SAUDI PAK REAL ESTATE LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 20182 pwe AFFERGUSON&CO. February 7, 2019 760 The Board of Directors Saudi Pak Real Estate Limited Islamabad Dear Sirs, AUDIT OF FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 We enclose five copies of the financial statements of Saudi Pak Real Estate Limited (the Company) for the year ended December 31, 2018 along with aur report thereon initialled by us for identification purposes. We shall be pleased to sign our report in present or amended form after: ii) iii) yy vy) the financial statements have been approved by the Board and signed by the Chief Executive Officer and atleast one director as authorised by the Board in this behalf we have received Board's specific approval for items listed in Annexure | to this letter we have reviewed the Directors’ Report to be presented to the Board along with the audited financial statements, we have received details of ‘other information’ (as defined in paragraph 12 (c) of International Standard on Auditing 720 - Revised) for our related consideration thereof along with the audited financial statements; and we have received a representation letter on the lines of the enclosed draft duly signed by the Chief Executive Officer and Chief Financial Officer of tie Gomoany. 2, Fifth Schedule to the Companies Act, 2017 The enclosed financial statements for the year ended December 31, 2018 are the first set of financial statements prepared in accordance with the requirements of the fifth schedule to the Companies Act, 2017 (the Act). The disclosure requirements contained in the fifth schedule have been revised, resulting in the: elimination of duplicative disclosures with the International Financial Reporting Standards (IFRSs) disclosure requirements; and incorporation of significant additional disclosures. ALE, PERCUSON & CO., Chorteret! Aecountonts, a member firm ofthe Pue€ network PLA Building, 3rd Floor, 40 Bhw Area, BacbubHag Road, P.O. Bas Fel 402 (5002 Islamabad-jqu0u. Pokisian D024, 22UbIT: = wlew,pwec.eony/pks 457-60/ 26043 4537: Fas 162 ($1) = KARACHI® LAHORE * ISLAMABAD- pwe AF FERGUSON&CO. The disclosure requirements outlined in the fifth schedule are in addition to the disclosure requirements prescribed in IFRSs, Therefore. duplicative disclosures have been eliminated. The impact of the above changes and other relevant changes have been incorporated in the Company's enclosed financial statements. . Revision in the format of the audit report The Securities and Exchange Commission of Pakistan (SECP) has issued Auditors (Reporting Obligations) Regulations, 2018 vide SRO 558(I)/2018 dated 26 April, 2018 through which the revised formats of the auditor's reports have been specified. Accordingly, our draft report to the members of the Company complies with the revised format as specified in the regulations. 4. Receivable from National Accountability Bureau As reflected in note 13 to the financial statements, balance of Rs 51.112 million is due from National Accountability Bureau (NAB) as at December 31, 2018 in respect of recoveries from a defaulted borrower on behalf of the Company. The balance represents the amount retained by NAB in excess of the commission amount agreed with NAB. The Company's management has sot carried any provision against this balance as they are actively pursuing the matter with NAB and Ministry of Finance and are confident of full recovery. 8. We wish to place on record our appreciation of the cooperation and courtesy extended tous by all concerned during the course of our audit, Yours truly wv tiem encl2 pwe AF-FERGUSON&.CO. Annexure I SAUDI PAK REAL ESTATE LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 List of items requiring the Board’s specific approval as referred to in our letter 760 dated February 7, 2018: Rupees i Additions to Property and Equipment during the year ~ at cost 3,509,166 i, Property and Equipment disposed during the year having cost of Rs 4,900,128 and written down value of Rs 1,670,482 for 2,227,500 ii Short term investments purchased during the year 188,379,908 wv. Remuneration of directors, chief executive and executive referred ts in note 29 of the accompanying financial statements v Transactions with related parties referred to in note 30 of the accompanying financial statementsa pwe AF-FERGUSON&CO. INDEPENDENT AUDITOR'S REPORT To the Members of Saudi Pak Real Estate Limited Report on the Audit of the Financial Statements Opinion We have audited the annexed financial statements of Saudi Pak Real Estate Limited (the Company), which comprise the statement of financial position as at December 31, 2018, and the statement of profit or loss, statement of comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including @ summary of significant accounting policies and other explanatory information, and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of the aut In our opinion and to the best of our information and according to the explanations given to us, the statement of financial position, statement of profit or loss, statement of comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan and give the information required by the Companies Act. 2017 (XIX of 2017). in the manner 80 required and respectively give a true and fair view of the state of the Company's affairs as at December 31, 2018 and of the profit or loss, the comprehensive income. the changes in equity and its cash flows for the year then ended. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Information Other than the Financial Statements and Auditor's Report Thereon Management is responsible for the other information. The other information obtained at the date of this auditor's report is information included in the director's report, but does not include the financial statements of the Company and our auditor's report thereon, Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to [L be materially misstated. A. FERGUSON & CO, Chorleredt Aceonmtents. 0 meander firm ofthe Pret ne PIA Building, grd Moor, 49 Blue Area, Fisiinu-ddeg Row, ?.0. Box Tel: 492 (51) 2273437-60/2604y3.4-37¢ Buk: #98 (54) 2877024. 22004735 « weer pure comp work 1, Fslomabenl-gg002, Pakistea = KARACHI* LAHORE * ISLA’ eana. pwe AF-FERGUSONE&CO. If based on the work we have performed, on other information obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard Responsibilities of Management and Board of Directors for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting and reporting standards as applicable in Pakistan and the requirements of the Companies Act, 2017(XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. in preparing the financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters reiated to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic altemative but to do so Board of directors are responsible for overseeing the Company's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high ievel of assurance but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: + identify and assess the risks of material misstatement of the financial statements ‘whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resuiting from error, as fraud may involve collusion. forgery. intentional omissions, misrepresentations, or the override of internal control. ‘+ Obtain an understanding of internal controt relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. + Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management + Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty Vvpwe A‘F-FERGUSON&CO. exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material unceriainty exists. we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate. to