Pakistan Telecommunication : Financial Statements - Q3-2020

PTCL - 3RD QUARTER REPORT 2020

CONDENSED INTERIM

STATEMENT OF FINANCIAL POSITION

AS AT SEPTEMBER 30, 2020 (UN-AUDITED)

		September 30,	December 31,
		2020	2019
			(Un-Audited)		(Audited)
	Note		Rs '000		Rs '000
Equity and liabilities
Equity
Share capital and reserves
Share capital		51,000,000	51,000,000
Revenue reserves
Insurance reserve			-		3,172,624
General reserve			27,497,072		27,497,072
Unappropriated profit			10,772,960		6,081,683
		38,270,032	36,751,379
		89,270,032	87,751,379
Liabilities
Deferred income tax			4,918,117		5,932,356
Employees retirement benefits			27,225,147		27,042,310
Deferred government grants			7,544,395		7,578,974
Advances from customers			1,574,259		1,526,911
Lease liabilities			1,392,900		927,185
		42,654,818	43,007,736
Trade and other payables	6
	82,567,655		78,261,680
Security deposits			593,246		583,739
Unpaid / unclaimed dividend			212,645		211,589
Current maturity of lease liabilities			193,506		177,955
		83,567,052	79,234,963

Total equity and liabilities	215,491,902	209,994,078
Contingencies and commitments	13

The annexed notes 1 to 22 are an integral part of these condensed interim financial statements.

Chief Financial Officer

President & CEO

Chairman

12

CONDENSED INTERIM

STATEMENT OF FINANCIAL POSITION

AS AT SEPTEMBER 30, 2020 (UN-AUDITED)

		September 30,	December 31,
		2020	2019
			(Un-Audited)		(Audited)
	Note		Rs '000		Rs '000
Assets
Property, plant and equipment	7	112,308,336	116,719,808
Right of use assets		1,723,007	1,144,505
Intangible assets		1,175,484	1,463,269
		115,206,827	119,327,582
Long term investments	8	14,236,284	8,936,284
Long term loans and advances	9	11,609,734	12,387,056
Contract costs		543,673	508,615
		141,596,518	141,159,537
Stores and spares			5,001,029		5,335,121
Contract costs			1,631,018		1,525,845
Trade debts and contract assets	10		24,210,694		20,258,574
Loans and advances			1,910,401		922,344
Income tax recoverable			16,065,898		17,756,175
Receivable from GoP			2,164,072		2,164,072
Prepayments and other receivables			14,423,461		16,697,980
Short term investments	11		3,452,416		6,906
Cash and bank balances	12		5,036,395		4,167,524
		73,895,384	68,834,541

Total assets	215,491,902	209,994,078

Chief Financial Officer

President & CEO

Chairman

13

PTCL - 3RD QUARTER REPORT 2020

CONDENSED INTERIM

STATEMENT OF PROFIT OR LOSS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

Note

Revenue	14	18,041,626	18,001,951	53,374,978	53,774,026
Cost of services		(14,135,387)	(13,840,833)	(42,149,339)	(40,593,609)
Gross profit		3,906,239	4,161,118	11,225,639	13,180,417
Administrative and general expenses	(1,680,675)		(1,712,613)		(4,839,772)		(4,919,540)
Selling and marketing expenses		(742,994)		(758,250)		(2,320,432)		(2,274,337)
Impairment loss on trade debts and
contract assets		(375,361)		(614,007)		(1,526,620)		(1,536,007)
		(2,799,030)	(3,084,870)	(8,686,824)	(8,729,884)
Operating profit		1,107,209	1,076,248	2,538,815	4,450,533
Other income	15	974,983	1,472,904	3,596,002	3,820,564
Finance costs		(102,732)	(88,409)	(238,218)	(233,709)
Profit before tax		1,979,460	2,460,743	5,896,599	8,037,388
Provision for income tax		(613,628)	(787,437)	(1,827,946)	(2,571,964)
Profit for the period		1,365,832	1,673,306	4,068,653	5,465,424
Earnings per share - basic and
diluted (Rupee)		0.27	0.33	0.80	1.07

The annexed notes 1 to 22 are an integral part of these condensed interim financial statements.

