annual report 2016 -...

Kissan Support Services(Pvt.) Limited(A wholly owned subsidiary of Zarai Taraqiati Bank Limited)

1 Faisal Avenue, Islamabad

Annual Report 2016

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DIRECTORS’ REPORT

On behalf of the Board of Directors, it gives us great pleasure to present the Directors’Report of Kissan Support Services (Pvt) Limited (KSSL) along with the Audited Accounts andAuditor’s Report thereon, for the year ended December 31, 2016.

The principal activity of the Company continued to be the provider of non–core supportservices to ZTBL by exercising appropriate control on the workforce in line with the best servicequality standards. However, the Company has amended its Memorandum of Association duringthe year 2016 enabling it to carry out wide ranging businesses and offer its services to the corporateclients, other than ZTBL.

Financial Overview

During the year, KSSL witnessed 28.59% increase in its revenue over the last year, theCompany’s Profit After Taxation was Rs. 104.909 million compared to Rs. 70.487 million for theprevious year, reflecting 48.83% increase in the company’s earning performance, resulting intoEarning Per Share (EPS) of Rs. 10.49 (2015: Rs. 7.05 per share). The Company being a whollyowned subsidiary of ZTBL neither proposes any dividend to be paid nor transferred any sum toany specific Fund/Reserve for the purpose.

No significant change or commitment occurred during the period from the end of the yearto the date of this report.

Key Operating & Financial Data of last 6 Years

(Rupees in Million)

Particulars 2011 2012 2013 2014 2015 2016

Total Assets 275.816 317.121 385.934 447.921 581.059 795.119

Cash & Cash Equivalents 216.231 242.909 301.917 333.372 416.394 544.968

Non–Current assets 23.842 30.813 34.660 56.074 64.473 89.300

Share Capital & Reserves 198.905 225.461 259.593 287.760 364.765 471.477

Non–Current Liabilities 42.652 54.919 60.939 150.552 196.722 258.491

Profit before Tax 43.850 44.190 44.387 57.677 114.830 155.487

Taxation 17.727 15.314 15.047 16.377 44.343 50.577

Profit after Tax 26.123 28.876 29.340 41.299 70.487 104.909

Earnings per Share (Rs.) 2.61 2.89 2.93 4.13 7.05 10.49

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Operations

During the year, Company’s operational performance remained satisfactory regardingservices rendered to ZTBL.

Corporate and Financial Reporting Framework

The Directors are pleased to give the following statements in respect of compliance with theCorporate and Financial Reporting Framework:

a) The financial statements, prepared by the management of the Company, present fairly itsstate of affairs, the results of its operations, cash flows and changes in equity.

b) Proper books of accounts of the Company have been maintained.

c) Appropriate accounting policies have been consistently applied in preparation offinancial statements and accounting estimates are based on reasonable and prudentjudgment.

d) International Accounting Standards, as applicable in Pakistan, have been followed inpreparation of financial statements and any departure there-from has been adequatelydisclosed.

e) The Company has complied with Public Sector Companies (Corporate Governance)Rules, 2013 (The Rules). Statement of Compliance with the Rules along with a statementenlisting the Rules which have not yet been complied with, including the Explanation forNon–Compliance has been prepared.

f) The system of internal control in design has been effectively implemented and monitored.

g) Key Operating and Financial data of last six years in summarized form is included in thisReport.

h) There are no significant doubts upon the Company’s ability to continue as a goingconcern.

Appointment & Remuneration of the Directors

The ZTBL, being 100% shareholder of KSSL, has nominated all the Board Members. TheCompany adopts the remuneration policy of the Board Members as given in Section 42 of itsArticles of Association. No remuneration is paid to the Non–Executive Directors. Theaccommodation of the Board Members is arranged by the Company itself whereas the existingremuneration of the Members are as follows;

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1. Meeting of the Board Rs. 20,000/– per meeting

2. Meeting of the Board’ssub–committee

Rs. 10,000/– per meeting

3. Travelling Rs.15/km if travelled by road orReturn Air Ticket (Economy plus)

Board of Directors

During the year 2016, the composition of the Board and meetings attended by each BoardMember is as follows:–

Sr. No. Name of Director Designation

No. of Boardmeetings

attended in2016

1 Syed Talat Mahmood Chairman 5

2 Rana Nazeer Ahmed Khan Director 5

3 Mr. Mehboob Hussain Director 5

4 Mr. Ishwar Lal Director 5

5 Col. (R) Zahid Iqbal * Director 3

6 Mr. Hasan Afzaal * Director 3

7 Lt. Col (R) Khalid Rafique Shah Director /MD/CEO 4

8 Shiekh Amanullah ** Ex-Director 2

9 Mr. Younus Kamran ** Ex–Director 2

10 Group Captain (R) Tariq JavedKamboh ** Ex–Director 1

11 Mr. Matloob Ahmad Khan Company Secretary 5

* Three Meetings were held during their tenure.** Retired. Two Meetings were held during their tenure.

Committees of the Board

The Board has constituted its sub-committees, namely, Audit Committee, Human ResourceManagement Committee, Nomination Committee & Procurement Committee, as required under

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Public Sector Companies (Corporate Governance) Rules, 2013 for smooth running of the businessactivities. The Audit and Human Resource Management Committees met from time to time todiscuss and carry out business as per their terms of reference.

General Meetings

Tenth Annual General Meeting of the Company was held on April 19, 2016. The Companyalso held its 1st Extraordinary General Meeting on September 8, 2016 to pass special resolution tochange object clauses of KSSL’s Memorandum of Association.

Chief Executive Officer

The Company has a full time Chief Executive Officer whose term of employment is undercontract.

Company’s Future Outlook

KSSL has a strong vision and passion to assist the ZTBL by provision of support staff andtaking over all non–core/auxiliary activities of the bank so that the bank may concentrate on itscore banking activities. Plans are in hand to take over more non–core/non–banking services of theBank in a phased manner.

The Company has amended its Memorandum of Association during the year 2016 whichwill enable it to carry out wide ranging businesses and offer its services to the corporate sector,other than ZTBL. The Company intends to offer its expertise in HR third party contracting to thecorporate sector. Further, prospects of initiating the project of provision of seeds to the farmingcommunity are also being considered.

Auditors

The Auditors for the year 2016 were M/s BDO Ebrahim & Co., Chartered Accountants,Islamabad.

Pattern of Shareholding

1. ZTBL 100% Shares (10 million shares of Rs. 10 each)

Company is a wholly owned subsidiary of ZTBL, incorporated under CompaniesOrdinance, 1984 in Pakistan.

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Acknowledgement

We appreciate the hard work and diligence of Company’s employees in making theCurrent Year a successful year for the Company.

On behalf of the Board of Directors

(KHALID RAFIQUE SHAH)MD/CEO

(SYED TALAT MEHMOOD)CHAIRMAN

IslamabadMarch 14, 2017

18DO Tel .92 51 160 4<61·5ra.: .41 ~1 260 4ot68www.bdo.com.pk

ltd ROOf.SMot'd Plau,22 £1I\t BlUItArfi.b1a_d ...000P.t 11t~,

REVIEW REPORTTO THE MEMBERSON THE STATEMENTOF COMPUANCEWITH THE PUBLIC SECTORCOMPANIES(CORPORATEGOVERNANCE)RULES, 2013

W~ have reviewed the enclosed Slat~m~nt of Compliance with the best practkes contained in thePublic Sector Companies (Corporate Governance) Rules, 2013 (..the Rules") prepared by the Board ofDirectors of KlSSAN SUPPORT SERVICES(PRIVATE) LIMITED ("the Company") for the year endedDecember 31. 2016.

The responsibility for compliance with the Rules is that of the Board of Dlrectol's of the Company, Ourresponsibility is to review. to the extent where such compliance can be objectively verified. whetherthe Statement of Compliance reflects the status of the Company's compliance with the provisions ofthe Rules and report if it does not and to highlight any non·compllance with the requirements of theRules. A r~iew is limited primarily to Inquiries of the Company's personnel and r~lew of variousdocuments prepared by the Company to comply WIth the Rules.

AS a part of our audit of the financial statements we are required to obtain an understanding of theaccounting and internal control systems suffldent to plan the audit and welop an effectiv~ auditapproach. We are not required to consider whether the Board of Directors' statement on internalcontrol covers all risks and controls or to form an opinion on the eflectlveness of such internal controt,the Company's corporate governance procedures and risks.

The Rules requires the Company LOplace before the Audit Committee. and upon recommendation ofthe Audit Committee, place before the Board of Directors for their review and approval Its relatedparty transactions distinguishing between transactions carried out on terms equivalent to those thatprevail in arm's length transactions and transactions which are not executed at arm's length price andrecording proper justification for using such alternate pricing mechanism. We are only required andhave ensured compliance of this requirement to the extent of the approval of the related partytransactions by the Board of Olrectors upon recommendation of the AUdit Committee, We have notearned out any procedures to determine whether the related party transactions were undertaken atanm's length price 0< not.

Following Instances of non-compliance with the requirements of the Rules were observed which arenot stated in the Statement of Comphance:

(n The Board has not formulated potkres regarding "Corporate Social Responsibility". and"Health Safety and Environment" as required by rule:; (7) (i) and 5 m (m) respectively of theRules.

(iI) The Board has not formula Led succession planning of the Chief executive as required by Rule 512)of the Rules.

(III) Though Chief Internal Auditor has been appointed. however. the qualification criteria asrequired by Rule 22 i2l of the Rules has not been complied with.

,IJ.....-Page· 1

... .... ..

IBDOBased on our review, except for the above instances of non-compuance, nothing has come to ourattention which causesus to believe that the Statement of Compliance does not appropriately reflectthe Company's compliance, in all material respects, with the best practices contained in the Rules asapplicable to the Company for the year ended December31, 2016.

further, we highlight below the instances of non·compliance with the requirements of the Rules asreflected in the following paragraph of enclosedStatement of Compliance:

Sr No. Reference Description

(i) Clause7(Ii) Clause18(a)

The Chairman hasnot been elected from amongst the independent directors.The Board has not carried out performance evaluation of Its members,including the Chairman and the Chief Executive, on the basis of a process,basedon specified criteria developed by it.Monthly accounts are not prepared and circulated amongst the Boardmembers.

(Iii) Clause20

ISLAMABAD ~@e-.,CHARTEREDACCOUNTANTS

DATED: t ~ MAR 2017 Engagement Partf'W!'r: Abdul Q,adeer

Page·2

BOOEbrahim ft Co. Chartered Accountants&00 (b''''',m & Cu <l1>"IuJUI!\ft(j~tletll).ftl'ot"\"OO ''''"' ." 3 Il~ (If 800 1I'I1i'rt'\'lI'OtI.ll'''''t~, • ViI <omplOllY\l""l~ by ,."tr",t"".."d fa.r>n PI.. t ollhe IfIU"fl'l/lt_IftJ' 600 N'tWll'j, I)' h"".kptll\k.>.1 ,""'fIIbo', III,,,,,

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Statement of Compliance with the Public Sector Companies (CorporateGovernance) Rules, 2013

Name of company: Kissan Support Services (Pvt.) Limited

Line Ministry: Subsidiary of ZTBL which is owned by Finance Division, GOP

For the Year Ended: December 31, 2016

I. This statement is being presented to comply with the Public Sector Companies Corporate

Governance) Rules, 2013 (hereinafter called “the Rules”) issued for the purpose of establishing

a framework of good governance, whereby a public sector company is managed in

compliance with the best practices of public sector governance.

