NAYA TEL (PRIVATE) LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED GRANT THORNTON ANJUM RAHMAN Chartered Accountants A member firm of €& GrantThornton An instinct for growthGrantThornton An instinct for growth Grant Thornton Anjum Rahman 302, 34 Flor Evacuee Tust Conples, ‘SirAgha Khan Rood F-5/, Isimabod Pakistan “1 9051 2271005, 2274665, +9261 2273874 ‘wangipakcom AUDITORS' REPORT TO THE MEMBERS We have audited the annexed balance sheet of Naya Tel (Private) Limited as at December 31, 2015 and the related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year ended December 31, 2015 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 audi. Itis the responsibility of the Company’s management to establish and maintain a system of internal controls 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 isto 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 requice 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 test basis, evidence supporting the amounts and disclosures in the above said statcments. An audit also includes assessing the accounting policies and significant estimates made by the management, ss well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that- a in our opinion, proper books of account have been kept by the Company as required by the Companies Ordinance, 1984; b. in our opinion:- i the 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 accounts and ae further in accotdance with accounting polices consistently applied; i, the expenditure incurred during the period was for the purpose of the Company's business; and iii the business conducted, investments made and the expenditure incurred during the petiod were in accordance with the objects of the Company, © Im our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, statement of comprehensive income, 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 # true and fair view of the state of the Company's affairs as at December 31, 2015 and of the profi, its comprehensive income, its cash flows and changes in equity for the year then ended; and d. In our opinion, no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980). feet ide Sen “Audit Engegement Partner: Nadeem Tizmizi Islamabad May 16, 2016 Chartered Accountants Member of Grant Thorton Intemational Ltd (Other offices in Lahore and KarachiAYA TEL (PRIVATE) LIMITED BALANCE SHEET AS AT DECEMBER 31, 2015 ‘Bi-Dec-15 BrDecis Notes Rupees Rupees ‘ASSETS Nom - Current Assets Property, plat and equipment 5 14519,192,0231,196,121341 Intangible assets 6 “413,954,502 9,957:390 Long term investment 7 22,410,596 22,410,396 Long term deposits 8 16,163,343, 9,033,853 F971 720,468 1,237,523,180 Current assets Stock in tade 9 BRENT EDS BARTZ “Trade debts - considered good 204,361,069 || 217,315,733 ‘Short term advances - considered good 10 119,796,924 15,417,680 ‘Short term deposits, prepayments and other receivables, rm 50,509,325 38,609,258 (Other financial assets held to matusity investment 2 109,100,000 22,121,045, -Acerued interest B 23,226,877 20,769,959 “Advances to associated companies - considered good 1% 12,244,381, 21,585,985, Refunds due from Government 26 44,763,757 1,202,754 ‘Cash and bank balances 5 18,435,971, 52,227,481 781,035,827 478,998,847 TOTAL ASSETS ZTE, 756 291 _1,716,520,027 EQUITY AND LIABILITIES Shate capital and reserves Share capital 16 593,073,600 415,151,500 Capital reserves ” 933,847,900 : Unappropsiated profit 399,997,734 781,927,454 ‘Total equity 7926,819,234 _1,197,078,954 LIABILITIES Non-curtent liabil Long term borrowings - secured 8 2,208,279 GDP Liabilities against assets subject to finance lease 9 7,303,762 25,473,238 Long term advances and deposits 20 39,832,609 33,634,875 Liability against investment in subsidiary Ba 22,410,596 22,410,596 Defeszed taxation 2 225,741,832 ||__ 215,262,928 506,492,078 370,465,846 Corrent liabilities Trade and other payables 2B 239,685,069 || 110,550,800 Maskup accrued m4 1,405,242 943,215 Current postion of long term liabilities 25 78,356,668 37,485,212 319,44,979___148,97,227 TOTAL EQUITY AND LIABILITIES ZISLTSGI91 1,716 522027 ‘Contingencies and commitments 2 ‘The annexed notes fy 1 to4% form an integral part ofthese financial statements 4 DIRECTOR {HER ERECUTIVENAYA TEL (PRIVATE) LIMITED. PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2015, ‘Year Ended ‘Six Months B-Dec-15, Ended 31-Dec-14 Notes Rupees Rupees eee Revenue - net 28 1,757,055,609 "743,132,683 Cost of services/sales 29 (1,053,565,940) (437,319,661) Gross profit "703,489,669 305,813,022 Administeative expenses 30 (237,470,374) (84290270), Profit from operating activities 466,019,295 221,522,752 Finance costs an (29,481,293) (0,063,358) Workers’ welfare fund (9,928,945) (4,409,031) 325,509,059 208,050,363 Other income 2 59,909,163, 7.992.166) Profit before taxation 