Qatar Telecom (Qtel) Q.S.C.
UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
30 September 2008
Qatar Telecom (Qtel) Q.S.C.
INTERIM CONSOLIDATED INCOME STATEMENT
For the Nine months Ended 30 September 2008
Three months ended
30 September
2007
2008
Nine months ended
30 September
2007
2008
(Unaudited)
(Unaudited)
QR’000
QR’000
QR’000
6,163,625
2,888,418
14,274,371
6,902,898
105,706
56,718
267,756
191,065
General and administrative expenses
(3,012,663)
(1,131,603)
(6,448,058)
(2,658,143)
Other operating expenses
(1,636,500)
(827,884)
(3,874,914)
(1,805,753)
(470,471)
(310,069)
(1,188,937)
(661,564)
Notes
Revenue
18
Other income
Finance costs
QR’000
Share of results of associates
9
(5,119)
20,860
(32,260)
57,416
Royalties
5
(234,162)
(155,829)
(658,036)
(490,877)
910,416
540,611
2,339,922
1,535,042
Equity holders of the parent
651,048
412,199
1,830,967
1,299,490
Minority interests
259,368
128,412
508,955
235,552
910,416
540,611
2,339,922
1,535,042
4.46
3.60
14.65
11.36
PROFIT FOR THE PERIOD
Attributable to:
Basic and diluted earnings per share
6
(attributable to equity holders of the parent)
(expressed in QR per share)
The attached notes 1 to 18 form part of these interim condensed consolidated financial statements
2
Qatar Telecom (Qtel) Q.S.C.
INTERIM CONSOLIDATED BALANCE SHEET
At 30 September 2008
Notes
30 September
2008
(Unaudited)
QR’000
31 December
2007
(Audited)
QR’000
ASSETS
Non-current assets
Property, plant and equipment
7
24,038,176
9,462,192
Intangible assets
8
33,749,472
26,547,074
Investment in associates
9
2,912,038
2,523,960
2,422,220
2,333,384
Other financial assets
765,727
143,848
Deferred tax asset
441,812
380,602
64,329,445
41,391,060
253,130
127,616
3,917,470
2,105,184
Available-for-sale investments
Current assets
Inventories
Accounts receivable and prepayments
Amounts due from liquidator
-
Bank balances and cash
TOTAL ASSETS
389,640
7,141,302
3,250,092
11,311,902
5,872,532
75,641,347
47,263,592
EQUITY AND LIABILITIES
Attributable to equity holders of the parent
Share capital
10
1,466,667
1,000,000
Legal reserve
10
6,494,137
1,000,000
Fair value reserve
642,266
600,759
Translation reserve
772,551
743,675
5,086,429
3,555,462
14,462,050
6,899,896
Minority interests
16,166,763
9,605,706
Total equity
30,628,813
16,505,602
Retained earnings
Continued….
The attached notes 1 to 18 form part of these interim condensed consolidated financial statements
3
Qatar Telecom (Qtel) Q.S.C.
INTERIM CONSOLIDATED BALANCE SHEET (continued)
At 30 September 2008
30 September
2008
(Unaudited)
QR’000
31 December
2007
(Audited)
QR’000
26,954,734
20,904,031
Employee benefit liabilities
520,572
191,075
Deferred tax liability
611,079
Notes
Non-current liabilities
Interest bearing loans and borrowings
11
Other liabilities
-
2,857,039
66,454
30,943,424
21,161,560
10,198,068
7,381,874
1,746,863
1,134,786
447,142
358,624
1,677,037
721,146
14,069,110
9,596,430
Total liabilities
45,012,534
30,757,990
TOTAL EQUITY AND LIABILITIES
75,641,347
47,263,592
Current liabilities
Accounts payable and accruals
Current account with State of Qatar
Deferred income
Interest bearing loans and borrowings
11
………………………………………..
…………………………………….