II. The company has complied with the provisions of the Rules in the following manner:

Sr.No. Provision of the Rules Rule

No.Y NTick the relevant

box1. The independent directors meet the criteria of independence, as definedunder the Rules.

2(d)

2. The Board has the requisite percentage of independent directors. Atpresent the board includes:

Category Names Date ofAppointment

IndependentDirector

1. Rana Nazeer Ahmad Khan2. Mr. Ishwar Lal3. Col. (R) Zahid Iqbal4. Dr. Hasan Afzaal

19–Apr–2016–do––do––do–

ExecutiveDirector

1. Mr. Khalid Rafique Shah,MD/CEO 19–Apr–2016

Non–ExecutiveDirector

1. Syed Talat Mahmood2. Mr. Mehboob Hussain

19–Apr–2016–do–

3(2)

3. A casual vacancy occurring on the board was filled up by the directorswithin ninety days.

3(4)



box4. The directors have confirmed that none of them is serving as a directoron more than five public sector companies and listed companiessimultaneously, except their subsidiaries.

3(5)

5. The appointing authorities have applied the fit and proper criteria givenin the Annexure in making nominations of the persons for election asboard members under the provisions of the Ordinance.

3(7)

6. The chairman of the board is working separately from the chief executiveof the Company.

4(1)

7. The chairman has been elected from amongst the independent directors. 4(4) 8. The Board has evaluated the candidates for the position of the chief

executive on the basis of the fit and proper criteria as well as theguidelines specified by the Commission.

5(2)

9. (a) The company has prepared a “Code of Conduct” and has ensured thatappropriate steps have been taken to disseminate it throughout thecompany along with its supporting policies and procedures, includingposting the same on the company’s website.(Address of website to be indicated www.kssl.ztbl.com.pk)

(b) The Board has set in place adequate systems and controls for theidentification and redressal of grievances arising from unethical practices.

5(4)

10. The Board has established a system of sound internal control, to ensurecompliance with the fundamental principles of probity and propriety;objectivity, integrity and honesty; and relationship with the stakeholders,in the manner prescribed in the Rules.

5(5)

11. The Board has developed and enforced an appropriate conflict of interestpolicy to lay down circumstances or considerations when a person maybe deemed to have actual or potential conflict of interests, and theprocedure for disclosing such interest.

5(5)(b)(ii)

12. The Board has developed and implemented a policy on anti-corruptionto minimize actual or perceived corruption in the company.

5(5)(b)(vi)

13. (a) The Board has ensured equality of opportunity by establishing openand fair procedures for making appointments and for determiningterms and conditions of service.

(b) A Committee has been formed to investigating deviations from thecompany’s code of conduct.

5(5)(c)(ii)

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box14. The Board has ensured compliance with the law as well as the company’sinternal rules and procedures relating to public procurement, tenderregulations, and purchasing and technical standards, when dealing withsuppliers of goods and services.

5(5)(c)(iii)

15. The board has developed a vision or mission statement, corporatestrategy and significant policies of the company. A complete record ofparticulars of significant policies along with the dates on which they wereapproved or amended has been maintained.

5(6)

16. The board has quantified the outlay of any action in respect of anyservice delivered or goods sold by the Company as a public serviceobligation, and has submitted its request for appropriate compensationto the Government for consideration.

5(8)

17. (a) The board has met at least four times during the year.

(b) Written notices of the board meetings, along with agenda andworking papers, were circulated at least seven days before themeetings.

(c) The minutes of the meetings were appropriately recorded andcirculated.

6(1)6(2)

6(3)

18. The board has carried out performance evaluation of its members,

including the chairman and the chief executive, on the basis of a process,based on specified criteria, developed by it.

The board has also monitored and assessed the performance of seniormanagement on quarterly basis.

8

19. The board has reviewed and approved the related party transactionsplaced before it after recommendations of the audit committee. A partywise record of transactions entered into with the related parties duringthe year has been maintained.

9

20. The board has approved the profit and loss account for, and balancesheet as at the end of, the first, second and third quarter of the year aswell as the financial year end, and has placed the annual financialstatements on the company’s website.

Monthly accounts were also prepared and circulated amongst the boardmembers.

10

21. All the board members underwent an orientation course arranged by the

company to apprise them of the material developments and informationas specified in the Rules.

11



box22. (a) The board has formed the requisite committees, as specified in theRules.

(b) The committees were provided with written term of referencedefining their duties, authority and composition.

(c) The minutes of the meetings of the committees were circulated to allthe board members.

(d) The committees were chaired by the following non–executivedirectors: –

12

Committee Number ofMembers Name of Chair

Audit Committee 3 Col. (R) Zahid Iqbal

Risk ManagementCommittee

N/A N/A

Human ResourcesCommittee 3 Mr. Ishwar Lal

ProcurementCommittee 3 Rana Nazeer Ahmad

Khan

NominationCommittee 3 Mr. Mehboob Hussain

23. The board has approved appointment of Chief Financial Officer andCompany Secretary, with their remuneration and terms and conditions ofemployment, and as per their prescribed qualifications.

13/14

24. The company has adopted International Financial Reporting Standardsnotified by the Commission under clause (i) of sub-section (3) of section234 of the Ordinance.

16

25. The directors’ report for this year has been prepared in compliance withthe requirements of the Ordinance and the Rules and fully describes thesalient matters required to be disclosed.

17

26. The directors, CEO and executives do not hold any interest in the sharesof the company other than that disclosed in the pattern of shareholding.

18

27. A formal and transparent procedure for fixing the remuneration packagesof individual directors has been set in place. The annual report of thecompany contains criteria and details of remuneration of each director.

19

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box28. The financial statements of the company were duly endorsed by thechief executive and chief financial officer, before approval of the board.

20 29. The board has formed an audit committee, with defined and written

terms of reference, and having the following members:

Name of Member Category ProfessionalBackground

Col. (R) Zahid Iqbal IndependentMember

MSc. Engineering(Digital Systems)

Dr. Hasan Afzaal –do– PhD in progress

Doctor of PharmacyMr. Mehboob Hussain Non–Executive

MemberCFO of the

parent/holdingcompany, ZTBL

The chief executive and chairman of the Board are not members of theaudit committee.

21

30. The board has set up an effective internal audit function, which has anaudit charter, duly approved by the audit committee, and which workedin accordance with the applicable standards.

22

31. The company has appointed its external auditors in line with therequirements envisaged under the Rules.

23 32. The external auditors of the company have confirmed that the firm and

all its partners are in compliance with International Federation ofAccountants (IFAC) guidelines on Code of Ethics as applicable inPakistan.

23(4)

33. The external auditors have not been appointed to provide non-auditservices and the auditors have confirmed that they have observedapplicable guidelines issued by IFAC in this regard.

23(5)

34. The company has complied with all the corporate and financial reportingrequirements of the Rules.


(SYED TALAT MAHMOOD)Chairman

Explanation for Non-Compliance with the Public Sector Companies(Corporate Governance) Rules, 2013

We confirm that all other material requirements envisaged in the Rules have beencomplied with [Except for the following, toward which reasonable progress is being madeby the company to seek compliance by the end of next accounting year]:

Sr.No.

Clause No. ofStatement ofCompliance

Rule/sub-rule No. ofCC Rules

Reasons for non–compliance Future course of action

1. 7 4(4)

The President, ZTBL (holding company)who was nominated by the Ministry ofFinance under BNA 1974, is elected asChairman, KSSL BOD. Since ZTBL is100% shareholder of the company,therefore, KSSL believes that this rule isnot applicable on it.

Clarification will besought on the issuefrom Finance Division,GOP.

2. 18 (a) 8

The Public Sector Companies (CorporateGovernance) Rules 2013 wereimplemented by the Company onDecember 31, 2016 for the first time andaccordingly, many policies weredeveloped and the remaining shall bedeveloped by the Board shortly.

We are in process ofdevising a mechanismwhereby performanceevaluation of BoardMembers will becarried out during theyear 2017.

3. 20 (b) 10

The accounts of the company areconsolidated with those of the ParentCompany i.e. ZTBL. Therefore, a softwarecapable of fulfilling needs of bothorganizations and later onsynchronize/consolidate both books ofaccounts is being developed/acquired bythe Parent Company.

KSSL is in process ofacquiring Oracle basedERP system which willenable it to prepareMonthly Accounts intimely manner. Thesame shall beimplemented during2016.


(SYED TALAT MAHMOOD)Chairman

IBDO

fiNANCIAL STATEMENTSOf

KISSAN SUPPORT SERVICES (PRIVATE) LIMITED

fOR THE YEAR ENDEDDECEMBER 31, 2016

BOOEbrahim (l Co. Chartered Accountants1100 ,,,, on', ~ I,,, '''''''\', ,I ~ /I "1'1. 'I, ,ftI'""~ I ~ IIlOlr'"" ,(.,,' ..II1t.rflIIO'\1 ilUIlr-nrn'",Vlvlo,....,I...,.l>y ..·.., .....,~,':d!et'lYItI I Il"c 'I .,,~. )"11111)(. !M. I~~" 1\ ,,~!'M', In.,

18DO Tel: .92 SI 2604461-5Fax: .92 SI 2604468www.bdo.com.pk

Jtd Floor,Saeed Plaza.22·East 8lue Area,1,'.mab.d-44000,Paklslan.

AUDITORS' REPORT TO THE MEMBERS

We have audited the annexed balance sheet of KISSAN SUPPORT SERVICES(PRIVATE) LIMITED (the Company)as at December 31, 2016 and the retated profit and loss account, statement of comprehensive income, cashflow statement and statement of changes in equity together with the notes fanning part thereof, for the yearthen ended and we state that we have obtained all the information and explanations which, to the best of ourknowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Company's management to establish and maintain a system of Internal cootrot,and prepare and present the above said statements in conformity with the approved accounting standards andthe requirements of the Companies Ordinance, 1984. Our responsibility Is to express an opinion on thesestatements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards" ..quire that we plan and perform the audit to obtain reasonable assurance about whether the above saidstatements are free of any material rnisstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the above said statements. An audit also includes assessing theaccounting policies and significant estimates made by management, as well aSJ evaluating the overallpresentation of the above said statements. We beUeve that our audit provides a reasonable basis for ouropinion and. after due verification, we state that: .

