Condensed interim separate financial statements
Global Telecom Holding S.A.E.
As of and for the three-month period ended March 31, 2019
Together with the Review Report
Global Telecom Holding S.A.E.
Condensed interim separate statement of income For the three-month period ended March 31
Note 2019 2018
(In millions of USD, except per share amounts)
Dividends income 4 27.5 10.4 Total operating income 27.5 10.4
Other operating expenses 5 (1.9) (0.1) Technical services expense 6 (1.7) (2.5) Other income 7 3.9 - Total operating income / (expenses) 0.3 (2.6) Operating profit 27.8 7.8
Finance costs 8 (37.6) (36.9) Finance income 9 5.1 4.1 Net foreign exchange (loss) / gain (3.4) 0.4 (Loss) before tax (8.1) (24.6) Income tax expense - - (Loss) for the period (8.1) (24.6)
(Losses) per share (expressed in USD per share) Basic and diluted (losses) per share for the period 10 (0.002) (0.005)
* Expenses have been presented on the nature of the expense in the condensed interim separate income statement other than other operating expenses, which have been presented in the function of the expense.
The accompanying notes from (1) to (21) are an integral part of these condensed interim separate financial statements.
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Global Telecom Holding S.A.E.
Condensed interim separate statement of comprehensive income For the three-month period ended March 31
2019 2018
(In millions of US dollars)
(Loss) for the period (8.1) (24.6) Other comprehensive income / (loss) to be reclassified to profit or loss in subsequent periods Change in fair value for available for sale investments 0.5 (0.1) Other comprehensive income / (loss) for the period net of tax 0.5 (0.1)
Total comprehensive (loss) for the period (7.6) (24.7)
The accompanying notes from (1) to (21) are an integral part of these condensed interim separate financial statements.
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Global Telecom Holding S.A.E.
Condensed interim separate statement of changes in equity For the three-month period ended March 31, 2019
(In millions of USD) Number Issued Legal General Change in fair Accumulated Total of shares capital reserve Reserves value for deficit Available for sale
As of January 1, 2019 4,721.1 406.5 0.7 (241.9) (0.3) (139.1) 25.9 (Loss) for the period - - - - - (8.1) (8.1) Other comprehensive income - - - - 0.5 - 0.5 Total Comprehensive (loss) for the period - - - - 0.5 (8.1) (7.6) As of March 31, 2019 4,721.1 406.5 0.7 (241.9) 0.2 (147.2) 18.3
For the three-month period ended March 31, 2018
(In millions of USD) Number Issued Legal General Change in fair Accumulated Total of shares capital reserve Reserves value for deficit Available for sale
As of January 1, 2018 4,721.1 406.5 - (241.9) - (73.7) 90.9 Transferred to legal reserve - - 0.7 - - (0.7) - (Loss) for the period - - - - - (24.6) (24.6) Other comprehensive loss - - - - (0.1) - (0.1) Total Comprehensive (loss) for the period - - - - (0.1) (24.6) (24.7) As of March 31, 2018 4,721.1 406.5 0.7 (241.9) (0.1) (99.0) 66.2
The accompanying notes from (1) to (21) are an integral part of these condensed interim separate financial statements.
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Global Telecom Holding S.A.E.
