POST AND TELECOMMUNICATIONS OF KOSOVO J.S.C.

Transcription

POST AND TELECOMMUNICATIONS OF KOSOVO J.S.C.
Independents Auditor’s Report and
Financial Statements for the year ended 31 December 2011
Content
Page
Independent Auditor’s Report
1
Statement of Financial Position
3
Statement of Comprehensive Income
4
Statement of Changes in Equity
5
Statement of Cash Flows
6
Notes to the Financial Statements
7 – 36
5
6
POST AND TELECOMUNICATION OF KOSOVO J.S.C.
Statement of Financial Position as of 31 December 2011
(all amounts are in thousands of Euro unless otherwise stated)
Note
ASSETS
Property, plant and equipment
Intangible assets
Available-for-sale financial assets
Long-term financial receivables
Deferred tax assets
Total non-current assets
31 December
2011
31 December
2010
5
6
8
12
8
117,616
9,417
240
740
128,013
114,471
15,916
240
58
1,655
132,340
Inventories
Trade receivables
9
10
7,707
16,458
6,885
15,311
Income tax receivable
Prepaid expenses and other receivables
Short-term financial receivables
Cash and cash equivalents
Total current assets
22
11
12
12
708
13,152
32,804
70,829
793
5,018
2,138
45,195
75,340
198,842
207,680
13
5,000
55,000
123,323
183,323
5,000
55,000
132,207
192,207
14
22
15
16
6,587
1,537
5,424
1,971
15,519
198,842
6,991
6,063
2,419
15,473
207,680
Current assets
TOTAL ASETS
EQUITY AND LIABILITIES
Equity
Shared capital
Reserves
Retained earnings
Total equity
Liabilities
Trade payables
Tax payables
Accruals and other payables
Deferred income
Total liabilities
TOTAL EQUITY AND LIABILITIES
Authorized to issue by the Board of Directors of Post and Telecommunications of Kosovo
J.S.C. on 20 June 2012, signed on their behalf.
Rexhë Gjonbalaj
Ejup Qerimi
Nuredin Krasniqi
The accompanying notes from 1 to 26 form an integral part of these financial statements
3
Statement of Comprehensive Income for the year ended 31 December 2011
Note
Revenue
Operational costs
Staff costs
Depreciation
Amortization
Other operating costs
17
19
20
5
6
21
Operating Profit
Income from release of impairment loss on
bank balances
Other income
Interest income
12
18
12
Profit before tax
Income tax expense
22
Net profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
31 December
2011
31 December
2010
162,268
(26,767)
(48,580)
(17,290)
(6,735)
(13,391)
151,503
(26,047)
(47,271)
(17,547)
(7,146)
(18,382)
49,505
35,110
569
140
1,320
10
482
2,054
51,534
37,656
(5,418)
(4,260)
46,116
33,396
-
-
46,116
33,396
4
Statement of Changes in Equity for the year ended 31 December 2011
Note
Balance at 1 January 2010
Comprehensive income for
the year
Shared
capital
Reserves
Retained
earnings
Total
5,000
55,000
178,811
238,811
-
-
33,396
-
33,396
-
-
-
33,396
33,396
-
-
(80,000)
(80,000)
-
-
(80,000)
(80,000)
Balance at 31 December 2010
5,000
55,000
132,207
192,207
Comprehensive income for
the year
5,000
55,000
132,207
192,207
-
-
46,116
-
46,116
-
-
-
46,116
46,116
-
-
(55,000)
(55,000)
-
-
(55,000)
(55,000)
5,000
55,000
123,323
183,323
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Distributions to the owner
Dividends paid
Total distributions to the
owner
13
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Distributions to the owner
Dividends paid
Total distributions to the
owner
13
5
Statement of Cash Flows for the year ended 31 December 2011
Note
Cash flows from operating activities
Net profit for the year
Adjustments for:
Depreciation
Amortization
Impairment losses on doubtful debts
Release of impairment provision bank
deposits
Interest income
Current income tax expense
Deferred tax expense
Operating profit before changes in working
capital and provisions
31 December
2011
31 December
2010
46,116
17,290
6,735
1,314
33,396
(569)
(1,320)
4,503
915
(10)
(2,054)
3,351
909
74,984
61,731
(822)
(2,461)
1,807
1,769
4,449
(404)
(640)
(448)
74,658
(391)
(8,872)
(279)
(507)
55,258
(2,173)
(498)
72,485
54,760
1,182
58
-
1,725
240
2,400
(20,671)
(10,445)
(17,619)
58,748
42,609
45,254
Cash flows from financing activities
Dividends paid
Net cash used in investing activities
(55,000)
(55,000)
(80,000)
(80,000)
Net change in cash and cash equivalents
(12,391)
20,014
45,195
25,181
32,804
45,195
5
6
21
12
12
22
8
Changes in inventories
Changes in trade receivables
Changes in prepaid expenses and other
receivables
Changes in trade payables
Changes in accruals and other payables
Changes in deferred income
Cash generated from operations
Income taxes paid
Net cash generated from/(used in)
operating activities
Cash flows from investing activities
Interest received
Decrease in long term financial receivables
Investments in associates
Payments for acquisition of property, plant,
equipment and intangibles
Net investments in bank deposits
Net cash (used in)/generated from
investing activities
7
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
17,547
7,146
1,686
6
Notes to the Financial Statements for the year ended 31 December 2011
1
INTRODUCTION
1.1
General
Post and Telecommunications of Kosovo J.S.C. (“the Company”) is a Joint Stock Company
incorporated in the Republic of Kosovo. The Company's head office is located at Dardania
Street, Prishtina, Republic of Kosovo.
The Company provides telecommunication services, such as mobile and fixed telephony,
postal services and internet services.
As at 31 December 2011 the Company has 3,349 employees (2010: 3,384).
1.2
Background information
PTK enterprise was an enterprise within the meaning of UNMIK Regulation No. 2005/18,
amending UNMIK Regulation No. 2002/12 “On the Establishment of the Kosovo Trust Agency”
(“KTA”). Regulation 2005/18 has given to KTA the authority to transform enterprises into
corporations. At a meeting dated 9 May 2005, the Board of Directors of the KTA resolved to
transform PTK enterprise into a joint stock Company, named Post and Telecommunications of
Kosovo Holding, J.S.C. On the incorporation date 22 June 2005, PTK Holding effectively
substituted the former “enterprise” formerly doing business as “Post and Telecommunications
of Kosovo” on a continuing basis, without liquidation. PTK enterprise was the first enterprise
that was transformed into a Corporation under the KTA Regulation and Administrative
Directive 2005/6. KTA, acted as trustee for the ultimate owners of Kosovo’s enterprises
pursuant to the KTA Regulation, was the current holder of 100 percent of the shares of PTK
Holding. The issued share capital upon incorporation amounts to Euro 260 million.
Shortly after its incorporation, PTK Holding formed an operating Company, Post and
Telecommunications of Kosovo J.S.C. (“PTK”) and transferred certain of its assets to PTK as a
capital contribution. PTK Holding was the 100% shareholder of Post and Telecommunications
of Kosovo J.S.C.