(at In our opinion, proper books of accounts have been kept by the Company as required by theCompanies Ordinance, 1984;

(b) in our opinion:-

(i) the balance sheet and profit and loss account together with the notes thereon have beendrawn up in conformity with the Companies Ordinance, 1984, and are in agreement with thebooks of account and are further in accordance with accounting policies consistentlyapplied;

(ii) the expenditure incurred during the year was for the purpose of the Company'sbusiness;and

(iii) the business conducted, investments made and the expenditure Incurred during the yearwere In accordance with the objects of the Company;

(c) in our opinion and to the best of our information and according to the explanations given to us, thebalance sheet, profit and tossaccount, statement of comprehensive income. cash flow statement andstatement of changes in equity together with the notes forming part thereof conform with approvedaccounting standards as applicable In Pakistan, and, give the infonnation required by the CompaniesOrdinance, 1984, in the manner so required and respectively give a true and fair view of the state ofthe Companys affairs as at December 31,2016 and of the profit, its comprehensive Income, Its cash(tows and changes in equity for the year then ended; and

(d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980(XVIII of1980).

ISLAMABAD/2/.{f. ...Q. ' Qe...

CftJlRTERED ACCOUNTANTSEngagement Partner;AbdulQadeer

/h_DATE: 1 4 MAR 20 II

BDO Ebrahim 6: Co. Chartered AccountantsIIOQ £Ilnhlm II Co.• " Pllk~"" I'f:'JI)lf'ol~ 1).'IAef~hlO f_I'II,IS" ml!l'flbl"C"01800 1rI1l'flU1I1lMi Lnltltd • UK (OIIIpM1), l.-!llte<! by 11l• ...,ntee.lind f",m~Pill of t~ ItIltf~IIQt\o11I8DO nttw()(11 of 1~lIdtn~ mombC'f fltm,

KlSSAN SUPPORT SERVICES (PRIVATE) LIMITEDBALANCE SHEET AS AT DECEMBER 31, 2016

ASSETSNON CURRENT ASSETS

Property, plant and equipmentOperating fixed assets

Deferred lax asset

CURRENT ASSETSReceivable from LTBLLoans and advancesShort-term prepaymentsShort-term investmentsAccrued interestOther receivablesTax refund due from GovernmentCash and bank balances

TOTAL ASSETS

EQUITY AND LJAilILITLESSHARE CAPITAL AND RESERVES

Share capitalAccumulated profit

NON CURRENT LIABILITIESDeferred liabilitiesPayable against car loan depreciation policy

CURRENT LIABILITIESTrade and other payablesSecurity depositsTaxat ion - net

CONTINCE CIES AND COMMITMENTSTOTAL EQUITY AND LlABIL[TlES

Nute2016

Rupees

56

13.280,06976,020.26589.300.334

20[SRupees

4,252.40760,220.49064,472.897

78910II121314

118.967.807 47,989.5221.515.815 2,623.186

628.682 463.256527,670,739 333.599,628

7.041.311 2.814.6325.210,663 5,728,928

35.156.137 43.850.7489,627.316 79,5 16.483- - -70),818.~ 70

795.118.804

15 10U.DUO,OOO371,477.366471.477.366

1617

256,092.1932.398.500

258.490.693

) 16.)86.383581.059,280

100.000.000?64,764.907364.764.907

196, 722,~921

196,722,292

181920

14,739.113 10.508,468225,002 369_002

50,186,630 8.694.611- - -21

795.118.804

The annexed notes from I 10 38 form an integral part or these financial statements.,1,-

~()JiAf/CIlIEF EXECUT[~IE'

581.059.280

1-'~----'"CIIAIRMAN

KISSAN SUPPORT SERVICES (PRIVATE) L1M1TRDPROFIT AND LOSS ACCOUNTFOR TilE YEAR ENDED DECEMBER 31, 2016

RevenueCost of servicesGross prolitAdministrative expensesOperating profitOther incomeFinancial chargesProfit before taxationTaxationProfit after taxation

Earnings per share - basic and diluted

Note

2223

24

27

25

2016 2015Rupees Rupees

J, 102.238,940 857.169.216(937,837.947) (738,833,733)164,400,993 118,335.483(39,207,690) (31,388.166)125.193,303 86.947.31730,328,416 27,922,850

(35.025) (40.030)155.486.694 114,830.137(50,577,474) (44.342,648)104.909,220 70,487.489

10.49 7.05

26

The annexed notes from 1 to 38 form an integral part of these linancial statements ..;L

~!lJ~CIIIEF EXECU1~JE'/

-t._. ..~ _(j;CIIAIHMAN

KISSAN SUPPORT S£RVICES (PRIVATE) I.IMITEJ)STATEMENT OF COMPREIl E:-;SI VE INCOI\1 EFOR TilE YEAR ENDED DECEl\IBER 31, 2016

2016 2015Note Rupees

Profit alter uixution 104,909,220Other comprehensive income

Item that will not be reclassified to pro lit lind loss UCCIHIIIl

Gain 011 rcmcasurcmcnt of defined benefit liability 2,576,056l'ax impact relating to rcrncasurcmcm of defined bcnclitliability (772,817)

70,4S7A89

(3,067,251 )6.517,lJ08

1),585,159

Total comprehcnsi vc income lor the yearLS03,:!39

77,005,397I06.7 1:!.459

The annexed notes from I to 38 fonn an integral part of these financial statements.At-

KlSSAN SUPPORT SERVICES (I'IUVATE) LIMlTEDCASH FLOW STATEMENTFOR THE YEAR F..NDED DRCEMI3ER 31,2(116

CASI:I FLOWS FROM OPERATING ACTIVITIESProfit before laxationAdjustments for non cash items:

DepreciationProvision for gratuityProvision for medical fundInterest income

Operating profit before working capital changesChanges in working capital:

(Increasej/decrease in current assetsReceivable from holding companyLoans and advancesShort-term prepaymentsOther receivables

Increase/tdecrcase} in current liabilitiesTrade and other payables

Cash generated from operations

Interest income receivedGratuity paidMedical ex penses paidIncome tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACnVITlESPurchase of fixed assets

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTrvlTIESPayable under car loan depreciation policySecurity deposits received/(paid)

Net cash generated from financing activitiesNet increase in cash and cash equivalentsCash and cash equivalents at the beginning or' the yearCash and cash equivalents (It the end of the year

Note2016

Rupees2015

Rupees

155.486,694 114.830,137

5 1.655,901 968,59547.445.960 43,424.09917.085.392 14,111.225

(30.328,416) (27.922.850)35.858,837 30.581,069

145.411,206191.345.531

(70.978,285) (39.859.942)1,107,371 (I ,396,870)(16S,426) (169.125)518,165 (443.422)

(69,5 18.075) (41,869,359)

4,230.645 1,117,070126,058, 101 104,658,917

26,[01.737 31.870,754(2.029.717) (1.193.435)

(S55.G78) (585.972)( 16,963.436) (-15,951.508)

- - (15.860.161)88,798,756[32,611,007

(10.683,563) (2,147,855)(10.683.563 ) (1,147,855)

2.398,500 I150,~021(144.000)

2.254.500 150,002124.18 J.94~ 86.800,903413.116,111 326,315,208

28 537,298,055 413.116,111

The annexed notes from I to 38 form an integral pan of these financial statements.A--

~U'lCIIl EF EXECU~rK,~

'1-_-..\..- - __'1:--ellA mJ\1;\]'I

KISSAN SUPPORT SERVICES (l'lUVATE) LIMITEDSTATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEM HER 31, 2016

Share capitalAccumulated

pro iiiTotal

-------------------RUDCCS--------------------Balance as at January 0 I. 2015Total comprehensive income for the year

Other comprehensive incomeProfit for the year

100,000.000

Balance as on December 3 I. 2016 100.000.000

187.759.510 287.759,510

6.517,908 6,517,90870.487,489 70,487.48977.005.397 77.005,397

264.764,907 364.764.907

1.803.239 1.803,239104,909,220 104,909,?20106,712,459 106.712,459371.477,366 471.477.366

Balance as on December 31. 2015Total comprehensive income for the year

Other comprehensive incomeProfit for the year

100.000.000

The annexed notes from I to 38 form an integral pan of these financial statements.At.-

~!t ~ ..."'" ' _...:l7C1IAIRM,\N

KISSAN SUPPORT SF.RVICES (PRIVATE) LIMITEDNOTES TO TilE ACCOUNTSFOR TI-II<:YEAR ENDED OECEMBER 31,2016

COMPANY ANI) ITS OI)F:RATIONS

1.1 Kissan Support Services (Private) Limited ("the Company") was incorporated in Pakistan as II

private limited company on September 19. 2005 under the Companies Ordinance, 1984. II is asubsidiary or Zarai Taraqiau Bank Limited (ZTBL) which holds 100% shares. The registered officeof U1e Company is situated at Zarai Taraqiati Bank Limited. lIead Office, 1 . Faisal Avenue. ZeroPoint. Islamabad.

1.2 The Company's principal business was to provide consulrancy, advisory. agency and other supportservices (Ill comractual basis or otherwise to ZTBL. During the year. the Company has changed iLSMemorandum 01 Association and now the Company can provide services/undertake business withother corporate sectors as well.

1.3 The Company's principal business is to provide consultancy. advisory (not being investmentadv isory). agency services and other support services. all kind of support stall' and ancillary services,marketing of products and services. provision of quality products and services for efficient andimproved tanning including seeds. lertilizers. pesticides. agri-rnachinery and technical services.training and education of farmers and others. provision of storage facilities such as warehousing andgrain silos facilities. import and export of' goods and services to any legal emily and corporate sectorill accordance with applicable laws.

2 BASIS OF PREPARATION

2.1 Statement of cumpliancc

l'hese financial stntements have been prepared in accordance with approved accounting standards asapplicable in Pakistan. Approved accounting standards comprise of such International FinancialReporting Standards (II'RS) issued by the lntemational Accounting Standards Board as are notifiedunder the Companies Ordinance. 11)84, provisions or and directives issued under the CompaniesOrdinance. 1984. In case requirements differ. the provisions or directives of the CompaniesOrdinance, 198-1 shall prevail.

2.2 Basis of measurement

These financial statements have been prepared under the historical cost convention except foremployee benefits which have been stated at present value.

These financial statements have been prepared following accrual basis or accounting except for CS$h

no" mformarion.

The preparation of these financial statements in conformity with approved accounting standardsrequires the managcrnent to exercise its judgment in the process or applying the Company'saccounting policies and usc or certain critical accounting estimates. The areas involving a higherdegree ofjudgmem, critical accounting estimates and significant aSSUI11))II<ln$arc disclosed in note-1.24.

/h<- Page· I

2.3 Funcrional nnd preveutarion currency

lhcse tinanci.rl statements are presented In Pakistan Rupees. which is tho Company's functional andpresentation currency.