Chief Financial Officer

President & CEO

Chairman

14

CONDENSED INTERIM

STATEMENT OF COMPREHENSIVE INCOME

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

Note

Profit for the period	1,365,832	1,673,306					5,465,424
Items that will not be reclassified to
profit or loss:
Remeasurement loss on employees
retirement benefits	-		-						(1,186,233)
Tax effect	-		-					344,008
Other comprehensive income for
the period	-	-				(842,225)
Total comprehensive income for the period	1,365,832	1,673,306					4,623,199

The annexed notes 1 to 22 are an integral part of these condensed interim financial statements.

Chief Financial Officer

President & CEO

Chairman

15

PTCL - 3RD QUARTER REPORT 2020

CONDENSED INTERIM

STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

			Nine months ended
			September 30,	September 30,
		2020	2019
Note		Rs '000		Rs '000
Cash flows from operating activities
Cash generated from operations	16		22,545,186	18,052,821
Employees retirement benefits paid			(834,025)	(881,674)
Payment to Pakistan Telecommunication Employee Trust (PTET)		(2,000,000)	(3,500,000)
Advances from customers			126,273	598,846
Income tax withheld			(1,151,907)	(1,402,391)
Net cash inflow from operating activities			18,685,527	12,867,602
Cash flows from investing activities
Capital expenditure			(6,899,830)		(14,890,192)
Proceeds from disposal of property, plant and equipment			1,044,960		669,387
Long term loans and advances			(111,123)		(228,566)
Addition to contract costs			(2,436,069)		(2,101,070)
Long term investment in PTML			(4,500,000)		-
Return on long term loan to subsidiaries			710,607		513,405
Return on short term investments			237,478		377,619
Government grants received			596,284		164,900
Net cash outflow from investing activities			(11,357,693)	(15,494,517)
Cash flows from financing activities
Dividend paid			(2,548,944)		(2,602,242)
Lease liabilities			(464,509)		(174,475)
Net cash outflow from financing activities			(3,013,453)		(2,776,717)
Net increase / (decrease) in cash and cash equivalents			4,314,381	(5,403,632)
Cash and cash equivalents at the beginning of the period			4,174,430	9,590,979
Cash and cash equivalents at the end of the period	17		8,488,811	4,187,347

The annexed notes 1 to 22 are an integral part of these condensed interim financial statements.

Chief Financial Officer

President & CEO

Chairman

16

Officer Financial Chief

CEO & President

Chairman 17

Balance as at December 31, 2018	37,740,000		13,260,000		2,985,696		27,497,072		2,088,583	83,571,351
Total comprehensive income for the period
Profit for the nine months period ended September 30, 2019	-		-		-		-		5,465,424		5,465,424
Other comprehensive income for the period	-		-		-		-		(842,225)		(842,225)
	-		-		-		-		4,623,199	4,623,199
Transfer to insurance reserve	-		-		186,928		-		(186,928)	-
	37,740,000		13,260,000		3,172,624		27,497,072		6,524,854	88,194,550
Distribution to owners of the Company
Interim dividend for the year ended
December 31, 2019 - Rs 0.50 per share	-		-		-		-		(2,550,000)	(2,550,000)
Balance as at September 30, 2019	37,740,000		13,260,000		3,172,624		27,497,072		3,974,854	85,644,550
Total comprehensive income for the period
Profit for the three months period ended December 31, 2019	-		-		-		-		881,811		881,811
Other comprehensive income for the period	-		-		-		-		1,225,018		1,225,018
	-	-	-	-	2,106,829	2,106,829
Balance as at December 31, 2019	37,740,000		13,260,000		3,172,624		27,497,072		6,081,683	87,751,379
Total comprehensive income for the period
Profit for the nine months period ended September 30, 2020
	-			-			-			-			4,068,653		4,068,653
Other comprehensive income for the period		-			-			-			-			-		-
	-		-		-		-			4,068,653	4,068,653
Transfer of insurance reserve	-		-		(3,172,624)		-		3,172,624	-
	37,740,000		13,260,000		-		27,497,072		13,322,960	91,820,032
Distribution to owners of the Company
Final dividend for the year ended
December 31, 2019 - Rs 0.50 per share	-		-		-		-		(2,550,000)	(2,550,000)
Balance as at September 30, 2020	37,740,000		13,260,000		-		27,497,072		10,772,960	89,270,032

The annexed notes 1 to 22 are an integral part of these condensed interim financial statements.