486,518,222 216,042,529 Taxation 3 (158,047,942) (74,937,899) Profit after taxation 328,470,280 141,104,630) ‘The annexed notes from 1 to 41 form an integral part of these financial statements. naz aq CHIEF EXECUTIVENAYATEL (PRIVATE) LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2015 ‘Year Ended ‘Six Months | MDeclS Ended 31-Dec-14 Rupees Rupees Profit after wxation 328,470,280 141,104,630 Other comprehensive income ‘Total comprehensive income for the year / petiod 328,470,280 141,270,450 ‘The annexed notes ftom 1 to 41 form an integral part of these financial statements, plan 2 CHIEF EXECUTIVE DIRECTORNAYA TEL (PRIVATE) LIMITED (CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2015, "Year Ended BeDec-l5, Rupees Six Months Ended 31-Dec-t4 Rupees — ee OO ‘Cash flow from operating activities Profit before taxation 486,518,222 216,042,529 ‘Adjustments for non-cash charges and other items: Finance cost 29,481,293 9,063,358 LLoss/ (gn) on disposal of property, plant and equipment 12,590 0443) Depreciation 161,338,102 72,190,344 Amortization 14,758,739 2873,333 Interet income (414,505,911) (7591,732) Provision for provident fond 15,480,986 53357,764 Provision for compensated absences 8,935,679 5,265,073, Provision for worker welfare fund 9,928,983 4409,031, 225,430,423 31,166,737 (Increase) /dectease in current assets: Stock in trade (108,848,551) 15,807,668 ‘Trade debts 12,954,664 (28,890,555) Short term advances - considered good (104,379,244) (65,775,500) Short term deposits, prepayments and other receivables 21,900,087) - Tncrease /(decrease) in current liabiliti Trade and other payables 101,460,929 62,906,922) “Advances from customer 21,473,259 (4,962,478) Gash generated from operation 259,030) BrTaTED Financial charges paid (29,019,266) (916,942) Vax paid (291,130,042) (86,373,568) Compensated absences paid (8,936,544) 675570) Provident fund paid (14,801,954) (8,836,799) Worker welfare fund paid (4,409,029) (6,730,962) [Net eash generated from operating activities 374,412,779 108,247,635. Cash flow from investing activities Payment for pital expenditure (486,540,067) (170,092,968) Proceeds from disposal of operating fixed assets 3,450,692 2,496,378 Interest received 12,048,993 5,007,499 Tnvesment in intangibles (418,755,851) - “Advance to pareat company 9,341,608 5,348,384 ‘Long teum sceusity deposits (7,129,490) 1518542 ‘Net cash used in investing activities (687,584,121) 155,725,160) Cash flow from financing activities Long tetm borrowings 177,192,983 64,736,841 Shate capital received 177,922,100 - Capital eserve received 933,847,900 : ‘Long term advances and deposits 697,733 6,458,304 Payment of liabilities against assets subject to Gnance leases (18,301,928) (6,069,953) Dividend paid (710,500,000) ‘Net cash generated in financing activities 566,358,788 5,125,102 ‘Net (decrease) /increase in cash and cash equivalents 33,187,445 17,646,666 Cash and cash equivalents at the beginning of the yeat / period 74,348,526, 56,701,860 Gash and cash equivalents at the end of the year / period S35 97 TE SAB SIG ‘The anacxed notes from/1 (S%1 frm an integral patt ofthese financial statements, 4 ‘CHIEF PRE geen * DIRECTORNAYATEL (PRIVATE) LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2015 Share Capital _Unappropriated ‘otal capital reserve Profit Tow (Rupees Balance at July 01, 2014 415,151,500 : 640,822,824 1,055,974,324 ‘Total comprehensive income for the year Profit for the year - 141,104,630 141,104,630 Other comprehensive income : - : - ‘Total comprehensive income for the year ~ > 141,104,630 141,104,630 Distribution to owners - . - Balance at December 31, 2014 “415,153,500 Tai ‘Total comprehensive income for the year Profit for the year 328,470,280 328,470,280 (Other comprehensive income : - - - ‘Total comprehensive income for the year : 7 328,470,280 328,470,280 Shares issue proceeds 177,922,100 933,847,900 = 4,111,770,000 Distribution to owners Dividend 2015 : - (710,500,000) (710,500,000) Balance at December 31, 2015 593,073,600 __ 933,847,900 399,897,734 __ 1,926, 819,234 ae ‘The annexed notes from 1 to 41 form an integral part ofthese financial statements DIRECTOR‘NAYA TEL (PRIVATE) LIMITED ‘NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 1 24d 2aa ‘STATUS AND NATURE OF BUSINESS ‘Naya Tel (Private) Limited (the "Company’) was incorporated on May 06, 2004 as a private limited Company in Islamabad under the Companies Ordinance, 1984, The registered office of the Company is located at GD Arcade, Blue Area, Islamabad. The Company has commenced its commercial operation with effect from September 01, 2006 and is principally engaged in the business of providing internet, telephone, video services and sale of related hardware. Micronet Broadband (Peivate) Limited, isthe parent Company which owns 99.9982 ‘% shateholding of the