The registered capital of the wholly owned subsidiary amounts to Euro 250 million, and the
shares of the subsidiary were issued in exchange for certain net assets contributed in kind by
PTK Holding. Given the practical effect of the transformation and of incorporation, the Tax
Administration has approved the restructuring process of PTK enterprise as “reorganization”
for the purposes of Section 24.1 of UNMIK Regulation No. 2004/51 “On Corporate Income
Taxes”.
On June 13, 2008, the Assembly of the Republic of Kosovo approved the Law on Publicly
owned Enterprises (Law No.03/L-087), and based on provision of section 3 of this Law,
Central publicly owned Enterprises including PTK JSC are declared to be assets of the
Republic of Kosovo. Government of the Republic of Kosovo has through the Ministry of
Economy and Finance the exclusive authority to exercise the shareholder rights over the
Publicly owned Enterprises.
On 13 October 2009, the Government has issued a decision for merging of this two companies
PTK Holding and PTK JSC into one company Post and Telecommunications of Kosovo J.S.C.
(“the Company”) with registered capital of Euro 5,000,000, composed of five million common
shares with nominal value of Euro 1 per share. All shares are issued in the name of Republic of
Kosovo.
At 31 December 2011, the Government has issued a decision on the establishment of the
Public Central Enterprise Post of Kosovo JSC. The Public Central Enterprise Post of Kosovo JSC
established the separation of the Postal Unit from the current division of Public Enterprise
Post and Telecommunications of Kosovo J.S.C..
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1.3
Business activities
At 31 December 2011, the Company has three business units, two of which are licensed by
Telecommunication Regulation Authority of Kosovo (“TRA”), one of them is also authorized by
the TRA for offering internet services and one is licensed by the Ministry of Transport and
Communications:
Postal Unit (“Post”)
Banking and Payments Authority of Kosovo (“BPK”) has issued to PTK a non-banking financial
license which enables the Post to offer cash payment and receipt services to third parties.
On 15 May 2006, the Ministry of Transport and Communications have issued the License for
providing Universal Postal Services to PTK.
Fixed Telecommunications Unit (“Fixed Telecommunications”)
The Fixed Telecommunications Unit is the only licensed network and service provider of fixed
telecommunication services to retail and business customers in the territory of Kosovo.
Fixed Telecommunications Unit also offered internet services from 2001 and today is one of
three operators offering internet services in Kosovo, authorized by the TRA.
Mobile Telephony Unit (“Vala”)
Vala is the GSM mobile operating unit and is currently one of two licensed network and
service providers of mobile telecommunication services in Kosovo.
PTK enterprise entered into an agreement in 2000, to provide mobile services in Kosovo, with
Monaco Telecom International (“MTI”) which entitles PTK to use the MTI international dialing
code and enables PTK to connect its mobile network to international networks. As a
component of this agreement PTK compensate MTI with a share of revenues and pay certain
international traffic costs. During 2006, the contract between MTI and PTK J.S.C. has been
re-negotiated and amended. The new framework Agreement covers the use of Monaco’s
International Dialing Code, International traffic, Roaming and technical know-how transfer. In
addition the framework Agreement provides for a termination clause in the event that Kosovo
acquires an International Dialing Code (IDC) of its own. Also in May of 2009, the contract
between MTI and PTK JSC was re-negotiated and changed, again. New Annex of the
Framework Contract covers the use of the Monaco International dialing code, international
traffic, roaming and transfer technical knowledge, which came into force on 1 January 2010.
In addition, the annex of the new framework contract covers a provision for termination of
contract if Kosovo provides / receives its own code as well as international calls for reduction
of tariff code.
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2.
ACCOUNTING POLICES
2.1 Statement of compliance
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS).
2.2 Basis of measurement
The financial statements have been prepared using the measurement bases specified by IFRS
for each type of asset, liability, income and expense. The measurement bases are more fully
described in the accounting policies below.
2.3 Functional and presentation currency
These financial statements are presented in Euro, which is the Company’s functional
currency. All financial information presented in Euro has been rounded to the nearest
thousand.
2.4 Use of estimates and judgments
The preparation of financial statements requires management to make judgments, estimates
and assumptions that affect the application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and in any
future periods affected.
In particular, information about significant areas of estimation uncertainty and critical
judgments in applying accounting policies that have the most significant effect on the amount
recognized in the financial statements are described in the Note 4 – Accounting estimates and
judgments.
The accounting policies set out below have been applied consistently to all years presented in
these financial statements, unless otherwise stated.
The financial statements are prepared as of and for the years ended 31 December 2011 and
2010.
2.5
Standards, amendments and interpretations issued and effective in 2011 but not
relevant
The following new standards, amendments to existing standards and interpretations to published
standards are mandatory for accounting periods beginning on or after 1 January 2011 or
subsequent periods, but are not relevant to the Company’s operations:
Effective for annual
Standard or
periods beginning
interpretation
Title
on or after
First Time Adoption of International Financial
1 July 2010/
IFRS 1
Reporting Standards
1 January 2011
IFRS 3
Business Combinations
1 July 2010
IAS 27
Consolidated and Separate Financial Statements
1 July 2010
IFRIC 13
Customer Loyalty Programmes
1 January 2011
The Limit on Defined Benefit Assets, Minimum
IFRIC 14
Funding Requirements and their Interaction
1 January 2011
Extinguishing Financial Liabilities with Equity
IFRIC 19
Instruments
1 July 2010
9
2
ACCOUNTING POLICIES (CONTINUED)
2.6
Improvements/amendments to IFRS (2010/2011)
Improvements/amendments to IFRS issued in 2010/2011 contained numerous amendments to
IFRS that the IASB considers non-urgent but necessary. ‘Improvements to IFRS’ comprise
amendments that result in accounting changes to presentation, recognition or measurement
purposes, as well as terminology or editorial amendments related to a variety of individual
IFRS standards. The amendments are effective for the Company’s 2011 annual audited
financial statements with earlier adoption permitted. No material changes to accounting
policies are expected as a result of these amendments.
2.7
Standards, amendments and interpretations issued but not yet effective in 2011
The following IFRS and IFRIC interpretations issued/revised as at 1 January 2011 or subsequent
periods have not been early adopted by the Company’s management:
Effective for annual
Standard or
periods beginning
interpretation
Title
on or after
IAS 1
Presentation of Financial Statements
1 January 2012
IAS 12
Income Taxes
1 January 2012
IAS 19
Employee benefits
1 January 2013
IAS 27
Separate Financial Statements
1 January 2013
IAS 28
Investments in Associates and Joint Ventures
1 January 2013
IFRS 1
First Time Adoption of International Financial
1 July 2011
Reporting Standards
IFRS 7
Financial Instruments – Disclosures
1 July 2011
IFRS 9
Financial Instruments – Classification and Measurement
1 January 2013
IFRS 10
Consolidated Financial Statements
1 January 2013
IFRS 11
Joint Agreements
1 January 2013
IFRS 12
Disclosure of Interests in Other Entities
1 January 2013
IFRS 13
Fair Value Measurement
1 January 2013
There would have been no changes in the operational results of the Company for the year
ended 31 December 2011 had the Company early adopted any of the above standards
applicable to the Company.
