Contents Nadeem Maqbool Adil A. Ghaffar (Chief Executive) AuditCommittee Zahid Bashir Nadeem Maqbool Room No. 503 - 504 5th Floor, Karachi Stock Exchange Building, Karachi. Tel: 32446020-3

Page 1MISSION AND VISION

First Equity Modaraba is committed to strive for excellence in all areas of itsactivities.

We view our business objective of providing distinctive financial products and servicesthat promote commerce and industry within the context of our overall objective of

contributing to the nation’s prosperity.

Contents

CORPORATE INFORMATION

TEN YEARS AT A GLANCE

PATTERN OF CERTIFICATE HOLDING

STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

REPORT OF THE DIRECTORS

SHARI’AH REVIEW REPORT

AUDITORS REVIEW ON STATEMENT OF COMPLIANCE

AUDITORS’ REPORTS TO THE CERTIFICATE HOLDERS

BALANCE SHEET

PROFIT AND LOSS ACCOUNT

STATEMENT OF OTHER COMPREHENSIVE INCOME

CASH FLOW STATEMENT

STATEMENT OF CHANGES IN EQUITY

NOTES TO THE FINANCIAL STATEMENTS

NOTICE OF ANNUAL REVIEW MEETING

CONSOLIDATED FINANCIAL STATEMENTS

2

3

4

6

7

9

11

12

13

15

16

17

18

19

39

40

Page 2 FIRST EQUITY MODARABA

CORPORATE INFORMATION

Modaraba CompanyPremier Financial Services (Private) Limited

Board of Directors

Zahid Bashir

Nadeem Maqbool

Adil A. Ghaffar

(Chief Executive)

Audit CommitteeZahid Bashir

Nadeem Maqbool

Room No. 503 - 504

5th Floor,

Karachi Stock Exchange

Building, Karachi.

Tel: 32446020-3

Fax: 32460766

B-1004, 10th Floor

Lakson Square Building # 3,

Sarwar Shaheed Road,

Karachi

Tel: 35672815-8

Fax: 35686116

E-mail: [email protected]

Registered and Business Office

AuditorsAvais Hyder Liaquat NaumanChartered Accountants407, Progressive Plaza,Beaumont Road, Karachi-75530Tel: 92-21-35655975-6,35656082Fax: 92-21-35655977

BankersBank Al-Habib Ltd.Habib Metropolitan Bank Ltd.MCB Bank Ltd.National Bank of Pakistan.NIB Bank Ltd.The Bank of Khyber.United Bank Ltd.Bank Islami Pakistan Ltd.Meezan Bank Ltd.Registrar

THK Associates (Pvt.) Ltd.RegistrarState Life Building # 3,Dr. Ziauddin Ahmed Road, Karachi.Tel: 111-000-322Fax: 92-21-35655595

General CounselMoshin M. Tayebaly & Co.Advocates & Legal Consultants

Page 3

Page 4 PATTERN OF HOLDING OF CERTIFICATES

BY THE CERTIFICATE HOLDERS AS AT JUNE 30, 2015

1,8421,0481,130

744167703017271065

15873413233313211114111111113111111111112111111111111111111111

Certificate HoldingFrom To

Number ofCertificate Holders

TotalCertificates Held

1101501

1,0015,001

10,00115,00120,00125,00130,00135,00140,00145,00150,00155,00160,00165,00170,00175,00180,00190,00195,001

100,001105,001110,001115,001120,001125,001130,001135,001145,001150,001155,001160,001165,001170,001185,001190,001195,001200,001205,001220,001225,001250,001255,001285,001290,001305,001310,001315,001335,001340,001380,001400,001405,001410,001415,001425,001625,001795,001

1,010,0011,025,0011,115,0011,155,0011,195,0011,280,0011,320,0011,705,0012,495,0013,095,0013,435,0015,240,0015,925,001

100500

1,0005,000

10,00015,00020,00025,00030,00035,00040,00045,00050,00055,00060,00065,00070,00075,00080,00085,00095,000

100,000105,000110,000115,000120,000125,000130,000135,000140,000150,000155,000160,000165,000170,000175,000190,000195,000200,000205,000210,000225,000230,000255,000260,000290,000295,000310,000315,000320,000340,000345,000385,000405,000410,000415,000420,000430,000630,000800,000

1,015,0001,030,0001,120,0001,160,0001,200,0001,285,0001,325,0001,710,0002,500,0003,100,0003,440,0005,245,0005,930,000

103,282265,871777,540

1,695,5321,296,057

918,853553,245389,739742,978334,917223,779208,280729,852420,110405,872183,550263,620

74,100236,217165,334279,041300,000303,483107,200338,140234,042123,000128,875134,660137,500593,356152,812159,516325,125167,000171,630187,500191,195198,194608,762205,994221,500227,916251,000258,500289,081292,214308,197310,426320,000337,500688,000383,050401,233405,835411,184420,000429,000627,000795,198

1,014,0381,026,5001,116,0001,156,5001,196,5001,282,9553,218,0421,707,1352,500,0003,100,0003,436,1975,244,0005,925,784

5,208 52,440,000TOTAL

Page 5PATTERN OF HOLDING OF CERTIFICATES

BY THE CERTIFICATE HOLDERS AS AT JUNE 30, 2015

D I R E C T O R S , C E O A N D O T H E R S P O U S E A N D M I N O R C H I L D R E N

Zahid Bashir

Nazia Maqbool

Ambreen Zahid Bashir

Nadeem Maqbool

19,500

144,660

202,262

152,356

Categories ofCertificate Holders

Number ofCertificate Holders

Percentage%

CertificatesHeld

DIRECTORS, CEO & CHILDREN

ASSOCIATE COMPANIES

NIT & ICP

BANKS, DFI & NBFI

INSURANCE COMPANIES

MODARABAS & MUTUAL FUNDS

GENERAL PUBLIC (LOCAL)

GENERAL PUBLIC (FOREIGN)

OTHERS

TOTAL

11

4

2

6

5

6

3,961

1,171

42

5,208

705,745

203,912

1,700

1,755,187

2,349,909

489,631

34,699,953

1,132,933

11,101,030

52,440,000

1.35

0.39

0.01

3.35

4.48

0.93

66.17

2.16

21.16

100

Page 6 STATEMENT OF COMPLIANCE WITH THE

CODE OF CORPORATE GOVERNANCE

The statement is being presented to comply with the Code of Corporate Governance (CCG) contained in Regulation 35 of Listing Regulationsof Karachi Stock Exchange Limited, the Chapter XIII of Listing Regulations of Lahore Stock Exchange Limited and Chapter XI of ListingRegulations of the Islamabad Stock Exchange Limited for the purpose of establishing a framework of good governance, whereby a listedcompany is managed in compliance with the best practice of corporate governance.

The Board of Directors of Premier Financial Services (Pvt) Ltd the manager of First Equity Modaraba (company) has applied the principlescontained in the CCG in the following manner:

CategoryNon-ExecutiveDirectorsExecutive Directors

NamesMr Zahid BashirMr Nadeem MaqboolMr Adil A Ghaffar

At present the board includes:

The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this company(excluding the listed subsidiaries of listed holding companies where applicable).All the resident directors of the company are registered as taxpayers and none of them has defaulted in payment of any loan to abanking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange.During the year no casual vacancy occur in the board.The company has prepared a “Code of Conduct” and has ensured that appropriate steps have been taken to disseminate it throughoutthe company along with its supporting policies and procedures.The Board has developed a vision/ statement, overall corporate strategy and significant policies of the Modaraba. A complete recordof particulars of significant policies along with the dates on which they were approved or amended has been maintained.All the powers of the Board have been duly exercised and decisions on material transactions, including appointment anddetermination of remuneration and terms and conditions of employment of the CEO, other executive and non-executive directors,have been taken by the Board.The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purposeand the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, werecirculated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.Two of the Board members are certified directors and one enjoys the exemption from certification.No appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions ofemployment was made during the year.The directors' report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salientmatters required to be disclosed.The financial statements of the Modaraba were duly endorsed by CEO and CFO before approval of the board.The directors, CEO and executives do not hold any interest in the certificate of the Modaraba other than that disclosed in the pattern ofshareholding.The company has complied with all the corporate and financial reporting requirements of the CCG.The Board has formed anAudit Committee. It comprises of non-executive members.The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of theModaraba and as required by the CCG. The terms of reference of the committee have been formed and advised to the committee forcompliance.The Board has formed an HR and Remuneration Committee. It comprises non-executive and executive / CEO.The Board has set up an effective internal audit function that is considered suitably qualified and experienced for the purpose and isconversant with the policies and procedures of the company.The statutory auditors of the Modaraba have confirmed that they have been given a satisfactory rating under the quality control reviewprogram of the ICAP, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the companyand that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code ofethics as adopted by the ICAP.The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordancewith the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.The 'closed period', prior to the announcement of interim/final results, and business decisions, which may materially affect the marketprice of Modaraba's securities, was determined and intimated to directors, employees and stock exchanges.Material/price sensitive information has been disseminated among all market participants at once through stock exchange(s).We confirm that all other material principles enshrined in the CCG have been complied with except induction of independent directorand head of internal audit for which reasonable progress is being made by the company to seek compliance by the end of nextaccounting year.

On behalf of the Board

Adil A GhaffarChief Executive Officer

October 9, 2015Karachi

1.

2.

3.

4.5.

6.

7.

8.

9.10.

11.

12.13.

14.15.16.

17.18.

19.

20.

21.

22.23.

REPORT OF THE DIRECTORS OF THE

MODARABA COMPANY

Page 7

The Directors of the Premier Financial Services (Private) Limited, the management company of the ,are pleased to present their report and audited financial statements of the Modaraba together with the consolidated financial statements of theModaraba and Equity Textiles Limited, a wholly owned subsidiary, for the year ended June 30, 2015.

The profit for the year amounted to Rs. 11.40 million as compared to Rs 24.7 million for the last year translated in an earning per certificate ofRs. 0.22 as compared to Rs. 0.47 last year. Break-up value per certificate amounted to Rs. 12.03 against Rs. 12.33 last year.

Income 34,252,047ExpensesOperating Expenses (21,538,416)Bank Charges (2,688)

(21,541,104)Operating profit 12,710,943Other Income 431,953

13,142,896Management remuneration (1,314,288)Service sale tax on Management remuneration (197,143)

11,631,465Provision for Worker Welfare Fund (232,629)Profit for the year 11,398,836

Earning per Certificate 0.22

The directors are pleased to announce cash dividend of Rs. 0.17(1.70%) per certificate {2014: Rs. (3.75%) 0.375}in its meeting held onOctober 08, 2015 for the year ended June 30, 2015.The Certificate Share Transfer Book for the entitlement of profit distribution will remain closed from Saturday, November 14, 2015 toThursday, November 26, 2015 (both days inclusive)

Auditors qualified their opinion based on non-compliance of certain international accounting standards relating to adjusting cost to fair valueof marketable securities and any profit / loss should be taken / charge to profit and loss account for the year. Our principal stand for notaccepting auditors' qualification was based on the fact that, firstly, we do not foresee that these impairments are of permanent nature. Secondly,our Industry was established on the concept to distribute what it earns on yearly basis. Our regulators made it mandatory that to claim incometax exemption modarabas have to distribute 90% of profit for the year in the form of cash dividend to certificate holders. Therefore, adjustingcost to fair value would tantamount to distribution of either unrealized capital gain or recovery of cost.The Auditors also qualified their report on valuation of Trading Right Entitlement Certificate (TREC) and shares of Karachi Stock ExchangeLtd (KSEL) and Islamabad Stock Exchange Ltd (ISEL) based on the Technical Opinion of Institute of CharteredAccountants of Pakistan. Wedo not concur with the auditors' opinion. :1. TREC was given notional value of Rs. 15 M and Rs. 4 M by KSELand ISEL, respectively, for the purpose of Base Minimum Capital

in consultation with SECP;2. Shares of KSEL/ISEL

KSE founded in 1949 is the biggest and most liquid exchange in Pakistan. It was declared the “Best Performing Stock Market of theWorld for the year 2002”.With more than 560 listed companies, market capitalization of Rs 7.4 trillion and having listed capital ofmore than Rs. 1.189 trillion, average monthly turnover of 4.7 billion shares.At the year end the KSE-100 Index was 34,399 points.Break-up value per share was Rs. 10.17 as per the audited accounts of KSELfor the year ended June 30, 2015;ISE incorporated in 1989 in Islamabad. With 273 listed companies, market capitalization of Rs. 5.669 trillion and having listedcapital of more than Rs 902 billion, total volume traded was Rs. 25.8 million shares.At the year end the ISE Index was 3,595 points.Break Up value per share was Rs. 11.10 as per the audited accounts of ISELfor the year ended June 30, 2015;

Alhamdulillah, our profit for the year as reflected in our financial statements is Rs. 11.4 m. Musharakah investment portfolio was stable.During the year stock market was volatile and saw some major fluctuation. Our performance despite restrictions on investments in Shariahcompliant scrips only, is cause for satisfactory.ETL's book value increased from Rs. 24.66 in June 2014 to Rs. 28.29 in 2015. ETLwas able to realize profit of Rs. 65.28 million as against Rs.74.6 million translated into an earning per share (EPS) of Rs. 2.61 from Rs 2.98 last year.As highlighted earlier, the practical difficulties in complying with Stock Exchange (Corporatization, Demutualization and Integration) Act2012, as thisAct restricts TREC to companies only, as defined in Companies Ordinance, 1984. Our submission to SECPthat Modaraba being

FIRST EQUITYMODARABA(FEM)

Financial Results

Dividend Distribution

Auditors Qualification

Our Performance and Future Prospects

Rupees

REPORT OF THE DIRECTORS OF THE

MODARABA COMPANY

Page 8

regulated under its auspices and being a corporate legal entity, be considered as company for the purposes of thisAct has not been accepted bythe Regulators. Thereafter, we requested our prime regulator, Registrar Modaraba (RM) to allow us to create a wholly owned subsidiarycompany enabling us to protect and safe guard assets of the modaraba. Even though there is a precedent of FEM holding a wholly ownedsubsidiary (ETL), RM rejected our request. Thus having no other option, FEM filed a suit in the Honorable High Court of Sindh on April 202013 and Stay Order was granted. Subsequently, SECPissued brokerage renewal license in our favor.As required under SCSAM, FEM's financial transactions were duly vetted and audited by the independent Shariah Advisor and his report isannexed.

During the year under review, four board meeting were held and attend by the Directors as follows:-

As stated in previous years Report that the Board has decided to adopt the code of corporate governance as issued by the Securities andExchange Commission of Pakistan and made part of listing regulationAll activities are conducted as per the listing regulations of the stock exchanges. Vision & Mission statements, Core values and Code ofConduct have been prepared and approved by the Board and have been communicated to the employees. Significant policies as required underthe Code of Corporate Governance have been framed and are periodically reviewed by the Board.As required by the Code of Corporate Governance, Directors are pleased to report that:a. The financial statements prepared by the management of the Modaraba present fairly its true state of affairs, the result of its

operations, cash flows and changes in equity;b. Proper books of accounts of the Modaraba have been maintained;c. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are

based on reasonable and prudent judgment;d. International Financial Reporting Standards (IFRS), as applicable in Pakistan, have been followed in the preparation of financial

statements and any departure there from has been adequately disclosed in theAnnual Report.e. The system of internal control is consistently applied though out the year and has been effectively implemented and monitored with

ongoing efforts to improve it further;f. There is no doubt about the Modaraba's ability to continue as a going concern; andg. There has been no material departure from the best practice of corporate governance as detailed in the listing regulation of the Stock

Exchange (s).

The Modaraba's service rules provide an unfunded gratuity scheme for the permanent employees.

Bakr Tilly Mehmood Idrees Qamar

We acknowledge hard work with full dedication of our employees and are thankful to our business associates, clients and financial institutionsfor their confidence and support. We also appreciate the guidance and cooperation received from our regulators. They have our full supportand good wishes in their efforts at reforms.

Board of Directors

Code of Corporate Governance

Pattern of Shareholding - annexed

Key Operating and Financial Data - annexed

Staff Retirement Benefits

Auditors

Acknowledgement

The present auditors M/sAvais Hyder Liaquat Nauman, CharteredAccountants have completed their term of 5 years as per Code of CorporateGovernance. The Board has recommended the name of , Chartered Accountants. Their appointment issubject to the approval of the Registrar Modaraba.

Mr. Zahid BashirMr. Nadeem MaqboolMr. Adil A. Ghaffar

Name of Board Members Meetings Attended444

1.2.3.

On behalf of the Board

Adil A GhaffarChief Executive Officer

October 8, 2015Karachi

SHARI'AH REVIEW REPORT Page 9

Page 10 SHARI'AH REVIEW REPORT

Page 11REVIEW REPORT TO THE MEMBERS

ON STATEMENT OF COMPLIANCE WITH

BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE

We have reviewed the enclosed statement of compliance with the best practices contained in the Code of Corporate Governance(the Code) prepared by the Board of Directors of Premier Financial Services (Private) Limited (the Management Company) forthe year ended June 30, 2015 to comply with the requirements of listing regulation No. 35(Chapter XI) of the Karachi StockExchange Limited, Lahore Stock Exchange Limited and Islamabad Stock Exchange Limited where the Modaraba is listed

The responsibility for compliance with the Code is that of the Board of Directors of the Management Company. Our responsibilityis to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects thestatus of the Modaraba's compliance with the provision of the Code and report if it does not and to highlight any non-compliancewith the requirements of the Code.Areview is limited primarily to inquiries of the Management Company's personnel and reviewof various documents prepared by the Management Company to comply with the Code.

As a part of our audit of financial statements we are required to obtain an understanding of the accounting and internal controlsystem sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board ofDirectors' statement on internal control covers all risk and controls or to form an opinion on the effectiveness of such internalcontrols, the Management Company's corporate governance procedures and risks.

The Code requires the Management Company to place before the Audit Committee, and upon recommendation of the AuditCommittee, place before the board of Directors for their review and approval its related party transactions distinguishing betweentransactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are notexecuted at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only requiredand have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board ofDirectors upon recommendation of theAudit Committee. We have not carried out any procedures to determine whether the relatedparty transactions were undertaken at arm's length price or not.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does notappropriately reflect the Management Company's compliance, in all materials respects, which the best practices contained in theCode as applicable to the Modaraba, for the year ended June 30, 2015.

Further, we highlight instances of non-compliances with the requirements of the Code in respect of head of internal audit for theModaraba and independent director as reflected in the paragraph 23 where these are stated in the Statement of Compliance.

CharteredAccountantsKarachi.Dated: October 08, 2015

Engagement Partner:Adnan Zaman

Page 12 AUDITORS' REPORT

TO THE CERTIFICATE HOLDERS

We have audited the annexed balance sheet of FIRST EQUITY MODARABA(the Modaraba) as at June 30, 2015 and the related profit and lossaccount, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming partthereof (hereinafter referred to as the financial statements), for the year then ended and we state that we have obtained all the information andexplanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

These financial statements are the Modaraba Company's [Premier Financial Services (Private) Limited] responsibility who is also responsibleto establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approvedaccounting standards as applicable in Pakistan and the requirements of the Modaraba Companies and Modaraba (Floatation and Control)Ordinance 1980 (XXXI of 1980), and the Modaraba Companies and Modaraba Rules, 1981. Our responsibility is to express an opinion on thesestatements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of any material misstatement. An audit includesexamining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting policies and significant estimates made by the Modaraba Company, as well as, evaluating the overall presentation of the financialstatements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:

(a) Management of the Modaraba in the financial statements for the year ended June 30, 2013, had assigned values toTrading Rights Entitlement Certificates (TREC) of Karachi Stock Exchange Limited (KSE) and Islamabad StockExchange Limited (ISE) of Rs. 15 million and Rs. 4 million respectively that were based on the value assigned by KSEand ISE for base minimum capital requirement purposes applicable to the brokers of the stock exchange and hadrecognised 4,007,383 shares of KSE and 3,034,603 shares of ISE at their face values of Rs. 10/- each on exchange ofmembership card thereby the Modaraba recognized gain of Rs. 36.369 million which, in our opinion, was not inaccordance with International Accounting Standards and technical opinion of The Institute of Chartered Accountants ofPakistan (ICAP) issued in this respect.

(b) Modaraba has charged unrealised loss of Rs. 16.728 million, in respect of investment classified as financial asset at fairvalue through profit and loss, in other comprehensive income instead of profit and loss account as required under IAS 39.Had the Modaraba recognized the intangible asset and shares of KSE and ISE in accordance with the Technical Opinionof ICAP, its equity, intangible asset and long term investments would have been lower by Rs. 36.369 million, Rs. 7.7million and Rs. 28.6 million respectively and had the Modaraba charged the unrealized loss to the profit and loss account,Its profit for the year would have been lower by Rs. 16.728 million.

(c) Except for the matter discussed in paragraph (a) and (b) above, in our opinion, proper books of accounts have been keptby the Modaraba Company in respect of the Modaraba as required by the Modaraba Companies and Modaraba(Floatation and Control) Ordinance, 1980 (XXXI of 1980), and the Modaraba Companies and Modaraba Rules, 1981;

(d) Except for the matter discussed in paragraph (a) and (b) above, in our opinion:(i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with theModaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980), and the ModarabaCompanies and Modaraba Rules 1981, and are in agreement with the books of accounts and are further in agreementwith accounting policies consistently applied;(ii) the expenditure incurred during the year was for the purpose of the Modaraba's business; and(iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects,terms and conditions of the Modaraba;

(e) Except for the matter discussed in paragraph (a) and (b) above, in our opinion and to the best of our information and according to theexplanations given to us, the balance sheet, profit and loss account, statement of comprehensive income, cash flow statement andstatement of changes in equity together with the notes forming part thereof confirm with the approved accounting standards asapplicable in Pakistan and give the information required by the Modabara Companies and Modaraba (Floatation and Control)Ordinance, 1980 (XXXI of 1980), and the Modaraba Companies and Modaraba Rules, 1981, in the manner so required andrespectively give a true and fair view of the state of Modaraba's affairs as at June 30, 2015 and of its profit, its total comprehensiveIncome, its cash flows and changes in equity for the year then ended;

(f) In our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).