Company. STATEMENT OF COMPLIANCE "These Gnancial statements have been prepared in accordance with approved aevounting standards, 3s applicable in Pakistan, Approved accounting standards comprise of such International Financial Reporting Standards (ERS) issued by the International Accounting Standard Board (IASB) 25 are notified under the Companies Ordinance, 1984 and provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or dzectives of the Companies Ordinance, 1984 shall prevail. Standards, interpretations and amendments not yet adopted "The following new standarde have been issued by the International Accounting Standacds Board (LASB), which fare yet to be notified by the Securities and Exchange Commission of Pakistan, for the purpose of their applicability in Pakistan: Effective for period beginning on or after IFRS1 First time adoption of International Financial Reporting Standards Jaly 01, 2008 IERS9 Financial Instrument January 01, 2018, TERS 14 Regulatory Deferral Accounts January 01, 2016 IPRS 15 Revenue from Contracts with Customers January 01, 2018, ‘The following interpretations issued by the IASB have been waived of by SECP on January 16, 2012: TFRIC 4 Determining whether an arrangement contains lease TPRIC 12 Service Concession Arrangements Standards, interpretations and amendments not yet effective ‘The following standarde and amendments to published accounting standard are effective for accounting petiods beginning from the dates specified below and have not been easler adopted by the Company. These standards ae either not relevant to the the Company operations of are not expected to have significant impact on the Company financial statements other than pretentation / disclosure. The Company has yet to assess the fall impact of the amendments Effective for period beginning on of after TERS 5 —_Non-curtent Assets Held for Sale and Discontinued Operations Tj yrnay 2016 (Amendments) IFRS 7 Financial Instruments: Disclosures (Amendments) Janay 1, 2016 TERS 10 Consolidated Financial Seatements (Amendments) Janay 1, 2016 TERS 11 Joint Arrangements (Amendments) Janay 1, 2016 TERS 12 Disclorure of Interests in Other Entities (Amendments) ‘January 1,2016 IAS1 Presentation of Financial Statements (Amendments) ‘January 1, 2016 IAS 16 Propesty, Plant and Equipment (Amendments) ‘Jannary 1, 2016, ~‘NAYA TEL (PRIVATE) LIMITED ‘NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 3t, 2015 22 Effective for period beginning on ot after IAS 19 Employee Benefits (Amendments) jnmy 206 TAS27 Separate Financial Statements (Amendments) Jenuary 1, 2016 TAS28 Investment in Associates and Joint ventures (Amendments) January 1, 2016 IAS34 Interim Financial Reporting (Amendments) ‘Tanuary 1, 2016 IAS38 Intangible Assets (Amendments) ‘January 1,2016 IAS 41 —_Agriculure (Amendments) ‘January 1,2016 Basis of preparation ‘These financial statements have been prepared under the historical cost convention and accrual basis of accounting except cash flow information, For periods up to and inchuding the year ended 31 December 2014, the Company prepared its financial statements in accosdance with accounting and financial reporting standards for Medium Sized Entities as applicable in Pakistan and the requicements of the Companies Oxdinance, 1984 . The adoption of IFRS resulted in preparation of additional statements and cerstin additional disclosures while there is no financial implication ‘om current and prior pexiod. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 34 BAL 3a2 32 Property, plant and equipment Owned Property, plant and equipment, except freehold land and capital work in progress, are initially recognized at Acquisition cost, including any costs ditecty attibutable to bringing the assets t0 the location and condition necessary for it to be capable of operating in the mannes intended by the Company's management. Subsequently these ae stated at cost less accumulated depreciation and impairment losses, if any. Capital work in progress is stated at cost less impairment value, if any. It consists of expenditure incurted in ‘respect of tangible and intangible assets in the course of their construction and installation. ‘These assets ace depreciated on reducing balance method at rates given in note 52 so as to waite off the cost of, assets over their estimated wsefil lives with out taking into account any residual value. The Company charges depreciation on all additions fom the month in which an asset is acquieed or capitalized up to the month in ‘which the asset is disposed off, Maintenance and nocmal repairs ate charged to income at and when incurred. The gain of loss on disposal of tn asset, calculated at the difference between the sale proceeds and the carrying amount of the asset, is recognized in income for the year Leased ‘The Company accounts for assets