Emirates Integrated Telecommunications : Financial statements for the year of 2021

Emirates Integrated Telecommunications Company PJSC and its subsidiaries

Consolidated financial statements for the year ended 31 December 2021

Emirates Integrated Telecommunications Company PJSC and its subsidiaries

Consolidated financial statements for the year ended 31 December 2021

	Pages
Independent auditors' report	1 - 6
Consolidated statement of financial position	7
Consolidated statement of comprehensive income	8
Consolidated statement of changes in equity	9
Consolidated statement of cash flows	10
Notes to the consolidated financial statements	11 - 71

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INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF EMIRATES INTEGRATED TELECOMMUNICATIONS COMPANY PJSC

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Opinion

We have audited the consolidated financial statements of Emirates Integrated Telecommunications Company PJSC ("EITC" or "the Company") and its subsidiaries (collectively referred to as "the Group"), which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2021, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the other ethical requirements that are relevant to our audit of the Group's consolidated financial statements in the United Arab Emirates, and we have fulfilled our other ethical responsibilities. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current year. We have communicated the key audit matters to the Audit Committee but they are not a comprehensive reflection of all matters that were identified by our audit and that were discussed with the Audit Committee. On the following pages, we have described the key audit matters we identified and have included a summary of the audit procedures we performed to address those matters.

The key audit matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Akbar Ahmad (1141), Cynthia Corby (995), Georges Najem (809), Mohammad Jallad (1164), Mohammad Khamees Al Tah (717), Musa Ramahi (872), Mutasem M. Dajani (726), Obada Alkowatly (1056), Rama Padmanabha Acharya (701) and Samir Madbak (386) are registered practicing auditors with the UAE Ministry of Economy.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

EMIRATES INTEGRATED TELECOMMUNICATIONS COMPANY PJSC (continued)

Key audit matter			How our audit addressed the Key audit matter
Revenue recognition and related IT systems
The Group reported revenue of AED 11.68 billion	Our audit procedures included a combination of
from telecommunication and related activities.	controls testing, data analytics and other
				substantive procedures, but were not limited to the
We focused on this area of the audit as there is an	following:
inherent risk related to revenue recognition given
the complexity of the systems and changing mix	• performing	enhanced	risk	assessment
of business products and services including a	procedures in response to the significant
variety of plans available for consumer and	economic disruption associated with the
enterprise customers, tariff structures, roaming	COVID-19 pandemic and increasing audit
and	international	hubbing	('wholesale')	effort to challenge whether the revenue
agreements, site sharing agreements, incentive	recognition criteria adopted for significant
programmes and discounts.		revenue streams is appropriate and in
Due to the estimates made, complexities involved	accordance with IFRSs;
• obtaining an understanding of the significant
and judgements applied in the revenue process	revenue processes including performance of
and the degree of complexity of IT systems and	an end to end walkthrough of the revenue
processes used, we have considered this matter as	process and identifying the relevant controls
a key audit matter.			(including Information Technology ("IT")
The	Group's accounting policies	relating to	systems, interfaces,	revenue assurance and
reports);
revenue recognition are presented in note 3 and
• testing the design and implementation as well
details about the Group's revenue are disclosed in	as the operating effectiveness of the relevant
note 34 to the consolidated financial statements.
controls;
				• involving our internal IT specialists to test IT
				general	controls,	system	interfaces,
				data/information	reporting	and	application
				specific controls surrounding relevant revenue
				systems;
				• reviewing significant new contracts on sample
				basis and the regulatory pronouncements, the
				accounting treatments adopted and testing the
				related revenues recognised during the year;
				• performing	data	analysis	and	substantive
				analytical procedures	of significant revenue

streams;

• reviewing key reconciliations performed by the Revenue Assurance team;

• performing test of details on non-routine adjustments processed by management which are outside of normal billing platform;

• performing specific procedures to test the accuracy and completeness of adjustments relating to grossing up certain revenue and costs; and

• assessing the disclosures in the consolidated financial statements relating to revenue against the requirements of IFRSs.

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF

EMIRATES INTEGRATED TELECOMMUNICATIONS COMPANY PJSC (continued)

Key audit matter

How our audit addressed the Key audit matter

Federal royalty computation

The federal royalty is a significant charge levied

In responding to this risk, our audit procedures

against regulated revenues of the Group and

included, but were not limited to, the following:

against operating profits, based on fixed

percentages, as disclosed in Note 2.3 to the

• obtaining an understanding of the process used by

consolidated financial statements.

management to determine the federal royalty

The federal royalty charge for

the

year

is

charge and related accrual;

• testing

the design and implementation of the

AED 1.38 billion for the year with an accrual of

relevant controls over the calculation of the

AED 1.50 billion as at 31 December 2021.

federal royalty charge;

We focused on this area of the audit as the royalty

• holding meetings with management to discuss the

federal royalty calculation and inspecting

calculations are subject to significant judgements,

correspondence from the MOF relating to this

interpretations and assumptions in respect of the

matter;

definition of regulated items, the determination of

•

assessing

the

judgements

applied

in

the

certain allowable deductions and allocated costs

calculation of the federal royalty for the current

and the

treatment

of royalties

on

site

sharing

year against the guidelines provided by the MOF

transactions.

and the abovementioned correspondence;

These are also subject to change from time to time

• evaluating the classification of regulated and non-

regulated revenues in the calculation of the federal

as per the guidelines provided by the United Arab

royalty on the telecommunication operations;

Emirates

Ministry

of Finance

("the MoF")

are

•

testing

the

allocation

of

indirect costs

on

amended or as clarifications are received from the

nonregulated

activities

based

on

clarifications

MoF.

received from the MOF;

Accordingly,

the

computation

of

the

federal

• evaluating the exclusion of items which were not

included in the calculation of

the federal royalty

royalty for the year ended 31 December 2021 is

against

the

guidelines

and

the

clarifications

considered to be a key audit matter.

received from the MOF;

The critical

accounting

estimates

made

and

•

reperforming

the

arithmetical

accuracy

of

the

calculation of the federal royalty for the year; and

judgements applied by management are disclosed

•

assessing

the

disclosures

in

the

consolidated

in note 2.3 and further details about the federal

financial

statements against

the requirements

of

royalty

are

disclosed

in note

27

to

the

IFRSs.

consolidated financial statements.