modify our opinion Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern + Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and ‘whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Report on Other Legal and Regulatory Requirements Based on our audit, we further report that in our opinion 1a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017) b} the statement of financial position, the statement of profit or loss. the statement of comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns: ¢) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company's business, and 4d) no Zakat was deductivie at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), The engagement partner on the audit resulting in this independent auditor's report is 8. Haider Abbas Chartered Accountants, Islamabad Date: February 12, 2019SAUDI PAK REAL ESTATE LIMITED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2018 ASSETS Non-current assets Property and equipment Investment properties Security deposit Deferred tax asset Current assets Development properties Advances and prepayments Other receivables Tax refundable - net Short term investments Accrued interest Cash and bank balances Total assets EQUITY AND LIABILITIES Share capital and reserves Authorised share capital 100,000,000 ( 2017: 50,000,000) ordinary shares of Rs 10 each Issued, subscribed and paid-up capital 50,000,000 (2017: 50,000,000) ordinary shares of Rs 17 each Unappropniated profit Non-current liabilities Staff defined benefit obligation - net Long term finance Current liabilities Accrued and other liabilities Advances from customers Current portion of long term finance Total equity and liabilitios Contingencies and commitments ‘The annexed not Chief Executive Officer Note u 12 13, 14 15 16 a7 7 18 19 v7 20 fom 1 to 36 form an integral part of these financial statemet 2018 4.994.091 4,941,509 179,408,000 154,705,500 626,400 401,960 785.028.4901 ~ 160,048,969 213,625,822 |[ 246, 160,698 1,620,608 9,552,028 51,172,187 || 51,246,477 | 6,657,725 2,103,043 | 266,321,549 165.751.935 | 97.965, 32,869 | 33,644,409 ||_ 162,237,583 | 573,080,235 637,084,633 6 1,000,000,000_ ___ 509,000,000 500,000,000 500,000,000 180,001,620 __ 178,152,024 680,001,620 878 152,024 63.976 =| |___ 25,000,000 ||__75,000,000 | 25,063,978 _75.000.000 7,855,800 2,053,014] 1,787,500 | 91,167.92 ||_26.140,164 53,043,130 43,981,578 758,108,726. __797 133,602 Mant) DirectorSAUDI PAK REAL ESTATE LIMITED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED DECEMBER 31, 2018 Note Revenue 21 54,625,000 128,175,000 Cost of sales 22 (44,862,604) (78,417,584) Gross profit 9,762,396 49,757,416 Administrative expenses 23 (39,806,315) (32,283,595) Marketing and selling expense 24 (73,040) (881,200) Operating profit (80,116.959) ~~ 16,592,621 Changes in fair value of investment properties 20,239,077 4.901.550 Finance cost (8,452,212) (5,248,658) Other income 28 22,288,302 18,986,389 Profit before taxation 3,958,208 36,231,902 Provision for taxation - current 26 1,852,207) ___(5,650.490) Profit after taxation 2,106,001 29,58: The annexed notes from 1 to 36 form an integral part of these financial statements, a ~< 7 Chief Executive Officer DirectorSAUDI PAK REAL ESTATE LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2018 2018 2017 Rupees ~ Profit after taxation for the year 2.106001 29,581,412 Other comprehensive income Items that will not be reclassified to profit and loss: Remeasurement loss on staff defined benefit plan 27 (256,405) (193,682) Total comprehensive income for the year 1,849,596 _ 29,387,730 The annexed notes from 1 to 36 form an integral part of these financiai statements. at Mh! Chief Executive Officer DirectorSAUDI PAK REAL ESTATE LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2018 Balance as at January 1, 2017 Total comprehensive income for the year Profit after tax for the year Other comprehensive loss Transactions with owners Dividend paid during the year Balance as at December 31, 2017 Balance as at January 1, 2018 Total comprehensive income for the year Profit after tax for the year Other comprehensive loss Balance as at December 31, 2018 Share capital Unappropriated Total profit Rupees 500,000,000 173,764,284 673,764,294 29,581 412 29.581 412 - (193.682) (193,682) - 29,387,730 29,387,730 - (25,000,000) __(25,000.000) 500,000,000 _ 178,152,024 __ 678,152,024 500,000,000 178,152,024 678,152,024 - 2,106,001 2,106,001 | (256.405) (256.405)} - 7,849,596 7,649,596 500.000,000_ __180.007-620_ __680,007,620 The annexed notes from 1 to 36 form an integral part of these financial statements MwA! Chief Executive Officer Director‘SAUDI PAK REAL ESTATE LIMITED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 2018 2017 Note Rupees CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 3,998,208 9,231,902 Adjustments: Depreciation 41,786,102 2,142,747 Gain on sale of property and equipment (657.018) : Charge for staff retirement benefit, 660,750 983.234 Other receivables written off 99,529 Gain on revaluation of invesiment properties, (20,239.07) (4,901,550) Interest income on bank deposits (15,703,521) (14,920,315) Gain on dealing in mutual funds - realised (4.677.243) (2,991.71) Gain on dealing in mutual funds - unrealised (1,073,903) Interest income on letter of placement (57.534) - Interest income on term deposit certificate (372,192) Interest income on tills (893.091), : Finance cost 8.452.212 $248,658 i27,642875) 19,319,002 Changes in working capital (increase) in security deposits (224,480) (123.680) Decrease / (increase) in development properties 32,534,876 | | (116,171,632) Decrease / {increase} in advances and prepayments 7,931,420 (1,028,115 Decrease / (increase) in other recewables - 110.57. 614 (Decrease) ! increase in accrued and other liabilities ¢198,108)] | (7.133.351) (Decrease) / increase in advances from customers 15,787,500), |__ (1,587.00) 24.256,251 (9.446.164 Cash (used in) / generated from operations. (3.286 624) Paid to staff defines benefit plan (818,388) (807,636) Interest paid (8.408,058)| | 4,108,494) Income tax paid 6.406,889)} |__(9,058'20%) 115.630.332) 74.337) Net cash used in operating activities (18.916,956) (4,107,493) CASH FLOWS FROM INVESTING ACTIVITIES _ ee Adaitlons of property and equipment (5.509 768) (536,366) Proceeds from disposal of property and equipment 2.227.500 Proceeds from sale of investments 97.871.656 | | 234,812,925 Adaition to investment properties (4,463,423)| | (9.017,480)), Interest received on bank deposits 16.638.425|] 14.985.696 Interest received on letter of placement 57.634 Interest received on term denosit certificate 972,192 Interest received on t-bi 893,091 - Investments in mutual funds (5,000,000)) |_(171,997.576) Net cash inflow from investing activities 704,087,809 68,290,629 ‘CASH FLOWS FROM FINANCING ACTIVITIES Long term financing 725,000,000] [100,000,000 Dividend paid - (25,000,000) Net cash (outflow) inflow from financing activities (25,000,000) —_ 75,000,000. Net increase in cash and cash equivalents 80,170,853 ~ 139,189,136 Cash and cash equivalents at beginning of the year 239,795,105 __ 100,605,969 Cash and cash equivalents at end of the year 33 [299.965.958° 239.795. 105 The annexed notes from 1 to 36 form an integral par of these financial statements. a. Chief Executive Officer DirectorSAUDI PAK REAL ESTATE LIMITED NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2018 1. 