Engagement Partner: Adnan Zaman

Page 13BALANCE SHEET

AS AT JUNE 30, 2015

2014Rupees

524,400,000

134,699,560

(13,149,967)

646,764,838

815,245Remeasurement of defined benefit liability - Actuarial gain

Authorized Certificate Capital

60,000,000 (2014: 60,000,000) modaraba

certificates of Rs. 10 each

Equity &Liabilities

Capital and reserves

Certificate holders' equity

Certificate capital

Reserves

Total certificates holders' equity

Unrealised loss on remeasurment of investments

2015Rupees

600,000,000600,000,000

524,400,000

126,433,396

(20,170,414)

630,754,173

91,191

6

7

Note

1,556,255

1,756,255

11,856,701

37,823,469

25,966,768

200,000

Deferred liabilities

Creditors, accrued and other liabilities

Total current liabilities

Total non-current liabilities

Current liabilities

Non-current liabilities

Unclaimed profit distribution

Security deposit

2,655,483

2,855,483

24,375,437

51,993,753

686,344,562Total equity and liabilities 685,603,409

27,618,316

200,000

8

9

Contingencies and commitments 10

Page 14 BALANCE SHEET

AS AT JUNE 30, 2015

2014Rupees

Assets

Non-CurrentAssets

2015RupeesNote

Fixed assets

-tangible

-intangible

Investment property

Long term investments

Advances-considered good

Deposits

TotalNon-CurrentAssets

15,777,617

19,000,000

2,071,667

324,387,730

2,510,000

1,150,000

364,897,014

15,426,202

19,000,000

1,951,667

326,007,730

2,510,000

1,150,000

366,045,599

11

12

13

14

Morabaha/Musharaka receivables-secured

Short term investments

Advances

Trade deposits and prepayments

Other receivables

Tax refunds due from government

Bank balances

CurrentAssets

Total CurrentAssets

TotalAssets

159,320,497

107,396,243

1,422,588

14,981,918

24,533,228

3,903,578

9,889,496

321,447,548

686,344,562

153,003,609

97,882,927

3,525,359

15,027,294

25,218,541

4,614,680

20,285,400

319,557,810

685,603,409

15

16

17

18

19

20

The annexed notes 1 to 36 form an integral part of these financial statements.

Adil A. Ghaffar

Chief Executive Officer

Premier FinancialServices (Private) Limited

Zahid Bashir

Director


Nadeem Maqbool

Director


Page 15PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED JUNE 30, 2015


2014Rupees

2015RupeesNote

Income

Expenditure

Operating expenses

Financial charges

Operating profit

Other income

Management remuneration

Service Sales Tax on management remuneration

Worker Welfare Fund

Profit before taxation

Taxation - Current

Profit for the year

Earnings per certificate - Basic & Diluted

46,224,523

(18,425,749)

(5,695)

(18,431,444)

27,793,079

713,980

28,507,059

25,200,247

(2,850,700)

-

0.471

(456,112)

(504,005)

24,696,242

24,696,242

34,252,047

(21,538,416)

(2,688)

(21,541,104)

12,710,943

431,953

13,142,896

11,631,465

(1,314,288)

-

0.217

(197,143)

(232,629)

11,398,836

11,398,836

21

22

23

24

25

26

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


Page 16 STATEMENT OF OTHER COMPREHENSIVE INCOME



2014Rupees

2015Rupees

Profit for the year

Other comprehensive income

Unrealized (loss) on remeasurement of investments

Gain realized on disposal of investments

Items that will not be reclassified to profit & loss account

Remeasurement of defined benefit liability


Total comprehensive income for the year

24,696,242

(10,787,319)

4,992,048

(5,795,271)

355,591

(5,439,680)

19,256,562

Items that will be reclassified to profit & loss account on disposal

11,398,836

(15,099,567)

8,079,120

(7,020,447)

(724,054)

(7,744,501)

3,654,335

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


Page 17CASH FLOW STATEMENT


2014Rupees

2015RupeesNote


Adjustments for:

811

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


DepreciationProvision for gratuity

Dividend incomeLoss on sale of fixed asset

24,696,242

1,651,506351,700

(3,789,318)34,844

(1,751,268)Cash generated from operations before working capital changes 22,944,974

20

Working Capital changesDecrease/(increase) in operating assets

Morabaha/Musharaka receivables-securedAdvancesTrade deposits and prepayments

Other receivablesIncrease in operating liabilitiesCreditors, accrued and other liabilities

(9,281,437)1,779,560

44,6992,445,945

5,918,398907,165

Staff retirement benefit-gratuity paidDividend paidTaxes paidNet cash generated from operating activities

Cash flows from investing activities

Investments

Dividend receivedPurchase of tangible assetsNet cash (used in)generated from / investing activities

Net (decrease) / increase in cash and cash equivalentsCash and cash equivalents at beginning of the yearCash and cash equivalents at the end of the year


49,575,019

(531,875)(36,451)

(2,051,150)21,232,663

(64,387,724)3,771,518(301,980)

(60,918,186)

(39,685,523)

9,889,49619

11,398,836

1,680,912375,174

(4,185,556)13,303

(2,116,167)9,282,669

6,316,88850,573

(45,376)(529,265)

12,518,73618,311,556

9,889,496

-(18,013,452)(2,865,076)

6,715,697

872,8694,035,138

(1,227,800)3,680,207

10,395,904

20,285,400

Cash generated from operating activities

Page 18 STATEMENT OF CHANGES IN EQUITY


Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


Page 19NOTES TO THE FINANCIAL STATEMENTS


Legal Status and nature of business:

Statement of Compliance:

First Equity Modaraba (the Modaraba) was formed in 1991 under the Modaraba Companies and Modaraba (Floatation andControl) Ordinance, 1980 and the Rules framed there under and is managed by Premier Financial Services (Private) Limited (theModaraba Management Company), a company incorporated in Pakistan.The Modaraba is a perpetual, multipurpose modaraba and is able to undertake a variety of fund and fee based activities. Theseinclude trading, manufacturing, equity investment and their financing and facilitation. The Modaraba is a trading rightentitlement certificate holder of the Karachi and Islamabad stock exchanges of Pakistan and is currently operating its brokerageactivities in Karachi Stock Exchange.The Modaraba is listed on Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Modaraba is situated at B-1004, 10th floor, Lakson Square Building 3, Sarwar Shaheed Road, Karachi. The Modaraba is holding Equity Textiles Limited as awholly owned subsidiary company.

These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan.Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the InternationalAccounting Standards Board as are notified under the Companies Ordinance, 1984, the requirements of the Modaraba Companiesand Modaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued bythe Securities and Exchange Commission of Pakistan (SECP). Wherever the requirements of the Modaraba Companies andModaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued bySECP differ with the requirements of IFRS, the requirements of the Modaraba Companies and Modaraba (Floatation and Control)Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 or the directives issued by SECPprevail.

The Securities and Exchange Commission of Pakistan (SECP) has issued directive (vide SRO 865 (l) / 2005) that Islamic FinancialAccounting Standard 1 (IFAS-1) shall be followed in preparation of the financial statement by Companies and Modarabas whileaccounting for Morabaha transactions as defined by said Standard. The Modaraba has adopted the above said Standard.

The Securities and Exchange Commission of Pakistan (SECP) has issued directive (vide SRO 431 (l) / 2007) that Islamic FinancialAccounting Standard 2 (IFAS-2) shall be followed in preparation of the financial statement by Companies and Modarabas whileaccounting for Ijarah (Lease) transactions as defined by said Standard. The Modaraba has adopted the above said Standard.

The Securities and Exchange Commission of Pakistan (SECP) vide circular No. 10 of 2004 dated February 13, 2004 has deferred theapplication of IAS 17 "Leases" on modarabas till further orders.

The Modaraba has adopted the amendments to the following standards which became effective during the year:

The following standards, interpretations and improvements became effective for the current financial year but are either not relevantor do not have any material effect on the financial statements of the modaraba:IAS 19 - Employee Benefits (Amendment) - Defined benefit plans: Employee contributionsIAS 32 - Financial Instruments - Presentation - (Amendment) Offsetting financial assets and financial liabilitiesIAS 36 - Impairment ofAssets - (Amendment)- RecoveryAmount Disclosures for Non-FinancialAssetsIAS 36 - Impairment ofAssets - (Amendment) -RecoveryAmount Disclosures for Non-FinancialAssetsIAS 39 - Financial Instruments: Recognition and Measurement - (Amendment) Novation of Derivative and Continuation of hedgeAccountingIFRIC 21 - Levies

IFRS 2 Share-based Payment - Definitions of vesting conditionsIFRS 3 Business Combinations -Accounting for contingent consideration in a business combinationIFRS 3 Business Combinations - Scope exceptions for joint venturesIFRS 8 Operating Segments -Aggregation of operating segmentsIFRS 8 Operating Segments - Reconciliation of the total of the reportable segments' assets to the entity's assetsIFRS 13 Fair Value Measurement - Scope of paragraph 52 (portfolio exception)IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets - Revaluation method - proportionate restatement ofaccumulated depreciation / amortisationIAS 24 Related party Disclosures - Key management personnelIAS 40 Investment Property - Interrelationship between IFRS 3 and IAS 40 (ancillary services)The adoption of the above improvements to accounting standards and interpretations did not have any material effect on the financialstatements.

Initial application of standards, amendments or an interpretation to existing standards

Standards that became effective but not relevant to the company or do not have material effect

Improvements toAccounting Standards Issued by the IASB

1.

2.

.

2.1

2.2

2.3

2.4

2.5

2.5.1

2.5.2

Page 20 NOTES TO THE FINANCIAL STATEMENTS


Standards and interpretations issued but not yet effective for the current financial yearThe following are the standards and interpretations, which have been issued but are not yet effective for the current financial year:IFRS 10 Consolidated Financial Statements January 01, 2015IFRS 10, 12 & IAS 27 Investment Entities (Amendment) January 01, 2015

IFRS 9 Financial Instruments: Classification and Measurement January 01, 2018IFRS 14 Regulatory DeferralAccounts January 01, 2016IFRS 15 Revenue from Contracts with Customers January 01, 2018Securities and Exchange Commission of Pakistan (SECP) vide SRO 633(1)/2014 dated 10th July 2014 has approved the belowIFRSs:IFRS 10 - Consolidated Financial StatementsIFRS 11 - JointArrangementsIFRS 12 - Disclosure of interests in other entitiesIFRS 13 - Fair Value Measurements

These financial statements have been prepared under the historical cost convention except for certain financial assets which are statedat fair value.These financial statements have been prepared under the accrual basis of accounting except for cash flow information.

The preparation of financial statements in conformity with approved accounting standards requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgment in the process of applying the Modaraba's accountingpolicies. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of futureevents that are believed to be reasonable under circumstances. However, assumptions and judgments made by management in theapplication of accounting policies that have significant effect on the financial statements are not expected to result in materialadjustment to the carrying amounts of assets and liabilities in the next year. The areas involving a higher degree of judgments orcomplexity or areas where assumptions and estimates are significant to the financial estimates are as follows:

IFRS 10, 12 & IAS 27 Investment Entities:Applying the Consolidation Exception (Amendment) January 01, 2015IFRS 10 & IAS 28 Sale or Contribution ofAssets between an Investor and itsAssociate or January 01, 2016

Joint Venture (Amendment)IFRS 11 JointArrangements January 01, 2015IFRS 11 Accounting forAcquisition of Interest in Joint Operation (Amendment) January 01, 2016IFRS 12 Disclosure of interests in Other Entities January 01, 2015IFRS 13 Fair Value Measurement January 01, 2015IAS 1 Disclosure Initiative (Amendment) January 01, 2016IAS 16 & 38 Clarification ofAcceptable Method of Depreciation andAmortisation January 01, 2016

(Amendment)IAS 16 & 41 Agriculture Bearer Plants (Amendment) January 01, 2016IAS 27 Equity Method in Separate Financial Statements (Amendment) January 01, 2016

a) Useful life of depreciable assets/amortizable assets 5.1 & 5.2b) Impairment of assets 5.1.2 & 5.3.1c) Classification of investments 5.4d) Income tax 5.6e) Provision for staff gratuity 5.8f) Provision for non performing assets 5.12

The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies havebeen consistently applied to all the years presented, unless otherwise stated.

Fixed assets are stated at cost less accumulated depreciation and identified impairment loss, if any.Depreciation is charged to income applying the straight line method whereby the depreciable amount of an asset is written off over itsestimated useful life. Depreciation is charged at rates stated in note 11.

Standards issued by IASB but not yet notified by SECP

Tangible

Basis of measurement

Use of estimates

Note

Fixed assets

Significant accounting policies

2.5.3

2.5.4

3.1

3.2

5.1

5.1.1

3.

4.

5.



Depreciation on additions is charged from the month during which the asset is put to use. For disposals during the year, depreciation ischarged up to the month preceding the month of disposal.The assets' residual value and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements are capitalized.Expenditure incurred subsequent to the initial acquisition of assets are capitalised only when it meets the recognition criteria. Theprofit or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount ofthe asset is recognized as an income or expense.The Modaraba assesses at each balance sheet date whether there is any indication that fixed assets may be impaired. If such indicationexists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount.Where carrying values exceed the respective recoverable amounts, assets are written down to their recoverable amounts and theresulting impairment loss is recognized in income currently. The recoverable amount is the higher of an assets’ fair value less costs tosell and value in use. Where an impairment loss is recognized, the depreciation charge is adjusted in the future periods to allocate theassets’revised carrying amount over its estimated useful lives.

Intangible assets are stated at cost less impairment, if any. The carrying amount is reviewed at each balance sheet date to assesswhether it is in excess of its recoverable amount and where the carrying value exceeds estimated recoverable amount, it is writtendown to its estimated recoverable amount.

Property held to earn rentals or for capital appreciation or for both is classified as investment property. The investment property of theModaraba comprises of office premises and is valued using the cost method i.e.at cost less any accumulated depreciation and anyidentified impairment loss.Depreciation on office premises is charged to profit and loss account on the straight line method so as to write off the depreciableamount of office premises over its estimated useful life at the rate defined in note # 13. Depreciation on additions to investmentproperty is charged from the month in which a property is acquired or capitalized while no depreciation is charged for the month inwhich the property is disposed off.The Modaraba assesses at each balance sheet date whether there is any indication that investment property may be impaired. If suchindication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverableamount. Where carrying amounts exceed the respective recoverable amount, assets are written down to their recoverable amount andthe resulting impairment loss is recognised in profit and loss account.The recoverable amount is the higher of an asset’s fair value less

Intangible

Investment property

costs to sell and value in use. Where an impairment loss is recognised, the depreciation charge is adjusted in the future periods toallocate the asset’s revised carrying amount over its estimated useful life.The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amountof the asset is recognised as an income or expense

The deferred cost is written off over a period not exceeding five years in accordance with the requirements of third schedule ofModaraba Companies and Modaraba Rules, 1981.

Financial assets and financial liabilities are recognised when the Modaraba becomes a party to the contractual provisions of thefinancial instrument.

Financial assets and financial liabilities are measured initially at fair value plus transaction costs, except for financial assets andfinancial liabilities carried at fair value through profit or loss, which are measured initially at fair value.All regular way of purchases and sale of financial instruments are recognized/derecognized on the trade date.

Financial assets and financial liabilities are measured subsequently as described below.

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:- loans and receivables;- financial assets at fair value through profit or loss;- available-for-sale financial assets; and- held to maturity (the Modaraba does not have any such investments).

Deferred cost and amortization

Financial instruments

Initial recognition

Subsequent measurement

Financial assets

5.1.2

5.2

5.3

5.4

5.4.1



Loans and receivables

Financial assets at fair value through profit or loss

Available for sale financial assets

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.Following financial assets fall into this category of financial instruments:- Deposits-Advances- Other receivables- Cash and cash equivalents

Investments which are acquired principally for the purposes of generating profit from short term fluctuation in price or are part of theportfolio in which there is recent actual pattern of short term profit taking are classified as 'financial assets at fair value through profitor loss.Financial assets in this category are measured at fair value with gains or losses recognised in profit and loss account. Theseinvestments are marked to market and are carried on the balance sheet at fair value. Net gains and losses arising on changes in fairvalue of these investments are taken to the profit and loss account for the year.

Investments intended to be held for indefinite period of time, which may be sold in response to needs for liquidity or changes in equityprices, are classified as 'available for sale financial assets'.Available-for-sale financial assets are those non-derivative financial assetsthat are designated as available-for-sale financial assets or are not classified as (a) loans and receivables (b) held to maturityinvestments (c) financial assets at fair value through profit or loss. Subsequent to initial recognition these investments are marked tomarket using the closing market rate and are carried on the balance sheet at fair value. Surplus/Deficit arising from re-measurement aretaken to comprehensive income until the investments are sold/disposed-off or untill the investments are determined to be impaired, atwhich time, cumulative surplus or deficit previously reported in the comprehensive income is included in the current year's profit andloss accountInvestments in equity instruments that do not have a quoted market price in an active market and whose fair value can not be reliablymeasured are measured at cost or fair value

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financialasset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimatedfuture cash flows of that asset. Musharika and Morabaha receivables considered doubtful are provided for in accordance with therequirements of the Prudential Regulations for Modarabas.An impairment loss on available for sale financial asset -equity instruments is reversed only on the disposal of financial asset. Reversalof provision on musharika and morabaha receivables are reversed in accordance with Prudential Regulations for Modarabas.

These are derecognised when the contractual rights to the cash flows from the financial assets expire, or when the financial asset and allsubstantial risks and rewards are transferred.

The Modaraba's financial liabilities include unclaimed profit distribution, creditors, accrued expenses and other liabilities.

Derecognition of financial liabilitiesThese are derecognised when they are extinguished, discharged, cancelled or expired.

Investment in subsidiary is initially recognized at cost. At subsequent reporting dates, the recoverable amounts are estimated todetermine the extent of impairment losses, if any, and carrying amounts of investments are adjusted accordingly. Impairment losses arerecognized as expense. Where impairment losses subsequently reverse, the carrying amounts of the investments are increased to therevised recoverable amounts but limited to the extent of initial cost of investments. A reversal of impairment loss is recognized in theprofit and loss account.

a) Income from Morabaha/Musharaka transactions is recognized on the basis of pro-rata accrual of the estimated profit earned duringthe year.b) Dividend income is recognized when the right to receive dividend is established.c) Brokerage commission and fee income is recognized when accrued.d) Profit on PLS deposits is recognized on an accrual basis.E) Capital gains or losses arising on sale of investments are taken to income in the period in which they arise.

Impairment of financial assets

Derecognition of financial assets

Financial liabilities

Investment in subsidiary

Revenue recognition

5.4.2

5.4.3

5.5

Page 23

Taxation

CurrentThe charge for taxation is based on taxable income at current rates of taxation after taking into account tax credits and tax rebatesavailable, if any or minimum tax under the provisions of the Income Tax Ordinance, 2001. For items covered under final tax regime,provision is made according to the final tax rate provided in the Income Tax Ordinance, 2001. The income of Modaraba other thantrading income is exempt from tax under Clause 100 of Part I of the Second Schedule to the Income Tax Ordinance, 2001. Provided thatnot less than 90% of its total profits in the year as reduced by the amount transferred to a mandatory reserve, as required under theprovisions of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 or the rules made thereunder, as aredistributed amongst the certificate holders.

DeferredDeferred tax is recognized using the balance sheet liability method in respect of all temporary differences arising from differencesbetween the carrying amount of assets and liabilities in the financial statements and the tax base. This is recognized on the basis ofexpected manner of the realization and the settlement of the carrying amount of assets and liabilities using the tax rates enacted orsubstantially enacted at the balance sheet date. Deferred tax assets are recognized for all deductible temporary differences and carryforward of unused tax losses, if any, to the extent that future taxable profits will be available against which the deductible temporarydifferences can be utilised. Deferred tax assets are reduced to the extent that is no longer probable that the related tax benefit will berealised.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset isrealized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.However, deferred tax is not accounted for as the management believes that the temporary differences will not reverse in theforeseeable future.

All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at exchange rates prevailing at the balancesheet date. Transactions in foreign currencies are translated into Pak rupees at exchange rate prevailing at the date of transaction. Allnon-monetary items are translated into rupees at exchange rate prevailing on the date of transaction or on the date when fair values aredetermined. Exchange differences are included in income currently.

The Modaraba operates an Unfunded Gratuity for its permanent employees who complete the qualifying period of service. Provisionhas been made in accordance with actuarial recommendations using the Projected Unit Credit Method. The results of currentvaluation are summarized in Note 8.Actuarial gains / losses are recognized over the average lives of the employees.

A financial asset and financial liability is offset and the net amount is reported in the balance sheet if the Modaraba has a legallyenforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle theliability simultaneously.

Provisions are recognized in the balance sheet when the Modaraba has a legal or constructive obligation as a result of past event and itis probable that an outflow of resources embodying economic benefit will be required to settle the obligation and reliable estimate canbe made of the amount of the obligation.

Profit distribution to certificate holders is recognized as liability in the period in which such distribution is announced.

The carrying amount of Modaraba's assets are reviewed at each balance sheet date to determine whether there is any indication ofimpairment. If any such indication exists, the assets recoverable amount is estimated and impaired losses are recognized in the profitand loss account.

A segment is a distinguishable component of the Modaraba that is engaged in business activities from which the Modaraba earnsrevenues and incur expenses and its results are regularly reviewed by the Modaraba's Chief Operating Decision Maker to makedecision about resources to be allocated to the segment and assess its performance. Further, discrete financial information is availablefor each segment.Based on internal management reporting structure, services provided and products produced and sold, the Modaraba is organized intothe following four operating segments:

Foreign currency translation

Retirement benefits

Offsetting of financial assets and financial liabilities

Provisions

Profit distribution to certificates holders

Impairment

Segment reporting

5.6

5.6.1

5.6.2

5.7

5.8

5.9

5.10

5.11

5.12

5.13



Page 24

236,322



- Musharakah facility- Brokerage Operation- Capital Market- OthersManagement monitors the operating results of above mentioned segments separately for the purpose of making decisions aboutresources to be allocated and of assessing performance.