2.8
Foreign currency
Transactions in foreign currencies are translated to the functional currency at exchange rates
at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the exchange
rate at that date. The foreign currency gain or loss on monetary items is the difference
between amortized cost in the functional currency at the beginning of the period, adjusted
for effective interest and payments during the period, and the amortized cost in foreign
currency translated at the exchange rate at the end of the period. Non-monetary assets and
liabilities denominated in foreign currencies that are measured at fair value are retranslated
to the functional currency at the exchange rate at the date that the fair value was
determined. Foreign currency differences arising on retranslation are recognized in profit or
loss, except for differences arising on the retranslation of available-for-sale equity
instruments (if any).
10
2
2.9
Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are stated at cost or deemed cost less accumulated
depreciation and impairment provisions. Deemed cost represents revalued cost of certain
items of property, plant and equipment revalued on 1 January 2005, the date of transition to
IFRSs, to fair value in relation to the initiated incorporation of PTK Holding.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The
cost of self-constructed assets includes the cost of materials and direct labor (if involved),
any other costs directly attributable to bringing the asset to a working condition for its
intended use, and the costs of dismantling and removing the items and restoring the site on
which they are located. Capital expenditure on assets in the course of construction is carried
forward under Assets under construction and is capitalized and transferred to the appropriate
asset category once completed, from which time depreciation is applied at the rate
applicable to the category concerned.
When parts of an item of property, plant and equipment have different useful lives, they are
accounted for as separate items (major components) of property, plant and equipment.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognized in the
carrying amount of the item if it is probable that the future economic benefits embodied
within the part will flow to the Company and its cost can be measured reliably. The costs of
the day-to-day servicing of property, plant and equipment are recognized in statement of
comprehensive income as incurred.
Gains and losses on disposal of property, plant and equipment are determined by reference to
their carrying amount and are taken into account in determining the operating result for the
period.
(iii) Depreciation
Depreciation is recognized in statement of comprehensive income on a straight-line basis over
the estimated useful lives of each part of an item of property, plant and equipment. Land and
assets under construction are not depreciated. The estimated useful lives for the major
classes of assets are as follows (in both 2011 and 2010):






20 years
10 years
20 years
20 years
5 years
5 to 10
years
The useful lives, deprecation methods and residual values, if not insignificant, of property,
plant and equipment are reassessed at the reporting date.
Buildings (from date of valuation)
Post offices (wooden structure)
Network lines
Cable duct and Towers
Base Stations
Machinery and equipment
11
2
2.10
Intangible assets
(i) Recognition and measurement
Intangible assets are measured at cost less accumulated depreciation and accumulated
impairment losses, if any.
(ii) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure, including
expenditure on internally generated goodwill and brands, is recognized in profit or loss when
incurred.
(ii) Amortization
Amortization is recognized in statement of comprehensive income on a straight-line basis over
the estimated useful lives of intangible assets from the date they are available for use. The
estimated useful lives are as follows (in both 2011 and 2010):


2.11
5 years
15 years
Software
Telecom Licenses
Impairment of non-financial assets
Property, plant and equipment, as well as intangibles, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an
impairment loss is recognized in statement of comprehensive income. The recoverable
amount is the higher of an asset’s net selling price and value in use. The net selling price is
the amount obtainable from the sale of an asset in an arm’s length transaction while value in
use is the present value of estimated future cash flows expected to arise from the continuing
use of an asset and from its disposal at the end of its useful life. Recoverable amounts are
estimated for individual assets or, if it is not possible, for the cash-generating unit.
2.12 Financial assets
The Company classifies its financial assets in the following categories: loans and receivables
and available for sale financial assets. Management determines the classification of its
investments at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held-for-trading. A
financial asset is classified in this category if acquired principally for the purpose of selling in
the short-term. Assets in this category are classified as current assets. The Company has no
assets classified in this category as of reporting dates.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are included in current assets, except for
maturities greater than 12 months after the balance sheet date. Company’s loans and
receivables at the balance sheet date consist of trade and other receivables as well as cash
and cash equivalents.
12
2
2.12
Financial assets (continued)
Available-for-sale financial assets are non-derivatives that are either designated in this
category or not classified in any of the other categories. They are included in non-current
assets unless management intends to dispose of the investment within 12 months of the
statement of financial position date.
Purchases and sales of financial assets are recognized on trade-date – the date on which the
Company commits to purchase or sell the asset.
Recognition and measurement
All financial assets other than assets at fair value through profit or loss are initially
recognized at fair value plus transaction costs.
Available-for-sale financial assets are subsequently carried at fair value. Loans and
receivables are carried at amortized cost using the effective interest method.
Changes in the fair value of monetary and non-monetary securities classified as available-forsale are recognized in equity.
When securities classified as available-for-sale are sold or impaired, the accumulated fair
value adjustments recognized in equity are included in the statement of comprehensive
income as gains and losses from investment securities.
Interest on available-for-sale securities calculated using the effective interest method is
recognized in the statement of comprehensive income as part of other income. Dividends on
available for sale equity instruments are recognized in the statement of comprehensive
income as part of other income when the group’s right to receive payments is established.
The fair values of quoted investments are based on current bid prices. If the market for a
financial asset is not active (and for unlisted securities), the Company establishes fair value
by using valuation techniques. The fair values of quoted investments are based on current bid
prices. If the market for a financial asset is not active (and for unlisted securities), the
Company establishes fair value by using valuation techniques. In case of available for sale
investments, significant or prolonged decline in the fair value of the assets below their cost is
considered in determining whether the assets are impaired. If any such evidence exists for
available for sale financial assets, the cumulative loss – measured as the difference between
the acquisition cost and the current fair value, less any impairment loss on that financial
asset previously recognized in profit or loss – is removed from equity and recognized in the
statement of comprehensive income. Impairment losses recognized in the statement of
comprehensive income on equity instruments are not reversed through the income statement.
Impairment testing of trade receivables is described in this Note 2.13.
2.13
Inventories
Inventories are stated at the lower of cost and net realizable value. Net realizable value is
the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses. The cost includes expenditure incurred in acquiring the
inventories and bringing them to their existing location and condition.
The cost of inventories consumed is based on the weighted average formula.
13
2
2.14
Trade receivables
Trade receivables are recognized initially at fair value and subsequently measured at
amortized cost using the effective interest method, less provision for impairment. A provision
for impairment of trade receivables is established when there is objective evidence that the
Company will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will
enter bankruptcy or financial reorganization, and default or delinquency in payments (more
than 30 days overdue) are considered indicators that the trade receivable is impaired.
The amount of the provision is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest
rate. Assets with a short maturity are not discounted. The carrying amount of the asset is
reduced through the use of an allowance account, and the amount of the loss is recognized in
the statement of comprehensive income. When a trade receivable is uncollectible, it is
written off against the allowance account for trade receivables. Subsequent recoveries of
amounts previously written off are recognized as current income in the statement of
comprehensive income.