3 '\£\\ ST \ '\'1) \lU)~, INTERl'ltET \ TIONS A.,\I) A\lENDM£:\TS TO PUBLISFrEI)\I'I'RO\'£O \CCOl',\TI'\'G ST,\J\I) \RI>l;

3.1 Amendments thut lire effective in currcui year but nol rclevunt to the Compun)

I he Cornpany hus adopted the amendments 10 the following approved uccounnng standards asapplicable in Pakistan which become effecuv e during the year from the dales mentioned belowagllmsllhe respccuve standard:

Effective date(annual period,bc!(inning on or

lifter)II:RS 10 Cousolldutcd Financial Stutcmcms

apphcuuon of the consohdanon exceptionAmendments regarding

Junuury I.2016

If-RS II Joint Arrangements • Amendments regarding Ihe accounting loracquisurons of an interest In "JOInt operation January I.2016

II·RS I" Disclosure Ill" Interests in Other Entities· Amendments regarding theapplle,"ion ofthe consolidation exception January I.2016

I \S I Presentation of Financial Statements •• Amendmcms resulting fromthe dr-, losure initiativ e January I. 2016

lAS 16 Property. I'lanl ami I·quipment • Amendments regarding theclurificution 01' acceptable methods of depreciation and amortisationand umcndrnents bringing bearer plants into the scope of lAS 16 January l. 2016

I \S 27 Separate Financial Statcmenrs (as amended in 20 II) • Amendmentsreinst.lling the equity method a~ an accounting option till' investmentsin subsidiaries. joint ventures and ;'SSOCI3Iesrn an cntuy's separatetinonciul statements January 1,2016

I \S 28 Ill\e,lmen" in Associates and Joint Ventures • Amendmentsregarding the applicauon 01 the consolidation cvcepnon January I. 2016

I \S 38 Intangible Assets . Amendments regarding the clarificauon 01acccprublc methods 01 depreciation and arnoruvauon January I,2016

I \S 41 Agriculture. Amendments bringing bearer plants into the scope ofI \S 16 January 1.2016- Page.2

'Other than the amendments to standards mentioned above. there arc certain annual improvementsmade to n:RS that became effective during the year:

Annual Improvements to IFRSs (2012 - 2014) Cycle:

IFRS 5 Non-current Assets Held for Sale and Discontinued OperationsIFRS 7 Financial lnstrumerus: DisclosureslAS 19 Employe", BenefitslAS 34 Interim Financial Reporting

3.2 Amendments not yet effective

The following amendments and interpretations with respect to the approved accounting standards asapplicable in Pakistan would be effective from the dates mentioned below against the respectivestandard or iruerpretation:

Effective date(annual periods

bcginning on orafter)

IFRS 2 Share-based Payment - Amendments to clarify the classification andmeasurement of share-based payment transactions January 0 I. 2018

IFRS 4 Insurance Contracts - Amendments regarding the interaction of IFRS.j and IFRS 9 January 01. 2018

IFRS 10 Consolidated Financial Statements - Amendments regarding the saleor coruribuuon of assets between an investor and its associate or joint Deterredventure indef nitely

lAS 7 Statement of Cash Flows - Amendments resulting trom thedisclosure initiative January 01. 2017

lAS 12 Income Taxes - Amendments regarding the recognition of deferredtax assets for unrcaliscd losses January 0 J. 2017

lAS 28 Investments in Associates and Joint Ventures - Amendmentsregarding the sale or contribution of assets between an investor and Deterredits associate or joint venture indefinitely

lAS 40 lnvcsuneru Property - Amendments to clarify transfers or property to.or trom. investment property January 0 I.20 I 8

The Annual Improvements to IFRSs that arc ctfective from the dates mentioned below against therespective standard arc as follows:

1'91-

Page - 3

Annual lmprovements to IFRS, (2014 - 2016) Cycle:

IFRS I First-time Adoption of International Financial Reponing StandardsIFRS 12 Disclosure of lmercsts in Other EntitieslAS 28 Investments in Associates and Joint Ventures

January 01. 2018January 0 I. 20 17January 0 I. 2018

3,3 Standards or inrerpretntiuns not yet effective

The following new standards and interpretations have been issued by the International AccountingStandards Board (IASB), which have not been adopted locally by the Securities 311d ExchangeCommission of Pakistan:

IYRS IlFRS 9IFRS 14IrRS 15LFRS 16

First Time Adoption of lrnernational Financial Reporting StandardsFinancial InstrumentsRegulatory Deferral AccountsRevenue from Contracts with CustomersLeases

The crlccts of IFRS 15 - Revenues from Contracts with Customers and IFRS 9 - Financiallnsrrumcms arc still being assessed, as these new standards may have a significant effect on theCompany's future financial statcmcms.

'I he Company expects that the adoption of the other amendments and interpretations of thestandards will 1101 have any material impact and therefore \\~II not affect the Bank's financialstatements in the period of initial application,

.I SLIM MARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the presentation of these financial statements arc set outbelow, These policies have been consistently applied 10 all the years presented, unless otherwisestated,

.1,1 l'rOllc"l)'. plant and equipment

l'hcse arc stated at cost less accumulated depreciation and impairment losses, if any, Depreciation ischarged on reducing balance method except for vehicles and computer equipment which aredepreciated on straight line method.

Normal repairs and maintenance are charged 10 profit and loss account as and when incurredwhereas major renewals and improvements arc capitalized,

Depreciation is charged on pro-rata basis from the month in which an asset is acquired or capitalisedwhile no depreciation is charged lor the month in which asset is disposed 011'.

Gain and losses on disposal of operating assets are taken to profit and loss account.-1k

Page - .I

4.2 Impairment losses

The Company assesses lit each balance sheet date whether there is any indication that assets otherthan stores and spares and stock in trade and deferred tax assets may be impaired. If such anindication exists, the recoverable amount of the assets is estimated in order I() determine the extentor impairment loss. if any. Where carrying values exceed the estimated recoverable amount. assetsare written down to ule recoverable amounts and the resulting impairment loss is recognized asexpense in the profit and loss account. unless the asset is carried at revalued amount. Anyirnpairmcnt loss 01' a revalued asset is treated as a revaluation decrease.

4.3 Trade debts

'1 rade debts originated by the company are recognized and carried at original invoice amount lessprovision for any uncollectible amounts. Provision for doubtful debt is made when collection of thefull amount is no longer probable. Debts considered irrecoverable arc written off when identified.

4.4 Loans, advances nod other receivables

Ihese are recognized at cost. which is the fair value of the consideration given. An assessment ismade at each balance sheet date to determine. whether there is an indication that a financial asset. ora group or financial assets. m~)' be impaired. If such an indication exists. the estimated recoverableamount of thnt asset is determined and an impairment loss is recognized for the difference betweenthe recoverable amount and the carrying value.

~.5 lnvestrnents

Investments me classified into the following two categories:

ITclti tl) maturity (HTM)

IITM Investments arc non-derivative financial assets with fixed or determinable payments and fixedmaturity other than loans and receivables. lnvesunents are classified as IITM if the Company has Oleimeruion and abiluy to hold them until maturity. HTM invesunerns arc measured subsequently atamortized cost using the etfective interest method.

Available for sale investments

These arc invcsuncnts which do not fall under the "investment ~t tair value III rough pro lit and loss"or "held to maturity categories". These investments are initially measured at their fair value plusdirectly attributable transaction cost and at subsequent reporting dates measured at luir values andgains or losses from changes in fair values other than impairment loss arc recognized in othercomprehensive income until disposal at which time these are charged through profit and lossaccount. Impairment Joss on investments available lor sale is recognized in [he profit and lossaCCUUI11.

-1.6 Cash anti cash equivalents

For the pUI']JQse of cash !low statement. cash and cash equivalent comprise cash at bank and short1C1ll1 investments with maturity <,I' not later than three months at known amount in rupees ir any.

~Page - 5

.j.7 I rude und ether flU) ublCl>

I rabilities for trudc and other amounts payable are carried at cost which is the lair value of theconsiderurion to he paid in the future 101'the goods and services received, whether 01' 1101 billed tothe Com pan}

.j.8 Cash and ban" balances

Cash In hand und at banks arc carried at nominal amount .

.j.9 t'axurion

Income tax expense comprises current and deferred tax Income tax expense is recognized in prolitand loss account except to the extent that it relate, to items recognized direct I} in.:quit) 'comprehensive income. in which Ca.'SC it is recognized III cquil} 'comprehcnsrvc mcome.

Current

I he Company l1CCULnllSlor current taxation on the basis of' taxable income at the current rates oriuxauon after taking into account lOX credits and rebates UI ailuble. if any. or one percent uf turnov cr.Ill' ahcrnativ c corporate tax. whichev er IS higher In accordance with the provrsrons of the Incomel ax Ordinance, :!OO I.

Deferred

Deterred tux i" computed using the balance sheet linhilit)· method providing lor temporarydifferences between the carrying amounts of assets and Iiuhiliries for linancial reponing purposesand the amounts used lor taxation purposes

Deterred tax a"crs and liabilities me measured at the ta\ rates that arc expected to apply to theperiod when the Imbillt) is settled based on 10\ rates that huve been enacted or substamively enactedat the balance sheet date.

A deferred tax asset i:. recognized onl) to the extent that it is probable that future taxable profit "illbe 11' ailable and the credits can be utilized

Prior years

lhc taxation charge tor prior years represents adjustments to the tax charge rcluung to prior years,arising from assessments and changes in estimates made during the current year. except otherwise'tat cd

.j.IO I)ro\ bion

\ pro' ision I:' recognized in Ihe balance sheet when the Company has a legal or construcuveobligation as a result of a past event. II is probable that all outflow or resources embodying economicbenefits will he required to sen Ie rhe obligation and a reliable estimate can be made ofthe amount ofubligation. I'm' isions are determined by discounting future cash flows 3t appropriate discount rareII here ev cr required. Provisions are rev iCII.:d at each balance sheet date and adjusted 10 reflectcurrent besi esumarc

Page - 6

-1.11 Share capital

Share capital is classified as equity and recognized at the face value. lncremental costs directlyuuributable to the issue of new shares are shown as a deduction in equity .

.t.12 Employees benerirs

Unfunded medical benefits

[he Company operates an unfunded medical benefit fund for its employees. I:.mployees are entitledfor free medical facility during their service. This unfunded amount is utilized against thereimbursement of employee's actual medical expenses. The benefits arc charged to prolit and lossaccount at the rate of Rs 4001- per employee per month on time proportionate basis.

Staff retirement benefits

Ihc Company operates an un-funded gratuity scheme for its permanent employees whose period ofservice is one year 01' more. Employees are entitled to gratuity on the basis set out in staff regulation.The most recent actuarial valuation is carried out at December 31. 2016 using the Projected UnitCredit Actuarial Cost method as mandated under the latest lAS-It) revised 2011. The ActuarialGains/Losses arising due to differences between actuarial assumptions and acrual experienceregarding salary increase. mortality and withdrawal probabilities are considered as rcmeasurcmcrusofthe net defined benefit liability, and are recognized in Other Comprehensive Income.

4.13 Reven ue recogn ition

Revenue comprises of the fair value of the consideration received or receivable (rOI11Ole sale ofgoods and services in the ordinary course of the Company's activities.

