NURICON PETROSERVICES (PVT) LIMITED KARACHI Financial Statements For the year ended June 30, 2015S. M. REHAN & CO CHARTERED ACCOUNTANTS AUDITORS’ REPORT TO THE MEMBERS We have audited the annexed balance sheet of NURICON PETROSERVICES (PVT) LIMITED (‘the Company”) as at June 30, 2015 and the related profit and loss account, cash flow statement and statement of ‘changes in equity together with the notes forming part thereof, forthe year then ended 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 our audit. It s the responsibilty of the company’s management to establish and maintain @ system of internal contro, ‘and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auciting standards as applicable in Pakistan, These standards Fequire that we plan and perform the aucit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the abave said statements. An audit also includes assessing the accounting polices and significant estimates made by management, as well as, evaluating the overall Presentation of the above said statements. We believe that our audit provides a reasonable basis for our ‘pinion and, after due verification, we report that: ) in cur opinion, proper books of accounts have been kept by the company as required by the ‘Companies Ordinance, 1984; >) nour opinion: 1) the balance sheet and profit and loss account together with the notes thereon have been ‘crawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of account and are further in accordance with accounting policies consistently applied; li) the expenditure incurred during the year was for the purpose of the company’s business; and fil) the business conducted, investments made and the expenditure incurred during the year were im accordance with the objects of the company; ©) _imour opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the ‘manner so required and respectively give a true and fair view of the state of the company's affairs as ‘at June 30, 2015 and of the Prof, Its cashflows and changes in equity for the year then ended; and ) _imour opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980, Date: 3 0 SEP 2015 Place: Karachi Frsos Ho@rreenoncom‘Nuricon Petroservices (Pvt) Limited Balance Sheet As at June 30, 2015 ASSETS Tangible fixed assets Property plant and equipments Intangible assets Softwares Current assets Trade debts Advances Deposits and prepayments Other receivables (Cash & bank balances Total assets EQUITY & LIABILITIES ‘Share capital & reserves ‘Share Capital ‘Unappropriated profit Long term foan LUabilties against assets subject to finance lease Current liabilities ‘Trade and other payables Current maturity of lease labiities Provision for taxation Contingencies and commitments Total equity and liabilities eaVvan 10 Br 12 13 12 15 ‘The annexed notes form an integral part of theses financial statements (CHIEF EXECUTIVE OFFICER 2015 2018 Rupees Rupees 41,229,093, 43,869,070 618,975 434,250 164,809,194 24,127,604 101,459,565 48,622,213. 22,440,928 11,292,398 6,559,225 1,451,176 45,879,186, 16,159,326, 341,148,098 103,652,717 382,996,166 _ 145,956,037_ 1,588,000 1,588,000 267,243,197 84,448,638 268,831,197 86,036,638 18,000,000 48,000,000, 123,283 4,227,740 6,980,801 5,561,991 1,053,712 1,749,326 86,007,173, 33,380,342 96,041,686 40,691,659 362,996,166 _ 145,956,037 W DIRECTORNuricon Petroservices (Pvt) Limited Profit and Loss Account For the year ended June 30, 2015 2015 2016 Note Rupees Rupees Receipts 967,411,154 339,267,409 Less: Cost of receipts 646,128,689 _ 249,420,446 Gross Profit 321,282,465 89,846,963 Service revenue 26,710,085 __31,527,765 347,992,510 121,374,728 Operating expenses ‘Administrative expense 36 [75,763,407] [71,857311 Financial charges 7 |_3758,0%4] |_2,603,966 72.542451__ 74,461,277 268,450,059 46,913,451 Other charges 18 - (773,687 268,450,059 46,139,764 (Other income 19 351,673 328,326 Prof before taxation 