2.15
Cash and cash equivalents includes cash in hand, deposits held at call with banks and other
short-term highly liquid investments with original maturities of three months or less.
2.16
Share capital
Share capital and retained earnings
(i) Shareholders’ capital
Share capital represents the nominal value of shares that have been issued.
(ii) Share issue costs
Incremental costs directly attributable to the issue of new shares or options or to the
acquisition of a business are shown in equity as a deduction, net of tax, from the proceeds.
(iii) Treasury shares
Where the Company purchases equity share capital, the consideration paid is deducted from
total shareholders’ equity as treasury shares until they are cancelled. Where such shares are
subsequently sold or reissued, any consideration received is included in shareholders’ equity.
(iv) Reserves
Reserves were created during 2009 by merging of two companies PTK Holding and PTK JSC,
upon decision of the Government for allocation part of consolidated equity into reserves.
(v) Retained earnings
Retained earnings comprise of non-distributed earnings from the current and past periods.
2.17 Trade payables
Trade payables are carried at their fair value and subsequently measured at their amortized
cost by applying the effective interest rate method.
14
2
2.18
Employee benefits
Mandatory pensions
The Company, in the normal course of its business, makes payments on its own behalf and on
behalf of its employees to contribute to the mandatory pensions according to the local
legislation. The costs incurred on behalf of the Company are charged to statement of
comprehensive income as incurred.
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are
expensed as the related service is provided. A provision is recognized for the amount
expected to be paid under a short-term cash bonus if the Company has a present legal or
constructive obligation to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
2.19
Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability.
2.20 Recognition of revenue
Mobile service revenue
Mobile service revenue from prepaid scratch and sim cards is recognized based on usage.
Unused airtime is included in “deferred income” in the Statement of financial position. Upon
the expiration of pre-paid scratch cards, any unused airtime is recognized as income.
Revenue from post-paid traffic is recognized based on the actual traffic generated by the
caller in the current period.
Revenue from international roaming air time and incoming calls is recognized on a per-minute
basis in accordance with the periodic financial reports provided by its network services
provider, Monaco Telecom International.
Fixed line revenue
Fixed line revenue is recognized on a per-impulse basis related to the current period.
Internet service revenue
Internet service revenue is recognized on a straight-line basis over the customer subscription
period.
Other revenue
Revenue from the sale of goods is recognized in the statement of comprehensive income
when the significant risks and rewards of ownership have been transferred to the buyer.
Revenue from services rendered is recognized in the statement of comprehensive income in
proportion to the stage of completion of the transaction at the financial position date.
15
2
2.21 Expenses
Commissions due to Monaco Telecom International
Commission costs to Monaco Telecom International are recognized on an accrual basis when
incurred.
Operating lease payments
Payments made under operating leases are recognized in profit or loss on a straight-line basis
over the term of the lease. Lease incentives received are recognized as an integral part of the
total lease expense, over the term of the lease.
2.22 Finance income and expenses
Finance income comprises interest income on funds invested in bank deposits, gains on the
disposal of available-for-sale financial assets, and foreign currency gains. Interest income is
recognized as it accrues, using the effective interest method.
Finance expenses comprise foreign currency losses, unwinding of the discount on provisions, if
material, and impairment losses recognized on financial assets.
2.23 Dividend distribution
Distribution of dividends to the Company’s shareholders is recognized as a liability in the
financial statements in the period when they are approved by the Company’s shareholders.
2.24 Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is recognized in
profit or loss except to the extent that it relates to items recognized directly in equity, in
which case it is recognized in equity.
The tax currently payable is calculated and paid in accordance with Income Corporate Law No
03/L-162 entered into force commencing on 01 January 2010. Final tax on profit at a rate of
10% are payable based on the annual profit shown in the statutory statement of income as
adjusted for items, which are non-assessable or disallowed. According to the current tax
legislation, tax losses may be carried forward within a period seven years following the year
in which the tax loss was incurred.
Deferred tax is recognized using the balance sheet method, providing for temporary
differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the
following temporary differences: the initial recognition of goodwill, the initial recognition of
assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries and
jointly controlled entities to the extent that they probably will not reverse in the foreseeable
future. Deferred tax is measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that have been enacted or
substantively enacted by the reporting date.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits
will be available against which temporary differences can be utilized. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable
that the related tax benefit will be realized.
16
2
2.25 Segment reporting
The Company operates entirely on the territory of Kosovo which is identified as one
geographical segment. In addition, data available with respect to different business segments
are provided in Note 18: Operating revenue.
2.26 Commitments and contingencies
Contingent liabilities are not recognized in the financial statements. They are disclosed unless
the possibility of an outflow of resources embodying economic benefits is remote. A
contingent asset is not recognized in the financial statements but disclosed when an inflow of
economic benefits is probable. The amount of a contingent loss is recognized as a provision if
it is probable that future events will confirm that, a liability incurred as at the financial
position date and a reasonable estimate of the amount of the resulting loss can be made.
2.27 Related parties
Related parties are those where one of the parties is controlled by the other or has significant
influence in making financial or business decisions of the other party.
2.28 Events after reporting date
Post-year-end events that provide additional information about a Company’s position at the
balance sheet date (adjusting events) are reflected in the financial statements. Post-year-end
events that are not adjusting events are disclosed in the notes when material.
17
3
FINANCIAL RISK MANAGEMENT
3.1
Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk (including
currency risk, fair value interest risk, cash flow interest rate risk and price risk), credit risk
and liquidity risk. The Company’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the
Company’s financial performance.
This note presents information about the Company’s exposure to each of the above risks, the
Company’s objectives, policies and processes for measuring and managing risk, and the
Company’s management of capital. Further quantitative disclosures are included throughout
these financial statements.
The management has overall responsibility for the establishment and oversight of the
Company’s risk management framework. The Company’s risk management policies are
established to identify and analyze the risks faced by the Company, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies
and systems are reviewed regularly to reflect changes in market and legislative conditions and
the Company’s activities.
3.2
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a
financial instrument fails to meet its contractual obligations, and arises principally from the
Company’s receivables from customers and investments in bank deposits.
Trade receivables
The Company establishes an allowance for impairment that represents its estimate of
incurred losses in respect of trade and other receivables and investments. The main
components of this allowance are a collective loss component established for similar
customers in respect of losses that have been incurred but not yet identified. The collective
loss allowance is determined based on historical data of payment statistics for similar
financial assets.
Investments in bank deposits
The Company has significant current and investment accounts with all of Kosovo’s bank
institutions.
Guarantees
The Company’s policy is to provide financial guarantees only upon a decision of authorized
directors or other key management personnel.
The process of managing the credit risk from operating activities includes preventive
measures such as creditability checking and prevention barring, corrective measures during
legal relationship for example reminding and disconnection activities, collaboration with
collection agencies and collection after legal relationship as litigation process, court
proceedings, involvement of the executive unit and factoring. The overdue payments are
followed through a debt escalation procedure based on customer’s type, credit class and
amount of debt.