Revenue is recognized when it is probable Ihat the economic benefits associated with thetransactions will now to the Company and the amount of revenue can be measured reliably. Therevenue arising from different acuvitics of the Company is recognized on the following basis:

Rev cnue trom services is recognised as and when services are rendered.Interest income is recognized as revenue on time proponion basis.Commission income is recognized when sen ices arc rendered.Rental income is recognized on accrual basis.

4.14 Borrowing

Loans and borrowings ate recorded at the proceeds received. Mark up, interest and other borrowing\:OSlS arc charged to income in the period in which they are incurred.

Borrowing \:OSt on long term finances which arc specifically obtained lor the acquisition ofqualifying assets (plant and machinery) arc capitalized up to the date of commencement ofcommercial production 011 the respective aSSCt,;.All other borrowing costs arc charged to profit andloss account in the period in which these arc incurred.

Page -7 ~

-1.15 Related party transacrions

Transactions involving related parties arising in the normal course of business are conducted atarm's length at normal commercial rates on the same terms and conditions as third party transactionsusing valuation modes as admissible.

-1.16 Otfserri ng of fin ancial assets and finn ncial liabilities

!I. financial asset and a financial liability is offset and the net amount is reponed in the balance sheetif the Company has a legally enforceable right to set-off the recognized amounts and intends eitherto settle on a net basis or to realize the assets and settle the liability simultaneously.

-1.17 Cuntingencies

A contingent liability is disclosed when the Company has a possible obligation as a result of pastevents. existence of which will be confirmed only by the occurrence or non-occurrence of onc ormore uncertain future events not wholly within the control of the Company; or the Company has apresent legal or constructive obligation tha! arises from pas! events. but il is nOI probable that anoutflow or resources embodying economic benefits will be required to settle thc obligation. or theamount or Ille obligation cannot be measured with sul1icient reliability.

-1.18 Fmuucial instruments

Financial assets

Thc Company classifies its financial assets in the following categories: at fair value through profit orloss. loans and receivables. held to maturity and available for sale. The classification depends on thepurpose lor which the financial assets were acquired. Management determines the classification ofits financial assets at initial recognition. All the financial assets or the Company as at balance sheetdate are carried as loans and receivables and held to rnaruruy.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments rhatarc not quoted in an active market. These arc included in current assets. except lor maturities greaterthan 12 monrhs after the balance sheet. which are classi tied as non-current assets. The Company'sloans and receivables comprise 'trade debts'. 'loans and deposits'. 'other receivables' and 'cash andcash equivalents' in the balance sheet.

lIeld 10 maturity and available 1'01' sale investments

l'he particular measurement method adopted is disclosed in the individual policy.

lmpairment

At the end of each reponing period the Company assesses whether there is an objective evidencethat a financial asset or group of financial assets is impaired. !I. financial asset or a group 01' financialassets is impaired and impairment losses are incurred unly if there is objective evidence ofimpairment as a result of one or more events that occurred after the initial recognition of the asset (a"loss event") and thai loss event (or events) has an impact on the estimated future cash 110ws of thefinancial asset or group of financial assets that can be reliably estimated .

.-.t-Page - 8

rr in a subsequent period. the amount of the impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognized, the previouslyrecognized impairment loss wi]! be reversed either directly or by adjusting provision account.

Financial liabilities

All tinancial liabilities arc recognized at the time when the Company becomes a party to thecontractual provisions a r the instrument.

Recognition and measurement

All financial assets and liabilities are initially measured at cost. which is the fair value of theconsideration given and received respectively. These financial assets and liabilities are subsequentlymeasured at fair value, amortized cost 01' cost. as the case may be. The particular measurementmethods adopted are disclosed in the individual policy statements associated with each item.

Derccognitlon

The financial assets are de-recognized when the Company loses control of the contractual right thatcomprise the financial assets. The financial liabilities are de-recognized when they arc extinguishedr.e. when the obligation specified in the COntract is discharged, cancelled or expired

4,19 Foreign currency translation

Transactions in foreign currencies nrc converted into Pak Rupees at the rates of exchange prevailing011 th" dates or transactions. Monetary assets and liabilities in foreign currencies are translated intoPak Rupees lit the rates of exchange prevailing at Ole balance sheet date. Exchange gains and lossesare included in the profit and loss accouru.

4,20 Segment repurtlng

An operating segment is a component of the Company that engages in business activities fromwhich it may earn revenues and incur expenses including revenues and expenses that relate totransactions" ith any of the Company's other components. The Company has only one reportablesegment.

4.21 Dividend and apportioning to reserves

Dividend and appropriation to reserves are recognized in the financial statements in the period in\\ hich these lire approved.

4.22 Operating lease

Rentals payablcs under the operating leases are charged to profit or loss on straight line basis overthe term of relex ant lease.

4.23 Earnings PCI' share

The Company presents earnings per share (EI'S) data for its ordinary shares. Basic EPS is calculatedby dividing the profit or loss attributable 10 ordinary shareholders of the Company by weightedaverage number of ordinary shares outstanding during the year. Diluted EPS is determined byadjusting the profit or loss attributable to ord inary shareholders and the weighted average number ofordinal") shares outstanding lor the effects of all dilutive potential ord inary shares.

Page - 9 Ai-

4.2-1 Significant accounting judgments and critical accounting estimates I ussumprions

- exercise its judgment in process or applying the Company's accounting policies. and- lise of" certain critical accounting estimates and assumptions concerning the future.

Judgments and assumptions have been required by the management in applying the Company'saccounting policies in many areas. Actual results may differ from estimates calculated using theseJudgments and assumptions.

I he areas involving critical accounting estimates and significant assumptions concerning thc futurearc discussed helow:-

a) Property plant and equipment

Management has made estimates of residual values. useful lives and recoverable amounts of certainitems of property. plant and equipment. Any change in these estimates in future years might affectthe carrying amounts of the respective items of property. plant !U1dequipment with correspondingeffect on the depreciation charge and impairment loss.

b) Income taxes

The Com pan) takes into account the current income tax law and decisions taken by appellateauthorities. Instances where the Company's view differs from the view taken by the income taxdepartment at the assessment Stage and where the COmp3Jl) considers thai its view on items ofmaterial nature is in accordance with law. the amounts arc shown as contingent liabilities.

c) Provision for doubtful receivables

The carrying amount of trade and other receivables are assessed on regular basis and if there is anydoubt about the reliability ofthese receivables, appropriate amount of provision is made.

d) Contingencies

The Company reviews the status of al I the legal cases on regular basis. Based on expected outcome!U1dlawyers' judgments, appropriate disclosure or provision is made.

e) Finaneiul Instrument

The fair value of the financial instrument that are not traded in an active market is determined byusing valuation techniques based on assumption that arc dependent on conditions existing at thebalance sheet.

I) Defined benefits plan

Certain actuarial assumptions have been adopted as disclosed ill note 16 of these financialstatements for valuation of present value of defined benefit obligation. Any changes in theseassumptions in future years might affect actuarial gains I losses recognized in those years withcorresponding effect on carrying arnoum of defined benefit plan liability f asset.

J>agt.'-IO ~

5 OPERATING F'IX~;I) ASSETS

Furniture ElectricalVehicles Office

Compurer-, TolalParticular, and fixtures Instutlarions equipment

--- -- --- -- I~UI)'~Cs..-",..- --- --- ........

Net clIrrying value ba,i,Year ended December 31,2016

Opening boo. value 325.60J ~-I1.53J 2.823.113 200.737 661..121 4.252.407Addiuons 837.065 153.988 9.572.81-1 62.600 57J)96 10.683.56,Depreciation charg e (65.399) (56.278) (1.112.7~8) (-Il.It)l) (~80.3()5) (1.655.901)Closing nCI boo. value 1.097.269 339.:!~3 11.283.199 222.1-16 DS.:!12 11.280.069

Gross carrying I ulue bu,i,As al December 31. 2016

("lSI 1.-120.193 861.271 15.682.883 5J7.795 2.691.081 21.193.223Accumulated dcpreciauon (322.924) (512.028) (4.399.684) (315.6-19) 2.352.86<» (7.913.154)Net boo. \ aluc 1.097.269 339.243 11.283.199 222.146 338.212 13.280.069

Net carrying' alue b:HhYear ended December 31, 20lS

Opening hook value '61. 78) 20<).432 1.683,585 I67.KIN (>sOA65 3.073.147Additions 82.170 1.554.785 73.430 437A70 2.147.855Deprecim ion charge (36.178) (50.069) (415.257) (40,5771 (42(,':; (4) (968.595)Closing net book value 325.603 241.533 2.82),113 200,TI7 661,421 4,252,407

Gross cnrrrin~ "lillie hllsi,As at Deccmher 31.2015

Cost 583.128 707.283 6, II 0,069 475.195 2.611.t)8~ 10.509.660Accumulated dcprecuuion (257.525) (-165.750) (3.286,956) (274.458) I 1 ')72.5(,4) (6.257,253)\Jel book value ~25.603 241.533 2.823.1 n 200,717 (,61,42 ) 4.252.407

Annual rate of deprecinriun ("/0) 10.,. 10°-'0 20°,. JO~iO 111:lQo

5 I Depreciauon ha' been allocated to administruuv c expenses,.,._Page - 11

5.3

I he COSIOI' fully depreciated property and equipment that are slill In use is Rs. 3.831 million(2015' Ih. ~.512 million).

I he vehicles includes un amounting to Rs. 2398 million (1015, Nil) which arc registered on theioinr name of the Company and the employees under the "Car loan depreciation policy" and aretransferable after the li\ c years 10 the employees at the net book value against rhc amount receivedtrom employ ces as per note I 7 to these financial statements

Note2016

Rupees6 Or.fJ<:RIlEI> TAX ASSET

Deferred tux asset 76.020.2656.1

6.1 Deferred tax aSSCL~arising on account of temporary differences in:

vccelcrurcd dcprecrauonProvision lor post employment benelit obhgationProvision lor medical facilities

6.~. -

13.129.6-l5 7.241.4323.814.131 3,016.665(371.184) 2H.49')- - -

(34.577)53.924.18522.130.65776.020.265

Tax rate used

Recunciliutiun of deferred hl~

Balance ;II the beginning of the ) carProvisum against employment benefits obligationl'rO"151011against medical fundOperating fixed a",ebCharged to profit and loss accountCharged to other comprehensive IncomeDeferred lax all remcasurerncm of 1)05temploymentbcncfii obhgauonBalance ;11 the end "I' the year

60 '''10 490

(712.817)

2015Rupees

60.220.-190

336.60741.567.35718.316.52660.220.-190

53 001 IS'}

10.286.)89

(3.()67.25I)60.220.490

6.3 l'he deferred tax asset recognized in the Iinancial statcmerus represents the management's bestestimate or potential benefit which is expected to be realized in future ) cars in the form or reducedtax liability ali the Company would be able 10 set ott the profits earned in those years againsttemporary di rtcrcnccs.

