings / (loss) per share 42.97 65.20 85.100. credit risk and investment of excess liquidity.921 25. GBP and Euro with all other variables held constant. mainly as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments.185 5. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies.55 68.830 – – Rupees in thousand Numbers in thousand Rupees 9.889) 5.352 2008 80.980 thousand) respectively lower / higher. primarily with respect to the United States Dollar (USD).595.1 Financial risk management Financial risk factors The Company’s activities expose it to a variety of financial risks: market risk (including currency risk. Risk management is carried out by the Board of Directors (the Board). The Company’s exposure to currency risk is as follows: 2009 Trade and other payables – USD Trade Debts – USD Cash and bank – USD Net exposure – USD Trade and other payables – CHF Loans and advances – AUD The following significant exchange rates were applied during the year: Rupees per USD Average rate Reporting date rate Rupees per CHF Average rate Reporting date rate Rupees per AUD Average rate Reporting date rate 53.571 49.000 (0.490.925. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance. interest rate risk.751.20 65. Australian Dollar (AUD) and Swiss Franc (CHF).26 56. The Board has provided ‘Risk Management Policy’ covering specific areas such as foreign exchange risk. the Company’s foreign exchange risk exposure is restricted to the amounts receivable from / payable to the foreign entities. (a) (i) Market risk Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. credit risk and liquidity risk.550 25. 74 Pakistan Telecommunication Company Limited .98 56.000 1.750 thousand (2008: Rs 72. Currently.143.30 62.336 71. The Company is exposed to currency risk arising from various currency exposures.314 10.60 64. at reporting date.217.67 66. 2009 2009 41. All treasury related transactions are carried out within the parameters of this policy.151. the impact on profit after taxation for the year would have been Rs 67. 42.

790 524.072 10.304.790 11.017.536 Fair value sensitivity analysis for fixed rate instruments The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss.936 – 3.379 2008 (Rupees in thousand) (Rupees in thousand) Annual Report 2009 75 . The Company is not exposed to equity price risk since the investments held by the Company are unquoted and are not subject to fluctuations in market prices.556 10.332.000. The carrying amount of financial assets represents the maximum credit exposure.648.906.103 455. mainly as a result of higher / lower markup income on floating rate loans / investments.344.250 million (2008: Nil) higher / lower.777.974 590. whether those changes are caused by factors specific to the individual financial instrument or its issuer.147 34. Cash flow sensitivity analysis for variable rate instruments If interest rates on long term loans to subsidiaries and deposit bank balances.164. The maximum exposure to credit risk at the reporting date is as follows: 2009 Long term loans Trade debts Loans and advances Accrued interest Other receivables Receivable from GoP for VSS Short term investments Cash and bank balances 3. profit after taxation for the year would have been Rs 11.366.178 10.000 10.817 1.027 698.017.270 2. fluctuate by 1% higher / lower with all other variables held constant.583 33.641. Therefore.617 2.072 21.164.599 21. at the year end date. At the balance sheet date.Notes to and forming part of the Financial Statements for the year ended June 30.792 2008 394.216 888. a change in interest rate at the balance sheet date would not affect profit or loss of the Company.309 315.685.943 13.816.760.290. (b) Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. the interest rate profile of the Company’s interest bearing financial instruments is: 2009 Financial assets Fixed rate instruments Staff loans Short term investments Floating rate instruments Long term loans – loan to subsidiary Bank balances – deposit accounts 3.533. 2009 (ii) Other price risk Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). or factors affecting all similar financial instruments traded in the market.379 4.344.420 51.061 821. (iii) Interest rate risk Interest rate risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Company’s credit risk is primarily attributable to its trade debts and its balances at banks.168 14.