18
3
FINANCIAL RISK MANAGEMENT (CONTINUED)
3.2
Credit risk (continued)
The Company’s maximum exposure to credit risk is represented by the carrying amount of
each financial asset in the statement of financial position as summarized below:
2011
2010
Classes of financial assets - carrying amounts:
Financial receivables
Trade receivables
240
13,152
16,458
32,804
62,654
240
2,196
15,311
45,195
62,942
The credit risk for cash and cash equivalents is considered negligible, since the counterparties
are reputable banks with high quality external credit ratings.
The age structure of trade receivables is as follows:
2011
2011
Gross
amount
Impair.
Up to 30 days
From 1-3 months
From 3-6 months
From 6-12 months
Over 1 year
7,773
5,595
2,371
2,045
40,114
57,898
2011
Net
amount
(119)
(255)
(421)
(1,206)
(39,439)
(41,440)
2010
2010
Gross
amount
Impair.
7,654
5,340
1,950
839
675
16,458
7,470
4,998
2,226
1,589
39,154
55,437
2010
Net
amount
164
268
359
846
38,489
40,126
7,306
4,730
1,867
743
665
15,311
As of 31 December 2011 the credit quality of Company’s trade receivables is as follows:
Carrying amount
Impairment provision
3.3
Neither past due
nor impaired
7,773
7,773
Past due but not
impaired
8,685
8,685
Impaired
41,440
(41,440)
-
Total
57,898
(41,440)
16,458
Liquidity risk
Liquidity risk is defined as the risk that the Company could not be able to settle or meet its
obligations on time.
The Company’s policy is to maintain sufficient cash and cash equivalents to meet its
commitments in the foreseeable future. Finance sector is preparing cash flow forecasting for
liquidity requirements to ensure that there is sufficient cash to meet operational needs at any
time. The forecasting takes into consideration the Company’s debt financing plans and
compliance with internal balance sheet ratio targets. Any surplus cash held by the Company
over and above balance required for working capital needs is usually deposited in commercial
banks.
The table below analyses the Company’s financial liabilities into relevant maturity based on
the remaining period at the financial position date to the contractual maturity date. Balances
due within 12 months equal their carrying balances as the impact of discounting is not
significant. Great part of the trade payables has maturity within one year.
19
3
3.4
Liquidity risk (continued)
Less than 1
At 31 December 2011
year
Trade and other payables
Total
At 31 December 2010
Total
3.4
Between 1
and 2 years
6,587
6,587
Less than 1
year
Between 2
and 5 years
Between 1
and 2 years
6,991
6,991
-
Above 5
years
-
Between 2
and 5 years
Above 5
years
-
-
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices will affect the Company’s income or the value of its holdings of
financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimizing the return.
Foreign exchange risk
As a whole, the Company is not exposed to currency risk because:
 revenue is earned in Euro
 purchases of main assets and materials used in the Company’s investment activities are
denominated in Euro
 financial assets are denominated in Euro.
Price risk
The Company is not significantly exposed to equity securities price risk since beside the
available-for-sale financial assets disclosed in Note 8, there are no other investments
classified as available-for-sale, which could be affected by risk variables such as stock
exchange prices.
Cash flow and fair value interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument
will fluctuate because of changes in market interest rates. The Company’s exposure to the
risk of changes in market interest rates relates primarily to the Company’s investments in
bank deposits.
Company’s bank deposit accounts earn interest at commercial rates fixed at the date of the
respective contract and mature upon fixed dates. The Company had no interest-bearing
borrowings in both 2011 and 2010.
20
3
3.4
Market risk (continued)
The table below summarizes the Company’s exposure to interest rate risk.
2011
Assets
Non-interest bearing:
240
Trade receivables
16,459
Cash on hand
614
17,313
With fixed interest rate:
13,153
32,158
Liabilities
Non-interest bearing:
2010
240
15,311
683
16,234
2,196
44,512
45,311
62,624
46,708
62,942
6,587
6,587
6,991
6,991
PTK’s bank deposit accounts earn interest at commercial rates fixed at the date of the
respective contract and mature upon fixed dates. The Company has no interest-bearing
borrowings in both 2011 and 2010.
3.5
Capital risk management
The management’s policy is to maintain a strong capital base so as to maintain market
confidence and to sustain future development of the business.
Due to the external restrictions imposed by the environment (e.g. inability to place deposits
abroad, lengthy procurement processes, etc.) the management of the Company cannot
implement an efficient capital management specific to liberalized economies.
There were no changes in the Company’s approach to capital management during the year.
The Company is not subject to contractual or legally imposed capital requirements.
3.6
Fair value estimation
Fair value represents the amount at which an asset could be replaced or a liability settled on
an arms length basis. Fair values have been based on management assumptions according to
the profile of the asset and liability base.
3.6.1 Financial instruments presented at fair value
The financial assets measured according to the fair value in the Statement of financial
position in accordance with the hierarchy of the fair value are shown in the next table. This
hierarchy groups the financial assets and liabilities into three levels that are based on the
significance of the incoming data used during the measurement of the fair value of the
financial assets. The hierarchy according to the fair value is determined as follows:
 Level 1: quoted prices (not adjusted) on the active markets for identical assets or
liabilities;
 Level 2: other incoming data, aside from the quoted prices, included in Level 1 which are
available for asset or liability observing, directly (i.e. as prices), or indirectly (i.e. made of
prices) and
 Level 3: incoming data on the asset or liability that are not based on data available for
market observing.
21
3
3.7.1 Financial instruments presented at fair value (continued)
The financial assets that are registered according to their fair values in the Statement of
financial position are grouped according to the hierarchy level of the fair value, as follows:
Assets
Financial assets available–for–sale
Level 1
-
Level 2
240
Level 3
-
Total
240
Financial assets available–for–sale comprise of participation in equity of domestic and foreign
legal entities. They are measured according to their fair value on basis on their market value
at the Statement of financial position date.
3.6.2 Financial instruments that are not presented at fair value
The following table summarizes the carrying amounts and fair values to those financial assets
and liabilities that are not presented on Statement of financial position at their fair value.
Carrying value
2011
2010
Fair value
2011
2010
Assets
Trade receivables
Total assets
32,804
16,458
13,152
62,414
45,195
15,311
2,196
62,702
32,804
16,458
13,153
62,415
45,195
15,311
2,196
62,702
Liabilities
Trade payables
Accruals and other payables
Total liabilities
6,587
5,424
12,011
6,991
6,063
13,054
6,587
5,424
12,011
6,991
6,063
13,054
Trade receivables
Trade receivables are carried at amortized cost, less provisions for impairment. Due to their
short maturity, their fair value corresponds to their carrying value.
The fair value of monetary assets that includes cash and cash equivalents is considered to
approximate their respective carrying values by definition and due to their maturity of less
than 3 months.
Trade payable
Carrying value of trade payable approximates their fair value, due to their short maturity.
22
4
ACCOUNTING ESTIMATES AND JUDGEMENTS
Management discussed with the Audit, Finance and Insurance Committee, an Advisory
Committee to the Board of Directors of PTK J.S.C., the development, selection and disclosure
of the critical accounting policies and estimates and the application of these policies and
estimates.