under finance lease by recording the asset and the related liability. The amounts are determined on the basis of the lower of fie value ofthe assets and the present value of minimam lease payments atthe inception of ease less accurnulated depreciation and impairment losses, if any Financial charges ate charged to profit and loss account and are allocated to accounting periods in a manner 30 18 to provide a constant periodic rute of charge on the outstanding lability. Depreciation is charged to income ‘using reducing balance method at mites given in note 5.2, so as to write off the assets over their estimated useful lives in view of the certainty of the ownership of the assets at the end of the lease. The Company charges depreciation on all additions to assets subject to finance lease from the month in which an asset is acquired or capitalized up to the month in which the asset is disposed off/transfecred. Intangible assets Intangible assets are stated at cost less accumulated amortization and accumulated impaitment losses, if any Amortization is charged on a straight line basis over the estimated useful lives of intangible assets. The estimated useful life and amoctzation method are seviewed at the end of each annual reporting period, with the effect of. any changes in estimate being accounted for on a prospective bass. The Company charges amortization on all additions from the month in which an asset is acquired or capitalized up to the month in which the asset is disposed off‘NAYA TEL (PRIVATE) LIMITED ‘NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 33 334 332 34 35 36 361 362 37 374 372 Investments Subsidiaries ‘The investment made in the subsidiaries is stated at cost and the eazcying amount is adjusted for impairment, if Held to maturity Investments with fixed or determinable payments and fixed maturity, which the Company has the positive intent and ability to hold to maturity, are carsied at amortized cost, using the effective interest rate method less ‘impairment losses, ifso determined. Stock in trade “These are valued at the lower of cost, determined on weighted average basis and net realizable value. Cost ‘comprises specific cost of purchase including other charges paid thereon [Net realizable value is the estimated eclling price in the otdinary course of business less the estimated cost of ‘completion and estimated cost necessary to make the sale. Provisions Provisions are recognized when the Company has a present obligation (legal or constructive) as a zesult oF a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amouat of obligation. Provisions are reviewed at each balance sheet date and are adjusted to reflect the current best estimate Staff retirement benefits Provident fund - Defined contribution plan ‘The Company is operating funded contributory provident fund scheme for all its permanent employecs. Moathly contributions @ 5% of the gross salary of the employee is deducted and equivalent amount is contributed by the Company towards the Fund. Contsibution forthe year has been charged to income. ‘Compensated absences "The Company provides a facility to its employees for encashment of their annual earned leaves up to a maximus limit of 20 days each yeur. Provision is made for the amount that che Company expects to pay a a result of the ‘unused entidlement that has accumulated at the balance sheet date and related expense thereof is charged to the profit and loss account for the year Taxation ‘The tax expense for the year comprises of current and deferred income tax, and is recognized in income for the year except to the extent chat it relates to items recognized dizecty in other comprehensive income, in which ‘case the related taxis also recognized in other comprehensive income. Current taxation Charge for current taxation is based on taxable income at cusrent tax sates after taking into account all tax credits and rebates available if any under the Income Ordinance, 2001 ‘Where the collection of deduction of taxis treated at final tx under the Ordinance then the amount so collected ‘or deducted on transactions isa charge against income for that particular transaction Deferred taxation Defected income tax is accounted for using the balance sheet lability method in respect of all temporary differences stiting from differences berween the carrying amount of assets and labllites ia the financial statements and the corresponding tax bases used in computation of taxable profit. Deferred tax labiltes are recognized for all taxable temporary differences and deferred tax assets aze recognized on all deductible temporary differences to the extent that it is probable that taxable profit will be avaiable against which the deductible temporuy differences, unused tax losses and tax credit can be utilized. Deferred tax is charged or