268,801,732 46,467,890 Taxation 20 _ (86,007,173) (33,448,645) Proftl(Loss) after taxation 182,794,559 13,019,245 “The annexed notes form an Integral pat of theses financial statements —2. Brverny CHIEF EXECUTIVE OFFICER DIRECTOR‘Nuricon Petroservices (Pvt) Limited Cash Flow Statement For the year ended June 30, 2015 2015 2014 Rupees Rupees CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation 268,801,732 46,467,890 Adjustments for: Gain on sale of fied asset : (328,126) Depriciation| 2,794,877 (2,836,916 ‘Amettization 175,275 105,750 TTT aa 45,062,429 Changes in operating assets/llabilities (increase) / decrease in operating assets Trade debts (140,681,590)| Goi} Advances 611,191 | | (3,704,052)} Deposits and prepayments, (11,248,53)] | (6,764,871)| Other receivables (6,108,049)] | 2,196,405 Increase / (decrease) in operating liabilities ‘Trade and other payables 3,416,810] |_(,331,312)] (152,908,168) (11,605,847) Income tax paid (86,828,885) _ (22,957,272 Net cash flows from operating activities 32,034,431 ~ 14,519,310 ‘CASH FLOW FROM INVESTING ACTIVITIES Capital expenditure (514,500) (1,448,063) Proceed from sale of fixed assets 860,000 Net cash flows from investing activities Gir soy (588,063) ‘CASH FLOW FROM FINANCING ACTIVITIES Long term loan 5 > Payments against assets subject to finance lease (1,800,071)| |_(2,326,182)] Net cash flows from financing activites 1,800,071) (2,326,182, Net increase in cash and cash equivalents Sit —ietseee ‘Cash and bank balances at the beginning of the year 16,159,326 __ 4554261 ‘Cash and bank balances at the end of the year 45,879,186 _ 16,159,326 ‘The annexed notes form an integral part of theses financial statements 2. Brod (CHIEF EXECUTIVE OFFICER DIRECTOR‘Nuricon Petraservices (Pvt) Limited ‘Statement of Changes in Equity For the year ended tne 30, 2015 Issued, subsered UNPTRTated yop paidup capital Balance as at 30 June 2012 1,588,000 71,428,203 73,017,393 Pronto the ear - aoa sais 25 Balance as at 30 June 2014 Er are aR Proto the year = tea704559 192704559 Balance as at 30 June 2015 7 586/000- 767,263,197 —T6S STL IT_ ‘The annexed notes form an integral part of theses financial statements is PereyNURICON PETROSERVICES (PVT) LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2015 4. STATUS AND NATURE OF BUSINESS ‘The company is a private limited company incorporated in Pakistan under Companies Ordinance, 1984. The principal activity of the company Is to execute contracts and provide oil field and mud engineering services, biostratigraphic and corrosion engineering services. The registered office of the Company is stuated at 4th Floor, Mubarak Manzil 39 Garden road Saddar, Karachi. 2, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Statement of compliance ‘These financial statements have been prepared in accordance with approved accounting standards, as applicable in Pakistan. Approved Accounting Standards comprise of Accounting and Financial Reporting Standard for Medium-Sized Entities (MSES) Issued by the Institute of Chartered Accountants of Pakistan and provisions of ard crectves issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 shall prevail, 2.2 Basis of Preparation ‘These financial statements have been prepared on the basis of historical cost convention’. Use of estimates The preparation of finandal statements in conformity with approved accounting standards requires management to make judgment, estimates and assumptions that affect the application Of polices and reported amounts of assets and liabilties, 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 result of which form the basis of ‘making the judgments about the carrying values of assets and labilties 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 estimates are revised, ifthe revision affect only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 2.3. Property, plant and equipment