Key sources of estimation uncertainty
Lack of an interconnection agreement with Telekom Serbia
PTK connects international fixed calls to foreign administrations through Belgrade on the
fixed lines managed by Telekom Serbia. Neither in the past nor currently have formal
contracts between PTK and Telekom Serbia been established. An interconnection agreement
that would regulate mutual relationships with regard to telecommunications traffic is absent.
PTK’s management considers it unrealistic to expect any kind of retrospective settlement in
regard to telephone traffic between Telekom Serbia and PTK and, instead, estimates it
possible that, pending further political developments between Kosovo and Serbia, it might
take more years before an interconnect agreement between the two parties is established.
In the absence of a formal interconnection agreement that would set out the tariffs for
incoming and outgoing calls to/from the ‘381’ network, it is impractical to measure the value
of the traffic to and from the ‘381’ network. It is measurable, however, that the incoming
calls to the ‘381’ network areas in Kosovo (“calls terminating in Kosovo”) are significantly
higher than the outgoing traffic from Kosovo to abroad (“outgoing calls”). This indicates that
if a settlement takes place, it would be likely to give rise to net revenue in favor of PTK. As a
retrospective settlement is considered unrealistic at present, these financial statements do
not reflect any financial effect from such international traffic in regard to assets, liabilities,
revenue and expenses.
Recoverability of bank accounts and deposits
Subsequent to the end of 2005, Credit Bank of Pristina, with which the Company had deposits
at 31 December 2005, went into receivership following the withdrawal of its licence by
Banking and Payments Authority of Kosovo on 13 March 2006. Provision has been made in
these and prior year financial statements for the balances at 31 December 2011 and 2010 of
Euro 11,923 thousand and Euro 12,492 thousand respectively, as significant uncertainty exists
on the recoverability of the balances with this bank. In 2011, Euro 569 thousand (2010: Euro
10 thousand) are reimbursed and recognized as income accordingly.
To the extent that it is still not possible to determine the outcome of the liquidation process
and the amount of the deposits guaranteed by BPK, significant uncertainty exists on the
recoverability of the balances with this bank. Therefore, an impairment loss of 100% of the
amounts held with the bank has been provided. If there are enough liquidation assets to
cover creditors’ claims, revenue will be recognised in future periods up to the recovered
amount.
Land used by the Company
The management are of the opinion that certain plots of land are deemed to be owned by
PTK in view of continuing use within the definitions of Kosovo ownership. A value cannot be
applied to these assets at the present time. At the time of the verification of assets exercise
this item was excluded, due to the uncertainty of legal title.
23
4.
ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
Key sources of estimation uncertainty (continued)
Buildings used by the Company
During the verification of assets exercise in prior period the ownership of certain buildings,
identified as in use or under the control of PTK, could not be established, due mainly to the
lack of accessibility or lack of ownership documentation. A value cannot be applied to these
assets at the present time.
Useful life of assets
The determination of the useful lives of assets is based on historical experience with similar
assets as in broad economic or industry factors. The appropriateness of the estimated useful
lives is reviewed annually, or whenever there is an indication of significant changes in the
underlying assumptions. We believe that the accounting estimate related to the
determination of the useful lives of assets is a critical accounting estimate since it involves
assumptions about technological development in an innovative industry. Following this the
Company had made an assumption that the useful live of assets should remain the same as
the previous year.
Inventories
Inventories are stated at the lower of cost and net realizable value. When determining the
net realizable value, the most objective evidence / data available at the making of
assessments are taken.
Recoverability of trade receivables
Impairment for doubtful accounts is calculated based on estimated losses resulting from the
inability of our customers to make required payments. We base our estimate on the aging of
our account receivables balance and our historical write-off experience, customer creditworthiness and changes in our customer payment terms when evaluating the adequacy of the
impairment loss for doubtful accounts. These involve assumptions about future customer
behavior and the resulting future cash collections. If the financial condition of our customers
were to deteriorate, actual write-offs of currently existing receivables may be higher than
expected and may exceed the level of the impairment losses recognized so far.
24
5
PROPERTY, PLANT AND EQUIPMENT
Land and
Buildings
Network Lines
Machinery and
equipment
Advances for,
and W.I.P.
Total
Cost / Deemed Cost
Additions
Write offs
Transfers
25,090
267
(40)
25,317
54,364
12,804
(227)
66,941
103,294
26,810
(19,981)
110,123
36,584
(22,262)
(8,679)
5,643
219,332
17,619
(20,248)
(8,679)
208,024
Additions
Write Off
Transfers
25,317
955
26,272
66,941
(73)
1,127
67,995
110,123
523
(3,149)
2,609
110,106
5,643
20,148
208,024
20,671
(3,222)
(236)
225,237
Accumulated depreciation
Charge for the period
Write Off
Write Off
(5,655)
(1,302)
40
(6,917)
(6,917)
(1,290)
(8,207)
(18,098)
(5,161)
227
(23,032)
(23,032)
(3,387)
73
(26,346)
(72,501)
(11,084)
19,981
(63,604)
(63,604)
(12,613)
3,149
(73,068)
-
-
(96,254)
(17,547)
20,248
(93,553)
(93,553)
(17,290)
3,222
(107,621)
At 31 December 2010
18,400
43,909
46,519
5,643
114,471
At 31 December 2011
18,065
41,649
37,038
20,864
117,617
(4,927)
20,864
-
Net Carrying amount
25
5.
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Transfers
During year end 2011 the amount of Euro 236 thousand (2010: Euro 8,679 thousand) were
transferred from work in progress into Intangibles (see note 6).
Write off
As of 31 December 2011 the Company’s audit committee decided to write off the assets
that are out of use. Their cost and accumulated depreciation is Euro 2,878 thousand.
Sale
During the year 2011, the Company sold fully depreciated assets and recognized gain in
amount of Eur 81 thousand (see note 18).
Impairment loss and subsequent reversal
The Company is continuously assessing the technological advancements and progress on the
property, plant and equipment, revising also their functionality and suitability to the
existing infrastructure. Should there be damaged or obsolete property, plant and
equipment, then an impairment test is carried out and the property, plant and equipment
is either impaired or disposed of.
Property, plant and equipment under construction
As of 31 December 2011 and 2010 advances for, and construction in progress consist of the
following:
2011
2010
- Construction of Mobile Network and BTS Equipment
4,703
2,671
- Renewal and expansion of the infrastructure and
construction of local landline networks
528
2,425
- Advances for projects for mobile network
14,181
137
- Advances for projects for landline network
11
30
- Other
1,441
380
20,864
5,643
Security
No property, plant and equipment are given as collateral for any borrowings.
Ownership
Ownership issues exist regarding the infrastructure inherited at the commencement of the
UN administration of Kosovo in 1999. This represents a contingent liability to PTK which is
not quantifiable at the present time. The resolution of title is one element of
institutionalizing the final status of Kosovo, to which PTK is not a party.
Other matters
There are no assets acquired under finance lease terms.