3.2 STATUS AND NATURE OF BUSINESS Saudi Pak Real Estate Limited (the Company), @ wholly owned subsidiary of Saudi Pak Industrial and Agricultural Investment Company Limited, was incorporated in Pakistan as an unlisted public limited company on November 14, 2006 under the repealed Companies Ordinance, 1984 (now the Companies Act, 2017). The principal business of the Company is investment in properties (both for investment and development purposes), property management services, investment in joint ventures and other related services. The registered office of the Company is situated at Saudi Pak Tower, 61-A, Jinnah Avenue, Islamabad STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of - Intemational Financial Reporting Standards (IFRS Standards) issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017: and Provisions of and directives issued under the Companies Act, 2017 Where provisions of and directives issued under the Companies Act, 2017 differ from the IFRS Standards, the provisions of and directives issued under the Companies Act, 2017 have been followed ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS The Fifth Schedule to the Companies Act, 2017 (the Act) became applicable to the Company for the first time for the preparation of these financial statements, The Act (including is fifth schedule) forms an integral part of the statutory financial reporting framework applicable to the Company and amongst others, prescribes the nature and content of disclosures in relation to various elements of the financial statements. The Act has also brought certain changes with regard to preparation and presentation of annual and interim financial statements of the Company. These changes include change in nomenclature of primary financial statements. Further. the disclosure requirements contained in the fifth schedule to the Act have been revised, resulting in the: - _ elimination of duplicative disclosures with the IFRS disclosure requirements; and - incorporation of significant additional disclosures Significant additional disclosures and changes to the existing disclosures as a result of this change are stated in notes 2, 17, 23.2, 29. 30 & 35 Standards, amendments and interpretations to existing standards that are not yet effective Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Company: Effective date (annual reporting periods beginning on or after) IFRS Financial Instruments (Amendments) July 1, 2018 IFRS 15 Revenue from Contracts with Customers July 1, 2078 IFRS 16 Leases January 1, 2019 IAS 12 Income Taxes (Amendments) January 1, 2019 IAS 19 Employee Benefits (Amendments) January 7, 2019 'FRIC 23. Uncertainty over Income Tax Treatments January 7, 20193.3 3.4 5A 5.2 The management anticipates that adoption of above standards, amendments and interpretations in future periods, will have no material impact on the financial statements other than in presentation / disclosures, The following new standards and interpretations have been issued by IASB, which are yet to be notified by the Securities and Exchange Commission of Pakistan (SECP). for the purpose of their applicability in Pakistan IFRS 1 First-time Adoption of International Financial Reporting Standards The following interpretations issued by the IASB have been waived off by SECP. IFRIC 4 Determining whether an arrangement contains lease IFRIC 12 Service concession arrangements SUMMARY OF SIGNIFICANT TRANSACTIONS AND EVENTS DURING THE YEAR The financial position and performance of the Company was affected by the following significant events and transactions during the year i) The Company increased the authorized share capital from Rs 500 million to Rs 1 billion during the year, ii) The Company redeemed investment in mutual funds and invested in Treasury bills and Term Deposit Certificates. lil) Investment properties were revalued as at year end resulting in a revaluation gain of Rs 20 million. iv) Development properties costing Rs 44.8 million were sold to customers earning a revenue of Rs 54.6 million, ¥) Other significant transactions and events have been adequately described in relevant notes to the financial statements. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of measurement These financial statements have been prepared under the historical cost convention except for investment properties and investment in mutual funds which are carried at fair values and staff defined benefit plan which is carried at present value of staff defined benefit obligation net of fair value of plan assets. Functional and presentation currency These financial statements are presented in Pak rupees which is also the Company's functional currency. nit53 54 5.5 Property and equipment Property and equipment are stated at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the asset Depreciation is charged to statement of profit or loss applying straight line method at the rate specitied in note 7 to the financial statements. Depreciation is calculated on a proportionate basis from the date of acquisition of an asset tll its disposal or retirement. The estimated useful lives are as follows: Leasehold improvements 10 years Furniture and fixtures 5 years Office equipments 5 years Vehicles 5 years Computer equipments 3 years Normal repairs and maintenance are charged to statement of profit or loss as and when incurred Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the item of property and equipment and the cost of the item can be measured reliably. The residual values and useful life of assets are reviewed anid adjusted, if appropriate at each statement of financial position date. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gains and losses on disposal are taken to the statement of profit or loss. Investment properties Investment properties are properties held to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment properties are measured at cost on initial recognition and subsequently at fair value with any change therein recognized in statement of profit or Joss for the year in which it arises. Cost includes purchase price and any directly attributable expenditure. The fair value is arrived at by reference to market values determined on the basis of physical condition and location of investment properties and market value of compareable properties. Development properties Development properties include acquisition or development of properties for sale in the ordinary course of business. These are carried in the statement of financial position at lower of cost and net realizable value. Cost includes all direct costs attributable to the acquisition, design and construction of the properties. The cost of development properties recognized in statement of profit or loss on sale is determined with reference to the specific costs incurred on the property sold and an allocation of any non- specific costs based on the relative size of the property sold. Net realizable value represents the selling price in the ordinary course of business less cost of completion and estimated cost necessarily to be incurred for sale. The management reviews the carrying values of the development properties on an annual basis.5.6 5.6.1 4 Financial instruments. Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument and de-recognized when the Company loses control of the contractual rights that comprise the financial asset and in case of financial liability when the obligation specified in the contract is discharged, cancelled or expires. All financial assets and liabilities are initially measured at cost. which is the fair value of the consideration given and received respectively Financial assets The Company classifies its financial assets in four categories: at fair value through profit or loss, held to maturity investment, loans and receivables and available for sale investments. The slassification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition (i) Investments at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Financial assets carried at faic value through profit or losses are recognized at fair value and transaction costs are expensed in the statement of profit or loss. At subsequent dates these investments are measured at fair vaiue with any resulting gains or losses recognised directly in the statement of profit or loss, (ii) Held-to-maturity investments Investments having fixed payments and maturity, that the Company has the positive intent and ability to hold to maturity, are classified as held-to-maturity investments and are carried at amortised cost using the effective interest method less impairment losses, if any. (iii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments. that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the statement of financial position date. These are classitied as non-current assets, The Company's loans and receivables comprise "Advances", "Deposits", "Other receivables", “Accrued interest" and "Cash and bank balances’ in the ‘statement of financial position. Loans and receivables are carried at amortized cost using the effective interest method less impairment losses. (iv) Available-for-sale investments Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date. Subsequent to initial measurement, available for sale investments are measured at fair value and changes therein, other than impairment losses, are recognized in other comprehensive income, When an investment is derecognized, the accumulated unrealized gain or loss is feclassified to statement of profit or loss.5.7 58 59 5.10 544 iabili Ss All financial liabilities are recognised at the time when the Company becomes a party to the contractual provisions of an instrument. Financial liabilities are extinguished when these are discharged or cancelled or expire or when there is substantial modification in the terms and conditions of the original financial liability or part of it, Offset ig A financial asset and financial liability is offset and the net amount is reported in the statement of financial position if the Company has a legal enforceable right to set off the transaction and aiso intends to settle on a net basis oF to realise the asset and settle the liability simultaneously. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, bank balances and highly liquid short term investments. Staff retirement benefits Defined benefit plan The Company operates an approved gratuity fund for all its permanent employees which provides for a graduated scale of benefits dependent on the length of service of the employee on terminal date. Under the gratuity fund, gratuity is payable on retirement, resignation or death. Contributions are to be made annually on the basis of actuarial valuation carried out every year using the projected unit credit method. Actuarial gains and losses are recognized immediately in the period they arise in other comprehensive income and past service cost is recognized in statement of profit or loss when they occur. Defined contribution plan The Company operates an approved provident fund for its permanent employees. Equal monthly contributions are made, both by the Company and the employees, to the fund at the rate of 10% of basic salary, The Company's share of contribution to the provident fund is recognized as an expense in the statement of profit or loss Compensated absences The Company also provides compensated absences to ail employees in accordance with the service rules of the Company. Alf eligible employees are entitled to 30 days leaves for each completed year of service. They will be entitled to en-cash earned leave accrued and sanctioned in any one calendar year subject to the condition that the eared leave balance after the adjustment of encashment shall not be less than 15, Taxation Income tax comprises current and deferred tax. Income tax expense is recognized in statement of profit or loss, except to the extent that it relates to items recognized directly in equity or in other comprehensive income.Current tax Provision for current taxation is based on the taxable income calculated at the applicable rates of taxation for the year determined in accordance with the Income Tax Ordinance, 2001 after taking into account available tax credits, if any. Deferred tax Deferred tax is accounted for using the statement of financial position liability method providing for all temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the statement of financial position date. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, un-used tax losses and tax credits can be utilized. Deferred tax assets are reviewed at each statement of financial position date and are reduced to the extent that itis no longer probable that the related tax benefits will be realised 5.12. Impairment (i) Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that itis impaired. A financial asset is impaired if there is objective evidence as a result of one or more events that occurred after the initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows of that asset that can be estimated reliably. Non - financial assets The carrying amount of the assets other than deferred tax assets are reviewed at each statement of financial position date to determine whether there ‘s any indication of impairment of any asset or a group of assets. If any such indication exists, the recoverable amount of such assets is estimated and impairment losses are recognized immediately in the statement of profit or loss. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation) had no impairment loss been recognized for the asset in prior years, Reversal of impairment loss is recognized as income 5.13 Accrued and other liabilities Accrued and other liabilities are carried at cost, which is the fair value of the consideration to be paid in future for goods and services received, whether or not billed to the Company. 5.14 Provisions Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. However, provisions are reviewed at each statement of financial position date and adjusted to reflect current best estimates. b mi5.15 5.16 SAT Contingent liabilities A contingent liability is disclosed when the Company has a possible obligation as a result of past events, whose existence will be confirmed only by the occurrence or non-occurrence, of one or more uncertain future events not wholly within the control of the Company: or the Company has a present legal or constructive obligation that arises from past events, but it is not probable that an. outflow of resources embodying economic benefits will be required to settle the obligation, or the amount of the obligation cannot be measured with sufficient reliability, Revenue recognition (i) Sale of properties Revenue on sale of plots, buildings, houses, bungalows and villas is recognized on accrual basis if all of the following conditions are met: - the Company has transferred to the buyer the significant risks and rewards of ownership of the goods; =the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the properties sold; - the amount of revenue, cost incurred or to be incurred in respect of the transaction can be measured reliably, and ~it is probable that the economic benefits associated with the transaction will flow to the Company. Revenue from sles agreements, where significant risks and rewards are not passed on to the buyer as construction progresses, is recognized when possession is handed over to the buyer and the Company does not expect any further future economic benefits from such property. {il) Lease rentals Rental income from investment property is recognized as revenue on accrual basis (iii) Return on investments, securities and loans Return on loans. deposits