000 2.650.000.754. The following are the contractual maturities of financial liabilities as at June 30.476 – 1.488 1.192 1.000.055 – – – – – 76 Pakistan Telecommunication Company Limited .500.567 1.593 11.481 (Rupees in thousand) Due to the Company’s long standing business relationships with these counterparties and after giving due consideration to their strong financial standing.758.558.000 33.285.082 4.000 3. The Company follows an effective cash management and planning policy to ensure availability of funds and to take appropriate measures for new requirements.Notes to and forming part of the Financial Statements for the year ended June 30.462 7.937.636.055 23.758.055 – – 990.080 2.500.000 34.971 – 23.500.243 26 32.281 – 1.601 2008 6.846.314 – 7 – 77 – – 16.000.434 1.650. * Royal Bank of Scotland has been placed on watchlist by the State Bank of Pakistan and the most recent rating was carried out in September 2008.953.971 990. management does not expect non–performance by these counter parties on their obligations to the Company.399.639 4.071 1.000 1.433 – 990. The credit quality of cash and bank balances that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rate: Rating Short term National Bank of Pakistan Bank Al Falah Limited MCB Bank Soneri Bank Limited Habib Metropolitan Bank Bank of Punjab NIB Bank Faysal Bank Limited Habib Bank Limited Royal Bank of Scotland * Askari Bank Limited Allied Bank Limited United Bank Limited A–1+ A1+ A1+ A1+ A1+ A1+ A1+ A–1+ A–1+ A1+ A1+ A1+ A–1+ Long term AAA AA AA+ AA– AA+ AA– AA– AA AA+ AA AA AA AA+ Agency JCR PACRA PACRA PACRA PACRA PACRA PACRA PACRA JCR PACRA PACRA PACRA JCR 2009 15. the credit risk is minimal.352.362.000 5. The company believes that it is not exposed to major concentration of credit risk as its exposure is spread over a large number of counter parties and subscribers in the case of trade debts. Accordingly.953. 2009 The credit risk on liquid funds is limited because the counter parties are banks with reasonably high credit ratings.462 7. (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.500.638. 2009: Carrying amount Less than one year One to five years More than five years ( Rupees in thousand) Payable to PTA against WLL license fee Long term security deposits from customers Trade and other payables Dividend payable 1.000 2.

027 – 883.573.900 – – 3.462 – 7.488 1.055 – 23.650.344.974 590.061 821.350 – – 18.509 2.072 10.900 – – – – – – – – 83. 2009 The following are the contractual maturities of financial liabilities as at June 30.072 10.618 – 2.893 – 21.448 51.344.164.900 51.448 83.573.573.573.839 951.893 – 21.027 883.294.790 11.164.906.352.350 1.Notes to and forming part of the Financial Statements for the year ended June 30.350 Annual Report 2009 77 .971 – 990.817 1.378 – 10.582.953.366.943 13.072 21.017.379 4.758.758.457 – – – – 42.839 951.403 2.893 18.720.893 1.760.259 – 394.509 – 2.366.145 33.000 – 34.943 13.545.3 Financial instruments by categories Financial assets as per balance sheet Long term investments Long term loans Trade debts Loans and advances Accrued interest Other receivables Receivable from GoP for VSS Short term investments Cash and bank balances 83.164.017.294.900 83.839 951.601.618 18.573.768.379 4.768.294.685.768.2 Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values.476.184 Liabilities at fair value through profit and loss 2009 2008 Other financial liabilities 2009 2008 (Rupees in thousand) Total 2009 2008 Financial liabilities as per balance sheet Payable to PTA against WLL license fee Long term security deposits from customers Trade and other payables Dividend payable – – – – – – 1. Fair value is determined on the basis of objective evidence at each reporting date.352.309 315.378 10.618 18.760.768.893 21.164.582.900 394.790 – 11.216 888.817 1.618 18.332.159 83.545.488 1. Available for sale 2009 2008 Loans and receivables 2009 2008 (Rupees in thousand) Total 2009 2008 42.145 33.650.061 – 821.309 315.403 2. 2008: Carrying amount Less than one year One to five years More than five years ( Rupees in thousand) Payable to PTA against WLL license fee Long term security deposits from customers Trade and other payables 1.971 990.839 951.284 83.000 34.560.900 3.216 888.953.462 7.974 – 590.332.072 – 21.906.055 23.