All transactions with related party, if any, are recorded at an arm's length basis.

For the purposes of cash flow statement, Cash and cash equivalents comprise cash in hand and cash with banks.

Items include in the financial statements are measured using the currency of primary economic environment in which the Modarabaoperates.The financial statements are presented in Pakistani Rupees, which is the Modaraba's functional and presentation currency.

The Modaraba's objective when managing capital is to safe guard the Modaraba's ability to continue as a going concern so that it canprovide returns for certificate holders and benefits for other stakeholders and to maintain a strong capital base to support the sustaineddevelopment of its businesses.The Modaraba manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes ineconomic conditions. In order to maintain or adjust the capital structure, the Modaraba may adjust the amount of dividend paid tocertificate holders or issue new certificates.

IAS 19 ‘Employee Benefits’(revised 2011) which become effective for the annual periods commencing on or after January 01, 2013,amends the accounting for the defined benefit plan. The revised standard has been applied retrospectively in accordance with thetransition provisions of the said standard and IAS 8 ‘Accounting Policies, Changes inAccounting Estimates and Errors’. The impactof adaption of IAS 19 (revised 2011) has been in the following areas:The standard requires that all actuarial gains /loss should be recognized immediately in other comprehensive income (OCI).The standard has also removed the option of Corridor approach and the standard requires immediate recognition of past service costin profit and loss statement. There is no impact of these requirements in the current year as Modaraba has not opted for corridorapproach neither it has unrecognized past service costs at the time of adoption of the said standard.The quantitative impacts arising from amendments in IAS 19 (revised 2011) on the items of financial statements are as follows:

The Modaraba’s policy for Staff Retirement Benefits and disclosure relating thereto have been amended to comply with therequirements of IAS 19 (revised 2011).

The FinanceAct 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance).Through these

Related party transactions

Cash and cash equivalents

Functional and reporting currency

Capital Risk Management

Change in Accounting PolicyAdoption of amendments in IAS 19 ‘Employee Benefits’

Workers' Welfare Fund

5.14

5.15

5.16

5.17

5.185.18.1

(i)(Ii)

5.18.2

5.18.3

5.18.4

2014 20122013Rupees Rupees Rupees

Impact on balance sheetDecrease in reservesIncrease in remeasurement of defined benefit liabilityImpact on profit and loss accountIncrease in salaries, allowances and benefits-gratuity expenseImpact on other comprehensive incomeIncrease in gain on remeasurement of defined benefit liabilityImpact on cash flow statementDecrease in profit before taxationIncrease in adjustments relating to provision for gratuityImpact on statement of changes in equityIncrease in unappropriated losses/ decrease in profitIncrease in remeasurement of defined benefit liability

351,700

351,700351,700

351,700351,700

351,700

351,700

351,700236,322236,322

236,322

236,322

236,322236,322

236,322236,322

223,332223,332

223,332

223,332

223,332223,332

223,332223,332

Page 25

6.

7.

8.

6.1

8.1

8.2



amendments Workers' Welfare Fund (WWF) is payable @ 2% of the profit before taxation as per the financial statements or taxableincome which ever is higher.During the year 2011, the Honorable Lahore High Court (LHC) in a constitutional petition relating to the amendments brought in theWWF Ordinance, 1971 through the Finance Act 2006, and the Finance Act 2008, has declared the said amendments as unlawful andunconstitutional and struck them down. In March 2013, a larger bench of the Sindh High Court (SHC) in various constitutionalpetitions declared that amendments brought in the WWF Ordinance, 1971 through the FinanceAct, 2006, and the FinanceAct 2008, donot suffer from any constitutional or legal infirmity. The Management Company as a matter of abundant caution, has made the provision forWWF.

Certificates held by management company 5,532,296 (2014: 5,532,296).Certificates held by associated companies and undertakings 1,126,412 (2014: 1,126,,412).

In accordance with the Prudential Regulations for Modarabas, the Modaraba is required to transfer an amount not less than 20% andnot more than 50% of its after tax profits to statutory reserve until the reserve funds equals the certificate capital. Thereafter, a sum notless than 5% of the after tax profits is required to be transferred to the statutory reserve.

Staff gratuity

Employees, after completion of one year of service, shall be entitled for gratuity on leaving the company’s employment. Gratuity shallbe paid on the basis of one month’s last drawnmonthly gross salary for each completed year of service.Annual provision is based on actuarial valuation, which was carried out as at June 30, 2015 on September 23, 2015 using the ProjectedUnit Method.

Amount recognized in the balance sheet are as follows:Present value of defined benefit obligationFair value of plan assetsTotal defined benefit

Certificate capital

Reserves

Deferred liability

General description

462,200,00046,220,000 46,220,000 462,200,000

62,200,0006,220,000 6,220,000

524,400,00052,440,000 52,440,000 524,400,000

62,200,000

20152015 20142014

RupeesRupees

Modaraba certificates of Rs. 10 each fully paid-up in cash

Modaraba certificates of Rs. 10 each issued as fully paid-upbonus certificates

110,003,318148,356,187

-

2,279,767 2,279,767 (2,279,767) (2,279,767)

150,635,954

279,456,187131,100,000

131,100,000

-

281,735,954

(171,876,627)

--

27,120,000

27,120,000

(144,756,627)

(155,302,558)

-

-

134,699,560

- 11,398,836 11,398,836 11,398,836 24,696,242- -

- (19,665,000) (19,665,000)

- -

Opening balance

Transfer from Profit & Loss

Account

Transfer to statutary reserve

StatutoryReserve *

Certificatepremiumaccount

TotalCapitalReserve

AccumulatedLoss

TotalRevenueReserves

GeneralReserve

TotalReserves

2015

TotalReserves

2014

Closing balance

-

(162,757,558)

134,699,560

-

126,433,396

Dividends paid

Capital Reserves Revenue Reserves

2015Rupees

2,655,4832,655,483

2,655,483-

2,655,483

2014Rupees

1,556,2551,556,255

1,556,255-

1,556,255

Note

8.1

No ofCertificates

No ofCertificates



Movement in defined benefit obligation

Actuarial assumptions

Sensitivity analysis of principal assumptions

Charity Payable - reconcilation

Opening balanceCharged for the define benefit planCurrent service costNet interest

Remeasurement of defined benefit liabilityDue to financial assumptionsDue to demographic assumptionsDue to experience adjustments

Benefits paidClosing balance

Valuation discount rateSalary increase rate -Short term (period of next one year)Salary increase rate- long term

Discount rateSalary Increase rateWithdrawal rate

Expected maturity analysis of undiscounted defined obligation for the gratuity scheme is as follows:

Following risks are associated with Defined benefit plans:The risk arises when the actual lifetime of retirees in longer than expectation. This risk is measured at the plan level

over the entire retiree population.The most common type of retirement benefit is one where the benefit is linked with the final salary. The risk

arises when the actual increases are higher than expectation and impacts the liability accordingly.The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation.

The movement of liability can go either way.

The disclosure made in notes 8.5 to 8.7 are based on the information included in the actuarial valuation report of the Modaraba as ofJune 30, 2014.

Payable to clientsAccrued expensesCharity payableOther liabilities

Opening balanceAdditionDisbursementsClosing balance

This include Rs 4,829,780 (2014 : Rs 5,754,180) payable to Premier Financial Services (Private) Limited.

Longevity risks:

Salary increase risk:

Withdrawal risk:


8.3

8.4

8.5

8.6

8.7

8.8

9.1

9.2

9.

1,556,255

168,971206,204375,175

341,123-

382,931724,054

-2,655,484

9.75%9.78%9.75%

1,623,0211,624,5601,556,496

16,277,2523,242,302

26,1034,829,780

24,375,437

255,42037,517

(266,834)26,103

2,092,021

141,700210,000351,700

(179,422)1,650

(177,819)(355,591)(531,875)1,556,255

13.25%0.00%

12.25%

1,495,0061,492,5271,556,012

3,797,3461,301,347

255,4206,502,588

11,856,701

227,39328,027

-255,420

8.4

1%1%

10%

9.19.2

2015Rupees

2014Rupees

Note

Rate per annum

Change inassumption

Increase inobligation

Decrease inobligation

Impact on obligation of change in assumptions

Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 yearsAt at June 30, 2015

Gratuity 902,214 15,196 15,972 73,892 15,284 2,200,849

Page 27

10.

11.

12.

12.1



Contingencies and commitments

Tangible

Intangible

Modaraba has filed a suit against Samba Bank Ltd for the recovery of deposit amounting to Rs 21 million alongwith mark up. Thematter is pending before the Honourable High Court of Sindh. Management of the Modaraba and its legal advisor are of the opinion thatModaraba has reasonable chance and it appear unlikely that Modaraba may suffer any loss from the same.

Trading Right Entitled Certificate

This represents Trading Right Entitlment certificates (TREC) recieved from Karachi Stock Exchanges Ltd and Islamabad StockExchanges Ltd after Demutilization.

2015Rupees

19,000,00019,000,000

2014Rupees

19,000,00019,000,000

Note

12.1 & 12.2

520,804,134

652,055

1,055,685

27,243,821

6,275,259 1,040,207-

1,024,000

82,300

121,500

1,059,460

(61,000)

33

20

20

- 20

(107,340)

Office premises

Furniture & fixtures

Motor vehicles

As atJuly 01,

2014

As atJuly 01,

2014

Addition /(Deletion) /* Transfer

Chargedduring the

year /*Transfer /

Disposal %

Office Equipments

2015

196,509

4,535,438

20,804,134 7,315,466

627,015 523,622598,069 32,890(107,337)

1,116,185 808,392770,165 83,001(44,774)

28,303,281 12,879,15211,466,204 1,562,985

196,509 196,500196,500 -

5,559,438 4,033,0993,626,211 406,888

13,488,668

1,526,339

103,393

307,792

15,426,202

9

Computers

Cost Accumulated Depreciation

ParticularsAs at

June 30,2015

As atJune 30,

2015

Book Valueas at

June 30,2015

Rate

2015

51,150,207(2,400,000)Office premises

As atJuly 01,

2013

As atJuly 01,

2013

Addition /(Deletion) /* Transfer

Chargedduring the

year /*Transfer /

Disposal %

23,204,134 5,443,385 14,528,875


ParticularsAs at

June 30,2014

As atJune 30,

2014

Book Valueas at

June 30,2014

Rate

2014

20,804,134 6,275,259

(899,000) 20

- 20Furniture & fixtures

Motor vehicles

196,509

5,434,438

-196,500

4,135,389 389,821 909,227

9196,509

4,535,438

73,800

228,180

(3,166,250)

(169,500)

33

20Office Equipments

2015

578,255

997,005

30,410,341

52,257

49,219(134,654)

289,518

545,812

855,600

11,176,686

53,986

285,520

15,777,617

Computers 625,055

1,055,685

27,243,821

598,069

770,165

11,466,204

196,500

3,626,211

(318,333)

(898,999)



In Stock Exchange (Corporatization, Demutualization and Integration) Act 2012 the prerequsite for TREC holder to register asBroker should be a company as defined in Companies Ordinance, 1984. Our submission to SECP that Modaraba although not acompany but being regulated under its auspices and a corporate legal entity, has not been accepted by the Regulators. Thereafter, wehave requested our prime regulator, Registrar Modaraba to allow us to create a wholly owned subsidiary enabling us to protect andsafe guard assets of the modaraba. The Registrar Modaraba did not understand our challenge and concern, we have left with no otheroption but to file a suit in the Honorable Sindh High Cout and got a stay order against the cancelation of Broker registration.

Fair value of the investment property, based on the valuation carried out by Consultancy Support & Service as at June 30, 2015 is Rs.23,432,500 (2014: Rs 20,000,000).

Listed securitiesUnlisted securities

Preference Share

The holdings are in ordinary shares of Rs. 10 each.

Equity Textiles Limited

Equity Textiles Limited is a wholly owned subsidiary of the Modaraba. Net assets value per share of Equity Textiles Limited is Rs.28.29 (2014: Rs. 24.66) as per financial statements as at June 30, 2015 audited by BDO Ebrahim & Company, CharteredAccountants.

The holding is in ordinary shares/units of Rs. 10 each of listed companies, unless otherwise stated:

Dawood Income Fund (Unit of Rs. 100 each)

Pakistan Telecommunication Company Limited

Javed Omer Vohra & Company Limited

First Dawood Mutual Fund

There was no trading on these scrips on June 30, 2015. Their last quoted /traded value is taken for valuation.Investment was made at inception and the carrying value was Rs 5,145,000. SECP took action against the management and as aresult the Trustee (Central Depository Company of Pakistan Limited) sold its investment and made the partial payment to shareholders. The Modaraba recieved Rs 4,935,859 in this matter.

Investment Property


Listed securities


Investment classified as available-for-sale financial assets



Open-end mutual funds

Fixed Line Telecommunication

Financial Services

Equity investment instruments

12.2

13.

14.

14.1

14.1.1

14.214.2.1

14.2.1.114.2.1.2

250,000,000250,000,000

1,959,12972,219,86174,178,990

1,828,740326,007,730

250,000,000

847,188

861,000

41,800

209,141

1,959,129

250,000,000250,000,000

2,167,86972,219,86174,387,730

-324,387,730

250,000,000

847,188

1,069,740

41,800

209,141

2,167,869

14.1

14.2.114.2.2

14.3

14.2.1.1

14.2.1.1

14.2.1.1 &14.2.1.2

2015Rupees

2014Rupees

Note

52,400,000 2,400,000 328,333 120,000-Office premises

As atJuly 01,

2014

Transferredfrom

tangiblefixed assetTransfer

Chargedduring the

year %

448,333 1,951,667


ParticularsAs at

June 30,2015

As atJune 30,

2015

Book Valueas at

June 30,2015

Rate

2015

25,000,000

11,968

42,000

22,000

735,000

25,000,000

11,968

42,000

22,000

735,000

2015Number

2014Number


FOR THE YEAR ENDED JUNE 30, 2015Unlisted securitiesThe holding is in ordinary shares of Rs. 10 each.

Sapphire Power Generation LimitedKarachi Stock Exchange LimitedIslamabad Stock Exchange LimitedCallmate Telips Telecom Limited

Net assets value per share of Sapphire Power Generation Limited is Rs. 69.72 (2013: Rs. 85.67) as per financial statements as atJune 30, 2014 audited by RiazAhmad, Saqib, Gohar & Company, CharteredAccountants.Net assets value per share of Karachi Stock Exchange Limited and Islamabad Stock Exchange Limited is Rs. 10.17 (2014: Rs.10.08) and Rs 11.10 (2014: Rs. 10.68) as per financial statements as at June 30, 2014 audited by Ernst & Young Ford Rhodes SidatHyder, CharteredAccountants and BDO Ebrahim & Company, CharteredAccountants respectively.The company is in the process of winding up, hence net assets value per share is not available.

The holding is in ordinary shares of Rs. 10 each.Mari Petroleum Ltd

Musharaka - considered goodMorabaha - considered doubtful

Provision for non performing assets

The Modaraba has entered into Morabaha and Musharaka agreements under which the Modaraba has provided funds for workingcapital requirements on profit and loss sharing basis. These are secured against pledge, hypothecation of stock and receivables,demand promissory notes, personal guarantee of directors / proprietors and mortgage of property. Expected rate of profit onMusharaka transactions during the year range between 12% to 16 % per annum ( 2014: 12 % to 20% per annum).All the amounts are short term. The carrying amount is considered a reasonable approximation of fair value.

Listed securities


Attock RefineryMari Petroleum Company LimitedHascol Petroleum Company LimitedNational Refinery LimitedOil & Gas Development Co LimitedPakistan Petroleum LimitedShell Pakistan Limited

Engro Foods Limited

AkzoNobel Pakistan LimitedLotte Chemical Pakistan PTALimitedGhani Global Gass LimitedICI Pakistan LimitedWah Noble Chemicals Limited

D.G. Khan Cement Company LimitedDewan Cement Limited

Preference Shares

Investment classified as financial asset at fair value through profit or loss

Listed securities

Oil and Gas

Food

Chemicals

Construction and materials



14.2.2

14.2.2.1

14.2.2.2

14.2.2.3

14.3

15.1

15.2

16.1

15.

16.

1,800,00040,073,83030,346,030

172,219,861

1,828,740

153,003,60917,380,055

170,383,664(17,380,055)153,003,609

97,882,927

-9,770,3101,145,100

-5,359,276

-12,597,408

-

1,787,352934,200655,900

1,115,062805,600

-4,145,460

1,800,00040,073,83030,346,030

172,219,861

-

159,320,49717,380,055

176,700,552(17,380,055)159,320,497

107,396,243

12,397,7369,261,064

-4,264,326

-12,966,852

6,050,532

102,530

692,736291,195

---

923,580-

14.2.2.114.2.2.214.2.2.3

15.2

16.1

2015Rupees

2014Rupees

Note

50,0004,007,3833,034,603

78,150

-

58,40024,800

-19,800

-57,80021,900

1,000

4,10040,500

---

10,500-

50,0004,007,3833,034,603

78,150

182,784

-20,85010,000

-29,900

-49,800

-

5,600135,000

35,0002,600

16,000

-285,000

2015Number

2014Number



Fauji Cement Company LimitedCherat Cement Company LimitedFecto Cement LimitedLucky Cement LimitedLafarge Pakistan Cement LimitedPioneer Cement Limited

Pakistan International Bulk Terminals Limited

Nishat Mills Limited

Tariq Glass Industries Limited

IBLHealthcare LimitedThe Searle Pakistan Limited

HondaAtlas Car (Pakistan) LimitedPak Suzuki LimitedGhaniAutomobile Limited

Pakistan Telecommunication Company LimitedNetsol Technologies Limited

K-Electric Limited

Bank Islami Pakistan Limited

EmployeeAdvance tax

The maximum aggregate amount due from employees at the end of any month during the year was Rs. 804,526 (2014: Rs.1,136,358). These are secured against the property documents retained by the Modaraba.

DepositsPrepayments

Sale proceeds of investmentsReceivable from clientsDividendOthers

Considered goodConsidered doubtful

Less: Provision for doubtful debts

Receivable from clients and others include receivable from related parties amounting to Rs. 358,628 (2014: Rs. 26,817).

Transport

Personal goods

Household goods

Pharma and biotech

Automobile and parts

Fixed line telecommunication

Electricity

Banks

Receivable from clients

Advances - considered good

Trade deposits and prepayments

Other receivables

17.

18.

19.

17.1

19.1

19.2

3,487,000174,060

-6,131,516

--

8,985,800

-

-

986,1007,215,525

7,391,3842,789,8245,822,200

12,207,750-

2,973,600

1,402,50097,882,927

660,2832,865,0763,525,359

14,772,665254,629

15,027,294

(3,457)24,064,703

168,217989,078

25,218,541

24,064,70312,500,00036,564,703

(12,500,000)24,064,703

1,452,620949,170

2,700,000-

10,283,1302,333,000

-

4,286,536

518,100

-3,560,616

7,354,110--

13,384,4852,870,420

9,249,855

1,503,650107,396,243

710,856711,732

1,422,588

14,767,556214,362

14,981,918

327,97923,226,360

17,800961,089

24,533,228

23,226,36012,500,00035,726,360

(12,500,000)23,226,360

17.1

19.1&19.2

2015Rupees

2014Rupees

Note2015Number

2014Number

75,50014,50054,000

-643,50050,000

-

38,300

16,500

-20,400

79,000--

525,50098,000

1,089,500

152,500

100,0002,000

-11,800

--

251,000

-

-

8,65022,500

33,8006,400

677,000

595,500-

354,000

137,500



Bank balances

Income

Operating expenses

in current accountsin saving accountsin Islamic bank investment accounts

Profit on MusharakaBrokerage commissionCapital gainDividendRentalCommission and fees

Salaries, allowances and benefitsTraveling, conveyance and entertainmentTelephone and postageElectricityInsurancePrinting, stationery and advertisingFees and subscriptionsVehicle running and maintenanceDepreciationFacilities and servicesRepair and maintenanceAnnual review meetingAuditor's remunerationLegal and professionalTraining and developmentShariahAdvisorZakat deductionKSE & SECPChargesWithholding & CVTtaxOthers

The aggregate amount charged in the financial statements for remuneration, including benefits to 8 (2014 : 8) employees of themodaraba is:

Salaries, allowances and benefits include provision for gratuity of Rs. 297,858 ( 2014: Rs. 351,700 ). Officers are also provided withfree use of the Modaraba maintained cars.

Remuneration of officers and other employees

20.

21.

22.

22.1

22.2

1,994,643311,027

17,979,73020,285,400

17,756,8382,852,1295,829,2344,185,5561,200,0002,428,290

34,252,047

4,338,679495,753922,061408,737201,089

1,160,6811,628,6221,251,0481,682,9854,508,446

922,40991,382

251,802531,682

-150,000

2,225721,206

2,194,60775,002

21,538,416

1,795,379319,212

7,774,9059,889,496

18,162,4771,368,642

21,799,0393,789,318

-1,105,047

46,224,523

4,360,627634,018265,587465,274279,212287,696

1,061,4221,608,5701,651,5064,508,4521,000,378

62,500318,145405,919

1,000131,250

-360,946951,576

71,67118,425,749

22.1

11

22.3

2015Rupees

2014Rupees

Note

2015 2014

OfficersOther

Employees OfficersOther

Employees

Salaries and allowances

Leave fare & Encashment

Expenses reimbursed: Medical

1,599,000

175,00029,832

1,803,832

1,655,100

74,340187,033

1,916,473

1,932,000

303,430

86,105

2,321,535

1,412,765

186,455

142,750

1,741,970



Auditor's remunerationAudit feeHalf yearly reviewOther fees

Bank Charges

Profit on Investment accounts with Islamic bankLoss on sale of tangible fixed assets

Assessment upto and including the tax year 2014 have been finalized under section 120 of the Income Tax Ordinance, 2001 (theOrdinance) which is subject to audit under section 170 of the Ordinance.The income of non-trading Modarabas is exempt from tax provided that not less than ninety percent of their profits for the year asreduced by the amount transferred to mandatory reserves are distributed to the certificate holders. As the Management Company ofthe Modaraba, subsequent to the year end, has approved the required distribution, no provision for taxation has been made in thesefinancial statements.