6.4 lhc applicable mcome tax rate lor subsequent years beyond tax year 2017 was reduced 10 JU% onaccount of changes Illude to Income Tax Ordinance 2001 through Finance Act 2015. I hercfore.deferred tax is computed 31 the rate of 30% applicable to the period when temporary differencesarc expected to be reversed/utilised,

7 RECEIV;\BLJ<: FROM ZTBL'Iote

20J6Rupee,

Holding companyUnsecured - considered good

Zarui 1aruqiati Ilank Limited (7.TBL)

Paj(e. 12

118.967.807

2015Rupees

47.989.522

Note2016

Rupees

7.1 I he aging or balances at the balance sheet date is as follows:

Not past duePast due 30 - 90 days

118.967.807

118.967.807

I.OANS ANI) ADVANCES

Unsecured - considered goodvdvunces 10.

l.mployec»Other>

8.1 1.515.815

1.515.815

2015Rupees

47.989.522

47.989.522

1.291.1861.332.0002.623.186

8.1 I hi, Includes advances provided to employees to meet business expenses and are settled as and\Ihen the expenses arc incurred

10.1 152.205.73M10.2 375.465.00 I 333.599.628

527.670.739 313.599.628

10.1.1 152.205.738

Note2016

Rupee,

') SIIOnT-TF:RM PREI'A YMF.NTS

I ill:; nsuranceVcbiclcs insurance

434.487194.195628.682

IIdd to maturityl erm deposit receipts (TOR) - Holding Company1crm deposit receipts (lDR) - Other>

10.1 Icrm <kposit receipts (TOR) - Holding COll1pan)

lam; l'araqiau Bank Limited

2015Rupees

412.05551.101

463.256

10.1.) This represents two TORs having maturity or six months each (2015: nil) and carrying interest atrbc rate 01 6.50·'. each (2015' nil) pCI' annum

Note2016

Rupees

10.2 1 erm deposit receipts (TOR) - Other>'>il... nan'" I unitedJS Ban], l.rmitedDub,u lslanuc Bank Lunued

10.2 I 1-10.092.715102.2 235.372.286102.3 _~ _

375.-165.001

I'al!t - 13

2015Rupees

103599.6~880.000.000

150.UOO.UOO333.599.628

..,.__

10.2.1 This represents three TDRs having maturity of three months each (2015: three to six months) andinterest at the rate 6.50% each (2015: 7. J 0%) per annum.

10.2.2 This represents four TDR having maturity of six to seven months (2015: three months) andcarrying interest at rates ranging from 6.80% to 6.95% (201 5: 6.55% to 6.95%) per annum.

10.2.3 This investment has been matured during the year and carried mark up at the rate 6.70% perannum.

2016 2015Note RUJlcCS Rupees

11 ACCRUED INTEREST

Term deposit receipts 6.49,),004 2,274,159Saving accounts 542.307 540.473

7.041.311 2,814,632

2016 2015Note RUJlcCS Rupees

12 OTHER RECEIVABLES

Unsecured- considered goodIncome tax recei vables 12,1 5,095,687 5,095.687Other receivables 12.2 114,976 633,241

5,210.663 5,728,928

12.1 As explained in note 21.1 (c) this represents income tax paid under protest to the laxationauthorities.

12.2 This includes an amount ofRs. 0.114 million (2015: Rs. 0.114) expenses incurred by the Companyfor establishment of Kissan Security Services (Private) l.imitcd, a related party. '1he aging of thebalance receivable is more than one year.

/~

Pugc - 14

2016Rupees

13 TAX REFUNO DUE FROM COVERNMENT

Income tax 35.156.137

2015Rupees

-13.850.748

13.1 During the )C81' IIIl IIl110unl of Rs. 8.683 million (201S: Nil) has been adjusted against the taxImoilit) of the ('ol11l'<1n)

2016 2015NHte Rupees Rupees

1-1 C \SII \'<0 BANK IlAL\:\CES

Cush at bankCurrent account 14.165 62.633Sa, mgs accounts 14.1 9.612.951 79.-153.850

9.627.316 79.516.483

14.1 Saving tlCCOU11lS CUITY mark uJl at the rates ranging fr0111 3.75% to 5.50% pCI' annum (2015: 4.S%In 6". pCI' annum) and this balance in saving accounts include lunds kept in ZTBL Ill' Rs. 5.595million 0015: R, 78.866 million).

2016RUIICC~

IS "III \I{E CAPIT \1.

15.1 Issued, subscribed nnd paid up capita!

Number of urdinaryshures of R~. 10/- each

2016 2015

=_1 (_)'cOO=O=.O=(=)O~-=10=.0;,;0=0;:.0=0_0l-ully paid in cosh IOO,()OO.OOO

10; 1.1 Percentage of hold 1011company (/;lrai Iaraqiau flank Limited) IOO~.

15.2 Authorised share cupital

2015Rupees

I00,000.000

Ihis represents 10.000.0000015: 10.000.000) ordinary shares of Rs. 10 each amounung to Rs.100.000.000 (:!O15 R~. 100.000.(00).

Note2016

RUJlees16 DEFERRED LI \IlILlTIES

(jratUll)Medical fund

2015Rupees

16.1 181.323.337 IWAR3.15016.2 73.768.856 57,239.142

256.092.193 196.722.292/L..Page - 15


16.1 Rccnnciliatiun of )::rnluir) lillhilil) recognized in thebnlance sheet

16.1.1 The amountv l'cco)::lIi/('d in the bnlunce sheet aredetermined '" 1'01111\\:

Present value 0) de Iilied Ilcllclit obligation ] 82.323..337 139.483.150Henefits due bUI 1101paid during the ) earl.iabiluy in the balance sheer 182.323.337 1)9.483.150

16.1.2 ~hl\ emeru in the liabilil) rcco)::ni./cd in the balance sheer

\1 the bcginmng of Ihe ) car 139.483.150 106.817.6-15.\mount recognized dunng the year -17..1-15.960 -I3.-1:!-I.099Bcnctits paid dunng the > car (2.029.717) ( 1.193.435)Remcasurcmcnt (gam, on obligauon (2,576,056) (9,585.159)

182,323.337 139.483,150

16.1.3 l\Iol'Cn1cnl in present value of defined benefitIIbli~:lIion'

Opening present value of defined benefit obligations 139.-183.150 106.837.645Current serl icc cost tor Ihe year 33.599.131 31.471,995Imerest <OSItor Ihe ) car 13.846.829 I 1.952.1 ()4Benefits puid during the ) ell!' (2.029,717) ( 1.193,435)Rcmcasurcmcm (guin) on obligution (2.576,056) (9.585.159)Closing. present value of defined benefit obligations 182.323.337 139.483,150

16.1.4 Remeusurement chnrgeable 10 other comprehensiveincome

Rcrneasurcmcm (g"in) \)I) defined obligation (2.576,056) (9.585.159)

16.1.:- Charl:" fur Ih~ year

Currcru -crv icc charges 33.599.131 31,471.995[merest COSIfor the 'car 13.8-16.829 11.952.1 0-1

.j7,-1-15.960 -13,.p-I.()<)<)

16.1.6 The principut uctuurinl uwumptiens !I.,cd "ere us Icllows:

I'olh)\\ ing arc a 1"'\\ important actuarial ussurnpuons used on the valuation:

Discount rate (. u,Expected rare III increase on sill,,1') (0 e)

Mortality rate

9.00°.8.00·.

Adjustedsue 2001-

2005

10.00%9.00·'.

Adjusted SI 1('2001-20(J;

Pa~c-16

16.1.7 General descr iptiun

The scheme provides for terminal benefits for all its permanent employees who attain theminimum qualifying period at varying percentages of last drawn basic salary. Ihe percentagedepends on the number of service years with the Company. Annual charge is based 011 actuarial\ aluauon carried OUl as at December 31. 2016 using the Projected Unit Credit Method.

The Company faces the following risks on account of gratuity:

Final salary risk - 'I he risk that the final salary at the time of cessation of service is greater thanwhat the Company has assumed. Since the bene lit is calculated on the final salary. the benefitamount would also increase proportionately.

Asset volatility - Most assets are invested in risk free investments i.e. Government Bonds /Ireasury bills. However. investments in equity instruments is subject to adverse rluctuaiions as aresult or change in the market pncc.

Discount rate lluctuation - The plan liabilities arc calculated using a discount rate set withreference to corporate bond yields. /\ decrease in corporate bond yields will increase planliabilities. although this will be partially offset by an increase in the value of [he current plans'

Invesuneru risks - The risk of the investment underperforming and not being sufficient .0 meet theliabilities. This risk is mitigated by closely monitoring the perf0J111SnCeof investment.

Risk of insufficiency or assets - This is managed by making regular comribution to the Fund asadvised b) the actuary

16.1.8 Sensitivity nnalysi,

The calculation of lhc deli ned benefit obligations sensitive 10 the assumption set out above. Thefollowing table summaries how the impact on the defined benefit obligation at the end of thereporting period would have increased / (decreased) as a result of a change ill the respectiveassumptions by one percent.

Increase inAssumptior;

Rupees

Decrease inAssumption

Rupees

Discount rateSalary increase

161,912,636207.961.207

207.037.561160.~49.323

16.1.9 Comparison for five years

2016 2015 2014 2013 2012

182.323.337.----------------, RupeeS----------------------

139,-183,150 l06.837.645 60.938.653 54.919,470,;It..-

Page - 17

16.1. I (J The charge in respect or defined benefit plan for the year ending December 31. 2016 is estimatedto be Rs. 47.446 million.

16.1.1 I [here arc no plan assets. therefore. disclosure in respect to plan assets required as per lAS 19"Employee Benefits" has not been made in these financial statements.

2016Rupees

2015Rupees

16.2 Medical fund

Movement in the fund recognized in the balance sheet

At the beginni ng of the yearRecognized during the yearPayments tIuri ng the yearBa lance at the end of the year

57.239.142 43.713.88917.085,392 14.111,225

(555.678) _-:-::!-t.;;S8:;;5:,-,,9-:-71:;:.<.)

73.768.856 57,239,142

16.2.1 Ccneral description

This represents amount set aside far employees' hospitalization expenses. This unfunded amount isutilized agains: the reimbursement of employees' hospitalization expenses. Contribution to thisfund is made at the rate of Rs. 400 per employee per month on proportionate time basis.

2016 2015Note Rupees Rupees

17 I'A YABLE AGAINST CAR LOANOEPRECIATION l'OLlCY

Secured - against vehiclesAgainst CLDP 17.1 2J98.S00

17.1 l'his represents amount received being the difference of price paid by employees against purchaseor \ chicles under cal' loan depreciation policy (CLDP) above their eligible entitlement and will beadjusted at the time of transfer of vehicle to the employees. The vehicles are registered on the jointname of the Company and the employees and transferable after the five years to the employees atnet book value.