Abdullah Bin Mohamed Bin Saud Al-Thani
Chairman
Ali Shareef Al-Emadi
Member of the Board
The attached notes 1 to 18 form part of these interim condensed consolidated financial statements
4
Qatar Telecom (Qtel) Q.S.C.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine months Ended 30 September 2008
Notes
For the nine months ended
30 September
2007
2008
Unaudited
QR’000
QR’000
OPERATING ACTIVITIES
6,126,287
(48,732)
(416,861)
1,285,112
2,897,546
(56,005)
(381,481)
2,382,802
6,945,806
(1,188,937)
(2,332)
4,842,862
(661,564)
(2,665)
5,754,537
4,178,633
(2,932,147)
(1,091,913)
(2,484,210)
(4,005)
(92,908)
(143,185)
(684)
7,165
68,146
(62,912)
221,503
(1,106,448)
(2,277,974)
(12,938,411)
(364,150)
(2,329,123)
(114,535)
(32,659)
17,793
301,706
868
109,348
(6,515,150)
(18,733,585)
Net movements in interest bearing loans and borrowings
Dividends paid to equity holders of the parent
Dividends paid to minority interests
Minority interest holders’ contributions
Net movement in minority interests
Proceeds from rights issue
(556,946)
(200,000)
(151,538)
279,038
(20,661)
5,860,804
17,291,861
(775,000)
44,932
11,352
-
Net cash from financing activities
5,210,697
16,573,145
INCREASE IN CASH AND CASH EQUIVALENTS
4,450,084
2,018,193
Net foreign exchange differences
Cash and cash equivalents at 1 January
(553,728)
3,235,165
22,544
1,416,683
7,131,521
3,457,420
Operating profit before working capital changes
Inventories
Receivables
Payables
12
Cash from operations
Finance costs paid
Employees’ end of service benefits paid
Net cash from operating activities
INVESTING ACTIVITIES
Purchase of property, plant and equipment
Additions to intangible assets
Acquisition of subsidiaries, net of cash acquired
Acquisition of minority interests
Investments in associates
Purchase of available-for-sale investments
Net movement in deferred tax
Proceeds from disposal of plant and equipment
Proceeds from sale of available-for-sale investments
Net movement in other financial assets
Dividend and interest income
3.1
Net cash used in investing activities
FINANCING ACTIVITIES
CASH AND CASH EQUIVALENTS AT 30 SEPTEMBER
13
The attached notes 1 to 18 form part of these interim condensed consolidated financial statements
5
Qatar Telecom (Qtel) Q.S.C.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Nine months Ended 30 September 2008
Attributable to equity holders of the parent
At 1 January 2008 (Audited)
Share
capital
QR’000
Legal
reserve
QR’000
1,000,000
Fair value
reserve
QR’000
Translatio
n reserve
QR’000
1,000,000
600,759
Retained
earnings
QR’000
Total
QR’000
Minority
interests
QR’000
Total
equity
QR’000
743,675
3,555,462
6,899,896
9,605,706
16,505,602
18,629
22,878
28,876
(16,172)
(117)
128,919
2,457
22,761
157,795
Net fair value reserve movement in available-for-sale
investments
Net gain on cash flow hedge
Net movement in translation reserve
-
-
18,629
22,878
-
28,876
-
Total expenses for the period recognised directly in equity
Profit for the period
-
-
41,507
-
28,876
-
1,830,967
70,383
1,830,967
112,630
508,955
183,013
2,339,922
28,876
-
1,830,967
(200,000)
(100,000)
1,901,350
(200,000)
5,860,804
-
621,585
(151,538)
279,038
5,832,633
(20,661)
2,522,935
(351,538)
5,860,804
279,038
5,832,633
(20,661)
14,462,050
16,166,763
30,628,813
Total income and expenses for the period
Final dividend paid for 2007 (Note 14)
Capitalisation of bonus shares for 2007 (Note 14)
Rights shares issued
Contributions
Acquisition of minority interests (Notes 3.1)
Net movement in minority interests
At 30 September 2008 (Unaudited)
100,000
366,667
-
5,494,137
-
41,507
-
1,466,667
6,494,137
642,266
-
772,551
5,086,429
Continued….
The attached notes 1 to 18 form part of these interim condensed consolidated financial statements
6
Qatar Telecom (Qtel) Q.S.C.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
For the Nine months Ended 30 September 2008
Share
capital
QR’000
At 1 January 2007 (Audited)
1,000,000
Attributable to equity holders of the parent
Legal
Fair value
Translation
Retained
reserve
reserve
reserve
earnings
QR’000
QR’000
QR’000
QR’000
888,761
327,185
90
Net fair value reserve movement in available-for-sale
investments
Net gain on cash flow hedge
Net movement in translation reserve
-
-
157,110
(2,187)
-
Total expenses for the period recognised directly in equity
Profit for the period
-
-
154,923
-
-
Total income and expenses for the period
Final dividend paid for 2006 (Note 14)
Contributions
Acquisition of minority interests
Equity adjustments to minority interests
Net movement in minority interests
Transfer to legal reserve
Interim dividend declared for 2007 (Note 14)
-
98,894
-
154,923
(6)
-
-
987,655
482,102
At 30 September 2007 (Unaudited)
1,000,000
The attached notes 1 to 18 form part of these interim condensed consolidated financial statements
7
7,619
2,775,951
-
Total
QR’000
Minority
interests
QR’000
Total
equity
QR’000
4,991,987
60,783
5,052,770
157,110
(2,187)
7,619
(909)
(1,747)
(8,675)
156,201
(3,934)
(1,056)
7,619
1,299,490
162,542
1,299,490
(11,331)
235,552
151,211
1,535,042
7,619
1,299,490
(575,000)
(260)
(98,894)
(200,000)
1,462,032
(575,000)
(266)
(200,000)
224,221
44,932
2,492,575
266
11,352
-
1,686,253
(575,000)
44,932
2,492,575
11,352
(200,000)
7,709
3,201,287
5,678,753
2,834,129
8,512,882
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
1
CORPORATE INFORMATION AND principal activities
Qatar Public Telecommunications Corporation was formed on 29 September 1987 by Law No. 13 of 1987 to provide
domestic and international telecommunication services within the State of Qatar.