Condensed interim Separate statement of cash flows For the three month periods ended March 31
(In millions of USD) Note 2019 2018
Operating activities (Loss) for the period before tax (8.1) (24.6) Non-cash adjustment to reconcile (loss) for the period to net cash flows (used in) operating activities: Finance costs 8 37.6 36.9 Finance income 9 (5.1) (4.1) Net foreign exchange loss / (gain) 3.4 (0.4) Dividends income 4 (27.5) (10.4) Operating profit / (loss) before working capital adjustments 0.3 (2.6)
Working capital adjustments: Changes in current assets (6.3) (0.5) Changes in current liabilities 0.4 (0.2) Cash flows (used in) operating activities (5.6) (3.3) Finance cost paid - (2.8) Net cash flows (used in) operating activities (5.6) (6.1)
Investing activities Dividends received 48.9 10.4 Net cash flows provided from investing activities 48.9 10.4
Financing activities Proceeds from borrowings 4.0 - Repayments of borrowings (43.0) - Net cash flows (used in) financing activities (39.0) -
Net increase in cash and cash equivalents 4.3 4.3 Cash and cash equivalents at beginning of the period - 9.6 Cash and cash equivalents at end of period 16 4.3 13.9
The accompanying notes from (1) to (21) are an integral part of these condensed interim separate financial statements.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
1 Background
1-1 Legal form Global Telecom Holding S.A.E. (“GTH” or the “Company”) is an Egyptian joint stock company subject to the provisions of the Capital Market Law No. 95 of 1992 and its executive regulations and registered in the commercial register under number 365751. The Company is listed on the Egyptian Stock Exchange (“EGX”).
The Company’s registered office is located at 2005 A - Nile City Towers– Northern tower– Ramlet Beaulac, Cairo, Egypt.
On September 21, 2015, the Company announced the move of its place of operations to Amsterdam. Currently the office address in Amsterdam is Claude Debussylaan 92, 1082 MD Amsterdam, the Netherlands.
57.69% of the Company’s shares are owned indirectly by VEON Ltd. through VEON Luxembourg Finance Holding S.a.r.l. and VEON Luxembourg Finance S.A.
1-2 Purpose of the Company The Company’s purpose is to participate in incorporating companies issuing securities or to increase the share capital of these companies according to subject article (127) from executive regulations. The Company may have an interest or participate, by any means, in companies and other enterprises that have activities similar to those of the Company or those that may assist the Company to achieve its objective in Egypt or abroad. The Company may also merge into those companies and enterprises, or acquire them, pursuant to the provisions of the law and its executive regulations.
The Company, through its subsidiaries, operates telecommunications services in Pakistan, Algeria and Bangladesh, having a total population under license of more than 400 million.
1-3 The Company duration The Company's duration is 25 years starting from the date of registration in the Commercial register.
1-4 The approval of the financial statements These condensed interim separate financial statements for the period ended March 31, 2019, that were prepared according to the Egyptian Accounting Standards (“EAS”) were approved for issuance by the Board of Directors on May 1, 2019.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
2 Basis of preparation a) Statement of compliance
The Company has subsidiaries, and in accordance with Egyptian Accounting Standard No.42 (Consolidated Financial Statements) and article 188 of the executive regulations of law 159 of 1981, the Company prepares consolidated financial statements for the group that present fairly the financial position, results of operation and cash flows of the group as a whole.
The condensed interim separate financial statements of the Company have been prepared in accordance with the Egyptian Accounting Standards (“EAS”) and the applicable laws and regulations.
These condensed interim separate financial statements as at March 31, 2019 have been prepared in accordance with EAS 30 “Interim Financial Reporting”. As permitted by EAS 30, the Company has opted to prepare a condensed interim version as compared to the year-end separate financial statements. These condensed interim separate financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the separate financial statements as of and for the year ended December 31, 2018.
b) Basis of measurement The condensed interim separate financial statements have been prepared on historical cost basis except for the financial assets and liabilities which are stated at fair values or amortized cost. c) Functional and presentation currency These condensed interim separate financial statements are measured and presented using the currency of the primary economic environment in which the Company operates (‘the functional currency’). The financial statements are presented in US dollars (USD). All financial information presented in US dollars has been rounded to the nearest USD 1 million, except earnings per share and unless otherwise stated.
The Company has not changed the Company’s capital currency, which is still in Egyptian pounds. d) Use of estimates and judgments The preparation of the condensed interim separate financial statements in conformity with Egyptian Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying values of assets and liabilities that are readily apparent from other sources. Actual results may differ from these estimates.
The 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 if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
In particular, significant areas of uncertainty which require critical judgment in applying relevant accounting policies, and which may have the most significant effect on certain amounts presented in the financial statements, include: • The measurement of recoverable amounts of investments in subsidiaries, associates; and • Provisions and contingent assets and liabilities.