2020 30, SEPTEMBER ENDED PERIOD MONTHS NINE THE FOR	INTERIM CONDENSED EQUITY IN CHANGES OF STATEMENT
AUDITED)-(UN

PTCL - 3RD QUARTER REPORT 2020

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

1. THE COMPANY AND ITS OPERATIONS

Pakistan Telecommunication Company Limited ("PTCL", "the Company") was incorporated in Pakistan on December 31, 1995 and commenced business on January 01, 1996. The Company, which is listed on the Pakistan Stock Exchange Limited (PSX), was established to undertake the telecommunication business formerly carried on by the Pakistan Telecommunication Corporation (PTC). PTC's business was transferred to the Company on January 01, 1996 under the Pakistan Telecommunication (Re-organization) Act, 1996, on which date, the Company took over all the properties, rights, assets, obligations and liabilities of PTC, except those transferred to the National Telecommunication Corporation (NTC), the Frequency Allocation Board (FAB), the Pakistan Telecommunication Authority (PTA) and the Pakistan Telecommunication Employees Trust (PTET). The registered office of the Company is situated at PTCL Headquarters, G-8/4, Islamabad.

The Company provides telecommunication services in Pakistan. It owns and operates telecommunication facilities and provides domestic and international telephone services and other communication facilities throughout Pakistan. The Company has also been licensed to provide such services in territories of Azad Jammu and Kashmir and Gilgit-Baltistan.

1.1 Impact of COVID-19 on the condensed interim financial statements

During the period ended 30 September 2020, the COVID-19 pandemic emerged which impacted the economy in general. Due to temporary lockdown imposed to counter COVID-19 outbreak, there is a negative impact of approximately Rs 687,481 thousand on the revenues of the Company.

2. STATEMENT OF COMPLIANCE

• These condensed interim financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprise of:

• International Accounting Standard (IAS) 34, Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and
• Provision of and directives issued under the Companies Act, 2017.

Where the provisions of and directives issued under the Companies Act, 2017 differ with the requirements of IAS 34, the provisions of and directives issued under the Companies Act, 2017 have been followed.

1. BASIS OF PREPARATION
   These condensed interim financial statements do not include all of the information required in the annual financial statements prepared in accordance with the approved accounting and reporting standards as applicable in Pakistan. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company's financial position and performance since the last annual financial statements. These condensed interim financial statements should be read in conjunction with the Company's latest annual financial statements as at and for the year ended December 31, 2019.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
   The preparation of these condensed interim financial statements in conformity with approved accounting and reporting standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on historic experience including expectations of future events that are believed to be reasonable under the circumstances.

Estimates and judgments made by the management in the preparation of these condensed interim financial statements are the same as those used in the preparation of audited financial statements of the Company for the year ended December 31, 2019 except of the following:

18

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

Useful life of certain items of property plant and equipment has been revised during the period, consequent to the capacity enhancement. This change has resulted in reduction in depreciation charge for the period by Rs 151 million.

Estimate for average life of wireless customer has been revised in accordance with customer retention pattern. This change has resulted in reduction of revenue and cost of sales by Rs 99 million and Rs 229 million respectively.

5.	SIGNIFICANT ACCOUNTING POLICIES
	The accounting policies and the methods of computations adopted in the preparation of these
	condensed interim financial statements are consistent with those followed in the preparation
	of the Company's audited financial statements for the year ended December 31, 2019.
			September 30,	December 31,
			2020	2019
				(Un-Audited)		(Audited)
		Note		Rs '000		Rs '000
6.	TRADE AND OTHER PAYABLES
	Trade creditors			9,581,771	11,289,895
	Accrued and other liabilities	6.1		29,966,961	27,657,593
	Technical services assistance fee			24,636,596	21,297,281
	Advances from customers / contract liabilities			6,055,632	5,932,578
	Retention money / payable to contractors and suppliers		6,447,859	6,761,684
	Income tax collected / deducted at source			656,426	718,313
	Payable to subsidiaries on account of group taxation			3,401,122	3,401,122
	Sales tax payable			1,821,288	1,203,214
				82,567,655	78,261,680
6.1	Accrued and other liabilities
	Accrued liability for operational expenses			7,675,541	5,484,769
	Amount withheld on account of provincial levies (Sub judice)
	for ICH operations			12,110,803	12,110,803
	Accrual for Government / regulatory expenses			8,888,465	8,305,315
	Accrued wages			677,472	1,160,504
	Others			614,680	596,202
				29,966,961	27,657,593
7.	PROPERTY, PLANT AND EQUIPMENT
	Operating fixed assets	7.1		103,299,031	103,626,162
	Capital work-in-progress	7.3		9,009,305	13,093,646
				112,308,336	116,719,808
				September 30,	September 30,
				2020	2019
				(Un-Audited)		(Un-Audited)
				Rs '000		Rs '000
7.1	Operating fixed assets
	Opening net book value			103,626,162	91,947,710
	Additions during nine months period	7.2		10,984,171	7,528,823
				114,610,333	99,476,533
	Disposals during the period - at net book value			(3,492)		(15,969)
	Depreciation charge for the period			(11,307,810)		(6,920,897)
				(11,311,302)		(6,936,866)
	Closing net book value			103,299,031	92,539,667