The Corporation was transformed into a Qatari Shareholding Company under the name of Qatar Telecom (Qtel) Q.S.C.
(the “Company”) on 25 November 1998, pursuant to Law No.21 of 1998. Under that Law, Qatar Telecom (Qtel) Q.S.C.
is exclusively entitled to provide domestic and international telecommunication services in Qatar for a period of 15 years
and has the right to own, operate, maintain and develop telecommunications network in Qatar.
Under Law No. 21 of 1998 the Company is not subject to taxation on its earnings for a period of ten years commencing 1
January 1999.
The privileges granted to Qatar Telecom (Qtel) Q.S.C. under Law No. 21 of 1998 shall be cancelled from the effective
date of Law No. 34 of 2006 issued on 6 November 2006. In accordance with this Law, the powers and competencies
previously vested on Qatar Telecom (Qtel) Q.S.C. in connection with the organization of telecommunications shall pass to
the Supreme Council and also the payment of the annual fee prescribed under Article 4 of Law No. 6 of 2002 shall be
discontinued from the date another operator licensed under the Law commences telecommunications activities.
The interim condensed consolidated financial statements of the Group for the nine months ended 30 September 2008 were
authorised for issue by a Board Member and the Chairman on 21 October 2008.
The principal subsidiaries of the Group, incorporated in the interim consolidated financial statements of Qatar Telecom
(Q-Tel) Q.S.C are as follows:
Name of subsidiary
Qtel Investment Holdings B.S.C.
Qtel International Investment L.L.C.
Qtel International L.L.C.
Qatar Southeast Asia Holding S.P.C (QSEAS) (iii)
Q- Tel West Bay Holding P.S.C
Wi Tribe Asia Limited (“WiTA”)
Indonesia Communications Pte Ltd., Singapore (“ICLS”)
Indonesia Communications Ltd., Mauritius (“ICLM”)
TDC – Qtel MENA Investcom B.S.C.
Omani Qatari Telecommunications Company S.A.O.C.
National Mobile Telecommunications Company K.S.C
(“Wataniya Telecom”)
Wataniya International FZ – LLC (WTI)
Wataniya Telecom Maldives (WTM)
Wataniya Telecom Algerie S.P.A. (WTA) (i)
WARF Telecom International Private limited (WARF) (i)
Public Telecommunication Company Ltd. (PTC) (i)
Wataniya Palestine Mobile Telecom Limited (i)
Raywood Incorporation (Raywood) (ii)
AL Rowad General Services Limited (AL Rowad) (ii)
Asia Cell for Communication L.L.C. (“ACL, Iraq” ) (ii)
Wi Tribe Limited (“WiT”)
Wi Tribe Limited (Private Shareholding Company)
Wi Tribe Limited
Country of
incorporation
Group effective shareholding
percentage
31 December
30 September
2007
2008
Bahrain
Qatar
Qatar
Bahrain
Bahrain
Cayman Islands
Singapore
Mauritius
Bahrain
Sultanate of Oman
100%
100%
100%
100%
100%
100%
100%
100%
79.4%
55.6%
100%
100%
100%
79.4%
55.6%
Kuwait
Dubai
Maldives
Algeria
Maldives
Saudi Arabia
Palestine
Cayman Islands
Iraq
Iraq
Cayman Islands
Jordan
Pakistan
51.0%
51.0%
51.0%
45.2%
33.2%
28.4%
29.1%
61.2%
61.2%
30.0%
77.5%
77.5%
77.5%
51.0%
51.0%
51.0%
45.2%
33.2%
28.4%
29.1%
61.2%
61.2%
30.0%
77.5%
77.5%
58.1%
8
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
1
CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES (continued)
Group effective shareholding
percentage
31 December
30 September
2007
2008
Name of subsidiary
Country of
incorporation
PT Indosat Tbk (iii)
Indonesia
40.8%
-
Indosat Finance Company B.V. (“IFB”) (iii)
Amsterdam
40.8%
-
Indosat International Finance Company B.V. (“IIFB”) (iii)
Amsterdam
40.8%
-
Indosat Singapore Pte. Ltd. (“ISP”) (iii)
Singapore
40.8%
-
PT Indosat Mega Media (“IMM”) (iii)
Jakarta
40.8%
-
PT Satelindo Multi Media (“SMM”) (iii)
Jakarta
40.7%
-
PT Aplikanusa Lintasarta (“Lintasarta”) (iii)
Jakarta
29.5%
-
PT Starone Mitra Telekomunikasi (“SMT”) (iii)
Semarang
22.6%
-
16.2%
-
PT Artajasa Pembayaran Elektronis (“APE”) (iii)
Jakarta
Notes
(i)
The Group has the power, indirectly through Wataniya Telecom, to govern the financial and operating policies of
Wataniya Telecom Algerie S.P.A. (WTA), WARF Telecom International Private limited (WARF), Public
Telecommunication Company Ltd. (PTC) and Wataniya Palestine Mobile Telecom Limited and accordingly, these
companies have been considered as subsidiaries of the Group.