3 Significant accounting policies applied The following accounting policies have been applied consistently by the Company on March 31, 2019 condensed interim separate financial statements.
3-1 Foreign currency translation The Company has maintained its accounts in US dollars since the beginning of January 2015. Transactions denominated in foreign currencies are translated at the relevant foreign exchange rate prevailing on the date of the transaction. Foreign currency differences arising are recognized in the income statement. Monetary assets and liabilities denominated in foreign currencies at the financial position date are retranslated at the foreign exchange rates prevailing at that date. Foreign currency differences arising on the retranslation are recognized in the income statement.
3-2 Property, equipment and depreciation Property and equipment are stated at historical cost and presented in the financial position net of accumulated depreciation and impairment (Note 3-7). Depreciation is charged to the income statement over the estimated useful-life of each asset using the straight-line method. The following are the estimated useful lives, for each class of assets, for depreciation calculation purposes: Asset Depreciation period Furniture and fixtures 3-10 years Systems and equipment 3-5 years Computers 3 years
The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year-end and revised if necessary. Maintenance and repair expense are recognized in the income statement of the financial year in which it incurred.
3-3 Capital gain or loss Gain or loss on disposal of an item of fixed assets are determined by comparing the proceeds from disposal with the carrying amount of the fixed asset and is recognized in the income statement.
3-4 Intangible assets Intangible assets are recorded at historical cost and presented in the financial position net of accumulated amortization and impairment (Note 3-7). Amortization is charged to the income statement over the estimated useful life using the straight- line method. Intangible assets are represented in computer software. The estimated useful life of such assets range between two and three years.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
3-5 Investments
3-5-1 Investments in subsidiaries Investments in subsidiaries are stated at cost less impairment (Note 3-7). On each financial position date, management assesses the investments’ recoverable amount and in case the recoverable amount is less than the carrying amount then an impairment loss is recognized in the income statement.
3-5-2 Available for sale investments Available-for-sale investments are initially measured at fair value, along with the attributable transaction costs as of the reporting date, with any change in fair value, whether it is a gain or loss, being recognized directly in other comprehensive income, other than impairment losses which are transferred to the income statement. When an investment is derecognized, the cumulative gain or loss in other comprehensive income is transferred to the income statement.
The fair value for available-for-sale investments is calculated based on the quoted price of the exchange market at the financial position date, except for the investments that are not quoted at cost due to the inability to assess the fair value of such investment.
3-6 Cash and cash equivalents For the purpose of preparing the Statement of Cash Flows, the Company considers all cash on hand and at bank, all on demand deposits with banks and all short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of change in value, each with original maturities of three months or less, as cash and cash equivalents. The Statement of Cash Flows is prepared according to the indirect method.
3-7 Impairment 3-7-1 Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of its estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.
In the case of classifying the financial assets in the equity as a financial asset available for sale, any decrease in the fair value of the assets below its cost is evidence that the assets are impaired. If any such evidence exists, 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 profit or loss and regarding an impairment loss for equity securities which is previously recognized in profit or loss is not to be reversed in profit or loss.
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
All impairment losses are recognized in the income statement. Any cumulative loss in respect of an available-for-sale financial asset recognized previously in equity is transferred to the income statement.
An impairment loss may be reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in the income statement. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in equity.
3-7-2 Non-financial assets The carrying amounts of the Company’s non-financial assets, other than deferred tax assets, are reviewed in each reporting year to determine whether there is any indication of impairment. If any such indication exists the asset’s recoverable amount is estimated.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment losses are recognized in the income statement.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less cost to sell. In assessing fair value less cost to sell, the estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time-value of money and the risks specific to the asset.
An impairment loss recognized in prior periods is assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
3-8 Interest-bearing borrowings Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between cost and redemption value being recognized in the income statement over the period of the borrowings on an effective interest basis.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
3-9 Provisions Provisions are recognized when the Company has a legal or constructive obligation as a result of a past event and it is probable that a flow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessment of the time value of money and, where appropriate, the risks specific to the liability. The provisions balances are reviewed on an ongoing basis at the reporting date to disclose the best estimation on the current period.