Owned Fixed assets are stated at cost less accumulated depreciation except freehold land and capitat work-in-progress, which are stated at cost. Depreciation is charged to income using the reducing balance method at the rates reflected in the relevant note to fixed assets. Depreciation on additions is charged on the basis of whole year. Whereas no depreciation Is charged on fixed assets disposed off during the year. Residual values, useful lives and methods Of depreciation are reviewed at each balance sheet date and adjusted, if expectations differ, significantly from previous estimates, es CHIEF EXECUTIVE DIRECTOR24 25 26 27 28 Useful lives are determined by the management based on expected usage of asset, expected physical wear and tear, technical and commercial obsolescence, legal and similar limits on the use of the assets and other similar factors. Maintenance and normal repairs are charged to Income as and when incurred. Major renewals and improvements are capitalized. Gains or losses on disposal of assets are included in current income. Expenditure incurred subsequent to the initial acquisition of assets is capitalized only when it increases the future economic lives embodied in the items of property, plant and equipment. Leased Leased assets in terms of which the Company assumes substantially all the risks and rewards (of ownership are classified as finance lease. Assets held under finance lease are accounted for by recording the assets and the corresponging liability there against. The amount capitalized is determined on the basis of discounted value of total minimum lease payments, Financial charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of change on the outstanding lability. Depreciation is charged on leased assets on a basis similar to that of owned assets. Staff retirement benefits ‘The company operates provident fund scheme covering all permanent employees. Equal monthly contributions are made both by the company and employee to the fund, Trade debts and other receivables Trade debts and other receivables are stated at original invoice amount as reduced by ‘appropriate provision for debts / receivables considered to be doubtful. Bad debts are written off when identified. Provisions A. provision is recognized in the balance sheet when the company has legal or constructive obligation as a resuit of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are reviewed at each balance sheet date and ‘adjusted to reflect the current best estimates. ‘Trade payables, accrued and other payables abilities for trade and other amounts payable are carried at cost, which is the fair value of the Consideration to be paid in the future for goods and services, whether of not billed to the ‘company. Taxation Current ‘The charge for current taxation is based on taxable income at the current rates of taxation ‘after taking into account applicable tax credits, rebates and exemptions avaliable, if any. SP) (CHIEF EXECUTIVE DIRECTORDeferred Deferred tax is accounted for using the balance sheet lability method on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that itis probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. ‘The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that itis no longer probable that sufficient taxable profit will be avaliable toallow all or part for the deferred tax asset to be utlized. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the profit and loss account. ‘The charge for current taxation is based on taxable income at the current rates of taxation after taking into account applicable tax credits, rebates and exemptions avalable, if any. 2.9 Revenue recognition Revenue is recognized to the extent that itis probable that the economic benefits will flow to the Company and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable. Revenue is recorded on rendering of services, Income on investments, if any, is recorded on accrual basis. Profit from bank accounts, if any, is recognized on a time proportion basis, 2.40 Financial instruments Al financial assets and labilties are recognized at the time when the company becomes 2 party to the contractual provisions of the instruments. All the financial assets are derecognized at the time when the company loses control of contractual rights that comprise the financial assets, All financial liabilities are derecognized at the time when they are extinguished i.e, ‘when the obligation specified in the contract is discharged, cancelled, or expired. Any gain or loss on recognition / de-recognition of the financial assets and lablities is taken to profit and loss account currentiy Financial assets and financial liabilities are initially measured at cost, which Is the falr value of the consideration given and received respectively. These financial assets and liabilities are subsequently measured at fair value, amortized cost or cast, as the case may be. 2.411, Foreign currency translation Foreign currency transactions are translated Into rupees at the rates of exchange approximating those prevaling on the date of transactions. Monetary assets and liabilities in foreign currencies are translated into rupees at the rates of exchange approximating those prevailing at the balance sheet date. Exchange gains and losses are included in the profit and loss account. Non-monetary foreign currency assets and liabilities, which are carried at historical cost in foreign currencies, are translated into rupees at the rates of exchange existing fon the date of transaction, Reeress) (CHIEF EXECUTIVE DIRECTOR2a2 2.43 214 245 Offsetting of financial assets and financial liabilities. Financial assets and financial labiities are offset and the net amount is reported in the financial statements only when the Company has legally enforceable right to offset the recognized ‘amounts and the Company intends elther to settle on a net basis, orto realize the assets or to settle the labilties simultaneously, Impairment ‘The carrying amounts of the Company/s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment foss. If any such indication exists the asset's recoverable amount is estimated in order to determine the extent of the impairment loss if any. Impairment losses are recognized as expense in income and expenditure account Cash and cash equivalents ‘Cash and cash equivalents are carted in the balance sheet at cost. For the purpose of cash fiow statement, cash and cash equivalents include cash in hand, deposits held with banks, ‘other short term highly liquid investments that are readily convertible to known amount of cash ‘and which are subject to an insignificant risk of change in value. Related party transactions ‘Transactions involving related parties arising in the normal course of business are conducted at arm's length of normal commercial rates on the same terms and conditions as third patty, transactions using valuation modes as admissible, Boor ae (CHIEF EXECUTIVE DIRECTORwooaura wa014s0 3ALLNDaXa 33TH ooo'ers §=—000'ors - soodny TOE osz'soT OSZ'sot es sass sz0'tse S20S2F 08's0T co0'008 G00'SE 00 OFS seodny 308 ‘SL6’819 ‘Sz0'tee sez/SeT osz’sor %0E 000'006 000'09¢ 000'0rS SQUEMYOS, stoz Sunc ‘STO aunt ‘Gaysuedt) p10 Ane ‘sT0z unc (saysueiL) eT07 AINE OE _3@ Sy of ey [a@oh O19 4104 1038 Sv % Of 32 Sy {suonippy_ 1038 Sv aN TWA NMOG NOLLVZLLYOWY anew 4so> (sressy paumo) SLISSV TISIONVINI “y a 5 | oco'698’ey zs9’99s'pt 916’9E8'% ZIE’ss9’zT tze'str’ss e90'ter’e 60609095 seedny er0r €60°677 Th G6tITSE ZT Lév'v6L'2 = 7S9'995'bT ‘77z'06S'8S = O0S‘bST ttL'See'ss soadny ‘St0z ozs’T9E"E 086’6Ee'e OSE'ObS 009'666'T 00s"T0Z'S - 00s'T0L'S ozs‘T9e'€ 0g6'6ee'Z O8E 08 009'66¢'T 02 00S‘TOL'S “ 00s'TOL's SOpIURA SLaSSY aaSYa €257298'2E GHI'TZO'ST §=—-L60°bS6'T ‘7S0°290'ET te eae tS «OOS HST tee