Profit for the year

Weighted average number of certificates outstanding during the year

Earnings per certificate - basic and diluted

There is no dilution effect on the basic earnings per share of the modaraba as the modaraba has no such commitments.

The board of directors of the Modaraba Management Company has overall responsibility for the establishment and oversight of theModaraba's risk management framework. The Modaraba has exposure to the following risks from its use of financial instruments:- Credit risk- Liquidity risk- Market risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur afinancial loss, without taking into account the fair value of any collateral. Concentration of credit risk arises when a number ofcounterparties are engaged in similar business activities or have similar economic features that would cause their ability to meetcontractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations of credit riskindicate the relative sensitivity of the Modaraba's performance to developments affecting a particular industry.Credit risk of the Modaraba arises principally from the investments, Musharaka/Morahaba receivables, advances, trade deposits andother receivables. The carrying amount of financial assets represents the maximum credit exposure. To reduce the exposure to creditrisk, the Modaraba has developed a formal approval process whereby credit limits are applied to its customers. The managementcontinuously monitors the credit exposure towards the customers and makes provision against those balances considered doubtfulfor recovery.

Financial Charges

Other income

Taxation

Earnings per certificates - basic and diluted

Risk management policies and objectives

Current

Financial risk management

Credit and concentration risk

22.3

26.1

23.

24.

25.

26.

27.

130,00025,00096,802

251,802

2,6882,688

445,256(13,303)431,953

11,398,836

52,440,000

0.217

130,00025,000

163,145318,145

5,6955,695

748,824(38,844)713,980

24,696,242

52,440,000

0.471

2015Rupees

2014Rupees



BusinessOpen-end mutual fundsOil and GasChemicalsConstruction and materialsPersonal goodsAutomobile and partsPharma and biotechFixed line telecommunicationElectricityFoodBankFinancial servicesEquity investment instrumentsStock ExchangeEngineeringOthers

The Carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The maximumexposure to credit risk at the reporting date is:

InvestmentMorabaha/Musharaka receivables-securedAdvances-considered goodTrade deposits and prepaymentsOther receivables

Liquidity risk is the risk that the Modaraba will encounter difficulty in meeting its financial obligations as they fall due. Liquidityrisk arises because of the possibility that the Modaraba could be required to pay its liabilities earlier than expected or difficulty inraising funds to meet commitments associated with financial liabilities as they fall due. The Modaraba's approach to managingliquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normaland stressed conditions, without incurring unacceptable losses or risking damage to the Modaraba's reputation.

Assets

Long term investmentsMorabaha & Musharaka receivablesShort term investmentsAdvancesTrade depositsOther receivablesTax refunds due from governmentBank balances

Liabilities

Deferred liabilitySecurity DepositCreditors, accrued and other liabilitiesProvision for taxationUnclaimed profit distribution

Net balance

Liquidity risk

847,18844,940,510

983,93118,641,500

254,804,6367,354,1103,560,616

17,324,64511,049,855

102,5301,503,650

41,800209,141

70,419,86013,819,560

190,098,672635,702,204

Over five years

250,000,000-------

250,000,000

250,000,000

423,890,657153,003,609

6,035,35916,177,29425,218,541

624,325,460

------

847,18828,872,094

5,298,11413,938,036

250,000,00016,003,408

8,201,62513,068,750

4,773,600-

1,402,50041,800

209,14170,419,86015,939,498

209,338,385638,353,999

Less thanOne year

-153,003,60997,882,927

3,525,35914,772,66525,218,541

4,614,68020,285,400

319,303,181

--

24,375,437-

27,618,31651,993,753

267,309,428

0.150.461.711.03

43.860.461.560.80

-1.25

-0.010.04

12.352.44

32.09100.00

431,783,973159,320,497

3,932,58816,131,91824,533,228

635,702,204

Total

326,007,730153,003,60997,882,927

6,035,35915,922,66525,218,541

4,614,68020,285,400

648,970,911

2,655,483200,000

24,375,437-

27,618,31654,849,236

594,121,675

0.134.520.832.18

39.162.511.282.050.75

-0.220.010.03

11.032.50

32.80100.00

Over one yearbut less than

five years76,007,730

--

2,510,0001,150,000

---

79,667,730

2,655,483200,000

---

2,855,48376,812,247

Rupees %Rupees %2015 2014

2015Rupees

2014Rupees

2015

Page 34

Assets

Long term investmentsMorabaha & Musharaka receivablesShort term investmentsAdvancesTrade depositsOther receivablesTax refunds due from governmentBank balances

Liabilities

Deferred liabilitySecurity DepositCreditors, accrued and other liabilitiesProvision for taxationUnclaimed profit distribution

Net balance

Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market interest rates or themarket price due to a change in credit rating of the issuer or the instrument, change in market sentiments, speculative activities,supply and demand of securities and liquidity in the market.

Operational Risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technologyand infrastructure supporting the Modaraba’s operations either internally within the Modaraba or externally at the Modaraba’sservice providers, and from external; factors other than credit, market and liquidity risks such as those arising from legal andregulatory requirements and generally accepted standards of investment management behavior. Operational risks arise from all ofthe Modaraba’s activities.The Modaraba’s objective is to manage operational risk so as to balance limiting of financial losses and damage to its reputation withachieving its objective of generating returns for certificate holders. The primary responsibility for the development andimplementation of controls over operational risk rests with the Board of Directors of the Management Company. This responsibilityencompasses the controls in the following areas:- Requirements for appropriate segregation of duties between various functions, roles and responsibilities;- Requirements for the reconciliation and monitoring of transactions;- Compliance with regulatory and other legal requirements- Documentation of controls and procedures;- Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address therisks identified;- Ethical and business standards;- Risk mitigation, including insurance where this is effective.

The Modaraba is of the view that the fair market value of most of the financial assets and financial liabilities are not significantlydifferent from their carrying amounts.

Morabaha/Musharaka receivablesAdvancesTrade deposits

Market risk

Operational Risk

Financial instruments by category

Fair value of financial instruments

Financial assetsLoans and receivables

28.

28.1

Over five years250,000,000

-------

250,000,000

250,000,000

------

153,003,6096,035,359

15,922,665

Less thanOne year

-159,320,497107,396,243

1,422,58814,767,55624,533,228

3,903,5789,889,496

321,233,186

--

11,856,701-

25,966,76837,823,469

283,409,717

Total324,387,730159,320,497107,396,243

3,932,58815,917,55624,533,228

3,903,5789,889,496

649,280,916

1,556,255200,000

11,856,701-

25,966,76839,579,724

609,701,192

159,320,4973,932,588

15,917,556



2,510,0001,150,000

-----

78,047,730

1,556,255200,000

---

1,756,25576,291,475

2014

2015Rupees

2014Rupees





Other receivablesBank balances



Financial liabilitiesFinancial liabilities at amortised costCreditors, accrued and other liabilitiesUnclaimed profit distribution

On balance sheet gap

The above analysis is based on the contractual/expected maturities of assets and liabilities which may not necessarily correspondwith actual maturities.

Tangible assetsIntangible assetsInvestment propertyLong term investmentsMorabaha & Musharaka receivablesShort term investmentsAdvancesTrade deposits and prepaymentsOther receivablesTax refunds due from governmentBank balances

Deferred liabilitiesSecurity DepositCreditors, accrued and other liabilitiesProvision for taxationUnclaimed profit distribution

Net balance

AssetsTangible assetsIntangible assetsInvestment propertyLong term investmentsMorabaha & Musharaka receivablesShort term investmentsAdvancesTrade deposits and prepaymentsOther receivablesTax refunds due from governmentBank balances


Available-for-sale financial assets

Maturities of assets and liabilities

Assets

Liabilities

29.

25,218,54120,285,400

97,882,927

74,178,990392,527,491

24,375,43727,618,31651,993,753

340,533,738

Over fiveYears

15,426,20219,000,000

1,951,667--------

36,377,869

------

36,377,869

15,777,61719,000,000

2,071,667--------

36,849,284

Over onemonth to one

year

----

125,175,89897,882,927

3,525,35914,877,29425,218,541

4,614,68020,285,400

304,495,139

--

20,181,939-

27,618,31647,800,255

256,694,884

----

138,090,938107,396,243

1,422,58814,831,91824,533,228

3,903,5789,889,496

300,067,989

24,533,2289,889,496

107,396,243

74,387,730395,377,338

11,856,70125,966,76837,823,469

357,553,869

Total

15,426,20219,000,000

1,951,667326,007,730153,003,60997,882,927

6,035,35916,177,29425,218,541

4,614,68020,285,400

685,603,409

2,655,483200,000

24,375,437-

27,618,31654,849,236

630,754,173

15,777,61719,000,000

2,071,667324,387,730159,320,497107,396,243

3,932,58816,131,91824,533,228

3,903,5789,889,496

686,344,562

Over one yearto five years

---

326,007,730--

2,510,0001,150,000

---

329,667,730

2,655,483200,000

---

2,855,483326,812,247

---

324,387,730--

2,510,0001,150,000

---

328,047,730

2015Rupees

2014Rupees

Upto onemonth

----

27,827,711--

150,000---

21,379,559

--

4,193,498--

4,193,49817,186,061

----

21,229,559--

150,000---

21,379,559

2015

2014

Page 36

After 1 Yr Sub totalWithin 1 Yr

2015


Effectiveyield /

profit riskYield / profit bearing maturing Non yield / profit bearing maturing

Total

-

12% to 16%

5% to 7%

-

-

- - -%

74,387,730

74,387,730

74,387,730

74,387,730 74,387,730Long term investments

Morabaha / Musharakah

receivables

Advances

Trade deposits

Other receivables

Bank balances


RupeesAfter 1 Yr Sub totalWithin 1 Yr

2014


Effectiveyield /


Total

159,320,497 159,320,497 159,320,497- - -

107,396,243 107,396,243 107,396,243

8,094,117 8,094,117

274,810,857

274,810,857

349,198,587

349,198,587

- - -

1,422,588

14,767,556

24,533,228 24,533,228 24,533,228

1,795,379 1,795,379

42,518,751 46,178,751

9,889,496

395,377,338

-

-

-

3,660,000

-

- - -- 2,510,000

1,150,000

3,932,588 3,932,588

15,917,556 15,917,556- - --

- - --

-

Financial Liabilities


On Balance Sheet Gap

Creditors, accrued and other

liabilities 11,856,701 11,856,701 11,856,701

25,966,768 25,966,768 25,966,768

34,582,793 34,582,793 37,823,469

7,935,958 3,660,000 11,595,958 357,553,869

-

-

-

-

-

-

-

-

-

-

-

-

-

-



LiabilitiesDeferred liabilitiesCreditors, accrued and other liabilitiesProvision for taxationUnclaimed profit distribution

Net balance

Yield/Profit rate risk exposure

The above analysis is based on the contractual/expected maturities of assets and liabilities which may not necessarily correspond with actual maturities.Yield risk is the risk of decline in earning due to adverse movement of the yield curve.Profit rate risk is the risk that the value of the financial instruments will fluctuate due to changes in the market profit rates.

30.

Over fiveYears

-----

36,849,284


year

--

7,663,20325,966,76833,629,971

266,438,018

Total

1,556,255200,000

11,856,70125,966,76839,579,724

646,764,838


1,556,255200,000

--

1,756,255326,291,475

Upto onemonth

--

4,193,498-

4,193,49817,186,061

-

12% to 16%

5% to 7%

-

-

- - -%

74,178,990

74,178,990

74,178,990 74,178,990Long term investments


receivables

Advances

Trade deposits

Other receivables

Bank balances


Rupees

153,003,609 153,003,609 153,003,609- - -

97,882,927

18,290,757

269,177,293

18,290,757

343,356,283

- - 97,882,927 -

3,525,359

14,772,665

25,218,541

1,994,643

45,511,208

1,994,643

49,171,208

20,285,400

392,527,491

25,218,541 25,218,541

-

-

-

3,660,000

- 97,882,927

- - -- 2,510,000

1,150,000

6,035,359

15,922,665 15,922,665

6,035,359

- - --

- - --

-





liabilities 24,375,437 24,375,437

27,618,316

51,993,753 51,993,753 51,993,753

(6,482,545) 3,660,000 (2,822,545) 340,533,738

27,618,316 27,618,316

24,375,437-

-

-

-

-

-

-

-

269,177,293 74,178,990 343,356,283

-

-

-

-

-

-

Description

Financial Assets

Description

Financial Assets



Segment information

Transactions with related parties

The Modaraba has three primary sources of revenue i.e. Musharaka facility, brokerage operations and capital market based on thenature of business and related risk associated with each type of business segment which are not deemed by the management to thesufficiently significant to disclose as separate items are reported under others.Segment assets and liabilities included all assets and liabilities related to the segment relevant proportion of the assets and liabilitiesallocated to the segment on reasonable basis.Segment revenue and expenses included all revenue and expenses related to the segment and relevant proportion of the revenue andexpenses allocated to the segment on reasonable basis.

The related parties of the Modaraba comprise the Modaraba Management Company, subsidiary company, staff retirement funds,directors of the Modaraba Management Company and key management personnel. Transactions with related parties are entered intoat arm's length.Transactions with related parties other than remuneration and benefits to officers and employees under the terms of theiremployment are as follows:

- Current account payable

- Investment in Equity Textiles Limited

- Deferred liability staff gratuity- Brokerage house client receivable

Balance outstanding at year endModaraba Management Company

Subsidiary company

Receivable from associated companyOther related parties (including key management personnel)

31.

32.

32.1

4,829,780

250,000,000418,367

2,655,483358,712

5,754,180

250,000,000349,099

1,556,25526,817

27,026,779

367,678,254 313,983,581

317,925,155 372,360,981

685,603,409 686,344,562

(13,883,883) (12,859,648)

(1,314,288) (2,850,700)

(197,143) (456,112)

(232,629) (504,005)

11,398,836

11,398,836

24,696,242

24,696,242

- -

46,938,503

41,366,707

5,280,419

(907,800)

44,244,512

44,244,512

16,277,252 16,277,252 3,950,979

38,571,984 32,628,745

54,849,236 36,579,72416,277,252

17,756,838

17,756,838

153,003,609

-

-

- -

-

- - -

-

-153,003,609

10,014,790

8,545,788

170,430,133

170,430,133

Segment Revenues

Segment Result

Unallocated Cost

Operating expenses

Management fee

Service Sale Tax

WWF


Taxation

Profit for the year

Other information

Segment assets

Unallocated assets

Total assets

Segment liabilities

Unallocated liabilities

Total liabilities

Rupees

MusharakahFacility

BrokerageOperation

CapitalMarkets

2015

Total TotalOthers

2014

1,631,953 34,684,000

1,631,953

-

-

-

-

-

-

2015Rupees

2014Rupees

Page 38

Transactions during the yearModaraba Management Company

Other related parties (including key management personnel)

- Reimbursement with service Sale Tax- Reimbursement

- Contribution to staff gratuity fundRelationship

Services acquired Associated companyBrokerage commission earned Associated company

Total number of employees of the Modaraba as at June 30, 2015 are 8 (2014: 8).

Figures have been rounded off to the nearest rupee.

These financial statements were authorized for issue in accordance with a resolution of the Board of Directors on October 08, 2015.The Board of Directors of the Management Company has approved dividend at the rate of Re. 0.17 per certificate (2014: Re. 0.375per certificate) for the year ended June 30, 2015, resulting in a total distribution of profit amounting to Rs. 8,914,800/- (2014: Rs.19,665,000/-), in its meeting held on October 08, 2015, which is more than 90% of the net profit for the year ended June 30, 2015,after appropriation to the statutory (mandatory) reserve as required under the Modaraba Regulations.

Figures in these financial statements have been rounded off to the nearest rupee.The corresponding figures, wherever necessary, have been re-arranged /re-classified for the purpose of comparison.Prior year figures have been reclassified for the purpose of better presentation and comparison.

Number of employees

Corresponding Figures

Authorization for issue

General

32.2

35.135.2

36.136.236.3

33.

34.

35.

36.

197,1434,508,446

1,099,228

227,412476,623

3,306,8124,508,452

351,700

247,15569,704

2015Rupees

2014Rupees

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director




Page 39NOTICE FOR BOOK CLOSURE

AND ANNUAL REVIEW MEETING

The 16th Annual Review Meeting of certificate holders of First Equity Modaraba will be held on ThursdayNovember 26, 2014 at 10:30 am. at Banquet Hall Regent Plaza Hotel & Convention Centre Shahrah-e-FaisalKarachi to review the performance of the Modaraba for the financial year ended June 30, 2015.

The certificate transfer book of the Modaraba shall remain closed from Saturday November 14, 2015 to ThursdayNovember 26, 2015 (both days inclusive) for the purpose of entitlement of cash profit distribution dividend. Alltransfers received by our certificate registrar M/s THK Associates (Pvt) Ltd. State Life Building # 3, Dr. ZiauddinAhmed Road, Karachi before the close of business on Friday, November 13, 2015 will be treated valid for attendingtheAnnual Review Meeting.

October 08, 2015 by order of the BoardQazi Obaid UllahCompany Secretary

Page 40

Page 41AUDITORS' REPORT

TO THE CERTIFICATE HOLDERS

We have audited the annexed consolidated financial statements comprising consolidated balance sheet of FIRST EQUITY MODARABA (theModaraba) and its subsidiary company as at June 30, 2015 and the related consolidated profit and loss account, consolidated statement ofcomprehensive income, consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming partthereof (hereinafter referred to as the financial statements), for the year then ended. We have also expressed separate opinion on the financialstatements of Modaraba. The financial statements of subsidiary company were audited by another auditor, whose report has been furnished to usand our opinion, in so far as its relates to the amounts included for the subsidiary company, is based solely on the report of such other auditorswho expressed an unqualified opinion.

These consolidated financial statements are the Modaraba Company's [Premier Financial Services (Private) Limited] responsibility who is alsoresponsible to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with theapproved accounting standards as applicable in Pakistan and the requirements of the Modaraba Companies and Modaraba (Floatation andControl) Ordinance 1980 (XXXI of 1980), Modaraba Companies and Modaraba Rules, 1981 and the Companies Ordinance, 1984. Ourresponsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free of any material misstatement. An auditincludes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting policies and significant estimates made by the Modaraba Company, as well as, evaluating the overall presentation ofthe consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we reportthat:

(a) Management of the Modaraba in the financial statements for the year ended June 30, 2013, had assigned values to Trading RightsEntitlement Certificates (TREC) of Karachi Stock Exchange Limited (KSE) and Islamabad Stock Exchange Limited (ISE) Rs. 15million and Rs. 4 million respectively that were based on the value assigned by KSE and ISE for base minimum capital requirementpurposes applicable to the brokers of the stock exchange and had recognised 4,007,383 shares of KSE and 3,034,603 shares of ISE attheir face values of Rs. 10/- each on exchange of membership card thereby the Modaraba recognized gain of Rs. 36.369 millionwhich, in our opinion, was not in accordance with InternationalAccounting Standards and technical opinion of The Institute ofCharteredAccountants of Pakistan (ICAP) issued in this respect.

(b) Modaraba has charged unrealised loss of Rs. 16.728 million, in respect of investment classified as financial asset at fair value throughprofit and loss, in other comprehensive income instead of profit and loss account as required under IAS 39.Had the Modaraba recognized the intangible asset and shares of KSE and ISE in accordance with theTechnical Opinion of ICAP, itsequity, intangible asset and long term investments would have been lower by Rs. 36.369 million, Rs. 7.7 million and Rs. 28.6 millionrespectively and had the Modabra charged the unrealized loss to the profit and loss account, its profit for the year would have beenlower by Rs. 16.728 million.

In our opinion, except for the matters stated in paragraph (a) and (b) above, the consolidated financial statements examined by us, present fairlythe financial position of First Equity Modaraba and its subsidiary company as at June 30, 2015 and the results of their operations,comprehensive income, their cash flows and changes in equity for the year then ended in accordance with approved accounting standards asapplicable in Pakistan.