3-10 Creditors, accrued expenses & other credit balances Creditors and accrued expenses & other credit balances are recognized initially at the value of goods or services received from others whether the invoice was received or the service was rendered, and subsequently measured at amortized cost using the effective interest rate.
3-11 Legal reserve As per the Company’s statutes, 5% of the annual net profit is set aside to form a legal reserve; the transfer to such reserve ceases once it reaches 50% of the Company’s issued share capital. If the reserve falls below 50%, the Company should resume setting aside 5% of its annual net profit. The reserve can be utilized for covering losses or for increasing the Company’s share capital.
3-12 Share capital Common shares are classified as equity. i) Treasury shares When share capital recognized as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and are presented as a deduction from total equity.
When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to / from retained earnings.
ii) Dividends Dividends are recognized as a liability in the period in which they are declared.
iii) Profit sharing to employees The Company pays 10% of its cash dividends as profit sharing to its employees provided that it will not exceed total employees’ annual salaries. Profit sharing is recognized as a dividend distribution through equity and as a liability when approved by the Company’s shareholders.
3-13 Revenue i) Dividends Dividends income is recognized in the income statement on the date the Company’s right to receive dividends is established from invested companies.
ii) Technical support fees Technical support fees are recognized in the income statement over the term of the contracts with the subsidiaries and associates using the accrual basis.
iii) Interest income Interest income is recognized in the income statement as it accrues using the effective interest method.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
3-14 Expenses i) Interest expense Borrowing costs are recognized as expenses in the income statement when incurred, with the exception of borrowing costs directly attributable to the construction and acquisition of new assets which are capitalized as part of the relevant assets’ cost and depreciated over assets’ estimated useful lives. This capitalization ceases once the assets are in operational condition and ready for use.
ii) Employees’ pension The Company contributes to the government social insurance system for the benefit of its employees in accordance with the social insurance law. Under this law, the employees and the employers contribute into the system on a fixed percentage-of-salaries basis. The Company’s liability is confined to the amount of its contribution. Contributions are charged to income statement using the accrual basis of accounting.
3-15 Related party transactions Related parties represent associated companies, major shareholders, directors and key management personnel of the Company, and entities controlled, jointly controlled or significantly influenced by such parties. Transactions with related parties are approved in the general assembly meeting.
3-16 New Issues and Amendments issued to the Egyptian Accounting Standards (EAS) but not adopted. On March 28, 2019, the Minister of Investment issued a decree no. 69 of 2019, amending some of the Egyptian accounting standards, which include some new accounting standards and amendments to certain existing standards. These amendments have been published in the Official Gazette on April 7, 2019. The most important amendments are the issuance of 3 new standards, which shall come into force for the financial periods that starting in or after January 1, 2020:
1- The Egyptian accounting standard no. (47) “Financial Instruments” This standard shall be adopted for the financial periods starting on or after January 1, 2020, and shall allow for early adoption, subject to the adoption of the revised Egyptian accounting standards no (1), (25), (26) and (40), at the same time.
2- The Egyptian accounting standard no. (48) “Revenue from Contracts with Customers” This standard shall be adopted for the financial periods starting on or after January 1, 2020, and shall allow for early adoption.
3- The Egyptian accounting standard no. (49) “Leases” This standard shall be adopted for the financial periods starting on or after January 1, 2020, and shall allow for early adoption, subject to the adoption of the Egyptian accounting standard no (48) “Revenue from Contracts with Customers” at the same time.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
4 Dividends Income Dividends income consisted of the following for the three months ended March 31:
2019 2018
Iraq Holding Ltd. 27.5 - International Wireless Communication Pakistan Ltd Co. - 10.4 27.5 10.4
During the period ended March 31, 2019, Iraq Holding Limited (“IHL”) distributed the sum of USD 27.5 as a dividend, which was set-off against all intercompany payable amounts outstanding between the Company and IHL.