bELeS 682'Ibe e00'LeL 829'967 bze'08b OE 067'8TS'T 005'PST 06¢'E9¢'T ‘suayndwoy 06e’ZE9'7 9S0'L62' ‘£60'8S9 656'8£9'9 %OZ 9bb'676'6 o ‘Obb'676'6 SOPIYRA 87S'bEg €9S‘866 c0S‘0L 090’sze ‘HOT T60'EEO'T « T60'EE0'T sauoRIpUODUTY 629's7s Tep'as, 069'E69 ‘OT 000'8Z7'T o00'822’T soye:8U29, 6ST er 6cE'0T %OT 000'2T 000'2T JayRed ste'ecs T ETE'b9 z9e'sey'T %OT 066'8z0'2 066'820°% auraxy pue auuuung £99'b9> 6bE'929 629'TS 022'bz9 OT ZTO'THT'T CLOT ‘squawidinbs 2179943, zes‘0z v0s'be ste'z 682'2LE OT 9Eb'S6E 9Eb'S6E ‘quawdinba qe7 ‘pL0'TSO'2 Tep‘29e L687 bes'bes: WOT SbS’ETa’Z Sps'ere’z aunpnusesyul ZY) Sv9'9te'> Lovett 7L0'btS S61‘8b6'T ‘OT 7T6'ssT'L ‘tt6'88T'L ‘Pue| pjoyeses| Uo Bulpting 000'00s'sz * * 2 = 000'00s'sz ' 000'00s'sz PUeT poy aseo7, sLassv a3NMO ‘sToz aunt ‘sTO0z aunt ‘Caysuedl) ‘bT0z Aine ‘sto aunt GejsuelL) ‘07 ANC oc ev Oe Iesy —/yeok ap 404 To 72 sv % og 1 sy /suogippy To 1 Sv mwanmoa ___Nonwinguazg__—_—_—_1eu 1509 NaLLTaM SANAWdINDA GNV INVId ALUZdOUd “E20 a wa 2015 2016 Rupees Rupees ‘TRADE DEBTS - Considered good 164,809,194 _ 24,127,604 Abvances Advances -Uneecured considered good = Tosa fr expense aeisess 4936550 = Lean to employees 1685 500 : “taeton srayiaes __<3725603 Toss DEPOSITS AND PREPAYMENTS. Depots za.119908 105600 Prepayments Saooe ‘sagan ma. ag OTHER RECEIVABLE sales tox 2oesses 135506 atnaeeednindeeepeenecde by Premier Inapacion Seve Pvt) United 1601650 pat seraces «Gr seta . Sion Patt () i 2,300,000 é essa Tas CASH & BANK BALANCES cash nha 600,000 . Cash at bark - Curent socounts 45279195 16415096 eRe esas ‘SHARE CAPITAL ‘Authorised capital 20,000 (2014: 20,000) Ordinary shares of Rs.100/- each 2,000,000, __2,000,000 Issued, subscribed & paid-up capital 15,880 (2014: 15,880) Ordinary shares of Rs. 100/- each fully paid in cas. 1,588,000 __ 1,588,000 LONG TERM LOAN From associated company-Siprion Petrotoks (Pvt) Ltd. (1.1) 16,000,000_ __ 18,000,000 ‘This represents unsecured and interest free loan and payment willbe due on or before June 30, 2018, However balloon payments at the sole discretion of associated company are permissible, rosy (CHIEF EXECUTIVE OFFICER DIRECTOR14 2015 2016 Rupees Rupees LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE The amount of future rentals and periods during which they fall due are as under: ue within one year 4,188,921 2,265,727 Due after one year but within three years 326,165 _1,359,316 4 315,086. 3,625,043 Less: Financial charges (338,001 (647,97 Present value of minimum lease payments 1,176,995 2,977,066 Less: Current portion shown under current Habilties 1,053,712) __(1,749,326) T2328 1227,740. ‘These represent finance lease entered into with leasing company for lease of vehicles and Generator. ‘The periodic lease payments include bull in rate of mark-up 18% to 28% (2014:18% to 26%) per annum which was used as discounting factor. The lessee has the option to purchase the assets upon ‘expr of the respective lease terms. Lease rental payments are secured by way of demand promissory notes and personal guarantees of directors. ‘TRADE AND OTHER PAYABLES “Trade Creators 2,050,480, 740,780 ‘Accrued Uabilties 5,150,605 2,683,053, ‘Advance from customers 234,000 : Sales tax payable 142,260 Income tax payable 38,985 : Workers weifare fund - 773,687 Due to associated company: Sion Petrotoo's (Pvt) Ltd. 1,364,471 __ 1,364,471 3,980,801 LETTER OF GUARANTEE AND OVERDRAFT FACILITY ‘A commercial bank has sanctioned letter of guarantee and overdraft facies to the company and its ‘associated companies. Interchangeable group limit avaliable tothe Nuricon group companies in respect Of letter of guarantee is Rs. 300 milion (2014: 263 millon) which remained unutilzed by the company. ‘The mark-up rate applicable to overdraft facility ‘s 3 Month KIBOR plus 1.5% per annum payable on ‘quarterly basis. In respect of letter of guarantee 0.10% commission is payable quarterly to the