and securities are recognized on time proportion basis using effective interest rate method in the period in which they arise. Borrowing costs General and specific borrowing costs that are directly attributable to the acquisition, construction or production of @ qualifying asset in which case such costs are capitalized as part of the cost of that asset. Qualifying assets are assets that necessarily take @ substantial period of time to get ready for their sale. Other borrowing costs are expensed in the period in which they are incurredCRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, 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 not 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 bath current and future periods. Critical accounting estimates and judgments are as follows, (i) Estimated useful life of property and equipment - note 7 (ii) Revaluation of investment properties - note 8 (ii) Net realizable value of development properties - note 11 (iv) Provision for taxation - note 26 (v)_ Present value of statf defined benefit obligation - note 27 afid Fu Computer Leasehol Office compute Vehicles Total improvements and equipments equipments - Rupees ~ ~ 7. PROPERTY AND EQUIPMENT As at January 1, 2017 Cost 2,934,471 4,174,548 851,080 845,371 6.557.191 15,362,661 Accumulated depreciation (814,526) _ (1,421,408) __(194.125) __ (659,539) __ (5.701.201) _ (8,790,799) Net book value 2,119,945 753,140 656,955 185,832 855,990_ __ 6,571,862 Year ended December 31, 2017 Opening net book value 2.119.945 2,783,140 656,055 185,832 855,990 6,871,862 Additions - - 153,150 385,816 - 538,966 Disposals, - : : : - : Depreciation charge (367,068) (814,264) (191.699) (73,364) (622,923) (2,169,319) Closing net book value 7752876 1.838.876 18,406 408,284 235067 4,947,508 As at December 31, 2017 Cost 2.934.471 4,174,548 1,004,230 1,231,187 6.587.191 15,901,627 Accumulated depres (1.181.595) __ (2,335,672) __ (985.824) _ (732.903) __(6,324.124) _(10.980.118) Net book value 1,752,876 _ 1,838,876 618,406 498,284 233,067 _ 4,941,509 Year ended December 31, 2018 Opening net book value 1,752,876 1,838,876 618.406 498,284 233,067 4,941,509 - - - 183,150 3366.016 3,509,166 Cost > (2,699,378)| [~ (448.70) (.752,000)] | (4.900,128) Depreciation : 1,276,953 200.694 - 1.751.999 || 3.229.646 ss 4.422.425 248.056 = 1 1,670,482 Depreciation charge (967,070) (408,126) (184,860) (218,798) (607.248) (1,786,102) Closing net book value 1,385,806, 8325 785,490 432 635 2981834 4594 091 As at December 31, 2018 Cost 2,934,471 1.475.170 555.480 1,384,337 8.161.207 14,510,665 Accumulated depreciation (1,548,666) (1.466.845) (369,990) (951,701) (6.179.373) (9.816.574) Net book value 7,385,806 5.325 185,490 _ 432,636 2,981,834 _ 4,994,091 Annual rate of depreciation (%) 20 20 33,33 20 Depreciation an office equipments includes Rs NIL (2017: Rs 28,872) 1d to development properties during the year During the year, assets having aggregate book value of Rs 1.67 millon were disposed off for Rs 2.23 million. The Annexure A to the financial statements. of assets disposed off is attached in“10 2018 2017 8. INVESTMENT PROPERTIES. Balance at beginning of the year 154,705,500 140,792,600 Additions during the year 4.483.423 9,011,450 Fair value gain during the year 20,239,077, 4,901,550 Balance at end of the year 775408000, | 154,705, 500_ 8.1 Breakup of the closing balance of investment properties Office No. 301, Tricon Tower. Lahore 95,040,000 82,520,000 Office No. 304, Tricon Tower, Lahore 84,368,000 71,185,500 179,406,000, _154.705.500 8.2 The fair value of the investment properties as at December 31, 2018 has been arrived at on the basis of valuation carried out by an external valuer engaged by the Company. Further, the forced sale value of the investment properties, as determined by the external valuer as at December 31, 2018 was Rs 161.5 millon (2087. Rs 1392 million). 2018 2017 9. SECURITY DEPOSIT - Security deposit - note 9.1 401,980 401,980 Security deposit - Tricon offices 224,440 826,400 9.1 This represents security deposit paid to the parent Company in accardance with terms of the rent agreement for leased office space in Saudi Pak Tower, Islamabad 2018 2017 10. DEFERRED TAX ASSET Rupees: Deferred tax liability in respect of: Unrealised gain on mutual funds 266,476 268,476 Deferred tax asset in respect of, Accelerated depreciation (i177, 703)] | (7,338,079) Remeasurement loss an staff defined benefit obligation (169,939) (98.878) Alternative corporate tax in excess of corporate tax (175 430)} (175,430) Unused tax losses (7,002,960)] |_(1,502.073) (8,485,432) (3,114,400) Deferred tax asset not recognised 8,465,432 2,845,924 Net deferred tax (asset) / liability 10/1 Deferred tax asset to the extent of Rs 8,465,432 (2017: Rs 2,845,924) has not been recognized in view of uncertainty related to availabilty of taxable profits in foreseeable future, 2018 2017 11, DEVELOPMENT PROPERTIES Rupees Balance at beginning of the year 246,160,698 129,982,494 Additions during the year 12,327,728 194.615,788 Cost of plots / houses sold during the year (44,862,604) (78,417,584) Balance at end of the year 213,625,822 _ 246,160,608 11.4. Breakup of the closing balance of development properties is as follows: - Residential houses in Paragon City. Lahore - 31,286,253 Grey structure houses in Paragen City, Lahore 15,415,659 23,595,581 = Plots in Paragon City, Lahore - 4,993,664 Plots in Royal Residencia Scheme, Lahore 198,210,163 186,285,2002016 2007 12. ADVANCES AND PREPAYMENTS. Advance to suppliers. 8,203,687 Advance to employees 401,000 216,002 Prepayments - note 12.1 1.219.608 4,192,339 7,620,608. __ 9,557,028 12.1 It includes amount of Rs 1.08 million (2017: Rs 1 millon) in respect of prepaid office vent paid to the Parent Company 2018 2017 13. OTHER RECEIVABLES -Rupees---——~ Receivable from National Accountability Bureau (NAB) - note 13.1 91,112,187 51,211,686 Stalf defined benefit obligation - note 27 34791 Siz __81.246.477_ 13.4 The Company filed a law suit in the civil court Lahore for recovery of Rs 335.328 milion due from Divine Developers Private Limited (DDPL) in respect of sale of 90 houses in 2011. This malter was also referred to National Accountability Bureau (NAB) for recovery. During October 2015, DOPL offered payment under voluntary return scheme subject to certain conditions which were accepted by the management of the Company. The settlement terms were also approved by the Executive Board of NAB on February 9, 2016. AS per the agreed terms, the amount was to be recovered by NAB on behalf of the Company from DOPL in three installments As at December 31, 2018, NAB has recovered whole amount of Rs 336.328 million from DDPL and has released Rs 284.116 milion to the Company. Amount of Rs 99.529 deducted by NAB from third installment was wnitten off by the Company and remaining balance of Rs $1,112 milion is carried as receivable from NAB. The Company's management is pursuing this matter with NAB and the Ministry of Finance and is confident of full recovery of the balance Accordingly, no provision thereagainst has been carried in the financial statements 14, SHORT TERM INVESTMENTS. Note Held to matur - Certificate of Investment (CO!) 144 77 841 6at ~ Treasury Bills ( T-Bills) 142 123,007,716 - Term Deposit Certificate 143 65,372,192 J 266.321.5689 77,557 522 At fair value through profit or loss. ~ Mutual funds 144 : 88,194.413 165,751,935, 14.1 This represents following investment in COls with Pak Oman Investment Company Limited Maturity date Mark up rate 2018 2017 er annum: - March 06. 2019 10.27% 65.475.515 February 15. 