5 Other operating expenses Other operating expenses consisted of the following amounts relating to personnel expenses and remunerations of board of directors and other expenses for the three months ended March 31:
2019 2018 5-1 Personal expenses and remunerations of board of directors Personnel expenses (0.4) 1.2 (0.4) 1.2 5-2 Other expenses Consultation and legal expenses (0.3) (0.5) Rent expenses - (0.5) Other expenses (1.2) (0.3) (1.5) (1.3) (1.9) (0.1)
6 Technical service expenses Technical service expense consisted of the following for the three months ended March 31:
2019 2018
VEON (Note 12) (1.7) (2.5) (1.7) (2.5)
On June 16, 2015, the ordinary general assembly approved a mutual service agreement whereby the Company may render operational support services from VEON Ltd., and vice versa. The mutual service agreement will expire on June 2020.
7 Other income Other income consisted of the following for the three months ended March 31:
2019 2018
Reversal of impairment loss of due from subsidiaries (IHL) 4.4 - Loss from sale of investments (Lingo Media Corporation) (0.6) - Others 0.1 - 3.9 -
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
8 Finance cost Finance cost consisted of the following for the three months ended March 31:
2019 2018
Interest on borrowings (36.9) (36.2) Amortization of deferred finance charges (0.7) (0.6) Other - (0.1) (37.6) (36.9)
VEON Holdings B.V. revolving credit facility (RCF) During the period ended March 31, 2019, the Company had interest expense in an amount of USD 7.4 from the RCF (compared to USD 3.3 during the period ended March 31, 2018) (see note 12 for more details).
Loans interest from subsidiaries During the period ended March 31, 2019, the costs associated with the Company’s loan from GTH Finance B.V., amounted to USD 29.5 (compared to USD 29.5 during the period ended March 31, 2018).
9 Finance income Finance income consisted of the following for the three months ended March 31:
2019 2018
Credit interest from loans to subsidiaries 5.1 4.1 5.1 4.1
Finance income is mainly from interest from Telecom Ventures Limited loans.
10 (Losses) per share The basic/diluted (losses) per share are calculated using the weighted average number of outstanding shares throughout the period. March 31, March 31,
2019 2018
Net (loss) for the period (8.1) (24.6) Average outstanding shares during the period (in millions) 4,721.1 4,721.1 Basic / diluted (losses) per share (USD) for the period (0.002) (0.005)
(Losses) per diluted share are calculated by adjusting the weighted average number of shares by the effects resulting from all the ordinary potential shares that causes this dilution.
The Company has no potential diluted shares as of March 31, 2019, therefore; the (losses) per diluted share are equivalent to basic (losses) per share.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
11 Investments March 31, 2019 December 31, 2018 Country % of Book % of Book Company name
Ownership value Ownership value
11-1 Investments in subsidiaries
Telecom Ventures Limited * Malta 100% 1,262.6 100% 826.2
International Wireless Communication Pakistan Ltd Co. Malta 100% 762.6 100% 762.6
Oratel International Inc. Malta 100% 323.7 100% 323.7
Omnium Telecom Algérie S.p.A. Algeria 6.37% 56.5 6.37% 56.5
Moga Holding Ltd Co. Malta 100% 43.0 100% 43.0
Mobilink Microfinance Bank Limited Investment Pakistan 100% 25.3 100% 25.3
Global Luxembourg S.a.r.l Luxembourg 100% 0.3 100% 0.3
Global Telecom One S.a.r.l Luxembourg 100% 0.3 100% 0.3
Global Telecom Acquisition S.a.r.l Luxembourg 100% 0.3 100% 0.3
Other companies 1.1 1.1
2,475.7 2,039.3 Impairment loss in investment of Telecom Ventures (756.0) (756.0) Limited 1,719.7 1,283.3 11-2 Available for sale investments
Lingo Media Corporation Canada - - 8% 0.1
- 0.1
1,719.7 1,283.4
* During the period ended March 31, 2019, the GTH and Telecom Ventures Limited board of directors approved converting the whole outstanding receivable shareholder loan from Telecom Ventures Limited (TVL) amounting to USD 370.5 and accrued interest amounting to USD 65.9 into investments in subsidiaries.