Engagement Partner: Adnan Zaman

Page 42 CONSOLIDATED BALANCE SHEET

AS AT JUNE 30, 2015

2014Rupees

Equity &Liabilities

2015RupeesNote

Remeasurement of defined benefit liability - Actuarial gain

Authorized Certificate Capital

Surplus on revaluation of fixed assets

60,000,000 (2014: 60,000,000) modaraba

certificates of Rs. 10 each

Capital and reserves

Certificate holders' equity

Certificate capital

Reserves

Total certificates holders' equityUnrealised loss on remeasurment of investments


Deferred Mark upLong term financing

Subordinated loan


Current portion of long term liabilities

Short term borrowings

Total current liabilities

Total non-current liabilities

Current liabilities

Non-current liabilities


Accrued mark up

Security deposit

Total equity and liabilities


600,000,000600,000,000

524,400,000 524,400,000

187,492,272

(20,170,414)

691,813,806

396,256,172

439,104,58425,537,448

203,408,950

200,000

668,250,982

200,000

853,396,432

-

91,948

94,551,341

810,742

(13,149,967)

606,612,116

420,140,893

510,782,76649,537,448

252,876,218

40,000,000

18,166,501 59,286,520

93,928,184 57,428,186

176,149,285 137,864,786

19,722,294 19,925,020

27,618,316 25,966,768

335,584,580 300,471,280

2,091,905,540 2,180,620,720

6

7

8

9

10

11

12

13

14

15

16

17

Page 43CONSOLIDATED BALANCE SHEET

AS AT JUNE 30, 2015

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


2014Rupees

2015RupeesNote

AssetsNon-CurrentAssetsFixed assets-tangible

-intangible

Investment property


Advances

Deposits

TotalNon-CurrentAssets

CurrentAssetsStore and spares

Stock-in-trade

Trade debts



AdvancesTrade deposits and prepayments

Other receivablesTax refunds due from government

Tax-net

Cash and bank balances

Total CurrentAssets

TotalAssets


1,223,964,011

1,324,583,408

1,268,537,035

1,367,656,432

19,000,000 19,000,000

1,951,667 2,071,66776,007,730 74,387,730

2,510,000

1,150,000

2,510,000

1,150,000

29,440,537

214,722,397

93,542,674153,003,609

124,862,544

38,406,84023,167,882

26,918,541

20,987,246

10,639,864

31,629,998

767,322,132

2,091,905,540

26,392,239

197,654,563

161,835,541159,320,497

131,772,758

38,451,88026,327,143

28,886,955

24,387,804

1,334,370

16,600,538

812,964,288

2,180,620,720

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

Page 44 CONSOLIDATED PROFIT AND LOSS ACCOUNT


2014Rupees

2015RupeesNote

Income

Expenditure

Operating expenses

Distribution and selling expenses

Operating profit

Financial Charges

Management fee

Other Income

Other Charges

Service Sales Tax on management remuneration

Impairment in associated company

Share of profit / (loss) in associated company


Taxation

Profit for the year

- current

- prior

- deferred

Earnings per certificate - basic and diluted

221,646,648

(36,028,548)

(15,117,068)

(51,145,616)

170,501,032

(76,568,945)

93,932,087

1,281,706

95,213,793

(5,544,585)

(2,850,700)

(456,112)

-

(2,901,431)

83,460,965

(20,996,096)

(708,990)

33,682,101

11,977,015

95,437,980

1.82

200,762,263

(45,050,873)

(16,940,059)

(61,990,932)

138,771,331

(71,492,500)

67,278,831

1,951,525

69,230,356

(5,761,443)

(1,314,288)

(197,143)

(10,685,020)

3,073,446

54,345,908

(15,905,952)

(285,243)

30,422,755

14,231,560

68,577,468

1.31

33

34

35

36

37

38

39

40

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director



Page 45

20142015

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME



RupeesRupees

Profit for the year


Unrealized (loss) on remeasurement of investments

Gain realized on disposal of investments

Items that will not be reclassified to profit & loss account

Remeasurement of defined benefit liability

Share of gain / (loss) on remeasurement of defined benefit liability

in associated company


Total comprehensive income for the year

95,437,980

(10,787,319)

4,992,048

(5,795,271)

355,591

(10,805)

(5,450,485)

89,987,495

Items that will be reclassified to profit & loss account on disposal

68,577,468

(15,099,567)

8,079,120

(7,020,447)

(724,054)

5,260

(7,739,241)

60,838,227

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


Page 46 CONSOLIDATED CASH FLOW STATEMENT


2014Rupees

2015Rupees

Depreciation

Profit before taxationAdjustments for:

Provision for gratuity

Dividend income(Gain) / loss on sale of asset

Provision for doubtful debtImpairment in associated companyFinancial charges

Share of profit in associated company

83,460,965

134,151,011351,700

(3,789,318)2,901,431

34,844

Cash generated from operations before working capital changes

396,066-

76,568,945

210,614,679294,075,644

Cash flows from operating activities

AdvancesTrade deposits and prepayments

Other receivablesTax refund from government authoritiesIncrease/(decrease) in operating liabilities


Short term borrowing

Staff retirement benefit-gratuity paidFinancial charges paidDividend paidTaxes paidNet cash generated from operating activities

(39,911,247)(17,656,808)(21,931,308)

(531,875)

(36,451)(19,774,107)157,608,558

(64,387,724)-

4,752,652

(70,608,999)(130,244,071)

54,345,908

126,809,645375,174

(4,185,556)(3,073,446)

(342,140)1,721,890

10,685,02071,489,812

203,480,399257,826,307

(3,048,298)(17,067,834)

66,570,9776,316,888

45,0403,159,2612,124,462

4,449,055

(18,013,452)

(41,120,019)38,284,49959,714,031

(71,692,538) (94,193,345)

-

(26,545,814)201,288,534

(9,827,131)440,003

4,525,722(82,219,484)(87,080,890)

Working Capital changesDecrease/(increase) in operating assetsStore, Spares and Loose tools

Stock-in-trade

Trade debtsMorabaha/Musharaka receivables-secured

(880,487)93,693,613

(46,329,815)(9,281,437)(2,097,403)

532

531,744

-

Cash flows from investing activities

InvestmentsProceeds from sale of tangible assets

Dividend receivedPurchases of tangible assetsNet cash (used in)generated investing activities

Page 47

2014Rupees

2015Rupees

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


Cash flows from financing activities

Subordinated loanLong term financingNet cash generated from financing activities

Net (decrease) / increase in cash and cash equivalentsCash and cash equivalents at beginning of the yearCash and cash equivalents at the end of the year

-(70,346,630)(70,346,630)

(42,982,143)59,582,68116,600,538

(40,000,000)(59,178,184)(99,178,184)

15,029,46016,600,53831,629,998


CONSOLIDATED CASH FLOW STATEMENT


Page 48

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Page 49

Legal Status and nature of business:The group

Statement of compliance

The group consist of First Equity Modaraba (the Modaraba) and its subsidiary, Equity Textiles Limited (ETL) (subsidiary company).

First Equity Modaraba (the Modaraba) was formed in 1991 under the Modaraba Companies and Modaraba (Floatation and Control)Ordinance, 1980 and the Rules framed there under and is managed by Premier Financial Services (Private) Limited (the ModarabaManagement Company), a company incorporated in Pakistan.The Modaraba is a perpetual, multipurpose modaraba and is able to undertake a variety of fund and fee based activities. These includetrading, manufacturing, equity investment and their financing and facilitation. The Modaraba is a trading right entitlement certificateholder of the Karachi and Islamabad stock exchanges of Pakistan and is currently operating its brokerage activities in Karachi StockExchange.The Modaraba is listed on Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Modaraba is situated at B-1004, 10thfloor, Lakson Square Building 3, Sarwar Shaheed Road, Karachi. The Modaraba is holding Equity Textiles Limited as a wholly ownedsubsidiary company.

Equity Textiles Limited (ETL) was incorporated in Pakistan on May 31, 2005 as a public limited company under the Companies Ordinance,1984. The registered office of ETL is situated at 3rd Floor, Cotton Exchange Building, I.I. Chundrigar Road, Karachi. The principal activitiesof ETLis manufacturing and sale of textile products. ETLcommenced commercial operations onApril 1, 2007.

Subsidiaries are all entities over which the group has the power to govern the financial and operating policies generally accompanying ashareholding of more than one half of the voting rights or the parent - subsidiary relationship meet the definition as given in section 3 of theCompanies Ordinance, 1984. The existence and effect of potential voting rights that are currently exercisable or convertible are consideredwhen assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred tothe group and are de-consolidated from the date that control ceases.The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured asthe fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directlyattributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination aremeasured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost ofacquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is lessthan the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the profit and loss account.

Inter-company transactions, balances and unrealized gains/losses on transactions between group companies are eliminated.

Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which thegroup operates. The consolidated financial statements are presented in Pakistani Rupees which is the functional and presentation currency ofall the group companies.

These consolidated financial statements include the accounts of group [First Equity Modaraba and its subsidiary company Equity TextileMills Limited - (100% - Holding)]. Financial Statements of subsidiary company have been consolidated on a line-by-line basisAll material inter-company balances, transactions and resulting unrealized profit and losses have been eliminated.

These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approvedaccounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting StandardsBoard as are notified under the Companies Ordinance, 1984, the requirements of the Modaraba Companies and Modaraba (Floatation andControl) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued by the Securities and ExchangeCommission of Pakistan (SECP). Wherever the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance,1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued by SECP differ with the requirements of IFRS, the requirementsof the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 orthe directives issued by SECPprevail.The Securities and Exchange Commission of Pakistan (SECP) has issued directive (vide SRO 865 (l) / 2005) that Islamic FinancialAccounting Standard 1 (IFAS-1) shall be followed in preparation of the financial statement by Companies and Modarabas while accountingfor Morabaha transactions as defined by said Standard. The Modaraba has adopted the above said StandardThe Securities and Exchange Commission of Pakistan (SECP) has issued directive (vide SRO 431 (l) / 2007) that Islamic FinancialAccounting Standard 2 (IFAS-2) shall be followed in preparation of the financial statement by Companies and Modarabas while accountingfor Ijarah (Lease) transactions as defined by said Standard. The Modaraba has adopted the above said Standard.The Securities and Exchange Commission of Pakistan (SECP) vide circular No. 10 of 2004 dated February 13, 2004 has deferred theapplication of IAS 17 "Leases" on modarabas till further orders.

During the year, certain amendments to the Standards or new interpretation become effective. However, the amendments or interpretations didnot have any material effect on the financial statement of modaraba.

First Equity Modaraba

Equity Textiles Ltd

Consolidation procedure

Basis of consolidation

New standards, interpretations and amendments to published approved accounting standards

Subsidiaries

Transactions eliminated on consolidation

Functional and reporting currency of group

Standards, amendments or interpretations which may become effective during the year

1.

2.

1.1

1.2

1.3

1.4

2.1

2.2

2.3

2.4

2.52.5.1



Page 50

Standards that became effective but not relevant to the company or do not have material effect

Improvements toAccounting Standards Issued by the IASB

Amendments not yet effective

The following standards, interpretations and improvements became effective for the current financial year but are either not relevant or donot have any material effect on the financial statements of the modarabaIAS 19 - Employee Benefits (Amendment) - Defined benefit plans: Employee contributionsIAS 32 - Financial Instruments - Presentation - (Amendment) Offsetting financial assets and financial liabilitiesIAS 36 - Impairment ofAssets - (Amendment)- RecoveryAmount Disclosures for Non-FinancialAssetsIAS 39 - Financial Instruments: Recognition and Measurement - (Amendment)

Novation of Derivative and Continuation of hedgeAccountingIFRIC 21 - Levies

IFRS 2 - Share-based Payment - Definitions of vesting conditionsIFRS 3 - Business Combinations -Accounting for contingent consideration in a business combinationIFRS 3 - Business Combinations - Scope exceptions for joint venturesIFRS 8 - Operating Segments -Aggregation of operating segmentsIFRS 8 - Operating Segments - Reconciliation of the total of the reportable segments' assets to the entity's assetsIFRS 13 - FairValue Measurement - Scope of paragraph 52 (portfolio exception)IAS 16 - Property, Plant and Equipment and IAS 38 IntangibleAssets - Revaluation method - proportionate restatement of accumulateddepreciation / amortisationIAS 24 - Related party Disclosures - Key management personnelIAS 40 - Investment Property - Interrelationship between IFRS 3 and IAS 40 (ancillary services)The adoption of the above improvements to accounting standards and interpretations did not have any material effect on the financialstatements.

The following amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would beeffective from the dates as mentioned below against the respective standards or interpretationIFRS 5 Non-currentAssets Held for Sale and Discontinued Operations:Amendments resulting

from September 2014Annual Improvements to IFRSsIFRS 7 Financial Instruments: Disclosures -Amendments resulting from September 2014

Annual Improvements to IFRSs (Servicing Contracts andApplicability of the offsettingamendments in condensed interim financial statements)

IFRS 9 Financial Instruments - Finalised version, incorporating requirements for classificationand measurement, impairment, general hedge accounting and derecognition

IFRS 10 Consolidated Financial Statements -Amendments regarding the sale or contribution ofassets between an investor and its associate or joint venture

IFRS 10 Consolidated Financial Statements -Amendments regarding the application of theconsolidation exception

IFRS 11 JointArrangements -Amendments regarding the accounting for acquisitions of an interestin a joint operation

IFRS 12 Disclosure of Interests in Other Entities -Amendments regarding the application of theconsolidation exception

IAS 1 Presentation of Financial Statements -Amendments resulting from the disclosure initiative January 01, 2016IAS 16 Property, Plant and Equipment -Amendments regarding the clarification of acceptable

methods of depreciation and amortisation and amendments bringing bearer plants into thescope of IAS 16

IAS 19 Employee Benefits -Amendments resulting from September 2014Annual Improvementsto IFRSs

IAS 27 Separate Financial Statements (as amended in 2011) -Amendments reinstating theequity method as an accounting option for investments in in subsidiaries, joint venturesand associates in an entity's separate financial statements

IAS 28 Investments inAssociates and Joint Ventures -Amendments regarding the applicationof the consolidation exception

IAS 34 Interim Financial Reporting -Amendments resulting from September 2014AnnualImprovements to IFRSs

IAS 38 IntangibleAssets -Amendments regarding the clarification of acceptable methodsof depreciation and amortisation

IAS 39 Financial Instruments: Recognition and Measurement:Amendments to permit an entity toelect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedgeof the interest rate exposure of a portion of a portfolio of financial assets or financialliabilities when IFRS 9 is applied, and to extend the fair value option to certain contractsthat meet the 'own use' scope exception

IAS 41 Agriculture -Amendments bringing bearer plants into the scope of IAS 16 January 01, 2016IFRS 2 Share-based Payment -Amendments resulting from Annual Improvements

2010-2012 Cycle (definition of 'vesting condition')

January 01, 2016

January 01, 2016

January 01, 2018

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2016

January 01, 2014

January 01, 2018

July 01, 2014

2.5.2

Page 51NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


IFRS 3 Business Combinations -Amendments resulting from Annual Improvements2010-2012 Cycle (accounting for contingent consideration) and 2011-2013 Cycle (scope exception for joint ventures)

IFRS 8 Operating Segments -Amendments resulting from Annual Improvements 2010-2012Cycle (aggregation of segments, reconciliation of segment assets)

IFRS 10 Consolidated Financial Statements -Amendments for investment entities January 01, 2014IFRS 12 Disclosure of Interests in Other Entities -Amendments for investment entities January 01, 2014IFRS 13 Fair Value Measurement -Amendments resulting from Annual Improvements 2011-2013

Cycle (scope of the portfolio exception in paragraph 52)IAS 16 Property, Plant and Equipment -Amendments resulting from Annual Improvements

2010-2012 Cycle (proportionate restatement of accumulated depreciation on revaluation)IAS 19 Employee Benefits -Amended to clarify the requirements that relate to how

contributions from employees or third parties that are linked to service should be attributedto periods of service

IAS 24 Related Party Disclosures -Amendments resulting from Annual Improvements 2010-2012Cycle (management entities)

IAS 27 Separate Financial Statements -Amendments for investment entities January 01, 2014IAS 32 Financial Instruments - Presentation -Amendments relating to the offsetting of assets and

liabilitiesIAS 36 Impairment ofAssets -Amendments arising from recoverable amount disclosures for

non financial assetsIAS 38 IntangibleAssets -Amendments resulting from Annual Improvements 2010-2012

Cycle (proportionate restatement of accumulated depreciation on revaluation)IAS 39 Financial Instruments: Recognition and Measurement -Amendments for novations of

derivativesIAS 40 Investment Property -Amendments resulting from Annual Improvements 2011-2013

Cycle (interrelationship between IFRS 3 and IAS 40)

The following International Financial Reporting Standards or interpretations issued by IASB would be effective from the dates mentionedbelow against the respective standard or interpretation:IFRS 10 Consolidated Financial Statements January 01, 2015IFRS 10, 12 & IAS 27 Investment Entities (Amendment) January 01, 2015IFRS 10, 12 & Investment Entities:Applying the Consolidation Exception (Amendment) January 01, 2016IFRS 10 & Sale or Contribution ofAssets between an Investor and itsAssociate or

Joint Venture (Amendment)IFRS 11 JointArrangements January 01, 2015IFRS 11 Accounting forAcquisition of Interest in Joint Operation (Amendment) January 01, 2016IFRS 12 Disclosure of interests in Other Entities January 01, 2015IFRS 13 Fait Value Measurement January 01, 2015IAS 1 Disclosure Initiative (Amendment) January 01, 2016IAS 16 & 38 Clarification ofAcceptable Method of Depreciation andAmortisation (Amendment) January 01, 2016IAS 16 & 41 Agriculture Bearer Plants (Amendment) January 01, 2016IAS 27 Equity Method in Separate Financial Statements (Amendment) January 01, 2016

The following new standards and interpretations have been issued by the InternationalAccounting Standards Board (IASB), which have notbeen adopted locally by the Securities and Exchange Commission of Pakistan:IFRS 1 First TimeAdoption of International Financial Reporting StandardsIFRS 9 Financial InstrumentsIFRS 14 Regulatory DeferralAccountsIFRS 15 Revenue from Contracts with CustomersThe Company expects that the adoption of the above amendments and interpretations of the standards will not have any material impact andtherefore will not affect the Company's financial statements in the period of initial application.

The Modaraba has adopted the amendments to the following accounting standards which became effective during the year:Standards issued by IASB but not yet notified by SECPIFRS 9 Financial Instruments: Classification and Measurement January 01, 2018IFRS 14 Regulatory DeferralAccounts January 01, 2016IFRS 15 Revenue from Contracts with Customers January 01, 2018Securities and Exchange Commission of Pakistan (SECP) vide SRO 633(1)/2014 dated 10th July 2014 has approved the below IFRSs:- IFRS 10 - 'Consolidated Financial Statements"- IFRS 11 - 'JointArrangements'- IFRS 12 - 'Disclosure of interests in other entities'- IFRS 13 - ‘FairValue Measurement'

July 01, 2014

July 01, 2014

July 01, 2014

July 01, 2014

July 01, 2014

July 01, 2014

January 01, 2014

January 01, 2014

July 01, 2014

January 01, 2014

July 01, 2014

IAS 27IAS 28 January 01, 2016

Standards or interpretations not yet effective

Standards or interpretations not yet effective

Amendments that are effective in current year but not relevant to the Modaraba

2.5.3

2.5.4



Page 52

Basis of measurement

Use of estimates

Significant accounting policies

These financial statements have been prepared under the historical cost convention method except for certain financial assets which arestated at fair value and subsidiary's fixed assets which have been stated at revalued amounts.These financial statements have been prepared under the accrual basis of accounting except for cash flow information.

The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accountingestimates. It also requires management to exercise its judgment in the process of applying the Modaraba's accounting policies. Estimates andjudgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to bereasonable under circumstances. However, assumptions and judgments made by management in the application of accounting policies thathave significant effect on the financial statements are not expected to result in material adjustment to the carrying amounts of assets andliabilities in the next year. The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates aresignificant to the financial estimates are as follows:

a) Useful life of depreciable assets/amortizable assets 5.1 & 5.2b) Impairment of assets 5.1.3 & 5.4.1c) Classification of investments 5.4d) Income tax 5.12e) Provision for staff gratuity 5.14f) Provision for non performing assets 5.19

The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have beenconsistently applied to all the years presented, unless otherwise stated.

Fixed assets are stated at cost/revalued amount less accumulated depreciation and identified impairment loss, if any. Capital work-in-progress is stated at cost. Cost of operating fixed assets comprises historical cost, borrowing cost and other expenditures pertaining to theacquisition, construction, erection and installation of these assets.The Parent company charges depreciation on the straight line method and subsidiary company charge depreciation on reducing balancemethod, whereby the depreciable amount of an asset is written off over its estimated useful life. Depreciation is charged at rates stated in note17. Full Depreciation is charged on additions, except major additions or extensions to production, facilities which are depreciated on pro-ratabasis for the duration of use during the year. Parent company charges depreciation on additions from the month during which the asset is putto use. For disposals during the year, depreciation is charged up to the month preceding the month of disposal but subsidiary charge nodepreciation on assets deleted during the year. The Modaraba accounts for impairment, where indication exists, by reducing the carryingvalue to the estimated recoverable amount.The assets' residual value and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements are capitalized.Expenditures incurred subsequent to the initial acquisition of assets are capitalized only when it meets the recognition criteria. The profit orloss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset isrecognized as an income or expense.The group assesses at each balance sheet date whether there is any indication that fixed assets may be impaired. If such indication exists, thecarrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amounts. Where carryingvalues exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss isrecognized in income currently. The recoverable amount is the higher of an assets’ fair value less costs to sell and value in use. Where animpairment loss is recognized, the depreciation charge is adjusted in the future periods to allocate the assets’revised carrying amount over itsestimated useful lives.

Capital work-in-progress are stated at cost and consist of expenditure incurred, advances made and other costs directly attributable tooperating fixed assets in the course of their construction and installation. Cost also includes applicable borrowing costs. Transfers are madeto relevant operating fixed assets category as and when assets are available for use intended by the management.

Intangible assets are stated at cost less impairment, if any. The carrying amount is reviewed at each balance sheet date to assess whether it isin excess of its recoverable amount and where the carrying value exceeds estimated recoverable amount, it is written down to its estimatedrecoverable amount.

Property held to earn rentals or for capital appreciation or for both is classified as investment property. The investment property of theModaraba comprises of office premises and is valued using the cost method i.e. at cost less any accumulated depreciation and any identifiedimpairment loss.Depreciation on office premises is charged to profit and loss account on the straight line method so as to write off the depreciable amount of

Parent

Note

Fixed assets

Investment property

Tangible

Capital work-in-progress

Intangible

3.

4.

5.

3.1

3.2

5.15.1.1

5.1.2

5.1.3

5.2



office premises over its estimated useful life at the rate defined in note # 18. Depreciation on additions to investment property is charged fromthe month in which a property is acquired or capitalized while no depreciation is charged for the month in which the property is disposed off.The Modaraba assesses at each balance sheet date whether there is any indication that investment property may be impaired. If suchindication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount.Where carrying amounts exceed the respective recoverable amount, assets are written down to their recoverable amount and the resultingimpairment loss is recognised in profit and loss account. The recoverable amount is the higher of an asset’s fair value less costs to sell andvalue in use. Where an impairment loss is recognised, the depreciation charge is adjusted in the future periods to allocate the asset’s revisedcarrying amount over its estimated useful life.The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of theasset is recognised as an income or expense.

The deferred cost is written off over a period not exceeding five years in accordance with the requirements of third schedule of ModarabaCompanies and Modaraba Rules, 1981.

Financial assets and financial liabilities are recognised when the Modaraba becomes a party to the contractual provisions of the financialinstrument.

Financial assets and financial liabilities are measured initially at fair value plus transaction costs, except for financial assets and financialliabilities carried at fair value through profit or loss, which are measured initially at fair value.All regular way of purchases and sale of financial instruments are recognized/derecognized on the trade date.

Financial assets and financial liabilities are measured subsequently as described below.

All the financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions ofthe instruments. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.Anygain or loss on de-recognition of the financial assets and financial liabilities is taken to profit and loss account currently.