Notes to and forming part of the Financial Statements for the year ended June 30. or sell assets to reduce debt. The Board of Directors also monitors the level of dividends to ordinary shareholders. Amounts due from / (to) related parties are shown under receivables and payables. For working capital requirements and capital expenditure. subsidiary. adjust the amount of dividends paid to shareholders. 2009 42. employee retirement benefit plans and key management personnel. Remuneration of key management personnel is disclosed in note 36. 43. and (ii) to provide an adequate return to shareholders. for example. which the Company defines as operating income divided by total capital employed. The Company manages the capital structure in the context of economic conditions and the risk characteristics of the underlying assets. Transactions with related parties The related parties comprise associated undertakings. so that it can continue to provide returns for shareholders and benefits for other stakeholders. In order to maintain or adjust the capital structure. the Company primarily relies on internal cash generation and does not have any significant borrowings. The Board of Directors monitors the return on capital employed. issue new shares. Enterprises where control exists Subsidiary Pak Telecom Mobile Limited Other related parties with whom the Company had transactions Associates Telecom Foundation Telecom Foundation Pipes Limited Etisalat International Pakistan (EIP) Etisalat – UAE Etisalat – Afghanistan Emirates Telecommunication Corporation Mobily – Saudi Arabia Thuraya Satellite Company Universal Service Fund – (USF) National Telecommunication Corporation – (NTC) Employee benefit plans Pakistan Telecommunication Employee Trust – (PTET) General Provident Fund Trust 78 Pakistan Telecommunication Company Limited . creditor and market confidence and to sustain the future development of its business. The Company’s objectives when managing capital are: (i) to safeguard the entity’s ability to continue as a going concern. the Company may.4 Capital risk management The Board’s policy is to maintain an efficient capital base so as to maintain investor.

545. deposits.Notes to and forming part of the Financial Statements for the year ended June 30.817 Loans and advances 888.000 2. advances. plant and equipment (Rupees in thousand) 5.760 401. prepayments and other receivables Loans.344.096.432 32. advances.452 519.427 966.312.799.365.808 263.437 10.617 2. deposits.991 Reclassification to component Cost of services Cost of services Administrative expenses Selling and marketing expenses Property.641.000.851 Recoverable from tax authorities 1.333 2.000 449.823.166 2. prepayments and other receivables Loans. advances.243 95. for better presentation and disclosure: Reclassification from component (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) Revenue Operating cost Operating cost Operating cost Long term investments Loans.226 8.555 1. advances.629. Corresponding figures Corresponding figures have been rearranged and reclassified.685.152 24.250. deposits.000 3.371. Proposed dividends The Board of Directors of the Company has proposed a final dividend for the year ended June 30.358. 2009 of Rs Nil (2008: Nil) at their meeting held on September 29.193. deposits. prepayments and other receivables Loans. wherever necessary. 2009.044 1.532 5.133.000. prepayments and other receivables Loans.710 10. advances. 2009 in these financial statements: 2009 2008 Disclosure of transactions between the Company and related parties other than those which have been disclosed elsewhere (Rupees in thousand) Subsidiary Purchase of goods and services Sale of goods and services Mark–up on long term loans Advance against purchase of shares Disbursement of loan – 5.854 2.196.536.946 3.966 – – 1.092 Annual Report 2009 79 . deposits. prepayments and other receivables Short term borrowings Cash and bank Accrued and other liabilities Accrued and other liabilities Trade creditors Other receivables Cash and bank Short term investments Accrued liabilities Other liabilities Accrued liabilities 1.766 Accrued interest 315.309 Capital work–in–progress 351.383.000 Associates Purchase of goods and services Sale of goods and services Government grant received Advances against capital expenditure 44. 45.379 1.

Chairman President & CEO Pakistan Telecommunication Company Limited 80 . Date of authorization for issue These financial statements were authorized for issue on September 29. 47. General Figures have been rounded off to the nearest thousand rupees unless otherwise specified. 2009 by the Board of Directors of the Company.46.

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