credited tothe profit and loss account ‘Deferred tax is caleulated at tax rates that are expected to apply o the pesiod when the temporary differences ate reversed, based on tax rates and tax laws chat have been enacted or substantively enacted by the balance sheet date‘NAYA TEL (PRIVATE) LIMITED ‘NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 3t, 2015 38 39 3.40 3a 3.2 33 34 38 Deferred tax assets and deferred tx lisilties are offset only if there is 2 legally enforceable right to offset ‘current tax assets and liabilities and they relate to the income tax levied by the same tax authoty. Operating Leases Leases in which a significant portion of the risks and rewaeds of ownetship is retained by the lessor are classified 1s operating lease, Payments made under operating lease/Tjarah contracts are charged to profit & loss on straight line basis over the petiod of lease Revenue recognition Revenue is recognized when itis probable that the economic benefit associated withthe transaction will dow 10 the Company and the amount of revenue and associated cost incurred or to be incurred can be measured rellably. Revenue ie meusured by reference to fair value of consideration received or receivable les sales tax, federal excise duty and discount. Revenue from telecommunication services is recognized net of services tax, rebates and discounts when services ace delivered tothe customers. Revenue fiom sale of equipment is recognized when the goods are delivered and the risks and rewards of ‘ownership have passed co the customer. Interest on bank deposits is recognized on a time proportion basis by reference to the principal outstanding and the applicable sate of xeuen Related party transactions All transactions involving related parties arising in the normal course of business are conducted at arm's length at ‘normal commercial rates on the same terms and conditions as approved by the board. Financial instruments Financial assets and liabilities are recognized when the Company becomes a patty to the contractual provisions of the instrument, These ate de-recognized when the Company ceases to be the party to the contractual provisions ofthe instrument. Financial assets mainly comprise advances, deposits, tade debts and other receivable and cash and bank balances. Financial liabilities are classified according to the substance of the contractual arrangement entered into, Significant Liabilities are long term loans, deposits, trade and othes payables and short term running finance ‘All financial assets and labiles are intially measured at cost which is the fir value of the consideration given dnd received respectively. These financial assets and liabilities are subsequently measuted at fai value, amortized ‘cost or cost, as the ease may be. Trade debts ‘Trade debts are cattied at original invoice amount less an estimates made forall doubtful receivables bused on eview of outstanding amounts at the year end. Balances considered bad and irrecoverable are writen off when identified, Cash and cath equivalents ‘Cath and cath equivalents ate caied in the balance sheet at cost. For the purpose of cash flow statement, cash and cash equivalents comprise cash in hand and cash at bank, short term running finances and short term highly liquid investments that are readily convertible to knowa amounts of cash and which are subject to insigniieant fisk of change in value ‘Trade and other payables Liabilities for trade and other amounts payable are carted at cost which isthe far value of the consideration to be paid in future for goods and services received, whether or not billed to the Company. Markup bearing borrowings Mark-up bearing borrowings are recognized initially at cost, less attibutable transaction cost. Subsequent to inital recognition, mack up beating borrowings are stated at originally recognized amount less subsequent ‘repayments, while the difference between the original recognized amounts (as reduced by periodic payments) ‘and redempsion value is recognized in the profit and loss account over the period of borrowings on an effective rate bassAYA TEL (PRIVATE) LIMITED ‘NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 3.16 aa and 3472 3.8 3.9 3.20 3.204 3.202 3.2 4 Offsetting of financial assets and financial liabilities Financial assets and liabilities are set off in the balance sheet, only when the Company has a legally enforceable ight to set off the recognized amounts and intends either to setle on a net basis or to realize the assets and settle the labiltes simultaneously. Impairment ‘Non-financial assets “The carrying amounts of the Compang’s assets other than stock-in-tade ae reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indications exist, the assets recoverable amount is estimated in order to determine the extent of impairment loss, if