12 Due from / to related parties March 31, 2019 December 31, 2018 A- Long-term Receivables Payables Receivables Payables
Subsidiaries (loans) - 1,200.0 351.8 1,200.0 - 1,200.0 351.8 1,200.0 B- Short-term VEON (Credit Facility) - 293.2 - 324.9 VEON (other) - 97.4 - 95.4 Subsidiaries (current) 61.1 0.9 263.2 105.6 Subsidiaries (loans) - 51.3 - 21.8 61.1 442.8 263.2 547.7
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
Subsidiaries receivables (long-term loans) As described in Note 11 above, all outstanding balances of the term loans including accrued interest has transferred to investments in subsidiaries.
Wind Tre Group The Company has receivables from the Wind Tre group which, as of March 31, 2019, amounted to USD 0.9 (compared to USD 0.9 as of December 31, 2018).
Subsidiaries receivables -current The main transactions represented in the financing activities to subsidiaries are (1) the loan granted in favour of Omnium Telecom Algérie S.p.A. with an outstanding balance of USD 13.1 as of March 31, 2019 (USD 13.2 as of December 31, 2018), and (2) the loan granted in favour of Med Cable Limited with an outstanding balance of USD 24.8 as of March 31, 2019 (USD 25.2 as of December 31, 2018). In addition, the Company has a receivable of USD 9.1 as of March 31, 2019 (USD 9.8 as of December 31, 2018), representing borrowing costs that the Company paid on behalf of GTH Finance B.V.
Subsidiaries loans – non-current On April 26, 2016, GTH Finance B.V., a wholly owned subsidiary of the Company, issued USD 500, 6.25% Senior Notes due 2020 and USD 700, 7.25% Senior Notes due 2023, guaranteed by VEON Holdings B.V., for a guarantee fee of 3% per annum. The proceeds of these notes have been on-lent to the Company on the following basis: USD 500 at an interest rate of 9.25%, maturing 2020, and USD 700 at an interest rate of 10.25%, maturing 2023, with interest under each loan being paid semi-annually (the “GTH Finance Loans”).
As of March 31, 2019, the outstanding balance under the GTH Finance Loans is USD 1,200.0 (USD 1,200.0 as of December 31, 2018).
VEON Holdings B.V. revolving credit facility (RCF) As of March 31, 2019, the outstanding amount under the revolving credit facility agreement (the “RCF”) with VEON Holdings B.V., including accrued interest, is USD 293.2 (USD 324.9 as of December 31, 2018).
VEON - other The Company has also entered into certain transactions with VEON Ltd. and certain of its wholly-owned subsidiaries (“VEON”) which have a net outstanding balance of USD 97.4 as of March 31, 2019 (USD 95.4 as of December 31, 2018).
This includes costs for technical services provided by VEON during the period ended March 31, 2019 amounting to USD 1.7 (USD 2.5 during period ended March 31, 2018).
GTH Finance B.V. accrued interest As of March 31, 2019, the accrued and unpaid interest under the GTH Finance Loans is USD 50.8 (USD 21.3 as of December 31, 2018).
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
13 Advances to tax authority March 31, December 31,
2019 2018
Income tax paid in advance 0.6 0.6 0.6 0.6
14 Other current financial assets March 31, December 31,
2019 2018
Other receivables 59.6 59.6 Advances to suppliers 3.9 4.0 Other debit balances 3.4 1.4 66.9 65.0 Impairment loss (59.6) (59.6) 7.3 5.4
15 Other current financial liabilities March 31, December 31,
2019 2018
Down payment from sale of Telecel Globe * 50.0 50.0 Accrued expenses 2.3 3.1 Accrued bonus 1.7 2.3 Other credit balances 0.4 0.5 54.4 55.9
* see note no. 21 for more details.