For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:• loans and receivables;• financial assets at fair value through profit or loss;• available-for-sale financial assets; and• held to maturity (the Modaraba does not have any such investments).

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.Following financial assets fall into this category of financial instruments:

• Deposits•Advances• Other receivables• Cash and cash equivalents

Investments which are acquired principally for the purposes of generating profit from short term fluctuation in price or are part of theportfolio in which there is recent actual pattern of short term profit taking are classified as 'financial assets at fair value through profit or loss'.Financial assets in this category are measured at fair value with gains or losses recognised in profit and loss account. These investments aremarked to market and are carried on the balance sheet at fair value. Net gains and losses arising on changes in fair value of these investmentsare taken to the profit and loss account for the year.

Investments intended to be held for indefinite period of time, which may be sold in response to needs for liquidity or changes in equity prices,are classified as 'available for sale financial assets'. Available-for-sale financial assets are those non-derivative financial assets that aredesignated as available-for-sale financial assets or are not classified as (a) loans and receivables (b) held to maturity investments (c) financialassets at fair value through profit or loss. Subsequent to initial recognition these investments are marked to market using the closing marketrate and are carried on the balance sheet at fair value. Surplus/Deficit arising from re-measurement are taken to comprehensive income untilthe investments are sold/disposed-off or untill the investments are determined to be impaired, at which time, cumulative surplus or deficitpreviously reported in the comprehensive income is included in the current year's profit and loss accountInvestments in equity instruments that do not have a quoted market price in an active market and whose fair value can not be reliablymeasured are measured at cost or fair value.

Afinancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired.Afinancial asset isconsidered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cashflows of that asset. Musharika and Morabaha receivables considered doubtful are provided for in accordance with the requirements of thePrudential Regulations for Modarabas.An impairment loss on available for sale financial asset -equity instruments is reversed only on the disposal of financial asset. Reversal ofprovision on musharika and Morabaha receivables are reversed in accordance with Prudential Regulations for Modarabas.

Deferred cost and amortization

Financial instruments

Initial recognition

Subsequent measurement

Subsidiary Company

Financial assets

Loans and receivables


Available for sale financial assets

Impairment of financial assets

5.3

5.4

5.4.1



Page 54

Derecognizing of financial assets


Derecognition of financial liabilities

Investment in associate

Parent companyCurrent

Deferred

These are derecognised when the contractual rights to the cash flows from the financial assets expire, or when the financial asset and allsubstantial risks and rewards are transferred.

The Modaraba's financial liabilities include unclaimed profit distribution, creditors, accrued expenses and other liabilities.

These are derecognised when they are extinguished, discharged, cancelled or expired.

Associated companies, where the Modaraba holds 20% or more of the voting power of the investee company and where the company hassignificant influence, but not control, over the financial and operating policies, are accounted for using the equity method.Investment in associate is stated in consolidated financial statements using the equity method of accounting. Under the equity method,investments in associate is carried in the balance sheet at cost as adjusted for post acquisition changes in the Modaraba's share of net assets ofthe associate, less any impairment in the value of individual investment. When the Modaraba's share of losses in an associate equals orexceeds its interest in the associate including any other unsecured receivables if any, the Modaraba does not recognise further losses, unless ithas incurred obligations or made payments on behalf of associate.

These are valued at weighted average cost except for items in transit, which are valued at cost comprising invoice value, plus other chargespaid thereon. Provision is made for slow moving and obsolete items.

These are valued at the lower of cost and net realizable value except waste, which is valued at net realizable value determined on the basis ofcontract price. The cost is determined as follows:Raw materials Weighted average costWork-in-progress and finished goods Weighted average manufacturing cost including a proportion of production overheadsWaste Net realizable valueNet realisable value represents estimated selling prices in the ordinary course of business less expenses incidental to making the sale.

Trade debts are carried at the amounts billed / charged which is fair value of consideration to be received in the future.An estimate is made fordoubtful receivables based on review of outstanding amounts at the year end, if any. Provision is made against those having no activityduring the current period and are considered doubtful by the management. Balances considered bad and irrecoverable are written off whenidentified.

Other receivables are recognized at nominal amount which is fair value of the consideration to be received in the future.

Liabilities 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 goodsand services received.

(a) Income from Morabaha/Musharaka transactions is recognized on the basis of pro-rata accrual of the estimated profit earnedduring the year.

(b) Dividend income is recognized when the right to receive dividend is established.(c) Brokerage commission and fee income is recognized when accrued.(d) Profit on PLS deposits is recognized on an accrual basis.(e) Capital gains or losses arising on sale of investments are taken to income in the period in which they arise.(f) Sales are recognized on dispatch of goods to customers, when risk and rewards of ownership are transferred. Waste sales are

recognized when delivery is made to customers.(g) Profit on investment accounts with Islamic banks is recognized on an accrual basis.(h) Rent from investment property is recorded on accrual basis

Financing and borrowings are recorded at the amounts received. Financial charges are accounted for on accrual basis. Financial charges onlong term financing is capitalized up to the date of commissioning of respective property, plant and equipment acquired out of the proceeds ofsuch long term financing. Other financial charges are charged to profit and loss account in the year in which they are incurred.

The charge for taxation is based on taxable income at current rates of taxation after taking into account tax credits and tax rebates available, ifany or minimum tax under the provisions of the Income Tax Ordinance, 2001. For items covered under final tax regime, provision is madeaccording to the final tax rate provided in the Income Tax Ordinance, 2001. The income of Modaraba other than trading income is exemptfrom tax under Clause 100 of Part I of the Second Schedule to the Income Tax Ordinance, 2001. Provided that not less than 90% of its totalprofits in the year as reduced by the amount transferred to a mandatory reserve, as required under the provisions of the Modaraba Companiesand Modaraba (Floatation and Control) Ordinance, 1980 or the rules made thereunder, as are distributed amongst the certificate holders.

Deferred tax is recognized using the balance sheet liability method in respect of all temporary differences arising from differences between

Stores, spares and loose tools

Stock-in-trade

Trade debts

Other receivables


Revenue recognition

Borrowing cost

Taxation

5.4.2

5.4.3

5.5

5.6

5.7

5.8

5.9

5.10

5.11

5.12



the carrying amount of assets and liabilities in the financial statements and the tax base. This is recognized on the basis of expected manner ofthe realization and the settlement of the carrying amount of assets and liabilities using the tax rates enacted or substantially enacted at thebalance sheet date. Deferred tax assets are recognized for all deductible temporary differences and carry forward of unused tax losses, if any, tothe extent that future taxable profits will be available against which the deductible temporary differences can be utilised. Deferred tax assetsare reduced to the extent that is no longer probable that the related tax benefit will be realised.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or theliability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.However, deferred tax is not accounted for as the management believes that the temporary differences will not reverse in the foreseeable future.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date,and any adjustment to tax payable in respect of previous years

Deferred taxation is accounted for using the balance sheet liability method providing for temporary differences between the carrying amountof assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred taxliabilities are generally recognized for all taxable temporary timing differences and deferred tax assets to the extent that it is probable thattaxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or theliability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.Deferred tax is calculated based on the rates that have been enacted or substantively enacted upto the balance sheet date and are expected toapply to the period when the difference arises

All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at exchange rates prevailing at the balance sheet date.Transactions in foreign currencies are translated into Pak rupees at exchange rate prevailing at the date of transaction.All non-monetary itemsare translated into rupees at exchange rate prevailing on the date of transaction or on the date when fair values are determined. Exchangedifferences are included in income currently.

Assets and liabilities in foreign currencies are translated at the rates of exchange prevailing at balance sheet date or at the contracted rates whileforeign currency transactions are recorded at the rates of exchange prevailing at the transaction date or at the contracted rates. Exchange gainsand losses are charged to income currently.

The Modaraba operates an Unfunded Gratuity for its permanent employees who complete the qualifying period of service. Provision has beenmade in accordance with actuarial recommendations using the Projected Unit Credit Method. The results of current valuation are summarizedin Note 12 of this financial statement.Actuarial gains / losses are recognized over the average lives of the employees.Subsidiary company

The Company operates a funded employees’ provident fund scheme for its permanent employees. Equal monthly contributions at therate of 6 percent of basic pay are made both by the Company and employees to the Fund.

Compensated absences are accounted for in the period in which the absences are earned.

A financial asset and financial liability is offset and the net amount is reported in the balance sheet if the Modaraba has a legally enforceableright to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The Company enters in to derivative financial instruments. These are initially recorded at cost and are re-measured to fair value at subsequentreporting dates. Any resulting gain or loss is recognized in current year income. Derivatives with positive market values are included in otherreceivables and derivatives with negative market values are included in other liabilities in the balance sheet.

Provisions are recognized in the balance sheet when the Modaraba has a legal or constructive obligation as a result of past event and it isprobable that an outflow of resources embodying economic benefit will be required to settle the obligation and reliable estimate can be madeof the amount of the obligation.

Profit distribution to certificate holders is recognized as liability in the period in which such distribution is announced

The carrying amount of Modaraba's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.If any such indication exists, the assets recoverable amount is estimated and impaired losses are recognized in the profit and loss account.

Asegment is a distinguishable component of the Modaraba that is engaged in business activities from which the Modaraba earns revenues andincur expenses and its results are regularly reviewed by the Modaraba's Chief Operating Decision Maker to make decision about resources tobe allocated to the segment and assess its performance. Further, discrete financial information is available for each segment.

Subsidiary companyCurrent

Deferred

Parent company

Subsidiary company

Parent company

Defined contribution plan

Employee compensated absences

Foreign currency translation

Retirement benefits

Offsetting of financial assets and financial liabilities

Derivative financial instruments

Provisions

Profit distribution to certificates holders

Impairment

Segment reporting

5.13

5.14

5.15

5.16

5.17

5.18

5.19

5.20



Page 56

Based on internal management reporting structure, services provided and products produced and sold, the Modaraba is organized into thefollowing four operating segments:- Musharaka facility- Brokerage operation- Capital market- Textile Business- OthersManagement monitors the operating results of above mentioned segments separately for the purpose of making decisions about resources tobe allocated and of assessing performance.

All transactions with related parties, if any, are recorded at an arm's length basis.

Transactions and contracts with the related parties are based on the policy that all transactions between the Company and related parties arecarried out at an arm’s length.These prices are determined in accordance with the methods prescribed in the Companies Ordinance, 1984.

For the purposes of cash flow statement, Cash and cash equivalents comprise cash in hand and cash with banks net of borrowing consideredas being in the nature of financing activities. .

Items include in the financial statements are measured using the currency of primary economic environment in which the Modaraba operates.The financial statements are presented in Pakistani Rupees, which is the Modaraba's functional and presentation currency.

The Modaraba's objective when managing capital is to safeguard the Modaraba's ability to continue as a going concern so that it can providereturns for certificate holders and benefits for other stakeholders and to maintain a strong capital base to support the sustained developmentof its businesses.The Modaraba manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes ineconomic conditions. In order to maintain or adjust the capital structure, the Modaraba may adjust the amount of dividend paid to certificateholders or issue new certificates.

IAS 19 ‘Employee Benefits’ (revised 2011) which become effective for the annual periods commencing on or after January 01, 2013,amends the accounting for the defined benefit plan. The revised standard has been applied retrospectively in accordance with the transitionprovisions of the said standard and IAS 8 ‘Accounting Policies, Changes inAccounting Estimates and Errors’.The impact of adaption of IAS19 (revised 2011) has been in the following areas:The standard requires that all actuarial gains /loss should be recognized immediately in other comprehensive income (OCI).The standard has also removed the option of Corridor approach and the standard requires immediate recognition of past service cost in profitand loss statement. There is no impact of these requirements in the current year as Modaraba has not opted for corridor approach neither it hasunrecognized past service costs at the time of adoption of the said standard.The quantitative impacts arising from amendments in IAS 19 (revised 2011) on the items of financial statements are as follows:

The Modaraba’s policy for Staff Retirement Benefits and disclosure relating thereto have been amended to comply with the requirements ofIAS 19 (revised 2011).Subsidiary accounting judgment and critical estimates / assumptionsThe preparation of financial statements in conformity with approved accounting standards requires the management to:-

Related party transactions

Cash and cash equivalents

Functional and reporting currency

Capital Risk Management

Change in Accounting Policy

Parent

Subsidiary Company

Adoption of amendments in IAS 19 ‘Employee Benefits’

5.21

5.22

5.23

5.24

5.255.25.1

(i)(ii)

5.25.2

5.25.3

236,322

2014 20122013Rupees Rupees Rupees

Impact on balance sheet

Decrease in reservesIncrease in remeasurement of defined benefit liabilityImpact on profit and loss accountIncrease in salaries, allowances and benefits-gratuity expenseImpact on other comprehensive incomeIncrease in gain on remeasurement of defined benefit liabilityImpact on cash flow statementDecrease in profit before taxationIncrease in adjustments relating to provision for gratuityImpact on statement of changes in equityIncrease in unappropriated losses/ decrease in profitIncrease in remeasurement of defined benefit liability

351,700

351,700351,700

351,700351,700

351,700

351,700

351,700236,322236,322

236,322

236,322

236,322236,322

236,322236,322

223,332223,332

223,332

223,332

223,332223,332

223,332223,332



- exercise its judgment in process of applying the Company’s accounting policies, and- use of certain critical accounting estimates and assumptions concerning the future.These involve critical accounting estimates and significant assumptions concerning the future are discussed below:-Income taxesThe Company takes into account relevant provisions of the prevailing income tax laws while providing for current and deferred taxes asexplained in note 4.6 to these financial statements.Property, plant and equipmentManagement has made estimates of residual values, useful lives and recoverable amounts of certain items of property, plant and equipment.Any change in these estimates in future years might affect the carrying amounts of the respective items of property, plant and equipment withcorresponding effect on the depreciation charge and impairment loss.Stores and sparesManagement has made estimates for realizable amount of slow moving and obsolete stores and spares items to determine provision for slowmoving and obsolete items. Any future change in the estimated realizable amounts might affect carrying amount of stores and spares withcorresponding affect on amounts recognized in profit and loss account as provision / reversal.Workers' Welfare FundThe Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). Through theseamendments Workers' Welfare Fund (WWF) is payable @ 2% of the profit before taxation as per the financial statements or taxable incomewhich ever is higher.During the year 2011, the Honorable Lahore High Court (LHC) in a constitutional petition relating to the amendments brought in the WWFOrdinance, 1971 through the Finance Act 2006, and the Finance Act 2008, has declared the said amendments as unlawful andunconstitutional and struck them down. In March 2013, a larger bench of the Sindh High Court (SHC) in various constitutional petitionsdeclared that amendments brought in theWWF Ordinance, 1971 through the FinanceAct, 2006, and the FinanceAct 2008, do not suffer fromany constitutional or legal infirmity. The Management Company as a matter of abundant caution, has made the provision forWWF.

Certificate capital

Reserves

Certificates held by management company 5,532,296 (2014: 5,532,296).Certificates held by associated companies and undertakings 1,126,412 (2014: 1,126,,412).

In accordance with the Prudential Regulations for Modarabas, the Modaraba is required to transfer an amount not less than 20% and not morethan 50% of its after tax profits to statutory reserve until the reserve funds equals the paid-up capital. Thereafter, a sum not less than 5% of theafter tax profits is required to be transferred to the statutory reserve.

a)

b)

c)

5.27

6.

7.

462,200,00046,220,000 46,220,000 462,200,000

62,200,0006,220,000 6,220,000

524,400,00052,440,000 52,440,000 524,400,000

62,200,000

20152015 20142014

RupeesRupees

Modaraba certificates of Rs. 10 each fully paid-up in cash

Modaraba certificates of Rs. 10 each issued as fully paid-upbonus certificates

No ofCertificates

No ofCertificates

(48,368,315)148,356,187

150,635,954

-

2,279,767 2,279,767 (2,279,767) (2,279,767)

279,456,187

281,735,954

131,100,000

131,100,000

-

-

(212,024,846)

-

27,120,000

27,120,000

(184,904,846)

(94,243,682)

-

-

94,551,341

-- -68,577,468 68,577,468 68,577,468

(19,665,000)

44,028,463 44,028,463 44,028,463 47,481,676

(19,665,000) (19,665,000)

95,437,980

-

-

-

Opening balance - restated

Transfer from Profit & LossAccount

Transfer to statutary reserve

StatutoryReserve *

Certificatepremiumaccount

TotalReserve

AccumulatedLoss

TotalReserves

GeneralReserve

TotalReserves

2015

TotalReserves

2014

Closing balance

-

(121,363,682)

94,551,341

-

187,492,272

Profit distribution

Capital Reserves Revenue Reserves

--

Incremental depreciation onrevaluation surplus net offdeferred tax -



Page 58

Surplus on revaluation of fixed assets

Subordinated Loan

Long term financing

Opening balanceRevaluation during the yearLess: transfer to unappropriated profit in respect

charged during the year- (net of deferred tax)Related deferred tax liability

Closing balanceRelated deferred tax effect onOpening balanceEffect of rate adjustmentLess: incremental depreciation charged during the year

to the profit and loss account.Closing balanceNet Closing balance

The loan was obtained from a Sponsor of the Company subordinated to the repayments of other financing facilities from Habib Bank Limitedavailed by the Company. The loan carried mark-up at the rate of one month KIBOR plus 2% payable on a quarterly basis. The loan has beenrepaid during the year.

Habib Bank Limited - Demand FinanceThe Bank of Punjab - Demand Finance

Less: Current portion shown under current liabilities

Demand finance IIIDemand finance

This finance was secured against first pari passu hypothecation charge on present and future plant and machinery, first pari passu equitablemortgage charge on present and future land and building, equitable mortgage over personal property and personal guarantees of all thedirectors of the Company. The finance carried mark up at 3 month KIBOR plus 1.50% per annum on quarterly basis. The facility wasrepayable in 16 equal quarterly installments, commencing from February 2011. The facility has been repaid during the year.This finance is obtained for the construction of grid station and is secured against first pari passu hypothecation charge on present and futureplant and machinery, first pari passu equitable mortgage charge on present and future land and building, equitable mortgage over personalproperty and personal guarantees of all the directors of the Company. The finance carries mark up at 6 month KIBOR plus 2% per annum onquarterly basis. The facility is repayable in 12 equal quarterly installments, commencing from July 2014.

Demand finance IDemand finance II

'This amount is payable against demand finance as a sub limit of import letter of credit sight / DA 720 days opened with Bank of Punjab forimport of plant and machinery. This facility is secured against existing first pari passu charge of Rs. 643.72 million on all present and futurefixed assets of the Company with 25% margin duly registered with SECP. The loan was rescheduled on March 31, 2014 and the Company'sold facilities of running finance and PAOA was merged with demand finance. As per the revised terms, the facility is additionally securedwith equitable mortgage of project building and personal guarantee of three directors of the Company. The charge over the said project rankspari passu with the charge registered with Habib Bank Limited. The finance carries markup at the rate of 3 month KIBOR plus 200 bps with afloor of 11% per annum payable on quarterly basis. The loan is now repayable in 43 quarterly installments commencing fromApril 15, 2010.The accompanying suspended mark up was also rescheduled with the same facility.'The facility is created against conversion of accrued markup upto September 30, 2009 on all facilities except LTF-EOP loan. The facility issecured against equitable mortgage of project building and personal guarantee of three directors of the Company. The charge over the saidproject ranks pari passu with the charge registered with Habib Bank Limited. The loan was rescheduled on March 31, 2014 and theCompany's old facilities of running finance and PAOA was merged with demand finance. This loan is repayable in 39 quarterly installmentscommencing fromApril 15, 2010.

of incremental depreciation

transferred

Secured - Financial institution

Habib Bank Limited - Demand Finance

The Bank of Punjab

8.

9.

10.

9.1

10.1

10.1.1

10.1.2.

10.2

10.2.1

10.2.2

2015Rupees

647,477,404

44,028,46320,719,27764,747,740

582,729,664

227,336,511(20,143,742)

(20,719,277)186,473,492396,256,172

-

12,250,000496,782,768509,032,768(69,928,184)439,104,584

-12,250,00012,250,000

452,231,99844,550,770

496,782,768

2014Rupees

719,419,337

47,481,67624,460,25771,941,933

647,477,404

251,796,768-

(24,460,257)227,336,511420,140,893

40,000,000

24,500,000519,710,952544,210,952(33,428,186)510,782,766

5,250,00019,250,00024,500,000

464,231,99855,478,954

519,710,952

Note

9.1

10.110.2

10.1.110.1.2

10.2.110.2.2



Deferred mark up


Deferred markupLess: Current portion shown under current liabilities

Deferred taxation liabilityStaff gratuity

The net balance for deferred taxation is in respect of the following temporary differences:

Accelerated tax depreciation allowanceRevaluation of operating fixed assets

losses carried forwardturnover tax

Employees, after completion of one year of service, shall be entitled for gratuity on leaving the company’s employment. Gratuity shall bepaid on the basis of one month’s last drawn monthly gross salary for each completed year of service.Annual provision is based on actuarial valuation, which was carried out as at June 30, 2015 on September 23, 2015 using the Projected UnitMethod.Amount recognized in the balance sheet are as follow:Present value of defined benefit obligationFair value of plan assetsTotal defined benefit obligation

Opening balanceCharged for the define benefit planCurrent service costNet interest

Remeasursement of defined benefit liabilityDue to financial assumptionsDue to demographic assumptionsDue to experience adjustments

Benefits paidClosing balance

Valuation discount rateSalary increase rate -Short term (period of next one year)Salary increase rate- long term

Discount rateSalary Increase rateWithdrawal rate

Deferred taxation liability/asset

Deferred tax liabilities

Deferred tax assets

Staff gratuityGeneral description

Movement in defined benefit obligation

Actuarial assumptions

Sensitivity analysis of principal assumptions

11.

12.