(ii)
The Group incorporated Raywood Incorporation (“Raywood”), a special purpose entity registered in Cayman
Islands with 61% voting interest to carry out investment activities in Iraq. Raywood established Al Rowad General
Services Limited (“AL Rowad”) in Iraq as a wholly owned subsidiary to acquire 49% voting interests in Asia Cell
for Communications L.L.C. (“ACL, Iraq), a newly incorporated company with license to provide
telecommunication services in Iraq. The Group has the power to govern the financial and operating policies of
ACL, Iraq by virtue of the shareholders’ agreements through Raywood and, accordingly ACL, Iraq is considered
as a subsidiary of the Group.
(iii)
The Group incorporated Qatar Southeast Asia Holding S.P.C (QSEAS), a special purpose entity registered in
Bahrain to acquire 40.8% of PT Indosat Tbk, a telecommunication company operating in Indonesia through
Indonesia Communications Pte Ltd., Singapore (“ICLS”) and Indonesia Communications Ltd., Mauritius (“ICLM”). The
Group has the power to govern the financial and operating policies by virtue of the share purchase agreement dated
6 June 2008 and accordingly, PT Indosat Tbk is considered as a subsidiary of the Group. The Group through PT
Indosat Tbk has the power to govern the financial and operating policies of the following companies and
accordingly, these companies have been considered as subsidiaries of the Group.
•
Indosat Finance Company B.V. (“IFB”)
•
Indosat International Finance Company B.V. (“IIFB”)
•
Indosat Singapore Pte. Ltd. (“ISP”)
•
PT Indosat Mega Media (“IMM”)
•
PT Satelindo Multi Media (“SMM”)
•
PT Aplikanusa Lintasarta (“Lintasarta”)
•
PT Starone Mitra Telekomunikasi (“SMT”)
•
PT Artajasa Pembayaran Elektronis (“APE”)
9
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
2
2.1
BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
The interim condensed consolidated financial statements for the nine months ended 30 September 2008 have been
prepared in accordance with IAS 34 Interim Financial Reporting.
The interim condensed consolidated financial statements are prepared in Qatar Riyals, which is the Group’s presentation
currency and all values are rounded to the nearest thousands (QR’000) except when otherwise indicated.
The interim condensed consolidated financial statements do not include all information and disclosures required in the
annual financial statements and should be read in conjunction with the Group’s annual financial statements as at 31
December 2007. In addition, results for the nine months ended 30 September 2008 are not necessarily indicative of
the results that may be expected for the financial year ending 31 December 2008.
2.2
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are
consistent with those used in the preparation of the Group’s annual financial statements for the year ended 31 December
2007.
10
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
3
BUSINESS COMBINATIONS
Acquisition of PT Indosat Tbk
On 6 June 2008, the Group acquired 40.8% of the voting shares of PT Indosat Tbk and exercised beneficiary ownership.
Subsequent to the acquisition upon completion of legal formalities in respect of the acquisition, the Group obtained the
legal ownership rights on 22 June 2008. PT Indosat Tbk is a Indonesian Shareholding Company listed in the Indonesia
Stock Exchange which along with its subsidiaries is engaged in providing telecommunication services such as cellular
services, fixed telecommunications, multimedia, data communication and internet services primarily in Indonesia. The
acquisition has been accounted for using the purchase method of accounting.