19

PTCL - 3RD QUARTER REPORT 2020

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

7.2 Detail of additions during the period:
Leasehold land	193	10,563
Buildings on freehold land	95,047	36,797
Buildings on leasehold land	28,348	20,057
Lines and wires	5,782,712	1,939,954
Apparatus, plant and equipment	4,647,913	5,384,812
Office equipment	133,351	16,196
Computer equipment	26,575	40,474
Furniture and fittings	2,873	2,582
Vehicles	59,362	77,388
Submarine cables	207,797	-
	10,984,171	7,528,823

7.3 Additions to CWIP during the nine months period ended September 30, 2020 were Rs 6,814,511 thousand (September 30, 2019: Rs 14,731,291 thousand).

• During the period investment of Rs 4,500,000 thousand was made in PTML against issuance of 450,000,000 ordinary shares of Rs 10 each for consideration received in cash and Rs 800,000 thousand investment made in U Bank against issuance of 80,000,000 ordinary shares of Rs 10 each by conversion of subordinated loan into share capital.

	Note
9 LONG TERM LOANS AND ADVANCES
Loans to PTML - unsecured	7,500,000	7,500,000
Loans to U Bank - unsecured	3,200,000	4,000,000
Loans to employees - secured	849,316	828,438
Others	60,418	58,618
	11,609,734	12,387,056
10 TRADE DEBTS AND CONTRACT ASSETS
Trade debts	28,136,027	22,734,097
Contract assets	5,257,649	5,177,698
	33,393,676	27,911,795
Allowance for expected credit loss	(9,182,982)	(7,653,221)
	24,210,694	20,258,574
11 SHORT TERM INVESTMENTS
Market treasury bills - Amortized cost	3,452,416	-
Investment in mutual funds - FVTPL	-	6,906
	3,452,416	6,906
12 CASH AND BANK BALANCES
Cash in hand	184,273	51,335
Balances with banks:	12.1
Local currency accounts		2,788,548		3,407,373
Foreign currency accounts		2,063,574		708,816
	4,852,122	4,116,189
	5,036,395	4,167,524

12.1 Bank balance includes Rs 21,228 thousands (December 31, 2019: Rs 147,092 thousand)

carrying profit at the rate of 2.83 % (December 31, 2019: 7%) per annum from Shariah compliant arrangements.

20

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

13. CONTINGENCIES AND COMMITMENTS

There has been no material change in contingencies as disclosed in the last audited financial statements of the Company for the year ended December 31, 2019, except as disclosed in note 13.1.

1. For the tax years 2007, 2009, 2010 and 2011 to 2018, Taxation Officer disallowed certain expenses and tax credits. The impugned orders were challenged at the relevant appellate forums which allowed partial relief thereof. After taking into account the orders of CIR (Appeals), ATIR as well as rectification orders tax impact of the disallowances is Rs 21,487,780 thousand. Appeals on the remaining outstanding items are pending adjudication before ATIR. Reference in respect of 2007 is subjudice before Honorable Islamabad High Court. Stay has been obtained in all cases from different fora.
2. Further, there has been no change in the status of pension case as disclosed in the annual financial statements for the year ended December 31, 2019. As also disclosed in the annual financial statements, under the circumstances, management of the Company, on the basis of legal advice, believes that the Company's obligations against benefits are restricted to the extent of pension increases as determined solely by the Board of Trustees of the Pakistan Telecommunication Employees Trust in accordance with the Pakistan Telecommunication (Re-Organization) Act, 1996 and the pension Trust Rules of 2012 and accordingly, no provision has been recognized in these condensed interim financial statements.
3. Bank guarantee and bid bonds issued in favour of :

Universal Service Fund (USF) against government grants	4,065,496	4,065,496
Others	2,313,825	2,539,018
	6,379,321	6,604,514

13.4 Commitments

Commitments, in respect of contracts for capital expenditure amount to Rs 3,907,455 thousand (December 31, 2019: Rs 4,065,672 thousand).