At 31 December 2011 fully depreciated assets amount to Euro 77,150 thousand at cost.
26
6
INTANGIBLE ASSETS
Software
Licenses
Total
Cost
Transfers
25,223
8,679
9,759
-
34,982
8,679
Write off
(2,156)
-
(2,156)
31,746
9,759
41,505
31,746
236
(169)
9,759
-
41,505
236
(169)
31,813
9,759
41,572
(17,043)
(6,527)
2,156
(3,556)
(619)
(21,414)
(4,175)
(20,599)
(7,146)
2,156
(25,589)
(21,414)
(6,116)
169
(4,175)
(619)
-
(27,361)
(4,794)
At 31 December 2010
10,332
5,584
15,916
At 31 December 2011
4,452
4,965
9,417
Transfers (Note 5)
Write off
Accumulated amortization
Write off
(25,589)
(6,735)
169
(32,155)
Carrying amount
Software relates to the cost of the billing system and the internet service platform.
In 2004 two licenses were granted for 15 years to operate telecommunications within
Kosovo, consisting of a mobile license for Euro 6,500 thousand and a fixed license for Euro
2,900 thousand.
Write off
In accordance with decision from audit committee, the Company wrote off intangibles with
cost and accumulated depreciation amounting to Euro 169 thousand.
27
7
AVAILABLE-FOR-SALE FINANCIAL ASSETS
As of 31 December 2011, available-for-sale financial assets in amount of Euro 240 thousand
entirely consist of investment in Mobile 4 AL Sh.a, Albania Add wording from note above.
8
DEFERRED TAX ASSETS AND LIABILITIES
Recognized deferred tax assets and liabilities
The Company’s applicable tax rate represents the statutory corporate tax rate being 10%.
31 December
2011
Deferred tax assets at 1 January
Change recognized in statement of comprehensive
income
Deferred tax assets at 31 December
31 December
2010
1,655
2,564
(915)
(909)
740
1,655
Deferred tax assets recognized in the Statement of financial position relate to temporary
differences between the accounting and tax base of property, plant and equipment.
Unrecognized deferred tax assets
Deferred tax assets have not been recognized in respect of impairment of trade receivables
because it is not probable at this stage that these assets will be utilized in future periods.
9
INVENTORIES
31 December
2011
Cables and maintenance materials
SIM cards and scratch cards
Postal items
Other inventories
28
31 December
2010
6,950
425
113
219
5,967
548
91
279
7,707
6,885
10
TRADE RECEIVABLES
31 December
2011
Fixed line – individuals
Fixed line – companies
Mobile network
Incoming calls - locally
Roaming – Monaco Telecom International
Incoming calls – Monaco Telecom International
Postal services
Other accounts receivable
Impairment of doubtful debts
31 December
2010
16,807
20,526
11,546
2,656
2,924
2,559
850
30
57,898
(41,440)
17,402
19,166
10,872
1,917
3,185
2,122
753
20
55,437
(40,126)
16,458
15,311
Provision for impairment and write-offs due to un-collectability
The movement in the impairment for doubtful debts account is summarized as
follows:
Fixed
Mobile
Post
Total
Opening balance at 1 Jan 2010
Increase
Write off of bad debts
Closing balance at 31 Dec 2010
29,984
595
1,295
31,874
6,993
1,044
8,037
168
47
215
37,145
1,686
1,295
40,126
Opening balance at 1 Jan 2011
31,874
8,037
215
40,126
Loss for the year
Closing balance at 31 Dec 2011
302
32,176
975
9,012
38
253
1,314
41,440
At 31 December 2011, the Company assessed the recoverability of its trade receivables,
and recognized impairment loss as current expenses in statement of comprehensive income
in the amount of Euro 1,314 thousand (2010: Euro 1,686 thousand) (see Note 22).
11
PREPAID EXPENSES AND OTHER RECEIVABLES
31 December
2011
Advances for health insurance of employee
Rent
Insurances
Other prepayments
Other accounts receivable
29
31 December
2010
1
23
26
295
363
4,018
294
19
277
410
708
5,018
12
CASH ON HAND AND BANK BALANCES
31 December
2011
Current bank accounts with local banks
Bank deposits with original maturity three months or
less
Cash on hand
Cash in transit
Cash and cash equivalents in the statement of cash
flows
Short-term financial investments (bank deposits 3 to
12 months maturity)
Long-term financial investments (bank deposits
greater than 12 months maturity)
Cash on hand and bank balances
31 December
2010
2,552
22,502
29,607
615
30
22,010
683
-
32,804
45,195
13,152
2,138
-
58
45,956
47,391
The bank deposits are maintained in all banks in Kosovo. There are no current or
investment accounts held with foreign banks. The effective interest rate earned on bank
deposits in 2011 varied between 3.0% and 4.7% (2010: 3.0% to 5.3%). The interest income
earned during 2011 amounted to Euro 1,320 thousand (2010: Euro 2,054 thousand).
The cash in transit represents cash collected in the selling points and deposited in the
respective banks, which is debited in the Company’s bank accounts after the financial
position date.
The above balances with banks are presented net of impairment of bank accounts with
Banka Kreditore e Prishtines Sh.a. (Credit Bank of Pristina), which outstanding balances as
of 31 December 2011 and 31 December 2010 are fully provided for.
The movements of impairment provision account for the period considered is as follows:
31 December
2011
At 01 January
Release
At 31 December
31 December
2010
12,492
(569)
12,502
(10)
11,923
12,492
Restricted deposits for unutilized letters of credit
As of 31 December 2011 the Company have restricted cash for unutilized letter of credits
for Euro 46 thousand.
30
13
SHARE CAPITAL, RESERVES AND RETAINED EARNINGS
Share capital
On June 13, 2008, the Assembly of Kosovo approved the Law on Public Owned Enterprises
(Law Nr. 03/L-087), and based on Article 3 of this Law, public enterprises including PTK
JSC are declared as property of the Republic of Kosovo. Government of Kosovo has,
through the Ministry of Economy and Finance exclusive authority to exercise shareholder
rights over POEs.
On 13 October 2009, the company status is changed and supplemented: the registered
issued capital comprises 5 million shares Euro (Five million), composed of five million
common shares with nominal value of 1 (One) Euro each. All shares are issued at the name
of Republic of Kosovo.
Reserves
Reserves are created during 2009 by merging of two companies PTK Holding and PTK JSC,
upon decision of the Government for allocation part of consolidated equity into reserves in
amount of Euro 55,000 thousand.
Dividends
During 2011, the Company has declared in accordance with decision from Board of
Directors dated 30 march and 07 September 2011 and fully paid to the shareholders
dividends in amount of Euro 55,000 thousand (2010: Euro 80,000 thousand).