Note2016

Rupees2015

Rupees

18 TRAOI!: ANO OTHER PAYAIlLES

Page - 18

3.629.278 2.945.7674.239.828 1.943.621

18.1 6,870,007 5,619,08014.739.113 10,508.468

5.019,197 5.212.4801,850,810 406.6006.870.007 5,6J9,080

,,;.,_

Sundry !U1dtrade creditorsTax deducted payableOther payables

18.1 Other parablesAccrued expensesSports expenses payable

Note2016

Rupees2015

Rupees19 SECURITY DF.l'OSITS

Contractors securities 19.1 225.002 369.002

19. I This represents security deposits received from contractors against service agreements executedwith contractors.


20 TAXATION-NET

Advance income tax 16.963,436 45.951.508Less: Provision for taxation

Current year 67.161.123 54.646.11_91Prior year (11,057)

67.150.066 54.646,119(50.186.630) (8.694.611)

21 CONTTNGENCIES AND COMMITMENTS

21.1 Contingencies

a) The Officer Inland Revenue LTU. Islamabad has initiated proceedings against the Company underSection 161/205 of the IJ1COmeTax Ordinance. 2001 for the Tax Year 2009 and 2011. TheCompany has submitted all the documentary evidences yet. the case is pending for adjudication.No provision has been made in these accounts as thc management is confident that the decision ofthe case will be decided in the favor of the Company.

The Officer Inland Revenue LTU. Islamabad initiated proceedings against the Company underSection 1611205 of the Income Tax Ordinance. 200 I tOI' the financial year ended December 31,2013 i.e. Tax Year 2014 and created a demand of Rs. 1.182 million. The Company liIed an appealbefore the Commissioner Inland Revenuef.Appeals), The Commissioner passed an Order againstthe Company and maintained the assessment by the Officer Inland Revenue. Now, the Companyhas filed an appeal to the Appellate Tribunal Inland Revenue. Islamabad and stay against therecovery of the said demand till the decision of Appeal. The Appellate tribunal granted the stay,however, the hearing date for appeal against the decision of Commissioner Appeals has been to befixed. No provision has been made in these financial statements as the management is confidentthat the decision or the case will be decided in the favor of the Company.

b)

c) The Officer Inland Revenue, Large Taxpayers Unit. Islamabad amended the assessment of LheCompany under section 122(5A) for Ole financial year ended December 31. 2009 i.e. Tax Year2010 and created a demand of Rs. 5.095 million. Being aggrieved. the Company liled an appealbefore the Commissioner Inland Revenue (Appeals). The Commissioner passed an Ordcr againstOle Company and maintained the assessment framed by the Officer Inland Revenue. The taxamount or Rs. 5.095 million has been deposited with the Tax Authorities and at the same time theCompany preferred an appeal before the Appellate Tribunal Inland Revenue. Islamabad undersection 13 I of the Income Tax Ordinance, 200 I. Appellate Tribunal Revenue Islamabad passedorder against the Company and maintained! upheld the order of the commissioner (Appeals). TheCompany had filed an application for rectification of mistake under section 221 of the Ordinanceto the Appellate Tribunal Revenue Islamabad, which passed order against 1]1CCompany andmaintained/upheld the order already passed.

I'nge _ 19

Now. tile Company has filed a suit against the Large Taxpayer's Unit Islamabad in the IIonourableHigh Court Islamabad which has not been decided yet. No provision has been made in theseaccounts as the management is confident that the decision of the case will be decided in the favourof the Company.

d) The Company is Iacing claims launched in various Courts filed by the employees. pertaining toservice promotion, dismissal [rom service and entry into company's premises and others. Themailers are still pending before the Courts. As no amount is involved in most or the cases.therefore. the liabitity is 110taccurately quantifiable (2015: same as mentioned).

c) There was no other contingent liability of the company as at the balance sheet date (2015: Nil).

21.2 Commitment.

The company has no commitments as at the balance sheet dale (~OI5: Nil).

Note2016

Rupees2015

Rupees22 REVENUE

Service chargesOtherLess: Sales tax on services

12.112.2

189.863,90 I 128,517,8111.742.381 1.484.094

(26.187,908) ( 11.043,665)- -16),418.374936,820,566

118.9)8240738,210,976Add: Expcndirurc reimbursed during the year 22.3

LI 02.238.940 857,169.216

12.1 Service chargesHuman resource services 178,783.650 124.093,684Janitorial services 728554 450.927Sports activit) 9.838,684 3,372,220Security services 157.633 487.301Photocopies 255,380 113.679

189.863.90 I 128,517,81 I

12.2 OthersRental income 1,630580 1,473,09-1Miscellaneous income 111.801 11.000

1.742.381 1.484,094

22.3 Expenditure reimbursedl Iuman resource services 842.-101.942 671.852.708Janitorial services 6,280.653 4.138,800Sports activities 84.816.225 56.631.064Photocopies 1, I00.779 1.024,493Security services 2.220.967 4563.91 I

936,820566 738,210.976

Page - 20 /til-

,.

22.4 The Company has revised its agreement with Zarai Taraqiati Bank Limited. a holding company.effective from July O}, 2015 the holding company will reimburse all expenses plus servicescharges as per agreement.

2016 20lSNote Rupees Rupees

23 COST OF SERVICES

Human resource services 23.1 842.401.942 671.852,70SPhotocopies [,[00.779 1.024.493Janitorial expenses 6.280,653 4.138.800Sports activities 84.816.225 56.631,064Security ex penses 2,220,967 4.563.911Expenses on hostel [,017.381 622.757

937.837.947 738.833,733

23. I 1luman resource services include Rs. 41.709 mi Ilion (2015: 40.549 mill ion) in respect of staffretirement benefits.

24 AOMINISTRAT[VE EXPENSES

Salaries. wages and other benefitsRepair and maintenanceTravel! ing and conveyanceRent, rates and taxesPostage, telephone and te legramPrinting, stationery and advertisement materialFcc and meeting expensesInsuranceLegal and professional chargesAuditors' remunerationFuel expensesEnrcnainment expensesDepreciationExpenses on I'M radio stationMiscellaneous expenses

Note

24.1

24.2

5

201(,Rupees

2015Rupees

28,951,915 24.670,69896.287 71.564

[,288.944 327.8763.095,856 2.402.()SS

5n.S55 227,667579.169 798.135926.539 832,716153.317 122,353

1,315.528 576.[O()278,300 253.000141,468 46.800191.611 79.627

1,655.90 I 968,59510.000 10.00()

95039,207.690 31.388.[66

24. I Salaries, wages and other benefits include Rs, 2.353 million (2015: 2.875 million) in respect ofstaff retirement benefits.

RI--

Page - 21


24.2 Auditors' remunerationAnnual audit Ice 151.250 137,500Half yearly and quarterly review 78.650 71.500Other services 48,4()() 44.()OO

278,300 253.0002S OTHER INCOM~E

Income from financial assetsInterest income from investments 2&.222.355 26.206.608Interest on bank deposits 2.106.061 1.716.241

30.328.416 27,9?2.85026 PROVISION FOI~ TAXATION

CU1Tent 67.161.123 54.646.119Prior (11.057) ( 16.882)Deferred ( 16,572.592) II0,286.589)

50.577,474 44.342.648

26.1 Numerical reconciliation between the applicable tax rate and average effective lax rate is asfollows:

2tll6c~,

2015%

Average effecti ve lax rateTemporary differenceOthers

Applicable lax rate

OA3«(J.I I )(0.0 I)0.31

0.63(0.31 )0.002

O.3?

26.2 The applicable income lax rate was reduced from 32% to 31% lor the year on account of thechanges made to Income Tax Ordinance 2001 through Finance Act. 2016.

27 EARNING PER SHARE - Basic and diluted

Profit for tile yearBasic:Weighted average ordinary shares (Number)Earning per share (Rupees)

27.1 There is no dilutivc effect on the basic earnings pCI' share. as the C0111pany has 110t issued 011)instruments carrying option which would have any impact 011 earnings pCI' share when exercised.

211 1(, 2UI:-Rupees Rupees

104,909,220 70,487.489

10,000,000 10,000,000IOA9 7.05

Note2t1l6

RUI1CCS

2015f-t u 1)"~cS

28 CASH AND CASH EQUIVALENTS

Cash and bank balancesShort term investments

1410

9.627.316527,67(),739

79.516.4833J3.599.6:!S

Pagc - 22537.:;98,055 413.116.111

29 REMLNEltATIO'l OF CHmF EXECUTIVE, DIRECT()I~S AND EXFCllTIVES

a) The aggn:~Jle amount charged In the financial staremernv lor remuneranon. mcluding nil benefits III (,hlc! t.vecurive. Director- andExccuuve ot ihe Company ,.. n, folio",'

2016 21115ChicI'

Ilir<ctors E\ccuU, es TUlnl Chiefllirectors Execuuves I utul

Execunve Executive( I{1Ipees )

Managerial rcmunerauon

Bonus

61.395.170

2.284.624

4.669.805

415.808

Staff renrernem benefits

Fee soe.oooUtilhies

Others

Toml

B5.191 971.1138

5.-120.804 500.000 64.650.832

72

66.1164.'>75

2.71)0.432

SOO.DOIl

1.30('.22')

7'1

2.787.161

24&.472

37.1 S1.145

1.799.717

39.'I3K..l06

2.048.189

470.000

7M.I72

41.216.667

62

h) The Chicl I xecutive he, been provided ";Ih self maintained car under Cur I onn Depreciation Policy li.r offu.ial cum private US" and otherbencfitx a .. per his terms of employment.

c) The aggregate amount charged in the finandal statements for remuneration. Including all bene Iii' 10 Executive directors and \Jon cvecutivedirectors of the Compan} "'" follows:

470.000

264.921 495.25 I

2016 2015Executive NOli Executive TollIl

Executive Non Exceutive TotalDirectors Directors Directors J)ireclol'l>

(Rupees)

\.1anagcr",1 rcmunerauon 5.420.804 5(1) .1100

Number 01 persons

5.92().K04

39.446.113

7

J.770.554

3.300554 470.000

8

d) No remunerauon I bcnefitv "ere paid 10 the Non-Execuuve Directors other than the 4 independent Directnrv dunng the current )car andduring preceding financial years.