bank. ‘The Group limit interchangeable of overdraft facilty is Rs. $9.00 (2014 : 59 Rs. Nil) million wich remained unutlized by the company. The principal is repayable on demand. The feclty is secured against Equitable Mortgage of associated company's property and assignment agreement and equitable mortgage on directors personal property and personal guarantees of all directors of the Group of Companies. ‘CONTINGENCIES AND COMMITMENTS Contingencies The bank has gen guarantee on behalf of the company amounting to Rs. 152,144,886 (2014 Rs, 144,585,804), ‘Commitments ‘There were no commitments as a balance sheet date, Brpraaed CHIEF EXECUTIVE OFFICER DIRECTOR2015 2016 Rupees Rupees. 16 ADMINISTRATIVE EXPENSES Directors remuneration 5448042 4,859,141 Salaries, wages & benefits (note no.16.1) 29,148,075 27,268,697 Traveling 5,053,933 4,230,931 ‘Transportation 990,919 936,331 Vehicle up keep 6,907,196 7,399,345 Communication 2,644,762 2,408,343, Rent, Rates & Taves 2,639,095 2,359,684 Electric & Gas charges 23348451 2,011,064 Registration & Subscription "362,870 364,97 Entertainment 439,041 4,295,005 Tender fee 19,850 25,500 Business promotions. 1,668,157 1,971,024 ‘Advertisement | 142,000 153,760 Printing & stationary 2,043,058 2,410,214 Photostat 16,141 26,849 Repairs & maintenance 5,430,695 5,377,193, ‘Auditors’ remunerations (note no, 16.2) "397,500 210,000 Legal & Professional Exp. 1,326,133 465,510 General expenses 919,944 $39,334 Property & Professional tax 46,103 90,450 Insurance 811,680 475,072 Bad debts Written off : 726,221 Depreciation 2,794,477 2,836,916, ‘Amortization 175,275 105,750 asa sa 16: Tis includes amount Rs. 122,982 (2014: 1072075) respect of aff retremen beret, 16.2 Auctors' remunerations Audit Fee 318,000 183,750 Tax fee 79,500 26,250 397/500. ED 2am 17 FINANCIAL EXPENSES Bank charges: 3224408 1,871,303, Markup on short term borrowings 68,994 25,263 ease financial charges 465,646 707,400 3,759,044 7,603,965, 18 OTHER CHARGES ‘Workers welfare fund = —s/ CHIEFEKECUTIVE Grricer DIRECTOR19 Pry 23 2015 2014 RUPEES RUPEES OTHER INCOME Exchange gain/(loss) 351,673, : Gain on disposal of assets - 328,126 eT 378,126 ‘TAXATION (Current year 86,007,173 33,380,342 Prior year 68,303 = aS ‘TRANSACTIONS WITH RELATED PARTIES ‘The related parties comprise of directors and key management personnel. Transactions with related parties are made under normal commercial tems and conditions. ‘The related party status of outstanding balances at June 30, 2015 Is included in the respective notes to the financial statements, REMUNERATION OF CHIEF EXECUTIVE AND DIRECTORS ‘The aggregate amounts charged in the accounts for the year for remuneration and benefits to the directors of the Company were as follows: DIRECTORS 2015 2014 RUPEES RUPEES _ ‘Managerial remuneration 3,296,165. 3,009,750, sities 1687835 1,504/650 Medical Reimbursements 504042 __ ‘344,741 aa” a umber of persons = No remuneration has been paid to Chief Executive Officer of the company. PROVIDENT FUND Disclosure with regards to provident fund Size of the fund/trust 5,259,561 4,651,590 Percentage of investment made WA ‘A ‘The funds available were not invested any where and these are kept in current accounts. ‘According to the Trustees funds of provident fundjtrust have been kept in accordance with the provisions of section 227 of the Ordinance (current account with scheduled bank) and were not Invested. comer EXECUTIVE oFriceR DIRECTOR24 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURE 24.4 Interest / mark-up rate risk management Interest/ mark-up rate isthe risk that the value of a financial instrument will fluctuate due to changes in the market interest/ mark-up rates. Sensitivity to interest/ mark-up rate risk arises from mismatches of financial assets and financial labiliies 2015 Mark-up / interest bearing Tess than Non mark- ‘one One month One yearto up /interest Total Month __toone year _fiveyears bearing _Rupees_ Financial Assets Trade debts, : : 164,809,194 164,809,194 ‘Advances : : 2619859 2,619,859 Deposits and prepayments : : = 22,119,986 22,119,986 ‘Other receivables - : = 659,225 6,559,225, ‘Gash & bank balances - - 45,879,186 45,879,186, a 741,987,450 241,987,450 — ES BS Financial Liabilities Lease lability 1,053,712 123,288 - 1,176,995 ‘Trade and other payables : - = 8,980,801 __8,980,801, = 053,719 "193,783 8,980,801 10,157,796. go mance set op 20159) =) Te LE On balance sheet: 2026 (0) ED SY EE OS ee (a) On balance sheet gap represents the net amounts of on balance sheet items. (b) Effective rates of return / mark-up on financial assets and liabilities are as follows: Of mre heen are rot epee omar eee Interest/ mark-up rates per annum on financial assets and financial liabilities are as follows: 2015, 2014 Financial assets Ni Ni Financial liabilities: Lease lability 18%-22% 18%-22% 24.2 Credit risk exposure and concentration of credit risk CCreait risk isthe risk which arises with the possibilty that one party to a financial instrument wil fall to discharge its obligations and cause the other party to incur a financial loss, The company attempts to control credit risk by ‘monitoring credit exposure, limiting transactions with specific counterparties and continually assessing the creditworthiness of counterparties. Concentrations of credit risk arise when number of counterparties are engaged in similar business activities or hhave similar economic features that would cause their abilty to meet contractual obligations to be simiariy affected by changes in economic, political or other conditions. Concentrations of credit risk indicate the relative, sensitivity of the Company's performance to developments affecting a particular industry. ee (CHIEF EXECUTIVE OFFICER DIRECTOR24.3 Liquidity risk Liquidity risk isthe risk that the company will be unable to meet its funding requirements. To guard against the risk, the company has diversified funding sources and assets are managed with liquidity in mind, maintaining a healthy balance of cash and cash equivalents. The maturity profile is monitored to ensure adequate liquidity is ‘maintained. 24.4 Foreign exchange risk management Foreign currency risk arises mainly where receivables and payables exists due to transactions entered into foreign ccurencies. Payables exposed to foreign currency risks are usually covered through forward foreign exchange contracts on the basis of management's assessment of fluctuation in exchange rates. 24S. Fairvalue of financial Instruments Fair value is amount for which an asset could be exchanged, or alablty settled, between knowledgeable willing parties in an arms length transaction. Carrying value of all the financial instruments reflected in the financial ‘Statements approximate their respective far values. Consecuenty, the differences may arse between the carrying values and the fair value estimates, Underlying the definition of fair value is the presumption that the company is a going concem without any intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms, 25 DEFERRED TAXATION ‘The major portion of income of the company are finalised under section 169 (Final Tax Regime). Accordingly the ‘timing difference between accounting income and taxable income are not reversible in the foreseeable future. ‘Therefore, no provision of deferred tax has been made. 26 CORRESPONDING FIGURES “The figures have been reclassified wherever necessary to facilitate comparison, 27 NUMBER OF EMPLOYEES “The number of employees as at balance sheet date were 29 (2014: 29). 28 DATE OF AUTHORISATION ‘These financial statements were authorised for issue in the Board of Director's meeting held on September 29, 2015. 29 GENERAL ‘The figures have been rounded off to the nearest rupee, — (CHIEF EXECUTIVE OFFICER DIRECTOR