2019 8.50% 42.466.126 January 22, 2018 6.00% : 5.117.534 February 12, 2018 6.15% : 12.439,988 Deposits equivalent 19 Rs 12.334 million are under lien during tener of the facility, against long term finance obtained from Pak Oman Investment Company Limited. reflected in note 17 to these financial statements. 14.2 This represents investment in T-Bills having face value of Rs 126 milion, carrying markup at the rate of 10.27% per annum and maturing on February 28, 2019.“12 14.3 This represents investment in Term Deposit Certificate of Rs 65 million with Khushhali Microfinance Bank Limited, carrying markup at the rate of 11% per annum and maturing on March 13, 2019, 14.4 Break-up of investment in mutual funds Fund name 2018 2017 Units Rupees Units Rupees NAFA Money Market Fund : - 4.255.030 43,080.01 Alas iMoney Market Fund - : 9.878 5.092.552 ‘ABL Cash Fund 1.938.905 20.014 930 MGB Cash Management Optimizer Fund 193.905 20.006 030 So ai sag 2018 2017 15, CASH AND BANK BALANCES mae RUPEES anne Cash in hand 36.051 23.974 Cash at banks in ~ Savings accounts - note 15.4 33,528,358 160,592 744 - Current account 80,000 1,820,865 5,644,409" 162,237,583 18.1 Savings accounts carry mark-up at rates ranging from 2.69% to 10.30 % (2017: 2.18% to 7.25% ) per annum. 2018 2017 Rupees- 16. SHARE CAPITAL ~ ‘Authorized share capital 100,000,000 (2017: 50,000,000) ordinary shares of Rs 10 each 1,000,000.000_ __s00,000,000 Issued, subscribed and paid-up capital 50,000,000 (2017: 50,000,000) ordinary shares of Rs 10 each 46.1 Saudi Pak Industrial and Agricultural Investment Company Limited and its nomince directors held 49,996,500 (2017: 49,997,500) and 3,500 (2017: 2,500) ordinary shares respectively al year end. 47. LONG TERM FINANCE 2018 2017 Rupees-~ Long {etm finance - secured 76,187,321 101,140,164 Less. Current portion of long term finance - Principal (60,000.000)] |" (25.000.000)] Accrued markup 4,187,321)]|_ (1.140.184), G1.187,321) (26,*40, 164) Long term portion 25,000,000, This represents term finance faciity obtained in May 2017 for @ period of three years from Pek Oman Investment Company Limited to meet the operating and expansion requirements of the Company. The facility is repayable in eight quarterly installments starting from August 2018 after @ grace period of one year. The facility will expire on May 10, 2020 and carries markup at annual rate of three month KIBOR + 2% payable quarterly. The facilty is secured by way of first charge through equitable mortgage of corporate offices owned by the Company at Tricon Corporate Center, Lahore as well as by way of hypothecation charge on present and future furniture, fixtures fittings, equipments and all present and future receivables of the Company. Further, deposits equivalent 1o RS 12.334 milion with Pak Oman Investment company Limited are also under lien during tenor of the facility.43 2018 2017 ~-Rupees- 18. ACCRUED AND OTHER LIABILITIES Accrued expenses 336.351 573.700 Leave encashment payable 851.143 859,519 Other liabilities, 668,315 620695 7,855 805) 2,053,014 19. ADVANCES FROM CUSTOMERS 20. 20. 20. 2 22. This represents advance receipt from its customers against booking of houses in Company's housing project at Paragon City Lahore. The booking is made on installment plan and advances are transferred to revenue on transfer of possession to the customer. CONTINGENCIES AND COMMITMENTS 1 Contingencies During the tax year 2017, the Company was selected for tax audit uls 177 of the Income Tax Ordinance 2001 (TO). Amended order ls 122 (1) of ITO was passed raising a demand of Rs 4,787,629. According to the Company's tax advisors hearing of the Company's appeal before the Commissioner Appeals is complete and order Is pending in which favorable outcome is expected. Accordingly, Rs 2,000,000 deposited into the government treasury in this regard has been carried as tax refundable 2 Commitments ‘There is no capital or other significant financial commitment at the end of the year. 2018 2017 Rupees nena |. REVENUE Saie of resident 47,425,000 11,650,000 Sale of plots 7,200,000 116,528,000 54,525,000 __ 128,175,001 COST OF SALES Cost of residential houses sold 38,868,940 8,232,788 Cost of plots sold 4,993,664 70,184,796 4 44,862,604 __ 76,A17,584 A23. 23.4 23.2 24, td Note ADMINISTRATIVE EXPENSES Salaries and other benefits 234 19,068,907 Directors’ fee 3,500,882 Travelling and conveyance 556.496 Legal and professional charges 3,087,964 Fees and subscriptions 48,800 Office rent 5,019,536 Vehicles running and maintenance cost 4,207 638 Repairs and maintenance 2.872.527 Depreciation 1,786,103, Receivable from NAB written-off 99,529 Insurance expenses 350,985 Advertising and business promotion 629,820 Utilities 443,650 Printing and stationery 76.684 Auditors’ remuneration 23.2 725,000 Postage, courier and internet services 139,426 Bank charges 31,042 Training & professional development 32,856 Expendabies 43,671 Others 384,799 30,806,315 Rupees~ 18,127,473 4,830,000 666,270 4,042,509 86.500 4.474.577 826.735 264.763 2,142,747 297.707 433.240 506,482 98,985 678,000 117.946 33.016 203,480 2017 600.000 This includes charge of Rs. 660.750 (2017: Rs. 583,234) for staff gratuity fund and contribution of Rs. 577,523 (2017: Rs. 524,780) to staff provident fund 2018 Auditors’ remuneration ~ Audit fee 650,000 Out of pocket expenses 75,000 75,000 MARKETING AND SELLING EXPENSE Commission on sale of plots 72.000 Marketing / advertisement 1,040 878,000 3,20028. 26. 15 2018 2017 OTHER INCOME Financial assets Gain on investments at fair value through profit or loss = realised 4.677.243 2,991,771 - unrealised 1,073,903 Retum on held to maturity investments ~ Interest income on COls. 7,399,218 4,390,456 ~ Interest income on letter of placement 97,534 - - Interest income on term deposit certificate 372,192, - Interest income on T - Bills, 893,091 - Interest on bank deposits 8,304,303 __ 10,520,859 24,703,581 ~ 18,986,989 Non-financial assets Gain on disposal of property and equipment 957.018 - Others 27,703, 400 22.288.302_ _ 18.906 .389 TAXATION Current tax Current 1,852,123 5,680,480 Prior years, a4 1,852,207 5,650,490 Deferred tax - 852,207 5,650,490 Numerical reconciliation between tax expense and accounting profit has not been presented since Provision for income tax is based on minimum tax at the rate of 1.25% of the turnover and capital gain tax @ 25% of realized gain on investments. Turnover means gross sales or gross receipts exclusive of sales tax, excise duty, trade discounts shown on invoices and sales/receipts taxable under FTR.27, 16- STAFF DEFINED BENEFIT OBLIGATION The latest actuarial valuation of the staff defined benefit plan (staff gratuily fund) was conducted al December 31. 