12.1

12.212.2.1

12.2.2

12.2.3

12.2.4

12.2.5

2015Rupees

49,537,44824,000,00025,537,448

200,753,4662,655,484

203,408,950

101,220,233186,473,492287,693,725

-(86,940,259)200,753,466

2,655,484-

2,655,484

1,556,255

168,971206,204375,175

341,123-

382,931724,054

-2,655,484

9.75%9.78%9.75%

1,623,0211,624,5601,556,496

2014Rupees

73,537,44824,000,00049,537,448

251,319,9631,556,255

252,876,218

106,000,972220,142,317326,143,289

(3,540,175)(71,283,151)251,319,963

1,556,255-

1,556,255

2,092,021

141,700210,000351,700

(179,422)1,650

(177,819)(355,591)(531,875)1,556,255

13.25%0.00%

12.25%

1,495,0061,492,5271,556,012

Note

12.112.2

1%1%10%

Rate per annum

Change inassumption

Increase inobligation

Decrease inobligation

Impact on obligation of change in assumptions



Page 60

Expected maturity analysis of undiscounted defined obligation for the gratuity scheme is as follows:

Following risks are associated with Defined benefit plans:The risk arises when the actual lifetime of retirees in longer than expectation. This risk is measured at the plan level over the

entire retiree population.The most common type of retirement benefit is one where the benefit is linked with the final salary. The risk arises when

the actual increases are higher than expectation and impacts the liability accordingly.The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation. The

movement of liability can go either way.

The disclosure made in notes 12.2.5 to 12.2.7 are based on the information included in the actuarial valuation report of the Modaraba as ofJune 30, 2014.

Habib Bank Limited - PledgeHabib Bank Limited - Hypothecation

The facility is obtained for import / purchase of raw cotton bales and to finance working capital inventory. This facility is secured againstpledge of raw cotton with 10% margin and pledge of cotton / blended yarn with 15% margin. The finance carries mark-up at the rate of 1month KIBOR + 125 basis points to be calculated on monthly basis. The total sanctioned limit is Rs. 250 million (2014: Rs. 250 million).The facility was obtained for working capital requirements. This facility was secured against first pari passu charge of Rs. 57 million onstocks and receivables of the Company. The finance carries markup at the rate of 1 month KIBOR plus 125 basis points to be calculated onmonthly basis. The total sanctioned limit was Rs. 10 million.

Habib Bank Limited Demand FinanceBank of Punjab Demand FinanceHabib Bank Limited - Grid Station

Deferred mark up

CreditorsAccrued expensesCharityPayable to clientsAdvance from customerRention money payablesSale tax paybleWithholdolding tax payableWorkers Profit Participation FundWorkers' Welfare FundOther liabilities

This includes Rs. 13.214 million (2014: Rs. 13.214 million) due to associated undertakings.This includes Rs 4,829,780 (2014 : Rs 5,754,180) payable to Premier Financial Services (Private) Limited

Financial institutionsSponsors

Longevity risks:

Salary increase risk:

Withdrawal risk:

Short term borrowings



Accrued Mark Up

Secured - financial institutions (Running finance arrangements)

Secured – financial institution

12.2.6

12.2.7

12.2.8

13.1

13.2

15.115.2

13.

14.

15.

16.

2015Rupees

18,166,501-

18,166,501

-62,928,184

7,000,00069,928,18424,000,00093,928,184

39,782,529106,009,496

26,10316,277,252

549,0053,172,4461,536,392

182,7012,741,6372,553,3753,318,349

176,149,285

14,696,8125,025,482

19,722,294

2014Rupees

49,888,1589,398,362

59,286,520

5,250,00222,928,184

5,250,00033,428,18624,000,00057,428,186

49,991,68965,143,408

255,4203,797,3461,682,3552,984,5082,292,273

59,7503,365,5901,789,8596,502,588

137,864,786

15,571,8574,353,163

19,925,020

Note

13.113.2

15.1

15.2

Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 yearsAt at June 30, 2015

Gratuity 902,214 15,196 15,972 73,892 15,284 2,200,849




Tangible

There is a contingent liability in respect of bank guarantees issued by the Company's banker in the ordinary course of business in favor of SuiSouthern Gas Company Limited and HESCO aggregating to Rs. 25.60 million (2014: Rs. 24.556 million).During the prior year, two separate cases have been decided in the International Court of Arbitration against the Company in respect ofliabilities aggregating to US$ 611,523. The plaintiffs through their legal advisor served the Company with a notice to pay the amount as perthe award and filed suits against the Company in the Honorable High Court of Sindh for enforcement of award. No provision has been madein the financial statements for the liability that may arise in the event of a decision against the Company as the management is of the opinion,based on advice of legal advisor, that the decision is likely to be in the favor of the Company.Modaraba has filed a suit against Samba Bank Ltd for the recovery of deposit amounting to Rs 21 million alongwith mark up. The matter ispending before the Honourable High Court of Sindh. Management of the Modaraba and its legal advisor are of the opinion that Modaraba hasreasonable chance and it appear unlikely that Modaraba may suffer any loss from the same

Commitment in respect of letters of credit as at the balance sheet date amounted to Rs. 26.887 million (2014: Rs. 34.169 million).

Operating fixed assetsCapital work in progress

Contingencies

Commitments

17.

18.

18.1

2015Rupees

1,223,964,011-

1,223,964,011

2014Rupees

1,258,845,4859,691,550

1,268,537,035

Note

18.118.2

Owned

2015

Leasehold landFactory buildingColony buildingPlant & machineryGas generatorElectric installationsOffice premisesGrid StationOffice equipments

Factory equipmentComputers

Motor vehicles

Furniture & fixtures

Rupees

As atJuly 01,

2014Addition /*Transfer

Surpluson

revaluation

As atJune 30,

2015

As atJune 30,

2015

As atJuly 01,

2014

Chargedduring the

year

Book valueAs at

June 30,2015

Rate

%

Cost Accumulated depreciation2015

Particulars

40,140,000301,838,78558,423,768

1,417,575,075110,674,82782,204,31820,848,634

-1,055,685

4,719,9151,760,945

17,005,948

1,201,2342,057,449,134

-5,594,127

-

---

23,809,569121,500(61,000)

-397,300

(107,340)3,136,000

(1,286,508)-

58,852,538

90,456,186

---------

--

-

--

40,140,000307,432,91258,423,768

1,476,427,613110,674,82782,204,31820,848,63423,809,569

1,116,185

4,719,9152,050,905

18,855,440

1,201,2342,147,905,320

3,101,027103,562,81622,988,647

565,814,56446,786,58534,762,887

6,296,110-

772,528

1,874,5261,225,526

10,701,385

717,048798,603,649

370,39020,203,082

3,543,51287,857,242

6,388,8244,744,1431,040,207

198,41387,258

(44,773)284,539224,570

(107,337)1,652,702

(1,201,948)96,836

125,337,660

3,471,417123,765,89826,532,159

653,671,80653,175,40939,507,030

7,336,317198,413815,013

2,159,0651,342,759

11,152,139

813,884923,941,309

36,668,583183,667,01431,891,609

822,755,80757,499,41842,697,28813,512,31723,611,156

301,172

2,560,850708,146

7,703,300

387,3501,223,964,011

311010101010

5 & 10

20

2033 & 20

20

20



Page 62

OwnedLeasehold landFactory buildingColony buildingPlant & machineryGas generatorElectric installationsOffice premises

Office equipments

Factory equipmentComputers

Motor vehicles

Furniture & fixtures2014

Rupees

As atJuly 01,

2013Addition /*Transfer

Surpluson

revaluation

As atJune 30,

2014

As atJune 30,

2014

As atJuly 01,

2013

Chargedduring the

year

Book valueAs at

June 30,2014

Rate

%

Cost Accumulated depreciation2014

Particulars

40,140,000271,811,45858,423,768

1,380,130,738110,674,82782,204,31823,248,634

997,005

4,719,9151,058,455

16,894,948

1,201,2341,991,505,300

-30,027,327

-37,444,337

--

(2,400,000)

228,180(169,500)

-628,69073,800

1,010,000(899,000)

-65,943,834

-------

-

--

-

--

40,140,000301,838,78558,423,768

1,417,575,075110,674,82782,204,31820,848,634

1,055,685

4,719,9151,760,945

17,005,948

1,201,2342,057,449,134

2,726,89683,368,51419,051,411

471,991,92239,687,89129,491,617

5,464,236

855,600

1,558,369966,940

9,987,980

663,250665,814,626

374,13120,194,302

3,937,23693,822,642

7,098,6945,271,2701,150,207(318,333)

51,582(134,654)

316,157258,586

1,612,404(898,999)

53,798132,789,023

3,101,027103,562,81622,988,647

565,814,56446,786,58534,762,887

6,296,110

772,528

1,874,5261,225,526

10,701,385

717,048798,603,649

37,038,973198,275,96935,435,121

851,760,51163,888,24247,441,43114,552,524

283,157

2,845,389535,419

6,304,563

484,1861,258,845,485

301010101010

5 & 10

20

2033 & 20

20

20

Depreciation for the year has been allocated as follows:

Administrative expense

Cost of saleAdministrative expense

Had there been no revaluation, the net book value of the specific classes of property, plant and equipment would have been as follows:Factory buildingColony buildingPlant & machineryGas generatorElectric installationsFactory equipment

This comprises of:Civil worksBorrowing costs

This represents Trading Right Entitlment certificates (TREC) recieved from Karachi Stock Exchanges Ltd and Islamabad Stock ExchangesLtd after Demutilization.In Stock Exchange (Corporatization, Demutualization and Integration) Act 2012 the prerequsite for TREC holder to register as Brokershould be a company as defined in Companies Ordinance, 1984. Our submission to SECP that Modaraba although not a company but beingregulated under its auspices and a corporate legal entity, has not been accepted by the Regulators. Thereafter, we have requested our primeregulator, Registrar Modaraba to allow us to create a wholly owned subsidiary enabling us to protect and safe guard assets of the modaraba.The Registrar Modaraba did not understand our challenge and concern, we have left with no other option but to file a suit in the HonorableSindh High Cout and got a stay order against the cancelation of Broker registration.

Modaraba business

Textile Business

Capital Work-In-Progress

Intangible

18.1.1

18.1.2

18.2

19.119.

2015Rupees

1,562,986

120,924,4111,496,205

123,983,602

70,717,19111,963,457

347,424,09925,063,58418,611,4411,241,389

475,021,161

---

19,000,000

2014Rupees

1,641,504

131,078,2931,421,212

134,141,009

78,574,65713,292,730

386,026,77727,848,42720,679,379

1,379,321527,801,291

9,125,170566,380

9,691, 550

19,000,000

Note

19.1



52,400,000 2,400,000 328,333 120,000-Office premises

As atJuly 01,

2014

Transferredfrom


Chargedduring the

year %

448,333 1,951,667


ParticularsAs at

June 30,2015

As atJune 30,

2015

Book Valueas at

June 30,2015

Rate

2015

Investment Property


Modaraba is holding one of its office premises to investment property. Modaraba will generate rental income on this property fromnext year.Fair value of the investment property, based on the valuation carried out by Consultancy Support & Services as at June 30, 2015 is Rs.23,432,500 (2014: Rs. 15,000,000)

Listed securitiesUnlisted securitiesPreference Share


Dawood Income Fund (Unit of Rs. 100 each)

Pakistan Telecommunication Company Limited

Javed Omer Vohra & Company Limited

First Dawood Mutual Fund

There was no trading on these scrips on June 30, 2015. Their last quoted /traded value is taken for valuation.

Investment was made at inception and the carrying value was Rs 5,145,000. SECP took action against the management and as aresult the Trustee (Central Depository Company of Pakistan Limited) sold its investment and made the partial payment to shareholders. The Modaraba recieved Rs 4,935,859 in this matter.

The holding is in ordinary shares of Rs. 10 each.

Sapphire Power Generation LimitedKarachi Stock Exchange LtdIslamabad Stock Exchange LtdCallmate Telips Telecom Limited



Open-end mutual funds

Fixed Line Telecommunication

Financial Services

Equity investment instruments

Listed securities

Unlisted securities

20.

21.

21.121.1.1

21.1.1.1

21.1.1.2

21.2

1,959,12972,219,861

1,828,74076,007,730

847,188

861,000

41,800

209,141

1,959,129

1,800,00040,073,83030,346,030

172,219,861

2,167,86972,219,861

-74,387,730

847,188

1,069,740

41,800

209,141

2,167,869

1,800,00040,073,83030,346,030

172,219,861

21.121.221.3

21.1.1.1

21.1.1.1

21.1.1.1 &21.1.1.2

21.2.121.2.221.2.221.2.3

2015Rupees

2014Rupees

Note

52,400,000 2,400,000 328,333 120,000-Office premises

As atJuly 01,

2014

Transferredfrom


Chargedduring the

year %

448,333 1,951,667


ParticularsAs at

June 30,2015

As atJune 30,

2015

Book Valueas at

June 30,2015

Rate

2015

11,968

42,000

22,000

735,000

50,0004,007,3833,034,603

78,150

11,968

42,000

22,000

735,000

50,0004,007,3833,034,603

78,150

2015Number

2014Number



Page 64

Net assets value per share of Sapphire Power Generation Limited is Rs. 69.72 (2013: Rs. 85.67) as per financial statements as at June 30,2014 audited by RiazAhmad, Saqib, Gohar & Company, CharteredAccountants.Net assets value per share of Karachi Stock Exchange Ltd and Islamabad Stock Exchange Ltd is Rs.10.17 (2014: Rs. 10.08) and Rs 11.10(2014: Rs. 10.68) as per financial statements as at June 30, 2014 audited by Ernst & Young Ford Rhodes Sidat Hyder, CharteredAccountantsand BDO Ebrahim & Company, CharteredAccountants respectively.The company is in the process of winding up, hence Net assets value per share is not available.

Mari Petroleum

- in hand- in transit

Raw material- in hand- in transit

Work in ProcessFinished goods

Secured - considered goodUnsecured - considered good

Unsecured - considered doubtfulLess: Provision for bad debts against local debtors

This comprises of amounts receivable from:Suraj Cotton Mills LimitedThe aging of related party balances at the balance sheet date is as follows:Past due by over 60 days

Musharaka - considered goodMorabaha - considered doubtful

Provision for non performing assets

The Modaraba has entered into musharaka agreements under which the Modaraba has provided funds for working capital requirements onprofit and loss sharing basis. These are secured against pledge, hypothecation of stock and receivables, demand promissory notes, personalguarantee of directors / proprietors and mortgage of property. Expected rate of profit on musharaka transactions during the year rangebetween 12% to 16 % ( 2014: 12 % to 16%).

Investments in associated company

Listed securities

Preference SharesThe holding is in ordinary shares of Rs. 10 each.

Store and spares

Stock-in-trade

Trade debts



Investment classified as financial asset at fair value through profit or loss

21.2.1

21.2.2

21.2.3

21.3

24.1

24.2

25.1

22.

23.

24.

25.

26.

1,828,7401,828,740

29,440,537-

29,440,537

114,992,056-

6,812,61392,917,728

214,722,397

619,90892,922,76693,542,674

9,565,353(9,565,353)

-93,542,674

619,908

619,908

153,003,60917,380,055

170,383,664(17,380,055)153,003,609

26,979,617

97,882,927124,862,544

--

26,392,239-

26,392,239

103,135,16818,678,526

9,346,24266,494,627

197,654,563

-161,835,541161,835,541

7,843,463(7,843,463)

-161,835,541

-

-

159,320,49717,380,055

176,700,552(17,380,055)159,320,497

24,376,515

107,396,243131,772,758

24.1

25.1

26.1

26.2

2015Rupees

2014Rupees

Note2015Number

2014Number

- 182,874



Investments in associated company

Oil and Gas

Food

Chemicals

Construction and materials

Transport

Personal goods

Household goods

Pharma and biotech

Automobile and parts

Fixed line telecommunication

Electricity

Banks

The holdings are in ordinary shares of Rs. 10 each.

Premier Insurance LimitedPurchased of holding in associated companyShare of (loss) / profitImpairment in associated companyLess: dividend income

During the year, Premier Insurance Limited has consolidated its shares in ratio of 1:2 resulting inchange in face value of shares from Rs. 5 toRs. 10.


Attock RefineryMari Petroleum Company LimitedHascol Petroleum Company LimitedNational Refinery LimitedOil & Gas Development Co LimitedPakistan Petroleum LimitedShell Pakistan Limited

Engro Foods Limited

AkzoNobel Pakistan LimitedLotte Chemical Pakistan PTALimitedGhani Global Gass LimitedICI Pakistan LimitedWah Noble Chemicals Limited

D.G. Khan Cement Company LimitedDewan Cement LimitedFauji Cement Company LimitedCherat Cement Company LimitedFecto Cement LimitedLucky Cement LimitedLafarge Pakistan Cement LimitedPioneer Cement Limited

Pakistan International Bulk Terminals Limited

Nishat Mills Limited

Tariq Glass Industries Limited

IBLHealthcare LimitedThe Searle Pakistan Limited

HondaAtlas Car (Pakistan) LimitedPak Suzuki LimitedGhaniAutomobile Limited

Pakistan Telecommunication Company LimitedNetsol Technologies Limited

K-Electric Limited

Bank Islami Pakistan Limited

Listed securities

26.1

26.2

24,376,51510,700,000

3,078,706(10,685,020)

(490,584)26,979,617

-9,770,3101,145,100

-5,359,276

-12,597,408

-

1,787,352934,200655,900

1,115,062805,600

-4,145,4603,487,000

174,060-

6,131,516--

8,985,800

-

-

986,1007,215,525

7,391,3842,789,8245,822,200

12,207,750-

2,973,600

1,402,50097,882,927

28,269,886-

(2,912,237)-

(981,134)24,376,515

12,397,7369,261,064

-4,264,326

-12,966,852

6,050,532

102,530

692,736291,195

---

923,580-

1,452,620949,170

2,700,000-

10,283,1302,333,000

-

4,286,536

518,100

-3,560,616

7,354,110--

13,384,4852,870,420

9,249,855

1,503,650107,396,243

2015Rupees

2014Rupees

Note2015Number

2014Number

490,567

58,40024,800

-19,800

-57,80021,900

1,000

4,10040,500

---

10,500-

75,50014,50054,000

-643,50050,000

-

38,300

16,500

-20,400

79,000--

525,50098,000

1,089,500

152,500

964,151

-20,85010,000

-29,900

-49,800

-

5,600135,000

35,0002,600

16,000

-285,000100,000

2,000-

11,800--

251,000

-

-

8,65022,500

33,8006,400

677,000

595,500-

354,000

137,500



Page 66

Advances - considered good

Trade Deposits and Prepayments

Other Receivables

Tax refund from government authorities

Taxation - Net

Cash and bank balances

Income

To employeesTo supplier of goodsAgainst letter of creditOthers

DepositsMargin depositPrepayments

Sale proceeds of investmentsReceivable from clientsInsurance claimDividendCotton claimsOthers

Considered goodConsidered doubtful

Less: Provision for doubtful debts

Movement in provision for doubtful debtsOpening provision

The insurance claim was receivable from Premier Insurance Limited, an associated undertaking which has been received during year.Receivables from client includes receivable from related parties of Rs 358,628 (2014: Rs. 26,817).All the amounts are short term. The carrying amount is considered a reasonable approximation of fair value.

Sales tax refundableIncome tax refundable

Advance income taxLess : Provision for taxation

Cash in handBank balances

-in current accounts-in Islamic bank-In saving accounts

Effective mark-up rate in respect of PLS accounts ranges from 5% to 7% (2014: 5% to 7%) per annum.

Income from modaraba's businessIncome from textile's business

Receivable from clients

27.

28.

29.

30.

31.

32.

33.

29.1

29.1.1

29.229.2.129.3

32.1

1,560,07736,769,364

77,399-

38,406,840

14,772,6658,140,588

254,62923,167,882

(3,457)24,061,246

-168,217

-2,689,078

26,918,541

24,061,24612,500,00036,561,246

(12,500,000)24,061,246

12,500,00012,500,000

7,390,25913,596,98720,987,246

26,545,816(15,905,952)

10,639,864

822,513

12,516,72817,979,730

311,02731,629,998

34,252,047166,510,216200,762,263

1,035,19537,372,542

44,143-

38,451,880

14,767,55611,345,225

214,36226,327,143

327,97923,226,360

2,589,57617,80064,151

2,661,08928,886,955

23,226,36012,500,00035,726,360

(12,500,000)23,226,360

12,500,00012,500,000

11,839,31412,548,49024,387,804

22,330,466(20,996,096)

1,334,370

753,817

7,752,6047,774,905

319,21216,600,538

46,224,523175,422,125221,646,648

27.1

29.129.2

32.1

33.133.2

2015Rupees

2014Rupees

Note



Income from modaraba's business

Income from textile's business

Cost of sale

Profit on musharakaBrokerage commissionCapital gainDividendsRentalsCommission and fees

Sales- Local- Exports- Waste sales

Commission to selling agent

Cost of sale

Raw material consumedStore consumedPacking material consumedSalaries, wages and other benefitsProvident fund contributionFuel and powerInsuranceRepair & maintenanceDepreciationOther manufacturing overheads

Work in Process-opening stock-closing Stock

Cost of goods manufactured

Finished goods-opening stock-closing Stock

Opening stockPurchased during the year

Closing stock

Raw material consumed

33.1

33.2

33.3

33.3.1

17,756,8382,852,1295,829,2344,185,5561,200,0002,428,290

34,252,047

2,084,515,87924,168,81953,889,255

2,162,573,953(48,791,241)

2,113,782,712(1,947,272,496)

166,510,216

1,455,815,49839,435,68627,802,462

120,461,0731,918,225

185,293,9758,400,7315,896,843

123,632,5282,504,947

1,971,161,968

9,346,242(6,812,613)

1,973,695,597

66,494,627(92,917,728)

1,947,272,496

103,135,1681,467,672,3861,570,807,554(114,992,056)1,455,815,498

18,162,4771,368,642

21,799,0393,789,318

-1,105,047

46,224,523

2,383,380,28625,967,08250,278,570

2,459,625,938(58,489,135)

2,401,136,803(2,225,714,678)

175,422,125

1,784,943,11037,799,13026,902,101

106,855,8321,574,425

150,291,5788,245,8206,907,711

131,078,2931,937,299

2,256,535,299

9,324,421(9,346,242)

2,256,513,478

35,695,827(66,494,627)

2,225,714,678

246,327,9281,641,750,3501,888,078,278(103,135,168)1,784,943,110

33.3

33.3.1

18.1.1

2015Rupees

2014Rupees

Note



Page 68

Operating expenses

Distribution and Selling Expenses

Salaries, allowances and benefitsProvident fund contributionTraveling, conveyance and entertainmentTelephone and postageRent, rates and taxesElectricityInsurancePrinting, stationery and advertisingFees and subscriptionsVehicle running and maintenanceDepreciationFacilities and servicesRepair and maintenanceAnnual Review MeetingAuditors' remunerationLegal and professionalShariahAdvisorTraining and developmentKSE & SECPChargesZakatWithholding & CVT taxDonationCartage expenseOthers

The aggregate amount charged in the consolidated financial statements for remuneration, including benefits to 511 (2014: 518) employeesof the Modaraba is:

Salaries, allowances and benefits include provision for gratuity of Rs. 297,858 ( 2014: Rs.351,700). Officers are also provided with free useof Modaraba maintained cars.