any. Impairment losses are recognized as expense in the profit and loss account. The fecoverable amount is the higher of an assets fair vvaue less costs to sell and value in use Financial assets |A Ginancial asset is assessed at each reporting date to determine whether there is any objective evidence that itis impuired. A financial aset ie considered to be impaiced if objective evidence indicates that one or more events Ihave had a negative effect on the estimated future cash flows of that asset. Dividend Dividend is recognized as Liability in the period in which it is approved by the Company's shareholdes. Borrowing cost Borrowing costs are recognized as an expense in the period in which chese are incurred except to the extent of borrowing cost that are directly attributable to the acquisition, construction or production of a qualifying assets Such borrowing cost, if any are capitalized as part ofthe cost of the asset. Foreign currency transactions Functional and pres Items included in the financial sttements of the Company are measused using the currency of the primary economic environment in which the entity operates (che fanctional cusrency). These financial statements ate presented in Pakistan Rupees (Re), which is the Company's functional currency. sation currency Foreign currency transactions and translations Foreign currency transactions are recorded at the exchange sate applicable at the transaction date. Monetary assets and abilities are translated into eupees using exchange rates applicable at the balance sheet date. All gains and losses on settlement and translation at yearend are recognized inthe income staternent. Contingencies ‘The assessment of the contingencies inherently involves the exercise of significant judgment as the outcome of, the future events cannot be predicted with certainty. The Company, based on the availabilty of the latest information, estimates the value of contingent assets and Liabilities, which may differ on the oceurzence/non: ‘occurrence of the uncertain fatare event(s). CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS. Estimates and judgments ate continually evaluated and are based on historical expenditure and other factors, inchiding expectations of farure events that are believed to be reasonable under the circumstances. "The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, bby definition, rarely equal the related acrual results. The estimates and assumptions that have a significant risk of ‘causing a material adjustment to the carrying amounts of asses sod liabilities within the next Gnancial year are ‘outlined below: @ Depreciation on propery, plage and equipment; ©) Recoverable amount and related impaizment of depreciable, amortizable and financial assets; (© Provision for taxation and related defecred tax ibility © Liability aguinst employees! benefit; and (© Other provision, contingent liabilities and contingent assets. e‘NAYA TEL (PRIVATE) LIMITED ‘NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 3, 2015 However, assumptions and judgments made by de management in the application of accounting policies chat hhave significant effect on the financial statements are not expected to result in matedal adjustment to the ‘carrying amounts of assets and Lables inthe foreseeable period. 31-Decst5, 3LDeclt 5__ Property, plant and equipment Note Rupees Rupees Operating fixed assets 54 144,150,374 1,195,867,174 ‘Capital work in progress 52 75,041,649 254,167, 519,192,023 1,196,121,541 5. Capital work in progress Caraying vale atthe beginning of the year 254,167 : Additions ducing the year / period 74,787,482 254,167 CCareying value atthe end of the year 75,041,609 254167 aAYA TEL (PRIVATE) LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015, Deets Deo Deets BDects Computer Contract Licenses compote ‘Total (Noe 62) —_Note(6.3) Rupees Rupees ___Rupees Rupees © Intangibles At June 30, 2014 Coxe : : 780,492 17,180,192 Accumulated amortization - = 6324831 6324851 Net book value = = 10,855,361 70,855,361, ‘At December 31, 2014 ‘Opening net book value : - 10,855,361 10,855,361, Additions made during the period : - 4,995,362 1,975,362 Amoxtization chaege : - 2,873,333, 2873333 ‘Closing net book value : 9,957,390, 9,957,390 ‘At December 31,2014 Cost - : 19,155,554 19,135,554 Accumulated amortization : - 9,198,164 9.198.164 "Net book value. 