14 REVENUE

The Company principally obtains revenue from providing telecommunication services such as Broadband, IPTV, Voice, data, wireless services, interconnect, corporate and international services.

For bundled packages, the Company accounts for individual products and services separately if they are distinct i.e. if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it. The consideration is allocated between separate products and services in a bundle based on their stand alone selling prices.

The Company generates revenue from the following performance obligations of its telecommunication services.

Nine months ended

Broadband and IPTV
20,699,885	21,104,071
Voice services	8,196,394		9,572,211
Wireless data	1,707,562		1,559,733
Revenue from retail customers
30,603,841	32,236,015
Corporate and wholesale	16,832,215	15,917,478
International	5,938,922	5,620,533
Total revenue	53,374,978	53,774,026

21

PTCL - 3RD QUARTER REPORT 2020

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

14.1 Revenue is stated net of trade discount amounting to Rs 52,988 thousand (September 30, 2019 Rs 51,150 thousand) and sales and other taxes directly attributable to sales amounting to Rs 7,914,659 thousand (September 30, 2019: Rs 7,720,675 thousand)

		Note
15 OTHER INCOME
	Income from financial assets	15.1	1,506,155	2,013,850
	Income from non-financial assets		2,089,847	1,806,714
			3,596,002	3,820,564

15.1 Income from financial assets include Rs 246 thousand (September 30, 2019: Rs 967 thousand) earned from Shariah compliant arrangements.

16 CASH GENERATED FROM OPERATIONS
	Profit before tax	5,896,599	8,037,388
	Adjustments for non-cash charges and other items:
	Depreciationof property, plant and equipment	11,307,810	10,485,540
	Amortization of intangible assets	287,786	357,266
	Depreciation of right of use assets	259,947	205,942
	Amortization of contract costs	2,295,838	1,782,427
	Provision for obsolete stores and spares	(2,573)	15,563
	Impairment loss on trade debts and contract assets	1,526,620	1,536,007
	Provision for employees retirement benefits	3,016,861	3,143,166
	Gain on disposal of property, plant and equipment	(1,041,468)	(653,462)
	Return on bank deposits	(254,927)	(276,399)
	Imputed interest on long term loans	15,056	22,774
	Imputed interest on lease liabilities	107,326	91,117
	Return on long term loan to subsidiaries	(986,687)	(936,907)
	Unearned revenue realised	(78,925)	(10,918)
	Gain on investment measured at fair value through profit or loss	(1,026)	(93,127)
	Release of deferred government grants	(630,863)	(312,206)
		21,717,374	23,394,171
	Effect on cash flows due to working capital changes:
	Decrease / (increase) in current assets:
	Stores and spares	336,664		23,231
	Trade debts and contract assets	(5,478,740)		(5,294,903)
	Loans and advances	(914,669)		(555,477)
	Prepayments and other receivables	2,569,073		(2,198,540)
		(3,487,672)	(8,025,689)
	Increase in current liabilities:
	Trade and other payables	4,305,977	2,683,757
	Security deposits	9,507	582
		22,545,186	18,052,821
17 CASH AND CASH EQUIVALENTS
	Short term investments	3,452,416	-
	Cash and bank balances	5,036,395	4,187,347
		8,488,811	4,187,347

22

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

18 TRANSACTIONS AND BALANCES WITH RELATED PARTIES
	Relationship with the Company	Nature of transaction
	i. Shareholders	Technical services assistance fee -
		note 18.1	1,975,241	1,897,505
	ii. Subsidiaries	Sale of goods and services	3,771,042	4,362,060
		Purchase of goods and services	2,187,789	2,076,972
		Mark up on long term loans	986,687	936,907
		Long term investments in subsidiaries	5,300,000	-
	iii. Associated undertakings	Sale of goods and services	3,056,171	2,237,565
		Purchase of goods and services	438,052	400,478
	iv. Employees contribution plan	PTCL Employees GPF Trust - net	86,384	59,664
	v. Employees retirement benefit plan Contribution to the plan- PTET	2,000,000	3,500,000
		Contribution to the plan- Gratuity	49,454	86,048
	vi. Other related parties	Charge under license obligations	1,215,190	1,214,606
	vii. Directors, Chief Executive	Fee and remuneration including
	and Key management personnel	benefits and perquisites	568,993	939,594