14
TRADE ACCOUNTS PAYABLE
31 December
2011
Monaco Telecom International
IPKO
Other suppliers
15
31 December
2010
926
5,661
979
137
5,875
6,587
6,991
ACCRUALS AND OTHER PAYABLES
Bonus for the employees
Accruals for commission costs
V.A.T. payable
Pension contributions payable to Kosovo pension fund
Personal income tax payable
Salaries payable
Tax on rent
Security deposits received from customers
Other payables
31
31 December
2011
31 December
2010
2,268
1,876
925
3
18
1
333
2,382
1,712
974
465
220
77
20
1
212
5,424
6,063
16
DEFERRED INCOME
31 December
2011
Mobile prepaid (top up and scratch cards)
Mobile fees billed in advance
31 December
2010
1,937
34
2,376
43
1,971
2,419
Deferred income relates to unused portion at the yearend of prepaid and scratch cards sold
to mobile customers during the year.
17
REVENUE
31 December
2011
Mobile phone service revenue
Fixed line revenue
Internet services revenue
Postal revenue
Income from public phone booths
Other revenue
18
138,230
18,776
1,132
2,040
510
1,580
126,915
18,677
2,950
2,075
635
251
162,268
151,503
OTHER INCOME
31 December
2011
Participation in equity in foreign companies
Received compensation for selling equity participation
Gain from sold property, plant and equipment (Note 5)
Other revenue
19
31 December
2010
31 December
2010
81
58
240
120
73
49
140
482
OPERATIONAL COSTS
31 December
2011
Mobile phone network costs
Commission for mobile services provided by MTI
Public services
Direct cost of sold products
Sales Discount
Cost of material for maintenance
Costs for IP intercommunication
Fuel costs
Cost for international traffic/leased lines
Satellite link and equipment
32
31 December
2010
13,370
3,064
2,751
4,321
940
664
302
676
547
132
13,596
2,998
2,799
2,415
1,013
948
801
616
562
299
26,767
26,047
20
STAFF COSTS
31 December
2011
Salaries
Pensions paid directly to retired employers
Pension contribution
Health insurance contribution
21
31 December
2010
41,857
4,069
2,654
41,132
2
4,254
1,883
48,580
47,271
OTHER OPERATING COSTS
31 December
2011
Marketing
Security and maintenance
Rent
License fees, customs duties and taxes
Impairment loss on doubtful debts (refer Note 11)
Office and administration expenses
Motor vehicle expenses
Training and travel expenses
Consulting expenses
Other
31 December
2010
1,953
1,143
2,329
2,508
1,314
1,773
739
748
234
650
4,868
3,434
2,257
2,224
1,686
1,686
735
726
342
424
13,391
18,382
The other expenses include bank service charges, vehicles costs, etc.
22
INCOME TAX EXPENSE
The total income tax expense recognized in the income statement consists of:
31 December
2011
Current tax expense
Current year
31 December
2010
4,503
3,351
Deferred tax expense
Origination and reversal of temporary differences
915
909
Total income tax expense in income statement
5,418
4,260
33
22.
INCOME TAX EXPENSE (CONTINUED)
An explanation of the relationship between the income tax expense in the income
statement and the accounting profit is presented below:
2011
Tax
adjustments
(EUR’000)
Accounting profit before tax
2010
Effective
tax* (%)
Tax
adjustments
(EUR’000)
Tax
(EUR’000)
51,534
Income tax using the standard tax
rate
Effective
tax* (%)
Tax
(EUR’000)
37,656
10%
5,153
10%
3,766
(9,994)
-2.0%
(999)
(9,093)
-2.5%
(909)
1,314
0.3%
131
2,590
0.4%
168
Non-deductible expenses:
- depreciation and amortization
- impairment loss on doubtful
debts
- fines and penalties
- Other expenses (nonresidents/creditors)
- accruals not recognized for tax
purposes
47
0.0%
5
(5)
0.0%
-
2,700
0.5%
270
2,704
0.7%
270
0.0%
-
565
0.2%
56
- nontaxable income
(569)
-0.1%
(57)
(10)
0.0%
0
2%
915
2%
909
10.5%
5,418
10,9%
4,260
Effects of temporary differences
debited to the income statement
Total income tax expense in
income statement
*The average effective tax rate is the tax expense/(income) divided by the accounting
profit.
A reconciliation of corporate tax receivable at the balance sheet date is presented as
follows:
31 December
31 December
2011
2010
Corporate profit tax receivable at January 1
Current profit tax (expense)
Profit tax payments made during the year
Corporate profit tax (payable)/receivable at 31
December
34
793
(4,503)
2,173
3,646
(3,351)
498
(1,537)
793
23
RELATED PARTIES
In the ordinary course of business, PTK entered into transactions during the financial
reporting periods with customers who are UNMIK, Government entities and individuals who
are associated with or work for UNMIK and Government entities. The Company has also a
related party relationship with its directors and executive officers. The monetary
transactions with related parties and its directors and chief executive officer where only
related to the payment of the:
31 December
31 December
2011
2010
Executive and Non-executive officers compensations
Donations
24
401
266
667
309
309
2011
2010
147
92
234
473
732
628
356
1,716
COMMITMENTS
Leases as a lessee
Non-cancelable operating lease are payable as follows:
Less than one year
Between one and five years
More than five years
The major part of the operating lease rentals relate to the rent of one administrative
building for the operations of PTK.
35
25
CONTINGENCES
Legal proceedings
At 31 December 2011, legal proceedings raised against the Company amount in Euro 18,177
thousand. As of the financial position date of these financial statements, there are no
provisions from potential losses recorded, regarding legal proceedings. The Company’s
Management, regularly analyses potential risks resulting from losses regarding legal
proceedings, along with proceedings and possible receivables aimed against the Company,
which may arise in the future. Although the outcome of these matters cannot always be
ascertained with precision, the management of the Company believes that no material
liabilities are likely to result.
Ownership of property, plant and equipment
Note 5, Property, plant and equipment, refer to ownership issues existing regarding the
infrastructure inherited at the commencement of the UN administration of Kosovo. This
represents a contingent liability to PTK which is not quantifiable at the present time.
Guarantees in favor of third parties
At 31 December 2011, the total bank guarantees issued in favor of third parties (mainly
PTK suppliers) amount to Euro 12 thousand.
Capital commitments
There are no significant capital commitments contracted at the financial position date that
are not already recognized in the financial statements.
26
EVENTS AFTER THE REPORTING PERIOD
Subsequent to the Statement of financial position date and prior to the issuance of these
financial statements, following are the events with significant influence over the
Company’s business operations:
 Subsequent to the Statement of financial position date the Board of Directors has
declared a dividend payment in total amount of Euro 35,000 thousand, on 21 March
2012 year.

The owner of the Company the Government of Kosovo by decision Nr. 16/53 dated
21 December 2011 has decided to establish a new Company for Postal Services of
Kosovo J.S.C as separate entity which will inherit certain assets of Post and
Telecommunication of Kosovo J.S.C. The estimated net carrying value fixed assets
and work in progress is amount of Euro 19,590 thousand as of 31 May 2012, and net
assets to be transferred are Euro 16,547 thousand as of 31 May 2012. The target
date set by the Government for the division of Postal services into new Company
according to the management is 30 June 2012.
36

POST AND TELECOMMUNICATIONS OF KOSOVO J.S.C.

Transcription

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