5 = 9,957,390, 9.957 390 pening netbook value : - 9,957,390 9,957,390 Additions made during the year 496,000,000 5,085,000 7,670,851 418,755,851 Amortration chazge 13,533,333 105,938 4119,469, 14,758,739 Closing net book value 39,166,667 4 979,065, 16,508,772 713,954,502 At December 31, 2015, Cost 496,000,000 5,085,000 26,826,405 487911405 Accumolated amortization 13,533,333 105,937.50, 10,317,633 23,956,903 ‘Nex book value, $92,466,667 4,979,063 16,508,772 Fis 954502 “Amortization rate 10% % 30% | 64. The allocation of amortization charged is as under Year Ended Six Months Ended BLDeols 31Dec-14 Notes___ Rupees Rupees Cost of services 2A 14.432,624 2,108,655 ‘Administtive expenses 30 326,116 7646578 7758,740, 7986247 62 This sepresents payment made to Pakistan Telecommunication Company Limited (PTCI) under an agreement dated July 27, 2015 for the protection of the Company's assets and business ensuring the farice business cath Hows 63 Licenses includes Local loop license obtained from PTA to provide licensed services in licensed regions, and to establish, maintain and operate a Telecommunication system, 7___Long term investment Tnvestment in following unquoted subsidiary companies - at cost SiDecsts 31 Deeis Equity Tavestnent Equity Tavesunent held Rupees held Rupees pee dialogue (Pieat) Lima '500,000 (December 31, 2014 : 500,000) 100% 149,71 100% 14,179.71 ‘ordinary shares of Rupecs 10 each mpneiys 3 212000 (December 31, 2014 : 212,000) ordinary shases of Rs.10 each. 100% 8,230,895, 100% 8.230825 Total 22.s10,596, 72,410,596NAYA TEL (PRIVATE) LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015, Sect 8 __Long term deposits Rupect ‘Lease key money 2458651 ther deposits 6575;202 3,055 853 81__Other deposits akisan Telecommunication Company Limited (PCL) 572.843 National Highway Authority (NITA) 986,250 Ofice rent security 53192789 ‘Water and Power Development Authority (WAPDA) 23320 Mobiliak MCL) SM 9 Stockin wade Optical network terminal 101,487,402 12546668 Uninterrupted power supply 22,730,083 23,006,128 IP mux 1,504,599 1386215 Sertop box 1,305,538, 10542,138 Routers 2,619,408, 1870,11 Optical fiber cable 24,914,534 123811,105 Cables and installation accessories 29,397,894 24033,039 Other: 8,425,310 460575 199,384,735 90,536,182 Provision for slow moving items oa 787,210) 787.210) 158,597,523 Byes 9.1 Provision for slow moving items Opening balance as at Jan 01, 215 787,210 787210 Provision forthe yea/period : - Reversal for the yeat/petiod Closing balance Sa oom 10 __ Short tem advances - considered good “Advances o supplies and contractors 118,172,615 11 543,308 “Advances to employees against ~ Company expenses 734,961 2584,193, = Pessonal advances 889,348 1254558 Recovenle fom ex-employees 35561 F-16924 7517.80 11__Short term deposits, prepayments and other receivables ‘Margin and security aginst bank guarantees and letter of credits 24,080,608 20,804.130 Security aginst tenders and agreements 4,569,283, 3672887 Lease key money 448,31, 5015198 Prepayments 16,486,012, 9,117,424 (Other receivables 1324165, - 50 500,325 SBOENAVA TEL (PRIVATE) LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 3Deois 3iDeet4 12 __Other financial assets ~ held to maturity investment Rupees Rupees PAK Oman Investment Company Limited 1a 100,000,000 7121 045, First Habib Modaraba 22 9,100,000 < ‘Bank alfalah limited ~ 15,000,000 109,100,000 2,121,045, 124 This represents certificates of investment (COL') of Pak Oman Investment Company Limited due at January 14, 2016 cnrried an effective interest rate of 6 40% per annum. 12.2 This represents centfcates of musharika (COMS) issued by First Habib Modaraba due on Pebrusry 06, 2016 cattied an effective interest rate of 6.35% per annum, BDecl5 BDecls 13 Accrued interest Note __ Rupees Rupees Accrued interest on advances to associated company BA 22,676,955 19923967 Accrued interest on short term investment held to maturity 549,922 45,992 23,226,877 20,769,959 1A This represents interes on advances to associated companies at the rate of $ Months KIBOR plus 275% pa. MDeci5 Dees 14 __Advances to associated companies - considered good Note __Rupees Rupees Micronet Broadband - Parent Company 8,121,138 20331,427 Super Dialogue - Subsidiary Company 2,315,276 1.254558 ‘Metro Tel - Subsidiary Company 1,807,967 632,000, 2,244,381 2.217.985 15 __Cashand bank balances (Cash i hand 607,097 807,471 (Cash at bank ~ Current accounts 8,427,536 49,875,149 = Saving accounts 1A 9,401,338 1544861, 78,435,071 36,701,861 15.1 Balances in saving accounts carey effective intecest ete of 4.0% to 6.20% (2014: 7.5 % to 8.25%) per annum. 16 __ Share capital 161 Authorized share capital BMDecs 31-Dec-14 3rDecs 31-Dec-lt Number (Rupees) ‘Opening balance: Ordinary shares of Rs, 4,180,000 4,180,000 100 each 418,000,000 418,000,000 Additions: In respect of authorized ‘capital isue of ordinary shares of Rs. 1,820,000 = W0each 182,000,000 . Closing balance: Ordinary shares of Rs $000,000 180,000 100 each 600,000,000 418,000,000, 162. Issued, subscribed and paid up capital ‘Opening Balance: Ordinary shares of 4151,515, 4,151,515 Rs, 100 each fully paid in cash 415,151,500 415,151,500 719,208, = Additions: Ordinary shares of Rs. 100 17,922,100 . ‘each fully paid in cash issued during the your (Closing Balance: Ordinary shaces of Re 5 930,736, AIST STS 100 cach fll pid in cash Te aso eNAYA TEL (PRIVATE) LIMITED. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015, 0 Capital reserve “This represents premium of Rs. 52486 per share ceived on issue of 1,779,221 oxdinary shares of Rs. 100 each in 2015, This ‘premium cannot be utilized except fo the purposes mentioned under section 83 ofthe Companies Ordinance, 1986. StDecds 3Dects 18 _Long term borrowings - secured Notes __Rupees Ropese "Term finance facilities 1B 271,929,824 947363881 ‘Cusrent portion shown under eusent Fables 5 (60,726,545) (21,052,632), 211,203,279 BGBA20, 184 Pak Oman Investment Company Total ails of Term Finance Facilities Details of Term Fis " Facing [Facility 2 Note 111 | Note 181.2 = Rupees (Opening balance as at Jamvary 1, 2075 TOBA 5 DAG, ‘Add: Borrowing ducing the year : 200,000,000 200,000,900 ‘Less: Pincpal sepa during the year 22,807,018 - 22,807,018 Closing balance as at December 31, 2015, 7s 504 200,000,900 71,995,826 Sanctioned amount ofthe fclty 100,000,000 _ 200,000,000 300,000,000, 18.1.4. The facliy is fr the period of 5 yeas tepayable in 19 quately installments bearing mark up at ase rate (daily average of three ‘month KIBOR at 11:30am) plus 225% per annum. The felt is secured against: 2st charge on present and furue assets ofthe Company with 25% magi bjcharge on identified receivables ofthe Company with 25% macy along withthe general power of attomey to dliecly collect such receivables in ease of default and personal guarantees of sharcholdert ofthe parent company. 48.4.2 The faclity is for the petiad of 5 years repayable in 16 quartecyinvallments with 1 yeae grace period for payment of principal from date of fst disbursement beating mack up at base rate (dally average of thece month KIBOR at 11:30 am) plus 225% pee snnum. The facility i vecured against fist charge on present and future asset ofthe Company with 25% margins ‘charge on identified receivables ofthe Company with 25% margin along with the general power of attomey to dneely collect sich receivables in case of default; and ‘personal guarantees of sharcholders ofthe parent company, 19 __Liabiltics against assets subject to finance lease 31Decas within Lyear 210 5 year Total Rupees Rupees Rupees Minizour lease payments 21,686,239 7460211 20,146,451 Financial charges 4.056.116) (156.450) (4.212566) ‘Net present value, 77,630,123 7,203,762 24,933,385 3Decis Minimum lease payments 17,660;306, 27,932,691 45,592,998 nancial charges 229,72 (2,459,453) 3,689,180) ‘Net present value 16 430,580, 25.473 238 41,903.818 194 The Company has entered into finance leae arsingements with leasing conspanies for late of motor vehicles. The lease term of these arrangements i up to three years and will be matured by 2017. The periodic lease payments includes built in rates of, ‘matkup ranging between 10% to 13% pa. (Dee-2014: 11% to 13% pa). The Company intends to exercise it option to purchase the leased assets upon completion of the lente term. The Company's obligation under these arrangements are secured bythe lessor’ le tothe leased asses ~~NAYA TEL (PRIVATE) LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015 “SeDeots BE Dent 20 Long term advances and deposits Notes Rupees Rupees Security deposits from customers 10,141,21 7,980,208 Deposits from employees 20,651,488, 25,754,567 39,832,605 33.4875 2A__Liabilty against investment in i payable on quartely basis atthe rate of 3 months KIBO! plos 275% pa (29 be reset on quartesty basis) S-Dee-tS ShDecsis 35 Cath and cash equivalents Rupees Rupect (Other financial assets «held to maturity investment 2 109,100,000, 22,121,045 (Cash and bank balances 5 18,435,971 48 1 97 535,71 74,348,526, 36__ Related party transactions “The slated parties compare holding company, subsidiary companies, director of the Company, other companies with ‘common directorship, sf retirement benchit fugds and key management personne “The Companys significant related party transactions consist of transactions with holding company and subsidiary companies ‘Details of transactions with related parties, ocher than those disclose elsewhere in these financial statements area follow cS Rupees Rupees 361 Transactions with Micro Not P-szdband - rarent co=-pany ~ Mark up earned on advance given to parent company 2,752,908 1353,28 ‘Advances given to pareat company 9,652,340 275025 “Advances recovered from parent company 18,964,555 33525005 Expenses incurted by the Company on behalf of parent company 5,618,773 4311805 Expenses incuceed by parent company on behalf ofthe Company 816,848 3651147 362 Transactions with Super Diatog:s -subsid’cry company _Expecses incurred on behalf of Sspee Dialogue 1,060,712 1,256.39 7 Trancactions with Motto Tel - vbsidiary 2rapany “Experses incurced on Schalf of etotel 237596 esape *