The fair value of the identifiable assets and liabilities of PT Indosat Tbk at the date of acquisition were:
(Unaudited)
QR’000
Property, plant and equipment (Note 7)
Goodwill (Note 8)
Intangible assets (Note 8)
Investment in associates
Available-for-sale investments
Deferred tax asset
Other non-current financial assets
Inventories
Accounts receivable and prepayments
Cash and cash equivalents
13,108,251
857,811
3,914,115
110
1,050
36,924
558,967
76,782
983,024
3,658,832
23,195,866
Interest bearing loans and borrowings
Employees’ benefit liabilities
Deferred tax liability
Other non-current liabilities
Accounts payable and accruals
Other current liabilities
Minority interests
7,568,686
235,796
587,477
620,813
3,953,026
448,423
5,836,638
19,250,859
Net assets acquired
Goodwill arising on acquisition (Note 8)
3,945,007
1,838,142
Cost of business combination, net of adjustment
5,783,149
Cost of business combination, net of adjustment is arrived as follows:
Cash paid for business combination
Less: Share of capital gains deducted from the cost of business combination (Note 9)
6,143,042
(359,893)
5,783,149
Net cash outflow on acquisition:
Net cash acquired with the subsidiary
Cash paid
3,658,832
(6,143,042)
(2,484,210)
11
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
3
BUSINESS COMBINATIONS (continued)
Acquisition of PT Indosat Tbk (continued)
The initial accounting for the above acquisition is only provisional at the period end as the fair value to be assigned to the
acquiree’s identifiable assets and liabilities could be determined only provisionally. The Group will recognise any
adjustments to those provisional values as a result of completing the initial accounting within twelve months of the date of
the acquisition date, and with effect from the acquisition date.
From the date of acquisition, Indosat Tbk contributed QR 245,423,000 to the profit of the Group.
The costs of the investment in PT Indosat Tbk as at the reporting date amounted to QR 6,143,042,000. Included in the
costs of the investment are directly attributable costs with respect to the acquisition amounting to QR 43,716,000.
If the business combination had taken place at the beginning of the year, the profit for the group would have been QR
2,719,926,000 and revenue from continuing operations would have been QR 17,262,372,000.
4
INTEREST IN A JOINT VENTURE
The Group’s subsidiary Wataniya Telecom has a 50% equity shareholding with equivalent voting power in Tunisiana, a
joint venture established in Tunisia.
The following amounts are included in the Group’s financial statements as a result of the proportionate consolidation of
Tunisiana:
Share of joint venture’s balance sheet:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Carrying amount of the net assets
30 September
2008
(Unaudited)
QR’000
31 December
2007
(Audited)
QR’000
385,567
1,278,717
(577,358)
(348,528)
336,166
1,347,725
(493,587)
(475,902)
738,398
714,402
Three months ended 30 September
2007
2008
Nine months ended 30 September
2007
2008
(Unaudited)
Share of joint venture’s income statement:
Revenue
Other income
General and administrative expenses
Finance costs
Profit for the period
(Unaudited)
QR’000
QR’000
QR’000
QR’000
381,523
(272,252)
(9,768)
268,758
5
(222,322)
(9,991)
1,034,086
(772,095)
(32,060
556,649
430
(455,602)
(20,388)
99,503
36,450
229,931
81,089
12
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
5
ROYALTIES
Three months ended 30
September
2007
2008
Nine months ended 30
September
2007
2008
(Unaudited)
QR’000
QR’000
(Unaudited)
QR’000
QR’000
Royalty to the Government of State of Qatar
Royalty to the Government of Sultanate of Oman
217,017
17,145
137.399
18,430
610,323
47,713
435,930
54,947
234,162
155,829
658,036
490,877
In accordance with Law No. 6 of 2002, effective 1 January 2005, Qtel is liable to pay royalty to the Government of the
State of Qatar for the exclusive right to provide telecommunication services in the State of Qatar. However, in accordance
with Law No. 34 of 2006 issued on 6 November 2006, the payment of royalty to the Government of the State of Qatar
shall be discontinued from the date another operator licensed under the Law commences telecommunication activities.
Additionally, in accordance with the terms of a licence granted to Omani Qatari Telecommunications Company S.A.O.C.
to operate wireless telecommunication services in the Sultanate of Oman, royalty is payable to the Government of the
Sultanate of Oman, effective March 2005.
6
BASIC AND DILUTED EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit for the period attributable to equity holders of the parent by the
weighted average number of shares outstanding during the period.