Period / year-end balances

Receivables from related parties

Long term loans to subsidiaries	10,700,000	11,500,000
Trade debts
- Subsidiaries	312,766	431,164
- Associated undertakings	9,684,933	6,267,566
Other receivables
- Subsidiaries	9,696,653	12,634,977
- Associated undertakings	71,305	71,305
- PTCL Employees GPF Trust	21,071	107,454
-Pakistan Telecommunication Employees Trust (PTET)	3,556	94
- Long term loans to executives and key management personnel	79,993	68,135
Bank deposit with subsidiary	348	565,434

23

PTCL - 3RD QUARTER REPORT 2020

NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

	September 30,	December 31,
	2020	2019
	(Un-Audited)	(Audited)
	Rs '000	Rs '000
Payables to related parties
Trade creditors
- Subsidiaries	1,126,306	969,409
- Associated undertakings	1,254,537	887,697
- The Government of Pakistan related entities	966,291	1,301,247
Security deposits from subsidiary	3,623	3,623
Retention money payable to associated undertakings	3,055	3,055
Technical services assistance fee payable to Etisalat	24,636,596	21,297,281
Pakistan Telecommunication Company Limited
Employees Gratuity Fund	232,136	137,974
Pakistan Telecommunication Employees Trust (PTET)	2,974,612	4,135,611

18.1 This represents the Company's share of fee payable to Emirates Telecommunication Corporation (Etisalat) under an agreement for technical services at the rate of 3.5% of Pakistan Telecommunication Group's consolidated revenue.

19 OFFSETTING OF FINANCIAL ASSETS AND LIABILITIES
	Gross			Amount	Net as per
	amounts			not in	statement
	subject		Net	scope of
	to setoff	Offset	amount	offsetting	position
	Rs '000	Rs '000	Rs '000	Rs '000	Rs '000
As at September 30, 2020
Trade debts and contract
assets	14,827,319	(4,186,032) 10,641,287	22,752,389	33,393,676
Trade creditors	(4,495,060)	4,186,032	(309,028)	(9,272,743)	(9,581,771)
As at December 31, 2019
Trade debts and contract
assets	14,335,367	(6,709,298)	7,626,068	20,285,727	27,911,795
Trade creditors	(7,252,473)	6,709,298	(543,174)	(10,746,721)	(11,289,895)

20 FINANCIAL RISK MANAGEMENT AND FAIR VALUES

The Company's financial risk management objectives and policies are consistent with that disclosed in the annual financial statements for the year ended December 31, 2019. There is no change in the nature and corresponding hierarchies of fair value levels of financial instruments form those as disclosed in the audited financial statements of the Company for the year ended December 31, 2019.

The carrying amount of all financial assets and financial liabilities are estimated to approximate their fair values.

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NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2020 (UN-AUDITED)

21 CORRESPONDING FIGURES

Following corresponding figures have been reclassified for appropriate presentation of operating results.

Condensed Interim Statement of Profit or Loss

		As previously			As
		reported		Reclas	reclas
		Rs '000		Rs '000	Rs '000
Cost of services	(40,594,094)	485 (40,593,609)
Administrative and general expenses					(4,919,540)
	(6,575,327)	119,780
Impairment loss on trade debts			(1,536,007)	(1,536,007)
Selling and marketing expenses	(2,154,072)	(120,265)	(2,274,337)

Condensed Interim Statement of Cash Flows
Reclassification from	Reclassification to	Rs '000
Cash generated from operations	Cash flows from investing activities	2,101,070

22 DATE OF AUTHORIZATION FOR ISSUE OF CONDENSED INTERIM FINANCIAL STATEMENTS This condensed interim financial statements for the nine months period ended September 30, 2020 were authorized for issue by the Board of Directors of the Company on October 14, 2020.

Chief Financial Officer

President & CEO

Chairman

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