Audit feeHalf yearly reviewOther fees

Freight loading and unloadingClearing & forwarding - exportsExport development chargesPressing comber noil

Remuneration of officers and other employees

Auditor's remuneration

34.

35.

34.1.

34.2

34.3

13,189,261323,110862,703

1,106,8011,139,636

408,737521,761

1,971,3052,351,9162,168,7093,179,1904,508,4461,334,055

91,382431,802

2,427,708150,000

-721,206

2,2252,194,6075,333,334

42,130590,849

45,050,873

310,00025,00096,802

431,802

15,466,8411,090,131

66,463316,624

16,940,059

11,723,621262,161

1,098,648417,442118,400465,274632,163534,616

1,579,8362,521,0353,072,7184,508,4521,288,284

62,500488,145

3,460,510131,250

1,000360,946

-951,576

2,100,000112,098137,873

36,028,548

130,00025,000

113,576268,576

13,525,8151,392,316

71,022127,915

15,117,068

34.1

18.1.1

34.3

2015Rupees

2014Rupees

Note

2015 2014

OfficersOther

Employees OfficersOther

Employees

Salaries and allowances

Gratuity and Leave fare

Expenses reimbursed: Medical

4,977,698

423,979

278,811

5,680,488

6,305,916

397,450

510,143

7,213,509

4,880,086

303,430

466,105

5,649,621

1,710,351

186,455

627,750

2,524,556



Financial Charges

Other income

Other charges

Taxation

Earnings per certificates - basic and diluted

Risk Management Policies and Objectives:

Mark up / interest on :Long term loan - securedShort term loan & running finance - securedLoan from directorsBank charges

Financial risk management

Credit and concentration risk

Profit on PLS depositsGain on sale of fixed assetsInterest incomeExchange gain

Exchange loss - netProvision for doubtful debtsWorker Welfare FundWorkers Profit Participation Fund

The charge for current tax is based on taxable income at current rates of taxation after taking into account tax credits and rebates availableand minimum tax as applicable under the Income Tax Ordinance, 2001.Assessments, in respect of First Equity Modaraba, upto and including the tax year 2014 have been finalized under section 120 of the IncomeTax Ordinance, 2001 (the Ordinance) which is subject to audit under section 170 of the Ordinance.

Profit for the year

Weighted average number of certificates outstanding during the year

Profit per certificate - basic and diluted

There is no dilution effect on the basic earnings per share of the Modaraba as the Modaraba has no such commitments.

The board of directors has overall responsibility for the establishment and oversight of the Modaraba's risk management framework. TheModaraba has exposure to the following risks from its use of financial instruments:- Credit risk- Liquidity risk- Market risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financialloss, without taking into account the fair value of any collateral. Concentration of credit risk arises when a number of counterparties areengaged in similar business activities or have similar economic features that would cause their ability to meet contractual obligations to besimilarly affected by changes in economic, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of theModaraba's performance to developments affecting a particular industry.Credit risk of the Modaraba arises principally from the investments, musharaka/morahaba receivables, advances, trade deposits and otherreceivables. The carrying amount of financial assets represents the maximum credit exposure. To reduce the exposure to credit risk, theModaraba has developed a formal approval process whereby credit limits are applied to its customers. The management continuouslymonitors the credit exposure towards the customers and makes provision against those balances considered doubtful for recovery.

36.

37.

38.

39.

40.

41.

40.1

51,696,32511,874,4374,252,0933,669,645

71,492,500

445,256342,140

1,164,129-

1,951,525

23,4651,721,8901,274,4512,741,6375,761,443

68,577,468Number52,440,000

Rupees1.31

53,107,48115,519,745

4,767,5613,174,158

76,568,945

748,824(34,844)461,568106,158

1,281,706

-396,066

1,782,9293,365,5905,544,585

95,437,980Number52,440,000Rupees

1.82

2015Rupees

2014Rupees

Note



Page 70

BusinessOpen-end mutual fundsOil and GasChemicalsConstruction and materialsAutomobile and partsPersonal goodsPharma and biotechFixed line telecommunicationElectricityFoodBankNon life insuranceFinancial servicesEquity investment instrumentsStock ExchangeEngineeringOthers

The Carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The maximum exposureto credit risk at the reporting date is:

InvestmentTrade debtsMorabaha/Musharaka receivables-securedAdvances-considered goodTrade deposits and prepaymentsOther receivables

Liquidity risk is the risk that the Modaraba will encounter difficulty in meeting its financial obligations as they fall due. Liquidity risk arisesbecause of the possibility that the Modaraba could be required to pay its liabilities earlier than expected or difficulty in raising funds to meetcommitments associated with financial liabilities as they fall due. The Modaraba's approach to managing liquidity is to ensure, as far aspossible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, withoutincurring unacceptable losses or risking damage to the Modaraba's reputation.

Assets

Long term investmentsTrade debtsMorabaha & musharaka receivablesShort term investmentsAdvancesTrade depositsOther receivablesBank balances

LiabilitiesSubordinated loanSecurity DepositLong term financingDeferred Mark upCurrent portion of long term liabilitiesShort term borrowingsCreditors, accrued and other liabilitiesAccrued mark upUnclaimed profit distribution

Net balance

Liquidity risk

847,18844,940,510

983,93118,641,500

7,354,1104,804,6363,560,616

17,324,64511,049,855

102,5301,503,650

10,792,47541,800

209,14170,419,86013,819,560

418,246,497624,642,504

Over five years----

2,510,000---

2,510,000

---

25,537,448-----

25,537,448(23,027,448)

200,870,27493,542,674

153,003,60940,916,84024,317,88226,918,541

539,569,820

847,18828,872,094

5,298,11413,938,03616,003,408

-8,201,625

13,068,7504,773,600

-1,402,500

26,979,61741,800

209,14170,419,86015,939,498

333,574,589539,569,820

Less thanOne year

-93,542,674

153,003,609124,862,544

38,406,84022,913,25326,918,54131,629,998

491,277,459

----

93,928,18418,166,501

176,149,28519,722,29427,618,316

335,584,580155,692,879

0.147.190.162.981.180.770.572.771.770.020.241.730.010.03

11.272.21

66.96100

206,160,488161,835,541159,320,497

40,961,88027,477,14328,886,955

624,642,504

.

Total76,007,73093,542,674

153,003,609124,862,544

40,916,84024,063,25326,918,54131,629,998

570,945,189

-200,000

439,104,58425,537,44893,928,18418,166,501

176,149,28519,722,29427,618,316

800,426,612(229,481,423)

0.165.350.982.582.97

-1.522.420.88

-0.265.000.010.04

13.052.95

61.82100



----

1,150,000--

77,157,730

-200,000

439,104,584------

439,304,584(362,146,854)

Rupees %Rupees %2015 2014

2015Rupees

2014Rupees

2015



Assets

Long term investmentsTrade debtsMorabaha & musharaka receivablesShort term investmentsAdvancesTrade depositsOther receivablesBank balances

LiabilitiesSubordinated loanSecurity DepositLong term financingDeferred Mark upCurrent portion of long term liabilitiesShort term borrowingsCreditors, accrued and other liabilitiesTaxation - netUnclaimed profit distribution

Net balance

Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market interest rates or the marketprice due to a change in credit rating of the issuer or the instrument, change in market sentiments, speculative activities, supply and demandof securities and liquidity in the market.

Operational Risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology andinfrastructure supporting the Modaraba’s operations either internally within the Modaraba or externally at the Modaraba’s serviceproviders, and from external; factors other than credit, market and liquidity risks such as those arising from legal and regulatoryrequirements and generally accepted standards of investment management behavior. Operational risks arise from all of the Modaraba’sactivities.The Modaraba’s objective is to manage operational risk so as to balance limiting of financial losses and damage to its reputation withachieving its objective of generating returns for certificate holders. The primary responsibility for the development and implementation ofcontrols over operational risk rests with the Board of Directors of the Management Company. This responsibility encompasses the controlsin the following areas:- Requirements for appropriate segregation of duties between various functions, roles and responsibilities;- Requirements for the reconciliation and monitoring of transactions;- Compliance with regulatory and other legal requirements- Documentation of controls and procedures;- Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risksidentified;- Ethical and business standards;- Risk mitigation, including insurance where this is effective.

The Modaraba is of the view that the fair market value of most of the financial assets and financial liabilities are not significantly differentfrom their carrying amounts.

Morabaha/Musharaka receivablesTrade debtsAdvancesTrade depositsOther receivablesBank balances

Market risk

Operational Risk

Financial instruments by category

Fair value of financial instruments

Financial assetsLoans and receivables

42.

42.1

Over five years

----

2,510,000---

2,510,000

---

49,537,448-----

49,537,448(47,027,448)

153,003,60993,542,67440,916,84024,063,25326,918,54131,629,998

Less thanOne year

-161,835,541159,320,497131,772,758

38,451,88026,112,78128,886,95516,600,538

562,980,950

----

57,428,18659,286,520

137,864,786-

25,966,768300,471,280262,509,670

Total

74,387,730161,835,541159,320,497131,772,758

40,961,88027,262,78128,886,95516,600,538

641,028,680

40,000,000200,000

510,782,76649,537,44857,428,18659,286,520

137,864,786-

25,966,768900,991,494

(259,962,814)

159,320,497161,835,541

40,961,88027,262,78128,886,95516,600,538


five years

74,387,730----

1,150,000--

75,537,730

40,000,000200,000

510,782,766------

550,982,766(475,445,036)

2014

2015Rupees

2014Rupees



Page 72


Available-for-sale financial assets



Subordinated loanSecurity DepositLong term financingShort term loansDeferred Mark upCurrent portion of long term liabilitiesCreditors, accrued and other liabilitiesAccrued mark upTaxation - netUnclaimed profit distribution

On balance sheet gap

The above analysis is based on the contractual/expected maturities of assets and liabilities which may not necessarily correspondwith actual maturities.

AssetsTangible assetsIntangible assetsInvestment propertyLong term investmentsLong term investmentsStock-in-tradeTrade debtsMorabaha & musharaka receivablesShort term investmentsAdvancesTrade deposits and prepaymentsOther receivablesTax refund from government authoritiesBank balances

LiabilitiesSubordinated loanSecurity DepositLong term financingDeferred Mark upDeferred liabilitiesShort term loanCurrent portion of long term liabilitiesCreditors, accrued and other liabilitesAccrued mark upUnclaimed profit distribution

Net balance


Maturities of assets and liabilities43.

124,862,544

76,007,730570,945,189

-200,000

439,104,58418,166,50125,537,44893,928,184

176,149,28519,722,294

-27,618,316

800,426,612(229,481,423)

Over fiveYears

13,189,28019,000,000

------------

32,189,280

---

25,537,448------

25,537,4486,651,832


year

----

29,440,537214,722,39793,542,674

125,175,898124,862,54438,371,19614,851,09326,918,54131,627,110

-605,969,316

-----

18,166,50193,928,184

148,514,88419,722,29427,618,316

307,950,179298,019,137

131,772,758

74,387,730641,028,680

40,000,000200,000

510,782,76659,286,52049,537,44857,428,186

137,864,78619,925,020

-25,966,768

900,991,494(259,962,814)

Total

1,223,964,01119,000,000

1,951,66776,007,73029,440,537

214,722,39793,542,674

153,003,609124,862,54440,916,84024,317,88226,918,54131,627,11031,629,998

2,091,905,540

-200,000

439,104,58425,537,448

203,408,95018,166,50193,928,184

176,149,28519,722,29427,618,316

1,003,835,5621,088,069,978


1,210,774,731-

1,951,66776,007,730

-----

2,510,0001,150,000

---

1,292,394,128

-200,000

439,104,584-

203,408,950-----

642,713,534649,680,594

2015Rupees

2014Rupees

Upto onemonth

-------

27,827,711-

35,6448,316,789

--

31,629,99867,810,142

-------

27,634,401--

27,634,40140,175,741

2015



AssetsTangible assetsIntangible assetsDeferred costLong term investmentsStore and sparesStock-in-tradeTrade debtsMorabaha & musharaka receivablesShort term investmentsAdvancesTrade deposits and prepaymentsOther receivablesTax refund from government authoritiesBank balances

LiabilitiesSubordinated loanSecurity DepositLong term financingDeferred Mark upDeferred liabilitiesShort term loanCurrent portion of long term liabilitiesAccrued mark upTaxation - netUnclaimed profit distribution

Net balance

Yield/Profit rate risk exposure44.

Over fiveYears

13,189,28019,000,000

------------

32,189,280

---

49,537,448------

49,537,448(17,348,168)

Over one monthto one year

----

26,392,239197,654,563161,835,541

95,500,000131,772,758

38,416,23614,851,093(9,894,896)25,722,174

-682,249,708

---

-59,286,52057,428,18619,925,020

--

246,870,111435,379,597

Total

1,268,537,03519,000,000

-74,387,73026,392,239

197,654,563161,835,541159,320,497131,772,758

40,961,88027,477,14328,886,95525,722,17416,600,538

2,180,620,720

40,000,000200,000

510,782,76649,537,448

252,876,21859,286,52057,428,18619,925,020

-25,966,768

1,153,867,7121,026,753,008


1,255,347,755--

74,387,730-----

2,510,0001,150,000

---

1,335,467,152

40,000,000200,000

510,782,766

252,876,218-----

803,858,984531,608,168

Upto one month

-------

63,820,497-

35,64411,476,05038,781,851

-16,600,538

130,714,580

---

-----

25,966,76853,601,16977,113,411

2014

-

-

12% to 20%

5% to 7%

-

-

-

-

93,542,674 93,542,674 93,542,674

-

-

-%

76,007,730

76,007,730

76,007,730 76,007,730

- -


Trade debts


receivables

Advances

Trade deposits

Other receivables

Bank balances



2015


Effectiveyield /


Total

153,003,609 153,003,609 153,003,609- - -

124,862,544 124,862,544 124,862,544

18,290,757 18,290,757

296,156,910 372,164,640

- - -

38,406,840

22,913,253

26,918,541 26,918,541 26,918,541

13,339,241 13,339,241

195,120,549 198,780,549

31,629,998

570,945,189

-

-

-

3,660,000

-

- - -- 2,510,000

1,150,000

40,916,840 40,916,840

24,063,253 24,063,253- - --

- - --

-


Security deposit - 200,000 200,000 200,000- - -

(363,296,854)

18,166,501 18,166,501 18,166,501

93,928,184 93,928,184 93,928,184

184,062,225 (179,034,629)

Long term financing

Short term loan





liabilities 195,871,579 221,409,027 221,409,027

27,618,316 27,618,316 27,618,316

223,489,895 249,027,343 800,426,612

(28,369,346) (21,877,448) (50,246,794) (229,481,423)

25,537,448

25,537,448

-

-

- 439,104,584

439,304,584 551,199,269

439,104,584 439,104,584

-

112,094,685

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Financial Assets



Page 74

193,856,567

(36,193,652)

(16,940,059)

(30,456,752)

(15,117,068)

(71,492,500)

(5,761,443)

(76,568,945)

(5,544,585)

(1,511,431) (3,306,812)

(10,685,020) -

2,448,643,032

217,356,558

5,280,419

(907,800)

17,756,838

17,756,838

10,014,790 2,113,782,712

8,545,788 166,510,216

Segment Revenues

Segment Result

Unallocated Cost

Operating expenses

Distribution & Selling expenses

Financial Charges

Other Charges

Management fee with Service Sale Tax

Impairment in associated company

Rupees

MusharakahFacility

BrokerageOperation

CapitalMarkets

TextileBusiness

2015

Total TotalOthers

2014

1,951,525

1,951,525

2,148,786,284

The above analysis is based on the contractual/expected maturities of assets and liabilities which may not necessarily correspond withactual maturities.Yield risk is the risk of decline in earning due to adverse movement of the yield curve.Profit rate risk is the risk that the value of the financial instruments will fluctuate due to changes in the market profit rates.

The Modaraba has four primary source of revenue i.e. musharaka facility, brokerage operations, textile unit and capital market based onthe nature of business and related risk associated with each type of business segment which are not deemed by the management to thesufficiently significant to disclose as separate items are reported under others.Segment assets and liabilities included all assets and liabilities related to the segment relevant proportion of the assets and liabilitiesallocated to the segment on reasonable basis.Segment revenue and expenses included all revenue and expenses related to the segment and relevant proportion of the revenue andexpenses allocated to the segment on reasonable basis.

Segment information

-

--

45.

-

-

12% to 20%

5% to 7%

-

-

-

-

161,835,541 161,835,541 161,835,541

-

-

-%

74,387,730

74,387,730

74,387,730 74,387,730

-

(436,595,036)

-


Financial Assets

Trade debts


receivables

Advances

Trade deposits

Other receivables

Bank balances



2014


Effectiveyield /


Total

159,320,497 159,320,497 159,320,497- - -

131,772,758 131,772,758 131,772,758

8,094,117 8,094,117

59,286,520 59,286,520 59,286,520

57,428,186 57,428,186 57,428,186

299,187,372

182,472,666

373,575,102

(253,922,370)

- - -

38,451,880

28,886,955 28,886,955 28,886,955

16,600,538

26,112,781

8,506,421 8,506,421

263,793,578 267,453,578 641,028,680

-

-

-

3,660,000

-

- - -- 2,510,000

1,150,000

40,961,880 40,961,880

27,262,781 27,262,781- - --

- - --

-


Security deposit

Subordinated loan

Long term financing

Short term loan





liabilities 157,789,806 207,327,254 207,327,254

25,966,768 25,966,768 25,966,768

183,756,574 273,294,022 900,991,494

80,037,004 (85,877,448) (5,840,444) (259,962,814)

49,537,448

89,537,448

-

-

- 200,000 200,000

40,000,000 40,000,000 40,000,000

200,000

- - -

- 510,782,766

510,982,766

510,782,766 510,782,766

627,497,472

-

116,714,706

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-



Transactions with related parties

Number of employees

Authorization for issue

The related parties of the Modaraba comprise management company, staff retirement funds, directors of the management company and keymanagement personnel. Transactions with related parties other than remuneration and benefits to officers and employees under the terms oftheir employment are as follows:

Modaraba Management Company- Current account payableReceivable fromAssociatedOther related parties (other than key management personnel)- Deferred liability staff gratuity- Brokerage house clients receivablesSubordinated loan from sponsor

Modaraba Management Company- ReimbursementOther related parties (including key management personnel)- Contribution to staff gratuity fund- Remuneration and other benefitsDonationPurchase of sharesServices acquired Associated CompanyBrokerage commission earned Associated CompanyPurchases of goods and services Associated CompanySales of goods and services Associated CompanyServices rendered Associated CompanyReimbursementContribution towards employees Retirement Benefit PlansProfit on Subordinated loan from Sponsor Director

Total number of employees of the Modaraba as at June 30, 2015 are 511 (2014: 518)

These financial statements were authorized for issue in accordance with a resolution of the Board of Directors on October 08, 2015.

Balance outstanding at year end

Transactions during the year Relationship

46.

47.

48.

46.1

46.2

4,829,780418,367

2,655,483358,712

-

4,508,446

375,1753,876,6563,333,333

10,700,000227,412476,623

11,814,192676,918

16,269,611-

2,241,3354,252,093

5,754,180349,099

1,556,25526,817

40,000,000

4,508,452

351,7003,150,239

--

247,15515,909

62,749,1035,549,530

18,470,356-

1,836,5864,767,561

1,997,372,443 2,033,078,207

94,533,097 147,542,513

2,091,905,540 2,180,620,720

3,073,446

54,345,908

14,231,560

(2,901,431)

83,460,965

95,437,98068,577,468

11,977,015

44,244,512

44,244,512

16,277,252

16,277,252

959,051,423 1,096,121,112

44,784,139 57,746,600

1,003,835,562

1,088,069,978

1,153,867,712

1,026,753,008

153,003,609

-

-

- -

-

- - - -

-

-153,003,609

170,430,133 1,629,694,189

1,629,694,189170,430,133

942,804,400

942,804,400

Share of profit / (loss) in associated company


Taxation

Profit for the year

Other information

Segment assets

Unallocated assets

Total assets

Segment liabilities

Unallocated liabilities

Total liabilities

-

-

-

- -

-

-

Rupees

MusharakahFacility

BrokerageOperation

CapitalMarkets

TextileBusiness

2015

Total TotalOthers

2014

2015Rupees

2014Rupees



Page 76

The Board of Directors of the Management Company has approved dividend at the rate of Re. 0.17 per certificate (2014: Re. 0.375per certificate) for the year ended June 30, 2015, resulting in a total distribution of profit amounting to Rs. 8,914,800/- (2014: Rs.19,665,000/-), in its meeting held on October 08, 2015, which is more than 90% of the net profit for the year ended June 30, 2015,after appropriation to the statutory (mandatory) reserve as required under the Modaraba Regulations.

Figures in these financial statements have been rounded off to the nearest of rupee.The corresponding figures, wherever necessary, have been re-arranged for purpose of comparison.

General

48.1

49.149.2

49.

Adil A. Ghaffar



Zahid Bashir

Director


Nadeem Maqbool

Director


Documents

Contents Nadeem Maqbool Adil A. Ghaffar (Chief Executive) AuditCommittee Zahid Bashir Nadeem Maqbool Room No. 503 - 504 5th Floor, Karachi Stock Exchange Building, Karachi. Tel: 32446020-3