There were no potentially dilutive shares outstanding at any time during the period and, therefore, the dilutive earnings
per share is equal to the basic earnings per share.
Three months ended 30
Nine months ended 30
September
September
2007
2007
2008
2008
(Unaudited)
(Unaudited)
Profit for the period attributable to equity
holders of the parent (QR’000)
412,199
1,299,490
651,048
1,830,967
Weighted average number of shares ( 000’s)
145,965
114,400
124,999
114,400
4.46
3.60
14.65
11.36
100,000
10,000
35,965
100,000
10,000
4,400
100,000
10,000
14,999
100,000
10,000
4,400
145,965
114,400
124,999
114,400
Basic and diluted earnings per share (QR)
The weighted average number of shares has been calculated as follows:
Qualifying shares at 1 January (000’s)
Effect of bonus share issue (000’s)
Effect of rights issue (000’s)
During the current period, the Group issued and allocated bonus shares and rights issue shares and accordingly, the
previously reported earnings per share has been restated. If the effect of the said additional shares issue during the period
was not considered on the earnings per share of the previous period, the earnings per share for the three months period and
nine months period ended 30 September 2007 would have been QR 4.12 per share and QR 12.99 respectively.
13
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
7
PROPERTY, PLANT AND EQUIPMENT
30 September
2008
(Unaudited)
QR’000
31 December
2007
(Audited)
QR’000
Net book value at beginning of the period/year
Acquired through acquisition of subsidiaries (Notes 3)
Additions
Disposals
Depreciation for the period/year
Exchange adjustment
9,462,192
13,108,251
2,932,147
(4,297)
(1,754,604)
294,487
3,043,280
5,597,811
2,062,225
(85,167)
(1,135,847)
(20,110)
Net book value at the end of the period/year
24,038,176
9,462,192
8
INTANGIBLE ASSETS
30 September
2008
(Unaudited)
QR’000
31 December
2007
(Audited)
QR’000
Net book value at beginning of the period/year
Acquired through acquisition of subsidiaries (Notes 3)
Acquired through acquisition of minority interest
Additions
Amortisation for the period/year
Exchange adjustment
26,547,074
6,610,068
1,091,913
(951,882)
452,299
353,658
22,206,460
194,690
4,603,465
(709,031)
(102,168)
Net book value at the end of the period/year
33,749,472
26,547,074
9
INVESTMENTS IN ASSOCIATES
The Group has the following investment in associates:
Country of
Principal activity
Ownership
2007
incorporation
2008
Managed Service Provider
delivering technology solutions in
the enterprise data market
United State of
America
38.16%
38.16%
Holding company
Singapore
25.00%
25%
Satellite based telecommunication
services
Indonesia
26.67%
-
PT Swadharma Marga Inforindo
Property rental services
Indonesia
20.00%
-
Liberty Telecoms Holdings Inc.
(“LTHI”)
Telecommunication services
Philippines
27.12%
-
Navlink, Inc., a Delaware
Corporation
Asia Mobile Holding Pte Ltd
(“AMH”)
PT Multi Media Asia Indonesia
14
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
Notes:
(i)
On 1 March 2007, the Group acquired a 25% stake in AMH. AMH is the holding company for ST Telemedia’s
stake in Star Hub Ltd., Singapore. AMH was also the holding company of PT Indosat Tbk., Indonesia, prior to its
sale (see below).
On 6 June 2008, AMH disposed of its stake in PT Indosat Tbk to the Group. The Group share of the gain resulting
from such disposal included in the results of AMH amounting to QR 359,893,000 has been deducted from the
acquisition cost of investments of PT Indosat Tbk (Note 3.1).
(ii)
On 8 May 2008, the Group acquired 27.12% of LTHI, a Philippines shareholding Company which is engaged in
providing telecommunication services in Philippines. LTHI was treated as a subsidiary of the Group in the
previous quarter. Taking into account the current effective holding of 27.12%, LTHI is accounted for as an
associate of the Group in the financial statements.
(ii)
The following table is the summarised financial information of the Group’s investments in the associates.