2018 using the projected unit credit method. Details of the defined benafit pian are as follow: a) The amounts recognised in the statement of financial position: Present value of defined benefit obligation Less: Fair value of plan assets Net liability/(asset) at end of the year b) The amounts recognised in the statement of profit or loss: Current service cost Interest expense Interest income on plan assets ¢) The amounts recognised in other comprehensive income: Actuarial losses! (gains) from changes in financial assumptions Experience adjustments Remeasurement loss on defined benefit obligation Remeasuroment loss on fair value of plan assets dj Movement in present value of defined benefit obligation Present value of defined benefit obligation as at beginning of the year Current service cost Interest expense Benefits paid Remeasurement loss on defined benefit obligation Present value of defined benefit obligation as at end of the year e) Movement in the fair value of plan assets: Fair value of plan assets as at beginning of the year Contributions by the Company Interest income on plan assets Benefits paid Remeasurement loss on fair value of plan assets Fair value of plan assets as al end of the year Actual return on plan assets 2018 2017 upees- 3,171,871 (3,206,662) 34,791) 697.379, 615,865 261.679 184.238 (298,308) (216,869) = 880,750 503,234 6.394] («2.679 95.633, 66.120 162.027 68,799, 124,883 193,682 3,171,871 2,302,969 697.379 618 865, 261,679 184,238 162,027 68.79% 4282, 956 3.171.871 3,206,062 2.307.040 818,388 807.636 298,308 216,869 (94.378) (124,883) 4.228,980 3,208,662 ‘The Company expects to contribute Rs 779,671 (2018: Rs. 661.194) to its staff defined benefit plan during the year 2019. f Plan assets comprise of: Investment in units of mutual funds Deposits with banks v af 2018 2017 Rupees. a 923,858, 880.75 _ 3,305,122 4,228,98028. “a7 2018 2017 g) Actuarial assumptions Discount rate 13.25% 8.26% Salary increase rate 12.25% 7.25% Mortality rate SLIC 2001. SLIC 2001- 2005 Setback 2005 Setback 1 Year + Year h) Sensitivity analysis The calculation of the defined benefit obligation is sensitive to assumptions set out above. The following table summarizes how the impact on the defined benefit obligation at the end of the reporting period would have increased / (decreased) as a result of a change in respective assumptions by 1%. Impact on defined benefit obligation Increase of Decrease of 1000p 100bps ~ Rupees- - Discount rate (4.043.059) 4,582,510 Salary increase 4.593.672 (4,028,642) i) Projected benefit payments from staff defined gratuity fund are as follows: Rupees For the year 2019 602,524 For the year 2020 1,887,380 For the year 2021 540,391 For the year 2022 520.826 For the year 2023 - 28 3.031.081 j) The weighted average number of years of staff defined benefit obligation is 6 years. EMPLOYEES PROVIDENT FUND Details of the provident fund, based on un-audited financial statements of the Fund for the year ended December 31, 2018 are as follows: 2018 2017 (Un-Audited) (Audited) upees-—~ Size of the Fund 5.143.271 3,624,154 Cost of investments made 4,881,591 3,388,714 Percentage of investments made 98% 93% Fair value of investment 5.143.271 3.624.154 Breakup of investments - at cost 2018 2017 (Rupees) cs) (Rupees) wm Mutual funds 587,329 12% 366.375 Bank deposits 88% 3,002,339) 4,881,591 100% 3.368.714“18 29. REMUNERATION OF DIRECTORS AND EXECUTIVES Chief Executive Officer Executives 2018 2017 2018 207" Rupees _--Rupees- Managerial remuneration 4,410,000 4,200,000 5,730,730 5,297,316 Ex- gratia 200,000 700,000 300,361 877,059 Directors meeting fees 500,000 220,000 - - Provision for staff gratuity fund - - 465.561 429.443, Contribution to staff provident fund - - 360.433 332.471 Medical benefits 631.502 584.899 (0,000 _ 5,120,000 * Comparative figures for the year 2017 have been restated to reflect changes in the definition of executive as per the Fifth Schedule of the Companies Act, 2017. Executives mean employees, other than CEO and directors, whose basic salary exceeds twelve hundred thousand rupees in a financial year. In addition to the above, CEO and one executive are provided with the Company maintained car in accordance with their terms of employment. Directors of the Company were not paid any remunerations except the fee for altending meetings amounting to Rs 3 million (2017: Rs 1.6 million) whereas related boarding / lodging expenses incurred for the said meetings were borne by the Company ont30. 304 30.2 19 TRANSACTIONS AND BALANCES WITH RELATED PARTIES ‘The Company is wholly owned subsidiary of Saudi Pak industriat and Agricultural Investment Company Limited (Saudi Pak), Therefore, all subsidiaries and associated undertakings of Saudi Pak are related parties of the Company. Other related parties include staff retirement benefits funds, directors, key management personne! which include CEO and Head of Departments (HOD's) and entities under common dicectorship. Remuneration to directors and executives is disclosed in note 29 to these financial statements. All transactions involving related parties are subject to the approval of the Board of Directors Significant related party transactions during the year and outstanding balances at the year end are as follows: Transactions during the year Relationship Saudi Pak Parent Company Rent expense 5.019.536 4,474,577 Electricity expense 297,388 958.327 Staff Gratuity Fund Employees’ Trust Contribution by the Company 818,388 807.636 Employees Provident Fund Employees’ Trust Contribution by the Company 517.523 524,780 Key Management Personnel Key management Remunerations personnel 12,598,587 12,641,189 Balances outstanding as at December 31, 2018 Saudi Pak Parent Company Prepaid rent 1,080,267 1,004.900 Security deposit 401,960 401,960 Following are the related parties with whom the Company had entered into transactions or have arrangement / agreement in place. Sr.No. Company Name Basis of association Aggregate % shareholding 1 Saudi Pak Industrial and Agricultural Holding Company 100% Investment Company Limited 2 Employees’ Provident Fund Employees’ Trust Nil 3 Staff Gratuity Fund Employees’ Trust Nil31, FINANCIAL INSTRUMENTS AND RISK MANAGEMENT 31.4 Financial assets and liabil 2016 2017 Financial assets: Loans and receivables Maturity more han one year Security deposits 626.400 401.960 ‘Matnily upto one year ‘Advances 07.000 716.002 Other receivables 91.112.157, 91,211,686 Accrued interest 97.965 32.889 Cash and bank balances 33,644,409) 162,237,533 | 35,255.53 213.698, 140 Investments at fair value through profit or loss Maturity upto one year Investment in mutual funes 85,194,413 Held to maturity investments, ‘Maturity upto one year Certificate of investments, 77.947 Bat 75ST SD ‘Treasury bills ( T-Bills) 123,007,716 Term Deposit Certificate 65.972,102 266.321.6549 T7557 Sa ae, SEE. Financial liabilities: Other financiat liabilities ‘Malunty upto one year ‘Accrued and other abilities Current portion of long term finance 1194398 52,191,987 Maturity more than one year Long term finance 25,001 701,287 i 50 0 31.2 Crodit quality of financial assots The credit quality of Company's financial assets has been assessed below by reference to external credit ratings of counter parties determined by the Pakislan Credit Rating Agency Limited (PACRA) and JCR - VIS Cresit Rating Company Limited WER VIS). The counterparties for wham extemal creait ralings were not available have been assessed based on their historical information for any defaults in meeting obligations, Rating 2018 2017 -Rupees: Bank balances Counter parties with external eredit rating THC Bank Linea ate 928,604 9.196.602 Kesha Bank Lined mM pecsass? 167 068.223 Bank of Punab aie 18.387 3.508 Es, 2s8.478 Accrued Interest Counter parties with extemal credit rating MCB Bank Limited Ate 97.955. 32,869ate Rating 2018 2017 7 Rupees Other receivables Counter parties without external credit rating 51,112,197 Short torm investments Counter parties with extemal credit rating Pak Oman Invastment Limited aoe 200,949,367 77.887 522 Kushal Microfinance Bank Limited At 65,972,192 - NAFA Money Market Fund AA) - 43.080.901 ‘las Money Market Fund AAD, - 5,092,552 ABL Cash Fung AAU, - 20,018.30 MCB Cash Management Optimizer Fund AAU) - 20,006,030 Bees 78S THT SIS Security doposits: Counter parties with external credit rating Saudi Pak Industial and Agricultural Investment Company Limited Ate 401,950 960. 