16 Cash and cash equivalents March 31, December 31,
2019 2018 Cash and cash equivalents at banks 4.3 - 4.3 -
17 Issued capital and reserves As of March 31, 2019 and December 31, 2018, the issued and fully paid share capital amounted to EGP 2,738.3 million (equivalent to USD 406.5) comprising 4,721,121,558 shares of a nominal value of local shares EGP 0.58. The Company’s authorized capital is EGP 14.0 billion.
18 Legal status There were no material changes during the three month period ended March 31, 2019 to the legal status as disclosed in the Note 22 in the Company’s annual separate financial statements for the year ended December 31, 2018.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
19 Tax Status There were no material changes during the three month period ended March 31, 2019 to the tax status as disclosed in the Note 23 in the Company’s annual separate financial statements for the year ended December 31, 2018.
20 Going concern The Company incurred a net loss of USD 8.1 during the three-month period ended March 31, 2019, and as of that date, the Company has net current liabilities of USD 501.5 and an inadequate cash position to meet all upcoming debt obligations within the next twelve-month period.
While the Company's net current liability position and the inadequate cash position indicate the existence of a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern, Management believes that the going concern assumption of the Company is appropriate. Management has come to this assessment on the following basis:
(i) the Company is exploring alternate financing options to service its upcoming debt obligations in 2019, including commencing preparation for a potential Rights Issue. An ordinary general assembly meeting has been scheduled for June 26, 2019 to approve the Right Issue;
(ii) the Company’s Management has agreed with VEON Holdings B.V. to extend the maturity date of the amounts drawn by the Company under the revolving facility agreement between VEON Holdings B.V. and the Company until August 31, 2019;
(iii) the Company expects to receive dividends from Algeria and Pakistan during the upcoming twelve-month period, and the Company collected dividends of USD 48.9 during the first quarter;
(iv) VEON Ltd., in a letter to the Company, has expressed its intention to explore taking GTH private (and has deposited documentation with the Egyptian Financial Regulatory Authority to commence a mandatory tender offer (“MTO”)), which in Management’s view could alleviate liquidity issues if the MTO and a transaction to take GTH private takes place. In the event that VEON is not successful in taking GTH private, the Company will continue to pursue the Rights Issue;
(v) the Company’s external bonds are guaranteed by VEON Holdings B.V.; and
GTH management does not expect VEON to request repayment of the intercompany payable of USD 100, which is an amount accrued since mid-2015 and which VEON has not yet sought repayment of, until a sufficient liquidity position has been reached.
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Global Telecom Holding S.A.E In millions of USD Notes to the condensed interim separate financial statements for the three months ended March 31, 2019
21 Events after the reporting period
Dispute concerning sale of Telecel Globe Limited Global Telecom Holding S.A.E. (“GTH”) and Niel Natural Resources Investments S.A. ("Niel") entered into a Share Purchase Agreement on March 28, 2013, as amended from time to time (the “SPA”) in relation to the proposed purchase by Niel of GTH's majority stake in Telecel Globe Limited ("Telecel") and telecommunications operations in the Central African Republic and Burundi. The parties subsequently entered into three amendments to the original SPA between April and August 2013 due to Niel’s failure to timely close the intended transaction. Pursuant to the terms of the amendments, the parties extended the Longstop Date each time in exchange for payments of deposits by Niel. As Niel ultimately failed to close the intended transaction, the deposits paid to GTH were not refunded, which was in accordance with the terms of the SPA which is no longer in force. GTH completed the sale of Telecel in October 2014 to another purchaser for consideration less than had been agreed with Niel.
In 2019, Niel commenced an arbitration at the London Court of International Arbitration in relation to the deposit monies retained by GTH and, in the Dutch courts, obtained an ex parte order freezing GTH’s bank accounts in The Netherlands and other pre-award security. GTH plans to vigorously contest Niel’s arbitration claims and otherwise defend against all proceedings and actions.
Amsterdam, May 1, 2019
Global Telecom Holding S.A.E.
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