30 September
2008
(Unaudited)
QR’000
Share of associates’ balance sheet:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
31 December
2007
(Audited)
QR’000
2,001,283
2,470,942
(1,577,440)
(1,109,017)
1,301,133
6,211,400
(1,389,411)
(4,642,203)
Net assets
Unimpaired goodwill
1,785,768
1,126,270
1,480,919
1,043,041
Carrying amount of the investment
2,912,038
2,523,960
Three months ended 30 September
2007
2008
Nine months ended 30 September
2007
2008
(Unaudited)
Share of associates’ revenues and results:
Revenues
Results
(Unaudited)
QR’000
QR’000
QR’000
346,016
687,892
1,054,569
1,554,821
(5,119)
20,860
(32,260)
57,416
QR’000
15
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
10
SHARE CAPITAL
30 September
2008
(Unaudited)
QR’000
31 December
2007
(Audited)
QR’000
Authorised
Ordinary shares of QR 10 each
At 1 January
Increase in shares
1,000,000
1,000,000
1,000,000
-
At end of the period / year
2,000,000
1,000,000
Issued and fully paid up
Ordinary shares of QR 10 each
At 1 January
Issue of bonus shares
Issue of right shares
1,000,000
100,000
366,667
1,000,000
-
At the end of the period / year
1,466,667
1,000,000
Notes:
(i)
The Government of the State of Qatar owns 55% of the share capital.
(ii)
During the period, the shareholders resolved at the Annual General meeting held on 23 March 2008 to increase
the authorised share capital by QR 1,000,000,000 by the creation of 100,000,000 ordinary shares at QR 10 each.
(iii)
Consequent to the Annual General meeting, the Board of Directors of the Group called for a right issue of
36,666,667 in the ratio of one is to three (1:3) with a premium of QR 150 per share on 8 June 2008 and
accordingly, the allotment was made on 3 July 2008.
(iv)
The share premium arising out of the rights issue is included in legal reserve.
11
INTEREST BEARING LOANS AND BORROWINGS
30 September
2008
(Unaudited)
QR’000
Long term loans from banks
Bank overdrafts
Less: Deferred financing costs
31 December
2007
(Audited)
QR’000
28,721,789
9,781
(99,799)
21,720,303
14,927
(110,053)
28,631,771
21,625,177
Presented in the balance sheet as follows:
Current portion
Non-current portion
16
1,677,037
26,954,734
721,146
20,904,031
28,631,771
21,625,177
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
12
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES
Notes
Profit for the period
Adjustments for:
Depreciation and amortisation
Dividend and interest income
Profit on sale of available-for-sale investments
Profit on disposal of plant and equipment
Finance costs
Provision for employees’ end of service benefits
Share of results of associates
13
9
For the nine months ended
30 September
2007
2008
(Unaudited)
QR’000
QR’000
2,339,922
1,535,042
2,706,486
(221,503)
(10,290)
(2,868)
1,188,937
93,343
32,260
904,859
(109,348)
(68,382)
(4,655)
661,564
35,882
(57,416)
6,126,287
2,897,546
CASH AND CASH EQUIVALENTS
For the purpose of the interim condensed consolidated statement of cash flows, cash and cash equivalents comprise of the
following amounts:
For the nine months ended
30 September
2007
2008
(Unaudited)
QR’000
QR’000
Bank balances and cash
Bank overdrafts
14
7,141,302
(9,781)
3,490,503
(33,083)
7,131,521
3,457,420
DIVIDENDS AND BONUS SHARES
During the current period, the following were approved at the Annual General Assembly held on 23 March 2008:
Dividends:
The Group paid a final dividend of QR 2 per share totalling QR 200 million relating to the year 2007 (2007 : QR 5.75 per
share totalling QR 575 million relating to the year 2006 and interim dividend declared for 2007 QR 2 per share totalling
QR 200 million).
Bonus Shares:
The Group issued a 10% bonus share of the share capital as at 31 December 2007 amounting to QR 100 million (2006:
Nil).
17
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
15
COMMITMENTS
Capital expenditure commitments
30 September
2008
(Unaudited)
QR’000
31 December
2007
(Audited)
QR’000
Estimated capital expenditure budgeted for at balance sheet date but not
provided for:
Property, plant and equipment
16
2,856,043
1,654,871
CONTINGENT LIABILITIES
30
2008
(Unaudited)
QR’000
31 December
2007
(Audited)
QR’000
Letters of guarantee
611,995
660,208
Letters of credit
158,938
141,720
10,488
1,519
Claims against the Group not acknowledged as debts
During 2003, the Ministry of Communications, Kuwait (“MOC”) filed a case against Wataniya Telecom, claiming
network license fee on its subscriber base, under the Ministerial decision No. 168/97. The case was dismissed by the Court
of first instance and subsequently dismissed by the Court of Appeal. MOC has filed a cessation motion against the verdict
seeking the appointment of an expert to determine the entitlement arising from the above ministerial decision and such
decision has not yet been cancelled or annulled. The Group, based on management’s best estimate, has recognised an
accrual of QR.754,690,000 at 30 September 2008 towards the amount required to settle the present obligation of network
license fees to MOC.