31.3 FINANCIAL RISK MANAGEMENT 31.3.1 Financial risk factors The Company's activites expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including ct tisk, interest rate risk and price risk}. The Company's overall risk management pclicy focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance, The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk managentent framework, The Board is also responsible for developing an monitoring the Company's risk management policies, a) Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation The Company's credit risk is primarily attributable to its trade receivable, other receivables and placements vath banks: Services are rendered essentially 10 group companies and other reputable customers, The Company's placements are wil banks & DFls having satisfactory credit rating. Due to the high credit worthiness of counter parlias the credit risk is ‘considered minimal As al December 31, 2018, other receivables of Rs 1.112 million (2017: 51.112 million) were due for more than one year but not impaired. bb) Liquidity risk Liquidiy risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing Iquidity is ta ensure. as far as possible, that it will always have sufficient liquidity to meet ls labile when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Typically the Company ensures that it has sufficient cash on demand to meet expected operational expenses for a reasonable period, including the servicing of financial obligations: this excludes the potential impact of extreme circumstances thal cannot reasonably be predicted, such as natural disasters,22, The table below analyses the Company's financial labiliies into relevant maturity groupings based on the remaining period 2! the statement of financial position date to the maturity date. The amounts disclosed in the table are undiscounted cash flows. Carrying Contractual-—Less than1 Above 1 year amount Cashlows. year ~~ Rupees At December 31, 2018 ‘Accrued and otner liabilities 1,004,666 1,004,686, 1,004,666 Long tesm finance 768.187.3921 76187321 81,187 321 28,000.00 Tigi ger 77107 __ STOTT 25,000,000_ At December 31, 2017 ‘Accrued and other liabiltes 2.934.599 2,334,959 2.934.559 Long term finance 101.140.164 —101,140.184 26,140,164 75,000,000 AST TSB ATA TS 75,0000 It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts, «¢) Market risk Market risk is the risk that the value of the financial instrument may fluctuates as a regull of changes in market interest rales or the market price due to change in credit rating of the issuer oF the instrument, change in market sentiments, speculative aciviies, supply and demand of securities and liquidity in the market, The Company incurs financial iabilies 10 manage its market risk. All such activities are cared out with the approval of the Board, The Company 's exposed to Interest rate risk and market nrice rick i) Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates, The Company is nol exposed fo curtency risk. ii) Interest rate risk Interest rate risk represents the risk thatthe fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates. Financial assets include Rs 300 million (2017. Rs 238 million) and financial labiities include Rs 175 milion (2017: 100 milion) which are subject to interest rate risk. Applicable interest rates for financial assets rave been indicated in respective notes, Sensitivity analysis At December 31, 2018 if the interest rates had been 1% higheniower with allcther variables held constant, profit before tax for the year would have been Rs 2.25 milion higher J lower (2047: Rs 1.38 mullion higher / lower), mainly as 2 resull of highertowor net interest from these financial instruments iil) Price risk Price risk represents the risk thal the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency sisk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, oF factors affecting all similar financial Instruments traded in the market, Short term invesiments include mutual funds of Re Nil (2017 Rs 88 milion) which are Sensitivity analysis If tedemption price on mutual funds. at the year end date had been 1% higher / lower with all other variables eld constant, total profit before tax would have been Rs Nil (2017: 881,914) higher / lower, mainly as a result of higher / lower redemption price on units of mutual funds, 31.32 Capital risk management The Company is fo maintain a strong capital base so as to maintain investor, credilor and market confidence and to sustain future development of the business. The Board of Directors monitor the return on capital and the level of dividend to ordinary shareholders. There was no change to the Company's approach to the capital management during the year anc the Company is net subject to extemally imposed capital requirement 31.323 Fair value of financial assets and liabilities The carrying value of financial assets and liabilities approximate their fair value.32, 33. 23. FAIR VALUE HIERARCHY Fair value hierarchy levels: The fair value of mutual funds is determined on the basis of Net assets value (NAV) available at Mutual Funds: Association of Pakistan (MUFAP). Valuation of the investment properties owned by the Company was valued by independent valuer to determine the fair value of the investment properties as at December 31, 2016. The different levels have been defined as follows: Level 1 Quoted prices (unadjusted) in active markel for identical assets’ liabilities. Level 2 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) = Level3 Inputs for the asset or lability that are not based on observable market data (that is, unobservable inputs) Level t Level2 Level 3 Total (Rupees) As at December 31, 2018 jancial assets Investment in mutual funds Non-financial assets Investment properties 179,408,000 4179,408,000_ As at December 31, 2017 Financial assets investment in mutual funds : 58,194.413, 194,413, 8 Non-financial assets Investment properties CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise Cash and bank balances 33,844.49 162,237,583 Short term investments (COIs) 266,321.54 77.557 522, 209,065,058, 230,795,105. NUMBER OF EMPLOYEES 2018 2017 Number of persons employed Total number of employees al end of the year 10 10 Average number of employees during the year 10 1024. 35. RECLASSIFICATION OF CORRESPONDING FIGURES Corresponding figures in the statement of financial position for the prior year have neen rearranged and reciassified where necessary for more appropriate presentation of balances for the purpose cf comparison Significant rearrangements and reclassifications 1n the financial statements are as follows! From To Rupees Accrued and other liabilities Long term finance 1,140,164 36. DATE OF AUTHORIZATION These financial statements were authorised for issue by the Board of Directors of the Company on February 12,2019, ee Chairman Chief Executive OfficerAnnexure A SAUDI PAK REAL ESTATE LIMITED NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS: FOR THE YEAR ENDED DECEMBER 31, 2018 Details of property and equipment disposed off during the year as referred to in note 7.2 of these financial statements WV at the ; Particulars of assets Cost —dateof =| Sale Sain! Mode of disposal Parteulars of the 4 proceeds (loss) buyer posal sorrennnnnnnnannnnaa ------= Rupees ~-- rane Motor vehicle Toyota Corolla GLI 4,782,000 1 427,500 427,499 As per Company's policy Mian Faisal Ashraf Employee Furniture and fixtures. Furniture 2.418.638 1,271,558 1,370,540 98,972 Negotiation Abdul Waheed Akbar None Paintings 151,680 85,938 92,425 6,487 Negotiation Abdul Waheed Akbar None Window blinds 129,060. 64.919 70,068 5.149 Negotiation Abdul Waheed Akbar None 2,699,378 1,422,425 1,533,033 140,608 Office equipment Refrigerator 89,017 45,801 49,399 3,598 Negotiation: Abdul Waheed Akbar None Microwave oven 7age3| 38582} 41.612| 3,030 Negotiation Abdul ‘Waheed Akbar None Air conditioners zearso| 163.873 | 175.986] 12.283 Negotiation Abdul ‘Waheed Akbar None 448,750 248,056 266,966 18,911 4,900,128 1,670,482 _ 2,227,499 557,018