H'-I'alle - 23

7 54

7

3.300,554 470.000

30 FINANCIAL ASSETS ANO LIABILITIES

The Company's exposure to interest rate risk On its financial assets and liabilities arc summarized as follows:2016

Interest/mark up bearing NOI interest IDescription Total

Maturity Maturitymark "11up 10 one nfrcr 011t' Sub-total

year year be. dugu ces

Financial assetsLoans lind receivables and UTM at amortised costReceivable 118,967,807 118.967,807Accrued interest 7,041,)11 7,041,)11Short term investments 527.670.739 527.670.739 527,670,739Other receivables 114,976 114,976Cash and bank balances 9,627,)16 9,612,951 9,612,951 14,365

663.422.149 537.283.690 537.283.690 126.138,459Financial liabilitiesFinancial liabilities carried at amortised costDeferred liabilities 256.092,193 256.092,193Trade and other payablcs 10.499,285 10.499,285Security deposits 225,002 225,002

266.816,-180 266.816,480On halaucc sheet gap 396.605.669 537.283.690 537.283.690 ( 140.678,0212Off Balance sheet ItemsFinancial commitments:

Totol Cnp 396.605,669 537,283,690 537,283.690 (140,678,021 )

Not interest IDescription Total Mallll1ty

mark upup to one after nne Sub-total~ear year bcnring

I(u leesLO,lnS and receivables lind HTM OIl amortised costReceivable 47.989.522 ~7.989,522Short term investments 333.599.628 333.599.628 333.599.628Accrued interest 2.814,632 2.81 '1.632Other receivables 633,241 633.241Cash and bank balances 79.516.483 7'>.4S3.8S() 79,453.850 62.633

464.553,506 ~ 13,053A78 ·113.053,478 51.500.028Financial liabilitiesFinnnciul Hahilities cnrrlcd nt amortiseu costDeferred liabilities 196,722,292 196.722.292Trade and other payables 8.5M,8~7 8.56'1.847Security deposits 369.002 369.002

20S.656,141 205,656,14 IOn balance sheet gap 258,897.365 413.053A78 413,053.478 (154,156.113)Ofr Balance sheet ItemsFinancial cornmiunerus:

Total Cal' 258.897.365 413.053,478 413,053,478 (154,156, II J)

Effective interest rates are mentioned in the respective notes to the financial statements.Page - 24 .e.-

31 FI:-'/\ '1CIAL RISK MAN \GE;\IENT OB.IECTIV(!o. ANI) I'OLICIES

31.1 1 he Company's object" c in managing risks is the creauon and protection of share holders' value.R,,~ is inherent in the Comp[I11)' s activities. but it i, managed through a process of ongoingidentification, measurement lind monitoring. subject to risk limits and other controls. I he process ofrisk management is critical to the Company's continuing profitability. The Company is exposed tocredit risk. liquidity ris~ llllli market risk (which includes interest rate risk and price risk) arisingfrom the financial instruments it holds.

The Company finances it~ operations through equity and management of working capital with aview to maintaining an appropriate mix between various sources of finance to minimize risk.

31.2 Credit risk

Credit risk represents the accounting loss that would be recognized at the reporting dare if counterparties fail to pertorrn us contracted and arises principally from trade and other receivables. TheCompany's policy is to enter into financial contracts with reputable counter parties in accordancewith the internal guidelines and regulatory requirements.

Evposure to credit risk

l'he carrying amounts of the financial assets represent the maximum credit exposures before anycredit enhancements. The carrying amounts of financial assets exposed to credit risk at reponingdale arc as under:


Receivable from 7TBL 118.967.807 47.989.522Short-term investments 527.670.739 333.599.628Other recei vables 11-1.976 633.241Accrued mterest 7.0-11.311 2.81-1.632Cash and hank balances 9.6')7.316 79,516.-183

663.-122.149 46-1.553.506

To manage exposure to credit risk in respect of trade receivables, management performs creditreviews taking into account the customer's linancial position. past experience and other factors.Where considered necessary. advance payments are obtamed lrom certain parties.

The exposure to banks IS managed b) dealing \\ ith \ ariet) of major banks and monitoring exposurelimits on continuous basis.

The IIg;ng of trade debts lit the reporting date is:

2016Rupee.

201:;Rupees

t\ot past duePast due 1-30 daysPast due 30-90 days

I18.967.807 47.98l).5~2

I 18.967.807 -17.989.5~?I'''gt' - 25

Cunecntrarion or credit rhl.

Conccrnrurion of credit ris], anses "hen a number of counter panics are engaged in similar businessacu. iues or have Similar economic features that would cause their abilities to mCCI contractualobligation 10 be similarly ulfccrcd b) the changes 111 economic. political or other conditions. TheCompany believes lhui II is not exposed to major concerurmion of credit risk.

Impaired assets

During the year no asset, hal e been Impaired.

31.3 Liquidity risk

I iquidity ris], is the risk thut the Company will encounter difficulty in meeting Its linancialobhgations <IS they rail due. lhe Company's approach to managing liquidity is 10 ensure. us far aspossible. that it will al\\3) shave sufficient liquidity to meet its liabilities when due. under bothnormal and stress conditions. II ithour incurring unacceptable losses or risking damage 10 theCompany's reputation. Ihe tollowmg are the contractual rnaruriues of financial Iiabiliues, includinginterest payments and c\clutling the impact of netting agreements. if any:

Carr)in~ Conlr9CIU(l1

;\Inollnt CashOne j ear

or It:"\\

One 10

0\0

flo\\'). years..---------~---- ......•....- ....-..-I~UI)(·e!!o------..--- ..- ......--------

20t6

Deterred liabilities 2<6.0n.IYJ 2~6.091.193 700.000

t r.•de oIlld o tber pa) .bt"" t~.73Q.1 t3 t~.739.1 tJ 14,73Q.t 13

"'=\:\JMl~ deposHs ~:!S.OO2 225.002 12S.00~270.83 t .300 270.831,306 15.·139.1tJ

21)15I)ch,'ncd hub,hlie!'o 196.722.292 1')6.122.191 ?OO.OOO

J rade und other payables I(1.50K.468 10.508.468 to.508A6K\t'!,:Uflt)' J\."f')05ILIO 369.002 369.002 369.002

207.230.760 207230,760 11.208.~6K

31.4 'lurkct risk

255.392.193

255.392.193

196.022.292

196.022.292

i\lt1Tk~t risk is the risk that changes in market price. such as foreign exchange rates. interest ratesand equity prices "ill effect the Company's income or the value of its holdings of financialinstruments

(i) Curreucyrisk

I 'oreign currency nsk IS thc rISk that the value of financial asset or a liability 11111 fluctuate due to achange in foreign exchange rates It arises Illainl~ where receivables and payables cxrst due to

rransacuons entered into in toreign currencies.Jt.-P:lgc • 26

Presently the Company is not exposed to foreign currency risk.

(ii) Interest rate risk

Imcrcsi rate risk is the risk that the tail' value or future cash tlows or a financial instrument willlluctuatc because of changes in market interest rates. Majority of the interest rate exposure arisesfrom short-term investments.

lnterest rate of the Company's financial assets and financial liabilities as at December 31. 2016 canbe evaluated from the following schedule:

2016Rupees

2015Rupees

At amortized costFinancial assets with fixed rates

Short-term investmentsSaving accounts

527.670.7399.612,951

333.599.62879.453.850

537.283.690 413.053.478

The following rates have been applied:

Reporting dare rate2016 2015

Short -term investmentsSav ing accounts

Percentage6.55 to 6.953.75 to 5.50

Percentage6.55 to 7.10

-1.5 to 6

The Company is not exposed to variable interest rate risk as the Company does not hold anyvariable interest bearing instrument as at the balance sheet date. therefore, no sensitivity analysishas been presented.

(iii) Other price risk

Price risk is the risk thai the fair value or future cash flows of a financial instrument will tluctuatebecause of changes in market prices (other than those arising from interest rate risk or currencyrisk). whether those changes are caused by factors specific to the individual financial instrument orits issuer. or factors affecting all similar financial instruments traded in the market.

At the year end the Company is not exposed to price risk since there nrc 110 financial instrumentswhose fair value or future cash flows will fluctuate because of changes in market prices.

32 FAIR VALUE MF:ASUREMF:NT

Pair value is the amount for which an asset could be exchanged. or a liability settled. betweenknowledgeable willing parties in an arms length transaction.

The carrying values of all financial assets and liabilities reflected in the financial statementsapproximate their lair values. Fair value is determined on the basis of objective evidence al eachreporting dare.

Page - 27

lhe management assessed that the cash and bank balances and short-term deposits, traderecervablcs. trade and other payable. approximate their carry mg amOUI1l, largely due 10 the shortterm rnaturirics of these instruments.

lntemational financial Reporting Standard (lFRS) 13. "I,air Value Measurement" requires the Fund10 classify fair value measurements USI11!; a fair value hierarchy Ihat reflects the significance of theinputs used in ma~mg the measurements, The fair value hierarchy has the following levels:

Fuir value hienlrch)

I he Compall) using following hierarchy for determining and disclosing the lair value of financialinstruments b) valuation techniques.

1e' el I' quoted (unudjustablc) prices in acuvc market 101' identical assets 01' liabil nics.

l.evel 2; Other tcchruqucs Iilr which nil inputs which have a significaru effect on the recorded fairvalue arc observahles either. directly III indirectly

l.cv cl 3: techniques which usc inputs that h8' en significant effect on the recorded tair value that areIll" based on observablcs market data.

I ransfer betw een Ic, cl of the fair value hierarch) are recognized .u the end of the reponing periodduring which the changes have occurred.

As at December 31. 2016 and December 31. 2015 the Company did not hold an) financialinstruments carried at tair value.

33 C \PITAL \1..\ '"GEMEYI

I he Board's policy Is to maintain II strong capital base so as to maintain investor, creditor andmarket confidence and to sustain future development of the business. The Board of Directorsmonuors the return on capual. which the Company defines as nel profit after taxation div ided bytotal shareholders' equity. rhe Board of Directors also monitors the level or dividend to ordinaryshareholders. There \l ere no changes III the Company's approach to capital management during theyear and the Company is not subject to externally imposed capital requirements.

3.t TRA~S.\C"'IONS WITII RELATF.D 1'..\RTlES

I he related panic, or the Com pan) comprise of holding company. directors and ~C) managementpersonnel I ransacuons with related parties during the period arc as follows:

2016Rupees

2015Rupee,

Relation with rhe NalUre (If rransactiensCompany

Holding cornpanvtlarai I araqiatiBank I imucd/ I BU

Sen ices chargesOthersRent. accounting and communicntioncharges paidExpenses reimbursed during the lear

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189.863.901 128.404.1321.138.171

7.012.587(936.820.566)

7.502.451737.186..183

/.)I~

2016Rupees

2015Rupees

Relation with the Nature of transactionsCornnanv

Holding company(Zarai TaraqiatiBlink LimitedLTBL)

Short-term investment made (TDRs)Short-term investment enchasedInterest income

264.950.738(112.745,000)

5.056.825

225,000.000(225,000,000)

1.215.000

Year end balances

Receivable balanceBank accounts maintained

Current accountSaving accounts

118.967.807 47,989,522

14.3655.594.991

62.63378.866.278

There are no transactions with key management personnel other than those which are under theirterms of employment.

35 NUMRIi:R OF EMPLOYEES

The number of employees as at year end was 4194 (2015: 3.583) and average number or employeesduring U1e year \VIIS 3889 (2015: 3.028).

36 CORRESPONDING FIGURES

Corresponding ligures have been rearranged and reclassified. wherever necessary for the purposesof comparison and for better presentation. However. no significant reclassitication has been madeduring the year except security deposits amounting to Rs. 0.369 million which has been reclassifiedfrom trade and other payables to security deposits on the face of balance sheet for beuerpresentation.

37 DATE OF AUTIIORIZATION

These financial statements are authorized for issue by the Board of Directors of the Company on

38 GENERAL

Figures have been rounded off to the nearest rupee.,.:h-

q.;.", .J~_~_.%:CHAIRMAN

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annual report 2016 -...

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