According to the Company’s legal advisors and under Jakarta Stock Exchange regulations, the Company will be
required to make a tender offer, which is expected to increase its existing shareholding interest of 40.8% in PT Indosat
Tbk. A regulatory decision regarding the terms and potential limits of the offer is anticipated shortly.
17
RELATED PARTY DISCLOSURES
Related party transactions
Related parties represent associated companies including Government and semi Government agencies, associate, major
shareholders, directors and key management personnel of the Group, and companies of which they are principal owners.
In the ordinary course of business the Group enters into transactions with related parties. Pricing policies and terms of
transactions are approved by the Group’s management.
18
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
18
SEGMENT INFORMATION
Business Segments
The segment information is presented based on the Group’s reporting structure and comprises of Wireless Services and
Wireline Services and is disclosed after elimination of inter company transactions.
Three months ended 30 September 2008
(Unaudited)
Wireless
Services
QR’000
Revenue
5,655,731
Contribution
1,373,766
Wireline
Services
QR’000
507,894
131,167
Other income
Share of results of associates
Royalties
Profit for the period
Contribution
Wireless
Services
QR’000
Wireline
Services
QR’000
Total
QR’000
6,163,625
12,900,538
1,373,833
14,274,371
1,504,933
3,424,234
578,008
4,002,242
Total
QR’000
Unallocated costs
Revenue
Nine months ended 30 September 2008
(Unaudited)
(460,942)
(1,239,780)
105,706
267,756
(5,119)
(32,260)
(234,162)
(658,036)
910,416
2,339,922
Three months ended 30 September 2007
(Unaudited)
Nine months ended 30 September 2007
(Unaudited)
Wireless
Services
QR’000
Total
QR’000
Wireless
Services
QR’000
Wireline
Services
QR’000
Wireline
Services
QR’000
Total
QR’000
2,563,117
325,301
2,888,418
5,930,986
971,912
6,902,898
800,064
209,043
1,009,467
2,089,265
581,053
2,670,318
Unallocated costs
(390,605)
(892,880)
Other income
56,718
191,065
Share of results of associates
20,860
57,416
(155,829)
(490,877)
Royalties
540,611
Profit for the period
19
1,535,042
Qatar Telecom (Qtel) Q.S.C.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At 30 September 2008
18
SEGMENT INFORMATION (continued)
Geographic segments
The Group provides telecommunication services in the various countries. Segment information is disclosed after
elimination of inter company transactions.
Three months ended 30 September 2008
(Unaudited)
Outside
Qatar
Qatar
Total
QR’000
QR’000
QR’000
Nine months ended 30 September 2008
(Unaudited)
Outside
Qatar
Qatar
Total
QR’000
QR’000
QR’000
1,364,600
4,799,025
6,163,625
3,974,472
10,299,899
14,274,371
expenses
(510,019)
(2,502,644)
(3,012,663)
(1,386,165)
(5,061,893)
(6,448,058)
Other operating expenses
(151,348)
(1,485,152)
(1,636,500)
(435,256)
(3,439,658)
(3,874,914)
Finance costs
(169,513)
(300,958)
(470,471)
(557,270)
(631,667)
(1,188,937)
Other Income
30,464
75,242
105,706
113,358
154,398
267,756
(5,119)
(5,119)
(32,260)
(32,260)
(217,017)
(17,145)
(234,162)
(610,323)
(47,713)
(658,036)
347,167
563,249
910,416
1,098,816
1,241,106
2,339,922
Revenue
General and administrative
Share of results of
-
-
associates
Royalties
Profit for the period
Three months ended 30 September 2007
(Unaudited)
Outside
Qatar
Qatar
Total
QR’000
QR’000
QR’000
Revenue
Nine months ended 30 September 2007
(Unaudited)
Outside
Qatar
Qatar
Total
QR’000
QR’000
QR’000
1,097,030
1,791,388
2,888,418
3,245,542
3,657,356
6,902,898
expenses
(371,191)
(760,412)
(1,131,603)
(1,070,538)
(1,587,605)
(2,658,143)
Other operating expenses
(124,772)
(703,112)
(827,884)
(365,656)
(1,440,097)
(1,805,753)
Finance costs
(253,760)
(56,309)
(310,069)
(525,485)
(136,079)
(661,564)
Other Income
40,096
16,622
56,718
111,372
79,693
191,065
Share of results of associates
-
20,860
20,860
57,416
57,416
(137,399)
(18,430)
(155,829)
(435,930)
(54,947)
(490,877)
250,004
290,607
540,611
959,305
575,737
1,535,042
General and administrative
Royalties
Profit for the period
20
-